<PAGE>
[Logo] wm
GroupofFunds
money market
funds
[Graphic Omitted]
THE DIFFERENCE IS EXPERIENCE
Annual Report
for the year ended October 31, 2000
<PAGE>
money funds
money market fund
tax-exempt money market fund
california money fund
contents
message from the president ............. 1
is the market becoming more volatile? .. 2
individual fund reviews ................ 5
statements of assets and liabilities ... 6
statements of operations ............... 7
statements of changes in net assets .... 8
statements of changes in net
assets - capital stock activity ........ 9
financial highlights ................... 10
portfolio of investments ............... 12
notes to financial statements .......... 19
independent auditor's report ........... 23
tax information (unaudited) ............ 24
<PAGE>
[Photo of William G. Papesh]
DEAR SHAREHOLDER,
Looking at the performance of U.S. equity markets over the past year, volatility
certainly has been the underlying theme. We have witnessed daily fluctuations of
the Dow Jones Industrial Average (DJIA) that seem larger than many of us can
ever remember. In fact, these fluctuations have been greater this year than in
any year during the 1990s.(1) The important thing to keep in mind, however, is
that volatility is a natural part of investing. If you build a well-diversified
investment portfolio while maintaining a long-term perspective, you can
potentially lower your risk and be less concerned with market volatility over
the short term.
Diversification is the key to controlling market volatility. The old adage
"don't put all your eggs in one basket," certainly rings true when it comes to
investing. It also represents the basis of mutual fund investing. Mutual funds
are able to hold a large number of securities, allowing them to achieve a level
of diversification that would otherwise be difficult for individual investors to
attain on their own. At the WM Group of Funds, we take the concept of
diversification a step further. We have built a fund family that is predicated
on the investment tenets of diversification and risk management. Whether you've
invested in one or more of our 18 individual mutual funds or our five actively
managed Strategic Asset Management Portfolios, your long-term assets are being
managed with a focus on some degree of diversification and/or asset allocation.
The WM Group of Funds utilizes multiple levels of diversification. We offer a
comprehensive family of funds that is representative of the major asset classes
or investment categories. We also give you access to different investment
styles, such as growth or momentum investing and value investing. Over the past
year, we have rounded out our equity fund offerings by introducing the WM Mid
Cap Stock Fund and repositioning the WM Equity Income Fund into larger-cap,
traditional dividend-producing value holdings. Our newest fund, the WM Mid Cap
Stock Fund represents an important segment of the investment arena, mid-sized
companies, and underscores another level of diversification -- company size. In
addition, our fixed-income funds provide investment choices segmented by type of
issuer, maturity, and yield potential.
Another unique feature of the WM Group of Funds family is the structure of its
portfolio management team. All mutual funds have an investment advisor that
oversees the day-to-day investment management of the Funds. Our investment
advisor, WM Advisors, Inc., has created an environment that allows additional
managers and management companies to leverage their strengths in one fund
family, giving you access to multiple managers and management styles.
In addition to the investment advisor, a very important aspect of mutual fund
investing is the Board of Trustees. As mandated by the Investment Company Act of
1940, all mutual funds are required to have a board structure that looks out for
the best interest of you, the shareholder. They are responsible for protecting
the interests of fund investors as well as overseeing general fund operations.
It is important to note that 11 of the 14 Board members are not directly
affiliated with WM Advisors, which offers objective leadership to the process.
In the coming pages of this report, we highlight the members of the WM Board of
Trustees and provide some insight into how they assist in the overall management
of your investment assets. I also wanted to express my personal appreciation to
the WM Trustees, who have helped shape and grow the fund family, ever mindful of
the interests of all shareholders.
Thank you for your continued support and trust in the
WM Group of Funds. For more than 60 years, and through various economic and
market cycles, we have been dedicated to helping you build your investment
wealth. Please take the time to review the following pages that highlight the
important facets of the performance of your investments and the financial
markets during the past year, as well as recognizing the value and importance of
your WM Group of Funds' Board of Trustees. I again want to take the opportunity
to stress the benefit of having regular meetings with your Financial Advisor to
ensure that you are positioned to meet your long-term investment objectives.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
(1) As measured by the standard deviation of the closing prices of the DJIA.
<PAGE>
diversification
"Diversification is
the key to investing
in volatile markets"
IS THE MARKET BECOMING
MORE VOLATILE AND WHAT
CAN BE DONE ABOUT IT?
VOLATILE MARKETS
The daily price fluctuations of the Dow Jones Industrial Average (DJIA) have
increased significantly thus far in 2000. As you can see from the chart below,
the volatility has increased substantially compared to the 1990s. Even more
dramatic, the daily volatility of the technology-heavy Nasdaq Index was more
than double that of the already high levels of the DJIA during the same period.
Rapid and dramatic price changes have become almost a daily event. Higher
short-term interest rates, unrealistic equity valuations, and rising oil prices
all contributed to this volatile environment. This volatility can be
disconcerting for investors, especially for those who have not diversified their
portfolios.
Diversification is the key to investing in volatile markets; a portfolio that is
diversified in multiple asset classes is less subject to risk and volatility as
compared to an investment in one particular asset class. Diversification can be
a powerful tool in helping investors manage risk and meet their long-term
investment goals.
DAILY MARKET VOLATILITY*
1990s 0.89%
2000 1.32%
* Source: Dow Jones Industrial Average. Volatility is measured by the standard
deviation. Results for 2000 are through October 31.
DIVERSIFIED PORTFOLIOS
Diversification is the process of combining different types of asset classes or
investment categories in one portfolio. For instance, a portfolio that is
invested in stocks, bonds, and cash will be less subject to market fluctuations
than one that is invested only in stocks. While this is a simplified look at
diversification, in practice, we can actually take this a step further. For
instance, it is also possible to reduce risk by adding what is normally
considered a "risky" asset into a portfolio. Historically speaking, by adding a
portion of international stocks into a domestic equity portfolio, risk can
actually be reduced. This process is called asset allocation -- in other words
the decision of where and to what degree you diversify your assets. The example
to the right demonstrates how diversified portfolios have the potential not only
to reduce risk, but also to generate additional returns.
PERFORMANCE DISPARITY
In addition to being more volatile than any year in the 1990s, the past 12
months have produced significantly varied results from different types of
investment categories. From the strong performance exhibited by mid-sized
companies to the negative returns of stocks from emerging market countries,
investment results from the past year reinforce the need for a diversified
portfolio. Diversification enables an investor to participate in market upswings
-- mid-cap stocks for example -- while minimizing risk should one portion of the
market stumble, such as the technology sector in 2000.
INVESTMENT PERFORMANCE
FOR THE ONE-YEAR PERIOD ENDED OCTOBER 31, 2000
Mid-Cap Stocks 31.6%
Small-Cap Stocks 17.4%
Gov't. Bonds 8.0%
Large-Cap Stocks 6.1%
Corporate Bonds 5.5%
Inflation 3.6%
High Yield Bonds -1.6%
Foreign Stocks -2.7%
Emerging Markets -10.1%
Source: Ibbotson Associates. The following indices were used: Mid-cap Stocks
(S&P 400 Midcap Index), Small-cap Stocks (Russell 2000), Gov't. Bonds (Lehman
Brothers Government Bond Index), Large-cap Stocks (S&P 500), Corporate Bonds (LB
Credit Bond Index), Inflation (CPI), High Yield Bonds (LB High Yield Bond
Index), Foreign Stocks (MSCI EAFE Index), Emerging Market Stocks (S&P/IFCI
Emerging Composite). Individuals cannot invest directly in an index.
International investments can carry greater risks including currency, liquidity,
and political risks.
DIVERSIFIED PORTFOLIOS CAN ENHANCE RETURNS AND REDUCE RISK
DIVERSIFIED PORTFOLIO
AVERAGE ANNUAL RETURN: 13.3%
RISK: 9.8%
Bonds 35%
Large-Cap Stocks 20%
Cash 10%
Small-Cap Stocks 15%
Foreign Stocks 20%
50% STOCKS/50% BONDS
AVERAGE ANNUAL RETURN: 12.7%
RISK: 10.0%
Large-Cap Stocks 50%
Bonds 50%
Source: Ibbotson Associates. Represents 25 year period ended 10-31-00.
Diversified Portfolio is allocated as follows: Bonds 35% (Lehman Brothers
Gov't./Credit), Stocks 20% (S&P 500), Cash 10% (30-day T-Bill), Small-Cap Stocks
15% (Ibbotson Small Cap Index), Foreign Stocks 20% (MSCI Europe). 50/50
Portfolio: 50% S&P 500, 50% LB Gov't./Credit. Risk is measured by standard
deviation.
<PAGE>
MEET WITH YOUR FINANCIAL ADVISOR
At the WM Group of Funds, we continually stress the importance of meeting with
your Financial Advisor to discuss your long-term goals and objectives. This is
especially important when it comes to diversification and asset allocation. It
is important to discuss you and your family's changing needs as you invest both
now and for retirement. As your goals change, so should your investment
strategy. Your Financial Advisor can help you devise a strategy that allows your
investment portfolio to stay in line with your short-term and long-term needs.
YOUR BOARD OF TRUSTEES
The Investment Company Act of 1940 mandated a board structure for mutual funds
that is unique compared to other types of companies. Shareholders of a mutual
fund have a team of professionals working for them whose goal is to protect
their interests. The WM Group of Funds' Board of Trustees has been chosen by
shareholders to do just that. They meet quarterly to enact policies for
investment advisory functionality, discuss fund-specific policies, and oversee
fund management to ensure that performance remains in line with investment
objectives.
The WM Group of Funds' Board of Trustees has been selected for their knowledge
in both the business and investment worlds. With experience in a wide array of
fields and backgrounds, they are well prepared to look out for your best
interests. Some of the professions of the WM Group of Funds' board members
include a lawyer, a doctor, an accountant, a university professor and an
investment banker. Other professions range from an investment manager and a
public relations executive to leaders of a charitable foundation and a
consulting firm. Additionally, four of our board members are former or current
presidents of their respective organizations, specifically a major
telecommunications company, a venture capital company, an industrial firm and a
university. The President of WM Advisors is also a member of the Board. The
Board plays an extremely important role at the WM Group of Funds and has been
chosen to leverage their wide scope of expertise to serve the best interests of
all WM Group of Funds shareholders.
[Photo of Board of Trustees]
WM Group of Funds' Board of Trustees
Back Row (left to right): Wayne L. Attwood, M.D.; Carrol R. McGinnis;
Richard C. Yancey; Jay Rockey; Michael K. Murphy; William G. Papesh;
Arthur H. Bernstein, Esq.
Front Row (seated left to right): David E. Anderson; Morton O. Schapiro;
Kristianne Blake; Daniel L. Pavelich; Alfred E. Osborne, Jr., Ph.D.;
Anne V. Farrell; Edmond R. Davis, Esq.
Special thanks to John English (not pictured) for more than six years of
dedicated service as a Board member.
<PAGE>
money market funds
PORTFOLIO MANAGER: AUDREY QUAYE
WM ADVISORS, INC.
Audrey Quaye has eight years experience in investment management and analysis.
She is a Chartered Financial Analyst and a Certified Public Accountant. She also
holds an MBA from the University of Southern California, and has been with WM
Advisors, Inc. since 1996.
ECONOMIC OVERVIEW
At the close of 1999, the world was preparing for the transition through Y2K and
into the new millennium. The Federal Reserve had lowered interest rates and
subsequently provided liquidity to the financial markets, resulting in a
substantial decline in short-term yields. The domestic economy continued to boom
as consumer spending grew steadily. Because the labor market remained tight and
the unemployment rate declined to historical lows, the Federal Reserve shifted
to a tightening bias in an effort to quell inflationary pressures. The Fed
raised short-term rates (Fed Funds rate) from 5.5% at the beginning of 2000 to
6.5% in May -- holding rates steady through the end of the period. Central banks
around the globe followed suit, raising their interest rates in concert with the
Federal Reserve in an effort to support their own currencies.
Higher interest rates do seem to have taken their toll as a global slowdown has
ensued. However, with escalating oil prices and a very tight labor market
(unemployment remains below 4%), there is still some uncertainty in the markets
and the Federal Reserve has maintained a tightening bias.
ECONOMIC AND INTEREST RATE OUTLOOK
We expect the economy to slow and anticipate that the Federal Reserve will shift
its bias and possibly lower rates sometime in 2001. Therefore, we have adopted a
neutral stance in the management of the Funds.
PORTFOLIO STRATEGY
WM MONEY MARKET FUND
At the close of the period, net assets in the Fund totaled $498 million. We
increased our holdings in floating rate notes, as yields were very attractive.
We also generated some attractive yields with callable agency bonds, but the
position has now been reduced as the economy has begun to slow and lower
interest rates may be on the horizon. Callable bonds and floating rate notes
tend to do better in a stable or rising interest rate environment. We remain
neutral in the weighted average maturity of the Fund.
WM TAX-EXEMPT MONEY MARKET FUND
As of October 31, 2000, net assets in the Fund totaled over $28 million. We took
advantage of the seasonal effects of tax-exempt money market yield changes,
shifting out of variable rate instruments, when necessary, to reduce yield
volatility. Currently, the Fund's weighted average maturity is slightly long
relative to the market.
WM CALIFORNIA
MONEY MARKET
The California Money Fund's net assets totaled $35 million at the end of the
period. Early in the period, there was a significant shortage in the supply of
California paper. As a result of higher tax collections, municipalities reduced
their issuance of municipal notes. However, demand for California securities was
high, creating a shortage in supply that pushed down yields significantly. The
market supply has since improved, and we were able to invest in some
higher-yielding instruments.
<TABLE>
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fund performance*
as of October 31, 2000
<CAPTION>
7-day 7-day
Simple Yield Compounded Yield Weighted Average
A shares A shares Maturity (days)
<S> <C> <C> <C>
WM Money Market Fund 6.22% 6.41% 56
---------------------------------------------------------------------------------------
WM Tax-Exempt Money Market Fund 3.64% 3.71% 51
---------------------------------------------------------------------------------------
WM California Money Fund 3.37% 3.43% 47
---------------------------------------------------------------------------------------
During the period noted, WM Advisors, Inc. waived a
portion of its management fees for the WM Tax-Exempt Money Market Fund. The
Fund's yields 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.
All yield information represents past performance, which cannot guarantee future
results. An investment in the Funds is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the Funds
seek to preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the Funds. B share yields will differ.5
</TABLE>
<PAGE>
<TABLE>
statements of assets and liabilities
WM GROUP OF FUNDS
October 31, 2000
<CAPTION>
Tax-Exempt
Money Money California
Market Market Money
Fund Fund Fund
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value
(See portfolio of investments) (a) ................................. $501,823,847 $ 28,783,736 $ 35,880,497
Cash ................................................................. 51,987 -- --
Interest receivable .................................................. 2,609,305 234,732 244,521
Receivable for Fund shares sold ...................................... 4,257,428 155,838 1,797
Prepaid expenses ..................................................... 7,366 431 527
------------ ------------ ------------
Total Assets ...................................................... 508,749,933 29,174,737 36,127,342
------------ ------------ ------------
LIABILITIES:
Payable for Fund shares redeemed ..................................... 508,331 12,264 43,950
Payable for investment securities purchased .......................... 10,000,000 501,039 623,881
Investment advisory fee payable ...................................... 190,620 11,143 13,455
Shareholder servicing and distribution fees payable .................. 18,310 -- --
Transfer agent fees payable .......................................... 33,287 3,044 2,234
Dividends payable .................................................... 21,832 2,539 1,541
Due to custodian ..................................................... -- -- 10
Accrued expenses and other payables .................................. 256,020 49,006 35,596
------------ ------------ ------------
Total Liabilities ................................................. 11,028,400 579,035 720,667
------------ ------------ ------------
NET ASSETS ........................................................... $497,721,533 $ 28,595,702 $ 35,406,675
============ ============ ============
(a) Investments, at cost ............................................. $501,823,847 $ 28,783,736 $ 35,880,497
============ ============ ============
NET ASSETS consist of:
Undistributed net investment income .................................. $ 4,275 $ -- $ 85
Accumulated net realized loss on investments sold .................... (72,043) (4,891) (27,626)
Paid-in capital ...................................................... 497,789,301 28,600,593 35,434,216
------------ ------------ ------------
Total Net Assets ................................................... $497,721,533 $ 28,595,702 $ 35,406,675
============ ============ ============
NET ASSETS:
Class A Shares ....................................................... $458,367,964 $ 28,595,702 $ 35,406,675
============ ============ ============
Class B Shares ....................................................... $ 23,468,679 -- --
============
Class I Shares ....................................................... $ 15,884,890 -- --
============ ============ ============
SHARES OUTSTANDING:
Class A Shares ....................................................... 458,407,244 28,595,680 35,452,067
============ ============ ============
Class B Shares ....................................................... 23,469,071 -- --
============ ============ ============
Class I Shares ....................................................... 15,897,185 -- --
============ ============ ============
CLASS A SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding* ....................................................... $ 1.00 $ 1.00 $ 1.00
CLASS B SHARES:
Net asset value and offering price per
share of beneficial interest outstanding* .......................... $ 1.00 -- --
============ ============ ============
CLASS I SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding ........................................................ $ 1.00 -- --
============ ============ ============
----------
* Redemption price per share is equal to net asset value per share less any applicable contingent deferred sales charge.
See Notes to Financial Statements.6statements of operations
</TABLE>
<PAGE>
<TABLE>
statements of operations
WM GROUP OF FUNDS
FOR THE YEAR ENDED OCTOBER 31, 2000
<CAPTION>
TAX-EXEMPT
MONEY MONEY CALIFORNIA
MARKET MARKET MONEY
FUND FUND FUND
----------- ---------- ----------
INVESTMENT INCOME:
<S> <C> <C> <C>
Interest ....................................... $32,418,055 $1,198,887 $1,224,745
----------- ---------- ----------
EXPENSES:
Investment advisory fee ........................ 2,325,604 133,284 159,751
Custodian fees ................................. 53,788 6,252 4,206
Legal and audit fees ........................... 51,026 17,186 17,117
Registration and filing fees ................... 178,287 39,686 13,851
Printing and postage expenses .................. 108,027 11,830 12,212
Other .......................................... 122,116 7,287 10,270
Shareholder servicing and distribution fees:
Class B Shares ............................... 183,679 2,208 80
Transfer agent fees:
Class A Shares ............................... 473,064 44,393 28,956
Class B Shares ............................... 30,359 94 15
Fees waived by the investment advisor .......... -- (44,931) --
----------- ---------- ----------
Total expenses .............................. 3,525,950 217,289 246,458
Fees reduced by credits allowed by the custodian (14,012) (1,739) (1,199)
----------- ---------- ----------
Net expenses ................................ 3,511,938 215,550 245,259
----------- ---------- ----------
NET INVESTMENT INCOME .......................... 28,906,117 983,337 979,486
----------- ---------- ----------
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS . 1,764 -- --
----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................... $28,907,881 $ 983,337 $ 979,486
=========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
statements of changes in net assets
WM GROUP OF FUNDS
FOR THE YEAR ENDED OCTOBER 31, 2000
<CAPTION>
TAX-EXEMPT
MONEY MONEY CALIFORNIA
MARKET MARKET MONEY
FUND FUND FUND
------------ ---------- ----------
<S> <C> <C> <C>
Net investment income ............................................. $ 28,906,117 $ 983,337 $ 979,486
Net realized gain on investment transactions ...................... 1,764 -- --
------------ ---------- ----------
Net increase in net assets resulting from operations .............. 28,907,881 983,337 979,486
Distributions to shareholders from net investment income:
Class A Shares .................................................. (25,504,965) (978,029) (983,054)
Class B Shares .................................................. (842,471) (5,308) (118)
Class I Shares .................................................. (2,557,925) -- --
Net increase/(decrease) in net assets from Fund share transactions:
Class A Shares .................................................. (2,079,285) (2,757,193) 1,194,633
Class B Shares .................................................. 3,016,875 (353,563) (53,133)
Class I Shares .................................................. (86,874,392) -- --
------------ ---------- ----------
Net increase/(decrease) in net assets ............................. (85,934,282) (3,110,756) 1,137,814
NET ASSETS:
Beginning of year ................................................. 583,655,815 31,706,458 34,268,861
------------ ---------- ----------
End of year ....................................................... $497,721,533 $28,595,702 $35,406,675
============ ========== ==========
Undistributed net investment income at end of year ................ $ 4,275 $ -- $ 85
============ ========== ==========
For the Year Ended October 31, 1999
<CAPTION>
TAX-EXEMPT
MONEY MONEY CALIFORNIA
MARKET MARKET MONEY
FUND FUND FUND
------------ ---------- ----------
Net investment income ............................................. $ 25,645,689 $ 869,348 $ 803,647
Net realized gain/(loss) on investment transactions ............... 14,291 25 (2)
------------ ---------- ----------
Net increase in net assets resulting from operations .............. 25,659,980 869,373 803,645
Distributions to shareholders from net investment income:
Class A Shares .................................................. (21,285,571) (867,445) (802,809)
Class B Shares .................................................. (349,900) (1,903) (710)
Class S Shares .................................................. (106,011) -- (9)
Class I Shares .................................................. (3,900,688) -- (19)
Net increase/(decrease) in net assets from Fund share transactions
Class A Shares .................................................. 56,987,030 5,911,868 (2,951,415)
Class B Shares .................................................. 13,832,418 141,454 (4,995)
Class S Shares .................................................. (6,304,983) -- (1,182)
Class I Shares .................................................. (5,963,302) -- (1,068)
------------ ---------- ----------
Net increase/(decrease) in net assets ............................. 58,568,973 6,053,347 (2,958,562)
NET ASSETS:
Beginning of year ................................................. 525,086,842 25,653,111 37,227,423
------------ ---------- ----------
End of year ....................................................... $583,655,815 $31,706,458 $34,268,861
============ ========== ==========
Undisributed net investment income at end of year ................. $ 3,519 $ -- $ 3,771
============ ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
statements of changes in net assets -- capital stock activity
WM GROUP OF FUNDS
Since the Funds have sold, issued as reinvestment of dividends and redeemed shares only at a constant net asset value of $1.00 per
share, the number of shares represented by such sales, reinvestments and redemptions is the same as the amounts shown below for such
transactions.
<CAPTION>
MONEY MARKET FUND TAX-EXEMPT MONEY MARKET FUND CALIFORNIA MONEY FUND
------------------------------- --------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/00 10/31/99 10/31/00 10/31/99 10/31/00 10/31/99
------------- --------------- ------------ ------------ ------------ ------------
CLASS A:
<S> <C> <C> <C> <C> <C> <C>
Sold ................................ $ 912,624,703 $ 849,142,559 $ 35,306,509 $ 43,233,412 $ 45,209,295 $ 33,348,665
Issued in exchange for Class A shares
of Griffin Money Market Fund ....... -- 227,709,262 -- -- -- --
Issued in exchange for Class A shares
of Griffin Tax-Free Money
Market Fund ........................ -- -- -- 21,062,829 -- --
Issued as reinvestment of dividends . 25,024,469 20,521,935 952,190 838,120 956,079 773,933
Redemption in-kind (Note 9) ......... -- (31,927,854) -- -- -- --
Redeemed ............................ (939,728,457) (1,008,458,872) (39,015,892) (59,222,493) (44,970,741) (37,074,013)
------------- --------------- ------------ ------------ ------------ ------------
Net increase/(decrease) ............. $ (2,079,285) $ 56,987,030 $ (2,757,193) $ 5,911,868 $ 1,194,633 $ (2,951,415)
============= =============== ============ ============ ============ ============
CLASS B:
Sold ................................ $ 42,305,282 $ 28,425,937 $ -- $ 534,633 $ -- $ 32,072
Converted from Class S shares of Fund -- 3,673,738 -- -- -- --
Issued as reinvestment of dividends . 786,754 330,884 2,658 1,641 105 685
Redeemed ............................ (40,075,161) (18,598,141) (356,221) (394,820) (53,238) (37,752)
------------- --------------- ------------ ------------ ------------ ------------
Net increase/(decrease) ............. $ 3,016,875 $ 13,832,418 $ (353,563) $ 141,454 $ (53,133) $ (4,995)
============= =============== ============ ============ ============ ============
CLASS S:
Sold ................................ -- $ 322,752 -- -- -- $ --
Issued as reinvestment of dividends . -- 97,701 -- -- -- 9
Converted to Class B shares of Fund . -- (3,673,738) -- -- -- --
Redeemed ............................ -- (3,051,698) -- -- -- (1,191)
--------------- ------------
Net decrease ........................ -- $ (6,304,983) -- -- -- $ (1,182)
============= =============== ============
Sold ................................ $ 113,046,246 $ 71,638,115 -- -- -- $ --
Contribution in-kind (Note 9) ....... -- 31,927,854 -- -- -- --
Issued as reinvestment of dividends . 2,554,663 3,634,675 -- -- -- 18
Redeemed ............................ (202,475,301) (113,163,946) -- -- -- (1,086)
------------
Net decrease ........................ $ (86,874,392) $ (5,963,302) -- -- -- $ (1,068)
============= =============== ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
financial highlights
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------------ ---------------------------------------------
NET DIVIDENDS DISTRIBUTIONS
ASSET VALUE, NET NET REALIZED TOTAL FROM FROM NET FROM
BEGINNING OF INVESTMENT GAIN ON INVESTMENT INVESTMENT NET REALIZED TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
------------ ---------- ------------ ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET FUND
CLASS A
10/31/00 $1.00 $0.056 $ -- $0.056 $(0.056) $ -- $(0.056)
10/31/99 1.00 0.044 -- 0.044 (0.044) -- (0.044)
10/31/98(3) 1.00 0.041 -- 0.041 (0.041) -- (0.041)
12/31/97 1.00 0.049 -- 0.049 (0.049) -- (0.049)
12/31/96 1.00 0.048 -- 0.048 (0.048) -- (0.048)
12/31/95 1.00 0.052 -- 0.052 (0.052) -- (0.052)
CLASS B
10/31/00 1.00 0.046 -- 0.046 (0.046) -- (0.046)
10/31/99 1.00 0.034 -- 0.034 (0.034) -- (0.034)
10/31/98(3) 1.00 0.035 -- 0.035 (0.035) -- (0.035)
12/31/97 1.00 0.041 -- 0.041 (0.041) -- (0.041)
12/31/96 1.00 0.038 -- 0.038 (0.038) -- (0.038)
12/31/95 1.00 0.042 -- 0.042 (0.042) -- (0.042)
CLASS I
10/31/00 1.00 0.057 -- 0.057 (0.057) -- (0.057)
10/31/99 1.00 0.046 -- 0.046 (0.046) -- (0.046)
10/31/98(4) 1.00 0.031 -- 0.031 (0.031) -- (0.031)
TAX-EXEMPT MONEY MARKET FUND
CLASS A
10/31/00 $ 1.00 $0.033 $ -- $0.033 $(0.033) $ --
10/31/99 1.00 0.026 -- 0.026 (0.026) -- (0.026)
10/31/98(3) 1.00 0.026 -- 0.026 (0.026) -- (0.026)
12/31/97 1.00 0.031 -- 0.031 (0.031) -- (0.031)
12/31/96 1.00 0.030 -- 0.030 (0.030) -- (0.030)
12/31/95 1.00 0.034 0.000(5) 0.034 (0.034) (0.000)(5)
CALIFORNIA MONEY FUND
CLASS A
10/31/00 $ 1.00 $0.028 $ -- $0.028 $(0.028) $ --
10/31/99 1.00 0.022 -- 0.022 (0.022) -- (0.022)
10/31/98(7) 1.00 0.008 -- 0.008 (0.008) -- (0.008)
06/31/98 1.00 0.027 -- 0.027 (0.027) -- (0.027)
06/31/97 1.00 0.028 -- 0.028 (0.028) -- (0.028)
06/31/96 1.00 0.029 -- 0.029 (0.029) -- (0.029)
----------------
(1) Total return is not annualized for the periods less than one year. 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.
(2) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(3) Fiscal year end changed to October 31 from December 31. (4) On March 23, 1998 the Money Market Fund commenced selling Class I
shares.
(5) Amount represents less than $0.001 per share.
(6) Annualized.
(7) Fiscal year end changed to October 31 from June 30.
</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
OPERATING NET INVESTMENT REDUCED BY
NET NET ASSETS, EXPENSES TO INCOME TO CREDITS ALLOWED
ASSET VALUE, TOTAL END OF PERIOD AVERAGE NET AVERAGE NET BY THE
END OF PERIOD RETURN(1) (IN 000'S) ASSETS(2) ASSETS CUSTODIAN
------------- --------- ------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
MONEY MARKET FUND
CLASS A
10/31/00 $1.00 5.79% $458,368 0.65% 5.62% 0.65%
10/31/99 1.00 4.52% 460,444 0.72 4.43% 0.73%
10/31/98(3) 1.00 4.19% 403,443 0.66 4.94%(6) 0.67%(6)
12/31/97 1.00 5.04% 260,877 0.75 4.93% 0.83%
12/31/96 1.00 4.88% 229,355 0.79 4.77% 0.89%
12/31/95 1.00 5.33% 171,225 0.92 5.19% 1.04%
CLASS B
10/31/00 1.00 4.68% 23,469 1.71% 4.56% 1.71%
10/31/99 1.00 3.44% 20,452 1.77% 3.38% 1.78%
10/31/98(3) 1.00 3.52% 6,619 1.64%(6) 3.96%(6) 1.65%(6)
12/31/97 1.00 4.15% 471 1.59% 4.15% 1.80%
12/31/96 1.00 3.91% 117 1.69% 3.87% 1.90%
12/31/95 1.00 4.30% 74 1.94% 4.19% 2.10%
CLASS I
10/31/00 1.00 5.90% 15,885 0.55% 5.72% 0.55%
10/31/99 1.00 4.66% 102,760 0.62% 4.53% 0.63%
10/31/98(4) 1.00 3.17% 108,720 0.54%(6) 5.06%(6) 0.55%(6)
TAX-EXEMPT MONEY MARKET FUND
CLASS A
10/31/00 $1.00 3.39% $ 28,596 0.72% 3.33% 0.88%
10/31/99 1.00 2.65% 31,353 0.57% 2.63% 0.89%
10/31/98(3) 1.00 2.60% 25,441 0.55%(6) 3.09%(6) 0.72%(6)
12/31/97 1.00 3.18% 32,134 0.57% 3.14% 0.71%
12/31/96 1.00 3.05% 31,974 0.57% 3.01% 0.72%
12/31/95 1.00 4.01% 30,988 0.61% 3.39% 0.81%
CALIFORNIA MONEY FUND
CLASS A
10/31/00 $1.00 2.79% $ 35,407 0.69% 2.76% 0.69%
10/31/99 1.00 2.24% 34,216 0.81% 2.22% 0.81%
10/31/98(7) 1.00 0.99% 37,167 0.73%(6) 2.31%(6) 0.87%(6)
06/31/98 1.00 2.73% 37,403 0.82% 2.71% 0.99%
06/31/97 1.00 2.81% 42,923 0.85% 2.75% 1.14%
06/31/96 1.00 3.00% 51,211 0.85% 2.94% 1.14%
See Notes to Financial Statements.
</TABLE>
<PAGE>
portfolio of investments
MONEY MARKET FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
--------- -----
COMMERCIAL PAPER (DOMESTIC) - 40.5%
AT&T Corporation:
$ 10,000,000 6.470% due 11/07/2000+++ .................... $ 9,989,217
10,000,000 6.480% due 12/12/2000+++ .................... 9,926,200
6,100,000 Columbia University,
6.470% due 12/08/2000+++ .................... 6,059,437
10,000,000 Ford Motor Credit Corporation,
6.450% due 11/15/2000+++ .................... 9,974,917
General Electric Capital Corporation:
10,000,000 6.480% due 11/22/2000+++ .................... 9,962,200
10,000,000 6.490% due 11/29/2000+++ .................... 9,949,522
General Motors Acceptance Corporation:
10,000,000 6.480% due 11/28/2000+++ .................... 9,951,400
10,000,000 6.500% due 12/07/2000+++ .................... 9,935,000
10,000,000 Goldman Sachs Group, Inc.,
6.500% due 11/16/2000+++ .................... 9,972,917
Household Finance Corporation:
10,000,000 6.460% due 11/06/2000+++ .................... 9,991,028
10,000,000 6.490% due 11/24/2000+++ .................... 9,958,536
13,000,000 International Lease Finance Corporation,
6.460% due 11/13/2000+++ .................... 12,972,007
10,000,000 John Deere Capital Corporation,
6.490% due 11/21/2000+++ .................... 9,963,944
10,000,000 Morgan Stanley Dean Witter Discover,
6.480% due 11/14/2000+++ .................... 9,976,600
National Rural Utilities Cooperative Finance
Corporation:
10,000,000 6.500% due 01/10/2001+++ .................... 9,873,611
4,000,000 6.510% due 01/19/2001+++ .................... 3,942,857
10,000,000 Wachovia Bank N.A.,
6.570% due 11/20/2000+++ .................... 10,000,000
10,000,000 Wells Fargo & Company,
6.490% due 11/17/2000+++ .................... 9,971,155
10,000,000 Windmill Funding Corporation,
6.500% due 11/09/2000+++,# .................. 9,985,555
18,800,000 Yale University,
6.470% due 12/15/2000+++ .................... 18,651,334
------------
Total Commercial Paper (Domestic)
(Cost $201,007,437) ......................... 201,007,437
------------
COMMERCIAL PAPER (YANKEE) - 8.6%
10,000,000 Abbey National North America Corporation,
6.515% due 01/25/2001+++ .................... 9,846,174
10,000,000 American Honda Finance Corporation,
6.480% due 11/16/2000+++ .................... 9,973,000
10,000,000 Barclays U.S. Funding Corporation,
6.480% due 11/16/2000+++ .................... 9,973,000
3,000,000 Canadian Imperial Bank of Commerce,
6.560% due 12/19/2000+++ .................... 2,999,966
10,000,000 DaimlerChrysler North American Holding,
6.480% due 11/17/2000+++ .................... 9,971,200
------------
Total Commercial Paper (Yankee)
(Cost $42,763,340) .......................... 42,763,340
------------
CERTIFICATE OF DEPOSIT (DOMESTIC) - 2.5%
(Cost $12,600,129)
12,600,000 Wachovia Bank NA,
6.760% due 01/11/2001++ ..................... 12,600,129
------------
CERTIFICATE OF DEPOSIT (YANKEE) - 2.0%
(Cost $9,998,233)
10,000,000 Societe Generale NY,
6.560% due 06/29/2001++ ..................... 9,998,233
------------
MEDIUM TERM NOTES - 10.8%
Bear Stearns Companies Inc., Series B:
10,000,000 6.670% due 05/29/2001++ ..................... 10,000,000
10,000,000 6.670% due 07/06/2001++ ..................... 10,000,000
5,000,000 6.610% due 09/25/2001++ ..................... 5,000,000
6,795,000 Columbia University, Series C,
5.890% due 12/15/2000 ....................... 6,787,293
2,000,000 General Electric Capital Corporation,
5.920% due 04/03/2001 ....................... 1,990,976
10,000,000 Merrill Lynch & Co. Inc.,
6.789% due 03/01/2001 ....................... 10,005,991
10,000,000 National Rural Utilities Cooperative Finance
Corporation, Series C,
6.730% due 07/20/2001++ ..................... 10,000,000
------------
Total Medium Term Notes
(Cost $53,784,260) .......................... 53,784,260
------------
CORPORATE BONDS AND NOTES - 9.5%
10,000,000 Bank of America, Note,
6.670% due 09/06/2001++ ..................... 10,006,585
3,400,000 DBSI First Mortgage 1998, Note,
6.700% due 07/01/2023++ ..................... 3,400,000
Everett Clinic, P.S., Note:
5,400,000 6.630% due 12/01/2018++ ..................... 5,400,000
3,700,000 6.630% due 12/01/2021++ ..................... 3,700,000
10,000,000 Fifth Third Bank, Note,
6.510% due 11/27/2000 ....................... 10,000,000
5,000,000 Presbyterian Homes & Services of New
Jersey Obligated Group, Revenue Bonds,
1998 Series B1, (Taxable),
6.620% due 12/01/2028++ ..................... 5,000,000
10,000,000 Wells Fargo & Company, Note,
6.600% due 07/16/2001++ ..................... 9,998,558
------------
Total Corporate Bonds and Notes
(Cost $47,505,143) .......................... 47,505,143
------------
MUNICIPAL BONDS - 7.2%
8,000,000 California Housing Finance Agency
Revenue, Home Mortgage, Series M,
Taxable Bonds,
6.600% due 08/01/2019+ ...................... 8,000,000
9,700,000 Santa Rosa, California, Wastewater Revenue,
Series A, Taxable Bonds,
6.700% due 09/01/2028+ ...................... 9,700,000
12,200,000 South Fulton, Georgia, Municipal Regional
Jail Authority, Taxable Revenue Bonds,
(Union City Justice Center Project),
Series 1999,
6.620% due /1101/2017+ ...................... 12,200,000
Washington State Housing Finance
Community, Multi-family Revenue,
Series B, Taxable Bonds:
2,480,000 (Boardwalk Apartments),
6.700% due 09/01/2028+ ...................... $ 2,480,000
2,100,000 (Cedar Landing),
6.700% due 12/01/2028+ ...................... 2,100,000
1,400,000 (Oxford Square),
6.700% due 12/01/2028+ ...................... 1,400,000
------------
Total Municipal Bonds
(Cost $35,880,000) .......................... 35,880,000
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 17.4%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 8.4%
10,000,000 5.375% due 03/01/2001 ....................... 9,946,161
12,000,000 6.750% due 04/27/2001 ....................... 12,000,000
10,000,000 7.000% due 07/26/2001 ....................... 10,000,000
10,000,000 6.680% due 11/07/2001 ....................... 10,000,000
------------
Total FHLMCs (Cost $41,946,161) ............... 41,946,161
------------
FEDERAL HOME LOAN BANK (FHLB) - 6.0%
10,000,000 6.700% due 03/30/2001 ....................... 10,000,000
10,000,000 6.500% due 04/24/2001 ....................... 9,984,244
10,000,000 7.000% due 06/14/2001 ....................... 10,000,000
------------
Total FHLBs (Cost $29,984,244) ................ 29,984,244
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 3.0%
10,000,000 6.420% due 01/18/2001+++ .................... 9,860,900
5,000,000 6.570% due 04/26/2001 ....................... 5,000,000
------------
Total FNMAs (Cost $14,860,900) ................ 14,860,900
------------
Total U.S. Government Agency Obligations
(Cost $86,791,305) .......................... 86,791,305
------------
REPURCHASE AGREEMENT - 2.3%
(Cost $11,494,000)
$ 11,494,000 Agreement with Goldman Sachs & Company, 6.420%
dated 10/31/2000, to be repurchased at
$11,496,050, on 11/01/2000 collateralized by
$9,518,879 U.S. Treasury Bond, 7.875% due
02/15/2021 (Market Value $11,741,621), ...... $ 11,494,000
------------
TOTAL INVESTMENTS (Cost $501,823,847*) ................ 100.8% 501,823,847
OTHER ASSETS AND LIABILITIES (NET) (0.8) (4,102,314)
----- ------------
NET ASSETS ............................................ 100.0% $497,721,533
===== ============
----------
* Aggregate cost for federal tax purposes.
+ Variable rate securities payable upon not more than seven calendar days
notice, and secured by bank letters of credit. The interest rate shown
reflect the rate in effect at October 31, 2000.
++ Floating rate security whose interest rate is reset periodically based on an
index.
+++ Rate represents discount rate at the date of purchase.
# 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.
See Notes to Financial Statements.
<PAGE>
portfolio of investments
TAX-EXEMPT MONEY MARKET FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
--------- -----
MUNICIPAL BONDS AND NOTES - 100.5%
ALASKA - 1.2%
$ 300,000 Alaska, Municipal Bond Bank Authority
Revenue,
4.750% due 12/01/2000 ....................... $ 300,036
------------
ARIZONA - 3.5%
1,000,000 Maricopa County, Industrial Development
Authority Revenue, MFHR, (Gran Victoria
Housing LLC Project), Series A,
4.300% due 04/15/2030+ ...................... 1,000,000
------------
FLORIDA - 3.8%
600,000 Dade County, Aviation Revenue, Series A,
4.350% due 10/01/2009+ ...................... 600,000
500,000 Florida, Housing Finance Agency, Refunding
Revenue, MFHR, (Oaks), Series A,
4.350% due 07/01/2007+ ...................... 500,000
------------
1,100,000
------------
GEORGIA - 1.7%
500,000 Douglas County, COP, (Judicial & Administration
Complex Project),
4.375% due 11/01/2000 ....................... 500,000
------------
ILLINOIS - 6.6%
200,000 Cook County, High School District, No. 205,
Thornton Township, Unlimited Tax
General Obligation Bonds, Series B,
5.400% due 12/01/2000 ....................... 200,176
500,000 Illinois Educational Facility Authority Revenue,
(DePaul University),
4.400% due 10/01/2001 ....................... 500,000
1,200,000 Illionois Health Facility Authority Revenue,
(Blessing Hospital), Series B,
4.350% due 11/15/2029+ ...................... 1,200,000
------------
1,900,176
------------
INDIANA - 0.9%
245,000 Indiana Health Facilities Financing Authority,
Refunding and Improvement Revenue,
(Community Hospitals Project),
4.700% due 05/15/2001 ....................... 245,253
------------
KENTUCKY - 2.9%
220,000 Jefferson County, School District Finance
Corporation, School Building Revenue,
Series B,
4.750% due 06/01/2001 ....................... 220,490
600,000 Kentucky Economic Development Finance
Authority, Hospital Facilities Revenue,
Health Alliance, Series C,
4.400% due 01/01/2022+ ...................... 600,000
------------
820,490
------------
LOUISIANA - 7.0%
1,000,000 Ascension Parish, Refunding Pollution Control
Revenue, (Borden Inc. Project),
4.400% due 12/01/2009+ ...................... 1,000,000
1,000,000 Louisana Public Facilities Authority Revenue,
Multi-family Mortgage Revenue,
(Emberwood),
4.300% due 10/01/2022+ ...................... 1,000,000
------------
2,000,000
------------
MARYLAND - 2.8%
800,000 Montgomery County, Housing Opportunities
Community, MFHR, (Grosvenor Housing
Association LP), Series A,
4.350% due 07/15/2007+ ...................... 800,000
------------
MASSACHUSETTS - 1.0%
275,000 Massachusetts State, Unlimited Tax General
Obligation Bonds, Consolidated Loans,
Series C, (Pre-refunded to
12/01/2000 @ 100),
7.000% due 12/01/2010 ....................... 275,616
------------
MICHIGAN - 8.6%
750,000 Goodrich, Area School District, Unlimited
Tax General Obligation Bonds, (School
Building & Site Project), Series B,
4.750% due 05/01/2030 ....................... 751,225
700,000 Michigan State Hospital Finance Authority
Revenue, (Hospital Equipment Loan
Program), Series A,
4.350% due 12/01/2023+ ...................... 700,000
500,000 Michigan State Housing Development
Authority, Limited Obligation Revenue,
(Laurel Valley),
4.400% due 12/01/2007 ....................... 500,000
Michigan State Job Development Authority
Revenue:
200,000 (Kentwood Residence),
4.200% due 11/01/2014+ ...................... 200,000
300,000 (East Lansing Residence),
4.200% due 12/01/2014+ ...................... 300,000
------------
2,451,225
------------
MISSOURI - 3.5%
500,000 Columbia, Water & Electric Revenue,
Series B, 4.350% due 12/01/2015+ ............ 500,000
500,000 Kansas City Industrial Development
Authority, Hospital Revenue, (Baptist
Health System), Series A,
4.500% due 08/01/2018+ ...................... 500,000
------------
1,000,000
------------
NEVADA - 5.6%
500,000 Nevada State, Capital Improvements &
Cultural Affairs, Limited Tax General
Obligation Bonds, Series A,
5.500% due 03/01/2001 ....................... 501,991
450,000 Reno, Hospital Revenue, (St. Mary's Regional
Medical Center), Series B,
4.650% due 05/15/2023+ ...................... 450,000
645,000 Washoe County, School District, Limited
Tax General Obligation Bonds,
5.000% due 06/01/2001 ....................... 646,388
------------
1,598,379
------------
NEW YORK - 6.6%
300,000 Jefferson County, Industrial Development
Agency, Industrial Development Revenue,
(Watertown-Carthage TV),
4.450% due 12/01/2012+ ...................... 300,000
120,000 Long Island Power Authority, Electric
Systems Revenue, Subordinated Revenue,
Series 6,
4.550% due 05/01/2033+ ...................... 120,000
275,000 Morrisville-Eaton, Central School District,
Unlimited Tax General Obligation Bonds,
5.000% due 06/15/2001 ....................... 275,855
200,000 New York State, Housing Finance Agency,
Refunding State University Construction
Revenue, Series A, ETM,
7.500% due 11/01/2000 ....................... 200,000
200,000 New York State, Thruway Authority, Highway
& Bridge Trust Fund, Series B,
6.000% due 04/01/2001 ....................... 201,325
500,000 Suffolk County, Industrial Development
Agency, Southwest Sewer System Revenue,
4.400% due 02/01/2001 ....................... 500,116
300,000 West Seneca, Central School District,
Unlimited Tax General Obligation Bonds,
5.250% due 05/01/2001 ....................... 301,117
------------
1,898,413
------------
NORTH CAROLINA - 3.8%
500,000 Durham, Water & Sewer Utility System Revenue,
4.450% due 12/01/2015+ ...................... 500,000
600,000 North Carolina Medical Care Community
Hospital Revenue, (Baptist Hospital Project),
Series B,
4.450% due 06/01/2022+ ...................... 600,000
------------
1,100,000
------------
NORTH DAKOTA - 0.7%
200,000 University of North Dakota, Aerospace
Foundation, Lease Revenue,
4.375% due 09/01/2001 ....................... 200,000
------------
TENNESSEE - 5.2%
500,000 Metropolitan Government Nashville &
Davidson County, Industrial Development
Board, MFHR, (Chimneytop II),
4.400% due 09/01/2006+ ...................... 500,000
Metropolitan Nashville Airport Revenue
Authority, Special Facilities Revenue,
(American Airlines Project):
500,000 Series A,
4.550% due 10/01/2012+ ...................... 500,000
500,000 Series B,
4.550% due 10/01/2012+ ...................... 500,000
------------
1,500,000
------------
TEXAS - 9.4%
200,000 Alice, Water Authority, Unlimited Tax General
Obligation Bonds,
4.550% due 04/01/2001 ....................... 200,279
Grapevine, Industrial Development Corporation
Revenue, (American Airlines Inc.):
300,000 Series A1,
4.650% due 12/01/2024+ ...................... 300,000
100,000 Series A2,
4.650% due 12/01/2024+ ...................... 100,000
500,000 Series B3,
4.650% due 12/01/2024+ ...................... 500,000
200,000 Hunt County, Industrial Development
Corporation Revenue, (Trico Industries Inc.
Project),
4.450% due 10/01/2002+ ...................... 200,000
500,000 Lower Neches Valley Authority, Industrial
Development Corporation, Pollution Control
Revenue, (Neches River Treatment Corporation
Project), Series 1994A, (Guaranteed by Mobil
Oil Corporation),
4.300% due 02/01/2004+ ....................... 500,000
900,000 Texas State, Veterans Housing Assistance
Fund I, Unlimited Tax General Obligation
Bonds,
4.250% due 12/01/2016+ ...................... 900,000
------------
2,700,279
------------
UTAH - 1.1%
300,000 Utah State Board of Regents Revenue,
(University of Utah Research Facilities),
Series A,
5.000% due 04/01/2001 ....................... 300,833
------------
WASHINGTON - 18.7%
1,000,000 King County, Economic Enterprise
Corporation Revenue, (Puget Sound Blood
Center Project),
4.350% due 04/01/2023+ ...................... 1,000,000
600,000 Richland, Golf Enterprise Revenue,
4.250% due 12/01/2021+ ...................... 600,000
915,000 Seattle Housing Authority, Low Income
Housing Assistance Revenue, (Bayview
Manor Project), Series B,
4.300% due 05/01/2019+ ...................... 915,000
500,000 Tacoma, Revenue Anticipation Notes,
4.300% due 02/07/2001+ ...................... 500,000
520,000 Washington State, Elderly Housing
Community Finance Revenue, (Riverview
Retirement Project),
4.350% due 07/01/2022+ ...................... 520,000
300,000 Washington State, Health Care Facilities
Authority Revenue, (Virginia Mason
Medical Center), Series B,
4.650% due 02/15/2027+ ...................... 300,000
Washington State, Unlimited Tax General
Obligation Bonds:
500,000 Series A,
6.500% due 02/01/2001 ....................... 502,612
Series B:
500,000 6.625% due 06/01/2006 ....................... 505,816
500,000 6.700% due 06/01/2016 ....................... 506,798
------------
5,350,226
------------
WEST VIRGINIA - 1.3%
380,000 Harrison County, County Community Special
Obligation Bonds, Series A,
6.000% due 05/15/2001 ....................... $ 383,247
------------
WISCONSIN - 4.2%
200,000 Kewaunee, School District, Unlimited Tax
General Obligation Bonds, Promissory Notes,
5.000% due 03/01/2001 ....................... 200,414
500,000 Wisconsin State, Health and Educational
Facilities Authority Revenue, (Franciscan
Health Care Inc.), Series A-1,
4.400% due 01/01/2016 ....................... 500,000
500,000 Wisconsin State, Unlimited Tax General
Obligation Bonds, Series C,
5.000% due 05/01/2001 ....................... 501,667
------------
1,202,081
------------
WYOMING - 0.4%
100,000 Lincoln County, Pollution Control Revenue,
(Exxon Project), Series C,
4.550% due 11/01/2014 ....................... 100,000
------------
Total Municipal Bonds and Notes
(Cost $28,726,254) .......................... 28,726,254
------------
INVESTMENT COMPANY SECURITY - 0.2%
(Cost $57,482)
57,482 Dreyfus Tax-Exempt Cash Management Fund ..... $ 57,482
------------
TOTAL INVESTMENTS (Cost $28,783,736*) ................ 100.7% 28,783,736
OTHER ASSETS AND LIABILITIES (NET) ................... (0.7) (188,034)
----- ------------
NET ASSETS ........................................... 100.0% $ 28,595,702
===== ============
----------
* Aggregate cost for federal tax purposes.
+ Variable rate securities payable upon not more than seven calendar days
notice. The interest rate shown reflect the rate in effect at October 31,
2000.
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
COP -- Certificate of Participation
ETM -- Escrowed to Maturity
MFHR -- Multi-family Housing RevenueSee Notes to Financial
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
portfolio of investments
CALIFORNIA MONEY FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
--------- -----
MUNICIPAL BONDS AND NOTES - 101.1%
CALIFORNIA - 99.7%
Alameda County, IDR:
$ 900,000 Heat and Control Inc. Project, Series A,
4.100% due 11/01/2025+ ...................... $ 900,000
400,000 JMS Family Partnership, Series A,
4.100% due 10/01/2025+ ...................... 400,000
California Health Facilities Financing Authority:
100,000 Kaiser Permanente, Series A, (Pre-refunded to
12/01/2010 @ 102), 7.000% due 12/01/2010 .... 102,250
800,000 Scripps Health Insured Revenue Bonds, Series B,
3.950% due 10/01/2022+ ...................... 800,000
150,000 UC Stanford Health Care Revenue Bonds, Series B,
5.000% due 11/15/2000 ....................... 150,056
500,000 California Housing Finance Agency, Home Mortgage,
Series J-2, AMT, 4.050% due 08/01/2020+ ..... 500,000
400,000 California Pollution Control Financing Authority,
Solid Waste Disposal Revenue Bonds,
(Shell Oil Company Martinez Project), Series A,
4.500% due 10/01/2024+ ...................... 400,000
500,000 California School Cash Reserve Program
Authority, TRAN, Series A,
5.250% due 07/03/2001 ....................... 503,139
1,000,000 California State Economic Development
Financing Authority, IDR, Calco Project,
3.900% due 04/01/2027+ ...................... 1,000,000
545,000 California State Water Resource Department,
Water Systems Revenue Bonds, Central Valley
Project, Series J-2, (Pre-refunded to
06/01/2001 @ 101.50), 6.125% due 12/01/2013 . 559,832
1,500,000 California Transportation Finance Authority,
Revenue Bonds, 3.750% due 10/01/2027+ ....... 1,500,000
100,000 Calleguas, Water District, COP,
8.750% due 07/01/2001 ....................... 102,819
900,000 Chula Vista, Charter City Revenue Bonds,
Home Depot Inc. Project, 3.450% due 12/01/2010+ 900,000
115,000 Colton, Public Financing Authority Tax
Allocation Refunding Revenue Bonds, Series A,
4.100% due 08/01/2001 ....................... 115,164
585,000 Fremont, Unified High School District, Santa
Clara County, Series B, 12.000% due 09/01/2001 622,516
150,000 Glendale, California Insured Refunding
Hospital Revenue Bonds, Adventist Health
System, Series A, 6.450% due 03/01/2001 ..... 151,197
700,000 Irvine Ranch, Water District, Consolidated
Improvement Districts, Unlimited Tax
General Obligation Bonds,
4.450% due 06/01/2015+ ...................... 700,000
800,000 Irvine Ranch, Water District, Consolidated
Revenue Bonds, 4.500% due 08/01/2016+ ....... 800,000
600,000 Irvine Ranch, Water District, Consolidated
Revenue Bonds, Series A,
4.450% due 05/01/2009+ ...................... 600,000
500,000 Irvine Ranch, Water District, COP, Capital
Improvement Project, 4.500% due 08/01/2016+ . 500,000
400,000 Irvine Ranch, Water District, Nos. 102, 103,
105 & 106, Unlimited Tax General Obligation
Bonds, 4.450% due 09/01/2006+ ............... 400,000
600,000 Irvine Ranch, Water District, Nos. 105, 140,
240 & 250, Unlimited Tax General Obligation
Bonds, 4.500% due 01/01/2021+ ............... 600,000
1,000,000 Kern City, TRAN, 5.000% due 07/02/2001 ........ 1,004,592
85,000 Lathrop, COP, Series A, 4.250% due 06/01/2001 . 85,000
1,000,000 Livermore, MFHR, Portola Meadows Apartments,
Series 1989A, 4.050% due 05/01/2019+ ........ 1,000,000
100,000 Los Angeles County, Community Development, COP,
Willowbrook Project, 3.950% due 11/01/2015+ . 100,000
900,000 Los Angeles County, Pension Obligation,
Refunding Revenue, Series C,
3.750% due 06/30/2007+ ...................... 900,000
1,000,000 Los Angeles County, Transportation
Commission Sales Tax Refunding Revenue
Bonds, Series 1992A, 3.750% due 07/01/2012+ . 1,000,000
1,200,000 Los Angeles, Community Redevelopment
Agency, COP, Baldwin Hills Public Park
Project, 3.950% due 12/01/2014+ ............. 1,200,000
880,000 Los Angeles County, Unified School District,
COP, Belmont Learning Complex, Series 1997A,
4.000% due 12/01/2017+ ...................... 880,000
200,000 Mendota, Unified School District, Unlimited
Tax General Obligation Bonds,
7.000% due 05/01/2001 ....................... 202,692
1,000,000 Montebello, TRAN,
4.600% due 06/29/2001 ....................... 1,001,762
900,000 Oakland Joint Powers Financing Authority,
Lease Revenue Bonds, Series A-1,
4.050% due 08/01/2021+ ...................... 900,000
1,000,000 Orange County, Apartment Development
Revenue Bonds, (Wood Canyon Villas),
4.050% due 12/01/2021+ ...................... 1,000,000
1,100,000 Orange County, COP, Florence Crittendoc Services,
3.950% due 03/01/2016+ ...................... 1,100,000
250,000 Orange County, Transportation Authority, Sales
Tax Revenue Bonds, Series 1992M,
5.500% due 02/15/2001 ....................... 250,869
600,000 Orange County, Water District, COP, Series 1990B,
4.450% due 08/15/2015+ ...................... 600,000
100,000 Petaluma, Wastewater Revenue Bonds,
4.250% due 05/01/2001 ....................... 100,120
250,000 Pittsburg, Public Financing Authority,
Wastewater Revenue Bonds, (Pre-refunded to
06/01/2001 @ 102), 6.800% due 06/01/2022 .... 258,603
1,000,000 Rancho Mirage, Joint Powers Financing
Authority, COP, Eisenhower Medical
Center, Series 1997B, 3.950% due 07/01/2022+ 1,000,000
1,700,000 Regional Airports Improvement Corporation,
Los Angeles Terminal Facilities Completion,
(Los Angeles International Airport),
4.750% due 12/01/2025+ ...................... 1,700,000
500,000 Riverside County, IDR, (Calavo Growers),
3.950% due 09/01/2005+ ...................... 500,000
500,000 Riverside County, Transportation Community,
Sales Tax Revenue Bonds, Series 2000A,
5.000% due 06/01/2001 ....................... 502,379
864,000 Riverside County, Public Facilities Authority,
COP, Series B, 3.900% due 12/01/2015+ ....... 864,000
135,000 Sacramento, Redevelopment Agency Tax
Allocation, Merged Downtown, Series A,
6.500% due 11/01/2013+ ...................... 137,700
185,000 San Bernardino County, COP, Medical Center
Financing Project, Series A,
4.900% due 08/01/2001 ....................... 186,479
250,000 San Diego, GO, Refunding Series 1994, Open
Space Parking Facilities District No.1,
5.200% due 01/01/2001 ....................... 250,524
300,000 San Diego, Multi-family Mortgage Revenue Bonds,
3.950% due 08/01/2014+ ...................... 300,000
200,000 San Diego County, Regional Transportation
Community Sales Tax Revenue Bonds,
Series 1991A, (Pre-refunded to
04/01/2001 @ 102), 7.000% due 04/01/2006 .... 206,089
500,000 San Dimas, Redevelopment Agency, Diversified
Shopping, COP, Refunding,
3.950% due 12/01/2005+ ...................... 500,000
395,000 San Francisco, Bay Area Rapid Transportation
District, Sales Tax Revenue Bonds,
(Pre-refunded to 07/01/2001 @ 102),
6.400% due 07/01/2005 ....................... 409,363
1,000,000 San Franscisco City & County, Refunding
Housing Revenue Redevelopment Agency,
MFHR, (Fillmore Center), Series A-1,
3.900% due 12/01/2017+ ...................... 1,000,000
1,000,000 San Jose, Redevelopment Agency Revenue,
Merged Area Redevelopment Project, Series B,
3.600% due 07/01/2026 ....................... 1,000,000
500,000 San Jose, Santa Clara, Water Financing
Authority, Sewer Revenue Bonds, Series B,
3.750% due 11/15/2011+ ...................... 500,000
Southern California Public Power Authority
Refunding Revenue:
200,000 Palo Verde Project, Series B,
3.750% due 07/01/2009+ ...................... 200,000
400,000 Palo Verde Project, Series C,
3.750% due 07/01/2017+ ...................... 400,000
1,100,000 Transmission Project, (Southern Transmission),
3.750% due 07/01/2019+ ...................... 1,100,000
400,000 Union City, Industrial Development Authority,
IDR, Series A-1, 3.900% due 12/01/2006+ ..... 400,000
255,000 University of California, University
Improvements Revenue Bonds,
Multi-Purpose Projects, Series G,
4.500% due 09/01/2001 ....................... 256,339
------------
35,303,484
------------
PUERTO RICO - 1.4%
500,000 Commonwealth of Puerto Rico, Unlimited
Tax General Obligation Bonds,
5.000% due 07/01/2001 ....................... 503,479
------------
Total Municipal Bonds and Notes
(Cost $35,806,963) .......................... 35,806,963
------------
SHARES
------
INVESTMENT COMPANY SECURITY - 0.2%
(Cost $73,534)
73,534 Dreyfus Basic California Municipal Money
Market Fund ................................. 73,534
------------
TOTAL INVESTMENTS (Cost $35,880,497*) ................ 101.3% 35,880,497
OTHER ASSETS AND LIABILITIES (NET) ................... (1.3) (473,822)
----- ------------
NET ASSETS ........................................... 100.0% $ 35,406,675
===== ============
----------------------
* Aggregate cost for federal tax purposes.
+ Variable rate security that is payable on demand or upon a five business days
notice, and secured by a letter of credit. The interest rates shown reflect
the rate in effect at October 31, 2000.
-------------------------------------------------------------------------------
GLOSSARY OF TERMS
AMT -- Alternative Minimum Tax
COP -- Certificate of Participation
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue
MFHR -- Multi-family Housing Revenue
TRAN -- Tax and Revenue Anticipation Notes
-------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
notes to financial statements.
WM GROUP OF FUNDS
1. ORGANIZATION
WM Trust I ("Trust I") and WM Trust II ("Trust II") (collectively, the "Trusts")
were organized as Massachusetts business trusts on September 19, 1997 and
February 22, 1998, respectively. The Trusts are registered under the Investment
Company Act of 1940 (the "1940 Act"), as open-end management investment
companies. The Money Market Fund and Tax-Exempt Money Market Fund are
diversified under the 1940 Act and are two of ten series of WM Trust I. The
California Money Fund is non-diversified under the 1940 Act and is one of eight
series of WM Trust II. Information presented in this report pertains only to the
three named "Funds". Financial statements for the other funds included in the
Trusts are presented in a separate report. WM Advisors, Inc. (the "Advisor")
serves as investment manager to the Funds. The Advisor is a wholly-owned
subsidiary of Washington Mutual, Inc., a publicly owned financial services
company.
The Funds are authorized to offer three classes of shares: Class A shares, Class
B shares and Class I shares. The classes differ primarily in their respective
shareholder servicing and distribution expenses and arrangements. All shares of
each Fund represent an equal pro-rata interest in the assets of the particular
class to which the shares belong, and all classes have identical rights except
with respect to class specific expenses and exclusive rights to vote on matters
affecting only individual classes. Class I shares are currently only offered to
the WM Strategic Asset Management Portfolios. The Tax-Exempt Money Market and
California Money Funds are not currently offering Class B or Class I shares. The
Funds offered Class S shares prior to July 16, 1999, when all outstanding Class
S shares were converted into Class B shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Funds in the preparation of their financial statements.
PORTFOLIO VALUATION:
Securities are valued on the basis of amortized cost, which approximates market
value. Amortized cost valuation involves initially valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, as long as the effect of fluctuating interest rates on the market
value of the instrument is not significant. Restricted securities and certain
other assets are valued by the investment advisor under the supervision of the
Board of Trustees.
REPURCHASE AGREEMENTS:
Each Fund may engage in repurchase agreement transactions. A repurchase
agreement is a purchase of an underlying debt obligation subject to an agreement
by the seller to repurchase the obligation at an agreed upon price and time. The
value of the collateral is at all times at least equal to the total amount of
the repurchase obligation. In the event of counterparty default, the 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.
ILLIQUID INVESTMENTS:
Up to 10% of the net assets of the Funds 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) certain variable rate demand notes having a demand period of
more than seven days; and (4) 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 10%
limitation, as applicable, on investments 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. 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 Funds are declared daily and paid
monthly. Distributions of any net 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 accounting principles generally accepted in the United
States of America. These differences are primarily due to timing differences and
differing characterizations of distributions made by each Fund as a whole. Net
investment income per share calculations in the financial highlights for the
year ended October 31, 2000 excludes these adjustments:
DECREASE
ACCUMULATED
DECREASE NET REALIZED
PAID-IN CAPITAL LOSS
--------------- ------------
California Money Fund $ (13,350) $ 13,350
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 except printing and postage expenses, which are
allocated to all the Funds based upon the relative number of shareholder
accounts 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.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
WM Advisors, Inc. serves as investment advisor to the Funds. The Advisor is
entitled to a monthly fee, in arrears, based on a percentage of the average
daily net assets of each Fund at the following rates:
FEES ON
NET ASSETS
EXCEEDING
FEES ON $500 MILLION AND FEES ON
NET ASSETS EQUAL TO NET ASSETS
UP TO OR LESS THAN EXCEEDING
NAME OF FUND $500 MILLION $1 BILLION $1 BILLION
------------ ------------ ---------- ----------
Money Market Fund .45% .45% .40%
Tax-Exempt Money Market Fund .45% .45% .40%
California Money Fund .45% .40% .40%
The Advisor has voluntarily waived $44,931 of its advisory fees for the
Tax-Exempt Money Market Fund for the year ended October 31, 2000.
WM Shareholder Services, Inc. (the "Transfer Agent") 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 fee is $1.65 for both
Class A and Class B shareholder accounts. 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 investments. Fees reduced by credits allowed by the
custodian for the year ended October 31, 2000 are shown separately in the
Statements of Operations.
4. TRUSTEES' FEES
No director, officer or employee of Washington Mutual or its subsidiaries
receives any compensation from the 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 a director, officer or employee of
Washington Mutual or its subsidiaries, $18,000 per annum plus $3,000 per board
meeting attended and $1,000 per board meeting attended by telephone. The Lead
Trustee receives an additional $6,000 per annum. Trustees are also reimbursed
for travel and out-of-pocket expenses. The Chairman of each committee receives
an additional $500 per committee meeting attended.
Pursuant to an exemptive order granted by the Securities and Exchange
Commission, the Trust's eligible Trustees may participate in a deferred
compensation plan (the "Plan") which may be terminated at any time. Under the
Plan, Trustees may elect to defer receipt of all or a portion of their fees
which, in accordance with the Plan, are invested in mutual fund shares. Upon
termination of the Plan, Trustees that have deferred accounts under the Plan
will be paid benefits no later than the time the payments would otherwise have
been made without regard to such termination. All benefits provided under these
plans are funded and any payments to Plan participants are paid solely out of
the 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 and B shares. For the year ended October 31, 2000, the Distributor
received $861,142 representing CDSC fees from Class B shares. WM Financial
Services, Inc. ("WMFS") also serves as a registered broker-dealer for the Funds.
For the year ended October 31, 2000, WMFS received $89,479, representing CDSC
fees from Class B shares.
Each of the Funds has adopted two distribution plans, pursuant to Rule 12b-1
under the 1940 Act, applicable to Class A and Class B shares of the Fund (each,
a "Rule 12b-1 Plan"), respectively. There are no 12b-1 Plans applicable to the
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 both classes. 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 shares at an annual rate of 0.75% of the average
daily net assets of such shares. These fees may be used to cover the expenses of
the Distributor primarily intended to result in the sale of such shares,
including payments to the Distributor's representatives or others for selling
shares. Because the Distributor may retain any amount of its fee that is not so
expended, the Rule 12b-1 Plans are characterized by the SEC as
"compensation-type" plans. The service fee is paid by the Fund to the
Distributor, which in turn, pays a portion of the service fee to broker/dealers
that 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, both the Class A
Plan and the Class B 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. SHARES OF BENEFICIAL INTEREST
The Trusts may issue an unlimited number of shares of beneficial interest, each
without par value.
As of October 31, 2000, WM Shareholder Services, Inc. owned 3,504,529 Class I
Shares of the Money Market Fund which was equal to 22% of the outstanding Class
I Shares.
7. CAPITAL LOSS CARRYFORWARDS
At October 31, 2000, the following Funds had available for federal income tax
purposes unused capital losses as follows:
EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
IN 2001 IN 2002 IN 2003 IN 2006 IN 2007
Money Market Fund ... $ -- $ -- $ -- $72,043 $ --
Tax Exempt Money
Market Fund ..... -- 4,639 -- 252 --
California Money Fund 7,549 1,294 18,781 -- 2
8. GEOGRAPHIC AND INDUSTRY CONCENTRATION AND RISK FACTORS
There are certain risks arising from the concentration of California Money
Fund's investments in California municipal securities. The California Money Fund
is more susceptible to factors adversely affecting issuers of California
municipal securities than a 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.
9. CONTRIBUTION/REDEMPTION IN-KIND
Effective as of the close of business on July 16, 1999, the Griffin Portfolio
Builder Accounts (asset allocation accounts that were invested in Class A shares
of certain Funds in the WM Group of Funds) redeemed in kind their investments in
Class A of the Money Market Fund and contributed these assets to the WM
Strategic Asset Management Portfolios (the "Portfolios"). The Portfolios used
these contributed assets to acquire shares in Class I of certain Funds in the WM
Group of Funds.
<PAGE>
independent auditors' report
To the Trustees and Shareholders of
WM Money Market Fund, WM Tax-Exempt Money Market Fund
and WM California Money Fund
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of WM Money Market Fund, WM Tax-Exempt Money
Market Fund and WM California Money Fund (collectively, the "Funds") as of
October 31, 2000, the related statements of operations for the year then ended,
the statements of changes in net assets for the years ended October 31, 2000 and
1999 and the financial highlights for the years ended October 31, 2000 and 1999
and the period ended October 31, 1998. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for WM California Money Fund for
the period ended June 30, 1998 and prior were audited by other auditors whose
report, dated August 14, 1998, expressed an unqualified opinion on those
financial highlights. The financial highlights for WM Money Market Fund and the
WM Tax-Exempt Money Market Fund for the period ended December 31, 1997 and prior
were audited by other auditors whose report, dated January 20, 1998, expressed
an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our procedures
included confirmation of securities owned at October 31, 2000, by correspondence
with the custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the aforementioned
Funds at October 31, 2000, the results of their operations, changes in their net
assets and their financial highlights for the respective stated periods in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
San Francisco, California
December 8, 2000
tax information (unaudited)
WM GROUP OF FUNDS
YEAR ENDED OCTOBER 31, 2000
The following tax information represents fiscal year end disclosures of
various tax benefits passed through to shareholders at calendar year end.
Of the distributions made from investment income the following percentages are
tax exempt for regular Federal income tax purposes:
Name of Fund
------------
Tax-Exempt Money Market Fund ......................... 100%
California Money Fund ................................ 100%
A portion of this income may be subject to alternative minimum tax.
The above percentages may differ from those cited elsewhere in this report due
to differences in the calculation of income and capital gains for Securities and
Exchange Commission (book) purposes and Internal Revenue Service (tax) purposes.
<PAGE>
This Annual Report is published for the general information
of the shareholders of the WM Group of Funds. It is
authorized for distribution to prospective investors only
when preceded or accompanied by a current WM Group of Funds
prospectus. A mutual fundshare price and investment return
will vary with market conditions, and the principal value of
an investment when you sell your shares may be more or less
than the original cost.
The WM Group of Funds are not insured by the FDIC. They are
not deposits or obligations of, nor are they guaranteed by,
any bank. These securities are subject to investment risk,
including possible loss of principal amount invested.
Distributed by
WM Funds Distributor, Inc.
Member NASD
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