UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07577
WM Strategic Asset Management Portfolios, LLC
(Exact name of registrant as specified in charter)
1201 Third Avenue, 22nd Floor, Seattle, WA 98101
(Address of principal executive offices) (Zip code)
Jeffrey L. Lunzer
1201 Third Avenue, 22nd Floor, Seattle, WA 98101
(Name and address of agent for service)
Registrant's telephone number, including area code: (206) 461-3800
Date of fiscal year end: October 31, 2005
Date of reporting period: April 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS
[WM LOGO]
GROUP of FUNDS
SEMIANNUAL REPORT
April 30, 2005
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
and WM Money Market Fund
WM Strategic Asset
Management Portfolios WM Money Market Fund
Flexible Income Portfolio
Conservative Balanced Portfolio
Balanced Portfolio
Conservative Growth Portfolio
Strategic Growth Portfolio
[GRAPHIC]
At the WM Group of Funds, our passion is piecing individual investments together
into comprehensive portfolios to make your financial plan more effective.
Table of Contents
Letter from the President 1
SAM Portfolio Performance and Composition:
Flexible Income Portfolio 2
Conservative Balanced Portfolio 3
Balanced Portfolio 4
Conservative Growth Portfolio 5
Strategic Growth Portfolio 6
Money Market Fund Performance and Composition 7
Expense Information 8
Financial Statements 10
Notes to Financial Statements 32
Other Information 38
NOT FDIC INSURED
MAY LOSE VALUE - NOT A DEPOSIT - NO BANK GUARANTEE
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Dear Shareholder,
[PHOTO OF WILLIAM G. PAPESH]
Since my last letter to you, the financial markets have continued to be volatile
and uncertain. No more certain have been issues at home--such as rising oil
prices and the ongoing Social Security debate--not to mention events abroad.
Amid this uncertainty, I am proud to say that we have remained as committed as
ever to effective asset allocation and consistent investment discipline. We
trust that these core commitments can continue to build value for you over time.
We are delighted to note that as a result of our efforts, the WM Group of Funds
was once again recognized for its 5-year results by Barron's, as it has been
every year since 1999. In addition, over the last five years assets in the WM
Group of Funds--from a combination of net shareholder purchases and fund
performance--have increased by 133%, while industry assets during that period
increased by 18%.(1) The stock market (as measured by the S&P 500(2)) fell by
11% over the same five years through 2004.
BARRON'S ANNUAL FUND FAMILY RANKINGS
YEAR 5-YEAR RANKING 1-YEAR RANKING
- ---- -------------- --------------
2004 #15 out of 67 #46 out of 73
2003 #5 out of 70 #41 out of 75
2002 #1 out of 72 #7 out of 81
2001 #5 out of 70 #6 out of 88
2000 #11 out of 65 #44 out of 84
1999 #9 out of 68 #9 out of 92
THE ENDURING VALUE OF MUTUAL FUNDS
We believe that these figures reflect not only the attractiveness of the WM
Group of Funds, but also the enduring value of mutual funds as an investment
vehicle for our shareholders. While some investors are lured away by alternative
strategies such as wrap accounts or hedge funds, we think mutual funds continue
to represent one of the most cost-effective vehicles investors can use to gain
diversified access to U.S. and foreign securities markets. We also believe that
our business remains one that can significantly aid investors in achieving their
long-term financial objectives--among the most important of which is laying a
foundation for their retirement years.
The recent debate over Social Security policy highlights this need more than
ever. Regardless of one's political position, we think it has become
increasingly clear that one of the best solutions to the Social Security
quandary is for Americans to reduce their dependence on that program. We firmly
believe that investors and their advisors will be well served by continuing to
focus on long-term strategies that can build wealth independent of the
wranglings of government policy.
PRIDE IN OUR HERITAGE
As a firm, we are proud of our 66 years of intensive asset management
experience. We believe this heritage will serve our shareholders well as
financial markets and world events continue to produce the unexpected. As
always, our focus remains on pursuing the highest risk-adjusted returns for
investors, and we thank you again for your ongoing confidence and support.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
Note regarding Barron's rankings: PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE
RESULTS. Barron's rankings are for periods ended 12/31 and are determined using
weighted calculations based on the performance of each family's funds as tracked
by Lipper. To qualify for the rankings, Barron's requires that a fund family
offer funds within a wide array of asset classes. For the periods shown above,
the WM Group of Funds did not qualify for 10-year rankings because it did not
have the appropriate fund qualifications with 10-year performance. To calculate
the results, Lipper ranks each fund's return versus those of others in the same
category, placing the best performers in the first percentile. Next, all funds
in a given family that fit a particular asset class category are averaged
together on an asset-weighted basis. Finally, each family's percentile rankings
in the broad categories are combined to create the final ranking.
1 Source: WM Group of Funds and the Investment Company Institute. Figures are
for the 5-year period ended 12/31/04. They are based on long-term assets only
and do not include money market funds.
2 The S&P 500 is a broad-based index intended to represent the U.S. equity
market. Indices are unmanaged, and individuals cannot invest directly in an
index.
Flexible Income Portfolio PORTFOLIO MANAGER
Asset Allocation Team
WM Advisors, Inc.
[GRAPHIC]
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. An
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. A sales charge may apply as follows: Class A shares:
maximum up-front sales charge of 5.5% (for the Conservative Balanced Portfolio)
or 4.5%
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF APRIL 30, 2005
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS A SHARES Net Asset Value(3) 1.03% 4.35% 5.04% 7.05% 7/25/96
With Sales Charge -3.51% -0.34% 4.07% 6.49%
CLASS B SHARES Net Asset Value(3) 0.72% 3.64% 4.27% 6.33% 7/25/96
With Sales Charge -4.28% -1.36% 3.93% 6.33%
CLASS C SHARES Net Asset Value(3) 0.76% 3.63% - 4.68% 3/1/02
With Sales Charge -0.24% 2.63% - 4.68%
Lehman Brothers Aggregate Bond Index(4) 0.98% 5.26% 7.49% 7.01%
S&P 500(4) 3.28% 6.32% -2.94% 8.69%
Capital Market Benchmark(4) 1.48% 5.55% 5.57% 7.59%
Average annual total returns(1) (with sales charge) as of 3/31/05:
Class A Shares: -2.70% (1-year), 3.85% (5-year), 6.53% (since inception)
Class B Shares: -3.93% (1-year), 3.68% (5-year), 6.37% (since inception)
Class C Shares: 0.15% (1-year), 4.74% (since inception)
PORTFOLIO COMPOSITION(5)
As of As of
4/30/05 10/31/04 Change
------- -------- ------
Mortgage-& Asset-Backed Bonds 37% 37% 0%
Investment-Grade Corporate Bonds 18% 19% -1%
High-Yield Corporate Bonds 9% 9% 0%
U.S. Large-Cap Value Stocks 7% 7% 0%
U.S. Government Securities 7% 6% +1%
U.S. Large-Cap Growth Stocks 6% 6% 0%
U.S. Mid-Cap Value Stocks 3% 3% 0%
U.S. Mid-Cap Growth Stocks 3% 2% +1%
Convertible Securities 2% 2% 0%
REITs 2% 2% 0%
U.S. Small-Cap Growth Stocks 1% 1% 0%
U.S. Small-Cap Value Stocks 1% 1% 0%
Cash Equivalents 4% 5% -1%
Note: Pages 38 and 39 provide information about certain WM Funds in which the
Flexible Income and Conservative Balanced Portfolios invest a significant
portion of their assets (i.e., more than 25%). For additional information about
these and other WM Funds, please see the WM Group of Funds semiannual
report, which is available online at wmgroupoffunds.com or by calling
800-222-5852.
1 Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects ongoing fund expenses paid by
the Portfolios' applicable Funds, which include the effects of expense
reimbursement. Performance does not reflect the impact of federal, state, or
municipal taxes. If it did, performance would be lower. The Flexible Income
Portfolio's performance between 1996 and 1999 benefited from the agreement of
WM Advisors and its affiliates to limit the Portfolio's expenses. The
Conservative Balanced Portfolio's performance between 1996 and 2003 benefited
from the agreement of WM Advisors and its affiliates to limit the Portfolio's
expenses.
2 Periods of less than one year are not annualized.
3 Net asset value is not adjusted for sales charge.
2
PORTFOLIO MANAGER Conservative Balanced Portfolio*
Asset Allocation Team
WM Advisors, Inc.
(for the Flexible Income Portfolio); Class B shares: contingent deferred sales
charge of 5%, which declines over 5 years (5-5-4-3-2-0%); Class C shares:
contingent deferred sales charge of 1% on redemptions made during the first 12
months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise.
* As of 8/1/00, the Income Portfolio became the Conservative Balanced Portfolio,
and the Portfolio's objectives and strategies changed. This information should
be considered when reviewing past performance. Please see the prospectus for
detailed information.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF APRIL 30, 2005
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS A SHARES Net Asset Value(3) 1.83% 5.38% 4.47% 5.00% 7/25/96
With Sales Charge -3.80% -0.39% 3.29% 4.33%
CLASS B SHARES Net Asset Value(3) 1.43% 4.47% 3.67% 4.28% 7/25/96
With Sales Charge -3.57% -0.54% 3.33% 4.28%
CLASS C SHARES Net Asset Value(3) 1.47% 4.55% - 5.08% 3/1/02
With Sales Charge 0.47% 3.55% - 5.08%
Lehman Brothers Aggregate Bond Index(4) 0.98% 5.26% 7.49% 7.01%
S&P 500(4) 3.28% 6.32% -2.94% 8.69%
Capital Market Benchmark(4) 1.96% 5.79% 3.57% 8.06%
Average annual total returns(1) (with sales charge) as of 3/31/05:
Class A Shares: -2.67% (1-year), 3.31% (5-year), 4.40% (since inception)
Class B Shares: -2.78% (1-year), 3.34% (5-year), 4.34% (since inception)
Class C Shares: 1.30% (1-year), 5.31% (since inception)
PORTFOLIO COMPOSITION(5)
As of As of
4/30/05 10/31/04 Change
------- -------- ------
Mortgage- & Asset-Backed Bonds 31% 30% +1%
Investment-Grade Corporate Bonds 12% 13% -1%
U.S. Large-Cap Value Stocks 12% 10% +2%
U.S. Large-Cap Growth Stocks 9% 9% 0%
High-Yield Corporate Bonds 7% 7% 0%
U.S. Government Securities 5% 5% 0%
U.S. Mid-Cap Value Stocks 4% 5% -1%
Foreign Stocks 4% 4% 0%
U.S. Mid-Cap Growth Stocks 4% 3% +1%
REITs 3% 3% 0%
Convertible Securities 2% 2% 0%
U.S. Small-Cap Growth Stocks 2% 2% 0%
U.S. Small-Cap Value Stocks 1% 2% -1%
Cash Equivalents 4% 5% -1%
4 The Lehman Brothers Aggregate Bond Index is a broad-based index intended to
represent the U.S. fixed-income market. The S&P 500 is a broad-based index
intended to represent the U.S. equity market. The Capital Market Benchmark is
intended to represent a relevant proxy for market and Portfolio performance.
It is allocated as follows: Flexible Income Portfolio: 20% S&P 500 and 80%
Lehman Brothers Aggregate Bond Index; Conservative Balanced Portfolio: 40%
S&P 500 and 60% Lehman Brothers Aggregate Bond Index. Returns shown for the
indices assume reinvestment of all dividends and distributions, and
since-inception returns shown for the indices are calculated from 7/31/96.
Indices are unmanaged, and individuals cannot invest directly in an index.
5 May not reflect the current portfolio composition.
3
Balanced Portfolio PORTFOLIO MANAGER
Asset Allocation Team
WM Advisors, Inc.
[GRAPHIC]
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. An
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. A sales charge may apply as follows: Class A shares:
maximum up-front sales charge of 5.5%; Class B shares: contingent deferred sales
charge of 5%, which declines over 5 years
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF APRIL 30, 2005
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS A SHARES Net Asset Value(3) 2.61% 6.18% 2.66% 8.45% 7/25/96
With Sales Charge -3.06% 0.30% 1.51% 7.75%
CLASS B SHARES Net Asset Value(3) 2.23% 5.38% 1.90% 7.70% 7/25/96
With Sales Charge -2.77% 0.38% 1.52% 7.70%
CLASS C SHARES Net Asset Value(3) 2.27% 5.40% - 5.18% 3/1/02
With Sales Charge 1.27% 4.40% - 5.18%
S&P 500(4) 3.28% 6.32% -2.94% 8.69%
Lehman Brothers Aggregate Bond Index(4) 0.98% 5.26% 7.49% 7.01%
Capital Market Benchmark(4) 2.42% 6.01% 1.48% 8.40%
Russell 3000(R) Index(4) 3.69% 6.97% -2.21% 8.78%
Average annual total returns(1) (with sales charge) as of 3/31/05:
Class A Shares: -1.41% (1-year), 1.10% (5-year), 7.93% (since inception)
Class B Shares: -1.50% (1-year), 1.08% (5-year), 7.87% (since inception)
Class C Shares: 2.51% (1-year), 5.62% (since inception)
PORTFOLIO COMPOSITION(5)
As of As of
4/30/05 10/31/04 Change
------- -------- ------
Mortgage- & Asset-Backed Bonds 19% 19% 0%
U.S. Large-Cap Value Stocks 18% 16% +2%
U.S. Large-Cap Growth Stocks 14% 14% 0%
U.S. Mid-Cap Value Stocks 7% 8% -1%
Investment-Grade Corporate Bonds 6% 7% -1%
U.S. Mid-Cap Growth Stocks 6% 5% +1%
Foreign Stocks 6% 5% +1%
High-Yield Corporate Bonds 5% 5% 0%
REITs 4% 5% -1%
U.S. Small-Cap Growth Stocks 3% 3% 0%
U.S. Government Securities 3% 2% +1%
U.S. Small-Cap Value Stocks 2% 3% -1%
Convertible Securities 1% 1% 0%
Cash Equivalents 6% 7% -1%
Note: For information about the underlying WM Funds of the SAM Portfolios,
please see the WM Group of Funds semiannual report, which is available online at
wmgroupoffunds.com or by calling 800-222-5852.
1 Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects ongoing fund expenses paid by
the Portfolios' applicable Funds, which include the effects of expense
reimbursement. Performance does not reflect the impact of federal, state, or
municipal taxes. If it did, performance would be lower. The Portfolios'
performance between 1996 and 1999 benefited from the agreement of WM Advisors
and its affiliates to limit the Portfolios' expenses.
2 Periods of less than one year are not annualized.
3 Net asset value is not adjusted for sales charge.
4
PORTFOLIO MANAGER Conservative Growth Portfolio
Asset Allocation Team
WM Advisors, Inc.
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF APRIL 30, 2005
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS A SHARES Net Asset Value(3) 3.23% 6.70% 0.73% 8.64% 7/25/96
With Sales Charge -2.45% 0.85% -0.41% 7.94%
CLASS B SHARES Net Asset Value(3) 2.95% 5.92% -0.04% 7.86% 7/25/96
With Sales Charge -2.05% 0.92% -0.44% 7.86%
CLASS C SHARES Net Asset Value(3) 2.88% 5.87% - 5.07% 3/1/02
With Sales Charge 1.88% 4.87% - 5.07%
S&P 500(4) 3.28% 6.32% -2.94% 8.69%
Lehman Brothers Aggregate Bond Index(4) 0.98% 5.26% 7.49% 7.01%
Capital Market Benchmark(4) 2.86% 6.18% -0.70% 8.61%
Russell 3000(R) Index(4) 3.69% 6.97% -2.21% 8.78%
Average annual total returns(1) (with sales charge) as of 3/31/05:
Class A Shares: -0.63% (1-year), -0.98% (5-year), 8.19% (since inception)
Class B Shares: -0.61% (1-year), -1.03% (5-year), 8.11% (since inception)
Class C Shares: 3.42% (1-year), 5.69% (since inception)
PORTFOLIO COMPOSITION(5)
As of As of
4/30/05 10/31/04 Change
-------- -------- ------
U.S. Large-Cap Value Stocks 23% 21% +2%
U.S. Large-Cap Growth Stocks 19% 19% 0%
U.S. Mid-Cap Value Stocks 9% 11% -2%
Mort gage- & Asset-Backed Bonds 9% 9% 0%
U.S. Mid-Cap Growth Stocks 9% 7% +2%
Foreign Stocks 8% 7% +1%
REITs 5% 6% -1%
U.S. Small-Cap Growth Stocks 3% 4% -1%
U.S. Small-Cap Value Stocks 3% 4% -1%
High-Yield Corporate Bonds 3% 3% 0%
Investment-Grade Corporate Bonds 2% 2% 0%
U.S. Government Securities 2% 1% +1%
Convertible Securities 1% 1% 0%
Cash Equivalents 4% 5% -1%
4 The S&P 500 is a broad-based index intended to represent the U.S. equity
market. The Lehman Brothers Aggregate Bond Index is a broad-based index
intended to represent the U.S. fixed-income market. The Capital Market
Benchmark is intended to represent a relevant proxy for market and Portfolio
performance. It is allocated as follows: Balanced Portfolio: 60% S&P 500 and
40% Lehman Brothers Aggregate Bond Index; Conservative Growth Portfolio: 80%
S&P 500 and 20% Lehman Brothers Aggregate Bond Index. The Russell 3000(R)
Index measures the performance of the 3,000 largest U.S. companies based on
total market capitalization, which represents approximately 98% of the
investable U.S. equity market. Effective 3/1/05, the S&P 500 replaced the
Russell 3000(R) Index because WM Advisors believes the new benchmark more
accurately reflects the Portfolios' performance characteristics. Returns
shown for the indices assume reinvestment of all dividends and distributions,
and since-inception returns shown for the indices are calculated from
7/31/96. Indices are unmanaged, and individuals cannot invest directly in an
index.
5 May not reflect the current portfolio composition.
5
Strategic Growth Portfolio PORTFOLIO MANAGER
Asset Allocation Team
WM Advisors, Inc.
[GRAPHIC]
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. An
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. A sales charge may apply as follows: Class A shares:
maximum up-front sales charge of 5.5% (for the Strategic Growth Portfolio);
Class B shares:
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF APRIL 30, 2005
6-Month(2) 1-Year 5-Year Since Inception Inception Date
---------- ------ ------ --------------- --------------
CLASS A SHARES Net Asset Value(3) 3.62% 6.94% -0.68% 9.29% 7/25/96
With Sales Charge -2.06% 1.04% -1.80% 8.59%
CLASS B SHARES Net Asset Value(3) 3.24% 6.14% -1.44% 8.55% 7/25/96
With Sales Charge -1.76% 1.14% -1.87% 8.55%
CLASS C SHARES Net Asset Value(3) 3.23% 6.13% - 4.79% 3/1/02
With Sales Charge 2.23% 5.13% - 4.79%
S&P 500(4) 3.28% 6.32% -2.94% 8.69%
Russell 3000(R) Index(4) 3.69% 6.97% -2.21% 8.78%
Average annual total returns(1) (with sales charge) as of 3/31/05:
Class A Shares: 0.10% (1-year), -2.50% (5-year), 8.90% (since inception)
Class B Shares: 0.18% (1-year), -2.58% (5-year), 8.86% (since inception)
Class C Shares: 4.17% (1-year), 5.55% (since inception)
PORTFOLIO COMPOSITION(5)
As of As of
4/30/05 10/31/04 Change
------- -------- ------
U.S. Large-Cap Value Stocks 26% 24% +2%
U.S. Large-Cap Growth Stocks 21% 21% 0%
U.S. Mid-Cap Value Stocks 11% 13% -2%
U.S. Mid-Cap Growth Stocks 10% 8% +2%
Foreign Stocks 9% 9% 0%
REITs 6% 6% 0%
U.S. Small-Cap Growth Stocks 4% 5% -1%
U.S. Small-Cap Value Stocks 4% 4% 0%
High-Yield Corporate Bonds 4% 3% +1%
Convertible Securities 1% 1% 0%
Cash Equivalents 4% 6% -2%
Note: For information about the underlying WM Funds of the Strategic Growth
Portfolio, please see the WM Group of Funds semiannual report, which is
available online at wmgroupoffunds.com or by calling 800-222-5852.
1 Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects ongoing fund expenses paid by
the Portfolio's applicable Funds, which include the effects of expense
reimbursement. Performance does not reflect the impact of federal, state, or
municipal taxes. If it did, performance would be lower. The Strategic Growth
Portfolio's performance between 1996 and 1999 benefited from the agreement of
WM Advisors and its affiliates to limit the Portfolio's expenses. The Money
Market Fund's performance between 1995 and 2004 benefited from the agreement
of WM Advisors and its affiliates to limit the Fund's expenses.
2 Periods of less than one year are not annualized.
3 Net asset value is not adjusted for sales charge.
6
PORTFOLIO MANAGER Money Market Fund
Scott J. Peterson, CFA
WM Advisors, Inc.
contingent deferred sales charge of 5%, which declines over 5 years (5-5-4-
3-2-0%); Class C shares: contingent deferred sales charge of 1% on redemptions
made during the first 12 months. See the prospectus for details. Performance
listed with sales charge reflects the maximum sales charge.
An investment in the Money Market Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
The 7-day simple yield more closely reflects current Money Market Fund earnings
than the total return data.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF APRIL 30, 2005
Since Inception Inception
6-Month(2) 1-Year 5-Year 10-Year of Class C Shares Date
---------- ------ ------ ------- ----------------- ---------
CLASS A SHARES Net Asset Value(3) 0.89% 1.34% 2.26% 3.60% N/A 11/19/79
CLASS B SHARES Net Asset Value(3) 0.34% 0.37% 1.32% 2.80% N/A 5/2/94
With Sales Charge -4.66% -4.63% 0.94% 2.80% N/A
CLASS C SHARES Net Asset Value(3) 0.34% 0.38% - - 0.20% 3/1/02
With Sales Charge -0.66% -0.63% - - 0.20%
FUND YIELDS(6)
AS OF APRIL 30, 2005
7-Day 7-Day
Simple Yield Effective Yield
(Class A Shares) (Class A Shares)
---------------- ----------------
MONEY MARKET FUND 2.25% 2.28%
Fund yields(6) as of 3/31/05:
Class A Shares: 2.10% (7-day simple yield), 2.12% (7-day effective yield)
PORTFOLIO COMPOSITION(5)
AS OF APRIL 30, 2005
Corporate Bonds and Notes 36%
Taxable Municipal Bonds 28%
Medium Term Notes 15%
Commercial Paper (Domestic and Yankee) 6%
U.S. Government Agency Obligations 4%
Certificates of Deposit (Yankee) 3%
Other 8%
4 The S&P 500 is a broad-based index intended to represent the U.S. equity
market. The Russell 3000(R) Index measures the performance of the 3,000
largest U.S. companies based on total market capitalization, which represents
approximately 98% of the investable U.S. equity market. Returns shown for the
indices assume reinvestment of all dividends and distributions, and
since-inception returns shown for the indices are calculated from 7/31/96.
Indices are unmanaged, and individuals cannot invest directly in an index.
5 May not reflect the current portfolio composition.
6 The 7-day simple yield is calculated based on the income generated by an
investment in the Fund over a 7-day period and is expressed as an annual
percentage rate. The 7-day effective yield is calculated similarly to the
7-day simple yield but assumes that income earned from the Fund's investments
is reinvested and compounded.
7
Expense Information
As a shareholder of the Flexible Income Portfolio, Conservative Balanced
Portfolio, Balanced Portfolio, Conservative Growth Portfolio or Strategic Growth
Portfolio ("the Portfolios") or the Money Market Fund (the "Fund"), you incur
two types of costs: (1) transaction costs, including sales charges (loads) on
purchase of Class A shares and, if applicable, contingent deferred sales charges
on redemption of shares and (2) ongoing costs, including management fees,
distribution and/or service fees, and other Portfolio or Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Portfolios or the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period November 1, 2004 to April 30, 2005.
ACTUAL EXPENSES:
The first section of the table below provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the third column under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES:
The second section of the table below provides information about hypothetical
account values and hypothetical expenses based on each Portfolio's and Fund's
actual expense ratios and an assumed rate of return of 5% per year before
expenses (rather than each Portfolio's and Fund's actual rate of return). The
hypothetical account values and expenses may not be used to estimate the actual
ending balance or expenses you paid for the period. You may use this information
to compare the ongoing costs of investing in the Portfolios or the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the hypothetical section of the table is useful in
comparing ongoing costs only, and will not help you compare the relative total
costs of owning different funds. In addition, if these transactional costs were
included, the cost shown would have been higher.
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
---------------------------------------- ---------------------------------------
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING
ACCOUNT ACCOUNT PERIOD* ACCOUNT ACCOUNT PERIOD*
VALUE VALUE 11/01/2004- VALUE VALUE 11/01/2004- EXPENSE
11/01/2004 04/30/2005 04/30/2005 11/01/2004 04/30/2005 04/30/2005 RATIO
---------- ---------- ------------ ---------- ---------- ----------- -------
Flexible Income Portfolio
Class A............................ $ 1,000 $ 1,010 $ 4.98 $ 1,000 $ 1,020 $ 5.01 1.00%
Class B............................ 1,000 1,007 8.86 1,000 1,016 8.90 1.78%
Class C............................ 1,000 1,008 8.76 1,000 1,016 8.80 1.76%
Conservative Balanced Portfolio
Class A............................ $ 1,000 $ 1,018 $ 4.95 $ 1,000 $ 1,020 $ 4.96 0.99%
Class B............................ 1,000 1,014 8.89 1,000 1,016 8.90 1.78%
Class C............................ 1,000 1,015 8.79 1,000 1,016 8.80 1.76%
Balanced Portfolio
Class A............................ $ 1,000 $ 1,026 $ 4.72 $ 1,000 $ 1,020 $ 4.71 0.94%
Class B............................ 1,000 1,022 8.62 1,000 1,016 8.60 1.72%
Class C............................ 1,000 1,023 8.53 1,000 1,016 8.50 1.70%
Conservative Growth Portfolio
Class A............................ $ 1,000 $ 1,032 $ 4.89 $ 1,000 $ 1,020 $ 4.86 0.97%
Class B............................ 1,000 1,029 8.81 1,000 1,016 8.75 1.75%
Class C............................ 1,000 1,029 8.65 1,000 1,016 8.60 1.72%
Strategic Growth Portfolio
Class A............................ $ 1,000 $ 1,036 $ 5.10 $ 1,000 $ 1,020 $ 5.06 1.01%
Class B............................ 1,000 1,032 9.02 1,000 1,016 8.95 1.79%
Class C............................ 1,000 1,032 8.87 1,000 1,016 8.80 1.76%
Money Market Fund
Class A............................ $ 1,000 $ 1,009 $ 2.99 $ 1,000 $ 1,022 $ 3.01 0.60%
Class B............................ 1,000 1,003 8.44 1,000 1,016 8.50 1.70%
Class C............................ 1,000 1,003 8.44 1,000 1,016 8.50 1.70%
Class I............................ 1,000 1,009 2.69 1,000 1,022 2.71 0.54%
* Expenses are equal to each Portfolio's or Fund annualized expense ratio,
multiplied by the average account value over the period, multiplied by the 181
days in the most recent fiscal half-year, divided by 365 days in the year (to
reflect the one-half year period).
8
Expense Information (continued)
The following table sets forth the estimated ongoing aggregate expenses of the
Portfolios, including expenses of the Underlying Funds, based upon expenses
shown in the table on the prior page for each Portfolio and corresponding
expenses for each Underlying Fund's Class I shares. These estimates assume a
constant allocation by each Portfolio of its assets among the Underlying Funds
identical to the actual allocation of the Portfolio at April 30, 2005. A
Portfolio's actual aggregate expenses may be higher as a result of changes in
the allocation of the Portfolio's assets among the Underlying Funds, the
expenses of the Underlying Funds and/or the Portfolio's own expenses.
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
---------------------------------------- ---------------------------------------
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING ESTIMATED
ACCOUNT ACCOUNT PERIOD* ACCOUNT ACCOUNT PERIOD* AGGREGATE
VALUE VALUE 11/01/2004- VALUE VALUE 11/01/2004- EXPENSE
11/01/2004 04/30/2005 04/30/2005 11/01/2004 04/30/2005 04/30/2005 RATIO
---------- ---------- ------------ ---------- ---------- ----------- ---------
Flexible Income Portfolio
Class A............................ $ 1,000 $ 1,010 $ 7.88 $ 1,000 $ 1,017 $ 7.90 1.58%
Class B............................ 1,000 1,007 11.75 1,000 1,013 11.78 2.36%
Class C............................ 1,000 1,008 11.65 1,000 1,013 11.68 2.34%
Conservative Balanced Portfolio
Class A............................ $ 1,000 $ 1,018 $ 8.06 $ 1,000 $ 1,017 $ 8.05 1.61%
Class B............................ 1,000 1,014 11.99 1,000 1,013 11.98 2.40%
Class C............................ 1,000 1,015 11.89 1,000 1,013 11.88 2.38%
Balanced Portfolio
Class A............................ $ 1,000 $ 1,026 $ 8.09 $ 1,000 $ 1,017 $ 8.05 1.61%
Class B............................ 1,000 1,022 11.98 1,000 1,013 11.93 2.39%
Class C............................ 1,000 1,023 11.89 1,000 1,013 11.83 2.37%
Conservative Growth Portfolio
Class A............................ $ 1,000 $ 1,032 $ 8.31 $ 1,000 $ 1,017 $ 8.25 1.65%
Class B............................ 1,000 1,029 12.23 1,000 1,013 12.13 2.43%
Class C............................ 1,000 1,029 12.07 1,000 1,013 11.98 2.40%
Strategic Growth Portfolio
Class A............................ $ 1,000 $ 1,036 $ 8.73 $ 1,000 $ 1,016 $ 8.65 1.73%
Class B............................ 1,000 1,032 12.65 1,000 1,012 12.52 2.51%
Class C............................ 1,000 1,032 12.50 1,000 1,012 12.37 2.48%
* Expenses are equal to each Portfolio's estimated aggregate annualized expense
ratio, multiplied by the average account value over the period, multiplied by
the 181 days in the most recent fiscal half year, divided by 365 days in the
year (to reflect the one-half year half-year period).
9
Financial Statements:
Portfolios of Investments
FLEXIBLE INCOME PORTFOLIO
April 30, 2005 (unaudited)
VALUE
SHARES (000s)
------ -----------
INVESTMENT COMPANY SECURITIES - 99.9%
EQUITY FUNDS - 23.4%
1,918,936 WM Equity Income Fund.................. $ 36,479
2,941,645 WM Growth & Income Fund ............... 71,129
3,334,017 WM Growth Fund......................... 50,744
1,636,948 WM Mid Cap Stock Fund.................. 28,843
633,041 WM REIT Fund........................... 10,160
691,808 WM Small Cap Growth Fund+.............. 8,419
886,232 WM Small Cap Value Fund................ 10,387
270,163 WM West Coast Equity Fund.............. 9,547
-----------
Total Equity Funds
(Cost $183,225)...................... 225,708
-----------
FIXED INCOME FUNDS - 76.5%
8,170,564 WM High Yield Fund..................... 65,528
25,251,512 WM Income Fund......................... 234,334
49,015,109 WM Short Term Income Fund.............. 114,695
29,897,464 WM U.S. Government Securities Fund..... 321,697
-----------
Total Fixed Income Funds
(Cost $736,613)...................... 736,254
-----------
Total Investment Company Securities
(Cost $919,838)....................... 961,962
-----------
PRINCIPAL
AMOUNT
(000s)
- -------------
REPURCHASE AGREEMENT - 0.3%
(Cost $2,616)
$ 2,616 Agreement with Morgan Stanley,
2.850% dated 04/29/2005, to be
repurchased at $2,617,000 on
05/02/2005 (Collateralized by
U.S. Treasury Note, 2.000% due
07/15/2014, market value
$2,701,000)...................... 2,616
---------
TOTAL INVESTMENTS (Cost $922,454*)............. 100.2% 964,578
OTHER ASSETS (LIABILITIES) (NET)............... (0.2) (1,810)
----- ---------
NET ASSETS..................................... 100.0% $ 962,768
===== =========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
CONSERVATIVE BALANCED PORTFOLIO
April 30, 2005 (unaudited)
VALUE
SHARES (000s)
------ -----------
INVESTMENT COMPANY SECURITIES - 99.6%
EQUITY FUNDS - 40.4%
2,005,912 WM Equity Income Fund.................. $ 38,132
2,210,389 WM Growth & Income Fund................ 53,447
2,836,307 WM Growth Fund......................... 43,169
2,298,778 WM International Growth Fund........... 22,275
1,175,619 WM Mid Cap Stock Fund.................. 20,714
711,406 WM REIT Fund........................... 11,418
400,474 WM Small Cap Growth Fund+.............. 4,874
733,934 WM Small Cap Value Fund................ 8,602
441,859 WM West Coast Equity Fund.............. 15,615
-----------
Total Equity Funds
(Cost $188,147)...................... 218,246
-----------
FIXED INCOME FUNDS - 59.2%
3,845,944 WM High Yield Fund..................... 30,844
10,997,268 WM Income Fund......................... 102,055
13,387,390 WM Short Term Income Fund.............. 31,327
14,511,276 WM U.S. Government Securities Fund..... 156,141
-----------
Total Fixed Income Funds
(Cost $321,358)...................... 320,367
-----------
Total Investment Company Securities
(Cost $509,505)...................... 538,613
-----------
PRINCIPAL
AMOUNT
(000s)
- -------------
REPURCHASE AGREEMENT - 0.3%
(Cost $1,427)
$ 1,427 Agreement with Morgan Stanley,
2.850% dated 04/29/2005, to be
repurchased at $1,427,000 on
05/02/2005 (Collateralized by
U.S. Treasury Note, 2.000% due
07/15/2014, market value
$1,473,000)...................... 1,427
---------
TOTAL INVESTMENTS (Cost $510,932*)............. 99.9% 540,040
OTHER ASSETS (LIABILITIES) (NET)............... 0.1 532
------ ---------
NET ASSETS..................................... 100.0% $ 540,572
====== =========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
See Notes to Financial Statements.
10
Portfolios of Investments
BALANCED PORTFOLIO
April 30, 2005 (unaudited)
VALUE
SHARES (000S)
---------- ----------
INVESTMENT COMPANY SECURITIES - 98.3%
EQUITY FUNDS - 62.5%
21,849,024 WM Equity Income Fund........................ $ 415,350
23,690,078 WM Growth & Income Fund...................... 572,826
31,940,509 WM Growth Fund............................... 486,135
23,080,030 WM International Growth Fund................. 223,645
12,777,806 WM Mid Cap Stock Fund........................ 225,145
7,875,739 WM REIT Fund................................. 126,406
5,141,581 WM Small Cap Growth Fund+.................... 62,573
8,704,828 WM Small Cap Value Fund...................... 102,021
5,173,783 WM West Coast Equity Fund.................... 182,841
----------
Total Equity Funds
(Cost $2,092,950)........................ 2,396,942
----------
FIXED INCOME FUNDS - 35.8%
23,208,912 WM High Yield Fund........................... 186,135
47,178,111 WM Income Fund............................... 437,813
16,271,142 WM Short Term Income Fund.................... 38,074
66,070,345 WM U.S. Government Securities Fund........... 710,917
----------
Total Fixed Income Funds
(Cost $1,367,582)........................ 1,372,939
----------
Total Investment Company Securities
(Cost $3,460,532)........................ 3,769,881
----------
PRINCIPAL
AMOUNT
(000S)
---------
REPURCHASE AGREEMENT - 1.8%
(Cost $71,479)
$ 71,479 Agreement with Morgan Stanley,
2.850% dated 04/29/2005, to be
repurchased at $71,496,000 on
05/02/2005 (Collateralized by
U.S. Treasury Note, 2.000% due
07/15/2014, market value
$73,805,000)......................... 71,479
-----------
TOTAL INVESTMENTS (Cost $3,532,011*).............. 100.1% 3,841,360
OTHER ASSETS (LIABILITIES) (NET).................. (0.1) (4,862)
----- -----------
NET ASSETS ....................................... 100.0% $ 3,836,498
===== ===========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
CONSERVATIVE GROWTH PORTFOLIO
April 30, 2005 (unaudited)
VALUE
SHARES (000S)
---------- -----------
INVESTMENT COMPANY SECURITIES - 100.0%
EQUITY FUNDS - 82.9%
20,445,319 WM Equity Income Fund ...................... $ 388,665
25,079,355 WM Growth & income fund .................... 606,419
33,709,529 WM Growth Fund ............................. 513,059
24,384,076 WM International Growth Fund ............... 236,282
13,393,121 WM Mid Cap Stock Fund ...................... 235,987
8,020,248 WM REIT Fund ............................... 128,725
5,643,271 WM Small Cap Growth Fund+................... 68,679
9,593,676 WM Small Cap Value Fund .................... 112,438
5,684,141 WM West Coast Equity Fund .................. 200,877
-----------
Total Equity Funds
(Cost $2,221,547) ...................... 2,491,131
-----------
FIXED INCOM FUNDS - 17.1%
14,573,615 WM High Yield Fund.......................... 116,880
12,880,318 WM Income Fund.............................. 119,529
25,590,201 WM U.S. Government Securities Fund.......... 275,351
-----------
Total Fixed Income Funds
(Cost $504,284)......................... 511,760
-----------
Total Investment Company Securities
(Cost $2,725,831)........................ 3,002,891
-----------
PRINCIPAL
AMOUNT
(000S)
- ---------
REPURCHASE AGREEMENT - 0.1%
(Cost $2,919)
$ 2,919 Agreement with Morgan Stanley,
2.850% dated 04/29/2005, to be
repurchased at $2,920,000 on
05/02/2005 (Collateralized by
U.S. Treasury Note, 2.000% due
07/15/2014, market value
$3,014,000).......................... 2,919
----------
TOTAL INVESTMENTS (Cost $2,728,750*)............. 100.1% 3,005,810
OTHER ASSETS (LIABILITIES) (NET)................. (0.1) (1,949)
----- ----------
NET ASSETS....................................... 100.0% $3,003,861
===== ==========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
See Notes to Financial Statements.
11
Portfolio of Investments
STRATEGIC GROWTH PORTFOLIO
April 30, 2005 (unaudited)
VALUE
SHARES (000S)
---------- ----------
INVESTMENT COMPANY SECURITIES - 99.9%
EQUITY FUNDS - 95.0%
12,373,407 WM Equity Income Fund....................... $ 235,218
17,443,552 WM Growth & Income Fund..................... 421,785
20,529,085 WM Growth Fund.............................. 312,453
16,794,818 WM International Growth Fund................ 162,742
10,687,161 WM Mid Cap Stock Fund....................... 188,308
4,771,189 WM REIT Fund ............................... 76,578
3,992,312 WM Small Cap Growth Fund+................... 48,586
6,180,602 WM Small Cap Value Fund..................... 72,437
4,246,809 WM West Coast Equity Fund................... 150,082
----------
Total Equity Funds
(Cost $1,532,792)........................ 1,668,189
----------
FIXED INCOME FUND - 4.9%
10,709,849 WM High Yield Fund.......................... 85,893
----------
Total Fixed Income Funds
(Cost $84,803)........................... 85,893
----------
Total Investment Company Securities
(Cost$l,617,595)......................... 1,754,082
----------
PRINCIPAL
AMOUNT
(000S)
----------
REPURCHASE AGREEMENT - 0.0%++
(Cost $518)
$ 518 Agreement with Morgan Stanley,
2.850% dated 04/29/05, to be
repurchased at $518,000 on
05/02/2005 (Collateralized by
U.S. Treasury Note, 2.000% due
07/15/2014, market value
$535,000)............................... 518
----------
TOTAL INVESTMENTS (Cost $1,618,113*)...................... 99.9% 1,754,600
OTHER ASSETS (LIABILITIES) (NET).......................... 0.1 1,706
----- ----------
NET ASSETS................................................ 100.0% $1,756,306
===== ==========
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
++ Amount represents less than 0.1% of the total net assets of the Portfolio.
See Notes to Financial Statements.
12
Portfolio of Investments
MONEY MARKET FUND
April 30, 2005 (unaudited)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------- ---------
COMMERCIAL PAPER (DOMESTIC) - 4.8%
Cooperative Association of Tractor
Dealers Inc.:
$ 10,200 Series A,
2.850% due 07/19/2005+++ .............. $ 10,137
Series B:
6,000 2.770% due 05/31/2005+++ .............. 5,987
6,100 2.860% due 06/28/2005+++ .............. 6,072
10,000 Morgan Stanley,
3.000% due 06/20/2005+++ .............. 9,959
---------
Total Commercial Paper (Domestic)
(Cost $32,155) ........................ 32,155
---------
COMMERCIAL PAPER (YANKEE) - 1.5%
(Cost $9,999)
10,000 American Honda Finance Corporation,
2.710% due 05/03/2005+++ .............. 9,999
---------
CERTIFICATES OF DEPOSIT (YANKEE) - 3.1%
Canadian Imperial Bank of Commerce, Note:
16,000 2.820% due 11/28/2005++ ............... 15,995
5,000 3.004% due 04/28/2006++ ............... 4,999
---------
Total Certificates of Deposit (Yankee)
(Cost $20,994) ........................ 20,994
---------
MEDIUM TERM NOTES - 15.1%
American Honda Finance Corporation:
13,000 3.040% due 03/13/2006++** ............. 13,009
10,000 3.080% due 07/11/2005++** ............. 10,000
3,400 Bank One Corporation, Note, Series C,
3.361% due 07/25/2005++ ............... 3,402
8,000 Caterpillar Financial Service
Corporation, Note, Series F,
3.153% due 04/07/2006++ ............... 8,004
General Electric Capital Corporation,
Series A:
10,200 2.870% due 05/12/2005++ ............... 10,200
4,850 2.950% due 02/03/2006++ ............... 4,859
12,000 3.090% due 03/29/2006++ ............... 12,005
5,000 J.P. Morgan Chase & Company, Sr. Note,
Series C,
3.120% due 05/20/2005++ ............... 5,000
Merrill Lynch & Company, Inc., Note:
10,000 3.280% due 07/11/2005++ ............... 10,004
19,522 Series B,
3.400% due 06/13/2005++ ............... 19,531
5,000 National City Bank, Note,
2.820% due 05/19/2005++ ............... 5,000
---------
Total Medium Term Notes
(Cost $101,014) ....................... 101,014
---------
CORPORATE BONDS AND NOTES - 35.9%
1,153 2440 LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 05/01/2024+** ............. 1,153
6,500 2880 Stevens Creek LLC, Bond,
(LOC: Bank of the West),
3.100% due 11/01/2033+ ................ 6,500
2,885 ASSK Properties LC, Note,
(LOC: Wells Fargo Bank),
3.170% due 12/01/2017+ ................ 2,885
5,950 Associates Corporation NA, Sr. Note,
6.200% due 05/16/2005 ................. 5,958
1,750 Avatar Corporation, Note,
(LOC: Fifth Third Bank),
3.060% due 05/01/2039+** .............. 1,750
1,000 Banaba Properties LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 03/01/2020+ ................ 1,000
21,850 Bank One Corporation, Note,
7.625% due 08/01/2005 ................. 22,101
1,300 Bedford Hills Golf Club, Note,
(LOC: Fifth Third Bank),
3.060% due 04/01/2013+ ................ 1,300
2,405 Boardwalk Enterprises, Note,
(LOC: Fifth Third Bank),
3.060% due 04/01/2024+** .............. 2,405
1,450 Brookville Enterprises, Note,
(LOC: Fifth Third Bank),
3.060% due 10/01/2025+ ................ 1,450
3,000 Campus Research Corporation, Note,
Series A, (LOC: Wells Fargo Bank),
3.220% due 06/01/2013+ ................ 3,000
3,800 Chatham Capital Corporation, Note,
(LOC: Fifth Third Bank),
3.010% due 11/01/2028+ ................ 3,800
14,000 Citigroup Inc., Note,
2.950% due 09/01/2005++ ............... 14,003
12,315 Commercial Credit Corporation, Note,
(LOC: Citigroup),
6.500% due 06/01/2005 ................. 12,359
2,000 Community Housing Development,
Bond, (LOC: Wells Fargo Bank),
3.070% due 08/01/2024+ ................ 2,000
8,475 Corporate Finance Managers, Note,
(LOC: Wells Fargo Bank),
3.070% due 02/02/2043+ ................ 8,475
1,150 Corvasc Real Estate, Note,
(LOC: Fifth Third Bank),
3.060% due 05/01/2024+ ................ 1,150
1,000 Crestmont Nursing Home, Note,
(LOC: Fifth Third Bank),
3.010% due 03/01/2024+** .............. 1,000
1,500 D & I Properties LLC, Bond,
(LOC: Wells Fargo Bank),
3.100% due 11/01/2034+ ................ 1,500
See Notes to Financial Statements.
13
Portfolio of Investments (Continued)
MONEY MARKET FUND
April 30, 2005 (unaudited)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------- ---------
CORPORATE BONDS AND NOTES - (CONTINUED)
$ 1,600 DBSI First Mortgage 1998, Note,
(LOC: U.S. Bank),
3.100% due 07/01/2023+ ................ $ 1,600
200 Derby Fabricating LLC, Bond,
(LOC: Fifth Third Bank),
3.060% due 06/01/2024+ ................ 200
1,000 Elmhurst Memorial Healthcare, Note,
(LOC: Fifth Third Bank),
3.030% due 01/01/2034+** .............. 1,000
27,131 Everett Clinic, P.S., Bond,
(LOC: Bank of America),
3.070% due 05/01/2022+ ................ 27,131
800 Exal Corporation, Note,
(LOC: Fifth Third Bank),
3.060% due 03/01/2009+ ................ 800
950 Family Express LLC, Note,
(LOC: Fifth Third Bank),
3.010% due 04/01/2028+ ................ 950
1,100 Fifth Third Bank, Note,
(LOC: Fifth Third Bank),
3.060% due 06/01/2018+** .............. 1,100
7,490 Foster Schweihofer Real Estate Holdings
Company, LLC, Note,
(LOC: Fifth Third Bank),
3.010% due 09/20/2033+ ................ 7,490
1,630 Gold Key Processing Limited, Note,
(LOC: Fifth Third Bank),
3.060% due 07/01/2024+ ................ 1,630
2,000 Gulf Gate Apartments, Bond,
(LOC: Wells Fargo Bank),
3.070% due 09/01/2028+** .............. 2,000
900 Henderson Regional Authority, Bond,
(LOC: Fifth Third Bank),
3.060% due 07/01/2023+ ................ 900
4,600 Iowa 80 Group Inc., Note,
(LOC: Wells Fargo Bank),
3.010% due 06/01/2016+ ................ 4,600
1,000 ISO Building LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 03/01/2023+** .............. 1,000
1,000 JUL-Mark Investments LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 10/01/2025+** .............. 1,000
2,038 KAT LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 06/01/2029+ ................ 2,038
1,880 KL Morris Family LP, Note,
(LOC: Fifth Third Bank),
3.060% due 02/01/2020+ ................ 1,880
1,500 LAL Holding Company, Note,
(LOC: Fifth Third Bank),
3.060% due 08/01/2019+ ................ 1,500
955 Lauren Company LLC, Bond,
(LOC: Wells Fargo Bank),
3.070% due 07/01/2033+** .............. 955
1,000 Lee Family Partnership, Note,
(LOC: Fifth Third Bank),
3.060% due 06/01/2034+ ................ 1,000
2,200 Lincoln Parkway LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 06/01/2044+ ................ 2,200
1,800 Marsh Enterprises LLC, Note,
(LOC: Fifth Third Bank),
3.010% due 01/01/2028+ ................ 1,800
900 Martin Road Investments, Bond,
(LOC: Fifth Third Bank),
3.060% due 10/01/2027+ ................ 900
2,400 Medical Properties Inc., Revenue Bonds,
(Dakota Clinic Ltd. Project),
(LOC: ABN AMRO Bank NV),
2.870% due 12/15/2024+ ................ 2,400
Michigan Equity Group, Note,
(LOC: Fifth Third Bank):
900 3.060% due 04/01/2034+ ................ 900
2,530 Series B,
3.060% due 04/01/2034+** .............. 2,530
3,220 Morgan Stanley Dean Witter, Note,
7.750% due 06/15/2005 ................. 3,238
2,300 NO S Properties LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 08/01/2024+ ................ 2,300
4,500 Pineview Estates LC, Note,
(LOC: Fifth Third Bank),
3.010% due 01/01/2023+ ................ 4,500
14,028 Portland Clinic LLP, Bond,
(LOC: U.S.Bank),
2.870% due 11/20/2027+ ................ 14,028
1,000 R.O. Davis Real Estate, Note,
(LOC: Fifth Third Bank),
3.060% due 04/01/2023+ ................ 1,000
1,610 Realty Holding Company LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 05/01/2024+** .............. 1,610
3,750 Robert C. Fox, Jr., Note,
(LOC: Comerica Bank),
3.100% due 06/01/2033+ ................ 3,750
4,600 Rockwood Quarry LLC, Note,
(LOC: Fifth Third Bank),
3.010% due 12/01/2022+ ................ 4,600
1,400 Sanders CRS Exchange LLC, Note,
(LOC: Wells Fargo Bank),
3.300% due 10/01/2023+** .............. 1,400
1,000 SJD Service Company LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 10/01/2023+ ................ 1,000
1,000 Skeletal Properties, Note,
(LOC: Fifth Third Bank),
3.060% due 11/01/2014+ ................ 1,000
3,000 SouthTrust Bank NA, Note,
2.810% due 05/02/2005++ ............... 3,000
See Notes to Financial Statements.
14
Portfolio of Investments (continued)
MONEY MARKET FUND
April 30, 2005 (unaudited)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------- ---------
CORPORATE BONDS AND NOTES - (CONTINUED)
$ 1,250 Spartan Medical Facility, Note,
(LOC: Fifth Third Bank),
3.060% due 12/01/2026+** .............. $ 1,250
3,000 Stephens & Stephens XI, Bond,
(LOC: Bank of the West),
3.100% due 11/01/2034+ ................ 3,000
2,800 Tacoma Goodwill Industries, Bond,
(LOC: Bank of America),
3.020% due 02/01/2023+ ................ 2,800
2,000 Titan Holdings Group LLC, Note,
(LOC: Fifth Third Bank),
3.060% due 05/01/2012+ ................ 2,000
1,125 United Transportation Union, Bond,
(LOC: Fifth Third Bank),
3.060% due 06/01/2009+ ................ 1,125
8,228 Wachovia Corporation, Sr. Note,
7.550% due 08/18/2005 ................. 8,338
1,393 Watts Brothers Frozen Foods, Bond,
(LOC: U.S. Bank),
3.100% due 07/01/2013+ ................ 1,393
13,000 Wells Fargo Company, Note,
3.030% due 03/03/2006+ ................ 13,015
2,260 Westgate Investment Fund, Bond,
(LOC: Wells Fargo Bank),
3.070% due 02/01/2012+ ................ 2,260
---------
Total Corporate Bonds and Notes
(Cost $239,900) ....................... 239,900
---------
TAXABLE MUNICIPAL BONDS - 28.6%
2,000 ABAG, California, Finance Authority
for Nonprofit Corporations, Revenue
Bonds, (Public Policy Institute of
California Project), Series B,
(LOC: Bank of New York),
3.100% due 11/01/2031+ ................ 2,000
6,940 Acworth, Georgia, Downtown
Development Authority, IDR, (City of
Acworth Cable Fiber Optic Project),
(AMBAC Insured),
3.020% due 01/01/2017+ ................ 6,940
1,300 California Statewide Communities
Development Authority, MFHR,
(Pavilions at Sunrise Apartments),
Series M-T, (FNMA Collateral),
2.970% due 08/15/2034+ ................ 1,300
2,085 Collier County, Florida, MFHR,
(Brittany Bay Apartments Project),
Series B, (FNMA Collateral),
3.050% due 07/15/2034+ ................ 2,085
1,225 Colorado Housing & Finance Authority,
Economic Development Revenue,
(G.A. Wright Asset Management,
LLC Project), (LOC: Wells Fargo Bank),
3.070% due 04/01/2029+ ................ 1,225
25,000 Connecticut State Housing Finance
Authority, Housing Revenue,
(Housing Mortgage Finance Program),
Subseries B-6, (AMBAC Insured),
3.050% due 11/15/2027+ ................ 25,000
Fairfield California Pension Obligation,
Revenue Bonds, Series A-2,
(LOC: Landesbank Hessen-Thuringen):
5,000 3.100% due 06/01/2034+ ................ 5,000
2,000 3.100% due 06/01/2034+ ................ 2,000
4,250 Four Dam Pool Power Agency,Alaska,
Electric Revenue, Series B,
(LOC: Dexia Bank),
3.020% due 07/01/2026+ ................ 4,250
200 Illinois Health Facilities Authority,
Health Care Revenue, (West Suburban
Hospital Medical Center Project),
Series B, (LOC:American National
Bank),
2.850% due 07/01/2024+ ................ 200
4,000 Kansas City, Missouri, Tax Increment
Financing Commission, Tax
Increment Revenue, (909 Walnut
Parking Facility Project), (AMBAC
Insured),
3.050% due 02/01/2024+ ................ 4,000
2,900 Kern Water Bank Authority, California,
Water Revenue, Series B,
(LOC: Wells Fargo Bank),
3.070% due 07/01/2028+ ................ 2,900
2,600 Kit Carson County, Colorado,
Agricultural Development Revenue,
(Midwest Farms LLC),
(LOC: Wells Fargo Bank),
3.050% due 06/01/2027+ ................ 2,600
3,000 Long Beach, California, Revenue Bonds,
(Long Beach Towne Center Site
Refinancing Project), Series A,
(LOC: Allied Irish Bank PLC),
3.100% due 11/01/2030+ ................ 3,000
2,450 Massachusetts State Development
Finance Agency, Solid Waste
Disposal Revenue, (The Newark
Group Project), Series D,
(LOC: JPMorgan Chase Bank),
3.020% due 07/01/2016+ ................ 2,450
2,000 Memorial Health System, Illinois,
Health Care Revenue,
(LOC: Bank One NA),
3.050% due 10/01/2024+ ................ 2,000
3,005 Michigan State Strategic Fund, Limited
Obligation Revenue, (Environmental
Research Institute of Michigan
Project), Series B, (LOC: Fifth Third
Bank), 3.010% due 10/01/2025+ ......... 3,005
See Notes to Financial Statements.
15
Portfolio of Investments (continued)
MONEY MARKET FUND
April 30, 2005 (unaudited)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------- ---------
TAXABLE MUNICIPAL BONDS - (CONTINUED)
$ 1,000 Montrose County, Colorado, Economic
Development Revenue, (Gordon
Development Project), Series A,
(LOC: Wells Fargo Bank),
3.070% due 06/01/2010+ ................ $ 1,000
4,110 New Hampshire State Housing Finance
Authority, MFHR, (Pheasant Run
Properties Limited Partnership
Project), (FNMA Collateral),
2.850% due 04/15/2016+ ................ 4,110
20,000 New York City, GO, Subseries A-11,
(FGIC Insured),
3.050% due 11/01/2020+ ................ 20,000
28,000 New York State Housing Finance Agency,
Housing Revenue, (900 8th Avenue
Housing Project), Series B,
(LOC: KeyBank National Association),
2.850% due 11/01/2035+ ................ 28,000
4,800 New York State Housing Finance Agency,
Housing Revenue, (West 33rd Street
Project), Series B, (FNMA Collateral),
2.950% due 11/15/2036+ ................ 4,800
6,685 North Carolina Capital Facilities Finance
Agency, College & University
Revenue, (Wolfpack Towers Project),
Series B, (LOC: Bank of America),
3.020% due 09/01/2018+ ................ 6,685
Orange County, Florida, Housing Finance
Authority, MFHR, Series B:
2,320 (Northbridge At Millenia - Phase II
Project), (LOC: SouthTrust Bank),
3.080% due 09/15/2036+ ................ 2,320
1,550 (The Landings on Millenia Blvd.
Apartments), (FNMA Collateral),
2.860% due 08/15/2035+ ................ 1,550
2,375 Plymouth, Minnesota, Health Facilities
Revenue, (Westhealth Project),
Series B, (FSA Insured),
3.050% due 06/01/2024+ ................ 2,375
3,200 Richmond, California, MFHR, (Bay Cliff
Apartments Project), Series B,
(FNMA Collateral),
2.960% due 08/15/2037+ ................ 3,200
5,250 Santa Rosa, California, Pension
Obligation, Revenue Bonds, Series A,
(LOC: Landesbank Hessen-Thuringen),
3.100% due 09/01/2024+ ................ 5,250
2,800 Savannah College of Art & Design, Inc.,
Georgia, Revenue Bonds,
(LOC: Bank of America),
3.060% due 04/01/2024+ ................ 2,800
10,200 South Fulton, Georgia, Municipal
Regional Jail Authority, Lease
Revenue, (Union City Justice Center
Project), (MBIA Insured),
3.060% due 11/01/2017+ ................ 10,200
5,750 Union County Improvement Authority,
New Jersey, Revenue Bonds, (Cedar
Glen Housing Corporation - Hanover
Township Housing Project), Series B,
(FNMA Collateral),
2.950% due 12/15/2014+ ................ 5,750
7,000 Utah Telecommunication Open
Infrastructure Agency,
Telecommunications Revenue,
(LOC: Bank of America),
3.020% due 07/01/2026+ ................ 7,000
3,600 Val Verde Unified School District,
California, COP, (Land Bank Program),
Series B, (LOC: Bank of America),
3.020% due 09/01/2010+ ................ 3,600
Washington State Housing Finance
Commission, MFHR, Series B:
1,810 (Boardwalk Apartments Project),
(FNMA Collateral),
2.950% due 09/01/2028+ ................ 1,810
975 (Oxford Square Project),
(LOC: U.S. Bank),
3.100% due 12/01/2028+ ................ 975
2,020 (Queen Anne Project),
(LOC: Bank of America),
2.970% due 12/01/2040+ ................ 2,020
5,250 (Silver Creek Apartment Project),
2.960% due 12/20/2037+ ................ 5,250
2,730 (Washington Terrace Senior
Apartments Project),
(FNMA Collateral),
2.960% due 09/15/2037+ ................ 2,730
---------
Total Taxable Municipal Bonds
(Cost $191,380) ....................... 191,380
---------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.7%
Federal National Mortgage Association, Note:
5,000 1.610% due 05/13/2005 ................. 5,000
5,000 1.750% due 05/23/2005 ................. 5,000
5,000 1.800% due 05/27/2005 ................. 5,000
10,000 1.850% due 06/03/2005 ................. 10,000
---------
Total U.S. Government Agency Obligations
(Cost $25,000) ........................ 25,000
---------
See Notes to Financial Statements.
16
Portfolio of Investments (continued)
MONEY MARKET FUND
April 30, 2005 (unaudited)
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- ----------------- ---------
FUNDING AGREEMENT - 4.8%
(Cost $32,000)
$ 32,000 New York Life Insurance,
2.780% due 08/03/2005*** . . . . . . . $ 32,000++
---------
REPURCHASE AGREEMENT - 3.0%
(Cost $19,801)
19,801 Agreement with Morgan Stanley,
2.850% dated 04/29/05, to be
repurchased at $19,806,000 on
05/02/2005 (Collateralized by
U.S. Treasury Note, 2.000% due
07/15/2014, market value
$20,445,000) .......................... 19,801
---------
TOTAL INVESTMENTS (Cost $672,243*) .......... 100.5% 672,243
OTHER ASSETS (LIABILITIES) (NET) ............ (0.5) (3,216)
----- ---------
NET ASSETS ................................. 100.0% $ 669,027
===== =========
- -------------
* Aggregate cost for federal tax purposes.
** Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933, as amended.
*** Security is restricted and illiquid. It was acquired on August 4, 2004,
and has a value of $0.05 per Fund share at April 30, 2005.
+ Variable rate securities payable upon demand with not more than five
business days notice, and secured by bank letters of credit or guarantees
by certain corporations. The interest rate shown reflects the rate in
effect at April 30, 2005.
++ Floating rate security whose interest rate is reset periodically based on
an index.
+++ Rate represents discount rate on purchase date.
++ Represents fair value as determined in good faith under the direction of
the Board of Trustees.
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
COP -- Certificate of Participation
FGIC -- Federal Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GO -- General Obligation
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
See Notes to Financial Statements.
17
Statements of Assets and Liabilities
April 30, 2005 (unaudited)
(In thousands)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC MONEY
INCOME BALANCED BALANCED GROWTH GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND
------------ ------------ ------------ ------------- ------------- ------------
ASSETS:
Investments, at value (a) .................. $ 964,578 $ 540,040 $ 3,841,360 $ 3,005,810 $ 1,754,600 $ 672,243
Cash ....................................... -- -- -- -- -- 23
Dividends and/or interest receivable ....... --* --* 11 --* --* 3,187
Receivable for Portfolio/Fund shares sold .. 2,391 2,945 11,001 7,229 6,661 543
Prepaid expenses and other assets .......... 11 6 43 34 19 16
------------ ------------ ------------ ------------ ------------ ------------
Total Assets ........................... 966,980 542,991 3,852,415 3,013,073 1,761,280 676,012
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES:
Payable for Portfolio/Fund shares
redeemed ................................ 2,345 959 7,861 4,138 2,772 6,464
Payable for investment securities
purchased ............................... 616 827 3,479 1,419 -- --
Investment advisory fee payable ............ 500 279 1,849 1,488 888 248
Shareholder servicing and distribution
fees payable ............................ 534 286 2,014 1,623 972 38
Transfer agent fees payable ................ 47 23 150 123 80 26
Dividends payable .......................... -- -- -- -- -- 24
Due to custodian ........................... 3 2 16 15 11 --
Accrued printing and postage expenses ...... 111 20 348 256 179 143
Accrued legal and audit fees ............... 28 21 69 58 39 28
Accrued expenses and other payables ........ 28 2 131 92 33 14
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities ...................... 4,212 2,419 15,917 9,212 4,974 6,985
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS ................................. $ 962,768 $ 540,572 $ 3,836,498 $ 3,003,861 $ 1,756,306 $ 669,027
============ ============ ============ ============ ============ ============
(a) Investments, at cost ................... $ 922,454 $ 510,932 $ 3,532,011 $ 2,728,750 $ 1,618,113 $ 672,243
============ ============ ============ ============ ============ ============
NET ASSETS CONSIST OF:
Undistributed net investment income/
(accumulated net investment loss) ....... $ 1,864 $ 621 $ 793 $ (1,976) $ (4,615) $ --
Accumulated net realized loss on
investment transactions ................. (4,777) (1,993) (58,554) (70,943) (57,362) (45)
Net unrealized appreciation
of investments .......................... 42,124 29,108 309,349 277,060 136,487 --
Paid-in capital ............................ 923,557 512,836 3,584,910 2,799,720 1,681,796 669,072
------------ ------------ ------------ ------------ ------------ ------------
Total Net Assets ....................... $ 962,768 $ 540,572 $ 3,836,498 $ 3,003,861 $ 1,756,306 $ 669,027
============ ============ ============ ============ ============ ============
- ------------------
* Amount represents less than $500.
See Notes to Financial Statements.
18
Statements of Assets and Liabilities (continued)
April 30, 2005 (unaudited)
(In thousands)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC MONEY
INCOME BALANCED BALANCED GROWTH GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND
---------- ------------ ----------- ------------ --------- ----------
NET ASSETS:
Class A Shares ................................... $ 409,924 $ 251,774 $ 1,835,566 $ 1,371,995 $ 766,646 $ 533,175
========== ============ =========== ============ ========= ==========
Class B Shares ................................... $ 408,213 $ 165,796 $ 1,392,519 $ 1,025,909 $ 636,424 $ 39,396
========== ============ =========== ============ ========= ==========
Class C Shares ................................... $ 144,631 $ 123,002 $ 608,413 $ 605,957 $ 353,236 $ 7,023
========== ============ =========== ============ ========= ==========
Class I Shares ................................... $ 89,433
==========
SHARES OUTSTANDING:
Class A Shares ................................... 36,721 24,444 143,081 98,888 51,162 533,196
========== ============ =========== ============ ========= ==========
Class B Shares ................................... 36,625 16,123 108,805 75,839 44,351 39,392
========== ============ =========== ============ ========= ==========
Class C Shares ................................... 13,035 12,005 47,757 45,110 24,558 7,023
========== ============ =========== ============ ========= ==========
Class I Shares ................................... 89,446
==========
CLASS A SHARES:**
Net asset value per share of beneficial
interest outstanding * ........................ $ 11.16 $ 10.30 $ 12.83 $ 13.87 $ 14.98 $ 1.00
========== ============ =========== ============ ========= ==========
Maximum sales charge ............................. 4.50% 5.50% 5.50% 5.50% 5.50%
========== ============ =========== ============ =========
Maximum offering price per share of
beneficial interest outstanding ............... $ 11.69 $ 10.90 $ 13.58 $ 14.68 $ 15.85
========== ============ =========== ============ =========
CLASS B SHARES:**
Net asset value and offering price per share
of beneficial interest outstanding * .......... $ 11.15 $ 10.28 $ 12.80 $ 13.53 $ 14.35 $ 1.00
========== ============ =========== ============ ========= ==========
CLASS C SHARES:**
Net asset value and offering price per share
of beneficial interest outstanding * .......... $ 11.10 $ 10.25 $ 12.74 $ 13.43 $ 14.38 $ 1.00
========== ============ =========== ============ ========= ==========
CLASS I SHARES:**
Net asset value, offering and redemption
price per share of beneficial interest
outstanding ................................... $ 1.00
==========
- ------------------
* Redemption price per share is equal to net asset value per share less any
applicable contingent deferred sales charge.
** Net asset value and maximum offering price are not shown in thousands.
See Notes to Financial Statements.
19
Statements of Operations
For the Six Months Ended April 30, 2005 (unaudited)
(In thousands)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC MONEY
INCOME BALANCED BALANCED GROWTH GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND
--------- ------------ --------- ------------ --------- ----------
INVESTMENT INCOME:
Dividends from investment
company securities ............................ $ 19,728 $ 9,563 $ 55,972 $ 36,307 $ 18,189 $ --
Interest ......................................... 23 14 829 40 29 8,054
--------- ------------ --------- ------------ --------- ---------
Total investment income ...................... 19,751 9,577 56,801 36,347 18,218 8,054
--------- ------------ --------- ------------ --------- ---------
EXPENSES:
Investment advisory fee .......................... 2,952 1,609 10,788 8,731 5,168 1,524
Custodian fees ................................... 3 2 1 1 1 13
Legal and audit fees ............................. 23 18 60 50 34 23
Registration and filing fees ..................... 71 48 169 136 91 32
Printing and postage expenses .................... 100 23 333 262 184 186
Other ............................................ 78 43 303 250 159 52
Shareholder servicing and distribution fees:
Class A Shares ............................... 481 289 2,127 1,614 879 --
Class B Shares ............................... 2,040 819 6,955 5,188 3,220 216
Class C Shares ............................... 666 548 2,752 2,787 1,632 32
Transfer agent fees:
Class A Shares ............................... 100 59 425 407 300 151
Class B Shares ............................... 164 76 588 499 381 36
Class C Shares ............................... 45 35 171 198 140 5
--------- ------------ --------- ------------ --------- ---------
Total expenses ............................ 6,723 3,569 24,672 20,123 12,189 2,270
Fees reduced by custodian credits ................ --* --* --* --* --* (1)
--------- ------------ --------- ------------ --------- ---------
Net expenses .............................. 6,723 3,569 24,672 20,123 12,189 2,269
--------- ------------ --------- ------------ --------- ---------
NET INVESTMENT INCOME ............................ 13,028 6,008 32,129 16,224 6,029 5,785
--------- ------------ --------- ------------ --------- ---------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on investment
transactions .................................. 19 (43) (671) (1,140) (767) --
Capital gain distributions received .............. 1,239 1,041 11,568 12,156 8,964 --
Net change in unrealized appreciation/
depreciation of investments ................... (6,740) 157 34,310 49,714 32,672 --
--------- ------------ --------- ------------ --------- ---------
Net realized and unrealized gain/(loss) on
investments ................................... (5,482) 1,155 45,207 60,730 40,869 --
--------- ------------ --------- ------------ --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $ 7,546 $ 7,163 $ 77,336 $ 76,954 $ 46,898 $ 5,785
========= ============ ========= ============ ========= =========
- ---------------
* Amount represents less than $500.
See Notes to Financial Statements.
20
Statements of Changes in Net Assets
For the Six Months Ended April 30, 2005 (unaudited)
(In thousands)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC MONEY
INCOME BALANCED BALANCED GROWTH GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND
--------- ------------ ----------- ------------ ----------- -----------
Net investment income ........................ $ 13,028 $ 6,008 $ 32,129 $ 16,224 $ 6,029 $ 5,785
Net realized gain/(loss) on investment
transactions .............................. 19 (43) (671) (1,140) (767) --
Capital gain distributions received .......... 1,239 1,041 11,568 12,156 8,964 --
Net change in unrealized appreciation/
depreciation of investments ............... (6,740) 157 34,310 49,714 32,672 --
--------- ------------ ----------- ------------ ----------- -----------
Net increase in net assets resulting
from operations ........................... 7,546 7,163 77,336 76,954 46,898 5,785
Distributions to shareholders from:
Net investment income:
Class A Shares ......................... (6,236) (3,202) (18,707) (11,899) (1,610) (4,720)
Class B Shares ......................... (4,919) (1,630) (9,999) (2,201) -- (142)
Class C Shares ......................... (1,682) (1,137) (4,097) (2,378) -- (22)
Class I Shares ......................... -- -- -- -- -- (901)
Net realized gains on investments:
Class A Shares ......................... (1,158) (307) -- -- -- --
Class B Shares ......................... (1,306) (232) -- -- -- --
Class C Shares ......................... (401) (145) -- -- -- --
Net increase/(decrease) in net assets from
Portfolio/Fund share transactions:
Class A Shares ......................... 55,860 43,845 291,590 191,147 139,538 3,124
Class B Shares ......................... (7,586) 3,723 17,866 (1,921) 3,887 (13,369)
Class C Shares ......................... 18,150 25,740 120,194 114,021 68,293 (1,457)
Class I Shares ......................... -- -- -- -- -- (2,286)
--------- ------------ ----------- ------------ ----------- -----------
Net increase/(decrease) in net assets ........ 58,268 73,818 474,183 363,723 257,006 (13,988)
NET ASSETS:
Beginning of period .......................... 904,500 466,754 3,362,315 2,640,138 1,499,300 683,015
--------- ------------ ----------- ------------ ----------- -----------
End of period ................................ $ 962,768 $ 540,572 $ 3,836,498 $ 3,003,861 $ 1,756,306 $ 669,027
========= ============ =========== ============ =========== ===========
Undistributed net investment income/
(accumulated net investment loss) at
end of period ............................. $ 1,864 $ 621 $ 793 $ (1,976) $ (4,615) $ --
========= ============ =========== ============ =========== ===========
See Notes to Financial Statements.
21
Statements of Changes in Net Assets (continued)
For the Year Ended October 31, 2004
(In thousands)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC MONEY
INCOME BALANCED BALANCED GROWTH GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND
--------- ------------ ----------- ------------ ----------- -----------
Net investment income/(loss) ................. $ 20,738 $ 7,342 $ 31,455 $ 6,607 $ (5,054) $ 5,317
Net realized gain/(loss) on investment
transactions .............................. 2,394 646 (21,358) (33,528) (25,066) 1
Capital gain distributions received .......... 81 53 619 633 435 --
Net change in unrealized appreciation/
depreciation of investments ............... 19,948 14,620 184,763 192,878 127,779 --
--------- ------------ ----------- ------------ ----------- -----------
Net increase in net assets
resulting from operations ................. 43,161 22,661 195,479 166,590 98,094 5,318
Distributions to shareholders from
net investment income:
Class A Shares ......................... (9,197) (3,698) (18,617) (3,971) -- (4,740)
Class B Shares ......................... (9,486) (2,374) (10,238) (3,187) -- (34)
Class C Shares ......................... (2,379) (1,260) (3,132) (1,027) -- (4)
Class I Shares ......................... -- -- -- -- -- (539)
Net increase/(decrease) in net assets from
Portfolio/Fund share transactions:
Class A Shares ......................... 125,662 107,648 665,510 474,242 272,782 (177,905)
Class B Shares ......................... 35,707 38,752 203,662 104,834 81,770 (26,548)
Class C Shares ......................... 56,455 42,994 228,227 264,288 155,320 3,434
Class I Shares ......................... -- -- -- -- -- 66,839
--------- ------------ ----------- ------------ ----------- -----------
Net increase/(decrease) in net assets ........ 239,923 204,723 1,260,891 1,001,769 607,966 (134,179)
NET ASSETS:
Beginning of year ............................ 664,577 262,031 2,101,424 1,638,369 891,334 817,194
--------- ------------ ----------- ------------ ----------- -----------
End of year .................................. $ 904,500 $ 466,754 $ 3,362,315 $ 2,640,138 $ 1,499,300 $ 683,015
========= ============ =========== ============ =========== ===========
Undistributed net investment income/
(accumulated net investment loss) at
end of year ............................... $ 1,673 $ 582 $ 1,467 $ (1,722) $ (9,034) $ --
========= ============ =========== ============ =========== ===========
See Notes to Financial Statements.
22
This Page Left Blank Intentionally.
23
Statements of Changes in Net Assets -- Capital Stock Activity
(In thousands)
CONSERVATIVE
FLEXIBLE INCOME PORTFOLIO BALANCED PORTFOLIO BALANCED PORTFOLIO
------------------------- ------------------------- ------------------------
PERIOD PERIOD PERIOD
ENDED ENDED ENDED
04/30/05 YEAR ENDED 04/30/05 YEAR ENDED 04/30/05 YEAR ENDED
(UNAUDITED) 10/31/04 (UNAUDITED) 10/31/04 (UNAUDITED) 10/31/04
----------- ----------- ----------- ----------- ----------- ----------
AMOUNT
CLASS A:
Sold ..................................... $ 103,855 $ 205,718 $ 69,671 $ 146,926 $ 402,307 $ 833,154
Issued as reinvestment of dividends ...... 6,404 8,244 3,136 3,374 17,267 17,690
Redeemed ................................. (54,399) (88,300) (28,962) (42,652) (127,984) (185,334)
----------- ---------- ----------- ---------- ----------- ----------
Net increase/(decrease) .................. $ 55,860 $ 125,662 $ 43,845 $ 107,648 $ 291,590 $ 665,510
=========== ========== =========== ========== =========== ==========
CLASS B:
Sold ..................................... $ 37,540 $ 131,911 $ 18,312 $ 70,538 $ 115,025 $ 384,734
Issued as reinvestment of dividends ...... 5,440 8,441 1,665 2,179 9,292 9,770
Redeemed ................................. (50,566) (104,645) (16,254) (33,965) (106,451) (190,842)
----------- ---------- ----------- ---------- ----------- ----------
Net increase/(decrease) .................. $ (7,586) $ 35,707 $ 3,723 $ 38,752 $ 17,866 $ 203,662
=========== ========== =========== ========== =========== ==========
CLASS C:
Sold ..................................... $ 40,967 $ 79,388 $ 34,912 $ 58,347 $ 161,638 $ 276,378
Issued as reinvestment of dividends ...... 1,828 2,086 1,155 1,151 3,799 2,947
Redeemed ................................. (24,645) (25,019) (10,327) (16,504) (45,243) (51,098)
----------- ---------- ----------- ---------- ----------- ----------
Net increase/(decrease) .................. $ 18,150 $ 56,455 $ 25,740 $ 42,994 $ 120,194 $ 228,227
=========== ========== =========== ========== =========== ==========
CLASS I:
Sold .....................................
Issued as reinvestment of dividends ......
Redeemed .................................
Net increase/(decrease) ..................
SHARES
CLASS A:
Sold ..................................... 9,195 18,450 6,681 14,538 30,924 67,334
Issued as reinvestment of dividends ...... 568 741 301 334 1,317 1,433
Redeemed ................................. (4,822) (7,941) (2,775) (4,219) (9,844) (14,979)
----------- ---------- ----------- ---------- ----------- ----------
Net increase/(decrease) .................. 4,941 11,250 4,207 10,653 22,397 53,788
=========== ========== =========== ========== =========== ==========
CLASS B:
Sold ..................................... 3,346 11,851 1,761 6,992 8,864 31,147
Issued as reinvestment of dividends ...... 483 760 159 216 708 797
Redeemed ................................. (4,487) (9,420) (1,562) (3,366) (8,206) (15,466)
----------- ---------- ----------- ---------- ----------- ----------
Net increase/(decrease) .................. (658) 3,191 358 3,842 1,366 16,478
=========== ========== =========== ========== =========== ==========
CLASS C:
Sold ..................................... 3,652 7,161 3,366 5,800 12,514 22,496
Issued as reinvestment of dividends ...... 163 189 111 115 291 241
Redeemed ................................. (2,197) (2,261) (996) (1,644) (3,510) (4,153)
----------- ---------- ----------- ---------- ----------- ----------
Net increase/(decrease) .................. 1,618 5,089 2,481 4,271 9,295 18,584
=========== ========== =========== ========== =========== ==========
CLASS I:
Sold .....................................
Issued as reinvestment of dividends ......
Redeemed .................................
Net increase/(decrease) ..................
See Notes to Financial Statements.
24
CONSERVATIVE GROWTH PORTFOLIO STRATEGIC GROWTH PORTFOLIO MONEY MARKET FUND
- ----------------------------- -------------------------- ---------------------------
PERIOD PERIOD PERIOD
ENDED ENDED ENDED
04/30/05 YEAR ENDED 04/30/05 YEAR ENDED 04/30/05 YEAR ENDED
(UNAUDITED) 10/31/04 (UNAUDITED) 10/31/04 (UNAUDITED) 10/31/04
- ------------ ------------- ------------ ----------- ------------ ------------
$ 272,507 $ 597,373 $ 190,474 $ 348,227 $ 273,697 $ 847,283
11,333 3,856 1,534 -- 4,596 4,517
(92,693) (126,987) (52,470) (75,445) (275,169) (1,029,705)
- ----------- ------------ ----------- ----------- ------------ ------------
$ 191,147 $ 474,242 $ 139,538 $ 272,782 $ 3,124 $ (177,905)
=========== ============ =========== =========== ============ ============
$ 89,491 $ 249,220 $ 62,053 $ 160,387 $ 10,206 $ 36,057
2,099 3,092 -- -- 115 30
(93,511) (147,478) (58,166) (78,617) (23,690) (62,635)
- ----------- ------------ ----------- ----------- ------------ ------------
$ (1,921) $ 104,834 $ 3,887 $ 81,770 $ (13,369) $ (26,548)
=========== ============ =========== =========== ============ ============
$ 152,984 $ 306,396 $ 92,909 $ 177,989 $ 8,373 $ 14,376
2,203 960 -- -- 18 3
(41,166) (43,068) (24,616) (22,669) (9,848) (10,945)
- ----------- ------------ ----------- ----------- ------------ ------------
$ 114,021 $ 264,288 $ 68,293 $ 155,320 $ (1,457) $ 3,434
=========== ============ =========== =========== ============ ============
$ 39,313 $ 134,300
901 539
(42,500) (68,000)
------------ ------------
$ (2,286) $ 66,839
============ ============
19,322 45,316 12,470 24,697 273,697 847,283
789 301 98 -- 4,596 4,517
(6,579) (9,635) (3,439) (5,365) (275,169) (1,029,705)
- ----------- ------------ ----------- ----------- ------------ ------------
13,532 35,982 9,129 19,332 3,124 (177,905)
=========== ============ =========== =========== ============ ============
6,514 19,332 4,247 11,813 10,206 36,057
149 246 -- -- 115 30
(6,816) (11,484) (3,984) (5,796) (23,690) (62,635)
- ----------- ------------ ----------- ----------- ------------ ------------
(153) 8,094 263 6,017 (13,369) (26,548)
=========== ============ =========== =========== ============ ============
11,196 23,937 6,347 13,091 8,373 14,376
158 77 -- -- 18 3
(3,015) (3,368) (1,680) (1,664) (9,848) (10,945)
- ----------- ------------ ----------- ----------- ------------ ------------
8,339 20,646 4,667 11,427 (1,457) 3,434
=========== ============ =========== =========== ============ ============
39,313 134,300
901 539
(42,500) (68,000)
------------ ------------
(2,286) 66,839
============ ============
See Notes to Financial Statements.
25
Financial Highlights
For a Portfolio share outstanding throughout each period.
CLASS A
------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31
04/30/05 -----------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
------------ ----------- ----------- ----------- ----------- -----------
FLEXIBLE INCOME PORTFOLIO
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 11.26 $ 10.92 $ 10.17 $ 10.71 $ 11.06 $ 10.75
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................ 0.18 0.34(6) 0.38(6) 0.45(6) 0.50(6) 0.47(6)
Net realized and unrealized gain/(loss) on
investments ....................................... (0.06) 0.35 0.77 (0.48) (0.04) 0.42
-------- -------- -------- -------- -------- --------
Total from investment operations ..................... 0.12 0.69 1.15 (0.03) 0.46 0.89
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income(1) .............. (0.18) (0.35) (0.38) (0.43) (0.61) (0.55)
Distributions from net realized capital gains ........ (0.04) -- (0.02) (0.08) (0.20) (0.03)
-------- -------- -------- -------- -------- --------
Total distributions .................................. (0.22) (0.35) (0.40) (0.51) (0.81) (0.58)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD ............................ $ 11.16 $ 11.26 $ 10.92 $ 10.17 $ 10.71 $ 11.06
======== ======== ======== ======== ======== ========
TOTAL RETURN(2)............................................ 1.03% 6.38% 11.49% (0.37)% 3.67% 8.56%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) .................. $409,924 $357,735 $224,192 $144,710 $110,680 $129,386
Ratio of operating expenses to average net
assets(3) ......................................... 1.00%(7) 1.02% 1.04% 1.06% 1.06% 1.06%
Ratio of net investment income to average
net assets ........................................ 3.27%(7) 3.07% 3.64% 4.41% 4.61% 4.28%
Portfolio turnover rate .............................. 1% 3% 3% 9% 7% 27%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the
custodian(3)(4).................................... 1.00%(7) 1.02% 1.04% 1.06% 1.06% 1.06%
CLASS A
---------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31
04/30/05 --------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
------------ ---------- ----------- ---------- ----------- ----------
CONSERVATIVE BALANCED PORTFOLIO
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 10.27 $ 9.81 $ 8.83 $ 9.43 $ 9.96 $ 9.94
-------- --------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................ 0.14 0.24 0.28(6) 0.33 0.34(6) 0.51(6)
Net realized and unrealized gain/(loss) on
investments........................................ 0.05 0.47 0.97 (0.61) (0.44) 0.02(8)
-------- --------- -------- -------- -------- -------
Total from investment operations ..................... 0.19 0.71 1.25 (0.28) (0.10) 0.53
-------- --------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income(1)............... (0.15) (0.25) (0.27) (0.32) (0.43) (0.50)
Distributions from net realized capital gains......... (0.01) -- -- -- -- (0.01)
-------- --------- -------- -------- -------- -------
Total distributions .................................. (0.16) (0.25) (0.27) (0.32) (0.43) (0.51)
-------- --------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD ............................ $ 10.30 $ 10.27 $ 9.81 $ 8.83 $ 9.43 $ 9.96
======== ========= ======== ======== ======== =======
TOTAL RETURN(2) ........................................... 1.83% 7.29% 14.38% (3.06)% (0.99)% 5.52%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)................... $251,774 $ 207,816 $ 94,005 $ 31,070 $ 12,257 $ 4,557
Ratio of operating expenses to average net
assets(3) ........................................ 0.99%(7) 1.04% 1.05% 1.05% 1.16% 1.32%
Ratio of net investment income to average
net assets........................................ 2.81%(7) 2.42% 2.99% 3.67% 3.65% 5.16%
Portfolio turnover rate .............................. 1% 2% 4% 9% 18% 59%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the
custodian(3)(4) ................................... 0.99%(7) 1.04% 1.09% 1.17% 1.30% 1.32%
- ----------------
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods less than one year and does not
reflect any applicable sales charges. The total return would have been
lower if certain fees had not been waived and/or expenses reimbursed by
the investment advisor or if fees had not been reduced by credits allowed
by the custodian.
(3) The Portfolio also will indirectly bear its prorated share of expenses of
the Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) The Portfolios commenced selling Class C shares on March 1, 2002.
(6) Per share numbers have been calculated using the average shares method.
(7) Annualized.
(8) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Portfolio shares.
See Notes to Financial Statements.
26
CLASS B CLASS C
- ----------------------------------------------------------------------- ----------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEARS ENDED OCTOBER 31 ENDED YEARS ENDED OCTOBER 31
04/30/05 ---------------------------------------------------------- 04/30/05 ---------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000 (UNAUDITED) 2004 2003 2002(5)
- ------------ ----------- ----------- ----------- ----------- ---------- ------------ ------------- ----------- -------------
$ 11.24 $ 10.90 $ 10.15 $ 10.71 $ 11.06 $ 10.75 $ 11.19 $ 10.86 $ 10.13 $ 10.54
- -------- -------- -------- -------- -------- ------- -------- ---------- -------- ---------
0.14 0.26(6) 0.30(6) 0.38(6) 0.42(6) 0.39(6) 0.14 0.26(6) 0.30(6) 0.24(6)
(0.05) 0.34 0.77 (0.50) (0.04) 0.42 (0.05) 0.34 0.76 (0.43)
- -------- -------- -------- -------- -------- ------- -------- ---------- -------- ---------
0.09 0.60 1.07 (0.12) 0.38 0.81 0.09 0.60 1.06 (0.19)
- -------- -------- -------- -------- -------- ------- -------- ---------- -------- ---------
(0.14) (0.26) (0.30) (0.36) (0.53) (0.47) (0.14) (0.27) (0.31) (0.22)
(0.04) -- (0.02) (0.08) (0.20) (0.03) (0.04) -- (0.02) --
- -------- -------- -------- -------- -------- ------- -------- ---------- -------- ---------
(0.18) (0.26) (0.32) (0.44) (0.73) (0.50) (0.18) (0.27) (0.33) (0.22)
- -------- -------- -------- -------- -------- ------- -------- ---------- -------- ---------
$ 11.15 $ 11.24 $ 10.90 $ 10.15 $ 10.71 $ 11.06 $ 11.10 $ 11.19 $ 10.86 $ 10.13
======== ======== ======== ======== ======== ======= ======== ========== ======== =========
0.72% 5.56% 10.60% (1.08)% 2.92% 7.76% 0.76% 5.57% 10.63% (1.78)%
$408,213 $418,994 $371,639 $244,999 $146,555 $77,238 $144,631 $ 127,771 $ 68,746 $ 20,677
1.78%(7) 1.79% 1.79% 1.81% 1.79% 1.80% 1.76%(7) 1.78% 1.79% 1.81%(7)
2.49%(7) 2.30% 2.89% 3.66% 3.88% 3.54% 2.51%(7) 2.31% 2.89% 3.66%(7)
1% 3% 3% 9% 7% 27% 1% 3% 3% 9%
1.78%(7) 1.79% 1.79% 1.81% 1.79% 1.80% 1.76%(7) 1.78% 1.79% 1.81%(7)
CLASS B CLASS C
- --------------------------------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEARS ENDED OCTOBER 31 ENDED YEARS ENDED OCTOBER 31
04/30/05 -------------------------------------------------------- 04/30/05 ----------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000 (UNAUDITED) 2004 2003 2002(5)
- ------------ ---------- ----------- ---------- ----------- ---------- ------------ --------- ----------- ------------
$ 10.25 $ 9.79 $ 8.82 $ 9.43 $ 9.96 $ 9.94 $ 10.22 $ 9.76 $ 8.80 $ 9.39
- -------- --------- -------- -------- -------- ------- -------- -------- -------- --------
0.10 0.17 0.21(6) 0.27 0.27(6) 0.44(6) 0.10 0.16 0.21(6) 0.16
0.05 0.46 0.96 (0.62) (0.44) 0.02(8) 0.05 0.48 0.97 (0.60)
- -------- --------- -------- -------- -------- ------- -------- -------- -------- --------
0.15 0.63 1.17 (0.35) (0.17) 0.46 0.15 0.64 1.18 (0.44)
- -------- --------- -------- -------- -------- ------- -------- -------- -------- --------
(0.11) (0.17) (0.20) (0.26) (0.36) (0.43) (0.11) (0.18) (0.22) (0.15)
(0.01) -- -- -- -- (0.01) (0.01) -- -- --
- -------- --------- -------- -------- -------- ------- -------- -------- -------- --------
(0.12) (0.17) (0.20) (0.26) (0.36) (0.44) (0.12) (0.18) (0.22) (0.15)
- -------- --------- -------- -------- -------- ------- -------- -------- -------- --------
$ 10.28 $ 10.25 $ 9.79 $ 8.82 $ 9.43 $ 9.96 $ 10.25 $ 10.22 $ 9.76 $ 8.80
======== ========= ======== ======== ======== ======= ======== ======== ======== ========
1.43% 6.47% 13.46% (3.77)% (1.71)% 4.76% 1.47% 6.55% 13.53% (4.70)%
$165,796 $ 161,623 $116,742 $ 58,054 $ 30,554 $10,947 $123,002 $ 97,315 $ 51,284 $ 10,505
1.78%(7) 1.81% 1.82% 1.80% 1.89% 2.04% 1.76%(7) 1.79% 1.80% 1.78%(7)
2.02%(7) 1.65% 2.22% 2.92% 2.92% 4.44% 2.04%(7) 1.67% 2.24% 2.94%(7)
1% 2% 4% 9% 18% 59% 1% 2% 4% 9%
1.78%(7) 1.81% 1.86% 1.92% 2.03% 2.04% 1.76%(7) 1.79% 1.84% 1.90%(7)
See Notes to Financial Statements.
27
Financial Highlights
For a Portfolio share outstanding throughout each period.
CLASS A
-------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31
04/30/05 ----------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
---------- ---------- --------- --------- --------- ---------
BALANCED PORTFOLIO
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 12.64 $ 11.85 $ 10.24 $ 11.63 $ 13.55 $ 12.22
---------- ---------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................... 0.14 0.20 0.22 0.28 0.33(6) 0.28(6)
Net realized and unrealized gain/(loss) on
investments.................................. 0.19 0.79 1.62 (1.08) (1.27) 1.53
---------- ---------- --------- --------- --------- ---------
Total from investment operations................ 0.33 0.99 1.84 (0.80) (0.94) 1.81
---------- ---------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income(1)......... (0.14) (0.20) (0.23) (0.33) (0.51) (0.48)
Distributions from net realized capital gains... - - - (0.26) (0.47) -
---------- ---------- --------- --------- --------- ---------
Total distributions............................. (0.14) (0.20) (0.23) (0.59) (0.98) (0.48)
---------- ---------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD....................... $ 12.83 $ 12.64 $ 11.85 $ 10.24 $ 11.63 $ 13.55
========== ========== ========= ========= ========= =========
TOTAL RETURN(2)...................................... 2.61% 8.51% 18.07% (7.32)% (7.28)% 15.11%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)............. $1,835,566 $1,524,988 $ 792,423 $ 423,478 $ 380,681 $ 391,655
Ratio of operating expenses to average net
assets(3).................................... 0.94%(7) 0.98% 1.02% 1.04% 1.02% 1.03%
Ratio of net investment income to average net
assets....................................... 2.18%(7) 1.56% 2.03% 2.55% 2.63% 2.05%
Portfolio turnover rate......................... 1% 2% 5% 19% 6% 22%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(3)(4)...... 0.94%(7) 0.98% 1.02% 1.04% 1.02% 1.03%
CLASS A
---------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31
04/30/05 ------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
---------- ---------- --------- -------- --------- ---------
CONSERVATIVE GROWTH PORTFOLIO
NET ASSET VALUE, BEGINNING OF PERIOD................ $ 13.56 $ 12.47 $ 10.37 $ 12.35 $ 15.52 $ 13.43
---------- ---------- --------- -------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss)................... 0.12 0.10(6) 0.14(6) 0.16(6) 0.20(6) 0.12(6)
Net realized and unrealized gain/(loss) on
investments................................. 0.32 1.06 2.14 (1.52) (2.34) 2.40
---------- ---------- --------- -------- --------- ---------
Total from investment operations............... 0.44 1.16 2.28 (1.36) (2.14) 2.52
---------- ---------- --------- -------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income(1) ....... (0.13) (0.07) (0.14) (0.22) (0.58) (0.43)
Distributions from net realized capital
gains ...................................... - - (0.04) (0.40) (0.45) -
---------- ---------- --------- -------- --------- ---------
Total distributions ........................... (0.13) (0.07) (0.18) (0.62) (1.03) (0.43)
---------- ---------- --------- -------- --------- ---------
NET ASSET VALUE, END OF PERIOD ..................... $ 13.87 $ 13.56 $ 12.47 $ 10.37 $ 12.35 $ 15.52
========== ========== ========= ======== ========= =========
TOTAL RETURN(2) .................................... 3.23% 9.44% 22.12% (11.72)% (14.31)% 18.89%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) ........... $1,371,995 $1,157,038 $ 615,501 $347,297 $ 319,583 $ 341,685
Ratio of operating expenses to average net
assets(3)................................... 0.97%(7) 1.01% 1.05% 1.06% 1.03% 1.02%
Ratio of net investment income/(loss) to
average net assets.......................... 1.55%(7) 0.74% 1.24% 1.41% 1.45% 0.76%
Portfolio turnover rate ....................... 1% 5% 7% 14% 5% 17%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(3)(4)..... 0.97%(7) 1.01% 1.05% 1.06% 1.03% 1.02%
- ----------------
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods less than one year and does not
reflect any applicable sales charges. The total return would have been
lower if certain fees had not been waived and/or expenses reimbursed by
the investment advisor or if fees had not been reduced by credits allowed
by the custodian.
(3) The Portfolio also will indirectly bear its prorated share of expenses of
the Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) The Portfolios commenced selling Class C shares on March 1, 2002.
(6) Per share numbers have been calculated using the average shares method.
(7) Annualized.
(8) Amount represents less than $0.01 per share.
See Notes to Financial Statements.
28
CLASS B CLASS C
- -------------------------------------------------------------------------------- ----------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEARS ENDED OCTOBER 31 ENDED YEARS ENDED OCTOBER 31
04/30/05 ----------------------------------------------------------------- 04/30/05 ---------------------------
(UNAUDITED) 2004 2003 2002 2001 2000 (UNAUDITED) 2004 2003 2002(5)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------
$ 12.61 $ 11.82 $ 10.22 $ 11.62 $ 13.54 $ 12.21 $ 12.55 11.78 $ 10.20 $ 11.35
- ---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
0.09 0.10 0.14 0.20 0.23(6) 0.18(6) 0.09 0.10 0.14 0.13
0.19 0.79 1.61 (1.09) (1.27) 1.55 0.19 0.78 1.60 (1.15)
- ---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
0.28 0.89 1.75 (0.89) (1.04) 1.73 0.28 0.88 1.74 (1.02)
- ---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
(0.09) (0.10) (0.15) (0.25) (0.41) (0.40) (0.09) (0.11) (0.16) (0.13)
- - - (0.26) (0.47) - - - - -
- ---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
(0.09) (0.10) (0.15) (0.51) (0.88) (0.40) (0.09) (0.11) (0.16) (0.13)
- ---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
$ 12.80 $ 12.61 $ 11.82 $ 10.22 $ 11.62 $ 13.54 $ 12.74 $ 12.55 $ 11.78 $ 10.20
========== ========== ========== ========== ========== ========== ======== ======== ======== =======
2.23% 7.59% 17.25% (8.03)% (7.98)% 14.26% 2.27% 7.64% 17.15% (9.00)%
$1,392,519 $1,354,528 $1,074,925 $ 743,953 $ 670,318 $ 549,849 $608,413 $482,799 $234,076 $54,745
1.72%(7) 1 .75% 1.78% 1.80% 1.78% 1.77% 1.70%(7) 1.74% 1.76% 1.80%(7)
1.40%(7) 0.79% 1.27% 1.79% 1.87% 1.31% 1.42%(7) 0.80% 1.29% 1.79%(7)
1% 2% 5% 19% 6% 22% 1% 2% 5% 19%
1.72%(7) 1.75% 1.78% 1.80% 1.78% 1.77% 1.70%(7) 1.74% 1.76% 1.80%(7)
CLASS B
- ------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31
04/30/05 ---------------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
- ---------- ---------- -------- -------- -------- --------
$ 13.17 $ 12.18 $ 10.14 $ 12.10 $ 15.17 $ 13.21
- ---------- ---------- -------- -------- -------- --------
0.05 (0.00)(6)(8) 0.05(7) 0.08(6) 0.09(6) 0.00(6)(8)
0.34 1.04 2.09 (1.50) (2.28) 2.37
- ---------- ---------- -------- -------- -------- --------
0.39 1.04 2.14 (1.42) (2.19) 2.37
- ---------- ---------- -------- -------- -------- --------
(0.03) (0.05) (0.06) (0.14) (0.43) (0.41)
- - (0.04) (0.40) (0.45) -
- ---------- ---------- -------- -------- -------- --------
(0.03) (0.05) (0.10) (0.54) (0.88) (0.41)
- ---------- ---------- -------- -------- -------- --------
$ 13.53 $ 13.17 $ 12.18 $ 10.14 $ 12.10 $ 15.17
========== ========== ======== ======== ======== ========
2.95% 8.53% 21.24% (12.46)% (14.93)% 18.07%
$1,025,909 $1,001,081 $827,312 $623,852 $636,145 $604,460
1.75%(7) 1.78% 1.81% 1.82% 1.79% 1.77%
0.77%(7) (0.03)% 0.48% 0.65% 0.69% 0.01%
1% 5% 7% 14% 5% 17%
1.75%(7) 1.78% 1.81% 1.82% 1.79% 1.77%
CLASS C
- ----------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31
04/30/05 ---------------------------------------
(UNAUDITED) 2004 2003 2002(5)
- ---------- -------- -------- ----------
$ 13.11 $ 12.13 $ 10.10 $ 11.79
- -------- -------- -------- -------
0.06(6) (0.00)(6)(8) 0.06(6) 0.05(6)
0.32 1.03 2.08 (1.66)
- -------- -------- -------- -------
0.38 1.03 2.14 (1.61)
- -------- -------- -------- -------
(0.06) (0.05) (0.07) (0.08)
- - (0.04) -
- -------- -------- -------- -------
(0.06) (0.05) (0.11) (0.08)
- -------- -------- -------- -------
$ 13.43 $ 13.11 $ 12.13 $ 10.10
======== ======== ======== =======
2.88% 8.53% 21.41% (13.72)%
$605,957 $482,019 $195,556 $48,424
1.72%(7) 1.76% 1.79% 1.82%(7)
0.80%(7) (0.01)% 0.50% 0.65%(7)
1% 5% 7% 14%
1.72%(7) 1.76% 1.79% 1.82%(7)
See Notes to Financial Statements.
29
Financial Highlights
For a Portfolio/Fund share outstanding throughout each period.
CLASS A
---------------------------------------------------------------------
SIX MONTHS YEARS ENDED OCTOBER 31
ENDED --------------------------------------------------------
04/30/05
(UNAUDITED) 2004 2003 2002 2001 2000
----------- -------- -------- -------- -------- --------
STRATEGIC GROWTH PORTFOLIO
NET ASSET VALUE, BEGINNING OF PERIOD ........ $ 14.49 $ 13.16 $ 10.59 $ 13.10 $ 17.11 $ 14.61
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) .......... 0.09(6) 0.01(6) 0.03(6) 0.03(6) 0.05(6) (0.04)(6)
Net realized and unrealized gain/(loss)
on investments ..................... 0.44 1.32 2.63 (1.92) (3.21) 3.07
-------- -------- -------- -------- -------- --------
Total from investment operations ...... 0.53 1.33 2.66 (1.89) (3.16) 3.03
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income'(1) ........................... (0.04) -- -- (0.14) (0.47) (0.53)
Distributions from net realized capital
gains ................................ -- -- (0.09) (0.48) (0.38) --
-------- -------- -------- -------- -------- --------
Total distributions ................... (0.04) -- (0.09) (0.62) (0.85) (0.53)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD .............. $ 14.98 $ 14.49 $ 13.16 $ 10.59 $ 13.10 $ 17.11
======== ======== ======== ======== ======== ========
TOTAL RETURN(2) ............................. 3.62% 10.11% 25.24% (15.45)% (19.03)% 20.84%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of period (in 000s) ... $766,646 $609,250 $298,852 $166,354 $153,857 $142,241
Ratio of operating expenses to average
net assets(3) ...................... 1.01%(7) 1.07% 1.13% 1.13% 1.08% 1.06%
Ratio of net investment income/(loss)
to average net assets ............. 1.17%(7) 0.07% 0.30% 0.23% 0.34% (0.21)%
Portfolio turnover rate ............... 1% 3% 7% 10% 2% 15%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(3)(4) .................... 1.01%(7) 1.07% 1.13% 1.13% 1.08% 1.06%
CLASS B
-------------------------------
SIX MONTHS
ENDED
04/30/05
(UNAUDITED) 2004
------------ ---------
STRATEGIC GROWTH PORTFOLIO
NET ASSET VALUE, BEGINNING OF PERIOD ........ $ 13.90 $ 12.73
-------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) .......... 0.03(6) (0.09)(6)
Net realized and unrealized gain/(loss)
on investments ....................... 0.42 1.26
-------- ---------
Total from investment operations ...... 0.45 1.17
-------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income(1) ............................ -- --
Distributions from net realized capital
gains ................................ -- --
-------- ---------
Total distributions ................... -- --
-------- ---------
NET ASSET VALUE, END OF PERIOD .............. $ 14.35 $ 13.90
======== =========
TOTAL RETURN(2) ............................. 3.24% 9.19%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of period (in 000s) ... $636,424 $ 612,914
Ratio of operating expenses to average
net assets(3) ...................... 1.79%(7) 1.83%
Ratio of net investment income/(loss)
to average net assets ............. 0.39%(7) (0.69)%
Portfolio turnover rate ............... 1% 3%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(3)(4) ................... 1.79%(7) 1.83%
CLASS A
-------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBERS 31
04/30/05 -----------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
----------- -------- -------- -------- -------- --------
MONEY MARKET FUND
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Net investment income ................................... 0.009 0.007 0.008 0.014 0.043 0.056
Dividends from net investment income .................... (0.009) (0.007) (0.008) (0.014) (0.043) (0.056)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
TOTAL RETURN(2) ........................................... 0.89% 0.74% 0.78% 1.42% 4.40% 5.79%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) ..................... $533,175 $530,052 $707,954 $689,002 $647,951 $458,368
Ratio of operating expenses to average net assets........ 0.60%(7) 0.57% 0.59% 0.59% 0.64% 0.65%
Ratio of net investment income to average net assets..... 1.78%(7) 0.72% 0.78% 1.41% 4.21% 5.62%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(4).. 0.60%(7) 0.57% 0.59% 0.59% 0.64% 0.65%
CLASS B
---------------------------
SIX MONTHS
ENDED
04/30/05
(UNAUDITED) 2004
----------- ---------
MONEY MARKET FUND
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $ 1.00 $ 1.00
-------- ---------
Net investment income .................................... 0.003 0.001
Dividends from net investment income ..................... (0.003) (0.001)
-------- ---------
NET ASSET VALUE, END OF PERIOD ................................. $ 1.00 $ 1.00
======== =========
TOTAL RETURN(2) ................................................ 0.34% 0.06%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) ..................... $ 39,396 $ 52,764
Ratio of operating expenses to average net assets........ 1.70%(7) 1.24%
Ratio of net investment income to average net assets..... 0.68%(7) 0.06%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(4).. 1.70%(7) 1.68%
- ----------
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods less than one year and does not
reflect any applicable sales charges. The total return would have been lower
if certain fees had not been waived and/or expenses reimbursed by the
investment advisor and/or distributor or if fees had not been reduced by
credits allowed by the custodian.
(3) The Portfolio also will indirectly bear its prorated share of expenses of
the Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) The Portfolio/Fund commenced selling Class C shares on March 1, 2002.
(6) Per share numbers have been calculated using the average shares method.
(7) Annualized.
See Notes to Financial Statements.
30
CLASS C
----------------------------------------------------------
SIX MONTHS
YEARS ENDED OCTOBER 31 ENDED YEARS ENDED OCTOBER 31
- --------------------------------------------------------- 04/30/05 -----------------------------------------
2003 2002 2001 2000 (UNAUDITED) 2004 2003 2002(5)
- -------- -------- -------- --------- ----------- -------- -------- ---------
$ 10.32 $ 12.78 $ 16.75 $ 14.40 $ 13.93 $ 12.74 $ 10.32 $ 12.50
- -------- -------- -------- --------- ----------- -------- -------- ---------
(0.05)(6) (0.06)(6) (0.06)(6) (0.16)(6) 0.03(6) (0.09)(6) (0.05)(6) (0.04)(6)
2.55 (1.88) (3.14) 3.02 0.42 1.28 2.56 (2.14)
- -------- -------- -------- --------- ----------- -------- -------- ---------
2.50 (1.94) (3.20) 2.86 0.45 1.19 2.51 (2.18)
- -------- -------- -------- --------- ----------- -------- -------- ---------
-- (0.04) (0.39) (0.51) -- -- -- --
(0.09) (0.48) (0.38) -- -- -- (0.09) --
- -------- -------- -------- --------- ----------- -------- -------- ---------
(0.09) (0.52) (0.77) (0.51) -- -- (0.09) --
- -------- -------- -------- --------- ----------- -------- -------- ---------
$ 12.73 $ 10.32 $ 12.78 $ 16.75 $ 14.38 $ 13.93 $ 12.74 $ 10.32
======== ======== ======== ========= =========== ======== ======== =========
24.35% (16.04)% (19.70)% 19.95% 3.23% 9.34% 24.44% (17.44)%
$484,656 $350,982 $384,566 $ 363,910 $ 353,236 $277,136 $107,826 $ 26,645
1.88% 1.87% 1.84% 1.81% 1.76%(7) 1.81% 1.84% 1.85%(7)
(0.45)% (0.51)% (0.42)% (0.96)% 0.42%(7) (0.67)% (0.41)% (0.49)%(7)
7% 10% 2% 15% 1% 3% 7% 10%
1.88% 1.87% 1.84% 1.81% 1.76%(7) 1.81% 1.84% 1.85%(7)
CLASS C
-----------------------------------------------------
SIX MONTHS
YEARS ENDED OCTOBER 31 ENDED YEARS ENDED OCTOBER 31
- ------------------------------------------------- 04/30/05 -----------------------------------
2003 2002 2001 2000 (UNAUDITED) 2004 2003 2002(5)
- --------- ---------- --------- --------- ----------- --------- --------- ---------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------- ---------- --------- --------- ----------- --------- --------- ---------
0.001 0.003 0.033 0.046 0.003 0.001 0.001 0.002
(0.001) (0.003) (0.033) (0.046) (0.003) (0.001) (0.001) (0.002)
- --------- ---------- --------- --------- ----------- --------- --------- ---------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========= ========= =========== ========= ========= =========
0.05% 0.34% 3.32% 4.68% 0.34% 0.06% 0.06% 0.17%
$ 79,314 $ 104,530 $ 74,603 $ 23,469 $ 7,023 $ 8,480 $ 5,046 $ 3,676
1.33% 1.67% 1.69% 1.71% 1.70%(7) 1.30% 1.29% 1.64%(7)
0.04% 0.33% 3.16% 4.56% 0.68%(7) 0.07% 0.08% 0.36%(7)
1.71% 1.67% 1.69% 1.71% 1.70%(7) 1.65% 1.67% 1.64%(7)
CLASS I
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31
04/30/05 --------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
- ----------- --------- --------- ---------- --------- ---------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------- --------- --------- ---------- --------- ---------
0.009 0.008 0.008 0.015 0.044 0.057
(0.009) (0.008) (0.008) (0.015) (0.044) (0.057)
- ----------- --------- --------- ---------- --------- ---------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ========= ========= ========== ========= =========
0.92% 0.79% 0.84% 1.47% 4.46% 5.90%
$ 89,433 $ 91,719 $ 24,880 $ 169,295 $ 17,755 $ 15,885
0.54%(7) 0.52% 0.54% 0.54% 0.58% 0.55%
1.84%(7) 0.83% 0.83% 1.46% 4.27% 5.72%
0.54%(7) 0.52% 0.54% 0.54% 0.58% 0.55%
See Notes to Financial Statements.
31
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND BUSINESS
WM Strategic Asset Management Portfolios, LLC (the "LLC") was organized under
the laws of the Commonwealth of Massachusetts on March 12, 1999 as a limited
liability company. The LLC is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company.
The LLC offers five portfolios: Flexible Income, Conservative Balanced,
Balanced, Conservative Growth and Strategic Growth Portfolios (each a
"Portfolio" and collectively, the "Portfolios").
WM Trust I ("Trust I") was organized as a Massachusetts business trust on
September 19, 1997. The Trust is registered under the Investment Company Act of
1940 (the "1940 Act"), as open-end management investment company. Information
presented in this report pertains only to the Money Market Fund (the "Fund").
The Money Market Fund is a diversified series of WM Trust I. Financial
statements for the other funds included in the Trust are presented in a separate
report.
The LLC and Trust are authorized to issue an unlimited number of shares of
beneficial interest, each without par value. Each Portfolio offers three classes
of shares: Class A shares, Class B shares and Class C shares. The Fund may offer
four classes of shares: Class A shares, Class B shares, Class C shares and Class
I shares. Class A shares are generally subject to an initial sales charge at the
time of purchase. Certain Class A shares purchased without an initial sales
charge may be subject to a contingent deferred sales charge ("CDSC") if redeemed
within eighteen months from the date of purchase. Class B shares are not subject
to an initial sales charge although they are generally subject to a CDSC if
redeemed within five years from the date of purchase. Class C shares are not
subject to an initial sales charge although they are subject to a CDSC if
redeemed within one year from the date of purchase. Class I shares are currently
only offered to the LLC and affiliates of Washington Mutual, Inc. ("Washington
Mutual"), a publicly owned financial services company, and are not available for
direct purchase by investors.
WM Advisors, Inc. (the "Advisor" or "WM Advisors"), a wholly owned subsidiary of
Washington Mutual, serves as investment advisor to the Portfolios and the Fund.
Each of the Portfolios invests, within certain percentage ranges, in Class I
shares of various funds in the WM Group of Funds (collectively, the "Underlying
Funds"). The Advisor may alter these percentage ranges when it deems
appropriate. The assets of each Portfolio will be allocated among the Underlying
Funds in accordance with its investment objective based on the Advisor's outlook
for the economy, the financial markets and the relative market valuations of the
Underlying Funds. In addition, in order to meet liquidity needs or for temporary
defensive purposes, each Portfolio may invest its assets directly in cash, stock
or bond index futures, options, money market securities and certain short-term
debt instruments, including repurchase agreements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies, in conformity
with accounting principles generally accepted in the United States of America
("generally accepted accounting principles"), which are consistently followed by
the Portfolios and Funds in the preparation of their financial statements.
PORTFOLIO VALUATION:
Investments in the Underlying Funds are valued at net asset value per Class I
share of the respective Underlying Funds determined as of the close of the New
York Stock Exchange on each valuation date. Short-term debt securities that
mature in 60 days or less are valued at amortized cost, which approximates
market value.
Securities of the Fund are valued on the basis of amortized cost in accordance
with Rule 2a-7 of the 1940 Act, which approximates market value and does not
take into account unrealized capital gains or losses. Amortized cost valuation
involves initially valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, as long as the
amortized cost fairly reflects the market-based net asset value per share.
Certain assets may be valued by the Advisor under the supervision of the Board
of Trustees.
REPURCHASE AGREEMENTS:
Each Portfolio and the Fund may enter into repurchase agreement transactions. A
repurchase agreement is a purchase of an underlying debt obligation subject to
an agreement by the seller to repurchase the obligation at an agreed upon price
and time. It is each Portfolio's and the Fund's policy that its custodian take
possession of the underlying collateral securities. The fair value of the
collateral is at all times at least equal to the total amount of the repurchase
obligation. In the event of counterparty default, the Portfolio and the Fund
would seek to use the collateral to offset losses incurred. There is potential
loss to the Portfolio or the Fund in the event the Portfolio or the Fund is
delayed or prevented from exercising its right to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Portfolio or the Fund seeks to
assert its rights. WM Advisors, acting under the supervision of the Board of
Trustees, reviews the value of the collateral and the creditworthiness of those
banks and broker-dealers with whom each Portfolio and the Fund enters into
repurchase agreements.
32
Notes to Financial Statements (unaudited)(continued)
ILLIQUID INVESTMENTS:
The Fund may invest a portion of its net assets in securities that are not
readily marketable, including: (1) repurchase agreements with maturities greater
than seven calendar days; (2) time deposits maturing in more than seven calendar
days; (3) certain futures contracts and options; (4) certain variable rate
demand notes having a demand period of more than seven calendar days; (5)
securities, the disposition of which are restricted under Federal securities
laws, excluding certain Rule 144A securities, as defined in the following
paragraph; and (6) certain over-the-counter options.
Illiquid securities generally cannot be sold or disposed of in the ordinary
course of business (within seven calendar days) at approximately the value at
which the Fund has valued the investments. This may have an adverse effect on
the Fund's ability to dispose of particular illiquid securities at fair market
value and may limit the Fund's ability to obtain accurate market quotations for
purposes of valuing the securities and calculating the net asset value of shares
of the Fund. The Fund may also purchase securities that are not registered under
the Securities Act of 1933, as amended (the "Act"), but that can be sold to
qualified institutional buyers in accordance with Rule 144A under the Act ("Rule
144A Securities"). Rule 144A Securities generally must be sold only to other
qualified institutional buyers. If a particular investment in Rule 144A
Securities is not determined to be liquid under the guidelines established by
the Board of Trustees, that investment will be subject to a Fund's limitation on
investment in illiquid securities as indicated above.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on a trade date basis. Realized gains and
losses from securities sold are recorded on the identified cost basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income is not accrued
until settlement date. The Fund instructs the custodian to segregate assets of
the Fund with a current value at least equal to the amount of its when-issued
purchase commitments.
Interest income on debt securities is accrued daily. Premiums and discounts are
amortized using the interest method. Dividend income is recorded on the
ex-dividend date. Each Portfolio's and the Fund's investment income and realized
and unrealized gains and losses are allocated among the classes of that
Portfolio or Fund based upon the relative average net assets of each class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income of the Flexible Income, Conservative
Balanced, Balanced and Conservative Growth Portfolios are declared and paid
quarterly. Dividends from any net investment income of the Strategic Growth
Portfolio are declared and paid annually. Dividends from net investment income
of the Fund are declared daily and paid monthly. Distributions of any net
capital gains earned by a Portfolio or the Fund are distributed no less
frequently than annually at the discretion of the Board of Trustees. Additional
distributions of net investment income and capital gains for each Portfolio or
the Fund may be made at the discretion of the Board of Trustees in accordance
with federal income tax regulations.
Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investments held by the Portfolios, redesignated
distributions and differing characterization of distributions made by each
Portfolio.
FEDERAL INCOME TAXES:
It is each Portfolio's and the Fund's policy to qualify as a regulated
investment company by complying with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and by
distributing substantially all of its earnings to its shareholders. Therefore,
no federal income or excise tax provision is required.
EXPENSES:
General expenses of the LLC and the Trust are allocated to all the Portfolios
and Funds based upon the relative average net assets of each Portfolio and Fund
except printing and postage expenses, which are allocated to all the Portfolios
and Funds based upon the relative number of shareholder accounts of each
Portfolio and Fund. In addition, the Portfolios will indirectly bear their
prorated share of expenses of the Underlying Funds. Operating expenses directly
attributable to a class of shares are charged to the operations of that class of
shares. Expenses of each Portfolio and Fund not directly attributable to the
operations of any class of shares are prorated among the classes to which the
expenses relate based on the relative average net assets of each class of
shares.
USE OF ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
33
Notes to Financial Statements (unaudited)(continued)
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
WM Advisors serves as investment advisor to the LLC and Trust. As such,WM
Advisors provides its proprietary asset allocation services to the Portfolios,
formulates the Portfolios' investment policies, analyzes economic and market
trends, exercises investment discretion over the assets of the Portfolios and
monitors the allocation of each Portfolio's assets and each Portfolio's
performance. For its investment advisory services to the Portfolios, WM Advisors
is entitled to a monthly fee at an annual rate of 0.650% of each Portfolio's
average daily net assets up to $1 billion, 0.600% of the next $2 billion of each
Portfolio's average daily net assets and 0.550% of each Portfolio's average
daily net assets over $3 billion. WM Advisors discounts its monthly fee based
upon aggregate average daily net assets ("aggregate net assets") of the LLC.
Each Portfolio receives a monthly discount at an annual rate of 0.025% of
average daily net assets for aggregate net assets from $5 to $10 billion; 0.050%
of average daily net assets for aggregate net assets from $10 to $15 billion;
0.075% of average daily net assets for aggregate net assets from $15 to $20
billion; 0.100% of average daily net assets from aggregate net assets from $20
to $25 billion; and 0.125% of average daily net assets for aggregate net assets
over $25 billion. For its investment advisory services to the Fund, WM Advisors
is entitled to a monthly fee at an annual rate of 0.450% of the Fund's average
daily net assets up to $1 billion and 0.400% of the Fund's average daily net
assets over $1 billion.
WM Shareholder Services, Inc. (the "Transfer Agent"), a wholly owned subsidiary
of Washington Mutual, serves as the transfer agent of the Portfolios and the
Fund. Fees are paid to the Transfer Agent for services related to the issuance
and transfer of shares, maintaining shareholder lists, and issuing and mailing
distributions and reports. For such services, the Transfer Agent receives a fee
per open and closed account, in addition to reimbursement for certain
out-of-pocket expenses. The Transfer Agent is entitled to a monthly fee based
upon an annual rate of $20.40 per open account for Class A, Class B and Class C
shareholder accounts, with the exception of the Flexible Income Portfolio and
the Money Market Fund, for which the fee is $21.15 and $24.19, respectively.
Effective June 1, 2005, the authorized annual transfer agent fee will change to
$20.00 per open account for all Class A, Class B and Class C shareholder
accounts.
Custodian fees for certain Portfolios and the Fund have been reduced by credits
allowed by the Portfolio's and the Fund's custodian for uninvested cash
balances. The Portfolios and the Fund could have invested this cash in income
producing investments. Fees reduced by credits allowed by the custodian for the
six months ended April 30, 2005 are shown separately in the "Statements of
Operations".
4. TRUSTEES' FEES
No officer or employee of Washington Mutual or its subsidiaries receives any
compensation from the LLC or Trust for serving as an officer or Trustee of the
LLC or Trust. The LLC and Trust, together with other mutual funds advised by WM
Advisors, pays each Trustee who is not an officer or employee of Washington
Mutual or its subsidiaries, a per annum retainer plus attendance fees for each
meeting at which they are present. The Lead Trustee, Committee Chairs and
Committee Members receive additional remuneration for these services to the LLC
and Trust. Trustees are also reimbursed for travel and out-of-pocket expenses.
Each Trustee serves in the same capacity for all 42 funds within the WM Group of
Funds.
5. DISTRIBUTION PLANS
WM Funds Distributor, Inc. (the "Distributor"), a registered broker-dealer and a
wholly owned subsidiary of Washington Mutual, serves as distributor for Class A,
Class B and Class C shares of the Portfolios and the Fund. For the six months
ended April 30, 2005, the Distributor has received $4,666,788 representing
commissions (front end sales charges) on Class A and Class C shares and
$3,464,156 representing CDSCs from Class A, Class B and Class C shares.
Each of the Portfolios and the Fund have adopted three distribution plans,
pursuant to Rule 12b-1 under the 1940 Act, applicable to Class A, Class B and
Class C shares of the Portfolio and the Fund (each, a "Rule 12b-1 Plan"),
respectively. There are no 12b-1 Plans applicable to the Class I shares of the
Fund. Under the applicable Rule 12b-1 Plans, the Distributor may receive a
service fee at an annual rate of 0.25% of the average daily net assets of each
class. The Trustees have not authorized, and the Fund does not currently pay,
service fees with respect to Class A shares. In addition, the Distributor is
paid a fee as compensation in connection with the offering and sale of Class B
and Class C shares at an annual rate of 0.75% of the average daily net assets of
each class. These fees may be used to cover the expenses of the Distributor
primarily intended to result in the sale of such shares, including payments to
the Distributor's representatives or others for selling shares. The service fee
is paid by the Portfolio and the Fund to the Distributor, which in turn, pays
service fees to broker/dealers that provide services, such as responding to
telephone inquiries, receiving transaction requests, and processing
correspondence, new account applications and subsequent purchases for the
shareholders. Under their terms, each Rule 12b-1 plan shall remain in effect
from year to year, provided such continuance is approved annually by vote of the
Board of Trustees, including a majority of those Trustees who are not
"interested persons" of the LLC and Trust, as defined in the 1940 Act, and who
have no direct or indirect financial interest in the operation of such
distribution plans, or any agreements related to such plans, respectively.
34
Notes to Financial Statements (unaudited)(continued)
6. PURCHASES AND SALES OF INVESTMENTS
The aggregate cost of purchases and proceeds from sales of Underlying Funds for
the six months ended April 30, 2005 are as follows:
PURCHASES SALES
NAME OF PORTFOLIO (000S) (000S)
----------------- --------- -------
Flexible Income Portfolio................ $ 70,790 $ 8,400
Conservative Balanced Portfolio.......... 81,017 4,750
Balanced Portfolio....................... 458,068 18,000
Conservative Growth Portfolio............ 338,518 21,000
Strategic Growth Portfolio............... 235,421 10,200
7. UNREALIZED APPRECIATION/(DEPRECIATION)
At April 30, 2005, the aggregate gross unrealized appreciation/(depreciation) on
a tax basis are as follows:
(IN THOUSANDS)
------------------------------------------------------------------------
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC MONEY
INCOME BALANCED BALANCED GROWTH GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND
--------- ------------ --------- ------------ --------- ------
Tax basis unrealized appreciation............ $ 46,811 $ 31,665 $ 312,170 $ 277,931 $ 150,866 $ --
Tax basis unrealized depreciation............ (4,687) (2,557) (2,821) (871) (14,379) --
--------- ------------ --------- ------------ --------- ------
Net tax basis unrealized appreciation........ $ 42,124 $ 29,108 $ 309,349 $ 277,060 $ 136,487 $ --
========= ============ ========= ============ ========= ======
8. UNDERLYING FUNDS
The following is a summary of investment objectives and risk factors of the
Underlying Funds, and Portfolio ownership in the Underlying Funds. The WM Group
of Funds semiannual report, which is available online at wmgroupoffunds.com or
by calling 800-222-5852, contains more information regarding the Underlying
Funds.
INVESTMENT OBJECTIVES OF UNDERLYING FUNDS:
The investment objectives of the Underlying Funds are as follows:
WM REIT Fund Seeks to provide a high level of current income and intermediate to
long-term capital appreciation.
WM Equity Income Fund Seeks to provide a relatively high level of current income and
long-term growth of income and capital.
WM Growth & Income Fund Seeks to provide long-term capital growth. Current income is a
secondary consideration.
WM West Coast Equity Fund Seeks to provide long-term growth of capital.
WM Mid Cap Stock Fund Seeks to provide long-term capital appreciation.
WM Growth Fund Seeks to provide long-term capital appreciation.
WM Small Cap Value Fund Seeks to provide long-term capital appreciation.
WM Small Cap Growth Fund Seeks to provide long-term capital appreciation.
WM International Growth Fund Seeks to provide long-term capital appreciation.
WM Short Term Income Fund Seeks to provide as high a level of current income as is consistent with
prudent investment management and stability of principal.
WM U.S. Government Securities Fund Seeks to provide a high level of current income consistent with safety
and liquidity.
WM Income Fund Seeks to provide a high level of current income consistent with preservation
of capital.
WM High Yield Fund Seeks to provide a high level of current income.
35
Notes to Financial Statements (unaudited)(continued)
RISK FACTORS OF UNDERLYING FUNDS:
While no individual fund is intended as a complete investment program, this is
especially true for funds that concentrate their investments such as those
investing in particular industries or regions.
The REIT Fund concentrates its investments in real estate investment trust
("REIT") securities or debt securities of issuers that are principally engaged
in the U.S. real estate or related industries. The REIT Fund could be adversely
impacted by economic trends within this industry.
The West Coast Equity Fund concentrates its investments in companies located or
doing business in Alaska, California, Idaho, Montana, Oregon and Washington. The
West Coast Equity Fund could be adversely impacted by economic trends within
this region.
The High Yield Fund invests in lower rated debt securities, which may be more
susceptible to adverse economic conditions than investment grade holdings. These
securities are often subordinated to the prior claims of other senior lenders,
and uncertainties exist as to an issuer's ability to meet principal and interest
payments.
Certain Underlying Funds may invest a portion of their assets in foreign
securities of developing or emerging markets countries; enter into forward
foreign currency transactions; lend their portfolio securities; enter into a
stock index, interest rate and currency futures contracts, and options on such
contracts; enter into interest rate swaps or purchase or sell interest rate caps
or floors; enter into other types of options transactions; make short sales;
purchase zero coupon and payment-in-kind bonds; enter into repurchase or reverse
repurchase agreements; purchase and sell "when-issued" securities and engage in
"delayed-delivery" transactions; and enter into various other investment
practices, each with inherent risks. The risks involved in investing in foreign
securities include those resulting from future adverse political and economic
developments and the possible imposition of currency exchange restrictions or
other foreign laws or restrictions. The risks involved in investing in a high
concentration of a single sector include those resulting from future adverse
political and economic developments or regulatory occurrences and the potential
for adverse effects to the financial conditions of the industries within the
sector due to market fluctuations.
PORTFOLIO OWNERSHIP IN THE UNDERLYING FUNDS:
At April 30, 2005, the LLC hold investments in a number of the Underlying Funds.
The figures presented below represent the percentage of shares outstanding of
each Fund owned by the Portfolios:
PORTFOLIOS
------------------------------------------------------------------
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
NAME OF FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
------------ --------- ------------ --------- ------------ --------- -----
REIT Fund........................... 2.7% 3.0% 33.3% 33.9% 20.2% 93.1%
Equity Income Fund.................. 1.8% 1.9% 20.9% 19.6% 11.9% 56.1%
Growth & Income Fund................ 3.0% 2.2% 23.8% 25.2% 17.5% 71.7%
West Coast Equity Fund.............. 0.7% 1.1% 13.1% 14.4% 10.8% 40.1%
Mid Cap Stock Fund.................. 3.6% 2.6% 28.3% 29.7% 23.7% 87.9%
Growth Fund......................... 3.1% 2.6% 29.4% 31.1% 18.9% 85.1%
Small Cap Value Fund................ 3.3% 2.7% 32.2% 35.5% 22.9% 96.6%
Small Cap Growth Fund............... 3.0% 1.7% 22.0% 24.2% 17.1% 68.0%
International Growth Fund........... -- 3.2% 32.1% 33.9% 23.4% 92.6%
Short Term Income Fund.............. 42.4% 11.6% 14.1% -- -- 68.1%
U.S. Government Securities Fund..... 18.5% 9.0% 40.8% 15.8% -- 84.1%
Income Fund......................... 19.7% 8.6% 36.8% 10.0% -- 75.1%
High Yield Fund..................... 8.6% 4.0% 22.1% 15.3% 11.2% 61.2%
OTHER FACTORS OF UNDERLYING FUNDS:
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and tax results that would not be present in a direct
investment in the Underlying Funds. For example, under certain circumstances, an
Underlying Fund may determine to make payment of a redemption request by a
Portfolio wholly or partly by a distribution in kind of securities from its
portfolio, instead of cash, in accordance with the rules of the Securities and
Exchange Commission. In such cases, the Portfolios may hold securities
distributed by an Underlying Fund until the Advisor determines that it is
appropriate to dispose of such securities.
36
Notes to Financial Statements (unaudited)(continued)
The officers and Trustees, the Advisor, the Distributor and Transfer Agent of
the Portfolios serve in the same capacity for the Underlying Funds. Conflicts
may arise as these persons and companies seek to fulfill their fiduciary
responsibilities to both the Portfolios and the Underlying Funds.
From time to time, one or more of the Underlying Funds used for investment by a
Portfolio may experience relatively large investments or redemptions due to
reallocations or rebalancings by the Portfolios. These transactions will affect
the Underlying Funds, since the Underlying Funds that experience redemptions as
a result of the reallocations or rebalancings may have to sell portfolio
securities and the Underlying Funds that receive additional cash will have to
invest such cash. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management
to the extent that the Underlying Funds may be required to sell securities or
invest cash at times when they would not otherwise do so. These transactions
could also have tax consequences if sales of securities resulted in gains and
could also increase transaction costs. The Advisor is committed to minimizing
such impact on the Underlying Funds to the extent it is consistent with pursuing
the investment objectives of the Portfolios. The Advisor may nevertheless face
conflicts in fulfilling its responsibilities. The Advisor will, at all times,
monitor the impact on the Underlying Funds of transactions by the Portfolios.
9. OTHER PORTFOLIO OR FUND INFORMATION
SCHEDULES OF INVESTMENTS
The LLC and the Trust file their complete schedules of portfolio holdings with
the Securities and Exchange Commission ("SEC") for the first and third quarters
of each fiscal year on Form N-Q. The LLC's and the Trust's Forms N-Q are
available at http://www.wmgroupoffunds.com. The LLC's and the Trust's Forms N-Q
are also available at http://www.sec.gov and also may be reviewed and copied at
the SEC's Public Reference Room ("PRR") in Washington, DC. Information regarding
the operation of the PRR may be obtained by calling 1-800-SEC-0330.
PROXY VOTING INFORMATION:
The policies and procedures that the LLC and the Trust use to determine how to
vote proxies relating to portfolio securities held by the Portfolio or Fund are
included in the LLC's and Trust's Statement of Additional Information which is
available, without charge and upon request, by calling 1-800-222-5852.
Information regarding how the Portfolio or Fund voted proxies relating to
portfolio securities during the most recent twelve-month period ended June 30 is
available at http://www.wmgroupoffunds.com. This information is also available
at http://www.sec.gov.
37
Other Information (Unaudited)
PORTFOLIO MANAGER
U.S. Government Securities Fund
Craig V. Sosey
WM Advisors, Inc.
Note: Pages 38 and 39 provide information about certain WM Funds in which the
Flexible Income and Conservative Balanced Portfolios invest a significant
portion of their assets (i.e., more than 25%). For additional information about
these and other WM Funds, please see the WM Group of Funds semiannual report,
which is available online at wmgroupoffunds.com or by calling 800-222-5852.
Data shown is past performance and does not guarantee future results. Current
performance, including the most recent month-end results, which may be higher or
lower than the data shown, can be obtained by calling 800-222-5852. An
investment's return and principal value will fluctuate, so it may be worth more
or less upon redemption. A sales charge may apply as follows: Class A shares:
maximum up-front sales charge of 4.5%; Class B shares: contingent deferred sales
charge of 5%, which declines over 5 years
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF APRIL 30, 2005
6-Month(2) 1-Year 5-Year 10-Year Since Inception Inception Date
---------- ------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(3) 1.02% 4.32% 6.05% 6.26% 7.79% 5/4/84
With Sales Charge -3.51% -0.41% 5.07% 5.77% 7.56%
CLASS B SHARES Net Asset Value(3) 0.65% 3.57% 5.29% 5.59% 5.56% 3/30/94
With Sales Charge -4.35% -1.43% 4.96% 5.59% 5.56%
CLASS C SHARES Net Asset Value(3) 0.57% 3.50% - - 3.14% 3/1/02
With Sales Charge -0.43% 2.50% - - 3.14%
Citigroup Mortgage Index(4) 1.43% 5.67% 7.09% 6.98% 9.36%
Average annual total returns(1) (with sales charge) as of 3/31/05:
Class A Shares: -3.03% (1-year), 4.85% (5-year), 5.81% (10-year), 7.53% (since
inception)
Class B Shares: -4.17% (1-year), 4.73% (5-year), 5.62% (10-year), 5.50% (since
inception)
Class C Shares: -0.14% (1-year), 2.90% (since inception)
PORTFOLIO COMPOSITION(5)
As of
4/30/05
[PIE CHART]
As of As of
4/30/05 10/31/04 Change
------- -------- ------
FHLMC 31% 34% -3%
FNMA 30% 27% +3%
CMOs 17% 17% 0%
GNMA 9% 10% -1%
U.S. Treasuries 6% 6% 0%
U.S. Government Agency 4% 3% +1%
Cash Equivalents 3% 3% 0%
1 Performance reflects ongoing fund expenses, which may have been waived, and
assumes reinvestment of all dividends and capital gains. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower. The U.S. Government Securities Fund's
performance between 1998 and 2000 benefited from the agreement of WM
Advisors and its affiliates to limit the Fund's expenses. On 3/1/04, the
investment policies of the Fund were modified. As a result, the Fund's
performance for periods prior to that date may not be representative of
the performance it would have achieved had its current investment policies
been in place. The Income Fund's performance in 1999 benefited from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.
2 Periods of less than one year are not annualized.
3 Net asset value is not adjusted for sales charge.
38
PORTFOLIO MANAGERS
Gary J. Pokrzywinski, CFA and
John R. Freidl, CFA Income Fund
WM Advisors, Inc.
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. U.S. Government Securities Fund: Neither the
principal of government bond funds nor their yields are guaranteed by the U.S.
government.
Income Fund: Lower-rated securities are subject to additional credit and default
risks.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF APRIL 30, 2005
6-Month(2) 1-Year 5-Year 10-Year Since Inception Inception Date
---------- ------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(3) 0.40% 4.97% 7.42% 7.33% 8.54% 12/15/75
With Sales Charge -4.16% 0.22% 6.42% 6.84% 8.37%
CLASS B SHARES Net Asset Value(3) 0.04% 4.21% 6.65% 6.69% 6.54% 3/30/94
With Sales Charge -4.96% -0.79% 6.34% 6.69% 6.54%
CLASS C SHARES Net Asset Value(3) 0.05% 4.21% - - 5.53% 3/1/02
With Sales Charge -0.95% 3.21% - - 5.53%
Citigroup Broad Investment-Grade
Bond Index(4) 1.01% 5.39% 7.52% 7.16% -
Average annual total returns(1) (with sales charge) as of 3/31/05:
Class A Shares: -3.37% (1-year), 6.16% (5-year), 6.95% (10-year), 8.37% (since
inception)
Class B Shares: -4.56% (1-year), 6.05% (5-year), 6.78% (10-year), 6.52% (since
inception)
Class C Shares: -0.56% (1-year), 5.44% (since inception)
PORTFOLIO COMPOSITION(5)
As of
4/30/05
[PIE CHART]
As of As of
4/30/05 10/31/04 Change
------- -------- ------
Domestic Corporate Bonds 57% 57% 0%
Mortgage-Backed Bonds 22% 23% -1%
Foreign Corporate
Bonds (U.S. $) 7% 6% +1%
U.S. Treasuries 7% 6% +1%
Foreign Government
Bonds (U.S. $) 2% 2% 0%
Cash Equivalents 5% 6% -1%
4 The Citigroup Mortgage Index represents the mortgage-backed securities
component of Citigroup's Broad Investment-Grade Bond Index. It consists of
30- and 15-year agency-issued (GNMA, FNMA, and FHLMC) pass-through
securities as well as FNMA and FHLMC balloon mortgages. The Citigroup Broad
Investment-Grade Bond Index measures the performance of bonds, including
U.S. and non-U.S. corporate securities and non-U.S. sovereign and provincial
securities. It includes institutionally traded U.S. Treasury,
government-sponsored, mortgage, asset-backed, and investment-grade
securities. Returns shown for the indices assume reinvestment of all
dividends and distributions. Since-inception returns shown for the Citigroup
Mortgage Index are calculated from 4/30/84. Indices are unmanaged, and
individuals cannot invest directly in an index.
5 May not reflect the current portfolio composition.
39
This page left Blank Intentionally.
40
(artwork)
[WM LOGO]
GROUP of FUNDS
A mutual fund's share price and investment return will vary with market
conditions, and the principal value of an investment when you sell your shares
may be more or less than the original cost.
This semiannual report is published for the general information of the
shareholders of the WM Group of Funds. This material is not authorized for
distribution unless preceded or accompanied by a current prospectus that
includes more information regarding the risk factors, expenses, policies, and
objectives of the funds. Investors should read the prospectus carefully before
investing. To obtain an additional prospectus, please contact your Investment
Representative or call 800-222-5852.
The WM Group of mutual funds is advised by WM Advisors, Inc., distributed by WM
Funds Distributor, Inc., and sold through WM Financial Services, Inc. (all
affiliates of Washington Mutual, Inc.) and independent broker/dealers.
Distributed by:
WM Funds Distributor, Inc.
Member NASD
[WM LOGO] PRESORTED
GROUP of FUNDS STANDARD
US POSTAGE PAID
P. O. Box 8024 LOS ANGELES, CA
Boston, MA 02266-8024 PERMIT #1831
WMSAMSAR (6/29/05)
ITEM 2. CODE OF ETHICS
Not applicable for this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable for this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable for this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable for this filing.
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANIES AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 11. CONTROLS AND PROCEDURES:
(a) The registrant's principal executive officer and principal financial officer
have concluded, based on their evaluation of the effectiveness of the design and
operation of the registrant's disclosure controls and procedures as of a date
within 90 days of the filing date of this report on Form N-CSR, that the design
and operation of such procedures are effective to provide reasonable assurance
that information required to be disclosed by the registrant in the reports that
it files or submits on Form N-CSR is recorded, processed, summarized, and
reported within the time periods specified in the SEC's rules and forms.
(b) There have been no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment Company
Act of 1940, as amended) that occurred during the second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS
(a) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 of the Investment
Company Act of 1940 attached hereto as Exhibit 99.CERT.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
attached hereto as Exhibit 99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
WM Strategic Asset Management Portfolios, LLC
By: /s/ William G. Papesh
William G. Papesh
President and Chief Executive Officer
July 7, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Jeffrey L. Lunzer
Jeffrey L. Lunzer
Treasurer and Chief Financial Officer
July 7, 2005
By: /s/ William G. Papesh
William G. Papesh
President and Chief Executive Officer
July 7, 2005