<PAGE>
[Logo] WM
GROUP OF FUNDS
[graphic omitted]
----------------------------
THE DIFFERENCE IS EXPERIENCE
----------------------------
SEMI-ANNUAL REPORT
for the period ended April 30, 1999
<PAGE>
FIXED-INCOME FUNDS
target maturity 2002 fund
short term high quality bond fund
U.S. government securities fund
income fund
high yield fund
MUNICIPAL FUNDS
california insured intermediate municipal fund
california municipal fund
florida insured municipal fund
tax-exempt bond fund
EQUITY FUNDS
bond & stock fund
growth & income fund
growth fund
northwest fund
emerging growth fund
international growth fund
<PAGE>
[graphic omitted]
message from the president ................................. 2
WM Group of Funds market &
economic overview ......................................... 4
individual portfolio reviews ............................... 7
statements of assets and liabilities ...................... 38
statements of operations ................................... 42
statements of changes in net assets ........................ 44
statements of changes in net assets -
capital stock activity ................................... 52
financial highlights ....................................... 64
portfolio of investments ................................... 94
notes to financial statements .............................. 139
<PAGE>
MESSAGE FROM THE PRESIDENT
[graphic omitted]
[Photo of William G. Papesh]
We are pleased to provide you this WM Group of Funds semi-annual report for the
period ended April 30, 1999. As I review recent market activity, I am struck by
certain similarities between the current investment environment and that of the
1950s and '60s. As in that period of American economic expansion, U.S. investors
today are enjoying an extended period of economic abundance, brought about by
structural changes in the global economy, as well as revolutionary technological
advances.
Equity investors have benefited from exceptionally strong returns through much
of this decade. The S&P 500 rose 28% in 1998, bringing the market's four-year
cumulative gain to 190%.(1) Since 1995, the U.S. stock market has created almost
$7 trillion in wealth.(2) On the fixed-income side, the early 1990s brought bond
investors significant opportunities to benefit from declining interest rates.
Internationally, increased opportunities in emerging markets have offered
aggressive growth investors new venues in which to invest.
While this decade has been quite rewarding for many investors, there are aspects
of the economy and financial markets that warrant some caution. For example, the
domestic economy is expanding rapidly due primarily to strong consumer spending,
with GDP growing between 4%-6% on an annualized basis. As a result, there is
increased fear among investors that higher inflation may lead to higher interest
rates. Also, while the Dow Jones Industrial Average continues to post record
highs, the stock market's current strength is not broad based. Stocks of small-
and medium-sized companies have not kept pace with the mega-cap growth stocks,
some of which are trading at more than 100 times earnings. There is also concern
that rapid change in the technology sector has a speculative environment,
particularly with regard to some Internet stocks.
DEVELOP A STRATEGY TO WEATHER MARKET CYCLES
While no one can precisely predict the future course of the stock market, the
economy and financial markets are often linked in more predictable ways.
Economic growth can fuel inflation and higher interest rates, typically
resulting in reduced consumer spending and slower corporate earnings growth. On
the other hand, when the economy slows, interest rates typically fall, which
helps to spur renewed investment. These cycles are an inherent part of
investing. Fortunately, there are a variety of strategies that individual
investors can employ to lessen the effects of market volatility on their
portfolios.
First and foremost, investors can seek to remain diversi-fied by investing in a
mix of equity and fixed-income investments. Some investors may be tempted to
ignore this strategy when stocks are posting 20%+ returns per year. From April
1993 through April 1999, for example, the WM GROWTH FUND posted an average
annual return of 26.52%, not adjusted for the maximum sales charge. For the 12
months ended April 30, 1999, the Fund gained 65.36%.(3) Yet, I would caution
investors to remember that these years have been marked by an exceptionally
strong stock market. Over an investment horizon of 10 or 20 years, a diversified
strategy can provide strong returns with less risk than a pure equity portfolio.
Since 1926, the long-term average annual return for stocks, as measured by the
S&P 500, has been in the 10%-12% range. From its inception in May 1939 through
April 30, 1999, the WM BOND & STOCK FUND has posted an average annual return of
9.06%, not adjusted for the maximum sales charge, with significantly less
volatility in year-to-year returns than the S&P 500.(4)
Another strategy investors can use to help reduce risk in their investment
portfolios is known as dollar cost averaging (DCA). With this strategy, a set
amount is invested on a regular basis, usually monthly or quarterly. The
advantage of a DCA program is that it allows you to take advantage of potential
temporary price declines. For example, if you invest $100 each month, more
shares will be bought when prices are low and fewer shares when prices are high.
It is important to note that DCA does not guarantee a profit or protect against
a loss, and you must consider your ability to continue purchases in a declining
market. However, as a long-term investment strategy, it can help you lower the
average cost of the shares you purchase.
YOUR INVESTMENT REPRESENTATIVE IS A VALUABLE RESOURCE
Whether you are investing for retirement, future college tuition costs, or
short-term goals, your ability to meet your financial goals will require a
well-defined investment strategy. Your Investment Representative can help you in
several ways. First, he or she has the tools and resources available to help you
clearly define your goals. Many individuals today who are saving for retirement,
for example, may be unsure about the amount they actually need to save. Your
Investment Representative can help you evaluate how the rising cost of living,
coupled with today's longer lifespans, will affect your retirement savings goal.
Secondly, your Investment Representative can assist you in determining which
types of investment vehicles are best suited for your goals and objectives.
The WM GROUP OF FUNDS offers a diverse family of mutual funds with a variety of
investment objectives to help you meet your financial goals. You can choose to
combine individual funds, including stock, bond, and tax-exempt fixed-income
funds, to create a diversified portfolio. Or, if you seek the advantages of a
professionally managed asset allocation portfolio, consider also the WM
STRATEGIC ASSET MANAGEMENT PORTFOLIOS. We suggest you consult with your
Investment Representative to determine which investments are appropriate for
your particular needs.
Thank you for your continued trust in the WM GROUP OF FUNDS. We look forward to
continuing to provide you with investment opportunities, today and into the next
century.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
(1) Source: Ibbotson Associates
(2) Source: YOUR MONEY, June/July 1999
(3) Performance for A shares through March 31, 1999, adjusted for the maximum
sales charge, is as follows: 1-year: 54.24%, 5-year: 26.14%, since
inception: 24.70%. Past performance is not a guarantee of future results.
(4) Performance for A shares through March 31, 1999, adjusted for the maximum
sales charge, is as follows: 1- year: -5.09%, 5-year: 12.69%, since
inception: 8.87%. Past performance is not a guarantee of future results. The
S&P 500 is an unmanaged, weighted index of 500 companies frequently used in
the equity markets for comparison purposes. Investors cannot invest directly
in an index, and there is no guarantee that the WM Bond & Stock Fund will be
less volatile than this index in the future.
<PAGE>
WM GROUP OF FUNDS
MARKET & ECONOMIC OVERVIEW
STRONG ECONOMIC GROWTH A POSITIVE FOR INVESTORS
In the wake of the Russian debt default and the bailout of Long-Term Capital
Management, U.S. financial markets experienced a period of marked instability in
August and September of last year. Markets then largely recovered in the fourth
quarter of 1998. Normal price relationships in debt securities have been
restored, and with investor confidence high, the Dow Jones Industrial Average
broke through the 10,000 point barrier on March 29, 1999.
Following trends of recent periods, the largest companies tended to outperform
smaller companies. The S&P 500, after giving up nearly all of its 1998 gains in
the late summer correction, ended the year up 28.6%. The S&P Mid-Cap 400 posted
a 19.1% gain for 1998, while the Russell 2000 fell 2.5%. This trend continued
into 1999, with the S&P 500 gaining 9% through April 30, 1999. In the first four
months of 1999, mid- and small-capitalization stocks as a group lost ground in
January and February, posted minor gains in March, and rebounded significantly
in April. The S&P Mid-Cap 400 advanced 4.3% through April 30, 1999, and the
Russell 2000 climbed 3.1%.
STRONG ECONOMY BOLSTERS U.S. MARKETS
The U.S. economy posted surprisingly strong growth in the fourth quarter of 1998
and continued to expand in the first quarter of 1999, which bolstered corporate
earnings growth. In 1998, gross domestic product (GDP) grew 3.9%, with increases
in consumer spending generating a large amount of the results. Strong fourth
quarter growth of 6% raised concerns of potentially higher inflation, but
significant wage and price pressures have yet to materialize. This phenomenon is
unique as inflation pressures normally follow periods of such strong economic
growth.
In the first quarter, GDP growth of 4.1% was attributed to increases in consumer
spending and business investment in technology. Consumer spending grew at a 6.7%
annual rate in the first quarter, a significant increase over prior quarters.
Rising consumer confidence is due in part to falling energy prices and low
interest rates, which has led to a boom in mortgage refinancing. Business
investment in durable equipment also rose, with spending on information
technology up 21% on an annualized basis. Residential construction spending also
posted strong gains in the first quarter.
Strong economic growth can often negatively impact the stock market as investors
fear rising inflation will trigger higher interest rates and dampen corporate
earnings. Yet despite historically low unemployment levels, inflation has
remained relatively subdued. As a result, the Federal Reserve left interest
rates unchanged at its March 30, 1999 Federal Open Market Committee (FOMC)
meeting.
INTEREST RATES STABILIZE
Following Russia's debt default last August, investors flocked to U.S. debt
issues, and as a result, rates on lower-quality debt rose dramatically. With
strong demand for U.S. government debt, yields on Treasuries fell while prices
increased significantly. Medium- and long-term Treasury bonds outperformed all
conventional fixed-income investments in 1998. Thirty-year zero-coupon bonds
gained 20.1% in 1998, as measured by Merrill Lynch's fixed-income indices.
As the financial crisis spread to Latin America, the Federal Reserve acted to
forestall a "liquidity crunch" and to maintain normal price relationships
between short- and long-term debt. By the end of 1998, the Federal Reserve had
dropped the target federal funds rate from 5.5% to 4.8%, and cut the discount
rate on two occasions to 4.5%.
DOW JONES INDUSTRIAL AVERAGE
six months ended 4-30-99
- -----------------------------
Oct 98 8,592
Nov 98 8,975
8,919
9,159
9,333
Dec 98 9,016
8,821
8,903
9,217
9,181
Jan 99 9,643
9,340
9,120
9,358
Feb 99 9,304
9,274
9,339
9,306
Mar 99 9,736
9,876
9,903
9,822
10,006
Apr 99 9,832
10,173
10,493
10,689
10,789
Source: The Wall Street Journal
Note: The Dow Jones Industrial Average is an unmanaged index of 30 stocks and is
sometimes used to measure the overall U.S. stock market performance. Individuals
cannot invest directly in an index.
ASSET CLASS PERFORMANCE DISPARITY
Six months ended 4-30-99
- -----------------------------------------------
LARGE-CAP STOCKS 22.30%
MID-CAP STOCKS 18.90%
SMALL-CAP STOCKS 15.20%
MORTGAGE BONDS 2.40%
T-BILLS 2.20%
CORPORATE BONDS 1.80%
GOVERNMENT BONDS -1.00%
Source: Ibbotson Associates. Domestic Stocks are represented by: S&P 500, S&P
Mid-Cap 400, and the Russell 2000, respectively. Bonds are represented by Lehman
Brothers indices. An investor would typically purchase stocks for long-term
growth of capital. However, stocks are often subject to significant price
fluctuation, and therefore, an investor may have a gain or loss in principal
when the shares are sold. Indices are unmanaged and individuals cannot invest
directly in an index. This chart is not intended to represent the performance of
any mutual fund.
Overall investor confidence continued to strengthen in the first quarter of
1999. As a result, the Federal Reserve's interest rate policy is once again
focused on inflation. Although job growth continues to be strong and the
unemployment rate (4.2% in March) remains at the lowest point in three decades,
inflation remains under 2%. A combination of modest increases in wages and
better-than-expected productivity gains have resulted in flat or lower unit
labor costs.
Yields on long-term U.S. Treasury bonds climbed to 5.6% on March 31, from 5.1%
at the end of 1998. Since February, long-term interest rates have drifted in the
5.3% to 6.0% range, amid concerns that the Federal Reserve would raise interest
rates to forestall inflation.
INTERNATIONAL MARKETS POST MIXED RESULTS
Many international economies have shown signs of recovery, but many analysts do
not expect economic growth in emerging economies to reach the levels seen
earlier in the decade for some time. The Morgan Stanley Capital International
(MSCI) Europe, Australasia and Far East (EAFE) Index gained over 15% for the
six-month period ended April 30, 1999, with stronger performances by several
European countries. The introduction of the Euro on January 1 established a new
benchmark indicator for the direction of European economic growth and
import/export activity. The cooperative framework between the 11 participating
countries is being tested as the European Central Bank seeks to satisfy
competing agendas. The bank recently cut interest rates 50 basis points to
stimulate growth and increase pressure for corporate restructurings and labor
market reform.
YIELD ON THE 30-YEAR TREASURY BOND
six months ended 4-30-99
- -----------------------------------
Oct 98 5.160
Nov 98 5.390
5.250
5.220
5.160
Dec 98 5.040
5.030
5.000
5.220
5.100
Jan 99 5.270
5.110
5.080
5.090
Feb 99 5.350
5.420
5.390
5.580
Mar 99 5.600
5.530
5.560
5.660
Apr 99 5.600
5.460
5.570
5.600
5.660
Source: The Wall Street Journal
Note: Represents yield on the 30-year Treasury bond which is sometimes used to
characterize the overall bond market.
Japan continues to be mired in a recession. In yet another attempt to jump-start
its economy, the Bank of Japan dropped short-term interest rates to nearly zero
percent in March. However, corporate borrowing remains at very low levels.
Despite strong gains in the fourth quarter of 1998, the recession-plagued Asian
emerging markets were down an average of 7% for the year. Financial stability in
the region is gradually being restored and markets have responded. Efforts to
dispose of problem loans intensified with the development of a secondary market
for corporate debt led by 15 Singapore and Hong Kong banks. In Latin America,
stock markets of both Mexico and Brazil strengthened in the first quarter of
1999 as global uncertainty eased.
Slower economic growth internationally has had a negative effect on U.S. export
growth. Exports did rise in the fourth quarter of last year as Asian markets
began showing signs of recovery, but the gains were not sustained in the first
quarter of 1999. In the near term, the U.S. economy will continue to rely on
domestic consumer demand. Advances in corporate productivity will likely be a
key factor for driving future growth in the economy and the markets.
TEMPERING THE EFFECTS OF MARKET VOLATILITY
While the stock market has continued to reach new highs this year, no one can
predict what direction it is headed next. As an investor, however, one thing you
can count on with certainty is market volatility. Investors should not become
overconfident that the markets will continue to provide the above-average
returns we have witnessed in recent years. Even in a bull market, it is wise to
be prepared for market volatility. Since investment risk and reward go
hand-in-hand, it is essential that you take steps to protect your assets while
striving to meet your long-term goals.
Asset allocation and diversification help to minimize risk. Investing in
different asset classes, such as stocks, bonds, and cash equivalents, can help
you minimize the effect a downturn in one market sector may have on your entire
portfolio. While creating a well-diversified portfolio can help smooth out the
effects of market swings on your overall portfolio, it is essential that you
review your investment mix on a regular basis. Allowing your portfolio to become
too heavily weighted in one asset class can reduce diversification and expose
you to unnecessary risk.
CONSULT REGULARLY WITH YOUR INVESTMENT REPRESENTATIVE
In order to keep your investment portfolio on track, it is important to stay
focused on your investment objective and time frame. To ensure that your
portfolio is properly diversified and in line with your goals, we encourage you
to meet with your Investment Representative at least once a year. He or she can
help you re-evaluate your portfolio and determine which investments are best
suited for your particular needs.
The WM GROUP OF FUNDS offers an array of professionally managed investments that
may be appropriate for your portfolio. Depending on your financial goals, you
can choose among a variety of investment options, including six equity funds,
four tax-exempt bond funds, five taxable bond funds, three money market funds,
and five asset allocation funds.
To find out how the WM GROUP OF FUNDS can help you reach your long-term goals,
please contact your Investment Representative for a WM GROUP OF FUNDS
prospectus, which contains more complete information, including charges and
expenses.
INTERNATIONAL MARKET PERFORMANCE
six months ended 4-30-99
- -----------------------------------------
WORLD 19.80%
EAFE 15.44%
EUROPE 11.00%
PACIFIC REGION 27.70%
JAPAN 30.10%
NORDIC REGION 22.00%
IFCG EMERGING MARKETS 29.10%
Sources: Morgan Stanley Capital International (MSCI). MSCI indices are
maintained and calculated by Morgan Stanley's Capital International group, which
tracks more than 45 equity markets throughout the world. The MSCI indices are
market capitalization weighted and cover both developed and emerging markets. In
addition to the country indices, MSCI also calculates aggregate indices for the
world, Europe, North America, Asia and Latin America. Most international mutual
funds measure their performance against MSCI indices. Each region above is
represented by the corresponding MSCI Index in U.S. Dollars. There are
additional risks associated with international investing, including currency
fluctuations.
<PAGE>
TO OUR
SHAREHOLDERS
[graphic omitted]
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, 1999.
To help you better
understand the
professional investment
management available
to you as a
WM Group of Funds'
shareholder,
we have also
included biographies
of the investment
professionals managing
the funds.
<PAGE>
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
in their day-to-day management of the Funds in the WM Group of Funds to ensure
that the policies are met and guidelines are followed, and to determine
appropriate investment performance measures.
UNDERSTANDING THE ENCLOSED CHARTS AND PERFORMANCE FIGUREs
In order to help you understand the 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 charges for investment management or other expenses.
Total return is used to measure a Fund's performance and reflects both changes
in 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 Securities and Exchange Commission (SEC) yield is computed by
dividing net investment income per share over the one-month period ended April
30, 1999, 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
SEC for performance advertisement purposes, and does not imply any endorsement
or recommendation by the SEC.
THE YEAR 2000 PROBLEM
Many computer systems in use today cannot properly process date-related
information in relation to the year 2000. This issue originates in the practice
of abbreviating years to their last two digits. Computer systems may not be able
to decide correctly when a date entered with a year of "00" should be
interpreted as 1900 or 2000. At the turn of the new century, computer systems
may not function properly because they may not be able to recognize or interpret
the year 2000.
Should any of the computer systems employed by the WM Funds' major service
providers fail to process this type of information properly, it could have a
negative impact on Fund operations and the services that are provided to
shareholders. Similarly, the values of certain of the WM Funds' assets may be
adversely affected by the inability of their issues or third parties to properly
process date-related information.
The Advisor, Shareholder Servicing Agent and Administrator have advised the
Funds that they are reviewing all of their computer systems with the goal of
modifying or replacing such systems prior to January 1, 2000 to the extent
necessary to avoid any such negative impact. The Funds are seeking assurance
from each of their key service providers that similar replacements or
modifications will be completed to avoid any negative impact from this issue. As
of this date, the Funds have received assurances from their key service
providers. However, there can be no guarantee that these assurances will
ultimately be successful. In the event a key service provider cannot provide
such assurance, the Funds and Portfolios may consider retaining an alternative
service provider.
In addition, the Advisor has been informed by the Custodian that it is also in
the process of reviewing its systems with the same goal. As of the date of this
report, the Funds and Advisor have no reason to believe that these goals will
not be achieved.
<PAGE>
TARGET MATURITY
2002 FUND
PORTFOLIO MANAGER:
GARY POKRZYWINSKI
WM ADVISORS, INC.
The day-to-day management of the Target Maturity 2002 Fund's portfolio is the
responsibility of a fixed-income team led by Senior Portfolio Manager Gary
Pokrzywinski, who has over 14 years of asset management experience and has been
with WM Advisors, Inc. for more than six years. Mr. Pokrzywinski is a Chartered
Financial Analyst and holds a Business Degree from the University of Wisconsin.
Mr. Pokrzywinski began managing the Target Maturity 2002 Fund on March 23, 1998.
PERFORMANCE REVIEW
The Target Maturity 2002 Fund performance for the six-month period ended April
30, 1999 was -2.01% (not adjusted for sales charge) due to a significant
increase in interest rates in 1999.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED APRIL 30, 1999?
During the six-month period, there was a fairly significant rise in interest
rates; this is negative for the Fund as its price moves in the opposite
direction of interest rates. Rates increased by 70 basis points (0.70%) for
intermediate-maturity Treasury bonds. The Fund's investment objective is to hold
90% of assets in zero-coupon Treasury notes with maturities in November of 2002.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
There have been no shifts in holdings that had a significant impact on
performance. The Fund continued to hold the November 2002 zero-coupon Treasury
strips.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Given the objective of the Fund to remain invested in Treasury STRIPs maturing
at the termination date, the Fund's net asset value (NAV) will move inversely to
interest rates. Over time, as its termination date approaches, the duration of
the Fund will shorten, lessening the impact of changes in interest rates on the
NAV. When the termination date is reached, the November 2002 Treasury STRIPs
will mature.
The economy has been growing above potential in recent periods and if this
continues, the risk of an acceleration in inflation will become a concern. The
result of this growth has been higher interest rates -- this trend may continue
in the short term. However, if a rise in rates occurs, it should be rather short
lived because of the structural deflationary forces remaining in the world
economy. Despite the possibility of higher near-term rates, we forecast lower
interest rates over the course of the next 12 months -- a positive sign for the
Fund.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Fund
(Class A
Fund Shares; Lehman
(Class A adjusted Brothers
Shares; not for the Government
adjusted for maximum 2% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- -------------------------------------------------------------------------------
Inception -- 3/20/95 $10,000 $ 9,800
9,990 9,790 $10,000 $10,000
Apr 95 10,140 9,937 10,131 10,007
10,690 10,476 10,539 10,020
Jun 10,780 10,564 10,620 10,020
10,670 10,457 10,581 10,060
Aug 10,840 10,623 10,705 10,100
10,960 10,741 10,808 10,134
Oct 11,160 10,937 10,972 10,167
11,390 11,162 11,143 10,187
Dec 95 11,570 11,339 11,301 10,208
11,642 11,410 11,370 10,208
Feb 11,311 11,085 11,138 10,234
11,146 10,923 11,046 10,255
Apr 10,990 10,770 10,975 10,289
10,928 10,710 10,957 10,281
Jun 11,094 10,872 11,098 10,274
11,104 10,882 11,126 10,335
Aug 11,042 10,821 11,101 10,368
11,270 11,044 11,285 10,422
Oct 11,580 11,349 11,534 10,463
11,808 11,572 11,734 10,482
Dec 96 11,621 11,389 11,615 10,489
11,643 11,410 11,627 10,509
Feb 11,631 11,399 11,644 10,529
11,443 11,214 11,520 10,562
Apr 11,632 11,399 11,686 10,596
11,732 11,497 11,787 10,616
Jun 11,865 11,628 11,920 10,616
12,232 11,987 12,258 10,650
Aug 12,065 11,824 12,137 10,683
12,243 11,998 12,319 10,710
Oct 12,442 12,193 12,532 10,723
12,442 12,193 12,596 10,716
Dec 97 12,582 12,330 12,728 10,729
12,798 12,542 12,919 10,750
Feb 12,738 12,483 12,884 10,770
12,762 12,507 12,920 10,790
Apr 12,834 12,577 12,978 10,810
12,917 12,659 13,112 10,829
Jun 13,025 12,765 13,262 10,842
13,097 12,835 13,282 10,855
Aug 13,493 13,223 13,627 10,868
13,900 13,622 13,995 10,881
Oct 13,984 13,704 13,947 10,908
13,864 13,587 13,951 10,908
Dec 98 13,847 13,570 13,982 10,901
13,860 13,582 14,063 10,928
Feb 13,597 13,325 13,728 10,941
13,676 13,403 13,782 10,974
Apr 99 13,702 13,428 13,814 10,997
(1) Index total returns were calculated from 3/31/95 to 4/30/99. The Lehman
Brothers Government Bond Index represents all U.S. Government agency and
Treasury securities. 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 performance does not guarantee
future performance. The returns shown for the Fund assume reinvestment of
all dividends/distributions by the shareholder.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees or reimbursed certain other expenses and the Fund's
custodian had not allowed its fees to be reduced by credits.
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR SINCE INCEPTION*
(MARCH 20, 1995)
Fund (not adjusted for sales charge) -2.01% 6.78% 7.96%
Fund (adjusted for the maximum
2% sales charge) -3.99% 4.63% 7.44%
Lehman Brothers Government Bond Index(1) 0.82% 1.73% 8.23%
*Annualized
<PAGE>
SHORT TERM HIGH QUALITY BOND FUND
PORTFOLIO MANAGER:
GARY POKRZYWINSKI
WM ADVISORS, INC.
The Short Term High Quality Bond Fund is managed by a fixed-income team led by
Senior Portfolio Manager Gary Pokrzywinski, who has over 14 years of asset
management experience and has been with WM Advisors, Inc. for more than six
years. Mr. Pokrzywinski is a Chartered Financial Analyst and holds a Business
Degree from the University of Wisconsin.
PERFORMANCE REVIEW
The Fund's A shares advanced 1.61% (not adjusted for sales charge) during the
six-month period ended April 30, 1999. Long-term results are very favorable and
provide the potential for inflation protection as the Fund has averaged 5.30%
for the past five years (not adjusted for sales charge).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX- MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
With a portfolio of short-term securities, the largest contributor to
performance is almost always the income generated by the Fund. Short-term bond
prices are normally relatively stable, as they do not fluctuate with interest
rate changes as much as long-term holdings. In addition, the Fund is highly
concentrated in the highest rated securities; it is managed in an effort to be
more stable and less risky than longer-maturity and lower-rated investment
vehicles.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Lehman
Fund Brothers
(Class A Mutual Fund
Fund shares Short (1-5)
(Class A adjusted Investment
Shares; not for the Grade
adjusted for maximum 3.5% Debt Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception - 11/1/93 $10,000 $ 9,650 $10,000 $10,000
10,005 9,655 9,991 10,014
Dec 93 10,052 9,700 9,940 10,028
10,098 9,745 10,046 10,028
10,063 9,711 9,944 10,056
Mar 9,947 9,599 9,831 10,077
9,908 9,561 9,772 10,119
9,915 9,568 9,788 10,126
Jun 9,927 9,580 9,816 10,126
9,981 9,632 9,944 10,153
9,989 9,639 9,988 10,187
Sep 9,993 9,644 9,933 10,222
9,997 9,647 9,945 10,236
10,002 9,652 9,888 10,244
Dec 94 9,842 9,497 9,910 10,278
9,851 9,507 10,074 10,306
9,942 9,594 10,274 10,347
Mar 10,037 9,685 10,339 10,375
10,130 9,776 10,461 10,383
10,357 9,995 10,730 10,396
Jun 10,366 10,003 10,800 10,396
10,375 10,012 10,828 10,438
10,472 10,105 10,922 10,479
Sep 10,524 10,156 10,993 10,514
10,625 10,253 11,100 10,549
10,726 10,351 11,233 10,570
Dec 95 10,829 10,450 11,340 10,591
10,933 10,550 11,458 10,591
10,852 10,472 11,376 10,618
Mar 10,815 10,437 11,331 10,640
10,776 10,399 11,321 10,675
10,786 10,408 11,330 10,667
Jun 10,890 10,509 11,437 10,660
10,950 10,567 11,480 10,723
10,963 10,579 11,504 10,757
Sep 11,069 10,682 11,650 10,813
11,171 10,780 11,830 10,855
11,268 10,874 11,960 10,876
Dec 96 11,274 10,879 11,918 10,882
11,278 10,883 11,979 10,903
11,337 10,940 12,010 10,924
Mar 11,349 10,952 11,956 10,959
11,404 11,005 12,080 10,994
11,506 11,104 12,177 11,015
Jun 11,560 11,156 12,284 11,015
11,720 11,310 12,498 11,050
11,727 11,317 12,460 11,084
Sep 11,780 11,368 12,590 11,112
11,840 11,425 12,678 11,125
11,846 11,431 12,700 11,119
Dec 97 11,925 11,508 12,783 11,132
12,034 11,613 12,937 11,153
12,030 11,609 12,946 11,174
Mar 12,084 11,661 12,995 11,195
12,139 11,714 13,067 11,216
12,192 11,765 13,155 11,236
Jun 12,246 11,817 13,224 11,249
12,301 11,870 13,277 11,263
12,463 12,027 13,390 11,276
Sep 12,625 12,183 13,665 11,290
12,628 12,186 13,641 11,317
12,625 12,183 13,704 11,317
Dec 98 12,678 12,234 13,749 11,310
12,734 12,288 13,851 11,338
12,674 12,231 13,730 11,352
12,779 12,332 13,858 11,386
Apr 99 12,832 12,383 13,924 11,410
(1) Index total returns were calculated from 10/31/93 to 4/30/99. The Lehman
Brothers Mutual Fund Short (1-5) Investment Grade Debt Index includes all
investment-grade, corporate debt securities with maturities of one to five
years, assumes reinvestment of all dividends/distributions, and does not
reflect any asset-based charges for investment management or other expenses.
The Consumer Price Index is a measurement of inflation for all urban
consumers (CPI-U).
Past performance does not guarantee future performance. The returns shown
for the Fund assume reinvestment of all dividends/distributions by the
shareholder.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees or reimbursed certain other expenses and the Fund's
custodian had not allowed its fees to be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(NOVEMBER 1, 1993)
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 1.61% 5.70% 5.30% 4.64%
Fund (adjusted for the maximum 3.5% sales charge) -2.14% 2.18% 4.53% 3.97%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index(1) 2.08% 6.56% 7.34% 6.20%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 1.22% 4.90% N/A 4.66%
Fund (adjusted for the maximum contingent deferred sales charge) -2.74% 0.90% N/A 4.66%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index(1) 2.08% 6.56% N/A 7.50%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 1.23% 4.90% N/A 4.66%
Fund (adjusted for the maximum contingent deferred sales charge) -3.73% -0.10% N/A 4.49%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index(1) 2.08% 6.56% N/A 7.50%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
AAA 59%
AA 6%
A 19%
BBB 16%
++ Bond ratings provided by Standard & Poors and Moody's. Allocation
percentages are based on total investment value of the portfolio as of 4/30/99.
During the six-month period ended April 30, 1999, interest rates rose
significantly, even for short-term maturities. This had a slightly negative
impact on performance. Because of its short-term holdings, the interest rate
increase was tempered. Relative performance can be attributed to the low
duration (a measure of price sensitivity to interest rate changes) of the Fund
and the strength in mortgage, asset-backed, and corporate sectors. As stability
returned to global markets and liquidity returned to investments other than the
U.S Treasury, fixed-income market performance broadened. Mortgage-backed and
asset-backed securities were some of the strongest in the period and corporate
holdings benefited from the strength of the domestic economy. The Fund benefited
from the market broadening as over 75% of the portfolio is invested in these
three sectors.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
During the period, assets were merged from the Griffin Short-Term Bond Fund into
the WM Short Term High Quality Bond Fund. This merger was very complementary, as
Fund assets were similar. As always, we remain very focused on high-quality
holdings with an average weighting of AA++; currently, 65% of assets are
invested in bonds rated AA or higher. Asset-backed securities have provided
strong results in recent months; these holdings normally provide a 40 to 60
basis point yield advantage over Treasuries and have a secure structure with
very little credit risk. We are in the process of increasing the position of
these types of securities. We feel that a diversified portfolio of short-term
mortgages, asset-backed, corporates and Treasuries should generate a competitive
yield and provide relative stability. As of April 30, 1999, the SEC Yield of the
Fund was 5.02% (4.46% for B shares).
The overall investment strategy is to modestly shift the holdings between
sectors depending upon historical yield (spread) relationships. Generally, we
think the best approach is to have the highest ratings concentrated in
asset-backed, mortgage, and Treasury securities (equivalent to "AAA") and hold
corporate securities for the "A" and "BBB" portion. This balance provides good
risk/reward characteristics.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Economic growth has been far greater than predicted by most economists and
analysts. The domestic economy has expanded at an average of over 5% for the
past six months -- very high relative to historical averages. Following the
higher than expected growth were renewed concerns over inflation and the
possibility of intervention by the Federal Reserve. This has caused a fairly
substantial rise in interest rates for short-term Treasuries. We feel that the
interest rate increase is a short-term phenomenon and we see rates falling over
the next 12 months. This creates a very positive environment for the Fund -- if
growth slows from current levels and inflation concerns subside, rates could
fall, supporting price performance for fixed-income assets.
<PAGE>
U.S. GOVERNMENT
SECURITIES FUND
PORTFOLIO MANAGER:
CRAIG SOSEY
WM ADVISORS, INC.
The U.S. Government Securities Fund is managed by a fixed-income team led by
senior portfolio manager Craig Sosey, who has over 15 years banking and
financial analysis experience and joined WM Advisors, Inc. in 1998. Mr. Sosey
has a BS in Finance from the University of the Pacific and an MBA from the
University of California Berkeley. He has extensive experience managing
government and mortgage-backed securities.
PERFORMANCE REVIEW
The Fund's A shares advanced 1.40% (not adjusted for sales charge),
outperforming its benchmark during the six-month period ended April 30, 1999.
Long-term results are very favorable and provide the potential for inflation
protection as the Fund has averaged 8.85% for the past 10 years (not adjusted
for sales charge).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX- MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
Interest rates rose dramatically over the last six months, as worries about the
global economy receded and the U.S. economy remained remarkably strong. Consumer
spending increased as strong consumer confidence and rising income levels
supported growth. With the higher than expected growth, price pressures surfaced
and the Federal Reserve began looking closely at short-term interest rate
levels. The rate on the 2-year Treasury note increased nearly 100 basis points,
from 4.11% to 5.06%, while the 30-year bond yield rose 51 basis points to 5.66%.
This of course, had a negative impact on performance of the Fund as prices move
in the opposite direction of interest rates.
Helping offset the higher interest rates, was the improved performance of
mortgage-backed securities during the period. Mortgage spreads tightened in the
past six months, as prepayment fears lessened and refinancing opportunities
diminished. This meant that mortgage holdings outperformed Treasuries as the
difference in yields between these two types of bonds got smaller, allowing
better relative price movement as well as normally higher income levels.
Mortgages make up a significant portion of the Fund and have generated good
results relative to many other fixed-income investments for the period. In fact,
the Lehman Brothers Government Bond Index actually fell 0.96% over the past six
months while the Fund reported positive performance. We will continue to focus
on mortgage-backed securities as they normally perform very well in stable
interest rate environments and we feel this strategy will help us meet our
long-term investment goals.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Lehman
(Class A adjusted Brothers
Shares; not for the Government
adjusted for maximum 4.5% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception* - 4/1/89 $10,000 $ 9,550 $10,000 $10,000
10,253 9,792 10,236 10,008
Jun 89 10,539 10,065 10,578 10,025
10,741 10,258 10,801 10,075
10,597 10,120 10,620 10,116
10,632 10,153 10,665 10,175
10,860 10,371 10,942 10,241
10,970 10,477 11,048 10,300
Dec 89 11,018 10,522 11,066 10,324
10,912 10,421 10,909 10,349
10,989 10,495 10,931 10,366
10,969 10,476 10,929 10,399
10,892 10,402 10,833 10,449
11,176 10,673 11,135 10,474
Jun 11,302 10,794 11,311 10,491
11,487 10,970 11,456 10,599
11,420 10,906 11,296 10,648
11,512 10,994 11,405 10,707
11,639 11,115 11,591 10,724
11,883 11,348 11,848 10,749
Dec 90 12,059 11,517 12,032 10,807
12,201 11,652 12,160 10,848
12,278 11,725 12,230 10,948
12,359 11,803 12,292 11,040
12,466 11,905 12,427 11,106
12,561 11,996 12,476 11,130
Jun 12,557 11,992 12,458 11,130
12,714 12,142 12,607 11,197
12,958 12,375 12,899 11,214
13,216 12,621 13,170 11,231
13,377 12,775 13,286 11,248
13,497 12,890 13,419 11,281
Dec 91 13,834 13,212 13,876 11,314
13,596 12,984 13,660 11,331
13,717 13,100 13,713 11,364
13,644 13,030 13,634 11,414
13,752 13,133 13,720 11,431
13,994 13,364 13,973 11,464
Jun 14,170 13,533 14,173 11,472
14,361 13,715 14,530 11,489
14,498 13,846 14,665 11,531
14,636 13,977 14,872 11,590
14,461 13,810 14,658 11,606
14,446 13,796 14,633 11,622
Dec 92 14,681 14,020 14,879 11,664
14,945 14,273 15,196 11,688
15,127 14,446 15,500 11,721
15,184 14,501 15,551 11,754
15,280 14,593 15,671 11,795
15,320 14,631 15,653 11,812
Jun 15,572 14,872 16,001 11,803
15,651 14,947 16,099 11,861
15,873 15,159 16,458 11,903
15,881 15,167 16,520 11,944
15,947 15,229 16,583 11,978
15,777 15,067 16,400 11,995
Dec 93 15,873 15,159 16,464 12,011
16,068 15,345 16,690 12,011
15,745 15,036 16,336 12,045
15,288 14,600 15,969 12,070
15,111 14,431 15,842 12,120
15,129 14,448 15,822 12,128
Jun 15,041 14,364 15,785 12,128
15,347 14,656 16,076 12,161
15,350 14,659 16,079 12,202
15,046 14,369 15,852 12,244
14,973 14,300 15,841 12,261
14,948 14,275 15,813 12,270
Dec 94 15,093 14,414 15,909 12,311
15,442 14,747 16,201 12,345
15,840 15,127 16,554 12,394
15,956 15,238 16,658 12,427
16,182 15,454 16,876 12,436
16,890 16,130 17,556 12,452
Jun 16,990 16,225 17,691 12,452
16,896 16,135 17,626 12,502
17,110 16,340 17,832 12,552
17,276 16,498 18,003 12,593
17,525 16,736 18,277 12,635
17,775 16,975 18,562 12,660
Dec 95 18,028 17,217 18,826 12,686
18,131 17,316 18,941 12,686
17,716 16,919 18,554 12,719
17,536 16,747 18,400 12,744
17,420 16,637 18,282 12,786
17,373 16,591 18,251 12,777
Jun 17,596 16,805 18,487 12,768
17,634 16,840 18,533 12,844
17,568 16,778 18,492 12,885
17,884 17,080 18,799 12,952
18,324 17,500 19,213 13,002
18,732 17,889 19,547 13,027
Dec 96 18,476 17,644 19,348 13,035
18,515 17,682 19,369 13,059
18,535 17,701 19,396 13,084
18,272 17,450 19,190 13,126
18,598 17,761 19,467 13,168
18,767 17,922 19,634 13,193
Jun 19,005 18,150 19,854 13,193
19,591 18,709 20,418 13,235
19,356 18,485 20,216 13,276
19,671 18,786 20,519 13,310
20,006 19,106 20,874 13,326
20,082 19,178 20,981 13,318
Dec 97 20,309 19,395 21,201 13,334
20,534 19,610 21,519 13,359
20,514 19,590 21,461 13,384
20,561 19,636 21,521 13,410
20,684 19,753 21,618 13,434
20,866 19,927 21,840 13,458
Jun 21,048 20,101 22,089 13,474
21,115 20,165 22,122 13,490
21,375 20,413 22,698 13,506
21,655 20,680 23,310 13,523
21,603 20,631 23,231 13,556
21,730 20,752 23,238 13,556
Dec 98 21,774 20,794 23,289 13,547
21,898 20,912 23,424 13,580
21,723 20,745 22,867 13,597
21,846 20,863 22,956 13,638
Apr 99 21,908 20,922 23,009 13,666
(1) 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.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian had not allowed its fees to be
reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* 10 YEAR*
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 1.40% 5.89% 7.71% 8.85%
Fund (adjusted for the maximum 4.5% sales charge) -3.19% 1.13% 6.73% 8.51%
Lehman Brothers Government Bond Index1 -0.96% 6.44% 7.75% 8.69%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 31, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 0.99% 4.95% 6.79% 6.43%
Fund (adjusted for the maximum contingent deferred sales charge) -3.94% -0.04% 6.64% 6.43%
Lehman Brothers Government Bond Index1 -0.96% 6.44% 7.75% 7.45%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 23, 1998)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 0.89% 4.95% N/A 4.77%
Fund (adjusted for the maximum contingent deferred sales charge) -4.03% -0.04% N/A 1.17%
Lehman Brothers Government Bond Index1 -0.96% 6.44% 7.75% 7.45%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
GNMA 26%
TREASURIES 12%
CMOS 14%
FHLMC 20%
FNMA 19%
AGENCY OBLIGATIONS 6%
OTHER 3%
++ Allocation percentages are based on total investment value of the portfolio
as of 4/30/99.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
In early March, the Griffin U.S. Government Income Fund was merged into the WM
U.S. Government Securities Fund. The merger added over $100 million in assets to
the Fund and reduced overall mortgage exposure by about 5%. We are now looking
for opportunities to increase the mortgage exposure back up to targeted levels.
Our long-term strategy is to hold approximately 90% of portfolio assets in
mortgages to capitalize on their yield advantage over Treasuries.
Over the course of the period, we sold a number of smaller positions of high
coupon mortgage securities that had not experienced a slow down in prepayments
and reinvested the proceeds in mortgages that have better prepayment protection.
This strategy should benefit the Fund as lower levels of prepayments help
maintain a competitive yield. Some of our purchases were focused on Federal
National Mortgage Association (FNMA) bonds as we were able to find compelling
valuations in this very liquid market.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
The economy should continue to grow at a reasonable level, although at a slower
pace than the last few quarters. However, fears of renewed inflation stemming
from strong consumer spending and an improving global economy will keep interest
rates volatile for a period until the market can gain a clearer picture of the
outlook for the economy. We expect the Fund to continue to perform well in this
environment. The high percentage of mortgage securities should generate a
relatively high level of income in any rate scenario, while mitigating price
fluctuations in a volatile market. We are looking to use periods of interest
rate volatility to find attractive prices on mortgage-backed holdings and
position the portfolio for relative strength.
<PAGE>
INCOME
FUND
PORTFOLIO MANAGER:
GARY POKRZYWINSKI
WM ADVISORS, INC.
The Income Fund is managed by a fixed-income team led by Senior Portfolio
Manager Gary Pokrzywinski, who has over 14 years of asset management experience
and has been with WM Advisors, Inc. for more than six years. Mr. Pokrzywinski is
a Chartered Financial Analyst and holds a Business Degree from the University of
Wisconsin.
PERFORMANCE REVIEW
The Fund's A shares advanced 2.23% (not adjusted for sales charge),
outperforming its benchmark during the six-month period ended April 30, 1999.
Long-term results are very favorable and provide the potential for inflation
protection as the Fund has averaged 8.39% for the past 10 years (not adjusted
for sales charge).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX- MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
Interest rates rose fairly significantly over the last six months. Stronger than
expected economic growth instilled new concerns over accelerating inflation.
Rates of intermediate-term bonds increased by 75 basis points (0.75%) during the
period. Although this negatively affected the price of the Fund, because of the
competitive levels of income generated, the overall return of the Fund was
positive. Over a long-term investment horizon, the majority of the overall total
return of the Fund will be derived from its yield. As of April 30, 1999, the
30-day SEC Yield of the Fund's A shares was 6.08% (5.56% for B shares).
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A Lehman
Fund shares; Brothers
(Class A adjusted Government/
Shares; not for the Corporate
adjusted for maximum 4.5% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception* - 4/1/89 $10,000 $ 9,550 $10,000 $10,000
10,147 9,690 10,246 10,008
Jun 89 10,295 9,832 10,580 10,025
10,360 9,893 10,800 10,075
10,512 10,039 10,633 10,116
10,445 9,975 10,679 10,175
10,511 10,038 10,950 10,241
10,588 10,112 11,048 10,300
Dec 89 10,625 10,147 11,065 10,324
10,568 10,092 10,913 10,349
10,489 10,017 10,937 10,366
10,505 10,033 10,938 10,399
10,508 10,035 10,838 10,449
10,476 10,005 11,152 10,474
Jun 10,712 10,230 11,333 10,491
10,887 10,397 11,473 10,599
10,972 10,479 11,307 10,648
10,868 10,379 11,401 10,707
10,965 10,472 11,552 10,724
11,091 10,592 11,804 10,749
Dec 90 11,294 10,785 11,982 10,807
11,435 10,921 12,117 10,848
11,550 11,031 12,221 10,948
11,696 11,169 12,305 11,040
11,836 11,304 12,447 11,106
11,992 11,452 12,505 11,130
Jun 12,044 11,502 12,491 11,130
12,056 11,513 12,649 11,197
12,193 11,644 12,940 11,214
12,449 11,889 13,210 11,231
12,712 12,139 13,328 11,248
12,911 12,330 13,461 11,281
Dec 91 13,019 12,433 13,915 11,314
13,413 12,809 13,709 11,331
13,242 12,646 13,781 11,364
13,305 12,707 13,705 11,414
13,266 12,669 13,788 11,431
13,360 12,759 14,055 11,464
Jun 13,581 12,970 14,262 11,472
13,816 13,195 14,627 11,489
14,100 13,465 14,757 11,531
14,276 13,634 14,958 11,590
14,436 13,787 14,729 11,606
14,205 13,566 14,716 11,622
Dec 92 14,176 13,538 14,969 11,664
14,403 13,755 15,295 11,688
14,695 14,034 15,613 11,721
14,983 14,308 15,666 11,754
15,067 14,389 15,787 11,795
15,183 14,500 15,779 11,812
Jun 15,219 14,534 16,137 11,803
15,452 14,757 16,241 11,861
15,570 14,870 16,614 11,903
15,905 15,190 17,672 11,944
16,023 15,302 16,741 11,978
16,109 15,384 16,551 11,995
Dec 93 15,872 15,158 16,624 12,011
15,961 15,243 16,874 12,011
16,233 15,503 16,506 12,045
15,829 15,117 16,101 12,070
15,331 14,641 15,968 12,120
15,188 14,505 15,939 12,128
Jun 15,133 14,452 15,902 12,128
15,113 14,433 16,220 12,161
15,397 14,704 16,227 12,202
15,416 14,722 15,982 12,244
15,148 14,467 15,964 12,261
15,095 14,415 15,935 12,270
Dec 94 15,076 14,398 16,041 12,311
15,191 14,508 16,349 12,345
15,467 14,771 16,728 12,394
15,847 15,134 16,840 12,427
15,978 15,259 17,074 12,436
16,255 15,523 17,789 12,452
Jun 17,118 16,347 17,932 12,452
17,263 16,486 17,862 12,502
17,145 16,374 18,090 12,552
17,392 16,609 18,275 12,593
17,617 16,825 18,544 12,635
17,848 17,045 18,850 12,660
Dec 95 18,138 17,322 19,127 12,686
18,469 17,638 19,245 12,686
18,603 17,766 18,837 12,719
18,107 17,292 18,679 12,744
17,950 17,142 18,550 12,786
17,827 17,025 18,519 12,777
Jun 17,806 17,005 18,767 12,768
18,023 17,212 18,810 12,844
18,060 17,247 18,765 12,885
18,059 17,247 19,099 12,952
18,405 17,577 19,544 13,002
18,900 18,049 19,903 13,027
Dec 96 19,334 18,464 19,683 13,035
19,109 18,249 19,706 13,059
19,169 18,307 19,748 13,084
19,203 18,339 19,513 13,126
18,952 18,099 19,797 13,168
19,225 18,360 19,982 13,193
Jun 19,487 18,610 20,221 13,193
19,827 18,935 20,840 13,235
20,560 19,635 20,607 13,276
20,282 19,369 20,930 13,310
20,629 19,701 21,265 13,326
20,959 20,016 21,378 13,318
Dec 97 21,047 20,100 21,602 13,334
21,247 20,291 21,907 13,359
21,330 20,370 21,863 13,384
21,494 20,527 21,931 13,410
21,565 20,595 22,040 13,434
21,822 20,840 22,276 13,458
Jun 21,988 20,998 22,503 13,474
21,955 20,967 22,522 13,490
22,040 21,049 22,961 13,506
22,439 21,430 23,617 13,523
22,143 21,147 23,450 13,556
22,520 21,506 23,590 13,556
Dec 98 22,551 21,536 23,647 13,547
22,774 21,750 23,815 13,580
22,246 21,245 23,248 13,597
22,368 21,362 23,364 13,638
Apr 99 22,635 21,616 23,423 13,666
(1) Index total returns were calculated from 10/31/88 to 4/30/99. The Lehman
Brothers Government/Corporate Bond 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.
The Fund's performance would have been lower had the Advisor and Distributor
not waived a portion of their fees and the Fund's custodian had not allowed
its fees to be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* 10 YEAR*
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 2.23% 4.96% 8.38% 8.39%
Fund (adjusted for the maximum 4.5% sales charge) -2.32% 0.22% 7.39% 7.90%
Lehman Brothers Government/Corporate Bond Index1 -0.11% 6.27% 7.96% 8.88%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 1.83% 4.16% 7.53% 7.13%
Fund (adjusted for the maximum contingent deferred sales charge) -3.12% -0.75% 7.38% 7.13%
Lehman Brothers Government/Corporate Bond Index1 -0.11% 6.27% 7.96% 7.65%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 23, 1998)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 1.82% 4.16% N/A 3.67%
Fund (adjusted for the maximum contingent deferred sales charge) -3.12% -0.75% N/A 0.15%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
INDUSTRIAL BONDS 41%
FINANCIAL BONDS 11%
FOREIGN BONDS 11%
OTHER CORPORATE BONDS 14%
MORTGAGE-BACKED 14%
TREASURIES 6%
OTHER 3%
The performance over the six-month period was also helped by resurgence in the
corporate sector. As the flight-to-quality of last summer moved completely
behind us, our dominant investment sector -- investment grade corporate bonds --
outperformed much of the fixed-income market. Economic strength, a surging stock
market, and good consumer sentiment supported this sector. In addition, our
investment in below investment grade corporate debt provided very strong
performance as the high-yield sector led the market.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
In March, the assets of the Griffin Bond Fund were merged into the WM Income
Fund. This proved to be a benefit to shareholders as we were able to acquire
additional mortgage-backed securities. We were in the process of increasing our
exposure to this sector, which generally provides strong yields and relative
performance during stable interest rate environments. As a result of the merger,
we are also in the process of reducing the number of issues in the portfolio.
Credit quality of the Fund remained strong, with securities average rating of
A-++.
We have focused purchases on businesses in non-cyclical industries that are less
capital intensive and have more free cash flow. These firms are less susceptible
to changes in the business cycle, for example, Cendant Corporation, a worldwide
provider of consumer and business services has performed well. We continue to
invest primarily in a diverse portfolio of intermediate-maturity,
investment-grade corporate bonds with some holdings in mortgages and Treasury
notes. These investments work together in an attempt to produce the stated
objectives of a high level of current income with preservation of capital.
Corporate bonds are the primary investment tools used to accomplish the
objectives of the Fund. We focus our efforts on a core portfolio of liquid,
recognizable issuers such as General Motors, United Airlines, and Time Warner. A
smaller percentage of the portfolio is based on bottom-up research, scouring the
market to find issuers that we feel can achieve a higher level of income and are
priced attractively. The Fund moves within sectors and industries based on the
anticipation of the business cycle. Currently, the Fund is focused on Healthcare
and Telecommunications. From an interest rate perspective, the strategy is to
skew Fund investments based upon our secular outlook for interest rates.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
The economy has been growing above potential in recent periods and if this
continues, the risk of an acceleration in inflation will become a concern. The
result of this growth has been higher interest rates -- this trend may continue
in the short term. Any rise in sales, however, should be rather short lived
because of the structural deflationary forces remaining in the world economy.
Forces, such as global competition, could offset current price pressures and
hold inflation back. Despite the possibility of higher near-term rates, we
forecast lower interest rates over the course of the next 12 months -- a
potentially positive sign for the Fund.
++ Bond ratings provided by Standard & Poors and Moody's. Allocation
percentages are based on total investment value of the portfolio as
of 4/30/99.
<PAGE>
HIGH YIELD FUND
PORTFOLIO MANAGER:
GARY POKRZYWINSKI
WM ADVISORS, INC.
The High Yield Fund is managed by a fixed-income team led by Senior Portfolio
Manager Gary Pokrzywinski, who has over 14 years of asset management experience
and has been with WM Advisors, Inc. for more than six years. Mr. Pokrzywinski is
a Chartered Financial Analyst and holds a Business Degree from the University of
Wisconsin.
PERFORMANCE REVIEW
The Fund's A shares advanced 10.19% (not adjusted for sales charge),
outperforming its benchmark during the six-month period ended April 30, 1999.
The Fund continued to generate a very competitive yield. As of April 30, 1999,
the 30-day SEC Yield for A shares was 9.12% (8.67% for B shares).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX- MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
The performance of the Fund and of the high-yield market in general was
exceptional for the six-month period ended April 30, 1999. In the summer of
1998, a global flight-to-quality crippled the below investment grade market as
the asset class retreated considerably. The event culminated with a collapse of
the Russian economy and major problems for global hedge funds. This period was
the worst in five years for the high-yield market, as concerns erupted over a
credit crunch in the banking system and a lack of liquidity for financial
institutions. In response, both stock markets and the high-yield market fell
severely. Central banks around the developed world intervened, lowering interest
rates and infusing capital into many emerging markets.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Lehman
(Class A adjusted Brothers
Shares; not for the High
adjusted for maximum 4.5% Yield Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception - 4/8/98 $ 9,997 $ 9,547 $10,000 $10,000
May 9,965 9,517 10,018 10,035
Jun 9,918 9,471 10,030 10,071
Jul 9,892 9,447 10,042 10,129
Aug 9,345 8,925 10,054 9,569
Sep 9,336 8,916 10,066 9,612
Oct 9,310 8,891 10,091 9,415
Nov 9,686 9,250 10,091 9,806
Dec 98 9,670 9,235 10,085 9,817
Jan 9,834 9,391 10,109 9,962
Feb 9,722 9,284 10,122 9,903
Mar 9,899 9,453 10,152 9,998
Apr 99 10,259 9,798 10,173 10,192
(1) Index total returns were calculated from 4/30/98 to 4/30/99. The Lehman
Brothers High Yield Index includes all below investment-grade, corporate
debt securities, assumes reinvestment of all dividends/distributions, and
does not reflect any asset-based charges for investment management or other
expenses. The Consumer Price Index is a measurement of inflation for all
urban consumers (CPI-U). Past performance does not guarantee future
performance. The returns shown for the Fund assume reinvestment of all
dividends/distributions by the shareholder.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian had not allowed its fees to be
reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(APRIL 8, 1998)
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 10.19% 2.63% N/A 2.44%
Fund (adjusted for the maximum 4.5% sales charge) 5.21% -1.99% N/A -1.89%
Lehman Brothers high yield index(1) 8.24% 1.92% N/A 1.92%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MAY 5, 1998)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 9.74% N/A N/A 2.42%
Fund (adjusted for the maximum contingent deferred sales charge) 4.74% N/A N/A -2.22%
Lehman Brothers high yield index(1) 8.24% N/A N/A 1.92%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(AUGUST 10, 1998)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 9.74% N/A N/A 3.93%
Fund (adjusted for the maximum contingent deferred sales charge) 4.74% N/A N/A -0.90%
Lehman Brothers high yield index1 8.24% N/A N/A 1.92%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
HEALTH CARE BONDS 18%
TREASURY NOTES 2%
OTHER CORPORATE BONDS 24%
INFORMATION TECHNOLOGY 12%
EQUITY 8%
FOREIGN BONDS 32%
OTHER 4%
The intervention erased market fears. And as liquidity returned to the markets
and the economy remained strong, prices in the high-yield market rebounded
significantly. Even as the general level of interest rates increased in 1999,
prices of high-yield bonds also increased and economic stability returned.
Higher-yielding securities tend to be more tied to economic conditions than to
changes in overall interest rate levels. As a result, the High Yield Fund
appreciated while many fixed-income investments reported negative performance.
We continued to remain positive and focused on the objectives of the Fund during
the turbulent period and we were able to capture the full extent of the rally.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
During the course of the six-month period, our holdings in technology performed
very well as signs of over capacity in the industry diminished and demand began
to strengthen. We continued to invest a good portion of assets in U.S. dollar
denominated foreign holdings as global economies improved and these bonds
performed extremely well. For example, our Asian (U.S. Dollar denominated)
holdings performed very well as the economies of South East Asia strengthened
considerably from their lows. Our intense research allows us to uncover foreign
firms that add value and yield to the overall portfolio. It is not likely that
we will increase the foreign exposure, since much of the price appreciation may
be behind us. Most of these investments are in some of the larger companies in
these regions and still remain attractive because of their high yields.
We saw some weakness in a portion of our healthcare holdings, particularly in
the long-term care sector. Changes in government reimbursement for Medicare have
had a severe impact on financial performance. We took advantage of the decline
in prices to accumulate positions of high-quality operators in the sector. We
feel these providers have the financial strength and acumen to remain viable
under the new payment system. Overall, the Fund was positioned to take advantage
of very positive market conditions throughout the period.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Yields in the below investment grade market continue to remain very attractive.
Inflation remains a wildcard -- accelerating inflation would be detrimental to
high-yield securities, as well as to most financial assets. If inflation becomes
embedded in the economy, the Federal Reserve will be forced to increase interest
rates to slow growth and therefore curb price pressures. Although the economy
has exhibited greater than expected growth for the past few quarters, we feel
there is little risk that inflation will rise significantly. This is due to the
following factors:
o Some weakness in global conditions
o Excess capacity worldwide
o Technological enhancements
o Favorable demographics
o A Federal Reserve that is proactive instead of reactive
Over longer periods of time, the income generated from high-yield investments
makes up the majority of the overall return to an investor in the High Yield
Fund. However, over shorter horizons, the movement of prices will have a
significant impact on overall results (as was seen with the trough of last
summer and the subsequent rally in the past six months). Therefore, we suggest
maintaining a long-term focus so that the best investment value in the
high-yield market can be captured.
++ Allocation percentages are based on total investment value of the portfolio
as of 4/30/99. There may be additional risks associated with foreign
securities. There are also additional credit and default risks associated
with lower-rated securities.
<PAGE>
CALIFORNIA INSURED INTERMEDIATE
MUNICIPAL FUND
PORTFOLIO MANAGER:
JOSEPH PIRARO
VAN KAMPEN INVESTMENTS
Mr. Piraro is portfolio manager of the WM California Municipal and the WM
California Insured Intermediate Municipal Funds. He serves as Vice President at
Van Kampen Investments and has been with the company since 1992.
PERFORMANCE REVIEW
The Fund's A shares advanced 0.81% (not adjusted for sales charge) during the
past six months and since inception the Fund has averaged a 6.86% annual return
(not adjusted for sales charge). The 30-day SEC Yield for the Fund as of April
30, 1999 was 3.08% for A shares and 2.46% for B shares. The Fund's tax
equivalent SEC Yield for A shares was 5.62% and 4.49% for B shares.(++)
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX- MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
Economic growth was very strong for the period as consumer confidence drove
demand and the Asian financial crisis subsided. High levels of retail sales,
strong construction spending, and low unemployment propelled the nation's gross
domestic product (GDP) growth to 6% and 4.1% for the past two quarters
respectively.
Even with a rebound in emerging markets and the strength of the domestic
economy, strong inflation pressures did not surface as prices of many
commodities dropped significantly. Although rising oil prices pushed inflation
up 3.3% on an annualized basis in the first four months of 1999, overall price
increases remained moderate enough to keep inflation-adjusted interest rates
attractive.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Lehman
(Class A adjusted Brothers
Shares; not for the Municipal
adjusted for maximum 4.5% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception - 4/4/94 $10,000 $ 9,550
10,172 9,714 $10,000 $10,000
10,264 9,802 10,087 10,007
Jun 10,226 9,766 10,025 10,007
10,410 9,942 10,209 10,034
10,443 9,973 10,245 10,068
Sep 10,333 9,868 10,094 10,102
10,181 9,723 9,914 10,117
10,039 9,587 9,735 10,124
Dec 94 10,175 9,717 9,949 10,158
10,468 9,997 10,234 10,185
10,793 10,308 10,531 10,226
Mar 10,911 10,420 10,653 10,254
10,913 10,422 10,665 10,261
11,253 10,746 11,006 10,274
Jun 11,117 10,617 10,910 10,274
11,257 10,751 11,013 10,315
11,430 10,916 11,153 10,357
Sep 11,507 10,989 11,224 10,391
11,648 11,123 11,386 10,425
11,800 11,269 11,575 10,446
Dec 95 11,849 11,316 11,686 10,467
11,960 11,421 11,775 10,467
11,939 11,402 11,695 10,494
Mar 11,775 11,245 11,546 10,515
11,754 11,225 11,513 10,550
11,733 11,205 11,509 10,542
Jun 11,812 11,280 11,634 10,535
11,925 11,388 11,740 10,597
11,937 11,400 11,738 10,631
Sep 12,028 11,487 11,902 10,686
12,153 11,607 12,036 10,728
12,359 11,803 12,255 10,748
Dec 96 12,312 11,758 12,203 10,755
12,348 11,792 12,227 10,775
12,418 11,859 12,339 10,796
Mar 12,291 11,738 12,175 10,830
12,350 11,795 12,277 10,865
12,503 11,941 12,461 10,886
Jun 12,634 12,065 12,594 10,886
12,929 12,347 12,943 10,920
12,836 12,258 12,821 10,954
Sep 12,955 12,372 12,974 10,982
13,005 12,419 13,057 10,995
13,054 12,467 13,134 10,988
Dec 97 13,191 12,598 13,326 11,001
13,302 12,703 13,463 11,022
13,323 12,724 13,467 11,043
Mar 13,277 12,679 13,479 11,064
13,216 12,621 13,419 11,084
13,402 12,799 13,631 11,104
Jun 13,426 12,822 13,684 11,117
13,464 12,858 13,718 11,131
13,676 13,061 13,929 11,144
Sep 13,888 13,263 14,103 11,158
13,888 13,263 14,103 11,185
13,899 13,274 14,153 11,185
Dec 98 13,884 13,259 14,188 11,178
14,034 13,403 14,357 11,205
13,974 13,345 14,294 11,219
13,995 13,365 14,314 11,253
Apr 99 14,002 13,372 14,349 11,276
(1) Index total returns were calculated from 4/30/94 to 4/30/99. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for
the long-term, investment-grade, tax-exempt bond market. 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.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees or reimbursed certain other expenses and the Fund's
custodian had not allowed its fees to be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(APRIL 4, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 0.81% 5.96% 6.60% 6.86%
Fund (adjusted for the maximum 4.5% sales charge) -3.73% 1.15% 5.62% 5.90%
Lehman Brothers Municipal Bond Index(1) 1.75% 6.94% 7.49% 7.49%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 0.43% 5.16% N/A 5.93%
Fund (adjusted for the maximum contingent deferred sales charge) -4.44% 0.16% N/A 5.76%
Lehman Brothers Municipal Bond Index1 1.75% 6.94% N/A 7.70%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
Fund (not adjusted for contingent deferred sales charge) 0.46% 5.19% N/A 5.93%
Fund (adjusted for the maximum contingent deferred sales charge) -4.41% 0.19% N/A 5.76%
Lehman Brothers Municipal Bond Index1 1.75% 6.94% N/A 7.70%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
AAA 88%
A 1%
BBB 3%
NOT RATED 8%
Yields on municipal bonds remained very attractive compared to Treasuries.
Toward the end of 1998, the yields on 30-year insured municipal bonds and
comparable U.S. Treasury bonds reached equivalent levels, which is a rare
occurrence. investors realized the tremendous opportunities available in the
municipal market, and demand for municipals began to increase. In conjunction
with a recent slowdown in supply, this boost in municipal demand pushed the
municipal-to-Treasury yield ratio back to more traditional but still attractive
levels.
Despite volatility in much of the financial markets, the municipal market
remained relatively stable. This happened as the Federal Reserve cut interest
rates and the 30-year U.S. Treasury bond reached record lows. Much of the
stability in the municipal market can be attributed to its isolation from
turbulence abroad. Concerns about the financial conditions in Asia and Latin
America hurt the stock and high-yield bond markets last fall, but had little
effect on municipals.
In the intermediate range of the yield curve, 10-year AAA rated national
offerings yielded 4.18% at the beginning of the year, compared to 4.30% at the
end of the first quarter. In comparison, 10-year California AAA rated insured
securities outperformed the general market, beginning the year at 4.28% and
ending the quarter at 4.25%.
The positive economic and market conditions encouraged more municipalities to
take advantage of low interest rates and issue new bonds. In 1998, we
experienced the second-heaviest level of municipal issuance ever. Although the
amount of municipal debt increased, the credit quality of many issuers remained
firm -- in fact, it improved as the positive economic environment led to
stronger balance sheets. As a result, we saw more issuers financing special
growth and expansion projects, as opposed to using municipal bonds to finance
their regular operations.
Issuance in California was down 27% during the first three months of 1999
compared to the same period a year ago, however we continued to see a steady
supply of attractive offerings. The credit outlook for the state of California
and local government bonds remains positive due to broad-based economic
expansion that has lead to improved fiscal positions and increases in reserves.
The state has diversified its economy both regionally and by sector since the
early 1990s. Overall, the economic forecast for the state reflects moderate
growth as the most likely outcome for 1999 with the potential for a manageable
slowdown.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON THE FUND'S PERFORMANCE?
We continue to maintain a higher than required percentage of AAA rated
securities, which at the end of the reporting period totaled 88% of assets.++
Demand for quality California securities remains strong -- both instate and
nationally -- and we will continue to maintain this emphasis, as we feel this
sector will outperform.
Sector concentrations were adjusted during the period, with a 9% increase in
exposure to public education bonds and a 7% decrease to the transportation
industry. This shift in industry weighting did not significantly impact Fund
performance. The Fund continues to be well diversified with exposure to fourteen
industries, the largest of which is public education.
We also increased our holdings of bonds subject to the Alternative Minimum Tax
(AMT). These securities typically offer a slightly higher yield over non-AMT
securities.
WHAT IS THE INTERMEDIATE AND LONG-TERM OUTLOOK FOR THE FUND AND THE OVERALL
ECONOMY?
Our outlook for the domestic economy remains positive, although we anticipate
slower growth in the second half of the year. We look for a gradual but steady
rise in inflation throughout 1999 to more normal, but certainly not alarming
levels. Because of low inflation, we do not foresee any significant increase in
interest rates in the near term -- a favorable situation for bond prices. We
believe the supply of municipal debt will be lower than last year's near record
levels. A decrease in new issue supply will most likely help to restore the
price relationship between municipals and Treasuries to more traditional levels.
Strong economic performance continues to bolster the credit conditions of
municipal issuers -- a trend we expect to persist. As we mentioned earlier,
economic strength has made issuers more likely to issue debt for special
projects rather than for general operating financing. We believe that as long as
municipalities remain economically healthy, this situation is likely to
continue.
Although insured debt has been increasing in recent years, we have started to
see a reversal of this trend, because municipal bond insurers have recently
become more cautious.(*) If, as anticipated, this caution continues, credit
spreads may widen as the proportion of higher-yielding uninsured bonds
increases.
Finally, we see the potential for changes in traditional economic activity
toward the end of the year due to investor concerns about the year 2000 computer
problem. These temporary concerns, however, may result in attractive investment
opportunities that our research staff can explore to uncover value.
++ Bond ratings provided by Standard & Poors and Moody's. Allocation
percentages are based on total investment value of the portfolio as of
4/30/99.
(++) A portion of income may be subject to some state and/or local taxes, and
for certain investors, may be subject to the federal alternative minimum
tax (AMT). Tax equivalent yield based on a 39.6% Federal and 9.3% State tax
brackets and the federal deduction of state taxes paid.
(*) Insurance applies only to the timely repayment of principal and interest
and does not eliminate market risk.
<PAGE>
CALIFORNIA
MUNICIPAL FUND
PORTFOLIO MANAGER:
JOSEPH PIRARO
VAN KAMPEN INVESTMENTS
Mr. Piraro joined the company in 1992, and serves as Vice President and
portfolio manager of Van Kampen Investments. He has had primary portfolio
management responsibility for the California Municipal Fund since May 1992.
PERFORMANCE REVIEW
The Fund's A shares advanced 1.77% (not adjusted for sales charge) during the
past six months and since inception the Fund has averaged a 7.31% annual return
(not adjusted for sales charge). The 30-day SEC Yield for the Fund as of April
30, 1999 was 3.81% for A shares and 3.20% for B shares. The Fund's tax
equivalent yield for A shares was 6.95% and 5.84% for B shares.(++)
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX- MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
A surge in consumer confidence led to strong economic growth over the past six
months, as fears about the impact of the Asian financial crisis subsided. In the
fourth quarter of 1998, the nation's gross domestic product (GDP) rose at an
astounding 6% annual rate and remained strong at 4.1% through the first quarter
of 1999. This powerful level of growth is attributed to a continued increase in
consumer spending, a strong housing market, and high retail sales -- all the
result of increased consumer confidence.
Despite continued improvements in Asia and Latin America and the record economic
growth in the United States, inflation remained at bay in late 1998 as commodity
prices tumbled. Although rising oil prices pushed inflation up during the first
four months of 1999, overall price increases remained moderate enough to keep
inflation-adjusted interest rates attractive.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Lehman
(Class A adjusted Brothers
Shares; not for the Municipal
adjusted for maximum 4.5% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception - 7/25/89 $10,000 $ 9,550
10,080 9,626 $10,000 $10,000
9,978 9,529 9,902 10,041
9,952 9,504 9,872 10,099
10,117 9,662 9,993 10,165
10,252 9,790 10,168 10,223
Dec 89 10,325 9,860 10,251 10,247
10,208 9,748 10,203 10,272
10,303 9,840 10,294 10,288
10,379 9,912 10,297 10,321
10,214 9,755 10,223 10,371
10,458 9,988 10,445 10,396
Jun 10,598 10,122 10,537 10,412
10,750 10,266 10,692 10,520
10,497 10,024 10,537 10,569
10,564 10,089 10,544 10,627
10,740 10,257 10,734 10,644
10,992 10,498 10,950 10,669
Dec 90 10,993 10,498 10,998 10,726
11,044 10,547 11,146 10,767
11,115 10,615 11,243 10,866
11,161 10,659 11,247 10,957
11,274 10,767 11,397 11,023
11,389 10,876 11,498 11,047
Jun 11,357 10,846 11,487 11,047
11,472 10,956 11,627 11,114
11,607 11,085 11,780 11,130
11,724 11,196 11,933 11,147
11,864 11,330 12,041 11,164
11,901 11,365 12,075 11,197
Dec 91 12,054 11,511 12,334 11,230
12,045 11,503 12,362 11,247
12,059 11,516 12,366 11,279
12,096 11,552 12,371 11,329
12,182 11,633 12,481 11,346
12,315 11,761 12,629 11,379
Jun 12,556 11,991 12,841 11,387
13,015 12,430 13,226 11,404
12,812 12,236 13,096 11,445
12,851 12,273 13,181 11,503
12,587 12,020 13,052 11,519
12,970 12,387 13,286 11,535
Dec 92 13,159 12,567 13,421 11,577
13,336 12,736 13,577 11,601
13,899 13,274 14,069 11,634
13,787 13,167 13,919 11,666
13,939 13,311 14,060 11,707
14,028 13,396 14,139 11,724
Jun 14,294 13,651 14,375 11,715
14,282 13,640 14,394 11,773
14,654 13,994 14,693 11,814
14,847 14,179 14,860 11,855
14,848 14,180 14,889 11,888
14,628 13,970 14,758 11,905
Dec 93 14,955 14,282 15,069 11,922
15,113 14,433 15,241 11,922
14,719 14,057 14,846 11,955
13,967 13,338 14,242 11,980
13,981 13,352 14,363 12,029
14,088 13,454 14,488 12,038
Jun 13,982 13,352 14,400 12,038
14,210 13,570 14,663 12,070
14,264 13,622 14,714 12,111
14,075 13,441 14,498 12,153
13,788 13,168 14,240 12,170
13,446 12,841 13,982 12,178
Dec 94 13,667 13,052 14,290 12,219
14,126 13,490 14,699 12,252
14,559 13,904 15,126 12,301
14,728 14,065 15,300 12,335
14,757 14,093 15,319 12,343
15,224 14,539 15,807 12,359
Jun 15,040 14,363 15,670 12,359
15,112 14,432 15,819 12,409
15,300 14,611 16,019 12,458
15,414 14,721 16,120 12,500
15,660 14,955 16,354 12,541
15,950 15,232 16,626 12,566
Dec 95 16,139 15,413 16,785 12,591
16,212 15,483 16,913 12,591
16,123 15,397 16,798 12,624
15,885 15,170 16,583 12,649
15,869 15,155 16,536 12,691
15,869 15,155 16,530 12,682
Jun 16,003 15,283 16,710 12,673
16,168 15,441 16,862 12,748
16,228 15,498 16,859 12,789
16,441 15,701 17,095 12,855
16,623 15,875 17,287 12,905
16,899 16,139 17,602 12,930
Dec 96 16,852 16,094 17,528 12,937
16,882 16,123 17,561 12,962
17,021 16,255 17,723 12,987
16,847 16,089 17,487 13,028
16,972 16,208 17,634 13,070
17,192 16,419 17,898 13,095
Jun 17,414 16,631 18,089 13,095
17,956 17,148 18,590 13,137
17,810 17,009 18,415 13,177
18,019 17,208 18,634 13,210
18,147 17,330 18,754 13,226
18,292 17,469 18,864 13,218
Dec 97 18,585 17,748 19,140 13,234
18,730 17,887 19,337 13,259
18,754 17,910 19,343 13,284
18,754 17,910 19,360 13,310
18,666 17,826 19,273 13,334
18,963 18,109 19,577 13,358
Jun 19,023 18,167 19,654 13,374
19,036 18,180 19,703 13,390
19,320 18,451 20,006 13,406
19,600 18,718 20,256 13,422
19,559 18,679 20,256 13,455
19,651 18,767 20,327 13,455
Dec 98 19,712 18,825 20,378 13,446
19,937 19,040 20,621 13,479
19,859 18,965 20,530 13,496
19,893 18,998 20,559 13,536
Apr 99 19,905 19,009 20,610 13,565
(1) Index total returns were calculated from 7/31/89 to 4/30/99. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for
the long-term, investment-grade, tax-exempt bond market. 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.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian had not allowed its fees to be
reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JULY 25, 1989)
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 1.77% 6.65% 7.33% 7.31%
Fund (adjusted for the maximum 4.5% sales charge) -2.81% 1.84% 6.35% 6.81%
Lehman Brothers Municipal Bond Index(1) 1.75% 6.94% 7.49% 7.70%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 1.39% 5.85% N/A 6.79%
Fund (adjusted for the maximum contingent deferred sales charge) -3.55% 0.85% N/A 6.63%
Lehman Brothers Municipal Bond Index(1) 1.75% 6.94% N/A 7.70%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 1.39% 5.85% N/A 6.79%
Fund (adjusted for the maximum contingent deferred sales charge) -3.55% 0.85% N/A 6.63%
Lehman Brothers Municipal Bond Index(1) 1.75% 6.94% N/A 7.70%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
AAA 62%
AA 9%
A 4%
BBB 9%
NON RATED 16%
Yields on municipal bonds remained very attractive relative to treasuries.
Toward the end of 1998, the yields on 30-year insured municipal bonds and
comparable U.S. Treasury bonds reached equivalent levels, which is a rare
occurrence. Also, while most of the financial markets experienced significant
volatility during the period, the municipal market remained relatively stable.
For the majority of the six months, long-term municipal bond yields remained
within a small range, even as the Federal Reserve cut interest rates and the
30-year U.S. Treasury bond reached its lowest yield on record. Much of the
stability in the municipal market can be attributed to its isolation from
turbulence abroad. Concerns about financial conditions in Asia and Latin America
hurt the stock and high-yield bond markets last fall, but had little effect on
municipals.
The positive economic and market conditions encouraged more municipalities to
take advantage of low interest rates and issue new bonds. In 1998, we
experienced the second-heaviest level of municipal issuance ever. Although the
amount of municipal debt increased, the credit quality of many issuers was not
compromised -- in fact, it improved as the positive economic environment led to
stronger balance sheets. As a result, we saw more issuers financing special
growth and expansion projects, as opposed to using municipal bonds to finance
their regular operations.
The proportion of higher-yielding municipal bonds also increased during the
period as the number of insured bonds declined. Because bond insurers tightened
their underwriting criteria, more issuers came to market without insurance and
offered higher yields to compensate bondholders for the increased credit risk.
This benefited the Fund because it allowed our experienced research staff to
seek out those higher-yielding bonds that we felt had strong underlying quality.
Issuance in California was down 27% during the first three months of 1999
compared to the same period a year ago; however, we continued to see a steady
supply of attractive offerings. The credit outlook for the state of California
and local government bonds remains positive due to broad-based economic
expansion that has lead to improved fiscal positions and increases in reserves.
The state has diversified its economy both regionally and by sector since the
early 1990s and we project moderate growth.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON THE FUND'S PERFORMANCE?
We made some minor shifts in rating distribution and sector concentration, but
these adjustments did not significantly impact the Fund's performance. However,
due to increasing financial pressures on the hospital and health care industry,
we reduced the Fund's holdings in this sector. Although many health care bonds
remain attractive, the challenges imposed by managed care and changing Medicare
reimbursement policies have led us to view this sector more cautiously. For
example, one of the main participants of the California HMO market is Kaiser
Permanente which insures one out of every five insured Californians. Kaiser
reported a sizeable loss for 1998 after a similar loss in 1997 due to industry
wide competitive pressures and higher operating costs.
Through the end of 1998, over 55% of new issue volume in California came to the
market insured. Reflecting this, 62% of the portfolio remains AAA rated++ and we
continue to see the most value in this sector. An additional 16% of assets are
non-rated, a position which helps support the portfolio's dividend
distributions.
WHAT IS THE INTERMEDIATE AND LONG-TERM OUTLOOK FOR THE FUND AND THE OVERALL
ECONOMY?
Our outlook for the domestic economy remains positive, although we anticipate
slower growth in the second half of the year. We look for a gradual but steady
rise in inflation throughout 1999 to more normal, but certainly not alarming
levels. Because of this benign inflation, we do not foresee any significant
increase in interest rates in the near term -- a favorable situation for bond
prices. We believe the supply of municipal debt will be lower than last year's
near record levels. A decrease in new issue supply will most likely help to
restore the price relationship between municipals and Treasuries to more
traditional levels.
Strong economic performance continues to bolster the credit conditions of
municipal issuers -- a trend we expect to persist. Although insured debt has
been increasing in recent years, we have started to see a reversal of this
trend, as municipal bond insurers have become more cautious. If, as anticipated,
this caution continues, credit spreads may widen as the proportion of
higher-yielding uninsured bonds increases.
Finally, we see the potential for changes in traditional economic activity
toward the end of the year because of investor concerns about the year 2000
computer problem. These temporary concerns, however, may result in attractive
investment opportunities that our research staff can explore to uncover value.
The Fund continues to experience strong growth, and our outlook is positive. As
new assets flow into the fund, we will invest the proceeds in line with the
current structure and characteristics of the portfolio.
++ Bond ratings provided by Standard & Poors and Moody's. Allocation
percentages are based on total investment value of the portfolio as of
4/30/99.
(++)A portion of income may be subject to some State and/or local taxes, and
for certain investors, may be subject to the federal alternative minimum tax
(AMT). Tax equivalent yield based on a 39.6% Federal and 9.3% State tax
brackets and the federal deduction of state taxes paid.
<PAGE>
FLORIDA INSURED
MUNICIPAL FUND
PORTFOLIO MANAGER:
THOMAS BYRON
VAN KAMPEN INVESTMENTS
Mr. Byron, Vice President of Van Kampen, has over 15 years of experience with
the company. He has been with Van Kampen since 1981 and held the position of
Head Buyer and Manager, with responsibility for all tax-exempt and taxable Unit
Investment Trusts. Mr. Byron has had primary portfolio management responsibility
for the WM Florida Insured Municipal Fund since January 1997.
PERFORMANCE REVIEW
The Fund advanced 1.25% (not adjusted for sales charge) for the six-month period
and has averaged 7.14% per year for the past five years ended April 30, 1999
(not adjusted for sales charge). The 30-day SEC Yield for the Fund was 3.83% for
A shares and 3.25% for B shares. The Fund's tax equivalent yield for A shares
was 6.34% and 5.38% for B shares.(++)
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX- MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
A surge in consumer confidence led to strong economic growth over the past six
months, as fears about the impact of the Asian financial crisis subsided. The
nation's gross domestic product (GDP) rose at 6.0% percent annual rate in the
fourth quarter and remained strong at 4.1% during the first quarter of 1999.
This level of growth is attributed to a strong housing market and high retail
sales -- all results of increased consumer confidence. The economy began to show
signs of slowing early in 1999 as corporate profits and wage growth declined.
Despite continued improvements in Asia, Latin America, and the United States,
inflation remained at bay in late 1998 as commodity prices tumbled. Although
rising oil prices pushed inflation up 3.3% at an annualized rate during 1999,
overall price increases remained moderate enough to keep inflation-adjusted
interest rates attractive.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Lehman
(Class A adjusted Brothers
Shares; not for the Municipal
adjusted for maximum 4.5% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception - 6/7/93 $10,000 $ 9,550
10,050 9,598 $10,000 $10,000
10,083 9,629 10,013 10,049
10,387 9,920 10,221 10,084
Sep 10,511 10,038 10,338 10,119
10,545 10,070 10,357 10,148
10,355 9,889 10,266 10,162
Dec 93 10,686 10,206 10,483 10,176
10,813 10,326 10,602 10,176
10,414 9,945 10,328 10,205
Mar 9,797 9,356 9,907 10,226
9,893 9,448 9,992 10,268
9,970 9,521 10,079 10,275
Jun 9,899 9,454 10,017 10,275
10,092 9,638 10,200 10,303
10,095 9,641 10,236 10,338
Sep 9,960 9,512 10,086 10,373
9,675 9,240 9,906 10,388
9,410 8,987 9,727 10,395
Dec 94 9,780 9,340 9,941 10,430
10,043 9,591 10,225 10,458
10,362 9,896 10,523 10,500
Mar 10,464 9,993 10,644 10,529
10,445 9,975 10,656 10,536
10,702 10,220 10,996 10,550
Jun 10,495 10,022 10,901 10,550
10,587 10,111 11,004 10,592
10,758 10,274 11,144 10,634
Sep 10,815 10,329 11,214 10,669
11,053 10,556 11,377 10,705
11,315 10,806 11,566 10,726
Dec 95 11,498 10,981 11,677 10,747
11,556 11,036 11,766 10,747
11,431 10,917 11,686 10,775
Mar 11,156 10,654 11,536 10,797
11,134 10,633 11,504 10,833
11,147 10,645 11,499 10,825
Jun 11,288 10,780 11,624 10,817
11,430 10,915 11,730 10,881
11,419 10,905 11,728 10,916
Sep 11,597 11,076 11,892 10,973
11,729 11,201 12,026 11,016
11,944 11,407 12,245 11,037
Dec 96 11,891 11,356 12,193 11,043
11,880 11,345 12,216 11,064
12,001 11,461 12,329 11,085
Mar 11,881 11,346 12,165 11,121
11,943 11,405 12,267 11,156
12,103 11,558 12,451 11,177
Jun 12,240 11,689 12,584 11,177
12,647 12,078 12,932 11,213
12,537 11,973 12,811 11,248
Sep 12,688 12,117 12,963 11,276
12,776 12,202 13,046 11,290
12,877 12,298 13,123 11,283
Dec 97 13,080 12,491 13,315 11,296
13,206 12,612 13,452 11,318
13,192 12,598 13,456 11,339
Mar 13,208 12,613 13,468 11,361
13,159 12,567 13,407 11,381
13,342 12,741 13,619 11,402
Jun 13,382 12,780 13,672 11,416
13,437 12,832 13,707 11,429
13,634 13,021 13,918 11,443
Sep 13,805 13,183 14,092 11,457
13,795 13,174 14,092 11,485
13,849 13,226 14,141 11,485
Dec 98 13,864 13,240 14,176 11,478
13,997 13,367 14,345 11,506
13,940 13,312 14,282 11,520
13,927 13,300 14,302 11,554
Apr 99 13,966 13,338 14,338 11,578
(1) Index total returns were calculated from 6/30/93 to 4/30/99. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for
the long-term, investment-grade, tax-exempt bond market. 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.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees or reimbursed certain other expenses and the Fund's
custodian had not allowed its fees to be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 7, 1993)
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 1.25% 6.13% 7.14% 5.83%
Fund (adjusted for the maximum 4.5% sales charge) -3.27% 1.39% 6.15% 5.01%
Lehman Brothers Municipal Bond Index(1) 1.75% 6.94% 7.49% 6.37%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 0.87% 5.34% N/A 6.59%
Fund (adjusted for the maximum contingent deferred sales charge) -4.08% 0.34% N/A 6.42%
Lehman Brothers Municipal Bond Index1 1.75% 6.94% N/A 7.70%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 0.89% 5.36% N/A 6.59%
Fund (adjusted for the maximum contingent deferred sales charge) -4.06% 0.36% N/A 6.43%
Lehman Brothers Municipal Bond Index(1) 1.75% 6.94% N/A 7.70%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
AAA 83%
BBB 8%
NOT RATED 9%
Yields on municipal bonds remained attractive compared to Treasuries. Toward the
end of 1998, the yields on 30-year insured municipal bonds and comparable U.S.
Treasury bonds reached equivalent levels, which is a rare occurrence. However,
as Treasury yields fell and municipal yields remained stable, the yield
difference between the two types of bonds diminished. Early in 1999, investors
realized the tremendous opportunities available in the municipal market and
municipal demand increased. In conjunction with a recent slowdown in supply,
this boost in demand pushed the municipal-to-Treasury yield ratio back to more
traditional but still attractive levels.
Although most financial markets experienced significant volatility during the
period, the municipal market remained relatively stable. Much of the stability
can be attributed to municipals' isolation from turbulence abroad. Concerns
about the financial conditions in Asia and Latin America had little effect on
municipals. The positive economic and market conditions encouraged more
municipalities to take advantage of low interest rates and issue new bonds. In
1998, we experienced record levels of municipal issuance. Although the amount of
municipal debt increased, the credit quality improved and the positive economic
environment led to stronger balance sheets. As a result, more municipal issuance
occurred to finance special growth and expansion projects, as opposed to
municipal bonds being used to finance their regular operations.
The proportion of higher-yielding municipal bonds also increased during the
period and the number of insured bonds declined. Because bond insurers tightened
their underwriting criteria, more issuers came to market without insurance and
offered higher yields to compensate for increased credit risk. This benefited
the Fund because it allowed our experienced research staff to seek out those
higher-yielding bonds that we felt had strong underlying quality.
The fiscal condition of the state of Florida is very sound. Strong revenue
growth and mild expenditure increases resulted in a budget surplus and a strong
reserve fund balance. Budget surpluses have prompted the recent passage of the
largest tax cut in state history. Part of the $1 billion tax cut includes a
reduction in the intangibles tax rate. With no state income tax, the sales tax
remains the dominant source of state revenues accounting for about 60% of total
revenues. Debt levels of the state are relatively modest despite recent
increases in issuance.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We made minor adjustments to sector concentration, which did not significantly
impact Fund performance. We increased exposure to the public education sector,
with a similar decrease to water and sewer bonds. AAA rated++ insured assets
increased slightly, ending the period at 83% of assets. The remainder of the
portfolio is almost evenly distributed between BBB rated and non-rated
exposure.++
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Our outlook for the domestic economy remains positive, although we anticipate
slower growth in the second half of the year. Inflation should steadily rise
throughout 1999 to more normal levels. Internationally, low interest rates and
improving financial conditions should continue to support the economic progress.
Strong economic performance continues to bolster the credit conditions of
municipal issuers. As mentioned earlier, economic strength has made issuers more
likely to issue debt for special projects rather than for general operating
financing. We believe that as long as municipalities remain economically
healthy, this situation is likely to continue.
Although insured debt has been increasing in recent years, we have experienced a
reversal of this trend, and municipal bond insurers have become more cautious.
If this caution continues, credit spreads may widen as the proportion of
higher-yielding uninsured bonds increases. We believe the supply of municipal
debt will be lower than last year's near record levels. A decrease in new issue
supply will most likely help to restore the price relationship between
municipals and Treasuries to more traditional levels.
Finally, we see the potential for changes in traditional economic activity
toward the end of the year because of investor concerns about the year 2000
computer problem. These temporary concerns, however, may result in attractive
investment opportunities that our research staff can explore to uncover value.
We do not expect to make any significant changes to the structure of the
portfolio. We feel the Fund is positioned for continued strong performance and
will continue our "bottom up" approach of investing by identifying individual
securities we feel will out-perform the general market.
++ Bond ratings provided by Standard & Poors and Moody's. Allocation
percentages are based on total investment value of the portfolio as of
4/30/99.
(++) A portion of income may be subject to some state and/or local taxes, and
for certain investors, may be subject to the federal alternative minimum
tax (AMT). Tax equivalent yield based on a 39.6% Federal tax rate.
<PAGE>
TAX-EXEMPT BOND FUND
PORTFOLIO MANAGERS:
DAVID JOHNSON AND THOMAS BYRON
VAN KAMPEN INVESTMENTS
The Fund is co-managed by David Johnson and Thomas Byron. Mr. Johnson, Senior
Portfolio Manager, has 14 years of tax-free management experience. He has a BS
from Lewis University and an MBA from Loyola University. Mr. Byron has been with
Van Kampen since 1981 and currently serves as a Vice President. He received his
BS in Finance from Marquette University and his MBA from Depaul University. Van
Kampen has had management responsibilities of the Fund since January 1999.
PERFORMANCE REVIEW
The Fund advanced 1.42% for the six-month period and has averaged 7.19% per year
for the past 10 years ended April 30, 1999 (not adjusted for sales charge). The
30-day SEC Yield for the Fund was 4.04% for A shares and 3.46% for B shares. On
a tax equivalent basis, the Fund's yield for A shares is 6.69% and 5.73% for B
shares.(++)
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
A surge in consumer confidence led to strong economic growth over the past six
months, as fears about the impact of the Asian financial crisis subsided. The
nation's gross domestic product (GDP) rose at a 6.0% annual rate in the fourth
quarter and remained strong at 4.1% in the first quarter of 1999. This level of
growth is attributed to a continued increase in consumer spending, a strong
housing market, and high retail sales -- all a result of confident consumers
given the positive employment environment. The economy began to show signs of
slowing early in 1999 as corporate profits and wage growth declined.
Despite continued improvements in Asia, Latin America, and the United States,
inflation remained at bay in late 1998 as commodity prices tumbled. Although
rising oil prices pushed inflation up 3.3% at an annualized rate during 1999,
overall price increases remained moderate enough to keep inflation-adjusted
interest rates very attractive.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Lehman
(Class A adjusted Brothers
Shares; not for the Municipal
adjusted for maximum 4.5% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception* - 4/1/89 $10,000 $ 9,550 $10,000 $10,000
10,141 9,685 10,208 10,008
Jun 89 10,226 9,766 10,347 10,025
10,326 9,862 10,488 10,075
10,244 9,783 10,385 10,116
10,230 9,769 10,354 10,175
10,303 9,840 10,480 10,241
10,447 9,977 10,663 10,300
Dec 89 10,529 10,055 10,751 10,324
10,428 9,958 10,700 10,349
10,540 10,066 10,795 10,366
10,526 10,053 10,799 10,399
10,405 9,937 10,721 10,449
10,675 10,195 10,955 10,474
Jun 10,794 10,308 11,051 10,491
10,930 10,438 11,214 10,599
10,731 10,248 11,051 10,648
10,774 10,289 11,058 10,707
10,928 10,436 11,258 10,724
11,204 10,700 11,484 10,749
Dec 90 11,236 10,730 11,535 10,807
11,356 10,845 11,689 10,848
11,427 10,913 11,791 10,948
11,457 10,941 11,795 11,040
11,549 11,029 11,952 11,106
11,659 11,134 12,059 11,130
Jun 11,637 11,114 12,047 11,130
11,812 11,280 12,194 11,197
11,955 11,417 12,355 11,214
12,113 11,568 12,515 11,231
12,225 11,675 12,628 11,248
12,219 11,669 12,663 11,281
Dec 91 12,513 11,950 12,935 11,314
12,523 11,959 12,965 11,331
12,495 11,933 12,969 11,364
12,504 11,942 12,974 11,414
12,614 12,047 13,090 11,431
12,761 12,186 13,244 11,464
Jun 12,992 12,407 13,467 11,472
13,503 12,896 13,871 11,489
13,286 12,688 13,735 11,531
13,293 12,695 13,824 11,590
13,108 12,518 13,689 11,606
13,432 12,828 13,934 11,622
Dec 92 13,639 13,026 14,076 11,664
13,792 13,171 14,239 11,688
14,299 13,656 14,754 11,721
14,183 13,544 14,598 11,754
14,316 13,671 14,746 11,795
14,358 13,712 14,828 11,812
Jun 14,676 14,016 15,076 11,803
14,627 13,969 15,095 11,861
15,004 14,329 15,409 11,903
15,212 14,528 15,585 11,944
15,254 14,568 15,615 11,978
15,014 14,338 15,477 11,995
Dec 93 15,350 14,659 15,804 12,011
15,526 14,828 15,984 12,011
15,065 14,387 15,570 12,045
14,378 13,731 14,936 12,070
14,440 13,790 15,063 12,120
14,582 13,926 15,194 12,128
Jun 14,469 13,818 15,102 12,128
14,749 14,086 15,378 12,161
14,775 14,110 15,432 12,202
14,503 13,850 15,205 12,244
14,231 13,591 14,934 12,261
13,938 13,311 14,664 12,270
Dec 94 14,347 13,701 14,987 12,311
14,797 14,131 15,415 12,345
15,283 14,595 15,864 12,394
15,392 14,699 16,046 12,427
15,396 14,703 16,065 12,436
15,933 15,216 16,578 12,452
Jun 15,771 15,062 16,434 12,452
15,899 15,184 16,590 12,502
16,048 15,326 16,800 12,552
16,134 15,408 16,906 12,593
16,410 15,672 17,151 12,635
16,749 15,995 17,436 12,660
Dec 95 16,965 16,202 17,604 12,686
17,055 16,287 17,737 12,686
16,885 16,126 17,617 12,719
16,614 15,866 17,391 12,744
16,509 15,767 17,343 12,786
16,513 15,770 17,336 12,777
Jun 16,665 15,915 17,525 12,768
16,819 16,062 17,684 12,844
16,823 16,066 17,681 12,885
17,023 16,257 17,928 12,952
17,182 16,409 18,130 13,002
17,473 16,687 18,461 13,027
Dec 96 17,393 16,611 18,382 13,035
17,400 16,617 18,417 13,059
17,556 16,766 18,587 13,084
17,315 16,536 18,339 13,126
17,432 16,646 18,494 13,168
17,687 16,892 18,771 13,193
Jun 17,849 17,046 18,971 13,193
18,401 17,573 19,496 13,235
18,152 17,335 19,313 13,276
18,336 17,511 19,543 13,310
18,455 17,625 19,668 13,326
18,551 17,716 19,784 13,318
Dec 97 18,889 18,039 20,073 13,334
19,059 18,201 20,280 13,359
19,011 18,156 20,286 13,384
19,023 18,167 20,304 13,410
18,891 18,041 20,213 13,434
19,165 18,303 20,532 13,458
Jun 19,248 18,382 20,612 13,474
19,261 18,394 20,664 13,490
19,587 18,705 20,982 13,506
19,790 18,900 21,244 13,523
19,753 18,864 21,244 13,556
19,786 18,896 21,318 13,556
Dec 98 19,848 18,955 21,372 13,547
20,080 19,176 21,626 13,580
19,988 19,088 21,531 13,597
19,976 19,077 21,561 13,638
Apr 99 20,036 19,134 21,615 13,666
(1) 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.
The Fund's performance would have been lower had the Fund's custodian not
allowed its fees to be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* 10 YEAR*
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 1.42% 6.04% 6.77% 7.19%
Fund (adjusted for the maximum 4.5% sales charge) -3.12% 1.21% 5.79% 6.70%
Lehman Brothers Municipal Bond Index(1) 1.75% 6.94% 7.49% 8.01%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 1.02% 5.22% 5.89% 5.73%
Fund (adjusted for the maximum contingent deferred sales charge) -3.92% 0.22% 5.73% 5.73%
Lehman Brothers Municipal Bond Index(1) 1.75% 6.94% 7.49% 7.54%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 23, 1998)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 1.06% 5.20% N/A 3.95%
Fund (adjusted for the maximum contingent deferred sales charge) -3.88% 0.20% N/A 0.35%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
AAA 47%
AA 24%
A 13%
BBB 10%
NON RATED 6%
Yields on municipal bonds remained attractive compared to Treasuries. Toward the
end of 1998, the yields on 30-year insured municipal bonds and comparable U.S.
Treasury bonds reached equivalent levels, which is a rare occurrence. However,
as Treasury yields fell and municipal yields remained stable, the yield
difference between the two types of bonds diminished. Early in 1999, investors
realized the tremendous opportunities available in the municipal market and
municipal demand increased. In conjunction with a recent slowdown in supply,
this boost in demand pushed the municipal-to-Treasury yield ratio back to more
traditional but still attractive levels.
Although most financial markets experienced significant volatility during the
period, the municipal market remained relatively stable. Much of the stability
can be attributed to municipals' isolation from turbulence abroad. Concerns
about the financial conditions in Asia and Latin America had little effect on
municipals. The positive economic and market conditions encouraged more
municipalities to take advantage of low interest rates and issue new bonds. In
1998, we experienced record levels of municipal issuance. Although the amount of
municipal debt increased, the credit quality of many issuers improved as the
positive economic environment led to stronger balance sheets. As a result, we
saw more municipalities issuing to finance special growth and expansion
projects, as opposed to using municipal bonds to finance their regular
operations.
The proportion of higher-yielding municipal bonds also increased during the
period as the number of insured bonds declined. Because bond insurers tightened
underwriting criteria, more issuers came to market without insurance and offered
higher yields to compensate for increased credit risk. This benefited the Fund
because it allowed our experienced research staff to seek out those
higher-yielding bonds that were felt to have a strong underlying quality.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
Management of the Fund's assets was transferred to Van Kampen effective January
of 1999. Most shifts in sector concentrations that occurred during the period
were a result of merging the assets of the Griffin Municipal Bond fund into the
portfolio in March. Due to increasing financial pressures on the hospital and
health care industry, however, we did reduce the Fund's holdings in this sector.
Although many health care bonds remain attractive, the challenges imposed by
managed care and changing Medicare reimbursement policies have led us to view
this sector more cautiously.
Our focus was on supporting the fund's income stream while monitoring its risk
level and price volatility. We found value in bonds in the intermediate range of
the yield curve -- primarily 15 to 20 year maturities. This range of the yield
curve offered almost as much yield as comparable 30-year bonds, but with
significantly less volatility.
The credit quality of the portfolio remains high, with almost 47% of assets
being AAA rated.++ We increased our exposure to non-rated securities that help
contribute to overall income levels. As we see attractive offerings of non-rated
issues in the market, we will continue to add to this position by leveraging our
research expertise.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Our outlook for the domestic economy remains positive, although we anticipate
slower growth in the second half of the year. Inflation should steadily rise
throughout 1999 to more normal levels. Internationally, low interest rates and
improving financial conditions should continue to support the economic progress.
Strong economic performance continues to bolster credit conditions of municipal
issuers. As mentioned earlier, economic strength has made issuers more likely to
issue debt for special projects rather than for general operating financing. We
believe that as long as municipalities remain economically healthy, this
situation is likely to continue. Although insured debt has been increasing in
recent years, we have experienced a reversal of this trend, and municipal bond
insurers have become more cautious. If this caution continues, credit spreads
may widen as the proportion of higher-yielding uninsured bonds increases. We
believe the supply of municipal debt will be lower than last year's near record
levels. A decrease in new issue supply will most likely help to restore the
price relationship between municipals and Treasuries to more traditional levels.
Finally, potential for changes in traditional economic activity arise as
concerns about year 2000 computer problem surface. These temporary concerns,
however, may result in investment opportunities our research staff can explore
to uncover value. We do not expect to make any significant changes to the
structure of the portfolio.
++ Bond ratings provided by Standard & Poors and Moody's. Allocation
percentages are based on total investment value of the portfolio as of
4/30/99.
(++) 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. Tax
equivalent yield based on a 39.6% Federal tax rate.
<PAGE>
BOND & STOCK FUND
PORTFOLIO MANAGER:
JEFFREY D. HUFFMAN
WM ADVISORS, INC.
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 14 years of investment
management experience.
PERFORMANCE REVIEW
The Fund's A shares advanced 11.32% (not adjusted for sales charge) during the
six-month period ended April 30, 1999. Long-term results provide the potential
for inflation protection and growth as the Fund has averaged 11.74% for the past
10 years (not adjusted for sales charge). Although the Fund has underperformed
the overall market in recent periods, this trend could reverse as the market
broadens and value stocks regain strength.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
The outlook for the global economy has improved as the credit crunch of last
summer has given way to strong economic growth. Many central banks decreased
interest rates toward the end of 1998. Market liquidity has improved and
emerging markets have rebounded. The domestic economy grew at very high levels
during the period, as consumer spending drove the expansion forward. The levels
of growth surpassed most observers' expectations and after months of nonexistent
inflation and even some deflationary forces, renewed concerns for escalating
prices surfaced. This caused a spike in interest rates in 1999. The Federal
Reserve is watching the inflation front very closely and is poised to tighten
rates if inflation fears prove true.
<TABLE>
<CAPTION>
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Lehman Standard
(Class A adjusted Brothers & Poors
Shares; not for the Government/ 500
adjusted for maximum 5.5% Corporate Composite Inflation
sales charge) sales charge) Bond Index(1) Index(1) (CPI)(1)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception* - 4/1/89 $10,000 $ 9,450 $10,000 $10,000 $10,000
10,286 9,721 10,246 10,402 10,008
Jun 89 10,372 9,802 10,580 10,346 10,025
10,778 10,185 10,800 11,275 10,075
10,826 10,231 10,633 11,492 10,116
10,769 10,176 10,679 11,448 10,175
10,661 10,075 10,950 11,181 10,241
10,593 10,010 11,048 11,414 10,300
Dec 89 10,572 9,991 11,065 11,683 10,324
10,220 9,658 10,913 10,899 10,349
10,271 9,706 10,937 11,040 10,366
10,371 9,800 10,938 11,330 10,399
10,116 9,560 10,838 11,050 10,449
10,676 10,089 11,152 12,127 10,474
Jun 10,696 10,108 11,333 12,043 10,491
10,665 10,079 11,473 12,004 10,599
10,046 9,494 11,307 10,920 10,648
9,828 9,287 11,401 10,383 10,707
9,890 9,346 11,552 10,344 10,724
10,350 9,781 11,804 11,011 10,749
Dec 90 10,581 9,999 11,982 11,312 10,807
10,942 10,340 12,117 11,812 10,848
11,473 10,842 12,221 12,658 10,948
11,632 10,992 12,305 12,959 11,040
11,804 11,155 12,447 12,995 11,106
12,083 11,419 12,505 13,552 11,130
Jun 11,857 11,205 12,491 12,932 11,130
11,987 11,328 12,649 13,538 11,197
12,161 11,492 12,940 13,856 11,214
12,249 11,575 13,210 13,629 11,231
12,304 11,627 13,328 13,811 11,248
12,106 11,440 13,461 13,253 11,281
Dec 91 12,883 12,174 13,915 14,768 11,314
12,836 12,130 13,709 14,493 11,331
12,941 12,229 13,781 14,679 11,364
12,887 12,179 13,705 14,391 11,414
13,182 12,457 13,788 14,810 11,431
13,252 12,523 14,055 14,890 11,464
Jun 13,241 12,513 14,262 14,674 11,472
13,658 12,907 14,627 15,265 11,489
13,586 12,839 14,757 14,957 11,531
13,742 12,986 14,958 15,129 11,590
13,550 12,804 14,729 15,183 11,606
13,862 13,100 14,716 15,695 11,622
Dec 92 14,157 13,379 14,969 15,901 11,664
14,280 13,495 15,295 16,017 11,688
14,464 13,868 15,613 16,233 11,721
14,734 13,924 15,666 16,582 11,754
14,610 13,807 15,787 16,176 11,795
14,759 13,947 15,779 16,613 11,812
Jun 14,809 13,995 16,137 16,667 11,803
14,835 14,019 16,241 16,589 11,861
15,298 14,456 16,614 17,221 11,903
15,254 14,415 16,672 17,094 11,944
15,443 14,594 16,741 17,441 11,978
15,229 14,391 16,551 17,277 11,995
Dec 93 15,469 14,618 16,624 17,489 12,011
15,908 15,033 16,874 18,075 12,011
15,534 14,679 16,506 17,587 12,045
14,922 14,102 16,101 16,822 12,070
15,013 14,188 15,968 17,041 12,120
15,092 14,262 15,939 17,318 12,128
Jun 14,805 13,990 15,902 16,891 12,128
15,186 14,351 16,220 17,450 12,161
15,567 14,711 16,227 18,160 12,202
15,238 14,400 15,982 17,722 12,244
15,305 14,463 15,964 18,128 12,261
14,973 14,149 15,935 17,463 12,270
Dec 94 15,139 14,307 16,041 17,718 12,311
15,397 14,550 16,349 18,179 12,345
15,857 14,985 16,728 18,884 12,394
16,243 15,349 16,840 19,443 12,427
16,653 15,737 17,074 20,009 12,436
17,227 16,280 17,789 20,799 12,452
Jun 17,575 16,609 17,932 21,288 12,452
17,934 16,948 17,862 21,997 12,502
18,113 17,117 18,090 22,056 12,552
18,687 17,659 18,275 22,980 12,593
18,756 17,725 18,544 22,900 12,635
19,327 18,264 18,850 23,907 12,660
Dec 95 19,860 18,768 19,127 24,350 12,686
20,421 19,298 19,245 25,187 12,686
20,335 19,216 18,837 25,429 12,719
20,369 19,249 18,679 25,673 12,744
20,500 19,372 18,550 26,050 12,786
20,805 19,660 18,519 26,723 12,777
Jun 20,929 19,778 18,767 26,832 12,768
20,398 19,266 18,810 25,638 12,844
20,665 19,529 18,765 26,182 12,885
21,398 20,221 19,099 27,653 12,952
21,693 20,500 19,544 28,411 13,002
22,681 21,434 19,903 30,567 13,027
Dec 96 22,561 21,320 19,683 29,968 13,035
23,117 21,845 19,706 31,829 13,059
23,371 22,085 19,748 32,087 13,084
22,954 21,691 19,513 30,752 13,126
23,370 22,085 19,797 32,588 13,168
24,410 23,068 19,982 34,589 13,193
Jun 25,145 23,762 20,221 36,131 13,193
26,371 24,921 20,840 39,000 13,235
25,516 24,113 20,607 36,832 13,276
26,549 25,088 20,930 38,850 13,310
26,207 24,766 21,265 37,553 13,326
26,792 25,318 21,378 39,291 13,318
Dec 97 27,049 25,561 21,602 39,967 13,334
27,049 25,561 21,907 40,411 13,359
28,012 26,471 21,863 43,324 13,384
28,578 27,006 21,931 45,543 13,410
28,769 27,187 22,040 46,003 13,434
28,309 26,752 22,276 45,211 13,458
Jun 28,524 26,955 22,503 47,047 13,474
27,386 25,880 22,522 46,548 13,490
24,549 23,199 22,961 39,817 13,506
25,629 24,219 23,617 42,370 13,523
27,261 25,762 23,450 45,816 13,556
28,565 26,993 23,590 48,593 13,556
Dec 98 28,922 27,331 23,647 51,393 13,547
29,237 27,629 23,815 53,542 13,580
28,097 26,551 23,248 51,878 13,597
28,703 27,125 23,364 53,954 13,638
Apr 99 30,345 28,676 23,423 56,042 13,666
(1) The Standard & Poor's 500 Composite Index (S&P 500) represents an unmanaged weighted
index of 500 companies. The Lehman Brothers Government/Corporate Bond Index 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.
The Fund's performance would have been lower had the Fund's custodian not allowed its
fees to be reduced by credits.
+ The performance of the Class B Shares was different than that indicated by the lines
shown on the left for the Class A Shares, based on the difference in sales loads and
fees paid by Class B shareholders.
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* 10 YEAR*
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 11.32% 5.49% 15.11% 11.74%
Fund (adjusted for the maximum 5.5% sales charge) 5.17% -0.29% 13.82% 11.11%
Lehman Brothers Government/Corporate Bond Index(1) -0.11% 6.27% 7.96% 8.88%
Standard & Poor's 500 Composite Index1 22.32% 21.82% 26.88% 18.81%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 10.84% 4.54% 14.17% 14.02%
Fund (adjusted for the maximum contingent deferred sales charge) 5.84% -0.46% 14.06% 14.02%
Lehman Brothers Government/Corporate Bond Index(1) -0.11% 6.27% 7.96% 7.65%
Standard & Poor's 500 Composite Index1 22.32% 21.82% 26.88% 26.71%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MAY 6, 1998)
<S> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 10.88% N/A N/A 5.71%
Fund (adjusted for the maximum contingent deferred sales charge) 5.88% N/A N/A 0.71%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
COMMON STOCKS 63%
CONVERTIBLE BONDS & PREFERRED STOCKS 6%
TREASURIES & AGENCIES 11%
CORPORATES BONDS 12%
MORTGAGE-BACKED 5%
CONVERTIBLE BONDS 2%
OTHER 1%
Equity performance was very strong for the period. Large-cap stocks have
continued to lead the market, while overall small- and mid-cap stocks have
lagged behind. Toward the end of the first quarter of 1999, small- and mid-cap
growth stocks performed very well, significantly outpacing their value
counterparts. Value stocks in general have underperformed growth stocks in
recent periods, but large-cap value regained strength in April. Favorable
sectors within equities were financial services, computer software, retailers,
and telecommunications. The Fund was well represented in these leading sectors
and benefited from holdings such as Citigroup Inc. (+60%), Adobe Systems, Inc.
(+71%), Limited Inc. (+71%), and Alltel Corp. (+44%). Two of our mid-cap
holdings underperformed the overall market, Dentsply International, a healthcare
firm, and Conseco, a life insurance company. Additionally, Crane Co. was flat
over the six-month period.
In the fixed-income arena, interest rates generally rose and bonds
underperformed. However, spreads in corporates and mortgages tightened relative
to comparable Treasury bonds. This created some good performance in these
sectors as tightening yields cause positive price performance for these mortgage
and corporate holdings. These sectors also benefit from higher overall yields
and therefore normally provide substantial income to the Fund.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We continued to focus on a diversified portfolio that invests in multiple
classes of both equity and fixed-income investments. Investments include
Treasuries, mortgage-backed securities, corporate bonds, convertibles and common
stocks. Our asset allocation was unchanged at approximately 70% in equities and
30% in bonds. We slightly increased our corporate bonds and convertible holdings
throughout the period, while reducing Treasuries as the flight-to-quality ended
and other bond classes gained relative strength.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Global economic growth appears to be accelerating and many uncertainties have
cleared. Asia and Brazil, last year's most worrisome economies, have improved
and these markets have rebounded significantly. In addition to the intervention
by the Federal Reserve, European central banks also cut interest rates,
contributing to overall global liquidity. The American consumer continues to
fuel the domestic economy, driven by strong retail sales, a powerful housing
market and high confidence levels. Inflation pressures have been re-surfacing,
but seem to currently be contained. This is an important aspect of overall
economic growth and will be watched closely. Both wage increases and
productivity enhancements have allowed corporations to grow their earnings
without inciting inflation. In turn, real (inflation-adjusted) interest rates in
the United States are historically high -- helping to create a positive backdrop
for financial assets. In the equity markets, positive earnings growth for the
S&P 500 is forecasted for 1999. We do feel that the current valuation levels of
the largest growth stocks are a bit troubling, but the recent broadening of the
market is a very positive sign. Overall, we remain moderately bullish for the
remainder of year.
++ Allocation percentages are based on total investment value of the portfolio
as of 4/30/99. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
GROWTH & INCOME FUND
PORTFOLIO MANAGER
RANDALL L. YOAKUM
WM ADVISORS, INC.
The Growth & Income Fund is managed by an equity team led by Senior Portfolio
Manager Randall Yoakum. Mr. Yoakum has 16 years experience in investment and
financial analysis including seven years with WM Advisors. He holds a BBA in
Economics/Finance from Pacific Lutheran University, an MBA in Finance/Economics
from Arizona State University, and is a Chartered Financial Analyst. Mr. Yoakum
serves as chair of WM Advisors, Inc. Investments Committee and leads the Funds
equity team.
PERFORMANCE REVIEW
The Growth & Income Fund returned 24.44% (not adjusted for sales charge) for the
six-month period ended April 30, 1999, outperforming the S&P 500 Index's return
of 22.32%. Long-term results continue to be very favorable, as the Fund has
averaged 15.02% for the past 10 years (not adjusted for sales charge).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
The six-month period ended April 30, 1999 was exceptional for equity investments
as large-cap stocks advanced significantly. Strong economic fundamentals and a
resurgence of global stability supported strong market performance. Most equity
indices reached their all-time highs during the period as healthy consumer
spending drove domestic economic growth to an average of over 5% for the past
two quarters.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Standard
(Class A adjusted & Poor's
Shares; not for the 500
adjusted for maximum 5.5% Composite Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception* - 4/1/89 $10,000 $ 9,450 $10,000 $10,000
10,289 9,723 10,402 10,008
Jun 89 10,221 9,659 10,346 10,025
10,718 10,129 11,275 10,075
10,898 10,299 11,492 10,116
10,770 10,178 11,448 10,175
10,494 9,917 11,181 10,241
10,330 9,762 11,414 10,300
Dec 89 10,336 9,768 11,683 10,324
9,842 9,301 10,899 10,349
9,935 9,389 11,040 10,366
10,075 9,521 11,330 10,399
9,689 9,156 11,050 10,449
10,414 9,841 12,127 10,474
Jun 10,328 9,760 12,043 10,491
10,195 9,634 12,004 10,599
9,266 8,756 10,920 10,648
8,808 8,323 10,383 10,707
8,789 8,305 10,344 10,724
9,411 8,893 11,011 10,749
Dec 90 9,718 9,183 11,312 10,807
10,239 9,676 11,812 10,848
10,982 10,378 12,658 10,948
11,214 10,597 12,959 11,040
11,360 10,735 12,995 11,106
11,758 11,112 13,552 11,130
Jun 11,427 10,799 12,932 11,130
11,623 10,983 13,538 11,197
11,740 11,094 13,856 11,214
11,701 11,057 13,629 11,231
11,662 11,020 13,811 11,248
11,288 10,667 13,253 11,281
Dec 91 12,379 11,699 14,768 11,314
12,421 11,738 14,493 11,331
12,621 11,926 14,679 11,364
12,525 11,836 14,391 11,414
12,873 12,165 14,810 11,431
12,905 12,195 14,890 11,464
Jun 12,705 12,006 14,674 11,472
13,150 12,427 15,265 11,489
12,843 12,137 14,957 11,531
13,066 12,348 15,129 11,590
12,821 12,116 15,183 11,606
13,386 12,650 15,695 11,622
Dec 92 13,741 12,985 15,901 11,664
13,807 13,047 16,017 11,688
13,752 12,995 16,233 11,721
14,087 13,312 16,582 11,754
13,822 13,062 16,176 11,795
14,120 13,343 16,613 11,812
Jun 14,027 13,255 16,667 11,803
13,949 13,182 16,589 11,861
14,326 13,538 17,221 11,903
14,082 13,308 17,094 11,944
14,238 13,455 17,441 11,978
14,149 13,371 17,277 11,995
Dec 93 14,675 13,868 17,489 12,011
15,337 14,493 18,075 12,011
15,096 14,266 17,587 12,045
14,498 13,701 16,822 12,070
14,667 13,861 17,041 12,120
14,860 14,043 17,318 12,128
Jun 14,552 13,752 16,891 12,128
15,025 14,199 17,450 12,161
15,631 14,771 18,160 12,202
15,285 14,445 17,722 12,244
15,456 14,606 18,128 12,261
15,006 14,180 17,463 12,270
Dec 94 15,051 14,224 17,718 12,311
15,291 14,450 18,179 12,345
15,809 14,940 18,884 12,394
16,270 15,375 19,443 12,427
16,662 15,746 20,009 12,436
17,081 16,141 20,799 12,452
Jun 17,416 16,459 21,288 12,452
18,039 17,047 21,997 12,502
18,179 17,179 22,056 12,552
18,796 17,762 22,980 12,593
18,681 17,654 22,900 12,635
19,447 18,377 23,907 12,660
Dec 95 20,037 18,935 24,350 12,686
20,608 19,474 25,187 12,686
20,887 19,738 25,429 12,719
21,085 19,926 25,673 12,744
21,578 20,391 26,050 12,786
22,044 20,831 26,723 12,777
Jun 22,070 20,857 26,832 12,768
20,963 19,810 25,638 12,844
21,590 20,403 26,182 12,885
22,838 21,582 27,653 12,952
23,092 21,822 28,411 13,002
24,778 23,415 30,567 13,027
Dec 96 24,501 23,153 29,968 13,035
25,664 24,252 31,829 13,059
25,808 24,388 32,087 13,084
24,915 23,545 30,752 13,126
25,836 24,415 32,588 13,168
27,549 26,034 34,589 13,193
Jun 28,959 27,367 36,131 13,193
31,137 29,425 39,000 13,235
29,753 28,116 36,832 13,276
31,433 29,704 38,850 13,310
30,307 28,640 37,553 13,326
31,231 29,514 39,291 13,318
Dec 97 31,734 29,989 39,967 13,334
31,204 29,488 40,411 13,359
33,591 31,744 43,324 13,384
34,834 32,918 45,543 13,410
34,980 33,057 46,003 13,434
34,071 32,197 45,211 13,458
Jun 35,008 33,082 47,047 13,474
33,608 31,759 46,548 13,490
27,686 26,163 39,817 13,506
29,923 28,277 42,370 13,523
32,544 30,745 45,816 13,556
34,660 32,753 48,593 13,556
Dec 98 36,306 34,309 51,393 13,547
37,707 35,633 53,542 13,580
36,927 34,896 51,878 13,597
38,001 35,911 53,954 13,638
Apr 99 40,498 38,271 56,042 13,666
(1) 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.
The Fund's performance would have been lower had the Distributor not waived
a portion of its fees and the Fund's custodian had not allowed its fees to
be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* 10 YEAR*
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 24.44% 15.77% 22.53% 15.02%
Fund (adjusted for the maximum 5.5% sales charge) 17.61% 9.41% 21.15% 14.37%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% 26.88% 18.81%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 23.93% 14.81% 21.56% 21.42%
Fund (adjusted for the maximum contingent deferred sales charge) 18.93% 9.81% 21.47% 21.42%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% 26.88% 26.71%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 23, 1998)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 23.90% 14.79% N/A 13.89%
Fund (adjusted for the maximum contingent deferred sales charge) 18.90% 9.79% N/A 10.31%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
COMPUTER STOCKS 14%
HEALTH CARE 9%
CONSUMER STOCKS 16%
FINANCIAL SERVICES 19%
OIL & GAS 6%
AERO SPACE/DEFENSE 3%
UTILITIES 7%
CAPITAL GOODS 3%
MEDIA 4%
TRANSPORTATION 3%
BASIC INDUSTRY 4%
OTHER 12%
The period closed with very good performance for the Fund as sector breadth
widened and large-cap value stocks regained strength. Strong performance in
Cyclicals, Technology and Finance contributed to this strength, while poor
Health Care Services performance detracted from otherwise strong results.
While momentum, not value, continued to drive the overall markets during the
early months of 1999, renewed confidence in the strength of the U.S. economy led
to broader sector performance. For 1998, only one-third of industry groups
outperformed the S&P 500 Index. This represents very narrow performance as most
sectors lagged the overall market and the strong advance was limited to the
largest growth stocks in the Index. During the first quarter of 1999, nearly
one-half the industry groups beat the index. Broader participation is a positive
force for a well-diversified core portfolio such as the Growth & Income Fund, as
multiple holdings contribute to overall performance.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
The Fund's outperformance reflects changes in the portfolio that were initiated
in the stock market correction that began in August and continued into October.
As stock prices declined, we became more bullish on the overall outlook for the
market. That bullish outlook was the product of our belief that the market had
discounted a severe slowdown in global economic growth. We believed that a
diminished outlook for emerging markets had been fully discounted and that there
was evidence to suggest that emerging markets would stabilize. In addition, the
Federal Reserve changed its policy stance from restrictive to accommodative with
three separate interest rate cuts. We saw the potential for a quick recovery in
stock prices and felt financial and consumer cyclical stocks would likely lead
the market advance. Consequently, we initiated or added to our holdings in Chase
Manhattan Bank Corp., Merrill Lynch & Co. Inc., Price (T. Rowe) Associates,
Inc., Dayton Hudson Corp., and Walt Disney & Co. These purchases have benefited
Fund performance as the stocks have proven to be strong performers.
Consumer Cyclicals benefited from investors' perceptions that the U.S. economy
was strengthening. Within the Fund, Cyclicals were led by the strong performance
of Sony Corp., Liberty Media Group, Circuit City and Intimate Brands. Technology
stocks continued to fuel performance as prospects for earnings growth remained.
First Data Corp., EMC Corp., and Microsoft contributed nicely to the Fund's
Technology gains. Compaq Computers was a disappointment within this group, as
earnings did not meet expectations. Our increased weighting in the Finance
sector also paid off as the sector showed strong gains. Chase Manhattan Corp.,
Citigroup Inc., Providian Financial and American International Group led the way
within the Financial sector.
Our performance during the period was held back by positions in small-cap stocks
in general, and by our holdings in Health Care stocks and REITs. Health Care
stocks within the Fund were a disappointment, particularly companies such as
Columbia HCA, Pacificare Health and Medpartners, Inc. Although not large
positions, these stocks lagged the overall market and the industry continued to
experience the pains of health care reform -- both real and perceived. While
comprising only a small percentage of the Fund, we feel Health Care Services
companies do offer compelling long-term value as a result of turmoil within the
industry. Overall, performance was very strong for the period, especially in
recent months as our commitment to value has rewarded shareholders.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Going forward, we expect the Fed's easing of interest rates this past fall to
support moderate growth in the domestic economy in 1999. Weakness in Brazil and
other Latin American countries, along with continued weakness in the Asian
economies may result in poor export growth. Careful monitoring of expectations
is warranted at current valuation levels. Several of our long-term holdings in
specific sectors such as technology and telecommunications are meeting or
exceeding our valuation targets -- prompting us to take some profits. At the
same time, we continue to find stocks that meet our quality standards trading in
the market at very reasonable valuations. It is our intention to maintain the
same investment discipline that has been employed in the past to meet the Fund's
objectives. We focus on owning quality businesses at attractive valuations, with
an emphasis on long-term research. We feel that this style will benefit
investors over the course of a long-term investment horizon.
++ Allocation percentages are based on total investment value of the portfolio
as of 4/30/99. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
GROWTH FUND
PORTFOLIO MANAGER:
WARREN LAMMERT
JANUS CAPITAL CORPORATION
Mr. Lammert is a graduate of Yale University and the London School of Economics.
He first joined Janus in January 1987 and has been portfolio manager of the
Growth Fund since its inception. He is a Chartered Financial Analyst.
PERFORMANCE REVIEW
For the six-month period ended, the Fund's A shares advanced significantly
63.11% (53.70% adjusted for the maximum sales charge), nearly tripling the
performance of the S&P 500 Index.1 Long-term results are also very strong, as
the Fund has averaged over 25% per year after sales charges since its inception
(4/93).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDING APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
During the period, the U.S. economy continued to surprise investors with its
resilience, easing concerns that last fall's crisis in the developing countries
might spark a global recession. The persistence of solid economic growth, low
interest rates, and benign inflation helped the stock market gain momentum.
However, the market advance was relatively narrow, driven by a handful of large
growth companies.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Standard
(Class A adjusted & Poor's
Shares; not for the 500
adjusted for maximum 5.5% Composite Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception - 4/5/93 $10,000 $ 9,450
10,020 9,469 $10,000 $10,000
10,550 9,970 10,267 10,014
Jun 10,720 10,130 10,297 10,007
10,480 9,904 10,255 10,056
10,900 10,301 10,644 10,091
Sep 11,250 10,631 10,560 10,127
11,500 10,868 10,778 10,155
11,300 10,679 10,676 10,169
Dec 93 11,680 11,038 10,805 10,183
12,160 11,491 11,172 10,183
12,040 11,378 10,869 10,212
Mar 11,740 11,094 10,395 10,233
11,630 10,990 10,529 10,275
11,190 10,575 10,701 10,282
Jun 10,730 10,140 10,439 10,282
11,150 10,537 10,782 10,310
11,830 11,179 11,223 10,345
Sep 11,870 11,217 10,949 10,380
12,200 11,529 11,194 10,395
11,750 11,104 10,787 10,402
Dec 94 11,756 11,109 10,947 10,438
11,886 11,232 11,230 10,466
12,257 11,583 11,668 10,508
Mar 12,507 11,819 12,011 10,536
12,938 12,226 12,365 10,543
13,428 12,690 12,858 10,557
Jun 14,199 13,418 13,156 10,557
15,121 14,289 13,593 10,599
15,231 14,393 13,627 10,642
Sep 15,681 14,819 14,201 10,677
15,261 14,421 14,151 10,712
15,942 15,065 14,771 10,734
Dec 95 16,018 15,137 15,056 10,755
16,393 15,491 15,568 10,755
17,187 16,242 15,712 10,783
Mar 17,312 16,360 15,863 10,805
18,243 17,240 16,096 10,840
18,606 17,583 16,512 10,833
Jun 17,812 16,832 16,575 10,825
16,563 15,652 15,842 10,889
17,664 16,693 16,176 10,924
Sep 18,822 17,787 17,087 10,981
18,197 17,196 17,558 11,023
18,856 17,819 18,884 11,044
Dec 96 18,728 17,698 18,510 11,051
19,642 18,561 19,666 11,072
18,768 17,735 19,820 11,093
Mar 17,535 16,570 19,007 11,128
17,799 16,820 20,141 11,164
19,019 17,973 21,367 11,185
Jun 19,747 18,661 22,323 11,185
21,429 20,251 24,096 11,221
20,277 19,161 22,756 11,256
Sep 21,469 20,288 24,003 11,284
20,872 19,724 23,201 11,298
20,780 19,637 24,276 11,291
Dec 97 20,558 19,427 24,693 11,304
21,195 20,029 24,967 11,326
23,179 21,904 26,767 11,347
Mar 24,294 22,958 28,138 11,369
25,207 23,821 28,422 11,389
24,438 23,094 27,933 11,410
Jun 26,743 25,272 29,067 11,424
26,628 25,163 28,759 11,437
22,080 20,866 24,601 11,451
Sep 24,745 23,384 26,177 11,465
25,557 24,151 28,307 11,493
27,282 25,781 30,022 11,493
Dec 98 32,299 30,522 31,752 11,486
36,578 34,567 33,080 11,514
35,368 33,422 32,052 11,528
39,665 37,483 33,334 11,562
Apr 99 41,684 39,391 34,624 11,587
(1) Index total returns were calculated from 4/30/93 to 4/30/99. The Standard &
Poor's 500 Composite Index (S&P 500) represents an unmanaged weighted index
of 500 industrial, transportation, utility, and financial companies widely
regarded by investors as representative of the stock market. 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.
The Fund's performance would have been lower had the Advisor and Distributor
not waived a portion of their fees and the Fund's custodian had not allowed
its fees to be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(APRIL 5, 1993)
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 63.11% 65.36% 29.09% 26.52%
Fund (adjusted for the maximum 5.5% sales charge) 53.70% 56.28% 27.63% 25.35%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% 26.88% 23.00%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 62.74% 64.38% N/A 31.50%
Fund (adjusted for the maximum contingent deferred sales charge) 57.74% 59.38% N/A 31.43%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% N/A 28.15%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 62.48% 64.12% N/A 31.45%
Fund (adjusted for the maximum contingent deferred sales charge) 57.48% 59.12% N/A 31.37%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% N/A 28.15%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
HEALTH CARE 10%
UTILITIES/TELECOM 14%
MEDIA 14%
COMPUTER STOCKS 29%
ELECTRONICS/SEMICONDUCTORS 10%
CAPITAL GOODS 5%
BANK/SAVINGS & LOAN 5%
OIL & GAS 4%
OTHER 9%
Contributing to the Fund's performance during the period were many of the same
themes that supported our gains in the latter half of 1998. These themes
included cable, wireless telecommunications and the Internet. In the cable
industry, recent developments have affirmed the value we have long seen in this
area. A standout among our cable equities was United International Holdings,
which owns cable systems in Europe, Latin America and Australia. Early in the
year, United International completed a public offering of its European
subsidiary, helping to expose its vital assets to a broader range of European
and U.S. investors. In turn, the company's stock rose dramatically. Like many
U.S. cable firms, United International is leveraging broadband networks to offer
new services such as high-speed Internet access and cable telephony; therefore,
we believe further upside potential still exists for this stock.
As cable companies get ready to rollout these new services, many are realizing
the benefits of increasing their scale of operations through acquisitions.
During the period, AT&T and Comcast made bids to acquire MediaOne Group, another
cable position in the Fund. Although MediaOne accepted AT&T's more generous
offer, Comcast walked away from negotiations with two million additional
subscribers. This consolidation is further evidence that people are recognizing
the potential of the cable business.
In the wireless telecommunications sector, Finnish equipment provider Nokia
continued to provide strong performance for the Fund. Nokia's success has been
supported in part by the rapid rise in cellular subscriber rates worldwide.
Additionally, the company continues to introduce compelling new products in the
areas of wireless handsets and base-station equipment. In particular, we believe
Nokia's position as the global leader in digital handsets provides it with
open-ended long-term opportunity.
Our Internet-related positions have also performed well, aided by the growing
accessibility and affordability of Internet use. In particular, the recent
introductions of Internet-ready cable set-up boxes and the sub-$600 personal
computers have driven online traffic up and the price of access down. Also
supporting gains in this sector was the growing popularity of e-commerce. For
example, during the 1998 holiday season, Internet service provider America
Online (AOL) saw average purchases made over its shopping channel rise 50% from
a year earlier. Amazon.com is also capitalizing on this trend. Amazon.com
continued to extend its brand across new product categories, investing most
recently in Web start-ups Drugstore.com and Pets.com.
Despite the Fund's solid results, one area of focus that lagged on a relative
basis was pharmaceuticals. These stocks were buffeted by concerns surrounding
potential legislation that could introduce a drug benefit to Medicare
participants. While a Medicare drug benefit would expand the overall consumption
of pharmaceuticals, it could also carry with it the threat of governmental price
controls. Such price controls could dampen earnings prospects in the industry,
and hinder efforts to recoup research and developments costs. Also contributing
to the cloud over pharmaceutical stocks was the cancellation of several
promising launches following disappointing clinical trials. The negative climate
for this sector hindered performance of a number of our pharmaceutical stocks,
including Warner-Lambert's.
While we continue to monitor developments in the pharmaceuticals sector, we are
still excited about the long-term potential of this industry. New drug discovery
technologies should enable pharmaceutical companies to expand their product
pipelines and accelerate revenue growth over the next five to ten years.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
During the quarter, we selectively added to our financial holdings and initiated
a position in Fifth Third Bank. Fifth Third Bank is perhaps the most successful
and fastest growing consumer banking company in the U.S. We are intrigued by the
ability of its management to find low-cost consumer funding, acquire smaller
competitors, and to keep a tight lid on costs as the company grows.
We have not altered our strategy to suit current or anticipated market
conditions. Instead, we continue to utilize a fundamental, bottom-up approach in
order to find individual companies that exhibit strong earnings growth potential
that may not yet be fully recognized by the market. In this, we rely on the
fundamental analysis performed by Janus' investment team. Additionally, we
continue to apply a strict buy/sell discipline to each opportunity. This means
that positions are added or increased when the stock can be purchased at a
discount to expected earnings growth. Positions are then trimmed or eliminated
when the stocks reach our target price or experience fundamental changes that
can negatively impact our original expectations.
While our primary focus is on individual stock-by-stock analysis, the Fund may
at times reflect themes that develop as market conditions create opportunities
in certain industries or sectors. Regardless of the theme, we constantly
evaluate each security's price against its projected growth rate and underlying
fundamentals.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
We continue to be enthusiastic about business fundamentals of companies we own
and we believe our major themes, namely cable, telecommunications, the Internet
and pharmaceuticals, remain largely consistent. While we were excited about the
results of the last two quarters, we would not be surprised if investors'
appreciation of our holdings' improving fundamentals fluctuated somewhat.
However, this fundamental improvement supports our optimism about the
performance of the Fund over the balance of the year. Consequently, we are
inclined to ride through any short-term changes in market psychology surrounding
these opportunities.
While the recent rise in interest rates has caused us some concern, we remain
optimistic on the outlook for the Fund. Our confidence reflects the strong U.S.
economy, the apparent absence of inflation, and the increasing opportunities we
see in the companies in which we invest.
++ Allocation percentages are based on total investment value of the portfolio
as of 4/30/99. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
NORTHWEST FUND
PORTFOLIO MANAGER:
DAVID SIMPSON
WM ADVISORS, INC.
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 13 years of continuous investment experience.
PERFORMANCE REVIEW
For the six-month period ended April 30, 1999, the Fund's A shares significantly
advanced 36.23% (not adjusted for the maximum sales charge), far outpacing the
performance of the S&P 500 Index1 for the same period. Long-term results were
also very strong, as the Fund's gains averaged over 16% per year for the past 10
years.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDING APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
The period from October 31, 1998 to April 30, 1999 was very unusual. Following a
terrible small-cap rout in August and September (when we increased positions in
small-cap stocks, mostly in the hard-hit technology sector), the Fund
appreciated significantly, mainly driven by small-cap technology, but we had
help from most sectors. The end of 1998 was one of the best periods on record
for equity investments and the fourth quarter of 1998 was the best quarter (+45%
not adjusted for sales charge) in the Fund's 13 year history.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Standard
(Class A adjusted & Poor's
Shares; not for the 500
adjusted for maximum 5.5% Composite Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception* - 4/1/89 $10,000 $ 9,450 $10,000 $10,000
10,445 9,870 10,402 10,008
Jun 89 10,090 9,535 10,346 10,025
10,794 10,200 11,275 10,075
11,431 10,802 11,492 10,116
11,684 11,042 11,448 10,175
11,481 10,850 11,181 10,241
11,566 10,930 11,414 10,300
Dec 89 11,531 10,897 11,683 10,324
10,763 10,171 10,899 10,349
11,164 10,550 11,040 10,366
12,011 11,350 11,330 10,399
11,587 10,949 11,050 10,449
12,966 12,253 12,127 10,474
Jun 13,011 12,296 12,043 10,491
12,615 11,921 12,004 10,599
10,854 10,257 10,920 10,648
9,958 9,410 10,383 10,707
9,566 9,040 10,344 10,724
10,786 10,193 11,011 10,749
Dec 90 11,405 10,778 11,312 10,807
12,866 12,159 11,812 10,848
13,838 13,077 12,658 10,948
14,367 13,577 12,959 11,040
14,743 13,932 12,995 11,106
15,575 14,718 13,552 11,130
Jun 14,537 13,738 12,932 11,130
15,205 14,368 13,538 11,197
15,798 14,929 13,856 11,214
15,444 14,595 13,629 11,231
15,353 14,509 13,811 11,248
14,754 13,942 13,253 11,281
Dec 91 16,411 15,508 14,768 11,314
17,207 16,260 14,493 11,331
17,466 16,505 14,679 11,364
16,895 15,966 14,391 11,414
16,104 15,218 14,810 11,431
15,943 15,066 14,890 11,464
Jun 15,383 14,537 14,674 11,472
15,522 14,668 15,265 11,489
15,094 14,264 14,957 11,531
15,660 14,799 15,129 11,590
16,239 15,346 15,183 11,606
16,945 16,013 15,695 11,622
Dec 92 16,991 16,057 15,901 11,664
17,084 16,145 16,017 11,688
16,539 15,630 16,233 11,721
17,183 16,238 16,582 11,754
16,742 15,821 16,176 11,795
17,148 16,205 16,613 11,812
Jun 16,690 15,772 16,667 11,803
16,063 15,179 16,589 11,861
16,713 15,794 17,221 11,903
16,324 15,427 17,094 11,944
16,859 15,932 17,441 11,978
17,196 16,251 17,277 11,995
Dec 93 17,415 16,457 17,489 12,011
17,947 16,960 18,075 12,011
18,189 17,189 17,587 12,045
17,529 16,565 16,822 12,070
17,456 16,496 17,041 12,120
17,711 16,736 17,318 12,128
Jun 17,159 16,216 16,891 12,128
17,268 16,319 17,450 12,161
18,227 17,224 18,160 12,202
17,517 16,554 17,722 12,244
17,359 16,404 18,128 12,261
17,068 16,129 17,463 12,270
Dec 94 17,168 16,224 17,718 12,311
17,083 16,143 18,179 12,345
17,691 16,718 18,884 12,394
18,290 17,284 19,443 12,427
18,813 17,779 20,009 12,436
18,825 17,790 20,799 12,452
Jun 19,925 18,829 21,288 12,452
20,632 19,497 21,997 12,502
20,937 19,785 22,056 12,552
21,708 20,514 22,980 12,593
21,221 20,053 22,900 12,635
21,513 20,330 23,907 12,660
Dec 95 21,720 20,526 24,350 12,686
21,622 20,432 25,187 12,686
22,128 20,911 25,429 12,719
22,640 21,395 25,673 12,744
24,294 22,958 26,050 12,786
24,948 23,576 26,723 12,777
Jun 23,899 22,584 26,832 12,768
22,282 21,056 25,638 12,844
23,677 22,374 26,182 12,885
24,356 23,016 27,653 12,952
24,306 22,969 28,411 13,002
25,985 24,556 30,567 13,027
Dec 96 26,621 25,157 29,968 13,035
28,287 26,732 31,829 13,059
28,220 26,668 32,087 13,084
27,109 25,618 30,752 13,126
28,057 26,514 32,588 13,168
31,038 29,331 34,589 13,193
Jun 32,474 30,688 36,131 13,193
34,695 32,787 39,000 13,235
34,208 32,326 36,832 13,276
37,053 35,015 38,850 13,310
35,115 33,184 37,553 13,326
35,997 34,017 39,291 13,318
Dec 97 35,374 33,429 39,967 13,334
35,438 33,489 40,411 13,359
38,631 36,506 43,324 13,384
39,187 37,032 45,543 13,410
39,367 37,202 46,003 13,434
37,249 35,201 45,211 13,458
Jun 36,512 34,504 47,047 13,474
34,065 32,192 46,548 13,490
27,174 25,679 39,817 13,506
29,948 28,301 42,370 13,523
33,428 31,590 45,816 13,556
38,369 36,259 48,593 13,556
Dec 98 43,507 41,114 51,393 13,547
44,703 42,245 53,542 13,580
41,784 39,486 51,878 13,597
42,950 40,588 53,954 13,638
Apr 99 45,544 43,039 56,042 13,666
(1) The Standard & Poor's 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 performance does not
guarantee future performance. The returns shown for the Fund assume
reinvestment of all dividends/distributions by the shareholder.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian had not allowed its fees to be
reduced by credits.
+ The performance of the Class B Shares was different than that indicated by
the lines shown on the left for the Class A Shares, based on the differences
in sales loads and fees paid by Class B shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* 10 YEAR*
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 36.23% 15.67% 21.14% 16.36%
Fund (adjusted for the maximum 5.5% sales charge) 28.71% 9.29% 19.77% 16.05%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% 26.88% 18.81%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(MARCH 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 35.69% 14.67% 20.12% 19.74%
Fund (adjusted for the maximum contingent deferred sales charge) 30.69% 9.67% 20.03% 19.74%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% 26.88% 26.71%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
COMPUTER STOCKS 22%
HEALTH CARE 10%
ELECTRONICS/SEMICONDUCTORS 13%
BASIC INDUSTRY 7%
FINANCIAL SERVICES 9%
TRANSPORTATION 6%
CONSUMER STOCKS 13%
AEROSPACE & DEFENSE 3%
UTILITIES/TELECOM 3%
CAPITAL GOODS 3%
OTHER 11%
During the first quarter of 1999, performance reversed as large-cap technology
stocks resumed market leadership. No single sector had significant influence on
the Fund from the perspective of over- or under-performance, although some
individual issues did. In general, the market continued to be very narrow, with
breadth decreasing and the valuations of the largest issues becoming more and
more extreme. The Internet sector continued to show very high valuations while
many small-cap issues languished at depressed valuations. The disparity between
the very largest companies and small companies appears to be wider than seen in
many years, if not ever.
The period closed with a return of market breadth as some value holdings
performed very well and the Fund again outperformed the S&P 500 Index. We will
maintain our focus on fundamentally strong companies which we feel are
attractively priced.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We slightly reduced our exposure to technology during the period, although the
sector remains our largest allocation. We continue to have heavy exposure to
small-caps as we see the most compelling values in smaller companies. This is
due to a protracted period of underperformance relative to market
capitalization; as these companies regain favor, we could see a period of strong
relative performance.
We did not make any major changes to the Fund or to our overall investment
strategy during the period. We built a slightly larger than typical cash
position at the end of 1998, and we put much of this to work during the first
quarter. We emphasized purchases of those companies which appeared to have the
best long-term opportunities and offered the most compelling valuations. In the
past, we have been rewarded for buying sectors that are out of favor, but
maintaining a long-term focus is very important. As is characteristic of the
industry, biotechnology stocks were among our best and worst performers in the
quarter. Immunex rose 32.3% on enthusiasm for a new arthritis drug while
Pathogenesis lost 79.1% of its value. Pathogenesis pre-announced a profound
revenue and earnings shortfall. We were sufficiently discouraged by the revenue
issues that we chose to sell the stock. We had similar disparity of performance
in other sectors, with technology being the most dramatic. Microsoft was not
surprisingly the largest contributor to portfolio performance, rising 29.2%,
while two other software companies, Wall Data and Visio, lost 40.1% and 23.1%
respectively.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Both the Northwest and national economies are proving to be more resilient than
we previously predicted. The U.S. consumer has shown an unusual willingness to
spend money, supporting a robust domestic economy, yet inflation has remained
tame. However, consumer spending tends to be a coincident indicator, not a
leading indicator, and some of the spending may be a wealth effect tied to the
stock market itself. The global economy is mixed, and corporate capital spending
may be slowing both due to weak export demand and concerns about Y2K. We
continue to believe that large-cap stocks are, in general, overvalued.
The Northwest economy continues its strength despite the slowdown as a result of
Asia and the Boeing layoffs -- Boeing is in the process of significantly
reducing employment in the Puget Sound region. It is important to note that
while the Fund is concentrated in the Northwest, because of the global diversity
of many of its holdings, it is not solely linked to the region. Companies like
Boeing, Microsoft, and Intel, and even many of the smaller companies in the
Fund, generate revenues and earnings from business practices around the globe.
Overall, we continue to find sound investments in the Northwest region and
maintain a very positive long-term outlook for the companies in the Fund.
++ Allocation percentages are based on total investment value of the portfolio
as of 4/30/99. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
EMERGING GROWTH FUND
PORTFOLIO MANAGERS:
DAVID SIMPSON AND LINDA WALK
WM ADVISORS, INC.
Mr. Simpson and Ms. Walk have been managing the Fund since March 23, 1998. David
Simpson, Senior Portfolio Manager of WM Advisors, Inc., is a Chartered Financial
Analyst, holds an MBA and has over 13 years of continuous investment experience.
Linda Walk, Portfolio Manager of WM Advisors, Inc., is a graduate of the
University of Washington and has over 13 years of investment experience. She is
a Chartered Financial Analyst, a Certified Financial Planner, and has
participated in the Wharton Executive Education program.
PERFORMANCE REVIEW
Although small-cap stocks have severely underperformed the market in recent
years, the Emerging Growth Fund reported performance of 13.73% (not adjusted for
sales charge) for the six-month period ended April 30, 1999. In addition, the
Fund has averaged 11.32% per year since its inception (not adjusted for sales
charge).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED APRIL 30, 1999 AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
The investment psychology of the market so far in 1999 has been a continuation
of a trend that began in the second half of 1998. Last year, highly valued,
large-capitalization stocks outperformed low P/E (price to earnings) value
stocks by nearly 20%. While momentum stocks have led the market, they have
become very expensive. The relative P/E ratio premium for growth momentum stocks
is the highest since the era of the "Nifty Fifty" and over six times the
historic norm. It is difficult to predict how long this trend will last, but
what we do know is the cost of buying into strong price momentum has never been
higher. Within the small-cap arena, the Russell 2000 Growth Index significantly
outperformed its Value Index counterpart. The difference in performance can be
attributed to one thing -- the indices' exposure (or lack thereof) to the
Internet. As valuations seem unjustifiably high for many of these momentum
stocks, particularly Internet-related shares, we have generally chosen not to
hold these stocks given their current valuations.
<TABLE>
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund Fund Standard
(Class A (Class A & Poor's
not adjusted adjusted for 500 Russell
for sales the maximum Composite Inflation 2000
charge) 5.5% sales chg) Index(1) (CPU)(1) Index(1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception - 7/18/90 $10,000 $ 9,450 $10,000 $10,000 $10,000
9,997 9,476 10,074 10,016 10,127
9,773 9,715 10,177 10,039 10,345
10,007 9,556 10,074 10,016 10,127
10,173 9,715 10,177 10,039 10,345
Dec 90 10,328 9,864 10,284 10,093 10,506
10,386 9,919 10,370 10,132 10,636
10,558 10,083 10,457 10,225 10,727
10,661 10,182 10,530 10,311 10,801
10,823 10,336 10,616 10,373 10,917
10,891 10,401 10,681 10,395 10,981
Jun 10,896 10,406 10,730 10,395 10,975
11,047 10,550 10,825 10,458 11,128
11,302 10,794 10,951 10,473 11,368
11,455 10,940 11,065 10,489 11,599
11,596 11,075 11,155 10,505 11,728
11,711 11,184 11,234 10,536 11,836
Dec 91 12,033 11,492 11,386 10,567 12,187
11,913 11,377 11,364 10,583 12,021
12,004 11,464 11,419 10,613 12,100
11,926 11,390 11,421 10,660 12,032
11,997 11,458 11,485 10,676 12,118
12,241 11,691 11,597 10,707 12,347
Jun 12,416 11,858 11,692 10,715 12,518
12,688 12,117 11,810 10,731 12,773
12,767 12,192 11,885 10,769 12,902
12,868 12,289 11,966 10,824 13,056
12,673 12,103 11,911 10,839 12,882
12,690 12,119 11,928 10,855 12,885
Dec 92 12,890 12,310 12,024 10,894 13,090
13,120 12,530 12,141 10,917 13,341
13,371 12,769 12,244 10,947 13,574
13,447 12,841 12,284 10,978 13,631
13,533 12,924 12,342 11,016 13,727
13,625 13,012 12,360 11,032 13,745
Jun 13,869 13,245 12,463 11,024 13,993
13,979 13,350 12,507 11,078 14,073
14,225 13,585 12,611 11,117 14,319
14,214 13,574 12,637 11,156 14,358
14,331 13,686 12,678 11,187 14,411
14,191 13,553 12,663 11,202 14,289
Dec 93 14,245 13,604 12,711 11,218 14,366
14,466 13,815 12,810 11,218 14,560
14,123 13,488 12,740 11,250 14,306
13,627 13,013 12,636 11,273 13,953
13,422 12,818 12,603 11,319 13,841
13,329 12,729 12,615 11,327 13,840
Jun 13,250 12,654 12,634 11,327 13,810
13,531 12,922 12,771 11,358 14,084
13,481 12,874 12,808 11,397 14,101
13,277 12,680 12,758 11,435 13,894
13,240 12,644 12,784 11,451 13,882
13,259 12,662 12,792 11,459 13,851
Dec 94 13,177 12,584 12,858 11,498 13,947
13,352 12,751 13,005 11,529 14,223
13,616 13,004 13,175 11,575 14,561
13,688 13,072 13,254 11,607 14,650
13,870 13,246 13,373 11,615 14,855
14,433 13,784 13,624 11,630 15,430
Jun 14,450 13,800 13,704 11,630 15,543
14,393 13,745 13,741 11,676 15,509
14,624 13,966 13,848 11,723 15,696
14,746 14,083 13,938 11,762 15,848
14,957 14,284 14,034 11,801 16,054
15,170 14,487 14,156 11,824 16,295
Dec 95 15,373 14,681 14,276 11,848 16,523
15,448 14,753 14,358 11,848 16,632
15,127 14,446 14,298 11,879 16,343
14,990 14,315 14,298 11,902 16,229
14,880 14,211 14,302 11,942 16,138
14,851 14,182 14,333 11,933 16,105
Jun 15,011 14,335 14,448 11,925 16,321
15,053 14,375 14,503 11,995 16,365
15,007 14,332 14,536 12,034 16,338
15,248 14,561 14,681 12,096 16,622
15,575 14,875 14,859 12,144 16,991
15,817 15,105 14,998 12,167 17,281
Dec 96 15,717 15,010 14,982 12,174 17,121
15,731 15,023 15,045 12,197 17,174
15,810 15,099 15,103 12,220 17,217
15,641 14,937 15,074 12,259 17,026
15,814 15,103 15,200 12,299 17,281
15,957 15,239 15,303 12,322 17,445
Jun 16,131 15,405 15,420 12,322 17,653
16,545 15,801 15,634 12,361 18,129
16,401 15,663 15,620 12,400 17,975
16,610 15,862 15,754 12,431 18,241
16,821 16,064 15,875 12,446 18,506
16,869 16,110 15,940 12,438 18,591
Dec 97 17,019 16,254 16,050 12,453 18,779
17,196 16,423 16,168 12,477 19,019
17,184 16,411 16,202 12,500 19,004
17,226 16,451 16,268 12,524 19,068
17,300 16,521 16,349 12,547 19,168
17,426 16,642 16,451 12,569 19,350
Jun 17,536 16,747 16,535 12,584 19,514
17,562 16,772 16,590 12,599 19,555
17,611 16,819 16,697 12,615 19,874
17,810 17,009 16,902 12,630 20,339
17,703 16,907 16,895 12,661 20,231
17,907 17,101 16,993 12,661 20,346
Dec 98 17,918 17,111 17,049 12,653 20,407
18,056 17,243 17,148 12,684 20,552
19,859 19,055 17,075 12,699 20,193
19,979 19,170 27,170 12,737 20,304
25,649 24,238 46,659 12,895 30,769
(1) Index total returns were calculated from 7/31/90 to 4/30/99. The Standard & Poor's 500
Composite Index (S&P 500) represents an unmanaged weighted index of 500 industrial,
transportation, utility, and financial companies widely regarded by investors as
representative of the stock market. The Russell 2000 Index represents the smallest 2000
companies followed by Russell and is used to measure the small-cap market. 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 investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment of all
dividends/distributions by the shareholder.
The Fund's performance would have been lower had the Advisor not waived a portion of its
fees and the Fund's custodian had not allowed its fees to be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than that indicated
by the lines shown on the left for the Class A Shares, based on the differences in sales
loads and fees paid by Class B and Class S shareholders.
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 4/30/99
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JULY 18, 1990)
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 13.73% -11.74% 10.93% 11.32%
Fund (adjusted for the maximum 5.5% sales charge) 7.20% -16.60% 9.67% 10.60%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% 26.88% 19.25%
Russell 2000 Index(1) 15.16% -9.25% 13.02% 13.71%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 13.30% -12.50% N/A 11.34%
Fund (adjusted for the maximum contingent deferred sales charge) 8.54% -16.18% N/A 11.20%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% N/A 28.15%
Russell 2000 Index(1) 15.16% -9.25% N/A 14.57%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 13.30% -12.50% N/A 11.34%
Fund (adjusted for the maximum contingent deferred sales charge) 8.54% -16.18% N/A 11.20%
Standard & Poor's 500 Composite Index(1) 22.32% 21.82% N/A 28.15%
Russell 2000 Index(1) 15.16% -9.25% N/A 14.57%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
ELECTRICAL EQUIPMENT 3%
COMPUTER STOCKS 29%
HEALTH CARE 14%
ELECTRONICS/SEMICONDUCTORS 9%
BUSINESS SERVICES 6%
FINANCIAL SERVICES 9%
TRANSPORTATION 5%
CONSUMER STOCKS 10%
MEDIA 3%
UTILITIES/TELECOM 7%
OTHER 5%
The Emerging Growth Fund had extremely strong performance during the last three
months of 1998, due primarily to the overweight positions in technology and
healthcare companies, which we believed represented significant value. An
underweight position in energy also contributed to the Fund's outperformance
during that period. Beginning in 1999, the Fund gave up some gains particularly
in the positions in software and healthcare companies. Additionally, the Fund's
underweighted position in momentum, high P/E (including Internet) stocks hurt
relative performance.
Utilities and energy were strong sectors in the first quarter, both of which we
have underweighted due to the lack of long-term fundamentals for growth.
Healthcare was the main source of trouble for small-cap stocks in general, as
that sector dropped significantly during the quarter. The Emerging Growth Fund
was also weighed down by the underperformance of healthcare stocks.
Small-cap software stocks were also under pressure during the first quarter,
turning in negative overall performance. This was due largely to the uncertainty
generated by Y2K issues and the resulting corporate spending over the coming
year. Although software has been a drag on performance this quarter, primarily
due to negative investor sentiment, our outlook for the long-term remains
optimistic. Many software companies are trading at compelling valuations and we
have used this opportunity to add to our positions, which we feel represent
strong long-term opportunities.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We continue to invest in companies with solid growth opportunities and strong
management teams that we feel will benefit our shareholders over the long term.
In keeping with our strategy to emphasize emerging growth industries, we will
continue to overweight the healthcare and technology sectors. As noted above, we
have added to posi-tions which represent compelling valuations such as software
and services. We remain focused on finding strong long-term investment
opportunities in strong companies that are attractively priced.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Given the extreme weakness of small-cap stocks in recent years, there are many
attractive values in today's marketplace. Small-cap issues have only been
through a handful of such prolonged periods of underperformance. The most
comparable period appears to be in 1990 when small-stock investors had suffered
through seven years of underperformance. In that period, valuations, momentum,
and sentiment were consistent with current conditions. Although past performance
does not predict future results, in 1990, portfolios dedicated to small- and
mid-cap growth issues sustained a six-year period of broad-based outperformance.
One of the key reasons for the strong performance of emerging growth portfolios
from 1990 to 1996 reflected the aftermath of the stock market correction around
the time of the Gulf War. A similar period was reached last October as the
capital markets struggled with the Asian/Latin America currency crises and
leverage at Long Term Capital Management. The market has broadened in recent
months, but only modestly. If the capital markets adjust to more historical
levels, we believe small- and mid-cap stocks have the potential for strong
relative performance.
We are optimistic regarding the investment prospects for small-cap stocks for
1999. Our outlook reflects three fundamental factors, which, collectively,
should allow the group to outperform the broader market averages throughout
1999. These factors include:
(1) Historically discounted valuations -- there can be little doubt that
valuations for small-cap issues sit near historical lows. On a relative basis,
small-cap stocks have only seen valuations this low twice in the past 40 years
(2) The anticipation of relative earnings strength -- the ability for small-cap
stocks to deliver strong earnings growth over the next several years versus
lackluster profits for most larger-cap issues remains critical. With a shift in
market leadership from large-cap stocks, small-cap growth portfolios should be
able to deliver strong relative earnings
(3) A potential liquidity shift to small-cap stocks -- over the past two years,
many funds historically aimed at small-cap investing have migrated into
larger-cap issues in search of liquidity and performance. As earnings growth
within the smaller stocks attracts capital with the attractive prices presently
offered, many stock investors are likely to return to the small-cap arena.
Individually, each of these forces has the potential to effect gains within the
small-cap emerging growth area.
++ Allocation percentages are based on total investment value of the portfolio
as of 4/30/99. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
INTERNATIONAL GROWTH FUND
PORTFOLIO MANAGER:
WARBURG PINCUS ASSET MANAGEMENT, INC.
The following team has been primarily responsible for managing the International
Growth Fund: Richard H. King, Senior Managing Director, joined the firm in 1989
to found the international equity department and has 33 years of investment
experience. Prior to joining Warburg, Mr. King was chief investment officer and
a director of Fiduciary Trust Company International S.A. in London from 1984 to
1988. P. Nicholas Edwards, Managing Director, has 15 years of investment
experience. Prior to joining Warburg, Mr. Edwards was a director and senior Fund
manager at Jardine Fleming Investment Advisers in Tokyo from 1991 to 1995.
Harold W. Ehrlich, CFA, CIC, Managing Director, has 15 years of investment
experience. Prior to joining Warburg, Mr. Ehrlich was a senior vice president,
portfolio manager and analyst at Templeton Investment Counsel Inc. from 1987 to
1995. Vincent J. McBride, Senior Vice President, has 12 years of investment
experience. Prior to joining Warburg, Mr. McBride was an international equity
analyst at Smith Barney Inc. from 1993 to 1994. He also served as international
equity analyst at General Electric Investments from 1992 to 1993 and a portfolio
manager/analyst at United Jersey Bank from 1989 to 1992.
PERFORMANCE REVIEW
For the six months ended April 30, 1999, the WM International Growth had a
return of 13.61% (A shares, not adjusted for sales charge) versus a gain of
17.47% for the Morgan Stanley All Country Excluding the U.S. Index and a gain of
15.44% for the MSCI EAFE Index.(1)
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)+
Fund
(Class A
Fund shares; Morgan
(Class A adjusted Stanley Capital
Shares; not for the International
adjusted for maximum 5.5% EAFE Inflation
sales charge) sales charge) Index(1) (CPI)(1)
- --------------------------------------------------------------------------------
Inception - 7/18/90 $10,000 $ 9,450
9,780 9,242 $10,000 $10,000
8,690 8,212 9,032 10,047
7,760 7,333 7,776 10,102
8,730 8,250 8,989 10,118
8,250 7,796 8,462 10,142
Dec 90 8,150 7,702 8,602 10,196
8,460 7,995 8,883 10,235
9,190 8,685 9,838 10,329
8,630 8,155 9,249 10,416
8,720 8,240 9,343 10,479
8,870 8,382 9,443 10,502
Jun 8,270 7,815 8,751 10,502
8,680 8,203 9,184 10,565
8,700 8,222 8,999 10,581
9,020 8,524 9,509 10,596
9,050 8,552 9,645 10,612
8,800 8,316 9,198 10,644
Dec 91 9,325 8,812 9,675 10,675
9,255 8,746 9,471 10,691
9,124 8,622 9,135 10,722
8,742 8,261 8,535 10,769
8,792 8,308 8,577 10,785
9,214 8,708 9,155 10,817
Jun 8,872 8,384 8,723 10,824
8,540 8,071 8,503 10,840
9,043 8,546 9,039 10,879
8,651 8,175 8,864 10,935
8,279 7,823 8,401 10,950
8,319 7,862 8,483 10,966
Dec 92 8,339 7,881 8,529 11,005
8,359 7,900 8,531 11,028
8,642 8,167 8,791 11,059
9,197 8,691 9,561 11,090
9,833 9,293 10,471 11,129
10,055 9,502 10,695 11,144
Jun 9,894 9,350 10,530 11,137
10,217 96,55 10,901 11,191
10,792 10,199 11,492 11,230
10,762 10,170 11,235 11,270
11,065 10,456 11,584 11,301
10,439 98,65 10,573 11,317
Dec 93 11,037 10,430 11,339 11,333
11,813 11,164 12,301 11,333
11,503 10,870 12,269 11,365
10,933 10,332 11,742 11,388
11,265 10,645 12,244 11,435
11,296 10,674 12,176 11,443
Jun 11,120 10,508 12,352 11,443
11,430 10,802 12,473 11,474
11,679 11,036 12,771 11,513
11,296 10,674 12,371 11,552
11,513 10,880 12,785 11,568
11,026 10,420 12,174 11,577
Dec 94 10,892 10,293 12,253 11,616
10,324 97,57 11,785 11,647
10,182 96,22 11,755 11,694
10,368 97,98 12,492 11,725
10,695 10,107 12,965 11,734
10,794 10,200 12,814 11,749
Jun 10,674 10,087 12,592 11,749
11,143 10,530 13,379 11,796
11,001 10,396 12,872 11,843
11,088 10,478 13,127 11,882
10,859 10,262 12,777 11,921
10,968 10,365 13,137 11,945
Dec 95 11,422 10,794 13,669 11,969
11,825 11,175 13,727 11,969
11,733 11,088 13,777 12,000
11,837 11,186 14,073 12,024
12,009 11,349 14,485 12,064
11,963 11,305 14,222 12,055
Jun 12,078 11,414 14,306 12,047
11,503 10,870 13,891 12,118
11,641 11,001 13,924 12,157
11,906 11,251 14,297 12,220
11,825 11,174 14,154 12,268
12,355 11,675 14,720 12,291
Dec 96 12,338 11,660 14,535 12,298
12,398 11,716 14,029 12,322
12,503 11,815 14,262 12,345
12,409 11,727 14,318 12,385
12,598 11,905 14,396 12,424
13,387 12,650 15,336 12,448
Jun 13,951 13,184 16,186 12,448
14,423 13,630 16,452 12,488
13,199 12,473 15,226 12,526
13,905 13,140 16,082 12,558
12,363 11,683 14,850 12,573
12,092 11,427 14,701 12,565
Dec 97 12,031 11,370 14,834 12,580
12,123 11,456 15,516 12,604
12,896 12,187 16,515 12,628
13,591 12,844 17,027 12,652
13,933 13,166 17,165 12,675
13,814 13,054 17,086 12,698
Jun 13,368 12,633 17,219 12,713
13,512 12,769 17,398 12,728
11,599 10,961 15,246 12,744
11,035 10,428 14,783 12,759
11,612 10,974 16,328 12,790
12,255 11,581 17,168 12,790
Dec 98 12,523 11,834 17,850 12,782
12,659 11,963 17,802 12,813
12,277 11,602 17,382 12,829
12,742 12,042 18,112 12,868
Apr 99 13,193 12,468 18,849 12,895
(1) Index total returns were calculated from 7/31/90 to 4/30/99. The Morgan
Stanley Capital International EAFE Index includes stock markets of Europe,
Australia, and the Far East weighted by capitalization. EAFE is a
broad-based index of equity markets representing 18 countries. 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 alldividends/distributions
by the shareholder.
The Fund's performance would have been lower had the Fund's custodian not
allowed its fees to be reduced by credits.
+ The performance of the Class B Shares and Class S Shares was different than
that indicated by the lines shown on the left for the Class A Shares, based
on the differences in sales loads and fees paid by Class B and Class S
shareholders.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF 10/31/98
CLASS A SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JULY 18, 1990)
<S> <C> <C> <C> <C>
Fund (not adjusted for sales charge) 13.61% -5.31% 3.21% 3.20%
Fund (adjusted for the maximum 5.5% sales charge) -7.03% -10.53% 2.05% 2.54%
Morgan Stanley Capital International EAFE Index(1) 15.44% 9.81% 9.01% 7.51%
<CAPTION>
CLASS B SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 13.02% -6.23% N/A 2.80%
Fund (adjusted for the maximum contingent deferred sales charge) -8.02% -10.73% N/A 2.64%
Morgan Stanley Capital International EAFE Index(1) 15.44% 9.81% N/A 9.14%
<CAPTION>
CLASS S SHARES SIX MONTH 1 YEAR 5 YEAR* SINCE INCEPTION*
(JUNE 30, 1994)
<S> <C> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 13.22% -6.09% N/A 2.81%
Fund (adjusted for the maximum contingent deferred sales charge) 8.22% -10.60% N/A 2.64%
Morgan Stanley Capital International EAFE Index(1) 15.44% 9.81% N/A 9.14%
*Annualized
</TABLE>
PORTFOLIO COMPOSITION++
CANADA 3%
OTHER ASIA 6%
JAPAN 26%
UNITED KINGDOM 12%
FRANCE 8%
ITALY 9%
OTHER EUROPE 29%
AUSTRALIA 1%
AFRICA & MID-EAST 3%
CASH EQUIVALENT 3%
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX- MONTH PERIOD ENDED APRIL 30, 1999, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
The six-month period was almost uniformly positive for foreign stock markets,
reflecting a worldwide easing of monetary policy in the wake of last summer's
global financial market turmoil. Latin American markets had impressive gains,
fueled by declining fears over Brazil's financial weakness. Asian/Pacific
markets also showed strength, reflecting investor optimism as the region's
financial crisis subsided -- this positive sentiment extended to Japan, whose
market was helped by favorable investor reaction to a wave of corporate
restructuring news. Most European markets, meanwhile, had solid performance,
buoyed by the successful launch of the European Monetary Union on January 1 and
by a continued supportive interest-rate and inflation backdrop (these markets
had less-impressive results in dollar terms, as most European currencies
weakened versus the U.S. Dollar).
Against this backdrop, the Fund had a solid return in absolute terms, though it
lagged its benchmark for the six months. Positive contributors to the Fund's
performance included good showings from a number of its holdings, as well as its
increased weighting in Japan. That proved to be a timely allocation, given the
Japanese market's significant advance. The major force weighing on the Fund was
the surprising weakness in European currencies, particularly the euro, which
declined nearly 10% versus the U.S. Dollar during the period. European stocks
represented the majority of the Fund's assets through the six months, and the
currency-translation loss (the Fund's exposure was unhedged) reduced the
local-currency share-price gains generated by the Fund.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We made a few noteworthy changes to the Fund during the period in terms of its
regional exposure. Most notably, we lowered our weighting in Europe, from
roughly 70% of the Fund at the start of the period to about a 59% weighting on
April 30, 1999. This reflected both stock-specific decisions and top-down
considerations (e.g., because we believe that interest-rate convergence, a major
factor supporting European stocks over the last three years, will provide far
less of a tailwind going forward). We continue to find strength in Europe, given
the launch of EMU and the prospects for a significant increase in restructuring
and merger/acquisition activity.
As noted, we raised our position in Japan. While the country's economy remains
stagnant, we believe the seeds for recovery have been sown thanks to some
pro-growth government policies and to Japan's apparent commitment to corporate
restructuring. Our specific focuses here throughout the period were on
technology, consumer-finance, telecommunications, and banking companies.
Elsewhere, we modestly raised our exposure to emerging markets late in the
period, as we were encouraged by the less-than-feared impact Brazil was having
on worldwide financial markets and by central banks' efforts to keep global
growth in positive territory. In this context, we added several Asian stocks
(mostly from South Korea), including local financial companies as well as more
globally oriented technology names. We had no exposure to Latin America at the
end of the period since we view valuations as relatively expensive from a risk
versus reward perspective. We will, however, continue to closely monitor the
region for buying opportunities.
With respect to hedging strategies, the Fund's currency exposure was unhedged at
the end of the period, a stance we expect to maintain until we develop a
particularly strong view on either of the major currencies in question, the euro
or the yen. As it stands currently, we expect both currencies to trade within
relatively confined ranges over the near term, hence we see little advantage to
hedging. We continue to closely monitor the actions of both the European Central
Bank and the Bank of Japan as well as all other relevant variables, and will not
hesitate to take defensive measures if it appears either currency is likely to
weaken against the Dollar.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
It is now clear that European economic growth, in aggregate, is going to be far
less vibrant in 1999 than had originally been predicted. Profit growth, while
still healthy, appears likely to slow relative to 1998, and the general trend in
analysts' earnings revisions remains downward. However, we still are finding
strong investment opportunities in Europe and will continue to weight the Fund
in equities of the region.
In Asia, we are looking again to Japan, with our outlook being cautiously
optimistic. Positive signs in Japan stem from the many restructuring plans that
have been announced by Japanese businesses in recent months, which are very
significant to the mindset of the Japanese. Assuming the trend continues, and
the restructuring measures are legitimate and faithfully carried out, prospects
should improve. Conversely, the economy remains extremely weak, as does the
general outlook for corporate profits, and the chances of an imminent recovery
in either appear slight. All things considered, we do not expect to take a much
more aggressive long-term stance in terms of our weighting until some of these
questions have been answered.
++ Allocation percentages are based on total investment value of the portfolio
as of 4/30/99.
<PAGE>
<TABLE>
STATEMENTS of ASSETS and LIABILITIES
WM GROUP OF FUNDS
APRIL 30, 1999 (UNAUDITED)
<CAPTION>
CALIFORNIA
SHORT TERM U.S. INSURED
TARGET HIGH HIGH GOVERNMENT INTERMEDIATE
MATURITY YIELD QUALITY SECURITIES INCOME MUNICIPAL
2002 FUND FUND BOND FUND FUND FUND FUND
---------- ----------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (See
portfolios of investments):
Securities .............. $2,076,721 $50,489,656 $152,161,584 $429,689,984 $325,655,645 $ 70,033,821
Repurchase Agreements ... -- 2,197,000 1,099,000 9,833,000 -- --
---------- ----------- ------------ ------------ ------------ ------------
Total Investments (a) . 2,076,721 52,686,656 153,260,584 439,522,984 325,655,645 70,033,821
Cash and/or foreign
currency (b) ............ -- 322 -- 66,659 -- 15,226
Net unrealized
appreciation of forward
foreign currency
contracts (See portfolios
of investments) ......... -- 956 -- -- -- --
Variation margin .......... -- -- 56,547 -- -- --
Dividends and/or interest
receivable .............. -- 939,463 2,584,977 3,221,971 5,506,744 966,934
Receivable for Fund shares
sold .................... -- 417,154 103,019 3,728,577 1,477,818 552,366
Receivable for investment
securities sold ......... -- -- 570,619 -- 1,792,489 501,948
Unamortized organization
costs ................... 10,776 -- -- -- -- --
Receivable from
investment advisor ........ 5,443 -- -- -- -- --
Prepaid expenses and
other assets ............ 31 140 7,079 24,473 3,124 735
---------- ----------- ------------ ------------ ------------ ------------
Total Assets .......... 2,092,971 54,044,691 156,582,825 446,564,664 334,435,820 72,071,030
---------- ----------- ------------ ------------ ------------ ------------
LIABILITIES:
Net unrealized depreciation
of forward foreign
currency contracts (See
portfolios of
investments) ............ -- -- -- -- -- --
Payable for Fund shares
redeemed ................ -- 53,038 -- 947,082 845,132 249,855
Payable for when-issued
securities .............. -- -- -- -- -- 1,727,571
Payable for investment
securities purchased .... -- 1,560,000 -- -- 5,454 953,694
Varation margin ........... -- -- -- -- -- 88,212
Investment advisory fee
payable ................. -- 7,861 60,856 73,667 107,218 39,978
Shareholder servicing and
distribution fees
payable ................. 418 8,512 28,202 116,284 89,244 33,149
Dividends ................. -- 52,284 -- 441,809 430,134 58,564
Due to custodian .......... 72,133 -- 1,117,087 -- 1,632,113 --
Accrued printing and
postage fees ............ 736 1,323 24,068 61,017 58,474 4,547
Accrued expenses and
other payables .......... 13,207 13,227 152,233 199,562 149,614 24,288
---------- ----------- ------------ ------------ ------------ ------------
Total Liabilities ..... 86,494 1,696,245 1,382,446 1,839,421 3,317,383 3,179,858
---------- ----------- ------------ ------------ ------------ ------------
NET ASSETS ................ $2,006,477 $52,348,446 $155,200,379 $444,725,243 $331,118,437 $ 68,891,172
========== =========== ============ ============ ============ ============
- ----------------
(a) Investments, at cost .. $2,017,320 $52,620,740 $153,014,567 $435,761,580 $314,349,711 $ 66,752,892
========== =========== ============ ============ ============ ============
(b) Cash and/or foreign
currency, at cost ..... $ -- $ 322 $ -- $ 66,659 $ -- $ 15,226
========== =========== ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLORIDA
CALIFORNIA INSURED TAX-EXEMPT BOND & GROWTH & EMERGING INTERNATIONAL
MUNICIPAL MUNICIPAL BOND STOCK INCOME GROWTH NORTHWEST GROWTH GROWTH
FUND FUND FUND FUND FUND FUND FUND FUND FUND
------------ ----------- ------------ ------------ -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$414,304,828 $25,379,706 $337,251,841 $366,082,300 $1,311,993,934 $634,770,798 $355,693,043 $109,076,108 $134,744,144
-- -- -- 783,000 14,559,000 -- 12,147,000 -- 5,963,000
------------ ----------- ------------ ------------ -------------- ------------ ------------ ------------ ------------
414,304,828 25,379,706 337,251,841 366,865,300 1,326,552,934 634,770,798 367,840,043 109,076,108 140,707,144
-- -- 53,130 1,045,711 -- 101,886 -- -- --
-- -- -- -- -- 2,177,624 -- -- --
-- -- -- -- -- -- -- -- --
6,321,816 307,709 5,047,801 2,073,691 888,274 78,083 72,179 222,226 648,146
5,889,127 444,313 309,267 1,162,348 3,835,613 5,096,892 694,802 7,276 204,499
5,303,466 147,454 50,643 5,115,987 4,178,026 8,109,814 895,250 1,096,496 3,616
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
14,297 263 3,962 4,676 9,729 9,894 3,843 2,275 1,956
------------ ----------- ------------ ------------ -------------- ------------ ------------ ------------ ------------
431,833,534 26,279,445 342,716,644 376,267,713 1,335,464,576 650,344,991 369,506,117 110,404,381 141,565,361
------------ ----------- ------------ ------------ -------------- ------------ ------------ ------------ ------------
-- -- -- -- -- -- -- -- 4,901
49,780 6,001 759,034 968,835 1,472,668 571,595 909,953 211,293 47,994
-- 2,042,723 -- -- -- -- -- -- --
9,054,922 1,725,016 19,428,566 4,266,504 -- 16,068,757 2,735,556 323,700 1,044,349
690,625 -- 121,719 -- -- -- -- -- --
256,037 6,406 127,313 176,300 598,435 352,114 183,182 79,133 114,850
141,921 9,305 79,953 124,569 305,547 147,612 110,812 38,273 14,331
-- 37,473 391,744 -- -- -- -- -- --
110,118 24,054 -- -- 63,855 -- 304,057 185,297 724,150
24,194 1,801 23,569 48,375 144,198 84,362 75,752 75,110 26,247
108,821 22,482 56,394 47,089 455,415 191,091 52,378 51,049 46,691
------------ ----------- ------------ ------------ -------------- ------------ ------------ ------------ ------------
10,436,418 3,875,261 20,988,292 5,631,672 3,040,118 17,415,531 4,371,690 963,855 2,023,513
------------ ----------- ------------ ------------ -------------- ------------ ------------ ------------ ------------
$421,397,116 $22,404,184 $321,728,352 $370,636,041 $1,332,424,458 $632,929,460 $365,134,427 $109,440,526 $139,541,848
============ =========== ============ ============ ============== ============ ============ ============ ============
$389,859,030 $23,673,350 $308,698,803 $313,079,052 $ 967,285,975 $465,466,585 $236,294,083 $105,052,175 $125,586,265
============ =========== ============ ============ ============== ============ ============ ============ ============
$ -- $ -- $ 53,130 $ 1,045,711 $ -- $ 101,088 $ -- $ -- $ --
============ =========== ============ ============ ============== ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of ASSETS and LIABILITIES (continued)
WM GROUP OF FUNDS
APRIL 30, 1999 (UNAUDITED)
<CAPTION>
CALIFORNIA
SHORT TERM U.S. INSURED
TARGET HIGH HIGH GOVERNMENT INTERMEDIATE
MATURITY YIELD QUALITY SECURITIES INCOME MUNICIPAL
2002 FUND FUND BOND FUND FUND FUND FUND
---------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net
investment income/
(accumulated net
investment loss/
distributions in excess
of net investment
income) ................. $ 36,185 $ (6,644) $ 35,130 $ (360,718) $ (14,407) $ 13,728
Accumulated net realized
gain/(loss) on
investments sold,
futures contracts,
closed written options,
forward foreign currency
contracts and foreign
currency transactions ... 19,645 (293,290) (1,882,711) (68,454,591) (31,017,793) 350,919
Net unrealized appreciation
of investments, foreign
currency, futures
contracts, forward
foreign currency
contracts and other
assets and liabilities .. 59,401 66,121 243,729 3,761,404 11,305,934 3,250,414
Paid-in capital ........... 1,891,246 52,582,259 156,804,231 509,779,148 350,844,703 65,276,111
---------- ----------- ------------ ------------ ------------ ------------
Total Net Assets ...... $2,006,477 $52,348,446 $155,200,379 $444,725,243 $331,118,437 $ 68,891,172
========== =========== ============ ============ ============ ============
NET ASSETS:
Class A Shares ............ $2,006,477 $ 4,323,484 $113,773,330 $337,867,394 $276,228,991 $ 37,561,842
========== =========== ============ ============ ============ ============
Class B Shares ............ -- $10,371,376 $ 3,950,450 $ 54,527,971 $ 40,241,792 $ 31,326,325
========== =========== ============ ============ ============ ============
Class S Shares ............ -- $ 22,901 $ 1,299,044 $ 3,965,924 $ 1,358,799 $ 1,814
========== =========== ============ ============ ============ ============
Class I Shares ............ -- $37,630,685 $ 36,177,555 $ 48,363,954 $ 13,288,855 $ 1,191
========== =========== ============ ============ ============ ============
SHARES OUTSTANDING:
Class A Shares ............ 192,000 469,664 48,894,812 31,231,697 29,581,921 3,499,979
========== =========== ============ ============ ============ ============
Class B Shares ............ -- 1,118,920 1,698,699 5,044,079 4,302,814 2,919,062
========== =========== ============ ============ ============ ============
Class S Shares ............ -- 2,471 558,556 366,421 145,318 169
========== =========== ============ ============ ============ ============
Class I Shares ............ -- 4,090,077 15,552,228 4,468,760 1,422,687 111
========== =========== ============ ============ ============ ============
CLASS A SHARES:
Net asset value per
share of beneficial
interest outstanding* ... $10.45 $9.21 $2.33 $10.82 $9.34 $10.73
========== =========== ============ ============ ============ ============
Maximum sales charge ...... 2.00% 4.50% 3.50% 4.50% 4.50% 4.50%
========== =========== ============ ============ ============ ============
Maximum offering price per
share of beneficial
interest outstanding ...... $10.66 $9.64 $2.41 $11.33 $9.78 $11.24
========== =========== ============ ============ ============ ============
CLASS B SHARES:
Net asset value and
offering price per
share of beneficial
interest outstanding* ... -- $9.27 $2.33 $10.81 $9.35 $ 10.73
========== =========== ============ ============ ============ ============
CLASS S SHARES:
Net asset value and
offering price per
share of beneficial
interest outstanding* ... -- $9.27 $2.33 $10.82 $9.35 $10.73
========== =========== ============ ============ ============ ============
CLASS I SHARES:
Net asset value, offering
and redemption price
per share of beneficial
interest outstanding .... -- $9.20 $2.33 $10.82 $9.34 $10.73
========== =========== ============ ============ ============ ============
- --------------
* Redemption price per share is equal to net asset value per share less any applicable contingent deferred sales charge.
** Represents most recent offering price.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLORIDA
CALIFORNIA INSURED TAX-EXEMPT BOND & GROWTH & EMERGING INTERNATIONAL
MUNICIPAL MUNICIPAL BOND STOCK INCOME GROWTH NORTHWEST GROWTH GROWTH
FUND FUND FUND FUND FUND FUND FUND FUND FUND
- -------------- ------------ ------------- ------------ -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 25,455 $ 17,178 $ 79,147 $ 958,185 $ 38,795 $(1,359,758) $ (460,045) $ (644,181) $ 2,021,877
2,008,297 (1,991,226) 1,482,875 18,285,981 17,886,431 100,821,065 43,970,730 10,851,523 (18,915,203)
23,961,169 1,706,356 28,471,300 53,786,248 359,266,959 171,477,897 131,545,960 4,023,486 15,118,745
395,402,195 22,671,876 291,695,030 297,605,627 955,232,273 361,990,256 190,077,782 95,209,698 141,316,429
------------ ----------- ------------ ------------ -------------- ------------ ------------ ------------ ------------
$421,397,116 $22,404,184 $321,728,352 $370,636,041 $1,332,424,458 $632,929,460 $365,134,427 $109,440,526 $139,541,848
============ =========== ============ ============ ============== ============ ============ ============ ============
$321,302,652 $14,331,888 $300,232,590 $289,057,835 $ 851,453,306 $273,003,329 $302,488,517 $ 83,780,282 $ 27,523,322
============ =========== ============ ============ ============== ============ ============ ============ ============
$100,086,144 $ 8,069,262 $ 21,493,060 $ 81,537,594 $ 205,272,317 $114,957,544 $ 62,642,156 $ 21,575,657 $ 3,689,603
============ =========== ============ ============ ============== ============ ============ ============ ============
$ 7,075 $ 1,797 $ 1,475 $ 40,612 $ 11,650,681 $ 15,193,051 $ 3,754 $ 4,084,587 $ 6,797,270
============ =========== ============ ============ ============== ============ ============ ============ ============
$ 1,245 $ 1,237 $ 1,227 -- $ 264,048,154 $229,775,536 -- -- $101,531,653
============ =========== ============ ============ ============== ============ ============ ============ ============
28,386,797 1,379,153 37,431,391 18,849,178 34,309,556 10,418,384 10,902,575 5,355,369 2,853,217
============ =========== ============ ============ ============== ============ ============ ============ ============
8,842,816 776,537 2,679,924 5,341,435 8,378,022 4,583,731 2,350,984 1,446,233 389,908
============ =========== ============ ============ ============== ============ ============ ============ ============
625 173 184 2,686 475,243 606,654 144 273,702 711,260
============ =========== ============ ============ ============== ============ ============ ============ ============
110 119 153 -- 10,619,500 8,689,795 -- -- 10,553,141
============ =========== ============ ============ ============== ============ ============ ============ ============
$11.32 $10.39 $8.02 $15.34 $24.82 $26.20 $27.74 $15.64 $9.65
============ =========== ============ ============ ============== ============ ============ ============ ============
4.50% 4.50% 4.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50%
============ =========== ============ ============ ============== ============ ============ ============ ============
$11.85 $10.88 $8.40 $16.23 $26.26 $27.72 $29.35 $16.55 $10.21
============ =========== ============ ============ ============== ============ ============ ============ ============
$11.32 $10.39 $8.02 $15.27 $24.50 $25.08 $26.65 $14.92 $9.46
============ =========== ============ ============ ============== ============ ============ ============ ============
$11.32 $10.39 $8.02 $15.12 $24.52 $25.04 $26.07 $14.92 $9.56
============ =========== ============ ============ ============== ============ ============ ============ ============
$11.32 $10.39 $8.02 -- $24.86 $26.44 -- $15.16** $9.62
============ =========== ============ ============ ============== ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of OPERATIONS
WM GROUP OF FUNDS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<CAPTION>
CALIFORNIA
SHORT TERM U.S. INSURED
TARGET HIGH HIGH GOVERNMENT INTERMEDIATE
MATURITY YIELD QUALITY SECURITIES INCOME MUNICIPAL
2002 FUND FUND BOND FUND FUND FUND FUND
---------- ----------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ................. $ -- $ 108,705 $ -- $ -- $ 55,659 $ --
Foreign withholding tax
on dividend income ...... -- -- -- -- -- --
Foreign withholding tax
on interest income ...... -- (4,159) -- -- (9,700) --
Interest .................. 69,123 1,319,237 2,768,670 11,800,742 10,590,929 1,611,547
---------- ----------- ------------ ------------ ------------ ------------
Total investment
income .............. 69,123 1,423,783 2,768,670 11,800,742 10,636,888 1,611,547
---------- ----------- ------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fee ... 2,713 79,790 240,928 929,068 742,571 183,950
Custodian fees ............ 70 1,132 4,925 13,366 2,137 6,715
Legal and audit fees ...... 11,996 17,764 24,619 33,583 23,060 16,904
Amortization of
organization costs ...... 5,878 -- -- -- -- 677
Registration and filing
fees .................... 10,457 22,766 17,452 28,629 30,189 13,467
Printing and postage fees . 3,133 4,426 60,876 206,969 213,943 20,087
Other ..................... 124 2,225 8,123 40,092 22,428 6,922
Shareholder servicing and
distribution fees:
Class A Shares .......... 2,713 13,363 72,035 352,935 285,284 47,166
Class B Shares .......... -- 28,961 18,101 195,005 182,287 136,911
Class S Shares .......... -- 108 6,910 21,854 7,398 9
Transfer agent fees:
Class A Shares .......... 2,069 1,856 54,069 143,551 133,941 7,531
Class B Shares .......... -- 2,308 3,863 18,250 23,703 5,730
Class S Shares .......... -- 30 2,333 6,411 1,923 19
Fees waived and/or expenses
reimbursed by the
investment advisor and/or
distributor ............. (29,592) (79,790) (173,220) (213,833) (34,591) (41,951)
---------- ----------- ------------ ------------ ------------ ------------
Total expenses ........ 9,561 94,939 341,014 1,775,880 1,634,273 404,137
Fees reduced by credits
allowed by the custodian (164) (1,398) (1,282) -- (682) (5,963)
---------- ----------- ------------ ------------ ------------ ------------
Net expenses .......... 9,397 93,541 339,732 1,775,880 1,633,591 398,174
---------- ----------- ------------ ------------ ------------ ------------
NET INVESTMENT INCOME/
(LOSS) .................. 59,726 1,330,242 2,428,938 10,024,862 9,003,297 1,213,373
---------- ----------- ------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS:
Realized gain/(loss) from:
Security transactions ... 19,654 (291,256) (158,061) 1,038,589 (447,565) 363,716
Forward foreign currency
contracts and foreign
currency transactions . -- (2,128) -- -- -- --
Futures contracts ....... -- 102 2,813 (559,066) -- (12,361)
---------- ----------- ------------ ------------ ------------ ------------
Subtotal .............. 19,654 (293,282) (155,248) 479,523 (447,565) 351,355
---------- ----------- ------------ ------------ ------------ ------------
Change in unrealized appreciation/
(depreciation) of:
Securities .............. (124,240) 1,727,062 (292,248) (6,229,817) (2,015,181) (1,089,800)
Forward foreign currency
contracts ............... -- 7,912 -- -- -- --
Foreign currency,
futures contracts
and other assets and
liabilities ........... -- (700) (2,288) -- -- (30,515)
---------- ----------- ------------ ------------ ------------ ------------
Subtotal .............. (124,240) 1,734,274 (294,536) (6,229,817) (2,015,181) (1,120,315)
---------- ----------- ------------ ------------ ------------ ------------
Net realized and
unrealized gain/(loss)
on investments .......... (104,586) 1,440,992 (449,784) (5,750,294) (2,462,746) (768,960)
---------- ----------- ------------ ------------ ------------ ------------
NET INCREASE/ (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .............. $ (44,860) $ 2,771,234 $ 1,979,154 $ 4,274,568 $ 6,540,551 $ 444,413
========== =========== ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLORIDA
CALIFORNIA INSURED TAX-EXEMPT BOND & GROWTH & EMERGING INTERNATIONAL
MUNICIPAL MUNICIPAL BOND STOCK INCOME GROWTH NORTHWEST GROWTH GROWTH
FUND FUND FUND FUND FUND FUND FUND FUND FUND
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ 2,686,318 $ 6,645,494 $ 616,134 $ 1,413,319 $ 446,578 $ 1,600,750
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
-- -- -- -- -- 37,161 -- -- (196,792)
-- -- -- -- -- -- -- -- --
10,714,056 608,597 9,414,029 4,227,094 236,516 592,167 419,373 259,370 144,803
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
10,714,056 608,597 9,414,029 6,913,412 6,882,010 1,245,462 1,832,692 705,948 1,548,761
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
1,022,671 62,035 752,792 1,080,015 2,647,159 1,844,724 1,067,670 648,618 728,660
11,067 2,973 5,599 14,923 10,338 7,569 6,688 6,539 53,853
26,748 15,090 29,461 38,353 78,906 39,962 34,738 48,759 29,198
-- -- -- -- -- -- -- -- --
13,535 20,767 20,190 29,518 77,213 32,936 26,315 19,948 20,041
106,809 10,996 103,856 203,405 533,538 272,784 305,943 326,211 92,241
37,178 8,359 25,747 26,162 31,535 18,291 20,932 10,602 6,769
370,011 27,372 368,455 365,361 1,571,760 203,064 355,723 113,910 36,155
335,881 26,003 98,214 388,451 -- 328,660 285,376 116,084 18,571
36 7 7 202 -- 66,986 2 21,572 35,961
55,095 3,814 61,324 83,104 367,679 129,082 134,076 127,892 47,120
14,206 1,445 5,171 39,119 -- 71,406 55,432 54,020 12,312
28 19 19 20 -- 9,129 1 8,667 8,842
(143,665) (47,323) -- -- (95,354) (416,103) -- (159,910) --
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
1,849,600 131,557 1,470,835 2,268,633 5,222,774 2,608,490 2,292,896 1,342,912 1,089,723
(8,101) (2,687) (1,623) (142) (145) (5,724) (159) (736) --
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
1,841,499 128,870 1,469,212 2,268,491 5,222,629 2,602,766 2,292,737 1,342,176 1,089,723
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
8,872,557 479,727 7,944,817 4,644,921 1,659,381 (1,357,304) (460,045) (636,228) 459,038
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
2,010,608 156,022 2,727,682 19,833,106 21,014,312 101,744,183 44,155,187 12,169,854 (527,443)
-- -- -- -- -- (348,848) -- -- (3,166,959)
-- (3,050) -- -- -- 33,463 -- (140,948) --
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
2,010,608 152,972 2,727,682 19,833,106 21,014,312 101,428,798 44,155,187 12,028,906 (3,694,402)
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
(2,731,861) (377,694) (5,562,365) 15,120,061 226,001,863 112,545,997 58,057,578 5,538,054 19,490,029
-- -- -- -- -- 2,635,284 -- -- 2,295,414
(484,629) -- (81,738) -- -- (3,938) -- (296) (9,512)
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
(3,216,490) (377,694) (5,644,103) 15,120,061 226,001,863 115,177,343 58,057,578 5,537,758 21,775,931
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
(1,205,882) (224,722) (2,916,421) 34,953,167 247,016,175 216,606,141 102,212,765 17,566,664 18,081,529
------------ -------- ---------- ----------- ------------ ------------ ------------ ----------- -----------
$ 7,666,675 $255,005 $5,028,396 $39,598,088 $248,675,556 $215,248,837 $101,752,720 $16,930,436 $18,540,567
============ ======== ========== =========== ============ ============ ============ =========== ===========
</TABLE>
<PAGE>
STATEMENTS of CHANGES in NET assets
WM GROUP OF FUNDS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHORT TERM CALIFORNIA
TARGET HIGH U.S. INSURED
MATURITY HIGH QUALITY GOVERNMENT INTERMEDIATE
2002 YIELD BOND SECURITIES INCOME MUNICIPAL
FUND FUND FUND FUND FUND FUND
-------------- --------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income/
(loss) ................. $ 59,726 $ 1,330,242 $ 2,428,938 $ 10,024,862 $ 9,003,297 $ 1,213,373
Net realized gain/(loss)
on investments sold,
forward foreign currency
contracts,
foreign currency
transactions, and
futures contracts during
the period ............ 19,654 (293,282) (155,248) 479,523 (447,565) 351,355
Net change in unrealized
appreciation/
(depreciation) of
investments, forward
foreign currency
contracts, foreign
currency, futures
contracts and other
assets and liabilities
during the period ..... (124,240) 1,734,274 (294,536) (6,229,817) (2,015,181) (1,120,315)
----------- ------------ ------------- ------------- ------------- ------------
Net increase/(decrease) in
net assets resulting from
operations ............ (44,860) 2,771,234 1,979,154 4,274,568 6,540,551 444,413
Distributions to shareholders from:
Net investment income:
Class A Shares ....... (158,581) (571,699) (1,450,135) (8,114,139) (7,563,707) (812,369)
Class B Shares ...... -- (276,945) (76,358) (949,243) (1,054,020) (401,823)
Class S Shares ...... -- (1,067) (29,474) (108,334) (42,960) (27)
Class I Shares ...... -- (480,250) (885,761) (746,011) (340,610) (22)
Net realized gains on investments:
Class A Shares ...... (40,651) (70,737) -- -- -- (551,842)
Class B Shares ...... -- (24,411) -- -- -- (380,181)
Class S Shares ...... -- (126) -- -- -- (26)
Class I Shares ...... -- (19,594) -- -- -- (17)
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares ........ (134,675) (6,726,764) 81,200,145 76,011,436 64,738,626 1,026,457
Class B Shares ........ -- 7,275,856 242,669 26,410,793 6,337,563 8,073,904
Class S Shares ........ -- (2,051) 549,977 (1,324,860) (249,177) 53
Class I Shares ........ -- 35,451,309 34,782,154 8,893,870 6,068,681 39
----------- ------------ ------------- ------------- ------------- ------------
Net increase/(decrease) in
net assets ............ (378,767) 37,324,755 116,312,371 104,348,080 74,434,947 7,398,559
NET ASSETS:
Beginning of period ..... 2,385,244 15,023,691 38,888,008 340,377,163 256,683,490 61,492,613
----------- ------------ ------------- ------------- ------------- ------------
End of period ........... $ 2,006,477 $ 52,348,446 $ 155,200,379 $ 444,725,243 $ 331,118,437 $ 68,891,172
=========== ============ ============= ============= ============= ============
Undistributed net
investment income/
(accumulated net
investment loss/
distributions in excess
of net investment
income) at end of period $ 36,185 $ (6,644) $ 35,130 $ (360,718) $ (14,407) $ 13,728
=========== ============ ============= ============= ============= ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLORIDA
CALIFORNIA INSURED TAX-EXEMPT BOND & GROWTH & EMERGING INTERNATIONAL
MUNICIPAL MUNICIPAL BOND STOCK INCOME GROWTH NORTHWEST GROWTH GROWTH
FUND FUND FUND FUND FUND FUND FUND FUND FUND
- ------------ ---------- ---------- ---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> > <C> <C>> <C> <C>
$ 8,872,557 $ 479,727 $ 7,944,817 $ 4,644,921 $ 1,659,381 $ (1,357,304) $ (460,045) $ (636,228) $ 459,038
2,010,608 152,972 2,727,682 19,833,106 21,014,312 101,428,798 44,155,187 12,028,906 (3,694,402)
(3,216,490) (377,694) (5,644,103) 15,120,061 226,001,863 115,177,343 58,057,578 5,537,758 21,775,931
- ------------ ----------- ------------ ------------ ------------ ------------ ----------- ----------- ------------
7,666,675 255,005 5,028,396 39,598,088 248,675,556 215,248,837 101,752,720 16,930,436 18,540,567
(7,625,622) (346,419) (7,521,881) (4,217,712) (1,544,455) -- -- -- (910,493)
(1,253,585) (133,000) (422,872) (864,937) -- -- -- -- (103,771)
(131) (34) (32) (453) -- -- -- -- (223,938)
(27) (30) (32) -- (703,039) -- -- -- (3,218,122)
(1,426,220) -- -- (803,910) -- -- -- (14,838,774) (373,169)
(279,536) -- -- (208,366) -- (10,715,680) -- (3,867,191) (45,344)
(35) -- -- (109) -- (4,454,756) -- (743,226) (95,258)
(6) -- -- -- -- (1,204,673) -- (4,308,281) (1,277,014)
(12,516,104)
35,887,614 (1,332,717) 1,775,382 (36,098,077) 188,266,914 81,284,065 (25,788,742) 22,659,933 (5,102,945)
51,146,949 2,091,145 4,360,025 2,805 52,945,781 48,559,820 (1,065,873) (9,823,903) (164,482)
(72) 34 32 273 (3,234,386) (1,751,017) 3,581 2,297,333 (1,249,223)
33 30 32 -- 31,066,892 43,328,751 -- (25,943,679) (5,912,586)
- ------------ ----------- ------------ ------------ ------------ ------------ ----------- ----------- ------------
84,116,037 534,014 3,219,050 (2,592,398) 515,473,263 357,779,243 74,901,686 (17,637,352) (135,778)
337,281,079 21,870,170 318,509,302 373,228,439 816,951,195 275,150,217 290,232,741 127,077,878 139,677,626
- ------------ ----------- ------------ ------------ ------------ ------------ ----------- ----------- ------------
$421,397,116 $22,404,184 $321,728,352 $370,636,041 $1,332,424,458 $632,929,460 $365,134,427 $109,440,526 $139,541,848
============ =========== ============ ============ ============== ============ ============ ============ ============
$ 25,455 $ 17,178 $ 79,147 $ 958,185 $ 38,795 (1,359,758) $ (460,045) $ (644,181) $ 2,021,877
============ =========== ============ ============ ============== ============ ============ ============ ============
</TABLE>
<PAGE>
STATEMENTS of CHANGES in NET assets
WM GROUP OF FUNDS
FOR THE YEAR ENDED OCTOBER 31, 1998
<TABLE>
<CAPTION>
SHORT TERM CALIFORNIA
TARGET HIGH U.S. INSURED
MATURITY HIGH QUALITY GOVERNMENT INTERMEDIATE
2002 YIELD BOND SECURITIES INCOME MUNICIPAL
FUND FUND FUND FUND FUND FUND
-------------- --------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income/
(loss) ................. $ 48,894 $ 598,305 $ 726,414 $ 14,812,357 $ 11,867,176 $ 835,876
Net realized gain/(loss) on
investments sold, forward
foreign currency
contracts, foreign
currency transactions,
and futures contracts
during the period ...... 32,506 107,884 46,436 4,998,746 6,461,709 248,796
Net change in unrealized
appreciation/
(depreciation) of
investments, forward
foreign currency
contracts, foreign
currency, futures
contracts and other
assets and liabilities
during the period ....... 89,659 (1,668,153) 380,029 6,541,683 9,512,086 888,856
--------- ---------- ---------- ------------- ------------- -----------
Net increase/(decrease) in
net assets resulting from
operations ................ 171,059 (961,964) 1,152,879 26,352,786 27,840,971 1,973,528
Distributions to shareholders from:
Net investment income:
Class A Shares ........ -- (499,993) (609,802) (11,608,371) (10,237,430) (563,810)
Class B Shares ....... -- (57,889) (53,647) (762,576) (1,294,669) (272,587)
Class S Shares ....... -- (473) (11,951) (200,327) (63,170) (22)
Class I Shares ....... -- (26,018) (32,624) (2,016,083) (271,907) (18)
Distributions in excess
of net investment income:
Class A Shares ....... -- (11,898) -- -- -- --
Class B Shares ....... -- (1,434) -- -- -- --
Class S Shares ....... -- (11) -- -- -- --
Class I Shares ....... -- (538) -- -- -- --
Net realized gains on investments:
Class A Shares ....... -- -- -- -- -- --
Class B Shares ....... -- -- -- -- -- --
Class S Shares ....... -- -- -- -- -- --
Class I Shares ....... -- -- -- -- -- --
Capital:
Class A Shares ....... -- -- -- -- -- --
Class B Shares ....... -- -- -- -- -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class A Shares ....... (321,663) 12,128,281 (3,182,556) 150,896,689 121,902,271 (1,916,283)
Class B Shares ....... -- 3,034,079 249,247 24,695,898 23,027,651 1,857,862
Class S Shares ....... -- 25,952 (97,582) 5,098,895 1,458,569 22
Class I Shares ....... -- 1,395,597 (1,488,732) 37,514,925 6,765,814 18
--------- ---------- ---------- ------------- ------------ ----------
Net increase/(decrease) in
net assets ............. (150,604) 15,023,691 (4,074,768) 229,971,836 169,128,100 1,078,710
NET ASSETS:
Beginning of period ...... 2,535,848 -- 42,962,776 110,405,327 87,555,390 60,413,903
--------- ---------- ---------- ------------- ------------- -----------
End of period ............ $2,385,244 $15,023,691 $38,888,008 $ 340,377,163 $ 256,683,490 $61,492,613
========== =========== =========== ============= ============= ===========
Undistributed net
investment income/
(accumulated net
investment loss/
distributions in excess
of net investment income)
at end of period ........ $ 135,040 $ (6,925) $ 47,920 $ (467,853) $ (16,407) $ 14,596
========== =========== =========== ============= ============= ===========
- --------------
* The High Yield Fund commenced operations on April 8, 1998.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30. The amounts reported are for the period
July 1, 1998 through October 31, 1998.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31. The amounts reported are for the
period January 1, 1998 through October 31, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLORIDA
CALIFORNIA INSURED TAX-EXEMPT BOND & GROWTH & EMERGING INTERNATIONAL
MUNICIPAL MUNICIPAL BOND STOCK INCOME GROWTH NORTHWEST GROWTH GROWTH
FUND FUND FUND FUND FUND FUND FUND FUND FUND
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 5,312,537 $ 331,990 $ 12,382,951 $ 11,129,718 $ 2,881,849 $ (1,062,629) (686,962) $ (731,032) $ (96,155)
1,118,256 108,099 2,762,769 16,284,537 13,620,241 (548,823) 15,687,952 (693,245) (14,189,103)
2,680,980 190,205 14,926,609 (16,486,272) 46,786,931 (10,235,023) (33,975,835) (28,829,618) (7,200,561)
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
9,111,773 630,294 30,072,329 10,927,983 63,289,021 (11,846,475) (18,974,845) (30,253,895) (21,485,819)
(4,707,679) (258,634) (11,894,595) (9,469,674) (1,675,441) -- -- -- --
(562,047) (72,319) (488,280) (1,454,890) (6,863) -- -- -- --
(100) (24) (37) (899) -- -- -- -- --
(22) (20) (39) -- (599,129) -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- (44,700,817) (35,349,722) -- (48,525,837) -- --
-- -- -- (8,011,754) (6,489,532) -- (8,244,288) -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- (403,517) -- --
-- -- -- -- -- -- (73,872) -- --
(6,121,441) (949,005) 96,159,954 35,961,096 204,140,230 (3,032,635) 50,296,608 (10,392,036) (3,249,877)
14,687,124 904,259 8,527,127 36,372,086 65,990,211 2,756,641 19,623,808 (1,508,977) (105,427)
(505) 24 1,303 31,557 10,374,502 (938,866) -- (1,254,006) (851,874)
22 20 1,075 -- 167,355,560 8,657,383 -- (16,400,862) 4,675,514
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
12,407,125 254,595 122,378,837 19,654,688 467,028,837 (4,403,952) (6,301,943) (59,809,776) (21,017,483)
324,873,954 21,615,575 196,130,465 353,573,751 349,922,358 279,554,169 296,534,684 186,887,654 160,695,109
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 337,281,079 $ 21,870,170 $318,509,302 $373,228,439 $816,951,195 $275,150,217 $290,232,741 $127,077,878 $139,677,626
============= ============ ============ ============ ============ ============ ============ ============ ============
$ 32,263 $ 16,934 $ 79,147 $ 1,396,366 $ 626,908 $ (2,454) $ -- $ (7,953) $ 6,019,163
============= ============ ============ ============ ============ ============ ============ ============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
STATEMENTS of CHANGES in NET assets (continued)
WM GROUP OF FUNDS
FOR THE YEAR ENDED JUNE 30, 1998
SHORT TERM
TARGET HIGH
MATURITY QUALITY
2002 FUND BOND FUND
------------ ------------
Net investment income/(loss) ................... $ 148,042 $ 1,632,211
Net realized gain/(loss) on investments sold,
forward foreign currency contracts, foreign
currency transactions and futures contracts
during the year .............................. 22,489 (214,600)
Net change in unrealized appreciation/
(depreciation) of investments, forward
foreign currency contracts, foreign currency,
futures contracts and other assets and
liabilities during the year .................. 79,878 72,112
------------ ------------
Net increase/(decrease) in net assets resulting
from operations ................................ 250,409 1,489,723
Distributions to shareholders from:
Net investment income:
Class A Shares ............................... (170,981) (1,197,547)
Class B Shares ............................... -- (145,841)
Class S Shares ............................... -- (29,081)
Class I Shares ............................... -- (171,711)
Distributions in excess of investment income:
Class A Shares ............................... -- --
Class B Shares ............................... -- --
Class S Shares ............................... -- --
Class I Shares ............................... -- --
Net realized gains on investments:
Class A Shares ............................... (26,467) --
Class B Shares ............................... -- --
Class S Shares ............................... -- --
Class I Shares ............................... -- --
Capital:
Class A Shares ............................... -- (31,166)
Class B Shares ............................... -- (3,795)
Class S Shares ............................... -- (757)
Class I Shares ............................... -- (4,469)
Net increase/(decrease) in net assets from
Fund share transactions:
Class A Shares ............................... (332,981) 21,970,831
Class B Shares ............................... -- 460,337
Class S Shares ............................... -- 51,136
Class I Shares ............................... -- 345,142
------------ ------------
Net increase/(decrease) in net assets .......... (280,020) 22,732,802
NET ASSETS:
Beginning of year .............................. 2,815,868 20,229,974
------------ ------------
End of year .................................... $ 2,535,848 $ 42,962,776
============ ============
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net investment
income) at end of year ....................... $ 82,227 $ (650)
============ ============
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA
INSURED FLORIDA
INTERMEDIATE CALIFORNIA INSURED EMERGING INTERNATIONAL
MUNICIPAL MUNICIPAL MUNICIPAL GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND FUND
- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 2,670,734 $ 17,231,177 $ 1,156,596 $ (2,552,797) $ (2,822,592) $ 924,661
883,975 8,843,806 484,348 58,434,054 79,122,078 10,921,112
184,266 3,864,365 620,889 33,501,266 (45,805,742) (21,911,580)
- ------------ ------------ ------------ ------------ ------------ ------------
3,738,975 29,939,348 2,261,833 89,382,523 30,493,744 (10,065,807)
(1,873,113) (16,032,716) (954,335) -- -- (1,975,295)
(797,504) (1,238,105) (204,787) -- -- (178,840)
(64) (548) (442) -- -- (317,435)
(53) (50) (53) -- -- (4,405,354)
(57) (9,986) -- -- -- (123,824)
(24) (771) -- -- -- (11,211)
-- -- -- -- -- --
-- -- -- -- -- --
(403,151) (23,641) -- (8,274,234) (8,507,941) (1,992,183)
(200,864) (1,826) -- (2,485,038) (1,627,499) (212,435)
(16) -- -- (1,125,281) (372,058) (403,997)
(10) -- -- (10,259,464) (2,639,418) (4,204,998)
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
(6,761,633) (39,569,128) (7,117,017) (24,983,912) (59,785,251) (14,343,542)
559,381 8,332,257 (200,018) 656,439 (2,364,589) 108,509
80 329 (28,294) (3,717,859) (2,844,853) (905,239)
63 61 53 (42,247,133) (20,847,090) 29,866,956
- ------------ ------------ ------------ ------------ ------------ ------------
(5,737,990) (18,604,776) (6,243,060) (3,053,959) (68,494,955) (9,460,748)
66,151,893 343,478,730 27,858,635 282,608,128 255,382,609 170,155,857
- ------------ ------------ ------------ ------------ ------------ ------------
$ 60,413,903 $324,873,954 $ 21,615,575 $279,554,169 $186,887,654 $160,695,109
============ ============ ============ ============ ============ ============
$ 15,157 $ (6,864) $ 13,135 $ (12,382) $ 161,566 $ 3,597,176
============ ============ ============ ============ ============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets (continued)
WM GROUP OF FUNDS
FOR THE YEAR ENDED OCTOBER 31, 1997
<CAPTION>
BOND & GROWTH &
STOCK INCOME NORTHWEST
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
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 and futures
contracts during the year ................................ 36,021,498 26,629,017 41,408,116
Net change in unrealized appreciation of
investments, forward foreign currency
contracts, foreign currency, futures
contracts 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.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets (continued)
WM GROUP OF FUNDS
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
U.S.
GOVERNMENT TAX-EXEMPT
SECURITIES INCOME BOND
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
Net investment income ...................................... $ 7,263,894 $ 5,669,177 $ 9,648,920
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions and futures
contracts during the year ................................ (493,856) 1,059,244 2,286,826
Net change in unrealized appreciation of
investments, forward foreign currency
contracts, foreign currency, futures
contracts 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 ............................................... 11,141,463 8,648,328 16,206,677
Distributions to shareholders from:
Net investment income:
Class A Shares ......................................... (7,110,859) (5,227,656) (9,381,180)
Class B Shares ......................................... (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 ......................................... (34,875,593) (11,496,316) (21,611,179)
Class B Shares ......................................... 281,357 2,293,277 2,607,483
------------ ------------ ------------
Net decrease in net assets ................................. (30,716,667) (6,223,888) (12,741,318)
NET ASSETS:
Beginning of year .......................................... 141,121,994 93,779,278 208,871,783
------------ ------------ ------------
End of year ................................................ $110,405,327 $ 87,555,390 $196,130,465
============ ============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
TARGET MATURITY 2002 FUND HIGH YIELD FUND (b)
--------------------------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 PERIOD ENDED YEAR ENDED 04/30/99 PERIOD ENDED
(UNAUDITED) 10/31/98(a) 06/30/98 (UNAUDITED) 10/31/98
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ...................................... $ 26,463 $ 13,000 $ 34,948 $ 3,029,510 $11,803,472
Issued as reinvestment of dividends ....... 199,232 -- 196,535 501,995 462,184
Redeemed .................................. (360,370) (334,663) (564,464) (10,258,269) (137,375)
----------- ----------- ----------- ----------- -----------
Net increase/(decrease) ................... $ (134,675) $ (321,663) $ (332,981) $(6,726,764) $12,128,281
=========== =========== =========== =========== ===========
CLASS B:
Sold ...................................... -- -- -- $ 7,701,854 $ 3,075,214
Issued as reinvestment of dividends ....... -- -- -- 140,506 22,719
Redeemed .................................. -- -- -- (566,504) (63,854)
----------- -----------
Net increase .............................. -- -- -- $ 7,275,856 $ 3,034,079
=========== ===========
Sold ...................................... -- -- -- $ -- $ 25,593
Issued as reinvestment of dividends ....... -- -- -- 1,191 359
Redeemed .................................. -- -- -- (3,242) --
----------- -----------
Net increase/(decrease) ................... -- -- -- $ (2,051) $ 25,952
=========== ===========
CLASS I:
Sold ...................................... -- -- -- $35,077,820 $ 1,380,336
Issued as reinvestment of dividends ....... -- -- -- 499,844 26,556
Redeemed .................................. -- -- -- (126,355) (11,295)
----------- -----------
Net increase .............................. -- -- -- $35,451,309 $ 1,395,597
=========== ===========
SHARES
CLASS A:
Sold ...................................... 2,504 1,167 3,257 335,911 1,197,921
Issued as reinvestment of dividends ....... 18,778 -- 18,789 55,659 42,998
Redeemed .................................. (33,931) (29,926) (52,004) (1,148,206) (14,619)
----------- ----------- ----------- ----------- -----------
Net increase/(decrease) ................... (12,649) (28,759) (29,958) (756,636) 1,226,300
=========== =========== =========== =========== ===========
CLASS B:
Sold ...................................... -- -- -- 847,681 322,674
Issued as reinvestment of dividends ....... -- -- -- 15,436 2,484
Redeemed .................................. -- -- -- (62,272) (7,083)
----------- -----------
Net increase .............................. -- -- -- 800,845 318,075
=========== ===========
CLASS S:
Sold ...................................... -- -- -- -- 2,650
Issued as reinvestment of dividends ....... -- -- -- 130 54
Redeemed .................................. -- -- -- (363) --
----------- -----------
Net increase/(decrease) ................... -- -- -- (233) 2,704
=========== ===========
CLASS I:
Sold ...................................... -- -- -- 3,901,102 146,137
Issued as reinvestment of dividends ....... -- -- -- 54,947 2,971
Redeemed .................................. -- -- -- (13,831) (1,249)
----------- -----------
Net increase .............................. -- -- -- 3,942,218 147,859
=========== ===========
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30. The amounts reported are for the period
July 1, 1998 through October 31, 1998.
(b) The High Yield Fund commenced operations on April 8, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
SHORT TERM HIGH QUALITY BOND FUND
-------------------------------------------
SIX MONTHS
ENDED
04/30/99 PERIOD ENDED YEAR ENDED
(UNAUDITED) 10/31/98(a) 06/30/98
------------ ------------ ------------
<S> <C> <C> <C>
AMOUNT
CLASS A:
Sold ................................... $ 7,903,904 $ 394,104 $ 39,093,511
Issued in exchange for Class A shares of
Sierra Trust ......................... -- -- 33,873,483
Issued in exchange for Class A shares of
Griffin Short Term Bond Fund ......... 91,614,250 -- --
Issued as reinvestment of dividends .... 1,197,785 421,928 799,463
Redeemed ............................... (19,515,794) (3,998,588) (51,795,626)
------------ ------------ ------------
Net increase/(decrease) ................ $ 81,200,145 $ (3,182,556) $ 21,970,831
============ ============ ============
CLASS B:
Sold ................................... $ 806,654 $ 574,367 $ 348,662
Issued in exchange for Class B shares of
Sierra Trust ......................... -- -- 1,149,624
Issued in exchange for Class B shares of
Griffin Short Term Bond Fund ......... 419,976 -- --
Issued as reinvestment of dividends .... 57,786 39,967 110,925
Redeemed ............................... (1,041,747) (365,087) (1,148,874)
------------ ------------ ------------
Net increase ........................... $ 242,669 $ 249,247 $ 460,337
============ ============ ============
CLASS S:
Sold ................................... $ 983,060 $ 200 $ 27,837
Issued in exchange for Class S shares of
Sierra Trust ......................... -- -- 568,432
Issued as reinvestment of dividends .... 23,992 8,328 21,221
Redeemed ............................... (457,075) (106,110) (566,354)
------------ ------------ ------------
Net increase/(decrease) ................ $ 549,977 $ (97,582) $ 51,136
============ ============ ============
CLASS I:
Sold ................................... $ 40,020,555 $ 508,910 $ 131,968
Issued in exchange for Class I shares of
Sierra Trust ......................... -- -- 1,470,065
Issued as reinvestment of dividends .... 799,532 -- --
Redeemed ............................... (6,037,933) (1,997,642) (1,256,891)
------------ ------------ ------------
Net increase/(decrease) ................ $ 34,782,154 $ (1,488,732) $ 345,142
============ ============ ============
SHARES
CLASS A:
Sold ................................... 3,338,049 167,245 16,747,592
Issued in exchange for Class A shares of
Sierra Trust ......................... -- -- 14,537,976
Issued in exchange for Class A shares of
Griffin Short Term Bond Fund ......... 39,480,745 -- --
Issued as reinvestment of dividends .... 513,717 180,152 363,171
Redeemed ............................... (8,375,137) (1,710,460) (22,246,314)
------------ ------------ ------------
Net increase/(decrease) ................ 34,957,374 (1,363,063) 9,402,425
============ ============ ============
CLASS B:
Sold ................................... 344,696 245,069 151,031
Issued in exchange for Class B shares of
Sierra Trust ......................... -- -- 493,401
Issued in exchange for Class B shares of
Griffin Short Term Bond Fund ......... 180,972 -- --
Issued as reinvestment of dividends .... 24,766 17,061 47,771
Redeemed ............................... (446,395) (156,010) (494,001)
------------ ------------ ------------
Net increase ........................... 104,039 106,120 198,202
============ ============ ============
CLASS S:
Sold ................................... 420,173 85 12,088
Issued in exchange for Class S shares of
Sierra Trust ......................... -- -- 243,962
Issued as reinvestment of dividends .... 10,281 3,556 9,129
Redeemed ............................... (196,025) (45,552) (243,870)
------------ ------------ ------------
Net increase/(decrease) ................ 234,429 (41,911) 21,309
============ ============ ============
CLASS I:
Sold ................................... 17,115,289 216,632 59,563
Issued in exchange for Class I shares of
Sierra Trust ......................... -- -- 630,929
Issued as reinvestment of dividends .... 342,838 -- --
Redeemed ............................... (2,600,367) (857,694) (540,840)
------------ ------------ ------------
Net increase/(decrease) ................ 14,857,760 (641,062) 149,652
============ ============ ============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
The amounts reported are for the period July 1, 1998 through October 31, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND INCOME FUND
----------------------------------------------- -------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 PERIOD ENDED YEAR ENDED 04/30/99 PERIOD ENDED YEAR ENDED
(UNAUDITED) 10/31/98(a) 12/31/97 (UNAUDITED) 10/31/98(a) 12/31/97
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ....................... $ 13,386,882 $ 10,226,965 $ 4,447,940 $ 18,350,502 $ 26,781,674 $ 11,286,277
Issued in exchange for
Class A shares of
Sierra Trust ............. -- 199,804,185 -- -- 142,588,808 --
Issued in exchange for
Class A shares of
Griffin U.S. Government
Income Fund .............. 100,746,713 -- -- -- -- --
Issued in exchange for
Class A shares of
Griffin Bond Fund ........ -- -- -- 88,439,108 -- --
Issued as reinvestment
of dividends ............. 5,662,658 7,762,789 5,145,658 5,159,001 6,336,890 3,823,083
Redeemed ................... (43,784,817) (66,897,250) (44,469,191) (47,209,985) (53,805,101) (26,605,676)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) .... $ 76,011,436 $ 150,896,689 $ (34,875,593) $ 64,738,626 $ 121,902,271 $ (11,496,316)
============= ============= ============= ============= ============= =============
CLASS B:
Sold ....................... $ 24,642,239 $ 11,302,827 $ 864,913 $ 10,117,616 $ 11,883,309 $ 4,354,889
Issued in exchange for
Class B shares of
Sierra Trust ............. -- 17,545,619 -- -- 17,326,196 --
Issued in exchange for
Class B shares of
Griffin U.S. Government
Income Fund .............. 5,799,302 -- -- -- -- --
Issued in exchange for
Class A shares of
Griffin Bond Fund ........ -- -- -- 573,288 -- --
Issued as reinvestment
of dividends ............. 734,221 529,390 123,880 711,100 848,522 374,440
Redeemed ................... (4,764,969) (4,681,938) (707,436) (5,064,441) (7,030,376) (2,436,052)
------------- ------------- ------------- ------------- ------------- -------------
Net increase ............... $ 26,410,793 $ 24,695,898 $ 281,357 $ 6,337,563 $ 23,027,651 $ 2,293,277
============= ============= ============= ============= ============= =============
CLASS S:
Sold ....................... $ 66,877 $ 97,657 -- $ 35,920 $ 64,835 --
Issued in exchange for
Class S shares of
Sierra Trust ............. -- 7,569,635 -- -- 1,686,388 --
Issued as reinvestment
of dividends ............. 100,344 187,818 -- 35,075 51,094 --
Redeemed ................... (1,492,081) (2,756,215) -- (320,172) (343,748) --
------------- ------------- ------------- -------------
Net increase/(decrease) .... $ (1,324,860) $ 5,098,895 -- $ (249,177) $ 1,458,569 --
============= ============= ============= =============
CLASS I:
Sold ....................... $ 32,150,107 $ 1,897,904 -- $ 6,436,465 $ 1,682,081 --
Issued in exchange for
Class I shares of
Sierra Trust ............. -- 77,055,299 -- -- 6,001,602 --
Issued as reinvestment
of dividends ............. 626,402 -- -- 295,572 -- --
Redeemed ................... (23,882,639) (41,438,278) -- (663,356) (917,869) --
------------- ------------- ------------- -------------
Net increase ............... $ 8,893,870 $ 37,514,925 -- $ 6,068,681 $ 6,765,814 --
============= ============= ============= =============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31. The amounts reported are for the
period January 1, 1998 through October 31, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND INCOME FUND
----------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 PERIOD ENDED YEAR ENDED 04/30/99 PERIOD ENDED YEAR ENDED
(UNAUDITED) 10/31/98(a) 12/31/97 (UNAUDITED) 10/31/98(a) 12/31/97
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
SHARES
CLASS A:
Sold ........................ 1,153,989 937,355 424,259 1,900,305 2,798,947 1,212,967
Issued in exchange for
Class A shares of
Sierra Trust .............. -- 18,833,600 -- -- 16,561,879 --
Issued in exchange for
Class A shares of
Griffin U.S. Government
Income Fund ............... 9,316,736 -- -- -- -- --
Issued in exchange for
Class A shares of
Griffin Bond Fund ......... -- -- -- 9,555,982 -- --
Issued as reinvestment
of dividends .............. 519,806 711,256 489,525 548,573 664,762 413,335
Redeemed .................... (4,018,530) (6,100,043) (4,240,473) (5,016,602) (5,645,131) (2,880,356)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 6,972,001 14,382,168 (3,326,689) 6,988,258 14,380,457 (1,254,054)
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ 2,257,959 1,033,341 81,465 1,071,128 1,248,615 467,109
Issued in exchange for
Class B shares of
Sierra Trust .............. -- 1,655,309 -- -- 2,009,654 --
Issued in exchange for
Class B shares of
Griffin U.S. Government
Income Fund ............... 536,901 -- -- -- -- --
Issued in exchange for
Class B shares of
Griffin Bond Fund ......... -- -- -- 61,849 -- --
Issued as reinvestment
of dividends .............. 67,452 48,455 11,762 75,419 88,864 40,332
Redeemed .................... (437,930) (426,676) (67,110) (536,136) (737,401) (263,592)
------------- ------------- ------------- ------------- ------------- -------------
Net increase ................ 2,424,382 2,310,429 26,117 672,260 2,609,732 243,849
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ 6,116 8,987 -- 3,794 6,828 --
Issued in exchange for
Class S shares of
Sierra Trust .............. -- 714,499 -- -- 195,664 --
Issued as reinvestment
of dividends .............. 9,194 17,192 -- 3,717 5,348 --
Redeemed .................... (136,461) (253,106) -- (33,987) (36,046) --
------------- ------------- ------------- -------------
Net increase/(decrease) ..... (121,151) 487,572 -- (26,476) 171,794 --
============= ============= ============= =============
CLASS I:
Sold ........................ 2,953,307 172,564 -- 684,457 176,652 --
Issued in exchange for
Class I shares of
Sierra Trust .............. -- 7,273,265 -- -- 697,179 --
Issued as reinvestment
of dividends .............. 57,631 -- -- 31,500 -- --
Redeemed .................... (2,176,338) (3,811,669) -- (70,874) (96,227) --
------------- ------------- ------------- -------------
Net increase ................ 834,600 3,634,160 -- 645,083 777,604 --
============= ============= ============= =============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31. The amounts reported are for the
period January 1, 1998 through October 31, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
CALIFORNIA INSURED
INTERMEDIATE MUNICIPAL FUND CALIFORNIA MUNICIPAL FUND
----------------------------------------------- ----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 PERIOD ENDED YEAR ENDED 04/30/99 PERIOD ENDED YEAR ENDED
(UNAUDITED) 10/31/98(a) 06/30/98 (UNAUDITED) 10/31/98(a) 06/30/98
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ........................ $ 3,663,364 $ 703,974 $ 45,133,314 $ 17,557,297 $ 6,565,808 $ 109,366,878
Issued in exchange for
Class A shares of
Griffin California Tax
Free Fund ................. -- -- -- 37,928,445 -- --
Issued as reinvestment
of dividends .............. 1,004,210 372,864 1,692,248 6,049,817 3,068,180 10,168,881
Redeemed .................... (3,641,117) (2,993,121) (53,587,195) (25,647,945) (15,755,429) (159,104,887)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 1,026,457 $ (1,916,283) $ (6,761,633) $ 35,887,614 $ (6,121,441) $ (39,569,128)
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ $ 9,654,091 $ 2,998,917 $ 3,830,587 $ 45,152,292 $ 15,977,261 $ 11,852,598
Issued in exchange for
Class B shares of
Griffin California Tax
Free Fund ................. -- -- -- 8,299,621 -- --
Issued as reinvestment
of dividends .............. 686,910 206,027 785,124 1,261,088 403,939 880,758
Redeemed .................... (2,267,097) (1,347,082) (4,056,330) (3,566,052) (1,694,076) (4,401,099)
------------- ------------- ------------- ------------- ------------- -------------
Net increase ................ $ 8,073,904 $ 1,857,862 $ 559,381 $ 51,146,949 $ 14,687,124 $ 8,332,257
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ $ -- $ -- $ -- $ -- $ -- $ --
Issued as reinvestment
of dividends .............. 53 22 80 166 101 329
Redeemed .................... -- -- -- (238) (606) --
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 53 $ 22 $ 80 $ (72) $ (505) $ 329
------------- ------------- ------------- ------------- ------------- -------------
CLASS I:
Sold ........................ $ -- $ -- $ -- $ -- $ -- $ --
Issued as reinvestment
of dividends .............. 39 18 63 33 22 61
Redeemed .................... -- -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Net increase ................ $ 39 $ 18 $ 63 $ 33 $ 22 $ 61
============= ============= ============= ============= ============= =============
SHARES
CLASS A:
Sold ........................ 337,147 64,616 4,166,073 1,681,238 577,201 9,670,102
Issued in exchange for
Class A shares of
Griffin California Tax
Free Fund ................. -- -- -- 3,337,347 -- --
Issued as reinvestment
of dividends .............. 92,865 34,046 155,891 530,355 268,682 903,373
Redeemed .................... (336,394) (274,458) (4,944,950) (2,250,171) (1,382,174) (14,095,738)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 93,618 (175,796) (622,986) 3,298,769 (536,291) (3,522,263)
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ 891,069 273,439 353,152 3,979,764 1,399,254 1,051,959
Issued in exchange for
Class B shares of
Griffin California Tax
Free Fund ................. -- -- -- 730,865 -- --
Issued as reinvestment
of dividends .............. 63,541 18,811 72,337 110,590 35,356 78,161
Redeemed .................... (210,334) (123,678) (374,167) (312,528) (148,795) (391,417)
------------- ------------- ------------- ------------- ------------- -------------
Net increase ................ 744,276 168,572 51,322 4,508,691 1,285,815 738,703
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ -- -- -- -- -- --
Issued as reinvestment
of dividends .............. 5 2 7 16 8 29
Redeemed .................... -- -- -- (21) (53) --
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 5 2 7 (5) (45) 29
============= ============= ============= ============= ============= =============
CLASS I:
Sold ........................ -- -- -- -- -- --
Issued as reinvestment
of dividends .............. 4 2 6 3 2 6
Redeemed .................... -- -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Net increase ................ 4 2 6 3 2 6
============= ============= ============= ============= ============= =============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30. The amounts reported are for the period
July 1, 1998 through October 31, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
FLORIDA INSURED MUNICIPAL FUND TAX-EXEMPT BOND FUND(a)
----------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 PERIOD ENDED YEAR ENDED 04/30/99 PERIOD ENDED YEAR ENDED
(UNAUDITED) 10/31/98(a) 06/30/98 (UNAUDITED) 10/31/98(b) 12/31/97
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ........................ $ 644,694 $ 147,296 $ 17,026,487 $ 4,258,099 $ 14,111,965 $ 9,139,630
Issued in exchange for
Class A shares of
Sierra Trust .............. -- -- -- -- 131,911,067 --
Issued in exchange for
Class A shares of
Griffin Municipal Bond
Fund ...................... -- -- -- 21,093,435 -- --
Issued as reinvestment
of dividends .............. 165,679 123,333 430,764 5,140,245 7,889,912 7,486,759
Redeemed .................... (2,143,090) (1,219,634) (24,574,268) (28,716,397) (57,752,990) (38,237,568)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ (1,332,717) $ (949,005) $ (7,117,017) $ 1,775,382 $ 96,159,954 $ (21,611,179)
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ $ 2,626,840 $ 1,094,291 $ 1,328,489 $ 5,069,223 $ 4,749,727 $ 3,133,343
Issued in exchange for
Class B shares of
Sierra Trust .............. -- -- -- -- 5,255,068 --
Issued in exchange for
Class B shares of
Griffin Municipal Bond
Fund ...................... -- -- -- 565,513 -- --
Issued as reinvestment
of dividends .............. 86,658 50,148 134,076 325,727 362,204 218,328
Redeemed .................... (622,353) (240,180) (1,662,583) (1,600,438) (1,839,872) (744,188)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 2,091,145 $ 904,259 $ (200,018) $ 4,360,025 $ 8,527,127 $ 2,607,483
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ $ -- $ -- $ -- $ -- $ 2 $ --
Issued in exchange for
Class S shares of
Sierra Trust .............. -- -- -- -- 1,265 --
Issued as reinvestment
of dividends .............. 34 24 358 32 36 --
Redeemed .................... -- -- (28,652) -- --
------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 34 $ 24 $ (28,294) $ 32 $ 1,303 --
============= ============= ============= ============= =============
CLASS I:
Sold ........................ $ -- $ -- $ -- $ -- $ 3 $ --
Issued in exchange for
Class I shares of
Sierra Trust .............. -- -- -- -- 1,035 --
Issued as reinvestment
of dividends .............. 30 20 53 32 37 --
Redeemed .................... -- -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Net increase ................ $ 30 $ 20 $ 53 $ 32 $ 1,075 --
============= ============= ============= ============= =============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30. The amounts reported are for the period
July 1, 1998 through October 31, 1998.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31. The amounts reported are for the
period January 1, 1998 through October 31, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
FLORIDA INSURED MUNICIPAL FUND TAX-EXEMPT BOND FUND
----------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 PERIOD ENDED YEAR ENDED 04/30/99 PERIOD ENDED YEAR ENDED
(UNAUDITED) 10/31/98(a) 06/30/98 (UNAUDITED) 10/31/98(b) 12/31/97
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
SHARES
CLASS A:
Sold ........................ 61,634 14,033 1,660,760 598,788 1,647,687 1,161,023
Issued in exchange for
Class A shares of
Sierra Trust .............. -- -- -- -- 18,330,460 --
Issued in exchange for
Class A shares of
Griffin Municipal Bond
Fund ...................... -- -- -- 2,623,522 -- --
Issued as reinvestment
of dividends .............. 15,843 11,782 41,985 636,917 964,582 951,410
Redeemed .................... (204,663) (117,042) (2,396,458) (3,557,893) (7,066,128) (4,861,387)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... (127,186) (91,227) (693,713) 301,334 13,876,601 (2,748,954)
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ 250,953 104,711 129,041 629,712 585,326 398,272
Issued in exchange for
Class B shares of
Sierra Trust .............. -- -- -- -- 730,248 --
Issued in exchange for
Class B shares of
Griffin Municipal Bond
Fund ...................... -- -- -- 70,316 -- --
Issued as reinvestment
of dividends .............. 8,288 4,792 13,052 40,366 44,887 27,480
Redeemed .................... (59,446) (23,021) (161,939) (198,471) (225,252) (95,335)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 199,795 86,482 (19,846) 541,923 1,135,209 330,417
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ -- -- -- -- 2 --
Issued in exchange for
Class S shares of
Sierra Trust .............. -- -- -- -- 175 --
Issued as reinvestment
of dividends .............. 3 3 36 4 3 --
Redeemed .................... -- -- (2,810) -- -- --
------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 3 3 (2,774) 4 180 --
============= ============= ============= ============= =============
CLASS I:
Sold ........................ -- -- -- -- 1 --
Issued in exchange for
Class I shares of
Sierra Trust .............. -- -- -- -- 144 --
Issued as reinvestment
of dividends .............. 3 2 5 4 4 --
Redeemed .................... -- -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Net increase ................ 3 2 5 4 149 --
============= ============= ============= ============= =============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30. The amounts reported are for the period
July 1, 1998 through October 31, 1998.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31. The amounts reported are for the
period January 1, 1998 through October 31, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
BOND & STOCK FUND GROWTH & INCOME FUND
----------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 YEAR ENDED YEAR ENDED 04/30/99 YEAR ENDED YEAR ENDED
(UNAUDITED) 10/31/98 10/31/97 (UNAUDITED) 10/31/98 10/31/97
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ........................ $ 11,077,443 $ 77,100,034 $ 52,484,804 $ 46,714,505 $ 222,069,018 $ 106,141,702
Issued in exchange for
Class A shares of
Sierra Trust .............. -- -- -- -- 158,740,743 --
Issued in exchange for
Class A shares of
Griffin Growth &
Income Fund ............... -- -- -- 281,276,085 -- --
Issued as reinvestment
of dividends .............. 4,753,295 48,830,627 24,871,733 1,501,078 35,964,668 13,852,602
Redeemed .................... (51,928,815) (89,969,565) (53,158,304) (141,224,754) (212,634,199) (40,759,068)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ (36,098,077) $ 35,961,096 $ 24,198,233 $ 188,266,914 $ 204,140,230 $ 79,235,236
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ $ 10,491,128 $ 39,221,359 $ 22,935,586 $ 20,904,829 $ 36,396,662 $ 22,289,439
Issued in exchange for
Class B shares of
Sierra Trust .............. -- -- -- -- 40,265,726 --
Issued in exchange for
Class B shares of
Griffin Growth &
Income Fund ............... -- -- -- 50,553,133 -- --
Issued as reinvestment
of dividends .............. 1,048,823 8,205,251 2,352,873 -- 6,447,498 1,737,586
Redeemed .................... (11,537,146) (11,054,524) (4,233,922) (18,512,181) (17,119,675) (3,856,814)
------------- ------------- ------------- ------------- ------------- -------------
Net increase ................ $ 2,805 $ 36,372,086 $ 21,054,537 $ 52,945,781 $ 65,990,211 $ 20,170,211
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ $ 13,530 $ 106,558 -- $ 642,459 $ 1,551,469 --
Issued in exchange for
Class S shares of
Sierra Trust .............. -- -- -- -- 11,890,222 --
Issued as reinvestment
of dividends .............. 361 80 -- -- -- --
Redeemed .................... (13,618) (75,081) -- (3,876,845) (3,067,189) --
------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 273 $ 31,557 -- $ (3,234,386) $ 10,374,502 --
============= ============= ============= =============
CLASS I:
Sold ........................ -- -- -- $ 39,851,579 $ 21,232,340 --
Issued in exchange for
Class I shares of
Sierra Trust .............. -- -- -- -- 156,826,637 --
Issued as reinvestment
of dividends .............. -- -- -- 703,039 -- --
Redeemed .................... -- -- -- (9,487,726) (10,703,417) --
------------- -------------
Net increase ................ -- -- -- $ 31,066,892 $ 167,355,560 --
============= =============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
BOND & STOCK FUND GROWTH & INCOME FUND
----------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 YEAR ENDED YEAR ENDED 04/30/99 YEAR ENDED YEAR ENDED
(UNAUDITED) 10/31/98 10/31/97 (UNAUDITED) 10/31/98 10/31/97
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
SHARES
CLASS A:
Sold ........................ 758,727 5,082,555 3,423,606 3,214,542 11,565,737 5,205,714
Issued in exchange for
Class A shares of
Sierra Trust .............. -- -- -- -- 8,901,693 --
Issued in exchange for
Class A shares of
Griffin Growth &
Income Fund ............... -- -- -- 12,108,922 -- --
Issued as reinvestment
of dividends .............. 330,402 3,411,130 1,697,502 65,901 641,460 798,609
Redeemed .................... (3,548,951) (6,215,419) (3,452,180) (6,191,836) (10,275,325) (2,059,919)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... (2,459,822) 2,278,266 1,668,928 9,197,529 10,833,565 3,944,404
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ 746,098 2,650,249 1,491,572 1,068,574 1,991,929 1,165,851
Issued in exchange for
Class B shares of
Sierra Trust .............. -- -- -- -- 2,281,424 --
Issued in exchange for
Class B shares of
Griffin Growth &
Income Fund ............... -- -- -- 2,204,430 -- --
Issued as reinvestment
of dividends .............. 73,213 574,422 160,463 -- 116,619 101,631
Redeemed .................... (815,992) (779,074) (274,187) (815,421) (867,171) (201,009)
------------- ------------- ------------- ------------- ------------- -------------
Net increase ................ 3,319 2,445,597 1,377,848 2,457,583 3,522,801 1,066,473
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ 953 8,164 -- 30,556 73,567 --
Issued in exchange for
Class S shares of
Sierra Trust .............. -- -- -- -- 700,170 --
Issued as reinvestment
of dividends .............. 26 6 -- -- -- --
Redeemed .................... (921) (5,542) -- (174,081) (154,969) --
------------- ------------- ------------- -------------
Net increase/(decrease) ..... 58 2,628 -- (143,525) 618,768 --
============= ============= ============= =============
CLASS I:
Sold ........................ -- -- -- 1,750,543 1,012,389 --
Issued in exchange for
Class I shares of
Sierra Trust .............. -- -- -- -- 8,777,545 --
Issued as reinvestment
of dividends .............. -- -- -- 31,172 -- --
Redeemed .................... -- -- -- (424,243) (527,906) --
------------- -------------
Net increase ................ -- -- -- 1,357,472 9,262,028 --
============= =============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
GROWTH FUND NORTHWEST FUND
----------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 PERIOD ENDED YEAR ENDED 04/30/99 YEAR ENDED YEAR ENDED
(UNAUDITED) 10/31/98(a) 06/30/98 (UNAUDITED) 10/31/98 10/31/97
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ........................ $ 88,139,363 $ 99,386,706 $ 376,606,887 $ 31,487,371 $ 71,928,894 $ 37,595,728
Issued in exchange for
Class A shares of
Griffin Growth Fund ....... 82,224,769 -- -- -- -- --
Issued as reinvestment
of dividends .............. 10,484,224 -- 8,098,957 -- 48,141,885 16,535,329
Redeemed .................... (99,564,291) (102,419,341) (409,689,756) (57,276,113) (69,774,171) (35,788,151)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 81,284,065 $ (3,032,635) $ (24,983,912) $ (25,788,742) $ 50,296,608 $ 18,342,906
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ $ 45,895,582 $ 6,289,271 $ 21,624,274 $ 5,112,658 $ 19,506,022 $ 19,318,236
Issued in exchange for
Class B shares of
Griffin Growth Fund ....... 6,591,595 -- -- -- -- --
Issued as reinvestment
of dividends .............. 4,359,229 -- 2,457,020 -- 8,274,120 1,445,397
Redeemed .................... (8,286,586) (3,532,630) (23,424,855) (6,178,531) (8,156,334) (2,256,041)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 48,559,820 $ 2,756,641 $ 656,439 $ (1,065,873) $ 19,623,808 $ 18,507,592
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ $ 387,774 $ 638,109 $ 1,576,379 $ 3,581 -- --
Issued as reinvestment
of dividends .............. 1,200,444 -- 1,116,531 -- -- --
Redeemed .................... (3,339,235) (1,576,975) (6,410,769) -- -- --
------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ (1,751,017) $ (938,866) $ (3,717,859) $ 3,581 -- --
============= ============= ============= =============
CLASS I:
Sold ........................ $ 36,742,155 $ 14,170,562 $ 24,923,298 -- -- --
Issued as reinvestment
of dividends .............. 12,516,104 -- -- -- -- --
Redeemed .................... (5,929,508) (5,513,179) (67,170,431) -- -- --
------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 43,328,751 $ 8,657,383 $ (42,247,133) -- -- --
============= ============= ============= =============
SHARES
CLASS A:
Sold ........................ 5,102,968 5,653,629 23,228,866 1,228,172 3,162,857 1,637,573
Issued in exchange for
Class A shares of
Griffin Growth Fund ....... 3,548,041 -- -- -- -- --
Issued as reinvestment
of dividends .............. 562,458 -- 590,930 -- 2,054,110 855,423
Redeemed .................... (4,733,482) (5,790,961) (25,206,344) (2,260,393) (3,194,232) (1,553,311)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 4,479,985 (137,332) (1,386,548) (1,032,221) 2,022,735 939,685
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ 2,094,824 373,144 1,368,627 204,980 869,783 836,203
Issued in exchange for
Class B shares of
Griffin Growth Fund ....... 297,415 -- -- -- -- --
Issued as reinvestment
of dividends .............. 244,078 -- 184,877 -- 362,689 74,775
Redeemed .................... (370,896) (208,958) (1,490,854) (252,377) (397,671) (100,926)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 2,265,421 164,186 62,650 (47,397) 834,801 810,052
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ 18,077 37,098 104,482 144 -- --
Issued as reinvestment
of dividends .............. 67,214 -- 83,953 -- -- --
Redeemed .................... (164,045) (96,855) (408,947) -- -- --
------------- ------------- ------------- -------------
Net increase/(decrease) ..... (78,754) (59,757) (220,512) 144 -- --
============= ============= ============= =============
CLASS I:
Sold ........................ 1,612,761 795,462 1,783,635 -- -- --
Issued as reinvestment
of dividends .............. 666,459 -- -- -- -- --
Redeemed .................... (310,471) (308,846) (4,048,118) -- -- --
------------- ------------- -------------
Net increase/(decrease) ..... 1,968,749 486,616 (2,264,483) -- -- --
============= ============= =============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30. The numbers reflected are for the period
July 1, 1998 through October 31, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
EMERGING GROWTH FUND INTERNATIONAL GROWTH FUND
----------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
04/30/99 PERIOD ENDED YEAR ENDED 04/30/99 PERIOD ENDED YEAR ENDED
(UNAUDITED) 10/31/98(a) 06/30/98 (UNAUDITED) 10/31/98(a) 06/30/98
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ........................ $ 45,559,136 $ 45,697,143 $ 313,664,566 $ 868,182 $ 407,310 $ 187,840,932
Issued as reinvestment
of dividends .............. 14,648,007 -- 8,402,791 1,259,502 -- 4,018,393
Redeemed .................... (37,547,210) (56,089,179) (381,852,608) (7,230,629) (3,657,187) (206,202,867)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 22,659,933 $ (10,392,036) $ (59,785,251) $ (5,102,945) $ (3,249,877) $ (14,343,542)
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ $ 1,097,510 $ 897,561 $ 14,180,902 $ 345,725 $ 759,141 $ 1,184,200
Issued as reinvestment
of dividends .............. 3,763,564 -- 1,579,773 145,074 -- 390,469
Redeemed .................... (14,684,977) (2,406,538) (18,125,264) (655,281) (864,568) (1,466,160)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ (9,823,903) $ (1,508,977) $ (2,364,589) $ (164,482) $ (105,427) $ 108,509
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ $ 2,345,898 $ 47,525 $ 341,783 $ 362,613 $ 187,031 $ 2,290,224
Issued as reinvestment
of dividends .............. 742,277 -- 370,065 316,165 -- 735,597
Redeemed .................... (790,842) (1,301,531) (3,556,701) (1,928,001) (1,038,905) (3,931,060)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... $ 2,297,333 $ (1,254,006) $ (2,844,853) $ (1,249,223) $ (851,874) $ (905,239)
============= ============= ============= ============= ============= =============
CLASS I:
Sold ........................ $ 15,296,619 $ 352,945 $ 2,367,463 $ 13,205,371 $ 6,040,073 $ 46,484,844
Issued as reinvestment
of dividends .............. 4,308,281 -- -- 4,495,136 -- --
Redeemed .................... (45,548,579) (16,753,807) (23,214,553) (23,613,093) (1,364,559) (16,617,888)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/decrease) ...... $ (25,943,679) $ (16,400,862) $ (20,847,090) $ (5,912,586) $ 4,675,514 $ 29,866,956
============= ============= ============= ============= ============= =============
SHARES
CLASS A:
Sold ........................ 1,299,636 2,576,643 16,007,665 93,635 41,432 18,508,938
Issued as reinvestment
of dividends .............. 951,787 -- 466,974 140,440 -- 438,682
Redeemed .................... (2,343,486) (3,207,380) (19,463,142) (781,744) (393,624) (20,071,107)
------------- ------------- ------------- ------------- ------------- -------------
Net decrease ................ (92,063) (630,737) (2,988,503) (547,669) (352,192) (1,123,487)
============= ============= ============= ============= ============= =============
CLASS B:
Sold ........................ 70,399 56,594 758,262 37,789 75,429 108,136
Issued as reinvestment
of dividends .............. 255,676 -- 90,322 16,430 -- 43,146
Redeemed .................... (295,117) (154,881) (966,584) (71,882) (94,402) (141,350)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 30,958 (98,287) (118,000) (17,663) (18,973) 9,932
============= ============= ============= ============= ============= =============
CLASS S:
Sold ........................ 35,207 2,816 18,531 38,875 19,151 213,909
Issued as reinvestment
of dividends .............. 50,426 -- 21,107 35,483 -- 80,569
Redeemed .................... (51,442) (80,916) (189,249) (210,304) (116,365) (368,556)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/(decrease) ..... 34,191 (78,100) (149,611) (135,946) (97,214) (74,078)
============= ============= ============= ============= ============= =============
CLASS I:
Sold ........................ 887,057 19,660 125,672 1,451,346 642,775 4,334,679
Issued as reinvestment
of dividends .............. 277,774 -- -- 502,812 -- --
Redeemed .................... (1,938,470) (974,867) (1,245,200) (2,563,303) (161,051) (1,736,507)
------------- ------------- ------------- ------------- ------------- -------------
Net increase/decrease) ...... (773,639) (955,207) (1,119,528) (609,145) 481,724 2,598,172
============= ============= ============= ============= ============= =============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30. The numbers reflected are for the period
July 1, 1998 through October 31, 1998.
See Notes to Financial Statements.
</TABLE>
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
<TABLE>
FINANCIAL highlights
TARGET MATURITY 2002 FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------------------- ------------------------------------------
NET ASSET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE, AND UNREALIZED TOTAL FROM FROM NET FROM NET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
------------ -------------- -------------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99 (unaudited) $11.66 $ 0.29++ $(0.51) $(0.22) $(0.79) $(0.20) $(0.99)
10/31/98(a) 10.86 0.23 0.57 0.80 -- -- --
06/30/98 10.69 0.61++ 0.40 1.01 (0.73) (0.11) (0.84)
06/30/97 10.72 0.62++ 0.11 0.73 (0.71) (0.05) (0.76)
06/30/96 10.78 0.63 (0.30) 0.33 (0.39) -- (0.39)
06/30/95(c) 10.00 0.12 0.66 0.78 -- -- --
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The total
return would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor or if fees
had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) The Fund commenced operations on March 20, 1995.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS,
EXPENSES
REIMBURSED
AND/OR FEES
REDUCED BY
RATIO OF OPERATING RATIO OF NET CREDITS
NET ASSET VALUE, NET ASSETS, END OF EXPENSES TO AVERAGE INVESTMENT INCOME TO PORTFOLIO ALLOWED BY
END OF PERIOD TOTAL RETURN+ PERIOD (IN 000'S) NET ASSETS(b) AVERAGE NET ASSETS TURNOVER RATE THE CUSTODIAN
- ---------------- ------------- ------------------ ------------------- -------------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$10.45 (2.01)% $2,006 0.87%* 5.50%* 0% 3.61%*
11.66 7.37% 2,385 0.64%* 5.92%* 0% 1.47%*
10.86 9.78% 2,536 0.62% 5.61% 0% 2.63%
10.69 6.95% 2,816 0.64% 5.80% 0% 2.89%
10.72 2.91% 3,125 0.62% 5.66% 5% 2.55%
10.78 7.80% 2,626 0.74%* 5.22%* 0% 4.71%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
HIGH YIELD FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------------ ----------------------------------------
DISTRIBUTIONS
IN
NET ASSET NET REALIZED DIVIDENDS EXCESS OF
VALUE, AND UNREALIZED TOTAL FROM FROM NET NET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT INVESTMENT TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME DISTRIBUTIONS
------------ ------------ ------------ ------------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $ 8.86 $ 0.45 $ 0.43 $ 0.88 $(0.48) $(0.05) $(0.53)
10/31/98(a) 10.00 0.47 (1.15) (0.68) (0.45) (0.01) (0.46)
CLASS B
04/30/99
(unaudited) 8.90 0.46 0.40 0.86 (0.44) (0.05) (0.49)
10/31/98(a) 10.00 0.42 (1.09) (0.67) (0.42) (0.01) (0.43)
CLASS S
04/30/99
(unaudited) 8.92 0.43 0.41 0.84 (0.44) (0.05) (0.49)
10/31/98(a) 9.61 0.16 (0.67) (0.51) (0.18) (0.00)# (0.18)
CLASS I
04/30/99
(unaudited) 8.85 0.51 0.38 0.89 (0.49) (0.05) (0.54)
10/31/98(a) 10.00 0.22 (1.13) (0.91) (0.23) (0.01) (0.24)
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The total
returns would have been lower if certain fees had not been waived or if fees had not been reduced by credits allowed by the
custodian.
# Amount represents less than $0.01 per share.
(a) On April 8, 1998, May 5, 1998, August 10, 1998 and July 27, 1998 the Fund commenced selling Class A, Class B, Class S and Class
I shares, respectively.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS, OR
FEES
REDUCED BY
RATIO OF OPERATING RATIO OF NET CREDITS
NET ASSET VALUE, NET ASSETS, END OF EXPENSES TO AVERAGE INVESTMENT INCOME TO PORTFOLIO ALLOWED BY
END OF PERIOD TOTAL RETURN+ PERIOD (IN 000'S) NET ASSETS(b) AVERAGE NET ASSETS TURNOVER RATE THE CUSTODIAN
- ---------------- ------------- ------------------ ------------------- -------------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 9.21 10.19% $ 4,323 0.65%* 10.50%* 12% 1.28%*
8.86 (6.90)% 10,861 0.78%* 8.80%* 54% 1.22%*
9.27 9.74% 10,371 1.45%* 9.70%* 12% 2.08%
8.90 (6.33)% 2,830 1.57%* 8.01% 54% 2.02%*
9.27 9.74% 23 1.64%* 9.51%* 12% 2.27%*
8.92 (5.30)% 24 1.51%* 8.07%* 54% 2.18%*
9.20 10.36% 37,631 0.37%* 10.78%* 12% 1.00%*
8.85 (9.13)% 1,309 0.48%* 9.10%* 54% 0.97%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
SHORT TERM HIGH QUALITY BOND FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------- --------------------------------------------------------
NET REALIZED DISTRIBUTIONS
AND IN
NET ASSET UNREALIZED DIVIDENDS EXCESS OF
VALUE, GAIN/(LOSS) TOTAL FROM FROM NET NET DISTRIBUTIONS
BEGINNING OF NET INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT FROM TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME CAPITAL DISTRIBUTIONS
------------ ------------ ----------- --------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $ 2.35 $ 0.06++ $(0.02) $ 0.04 $(0.06) $ -- $ -- $(0.06)
10/31/98(a) 2.32 0.04 0.03 0.07 (0.04) -- -- (0.04)
06/30/98 2.32 0.13 0.00# 0.13 (0.13) -- (0.00)# (0.13)
06/30/97 2.32 0.14 0.00# 0.14 (0.14) -- -- (0.14)
06/30/96 2.35 0.15++ (0.03) 0.12 (0.15) -- (0.00)# (0.15)
06/30/95 2.39 0.08 0.02 0.10 (0.08) (0.06) (0.00)# (0.14)
06/30/94(c) 2.50 0.09 (0.11) (0.02) (0.09) -- -- (0.09)
CLASS B
04/30/99
(unaudited) 2.35 0.05++ (0.02) 0.03 (0.05) -- -- (0.05)
10/31/98(a) 2.32 0.04 0.03 0.07 (0.04) -- -- (0.04)
06/30/98 2.32 0.12 0.00# 0.12 (0.12) -- (0.00)# (0.12)
06/30/97 2.32 0.12 0.00# 0.12 (0.12) -- -- (0.12)
06/30/96 2.35 0.13++ (0.03) 0.10 (0.13) -- (0.00)# (0.13)
06/30/95(c) 2.39 0.06 0.02 0.08 (0.06) (0.06) (0.00)# (0.12)
CLASS S
04/30/99
(unaudited) 2.35 0.05++ (0.02) 0.03 (0.05) -- -- (0.05)
10/31/98(a) 2.32 0.04 0.03 0.07 (0.04) -- -- (0.04)
06/30/98 2.32 0.12 0.00# 0.12 (0.12) -- (0.00)# (0.12)
06/30/97 2.32 0.12 0.00# 0.12 (0.12) -- -- (0.12)
06/30/96 2.35 0.13++ (0.03) 0.10 (0.13) -- (0.00)# (0.13)
06/30/95(c) 2.39 0.06 0.02 0.08 (0.06) (0.06) (0.00)# (0.12)
CLASS I
04/30/99
(unaudited) 2.35 0.06++ (0.02) 0.04 (0.06) -- -- (0.06)
10/31/98(a) 2.32 0.04 0.03 0.07 (0.04) -- -- (0.04)
06/30/98 2.32 0.14 0.00# 0.14 (0.14) -- (0.00)# (0.14)
06/30/97(c) 2.32 0.14 0.00# 0.14 (0.14) -- -- (0.14)
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The total
returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor or if fees
had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On November 1, 1993, July 1, 1994, July 1, 1994 and July 25, 1996 the Fund commenced selling Class A, Class B, Class S and Class
I shares, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS,
EXPENSES
REIMBURSED
AND/OR FEES
REDUCED BY
RATIO OF OPERATING RATIO OF NET CREDITS
NET ASSET VALUE, NET ASSETS, END OF EXPENSES TO AVERAGE INVESTMENT INCOME TO PORTFOLIO ALLOWED BY
END OF PERIOD TOTAL RETURN+ PERIOD (IN 000'S) NET ASSETS(b) AVERAGE NET ASSETS TURNOVER RATE THE CUSTODIAN
- ---------------- ------------- ------------------ ------------------- -------------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 2.33 1.61% $113,773 0.82%* 4.93%* 44% 1.18%*
2.35 3.11% 32,748 0.82%* 5.44%* 19% 1.40%*
2.32 5.19% 35,551 0.86% 5.71% 138% 1.32%
2.32 6.15% 13,685 0.82% 6.50% 51% 1.45%
2.32 5.05% 32,440 0.75% 6.22% 225% 1.42%
2.35 4.42% 43,811 0.75% 6.10% 137% 1.39%
2.39 (0.73)% 21,771 0.00%* 5.70%* 95% 1.61%*
2.33 1.22% 3,950 1.59%* 4.16%* 44% 1.95%*
2.35 2.85% 3,747 1.57%* 4.69%* 19% 2.18%*
2.32 5.13% 3,459 1.61% 4.96% 138% 2.07%
2.32 5.37% 2,994 1.57% 5.75% 51% 2.20%
2.32 4.27% 3,437 1.50% 5.47% 225% 2.17%
2.35 3.64% 3,015 1.50% 5.35% 137% 2.14%
2.33 1.23% 1,299 1.72%* 4.03%* 44% 2.08%*
2.35 2.85% 762 1.57%* 4.69%* 19% 2.08%*
2.32 5.13% 850 1.58% 4.98% 138% 2.05%
2.32 5.37% 800 1.57% 5.75% 51% 2.20%
2.32 4.27% 3,531 1.50% 5.47% 225% 2.17%
2.35 3.64% 2,303 1.50% 5.35% 137% 2.14%
2.33 1.73% 36,178 0.38%* 5.37%* 44% 0.74%*
2.35 3.20% 1,631 0.57%* 5.69%* 19% 0.96%*
2.32 6.17% 3,103 0.53% 6.03% 138% 1.00%
2.32 5.94% 2,752 0.57%* 6.75%* 51% 1.20%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
U.S. GOVERNMENT SECURITIES FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------------ -------------------------------
NET ASSET NET REALIZED
VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME DISTRIBUTIONS
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99 (unaudited) $10.98 $ 0.31++ $(0.16) $ 0.15 $(0.31) $(0.31)
10/31/98(a) 10.84 0.54 0.14 0.68 (0.54) (0.54)
12/31/97 10.46 0.62 0.38 1.00 (0.62) (0.62)
12/31/96 10.84 0.63 (0.38) 0.25 (0.63) (0.63)
12/31/95 9.64 0.63 1.20 1.83 (0.63) (0.63)
12/31/94 10.79 0.63 (1.15) (0.52) (0.63) (0.63)
12/31/93 10.63 0.69 0.16 0.85 (0.69) (0.69)
CLASS B
04/30/99 (unaudited) 10.97 0.27++ (0.16) 0.11 (0.27) (0.27)
10/31/98(a) 10.84 0.47 0.12 0.59 (0.46) (0.46)
12/31/97 10.46 0.54 0.38 0.92 (0.54) (0.54)
12/31/96 10.84 0.54 (0.38) 0.16 (0.54) (0.54)
12/31/95 9.64 0.54 1.20 1.74 (0.54) (0.54)
12/31/94(c) 10.24 0.41 (0.60) (0.19) (0.41) (0.41)
CLASS S
04/30/99 (unaudited) 10.99 0.27++ (0.17) 0.10 (0.27) (0.27)
10/31/98(c) 10.86 0.35 0.13 0.48 (0.35) (0.35)
CLASS I
04/30/99 (unaudited) 10.99 0.32++ (0.17) 0.15 (0.32) (0.32)
10/31/98(c) 10.86 0.42 0.12 0.54 (0.41) (0.41)
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The total
returns would have been lower if certain fees had not been waived by the investment advisor or if fees had not been reduced by
credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On March 30, 1994, March 23, 1998 and March 23, 1998 the Fund commenced selling Class B, Class S and Class I shares
respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO
AVERAGE
NET
ASSETS
WITHOUT
RATIO OF FEE
OPERATING WAIVERS
EXPENSES RATIO OF AND/OR
RATIO OF TO NET FEES
OPERATING AVERAGE INVESTMENT REDUCED
NET EXPENSES NET INCOME BY
NET ASSET ASSETS, TO ASSETS TO CREDITS
VALUE, END OF AVERAGE INCLUDING AVERAGE PORTFOLIO ALLOWED
END OF TOTAL PERIOD NET INTEREST NET TURNOVER BY THE
PERIOD RETURN+ (IN 000'S) ASSETS(b) EXPENSE ASSETS RATE CUSTODIAN
--------- ------- ---------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
$10.82 1.40% $337,867 0.94%* N/A 5.79%* 31% 1.06%*
10.98 6.38% 266,334 0.92%* 1.36%* 5.99%* 12% 1.45%*
10.84 9.92% 107,054 1.05% N/A 5.92% 6% 1.05%
10.46 2.48% 138,159 0.97% N/A 6.01% 16% 0.97%
10.84 19.45% 177,310 1.01% N/A 6.08% 8% 1.01%
9.64 (4.91)% 188,068 0.97% N/A 6.19% 34% 0.97%
10.79 8.12% 268,112 0.99% N/A 6.29% 51% 0.99%
10.81 0.99% 54,528 1.69%* N/A 5.04%* 31% 1.81%*
10.97 5.54% 28,747 1.67%* 2.12%* 5.24%* 12% 2.22%*
10.84 9.03% 3,352 1.84% N/A 5.08% 6% 1.84%
10.46 1.58% 2,963 1.85% N/A 5.14% 16% 1.85%
10.84 18.48% 2,206 1.84% N/A 5.20% 8% 1.84%
9.64 (1.86)% 1,063 1.76%* N/A 5.43%* 34% 1.76%*
10.82 0.89% 3,966 1.89%* N/A 4.84%* 31% 2.01%*
10.99 4.35% 5,357 1.67%* 2.12%* 5.24%* 12% 2.34%*
10.82 1.41% 48,364 0.59%* N/A 6.14%* 31% 0.71%*
10.99 5.00% 39,939 0.66%* 1.10%* 6.25%* 12% 1.11%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
INCOME FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------------ ------------------------------
NET ASSET NET REALIZED
VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME DISTRIBUTIONS
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99 (unaudited) $ 9.44 $ 0.31 $(0.10) $ 0.21 $(0.31) $(0.31)
10/31/98(a) 9.48 0.53 (0.04)# 0.49 (0.53) (0.53)
12/31/97 9.15 0.60 0.33 0.93 (0.60) (0.60)
12/31/96 9.44 0.59 (0.29) 0.30 (0.59) (0.59)
12/31/95 8.29 0.59 1.15 1.74 (0.59) (0.59)
12/31/94 9.33 0.60 (1.04) (0.44) (0.60) (0.60)
12/31/93 8.99 0.61 0.34 0.95 (0.61) (0.61)
CLASS B
04/30/99 (unaudited) 9.45 0.27 (0.10) 0.17 (0.27) (0.27)
10/31/98(a) 9.49 0.46 (0.04)# 0.42 (0.46) (0.46)
12/31/97 9.17 0.53 0.32 0.85 (0.53) (0.53)
12/31/96 9.46 0.52 (0.29) 0.23 (0.52) (0.52)
12/31/95 8.30 0.51 1.16 1.67 (0.51) (0.51)
12/31/94(c) 8.85 0.40 (0.55) (0.15) (0.40) (0.40)
CLASS S
04/30/99 (unaudited) 9.45 0.27 (0.10) 0.17 (0.27) (0.27)
10/31/98(c) 9.58 0.35 (0.13)# 0.22 (0.35) (0.35)
CLASS I
04/30/99 (unaudited) 9.44 0.32 (0.10) 0.22 (0.32) (0.32)
10/31/98(c) 9.57 0.41 (0.13)# 0.28 (0.41) (0.41)
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The total
returns would have been lower if certain fees had not been waived by the investment advisor and distributor or if fees had not
been reduced by credits allowed by the custodian.
# The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing of sales
and redemptions of Fund shares.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On March 30, 1994, March 23, 1998 and March 23, 1998 the Fund commenced selling Class B, Class S and Class I shares,
respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS
WITHOUT FEE
WAIVERS
RATIO OF AND/OR FEES
RATIO OF NET REDUCED BY
NET ASSET NET ASSETS, OPERATING INVESTMENT CREDITS
VALUE, END OF EXPENSES TO INCOME TO PORTFOLIO ALLOWED BY
END OF TOTAL PERIOD (IN AVERAGE NET AVERAGE NET TURNOVER THE
PERIOD RETURN+ 000'S) ASSETS(b) ASSETS RATE CUSTODIAN
-------- ------- ---------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 9.34 2.23% $276,229 1.09%* 6.61%* 16% 1.11%*
9.44 5.21% 213,397 1.07%* 6.66%* 37% N/A
9.48 10.51% 77,864 1.08% 6.47% 27% N/A
9.15 3.46% 86,657 1.03% 6.52% 42% N/A
9.44 21.58% 97,534 1.08% 6.59% 43% N/A
8.29 (4.82)% 88,102 1.04% 6.83% 26% N/A
9.33 10.82% 104,876 1.08% 6.58% 51% N/A
9.35 1.83% 40,242 1.82%* 5.88%* 16% 1.87%*
9.45 4.51% 34,321 1.84%* 5.89%* 37% N/A
9.49 9.51% 9,691 1.86% 5.65% 27% N/A
9.17 2.59% 7,122 1.89% 5.69% 42% N/A
9.46 20.70% 4,452 1.91% 5.73% 43% N/A
8.30 (1.67)% 2,299 1.80%* 6.25%* 26% N/A
9.35 1.82% 1,359 1.98%* 5.72%* 16% 2.00%*
9.45 2.20% 1,624 1.92%* 5.81%* 37% N/A
9.34 2.34% 13,289 0.72%* 6.98%* 16% 0.74%*
9.44 2.84% 7,342 0.71%* 7.02%* 37% N/A
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- ---------------------------------------------------
NET REALIZED
AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET UNREALIZED DIVIDENDS IN EXCESS OF FROM
VALUE, GAIN/(LOSS) TOTAL FROM FROM NET NET NET
BEGINNING OF NET INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT REALIZED TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME GAINS DISTRIBUTIONS
------------ ------------ ----------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $ 11.02 $ 0.22++ $ (0.13) $ 0.09 $ (0.22) $ -- $ (0.16) $ (0.38)
10/31/98(a) 10.81 0.16 0.21 0.37 (0.16) -- -- (0.16)
06/30/98 10.74 0.49 0.17 0.66 (0.49) (0.00)# (0.10) (0.59)
06/30/97 10.56 0.49++ 0.23 0.72 (0.49) -- (0.05) (0.54)
06/30/96 10.45 0.49 0.15 0.64 (0.49) -- (0.04) (0.53)
06/30/95 10.10 0.50 0.35 0.85 (0.50) -- -- (0.50)
06/30/94(c) 10.00 0.11 0.11## 0.22 (0.11) -- (0.01) (0.12)
CLASS B
04/30/99
(unaudited) 11.02 0.18++ (0.13) 0.05 (0.18) -- (0.16) (0.34)
10/31/98(a) 10.81 0.13 0.21 0.34 (0.13) -- -- (0.13)
06/30/98 10.74 0.41 0.17 0.58 (0.41) (0.00)# (0.10) (0.51)
06/30/97 10.56 0.41++ 0.23 0.64 (0.41) -- (0.05) (0.46)
06/30/96 10.45 0.41 0.15 0.56 (0.41) -- (0.04) (0.45)
06/30/95(c) 10.10 0.43 0.35 0.78 (0.43) -- -- (0.43)
CLASS S
04/30/99
(unaudited) 11.02 0.18++ (0.13) 0.05 (0.18) -- (0.16) (0.34)
10/31/98(a) 10.81 0.13 0.21 0.34 (0.13) -- -- (0.13)
06/30/98 10.74 0.41 0.17 0.58 (0.41) -- (0.10) (0.51)
06/30/97 10.56 0.41++ 0.23 0.64 (0.41) -- (0.05) (0.46)
06/30/96 10.45 0.41 0.15 0.56 (0.41) -- (0.04) (0.45)
06/30/95(c) 10.10 0.43 0.35 0.78 (0.43) -- -- (0.43)
CLASS I
04/30/99
(unaudited) 11.02 0.23++ (0.13) 0.10 (0.23) -- (0.16) (0.39)
10/31/98(a) 10.81 0.17 0.21 0.38 (0.17) -- -- (0.17)
06/30/98 10.74 0.51 0.17 0.68 (0.51) -- (0.10) (0.61)
06/30/97(c) 10.58 0.49++ 0.21 0.70 (0.49) -- (0.05) (0.54)
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor
or if fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing
of sales and redemptions of Fund shares.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On April 4, 1994, July 1, 1994, July 1, 1994 and July 25, 1996 the Fund commenced selling Class A. Class B, Class S and
Class I shares, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS
WITHOUT FEE
WAIVERS,
EXPENSES
REIMBURSED
RATIO OF AND/OR FEES
RATIO OF NET REDUCED BY
NET ASSET NET ASSETS, OPERATING INVESTMENT CREDITS
VALUE, END OF EXPENSES TO INCOME TO PORTFOLIO ALLOWED BY
END OF TOTAL PERIOD (IN AVERAGE NET AVERAGE NET TURNOVER THE
PERIOD RETURN+ 000'S) ASSETS(b) ASSETS RATE CUSTODIAN
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$10.73 0.81% $ 37,562 0.91%* 4.04%* 51% 1.05%*
11.02 3.46% 37,529 0.82%* 4.39%* 7% 1.15%*
10.81 6.26% 38,724 0.86% 4.49% 25% 1.25%
10.74 6.97% 45,157 0.82% 4.61% 29% 1.31%
10.56 6.25% 54,518 0.73% 4.62% 27% 1.39%
10.45 8.71% 54,507 0.42% 4.95% 13% 1.41%
10.10 2.20% 34,147 0.00%* 4.25%* 17% 1.95%*
10.73 0.43% 31,326 1.66%* 3.29%* 51% 1.81%*
11.02 3.20% 23,960 1.57%* 3.64%* 7% 1.90%*
10.81 5.47% 21,688 1.61% 3.74% 25% 2.01%
10.74 6.17% 20,992 1.57% 3.86% 29% 2.06%
10.56 5.46% 20,948 1.48% 3.87% 27% 2.14%
10.45 7.90% 12,391 1.17% 4.20% 13% 2.16%
10.73 0.46% 2 3.70%* 1.25%* 51% 3.84%*
11.02 3.20% 2 1.57%* 3.64%* 7% 3.36%*
10.81 5.47% 2 1.59% 3.76% 25% 1.98%
10.74 6.17% 2 1.57% 3.86% 29% 2.06%
10.56 5.46% 11 1.48% 3.87% 27% 2.14%
10.45 7.90% 11 1.17% 4.20% 13% 2.16%
10.73 0.95% 1 0.62%* 4.33%* 51% 0.76%*
11.02 3.54% 1 0.57%* 4.64%* 7% 0.86%*
10.81 6.53% 1 0.60% 4.75% 25% 0.99%
10.74 6.70% 1 0.57%* 4.86%* 29% 1.06%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
CALIFORNIA MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
---------------------------------- --------------------------------------------------------------------
NET
REALIZED DISTRIBUTIONS
AND DISTRIBUTIONS DISTRIBUTIONS IN EXCESS
NET ASSET UNREALIZED DIVIDENDS IN EXCESS OF FROM OF
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET NET NET NET
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT REALIZED REALIZED TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME GAINS GAINS DISTRIBUTIONS
--------- --------- ----------- ---------- ---------- ---------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $11.46 $ 0.28++ $ (0.08) $ 0.20 $ (0.28) $ -- $ (0.06) $ -- $ (0.34)
10/31/98(a) 11.33 0.19++ 0.13 0.32 (0.19) -- -- -- (0.19)
06/30/98 10.92 0.58++ 0.41 0.99 (0.58) -- -- -- (0.58)
06/30/97 10.60 0.59 0.32 0.91 (0.59) -- -- -- (0.59)
06/30/96 10.53 0.60++ 0.07 0.67 (0.60) -- -- -- (0.60)
06/30/95 10.38 0.61 0.15 0.76 (0.61) -- (0.00)# -- (0.61)
06/30/94 11.22 0.61 (0.82) (0.21) (0.61) (0.00)# -- (0.02) (0.63)
CLASS B
04/30/99
(unaudited) 11.46 0.24++ (0.08) 0.16 (0.24) -- (0.06) -- (0.30)
10/31/98(a) 11.33 0.16++ 0.13 0.29 (0.16) -- -- -- (0.16)
06/30/98 10.92 0.50++ 0.41 0.91 (0.50) -- -- -- (0.50)
06/30/97 10.60 0.51 0.32 0.83 (0.51) -- -- -- (0.51)
06/30/96 10.53 0.51++ 0.07 0.58 (0.51) -- -- -- (0.51)
06/30/95(c) 10.38 0.53 0.15 0.68 (0.53) -- (0.00)# -- (0.53)
CLASS S
04/30/99
(unaudited) 11.46 0.24++ (0.08) 0.16 (0.24) -- (0.06) -- (0.30)
10/31/98(a) 11.33 0.16++ 0.13 0.29 (0.16) -- -- -- (0.16)
06/30/98 10.92 0.50++ 0.41 0.91 (0.50) -- -- -- (0.50)
06/30/97 10.60 0.51 0.32 0.83 (0.51) -- -- -- (0.51)
06/30/96 10.53 0.51++ 0.07 0.58 (0.51) -- -- -- (0.51)
06/30/95(c) 10.38 0.53 0.15 0.68 (0.53) -- (0.00)# -- (0.53)
CLASS I
04/30/99
(unaudited) 11.46 0.30++ (0.08) 0.22 (0.30) -- (0.06) -- (0.36)
10/31/98(a) 11.33 0.20++ 0.13 0.33 (0.20) -- -- -- (0.20)
06/30/98 10.92 0.61++ 0.41 1.02 (0.61) -- -- -- (0.61)
06/30/97(c) 10.62 0.58 0.30 0.88 (0.58) -- -- -- (0.58)
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The total
returns would have been lower if certain fees had not been waived by the investment advisor or if fees had not been reduced by
credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On July 1, 1994, July 1, 1994 and July 25, 1996 the Fund commenced selling Class B, Class S and Class I shares, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS
WITHOUT FEE
WAIVERS
RATIO OF AND/OR FEES
RATIO OF NET REDUCED BY
NET ASSET NET ASSETS, OPERATING INVESTMENT CREDITS
VALUE, END OF EXPENSES TO INCOME TO PORTFOLIO ALLOWED BY
END OF TOTAL PERIOD (IN AVERAGE NET AVERAGE NET TURNOVER THE
PERIOD RETURN+ 000'S) ASSETS(b) ASSETS RATE CUSTODIAN
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$11.32 1.77% $321,303 0.88%* 5.03%* 42% 0.97%*
11.46 2.82% 287,590 0.97%* 4.87%* 28% 1.05%*
11.33 9.26% 290,328 1.00% 5.18% 87% 1.19%
10.92 8.83% 318,251 0.97% 5.51% 36% 1.26%
10.60 6.40% 372,177 0.94% 5.56% 17% 1.29%
10.53 7.57% 405,967 0.85% 5.89% 22% 1.29%
10.38 (2.19)% 509,223 0.79% 5.45% 50% 1.39%
11.32 1.39% 100,086 1.63%* 4.27%* 42% 1.72%*
11.46 2.56% 49,683 1.72%* 4.12%* 28% 1.81%*
11.33 8.45% 34,537 1.75% 4.42% 87% 1.95%
10.92 8.02% 25,219 1.72% 4.76% 36% 2.01%
10.60 5.61% 20,543 1.69% 4.81% 17% 2.04%
10.53 6.78% 7,230 1.60% 5.14% 22% 2.04%
11.32 1.39% 7 2.36%* 3.54%* 42% 2.45%*
11.46 2.56% 7 1.72%* 4.12%* 28% 2.33%*
11.33 8.45% 8 1.74% 4.43% 87% 1.95%
10.92 8.02% 7 1.72% 4.76% 36% 2.01%
10.60 5.61% 11 1.69% 4.81% 17% 2.04%
10.53 6.78% 11 1.60% 5.14% 22% 2.04%
11.32 1.88% 1 0.59%* 5.31%* 42% 0.68%*
11.46 2.90% 1 0.72%* 5.12%* 28% 0.76%*
11.33 9.53% 1 0.74% 5.44% 87% 0.93%
10.92 8.49% 1 0.72%* 5.76%* 36% 1.01%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
FLORIDA INSURED MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- ---------------------------------------------------
NET REALIZED
AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET UNREALIZED DIVIDENDS IN EXCESS OF IN EXCESS OF
VALUE, GAIN/(LOSS) TOTAL FROM FROM NET NET NET
BEGINNING OF NET INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT REALIZED TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME GAINS DISTRIBUTIONS
------------ ------------ ----------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $ 10.50 $ 0.24++ $ (0.11) $ 0.13 $ (0.24) $ -- $ -- $ (0.24)
10/31/98(a) 10.35 0.17 0.15 0.32 (0.17) -- -- (0.17)
06/30/98 9.93 0.49 0.42 0.91 (0.49) -- -- (0.49)
06/30/97 9.64 0.49++ 0.30 0.79 (0.50) (0.00)# -- (0.50)
06/30/96 9.43 0.50 0.21 0.71 (0.50) -- -- (0.50)
06/30/95 9.40 0.52 0.03## 0.55 (0.52) -- -- (0.52)
06/30/94 10.05 0.52 (0.65) (0.13) (0.52) (0.00)# (0.00)# (0.52)
CLASS B
04/30/99
(unaudited) 10.50 0.20++ (0.11) 0.09 (0.20) -- -- (0.20)
10/31/98(a) 10.35 0.14 0.15 0.29 (0.14) -- -- (0.14)
06/30/98 9.93 0.41 0.43 0.84 (0.42) -- -- (0.42)
06/30/97 9.64 0.42++ 0.30 0.72 (0.43) (0.00)# -- (0.43)
06/30/96 9.43 0.42 0.21 0.63 (0.42) -- -- (0.42)
06/30/95(c) 9.40 0.45 0.03## 0.48 (0.45) -- -- (0.45)
CLASS S
04/30/99
(unaudited) 10.50 0.20++ (0.11) 0.09 (0.20) -- -- (0.20)
10/31/98(a) 10.35 0.14 0.15 0.29 (0.14) -- -- (0.14)
06/30/98 9.93 0.36 0.48 0.84 (0.42) -- -- (0.42)
06/30/97 9.64 0.42++ 0.30 0.72 (0.43) (0.00)# -- (0.43)
06/30/96 9.43 0.42 0.21 0.63 (0.42) -- -- (0.42)
06/30/95(c) 9.40 0.45 0.03## 0.48 (0.45) -- -- (0.45)
CLASS I
04/30/99
(unaudited) 10.50 0.25++ (0.11) 0.14 (0.25) -- -- (0.25)
10/31/98(a) 10.35 0.19 0.14 0.33 (0.18) -- -- (0.18)
06/30/98 9.93 0.54 0.36 0.90 (0.48) -- -- (0.48)
06/30/97(c) 9.68 0.49++ 0.26 0.75 (0.50) (0.00)# -- (0.50)
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The total
returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor or if fees
had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing of sales
and redemptions of Fund shares.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On July 1, 1994, July 1, 1994 and July 25, 1996 the Fund commenced selling Class B, Class S and Class I shares,
respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS
WITHOUT FEE
WAIVERS,
EXPENSES
REIMBURSED
RATIO OF AND/OR FEES
RATIO OF NET REDUCED BY
NET ASSET NET ASSETS, OPERATING INVESTMENT CREDITS
VALUE, END OF EXPENSES TO INCOME TO PORTFOLIO ALLOWED BY
END OF TOTAL PERIOD (IN AVERAGE NET AVERAGE NET TURNOVER THE
PERIOD RETURN+ 000'S) ASSETS(b) ASSETS RATE CUSTODIAN
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$10.39 1.25% $ 14,332 0.94%* 4.62%* 70% 1.40%*
10.50 3.08% 15,813 0.82%* 4.76%* 40% 1.40%*
10.35 9.34% 16,538 0.88% 4.79% 51% 1.45%
9.93 8.43% 22,761 0.82% 5.01% 53% 1.46%
9.64 7.56% 29.821 0.63% 5.08% 52% 1.46%
9.43 6.01% 33,714 0.39% 5.53% 44% 1.51%
9.40 (1.50)% 38,541 0.00% 5.09% 83% 1.55%
10.39 0.87% 8,069 1.68%* 3.88%* 70% 2.14%*
10.50 2.82% 6,054 1.57%* 4.01%* 40% 2.15%*
10.35 8.53% 5,075 1.63% 4.04% 51% 2.21%
9.93 7.63% 5,067 1.57% 4.26% 53% 2.21%
9.64 6.76% 5,428 1.38% 4.33% 52% 2.21%
9.43 5.23% 3,330 1.14% 4.78% 44% 2.26%
10.39 0.89% 2 3.80%* 1.76%* 70% 4.26%*
10.50 2.82% 2 1.57%* 4.01%* 40% 3.64%*
10.35 8.53% 2 1.62% 4.05% 51% 2.19%
9.93 7.63% 29 1.57% 4.26% 53% 2.21%
9.64 6.76% 11 1.38% 4.33% 52% 2.21%
9.43 5.23% 11 1.14% 4.78% 44% 2.26%
10.39 1.35% 1 0.64%* 4.92%* 70% 1.10%*
10.50 3.17% 1 0.57%* 5.01%* 40% 1.10%*
10.35 9.61% 1 0.62% 5.05% 51% 1.19%
9.93 7.88% 1 0.57%* 5.26%* 53% 1.21%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
TAX-EXEMPT BOND FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
----------------------------------------------- ------------------------------------------
NET ASSET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE, AND UNREALIZED TOTAL FROM FROM NET FROM NET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
------------ ------------ ------------ ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $ 8.11 $ 0.20++ $(0.09) $ 0.11 $(0.20) $ -- $(0.20)
10/31/98(a) 8.09 0.34 0.02 0.36 (0.34) -- (0.34)
12/31/97 7.83 0.38 0.27 0.65 (0.38) (0.01) (0.39)
12/31/96 8.02 0.38 (0.19) 0.19 (0.38) -- (0.38)
12/31/95 7.13 0.38 0.89 1.27 (0.38) -- (0.38)
12/31/94 8.04 0.39 (0.91) (0.52) (0.39) -- (0.39)
12/31/93 7.58 0.40 0.54 0.94 (0.40) (0.08) (0.48)
CLASS B
04/30/99
(unaudited) 8.11 0.17++ (0.09) 0.08 (0.17) -- (0.17)
10/31/98(a) 8.09 0.28 0.03 0.31 (0.29) -- (0.29)
12/31/97 7.83 0.32 0.27 0.59 (0.32) (0.01) (0.33)
12/31/96 8.02 0.31 (0.19) 0.12 (0.31) -- (0.31)
12/31/95 7.13 0.32 0.89 1.21 (0.32) -- (0.32)
12/31/94(c) 7.49 0.25 (0.36) (0.11) (0.25) -- (0.25)
CLASS S
04/30/99
(unaudited) 8.11 0.18++ (0.09) 0.09 (0.18) -- (0.18)
10/31/98(c) 8.06 0.16 0.10 0.26 (0.21) -- (0.21)
CLASS I
04/30/99
(unaudited) 8.11 0.21++ (0.09) 0.12 (0.21) -- (0.21)
10/31/98(c) 8.06 0.27 0.05 0.32 (0.27) -- (0.27)
- ----------------
* Annualized.
+ Total return is not annualized for the periods less than one year and does not reflect any applicable sales charges. The total
returns would have been lower if fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On March 30, 1994, March 23, 1998 and March 23, 1998 the Fund commenced selling Class B, Class S and Class I shares,
respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------
RATIO OF RATIO OF
OPERATING NET
EXPENSES INVESTMENT
NET ASSET NET ASSETS, TO AVERAGE INCOME TO PORTFOLIO
VALUE, TOTAL END OF PERIOD NET AVERAGE NET TURNOVER
END OF PERIOD RETURN+ (IN 000'S) ASSETS(b) ASSETS RATE
------------- ------------ ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 8.02 1.42% $300,233 0.89%* 5.10%* 26%
8.11 4.58% 301,162 0.84%* 5.14%* 6%
8.09 8.59% 188,021 0.80% 4.84% 21%
7.83 2.52% 203,606 0.75% 4.90% 22%
8.02 18.25% 230,055 0.81% 5.03% 8%
7.13 (6.53)% 215,438 0.79% 5.23% 12%
8.04 12.54% 259,045 0.81% 4.97% 19%
8.02 1.02% 21,493 1.65%* 4.34%* 26%
8.11 3.88% 17,344 1.62%* 4.36%* 6%
8.09 7.71% 8,110 1.62% 4.00% 21%
7.83 1.61% 5,266 1.65% 4.01% 22%
8.02 17.30% 2,682 1.62% 4.18% 8%
7.13 (1.46)% 1,258 1.58%* 4.53%* 12%
8.02 1.06% 1 4.16%* 1.83%* 26%
8.11 3.27% 1 2.70%* 3.28%* 6%
8.02 1.54% 1 0.60%* 5.39%* 26%
8.11 4.00% 1 0.55%* 5.43%* 6%
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
BOND & STOCK FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------------ ----------------------------------------
DISTRIBUTIONS
NET ASSET NET REALIZED DIVIDENDS FROM
VALUE, AND UNREALIZED TOTAL FROM FROM NET NET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
------------ ------------ ------------ ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $14.02 $ 0.20++ $ 1.37 $ 1.57 $(0.21) $(0.04) $(0.25)
10/31/98 16.13 0.45++ 0.21 0.66 (0.45) (2.32) (2.77)
10/31/97 14.71 0.50 2.37 2.87 (0.51) (0.94) (1.45)
10/31/96 13.48 0.52 1.53 2.05 (0.50) (0.32) (0.82)
10/31/95 11.53 0.50 2.02 2.52 (0.49) (0.08) (0.57)
10/31/94 12.23 0.46 (0.57) (0.11) (0.44) (0.15) (0.59)
CLASS B
04/30/99
(unaudited) 13.96 0.14++ 1.37 1.51 (0.16) (0.04) (0.20)
10/31/98 16.10 0.33++ 0.19 0.52 (0.34) (2.32) (2.66)
10/31/97 14.69 0.39 2.36 2.75 (0.40) (0.94) (1.34)
10/31/96 13.47 0.41 1.53 1.94 (0.40) (0.32) (0.72)
10/31/95 11.51 0.39 2.03 2.42 (0.38) (0.08) (0.46)
10/31/94(a) 11.49 0.18 0.04 0.22 (0.20) -- (0.20)
CLASS S
04/30/99
(unaudited) 13.79 0.14++ 1.39 1.53 (0.16) (0.04) (0.20)
10/31/98(a) 14.72 0.14++ (0.87)# (0.73) (0.20) -- (0.20)
- ----------------
* Annualized.
+ Total return is not annualized for the periods less than one year and does not reflect any applicable sales charges. The
total returns would have been lower if fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing
of sales and redemption of Fund shares.
(a) On March 30, 1994 and May 28, 1998 the Fund commenced selling Class B and Class S shares, respectively.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------
RATIO OF RATIO OF
OPERATING NET
EXPENSES INVESTMENT
NET ASSET NET ASSETS, TO AVERAGE INCOME TO PORTFOLIO
VALUE, TOTAL END OF PERIOD NET AVERAGE NET TURNOVER
END OF PERIOD RETURN+ (IN 000'S) ASSETS(b) ASSETS RATE
------------- ------------ ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
$15.34 11.32% $289,058 1.06%* 2.68%* 21%
14.02 4.03% 298,651 0.97% 3.09% 80%
16.13 20.81% 307,018 0.99% 3.31% 54%
14.71 15.66% 255,414 0.98% 3.68% 46%
13.48 22.55% 208,592 1.02% 3.98% 32%
11.53 (0.90)% 191,615 1.06% 3.97% 25%
15.27 10.84% 81,538 1.85%* 1.89%* 21%
13.96 3.12% 74,542 1.76% 2.30% 80%
16.10 19.86% 46,556 1.79% 2.48% 54%
14.69 14.73% 22,243 1.86% 2.80% 46%
13.47 21.60% 7,372 1.84% 3.10% 32%
11.51 1.94% 3,362 1.77%* 3.22%* 25%
15.12 10.88% 41 1.85%* 1.89%* 21%
13.79 (4.66)% 36 1.73%* 2.33%* 80%
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
GROWTH & INCOME FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------------ ----------------------------------------
NET ASSET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE, AND UNREALIZED TOTAL FROM FROM NET FROM NET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
------------ ------------ ------------ ------------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $19.99 $ 0.04++ $ 4.84 $ 4.88 $(0.05) $ -- $(0.05)
10/31/98 21.01 0.11++ 1.43 1.54 (0.09) (2.47) (2.56)
10/31/97 17.26 0.12 4.98 5.10 (0.14) (1.21) (1.35)
10/31/96 14.65 0.20 3.16 3.36 (0.21) (0.54) (0.75)
10/31/95 12.71 0.22 2.31 2.53 (0.19) (0.40) (0.59)
10/31/94 12.81 0.18 0.85 1.03 (0.18) (0.95) (1.13)
CLASS B
04/30/99
(unaudited) 19.77 (0.04)++ 4.77 4.73 -- -- --
10/31/98 20.85 (0.07)++ 1.46 1.39 (0.00)# (2.47) (2.47)
10/31/97 17.17 (0.02) 4.93 4.91 (0.02) (1.21) (1.23)
10/31/96 14.59 0.06 3.14 3.20 (0.08) (0.54) (0.62)
10/31/95 12.68 0.11 2.31 2.42 (0.11) (0.40) (0.51)
10/31/94(a) 12.00 0.05 0.69 0.74 (0.06) -- (0.06)
CLASS S
04/30/99
(unaudited) 19.79 (0.05)++ 4.78 4.73 -- -- --
10/31/98(a) 21.26 (0.03)++ (1.44)## (1.47) -- -- --
CLASS I
04/30/99
(unaudited) 20.03 0.08++ 4.82 4.90 (0.07) -- (0.07)
10/31/98(a) 21.42 0.11++ (1.43)## (1.32) (0.07) -- (0.07)
- ----------------
* Annualized.
+ Total return is not annualized for the periods less than one year and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing
of sales and redemptions of Fund shares.
(a) On March 30, 1994, March 23, 1998 and March 23, 1998 the Fund commenced selling Class B, Class S and Class I shares,
repectively.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS
WITHOUT FEE
WAIVERS
RATIO OF AND/OR FEES
RATIO OF NET REDUCED BY
NET ASSET NET ASSETS, OPERATING INVESTMENT CREDITS
VALUE, END OF EXPENSES TO INCOME TO PORTFOLIO ALLOWED BY
END OF TOTAL PERIOD (IN AVERAGE NET AVERAGE NET TURNOVER THE
PERIOD RETURN+ 000'S) ASSETS(b) ASSETS RATE CUSTODIAN
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$24.82 24.44% $851,453 1.00%* 0.38%* 24% 1.00%*
19.99 7.38% 502,115 0.94% 0.52% 79% N/A
21.01 31.24% 299,928 1.05% 0.66% 71% N/A
17.26 23.61% 178,331 1.03% 1.26% 52% N/A
14.65 20.87% 130,630 1.07% 1.62% 39% N/A
12.71 8.55% 102,837 1.10% 1.45% 34% N/A
24.50 23.93% 205,272 1.76%* (0.38)%* 24% 1.85%*
19.77 6.60% 117,063 1.79% (0.33)% 79% N/A
20.85 30.20% 49,994 1.88% (0.19)% 71% N/A
17.17 22.55% 22,851 1.94% 0.34% 52% N/A
14.59 19.95% 8,871 1.91% 0.69% 39% N/A
12.68 6.14% 2,082 1.85%* 0.65%* 34% N/A
24.52 23.90% 11,651 1.83%* (0.45)%* 24% 1.83%*
19.79 (6.83)% 12,245 1.74%* (0.28)%* 79% N/A
24.86 24.56% 264,048 0.68%* 0.70%* 24% 0.68%*
20.03 (6.18)% 185,528 0.62%* 0.84%* 79% N/A
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
GROWTH FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------------ ----------------------------------------
NET ASSET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE, AND UNREALIZED TOTAL FROM FROM NET FROM NET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
------------ ------------ ------------ ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $17.64 $(0.08)++ $10.47 $10.39 $ -- $(1.83) $(1.83)
10/31/98(a) 18.46 (0.07)++ (0.75) (0.82) -- -- --
06/30/98 14.90 (0.15)++ 4.99 4.84 -- (1.28) (1.28)
06/30/97 15.69 (0.03)++ 1.58 1.55 -- (2.34) (2.34)
06/30/96 14.18 (0.07)++ 3.47 3.40 -- (1.89) (1.89)
06/30/95 10.73 0.05++ 3.42 3.47 (0.02) (0.00)# (0.02)
06/30/94 10.72 (0.02) 0.03## 0.01 -- -- --
CLASS B
04/30/99
(unaudited) 16.99 0.02++ 9.90 9.92 -- (1.83) (1.83)
10/31/98(a) 17.82 (0.12)++ (0.71) (0.83) -- -- --
06/30/98 14.53 (0.25)++ 4.82 4.57 -- (1.28) (1.28)
06/30/97 15.47 (0.14)++ 1.54 1.40 -- (2.34) (2.34)
06/30/96 14.10 (0.19)++ 3.45 3.26 -- (1.89) (1.89)
06/30/95(c) 10.73 (0.04)++ 3.42 3.38 (0.01) (0.00)# (0.01)
CLASS S
04/30/99
(unaudited) 16.99 (0.14)++ 10.02 9.88 -- (1.83) (1.83)
10/31/98(a) 17.83 (0.11)++ (0.73) (0.84) -- -- --
06/30/98 14.54 (0.25)++ 4.82 4.57 -- (1.28) (1.28)
06/30/97 15.47 (0.14)++ 1.55 1.41 -- (2.34) (2.34)
06/30/96 14.11 (0.19)++ 3.44 3.25 -- (1.89) (1.89)
06/30/95(c) 10.73 (0.04)++ 3.42 3.38 (0.00)# (0.00)# (0.00)
CLASS I
04/30/99
(unaudited) 17.76 (0.03)++ 10.54 10.51 -- (1.83) (1.83)
10/31/98(a) 18.56 (0.05)++ (0.75) (0.80) -- -- --
06/30/98 14.94 (0.10)++ 5.00 4.90 -- (1.28) (1.28)
06/30/97(c) 14.21 0.00++# 3.07 3.07 -- (2.34) (2.34)
- ----------------
* Annualized.
+ Total return is not annualized for the periods less than one year and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing
of sales and redemptions of Fund shares.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On July 1, 1994, July 1, 1994 and July 25, 1996 the Fund commenced selling Class B, Class S and Class I shares,
respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS
WITHOUT FEE
WAIVERS
RATIO OF AND/OR FEES
RATIO OF NET REDUCED BY
NET ASSET NET ASSETS, OPERATING INVESTMENT CREDITS
VALUE, END OF EXPENSES TO INCOME TO PORTFOLIO ALLOWED BY
END OF TOTAL PERIOD (IN AVERAGE NET AVERAGE NET TURNOVER THE
PERIOD RETURN+ 000'S) ASSETS(b) ASSETS RATE CUSTODIAN
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$26.20 63.11% $273,003 1.29%* (0.68)%* 79% 1.49%*
17.64 (4.44)% 104,775 1.69%* (1.21)%* 24% N/A
18.46 35.43% 112,153 1.66% (0.91)% 153% N/A
14.90 10.88% 111,187 1.70% (0.22)% 156% N/A
15.69 25.44% 179,720 1.70% (0.49)% 205% N/A
14.18 32.33% 154,763 1.76% 0.28% 233% N/A
10.73 0.00% 126,808 1.75% (0.35)% 227% N/A
25.08 62.74% 114,958 2.05%* (1.44)%* 79% 2.30%*
16.99 (4.66)% 39,379 2.54%* (2.06)%* 24% N/A
17.82 34.43% 38,390 2.46% (1.70)% 153% N/A
14.53 9.99% 30,397 2.45% (0.97)% 156% N/A
15.47 24.54% 25,067 2.45% (1.24)% 205% N/A
14.10 31.46% 6,928 2.51% (0.47)% 233% N/A
25.04 62.48% 15,193 2.02%* (1.41)%* 79% 2.22%*
16.99 (4.71)% 11,645 2.39%* (1.91)%* 24% N/A
17.83 34.40% 13,283 2.39% (1.64)% 153% N/A
14.54 10.06% 14,038 2.45% (0.97)% 156% N/A
15.47 24.54% 45,652 2.45% (1.24)% 205% N/A
14.11 31.44% 18,730 2.51% (0.47)% 233% N/A
26.44 63.38% 229,776 0.89%* (0.28)%* 79% 1.09%*
17.76 (4.31)% 119,351 1.26%* (0.78)%* 24% N/A
18.56 35.75% 115,729 1.36% (0.61)% 153% N/A
14.94 22.73% 126,986 1.45%* 0.03%* 156% N/A
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
NORTHWEST FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- ------------------------------------------------------
NET REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS
VALUE, GAIN/(LOSS) TOTAL FROM FROM NET FROM NET DISTRIBUTIONS
BEGINNING OF NET INVESTMENT ON INVESTMENT INVESTMENT REALIZED FROM TOTAL
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
------------ ------------ ----------- --------- --------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $20.37 $(0.02)++ $ 7.39 $ 7.37 $ -- $ -- $ -- $ --
10/31/98 25.92 (0.02)++ (0.76) (0.78) -- (4.74) (0.03) (4.77)
10/31/97 19.69 (0.02) 8.13 8.11 -- (1.88) -- (1.88)
10/31/96 17.40 0.03 2.47 2.50 (0.03) (0.18) -- (0.21)
10/31/95 14.30 0.07 3.10 3.17 (0.07) -- -- (0.07)
10/31/94 14.50 0.08 0.35 0.43 (0.08) (0.55) -- (0.63)
CLASS B
04/30/99
(unaudited) 19.64 (0.12)++ 7.13 7.01 -- -- -- --
10/31/98 25.34 (0.20)++ (0.73) (0.93) -- (4.74) (0.03) (4.77)
10/31/97 19.45 (0.08) 7.85 7.77 -- (1.88) -- (1.88)
10/31/96 17.31 (0.08) 2.40 2.32 -- (0.18) -- (0.18)
10/31/95 14.28 (0.05) 3.08 3.03 -- -- -- --
10/31/94(a) 14.42 (0.02) (0.12) (0.14) -- -- -- --
CLASS S
04/30/99
(unaudited)(a) 24.89 (0.12)++ 1.30 1.18 -- -- -- --
- ----------------
* Annualized.
+ Total return is not annualized for the periods less than one year and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
(a) On March 30, 1994 and March 30, 1999 the Fund commenced selling Class B and Class S shares, respectively.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS
WITHOUT FEE
WAIVERS
RATIO OF OR FEES
RATIO OF NET REDUCED BY
NET ASSET NET ASSETS, OPERATING INVESTMENT CREDITS
VALUE, END OF EXPENSES TO INCOME TO PORTFOLIO ALLOWED BY
END OF TOTAL PERIOD (IN AVERAGE NET AVERAGE NET TURNOVER THE
PERIOD RETURN+ 000'S) ASSETS(b) ASSETS RATE CUSTODIAN
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$27.74 36.23% $302,489 1.20%* (0.13)%* 18% 1.20%*
20.37 (4.81)% 243,126 1.10% (0.09)% 39% 1.10%
25.92 44.47% 256,908 1.05% (0.08)% 37% 1.11%
19.69 14.54% 176,706 1.08% 0.16% 42% 1.08%
17.40 22.24% 157,953 1.10% 0.44% 9% 1.10%
14.30 2.97% 152,622 1.09% 0.51% 11% 1.09%
26.65 35.69% 62,642 2.05%* (0.98)%* 18% 2.05%*
19.64 (5.63)% 47,106 1.95% (0.94)% 39% 1.95%
25.34 43.17% 39,627 1.91% (0.96)% 37% 1.97%
19.45 13.54% 14,653 1.98% (0.76)% 42% 1.98%
17.31 21.25% 7,083 1.95% (0.45)% 9% 1.95%
14.28 (0.97)% 3,102 1.96%* (0.39)%* 11% 1.96%*
26.07 4.74% 4 2.23%* (1.16)%* 18% 2.23%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
EMERGING GROWTH FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------------ ------------------------------
NET ASSET NET REALIZED
VALUE, AND UNREALIZED TOTAL FROM DISTRIBUTIONS
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT FROM NET TOTAL
PERIOD LOSS INVESTMENTS OPERATIONS REALIZED GAINS DISTRIBUTIONS
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99 (unaudited) $16.25 $(0.06)++ $ 2.25 $ 2.19 $(2.80) $(2.80)
10/31/98(a) 19.49 (0.08)++ (3.16) (3.24) -- --
06/30/98 18.28 (0.22)++ 2.50 2.28 (1.07) (1.07)
06/30/97 20.17 (0.21)++ (0.18) (0.39) (1.50) (1.50)
06/30/96 15.47 (0.19)++ 5.65 5.46 (0.76) (0.76)
06/30/95 13.02 (0.00)++# 2.77 2.77 (0.32) (0.32)
06/30/94 13.76 (0.09) 0.68 0.59 (1.33) (1.33)
CLASS B
04/30/99 (unaudited) 15.67 (0.13)++ 2.18 2.05 (2.80) (2.80)
10/31/98(a) 18.86 (0.13)++ (3.06) (3.19) -- --
06/30/98 17.85 (0.36)++ 2.44 2.08 (1.07) (1.07)
06/30/97 19.88 (0.34)++ (0.19) (0.53) (1.50) (1.50)
06/30/96 15.37 (0.32)++ 5.59 5.27 (0.76) (0.76)
06/30/95(c) 13.02 (0.10)++ 2.77 2.67 (0.32) (0.32)
CLASS S
04/30/99 (unaudited) 15.67 (0.13)++ 2.18 2.05 (2.80) (2.80)
10/31/98(a) 18.86 (0.12)++ (3.07) (3.19) -- --
06/30/98 17.85 (0.35)++ 2.43 2.08 (1.07) (1.07)
06/30/97 19.88 (0.34)++ (0.19) (0.53) (1.50) (1.50)
06/30/96 15.37 (0.32)++ 5.59 5.27 (0.76) (0.76)
06/30/95(c) 13.02 (0.10)++ 2.77 2.67 (0.32) (0.32)
CLASS I
04/30/99 (unaudited) 16.35 (0.03)++ 1.64 1.61 (2.80) (2.80)
10/31/98(a) 19.60 (0.05)++ (3.20) (3.25) -- --
06/30/98 18.33 (0.16)++ 2.50 2.34 (1.07) (1.07)
06/30/97(c) 17.52 (0.16)++ 2.47## 2.31 (1.50) (1.50)
- ----------------
* Annualized.
** Represents offering share price.
+ Total return is not annualized for the periods less than one year and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing
of sales and redemptions of Fund shares.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On July 1, 1994, July 1, 1994 and July 25, 1996 the Fund commenced selling Class B, Class S and Class I shares,
respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS
WITHOUT FEE
WAIVERS
RATIO OF AND/OR FEES
RATIO OF NET REDUCED BY
NET ASSET NET ASSETS, OPERATING INVESTMENT CREDITS
VALUE, END OF EXPENSES TO LOSS TO PORTFOLIO ALLOWED BY
END OF TOTAL PERIOD (IN AVERAGE NET AVERAGE NET TURNOVER THE
PERIOD RETURN+ 000'S) ASSETS(b) ASSETS RATE CUSTODIAN
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$15.64 13.73% $83,780 1.80%* (0.80)%* 22% 2.03%*
16.25 (16.62)% 88,502 1.88%* (1.43)%* 20% 1.89%*
19.49 12.95% 118,473 1.66% (1.10)% 112% 1.66%
18.28 (1.50)% 165,719 1.64% (1.17)% 81% 1.64%
20.17 35.93% 283,747 1.64% (1.02)% 131% 1.65%
15.47 21.54% 185,722 1.68% (0.31)% 181% N/A
13.02 3.40% 124,941 1.66% (0.68)% 224% N/A
14.92 13.30% 21,576 2.73%* (1.73)%* 22% 2.96%*
15.67 (16.87)% 22,172 2.84%* (2.39)%* 20% 2.85%*
18.86 12.05% 28,540 2.47% (1.92)% 112% 2.47%
17.85 (2.26)% 29,123 2.39% (1.92)% 81% 2.39%
19.88 34.93% 28,920 2.39% (1.77)% 131% 2.40%
15.37 20.69% 10,208 2.43% (1.06)% 181% N/A
14.92 13.30% 4,085 2.67%* (1.67)%* 22% 2.90%*
15.67 (16.91)% 3,753 2.66%* (2.21)%* 20% 2.67%*
18.86 12.11% 5,989 2.41% (1.86)% 112% 2.42%
17.85 (2.26)% 8,341 2.39% (1.92)% 81% 2.39%
19.88 34.91% 43,645 2.39% (1.77)% 131% 2.40%
15.37 20.76% 11,840 2.43% (1.06)% 181% N/A
15.16** 9.43% -- 1.27%* (0.27)%* 22% 1.50%*
16.35 (16.58)% 12,651 1.35%* (0.90)%* 20% 1.36%*
19.60 13.25% 33,886 1.36% (0.80)% 112% 1.36%
18.33 13.69% 52,199 1.39%* (0.92)%* 81% 1.39%*
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL highlights
INTERNATIONAL GROWTH FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ------------------------------------------------------------------
NET
REALIZED
AND DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
NET ASSET NET UNREALIZED DIVIDENDS IN EXCESS OF FROM OF
VALUE, INVESTMENT GAIN/(LOSS) TOTAL FROM FROM NET NET NET NET
BEGINNING INCOME/ ON INVESTMENT INVESTMENT INVESTMENT REALIZED REALIZED TOTAL
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS GAINS DISTRIBUTIONS
--------- ---------- ----------- ---------- ---------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
04/30/99
(unaudited) $ 8.86 $ 0.01++ $ 1.16 $ 1.17 $ (0.27) $ -- $ (0.11) $ -- $ (0.38)
10/31/98(a) 10.20 (0.02)++ (1.32) (1.34) -- -- -- -- --
06/30/98 11.85 0.05++ (0.67) (0.62) (0.50) (0.03) (0.50) -- (1.03)
06/30/97 10.49 0.04++ 1.55 1.59 (0.13) -- (0.10) -- (0.23)
06/30/96 9.78 0.05++ 1.21 1.26 (0.05) (0.04) (0.46) -- (0.55)
06/30/95 10.74 (0.11)++ (0.31) (0.42) (0.04) -- (0.44) (0.06) (0.54)
06/30/94 9.80 0.06 1.15 1.21 (0.02) -- (0.25) -- (0.27)
CLASS B
04/30/99
(unaudited) 8.72 (0.04)++ 1.15 1.11 (0.26) -- (0.11) -- (0.37)
10/31/98(a) 10.07 (0.05)++ (1.30) (1.35) -- -- -- -- --
06/30/98 11.70 (0.04)++ (0.64) (0.68) (0.42) (0.03) (0.50) -- (0.95)
06/30/97 10.39 (0.04)++ 1.53 1.49 (0.08) -- (0.10) -- (0.18)
06/30/96 9.73 (0.03)++ 1.21 1.18 (0.02) (0.04) (0.46) -- (0.52)
06/30/95(c) 10.74 (0.17)++ (0.31) (0.48) (0.03) -- (0.44) (0.06) (0.53)
CLASS S
04/30/99
(unaudited) 8.80 (0.02)++ 1.15 1.13 (0.26) -- (0.11) -- (0.37)
10/31/98(a) 10.16 (0.04)++ (1.32) (1.36) -- -- -- -- --
06/30/98 11.77 (0.02)++ (0.67) (0.69) (0.40) (0.02) (0.50) -- (0.92)
06/30/97 10.38 (0.04)++ 1.53 1.49 -- -- (0.10) -- (0.10)
06/30/96 9.73 (0.03)++ 1.20 1.17 (0.02) (0.04) (0.46) -- (0.52)
06/30/95(c) 10.74 (0.17)++ (0.31) (0.48) (0.03) -- (0.44) (0.06) (0.53)
CLASS I
04/30/99
(unaudited) 8.83 0.04++ 1.14 1.18 (0.28) -- (0.11) -- (0.39)
10/31/98(a) 10.16 0.00++# (1.33) (1.33) -- -- -- -- --
06/30/98 11.82 0.09++ (0.69) (0.60) (0.53) (0.03) (0.50) -- (1.06)
06/30/97(c) 9.88 0.06++ 2.15 2.21 (0.17) -- (0.10) -- (0.27)
- ----------------
* Annualized.
+ Total return is not annualized for the periods less than one year and does not reflect any applicable sales charges. The
total returns would have been lower if fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) On July 1, 1994, July 1, 1994 and July 25, 1996 the Fund commenced selling Class B, Class S and Class I shares,
respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------
RATIO OF
RATIO OF NET
OPERATING INVESTMENT
EXPENSES INCOME/
NET ASSET NET ASSETS, TO AVERAGE (LOSS) TO PORTFOLIO
VALUE, TOTAL END OF PERIOD NET AVERAGE NET TURNOVER
END OF PERIOD RETURN+ (IN 000'S) ASSETS(b) ASSETS RATE
------------- ------------ ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 9.65 13.61% $27,523 1.86%* 0.28%* 72%
8.86 (13.14)% 30,117 1.86%* (0.50)%* 41%
10.20 (4.19)% 38,281 1.67% 0.50% 118%
11.85 15.50% 57,776 1.65% 0.35% 67%
10.49 13.16% 116,254 1.77% 0.46% 125%
9.78 (4.01)% 91,763 1.69% 0.62% 81%
10.74 12.39% 127,764 1.69% 0.54% 44%
9.46 13.02% 3,690 2.95%* (0.81)%* 72%
8.72 (13.41)% 3,552 2.97%* (1.61)%* 41%
10.07 (4.95)% 4,294 2.94% (0.35)% 118%
11.70 14.66% 4,876 2.40% (0.40)% 67%
10.39 12.34% 4,447 2.52% (0.29)% 125%
9.73 (4.61)% 2,268 2.44% (0.13)% 81%
9.56 13.22% 6,797 2.53%* (0.39)%* 72%
8.80 (13.47)% 7,455 2.50%* (1.14)%* 41%
10.16 (4.94)% 9,599 2.41% (0.23)% 118%
11.77 14.61% 11,991 2.40% (0.40)% 67%
10.38 12.29% 38,900 2.52% (0.29)% 125%
9.73 (4.61)% 11,120 2.44% (0.13)% 81%
9.62 13.76% 101,532 1.28%* 0.86%* 72%
8.83 (13.09)% 98,554 1.32%* 0.04%* 41%
10.16 (3.98)% 108,521 1.36% 0.81% 118%
11.82 22.76% 95,512 1.40%* 0.60%* 67%
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
TARGET MATURITY 2002 FUND
APRIL 30, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. TREASURY OBLIGATION - 103.5%
U.S. TREASURY STRIP (PRINCIPAL ONLY)
$2,485,000 Zero coupon due 11/15/2002 ............. $2,076,721
----------
TOTAL INVESTMENTS (Cost $2,017,320*) ............... 103.5% 2,076,721
OTHER ASSETS AND LIABILITIES (NET) ................. (3.5) (70,244)
----- ----------
NET ASSETS ......................................... 100.0% $2,006,477
===== ==========
- --------------
* Aggregate cost for federal tax purposes.
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
STRIP -- Separate trading of registered interest and principal of securities
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
HIGH YIELD FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----
CORPORATE BONDS AND NOTES - 82.7%
FOREIGN (U.S. DOLLAR DENOMINATED) - 31.0%
<C> <S> <C>
$ 1,000,000 @Entertainment Inc., Sr. Disc. Note,
Zero coupon to 07/15/2003;
14.5000% due 07/15/2008 .................................. $ 475,000
1,800,000 @Entertainment Inc., Unit, Sr. Disc. Note,
Zero coupon to 07/15/2003;
14.500% due 02/01/2009++ ................................. 884,250
850,000 HIH Capital Ltd., Conv. Note,
7.500% due 09/25/2006 .................................... 561,000
350,000 HIH Capital Ltd., Conv. Note,
7.500% due 09/25/2006++ .................................. 229,250
2,500,000 MBI Metrobank Finance Ltd., Conv. Bond
Zero coupon due 12/18/2001 ............................... 1,975,000
590,000 Metro Pacific Capital, Bond,
2.500% due 04/11/2003+ ................................... 597,375
900,000 Mexican United States, Bond,
9.875% due 01/15/2007 .................................... 948,375
1,300,000 Pemex Finance Ltd., Bond,
8.875% due 11/15/2010++ .................................. 1,290,198
Philippine Long Distance Telephone Company, MTN:
1,500,000 7.850% due 03/06/2007 .................................... 1,350,525
500,000 10.500% due 04/15/2009 ................................... 510,423
850,000 Poland Communications Inc., Sr. Note,
9.875% due 11/01/2003 .................................... 811,750
2,050,000 SB Treasury Company, Bond,
9.400% due 12/29/2049++ .................................. 2,056,295
1,915,000 Ssangyong Oil Refining Company,
Conv. Deb.,
3.750% due 12/31/2008 .................................... 2,077,775
300,000 Supercanal Holdings SA, Sr. Note,
11.500% due 05/15/2005++ ................................. 142,500
1,600,000 Tokai Pfd Capital Company, Bond,
11.091% due 12/29/2049++ ................................. 1,522,325
850,000 Total Access Communications, Conv. Note,
2.000% due 05/31/2006++ .................................. 803,250
-----------
16,235,291
-----------
HEALTH CARE - 17.8%
2,000,000 Beverly Enterprises Inc., Gtd. Deb.,
9.000% due 02/15/2006 .................................... 2,005,000
242,000 CII Financial Inc., Conv.,
7.500% due 09/15/2001 .................................... 225,968
500,000 Columbia/HCA Healthcare Corporation, Note,
7.750% due 07/15/2036 .................................... 426,933
2,550,000 Dura Pharmaceuticals Inc., Conv. Sub. Note,
3.500% due 07/15/2002 .................................... 1,899,750
1,800,000 DVI, Inc., Sr. Note,
9.875% due 02/01/2004 .................................... 1,773,000
1,450,000 Ivax Corporation, Conv. Deb.,
6.500% due 11/15/2001 .................................... 1,384,750
550,000 Mariner Post-Acute Network, Sub. Note,
9.500% due 11/01/2007 .................................... 286,000
1,111,000 Medical Care International (Columbia),
Conv. Sub. Note,
6.750% due 10/01/2006 .................................... 965,181
500,000 Wright Medical Technology Company,
Series D, Sr. Note,
12.250% due 07/01/2000 ................................... 335,000
-----------
9,301,582
-----------
INFORMATION TECHNOLOGY - 12.3%
2,250,000 Adaptec Inc., Conv. Sub. Note,
4.750% due 02/01/2004 .................................... 1,920,938
2,000,000 Credence Systems Corporation,
Conv. Sub. Note,
5.250% due 09/15/2002 .................................... 1,660,000
1,265,000 Integrated Device Technology, Inc.,
Conv. Sub. Note,
5.500% due 06/01/2002 .................................... 918,706
2,000,000 Loral Space & Communications Ltd., Sr. Note,
9.500% due 01/15/2006++ .................................. 1,930,000
-----------
6,429,644
-----------
SERVICE - 4.9%
950,000 Corporate Express Inc., Conv. Note,
4.500% due 07/01/2000 .................................... 852,625
2,400,000 Veterinary Centers of America,
Conv. Sub. Deb.,
5.250% due 05/01/2006 .................................... 1,743,000
-----------
2,595,625
-----------
MEDIA - 3.4%
1,750,000 Charter Communications Holdings, LLC,
Sr. Note,
8.625% due 04/01/2009++ .................................. 1,800,313
-----------
GAMING - 3.4%
1,875,000 Riviera Holdings Corporation, Company
Guarantee,
10.000% 08/15/2004 ....................................... 1,790,625
-----------
TRANSPORTATION - 3.4%
2,479,000 Equimar Shipholdings Ltd., Gtd. Deb.,
9.875% due 07/01/2007 .................................... 1,769,386
-----------
MANUFACTURING - 2.9%
1,500,000 Jackson Products Inc., Company
Guarantee,
9.500% due 04/15/2005 .................................... 1,507,500
-----------
FOREIGN (U.S. NON-DOLLAR DENOMINATED) - 1.4%
525,000 IPC Magazines, Plc, Bond,
9.625% due 03/15/2008 .................................... 730,551
-----------
METALS/MINING - 1.4%
700,000 Peabody Coal (P&L Coal Holdings Corporation),
Sr. Note, 8.875% due 05/15/2008++ ........................ 729,750
-----------
REAL ESTATE INVESTMENT TRUST - 0.5%
325,000 Rockefeller Center Property Trust, Conv. Deb.,
Zero coupon due 12/31/2000 ............................... 245,375
-----------
CONSUMER NON-DURABLES - 0.3%
1,400,000 Sunbeam Corporation, Sr. Sub. Deb.,
Zero coupon due 03/25/2018++ ............................. 164,500
-----------
Total Corporate Bonds and Notes
(Cost $43,400,084) ....................................... 43,300,142
-----------
LOAN PARTICIPATION AGREEMENTS - 3.0%
1,000,000 Mariner Post-Acute Term Loan B,
8.250% due 03/31/2005** .................................. 800,000
1,000,000 Mariner Post-Acute Term Loan C,
8.500% due 03/31/2006** .................................. 800,000
-----------
Total Loan Participation Agreements
(Cost $1,560,000) ........................................ 1,600,000
-----------
U.S. TREASURY NOTE - 2.4%
(Cost $1,256,094)
1,250,000 5.500% due 03/31/2003*** ................................... 1,260,547
-----------
COLLATERALIZED MORTAGE OBLIGATION - 0.7%
(Cost $396,998)
424,597 Donaldson, Lufkin & Jenrette Acceptance
Corporation, 1995-Q10-B1,
7.928% due 01/25/2026 .................................... 361,173
-----------
SHARES
- ------
COMMON STOCKS - 5.9%
23,800 Franchise Finance Corporation of America ................... 551,863
37,000 Health Care Property Investors, Inc ........................ 1,137,750
69,300 Nationwide Health Properties, Inc .......................... 1,407,656
-----------
Total Common Stocks (Cost $2,935,338) ...................... 3,097,269
-----------
PREFERRED STOCKS - 1.7%
7,000 California Federal Bank, Series A .......................... 187,906
8,200 Cendant Corporation, Conv. Pfd.,
7.500% due 02/16/2001 .................................... 259,838
13,100 First Industrial Realty Trust, Inc.,
Series A, Conv. Pfd.,
9.500% due 11/17/2000 .................................... 323,406
1,000 Microsoft Corporation, Series A, Conv. Pfd.,
$2.196 due 12/15/1999 .................................... 99,375
-----------
Total Preferred Stocks (Cost $875,226) ..................... 870,525
-----------
REPURCHASE AGREEMENT - 4.2%
(Cost $2,197,000)
$ 2,197,000 Agreement with Credit Suisse First Boston Corporation,
4.840%, dated 04/30/1999, to be repurchased at $2,197,886
on 05/03/1999, collateralized by $2,240,940 U.S. Treasury
Bond, 8.875% due 02/15/2019 (Market Value $2,237,289) .... 2,197,000
-----------
TOTAL INVESTMENTS (Cost $52,620,740*) .......................... 100.6% 52,686,656
OTHER ASSETS AND LIABILITIES (NET) ............................. (0.6) (338,210)
----- -----------
NET ASSETS ..................................................... 100.0% $52,348,446
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
** Illiquid security (see note 2 to financial statements).
*** Security held as collateral for loan participation agreements.
+ Variable rate security. The interest rate shown reflects the rate currently in effect.
++ Security exempt from registration under Rule 144A of the Securities Act of 1933.
This security may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
</TABLE>
SCHEDULE OF FOREIGN CURRENCY CONTRACTS
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
---------------------------------------------- NET
IN UNREALIZED
EXPIRATION LOCAL VALUE IN EXCHANGE APPRECIATION
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------------- ------------------ ----------- ------------- --------------
07/28/2000 GBP 300,000 482,344 483,300 $956
====
- ------------------------------------------------------------------------------
GLOSSARY OF TERMS
GBP -- Great Britain Pound Sterling
MTN -- Medium Term Note
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
SHORT TERM HIGH QUALITY BOND FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- -----
CORPORATE BONDS & NOTES - 39.4%
FINANCIAL - 13.5%
<C> <S> <C>
Associates Corporation, Sr. Note:
$ 16,000 6.750% due 10/15/1999 ................................... $ 16,099
250,000 6.000% due 03/15/2000 ................................... 251,252
1,000,000 Bear Stearns Company, Inc., Note,
6.200% due 03/30/2003 ................................... 998,536
1,500,000 Boeing Capital Corporation, MTN,
6.710% due 07/19/2000 ................................... 1,517,554
1,000,000 CIT Group Inc., Sr. Note,
6.375% due 11/15/2002 ................................... 1,014,128
1,500,000 Citigroup, Inc., Note,
6.125% due 06/15/2000 ................................... 1,508,610
1,000,000 Donaldson, Lufkin & Jenrett Acceptance Corporation, MTN,
6.375% due 05/26/2000 ................................... 1,006,879
1,000,000 Finova Capital Corporation, MTN,
6.280% due 11/01/1999 ................................... 1,003,672
1,500,000 General Electric Capital Corporation,
Series A, MTN,
5.800% due 04/24/2000 ................................... 1,506,982
General Motors Acceptance Corporation, Note:
200,000 5.625% due 02/15/2001 ................................... 199,644
300,000 6.875% due 07/15/2001 ................................... 307,128
255,000 Golden West Financial, Deb.,
10.250% due 12/01/2000 .................................. 272,438
3,000,000 Goldman Sachs Group, Note,
7.800% due 07/15/2002++ ................................. 3,153,225
100,000 Heller Financial Inc., Deb.,
9.125% due 08/01/1999 ................................... 100,886
1,000,000 Lehman Brothers Inc., Sr. Sub. Note,
6.125% due 02/01/2001 ................................... 1,000,497
450,000 MBNA America Bank, Note,
6.100% due 12/15/2000 ................................... 447,035
210,000 MBNA Corporation, Sr. Note,
6.875% due 10/01/1999 ................................... 211,142
1,500,000 Merrill Lynch Finance & Company, Note,
8.300% due 11/02/2002 ................................... 1,609,497
1,500,000 Merrill Lynch Finance & Company,
Series B, Note,
6.100% due 10/04/1999 ................................... 1,504,740
717,000 Paine Webber Group, Inc, Deb.,
9.250% due 12/15/2001 ................................... 770,049
1,000,000 Potomac Capital Investment, Note,
6.800% due 09/12/2001++ ................................. 1,002,893
1,000,000 Salomon Smith Barney Holdings, Note,
6.125% due 01/15/2003 ................................... 1,004,172
500,000 US West Capital Funding Inc.,
Company Guaranty,
6.125% due 07/15/2002 ................................... 503,847
------------
20,910,905
------------
BANKS - 3.6%
470,000 Bankers Trust Corporation, Sub. Deb.,
9.500% due 06/14/2000 ................................... 487,810
1,500,000 Chase Manhattan Corporation, Note,
5.500% due 02/15/2001 ................................... 1,493,709
Federal Home Loan Bank, Deb.:
200,000 5.940% due 06/13/2000 ................................... 201,346
200,000 5.890% due 07/24/2000 ................................... 201,315
First Chicago, Bank One Corporation, Sub. Note:
30,000 9.000% due 06/15/1999 ................................... 30,116
2,000,000 9.250% due 11/15/2001 ................................... 2,163,090
1,000,000 Northern Trust Company, Sub. Note,
6.500% due 05/01/2003 ................................... 1,007,136
------------
5,584,522
------------
OIL & GAS - 3.1%
1,000,000 Atlantic Richfield, Inc., MTN,
6.600% due 12/04/2002 ................................... 1,007,500
465,000 Consolidated Natural Gas, Deb.,
8.750% due 06/01/1999 ................................... 465,983
710,000 Enron Corporation, Deb.,
9.125% due 04/01/2003 ................................... 781,721
2,500,000 Occidental Petroleum Corporation, Sr. Note,
6.400% due 04/01/2003 ................................... 2,469,015
65,000 Texaco Capital, Inc., Note,
9.000% due 12/15/1999 ................................... 66,459
------------
4,790,678
------------
FOREIGN (U.S. DOLLAR DENOMINATED) - 2.5%
750,000 Eaton Off Shore Ltd., Company Guaranty,
9.000% due 02/15/2001 ................................... 792,942
1,000,000 Fairfax Financial Holdings, Note,
7.750% due 12/15/2003 ................................... 1,031,042
1,200,000 PDVSA Finance Ltd., Bond,
6.450% due 02/15/2004 ................................... 1,119,780
1,000,000 Sony Corporation, Unsub. Deb.,
6.125% due 03/04/2003 ................................... 1,009,900
------------
3,953,664
------------
UTILITIES - 2.4%
30,000 Alabama Power Company, First Mortgage,
6.375% due 08/01/1999 ................................... 30,066
300,000 National Rural Utilities, Collateral Trust,
6.750% due 09/01/2001 ................................... 306,774
275,000 Orange & Rockland Utilities, Deb.,
9.375% due 03/15/2000 ................................... 283,500
1,000,000 Philadelphia Electric, First Mortgage,
8.000% due 04/01/2002 ................................... 1,055,195
1,000,000 Public Service Electric and Gas, Series Z, Mortgage,
8.750% due 07/01/1999 ................................... 1,005,043
60,000 Southern California Edison Company, Note,
8.250% due 02/01/2000 ................................... 61,103
1,000,000 United Illuminating Company, Note,
6.000% due 12/15/2003 ................................... 974,955
------------
3,716,636
------------
TRANSPORTATION - 2.3%
1,220,000 CSX Corporation, Deb.,
9.500% due 08/01/2000 ................................... 1,275,462
1,000,000 Norfork Southern Corporation, Note,
6.950% due 05/01/2002 ................................... 1,028,147
150,000 Southwest Airlines, Deb.,
9.400% due 07/01/2001 ................................... 160,556
1,000,000 Union Pacific Company, Deb.,
9.625% due 12/15/2002 ................................... 1,115,927
------------
3,580,092
------------
INDUSTRIAL - 2.3%
2,500,000 Cendant Corporation, Note,
7.500% due 12/01/2000 ................................... 2,546,640
1,000,000 Praxair, Inc., Note,
6.150% due 04/15/2003 ................................... 992,393
------------
3,539,033
------------
CONSUMER STAPLES - 2.2%
100,000 Anheuser-Busch Company, Inc., Deb.,
8.750% due 12/01/1999 ................................... 101,881
200,000 Nabisco Inc., Bond,
6.300% due 08/26/1999++ ................................. 200,500
2,000,000 Philip Morris Companies, Inc., Note,
7.500% due 04/01/2004 ................................... 2,106,172
1,000,000 Tyson Foods, Inc., Note,
6.000% due 01/15/2003 ................................... 997,500
------------
3,406,053
------------
RETAIL SALES - 2.1%
1,000,000 Dillards, Inc., Note,
6.430% due 08/01/2004 ................................... 992,974
500,000 Federated Department Stores Inc., Bond,
6.790% due 07/15/2027 ................................... 510,740
450,000 Penny (J.C.) & Company, Inc., Note,
6.950% due 04/01/2000 ................................... 453,306
Wal-Mart Stores, Inc., Note:
100,000 6.750% due 05/15/2002 ................................... 103,574
1,250,000 5.850% due 06/01/2018 ................................... 1,251,563
------------
3,312,157
------------
REAL ESTATE INVESTMENT TRUSTS - 1.8%
400,000 Colonial Realty LP, Note,
7.500% due 07/15/2001 ................................... 403,380
565,000 Dobie Centers Properties, Ltd., Note, Taxable,
6.060% due 05/01/2001++ ................................. 565,407
400,000 ERP Operating LP, Note,
8.500% due 05/15/1999++ ................................. 400,255
1,500,000 Sun Communities Inc., Sr. Note,
7.625% due 05/01/2003 ................................... 1,521,655
------------
2,890,697
------------
CAPITAL GOODS - 1.3%
1,000,000 Crane Company, Note,
7.250% due 06/15/1999 ................................... 1,001,923
1,000,000 Ingersoll-Rand, Sr. Note,
6.255% due 02/15/2001 ................................... 1,009,624
------------
2,011,547
------------
RENTAL AUTO/EQUIPMENT - 1.1%
1,000,000 Hertz Corporation, Sr. Note,
7.375% due 06/15/2001 ................................... 1,027,479
750,000 Penske Truck Leasing Company, Company Guaranty, MTN,
6.650% due 11/01/2000 ................................... 762,187
------------
1,789,666
------------
UTILITIES/TELECOMMUNICATIONS/MEDIA - 0.6%
600,000 Continental Cablevision, Sr. Note,
8.500% due 09/15/2001 ................................... 634,823
Cox Communications, Note:
40,000 8.550% due 06/01/2000 ................................... 41,217
100,000 6.375% due 06/15/2000 ................................... 100,847
100,000 Time Warner Inc., Note,
7.950% due 02/01/2000 ................................... 101,594
------------
878,481
------------
PAPER PRODUCTS - 0.5%
603,000 Boise Cascade Company, Deb.,
9.900% due 03/15/2000 ................................... 618,781
150,000 International Paper Company, Deb.,
9.700% due 03/15/2000 ................................... 154,768
------------
773,549
------------
AEROSPACE/DEFENSE - 0.1%
71,000 Lockheed Martin Corporation, Deb.,
9.375% due 10/15/1999 ................................... 72,194
------------
Total Corporate Bonds & Notes
(Cost $61,072,302) ...................................... 61,209,874
------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 22.6%
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 17.4%
475,000 9.050% due 04/10/2000 ..................................... 491,236
225,000 8.250% due 12/18/2000 ..................................... 235,041
2,000,000 6.450% due 04/23/2001 ..................................... 2,040,175
1,500,000 7.500% due 02/11/2002 ..................................... 1,579,650
5,227,000 5.125% due 02/13/2004 ..................................... 5,119,977
149,905 #250235, 7 Year Balloon,
8.500% due 02/01/2002 ................................... 154,885
859,352 #251621,
6.000% due 03/01/2005 ................................... 860,444
2,917,205 #252214,
6.500% due 01/01/2014 ................................... 2,946,759
224,033 #313030,
10.000% due 05/01/2022 .................................. 241,525
4,916,348 #323075,
6.500% due 01/01/2014 ................................... 4,966,155
4,692,167 #313293,
6.500% due 03/01/2013 ................................... 4,739,703
387,959 #313641,
8.500% due 11/01/2017 ................................... 408,486
3,166,546 #456445,
6.500% due 01/01/2014 ................................... 3,198,626
------------
Total FNMAs (Cost $27,034,570) ............................ 26,982,662
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 3.2%
175,000 7.125% due 07/21/1999 ..................................... 175,796
50,000 7.750% due 11/07/2001 ..................................... 52,756
3,000,000 5.890% due 07/17/2003 ..................................... 3,012,150
112,367 #L73756,
5.500% due 05/01/2001 ................................... 111,689
116,219 #L90217,
5.500% due 06/01/2001 ................................... 115,519
50,044 #L73821,
6.000% due 06/01/2001 ................................... 50,311
240,628 #M90218,
6.000% due 06/01/2001 ................................... 241,911
202,042 #M90453,
6.500% due 05/01/2001 ................................... 204,762
163,261 #G40221,
6.500% due 12/01/1999 ................................... 165,458
216,943 #L74100,
7.000% due 09/01/2001 ................................... 221,218
320,725 #845988,
7.513% due 11/01/2021 ................................... 327,664
244,879 #A01226,
9.500% due 08/01/2016 ................................... 261,097
------------
Total FHLMCs (Cost $4,920,758) ............................ 4,940,331
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 1.2%
143,589 #001991,
9.000% due 04/20/2025 ................................... 152,031
162,926 #038720,
11.000% due 02/15/2010 .................................. 181,326
51,749 #130183,
11.000% due 05/15/2015 .................................. 57,593
143,901 #131917,
11.000% due 10/15/2015 .................................. 160,153
53,286 #139704,
11.000% due 11/15/2015 .................................. 59,304
157,103 #140835,
11.000% due 11/15/2015 .................................. 174,846
99,693 #153965,
10.000% due 02/15/2019 .................................. 109,239
47,701 #189482,
11.000% due 04/15/2020 .................................. 53,088
609,655 #262996,
10.000% due 01/15/2019 .................................. 668,029
150,074 #291375,
11.000% due 08/15/2020** ................................ 167,022
57,588 #377550,
8.000% due 03/15/2012 ................................... 60,148
------------
Total GNMAs (Cost $1,838,067) ............................. 1,842,779
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 0.8%
84,980 #124571,
7.410% due 11/01/2022+ .................................. 87,087
197,145 #141461,
7.466% due 11/01/2021+ .................................. 202,334
182,650 #152205,
7.204% due 01/01/2019+ .................................. 187,342
458,056 #313257,
6.176% due 11/01/2035+ .................................. 460,891
310,935 #82247,
6.125% due 04/01/2019+ .................................. 313,926
------------
Total FNMAs (Cost $1,240,388) ............................. 1,251,580
------------
Total U.S. Government Agency Mortgage-Backed Securities
(Cost $35,033,783) ...................................... 35,017,352
------------
U.S. TREASURY NOTES - 21.6%
350,000 5.875% due 08/31/1999 ............................. 351,313
2,950,000 7.750% due 01/31/2000 ............................. 3,012,687
1,000,000 5.500% due 04/15/2000 ............................. 1,005,313
3,500,000 6.125% due 07/31/2000 ............................. 3,548,125
1,100,000 5.750% due 10/31/2000 ............................. 1,111,344
8,250,000 5.750% due 11/15/2000 ............................. 8,337,614
2,600,000 5.500% due 12/31/2000 ............................. 2,617,875
6,550,000 6.250% due 04/30/2001 ............................. 6,695,331
5,650,000 6.625% due 06/30/2001 ............................. 5,824,799
1,000,000 5.750% due 08/15/2003 ............................. 1,017,813
------------
Total U.S. Treasury Notes
(Cost $33,352,188) ................................... 33,522,214
------------
ASSET-BACKED SECURITIES - 11.8%
300,000 Conti-Mortgage Home Equity Loan Trust, 1996-4-A6,
6.710% due 06/15/2014 ................................... 303,695
3,900,000 Dayton Hudson Credit Card Master Trust, 1997-1-A,
6.250% due 08/25/2005 ................................... 3,937,460
5,000,000 FFCA Secured Lending Corporation,
1999-1A-A1A,
6.370% due 10/18/2008 ................................... 5,001,025
2,500,000 First USA Credit Card Master Trust,
1997-6-A,
6.420% due 03/17/2005 ................................... 2,553,488
300,000 Green Tree Financial Corporation, 1995-6-B1,
7.700% due 09/15/2026 ................................... 305,959
General Electric Management Services,
1996-HE3-A3:
73,608 6.500% due 07/25/2024 ................................... 73,446
1,491,104 7.150% due 09/25/2026 ................................... 1,502,712
300,000 Green Tree Home Equity Loan Trust,
1997-B-A5,
7.150% due 04/15/2027 ................................... 305,081
1,182,106 Green Tree Security Mortgage Trust, 1994-A,
6.900% due 02/15/2004 ................................... 1,181,946
600,000 MBNA Master Credit Card Trust, 1995-E-A,
5.1463% due 01/15/2005+ ................................. 602,265
51,831 Old Stone Credit Corporation, 1992-4-A,
6.550% due 11/15/2007 ................................... 51,969
1,000,000 Standard Credit Card Master Trust, 1994-4A,
8.250% due 11/07/2003 ................................... 1,055,696
729,365 The Money Store Home Equity Trust,
1997-C-AF,
6.307% due 08/15/2012 ................................... 730,908
687,223 World Omni Automobile Lease Securitization, 1996-B,
6.850% due 11/15/2002++ ................................. 683,787
------------
Total Asset-Backed Securities
(Cost $18,336,661) ...................................... 18,289,437
------------
FOREIGN GOVERNMENT BONDS - 1.5%
1,000,000 Ontario, Province of Canada,
6.125% due 06/28/2000 ................................... 1,010,900
1,250,000 Province of Alberta, Government Guaranty,
9.250% due 04/01/2000 ................................... 1,295,062
------------
Total Foreign Government Bonds
(Cost $2,289,454) ....................................... 2,305,962
------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 1.2%
Countrywide Funding Corporation:
72,943 1994-1-A3,
6.250% due 03/25/2024 ................................... 72,308
140,945 1994-C-A5,
6.375% due 03/25/2024 ................................... 141,078
1,399,018 Federal Home Loan Mortgage Corporation,
Class VG,
6.250% due 06/25/2004 ................................... 1,407,363
196,570 Prudential Home Mortgage, 1993-43-A1,
5.400% due 10/25/2023 ................................... 195,996
------------
Total CMOs (Cost $1,831,179) .............................. 1,816,745
------------
REPURCHASE AGREEMENT - 0.7%
(Cost $1,099,000)
1,099,000 Agreement with Credit Suisse First Boston Corporation,
4.840%, dated 04/30/1999, to be repurchased at $1,099,443
on 05/03/1998, collateralized by $1,120,980 U.S. Treasury
Bond, 8.875% due 02/15/2019 (Market Value $1,119,154) ... 1,099,000
------------
TOTAL INVESTMENTS (Cost $153,014,567*) ......................... 98.8% 153,260,584
OTHER ASSETS AND LIABILITIES (NET) ............................. 1.2 1,939,795
----- ------------
NET ASSETS ..................................................... 100.0% $155,200,379
===== ============
- --------------
* Aggregate cost for federal tax purposes.
** Security pledged as collateral for futures contract.
+ Variable rate security. The interest rate shown reflects the rate currently in effect.
++ Security exempt from registration under Rule 144A of the Securities Act of 1933. This security
may be resold in transactions exempt from registration, normally to qualified institutional buyers.
</TABLE>
NUMBER OF UNREALIZED
CONTRACTS VALUE (DEPRECIATION)
--------- ----- --------------
FUTURES CONTRACTS - SHORT POSITION
77 U.S. 5 Year Treasury Note,
June 1999 ................. $8,557,828 $(2,288)
========== =======
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
BALLOON -- Five- and seven- year mortgages with larger dollar amounts of
payments falling due in the later years of the obligation.
LP -- Limited Partnership
MTN -- Medium Term Note
- ------------------------------------------------------------------------------
See Notse to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
U.S. GOVERNMENT SECURITIES FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- -----
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 64.7%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 26.0%
<C> <S> <C>
$10,430,291 6.000% due 04/20/2026 - 02/20/2029 ....................... $ 10,072,875
11,808,892 6.500% due 08/15/2023 - 03/15/2024 ....................... 11,756,388
3,051,843 6.800% due 04/20/2025 .................................... 3,063,974
23,265,722 7.000% due 07/15/2008 - 01/15/2029 ....................... 23,670,911
43,496,476 7.500% due 12/15/2022 - 06/15/2027 ....................... 44,912,188
796,946 8.000% due 04/15/2022 .................................... 831,917
1,032,766 8.500% due 05/15/2022 .................................... 1,093,024
9,463,614 9.000% due 10/15/2008 - 06/15/2022 ....................... 10,151,516
9,263,071 9.500% due 04/15/2016 - 08/15/2021 ....................... 9,993,186
32,593 13.500% due 09/15/2014 - 12/15/2014 ...................... 38,193
15,930 14.000% due 06/15/2011 ................................... 18,747
-------------
Total GNMAs (Cost $117,184,513) .......................... 115,602,919
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 20.0%
31,092,730 6.500% due 02/01/2011 - 03/01/2029 ....................... 31,228,408
1,388,431 7.000% due 07/01/2024 - 02/01/2026 ....................... 1,411,049
50,000,381 7.500% due 02/01/2006 - 02/01/2013 ....................... 51,708,184
2,238,702 8.500% due 04/01/2019 .................................... 2,356,730
686,895 8.750% due 01/01/2013 .................................... 724,997
1,115,662 9.000% due 12/01/2008 - 08/01/2022 ....................... 1,185,640
443,145 9.500% due 06/01/2016 - 05/01/2017 ....................... 471,395
-------------
Total FHLMCs (Cost $87,607,156) .......................... 89,086,403
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 18.7%
28,594 5.500% due 02/01/2009 .................................... 27,796
2,468,657 5.880% due 03/01/2028 .................................... 2,473,856
9,927,349 6.000% due 11/01/2028 - 02/01/2029 ....................... 9,641,240
53,299,633 6.500% due 08/01/2028 - 04/01/2029 ....................... 53,062,623
13,338,472 7.000% due 06/01/2010 - 04/01/2029 ....................... 13,567,728
3,191,551 8.000% due 05/01/2022 - 01/01/2025 ....................... 3,323,911
474,478 8.500% due 02/01/2023 - 09/01/2025 ....................... 499,583
357,320 9.000% due 06/01/2016 - 06/01/2021 ....................... 379,509
-------------
Total FNMAs (Cost $83,317,842) ........................... 82,976,246
-------------
Total U.S. Government Agency Mortgage-Backed Securities
(Cost $288,109,511) .................................... 287,665,568
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 13.8%
Federal Home Loan Mortgage Corporation:
2,629,176 Series 1049, Class F,
5.838% due 02/15/2021 .................................. 2,659,911
1,142,214 Series 1288, Class HA,
5.500% due 11/15/2020 .................................. 1,140,175
4,770,000 Series 1638, Class K,
6.500% due 03/15/2023 .................................. 4,773,411
2,000,000 Series 1652, Class PL,
7.000% due 01/15/2024 .................................. 2,060,354
1,795,595 Series 1730, Class A,
7.000% due 07/15/2017 .................................. 1,803,487
5,000,000 Series 2076, Class PB,
6.000% due 10/15/2017 .................................. 5,006,125
3,287,491 6.850% due 07/25/2018 .................................. 3,295,956
Federal National Mortgage Association:
2,230,000 Series G93-11, Class D,
6.000% due 08/25/2007 .................................. 2,239,333
1,945,423 Series 1990-49, Class G,
9.000% due 05/25/2020 .................................. 2,033,216
1,012,126 Series 1993-103, Class FA,
5.388% due 06/25/2019 .................................. 1,019,754
4,200,000 Series 1993-103, Class PG,
6.250% due 06/25/2019 .................................. 4,227,279
1,950,000 Series 1994-64, Class JC,
7.500% due 08/25/2001 .................................. 1,988,333
6,000,000 Series 1997-40, Class PE,
6.750% due 07/18/2019 .................................. 6,049,176
2,476,986 Series 1997-32, Class FA,
5.538% due 04/25/2027 .................................. 2,490,736
6,996,495 Trust 259 STRIP,
7.000% due 04/01/2024 .................................. 1,669,202
Series 1997-MI, Class A,
672,986 6.783% due 01/17/2003 .................................. 682,237
4,000,000 Series 1989-18, Class-C,
9.500% due 04/25/2004 .................................. 4,153,784
1,611,142 Series 1992-83, Class X,
7.000% due 02/25/2022 .................................. 1,625,422
3,268,577 Series 1993-162, Class E,
6.000% due 08/25/2023 .................................. 3,207,458
5,000,000 Series 1993-163, Class BE,
7.000% due 10/25/2021 .................................. 5,055,245
694,198 L.F. Rothschild Mortgage Trust,
Series 3, Class Z,
9.950% due 09/01/2017 .................................. 754,411
3,581,528 Merrill Lynch Trust,
6.500% due 08/25/2015 .................................. 3,574,565
-------------
Total CMOs (Cost $56,877,676) ............................ 61,509,570
-------------
U.S. TREASURY OBLIGATIONS - 11.8%
U.S. TREASURY BONDS - 7.1%
1,500,000 6.000% due 02/15/2026 .................................... 1,519,687
5,695,000 6.250% due 08/15/2023 .................................... 5,931,701
1,888,000 6.625% due 02/15/2027 .................................... 2,075,031
3,250,000 7.250% due 08/15/2022 .................................... 3,782,188
6,500,000 7.500% due 11/15/2016 .................................... 7,613,125
7,000,000 8.125% due 08/15/2019 .................................... 8,795,940
2,000,000 5.250% due 11/15/2028 .................................... 1,848,750
-------------
31,566,422
-------------
U.S. TREASURY NOTES - 4.7%
10,000,000 4.750% due 11/15/2008 .................................... 9,553,129
5,000,000 4.875% due 03/31/2001 .................................... 4,982,815
5,000,000 5.750% due 10/31/2000 .................................... 5,051,564
1,100,000 6.500% due 10/15/2006 .................................... 1,172,532
-------------
20,760,040
-------------
Total U.S. Treasury Obligations
(Cost $52,233,489) ..................................... 52,326,462
-------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.3%
3,000,000 Federal Home Loan Bank, Bond,
6.135% due 02/17/2009 .................................. 2,905,320
10,000,000 Federal Home Loan Bank, Note,
5.125% due 10/15/2008 .................................. 9,460,809
2,000,000 Federal National Mortgage Association, MTN,
6.000% due 01/14/2005 .................................. 1,993,091
12,500,000 Federal National Mortgage Association, Note,
6.000% due 05/15/2008 .................................. 12,618,897
1,250,000 Federal National Mortgage Association, Deb.,
6.210% due 08/06/2038 .................................. 1,210,267
-------------
Total U.S. Government Obligations
(Cost $28,707,904) ..................................... 28,188,384
-------------
REPURCHASE AGREEMENT - 2.2%
(Cost $9,833,000)
9,833,000 Agreement with Credit Suisse First Boston Corporation,
4.840% dated 04/30/1999, to be repurchased at
$9,836,966 on 05/03/1999, collateralized by $10,029,660
U.S. Treasury Bond, 8.875% due 02/15/2019
(Market Value $10,013,319) .............................. 9,833,000
-------------
TOTAL INVESTMENTS (Cost $435,761,580*) ......................... 98.8% 439,522,984
OTHER ASSETS AND LIABILITIES (NET) ............................. 1.2 5,202,259
----- -------------
NET ASSETS ..................................................... 100.0% $444,725,243
===== ============
- --------------
*Aggregate cost for federal tax purposes.
</TABLE>
- ------------------------------------------------------------------------------
GLOSSARY OF TERMS
MTN -- Medium Term Note
STRIP -- Separate trading of registered interest and principal of securities
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
INCOME FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------- -----
CORPORATE BONDS AND NOTES - 77.6%
INDUSTRIAL - 41.4%
<C> <S> <C>
$ 100,000 360(deg) Communications Company, Sr. Note, 7.600%
due 04/01/2009 ........................................ $ 109,011
1,500,000 Aetna Services, Inc., Company Guarantee, 7.625%
due 08/15/2026 ........................................ 1,513,023
1,500,000 American Home Products Corporation, Deb., 7.250%
due 03/01/2023 ........................................ 1,573,224
1,000,000 AMR Corporation, Deb.,
9.750% due 03/15/2000 .................................. 1,031,967
250,000 Battle Mountain Gold Company, Conv. Note, 6.000%
due 01/04/2005 ......................................... 184,778
Black & Decker Corporation, Note:
185,000 7.500% due 04/01/2003 .................................. 192,404
50,000 7.000% due 02/01/2006 .................................. 50,882
179,000 Burlington Industries Inc., Deb.,
7.250% due 08/01/2027 .................................. 181,169
1,500,000 Burlington Northern Santa Fe, Note,
8.750% due 02/25/2022 .................................. 1,759,002
1,600,000 Burlington Resources, Deb.,
9.125% due 10/01/2021 .................................. 1,957,181
5,000,000 Cendant Corporation, Note,
7.750% due 12/01/2003 .................................. 5,161,579
1,047,000 CII Financial Inc., Conv. Note,
7.500% due 09/15/2001 .................................. 977,636
165,000 Coastal Corporation, Sr. Note,
8.125% due 09/15/2002 .................................. 174,956
1,800,000 Columbia/HCA Healthcare Corporation,
Sub. Deb.,
6.750% due 10/01/2006 .................................. 1,563,750
550,000 Comcast Cable Communication, Note, 6.200% due 11/15/2008 . 537,535
Conagra, Inc., Sr. Note:
750,000 9.750% due 03/01/2021 .................................. 966,868
843,000 6.700% due 08/01/2027 .................................. 853,529
3,030,000 Conrail, Inc., Deb.,
9.750% due 06/15/2020 .................................. 3,916,396
2,000,000 Corporate Express, Inc., Conv. Note,
4.500% due 07/01/2000 .................................. 1,795,000
350,000 CPC International, Inc., Note,
6.150% due 01/15/2006 .................................. 350,585
Crane Company, Note:
1,000,000 7.250% due 06/15/1999 .................................. 1,001,923
500,000 8.500% due 03/15/2004 .................................. 550,470
300,000 CSR America, Inc., Note,
6.875% due 07/21/2005 .................................. 301,519
200,000 Dura Pharmaceuticals Inc., Conv. Sub. Note, 3.500%
due 07/15/2002 ......................................... 149,000
250,000 Equimar Shipholdings Ltd., Gtd. Deb.,
9.875% due 07/01/2007 .................................. 178,438
355,000 Federated Department Stores, Inc., Sr. Note, 8.125%
due 10/15/2002 ......................................... 377,469
2,000,000 Ford Holdings, Inc., Deb.,
9.375% due 03/01/2020 .................................. 2,512,782
Ford Motor Company, Deb.:
3,750,000 8.900% due 01/15/2032 .................................. 4,611,615
825,000 7.400% due 11/01/2046 .................................. 856,608
120,000 Fortune Brands, Inc., Note,
7.500% due 05/15/1999 .................................. 120,079
General Motors Corporation, Deb.:
350,000 9.625% due 12/01/2000 .................................. 370,742
8,000,000 9.400% due 07/15/2021 .................................. 10,127,294
265,000 Goodrich (BF) Company, Note,
7.000% due 04/15/2038 .................................. 254,464
850,000 Golden Books Publishing, Sr. Note,
in default,
7.650 due 09/15/2002 ................................... 355,938
250,000 GTE South, Inc., Deb.,
6.000% due 02/15/2008 .................................. 247,102
400,000 Honeywell, Inc., Note,
6.600% due 04/15/2001 .................................. 406,004
675,000 Ingersoll-Rand Company, Sr. Note,
6.255% due 02/15/2001 .................................. 681,496
1,400,000 Integrated Device Technology, Inc.,
Conv. Sub. Note,
5.500% due 06/01/2002 .................................. 1,016,750
200,000 International Business Machines Corporation, Note,
6.375% due 06/15/2000 .................................. 202,237
160,000 International Paper Company, Deb.,
9.700% due 03/15/2000 .................................. 165,086
1,250,000 Jackson Products, Inc., Company Guarantee, 9.500% due 04/
15/2005 ................................................ 1,256,250
6,000,000 James River Corporation, Deb.,
9.250% due 11/15/2021 .................................. 7,190,987
250,000 Lennar Corporation, Sr. Note,
7.625% due 03/01/2009 .................................. 247,332
955,000 Lockheed Martin Corporation, Company Guaranty,
7.750% due 05/01/2026 .................................. 1,033,724
Loral Corporation, Deb.:
1,000,000 8.375% due 06/15/2024 .................................. 1,135,787
1,000,000 7.625% due 06/15/2025 .................................. 1,050,176
500,000 Loral Space & Communications Ltd.,
Sr. Note,
9.500% due 01/15/2006++ ................................ 482,500
MCI Worldcom, Inc., Sr. Note:
996,000 6.125% due 08/15/2001 .................................. 1,002,544
675,000 7.550% due 04/01/2004 .................................. 716,160
540,000 Nabisco, Inc., Note,
6.000% due 02/15/2001++ ................................ 539,618
8,700,000 Occidental Petroleum Corporation, Sr. Note, 11.125%
due 08/01/2010 ......................................... 11,151,598
6,500,000 Ogden Corporation, Deb.,
9.250% due 03/01/2022 .................................. 7,831,407
3,000,000 PacifiCare Health Systems Inc., Sr. Note, 7.000%
due 09/15/2003 ......................................... 3,077,886
5,950,000 Phillips Petroleum Company, Deb.,
9.180% due 09/15/2021 .................................. 6,412,082
6,860,000 Praxair, Inc., Deb.,
8.700% due 07/15/2022 .................................. 7,931,319
Raytheon Company, First Mortgage:
750,000 Deb., 7.200% due 8/15/2027 ............................. 772,845
Note:
2,385,000 5.950% due 3/15/2001 ................................... 2,397,454
1,070,000 6.450% due 8/15/2002 ................................... 1,087,318
1,000,000 Riviera Holdings Corporation, Company Guarantee,
10.000% due 8/15/2004 .................................. 955,000
866,000 Saks, Inc., Company Guaranty,
8.250% due 11/15/2008 .................................. 948,270
200,000 Southwest Airlines Company, Deb.,
7.875% due 09/01/2007 .................................. 217,805
1,630,000 Staples, Inc., Sr. Note,
7.125% due 08/15/2007 .................................. 1,665,358
5,260,000 Time Warner, Inc., Deb.,
9.150% due 02/01/2023 .................................. 6,534,692
Union Pacific Company:
250,000 Note,
7.375% due 05/15/2001 .................................. 257,156
200,000 Deb., 9.625% due 12/15/2002 ............................ 223,185
United Air Lines, Inc.:
5,000,000 Equipment Trust Certificates,
10.850% due 07/05/2014 ................................. 6,204,329
Pass-through Certificates:
3,000,000 9.080% due 10/26/2015 .................................. 3,442,290
5,500,000 9.560% due 10/19/2018 .................................. 6,551,875
495,000 USA Waste Services, Inc., Sr. Note,
7.125% due 10/01/2007 .................................. 515,500
1,012,000 USG Corporation, Sr. Note,
9.250% due 09/15/2001 .................................. 1,078,196
1,200,000 Veterinary Centers of America,
Conv. Sub. Deb.,
5.250% due 05/01/2006 .................................. 871,500
1,000,000 V.F. Corporation, Note,
9.500% due 05/01/2001 .................................. 1,069,570
350,000 Wal-Mart Stores, Inc., Note,
8.625% due 04/01/2001 .................................. 369,362
1,145,000 Waste Management, Inc., Note,
7.700% due 10/01/2002 .................................. 1,191,541
275,000 Williams Companies, Inc., Note,
6.200% due 08/02/2002 .................................. 274,606
200,000 WMX Technologies Inc., Note,
8.250% due 11/15/1999 .................................. 202,631
-------------
137,227,344
-------------
FINANCIAL - 11.5%
310,000 Allstate Corporation, Deb.,
6.750% due 05/15/2018 .................................. 309,963
80,000 Associates Corporation, Sr. Note,
6.625% due 05/15/2001 .................................. 81,481
1,225,000 AT&T Capital Corporation, MTN,
6.250% due 05/15/2001 .................................. 1,233,798
9,000,000 Barclays North American Capital Corporation, Capital Note,
9.750% due 05/15/2021 .................................. 9,923,444
2,000,000 Continental Corporation, Note,
7.250% due 03/01/2003 .................................. 2,010,148
1,520,000 Donaldson, Lufkin & Jenrette Acceptance Corporation,
Sr. Note, 6.500% due 06/01/2008 ........................ 1,502,339
440,000 Equitable Companies, Inc., Deb.,
7.000% due 04/01/2028 .................................. 439,954
Finova Capital Corporation, MTN:
745,000 6.220% due 03/01/2000 .................................. 748,463
1,146,000 5.980% due 02/27/2001 .................................. 1,147,926
Ford Motor Credit Company, Note:
250,000 6.850% due 08/15/2000 .................................. 254,378
500,000 8.200% due 02/15/2002 .................................. 530,576
820,000 6.125% due 04/28/2003 .................................. 824,736
1,000,000 GATX Leasing Corporation, MTN,
10.000% due 03/21/2001 ................................. 1,065,297
General Motors Acceptance Corporation, Note:
100,000 9.625% due 05/15/2000 .................................. 104,116
2,110,000 7.125% due 05/01/2001 .................................. 2,165,786
Jefferson-Pilot Capital, Bond:
500,000 8.140% due 01/15/2046++ ................................ 510,979
100,000 8.285% due 03/01/2046++ ................................ 103,971
1,250,000 Kemper Corporation, Note,
6.875% due 09/15/2003 .................................. 1,278,915
950,000 Lehman Brothers Holdings Inc., Note, 8.500%
due 05/01/2007 ......................................... 1,046,427
495,000 MBNA America Bank NA, Note,
6.920% due 05/30/2000 .................................. 497,789
Merrill Lynch & Company, Note:
1,000,000 6.000% due 02/12/2003 .................................. 1,000,522
1,450,000 6.500% due 07/15/2018 .................................. 1,378,107
2,000,000 6.750% due 06/01/2028 .................................. 1,930,190
Paine Webber Group, Inc., MTN, Sr. Note:
375,000 6.785% due 07/01/2003 .................................. 379,937
830,000 8.060% due 01/17/2017 .................................. 898,732
415,000 7.390% due 10/16/2017 .................................. 420,890
500,000 PNC Institute Capital B, Company Guaranty, 8.315%
due 05/15/2027++ ....................................... 531,565
280,000 Salomon, Inc., Sr. Note,
7.000% due 05/15/1999 .................................. 280,129
Salomon Smith Barney Holding:
300,000 Sr. Note,
7.590% due 01/28/2000 .................................. 304,355
1,382,000 Note,
6.500% due 03/01/2000 .................................. 1,393,965
Sears Roebuck Acceptance Corporation:
1,075,000 Note,
6.000% due 03/20/2003 .................................. 1,075,731
1,000,000 Bond,
7.000% due 06/15/2007 .................................. 1,034,647
500,000 Travelers Property Casualty Corporation, Note,
6.750% due 04/15/2001 .................................. 507,207
505,000 US Leasing International, Sr. Note,
8.750% due 12/01/2001 .................................. 536,106
575,000 USF&G Corporation, Sr. Note,
8.375% due 06/15/2001 .................................. 601,388
-------------
38,053,957
-------------
FOREIGN (U.S. DOLLAR DENOMINATED) - 11.0%
764,000 Canadian National Railway Company, Note, 6.900%
due 07/15/2028 ......................................... 750,865
2,500,000 HIH Capital Ltd., Conv. Note,
7.500% due 09/25/2006 .................................. 1,650,000
1,000,000 Hyder Plc, Bond,
6.750% due 12/15/2004++ ................................ 1,000,153
4,250,000 MBI Metrobank Finance Ltd., Conv. Bond, Zero coupon
due 12/18/2001 ......................................... 3,357,500
250,000 Metro Pacific Capital, Bond,
2.500% due 04/11/2003 .................................. 253,125
8,500,000 Petro-Canada, Deb.,
9.250% due 10/15/2021 .................................. 10,472,425
2,300,000 Poland Communications, Inc., Sr. Note, 9.875%
due 11/01/2003 ......................................... 2,196,500
1,650,000 Republic of Korea, Unsub. Note,
8.875% due 04/15/2008 .................................. 1,795,795
Royal Caribbean Cruises:
426,000 Sr. Note,
7.125% due 09/18/2002 .................................. 435,089
111,000 Sr. Note,
7.250% due 08/15/2006 .................................. 113,558
450,000 Deb.,
7.500% due 10/15/2027 .................................. 436,670
1,750,000 SB Treasury Company, Bond,
9.400% due 12/29/2049++ ................................ 1,755,374
100,000 Sony Corporation, Unsub. Bond,
6.125% due 03/04/2003 .................................. 100,990
2,490,000 Ssangyong Oil Refining Company,
Conv. Deb.,
3.750% due 12/31/2008 .................................. 2,701,650
2,500,000 Tatneft Finance,
9.000% due 10/29/2002 .................................. 768,750
1,500,000 Tokai Pfd Capital Company, Bond,
9.980% due 12/29/2049++ ................................ 1,427,179
500,000 Total Access Communications, Conv. Note,
2.000% due 05/31/2006++ ................................ 472,500
5,750,000 Trans-Canada Pipeline Corporation, Deb., 8.500% due 03/20/
2023 ................................................... 6,045,493
883,000 United Utilities PLC, Note,
6.250% due 08/15/2005 .................................. 872,406
-------------
36,606,022
-------------
BANKS - 7.3%
175,000 Abbey National First Capital,
Conv. Sub. Note,
8.200% due 05/15/2004 .................................. 190,368
400,000 Banc One Corporation, Sub. Note,
10.000% due 08/15/2010 ................................. 510,096
BankAmerica Corporation, Sub. Note:
150,000 7.500% due 10/15/2002 .................................. 157,286
1,000,000 6.625% due 08/01/2007 .................................. 1,015,975
275,000 7.250% due 10/15/2025 .................................. 283,968
670,000 6.800% due 03/15/2028 .................................. 655,048
BankBoston NA, Sub. Note:
370,000 7.375% due 09/15/2006 .................................. 379,490
1,500,000 6.375% due 03/25/2008 .................................. 1,483,072
1,000,000 Bank of New York, Sub. Note,
7.875% due 11/15/2002 .................................. 1,063,127
1,000,000 Barnett Banks, Florida, Inc., Sub. Note, 10.875%
due 03/15/2003 ......................................... 1,154,039
690,000 BB&T Corporation, Sub. Note,
7.250% due 06/15/2007 .................................. 721,117
Chase Manhattan Corporation, Sub. Note:
1,000,000 8.500% due 02/15/2002 .................................. 1,065,184
400,000 7.125% due 03/01/2005 .................................. 415,944
1,000,000 Citicorp, Sub. Note,
8.000% due 02/01/2003 .................................. 1,064,598
1,100,000 First Interstate Bancorp, Sub. Note,
9.125% due 02/01/2004 .................................. 1,229,672
1,000,000 First Nationwide Bank, Sub. Deb.,
10.000% due 10/01/2006 ................................. 1,149,089
246,000 First Union Corporation, Sub. Note,
9.450% due 08/15/2001 .................................. 263,619
995,000 Fleet Financial Group, Sub. Deb.,
6.875% due 01/15/2028 .................................. 977,492
1,000,000 Key Bank NA, Sub. Deb.,
6.950% due 02/01/2028 .................................. 988,228
1,000,000 Manufacturers and Trade Trust Company, Sub. Note,
8.125% due 12/01/2002 .................................. 1,058,775
1,000,000 Mellon Financial Company, Sub. Deb., 9.750%
due 06/15/2001 ......................................... 1,079,096
500,000 Mercantile Bank, Sub. Note,
7.625% due 10/15/2002 .................................. 524,641
250,000 Morgan (JP) & Company Inc., Sub. Note, 7.625%
due 09/15/2004 ......................................... 265,939
600,000 NationsBank Corporation, Sub. Note, 6.375% due 02/15/2008 598,141
1,000,000 Norwest Bancorp, Sub. Deb.,
6.650% due 10/15/2023 .................................. 946,574
400,000 Shawmut Bank, NA, Sub. Note,
8.625% due 02/15/2005 .................................. 444,982
500,000 Summit Bancorp, Sub. Note,
8.625% due 12/10/2002 .................................. 538,803
1,475,000 SunTrust Banks, Sr. Note,
6.250% due 06/01/2008 .................................. 1,462,675
2,500,000 Superior Financial Acquisition Corporation, Sr. Note,
8.650% due 04/01/2003 .................................. 2,488,770
-------------
24,175,808
-------------
UTILITIES - 4.7%
300,000 Avon Energy Partners Holding, Sr. Note,
6.730% due 12/11/2002++ ................................ 304,826
305,000 Florida Power & Light, First Mortgage, 5.375%
due 04/01/2000 ......................................... 305,206
5,000,000 Mississippi Power & Light Company, First and Refundable
Mortgage,
8.650% due 01/15/2023 .................................. 5,084,435
1,030,000 National Rural Utilities, Collateral Trust, 5.750%
due 01/15/2010 .......................................... 992,288
Niagara Mohawk Power, Deb.:
1,000,000 9.750% due 11/01/2005 .................................. 1,181,444
1,414,000 8.770% due 01/01/2018 .................................. 1,498,908
Texas Utilities Electric Company, First Mortgage:
1,200,000 9.500% due 08/01/1999 .................................. 1,207,736
1,200,000 8.875% due 02/01/2022 .................................. 1,309,224
3,000,000 8.750% due 11/01/2023 .................................. 3,238,616
220,000 Texas-New Mexico Power Company, Sr. Note,
6.250% due 01/15/2009 .................................. 214,791
125,000 Virginia Electric Power Company, Mortgage, 8.875%
due 06/01/1999 ......................................... 125,315
-------------
15,462,789
-------------
REAL ESTATE INVESTMENT TRUSTS - 1.7%
490,000 Avalonbay Communities, Sr. Note,
6.500% due 07/15/2003 .................................. 487,663
500,000 Developers Diversified Realty, MTN,
Sr. Note,
6.580% due 02/06/2001 .................................. 494,916
Franchise Finance Corporation:
3,000,000 MTN,
7.070% due 01/15/2008 .................................. 2,784,903
Sr. Note:
900,000 7.000% due 11/30/2000 .................................. 900,066
1,100,000 7.875% due 11/30/2005 .................................. 1,090,037
-------------
5,757,585
-------------
Total Corporate Bonds and Notes
(Cost $246,588,661) .................................... 257,283,505
-------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 11.3%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 4.1%
1,135,216 7.000% due 07/15/2023 .................................... 1,154,292
600,436 6.500% due 08/15/2023 .................................... 597,766
1,733,848 6.500% due 12/15/2023 .................................... 1,726,139
403,839 7.500% due 12/15/2023 .................................... 417,830
2,167,431 6.000% due 02/15/2024 .................................... 2,103,129
1,715,847 6.500% due 03/15/2024 .................................... 1,708,218
1,509,825 6.500% due 07/15/2024 .................................... 1,507,979
173,190 8.000% due 06/15/2027 .................................... 180,790
1,525,740 8.000% due 08/15/2027 .................................... 1,592,691
424,762 7.500% due 01/15/2028 .................................... 438,536
247,382 7.500% due 02/15/2028 .................................... 255,404
765,057 7.500% due 03/15/2028 .................................... 789,867
535,816 7.500% due 08/15/2028 .................................... 553,192
570,411 7.500% due 10/15/2028 .................................... 588,909
-------------
Total GNMAs (Cost $13,417,553) ........................... 13,614,742
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 3.7%
1,361,809 6.000% due 08/01/2013 .................................... 1,351,622
1,622,352 5.500% due 03/01/2014 .................................... 1,577,083
317,481 7.536% due 06/01/2016 .................................... 324,342
58,838 7.000% due 07/01/2022 .................................... 59,716
163,950 7.000% due 07/01/2023 .................................... 166,397
61,743 7.000% due 08/01/2026 .................................... 62,665
120,569 7.000% due 09/01/2026 .................................... 122,369
18,832 7.000% due 11/01/2026 .................................... 19,113
3,478,817 6.500% due 09/01/2028 .................................... 3,463,350
2,987,836 6.500% due 11/01/2028 .................................... 2,974,552
132,652 6.000% due 02/01/2029 .................................... 128,815
999,107 6.000% due 03/01/2029 .................................... 970,202
999,253 6.000% due 04/01/2029 .................................... 970,343
-------------
Total FNMAs (Cost $12,121,470) ........................... 12,190,569
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 3.5%
119,267 #380061,
9.000% due 12/01/2004 .................................. 124,218
1,479,838 #G10735,
7.500% due 09/01/2012 .................................. 1,529,812
978,417 #C00362,
9.000% due 06/01/2024 .................................. 1,039,787
390,803 #C80253,
9.000% due 01/01/2025 .................................. 415,316
8,409,050 #C00701,
6.500% due 01/01/2029 .................................. 8,379,550
-------------
Total FHLMCs (Cost $11,529,090) .......................... 11,488,683
-------------
Total U.S. Government Agency Mortgage-Backed Securities
(Cost $37,068,113) ..................................... 37,293,994
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 2.7%
1,750,000 Donaldson, Lufkin & Jenrette Acceptance Corporation,
1993-MF17-A2,
7.350% due 12/18/2003 .................................. 1,782,436
1,378,825 Donaldson, Lufkin & Jenrette Acceptance Corporation,
1995-Q10-B-1,
7.928% due 01/25/2026 .................................. 1,172,863
9,002 Federal Home Loan Mortgage Corporation, Series 1026-E,
8.750% due 06/15/2005 .................................. 8,990
85,389 Federal Home Loan Mortgage Corporation, Series 1311-H,
7.500% due 07/15/2020 .................................. 85,333
150,000 Federal National Mortgage Association, Series 1996-M7-B,
6.838% due 06/17/2011 .................................. 153,173
2,396,932 Federal National Mortgage Association, Series 1997-42-EA,
7.250% due 03/18/2026 .................................. 2,417,917
393,091 Resolution Trust Corporation, 1991-M2-A2, 7.132%
due 09/25/2020 ......................................... 376,902
2,838,954 Weyerhauser Mortgage Corporation,
1982-C, FHA Putable,
7.430% due 06/01/2022 .................................. 2,944,322
-------------
Total CMOs (Cost $8,827,295) ............................. 8,941,936
-------------
U.S. TREASURY OBLIGATIONS - 5.7%
U.S. TREASURY BONDS - 4.3%
10,500,000 6.250% due 08/15/2023 .................................... 10,936,410
3,000,000 6.125% due 11/15/2027 .................................... 3,098,439
-------------
14,034,849
-------------
U.S. TREASURY NOTE - 1.4%
3,985,000 7.250% due 08/15/2022 .................................... 4,637,544
-------------
U.S. TREASURY STRIP (PRINCIPAL ONLY) - 0.0%**
328,000 Zero coupon due 08/15/2022 ............................... 81,676
-------------
Total U.S. Treasury Obligations
(Cost $18,830,775) .................................... 18,754,069
-------------
SHARES
------
PREFERRED STOCKS - 1.0%
15,100 First Industrial Realty Trust, Series A .................. 372,781
28,000 Microsoft Corporation, Series A, Conv. Pfd., $2.196
due 12/15/2009 ......................................... 2,782,500
-------------
Total Preferred Stocks (Cost $2,833,450) ................. 3,155,281
-------------
COMMON STOCK - 0.1%
(Cost $201,417)
11,940 First State Bancorporation ............................... 226,860
-------------
TOTAL INVESTMENTS (Cost $314,349,711*) ........................ 98.4% 325,655,645
OTHER ASSETS AND LIABILITIES (NET) ............................ 1.6 5,462,792
----- -------------
NET ASSETS .................................................... 100.0% $331,118,437
===== ============
- --------------
* Aggregate cost for federal tax purposes.
** Amount represents less than 0.1% of net assets.
++ 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>
- ------------------------------------------------------------------------------
GLOSSARY OF TERMS
FHA --Federal Housing Association
MTN --Medium Term Note
STRIP --Separate trading of registered interest and principal securities
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- -----
MUNICIPAL BONDS AND NOTES - 101.7%
CALIFORNIA - 100.6%
<C> <S> <C>
Alameda County:
$1,000,000 COP, (Santa Rita Jail Project),
(MBIA Insured),
5.375% due 06/01/2009 .................................... $ 1,079,110
Public Financing Authority Revenue:
500,000 4.600% due 09/02/2003 .................................... 498,710
1,000,000 5.000% due 09/02/2008 .................................... 995,140
500,000 California Educational Facilities, Financing Authority
Revenue, University San Diego, (AMBAC Insured),
Zero coupon due 10/01/2009 ............................... 315,285
1,000,000 California Health Facilities, Financing Authority Revenue,
(Catholic Health Corporation), Series A, (AMBAC Insured),
5.875% due 07/01/2009 .................................... 1,094,440
California Housing Finance Agency Revenue:
2,070,000 Home Mortgage, Series B1, AMT, (AMBAC Insured),
6.200% due 02/01/2007** .................................. 2,184,719
445,000 Series E, (MBIA Insured),
6.050% due 08/01/2006 .................................... 468,941
California State, GO:
1,240,000 County Jail and School Building, (AMBAC Insured),
7.250% due 08/01/2003** .................................. 1,409,037
1,000,000 (FGIC Insured),
6.200% due 09/01/2005** .................................. 1,125,270
California State, Public Works Board, (Various California
University Projects), Series A, (AMBAC Insured):
1,500,000 Series A,
5.900% due 12/01/2003 .................................... 1,637,340
1,000,000 Series D,
5.250% due 10/01/2010 .................................... 1,079,820
1,495,000 California State University Revenue, Series AJ, AL, AM, AN,
AP, AQ, AR, (AMBAC Insured),
6.750% due 11/01/2007 .................................... 1,593,296
1,600,000 California Statewide Communities Development Authority,
(Children's Hospital), (MBIA Insured),
6.000% due 06/01/2007 .................................... 1,786,944
1,000,000 Castaic Lake, Water Agency, COP, (Water Systems Improvement
Project), Series A, (MBIA Insured),
5.600% due 08/01/2005 .................................... 1,083,940
Central Valley, School Districts Financing Authority,
Capital Appreciation, School District, GO, Series A, (MBIA
Insured):
1,000,000 Zero coupon due 02/01/2008 ............................... 684,680
3,940,000 Zero coupon due 08/01/2009 ............................... 2,639,879
El Rancho California University District,
Series B, (FGIC Insured):
190,000 Zero coupon due 08/01/2009 ............................... 121,059
290,000 Zero coupon due 08/01/2010 ............................... 175,856
1,000,000 Foothill Eastern Transportation Corridor Agency, Toll Road
Revenue, Capital Appreciation, Sr. Lien, Series A,
Zero coupon due 01/01/2004 ............................... 825,660
Gilroy, Unified School District, COP,
(FSA Insured):
1,390,000 5.600% due 09/01/2003 .................................... 1,496,849
1,400,000 5.625% due 09/01/2004 .................................... 1,521,226
Golden West Schools, Financing Authority, Series A, (MBIA
Insured):
1,625,000 5.000% due 08/01/2003 .................................... 1,709,614
685,000 5.650% due 02/01/2012 .................................... 759,000
1,000,000 Inland Empire Solid Waste Financing Authority Revenue,
(Landfill Improvement Financing Project), Series B, AMT,
(FSA Insured),
6.000% due 02/01/2006 .................................... 1,103,880
1,000,000 Irvine, California, Public Facilities and Infrastructure
Authority Assessment Revenue, Series A, (AMBAC Insured)
4.150% due 09/02/2009 .................................... 994,050
1,200,000 Los Angeles, COP,
5.000% due 02/01/2008 .................................... 1,209,648
Los Angeles, Community Redevelopment Agency, MFHR, (AMBAC
Insured):
275,000 5.650% due 07/01/2000 .................................... 278,262
910,000 6.000% due 07/01/2004 .................................... 962,807
Los Angeles, Department of Water and Power, Electric Revenue
Bond, (MBIA Insured):
1,500,000 8.500% due 01/15/2002** .................................. 1,684,830
1,500,000 5.400% due 09/01/2006 .................................... 1,070,480
1,000,000 Los Angeles, GO, Series A, (FSA Insured), 4.250%
due 09/01/2009 ........................................... 999,540
1,500,000 Los Angeles, Unified School District, COP, Series B, (AMBAC
Insured),
6.000% due 12/01/2001** .................................. 1,591,710
1,500,000 Los Angeles County, Capital Asset Leasing Corporation,
Leasehold Revenue, (AMBAC Insured),
6.000% due 12/01/2006** .................................. 1,678,440
1,500,000 Los Angeles County, Metropolitan Transportation Authority,
Sales Tax Revenue, 1st Tier, Series A, (FSA Insured),
5.250% due 07/01/2009 .................................... 1,619,505
528,000 Modesto, Mortgage Revenue Bond, (GNMA Insured),
5.875% due 12/01/2004 .................................... 556,486
250,000 Oakland, Improvement Board Act of 1915, Medical Hill
Parking, Assessment District #3, (MBIA Insured),
6.000% due 09/02/2004 .................................... 259,700
600,000 Oakland, Revenue Bonds, (YMCA East Bay Project),
6.250% due 06/01/2000 .................................... 611,046
500,000 Orange County, Recovery COP, Series A, (MBIA Insured),
6.000% due 07/01/2008 .................................... 565,230
1,395,000 Oroville, Hospital Revenue, Series A,
(MBIA Insured),
5.000% due 12/01/2009 .................................... 1,462,909
Oxnard, Harbor District Revenue,
(FSA Insured):
1,075,000 7.000% due 08/01/2001** .................................. 1,153,206
1,155,000 7.000% due 08/01/2002** .................................. 1,271,274
1,240,000 7.000% due 08/01/2003** .................................. 1,395,149
Paramount, Redevelopment Agency Tax Allocation,
(Redevelopment Project Area #1), (MBIA Insured):
1,610,000 6.100% due 08/01/2006** .................................. 1,782,817
1,700,000 6.100% due 08/01/2007** .................................. 1,882,478
Pomona California Public Financing Authority Revenue, Water
Facility Revenue Project, Series AA, (FSA Insured):
430,000 4.000% due 05/01/2008 .................................... 426,792
530,000 4.100% due 05/01/2009 .................................... 525,712
1,280,000 Redondo Beach, Public Financing Authority Revenue, (South
Bay Center Redevelopment Project),
6.750% due 07/01/2006 .................................... 1,384,243
1,300,000 Sacramento, Municipal Utility District, Electric Revenue,
(AMBAC Insured),
5.500% due 05/15/2007** .................................. 1,387,932
1,000,000 San Diego County, Public Financing Authority Revenue, Series
A, (AMBAC Insured), 4.000% due 09/02/2008 ................ 985,770
1,000,000 San Francisco, City & County Airport Community International
Airport Revenue, Second Series - Issue 22, (AMBAC
Insured), AMT,
6.000% due 05/01/2008 .................................... 1,121,440
Sanger, University School District, (MBIA Isured):
635,000 5.200% due 02/01/2004# ................................... 673,259
160,000 5.200% due 08/01/2004# ................................... 170,558
675,000 5.200% due 02/01/2005# ................................... 719,395
165,000 5.200% due 08/01/2005# ................................... 176,686
1,050,000 Santa Ana, COP, (Santa Ana Recycling Project), Series A,
AMT, (AMBAC Insured), 5.400% due 05/01/2007 .............. 1,129,296
650,000 Santa Clara, Redevelopment Agency, Tax Allocation, (Bay
Shore North Project), (AMBAC Insured),
7.000% due 07/01/2010 .................................... 783,744
1,000,000 Santa Clara County, Financing Authority Lease Revenue,
Series A, (AMBAC Insured),
5.750% due 11/15/2013** .................................. 1,126,041
1,350,000 Solano County, (Solano Park Hospital Project), COP, (FSA
Insured),
6.500% due 08/01/2006** .................................. 1,508,787
1,000,000 Southern California, Home Financing Authority, MFHR, (The
Fountains Project), Series A, AMT, (AMBAC/FNMA
Collateral),
5.400% due 01/01/2027 .................................... 1,042,610
1,000,000 Stanton, MFHR, (Continental Gardens Apartments), (AMBAC/FNMA
Collateral), 5.625% due 08/01/2029*** .................... 1,064,440
1,305,000 Stocton, Community Facilities Supplemental Tax, (Mello Roos-
Weston Ranch), Series A, 5.500% due 09/01/2009 ........... 1,318,663
University of California:
1,000,000 (Multiple Purpose Review Projects), (MBIA Insured),
10.000% due 09/01/2001** ................................. 1,142,440
1,070,000 Series A, (CONNIE LEE Insured),
5.500% due 09/01/2006 .................................... 1,121,596
1,000,000 Valley Health Systems, California Hospital Revenue,
(Hospital Revenue Refunding & Improvement Project), Series
A, (ACA Insured),
6.125% due 05/15/2005** .................................. 1,079,460
-------------
69,308,126
-------------
PUERTO RICO - 1.1%
695,544 Centro de Recaudaciones de Ingresos Municipales, COP,
6.850% due 10/17/2003 .................................... 725,695
-------------
TOTAL INVESTMENTS (Cost $66,752,892*) ......................... 101.7% 70,033,821
OTHER ASSETS AND LIABILITIES (NET) ........................... (1.7) (1,142,649)
----- -------------
NET ASSETS .................................................... 100.0% $ 68,891,172
===== =============
- --------------
* Aggregate cost for federal tax purposes.
** Securities are pledged as collateral for when-issued securities.
*** Security is pledged as collateral for futures contract.
# Security purchased on when-issued basis (Note 2).
</TABLE>
California Insured Intermediate Municipal Fund had the following industry
concentrations greater than 10% at April 30,1999 (as a percentage of net
assets):
Public Education 22.2%
General Purpose 12.9%
Health Care 10.4%
Transportation 10.3%
California Insured Intermediate Municipal Fund had the following insurance
concentrations greater than 10% at April 30,1999 (as a percentage of net
assets):
MBIA 31.6%
AMBAC 31.0%
FSA 17.4%
<PAGE>
NUMBER OF UNREALIZED
CONTRACTS VALUE (DEPRECIATION)
--------- ----- --------------
FUTURES CONTRACTS - LONG POSITION
55 U.S. Long Bond, June 1999 $3,004,688 $(30,515)
========== ========
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
ACA -- American Capital Access
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
CONNIE LEE -- College Construction Loan Association
COP -- Certificates of Participation
FGIC -- Federated Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
CALIFORNIA MUNICIPAL FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- -----
MUNICIPAL BONDS AND NOTES - 96.8%
CALIFORNIA - 94.4%
<C> <S> <C>
$ 1,100,000 Abag, Financing Authority for Nonprofit Corporation, COP,
(Episcopal Homes Foundation),
5.000% due 07/01/2007 .................................. $ 1,136,806
11,940,000 Alameda, Corridor Transporation Authority Revenue, Series
1999A, Capital Appreciation, (MBIA Insured),
Zero coupon due 10/01/2034 ............................. 1,864,431
5,360,000 Alhambra, Improvement Board Act of 1915, Assessment
District No. 1, Public Works, (MBIA Insured),
6.125% due 09/02/2018 .................................. 5,821,228
2,000,000 Anaheim, Public Financing Authority Revenue, Residual
Interest Bond, (MBIA Insured),
9.320% due 12/28/2018+ ................................. 2,620,000
1,485,000 Antioch, Public Financing Authority, Reassesment Revenue,
Series A,
(AMBAC Insured),
5.000% due 09/02/2018 .................................. 1,474,902
1,000,000 Arcadia, Hospital Revenue Authority, (Methodist Hospital),
6.500% due 11/15/2012 .................................. 1,075,210
2,000,000 Barstow Redevelopment Agency, Central Redevelopment
Project, Tax Allocation, Series A, (MBIA Insured),
7.000% due 09/01/2014 .................................. 2,517,460
1,000,000 Brawley, Wastewater Treatment Facility, (AMBAC Insured),
5.000% due 07/01/2016 .................................. 1,027,280
1,000,000 Brea & Olinda, Unified School District, (High School
Refinancing Project), COP, Series A, (FSA Insured),
6.000% due 08/01/2009 .................................. 1,080,700
4,000,000 California Community College Financing Authority Lease
Revenue, Series A, (MBIA Insured),
4.625% due 10/01/2019** ................................ 3,806,840
California Educational Facilities Authority Revenue:
4,715,000 (College of Osteopathic Medicine),
(Pre-refunded to 06/01/2003),
7.500% due 06/01/2018 .................................. 5,375,100
1,000,000 (Heald Colleges),
5.450% due 02/15/2022 .................................. 996,033
2,000,000 (Pooled College and University Projects), Series B,
5.125% due 04/01/2017 .................................. 1,953,400
1,000,001 (University of San Diego), (AMBAC Insured),
5.000% due 10/01/2022 .................................. 987,051
500,000 California Housing Finance Agency, Home Mortgage, AMT,
(Multi-family Housing II), Series C,
6.875% due 08/01/2024 .................................. 532,865
California Housing Finance Agency, Home Mortgage, AMT:
(Multi-family Housing III), Series A, (MBIA Insured):
1,000,000 5.850% due 08/01/2017 .................................. 1,049,140
3,000,000 5.950% due 08/01/2028 .................................. 3,149,070
Series B, (MBIA Insured):
1,000,000 6.000% due 08/01/2016 .................................. 1,062,860
2,000,000 6.100% due 02/01/2028 .................................. 2,125,140
985,000 Series N, (FHA/VA Insured),
6.375% due 02/01/2027 .................................. 1,060,067
California Housing Finance Agency, Home Ownership &
Improvement Revenue:
2,000,000 Series A, (MBIA Insured),
Zero coupon due 02/01/2016 ............................. 842,980
450,000 Series B, AMT, (MBIA Insured),
5.200% due 08/01/2026 .................................. 460,296
5,010,000 Series C, AMT, (FHA Insured),
6.650% due 08/01/2014** ................................ 5,342,213
2,065,000 Series D, AMT, (FHA Insured),
7.500% due 08/01/2020 .................................. 2,118,029
665,000 Series D, AMT, (MBIA Insured),
6.300% due 08/01/2014 .................................. 705,365
2,630,000 Series F, AMT, (MBIA Insured),
6.800% due 08/01/2014 .................................. 2,834,851
1,060,000 Series F1, AMT, (AMBAC Insured),
6.500% due 08/01/2008 .................................. 1,139,860
1,235,000 Series G, AMT, (FHA Insured),
8.150% due 08/01/2019 .................................. 1,261,355
California, Pollution Control Financing Authority, PCR:
1,000,000 (Keller Canyon Landfill Company Project), AMT,
6.875% due 11/01/2027 .................................. 1,057,510
2,890,000 (Mobil Oil Corporation Project), AMT,
5.500% due 12/01/2029 .................................. 2,957,944
2,500,000 (San Diego Gas and Electric), Series A, AMT, (AMBAC
Insured),
5.850% due 06/01/2021 .................................. 2,632,300
(Southern California Edison Company):
13,250,000 Series B, AMT, (AMBAC Insured),
6.400% due 12/01/2024** ................................ 14,501,595
5,000,000 Series B, AMT, (FGIC Insured),
6.400% due 12/01/2024** ................................ 5,472,300
6,565,000 (Tracy Material Recovery Project), Series A, AMT, LOC
Banque Nationale de Paris,
6.600% due 08/01/2014** ................................ 6,578,983
5,000,000 (Waste Management), Series A, AMT,
7.150% due 02/01/2011 .................................. 5,314,850
3,100,000 (Waste Removal Systems), Series A, AMT, LOC Wells Fargo
& Company,
7.100% due 11/01/2009 .................................. 3,206,826
2,250,000 California Residential Efficiency Financing Authority,
(First Resource Efficiency), (AMBAC Insured),
6.000% due 07/01/2017 .................................. 2,446,785
1,185,000 California Rural Home Mortgage Finance Authority, SFMR,
Mortgage-Backed Securities Project, Series A-2, AMT,
(GNMA Insured),
7.950% due 12/01/2024 .................................. 1,353,353
California State, GO:
1,500,000 4.000% due 04/01/2008 .................................. 1,479,480
5,000,000 5.500% due 12/01/2010 .................................. 5,497,250
2,000,000 5.500% due 04/01/2013 .................................. 2,188,840
1,500,000 5.000% due 10/01/2018 .................................. 1,497,165
(FGIC Insured):
1,000,000 6.750% due 02/01/2008 .................................. 1,181,460
1,000,000 4.500% due 12/01/2021 .................................. 919,410
10,000,000 4.500% due 12/01/2024 .................................. 9,140,800
415,000 (MBIA Insured),
6.000% due 10/01/2014** ................................ 451,229
California State Department Water Resources Revenue,
(Center Valley Project):
500,000 Series J-2,
6.000% due 12/01/2006 .................................. 563,290
500,000 Series Q,
6.000% due 12/01/2009 .................................. 571,885
1,915,000 California State, Public Works Board Lease Revenue,
(California Community Colleges), Series A,
5.000% due 12/01/2011 .................................. 2,001,481
California Statewide Communities Development Authority,
COP:
3,000,000 (Cedars-Sinai Medical Center), (MBIA Insured),
6.500% due 08/01/2012 .................................. 3,486,240
735,000 (Childrens Campus),
6.500% due 09/01/2022 .................................. 783,356
3,800,000 (John Muir/Mt. Dibablo Health Center), (AMBAC Insured),
4.100% due 08/15/2027+ ................................. 3,800,000
2,800,000 California Statewide Communities Development Authority
Revenue, (Sherman Oaks Project), Series A, (AMBAC
Insured),
5.000% due 08/01/2022 .................................. 2,801,705
Capistrano Beach, Water District, COP, (Wastewater
Enterprises), Capital Improvements, (MBIA Insured):
2,895,000 4.750% due 12/01/2028 .................................. 2,734,646
2,475,000 4.750% due 12/01/2028 .................................. 2,337,910
5,630,000 Carson, Improvement Board Act of 1915, GO,
7.375% due 09/02/2022** ................................ 6,094,644
4,675,000 Chula Vista, IDR, (San Diego Gas and Electric), Series A,
AMT, (AMBAC Insured),
6.400% due 12/01/2027 .................................. 5,119,873
2,920,000 Chula Vista, Redevelopment Agency, Tax Allocation Revenue,
8.625% due 09/01/2024 .................................. 3,572,328
2,000,000 Coachella, Redevelopment Agency, Tax Allocation Revenue,
(Project Area No. 3), 5.875% due 12/01/2028 ............ 1,977,740
Contra Costa County, Finance Authority, Tax Allocation
Revenue, Series A:
1,595,000 7.000% due 08/01/2009 .................................. 1,728,964
1,000,000 7.100% due 08/01/2022 .................................. 1,102,280
2,500,000 Davis, Public Facilities Finance Authority, Mace Ranch
Area, Series A,
6.600% due 09/01/2025 .................................. 2,641,250
Delano, COP:
1,720,000 Regional Medical Center,
5.250% due 01/01/2018 .................................. 1,648,775
3,200,000 Series A, (Prerefunded to 01/01/2003),
9.250% due 01/01/2022 .................................. 3,888,160
Duarte, COP, Series A:
1,500,000 5.250% due 04/01/2024 .................................. 1,469,310
2,500,000 5.250% due 04/01/2031 .................................. 2,428,300
1,985,000 El Cajon, COP, (Helix View Nursing Hospital), Limited
Obligation, Series 1990, AMT, (FHA Insured),
7.750% due 02/01/2029 .................................. 2,009,058
2,215,000 El Monte, COP, (AMBAC Insured),
4.750% due 06/01/2030 .................................. 2,079,907
Escondido, Unified High School District, Capital
Appreciation, (MBIA Insured):
5,850,000 Zero coupon due 11/01/2019 ............................. 2,064,582
3,715,000 Zero coupon due 05/01/2020 ............................. 1,270,381
3,655,000 Zero coupon due 11/01/2020 ............................. 1,218,321
4,650,000 Fairfield, Housing Authority Mortgage Revenue, (Creekside
Estates Project), (Prerefunded to 08/01/2002),
7.875% due 02/01/2015** ................................ 5,341,362
1,000,000 Fairfield, Housing Authority Revenue, (Creekside Estates
Mobile Homes Project),
5.625% due 09/01/2023** ................................ 992,060
5,000,000 Foothill Eastern Transportation Corridor Agency, Series A,
Zero coupon due 01/01/2008 ............................. 4,089,500
2,000,000 Gilroy, Unified School District, COP, (Measure J Capital
Projects), (FSA Insured),
6.250% due 09/01/2012 .................................. 2,234,760
Golden West Schools Financing Authority:
(School District Refinancing Program, Series A), (MBIA
Insured):
1,000,000 Zero coupon due 02/01/2010 ............................. 611,610
1,740,000 Zero coupon due 02/01/2011 ............................. 1,003,876
1,000,000 Zero coupon due 08/01/2011 ............................. 563,600
1,215,000 Zero coupon due 08/01/2016 ............................. 499,183
1,580,000 Zero coupon due 02/01/2017 ............................. 623,263
2,000,000 Huntington Park, Public Financing Authority Lease Revenue,
(Waste Water System Project),
6.200% due 10/01/2025 .................................. 2,069,860
1,625,000 Inglewood, Redevelopment Agency, Tax Allocation, (Merged
Redevelopment Project), Series A, (AMBAC Insured),
5.250% due 05/01/2015 .................................. 1,712,555
2,000,000 Irvine, Meadows Mobile Home Park Revenue, Series A, (GNMA
Collateral), 5.700% due 03/01/2018 ..................... 2,019,140
1,270,000 Irvine, Public Facilities & Infrastructure Authority,
Assessment Revenue, Series A, (AMBAC Insured),
4.050% due 09/02/2008 .................................. 1,261,643
1,000,000 Kern, High School District, GO, Series A, (MBIA Insured),
6.200% due 02/01/2009 .................................. 1,150,410
1,175,000 Kings County, Waste Management Authority, Solid Waste
Revenue, AMT,
7.200% due 10/01/2014 .................................. 1,309,267
3,625,000 La Habra, COP, Park and Viewpark,
Series A, (FSA Insured),
4.800% due 09/01/2022 .................................. 3,465,464
1,500,000 La Verne, Public Financing Authority, Capital Improvement,
7.250% due 09/01/2026 .................................. 1,657,995
2,000,000 Lake Elsinore, Public Financing Authority, Local Agency
Revenue, Series G,
5.800% due 09/02/2015 .................................. 1,986,280
Long Beach, Harbor Revenue, AMT:
2,000,000 (FGIC Insured),
6.000% due 05/15/2010 .................................. 2,244,860
1,000,000 (MBIA Insured),
5.250% due 05/15/2025 .................................. 1,002,500
Los Angeles, Community Redevelopment Agency, AMT:
1,425,000 5.850% due 12/01/2026 .................................. 1,429,973
3,490,000 Series C, (AMBAC Insured),
6.750% due 07/01/2014 .................................. 3,756,008
1,000,000 Los Angeles, Department of Airport Revenue, Series A,
(FGIC Insured), 5.500% due 05/15/2008 .................. 1,075,110
600,000 Los Angeles, Department of Water & Power, Waterworks
Revenue,
6.200% due 07/01/2012 .................................. 671,880
Los Angeles, Unified School District, GO, Series A, (FGIC
Insured):
1,000,000 6.000% due 07/01/2011 .................................. 1,141,840
1,445,000 6.000% due 07/01/2013 .................................. 1,657,887
10,000,000 Los Angeles County, Disney Parking Refunding Project, COP,
(AMBAC Insured),
4.750% due 03/01/2023** ................................ 9,486,700
1,000,000 Los Angeles County, Master Refunding Project, COP,
(Inverse Floater), (Prerefunded to 05/01/2001),
9.583% due 06/01/2015 .................................. 1,162,500
Los Angeles County, MFHR, AMT,
(GNMA Insured):
3,000,000 (Park Parthenia Project),
7.400% due 01/20/2022 .................................. 3,068,970
1,000,000 (Ridgecroft Apartments Project), Series E, AMT, (GNMA
Collateral),
6.250% due 09/20/2039 .................................. 1,058,900
4,000,000 Los Angeles County, Metropolitan Transportation Authority,
Sales Tax Revenue, First Tier Properties, Series C,
(AMBAC Insured),
5.000% due 07/01/2026 .................................. 3,932,600
1,000,000 Los Angeles County, Public Works Financing Authority,
Regional Park and Open Space District, Series A,
5.000% due 10/01/2016 .................................. 1,006,010
Los Angeles County, Residual Interest Bond:
3,740,000 (Edmund D. Edelman Children's Center), COP, (AMBAC
Insured),
6.000% due 04/01/2012 .................................. 4,015,488
6,920,000 (Pension Obligation), COP, (MBIA Insured),
6.900% due 06/30/2008 .................................. 8,295,627
1,125,000 Los Angeles County, SFHR, Series B, (GNMA Insured),
7.600% due 08/01/2016 .................................. 1,200,004
310,000 Los Angeles Home Mortgage Revenue, Mortgage-Backed
Securities Project, (GNMA Insured),
8.100% due 05/01/2017 .................................. 330,819
315,000 Los Angeles, SFMR, Program 1990, Issue A, AMT, (GNMA
Collateral),
7.550% due 12/01/2023 .................................. 326,519
4,055,000 Midpeninsula, Financing Authority Revenue, Regional Open
Space District, (AMBAC Insured),
Zero coupon due 09/01/2028 ............................. 856,497
1,000,000 Monterey County, COP, (Natividad Medical Center
Improvement Project), Series E, (MBIA Insured),
4.750% due 08/01/2017 .................................. 973,140
2,785,000 Needles, Public Utilities Authority Revenue, (Utilities
System Aquisition Project), Series A,
6.500% due 02/01/2022 .................................. 2,911,662
3,500,000 Novato, Special Tax Revenue, (Community Facilities
District),
7.200% due 08/01/2015 .................................. 3,826,025
2,000,000 Oakland, Revenue Bonds, (YMCA East Bay Project),
7.100% due 06/01/2010 .................................. 2,185,520
Oakland, Unified School District:
2,645,000 7.000% due 11/15/2011 .................................. 2,994,325
3,445,000 COP, Energy Retrofit,
6.750% due 11/15/2014 .................................. 3,674,644
4,500,000 Palm Desert, Financing Authority, Tax Allocation Revenue,
(Inverse Floater), (MBIA Insured),
3.300% due 04/01/2022+ ................................. 5,293,125
1,150,000 Palm Springs, Financing Authority, (Convention Center
Project), Series A, (MBIA Insured),
6.750% due 11/01/2021 .................................. 1,250,705
1,000,000 Pasadena, Electric Revenue, (MBIA Insured), 4.750% due
08/01/2024 ............................................. 949,860
3,000,000 Pomona, Public Financing Authority Revenue, (FSA Insured),
5.000% due 05/01/2029 .................................. 2,949,600
Port Oakland, AMT, (Mitsu Osk Lines Ltd.), Series A, LOC
Industrial Bank of Japan Ltd.:
3,030,000 6.750% due 01/01/2012 .................................. 3,282,126
2,300,000 6.800% due 01/01/2019 .................................. 2,430,249
3,000,000 Rancho, Water District Financing Authority, Residual
Interest Bond, (AMBAC Insured), (Pre-refunded to
09/11/2001), 9.304% due 08/17/2021**+ .................. 3,495,000
2,750,000 Redding, Electrical Systems Revenue, COP, (Inverse
Floater), (MBIA Insured),
9.319% due 07/08/2022+ ................................. 3,660,937
1,000,000 Redondo Beach, Public Financing Authority Revenue, (South
Bay Center Redevelopment Project),
7.125% due 07/01/2026 .................................. 1,107,090
Richmond, Power Financing Authority Term Lease Revenue:
1,180,000 4.450% due 06/01/2007 .................................. 1,169,450
1,000,000 4.550% due 06/01/2008 .................................. 991,520
4,560,000 Riverside, Redevelopment Agency, Tax Allocation Revenue,
(University Corridor), Series A, (AMBAC Insured),
4.750% due 08/01/2021 .................................. 4,334,189
1,500,000 Riverside, School District, Special Project, 7.250%
due 09/01/2018 ......................................... 1,606,260
Rocklin, Unified School District, (FGIC Insured):
1,030,000 Zero coupon due 08/01/2014 ............................. 479,104
1,210,000 Zero coupon due 08/01/2016 ............................. 497,818
1,255,000 Zero coupon due 08/01/2017 ............................. 487,718
1,310,000 Zero coupon due 08/01/2018 ............................. 480,285
1,360,000 Zero coupon due 08/01/2019 ............................. 471,335
1,415,000 Zero coupon due 08/01/2020 ............................. 463,554
1,225,000 Zero coupon due 08/01/2023 ............................. 340,489
Rohnert Park, Community Development Agency, Tax Allocation
Revenue, Capital Appreciation, (Rohnert Redevelopment
Project), (MBIA Insured):
1,745,000 Zero coupon due 08/01/2021 ............................. 548,628
1,755,000 Zero coupon due 08/01/2023 ............................. 495,858
1,755,000 Zero coupon due 08/01/2025 ............................. 445,296
1,755,000 Zero coupon due 08/01/2027 ............................. 397,701
1,755,000 Zero coupon due 08/01/2029 ............................. 356,774
10,490,000 Roseville, Special Tax Revenue, Community Facilities
District 1, Northwest Region, (FSA Insured),
4.750% due 09/01/2020** ................................ 9,995,606
750,000 Sacramento, COP, (Public Facilities Project), 6.000% due
07/01/2012 ............................................. 794,752
1,000,000 Sacramento, Municipal Utility District, Electric Revenue,
Series L, (MBIA Insured),
5.125% due 07/01/2022 .................................. 1,002,290
3,240,000 Sacramento County, Airport System Revenue, Series 1989,
AMT, (Unrefunded Balance), (AMBAC Insured),
7.000% due 07/01/2020 .................................. 3,323,721
2,300,000 Saddleback Valley, Unified School District, Public
Financing Authority, Special Tax Revenue, Series A, (FSA
Insured),
4.750% due 09/01/2020 .................................. 2,217,637
1,000,000 Salinas, California Improvement Board, Act 1915, Special
Assesment District #90-1, Series C-185,
5.400% due 09/02/2012 .................................. 1,008,920
10,000,000 San Bernardino County, COP, (MBIA Insured), Residual
Interest Bond,
6.800% due 07/01/2016**+ ............................... 10,800,000
3,000,000 San Diego, Public Facilities Financing Authority, Sewer
Revenue, Series A, (FGIC Insured),
5.000% due 05/15/20129 ................................. 2,947,260
1,600,000 San Diego County, COP,
5.700% due 02/01/2028 .................................. 1,586,656
4,000,000 San Diego County, Residual Interest Bond, COP, Series B,
(MBIA Insured), (Pre-refunded to 04/27/2006),
9.020% due 04/08/2021+ ................................. 5,235,000
1,000,000 San Dimas, Housing Authority Revenue, (Charter Oak Mobile
Home Project), Series A, (FNMA Collateral),
5.700% due 07/01/2028 .................................. 987,310
1,415,000 San Francisco, City and County, International Airport
Commission Revenue, Second Series, Issue 22, AMT, (AMBAC
Insured),
6.000% due 05/01/2008 .................................. 1,586,837
San Francisco, City and County, MFMR, Series A, (FNMA
Insured):
1,000,000 6.350% due 02/15/2012 .................................. 1,036,930
1,250,000 6.450% due 02/15/2024 .................................. 1,293,900
San Francisco, City and County, Redevelopment Agency,
Lease Revenue, Capital Appreciation, (George R. Moscone
Project):
2,000,000 Zero coupon due 07/01/2011 ............................. 1,108,980
3,000,000 Zero coupon due 07/01/2013 ............................. 1,478,820
600,000 San Francisco, City and County, Sewer Revenue, (AMBAC
Insured),
5.900% due 10/01/2008 .................................. 653,208
270,000 San Francisco, City and County, SFMR, AMT, GNMA and FNMA
Mortgage-Backed Securities Program,
7.450% due 01/01/2024 .................................. 280,173
1,000,000 San Joaquin Hills, Transportation Corridor Agency, Toll
Road Revenue, Capital Appreciation, Series A, (MBIA
Insured), Zero coupon due 01/15/2007 ................... 721,220
2,000,000 San Macros, Public Facilities Authority Revenue,
5.800% due 09/01/2018 .................................. 2,033,900
2,300,000 Santa Clara County, Financing Authority, Lease Revenue,
Series A, (AMBAC Insured),
5.750% due 11/15/2013 .................................. 2,589,892
3,000,000 Santa Clarita, Community Development Authority,
7.500% due 11/15/2012 .................................. 3,222,540
4,765,000 Santa Rosa, Mortgage Revenue, (Channate Lodge), (FHA
Insured),
6.700% due 12/01/2024 .................................. 5,074,248
2,000,000 Shasta Lake, COP, (FSA Insured),
6.000% due 04/01/2016 .................................. 2,188,860
2,500,000 Simi Valley, Community Development Agency, Commonwealth
Mortgage Revenue, Sycamore Plaza II,
6.000% due 09/01/2012 .................................. 2,675,825
5,000,000 South Orange County, Public Financing Authority, Special
Tax Revenue, Sr. Lien, Series A, (MBIA Insured),
6.200% due 09/01/2013** ................................ 5,537,900
Southern California, Housing Finance Agency, SFMR, GNMA
and FNMA Mortgage-Backed Securities Program, (GNMA
Collateral):
725,000 Series 1988A, AMT,
8.125% due 02/01/2021 .................................. 792,265
1,240,000 Series A,
7.350% due 09/01/2024 .................................. 1,298,305
170,000 Series B,
6.900% due 10/01/2024 .................................. 178,294
45,000 Stockton, Community Facilities Supplemental Tax #90-2,
SFMR, GNMA Mortgage-Backed Securities Program,
(Brookside Estates), AMT,
7.450% due 08/01/2010 .................................. 47,232
1,305,000 Stockton, Community Facilities Supplemental Tax #90-1,
(Mello Roos-Weston Ranch), Series A,
6.000% due 09/01/2018 .................................. 1,341,958
1,250,000 Turlock, District Revenue, Series A, (MBIA Insured),
5.000% due 01/01/2017 .................................. 1,255,562
400,000 University of California, COP, (UCLA Chiller/Cogen Center
Project),
6.000% due 11/01/2021 .................................. 424,436
2,025,000 Vallejo, Public Financing Authority Revenue, (Fairgrounds
Drive Assesment District), 5.700% due 09/02/2011 ....... 2,047,194
1,500,000 West & Central Basin, Financing Authority Revenue,
(Central Basin Refunding Project), Series A, (AMBAC
Insured),
5.125% due 08/01/2022 .................................. 1,503,435
-------------
397,826,571
-------------
PUERTO RICO - 1.9%
1,391,087 Centro de Recaudaciones de Ingresos Municipales,
6.850% due 10/17/2003 .................................. 1,451,392
750,000 Puerto Rico, Electric Power Authority Revenue, Series U,
6.000% due 07/01/2014 .................................. 815,962
Puerto Rico Commonwealth:
1,500,000 Aqueduct and Sewer Authority Revenue, (MBIA Insured),
6.250% due 07/01/2013 .................................. 1,761,480
800,000 GO, (MBIA Insured),
5.650% due 07/01/2015 .................................. 886,793
3,000,000 Puerto Rico Educational & Health Facilities, 5.700%
due 07/01/2016 ......................................... 3,165,030
-------------
8,080,657
-------------
GUAM - 0.5%
2,000,000 Guam Airport Authority Revenue, Series B, AMT,
6.700% due 10/01/2023 .................................. 2,197,600
-------------
Total Municipal Bonds and Notes
(Cost $383,659,030) .................................... 408,104,828
-------------
SHORT-TERM MUNICIPAL BONDS - 1.5%
100,000 California Health Facilities Financing Authority Revenue,
(Sutter Health),
Series A,
4.200% due 03/01/2020+ ................................. 100,000
California, PCR, Financing Authority, (Southern California
Edison Company):
5,800,000 Series 1986-A,
4.350% due 02/28/2008+ ................................. 5,800,000
300,000 Series C,
4.350% due 02/28/2008+ ................................. 300,000
-------------
Total Short-Term Municipal Bonds
(Cost $6,200,000) ...................................... 6,200,000
-------------
TOTAL INVESTMENTS (Cost $389,859,030*) .......................... 98.3% 414,304,828
OTHER ASSETS AND LIABILITES (NET) ............................... 1.7 7,092,288
----- -------------
NET ASSETS ...................................................... 100.0% $ 421,397,116
===== =============
- --------------
* Aggregate cost for federal tax purposes.
** Security pledged as collateral for futures contract.
+ Variable rate demand notes are payable upon not more than one business day's notice.
The interest rate shown reflects the rate currently in effect.
</TABLE>
California Municipal Fund had the following industry concentrations greater
than 10% at April 30, 1999 (as a percentage of net assets):
Tax District 14.5%
General Purpose 11.9%
Public Building 11.2%
California Municipal Fund had the following insurance concentrations greater
than 10% at April 30, 1999 (as a percentage of net assets):
MBIA 21.6%
AMBAC 18.6%
NUMBER OF UNREALIZED
CONTRACTS VALUE (DEPRECIATION)
--------- ----- --------------
FUTURES CONTRACTS - LONG POSITION
340 U.S. Long Bond, June 1999 $40,863,750 $(484,629)
=========== =========
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificates of Participation
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
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
MFHR -- Multi-family Housing Revenue
MFMR -- Multi-family Mortgage Revenue
PCR -- Pollution Control Revenue
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
VA -- Veterans' Administration
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
FLORIDA INSURED MUNICIPAL FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- -----
MUNICIPAL BONDS AND NOTES - 113.3%
FLORIDA - 113.3%
<C> <S> <C>
$ 1,000,000 Brevard County, School Board Authority, COP, Series B,
(AMBAC Insured),
5.500% due 07/01/2021 .................................... $ 1,041,940
1,000,000 Broward County, Educational Facilities Authority Revenue,
(Nova Southeastern University Project), (CONNIE LEE
Insured), 6.000% due 04/01/2008 .......................... 1,086,420
600,000 Cocoa Florida, Water & Sewer Revenue,
(FGIC Insured),
4.500% due 10/01/2026 .................................... 544,254
1,000,000 Collier County, Industrial Development Authority, IDR,
(Southern States Utilities Project), AMT,
6.500% due 10/01/2025 .................................... 1,045,820
1,000,000 Dade County, Aviation Revenue, Series B, AMT, (MBIA
Insured),
6.600% due 10/01/2022 .................................... 1,095,870
950,000 Escambia County, Health Facilities Revenue, Baptist
Hospital, Series B,
6.000% due 10/01/2014 .................................... 986,262
1,000,000 Escambia County, PCR, (Champion International Corporation
Project), AMT, 6.900% due 08/01/2022 ..................... 1,105,090
Florida Housing Finance Agency, AMT, (AMBAC Insured):
700,000 SFMR, Series A, (GNMA Collateral),
6.650% due 01/01/2024 .................................... 756,098
1,000,000 Spinnaker Cove Apartments, Series G,
6.500% due 07/01/2036 .................................... 1,085,710
500,000 Florida State Board of Education Capital Outlay, Series A,
(FGIC Insured),
4.500% due 06/01/2023 .................................... 457,025
1,100,000 Florida State Board of Regional University System
Improvement Revenue, (AMBAC Insured),
4.500% due 07/01/2023 .................................... 1,005,268
1,000,000 Florida State Turnpike Authority, Turnpike Revenue,
Department of Transportation, Series A, (FGIC Insured),
5.000% due 07/01/2016 .................................... 1,002,830
1,245,000 Hillsborough County, Capital Improvement Revenue, Criminal
Justice Facilities,
(FGIC Insured),
5.250% due 08/01/2016** .................................. 1,266,314
1,050,000 Hillsborough County, School Board Authority, COP, (MBIA
Insured),
6.000% due 07/01/2012
(Pre-refunded 07/01/2004) ................................ 1,171,821
1,250,000 Jacksonville, Water & Sewer Revenue, (United Water Project),
AMT, (AMBAC Insured), 6.350% due 08/01/2025 .............. 1,396,188
750,000 Lakeland Florida, Electric & Water Revenue, Series A, (MBIA
Insured),
5.000% due 10/01/2028 .................................... 733,575
1,500,000 Leon County, Florida School District,
(AMBAC Insured),
5.000% due 07/01/2008# ................................... 1,547,100
500,000 Manatee County, Refunding Revenue Bonds, (MBIA Insured),
4.750% due 04/01/2011# ................................... 499,650
950,000 Manatee County, Housing Finance Authority, SFMR, Sub. Series
4, AMT, (AMBAC Insured), (GNMA/FNMA Collateral),
6.875% due 11/01/2026 .................................... 1,068,313
1,000,000 Orange County, Florida School Board, COP, Series A, (MBIA
Insured),
5.000% due 08/01/2024 .................................... 979,550
1,000,000 Orange County, Housing Finance Authority, MFHR, (Hands Inc.
Project), Series A, 8.000% due 10/01/2025 ................ 1,107,580
1,000,000 Orlando & Orange County, Expressway Authority, Expressway
Revenue, Jr. Lien, (FSA Insured),
5.950% due 07/01/2023 .................................... 1,060,580
1,000,000 Pasco County, Solid Waste Disposal & Resource Recovery
System, AMT, (AMBAC Insured),
6.000% due 04/01/2011 .................................... 1,114,170
980,000 Pinellas County, Housing Finance Authority Revenue, SFMR,
Series A, AMT, (AMBAC Insured), (GNMA Collateral),
6.000% due 09/01/2018 .................................... 1,044,357
1,050,000 Seminole County, School Board Authority, COP, Series A,
(MBIA Insured),
6.125% due 07/01/2014
(Pre-refunded 07/01/2004) ................................ 1,177,921
-----------
Total Municipal Bonds and Notes
(Cost $23,673,350) ....................................... 25,379,706
-----------
TOTAL INVESTMENTS (Cost $23,673,350*) .......................... 113.3% 25,379,706
OTHER ASSETS AND LIABILITIES (NET) ............................. (13.3) (2,975,522)
----- -----------
NET ASSETS ..................................................... 100.0% $22,404,184
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
** Securities are pledged as collateral for when-issued securities.
# Security purchased on when-issued basis (Note 2).
Florida Insured Municipal Fund had the following industry concentrations
greater than 10% at April 30, 1999 (as a percentage of net assets):
Public Education 22.5%
Water & Sewage 20.9%
Single-family Housing 11.5%
Florida Insured Municipal Fund had the following insurance concentrations
greater than 10% at April 30, 1999 (as a percentage of net assets):
AMBAC 44.9%
MBIA 25.3%
FGIC 14.6%
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
CONNIE LEE -- College Construction Loan Association
COP -- Certificates of Participation
FGIC -- Federal Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
SFMR -- Single Family Mortgage Revenue
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
TAX-EXEMPT BOND FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----
MUNICIPAL BONDS AND NOTES - 104.8%
<S> <C> <C>
ALABAMA - 1.3%
4,000,000 Courtland, Industrial Development Board of Solid Waste,
(Champion International Corporation Project), Disposal
Revenue, AMT,
7.750% due 01/01/2020 .................................. $ 4,156,920
------------
ALASKA - 1.1%
1,235,000 Anchorage, Electric Utility, (MBIA Insured), 6.500%
due 12/01/2013 ......................................... 1,472,799
2,000,000 Anchorage, Ice Rink Revenue,
6.375% due 01/01/2020 .................................. 1,983,900
------------
3,456,699
------------
ARIZONA - 3.0%
200,000 Phoenix, GO, Series A,
6.250% due 07/01/2017 .................................. 234,212
Salt River Project Agricultural Improvement & Power
District:
3,000,000 Series A,
5.750% due 01/01/2009 .................................. 3,314,730
5,000,000 Series C,
6.250% due 01/01/2019 .................................. 5,363,200
740,000 Tucson, Airport Authority Inc., Supplemental Facilities
Revenue, AMT,
8.700% due 09/01/2019 .................................. 796,048
------------
9,708,190
------------
CALIFORNIA - 10.7%
5,625,000 Alameda Corridor Transportation Authority, Series 1999A,
Capital Appreciation, (MBIA Insured),
Zero coupon due 10/01/2030 ............................. 1,092,938
15,000,000 Anaheim, Public Financing Authority Lease, Capital
Appreciation Subordinated Public Improvements, Project-
C, (FSA Insured), Zero coupon due 09/01/2034 ........... 2,320,350
5,000,000 California State, GO, (FGIC Insured), 5.625% due
10/01/2023 ............................................. 5,294,700
1,250,000 California State Public Works Board Lease, Department of
Corrections, State Prison, Series E,
5.500% due 06/01/2015 .................................. 1,356,762
2,000,000 Center Unified School District California, Capital
Appreciation, Series C, GO, (MBIA Insured),
Zero coupon, due 09/01/2018 ............................ 753,180
2,000,000 Foothill/Eastern Corridor Agency, California Toll Road,
Sr. Lien, Series A,
5.000% due 01/01/2035 .................................. 1,902,640
3,925,000 Los Angeles County, Metroplitan Transportation Authority,
Sales Tax Revenue, Series C, (AMBAC Insured), 5.000%
due 07/01/2026 ......................................... 3,858,864
550,000 Los Angeles, Regional Airport Improvement, Series A, AMT,
6.700% due 01/01/2022 .................................. 582,615
3,335,000 Midpeninsula Regional, Open Space District, Financing
Authority Revenue, Capital Appreciation, (AMBAC
Insured),
Zero coupon due 09/01/2024 ............................. 878,606
3,000,000 Orange County Recovery, COP, Series A, (MBIA Insured),
6.000% due 07/01/2026 .................................. 3,255,810
1,173,000 Sacramento, COP, Centrex System Lease, Series A,
5.550% due 09/15/2004 .................................. 1,193,715
1,000,000 Sacramento, City Financing Authority Revenue, Convention
Center Hotel,
Series A,
6.250% due 01/01/2030 .................................. 1,001,210
5,000,000 San Francisco, City & County Airport Commission,
International Airport, Second Series-Issue 12-B, (FGIC
Insured),
5.625% due 05/01/2021 .................................. 5,283,350
3,000,000 San Joaquin Hills, California Transportation Corridor,
Agency Toll Road,
5.000% due 01/01/2033 .................................. 2,856,900
3,000,000 Student Education Loan Marketing Corporation, California
Student Loan Revenue, Series IV-D-1, AMT,
5.875% due 01/01/2018 .................................. 2,881,530
------------
34,513,170
------------
COLORADO - 4.8%
2,775,000 Colorado Springs Utilities System Revenue, Pre-refunded,
6.750% due 11/15/2021 .................................. 3,017,063
Denver City and County, Airport Revenue, AMT:
Series A, Pre-refunded:
530,000 8.875% due 11/15/2012 .................................. 606,097
1,045,000 8.500% due 11/15/2023 .................................. 1,125,820
Series A, Unrefunded:
1,470,000 8.875% due 11/15/2012 .................................. 1,645,827
1,835,000 8.000% due 11/15/2025 .................................. 1,963,413
Series C,
1,920,000 6.600% due 11/15/2004 .................................. 2,076,826
4,500,000 Meridian Metropolitan District, GO,
7.500% due 12/01/2011 .................................. 4,882,050
------------
15,317,096
------------
CONNECTICUT - 0.4%
995,000 Mashantucket Western Pequot Tribe, Special Revenue, Series
A, Pre-refunded,
6.500% due 09/01/2005 .................................. 1,135,036
------------
DISTRICT OF COLUMBIA - 0.9%
815,000 District of Columbia, COP,
6.875% due 01/01/2003 .................................. 852,857
500,000 District of Columbia, Water & Sewer Authority, (FSA
Insured),
5.500% due 10/01/2017 .................................. 533,275
1,500,000 Metropolitan District, Washington D.C., Airport Authority,
General Airport Revenue, Series A, AMT, (MBIA Insured),
6.625% due 10/01/2019 .................................. 1,644,990
------------
3,031,122
------------
FLORIDA - 4.7%
22,520,000 Dade County, Guaranteed Entitlement Revenue, Capital
Appreciation, Series A, (MBIA Insured),
Zero coupon due 02/01/2018 ............................. 8,104,948
425,000 Dade County, Seaport Authority, Refunding, (MBIA Insured),
6.500% due 10/01/2008 .................................. 496,595
1,000,000 Florida Board of Education, Series A,
(FGIC Insured),
4.500% due 06/01/2023 .................................. 914,050
5,000,000 Orlando Utilities Commission Water & Electric,
6.000% due 10/01/2010 .................................. 5,685,350
------------
15,200,943
------------
GEORGIA - 7.2%
1,000,000 Atlanta, Airport Facilities Revenue, AMT,
7.250% due 01/01/2017 .................................. 1,065,830
6,000,000 Georgia Municipal Electric Authority Power, Series Z,
(MBIA Insured),
5.500% due 01/01/2020 .................................. 6,425,160
5,000,000 Georgia State, GO, Series B,
6.300% due 03/01/2009 .................................. 5,797,050
Monroe, PCR, (Oglethorpe Power Company):
5,000,000 6.700% due 01/01/2009 .................................. 5,792,700
3,410,000 6.750% due 01/01/2010 .................................. 4,005,113
------------
23,085,853
------------
HAWAII - 2.7%
5,555,000 Hawaii State, GO, Series BW,
6.400% due 03/01/2009 .................................. 6,350,365
Honolulu, City & County, GO, Series A:
1,670,000 6.000% due 01/01/2012 .................................. 1,872,821
330,000 Pre-refunded,
6.000% due 01/01/2012 .................................. 373,114
------------
8,596,300
------------
IDAHO - 0.8%
2,000,000 Idaho Health Facilities Authority Revenue, (Inverse
Floater), ETM,
6.000% due 02/15/2021+ ................................. 2,429,720
------------
ILLINOIS - 14.8%
1,000,000 Berwyn, GO, (AMBAC Insured),
4.250% due 12/01/2018 .................................. 889,190
Bolingbrook, Capital Appreciation, (MBIA Insured):
4,000,000 Series B,
Zero coupon due 01/01/2030 ............................. 737,400
4,915,000 Series C,
Zero coupon due 01/01/2025 ............................. 1,273,870
3,665,000 Chicago Gas Supply, (People Gas),
6.875% due 03/01/2015 .................................. 3,981,693
Chicago, O'Hare International Airport Supplemental
Facilities, AMT:
2,500,000 American Airlines, Series C,
4.300% due 12/01/2017+ ................................. 2,500,000
700,000 American Airlines, Special Series A,
7.875% due 11/01/2025 .................................. 749,014
6,000,000 International Terminal, (MBIA Insured),
6.750% due 01/01/2012 .................................. 6,471,300
United Air Lines:
615,000 8.400% due 05/01/2004 .................................. 650,239
745,000 8.950% due 05/01/2018 .................................. 815,686
150,000 Special Series B,
8.500% due 05/01/2018 .................................. 159,024
Cook County, Community High School, Number 217, (AMBAC
Insured):
1,090,000 6.400% due 12/01/2003 .................................. 1,159,967
1,130,000 6.500% due 12/01/2004 .................................. 1,205,292
1,370,000 6.600% due 12/01/2005 .................................. 1,464,626
Cook County, School District, Number 026, ETM, (MBIA
Insured):
1,445,000 Zero coupon due 12/01/2003 ............................. 1,205,535
1,020,000 Zero coupon due 12/01/2004 ............................. 811,308
Illinois Health Facilities Authority Revenue:
250,000 Glenoak Medical Center, Series D,
Pre-refunded,
9.500% due 11/15/2015 .................................. 278,283
4,460,000 Hindsdale Hospital, Series B, ETM,
9.000% due 11/15/2015 .................................. 4,931,288
3,000,000 Rush Presbyterian - St. Luke's Medical Center, Residual
Interest Bond, (MBIA Insured),
10.122% due 10/01/2024+ ................................ 3,521,250
1,230,000 Servantcor, Series A, Pre-refunded,
8.000% due 08/15/2021 .................................. 1,365,534
5,000,000 Sister Services Hospital, Residual Interest Bond, (MBIA
Insured), Pre-refunded,
9.817% due 06/19/2015+ ................................. 5,931,250
280,000 Illinois Housing Development Authority, Series A, AMT,
7.350% due 08/01/2010 .................................. 293,143
1,600,000 Kendall County, Community School District #88, (AMBAC
Insured),
Zero coupon due 12/01/2015 ............................. 689,520
Metropolitan Pier and Exposition Authority, Dedicated
State Tax, (FGIC Insured):
4,000,000 Zero coupon due 06/15/2008 ............................. 2,657,920
5,185,000 Zero coupon due 06/15/2009 ............................. 3,261,935
815,000 ETM,
Zero coupon due 06/15/2009 ............................. 519,880
------------
47,524,147
------------
INDIANA - 2.1%
6,000,000 Indiana Municipal Power Agency, Series A, (MBIA Insured),
6.125% due 01/01/2013 .................................. 6,867,540
------------
KANSAS - 0.2%
500,000 Wichita, Health Care Facilities Revenue, (Larksfield
Place), Series I,
5.875% due 05/15/2027 .................................. 488,240
------------
KENTUCKY - 1.1%
3,000,000 Jefferson County, Hospital Revenue, Residual Interest
Bond, (MBIA Insured),
9.054% due 10/09/2008+ ................................. 3,544,500
------------
LOUISIANA - 0.2%
1,500,000 Louisiana Public Facility Authority Revenue, Series B,
ETM,
Zero coupon due 12/01/2019 ............................. 530,850
------------
MARYLAND - 2.0%
5,000,000 Baltimore, Port Facilities Revenue, Consolidated Coal
Sales, Series B,
6.500% due 10/01/2011+ ................................. 5,461,500
930,000 State of Maryland, Community Development Administration,
Department of Housing Revenue, Single Family Project,
AMT,
7.450% due 04/01/2032 .................................. 972,715
------------
6,434,215
------------
MASSACHUSETTS - 2.0%
750,000 Commonwealth of Massachusetts, GO, Consolidated Loan,
Series A,
Pre-refunded,
7.625% due 06/01/2008 .................................. 824,595
2,000,000 Commonwealth of Massachusetts, Health and Educational
Facilities Authority Revenue, Saint Memorial Medical
Center, Series A,
6.000% due 10/01/2023 .................................. 1,989,740
200,000 Massachusetts Bay Transportation Authority, Series A,
5.600% due 03/01/2008 .................................. 218,550
1,000,000 Plymouth County, COP, Series A,
7.000% due 04/01/2022 .................................. 1,123,890
2,125,000 State of Massachusetts, Development Finance Agency
Revenue, (Boston University), Series P,
5.450% due 05/15/2059 .................................. 2,126,594
------------
6,283,369
------------
MICHIGAN - 2.1%
75,000 Metropolitan Hospital, Series A,
5.875% due 07/01/2014 .................................. 77,425
Michigan State Hospital Finance Authority Revenue, Detroit
Medical, Series A,
Pre-refunded:
1,000,000 5.250% due 08/15/2028 .................................. 907,220
1,500,000 7.500% due 08/15/2011 .................................. 1,654,230
4,000,000 Michigan State, Strategic Funding Limited, Detroit Edison
Company, Series A, AMT, (MBIA Insured),
5.550% due 09/01/2029 .................................. 4,059,280
------------
6,698,155
------------
MISSISSIPPI - 4.0%
2,000,000 Jackson County, Port Facility Revenue, (Chevron USA Inc.
Project),
4.250% due 06/01/2023+ ................................. 2,000,000
Lowndes County, Solid Waste Disposal, PCR, (Weyerhauser
Company Project):
4,000,000 Series A,
6.800% due 04/01/2022 .................................. 4,835,800
5,000,000 Series B,
6.700% due 04/01/2022 .................................. 5,978,450
200,000 Warren County, Solid Waste Disposal Revenue,
(International Paper Project), Series A, AMT,
7.700% due 11/15/2009 .................................. 206,944
------------
13,021,194
------------
MISSOURI - 1.4%
1,000,000 Missouri State, Health and Educational Facilities
Authority Revenue, Bethesda Eye Institute, Pre-refunded,
6.800% due 11/01/2016 .................................. 1,091,830
3,000,000 St. Louis, Parking Facilities Revenue,
Pre-refunded,
6.625% due 12/15/2021 .................................. 3,327,990
------------
4,419,820
------------
MONTANA - 0.3%
1,000,000 Forsyth, PCR, Puget Sound Power & Light, Series B, AMT,
(AMBAC Insured),
7.250% due 08/01/2021 .................................. 1,082,290
------------
NEBRASKA - 3.3%
550,000 Nebraska Investment Finance Authority, Single Family
Housing Revenue, Residual Interest Bond, AMT, (GNMA
Collateral),
9.719% due 09/15/2024+ ................................. 612,563
Omaha Public Power District Electric:
7,000,000 Series B, ETM,
6.150% due 02/01/2012 .................................. 7,969,920
2,000,000 Series C,
5.500% due 02/01/2014 .................................. 2,176,520
------------
10,759,003
------------
NEVADA - 1.4%
4,000,000 Clark County, IDR, Nevada Power Company, Series A, AMT,
(FGIC Insured), (FGIC Insured),
6.700% due 06/01/2022 .................................. 4,348,920
------------
NEW JERSEY - 0.1%
350,000 New Jersey State, GO, Series D,
6.000% due 02/15/2011 .................................. 396,403
----------------
NEW MEXICO - 1.0%
1,500,000 Lordsburg, PCR, (Phelps Dodge),
6.500% due 04/01/2013 .................................. 1,642,335
1,500,000 Santa Fe County, New Mexico Correctional System, (FSA
Insured),
6.000% due 02/01/2027 .................................. 1,715,025
------------
3,357,360
------------
NEW YORK - 3.0%
1,265,000 Metropolitan Transportation Authority, Service Contract
Transportation Facilities, Series 7,
4.750% due 07/01/2019 .................................. 1,180,081
1,000,000 New York, GO, Unrefunded, Series B, (FSA Insured), ETM,
7.000% due 06/01/2014*** ............................... 1,077,500
New York, GO:
1,000,000 Series B, (FGIC Insured),
6.000% due 08/01/2007 .................................. 1,115,140
2,000,000 Series F, (AMBAC Insured),
5.250% due 08/01/2014 .................................. 2,075,600
2,000,000 New York State Dorm Authority Revenue, New York
University, Series A, (AMBAC Insured),
5.250% due 07/01/2006 .................................. 2,082,400
2,000,000 New York State Housing Finance Agency Revenue, MFHR,
Second Mortgage, Series F, AMT, (Sonyma Program
Insured), 6.625% due 08/15/2012 ........................ 2,120,420
105,000 New York State Medical Care Facilities Finance Agency
Revenue, Refunded, 7.750% due 08/15/2011 ............... 113,765
------------
9,764,906
------------
NORTH DAKOTA - 1.4%
4,370,000 Mercer County, PCR, (Otter Trail Power),
6.900% due 02/01/2019 .................................. 4,657,153
------------
OHIO - 1.1%
1,240,000 Lorain County, Hospital Revenue, Humility of Mary Health
Care, Series B, ETM,
7.200% due 12/15/2011 .................................. 1,374,490
1,000,000 Montgomery County, Hospital Revenue, Grandview Hospital &
Medical Center,
5.250% due 12/01/2003 .................................. 985,960
State of Ohio Water Development Authority Revenue:
(AMBAC Insured),
200,000 5.700% due 06/01/2009 .................................. 222,798
1,000,000 (MBIA Insured),
5.000% due 12/01/2015 .................................. 1,009,370
------------
3,592,618
------------
OKLAHOMA - 0.6%
1,415,000 Oklahoma Housing and Finance Authority, Single Family
Revenue, Series B, AMT, (GNMA Collateral),
7.997% due 08/01/2018 .................................. 1,564,608
200,000 Tulsa, Municipal Airport Revenue, American Airlines
Project, AMT,
7.600% due 12/01/2030 .................................. 215,640
------------
1,780,248
------------
OREGON - 0.2%
1,000,000 Columbia County Oregon, District No. 502, (FGIC Insured),
Zero coupon due 06/01/2016 ............................. 433,670
100,000 Oregon State Department Transportation Revenue, Light Rail
Funding, Westside Project, (MBIA Insured),
6.250% due 06/01/2009 .................................. 111,501
------------
545,171
------------
PENNSYLVANIA - 6.0%
Allegheny County, Hospital Development Revenue, (Ohio
Valley General Hospital):
700,000 5.100% due 04/01/2001 .................................. 712,509
735,000 5.300% due 04/01/2002 .................................. 757,498
625,000 5.400% due 04/01/2003 .................................. 648,163
Beaver County, IDR, PCR, (Edison Project), Series A:
300,000 7.750% due 09/01/2024 .................................. 308,895
3,675,000 (FGIC Insured),
7.000% due 06/01/2021 .................................. 3,959,813
2,500,000 McGuffey School District, Series B, (AMBAC Insured),
4.750% due 08/01/2028 .................................. 2,344,150
500,000 McKean County, Hospital Authority Revenue, Bradford
Hospital, Pottstown Memorial Medical Center,
8.875% due 10/01/2020 .................................. 544,855
1,500,000 Penn Cambria School District, Capital Apprecation, (FGIC
Insured),
Zero coupon due 08/15/2023 ............................. 417,390
2,000,000 Pennsylvania Intergovernmental Authority, Philadelphia
Program, (FGIC Insured), 5.250% due 06/15/2014 ......... 2,072,200
4,000,000 Pennsylvania State Higher Education Revenue, Assistance
Agency, Student Loan, Residual Interest Bond, AMT,
(AMBAC Insured),
10.103% due 09/01/2026+ ................................ 4,880,000
805,000 Pennsylvania State Turnpike, Community Oil Franchise Tax
Revenue, Series B, (AMBAC Insured),
5.250% due 12/01/2014 .................................. 840,146
1,000,000 Philadelphia, Water and Sewer Revenue,
Pre-refunded,
7.500% due 08/01/2010 .................................. 1,102,390
1,905,000 Southeast Delco School District, (MBIA Insured),
Zero coupon due 02/01/2022 ............................. 580,587
------------
19,168,596
------------
PUERTO RICO - 0.2%
200,000 Puerto Rico Electric Power Authority Revenue, Series S,
6.125% due 07/01/2008 .................................. 226,028
500,000 Puerto Rico Industrial, Tourist, Educational, Medical &
Environmental Facilities,
Inter-American University, Series A,
(MBIA Insured),
5.000% due 10/01/2015 .................................. 505,405
------------
731,433
------------
SOUTH CAROLINA - 0.4%
1,000,000 Charleston County, Industrial Revenue, Ziegler Coal
Holdings,
6.950% due 08/10/2028 .................................. 1,002,660
200,000 Columbia, Water Works & Sewer System Revenue,
5.375% due 02/01/2012 .................................. 214,914
------------
1,217,574
------------
SOUTH DAKOTA - 0.0%**
100,000 South Dakota Housing Development Authority, Homeownership
Mortgage, Series D,
6.650% due 05/01/2014 .................................. 107,496
------------
TEXAS - 3.7%
3,285,000 Boerne, Independent School District, Capital Appreciation,
Zero coupon due 02/01/2018 ............................. 1,247,577
415,000 Brazos, Higher Educational Facilities Authority, Series
C-2, AMT,
7.100% due 11/01/2004 .................................. 463,314
1,290,000 Crowley Independent School District, GO, (FGIC Insured),
Zero coupon due 08/01/2016 ............................. 541,065
5,000,000 Dallas-Fort Worth International Airport, (Facility
Improvement Corporate Revenue), (American Airlines,
Inc.), AMT,
7.500% due 11/01/2025 .................................. 5,323,100
3,245,000 Frisco Independent School District, GO, Series A,
4.500%, due 08/15/2029 ................................. 2,934,486
200,000 Harris County, GO,
6.000%, due 12/15/2010 ................................. 226,428
469,000 Texas State, Higher Education Coordinating Board, Student
Loan, AMT,
7.700% due 10/01/2025 .................................. 504,147
500,000 West Side Calhoun County, Solid Waste Revenue Bond, (Union
Carbide Project), AMT,
8.200% due 03/15/2021 .................................. 540,370
------------
11,780,487
------------
VERMONT - 0.0%**
140,000 Vermont Housing Finance Agency, Single Family, Series 1,
AMT,
6.800% due 05/01/2025 .................................. 140,504
------------
VIRGINIA - 0.3%
1,000,000 Pocahontas Parkway Association, Virginia Toll Road
Revenue, Series A,
5.000% due 08/15/2005 .................................. 1,015,290
------------
WASHINGTON - 11.9%
4,000,000 Central Puget Sound, Regional Transportation Authority,
Sales Tax Revenue, (FGIC Insured),
5.250% due 02/01/2021 .................................. 4,134,080
4,500,000 King County School District #415 Kent, GO, Series C,
6.300% due 12/01/2008 .................................. 5,160,735
Pierce County Housing Authority Revenue:
3,735,000 5.400% due 12/01/2013 .................................. 3,716,176
2,000,000 5.900% due 12/01/2028 .................................. 1,999,880
950,000 Port Anacortes, Revenue Bond, Series A, 5.125% due
09/01/2009 ............................................. 963,025
250,000 Seattle Water System Revenue,
5.250% due 12/01/2023 .................................. 250,440
University of Washington Revenue Bond, (MBIA Insured):
215,000 Pre-refunded,
7.000% due 12/01/2021 .................................. 237,007
785,000 Unrefunded,
7.000% due 12/01/2021 .................................. 857,039
3,500,000 Washington Public Power Supply System Nuclear Project #2
Revenue, Series C, Pre-refunded,
7.625% due 07/01/2010 .................................. 3,788,085
Washington State, GO:
200,000 5.750% due 09/01/2009 .................................. 221,954
7,570,000 Series B,
5.000% due 05/01/2017 .................................. 7,556,601
4,900,000 Series B & AT-7,
6.400% due 06/01/2017 .................................. 5,784,548
Washington State Health Care Facilities Authority, Fred
Hutchinson Cancer Center, (LOC Morgan Guarantee Trust):
1,750,000 7.200% due 01/01/2007 .................................. 1,873,375
1,750,000 7.375% due 01/01/2018 .................................. 1,879,308
------------
38,422,253
------------
WEST VIRGINIA - 1.1%
2,500,000 Harrison County, Solid Waste Disposal, (Monongahela
Power), Series A, AMT,
6.875% due 04/15/2022 .................................. 2,693,574
150,000 Kanawha County, IDR, (Union Carbide Project), Series A,
AMT,
8.000% due 08/01/2020 .................................. 158,805
750,000 South Charleston, IDR, (Union Carbide Project), Series A,
AMT,
8.000% due 08/01/2020 .................................. 793,980
------------
3,646,359
------------
WISCONSIN - 1.3%
1,000,000 Madison, IDR, (Madison Gas & Electric Company), (Project
A), AMT,
6.750% due 04/01/2027 .................................. 1,076,570
Wisconsin Health & Education Facilities Authority Revenue
(AMBAC Insured):
2,000,000 Prohealth Care Inc.,
5.125% due 08/15/2028 .................................. 1,943,740
1,000,000 Refunding Waukesha Memorial Hospital, Series A,
7.125% due 08/15/2007 .................................. 1,062,860
200,000 Wisconsin State, Transportation Revenue, Series A,
5.500% due 07/01/2014 .................................. 211,528
------------
4,294,698
------------
Total Municipal Bonds and Notes
(Cost $308,698,803) .................................... 337,251,841
------------
TOTAL INVESTMENTS (Cost $308,698,803*) ....................... 104.8% 337,251,841
OTHER ASSETS AND LIABILITIES (NET) ........................... (4.8) (15,523,489)
----- -------------
NET ASSETS .................................................... 100.0% $321,728,352
====== ============
- --------------
* Aggregate cost for federal tax purposes.
** Amount represents less than 0.1% of net assets.
*** Security pledged as collateral for futures contract.
+ Floating rate note. The interest rate shown reflects the rate currently in effect.
Tax Exempt Bond Fund had the following industry concentrations greater than
10% at April 30, 1999 (as a percentage of net assets):
General Purpose 17.1%
Public Education 13.6%
Industrial Revenue 12.2%
Health Care 11.4%
Tax Exempt Bond Fund had the following insurance concentrations greater than
10% at April 30, 1999 (as a percentage of net assets):
MBIA 18.6%
FGIC 10.9%
NUMBER OF UNREALIZED
CONTRACTS VALUE (DEPRECIATION)
--------- ----- --------------
FUTURES CONTRACTS - LONG POSITION
95 Municipal Bond, June 1999 ... $11,702,813 $(81,738)
=========== ========
- --------------------------------------------------------------------------------
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
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
BOND & STOCK FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 62.8%
CONSUMER STAPLES - 5.9%
80,309 Alberto-Culver Company, Class A ........................... $ 1,816,991
100,000 Libbey, Inc. .............................................. 3,006,250
123,200 PepsiCo, Inc. ............................................. 4,550,700
82,500 Phillip Morris Companies, Inc. ............................ 2,892,656
90,000 Ralston Purina Company .................................... 2,745,000
90,000 Sara Lee Corporation ...................................... 2,002,500
200,000 Supervalu, Inc. ........................................... 4,175,000
30,000 UST, Inc. ................................................. 836,250
------------
22,025,347
------------
REAL ESTATE INVESTMENT TRUSTS - 4.4%
71,300 Arden Realty, Inc. ........................................ 1,782,500
12,348 Burnham Pacific Properties, Inc. .......................... 142,002
63,000 Essex Property Trust, Inc. ................................ 1,988,437
80,400 Franchise Finance Corporation of America .................. 1,864,275
62,500 Health Care Property Investors, Inc. ...................... 1,921,875
85,000 New Plan Excel Realty Trust ............................... 1,577,812
294,120 Patriot American Hospitality, Inc. ........................ 1,488,982
92,000 Prison Realty Trust Inc. .................................. 1,794,000
75,000 Shurgard Storage Centers, Inc. ............................ 2,020,313
135,000 Taubman Centers, Inc. ..................................... 1,830,937
------------
16,411,133
------------
BANKS/SAVINGS & LOANS - 4.4%
22,200 Chase Manhattan Corporation ............................... 1,837,050
58,000 Citigroup, Inc. ........................................... 4,364,500
59,701 First State Bancorporation ................................ 1,134,319
53,500 Mellon Bank Corporation ................................... 3,975,719
95,200 Wells Fargo & Company ..................................... 4,111,450
24,000 US Bancorp ................................................ 889,500
------------
16,312,538
------------
COMPUTER SOFTWARE/SERVICES - 4.3%
102,500 Adobe Systems, Inc. ....................................... 6,495,938
135,500 Autodesk, Inc. ............................................ 4,031,125
125,800 Computer Associates International, Inc. ................... 5,370,087
------------
15,897,150
------------
HEALTH CARE PRODUCTS - 4.1%
37,000 Abbott Laboratories ....................................... 1,792,188
54,500 Baxter International, Inc. ................................ 3,433,500
80,000 Becton Dickinson & Company ................................ 2,975,000
150,000 DENTSPLY International Inc. ............................... 3,928,125
32,000 Johnson & Johnson ......................................... 3,120,000
------------
15,248,813
------------
CAPITAL GOODS - 3.9%
20,000 AlliedSignal Inc. ......................................... 1,175,000
116,250 Crane Company ............................................. 3,363,984
25,500 Grainger (W.W.) Inc. ...................................... 1,279,781
66,000 Sundstrand Corporation .................................... 4,735,500
65,000 Xerox Corporation ......................................... 3,818,750
------------
14,373,015
------------
COMPUTER SYSTEMS - 3.8%
85,200 Compaq Computer Corporation ............................... 1,901,025
150,000 Diebold, Inc. ............................................. 3,609,375
80,000 Hewlett-Packard Company ................................... 6,310,000
40,000 Sun Microsystems, Inc.+ ................................... 2,392,500
------------
14,212,900
------------
OIL & GAS - 3.6%
71,100 Ashland, Inc. ............................................. 3,003,975
150,000 Repsol, Sponsored ADR ..................................... 2,475,000
96,500 Tosco Corporation ......................................... 2,581,375
128,000 YPF S.A., Sponsored ADR ................................... 5,376,000
------------
13,436,350
------------
HEALTH CARE SERVICES - 3.6%
32,000 Aetna, Inc. ............................................... 2,806,000
175,000 Columbia/HCA Healthcare Corporation ....................... 4,320,312
150,000 HEALTHSOUTH Corporation+ .................................. 2,015,625
52,500 PacifiCare Health Systems, Inc., Class B+ ................. 4,188,512
------------
13,330,449
------------
BASIC INDUSTRY - 3.5%
68,500 Crompton & Knowles Corporation ............................ 1,387,125
126,000 Fort James Corporation .................................... 4,788,000
35,700 Nalco Chemical Company .................................... 1,305,281
146,400 Sonoco Products Company ................................... 3,778,950
27,500 Waste Management, Inc. .................................... 1,553,750
------------
12,813,106
------------
RETAIL SALES - 3.2%
100,000 Dillards, Inc., Class A ................................... 2,768,750
140,800 Limited, Inc. ............................................. 6,160,000
40,650 May Department Stores Company ............................. 1,618,378
32,000 Ross Stores, Inc. ......................................... 1,470,000
------------
12,017,128
------------
INSURANCE - 3.2%
24,500 American International Group, Inc. ........................ 2,877,219
131,445 Conseco, Inc. ............................................. 4,148,733
100,000 MGIC Investment Corporation ............................... 4,856,250
------------
11,882,202
------------
UTILITIES/TELECOMMUNICATIONS - 3.1%
55,000 Alltel Corporation ........................................ 3,709,063
48,200 SBC Communications, Inc. .................................. 2,699,200
50,000 Sprint Corporation ........................................ 5,128,125
------------
11,536,388
------------
FINANCIAL SERVICES - 3.0%
48,800 Federal National Mortgage Association ..................... 3,461,750
27,125 Finova Group Inc. ......................................... 1,310,476
17,600 Merrill Lynch & Company, Inc. ............................. 1,477,300
130,000 Price (T. Rowe) Associates, Inc. .......................... 4,899,375
------------
11,148,901
------------
CONSUMER DURABLES - 2.6%
32,600 Federal-Mogul Corporation ................................. 1,430,325
122,200 Mattel, Inc. .............................................. 3,161,925
77,400 U.S. Industries Inc. ...................................... 1,436,737
53,500 USG Corporation ........................................... 3,123,063
------------
9,152,050
------------
AEROSPACE/DEFENSE - 2.0%
33,200 Boeing Company ............................................ 1,348,750
85,700 Raytheon Company, Class B ................................. 6,020,425
------------
7,369,175
------------
CONSUMER CYCLICALS - 1.9%
38,000 Liz Claiborne, Inc. ....................................... 1,256,375
34,100 Sony Corporation, Sponsored ADR ........................... 3,154,250
102,800 The Warnaco Group, Inc. ................................... 2,743,475
------------
7,154,100
------------
ELECTRICAL EQUIPMENT - 1.4%
22,625 Emerson Electric Company .................................. 1,459,313
156,250 Tektronix, Inc. ........................................... 3,789,062
------------
5,248,375
------------
MEDIA - 0.9%
70,000 Sinclair Broadcast Group, Inc. ............................ 980,000
56,000 Viacom, Inc., Class A+ .................................... 2,271,500
------------
3,251,500
------------
Total Common Stocks (Cost $187,774,682) ................... 232,820,620
------------
CONVERTIBLE PREFERRED STOCKS - 5.6%
115,000 Cendant Corporation, Conv. Series CD,
Conv. Pfd.,
1.300% due 02/16/2001 ................................... 2,990,000
13,920 Estee Lauder Trust II, Conv. Pfd.,
6.250% due 02/23/2002 ................................... 1,350,240
45,000 Loral Space & Communications, Ltd.,
Series C, Conv. Pfd.,
6.000% due 11/01/2006++ ................................. 2,452,500
30,000 Qualcomm Financial Trust, Conv. Pfd.,
5.750% due 03/01/2012++ ................................. 4,170,000
50,000 Qwest Trends Trust, Conv. Pfd.,
5.750% due 11/17/2003++ ................................. 3,575,000
46,000 Sinclair Broadcasting Group, Inc., Conv. Pfd.
6.000% due 12/31/49 ..................................... 1,840,000
13,400 TCI Pacific Communications, Inc., Conv. Pfd.,
5.000% due 07/31/2006 ................................... 4,278,788
------------
Total Convertible Preferred Stocks
(Cost $14,548,151) ...................................... 20,656,528
------------
PRINCIPAL
AMOUNT
---------
FIXED INCOME SECURITIES - 30.4%
U.S. TREASURY OBLIGATIONS - 10.8%
U.S. TREASURY BONDS - 5.3%
$ 4,000,000 7.500% due 11/15/2016 ..................................... 4,685,000
4,000,000 9.000% due 11/15/2018 ..................................... 5,411,252
4,000,000 8.750% due 08/15/2020 ..................................... 5,347,500
4,000,000 6.250% due 08/15/2023 ..................................... 4,166,252
------------
19,610,004
------------
U.S. TREASURY NOTES - 5.0%
3,000,000 7.875% due 11/15/1999 ..................................... 3,048,750
2,000,000 7.750% due 11/30/1999 ..................................... 2,033,750
3,000,000 5.875% due 11/30/2001 ..................................... 3,053,439
5,000,000 6.375% due 08/15/2002 ..................................... 5,170,314
5,000,000 6.500% due 10/15/2006 ..................................... 5,329,689
------------
18,635,942
------------
U.S. TREASURY STRIP (PRINCIPAL ONLY) - 0.5%
4,000,000 Zero coupon due 08/15/2012 ................................ 1,840,091
------------
Total U.S. Treasury Obligations
(Cost $39,537,950) ...................................... 40,086,037
------------
CORPORATE BONDS AND NOTES - 11.8%
1,500,000 Aetna Services, Inc., Company Guaranty,
7.625% due 08/15/2026 ................................... 1,513,023
1,250,000 American Home Products Corporation, Deb., 7.250%
due 03/01/2023 .......................................... 1,311,020
2,000,000 Cendant Corporation, Note,
7.750% due 12/01/2003 ................................... 2,064,632
2,500,000 Citicorp, Sub. Note,
7.200% due 06/15/2007 ................................... 2,614,767
2,000,000 CNA Financial Corporation, Note,
6.600% due 12/15/2008 ................................... 1,953,422
1,000,000 Coastal Corporation, Note,
9.625% due 05/15/2012 ................................... 1,237,508
Conagra, Inc., Sr. Note:
750,000 9.750% due 03/01/2021 ................................... 966,868
1,000,000 6.700% due 08/01/2027 ................................... 1,012,490
1,000,000 Continental Corporation, Note,
7.250% due 03/01/2003 ................................... 1,005,074
500,000 Developers Diversified Realty, MTN,
Sr. Note,
6.580% due 02/06/2001 ................................... 494,916
2,000,000 Federal National Mortgage Association, Deb., 8.250%
due 12/18/2000 .......................................... 2,089,254
2,000,000 Federal National Mortgage Association, Note, 6.000%
due 12/18/2008 .......................................... 2,019,024
1,250,000 First Nationwide Bank, Sub. Deb.,
10.000% due 10/01/2006 .................................. 1,436,361
Franchise Finance Corporation, Sr. Note:
1,000,000 7.000% due 11/30/2000. .................................. 1,000,074
1,000,000 7.875% due 11/30/2005 ................................... 990,943
2,000,000 Loral Corporation, Deb.,
7.625% due 06/15/2025 ................................... 2,100,352
1,000,000 Medpartners, Inc., Sr. Note,
7.375% due 10/01/2006 ................................... 865,000
1,000,000 Mercantile Bank, Sub. Note,
7.625% due 10/15/2002 ................................... 1,049,282
2,500,000 Merrill Lynch & Company Inc., Note,
6.375% due 10/15/2008 ................................... 2,485,157
Niagara Mohawk Power, Deb.:
1,100,000 9.500% due 06/01/2000 ................................... 1,142,324
973,000 8.770% due 01/01/2018 ................................... 1,031,427
2,000,000 PacifiCare Health Systems Inc., Sr. Note,
7.00% due 09/15/2003 .................................... 2,051,924
1,000,000 Price/Costco, Inc., Sr. Note,
7.125% due 06/15/2005 ................................... 1,037,614
1,750,000 Raytheon Company, First Mortgage,
7.200% due 08/15/2027 ................................... 1,803,305
1,500,000 Superior Financial Acquisition Corporation, Sr. Note,
8.650% due 04/01/2003 ................................... 1,493,262
500,000 Summit Bancorp, Sub. Note,
8.625% due 12/10/2002 ................................... 538,803
1,000,000 Tenet Healthcare, Sr. Note,
7.875% due 01/15/2003 ................................... 1,005,000
2,000,000 Time Warner Inc., Deb.,
9.150% due 02/01/2023 ................................... 2,484,674
2,000,000 Texas-New Mexico Power Company, Sr. Note, 6.250%
due 01/15/2009 .......................................... 1,952,648
1,000,000 Westinghouse Electric, Deb.,
7.875% due 09/01/2023 ................................... 1,058,876
------------
Total Corporate Bonds and Notes
(Cost $43,147,823) ...................................... 43,809,024
------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES - 4.2%
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 0.2%
(Cost $657,921)
639,243 Federal National Mortgage Association,
8.000% due 12/01/2026 ................................... 665,753
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) - 4.0%
Government National Mortgage Association:
298,671 10.000% due 08/15/2019 .................................. 329,936
7,960,863 6.500% due 01/15/2024 - 05/15/2026 ...................... 7,925,469
3,962,233 7.000% due 12/15/2025 - 03/15/2028 ...................... 4,030,713
867,151 6.000% due 01/15/2026 - 02/15/2026 ...................... 841,425
1,704,443 Government National Mortgage Association - II ARM, Pool
#008132,
6.375% due 01/20/2023 ................................... 1,740,274
------------
Total GNMAs (Cost $14,320,596) ............................ 14,867,817
------------
Total U.S. Government Agency Mortgage-Backed Securities
(Cost $14,978,517) ...................................... 15,533,570
------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 1.1%
1,250,000 Donaldson, Lufkin & Jenrette Acceptance Corporation,
1993-M17,
7.350% due 12/18/2003 ................................... 1,273,950
773,527 Federal Home Loan Mortgage Corporation, Series 2-E,
6.850% due 07/25/2018 ................................... 776,002
85,389 Federal Home Loan Mortgage Corporation, Series 1311-H,
7.500% due 07/15/2020 ................................... 85,387
76,845 Merrill Lynch Mortgage Investors Inc.,
1988-P-A,
10.050% due 12/15/2008 .................................. 80,522
393,225 Resolution Trust Corporation, 1991-M2-A2,
7.132% due 09/25/2020 ................................... 377,276
1,490,202 Weyerhaeuser Mortgage Corporation, 1982-C FHA Putable,
7.430% due 06/01/2022 ................................... 1,545,510
------------
Total CMOs (Cost $3,906,856) .............................. 4,138,647
------------
CONVERTIBLE BONDS - 2.5%
2,770,000 At Home Corporation,
0.525% due 12/28/2018++ ................................. 2,638,424
1,080,000 CII Financial,
7.500% due 09/15/2001 ................................... 1,008,450
2,000,000 Corporate Express, Inc.,
4.500% due 07/01/2000 ................................... 1,795,000
2,700,000 Healthsouth Corporation,
3.250% due 04/01/2003 ................................... 2,274,750
1,750,000 Rockefeller Center Properties Trust,
Zero coupon due 12/31/2000 .............................. 1,321,250
------------
Total Convertible Bonds (Cost $8,402,073) ................. 9,037,874
------------
Total Fixed Income Securities
(Cost $109,973,219) ..................................... 112,605,152
------------
REPURCHASE AGREEMENT - 0.2%
(Cost $783,000)
783,000 Agreement with CS First Boston, 4.840% dated 04/30/1999, to
be repurchased at $783,316 on 05/03/1999, collateralized
by $798,660 U.S. Treasury Bond, 8.875% due 02/15/2019
(value $797,359) ........................................ 783,000
------------
TOTAL INVESTMENTS (Cost $313,079,052*) ........................... 99.0% 366,865,300
OTHER ASSETS AND LIABILITIES (NET) ............................... 1.0 3,770,741
----- ------------
NET ASSETS ....................................................... 100.0% $370,636,041
===== ============
- ----------------
* Aggregate cost for federal tax 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.
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
ARM -- Adjustable Rate Mortgage
FHA -- Federal Housing Authority
MTN -- Medium Term Note
STRIP -- Separate trading of registered interest and principal securities
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
GROWTH & INCOME FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
COMMON STOCKS - 95.6%
<S> <C> <C>
BANKS/SAVINGS & LOANS - 9.6%
183,468 Bank of America Corporation ............................ $ 13,209,696
134,600 Bank of New York Company, Inc. ......................... 5,384,000
229,900 Chase Manhattan Corporation ............................ 19,024,225
402,699 Citigroup, Inc. ........................................ 30,303,100
347,970 First Union Corporation ................................ 19,268,839
175,500 Mellon Bank Corporation ................................ 13,041,844
233,800 Prime Bancshares, Inc. ................................. 3,711,575
103,150 U.S. Bankcorp .......................................... 3,822,997
476,174 Wells Fargo & Company .................................. 20,564,765
--------------
128,331,041
--------------
COMPUTER SOFTWARE/SERVICES - 8.0%
257,400 Adobe Systems, Inc. .................................... 16,312,725
298,450 BARRA, Inc.+ ........................................... 5,838,428
410,000 BMC Software, Inc. ..................................... 17,655,625
261,700 Computer Associates International, Inc. ................ 11,171,319
359,500 First Data Corporation ................................. 15,256,281
312,000 Microsoft Corporation+ ................................. 25,369,500
577,000 Oracle Corporation+ .................................... 15,615,063
--------------
107,218,941
--------------
CONSUMER STAPLES - 7.6%
86,980 Alberto-Culver Company, Class A ........................ 1,967,923
153,100 Campbell Soup Company .................................. 6,277,100
79,000 Gillette Company ....................................... 4,122,813
241,500 Kimberly-Clark Corporation ............................. 14,806,969
340,000 Kimberly-Clark de Mexico, ADR .......................... 6,623,377
271,700 Libbey, Inc. ........................................... 8,167,981
483,000 PepsiCo, Inc. .......................................... 17,840,813
94,300 Philip Morris Companies, Inc. .......................... 3,306,394
82,000 Procter & Gamble Company ............................... 7,692,625
280,700 Ralston Purina Company ................................. 8,561,350
706,600 Sara Lee Corporation ................................... 15,721,850
90,000 Unilever NV ............................................ 5,844,375
--------------
100,933,570
--------------
HEALTH CARE PRODUCTS - 6.6%
224,200 Abbott Laboratories .................................... 10,859,687
67,000 ALZA Corporation+ ...................................... 2,248,687
135,500 American Home Products Corporation ..................... 8,265,500
167,000 Bristol-Myers Squibb Company ........................... 10,614,937
101,000 DENTSPLY International Inc. ............................ 2,644,937
193,800 Johnson & Johnson ...................................... 18,895,500
196,400 Merck & Company, Inc. .................................. 13,797,100
44,000 Pfizer, Inc. ........................................... 5,062,750
61,200 Pharmacia & Upjohn, Inc.+ .............................. 3,427,200
174,500 Warner Lambert Company ................................. 11,855,094
--------------
87,671,392
--------------
OIL & GAS - 6.1%
39,400 Ashland, Inc. .......................................... 1,664,650
58,000 BP Amoco PLC, Sponsored ADR ............................ 6,564,875
130,800 Conoco, Inc., Class A .................................. 3,547,950
64,900 ELF Aquitatine S.A., Sponsored ADR ..................... 5,070,313
100,560 Exxon Corporation ...................................... 8,352,765
160,600 Mobil Corporation ...................................... 16,822,850
161,600 Royal Dutch Petroleum .................................. 9,483,900
75,200 Schlumberger, Ltd. ..................................... 4,803,400
558,300 Tosco Corporation ...................................... 14,934,525
168,000 Unocal Corporation ..................................... 6,982,500
63,000 YPF S.A., Sponsored ADR ................................ 2,646,000
--------------
80,873,728
--------------
COMPUTER SYSTEMS - 5.7%
116,675 Cisco Systems, Inc.+ ................................... 13,308,242
550,000 Compaq Computer Corporation ............................ 12,271,875
152,500 EMC Corporation+ ....................................... 16,612,969
192,700 Hewlett-Packard Company ................................ 15,199,213
92,000 International Business Machines Corporation ............ 19,245,250
--------------
76,637,549
--------------
UTILITIES/TELECOMMUNICATIONS - 5.3%
225,591 AT&T Corporation ....................................... 11,392,367
151,900 Comcast Corporation, Special Class A ................... 9,977,931
161,400 MCI Worldcom+ .......................................... 13,265,063
263,500 SBC Communications, Inc. ............................... 14,756,000
204,400 Sprint Corporation, PCS Group+ ......................... 20,963,775
--------------
70,355,136
--------------
INSURANCE - 5.0%
222,900 Allstate Corporation ................................... 8,107,987
40,400 American General Corporation ........................... 2,989,600
150,947 American International Group, Inc. ..................... 17,726,838
95,200 Cigna Corporation ...................................... 8,300,250
365,154 Conseco, Inc. .......................................... 11,525,173
83,000 Everest Reinsurance Holdings, Inc. ..................... 2,515,938
223,880 Liberty Financial Companies, Inc. ...................... 5,023,307
105,000 Marsh & McLennan Companies, Inc. ....................... 8,039,062
53,500 MGIC Investment Corporation ............................ 2,598,094
--------------
66,826,249
--------------
MEDIA - 4.2%
416,313 AT&T Corporation - Liberty Media Group, Class A+ ....... 26,591,995
100,400 Harcourt General, Inc. ................................. 4,787,825
348,600 News Corporation, Ltd., Sponsored ADR .................. 10,654,087
218,000 Viacom, Inc., Class A+ ................................. 8,842,625
174,200 Walt Disney Company .................................... 5,530,850
--------------
56,407,382
--------------
RETAIL SALES - 4.1%
82,400 Dayton Hudson Corporation .............................. 5,546,550
119,400 Federated Department Stores, Inc.+ ..................... 5,574,488
331,500 Intimate Brands, Inc. .................................. 16,575,000
259,500 Limited, Inc. .......................................... 11,353,125
150,750 May Department Stores Company .......................... 6,001,734
52,625 Ross Stores, Inc. ...................................... 2,417,461
158,000 Wal-Mart Stores, Inc. .................................. 7,268,000
--------------
54,736,358
--------------
BASIC INDUSTRY - 4.1%
113,900 Albemarle Corporation .................................. 2,505,800
182,700 Allegheny Teledyne, Inc. ............................... 4,087,913
61,000 du Pont (E.I.) de Nemours & Company .................... 4,308,125
41,900 Nucor Corporation ...................................... 2,459,006
76,800 Sealed Air Corporation+ ................................ 4,670,400
102,900 Sigma-Aldrich Corporation .............................. 3,344,250
523,365 Waste Management, Inc. ................................. 29,570,123
56,000 Weyerhaeuser Company ................................... 3,759,000
--------------
54,704,617
--------------
FINANCIAL SERVICES - 3.8%
53,900 Ambac, Financial Group, Inc. ........................... 3,254,212
205,000 Federal Home Loan Mortgage Corporation 12,863,750
92,700 Federal National Mortgage Association .................. 6,575,906
39,000 Merrill Lynch & Company, Inc. .......................... 3,273,563
59,500 Morgan Stanley Dean Witter & Company, Inc. ............. 5,901,656
144,900 Price (T. Rowe) Associates, Inc. ....................... 5,460,919
100,000 Providian Financial Corporation ........................ 12,906,250
--------------
50,236,256
--------------
CONSUMER DURABLES - 3.7%
308,900 Federal-Mogul Corporation .............................. 13,552,988
87,000 Ford Motor Company ..................................... 5,562,563
351,400 Mattel, Inc. ........................................... 9,092,475
839,350 Miller Industries, Inc.+ ............................... 4,249,209
598,400 U.S. Industries, Inc. .................................. 11,107,800
91,000 USG Corporation ........................................ 5,312,125
--------------
48,877,160
--------------
AEROSPACE/DEFENSE - 3.3%
112,700 AlliedSignal, Inc. ..................................... 6,621,125
357,800 Boeing Company ......................................... 14,535,625
145,338 Lockheed Martin Corporation ............................ 6,258,618
233,650 Raytheon Company, Class B .............................. 16,413,913
--------------
43,829,281
--------------
CAPITAL GOODS - 2.8%
87,900 Caterpillar, Inc. ...................................... 5,658,562
150,800 Crane Company .......................................... 4,363,775
383,448 Donaldson Company, Inc. ................................ 8,579,649
76,700 Sundstrand Corporation ................................. 5,503,225
162,002 Tyco International, Ltd. ............................... 13,162,663
--------------
37,267,874
--------------
HEALTH CARE SERVICES - 2.6%
39,900 Aetna, Inc. ............................................ 3,498,731
301,650 Columbia/HCA Healthcare Corporation .................... 7,446,984
167,000 HEALTHSOUTH Corporation+ ............................... 2,244,063
206,000 IMS Health, Inc. ....................................... 6,180,000
133,733 PacifiCare Health Systems, Inc., Class A+ .............. 9,804,300
10,000 PacifiCare Health Systems, Inc., Class B+ .............. 797,812
213,300 Tenet Healthcare Corporation+ .......................... 5,039,213
--------------
35,011,103
--------------
TRANSPORTATION - 2.5%
55,700 Airborne Freight Corporation ........................... 1,782,400
72,900 AMR Corporation+ ....................................... 5,089,331
111,000 Canadian Pacific Limited ............................... 2,511,375
211,200 Expeditors International of Washington, Inc. ........... 12,804,000
183,800 Union Pacific Corporation .............................. 11,028,000
--------------
33,215,106
--------------
UTILITIES/GAS & ELECTRIC - 2.1%
104,900 Edison International ................................... 2,570,050
221,200 Enron Corporation ...................................... 16,645,300
113,100 Entergy Corporation .................................... 3,534,375
64,800 Pinnacle West Capital Corporation ...................... 2,515,050
116,500 Southern Company ....................................... 3,152,781
--------------
28,417,556
--------------
ELECTRICAL EQUIPMENT - 1.9%
77,525 Emerson Electric Company ............................... 5,000,362
157,900 General Electric Company ............................... 16,658,450
46,300 Honeywell, Inc. ........................................ 4,386,925
--------------
26,045,737
--------------
BUSINESS SERVICES - 1.9%
264,433 ACNielson Corporation+ ................................. 7,371,070
304,829 Cendant Corporation .................................... 5,486,922
331,100 Dun & Bradstreet Corporation ........................... 12,167,925
--------------
25,025,917
--------------
ELECTRONICS/SEMICONDUCTORS - 1.9%
579,625 General Semiconductor, Inc.+ ........................... 4,347,188
333,600 Intel Corporation ...................................... 20,412,150
--------------
24,759,338
--------------
REAL ESTATE INVESTMENT TRUSTS - 1.1%
163,900 Equity Office Properties Trust ......................... 4,517,494
164,700 Health Care Property Investors, Inc. ................... 5,064,525
251,475 Prison Realty Trust Inc. ............................... 4,903,762
--------------
14,485,781
--------------
CONSUMER CYCLICALS - 0.9%
125,400 Sony Corporation, ADR .................................. 11,599,500
--------------
LODGING & RESTAURANTS - 0.8%
83,000 McDonald's Corporation ................................. 3,517,124
365,780 Sunburst Hospitality Corporation ....................... 2,080,374
69,500 Tricon Global Restaurants .............................. 4,474,062
--------------
10,071,560
--------------
Total Common Stocks
(Cost $923,355,515) .................................. 1,273,538,132
--------------
CONVERTIBLE PREFERRED STOCKS - 2.0%
123,200 Cendant Corporation, Conv. Pfd.,
7.500% due 02/16/2001 ................................ 3,903,900
46,410 Estee Lauder Trust II, Conv. Pfd.,
6.250% due 02/23/2002 ................................ 4,501,770
80,000 Loral Space & Communications, Ltd., Series C,
Conv. Pfd.,
6.000% due 11/01/2006++ .............................. 4,360,000
95,000 Nextlink Communications Corporation, Conv. Pfd.,
6.500% due 03/31/2010++ .............................. 8,265,000
110,000 Union Pacific Capital Trust Corporation, Conv. Pfd.,
6.250% due 04/01/2028++ .............................. 5,843,750
--------------
Total Convertible Preferred Stocks
(Cost $23,274,648) ................................... 26,874,420
--------------
PRINCIPAL
AMOUNT
---------
CONVERTIBLE BOND - 0.4%
(Cost $3,180,011)
$ 6,000,000 At Home Corporation,
0.525% due 12/28/2018++ .............................. 5,715,000
--------------
CONVERTIBLE NOTE - 0.5%
(Cost $2,916,801)
2,662,000 Berkshire Hathaway Company, Conv. Sr. Note,
1.000% due 12/02/2001 ................................ 5,866,382
--------------
REPURCHASE AGREEMENT - 1.1%
(Cost $14,559,000)
14,559,000 Agreement with Credit Suisse First Boston, 4.840% dated
04/30/1999, to be repurchased at $14,564,872 on
05/03/1999, collateralized by $14,850,180 U.S.
Treasury Bond, 8.875% due 02/15/2019 (Market Value
$14,825,985) ......................................... 14,559,000
--------------
TOTAL INVESTMENTS (Cost $967,285,975*) ....................... 99.6% 1,326,552,934
OTHER ASSETS AND LIABILITIES (NET) ........................... 0.4 5,871,524
----- --------------
NET ASSETS ................................................... 100.0% $1,332,424,458
===== ==============
- --------------
* Aggregate cost for federal tax 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.
- ------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
GROWTH FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 96.8%
COMPUTER SOFTWARE/SERVICES - 23.7%
238,700 Amazon.com, Inc.+ ........................................ $ 41,071,319
85,655 America Online, Inc.+ .................................... 12,227,251
13,445 CIBER, Inc.+ ............................................. 253,774
47,375 DoubleClick, Inc.+ ....................................... 6,623,617
97,965 eBay, Inc.+ .............................................. 20,388,966
100,880 Excite, Inc.+ ............................................ 14,728,480
45,190 Exodus Communications, Inc.+ ............................. 4,072,749
185,205 IMS Health, Inc. ......................................... 5,556,150
59,625 Inktomi Corporation+ ..................................... 7,140,094
170,485 Microsoft Corporation+ ................................... 13,862,561
95,460 PSINet, Inc.+ ............................................ 4,820,730
101,695 Verio, Inc.+ ............................................. 7,220,345
51,460 VeriSign, Inc.+ .......................................... 5,917,900
33,370 Yahoo, Inc.+ ............................................. 5,829,322
------------
149,713,258
------------
MEDIA - 13.9%
12,055 Adelphia Communications Corporation+ ..................... 822,754
458,826 AT&T Corporation-Liberty Media Group, Class A+ ........... 29,307,511
122,290 Cablevision Systems Corporation, Class A+ ................ 9,462,189
200,074 Outdoor Systems, Inc.+ ................................... 5,039,364
80,570 Penton Media, Inc. ....................................... 1,913,537
17,725 TCI Music, Inc., Class A+ ................................ 810,919
364,225 Time Warner, Inc. ........................................ 25,495,750
159,520 United International Holdings, Inc., Class A+ ............ 9,531,320
142,345 Viacom, Inc., Class B (Non-Voting)+ ...................... 5,818,352
------------
88,201,696
------------
UTILITIES/TELECOMMUNICATIONS - 13.9%
1 AT&T Corporation ......................................... 25
242,020 Comcast Corporation, Special Class A ..................... 15,897,689
85,170 Cox Communications, Inc., Class A+ ....................... 6,760,369
275,500 Level 3 Communications, Inc.+ ............................ 24,812,219
61,650 MCI Worldcom+ ............................................ 5,066,859
244,915 MediaOne Group, Inc.+ .................................... 19,975,880
1,895 NEXTLINK Communications, Inc.+ ........................... 138,809
170,860 Sprint Corporation, PCS Group+ ........................... 7,240,193
606,501 Telecom Italia SPA ....................................... 6,453,147
34,919 United Pan-Europe Communications NV, Sponsored ADR+ ...... 1,805,952
------------
88,151,142
------------
HEALTH CARE PRODUCTS - 9.7%
128,125 Centocor, Inc.+ .......................................... 5,685,547
88,465 Eli Lilly and Company .................................... 6,513,236
107,955 Guidant Corporation+ ..................................... 5,795,834
306,661 Medtronic, Inc. .......................................... 22,060,426
106,060 MiniMed, Inc.+ ........................................... 6,628,750
98,170 Pfizer, Inc. ............................................. 11,295,686
19,410 Sepracor, Inc.+ .......................................... 1,640,145
14,100 VISX, Inc.+ .............................................. 1,815,375
------------
61,434,999
------------
ELECTRONICS/SEMICONDUCTORS - 9.7%
177,295 Conexant Systems, Inc.+ .................................. 7,224,771
22,000 Linear Technology Corporation ............................ 1,251,250
78,810 Maxim Integrated Products, Inc.+ ......................... 4,413,360
510,575 Nokia Corporation, Class A, Sponsored ADR 37,878,283
57,145 Texas Instruments, Inc. .................................. 5,835,933
103,350 Vitesse Semiconductor Corporation+ ....................... 4,786,397
------------
61,389,994
------------
COMPUTER SYSTEMS - 5.7%
136,165 ASM Lithography Holding NV+ .............................. 5,310,435
212,082 Cisco Systems, Inc.+ ..................................... 24,190,603
52,375 EMC Corporation+ ......................................... 5,705,601
19,000 Sun Microsystems, Inc.+ .................................. 1,136,438
------------
36,343,077
------------
CAPITAL GOODS - 4.9%
63,450 Applied Materials, Inc.+ ................................. 3,402,506
120,405 Federal-Mogul Corporation ................................ 5,282,769
272,664 Tyco International, Ltd. ................................. 22,153,950
------------
30,839,225
------------
BANKS/SAVINGS & LOANS - 4.7%
280,060 Bank of New York Company, Inc. ........................... 11,202,400
89,235 Fifth Third Bancorp ...................................... 6,397,034
394,329 Firststar Corporation .................................... 11,854,515
------------
29,453,949
------------
OIL & GAS - 3.6%
303,370 Enron Corporation ........................................ 22,828,592
------------
RETAIL SALES - 1.8%
72,670 Costco Companies, Inc.+ .................................. 5,881,728
183,875 Staples, Inc.+ ........................................... 5,516,250
------------
11,397,978
------------
BUSINESS SERVICES - 1.8%
95,085 Lamar Advertising Company+ ............................... 3,197,233
127,335 Sapient Corporation+ ..................................... 7,990,271
7,525 Sylvan Learning Systems, Inc.+ ........................... 189,066
------------
11,376,570
------------
FINANCIAL SERVICES - 1.0%
48,045 American Express Company ................................. 6,278,881
------------
AIRLINE - 0.9%
171,035 Southwest Airlines Company ............................... 5,569,327
------------
INSURANCE - 0.9%
38,120 Progressive Corporation .................................. 5,470,220
------------
TECHNOLOGY - 0.6%
155,850 Pittway Corporation, Class A ............................. 4,110,544
------------
CONSUMER STAPLES - 0.0%**
0.180 Tootsie Roll Industries, Inc. ............................ 7
------------
Total Common Stocks (Cost $443,547,657) .................. 612,559,459
------------
PRINCIPAL
AMOUNT
---------
U.S. GOVERNMENT AGENCY DISCOUNT NOTE - 1.6%
(Cost $9,988,200)
$10,000,000 Federal National Mortgage Association (FNMA),
4.720% due 05/10/1999++ ................................ 9,988,200
------------
COMMERCIAL PAPER - 1.5%
(Cost $9,797,349)
9,800,000 Prudential Funding Corporation,
4.870% due 05/03/1999++ ................................ 9,797,349
------------
CORPORATE BOND - 0.4%
(Cost $2,133,379)
3,323,000 Amazon.com Inc., Step coupon,
Sr. Disc. Note,
Zero coupon to 05/01/2003;
10.000% due 05/01/2008 ................................. 2,425,790
------------
TOTAL INVESTMENTS (Cost $465,466,585*)......................... 100.3 % 634,770,798
OTHER ASSETS AND LIABILITIES (NET) .......................... (0.3) (1,841,338)
----- ------------
NET ASSETS ................................................... 100.0 % $632,929,460
===== ============
- --------------
* Aggregate cost for federal tax purposes.
** Amount represents less than 0.1% of net assets.
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
SCHEDULE OF FOREIGN CURRENCY CONTRACTS
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
<CAPTION>
CONTRACTS TO RECEIVE
--------------------------------------------- NET
IN UNREALIZED
EXPIRATION LOCAL VALUE IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- -------------- ------------------ ----------- ------------ ---------------
<S> <C> <C> <C> <C>
07/22/1999 EMU 2,150,000 2,284,221 2,459,966 $(175,745)
08/12/1999 EMU 4,700,000 5,000,569 5,044,435 (43,866)
---------
$(219,611)
=========
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
<CAPTION>
CONTRACTS TO DELIVER
---------------------------------------------- NET
IN UNREALIZED
EXPIRATION LOCAL VALUE IN EXCHANGE APPRECIATION
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- -------------- ------------------ ----------- ------------- --------------
<S> <C> <C> <C> <C>
05/03/1999 EMU 1,640,997 1,734,001 1,737,849 $ 3,848
07/22/1999 EMU 16,150,000 17,158,218 18,909,563 1,751,345
08/12/1999 EMU 14,500,000 15,427,288 16,069,330 642,042
----------
$2,397,235
==========
Net Unrealized Appreciation of Forward Foreign
Currency Contracts ......................................... $2,177,624
==========
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
EMU -- European Monetary Unit
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
NORTHWEST FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 97.4%
COMPUTER SOFTWARE/SERVICES - 14.8%
132,415 Adobe Systems, Inc. ...................................... $ 8,391,801
131,200 ARIS Corporation+ ........................................ 1,070,100
121,700 Check Point Software Technologies, Ltd.+ ................. 4,289,925
595,840 Mentor Graphics Corporation+ ............................. 7,224,560
173,850 Microsoft Corporation+ ................................... 14,136,178
438,140 Orcad, Inc.+ ............................................. 3,395,585
239,600 Summit Design, Inc.+ ..................................... 816,138
346,065 Visio Corporation+ ....................................... 9,343,755
341,415 Wall Data, Inc.+ ......................................... 5,334,609
------------
54,002,651
------------
HEALTH CARE PRODUCTS - 10.3%
556,200 Corixa Corporation+ ...................................... 5,214,375
298,970 Icos Corporation+ ........................................ 11,884,058
123,010 Immunex Corporation+ ..................................... 11,747,455
511,800 NeoRx Corporation+ ....................................... 655,744
550,863 SonoSite, Inc.+ .......................................... 8,194,087
------------
37,695,719
------------
COMPUTER SYSTEMS - 7.2%
289,300 Apex PC Solutions, Inc.+ ................................. 4,809,613
778,530 In Focus Systems, Inc.+ .................................. 8,077,249
284,595 RadiSys Corporation+ ..................................... 8,929,168
394,990 Sequent Computer Systems, Inc.+ .......................... 4,320,203
------------
26,136,233
------------
BASIC INDUSTRY - 6.9%
45,633 Boise Cascade Corporation ................................ 1,836,728
343,130 Oregon Steel Mills, Inc. ................................. 5,618,754
432,080 Schnitzer Steel Industries, Inc., Class A ................ 6,184,145
89,800 Weyerhaeuser Company ..................................... 6,027,825
121,600 Willamette Industries, Inc. .............................. 5,684,800
------------
25,352,252
------------
ELECTRONICS/SEMICONDUCTORS - 6.8%
115,070 Credence Systems Corporation + ........................... 2,955,861
58,050 Intel Corporation ........................................ 3,551,934
142,870 Lattice Semiconductor Corporation+ ....................... 5,839,812
107,745 Micrion Corporation+ ..................................... 1,010,109
134,780 Micron Technology, Inc.+ ................................. 5,003,707
209,750 TriQuint Semiconductor, Inc.+ ............................ 6,371,156
------------
24,732,579
------------
ELECTRICAL EQUIPMENT - 6.5%
159,765 Electro Scientific Industries, Inc.+ ..................... 6,091,041
520,980 FEI Company+ ............................................. 3,907,350
174,300 Flir Systems, Inc.+ ...................................... 2,396,625
472,980 Tektronix, Inc. .......................................... 11,469,765
------------
23,864,781
------------
BANKS/SAVINGS & LOANS - 6.0%
170,705 First Savings Bank of Washington Bancorp, Inc. ........... 3,435,438
27,947 Horizon Financial Corporation ............................ 338,857
104,850 Interwest Bancorp, Inc. .................................. 2,437,762
93,600 KeyCorp .................................................. 2,895,750
159,300 Sterling Financial Corporation+ .......................... 2,349,675
161,168 US Bancorp ............................................... 5,973,289
193,826 Washington Federal, Inc. ................................. 4,288,400
------------
21,719,171
------------
TRANSPORTATION - 5.9%
193,150 Airborne Freight Corporation ............................. 6,180,800
128,410 Alaska Air Group, Inc.+ .................................. 5,658,066
162,830 Expeditors International of Washington, Inc. ............. 9,871,569
------------
21,710,435
------------
CONSUMER CYCLICALS - 4.8%
693,325 Building Materials Holding Corporation+ .................. 8,839,894
74,800 Columbia Sportswear Company+ ............................. 1,014,475
465,630 K2, Inc. ................................................. 4,743,606
46,710 Nike, Inc., Class B ...................................... 2,904,778
------------
17,502,753
------------
CONSUMER STAPLES - 3.5%
120,000 Albertson's, Inc. ........................................ 6,180,000
121,612 Fred Meyer Inc., Class A+ ................................ 6,582,250
------------
12,762,250
------------
AEROSPACE/DEFENSE - 3.4%
200,964 Boeing Company ........................................... 8,164,162
103,175 Precision Castparts Corporation .......................... 4,410,731
------------
12,574,893
------------
LODGING & RESTAURANTS - 3.3%
639,385 Cavanaugh's Hospitality Corporation+ ..................... 4,835,349
198,240 Starbucks Corporation+ ................................... 7,322,490
------------
12,157,839
------------
CAPITAL GOODS - 3.3%
291,200 Greenbrier Companies, Inc. ............................... 2,620,800
285,135 Microvision, Inc.+ ....................................... 4,954,221
76,350 PACCAR, Inc. ............................................. 4,275,600
------------
11,850,621
------------
RETAIL SALES - 2.7%
93,270 Costco Companies, Inc.+ .................................. 7,549,041
159,975 Multiple Zones International, Inc.+ ...................... 1,989,689
12,500 Nordstrom, Inc. .......................................... 439,844
------------
9,978,574
------------
UTILITIES/TELECOMMUNICATIONS - 2.7%
202,200 General Communication, Inc., Class A+ .................... 935,175
28,250 GST Telecommunications, Inc.+ ............................ 356,656
515,395 Metro One Telecommunications, Inc.+ ...................... 8,407,381
------------
9,699,212
------------
INSURANCE - 2.6%
176,190 Safeco Corporation ....................................... 7,003,552
103,015 StanCorp Financial Group, Inc. + ......................... 2,478,798
------------
9,482,350
------------
REAL ESTATE INVESTMENT TRUSTS - 2.2%
244,815 Pacific Gulf Properties, Inc. ............................ 5,095,212
110,680 Shurgard Storage Centers, Inc., Class A .................. 2,981,442
------------
8,076,654
------------
HEALTH CARE SERVICES - 2.2%
369,360 Foundation Health Systems, Inc., Class A+ ................ 5,101,785
36,500 PacifiCare Health Systems, Inc., Class B+ ................ 2,912,016
------------
8,013,801
------------
CONSUMER DURABLES - 1.7%
220,575 Monaco Coach Corporation+ ................................ 6,120,956
------------
BUSINESS SERVICES - 0.6%
124,550 Asymetrix Learning Systems, Inc.+ ........................ 513,769
258,600 Barrett Business Services, Inc.+ ......................... 1,745,550
------------
2,259,319
------------
Total Common Stocks (Cost $224,147,083) .................. 355,693,043
----------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 3.3%
(Cost $12,147,000)
$12,147,000 Repurchase agreement with CS First Boston, 4.840% dated
04/30/1999 to be repuchased at $12,151,899 on 05/03/
1999, collaterlized by 12,389,940 U.S. Treasury Bond,
8.875% due 02/15/2019 (Market Value of $12,369,753) .... $ 12,147,000
------------
TOTAL INVESTMENTS (Cost $236,294,083*) ........................ 100.7% 367,840,043
OTHER ASSETS AND LIABILITIES (NET) ............................ (0.7) (2,705,616)
----- ------------
NET ASSETS .................................................... 100.0% $365,134,427
===== ============
- --------------
*Aggregate cost for federal tax purposes.
+Non-income producing security.
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
EMERGING GROWTH FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
- ------ -----
<S> <C> <C>
COMMON STOCKS - 99.7%
COMPUTER SOFTWARE/SERVICES - 22.1%
234,150 ARIS Corporation+ ............................................ $ 1,909,786
106,200 AVT Corporation+ ............................................. 2,887,313
86,650 AXENT Technologies, Inc.+ .................................... 812,344
50,550 BARRA, Inc.+ ................................................. 988,884
320,050 Carreker-Antinori, Inc.+ ..................................... 2,360,369
77,000 Check Point Software Technologies, Ltd.+ ..................... 2,714,250
285,250 Harbinger Corporation+ ....................................... 3,119,922
198,250 Made2Manage Systems, Inc.+ ................................... 1,883,375
33,400 Onyx Software Corporation+ ................................... 780,725
76,850 Sterling Commerce, Inc.+ ..................................... 2,406,366
88,700 Visio Corporation+ ........................................... 2,394,900
124,290 Wall Data, Inc.+ ............................................. 1,942,031
------------
24,200,265
------------
HEALTH CARE PRODUCTS - 14.2%
173,250 Corixa Corporation+ .......................................... 1,624,219
169,200 ESC Medical Systems, Ltd.+ ................................... 1,089,225
39,500 GelTex Pharmaceuticals, Inc.+ ................................ 676,438
88,280 Icos Corporation+ ............................................ 3,509,130
113,200 Incyte Pharmaceuticals, Inc.+ ................................ 2,044,675
204,825 NeoRx Corporation+ ........................................... 262,432
82,250 Pharmacyclics, Inc.+ ......................................... 1,172,062
142,700 Shire Pharmaceuticals Group ADR+ ............................. 3,085,888
138,271 SonoSite, Inc.+ .............................................. 2,056,781
------------
15,520,850
------------
ELECTRONICS/SEMICONDUCTORS - 9.0%
114,110 ATMI, Inc.+ .................................................. 2,624,530
88,875 Credence Systems Corporation+ ................................ 2,282,977
44,550 Lattice Semiconductor Corporation+ ........................... 1,820,981
102,260 TriQuint Semiconductor, Inc.+ ................................ 3,106,148
------------
9,834,636
------------
FINANCIAL SERVICES - 9.0%
143,217 American Capital Strategies, Ltd. ............................ 2,542,102
89,000 Hambrecht & Quist Group+ ..................................... 3,137,250
68,210 HealthCare Financial Partners, Inc.+ ......................... 2,302,088
49,975 Profit Recovery Group International, Inc.+ ................... 1,824,088
------------
9,805,528
------------
COMPUTER SYSTEMS - 6.8%
179,000 Apex PC Solutions, Inc.+ ..................................... 2,975,875
174,400 In Focus Systems, Inc.+ ...................................... 1,809,400
82,975 RadiSys Corporation+ ......................................... 2,603,340
------------
7,388,615
------------
CONSUMER CYCLICALS - 6.7%
154,700 Building Materials Holding Corporation+ ...................... 1,972,425
61,100 Cutter & Buck, Inc.+ ......................................... 1,580,963
144,155 K2, Inc. ..................................................... 1,468,579
80,650 Nortek, Inc.+ ................................................ 2,333,809
------------
7,355,776
------------
UTILITIES/TELECOMMUNICATIONS - 6.5%
39,300 Gilat Satellite Networks, Ltd.+ .............................. 2,043,600
116,500 Metro One Telecommunications, Inc.+ .......................... 1,900,405
57,200 Teligent, Inc.+ .............................................. 3,110,250
------------
7,054,255
------------
BUSINESS SERVICES - 5.7%
478,525 Asymetrix Learning Systems, Inc.+ ............................ 1,973,916
95,400 Cognizant Technology Solutions Corporation+ .................. 2,140,538
188,095 First Consulting Group, Inc.+ ................................ 2,163,092
------------
6,277,546
------------
TRANSPORTATION - 5.1%
82,000 Airborne Freight Corporation ................................. 2,624,000
48,500 Expeditors International of Washington, Inc. ................. 2,940,311
------------
5,564,311
------------
MEDIA - 2.9%
171,400 Bowne & Company, Inc. ........................................ 3,213,750
------------
ELECTRICAL EQUIPMENT - 2.6%
32,560 Electro Scientific Industries, Inc.+ ......................... 1,241,350
215,000 FEI Company+ ................................................. 1,612,500
------------
2,853,850
------------
OIL & GAS - 2.0%
77,731 Hanover Compressor Company+ .................................. 2,229,908
------------
CAPITAL GOODS - 1.8%
116,280 Microvision, Inc.+ ........................................... 2,020,365
------------
CONSUMER STAPLES - 1.7%
23,400 Beringer Wine Estates Holding, Inc. .......................... 921,375
21,246 U.S. Foodservice+ ............................................ 893,660
------------
1,815,035
------------
LODGING & RESTAURANTS - 1.5%
178,940 Cavanaugh's Hospitality Corporation+ ......................... 1,353,233
11,950 PJ America, Inc.+ ............................................ 280,825
------------
1,634,058
------------
CONSUMER DURABLES - 1.3%
52,250 Monaco Coach Corporation ..................................... 1,449,938
------------
INSURANCE - 0.8%
21,880 Protective Life Corporation .................................. 857,422
------------
Total Common Stocks (Cost $105,052,175) ...................... 109,076,108
------------
TOTAL INVESTMENTS (Cost $105,052,175*) ......................... 99.7% 109,076,108
OTHER ASSETS AND LIABILITIES (NET) ............................. 0.3 364,418
----- ------------
NET ASSETS ..................................................... 100.0% $109,440,526
===== ============
- --------------
*Aggregate cost for federal tax purposes.
+Non-income producing security.
- ------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
INTERNATIONAL GROWTH FUND
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C>
COMMON STOCKS - 96.5%
JAPAN - 25.9%
23,210 Advantest Corporation ..................................... $ 1,774,768
224,000 Hitachi Ltd. .............................................. 1,635,913
58,000 Hoya Corporation .......................................... 3,036,013
38,000 Matsushita Communication Industrial Company, Ltd. ......... 2,727,471
16,900 Nichiei Company Ltd. ...................................... 1,464,950
137,000 Nomura Securities Company, Ltd. ........................... 1,477,856
76 NTT Mobile Communications Network, Inc. ................... 4,455,611
38,900 Orix Corporation .......................................... 3,130,896
179,000 Sanwa Bank, Ltd. .......................................... 2,008,878
7,270 Shohkoh Fund & Company, Ltd. .............................. 4,262,144
10,000 Softbank Corporation ...................................... 1,330,821
20,200 Sony Corporation .......................................... 1,886,348
49,000 Sumitomo Bank, Ltd. ....................................... 663,183
112,000 Sumitomo Rubber Industries, Ltd. .......................... 736,348
19,000 Tokyo Electron Ltd. ....................................... 1,082,077
28,900 Tokyo Seimitsu Company, Ltd. .............................. 1,599,908
432,000 Toshiba Corporation ....................................... 2,894,472
------------
36,167,657
------------
UNITED KINGDOM - 12.0%
37,500 AstraZeneca Group Plc ..................................... 1,467,738
51,700 Barclays Plc .............................................. 1,641,772
213,600 British Aerospace Plc ..................................... 1,597,825
88,800 British Energy Plc ........................................ 754,976
457,000 British Steel Plc ......................................... 1,086,222
613,100 FKI Plc ................................................... 1,696,425
113,000 Imperial Chemical Industries Plc .......................... 1,223,400
41,800 MEPC Plc .................................................. 306,295
205,000 Orange Plc+ ............................................... 2,789,968
10,700 Perpetual Plc ............................................. 629,138
157,800 Reed International Plc .................................... 1,435,538
319,008 Williams Holdings Plc ..................................... 2,191,311
------------
16,820,608
------------
ITALY - 8.5%
350,000 Banca Nazionale del Lavoro+ ............................... 1,194,486
800,000 Olivetti Spa+ ............................................. 2,789,424
2,246,200 Seat-Pagine Gialle Spa+ ................................... 1,848,828
397,800 Telecom Italia Spa ........................................ 4,232,577
3,060,000 Unione Immobiliare Spa+ ................................... 1,752,392
------------
11,817,707
------------
FRANCE - 7.9%
14,500 Elf Aquitaine SA .......................................... 2,252,143
10,600 PSA Peugeot Citroen ....................................... 1,758,394
35,600 Rhone-Poulenc Rorer, Inc. ................................. 1,692,673
6,000 Societe Generale, Class A ................................. 1,073,928
45,000 Societe Generale d'Enterprises Ord ........................ 1,901,880
8,000 Suez Lyonnaise Des Eaux ................................... 1,360,901
64,700 Usinor SA+ ................................................ 1,000,820
------------
11,040,739
------------
GERMANY - 6.5%
60,100 BHF-Bank AG ............................................... 2,260,659
22,800 Fresenius Medical Care AG ................................. 1,223,796
13,700 Hannover Rueckversicherungs AG ............................ 1,121,845
3,041 KSB AG-VORZUG ............................................. 443,411
9,000 Mannesmann AG ............................................. 1,184,871
38,700 Siemens AG ................................................ 2,862,329
600 Telegate AG ............................................... 27,260
------------
9,124,171
------------
NETHERLANDS - 5.2%
7,900 IHC Caland NV ............................................. 358,092
26,200 Koninklijke Hoogovens NV .................................. 1,050,567
52,200 United Pan-Europe Communications NV+ ...................... 2,699,814
69,504 Vedior NV+ ................................................ 1,564,228
65,287 Vendex NV ................................................. 1,624,532
------------
7,297,233
------------
SWITZERLAND - 3.6%
159 Roche Holdings AG Genuss .................................. 1,869,485
15,700 TAG Heuer International SA ................................ 1,571,749
4,800 UBS AG .................................................... 1,629,571
------------
5,070,805
------------
KOREA - 3.4%
38,800 Daewoo Securities Company+ ................................ 958,166
23,200 Hyundai Industrial Development & Construction Company ..... 306,470
24,700 Korea Electric Power Corporation .......................... 710,761
35,000 Samsung Corporation ....................................... 491,796
29,406 Samsung Electronics ....................................... 2,261,429
------------
4,728,622
------------
CANADA - 3.1%
116,600 Research in Motion Ltd.+ .................................. 1,411,516
152,500 Rogers Communications, Inc.+ .............................. 2,855,453
4,700 Versus Technologies Inc.+ ................................. 58,025
------------
4,324,994
------------
FINLAND - 3.0%
87,400 Metra Oyj, Class B ........................................ 2,174,768
80,500 Sonera Group Oyj+ ......................................... 1,590,553
52,000 Teleste Oyj+ .............................................. 453,281
------------
4,218,602
------------
ISRAEL - 2.9%
46,600 Blue Square-Israel Ltd., ADR .............................. 646,575
42,700 ECI Telecommunications Ltd., ADR .......................... 1,574,563
37,200 Orbotech, Ltd.+ ........................................... 1,785,600
------------
4,006,738
------------
DENMARK - 2.4%
9,100 International Service Systems A/S, Class B ................ 534,214
10,500 Tele Danmark A/S .......................................... 1,082,059
25,700 Unidanmark A/S, Class A ................................... 1,764,427
------------
3,380,700
------------
SWEDEN - 2.1%
17,650 Biora AB, Sponsored ADR+ .................................. 221,728
106,237 Electrolux AB, B Shares ................................... 2,153,197
23,700 Kinnevik AB, B Shares ..................................... 519,675
------------
2,894,600
------------
PORTUGAL - 2.1%
91,466 Banco Mello, SA ........................................... 831,129
33,900 Banco Pinto & Sotto Mayor, SA ............................. 632,201
34,200 Portugal Telecom, SA ...................................... 1,425,554
------------
2,888,884
------------
HONG KONG - 1.7%
696,000 SmarTone Telecommunications Holdings, Ltd. 2,410,992
------------
IRELAND - 1.7%
101,400 Bank of Ireland ........................................... 2,030,288
73,800 Greencore Group Plc ....................................... 280,717
------------
2,311,005
------------
AUSTRALIA - 1.3%
232,000 Australia & New Zealand Banking Group Ltd. 1,837,706
------------
SPAIN - 1.0%
62,400 Banco Santander Central Hispano, SA ....................... 1,355,559
------------
GREECE - 0.8%
96,200 Hellenic Telecommunications Organization SA (OTE), GDR .... 1,118,325
------------
TURKEY - 0.7%
9,660,000 Eregli Demir ve Celik Fabrikalari AS ...................... 177,492
14,000,000 Haci Omer Sabanci Holding AS .............................. 384,066
17,500,000 Yapi ve Kredi Bankasi AS .................................. 419,793
------------
981,351
------------
SINGAPORE - 0.5%
398,000 Development Bank of Singapore, Ltd. ....................... 736,733
------------
THAILAND - 0.2%
300,000 Siam Commerial Bank Public Company Ltd. ................... 210,413
------------
Total Common Stocks (Cost $119,623,265) ................... 134,744,144
------------
WARRANT - 0.0%**
Cost ($0)
300,000 Siam Commerial Bank Public Company Ltd.,
Expires 05/11/1999+ ..................................... 0
------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 4.3%
(Cost $5,963,000)
$5,963,000 Repurchase agreement with State Street Corporation, 4.820%
dated 04/30/1999 to be repuchased at $5,965,395 on
05/03/1999, collaterlized by $5,378,000 U.S. Treasury
Bond,10.375% due 11/15/2009 (Market Value of
$5,489,863) ............................................. 5,963,000
------------
TOTAL INVESTMENTS (Cost $125,586,265*) ........................ 100.8% 140,707,144
OTHER ASSETS AND LIABILITIES (NET) ............................ (0.8) (1,165,296)
----- ------------
NET ASSETS .................................................... 100.0% $139,541,848
===== ============
- --------------
* Aggregate cost for federal tax purposes.
** Amount represents less than 0.1% of net assets.
+ Non-income producing security.
<PAGE>
AS OF APRIL 30, 1999, SECTOR DIVERSIFICATION WAS AS FOLLOWS:
<CAPTION>
% OF
SECTOR DIVERSIFICATION NET ASSETS VALUE
---------------------- ---------- -----
<S> <C> <C>
COMMON STOCKS:
Telecommunications ...................................... 24.1 % $ 33,644,421
Financial Services ...................................... 22.6 31,576,130
Technology .............................................. 12.8 17,815,510
Producer Durables ....................................... 10.0 13,929,237
Material & Processing ................................... 7.6 10,589,665
Energy .................................................. 3.8 5,299,372
Health Care ............................................. 3.4 4,782,747
Retail .................................................. 2.8 3,842,856
Autos & Transportation .................................. 1.2 1,758,394
Consumer Discretionary .................................. 0.4 534,214
Consumer Staples ........................................ 0.2 280,717
Other ................................................... 7.6 10,690,882
----- ------------
TOTAL COMMON STOCKS ..................................... 96.5 134,744,144
WARRANT ................................................. 0.0 ** 0
OTHER INVESTMENTS ....................................... 4.3 5,963,000
----- ------------
TOTAL INVESTMENTS ....................................... 100.8 140,707,144
OTHER ASSETS AND LIABILITIES (NET) (0.8) (1,165,296)
----- ------------
NET ASSETS .............................................. 100.0 % $139,541,848
===== ============
- --------------
** Amount represents less than 0.1% of net assets.
SCHEDULE OF FOREIGN CURRENCY CONTRACTS
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
<CAPTION>
CONTRACTS TO RECEIVE NET
---------------------------------------------- UNREALIZED
IN APPRECIATION/
EXPIRATION LOCAL VALUE IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ------------- ------------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C>
05/07/1999 JPY 48,253,590 404,431 409,692 $(5,261)
05/07/1999 THB 7,800,000,000 210,433 210,073 360
-------
Net Unrealized Depreciation of Forward Foreign
Currency Contracts ........................................ $(4,901)
=======
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
JPY -- Japanese Yen
THB -- Thailand Baht
- ------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES to FINANCIAL statements (unaudited)
WM GROUP OF FUNDS
1. ORGANIZATION AND BUSINESS
WM Trust I ("Trust I") 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." Trust I is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. WM Trust II ("Trust II") was organized as a Massachusetts
business trust under the laws of the Commonwealth of Massachusetts on February
22, 1989 and is registered under the 1940 Act, as an open-end management
investment company. Trust I and Trust II (together the "Trusts") consist of 18
funds as follows:
TRUST I TRUST II
EQUITY FUNDS EQUITY FUNDS
Bond & Stock Fund Growth Fund
Growth & Income Fund Emerging Growth Fund
Northwest Fund International Growth Fund
FIXED INCOME FUNDS FIXED INCOME FUNDS
U.S. Government Securities Fund Short Term High Quality Bond Fund
Income Fund Target Maturity 2002 Fund
High Yield Fund
MUNICIPAL FUNDS
MUNICIPAL FUND California Municipal Fund
Tax-Exempt Bond Fund California Insured Intermediate Municipal Fund
Florida Insured Municipal Fund
MONEY MARKET FUNDS
Money Market Fund MONEY MARKET FUND
Tax-Exempt Money Market Fund California Money Fund
Trust I and Trust II (with the exception of the Money Market Funds) consist of
15 funds (each a "Fund" collectively, the "Funds") The financial statements
for the Money Market Funds are presented in a separate report.
WM Advisors, Inc. (the "Advisor" or "WM Advisors"), a wholly-owned subsidiary
of Washington Mutual, Inc. ("Washington Mutual"), a publicly owned financial
services company, serves as investment advisor to the Trusts.
Each of the Funds, except the Target Maturity 2002 Fund, offers four classes
of shares: Class A shares, Class B shares, Class S shares and Class I shares.
The Target Maturity 2002 Fund offers only Class A shares. Class A shares of
the Funds are subject to an initial sales charge at the time of purchase.
Certain Class A shares purchased by exchange from another Fund within Trust I
or Trust II may be subject to a contingent deferred sales charge ("CDSC") if
redeemed within two years of purchase. Class B shares and Class S shares are
not subject to an initial sales charge. Class B shares and Class S shares are
generally subject to a CDSC if redeemed within five years of purchase. Class I
shares are sold exclusively to the various investment portfolios of the WM
Strategic Asset Management Portfolios, an open-end management investment
company, and are not available for direct purchase by investors. Class I
shares are not subject to an initial sales charge or CDSC.
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 U.S. 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. Securities traded only on over-the-
counter markets (other than the Nasdaq National Market System and U.S.
Government Securities) are valued at the over-the-counter bid prices or, if no
sale occurred on such day, at the mean of the current bid and asked prices. An
option is generally valued at the last sale price or, in the absence of a last
sale price, at the mean of the current day's bid and asked prices. Short term
debt securities that mature in 60 days or less are valued at amortized cost.
The value of a foreign security is determined in its national currency as of
the close of trading on the foreign exchange on which it is traded or as of
4:00 p.m. Eastern Standard time, if that is earlier, and that value is then
converted into its U.S. dollar equivalent at the foreign exchange rate in
effect at noon, Eastern Standard time, on the day the value of the foreign
security is determined. 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. If the market makes a limit move with
respect to the security or index underlying the futures contract, the futures
contract will be valued at a fair market valued as determined by or under the
direction of the Board of Trustees.
Debt securities of U.S. issuers (other than U.S. Government securities and
short-term investments), including municipal securities, are valued by one or
more independent pricing services (each a "Pricing Service") retained by the
Trusts. When, in the judgment of a Pricing Service, market quotations for
these securities are readily available, they are valued at the mean between
the quoted bid prices and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by or under
the direction of the Board of Trustees, which may rely on the assistance of
one or more Pricing Services. The procedures of each Pricing Service are
reviewed periodically by the officers of the Trusts under the general
supervision and responsibility 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 subject to obligation 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 all times
at least equal 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, acting under the supervision of the
Board of Trustees, reviews the value of the collateral and the credit
worthiness of those banks and dealers with whom each Fund enters into
repurchase agreements.
REVERSE REPURCHASE AGREEMENTS:
Each Fund, except the Target Maturity 2002 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 Trusts' 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.
OPTION CONTRACTS:
The Equity Funds, Fixed Income Funds and the Municipal Funds may engage in
option contracts. The Funds may use option contracts to manage their exposure
to the stock and bond markets and to fluctuations in interest rates and
currency values. The underlying principal amounts and option values are shown
in the Portfolio of Investments under the captions "Put Options Purchased on
Foreign Currency," "Call Options Written on Foreign Currency" and "Call
Options Purchased on Stock Indices." These amounts reflect each contract's
exposure to the underlying instrument at April 30, 1999. Writing puts and
buying calls tends to increase the Funds' exposure to the underlying
instrument. Buying puts and writing calls tends to decrease the Funds'
exposure to the underlying instruments or to hedge other Fund investments.
Upon the purchase of a put option or a call option by the Funds, the premium
paid is recorded as an investment, the value of which is marked-to-market
daily. When a purchased option expires, the Funds will realize a loss in the
amount of the cost of the option. When the Funds enter into a closing sale
transaction, the Funds will realize a gain or loss depending on whether the
sales proceeds from the closing sale transaction are greater or less than the
cost of the option. When the Funds exercise a put option, they will realize a
gain or loss from the sale of the underlying security and the proceeds from
such sale will be decreased by the premium originally paid. When the Funds
exercise a call option, the cost of the security will be increased by the
premium originally paid.
When the Funds write a call option or a put option, an amount equal to the
premium received by the Funds is recorded as a liability, the value of which
is marked-to-market daily. When a written option expires, the Funds realize a
gain equal to the amount of the premium received. When the Funds enter into a
closing purchase transaction, the Funds realize a gain (or loss if the cost of
the closing purchase transaction exceeds the premium received when the option
was sold) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is eliminated. When a
written call option is exercised, the Funds realize a gain or loss from the
sale of the underlying security and the proceeds from such sale are increased
by the premium originally received. When a written put option is exercised,
the amount of the premium originally received will reduce the cost of the
security that the Funds purchased upon exercise.
The risk associated with purchasing options is limited to the premium
originally paid. Options written by a Fund involve, to varying degrees, risk
of loss in excess of the option value reflected in the Statements of Assets
and Liabilities. The risk in writing a covered call option is that the Funds
may forego the opportunity of profit if the market price of the underlying
security increases and the option is exercised. The risk in writing a covered
put option is that the Funds may incur a loss if the market price of the
underlying security decreases and the option is exercised. In addition, there
is the risk the Funds may not be able to enter into a closing transaction
because of an illiquid secondary market or, for over-the-counter options,
because of the counterparty's inability to perform.
The Equity Funds, Fixed Income Funds (except the Target Maturity 2002 Fund)
and the Municipal Funds may engage in options on foreign currency and options
on interest rate futures. Options on foreign currency and options on interest
rate futures act as a hedge to provide protection against adverse movements in
the value of foreign securities in the portfolio.
Certain risks are associated with the use of options on foreign currency and
options on interest rate futures contracts as hedging devices. The predominant
risk is that the movement in the price of the instrument underlying such
options may not correlate perfectly with the movement in the prices of the
assets being hedged. The lack of correlation could render the Funds' hedging
strategy unsuccessful and could result in a loss to the Funds. In addition,
there is the risk the Funds may not be able to enter into a closing
transaction because of an illiquid secondary market or, for over-the-counter
options, because of the counterparty's inability to perform. Options written
by a Fund involve, to varying degrees, risk of loss in excess of the option
value reflected in the Statements of Assets and Liabilities.
FUTURES CONTRACTS:
Each Fund 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, 1999. 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.
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 CURRENCY:
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.
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 arising from
changes in market prices of investments during the period. Accordingly, all
such changes have been reflected as realized and unrealized net gain/(loss)
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.
FORWARD FOREIGN CURRENCY CONTRACTS:
The Equity Funds and Fixed Income Funds (with the exception of the Target
Maturity 2002, U.S. Government Securities, Bond & Stock, Growth & Income and
Northwest Funds) may enter into forward foreign currency contracts. Forward
foreign currency contracts are agreements to exchange one currency for another
at a future date and at a specified price. The Funds may use forward foreign
currency contracts to facilitate transactions in foreign securities and to
manage the Funds' foreign currency exposure. The U.S. dollar market value,
contract value and the foreign currencies the Funds have committed to buy or
sell are shown in the Portfolio of Investments under the caption "Schedule of
Forward Foreign Currency Contracts." These amounts represent the aggregate
exposure to each foreign currency the Funds have acquired or hedged through
forward foreign currency contracts at April 30, 1999. Forward foreign currency
contracts are reflected as both a forward foreign currency contract to buy and
a forward foreign currency contract to sell. Forward foreign currency
contracts to buy generally are used to acquire exposure to foreign currencies,
while forward foreign currency contracts to sell are used to hedge the Funds'
investments against currency fluctuations. Also, a forward foreign currency
contract to buy or sell can offset a previously acquired opposite forward
foreign currency contract.
Forward foreign currency contracts are marked-to-market daily using foreign
currency exchange rates supplied by an independent pricing service. The change
in a contract's market value is recorded by the Funds as an unrealized gain or
loss. When the contract is closed or delivery is taken, the Funds record a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of the Fund's securities, but it does establish a
rate of exchange that can be achieved in the future. These forward foreign
currency contracts involve market risk in excess of the unrealized
appreciation/(depreciation) of forward foreign currency contracts reflected in
the Funds' Statements of Assets and Liabilities. Although forward foreign
currency contracts used for hedging purposes limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any potential
gain that might result should the value of the currency increase. In addition,
the Funds could be exposed to risks if the counterparties to the contracts are
unable to meet the terms of their contracts. The Fund's Advisor and/or Sub-
advisor will enter into forward foreign currency contracts only with parties
approved by the Board of Trustees because there is a risk of loss to the Funds
if the counterparties do not complete the transaction.
DOLLAR ROLL TRANSACTIONS:
The Income Fund, Short Term High Quality Bond Fund and U.S. Government
Securities 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 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 net assets of each 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) futures contracts and options to the extent
a liquid secondary market does not exist for the instruments; (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% 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
accreted less premiums amortized. Premiums on bonds can be amortized on the
basis of any of the following methods: yield-to-maturity, straight-line, or
yield-to-call. Discounts can be accreted using yield-to-maturity or straight-
line methods. Premiums and discount on mortgage-backed securities are
amortized or accreted using only the straight-line method. Dividend income is
recorded on the ex-dividend date, except 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 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 (except the
Target Maturity 2002 Fund), and the Municipal 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 Growth Fund are declared and paid semiannually.
Dividends from the net investment income of the Target Maturity 2002, Emerging
Growth, International Growth and Northwest Funds 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,
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 earnings
to its shareholders. Therefore, no Federal income tax provision is required.
EXPENSES:
General expenses of the Trusts 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 Municipal Funds and the Fixed 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 Fixed Income Funds 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
WM Advisors serves as investment advisor to the Trusts. The Advisor is
entitled to a monthly fee based upon a percentage of the average daily net
assets of each Fund at the following rates:
<TABLE>
<CAPTION>
FEES ON NET ASSETS
EXCEEDING
FEES ON NET ASSETS $200 MILLION
EQUAL TO AND EQUAL TO FEES ON NET ASSETS
OR LESS THAN OR LESS THAN EXCEEDING
NAME OF FUND $200 MILLION $500 MILLION $500 MILLION
- --------- --------- --------- ---------
<S> <C> <C> <C>
Short Term High Quality Bond Fund................... .500% .450% .400%
<CAPTION>
FEES ON
FEES ON NET ASSETS EXCEEDING AVERAGE DAILY
UP TO $500 MILLION $500 MILLION NET ASSETS
------------ ------- ---------
<C> <C> <C>
California Municipal Fund
(11/01/1998 - 12/31/1998) .......................... .700% .550% --
(01/01/1999 - 04/30/1999) .......................... -- -- .500%
California Insured Intermediate
Municipal Fund
(11/01/1998 - 12/31/1998) .......................... .700% .550% --
(01/01/1999 - 04/30/1999) .......................... -- -- .500%
Florida Insured Municipal Fund
(11/01/1998 - 12/31/1998) .......................... .700% .550% --
(01/01/1999 - 04/30/1999) .......................... -- -- .500%
<CAPTION>
FEES ON NET ASSETS FEES ON NET ASSETS FEES ON
UP TO EXCEEDING AVERAGE DAILY
NAME OF FUND $250 MILLION $250 MILLION NET ASSETS
- --------- --------- --------- ---------
<S> <C> <C>
Tax-Exempt Bond Fund ............................... .500% .400% --
U.S. Government Securities Fund
(11/01/1998 - 12/31/1998) .......................... .625% .500% --
(01/01/1999 - 04/30/1999) .......................... -- -- .500%
Income Fund
(11/01/1998 - 12/31/1998) .625% .500% --
(01/01/1999 - 04/30/1999) .......................... -- -- .500%
High Yield Fund .................................... .625% .500% --
Growth & Income Fund ............................... .625% .500% --
Bond & Stock Fund .................................. .625% .500% --
<CAPTION>
FEES ON NET ASSETS
EXCEEDING
FEES ON NET ASSETS $100 MILLION
EQUAL TO AND EQUAL TO FEES ON NET ASSETS FEES ON
OR LESS THAN OR LESS THAN EXCEEDING AVERAGE DAILY
$100 MILLION $200 MILLION $200 MILLION NET ASSETS
--------- --------- --------- ---------
Growth Fund
<C> <C> <C> <C> <C>
(11/01/1998 - 12/31/1998) ......... 1.100% 1.050% 1.025% --
(01/01/1999 - 04/30/1999) ......... -- -- -- .850%
<CAPTION>
FEES ON NET ASSETS
EXCEEDING
FEES ON NET ASSETS $500 MILLION
EQUAL TO AND EQUAL TO FEES ON NET ASSETS
OR LESS THAN OR LESS THAN EXCEEDING
$500 MILLION $1 BILLION $1 BILLION
--------- --------- ---------
<S> <C> <C> <C>
Northwest Fund ............................. .625% .500% .375%
<CAPTION>
FEES ON NET ASSETS
EXCEEDING
FEES ON NET ASSETS $50 MILLION
EQUAL TO AND EQUAL TO FEES ON NET ASSETS
OR LESS THAN OR LESS THAN EXCEEDING
$50 MILLION $125 MILLION $125 MILLION
--------- --------- ---------
<S> <C> <C> <C>
International Growth Fund .................. 1.100% 1.000% .800%
<CAPTION>
FEES ON NET ASSETS
EXCEEDING
FEES ON NET ASSETS $100 MILLION
EQUAL TO AND EQUAL TO FEES ON NET ASSETS FEES ON
OR LESS THAN OR LESS THAN EXCEEDING AVERAGE DAILY
$100 MILLION $500 MILLION $500 MILLION NET ASSETS
--------- --------- --------- ---------
<C> <C> <C> <C>
Emerging Growth Fund
(11/01/1998 - 12/31/1998) ......... 1.050% 1.000% .900% --
(01/01/1999 - 04/30/1999) ......... -- -- -- .850%
<CAPTION>
FEES ON
AVERAGE DAILY
NET ASSETS
---------
<S> <C>
Target Maturity 2002 Fund ....................................................... .250%
</TABLE>
WM Advisors provides administration services to the Trusts at no additional
fee.
The Advisor has agreed to waive a portion of its management fees and/or
reimburse expenses. Fees waived and/or expenses reimbursed by the Advisor for
the six months ended April 30, 1999 were as follows:
EXPENSES
NAME OF FUND FEES WAIVED REIMBURSED
- ------------ ----------- ----------
Target Maturity 2002 Fund ...................... $ 2,713 $ 26,879
High Yield Fund ................................ 79,790 --
Short Term High Quality Bond Fund .............. 173,220 --
U.S. Government Securities Fund ................ 213,833 --
Income Fund .................................... 30,000
California Insured Intermediate Municipal Fund . 41,951 --
California Municipal Fund ...................... 143,665 --
Florida Insured Municipal Fund ................. 47,323 --
Growth & Income Fund ........................... 30,000 --
Growth Fund .................................... 397,780 --
Emerging Growth Fund ........................... 159,910 --
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:
NAME OF FUND CLASS A CLASS B & S
- ------------ ------- -----------
The Fixed Income Funds ........................ $1.45 $1.55
The Equity Funds .............................. 1.25 1.35
The Municipal Funds ........................... 1.45 1.55
Class I shares are not subject to shareholder servicing fees.
Custodian fees for certain Funds have been reduced by credits allowed by the
custodian for uninvested cash balances. These Funds could have invested this
cash in income producing securities. Fees reduced by credits allowed by the
custodian for the six months ended April 30,1999 are shown separately in the
Statement of Operations.
4. TRUSTEES' FEES
No officer or employee of Washington Mutual or its subsidiaries receives any
compensation from the Trusts for serving as an officer or Trustee of the
Trusts. The Trusts, together with other mutual funds advised by WM Advisors,
Inc., pays each Trustee who is not an officer or employee of Washington Mutual
or its subsidiaries, $18,000 per annum plus $3,000 per board meeting attended
or $1,000 per board meeting attended by telephone. Trustees are also
reimbursed 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 Trusts' 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 Trusts' assets.
5. DISTRIBUTION PLANS
WM Funds Distributor, Inc. (the "Distributor"), a registered broker-dealer and
an indirect wholly-owned subsidiary of Washington Mutual, serves as
distributor for Class A, Class B and Class S shares of the Funds. For the six
months ended April 30, 1999, the Distributor received $2,220,773 representing
commissions (front-end sales charges) on Class A shares. In addition, the
Distributor received $1,030,351 representing CDSC fees from Class B and S
shares. For the six months ended April 30, 1999, WM Financial Services, Inc.
("WM Securities"), also a registered broker-dealer, received $239,921
representing commissions on Class A shares. In addition, WM Securities
received $416,976 representing CDSC fees 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. The Trustees have not authorized,
and the Funds do not currently pay service fees with respect to Class A
shares. 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. For the six months ended April
30, 1999, the Distributor waived fees of $4,591, $65,354 and $18,323 for the
Income Fund, the Growth & Income Fund and the Growth Fund, respectively.
Because the Distributor may retain any amount of its fee that is not so
expended, the Rule 12b-1 Plans are characterized by the SEC as "compensation-
type" plans. The service fee is paid by the Fund to the Distributor, which in
turn, pays a portion of the service fee to broker/dealers that provide
services, such as accepting telephone inquiries and transaction requests and
processing correspondences, new account applications and subsequent purchases
by check for the shareholders. Under their terms, each of the Class A Plan,
Class B Plan and Class S Plan shall remain in effect from year to year,
provided such continuance is approved annually by vote of the Board of
Trustees, including a majority of those Trustees who are not "interested
persons" of the Trust, as defined in the 1940 Act, and who have no direct or
indirect financial interest in the operation of such distribution plans, or
any agreements related to such plans, respectively.
6. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities,
excluding U.S. Government and short-term investments, for the six months ended
April 30, 1999 were as follows:
NAME OF FUND PURCHASES SALES
- ------------ --------- -----
High Yield Fund ................................$ 37,535,076 $ 3,099,890
Short Term High Quality Bond Fund .............. 29,300,882 5,040,326
U.S. Government Securities Fund ................ 791,621 1,659,850
Income Fund .................................... 8,654,670 30,496,442
California Insured Intermediate Municipal Fund . 39,834,821 34,486,130
California Municipal Fund ...................... 168,814,055 151,015,505
Florida Insured Municipal Fund ................. 18,386,054 17,176,442
Tax-Exempt Bond Fund ........................... 93,038,712 78,299,487
Bond & Stock Fund .............................. 69,235,593 96,805,118
Growth & Income Fund ........................... 223,353,592 280,324,127
Growth Fund .................................... 402,656,595 314,080,043
Northwest Fund ................................. 58,803,638 93,861,049
Emerging Growth Fund ........................... 28,699,429 63,552,274
International Growth Fund ...................... 99,827,318 110,355,493
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities, excluding short-term investments, for the six months ended April
30, 1999 were as follows:
NAME OF FUND PURCHASES SALES
- ------------ --------- -----
Target Maturity 2002 Fund ............. $ -- $ 251,629
High Yield Fund ....................... 508,828 --
Short Term High Quality Bond Fund ..... 32,569,853 32,920,156
U.S. Government Securities Fund ....... 109,385,283 110,050,133
Income Fund ........................... 28,826,566 11,255,107
Bond & Stock Fund ..................... 9,577,656 17,806,901
At April 30, 1999, 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
- ------------ ------------ ------------
Target Maturity 2002 Fund ..................... $ 59,401 $ --
High Yield Fund ............................... 1,308,699 1,242,783
Short Term High Quality Bond Fund ............. 695,901 449,884
U.S. Government Securities Fund ............... 6,445,519 2,684,115
Income Fund ................................... 15,871,132 4,565,198
California Insured Intermediate Municipal Fund 3,353,776 72,847
California Municipal Fund ..................... 25,553,330 1,107,532
Florida Insured Municipal Fund ................ 1,746,918 40,562
Tax-Exempt Bond Fund .......................... 28,740,183 187,145
Bond & Stock Fund ............................. 67,586,071 13,799,823
Growth & Income Fund .......................... 390,178,242 30,911,283
Growth Fund ................................... 173,430,065 4,125,852
Northwest Fund ................................ 143,900,344 12,354,384
Emerging Growth Fund .......................... 19,494,177 15,470,244
International Growth Fund ..................... 20,132,229 5,011,350
7. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest, each
without par value.
As of April 30, 1999, WM Shareholder Services, Inc. owned greater than five
percent of the respective share classes:
NUMBER OF PERCENTAGE OF
FUND SHARES TOTAL FUND SHARES
---------------------- --------------------
NAME OF FUND CLASS S CLASS I CLASS S CLASS I
- ------------ ------- ------- ------- -------
California Insured Intermediate
Municipal Fund ................. 83 111 49.11% 100.00%
California Municipal Fund ........ 82 110 13.12% 100.00%
Florida Insured Municipal Fund ... 85 119 49.13% 100.00%
Tax-Exempt Bond Fund ............. 92 153 50.00% 100.00%
8. 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.
9. GEOGRAPHIC AND INDUSTRY CONCENTRATION AND RISK FACTORS
There are certain risks arising from the California Municipal and California
Insured Intermediate Municipal Funds' investments in California municipal
securities. The California Municipal and California Insured Intermediate
Municipal Funds' are more susceptible to factors adversely affecting issuers
of California municipal securities than is a municipal bond fund that is not
concentrated in these issuers to the same extent. Uncertain economic
conditions or governmental developments may affect the ability of California
municipal securities issuers to meet their financial obligations.
The Florida Insured Municipal Fund primarily invests in debt obligations
issued by the State of Florida and its political subdivisions, agencies and
public authorities to obtain funds for various public purposes. The Florida
Insured Municipal Fund is more susceptible to factors adversely affecting
issuers of Florida municipal securities than is a municipal bond fund that is
not concentrated in these issuers to the same extent. Uncertain economic
conditions may affect the ability of Florida municipal securities issuers to
meet their financial obligations.
The Short Term High Quality Bond Fund and the Equity Funds invest in
securities of foreign companies and foreign governments. There are certain
risks involved in investing in foreign securities. These risks include those
resulting from future adverse political and economic developments and the
possible imposition of currency exchange restrictions or other foreign laws or
restrictions.
The Northwest Fund concentrates its investments in companies located or doing
business in the Northwest region of the United States. The Northwest Fund is
not intended as a complete investment program and could be adversely impacted
by economic trends within the region.
Certain Funds may invest a portion of their assets in foreign securities;
enter into forward foreign currency transactions; lend their portfolio
securities; enter into stock index, interest rate and currency futures
contracts, and options on such contracts; enter into interest rate swaps or
purchase or sell interest rate caps or floors; engage in other types of
options transactions; make short sales; purchase zero coupon and payment-in-
kind bonds; engage in repurchase or reverse repurchase agreements; purchase
and sell "when-issued" securities and engage in "delayed-delivery"
transactions; and engage in various other investment practices each with
inherent risks.
10. REORGANIZATION
On March 5, 1999, 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>
VALUE OF TOTAL NET ACQUIRED
SHARES SHARES TOTAL NET TOTAL NET ASSETS OF FUND
ISSUED BY ISSUED ASSETS OF ASSETS OF ACQUIRING UNREALIZED
ACQUIRING BY ACQUIRING ACQUIRED ACQUIRING FUND AFTER APPRECIATION/
ACQUIRING FUND ACQUIRED FUND FUND FUND FUND FUND ACQUISITION (DEPRECIATION)
- --------------------- ------------------ ----------- ------------ ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
WM Short Term High
Quality Griffin Short Term
Bond Fund Bond Fund 39,661,717 $ 92,034,226 $ 92,034,226 $ 75,432,745 $ 167,466,971 $ (64,260)
WM U.S. Government Griffin U.S.
Securities Government Income
Fund Fund 9,853,636 106,546,015 106,546,015 314,082,056 420,628,071 5,355,490
WM Income Fund Griffin Bond Fund 9,617,831 89,012,396 89,012,396 248,628,981 337,641,377 (408,651)
WM California Griffin California
Municipal Fund Tax Free Fund 4,068,212 46,228,066 46,228,066 357,003,927 403,231,993 1,834,004
WM Tax-Exempt Bond Griffin Municipal
Fund Bond Fund 2,693,838 21,658,948 21,658,948 307,360,142 329,019,090 599,436
WM Growth & Income Griffin Growth &
Fund Income Fund 14,313,352 331,829,218 331,829,218 928,644,038 1,260,473,256 30,243,249
WM Growth Fund Griffin Growth
Fund 3,845,456 88,816,364 88,816,364 412,602,290 501,418,654 24,492,457
</TABLE>
11. SUBSEQUENT EVENTS
Trustees approved the appointment of Capital Guardian Trust Company as sub-
advisor to the International Growth Fund at a telephonic meeting held April
21, 1999, and ratified that decision at an in-person meeting held June 8,
1999. Trustees also recommended that shareholders approve the appointment at a
special shareholder meeting scheduled for June 23, 1999. Should shareholders
approve, it is anticipated that the change in sub-advisor will occur on or
about June 23, 1999.
At their meeting on March 9, 1999, Trustees approved the conversion of Class S
shares to Class B shares for all funds in the Trusts offering Class S shares.
The conversion is expected to occur on or about July 16, 1999.
<PAGE>
SPECIAL meeting OF shareholders (unaudited)
WM GROUP OF FUNDS
SHAREHOLDER VOTES
1. At a special meeting of shareholders held December 18, 1998, shareholders
of the Tax-Exempt Bond Fund approved a
Sub-Advisory Agreement between WM Advisors, Inc. and Van Kempen Management,
Inc.
AGAINST OR FOR WITHHELD ABSTAINED TOTAL
-------------- -------- --------- -----
21,121,688 472,418 1,280,750 22,874,856
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<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 risk, including possible loss of principal amount
invested.
Distributed by WM Funds Distributor, Inc.
Member NASD
[Logo] Wm Bulk Rate
GROUPofFunds U.S. Postage
P.O. Box 5118 P A I D
Westborough, MA 01581-5118 No. Reading, MA
Permit #105
[recycle symbol] Printed on recycled paper
WMGSAR (6/24/99)
