RAINIER
INVESTMENT MANAGEMENT
MUTUAL FUNDS
SEMI-ANNUAL REPORT
INCLUDES UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
Small/Mid Cap Equity Portfolio
Core Equity Portfolio
Growth Equity Portfolio
Balanced Portfolio
Intermediate Fixed Income Portfolio
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS ...................................................... 3
COMMENTS FROM INVESTMENT ADVISOR ............................................ 4
PORTFOLIO INVESTMENT RETURNS
Small/Mid Cap Equity Portfolio ............................................ 5
Core Equity Portfolio ..................................................... 6
Growth Equity Portfolio ................................................... 7
Balanced Portfolio ........................................................ 8
Intermediate Fixed Income Portfolio ....................................... 9
SCHEDULES OF INVESTMENTS
Small/Mid Cap Equity Portfolio ............................................ 10
Core Equity Portfolio ..................................................... 13
Growth Equity Portfolio ................................................... 16
Balanced Portfolio ........................................................ 18
Intermediate Fixed Income Portfolio ....................................... 22
STATEMENTS OF ASSETS AND LIABILITIES ........................................ 24
STATEMENTS OF OPERATIONS .................................................... 25
STATEMENTS OF CHANGES IN NET ASSETS ......................................... 26
FINANCIAL HIGHLIGHTS ........................................................ 29
NOTES TO FINANCIAL STATEMENTS ............................................... 34
INDEX DESCRIPTIONS .......................................................... 36
DIRECTORY OF FUNDS' SERVICE PROVIDERS ....................................... 39
RAINIER
INVESTMENT MANAGEMENT
MUTUAL FUNDS
601 Union Street, Suite 2801
Seattle, Washington 98101
(800) 248-6314
www.rainierfunds.com
This report and the financial statements contained herein are provided for the
general information of the shareholders of the Rainier Investment Management
Mutual Funds. This report is not authorized for distribution to prospective
investors in the Funds unless preceded or accompanied by an effective
prospectus. For more information on any Fund, including charges and expenses,
visit our web site or call the number above to receive a free prospectus. Read
it carefully before you invest or send money. (The prospectus for the Growth
Equity Portfolio will be available January 2, 2001.)
<PAGE>
LETTER TO SHAREHOLDERS
Dear Shareholders,
As Chairman of Rainier Investment Management Mutual Funds and a fellow
shareholder in the Funds, I'd like to express our appreciation for your valued
investment in one of the five Portfolios covered in this report. This report,
known as the "Semi-Annual Report," contains unaudited financial statements for
the period ending September 30, 2000. The last audited Annual Report was
produced as of March 31, 2000, our fiscal year end.
As you review this Report, you will find commentary describing the equity
and fixed-income capital markets for the six months ending September 30, 2000.
Also, you will see commentaries for each of the five Portfolios, followed by
investment total returns. Finally, this Report contains financial statements
detailing the expenses and holdings of the Portfolios.
We are pleased to announce that the new Growth Equity Portfolio was
launched in June with funding by the principals of Rainier Investment
Management. This new fund and its Prospectus will be available to all investors
beginning January 2, 2001. The goal of this Portfolio is to provide our
investors with the opportunity to invest in some of the fastest growing
companies in America. The benchmark is the Russell 1000(R) Growth Index, and
therefore the Portfolio is more aggressive and somewhat less diversified, than
our other two equity Portfolios.
Investment performance relative to appropriate benchmarks has been good for
the last six months, although on an absolute basis the Portfolios with stock
positions have generated little in returns. The Core Equity lost 2.6% for the
period, but is up a remarkable 26.2% for the last 12 months, nearly 13
percentage points ahead of the S&P 500 Stock Index. The Small/Mid Cap Equity
Portfolio did manage a 3.3% gain for the six months. The best overall performer
was the Intermediate Fixed Income Portfolio with a 4.5% return, well ahead of
most stock indices, which were in negative territory. After five consecutive
calendar years of returns in excess of 20%, we are not surprised by the
revaluation in the equity markets.
We should mention that each Fund has a new logo associated with it. While
developing the logo for the Growth Equity Portfolio, we decided to redesign the
graphics for all the Portfolios. Each of the new fund logos are stylized
renderings of images that we see every day here in the Pacific Northwest. We
hope you will like them.
Thank you for your investment in the Rainier Investment Management Mutual
Funds. If we can improve our service to you, please feel free to contact us.
Sincerely,
/s/ J. Glenn Haber
J. Glenn Haber
Chairman
Rainier Investment Management Mutual Funds
3
<PAGE>
COMMENTS FROM INVESTMENT ADVISOR
ABOUT THE ADVISOR: The Investment Advisor to the Funds is Rainier
Investment Management, Inc.(R) (RIM) located in Seattle, Washington. RIM is one
of America's leading investment advisory firms, managing $5.9 billion of
discretionary assets for primarily institutional clients.
EQUITY COMMENTS
The six-month period ending September 30, 2000 was particularly challenging
for U.S. equity investors. Relatively small changes in most equity benchmarks
disguised significant turmoil and cross-currents beneath the surface. The
Internet "bubble" burst. Large-cap technology stocks faltered as market leaders.
Comparatively dull stocks emerged as performance stars, and "merger mania"
continued unabated. Rising energy costs and unrest in the Middle East reignited
concerns about the potential impact of higher oil and gas prices. Finally, U.S.
investors pondered the investment implications of a Bush or Gore Presidency. The
net impact of these events was high stock price volatility and a significant
shift in market leadership.
What was the cause of the shift in investor sentiment? First, the market
became more conscientious about the way stocks are priced or valued. This
brought valuations of many growth stocks, especially large-capitalization
technology shares, more in line with valuations appropriate for their growth
prospects. Second, while small-capitalization stocks generally lagged, the
market was more willing to acknowledge the excellent fundamental prospects in
many mid-capitalization stocks. Third, stable to downward trends in interest
rates buoyed many defensive and interest-sensitive stocks, contributing to
outstanding performance by financial, health care, utility and energy stocks.
We are pleased to report that all of our equity funds--including our
newest, the Growth Equity Portfolio--exceeded their primary benchmarks during
the last six months. We will continue to emphasize strong companies with good
prospects for exceeding expectations, together with a focus on quality and
valuation.
James R. Margard, CFA; David A. Veterane, CFA;
Peter M. Musser, CFA; Mark H. Dawson, CFA
FIXED INCOME COMMENTS
Interest rates exhibited a roller coaster movement during the six months
ending September 30, 2000, highlighted by increased volatility and a
reconfiguration of the yield curve. Short-term rates rose in response to a
one-half percent hike in the Federal Funds Rate in May to 6 1/2%. Mid-duration
interest rates fell the most dramatically. After rising nearly half of one
percent to a calendar-year high, intermediate treasuries fell three-quarters of
one percent as the period ended. Anticipation was strong that the rate hike
would slow the economy sooner and advantage mid-maturity securities. Long-term
interest rates remained relatively unchanged after declining earlier in the
year. The U.S. Treasury announced details of a securities buyback program to
reduce outstanding public debt and the long-term bond reacted to a perceived
future scarcity value. Overall the curve remains inverted, with shorter
maturities yielding more than long maturities, but less steep than six months
ago.
Liquidity continues to be an important consideration for performance in the
fixed-income markets. Investors have been willing to pay more for corporate
bonds if the overall size of the issue is over one billion and the quality
rating "A" or higher. The ability to sell into huge corporate bond supply was
made easier by the generous yields received over the Treasury benchmark.
Inflation has remained tame despite a historically tight labor market and rising
oil prices. Incremental returns of 4-5% were achieved over the "risk-free" U.S.
Treasury rate.
Looking ahead past the upcoming election and at the slowing of near-term
economic growth, interest rate levels should provide for stable fixed-income
returns as we enter the coming year.
Patricia L. Frost, CEO;
Michael E. Raney, CFA
4
<PAGE>
PORTFOLIO INVESTMENT RETURNS
Small/Mid Cap Equity Portfolio
OBJECTIVE: The Small/Mid Cap Equity Portfolio seeks to PROVIDE INVESTORS
WITH MAXIMUM LONG-TERM CAPITAL APPRECIATION. The Investment Advisor constructs a
diversified portfolio of small and medium capitalization common stocks.
COMMENTARY: The Small/Mid Cap Equity Portfolio recorded excellent results
during the six months ending September 30, 2000, rising 3.3% compared with a
negative 1.7% return for the Russell 2500(TM) Index. Among financial stocks, the
best performers were SEI Investments, a provider of investment and accounting
products, credit-card issuer Capital One, and brokerage firms Donaldson Lufkin
Jenrette and Lehman Brothers. Electric and gas utilities were also strong
performers, led by the largest holding PECO Energy, and Constellation Energy. In
the health-care sector, orthopedic implant manufacturer Biomet, emerging biotech
leader Med-Immune and ophthalmology specialist Allergan notched notable gains.
On the negative side of the ledger were technology stocks, which, despite
strength in selected issues such as Rational Software and WatchGuard
Technologies, endured a harsh six months. We anticipate making only minor
stock-specific changes in the Portfolio in the coming months. Sector weightings
will remain relatively close to the Russell 2500 Index.
COMPARISON OF CHANGE IN VALUE OF $10,000
Small/Mid Russell Consumer
Cap Equity 2500(TM) Price
Portfolio Index Index
--------- ----- -----
5/10/94 10,000 10,000 10,000
3/31/95 11,938 10,999 10,272
3/31/96 16,520 14,279 10,563
3/31/97 18,197 15,519 10,855
3/31/98 28,138 22,015 11,004
3/31/99 23,303 19,095 11,194
3/31/00 33,879 27,392 11,608
9/30/00 35,008 26,928 11,784
<TABLE>
<CAPTION>
TOTAL RETURNS Inception
for Periods Ending September 30, 2000 6 Months 1 Year 3 Years* 5 Years* to 9/30/00*
------------------------------------- -------- ------ -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Small/Mid Cap Equity Portfolio 3.3% 41.4% 11.7% 19.3% 21.6%
Russell 2500(TM) Index (1.7) 29.5 9.7 15.5 16.7
Russell 2000(R) Index (2.7) 23.4 6.0 12.4 14.1
Consumer Price Index 1.5 3.5 2.5 2.5 2.6
</TABLE>
* Annualized returns. Inception date 5/10/94.
See page 36 for index descriptions. Total return assumes reinvestment of
dividends and distributions. Past performance is not predictive of future
results. Investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Small-company
investing may involve greater risks and volatility, and the value of
small-company stocks may be adversely affected by less-liquid markets.
5
<PAGE>
PORTFOLIO INVESTMENT RETURNS, CONTINUED
Core Equity Portfolio
OBJECTIVE: The Core Equity Portfolio seeks to MAXIMIZE LONG-TERM CAPITAL
APPRECIATION. The Fund invests primarily in a diversified portfolio of common
stocks of U.S. companies.
COMMENTARY: The Core Equity Portfolio declined 2.6% during the six months
ending September 30, compared to a 3.6% fall in the S&P 500 Stock Index. Health
care, financial and utility stocks were the strongest groups. Allergan and Teva
Pharmaceutical, two innovative drug companies, recorded outstanding results.
Global financial giants Citigroup and American International Group posted
excellent returns, as did credit-card specialist MBNA. International utility
operator AES Corp., Maryland-based Constellation Energy, and East Coast-focused
Duke Energy were significant holdings and have been strong performance
contributors. General Electric, the largest holding, added further to gains.
Revenue warnings from Intel, mobile-handset manufacturers and other technology
leaders sent shock waves through the market, heightening investor worries about
the near-term prospects for personal computer and mobile-handset sales. Still,
some companies such as Sun Microsystems and EMC managed to maintain
extraordinarily high growth rates, and surged to new highs. In keeping with our
practices, sector weightings are reasonably close to the S&P 500 Index.
COMPARISON OF CHANGE IN VALUE OF $10,000
Core Equity Standard & Poor's Consumer
Portfolio 500 Stock Index Price Index
--------- --------------- -----------
5/10/94 10,000 10,000 10,000
3/31/95 11,787 11,495 10,272
3/31/96 16,341 15,190 10,563
3/31/97 19,263 18,186 10,855
3/31/98 28,826 26,915 11,004
3/31/99 31,318 31,881 11,194
3/31/00 41,358 37,602 11,608
9/30/00 40,270 36,248 11,784
<TABLE>
<CAPTION>
TOTAL RETURNS Inception
for Periods Ending September 30, 2000 6 Months 1 Year 3 Years* 5 Years* to 9/30/00*
------------------------------------- -------- ------ -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Core Equity Portfolio (2.6)% 26.2% 17.3% 22.8% 24.3%
Standard & Poor's 500 Stock Index (3.6) 13.3 16.4 21.7 22.3
Russell 1000(R) Index (2.7) 17.8 17.1 21.8 22.4
Consumer Price Index 1.5 3.5 2.5 2.5 2.6
</TABLE>
* Annualized returns. Inception date 5/10/94.
See page 36 for index descriptions. Total return assumes reinvestment of
dividends and distributions. Past performance is not predictive of future
results. Investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
6
<PAGE>
Growth Equity Portfolio
OBJECTIVE: The Growth Equity Portfolio seeks to MAXIMIZE LONG-TERM CAPITAL
APPRECIATION. The Portfolio invests primarily in the common stock of U.S. growth
companies.
COMMENTARY: The Growth Equity Portfolio was launched on June 15, 2000
(available to all investors on January 2, 2001) with the intent of investing
primarily in large-cap growth companies with over $5 billion in market
capitalization. Although the investment climate for growth stocks during the
first few months has been harsh, we are pleased with the progress of the
Portfolio compared to its primary benchmark, the Russell 1000(R) Growth Index.
While the Growth Equity Portfolio shares the same "bottom-up" stock-picking
approach as the Small/Mid Cap and Core Equity Portfolios, it will place a
comparatively greater emphasis on revenue growth and the competitive position of
each company within each industry, and less of an emphasis on the "price of
growth." This difference means that the Portfolio will carry greater risk than
our other portfolios. It may invest in companies with limited public histories,
and in some cases companies that have not yet reached profitability. Balancing
our efforts to identify early the "blue-chips of tomorrow" will be significant
investments in financially successful growth companies, some of which are also
held in our Core Equity Portfolio.
COMPARISON OF CHANGE IN VALUE OF $10,000
Growth Equity Russell 1000(R)
Portfolio Growth Index
--------- ------------
6/15/00 10,000 10,000
9/30/00 10,604 9,541
<TABLE>
<CAPTION>
TOTAL RETURNS Inception
for Periods Ending September 30, 2000 6 Months 1 Year 3 Years* 5 Years* to 9/30/00*
------------------------------------- -------- ------ -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Growth Equity Portfolio -- -- -- -- 6.0%
Russell 1000(R) Growth Index -- -- -- -- (4.6)
Standard & Poor's 500 Stock Index -- -- -- -- (3.5)
Consumer Price Index -- -- -- -- 1.0
</TABLE>
** Annualized returns. Inception date 6/15/00.
See page 36 for index descriptions. Performance shown is for a very limited
period. Total return assumes reinvestment of dividends and distributions. Past
performance is not predictive of future results. Investment return will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. The Advisor is currently limiting the Portfolio's
expenses, which enhances return.
7
<PAGE>
PORTFOLIO INVESTMENT RETURNS, CONTINUED
Balanced Portfolio
OBJECTIVE: The Balanced Portfolio seeks to PROVIDE INVESTORS WITH A BALANCE
OF LONG-TERM CAPITAL APPRECIATION AND CURRENT INCOME. The Fund invests primarily
in a diversified portfolio of common stocks of U.S. companies, investment grade
intermediate-term debt securities and cash equivalent securities.
COMMENTARY: Bolstered by its holdings in fixed-income securities, the
Balanced Portfolio was able to preserve principal in an equity market
environment punctuated with losses. The stock component was negative, but
outperformed the S&P 500 Stock Index by approximately 1%, with gains in
health-care and other defensive sectors being offset by declines in technology,
telecommunications and cyclical issues. Among the winners were Boeing, which
benefited from improvement in aircraft orders, and General Electric, which also
has meaningful exposure to the aerospace business. Health care proved to be a
haven; leaders in this group included Baxter International and Pharmacia &
Upjohn. Financial stocks were among the best performers in the Portfolio,
including insurance company Cigna and Federal Home Loan Mortgage. In the
fixed-income portion of the Portfolio, our emphasis on intermediate maturity
securities and healthy allocation to U.S. Treasuries helped offset equity
losses. We do not anticipate a significant shift away from our targeted asset
mix of 60-65% in stocks and 35-40% in fixed income.
COMPARISON OF CHANGE IN VALUE OF $10,000
Balanced Balanced Consumer
Portfolio Index Price Index
--------- ----- -----------
5/10/94 10,000 10,000 10,000
3/31/95 11,223 11,034 10,272
3/31/96 14,094 13,241 10,563
3/31/97 15,762 15,044 10,855
3/31/98 21,209 18,896 11,004
3/31/99 22,741 21,346 11,194
3/31/00 27,196 23,558 11,608
9/30/00 27,186 23,645 11,784
<TABLE>
<CAPTION>
TOTAL RETURNS Inception
for Periods Ending September 30, 2000 6 Months 1 Year 3 Years* 5 Years* to 9/30/00*
------------------------------------- -------- ------ -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balanced Portfolio 0.0% 18.0% 12.8% 16.0% 16.9%
Balanced Index 0.4 10.0 11.3 13.9 14.4
Standard & Poor's 500 Stock Index (3.6) 13.3 16.4 21.7 22.3
Lehman Brothers Govt./Corp. Intermediate Bond Index 4.6 6.2 5.7 6.1 6.8
Consumer Price Index 1.5 3.5 2.5 2.5 2.6
</TABLE>
* Annualized returns. Inception date 5/10/94.
See page 36 for index descriptions. Total return assumes reinvestment of
dividends and distributions. Past performance is not predictive of future
results. Investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The Advisor is
currently limiting the Portfolio's expenses, which enhances return.
8
<PAGE>
Intermediate Fixed Income Portfolio
OBJECTIVE: The Intermediate Fixed Income Portfolio seeks to PROVIDE
INVESTORS WITH CURRENT INCOME. The Fund invests primarily in a diversified
portfolio of investment grade, intermediate-term debt securities providing
current income. The Portfolio does not use risky derivative instruments.
COMMENTARY: The Intermediate Fixed Income Portfolio performed in line with
the market indices for the six-month period ending September 30, 2000. The
Federal Reserve raised the overnight lending rate on May 16 by half of one
percent to 6 1/2% and has held steady with a "tightening" directive going
forward as inflation concerns have begun to surface. Anticipation of a
deceleration in the U.S. domestic economy and a skittish equity market provided
a performance boost to bonds. Intermediate-duration assets did particularly
well, producing the greatest overall net drop in rates for the time period. The
Portfolio benefited from a strong allocation to U.S. Treasury issues as
investors continue to place a high premium upon liquidity. Higher quality
corporate bonds within the finance sector provided incremental returns due to
generous yield spreads to inflation. The Portfolio held a minimal cash position.
Looking ahead, we anticipate near-term market volatility as the election takes
place and the results are analyzed. Our current strategy in the Intermediate
Fixed Income Portfolio is to remain market neutral with a continued commitment
to high quality liquid investments.
COMPARISON OF CHANGE IN VALUE OF $10,000
Lehman
Intermediate Government/Corporate Consumer
Fixed Income Intermediate Price
Portfolio Bond Index Index
--------- ---------- -----
5/10/94 10,000 10,000 10,000
3/31/95 10,492 10,607 10,272
3/31/96 11,421 11,622 10,563
3/31/97 11,803 12,180 10,855
3/31/98 12,880 13,358 11,004
3/31/99 13,716 14,138 11,194
3/31/00 13,977 14,411 11,608
9/30/00 14,609 15,076 11,784
<TABLE>
<CAPTION>
TOTAL RETURNS Inception
for Periods Ending September 30, 2000 6 Months 1 Year 3 Years* 5 Years* to 9/30/00*
------------------------------------- -------- ------ -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Intermediate Fixed Income Portfolio 4.5% 6.0% 5.5% 5.6% 6.1%
Lehman Brothers Govt./Corp. Intermediate Bond Index 4.6 6.2 5.7 6.1 6.8
91-Day Treasury Bill Index 2.9 5.6 5.2 5.2 5.2
Consumer Price Index 1.5 3.5 2.5 2.5 2.6
</TABLE>
* Annualized returns. Inception date 5/10/94.
See page 36 for index descriptions. Total return assumes reinvestment of
dividends and distributions. Past performance is not predictive of future
results. Investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The Advisor is
currently limiting the Portfolio's expenses, which enhances return.
9
<PAGE>
SCHEDULE OF INVESTMENTS
SMALL/MID CAP EQUITY PORTFOLIO
September 30, 2000 (unaudited)
COMMON STOCKS (99.3%) Shares Value
--------------------------------------------------------------------------------
AUTOS AND TRANSPORTATION (1.8%)
Alaska Air Group, Inc. 84,900 $2,037,600
Southwest Airlines Co. 111,400 2,701,450
----------
Total Air Transportation 4,739,050
----------
TRUCKERS (0.8%)
US Freightways Corp. 172,950 3,923,803
----------
TOTAL AUTOS AND TRANSPORTATION 8,662,853
----------
CONSUMER DISCRETIONARY (12.5%)
ADVERTISING AGENCIES (0.9%)
Interpublic Group of Companies, Inc. 131,100 4,465,594
----------
CONSUMER ELECTRONICS (0.6%)
Infospace, Inc. 89,525 2,708,131
----------
HOUSEHOLD FURNISHINGS (1.0%)
Mohawk Industries, Inc. 216,297 4,717,978
----------
JEWELRY, WATCHES AND GEMSTONES (0.6%)
Tiffany & Co. 74,350 2,867,122
----------
PUBLISHING/MISCELLANEOUS (1.4%)
McGraw-Hill Companies, Inc. 106,900 6,794,831
----------
RADIO AND TV BROADCASTERS (0.6%)
Citadel Communications Corp. 81,300 1,382,100
----------
USA Networks, Inc. 63,900 1,401,806
----------
Total Radio and TV Broadcasters 2,783,906
----------
RENTAL AND LEASING SERVICES (0.6%)
Dollar Thrifty Automotive Group, Inc. 144,725 2,858,319
----------
RESTAURANTS (1.4%)
Brinker International, Inc. 138,500 4,172,313
Jack In The Box, Inc. 111,200 2,383,850
----------
Total Restaurants 6,556,163
----------
RETAIL (4.3%)
Family Dollar Stores, Inc. 241,000 $4,639,250
Fastenal Co. 83,950 4,837,619
The Men's Wearhouse, Inc. 157,525 4,459,927
Williams-Sonoma, Inc. 80,525 2,798,244
Zale Corp. 102,500 3,324,844
----------
Total Retail 20,059,884
----------
TEXTILES/APPAREL MANUFACTURERS (0.9%)
VF Corp. 178,725 4,412,273
----------
TOTAL CONSUMER DISCRETIONARY 58,224,201
----------
CONSUMER STAPLES(4.2%)
BEVERAGES (1.7%)
Canandaigua Brands, Inc. Cl. A 64,050 3,478,716
Coors (Adolph) 69,200 4,372,575
----------
Total Beverages 7,851,291
----------
FOODS (2.5%)
Keebler Foods Co. 72,475 3,043,950
McCormick and Co., Inc. 143,575 4,271,356
Suiza Foods Corp. 92,100 4,668,319
----------
Total Foods 11,983,625
----------
TOTAL CONSUMER STAPLES 19,834,916
----------
FINANCIAL SERVICES (18.7%)
BANKS/OUTSIDE NEW YORK CITY (2.7%)
City National Corp. 96,850 3,740,831
Compass Bancshares, Inc. 264,000 5,148,000
Silicon Valley Bancshares 31,925 1,859,132
Zions Bancorporation 34,925 1,786,086
----------
Total Banks/Outside New York City 12,534,049
----------
FINANCE COMPANIES (1.8%)
Capital One Financial Corp. 119,825 8,395,239
----------
FINANCIAL/MISCELLANEOUS (1.7%)
Nationwide Financial Services, Inc. 214,150 8,003,856
----------
INSURANCE (3.2%)
ACE Ltd. 130,150 5,108,388
See Accompanying Notes to Financial Statements.
10
<PAGE>
Everest Re Group Ltd. 80,300 $ 3,974,850
Lincoln National Corp. 107,225 5,160,203
PMI Group, Inc. 11,900 806,225
-----------
Total Insurance 15,049,666
-----------
INVESTMENT MANAGEMENT COMPANIES (4.3%)
Affiliated Managers Group 86,050 4,899,472
SEI Investments Co. 130,425 9,227,569
Stilwell Financial, Inc. 136,100 5,920,350
-----------
Total Investment Management Companies 20,047,391
-----------
REAL ESTATE INVESTMENT TRUSTS (2.9%)
Avalonbay Communities, Inc. 143,250 6,831,234
Equity Office Properties Trust 226,025 7,020,902
-----------
Total Real Estate Investment Trusts 13,852,136
-----------
SAVINGS AND LOANS (0.9%)
Bank United Corp. Cl. A 84,815 4,299,060
-----------
SECURITIES BROKERAGES (1.2%)
Lehman Brothers Holdings, Inc. 38,350 5,666,213
-----------
TOTAL FINANCIAL SERVICES 87,847,610
-----------
HEALTHCARE (13.9%)
BIOTECHNOLOGY RESEARCH (3.4%)
Corixa Corp. 150,525 7,563,881
Invitrogen Corp. 117,800 8,378,525
-----------
Total Biotechnology Research 15,942,406
-----------
DRUGS AND PHARMACEUTICALS (8.3%)
Allergan, Inc. 81,175 6,854,214
Alpharma, Inc. Cl. A 80,475 4,919,034
MedImmune, Inc. 125,850 9,721,912
NEO RX Corp. 117,175 2,870,787
Sepracor, Inc. 9,525 1,168,598
Teva Pharmaceuticals Industries ADR 147,250 10,776,859
Watson Pharmaceuticals, Inc. 44,600 2,893,425
-----------
Total Drugs and Pharmaceuticals 39,204,829
-----------
HEALTH CARE MANAGEMENT (0.3%)
Orthodontic Centers Of America 43,050 1,434,103
-----------
MEDICAL AND DENTAL INSTRUMENTS AND SUPPLIES (1.9%)
Biomet, Inc. 201,875 7,065,625
Inamed Corp. 71,425 2,008,828
-----------
Total Medical and Dental Instruments and Supplies 9,074,453
-----------
TOTAL HEALTHCARE 65,655,791
-----------
INTEGRATED OILS (3.7%)
OIL/INTEGRATED DOMESTIC (3.7%)
Amerada Hess Corp. 168,025 $11,247,173
USX-Marathon Group, Inc. 216,500 6,143,188
-----------
TOTAL INTEGRATED OILS 17,390,361
-----------
MATERIALS AND PROCESSING (4.6%)
CHEMICALS (2.0%)
Ecolab, Inc. 121,225 4,371,677
OM Group, Inc. 115,550 5,040,869
-----------
Total Chemicals 9,412,546
-----------
CONTAINERS AND PACKAGING (0.9%)
Bemis Co. 135,575 4,355,347
-----------
PAPER (1.7%)
The Mead Corp. 70,925 1,657,872
Willamette Industries, Inc. 222,725 6,236,300
-----------
Total Paper 7,894,172
-----------
TOTAL MATERIALS AND PROCESSING 21,662,065
-----------
OTHER ENERGY (3.2%)
MACHINERY/OIL WELL EQUIPMENT AND SERVICES (1.7%)
B J Services Co. 63,450 3,878,381
Rowan Companies, Inc. 146,425 4,246,325
-----------
Total Machinery/Oil Well Equipment and Services 8,124,706
-----------
OIL/CRUDE PRODUCERS (1.5%)
Devon Energy Corp. 120,150 7,227,023
-----------
TOTAL OTHER ENERGY 15,351,729
-----------
PRODUCER DURABLES (8.9%)
DIVERSIFIED PRODUCTION (2.0%)
Danaher Corp. 102,050 5,076,987
Dover Corp. 89,850 4,217,334
-----------
Total Diversified Production 9,294,321
-----------
ELECTRONICS/INSTRUMENTS (1.4%)
Tektronix, Inc. 84,175 6,465,692
-----------
IDENTIFICATION CONTROL AND FILTER DEVICES (0.6%)
Parker-Hannifin Corp. 78,950 2,664,562
-----------
MACHINERY/INDUSTRIAL AND SPECIALTY (0.6%)
Ingersoll-Rand Co. 83,850 2,840,419
-----------
PRODUCTION TECHNOLOGY EQUIPMENT (3.6%)
Electro Scientific Industries, Inc. 211,350 7,423,669
See Accompanying Notes to Financial Statements.
11
<PAGE>
SCHEDULE OF INVESTMENTS--SMALL/MID CAP EQUITY PORTFOLIO, CONTINUED
Electroglas, Inc. 194,300 $ 3,315,244
Millipore Corp. 35,000 1,695,313
Novellus Systems, Inc. 64,650 3,010,266
Teradyne, Inc. 40,000 1,400,000
------------
Total Production Technology Equipment 16,844,492
------------
TELECOMMUNICATIONS EQUIPMENT (0.7%)
Polycom, Inc. 46,800 3,134,138
------------
TOTAL PRODUCER DURABLES 41,243,624
------------
TECHNOLOGY (19.0%)
COMMUNICATIONS TECHNOLOGY (3.1%)
ADC Telecommunications, Inc. 219,400 5,899,803
Black Box Corp. 35,725 1,665,678
Copper Mountain Networks, Inc. 56,600 2,122,500
F5 Networks, Inc. 90,700 3,083,800
Go2Net, Inc. 35,075 1,903,367
------------
Total Communications Technology 14,675,148
------------
COMPUTER SERVICES, SOFTWARE AND SYSTEMS (7.9%)
Mercury Interactive Corp. 19,750 3,095,812
Micromuse, Inc. 12,000 2,411,250
Onyx Software Corp. 137,650 2,839,031
Quest Software, Inc. 16,400 1,018,594
Rational Software Corp. 105,400 7,312,125
RealNetworks, Inc. 45,625 1,813,594
Sapient Corp. 77,175 3,140,058
Symantec Corp. 141,075 6,207,300
WatchGuard Technologies, Inc. 78,825 4,729,500
Webtrends Corp. 10,075 376,553
Zoran Corp. 83,475 4,069,406
------------
Total Computer Services, Software and Systems 37,013,223
------------
COMPUTER TECHNOLOGY (1.1%)
Computer Sciences Corp. 51,500 3,823,875
Radisys Corp. 24,250 1,226,141
------------
Total Computer Technology 5,050,016
------------
ELECTRONICS/SEMI-CONDUCTORS (5.2%)
Celestica, Inc. 96,775 6,701,669
Integrated Device Technology, Inc. 134,250 12,149,625
LSI Logic Corp. 77,100 2,255,175
Vitesse Semiconductor Corp. 35,500 3,157,281
------------
Total Electronics/Semi-Conductors 24,263,750
------------
ELECTRONICS/SYSTEMS (1.7%)
Symbol Technologies, Inc. 229,250 $ 8,238,672
------------
TOTAL TECHNOLOGY 89,240,809
------------
UTILITIES (9.0%)
UTILITIES/ELECTRICAL (7.1%)
Constellation Energy Group, Inc. 187,775 9,341,806
PECO Energy Co. 248,425 15,045,239
Pinnacle West Capital Corp. 134,350 6,835,056
PPL Corp. 53,125 2,217,969
------------
Total Utilities/Electrical 33,440,070
------------
UTILITIES/TELECOMMUNICATIONS (1.9%)
CenturyTel, Inc. 216,338 5,895,211
Price Communications Corp. 41,150 804,997
Telephone & Data, Inc. 20,025 2,216,768
------------
Total Utilities/Telecommunications 8,916,976
------------
TOTAL UTILITIES 42,357,046
------------
TOTAL COMMON STOCKS (COST $393,321,841) $467,471,005
------------
SHORT-TERM INVESTMENTS (1.4%) PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* (1.4%)
American Family Financial Services
6.235% 12-01-2000 $ 414,061 $ 414,061
Sara Lee Corp.
6.220% 01-21-2001 5,025,030 5,025,030
Wisconsin Corp. Central Credit Union
6.290% 02-12-2001 725,779 725,779
Wisconsin Electric Power Co.
6.235% 12-30-2000 307,206 307,206
-------------
TOTAL VARIABLE RATE DEMAND NOTES 6,472,076
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $6,472,076) $ 6,472,076
-------------
TOTAL INVESTMENTS IN SECURITIES (100.7%)
(COST $399,793,917) $ 473,943,081
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.7%) $ (3,429,720)
-------------
NET ASSETS (100.0%) $ 470,513,361
=============
* The variable-rate securities are subject to a demand feature which reduces
the remaining maturity.
See Accompanying Notes to Financial Statements.
12
<PAGE>
Core Equity Portfolio
SEPTEMBER 30, 2000 (UNAUDITED)
COMMON STOCKS (98.4%) SHARES VALUE
--------------------------------------------------------------------------------
BASIC INDUSTRY (1.8%)
METALS (0.8%)
Alcoa, Inc. 291,072 $ 7,367,760
-----------
PAPER AND FOREST PRODUCTS (1.0%)
The Mead Corp. 162,052 3,787,966
Weyerhaeuser Co. 79,322 3,202,626
Willamette Industries, Inc. 86,063 2,409,764
-----------
Total Paper and Forest Products 9,400,356
-----------
TOTAL BASIC INDUSTRY 16,768,116
-----------
CAPITAL GOODS (6.8%)
DIVERSIFIED/MANUFACTURING (6.8%)
Danaher Corp. 140,367 6,983,258
Dover Co. 133,645 6,272,962
General Electric Co. 735,899 42,452,174
Ingersoll-Rand Co. 122,326 4,143,793
Tyco International, Ltd. 78,552 4,074,885
-----------
TOTAL CAPITAL GOODS 63,927,072
-----------
COMMUNICATION SERVICES (5.6%)
COMMUNICATIONS (2.5%)
ALLTEL Corp. 131,112 6,842,407
CenturyTel, Inc. 189,668 5,168,453
Qwest Communications International, Inc. 134,335 6,456,476
Worldcom, Inc. 159,330 4,839,649
-----------
Total Communications 23,306,985
-----------
TELECOMMUNICATIONS (0.9%)
General Motors Corp. Cl. H 219,863 8,174,506
-----------
TELEPHONE (2.1%)
BellSouth Corp. 86,500 3,481,625
SBC Communications, Inc. 92,625 4,631,250
Verizon Communications 247,609 11,993,561
-----------
Total Telephone 20,106,436
-----------
TOTAL COMMUNICATION SERVICES 51,587,927
-----------
CONSUMER CYCLICAL (5.7%)
ADVERTISING (0.9%)
Interpublic Group of Companies, Inc. 250,117 8,519,610
-----------
PUBLISHING (0.7%)
McGraw-Hill Companies, Inc. 98,150 6,238,659
-----------
RETAIL (4.1%)
Costco Wholesale Corp. 283,980 9,921,551
The Gap, Inc. 118,350 2,381,794
Home Depot, Inc. 161,435 8,566,145
The Men's Wearhouse, Inc. 106,002 3,001,182
Target Corp. 361,806 9,271,279
Tiffany & Co. 126,243 4,868,246
-----------
Total Retail 38,010,197
-----------
TOTAL CONSUMER CYCLICAL 52,768,466
-----------
CONSUMER STAPLES (8.8%)
ENTERTAINMENT (2.5%)
Time Warner, Inc. 172,104 13,467,138
Viacom, Inc. Cl. B 81,475 4,766,288
The Walt Disney Co. 131,889 5,044,754
-----------
Total Entertainment 23,278,180
-----------
FOODS AND BEVERAGES (4.5%)
Anheuser-Busch Companies, Inc. 418,926 17,725,806
The Coca-Cola Co. 115,870 6,387,334
Canandaigua Brands, Inc. Cl. A 53,224 2,890,729
PepsiCo, Inc. 187,189 8,610,694
The Quaker Oats Co. 78,887 6,241,934
-----------
Total Foods and Beverages 41,856,497
-----------
FOOD/RETAIL (1.4%)
Safeway, Inc. 284,629 13,288,616
-----------
See Accompanying Notes to Financial Statements.
13
<PAGE>
SCHEDULE OF INVESTMENTS--CORE EQUITY PORTFOLIO, CONTINUED
RESTAURANTS (0.4%)
Brinker International, Inc. 133,736 $ 4,028,797
------------
TOTAL CONSUMER STAPLES 82,452,090
------------
ENERGY (5.8%)
ENERGY SERVICES (0.5%)
B J Services Co. 76,275 4,662,309
------------
OIL/EXPLORATION AND PRODUCTION (0.3%)
Anadarko Petroleum Corp. 47,931 3,185,494
------------
OIL/INTEGRATED DOMESTIC (0.6%)
Amerada Hess Corp. 85,326 5,711,509
------------
OIL/INTEGRATED INTERNATIONAL (4.4%)
Chevron Corp. 162,550 13,857,388
Conoco Inc. Cl. B 302,523 8,149,213
ExxonMobil Corp. 187,084 16,673,862
Texaco, Inc. 53,163 2,791,058
------------
Total Oil/Integrated International 41,471,521
------------
TOTAL ENERGY 55,030,833
------------
FINANCIAL (15.6%)
BANKS (2.0%)
The Chase Manhattan Bank 149,516 6,905,770
FleetBoston Financial Corp. 298,109 11,626,251
------------
Total Banks 18,532,021
------------
CONSUMER FINANCE (0.8%)
MBNA Corp. 204,167 7,860,430
------------
DIVERSIFIED FINANCIAL SERVICES (6.9%)
American Express Co. 144,588 8,783,721
Citigroup, Inc. 411,387 22,240,610
Federal Home Loan Mortgage Corp. 229,408 12,402,370
Marsh & McLennan Companies, Inc. 156,703 20,802,323
------------
Total Diversified Financial Services 64,229,024
------------
INSURANCE (3.9%)
American International Group, Inc. 168,040 16,079,328
Cigna Corp 150,964 15,760,642
Lincoln National Corp. 94,825 4,563,453
------------
Total Insurance 36,403,423
------------
INVESTMENT BANKING/BROKERAGE (1.0%)
Goldman Sachs Group, Inc. 41,166 $ 4,690,351
Morgan Stanley Dean Witter & Co. 47,334 4,328,103
------------
Total Investment Banking/Brokerage 9,018,454
------------
INVESTMENT MANAGEMENT (1.0%)
Stilwell Financial, Inc. 222,408 9,674,748
------------
TOTAL FINANCIAL 145,718,100
------------
HEALTHCARE (11.6%)
BIOTECHNOLOGY (2.5%)
Amgen, Inc. 101,475 7,085,809
Genentech, Inc. 39,702 7,372,165
MedImmune, Inc. 113,527 8,769,961
------------
Total Biotechnology 23,227,935
------------
DRUGS (5.2%)
Bristol-Myers Squibb Co. 122,157 6,978,219
Johnson & Johnson Co. 119,001 11,178,656
Merck & Co., Inc. 173,875 12,942,820
Pharmacia & Upjohn, Inc. 177,255 10,668,535
Teva Pharmaceuticals Industries ADR 93,821 6,866,524
------------
Total Drugs 48,634,754
------------
DIVERSIFIED HEALTH CARE (3.9%)
Allergan, Inc. 108,425 9,155,136
American Home Products Corp. 200,788 11,357,071
Baxter International, Inc. 202,605 16,170,412
------------
Total Diversified Health Care 36,682,619
------------
TOTAL HEALTHCARE 108,545,308
------------
TECHNOLOGY (30.4%)
AEROSPACE (1.9%)
Boeing Co. 190,640 12,010,320
United Technologies Corp. 78,579 5,441,596
------------
Total Aerospace 17,451,916
------------
COMPUTER SOFTWARE/SERVICES (8.2%)
BEA Systems, Inc. 44,075 3,432,341
Computer Sciences Corp. 102,595 7,617,679
Comverse Technology, Inc. 124,900 13,489,200
Exodus Communications, Inc. 85,973 4,244,917
Microsoft Corp. 338,843 20,436,468
Oracle Corp. 213,622 16,822,732
Rational Software Corp. 65,625 4,552,734
------------
See Accompanying Notes to Financial Statements
14
<PAGE>
Siebel Systems, Inc. 54,402 $ 6,055,623
------------
Total Computer Software/Services 76,651,694
------------
COMPUTER SYSTEMS (6.6%)
EMC Corp. 216,089 21,419,822
Hewlett-Packard Co. 75,458 7,319,426
Sun Microsystems, Inc. 279,868 32,674,589
------------
Total Computer Systems 61,413,837
------------
ELECTRONICS/MANUFACTURING (0.5%)
Flextronics International Ltd. 61,018 5,011,103
------------
ELECTRONICS/SEMI-CONDUCTORS (5.6%)
Analog Devices, Inc. 101,478 8,378,277
Applied Materials, Inc. 2,782 165,007
Intel Corp. 472,764 19,649,254
LSI Logic Corp. 173,400 5,071,950
Novellus Systems, Inc. 50,800 2,365,375
Teradyne, Inc. 83,343 2,917,005
Texas Instruments, Inc. 177,085 8,356,198
Vitesse Semiconductor Corp. 63,401 5,638,726
------------
Total Electronics/Semi-Conductors 52,541,792
------------
ELECTRONICS/SYSTEMS (0.8%)
Symbol Technologies, Inc. 200,815 7,216,789
------------
NETWORKING/COMMUNICATIONS EQUIPMENT (6.8%)
Cisco Systems, Inc. 547,835 30,267,884
JDS Uniphase Corp. 36,137 3,421,722
Nokia Corp., ADR 341,124 13,580,999
Nortel Networks Corp. 273,495 16,290,046
------------
Total Networking/Communications Equipment 63,560,651
------------
TOTAL TECHNOLOGY 283,847,782
------------
TRANSPORTATION (1.1%)
AIRLINES/AIR FREIGHT (1.1%)
Southwest Airlines Co. 175,655 4,259,634
United Parcel Service 101,250 5,707,969
------------
TOTAL TRANSPORTATION 9,967,603
------------
UTILITIES (5.3%)
ELECTRIC/NATURAL GAS (5.3%)
AES Corp. 250,929 17,188,637
Constellation Energy Group, Inc. 171,847 8,549,388
Duke Energy Corp. 196,443 16,844,987
El Paso Energy Corp. 109,275 6,734,072
------------
TOTAL UTILITIES 49,317,084
------------
TOTAL COMMON STOCKS (COST $660,961,003) $919,930,381
------------
SHORT-TERM INVESTMENTS (1.8%) PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* (1.8%)
American Family Financial Services
6.235% 12-01-2000 $ 3,968,915 $ 3,968,915
Sara Lee Corp.
6.220% 01-21-2001 7,250,240 7,250,240
Wisconsin Corp. Central Credit Union
6.290% 02-12-2001 1,535,593 1,535,593
Wisconsin Electric Power Co.
6.235% 12-30-2000 3,802,717 3,802,717
-------------
TOTAL VARIABLE RATE DEMAND NOTES 16,557,465
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $16,557,465) $ 16,557,465
-------------
TOTAL INVESTMENTS IN SECURITIES (100.2%)
(COST $677,518,468) $ 936,487,846
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2%) $ (2,016,523)
-------------
NET ASSETS (100.0%) $ 934,471,323
=============
* The variable-rate securities are subject to a demand feature which reduces
the remaining maturity.
See Accompanying Notes to Financial Statements.
15
<PAGE>
SCHEDULES OF INVESTMENTS--CONTINUED
Growth Equity Portfolio
SEPTEMBER 30, 2000 (UNAUDITED)
COMMON STOCKS (100.1%) SHARES VALUE
--------------------------------------------------------------------------------
CONSUMER DISCRETIONARY (9.0%)
COMMERCIAL INFORMATION SYSTEMS (1.6%)
America Online, Inc. 310 $ 16,662
--------
COSMETICS (0.8%)
Estee Lauder Companies, Inc. 225 8,241
--------
ENTERTAINMENT (2.8%)
Time Warner, Inc. 160 12,520
Viacom, Inc. Cl. B 290 16,965
--------
Total Entertainment 29,485
--------
RETAIL (3.8%)
Best Buy Co., Inc. 150 9,544
Costco Wholesale Corp. 400 13,975
Home Depot, Inc. 200 10,612
Kohls Corp. 100 5,769
--------
Total Retail 39,900
--------
TOTAL CONSUMER DISCRETIONARY 94,288
--------
CONSUMER STAPLES (0.8%)
SOAPS AND HOUSEHOLD CHEMICALS (0.8%)
Colgate Palmolive Co. 175 8,260
--------
TOTAL CONSUMER STAPLES 8,260
--------
ENERGY (6.1%)
ENERGY MISCELLANEOUS (3.2%)
AES Corp. 500 34,250
--------
GAS PIPELINES (2.9%)
Enron Corp. 350 30,669
--------
TOTAL ENERGY 64,919
--------
FINANCIAL SERVICES (6.9%)
BANKS/OUTSIDE NEW YORK CITY (1.8%)
State Street Corp. 150 $ 19,500
--------
DIVERSIFIED FINANCIAL SERVICES (3.1%)
Citigroup, Inc. 266 14,381
Morgan Stanley Dean Witter & Co. 200 18,287
--------
Total Diversified Financial Services 32,668
--------
SECURITIES BROKERAGE AND SERVICES (2.0%)
Charles Schwab Corp. 600 21,300
--------
TOTAL FINANCIAL SERVICES 73,468
--------
HEALTHCARE (15.7%)
BIOTECHNOLOGY (2.5%)
Genentech, Inc. 145 26,925
--------
DRUGS AND PHARMACEUTICALS (11.2%)
Allergan, Inc. 100 8,444
Amgen, Inc. 225 15,711
Johnson & Johnson Co. 160 15,030
MedImmune, Inc. 200 15,450
Merck & Co., Inc. 275 20,470
Pfizer, Inc. 750 33,703
Protein Design Labs 80 9,640
--------
Total Drugs and Pharmaceuticals 118,448
--------
ELECTRONICS MEDICAL SYSTEMS (2.0%)
Medtronic, Inc. 400 20,725
--------
TOTAL HEALTHCARE 166,098
--------
OTHER (6.0%)
MULTI-SECTOR COMPANIES (6.0%)
General Electric Co. 1,100 63,456
--------
TOTAL OTHER 63,456
--------
PRODUCER DURABLES (3.2%)
PRODUCTION TECHNOLOGY EQUIPMENT (1.6%)
Applied Materials, Inc. 175 10,380
--------
See Accompanying Notes to Financial Statements
16
<PAGE>
Teradyne, Inc. 200 $ 7,000
----------
Total Production Technology Equipment 17,380
----------
TELECOMMUNICATIONS EQUIPMENT (1.6%)
Nokia Corp., ADR 425 16,920
----------
TOTAL PRODUCER DURABLES 34,300
----------
TECHNOLOGY (48.7%)
COMMUNICATIONS TECHNOLOGY (17.0%)
ADC Telecommunications, Inc. 250 6,723
Brocade Communications Systems, Inc. 60 14,160
Cisco Systems, Inc. 740 40,885
Comverse Technology, Inc. 150 16,200
Corning, Inc. 100 29,700
General Motors Corp. Cl. H 200 7,436
JDS Uniphase Corp. 160 15,150
Juniper Networks, Inc. 125 27,367
Nortel Network Corp. 375 22,336
----------
Total Communications Technology 179,957
----------
COMPUTER SERVICES, SOFTWARE AND SYSTEMS (11.1%)
i2 Technologies, Inc. 80 14,965
Mercury Interactive Corp. 120 18,810
Microsoft Corp. 250 15,078
Oracle Corp. 275 21,656
Siebel Systems, Inc. 260 28,941
VERITAS Software Corp. 125 17,750
----------
Total Computer Services, Software and Systems 117,200
----------
COMPUTER TECHNOLOGY (8.5%)
Corvis Corp. 150 9,157
Dell Computer Corp. 325 10,014
EMC Corp/Mass 320 31,720
Sun Microsystems, Inc. 340 39,695
----------
Total Computer Technology 90,586
----------
ELECTRONICS/SEMI-CONDUCTORS (9.4%)
Applied Micro Circuits Corp. 60 12,424
Broadcom Corp. 100 24,375
Intel Corp. 600 24,937
PMC-Sierra, Inc. 55 11,839
Texas Instruments, Inc. 300 14,156
Vitesse Semiconductor Corp. 130 11,562
----------
Total Electronics/Semi-Conductors 99,293
----------
SCIENTIFIC EQUIPMENT AND SYSTEMS (2.7%)
PE Corp.-PE Biosystems Group 250 29,125
----------
TOTAL TECHNOLOGY 516,161
----------
UTILITIES(3.7%)
CABLE TELEVISION AND RADIO (1.5%)
Comcast Corp.-Special Class A 400 16,375
----------
TELECOMMUNICATIONS (2.2%)
Qwest Communications
International, Inc. 300 14,419
Sprint Corp. (Pcs Group) 250 8,766
----------
Total Telecommunications 23,185
----------
TOTAL UTILITIES 39,560
----------
TOTAL COMMON STOCKS (COST $1,020,621) $1,060,510
----------
SHORT-TERM INVESTMENTS (0.1%) PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
DEMAND NOTES (0.1%)
Firstar Bank 6.370%, due upon demand $ 1,359 $ 1,359
-----------
TOTAL DEMAND NOTES 1,359
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $1,359) $ 1,359
-----------
TOTAL INVESTMENTS IN SECURITIES (100.2%)
(COST $1,021,980) $ 1,061,869
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2%) $ (1,615)
-----------
NET ASSETS (100.0%) $ 1,060,254
-----------
See Accompanying Notes to Financial Statements.
17
<PAGE>
SCHEDULES OF INVESTMENTS--CONTINUED
Balanced Portfolio
SEPTEMBER 30, 2000 (UNAUDITED)
LONG-TERM DEBT SECURITIES (30.6%) PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
CORPORATE BONDS (18.9%)
FINANCE (17.4%)
AUTOMOBILES (1.2%)
Ford Motor Credit Co.
6.125% 04-28-2003 $ 190,000 $ 185,900
GMAC
5.500% 12-15-2001 500,000 491,900
5.750% 11-10-2003 1,000,000 965,261
-----------
Total Automobiles 1,643,061
-----------
BANKS (2.9%)
Bank of America Corp.
7.875% 05-16-2005 1,500,000 1,552,599
Citicorp
7.125% 06-01-2003 1,000,000 1,003,485
NationsBank Corp.
6.125% 07-15-2004 1,350,000 1,308,843
-----------
Total Banks 3,864,927
-----------
CONSUMER (2.4%)
Avco Financial Services
6.000% 08-15-2002 800,000 785,347
Beneficial Corp.
6.350% 12-03-2001 850,000 844,393
Sears, Roebuck & Co.
6.670% 07-07-2003 1,000,000 983,372
Sears Roebuck Acceptance Medium-Term Note
7.110% 06-19-2001 650,000 651,458
-----------
Total Consumer 3,264,570
-----------
DIVERSIFIED (4.0%)
Associates Corp. of North America
7.500% 04-15-2002 100,000 100,988
5.750% 11-01-2003 1,000,000 969,069
Associates Corp. of North America Medium-Term Note
6.840% 07-03-2001 850,000 851,158
Commercial Credit Corp.
6.875% 05-01-2002 200,000 200,108
6.500% 06-01-2005 1,150,000 1,123,858
Household Finance Corp.
8.000% 05-09-2005 2,000,000 2,067,132
-----------
Total Diversified 5,312,313
-----------
INSURANCE (2.4%)
Hartford Life, Inc.
6.900% 06-15-2004 1,000,000 992,094
Reliastar Financial Corp.
6.500% 11-15-2008 1,600,000 1,503,445
Travelers Property & Casualty Corp.
6.750% 04-15-2001 750,000 749,434
-----------
Total Insurance 3,244,973
-----------
LEASING COMPANIES (0.7%)
International Lease Finance Corp.
6.250% 10-15-2000 500,000 499,888
International Lease Finance Corp.
Medium-Term Note
6.340% 02-01-2002 450,000 448,362
-----------
Total Leasing Companies 948,250
-----------
OTHER FINANCE (3.8%)
Goldman Sachs Group
6.650% 05-15-2009 2,000,000 1,894,878
Merrill Lynch
7.375% 08-17-2002 30,000 30,297
6.000% 02-12-2003 500,000 491,485
5.880% 01-15-2004 700,000 677,211
Morgan Stanley Group
5.750% 02-15-2001 500,000 498,300
6.125% 10-01-2003 215,000 210,902
Salomon Smith Barney Holdings, Inc.
6.625% 07-01-2002 1,300,000 1,293,627
-----------
Total Other Finance 5,096,700
-----------
TOTAL FINANCE 23,374,794
-----------
INDUSTRIAL (1.5%)
ENERGY AND RELATED GOODS AND SERVICES (0.3%)
Texaco Capital Medium-Term Note
7.250% 08-01-2002 400,000 402,456
-----------
See Accompanying Notes to Financial Statements.
18
<PAGE>
MEDICAL AND RELATED GOODS AND SERVICES (0.1%)
SmithKline Beecham PLC Corp. Medium-Term Note
6.625% 10-01-2005 $ 200,000 $ 197,048
-----------
TELEPHONE (1.1%)
AT&T Corp.
5.625% 03-15-2004 1,500,000 1,434,437
-----------
TOTAL INDUSTRIAL 2,033,941
-----------
TOTAL CORPORATE BONDS 25,408,735
-----------
U.S. TREASURY NOTES (10.9%)
5.750% 10-31-2000 700,000 699,782
7.750% 02-15-2001 970,000 975,154
7.500% 11-15-2001 400,000 405,375
6.375% 08-15-2002 2,500,000 2,515,625
6.250% 02-15-2003 425,000 427,656
5.750% 08-15-2003 700,000 696,500
6.000% 08-15-2004 3,000,000 3,010,314
7.000% 07-15-2006 2,750,000 2,892,656
6.500% 10-15-2006 3,000,000 3,083,439
-----------
TOTAL U.S. TREASURY NOTES 14,706,501
-----------
FOREIGN BONDS (U.S. DOLLAR DENOMINATED) (0.8%)
Hydro Quebec
7.375% 02-01-2003 350,000 354,714
-----------
Ontario Global Bond
7.375% 01-27-2003 650,000 660,237
-----------
TOTAL FOREIGN BONDS 1,014,951
-----------
TOTAL LONG-TERM DEBT SECURITIES (COST $41,606,095) $41,130,187
===========
COMMON STOCKS (63.7%) SHARES VALUE
--------------------------------------------------------------------------------
BASIC INDUSTRY (1.3%)
METALS (0.6%)
Alcoa, Inc. 31,800 $ 804,937
----------
PAPER AND FOREST PRODUCTS (0.7%)
The Mead Corp. 15,000 350,625
Weyerhaeuser Co. 7,550 304,831
Willamette Industries, Inc. 12,225 342,300
----------
Total Paper and Forest Products 997,756
----------
TOTAL BASIC INDUSTRY 1,802,693
----------
CAPITAL GOODS (3.8%)
DIVERSIFIED MANUFACTURING (3.8%)
Danaher Corp. 13,075 $ 650,481
Dover Corp. 13,425 630,136
General Electric Co. 51,675 2,981,002
Ingersoll-Rand Co. 11,800 399,725
Tyco International, Ltd. 9,175 475,953
----------
TOTAL CAPITAL GOODS 5,137,297
----------
COMMUNICATION SERVICES (3.5%)
COMMUNICATIONS (1.5%)
ALLTEL Corp. 10,125 528,398
CenturyTel, Inc. 18,287 498,321
Qwest Communications
International, Inc. 13,100 629,619
Worldcom, Inc. 14,825 450,309
----------
Total Communications 2,106,647
----------
TELECOMMUNICATIONS (0.6%)
General Motors Corp. Cl. H 20,400 758,472
----------
TELEPHONE (1.4%)
BellSouth Corp. 5,150 207,287
SBC Communications, Inc. 10,525 526,250
Verizon Communications 23,871 1,156,252
----------
Total Telephone 1,889,789
----------
TOTAL COMMUNICATION SERVICES 4,754,908
----------
CONSUMER CYCLICAL (3.8%)
ADVERTISING (0.6%)
Interpublic Group of Companies, Inc. 24,150 822,609
----------
PUBLISHING (0.6%)
McGraw-Hill Companies, Inc. 11,850 753,216
----------
RETAIL (2.6%)
Costco Wholesale Corp. 26,650 931,084
The Gap, Inc. 13,125 264,141
Home Depot, Inc. 15,499 822,416
The Men's Wearhouse, Inc. 10,225 289,495
Target Corp. 33,575 860,359
Tiffany & Co. 9,650 372,128
----------
Total Retail 3,539,623
----------
TOTAL CONSUMER CYCLICAL 5,115,448
----------
See Accompanying Notes to Financial Statements.
19
<PAGE>
SCHEDULE OF INVESTMENTS--BALANCED PORTFOLIO, CONTINUED
CONSUMER STAPLES (5.8%)
ENTERTAINMENT (1.6%)
Time Warner, Inc. 15,375 $ 1,203,094
Viacom, Inc. Cl. B 7,775 454,837
The Walt Disney Co. 12,575 480,994
-----------
Total Entertainment 2,138,925
-----------
FOODS/BEVERAGES (3.0%)
Anheuser-Busch Companies, Inc. 38,050 1,609,991
The Coca-Cola Co. 10,825 596,728
Constellation Brands, Inc. Cl. A 7,125 386,976
PepsiCo, Inc. 18,525 852,150
The Quaker Oats Co. 8,025 634,978
-----------
Total Foods/Beverages 4,080,823
-----------
FOOD/RETAIL (0.9%)
Safeway, Inc. 26,400 1,232,550
-----------
RESTAURANTS (0.3%)
Brinker International, Inc. 15,050 453,381
-----------
TOTAL CONSUMER STAPLES 7,905,679
-----------
ENERGY (3.9%)
ENERGY SERVICES (0.3%)
B J Services Co. 7,175 438,572
-----------
OIL/EXPLORATION AND PRODUCTION (0.2%)
Anadarko Petroleum Corp. 4,269 283,718
-----------
OIL/INTEGRATED DOMESTIC (0.5%)
Amerada Hess Corp. 9,925 664,355
-----------
OIL/INTEGRATED INTERNATIONAL (2.9%)
Chevron Corp. 14,375 1,225,469
Conoco Inc. Cl. B 25,972 699,621
ExxonMobil Corp. 18,754 1,671,450
Texaco, Inc. 4,850 254,625
-----------
Total Oil/Integrated International 3,851,165
-----------
TOTAL ENERGY 5,237,810
-----------
FINANCIAL (10.4%)
BANKS (1.3%)
The Chase Manhattan Corp. 13,875 640,851
FleetBoston Financial Corp. 28,500 1,111,500
-----------
Total Banks 1,752,351
-----------
CONSUMER FINANCE (0.6%)
MBNA Corp. 19,050 733,425
-----------
DIVERSIFIED FINANCIAL SERVICES (4.5%)
American Express Co. 13,100 795,825
Citigroup, Inc. 39,415 2,130,873
Federal Home Loan Mortgage Corp. 21,550 1,165,047
Marsh & McLennan Companies, Inc. 14,687 1,949,699
-----------
Total Diversified Financial Services 6,041,444
-----------
INSURANCE (2.5%)
American International
Group, Inc. 14,820 1,418,089
Cigna Corp. 14,450 1,508,580
Lincoln National Corp. 8,775 422,297
-----------
Total Insurance 3,348,966
-----------
INVESTMENT BANKING/BROKERAGE (0.8%)
Goldman Sachs Group, Inc. 3,750 427,266
Morgan Stanley Dean Witter & Co. 6,525 596,630
-----------
Total Investment Banking/Brokerage 1,023,896
-----------
INVESTMENT MANAGEMENT (0.7%)
Stilwell Financial, Inc 20,550 893,925
-----------
TOTAL FINANCIAL 13,794,007
-----------
HEALTHCARE (7.9%)
BIOTECHNOLOGY (1.6%)
Amgen, Inc. 8,200 572,591
Genentech, Inc. 3,700 687,044
MedImmune, Inc. 11,800 911,550
-----------
Total Biotechnology 2,171,185
-----------
DIVERSIFIED HEALTH CARE (2.7%)
Allergan, Inc. 9,725 821,155
American Home Products Corp. 27,075 1,531,430
Baxter International, Inc. 15,650 1,249,066
-----------
Total Diversified Health Care 3,601,651
-----------
DRUGS (3.6%)
Bristol-Myers Squibb Co. 11,550 659,794
Johnson & Johnson Co. 14,550 1,366,791
Merck & Co., Inc. 16,325 1,215,192
Pharmacia & Upjohn, Inc. 16,982 1,022,104
Teva Pharmaceuticals Industries ADR 8,500 622,094
-----------
Total Drugs 4,885,975
-----------
TOTAL HEALTHCARE 10,658,811
-----------
See Accompanying Notes to Financial Statements
20
<PAGE>
TECHNOLOGY(19.5%)
AEROSPACE (1.1%)
Boeing Co. 15,575 $ 981,225
United Technologies Corp. 7,000 484,750
-----------
Total Aerospace 1,465,975
-----------
COMPUTER SOFTWARE/SERVICES (5.2%)
BEA Systems, Inc. 4,275 332,916
Computer Sciences Corp. 9,350 694,237
Comverse Technology, Inc. 10,700 1,155,600
Exodus Communications, Inc. 8,000 395,000
Microsoft Corp. 31,325 1,889,289
Oracle Corp. 19,750 1,555,312
Rational Software Corp. 6,175 428,391
Siebel Systems, Inc. 5,250 584,391
-----------
Total Computer Software/Services 7,035,136
-----------
COMPUTER SYSTEMS (4.1%)
EMC Corp. 17,850 1,769,381
Hewlett-Packard Co. 6,875 666,875
Sun Microsystems, Inc. 26,150 3,053,012
-----------
Total Computer Systems 5,489,268
-----------
ELECTRONICS/MANUFACTURING (0.4%)
Flextronics International Ltd. 6,325 519,441
-----------
ELECTRONICS/SEMI-CONDUCTORS (3.8%)
Analog Devices, Inc. 9,500 784,344
Applied Materials, Inc. 1,125 66,726
Intel Corp. 43,950 1,826,672
LSI Logic Corp. 16,200 473,850
Novellus Systems, Inc. 6,975 324,773
Teradyne, Inc. 11,350 397,250
Texas Instruments, Inc. 16,800 792,750
Vitesse Semiconductor Corp. 5,625 500,273
-----------
Total Electronics/Semi-Conductors 5,166,638
-----------
ELECTRONICS/SYSTEMS (0.5%)
Symbol Technologies, Inc. 19,112 686,837
-----------
NETWORKING/COMMUNICATIONS EQUIPMENT (4.4%)
Cisco Systems, Inc. 50,596 2,795,429
JDS Uniphase Corp. 3,400 321,937
Nokia Corp., ADR 32,300 1,285,944
Nortel Networks Corp. 24,875 1,481,617
-----------
Total Networking/Communications Equipment 5,884,927
-----------
TOTAL TECHNOLOGY 26,248,222
-----------
TRANSPORTATION (0.7%)
AIRLINES/AIR FREIGHT (0.7%)
Southwest Airlines Co. 16,275 $ 394,669
United Parcel Service 9,175 517,241
-----------
TOTAL TRANSPORTATION 911,910
-----------
UTILITIES(3.1%)
ELECTRIC/NATURAL GAS (3.1%)
AES Corp. 23,350 1,599,475
Constellation Energy Group, Inc. 16,225 807,194
Duke Energy Corp. 16,600 1,423,450
El Paso Energy Corp. 5,150 317,369
-----------
TOTAL UTILITIES 4,147,488
-----------
TOTAL COMMON STOCKS (COST $65,029,718) $85,714,273
-----------
SHORT-TERM INVESTMENTS (6.2%) PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* (6.2%)
American Family Financial Services
6.235% 12-01-2000 $2,258,108 $ 2,258,108
Sara Lee Corp.
6.220% 01-21-2001 2,175,100 2,175,100
Wisconsin Corp. Central Credit Union
6.290% 02-12-2001 1,849,774 1,849,775
Wisconsin Electric Power Co.
6.235% 12-30-2000 2,063,901 2,063,901
-------------
TOTAL VARIABLE RATE DEMAND NOTES 8,346,884
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $8,346,884) $ 8,346,884
-------------
TOTAL INVESTMENTS IN SECURITIES (100.5%)
(COST $114,982,697) $ 135,191,344
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.5%) $ (606,734)
-------------
NET ASSETS (100.0%) $ 134,584,610
=============
* The variable-rate securities are subject to a demand feature which reduces
the remaining maturity.
See Accompanying Notes to Financial Statements.
21
<PAGE>
SCHEDULES OF INVESTMENTS--CONTINUED
Intermediate Fixed Income Portfolio
SEPTEMBER 30, 2000 (UNAUDITED)
LONG-TERM DEBT SECURITIES (98.3%) PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
CORPORATE BONDS (42.1%)
FINANCE (38.0%)
AUTOMOBILE (2.9%)
Ford Credit Co.
6.125% 04-28-2003 $ 125,000 $ 122,303
GMAC Medium-Term Note
6.500% 12-06-2004 500,000 489,818
----------
Total Automobile 612,121
----------
BANKS (3.8%)
Banc One Corp.
7.375% 12-01-2002 780,000 786,066
----------
CONSUMER (7.1%)
Beneficial Corp. Medium-Term Note
6.510% 12-03-2003 500,000 489,953
Sears, Roebuck & Co.
6.670% 07-07-2003 1,000,000 983,372
----------
Total Consumer 1,473,325
----------
DIVERSIFIED (8.6%)
Associates Corp. of North America Medium-Term Note
6.840% 07-03-2001 350,000 350,477
Commercial Credit TRV
6.500% 06-01-2005 400,000 390,907
Household Finance Corp.
8.000% 05-09-2005 1,000,000 1,033,566
----------
Total Diversified 1,774,950
----------
INVESTMENT BANKING/BROKERAGE (14.6%)
Goldman Sachs Group
6.650% 05-15-2009 600,000 568,463
----------
Merrill Lynch
5.880% 01-15-2004 475,000 459,536
----------
Morgan Stanley Dean Witter
6.125% 10-01-2003 200,000 196,188
6.375% 12-05-2003 175,000 172,371
5.625% 01-20-2004 500,000 481,112
----------
Salomon Smith Barney Holdings
6.625% 07-01-2002 1,150,000 1,144,363
----------
Total Investment Banking/Brokerage 3,022,033
----------
LEASING COMPANIES (1.0%)
International Lease Finance Corp.
6.250% 10-15-2000 200,000 199,955
----------
TOTAL FINANCE 7,868,450
----------
INDUSTRIAL (4.1%)
TELEPHONE (4.1%)
AT&T Corp.
5.625% 03-15-2004 900,000 860,662
----------
TOTAL INDUSTRIAL 860,662
----------
TOTAL CORPORATE BONDS 8,729,112
----------
U.S. TREASURY NOTES (53.8%)
7.500% 11-15-2001 500,000 506,719
6.625% 03-31-2002 1,000,000 1,007,500
6.375% 08-15-2002 1,300,000 1,308,125
6.250% 02-15-2003 75,000 75,469
5.750% 08-15-2003 1,500,000 1,492,500
7.250% 05-15-2004 1,000,000 1,042,813
7.000% 07-15-2006 2,400,000 2,524,500
6.500% 10-15-2006 2,100,000 2,158,407
6.625% 05-15-2007 1,000,000 1,036,875
----------
TOTAL U.S. TREASURY NOTES 11,152,908
==========
See Accompanying Notes to Financial Statements.
22
<PAGE>
FOREIGN BONDS (U.S. DOLLAR DENOMINATED) (2.4%)
Hydro Quebec
7.375% 02-01-2003 $ 200,000 $ 202,694
-----------
Ontario Global Bond
7.375% 01-27-2003 290,000 294,567
-----------
TOTAL FOREIGN BONDS 497,261
-----------
TOTAL LONG-TERM DEBT SECURITIES (COST $20,662,732) $20,379,281
===========
SHORT-TERM INVESTMENTS (0.2%) PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* (0.2%)
American Family Financial Services
6.235% 12-01-2000 36,414 36,414
-----------
TOTAL VARIABLE RATE DEMAND NOTES 36,414
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $36,414) $ 36,414
-----------
TOTAL INVESTMENTS IN SECURITIES (98.5%)
(COST $20,699,146) $20,415,695
-----------
OTHER ASSETS LESS LIABILITIES (1.5%) $ 311,184
-----------
NET ASSETS (100.0%) $20,726,879
===========
* The variable-rate securities are subject to a demand feature which reduces
the remaining maturity. See accompanying notes to financial statements.
See Accompanying Notes to Financial Statements.
23
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SMALL/MID GROWTH INTERMEDIATE
CAP EQUITY CORE EQUITY EQUITY BALANCED FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities at value
(Note 2) (cost of $399,793,917,
$677,518,468, $1,021,980, $114,982,697
and $20,699,146 respectively) $ 473,943,081 $ 936,487,846 $ 1,061,869 $135,191,344 $ 20,415,695
Cash -- 6,142 7 623 --
Receivables
Investment securities sold 2,944,642 6,163,609 -- 467,364 --
Dividends and interest 472,762 544,707 363 893,233 422,615
Fund shares sold 2,098,393 2,300,088 -- 3,763 1,250
Due from Investment Advisor (Note 3) -- -- 1,830 -- 1,471
Prepaid expenses -- -- 1,331 -- 2,214
------------- ------------- ----------- ------------ ------------
Total assets 479,458,878 945,502,392 1,065,400 136,556,327 20,843,245
------------- ------------- ----------- ------------ ------------
LIABILITIES
Payables
Investment securities purchased 8,202,869 9,866,198 -- 1,257,660 --
Fund shares redeemed 169,769 195,896 -- 5,251 --
Distributions to shareholders -- -- -- 541,629 90,905
Due to Investment Advisor (Note 3) 330,635 589,269 -- 83,626 --
Due under Distribution Plan (Note 3) 97,246 196,423 225 28,279 1,721
Accrued expenses 133,361 163,888 4,621 51,393 19,861
Deferred trustees compensation (Note 5) 11,637 19,395 300 3,879 3,879
------------- ------------- ----------- ------------ ------------
Total liabilities 8,945,517 11,031,069 5,146 1,971,717 116,366
------------- ------------- ----------- ------------ ------------
NET ASSETS $ 470,513,361 $ 934,471,323 $ 1,060,254 $134,584,610 $ 20,726,879
============= ============= =========== ============ ============
COMPOSITION OF NET ASSETS
Paid-in capital $ 333,348,914 $ 598,141,761 $ 1,000,000 $110,495,634 $ 21,007,968
Accumulated net investment income (loss) (644,174) (1,067,729) (1,822) 15,707 6,241
Accumulated net realized gain (loss)
on investments 63,659,457 78,427,913 22,187 3,864,622 (3,879)
Net unrealized appreciation (depreciation)
on investments 74,149,164 258,969,378 39,889 20,208,647 (283,451)
------------- ------------- ----------- ------------ ------------
Net assets $ 470,513,361 $ 934,471,323 $ 1,060,254 $134,584,610 $ 20,726,879
============= ============= =========== ============ ============
Number of shares issued and outstanding
(unlimited shares authorized) no par value 15,810,811 30,408,077 40,000 7,221,725 1,724,958
============= ============= =========== ============ ============
Net asset value per share $ 29.76 $ 30.73 $ 26.51 $ 18.64 $ 12.02
============= ============= =========== ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
STATEMENTS OF OPERATIONS
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS FOR
THE PERIOD ENDING SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SMALL/MID GROWTH INTERMEDIATE
CAP EQUITY CORE EQUITY EQUITY BALANCED FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividend income $ 1,980,564 $ 3,717,760 $ 863 $ 334,537 $ --
Interest income 217,294 452,867 1,037 1,521,019 676,549
------------ ------------ -------- ----------- ---------
Total income 2,197,858 4,170,627 1,900 1,855,556 676,549
------------ ------------ -------- ----------- ---------
EXPENSES
Investment advisory fees (Note 3) 1,940,055 3,539,848 2,346 456,697 49,833
Custodian fees 59,912 113,758 175 24,611 2,720
Administration fees (Note 3) 113,596 186,717 3,518 57,690 11,074
Fund accounting fees 27,585 40,383 1,026 18,449 12,442
Transfer agent fees 20,853 28,726 1,055 7,723 6,008
Legal fees 2,868 6,317 733 703 141
Distribution fees (Note 3) 570,604 1,179,949 782 163,106 11,074
Investment securities purchased 11,130 18,551 1,851 3,709 3,710
Reports to shareholders 22,562 25,069 147 4,513 2,006
Registration expense 71,939 79,336 219 12,949 10,017
Trustee fees 3,300 5,499 528 1,100 1,100
Start up costs -- -- 7,500 -- --
Miscellaneous expense 9,098 14,505 293 3,896 2,083
------------ ------------ -------- ----------- ---------
Total expenses 2,853,502 5,238,658 20,173 755,146 112,208
Less: fees waived and expenses
absorbed (Note 3) -- -- (16,451) -- (51,480)
Add: expenses recouped
by advisor (Note 3) -- -- -- 20,736 --
------------ ------------ -------- ----------- ---------
Net expenses 2,853,502 5,238,658 3,722 775,882 60,728
------------ ------------ -------- ----------- ---------
NET INVESTMENT INCOME (LOSS) (655,644) (1,068,031) (1,822) 1,079,674 615,821
------------ ------------ -------- ----------- ---------
NETREALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments 7,607,976 43,403,474 22,187 1,546,623 (3,312)
Net unrealized appreciation (depreciation)
on investments 8,127,578 (69,719,615) 39,889 (2,623,709) 344,427
------------ ------------ -------- ----------- ---------
NET GAIN (LOSS) ON INVESTMENTS 15,735,554 (26,316,141) 62,076 (1,077,086) 341,115
------------ ------------ -------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 15,079,910 $(27,384,172) $ 60,254 $ 2,588 $ 956,936
============ ============ ======== =========== =========
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
<TABLE>
<CAPTION>
SMALL/MID CAP EQUITY PORTFOLIO CORE EQUITY PORTFOLIO
------------------------------- -----------------------------------
For the six For the fiscal For the six For the fiscal
months ending year ending months ending year ending
09/30/00* 03/31/00 09/30/00* 03/31/00
------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income (loss) $ (655,644) $ (1,038,079) $ (1,068,031) $ (1,092,718)
Net realized gain (loss) on investments 7,607,976 85,726,484 43,403,474 72,990,860
Net unrealized appreciation
(depreciation) on investments 8,127,578 75,339,005 (69,719,615) 183,448,956
------------- ------------- --------------- ---------------
Increase (decrease) in net assets
resulting from operations 15,079,910 160,027,410 (27,384,172) 255,347,098
------------- ------------- --------------- ---------------
Distributions to shareholders
From net investment income -- -- -- (95,818)
From net realized gain -- -- -- (51,779,011)
------------- ------------- --------------- ---------------
Total distributions -- -- -- (51,874,829)
------------- ------------- --------------- ---------------
Investment securities purchased
Proceeds from shares sold 76,140,638 103,535,228 175,540,315 254,130,029
Net asset value of shares issued on
reinvestment of distributions -- -- -- 51,272,679
Cost of shares redeemed (88,945,135) (225,352,240) (219,733,006) (413,414,237)
------------- ------------- --------------- ---------------
Net increase (decrease) from
capital share transactions (12,804,497) (121,817,012) (44,192,691) (108,011,529)
------------- ------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS 2,275,413 38,210,398 (71,576,863) 95,460,740
NET ASSETS
Beginning of period 468,237,948 430,027,550 1,006,048,186 910,587,446
------------- ------------- --------------- ---------------
End of period $ 470,513,361 $ 468,237,948 $ 934,471,323 $ 1,006,048,186
============= ============= =============== ===============
CHANGE IN SHARES OUTSTANDING
Shares sold 2,689,464 4,421,836 5,758,146 9,152,362
Shares issued on reinvestment
of distributions -- -- -- 1,843,015
Shares redeemed (3,138,218) (9,868,285) (7,229,759) (15,046,220)
------------- ------------- --------------- ---------------
Net increase (decrease)
in shares outstanding (448,754) (5,446,449) (1,471,613) (4,050,843)
============= ============= =============== ===============
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
GROWTH EQUITY PORTFOLIO BALANCED PORTFOLIO INCOME PORTFOLIO
----------------------- ------------------------------- -----------------------------
From 06/15/00** For the six For the fiscal For the six For the fiscal
through months ending year ending months ending year ending
09/30/00* 09/30/00* 03/31/00 09/30/00* 03/31/00
----------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
$ (1,822) $ 1,079,674 $ 1,683,494 $ 615,821 $ 1,136,544
22,187 1,546,623 5,471,283 (3,312) (566)
39,889 (2,623,709) 12,272,961 344,427 (732,319)
----------- ------------- ------------- ------------ ------------
60,254 2,588 19,427,738 956,936 403,659
----------- ------------- ------------- ------------ ------------
-- (1,063,455) (1,675,733) (612,371) (1,130,637)
-- -- (4,460,597) -- --
----------- ------------- ------------- ------------ ------------
-- (1,063,455) (6,136,330) (612,371) (1,130,637)
----------- ------------- ------------- ------------ ------------
1,000,000 23,701,418 38,160,255 2,675,128 13,774,522
-- 1,075,596 5,993,660 622,552 1,117,851
-- (17,743,518) (25,677,221) (6,751,754) (10,734,159)
----------- ------------- ------------- ------------ ------------
1,000,000 7,033,496 18,476,694 (3,454,074) 4,158,214
----------- ------------- ------------- ------------ ------------
1,060,254 5,972,629 31,768,102 (3,109,509) 3,431,236
-- 128,611,981 96,843,879 23,836,388 20,405,152
----------- ------------- ------------- ------------ ------------
$ 1,060,254 $ 134,584,610 $ 128,611,981 $ 20,726,879 $ 23,836,388
=========== ============= ============= ============ ============
40,000 1,285,349 2,166,562 227,167 1,156,168
-- 57,915 344,984 52,617 93,467
-- (961,171) (1,471,182) (570,378) (900,613)
----------- ------------- ------------- ------------ ------------
40,000 382,093 1,040,364 (290,594) 349,022
=========== ============= ============= ============ ============
</TABLE>
* Unaudited.
** Commencement of Operations.
See Accompanying Notes to Financial Statements.
27
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's financial performance for the past five years. Certain information
reflects financial results for a single Portfolio share. The total returns in
the table represent the rate that an investor would have earned or lost on an
investment in the Portfolio (assuming reinvestment of all dividends and
distributions).
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
SMALL/MID CAP EQUITY PORTFOLIO
---------------------------------------------------------------------------------------------
For the six For the fiscal For the fiscal For the fiscal For the fiscal For the fiscal
months ending year ending year ending year ending year ending year ending
09/30/00* 03/31/00 03/31/99 03/31/98 03/31/97 03/31/96
--------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 28.80 $ 19.81 $ 24.92 $ 18.54 $ 17.89 $ 13.89
Income from investment operations
Net investment income (loss) (0.04) (0.06) (0.01) (0.01) 0.05 0.05
Net realized and unrealized
gain (loss) on investments 1.00 9.05 (4.24) 8.71 2.43 5.17
--------- --------- --------- --------- --------- --------
Total from investment
operations 0.96 8.99 (4.25) 8.70 2.48 5.22
--------- --------- --------- --------- --------- --------
Distributions
From net investment income -- -- (0.01) (0.01) (0.06) (0.06)
From net realized gain -- -- (0.85)(1) (2.31) (1.77) (1.16)
--------- --------- --------- --------- --------- --------
Total distributions -- -- (0.86) (2.32) (1.83) (1.22)
--------- --------- --------- --------- --------- --------
Net asset value, end of period $ 29.76 $ 28.80 $ 19.81 $ 24.92 $ 18.54 $ 17.89
========= ========= ========= ========= ========= ========
Total return 3.33%+ 45.38% (17.18%) 48.68% 14.57% 38.38%
========= ========= ========= ========= ========= ========
Net assets, end of period
(in 000's) $ 470,513 $ 468,238 $ 430,028 $ 515,682 $ 136,341 $ 79,495
========= ========= ========= ========= ========= ========
Ratio of expenses to average
net assets
Before fees waived and
expenses absorbed 1.25%++ 1.25% 1.25% 1.26% 1.33% 1.46%
After fees waived and
expenses absorbed n/a n/a n/a n/a 1.40% 1.48%
========= ========= ========= ========= ========= ========
Ratio of net investment
income (loss) to average
net assets, after fees waived
and expenses absorbed (0.29%)++ (0.24%) (0.04%) (0.06%) 0.27% 0.66%
========= ========= ========= ========= ========= ========
Portfolio turnover rate 64.96%+ 199.04% 143.70% 107.17% 130.54% 151.37%
========= ========= ========= ========= ========= ========
</TABLE>
* Unaudited.
+ Not Annualized.
++ Annualized.
(1) Of this amount, the fund designates $0.17 As a capital gain dividend per
IRC Section 852(b)(3).
See Accompanying Notes to Financial Statements.
29
<PAGE>
FINANCIAL HIGHLIGHTS, CONTINUED
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CORE EQUITY PORTFOLIO
----------------------------------------------------------------------------------------------
For the six For the fiscal For the fiscal For the fiscal For the fiscal For the fiscal
months ending year ending year ending year ending year ending year ending
09/30/00* 03/31/00 03/31/99 03/31/98 03/31/97 03/31/96
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 31.56 $ 25.34 $ 24.67 $ 18.97 $ 17.53 $ 13.84
Income from
investment operations
Net investment income (loss) (0.04) (0.03) 0.05 0.07 0.13 0.11
Net realized and unrealized
gain (loss) on investments (0.79) 7.93 1.95 8.86 2.86 5.13
--------- ----------- --------- --------- --------- ---------
Total from investment
operations (0.83) 7.90 2.00 8.93 2.99 5.24
--------- ----------- --------- --------- --------- ---------
Distributions
From net investment income -- -- (0.07) (0.07) (0.13) (0.11)
From net realized gain -- (1.68) (1.26)1 (3.16) (1.42) (1.44)
--------- ----------- --------- --------- --------- ---------
Total distributions -- (1.68) (1.33) (3.23) (1.55) (1.55)
--------- ----------- --------- --------- --------- ---------
Net asset value, end of period $ 30.73 $ 31.56 $ 25.34 $ 24.67 $ 18.97 $ 17.53
========= =========== ========= ========= ========= =========
Total return (2.63%)+ 32.06% 8.64% 49.64% 17.88% 38.64%
========= =========== ========= ========= ========= =========
Net assets, end of period
(in 000's) $ 934,471 $ 1,006,048 $ 910,587 $ 698,665 $ 260,629 $ 107,665
========= =========== ========= ========= ========= =========
Ratio of expenses to average
net assets
Before fees waived and
expenses absorbed 1.11%++ 1.11% 1.13% 1.14% 1.18% 1.30%
After fees waived and
expenses absorbed n/a n/a n/a n/a 1.22% 1.29%
========= =========== ========= ========= ========= =========
Ratio of net investment
income (loss) to average
net assets, after fees waived
and expenses absorbed (0.23%)++ (0.12%) 0.23% 0.37% 0.74% 1.07%
========= =========== ========= ========= ========= =========
Portfolio turnover rate 30.93%+ 82.98% 132.91% 119.88% 146.12% 138.02%
========= =========== ========= ========= ========= =========
</TABLE>
30
<PAGE>
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
GROWTH EQUITY PORTFOLIO
-----------------------
From 06/15/00**
through
09/30/00*
---------
Net asset value,
beginning of period $ 25.00
Income from
investment operations
Net investment income (loss) --
Net realized and unrealized
gain (loss) on investments 1.51
---------
Total from investment operations 1.51
---------
Distributions
From net investment income --
From net realized gain --
---------
Total distributions --
---------
Net asset value, end of period $ 26.51
=========
Total return 6.04% +
=========
Net assets, end of period (in 000's) $ 1,060
=========
Ratio of expenses to
average net assets
Before fees waived and
expenses absorbed 6.47%++
After fees waived and
expenses absorbed 1.19%++
=========
Ratio of net investment
income (loss) to average
net assets, after fees waived
and expenses absorbed (0.58%)++
=========
Portfolio turnover rate 22.31% +
=========
* Unaudited.
** Commencement of operations.
+ Not annualized.
++ Annualized.
(1) Of this amount, the fund designates $0.68 as a capital gain dividend per
IRC Section 852(b)(3).
See Accompanying Notes to Financial Statements.
31
<PAGE>
FINANCIAL HIGHLIGHTS, CONTINUED
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
-----------------------------------------------------------------------------------------------
For the six For the fiscal For the fiscal For the fiscal For the fiscal For the fiscal
months ending year ending year ending year ending year ending year ending
09/30/00* 03/31/00 03/31/99 03/31/98 03/31/97 03/31/96
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 18.80 $ 16.70 $ 16.78 $ 14.76 $ 14.53 $ 12.96
Income from
investment operations
Net investment income (loss) 0.15 0.28 0.28 0.35 0.37 0.38
Net realized and unrealized
gain (loss) on investments (0.16) 2.90 0.85 4.46 1.28 2.82
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations (0.01) 3.18 1.13 4.81 1.65 3.20
----------- ----------- ----------- ----------- ----------- -----------
Distributions
From net investment income (0.15) (0.28) (0.28) (0.35) (0.37) (0.37)
From net realized gain -- (0.80) (0.93)(1) (2.44) (1.05) (1.26)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.15) (1.08) (1.21) (2.79) (1.42) (1.63)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 18.64 $ 18.80 $ 16.70 $ 16.78 $ 14.76 $ 14.53
=========== =========== =========== =========== =========== ===========
Total return (0.03%)+ 19.59% 7.22% 34.57% 11.83% 25.58%
=========== =========== =========== =========== =========== ===========
Net assets, end of period
(in 000's) $ 134,585 $ 128,612 $ 96,844 $ 72,724 $ 40,630 $ 32,080
=========== =========== =========== =========== =========== ===========
Ratio of expenses to
average net assets
Before fees waived and
expenses absorbed 1.16%++ 1.21% 1.22% 1.28% 1.31% 1.50%
After fees waived and
expenses absorbed 1.19%++(3) 1.19% 1.19% 1.19% 1.19% 1.19%
=========== =========== =========== =========== =========== ===========
Ratio of net investment
income (loss) to average
net assets, after fees waived
and expenses absorbed 1.65%++ 1.63% 1.78% 2.09% 2.50% 2.76%
=========== =========== =========== =========== =========== ===========
Portfolio turnover rate 22.6%+ 67.55% 108.28% 102.98% 133.68% 114.85%
=========== =========== =========== =========== =========== ===========
</TABLE>
32
<PAGE>
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
INTERMEDIATE FIXED INCOME PORTFOLIO
-------------------------------------------------------------------------------------------------
For the six For the fiscal For the fiscal For the fiscal For the fiscal For the fiscal
months ending year ending year ending year ending year ending year ending
09/30/00* 03/31/00 03/31/99 03/31/98 03/31/97 03/31/96
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 11.83 $ 12.24 $ 12.45 $ 12.08 $ 12.33 $ 12.00
Income from
investment operations
Net investment income (loss) 0.63 0.63 0.68 0.71 0.65 0.70
Net realized and unrealized
gain (loss) on investments 0.19 (0.41) 0.11 0.37 (0.25) 0.34
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations 0.82 0.22 0.79 1.08 0.40 1.04
---------- ---------- ---------- ---------- ---------- ----------
Distributions
From net investment income (0.63) (0.63) (0.68) (0.71) (0.64) (0.70)
From net realized gain -- -- (0.32)(2) -- (0.01) (0.01)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.63) (0.63) (1.00) (0.71) (0.65) (0.71)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.02 $ 11.83 $ 12.24 $ 12.45 $ 12.08 $ 12.33
========== ========== ========== ========== ========== ==========
Total return 4.53%+ 1.90% 6.49% 9.11% 3.35% 8.85%
========== ========== ========== ========== ========== ==========
Net assets, end of period
(in 000's) $ 20,727 $ 23,836 $ 20,405 $ 19,961 $ 19,303 $ 9,740
========== ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets
Before fees waived and
expenses absorbed 1.01%++ 0.94% 1.04% 1.19% 1.53% 2.17%
After fees waived and
expenses absorbed 0.55%++ 0.55% 0.55% 0.55% 0.95% 0.95%
========== ========== ========== ========== ========== ==========
Ratio of net investment
income (loss) to average
net assets, after fees waived
and expenses absorbed 5.56%++ 5.31% 5.39% 5.73% 5.42% 5.69%
========== ========== ========== ========== ========== ==========
Portfolio turnover rate 1.67%+ 8.18% 54.59% 15.99% 8.37% 15.49%
========== ========== ========== ========== ========== ==========
</TABLE>
* Unaudited.
+ Not annualized.
++ Annualized.
(1) Of this amount, the fund designates $0.45 As a capital gain dividend per
IRC Section 852(b)(3).
(2) Of this amount, the fund designates $0.24 As a capital gain dividend per
IRC Section 852(b)(3).
(3) Includes the recapture of fees previously reduced by the Advisor.
See Accompanying Notes to Financial Statements.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
RAINIER INVESTMENT MANAGEMENT MUTUAL FUNDS
SEPTEMBER 30, 2000 (UNAUDITED)
NOTE 1. ORGANIZATION
Rainier Investment Management Mutual Funds (the "Trust") was organized as a
business trust in Delaware on December 15, 1993 and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified,
open-end management investment company. The Trust consists of five separate
series of portfolios: Small/Mid Cap Equity Portfolio, Core Equity Portfolio,
Growth Equity Portfolio, Balanced Portfolio and Intermediate Fixed Income
Portfolio (each a "Fund" and collectively the "Funds").
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are consistently followed by
the Funds in the preparation of their financial statements, and such policies
are in conformity with generally accepted accounting principles for investment
companies.
A) SECURITY VALUATION: The Funds invest in a range of securities, generally
including equities and debt securities. Equity securities are valued at the last
sale price (for exchange-listed securites) or the last bid price (if lacking any
sales and for over-the-counter securities). Debt securities generally are valued
at the mean between the last bid and asked prices. Debt securities with 60 days
or less remaining to maturity are valued on an amortized cost basis.
Securities for which market quotations are not readily available are valued
at fair value as determined in good faith by or under the direction of the Board
of Trustees. There were no such securities held during the period ending
September 30, 2000.
B) SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security
transactions are recorded on trade date. Dividend income is recognized on the
ex-dividend date, and interest income is recorded on an accrual basis. Realized
gains or losses are reported on the basis of identified cost of securities
delivered. Bond discounts are accreted and premiums are amortized. Distributions
to shareholders are recorded on the ex-dividend date.
C) FEDERAL INCOME TAXES: The Funds intend to continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of their net investment income and
any net realized capital gains to shareholders of the Funds. Therefore, no
provision is made for Federal income or excise taxes. Due to the timing of
dividend distributions and the differences in accounting for income and realized
gains (losses) for financial statement and federal income tax purposes, the
fiscal year in which amounts are distributed may differ from the year in which
the income and realized gains (losses) are recorded by the Funds.
On the Statement of Assets and Liabilities, as a result of permanent
book-to-tax differences, reclassification adjustments have been made between the
paid-in capital, undistributed net investment income and undistributed net
realized gain (loss) on investment accounts.
As of March 31, 2000, the Intermediate Fixed Income Portfolio has a capital
loss carryforward of $566 expiring on March 31, 2008.
D) USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 3. INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
A) INVESTMENT MANAGEMENT AGREEMENT: The Trust, on behalf of the Funds, has
entered into an investment management agreement with the Investment Advisor.
Under the terms of the agreement, the Trust will pay a fee equal to the
following annual percentages of average daily net assets:
Small/Mid Cap Equity Portfolio 0.85%
Core Equity Portfolio 0.75%
Growth Equity Portfolio 0.75%
Balanced Portfolio 0.70%
Intermediate Fixed Income Portfolio 0.50%
Effective April 1, 1997, the Investment Advisor has voluntarily undertaken
to limit the management fee for the Intermediate Fixed Income Portfolio to 0.45%
of the Portfolio's average annual net assets.
Although not required to do so, the Investment Advisor has contractually
agreed to reimburse each Fund to the extent necessary so that its ratio of
operating expenses to average daily net assets will not exceed the following
levels. Overall operating expenses for each Fund will not fall below the
applicable percentage limitation until the Investment Advisor has been fully
reimbursed for fees foregone and expenses paid by the Investment Advisor under
this agreement:
Small/Mid Cap Equity Portfolio 1.48%
Core Equity Portfolio 1.29%
Growth Equity Portfolio 1.19%
Balanced Portfolio 1.19%
Intermediate Fixed Income Portfolio 0.55%
These percentages are based on the average daily net assets of the Funds,
exclusive of interest, taxes, brokerage commissions, extraordinary expenses and
sales charges.
This contract has a one-year term, renewable at the end of each fiscal
year. The agreement may be terminated by either party upon 60 days' written
notice.
B) DISTRIBUTION PLAN: The Trust, on behalf of the Funds, has approved a
Distribution Plan (the "Plan") in accordance with Rule 12b-1 under the 1940 Act.
The Plan provides that the Funds will pay a fee to the Investment Advisor (as
the distribution coordinator) at an annual rate of up to 0.25% of each Fund's
average daily net assets. The fee is paid to the Investment Advisor as
reimbursement for, or in anticipation of, expenses incurred for
distribution-related activities.
Effective April 1, 1997, the Investment Advisor has voluntarily undertaken
to limit the distribution fee for the Intermediate Fixed Income Portfolio to
0.10% of the Portfolio's average annual net assets.
C) ADMINISTRATIVE SERVICES AGREEMENT: The Trust, on behalf of the Funds,
has entered into an administrative services agreement with an unrelated third
party. Under the terms of the agreement, each Fund will pay a monthly fee based
on the greater of $40,000 annual minimum or the annual rate of:
0.10% of first $100 million of average daily net assets
0.05% of next $100 million of average daily net assets
0.03% of average net assets over $200 million.
Effective April 1, 1998, the Intermediate Fixed Income Portfolio is not
subject to the $40,000 annual minimum. The Growth Equity Portfolio pays an
annual fee of $12,000, payable monthly, during its first year of operations.
NOTE 4. PURCHASES AND SALES OF SECURITIES
The aggregate security purchases and sales, other than short-term
obligations and U.S. Government securities, for the period ending September 30,
2000 were as follows:
FUND PURCHASES SALES
---- --------- -----
Small/Mid Cap Equity $294,041,991 $301,577,892
Core Equity 288,229,201 325,314,269
Growth Equity 1,227,985 235,876
Balanced 39,817,244 26,992,416
Intermediate Fixed Income 1,001,830 331,297
The Balanced Portfolio and Intermediate Fixed Income Portfolio purchased
$3,515,859 and $0, and sold $1,000,000 and $151,555, respectively, of U.S.
Government securities. There were no purchases or sales of U.S. Government
securities by the Small/Mid Cap Equity Portfolio, Core Equity Portfolio and
Growth Equity Portfolio.
The aggregate unrealized appreciation and depreciation of portfolio
securities at September 30, 2000, based on costs for federal income tax
purposes, were the same as their costs for financial reporting purposes, and
were as follows:
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
FUND APPRECIATION DEPRECIATION APPR./(DEPR.)
---- ------------ ------------ -------------
Small/Mid Cap Equity $102,773,453 $28,624,289 $ 74,149,164
Core Equity 286,509,158 27,539,780 258,969,378
Growth Equity 129,395 89,506 39,889
Balanced 24,476,396 4,267,749 20,208,647
Intermediate Fixed Income 80,656 364,107 (283,451)
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 5. RELATED PARTY TRANSACTIONS
Certain officers and Trustees of the Funds are also officers and/or
directors of the Investment Advisor. Outside Trustees are compensated by the
Trust at the total rate of $6,000 per year plus $1,500 for each meeting of the
Board of Trustees attended and any travel expenses incurred in such meetings,
which is allocated among the Funds.
On December 10, 1998 the Trust approved a Deferred Compensation Plan for
Trustees (the "Plan"). Trustees can elect to receive payment in cash or defer
payments provided for in the Plan. If a trustee elects to defer payment, the
Plan provides for the creation of a deferred payment account (phantom share
account). This account accumulates the deferred fees earned and the value of the
account is adjusted to reflect a value which would have been earned if the
account had been invested in a designated investment. The Funds recognize as
trustee expense amounts accrued as meetings are attended plus the change in the
value of the phantom share account.
INDEX DESCRIPTIONS
THE STANDARD & POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX COMPOSED OF 500
INDUSTRIAL, UTILITY, TRANSPORTATION AND FINANCIAL COMPANIES OF THE U.S. MARKETS.
THE INDEX REPRESENTS ABOUT 75% OF NEW YORK STOCK EXCHANGE ("NYSE") MARKET
CAPITALIZATION AND 30% OF NYSE ISSUES. IT IS A CAPITALIZATION-WEIGHTED INDEX
CALCULATED ON A TOTAL RETURN BASIS WITH DIVIDENDS REINVESTED.
THE RUSSELL 1000(R) INDEX, THE RUSSELL MIDCAP(TM) INDEX, THE RUSSELL 2500(TM)
INDEX AND THE RUSSELL 2000(R) INDEX ARE UNMANAGED INDICES COMPOSED OF THE
EQUITIES OF COMPANIES RANGING IN VALUE FROM APPROXIMATELY $1.1 TO $517.8
BILLION, $1.1 TO $25.9 BILLION, $80.0 MILLION TO $6.7 BILLION, AND $80.0 MILLION
TO $3.9 BILLION, RESPECTIVELY, AS OF JUNE 30, 2000.
THE RUSSELL 1000(R) GROWTH INDEX MEASURES THE PERFORMANCE OF THOSE RUSSELL 1000
COMPANIES WITH HIGHER PRICE-TO-BOOK RATIOS AND HIGHER FORECASTED GROWTH VALUES.
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX ("LEHMAN
INTERMEDIATE BOND INDEX") IS AN UNMANAGED INDEX COMPOSED OF ALL BONDS COVERED BY
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX WITH MATURITIES BETWEEN ONE AND
9.99 YEARS.
THE CONSUMER PRICE INDEX ("CPI") IS A MEASURE OF CHANGE IN CONSUMER PRICES AS
DETERMINED BY A MONTHLY SURVEY OF THE U.S. BUREAU OF LABOR STATISTICS.
THE SALOMON BROTHERS 3-MONTH TREASURY BILL INDEX ("91-DAY U.S. TREASURY BILL
INDEX") IS AN UNMANAGED INDEX OF EQUAL DOLLAR AMOUNTS OF THREE-MONTH TREASURY
BILLS PURCHASED AT THE BEGINNING OF EACH OF THREE CONSECUTIVE MONTHS.
THE "BALANCED INDEX" CONSISTS OF 50% STANDARD & POOR'S 500 STOCK INDEX, 40%
LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX, 10% 91-DAY U.S.
TREASURY BILL INDEX.
36
<PAGE>
DIRECTORY OF FUNDS' SERVICE PROVIDERS
INVESTMENT ADVISOR
Rainier Investment Management, Inc.(R)
601 Union Street, Suite 2801
Seattle, WA 98101
DISTRIBUTOR
First Fund Distributors, Inc.
4455 E. Camelback Road, Suite 261-E
Phoenix, AZ 85018
ADMINISTRATOR
Investment Company Administration, LLC
2020 E. Financial Way, Suite 100
Glendora, CA 91741
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTANT
Firstar Mutual Fund Services, LLC
615 E. Michigan Street
Milwaukee, WI 53202
INDEPENDENT AUDITORS
KPMG LLP
3100 Two Union Square
601 Union Street
Seattle, WA 98101
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker, LLP
345 California Street
San Francisco, CA 94104
39
<PAGE>
Notes
<PAGE>
RAINIER
INVESTMENT MANAGEMENT
MUTUAL FUNDS
601 Union Street, Suite 2801
Seattle, Washington 98101
(800) 248-6314
www.rainierfunds.com
