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WM
GROUPofFUNDS
the difference is experience
Annual Report
for the year ended October 31, 2000
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EQUITY FUNDS
equity income fund
growth & income fund
growth fund of the northwest
growth fund
mid cap stock fund
small cap stock fund
international growth fund
FIXED-INCOME FUNDS
short term income fund
u.s. government securities fund
income fund
high yield fund
MUNICIPAL FUNDS
tax-exempt bond fund
california municipal fund
california insured
intermediate municipal fund
florida insured municipal fund
CONTENTS
message from the president....................... 1
is the market becoming more volatile?............ 2
individual fund reviews.......................... 5
statements of assets and liabilities............. 36
statements of operations......................... 40
statements of changes in net assets.............. 42
statements of changes in net
assets -- capital stock activity............... 46
financial highlights............................. 52
portfolio of investments......................... 68
notes to financial statements....................110
special meeting of shareholders
(unaudited).....................................119
independent auditors' report.....................120
tax information (unaudited)......................121
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[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.
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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.
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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.
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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 OMITTED]
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.
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INDIVIDUAL FUND REVIEWS
TO OUR SHAREHOLDERS
We are pleased to provide you with an overview of the following funds in the WM
Group of Funds family for the 12-month period ended October 31, 2000.
To help you better understand the professional investment management available
to you as a shareholder of the WM Group of Funds, we have also included
biographies of the investment professionals managing the funds.
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, Inc. 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 charts that compare the Funds'
performance with certain market indices. On the following pages, we provide
descriptions of these indices adjacent to the corresponding chart.
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.
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.
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EQUITY INCOME
fund (formerly the Bond & Stock Fund)
PORTFOLIO MANAGER:
EQUITY TEAM
WM ADVISORS, INC.
The WM Advisors' large-cap equity team manages the Equity Income Fund. Included
on this team are Senior Portfolio Managers Randall Yoakum and Steve Spencer. Mr.
Yoakum has 17 years experience in investment and financial analysis including
over nine years with WM Advisors, Inc. 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 chairman
of WM Advisors' Investment Committee and leads the Fund's equity team. Mr.
Spencer is also a Chartered Financial Analyst and joined WM Advisors in 1999. He
holds both a BS and an MBA in Finance/Capital Markets from Brigham Young
University as well as having 16 years experience in investment and financial
analysis.
PERFORMANCE REVIEW(3)
For the 12-month period ended October 31, 2000, the WM EQUITY INCOME FUND (Class
A shares) returned 13.73% (not adjusted for sales charge), which significantly
outpaced the 6.09% return of the S&P 500 Index. Long-term results also have been
very favorable, as the Fund has averaged 12.90% per year for the past ten years
(not adjusted for sales charge). In August 2000, the Fund was repositioned to an
equity income objective that stresses dividend-producing, value stocks.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
[PLOT POINTS TO COME]
(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). The S&P 500 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. For comparative purposes, the benchmark's performance is shown
as of the Fund's inception date not from the inception date of the
benchmark.
The Fund's performance would have been lower had the Fund's custodian not
allowed its fees to be reduced by credits.
(2) 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.
(3) As of 08/01/00, the WM Bond & Stock Fund became the WM Equity Income Fund.
The Fund's objectives have changed and this information should be
considered when reviewing past performance. Please review the prospectus
for detailed information.
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AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for
sales charge) 13.73% 12.16% 12.90%
Fund (adjusted for the maximum
5.5% sales charge) 7.47% 10.90% 12.27%
Standard & Poor's 500
Composite Index(1) 6.09% 21.68% 19.43%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(MARCH 30, 1994)
Fund (not adjusted for contingent
deferred sales charge) 12.84% 11.25% 12.02%
Fund (adjusted for the maximum
contingent deferred sales charge) 7.84% 11.12% 12.02%
Standard & Poor's 500 Composite
Index(1) 6.09% 21.68% 21.64%(1)
The first half of the period was a continuation of strong performance by growth
stocks, which was led by the technology sector. During the early part of the
period, the Fund underperformed the overall market. However, performance rotated
into more traditional value holdings in March and April, and the Fund responded
with strong performance to close out the period. As the higher growth sectors
toppled, money poured into defensive value positions. Contributing to this
reversal were substantial signs pointing to an economic slowdown late in 2000
and into 2001. Slower economic growth caused many investors to question the
valuations of growth stocks, which contributed to the sell-off.
PORTFOLIO composition(4)
OTHER 3%
COMPUTER 3%
CASH EQUIVALENTS 4%
AEROSPACE/DEFENSE 4%
HEALTH CARE 5%
BASIC INDUSTRY 5%
CONVERTIBLES 6%
TELECOMMUNICATIONS 6%
OIL/GAS 7%
GAS/ELECTRIC UTILITIES 7%
REITS 8%
FIXED-INCOME 10%
CONSUMER 13%
FINANCE 19%
The Fund was overweighted in financial and utility stocks, and these sectors
were two of the best performers during the latter stages of the reporting
period. We increased holdings in the financial sector, con-tributing to the
strong per-formance for the period. The Fund benefited from holdings such as
Allstate, Citigroup, and the Federal National Mortgage Association, which all
closed the period on a strong note. In the utility sector, we focused on
electric utilities, adding positions in Duke Energy and Southern Company. Both
companies have benefited from deregu-lation and the ability to branch out into
utility-related aspects of their businesses such as transmission and
distribution. We also increased positions in the energy and consumer cyclical
sectors.
While the Fund performed very well late in the period, partially due to its
underweighting in technology holdings, a few positions have stumbled in recent
months. Companies like Autodesk and Computer Associates experienced sell-offs
along with the entire technology sector. Also, our positions in the
telecommunications sector have struggled lately. Both AT&T and Sprint have been
negatively affected by heightened competition from smaller local companies. We
still maintain positions in these companies because we believe they have strong
franchise values and are attractively priced. We also had some earnings
disappointments from two of our retailing stocks - JC Penney's and Albertson's.
We took advantage of the price weakness and added to these positions, believing
that they could rebound as the market refocuses on their long-term competitive
positioning and attractive valuation levels.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
The Fund's investment objective changed during the period to take advantage of
large-cap, dividend-producing value stocks, which signifi-cantly outperformed
the market during the second half of the period. In doing so, we repositioned
assets into four major classes--common stocks, convertibles, Real Estate
Investment Trusts (REITs), and bonds. We maintain a strict dividend bias in our
stock selection, looking for deep value with a dividend bias. This means we look
for companies that are very attractively priced, or "on sale," and pay a strong
dividend while possessing the potential to increase their dividend. It is a
conservative approach to equity investing, yet it has been one of the strongest
performing disci-plines in recent months. This style will normally limit the
exposure to health care and technology stocks, as these tend to be a bit more
expensive relative to their earnings. However, we are able to tap into the
long-term growth potential of these sectors by scouring the market for
convertibles that have been deeply discounted and which have the potential to
provide growth as well as a significant income stream. The position in REITs
(currently 8%) was increased during the period and has contributed to the Fund's
strong performance. We reduced our position in fixed-income holdings to about
10% of the Fund, and although equity levels increased, we maintained a similar
risk structure by investing in lower-risk stocks.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
We will continue to focus on defensive positions, which tend to be good
performers in volatile markets. With the economy showing significant signs of a
slowdown, tradi-tional value sectors could continue to lead the market. The
combination of six interest-rate increases by the Federal Reserve, rising energy
prices, and signs of a deceleration in technology spending all point to a
slowdown as we move into 2001. We believe the Fund should be positioned for
strong relative performance. The dividend bias of the Fund, coupled with a small
position in fixed-income holdings, should provide a conservative solution in an
environment of stable to lower interest rates. Because of the yield potential of
the Fund, it also provides inflation protection not usually available from
equity investments.
(4) Allocation percentages are based on total investment value of the portfolio
as of 10/31/00. Differences from financial statements are a result of a
consolidation of industries or sectors.
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GROWTH & INCOME fund
PORTFOLIO MANAGERS:
RANDALL L. YOAKUM AND STEVE SPENCER
WM ADVISORS, INC.
An equity team led by Senior Portfolio Managers Randall Yoakum and Steve Spencer
manages the Growth & Income Fund. Mr. Yoakum has 17 years experience in
investment and financial analysis including over nine years with WM Advisors,
Inc. 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 chairman of WM Advisors' Investment
Committee and leads the Fund's equity team. Mr. Spencer is also a Chartered
Financial Analyst and joined WM Advisors in 1999. He holds both a BS and an MBA
in Finance/Capital Markets from Brigham Young University. Mr. Spencer is a
Senior Portfolio Manager at WM Advisors and has 16 years experience in
investment and financial analysis.
PERFORMANCE REVIEW
For the 12-month period ended October 31, 2000, the WM GROWTH & INCOME FUND
(Class A shares) returned 13.95% (not adjusted for sales charge), which
significantly outpaced the 6.09% return of the S&P 500 Index. Many of the value
stocks held by the Fund led the market during the second half of the period.
Long-term results also have been very favorable, as the Fund has posted an
average annual return of 17.96% for the past ten years (not adjusted for sales
charge).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
[PLOT POINTS TO COME]
(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). The S&P 500 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. For comparative purposes, the benchmark's performance is
shown as of the Fund's inception date not from the inception date of the
benchmark.
The Fund's performance would have been lower had the Distributor not waived
a portion of its fees and the Fund's custodian not allowed its fees to be
reduced by credits.
(2) 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.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for
sales charge) 13.95% 19.66% 17.96%
Fund (adjusted for the maximum
5.5% sales charge) 7.70% 18.32% 17.30%
Standard & Poor's 500
Composite Index(1) 6.09% 21.68% 19.43%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(MARCH 30, 1994)
Fund (not adjusted for contingent
deferred sales charge) 13.01% 18.70% 18.14%
Fund (adjusted for the maximum
contingent deferred sales charge) 8.01% 18.60% 18.14%
Standard & Poor's 500 Composite
Index(1) 6.09% 21.68% 21.64%(1)
One of the most significant factors affecting the Fund during the past year was
the broad-based secular shift in performance. The technology sector dominated
both head-lines and performance for the first half of the period, rising to
unprecedented levels and historic valuations. However, when inflationary
concerns and overheating economic growth caused the Federal Reserve to raise
short-term interest rates several times, investors became much more concerned
with these escalating valuations (prices relative to earnings) and the
technology sector toppled. Some of the more traditional value sectors and
holdings responded with very strong performance, which benefited the Fund.
Positions in both health care and financial stocks appreciated, leading the
market from March until the close of the period.
PORTFOLIO composition(3)
CASH EQUIVALENTS 1%
CAPITAL GOODS 3%
TELECOMMUNICATIONS 5%
MEDIA 6%
AEROSPACE/DEFENSE 6%
OIL & GAS 7%
OTHER 8%
HEALTH CARE 12%
COMPUTER 16%
CONSUMER 16%
FINANCE 20%
Overall, the Fund benefited from its underweighting in the technology sector. In
the financial sector, insurance providers such as Allstate contributed to Fund
per-formance. While its stock had previously been depressed, Allstate began to
realize gains from higher premiums as well as from a significant drop-off in
catastrophic losses. Investments in companies such as Mellon Financial also
provided strong results, as the company moved toward the high-margin service end
of the business. Within the health care industry, many of our positions in
pharmaceutical companies also appreciated. The stock of Cardinal Health, a
pharmaceutical distributor, more than doubled during the period, benefiting from
growth in prescriptions driven by demographic shifts toward an aging population.
We also found value in American Home Products and Pfizer and were rewarded after
both stocks appreciated significantly.
The Fund saw some negative performance in the telecommunications area, as large
companies such as AT&T, Sprint, and WorldCom experienced problems during the
period. Sprint and WorldCom's proposed merger was disallowed, while AT&T
suffered from heightened competition from smaller niche players in the cable,
long distance, wireless, and local phone service areas. We still maintain
holdings of these stocks in the portfolio because we feel that they may be
attractively priced for a turnaround.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
After technology stocks were beaten down during the second half of the period,
we began looking for opportunities to add to and establish positions in some
larger companies that still are leaders in their business segments. We were able
to find attractive values in some very good businesses including Lucent
Technologies, Computer Associates, and Motorola. Some of our largest holdings,
such as Boeing and Tyco, performed very well during the period.
We also realized some value in the utility and energy sectors. One of the Fund's
best performing stocks was Enron, which is redefining the utility industry by
establishing new ways to market and distribute given the increased deregulation
within the sector. The energy sector positively contributed to performance late
in the period. The Fund benefited from its position in Tosco, a domestic oil
refiner, whose stock appreciated as a result of the huge shortage of capacity in
the U.S. market. During the period, we also established a position in
Exxon/Mobil following the merger of the two companies.
We scour the financial markets looking for industry leaders that are
attractively valued or "on sale". This focus drives a buy-and-hold investment
strategy that creates very low portfolio turnover. Our value bias helped
generate strong performance during the period as the Fund significantly
outperformed the S&P 500 --large-cap value stocks outperformed large-cap growth
stocks by nearly 15% during the past six months (as measured by S&P 500 BARRA
Value and Growth segments of the Index).
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
It seems likely that a slow-down in the economy will continue as we move into
2001. This scenario should be positive for value-oriented equity positions. In
managing the Fund, we look to over-weight certain sectors, such as finance and
health care, to take advantage of long-term trends, while focusing on the best
companies within each sector. Our stock selection focuses on firms that often
have lost stock value and seem poised for a turnaround. We continue to feel that
a low inflationary environment will keep interest rates generally low and pave
the way for strong long-term performance of equity investments, regardless of
any possible short-term volatility.
(3) Allocation percentages are based on total investment value of the portfolio
as of 10/31/00. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
GROWTH FUND of
the NORTHWEST
(formerly the Northwest Fund)
PORTFOLIO MANAGER:
DAVID SIMPSON
WM ADVISORS, INC.
An equity team led by David Simpson, Senior Portfolio Manager of WM Advisors,
Inc., has managed the Growth Fund of the Northwest since March 1993. Mr. Simpson
is a Chartered Financial Analyst, holds an MBA, and has over 14 years of
continuous investment experience.
PERFORMANCE REVIEW
For the 12-month period ended October 31, 2000, the GROWTH FUND OF THE NORTHWEST
(Class A shares) returned 28.73% (not adjusted for sales charge), which
significantly outpaced the 6.09% return of the S&P 500 and 17.41% return of the
small-cap Russell 2000 Index. Long-term results also have been very favorable,
as the Fund has averaged 26.11% per year for the past five years (not adjusted
for sales charge).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
[PLOT POINTS TO COME]
(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).The S&P 500 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. For comparative purposes, the benchmark's performance is shown
as of the Fund's inception date not from the inception date of the
benchmark.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian not allowed its fees to be
reduced by credits.
(2) 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.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for
sales charge) 28.73% 26.11% 21.61%
Fund (adjusted for the maximum
5.5% sales charge) 21.66% 24.69% 20.93%
Standard & Poor's 500
Composite Index(1) 6.09% 21.68% 19.43%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(MARCH 30, 1994)
Fund (not adjusted for contingent
deferred sales charge) 27.67% 25.02% 21.80%
Fund (adjusted for the maximum
contingent deferred sales charge) 22.67% 24.94% 21.80%
Standard & Poor's 500 Composite
Index(1) 6.09% 21.68% 21.64%(1)
Rising global interest rates and a significant increase in oil prices negatively
affected equity markets during the past 12 months. Global cur-rencies also
played a part in constricting earnings of some domestic corporations. As the
dollar strengthened relative to many major currencies, U.S. goods became more
expensive to foreign consumers and large domestic corporations reported weaker
earnings in dollar terms. In addition, central banks around the globe were
forced to protect their own currencies by increasing interest rates, thereby
putting a squeeze on growth rates. This created a volatile environment for
equities of both domestic and foreign corporations.
Volatility in the technology sector intensified during the past 12 months, as
investors digested concerns over the sustainability of earnings growth rates.
The Fund was able to post strong relative results despite this volatility,
partially due to a reduction of technology exposure in January and February
prior to the declines that occurred in March and April. We reduced the
concentration in technology stocks, as some valuations had escalated beyond what
we felt were reasonable levels. Although we trimmed some of these positions,
technology remained the Fund's largest sector weighting, and we continue to
favor select seg-ments and companies within the sector. Some of the technology
positions in the portfolio did perform well during the period. InFocus
Corporation, the leading provider of data and video projectors, merged with its
number two competitor and continued to perform very well. However, some of the
Fund's positions were not immune to the broad tech-nology sell-off during the
period. Credence Systems, a producer of semiconductor testing equipment, was
affected by what the market perceived as a retraction in the entire
semiconductor industry. We continue to like the prospects for this company, as
it maintains a strong balance sheet, good market share, and healthy
fundamentals.
Early in the period, investors strongly favored large-cap companies. However, as
many of these stocks struggled throughout the summer, we increased positions in
the small-cap sector. These companies were priced more attractively and
responded with strong relative per-formance during the period. At the end of
October, small-cap stocks accounted for about 50% of the Fund's portfolio.
Although we look for market leaders in our stock selection, we also pay careful
attention to valuations (price relative to earnings). For example, we reduced
our position in Microsoft early in the year, enabling us to lock in some
significant gains. We were then able to add to that position when its stock
price dropped and the valuation became very attractive.
WERE THERE ANY SHIFTS IN THE PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We increased positions in biotechnology stocks and added to cyclical positions,
which could benefit from lower interest rates moving into 2001. The Fund's
positions in biotechnology were some of the strongest performers during the
latter stages of the period. For example, Corixa, a phar-maceutical firm with a
broad pipeline of promising products, was involved in an acquisition during the
period and rallied considerably early in 2000 and also toward the close of the
fiscal year. Louisiana Pacific is an example of a cyclical firm that could
greatly benefit from lower interest rates in the coming year. It produces
oriented strand board, a plywood substitute, for the housing market and has been
hurt by a slowdown in new home construction. This company would benefit from any
future interest rate cuts by the Fed.
The Fund also benefited from its position in aerospace companies. Companies such
as Precision Castparts and Boeing performed very well during the period.
Boeing's stock was supported by an increase in order rates as well as a
streamlined management structure.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
While our long-term outlook for the technology sector remains positive, it seems
likely that valuations will play a more significant role than in prior years. We
will continue to look for dynamic market leaders that are attractively priced.
The biotechnology sector remains attractive as strong innovation, coupled with
increasing demand from the Baby Boomer population, is driving the sector
forward.
It seems likely that the Federal Reserve will be on hold until more data on the
economic slowdown surfaces. Although inflation has picked up some, it does not
present a problem at current levels. Although market performance may remain more
volatile than in prior years, strong economic fundamentals support the potential
for long-term equity growth.
PORTFOLIO composition(3)
TRANSPORTATION 3%
OTHER 4%
CAPITAL GOODS 4%
AEROSPACE/DEFENSE 5%
SEMICONDUCTORS 6%
BASIC INDUSTRY 6%
ELECTRONICS 8%
CASH EQUIVALENTS 8%
HEALTH CARE 12%
FINANCE 13%
COMPUTER 16%
CONSUMER 16%
(3) Allocation percentages are based on total investment value of the portfolio
as of 10/31/00. 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 12-month period ended October 31, 2000, the WM GROWTH FUND (Class A
shares) returned 24.21% (not adjusted for sales charge), which significantly
outpaced the 6.09% return of the S&P 500. Longer-term results also have been
very favorable, as the Fund has posted an average annual return of 41.16%
(38.51% adjusted for the maximum sales charge) for the past three years. The
Fund's performance was mixed during the period, as significant volatility in the
technology sector produced negative results for much of 2000.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
[PLOT POINTS TO COME]
(1) Index total returns were calculated from 4/30/93 to 10/31/00. 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). The S&P 500 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. For comparative purposes, the benchmark's performance is
shown as of the Fund's inception date not from the inception date of the
benchmark.
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 not
allowed its fees to be reduced by credits.
(2) 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.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for
sales charge) 24.21% 30.93% 26.33%
Fund (adjusted for the maximum
5.5% sales charge) 17.37% 29.45% 25.40%
Standard & Poor's 500
Composite Index(1) 6.09% 21.68% 19.43%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(JULY 1, 1994)
Fund (not adjusted for contingent
deferred sales charge) 23.28% 29.96% 29.81%
Fund (adjusted for the maximum
contingent deferred sales charge) 18.28% 29.89% 29.81%
Standard & Poor's 500 Composite
Index(1) 6.09% 21.68% 22.50%(1)
At the beginning of the reporting period, we saw a continuation of many of the
same trends that made 1999 so successful. By late spring, however, that
environment had changed. Sentiment quickly turned against many of the companies
that had led the technology sector higher for so long. This followed a series of
short-term interest rate hikes by the Federal Reserve, which made investors
rethink their assumptions about the market's most richly-priced companies.
Stocks dropped sharply as a result, leaving most major market indices with only
modest gains by the end of the period.
The stocks that most closely tracked the market's split performance were our
wireless positions. Companies like cellular handset leader Nokia traded
substantially higher during the opening months of the period due to expanded
subscriber roles and enthu-siasm surrounding wireless data. By spring, however,
the high costs paid by cellular operators for licenses to operate
next-generation, or "3-G", networks in Europe gave rise to concerns that the
industry's growth rate would slow. These fears were com-pounded later in the
period by Nokia's own warning that third-quarter revenue would be softer than
expected, causing Nokia and other cellular-related companies to decline sharply.
While this reduced the sizable gain our Nokia position had earned earlier in the
year, the stock still finished higher during the period. Further-more, Nokia's
troubles were soon proven to be a temporary reaction to the unfortunate timing
of a product replace-ment cycle. This was because the company's most recently
released earnings announce-ment showed substantial improvements in both revenue
growth and profitability.
Our Internet positions also traded with mixed results. Similar to our wireless
stocks, the holdings of a number of Web-related companies rose substantially
during the first three months of 2000, only to be taken lower by a rapid turn in
sentiment as the year progressed. While a number of our business-to-consumer
stocks worked against us and were ultimately trimmed or sold completely from the
Fund's portfolio, the Internet sector as a whole was once again a source of
strength. Companies such as Cisco Systems and EMC Corpor-ation, both of which
are leading the development of key pieces of the Internet's infrastructure,
continued to post strong gains. Business-to-business ("B2B") e-commerce company
i2 Technologies, which effectively responded to rapid changes in the B2B
marketplace to become a clear leader in the industry, was one of the Fund's most
notable performers.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
One area that received increased attention in the portfolio was the rapid
emer-gence of deregulated markets for electricity and natural gas, a theme that
was represented most prominently by our long-time investment in the diversified
energy company Enron. This company's out-standing performance, coupled with the
rapid deregulation of electricity and natural gas markets worldwide, caused us
to investigate a number of other compelling oppor-tunities. This ultimately led
to our adding companies such as Duke Energy and Southern Company to the
portfolio.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
We are optimistic about major themes such as wireless, cable and networking,
where fundamentals remain robust. Regardless, we will continue to judge each
holding on its own merits and are steadfast in our belief that a focus on
fast-growing companies in dynamic industries is the best way to produce
long-term results for our shareholders.
PORTFOLIO composition(3)
HEALTH CARE 3%
FINANCE 3%
OTHER 5%
OIL/GAS 6%
SEMICONDUCTORS 9%
MEDIA 11%
CASH EQUIVALENTS 15%
COMPUTER 20%
TELECOMMUNICATIONS 28%
(3) Allocation percentages are based on total investment value of the portfolio
as of 10/31/00. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
MID CAP STOCK
fund
PORTFOLIO MANAGERS:
RANDALL YOAKUM AND STEVE SPENCER
WM ADVISORS, INC.
An equity team led by Senior Portfolio Manager Randall Yoakum and Steve Spencer
manages the Mid Cap Stock Fund. Mr. Yoakum has 17 years experience in investment
and financial analysis including over nine years with WM Advisors, Inc. 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 Investment Committee and
leads the Fund's equity team. Mr. Spencer is also a Chartered Financial Analyst
and joined WM Advisors in 1999. He holds both a BS and an MBA in Finance/Capital
Markets from Brigham Young University. Mr. Spencer is a Senior Portfolio Manager
at WM Advisors and has 16 years experience in investment and financial analysis.
PERFORMANCE REVIEW
Since its inception (March 1, 2000) through October 31, 2000, the WM MID CAP
STOCK FUND (Class A shares) returned 25.80% (not adjusted for sales charge),
which significantly outpaced the 13.54% return of the S&P 400 Midcap Index. The
mid-cap value stocks held by the Fund led the market during the second half of
the period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES WERE USED
TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
[PLOT POINTS TO COME]
(1) Index total returns were calculated from 2/28/00 to 10/31/00. The Standard
& Poor's 400 Midcap Index represents an unmanaged weighted index of 400
Midcap Companies. The Consumer Price Index is a measurement of inflation
for all urban consumers (CPI). The Midcap Index 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. For
comparative purposes, the benchmark's performance is shown as of the Fund's
inception date not from the inception date of the benchmark.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian not allowed its fees to be
reduced by credits.
(2) 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.
In 1998 and 1999, the large-cap technology sector was the driving force behind
equity market performance. This trend reversed in March 2000, and mid-cap value
took over market prominence. When the series of short-term interest rates hikes
enacted by the Federal Reserve began to take effect, investors became much more
concerned with escalating valuations (prices relative to earnings) and the
technology sector toppled. Some of the more traditional value sectors and
holdings responded with very strong performance, which was beneficial to the
Fund. Health care and financial stocks appreciated significantly, leading the
market from the Fund's inception until the close of the period. In the financial
sector, three of the Fund's holdings, PMI Group, TCF Financial, and Bank United,
more than doubled during the period. In the health care sector, our positions in
pharmaceutical companies appreciated significantly. The stock price of
AmeriSource Health, a wholesale distributor of pharmaceuticals and health care
products, nearly tripled during the period. The Fund also received strong
performance from Foundation Health Systems and Alza Corporation, which is
developing a new drug for attention deficit disorder.
Although the Fund was negatively affected by declines in the technology sector
late in the period, we were under-weighted in this sector relative to the
market. We were disap-pointed in the performance of Sykes Enterprises, an
outsourcing provider of infor-mation technology support services, which reported
lower than expected revenues. Also, Electronics for Imaging, which designs and
markets imbedded routers for printers and copiers, missed its profit
expectations due to a delay in the product offering of one of its largest
clients. However, we took advantage of the stock price decline and added to this
position. We were also able to increase our position in BMC Software at a very
attractive valuation. The company experienced a delay in the release of one of
its main-frame software solutions, and its stock price declined substantially.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We focused stock selection in the health care, finance, and consumer-related
areas, all of which significantly outperformed the market and contributed to the
Fund's strong performance during the period. The Fund also benefited from merger
activity, as both Bank United and Beringer Wine Estates were involved in
takeovers that significantly increased the value of our original invest-ments.
The mid-cap area was very attractively priced in the spring and summer of 2000,
and we were able to purchase equities with strong earnings growth rates relative
to their valuations (price-to-earnings ratios). With the price increases of
mid-cap stocks, some of this relative valuation gap closed. However, the
valuation disparity still exists, and we feel that mid-cap value could continue
to provide strong relative results in periods of general market volatility.
We scour the financial markets, looking for mid-cap industry leaders that are
attractively priced, or "on sale". This focus creates a buy-and-hold strategy
with very low portfolio turnover. Our value bias helped generate strong
performance during the period, as the Fund significantly outperformed the S&P
400 Midcap Index. Mid-cap value stocks outperformed mid-cap growth stocks by
more than 20% during the past eight months (as measured by S&P 400 Midcap BARRA
Value and Growth segments of the Index).
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
It seems likely that an economic slowdown will continue into 2001. This scenario
should be positive for value-oriented equities, and we believe the value theme
could continue. In managing the Fund, we continue to focus on secular
overweights to take advantage of long-term trends in areas such as finance and
health care, where we continue to look for the best companies within the
sectors. The health care area looks positive as demographic forces of an aging
population are driving unit volume growth. Financial stocks are attractive based
on a shift in product offering to higher margin and more profitable segments of
the business.
Our stock selection focuses on companies that are attractively priced or have
lost stock value and seem poised for a turnaround. We continue to feel that a
weak inflationary environment will keep interest rates generally low and pave
the way for strong long-term performance of equity investments, regardless of
any possible short-term volatility.
--------------------------------------------------------------------------------
TOTAL RETURNS AS OF 10/31/99
CLASS A SHARES SINCE INCEPTION
(MARCH 1, 2000)
Fund (not adjusted for sales charge) 25.80%
Fund (adjusted for the maximum 5.5% sales charge) 18.90%
Standard & Poor's 400 Midcap Index1 13.54%(1)
CLASS B SHARES SINCE INCEPTION
(MARCH 1, 2000)
Fund (not adjusted for contingent deferred sales charge) 25.10%
Fund (adjusted for the maximum contingent deferred sales charge) 20.10%
Standard & Poor's 400 Midcap Index1 13.54%(1)
PORTFOLIO composition(3)
AEROSPACE/DEFENSE 4%
OIL/GAS 5%
OTHER 6%
CASH EQUIVALENTS 6%
BASIC INDUSTRY 6%
SEMICONDUCTORS 7%
COMPUTER 12%
CONSUMER 16%
FINANCE 18%
HEALTH CARE 20%
3 Allocation percentages are based on total investment value of the portfolio
as of 10/31/00. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
SMALL CAP STOCK
fund (formerly the Emerging Growth Fund)
PORTFOLIO MANAGER:
LINDA WALK
WM ADVISORS, INC.
An equity team led by Ms. Linda Walk has been managing the Fund since March
1998. Ms. Walk, Senior Portfolio Manager of WM Advisors, Inc., graduated magna
cum laude from the University of Washington and has over 14 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
For the 12-month period ended October 31, 2000, the WM SMALL CAP STOCK FUND
(Class A shares) returned 53.57% (not adjusted for sales charge), which
significantly outpaced the 17.41% return of the small-cap Russell 2000 Index.
Long-term results also have been very favorable, as the Fund has posted an
average annual return of 20.55% for the past ten years (not adjusted for sales
charge).
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
[PLOT POINTS TO COME]
(1) Index total returns were calculated from 10/31/90 to 10/31/00. 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). The Russell 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. For comparative purposes, the benchmark's performance is
shown as of the Fund's inception date not from the inception date of the
benchmark.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian not allowed its fees to be
reduced by credits.
(2) 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. Average
Annual Total Returns as of 10/31/00
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for
sales charge) 53.57% 19.99% 20.55%
Fund (adjusted for the maximum
5.5% sales charge) 45.14% 18.64% 19.87%
Russell 2000 Index(1) 17.41% 12.39% 17.14%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(JULY 1, 1994)
Fund (not adjusted for contingent
deferred sales charge) 52.34% 19.03% 20.11%
Fund (adjusted for the maximum
contingent deferred sales charge) 47.34% 18.93% 20.11%
Russell 2000 Index(1) 17.41% 12.39% 13.74%(1)
Although volatility plagued the small-cap technology arena late in the period,
overall results for the reporting period were quite favorable. The "dot com"
debacle was quite pronounced within small-cap stocks, but we feel the area will
see some long-term success in select companies. Over the past year, investors
have been willing to increase exposure to both small- and mid-cap stocks, and
these segments both outperformed large-cap stocks. Because of stock selection,
the Fund was able to perform well during periods of both strong and choppy stock
market performance.
Our positions in health care, particularly biotechnology, performed very well
during the period. For example, Corixa Corporation, which focuses on the
development of T-cell vaccines for treating and preventing cancer and infectious
diseases, saw its price nearly triple over the past 12 months. Another
significant holding, Shire Pharmaceuticals Group, which concentrates on
researching, developing, and marketing pharmaceuticals, had its price more than
double during the period.
The Fund also benefited from its consumer-related holdings. For example, catalog
retailer J. Jill Group was involved in a reorganization, and we were able to
purchase the stock at a very attractive price. The company has a strong
management team, and we saw value in their specialized niche of active, affluent
women's apparel. The Fund was rewarded when the stock's price more than tripled
during the past 12 months. We also benefited from our position in Beringer Wine
Estates, which was acquired during the period at a significant premium to our
purchase price.
The most volatile area of the Fund was the technology sector. At the close of
1999, performance in small-cap technology was outstanding, leading the market
into the first quarter of 2000. This trend then shifted, and stocks of
technology firms were battered throughout the summer and into the fall of 2000.
Although many positions in the Fund gave back some prior gains, we were able to
find strong companies that performed well during the period. NVIDIA Corporation,
which produces a 3-D graphics chip that will be utilized by Microsoft in its new
Xbox video game consoles, was one of the strongest performers for the Fund. The
stock increased more than five-fold, and we were able to take some significant
profits while maintaining a position in the company. Another strong performer
was Click2Learn, which has capitalized on the knowledge-based economy to develop
a platform for eLearning, training, and skill gap analysis.
We did have some disappointments in the Fund, as some of our positions in
software have been hit by the downturn in the technology sector. The stock of
Latitude Communi-cations, which develops software for conferencing with
real-time interaction, has tracked the e-commerce market contraction and lost
some of its value. We still hold the company in the Fund and feel that with
proper execution, the firm is poised for a rebound. Another holding that has had
some recent negative performance is Primus Knowledge. The company developed eCRM
(customer relationship management) software that helps businesses. The firm had
an earnings shortfall during the period and its stock suffered significantly.
How-ever, because we are still convinced of the viability of the company's
product and future opportunities, we continue to hold the stock in the Fund's
portfolio.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We added to our positions in biotech at a very good time during the period and,
as a result, were rewarded with strong performance. As of the end of the
reporting period, health care products accounted for 19% of the overall
port-folio. We reduced positions in computer hardware while increasing exposure
to computer software. The positions in software have taken some time to bounce
back from the market volatility, and we may have been a little early. However,
we feel that some of these software companies have been oversold and may be
poised for a rebound. The two largest positions in the Fund at the close of the
period, NetIQ Corporation (software) and Carreker-Antinori Inc. (computer and
software services), both performed very well and contributed to the
outperformance of the Fund relative to its benchmark index.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
We feel that the economy is fairly healthy and growth should continue, albeit at
a slower pace. There is a deceleration of spending in global technology, as
higher energy prices and interest rates have created a slowdown, both
domestically and abroad. We will therefore continue to pay careful attention to
valuations while maintaining limited exposure to momentum stocks. Our positions
in biotechnology firms have performed extremely well, and we may take the
opportunity to capture some profits, possibly refocusing assets into select
software companies with compelling valuations and growth potential.
PORTFOLIO composition(3)
MEDIA 3%
ELECTRICAL EQUIPMENT 4%
OTHER 5%
TELECOMMUNICATIONS 5%
FINANCE 5%
SEMICONDUCTORS 6%
CONSUMER 9%
BUSINESS SERVICES 11%
HEALTH CARE 19%
COMPUTER SOFTWARE & SERVICES 33%
3 Allocation percentages are based on total investment value of the portfolio
as of 10/31/00. Differences from financial statements are a result of a
consolidation of industries or sectors.
<PAGE>
INTERNATIONAL
growth fund
PORTFOLIO MANAGER:
CAPITAL GUARDIAN TRUST COMPANY
As of June 24, 1999, the Fund's investment management was transitioned to an
international equity team at Capital Guardian Trust Company. Nine portfolio
managers and 28 analysts now share the management responsibilities for the Fund.
The managers average over 26 years of investment experience and have been with
the firm for an average of 22 years.
PERFORMANCE REVIEW
For the 12-month period ended October 31, 2000, the WM INTERNATIONAL GROWTH FUND
(Class A shares) returned -0.43% (not adjusted for sales charge). This was
primarily the result of heightened volatility in many international markets,
particularly those in the Pacific Region and in emerging market countries.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
[PLOT POINTS TO COME]
(1) Index total returns were calculated from 10/31/90 to 10/31/00. The Morgan
Stanley Capital International EAFE Index includes stock markets of Europe,
Australasia, 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).
The MSCI EAFE 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. For comparative purposes, the
benchmark's performance is shown as of the Fund's inception date not from
the inception date of the benchmark.
The Fund's performance would have been lower had the Fund's custodian not
allowed its fees to be reduced by credits.
(2) 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.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for
sales charge) -0.43% 6.91% 5.68%
Fund (adjusted for the maximum
5.5% sales charge) -5.92% 5.70% 5.08%
Morgan Stanley Capital
International EAFE Index(1) -2.68% 8.94% 8.76%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(JULY 1, 1994)
Fund (not adjusted for contingent
deferred sales charge) -1.03% 6.08% 4.23%
Fund (adjusted for the maximum
contingent deferred sales charge) -5.95% 5.92% 4.23%
Morgan Stanley Capital
International EAFE Index(1) -2.68% 8.94% 7.57%(1)
The fourth quarter of 1999 capped off our best year for stock selection in
recent history. The Fund benefited from holdings in capital equipment and
services stocks, which include companies that provide technology, electronics
and electrical equipment, telecommunications services and equipment, and
semicon-ductor-related companies. These areas participated in a recovery cycle
that had been immune from the impact of rising interest rates because of strong
demand.
The first quarter of 2000 was marked by significant volatility, especially in
technology companies. However, the MSCI EAFE Index ended the quarter virtually
unchanged. Many of last year's themes were still in place, with Europe loosely
tracking the U.S. market and Japan separate and unto itself. Returns in the core
European markets were solid against a backdrop of improving economic growth,
while returns for smaller European countries were mixed. Although stocks in
Japan recovered in late March, markets in the U.K. and in most of the Pacific
were weak. The capital expenditure theme, which fueled returns in the capital
equipment sector, remained intact during the period.
The sell-off in equity markets began in March and continued through April.
European markets then began to turn around in late May and posted strong results
in June, paring their losses for the quarter. However, Japanese stocks did not
snap back as convincingly. Throughout the second quarter, investors continued to
reexamine the valuations of technology-related companies. The resulting
volatility pressured many of the technology, media, and tele-communications
companies that make up such a signifi-cant portion of the world market indices.
Non-U.S. equity markets fell in the third quarter. The period began with
investors picking up the pieces in the technology, media, and telecommunications
areas. It was a jittery time, as investors looked for direction and quickly sold
companies on hints of slower earnings growth. Although the second quarter slide
in equities spilled over into July, stocks recovered in August. Banks and energy
companies were strong along with many technology-related names. The resurgence
of technology stocks was especially robust in Japan, as upgrades in earnings
forecasts provided renewed confidence. However, telecommunications stocks
remained in a slump due to profit concerns.
Within the portfolio, there were certain stocks and regions that significantly
impacted performance. Nokia, STMicroelectronics, and Reuters were the strongest
performers for the year. The Fund also benefited from strong performance of some
of its holdings in Switzerland, such as Richemont and Nestle. Some of the Fund's
emerging market blue-chip stocks performed well, including Telefonos de Mexico,
WalMart de Mexico, and Hellenic Bottling. Conversely, our overweightings in
South Korea and Taiwan detracted from the Fund's performance, due mostly to
holdings in Samsung and Taiwan Semiconductor. In addition, stocks such as
Vodafone Group, Invensys, and Nikon posted poor per-formance during the period.
WERE THERE ANY SIGNIFICANT SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT
HAVE HAD A SIGNIFICANT IMPACT ON PERFORMANCE?
Although our technology weighting remained high, we began trimming the Fund's
telecommunications exposure in early 2000 because of valuation concerns. We
invested the proceeds in several depressed areas including food and consumer
stocks and banks in the U.K. This shift helped moderate the portfolio's decline
as tele-communications stocks continued to deflate. Within the portfolio's
technology exposure, our focus on companies with real earnings also softened the
fall. In August, we began adding to select technology names, primarily
semiconductor component manufacturers, which had experienced substantial
declines. This was helpful initially after a rally ensued, but proved to be a
drag on performance in September when many of these stocks experienced a
sell-off. We have reduced the telecommunications exposure, and are no longer
over-weighted in this sector. Within the telecommunications sector, we favor
wireless companies over the incumbent carriers.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
The portfolio maintains exposure to semiconductor technology, where we think
growth will be sustained due to the expansion of the Internet and today's broad
range of semiconductor uses. Semiconductor equipment companies have been unable
to meet demand, delaying the buildup of overcapacity. However, the fastest
growth increases may be behind us despite higher absolute growth levels.
Looking ahead, significant positive trends are beginning to develop. Central
Europe should continue to grow as a source of demand as it integrates into the
economy of Western Europe. U.S.-style Business-to-Business and
Business-to-Consumer Internet usage will likely catch on in Europe and Japan,
improving productivity and widening customer bases. Finally, Germany passed
sweeping tax reforms in the third quarter, followed by smaller tax cuts in
France. Other EU nations also have tax reforms on their agenda. This profound
shift in tax policy could provide an economic tailwind for years to come.
PORTFOLIO composition(3)
OTHER 1%
LATIN AMERICA 2%
CANADA 5%
CASH EQUIVALENTS 7%
PACIFIC BASIN 13%
JAPAN 23%
EUROPE 49%
3 Allocation percentages are based on total investment value of the portfolio
as of 10/31/00.
<PAGE>
SHORT TERM
income fund
(formerly the Short Term High Quality Bond Fund)
PORTFOLIO MANAGER:
CRAIG SOSEY
WM ADVISORS, INC.
A fixed-income team led by Senior Portfolio Manager Craig Sosey, who joined WM
Advisors, Inc. in 1998 and has over 15 years banking and financial analysis
experience, manages the Short Term Income Fund. Mr. Sosey has a BS in Finance
from the University of the Pacific and an MBA from the University of California,
Berkeley.
PERFORMANCE REVIEW
The WM SHORT TERM INCOME FUND (Class A shares) returned 5.70% (not adjusted for
sales charge) for the 12-month period ended October 31, 2000. Short-term
interest rates increased early in the period, but yields of securities with
maturities from two to five years fell during the second half of the period.
This contributed to the Fund's strong performance since bond prices move in the
opposite direction of yields. As of the close of the period, the Fund's 30-day
SEC yield was 5.75% for A shares and 5.35% for B shares.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
Lehman
Brothers
Mutual
Fund Fund Fund Short
(Class A (Class A shares; (1-5 yrs.)
shares; not adjusted for Investment
adjusted for maximum 3.5% Grade Inflation
sales charge) sales charge) Debt 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
Mar 12,779 12,332 13,858 11,386
12,832 12,383 13,924 11,469
12,777 12,329 13,838 11,469
Jun 12,775 12,328 13,875 11,469
12,831 12,382 13,857 11,504
12,835 12,386 13,875 11,531
Sep 12,969 12,515 14,006 11,586
12,987 12,532 14,043 11,628
13,045 12,589 14,081 11,614
Dec 99 13,048 12,591 14,074 11,614
13,051 12,594 14,045 11,642
13,109 12,651 14,153 11,711
Mar 13,171 12,710 14,235 11,807
13,174 12,713 14,201 11,814
13,235 12,772 14,235 11,821
Jun 13,414 12,945 14,456 11,890
13,477 13,006 14,576 11,911
13,542 13,068 14,729 11,918
Sep 13,664 13,186 14,885 11,932
Oct 00 13,728 13,248 14,900 11,970
(1) Index total returns were calculated from 10/31/93 to 10/31/00. The Lehman
Brothers Mutual Fund Short (1-5 years) 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). Past performance does not guarantee future
performance. The returns shown for the Fund assume reinvestment of all
dividends/distributions by the shareholder. For comparative purposes, the
benchmark's performance is shown as of the Fund's inception date not from
the inception date of the benchmark.
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 not allowed its fees to be reduced by credits.
(2) 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.
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(NOVEMBER 1, 1993)
Fund (not adjusted for sales charge) 5.70% 5.25% 4.63%
Fund (adjusted for the maximum 3.5%
sales charge) 2.13% 4.46% 4.10%
Lehman Brothers Mutual Fund Short
(1-5 yrs.) Investment Grade Debt
Index(1) 6.10% 6.06% 5.86%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(JULY 1, 1994)
Fund (not adjusted for contingent
deferred sales charge) 5.12% 4.45% 4.45%
Fund (adjusted for the maximum
contingent deferred sales
charge) 1.12% 4.45% 4.45%
Lehman Brothers Mutual Fund Short
(1-5 yrs.) Investment Grade Debt
Index(1) 6.10% 6.05% 6.81%(1)
A very strong domestic economy and the threat of upward pressures on prices
caused the Federal Reserve to increase short-term interest rates throughout the
first half of 2000. Rate increases on short-term Treasuries were quite
substantial, closing the period more than 100 basis points (or more than 1%)
higher than 12 months ago. As economic growth began to slow later in the period,
the bond market reacted, and yields began to come down in the intermediate-term
area, with a significant drop in both two- and five-year Treasuries. This
created a positive environment for fixed-income assets and contributed to the
Fund's strong overall performance.
PORTFOLIO composition(3)
AAA 52%
A 21%
BBB 15%
AA 12%
Within the fixed-income market, government, asset-backed, and mortgage-backed
securities performed well, outpacing corporate bonds with similar maturities.
Corporate bonds did not react as favorably to falling interest rates due to
credit concerns and the perception of a weaker domestic economy. We continued to
maintain a significant weighting in asset-backed securities (24%) during the
period. The secured nature of these bonds enabled their outperformance relative
to corporate issues. For example, a bond backed by a portion of the monthly
bills paid by PG&E customers was one of the largest positions in the Fund. This
bond performed very well during the period, outpacing standard PG&E corporate
bonds. The Fund's bond holdings of credit card backed securities also performed
well during the period.
The securities in the Fund have an average maturity of approximately 2.5 years,
which reduces interest rate risk compared to longer-term holdings. The average
rating of the Fund's bond holdings is AA, so the Fund continues to represent a
high-quality investment option for the risk-averse fixed-income investor.(3)
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
Overall, we managed the Fund in an effort to maximize liquidity of the issues
while maintaining a competitive yield by consolidating the number and size of
positions in the portfolio. We focused on agency-backed bonds rather than
Treasuries because they tend to be very liquid and normally generate higher
yields. To reduce risk, generate yield, and maintain the Fund's short duration
(a measure of price sensitivity to changes in interest rates), we balanced
holdings of bonds with five-year maturities with some very short-term
instruments. At the end of the period, the Fund had a 48% position in corporate
securities, which could be poised for strong performance in the coming months.
The total mortgage- and agency-backed positions represented 21% and 5% of the
Fund's assets, respectively.
The Fund continues to be focused in high-quality issues, but we were able to
gain additional yield by reducing AAA and BBB rated positions in favor of A and
AA rated securities.3 We did this at a favorable time in early 2000 and were
able to lock in strong yields while keeping overall risk levels constant.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
We may attempt to lock in profits on some of our asset-backed securities in the
coming period as corporate bond valuations begin to look more attractive.
Corporate positions did not perform as well as other sectors of the fixed-income
market during the summer and may be poised to benefit as a soft economic landing
unfolds. We are optimistic about the long-term outlook for bond markets.
Prospects for slower economic growth are quite positive, and weak long-term
inflationary pressures should help keep interest rates generally trending lower.
(3) Bond ratings provided by a combination of Standard & Poor's and Moody's.
Allocation percentages are based on total investment value of the portfolio
as of 10/31/00.
<PAGE>
U.S. GOVERNMENT
securities fund
PORTFOLIO MANAGER:
CRAIG SOSEY
WM ADVISORS, INC.
A fixed-income team led by senior portfolio manager Craig Sosey, who joined WM
Advisors, Inc. in 1998 and has over 15 years banking and financial analysis
experience, manages the U.S. Government Securities Fund. 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 WM U.S. GOVERNMENT SECURITIES FUND (Class A shares) returned 6.65% (not
adjusted for sales charge) for the 12-month period ended October 31, 2000.
Short-term interest rates increased early in the period, but yields of
intermediate-term government securities fell during the second half of the
period. This contributed to the Fund's strong performance since bond prices move
in the opposite direction of yields. Long-term results have been favorable as
the Class A shares have posted an average annual return of 7.21% (not adjusted
for sales charge) for the past 10 years. As of the close of the period, the
Fund's 30-day SEC yield was 5.64% for A shares and 5.20% for B shares.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
Fund Fund
(Class A (Class A shares; Lehman
shares; not adjusted for Brothers
adjusted for maximum 4.5% Government Inflation
sales charge) sales charge) Bond Index(1) (CPI)(1)
------------- ---------------- ------------- ---------
Oct 90 10,000 9,550 10,000 10,000
10,209 9,750 10,222 10,023
Dec 90 10,361 9,895 10,380 10,077
10,483 10,011 10,492 10,115
10,549 10,074 10,551 10,208
10,619 10,141 10,605 10,294
10,710 10,228 10,722 10,356
10,792 10,306 10,764 10,379
Jun 10,788 10,303 10,749 10,379
10,923 10,432 10,876 10,441
11,134 10,633 11,129 10,457
11,355 10,844 11,362 10,472
11,493 10,976 11,462 10,488
11,596 11,074 11,577 10,520
Dec 91 11,886 11,351 11,972 10,550
11,681 11,155 11,785 10,566
11,785 11,255 11,831 10,597
11,722 11,195 11,762 10,643
11,815 11,283 11,837 10,659
12,023 11,482 12,056 10,690
Jun 12,175 11,627 12,228 10,698
12,339 11,783 12,536 10,714
12,456 11,896 12,653 10,752
12,574 12,009 12,831 10,807
12,424 11,865 12,646 10,822
12,411 11,853 12,625 10,837
Dec 92 12,613 12,046 12,837 10,876
12,840 12,263 13,110 10,899
12,996 12,411 13,373 10,930
13,045 12,458 13,417 10,960
13,129 12,538 13,520 10,999
13,162 12,570 13,505 11,014
Jun 13,379 12,777 13,805 11,006
13,447 12,842 13,889 11,060
13,638 13,024 14,199 11,099
13,645 13,031 14,253 11,138
13,701 13,084 14,307 11,169
13,555 12,945 14,150 11,185
Dec 93 13,638 13,024 14,205 11,200
13,805 13,184 14,399 11,200
13,527 12,919 14,094 11,232
13,135 12,544 13,777 11,255
12,983 12,399 13,668 11,301
12,998 12,414 13,650 11,309
Jun 12,923 12,341 13,619 11,309
13,186 12,592 13,870 11,340
13,188 12,594 13,872 11,378
12,927 12,346 13,677 11,417
12,865 12,286 13,667 11,433
12,843 12,265 13,643 11,441
Dec 94 12,968 12,384 13,726 11,480
13,267 12,670 13,981 11,511
13,609 12,997 14,282 11,557
13,709 13,092 14,372 11,588
13,903 13,277 14,560 11,596
14,511 13,858 15,147 11,611
Jun 14,597 13,940 15,263 11,611
14,516 13,863 15,207 11,658
14,701 14,039 15,385 11,704
14,843 14,175 15,532 11,743
15,057 14,379 15,769 11,782
15,272 14,585 16,015 11,805
Dec 95 15,489 14,792 16,242 11,829
15,578 14,877 16,341 11,829
15,221 14,536 16,008 11,860
15,066 14,388 15,875 11,883
14,967 14,294 15,773 11,923
14,926 14,254 15,746 11,914
Jun 15,118 14,438 15,950 11,906
15,150 14,469 15,989 11,976
15,094 14,415 15,954 12,015
15,366 14,674 16,219 12,077
15,744 15,035 16,576 12,124
16,094 15,370 16,864 12,147
Dec 96 15,874 15,159 16,692 12,154
15,907 15,192 16,711 12,178
15,925 15,208 16,734 12,201
15,699 14,992 16,557 12,240
15,979 15,260 16,795 12,279
16,124 15,398 16,939 12,302
Jun 16,329 15,594 17,129 12,302
16,832 16,074 17,616 12,342
16,630 15,882 17,441 12,380
16,901 16,140 17,703 12,411
17,188 16,415 18,009 12,426
17,254 16,477 18,101 12,418
Dec 97 17,449 16,663 18,291 12,433
17,642 16,848 18,565 12,457
17,625 16,832 18,515 12,480
17,665 16,870 18,567 12,504
17,771 16,971 18,651 12,527
17,928 17,121 18,843 12,549
Jun 18,084 17,270 19,058 12,564
18,141 17,325 19,086 12,579
18,365 17,538 19,582 12,594
18,605 17,768 20,111 12,610
18,560 17,725 20,043 12,640
18,670 17,830 20,049 12,640
Dec 98 18,707 17,865 20,093 12,633
18,814 17,967 20,209 12,663
18,663 17,824 19,728 12,679
18,770 17,925 19,805 12,717
18,822 17,975 19,851 12,810
18,702 17,860 19,676 12,810
Jun 18,578 17,742 19,637 12,810
18,489 17,657 19,607 12,848
18,473 17,641 19,607 12,879
18,744 17,901 19,766 12,941
18,819 17,972 19,798 12,964
18,819 17,972 19,770 12,972
Dec 99 18,733 17,890 19,642 12,972
18,628 17,789 19,669 13,003
18,833 17,985 19,948 13,080
19,019 18,163 20,300 13,188
19,025 18,169 20,243 13,195
19,011 18,156 20,255 13,203
Jun 19,388 18,515 20,615 13,280
19,506 18,628 20,815 13,303
19,756 18,867 21,123 13,311
19,949 19,052 21,183 13,326
Oct 00 20,069 19,166 21,386 13,369
(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). The Lehman Brothers 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. For
comparative purposes, the benchmark's performance is shown as of the Fund's
inception date not from the inception date of the benchmark.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian not allowed its fees to be
reduced by credits.
(2) 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.
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for sales charge) 6.65% 5.91% 7.21%
Fund (adjusted for the maximum 4.5%
sales charge) 1.80% 4.95% 6.72%
Lehman Brothers Government Bond
Index(1) 8.02% 6.28% 7.90%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(MARCH 30, 1994)
Fund (not adjusted for contingent
deferred sales charge) 5.91% 5.04% 5.77%
Fund (adjusted for the maximum
contingent deferred sales charge) 0.91% 4.87% 5.77%
Lehman Brothers Government Bond
Index(1) 8.02% 6.28% 6.91%(1)
A very strong domestic economy and the threat of upward pressures on prices
caused the Federal Reserve to increase short-term interest rates throughout the
first half of 2000. Rate increases on short-term Treasuries were quite
substantial, closing the period more than 100 basis points (or more than 1%)
higher than 12 months ago. As economic growth began to slow later in the period,
the bond market reacted and yields began to come down in the intermediate-term
area. For the 12-month period, Treasury yields of 5-, 10-, and 30-year
maturities fell slightly, while shorter-term bond yields increased and closed
the period higher than longer-term yields. Mortgage-backed securities performed
reasonably well during the period, outpacing results for corporate bonds. This
created a positive environment for the Fund and contributed to its strong
overall performance.
PORTFOLIO composition(3)
GNMA 31%
FNMA 26%
FHLMC 18%
CMOs 13%
AGENCY OBLIGATIONS 7%
TREASURIES 3%
CASH EQUIVALENTS 2%
Within the fixed-income market, Treasury and mortgage-backed securities
performed well, outpacing corporate bonds with similar maturities. Corporate
bonds did not react as favorably to falling interest rates due to credit
concerns and the perception of a weaker domestic economy. We continued to focus
the majority of the Fund in mortgage-backed securities. Within this area, GNMA
securities were the strongest performers as both FNMA and FHLMC bonds
experienced a brief period of underperformance. During the period, the implied
guarantee and corresponding credit and leverage benefits of FNMA- and
FHLMC-backed bonds came into question, and GNMA securities benefited. An October
Congressional agreement ended the uncertainty, but GNMA securities still closed
the period with slight outperformance. The lack of supply of Treasury bonds also
impacted fixed-income performance during the period. With the government
repurchasing bonds and not issuing new debt, Treasury issuance was down
significantly relative to prior periods. This also drove additional investors
into GNMA bonds, which are backed by the "full faith and credit" of the U.S.
Government.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We slightly increased the Fund's exposure to GNMA securities, which represented
the best-performing segment of the mortgage market. We focused bond purchases on
securities that are less susceptible to prepayment, with a combination of
seasoned bonds of various coupons. These bonds have been around for some time
and are therefore less likely to prepay due to refinancing, which occurs as
mortgage rates fall. Prepayments can be negative for mortgage-backed securities
because the influx of cash must be reinvested at lower rates. Our focus on bonds
with less prepayment risk should help with the Fund's total return over a
long-term horizon.
The securities in the Fund have an average maturity of approximately 7.3 years
and a duration (measurement of the Fund's sensitivity to changes in interest
rates) of 4.5 years, which reduces interest rate risk compared to long-term
holdings. The average rating of the Fund's bond holdings is AAA equivalent, so
the Fund continues to represent a high-quality investment option for the
fixed-income investor.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
We are optimistic about the long-term outlook for bond markets. Prospects for
slower economic growth are quite positive, and weak long-term inflationary
pressures should help keep interest rates generally trending lower. It appears
that the economy will continue to slow as the effects of the interest rate
increases and high oil prices continue to work their way through the domestic
markets. A slow growth environment could affect the mortgage market, as lower
rates could spur refinancing of higher coupon notes. Because of this outlook, we
will continue to focus our purchases on bonds that we feel have a lower degree
of prepayment risk.
(3) Allocation percentages are based on total investment value of the portfolio
as of 10/31/00.
<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 15 years of asset management experience
and has been with WM Advisors, Inc. for more than eight years. Mr. Pokrzywinski
is a Chartered Financial Analyst and holds a Business Degree from the University
of Wisconsin.
PERFORMANCE REVIEW
The WM INCOME FUND (Class A shares) returned 6.16% (not adjusted for sales
charge) for the 12-month period ended October 31, 2000. While interest rates
fell throughout the second half of the period, corporate bonds slightly
underperformed other areas of the fixed-income market. Long-term results have
been favorable, as the Fund has averaged 8.05% per year (not adjusted for sales
charge) for the past 10 years. The yield of the Fund remains very attractive --
providing a strong income stream. As of the close of the period, the Fund's
30-day SEC Yield was 7.05% for A shares and 6.65% for B shares.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
-------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
Fund Fund Lehman
(Class A (Class A shares; Brothers
shares; not adjusted for Government/
adjusted for maximum 4.5% Credit Inflation
sales charge) sales charge) Bond Index(1) (CPI)(1)
------------- ---------------- ------------- ---------
Oct 90 10,000 9,550 10,000 10,000
10,183 9,725 10,218 10,023
Dec 90 10,311 9,847 10,372 10,077
10,414 9,946 10,488 10,115
10,545 10,071 10,579 10,208
10,672 10,192 10,652 10,294
10,812 10,326 10,774 10,356
10,859 10,370 10,825 10,379
Jun 10,870 10,381 10,813 10,379
10,993 10,499 10,949 10,441
11,224 10,719 11,201 10,457
11,461 10,945 11,435 10,472
11,641 11,117 11,537 10,488
11,739 11,210 11,652 10,520
Dec 91 12,094 11,549 12,045 10,550
11,939 11,402 11,867 10,566
11,997 11,457 11,930 10,597
11,961 11,423 11,864 10,643
12,046 11,504 11,935 10,659
12,245 11,694 12,167 10,690
Jun 12,457 11,897 12,345 10,698
12,713 12,141 12,662 10,714
12,872 12,293 12,774 10,752
13,016 12,431 12,948 10,807
12,808 12,232 12,750 10,822
12,781 12,206 12,738 10,837
Dec 92 12,986 12,402 12,957 10,876
13,250 12,654 13,240 10,899
13,509 12,901 13,515 10,930
13,585 12,974 13,561 10,960
13,690 13,074 13,666 10,999
13,722 13,105 13,659 11,014
Jun 13,932 13,305 13,969 11,006
14,039 13,407 14,058 11,060
14,341 13,696 14,382 11,099
14,447 13,797 14,432 11,138
14,524 13,871 14,491 11,169
14,311 13,667 14,327 11,185
Dec 93 14,391 13,744 14,390 11,200
14,636 13,978 14,606 11,200
14,272 13,630 14,288 11,232
13,823 13,201 13,938 11,255
13,694 13,078 13,822 11,301
13,645 13,031 13,797 11,309
Jun 13,627 13,013 13,766 11,309
13,883 13,258 14,041 11,340
13,900 13,274 14,046 11,378
13,658 13,044 13,834 11,417
13,610 12,997 13,819 11,433
13,593 12,981 13,794 11,441
Dec 94 13,697 13,081 13,885 11,480
13,945 13,318 14,152 11,511
14,288 13,645 14,480 11,557
14,406 13,758 14,577 11,588
14,656 13,996 14,780 11,596
15,434 14,739 15,399 11,611
Jun 15,565 14,864 15,522 11,611
15,459 14,763 15,462 11,658
15,681 14,975 15,660 11,704
15,885 15,170 15,819 11,743
16,092 15,368 16,052 11,782
16,354 15,618 16,317 11,805
Dec 95 16,653 15,903 16,557 11,829
16,773 16,018 16,659 11,829
16,326 15,591 16,306 11,860
16,185 15,456 16,169 11,883
16,074 15,350 16,058 11,923
16,055 15,332 16,030 11,914
Jun 16,250 15,519 16,245 11,906
16,284 15,551 16,283 11,976
16,283 15,550 16,243 12,015
16,595 15,848 16,533 12,077
17,041 16,274 16,918 12,124
17,433 16,648 17,229 12,147
Dec 96 17,229 16,454 17,038 12,154
17,284 16,506 17,058 12,178
17,314 16,535 17,094 12,201
17,088 16,319 16,891 12,240
17,334 16,554 17,137 12,279
17,570 16,780 17,297 12,302
Jun 17,877 17,072 17,504 12,302
18,538 17,704 18,040 12,342
18,287 17,464 17,838 12,380
18,600 17,763 18,118 12,411
18,898 18,047 18,408 12,426
18,977 18,123 18,505 12,418
Dec 97 19,040 18,183 18,700 12,433
19,221 18,356 18,963 12,457
19,296 18,427 18,925 12,480
19,444 18,569 18,984 12,504
19,508 18,630 19,079 12,527
19,740 18,852 19,283 12,549
Jun 19,890 18,995 19,480 12,564
19,861 18,967 19,495 12,579
19,938 19,041 19,875 12,594
20,299 19,385 20,444 12,610
20,031 19,130 20,299 12,640
20,372 19,455 20,421 12,640
Dec 98 20,400 19,482 20,470 12,633
20,602 19,675 20,615 12,663
20,124 19,218 20,124 12,679
20,235 19,324 20,225 12,717
20,475 19,554 20,275 12,810
20,306 19,392 20,067 12,810
20,168 19,260 19,948 12,848
20,161 19,254 19,932 12,879
20,353 19,437 20,112 12,941
20,430 19,511 20,164 12,964
20,436 19,517 20,152 12,972
Dec 99 20,422 19,503 20,029 12,972
20,451 19,530 20,023 13,003
20,655 19,726 20,273 13,080
20,913 19,972 20,565 13,188
20,796 19,861 20,465 13,195
20,636 19,708 20,446 13,203
Jun 21,136 20,185 20,863 13,280
21,334 20,374 21,084 13,303
21,772 20,792 21,382 13,311
21,752 20,773 21,463 13,326
Oct 00 21,689 20,713 21,598 13,369
(1) The Lehman Brothers Government/ Credit 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). The Lehman Brothers
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. For comparative purposes, the
benchmark's performance is shown as of the Fund's inception date not from
the inception date of the benchmark.
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 not allowed its
fees to be reduced by credits.
(2) 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.
-------------------------------------------------------------------------------
Average Annual Total Returns as of 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for sales charge) 6.16% 6.15% 8.05%
Fund (adjusted for the maximum 4.5%
sales charge) 1.42% 5.19% 7.56%
Lehman Brothers Government/Credit Bond
Index(1) 7.11% 6.12% 8.00%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(MARCH 30, 1994)
Fund (not adjusted for contingent
deferred sales charge) 5.53% 5.32% 6.21%
Fund (adjusted for the maximum
contingent deferred sales charge) 0.57% 5.17% 6.21%
Lehman Brothers Government/Credit
Bond Index(1) 7.11% 6.12% 6.88%(1)
Interest rates generally rose during the first half of the reporting period,
contributing to generally weak performance (bond prices move in the opposite
direction of interest rates) in fixed-income markets. This trend reversed in the
second half as rates fell in anticipation of a slowdown in domestic economic
activity. The Federal Reserve raised rates early in the period with the latest
hike occurring in May. The effects of the rate increases seem to have taken hold
and economic growth is slowing, especially in housing and government spending.
Treasury rates fell much more dramatically than corporate bond yields, allowing
most government bonds to outperform corporate bonds in recent months. In fact,
the yield differential between Treasuries and corporate bonds is at its highest
level since the Russian crisis in 1998 spurred a credit crunch in the
fixed-income markets. The reasons for the wide gap in yields are twofold. First,
with a slowing economy and large levels of outstanding debt, there are concerns
for credit quality deterioration of corporate issuers. Second, there has been a
significant reduction in the supply of Treasury bonds that has pushed yields
down below those of corporate bonds.
PORTFOLIO composition(3)
CORPORATE BONDS 57%
MORTGAGE-BACKED 17%
FOREIGN BONDS 9%
TREASURIES 8%
AGENCY-BACKED 7%
CMOs 1%
CASH EQUIVALENTS 1%
With the exception of lower-rated securities, corporate bonds posted positive
performance for the period. The high-yield market was most affected by the
economic slowdown and uncertainty. Although we reduced the Fund's weighting in
this area early in the period, we have recently been adding to the position, and
it now represents about 17% of the Fund.3 We feel that the market has already
discounted the possible problems in the corporate area, and these bonds may be
poised for a period of strong performance. Given the possibilities of an
economic soft landing and reductions in interest rates as we move into 2001, the
wide yield disparity between corporate and Treasury bonds could narrow, which
would benefit the corporate sector. We have therefore recently added to our
large positions in investment-grade corporate bonds.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
We maintained the Fund's duration (a measurement of the sensitivity to changes
in interest rates) at slightly longer than average levels. This benefited
performance when interest rates dropped in recent months. Another positive
factor for Fund performance was our reduction of high-yield corporate bonds in
favor of Treasury securities. This provided strong results during the summer,
but we have increased the corporate and high-yield areas recently. We also
increased positions in agency-backed bonds earlier in the period and were able
to capture some strong performance. The Fund benefited from good bond sector
selection and positions in deeply discounted convertible bonds. We did have some
holdings that underperformed the market. One example is Laidlaw, the parent of
Greyhound Bus Lines, which underwent a major restructuring that negatively
affected its bond performance.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
It seems likely that the current economic slowdown will result in a soft landing
that the Federal Reserve has been seeking. With low levels of inflation, the Fed
may not be forced to raise rates to further slow the economy--allowing for slow
growth rather than a stoppage in growth or a recession. Other positive factors
also exist in the economy. Banks are now more capitalized and should be able to
avoid a severe credit crunch; also, the fiscal situation has strengthened, with
surpluses allowing for more flexibility and responsiveness. We do have some
concern over the amount of both business and consumer debt in the economy. This
could not only lead to problems if the domestic picture worsens, but it also
could exacerbate any credit problems in the financial markets.
Overall, we continue to anticipate a long-term downward trend in interest rates
due to lower global inflation stemming from demographic forces, strong
productivity growth, and growing global capacity and competition. This points to
a very positive long-term environment for fixed-income assets.
(3) There may be additional risks associated with lower-rated securities.
Allocation percentages are based on total investment value of the portfolio
as of 10/31/00. Differences from financial statements are a result of a
consolidation of industries or sectors.
<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 15 years of asset management experience
and has been with WM Advisors, Inc. for more than eight years. Mr. Pokrzywinski
is a Chartered Financial Analyst and holds a Business Degree from the University
of Wisconsin.
PERFORMANCE REVIEW
The WM HIGH YIELD FUND (Class A shares) returned 5.28% (not adjusted for sales
charge) for the 12-month period ended October 31, 2000. While interest rates
fell throughout the second half of the period, high-yield corporate bonds under-
performed other areas of the fixed-income market. However, the Fund was able to
significantly outperform its benchmark index, which returned -1.61% for the
period. The yield of the Fund remains very attractive, providing a strong stream
of income. At the end of the period, the Fund's 30-day SEC Yield was 9.49% for A
shares and 9.18% for B shares.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
Fund Fund
(Class A (Class A shares; Lehman
shares; not adjusted for the Brothers
adjusted for maximum 4.5% High Yield Inflation
sales charge) sales charge) Index(1) (CPI)(1)
------------- ------------------ ------------- ---------
Apr 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 10,259 9,798 10,226 10,192
May 10,269 9,807 10,226 10,054
Jun 10,366 9,900 10,226 10,033
Jul 10,499 10,026 10,257 10,073
Aug 10,397 9,929 10,281 9,961
Sep 10,456 9,986 10,331 9,889
Oct 10,451 9,981 10,368 9,824
Nov 10,628 10,149 10,355 9,940
Dec 99 10,932 10,344 10,355 10,051
Jan 10,897 10,406 10,380 10,008
Feb 10,981 10,487 10,441 10,027
Mar 11,051 10,554 10,528 9,817
Apr 11,144 10,642 10,534 9,832
May 10,949 10,456 10,540 9,731
Jun 11,052 10,554 10,601 9,930
Jul 11,237 10,732 10,620 10,005
Aug 11,353 10,842 10,626 10,073
Sep 11,276 10,768 10,638 9,985
Oct 00 11,004 10,509 10,672 9,666
(1) Index total returns were calculated from 4/30/98 to 10/31/00. The Lehman
Brothers High Yield Index includes 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). Past performance does not guarantee future
performance. The returns shown for the Fund assume reinvestment of all
dividends/distributions by the shareholder. For comparative purposes, the
benchmark's performance is shown as of the Fund's inception date not from
the inception date of the benchmark.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian not allowed its fees to be
reduced by credits.
(2) 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.
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 Year Since Inception
(April 8, 1998)
Fund (not adjusted for sales charge) 5.28% 3.79%
Fund (adjusted for the maximum 4.5% sales charge) 0.54% 1.95%
Lehman Brothers high yield index1 -1.61% -1.35%(1)
CLASS B SHARES 1 Year Since Inception
(May 5, 1998)
Fund (not adjusted for contingent deferred
sales charge) 4.46% 3.38%
Fund (adjusted for the maximum contingent
deferred sales charge) -0.30% 2.40%
Lehman Brothers high yield index(1) -1.61% -1.35%(1)
Economic strength supported strong Fund performance during the first half of the
period, but this trend reversed after the Federal Reserve enacted a series of
short-term interest rate hikes. The desired effects of the rate increases seem
to have taken hold and economic growth is slowing, especially in the areas of
housing and government spending. Treasury rates fell much more dramatically
compared to corporate bond yields, which caused underperformance in the
high-yield corporate area in recent months. In fact, the yield differential
between Treasuries and corporate bonds is at its highest level since the Russian
crisis in 1998 spurred a credit crunch in the fixed-income markets. The reasons
for the wide gap in yields are twofold. First, with a slowing economy and large
levels of outstanding debt, there are concerns over default rates and credit
quality deterioration of lower-rated issuers. Second, there has been a
significant reduction in the supply of Treasury bonds that has pushed yields
down more than corporate bonds. The high-yield market has also been affected by
the blowup in many telecommunications firms, with these companies representing a
significant portion of the overall market.
PORTFOLIO composition(3)
INFORMATION TECHNOLOGY BONDS 22%
TELECOMMUNICATIONS/MEDIA 14%
HEALTH CARE BONDS 12%
FOREIGN BONDS 11%
EQUITY SECURITIES 11%
GAMING 11%
OTHER CORPORATE BONDS 7%
CASH EQUIVALENTS 7%
TREASURY NOTES 5%
However, we feel that the market has already discounted the majority of possible
problems in the corporate area, and these bonds may be poised for a period of
strong relative performance. The currently wide yield differential of corporate
and Treasury bonds with similar maturities may narrow, driving strong
performance in the higher-yielding corporate areas. This situation is supported
by the prospects of an economic soft landing and reductions in interest rates as
we move into 2001.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
The Fund was able to realize strong gains from its convertible bonds early in
the period, which contributed to the outperformance relative to the Fund's
benchmark. Currently, 30% of the Fund is invested in convertible bonds, as we
were able to find some great values in reputable firms that went through a
period of weak performance. We avoided the telecommunication sector for much of
the period, and our under- weighting in this area also contributed to strong
performance relative to the benchmark. Recently, we have taken advantage of some
attractive yields and prices in the technology sector, although we remain
underweighted in telecommunication bonds. The bonds of companies such as Adaptec
and Network Associates were reduced as a percentage of the portfolio and then
repurchased at significantly lower valuations.
We maintained secular industry overweightings in technology, finance, and health
care, which we added to throughout the period. Positions in health care REITs
contributed to overall performance as holdings, such as Healthcare Properties
and Nationwide Health, provided strong results. We also added to positions in
gaming firms, which came into favor late in the period. The Fund missed out on
some strong short-term performance in the energy area, but we do not view this
sector as a long-term performer.
The Fund was negatively affected by the poor performance of some of its
holdings. One example is Equimar, a shipping company, which was squeezed by
industry overcapacity and suffered as a result. Loral Space & Communications
also performed poorly during the period, but we continue to hold the bond and
like the company's prospects moving forward. We repositioned our foreign
holdings out of Asia, where we were able to realize some gains, and into a more
secure position in Mexican government bonds.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
It seems likely that a soft landing will be the outcome of the current economic
slowdown. With low levels of inflation, the Federal Reserve may not be forced to
raise rates to further slow the economy -- allowing for slow growth rather than
a stoppage in growth or a recession. Other positive factors also currently exist
in the economy. Banks are becoming more capitalized and should be able to avoid
a severe credit crunch; also, the fiscal situation has strengthened, with
surpluses allowing for more flexibility and responsiveness. We do have some
concern over the amount of business and consumer debt in the system. This could
not only lead to problems if the domestic picture worsens, but it also could
exacerbate any credit problems in the economy. Because of general market
conditions, there are a number of very good companies whose security prices have
moved down significantly. We will look to purchase companies that will provide
attractive income while potentially benefiting from capital appreciation once
the market environment improves.
(3) Allocation percentages are based on total investment value of the portfolio
as of 10/31/00. There may be additional risks associated with foreign
securities. There are also additional credit and default risks associated
with lower-rated securities.
<PAGE>
TAX-EXEMPT BOND
fund
PORTFOLIO MANAGER:
THOMAS BYRON
VAN KAMPEN INVESTMENTS
The Fund is managed by Thomas Byron of Van Kampen Investments. Mr. Byron has
been with Van Kampen Investments since 1981 and currently serves as Vice
President. He received his BS in Finance from Marquette University and his MBA
from DePaul University. Van Kampen has had management responsibilities for the
Fund since January 1999.
PERFORMANCE REVIEW
The WM TAX-EXEMPT BOND FUND (Class A shares) returned 7.52% (not adjusted for
sales charge) for the 12-month period ended October 31, 2000. Long-term results
have also been very favorable, as the Fund has averaged 6.46% per year for the
past ten years (not adjusted for sales charge). As of October 31, 2000, the
Fund's 30-day SEC Yield was 4.97% for A shares and 4.47% for B shares. On a
tax-equivalent basis, the yield was 8.23% for A shares and 7.40% for
B shares.(4)
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
Fund Fund Lehman
(Class A (Class A shares; Brothers
shares; not adjusted for Municipal
adjusted for maximum 4.5% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
------------- ------------------ --------- ---------
Oct 90 10,000 9,550 10,000 10,000
10,253 9,791 10,201 10,023
Dec 90 10,282 9,819 10,246 10,077
10,392 9,924 10,383 10,115
10,457 9,986 10,474 10,208
10,484 10,012 10,478 10,294
10,568 10,093 10,617 10,356
10,669 10,189 10,712 10,379
Jun 10,649 10,170 10,701 10,379
10,809 10,322 10,831 10,441
10,940 10,448 10,974 10,457
11,085 10,586 11,117 10,472
11,187 10,683 11,217 10,488
11,182 10,678 11,248 10,520
Dec 91 11,450 10,935 11,490 10,550
11,460 10,944 11,517 10,566
11,434 10,920 11,520 10,597
11,443 10,928 11,525 10,643
11,543 11,024 11,627 10,659
11,677 11,152 11,765 10,690
Jun 11,889 11,354 11,962 10,698
12,357 11,801 12,321 10,714
12,157 11,610 12,200 10,752
12,164 11,617 12,280 10,807
11,995 11,455 12,159 10,822
12,292 11,739 12,377 10,837
Dec 92 12,481 11,920 12,503 10,876
12,621 12,053 12,648 10,899
13,085 12,496 13,106 10,930
12,978 12,394 12,967 10,960
13,100 12,510 13,098 10,999
13,139 12,548 13,172 11,014
Jun 13,430 12,825 13,391 11,006
13,385 12,783 13,409 11,060
13,730 13,112 13,688 11,099
13,920 13,294 13,844 11,138
13,959 13,331 13,870 11,169
13,739 13,121 13,748 11,185
Dec 93 14,046 13,414 14,038 11,200
14,208 13,569 14,198 11,200
13,786 13,166 13,830 11,232
13,157 12,565 13,268 11,255
13,214 12,619 13,380 11,301
13,344 12,743 13,497 11,309
Jun 13,240 12,645 13,414 11,309
13,497 12,890 13,660 11,340
13,521 12,912 13,708 11,378
13,272 12,674 13,506 11,417
13,023 12,437 13,266 11,433
12,754 12,180 13,026 11,441
Dec 94 13,128 12,538 13,312 11,480
13,540 12,931 13,693 11,511
13,985 13,356 14,091 11,557
14,085 13,451 14,254 11,588
14,089 13,455 14,271 11,596
14,580 13,924 14,726 11,611
Jun 14,432 13,783 14,598 11,611
14,549 13,894 14,736 11,658
14,686 14,025 14,924 11,704
14,764 14,100 15,018 11,743
15,017 14,341 15,235 11,782
15,327 14,637 15,488 11,805
Dec 95 15,525 14,826 15,637 11,829
15,607 14,904 15,756 11,829
15,452 14,756 15,649 11,860
15,203 14,519 15,448 11,883
15,108 14,428 15,405 11,923
15,111 14,431 15,399 11,914
Jun 15,250 14,564 15,567 11,906
15,391 14,699 15,708 11,976
15,394 14,702 15,705 12,015
15,577 14,876 15,925 12,077
15,723 15,015 16,104 12,124
15,989 15,270 16,398 12,147
Dec 96 15,916 15,200 16,329 12,154
15,923 15,206 16,360 12,178
16,065 15,342 16,510 12,201
15,845 15,132 16,291 12,240
15,952 15,234 16,427 12,279
16,186 15,457 16,674 12,302
Jun 16,334 15,599 16,851 12,302
16,838 16,081 17,318 12,342
16,611 15,863 17,155 12,380
16,779 16,024 17,360 12,411
16,888 16,128 17,471 12,426
16,976 16,212 17,574 12,418
Dec 97 17,285 16,507 17,830 12,433
17,441 16,656 18,014 12,457
17,397 16,614 18,019 12,480
17,407 16,624 18,036 12,504
17,287 16,509 17,954 12,527
17,538 16,749 18,238 12,549
Jun 17,613 16,821 18,309 12,564
17,626 16,833 18,355 12,579
17,924 17,117 18,638 12,594
18,110 17,295 18,871 12,610
18,076 17,262 18,871 12,640
18,106 17,292 18,937 12,640
Dec 98 18,163 17,345 18,984 12,633
18,375 17,548 19,210 12,663
18,291 17,467 19,125 12,679
18,280 17,457 19,152 12,717
18,334 17,509 19,200 12,810
18,186 17,367 19,089 12,810
Jun 17,848 17,044 18,814 12,810
17,880 17,075 18,882 12,848
17,681 16,886 18,731 12,879
17,619 16,827 18,738 12,941
17,396 16,613 18,536 12,964
17,497 16,709 18,732 12,972
Dec 99 17,364 16,582 18,592 12,972
17,232 16,456 18,512 13,003
17,523 16,734 18,726 13,080
17,891 17,086 19,137 13,188
17,755 16,956 19,024 13,195
17,645 16,851 18,925 13,203
Jun 18,111 17,296 19,426 13,280
18,362 17,536 19,696 13,303
18,663 17,824 20,000 13,311
18,497 17,665 19,896 13,326
Oct 00 18,703 17,861 20,112 13,369
(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). The Lehman Brothers
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. For comparative purposes, the
benchmark's performance is shown as of the Fund's inception date not from
the inception date of the benchmark.
The Fund's performance would have been lower had the Fund's custodian not
allowed its fees to be reduced by credits.
(2) 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.
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for sales charge) 7.52% 4.49% 6.46%
Fund (adjusted for the maximum 4.5%
sales charge) 2.67% 3.52% 5.97%
Lehman Brothers Municipal Bond Index(1) 8.51% 5.71% 7.24%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(MARCH 30, 1994)
Fund (not adjusted for contingent
deferred sales charge) 6.73% 3.65% 4.53%
Fund (adjusted for the maximum
contingent deferred sales charge) 1.73% 3.48% 4.53%
Lehman Brothers Municipal Bond Index(1) 8.51% 5.71% 6.52%(1)
The most significant factor affecting bond markets during the past 12 months was
rising interest rates, particularly for the short end of the maturity spectrum.
This was the result of the Federal Reserve Board's commitment to keeping
inflation in check. As the economy showed signs of overheating, the Fed reacted
by notching up short-term interest rates. The Fed increased short-term rates on
four occasions during the reporting period, with the latest hike occurring in
May.
PORTFOLIO composition(3)
AAA 56%
AA 26%
BBB 8%
A 7%
NOT RATED/OTHER 3%
The strength of the economy and the Fed's ensuing rate hikes caused interest
rates to rise across the board for the first half of the reporting period. In
the spring of 2000, bond markets rallied, as investors began to anticipate the
end of the Fed's tightening cycle. By the end of October, short-term rates
remained high, but interest rates in the intermediate- to long-term maturity
market segments actually declined below the levels found at the beginning of the
reporting period.
After the steady increase in short-term rates for most of the period, we have
seen a more stable rate environment in recent months. The Fed left target
lending rates unchanged in response to slower growth, a more efficient workforce
output, and moderate inflation. The inflation rate, as measured by the Consumer
Price Index, peaked at 3.8% in March but then dropped back below the 3% level.
Supply in the municipal bond market was significantly lower compared to a year
ago, as higher interest rates have limited the ability for municipalities to
retire existing debt. At the same time, strong economic activity has allowed
many municipalities to generate a budget surplus, enabling them to cover
spending costs that normally would have required municipal bond financing.
Because demand has held up, the lack of new issues in the primary market helped
support bond prices. However, the somewhat limited selection of available
securities forced us to be very selective in choosing new bonds for the Fund's
portfolio. In many cases, we found attractive values in the secondary market,
buying and selling bonds that have been in the market for a while.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
The overall composition of the Fund changed somewhat as the percentage of AAA
bonds increased to 56% from 43% a year ago. The overall credit quality remained
high, with more than 88% of its assets A rated or better, compared with 83% 12
months ago.3 Sector composition also changed, as we reduced the position in
Industrial Revenue bonds. We also slightly decreased assets in the hospital
sector. We increased our general-purpose bond holdings as well as both the
public building and single-family housing bond holdings. These changes increased
the quality of the portfolio, reducing risk and positioning the Fund to perform
well going forward.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
The prospects for the municipal bond market will
be closely tied to the U.S. economy and the Fed's reaction to key economic
indicators. While interest rates have been fairly steady in recent months, the
Federal Reserve's next move more than likely hinges on the direction of price
and wage pressures. While inflation appears to be under control, the Fed will be
watching economic growth statistics, the labor market, and prices of key
commodities such as crude oil. Consequently, we will maintain a neutral stance
with respect to the portfolio's duration (a measure of price sensitivity to
interest rate changes) in the near term.
In November 2000, the WM FLORIDA INSURED MUNICIPAL FUND will be merged into the
WM TAX-EXEMPT BOND FUND. This merger should increase the overall credit quality
of the portfolio, since 89% of the FLORIDA INSURED MUNICIPAL FUND'S assets are
AAA rated.3 We positioned the Fund for strong relative performance by
diversifying the credit and sector risks in the portfolio. We will continue to
search for securities that could enhance the Fund's long-term performance while
offering strong relative value.
(3) Bond ratings provided by a combination of Standard & Poor's and Moody's.
Allocation percentages are based on total investment value of the portfolio
as of 10/31/00.
(4) 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>
CALIFORNIA
municipal fund
PORTFOLIO MANAGER:
JOSEPH PIRARO
VAN KAMPEN INVESTMENTS
Mr. Piraro joined Van Kampen Investments in 1992 and serves as Vice President
and portfolio manager. He has had primary portfolio management responsibility
for the California Municipal Fund since May 1992.
PERFORMANCE REVIEW
The WM CALIFORNIA MUNICIPAL FUND (Class A shares) returned 9.33% (not adjusted
for sales charge) for the 12-month period ended October 31, 2000. Long-term
results have also been very favorable, as the Fund has averaged 6.71% per year
for the past ten years (not adjusted for sales charge). As of October 31, 2000,
the Fund's 30-day SEC Yield was 4.82% for A shares and 4.32% for B shares; on a
tax equivalent basis, the yield was 8.80% for A shares and 7.89% for
B shares.(4)
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
Fund Fund Lehman
(Class A (Class A shares; Brothers
shares; not adjusted for Municipal
adjusted fo the maximum 4.5% Bond Inflation
sales charge) sales charge) Index(1) (CPI)(1)
------------- ------------------ --------- ---------
Oct 90 10,000 9,550 10,000 10,000
10,235 9,774 10,201 10,023
Dec 90 10,235 9,775 10,246 10,077
10,283 9,820 10,383 10,115
10,349 9,883 10,474 10,208
10,392 9,924 10,478 10,294
10,498 10,025 10,617 10,356
10,604 10,127 10,712 10,379
Jun 10,575 10,099 10,701 10,379
10,682 10,201 10,831 10,441
10,807 10,321 10,974 10,457
10,916 10,425 11,117 10,472
11,046 10,549 11,217 10,488
11,081 10,582 11,248 10,520
Dec 91 11,223 10,718 11,490 10,550
11,214 10,710 11,517 10,566
11,228 10,722 11,520 10,597
11,263 10,756 11,525 10,643
11,342 10,832 11,627 10,659
11,466 10,950 11,765 10,690
Jun 11,691 11,165 11,962 10,698
12,118 11,573 12,321 10,714
11,929 11,393 12,200 10,752
11,966 11,427 12,280 10,807
11,719 11,192 12,159 10,822
12,076 11,533 12,377 10,837
Dec 92 12,252 11,701 12,503 10,876
12,417 11,858 12,648 10,899
12,941 12,359 13,106 10,930
12,837 12,260 12,967 10,960
12,978 12,394 13,098 10,999
13,061 12,473 13,172 11,014
Jun 13,309 12,710 13,391 11,006
13,298 12,700 13,409 11,060
13,644 13,030 13,688 11,099
13,824 13,202 13,844 11,138
13,824 13,202 13,870 11,169
13,620 13,007 13,748 11,185
Dec 93 13,925 13,298 14,038 11,200
14,072 13,438 14,198 11,200
13,705 13,088 13,830 11,232
13,004 12,419 13,268 11,255
13,017 12,431 13,380 11,301
13,117 12,527 13,497 11,309
Jun 13,018 12,432 13,414 11,309
13,230 12,635 13,660 11,340
13,281 12,684 13,708 11,378
13,105 12,515 13,506 11,417
12,838 12,260 13,266 11,433
12,519 11,956 13,026 11,441
Dec 94 12,725 12,153 13,312 11,480
13,152 12,561 13,693 11,511
13,556 12,946 14,091 11,557
13,713 13,096 14,254 11,588
13,740 13,121 14,271 11,596
14,175 13,537 14,726 11,611
Jun 14,004 13,373 14,598 11,611
14,071 13,438 14,736 11,658
14,245 13,604 14,924 11,704
14,352 13,706 15,018 11,743
14,581 13,924 15,235 11,782
14,851 14,183 15,488 11,805
Dec 95 15,027 14,351 15,637 11,829
15,095 14,416 15,756 11,829
15,012 14,336 15,649 11,860
14,790 14,125 15,448 11,883
14,776 14,111 15,405 11,923
14,775 14,110 15,399 11,914
Jun 14,900 14,230 15,567 11,906
15,054 14,377 15,708 11,976
15,110 14,430 15,705 12,015
15,308 14,619 15,925 12,077
15,478 14,781 16,104 12,124
15,735 15,027 16,398 12,147
Dec 96 15,691 14,985 16,329 12,154
15,719 15,012 16,360 12,178
15,848 15,135 16,510 12,201
15,686 14,980 16,291 12,240
15,802 15,091 16,427 12,279
16,008 15,287 16,674 12,302
Jun 16,214 15,485 16,851 12,302
16,718 15,966 17,318 12,342
16,583 15,837 17,155 12,380
16,777 16,022 17,360 12,411
16,896 16,136 17,471 12,426
17,031 16,265 17,574 12,418
Dec 97 17,304 16,525 17,830 12,433
17,439 16,654 18,014 12,457
17,461 16,676 18,019 12,480
17,461 16,676 18,036 12,504
17,379 16,597 17,954 12,527
17,656 16,861 18,238 12,549
Jun 17,712 16,915 18,309 12,564
17,725 16,927 18,355 12,579
17,989 17,179 18,638 12,594
18,250 17,428 18,871 12,610
18,211 17,392 18,871 12,640
18,297 17,473 18,937 12,640
Dec 98 18,354 17,528 18,984 12,633
18,563 17,727 19,210 12,663
18,490 17,658 19,125 12,679
18,522 17,688 19,152 12,717
18,533 17,699 19,200 12,810
18,399 17,571 19,089 12,810
Jun 18,083 17,269 18,814 12,810
18,161 17,344 18,882 12,848
17,887 17,082 18,731 12,879
17,865 17,061 18,738 12,941
17,508 16,720 18,536 12,964
17,683 16,887 18,732 12,972
Dec 99 17,524 16,735 18,592 12,972
17,399 16,616 18,512 13,003
17,679 16,884 18,726 13,080
18,137 17,321 19,137 13,188
18,009 17,198 19,024 13,195
17,882 17,078 18,925 13,203
Jun 18,396 17,568 19,426 13,280
18,703 17,861 19,696 13,303
19,116 18,256 20,000 13,311
18,984 18,130 19,896 13,326
Oct 00 19,136 18,275 20,112 13,369
(1) Index total returns were calculated from 10/31/90 to 10/31/00. 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). The
Lehman Brothers 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. For comparative purposes, the
benchmark's performance is shown as of the Fund's inception date not from
the inception date of the benchmark.
The Fund's performance would have been lower had the Advisor not waived a
portion of its fees and the Fund's custodian not allowed its fees to be
reduced by credits.
(2) 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.
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
Fund (not adjusted for sales charge) 9.33% 5.60% 6.71%
Fund (adjusted for the maximum 4.5%
sales charge) 4.41% 4.63% 6.22%
Lehman Brothers Municipal Bond Index(1) 8.51% 5.71% 7.24%(1)
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(JULY 1, 1994)
Fund (not adjusted for contingent
deferred sales charge) 8.53% 4.81% 5.48%
Fund (adjusted for the maximum
contingent deferred sales charge) 3.53% 4.64% 5.48%
Lehman Brothers Municipal Bond Index(1) 8.51% 5.71% 6.60%(1)
The most significant factor affecting the market's behavior during the past year
has been generally rising interest rates, particularly for short-term bonds. The
interest rate environment was the result of the Federal Reserve Board's
commitment to keeping inflation in check. As the economy threatened to overheat
and push the prices of goods and services higher, the Fed reacted by increasing
short-term interest rates. In fact, the Fed increased rates on four occasions
during the reporting period, with the latest hike occurring in May.
PORTFOLIO composition(3)
AAA 55%
BBB 16%
NOT RATED/OTHER 16%
AA 7%
A 6%
The strength of the economy and the Fed's ensuing rate hikes caused interest
rates to rise across the board for the first half of the reporting period. In
the spring of 2000, bond markets rallied as investors began to anticipate an end
to the Fed's tightening cycle. By the end of October, short-term interest rates
remained high, but those in the intermediate- to long-term maturity segments of
the market actually declined below the levels found at the beginning of the
period.
Interest rates have stabilized in recent months, as the Fed has reacted to
slower growth, more efficient workforce output, and moderate price gains by
keeping target lending rates unchanged. The inflation rate, as measured by the
Consumer Price Index, peaked at 3.8% in March but then dropped back below the 3%
level.
Supply in the municipal bond market was sharply lower compared to a year ago,
because higher interest rates have made it unattractive for municipalities to
retire existing debt. At the same time, strong economic activity has allowed
many municipalities to generate a budget surplus, enabling them to cover
spending costs that normally would have required municipal bond financing.
Because demand has held up, the lack of new issues in the primary market helped
support bond prices. However, the somewhat limited selection of available
securities forced us to be very selective in choosing new bonds for the Fund's
portfolio. In many cases, we found attractive values in the secondary market,
buying and selling bonds that have been in the market for a while.
We took advantage of market price movements to enhance the current income
potential and tax management of the Fund. We continue to look for the best value
along the yield curve and found the 15 to 25 year maturity range the best value
for the Fund. The yield on long-term (30 year) California bonds was 5.93% as of
October 31, 1999, but then dropped to 5.43% by the end of October 2000. These
lower yields helped boost the prices of the bonds in the portfolio (yields move
in the opposite direction of prices) and aided in the strong performance of the
Fund. The Fund benefited from its AAA rated holdings since these securities are
more sensitive to interest rate changes, but its BBB rated securities were not
as quick in response to the rally that took place during the year.(3)
We also sold bonds that were about to be called or refunded and purchased longer
duration securities with 15 to 25 year maturities. We feel this strategy will
work well in a declining interest rate environment.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTOR THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
Through October 2000, approximately 40% of new issues in the state were insured
bonds. Although the portfolio saw a modest decline in AAA rated holdings
compared to a year ago (from 62% to 55%), we will maintain a high percentage of
these holdings for value and liquidity reasons. The Fund's AA rated issues
increased slightly to 7%, while its BBB rated issues increased from 14% to 16%.3
This position should help generate additional income for the Fund.
During the period, we increased exposure to the transportation sector, while
reducing holdings in health care related issues. We continue to like the
transportation area due to California's commitment to improving the state's
transportation infrastructure. This has contributed to increased supply and
attractiveness of the bonds. The health care sector continues to come under
increased financial pressure. Changing medical reimbursement policies in the
managed care area has led us to focus on other areas of the market.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
We feel the Fund is positioned for strong performance and will continue our
"bottom up" approach of investing by seeking individual securities we feel will
outperform the general market. We will also use our extensive research
capabilities to look for attractive opportunities throughout the coming months.
We do not anticipate any significant changes to the structure of the portfolio.
The outlook for the municipal bond market will be closely tied to the prospects
of the U.S. economy and the Fed's reaction to key economic indicators. While
interest rates have been fairly steady in recent months, the Fed's next move
hinges on the direction of price and wage pressures. Inflation currently appears
to be under control, but the Fed will be closely watching economic growth
statistics, the labor market, and the prices of key commodities such as crude
oil. Consequently, we will maintain a neutral stance with respect to the
portfolio's duration (a measure of price sensitivity to interest-rate changes)
in the near term.
(3) Bond ratings provided by a combination of Standard & Poor's and Moody's.
Allocation percentages are based on total investment value of the portfolio
as of 10/31/00.
(4) 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>
CALIFORNIA INSURED
intermediate
municipal fund
PORTFOLIO MANAGER:
JOSEPH PIRARO
VAN KAMPEN INVESTMENTS
Mr. Piraro is portfolio manager of both 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 WM CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND (Class A shares) returned
7.37% (not adjusted for sales charge) for the 12-month period ended October 31,
2000. Long-term results have also been very favorable, as the Fund has averaged
6.09% per year since its inception (not adjusted for sales charge). As of
October 31, 2000, the Fund's 30-day SEC Yield was 3.86% for A shares and 3.31%
for B shares; on a tax equivalent basis, the yield was 7.05% for A shares and
6.04% for B shares.(4)
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
The most significant factor affecting the market's behavior during the past year
has been generally rising interest rates, particularly for short-term bonds. The
interest rate environment was the result of the Federal Reserve Board's
commitment to keep inflation in check. As the economy threatened to overheat and
push the prices of goods and services higher, the Fed reacted by increasing
short-term interest rates. In fact, the Fed increased rates on four occasions
during the reporting period, with the latest hike occurring in May.
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
Fund Fund Lehman
(Class A (Class A shares; Brothers
shares; not adjusted for Municipal
adjusted for the 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 1,0000 10,000
10,264 9,802 1,0087 10,007
Jun 10,226 9,766 1,0025 10,007
10,410 9,942 1,0209 10,034
10,443 9,973 1,0245 10,068
Sep 10,333 9,868 1,0094 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
Mar 13,995 13,365 14,314 11,253
14,002 13,372 14,349 11,335
13,933 13,306 14,266 11,335
Jun 13,746 13,128 14,061 11,335
13,825 13,203 14,111 11,369
13,809 13,188 13,999 11,396
Sep 13,856 13,233 14,004 11,451
13,735 13,116 13,790 11,492
13,862 13,238 14,000 11,478
Dec 99 13,769 13,150 13,895 11,478
13,765 13,146 13,835 11,505
13,892 13,267 13,995 11,574
Mar 14,104 13,470 14,302 11,669
14,044 13,412 14,218 11,676
14,013 13,382 14,144 11,683
Jun 14,337 13,691 14,518 11,751
14,511 13,858 14,720 11,771
14,728 14,065 14,947 11,778
14,653 13,993 14,869 11,792
Oct 00 14,746 14,083 15,031 11,829
(1) Index total returns were calculated from 4/30/94 to 10/31/00. 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). The
Lehman Brothers 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. For comparative purposes, the
benchmark's performance is shown as of the Fund's inception date not from
the inception date of the benchmark.
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 not allowed its fees to be reduced by credits.
(2) 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>
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(APRIL 4, 1994)
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 7.37% 4.83% 6.09%
Fund (adjusted for the maximum 4.5% sales charge) 2.49% 3.87% 5.35%
Lehman Brothers Municipal Bond Index(1) 8.51% 5.71% 6.47%(1)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(JULY 1, 1994)
Fund (not adjusted for contingent deferred sales charge) 6.57% 4.04% 5.15%
Fund (adjusted for the maximum contingent deferred sales charge) 1.57% 3.88% 5.15%
Lehman Brothers Municipal Bond Index(1) 8.51% 5.71% 6.60%1
</TABLE>
PORTFOLIO composition(3)
AAA 87%
Not Rated 6%
A 4%
BBB 2%
AA 1%
The strength of the economy and the Fed's ensuing rate hikes caused interest
rates to rise across the board for the first half of the reporting period. In
the spring of 2000, bond markets rallied, as investors began to anticipate the
end of the Fed's tightening cycle. By the end of October, short-term interest
rates remained high, but rates in the intermediate- to long-term maturity
segments of the market actually declined below the levels found at the beginning
of the reporting period.
Interest rates have stabilized in recent months, as the Fed has reacted to
slower growth, more efficient workforce output, and moderate price gains by
keeping target lending rates unchanged. The inflation rate, as measured by the
Consumer Price Index, peaked at 3.8% in March but then dropped back below the 3%
level.
Supply in the municipal bond market was significantly lower compared to a year
ago, because higher interest rates have made it unattractive for municipalities
to retire existing debt. At the same time, strong economic activity has allowed
many municipalities to generate a budget surplus, enabling them to cover
spending costs that normally would have required municipal bond financing.
Because demand has held up, the lack of new issues in the primary market helped
support bond prices. However, the somewhat limited selection of available
securities forced us to be very selective in choosing new bonds for the Fund's
portfolio. In many cases, we found attractive values in the secondary market,
buying and selling bonds that have been in the market for a while.
In the intermediate range of the yield curve, 10-year California AAA rated
insured securities yielded approxi-mately 5% at the beginning of the reporting
period but then dropped to 4.5% by the end of the third quarter of 20005. These
lower yields helped boost the prices of the bonds in the portfolio (yields move
in the opposite direction of prices), which contributed to the Fund's strong
performance during the period.
Municipal bond issuance in California was down 18% for the year, while only
about 40% of these bonds were insured. Since the early 1990s, the state of
California has diversified its economy, both regionally and by sector. The
ratings of the state's general obligation bonds were upgraded by the two major
rating services, Moody's and Standard & Poor's, in September 2000.
We continue to look for the best value along the yield curve, and we purchased
securities in the 8 to 12 year maturity range during the period. Some bonds were
sold and replaced with higher yielding issues, which increased the tax-exempt
income generated by the Fund.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTOR THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
The Fund maintained a significant portion of AAA rated securities, which
represented 87% of assets at the end of the period.3 Demand for high-quality
California issues remained strong due to the state's booming economy. We
intend to keep a high level of AAA rated securities in the portfolio, as we feel
this sector will continue to outperform other rated securities.
We adjusted the Fund's sector concentrations, increasing exposure to
single-family housing bonds and multi-family housing issues. Conversely, we
decreased both higher education holdings and water and sewer issues. The Fund
continued to be well diversified, with exposure to 13 different sectors.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
We feel the Fund is positioned for strong performance, and we will continue our
"bottom up" approach of investing by seeking out individual securities we feel
will outperform the general market. We will also use our extensive research
capabilities to look for attractive opportunities throughout the coming months.
We do not anticipate any significant changes to the structure of the portfolio.
Overall, quality will continue to be an important emphasis in the portfolio.
The outlook for the municipal bond market will be closely tied to the prospects
of the U.S. economy and the Fed's reaction to key economic indicators. While
interest rates have been fairly steady in recent months, the Fed's next move
hinges on the direction of price and wage pressures. Currently, inflation
appears to be under control, but the Fed will be closely watching economic
growth statistics, the labor market, and the prices of key commodities such as
crude oil. Consequently, we will maintain a neutral stance with respect to the
portfolio's duration (a measure of price sensitivity to interest rate changes)
in the near term.
(3) Bond ratings provided by a combination of Standard & Poor's and Moody's.
Allocation percentages are based on total investment value of the portfolio
as of 10/31/00.
(4) 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.
(5) Insurance applies only to the timely repayment of principal and interest and
does not eliminate market risk.
<PAGE>
FLORIDA INSURED
municipal fund
PORTFOLIO MANAGER:
THOMAS BYRON
VAN KAMPEN INVESTMENTS
The Fund is managed by Thomas Byron of Van Kampen Investments. Mr. Byron has
been with Van Kampen Investments since 1981 and currently serves as Vice
President. He received his BS in Finance from Marquette University and his MBA
from DePaul University. Van Kampen has had management responsibilities for the
Fund since January 1999.
PERFORMANCE REVIEW
THE WM FLORIDA INSURED MUNICIPAL FUND (Class A shares) returned 6.68% (not
adjusted for sales charge) for the 12-month period ended October 31, 2000.
Long-term results have also been very favorable, as the Fund has averaged 5.00%
per year for the past five years (not adjusted for sales charge). The Fund will
be merged into the WM TAX-EXEMPT BOND FUND in November 2000, taking advantage of
increased fund assets as well as a larger supply of municipal securities. Please
refer to pages 28-29 for detailed performance information regarding the WM
TAX-EXEMPT BOND FUND.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE 12-MONTH PERIOD ENDED OCTOBER 31, 2000, AND WHAT INVESTMENT TECHNIQUES
WERE USED TO ADDRESS THOSE CONDITIONS?
The most significant factor affecting bond markets during the past 12 months was
rising interest rates, particularly for the short end of the maturity spectrum.
This was the result of the Federal Reserve Board's commitment to keeping
inflation in check. As the economy showed signs of overheating, the Fed reacted
by notching up short-term interest rates. The Fed increased short-term rates on
four occasions during the reporting period, with the latest hike occurring in
May.
VALUE OF A $10,000 INVESTMENT (CLASS A SHARES)(2)
NAV Sales Index Inflation
Fund Fund Lehman
(Class A (Class A shares; Brothers
shares; not adjusted for Municipal
adjusted for the 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
Mar 13,927 13,300 14,302 11,555
13,966 13,338 14,338 11,639
13,873 13,248 14,254 11,639
Jun 13,642 13,028 14,049 11,639
13,657 13,043 14,100 11,674
13,470 12,864 13,987 11,702
Sep 13,387 12,784 13,993 11,758
13,223 12,628 13,778 11,800
13,317 12,718 13,988 11,786
Dec 99 13,191 12,597 13,883 11,786
13,065 12,477 13,824 11,814
13,227 12,632 13,984 11,884
Mar 13,548 12,938 14,290 11,982
13,416 12,812 14,206 11,989
13,299 12,701 14,132 11,996
Jun 13,677 13,062 14,506 12,066
13,893 13,268 14,708 12,087
14,096 13,462 14,935 12,094
13,965 13,337 14,857 12,108
Oct 00 14,107 13,473 15,019 12,146
(1) Index total returns were calculated from 6/30/93 to 10/31/00. 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). The
Lehman Brothers 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. For comparative purposes, the
benchmark's performance is shown as of the Fund's inception date not from
the inception date of the benchmark.
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 not allowed its fees to be reduced by credits.
(2) 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.
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(JUNE 7, 1993)
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 6.68% 5.00% 4.76%
Fund (adjusted for the maximum 4.5% sales charge) 1.90% 4.04% 4.11%
Lehman Brothers Municipal Bond Index1 8.51% 5.71% 5.27%(1)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(JULY 1, 1994)
Fund (not adjusted for contingent deferred sales charge) 5.90% 4.21% 4.96%
Fund (adjusted for the maximum contingent deferred sales charge) 0.90% 4.04% 4.96%
Lehman Brothers Municipal Bond Index(1) 8.51% 5.71% 6.60%(1)
</TABLE>
PORTFOLIO composition(3)
AAA 89%
Not Rated 7%
BBB 4%
The strength of the economy and the Fed's ensuing rate hikes caused interest
rates to rise across the board for the first half of the reporting period. In
the spring of 2000, bond markets rallied, as investors began to anticipate the
end of the Fed's tightening cycle. By the end of October, short-term rates
remained high, but interest rates in the intermediate- to long-term maturity
market segments actually declined below the levels found at the beginning of the
reporting period.
After the steady increase in short-term rates for most of the period, we have
seen a more stable rate environment in recent months. The Fed left target
lending rates unchanged in response to slower growth, a more efficient workforce
output, and moderate inflation. The inflation rate, as measured by the Consumer
Price Index, peaked at 3.8% in March but then dropped back below the 3% level.
Supply in the municipal bond market was significantly lower compared to a year
ago, as higher interest rates limited the ability for municipalities to retire
existing debt. At the same time, strong economic activity has allowed many
municipalities to generate a budget surplus, enabling them to cover spending
costs that would normally require municipal bond financing.
Because demand has held up, the lack of new issues in the primary market helped
support bond prices. However, the somewhat limited selection of available
securities forced us to be very selective in choosing new bonds for the Fund's
portfolio. In many cases, we found attractive values in the secondary market,
buying and selling bonds that have been in the market for a while.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON PERFORMANCE?
The Fund's overall credit quality changed slightly during the period. The
percentage of AAA bonds increased from 85% to 89%, while both the BBB and
non-rated bonds decreased.3 We also changed the composition of the portfolio,
decreasing public education bonds significantly and lowering the concentration
of general purpose issues. As we repositioned the assets, we increased sector
weightings in water and sewage, retail electric, transportation and health care
bonds.
WHAT IS THE OUTLOOK FOR BOTH THE FUND AND THE OVERALL ECONOMY?
Because the Fund will be merged into the WM TAX-EXEMPT BOND FUND in November,
the outlook for the Fund will be based on the national municipal market rather
than just Florida municipalities. The prospects for the municipal bond market
will be closely tied to the U.S. economy and the Fed's reaction to key economic
indicators. While interest rates have been fairly steady in recent months, the
Fed's next move hinges on the direction of price and wage pressures. While
inflation appears to be under control, the Fed will be closely watching economic
growth statistics, the labor market, and the prices of key commodities such as
crude oil. Consequently, after the merger, we will maintain a neutral stance
with respect to the duration (a measure of price sensitivity to interest rate
changes) of the WM TAX-EXEMPT BOND FUND in the near term.
(3) Bond ratings provided by a combination of Standard & Poor's and Moody's.
Allocation percentages are based on total investment value of the portfolio
as of 10/31/00.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
WM GROUP OF FUNDS
OCTOBER 31, 2000
<TABLE>
<CAPTION>
EQUITY GROWTH & GROWTH FUND MID CAP
INCOME INCOME OF THE GROWTH STOCK
FUND FUND NORTHWEST FUND FUND
------------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value
(See portfolio of investments):
Securities .............................. $ 322,001,500 $1,613,342,422 $ 650,384,120 $1,222,507,903 $ 174,078,378
Repurchase Agreements ................... 12,935,000 16,244,000 59,573,000 -- 11,355,000
-------------- -------------- -------------- -------------- --------------
Total Investments (a) ................. 334,936,500 1,629,586,422 709,957,120 1,222,507,903 185,433,378
Cash and/or foreign currency (b) .......... 834 17 314 20,829 419
Cash held as collateral for loaned
securities (note 7) ..................... 322,000 8,221,200 5,942,819 25,408,744 2,903,229
Net unrealized appreciation of forward
foreign currency contracts (See portfolio
of investments) ......................... -- -- -- 3,449,624 --
Variation margin .......................... -- -- -- -- --
Dividends and/or interest receivable ...... 1,142,506 1,106,546 80,831 39,230 45,592
Receivable for Fund shares sold ........... 539,242 2,856,143 2,129,235 2,525,747 453,391
Receivable for investment securities sold . -- -- -- 6,712,849 --
Prepaid expenses .......................... 4,068 20,426 8,847 18,776 1,130
-------------- -------------- -------------- -------------- --------------
Total Assets .......................... 336,945,150 1,641,790,754 718,119,166 1,260,683,702 188,837,139
-------------- -------------- -------------- -------------- --------------
LIABILITIES:
Net unrealized depreciation of forward
foreign currency contracts (See
portfolio of investments) ............. -- -- -- -- --
Payable upon return of securities loaned
(note 7) ................................ 322,000 8,221,200 5,942,819 25,408,744 2,903,229
Payable for Fund shares redeemed .......... 598,521 2,176,190 381,822 1,688,040 13,974
Payable for when-issued securities ........ -- -- -- -- --
Payable for investment securities purchased -- -- 3,167,254 9,034,464 2,855,428
Investment advisory fee payable ........... 162,153 682,569 342,321 842,749 109,651
Shareholder servicing and distribution
fees payable ............................ 77,930 331,535 187,042 475,445 3,387
Dividends payable ......................... -- -- -- -- --
Due to custodian .......................... -- -- -- -- --
Accrued printing and postage expenses ..... 40,052 158,426 78,722 240,419 3,421
Accrued expenses and other payables ....... 71,958 283,545 139,843 254,101 65,861
-------------- -------------- -------------- -------------- --------------
Total Liabilities ..................... 1,272,614 11,853,465 10,239,823 37,943,962 5,954,951
-------------- -------------- -------------- -------------- --------------
NET ASSETS ................................ $ 335,672,536 $1,629,937,289 $ 707,879,343 $1,222,739,740 $ 182,882,188
============== ============== ============== ============== ==============
(a) Investments, at cost .................. $ 291,856,518 $1,193,288,459 $ 526,441,868 $ 983,788,989 $ 155,581,704
============== ============== ============== ============== ==============
(b) Cash and/or foreign currency,
at cost ......................... $ 834 $ 17 $ 314 $ 20,829 $ 419
============== ============== ============== ============== ==============
<CAPTION>
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT
STOCK GROWTH INCOME SECURITIES INCOME
FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value
(See portfolio of investments):
Securities ............................. $ 333,906,934 $ 172,228,531 $ 114,649,959 $ 459,556,274 $ 446,478,001
Repurchase Agreements .................. 935,000 13,748,000 1,632,000 9,264,000 4,154,000
-------------- -------------- -------------- -------------- --------------
Total Investments (a) ................. 334,841,934 185,976,531 116,281,959 468,820,274 450,632,001
Cash and/or foreign currency (b) .......... 278,965 -- -- 123 1,447
Cash held as collateral for loaned
securities (note 7) ..................... 3,011,741 11,333,480 145,425 17,131,734 59,582,802
Net unrealized appreciation of forward
foreign currency contracts (See portfolio
of investments) ......................... -- -- -- -- --
Variation margin .......................... -- -- 6,250 -- --
Dividends and/or interest receivable ...... 25,556 306,845 1,481,072 3,227,364 7,746,189
Receivable for Fund shares sold ........... 1,101,107 1,163,254 24,702 431,512 926,124
Receivable for investment securities sold . 2,114,126 1,310,226 9,680 6,456 --
Prepaid expenses .......................... 4,387 3,124 2,028 6,493 5,273
-------------- -------------- -------------- -------------- --------------
Total Assets .......................... 341,377,816 200,093,460 117,951,116 489,623,956 518,893,836
-------------- -------------- -------------- -------------- --------------
LIABILITIES:
Net unrealized depreciation of forward
foreign currency contracts (See portfolio
of investments) ......................... -- 347,517 -- -- --
Payable upon return of securities loaned
(note 7) ................................ 3,011,741 11,333,480 145,425 17,131,734 59,582,802
Payable for Fund shares redeemed .......... 179,311 52,697 228,148 744,794 625,112
Payable for when-issued securities ........ -- -- -- -- --
Payable for investment securities purchased 958,008 1,534,686 -- -- --
Investment advisory fee payable ........... 230,417 149,148 42,728 198,965 192,586
Shareholder servicing and distribution
fees payable ............................ 71,291 16,269 7,219 82,898 61,087
Dividends payable ......................... -- -- 25,152 299,853 276,991
Due to custodian .......................... -- 16,252 25,311 -- --
Accrued printing and postage expenses ..... 83,322 31,954 9,873 49,582 40,554
Accrued expenses and other payables ....... 90,479 105,562 41,798 113,905 123,868
-------------- -------------- -------------- -------------- --------------
Total Liabilities ..................... 4,624,569 13,587,565 525,654 18,621,731 60,903,000
-------------- -------------- -------------- -------------- --------------
NET ASSETS ................................ $ 336,753,247 $ 186,505,895 $ 117,425,462 $ 471,002,225 $ 457,990,836
============== ============== ============== ============== ==============
(a) Investments, at cost .................. $ 307,886,600 $ 171,880,872 $ 117,651,672 $ 474,048,771 $ 455,595,205
============== ============== ============== ============== ==============
(b) Cash and/or foreign currency,
at cost ......................... $ 278,965 $ -- $ -- $ 123 $ 1,447
============== ============== ============== ============== ==============
<CAPTION>
California
Insured Florida
High Tax-Exempt California Intermediate Insured
Yield Bond Municipal Municipal Municipal
Fund Fund Fund Fund Fund
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value
(See portfolio of investments):
Securities .............................. $192,991,151 $233,096,934 $410,242,642 $ 65,414,988 $ 13,590,755
Repurchase Agreements ................... 13,831,000 -- -- -- --
------------ ------------ ------------ ------------- ------------
Total Investments (a) ............... 206,822,151 233,096,934 410,242,642 65,414,988 13,590,755
Cash and/or foreign currency (b) 321 -- 5,330 857,211 35,516
Cash held as collateral for loaned
securities (note 7) ..................... 27,039,665 -- -- -- --
Net unrealized appreciation of forward
foreign currency contracts (See portfolio
of investments) ......................... -- -- -- -- --
Variation margin ......................... -- -- -- -- --
Dividends and/or interest receivable ...... 3,402,928 3,520,815 5,699,422 839,332 199,860
Receivable for Fund shares sold ........... 1,119,584 137,640 2,264,693 55,226 3
Receivable for investment securities sold . -- -- 2,955,700 565,809 --
Prepaid expenses .......................... 1,942 3,670 5,938 980 277
------------ ----------- ----------- ---------- ----------
Total Assets .......................... 238,386,591 236,759,059 421,173,725 67,733,546 13,826,411
------------ ----------- ----------- ---------- ----------
LIABILITIES:
Net unrealized depreciation of forward
foreign currency contracts (See portfolio
of investments) ......................... -- -- -- -- --
Payable upon return of securities loaned
(note 7) ................................ 27,039,665 -- -- -- --
Payable for Fund shares redeemed .......... 175,656 459,423 391,073 70,246 --
Payable for when-issued securities ........ -- 2,059,820 4,133,670 -- --
Payable for investment securities purchased 1,625,750 -- 5,520,868 2,170,680 --
Investment advisory fee payable ........... 109,340 99,035 171,409 27,535 5,901
Shareholder servicing and distribution
fees payable ............................ 29,020 66,135 186,297 36,360 6,497
Dividends payable ......................... 177,365 318,909 1,642,097 56,436 25,154
Due to custodian .......................... -- 39,105 -- -- --
Accrued printing and postage expenses ..... 4,564 22,318 28,326 6,020 1,647
Accrued expenses and other payables ....... 64,806 52,793 73,195 24,025 20,385
-------------- -------------- -------------- -------------- --------------
Total Liabilities ..................... 29,226,166 3,117,538 12,146,935 2,391,302 59,584
-------------- -------------- --------------
NET ASSETS ................................ $ 209,160,425 $ 233,641,521 $ 409,026,790 $ 65,342,244 $ 13,766,827
============== ============== ============== ============== ==============
(a) Investments, at cost .................. $ 219,493,103 $ 220,626,247 $ 396,865,637 $ 63,531,930 $ 13,114,899
============== ============== ============== ============== ==============
(b) Cash and/or foreign currency,
at cost ......................... $ 321 $ -- $ 5,330 $ 857,211 $ 35,516
============== ============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
WM GROUP OF FUNDS
OCTOBER 31, 2000
<TABLE>
<CAPTION>
EQUITY GROWTH & GROWTH FUND MID CAP
INCOME INCOME OF THE GROWTH STOCK
FUND FUND NORTHWEST FUND FUND
------------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
NET ASSETS consist of:
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) ...................... $ 1,246,605 $ -- $ 1,100,920 $ 9,027,956 $ 210,393
-------------- -------------- -------------- -------------- --------------
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign
currency contracts and foreign currency
transactions ............................ 24,310,939 70,141,211 100,606,990 143,898,698 683,534
Net unrealized appreciation/(depreciation)
of investments, foreign currency, futures
contracts, forward foreign currency
contracts and other assets and liabilities 43,079,982 436,297,963 183,515,252 242,168,538 29,851,674
Paid-in capital ........................... 267,035,010 1,123,498,115 422,656,181 827,644,548 152,136,587
-------------- -------------- -------------- -------------- --------------
Total Net Assets .................... $ 335,672,536 $1,629,937,289 $ 707,879,343 $1,222,739,740 $ 182,882,188
============== ============== ============== ============== ==============
NET ASSETS:
Class A Shares ............................ $ 191,850,389 $ 662,085,656 $ 442,253,395 $ 341,777,488 $ 2,451,283
============== ============== ============== ============== ==============
Class B Shares ............................ $ 47,386,193 $ 242,610,600 $ 116,671,668 $ 481,934,510 $ 3,777,790
============== ============== ============== ============== ==============
Class I Shares ............................ $ 96,435,954 $ 725,241,033 $ 148,954,280 $ 399,027,742 $ 176,653,115
============== ============== ============== ============== ==============
SHARES OUTSTANDING:
Class A Shares ............................ 12,306,016 24,426,115 12,208,297 10,426,026 194,874
============== ============== ============== ============== ==============
Class B Shares ............................ 3,053,369 9,159,450 3,418,984 15,657,162 302,054
============== ============== ============== ============== ==============
Class I Shares ............................ 6,186,978 26,702,474 4,098,706 12,008,778 14,000,907
============== ============== ============== ============== ==============
CLASS A SHARES:
Net asset value per share of beneficial
interest outstanding* ................... $ 15.59 $ 27.11 $ 36.23 $ 32.78 $ 12.58
============== ============== ============== ============== ==============
Maximum Sales Charge ...................... 5.50% 5.50% 5.50% 5.50% 5.50%
============== ============== ============== ============== ==============
Maximum offering price per share of
beneficial interest outstanding ......... $ 16.50 $ 28.69 $ 38.34 $ 36.49 $ 13.31
============== ============== ============== ============== ==============
CLASS B SHARES:
Net asset value and offering price per
share of beneficial interest outstanding* $ 15.52 $ 26.49 $ 34.12 $ 30.78 $ 12.51
============== ============== ============== ============== ==============
CLASS I SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding $ 15.59 $ 27.16 $ 36.34 $ 33.23 $ 12.62
============== ============== ============== ============== ==============
* Redemption price per share is equal to net asset value per share less any applicable contingent deferred sales charge.
<CAPTION>
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT
STOCK GROWTH INCOME SECURITIES INCOME
FUND FUND FUND FUND FUND
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
NET ASSETS consist of:
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) ...................... $ -- $ 347,911 $ 37,793 $ 166,896 $ 217,028
-------------- -------------- -------------- -------------- --------------
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign
currency contracts and foreign currency
transactions ............................ 41,267,417 11,358,690 (3,098,050) (71,155,108) (29,161,284)
Net unrealized appreciation/(depreciation)
of investments, foreign currency, futures
contracts, forward foreign currency
contracts and other assets and liabilities 26,955,334 13,705,400 (1,415,026) (5,228,497) (4,963,204)
Paid-in capital ........................... 267,035,010 1,123,498,115 422,656,181 827,644,548 152,136,587
-------------- -------------- -------------- -------------- --------------
Total Net Assets ................... $ 336,753,247 $ 186,505,895 $ 117,425,462 $ 471,002,225 $ 457,990,836
============== ============== ============== ============== ==============
NET ASSETS:
Class A Shares ............................ $ 132,273,560 $ 29,006,239 $ 20,223,741 $ 168,727,658 $ 131,665,343
============== ============== ============== ============== ==============
Class B Shares ............................ $ 54,406,646 $ 12,276,467 $ 3,460,671 $ 55,070,823 $ 39,346,602
============== ============== ============== ============== ==============
Class I Shares ............................ $ 150,073,041 $ 145,223,189 $ 93,741,050 $ 247,203,744 $ 286,978,891
============== ============== ============== ============== ==============
SHARES OUTSTANDING:
Class A Shares ............................ 4,959,324 2,643,287 8,821,103 15,996,655 14,800,868
============== ============== ============== ============== ==============
Class B Shares ............................ 2,181,992 1,146,953 1,509,640 5,224,600 4,409,679
============== ============== ============== ============== ==============
Class I Shares ............................ 5,606,002 13,198,349 40,889,519 23,430,460 32,197,710
============== ============== ============== ============== ==============
CLASS A SHARES:
Net asset value per share of beneficial
interest outstanding* ................... $ 26.67 $ 10.97 $ 2.29 $ 10.55 $ 8.90
============== ============== ============== ============== ==============
Maximum Sales Charge ...................... 5.50% 5.50% 3.50% 4.50% 4.50%
============== ============== ============== ============== ==============
Maximum offering price per share of
beneficial interest outstanding ......... $ 28.22 $ 11.61 $ 2.37 $ 11.05 $ 9.32
============== ============== ============== ============== ==============
CLASS B SHARES:
Net asset value and offering price per
share of beneficial interest outstanding* $ 24.93 $ 10.70 $ 2.29 $ 10.54 $ 8.92
============== ============== ============== ============== ==============
CLASS I SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding $ 26.77 $ 11.00 $ 2.29 $ 10.55 $ 8.91
============== ============== ============== ============== ==============
<CAPTION>
CALIFORNIA
INSURED FLORIDA
HIGH TAX-EXEMPT CALIFORNIA INTERMEDIATE INSURED
YIELD BOND MUNICIPAL MUNICIPAL MUNICIPAL
FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
NET ASSETS consist of:
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) ...................... $ 32,695 $ 84,427 $ (224,967) $ 3,028 $ 35,375
-------------- -------------- -------------- -------------- --------------
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign
currency contracts and foreign currency
transactions ............................ (1,325,683) (1,976,922) (8,586,550) 519,922 (2,230,348)
Net unrealized appreciation/(depreciation)
of investments, foreign currency,
futures contracts, forward foreign
currency contracts and other assets
and liabilities ......................... (12,671,514) 12,470,687 13,377,005 1,883,058 475,856
Paid-in capital ........................... 223,124,927 223,063,329 404,461,302 62,936,236 15,485,944
-------------- -------------- -------------- -------------- --------------
Total Net Assets ..................... $ 209,160,425 $ 233,641,521 $ 409,026,790 $ 65,342,244 $ 13,766,827
============== ============== ============== ============== ==============
NET ASSETS:
Class A Shares ............................ $ 8,181,654 $ 207,309,089 $ 248,940,511 $ 29,656,833 $ 8,200,237
============== ============== ============== ============== ==============
Class B Shares ............................ $ 32,881,431 $ 26,332,432 $ 160,086,279 $ 35,685,411 $ 5,566,590
============== ============== ============== ============== ==============
Class I Shares ............................ $ 168,097,340 -- -- -- --
============== ==============
SHARES OUTSTANDING:
Class A Shares ............................ 962,669 27,441,170 23,036,384 2,804,350 839,910
============== ============== ============== ============== ==============
Class B Shares ............................ 3,852,070 3,485,582 14,814,017 3,374,375 570,173
============== ============== ============== ============== ==============
Class I Shares ............................ 19,816,362 -- -- -- --
==============
CLASS A SHARES:
Net asset value per share
of beneficial interest
outstanding* ............................ $ 8.50 $ 7.55 $ 10.81 $ 10.58 $ 9.76
============== ============== ============== ============== ==============
Maximum Sales Charge ...................... 4.50% 4.50% 4.50% 4.50% 4.50%
============== ============== ============== ============== ==============
Maximum offering price per sha
interest outstanding .................... $ 8.90 $ 7.91 $ 11.32 $ 11.08 $ 10.22
============== ============== ============== ============== ==============
CLASS B SHARES:
Net asset value and offering
price per share of beneficial
interest outstanding* ................... $ 8.54 $ 7.55 $ 10.81 $ 10.58 $ 9.76
============== ============== ============== ============== ==============
CLASS I SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding ............................. $ 8.48 -- -- -- --
==============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
EQUITY GROWTH & GROWTH FUND MID CAP
INCOME INCOME OF THE GROWTH STOCK
FUND FUND NORTHWEST FUND FUND*
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .......................... $ 5,733,207 $ 16,515,958 $ 5,451,923 $ 2,505,808 $ 729,045
Foreign withholding tax on
dividend income ................. -- (61,974) -- (33,542) --
Interest ........................... 6,761,824 899,586 2,345,858 8,658,671 337,768
Foreign withholding tax on
interest income .................. -- -- -- -- --
Securities lending income (note 7) . 30,052 5,921 294,055 203,907 26,078
------------- ------------- ------------- ------------- -------------
Total investment income ............ 12,525,083 17,359,491 8,091,836 11,334,844 1,092,891
------------- ------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fee ............ 1,722,143 7,855,270 3,755,021 10,587,686 739,509
Custodian fees ..................... 32,299 98,221 42,004 190,711 8,538
Legal and audit fees ............... 35,117 107,108 49,035 87,045 25,649
Registration and filing fees ....... 31,206 113,749 128,434 42,482 63,895
Printing and postage expenses ...... 92,850 354,974 200,899 566,620 4,313
Other .............................. 127,022 526,741 193,407 455,668 22,291
Shareholder servicing and
distribution fees:
Class A Shares ................... 518,879 1,675,508 1,079,800 891,346 2,165
Class B Shares ................... 584,816 2,398,306 1,080,927 4,461,801 11,505
Transfer agent fees:
Class A Shares ................... 150,944 575,413 312,751 537,146 2,338
Class B Shares ................... 72,957 437,070 157,418 665,701 3,299
Fees waived and/or expenses
reimbursed by the investment
advisor and/or distributor ....... -- -- -- (712,482) --
------------- ------------- ------------- ------------- -------------
Total expenses ..................... 3,368,233 14,142,360 6,999,696 17,773,724 883,502
Fees reduced by credits
allowed by the custodian ......... (2,110) (5,871) (8,780) (25,283) (1,004)
------------- ------------- ------------- ------------- -------------
Net expenses ....................... 3,366,123 14,136,489 6,990,916 17,748,441 882,498
------------- ------------- ------------- ------------- -------------
NET INVESTMENT INCOME/(LOSS) ....... 9,158,960 3,223,002 1,100,920 (6,413,597) 210,393
------------- ------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS:
Realized gain/(loss) from:
Security transactions .............. 29,109,687 77,329,909 105,954,776 169,201,406 683,534
Foward foreign currency contracts
and foreign currency
transactions ..................... -- -- -- 16,436,922 --
Futures contracts .................. -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Net realized gain/(loss) on
investment transactions .......... 29,109,687 77,329,909 105,954,776 185,638,328 683,534
------------- ------------- ------------- ------------- -------------
Change in unrealized appreciation/
(depreciation) of:
Securities ....................... (1,244,383) 117,570,097 15,243,383 23,189,289 29,851,674
Forward foreign currency contracts -- -- -- 2,454,255 --
Foreign currency, futures contracts
and other assets and liabilities -- -- -- 11 --
------------- ------------- ------------- ------------- -------------
Net change in unrealized
appreciation/(depreciation)
of investment transactions ..... (1,244,383) 117,570,097 15,243,383 25,643,555 29,851,674
------------- ------------- ------------- ------------- -------------
Net realized and unrealized gain/
(loss) on investment transactions 27,865,304 194,900,006 121,198,159 211,281,883 30,535,208
------------- ------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........ $ 37,024,264 $ 198,123,008 $ 122,299,079 $ 204,868,286 $ 30,745,601
============= ============= ============= ============= =============
* The Mid Cap Stock Fund commenced operations on March 1, 2000.
<CAPTION>
U.S.
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT
STOCK GROWTH INCOME SECURITIES INCOME
FUND FUND FUND FUND FUND
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .......................... $ 762,792 $ 3,016,283 $ -- $ -- $ 50,984
Foreign withholding tax on
dividend income ................. -- (241,811) -- -- --
Interest ........................... 351,571 394,916 8,885,002 32,631,921 30,892,186
Foreign withholding tax on
interest income .................. -- -- (6,122) -- --
Securities lending income (note 7) . 151,732 40,165 3,996 15,263 63,854
------------- ------------- ------------- ------------- -------------
Total investment income ............ 1,266,095 3,209,553 8,882,876 32,647,184 31,007,024
------------- ------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fee ............ 2,342,203 1,974,607 678,793 2,307,217 1,938,925
Custodian fees ..................... 31,598 195,429 17,094 50,484 82,192
Legal and audit fees ............... 33,763 37,594 27,412 46,827 36,197
Registration and filing fees ....... 27,467 23,179 20,456 42,710 77,538
Printing and postage expenses ...... 178,553 67,295 6,187 94,794 77,040
Other .............................. 100,710 93,252 60,032 194,680 145,882
Shareholder servicing and
distribution fees:
Class A Shares ................... 352,165 78,432 57,480 471,406 368,867
Class B Shares ................... 524,487 138,649 39,149 610,707 401,855
Transfer agent fees:
Class A Shares ................... 265,430 123,016 102,347 283,519 249,238
Class B Shares ................... 137,825 47,254 9,807 60,131 51,275
Fees waived and/or expenses
reimbursed by the investment
advisor and/or distributor ....... -- -- (399,616) (158,232) --
------------- ------------- ------------- ------------- -------------
Total expenses ..................... 3,994,201 2,778,707 619,141 4,004,243 3,429,009
Fees reduced by credits
allowed by the custodian ......... (7,859) (1,058) (2,667) (1,291) (33,514)
------------- ------------- ------------- ------------- -------------
Net expenses ....................... 3,986,342 2,777,649 616,474 4,002,952 3,395,495
------------- ------------- ------------- ------------- -------------
NET INVESTMENT INCOME/(LOSS) ....... (2,720,247) 431,904 8,266,402 28,644,232 27,611,529
------------- ------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS:
Realized gain/(loss) from:
Security transactions .............. 51,380,726 18,143,721 (898,239) (1,911,166) 1,094,450
Foward foreign currency contracts
and foreign currency
transactions ..................... -- (1,613,636) -- -- --
Futures contracts .................. -- -- (50,621) -- --
------------- ------------- ------------- ------------- -------------
Net realized gain/(loss) on
investment transactions .......... 51,380,726 16,530,085 (948,860) (1,911,166) 1,094,450
------------- ------------- ------------- ------------- -------------
Change in unrealized appreciation/
(depreciation) of:
Securities ....................... 4,624,844 (10,266,838) 563,490 3,272,397 (3,150,240)
Forward foreign currency contracts -- (71,535) -- -- --
Foreign currency, futures contracts
and other assets and liabilities -- (31,056) (160,622) -- --
------------- ------------- ------------- ------------- -------------
Net change in unrealized
appreciation/(depreciation)
of investment transactions ..... 4,624,844 (10,369,429) 402,868 3,272,397 (3,150,240)
------------- ------------- ------------- ------------- -------------
Net realized and unrealized gain/
(loss) on investment transactions 56,005,570 6,160,656 (545,992) 1,361,231 (2,055,790)
------------- ------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........ $ 53,285,323 $ 6,592,560 $ 7,720,410 $ 30,005,463 $ 25,555,739
============= ============= ============= ============= =============
<CAPTION>
CALIFORNIA
INSURED FLORIDA
HIGH TAX-EXEMPT CALIFORNIA INTERMEDIATE INSURED
YIELD BOND MUNICIPAL MUNICIPAL MUNICIPAL
FUND FUND FUND FUND FUND
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .......................... $ 1,300,511 $ -- $ -- $ -- $ --
Foreign withholding tax on
dividend income ................. -- -- -- -- --
Interest ........................... 15,885,930 15,469,046 24,494,024 3,277,066 981,248
Foreign withholding tax on
interest income .................. (55,748) -- -- -- --
Securities lending income (note 7) . 69,916 -- -- -- --
------------- ------------- ------------- ------------- -------------
Total investment income ............ 17,200,609 15,469,046 24,494,024 3,277,066 981,248
------------- ------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fee ............ 963,117 1,225,541 1,985,499 320,907 83,433
Custodian fees ..................... 17,272 24,170 46,662 13,224 5,929
Legal and audit fees ............... 23,400 31,937 39,828 16,446 15,743
Registration and filing fees ....... 70,610 22,863 15,780 14,886 23,089
Printing and postage expenses ...... 2,634 49,878 65,407 11,853 3,549
Other .............................. 45,371 98,146 153,050 34,254 12,529
Shareholder servicing and
distribution fees:
Class A Shares ................... 18,513 551,361 637,801 73,293 25,790
Class B Shares ................... 271,182 252,591 1,419,793 348,644 63,704
Transfer agent fees:
Class A Shares ................... 8,567 127,511 123,898 12,597 6,159
Class B Shares ................... 16,201 10,948 42,435 12,005 2,544
Fees waived and/or expenses
reimbursed by the investment
advisor and/or distributor ....... -- (38,920) -- -- --
------------- ------------- ------------- ------------- -------------
Total expenses ..................... 1,436,867 2,356,026 4,530,153 858,109 242,469
Fees reduced by credits
allowed by the custodian ......... (14,570) (8,975) (28,855) (12,763) (5,777)
------------- ------------- ------------- ------------- -------------
Net expenses ....................... 1,422,297 2,347,051 4,501,298 845,346 236,692
------------- ------------- ------------- ------------- -------------
NET INVESTMENT INCOME/(LOSS) ....... 15,778,312 13,121,995 19,992,726 2,431,720 744,556
------------- ------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS:
Realized gain/(loss) from:
Security transactions .............. (1,108,841) 900,599 (3,610,988) 497,850 185,699
Foward foreign currency contracts
and foreign currency
transactions ..................... (20,360) -- -- -- --
Futures contracts .................. -- (27,061) (836,600) 25,188 (55,579)
------------- ------------- ------------- ------------- -------------
Net realized gain/(loss) on
investment transactions .......... (1,129,201) 873,538 (4,447,588) 523,038 130,120
------------- ------------- ------------- ------------- -------------
Change in unrealized appreciation/
(depreciation) of:
Securities ....................... (10,586,657) 3,162,237 17,526,109 1,227,571 117,846
Forward foreign currency contracts 9,407 -- -- -- --
Foreign currency, futures contracts
and other assets and liabilities (532) 242,617 182,058 -- --
------------- ------------- ------------- ------------- -------------
Net change in unrealized
appreciation/(depreciation)
of investment transactions ..... (10,577,782) 3,404,854 17,708,167 1,227,571 117,846
------------- ------------- ------------- ------------- -------------
Net realized and unrealized gain/
(loss) on investment transactions (11,706,983) 4,278,392 13,260,579 1,750,609 247,966
------------- ------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........ $ 4,071,329 $ 17,400,387 $ 33,253,305 $ 4,182,329 $ 992,522
============= ============= ============= ============= =============
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
WM GROUP OF FUNDS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
EQUITY GROWTH & GROWTH FUND MID CAP
INCOME INCOME OF THE GROWTH STOCK
FUND FUND NORTHWEST FUND FUND
------------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Net investment income/(loss) ......... $ 9,158,960 $ 3,223,002 $ 1,100,920 $ (6,413,597) $ 210,393
Net realized gain/(loss) on
investment transactions ............ 29,109,687 77,329,909 105,954,776 185,638,328 683,534
Net change in unrealized appreciation/
(depreciation) of investment
transactions ....................... (1,244,383) 117,570,097 15,243,383 25,643,555 29,851,674
------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations .......... 37,024,264 198,123,008 122,299,079 204,868,286 30,745,601
Distributions to shareholders from:
Net investment income:
Class A Shares ................... (6,905,223) (747,466) -- -- --
Class B Shares ................... (1,465,739) -- -- -- --
Class I Shares ................... (593,398) (2,475,536) -- -- --
Distributions in excess of
net investment income:
Class A Shares ................... -- -- -- -- --
Class B Shares ................... -- -- -- -- --
Class I Shares ................... (33,577) -- -- -- --
Net realized gains on investments:
Class A Shares ................... (7,152,213) (23,318,555) (43,607,604) (31,348,136) --
Class B Shares ................... (2,218,969) (7,955,993) (10,627,788) (33,045,218) --
Class I Shares ................... -- (15,881,027) (823,473) (50,654,245) --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares ................... (61,449,288) (106,959,291) 50,293,244 77,133,035 2,229,928
Class B Shares ................... (30,814,769) (11,747,378) 28,078,251 252,727,462 3,524,669
Class I Shares ................... 92,050,285 200,219,569 139,527,513 (50,178,596) 146,381,990
------------- -------------- ------------- -------------- --------------
Net increase/(decrease) in net assets 18,441,373 229,257,331 285,139,222 369,502,588 182,882,188
NET ASSETS:
Beginning of year .................... 317,231,163 1,400,679,958 422,740,121 853,237,152 --
------------- -------------- -------------- -------------- --------------
End of year .......................... $ 335,672,536 $1,629,937,289 $ 707,879,343 $1,222,739,740 $ 182,882,188
============= ============== ============= ============== ==============
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) at end of year .. $ 1,246,605 $ -- $ 1,100,920 $ 9,027,956 $ 210,393
============= ============= ============= ============= =============
* The Mid Cap Stock Fund commenced operations on March 1, 2000.
<CAPTION>
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT
STOCK GROWTH INCOME SECURITIES INCOME
FUND FUND FUND FUND FUND
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net investment income/(loss) ......... $ (2,720,247) $ 431,904 $ 8,266,402 $ 28,644,232 $ 27,611,529
Net realized gain/(loss) on
investment transactions ............ 51,380,726 16,530,085 (948,860) (1,911,166) 1,094,450
Net change in unrealized appreciation/
(depreciation) of investment
transactions ....................... 4,624,844 (10,369,429) 402,868 3,272,397 (3,150,240)
------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations .......... 53,285,323 6,592,560 7,720,410 30,005,463 25,555,739
Distributions to shareholders from:
Net investment income:
Class A Shares ................... -- -- (1,278,299) (11,458,108) (10,338,428)
Class B Shares ................... -- -- (195,897) (3,273,470) (2,522,065)
Class I Shares ................... -- (3,268,236) (6,797,219) (13,700,499) (14,806,027)
Distributions in excess of
net investment income:
Class A Shares ................... -- (354,293) -- -- (1,687)
Class B Shares ................... -- (67,963) -- -- (460)
Class I Shares ................... -- -- -- -- (2,288)
Net realized gains on investments:
Class A Shares ................... (12,252,014) (691) -- -- --
Class B Shares ................... (4,148,715) (305) -- -- --
Class I Shares ................... -- (3,613) -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares ................... 4,291,201 156,335 (52,826,734) (38,803,038) 2,804,513
Class B Shares ................... 17,337,026 1,716,595 (1,129,236) (17,569,598) (2,994,453)
Class I Shares ................... 157,141,454 (21,594,050) (44,714,540) 60,774,836 210,826,187
------------- ------------- ------------- ------------- -------------
Net increase/(decrease) in net assets 215,654,275 (16,823,661) (53,185,767) (8,048,110) 166,913,480
NET ASSETS:
Beginning of year .................... 121,098,972 203,329,556 170,611,229 479,050,335 291,077,356
------------- ------------- ------------- ------------- -------------
End of year .......................... $ 336,753,247 $ 186,505,895 $ 117,425,462 $ 471,002,225 $ 457,990,836
============= ============= ============= ============= =============
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) at end of year .. $ -- $ 347,911 $ 37,793 $ 166,896 $ 217,028
============= ============= ============= ============= =============
<CAPTION>
California
Insured Florida
High Tax-Exempt California Intermediate Insured
Yield Bond Municipal Municipal Municipal
Fund Fund Fund Fund Fund
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net realized gain/(loss) on
Net investment income/(loss) ......... $ 15,778,312 $ 13,121,995 $ 19,992,726 $ 2,431,720 $ 744,556
investment transactions ............ (1,129,201) 873,538 (4,447,588) 523,038 130,120
(depreciation) of investment
transactions ....................... (3,150,240) (10,577,782) 3,404,854 17,708,l67 1,227,571
------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations .......... 4,071,329 17,400,387 33,253,305 4,182,329 992,522
Distributions to shareholders from:
Net investment income:
Class A Shares ................... (739,027) (11,915,858) (13,435,754) (1,229,926) (500,004)
Class B Shares ................... (2,511,475) (1,173,152) (6,395,781) (1,201,794) (261,201)
Class I Shares .................. (12,484,162) -- -- -- --
Distributions in excess of
net investment income:
Class A Shares ................... -- -- -- -- --
Class B Shares ................... -- -- -- -- --
Class I Shares ................... -- -- -- -- --
Net realized gains on investments:
Class A Shares ................... -- -- -- (76,974) --
Class B Shares ................... -- -- -- (86,506) --
Class I Shares ................... -- -- -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares ................... 2,804,513 (44,342,808) (43,343,707) (2,301,750) (3,948,860)
Class B Shares ................... 13,248,802 799,613 21,178,631 (696,209) (1,803,101)
Class I Shares ................... 133,021,434 -- -- -- --
------------- ------------- ------------- ------------- -------------
Net increase/(decrease) in net assets 137,411,414 (39,231,818) (8,743,306) (1,410,830) (5,520,644)
NET ASSETS:
Beginning of year .................... 71,749,011 272,873,339 417,770,096 66,753,074 19,287,471
------------- ------------- ------------- ------------- -------------
End of year .......................... $ 209,160,425 $ 233,641,521 $ 409,026,790 $ 65,342,244 $ 13,766,827
============= ============= ============= ============= =============
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) at end of year .. $ 32,695 $ 84,427 $ (224,967) $ 3,028 $ 35,375
============= ============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
WM GROUP OF FUNDS
FOR THE YEAR ENDED OCTOBER 31, 1999
<CAPTION>
GROWTH
EQUITY GROWTH & FUND SMALL CAP
INCOME INCOME OF THE GROWTH STOCK
FUND FUND NORTHWEST FUND FUND
-------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C>
Net investment income/(loss) ...... $ 8,790,002 $ 3,761,794 $ (1,305,535) $ (4,689,670) $ (1,688,508)
Net realized gain/(loss) on
investment transactions ......... 12,594,357 55,169,792 64,144,998 158,802,856 20,786,767
Net change in unrealized
appreciation/(depreciation)
of investment transactions ...... 5,658,178 185,462,770 94,783,487 160,224,429 23,844,762
------------ -------------- ------------ ------------ ------------
Net increase/(decrease) in
net assets resulting
from operations ................. 27,042,537 244,394,356 157,622,950 314,337,615 42,943,021
Distributions to shareholders
from:
Net investment income:
Class A Shares .................... (7,559,965) (2,602,496) -- -- --
Class B Shares .................... (1,559,681) -- -- -- --
Class S Shares .................... (644) -- -- -- --
Class I Shares .................... -- (1,790,653) -- -- --
Distributions in excess of net
investment income:
Class A Shares .................... -- -- -- -- --
Class B Shares .................... -- -- -- -- --
Class S Shares .................... -- -- -- -- --
Class I Shares .................... -- -- -- -- --
Net realized gains on investments:
Class A Shares .................... (803,912) (121,462) -- (10,715,680) (14,838,773)
Class B Shares .................... (208,365) -- -- (4,454,756) (3,867,191)
Class S Shares .................... (108) -- -- (1,204,673) (743,226)
Class I Shares .................... -- (54,140) -- (12,516,104) (4,308,281)
Net increase/(decrease) in net
assets from
Fund share transactions:
Class A Shares .................... (70,804,319) 30,439,066 (35,387,914) 8,149,895 9,931,687
Class B Shares .................... (2,071,336) 83,250,940 4,440,907 133,358,773 (7,912,489)
Class S Shares .................... (31,483) (10,388,888) -- (5,835,817) (1,239,975)
Class I Shares .................... -- 240,602,040 5,831,437 156,967,682 (25,943,679)
------------ -------------- ------------ ------------ ------------
Net increase/(decrease) in
net assets ...................... (55,997,276) 583,728,763 132,507,380 578,086,935 (5,978,906)
NET ASSETS:
Beginning of year ................. 373,228,439 816,951,195 290,232,741 275,150,217 127,077,878
------------ -------------- ------------ ------------ ------------
End of year ....................... $317,231,163 $1,400,679,958 $422,740,121 $853,237,152 $121,098,972
============ ============== ============ ============ ============
Undistributed net investment income/
(accumulated net investment
loss/distributions in excess
of net investment income)
at end of year .................. $ 1,073,876 $ -- $ -- $ (995,369) $ --
============ ================ ============ ============ ============
<PAGE>
<CAPTION>
U.S.
INTERNATIONAL SHORT TERM GOVERNMENT HIGH
GROWTH INCOME SECURITIES INCOME YIELD
FUND FUND FUND FUND FUND
------------- ------------ ---------- ------ -----
<S> <C> <C> <C> <C> <C>
Net investment income/(loss) ...... $ 843,589 $ 7,175,214 $ 23,601,734 $ 19,831,823 $ 4,584,562
Net realized gain/(loss) on
investment transactions ......... 13,555,859 (389,404) (363,292) 543,055 (1,485,288)
Net change in unrealized
appreciation/(depreciation)
of investment transactions ...... 30,732,015 (2,356,159) (18,492,115) (15,134,079) (425,579)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in
net assets resulting
from operations ................. 45,131,463 4,429,651 4,746,327 5,240,799 3,939,950
Distributions to shareholders
from:
Net investment income:
Class A Shares .................... (910,893) (3,192,387) (15,781,217) (15,130,951) (953,604)
Class B Shares .................... (103,845) (179,144) (2,500,924) (2,350,704) (1,025,321)
Class S Shares .................... (224,002) (41,351) (145,020) (58,122) (1,605)
Class I Shares .................... (3,219,638) (3,800,419) (4,534,753) (2,290,516) (2,604,114)
Distributions in excess of net
investment income:
Class A Shares .................... -- -- (143,587) -- --
Class B Shares .................... -- -- (22,755) -- --
Class S Shares .................... -- -- (1,319) -- --
Class I Shares .................... -- -- (41,260) -- --
Net realized gains on investments:
Class A Shares .................... (372,771) -- -- -- (70,737)
Class B Shares .................... (45,270) -- -- -- (24,411)
Class S Shares .................... (95,194) -- -- -- (126)
Class I Shares .................... (1,275,498) -- -- -- (19,594)
Net increase/(decrease) in net
assets from
Fund share transactions:
Class A Shares .................... (9,815,055) (4,480,357) (31,267,391) (30,452,925) (5,334,713)
Class B Shares .................... 6,184,898 1,125,254 46,467,913 10,384,366 18,703,424
Class S Shares .................... (8,285,762) (911,044) (6,157,509) (1,597,339) (25,952)
Class I Shares .................... 36,683,497 138,773,018 148,054,667 70,649,258 44,142,123
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in
net assets ...................... 63,651,930 131,723,221 138,673,172 34,393,866 56,725,320
NET ASSETS:
Beginning of year ................. 139,677,626 38,888,008 340,377,163 256,683,490 15,023,691
------------ ------------ ------------ ------------ ------------
End of year ....................... $203,329,556 $170,611,229 $479,050,335 $291,077,356 $ 71,749,011
============ ============ ============ ============ ============
Undistributed net investment income/
(accumulated net investment
loss/distributions in excess
of net investment income)
at end of year .................. $ 3,391,053 $ 49,071 $ -- $ 54,991 $ 9,408
============ ============ ============ ============ ============
<PAGE>
<CAPTION>
CALIFORNIA
INSURED FLORIDA
TAX-EXEMPT CALIFORNIA INTERMEDIATE INSURED
BOND MUNICIPAL MUNICIPAL MUNICIPAL
FUND FUND FUND FUND
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net investment income/(loss) ...... $ 15,653,997 $ 18,878,860 $ 2,532,518 $ 959,178
Net realized gain/(loss) on
investment transactions ......... (4,085,194) 163,654
Net change in unrealized
appreciation/(depreciation)
of investment transactions ...... (25,049,570) (31,508,821) (3,715,242) (1,726,040)
------------ ------------ ------------ ------------
Net increase/(decrease) in
net assets resulting
from operations ................. (10,880,861) (16,715,155) (1,019,070) (949,188)
Distributions to shareholders
from:
Net investment income:
Class A Shares .................... (14,755,966) (15,504,606) (1,542,848) (672,564)
Class B Shares .................... (956,931) (3,858,984) (998,452) (289,752)
Class S Shares .................... (157) (34) (24)
Class I Shares .................... (45) (40) (33) (42)
Distributions in excess of net
investment income:
Class A Shares .................... -- -- -- --
Class B Shares .................... -- -- -- --
Class S Shares .................... -- -- -- --
Class I Shares .................... -- -- -- --
Net realized gains on investments:
Class A Shares .................... -- (1,424,459) (551,842) --
Class B Shares .................... -- (278,985) (380,181) --
Class S Shares .................... -- (36) (26) --
Class I Shares .................... -- (6) (17) --
Net increase/(decrease) in net
assets from
Fund share transactions:
Class A Shares .................... (28,830,750) 23,495,259 (3,869,985) (2,585,525)
Class B Shares .................... 9,791,011 94,783,391 13,625,253 1,916,021
Class S Shares .................... (1,317) (6,066) (1,171) (495)
Class I Shares .................... (1,087) (1,139) (1,133) (1,130)
------------ ------------ ------------ ------------
Net increase/(decrease) in
net assets ...................... (45,635,963) 80,489,017 5,260,461 (2,582,699)
NET ASSETS:
Beginning of year ................. 318,509,302 337,281,079 61,492,613 21,870,170
------------ ------------ ------------ ------------
End of year ....................... $272,873,339 $417,770,096 $ 66,753,074 $ 19,287,471
============ ============ ============ ============
Undistributed net investment income/
(accumulated net investment
loss/distributions in excess
of net investment income)
at end of year .................. $ 51,442 $ (432,588) $ 174 $ 27,933
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
GROWTH FUND
EQUITY INCOME (A) GROWTH & INCOME FUND OF THE NORTHWEST (B)
-------------------------- --------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/00 10/31/99 10/31/00 10/31/99 10/31/00 10/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ........................ $ 12,787,528 $ 19,134,660 $ 70,706,935 $190,640,822 $ 69,646,375 $ 68,805,400
Issued in exchange for Class A
shares of Griffin Growth &
Income Fund ............... -- -- -- 281,276,085 -- --
Issued as reinvestment of
dividends ................. 13,369,176 7,875,442 23,532,211 2,640,934 42,754,720 --
Redemption in-kind (Note 11) -- -- -- (166,275,618) -- (990,005)
Redeemed .................... (87,605,992) (97,814,421) (201,198,437) (277,843,157) (62,107,851) (103,203,309)
------------ ------------ -------------- ------------ ------------ ------------
Net increase/(decrease) ..... $(61,449,288) $(70,804,319) $($106,959,291) $ 30,439,066 $ 50,293,244 $(35,387,914)
============ ============ ============== ============ ============ ============
CLASS B:
Sold .......................... $ 4,783,795 $ 20,485,600 $ 45,012,532 $ 58,608,032 $ 33,346,302 $ 15,268,007
Converted from Class S shares
of Fund ..................... -- 42,306 -- 11,602,915 -- 4,417
Issued in exchange for Class B
shares of Griffin Growth &
Income Fund ................. -- -- -- 50,553,133 10,490,966 --
Issued as reinvestment of
dividends ................... 3,616,538 1,727,449 7,822,052 -- -- --
Redeemed ...................... (39,215,102) (24,326,691) (64,581,962) (37,513,140) (15,759,017) (10,831,517)
------------ ------------ -------------- ------------ ------------ ------------
Net increase/(decrease) ..... $(30,814,769) $ (2,071,336) $ (11,747,378) $ 83,250,940 $ 28,078,251 $ 4,440,907
============ ============ ============== ============ ============ ============
CLASS S:
Sold .......................... -- $ 13,604 -- $ 4,985,688 -- $ 3,584
Issued as reinvestment of
dividends ................... -- 552 -- -- -- --
Converted to Class B shares
of Fund ..................... -- (42,306) -- (11,602,915) -- (3,584)
Redeemed ...................... -- (3,333) -- (3,771,661) -- --
------------ ------------ ------------
Net decrease .................. -- $ (31,483) -- $(10,388,888) -- $ --
============ ============ ============
CLASS I:
Sold .......................... $ 91,459,710 -- $ 205,418,753 $ 88,357,264 $138,754,440 $ 4,841,432
Contribution in-kind (Note 11) -- -- -- 166,275,618 -- 990,005
Issued as reinvestment of
dividends ................... 626,975 -- 18,356,562 1,844,793 823,473 --
Redeemed ...................... (36,400) -- (23,555,746) (15,875,635) (50,400) --
------------ -------------- ------------ ------------ ------------
Net increase .................. $ 92,050,285 -- $ 200,219,569 $240,602,040 $139,527,513 $ 5,831,437
============ ============== ============ ============ ============
SHARES
CLASS A:
Sold .......................... 876,960 1,291,022 2,778,433 9,361,521 1,934,105 2,446,781
Issued in exchange for Class A
shares of Griffin Growth &
Income Fund ................. -- -- -- 12,108,922 -- --
Issued as reinvestment of
dividends ................... 930,070 537,940 955,496 111,449 1,434,241 --
Redemption in-kind (Note 11) .. -- -- -- (6,291,170) -- (30,192)
Redeemed ...................... (6,061,461) (6,577,515) (7,991,703) (11,718,860) (1,740,957) (3,770,477)
------------ ------------ -------------- ------------ ------------ ------------
Net increase/(decrease) ....... (4,254,431) (4,748,553) (4,257,774) 3,571,862 1,627,389 (1,353,888)
============ ============ ============== ============ ============ ============
CLASS B:
Sold .......................... 332,752 1,407,652 1,820,367 2,654,554 982,544 547,485
Converted from Class S shares of
Fund ........................ -- 2,669 -- 445,580 -- 140
Issued in exchange for Class B
shares of Griffin Growth &
Income Fund ................. -- -- -- 2,204,430 370,837 --
Issued as reinvestment of
dividends ................... 253,168 118,539 324,540 -- -- --
Redeemed ...................... (2,726,907) (1,672,620) (2,605,679) (1,604,781) (469,890) (410,513)
------------ ------------ -------------- ------------ ------------ ------------
Net increase/(decrease) ....... (2,140,987) (143,760) (460,772) 3,699,783 883,491 137,112
============ ============ ============== ============ ============ ============
CLASS S:
Sold .......................... -- 953 -- 31,900 -- 144
Issued as reinvestment of
dividends ................... -- 38 -- -- -- --
Converted to Class B shares of
Fund ........................ -- (2,698) -- (445,409) -- (144)
Redeemed ...................... -- (921) -- (205,259) -- --
------------ ------------ ------------
Net decrease .................. -- (2,628) -- (618,768) -- --
============ ============ ============
CLASS I:
Sold .......................... 6,147,404 -- 8,176,333 3,785,718 3,881,918 160,298
Contribution in-kind (Note 11) -- -- -- 6,291,170 -- 30,183
Issued as reinvestment of
dividends ................... 42,051 -- 739,968 77,193 27,614 --
Redeemed ...................... (2,477) -- (944,935) (685,001) (1,307) --
------------ -------------- ------------ ------------ ------------
Net increase .................. 6,186,978 -- 7,971,366 9,469,080 3,908,225 190,481
============ ============== ============ ============ ============
---------------
(a) Formerly Bond & Stock Fund.
(b) Formerly Northwest Fund.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
MID CAP SMALL CAP
GROWTH FUND STOCK FUND (A) STOCK FUND (B)
--------------------------- ------------- --------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
10/31/00 10/31/99 10/31/00 10/31/00 10/31/99
---------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .................................. $388,884,321 $337,963,924 $ 2,466,287 $ 62,129,618 $ 66,778,793
Issued in exchange for Class A shares
of Griffin Growth Fund .............. -- 82,274,308 -- -- --
Issued as reinvestment of dividends ... 30,575,687 10,484,224 -- 12,107,471 14,642,298
Redemption in-kind (Note 11) .......... -- (105,326,502) -- -- --
Redeemed .............................. (342,326,973) (317,246,059) (236,359) (69,945,888) (71,489,404)
------------ ------------ ------------ ------------ ------------
Net increase .......................... $ 77,133,035 $ 8,149,895 $ 2,229,928 $ 4,291,201 $ 9,931,687
============ ============ ============ ============ ============
CLASS B:
Sold .................................. $299,273,847 $135,842,242 $ 3,888,812 $ 23,786,600 $ 1,953,827
Converted from Class S shares of Fund . -- 15,635,767 -- -- 4,813,233
Issued in exchange for Class B shares
of Griffin Growth Fund .............. -- 6,593,119 -- -- --
Issued as reinvestment of dividends ... 32,331,222 4,359,229 -- 4,070,608 3,764,240
Redeemed .............................. (78,877,607) (29,071,584) (364,143) (10,520,182) (18,443,789)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............... $252,727,462 $133,358,773 $ 3,524,669 $ 17,337,026 $ (7,912,489)
============ ============ ============ ============ ============
CLASS S:
Sold .................................. -- $ 12,319,106 -- -- $ 3,711,234
Issued as reinvestment of dividends ... -- 1,200,444 -- -- 742,277
Converted to Class B shares of Fund ... -- (15,635,767) -- -- (4,813,233)
Redeemed .............................. -- (3,719,600) -- -- (880,253)
------------ ------------
Net decrease .......................... -- $ (5,835,817) -- -- $ (1,239,975)
============ ============
CLASS I:
Sold .................................. $ 54,016,326 $ 78,054,512 $146,437,490 $157,185,854 $ 15,296,619
Contribution in-kind (Note 11) ........ -- 105,326,502 -- -- --
Issued as reinvestment of dividends ... 50,654,249 12,516,104 -- -- 4,308,281
Redeemed .............................. (154,849,171) (38,929,436) (55,500) (44,400) (45,548,579)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............... $(50,178,596) $156,967,682 $146,381,990 $157,141,454 $(25,943,679)
============ ============ ============ ============ ============
SHARES
CLASS A:
Sold .................................. 11,019,806 14,438,655 215,033 2,119,895 2,541,226
Issued in exchange for Class A shares
of Griffin Growth Fund .............. -- 3,550,898 -- -- --
Issued as reinvestment of dividends ... 1,004,430 562,458 -- 581,821
951,416
Redemption in-kind (Note 11) .......... -- (3,702,162) -- -- --
Redeemed .............................. (9,687,197) (12,699,261) (20,159) (2,440,991) (4,241,475)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............... 2,337,039 2,150,588 194,874 260,725 (748,833)
============ ============ ============ ============ ============
CLASS B:
Sold .................................. 8,915,156 5,530,902 332,972 815,955 120,310
Converted from Class S shares of Fund . -- 580,608 -- -- 265,338
Issued in exchange for Class B shares
of Griffin Growth Fund .............. -- 297,523 -- -- --
Issued as reinvestment of dividends ... 1,123,538 244,078 -- 207,662 255,722
Redeemed .............................. (2,388,103) (964,850) (30,918) (398,402) (499,868)
------------ ------------ ------------ ------------ ------------
Net increase .......................... 7,650,591 5,688,261 302,054 625,215 141,502
============ ============ ============ ============ ============
CLASS S:
Sold .................................. -- 24,052 -- -- 35,487
Issued as reinvestment of dividends ... -- 67,214 -- -- 50,426
Converted to Class B shares of Fund ... -- (581,471) -- -- (263,688)
Redeemed .............................. -- (195,203) -- -- (61,736)
------------ ------------
Net decrease .......................... -- (685,408) -- -- (239,511)
============ ============
CLASS I:
Sold .................................. 1,582,791 2,949,912 14,005,493 5,607,580 887,057
Contribution in-kind (Note 11) ........ -- 3,702,162 -- -- --
Issued as reinvestment of dividends ... 1,647,773 666,459 -- -- 277,774
Redeemed .............................. (4,117,925) (1,143,440) (4,586) (1,578) (1,938,470)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............... (887,361) 6,175,093 14,000,907 5,606,002 (773,639)
============ ============ ============ ============ ============
---------------
(a) The Mid Cap Stock Fund commenced operations on March 1, 2000.
(b) Formerly Emerging Growth Fund.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
INTERNATIONAL SHORT TERM U.S. GOVERNMENT
GROWTH FUND INCOME FUND (A) SECURITIES 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
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .......................... $ 40,026,706 $ 53,460,353 $ 6,296,721 $ 27,192,755 $ 13,683,764 $ 53,790,954
Issued in exchange for Class A
shares of Griffin U.S. ......
Government Income Fund ...... -- -- -- -- -- 100,567,406
Issued in exchange for Class A
shares of Griffin Short-Term
Bond Fund ................... -- -- -- 91,614,250 -- --
Issued as reinvestment of
dividends ................... 348,185 1,259,502 932,571 2,500,289 7,986,790 11,105,283
Redemption in-kind (Note 11) .. -- (43,975,563) -- (75,284,631) -- (89,139,223)
Redeemed ...................... (40,218,556) (20,559,347) (14,020,278) (50,503,020) (74,497,288) (107,591,811)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... $ 156,335 $ (9,815,055) $ (6,790,986) $ (4,480,357) $(52,826,734) $(31,267,391)
============ ============ ============ ============ ============ ============
CLASS B:
Sold .......................... $ 4,967,237 $ 772,204 $ 1,201,309 $ 1,720,335 $ 16,422,051 $ 51,797,931
Converted from Class S shares
of Fund ..................... -- 6,848,720 -- 1,258,939 -- 3,829,707
Issued in exchange for Class B
shares of Griffin U.S. ......
Government Income Fund ...... -- -- -- -- -- 5,798,109
Issued in exchange for Class B
shares of Griffin Short-Term
Bond Fund ................... -- -- -- 419,976 -- --
Issued as reinvestment of
dividends ................... 67,625 145,074 156,554 140,363 2,575,301 2,005,674
Redeemed ...................... (3,318,267) (1,581,100) (2,487,099) (2,414,359) (36,566,950) (16,963,508)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... $ 1,716,595 $ 6,184,898 $ (1,129,236) $ 1,125,254 $(17,569,598) $ 46,467,913
============ ============ ============ ============ ============ ============
CLASS S:
Sold .......................... -- $ 369,294 -- $ 983,060 -- $ 77,730
Issued as reinvestment of
dividends -- 316,165 -- 31,859 -- 128,626
Converted to Class B shares of
Fund -- (6,848,720) -- (1,258,939) -- (3,829,707)
Redeemed ...................... -- (2,122,501) -- (667,024) -- (2,534,158)
------------ ------------ ------------
Net decrease .................. -- $ (8,285,762) -- $ (911,044) -- $ (6,157,509)
============ ============ ============
CLASS I:
Sold .......................... $ 41,835,841 $ 27,683,346 $ 6,558,302 $ 73,030,498 $ 76,147,760 $ 83,493,525
Contribution in-kind (Note 11) -- 43,975,563 -- 75,284,631 -- 89,139,223
Issued as reinvestment of
dividends ................... 3,271,849 4,495,136 6,796,675 3,705,635 13,700,499 4,456,402
Redeemed ...................... (66,701,740) (39,470,548) (58,069,517) (13,247,746) (29,073,423) (29,034,483)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... $(21,594,050) $ 36,683,497 $(44,714,540) $138,773,018 $ 60,774,836 $148,054,667
============ ============ ============ ============ ============ ============
SHARES
CLASS A:
Sold .......................... 3,241,714 5,422,990 2,773,313 11,722,723 1,311,611 4,937,112
Issued in exchange for Class A
shares of Griffin U.S. ......
Government Income Fund ...... -- -- -- -- -- 9,303,183
Issued in exchange for Class A
shares of Griffin Short-Term
Bond Fund ................... -- -- -- 39,480,745 -- --
Issued as reinvestment of
dividends ................... 27,788 140,440 409,649 1,079,642 768,978 1,035,779
Redemption in-kind (Note 11) .. -- (4,281,944) -- (32,590,750) -- (8,393,524)
Redeemed ...................... (3,195,657) (2,112,930) (6,166,906) (21,824,751) (7,174,532) (10,051,648)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... 73,845 (831,444) (2,983,944) (2,132,391) (5,093,943) (3,169,098)
============ ============ ============ ============ ============ ============
CLASS B:
Sold .......................... 392,403 81,463 529,097 667,980 1,581,026 4,818,623
Converted from Class S shares
of Fund ..................... -- 680,111 -- 544,995 -- 361,031
Issued in exchange for Class B
shares of Griffin U.S. ......
Government Income Fund ...... -- -- -- -- -- 536,862
Issued in exchange for Class B
shares of Griffin Short-Term
Bond Fund ................... -- -- -- 180,972 -- --
Issued as reinvestment of
dividends ................... 5,502 16,430 68,763 60,706 248,079 188,329
Redeemed ...................... (271,996) (164,531) (1,094,096) (1,043,437) (3,533,243) (1,595,804)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... 125,909 613,473 (496,236) 411,216 (1,704,138) 4,309,041
============ ============ ============ ============ ============ ============
CLASS S:
Sold .......................... -- 39,598 -- 420,173 -- 7,136
Issued as reinvestment of
dividends ................... -- 35,483 -- 13,694 -- 11,851
Converted to Class B shares of
Fund ........................ -- (672,762) -- (544,995) -- (360,613)
Redeemed ...................... -- (249,525) -- (212,999) -- (145,946)
------------ ------------ ------------
Net decrease .................. -- (847,206) -- (324,127) -- (487,572)
============ ============ ============
CLASS I:
Sold .......................... 3,358,465 2,887,901 2,870,381 31,460,394 7,349,701 7,793,119
Contribution in-kind (Note 11) -- 4,281,944 -- 32,590,750 --
8,393,524
Issued as reinvestment of
dividends ................... 261,957 502,812 2,985,391 1,608,705 1,317,932 422,276
Redeemed ...................... (5,085,452) (4,171,564) (25,581,567) (5,739,003) (2,812,172) (2,668,080)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... (1,465,030) 3,501,093 (19,725,795) 59,920,846 5,855,461 13,940,839
============ ============ ============ ============ ============ ============
---------------
(a) Formerly Short Term High Quality Bond Fund.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
INCOME FUND HIGH YIELD FUND TAX-EXEMPT BOND 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
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .......................... $ 9,003,576 $ 31,599,173 $ 5,197,962 $ 24,114,009 $ 8,450,929 $ 10,218,537
Issued in exchange for Class A
shares of Griffin Bond Fund . -- 88,322,084 -- -- -- --
Issued in exchange for Class A
shares of Griffin Municipal
Bond Fund ................... -- -- -- -- -- 21,016,760
Issued as reinvestment of
dividends ................... 6,846,040 10,268,480 290,085 678,585 8,237,480 10,215,393
Redemption in-kind (Note 11) .. -- (50,387,989) -- (18,189,328) -- --
Redeemed ...................... (54,652,654) (110,254,673) (2,683,534) (11,937,979) (61,031,217) (70,281,440)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... $(38,803,038) $(30,452,925) $ 2,804,513 $ (5,334,713) $(44,342,808) $(28,830,750)
============ ============ ============ ============ ============ ============
CLASS B:
Sold .......................... $ 12,430,816 $ 19,545,920 $ 18,487,891 $ 19,815,931 $ 7,171,202 $ 12,702,216
Converted from Class S shares
of Fund ..................... -- 1,322,036 -- 23,493 -- --
Issued in exchange for Class B
shares of Griffin Bond Fund . -- 573,322 -- -- -- --
Issued in exchange for Class B
shares of Griffin Municipal
Bond Fund ................... -- -- -- -- -- 565,210
Issued as reinvestment of
dividends ................... 1,632,571 1,576,240 1,139,957 538,148 803,764 733,907
Redeemed ...................... (17,057,840) (12,633,152) (6,379,046) (1,674,148) (7,175,353) (4,210,322)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... $ (2,994,453) $ 10,384,366 $ 13,248,802 $ 18,703,424 $ 799,613 $ 9,791,011
============ ============ ============ ============ ============ ============
CLASS S:
Sold ......................... -- $ 38,409 -- $ 6,781 -- $ --
Issued as reinvestment of
dividends .................. -- 45,668 -- 1,585 -- --
Converted to Class B shares of
Fund ....................... -- (1,322,036) -- (23,493) -- --
Redeemed ..................... -- (359,380) -- (10,825) -- (1,317)
------------ ------------ ------------
Net decrease ................. -- $ (1,597,339) -- $ (25,952) -- $ (1,317)
============ ============ ============
Class I:
Sold ......................... $208,480,575 $ 23,668,029 $123,229,599 $ 41,671,290 $ -- $ --
Contribution in-kind (Note 11) -- 50,387,989 -- 18,189,328 -- --
Issued as reinvestment of
dividends .................. 14,808,297 2,301,452 12,484,162 2,625,806 -- 43
Redeemed ..................... (12,462,685) (5,708,212) (2,692,327) (18,344,301) -- (1,130)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ...... $210,826,187 $ 70,649,258 $133,021,434 $ 44,142,123 -- $ (1,087)
============ ============ ============ ============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
INCOME FUND HIGH YIELD FUND TAX-EXEMPT BOND 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
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SHARES
CLASS A:
Sold .......................... 1,012,026 3,367,655 577,391 2,642,096 1,134,991 1,371,226
Issued in exchange for Class A
shares of Griffin Bond Fund . -- 9,538,022 -- -- -- --
Issued in exchange for Class A
shares of Griffin Municipal
Bond Fund ................... -- -- -- -- -- 2,614,025
Issued as reinvestment of
dividends ................... 769,686 1,111,937 32,521 75,101 1,111,565 1,299,806
Redemption in-kind (Note 11) .. -- (5,482,915) -- (1,957,947) -- --
Redeemed ...................... (6,141,532) (11,967,674) (300,357) (1,332,436) (8,250,914) (8,969,586)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... (4,359,820) (3,432,975) 309,555 (573,186) (6,004,358) (3,684,529)
============ ============ ============ ============ ============ ============
CLASS B:
Sold .......................... 1,391,972 2,164,259 2,064,229 2,173,216 966,931 1,619,222
Converted from Class S shares of
Fund ........................ -- 143,700 -- 2,510 -- --
Issued in exchange for Class B
shares of Griffin Bond Fund . -- 6,187 -- -- -- --
Issued in exchange for Class B
shares of Griffin Municipal
Bond Fund ................... -- -- -- -- -- 70,300
Issued as reinvestment of
dividends ................... 183,004 170,868 127,202 59,109 108,622 93,785
Redeemed ...................... (1,910,076) (1,370,789) (708,334) (183,937) (971,903) (539,376)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... (335,100) 1,114,225 1,483,097 2,050,898 103,650 1,243,931
============ ============ ============ ============ ============ ============
CLASS S:
Sold .......................... -- 4,062 -- 729 -- --
Issued as reinvestment of
dividends ................... -- 4,872 -- 173 -- --
Converted to Class B shares of
Fund ........................ -- (143,700) -- (2,510) -- --
Redeemed ...................... -- (37,028) -- (1,096) -- (180)
------------ ------------ ------------
Net decrease .................. -- (171,794) -- (2,704) -- (180)
============ ============ ============
CLASS I:
Sold .......................... 23,465,719 2,592,925 13,701,989 4,622,366 -- --
Contribution in-kind (Note 11) -- 5,482,915 -- 1,962,171 -- --
Issued as reinvestment of
dividends ................... 1,660,529 247,746 1,400,327 289,914 -- 5
Redeemed ...................... (1,397,599) (632,129) (301,066) (2,007,198) -- (154)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... 23,728,649 7,691,457 14,801,250 4,867,253 -- (149)
============ ============ ============ ============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<CAPTION>
CALIFORNIA CALIFORNIA INSURED FLORIDA INSURED
MUNICIPAL FUND INTERMEDIATE MUNICIPAL FUND MUNICIPAL 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
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .......................... $ 24,021,140 $ 41,751,098 $ 4,751,875 $ 5,801,531 $ 373,861 $ 1,254,546
Issued in exchange for Class A
shares of Griffin California
Tax-Free Fund ............... -- 37,928,445 -- -- -- --
Issued as reinvestment of
dividends ................... 8,634,573 10,372,674 939,517 1,516,470 227,186 320,965
Redeemed ...................... (75,999,420) (66,556,958) (7,993,142) (11,187,986) (4,549,907) (4,161,036)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... $(43,343,707) $ 23,495,259 $ (2,301,750) $ (3,869,985) $ (3,948,860) $ (2,585,525)
============ ============ ============ ============ ============ ============
CLASS B:
Sold .......................... $ 48,763,099 $ 98,776,438 $ 7,798,908 $ 20,313,812 $ 809,020 $ 3,424,000
Issued in exchange for Class B
shares of Griffin California
Tax-Free Fund ............... -- 8,299,621 -- -- -- --
Issued as reinvestment of
dividends ................... 4,255,234 2,729,175 960,503 1,125,985 148,402 181,259
Redeemed ...................... (31,839,702) (15,021,843) (9,455,620) (7,814,544) (2,760,523) (1,689,238)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... $ 21,178,631 $ 94,783,391 $ (696,209) $ 13,625,253 $ (1,803,101) $ 1,916,021
============ ============ ============ ============ ============ ============
CLASS S:
Sold .......................... -- $ -- -- $ -- -- $ --
Issued as reinvestment of
dividends ................... -- 193 -- 59 -- 24
Redeemed ...................... -- (6,259) -- (1,230) -- (519)
------------ ------------ ------------
Net decrease .................. -- $ (6,066) -- $ (1,171) -- $ (495)
============ ============ ============
CLASS I:
Sold .......................... -- $ -- -- $ -- -- $ --
Issued as reinvestment of
dividends ................... -- 38 -- 49 -- 40
Redeemed ...................... -- (1,177) -- (1,182) -- (1,170)
------------ ------------ ------------
Net decrease .................. -- $ (1,139) -- $ (1,133) -- $ (1,130)
============ ============ ============
SHARES
CLASS A:
Sold .......................... 2,262,579 3,895,529 455,965 541,797 39,048 121,863
Issued in exchange for Class A
shares of Griffin California
Tax-Free Fund ............... -- 3,337,347 -- -- -- --
Issued as reinvestment of
dividends ................... 822,916 926,781 90,531 141,850 23,698 31,470
Redeemed ...................... (7,267,414) (6,029,382) (775,039) (1,057,115) (474,234) (408,274)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... (4,181,919) 2,130,275 (228,543) (373,468) (411,488) (254,941)
============ ============ ============ ============ ============ ============
CLASS B:
Sold .......................... 4,622,197 8,896,807 751,427 1,905,592 84,917 329,416
Issued in exchange for Class B
shares of Griffin California
Tax-Free Fund ............... -- 730,865 -- -- -- --
Issued as reinvestment of
dividends ................... 405,076 245,464 92,523 105,550 15,478 17,806
Redeemed ...................... (3,043,753) (1,376,764) (914,730) (740,773) (287,756) (166,430)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ....... 1,983,520 8,496,372 (70,780) 1,270,369 (187,361) 180,792
============ ============ ============ ============ ============ ============
CLASS S:
Sold .......................... -- -- -- -- -- --
Issued as reinvestment of
dividends ................... -- 16 -- 5 -- 3
Redeemed ...................... -- (646) -- (169) -- (173)
------------ ------------ ------------
Net decrease .................. -- (630) -- (164) -- (170)
============ ============ ============
CLASS I:
Sold .......................... -- -- -- -- -- --
Issued as reinvestment of
dividends ................... -- 3 -- 5 -- 4
Redeemed ...................... -- (110) -- (112) -- (120)
------------ ------------ ------------
Net decrease .................. -- (107) -- (107) -- (116)
============ ============ ============
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
-------------------------------------------- --------------------------------------------------------
DISTRIBUTIONS
NET REALIZED IN EXCESS DISTRIBUTIONS
NET ASSET VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM OF NET FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT INVESTMENT NET REALIZED TOTAL
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS DISTRIBUTIONS
------ ------------- ----------- ---------- ------ ------ ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY INCOME FUND
CLASS A
10/31/00 $14.60 $ 0.49(3) $ 1.42 $ 1.91 $(0.48) $ -- $(0.44) $(0.92)
10/31/99 14.02 0.41 0.61 1.02 (0.40) -- (0.04) (0.44)
10/31/98 16.13 0.45(3) 0.21(5) 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)
CLASS B
10/31/00 14.53 0.37(3) 1.42 1.79 (0.36) -- (0.44) (0.80)
10/31/99 13.96 0.27 0.63 0.90 (0.29) -- (0.04) (0.33)
10/31/98 16.10 0.33(3) 0.19(5) 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)
CLASS I
10/31/00(15) 14.47 0.11(3) 1.13 1.24 (0.11) (0.01) -- (0.12)
GROWTH & INCOME FUND
CLASS A
10/31/00 $24.61 $0.06 $3.30 $3.36 $(0.03) $ -- $(0.83) $(0.86)
10/31/99 19.99 0.09(3) 4.62 4.71 (0.09) -- (0.00)(4) (0.09)
10/31/98 21.01 0.11(3) 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)
CLASS B
10/31/00 24.24 (0.17) 3.25 3.08 -- -- (0.83) (0.83)
10/31/99 19.77 (0.09)(3) 4.56 4.47 -- -- -- --
10/31/98 20.85 (0.07)(3) 1.46 1.39 (0.00)(4) -- (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)
CLASS I
10/31/00 24.65 0.14 3.31 3.45 (0.11) -- (0.83) (0.94)
10/31/99 20.03 0.16(3) 4.61 4.77 (0.15) -- (0.00)(4) (0.15)
10/31/98(10) 21.42 0.11(3) (1.43)(5) (1.32) (0.07) -- -- (0.07)
<PAGE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS
AND/OR FEES
RATIO OF REDUCED BY
OPERATING RATIO OF NET CREDITS
NET ASSETS, EXPENSES INVESTMENT ALLOWED
NET ASSET VALUE, END OF PERIOD TO AVERAGE INCOME/(LOSS) TO PORTFOLIO BY THE
END OF PERIOD TOTAL RETURN(2) (IN 000'S) NET ASSETS(6) AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN
------------- --------------- ---------- -------------- ------------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY INCOME FUND
CLASS A
10/31/00 $15.59 13.73% $191,850 1.05% 3.39% 84% 1.05%
10/31/99 14.60 7.36% 241,746 1.05% 2.61% 45% N/A
10/31/98 14.02 4.03% 298,651 0.97% 3.09% 80% N/A
10/31/97 16.13 20.81% 307,018 0.99% 3.31% 54% N/A
10/31/96 14.71 15.66% 255,414 0.98% 3.68% 46% N/A
CLASS B
10/31/00 15.52 12.84% 47,386 1.85% 2.59% 84% 1.85%
10/31/99 14.53 6.46% 75,485 1.84% 1.82% 45% N/A
10/31/98 13.96 3.12% 74,542 1.76% 2.30% 80% N/A
10/31/97 16.10 19.86% 46,556 1.79% 2.48% 54% N/A
10/31/96 14.69 14.73% 22,243 1.86% 2.80% 46% N/A
CLASS I
10/31/00(15) 15.59 8.63% 96,436 0.72%(1) 3.72%(1) 84% 0.72%(1)
GROWTH & INCOME FUND
CLASS A
10/31/00 $27.11 13.95% $662,086 0.94% 0.21% 35% 0.94%
10/31/99 24.61 23.57% 705,835 1.00% 0.37% 47% N/A
10/31/98 19.99 7.38% 502,115 0.94% 0.52% 79% N/A
10/31/97 21.01 31.24% 299,928 1.05% 0.66% 71% N/A
10/31/96 17.26 23.61% 178,331 1.03% 1.26% 52% N/A
CLASS B
10/31/00 26.49 13.01% 242,611 1.78% (0.63)% 35% 1.78%
10/31/99 24.24 22.61% 233,216 1.76% (0.39)% 47% 1.84%
10/31/98 19.77 6.60% 117,063 1.79% (0.33)% 79% N/A
10/31/97 20.85 30.20% 49,994 1.88% (0.19)% 71% N/A
10/31/96 17.17 22.55% 22,851 1.94% 0.34% 52% N/A
CLASS I
10/31/00 27.16 14.35% 725,241 0.60% 0.55% 35% 0.60%
10/31/99 24.65 23.87% 461,629 0.67% 0.70% 47% N/A
10/31/98(10) 20.03 (6.18)% 185,528 0.62%(1) 0.84%(1) 79% N/A
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- --------------------------------------------------------
DISTRIBUTIONS
NET REALIZED IN EXCESS DISTRIBUTIONS
NET ASSET VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM OF NET FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT INVESTMENT NET REALIZED TOTAL
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS DISTRIBUTIONS
------ ------------- ----------- ---------- ------ ------ ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND OF THE NORTHWEST
CLASS A
10/31/00 $32.04 $ 0.10(3) $ 8.22 $ 8.32 $ -- $(4.13) $ -- $(4.13)
10/31/99 20.37 (0.05) 11.72 11.67 -- -- -- --
10/31/98 25.92 (0.02)(3) (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)
CLASS B
10/31/00 30.63 (0.19)(3) 7.81 7.62 -- (4.13) -- (4.13)
10/31/99 19.64 (0.25) 11.24 10.99 -- -- -- --
10/31/98 25.34 (0.20)(3) (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)
CLASS I
10/31/00 32.04 0.22(3) 8.21 8.43 -- (4.13) -- (4.13)
10/31/99(12) 29.72 0.01 2.31 2.32 -- -- -- --
GROWTH FUND
CLASS A
10/31/00 $29.71 $(0.14)(3) $ 7.04 $ 6.90 $ -- $(3.83) $ -- $(3.83)
10/31/99 17.64 (0.21)(3) 14.11 13.90 -- (1.83) -- (1.83)
10/31/98(7) 18.46 (0.07)(3) (0.75) (0.82) -- -- -- --
06/30/98 14.90 (0.15)(3) 4.99 4.84 -- (1.28) -- (1.28)
06/30/97 15.69 (0.03)(3) 1.58 1.55 -- (2.34) -- (2.34)
06/30/96 14.18 (0.07)(3) 3.47 3.40 -- (1.89) -- (1.89)
CLASS B
10/31/00 28.29 (0.38)(3) 6.70 6.32 -- (3.83) -- (3.83)
10/31/99 16.99 (0.38)(3) 13.51 13.13 -- (1.83) -- (1.83)
10/31/98(7) 17.82 (0.12)(3) (0.71) (0.83) -- -- -- --
06/30/98 14.53 (0.25)(3) 4.82 4.57 -- (1.28) -- (1.28)
06/30/97 15.47 (0.14)(3) 1.54 1.40 -- (2.34) -- (2.34)
06/30/96 14.10 (0.19)(3) 3.45 3.26 -- (1.89) -- (1.89)
CLASS I
10/31/00 29.96 0.01(3) 7.09 7.10 -- (3.83) -- (3.83)
10/31/99 17.76 (0.11)(3) 14.14 14.03 -- (1.83) -- (1.83)
10/31/98(7) 18.56 (0.05)(3) (0.75) (0.80) -- -- -- --
06/30/98 14.94 (0.10)(3) 5.00 4.90 -- (1.28) -- (1.28)
06/30/97(9) 14.21 0.00(3)(4) 3.07 3.07 -- (2.34) -- (2.34)
<PAGE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS
AND/OR FEES
RATIO OF REDUCED BY
OPERATING RATIO OF NET CREDITS
NET ASSETS, EXPENSES INVESTMENT ALLOWED
NET ASSET VALUE, END OF PERIOD TO AVERAGE INCOME/(LOSS) TO PORTFOLIO BY THE
END OF PERIOD TOTAL RETURN(2) (IN 000'S) NET ASSETS(6) AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN
------------- --------------- ---------- -------------- ------------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND OF THE NORTHWEST
CLASS A
10/31/00 $36.23 28.73% $442,253 1.02% 0.27% 42% 1.02%
10/31/99 32.04 57.29% 338,980 1.15% (0.21)% 41% 1.15%
10/31/98 20.37 (4.81)% 243,126 1.10% (0.09)% 39% 1.10%
10/31/97 25.92 44.47% 256,908 1.05% (0.08)% 37% 1.11%
10/31/96 19.69 14.54% 176,706 1.08% 0.16% 42% 1.08%
CLASS B
10/31/00 34.12 27.67% 116,672 1.84% (0.55)% 42% 1.84%
10/31/99 30.63 55.96% 77,658 1.99% (1.05)% 41% 1.99%
10/31/98 19.64 (5.63)% 47,106 1.95% (0.94)% 39% 1.95%
10/31/97 25.34 43.17% 39,627 1.91% (0.96)% 37% 1.97%
10/31/96 19.45 13.54% 14,653 1.98% (0.76)% 42% 1.98%
CLASS I
10/31/00 36.34 29.11% 148,954 0.70% 0.59% 42% 0.70%
10/31/99(12) 32.04 7.81% 6,102 0.81%(1) 0.13%(1) 41% 0.81%(1)
GROWTH FUND
CLASS A
10/31/00 $32.78 24.21% $341,777 1.30% (0.39)% 92% 1.36%
10/31/99 29.71 84.96% 240,363 1.27% (0.84)% 119% 1.46%
10/31/98(7) 17.64 (4.44)% 104,775 1.69%(1) (1.21)%(1) 24% N/A
06/30/98 18.46 35.43% 112,153 1.66% (0.91)% 153% N/A
06/30/97 14.90 10.88% 111,187 1.70% (0.22)% 156% N/A
06/30/96 15.69 25.44% 179,720 1.70% (0.49)% 205% N/A
CLASS B
10/31/00 30.78 23.28% 481,935 2.05% (1.14)% 92% 2.11%
10/31/99 28.29 83.57% 226,507 2.03% (1.60)% 119% 2.25%
10/31/98(7) 16.99 (4.66)% 39,379 2.54%(1) (2.06)%(1) 24% N/A
06/30/98 17.82 34.43% 38,390 2.46% (1.70)% 153% N/A
06/30/97 14.53 9.99% 30,397 2.45% (0.97)% 156% N/A
06/30/96 15.47 24.54% 25,067 2.45% (1.24)% 205% N/A
CLASS I
10/31/00 33.23 24.73% 399,028 0.90% 0.01% 92% 0.96%
10/31/99 29.96 85.13% 386,367 0.87% (0.44)% 119% 1.06%
10/31/98(7) 17.76 (4.31)% 119,351 1.26%(1) (0.78)%(1) 24% N/A
06/30/98 18.56 35.75% 115,729 1.36% (0.61)% 153% N/A
06/30/97(9) 14.94 22.73% 126,986 1.45%(1) 0.03%(1) 156% N/A
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- ------------------------------------------------------
DISTRIBUTIONS
NET REALIZED IN EXCESS
NET ASSET VALUE, AND UNREALIZED TOTAL FROM OF NET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT TOTAL NET ASSET VALUE,
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME DISTRIBUTIONS END OF PERIOD
------ ------------- ----------- ---------- ------ ------------- -------------
MID CAP STOCK FUND
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
10/31/00(14) $10.00 $(0.02)(3) $ 2.60 $2.58 $ -- $ -- $12.58
CLASS B
10/31/00(14) 10.00 (0.08) 2.59 2.51 -- -- 12.51
CLASS I
10/31/00(14) 10.00 0.02 2.60 2.62 -- -- 12.62
SMALL CAP STOCK FUND
CLASS A
10/31/00 $19.61 $(0.27)(3) $10.01 $ 9.74 $(2.68) $(2.68) $26.67
10/31/99 16.25 (0.20)(3) 6.36 6.16 (2.80) (2.80) 19.61
10/31/98(7) 19.49 (0.08)(3) (3.16) (3.24) -- -- 16.25
06/30/98 18.28 (0.22)(3) 2.50 2.28 (1.07) (1.07) 19.49
06/30/97 20.17 (0.21)(3) (0.18) (0.39) (1.50) (1.50) 18.28
06/30/96 15.47 (0.19)(3) 5.65 5.46 (0.76) (0.76) 20.17
CLASS B
10/31/00 18.61 (0.47)(3) 9.47 9.00 (2.68) (2.68) 24.93
10/31/99 15.67 (0.34)(3) 6.08 5.74 (2.80) (2.80) 18.61
10/31/98(7) 18.86 (0.13)(3) (3.06) (3.19) -- -- 15.67
06/30/98 17.85 (0.36)(3) 2.44 2.08 (1.07) (1.07) 18.86
06/30/97 19.88 (0.34)(3) (0.19) (0.53) (1.50) (1.50) 17.85
06/30/96 15.37 (0.32)(3) 5.59 5.27 (0.76) (0.76) 19.88
CLASS I
10/31/00(13) 24.98 (0.15)(3) 1.94 1.79 -- -- 26.77
<PAGE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS
AND/OR FEES
RATIO OF REDUCED BY
OPERATING RATIO OF NET CREDITS
NET ASSETS, EXPENSES INVESTMENT ALLOWED
TOTAL END OF PERIOD TO AVERAGE INCOME/(LOSS) TO PORTFOLIO BY THE
RETURN(2) (IN 000'S) NET ASSETS(6) AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN
---------- ---------- -------------- ------------------ ------------- ---------
MID CAP STOCK FUND
<S> <C> <C> <C> <C> <C> <C>
CLASS A
10/31/00(14) 25.80% $ 2,451 1.40%(1) (0.29)%(1) 9% 1.40%(1)
CLASS B
10/31/00(14) 25.10% 3,778 2.16%(1) (1.05)%(1) 9% 2.16%(1)
CLASS I
10/31/00(14) 26.20% 176,653 0.88%(1) 0.23%(1) 9% 0.88%(1)
SMALL CAP STOCK FUND
CLASS A
10/31/00 53.57% $132,274 1.42% (0.96)% 49% 1.43%
10/31/99 42.60% 92,130 1.78% (1.16)% 45% 1.94%
10/31/98(7) (16.62)% 88,502 1.88%(1) (1.43)%(1) 20% 1.89%(1)
06/30/98 12.95% 118,473 1.66% (1.10)% 112% 1.66%
06/30/97 (1.50)% 165,719 1.64% (1.17)% 81% 1.64%
06/30/96 35.93% 283,747 1.64% (1.02)% 131% 1.65%
CLASS B
10/31/00 52.34% 54,407 2.24% (1.78)% 49% 2.25%
10/31/99 41.32% 28,969 2.70% (2.08)% 45% 2.86%
10/31/98(7) (16.87)% 22,172 2.84%(1) (2.39)%(1) 20% 2.85%(1)
06/30/98 12.05% 28,540 2.47% (1.92)% 112% 2.47%
06/30/97 (2.26)% 29,123 2.39% (1.92)% 81% 2.39%
06/30/96 34.93% 28,920 2.39% (1.77)% 131% 2.40%
CLASS I
10/31/00(13) 7.21% 150,073 0.98%(1) (0.52)%(1) 49% 0.99%(1)
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- -----------------------------------------------------
DISTRIBUTIONS
NET ASSET NET REALIZED IN EXCESS DISTRIBUTIONS
VALUE, NET AND UNREALIZED TOTAL FROM DIVIDENDS FROM OF NET FROM DISTRIBUTIONS
BEGINNING OF INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT INVESTMENT NET REALIZED FROM
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS CAPITAL
------ ------------- ----------- ---------- ------ ------ ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH FUND
CLASS A
10/31/00 $11.14 $(0.03)(3) $(0.00)(4) $(0.03) $ -- $(0.14) $(0.00)(4) --
10/31/99 8.86 0.01(3) 2.65 2.66 (0.27) -- (0.11) --
10/31/98(7) 10.20 (0.02)(3) (1.32) (1.34) -- -- -- --
06/30/98 11.85 0.05(3) (0.67) (0.62) (0.50) (0.03) (0.50) --
06/30/97 10.49 0.04(3) 1.55 1.59 (0.13) -- (0.10) --
06/30/96 9.78 0.05(3) 1.21 1.26 (0.05) (0.04) (0.46) --
CLASS B
10/31/00 10.87 (0.12)(3) 0.02 (0.10) -- (0.07) (0.00)(4) --
10/31/99 8.72 (0.08)(3) 2.60 2.52 (0.26) -- (0.11) --
10/31/98(7) 10.07 (0.05)(3) (1.30) (1.35) -- -- -- --
06/30/98 11.70 (0.04)(3) (0.64) (0.68) (0.42) (0.03) (0.50) --
06/30/97 10.39 (0.04)(3) 1.53 1.49 (0.08) -- (0.10) --
06/30/96 9.73 (0.03)(3) 1.21 1.18 (0.02) (0.04) (0.46) --
CLASS I
10/31/00 11.16 0.05(3) 0.00(4) 0.05 (0.21) -- (0.00)(4) --
10/31/99 8.83 0.07(3) 2.65 2.72 (0.28) -- (0.11) --
10/31/98(7) 10.16 0.00(3)(4) (1.33) (1.33) -- -- -- --
06/30/98 11.82 0.09(3) (0.69) (0.60) (0.53) (0.03) (0.50) --
06/30/97(9) 9.88 0.06(3) 2.15 2.21 (0.17) -- (0.10) --
SHORT TERM INCOME FUND
CLASS A
10/31/00 $ 2.29 $ 0.13 $(0.00)(4) $ 0.13 $(0.13) -- -- $ --
10/31/99 2.35 0.13(3) (0.06) 0.07 (0.13) -- -- --
10/31/98(7) 2.32 0.04 0.03 0.07 (0.04) -- -- --
06/30/98 2.32 0.13 0.00(4) 0.13 (0.13) -- -- (0.00)(4)
06/30/97 2.32 0.14 0.00(4) 0.14 (0.14) -- -- --
06/30/96 2.35 0.15(3) (0.03) 0.12 (0.15) -- -- (0.00)(4)
CLASS B
10/31/00 2.29 0.11 (0.00)(4) 0.11 (0.11) -- -- --
10/31/99 2.35 0.10(3) (0.06) 0.04 (0.10) -- -- --
10/31/98(7) 2.32 0.04 0.03 0.07 (0.04) -- -- --
06/30/98 2.32 0.12 0.00(4) 0.12 (0.12) -- -- (0.00)(4)
06/30/97 2.32 0.12 0.00(4) 0.12 (0.12) -- -- --
06/30/96 2.35 0.13(3) (0.03) 0.10 (0.13) -- -- (0.00)(4)
CLASS I
10/31/00 2.29 0.14 (0.00)(4) 0.14 (0.14) -- -- --
10/31/99 2.35 0.13(3) (0.06) 0.07 (0.13) -- -- --
10/31/98(7) 2.32 0.04 0.03 0.07 (0.04) -- -- --
06/30/98 2.32 0.14 0.00(4) 0.14 (0.14) -- -- (0.00)(4)
06/30/97(9) 2.32 0.14 0.00(4) 0.14 (0.14) -- -- --
<PAGE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS
RATIO AND/OR FEES
NET NET RATIO OF OF NET REDUCED BY
ASSET ASSETS, OPERATING INVESTMENTET CREDITS
VALUE, END OF EXPENSES INCOME/(LOSS) PORTFOLIO ALLOWED
TOTAL END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER BY THE
DISTRIBUTIONS PERIOD RETURN(2) (IN 000'S) NET ASSETS(6) NET ASSETS RATE CUSTODIAN
------------- ------------- ---------- -------------- ------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH FUND
CLASS A
10/31/00 $(0.14) $10.97 (0.43)% $ 28,997 1.78% (0.25)% 37% 1.78%
10/31/99 (0.38) 11.14 31.15% 28,618 1.88% 0.13% 164% 1.89%
10/31/98(7) -- 8.86 (13.14)% 30,117 1.86%(1) (0.50)%(1) 41% 1.86%(1)
06/30/98 (1.03) 10.20 (4.19)% 38,281 1.67% 0.50% 118% 1.67%
06/30/97 (0.23) 11.85 15.50% 57,776 1.65% 0.35% 67% 1.65%
06/30/96 (0.55) 10.49 13.16% 116,254 1.77% 0.46% 125% 1.77%
CLASS B
10/31/00 (0.07) 10.70 (1.03)% 12,272 2.48% (0.95)% 37% 2.48%
10/31/99 (0.37) 10.87 29.87% 11,101 2.80% (0.79)% 164% 2.81%
10/31/98(7) -- 8.72 (13.41)% 3,552 2.97%(1) (1.61)%(1) 41% 2.97%(1)
06/30/98 (0.95) 10.07 (4.95)% 4,294 2.94% (0.35)% 118% 2.94%
06/30/97 (0.18) 11.70 14.66% 4,876 2.40% (0.40)% 67% 2.40%
06/30/96 (0.52) 10.39 12.34% 4,447 2.52% (0.29)% 125% 2.52%
CLASS I
10/31/00 (0.21) 11.00 0.26% 145,176 1.14% 0.39% 37% 1.14%
10/31/99 (0.39) 11.16 31.98% 163,610 1.28% 0.73% 164% 1.29%
10/31/98(7) -- 8.83 (13.09)% 98,554 1.32%(1) 0.04%(1) 41% 1.32%(1)
06/30/98 (1.06) 10.16 (3.98)% 108,521 1.36% 0.81% 118% 1.36%
06/30/97(9) (0.27) 11.82 22.76% 95,512 1.40%(1) 0.60%(1) 67% 1.40%(1)
SHORT TERM INCOME FUND
CLASS A
10/31/00 $(0.13) $ 2.29 5.70% 20,224 0.99% 5.55% 14% 1.29%
10/31/99 (0.13) 2.29 2.84% 27,059 0.82% 5.22% 85% 1.16%
10/31/98(7) (0.04) 2.35 3.11% 32,748 0.82%(1) 5.44%(1) 19% 1.40%(1)
06/30/98 (0.13) 2.32 5.91% 35,551 0.86% 5.71% 138% 1.32%
06/30/97 (0.14) 2.32 6.15% 13,685 0.82% 6.50% 51% 1.45%
06/30/96 (0.15) 2.32 5.05% 32,440 0.75% 6.22% 225% 1.42%
CLASS B
10/31/00 (0.11) 2.29 5.12% 3,461 1.55% 4.99% 14% 1.85%
10/31/99 (0.10) 2.29 1.79% 4,597 1.60% 4.44% 85% 1.94%
10/31/98(7) (0.04) 2.35 2.85% 3,747 1.57%(1) 4.69%(1) 19% 2.18%(1)
06/30/98 (0.12) 2.32 5.13% 3,459 1.61% 4.96% 138% 2.07%
06/30/97 (0.12) 2.32 5.37% 2,994 1.57% 5.75% 51% 2.20%
06/30/96 (0.13) 2.32 4.27% 3,437 1.50% 5.47% 225% 2.17%
Class I
10/31/00 (0.14) 2.29 6.43% 93,741 0.30% 6.24% 14% 0.60%
10/31/99 (0.13) 2.29 2.93% 138,955 0.37% 5.67% 85% 0.71%
10/31/98(7) (0.04) 2.35 3.20% 1,631 0.57%(1) 5.69%(1) 19% 0.96%(1)
06/30/98 (0.14) 2.32 6.17% 3,103 0.53% 6.03% 138% 1.00%
06/30/97(9) (0.14) 2.32 5.94% 2,752 0.57%(1) 6.75%(1) 51% 1.20%(1)
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- --------------------------------------------------------
DISTRIBUTIONS
NET REALIZED IN EXCESS
NET ASSET VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM OF NET NET ASSET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT INVESTMENT TOTAL VALUE, END
PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME DISTRIBUTIONS OF PERIOD
------ ------------- ----------- ---------- ------ ------ ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES FUND
CLASS A
10/31/00 $10.51 $ 0.63 $ 0.04 $ 0.67 $(0.63) $ -- $(0.63) $10.55
10/31/99 10.98 0.62 (0.47) 0.15 (0.61) (0.01) (0.62) 10.51
10/31/98(8) 10.84 0.54 0.14 0.68 (0.54) -- (0.54) 10.98
12/31/97 10.46 0.62 0.38 1.00 (0.62) -- (0.62) 10.84
12/31/96 10.84 0.63 (0.38) 0.25 (0.63) -- (0.63) 10.46
12/31/95 9.64 0.63 1.20 1.83 (0.63) -- (0.63) 10.84
CLASS B
10/31/00 10.50 0.56 0.04 0.60 (0.56) -- (0.56) 10.54
10/31/99 10.97 0.54 (0.48) 0.06 (0.53) (0.00)(4) (0.53) 10.50
10/31/98(8) 10.84 0.47 0.12 0.59 (0.46) -- (0.46) 10.97
12/31/97 10.46 0.54 0.38 0.92 (0.54) -- (0.54) 10.84
12/31/96 10.84 0.54 (0.38) 0.16 (0.54) -- (0.54) 10.46
12/31/95 9.64 0.54 1.20 1.74 (0.54) -- (0.54) 10.84
CLASS I
10/31/00 10.51 0.67 0.04 0.71 (0.67) -- (0.67) 10.55
10/31/99 10.99 0.66 (0.51) 0.15 (0.62) (0.01) (0.63) 10.51
10/31/98(10) 10.86 0.42 0.12 0.54 (0.41) -- (0.41) 10.99
INCOME FUND
CLASS A
10/31/00 $ 8.99 $ 0.62 $(0.09) $ 0.53 $(0.62) (0.00)(4) $(0.62) $ 8.90
10/31/99 9.44 0.63 (0.45) 0.18 (0.63) -- (0.63) 8.99
10/31/98(8) 9.48 0.53 (0.04)(5) 0.49 (0.53) -- (0.53) 9.44
12/31/97 9.15 0.60 0.33 0.93 (0.60) -- (0.60) 9.48
12/31/96 9.44 0.59 (0.29) 0.30 (0.59) -- (0.59) 9.15
12/31/95 8.29 0.59 1.15 1.74 (0.59) -- (0.59) 9.44
CLASS B
10/31/00 9.00 0.56 (0.08) 0.48 (0.56) (0.00)(4) (0.56) 8.92
10/31/99 9.45 0.56 (0.45) 0.11 (0.56) -- (0.56) 9.00
10/31/98(8) 9.49 0.46 (0.04)(5) 0.42 (0.46) -- (0.46) 9.45
12/31/97 9.17 0.53 0.32 0.85 (0.53) -- (0.53) 9.49
12/31/96 9.46 0.52 (0.29) 0.23 (0.52) -- (0.52) 9.17
12/31/95 8.30 0.51 1.16 1.67 (0.51) -- (0.51) 9.46
CLASS I
10/31/00 8.99 0.66 (0.08) 0.58 (0.66) (0.00)(4) (0.66) 8.91
10/31/99 9.44 0.65 (0.45) 0.20 (0.65) -- (0.65) 8.99
10/31/98(10) 9.57 0.41 (0.13)(5) 0.28 (0.41) -- (0.41) 9.44
<PAGE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
RATIO OF WITHOUT FEE
OPERATING WAIVERS
EXPENSES TO RATIO OF AND/OR FEES
RATIO OF AVERAGE NET REDUCED BY
OPERATING NET ASSETS INVESTMENT CREDITS
NET ASSETS, EXPENSES INCLUDING INCOME PORTFOLIO ALLOWED
END OF PERIOD TO AVERAGE INTEREST TO AVERAGE TURNOVER BY THE
TOTAL RETURN(2) (IN 000'S) NET ASSETS(6) EXPENSE NET ASSETS RATE CUSTODIAN
------------- --------------- ---------- -------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES FUND
CLASS A
10/31/00 6.65% $168,728 0.96% N/A 6.12% 13% 0.99%
10/31/99 1.38% 221,592 0.96% N/A 5.76% 55% 1.04%
10/31/98(8) 6.38% 266,334 0.92%(1) 1.36%(1) 5.99%(1) 12% 1.45%(1)
12/31/97 9.92% 107,054 1.05% N/A 5.92% 6% 1.05%
12/31/96 2.48% 138,159 0.97% N/A 6.01% 16% 0.97%
12/31/95 19.45% 177,310 1.01% N/A 6.08% 8% 1.01%
CLASS B
10/31/00 5.91% 55,071 1.66% N/A 5.42% 13% 1.69%
10/31/99 0.53% 72,751 1.70% N/A 5.02% 55% 1.78%
10/31/98(8) 5.54% 28,747 1.67%(1) 2.12%(1) 5.24%(1) 12% 2.22%(1)
12/31/97 9.03% 3,352 1.84% N/A 5.08% 6% 1.84%
12/31/96 1.58% 2,963 1.85% N/A 5.14% 16% 1.85%
12/31/95 18.48% 2,206 1.84% N/A 5.20% 8% 1.84%
CLASS I
10/31/00 7.07% 247,204 0.56% N/A 6.52% 13% 0.59%
10/31/99 1.43% 184,708 0.60% N/A 6.12% 55% 0.68%
10/31/98(10) 5.00% 39,939 0.66%(1) 1.10%(1) 6.25%(1) 12% 1.11%(1)
INCOME FUND
CLASS A
10/31/00 6.16% $131,665 1.02% -- 6.98% 32% 1.03%
10/31/99 1.98% 172,217 1.06% -- 6.84% 19% 1.10%
10/31/98(8) 5.21% 213,397 1.07%(1) -- 6.66%(1) 37% N/A
12/31/97 10.51% 77,864 1.08% -- 6.47% 27% N/A
12/31/96 3.46% 86,657 1.03% -- 6.52% 42% N/A
12/31/95 21.58% 97,534 1.08% -- 6.59% 43% N/A
CLASS B
10/31/00 5.53% 39,347 1.73% -- 6.27% 32% 1.74%
10/31/99 1.12% 42,715 1.81% -- 6.09% 19% 1.85%
10/31/98(8) 4.51% 34,321 1.84%(1) -- 5.89%(1) 37% N/A
12/31/97 9.51% 9,691 1.86% -- 5.65% 27% N/A
12/31/96 2.59% 7,122 1.89% -- 5.69% 42% N/A
12/31/95 20.70% 4,452 1.91% -- 5.73% 43% N/A
CLASS I
10/31/00 6.72% 286,979 0.60% -- 7.40% 32% 0.61%
10/31/99 2.24% 76,145 0.68% -- 7.22% 19% 0.72%
10/31/98(10) 2.84% 7,342 0.71%(1) -- 7.02%(1) 37% N/A
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- --------------------------------------------------------
DISTRIBUTIONS
NET REALIZED IN EXCESS DISTRIBUTIONS
NET ASSET VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM OF NET FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT INVESTMENT NET REALIZED TOTAL
PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME GAINS DISTRIBUTIONS
------ ------------- ----------- ---------- ------ ------ ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD FUND
CLASS A
10/31/00 $ 8.92 $ 0.90(3) $(0.43) $ 0.47 $(0.89) $ -- $ -- $(0.89)
10/31/99 8.86 0.91(3) 0.14(5) 1.05 (0.94) -- (0.05) (0.99)
10/31/98(11) 10.00 0.47 (1.15) (0.68) (0.45) (0.01) -- (0.46)
CLASS B
10/31/00 8.97 0.84(3) (0.43) 0.41 (0.84) -- -- (0.84)
10/31/99 8.90 0.86(3) 0.15(5) 1.01 (0.89) -- (0.05) (0.94)
10/31/98(11) 10.00 0.42 (1.09) (0.67) (0.42) (0.01) -- (0.43)
CLASS I
10/31/00 8.91 0.93(3) (0.43) 0.50 (0.93) -- -- (0.93)
10/31/99 8.85 0.98(3) 0.11(5) 1.09 (0.98) -- (0.05) (1.03)
10/31/98(11) 10.00 0.22 (1.13) (0.91) (0.23) (0.01) -- (0.24)
TAX-EXEMPT BOND FUND
CLASS A
10/31/00 $ 7.41 $ 0.40 $ 0.14 $ 0.54 $(0.40) -- $ -- $(0.40)
10/31/99 8.11 0.41 (0.70) (0.29) (0.41) -- -- (0.41)
10/31/98(8) 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)
CLASS B
10/31/00 7.41 0.34 0.14 0.48 (0.34) -- -- (0.34)
10/31/99 8.11 0.35 (0.70) (0.35) (0.35) -- -- (0.35)
10/31/98(8) 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)
<PAGE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS
AND/OR FEES
RATIO OF REDUCED BY
OPERATING RATIO OF NET CREDITS
NET ASSETS, EXPENSES INVESTMENT ALLOWED
NET ASSET VALUE, END OF PERIOD TO AVERAGE INCOME TO PORTFOLIO BY THE
END OF PERIOD TOTAL RETURN(2) (IN 000'S) NET ASSETS(6) AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN
------------- --------------- ---------- -------------- ------------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD FUND
CLASS A
10/31/00 $ 8.50 5.28% $ 8,182 1.08% 10.08% 40% 1.08%
10/31/99 8.92 12.26% 5,827 0.73% 10.17% 30% 1.37%
10/31/98(11) 8.86 (6.90)% 10,861 0.78%(1) 8.80%(1) 54% 1.22%(1
CLASS B
10/31/00 8.54 4.46% 32,881 1.78% 9.38% 40% 1.78%
10/31/99 8.97 11.44% 21,259 1.29% 9.61% 30% 1.93%
10/31/98(11) 8.90 (6.33)% 2,830 1.57%(1) 8.01%(1) 54% 2.02%(1
CLASS I
10/31/00 8.48 5.54% 168,097 0.72% 10.44% 40% 0.72%
10/31/99 8.91 12.75% 44,662 0.21% 10.69% 30% 0.85%
10/31/98(11) 8.85 (9.13)% 1,309 0.48%(1) 9.10%(1) 54% 0.97%(1
TAX-EXEMPT BOND FUND
CLASS A
10/31/00 $ 7.55 7.52% $207,309 0.88% 5.41% 28% 0.90%
10/31/99 7.41 (3.77)% 247,814 0.89% 5.16% 57% --
10/31/98(8) 8.11 4.58% 301,162 0.84%(1) 5.14%(1) 6% --
12/31/97 8.09 8.59% 188,021 0.80% 4.84% 21% --
12/31/96 7.83 2.52% 203,606 0.75% 4.90% 22% --
12/31/95 8.02 18.25% 230,055 0.81% 5.03% 8% --
CLASS B
10/31/00 7.55 6.73% 26,332 1.61% 4.68% 28% 1.63%
10/31/99 7.41 (4.52)% 25,059 1.64% 4.41% 57% --
10/31/98(8) 8.11 3.88% 17,344 1.62%(1) 4.36%(1) 6% --
12/31/97 8.09 7.71% 8,110 1.62% 4.00% 21% --
12/31/96 7.83 1.61% 5,266 1.65% 4.01% 22% --
12/31/95 8.02 17.30% 2,682 1.62% 4.18% 8% --
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- --------------------------------------------------------
DISTRIBUTIONS
NET REALIZED IN EXCESS DISTRIBUTIONS
NET ASSET VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM OF NET FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT INVESTMENT NET REALIZED TOTAL
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS DISTRIBUTIONS
------ ------------- ----------- ---------- ------ ------ ----- -------------
CALIFORNIA MUNICIPAL FUND
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/00 $10.43 $ 0.55 $ 0.38 $ 0.93 $(0.55) $ -- $(0.55)
10/31/99 11.46 0.54 (0.94) (0.40) (0.57) -- (0.06) (0.63)
10/31/98(7) 11.33 0.19(3) 0.13 0.32 (0.19) -- -- (0.19)
06/30/98 10.92 0.58(3) 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(3) 0.07 0.67 (0.60) -- -- (0.60)
CLASS B
10/31/00 10.43 0.48 0.38 0.86 (0.48) -- -- (0.48)
10/31/99 11.46 0.48 (0.97) (0.49) (0.48) -- (0.06) (0.54)
10/31/98(7) 11.33 0.16(3) 0.13 0.29 (0.16) -- -- (0.16)
06/30/98 10.92 0.50(3) 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(3) 0.07 0.58 (0.51) -- -- (0.51)
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
CLASS A
10/31/00 $10.30 $ 0.44 $ 0.31 $ 0.75 $(0.44) $ -- $(0.03) $(0.47)
10/31/99 11.02 0.44(3) (0.55) (0.11) (0.45) -- (0.16) (0.61)
10/31/98(7) 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)(4) (0.10) (0.59)
06/30/97 10.56 0.49(3) 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)
CLASS B
10/31/00 10.30 0.36 0.31 0.67 (0.36) -- (0.03) (0.39)
10/31/99 11.02 0.36(3) (0.56) (0.20) (0.36) -- (0.16) (0.52)
10/31/98(7) 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)(4) (0.10) (0.51)
06/30/97 10.56 0.41(3) 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)
<PAGE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS
AND/OR FEES
RATIO OF REDUCED BY
OPERATING RATIO OF NET CREDITS
NET ASSETS, EXPENSES INVESTMENT ALLOWED
NET ASSET VALUE, END OF PERIOD TO AVERAGE INCOME TO PORTFOLIO BY THE
END OF PERIOD TOTAL RETURN(2) (IN 000'S) NET ASSETS(6) AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN
------------- --------------- ---------- -------------- ------------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL FUND
CLASS A
10/31/00 $10.81 9.33% $248,941 0.87% 5.30% 40% 0.88%
10/31/99 10.43 (3.87)% 283,929 0.88% 4.94% 92% 0.91%
10/31/98(7) 11.46 2.82% 287,590 0.97%(1) 4.87%(1) 28% 1.05%(1)
06/30/98 11.33 9.26% 290,328 1.00% 5.18% 87% 1.19%
06/30/97 10.92 8.83% 318,251 0.97% 5.51% 36% 1.26%
06/30/96 10.60 6.40% 372,177 0.94% 5.56% 17% 1.29%
CLASS B
10/31/00 10.81 8.53% 160,086 1.60% 4.57% 40% 1.61%
10/31/99 10.43 (4.62)% 133,842 1.63% 4.19% 92% 1.66%
10/31/98(7) 11.46 2.56% 49,683 1.72%(1) 4.12%(1) 28% 1.81%(1)
06/30/98 11.33 8.45% 34,537 1.75% 4.42% 87% 1.95%
06/30/97 10.92 8.02% 25,219 1.72% 4.76% 36% 2.01%
06/30/96 10.60 5.61% 20,543 1.69% 4.81% 17% 2.04%
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
CLASS A
10/31/00 $10.58 7.37% $ 29,657 0.91% 4.19% 45% 0.93%
10/31/99 10.30 (1.11)% 31,253 0.89% 4.13% 93% 0.97%
10/31/98(7) 11.02 3.46% 37,529 0.82%(1) 4.39%(1) 7% 1.15%(1)
06/30/98 10.81 6.26% 38,724 0.86% 4.49% 25% 1.25%
06/30/97 10.74 6.97% 45,157 0.82% 4.61% 29% 1.31%
06/30/96 10.56 6.25% 54,518 0.73% 4.62% 27% 1.39%
CLASS B
10/31/00 10.58 6.57% 35,685 1.66% 3.44% 45% 1.68%
10/31/99 10.30 (1.89)% 35,501 1.64% 3.38% 93% 1.72%
10/31/98(7) 11.02 3.20% 23,960 1.57%(1) 3.64%(1) 7% 1.90%(1)
06/30/98 10.81 5.47% 21,688 1.61% 3.74% 25% 2.01%
06/30/97 10.74 6.17% 20,992 1.57% 3.86% 29% 2.06%
06/30/96 10.56 5.46% 20,948 1.48% 3.87% 27% 2.14%
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- --------------------------------------------------------
DISTRIBUTIONS
NET REALIZED IN EXCESS
NET ASSET VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM OF NET NET ASSET
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT INVESTMENT TOTAL VALUE,
PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME DISTRIBUTIONS END OF PERIOD
------ ------------- ----------- ---------- ------ ------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FLORIDA INSURED MUNICIPAL FUND
CLASS A
10/31/00 $ 9.60 $ 0.46 $ 0.16 $ 0.62 $(0.46) $ -- $(0.46) $ 9.76
10/31/99 10.50 0.48 (0.90) (0.42) (0.48) -- (0.48) 9.60
10/31/98(7) 10.35 0.17 0.15 0.32 (0.17) -- (0.17) 10.50
06/30/98 9.93 0.49 0.42 0.91 (0.49) -- (0.49) 10.35
06/30/97 9.64 0.49(3) 0.30 0.79 (0.50) (0.00)(4) (0.50) 9.93
06/30/96 9.43 0.50 0.21 0.71 (0.50) -- (0.50) 9.64
CLASS B
10/31/00 9.60 0.39 0.16 0.55 (0.39) -- (0.39) 9.76
10/31/99 10.50 0.40 (0.90) (0.50) (0.40) -- (0.40) 9.60
10/31/98(7) 10.35 0.14 0.15 0.29 (0.14) -- (0.14) 10.50
06/30/98 9.93 0.41 0.43 0.84 (0.42) -- (0.42) 10.35
06/30/97 9.64 0.42(3) 0.30 0.72 (0.43) (0.00)(4) (0.43) 9.93
06/30/96 9.43 0.42 0.21 0.63 (0.42) -- (0.42) 9.64
<PAGE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS
AND/OR FEES
RATIO OF REDUCED BY
OPERATING RATIO OF NET CREDITS
NET ASSETS, EXPENSES INVESTMENT ALLOWED
END OF PERIOD TO AVERAGE INCOME TO PORTFOLIO BY THE
TOTAL RETURN(2) (IN 000'S) NET ASSETS(6) AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN
--------------- ---------- -------------- ------------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
FLORIDA INSURED MUNICIPAL FUND
Class A
10/31/00 6.68% $ 8,200 1.14% 4.74% 34% 1.17%
10/31/99 (4.14)% 12,015 0.97% 4.68% 104% 1.14%
10/31/98(7) 3.08% 15,813 0.82%(1) 4.76%(1) 40% 1.40%(1)
06/30/98 9.34% 16,538 0.88% 4.79% 51% 1.45%
06/30/97 8.43% 22,761 0.82% 5.01% 53% 1.46%
06/30/96 7.56% 29,821 0.63% 5.08% 52% 1.46%
CLASS B
10/31/00 5.90% 5,567 1.87% 4.01% 34% 1.90%
10/31/99 (4.91)% 7,273 1.71% 3.94% 104% 1.88%
10/31/98(7) 2.82% 6,054 1.57%(1) 4.01%(1) 40% 2.15%(1)
06/30/98 8.53% 5,075 1.63% 4.04% 51% 2.21%
06/30/97 7.63% 5,067 1.57% 4.26% 53% 2.21%
06/30/96 6.76% 5,428 1.38% 4.33% 52% 2.21%
(1) Annualized.
(2) 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/or expenses reimbursed by the investment advisor or if
fees had not been reduced by credits allowed by the custodian.
(3) Per share numbers have been calculated using the average shares method.
(4) Amount represents less than $0.01 per share.
(5) 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.
(6) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(7) Fiscal year end changed to October 31 from June 30.
(8) Fiscal year end changed to October 31 from December 31.
(9) On July 25, 1996 the Fund commenced selling Class I shares.
(10) On March 23, 1998 the Fund commenced selling Class I shares.
(11) On April 8, 1998, May 5, 1998 and July 27, 1998 the Fund commenced selling Class A, Class B, and Class I shares, respectively.
(12) On June 7, 1999 the Fund commenced selling Class I shares.
(13) On January 5, 2000 the Fund commenced selling Class I shares.
(14) The Fund commenced operations on March 1, 2000.
(15) On August 1, 2000 the Fund commenced selling Class I shares.
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS
EQUITY INCOME FUNE
OCTOBER 31, 2000
SHARES VALUE
------ -----
COMMON STOCKS - 71.4%
BANKS/SAVINGS & LOANS - 13.0%
110,000 Bank of America Corporation .................... $ 5,286,875
120,000 Bank One Corporation ........................... 4,380,000
150,000 Chase Manhattan Corporation .................... 6,825,000
73,333 Citigroup Inc. ................................. 3,859,149
89,551 First State Bancorporation ..................... 1,029,836
180,000 First Union Corporation ........................ 5,456,250
107,000 Mellon Financial Corporation ................... 5,162,750
90,000 PNC Financial Services Group ................... 6,018,750
120,000 Wells Fargo & Company .......................... 5,557,500
--------------
43,576,110
--------------
OIL & GAS - 6.9%
60,000 Ashland Inc. ................................... 1,965,000
150,000 Repsol, Sponsored ADR .......................... 2,390,625
65,000 Royal Dutch Petroleum Company .................. 3,859,375
80,000 Texaco, Inc. ................................... 4,725,000
96,500 Tosco Corporation .............................. 2,762,312
80,000 Ultramar Diamond Shamrock Corporation .......... 2,100,000
90,000 Unocal Corporation ............................. 3,071,250
70,000 Valero Energy Corporation ...................... 2,314,375
--------------
23,187,937
--------------
UTILITIES/GAS & ELECTRIC - 6.5%
60,000 Duke Energy Corporation ........................ 5,186,250
80,000 FPL Group, Inc. ................................ 5,280,000
200,000 NiSource Inc. .................................. 4,987,500
50,000 Pinnacle West Capital Corporation .............. 2,171,875
140,000 Southern Company ............................... 4,112,500
--------------
21,738,125
--------------
CONSUMER STAPLES - 6.0%
190,000 Albertson's Inc. ............................... 4,500,625
65,000 Clorox Company ................................. 2,900,625
165,000 ConAgra Foods Inc. ............................. 3,526,875
50,000 Hershey Foods Corporation ...................... 2,715,625
50,000 PepsiCo Inc. ................................... 2,421,875
35,000 Procter & Gamble Company ....................... 2,500,312
113,000 Supervalu Inc. ................................. 1,737,375
--------------
20,303,312
--------------
UTILITIES/TELECOMMUNICATIONS - 5.9%
50,000 Alltel Corporation ............................. 3,221,875
150,000 AT&T Corporation ............................... 3,478,125
100,000 SBC Communications Inc. ........................ 5,768,750
57,500 Sprint Corporation, FON Group .................. 1,466,250
100,000 Verizon Communications ......................... 5,781,250
--------------
19,716,250
--------------
HEALTH CARE PRODUCTS - 4.9%
50,000 Abbott Laboratories ............................ 2,640,625
36,000 Baxter International Inc. ...................... 2,958,750
85,600 Becton Dickinson & Company ..................... 2,867,600
21,100 Johnson & Johnson .............................. 1,943,837
35,000 Merck & Company Inc. ........................... 3,147,812
100,000 Mylan Laboratories Inc. ........................ 2,800,000
--------------
16,358,624
--------------
BASIC INDUSTRY - 4.8%
100,000 Alcoa Inc. ..................................... 2,868,750
170,000 Dow Chemical Company ........................... 5,206,250
100,000 E.I. Du Pont de Nemours and Company ............ 4,537,500
68,500 Engelhard Corporation .......................... 1,429,937
50,000 PPG Industries, Inc. ........................... 2,231,250
--------------
16,273,687
--------------
FINANCIAL SERVICES - 4.1%
80,000 Fannie Mae ..................................... 6,160,000
60,000 Franklin Resources Inc. ........................ 2,570,400
60,000 Price (T. Rowe) Associates Inc. ................ 2,808,750
22,000 Providian Financial Corporation ................ 2,288,000
--------------
13,827,150
--------------
AEROSPACE/DEFENSE - 3.6%
33,200 Boeing Company ................................. 2,251,375
50,000 General Dynamics Corporation ................... 3,578,125
180,000 Raytheon Company, Class B ...................... 6,153,750
--------------
11,983,250
--------------
LEISURE - 3.0%
200,000 Carnival Corporation ........................... 4,962,500
400,000 Mattel Inc. .................................... 5,175,000
--------------
10,137,500
--------------
RETAIL SALES - 2.8%
225,000 May Department Stores Company .................. 5,906,250
310,000 Penney (J.C.) Company Inc. ..................... 3,623,125
--------------
9,529,375
--------------
DIVERSIFIED MANUFACTURING - 2.4%
150,000 Honeywell International Inc. ................... 8,071,875
--------------
COMPUTER SYSTEMS - 1.9%
150,000 Diebold Inc. ................................... 3,900,000
30,000 Hewlett-Packard Company ........................ 1,393,125
12,000 International Business Machines Corporation .... 1,182,000
--------------
6,475,125
--------------
INSURANCE - 1.7%
140,000 Allstate Corporation ........................... 5,635,000
--------------
CONSUMER CYCLICALS - 1.5%
230,000 Genuine Parts Company .......................... 4,901,875
--------------
COMPUTER SOFTWARE/SERVICES - 1.1%
30,000 Autodesk Inc. .................................. 661,875
93,000 Computer Associates International Inc. ......... 2,964,375
--------------
3,626,250
--------------
CAPITAL GOODS - 0.8%
101,250 Crane Company .................................. 2,651,484
--------------
HEALTH CARE SERVICES - 0.5%
30,600 Aetna Inc. ..................................... 1,769,062
--------------
Total Common Stocks
(Cost $194,528,382) ............................ 239,761,991
--------------
REAL ESTATE INVESTMENT TRUSTS - 8.2%
60,000 Arden Realty Inc. .............................. 1,440,000
74,800 CarrAmerica Realty Corporation ................. 2,211,275
140,000 Duke-Weeks Realty Corporation .................. 3,316,250
100,000 Equity Office Properties Trust ................. 3,012,500
65,000 Equity Residential Properties Trust ............ 3,059,062
75,000 Franchise Finance Corporation of America ....... 1,523,437
110,000 Health Care Property Investors Inc. ............ 3,231,250
140,000 Hospitality Properties Trust ................... 3,018,750
85,000 Shurgard Storage Centers Inc., Class A ......... 1,928,438
85,000 Simon Property Group Inc. ...................... 1,896,563
58,500 Storage USA Inc. ............................... 1,634,344
110,500 Taubman Centers Inc. ........................... 1,208,594
--------------
Total Real Estate Investment Trusts
(Cost $29,144,447) ............................. 27,480,463
--------------
PRINCIPAL
AMOUNT
---------
CONVERTIBLE SECURITIES - 6.3%
CONVERTIBLE BONDS AND NOTES - 4.1%
$ 4,000,000 Adaptec Inc., Conv. Sub. Note,
4.750% due 02/01/2004 ........................ 3,240,000
9,500,000 Network Associates Inc., Conv. Bond,
% due 02/13/2018 ............................. 3,621,875
1,750,000 Rockefeller Center Properties Trust,
Conv. Deb., Zero coupon due 12/31/2000 ....... 1,505,000
3,900,000 S3 Inc., Conv. Sub. Note, 5.750% due 10/01/2003 3,393,000
2,000,000 Waste Management Inc., Conv. Deb.,
4.000% due 02/01/2002 ........................ 1,875,000
--------------
Total Convertible Bonds and Notes
(Cost $14,007,983) .......................... 13,634,875
--------------
SHARES
------
CONVERTIBLE PREFERRED STOCKS - 2.2%
50,000 Bank United Corporation, Conv. Pfd., 8.000%
due 08/16/2004 .............................. 3,387,500
40,000 DECS Trust VI, Conv. Pfd.,6.250% due 11/15/2002 1,472,500
6,000 Global Crossing Holdings Ltd., Conv. Pfd.,
6.375% due 11/05/2004++ ..................... 952,500
11,200 TCI Pacific Communications Inc., Conv. Pfd.,
5.000% due 07/31/2006 ....................... 1,736,000
--------------
Total Convertible Preferred Stocks
(Cost $6,584,600) ........................... 7,548,500
--------------
Total Convertible Securities
(Cost $20,592,583) .......................... 21,183,375
--------------
PRINCIPAL
AMOUNT
---------
FIXED INCOME SECURITIES - 10.0%
CORPORATE BONDS AND NOTES - 7.2%
$ 1,500,000 Aetna Services Inc., Company Guarantee,
7.625% due 08/15/2026 ........................ 1,452,855
1,250,000 American Home Products Corporation, Deb.,
7.250% due 03/01/2023 ........................ 1,197,280
2,000,000 Cendant Corporation, Note, 7.750% due 12/01/2003 1,941,190
2,000,000 FHP International Corporation, Sr. Note,
7.000% due 09/15/2003 ........................ 1,950,212
1,250,000 First Nationwide Bank, Sub. Deb., 10.000%
due 10/01/2006 ............................... 1,351,698
1,165,000 HEALTHSOUTH Corporation, Sr. Note, 6.875%
due 06/15/2005** ............................. 1,034,025
2,000,000 Loral Corporation, Deb., 7.625% due 06/15/2025 . 1,849,206
1,000,000 Medpartners Inc., Sr. Note, 7.375% due 10/01/2006 905,000
2,500,000 Merrill Lynch & Company Inc., Note, 6.375%
due 10/15/2008 ............................... 2,342,963
1,000,000 Price/Costco Inc., Sr. Note, 7.125% due 06/15/2005 992,423
1,750,000 Raytheon Company, Deb., 7.200% due 08/15/2027 .. 1,607,713
1,500,000 Superior Financial Acquisition Corporation,
Sr. Note, 8.650% due 04/01/2003 .............. 1,474,626
1,000,000 Tenet Healthcare Corporation, Sr. Note,
7.875% due 01/15/2003 ........................ 990,000
2,000,000 Texas-New Mexico Power Company, Sr. Note,
6.250% due 01/15/2009 ........................ 1,789,018
2,000,000 Time Warner Inc., Deb., 9.150% due 02/01/2023 .. 2,245,074
1,000,000 Westinghouse Electric Corporation, Deb.,
7.875% due 09/01/2023 ........................ 973,510
--------------
Total Corporate Bonds and Notes
(Cost $25,205,936) .......................... 24,096,793
--------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 2.4%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 2.4%
4,097,078 #C01049, GOLD,
7.000% due 09/01/2030 ....................... 4,019,286
4,146,802 #C42264, GOLD,
6.500% due 09/01/2030 ....................... 3,989,911
--------------
Total FHLMC
(Cost $8,000,955) ........................... 8,009,197
--------------
COLLATERALIZED MORTGAGE OBLIGATION (CMO) - 0.4%
(Cost $1,449,170)
1,446,684 Reilly Mortgage FHA, 1982,
7.430% due 06/01/2022 ....................... 1,469,636
--------------
Total Fixed Income Securities
(Cost $34,656,061) ......................... 33,575,626
--------------
SHARES
------
WARRANTS - 0.0%#
(Cost $45)
4,500 V2 Music Holdings Plc,
Expires 04/15/2008+,++ ..................... $ 45
--------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 3.9%
(Cost $12,935,000)
$12,935,000 Agreement with Goldman Sachs & Company,
6.420% dated 10/31/2000, to be
repurchased at $12,937,307 on 11/01/2000,
collateralized by $10,712,259 U.S. Treasury
Bond, 7.875% due 02/15/2021
(Market Value $13,213,666) ................. 12,935,000
--------------
TOTAL INVESTMENTS (Cost $291,856,518*) ....... 99.8% 334,936,500
OTHER ASSETS AND LIABILITIES (Net) ........... 0.2 736,036
----- --------------
NET ASSETS ................................... 100.0% $ 335,672,536
===== ==============
-----------------------
* Aggregate cost for federal tax purposes is $291,879,411.
** This security or a partial position of this security is on loan
at October 31, 2000, which have an aggregate market value of $310,651,
representing 0.1% of the total net assets of the Fund (Note 7).
# Amount represents less than 0.1% of net assets.
+ 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 Depository Receipt
FHA -- Federal Housing Authority
GOLD -- Payments are on an accelerated 45-day payment cycle
instead of 75-day payment cycle
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
GROWTH & INCOME FUND
October 31, 2000
SHARES VALUE
------ -----
COMMON STOCKS - 99.0%
Banks/Savings & Loans - 12.5%
1,000,000 Bank of America Corporation .................... $ 48,062,500
397,500 Chase Manhattan Corporation .................... 18,086,250
805,397 Citigroup Inc. ................................. 42,384,017
840,000 First Union Corporation** ...................... 25,462,500
440,000 Mellon Financial Corporation ................... 21,230,000
1,050,462 Wells Fargo & Company .......................... 48,649,521
--------------
203,874,788
--------------
HEALTH CARE PRODUCTS - 10.6%
285,000 American Home Products Corporation ............. 18,097,500
300,000 Bristol-Meyers Squibb Company .................. 18,281,250
520,000 Cardinal Health Inc. ........................... 49,270,000
193,800 Johnson & Johnson .............................. 17,853,825
196,400 Merck & Company Inc. ........................... 17,663,725
1,410,000 Mylan Laboratories Inc. ........................ 39,480,000
275,000 Pfizer Inc. .................................... 11,876,563
--------------
172,522,863
--------------
CONSUMER STAPLES - 9.0%
738,000 Avon Products Inc. ............................. 35,793,000
324,000 Kimberly-Clark Corporation ..................... 21,384,000
2,400,000 Kroger Company+ ................................ 54,150,000
355,000 PepsiCo Inc. ................................... 17,195,312
255,000 Procter & Gamble Company ....................... 18,216,563
--------------
146,738,875
--------------
COMPUTER SOFTWARE/SERVICES - 8.9%
129,000 Adobe Systems Inc. ............................. 9,812,062
1,275,000 BMC Software Inc.+ ............................. 25,898,437
1,535,000 Computer Associates International Inc. ......... 48,928,125
355,000 First Data Corporation ......................... 17,794,375
420,000 Microsoft Corporation+ ......................... 28,927,500
400,000 Oracle Corporation+ ............................ 13,200,000
--------------
144,560,499
--------------
COMPUTER SYSTEMS - 6.9%
290,000 Cisco Systems Inc.+ ............................ 15,623,750
1,110,000 Compaq Computer Corporation .................... 33,755,100
170,000 EMC Corporation+ ................................ 15,140,625
420,000 Hewlett-Packard Company ........................ 19,503,750
285,000 International Business Machines Corporation .... 28,072,500
--------------
112,095,725
--------------
OIL & GAS - 6.4%
312,576 Exxon Mobil Corporation ........................ 27,877,872
560,000 Halliburton Company ............................ 20,755,000
390,000 Royal Dutch Petroleum Company .................. 23,156,250
558,300 Tosco Corporation .............................. 15,981,338
510,000 Unocal Corporation ............................. 17,403,750
--------------
105,174,210
--------------
AEROSPACE/DEFENSE - 6.3%
925,000 Boeing Company ................................. 62,726,562
1,165,000 Raytheon Company, Class B ...................... 39,828,437
--------------
102,554,999
--------------
MEDIA - 6.2%
1,202,000 AT&T Corporation-Liberty Media Group, Class A+ . 21,636,000
750,000 Comcast Corporation, Special Class A ........... 30,562,500
500,000 News Corporation Ltd., Sponsored ADR ........... 18,093,750
218,000 Viacom Inc., Class A+ .......................... 12,480,500
500,000 Walt Disney Company ............................ 17,906,250
--------------
100,679,000
--------------
UTILITIES/TELECOMMUNICATIONS - 4.9%
1,035,000 AT&T Corporation ............................... 23,999,063
350,000 SBC Communications Inc. ........................ 20,190,625
408,800 Sprint Corporation, FON Group .................. 10,424,400
185,000 Verizon Communications ......................... 10,695,313
595,000 Worldcom Inc.+ ................................. 14,131,250
--------------
79,440,651
--------------
INSURANCE - 4.3%
850,000 Allstate Corporation ........................... 34,212,500
360,000 American International Group Inc. .............. 35,280,000
--------------
69,492,500
--------------
LEISURE - 3.6%
1,225,000 Carnival Corporation ........................... 30,395,313
2,255,000 Mattel Inc. .................................... 29,174,062
--------------
59,569,375
--------------
CAPITAL GOODS - 3.5%
1,000,000 Tyco International Ltd. ........................ 56,687,500
--------------
RETAIL SALES - 3.4%
300,000 Costco Wholesale Corporation+ .................. 10,987,500
1,110,000 Intimate Brands Inc. ........................... 26,501,250
650,000 Target Corporation ............................. 17,956,250
--------------
55,445,000
--------------
FINANCIAL SERVICES - 2.9%
625,000 Freddie Mac .................................... 37,500,000
100,000 Providian Financial Corporation ................ 10,400,000
--------------
47,900,000
--------------
DIVERSIFIED MANUFACTURING - 2.3%
695,000 Honeywell International Inc. ................... 37,399,687
--------------
HEALTH CARE SERVICES - 1.8%
496,000 Aetna Inc. ..................................... 28,675,000
--------------
UTILITIES/GAS & ELECTRIC - 1.7%
338,000 Enron Corporation .............................. 27,737,125
--------------
ELECTRONICS/SEMICONDUCTORS - 1.6%
573,200 Intel Corporation .............................. 25,794,000
--------------
ELECTRICAL EQUIPMENT - 1.4%
425,000 General Electric Company ....................... 23,295,312
--------------
COMMUNICATIONS EQUIPMENT - 0.8%
390,000 Lucent Technologies Inc. ....................... 9,091,875
185,000 Motorola Inc. .................................. 4,613,438
--------------
13,705,313
--------------
Total Common Stocks
(Cost $1,177,044,459) .......................... 1,613,342,422
--------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 1.0%
(Cost $16,244,000)
$16,244,000 Agreement with Goldman Sachs & Company, 6.420%
dated 10/31/2000, to be repurchased at
$16,246,897 on 11/01/2000, collateralized by
$13,452,642 U.S. Treasury Bond, 7.875% due
02/15/2021 (Market Value $16,593,953) .......... $ 16,244,000
--------------
TOTAL INVESTMENTS (Cost $1,193,288,459*) ........... 100.0% 1,629,586,422
OTHER ASSETS AND LIABILITIES (NET) ................. 0.0# 350,867
----- --------------
NET ASSETS ......................................... 100.0% $1,629,937,289
===== ==============
-----------------
* Aggregate cost for federal tax purposes is $1,193,969,050.
** This security or a partial position of this security is on loan at
October 31, 2000, which have an aggregate market value of $8,038,875,
representing 0.5% of the total net assets of the Fund (Note 7).
# Amount represents less than 0.1% of net assets.
+ Non-income producing security.
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
GROWTH FUND OF THE NORTHWEST
October 31, 2000
SHARES VALUE
------ -----
COMMON STOCKS - 91.9%
BANKS/SAVINGS & LOANS - 12.1%
348,450 Bank of America Corporation .................... $ 16,747,378
487,526 Banner Corporation ............................. 6,520,654
409,700 KeyCorp ........................................ 10,114,469
479,200 Pacific Northwest Bancorp ...................... 6,409,300
592,068 U.S. Bancorp ................................... 14,320,645
768,326 Washington Federal Inc. ........................ 17,143,274
306,800 Wells Fargo & Company .......................... 14,208,675
--------------
85,464,395
--------------
HEALTH CARE PRODUCTS - 9.7%
558,700 Corixa Corporation+ ............................ 24,862,150
82,100 Dendreon Corporation+ .......................... 1,344,388
21,400 Eden Bioscience Corporation+ ................... 810,525
207,270 ICOS Corporation+ .............................. 10,648,496
102,590 Immunex Corporation+ ........................... 4,366,487
304,400 NeoRx Corporation+ ............................. 4,946,500
1,187,100 Orasure Technologies Inc.+ ..................... 11,203,256
814,463 SonoSite Inc.+** ............................... 10,384,403
--------------
68,566,205
--------------
COMPUTER SYSTEMS - 8.2%
784,400 Advanced Digital Information Corporation+....... 10,197,200
264,396 Avocent Corporation+ ........................... 18,755,591
319,030 InFocus Corporation+ ........................... 14,097,138
580,842 RadiSys Corporation+ ........................... 15,392,313
--------------
58,442,242
--------------
COMPUTER SOFTWARE/SERVICES - 7.2%
77,260 Adobe Systems Inc. ............................. 5,876,589
125,100 BSQUARE Corporation+ ........................... 1,954,687
337,440 Mentor Graphics Corporation+ ................... 7,908,750
228,139 Microsoft Corporation+ ......................... 15,713,074
803,100 ONYX Software Corporation+ ..................... 12,749,213
878,200 Primus Knowledge Solutions Inc.+ ............... 7,135,375
--------------
51,337,688
--------------
BASIC INDUSTRY - 6.2%
124,133 Boise Cascade Corporation ...................... 3,561,065
1,717,700 Louisiana-Pacific Corporation** ................ 14,600,450
1,886,030 Oregon Steel Mills Inc. ........................ 3,654,183
413,680 Schnitzer Steel Industries Inc., Class A ....... 6,101,780
175,000 Weyerhaeuser Company ........................... 8,214,062
209,200 Willamette Industries Inc. ..................... 7,596,575
--------------
43,728,115
--------------
CONSUMER CYCLICALS - 6.0%
1,120,725 Building Materials Holding Corporation+ ........ 9,806,344
74,000 Columbia Sportswear Company+ ................... 3,163,500
870,400 Cutter & Buck Inc.+ ............................ 8,921,600
1,310,480 K2 Inc. ........................................ 12,449,560
211,710 Nike Inc., Class B ............................. 8,455,168
--------------
42,796,172
--------------
ELECTRONICS/SEMICONDUCTORS - 5.9%
806,840 Credence Systems Corporation+ .................. 15,128,250
94,700 Intel Corporation .............................. 4,261,500
409,880 Lattice Semiconductor Corporation+ ............. 11,963,373
109,160 Micron Technology Inc.+ ........................ 3,793,310
459,800 Semitool Inc.+ ................................. 6,006,138
15,140 TriQuint Semiconductor Inc.+ ................... 580,051
--------------
41,732,622
--------------
AEROSPACE/DEFENSE - 5.4%
384,664 Boeing Company ................................. 26,085,027
332,650 Precision Castparts Corporation ................ 12,557,537
--------------
38,642,564
--------------
ELECTRICAL EQUIPMENT - 4.5%
257,030 Electro Scientific Industries Inc.+ ............ 8,979,986
960,425 FEI Company+ ................................... 22,750,067
--------------
31,730,053
--------------
CAPITAL GOODS - 4.3%
991,700 Greenbrier Companies Inc. ...................... 8,801,337
350,650 PACCAR Inc. .................................... 14,749,216
352,000 Tredegar Corporation ........................... 6,710,000
--------------
30,260,553
--------------
TRANSPORTATION - 3.1%
361,450 Airborne Freight Corporation ................... 3,659,681
192,810 Alaska Air Group Inc.+ ......................... 5,001,009
250,460 Expeditors International of Washington Inc. .... 12,992,613
--------------
21,653,303
--------------
CONSUMER STAPLES - 2.9%
120,000 Albertson's Inc. ............................... 2,842,500
797,424 Kroger Company+ ................................ 17,991,879
--------------
20,834,379
--------------
RETAIL SALES - 2.7%
186,540 Costco Wholesale Corporation+ .................. 6,832,028
4,098,000 Hollywood Entertainment Corporation+ ........... 12,550,125
--------------
19,382,153
--------------
CONSUMER DURABLES - 2.3%
940,812 Monaco Coach Corporation+ ...................... 16,052,605
--------------
MEDIA - 2.2%
838,700 Bowne & Company Inc. ........................... 7,024,112
266,000 Getty Images Inc.+ ............................. 8,445,500
--------------
15,469,612
--------------
HEALTH CARE SERVICES - 2.1%
737,760 Foundation Health Systems Inc., Class A+ ....... 14,893,530
--------------
ELECTRONICS - 2.0%
204,935 Microvision Inc.+ .............................. 6,980,598
103,080 Tektronix Inc. ................................. 7,344,450
--------------
14,325,048
--------------
LODGING & RESTAURANTS - 1.7%
122,540 Starbucks Corporation+ ......................... 5,476,006
1,282,085 WestCoast Hospitality Corporation+ ............. 6,490,555
--------------
11,966,561
--------------
INSURANCE - 1.6%
271,615 StanCorp Financial Group Inc. .................. 11,068,311
--------------
UTILITIES/TELECOMMUNICATIONS - 1.0%
506,795 Metro One Telecommunications Inc.+ ............. 6,968,431
--------------
BUSINESS SERVICES - 0.4%
176,450 Click2Learn.com Inc.+ .......................... 2,558,525
--------------
REAL ESTATE INVESTMENT TRUSTS - 0.4%
110,680 Shurgard Storage Centers Inc., Class A ......... 2,511,053
--------------
Total Common Stocks
(Cost $466,868,868) ............................ 650,384,120
--------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 8.4%
(Cost $59,573,000)
$59,573,000 Agreement with Goldman Sachs & Company, 6.420%
dated 10/31/2000, to be repurchased at
$59,583,624 on 11/01/2000, collateralized by
$49,336,017 U.S. Treasury Bond, 7.875% due
02/15/2021 (Market Value $60,856,413) .......... $ 59,573,000
--------------
TOTAL INVESTMENTS (Cost $526,441,868*) ........... 100.3% 709,957,120
OTHER ASSETS AND LIABILITIES (NET) ............... (0.3) (2,077,777)
----- --------------
NET ASSETS ....................................... 100.0% $ 707,879,343
===== ==============
-------------
* Aggregate cost for federal tax purposes is $526,575,728.
** This security or a partial position of this security is on loan
at October 31, 2000, which have an aggregate market value of $5,460,353,
representing 0.8% of the total net assets of the Fund (Note 7).
+ Non-income producing security.
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
GROWTH FUND
OCTOBER 31, 2000
SHARES VALUE
------ -----
COMMON STOCKS - 85.4%
UTILITIES/TELECOMMUNICATIONS - 27.8%
402,965 ADC Telecommunications Inc.+ ................... $ 8,613,377
2,106,000 China Mobile (Hong Kong), Ltd.+** .............. 13,569,518
876,220 China Unicom, Ltd., ADR+ ....................... 17,962,510
569,845 Comcast Corporation, Special Class A+ .......... 23,221,184
152,120 Corvis Corporation+ ............................ 9,982,875
200,290 Cox Communications Inc., Class A+** ............ 8,825,278
233,635 Duke Energy Corporation ........................ 20,194,825
1,458,420 Ericsson LM, B Shares .......................... 19,358,849
67,150 Juniper Networks Inc.+ ......................... 13,094,250
99,565 Level 3 Communications Inc.+ ................... 4,748,006
2,617,298 Nokia Corporation, Sponsored ADR ............... 111,889,489
208,865 Nokia Oyj ...................................... 8,584,884
455 NTT DoCoMo Inc. ................................ 11,209,742
9,125 ONI Systems Corporation+** ..................... 739,695
220,635 Sprint Corporation, PCS Group+ ................. 8,411,709
182,275 Symbol Technologies, Inc. ...................... 8,282,120
527,444 Telefonica SA+ ................................. 10,046,065
237,980 Telefonos de Mexico SA, Class L, Sponsored ADR . 12,836,046
590,690 Vodafone Group Plc ............................. 25,141,243
164,565 Winstar Communications Inc.+ ................... 3,209,017
--------------
339,920,682
--------------
COMPUTER SOFTWARE/SERVICES - 14.1%
1,011,325 Amazon.com Inc.+ ............................... 37,039,778
50,260 Ariba Inc.+ .................................... 6,351,607
261,930 DoubleClick Inc.+ .............................. 4,256,363
178,230 eBay Inc.+ ..................................... 9,178,845
476,195 Electronic Arts Inc.+ .......................... 23,809,750
244,600 Exodus Communications Inc.+ .................... 8,209,388
124,200 i2 Technologies Inc.+ .......................... 21,114,000
75,645 Inktomi Corporation+ ........................... 4,798,730
1,130 Macromedia, Inc.+ .............................. 87,081
142,120 Phone.com Inc.+ ................................ 13,154,983
110,260 Software.com Inc.+ ............................. 16,428,740
91,947 Terra Lycos, SA, ADR+ .......................... 2,223,962
91,715 VeriSign Inc.+ ................................. 12,106,380
94,862 VERITAS Software Corporation+** ................ 13,377,024
--------------
172,136,631
--------------
MEDIA - 11.3%
2,165,029 AT&T Corporation-Liberty Media Group, Class A+ . 38,970,522
202,385 Cablevision Systems Corporation, Class A+ ...... 15,077,683
450,020 Charter Communications Inc., Class A+ .......... 8,775,390
265,631 Infinity Broadcasting Corporation, Class A+ .... 8,832,231
62,380 Lamar Advertising Company+ ..................... 2,994,240
34,670 Liberty Digital Inc., Class A+ ................. 403,039
663,495 Time Warner Inc. ............................... 50,365,905
183,470 TMP Worldwide Inc.+ ............................ 12,771,232
--------------
138,190,242
--------------
ELECTRONICS/SEMICONDUCTORS - 9.1%
737,280 Analog Devices Inc.+ ........................... 47,923,200
1,660 Applied Micro Circuits Corporation+ ............ 126,782
363,582 JDS Uniphase Corporation+ ...................... 29,586,485
127,840 Maxim Integrated Products Inc.+ ................ 8,477,390
116,800 Sony Corporation+** ............................ 9,328,058
253,240 Texas Instruments Inc. ......................... 12,424,588
53,910 Vitesse Semiconductor Corporation+ ............. 3,770,331
--------------
111,636,834
--------------
COMPUTER SYSTEMS - 6.2%
291,055 3Com Corporation+ .............................. 5,166,226
397,395 ASM Lithography Holding NV+ .................... 11,052,548
465,788 Cisco Systems Inc.+ ............................ 25,094,329
204,455 EMC Corporation+ ............................... 18,209,273
306,095 Palm, Inc.+ .................................... 16,395,213
--------------
75,917,589
--------------
OIL & GAS - 5.9%
200,345 Anadarko Petroleum Corporation ................. 12,832,097
83,265 Burlington Resources Inc. ...................... 2,997,540
549,405 Enron Corporation** ............................ 45,085,548
399,505 Petroleo Brasileiro SA, ADR+ ................... 11,610,614
--------------
72,525,799
--------------
HEALTH CARE PRODUCTS - 3.1%
91,055 Eli Lilly and Company .......................... 8,138,041
455,447 Medtronic Inc. ................................. 24,736,465
67,665 MiniMed Inc.+ .................................. 4,935,316
--------------
37,809,822
--------------
FINANCIAL SERVICES - 2.2%
259,715 American Express Company ....................... 15,582,900
787,915 E*TRADE Group Inc.+** .......................... 11,474,012
--------------
27,056,912
--------------
ELECTRICAL EQUIPMENT - 1.9%
147,370 Dominion Resource, Inc. ........................ 8,777,726
475,360 Southern Company ............................... 13,963,700
--------------
22,741,426
--------------
AEROSPACE/DEFENSE - 1.3%
233,500 Boeing Company ................................. 15,834,219
--------------
BANKS/SAVINGS & LOANS - 1.1%
102,075 Chase Manhattan Corporation .................... 4,644,413
164,502 Fifth Third Bancorp ............................ 8,451,290
--------------
13,095,703
--------------
CAPITAL GOODS - 0.9%
211,230 Applied Materials Inc.+ ........................ 11,221,594
--------------
BUSINESS SERVICES - 0.5%
156,510 Sapient Corporation+ ........................... 5,565,887
--------------
Total Common Stocks
(Cost $804,934,426) ............................ 1,043,653,340
--------------
PRINCIPAL
AMOUNT
---------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 13.4%
FEDERAL HOME LOAN BANK (FHLB) - 13.4%
$25,000,000 6.310% due 12/15/2000++ ........................ 24,807,194
25,000,000 6.330% due 12/28/2000++ ........................ 24,749,438
10,000,000 6.350% due 11/30/2000++ ........................ 9,948,847
20,000,000 6.340% due 11/15/2000++ ........................ 19,950,689
50,000,000 6.340% due 12/22/2000++ ........................ 49,550,917
10,000,000 6.381% due 12/22/2000++ ........................ 9,909,603
25,000,000 6.390% due 11/15/2000++ ........................ 24,937,875
--------------
Total U.S. Government Agency DiscountNotes
(Cost $163,854,563) ............................ 163,854,563
--------------
COMMERCIAL PAPER - 1.2%
(Cost $15,000,000)
15,000,000 UBS Finance, LLC, 6.650% due 11/01/2000 ........ 15,000,000
--------------
TOTAL INVESTMENTS (Cost $983,788,989*) ............ 100.0% 1,222,507,903
OTHER ASSETS AND LIABILITIES (NET) ................ 0.0# 231,837
----- --------------
NET ASSETS ........................................ 100.0% $1,222,739,740
===== ==============
-----------------
* Aggregate cost for federal tax purposes is $997,122,886.
** This security or a partial position of this security is on loan at
October 31, 2000, which have an aggregate market value of $24,805,895,
representing 2.0% of the total net assets of the Fund (Note 7).
# Amount represents less than 0.1% net assets.
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
U. S. FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE
------------------------------------------- NET
UNREALIZED
IN APPRECIATION/
EXPIRATION LOCAL VALUE IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
---------- ---------------- ----------- ----------- --------------
01/26/2001 EUR 15,500,000 13,187,555 14,356,562 $ (1,169,007)
03/22/2001 EUR 25,100,000 21,401,766 22,487,829 (1,086,063)
03/22/2001 JPY 100,000,000 938,291 943,294 (5,003)
04/27/2001 EUR 4,400,000 3,755,664 3,790,644 (34,980)
06/27/2001 HKD 28,000,000 3,598,643 3,595,829 2,814
--------------
$ (2,292,239)
--------------
U. S. FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
------------------------------------------- NET
UNREALIZED
IN APPRECIATION/
EXPIRATION LOCAL VALUE IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
---------- ---------------- ----------- ----------- --------------
01/26/2001 EUR 39,450,000 33,564,455 36,602,488 $ 3,038,033
03/16/2001 HKD 25,000,000 3,211,873 3,209,498 (2,375)
03/22/2001 EUR 45,000,000 39,137,094 41,189,037 2,051,943
03/22/2001 JPY 801,000,000 7,515,711 7,820,968 305,257
04/12/2001 JPY 51,000,000 480,224 494,922 14,698
04/27/2001 EUR 14,500,000 12,376,620 12,597,796 221,176
04/27/2001 JPY 450,000,000 4,247,867 4,332,380 84,513
05/07/2001 EUR 29,800,000 25,450,392 25,493,900 43,508
05/10/2001 HKD 22,000,000 2,827,331 2,824,134 (3,197)
06/27/2001 HKD 112,000,000 14,394,573 14,382,880 (11,693)
--------------
$ 5,741,863
--------------
Net Unrealized Appreciation of Forward Foreign
Currency Contracts ...................................... $ 3,449,624
==============
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
EUR -- Euro
HKD -- Hong Kong Dollar
JPY -- Japanese Yen
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
MID CAP STOCK FUND
OCTOBER 31, 2000
SHARES VALUE
------ -----
COMMON STOCKS - 95.2%
COMPUTER SOFTWARE/SERVICES - 12.4%
85,000 Acxiom Corporation+ ............................ $ 3,421,250
205,000 BMC Software Inc.+.............................. 4,164,062
200,000 MarchFirst Inc.+................................ 1,162,500
165,000 PeopleSoft Inc.+................................ 7,200,703
215,000 Sykes Enterprises Inc.+......................... 1,155,625
103,000 Synopsys Inc.+.................................. 3,592,125
135,000 Systems & Computer Technology Corporation+ ..... 1,949,063
--------------
22,645,328
--------------
HEALTH CARE SERVICES - 10.2%
46,000 Aetna Inc. ..................................... 2,659,375
370,000 Covance Inc.+................................... 3,191,250
53,000 Express Scripts Inc., Class A+.................. 3,560,938
297,000 Foundation Health Systems Inc., Class A+........ 5,995,688
140,000 IMS Health Inc. ................................ 3,307,500
--------------
18,714,751
--------------
HEALTH CARE PRODUCTS - 9.7%
53,000 ALZA Corporation+............................... 4,289,688
125,000 AmeriSource Health Corporation, Class A+........ 5,429,688
105,000 ICN Pharmaceuticals Inc. ....................... 3,996,563
144,000 Mylan Laboratories Inc. ........................ 4,032,000
--------------
17,747,939
--------------
BANKS/SAVINGS & LOANS - 9.6%
91,000 Bank United Corporation, Class A ............... 5,158,562
170,000 Charter One Financial Inc. ..................... 3,899,375
65,000 Comerica Inc. .................................. 3,920,312
111,000 TCF Financial Corporation ...................... 4,488,562
--------------
17,466,811
--------------
ELECTRONICS/SEMICONDUCTORS - 6.6%
100,000 Arrow Electronics Inc.+......................... 3,200,000
140,000 Electronics for Imaging+........................ 2,170,000
81,000 Microchip Technology Inc.+...................... 2,561,625
230,000 Sensormatic Electronics Corporation+............ 4,140,000
--------------
12,071,625
--------------
BASIC INDUSTRY - 5.8%
175,000 Federal Signal Corporation ..................... 4,090,625
251,000 Republic Services Inc.+......................... 3,372,812
91,000 Teleflex Inc. .................................. 3,145,187
--------------
10,608,624
--------------
FINANCIAL SERVICES - 5.5%
55,000 A.G. Edwards Inc. .............................. 2,791,250
50,000 Ambac Financial Group Inc. ..................... 3,990,625
31,000 Providian Financial Corporation ................ 3,224,000
--------------
10,005,875
--------------
CONSUMER STAPLES - 5.4%
81,000 Avon Products Inc. ............................. 3,928,500
63,000 Hershey Foods Corporation ...................... 3,421,688
56,000 Suiza Foods Corporation+ ....................... 2,593,500
--------------
9,943,688
--------------
OIL & GAS - 5.0%
84,000 Baker Hughes Inc. .............................. 2,887,500
120,000 Ocean Energy Inc.+ ............................. 1,665,000
81,000 Tosco Corporation .............................. 2,318,625
65,000 Unocal Corporation ............................. 2,218,125
--------------
9,089,250
--------------
AEROSPACE/DEFENSE - 3.9%
67,000 Litton Industries Inc.+ ........................ 3,479,812
103,000 Lockheed Martin Corporation .................... 3,692,550
--------------
7,172,362
--------------
CONSUMER CYCLICALS - 3.0%
66,000 Jones Apparel Group Inc.+ ...................... 1,835,625
90,000 Nike Inc., Class B ............................. 3,594,375
--------------
5,430,000
--------------
RETAIL SALES - 2.9%
126,000 Intimate Brands Inc. ........................... 3,008,250
195,000 Penney (J.C.) Company Inc. ..................... 2,279,063
--------------
5,287,313
--------------
LODGING & RESTAURANTS - 2.7%
75,000 Papa John's International Inc.+ ................ 1,884,375
103,000 Tricon Global Restaurants Inc.+ ................ 3,090,000
--------------
4,974,375
--------------
INSURANCE - 2.7%
66,000 The PMI Group Inc. ............................. 4,875,750
--------------
LEISURE - 2.3%
331,000 Mattel Inc. .................................... 4,282,313
--------------
COMMERCIAL SERVICES - 2.0%
155,000 ACNielsen Corporation+ ......................... 3,710,312
--------------
CAPITAL GOODS - 2.0%
145,000 CommScope Inc.+ ................................ 3,670,312
--------------
UTILITIES/TELECOMMUNICATIONS - 2.0%
56,000 United States Cellular Corporation+** .......... 3,584,000
--------------
MEDIA - 1.5%
76,000 Houghton Mifflin Company ....................... 2,797,750
--------------
Total Common Stocks
(Cost $144,226,704) .......................... 174,078,378
--------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 6.2%
(Cost $11,355,000)
$11,355,000 Agreement with Goldman Sachs & Company,
6.420% dated 10/31/2000, to be repurchased
at $11,357,025 on 11/01/2000, collateralized
by $9,403,765 U.S. Treasury Bond,
7.875% due 02/15/2021
(Market Value $11,599,627) .................... 11,355,000
--------------
TOTAL INVESTMENTS (Cost $155,581,704*) ........... 101.4% 185,433,378
OTHER ASSETS AND LIABILITIES (Net) ............... (1.4) (2,551,190)
----- --------------
NET ASSETS ....................................... 100.0% $182,882,188
===== ==============
=========================
* Aggregate cost for federal tax purposes.
** This security or a partial position of this security is on loan at
October 31, 2000, which have an aggregate market value of $2,949,312,
representing 1.6% of the total net assets of the Fund (Note 7).
+ Non-income producing security.
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
SMALL CAP STOCK FUND
OCTOBER 31, 2000
SHARES VALUE
------ -----
COMMON STOCKS - 99.1%
HEALTH CARE PRODUCTS - 19.3%
233,050 Corixa Corporation+............................. $ 10,370,725
351,700 Dendreon Corporation+........................... 5,759,088
172,600 DUSA Pharmaceuticals Inc.+...................... 4,509,175
9,800 Eden Bioscience Corporation+.................... 371,175
75,900 Emisphere Technologies Inc.+.................... 1,921,219
54,680 ICOS Corporation+............................... 2,809,185
250,900 Incyte Genomics, Inc.+.......................... 9,189,213
51,425 NeoRx Corporation+.............................. 835,656
241,700 Pain Therapeutics Inc.+......................... 5,181,444
123,650 Pharmacyclics Inc.+............................. 6,653,916
130,850 Rosetta Inpharmatics Inc.+...................... 2,903,234
151,600 Shire Pharmaceuticals Group Plc, ADR+........... 9,531,850
401,071 SonoSite Inc.+** ............................... 5,113,655
--------------
65,149,535
--------------
COMPUTER SOFTWARE - 16.5%
476,800 Digimarc Corporation+** ........................ 7,122,200
1,038,800 Intraware Inc.+................................. 7,596,225
372,550 Made2Manage Systems Inc.+....................... 1,047,797
155,789 NetIQ Corporation+.............................. 13,417,328
500,300 ONYX Software Corporation+...................... 7,942,262
484,562 Peregrine Systems Inc.+......................... 11,629,488
849,200 Primus Knowledge Solutions Inc.+................ 6,899,750
--------------
55,655,050
--------------
BUSINESS SERVICES - 11.3%
762,525 Click2Learn.com Inc.+........................... 11,056,612
136,100 Edison Schools Inc.+............................ 3,734,244
1,087,295 First Consulting Group Inc.+.................... 7,271,285
242,400 Getty Images, Inc.+............................. 7,696,200
1,601,100 PeoplePC Inc.+** ............................... 5,303,644
1,460,300 ZapMe! Corporation+............................. 3,011,869
--------------
38,073,854
--------------
COMPUTER SERVICES - 9.3%
1,071,250 ARIS Corporation+** ............................ 2,778,555
479,600 BSQUARE Corporation+............................ 7,493,750
700,850 Carreker-Antinori Inc.+......................... 12,965,725
196,300 Cognizant Technology Solutions Corporation+..... 8,048,300
--------------
31,286,330
--------------
COMPUTER SYSTEMS - 7.1%
459,800 Advanced Digital Information Corporation+....... 5,977,400
157,065 Avocent Corporation+............................ 11,141,798
65,400 InFocus Corporation+............................ 2,889,863
146,112 RadiSys Corporation+............................ 3,871,968
--------------
23,881,029
--------------
ELECTRONICS/SEMICONDUCTORS - 6.2%
265,450 Credence Systems Corporation+ .................. 4,977,187
143,000 Lattice Semiconductor Corporation+ ............. 4,173,812
75,000 NVIDIA Corporation+ ............................ 4,660,547
218,100 Pixelworks Inc.+ ............................... 7,265,456
--------------
21,077,002
--------------
CONSUMER CYCLICALS - 4.9%
538,800 Building Materials Holding Corporation+......... 4,714,500
366,750 Cutter & Buck Inc.+............................. 3,759,187
449,155 K2 Inc. ........................................ 4,266,972
188,000 Quiksilver Inc.+................................ 3,595,500
--------------
16,336,159
--------------
UTILITIES/TELECOMMUNICATIONS - 4.8%
199,800 Gilat Satellite Networks Ltd.+.................. 10,227,263
16,498 GrandeTel Technologies Inc., Class A+........... 1,567
1,032,980 Latitude Communications Inc.+................... 5,939,635
--------------
16,168,465
--------------
FINANCIAL SERVICES - 4.6%
363,417 American Captial Strategies Ltd. ............... 8,017,888
253,891 Heller Financial Inc. .......................... 7,426,312
--------------
15,444,200
--------------
ELECTRICAL EQUIPMENT - 4.4%
60,520 Electro Scientific Industries Inc.+............. 2,114,417
384,000 FEI Company+.................................... 9,096,000
103,980 Microvision Inc.+............................... 3,541,819
--------------
14,752,236
--------------
MEDIA - 2.8%
422,100 Bowne & Company Inc. ........................... 3,535,087
117,500 Sirius Satellite Radio Inc.+** ................. 5,904,375
--------------
9,439,462
--------------
OIL & GAS - 2.0%
209,062 Hanover Compressor Company+..................... 6,820,648
--------------
RETAIL - 1.9%
428,200 J. Jill Group Inc.+............................. 6,503,288
--------------
TRANSPORTATION - 1.8%
119,800 Expeditors International of Washington Inc. .... 6,214,625
--------------
CONSUMER DURABLES - 1.1%
208,575 Monaco Coach Corporation+....................... 3,558,811
--------------
LODGING & RESTAURANTS - 0.9%
78,000 Intrawest Corporation .......................... 1,326,000
321,440 WestCoast Hospitality Corporation+.............. 1,627,290
--------------
2,953,290
--------------
BASIC INDUSTRY - 0.2%
40,200 Schnitzer Steel Industries Inc., Class A ....... 592,950
--------------
Total Common Stocks
(Cost $306,9 ................................. 333,906,934
--------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 0.3%
(Cost $935,000)
$ 935,000 Agreement with Goldman Sachs & Company,
6.420% dated 10/31/2000, to be repurchased
at $935,167 on 11/01/2000, collateralized by
$774,330 U.S. Treasury Bond, 7.875% due
02/15/2021 (Market Value $955,143) .......... 935,000
--------------
TOTAL INVESTMENTS (Cost $307,886,600*) ............. 99.4% 334,841,934
OTHER ASSETS AND LIABILITIES (Net) ................. 0.6 1,911,313
----- --------------
NET ASSETS ......................................... 100.0% $ 336,753,247
===== ==============
===================
* Aggregate cost for federal tax purposes is $309,043,334.
** This security or a partial position of this security is on loan
at October 31, 2000, which have an aggregate market value of $2,589,329,
representing 0.8% of the total net assets of the Fund (Note 7).
+ Non-income producing security.
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
INTERNATIONAL GROWTH FUND
OCTOBER 31, 2000
SHARES VALUE
------ -----
COMMON STOCKS - 91.6%
JAPAN - 22.7%
13,910 Advantest Corporation .......................... $ 1,812,859
6,400 Aiful Corporation .............................. 504,093
24,000 Bridgestone Corporation ........................ 237,832
52,000 Chugai Pharmaceutical Company Ltd.** ........... 882,015
32,000 Daiwa Securities Group Inc.** .................. 354,330
70 DDI Corporation ................................ 328,246
12,000 Fanuc Ltd. ..................................... 1,077,058
5,000 Fuji Soft ABC Inc. ............................. 328,796
24,000 Furukawa Electric Company Ltd.** ............... 630,848
3,000 Hirose Electric Company Ltd. ................... 346,197
148,000 Hitachi Ltd. ................................... 1,585,914
74,000 Japan Airlines Company Ltd. .................... 296,173
49,000 Jusco Company Ltd. ............................. 919,987
2,310 Keyence Corporation ............................ 717,205
18,000 Kokusai Securities Company Ltd.** .............. 151,667
223,000 Mitsubishi Heavy Industries Ltd. ............... 865,970
210,000 Mitsubishi Motors Corporation .................. 673,161
31,000 Mitsui Chemicals Inc. .......................... 158,427
160,000 Mitsui Marine & Fire Insurance Company Ltd.** .. 811,824
15,000 Murata Manufacturing Company Ltd. .............. 1,794,181
174,000 NEC Corporation** .............................. 3,314,702
20,000 Nichicon Corporation ........................... 357,005
25,000 Nikko Securities Company Ltd. .................. 215,686
99,000 Nikon Corporation .............................. 1,438,038
6,200 Nintendo Company Ltd. .......................... 1,024,946
57 Nippon Telegraph & Telephone Corporation ....... 518,389
263,000 Nissan Motor Company Ltd.+ ..................... 1,804,137
23,000 Nomura Securities Company Ltd. ................. 487,653
141 NTT DoCoMo Inc. ................................ 3,473,788
5,800 Rohm Company Ltd. .............................. 1,461,337
99,000 Sakura Bank Ltd. ............................... 720,832
31,000 Sankyo Company Ltd. ............................ 682,824
46,000 Sanwa Bank Ltd.** .............................. 408,659
53,000 Sekisui House Ltd.** ........................... 560,162
12,000 Shin-Etsu Chemical Company Ltd. ................ 492,370
59,000 Shionogi & Company Ltd. ........................ 1,150,969
46,890 Sony Corporation ............................... 3,744,800
40,000 Sumitomo Realty & Development Co., Ltd. ........ 229,333
20,000 Taiyo Yuden Company Ltd.** ..................... 763,832
1,000 Takeda Chemical Industries Ltd. ................ 65,851
39,000 Tokyo Electron Ltd.** .......................... 3,050,383
8,300 Tokyo Seimitsu Company Ltd. .................... 585,330
125,000 Toray Industries Inc. .......................... 486,554
20,000 Ushio Inc. ..................................... 348,029
8,000 Yamanouchi Pharmaceutical Company Ltd. ......... 361,950
--------------
42,224,342
--------------
UNITED KINGDOM - 16.0%
46,000 ARM Holdings Plc ............................... 454,217
16,500 AstraZeneca Group Plc .......................... 777,269
3,300 AstraZeneca Group Plc, ADR ..................... 157,369
11,000 Autonomy Corporation Plc ....................... 562,253
41,556 BG Plc ......................................... 166,548
123,000 Billiton Plc ................................... 469,740
69,456 British Aerospace Plc .......................... 394,855
61,800 British Airways Plc ............................ 276,399
29,000 Cadbury Schweppes Plc .......................... 179,392
124,600 Dimension Data Holdings Plc++ .................. 1,092,827
63,000 GKN Plc ........................................ 722,710
33,100 Granada Compass Plc+ ........................... 285,503
74,300 Granada Media Plc .............................. 432,643
93,400 Halifax Group Plc .............................. 735,094
324,300 Invensys Plc ................................... 774,657
60,600 Laporte Plc .................................... 463,746
41,556 Lattice Group Plc .............................. 88,705
324,200 Lloyds TSB Group Plc ........................... 3,304,811
127,243 New Dixons Group Plc ........................... 378,778
18,000 Pearson Plc .................................... 483,288
73,000 Reuters Group Plc .............................. 1,422,564
41,200 Royal Bank of Scotland Group Plc ............... 925,516
155,000 Shell Transport & Trading Company Plc .......... 1,248,044
110,800 Tate & Lyle Plc ................................ 354,366
194,000 TI Group Plc ................................... 1,057,811
1,947,929 Vodafone AirTouch Plc .......................... 8,110,975
94,800 Zeneca Group ................................... 4,443,635
--------------
29,763,715
--------------
NETHERLANDS - 7.3%
33,313 ABN-Amro Holding NV ............................ 770,891
74,568 Aegon NV ....................................... 2,958,114
66,000 ASM Lithography Holding NV (F)+................. 1,835,625
27,000 ASM Lithography Holding NV+..................... 737,176
8,923 DSM NV ......................................... 257,162
12,000 Heineken Holding NV, Class A ................... 427,216
31,700 Heineken NV .................................... 1,719,712
13,700 ING Groep NV+................................... 939,708
20,000 Koninklijke Luchtvaart Maatschappij NV (KLM) ... 364,489
12,000 Koninklijke (Royal) Philips Electronics NV ..... 471,056
44,500 STMicroelectronics NV .......................... 2,311,219
12,000 Unilever NV .................................... 601,153
9,300 United Pan-Europe Communications NV+............ 162,787
--------------
13,556,308
--------------
GERMANY - 6.1%
7,000 Aixtron AG ..................................... 976,069
1,200 Allianz AG ..................................... 403,515
44,200 Bayerische Motoren Werke (BMW) AG .............. 1,476,166
13,000 DaimlerChrysler AG ............................. 604,417
3,500 Deutsche Bank AG ............................... 283,327
16,300 Deutsche Telekom AG** .......................... 585,828
11,000 Dresdner Bank AG ............................... 444,296
6,200 Epcos AG+....................................... 471,938
40,600 Infineon Technologies AG+....................... 1,653,621
18,700 Infineon Technologies, ADR+..................... 801,762
7,500 Intershop Communications AG+.................... 376,992
24,800 Metro AG ....................................... 983,816
17,500 Siemens AG ..................................... 2,225,081
2,800 T-Online International AG+** ................... 57,081
--------------
11,343,909
--------------
FRANCE - 5.4%
38,700 Bouygues SA .................................... 1,968,243
7,000 Carrefour SA ................................... 469,344
11,200 Christian Dior SA .............................. 568,671
8,000 Compagnie de Saint Gobain ...................... 1,057,189
4,100 Dassault Systemes SA ........................... 312,262
9,800 Groupe Danone .................................. 1,368,989
2,500 LVMH (Louis Vuitton Moet Hennessy) ............. 182,245
11,700 Michelin (CGDE), Class B ....................... 338,187
2,900 PSA Peugeot Citroen ............................ 533,426
41,000 Sanofi-Synthelabo SA+ .......................... 2,154,726
20,000 Societe BIC SA ................................. 692,530
5,200 Vivendi ........................................ 373,339
4,200 Wanadoo+ ....................................... 53,402
--------------
10,072,553
--------------
CANADA - 5.0%
46,800 Abitibi-Consolidated Inc. ...................... 409,091
20,300 Alcan Aluminium Ltd. ........................... 638,678
11,100 ATI Technologies Inc. .......................... 89,760
27,300 Bank of Nova Scotia ............................ 777,579
140,000 Bombardier Inc., Class B ....................... 2,195,464
31,100 Clarica Life Insurance Company ................. 737,160
34,000 Inco Ltd.+...................................... 527,618
1,900 Magna International Inc., Class A .............. 84,970
16,300 Mitel Corporation .............................. 266,821
12,400 Nortel Networks Corporation .................... 561,038
23,500 Rogers Communications Inc., Class B ............ 455,462
53,000 Thomson Corporation ............................ 2,134,242
15,000 Toronto Dominion Bank Ontario .................. 412,018
--------------
9,289,901
--------------
SWITZERLAND - 4.7%
698 Adecco SA ...................................... 482,520
630 Compagnie Financiere Richemont AG, Units ....... 1,751,859
1,310 Holderbank Financiere Glarus AG ................ 1,376,233
454 Nestle SA ...................................... 940,526
1,220 Novartis AG .................................... 1,850,263
50 Roche Holding AG ............................... 456,596
181 Schweizerische Rueckversicherungs-Gesellschaft . 356,848
2,269 Swisscom AG .................................... 576,055
6,500 UBS AG ......................................... 900,122
--------------
8,691,022
--------------
HONG KONG - 4.0%
1,350,000 Amoy Properties Ltd. ........................... 1,229,029
98,000 Cheung Kong Holdings Ltd. ...................... 1,083,815
218,000 China Mobile (Hong Kong) Ltd.+.................. 1,404,632
35,000 Hongkong Land Holdings Ltd. .................... 64,750
133,200 Hutchison Whampoa Ltd. ......................... 1,652,438
402,000 Johnson Electric Holdings Ltd. ................. 798,965
180,000 Li & Fung Ltd. ................................. 334,665
458,000 Shangri-La Asia Ltd. ........................... 452,195
80,000 Swire Pacific Ltd., Class A .................... 493,407
--------------
7,513,896
--------------
AUSTRALIA - 3.5%
165,000 Australia & New Zealand Banking Group Ltd. ..... 1,218,324
179,720 Broken Hill Proprietary Company Ltd. ........... 1,741,413
202,100 Cable and Wirelsss Optus Ltd. .................. 427,886
260,000 Foster's Brewing Group Ltd. .................... 588,733
32,365 Lend Lease Corporation Ltd. .................... 378,756
37,000 News Corporation Ltd. .......................... 386,889
14,938 OneSteel Ltd. .................................. 7,121
208,700 Santos Ltd. .................................... 663,980
122,325 Westpac Banking Corporation Ltd. ............... 835,020
87,200 WMC Ltd. ....................................... 333,229
--------------
6,581,351
--------------
FINLAND - 3.3%
136,200 Nokia Oyj ...................................... 5,598,167
21,000 UPM-Kymmene Oyj ................................ 593,652
--------------
6,191,819
--------------
TAIWAN - 2.0%
94,268 Asustek Computer Inc., GDR ..................... 516,117
30,680 Hon Hai Precision Industry Company Ltd., GDR++ . 320,453
128,692 Taiwan Semiconductor Manufacturing
Company Ltd., Sponsored ADR+ ................. 2,919,700
--------------
3,756,270
--------------
SINGAPORE - 1.9%
11,000 Creative Technology Ltd. ....................... 178,586
5,000 Creative Technology Ltd., ORD .................. 84,375
11,000 Datacraft Asia Ltd. ............................ 75,350
83,000 DBS Group Holdings Ltd. ........................ 978,718
64,000 Singapore Press Holdings Ltd. .................. 915,088
853,000 Singapore Technologies Engineering Ltd. 1,375,132
--------------
3,607,249
--------------
SWEDEN - 1.9%
45,000 Ericsson LM, B Shares .......................... 597,323
58,000 Ericsson LM, Sponsored ADR ..................... 804,750
68,700 ForeningsSparbanken AB ......................... 983,907
70,000 Svenska Handlesbanken AB, A Shares ............. 1,096,839
--------------
3,482,819
--------------
SOUTH KOREA - 1.8%
55,600 Hyundai Motor Company Ltd., GDR+ ............... 360,566
500 Korea Telecom Corporation, Sponsored ADR+ ...... 18,437
17,316 Samsung Electronics ............................ 2,169,331
11,290 Samsung Electronics, GDR++ ** .................. 832,637
--------------
3,380,971
--------------
MEXICO - 1.7%
58,500 Telefonos de Mexico SA, ADR .................... 3,155,344
--------------
ITALY - 1.2%
20,000 Assicurazioni Generali** ....................... 656,929
265,000 ENI Spa** ...................................... 1,433,122
10,000 Fiat Spa+....................................... 232,256
--------------
2,322,307
--------------
SPAIN - 1.0%
58,900 Banco Bilbao Vizcaya Argentaria SA+ ............ 783,847
42,060 Telefonica SA+ ................................. 801,104
4,751 Telefonica SA, Sponsored ADR+ .................. 275,261
--------------
1,860,212
--------------
IRELAND - 0.6%
45,892 Allied Irish Banks Plc ......................... 466,999
44,268 CRH Plc ........................................ 670,925
--------------
1,137,924
--------------
PORTUGAL - 0.6%
51,100 Portugal Telecom SA ............................ 454,807
1,200 PT Multimedia Servicos de Telecomunicacoes
e Multimedia S.G.P.S. SA+ .................... 33,974
60,000 Telecel-Comunicacaoes Pessoais SA .............. 657,098
--------------
1,145,879
--------------
NORWAY - 0.5%
25,000 Norsk Hydro ASA ................................ 991,915
--------------
RUSSIA - 0.3%
8,900 Lukoil Holding, Sponsored ADR .................. 475,260
--------------
GREECE - 0.1%
16,798 Hellenic Bottling Company SA ................... 229,710
--------------
Total Common Stocks
(Cost $156,574,376) .......................... 170,774,676
--------------
CONVERTIBLE PREFERRED STOCK - 0.5%
(Cost $845,852)
JAPAN - 0.5%
93,000,000 Sanwa International Finance Bermuda Trust,
Conv. Pfd., 1.250% due 08/01/2005 (F) ........ 992,295
--------------
PREFERRED STOCKS - 0.2%
ITALY - 0.1%
20,230 Fiat Spa ....................................... 301,461
--------------
SOUTH KOREA - 0.1%
3,000 Samsung Electronics ............................ 153,763
--------------
UNITED KINGDOM - 0.0%#
545,400 Laporte Plc, Class B ........................... 6,336
--------------
Total Preferred Stocks
(Cost $712,644) .............................. 461,560
--------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 7.4%
(Cost $13,748,000)
$13,748,000 Agreement with Goldman Sachs & Company,
6.420% dated 10/31/2000 to be repurchased at
$13,750,452 on 11/01/2000, collateralized by
$11,385,553 U.S Treasury Bond, 7.875% due
02/15/2021 (Market Value $14,044,181) ........ 13,748,000
--------------
TOTAL INVESTMENTS (Cost $171,880,872*) ........... 99.7% 185,976,531
OTHER ASSETS AND LIABILITIES (Net) ............... 0.3 529,364
----- --------------
NET ASSETS ....................................... 100.0% $ 186,505,895
===== ==============
===================
* Aggregate cost for federal tax purposes is $171,912,868.
** This security or a partial position of this security is on loan
at October 31, 2000, which have an aggregate market value of $10,095,589,
representing 5.4% of the total net assets of the Fund (Note 7).
# Amount represents less than 0.1% of net assets.
+ 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.
AS OF OCTOBER 31, 2000, SECTOR DIVERSIFICATION WAS AS FOLLOWS (UNAUDITED):
% OF
SECTOR DIVERSIFICATION NET ASSETS VALUE
---------------------- ---------- -----
COMMON STOCKS:
Technology ........................... 17.5% $ 32,636,149
Telecommunications ................... 16.8 31,308,222
Financial Services ................... 15.0 27,884,344
Health Care .......................... 7.0 12,983,467
Material & Processing ................ 5.6 10,417,496
Autos & Transportation ............... 3.5 6,491,809
Consumer Staples ..................... 3.4 6,242,943
Real Estates ......................... 3.0 5,628,739
Producer Durables .................... 2.8 5,279,460
Energy ............................... 2.7 5,067,574
Retail ............................... 2.7 4,935,458
Electronics .......................... 2.5 4,707,801
Services ............................. 1.6 3,043,503
Computer Software .................... 1.2 2,310,747
Multimedia ........................... 1.0 1,905,852
Airline .............................. 0.5 937,061
Other ................................ 4.8 8,994,051
----- ------------
TOTAL COMMON STOCKS .................. 91.6 170,774,676
CONVERTIBLE PREFERRED STOCK .......... 0.5 992,295
PREFERRED STOCKS ..................... 0.2 461,560
REPURCHASE AGREEMENT ................. 7.4 13,748,000
----- ------------
TOTAL INVESTMENTS .................... 99.7 185,976,531
OTHER ASSETS AND LIABILITIES (Net) ... 0.3 529,364
----- ------------
NET ASSETS ........................... 100.0% $186,505,895
===== ============
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
U. S. FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE NET
---------------------------------------- UNREALIZED
IN APPRECIATION/
EXPIRATION LOCAL VALUE IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
---------- --------------- --------- ---------- ---------------
11/01/2000 EUR 36,584 31,013 30,837 $ 176
11/01/2000 JPY 4,188,396 38,365 38,596 (231)
11/01/2000 SGD 38,399 21,874 21,892 (18)
11/02/2000 JPY 2,045,002 18,735 18,768 (33)
11/03/2000 AUD 38,416 20,103 19,928 175
11/03/2000 HKD 8,280 1,062,037 1,061,770 267
11/03/2000 GBP 124,446 180,716 181,141 (425)
11/06/2000 JPY 5,259,197 48,527 48,223 304
11/27/2000 EUR 981,858 833,205 873,665 (40,460)
11/29/2000 EUR 939,049 796,952 835,948 (38,996)
12/07/2000 EUR 348,997 296,326 303,912 (7,586)
01/19/2001 EUR 3,760,700 3,198,851 3,162,421 36,430
02/09/2001 EUR 818,621 696,917 740,421 (43,504)
02/12/2001 EUR 947,863 807,030 859,629 (52,599)
02/20/2001 EUR 2,164,049 1,843,034 2,049,568 (206,534)
06/26/2001 EUR 252,683 216,180 224,262 (8,082)
----------
$ (361,116)
----------
U. S. FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER NET
---------------------------------------- UNREALIZED
IN APPRECIATION/
EXPIRATION LOCAL VALUE IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
---------- --------------- --------- ---------- ---------------
12/07/2000 CAD 450,485 295,203 303,912 $ 8,709
11/01/2000 EUR 584,440 495,435 491,285 (4,150)
11/01/2000 JPY 5,952,736 54,527 54,854 327
11/02/2000 CAD 208,454 136,559 136,602 (44)
11/02/2000 EUR 262,802 222,783 221,059 (1,724)
11/02/2000 GBP 16,135 23,430 23,485 55
11/02/2000 JPY 6,588,426 60,360 60,465 105
11/03/2000 GBP 54,927 79,762 79,745 (17)
11/06/2000 JPY 2,201,254 20,311 20,438 (127)
11/27/2000 JPY 93,993,270 865,090 873,665 8,575
11/29/2000 JPY 89,397,550 823,102 835,949 12,847
01/19/2001 JPY 342,035,720 3,176,798 3,162,422 (14,376)
02/09/2001 CAD 1,103,419 724,180 740,420 16,240
02/12/2001 GBP 571,371 831,276 859,628 28,352
02/20/2001 JPY 224,130,580 2,092,410 2,049,569 (42,841)
02/28/2001 JPY 92,074,950 860,674 862,154 1,480
06/26/2001 GBP 153,783 224,074 224,262 188
----------
$ 13,599
----------
Net Unrealized Depreciation of Forward Foreign
Currency Contracts .............................. $(347,517)
=========
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
AUD -- Australian Dollar
CAD -- Canadian Dollar
CHF -- Swiss Franc
EUR -- Euro
(F) -- Foreign Shares
GBP -- Great Britain Pound Sterling
GDR -- Global Depository Receipt
HKD -- Hong Kong Dollar
JPY -- Japanese Yen
ORD -- Ordinary Share
SGD -- Singapore Dollar
--------------------------------------------------------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
SHORT TERM INCOME FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
--------- -----
CORPORATE BONDS AND NOTES - 48.3%
FINANCIAL - 10.2%
$ 1,000,000 Bear Stearns Company, Inc., Note,
6.200% due 03/30/2003 ........................ $ 976,632
1,000,000 CIT Group Inc., Sr. Note,
6.375% due 11/15/2002 ........................ 983,953
General Motors Acceptance Corporation, Note:
200,000 5.625% due 02/15/2001 ........................ 199,261
300,000 6.875% due 07/15/2001 ........................ 300,068
255,000 Golden West Financial Corporation, Deb.,
10.250% due 12/01/2000 ....................... 255,580
3,000,000 Goldman Sachs Group L.P, Note,
7.800% due 07/15/2002++....................... 3,030,351
1,000,000 Lehman Brothers Inc., Sr. Sub. Note,
6.125% due 02/01/2001 ........................ 997,844
450,000 MBNA America Bank, NA, Note,
6.100% due 12/15/2000 ........................ 449,640
1,500,000 Merrill Lynch & Company, Series B, Note,
8.300% due 11/01/2002 ........................ 1,537,657
717,000 Paine Webber Group Inc., Deb.,
9.250% due 12/15/2001 ........................ 736,030
1,000,000 Potomac Capital Investment Corporation,
Note,
6.800% due 09/12/2001++....................... 1,000,400
1,000,000 Salomon Smith Barney Holdings, Note,
6.125% due 01/15/2003 ........................ 983,693
500,000 US West Capital Funding, Inc., Company
Guarantee,
6.125% due 07/15/2002 ........................ 492,580
--------------
11,943,689
--------------
BANKS - 9.8%
1,500,000 Chase Manhattan Corporation, Note,
5.500% due 02/15/2001 ........................ 1,493,104
2,000,000 First Chicago Corporation, Sub. Note,
9.250% due 11/15/2001 ........................ 2,045,886
1,000,000 Northern Trust Company, Sub. Note,
6.500% due 05/01/2003 ........................ 991,300
3,000,000 Wachovia Corporation, Sr. Unsub. Note,
6.700% due 06/21/2004 ........................ 2,961,030
4,000,000 Wells Fargo Company, Note,
6.500% due 09/03/2002 ........................ 3,984,956
--------------
11,476,276
--------------
RETAIL SALES - 4.5%
1,000,000 Dillards, Inc., Note,
6.430% due 08/01/2004 ........................ 760,978
500,000 Federated Department Stores, Inc., Bond,
6.790% due 07/15/2027 ........................ 485,948
Wal-Mart Stores, Inc.:
100,000 Note,
6.750% due 05/15/2002 ........................ 100,211
4,000,000 Sr. Note,
6.150% due 08/10/2001 ........................ 3,987,660
--------------
5,334,797
--------------
OIL & GAS - 3.6%
710,000 Enron Corporation, Deb.,
9.125% due 04/01/2003 ........................ 741,119
2,500,000 Occidental Petroleum Company, Sr. Note,
6.400% due 04/01/2003 ........................ 2,435,660
1,000,000 Union Texas Petroleum Holdings, Inc., Series
A, MTN,
6.600% due 12/04/2002 ........................ 996,696
--------------
4,173,475
--------------
FOREIGN (U.S. DOLLAR DENOMINATED) - 3.2%
750,000 Eaton Off Shore Ltd., Company Guarantee,
9.000% due 02/15/2001 ........................ 754,221
1,000,000 Fairfax Financial Holdings Ltd., Note,
7.750% due 12/15/2003 ........................ 934,454
1,200,000 PDVSA Finance Ltd., Bond,
6.450% due 02/15/2004 ........................ 1,131,000
1,000,000 Sony Corporation, Unsub. Note,
6.125% due 03/04/2003 ........................ 986,150
--------------
3,805,825
--------------
UTILITIES - 2.8%
300,000 National Rural Utilities Cooperative Finance
Corporation, Collateral Trust,
6.750% due 09/01/2001 ........................ 299,971
1,000,000 United Illuminating Company, Note,
6.000% due 12/15/2003 ........................ 967,618
2,000,000 Wisconsin Electric Power Company, Deb.,
6.625% due 12/01/2002 ........................ 1,998,264
--------------
3,265,853
--------------
INDUSTRIAL - 2.5%
1,000,000 Praxair, Inc., Note,
6.150% due 04/15/2003 ........................ 970,402
2,000,000 Sun Microsystems, Inc., Sr. Note,
7.000% due 08/15/2002 ........................ 1,999,298
--------------
2,969,700
--------------
CONSUMER STAPLES - 2.5%
2,000,000 Philip Morris Companies Inc., Note,
7.500% due 04/01/2004 ........................ 1,982,460
1,000,000 Tyson Foods, Inc., Note,
6.000% due 01/15/2003 ........................ 975,180
--------------
2,957,640
--------------
ADVERTISING AGENCIES - 2.4%
2,750,000 Interpublic Group Companies, Inc., Note,
7.875% due 10/15/2005 2,762,760
--------------
REAL ESTATE INVESTMENT TRUSTS/PROPERTY - 2.1%
400,000 Colonial Realty LP, Note,
7.500% due 07/15/2001 ........................ 398,526
565,000 Dobie Centers Properties, Ltd., Note, Taxable,
6.060% due 05/01/2001++ ...................... 561,890
1,500,000 Sun Communities Inc., Sr. Note,
7.625% due 05/01/2003 ........................ 1,490,749
--------------
2,451,165
--------------
TRANSPORTATION - 1.9%
1,000,000 Norfolk Southern Corporation, Note,
6.950% due 05/01/2002 ........................ 996,563
150,000 Southwest Airlines Company, Deb.,
9.400% due 07/01/2001 ........................ 151,825
1,000,000 Union Pacific Corporation, Deb.,
9.625% due 12/15/2002 ........................ 1,050,685
--------------
2,199,073
--------------
RENTAL AUTO/EQUIPMENT - 1.5%
1,000,000 Hertz Corporation, Sr. Note,
7.375% due 06/15/2001 ........................ 1,000,460
750,000 Penske Truck Leasing Company, MTN,
Company Guarantee,
6.650% due 11/01/2000 ........................ 750,000
--------------
1,750,460
--------------
CAPITAL GOODS - 0.8%
1,000,000 Ingersoll-Rand Company, Sr. Note,
6.255% due 02/15/2001 ........................ 997,224
--------------
MEDIA - 0.5%
600,000 Continental Cablevision, Inc., Sr. Note,
8.500% due 09/15/2001 ........................ 605,179
--------------
Total Corporate Bonds and Notes
(Cost $57,644,632) ........................... 56,693,116
--------------
ASSET-BACKED SECURITIES - 24.0%
6,416,000 California Infrastructure PG&E-1, 1997-1 A6,
6.320% due 09/25/2005 ........................ 6,369,837
5,000,000 Conseco Finance Lease, LLC, 2000-1 A4,
7.480% due 08/20/2005 ........................ 5,070,375
101,684 Conti-Mortgage Home Equity Loan Trust,
1996-4 A6,
6.710% due 06/15/2014 ........................ 101,420
3,900,000 Dayton Hudson Credit Card Master Trust,
Series 1997-1 A,
6.250% due 08/25/2005 ........................ 3,867,220
FFCA Secured Lending Corporation:
4,521,797 1999-1A A1A,
6.370% due 10/18/2008++ ...................... 4,371,108
3,500,549 1999-2 WA1A,
7.130% due 02/18/2009++ ...................... 3,503,830
4,680,000 First USA Credit Card Master Trust, 1997-6 A,
6.420% due 03/17/2005 ........................ 4,662,848
216,206 Green Tree Financial Corporation, 1995-6
B1,
7.700% due 09/15/2026 ........................ 216,674
56,885 Green Tree Home Equity Loan Trust, 1997-
B A5,
7.150% due 06/15/2028 ........................ 56,946
--------------
Total Asset-Backed Securities
(Cost $28,452,243) ........................... 28,220,258
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.6%
350,000 Federal Home Loan Bank, Bond,
7.000% due 04/21/2014 ........................ 330,176
5,000,000 Federal Home Loan Mortgage Corporation,
Note,
6.875% due 01/15/2005** ...................... 5,064,140
--------------
Total U.S. Government Agency Obligations
(Cost $5,299,864) ............................ 5,394,316
--------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES - 8.1%
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 5.5%
66,021 #250235, 7 Year BALLOON,
8.500% due 02/01/2002 ........................ 66,858
2,406,153 #252214
6.500% due 01/01/2014 ........................ 2,361,515
144,965 #313030
10.000% due 05/01/2022 ....................... 152,187
3,609,503 #313293
6.500% due 01/01/2012 ........................ 3,555,758
265,133 #313641
8.500% due 11/01/2017 ........................ 272,638
--------------
Total FNMAs (Cost $6,575,421) .................. 6,408,956
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 1.1%
87,135 #1991,
9.000% due 04/20/2025 ........................ 90,112
93,050 #38720
11.000% due 02/15/2010 ....................... 100,971
49,900 #130183
11.000% due 05/15/2015 ....................... 54,398
129,395 #131917
11.000% due 10/15/2015 ....................... 141,057
43,893 #139704
11.000% due 11/15/2015 ....................... 47,849
124,429 #140835
11.000% due 11/15/2015*** .................... 135,643
49,819 #153965
10.000% due 02/15/2019 ....................... 52,574
36,105 #189482
11.000% due 04/15/2020 ....................... 39,233
492,723 #262996
10.000% due 01/15/2019 ....................... 519,970
84,223 #291375
11.000% due 08/15/2020*** .................... 91,519
41,815 #377550
8.000% due 03/15/2012 ........................ 42,812
--------------
Total GNMAs (Cost $1,343,081) .................. 1,316,138
--------------
ADJUSTABLE RATE MORTGAGE-BACKED SECURITIES (ARM) - 0.9%
230,742 Federal Home Loan Mortgage Corporation
(FHLMC),
7.903% due 11/01/2021+ ....................... 231,282
Federal National Mortgage Association
(FNMA):
190,961 #082247,
6.500% due 04/01/2019+ ....................... 188,646
53,217 #124571,
8.122% due 11/01/2022+ ...................... 54,551
117,595 #141461,
7.250% due 11/01/2021+ ....................... 118,803
131,887 #152205,
7.562% due 01/01/2019+ ....................... 134,596
325,013 #313257,
6.637% due 11/01/2035+ ....................... 320,391
--------------
Total ARMs (Cost $1,056,791) ................... 1,048,269
--------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 0.6%
162,526 #A01226,
9.500% due 08/01/2016 ........................ 171,023
57,740 #L73756
5.500% due 05/01/2001 ........................ 56,779
36,797 #L73821
6.000% due 06/01/2001 ........................ 36,422
123,250 #L74100
7.000% due 09/01/2001 ........................ 122,850
76,585 #L90217
5.500% due 06/01/2001 ........................ 75,311
148,124 #L90218
6.000% due 06/01/2001 ........................ 146,615
138,765 #M90453
6.500% due 05/01/2001 ........................ 137,517
--------------
Total FHLMCs (Cost $754,180) ................... 746,517
--------------
Total U.S. Government Agency Mortgage-
Backed Securities (Cost $9,729,473) .......... 9,519,880
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 6.7%
56,647 Countrywide Funding Corporation, 1994-1 A3,
6.250% due 03/25/2024 ........................ 54,997
75,673 Countrywide Mortgage Backed Securities,
Inc., 1994-C A5,
6.375% due 03/25/2024 ........................ 74,867
Residential Funding Mortgage Security I:
3,864,718 1995-S14 A8,
7.500% due 09/25/2025 ........................ 3,859,635
4,003,653 1998-S20 A18,
6.400% due 09/25/2028 ........................ 3,895,014
--------------
Total CMOs (Cost $7,938,214) ................... 7,884,513
--------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) - 5.9%
3,640,394 GMAC Commercial Mortgage Securities Inc.,
1999-CTL, Class A,
7.150% due 01/15/2008++ ...................... 3,646,082
3,315,982 Morgan Stanley Capital I, 1999-CAMI A1,
6.540% due 04/15/2004 ........................ 3,291,794
--------------
Total CMBSs (Cost $6,955,246) .................. 6,937,876
--------------
REPURCHASE AGREEMENT - 1.4%
(Cost $1,632,000)
$ 1,632,000 Agreement with Goldman Sachs & Company,
6.420% dated 10/31/2000, to be repurchased at
$1,632,291 on 11/01/2000, collateralized by
$1,351,558 U.S. Treasury Bond, 7.875% due
02/15/2021 (Market Value $1,667,159) ......... $ 1,632,000
--------------
TOTAL INVESTMENTs (Cost $117,651,672*) ........... 99.0% 116,281,959
OTHER ASSETS AND LIABILITIEs (Net) ............... 1.0 1,143,503
----- --------------
NET ASSETs ....................................... 100.0% $ 117,425,462
===== ==============
===================
+ Aggregate cost for federal tax purposes.
** This security or a partial position of this security is on loan at October
31, 2000, which have an aggregate market value of $141,796, representing
0.1% of the total net assets of the Fund (Note 7).
*** Security pledged as collateral for futures contract.
+ Variable rate security. The interest rate shown reflects the rate
in effect at October 31, 2000.
++ 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.
NUMBER OF UNREALIZED
CONTRACTS VALUE (DEPRECIATION)
--------- ----- --------------
FUTURES CONTRACTS - SHORT POSITION
100 U.S. 5 Year Treasury Note,
December 2000 $10,068,750 $(45,313)
=========== ========
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
BALLOON -- Five- and seven-year mortgages with larger dollar amounts of
payments falling due in the later years of the obligation.
MTN -- Medium Term Note
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
U.S. GOVERNMENT SECURITIES FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
--------- -----
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES - 74.7%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) - 30.8%
$ 9,307,716 6.000% due 04/20/2026-02/20/2029 ............... $ 8,755,708
10,074,543 6.500% due 03/15/2024-02/20/2029 ............... 9,718,132
2,687,286 6.800% due 04/20/2025 .......................... 2,616,314
39,688,374 7.000% due 07/15/2008-08/20/2029 ............... 39,152,437
47,846,581 7.500% due 03/15/2024-11/15/2029 ............... 48,066,839
6,859,005 7.750% due 12/15/2029 .......................... 6,874,106
16,446,980 8.000% due 06/20/2030-04/15/2022 ............... 16,639,452
745,515 8.500% due 05/15/2022 .......................... 770,098
6,775,187 9.000% due 10/15/2008-06/15/2022 ............... 7,087,482
5,324,484 9.500% due 04/15/2016-08/15/2021 ............... 5,592,586
25,163 13.500% due 09/15/2014-12/15/2014 .............. 28,660
3,196 14.000% due 06/15/2011 ......................... 3,647
--------------
Total GNMAs (Cost $145,822,172) ................ 145,305,461
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 25.9%
20,539 5.500% due 02/01/2009 .......................... 19,721
1,712,162 5.900% due 03/01/2028 .......................... 1,672,742
9,029,711 6.000% due 11/01/2028-03/01/2029 ............... 8,488,646
47,560,718 6.500% due 08/01/2028-04/01/2029 ............... 45,789,279
3,287,246 6.820% due 02/01/2011 .......................... 3,281,387
28,145,694 7.000% due 06/01/2010-07/01/2029 ............... 27,749,623
22,889,845 7.500% due 12/01/2024-02/01/2030 ............... 22,944,724
2,249,012 8.000% due 05/01/2022-01/01/2025 ............... 2,284,225
321,800 8.500% due 02/01/2023-09/01/2025 ............... 331,638
9,157,960 9.000% due 06/01/2016-06/01/2030 ............... 9,454,813
--------------
Total FNMAs (Cost $124,260,033) ................ 122,016,798
--------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 18.0%
24,205,633 6.500% due 02/01/2011-03/01/2029 ............... 23,618,322
15,810,012 7.000% due 07/01/2024-07/01/2029 ............... 15,527,364
35,017,977 7.500% due 07/01/2002-03/01/2013 ............... 35,399,973
8,719,093 8.500% due 04/01/2019-07/01/2029 ............... 8,942,065
461,072 8.750% due 01/01/2013 .......................... 476,715
730,679 9.000% due 12/01/2008-08/01/2022 ............... 760,992
244,282 9.500% due 06/01/2016-05/01/2017 ............... 253,067
--------------
Total FHLMCs (Cost $86,384,170) ................ 84,978,498
--------------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $356,466,375) .......................... 352,300,757
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 12.8%
Federal Home Loan Mortgage Corporation:
1,535,889 Series 1049, Class F,
7.588% due 02/15/2021+ ....................... 1,551,118
302,924 Series 1288, Class HA,
5.500% due 11/15/2020 ........................ 300,214
4,770,000 Series 1638, Class K,
6.500% due 03/15/2023 ........................ 4,615,142
2,000,000 Series 1652, Class Pl,
7.000% due 01/15/2024 ........................ 1,950,590
7,500,000 Series 1981, Class C,
6.500% due 08/15/2027 ........................ 7,115,800
4,176,261 Series 2073, Class VA,
6.500% due 12/15/2005 ........................ 4,157,196
5,000,000 Series 2076, Class PB,
6.000% due 10/15/2017 ........................ 4,941,475
Federal National Mortgage Association:
7,000,000 Grantor Trust, Series 2000-T5 B,
7.300% due 05/25/2010 ........................ 7,168,502
2,467,802 Series 1989-18, Class C,
9.500% due 04/25/2004 ........................ 2,520,579
1,158,167 Series 1990-49, Class G,
9.000% due 05/25/2020 ........................ 1,197,815
1,788,967 Series 1992-83, Class X,
7.000% due 02/25/2022 ........................ 1,763,387
488,184 Series 1993-103, Class FA,
7.075% due 06/25/2019 ........................ 487,724
3,529,043 Series 1993-103, Class PG,
6.250% due 06/25/2019 ........................ 3,493,700
2,993,637 Series 1993-162, Class E,
6.000% due 08/25/2023 ........................ 2,834,529
5,000,000 Series 1993-163, Class BE,
7.000% due 10/25/2021 ........................ 4,978,037
1,857,225 Series 1997-32, Class FA,
7.225% due 04/25/2027 ........................ 1,863,455
4,432,322 Series 1997-40, Class PE,
6.750% due 07/18/2019 ........................ 4,410,182
422,571 Series 1997-M1 Class A,
6.784% due 01/17/2003 ........................ 421,252
1,033,037 Series GP92-64, Class JC,
7.500% due 08/25/2001 ........................ 1,031,141
1,470,629 Series G93-11, Class D,
6.000% due 08/25/2007 ........................ 1,461,239
5,657,077 Trust 259 STRIP,
7.000% due 04/01/2024 ........................ 1,629,299
428,867 L.F. Rothschild Mortgage Trust, Series 3, Class Z,
9.950% due 09/01/2017 ........................ 452,806
--------------
Total CMOs (Cost $59,414,864) .................. 60,345,182
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 7.1%
Federal Home Loan Banks, Bond:
3,000,000 6.135% due 02/17/2009 .......................... 2,819,062
6,500,000 6.810% due 08/20/2007 .......................... 6,360,211
10,000,000 Federal Home Loan Mortgage Corporation, Note,
5.125% due 10/15/2008** ........................ 9,053,670
2,000,000 Federal National Mortgage Association, MTN,
6.000% due 01/14/2005 .......................... 1,949,452
12,500,000 Federal National Mortgage Association, Note,
6.000% due 05/15/2008** ........................ 12,043,537
1,250,000 Federal National Mortgage Association, Deb.,
6.210% due 08/06/2038 .......................... 1,161,026
--------------
Total U.S. Government Agency Obligations
(Cost $35,203,842) ........................... 33,386,958
--------------
U.S. TREASURY OBLIGATIONS - 2.9%
U.S. TREASURY BONDS - 2.7%
7,000,000 8.125% due 08/15/2019** ........................ 8,649,396
3,250,000 7.250% due 08/15/2022** ........................ 3,739,235
--------------
12,388,631
--------------
U.S. TREASURY NOTE - 0.2%
1,100,000 6.500% due 10/15/2006** ........................ 1,134,746
--------------
Total U.S. Treasury Obligations
(Cost $13,690) ............................... 13,523,377
--------------
REPURCHASE AGREEMENT - 2.0%
(Cost $9,264,000)
9,264,000 Agreement with Goldman Sachs & Company,
6.420% dated 10/31/2000, to be repurchased
at $9,265,652 on 11/01/2000, collateralized
by $7,672,081 U.S. Treasury Bond,
7.875% due 02/15/2021
(Market Value $9,463,579) .................... 9,264,000
--------------
TOTAL INVESTMENTS (Cost $474,048,771*) .......... 99.5% 468,820,274
OTHER ASSETS AND LIABILITIES (Net) .............. 0.5 2,181,951
----- --------------
NET ASSETS ...................................... 100.0% $ 471,002,225
===== ==============
===================
* Aggregate cost for federal tax purposes.
** This security or a partial position of this security is on loan at October
31, 2000, which have an aggregate market value of $16,598,253, representing
3.5% of the total net assets of the Fund (Note 7).
+ Variable rate security. The interest rate shown reflects the rate in effect
at October 31, 2000.
--------------------------------------------------------------------------------
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
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
--------- -----
CORPORATE BONDS AND NOTES - 65.0%
FOREIGN (U.S. DOLLAR DENOMINATED) - 9.3%
$ 175,000 Abbey National First Capital, Sub. Note,
8.200% due 10/15/2004 ........................ $ 181,724
300,000 Avon Energy Partners Holding, Sr. Note,
6.730% due 12/11/2002+ ....................... 294,550
5,000,000 Deutsche Telephone Finance, Bond,
8.000% due 06/15/2010** ...................... 5,115,810
4,500,000 HIH Capital Ltd., Conv. Note,
7.500% due 09/25/2006 ........................ 1,932,412
1,000,000 Hyder Plc, Bond,
6.750% due 12/15/2004+ ....................... 920,009
5,000,000 Mexican United States, Bond,
9.875% due 02/01/2010** ...................... 5,212,500
8,500,000 Petro-Canada, Deb.,
9.250% due 10/15/2021 ........................ 9,425,828
1,650,000 Republic of Korea, Unsub. Note,
8.875% due 04/15/2008** ...................... 1,726,725
1,750,000 SB Treasury Company LLC, Bond,
9.400% to 06/30/2008;
10.925% due 12/29/2049+ ...................... 1,723,417
1,500,000 Tokai Pfd Capital Company, Bond,
9.980% to 06/30/2008;
11.091% due 12/29/2049+ ...................... 1,442,503
5,750,000 Trans-Canada Pipeline Corporation, Deb.,
8.500% due 03/20/2023 ........................ 5,993,576
8,000,000 Vodafone Airtouch, Unsub. Notes
7.750% due 02/15/2010 ........................ 8,160,520
--------------
42,129,574
--------------
INFORMATION TECHNOLOGY - 8.3%
9,500,000 Adaptec Inc., Conv. Sub. Note,
4.750% due 02/01/2004 ........................ 7,695,000
5,357,000 Arbor Software, Conv. Sub. Note,
4.500% due 03/15/2005 ........................ 3,877,129
6,000,000 Conexant Systems Inc., Conv. Sub. Note,
4.000% due 02/01/2007 ........................ 3,652,500
2,000,000 Exodus Communications Inc., Sr. Note,
11.625% due 07/15/2010+ ...................... 1,860,000
11,750,000 Network Associates Inc., Conv. Sub. Deb.,
Zero coupon due 02/13/2003 ................... 4,479,688
10,300,000 S3, Inc., Conv. Sub. Note,
5.750% due 10/01/2003 ........................ 8,961,000
7,250,000 Vantive Corporation, Sub. Note,
4.750% due 09/01/2002** ...................... 7,304,375
--------------
37,829,692
--------------
INDUSTRIAL - 7.8%
Black & Decker Corporation, Note:
185,000 7.500% due 04/01/2003 ........................ 186,405
50,000 7.000% due 02/01/2006 ........................ 49,225
550,000 Comcast Cable Communication, Note,
6.200% due 11/15/2008 ........................ 508,327
500,000 Crane Company, Note,
8.500% due 03/15/2004 ........................ 525,535
300,000 CSR America, Inc., Note,
6.875% due 07/21/2005 ........................ 292,769
400,000 Honeywell, Inc., Note,
6.600% due 04/15/2001 ........................ 399,090
675,000 Ingersoll-Rand Company, Sr. Note,
6.255% due 02/15/2001 ........................ 673,126
1,500,000 Jackson Products, Inc., Company Guarantee,
9.500% due 04/15/2005 ........................ 1,357,500
250,000 Lennar Corporation, Sr. Note,
7.625% due 03/01/2009 ........................ 223,193
Lockheed Martin Corporation:
955,000 Company Guarantee,
7.750% due 05/01/2026 ........................ 943,812
5,000,000 Note,
8.200% due 12/01/2009 ........................ 5,255,615
Loral Corporation, Deb.:
1,000,000 8.375% due 06/15/2024 ........................ 1,002,897
1,000,000 7.625% due 06/15/2025 ........................ 924,603
2,250,000 Loral Space & Communications Ltd., Sr.
Note,
9.500% due 01/15/2006** ...................... 1,687,500
6,500,000 Ogden Corporation, Deb.,
9.250% due 03/01/2022 ........................ 4,633,200
6,860,000 Praxair, Inc., Deb.,
8.700% due 07/15/2022 ........................ 7,032,604
Raytheon Company:
750,000 Deb.,
7.200% due 08/15/2027 ........................ 689,020
Note:
2,385,000 5.950% due 03/15/2001 ........................ 2,370,452
1,070,000 6.450% due 08/15/2002 ........................ 1,056,352
5,260,000 Time Warner, Inc., Deb.,
9.150% due 02/01/2023 ........................ 5,904,545
--------------
35,715,770
--------------
FINANCIAL - 7.5%
80,000 Associates Corporation NA, Sr. Note,
6.625% due 05/15/2001 ........................ 79,971
9,000,000 Barclays North American Capital Corporation,
Deb.,
9.750% due 05/15/2021 ........................ 9,511,137
5,000,000 Cendant Corporation, Note, 7.750%
due 12/01/2003 ............................... 4,852,975
2,000,000 Continental Corporation, Note,
7.250% due 03/01/2003 ........................ 1,961,254
440,000 Equitable Companies Inc.,
Deb., 7.000% due 04/01/2028 .................. 391,920
1,000,000 GATX Leasing Corporation, MTN,
10.000% due 03/21/2001 ....................... 1,003,666
500,000 Jefferson-Pilot Capital Trust A, Bond,
8.140% due 01/15/2046+ ....................... 449,995
100,000 Jefferson-Pilot Capital Trust B,
Company Guarantee, 8.285%
due 03/01/2046+ .............................. 91,569
1,250,000 Kemper Corporation, Note, 6.875% due
09/15/2003 ................................... 1,240,854
Merrill Lynch & Company Inc., Note:
5,000,000 6.000% due 02/17/2009 ........................ 4,558,075
1,450,000 6.500% due 07/15/2018 ........................ 1,282,249
2,000,000 6.750% due 06/01/2028 ........................ 1,704,798
Paine Webber Group, Inc., Sr. Note:
830,000 8.060% due 01/17/2017 ........................ 862,617
415,000 7.390% due 10/16/2017 ........................ 404,976
500,000 PNC Institute Capital B, Company Guarantee,
8.315% due 05/15/2027+ ....................... 473,463
4,500,000 Superior Financial Corporation, Sr. Note,
8.650% due 04/01/2003 ........................ 4,423,878
500,000 Travelers Property Casualty Corporation,
Note,
6.750% due 04/15/2001 ........................ 499,725
505,000 US Leasing International, Corporation, Sr.
Note,
8.750% due 12/01/2001 ........................ 513,176
--------------
34,306,298
--------------
TRANSPORTATION - 6.3%
Burlington Northern Santa Fe:
5,000,000 Deb.,
8.125% due 04/15/2020 ........................ 5,007,025
1,500,000 Note,
8.750% due 02/25/2022 ........................ 1,614,024
3,030,000 Consolidated Rail Corporation, Deb.,
9.750% due 06/15/2020 ........................ 3,385,107
5,000,000 Norfolk Southern Corporation, Sr. Note,
6.200% due 04/15/2009 ........................ 4,570,585
United Air Lines, Inc.:
5,000,000 Equipment Trust Certificates,
10.850% due 07/05/2014 ....................... 5,742,915
Pass-through Certificates:
3,000,000 9.080% due 10/26/2015 ........................ 3,159,135
5,500,000 9.560% due 10/19/2018 ........................ 5,541,773
--------------
29,020,564
--------------
AUTO - 4.6%
2,000,000 Ford Holdings, Inc., Deb.,
9.300% due 03/01/2030 ........................ 2,186,410
Ford Motor Company, Deb.:
3,750,000 8.900% due 01/15/2032 ........................ 4,005,274
825,000 7.400% due 11/01/2046 ........................ 734,957
5,000,000 Ford Motor Credit Company, Sr. Note,
5.800% due 01/12/2009 ........................ 4,423,050
General Motors Corporation, Deb.:
350,000 9.625% due 12/01/2000 ........................ 350,587
8,000,000 9.400% due 07/15/2021 ........................ 9,192,784
--------------
20,893,062
--------------
CONSUMER NON-DURABLES/SERVICES - 3.8%
350,000 CPC International, Inc., Note,
6.150% due 01/15/2006 ........................ 339,931
5,000,000 CUC International Inc., Conv. Sub. Note,
3.000% due 02/15/2002 ........................ 4,643,750
528,126 Golden Books Publishing Company, Secured
Bond, 14.250% to 12/31/2002;
10.750% due 12/31/2004 ....................... 213,891
3,650,000 International Speedway Corporation,
Company Guarantee,
7.875% due 10/15/2004 ........................ 3,668,557
540,000 Nabisco, Inc., Note,
6.000% due 02/15/2001 ........................ 536,367
Royal Caribbean Cruises Ltd., Sr. Note:
426,000 7.125% due 09/18/2002 ........................ 414,587
111,000 7.250% due 08/15/2006 ........................ 101,319
USA Waste Services, Inc., Sr. Note:
495,000 7.125% due 10/01/2007 ........................ 462,326
1,000,000 7.000% due 07/15/2028 ........................ 821,774
1,000,000 V.F. Corporation, Note,
9.500% due 05/01/2001 ........................ 1,011,978
Waste Management, Inc.:
3,450,000 Company Guarantee,
6.875% due 05/15/2009 ........................ 3,142,643
750,000 Conv. Sub. Note,
4.000% due 02/01/2002 ........................ 703,125
1,145,000 Note,
7.700% due 10/01/2002 ........................ 1,129,437
--------------
17,189,685
--------------
GAMING - 3.5%
5,000,000 Circus Circus Enterprise, Deb.,
7.000% due 11/15/2036 ........................ 4,360,230
1,500,000 Louisiana Casino Cruises, Note,
11.000% due 12/01/2005 ....................... 1,612,500
5,000,000 Park Place Entertainment, Sr. Note,
8.500% due 11/15/2006 ........................ 5,010,150
2,250,000 Riviera Black Hawk Inc., First Mortgage,
13.000% due 05/01/2005 ....................... 2,311,875
3,100,000 Riviera Holdings Corporation, Company
Guarantee,
10.000% due 08/15/2004 ....................... 2,766,750
--------------
16,061,505
--------------
MEDIA/UTILITIES/TELECOMMUNICATIONS - 3.2%
7,500,000 Cox Communications Inc., Note,
7.875% due 08/15/2009** ...................... 7,567,943
1,377,000 Niagara Mohawk Power Corporation, Deb.,
8.770% due 01/01/2018 ........................ 1,437,390
220,000 Texas-New Mexico Power Company, Sr.
Note,
6.250% due 01/15/2009 ........................ 196,792
1,000,000 Voicestream Wire Company, Sr. Note,
10.375% due 11/15/2009+ ...................... 1,070,000
5,000,000 Winstar Communications Inc., Sr. Note,
12.750% due 04/15/2010+ ...................... 3,550,000
996,000 Worldcom, Inc., Note,
6.125% due 08/15/2001 ........................ 990,058
--------------
14,812,183
--------------
BANKS - 2.8%
400,000 Banc One Corporation, Sub. Note,
10.000% due 08/15/2010 ....................... 445,685
1,000,000 BankAmerica Corporation, Sub. Note,
6.625% due 08/01/2007 ........................ 960,868
1,000,000 Bank of New York, Sub. Note,
7.875% due 11/15/2002 ........................ 1,022,242
1,000,000 Barnett Banks, Florida, Inc., Sub. Note,
10.875% due 03/15/2003 ....................... 1,079,159
690,000 BB&T Corporation, Sub. Note,
7.250% due 06/15/2007 ........................ 675,832
1,000,000 Chase Manhattan Corporation,
Sub. Note, 8.500% due 02/15/2002 ............. 1,019,233
1,000,000 Citicorp, Sub.
Note, 8.000% due 02/01/2003 .................. 1,023,066
1,100,000 First Interstate Bancorp, Sub. Note,
9.125% due 02/01/2004 ........................ 1,163,198
1,000,000 First Nationwide Bank, Sub. Deb.,
10.000% due 10/01/2006 ....................... 1,081,358
246,000 First Union Corporation, Sub. Note,
9.450% due 08/15/2001 ........................ 250,725
995,000 Fleet Financial Group, Inc., Sub. Deb.,
6.875% due 01/15/2028 ........................ 874,841
1,000,000 Key Bank NA, Sub. Deb.,
6.950% due 02/01/2028 ........................ 877,670
1,000,000 Manufacturers & Trade Trust Company, Sub.
Note,
8.125% due 12/01/2002 ........................ 1,018,858
670,000 NationsBank Corporation, Sub. Note,
6.800% due 03/15/2028 ........................ 582,499
1,000,000 Norwest Bancorp, Sub. Deb.,
6.650% due 10/15/2023 ....................... 873,233
--------------
12,948,467
--------------
RETAIL SALES - 2.2%
5,000,000 Fred Meyer Inc., Company Guarantee,
7.450% due 03/01/2008 ........................ 4,840,620
5,000,000 Safeway Inc., Note,
7.500% due 09/15/2009** ...................... 4,959,955
866,000 Saks, Inc., Company Guarantee,
8.250% due 11/15/2008** ...................... 497,950
--------------
10,298,525
--------------
HEALTH CARE - 2.1%
1,500,000 Aetna Services Inc., Company Guarantee,
7.625% due 08/15/2026 ........................ 1,452,855
1,500,000 American Home Products Corporation, Deb.,
7.250% due 03/01/2023 ........................ 1,436,736
1,047,000 CII Financial Inc., Conv. Note,
7.500% due 09/15/2001 ........................ 680,550
200,000 Dura Pharmaceuticals, Inc., Sub. Note,
3.500% due 07/15/2002 ........................ 193,500
1,500,000 DVI, Inc., Sr. Note,
9.875% due 02/01/2004 ........................ 1,365,000
3,000,000 FHP International, Sr. Note,
7.000% due 09/15/2003 ........................ 2,925,318
1,800,000 Medical Care International Inc. (Columbia),
Conv. Sub. Deb.,
6.750% due 10/01/2006 ........................ 1,692,000
--------------
9,745,959
--------------
REAL ESTATE INVESTMENT TRUSTS - 1.8%
2,000,000 American Health Properties, Inc., Note,
7.500% due 01/15/2007 ........................ 1,839,726
Franchise Finance Corporation:
3,000,000 MTN,
7.070% due 01/15/2008 ........................ 2,745,693
Sr. Note:
900,000 7.000% due 11/30/2000 ........................ 899,564
1,100,000 7.875% due 11/30/2005 ........................ 1,092,944
Health Care Property Investors Inc.:
1,000,000 Note,
6.875% due 06/08/2005 ........................ 918,241
1,000,000 Sr. Note,
6.500% due 02/15/2006 ........................ 894,996
--------------
8,391,164
--------------
OIL & GAS - 1.8%
1,600,000 Burlington Resources, Deb.,
9.125% due 10/01/2021 ........................ 1,822,298
5,950,000 Phillips Petroleum Company, Deb.,
9.180% due 09/15/2021 ........................ 6,255,562
--------------
8,077,860
--------------
Total Corporate Bonds and Notes
(Cost $304,535,421) .......................... 297,420,308
--------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES - 17.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 10.7%
7,510,235 #C0070,
6.500% due 01/01/2029 ........................ 7,235,116
6,998,913 #C00785,
6.500% due 06/01/2029 ........................ 6,736,834
7,277,696 #C26853,
6.500% due 05/01/2029 ........................ 7,005,178
11,219,340 #C29918,
6.500% due 08/01/2029 ........................ 10,799,224
17,748,972 #C38968,
6.500% due 06/01/2029 ........................ 17,084,350
--------------
Total FHLMCs (Cost $48,439,627) ................ 48,860,702
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 4.1%
8,000,000 7.630% due 02/01/2010 ........................ 8,332,145
312,375 7.536% due 06/01/2016 ........................ 322,489
3,152,389 6.500% due 09/01/2028 ........................ 3,034,711
2,615,542 6.500% due 11/01/2028 ........................ 2,517,903
4,850,350 7.000% due 01/01/2030 ........................ 4,758,326
--------------
Total FNMAs (Cost $18,842,761) ................. 18,965,574
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) - 2.3%
(Cost $10,246,813)
10,811,132
7.000% due 02/20/2030 ........................ 10,612,617
--------------
Total U.S. Government Agency Mortgage-
Backed Securities (Cost $77,559,201) ......... 78,438,893
--------------
U.S. TREASURY OBLIGATIONS - 7.6%
U.S. TREASURY BONDS - 4.4%
$10,500,000 6.250% due 08/15/2023** ...................... $ 10,834,457
5,000,000 5.250% due 11/15/2028** ...................... 4,547,025
3,985,000 7.250% due 08/15/2022** ...................... 4,584,877
--------------
19,966,359
--------------
U.S. TREASURY NOTE - 3.2%
15,000,000 5.625% due 05/15/2008** ...................... 14,791,740
--------------
Total U.S. Treasury Obligations
(Cost $34,334,302) ........................... 34,758,099
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.5%
Federal Home Loan Mortgage Corporation,
Note:
10,000,000 6.875% due 01/15/2005** ...................... 10,128,280
10,000,000 7.000% due 03/15/2010** ...................... 10,220,510
10,000,000 Federal National Mortgage Association,
Note,
6.000% due 05/15/2008 ........................ 9,634,830
--------------
Total U.S. Government Agency Obligations
(Cost $29,024,616) ........................... 29,983,620
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 1.2%
1,329,498 Donaldson, Lufkin & Jenrette Acceptance
Corporation, 1995-Q10 B1,
9.050% due 01/25/2026 ........................ 1,232,850
137,114 Federal National Mortgage Association,
Series 1996-M7B,
6.830% due 06/17/2011 ........................ 137,404
1,326,302 Federal National Mortgage Association,
Series 1997-42,
7.250% due 03/18/2026 ........................ 1,322,092
2,761,559 Reilly Mortgage FHA, 1982,
7.430% due 06/01/2022 ........................ 2,805,371
--------------
Total CMOs (Cost $5,488,088) ................... 5,497,717
--------------
SHARES
------
CONVERTIBLE PREFERRED STOCK - 0.1%
(Cost $380,580)
15,100 First Industrial Realty Trust Inc., Series A,
Conv. Pfd.,
9.500% due 11/17/2000 ........................ 371,838
--------------
COMMON STOCK - 0.0%#
(Cost $118,997)
24,083 Golden Books Family Entertainment .............. 7,526
--------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 0.9%
(Cost $4,154,000)
$ 4,154,000 Agreement with Goldman Sachs & Company,
6.420% dated 10/31/2000, to be repurchased
at $4,154,741, on 11/01/2000 collateralized
by $3,440,180 U.S. Treasury Bond,
7.875% due 02/15/2021
(Market Value $4,243,492) .................... $ 4,154,000
--------------
TOTAL INVESTMENTS (Cost $455,595,205*) ........... 98.4% 450,632,001
OTHER ASSETS AND LIABILITIES (Net) ............... 1.6 7,358,835
----- --------------
NET ASSETS ....................................... 100.0% $ 457,990,836
===== ==============
====================
* Aggregate cost for federal tax purposes.
** This security or a partial position of this security is on loan at
October 31, 2000, which have an aggregate market value of $57,357,448,
representing 12.5% of the total net assets of the Fund (Note 7).
# 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.
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
FHA -- Federal Housing Authority
MTN -- Medium Term Note
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
HIGH YIELD FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
--------- -----
CORPORATE BONDS AND NOTES - 76.6%
INFORMATION TECHNOLOGY - 22.5%
$13,000,000 Adaptec Inc., Conv. Sub. Note,
4.750% due 02/01/2004 ........................ $ 10,530,000
5,275,000 Arbor Software, Conv. Sub. Note,
4.500% due 03/15/2005** ...................... 3,817,780
13,500,000 Conexant Systems Inc., Conv. Sub. Note,
4.000% due 02/01/2007 ........................ 8,218,125
5,500,000 Exodus Communications Inc., Sr. Note,
10.750% due 12/15/2009** ..................... 5,005,000
2,750,000 HMT Technology Corporation, Conv. Sub.
Note,
5.750% due 01/15/2004 ........................ 838,750
23,341,000 Networks Associates Inc.,
Conv. Sub. Deb., Zero coupon due 02/13/2003 .. 8,898,756
3,000,000 Radisys Corporation, Sub. Note,
5.500% due 08/15/2007++ ...................... 2,073,750
8,525,000 S3 Inc., Conv. Sub. Note,
5.750% due 10/01/2003 ........................ 7,416,750
--------------
46,798,911
--------------
TELECOMMUNICATIONS/MEDIA - 13.8%
9,050,000 Charter Communications Holdings LLC, Sr.
Note,
8.625% due 04/01/2009 ........................ 8,190,250
3,250,000 Loral Space & Communications Ltd., Sr. Note,
9.500% due 01/15/2006++** .................... 2,437,500
5,000,000 Nextlink Communications Inc., Sr.
Note, 10.750% due 06/01/2009** ............... 4,412,500
5,000,000 Voicestream Wire Company, Sr. Note,
10.375% due 11/15/2009++ ..................... 5,375,000
9,000,000 Winstar Communications Inc., Sr. Note,
12.750% due 04/15/2010++* .................... 6,390,000
3,000,000 XM Satellite Radio, Inc.,
14.000% due 03/15/2010++** ................... 2,160,000
--------------
28,965,250
--------------
HEALTH CARE - 11.6%
6,150,000 Beverly Enterprises, Inc., Gtd. Deb.,
9.000% due 02/15/2006** ...................... 5,596,500
500,000 Columbia/HCA Healthcare Corporation, Note,
7.750% due 07/15/2036 ........................ 404,043
2,800,000 Dura Pharmaceuticals Inc., Conv. Sub. Note,
3.500% due 07/15/2002 ........................ 2,709,000
DVI Inc., Sr. Note:
6,400,000 9.875% due 02/01/2004 ........................ 5,824,000
2,000,000 9.875% due 02/01/2004++ ...................... 1,820,000
4,321,000 Medical Care International Inc. (Columbia),
Conv. Sub. Deb.,
6.750% due 10/01/2006 ........................ 4,061,740
4,445,000 Omnicare Inc., Conv. Bond,
5.000% due 12/01/2007 ........................ 3,339,306
5,000,000 PhyCor Inc., Conv. Sub. Deb.,
4.500% due 02/15/2003 ........................ 600,000
--------------
24,354,589
--------------
GAMING - 11.2%
$ 6,825,000 Aladdin Gaming, Series B, Sr. Disc. Note,
Zero coupon to 03/01/2003;
13.500% due 03/01/2010** ..................... $ 3,241,875
1,703,000 Isle of Capri Black Hawk LLC, First
Mortgage,
13.000% due 08/31/2004 ....................... 1,860,527
5,000,000 Louisiana Casino Cruises, Note,
11.000% due 12/01/2005 ....................... 5,375,000
3,125,000 Majestic Star LLC, Company Guarantee,
10.875% due 07/01/2006 ....................... 2,765,625
4,565,000 Riviera Black Hawk Inc., First Mortgage,
13.000% due 05/01/2005 ....................... 4,690,537
6,162,000 Riviera Holdings Corporation, Company
Guarantee,
10.000% due 08/15/2004 ....................... 5,499,585
--------------
23,433,149
--------------
FOREIGN (U.S. DOLLAR DENOMINATED) - 10.9%
1,000,000 @ Entertainment Inc., Sr. Disc. Note,
Zero coupon to 07/15/2003;
14.500% due 07/15/2008** ..................... 605,000
5,800,000 @ Entertainment Inc., Sr. Disc. Note,
Zero coupon to 02/01/2004;
14.500% due 02/01/2009 ....................... 3,219,000
HIH Capital Ltd., Conv. Note:
2,305,000 7.500% due 09/25/2006 ........................ 989,825
1,300,000 7.500% due 09/25/2006 ........................ 476,125
8,500,000 Mexican United States, Bond,
9.875% due 02/01/2010** ...................... 8,861,250
Philippine Long Distance Telephone Company,
MTN, Note:
1,500,000 7.850% due 03/06/2007 ........................ 1,138,098
1,000,000 10.500% due 04/15/2009 ....................... 825,258
6,750,000 Tokai Pfd Capital Company, Bond,
9.980% to 06/30/2008;
11.091% due 12/29/2049 ....................... 6,491,266
551,000 V2 Music Holdings Plc, Conv. Company
Guarantee,
6.500% due 06/30/2012 ........................ 165,300
--------------
22,771,122
--------------
CONSUMER NON-DURABLES/SERVICES - 5.8%
3,900,000 CUC International Inc., Conv. Sub. Note,
3.000% due 02/15/2002 ........................ 3,622,125
9,900,000 Sunbeam Corporation, Sr. Sub. Deb.,
Zero coupon due 03/25/2018 ................... 594,000
8,450,000 Waste Management Inc., Conv. Sub. Note,
4.000% due 02/01/2002 ........................ 7,921,875
--------------
12,138,000
--------------
MANUFACTURING - 0.8%
1,750,000 Jackson Products Inc., Company Guarantee,
9.500% due 04/15/2005 ........................ 1,583,750
--------------
Total Corporate Bonds and Notes
(Cost $173,228,051) .......................... 160,044,771
--------------
U.S. TREASURY NOTE - 4.9%
(Cost $10,121,080)
10,000,000 6.500% due 10/15/2006** ...................... 10,315,870
--------------
COLLATERALIZED MORTGAGE OBLIGATION (CMO) - 0.2%
(Cost $382,962)
409,408 Donaldson, Lufkin & Jenrette Mortgage
Acceptance Corporation, 1995-Q10 B1,
8.461% due 01/25/2026 ........................ 379,646
--------------
SHARES
------
COMMON STOCKS - 8.6%
57,845 Credence Systems Corporation+ .................. 1,084,594
232,200 Health Care Property Investors, Inc. ........... 6,820,875
226,860 Huntingdon Life Sciences Group, Plc, ADR+ ...... 439,541
180,460 ICO Global Communications Holdings, Ltd. ....... 1,804,601
527,000 Nationwide Health Properties Inc. .............. 7,872,063
--------------
Total Common Stocks
(Cost $18,240,060) ........................... 18,021,674
--------------
CONVERTIBLE PREFERRED STOCK - 1.9%
(Cost $3,677,551)
159,100 First Industrial Realty Trust Inc., Series A,
Conv. Pfd., 9.500% due 11/17/2000 ............ 3,917,838
--------------
WARRANTS - 0.1%
68,250 Aladdin Gaming, Expires 03/01/2010+,++
45,260 ICO Global Communications Holdings, Ltd.,
Expires 05/16/2006 ........................... 11,315
67 ICO Global Communications Holdings, Ltd.
Expires 05/16/2006 ........................... 27
1,000 V2 Music Holdings Plc, Expires 04/15/2008+,++ .. 10
3,000 XM Satellite Radio Inc., Expires 03/15/2010+ ... 300,000
--------------
Total Warrants
(Cost $12,399) ............................... 311,352
--------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 6.6%
(Cost $13,831,000)
$13,831,000 Agreement with Goldman Sachs & Company, 6.420%
dated 10/31/2000, to be repurchased at $13,833
467 on 11/01/2000, collateralized by $11,454,291
U.S. Treasury Bond, 7.875% due 02/15/2021
(Market Value $14,128,969) ................... 13,831,000
--------------
TOTAL INVESTMENTS (Cost $219,493,103*) ........... 98.9% 206,822,151
OTHER ASSETS AND LIABILITIES (Net) ............... 1.1 2,338,274
----- --------------
NET ASSETS ....................................... 100.0% $ 209,160,425
===== ==============
=================
* Aggregate cost for federal tax purposes is $219,676,485.
** This security or a partial position of this security is on loan
at October 31, 2000, which have an aggregate market value of $26,317,066,
representing 12.6% of the total net assets of the Fund (Note 7).
+ 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 Depository Receipt
MTN -- Medium Term Note
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT BOND FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
------ -----
MUNICIPAL BONDS AND NOTES - 99.8%
ALASKA - 1.4%
$ 1,235,000 Anchorage, Electric Utility, (MBIA Insured),
6.500% due 12/01/2013 ....................... $ 1,409,345
2,000,000 Anchorage, Ice Rink Revenue,
6.375% due 01/01/2020 ....................... 1,926,020
--------------
3,335,365
--------------
ARIZONA - 2.0%
Salt River Project Agricultural Improvement
& Power District:
3,000,000 Series A,
5.750% due 01/01/2009 ....................... 3,204,030
1,500,000 Series C,
6.250% due 01/01/2019 ....................... 1,550,145
--------------
4,754,175
--------------
CALIFORNIA - 5.8%
15,000,000 Anaheim, Public Financing Authority Lease,
Capital Appreciation Subordinate Public
Improvements, Project-C, (FSA Insured),
Zero coupon due 09/01/2034 .................. 2,180,550
5,860,000 California Educational Facilities Authority
Revenue, Loyola Marymount, (MBIA Insured),
Zero coupon due 10/01/2020 .................. 1,768,431
2,000,000 Center Unified School District California,
Capital Appreciation, Series C, GO,
(MBIA Insured),
Zero coupon due 09/01/2018 .................. 754,080
2,000,000 Foothill/Eastern Corridor Agency, California
Toll Road Revenue, (MBIA Insured),
Zero coupon due 01/15/2018 .................. 754,740
3,500,000 Lodi, Electric System Revenue, COP, Series B,
(MBIA Insured),
Zero coupon due 01/15/2024 .................. 876,435
550,000 Los Angeles, Regional Airport Improvement,
Series A, AMT,
6.700% due 01/01/2022 ....................... 567,132
2,000,000 Orange County Recovery, COP, Series A,
(MBIA Insured),
6.000% due 07/01/2026 ....................... 2,094,140
1,173,000 Sacramento, Centrex System Lease, COP,
Series A,
5.550% due 09/15/2004 ....................... 1,177,164
2,500,000 San Diego, Convention Center Expansion
Financing Authority Revenue,
Series A,
4.750% due 04/01/2028 ....................... 2,221,475
7,000,000 San Joaquin Hills, California Transportation
Corridor, Agency Toll Road Revenue,
Series A, (MBIA Insured),
Zero coupon due 01/15/2034 .................. 1,053,640
--------------
13,447,787
--------------
COLORADO - 4.6%
Denver City and County, Airport Revenue, AMT:
Series A, Unrefunded:
1,470,000 8.875% due 11/15/2012 ....................... 1,551,894
1,835,000 8.000% due 11/15/2025** ..................... 1,874,067
1,920,000 Series C,
6.600% due 11/15/2004 ....................... 2,013,946
1,650,000 Lakewood, COP, (AMBAC Insured),
5.350% due 12/01/2017 ....................... 1,648,812
3,500,000 Meridian Metropolitan District, GO,
7.500% due 12/01/2011 ....................... 3,619,700
--------------
10,708,419
--------------
CONNECTICUT - 1.1%
1,500,000 Connecticut State Special Obligation Parking
Revenue, Bradley International Airport,
Series A, AMT,
6.600% due 07/01/2024 ....................... 1,571,685
995,000 Mashantucket Western Pequot Tribe, Special
Revenue, Series A, Pre-refunded,
6.500% due 09/01/2005++ ..................... 1,080,729
--------------
2,652,414
--------------
DISTRICT OF COLUMBIA - 1.2%
630,000 District of Columbia, COP,
6.875% due 01/01/2003 ....................... 638,744
500,000 District of Columbia, Water & Sewer
Authority, (FSA Insured), 5.500%
due 10/01/2017 .............................. 507,975
1,500,000 Metropolitan District, Washington D.C.,
Airport Authority, General
Airport Revenue, Series A, AMT,
(MBIA Insured), 6.625% due 10/01/2019** ..... 1,567,155
--------------
2,713,874
--------------
FLORIDA - 5.7%
15,000,000 Dade County, Guaranteed Entitlement Revenue,
Capital Appreciation, Series A,
(MBIA Insured),
Zero coupon due 02/01/2018 .................. 5,472,750
1,500,000 Escambia County, Health Facilities Authority
Revenue, Florida Health Care Facilities
Loan, (VHA Program), (AMBAC Insured),
5.950% due 07/01/2020 ....................... 1,562,160
1,000,000 Florida Board of Education, Series A,
(FGIC Insured),
4.500% due 06/01/2023 ....................... 849,160
5,000,000 Orlando Utilities Commission, Water
& Electric Revenue,
6.000% due 10/01/2010 ....................... 5,491,550
--------------
13,375,620
--------------
GEORGIA - 5.2%
5,000,000 Georgia State, GO, Series B,
6.300% due 03/01/2009** ..................... 5,551,450
Monroe County, PCR, (Olgethorpe Power Company,
(MBIA Insured):
2,500,000 6.700% due 01/01/2009 ....................... 2,815,250
3,410,000 6.750% due 01/01/2010 ....................... 3,883,240
--------------
12,249,940
--------------
HAWAII - 0.9%
Honolulu City & County, GO, Series A:
730,000 Pre-refunded,
6.000% due 01/01/2012 ....................... 798,043
1,270,000 Unrefunded,
6.000% due 01/01/2012 ....................... 1,378,128
--------------
2,176,171
--------------
IDAHO - 1.0%
2,000,000 Idaho Health Facilities Authority Revenue,
(Inverse Floater), ETM,
6.650% due 02/15/2021+ ...................... 2,272,240
--------------
ILLINOIS - 12.4%
4,915,000 Bolingbrook, Capital Appreciation,
(MBIA Insured), Series C,
Zero coupon due 01/01/2025 .................. 1,211,400
10,000,000 Chicago, Board of Education, School Reform,
Series A, (FGIC Insured),
Zero coupon due 12/01/2031 .................. 1,615,800
2,665,000 Chicago, Gas Supply Revenue, (Peoples Gas),
6.875% due 03/01/2015 ....................... 2,783,806
Chicago, O'Hare International Airport
Supplemental Facilities, AMT:
700,000 American Air Lines, Special Series A,
7.875% due 11/01/2025 ....................... 714,798
5,000,000 International Terminal (MBIA Insured),
6.750% due 01/01/2012** ..................... 5,183,500
725,000 United Air Lines,
8.950% due 05/01/2018 ....................... 758,451
Cook County, School District, Number 026,
ETM, (MBIA Insured):
1,445,000 Zero coupon due 12/01/2003 .................. 1,251,023
1,020,000 Zero coupon due 12/01/2004 .................. 841,061
Illinois Health Facilities Authority Revenue:
240,000 Glenoak Medical Center, Series D,
Pre-refunded,
9.500% due 11/15/2015 ....................... 246,480
4,340,000 Hindsdale Hospital, Series B, ETM,
9.000% due 11/15/2015 ....................... 4,458,656
3,000,000 Rush Presbyterian - St. Luke's Medical
Center, Residual Interest Bond,
(MBIA Insured),
9.007% due 10/01/2024+ ...................... 3,236,250
Metropolitan Pier and Exposition Authority,
Dedicated State Tax, (FGIC Insured):
815,000 ETM,
Zero coupon due 06/15/2009 .................. 531,494
620,000 Pre-refunded,
Zero coupon due 06/15/2008 .................. 426,461
Unrefunded:
3,380,000 Zero coupon due 06/15/2008 .................. 2,323,175
5,185,000 Zero coupon due 06/15/2009 .................. 3,378,494
--------------
28,960,849
--------------
INDIANA - 2.8%
6,000,000 Indiana Municipal Power Agency, Series A,
(MBIA Insured),
6.125% due 01/01/2013** ..................... 6,542,280
--------------
KENTUCKY - 1.4%
Jefferson County, Hospital Revenue, Residual
Interest Bond, (MBIA Insured):
900,000 Pre-refunded,
8.090% due 10/09/2008+ ...................... 991,125
2,100,000 Unrefunded,
8.090% due 10/09/2008+ ...................... 2,291,625
--------------
3,282,750
--------------
LOUISIANA - 0.2%
1,500,000 Louisiana Public Facilities Authority Revenue,
Series B, ETM, Zero coupon due 12/01/2019 ... 517,035
--------------
MARYLAND - 1.4%
3,000,000 Baltimore, Port Facilities Revenue,
Consolidated Coal Sales, Series B,
6.500% due 10/01/2011** ..................... 3,153,900
--------------
MASSACHUSETTS - 1.7%
1,000,000 Massachusetts, Development Finance Agency Revenue,
(Hillcrest Educational Centers Inc.),
6.375% due 07/01/2029 ....................... 974,860
3,000,000 Route 3, North Transportation Improvement
Association, Lease Revenue, (MBIA Insured),
5.375% due 06/15/2033 ....................... 2,892,630
--------------
3,867,490
--------------
MISSISSIPPI - 1.3%
2,700,000 Lowndes County, Solid Waste Disposal, PCR,
(Weyerhaeuser Company Project), Series A,
6.800% due 04/01/2022+ ...................... 3,013,929
--------------
MISSOURI - 0.8%
St. Louis County, Pattonville R-3 School
District, Direct Deposit Program,
(FGIC Insured):
1,000,000 5.750% due 03/01/2017 ....................... 1,040,620
880,000 5.750% due 03/01/2018 ....................... 910,774
--------------
1,951,394
--------------
MONTANA - 0.5%
1,000,000 Forsyth, PCR, Puget Sound Power & Light,
Series B, AMT, (AMBAC Insured),
7.250% due 08/01/2021** ..................... 1,035,320
--------------
NEBRASKA - 3.5%
450,000 Nebraska Investment Finance Authority,
Single Family Housing Revenue, Residual
Interest Bond, AMT, (GNMA Collateral),
8.502% due 09/15/2024+ ...................... 470,250
7,000,000 Omaha Public Power District Electric,
Series B, ETM,
6.150% due 02/01/2012 ....................... 7,704,620
--------------
8,174,870
--------------
NEVADA - 2.2%
4,000,000 Clark County, IDR, Nevada Power Company,
Series A, AMT, (FGIC Insured),
6.700% due 06/01/2022** ..................... 4,173,240
1,000,000 Clark County, Las Vegas Convention, GO, Series A,
5.000% due 07/01/2024 ....................... 910,190
--------------
5,083,430
--------------
NEW JERSEY - 0.5%
1,400,000 New Jersey Economic Development Authority
Revenue, Educational Testing Service,
Series A, (MBIA Insured),
4.750% due 05/15/2025 ....................... 1,242,262
--------------
NEW MEXICO - 0.4%
1,000,000 Lordsburg, PCR, (Phelps Dodge),
6.500% due 04/01/2013 ....................... 1,024,140
--------------
New York - 8.5%
5,500,000 Long Island Power Authority, Electric System
Revenue, (FSA Insured),
Zero coupon due 06/01/2020 .................. 1,831,390
1,265,000 Metropolitan Transportation Authority, Service
Contract Transportation Facilities,
Series 7, 4.750% due 07/01/2019 ............. 1,111,378
2,000,000 Nassau County, Interim Finance Authority,
Sales Tax Secured, Series A,
5.750% due 11/15/2013 ....................... 2,100,300
3,265,000 New York City, GO Series I, (MBIA Insured),
5.000% due 04/15/2029 ....................... 2,972,652
1,500,000 New York City, Municipal Water Finance Authority,
Water & Sewer Systems Revenue,
Series A, (FSA Insured),
5.125% due 06/15/2021 ....................... 1,417,785
1,100,000 New York City, Transitional Finance Authority
Revenue, Future Tax Secured, Series C,
5.000% due 05/01/2029 ....................... 1,002,925
New York State, Dormitory Authority Revenue:
2,000,000 New York University, Series A,
(AMBAC Insured),
5.250% due 07/01/2006# ...................... 2,057,220
1,000,000 State University Educational Facilities,
(MBIA Insured),
6.000% due 05/15/2016 ....................... 1,068,390
1,000,000 New York State, GO, Unrefunded, Series B,
(FSA Insured), ETM,
7.000% due 06/01/2014** ..................... 1,028,120
580,000 New York State, Housing Finance Agency Revenue,
MFHR, Second Mortgage, Series F, AMT,
(Sonyma Program Insured),
6.625% due 08/15/2012 ....................... 590,394
2,500,000 New York State, Mortgage Agency Revenue,
Series 82, AMT,
5.650% due 04/01/2030 ....................... 2,457,275
2,500,000 North Hempstead, GO, Series A,
(FGIC Insured),
4.750% due 01/15/2023 ....................... 2,212,800
--------------
19,850,629
--------------
OHIO - 1.8%
1,000,000 Cuyahoga County, Hospital Facilities Revenue,
(Canton Inc. Project),
7.500% due 01/01/2030 ....................... 1,037,260
1,000,000 Hamilton County, Sales Tax, (Football Project),
(MBIA Insured),
4.750% due 12/01/2027 ....................... 865,710
1,240,000 Lorain County, Hospital Revenue, Humility of
Mary Health Care, Series B, ETM,
7.200% due 12/15/2011 ....................... 1,302,608
1,000,000 Montgomery County, Hospital Revenue,
(Grandview Hospital & Medical Center),
5.250% due 12/01/2003 ....................... 1,020,030
--------------
4,225,608
--------------
OKLAHOMA - 1.0%
1,085,000 Oklahoma Housing and Finance Authority,
Single Family Revenue, Series B, AMT,
(GNMA Collateral),
7.997% due 08/01/2018** ..................... 1,197,482
1,000,000 Tulsa County, Public Facilities Authority
Capital Improvement Revenue,
6.250% due 11/01/2022 ....................... 1,011,990
--------------
2,209,472
--------------
OREGON - 0.4%
1,000,000 Portland, Urban Renewal & Redevelopment,
Downtown Waterfront, Series A,
(AMBAC Insured),
5.750% due 06/15/2016 ....................... 1,045,640
--------------
PENNSYLVANIA - 8.5%
Allegheny County, Hospital Development
Revenue, (Ohio Valley General Hospital):
700,000 5.100% due 04/01/2001 ....................... 699,090
735,000 5.300% due 04/01/2002 ....................... 732,927
625,000 5.400% due 04/01/2003 ....................... 621,319
1,000,000 Carbon County, Industrial Development
Authority, (Panther Creek Partners), AMT,
6.650% due 05/01/2010 ....................... 1,017,950
1,150,000 Lehigh County, General Purpose Authority,
Hospital Lehigh Valley Health Network,
Series C, (MBIA Insured),
5.000% due 07/01/2028 ....................... 1,013,288
4,000,000 Pennsylvania Higher Education Revenue,
Assistance Agency, Student Loan, Residual
Interest Bond, AMT, (AMBAC Insured),
8.963% due 09/01/2026+ ...................... 4,865,000
Pennsylvania State Turnpike, Community Oil
Franchise Tax Revenue, (AMBAC Insured):
2,250,000 Series A,
4.750% due 12/01/2027 ....................... 1,961,212
1,750,000 Series B,
4.750% due 12/01/2027 ....................... 1,525,387
Philadelphia, Gas Works Revenue, Second Series,
(FSA Insured):
1,000,000 5.000% due 07/01/2029 ....................... 903,590
2,500,000 5.250% due 07/01/2029 ....................... 2,360,325
2,500,000 Philadelphia, GO, (FSA Insured),
5.000% due 03/15/2028 ....................... 2,259,700
2,000,000 Philadelphia, Parking Authority Revenue,
Series A, (AMBAC Insured),
5.250% due 02/15/2029 ....................... 1,890,740
--------------
19,850,528
--------------
SOUTH CAROLINA - 1.1%
1,000,000 Charleston County, Health Facilities Revenue,
First Mortgage, (Episcopal Church),
Series A,
5.400% due 04/01/2004 ....................... 973,880
1,000,000 Charleston County, Industrial Revenue,
Zeigler Coal Holdings,
6.950% due 08/10/2028 ....................... 240,000
1,375,000 Lancaster County, School District, GO,
(FSA Insured),
4.750% due 03/01/2019 ....................... 1,258,978
--------------
2,472,858
--------------
TENNESSEE - 1.5%
1,000,000 Johnson City, Health & Educational Facility
Board, Hospital Revenue, First Mortgage
Mountain States Health, Series A,
7.500% due 07/01/2033 ....................... 965,910
2,640,000 Tennessee, Housing Development Agency,
Homeownership Program, Series 2A, AMT,
5.700% due 07/01/2031 ....................... 2,574,792
--------------
3,540,702
--------------
TEXAS - 5.3%
415,000 Brazos, Higher Educational Facilities Authority,
Series C-2, AMT,
7.100% due 11/01/2004 ....................... 444,415
5,000,000 Dallas-Fort Worth, International Airport,
(Facility Improvement Corporate Revenue),
(American Airlines, Inc), AMT,
7.500% due 11/01/2025 ....................... 5,100,000
3,500,000 Harris County, COP,
4.500% due 10/01/2023 ....................... 2,934,365
2,050,000 Houston, Texas Water & Sewer System
Revenue, Jr. Lien, Series C, (FGIC Insured),
5.375% due 12/01/2027 ....................... 1,982,104
1,925,000 Round Rock, Independent School District,
GO, PSF-GTD,
4.500% due 08/01/2019 ....................... 1,681,988
244,000 Texas, Higher Education Coordinating Board,
Student Loan, AMT,
7.700% due 10/01/2025 ....................... 250,554
--------------
12,393,426
--------------
VIRGINIA - 1.6%
1,000,000 Pocahontas Parkway Association, Virgin Toll
Road Revenue, Series A,
5.000% due 08/15/2005 ....................... 967,890
Richmond, GO, (FSA Insured):
600,000 5.125% due 01/15/2008 ....................... 617,796
1,000,000 5.250% due 01/15/2009 ....................... 1,038,050
1,000,000 5.500% due 01/15/2010 ....................... 1,056,470
--------------
3,680,206
--------------
WASHINGTON - 8.9%
4,500,000 King County, School District #415 Kent, GO,
Series C,
6.300% due 12/01/2008 ....................... 4,949,190
1,500,000 Pierce County, Housing AuthorityRevenue,
5.400% due 12/01/2013 ....................... 1,410,060
950,000 Port Anacortes, Revenue Bond, Series A, AMT,
5.125% due 09/01/2009 ....................... 918,812
785,000 University of Washington Revenue Bond,
(MBIA Insured), Unrefunded,
7.000% due 12/01/2021 ....................... 818,888
Washington State Health Care Facilities
Authority, Fred Hutchinson Cancer Center,
(LOC Morgan Guarantee Trust):
1,000,000 7.200% due 01/01/2007 ....................... 1,023,790
1,000,000 7.375% due 01/01/2018 ....................... 1,023,360
Washington State, GO:
7,570,000 Series B,
5.000% due 05/01/2017 ....................... 7,246,004
3,000,000 Series B & AT-7,
6.400% due 06/01/2017 ....................... 3,366,270
--------------
20,756,374
--------------
WEST VIRGINIA - 1.5%
2,500,000 Harrison County, Solid Waste Disposal,
(Monongahela Power), Series A, AMT,
6.875% due 04/15/2022 ....................... 2,609,850
150,000 Kanawha County, IDR, (Union Carbide Project),
Series A, AMT,
8.000% due 08/01/2020 ....................... 153,239
750,000 South Charleston, IDR, (Union Carbide Project),
Series A, AMT,
8.000% due 08/01/2020 ....................... 766,193
--------------
3,529,282
--------------
WISCONSIN - 1.7%
750,000 Madison, IDR, (Madison Gas & Electric Company),
(Project A), AMT,
6.750% due 04/01/2027 ....................... 779,640
Wisconsin, Health & Educational Facilities
Authority Revenue:
1,500,000 (Kenosha Hospital & Medical Center),
5.625% due 05/15/2029 ....................... 1,307,055
1,000,000 (Waukesha Memorial Hospital), Series A,
(AMBAC Insured),
7.125% due 08/15/2007 ....................... 1,021,990
1,000,000 Wisconsin, Housing & Ecomomic Development
Authority, Home Ownership Revenue,
Series F, AMT,
5.250% due 07/01/2029 ....................... 897,870
--------------
4,006,555
--------------
Total Municipal Bonds and Notes
(Cost $220,626,247) ......................... 233,096,934
--------------
TOTAL INVESTMENTS (Cost $220,626,247*) 99.8% 233,096,934
OTHER ASSETS AND LIABILITIES (NET) ............... 0.2 544,587
----- --------------
NET ASSETS ...................................... 100.0% $ 233,641,521
===== ==============
* Aggregate cost for federal tax purposes is $220,639,481.
** Security pledged as collateral for when-issued securities.
# Security purchased on when-issued basis (Note 2).
+ Floating rate note. The interest rate shown reflects the rate in effect at
October 31, 2000.
++ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
Tax-Exempt Bond Fund had the following industry concentrations greater than 10%
at October 31, 2000 (as a percentage of net assets) (unaudited):
General Purpose 19.5%
Retail Utility 6.8%
Health Care 11.5%
Tax-Exempt Bond Fund had the following insurance concentrations greater than 10%
at October 31, 2000 (as a percentage of net assets) (unaudited):
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
ACA -- American Capital Access
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificates of Participation
ETM -- Escrowed to Maturity
FGIC -- Federal Guaranty Insurance Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
PSF-GTD -- Permanent School Fund Guaranteed
VHA -- Veterans Housing Authority
--------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
CALIFORNIA MUNICIPAL FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
------ -----
MUNICIPAL BONDS AND NOTES - 96.9%
CALIFORNIA - 95.0%
Abag, Financing Authority for Nonprofit
Corporation, COP:
$ 1,000,000 (Archstone Redwood), Series A,
5.300% due 10/01/2008++ ..................... $ 1,008,180
1,100,000 (Episcopal, Homes Foundation),
5.000% due 07/01/2007 ....................... 1,091,629
(O'Connor Woods Obligated Group):
1,000,000 5.400% due 11/01/2009 ....................... 1,036,410
2,530,000 5.700% due 11/01/2013 ....................... 2,627,860
2,000,000 6.200% due 11/01/2029 ....................... 2,085,380
5,360,000 Alhambra, Improvement Board Act of 1915,
Assessment District No. 1, Public Works,
(MBIA Insured),
6.125% due 09/02/2018** ..................... 5,599,110
2,550,000 Alta Loma, School District, Capital
Appreciation,Series A, (FGIC Insured),
Zero coupon due 08/01/2022 .................. 755,004
2,000,000 Anaheim, Public Financing Authority Tax
Allocation Revenue, (Inverse Floater),
(MBIA Insured),
8.420% due 11/28/2000 ....................... 2,360,000
1,455,000 Antioch, Public Financing Authority,
Reassessment Revenue, Series A,
(AMBAC Insured),
5.000% due 09/02/2018 ....................... 1,413,925
2,000,000 Barstow Redevelopment Agency, Central
Redevelopment, Tax Allocation, Series A,
(MBIA Insured),
7.000% due 09/01/2014 ....................... 2,451,180
4,000,000 California Community College Financing
Authority Lease Revenue, Series A,
(MBIA Insured),
4.625% due 10/01/2019** ..................... 3,611,080
California Educational Facilities Authority
Revenue:
2,650,000 (College of Osteopathic Medicine),
(Pre-refunded to 06/01/2003),
7.500% due 06/01/2018 ....................... 2,859,562
3,485,000 (Heald College), 5.450% due 02/15/2022 ...... 3,243,699
(Loyola Marymount), (MBIA Insured):
4,435,000 Zero coupon due 10/01/2028 .................. 792,845
3,435,000 Zero coupon due 10/01/2030 .................. 536,478
(Pooled College & University), Series B:
2,000,000 5.125% due 04/01/2017 ....................... 1,831,440
1,000,000 6.625% due 06/01/2020 ....................... 1,055,600
California Housing Finance Agency, Home
Mortgage, AMT:
500,000 Multi-family Housing II), Series C,
6.875% due 08/01/2024 ....................... 516,125
(Multi-family Housing III), Series B,
(FSA/VA Insured):
1,000,000 6.000% due 08/01/2016 ....................... 1,043,480
2,000,000 6.100% due 02/01/2028 ....................... 2,055,840
2,000,000 California Housing Finance Agency, Home
Mortgage Revenue, Series A,
(MBIA Insured),
Zero coupon due 02/01/2016 .................. 852,580
5,000,000 California Housing Finance Agency, Home
Mortgage, AMT, Series F, (FSA Insured), Zero
coupon due 08/01/2031 ....................... 701,900
California Housing Finance Agency, Home
Ownership & Improvement Revenue:
205,000 Series B, AMT, (MBIA Insured),
5.200% due 08/01/2026 ....................... 205,529
5,010,000 Series C, AMT, (FSA Insured),
6.650% due 08/01/2014** ..................... 5,121,873
665,000 Series D, AMT, (MBIA Insured),
6.300% due 08/01/2014 ....................... 696,720
4,990,000 Series D, AMT,
Zero coupon due 02/01/2019 .................. 1,675,542
2,630,000 eries F, AMT, (MBIA Insured),
6.800% due 08/01/2014 ....................... 2,808,787
1,060,000 Series F1, AMT, (AMBAC Insured),
6.500% due 02/01/2008 ....................... 1,099,496
California Infrastructure & Economic
Development Bank Revenue, (MBIA Insured):
2,655,000 5.500% due 06/01/2016 ....................... 2,752,784
3,855,000 5.500% due 06/01/2017 ....................... 3,973,117
California, Pollution Control Financing
Authority, PCR:
2,500,000 (San Diego Gas and Electric), Series A, AMT,
(AMBAC Insured),
5.850% due 06/01/2021 ...................... 2,543,800
2,000,000 (Southern California Edison Company):
Series B, (MBIA Insured),
5.450% due 09/01/2029 ....................... 2,002,280
13,250,000 (Southern California Edison Company):
Series B, AMT, (AMBAC Insured),
6.400% due 12/01/2024** ..................... 13,784,902
5,000,000 (Southern California Edison Company):
Series B, AMT, (FGIC Insured),
6.400% due 12/01/2024** ..................... 5,201,850
5,000,000 (Waste Management), Series A, AMT,
7.150% due 02/01/2011** ..................... 5,091,550
3,100,000 (Waste Removal Systems), Series A, AMT,
LOC Wells Fargo & Company,
7.100% due 11/01/2009 ....................... 3,135,867
2,250,000 Pollution Control California Residential
Efficiency Financing Authority,
(First Resource Efficiency),
(AMBAC Insured),
6.000% due 07/01/2017 ....................... 2,372,377
980,000 California Rural Home Mortgage Finance Authority,
SFMR, Mortgage-Backed Securities, Series A-2,
AMT, (GNMA Collateral),
7.950% due 12/01/2024 ....................... 1,040,309
California State, GO:
4,430,000 5.500% due 06/01/2025 ....................... 4,457,643
3,700,000 (FSA Insured),
4.500% due 10/01/2008 ....................... 3,737,962
2,000,000 (FGIC Insured),
4.500% due 12/01/2021 ....................... 1,739,720
3,000,000 California Statewide Communities Development
Authority, COP, (Cedars-Sinai Medical Center),
(MBIA Insured),
6.500% due 08/01/2012 ....................... 3,412,260
California Statewide Communities
Development Authority Revenue:
1,000,000 Multi-family, (Housing Equity Residential),
Series B,
5.200% due 12/01/2029 ....................... 998,560
3,300,000 Multi-family, (Housing Equity Residential),
Series C,
5.200% due 12/01/2029 ....................... 3,295,248
1,000,000 Water & Wastewater, (Pooled Finance Program),
Series A, (FSA Insured),
5.000% due 10/01/2025 ....................... 946,170
1,600,000 (United Airlines, Inc.), Series A, AMT,
5.700% due 10/01/2033 ....................... 1,452,976
6,115,000 Carson, Improvement Board Act 1915, GO,
7.375% due 09/02/2022** ..................... 6,467,774
10,445,000 Castaic Lake, Water Agency, COP, Water System
Improvement, (AMBAC Insured),
Zero coupon due 08/01/2022 .................. 3,085,975
4,675,000 Chula Vista, IDR, (San Diego Gas and Electric),
Series A, AMT, (AMBAC Insured),
6.400% due 12/01/2027** ..................... 4,848,162
2,845,000 Chula Vista, Redevelopment Agency, Tax
Allocation Revenue,
8.625% due 09/01/2024 ....................... 3,347,313
2,000,000 Coachella, Redevelopment Agency, Tax Allocation
Revenue, (Project Area No. 3),
5.875% due 12/01/2028 ....................... 1,935,840
Contra Costa County, Finance Authority, Tax
Allocation Revenue, Series A:
590,000 7.000% due 08/01/2009 ....................... 624,798
370,000 7.100% due 08/01/2022 ....................... 383,997
1,500,000 Culver City, Redevelopment Finance Authority\
Revenue, Tax Allocation, Series B,
6.250% due 11/01/2025 ....................... 1,525,830
1,720,000 Davis, Public Facilities Finance Authority,
Mace Ranch Area, Series A,
6.600% due 09/01/2025 ....................... 1,789,901
Delano, COP:
1,720,000 Regional Medical Center,
5.250% due 01/01/2018 ....................... 1,536,992
3,150,000 Series A, (Pre-refunded to 01/01/2003),
9.250% due 01/01/2022 ....................... 3,521,479
Duarte, Unified School District, Capital
Appreciation, GO, Series B, (FSA Insured):
1,060,000 Zero coupon due 11/01/2015 .................. 483,307
1,200,000 Zero coupon due 11/01/2024 .................. 311,808
1,985,000 El Cajon, COP, (Helix View Nursing Hospital),
Limited Obligation, Series 1990, AMT,
(FSA Insured),
7.750% due 02/01/2029 ....................... 1,992,741
Escondido, Unified High School District,
Capital Appreciation, (MBIA Insured):
5,850,000 Zero coupon due 11/01/2019 .................. 2,050,308
3,715,000 Zero coupon due 05/01/2020 .................. 1,254,630
3,655,000 Zero coupon due 11/01/2020 .................. 1,200,485
4,460,000 Fairfield, Housing Authority Mortgage
Revenue,(Creekside Estates Project),
(Pre-refunded to 08/01/2002),
7.875% due 02/01/2015** ..................... 4,826,166
2,215,000 Fairfield, Housing Authority Revenue,
(Creekside Estates Mobile Homes),
5.625% due 09/01/2023** ..................... 2,005,284
Foothill Eastern Transportation Corridor
Agency, Toll Road Revenue:
5,000,000 5.750% due 01/15/2040 ....................... 4,910,850
3,000,000 5.800% due 01/15/2020 ....................... 1,706,190
9,000,000 5.875% due 01/15/2026 ....................... 5,064,570
10,000,000 Zero coupon due 01/15/2032 .................. 1,342,300
10,000,000 Zero coupon due 01/15/2033 .................. 1,252,800
10,000,000 Zero coupon due 01/15/2034 .................. 1,174,500
10,000,000 Zero coupon due 01/15/2036 .................. 1,025,400
10,000,000 Zero coupon due 01/15/2037 .................. 957,400
10,000,000 Zero coupon due 01/15/2038 .................. 894,500
5,000,000 Series A,
7.000% due 01/01/2008 ....................... 4,355,150
750,000 Fresno Joint Powers Financing Authority,
Lease Revenue, (City Hall Project),
(AMBAC Insured),
5.250% due 08/01/2014 ....................... 767,467
Golden West Schools Financing Authority,
(School District Refinancing Program),
Series A, (MBIA Insured):
1,740,000 Zero coupon due 02/01/2011 .................. 1,057,798
1,215,000 Zero coupon due 08/01/2016 .................. 510,458
1,580,000 Zero coupon due 02/01/2017 .................. 634,575
Hacienda, Los Angeles Puente, Unified School
District, Capital Appreciation, Series A,
(MBIA Insured):
1,825,000 Zero coupon due 08/01/2016 .................. 789,696
1,750,000 Zero coupon due 08/01/2017 .................. 711,025
2,000,000 Zero coupon due 08/01/2018 .................. 763,440
Hi Desert, Members Health Care, District
Revenue Bonds:
2,250,000 5.500% due 10/01/2015 ...................... 2,014,852
1,175,000 5.500% due 10/01/2019 ...................... 1,021,240
2,000,000 Huntington Park, Public Financing Authority
Lease Revenue, (Waste Water System Project),
6.200% due 10/01/2025 ....................... 2,029,260
1,000,000 Irvine, Meadows Mobile Home Park Revenue,
Series A, (GNMA Collateral),
5.700% due 03/01/2018 ....................... 928,510
1,175,000 Kings County, Waste Management Authority,
Solid Waste Revenue, AMT,
7.200% due 10/01/2014 ....................... 1,265,910
3,625,000 La Habra, COP, Park and Viewpark, Series A,
(FSA Insured),
4.800% due 09/01/2022 ....................... 3,292,515
1,500,000 La Verne, Public Financing Authority, Capital
Improvement,
7.250% due 09/01/2026 ....................... 1,617,225
2,000,000 Lake Elsinore, Public Financing Authority,
Local Agency Revenue, Series G,
5.800% due 09/02/2015 ....................... 1,961,840
Larkspur, School District, Capital Appreciation,
Series A, (FGIC Insured):
930,000 Zero coupon due 08/01/2015 .................. 429,614
975,000 Zero coupon due 08/01/2016 .................. 420,927
955,000 Zero coupon due 08/01/2017 .................. 385,810
1,035,000 Zero coupon due 08/01/2018 .................. 392,017
1,070,000 Zero coupon due 08/01/2019 .................. 380,225
2,000,000 Long Beach, Special Tax, Community
Facilities District No. 5, (Towne Center),
6.875% due 10/01/2025 ....................... 2,069,420
Los Angeles, Community Redevelopment Agency, AMT:
1,425,000 5.850% due 12/01/2026 ....................... 1,321,032
1,490,000 Series C, (AMBAC Insured),
6.750% due 07/01/2014 ....................... 1,568,240
Los Angeles, Community Redevelopment Agency,
Parking Systems Revenue,
Cinerama Dome Public Parking Project,
(ACA Insured):
1,000,000 5.500% due 07/01/2016 ....................... 1,004,320
1,000,000 5.500% due 07/01/2017 ....................... 998,300
1,000,000 5.600% due 07/01/2018 ....................... 1,003,020
1,000,000 5.700% due 07/01/2020 ....................... 1,002,840
3,000,000 5.750% due 07/01/2026 ....................... 2,993,730
2,500,000 Los Angeles, Community Redevelopment Agency,
Tax Allocation-North Hollywood
Project, Series E, (MBIA Insured),
5.400% due 07/01/2024 ....................... 2,494,825
860,000 Los Angeles County, COP, (Pre-refunded to
04/01/2002), (AMBAC Insured),
6.000% due 04/01/2012 ....................... 899,870
1,000,000 Los Angeles County, Master Refunding Project,
COP, (Inverse Floater), (Pre-refunded to
05/01/2001),
8.518% due 06/10/2015 ....................... 1,065,000
2,000,000 Los Angeles County, Metropolitan Transportation
Authority, Sales Tax Revenue, First Tier
Properties, Series C,
5.000% due 07/01/2023 ....................... 1,902,260
12,300,000 Los Angeles County, Metropolitan Trasnportation
Authority, Sales Tax Revenue, First Tier
Properties, Series A, (AMBAC Insured),
5.000% due 07/01/2023 ....................... 11,698,899
Los Angeles County, MFHR, AMT, (GNMA Collateral):
3,000,000 (Park Parthenia Project),
7.400% due 01/20/2022 ....................... 3,052,350
1,000,000 (Ridgecroft Apartment Project), Series E,
6.250% due 09/20/2039 ....................... 1,031,010
Los Angeles County, Residual Interest Bond, COP:
1,880,000 (Edmund D Edlman Childrens Centers),
(AMBAC Insured),
6.000% due 04/01/2012 ....................... 1,954,899
1,220,000 (Pension Obligation), (MBIA Insured),
6.900% due 06/30/2008 ....................... 1,418,201
1,870,000 Los Angeles County, Sanitation District
Financing Authority, Revenue Bonds,
Series A,
5.250% due 10/01/2010 ....................... 1,928,269
Los Angeles County, School Regionalized
Business Service, COP, Series A,
(AMBAC Insured):
1,910,000 Zero coupon due 08/01/2015 .................. 879,803
1,945,000 Zero coupon due 08/01/2016 .................. 837,109
1,980,000 Zero coupon due 08/01/2017 .................. 797,306
2,135,000 Zero coupon due 08/01/2021 .................. 668,511
2,180,000 Zero coupon due 08/01/2022 .................. 644,081
Los Angeles, Department Airports, Airport
Revenue AMT, Ontario International,
Series A, (FGIC Insured):
2,205,000 5.600% due 05/15/2007 ....................... 2,333,816
2,575,000 5.700% due 05/15/2008 ....................... 2,730,118
240,000 Los Angeles, Home Mortgage Revenue,
Mortgage-Backed Security Project,
(GNMA Collateral),
8.100% due 05/01/2017 ....................... 242,880
465,000 Los Angeles, SFHR, Series B, (GNMA Collateral),
7.600% due 08/01/2016 ....................... 480,945
1,325,000 Los Angeles, University School District,
Certificate Participation, Series B,
5.250% due 10/01/2005 ....................... 1,389,475
15,000,000 Metropolitan Water District, Southern California
Waterworks Revenue, Series A,
4.750% due 07/01/2022 ....................... 13,488,300
1,000,000 Monterey County, COP, (Natividad Medical
Center Improvement Project),
Series E, (MBIA Insured),
4.750% due 08/01/2017 ....................... 935,660
2,785,000 Needles, Public Utilities Authority Revenue,
(Utilities System Acquisition Project),
Series A,
6.500% due 02/01/2022 ....................... 2,784,638
3,500,000 Novato, Special Tax Revenue, (Community
Facilities District),
7.200% due 08/01/2015** ..................... 3,741,955
2,000,000 Oakland, Revenue Bonds, (YMCA East Bay Project),
7.100% due 06/01/2010 ....................... 2,155,520
Oakland, Unified School District:
2,645,000 7.000% due 11/15/2011 ....................... 3,012,602
3,445,000 COP, Energy Retrofit,
6.750% due 11/15/2014 ....................... 3,937,980
5,000,000 Orange County, COP, Series A, (MBIA Insured),
5.800% due 07/01/2016 ...................... 5,253,400
4,500,000 Palm Desert, Financing Authority, Tax
Allocation Revenue, (Inverse Floater),
(MBIA Insured),
8.155% due 04/01/2022 ** .................... 4,875,210
1,150,000 Palm Springs, Financing Authority, (Convention
Center Project), Series A, (MBIA Insured),
6.750% due 11/01/2021 ....................... 1,197,691
9,145,000 Pittsburgh, Redevelopment Agency Tax Allocation,
Los Medanos Community Development Project,
(AMBAC Insured), Zero coupon due 08/01/2029 . 1,784,647
Port Oakland, AMT, (Mitsu Osk Lines Ltd.),
Series A, LOC Industrial Bank of Japan Ltd.:
3,030,000 6.750% due 01/01/2012 ....................... 3,154,715
2,300,000 6.800% due 01/01/2019 ....................... 2,320,424
2,750,000 Redding, Electrical Systems Revenue, COP,
(Inverse Floater), (MBIA Insured),
8.244% due 07/01/2022 ....................... 3,272,500
1,000,000 Redondo Beach, Public Financing Authority
Revenue, (South Bay Center
Redevelopment Project),
7.125% due 07/01/2026 ....................... 1,076,320
Richmond, Power Financing Authority Term
Lease Revenue:
1,180,000 4.450% due 06/01/2007 ....................... 1,157,851
1,000,000 4.550% due 06/01/2008 ....................... 981,430
1,500,000 Riverside, School District, Special Project,
7.250% due 09/01/2018 ....................... 1,611,060
Riverside County, Public Financing Authority
Revenue, COP:
1,500,000 5.750% due 05/15/2019 ....................... 1,423,020
2,100,000 5.800% due 05/15/2029 ....................... 1,956,402
Rocklin, Unified School District, (FGIC Insured):
1,030,000 Zero coupon due 08/01/2014 .................. 496,048
1,210,000 Zero coupon due 08/01/2016 .................. 508,938
1,255,000 Zero coupon due 08/01/2017 .................. 493,152
1,360,000 Zero coupon due 08/01/2019 .................. 468,520
1,415,000 Zero coupon due 08/01/2020 .................. 456,139
1,225,000 Zero coupon due 08/01/2023 .................. 329,574
Rohnert Park, Community Development
Agency, Tax Allocation Revenue, Capital
Appreciation, (Rohnert Redevelopment),
(MBIA Insured):
1,745,000 Zero coupon due 08/01/2021 .................. 547,494
1,755,000 Zero coupon due 08/01/2023 .................. 490,259
1,755,000 Zero coupon due 08/01/2025 .................. 436,153
1,755,000 Zero coupon due 08/01/2027 .................. 388,136
1,755,000 Zero coupon due 08/01/2029 .................. 345,366
1,635,000 Rowland, Unified Shcool District, Capital
Appreciation, Series A, (FSA Insured),
Zero coupon due 09/01/2017 .................. 655,406
3,240,000 Sacramento County, Airport System Revenue,
Series 1989, AMT, (Unrefunded Balance),
(AMBAC Insured),
7.000% due 07/01/2020 ....................... 3,278,362
2,000,000 Sacramento County, COP, Public Facilities
Project, (AMBAC Insured),
4.750% due 10/01/2027 ....................... 1,777,160
2,300,000 Saddleback Valley, Unified School District,
Public Financing Authority, Special Tax
Revenue, Series A, (FSA Insured),
4.750% due 09/01/2020 ....................... 2,097,002
995,000 Salinas, California Improvement Board,
Act 1915, Special Assessment District #90-1,
Series C-185,
5.400% due 09/02/2012 ....................... 995,697
10,000,000 San Bernardino County, COP, (MBIA
Insured), Residual Interest Bond,
6.450% due 07/01/2016** ..................... 10,096,400
San Bernardino, Redevelopment Agency Tax
Allocation, San Sevaine Redevelopment
Project, Series A:
1,000,000 6.900% due 09/01/2018 ....................... 1,052,710
2,000,000 7.100% due 09/01/2029 ....................... 2,112,480
1,600,000 San Diego County, COP, 5.700% due 02/01/2028 .. 1,533,536
4,000,000 San Diego County, Residual Interest Bond, COP,
Series B, (MBIA Insured), (Pre-refunded to
04/27/2006), 8.120% due 04/08/2021 .......... 4,895,000
San Diego, Redevelopment Agency:
1,000,000 Centre City Redevelopment Project,
Series A,6.400% due 09/01/2019 .............. 1,046,320
1,155,000 Southcrest Redevelopment Project,
6.500% due 10/01/2025# ...................... 1,203,036
San Diego, Unified School District,
Series A, (FGIC Insured):
1,545,000 Zero coupon due 07/01/2012 .................. 863,933
2,465,000 GO,
Zero coupon due 07/01/2018 .................. 931,499
1,000,000 San Dimas, Housing Authority Revenue,
(Charter Oak Mobile Home Project),
Series A,
(FNMA Collateral),
5.700% due 07/01/2028 ....................... 888,460
San Francisco City and County, International
Airport Commission Revenue, Second Series:
770,000 Issue 24A, AMT, (FSA Insured),
4.750% due 05/01/2006 ....................... 779,848
2,040,000 Issue 25, AMT, (FSA Insured),
4.750% due 05/01/2006 ....................... 2,066,092
San Francisco City and County, MFMR,
Series A, (FNMA Collateral):
1,000,000 6.350% due 02/15/2012 ....................... 1,011,520
1,250,000 6.450% due 02/15/2024 ....................... 1,266,238
San Francisco City and County,
Redevelopment Agency, Lease Revenue,
Capital Appreciation,
(George R. Moscone Project):
2,000,000 Zero coupon due 07/01/2011 .................. 1,173,060
3,000,000 Zero coupon due 07/01/2013 .................. 1,549,410
San Francisco University School District, COP,
Refunding Bonds, (MBIA Insured):
1,375,000 4.375% due 03/01/2006# ...................... 1,376,224
1,370,000 4.375% due 09/01/2006# ...................... 1,371,329
1,400,000 4.400% due 03/01/2007# ...................... 1,398,782
1,000,000 San Jose, MFHR, Sixth & Martha Family
Apartments, (FNMA Collateral), AMT,
5.875% due 03/01/2033 ....................... 1,019,480
1,000,000 San Jose, Redevelopment Agency, Tax
Allocation, Merged Area Redevelopment,
(AMBAC Insured),
4.750% due 08/01/2023 ....................... 899,050
San Juan, Unified School District, GO,
(FSA Insured):
1,825,000 Zero coupon due 08/01/2020 .................. 607,835
1,000,000 Zero coupon due 08/01/2021 .................. 313,750
1,820,000 Zero coupon due 08/01/2022 .................. 538,866
2,000,000 San Marcos, Public Facilities Authority
Revenue,
5.800% due 09/01/2018 ....................... 1,936,180
3,000,000 Santa Clarita, Community Development
Authority,
7.500% due 11/15/2012 ....................... 3,158,040
4,765,000 Santa Rosa, Mortgage Revenue, (Channate
Lodge), (FSA Insured),
6.700% due 12/01/2024** ..................... 4,978,853
2,490,000 Simi Valley, Community Development Agency,
Commonwealth Mortgage Revenue,
Sycamore Plaza II,
6.000% due 09/01/2012 ....................... 2,610,914
Southern California, Housing Finance
Agency, SFMR, GNMA and FNMA
Mortgage-Backed Securities Program,
(GNMA Collateral):
475,000 AMT, Series 1988A,
8.125% due 02/01/2021 ....................... 489,611
795,000 Series A,
7.350% due 09/01/2024 ....................... 813,261
125,000 Series B,
6.900% due 10/01/2024 ....................... 128,614
1,305,000 Stockton, Community Facilities Supplemental
Tax #90-1, (Mello Roos-Weston Ranch),
Series A,
6.000% due 09/01/2018 ....................... 1,305,274
45,000 Stockton, Community Facilities Supplemental
Tax #90-2, SFMR, GNMA Mortgage-
Backed Securities Program,
(Brookside Estates), AMT,
7.450% due 08/01/2010 ....................... 45,209
5,350,000 Vallejo, Parity Revenue, (Water Improvement),
Series A, (FSA Insured),
5.250% due 05/01/2029 ....................... 5,222,563
2,025,000 Vallejo, Public Financing Authority Revenue,
(Fairgrounds Drive Assessment District),
5.700% due 09/02/2011 ....................... 2,080,364
1,000,000 Walnut Valley, Unified School District, GO,
Series A, (FSA Insured),
5.500% due 08/01/2025 ....................... 1,008,090
-----------
388,394,574
-----------
GUAM - 0.5%
2,000,000 Guam Airport Authority Revenue, Series B,
AMT,
6.700% due 10/01/2023 ....................... 2,073,940
-----------
PUERTO RICO - 0.4%
973,372 Centro de Recaudaciones de Ingresos
Municipales, COP,
6.850% due 10/17/2003 ....................... 994,553
750,000 Puerto Rico, Electric Power Authority
Revenue, Series U,
6.000% due 07/01/2014 ....................... 787,875
-----------
1,782,428
-----------
VIRGIN ISLANDS - 1.0%
1,000,000 Virgin Islands, Public Finance Authority
Revenue, Senior Liens, 1998 Series C,
5.500% due 10/01/2005 ....................... 1,014,330
Virgin Islands, Public Finance Authority
Revenue, Gross Receipts, Taxes Loan Note,
Series A:
1,000,000 5.625% due 10/01/2010 ....................... 1,021,290
2,000,000 6.375% due 10/01/2019 ....................... 2,056,080
-----------
4,091,700
-----------
Total Municipal Bonds and Notes
(Cost $382,965,637) ......................... 396,342,642
-----------
SHORT-TERM MUNICIPAL BONDS - 3.4%
California Pollution Control Financing
Authority, PCR, (Pacific Gas & Electric
Corporation):
200,000 4.450% due 11/01/2026 ....................... 200,000
300,000 4.500% due 02/01/2016 ....................... 300,000
3,500,000 4.500% due 11/01/2026 ....................... 3,500,000
1,500,000 Irvine Ranch, Water District Revenue, District
Nos. 140-105-250, GO,
4.500% due 04/01/2033 ....................... 1,500,000
4,800,000 M-S-R Public Power Agency, California,
Modesto, Santa Clara, Readjusting
Sub-Lien, Series F,
4.450% due 07/01/2022 ....................... 4,800,000
300,000 Orange County, Water District, COP, Project B,
(MBIA Insured),
4.450% due 08/15/2015+ ...................... 300,000
3,300,000 Orange County, Sanitation Districts 1-3, 5-7
& 11, COP,
4.500% due 08/01/2016+ ...................... 3,300,000
-----------
Total Short-Term Municipal Bonds
(Cost $13,900,000) .......................... 13,900,000
-----------
TOTAL INVESTMENTS (Cost $396,865,637*) ............. 100.3% 410,242,642
OTHER ASSETS AND LIABILITIES (Net) ................. (0.3) (1,215,852)
----- ------------
NET ASSETS ......................................... 100.0% $409,026,790
===== ============
====================
* Aggregate cost for federal tax purposes.
** Security pledged as collateral for when-issued securities.
# Security purchased on when-issued basis (Note 2).
+ Variable rate demand notes are payable upon not more than one
business day's notice. The interest rate shown reflects the rate in effect at
October 31, 2000.
++ Variable rate security. The interest rate shown reflects the rate in
effect at October 31, 2000.
California Municipal Fund had the following industry concentrations greater than
10% at October 31, 2000 (as a percentage of net assets) (unaudited):
Tax District 14.0%
California Municipal Fund had the following insurance concentrations greater
than 10% at October 31,2000 (as a percentage of net assets) (unaudited):
MBIA 17.8%
AMBAC 14.1%
--------------------------------------------------------------------------------
GLOSSARY OF TERMS
ACA -- American Capital Access
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificates of Participation
FGIC -- Federal Guaranty Insurance Corporation
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
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
------ -----
MUNICIPAL BONDS AND NOTES - 98.3%
CALIFORNIA - 97.5%
$ 1,000,000 Abag Financing Authority for Nonprofit
Corporation, COP, (Episcopal Homes
Foundation),
6.250% due 08/15/2030 ....................... $ 1,029,290
Alameda County:
1,000,000 COP, (Santa Rita Jail Project), (MBIA Insured),
5.375% due 06/01/2009 ....................... 1,067,930
1,000,000 Public Financing Authority Revenue,
5.000% due 09/02/2008 ....................... 991,310
435,000 Calexico, Financing Authority Revenue,
Water Systems & Transportation
Improvement Projects, (AMBAC Insured),
3.950% due 11/01/2007 ....................... 425,600
500,000 California Educational Facilities, Financing
Authority Revenue, University of San Diego,
(AMBAC Insured),
Zero coupon due 10/01/2009 .................. 331,145
1,000,000 California Health Facilities, Financing
Authority Revenue, (Catholic Health
Corporation), Series A, (AMBAC Insured),
5.875% due 07/01/2009 ....................... 1,075,010
California Housing Finance Agency Revenue:
1,670,000 Home Mortgage, Series B1, AMT,
(AMBAC Insured),
6.200% due 02/01/2007 ....................... 1,705,922
Home Mortgage, Series L, AMT,
(MBIA Insured):
330,000 5.000% due 08/01/2008 ....................... 339,369
500,000 5.100% due 02/01/2009 ....................... 515,790
Home Mortgage, Series N, AMT,
(MBIA Insured):
1,000,000 5.000% due 08/01/2008 ....................... 1,034,990
1,000,000 5.100% due 02/01/2009 ....................... 1,031,580
445,000 Series E, (MBIA Insured),
6.050% due 08/01/2006 ....................... 455,208
450,000 SFMR, Series D1,
4.750% due 08/01/2009 ....................... 461,709
California State, GO:
1,000,000 (FGIC Insured),
6.200% due 09/01/2005 ....................... 1,088,190
1,000,000 (FSA Insured),
4.500% due 10/01/2008 ....................... 1,005,920
1,000,000 California State, GO, Veterans Bonds, Series
BL, AMT,
4.950% due 12/01/2007 ....................... 1,023,040
1,350,000 California Statewide Community
Development Authority, MFHR, Series D,
5.200% due 06/15/2009 ....................... 1,348,056
1,600,000 California Statewide Communities
Development Authority, Children's Hospital
of Los Angeles, COP, (MBIA Insured),
6.000% due 06/01/2007 ....................... 1,748,224
1,000,000 Castaic Lake, Water Agency, COP, (Water
Systems Improvement Project), Series A,
(MBIA Insured), 5.600% due 08/01/2005 ....... 1,061,200
Central Valley, School Districts Financing
Authority, Capital Appreciation, School
District, GO, Series A, (MBIA Insured):
1,385,000 Zero coupon due 02/01/2005 .................. 1,151,351
1,940,000 Zero coupon due 08/01/2008 .................. 1,362,190
850,000 Corona, Public Financing Authority, Superior
Lien, Series A, (FSA Insured),
4.375% due 09/01/2009 ....................... 848,725
1,455,000 Corona, Unified School District, Capital
Appreciation, Series B, (FSA Insured),
Zero coupon due 09/01/2014 .................. 697,629
Foothill Eastern Transportation Corridor
Agency, Toll Road Revenue:
1,000,000 Capital Appreciation, Sr. Lien, Series A,
Zero coupon due 01/01/2004 .................. 873,280
1,000,000 (MBIA Insured),
4.375% due 01/15/2007 ....................... 1,002,640
685,000 Golden West Schools, Financing Authority,
Series A, (MBIA Insured),
5.650% due 02/01/2012 ....................... 746,999
Hanford, Joint Union High School District,
Capital Appreciation, Series B,
(MBIA Insured):
595,000 Zero coupon due 08/01/2007 .................. 439,312
675,000 Zero coupon due 08/01/2008 .................. 473,958
745,000 Zero coupon due 08/01/2012 .................. 416,768
745,000 Zero coupon due 08/01/2013 .................. 391,281
755,000 Zero coupon due 08/01/2014 .................. 371,981
1,500,000 Huntington Beach, Huntington Village
Apartments, MFHR, Series A, AMT,
(FNMA Collateral),
4.800% due 09/01/2007 ....................... 1,500,150
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 ....................... 1,073,470
900,000 Larkspur, School District, Capital
Appreciation, Series A, (FGIC Insured),
Zero coupon due 08/01/2014 .................. 443,421
1,250,000 Los Angeles County, Capital Asset Leasing
Corporation, Leasehold Revenue,
(AMBAC Insured),
6.000% due 12/01/2006 ....................... 1,362,988
1,000,000 Los Angeles County, Metropolitan
Transporation Authority, Sales Tax
Revenue Bond, Proposition C 2nd, Senior
Series A, (AMBAC Insured),
5.600% due 07/01/2011 ....................... 1,056,380
Los Angeles County, Schools Regionalized
Business Services, Capital Appreciation,
COP, (AMBAC Insured):
Series A:
1,670,000 Zero coupon due 08/01/2008 .................. 1,170,820
1,980,000 Zero coupon due 08/01/2012 .................. 1,105,117
600,000 Series C,
4.400% due 11/01/2006 ....................... 600,516
855,000 Los Angeles, Community Redevelopment
Agency, MFHR, (AMBAC Insured),
6.000% due 07/01/2004 ....................... 875,494
1,000,000 Los Angeles County, Unified School District,
COP, Series B, 5.250% due 10/01/2005 ........ 1,048,660
414,000 Modesto, Mortgage Revenue Bonds, (GNMA Collateral),
5.875% due 12/01/2004 ....................... 422,735
205,000 Oakland, Improvement Board Act of 1915,
Medical Hill Parking, Assessment District #3,
(MBIA Insured), 6.000% due 09/02/2004 ....... 212,294
Paramount, Redevelopment Agency Tax
Allocation, (Redevelopment Project Area #1),
(MBIA Insured):
1,610,000 6.100% due 08/01/2006 ....................... 1,711,623
1,700,000 6.100% due 08/01/2007 ....................... 1,807,304
1,020,000 Redondo Beach, Public Financing Authority
Revenue, (South Bay Center
Redevelopment Project),
6.750% due 07/01/2006 ....................... 1,075,121
1,300,000 Sacramento, Municipal Utility District,
Electric Revenue, (AMBAC Insured),
5.500% due 05/15/2007 ....................... 1,359,657
940,000 San Bernardino, Unified City School District,
Capital Appreciation, Series B, (FGIC
Insured),
Zero coupon due 08/01/2008 .................. 660,030
San Diego, Unified School District, Capital
Appreciation, Series A, (FGIC Insured):
2,000,000 Zero coupon due 07/01/2008 .................. 1,405,440
1,500,000 Zero coupon due 07/01/2011 .................. 891,765
1,000,000 Zero coupon due 07/01/2012 .................. 559,180
San Francisco City & County, Airport
Community International Airport Revenue:
2,485,000 Second Series - Issue 18A, AMT, (MBIA Insured),
6.000% due 05/01/2006 ....................... 2,664,218
Second Series - Issue 22, AMT, (AMBAC Insured):
1,705,000 6.000% due 05/01/2006 ....................... 1,827,965
1,000,000 6.000% due 05/01/2008 ....................... 1,086,970
690,000 Second Series - Issue 23A, AMT,
(FGIC Insured),
5.500% due 05/01/2005 ....................... 720,539
1,000,000 San Joaquin Hills, California, Transportation
Corridor Agency, Toll Road Revenue, Jr.
Lien Revenue Board,
Zero coupon due 01/01/2009 .................. 686,740
1,050,000 Santa Ana, COP, (Santa Ana Recycling Project),
Series A, AMT, (AMBAC Insured),
5.400% due 05/01/2007 1,099,434
650,000 Santa Clara, Redevelopment Agency, Tax
Allocation, (Bay Shore North Project),
(AMBAC Insured),
7.000% due 07/01/2010 ....................... 765,908
1,350,000 Solano County, COP, (Solano Park Hospital
Project), (FSA Insured),
6.500% due 08/01/2006 ....................... 1,472,810
995,000 Southern California, Home Financing
Authority, MFHR, (The Fountains Project),
Series A, AMT, (AMBAC Insured),
(FNMA Collateral),
5.400% due 01/01/2027 ....................... 999,577
990,000 Stanton, MFHR, (Continental Gardens
Apartments), AMT, (AMBAC Insured),
(FNMA Collateral),
5.625% due 08/01/2029 ....................... 1,003,217
1,305,000 Stockton, Community Facilities Supplemental
Tax, (Mello Roos-Weston Ranch), Series A,
5.500% due 09/01/2009 ....................... 1,323,544
1,000,000 Tracy, California Area Public Facilities
Financing Agency, Special Tax Bonds,
Community Facilities District No 1987-
1-H, (MBIA Insured),
5.875% due 10/01/2013 ....................... 1,073,350
1,070,000 University of California, Series A,
(CONNIE LEE Insured),
5.500% due 09/01/2006 ....................... 1,101,298
1,000,000 Valley Health Systems, California Hospital
Revenue, (Hospital Revenue Refunding &
Improvement Project), Series A,
(ACA Insured),
6.125% due 05/15/2005 ....................... 1,034,380
--------------
63,717,712
--------------
PUERTO RICO - 0.8%
486,686 Centro de Recaudaciones de Ingresos
Municipales, COP,
6.850% due 10/17/2003 ....................... 497,276
--------------
Total Municipal Bonds and Notes
(Cost $62,331,930) .......................... 64,214,988
--------------
SHORT-TERM MUNICIPAL BONDS - 1.8%
1,000,000 California Statewide Communities
Development Authority, (John Muir/Mt.
Diablo Health Center), (AMBAC Insured),
4.450% due 08/15/2027 ....................... 1,000,000
200,000 M-S-R, Public Power Agency, San Juan
Project Revenue, (MBIA Insured),
4.450% due 07/01/2022 ....................... 200,000
--------------
Total Short-Term Municipal Bonds
(Cost $1,200,000) ........................... 1,200,000
--------------
TOTAL INVESTMENTS (Cost $63,531,930*) .............. 100.1% 65,414,988
OTHER ASSETS AND LIABILITIES (Net) ................. (0.1) (72,744)
----- --------------
NET ASSETS ......................................... 100.0% $ 65,342,244
===== ==============
=====================
* Aggregate cost for federal tax purposes.
+ Variable rate demand notes are payable upon not more than one
business day's notice. The interest rate shown reflects the rate in effect at
October 31, 2000.
California Insured Intermediate Municipal Fund had the following industry
concentrations greater than 10% at October 31, 2000 (as a percentage of net
assets) (unaudited):
Public Education 21.4%
California Insured Intermediate Municipal Fund had the following insurance
concentrations greater than 10% at October 31, 2000 (as a percentage of net
assets) (unaudited):
MBIA 31.2%
AMBAC 31.1%
--------------------------------------------------------------------------------
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 -- Federal 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
FLORIDA INSURED MUNICIPAL FUND
OCTOBER 31, 2000
PRINCIPAL
AMOUNT VALUE
------ -----
MUNICIPAL BONDS AND NOTES - 95.8%
FLORIDA - 95.8%
$ 250,000 Bay County,Water Systems Revenue,
(AMBAC Insured),
5.700% due 09/01/2030 ....................... $ 253,712
500,000 Brevard County, School Board Authority,
COP, Series B, (AMBAC Insured),
5.500% due 07/01/2021 ....................... 499,040
450,000 Collier County, Industrial Development
Authority, IDR, (Southern States Utilities
Project), AMT,
6.500% due 10/01/2025 ....................... 433,291
600,000 Dade County, Aviation Revenue, Series B,
AMT, (MBIA Insured),
6.600% due 10/01/2022 ....................... 627,714
250,000 Dade County, Water & Sewer Systems
Revenue, (FGIC Insured),
5.250% due 10/01/2026 ....................... 239,910
500,000 Escambia County, Health Facilities Authority
Revenue, Florida Health Care Facilities
Loan, (VHA Program), (AMBAC Insured),
5.950% due 07/01/2020 ....................... 520,720
200,000 Escambia County, Health Facilities Revenue,
Baptist Hospital, Series B,
6.000% due 10/01/2014 ....................... 187,270
300,000 Escambia County, PCR, (Champion
International Corporation Project), AMT,
6.900% due 08/01/2022 ....................... 309,696
650,000 Escambia County, Utilities Authority, Utility
Systems Revenue,
5.250% due 01/01/2029 ....................... 622,512
Florida Housing Finance Agency, AMT:
590,000 SFMR, Series A, (AMBAC Insured),
(GNMA Collateral),
6.650% due 01/01/2024 ....................... 612,538
900,000 Spinnaker Cove Apartments, Series G,
(AMBAC Insured),
6.500% due 07/01/2036 ....................... 933,498
800,000 Florida State Board of Education, Lottery
Revenue Bonds, Series A, (FGIC Insured),
5.250% due 07/01/2017 ....................... 795,984
1,000,000 Florida State Board of Regional University
System Improvement Revenue,
(AMBAC Insured),
4.500% due 07/01/2023 ....................... 847,730
1,000,000 Florida State Turnpike Authority, Turnpike
Revenue, Department of Transportation,
Series A, (FGIC Insured),
5.000% due 07/01/2016 ....................... 986,580
500,000 Gulf Breeze, Capital Funding Revenue,
Series B, (MBIA Insured),
4.500% due 10/01/2027 ....................... 415,330
800,000 Hillsborough County, Capital Improvement
Revenue, Criminal Justice Facilities,
(FGIC Insured),
5.250% due 08/01/2016 ....................... 792,744
600,000 Jacksonville, Water & Sewer Revenue,
(United Water Project), AMT,
(AMBAC Insured),
6.350% due 08/01/2025 ....................... 633,522
870,000 Manatee County, Housing Finance Authority,
SFMR, Sub. Series 4, AMT, (AMBAC
Insured), (GNMA/FNMA Collateral),
6.875% due 11/01/2026 ....................... 933,580
500,000 Orange County, Housing Finance Authority,
MFHR, (Hands Inc. Project), Series A,
8.000% due 10/01/2025 ....................... 530,585
600,000 Orlando & Orange County, Expressway
Authority, Expressway Revenue, Jr. Lien,
(FSA Insured),
5.950% due 07/01/2023 ....................... 608,562
900,000 Pasco County, Solid Waste Disposal &
Resource Recovery System, AMT,
(AMBAC Insured),
6.000% due 04/01/2011 ....................... 969,687
500,000 Tampa Bay, Water Utility Systems Revenue,
Series B, (FGIC Insured),
4.750% due 10/01/2027 ....................... 436,550
--------------
Total Municipal Bonds and Notes
(Cost $12,714,899) .......................... 13,190,755
--------------
SHORT-TERM MUNICIPAL BOND - 2.9%
(Cost $400,000)
400,000 Pinnellas County, Health Facilities Authority
Revenue, (Pooled Hospital Loan Program),
4.650% due 12/01/2015 ....................... 400,000
--------------
TOTAL INVESTMENTS (Cost $13,114,899*) .............. 98.7% 13,590,755
OTHER ASSETS AND LIABILITIES (Net) ................. 1.3 176,072
----- --------------
NET ASSETS ......................................... 100.0% $ 13,766,827
===== ==============
==================
* Aggregate cost for federal tax purposes.
+ Variable rate demand notes are payable upon not more than one
business day's notice. The interest rate shown reflects the rate in effect at
October 31, 2000.
Florida Insured Municipal Fund had the following industry concentrations greater
than 10% at October 31, 2000 (as a percentage of net assets) (unaudited):
Water & Sewage 21.6%
Transportation 14.6%
Single Family Housing 11.2%
Multi-Family Housing 10.6%
Florida Insured Municipal Fund had the following insurance concentrations
greater than 10% at October 31, 2000 (as a percentage of net assets)
(unaudited):
AMBAC 45.9%
FGIC 28.5%
--------------------------------------------------------------------------------
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
WM GROUP OF FUNDS
1. ORGANIZATION AND BUSINESS
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, 1989, respectively. The Trusts are each registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as open-end management
investment companies. 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.
<TABLE>
<CAPTION>
TRUST I TRUST II
<S> <C>
EQUITY FUNDS EQUITY FUNDS
Equity Income Fund Growth Fund
(formerly, Bond & Stock Fund) Small Cap Stock Fund
Growth & Income Fund (formerly, Emerging Growth Fund)
Growth Fund of the Northwest International Growth Fund
(formerly, Northwest Fund)
Mid Cap Stock Fund
FIXED INCOME FUNDS FIXED INCOME FUNDS
U.S. Government Securities Fund Short Term Income Fund
Income Fund (formerly, Short Term High Quality Bond 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
</TABLE>
WM Advisors, Inc. (the "Advisor" or "WM Advisors"), serves as investment
manager to the Funds. The Advisor is a wholly-owned subsidiary of Washington
Mutual, Inc., a publicly owned financial services company.
Each of the Fixed Income Funds and the Equity Funds, with the exception of the
Equity Income Fund, offers three classes of shares: Class A shares, Class B
shares and Class I shares. Each of the Municipal Funds, as well as the Equity
Income Fund, currently offer Class A and Class B shares. Effective July 11,
1999, seed money was withdrawn from the Municipal Funds' Class I shares,
although they are still authorized and could be issued. Effective as of the
close of business on July 16, 1999, all Class S shares were converted into their
respective Funds' Class B shares with the exception of the Municipal Funds',
which shares were terminated. Class A shares of the Funds are subject to an
initial sales charge at the time of purchase. Certain Class A shares purchased
without an initial sales charge may be subject to a contingent deferred sales
charge ("CDSC") if redeemed within two years of purchase. Class B shares are not
subject to an initial sales charge although they 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, LLC, 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 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:
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 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
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.
Debt securities of U.S. issuers (other than 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. 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 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 creditworthiness of those
banks and dealers with whom each Fund enters into repurchase agreements.
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 October 31, 2000. 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 arises 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 Equity Income
Fund, Growth & Income Fund, Growth Fund of the Northwest and the U.S. Government
Securities Fund) 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. These 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 October 31, 2000. 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.
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 and the Municipal
Funds are declared daily and paid monthly. Dividends from the net investment
income of the Equity Income and the 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
Growth Fund of the Northwest, International Growth, Mid Cap Stock and Small Cap
Stock 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. Net investment income per share calculations in the
financial highlights for the year ended October 31, 2000 excludes these
adjustments:
INCREASE/ INCREASE/
(DECREASE) (DECREASE)
INCREASE/ UNDISTRIBUTED ACCUMULATED
(DECREASE) NET INVESTMENT NET REALIZED
PAID-IN CAPITAL INCOME/(LOSS) GAIN/(LOSS)
--------------- -------------- ------------
Equity Income Fund $ 4,772,860 $ 11,706 $(4,784,566)
Growth & Income Fund 5,161,098 -- (5,161,098)
Growth Fund of the Northwest 5,213,518 -- (5,213,518)
INCREASE/ INCREASE/
(DECREASE) (DECREASE)
INCREASE/ UNDISTRIBUTED ACCUMULATED
(DECREASE) NET INVESTMENT NET REALIZED
PAID-IN CAPITAL INCOME/(LOSS) GAIN/(LOSS)
--------------- -------------- ------------
Growth Fund $23,030,993 $16,436,922 $(39,467,915)
Small Cap Stock Fund 5,332,724 2,720,247 (8,052,971)
International Growth Fund 2,306,564 215,446 (2,522,010)
Short Term Income Fund -- (6,265) 6,265
U.S. Government Securities Fund -- (45,259) 45,259
Income Fund (57,408) 221,463 (164,055)
High Yield Fund -- (20,361) 20,361
California Municipal Fund (2,312) 46,430 (44,118)
California Insured Intermediate
Municipal Fund -- 2,854 (2,854)
Florida Insured Municipal Fund -- 24,091 (24,091)
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 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.
OTHER:
The Fixed Income, Municipal, Equity Income and Growth & Income Funds 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 or Sub-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 as a result, 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.
RECLASSIFICATIONS:
Certain reclassifications have been made to the prior year financial statements
in order to conform to the current year presentation.
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:
FEES ON AVERAGE
NAME OF FUND DAILY NET ASSETS
------------ ----------------
Growth Fund ........................................... .850%
Mid Cap Stock Fund .................................... .750%
Small Cap Stock Fund .................................. .850%
U.S. Government Securities Fund ....................... .500%
Income Fund ........................................... .500%
California Municipal Fund ............................. .500%
California Insured Intermediate Municipal Fund ........ .500%
Florida Insured Municipal Fund ........................ .500%
<TABLE>
<CAPTION>
FEES ON
NET ASSETS FEES ON
EQUAL TO NET ASSETS
OR LESS THAN EXCEEDING
NAME OF FUND $250 MILLION $250 MILLION
------------ ------------ ------------
<S> <C> <C>
Equity Income Fund .................................... .625% .500%
Growth & Income Fund .................................. .625% .500%
High Yield Fund ....................................... .625% .500%
Tax-Exempt Bond Fund .................................. .500% .400%
</TABLE>
<TABLE>
<CAPTION>
FEES ON
NET ASSETS
FEES ON EXCEEDING
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 Income Fund .............. .500% .450% .400%
FEES ON NET ASSETS
FEES ON EXCEEDING
NET ASSETS $500 MILLION FEES ON
EQUAL TO AND EQUAL TO NET ASSETS
OR LESS THAN OR LESS THAN EXCEEDING
NAME OF FUND $500 MILLION $1 BILLION $1 BILLION
------------ ------------ ---------- ----------
Growth Fund of the Northwest ........ .625% .500% .375%
FEES ON NET ASSETS
FEES ON EXCEEDING
NET ASSETS $50 MILLION FEES ON
EQUAL TO AND EQUAL TO NET ASSETS
OR LESS THAN OR LESS THAN EXCEEDING
NAME OF FUND $50 MILLION $125 MILLION $125 MILLION
------------ ----------- ------------ ------------
International Growth Fund ........... 1.100% 1.000% .800%
</TABLE>
The Advisor has agreed to waive a portion of its management fees and/or
reimburse expenses. Fees waived by the Advisor for the year ended October 31,
2000 were as follows:
NAME OF FUND FEES WAIVED
------------ -----------
Growth Fund ........................................... $712,482
Short Term Income Fund ................................ 399,616
U.S. Government Securities Fund ....................... 158,232
Tax-Exempt Bond Fund .................................. 38,920
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 fee is $1.35 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
Funds' 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 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 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. 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 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 and Class B shares. For the year ended, October 31, 2000, the
Distributor received $6,225,144 representing commissions (front-end sales
charges) on Class A shares and $21,985,784 representing CDSC fees from Class B
shares. For the year ended October 31, 2000, WM Financial Services, Inc.
("WMFS"), also a registered broker-dealer, for the Funds, received $160,716
representing commissions on Class A shares and $231,120 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 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. 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 Rule 12b-1 plans 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 year ended October 31, 2000
were as follows:
<TABLE>
<CAPTION>
NAME OF FUND PURCHASES SALES
------------ --------- -----
<S> <C> <C>
Equity Income Fund .......................... $ 223,268,970 $199,769,363
Growth & Income Fund ........................ 569,591,305 524,270,476
Growth Fund of the Northwest ................ 354,750,072 247,106,041
Growth Fund ................................. 1,027,187,827 987,062,429
Mid Cap Stock Fund .......................... 155,522,952 11,979,782
Small Cap Stock Fund ........................ 288,851,984 131,151,345
International Growth Fund ................... 74,811,441 106,564,337
Short Term Income Fund ...................... 13,736,280 48,015,310
U.S. Government Securities Fund ............. -- 2,896,791
Income Fund ................................. 134,540,306 62,628,469
High Yield Fund ............................. 186,270,099 53,814,453
Tax-Exempt Bond Fund ........................ 67,982,510 120,956,669
California Municipal Fund ................... 156,716,941 186,447,412
California Insured Intermediate Municipal Fund 27,743,311 30,796,576
Florida Insured Municipal Fund .............. 5,853,206 13,573,675
</TABLE>
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities, excluding short-term investments, for the year ended October 31,
2000, were as follows:
<TABLE>
<CAPTION>
NAME OF FUND PURCHASES SALES
------------ --------- -----
<S> <C> <C>
Equity Income Fund .......................... $ 5,701,517 $ 38,166,692
Short Term Income Fund ...................... 5,300,250 23,267,500
U.S. Government Securities Fund ............. 58,283,882 70,296,634
Income Fund ................................. 143,376,032 54,233,111
High Yield Fund ............................. 1,020,625 3,093,795
</TABLE>
At October 31, 2000, 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:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF FUND APPRECIATION DEPRECIATION
------------ ------------ ------------
<S> <C> <C>
Equity Income Fund ...........................$ 52,172,923 $ 9,115,834
Growth & Income Fund ......................... 495,576,486 59,959,114
Growth Fund of the Northwest ................. 245,816,658 62,435,266
Growth Fund .................................. 287,176,677 61,791,660
Mid Cap Stock Fund ........................... 45,876,214 16,024,540
Small Cap Stock Fund ......................... 98,181,750 72,383,150
</TABLE>
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF FUND APPRECIATION DEPRECIATION
------------ ------------ ------------
<S> <C> <C>
International Growth Fund .................... $29,832,953 $15,769,290
Short Term Income Fund ....................... 218,526 1,588,239
U.S. Government Securities Fund .............. 3,317,411 8,545,908
Income Fund .................................. 9,141,528 14,104,732
High Yield Fund .............................. 3,874,187 16,728,521
Tax-Exempt Bond Fund ......................... 14,239,743 1,782,290
California Municipal Fund .................... 17,543,988 4,166,983
California Insured Intermediate Municipal Fund 1,994,367 111,309
Florida Insured Municipal Fund ............... 570,240 94,384
</TABLE>
7. LENDING OF SECURITIES
Certain Funds may lend securities to brokers, dealers and other financial
organizations to earn additional income. Each security loan is collateralized
with collateral assets in an amount equal to or greater than the current market
value of the loaned securities. There is a risk of delay in receiving collateral
or in recovering the securities loaned or even a loss of rights in collateral
should the borrower fail financially.
At October 31, 2000, the following Funds had outstanding loans of securities to
certain brokers, dealers or other financial institutions for which each Fund has
segregated cash and/or securities equivalent to 100% of the market value of
securities loaned with the Funds' custodian:
<TABLE>
<CAPTION>
MARKET VALUE
OF LOANED MARKET VALUE
NAME OF FUND SECURITIES OF COLLATERAL
------------ ------------- ----------
<S> <C> <C>
Equity Income Fund ......................... $ 310,651 $ 322,000
Growth & Income Fund ....................... 8,038,875 8,221,200
Growth Fund of the Northwest Fund .......... 5,460,353 5,942,819
Growth Fund ................................ 24,805,895 25,408,744
Mid Cap Stock Fund ......................... 2,949,312 2,903,229
Small Cap Stock Fund ....................... 2,589,329 3,011,741
International Growth Fund .................. 10,095,589 11,333,480
Short Term Income Fund ..................... 141,796 145,425
U.S. Government Securities Fund ............ 16,598,253 17,131,734
Income Fund ................................ 57,357,448 59,582,802
High Yield Fund ............................ 26,317,066 27,039,665
</TABLE>
8. SHARES OF BENEFICIAL INTEREST
The Trusts may issue an unlimited number of shares of beneficial interest, each
without par value.
9. CAPITAL LOSS CARRYFORWARDS
At October 31, 2000, the following Funds had available for Federal income tax
purposes unused capital losses as follows:
<TABLE>
<CAPTION>
EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
NAME OF FUND IN 2002 IN 2003 IN 2004 IN 2005 IN 2006 IN 2007 IN 2008
------------ ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Short Term Income Fund $ -- $ 206,653 $ 672,111 $828,245 $20,454 $312,683 $1,103,217
U.S. Government Securities
Fund 31,268,228 33,964,115 3,198,017 503,754 -- 254,447 1,966,547
Income Fund 16,998,233 11,486,626 676,425 -- -- -- --
High Yield Fund -- -- -- -- -- 216,842 925,459
Tax-Exempt Bond Fund -- 204,526 -- -- -- 1,759,162 --
California Municipal Fund -- -- -- -- -- 4,276,902 4,309,648
Florida Insured Municipal Fund 575,474 1,462,695 -- -- -- 192,179 --
</TABLE>
10. 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 Equity Funds, Short Term Income Fund, Income Fund and High Yield Fund,
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 Growth Fund of the Northwest concentrates its investments in companies
located or doing business in the Northwest region of the United States. The
Growth Fund of the Northwest 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;
developing or emerging markets countries 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.
11. 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 shares of the certain Funds 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.
12. SUBSEQUENT EVENT
On November 20, 2000 the Tax-Exempt Bond Fund acquired the assets and
liabilities of the Florida Insured Municipal Fund pursuant to an Agreement and
Plan of reorganization approved by the Florida Insured Municipal Fund
shareholders at a shareholder meeting held November 7, 2000. As of October 31,
2000, the net assets of the Florida Insured Municipal Fund were $13.7 million.
The business combination was treated as a non-taxable event.
13. SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
1. A special meeting of shareholders of the Florida Insured Municipal Fund was
convened on November 7, 2000, at which shareholders approved the proposed
reorganization plan as described in the Prospectus/Proxy Statement.
AFFIRMATIVE AGAINST ABSTAINED TOTAL
----------- ------- --------- -----
822,584.366 71,233.115 22,857.316 916,944.797
52.137% 4.514% 1.448% 58.099%
89.739% 7.768% 2.493% 100.000%
<PAGE>
INDEPENDENT auditors' REPORT
To the Trustees and Shareholders of
WM Trust I and WM Trust II:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of WM High Yield Fund, WM Income Fund, WM U.S.
Government Securities Fund, WM Tax-Exempt Bond Fund, WM Equity Income Fund
(formerly known as WM Bond & Stock Fund), WM Growth & Income Fund, WM Growth
Fund of the Northwest (formerly known as WM Northwest Fund) and WM Mid Cap Stock
Fund (all funds of WM Trust I) and WM Short Term Income Fund, (formerly known as
WM Short Term High Quality Bond Fund), WM California Insured Intermediate
Municipal Fund, WM California Municipal Fund, WM Florida Insured Municipal Fund,
WM Growth Fund, WM International Growth Fund, and WM Small Cap Stock Fund
(formerly known as WM Emerging Growth Fund) (all funds of WM Trust II)
(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 financial highlights for each of
the two years ended October 31, 2000 and 1999 and the period ended October 31,
1998. These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights of WM Short Term Income Fund, WM California Insured Intermediate
Municipal Fund, WM California Municipal Fund, WM Florida Insured Municipal Fund,
WM Growth Fund, WM International Growth Fund, and WM Small Cap Stock 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 of WM Income Fund, WM U.S.
Government Securities Fund and WM Tax-Exempt Bond Fund for the year 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. The financial highlights of WM Equity Income Fund, WM Growth &
Income Fund, and WM Growth Fund of the Northwest for the year ended October 31,
1997 and prior were audited by other auditors whose report, dated November 24,
1997, expressed an unqualified opinion of 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
<PAGE>
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.
In accordance with the Internal Revenue Code, the following Funds are
designating, for purposes of their dividends paid deduction, the corresponding
listed amounts as long-term capital gain dividends. These amounts are provided
for federal tax compliance purposes. This information is not intended to be used
when arriving at your year-end taxable income:
NAME OF FUND
------------
Equity Income Fund $22,799,524
Growth & Income Fund 76,091,369
Growth Fund of the Northwest 84,691,603
Growth Fund 72,670,747
Small Cap Stock Fund 24,610,986
International Growth Fund 2,829,922
California Insured Intermediate Municipal Fund 430,296
Of the distributions made from investment income the following percentages are
tax exempt for regular Federal income tax purposes:
NAME OF FUND
------------
Tax-Exempt Bond Fund 100%
California Municipal Fund 100%
California Insured Intermediate Municipal Fund 100%
Florida Insured Municipal Fund 100%
Of the distributions made by the following Funds, the corresponding percentages
represent the amount of each distribution which will qualify for the dividends
received deduction available to corporate shareholders:
NAME OF FUND
------------
Equity Income Fund 36.70%
Growth & Income Fund 54.95%
Growth Fund of the Northwest 66.48%
Growth Fund 2.53%
Income Fund 0.18%
High Yield Fund 8.27%
The total amount of income received by the International Growth Fund from
sources within foreign countries and possessions of the United States was
$0.1175 per share (representing a total of $3,016,283). The total amount of
taxes paid to such countries was $0.0142 per share (representing a total of
$241,811).
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>
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