<PAGE>
[LOGO]WM
GROUPofFUNDS
MONEY MARKET FUNDS
[Graphic Omitted]
THE DIFFERENCE IS EXPERIENCE
Annual Report
for the period ended October 31, 1998
<PAGE>
[Graphic Omitted]
message from the president ............................................. 1
individual fund reviews ................................................ 2
statements of assets and liabilities ................................... 4
statements of operations ............................................... 6
statements of changes in net assets .................................... 9
statements of changes in net assets - capital stock activity ........... 14
financial highlights ................................................... 16
portfolios of investments .............................................. 24
notes to financial statements .......................................... 31
independent auditors' report ........................................... 36
tax information (unaudited) ............................................ 37
<PAGE>
dear
shareholder:
[Photo of William G. Papesh]
As 1998 draws to a close, I would like to take this opportunity to reflect on
the events that we have witnessed in the investment markets this year. While the
U.S. stock and bond markets both posted positive returns to investors through
October, 1998, you probably know that there were some unusually bumpy periods
along the way.
The widespread stock market volatility that began in Asia and culminated in
substantial declines in some emerging markets demonstrated quite clearly that
the world's financial markets have become intertwined in recent years. Yet the
economies of these geographic regions, and even individual countries, remain
less closely linked. In 1998, this difference between economic events and market
events highlighted the importance of maintaining a long-term perspective when
pursuing long-term objectives.
Twenty years ago, money moved more slowly between investment markets than it
does today. The development of new communication and money-transfer technologies
over the years has created a new type of investor - institutions who invest
large amounts of capital in short-term opportunities throughout the world. One
result is that local events which affect one financial market can quickly spill
over to far distant economies as money is moved around the globe. In some cases
the result can be the tail wagging the dog. An example is the nearly 11% decline
in the U.S. stock market in August immediately following Russia's devaluation of
its currency. That decline was in part due to the need by some investment
companies to raise cash by selling holdings in the U.S.
Maintaining a long-term perspective during such periods can help investors avoid
turning a "paper loss" into a real one. Focusing on the longer term can also be
key to recognizing opportunity. A basic tenet of the investment approach
followed by portfolio managers who steer the individual funds in the WM Group of
Funds is that long-term investment opportunities are identified by focusing on
fundamental factors such as earnings. When distortions in market prices occur
due to temporary factors that do not affect fundamentals, investment managers
often have opportunities to buy at below-value prices.
THREE KEY REASONS FOR KEEPING ON TRACK
STAYING FOCUSED ON INVESTMENT OBJECTIVES can help you withstand market
turbulence. As an individual investor, how you pursue your financial goals will
be affected by several factors including your investment time frame, and your
ability to withstand a potential loss in the value of your investments. If you
choose investments that are appropriate to your goals, you'll probably be less
tempted to abandon your strategy during a market downturn.
MAINTAINING REALISTIC EXPECTATIONS is another key to keeping your equilibrium
during changing markets. According to a recent survey, nearly two thirds of
individual investors expect the long-term total return on their stock
investments to average 12% per year or less.* That's actually lower than recent
long-term historical trends. For example, over the four decades that ended on
June 30, 1998, the compound rate of return on the S&P 500 was 12.24%, with
periods of declining as well as rising prices. During those 40 years, there were
12 corrections in which prices slid by 10% or more before resuming their
generally upward trend.**
Finally, FOLLOWING SOUND INVESTMENT PRINCIPLES BY DIVERSIFYING YOUR INVESTMENTS
is always wise. Stock investments have captured the media's attention for the
last several years, but fixed-income investments have always been an important
part of a diversified portfolio, providing an income stream that can help smooth
out returns. For example, during the second and third quarters of 1998 bond
investments were the top performers, while stock prices were on the decline.
Thank you for your continued confidence in the WM Group of Funds. We are
committed to continuing to serve you, our shareholder, by providing an
appropriate selection of investment vehicles and mutual funds managed by
experienced professionals just as we have for nearly 60 years.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
- --------------------------------------------------------------------------------
*Source: Business Week, June 15, 1998.
**Source: Standard & Poor's. The S&P 500 is an unmanaged index that is generally
considered representative of the U.S. stock market. The performance of any index
is not indicative of the performance of a particular investment and does not
take into account the effects of fees and expenses associated with purchasing
mutual fund shares. Individuals cannot invest directly in any index. Past
performance does not guarantee future results.
<PAGE>
money market
funds
[Graphic Omitted]
PORTFOLIO MANAGER:
AUDREY QUAYE
WM ADVISORS, INC.
Audrey Quaye has over five years experience in investment management and
analysis. She is a Certified Public Accountant, holds an MBA, and has been with
WM Advisors, Inc. since 1996.
ECONOMIC HIGHLIGHTS AND OUTLOOK
Economic data released during the first half of 1998 indicated a moderate pace
of growth in the U.S. economy; however, some regions experienced a slowdown in
manufacturing and export activity. Consumer confidence was high during most of
the period, but recent reports indicate that it has begun to wane. The strength
in construction activity and home purchases in most regions which was due to
relatively low interest rates, and has also begun to slowdown in some areas. The
labor market remained tight during most of the period; however, the unemployment
rate, which declined to a 28-year low of 4.3% in April 1998, rose to 4.6% in
September. Overall, there is evidence that the effects of economic problems in
Asia and other emerging markets have begun to spill over into the U.S. economy.
Global equity markets reacted to this unrest and uncertainty with a significant
correction in August.
Fixed-income markets were affected by the volatility in the equity markets and
weakness in Japan, Asia, and most emerging markets as investors poured money
into U.S. Treasuries. The Federal Reserve Open Market Committee (FOMC) left its
target fed funds rate (the rate at which banks borrow from one another) of 5.50%
unchanged for the first eight months of 1998, until Sept. 29, 1998, when it cut
the rate by 25 basis points from 5.50% to 5.25%. The Fed then followed up with a
similar move in October, lowering the target rate to 5%. These moves were the
first rate changes since March 25, 1997, when the FOMC raised the fed funds rate
to 5.50% in a bid to curb inflation. The Fed took the rate action to combat
mounting evidence of a slowdown in the U.S. economy and continuing turmoil in
Asian and emerging markets.
The benchmark 90-day U.S. Treasury bill yield curve averaged 5.02% for the year
ended October 31, 1998. The yield declined from a high of 5.47% on December 23,
1997 to a low of 3.62% on October 16, 1998, after the Fed rate cut action.
Our outlook on the bond market is bullish as we expect inflation to remain tame
and anticipate a continued slowdown in the U.S. economy with further declines in
interest rates.
PORTFOLIO STRATEGY
As of October 31, 1998, the net assets of the WM MONEY MARKET FUND totaled
$525.09 million. During the period, we reduced the Fund's exposure to the
banking and foreign sectors and extended the portfolio's weighted average
maturity in view of our interest rate outlook. In the near term, we intend to
reduce the Fund's holding of callable securities as we anticipate further
declines in interest rates.
The WM TAX-EXEMPT MONEY MARKET FUND'S net assets at October 31, 1998 totaled
$25.65 million. In view of our interest rate outlook, we extended the
portfolio's weighted average maturity and reduced the Fund's exposure to the
more volatile daily variable rate securities when interest rates declined
significantly. We intend to maintain the weighted average maturity of the
portfolio slightly long relative to the benchmark, but we will shorten the
average maturity, as needed, to take advantage of seasonal hikes in municipal
money market yields.
As of October 31, 1998, the net assets of the WM CALIFORNIA MONEY FUND totaled
$37.23 million. As with the other money funds, we extended the portfolio's
weighted average maturity to reduce the volatility in the Fund's yield. We also
reduced the Fund's holding of securities that are subject to the alternative
minimum tax. While our goal is to maintain the portfolio's weighted average
maturity at par with the benchmark, we will shorten the average maturity
portfolio to take advantage of seasonal hikes in municipal money market yields
when necessary.
THE YEAR 2000 PROBLEM
Many computer systems in use today cannot process date-related information from
and after January 1, 2000. At the stroke of midnight on New Year's Eve, 1999,
some computer systems could become seriously confused. They may miscalculate
critical data, delete vital files, or simply not turn on because the computer's
internal calendars and clocks may not recognize the year 2000. This issue stems
from the practice of abbreviating years to their last two digits. Computer
systems may not be able to decide correctly when a date entered with a year of
"00" should be interpreted as 1900 or 2000.
Should any of the computer systems employed by the Funds' major service
providers fail to process this type of information properly, that could have a
negative impact on Fund operations and the services that are provided to
shareholders. Similarly, the values of certain Fund's assets may be adversely
affected by the inability of their issues or third parties to properly process
date-related information from and after January 1, 2000.
The Advisor, Shareholder Servicing Agent and Administrator have advised the
Funds that they are reviewing all of their computer systems with their goal of
modifying or replacing such systems prior to January 1, 2000 to the extent
necessary to avoid any such negative impact. Furthermore, the Funds are seeking
assurance from each of their key service providers that similar replacements or
modifications will be completed to avoid any negative impact from this issue. In
the event a key service provider cannot provide such assurance, the Funds may
consider retaining an alternate service provider.
In addition, the Advisor has been advised by the Custodian that it is also in
the process of reviewing its systems with the same goal. As of the date of this
report, the Funds and Advisor have no reason to believe that these goals will
not be achieved.
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
portfolios'
performance*
<CAPTION>
7-day 7-day
Simple Yield Compounded Yield Weighted Average
A shares B shares A shares B shares Maturity (days)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market Fund 4.65% 3.90% 4.76% 3.98% 83
- --------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund 2.87% 1.88% 2.91% 1.90% 74
- --------------------------------------------------------------------------------------------------------------------
California Money Fund 2.27% 1.27% 2.33% 1.28% 56
- --------------------------------------------------------------------------------------------------------------------
* During the period noted, WM Advisors, Inc. waived a portion of its management fees and absorbed certain other
expenses. Without the waiver and expense absorption, the yield would have been lower. All yield information
represents past performance, which cannot guarantee future results. An investment in the Fund(s) is neither insured
nor guaranteed by the U.S. Government and there can be no assurance that the Fund(s) will be able to maintain a
stable net asset value of $1.00 per share.
</TABLE>
<PAGE>
STATEMENTS of ASSETS and LIABILITIES
WM GROUP OF FUNDS
OCTOBER 31, 1998
TAX-EXEMPT
MONEY MONEY CALIFORNIA
MARKET MARKET MONEY
FUND FUND FUND
------------ ----------- -----------
ASSETS:
Investments, at value
(See portfolios of investments) (a) $529,260,767 $26,201,455 $37,823,686
Cash ................................. 15,488 -- --
Interest receivable .................. 4,108,834 205,669 228,735
Receivable for Fund shares sold ...... 1,547,156 147,336 40,098
Prepaid expenses and other assets .... 536 7,296 156
------------ ----------- -----------
Total Assets ..................... 534,932,781 26,561,756 38,092,675
------------ ----------- -----------
LIABILITIES:
Payable for Fund shares redeemed ..... 1,494,859 45,145 99,114
Payable for investment securities
purchased .......................... 7,500,000 769,167 728,400
Investment advisory fee payable ...... 201,112 6,134 10,151
Shareholder servicing and distribution
fees payable ....................... 10,844 179 52
Dividends payable .................... 408,707 67,488 1,752
Due to custodian ..................... -- 360 527
Accrued expenses and other payables .. 230,417 20,172 25,256
------------ ----------- -----------
Total Liabilities ................ 9,845,939 908,645 865,252
------------ ----------- -----------
NET ASSETS ........................... $525,086,842 $25,653,111 $37,227,423
============ =========== ===========
- ----------------
(a) Investments, at cost ............. $529,260,767 $26,201,455 $37,823,686
============ =========== ===========
See Notes to Financial Statements.
<PAGE>
STATEMENTS of ASSETS and LIABILITIES (continued)
WM GROUP OF FUNDS
OCTOBER 31, 1998
TAX-EXEMPT
MONEY MONEY CALIFORNIA
MARKET MARKET MONEY
FUND FUND FUND
------------- ------------ -----------
NET ASSETS consist of:
Undistributed net investment
income/(distributions in excess
of net investment income) ...... $ (3,587) $ -- $ 2,366
Accumulated net realized loss on
investments sold ............... (87,858) (3) (40,974)
Paid-in capital .................. 525,178,287 25,653,114 37,266,031
------------ ----------- -----------
Total Net Assets ........... $525,086,842 $25,653,111 $37,227,423
============ =========== ===========
NET ASSETS:
Class A Shares ................... $403,443,295 $25,441,001 $37,167,112
============ =========== ===========
Class B Shares ................... $ 6,618,925 $ 212,110 $ 58,063
============ =========== ===========
Class S Shares ................... $ 6,304,136 -- $ 1,181
============ ========
Class I Shares ................... $108,720,486 -- $ 1,067
============ ========
SHARES OUTSTANDING:
Class A Shares ................... 403,499,499 25,441,005 37,208,849
============ =========== ===========
Class B Shares ................... 6,619,778 212,109 58,128
============ =========== ===========
Class S Shares ................... 6,304,983 -- 1,182
============ ===========
Class I Shares ................... 108,734,879 -- 1,068
============ ===========
CLASS A SHARES:
Net asset value per share of
beneficial interest outstanding* $1.00 $1.00 $1.00
============ =========== ===========
CLASS B SHARES:
Net asset value and offering price
per share of beneficial interest
outstanding* ................... $1.00 $1.00 $1.00
============ =========== ===========
CLASS S SHARES:
Net asset value and offering price
per share of beneficial interest
outstanding* ................... $1.00 -- $1.00
============ ===========
CLASS I SHARES:
Net asset value, offering and
redemption price per share of
beneficial interest outstanding $1.00 -- $1.00
============ ===========
- --------------
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See Notes to Financial Statements.
<PAGE>
STATEMENTS of OPERATIONS
WM GROUP OF FUNDS
FOR THE PERIODS ENDED OCTOBER 31, 1998
TAX-EXEMPT
MONEY MONEY CALIFORNIA
MARKET MARKET MONEY
FUND(A) FUND(A) FUND(B)
------------ ------------ ----------
INVESTMENT INCOME:
Interest ........................... $20,582,639 $849,115 $390,362
----------- -------- --------
EXPENSES:
Investment advisory fee ............ 1,648,865 104,751 64,254
Custodian fees ..................... 49,833 6,584 1,371
Legal and audit fees ............... 15,398 16,239 12,964
Trustees' fees and expenses ........ 35,346 2,218 1,153
Registration and filing fees ....... 70,547 15,246 12,175
Printing and postage fees .......... 169,924 9,860 6,367
Other .............................. 17,254 (3,220) 485
Shareholder servicing and distribution fees:
Class A Shares ................... -- (18) --
Class B Shares.................... 24,993 269 209
Class S Shares ................... 41,416 -- 4
Transfer agent fees:
Class A Shares ................... 369,500 15,970 13,314
Class B Shares ................... 2,578 40 35
Class S Shares ................... 11,233 -- 12
Fees waived by investment advisor .. -- (37,019) (18,193)
----------- -------- --------
Total expenses ............... 2,456,887 130,920 94,150
Fees reduced by credits allowed by
the custodian .................... (14,189) (2,403) (133)
----------- -------- --------
Net expenses ................. 2,442,698 128,517 94,017
----------- -------- --------
NET INVESTMENT INCOME .............. 18,139,941 720,598 296,345
----------- -------- --------
NET REALIZED LOSS ON INVESTMENTS:
Realized loss from security
transactions ..................... (72,297) (3) --
----------- -------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... $18,067,644 $720,595 $296,345
=========== ======== ========
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end
was December 31. The amounts reflected are for the period January 1, 1998
through October 31, 1998.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end
was June 30. The amounts reflected are for the period July 1, 1998 through
October 31, 1998.
See Notes to Financial Statements.
<PAGE>
STATEMENTS of OPERATIONS
WM GROUP OF FUNDS
FOR THE YEAR ENDED DECEMBER 31, 1997
TAX-EXEMPT
MONEY MONEY
MARKET MARKET
FUND FUND
----------- ----------
INVESTMENT INCOME:
Interest ................................... $14,420,370 $1,186,528
----------- ----------
EXPENSES:
Investment advisory fee .................... 1,148,906 143,965
Custodian fees ............................. 120,711 13,859
Legal and audit fees ....................... 10,537 6,331
Trustees' fees and expenses ................ 8,499 8,499
Registration and filing fees ............... 147,863 18,754
Printing and postage fees .................. 151,433 10,553
Insurance .................................. 4,442 1,443
Shareholder servicing and distribution fees:
Class A Shares ........................... 526,840 26,630
Class B Shares............................ 2,660 149
Fees waived by investment advisor .......... (198,432) (45,307)
----------- ----------
Total expenses ....................... 1,923,459 184,876
Fees reduced by credits allowed by the
custodian ................................ (88,033) (7,751)
----------- ----------
Net expenses ......................... 1,835,426 177,125
----------- ----------
NET INVESTMENT INCOME ...................... 12,584,944 1,009,403
----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ............................... $12,584,944 $1,009,403
=========== ==========
See Notes to Financial Statements.
<PAGE>
STATEMENT of OPERATIONS
WM GROUP OF FUNDS
FOR THE YEAR ENDED JUNE 30, 1998
CALIFORNIA
MONEY
FUND
----------
INVESTMENT INCOME:
Interest ....................................................... $1,425,585
----------
EXPENSES:
Investment advisory fee ........................................ 188,184
Administration fee ............................................. 73,762
Custodian fees ................................................. 4,887
Legal and audit fees ........................................... 17,190
Trustees' fees and expenses .................................... 4,108
Registration and filing fees ................................... 11,849
Printing and postage fees ...................................... 25,721
Other .......................................................... 3,092
Shareholder servicing and distribution fees:
Class A Shares ............................................... 61,358
Class B Shares ............................................... 695
Class S Shares .............................................. 12
Transfer agent fees:
Class A Shares ............................................... 11,899
Fees waived by investment advisor .............................. (70,002)
----------
Total expenses ........................................... 332,755
Fees reduced by credits allowed by the custodian ............... (1,759)
----------
Net expenses ............................................. 330,996
----------
NET INVESTMENT INCOME .......................................... 1,094,589
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $1,094,589
==========
See Notes to Financial Statements.
<PAGE>
STATEMENTS of CHANGES in NET assets
WM GROUP OF FUNDS
FOR THE PERIODS ENDED OCTOBER 31, 1998
TAX-EXEMPT
MONEY MONEY CALIFORNIA
MARKET MARKET MONEY
FUND(A) FUND(A) FUND(B)
------------ ----------- -----------
Net investment income .......... $ 18,139,941 $ 720,598 $ 296,345
Net realized loss on
investments sold during
the period ................... (72,297) (3) --
------------ ----------- -----------
Net increase in net assets
resulting from operations .... 18,067,644 720,595 296,345
Distributions to shareholders
from net investment income:
Class A Shares ............... (14,948,299) (720,041) (296,197)
Class B Shares................ (103,182) (557) (141)
Class S Shares ............... (172,000) -- (3)
Class I Shares ............... (2,916,460) -- (4)
Net increase/(decrease) in net
assets from Fund share
transactions:
Class A Shares ............... 142,622,001 (6,693,465) (235,693)
Class B Shares ............... 6,149,166 200,309 (4,765)
Class S Shares ............... 6,304,983 -- 6
Class I Shares ............... 108,734,879 -- 8
------------ ----------- -----------
Net increase/(decrease) in net
assets ....................... 263,738,732 (6,493,159) (240,444)
NET ASSETS:
Beginning of period ............ 261,348,110 32,146,270 37,467,867
------------ ----------- -----------
End of period .................. $525,086,842 $25,653,111 $37,227,423
============ =========== ===========
Undistributed net investment
income at end of period/
(distributions in excess of net
investment income) ........... $ (3,587) $ -- $ 2,366
============ =========== ===========
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end
was December 31. The amounts reflected are for the period January 1, 1998
through October 31, 1998.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end
was June 30. The amounts reflected are for the period July 1, 1998 through
October 31, 1998.
See Notes to Financial Statements.
<PAGE>
STATEMENTS of CHANGES in NET assets
WM GROUP OF FUNDS
FOR THE YEAR ENDED DECEMBER 31, 1997
TAX-EXEMPT
MONEY MONEY
MARKET MARKET
FUND FUND
------------ -----------
Net investment income ....................... $ 12,584,944 $ 1,009,403
------------ -----------
Net increase in net assets resulting
from operations ........................... 12,584,944 1,009,403
Distributions to shareholders from net
investment income:
Class A Shares ............................ (12,575,604) (1,009,190)
Class B Shares............................. (9,340) (213)
Net increase in net assets from Fund
share transactions:
Class A Shares ............................ 31,522,179 160,533
Class B Shares ............................ 353,674 9,595
------------ -----------
Net increase in net assets .................. 31,875,853 170,128
NET ASSETS:
Beginning of year ........................... 229,472,257 31,976,142
------------ -----------
End of year ................................. $261,348,110 $32,146,270
============ ===========
See Notes to Financial Statements.
<PAGE>
STATEMENTS of CHANGES in NET assets
WM GROUP OF FUNDS
FOR THE YEAR ENDED DECEMBER 31, 1996
TAX-EXEMPT
MONEY MONEY
MARKET MARKET
FUND FUND
------------ -----------
Net investment income ....................... $ 9,711,582 $ 946,958
------------ -----------
Net increase in net assets resulting from
operations ................................ 9,711,582 946,958
Distributions to shareholders from net
investment income:
Class A Shares ............................ (9,706,992) (946,927)
Class B Shares ............................ (4,590) (31)
Net increase in net assets from Fund share
transactions:
Class A Shares ............................ 58,129,940 986,131
Class B Shares ............................ 42,492 1,172
------------ -----------
Net increase in net assets .................. 58,172,432 987,303
NET ASSETS:
Beginning of year ........................... 171,299,825 30,988,839
------------ -----------
End of year ................................. $229,472,257 $31,976,142
============ ===========
See Notes to Financial Statements.
<PAGE>
STATEMENTS of CHANGES in NET assets
WM GROUP OF FUNDS
FOR THE YEAR ENDED JUNE 30, 1998
CALIFORNIA
MONEY
FUND
-----------
Net investment income ............................................ $ 1,094,589
-----------
Net increase in net assets resulting from operations ............. 1,094,589
Distributions to shareholders from net investment income:
Class A Shares ................................................. (1,093,207)
Class B Shares.................................................. (1,326)
Class S Shares.................................................. (22)
Class I Shares.................................................. (31)
Net increase/(decrease) in net assets from Fund share
transactions:
Class A Shares ................................................. (5,520,424)
Class B Shares ................................................. (4,780)
Class S Shares ................................................. 22
Class I Shares ................................................. 31
-----------
Net decrease in net assets ....................................... (5,525,148)
NET ASSETS:
Beginning of year ................................................ 42,993,015
-----------
End of year ...................................................... $37,467,867
===========
Undistributed net investment income at end of year ............... $ 2,366
===========
See Notes to Financial Statements.
<PAGE>
STATEMENTS of CHANGES in NET assets
WM GROUP OF FUNDS
FOR THE YEAR ENDED JUNE 30, 1997
CALIFORNIA
MONEY
FUND
-----------
Net investment income ............................................ $ 1,285,640
-----------
Net increase in net assets resulting from operations ............. 1,285,640
Distributions to shareholders from net investment income:
Class A Shares ................................................. (1,284,111)
Class B Shares.................................................. (1,373)
Class S Shares.................................................. (125)
Class I Shares.................................................. (31)
Net increase/(decrease) in net assets from Fund share
transactions:
Class A Shares ................................................. (8,287,958)
Class B Shares ................................................. (79,592)
Class S Shares ................................................. (9,276)
Class I Shares ................................................. 1,029
-----------
Net decrease in net assets ....................................... (8,375,797)
NET ASSETS:
Beginning of year ................................................ 51,368,812
-----------
End of year ...................................................... $42,993,015
===========
Undistributed net investment income at end of year ............... $ 2,363
===========
See Notes to Financial Statements.
<PAGE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
<TABLE>
Since the Funds have sold, issued as reinvestment of dividends and redeemed shares only at a constant net asset value of $1.00
per share, the number of shares represented by such sales, reinvestments and redemptions is the same as the amounts shown below
for such transactions.
<CAPTION>
MONEY MARKET FUND(A) TAX-EXEMPT MONEY FUND(B)
------------------------------------------------ ---------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
10/31/98(C) 12/31/97 12/31/96 10/31/98(C) 12/31/97 12/31/97
------------ ---------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold ................. $ 1,029,291,671 $ 631,834,628 $ 600,191,639 $ 30,837,963 $ 55,194,481 $ 54,027,014
Issued in exchange for
Class A shares of
the Sierra Global
Money Fund ......... 86,308,379 -- -- -- -- --
Issued in exchange for
Class A shares of
the Sierra U.S.
Government Money
Fund ............... 21,242,345 -- -- -- -- --
Issued as reinvestment
of dividends ....... 13,666,591 12,427,917 9,585,807 710,706 1,003,218 939,901
Redeemed ............. (1,007,886,985) (612,740,366) (551,647,506) (38,242,134) (56,037,166) (53,980,784)
--------------- ------------- ------------- ------------ ------------ ------------
Net increase/
(decrease) ......... $ 142,622,001 $ 31,522,179 $ 58,129,940 $ (6,693,465) $ 160,533 $ 986,131
=============== ============= ============= ============ ============ ============
Class B:
Sold ................. $ 15,707,869 $ 916,714 $ 429,250 $ 201,001 $ 12,980 $ 2,901
Issued in exchange for
Class B shares of
the Sierra Global
Money Fund ......... 1,089,407 -- -- -- -- --
Issued in exchange for
Class B shares of
the Sierra U.S.
Government Money
Fund ............... 915,101 -- -- -- -- --
Issued as reinvestment
of dividends ....... 91,008 9,036 4,519 552 188 8
Redeemed ............. (11,654,219) (572,076) (331,277) (1,244) (3,573) (1,737)
--------------- ------------- ------------- ------------ ------------ ------------
Net increase/
(decrease) ......... $ 6,149,166 $ 353,674 $ 42,492 $ 200,309 $ 9,595 $ 1,172
=============== ============= ============= ============ ============ ============
Class S:
Sold ................. $ 1,846,781 -- -- -- -- --
Issued in exchange for
Class S shares of
the Sierra Global
Money Fund ......... 6,970,804 -- -- -- -- --
Issued in exchange for
Class S shares of
the Sierra U.S.
Government Money
Fund ............... 499,760 -- -- -- -- --
Issued as reinvestment
of dividends ....... 166,689 -- -- -- -- --
Redeemed ............. (3,179,051) -- -- -- -- --
---------------
Net increase ......... $ 6,304,983 -- -- -- -- --
===============
Class I:
Sold ................. $ 37,068,793 -- -- -- -- --
Issued in exchange for
Class I shares of
the Sierra Global
Money Fund ......... 76,706,647 -- -- -- -- --
Issued in exchange for
Class I shares of
the Sierra U.S.
Government Money
Fund ............... 13,331,744 -- -- -- -- --
Issued as reinvestment
of dividends ....... 356,277 -- -- -- -- --
Redeemed ............. (18,728,582) -- -- -- -- --
---------------
Net increase ......... $ 108,734,879 -- -- -- -- --
===============
- --------------
(a) Formerly, Composite Cash Management Company Money Market Portfolio. On March 23, 1998, shares were issued in exchange for the
Sierra Global Money Fund and the Sierra U.S. Government Money Fund.
(b) Formerly, Composite Cash Management Company Tax-Exempt Portfolio.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31. The amounts reflected are for the
period January 1, 1998 through October 31, 1998.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM GROUP OF FUNDS
Since the Funds have sold, issued as reinvestment of dividends and redeemed
shares only at a constant net asset value of $1.00 per share, the number of
shares represented by such sales, reinvestments and redemptions is the same as
the amounts shown below for such transactions.
CALIFORNIA MONEY FUND
------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED
10/31/98(A) 06/30/98 06/30/97
------------ ---------- ----------
Class A:
Sold .......................... $ 10,436,305 $ 30,331,723 $ 33,810,325
Issued as reinvestment of
dividends ................... 286,201 1,056,492 1,243,547
Redeemed ...................... (10,958,199) (36,908,639) (43,341,830)
------------ ------------ ------------
Net increase/(decrease) ....... $ (235,693) $ (5,520,424) $ (8,287,958)
============ ============ ============
Class B:
Sold .......................... $ -- $ 70,100 $ 2,200
Issued as reinvestment of
dividends ................... 301 1,322 1,341
Redeemed ...................... (5,066) (76,202) (83,133)
------------ ------------ ------------
Net increase/(decrease) ....... $ (4,765) $ (4,780) $ (7,592)
============ ============ ============
Class S:
Sold .......................... $ -- $ -- $ --
Issued as reinvestment of
dividends ................... 6 22 124
Redeemed ...................... -- -- (9,400)
------------ ------------ ------------
Net increase .................. $ 6 $ 22 $ (9,276)
============ ============ ============
Class I:
Sold .......................... $ -- $ -- $ 1,000
Issued as reinvestment of
dividends ................... 8 31 29
Redeemed ...................... -- -- --
------------ ------------ ------------
Net increase .................. $ 8 $ 31 $ 1,029
============ ============ ============
- --------------
(a) Fiscal year end changed to October 31. Prior to this, the fiscal year end
was June 30. The amounts reflected are for the period July 1, 1998 through
October 31, 1998.
See Notes to Financial Statements.
<PAGE>
FINANCIAL highlights
MONEY MARKET FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
--------------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/98(C) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income ....... 0.041 0.049 0.048 0.052 0.034 0.024
----- ----- ----- ----- ----- -----
Total from investment
operations ................ 0.041 0.049 0.048 0.052 0.034 0.024
----- ----- ----- ----- ----- -----
Less distributions:
Dividends from net investment
income .................... (0.041) (0.049) (0.048) (0.052) (0.034) (0.024)
----- ----- ----- ----- ----- -----
Total distributions ......... (0.041) (0.049) (0.048) (0.052) (0.034) (0.024)
----- ----- ----- ----- ----- -----
Net asset value, end of
period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return+ ............... 4.19% 5.04% 4.88% 5.33% 3.47% 2.41%
====== ====== ====== ====== ====== ======
Ratios to average net assets/supplemental data:
Net assets, end of period (in
000's) .................... $403,443 $260,877 $229,355 $171,225 $125,651 $135,187
Ratio of operating expenses to
average net assets(b) ..... 0.66%* 0.75% 0.79% 0.92% 0.95% 0.97%
Ratio of net investment income
to average net assets ..... 4.94%* 4.93% 4.77% 5.19% 3.39% 2.38%
Ratio of operating expenses to
average net assets without
fee waivers and/or fees
reduced by credits allowed
by the custodian .......... 0.67%* 0.83% 0.89% 1.04% 1.04% 1.03%
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year. The total returns would have been lower if certain fees had
not been waived by the investment advisor or if fees had not been reduced by credits allowed by custodian.
(a) Formerly, Composite Cash Management Company Money Market Portfolio.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL highlights
MONEY MARKET FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS S CLASS I
CLASS B SHARES SHARES SHARES
--------------------------------------------------------------------------- ------------- -------------
PERIOD YEAR YEAR YEAR PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/98(C) 12/31/97 12/31/96 12/31/95 12/31/94(D) 10/31/98(E) 10/31/98(E)
----------- -------- -------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income .. 0.035 0.041 0.038 0.042 0.018 0.026 0.031
------ ------ ------ ------ ------ ------ ------
Total from investment
operations ............ 0.035 0.041 0.038 0.042 0.018 0.026 0.031
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ..... (0.035) (0.041) (0.038) (0.042) (0.018) (0.026) (0.031)
------ ------ ------ ------ ------ ------ ------
Total distributions .... (0.035) (0.041) (0.038) (0.042) (0.018) (0.026) (0.031)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ======
Total return+ .......... 3.52% 4.15% 3.91% 4.30% 2.78% 2.58% 3.17%
====== ====== ====== ====== ====== ====== ======
Ratios to average net assets/supplemental data:
Net assets, end of
period (in 000's) ..... $6,619 $ 471 $ 117 $ 74 $ 11 $6,304 $108,720
Ratio of operating
expenses to average net
assets(b) ............. 1.64%* 1.59% 1.69% 1.94% 1.93%* 1.81%* 0.54%*
Ratio of net investment
income to average net
assets ................ 3.96%* 4.15% 3.87% 4.19% 3.29%* 3.79%* 5.06%*
Ratio of operating
expenses to average net
assets without fee
waivers and/or fees
reduced by credits
allowed by the
custodian ............. 1.65%* 1.80% 1.90% 2.10% 2.62%* 1.82%* 0.55%*
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year. The total returns would have been lower if certain fees had
not been waived by the investment advisor or if fees had not been reduced by credits allowed by custodian.
(a) Formerly, Composite Cash Management Company Money Market Portfolio.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(d) On May 2, 1994, the Fund commenced selling Class B Shares. Those shares in existence prior to May 2, 1994 were designated
as Class A shares.
(e) On March 23, 1998, the Fund commenced selling Class S and Class I shares.
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL highlights
TAX-EXEMPT MONEY MARKET FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
-----------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/98(C) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income ....... 0.026 0.031 0.030 0.034 0.024 0.020
Net realized and unrealized
gain on investments ........ -- -- -- 0.000# -- --
------ ------ ------ ------ ------ ------
Total from investment
operations ................. 0.026 0.031 0.030 0.034 0.024 0.020
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income ..................... (0.026) (0.031) (0.030) (0.034) (0.024) (0.020)
Distributions from net
realized gains ............. -- -- -- 0.000# -- --
------ ------ ------ ------ ------ ------
Total distributions ......... (0.026) (0.031) (0.030) (0.034) (0.024) (0.020)
------ ------ ------ ------ ------ ------
Net asset value, end of
period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return+ ............... 2.60% 3.18% 3.05% 4.01% 2.37% 2.06%
====== ====== ====== ====== ====== ======
Ratios to average net assets/supplemental data:
Net assets, end of period (in
000's) ..................... $25,441 $32,134 $31,974 $30,988 $33,612 $34,513
Ratio of operating expenses to
average net assets(b) ...... 0.55%* 0.57% 0.57% 0.61% 0.60% 0.50%
Ratio of net investment income
to average net assets ...... 3.09%* 3.14% 3.01% 3.39% 2.33% 2.03%
Ratio of operating expenses to
average net assets without
fee waivers and/or fees
reduced by credits allowed
by the custodian ........... 0.72%* 0.71% 0.72% 0.81% 0.76% 0.77%
- ----------------
* Annualized.
# Amount represents less than $0.001 per share.
+ Total return is not annualized for periods less than one year. The total returns would have been lower if certain fees had
not been waived by the investment advisor or if fees had not been reduced by credits allowed by custodian.
(a) Formerly, Composite Cash Management Company Tax-Exempt Portfolio.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL highlights
TAX-EXEMPT MONEY MARKET FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS B SHARES
------------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/98(C) 12/31/97 12/31/96 12/31/95 12/31/94(D)
----------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income .... 0.018 0.022 0.020 0.023 0.010
Net realized and
unrealized gain on
investments ............. -- -- -- (0.000)# --
------ ------ ------ ------ ------
Total from investment
operations .............. 0.018 0.022 0.020 0.023 0.010
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ....... (0.018) (0.022) (0.020) (0.023) (0.010)
Distributions from net
realized gains .......... -- -- -- (0.000)# --
------ ------ ------ ------ ------
Total distributions ...... (0.018) (0.022) (0.020) (0.023) (0.010)
------ ------ ------ ------ ------
Net asset value, end of
period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return+ ............ 1.79% 2.26% 2.01% 2.83% 1.45%
====== ====== ====== ====== ======
Ratios to average net assets/supplemental data:
Net assets, end of period
(in 000's) .............. $ 212 $ 12 $ 2 $ 1 $ 1
Ratio of operating
expenses to average net
assets(b) ............... 1.63%* 1.50% 1.53% 1.73% 1.66%*
Ratio of net investment
income to average net
assets .................. 2.01%* 2.32% 1.99% 2.12% 1.38%*
Ratio of operating
expenses to average net
assets without fee
waivers and/or fees
reduced by credits
allowed by the custodian 1.80%* 2.27% 4.22% 3.66% 3.61%*
- ----------------
* Annualized.
# Amounts represents less than $0.001 per share.
+ Total return is not annualized for periods less than one year. The total returns would have been lower if certain fees had
not been waived by the investment advisor or if fees had not been reduced by credits allowed by custodian.
(a) Formerly, Composite Cash Management Company Tax-Exempt Portfolio.
(b) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(d) On May 2, 1994, the Fund commenced selling Class B Shares. Those shares in existence prior to May 2, 1994 were designated as
Class A shares.
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL highlights
CALIFORNIA MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
-----------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/98(B) 06/30/98 06/30/97 06/30/96 06/30/95 06/30/94
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income ....... 0.008 0.027 0.028 0.029 0.028 0.018
------ ------ ------ ------ ------ ------
Total from investment
operations ................. 0.008 0.027 0.028 0.029 0.028 0.018
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income ..................... (0.008) (0.027) (0.028) (0.029) (0.028) (0.018)
------ ------ ------ ------ ------ ------
Total distributions ......... (0.008) (0.027) (0.028) (0.029) (0.028) (0.018)
------ ------ ------ ------ ------ ------
Net asset value, end of
period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
Total return+ ............... 0.99% 2.73% 2.81% 3.00% 2.79% 1.81%
====== ====== ====== ====== ====== ======
Ratios to average net assets/supplemental data:
Net assets, end of period (in
000's) ........ ............ $37,167 $37,403 $42,923 $51,211 $48,836 $62,500
Ratio of operating expenses to
average net assets(a) ...... 0.73%* 0.82% 0.85% 0.85% 0.85% 0.85%
Ratio of net investment income
to average net assets ...... 2.31%* 2.71% 2.75% 2.94% 2.73% 1.80%
Ratio of operating expenses to
average net assets without
fee waivers and/or fees
reduced by credits allowed
by the custodian ........... 0.87%* 0.99% 1.14% 1.14% 1.15% 1.27%
- ----------------
* Annualized.
+ Total return is not annualized for periods less than one year. The total returns would have been lower if certain fees had
not been waived by the investment advisor or if fees had not been reduced by credits allowed by custodian.
(a) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL highlights
CALIFORNIA MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS B SHARES
--------------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/98(B) 06/30/98 06/30/97 06/30/96 06/30/95*
----------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income ..... 0.005 0.019 0.020 0.022 0.020
------ ------ ------ ------ ------
Total from investment
operations ............... 0.005 0.019 0.020 0.022 0.020
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ........ (0.005) (0.019) (0.020) (0.022) (0.020)
------ ------ ------ ------ ------
Total distributions ....... (0.005) (0.019) (0.020) (0.022) (0.020)
------ ------ ------ ------ ------
Net asset value, end of
period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return+ ............. 0.63% 1.96% 2.03% 2.22% 2.04%
====== ====== ====== ====== ======
Ratios to average net assets/supplemental data:
Net assets, end of period
(in 000's) ............... $ 58 $ 63 $ 68 $ 147 $ 79
Ratio of operating expenses
to average net assets(a) . 1.60%** 1.60% 1.60% 1.60% 1.60%
Ratio of net investment
income to average net
assets ................... 1.44%** 1.88% 2.00% 2.19% 1.98%
Ratio of operating expenses
to average net assets
without fee waivers and/or
fees reduced by credits
allowed by the custodian . 2.05%** 1.82% 1.89% 1.89% 1.90%
- ----------------
* On July 1, 1994, the Fund commenced selling Class B shares in addition to Class A shares. Those shares in existence prior to
July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return is not annualized for periods less than one year. The total returns would have been lower if certain fees had
not been waived by the investment advisor or if fees had not been reduced by credits allowed by custodian.
(a) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL highlights
CALIFORNIA MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS S SHARES
-----------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/98(B) 06/30/98 06/30/97 06/30/96 06/30/95*
----------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income ..... 0.005 0.019 0.020 0.022 0.020
------ ------ ------ ------ ------
Total from investment
operations ............... 0.005 0.019 0.020 0.022 0.020
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ........ (0.005) (0.019) (0.020) (0.022) (0.020)
------ ------ ------ ------ ------
Total distributions ....... (0.005) (0.019) (0.020) (0.022) (0.020)
------ ------ ------ ------ ------
Net asset value, end of
period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total return+ ............. 0.66% 1.96% 2.03% 2.22% 2.04%
====== ====== ====== ====== ======
Ratios to average net assets/supplemental data:
Net assets, end of period
(in 000's) ............... $ 1 $ 1 $ 1 $ 10 $ 10
Ratio of operating expenses
to average net assets(a) . 1.60%** 1.60% 1.60% 1.60% 1.60%
Ratio of net investment
income to average net
assets ................... 1.44%** 1.85% 2.00% 2.19% 1.98%
Ratio of operating expenses
to average net assets
without fee waivers and/or
fees reduced by credits
allowed by the custodian . 4.80%** 1.85% 1.89% 1.89% 1.90%
- ----------------
* On July 1, 1994, the Fund commenced selling Class S shares in addition to Class A shares. Those shares in existence prior to
July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return is not annualized for periods less than one year. The total returns would have been lower if certain fees had
not been waived by the investment advisor or if fees had not been reduced by credits allowed by custodian.
(a) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL highlights
CALIFORNIA MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS I SHARES
-----------------------------------------------------
PERIOD YEAR PERIOD
ENDED ENDED ENDED
10/31/98(B) 06/30/98 06/30/97*
----------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period ............. $ 1.00 $ 1.00 $ 1.00
------ ------ ------
Income from investment operations:
Net investment income ............................ 0.008 0.029 0.028
------ ------ ------
Total from investment operations ................. 0.008 0.029 0.028
------ ------ ------
Less distributions:
Dividends from net investment income ............. (0.008) (0.029) (0.028)
------ ------ ------
Total distributions .............................. (0.008) (0.029) (0.028)
------ ------ ------
Net asset value, end of period ................... $ 1.00 $ 1.00 $ 1.00
====== ====== ======
Total return+ .................................... 1.06% 2.99% 2.89%
====== ====== ======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ............. $ 1 $ 1 $ 1
Ratio of operating expenses to average net
assets(a) ....................................... 0.60%** 0.63% 0.60%**
Ratio of net investment income to average net
assets .......................................... 2.44%** 2.89% 3.00%**
Ratio of operating expenses to average net assets
without fee waivers and/or fees reduced by
credits allowed by the custodian ................ 0.77%** 0.81% 0.89%**
- ----------------
* On July 25, 1996, the Fund commenced selling Class I shares.
** Annualized.
+ Total return is not annualized for periods less than one year. The total returns would have been lower
if certain fees had not been waived by the investment advisor or if fees had not been reduced by credits
allowed by custodian.
(a) Ratio of operating expenses to average net assets includes expenses paid indirectly beginning in fiscal
year 1995.
(b) Fiscal year end changed to October 31. Prior to this, the fiscal year end was June 30.
</TABLE>
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
MONEY MARKET FUND
OCTOBER 31, 1998
PRINCIPAL
AMOUNT VALUE
--------- -----
COMMERCIAL PAPER - 31.6%
American Express Corporation:
$ 7,500,000 5.270% due 11/13/1998+++ ....................... $ 7,486,825
7,500,000 5.210% due 12/09/1998+++ ....................... 7,458,754
7,500,000 Chrysler Financial Corporation,
5.000% due 11/30/1998+++ ....................... 7,469,792
7,500,000 Deere & Company,
5.250% due 11/05/1998+++ ....................... 7,495,625
Ford Motor Credit Company:
8,500,000 5.230% due 11/17/1998+++ ....................... 8,480,242
8,500,000 5.230% due 12/14/1998+++ ....................... 8,446,901
General Electric Capital Corporation:
10,000,000 5.060% due 11/09/1998+++ ....................... 9,988,756
8,500,000 5.250% due 11/13/1998+++ ....................... 8,485,125
10,000,000 Goldman Sachs & Company,
5.150% due 11/09/1998+++ ....................... 9,988,556
7,500,000 Household Finance Corporation,
5.250% due 11/25/1998+++ ....................... 7,473,750
7,000,000 IBM Corporation,
5.270% due 11/18/1998+++ ....................... 6,982,580
7,500,000 IBM Credit Corporation,
5.050% due 11/09/1998+++ ....................... 7,491,583
7,500,000 International Lease Finance Corporation,
5.230% due 11/19/1998+++ ....................... 7,480,388
2,950,000 National Rural Utilities Cooperative
Finance Corporation,
5.000% due 01/15/1999+++ ....................... 2,919,271
7,500,000 PNC Bank, N.A.,
5.230% due 11/12/1998+++ ....................... 7,488,014
7,500,000 Sears Roebuck Acceptance Corporation,
5.210% due 12/10/1998+++ ....................... 7,457,669
7,500,000 Southern Company,
5.700% due 11/02/1998+++ ....................... 7,498,813
Weyerhauser Company:
10,000,000 5.250% due 11/09/1998+++ ....................... 9,988,333
8,500,000 5.270% due 11/13/1998+++ ....................... 8,485,068
7,500,000 5.050% due 11/23/1998+++ ....................... 7,476,854
10,000,000 Xerox Credit Corporation,
5.150% due 12/11/1998+++ ....................... 9,942,778
------------
Total Commercial Paper
(Cost $165,985,677) ............................ 165,985,677
------------
COMMERCIAL PAPER (YANKEE) - 12.4%
American Honda Finance Corporation:
7,500,000 5.310% due 11/19/1998+++ ....................... 7,480,088
7,500,000 5.250% due 11/20/1998+++ ....................... 7,479,219
7,000,000 5.220% due 01/29/1999+++ ....................... 6,909,665
7,500,000 Pemex Capital, Inc.,
5.220% due 11/17/1998+++ ....................... 7,482,600
Statoil (Den Norske Stats Oljeselskap A/S):
5,000,000 5.270% due 11/04/1998+++ ....................... 4,997,804
7,050,000 5.480% due 11/06/1998+++ ............... ....... 7,044,634
Toyota Motor Credit Corporation:
8,000,000 5.100% due 11/25/1998+++ ....................... 7,972,800
8,500,000 5.120% due 01/22/1999+++ ....................... 8,403,025
7,500,000 5.170% due 01/22/1999+++ ....................... 7,409,525
------------
Total Commercial Paper (Yankee)
(Cost $65,179,360) ............................. 65,179,360
------------
MEDIUM TERM NOTES - 13.9%
3,000,000 Bank of America,
5.630% due 02/26/1999 .......................... 2,999,629
Bear Stearns Companies Inc.:
5,000,000 5.345% due 04/30/1999++ ........................ 5,000,000
7,500,000 5.628% due 08/31/1999++ ........................ 7,500,000
1,000,000 Caterpillar Financial Services Corporation,
6.770% due 03/15/1999 .......................... 1,004,055
7,000,000 Citigroup Inc.,
5.480% due 09/17/1999++ ........................ 7,000,000
3,250,000 General Electric Capital Corporation,
5.500% due 01/19/1999 .......................... 3,248,547
5,000,000 IBM Corporation,
6.150% due 12/11/1998 .......................... 5,003,179
International Lease Finance Corporation:
5,000,000 6.600% due 07/06/1999 .......................... 5,027,836
4,920,000 5.960% due 07/07/1999 .......................... 4,928,483
Merrill Lynch & Company, Inc., Series B:
1,350,000 6.650% due 01/15/1999 .......................... 1,352,475
1,000,000 5.565% due 02/16/1999 .......................... 999,388
5,000,000 5.790% due 04/28/1999 .......................... 5,000,000
5,000,000 5.870% due 05/04/1999 .......................... 5,002,831
5,000,000 5.608% due 08/13/1999++ ........................ 5,000,000
Morgan Stanley, Dean Witter, Discover:
5,000,000 5.400% due 01/20/1999++ ........................ 4,998,212
2,000,000 5.523% due 04/05/1999++ ........................ 2,003,092
5,000,000 NationsBank Corporation,
7.230% due 05/02/1999 .......................... 5,036,838
2,115,000 Toyota Motor Credit Corporation,
5.000% due 03/08/1999 .......................... 2,112,101
------------
Total Medium Term Notes
(Cost $73,216,666) ............................. 73,216,666
------------
CERTIFICATES OF DEPOSIT (YANKEE) - 5.9%
2,000,000 Bank of Nova Scotia,
5.675% due 03/04/1999 .......................... 1,999,773
7,000,000 Creditanstalt Bankverien, NY,
5.890% due 11/17/1998 .......................... 7,000,428
7,000,000 Credit Suisse First Boston, NY,
5.740% due 01/07/1999 .......................... 7,000,000
5,000,000 Societe Generale, NY,
5.665% due 03/23/1999 .......................... 4,998,737
5,000,000 Societe Generale, NY,
5.290% due 05/07/1999++ ........................ 4,998,604
5,000,000 Swiss Bank Corporation, NY,
5.740% due 06/11/1999 .......................... 4,999,709
------------
Total Certificates of Deposit (Yankee)
(Cost $30,997,251) ............................. 30,997,251
------------
CERTIFICATE OF DEPOSIT - 0.4% (Cost $2,000,371)
2,000,000 Bankers Trust Company,
6.010% due 12/10/1998 .......................... 2,000,371
------------
CORPORATE BONDS and NOTES - 12.6%
2,900,000 American Express Credit Corporation,
Sr. Note,
7.375% due 02/01/1999 .......................... 2,910,965
1,000,000 Bank of New York, Note,
5.640% due 03/26/1999 .......................... 1,001,741
3,000,000 Bank of New York, Note,
5.750% due 05/14/1999 .......................... 3,011,399
1,000,000 Bear Stearns Company, Inc., Sr. Note,
7.625% due 09/15/1999 .......................... 1,016,423
3,500,000 Chase Manhattan Corporation, Sub. Note,
8.000% due 06/15/1999 .......................... 3,547,886
2,600,000 Chemical New York Corporation, Deb.,
9.750% due 06/15/1999 .......................... 2,662,920
3,500,000 DBSI First Mortgage 1998, Note,
5.550% due 07/01/2023++ ........................ 3,500,000
Everett Clinic, P.S., Note:
5,800,000 5.280% due 12/01/2018++ ........................ 5,800,000
4,000,000 5.280% due 12/01/2021++ ........................ 4,000,000
1,000,000 First Chicago Corporation, Sub. Note,
9.875% due 07/01/1999 .......................... 1,031,443
2,000,000 First Interstate Bancorp, Sr. Sub. Note,
8.625% due 04/01/1999 .......................... 2,023,249
2,000,000 Ford Motor Credit Corporation, Note,
7.250% due 05/15/1999 .......................... 2,015,512
7,000,000 International Lease Finance Corporation, Note,
7.500% due 03/01/1999 .......................... 7,040,439
5,000,000 Keybank N.A., Sr. Note,
5.193% due 07/23/1999++ ........................ 5,001,790
5,000,000 Swiss Bank Corporation, Note,
5.825% due 04/29/1999 .......................... 4,999,391
6,500,000 U.S. Bank N.A., Note,
5.031% due 09/15/1999++ ........................ 6,501,755
2,000,000 Wachovia Bank N.A., Note,
5.600% due 03/08/1999 .......................... 2,003,967
8,000,000 Wenatchee Valley Clinic, Bond,
5.200% due 11/12/2017++ ........................ 8,000,000
------------
Total Corporate Bonds & Notes
(Cost $66,068,880) ............................. 66,068,880
------------
MUNICIPAL BONDS - 6.4%
10,000,000 California Housing Finance Agency, Home
Mortgage, Series M, Taxable Bonds,
5.270% due 08/01/2019+ ......................... 10,000,000
16,000,000 Santa Rosa California, Wastewater Revenue,
Series A, Taxable Bonds,
5.250% due 09/01/2028+ ......................... 16,000,000
5,000,000 Texas State, Veterans Land Board,
Taxable Bonds,
5.700% due 12/01/1998 .......................... 4,999,888
2,480,000 Washington State Housing Finance Community,
Multi-family Revenue, Boardwalk Apartments,
Series 1998B, Taxable Bonds,
5.300% due 09/01/2028+ ......................... 2,480,000
------------
Total Municipal Bonds (Cost $33,479,888) ......... 33,479,888
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 17.5%
Federal Farm Credit Bank (FFCB) - 4.3%
5,000,000 5.500% due 11/02/1998 ............................ 5,000,000
5,000,000 5.320% due 01/04/1999 ............................ 5,000,000
7,500,000 4.850% due 02/01/1999 ............................ 7,500,000
5,000,000 5.500% due 02/01/1999 ............................ 5,000,000
------------
Total FFCBs (Cost $22,500,000) ................... 22,500,000
------------
Federal Home Loan Bank (FHLB) - 5.2%
2,500,000 5.625% due 03/02/1999 ............................ 2,500,000
5,000,000 5.605% due 03/12/1999+++ ......................... 4,999,776
7,500,000 5.125% due 10/13/1999 ............................ 7,500,000
7,500,000 5.000% due 10/27/1999 ............................ 7,500,000
5,000,000 5.030% due 10/29/1999 ............................ 5,000,000
------------
Total FHLBs (Cost $27,499,776) ................... 27,499,776
------------
Federal National Mortgage Association (FNMA) - 3.2%
7,500,000 5.530% due 03/11/1999+++ ......................... 7,496,843
7,500,000 5.530% due 03/16/1999 ............................ 7,510,603
2,000,000 4.170% due 11/04/1998++ .......................... 1,999,273
------------
Total FNMAs (Cost $17,006,719) ................... 17,006,719
------------
Student Loan Mortgage Association (SLMA) - 4.8%
5,000,000 4.500% due 08/02/1999 ............................ 4,959,179
7,500,000 5.510% due 09/16/1999 ............................ 7,500,000
5,000,000 5.125% due 10/06/1999 ............................ 5,000,000
7,500,000 4.900% due 10/27/1999 ............................ 7,500,000
------------
Total SLMAs (Cost $24,959,179) ................... 24,959,179
------------
Total U.S. Government Agency Obligations
(Cost $91,965,674) ............................. 91,965,674
------------
REPURCHASE AGREEMENT - 0.1%
(Cost $367,000)
367,000 Agreement with CS First Boston,
5.300% dated 10/30/1998, to be repurchased
at $367,162 on 11/02/1998, collateralized by
$374,340 U.S. Treasury Note, 5.875% due
01/31/1999 (Market Value $374,680) ............. 367,000
------------
TOTAL INVESTMENTS (Cost $529,260,767*) 100.8% 529,260,767
OTHER ASSETS AND LIABILITIES (Net) ................ (0.8) (4,173,925)
----- ------------
NET ASSETS ........................................ 100.0% $525,086,842
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate securities payable upon not more than seven calendar days'
notice. The interest rate shown reflects the rate currently in effect.
++ Floating rate security whose interest rate is reset periodically based on
an index.
+++ Rate represents discount rate at the date of purchase (unaudited).
See Notes to Financial Statements.
<PAGE>
<TABLE>
PORTFOLIO of INVESTMENTS
TAX-EXEMPT MONEY MARKET FUND
OCTOBER 31, 1998
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- -----
STATE AND MUNICIPAL SECURITIES - 101.7%
<C> <S> <C>
ALABAMA - 5.4%
$500,000 Alabama State Special Care Authority Facilities Financing,
(Montgomery Hospital Depreciable Assets), Series 1985,
3.150% due 04/01/2015+ .................................. $ 500,000
400,000 Athens, Industrial Development Board, (Coilplus, Inc.
Project), Series 1984,
4.100% due 09/19/1999+ .................................. 400,000
500,000 Daphne-Villa Mercy, Special Care Authority Facilities
Financing, (Mercy Medical Project),
3.150% due 12/01/2027+ .................................. 500,000
-----------
1,400,000
-----------
ALASKA - 0.4%
100,000 Anchorage, Unlimited General Obligation Bonds, Series B,
4.400% due 08/01/1999 ................................... 100,474
-----------
ARIZONA - 1.2%
300,000 Arizona State Health Facilities Authority Revenue, (Pooled
Loan Program), Series 1985,
3.200% due 10/01/2015+ .................................. 300,000
-----------
CALIFORNIA - 0.8%
100,000 Los Angeles Regional Airport, (American Airlines/LA
International), Series C,
3.650% due 12/01/2024+ .................................. 100,000
100,000 Los Angeles Regional Airport, (American Airlines/LA
International), Series E,
3.650% due 12/01/2024+ .................................. 100,000
-----------
200,000
-----------
DISTRICT OF COLUMBIA - 2.3%
600,000 District of Columbia Revenue Bonds, Georgetown University,
Series B,
3.750% due 04/01/1999 ................................... 600,000
-----------
GEORGIA - 2.2%
300,000 Georgia State Unlimited General Obligation Bonds, Series C,
7.000% due 05/01/1999 ................................... 306,000
250,000 Georgia State Unlimited General Obligation Bonds, Series D,
6.500% due 08/01/1999 ................................... 255,488
-----------
561,488
-----------
HAWAII - 0.4%
100,000 Honolulu, Unlimited General Obligation Bonds, Series B,
4.600% due 10/01/1999 ................................... 101,114
-----------
ILLINOIS - 9.0%
100,000 Carbondale, Unlimited General Obligation Bonds,
5.900% due 05/01/1999 ................................... 100,957
400,000 Chicago O'Hare International Airport General Airport Second
Lein Revenue Bonds, 1984 Series A,
3.150% due 01/01/2015+ .................................. 400,000
500,000 Chicago O'Hare International Airport General Airport Second
Lein Revenue Bonds, 1984 Series B,
3.150% due 01/01/2015+ .................................. 500,000
400,000 Illinois Health Facilities Authority, (Bensenville Home
Society),
3.100% due 02/15/2019+ .................................. 400,000
300,000 Illinois Health Facilities Authority, (Palos Community
Hospital), Series B,
3.100% due 12/01/2015+ .................................. 300,000
500,000 Illinois State Health Facilities Authority, (Hospital
Sisters Services), Series 1985E, 3.200% due 12/01/2015+ . 500,000
100,000 Illinois State Unlimited General Obligation Bonds,
4.300% due 07/01/1999 ................................... 100,292
-----------
2,301,249
-----------
INDIANA - 4.8%
500,000 Indiana Health Facilities Financing Authority Revenue,
(Capital Access Designated Pool), 3.200% due 08/01/2006+ 500,000
300,000 Indianapolis, Multi-family Revenue Bonds, (Canal Square
Project),
3.200% due 12/01/2015+ .................................. 300,000
410,000 Lafayetten, Redevelopment Authority, Economic Development
Lease Rental, (Pre-refunded @ 102),
7.100% due 02/01/2009 ................................... 421,550
-----------
1,221,550
-----------
KANSAS - 1.2%
300,000 Shawnee, Industrial Revenue Bonds, (Shawnee Village
Associates LP),
3.150% due 12/01/2009+ .................................. 300,000
-----------
LOUISIANA - 2.8%
500,000 Ascension (Parish of), Pollution Control Revenue Bonds,
(Borden Inc. Project), 3.150% due 12/01/2009+ ........... 500,000
210,000 State Colleges & Universities, Southeastern Louisiana
University Revenue Bonds, 3.750% due 06/01/1999 ......... 210,000
-----------
710,000
-----------
MASSACHUSETTS - 0.4%
100,000 Massachusetts State Housing, Residential Development, FNMA
Collateral, Series A, 5.600% due 11/15/1998 ............. 100,067
-----------
MARYLAND - 1.6%
250,000 Howard County, Metropolitan District Bonds, 1989 Series A,
(Pre-refunded @ 101), 7.400% due 02/15/2009 ............. 253,879
150,000 Washington Suburban Sanitary District, General
Construction, (Pre-refunded @ 102),
7.000% due 12/01/1999 ................................... 153,395
-----------
407,274
-----------
MICHIGAN - 6.1%
125,000 Marysville, Public School District, Unlimited General
Obligation Bonds,
3.700% due 05/01/1999 ................................... 125,000
300,000 Michigan State Hospital Finance Authority, (Equipment Loan
Program Bonds),
3.200% due 12/01/2023+ .................................. 300,000
300,000 Michigan State Hospital Finance Authority, (Equipment Loan
Program Bonds), Series A,
3.200% due 12/01/2023+ .................................. 300,000
300,000 Michigan State Job Development Authority Revenue, (East
Lansing Residence),
3.400% due 12/01/2014+ .................................. 300,000
200,000 Michigan State Job Development Authority Revenue, (Kentwood
Residence),
3.400% due 11/01/2014+ .................................. 200,000
345,000 Northview, Public School District, Unlimited General
Obligation Bonds,
3.600% due 05/01/1999 ................................... 345,000
-----------
1,570,000
-----------
MINNESOTA - 0.8%
200,000 Beltrami County, Environmental Control Revenue, (Northwood
Panelboard Company),
3.700% due 12/01/2021+ .................................. 200,000
-----------
MISSOURI - 0.8%
200,000 Missouri Environmental Improvement and Energy Resources
Authority, Pollution Control Revenue Bonds, (Monsanto
Company),
3.150% due 06/01/2023+ .................................. 200,000
-----------
MONTANA - 1.4%
375,000 Lewis & Clark Counties, Elementary School District No.001
(Helena), Unlimited General Obligation Bonds,
3.500% due 06/01/1999 ................................... 375,000
-----------
NEVADA - 0.8%
200,000 Nevada State Limited General Obligation Bonds,
7.125% due 05/01/1999 ................................... 203,355
-----------
NEW JERSEY - 0.9%
144,000 Elizabeth, Sewer Utility, Unlimited General Obligation
Bonds,
4.900% due 07/15/1999 ................................... 145,179
100,000 New Jersey State Transportation Trust Fund, Series A,
5.000% due 12/15/1998 ................................... 100,147
-----------
245,326
-----------
NEW YORK - 5.1%
300,000 Jefferson County, Industrial Development Agency, Watertown-
Carthage TV,
3.550% due 12/01/2012+ .................................. 300,000
800,000 Metropolitan Tranportation Authority,
3.200% due 12/10/1998 ................................... 800,000
200,000 New York, Series B, Subseries B4,
3.700% due 08/15/2023+ .................................. 200,000
-----------
1,300,000
-----------
NORTH CAROLINA - 1.0%
250,000 North Carolina State Unlimited General Obligation Bonds,
5.500% due 08/01/1999 ................................... 253,657
-----------
North Dakota - 2.9%
500,000 Burleigh County, Retirement Facility Revenue Bonds,
(Missouri Slope Lutheran Care Center),
7.250% due 06/01/2012 ................................... 510,409
125,000 Grand Forks, Sales Tax Revenue Bonds, Aurora Project,
Series A,
3.900% due 12/15/1998 ................................... 125,015
100,000 West Fargo, Unlimited General Obligation Bonds, Series B,
3.900% due 05/01/1999 ................................... 100,243
-----------
735,667
-----------
OHIO - 2.5%
145,000 Little Miami, Local School District, Unlimited Tax General
Obligation Bonds,
3.600% due 12/01/1998 ................................... 145,000
505,000 Toledo, Limited Tax General Obligation Bonds, Various
Purpose Improvement Bonds, Series 1997,
3.900% due 12/01/1998 ................................... 505,034
-----------
650,034
-----------
PENNSYLVANIA - 1.9%
500,000 East Stroudsburg, Area School District, Unlimited General
Obligation Bonds, 4.000% due 11/15/1998 ................. 500,058
-----------
RHODE ISLAND - 1.9%
500,000 Rhode Island State Public Bulding Authority State Projects
Revenue, Series A,
4.375% due 02/01/1999 ................................... 501,229
-----------
TENNESSEE - 4.3%
600,000 Metro Government, Nashville/Davidson County, Industrial
Development Multi-family Housing Revenue Bonds,
(Chimneytop II),
3.150% due 09/01/2006+ .................................. 600,000
200,000 Metropolitan Nashville Airport Revenue Authority, Special
Facilities Revenue Bonds, (American Airlines Project),
Series A, 3.650% due 10/01/2012+ ........................ 200,000
300,000 Sullivan County, Industrial Development Board, Pollution
Control Revenue Bonds, (Mead Corporation Project),
3.600% due 10/01/2016+ .................................. 300,000
-----------
1,100,000
-----------
TEXAS - 15.9%
500,000 Austin County, Industrial Development Corporation (Justin
Industries, Inc. Project), 3.100% due 12/01/2014+ ....... 500,000
100,000 Bell County, Health Facility Development Corporation, (Cook
Childrens Medical Center),
3.700% due 12/01/1998 ................................... 100,000
500,000 Brazos River, Pollution Control Revenue Refunding Bonds,
(Monsanto Company Project),
3.250% due 11/01/2000+,++ ............................... 500,000
375,000 Brenham, Limited General Obligation Bonds,
5.500% due 08/15/1999 ................................... 380,597
540,000 Conroe, Independent School District, Unlimited General
Obligation Bonds, 4.000% due 02/15/1999 ................. 540,934
335,000 Dallas County, Community College District Revenue Bonds,
4.500% due 02/15/1999 ................................... 335,703
100,000 Grapevine, Industrial Development Corporation Revenue
Bonds, (American Airlines), Series B2,
3.650% due 12/01/2024+ .................................. 100,000
300,000 Harris County, Health Facility (Sisters of Charity),
Series C,
3.200% due 07/01/2023+ .................................. 300,000
190,000 Judson, Independent School District, Unlimited Tax General
Obligation Bonds,
3.800% due 02/01/1999 ................................... 190,000
800,000 Lower Neches Valley, Industrial Development Corporation,
Pollution Control Revenue Bonds, (Neches River Treatment
Corporation Project), Series 1994A, (Guaranteed By Mobil
Corporation),
3.150% due 02/01/2004+,++ ............................... 800,000
125,000 Mont Belvieu, Limited General Obligation Bonds,
3.800% due 02/15/1999 ................................... 125,130
195,000 Needville, Independent School District, Unlimited General
Obligation Bonds, 4.500% due 08/15/1999 ................. 196,415
-----------
4,068,779
-----------
UTAH - 1.9%
250,000 Ogden City, Unlimited General Obligation Bonds,
4.200% due 12/15/1998 ................................... 250,118
130,000 Utah Assisted Municipal Power Systems Revenue, (San Juan
Project),
4.000% due 06/01/1999 ................................... 130,216
100,000 Utah State Board, Regents Revenue Bonds, (Dixie College),
3.700% due 05/01/1999 ................................... 100,000
-----------
480,334
-----------
WASHINGTON - 18.3%
250,000 Clark County, School District No. 037, Unlimited General
Obligation Bonds, 4.100% due 06/01/1999 ................. 251,135
525,000 Franklin County, Public Utility District
No. 001, Electric Revenue Bonds,
4.000% due 09/01/1999 ................................... 526,700
500,000 King & Snohomish Counties, School District No. 417
(Northshore), Unlimited General Obligation Bonds,
3.700% due 12/15/1998 ................................... 500,000
115,000 Mason County, Public Utility District No. 003, Electric
Revenue Bonds,
3.750% due 12/01/1998 ................................... 115,000
600,000 Richland, Golf Enterprise Revenue Bonds, 1996,
3.150% due 12/01/2021+ .................................. 600,000
965,000 Seattle Housing Authority Low Income Housing Assistance
Revenue, (Bayview Manor Project), Series B,
3.150% due 05/01/2019+ .................................. 965,000
300,000 Seattle, Unlimited Tax, General Obligation Refunding Bonds,
Series A,
4.500% due 03/01/1999 ................................... 300,567
400,000 Seattle, Unlimited Tax, General Obligation Refunding Bonds,
Series C,
4.000% due 08/01/1999 ................................... 401,156
125,000 Seattle, Water System Revenue Bonds,
4.600% 06/01/1999 ....................................... 125,602
510,000 Snohomish County, Limited General Obligation Bonds,
3.750% due 12/01/1998 ................................... 510,000
250,000 Spokane County, Rural Library District, Unlimited General
Obligation Bonds, 4.050% due 12/01/1998 ................. 250,077
160,000 Washington State Unlimited General Obligation Bonds,
7.400% due 12/01/2000 ................................... 160,473
-----------
4,705,710
-----------
WISCONSIN - 2.7%
500,000 West Allis, Unlimited General Obligation Bonds, Series C,
4.200% due 06/01/1999 ................................... 501,465
200,000 Wisconsin State, Health Facilities Authority, (Hospital
Sisters Obligation), Series G,
3.200% due 12/01/2001+ .................................. 200,000
-----------
701,465
-----------
Total State and Municipal Securities
(Cost $26,093,830) ...................................... 26,093,830
-----------
Shares
------
INVESTMENT COMPANY SECURITY - 0.4%
(Cost $107,625)
107,625 Dreyfus Tax Exempt Cash Management Fund ................... 107,625
-----------
TOTAL INVESTMENTS (Cost $26,201,455*) ........................... 102.1 % 26,201,455
OTHER ASSETS AND LIABILITIES (Net) .............................. (2.1) (548,344)
----- -----------
NET ASSETS ...................................................... 100.0 % $25,653,111
===== ===========
- ----------------
* Aggregate cost for federal tax purposes.
+ Floating rate security. The interest rate shown reflects the rate currently in effect.
++ Obligations of various corporations and are not supported by other third party credit
agreements.
- -----------------------------------------------------------------------------------------
GLOSSARY
FNMA -- Federal National Mortgage Association
- -----------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
CALIFORNIA MONEY FUND
OCTOBER 31, 1998
PRINCIPAL
AMOUNT VALUE
- --------- -----
MUNICIPAL BONDS AND NOTES - 101.2%
CALIFORNIA - 101.2%
Alameda County, IDR:
$1,000,000 Heat and Control Inc. Project, Series 1995A,
2.900% due 11/01/2025+ ............................ $ 1,000,000
500,000 JMS Family Partnership, Series 1995A,
2.900% due 10/01/2025+ ............................ 500,000
200,000 Big Bear Lake, Industrial Revenue, Southwest Gas
Corporation Project, Series A,
2.500% due 12/01/2028+ ............................ 200,000
California Health Facilities Financing Authority Revenue:
1,500,000 Pooled Loan Program, Series B,
2.350% due 10/01/2010+ ............................ 1,500,000
1,200,000 Scripps Health, Series A,
2.750% due 10/01/2022+ ............................ 1,200,000
300,000 Scripps Health, Series B,
2.750% due 10/01/2022+ ............................ 300,000
360,000 Scripps Health, Memorial Hospital, Series B,
2.750% due 12/01/2015+ ............................ 360,000
California Pollution Control Financing Authority:
700,000 Southern California Edison, Series A,
3.650% due 02/28/ 2008+ ........................... 700,000
1,500,000 Pacific Gas & Electric, Series 1996A,
2.550% due 12/01/2016+ ............................ 1,500,000
675,000 Solid Waste Disposal Revenue, Credit & Revenue Income
Project, Series A,
2.600% due 10/01/2010+ ............................ 675,000
800,000 California Public Financing Authority, Tax Allocation
Revenue, Eureka Redevelopment Projects,
(Pre-refunded to 11/01/1998 @ 102),
7.400% due 11/01/2012+ ............................ 818,297
1,500,000 California State Economic Development Authority, IDR,
Tri-Valley Growers, Series 1995F,
2.800% due 12/01/2010+ ............................ 1,500,000
200,000 California Statewide Communities Development
Authority, COP,
3.450% due 04/01/2028+ ............................ 200,000
800,000 California Transit Finance Authority,
2.850% due 10/01/2027+ ............................ 800,000
725,000 Central Contra Costa County, Sanitary District Revenue,
3.500% due 09/01/1999 ............................. 728,400
900,000 Chula Vista, Charter City Revenue, Home Depot Inc.
Project,
2.600% due 12/01/2010+ ............................ 900,000
500,000 Elk Grove, Unified School District, TRAN,
4.500% due 06/30/ 1999 ............................ 502,867
230,000 Folsom Cordova, Unified School District, COP, 1998
Financing Project,
4.000% due 03/01/1999 ............................. 230,106
780,000 Irvine, Improvement Board Act of 1915, Assessment
District 89-10,
3.550% due 09/02/2015+ ............................ 780,000
1,200,000 Irvine Ranch, California Water District, COP,
Capital Improvement Project,
3.500% due 08/01/2016 ............................. 1,200,000
2,290,000 Kern County, California Board of Education, TRAN,
4.250% due 06/30/1999 ............................. 2,299,697
100,000 Lancaster, California Redevelopment Agency, MFHR,
Westwood Park Apartments, Series 1985K,
2.650% due 12/01/2007 ............................. 100,000
1,000,000 Livermore, MFHR, Portola Meadows Apartments,
Series 1989A,
2.650% due 05/01/2019+ ............................ 1,000,000
200,000 Los Angeles, Community College District, COP, Capital
Improvement Project, Series A, (Pre-refunded to
08/15/1999 @ 102),
7.250% due 08/15/2004 ............................. 209,554
Los Angeles, Regional Airports Improvement Corporation,
Lease Revenue:
American Airlines Inc., Los Angeles International:
600,000 Series 1984E,
3.650% due 12/01/2024+ ............................ 600,000
300,000 Series 1984F,
3.650% due 12/01/2024+ ............................ 300,000
800,000 Los Angeles International - Two Corporation, Sublease,
3.650% due 12/01/2025+ ............................ 800,000
100,000 Los Angeles County, COP,
7.000% due 06/01/2004 ............................. 103,864
400,000 Los Angeles County, Transportation Commission Sales
Tax Revenue, Series 1992A,
2.400% due 07/01/2012+ ............................ 400,000
700,000 Los Angeles County, Pension Obligation, Refunding
Revenue, Series A,
2.400% due 06/30/2007+ ............................ 700,000
700,000 Los Angeles County, Unified School District, COP,
Belmont Learning Complex, Series 1997A,
2.750% due 12/01/2017+ ............................ 700,000
100,000 Mesa, Water District, COP,
4.000% due 03/15/1999+ ............................ 100,113
100,000 Ontario, California Redevelopment Agency, MFHR,
Seasons at Gateway, Subordinate Series 1996B,
2.950% due 12/01/2026+ ............................ 100,000
1,000,000 Orange County, Apartment Development Revenue, Wood
Canyon Villas,
2.650% due 12/01/2021+ ............................ 1,000,000
500,000 Orange County, COP, Florence Crittendoc Services,
2.750% due 03/01/2016+ ............................ 500,000
1,500,000 Orange County, Fire Authority, TRAN,
4.200% due 07/13/1999 ............................. 1,506,039
850,000 Orange County, Local Transportation Authority, Sales
Tax Revenue,
5.000% due 02/15/1999 ............................. 853,136
100,000 Orange County, Water Districts, COP, Series B,
3.450% due 08/15/2015+ ............................ 100,000
1,000,000 Rancho Mirage, Joint Power Financing Authority, COP,
Eisenhower Medical Center, Series 1997B,
2.750% due 07/01/2022+ ............................ 1,000,000
495,000 Redwood City, Public Financing Authority, Lease
Revenue, Capital Facilities Project,
4.000% due 07/15/1999 ............................. 496,011
964,000 Riverside County, Public Facilities Authority, COP,
Series B,
2.750% due 12/01/2015+ ............................ 964,000
175,000 Roseville California Special Tax, Community Facilities
District 1, Northwest,
4.000% due 09/01/1999 ............................. 176,347
110,000 Sacramento, Redevelopment Agency, Tax Allocation,
Merged Downtown Redevelopment Project, Series A,
4.000% due 11/01/1998+ ............................ 110,000
300,000 San Bernardino County, IDR, Master Holco Inc.,
2.900% due 12/01/2006+ ............................ 300,000
San Bernardino County, MFHR, Western Properties
Projects:
200,000 Series I,
2.600% due 02/01/2005 ............................. 200,000
400,000 Series V,
2.600% due 08/01/2005 ............................. 400,000
800,000 San Diego, Multi-Family Mortgage Revenue,
2.600% due 08/01/ 2014+ ........................... 800,000
1,400,000 San Jose, Redevelopment Agency Revenue, Merged Area
Redevelopment Project, Series B,
2.550% due 07/01/2026+ ............................ 1,400,000
270,000 San Juan, United School District, COP,
3.650% due 08/01/1999 ............................. 270,000
Santa Clara, Electric Revenue:
600,000 Series A,
2.450% due 07/01/2010+ ............................ 600,000
100,000 Series B,
2.450% due 07/01/2010+ ............................ 100,000
700,000 Series C,
2.450% due 07/01/2010+ ............................ 700,000
205,000 Santa Clara County, Financing Authority Lease Revenue,
Multiple Facilities Projects, Series A,
3.375% due 05/15/1999+ ............................ 205,000
600,000 Santa Clara County, TRAN,
4.500% due 10/01/1999 ............................. 608,091
100,000 Southern California Public Power Authority, Palo
Verde Project, Series C,
2.400% due 07/01/2017+ ............................ 100,000
1,900,000 Southern Transmission Project,
2.400% due 07/01/2019+ ............................ 1,900,000
395,000 West Covina, Redevelopment Agency Lease Revenue,
Lakes Public Parking Project, 2.650% due 08/01/2018+ 395,000
-----------
Total Municipal Bonds and Notes
(Cost $37,691,522) ................................ 37,691,522
-----------
Shares
------
INVESTMENT COMPANY SECURITY - 0.4%
(Cost $132,164)
132,164 Dreyfus Basic California Municipal Money Market Fund. 132,164
-----------
TOTAL INVESTMENTS (Cost $37,823,686*) ..................... 101.6% 37,823,686
OTHER ASSETS AND LIABILITIES (Net) ........................ (1.6) (596,263)
----- -----------
NET ASSETS ................................................ 100.0% $37,227,423
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate security that is payable on demand or upon a five business
days' notice, and secured by a letter of credit, liquidity agreement or
letter of credit, liquidity agreement or other credit support. The interest
rates shown reflects the rate currently in effect.
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
COP -- Certificate of Participation
IDR -- Industrial Development Revenue
MFHR -- Multi-family Housing Revenue
TRAN -- Tax and Revenue Anticipation Note
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
NOTES to FINANCIAL statements
WM GROUP OF FUNDS
1. ORGANIZATION AND BUSINESS
WM Trust I ("Trust I") was organized under the laws of the Commonwealth of
Massachusetts on September 19, 1997 as a business entity commonly known as a
"Massachusetts business trust." Trust I is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. WM Trust II ("Trust II") was organized as a Massachusetts
business trust under the laws of the Commonwealth of Massachusetts on February
22, 1989 and is registered under the 1940 Act, as an open-end management
investment company. Trust I and Trust II (together the "Trusts") consist of 18
funds as follows:
<TABLE>
<S> <C>
TRUST I TRUST II
EQUITY FUNDS EQUITY FUNDS
Bond & Stock Fund Growth Fund
Growth & Income Fund Emerging Growth Fund
Northwest Fund International Growth Fund
FIXED INCOME FUNDS FIXED INCOME FUNDS
Tax-Exempt Bond Fund Short Term High Quality Bond Fund
U.S. Government Securities Fund Target Maturity 2002 Fund
Income Fund
High Yield Fund MUNICIPAL FUNDS
California Municipal Fund
MONEY MARKET FUNDS California Insured Intermediate Municipal Fund
Money Market Fund Florida Insured Municipal Fund
Tax-Exempt Money Market Fund
MONEY MARKET FUND
California Money Fund
</TABLE>
Information presented in these financial statements pertains only to the Money
Market Funds, hereafter referred to as the "Funds." The financial statements
for the Equity Funds, Fixed Income Funds and the Municipal Funds are presented
in a separate report.
WM Advisors, Inc. (the "Advisor" or "WM Advisors") (formerly Composite
Research & Management Co.), a wholly-owned subsidiary of Washington Mutual,
Inc. ("Washington Mutual"), a publicly owned financial services company,
serves as investment advisor to the Trusts. Sierra Investment Advisors
Corporation ("Sierra Advisors") served as investment advisor to Trust II prior
to March 23, 1998. Sierra Advisors became an indirect wholly-owned subsidiary
of Washington Mutual as a result of the merger between its parent, Great
Western Financial Corporation ("GWFC"), and Washington Mutual.
The Money Market Fund and the California Money Fund each offer four classes of
shares: Class A shares, Class B shares, Class S shares and Class I shares. The
Tax-Exempt Money Market Fund offers Class A and Class B shares. Class A shares
of the Funds are not subject to an initial or contingent deferred sales charge
("CDSC"). Certain Class A shares purchased by exchange from another Fund
within the Trusts may be subject to a contingent deferred sales charge if
redeemed within two years of purchase. Class B shares and Class S shares are
not subject to an initial sales charge. Class B shares and Class S shares are
generally subject to a CDSC if redeemed within five years of purchase. Class I
shares are not available for direct purchase by investors. Class I shares are
not subject to an initial sales charge or CDSC.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following is a summary
of significant accounting policies consistently followed by the Funds in the
preparation of their financial statements.
PORTFOLIO VALUATION:
Securities are valued on the basis of amortized cost, which approximates market
value. Amortized cost valuation involves initially valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, as long as the effect of fluctuating interest rates on the market
value of the instrument is not significant. Restricted securities and certain
other assets are valued by the investment advisor under the supervision of the
Board of Trustees.
REPURCHASE AGREEMENTS:
Each Fund may engage in repurchase agreement transactions. Under the terms of
a typical repurchase agreement, the Fund, through its custodian, takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase. The Fund is then obligated to resell the obligation at
an agreed upon price and time, thereby determining the yield during the Fund's
holding period. The value of the collateral is at all times at least equal to
the total amount of the repurchase obligation, including interest. In the
event of counterparty default, the Fund would seek to use the collateral to
offset losses incurred. There is potential loss to the Fund in the event that
the Fund is delayed or prevented from exercising its right to dispose of the
collateral securities, including the risk of a possible decline in the value
of the underlying securities during the period while the Fund seeks to assert
its rights. WM Advisors, acting under the supervision of the Board of
Trustees, reviews the value of the collateral and the credit worthiness of
those banks and dealers with whom each Fund enters into repurchase agreements.
ILLIQUID INVESTMENTS:
Up to 10% of the net assets of the Funds, may be invested in securities that
are not readily marketable, including:
(1) repurchase agreements with maturities greater than seven calendar days;
(2) time deposits maturing in more than seven calendar days; (3) 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 10% limitation, as applicable, on investments in illiquid
securities.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date (the date the order
to buy or sell is executed). Realized gains and losses from securities sold
are recorded on the identified cost basis. Interest income is recorded on the
accrual basis and consists of interest accrued and, if applicable, discount
accreted less premiums amortized. Each Fund's investment income and realized
and unrealized gains and losses are allocated among the classes of that Fund
based upon the relative average net assets of each class.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income is not accrued
until settlement date. Each Fund instructs the custodian to segregate assets
of the Fund with a current value at least equal to the amount of its when-
issued purchase commitments.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income of the Funds are declared daily and paid
monthly. Distributions of any net capital gains earned by a Fund are
distributed no less frequently than annually at the discretion of the Board of
Trustees. Additional distributions of net investment income and capital gains
for each Fund may be made at the discretion of the Board of Trustees in order
to avoid the application of a 4% non-deductible excise tax on certain
undistributed amounts of ordinary income and capital gains. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to timing differences and
differing characterization of distributions made by each Fund as a whole. Net
investment income per share calculations in the financial highlights for the
period ended October 31, 1998 for the Money Market Fund excludes these
adjustments.
<TABLE>
<CAPTION>
DECREASE INCREASE
UNDISTRIBUTED ACCUMULATED
INCREASE NET INVESTMENT NET REALIZED
NAME OF FUND PAID-IN CAPITAL INCOME LOSS
--------------- -------------- ------------
<S> <C> <C> <C>
Money Market Fund .................................. $19,148 $(3,587) $15,561
</TABLE>
FEDERAL INCOME TAXES:
It is each Fund's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by, among other
things, distributing substantially all of its taxable and tax-exempt earnings
to its shareholders. Therefore, no Federal income tax provision is required.
EXPENSES:
General expenses of the Trusts are allocated to all the Funds based upon the
relative net assets of each Fund. Operating expenses directly attributable to
a class of shares are charged to the operations of that class of shares.
Expenses of each Fund not directly attributable to the operations of any class
of shares are prorated among the classes to which the expenses relate based on
the relative net assets of each class of shares.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
WM Advisors serves as investment advisor to the Funds. Sierra Advisors served
as investment advisor to the California Money Fund prior to March 23, 1998.
The Advisor is entitled to a monthly fee, in arrears, based upon a percentage
of the average daily net assets of each Fund at the following rates:
<TABLE>
<CAPTION>
FEES ON NET ASSETS FEES ON NET ASSETS
UP TO EXCEEDING
NAME OF FUND $1 BILLION $1 BILLION
------------------ ------------------
<S> <C> <C>
Money Market Fund ........................................................ .45% .40%
Tax-Exempt Money Market Fund ............................................. .45% .40%
</TABLE>
<TABLE>
<CAPTION>
FEES ON NET ASSETS FEES ON ASSETS
UP TO EXCEEDING
NAME OF FUND $500 MILLION $500 MILLION
------------------ --------------
<S> <C> <C>
California Money Fund .................................................... .45% .40%
</TABLE>
WM Advisors provides administration services to the Trusts at no additional
fee. Prior to March 23, 1998, a fee of 0.30% of average daily net assets of
the California Money Fund was assessed for administration and transfer agent
services.
The Advisor has agreed to waive a portion of its management fees. Fees waived
by the Advisor are as follows:
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED YEAR ENDED
NAME OF FUND OCTOBER 31, 1998 DECEMBER 31, 1997 JUNE 30, 1998
- ------------ ---------------- ----------------- -------------
<S> <C> <C> <C>
Money Market Fund .......................... $ -- $198,432 $
Tax-Exempt Money Market Fund ............... 37,019 45,307 --
California Money Fund ...................... 18,193 -- 70,002
</TABLE>
As of March 23, 1998, WM Shareholder Services, Inc. (the "Transfer Agent")
serves as the transfer and shareholder servicing agent of the Funds. Prior to
March 23, 1998, Sierra Fund Administration Corporation, an indirect wholly-
owned subsidiary of GWFC, paid transfer agent fees from its administration fee
and did not charge the California Money Fund a separate transfer agent fee,
and Murphey Favre Securities Services, Inc. served as the transfer and
shareholder servicing agent for the Money Market Fund and Tax-Exempt Money
Market Fund. Shareholder servicing fees were paid to the Transfer Agent for
services incidental to issuance and transfer of shares, maintaining
shareholder lists, and issuing and mailing distributions and reports. The
authorized monthly shareholder servicing fees are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B & S
------- -----------
<S> <C> <C>
The Money Market Funds ................................................... $1.85 $1.95
</TABLE>
Class I shares are not subject to shareholder servicing fees.
Custodian fees for certain Funds have been reduced by credits allowed by the
custodian for uninvested cash balances. These Funds could have invested this
cash in income producing investments. Fees reduced by credits allowed by the
custodian are as follows:
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED YEAR ENDED
NAME OF FUND OCTOBER 31, 1998 DECEMBER 31, 1997 JUNE 30, 1998
- ------------ ---------------- ----------------- -------------
<S> <C> <C> <C>
Money Market Fund .......................... $14,189 $88,033 $ --
Tax-Exempt Money Market Fund ............... 2,403 7,751 --
California Money Fund ...................... 133 -- 1,759
</TABLE>
4. TRUSTEES' FEES
On March 23, 1998, the Boards of Trustees of the Trusts combined to form the
Board of Trustees of the Funds.
No director, officer or employee of Washington Mutual or its subsidiaries
receives any compensation from the Trusts for serving as an officer or Trustee
of the Trusts. The Trusts, together with other mutual funds advised by WM
Advisors, Inc., pays each Trustee who is not a director, officer or employee
of Washington Mutual or its subsidiaries, $18,000 per annum plus $3,000 per
board meeting attended or $1,000 per board meeting attended by telephone.
Trustees are also reimbursed for travel and out-of-pocket expenses. The
Chairman of each committee receives $500 per committee meeting attended.
Pursuant to an exemptive order granted by the Securities and Exchange
Commission, the Trusts' eligible Trustees may participate in a deferred
compensation plan (the "Plan") which may be terminated at any time. Under the
Plan, Trustees may elect to defer receipt of all or a portion of their fees
which, in accordance with the Plan, are invested in mutual fund shares. Upon
termination of the Plan, Trustees that have deferred accounts under the Plan
will be paid benefits no later than the time the payments would otherwise have
been made without regard to such termination. All benefits provided under
these Plans are funded and any payments to Plan participants are paid solely
out of the Trusts' assets.
5. DISTRIBUTION PLANS
As of March 23, 1998, WM Funds Distributor, Inc. (the "Distributor"), a
registered broker-dealer and an indirect wholly-owned subsidiary of Washington
Mutual, serves as distributor for Class A, Class B and Class S shares of the
Funds. For the periods ended October 31, 1998, the Distributor received
$151,969 representing CDSC fees from Class B and S shares. On May 1, 1998
Great Western Financial Securities Corporation ("GW Securities"), a registered
broker-dealer, merged with WM Financial Services, Inc. ("WM Securities"), also
a registered broker/dealer. For the periods ended October 31, 1998, GW
Securities and WM Securities received $42,453 representing CDSC fees from
Class B and S shares.
Each of the Funds has adopted three distribution plans, pursuant to Rule 12b-1
under the 1940 Act, applicable to Class A, Class B and Class S shares of the
Fund (each, a "Rule 12b-1 Plan"), respectively. There are no 12b-1 Plans
applicable to Class I shares of the Funds. Under the applicable Rule 12b-1
Plans, the Distributor may receive a service fee at an annual rate of 0.25% of
the average daily net assets of each class. The Trustees have not authorized,
and the Funds do not currently pay, services fees with respect to Class A
shares. In addition, the Distributor is paid a fee as compensation in
connection with the offering and sale of Class B and Class S shares at an
annual rate of 0.75% of the average daily net assets of such shares. These
fees may be used to cover the expenses of the Distributor primarily intended
to result in the sale of such shares, including payments to the Distributor's
representatives or others for selling shares. Because the Distributor may
retain any amount of its fee that is not so expended, the Rule 12b-1 Plans are
characterized by the SEC as "compensation-type" plans. The service fee is paid
by the Fund to the Distributor, which in turn, pays a portion of the service
fee to broker/dealers that provide services, such as accepting telephone
inquiries and transaction requests and processing correspondences, new account
applications and subsequent purchases by check for the shareholders. Under
their terms, each of the Class A Plan, Class B Plan and Class S Plan shall
remain in effect from year to year, provided such continuance is approved
annually by vote of the Board of Trustees, including a majority of those
Trustees who are "uninterested persons" of the Trusts, as defined in the 1940
Act, as those persons who have no direct or indirect financial interest in the
operation of such distribution plans, or any agreements related to such plans.
6. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest, each
without par value.
As of October 31, 1998, WM Shareholder Services, Inc. owned greater than five
percent of the respective shares classes:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
FUND SHARES TOTAL FUND SHARES
---------------------------- --------------------------
NAME OF FUND CLASS S CLASS I CLASS S CLASS I
- ------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
California Money Fund ........................ 591 1,068 49.95% 100.00%
</TABLE>
7. CAPITAL LOSS CARRYFORWARDS
At October 31, 1998, the following Funds had available for federal income tax
purposes unused capital losses as follows:
<TABLE>
<CAPTION>
EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
IN 1999 IN 2000 IN 2001 IN 2002 IN 2003 IN 2004 IN 2005 IN 2006
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Fund ............... $ -- $ -- $9,159 $1,367 $2,404 $1,470 $1,161 $72,297
Tax-Exempt Money Market -- -- -- -- -- -- -- 3
Fund ..........................
California Money Fund ........... 7,635 5,715 7,549 1,294 18,781 -- -- --
</TABLE>
8. GEOGRAPHIC AND INDUSTRY CONCENTRATION AND RISK FACTORS
There are certain risks arising from the California Money Fund's investments
in California municipal securities. The California Money Fund is more
susceptible to factors adversely affecting issuers of California municipal
securities than a fund that is not concentrated in these issuers to the same
extent. Uncertain economic conditions or governmental developments may affect
the ability of California municipal securities issuers to meet their financial
obligations.
9. REORGANIZATION
Each Acquiring Fund, as listed below acquired the assets and certain
liabilities of the Acquired Fund, also listed below, in a tax-free exchange
for shares of the Acquiring Fund, pursuant to a plan of reorganization
approved by the Acquired Fund's shareholders. Total shares issued by the
Acquiring Fund, the value of the shares issued by the Acquiring Fund, the
total net assets of the Acquired Fund and the Acquiring Fund and any
unrealized appreciation/(depreciation) included in the Acquired Fund's total
net assets at the acquisition date are as follows:
<TABLE>
<CAPTION>
TOTAL NET
SHARES VALUE OF TOTAL NET TOTAL NET ASSETS OF
ISSUED BY SHARES ISSUED ASSETS OF ASSETS OF ACQUIRING
ACQUIRING BY ACQUIRING ACQUIRED ACQUIRING FUND AFTER
ACQUIRING FUND ACQUIRED FUND DATE FUND FUND FUND FUND ACQUISITION
- -------------- ------------- ---- --------- ------------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
WM Money Market Fund Sierra Global
Money Fund 03/23/1998 171,075,237 $171,075,237 $171,075,237 $259,445,317 $466,509,504
WM Money Market Fund Sierra U.S.
Government Money
Fund 03/23/1998 35,988,950 $ 35,988,950 $ 35,988,950 $259,445,317 $466,509,504
</TABLE>
<PAGE>
INDEPENDENT auditors' REPORT
To the Trustees and Shareholders of
WM Money Market Fund, WM Tax-Exempt Money Market Fund
and WM California Money Fund:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of WM Money Market Fund, WM Tax- Exempt Money
Market Fund and WM California Money Fund (the "Funds") as of October 31, 1998,
and the related statements of operations, changes in net assets and financial
highlights for the period January 1, 1998 to October 31, 1998 for the WM Money
Market Fund and WM Tax-Exempt Money Market Fund and the period July 1, 1998 to
October 31, 1998 for the WM California Money Fund. 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 audit. The financial statements for WM
California Money Fund for the years ended June 30, 1998 and 1997 and financial
highlights for the five years ended June 30, 1998 were audited by other auditors
whose report, dated August 14, 1998, expressed an unqualified opinion on those
statements. The financial statements for WM Money Market Fund and WM Tax-Exempt
Money Market Fund for the years ended December 31, 1997 and 1996 and financial
highlights for the five years ended December 31, 1997 were audited by other
auditors whose report, dated January 20, 1998, expressed an unqualified opinion
on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
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, 1998, 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 audit provides 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, 1998, the results of their operations, the changes in their
net assets and their financial highlights for the respective stated periods
ended October 31, 1998 in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
San Francisco, California
December 11, 1998
<PAGE>
TAX information (UNAUDITED)
WM GROUP OF FUNDS
PERIOD ENDED OCTOBER 31, 1998
The following tax information represents fiscal year end disclosures of various
tax benefits passed through to shareholders at calendar year end.
Of the distributions made from investment income the following percentages are
tax exempt for regular Federal income tax purposes.
NAME OF FUND
- ------------
California Money Fund ................................................ 100.00%
A portion of this income may be subject to alternative minimum tax.
The above figures 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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This Annual Report is published for the
general information of the shareholders
of the WM Group of Funds. It is
authorized for distribution to
prospective investors only when preceded
or accompanied by a current WM Group of
Funds prospectus. A mutual fundshare
price and investment return will vary
with market conditions, and the principal
[Graphic Omitted] value of an investment when you sell your
shares may be more or less than the
original cost.
The WM Group of Funds are not insured by
the FDIC. They are not deposits or
obligations of, nor are they guaranteed
by any bank. These securities are subject
to investment risks, including possible
loss of principal amount invested.
Distributed by
WM Funds Distributor, Inc.
Member NASD
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WMMM 65M (12/24/98)
