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 811-05775
WM Trust II
(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: October 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS
(WM GROUPOFFUNDS LOGO)
WM GROUP OF FUNDS
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Annual Report
October 31, 2005
WM GROUP OF FUNDS
AT THE WM GROUP OF FUNDS, OUR PASSION IS PIECING INDIVIDUAL INVESTMENTS TOGETHER
INTO COMPREHENSIVE PORTFOLIOS TO MAKE YOUR FINANCIAL PLAN MORE EFFECTIVE.
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Table of Contents
1 Letter from the President
2 Economy & Financial Markets: Review & Outlook
4 Asset Allocation: A Key to Successful Investing
WM Group of Funds Performance and Investment Strategy:
6 REIT Fund
8 Equity Income Fund
10 Growth & Income Fund
12 West Coast Equity Fund
14 Mid Cap Stock Fund
16 Growth Fund
18 Small Cap Value Fund
20 Small Cap Growth Fund
22 International Growth Fund
24 Short Term Income Fund
26 U.S. Government Securities Fund
28 Income Fund
30 High Yield Fund
32 Tax-Exempt Bond Fund
34 California Municipal Fund
36 California Insured Intermediate Municipal Fund
38 Glossary
40 Expense Information
42 Financial Statements
126 Notes to Financial Statements
135 Report of Independent Registered Public Accounting Firm
136 Supplemental Information
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)
During the past fiscal year, our nation and the world endured much
uncertainty--and unfortunately, much tragedy. From the Asian tsunami and
Hurricane Katrina to the recent deadly earthquake in Pakistan and the threat of
the avian flu virus, Mother Nature has once again proven that her fury can rise
at any time, and with deadly effect. Meanwhile, the ongoing wars in Iraq and
Afghanistan offer us a sobering reminder of the sacrifices made by our men and
women in uniform. Still, our nation and financial markets remain
strong--testaments to the American character, and to the character of folks like
you.
Despite recent adversities, both the equity and fixed-income markets provided
positive returns for the fiscal year ended October 31, 2005, with the S&P 500
rising 8.72% and the Lehman Brothers Aggregate Bond Index adding 1.14%.(1) We
are proud to note that against this backdrop, the WM Group of Funds continues to
grow. Over the last five years, our assets under management have increased by
122%, while industry assets have increased by 18%.(2) During this same period,
the stock market (as measured by the S&P 500) declined 8.39%.
THE VALUE OF STAYING ACTIVE
In today's uncertain markets, some investors may try to limit their risk by
taking a passive investment approach--that is, building a portfolio based on
funds that track the performance of various indices. While passive investing may
be beneficial in some cases, we continue to believe strongly in the value of
active management. In our view, the power of active security selection can never
be replaced by indexing, pure and simple. We believe active investing also
offers several other potential advantages, such as superior risk management and
more flexible portfolio construction. At the end of the day, we firmly believe
that the combined talents of our portfolio managers and analysts--along with our
disciplined investment philosophy and processes--can add value to an investor's
portfolio.
A PROUD HERITAGE
At the WM Group of Funds, we continue to take pride in our firm's core values of
honesty, trust, and integrity. We're proud that for 66 years, we've served our
shareholders with the principles that we believe have made the WM Group of Funds
as successful as it is today. Now more than ever, we remain committed to
bringing you the utmost in value and quality of service. And as always, we thank
you for your support.
Sincerely,
/s/ William G. Papesh
- -------------------------------------
William G. Papesh
President
(1) 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. Indices are unmanaged,
and individuals cannot invest directly in an index.
(2) Source: WM Group of Funds, ICI, and Ibbotson Associates. Figures are for
the five-year period ended 10/31/05 and reflect both net shareholder
purchases and fund performance. They are based on long-term assets only and
do not include money market funds.
(GRAPHIC)
Economy & Financial Markets: Review & Outlook
ECONOMIC EXPANSION CONTINUES
The U.S. economy remained relatively strong during our 2005 fiscal year--the
twelve months between November 1, 2004, and October 31, 2005--as low interest
rates and improving corporate profits helped maintain positive economic
momentum. Real estate activity, including construction and home sales, was
especially robust with low mortgage and refinancing rates continuing to spur
demand.
Consumer confidence was relatively stable for much of the fiscal year, but it
plummeted late in the period due to the combined shocks of Hurricane Katrina,
soaring oil prices, and a weakening labor market. Consumer spending fell in
tandem as low approval ratings for the Bush administration and the ongoing wars
in Iraq and Afghanistan took their toll on the American psyche. Still, consumer
spending generally improved during the fiscal year, adding fuel to the growing
economy. As the economic expansion continued and oil prices rose sharply,
consumer prices (as measured by the Consumer Price Index) crept up, gaining
4.32% on a year-over-year basis.
In an effort to contain inflation, the Federal Reserve (the Fed) raised the
federal funds target rate to 3.75% during the period, an increase of two full
percentage points from the close of fiscal 2004. Against this backdrop,
short-term interest rates rose dramatically, while long-term rates rose more
modestly. As a result, the yield curve (the difference in yields between 2-and
10-year Treasury issues) flattened substantially--often an indication
that economic activity may slow in the near-to mid-term.
BONDS GAIN SLIGHTLY
Within this environment, the bond market (as measured by the Lehman Brothers
Aggregate Bond Index) gained slightly, rising 1.14% for the fiscal period.*
Yields on 10-year Treasury notes hovered within a tight range, rising from 4.07%
following the re-election of President Bush in November 2004 to close the period
at 4.56%. Generally, Treasuries outperformed investment-grade corporate
issues, though both sectors returned less than 1% for the period. High-yield
issues did much better, gaining 4.08% (as measured by the Lehman Brothers High
Yield Index).* Despite the increase in short-term rates, many investors
This economic and financial market analysis represents the opinions of WM
Advisors. It should not be considered as investment advice. No forecast based on
the opinions expressed can be guaranteed, and they may be subject to change
without notice.
* Indices are unmanaged, and individuals cannot invest directly in an index.
MAJOR MARKET EVENTS NOVEMBER 1, 2004 - OCTOBER 31, 2005
Source: Bloomberg L.P. (S&P 500 data).
2
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were willing to take on additional credit risk given the strength of corporate
balance sheets and the general economic recovery.
STOCKS RISE DESPITE FED TIGHTENING, OIL PRICES
In spite of the twin headwinds of rising short-term interest rates and high
energy costs, stocks gained nicely for the fiscal year, with the S&P 500 rising
8.72%.* In the two months following the presidential election, stocks added more
than 7% on optimism that Republican-backed tax cuts and generous government
spending would continue to spark the economy. By mid-2005, however, the S&P 500
had lost approximately half of that advance before rebounding late in the year
(see chart below). Within S&P 500 sectors, energy and utilities were the clear
winners, advancing 33.72% and 23.86%, respectively, on the back of high oil and
natural gas prices. Lagging sectors included telecommunication services (-0.46%)
and consumer discretionaries (-1.07%).
INVESTMENT OUTLOOK
Looking forward, we anticipate moderate, weaker-than-consensus economic growth
and subdued, lower-than-consensus inflation over the next fiscal year. The
housing market appears set for a slowdown, and consumer spending may be
adversely affected by higher rates for home equity loans. We believe that
long-term interest rates will fall to the 3%-4% range, while the Fed will likely
stop its monetary tightening campaign relatively early in 2006. In this
scenario, we would expect mortgage-backed securities to offer a better relative
value than corporate bonds, and that high-yield issues will continue to
outperform. Equities appear fairly valued, with international stocks more
attractive than U.S. holdings. We expect large-cap equities to outperform
small-cap equities and growth to outperform value.
Importantly, we anticipate an alignment between cyclical (short-term) and
secular (long-term) economic trends over the coming fiscal year. On the cyclical
side, we believe that Fed policy will put pressure on consumer and business
confidence, as will ongoing high energy prices. On the secular side, we believe
that the aging of U.S., European, and Japanese populations will continue to
temper global demand, while excess supply will limit pricing power. While we
expect that these forces will combine to produce slower economic growth, we
believe that the likely halt in Fed tightening will ultimately offer investors
reasonably strong buying opportunities, particularly in the equity space.
MAJOR MARKET EVENTS NOVEMBER 1, 2004 - OCTOBER 31, 2005
3
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Asset Allocation: A Key to Successful Investing
Asset allocation is widely recognized as being a critical element in the
financial planning process. Investment representatives generally use asset
allocation to help cushion client portfolios from market volatility and reduce
overall risk levels. Studies have also shown that historically, asset allocation
has been responsible for more than 90% of the variability of a portfolio's
return.* In other words, the asset class you choose--for example, stocks, bonds,
or cash--can be more important than the individual securities you select.
WHAT IS ASSET ALLOCATION?
When many people hear the term "asset allocation," they think of an efficient
frontier diagram and the work of a pioneering economist, Harry Markowitz. As a
25-year-old student at the University of Chicago in the early 1950s, Markowitz
needed a thesis topic. In a chance meeting, a stock broker suggested that he
investigate the stock market. Conventional wisdom at that time suggested that
investors should select stocks with the highest expected return without taking
risk into account.
Markowitz recognized that this approach neglected a key part of the investment
equation. The concept of risk was identified as early as 1654 in the work of
French mathematician Blaise Pascal, who worked on a system to determine
probabilities related to gambling. The concept of risk probability was then
studied by British astronomer Edmund Halley, who in 1690 applied it to mortality
tables. Halley's work was later used to help sell annuities and insure sailing
vessels and their cargoes, which eventually led to the founding of Lloyd's of
London.
But it was Markowitz who first rigorously applied the concept of risk to stock
portfolios in his 1952 essay "Portfolio Selection." His research found that
diversification is measurably beneficial, and that pairing risky and less risky
assets can actually lower portfolio volatility while simultaneously enhancing
potential returns. Markowitz's early work laid the foundation for more
sophisticated statistical concepts such as mean variance optimization, which
became integral to modern portfolio theory.
THE ALLOCATION PROCESS
While the term "asset allocation" is widely used to describe an investment
strategy, we believe it is actually a process. Most investment representatives
today use asset allocation as part of an overall approach that involves
identifying
A HISTORICAL PERSPECTIVE ON ASSET ALLOCATION
4
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a client's current investments, risk tolerance, portfolio construction, and
asset selection, as well as measuring performance.
IN PRACTICE, ASSET ALLOCATION IS OFTEN A MULTISTEP PROCESS:
- - Classifying an investor's current investments into their respective asset
classes.
- - Creating forecasts for each asset class and building a set of model
portfolios arranged along a spectrum of risk, often from conservative to
aggressive.
- - Determining important specific information about the client including their
risk tolerance, time horizon, and tax situation.
- - Recommending the actual asset class allocation to the client, primarily
based on their risk tolerance.
LOOKING AHEAD
The most time-consuming and analytical element of this process centers on asset
allocation modeling. This process involves analyzing hundreds of variables, such
as long- and short-term economic forecasts; expected returns for different
equity styles, sectors, and capitalizations; standard deviations; as well as
bond ratings and maturity structures. Each portfolio combination is then tested
for risk and return characteristics. But that is not the end of the process.
These multi-asset portfolios are then monitored and adjusted in response to
market conditions. Some asset allocation programs make adjustments at specific
intervals (monthly or quarterly) back to a predetermined static allocation. At
WM Advisors, we reevaluate asset allocations and reallocate assets daily using a
forward-looking process based on a longer-term allocation target. WM uses this
strategy to construct and monitor its Strategic Asset Management (SAM)
Portfolios for investors on a daily basis.
Yet even as this new work continues, one thing remains clear: asset allocation
will continue to be the foundation for many successful investment portfolios.
Note: Asset allocation does not guarantee a profit or protect against a loss.
* Gary P. Brinson, Brian D. Singer, and Gilbert L. Beebower, "Determinants of
Portfolio Performance II: An Update," Financial Analysts Journal, May/June,
1991. See also Gary P. Brinson, L. Randolph Hood, and Gilbert
L.Beebower, "Determinants of Portfolio Performance, "Financial Analysts Journal,
July/August, 1986.
A HISTORICAL PERSPECTIVE ON ASSET ALLOCATION
** As of 10/31/05,
5
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REIT Fund
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INVESTMENT STRATEGY
The WM REIT Fund performed strongly during the 2005 fiscal year, propelled by
strength in the housing market and relatively low mortgage rates. Yields on 5-
and 10-year Treasury notes remained low on a historical basis during the period.
Consequently, mortgage rates remained low as well, fueling the ongoing boom in
housing and allowing many consumers to utilize low-interest home equity loans.
Broadly speaking, these factors resulted in increased demand for real estate
investment trust (REIT) securities, which rose along with the broader equity
market.
During the period, the Fund benefited from its security selection in
industrial/office, retail, and residential REITs. Specific securities that
enhanced performance included AvalonBay Communities, Simon Property Group, and
Corporate Office Properties Trust. AvalonBay is a residential REIT; Simon
Property Group develops regional malls and community shopping centers; and
Corporate Office Properties Trust is an office REIT with particular expertise in
high security government buildings. The mortgage REIT sector was the
worst-performing sector in the REIT universe,
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. Your
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 (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 noted above.
REIT securities are subject to risk factors associated with the real estate
industry and tax factors of REIT registration.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year Since Inception Inception Date
------ --------------- --------------
CLASS A SHARES Net Asset Value(2) 15.46% 26.63% 3/1/03
With Sales Charge 9.10% 23.98%
CLASS B SHARES Net Asset Value(2) 14.57% 25.70% 3/1/03
With Sales Charge 9.57% 24.67%
CLASS C SHARES Net Asset Value(2) 14.66% 25.81% 3/1/03
With Sales Charge 13.66% 25.81%
NAREIT All REIT Index(3) 14.09% 27.25%
VALUE OF A $10,000 INVESTMENT(1) MARCH 1, 2003 - OCTOBER 31, 2005
(LINE CHART)
NAREIT - ALL
DATE NAV MOP REIT
- ------ ------ ------ ------------
Feb-03 10,000 9,450 10,000
Mar-03 10,070 9,516 10,207
Apr-03 10,460 9,884 10,694
May-03 11,030 10,423 11,348
Jun-03 11,248 10,630 11,643
Jul-03 11,884 11,230 12,254
Aug-03 11,964 11,306 12,306
Sep-03 12,339 11,660 12,694
Oct-03 12,644 11,948 12,967
Nov-03 13,171 12,447 13,553
Dec-03 13,640 12,890 14,018
Jan-04 14,226 13,444 14,620
Feb-04 14,555 13,754 14,941
Mar-04 15,366 14,521 15,777
Apr-04 13,176 12,451 13,370
May-04 13,940 13,174 14,314
Jun-04 14,446 13,652 14,742
Jul-04 14,478 13,682 14,748
Aug-04 15,453 14,603 15,910
Sep-04 15,513 14,660 15,940
Oct-04 16,273 15,378 16,664
Nov-04 16,981 16,047 17,437
Dec-04 17,885 16,901 18,277
Jan-05 16,405 15,503 16,831
Feb-05 16,824 15,898 17,210
Mar-05 16,444 15,539 16,890
Apr-05 17,297 16,346 17,680
May-05 17,999 17,009 18,313
Jun-05 18,701 17,673 19,174
Jul-05 20,014 18,913 20,434
Aug-05 19,256 18,196 19,565
Sep-05 19,334 18,271 19,546
Oct-05 18,789 17,756 19,012
See Glossary on page 38 for definitions of indices and terms.
(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.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 2/28/03. Indices are unmanaged, and individuals cannot
invest directly in an index.
6
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(PHOTO OF DAVID W. SIMPSON) PORTFOLIO MANAGER
David W. Simpson, CFA
WM Advisors, Inc.
and both of the Fund's holdings in this sector (Annaly Mortgage Management and
Redwood Trust) dragged on performance. These REITs hold mortgages in a leveraged
portfolio and their performance typically suffers in a flat yield curve
environment.
Changes in sector allocations were relatively modest during the period. The Fund
added to its holdings in specialty REITs (those with holdings outside of core
REIT categories such as mortgages, retail, and health care) on the belief that
many of these securities would benefit from increased consumer activity in
commercial properties. The Fund also added modestly to its holdings in health
care REITs as demographic changes--most notably the aging of the Baby Boom
generation--could be supportive of activity in health care facilities. In
contrast, the Fund reduced its holdings in residential REITs on potential
weakness in the rental market.
Looking ahead, we remain encouraged by the prospects for REIT securities. While
the sector has experienced tremendous appreciation since the Fund's inception,
we believe that continued low long-term interest rates and the ongoing
availability of low-interest home equity loans remain supportive of REIT
valuations. In our view, economic activity is likely to slow early in fiscal
2006. In turn, we believe that 5- and 10-year Treasury yields will remain muted,
which should contain mortgage rates. In this scenario, housing and commercial
real estate prices are unlikely to fall significantly. Against this backdrop, we
believe that REIT securities are well-positioned to experience further
appreciation.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
Simon Property Group Inc. 4.78% 26.93%
Equity Residential 4.48% 23.37%
AvalonBay Communities Inc. 4.10% 36.51%
Corporate Office Properties Trust 4.09% 31.17%
Macerich Company 3.98% 12.14%
Alexandria Real Estate Equities Inc. 3.97% 26.79%
General Growth Properties Inc. 3.53% 33.71%
Kimco Realty Corp. 3.27% 13.23%
Developers Diversified Realty Corp. 3.25% 9.46%
Mills Corporation 3.21% 0.77%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market
Capitalization: $5.9 billion
Weighted Average P/E
(based on trailing earnings): 27.3
Portfolio Turnover
(for fiscal year): 11%
Number of Securities: 47
Expense Ratio
(Class A shares for fiscal year): 1.31%
Total Net Assets: $421.1 million
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- ----------- -------- -------- ------
Industrial/Office 26% 26% 0%
Retail 26% 25% +1%
Residential 11% 13% -2%
Specialty 8% 5% +3%
Common Stocks 6% 6% 0%
Lodging/Resorts 6% 5% +1%
Health Care 5% 4% +1%
Diversified 4% 4% 0%
Self Storage 2% 3% -1%
Mortgage/Financial 1% 2% -1%
Cash Equivalents 5% 7% -2%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
7
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Equity Income Fund*
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 18.72%
2003 29.22%
2002 -12.82%
2001 7.41%
2000 14.64%
1999 4.83%
1998 6.93%
1997 19.89%
1996 13.60%
1995 31.18%
INVESTMENT STRATEGY
The WM Equity Income Fund performed very strongly during fiscal 2005, aided
primarily by positions in energy, consumer discretionaries, and materials. While
the U.S. economy continued its expansion during the period, higher oil prices
and increases in short-term interest rates put a damper on market sentiment.
Continuing with the course it began in June 2004, the Federal Reserve (the Fed)
raised the federal funds target rate eight times during the period, bringing the
target rate to 3.75% by the end of the fiscal year. This led some market
participants to fear a slowing economy for much of the period, and as a result,
price-to-earnings ratios for the broad market did not expand significantly.
Still, positive economic sentiment eventually trumped fears of inflation,
leading to reasonable gains for the equity markets.
The energy sector was the most significant contributor to Fund performance
during the period, due to such holdings as Valero Energy and ConocoPhillips. The
consumer discretionary sector also aided returns, helped by positions such as
Neiman Marcus and
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. Your
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 (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 noted above.
REIT securities are subject to risk factors associated with the real estate
industry and tax factors of REIT registration.
* As of 8/1/00, the WM Bond & Stock Fund became the WM Equity Income Fund, and
the Fund'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 OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 15.06% 9.74% 10.94% 9.05% 5/31/39
With Sales Charge 8.71% 8.50% 10.32% 8.96%
CLASS B SHARES Net Asset Value(2) 14.07% 8.76% 10.19% 10.91% 3/30/94
With Sales Charge 9.07% 8.47% 10.19% 10.91%
CLASS C SHARES Net Asset Value(2) 14.16% -- -- 9.35% 3/1/02
With Sales Charge 13.16% -- -- 9.35%
S&P 500/Barra Value Index(3) 10.17% 1.58% 9.81% --
S&P 500(3) 8.72% -1.74% 9.35% 11.54%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
S&P 500/BARRA
DATE NAV MOP S&P 500 VALUE INDEX
- ------ ------ ------ ------- -------------
OCT-95 10,000 9,450 10,000 10,000
Nov-95 10,304 9,737 10,440 10,524
Dec-95 10,588 10,006 10,633 10,816
Jan-96 10,888 10,289 10,999 11,139
Feb-96 10,842 10,245 11,105 11,244
Mar-96 10,860 10,263 11,211 11,507
Apr-96 10,930 10,328 11,376 11,624
May-96 11,092 10,482 11,669 11,800
Jun-96 11,158 10,544 11,717 11,743
Jul-96 10,870 10,272 11,196 11,247
Aug-96 11,018 10,412 11,433 11,558
Sep-96 11,408 10,781 12,076 12,053
Oct-96 11,566 10,929 12,407 12,461
Nov-96 12,092 11,427 13,348 13,414
Dec-96 12,028 11,367 13,087 13,194
Jan-97 12,325 11,647 13,899 13,803
Feb-97 12,460 11,775 14,012 13,903
Mar-97 12,238 11,565 13,429 13,428
Apr-97 12,460 11,774 14,231 13,931
May-97 13,014 12,299 15,104 14,805
Jun-97 13,406 12,669 15,778 15,370
Jul-97 14,060 13,286 17,031 16,600
Aug-97 13,604 12,856 16,084 15,850
Sep-97 14,154 13,376 16,965 16,779
Oct-97 13,972 13,204 16,399 16,163
Nov-97 14,284 13,498 17,158 16,779
Dec-97 14,421 13,628 17,453 17,151
Jan-98 14,421 13,628 17,647 16,940
Feb-98 14,935 14,113 18,919 18,211
Mar-98 15,236 14,398 19,888 19,134
Apr-98 15,338 14,495 20,089 19,360
May-98 15,093 14,263 19,743 19,087
Jun-98 15,208 14,371 20,545 19,232
Jul-98 14,601 13,798 20,327 18,814
Aug-98 13,088 12,368 17,388 15,789
Sep-98 13,664 12,912 18,502 16,749
Oct-98 14,534 13,735 20,007 18,061
Nov-98 15,229 14,392 21,219 19,002
Dec-98 15,420 14,571 22,441 19,668
Jan-99 15,588 14,730 23,379 20,066
Feb-99 14,980 14,156 22,652 19,634
Mar-99 15,303 14,462 23,558 20,229
Apr-99 16,179 15,289 24,470 21,973
May-99 16,326 15,428 23,892 21,584
Jun-99 16,716 15,797 25,218 22,413
Jul-99 16,301 15,405 24,432 21,723
Aug-99 15,814 14,944 24,309 21,173
Sep-99 15,208 14,372 23,643 20,345
Oct-99 15,604 14,746 25,140 21,493
Nov-99 15,775 14,908 25,650 21,366
Dec-99 16,163 15,274 27,161 22,169
Jan-00 15,574 14,717 25,798 21,464
Feb-00 15,340 14,496 25,310 20,123
Mar-00 16,302 15,405 27,785 22,221
Apr-00 16,267 15,373 26,949 22,073
May-00 16,403 15,500 26,397 22,141
Jun-00 16,302 15,406 27,046 21,266
Jul-00 16,245 15,352 26,624 21,692
Aug-00 16,822 15,897 28,277 23,147
Sep-00 17,118 16,177 26,784 23,143
Oct-00 17,745 16,769 26,672 23,575
Nov-00 17,461 16,500 24,570 22,368
Dec-00 18,529 17,510 24,691 23,520
Jan-01 18,974 17,931 25,567 24,513
Feb-01 18,826 17,791 23,235 22,888
Mar-01 18,610 17,586 21,765 21,984
Apr-01 19,281 18,221 23,456 23,474
May-01 19,681 18,598 23,613 23,721
Jun-01 19,596 18,518 23,039 22,952
Jul-01 19,960 18,863 22,813 22,555
Aug-01 19,835 18,744 21,385 21,251
Sep-01 18,861 17,823 19,657 19,232
Oct-01 18,797 17,763 20,033 19,232
Nov-01 19,594 18,516 21,569 20,454
Dec-01 19,903 18,809 21,759 20,765
Jan-02 19,826 18,735 21,441 20,196
Feb-02 19,748 18,662 21,027 20,014
Mar-02 20,669 19,532 21,818 21,039
Apr-02 20,001 18,901 20,496 19,985
May-02 20,079 18,975 20,344 20,064
Jun-02 19,025 17,978 18,896 18,798
Jul-02 17,606 16,637 17,422 16,766
Aug-02 17,947 16,960 17,537 16,882
Sep-02 16,203 15,311 15,631 14,952
Oct-02 16,851 15,924 17,006 16,195
Nov-02 17,857 16,875 18,008 17,333
Dec-02 17,350 16,395 16,949 16,432
Jan-03 16,935 16,004 16,505 15,982
Feb-03 16,642 15,727 16,257 15,547
Mar-03 16,792 15,868 16,415 15,527
Apr-03 18,026 17,035 17,768 17,063
May-03 19,100 18,050 18,704 18,318
Jun-03 19,433 18,364 18,943 18,452
Jul-03 19,580 18,503 19,277 18,862
Aug-03 19,878 18,785 19,653 19,269
Sep-03 20,073 18,969 19,444 18,920
Oct-03 20,968 19,815 20,545 20,215
Nov-03 21,308 20,136 20,726 20,396
Dec-03 22,422 21,189 21,812 21,657
Jan-04 23,010 21,744 22,213 22,040
Feb-04 23,596 22,298 22,522 22,538
Mar-04 23,631 22,331 22,182 22,383
Apr-04 23,069 21,800 21,833 21,830
May-04 23,302 22,020 22,133 22,081
Jun-04 23,936 22,619 22,562 22,560
Jul-04 23,371 22,085 21,815 22,132
Aug-04 23,660 22,359 21,902 22,371
Sep-04 24,202 22,871 22,139 22,796
Oct-04 24,547 23,197 22,478 23,140
Nov-04 25,790 24,371 23,388 24,269
Dec-04 26,623 25,158 24,183 25,060
Jan-05 26,053 24,620 23,593 24,451
Feb-05 26,967 25,484 24,089 24,894
Mar-05 26,633 25,168 23,662 24,451
Apr-05 26,521 25,062 23,213 23,952
May-05 27,248 25,749 23,951 24,709
Jun-05 27,722 26,197 23,984 25,082
Jul-05 28,576 27,004 24,877 25,872
Aug-05 28,364 26,804 24,650 25,678
Sep-05 28,566 26,994 24,850 25,945
Oct-05 28,243 26,689 24,435 25,491
See Glossary on page 38 for definitions of indices and terms.
(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.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the indices assume reinvestment of all dividends and
distributions, and the since-inception return shown for the S&P 500 is
calculated from 5/31/39. Indices are unmanaged, and individuals cannot
invest directly in an index.
8
(GRAPHIC)
(PHOTO OF JOSEPH T. SUTY) PORTFOLIO MANAGER
Joseph T. Suty, CFA
WM Advisors, Inc.
May Department Stores. In the aftermath of Hurricane Katrina, materials
providers such as Cemex also gained as demand for building materials spiked. In
the health care sector, holdings such as Smith & Nephew and Pfizer fell on
profitability concerns.
During the period, the Fund made several meaningful changes to its composition.
The most notable was a substantial decrease in the Fund's allocation to the
consumer discretionary sector. This came as a result of our belief that if
spending should slow in the near term, the sector will likely underperform. The
Fund also modestly decreased its holdings in consumer staples and materials. In
contrast, the Fund significantly added to its position in industrials, while
also adding to its positions in energy, health care, and U.S. Treasuries.
While we retain a positive long-term outlook for the equity markets, we believe
that their upside will be limited until the Fed stops raising short-term
interest rates or unless oil prices can continue to decline meaningfully.
With regard to the Fund's positioning, we have begun to shift the Fund to a
higher-quality, larger-capitalization bias. This comes as a result of our belief
that these holdings will likely outperform smaller, less liquid securities over
the upcoming fiscal year. We have also begun to trim our holdings in convertible
bonds and REITs. Looking forward, our outlook remains especially positive with
regard to the energy, technology, and industrial sectors.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
Microsoft Corp. 2.04% 3.14%
ACE Ltd. 2.02% 39.42%
AFLAC Inc. 1.98% 34.37%
Bank of America Corp. 1.96% 1.68%
FPL Group Inc. 1.88% 29.28%
Citigroup Inc. 1.87% 6.11%
Valero Energy Corp. 1.83% 145.19%
Wells Fargo & Co. 1.77% 4.07%
HCA Inc. 1.71% 32.55%
Johnson & Johnson 1.68% 9.27%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market Capitalization: $65.5 billion
Weighted Average P/E (based on estimated earnings): 14.2
Beta: 0.83
Fund Standard Deviation: 8.94
S&P 500 Standard Deviation: 11.57
Portfolio Turnover (for fiscal year): 32%
Number of Securities: 130
Expense Ratio (Class A shares for fiscal year): 0.90%
Total Net Assets: $2.5 billion
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- -------------------------- -------- -------- ------
Financials 24% 23% +1%
Energy 11% 9% +2%
Industrials 11% 8% +3%
Information Technology 8% 8% 0%
Health Care 7% 5% +2%
REITs 7% 7% 0%
Consumer Discretionary 6% 14% -8%
Consumer Staples 6% 7% -1%
Utilities 4% 4% 0%
Materials 3% 4% -1%
Telecommunication Services 3% 2% +1%
Convertible Securities 2% 1% +1%
U.S. Treasuries 2% 0% +2%
Corporate Bonds 1% 1% 0%
Cash Equivalents 5% 7% -2%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
9
(GRAPHIC)
Growth & Income Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 8.63%
2003 26.15%
2002 -20.37%
2001 -3.28%
2000 1.53%
1999 18.26%
1998 14.41%
1997 29.52%
1996 22.28%
1995 33.15%
INVESTMENT STRATEGY
The WM Growth & Income Fund performed well during fiscal 2005, aided primarily
by positions in energy and utilities. While the U.S. economy continued its
expansion during the period, higher oil prices and rising short-term interest
rates put a damper on market sentiment. Continuing with the course it began in
June 2004, the Federal Reserve (the Fed) raised the federal funds target rate
eight times during the period, bringing the target rate to 3.75% by the end of
the fiscal year. This led some market participants to fear a slowing economy for
much of the period, and as a result, price-to-earnings ratios for the broad
market did not expand significantly. Still, positive economic sentiment
eventually trumped fears of inflation, leading to reasonable gains for the
equity markets.
Generally speaking, sector allocation benefited Fund returns while stock
selection detracted from returns during the period. Positions that hurt
performance included the pharmaceutical giant Pfizer, manufacturer and service
provider Tyco, and cosmetics maker
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. Your
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 (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 noted above.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 6.34% -0.01% 9.38% 10.06% 10/31/49
With Sales Charge 0.50% -1.14% 8.77% 9.95%
CLASS B SHARES Net Asset Value(2) 5.28% -0.99% 8.62% 9.81% 3/30/94
With Sales Charge 0.28% -1.41% 8.62% 9.81%
CLASS C SHARES Net Asset Value(2) 5.30% -- -- 2.88% 3/1/02
With Sales Charge 4.30% -- -- 2.88%
S&P 500(3) 8.72% -1.74% 9.35% 11.98%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
DATE NAV MOP S&P 500
- ------ ------ ------ -------
OCT-95 10,000 9,450 10,000
Nov-95 10,410 9,837 10,440
Dec-95 10,726 10,136 10,633
Jan-96 11,031 10,424 10,999
Feb-96 11,180 10,566 11,105
Mar-96 11,287 10,666 11,211
Apr-96 11,550 10,915 11,376
May-96 11,800 11,151 11,669
Jun-96 11,814 11,164 11,717
Jul-96 11,221 10,604 11,196
Aug-96 11,557 10,921 11,433
Sep-96 12,225 11,553 12,076
Oct-96 12,361 11,681 12,407
Nov-96 13,264 12,534 13,348
Dec-96 13,115 12,394 13,087
Jan-97 13,738 12,982 13,899
Feb-97 13,815 13,055 14,012
Mar-97 13,337 12,603 13,429
Apr-97 13,830 13,069 14,231
May-97 14,747 13,936 15,104
Jun-97 15,502 14,649 15,778
Jul-97 16,667 15,751 17,031
Aug-97 15,926 15,050 16,084
Sep-97 16,826 15,900 16,965
Oct-97 16,223 15,331 16,399
Nov-97 16,718 15,798 17,158
Dec-97 16,987 16,053 17,453
Jan-98 16,703 15,785 17,647
Feb-98 17,981 16,992 18,919
Mar-98 18,646 17,621 19,888
Apr-98 18,725 17,695 20,089
May-98 18,238 17,235 19,743
Jun-98 18,739 17,709 20,545
Jul-98 17,990 17,000 20,327
Aug-98 14,820 14,005 17,388
Sep-98 16,017 15,136 18,502
Oct-98 17,421 16,462 20,007
Nov-98 18,553 17,533 21,219
Dec-98 19,434 18,365 22,441
Jan-99 20,184 19,074 23,379
Feb-99 19,767 18,679 22,652
Mar-99 20,342 19,223 23,558
Apr-99 21,678 20,486 24,470
May-99 21,399 20,222 23,892
Jun-99 22,471 21,235 25,218
Jul-99 21,709 20,515 24,432
Aug-99 21,071 19,912 24,309
Sep-99 20,529 19,400 23,643
Oct-99 21,527 20,343 25,140
Nov-99 22,121 20,904 25,650
Dec-99 22,984 21,720 27,161
Jan-00 21,816 20,616 25,798
Feb-00 21,138 19,975 25,310
Mar-00 23,503 22,210 27,785
Apr-00 23,475 22,184 26,949
May-00 23,846 22,534 26,397
Jun-00 23,583 22,286 27,046
Jul-00 22,888 21,629 26,624
Aug-00 24,453 23,108 28,277
Sep-00 23,942 22,625 26,784
Oct-00 24,531 23,182 26,672
Nov-00 22,757 21,506 24,570
Dec-00 23,338 22,054 24,691
Jan-01 25,303 23,911 25,567
Feb-01 24,164 22,835 23,235
Mar-01 22,995 21,730 21,765
Apr-01 24,114 22,788 23,456
May-01 24,693 23,335 23,613
Jun-01 24,187 22,857 23,039
Jul-01 24,158 22,829 22,813
Aug-01 22,856 21,599 21,385
Sep-01 20,977 19,823 19,657
Oct-01 21,244 20,075 20,033
Nov-01 22,403 21,171 21,569
Dec-01 22,569 21,328 21,759
Jan-02 21,815 20,616 21,441
Feb-02 21,333 20,160 21,027
Mar-02 22,434 21,200 21,818
Apr-02 20,918 19,767 20,496
May-02 21,187 20,022 20,344
Jun-02 19,708 18,625 18,896
Jul-02 18,134 17,136 17,422
Aug-02 18,395 17,383 17,537
Sep-02 16,539 15,629 15,631
Oct-02 17,824 16,844 17,006
Nov-02 18,713 17,684 18,008
Dec-02 17,972 16,984 16,949
Jan-03 17,640 16,670 16,505
Feb-03 17,211 16,265 16,257
Mar-03 17,259 16,310 16,415
Apr-03 18,654 17,628 17,768
May-03 19,699 18,615 18,704
Jun-03 20,118 19,012 18,943
Jul-03 20,108 19,002 19,277
Aug-03 20,351 19,232 19,653
Sep-03 20,313 19,195 19,444
Oct-03 21,064 19,906 20,545
Nov-03 21,338 20,164 20,726
Dec-03 22,672 21,425 21,812
Jan-04 23,066 21,798 22,213
Feb-04 23,440 22,151 22,522
Mar-04 23,046 21,779 22,182
Apr-04 23,046 21,779 21,833
May-04 23,214 21,938 22,133
Jun-04 23,716 22,411 22,562
Jul-04 22,760 21,508 21,815
Aug-04 22,976 21,713 21,902
Sep-04 23,054 21,786 22,139
Oct-04 23,054 21,786 22,478
Nov-04 23,900 22,586 23,388
Dec-04 24,625 23,270 24,183
Jan-05 24,285 22,949 23,593
Feb-05 24,693 23,335 24,089
Mar-05 24,305 22,968 23,662
Apr-05 23,987 22,667 23,213
May-05 24,565 23,214 23,951
Jun-05 24,724 23,365 23,984
Jul-05 25,053 23,675 24,877
Aug-05 24,865 23,498 24,650
Sep-05 24,676 23,319 24,850
Oct-05 24,516 23,168 24,435
See Glossary on page 38 for definitions of indices and terms.
(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.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 10/31/49. Indices are unmanaged, and individuals cannot
invest directly in an index.
10
(GRAPHIC)
(PHOTO OF STEPHEN Q. SPENCER) PORTFOLIO MANAGER
Stephen Q. Spencer, CFA
WM Advisors, Inc.
Avon. Pfizer fell on profitability concerns for big pharmaceuticals, while Tyco
lagged on higher-than-expected raw materials costs. Meanwhile, Avon lost market
share in its key North American segment. On the upside, stocks such as Motorola
and Hewlett-Packard added to returns as results were generally positive in the
large-cap technology area.
Changes to sector allocations were relatively modest for the period. The Fund
added to its holdings in energy and utilities as oil and gas prices spiked. The
Fund also added to its exposure in materials and industrials as these sectors
experienced strong demand in the aftermath of Hurricane Katrina and ongoing
demand from China. In contrast, the Fund decreased its holdings in financials as
the rise in short-term interest rates made it harder for financial institutions
to maintain profit margins. The Fund also decreased its exposure to the consumer
discretionary sector as the rise in oil prices and short-term interest rates
seemed to threaten consumer demand.
While we retain a positive long-term outlook for the equity markets, we believe
that upside potential will be limited until the markets perceive that the Fed is
nearly done raising short-term interest rates or unless oil prices decline
meaningfully. We believe it is likely that the economy will experience slower
growth in fiscal 2006, and that consumers may become cautious in the
discretionary areas of the economy. Against this backdrop, we believe we have
positioned the Fund to take advantage of businesses that can demonstrate
long-term, organic growth.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
Bank of America Corp. 3.34% 1.68%
Carnival Corp. 3.18% -0.44%
General Electric Co. 2.78% 1.89%
Allstate Corporation 2.55% 12.19%
Tyco International Ltd. 2.49% -14.13%
Teva Pharmaceutical Industries Ltd. 2.36% 47.58%
JPMorgan Chase & Co. 2.36% -1.39%
Freddie Mac 2.35% -5.90%
Microsoft Corp. 2.27% 3.14%
Citigroup Inc. 2.26% 6.11%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market Capitalization: $93.2 billion
Weighted Average P/E (based on estimated earnings): 14.8
Beta: 0.84
Fund Standard Deviation: 9.10
S&P 500 Standard Deviation: 11.57
Portfolio Turnover (for fiscal year): 15%
Number of Securities: 63
Expense Ratio (Class A shares for fiscal year): 0.89%
Total Net Assets: $2.6 billion
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- -------------------------- -------- -------- ------
Financials 22% 24% -2%
Information Technology 13% 13% 0%
Health Care 11% 13% -2%
Industrials 11% 10% +1%
Consumer Discretionary 10% 12% -2%
Consumer Staples 10% 10% 0%
Energy 9% 8% +1%
Utilities 5% 3% +2%
Materials 2% 0% +2%
Telecommunication Services 1% 1% 0%
Cash Equivalents 6% 6% 0%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
11
(GRAPHIC)
West Coast Equity Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 13.23%
2003 41.36%
2002 -22.45%
2001 6.34%
2000 6.65%
1999 42.27%
1998 22.98%
1997 32.88%
1996 22.56%
1995 26.52%
INVESTMENT STRATEGY
During the 2005 fiscal year, the WM West Coast Equity Fund was primarily
impacted by positive trends in technology, health care, and the housing market.
While the U.S. economy continued its expansion during the period, higher oil
prices and increases in short-term interest rates put a damper on market
sentiment. Continuing with the course it began in June 2004, the Federal Reserve
(the Fed) raised the federal funds target rate eight times during the period,
bringing the target rate to 3.75% by the end of the fiscal year. This led some
market participants to fear a slowing economy for much of the period, and as a
result, price-to-earnings ratios for the broad market did not expand
significantly. Still, positive economic sentiment eventually trumped fears of
inflation, leading to reasonable gains for the equity markets.
As the housing market continued its historic surge during the period, the Fund
benefited substantially from its holdings in building materials, particularly
lumber. In the health care sector, the Fund benefited from holdings
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. Your
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 (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 noted above.
Small-cap and mid-cap stocks may have additional risks, including greater price
volatility. There may be additional investment risks due to the Fund's
concentration in West Coast companies.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 13.13% 5.84% 15.53% 14.64% 11/24/86
With Sales Charge 6.90% 4.65% 14.88% 14.30%
CLASS B SHARES Net Asset Value(2) 12.09% 4.85% 14.70% 14.52% 3/30/94
With Sales Charge 7.09% 4.52% 14.70% 14.52%
CLASS C SHARES Net Asset Value(2) 12.18% -- -- 7.03% 3/1/02
With Sales Charge 11.18% -- -- 7.03%
Russell 3000(R) Index(3) 10.60% -0.81% 9.43% 11.17%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
RUSSELL 3000
DATE NAV MOP INDEX
- ------ ------ ------ ------------
OCT-95 10,000 9,450 10,000
Nov-95 10,138 9,580 10,444
Dec-95 10,236 9,673 10,614
Jan-96 10,189 9,629 10,922
Feb-96 10,427 9,854 11,083
Mar-96 10,669 10,082 11,193
Apr-96 11,448 10,819 11,406
May-96 11,757 11,110 11,698
Jun-96 11,262 10,643 11,661
Jul-96 10,500 9,923 11,050
Aug-96 11,157 10,544 11,384
Sep-96 11,477 10,846 12,004
Oct-96 11,454 10,824 12,223
Nov-96 12,245 11,572 13,085
Dec-96 12,545 11,855 12,928
Jan-97 13,330 12,597 13,643
Feb-97 13,298 12,567 13,658
Mar-97 12,775 12,072 13,041
Apr-97 13,222 12,494 13,684
May-97 14,626 13,822 14,618
Jun-97 15,303 14,461 15,226
Jul-97 16,350 15,451 16,420
Aug-97 16,120 15,233 15,753
Sep-97 17,461 16,500 16,647
Oct-97 16,548 15,638 16,087
Nov-97 16,963 16,030 16,704
Dec-97 16,670 15,753 17,038
Jan-98 16,700 15,781 17,126
Feb-98 18,204 17,203 18,351
Mar-98 18,467 17,451 19,261
Apr-98 18,551 17,531 19,450
May-98 17,553 16,588 18,969
Jun-98 17,206 16,260 19,610
Jul-98 16,053 15,170 19,253
Aug-98 12,806 12,101 16,304
Sep-98 14,113 13,337 17,416
Oct-98 15,753 14,886 18,738
Nov-98 18,081 17,087 19,884
Dec-98 20,502 19,375 21,149
Jan-99 21,066 19,907 21,868
Feb-99 19,690 18,607 21,094
Mar-99 20,240 19,127 21,868
Apr-99 21,462 20,282 22,854
May-99 22,490 21,253 22,420
Jun-99 24,523 23,175 23,552
Jul-99 24,330 22,992 22,839
Aug-99 24,408 23,065 22,578
Sep-99 23,519 22,226 22,000
Oct-99 24,780 23,417 23,380
Nov-99 25,761 24,344 24,034
Dec-99 29,167 27,562 25,568
Jan-00 28,957 27,364 24,566
Feb-00 33,323 31,491 24,794
Mar-00 34,203 32,322 26,735
Apr-00 31,809 30,059 25,794
May-00 30,594 28,911 25,069
Jun-00 33,454 31,614 25,812
Jul-00 33,347 31,513 25,355
Aug-00 36,245 34,252 27,236
Sep-00 33,755 31,899 26,002
Oct-00 31,899 30,144 25,633
Nov-00 29,133 27,531 23,270
Dec-00 31,108 29,397 23,661
Jan-01 33,709 31,855 24,470
Feb-01 30,429 28,755 22,233
Mar-01 28,810 27,226 20,784
Apr-01 31,792 30,043 22,450
May-01 34,310 32,423 22,630
Jun-01 37,394 35,338 22,214
Jul-01 34,713 32,804 21,847
Aug-01 33,960 32,092 20,558
Sep-01 27,996 26,457 18,745
Oct-01 29,813 28,174 19,182
Nov-01 32,207 30,436 20,659
Dec-01 33,087 31,267 20,950
Jan-02 32,713 30,914 20,688
Feb-02 31,987 30,227 20,266
Mar-02 33,708 31,854 21,154
Apr-02 32,595 30,802 20,043
May-02 31,399 29,672 19,811
Jun-02 29,958 28,310 18,384
Jul-02 26,806 25,332 16,923
Aug-02 25,844 24,422 17,002
Sep-02 23,823 22,513 15,215
Oct-02 25,362 23,967 16,426
Nov-02 27,340 25,836 17,420
Dec-02 25,661 24,250 16,436
Jan-03 25,256 23,867 16,033
Feb-03 24,978 23,604 15,769
Mar-03 24,646 23,290 15,934
Apr-03 26,475 25,018 17,236
May-03 29,082 27,483 18,277
Jun-03 29,690 28,057 18,524
Jul-03 30,792 29,098 18,948
Aug-03 32,193 30,422 19,369
Sep-03 31,765 30,017 19,158
Oct-03 34,350 32,461 20,317
Nov-03 35,078 33,149 20,597
Dec-03 36,275 34,279 21,538
Jan-04 37,098 35,058 21,989
Feb-04 37,376 35,321 22,285
Mar-04 37,044 35,006 22,020
Apr-04 35,784 33,816 21,564
May-04 36,382 34,381 21,877
Jun-04 37,793 35,715 22,312
Jul-04 35,847 33,875 21,469
Aug-04 35,707 33,743 21,557
Sep-04 36,818 34,793 21,889
Oct-04 37,459 35,399 22,248
Nov-04 39,471 37,300 23,283
Dec-04 41,077 38,818 24,111
Jan-05 39,525 37,351 23,470
Feb-05 40,394 38,173 23,986
Mar-05 39,611 37,432 23,581
Apr-05 38,097 36,002 23,069
May-05 39,922 37,727 23,944
Jun-05 40,521 38,292 24,111
Jul-05 42,640 40,295 25,100
Aug-05 42,653 40,307 24,861
Sep-05 42,926 40,565 25,078
Oct-05 42,381 40,050 24,609
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance in 1997 benefited
from the agreement of WM Advisors and its affiliates to limit the Fund's
expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 11/30/86. Indices are unmanaged, and individuals cannot
invest directly in an index.
12
(GRAPHIC)
(PHOTO OF PHILIP M. FOREMAN) PORTFOLIO MANAGER
Philip M. Foreman, CFA
WM Advisors, Inc.
such as Health Net, a health insurance provider, and Genentech, a biotechnology
research company. In contrast, information technology stocks such as Pixelworks,
a maker of chips for flat-panel TVs, were particularly harmful to performance.
With regard to sector allocations, the Fund significantly increased its
weighting in the health care sector during the period. This came as a result of
our belief that changes in national health care policy and demographic trends
will continue to benefit health care companies. The Fund also increased its
allocation to consumer staples on the belief that a slowing economy may result
in increased demand for non-discretionary items. In contrast, the Fund
substantially reduced its exposure to consumer discretionaries on the belief
that a decline in consumer spending may mute demand for the sector going
forward.
While we retain a positive long-term outlook for the equity markets, we believe
that their upside will be limited until the Fed stops raising short-term
interest rates or unless oil prices decline meaningfully. With regard to the
Fund's positioning, we continue to favor companies that benefit from trade with
China and Latin America, as well as those that benefit from the growth in the
Asian and Hispanic populations on the West Coast. Over the long term, we
continue to view the West Coast as the premier hub for U.S. technology and
biotech development. Accordingly, we believe we have positioned the Fund to
exploit these opportunities.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
Wells Fargo & Co. 3.16% 4.07%
Microsoft Corp. 2.83% 3.14%
Chevron Corp. 2.49% 10.84%
PACCAR Inc. 2.31% 4.78%
Boeing Company 2.05% 31.47%
Nabors Industries Ltd. 1.95% 39.47%
U.S. Bancorp 1.78% 7.66%
Costco Wholesale Corp. 1.70% -9.11%
Amgen Inc. 1.67% 32.93%
Expeditors Intl. of Wash Inc. 1.63% 6.74%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market Capitalization: $43.4 billion
Weighted Average P/E (based on estimated earnings): 16.6
Beta: 1.20
Fund Standard Deviation: 13.04
S&P 500 Standard Deviation: 11.57
Portfolio Turnover (for fiscal year): 13%
Number of Securities: 142
Expense Ratio (Class A shares for fiscal year): 0.91%
Total Net Assets: $ 1.5 billion
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- -------------------------- -------- -------- ------
Financials 18% 19% -1%
Health Care 17% 12% +5%
Information Technology 16% 17% -1%
Industrials 15% 15% 0%
Consumer Discretionary 12% 16% -4%
Energy 7% 7% 0%
Consumer Staples 5% 3% +2%
Materials 3% 3% 0%
REITs 3% 2% +1%
Telecommunication Services 1% 1% 0%
Cash Equivalents 3% 5% -2%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
13
(GRAPHIC)
Mid Cap Stock Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 13.87%
2003 26.78%
2002 -10.48%
2001 10.69%
INVESTMENT STRATEGY
The WM Mid Cap Stock Fund performed well during fiscal 2005, benefiting most
from its positions in energy, technology, and consumer discretionaries. While
the U.S. economy continued to grow during the period, increasing short-term
interest rates and skyrocketing oil and gas prices put a drag on consumer
sentiment. Combined with rising inflation, these factors led some market
participants to fear that fiscal 2005 might experience slowing economic growth.
Still, as the Federal Reserve (the Fed) appeared to get closer to ending its
monetary tightening campaign, the equity markets overcame these doubts and
posted solid returns. Performance in the mid-cap segment was particularly strong
as buyers gravitated up the capitalization range toward mid- and large-cap
holdings.
Individual securities that were particularly helpful to the Fund during the
period included Express Scripts, a pharmacy benefits manager; Tesoro, an oil and
gas refinery; and AMR, the parent company of American Airlines. Express Scripts
rose on increased
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. Your
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 (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 noted above.
Small-cap and mid-cap stocks may have additional risks, including greater price
volatility.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year Since Inception Inception Date
------ ------ --------------- --------------
CLASS A SHARES Net Asset Value(2) 16.75% 10.57% 13.77% 3/1/00
With Sales Charge 10.35% 9.33% 12.64%
CLASS B SHARES Net Asset Value(2) 15.63% 9.51% 12.70% 3/1/00
With Sales Charge 10.63% 9.23% 12.70%
CLASS C SHARES Net Asset Value(2) 15.73% -- 9.51% 3/1/02
With Sales Charge 14.73% -- 9.51%
S&P MidCap 4003 17.65% 7.32% 8.84%
VALUE OF A $10,000 INVESTMENT(1) MARCH 1, 2000 - OCTOBER 31, 2005
(LINE CHART)
S&P
DATE NAV MOP MIDCAP 400
- ------ ------ ------ ----------
Feb-00 10,000 9,450 10,000
Mar-00 11,210 10,593 10,837
Apr-00 11,271 10,651 10,459
May-00 11,681 11,038 10,328
Jun-00 11,420 10,792 10,480
Jul-00 11,650 11,009 10,645
Aug-00 12,450 11,765 11,833
Sep-00 12,351 11,671 11,752
Oct-00 12,580 11,888 11,353
Nov-00 12,221 11,548 10,496
Dec-00 13,460 12,719 11,299
Jan-01 13,892 13,128 11,551
Feb-01 13,842 13,080 10,892
Mar-01 13,339 12,606 10,082
Apr-01 14,072 13,298 11,194
May-01 14,553 13,752 11,455
Jun-01 15,014 14,188 11,409
Jul-01 14,924 14,103 11,239
Aug-01 14,482 13,686 10,872
Sep-01 13,088 12,368 9,519
Oct-01 13,550 12,804 9,940
Nov-01 14,101 13,326 10,680
Dec-01 14,898 14,078 11,232
Jan-02 14,399 13,607 11,174
Feb-02 14,389 13,597 11,187
Mar-02 15,252 14,413 11,987
Apr-02 15,138 14,305 11,930
May-02 15,272 14,432 11,729
Jun-02 14,481 13,685 10,870
Jul-02 13,430 12,691 9,817
Aug-02 13,566 12,819 9,866
Sep-02 12,514 11,826 9,071
Oct-02 12,888 12,180 9,464
Nov-02 13,555 12,809 10,012
Dec-02 13,336 12,603 9,600
Jan-03 13,098 12,377 9,320
Feb-03 12,931 12,220 9,098
Mar-03 12,994 12,279 9,174
Apr-03 13,420 12,682 9,840
May-03 14,429 13,635 10,656
Jun-03 14,502 13,705 10,792
Jul-03 14,742 13,931 11,175
Aug-03 15,116 14,285 11,682
Sep-03 14,929 14,108 11,503
Oct-03 15,959 15,081 12,373
Nov-03 16,396 15,494 12,803
Dec-03 16,909 15,979 13,020
Jan-04 17,117 16,176 13,302
Feb-04 17,598 16,630 13,622
Mar-04 17,410 16,452 13,680
Apr-04 17,243 16,294 13,231
May-04 17,660 16,689 13,505
Jun-04 18,223 17,221 13,813
Jul-04 17,482 16,520 13,168
Aug-04 17,282 16,332 13,134
Sep-04 17,595 16,628 13,523
Oct-04 17,804 16,825 13,739
Nov-04 18,755 17,723 14,558
Dec-04 19,252 18,193 15,168
Jan-05 18,582 17,560 14,781
Feb-05 19,069 18,020 15,278
Mar-05 19,404 18,337 15,108
Apr-05 18,841 17,805 14,520
May-05 19,718 18,633 15,395
Jun-05 20,193 19,082 15,752
Jul-05 21,047 19,889 16,579
Aug-05 21,003 19,848 16,395
Sep-05 21,047 19,889 16,521
Oct-05 20,788 19,645 16,166
See Glossary on page 38 for definitions of indices and terms.
(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.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 2/29/00. Indices are unmanaged, and individuals cannot
invest directly in an index.
14
(GRAPHIC)
(PHOTO OF DANIEL R. COLEMAN) PORTFOLIO MANAGER
Daniel R. Coleman
WM Advisors, Inc.
consumer use of generic drugs and mail-order prescriptions, while Tesoro
advanced on the back of higher oil and gas prices. Despite recent troubles in
the airline industry, AMR gained on optimism that restructuring efforts would
improve its financial outlook. On the downside, Superior Industries, a maker of
aluminum wheels, declined vis-a-vis the general malaise in the U.S. auto
industry and manufacturing troubles. Diebold, a manufacturer and servicer of
ATMs, declined due to poor operating performance in France and execution issues.
Key additions to the Fund during the fiscal year included Edwards Lifesciences,
a maker of heart valves and an innovator in non-invasive surgical procedures to
install the valves; Noble Energy, a leading energy exploration and production
company; Network Appliance, a high-end provider of data storage; and Max Re
Capital, a company that provides multi-line reinsurance and insurance products.
While our long-term outlook for the equity markets remains positive, we believe
that broad upside potential will be limited until the Fed stops raising
short-term interest rates or unless oil prices decline meaningfully.
Nevertheless, we continue to view prospects in the mid-cap sector as favorable.
In this environment, we believe that security selection will be paramount, and
we have therefore redoubled our efforts to find what we believe are the best
companies in our sector through insightful, bottom-up research. As always,
discipline and consistency remain central aspects of our investment process.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
HCC Insurance Holdings Inc. 2.91% 52.77%
Microchip Technology Inc. 2.44% 0.85%
Lincoln Electric Holdings Inc. 2.44% 20.99%
Express Scripts Inc. 2.38% 134.54%
Fidelity National Financial Inc. 2.37% 47.79%
Covance Inc. 2.35% 22.35%
Universal Health Services Inc. 2.27% 14.07%
Nabors Industries Ltd. 2.26% 39.47%
Magna International Inc. 2.22% -2.40%
North Fork Bancorporation Inc. 2.18% -10.90%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market Capitalization: $5.3 billion
Weighted Average P/E
(based on estimated earnings): 15.0
Beta: 0.79
Fund Standard Deviation: 9.53
S&P 500 Standard Deviation: 11.57
Portfolio Turnover
(for fiscal year): 28%
Number of Securities: 67
Expense Ratio
(Class A shares for fiscal year): 1.12%
Total Net Assets: $888.4 million
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- -------------------------- -------- -------- ------
Financials 18% 18% 0%
Industrials 15% 13% +2%
Consumer Discretionary 12% 15% -3%
Health Care 12% 9% +3%
Information Technology 12% 13% -1%
Energy 8% 7% +1%
Utilities 6% 5% +1%
Materials 5% 4% +1%
Consumer Staples 3% 4% -1%
REITs 2% 2% 0%
Telecommunication Services 0% 1% -1%
Cash Equivalents 7% 9% -2%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
15
(GRAPHIC)
Growth Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 7.46%
2003 27.68%
2002 -31.82%
2001 -29.45%
2000 -22.00%
1999 94.42%
1998 57.10%
1997 9.78%
1996 16.92%
1995 36.25%
INVESTMENT STRATEGY
Salomon Brothers Asset Management, Inc, Janus Capital Management, LLC, and
OppenheimerFunds, Inc. share management responsibilities for the WM Growth Fund.
During the 2005 fiscal year, attractive stock valuations and reasonable
corporate earnings growth overcame concerns about interest rates, energy prices,
and the potential for inflation. While both large-cap and mid-cap equities
performed well during the period, mid caps substantially outperformed. Within
the mid-cap sector, growth trailed value by a significant margin.
Salomon Brothers reported that the Fund's outperformance was driven by stock
selection, while sector allocations detracted from performance relative to the
benchmark. Stock selection in the health care and information technology sectors
was particularly helpful, with select holdings in the consumer discretionary and
consumer staples sectors also adding to returns. Stock selection in the
financial sector had a negative effect.
Janus cited strong stock selection in the health care sector as the primary
source of the Fund's performance during the period.
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. Your
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 (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 noted above.
International investing involves increased risks due to currency fluctuations,
political or social instability, and differences in accounting standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 9.59% -10.84% 8.04% 9.98% 4/5/93
With Sales Charge 3.57% -11.84% 7.43% 9.49%
CLASS B SHARES Net Asset Value(2) 8.55% -11.63% 7.37% 9.86% 7/1/94
With Sales Charge 3.55% -12.29% 7.37% 9.86%
CLASS C SHARES Net Asset Value(2) 8.85% -- -- 1.61% 3/1/02
With Sales Charge 7.85% -- -- 1.61%
Russell 1000(R) Growth Index(3) 8.81% -7.93% 6.78% 8.20%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
RUSSELL 1000
DATE NAV MOP GROWTH INDEX
- ------ ------ ------ ------------
OCT-95 10,000 9,450 10,000
Nov-95 10,446 9,872 10,389
Dec-95 10,496 9,919 10,448
Jan-96 10,742 10,151 10,798
Feb-96 11,262 10,643 10,996
Mar-96 11,344 10,720 11,010
Apr-96 11,954 11,297 11,300
May-96 12,192 11,522 11,694
Jun-96 11,672 11,030 11,710
Jul-96 10,853 10,256 11,024
Aug-96 11,575 10,938 11,309
Sep-96 12,334 11,655 12,132
Oct-96 11,924 11,268 12,205
Nov-96 12,356 11,676 13,121
Dec-96 12,272 11,597 12,864
Jan-97 12,871 12,163 13,766
Feb-97 12,298 11,622 13,672
Mar-97 11,490 10,858 12,933
Apr-97 11,663 11,022 13,791
May-97 12,462 11,777 14,787
Jun-97 12,940 12,228 15,379
Jul-97 14,042 13,270 16,738
Aug-97 13,287 12,556 15,759
Sep-97 14,068 13,294 16,534
Oct-97 13,677 12,925 15,922
Nov-97 13,617 12,868 16,599
Dec-97 13,471 12,730 16,785
Jan-98 13,889 13,125 17,287
Feb-98 15,189 14,353 18,587
Mar-98 15,919 15,044 19,328
Apr-98 16,518 15,609 19,595
May-98 16,014 15,133 19,039
Jun-98 17,524 16,560 20,204
Jul-98 17,449 16,489 20,070
Aug-98 14,468 13,673 17,058
Sep-98 16,215 15,323 18,368
Oct-98 16,747 15,826 19,845
Nov-98 17,877 16,894 21,355
Dec-98 21,165 20,001 23,281
Jan-99 23,969 22,651 24,648
Feb-99 23,176 21,901 23,521
Mar-99 25,991 24,562 24,761
Apr-99 27,314 25,812 24,793
May-99 25,782 24,364 24,032
Jun-99 27,847 26,316 25,714
Jul-99 26,753 25,281 24,896
Aug-99 27,494 25,982 25,302
Sep-99 28,838 27,252 24,771
Oct-99 30,975 29,272 26,641
Nov-99 34,364 32,474 28,077
Dec-99 41,151 38,887 30,997
Jan-00 41,221 38,954 29,543
Feb-00 46,278 43,733 30,988
Mar-00 47,088 44,498 33,207
Apr-00 42,817 40,462 31,626
May-00 39,002 36,857 30,032
Jun-00 40,106 37,900 32,309
Jul-00 39,472 37,301 30,961
Aug-00 42,405 40,073 33,763
Sep-00 40,294 38,077 30,569
Oct-00 38,472 36,356 29,123
Nov-00 32,194 30,423 24,831
Dec-00 32,094 30,329 24,046
Jan-01 33,599 31,751 25,708
Feb-01 27,202 25,706 21,342
Mar-01 24,354 23,014 19,020
Apr-01 28,737 27,157 21,426
May-01 27,915 26,380 21,111
Jun-01 26,846 25,370 20,622
Jul-01 25,311 23,919 20,106
Aug-01 22,790 21,536 18,461
Sep-01 20,597 19,465 16,619
Oct-01 20,857 19,710 17,491
Nov-01 22,213 20,991 19,172
Dec-01 22,637 21,392 19,136
Jan-02 21,924 20,718 18,797
Feb-02 19,953 18,855 18,017
Mar-02 20,569 19,438 18,641
Apr-02 19,228 18,171 17,120
May-02 18,913 17,873 16,705
Jun-02 17,105 16,164 15,160
Jul-02 15,707 14,843 14,326
Aug-02 15,899 15,025 14,369
Sep-02 14,557 13,757 12,879
Oct-02 15,707 14,843 14,060
Nov-02 16,639 15,723 14,824
Dec-02 15,434 14,585 13,799
Jan-03 15,119 14,288 13,464
Feb-03 14,873 14,055 13,402
Mar-03 15,023 14,197 13,651
Apr-03 16,228 15,335 14,660
May-03 17,119 16,177 15,392
Jun-03 17,214 16,268 15,604
Jul-03 17,653 16,683 15,993
Aug-03 18,188 17,188 16,391
Sep-03 17,819 16,839 16,215
Oct-03 18,778 17,745 17,127
Nov-03 18,997 17,953 17,307
Dec-03 19,710 18,626 17,905
Jan-04 20,080 18,976 18,271
Feb-04 20,135 19,027 18,388
Mar-04 19,929 18,833 18,046
Apr-04 19,491 18,419 17,836
May-04 19,834 18,743 18,168
Jun-04 20,205 19,093 18,395
Jul-04 19,301 18,240 17,356
Aug-04 19,124 18,072 17,271
Sep-04 19,466 18,396 17,435
Oct-04 19,781 18,693 17,707
Nov-04 20,493 19,366 18,316
Dec-04 21,184 20,019 19,034
Jan-05 20,606 19,472 18,400
Feb-05 20,756 19,615 18,595
Mar-05 20,453 19,328 18,257
Apr-05 20,136 19,029 17,910
May-05 21,195 20,030 18,777
Jun-05 20,879 19,731 18,707
Jul-05 22,076 20,862 19,622
Aug-05 21,829 20,628 19,369
Sep-05 21,925 20,719 19,458
Oct-05 21,677 20,485 19,269
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance between 1999 and 2000
benefited from the agreement of WM Advisors and its affiliates to limit the
Fund's expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 3/31/93. Indices are unmanaged, and individuals cannot
invest directly in an index.
16
(GRAPHIC)
PORTFOLIO MANAGERS
Alan Blake, CFA E. Marc Pinto, CFA William L. Wilby, CFA &
Salomon Brothers Asset Management, Inc Janus Capital Management, LLC Marc L. Baylin, CFA
OppenheimerFunds, Inc.
Meanwhile, the Fund's holdings in industrials, technology, and consumer
discretionaries dragged on returns. Among the top individual contributors to
performance were Motorola and Texas Instruments. Diversified electronics
manufacturer Motorola continued to enjoy strong growth in its resurgent cellular
handset business, while Texas Instruments, a key supplier of semiconductor chips
to Motorola and other handset industry leaders, also benefited from healthy
end-market demand.
Oppenheimer noted that holdings in the health care and energy sectors were
particularly helpful to returns. In health care, Genentech and Amgen were top
gainers. Top contributors in the energy sector included major integrated oil and
gas companies such as ExxonMobil, and oil service providers such as
Schlumberger. On the downside, performance suffered from the Fund's failure to
hold some of the market's better-performing consumer staples stocks, an area in
which Oppenheimer found few attractive growth-oriented investment opportunities.
While both Oppenheimer and Salomon Brothers are optimistic with regard to
prospects for the equity markets in fiscal 2006, Janus is not so sanguine.
Oppenheimer and Salomon Brothers both point to positive economic data and strong
corporate balance sheets as evidence that equity markets may rise significantly
going forward. In contrast, Janus has taken a more subdued outlook, citing the
damage from Hurricanes Rita and Katrina, high oil prices, and inflation fears as
cautionary signs. Each firm remains committed to its core investment discipline
and philosophy.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
General Electric Co. 3.71% 1.89%
Amgen Inc. 3.25% 32.93%
Microsoft Corp. 3.06% 3.14%
Home Depot Inc. 3.02% 0.86%
Genentech Inc. 2.90% 98.25%
Procter & Gamble Co. 2.75% 11.51%
Yahoo! Inc. 2.74% 2.14%
Motorola Inc. 2.54% 44.43%
Medtronic Inc. 2.42% 11.57%
UnitedHealth Group Inc. 2.42% 59.56%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market Capitalization: $84.8 billion
Weighted Average P/E (based on estimated earnings): 19.1
Beta: 1.06
Fund Standard Deviation: 11.06
S&P 500 Standard Deviation: 11.57
Portfolio Turnover (for fiscal year): 78%
Number of Securities: 157
Expense Ratio (Class A shares for fiscal year): 1.41%
Total Net Assets: $1.7 billion
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- -------------------------- -------- -------- ------
Information Technology 27% 24% +3%
Health Care 21% 18% +3%
Consumer Discretionary 20% 18% +2%
Financials 9% 9% 0%
Consumer Staples 8% 7% +1%
Industrials 6% 12% -6%
Energy 4% 5% -1%
Materials 2% 2% 0%
Telecommunication Services 1% 1% 0%
Cash Equivalents 2% 4% -2%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
17
(GRAPHIC)
Small Cap Value Fund
(GRAPHIC)
INVESTMENT STRATEGY
During the 2005 fiscal year, the WM Small Cap Value Fund was impacted primarily
by rising oil prices, increases in short-term interest rates, and investors'
willingness to take on greater risk in the equity markets. The economy grew at a
solid pace during the period, with reasonable gains in employment and sustained
strength in consumer spending. Although oil prices soared, core inflation (which
excludes food and energy) remained relatively benign. Continuing with the course
it began in June 2004, the Federal Reserve (the Fed) raised the federal funds
target rate eight times during the period, bringing the target rate to 3.75% by
the end of the fiscal year. Broadly speaking, these forces combined to create
reasonably strong returns in the equity markets, including the small-cap value
space.
On a sector basis, the Fund benefited substantially from its holdings in energy,
which rose on the back of high oil and gas prices. The Fund also gained from its
exposure to the materials sector, which continued to experience strong demand
from China.
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. Your
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 (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 noted above.
Small-cap and mid-cap stocks may have additional risks, including greater price
volatility. International investing involves increased risks due to currency
fluctuations, political or social instability, and differences in accounting
standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year Since Inception Inception Date
------ --------------- --------------
CLASS A SHARES Net Asset Value(2) 9.04% 10.31% 3/1/04
With Sales Charge 3.04% 6.66%
CLASS B SHARES Net Asset Value(2) 8.08% 9.30% 3/1/04
With Sales Charge 3.08% 6.47%
CLASS C SHARES Net Asset Value(2) 8.08% 9.42% 3/1/04
With Sales Charge 6.08% 9.42%
Russell 2000(R) Value Index(3) 13.04% 10.18%
VALUE OF A $10,000 INVESTMENT(1) MARCH 1, 2004 - OCTOBER 31, 2005
(LINE CHART)
DATE NAV MOP Russell 2000 Value Index
- ------ ------ ------ ------------------------
Feb-04 10,000 9,450 10,000
Mar-04 10,190 9,630 10,138
Apr-04 9,690 9,157 9,614
May-04 9,650 9,119 9,730
Jun-04 10,050 9,498 10,224
Jul-04 9,970 9,422 9,754
Aug-04 10,070 9,516 9,850
Sep-04 10,580 9,998 10,240
Oct-04 10,810 10,216 10,399
Nov-04 11,740 11,094 11,321
Dec-04 11,989 11,329 11,591
Jan-05 11,817 11,167 11,143
Feb-05 12,140 11,472 11,365
Mar-05 12,180 11,510 11,130
Apr-05 11,777 11,129 10,556
May-05 12,120 11,453 11,200
Jun-05 12,402 11,720 11,695
Jul-05 12,976 12,263 12,361
Aug-05 12,714 12,015 12,076
Sep-05 12,422 11,738 12,056
Oct-05 11,787 11,139 11,753
See Glossary on page 38 for definitions of indices and terms.
(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.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 2/29/04. Indices are unmanaged, and individuals cannot
invest directly in an index.
18
(GRAPHIC)
(PHOTO OF DAVID W. SIMPSON) PORTFOLIO MANAGER
David W. Simpson, CFA
WM Advisors, Inc.
On the downside, the Fund's exposure to the consumer discretionary sector
detracted from returns, as did its exposure to airlines. Several of the Fund's
consumer discretionary holdings fell on slowing consumer demand, while its
airline holdings generally suffered from a sharp rise in fuel costs.
During the period, the Fund trimmed its exposure to the energy sector, but
remained overweighted versus its benchmark. Meanwhile, it retained its
underweighting in the financial sector, as the flattening yield curve appeared
to make it more difficult for financial firms to sustain growth. Within the
technology sector, the Fund took advantage of compelling valuations in order to
increase its holdings to a market weighting.
Looking forward, we are somewhat concerned that rising short-term interest rates
and increased energy prices will challenge the U.S. consumer in the upcoming
fiscal period. For the past few years, consumers have enjoyed historically low
interest rates, and many have been able to refinance their mortgages and draw on
home equity lines of credit. If these dynamics were to change for the worse,
consumer spending could be impacted significantly. This in turn could lead to a
slowdown in the economy, given that consumer spending currently constitutes
about two-thirds of gross domestic product. In this scenario, small-cap value
equities would likely experience slower growth than in fiscal 2005.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
Kingsgate Consolidated Ltd. 2.38% 46.24%
Metal Management Inc. 2.13% 34.21%
Geac Computer Corp. Ltd. 2.06% 28.52%
Cimarex Energy Co. 1.89% 74.31%
New Flyer Industries Inc. 1.85% -15.41%
Randgold Resources Ltd. 1.77% 25.03%
Navigators Group Inc. 1.75% 31.37%
Tenneco Inc. 1.71% 29.49%
Bradley Pharmaceuticals Inc. 1.70% -27.17%
Fresh Del Monte Produce Inc. 1.66% 2.09%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market Capitalization: $1.0 billion
Weighted Average P/E (based on estimated earnings): 12.1
Portfolio Turnover (for fiscal year): 54%
Number of Securities: 82
Expense Ratio (Class A shares for fiscal year): 1.29%
Total Net Assets: $339.3 million
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- -------------------------- -------- -------- ------
Industrials 14% 15% -1%
Financials 13% 11% +2%
Materials 11% 10% +1%
Consumer Discretionary 11% 8% +3%
Energy 11% 14% -3%
Information Technology 11% 9% +2%
Consumer Staples 7% 7% 0%
Health Care 6% 3% +3%
REITs 4% 7% -3%
Options 3% 3% 0%
Telecommunication Services 3% 3% 0%
Utilities 1% 2% -1%
Cash Equivalents 5% 8% -3%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
19
(GRAPHIC)
Small Cap Growth Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 4.18%
2003 69.47%
2002 -47.41%
2001 -13.15%
2000 -11.53%
1999 71.61%
1998 4.94%
1997 12.63%
1996 8.50%
1995 32.26%
INVESTMENT STRATEGY
Delaware Management Company and Oberweis Asset Management, Inc. share management
responsibilities for the WM Small Cap Growth Fund.
During the 2005 fiscal year, attractive stock valuations and reasonable
corporate earnings growth overcame concerns about interest rates, energy prices,
and the potential for inflation. While both large-cap and small-cap equities
performed well during the period, small caps outperformed. Within the small-cap
sector, growth slightly trailed value.
Oberweis cited stock selection in the health care and consumer discretionary
sectors as the primary contributors to Fund performance during the period. On an
individual security basis, top performers included aQuantive, Ceradyne, and
LCA-Vision. Online advertising agency aQuantive rose on increasing revenues in
the online ad space. Ceradyne, which develops products using advanced technical
ceramics, gained on increasing orders from the U.S. Army for items such as
lightweight body armor. LCA-Vision rose due to increasing volumes of laser
refractive eye surgeries in the U.S. and Canada. Top detractors included Tessera
Technologies, Greenfield Online, and
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. Your
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 (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 noted above.
Small-cap and mid-cap stocks may have additional risks, including greater price
volatility.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 7.15% -8.39% 4.85% 7.88% 7/18/90
With Sales Charge 1.24% -9.41% 4.26% 7.48%
CLASS B SHARES Net Asset Value(2) 5.93% -9.34% 4.11% 6.44% 7/1/94
With Sales Charge 0.93% -9.94% 4.11% 6.44%
CLASS C SHARES Net Asset Value(2) 6.21% -- -- 1.85% 3/1/02
With Sales Charge 5.21% -- -- 1.85%
Russell 2000(R) Growth Index(3) 10.91% -1.62% 4.81% 7.37%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
RUSSELL 2000
DATE NAV MOP GROWTH INDEX
- ------ ------ ------ ------------
OCT-95 10,000 9,450 10,000
Nov-95 10,151 9,593 10,441
Dec-95 10,784 10,191 10,673
Jan-96 10,626 10,042 10,584
Feb-96 11,191 10,575 11,067
Mar-96 11,913 11,258 11,286
Apr-96 12,253 11,579 12,153
May-96 12,727 12,027 12,776
Jun-96 12,247 11,574 11,946
Jul-96 10,754 10,162 10,487
Aug-96 11,610 10,971 11,263
Sep-96 12,010 11,350 11,843
Oct-96 11,615 10,976 11,333
Nov-96 11,755 11,108 11,648
Dec-96 11,699 11,056 11,875
Jan-97 11,337 10,713 12,172
Feb-97 11,066 10,457 11,437
Mar-97 10,195 9,634 10,629
Apr-97 10,235 9,672 10,506
May-97 11,462 10,831 12,085
Jun-97 12,062 11,399 12,495
Jul-97 12,155 11,487 13,134
Aug-97 12,274 11,599 13,528
Sep-97 13,080 12,360 14,608
Oct-97 12,828 12,123 13,730
Nov-97 12,894 12,185 13,403
Dec-97 13,176 12,452 13,411
Jan-98 13,022 12,306 13,233
Feb-98 14,099 13,324 14,401
Mar-98 14,742 13,931 15,006
Apr-98 14,637 13,832 15,098
May-98 13,567 12,821 14,000
Jun-98 13,623 12,874 14,143
Jul-98 12,589 11,897 12,962
Aug-98 9,716 9,182 9,970
Sep-98 10,590 10,007 10,981
Oct-98 11,359 10,734 11,555
Nov-98 12,554 11,863 12,451
Dec-98 13,827 13,066 13,578
Jan-99 13,735 12,980 14,189
Feb-99 12,447 11,762 12,891
Mar-99 12,357 11,678 13,350
Apr-99 12,920 12,209 14,529
May-99 13,803 13,044 14,552
Jun-99 14,910 14,090 15,319
Jul-99 15,356 14,512 14,845
Aug-99 15,100 14,269 14,290
Sep-99 15,405 14,557 14,566
Oct-99 16,198 15,307 14,939
Nov-99 18,725 17,695 16,518
Dec-99 23,728 22,423 19,428
Jan-00 25,491 24,089 19,248
Feb-00 33,809 31,950 23,727
Mar-00 30,006 28,355 21,233
Apr-00 23,887 22,574 19,088
May-00 21,948 20,741 17,416
Jun-00 26,991 25,507 19,666
Jul-00 25,715 24,300 17,981
Aug-00 28,428 26,864 19,873
Sep-00 26,591 25,129 18,885
Oct-00 24,876 23,508 17,351
Nov-00 20,886 19,737 14,200
Dec-00 20,995 19,840 15,069
Jan-01 24,263 22,929 16,289
Feb-01 19,600 18,522 14,055
Mar-01 16,429 15,525 12,778
Apr-01 18,854 17,817 14,342
May-01 20,087 18,982 14,675
Jun-01 22,338 21,110 15,075
Jul-01 18,724 17,694 13,789
Aug-01 17,425 16,466 12,927
Sep-01 13,117 12,396 10,842
Oct-01 14,719 13,909 11,885
Nov-01 16,850 15,923 12,878
Dec-01 18,235 17,232 13,680
Jan-02 16,392 15,490 13,193
Feb-02 14,616 13,812 12,339
Mar-02 16,506 15,598 13,412
Apr-02 14,189 13,408 13,122
May-02 12,529 11,840 12,354
Jun-02 11,469 10,838 11,307
Jul-02 9,417 8,899 9,569
Aug-02 9,037 8,540 9,564
Sep-02 8,472 8,006 8,874
Oct-02 9,463 8,942 9,323
Nov-02 10,811 10,217 10,246
Dec-02 9,590 9,062 9,539
Jan-03 9,693 9,160 9,280
Feb-03 9,267 8,757 9,032
Mar-03 9,094 8,593 9,169
Apr-03 10,073 9,519 10,036
May-03 11,859 11,207 11,167
Jun-03 12,032 11,370 11,382
Jul-03 12,908 12,198 12,243
Aug-03 13,611 12,863 12,900
Sep-03 13,692 12,939 12,574
Oct-03 15,466 14,615 13,660
Nov-03 15,813 14,943 14,106
Dec-03 16,251 15,357 14,169
Jan-04 17,507 16,544 14,913
Feb-04 17,437 16,478 14,891
Mar-04 17,310 16,358 14,961
Apr-04 16,088 15,203 14,210
May-04 15,972 15,094 14,492
Jun-04 16,248 15,355 14,975
Jul-04 14,071 13,297 13,630
Aug-04 13,967 13,199 13,337
Sep-04 14,693 13,885 14,075
Oct-04 14,981 14,157 14,417
Nov-04 15,938 15,062 15,635
Dec-04 16,930 15,999 16,196
Jan-05 16,134 15,247 15,467
Feb-05 15,823 14,953 15,679
Mar-05 14,763 13,951 15,091
Apr-05 13,576 12,829 14,132
May-05 14,671 13,864 15,128
Jun-05 15,293 14,452 15,617
Jul-05 16,388 15,487 16,708
Aug-05 16,146 15,258 16,473
Sep-05 16,411 15,508 16,603
Oct-05 16,053 15,170 15,988
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance between 1998 and 1999
benefited from the agreement of WM Advisors and its affiliates to limit the
Fund's expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 7/31/90. Indices are unmanaged, and individuals cannot
invest directly in an index.
20
(GRAPHIC)
PORTFOLIO MANAGERS
Emerging Growth Team James W. Oberweis, CFA
Delaware Management Company Oberweis Asset Management, Inc.
SigmaTel. Tessera was hurt by weakness in semiconductor manufacturing, while
Greenfield Online and SigmaTel were sold due to liquidity risk.
Delaware cited strong stock selection in the consumer discretionary and health
care sectors as particularly helpful to performance. Top gainers included Urban
Outfitters, Coach, CV Therapeutics, and United Therapeutics. In contrast, sector
allocation generally detracted from returns. Specifically, the Fund's
underweighting in the energy sector was problematic.
Looking forward, Oberweis believes that energy prices will likely continue to
influence market fundamentals in the months to come. While natural catastrophes
and fluctuations in oil prices have fueled market volatility, the firm believes
that such conditions can offer attractive buying opportunities should the market
overreact. In their view, equity valuations remain quite reasonable, and current
conditions offer better-than-average investment opportunities within the
small-cap growth space. The firm continues to focus on exploiting market
inefficiencies through stock-specific research.
Delaware has concerns about the negative effects of higher energy prices and
interest rates on the consumer. They too believe that the market may overreact
to energy price shocks in the short term. With this in mind, they have chosen to
maintain their holdings in the highest-quality consumer names--those that should
be able to generate solid results and could be the beneficiaries of a return to
more neutral sentiment. They have further reduced their exposure to financial
stocks, reallocating much of the reduction to technology.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
United Therapeutics Corp. 2.09% 135.17%
aQuantive Inc. 1.92% 140.74%
Ceradyne Inc. 1.67% 36.86%
Coach Inc. 1.67% 37.78%
Kos Pharmaceuticals Inc. 1.66% 67.59%
SFBC International Inc. 1.46% 52.97%
Urban Outfitters Inc. 1.42% 37.95%
Hibbett Sporting Goods Inc. 1.38% 75.42%
Carrizo Oil & Gas Inc. 1.37% 159.35%
Euronet Worldwide Inc. 1.35% 22.60%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market
Capitalization: $1.2 billion
Weighted Average P/E (based on estimated earnings): 23.8
Beta: 1.96
Fund Standard Deviation: 23.31
S&P 500 Standard Deviation: 11.57
Portfolio Turnover (for fiscal year): 251%
Number of Securities: 157
Expense Ratio (Class A shares for fiscal year): 1.51%
Total Net Assets: $337.4 million
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- ---------------------------------------- -------- -------- ------
Health Care 28% 22% +6%
Consumer Discretionary 14% 15% -1%
Industrials 11% 12% -1%
Internet Software & Services 9% 8% +1%
Communications Equipment 7% 4% +3%
Energy 6% 3% +3%
Semiconductors & Semiconductor Equipment 6% 2% +4%
Software 5% 11% -6%
Financials 4% 8% -4%
Consumer Staples 2% 4% -2%
IT Services 2% 2% 0%
Computers & Peripherals 1% 1% 0%
Telecommunication Services 1% 1% 0%
REITs 1% 0% +1%
Electronic Equipment & Instruments 0% 4% -4%
Materials 0% 3% -3%
Cash Equivalents 3% 0% +3%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
21
(GRAPHIC)
International Growth Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 12.78%
2003 33.33%
2002 -15.61%
2001 -18.72%
2000 -21.15%
1999 49.91%
1998 4.08%
1997 -2.49%
1996 8.02%
1995 4.87%
INVESTMENT STRATEGY
International equity markets enjoyed solid gains for fiscal 2005, led by the
Japanese stock market. Markets rose despite the headwinds of soaring energy
prices, two devastating hurricanes in the U.S., rising costs for companies and
consumers, and questions about the strength of the global economy. Largely aided
by foreign investment, Japan's Nikkei 225 Average reached four-year highs
toward the end of the fiscal year on optimism about economic recovery and
reform. European equity markets overcame political stalemate and a loss of
momentum on economic reforms in Germany.
With relatively low interest rates across Europe, stocks in a variety of sectors
were buoyed by rising merger-and-acquisition activity as well as speculation
about further industrial consolidation.
Strong markets and stock selection helped absolute and relative Fund returns for
the period. Many domestically-oriented holdings in Japan were additive to
results, including those in banking, real estate, and retail. Top Japanese
contributors for the fiscal year included Sumitomo Mitsui, Mitsubishi Estate,
and Orix Corporation. The Fund's
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. Your
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 (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 noted above.
International investing involves increased risks due to currency fluctuations,
political or social instability, and differences in accounting standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 17.60% 1.54% 4.19% 3.27% 7/18/90
With Sales Charge 11.09% 0.39% 3.60% 2.89%
CLASS B SHARES Net Asset Value(2) 16.36% 0.47% 3.47% 2.89% 7/1/94
With Sales Charge 11.36% 0.07% 3.47% 2.89%
CLASS C SHARES Net Asset Value(2) 16.60% -- -- 8.99% 3/1/02
With Sales Charge 15.60% -- -- 8.99%
Morgan Stanley Capital
International EAFE Index(3) 18.59% 3.42% 6.15% 5.68%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
MSCI EAFE
DATE NAV MOP INDEX
- ------ ------ ------ ---------
OCT-95 10,000 9,450 10,000
Nov-95 10,101 9,545 10,281
Dec-95 10,518 9,940 10,697
Jan-96 10,890 10,291 10,743
Feb-96 10,805 10,211 10,782
Mar-96 10,900 10,301 11,014
Apr-96 11,059 10,451 11,337
May-96 11,017 10,411 11,130
Jun-96 11,123 10,511 11,196
Jul-96 10,593 10,010 10,871
Aug-96 10,720 10,130 10,897
Sep-96 10,964 10,361 11,189
Oct-96 10,889 10,290 11,077
Nov-96 11,377 10,751 11,521
Dec-96 11,362 10,737 11,375
Jan-97 11,417 10,789 10,980
Feb-97 11,514 10,881 11,162
Mar-97 11,428 10,799 11,205
Apr-97 11,601 10,963 11,267
May-97 12,327 11,649 12,003
Jun-97 12,848 12,141 12,668
Jul-97 13,282 12,551 12,875
Aug-97 12,154 11,486 11,916
Sep-97 12,805 12,100 12,586
Oct-97 11,385 10,758 11,622
Nov-97 11,135 10,523 11,506
Dec-97 11,080 10,470 11,609
Jan-98 11,164 10,550 12,143
Feb-98 11,876 11,223 12,925
Mar-98 12,516 11,828 13,326
Apr-98 12,830 12,125 13,434
May-98 12,721 12,022 13,372
Jun-98 12,310 11,633 13,476
Jul-98 12,443 11,759 13,616
Aug-98 10,681 10,094 11,932
Sep-98 10,162 9,603 11,569
Oct-98 10,694 10,106 12,778
Nov-98 11,285 10,664 13,436
Dec-98 11,532 10,898 13,970
Jan-99 11,658 11,017 13,932
Feb-99 11,306 10,684 13,603
Mar-99 11,734 11,089 14,175
Apr-99 12,150 11,481 14,752
May-99 11,661 11,020 13,995
Jun-99 12,430 11,746 14,543
Jul-99 12,933 12,222 14,980
Aug-99 13,122 12,400 15,038
Sep-99 13,399 12,662 15,193
Oct-99 14,029 13,257 15,766
Nov-99 15,137 14,304 16,318
Dec-99 17,292 16,341 17,785
Jan-00 16,388 15,487 16,657
Feb-00 16,911 15,981 17,108
Mar-00 17,344 16,390 17,776
Apr-00 16,529 15,619 16,844
May-00 15,765 14,898 16,437
Jun-00 16,643 15,728 17,083
Jul-00 15,688 14,825 16,370
Aug-00 15,981 15,102 16,516
Sep-00 14,695 13,886 15,715
Oct-00 13,969 13,200 15,347
Nov-00 13,396 12,659 14,775
Dec-00 13,636 12,886 15,304
Jan-01 13,948 13,181 15,296
Feb-01 12,740 12,039 14,150
Mar-01 12,022 11,360 13,214
Apr-01 13,079 12,360 14,140
May-01 12,524 11,835 13,652
Jun-01 11,940 11,283 13,099
Jul-01 11,560 10,924 12,862
Aug-01 11,194 10,578 12,539
Sep-01 9,891 9,347 11,271
Oct-01 10,339 9,770 11,560
Nov-01 10,922 10,321 11,987
Dec-01 11,084 10,474 12,059
Jan-02 10,564 9,983 11,418
Feb-02 10,646 10,061 11,499
Mar-02 11,249 10,630 12,127
Apr-02 11,235 10,617 12,214
May-02 11,262 10,643 12,381
Jun-02 10,755 10,164 11,893
Jul-02 9,701 9,168 10,720
Aug-02 9,565 9,039 10,699
Sep-02 8,582 8,110 9,553
Oct-02 9,268 8,758 10,067
Nov-02 9,844 9,302 10,525
Dec-02 9,354 8,840 10,172
Jan-03 8,982 8,488 9,748
Feb-03 8,776 8,293 9,525
Mar-03 8,486 8,019 9,345
Apr-03 9,300 8,788 10,272
May-03 9,796 9,258 10,904
Jun-03 10,003 9,453 11,173
Jul-03 10,375 9,805 11,446
Aug-03 10,665 10,078 11,724
Sep-03 10,858 10,260 12,087
Oct-03 11,561 10,925 12,841
Nov-03 11,713 11,068 13,129
Dec-03 12,472 11,786 14,156
Jan-04 12,583 11,891 14,357
Feb-04 12,778 12,075 14,691
Mar-04 12,847 12,141 14,779
Apr-04 12,430 11,746 14,457
May-04 12,443 11,759 14,519
Jun-04 12,569 11,878 14,843
Jul-04 12,152 11,484 14,364
Aug-04 12,249 11,575 14,430
Sep-04 12,430 11,747 14,809
Oct-04 12,820 12,115 15,316
Nov-04 13,544 12,799 16,366
Dec-04 14,067 13,294 17,085
Jan-05 13,772 13,014 16,772
Feb-05 14,277 13,492 17,500
Mar-05 13,897 13,133 17,068
Apr-05 13,546 12,801 16,686
May-05 13,574 12,828 16,711
Jun-05 13,729 12,974 16,939
Jul-05 14,207 13,425 17,460
Aug-05 14,811 13,996 17,906
Sep-05 15,372 14,526 18,707
Oct-05 15,077 14,248 18,163
See Glossary on page 38 for definitions of indices and terms.
(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.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 7/31/90. Indices are unmanaged, and individuals cannot
invest directly in an index.
22
(GRAPHIC)
PORTFOLIO MANAGER
International Equity Team
Capital Guardian Trust Company
underweighting in energy hurt relative returns during the period, but
investments in companies such as Royal Dutch/Shell, South Africa-listed Sasol,
and Spain's Repsol YPF were all positives. Emerging markets generally
outperformed developed markets during the fiscal year. The Fund benefited from
strong stock selection in holdings from Mexico, South Korea, and South Africa.
There were few significant shifts in overall Fund weightings during the period.
The largest shift came in the consumer discretionary sector (primarily within
the automobile industry), which ended the fiscal year at 9.2% of overall Fund
assets, down from 11.9% in the previous period. The health care sector
represented 8.6% of Fund assets at fiscal year-end, down from 11.3% at the
beginning of the period, primarily due to share price decreases in the
pharmaceutical industry.
While keenly aware of the risks to the global economy and corporate profits, we
continue to have a relatively sanguine view of the global economy and
international equity markets. Chinese demand remains strong; interest rates are
still low in many parts of the world; there is a continuing need for
infrastructure improvement; Japan's domestic economy appears to be on better
footing; corporate restructuring is still occurring in Europe and Japan; and
valuations remain attractive in many international markets, especially relative
to bonds. Broadly speaking, the investments we favor are still related to
restructuring, growth, and those companies that are using their cash-rich
balance sheets to do the right things for shareholders, such as dividend
increases and stock repurchases.
TOP 10 HOLDINGS(4) AS OF OCTOBER 31, 2005
% of Net Assets Total Return(5)
--------------- ---------------
Vodafone Group PLC 2.81% 2.31%
Mitsubishi UFJ Financial Group Inc. 2.63% 66.05%
Sumitomo Mitsui Financial Group Inc. 2.61% 41.23%
Novartis AG 1.89% 12.50%
BNP Paribas SA 1.74% 11.16%
Royal Dutch/Shell Group (A shares) 1.71% 13.29%
Sanofi-Aventis SA 1.62% 9.30%
Mitsubishi Estate Company Ltd. 1.46% 39.22%
Royal Bank of Scotland 1.39% -6.18%
Siemens AG 1.37% -0.28%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Market Capitalization: $45.5 billion
Weighted Average P/E (based on trailing earnings): 17.4
Beta: 1.02
Fund Standard Deviation: 11.90
S&P 500 Standard Deviation: 11.57
Portfolio Turnover (for fiscal year): 24%
Number of Securities: 253
Expense Ratio (Class A shares for fiscal year): 1.39%
Total Net Assets: $842.1 million
GEOGRAPHIC BREAKDOWN(4)
(PIE CHART)
As of As of
Country 10/31/05 10/31/04 Change
- ---------------- -------- -------- ------
Japan 29% 22% +7%
United Kingdom 16% 18% -2%
France 9% 11% -2%
Switzerland 8% 10% -2%
Germany 7% 5% +2%
Netherlands 6% 8% -2%
Spain 5% 4% +1%
Canada 4% 4% 0%
Australia 2% 3% -1%
Sweden 2% 1% +1%
Other Countries 9% 10% -1%
Cash Equivalents 3% 4% -1%
(4) May not reflect the current portfolio composition.
(5) Performance information provided for individual securities held by the Fund
represents performance for the fiscal year ended 10/31/05. The Fund may not
have held these securities throughout the entire period.
23
(GRAPHIC)
Short Term Income Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 1.62%
2003 4.60%
2002 5.63%
2001 7.96%
2000 7.61%
1999 2.92%
1998 6.30%
1997 5.77%
1996 4.09%
1995 10.03%
INVESTMENT STRATEGY
During the 2005 fiscal year, the WM Short Term Income Fund's performance was
most influenced by the actions of the Federal Reserve (the Fed). Continuing with
the course it began in June 2004, the Fed raised the federal funds target rate
eight times during the period, bringing the target rate to 3.75% by the end of
the fiscal year. In the balance of its policy statements, the Fed acknowledged
the inflationary risks posed by short-term price spikes in energy and other
consumer goods, but remained confident that long-term inflation would be muted.
Short- and intermediate-term bond yields moved upward in conjunction with the
Fed's actions.
On a broad basis, the rise in short-term interest rates hurt Fund performance
during the period. Helping offset this, the Fund gained from its positions in
health care, REITs, and mortgage-backed securities (MBS), including
collateralized mortgage obligations (CMOs). Individual securities that were
particularly helpful to performance included Nationwide Health Properties
(REITs), Cardinal Health (health care), and
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. Your
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 3.5%; Class B shares: contingent deferred sales
charge of 4%, which declines over 4 years (4-4-3-2-0%); 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 noted above.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. There may be additional credit and default risks
associated with lower-rated securities. REIT securities are subject to risk
factors associated with the real estate industry and tax factors of REIT
registration.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 0.49% 4.56% 4.90% 4.60% 11/1/93
With Sales Charge -3.17% 3.84% 4.51% 4.29%
CLASS B SHARES Net Asset Value(2) -0.26% 3.78% 4.27% 4.38% 7/1/94
With Sales Charge -4.26% 3.78% 4.27% 4.38%
CLASS C SHARES Net Asset Value(2) -0.26% -- -- 2.41% 3/1/02
With Sales Charge -1.26% -- -- 2.41%
Citigroup Broad Investment-Grade
Credit 1-3 Years Index(3) 1.17% 5.39% 5.79% 5.80%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
Citigroup Broad
Investment Grade
Credit 1-3
Date NAV MOP Years Index
- ------ ------ ------ ----------------
Oct-95 10,000 9,650 10,000
Nov-95 10,095 9,742 10,090
Dec-95 10,192 9,835 10,173
Jan-96 10,289 9,929 10,264
Feb-96 10,213 9,855 10,229
Mar-96 10,178 9,822 10,227
Apr-96 10,141 9,786 10,236
May-96 10,150 9,795 10,267
Jun-96 10,248 9,890 10,343
Jul-96 10,305 9,944 10,385
Aug-96 10,317 9,956 10,424
Sep-96 10,417 10,052 10,525
Oct-96 10,513 10,145 10,653
Nov-96 10,604 10,233 10,737
Dec-96 10,609 10,238 10,739
Jan-97 10,614 10,242 10,799
Feb-97 10,669 10,295 10,824
Mar-97 10,681 10,307 10,822
Apr-97 10,732 10,356 10,909
May-97 10,828 10,449 10,989
Jun-97 10,879 10,499 11,071
Jul-97 11,030 10,643 11,212
Aug-97 11,036 10,650 11,216
Sep-97 11,086 10,698 11,310
Oct-97 11,142 10,752 11,382
Nov-97 11,148 10,758 11,401
Dec-97 11,223 10,830 11,475
Jan-98 11,325 10,928 11,592
Feb-98 11,321 10,925 11,608
Mar-98 11,372 10,974 11,664
Apr-98 11,423 11,024 11,727
May-98 11,474 11,072 11,797
Jun-98 11,524 11,121 11,857
Jul-98 11,576 11,171 11,920
Aug-98 11,729 11,318 12,011
Sep-98 11,881 11,465 12,174
Oct-98 11,884 11,468 12,191
Nov-98 11,881 11,465 12,231
Dec-98 11,931 11,514 12,289
Jan-99 11,984 11,564 12,369
Feb-99 11,927 11,510 12,330
Mar-99 12,026 11,605 12,438
Apr-99 12,076 11,653 12,495
May-99 12,024 11,603 12,479
Jun-99 12,024 11,603 12,518
Jul-99 12,077 11,654 12,537
Aug-99 12,080 11,657 12,569
Sep-99 12,206 11,779 12,665
Oct-99 12,223 11,795 12,707
Nov-99 12,278 11,848 12,749
Dec-99 12,280 11,851 12,782
Jan-00 12,283 11,853 12,791
Feb-00 12,338 11,906 12,885
Mar-00 12,396 11,962 12,951
Apr-00 12,399 11,965 12,948
May-00 12,457 12,021 12,990
Jun-00 12,625 12,183 13,151
Jul-00 12,684 12,241 13,259
Aug-00 12,745 12,299 13,374
Sep-00 12,860 12,410 13,505
Oct-00 12,920 12,468 13,511
Nov-00 13,038 12,582 13,638
Dec-00 13,215 12,753 13,803
Jan-01 13,392 12,924 14,065
Feb-01 13,453 12,982 14,179
Mar-01 13,577 13,101 14,311
Apr-01 13,640 13,163 14,358
May-01 13,706 13,226 14,489
Jun-01 13,770 13,288 14,555
Jul-01 13,952 13,464 14,763
Aug-01 14,075 13,582 14,884
Sep-01 14,196 13,699 15,042
Oct-01 14,380 13,877 15,176
Nov-01 14,185 13,688 15,161
Dec-01 14,247 13,749 15,155
Jan-02 14,308 13,808 15,203
Feb-02 14,366 13,863 15,235
Mar-02 14,246 13,748 15,164
Apr-02 14,429 13,924 15,288
May-02 14,551 14,042 15,421
Jun-02 14,613 14,101 15,475
Jul-02 14,553 14,043 15,563
Aug-02 14,676 14,163 15,691
Sep-02 14,797 14,279 15,849
Oct-02 14,672 14,159 15,808
Nov-02 14,821 14,302 15,925
Dec-02 15,047 14,521 16,169
Jan-03 15,171 14,640 16,235
Feb-03 15,286 14,751 16,371
Mar-03 15,275 14,741 16,427
Apr-03 15,454 14,913 16,576
May-03 15,568 15,024 16,736
Jun-03 15,615 15,069 16,804
Jul-03 15,468 14,927 16,685
Aug-03 15,447 14,906 16,713
Sep-03 15,681 15,133 16,910
Oct-03 15,592 15,046 16,858
Nov-03 15,633 15,085 16,877
Dec-03 15,739 15,188 17,005
Jan-04 15,781 15,229 17,069
Feb-04 15,889 15,333 17,168
Mar-04 15,999 15,439 17,246
Apr-04 15,776 15,224 17,072
May-04 15,753 15,201 17,044
Jun-04 15,729 15,178 17,058
Jul-04 15,841 15,286 17,141
Aug-04 15,953 15,395 17,303
Sep-04 15,929 15,372 17,303
Oct-04 16,041 15,480 17,367
Nov-04 15,950 15,392 17,288
Dec-04 15,994 15,435 17,339
Jan-05 15,970 15,411 17,339
Feb-05 15,945 15,387 17,306
Mar-05 15,923 15,365 17,281
Apr-05 16,042 15,481 17,382
May-05 16,090 15,527 17,465
Jun-05 16,137 15,572 17,528
Jul-05 16,117 15,553 17,503
Aug-05 16,235 15,667 17,622
Sep-05 16,144 15,579 17,577
Oct-05 16,123 15,559 17,570
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance between 1995 and 2005
benefited from the agreement of WM Advisors and its affiliates to limit the
Fund's expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 10/31/93. Indices are unmanaged, and individuals cannot
invest directly in an index.
24
(GRAPHIC)
(PHOTO OF CRAIG V. SOSEY) PORTFOLIO MANAGER
Craig V. Sosey
WM Advisors, Inc.
Weyerhaeuser (materials). On the downside, the convertible securities of Sealed
Air (services) detracted from performance, as convertible securities in general
performed poorly over the period. Corporate spreads were generally very tight
versus Treasuries for the fiscal year, thus putting a damper on excess returns.
Portfolio composition was largely unchanged during the period. One notable
exception, however, was that the Fund increased its holdings in CMOs from 11% of
Fund assets at the beginning of the fiscal year to 18% at the close. This
increase resulted from our belief that CMOs would broadly outperform other
market sectors going forward. In contrast, the Fund modestly reduced its
holdings in corporates and asset-backed securities.
Looking forward, we anticipate that the Federal Reserve will continue its
monetary tightening campaign for a few months into fiscal 2006. If this happens,
we believe corporate spreads are likely to remain tight versus Treasuries,
making the front end of the yield curve a difficult place to add value. We would
expect that MBS will continue to outperform, and we will look to find value in
out-of-favor corporates. In our view, economic growth in the upcoming fiscal
year will be weaker than current consensus projections. We also believe that
inflation will be more muted than expected, leaving the Fed room to halt its
tightening campaign relatively early in fiscal 2006.
PORTFOLIO QUALITY(4)
As of As of
Rating 10/31/05 10/31/04 Change
- --------- -------- -------- ------
Aaa 48% 46% +2%
Aa 9% 10% -1%
A 13% 14% -1%
Baa 28% 29% -1%
Not Rated 2% 1% +1%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Maturity (years): 3.1
Weighted Average Duration (years): 1.9
Portfolio Turnover (for fiscal year): 13%
Number of Securities: 93
Expense Ratio (Class A shares for fiscal year):(5) 0.93%
Total Net Assets: $269.0 million
PORTFOLIO COMPOSITION(4)
As of As of
Asset Class 10/31/05 10/31/04 Change
- ------------------------------- -------- -------- ------
Domestic Corporate Bonds 49% 53% -4%
Mortgage-Backed Bonds/CMOs 18% 11% +7%
U.S. Government Agency 10% 13% -3%
U.S. Treasuries 6% 4% +2%
Asset-Backed Bonds 5% 7% -2%
Foreign Corporate Bonds (U.S.$) 5% 4% +1%
Cash Equivalents 7% 8% -1%
(4) May not reflect the current portfolio composition.
(5) If the effects of the Fund's fee waiver were reflected, the Fund's expense
ratio would have been 0.81%. Effective 11/1/05, the Fund's fees are no
longer being waived.
25
(GRAPHIC)
U.S. Government Securities Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 3.56%
2003 1.83%
2002 8.37%
2001 7.16%
2000 10.27%
1999 0.13%
1998 7.21%
1997 9.92%
1996 2.48%
1995 19.45%
INVESTMENT STRATEGY
Continuing with the course it began in June 2004, the Federal Reserve (the Fed)
raised the federal funds target rate eight times during the period, bringing the
target rate to 3.75% by the end of the 2005 fiscal year. While short- and
intermediate-term bond yields moved upward in conjunction with the Fed's
actions, long-term bond yields ended the period virtually unchanged. As a
result, the yield curve (the difference in yields between 2- and 10-year
Treasuries) flattened significantly. During the period, the 10-year Treasury
traded within a relatively tight range as investors tried to discount future
economic growth and Fed actions. Activity in the mortgage market was more
volatile, but excess returns were limited as spreads were compressed across a
range of fixed-income instruments.
As long-term interest rates rose early in the period, prepayments on
mortgage-backed securities (MBS) slowed. This in turn caused the durations on
these securities to extend, which led to further price declines. Interest rates
were volatile through much of the rest
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. Your
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 (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 noted above.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. Neither the principal of government bond funds
nor their yields are guaranteed by the U.S. government.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 1.02% 4.92% 5.42% 7.60% 5/4/84
With Sales Charge -3.51% 3.95% 4.93% 7.37%
CLASS B SHARES Net Asset Value(2) 0.28% 4.16% 4.75% 5.31% 3/30/94
With Sales Charge -4.72% 3.82% 4.75% 5.31%
CLASS C SHARES Net Asset Value(2) 0.29% -- -- 2.62% 3/1/02
With Sales Charge -0.71% -- -- 2.62%
Citigroup Mortgage Index(3) 1.80% 5.86% 6.31% 9.15%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
CITIGROUP
DATE NAV MOP MORTGAGE INDEX
- ------ ------ ------ --------------
OCT-95 10,000 9,550 10,000
Nov-95 10,143 9,687 10,117
Dec-95 10,287 9,824 10,242
Jan-96 10,346 9,881 10,321
Feb-96 10,109 9,654 10,240
Mar-96 10,006 9,556 10,205
Apr-96 9,940 9,493 10,158
May-96 9,913 9,467 10,145
Jun-96 10,041 9,589 10,275
Jul-96 10,062 9,609 10,316
Aug-96 10,025 9,574 10,318
Sep-96 10,205 9,746 10,491
Oct-96 10,456 9,986 10,695
Nov-96 10,689 10,208 10,842
Dec-96 10,543 10,068 10,795
Jan-97 10,565 10,090 10,886
Feb-97 10,576 10,100 10,898
Mar-97 10,426 9,957 10,808
Apr-97 10,613 10,135 10,972
May-97 10,709 10,227 11,074
Jun-97 10,845 10,357 11,202
Jul-97 11,179 10,676 11,409
Aug-97 11,045 10,548 11,388
Sep-97 11,225 10,719 11,524
Oct-97 11,416 10,902 11,648
Nov-97 11,459 10,943 11,688
Dec-97 11,589 11,067 11,794
Jan-98 11,717 11,190 11,904
Feb-98 11,705 11,179 11,940
Mar-98 11,732 11,204 11,986
Apr-98 11,803 11,272 12,053
May-98 11,907 11,371 12,138
Jun-98 12,010 11,470 12,191
Jul-98 12,049 11,507 12,251
Aug-98 12,197 11,648 12,362
Sep-98 12,357 11,801 12,511
Oct-98 12,327 11,772 12,497
Nov-98 12,400 11,842 12,554
Dec-98 12,425 11,865 12,617
Jan-99 12,495 11,933 12,704
Feb-99 12,395 11,838 12,657
Mar-99 12,466 11,905 12,744
Apr-99 12,501 11,938 12,807
May-99 12,421 11,862 12,721
Jun-99 12,339 11,784 12,692
Jul-99 12,280 11,727 12,606
Aug-99 12,269 11,717 12,598
Sep-99 12,449 11,889 12,812
Oct-99 12,499 11,936 12,880
Nov-99 12,499 11,936 12,890
Dec-99 12,441 11,881 12,848
Jan-00 12,372 11,815 12,749
Feb-00 12,508 11,945 12,899
Mar-00 12,632 12,063 13,037
Apr-00 12,635 12,067 13,044
May-00 12,627 12,058 13,054
Jun-00 12,877 12,297 13,336
Jul-00 12,955 12,372 13,422
Aug-00 13,121 12,530 13,620
Sep-00 13,250 12,653 13,766
Oct-00 13,329 12,729 13,868
Nov-00 13,510 12,902 14,073
Dec-00 13,718 13,101 14,298
Jan-01 13,915 13,288 14,520
Feb-01 14,008 13,377 14,600
Mar-01 14,075 13,442 14,695
Apr-01 14,064 13,431 14,711
May-01 14,117 13,482 14,802
Jun-01 14,157 13,520 14,823
Jul-01 14,407 13,759 15,098
Aug-01 14,527 13,873 15,236
Sep-01 14,739 14,076 15,460
Oct-01 14,979 14,305 15,670
Nov-01 14,792 14,126 15,526
Dec-01 14,700 14,039 15,470
Jan-02 14,835 14,168 15,622
Feb-02 14,997 14,322 15,792
Mar-02 14,792 14,126 15,632
Apr-02 15,077 14,399 15,923
May-02 15,186 14,502 16,039
Jun-02 15,309 14,620 16,169
Jul-02 15,486 14,789 16,352
Aug-02 15,623 14,920 16,496
Sep-02 15,759 15,049 16,616
Oct-02 15,784 15,073 16,680
Nov-02 15,751 15,042 16,664
Dec-02 15,930 15,213 16,839
Jan-03 15,954 15,236 16,887
Feb-03 16,075 15,352 17,001
Mar-03 16,053 15,330 16,996
Apr-03 16,115 15,390 17,061
May-03 16,175 15,447 17,069
Jun-03 16,162 15,435 17,105
Jul-03 15,784 15,074 16,796
Aug-03 15,885 15,170 16,905
Sep-03 16,179 15,451 17,194
Oct-03 16,091 15,367 17,135
Nov-03 16,104 15,380 17,185
Dec-03 16,222 15,492 17,354
Jan-04 16,326 15,591 17,465
Feb-04 16,445 15,705 17,617
Mar-04 16,504 15,761 17,694
Apr-04 16,247 15,515 17,383
May-04 16,183 15,455 17,327
Jun-04 16,301 15,568 17,478
Jul-04 16,435 15,695 17,642
Aug-04 16,662 15,912 17,931
Sep-04 16,673 15,923 17,957
Oct-04 16,778 16,023 18,111
Nov-04 16,713 15,961 18,058
Dec-04 16,802 16,045 18,192
Jan-05 16,875 16,116 18,285
Feb-05 16,796 16,040 18,206
Mar-05 16,763 16,008 18,157
Apr-05 16,949 16,186 18,371
May-05 17,057 16,289 18,520
Jun-05 17,101 16,332 18,585
Jul-05 17,004 16,239 18,498
Aug-05 17,160 16,388 18,662
Sep-05 17,063 16,295 18,560
Oct-05 16,948 16,186 18,441
See Glossary on page 38 for definitions of indices and terms.
(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 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.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 4/30/84. Indices are unmanaged, and individuals cannot
invest directly in an index.
26
(GRAPHIC)
(PHOTO OF CRAIG V. SOSEY) PORTFOLIO MANAGER
Craig V. Sosey
WM Advisors, Inc.
of the period leading to slight underperformance of MBS. The WM U.S. Government
Securities Fund's overweighted position in this area thus detracted from
performance. The Fund's best-performing sector was non-agency collateralized
mortgage obligations (CMOs). Due to their unique debt structure, the durations
on these securities did not extend significantly as overall prepayment activity
slowed. Consequently, their prices were more stable than those of MBS.
During the period, the Fund added to its positions in non-agency CMOs on the
belief that they would outperform versus other mortgage-backed securities. On
the other hand, the Fund decreased its position in 15-year MBS on the belief
that a flattening yield curve would make these issues less attractive. The
Fund's allocation to Ginnie Mae (GNMA) securities dropped as they became
somewhat overvalued, making it difficult to invest new money.
Looking forward, we anticipate that the Federal Reserve will continue its
monetary tightening campaign for a few months into fiscal 2006. If this happens,
we believe that MBS spreads are likely to remain tight. Still, we would expect
that MBS will outperform versus other securities, and we will look to find value
in agency securities. In our view, economic growth in the upcoming fiscal year
will be weaker than current consensus projections. We also believe that
inflation will be more muted than expected, leaving the Fed room to halt its
tightening campaign relatively early in fiscal 2006.
PORTFOLIO QUALITY(4)
As of As of
Rating 10/31/05 10/31/04 Change
- ------ -------- -------- ------
Aaa 99% 99% 0%
Aa 1% 1% 0%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Maturity (years): 6.0
Weighted Average Duration (years): 4.5
Portfolio Turnover (for fiscal year): 34%
Number of Securities: 376
Expense Ratio (Class A shares for fiscal year): 0.92%
Total Net Assets: $1.9 billion
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- ----------- -------- -------- ------
FHLMC 33% 34% -1%
FNMA 29% 27% +2%
CMOs 18% 17% +1%
GNMA 7% 10% -3%
U.S. Treasuries 5% 6% -1%
U.S. Government Agency 4% 3% +1%
Cash Equivalents 4% 3% +1%
(4) May not reflect the current portfolio composition.
27
(GRAPHIC)
Income Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 5.14%
2003 8.95%
2002 8.11%
2001 8.09%
2000 9.05%
1999 0.09%
1998 7.15%
1997 10.51%
1996 3.46%
1995 21.58%
INVESTMENT STRATEGY
During the 2005 fiscal year, the economy grew at a solid pace, with reasonable
gains in employment and sustained strength in consumer spending. Continuing with
the course it began in June 2004, the Federal Reserve (the Fed) raised the
federal funds target rate eight times during the period, bringing the target
rate to 3.75% by the end of the fiscal year. While short- and intermediate-term
bond yields moved upward in conjunction with the Fed's actions, long-term bond
yields ended the period virtually unchanged.
During the period, a slightly more aggressive stance in credit quality helped
the WM Income Fund as high-yield securities benefited from investors' increasing
appetite for risk. However, the Fund's weightings within the investment-grade
corporate sector detracted from performance, as Baa-rated bonds underperformed
A-rated or higher securities. Corporate bonds rated Baa were hurt due to an
increasing number of companies taking on more debt to finance stock repurchases
and/or higher dividends. An overweighting in mortgage-backed securities also
hurt performance due to the volatility in long-term interest rates.
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. Your
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 (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 noted above.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. Lower-rated securities are subject to additional
credit and default risks. International investing involves increased risks due
to currency fluctuations, political or social instability, and differences in
accounting standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 0.75% 6.59% 6.37% 8.41% 12/15/75
With Sales Charge -3.83% 5.61% 5.89% 8.24%
CLASS B SHARES Net Asset Value(2) 0.02% 5.85% 5.73% 6.28% 3/30/94
With Sales Charge -4.98% 5.53% 5.73% 6.28%
CLASS C SHARES Net Asset Value(2) 0.01% -- -- 4.74% 3/1/02
With Sales Charge -0.99% -- -- 4.74%
Citigroup Broad Investment-Grade
Bond Index(3) 1.24% 6.37% 6.35% --
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
CITIGROUP
BROAD
INVESTMENT
DATE NAV MOP GRADE INDEX
- ------ ------ ------ -----------
OCT-95 10,000 9,550 10,000
Nov-95 10,163 9,705 10,156
Dec-95 10,348 9,882 10,296
Jan-96 10,423 9,954 10,366
Feb-96 10,145 9,689 10,190
Mar-96 10,057 9,605 10,117
Apr-96 9,988 9,539 10,042
May-96 9,977 9,528 10,036
Jun-96 10,098 9,644 10,165
Jul-96 10,119 9,664 10,193
Aug-96 10,118 9,663 10,178
Sep-96 10,312 9,848 10,355
Oct-96 10,589 10,113 10,588
Nov-96 10,833 10,345 10,763
Dec-96 10,706 10,225 10,668
Jan-97 10,740 10,257 10,710
Feb-97 10,759 10,275 10,722
Mar-97 10,618 10,141 10,614
Apr-97 10,772 10,287 10,765
May-97 10,918 10,427 10,866
Jun-97 11,109 10,609 10,996
Jul-97 11,520 11,001 11,294
Aug-97 11,364 10,852 11,197
Sep-97 11,558 11,038 11,361
Oct-97 11,743 11,215 11,525
Nov-97 11,793 11,262 11,579
Dec-97 11,831 11,299 11,697
Jan-98 11,944 11,406 11,848
Feb-98 11,990 11,451 11,840
Mar-98 12,083 11,539 11,886
Apr-98 12,123 11,577 11,948
May-98 12,267 11,715 12,062
Jun-98 12,360 11,804 12,161
Jul-98 12,342 11,786 12,187
Aug-98 12,390 11,832 12,373
Sep-98 12,614 12,046 12,665
Oct-98 12,447 11,887 12,608
Nov-98 12,659 12,089 12,678
Dec-98 12,677 12,106 12,717
Jan-99 12,802 12,226 12,811
Feb-99 12,505 11,943 12,587
Mar-99 12,574 12,008 12,659
Apr-99 12,724 12,151 12,700
May-99 12,618 12,050 12,584
Jun-99 12,539 11,974 12,541
Jul-99 12,532 11,968 12,491
Aug-99 12,529 11,965 12,482
Sep-99 12,648 12,078 12,632
Oct-99 12,696 12,124 12,670
Nov-99 12,699 12,128 12,668
Dec-99 12,691 12,120 12,610
Jan-00 12,708 12,136 12,575
Feb-00 12,835 12,258 12,722
Mar-00 12,996 12,411 12,887
Apr-00 12,923 12,342 12,849
May-00 12,824 12,247 12,837
Jun-00 13,134 12,543 13,105
Jul-00 13,257 12,661 13,225
Aug-00 13,529 12,920 13,414
Sep-00 13,517 12,909 13,505
Oct-00 13,478 12,871 13,591
Nov-00 13,588 12,977 13,811
Dec-00 13,840 13,217 14,072
Jan-01 14,230 13,590 14,305
Feb-01 14,261 13,620 14,432
Mar-01 14,238 13,598 14,507
Apr-01 14,196 13,557 14,439
May-01 14,247 13,606 14,533
Jun-01 14,297 13,653 14,581
Jul-01 14,681 14,021 14,917
Aug-01 14,859 14,190 15,082
Sep-01 14,795 14,129 15,267
Oct-01 15,124 14,443 15,575
Nov-01 15,061 14,384 15,361
Dec-01 14,961 14,287 15,270
Jan-02 15,128 14,447 15,391
Feb-02 15,240 14,554 15,538
Mar-02 15,114 14,433 15,282
Apr-02 15,399 14,706 15,572
May-02 15,472 14,775 15,705
Jun-02 15,441 14,746 15,821
Jul-02 15,325 14,635 16,009
Aug-02 15,584 14,883 16,289
Sep-02 15,757 15,048 16,548
Oct-02 15,672 14,967 16,474
Nov-02 15,843 15,130 16,471
Dec-02 16,174 15,446 16,813
Jan-03 16,276 15,543 16,827
Feb-03 16,549 15,804 17,065
Mar-03 16,602 15,855 17,050
Apr-03 16,917 16,156 17,200
May-03 17,378 16,596 17,518
Jun-03 17,371 16,589 17,487
Jul-03 16,750 15,997 16,896
Aug-03 16,836 16,078 17,012
Sep-03 17,304 16,525 17,458
Oct-03 17,257 16,481 17,297
Nov-03 17,375 16,593 17,348
Dec-03 17,623 16,830 17,521
Jan-04 17,796 16,995 17,667
Feb-04 17,945 17,138 17,856
Mar-04 18,137 17,320 17,991
Apr-04 17,611 16,818 17,523
May-04 17,482 16,695 17,448
Jun-04 17,617 16,824 17,551
Jul-04 17,772 16,972 17,725
Aug-04 18,138 17,322 18,076
Sep-04 18,236 17,415 18,123
Oct-04 18,413 17,584 18,282
Nov-04 18,335 17,510 18,129
Dec-04 18,531 17,698 18,303
Jan-05 18,611 17,774 18,420
Feb-05 18,546 17,711 18,309
Mar-05 18,348 17,522 18,209
Apr-05 18,485 17,653 18,464
May-05 18,707 17,865 18,670
Jun-05 18,847 17,999 18,777
Jul-05 18,729 17,886 18,612
Aug-05 18,974 18,120 18,850
Sep-05 18,710 17,868 18,650
Oct-05 18,549 17,714 18,506
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance in 1999 benefited from
the agreement of WM Advisors and its affiliates to limit the Fund's
expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions. Indices are unmanaged, and individuals cannot invest
directly in an index.
28
(GRAPHIC)
(PHOTO OF JOHN R. FRIEDL) PORTFOLIO MANAGERS
(PHOTO OF GARY J. POKRZYWINSKI) John R. Friedl, CFA and
Gary J. Pokrzywinski, CFA
WM Advisors, Inc.
Securities that added to performance included Conexant Systems (information
technology), which rose on an increase in technology spending, and Ecuadorian
government bonds, which gained on the back of higher oil prices. Northwest
Airlines detracted from performance, as higher structural costs and higher fuel
costs, exacerbated by Hurricanes Katrina and Rita, hurt its competitive
position. Absolute performance was also hurt by General Motors and Ford
experiencing both slower sales in key market segments and increased pension
obligations. The Fund was generally market-weighted in the auto sector, so these
two names detracted only slightly from relative performance.
Looking forward, we anticipate that the Federal Reserve will continue its
monetary tightening campaign for a few months into fiscal 2006. Since it is our
view that the economy in the upcoming fiscal year will stabilize at a
weaker-than-expected growth rate, and that inflation will be more muted than
consensus expectations, the Fed should have room to halt its tightening
campaign within the first half of fiscal 2006. Given this environment, we expect
mortgage-backed securities to outperform, and therefore we maintain an
overweighting in the sector. Although corporate spreads are tight, we still
believe there is value, especially in out-of-favor securities. Therefore, we
will seek to keep the sector market-weighted but will strive to continue holding
out-of-favor corporate bonds that provide a higher yield or are slightly more
aggressive in credit quality. We will also strive to continue overweighting
certain sectors of the corporate bond market that we favor long term, including
health care, utilities, REITs, and gaming.
PORTFOLIO QUALITY(4)
As of As of
Rating 10/31/05 10/31/04 Change
- --------- -------- -------- ------
Aaa 35% 35% 0%
Aa 6% 6% 0%
A 6% 6% 0%
Baa 34% 36% -2%
Ba 5% 5% 0%
B 10% 6% +4%
Caa 1% 3% -2%
Not Rated 2% 3% -1%
Equities 1% 0% +1%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Maturity (years): 7.4
Weighted Average Duration (years): 5.0
Portfolio Turnover (for fiscal year): 20%
Number of Securities: 197
Expense Ratio (Class A shares for fiscal year): 0.91%
Total Net Assets: $1.2 billion
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- ------------------------ -------- -------- ------
Domestic Corporate Bonds 57% 57% 0%
Mortgage-Backed Bonds 23% 23% 0%
U.S. Treasuries 7% 6% +1%
Foreign Corporate
Bonds (U.S.$) 6% 6% 0%
Equities 1% 0% +1%
Foreign Government
Bonds (U.S.$) 1% 2% -1%
Cash Equivalents 5% 6% -1%
(4) May not reflect the current portfolio composition.
29
(GRAPHIC)
High Yield Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 11.43%
2003 28.10%
2002 3.66%
2001 3.14%
2000 -1.53%
1999 12.02%
INVESTMENT STRATEGY
During the 2005 fiscal year, the WM High Yield Fund's performance was positively
impacted by a broad increase in investors' appetite for risk. The economy grew
at a solid pace, with reasonable gains in employment and sustained strength in
consumer spending. Although oil prices soared, core inflation (which excludes
food and energy) remained relatively benign. Continuing with the course it began
in June 2004, the Federal Reserve (the Fed) raised the federal funds target rate
eight times during the period, bringing the target rate to 3.75% by the end of
the fiscal year. The net effect of these forces was a decent return for the
high-yield market after two very strong years of gains.
Security selection was the greatest contributor to Fund performance during the
fiscal year. TexCal, an oil and gas company, rose on gains in the energy
sector. Conexant Systems, a leading provider of semiconductor solutions for
broadband communications, gained on positive earnings and revenue forecasts. On
the downside, Northwest Airlines filed for bankruptcy on the back of higher fuel
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. Your
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 (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 noted above.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. Lower-rated securities are subject to additional
credit and default risks. International investing involves increased risks due
to currency fluctuations, political or social instability, and differences in
accounting standards. REIT securities are subject to risk factors associated
with the real estate industry and tax factors of REIT registration.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year Since Inception Inception Date
------ ------ --------------- --------------
CLASS A SHARES Net Asset Value(2) 6.56% 8.90% 7.14% 4/8/98
With Sales Charge 1.76% 7.91% 6.49%
CLASS B SHARES Net Asset Value(2) 5.75% 8.10% 6.51% 5/5/98
With Sales Charge 0.75% 7.81% 6.51%
CLASS C SHARES Net Asset Value(2) 5.77% -- 10.63% 3/1/02
With Sales Charge 4.77% -- 10.63%
Citigroup High Yield Market Index(3) 3.55% 8.22% 5.01%
VALUE OF A $10,000 INVESTMENT(1) APRIL 8, 1998 - OCTOBER 31, 2005
(LINE CHART)
CITIGROUP
HIGH YIELD
DATE NAV MOP MARKET INDEX
- ------ ------ ------ ------------
Mar-98 10,000 9,550 10,000
Apr-98 9,997 9,547 10,054
May-98 9,965 9,517 10,081
Jun-98 9,918 9,471 10,103
Jul-98 9,892 9,447 10,184
Aug-98 9,345 8,925 9,502
Sep-98 9,336 8,916 9,619
Oct-98 9,310 8,891 9,486
Nov-98 9,686 9,250 9,962
Dec-98 9,670 9,235 9,955
Jan-99 9,834 9,391 10,104
Feb-99 9,722 9,284 10,020
Mar-99 9,899 9,453 10,105
Apr-99 10,259 9,798 10,316
May-99 10,269 9,807 10,154
Jun-99 10,366 9,900 10,132
Jul-99 10,499 10,026 10,154
Aug-99 10,397 9,929 10,033
Sep-99 10,456 9,986 9,957
Oct-99 10,451 9,981 9,889
Nov-99 10,628 10,149 10,044
Dec-99 10,832 10,344 10,129
Jan-00 10,897 10,406 10,045
Feb-00 10,981 10,487 10,069
Mar-00 11,051 10,554 9,864
Apr-00 11,144 10,642 9,904
May-00 10,949 10,456 9,766
Jun-00 11,052 10,554 9,986
Jul-00 11,237 10,732 10,095
Aug-00 11,353 10,842 10,170
Sep-00 11,276 10,768 10,061
Oct-00 11,004 10,509 9,763
Nov-00 10,570 10,094 9,364
Dec-00 10,666 10,186 9,555
Jan-01 11,419 10,905 10,199
Feb-01 11,249 10,742 10,320
Mar-01 10,827 10,340 10,132
Apr-01 10,823 10,336 9,983
May-01 10,773 10,288 10,143
Jun-01 10,683 10,202 9,864
Jul-01 10,764 10,280 10,049
Aug-01 10,896 10,405 10,186
Sep-01 10,564 10,089 9,453
Oct-01 10,786 10,301 9,767
Nov-01 11,011 10,515 10,138
Dec-01 11,001 10,506 10,073
Jan-02 11,261 10,755 10,116
Feb-02 11,312 10,803 10,006
Mar-02 11,545 11,026 10,272
Apr-02 11,579 11,058 10,440
May-02 11,513 10,995 10,311
Jun-02 11,066 10,568 9,403
Jul-02 10,707 10,226 8,978
Aug-02 10,752 10,269 9,320
Sep-02 10,527 10,053 9,136
Oct-02 10,735 10,252 9,105
Nov-02 11,284 10,776 9,800
Dec-02 11,405 10,892 9,919
Jan-03 11,643 11,119 10,288
Feb-03 11,775 11,246 10,426
Mar-03 12,070 11,527 10,777
Apr-03 12,649 12,080 11,447
May-03 13,118 12,528 11,522
Jun-03 13,400 12,797 11,881
Jul-03 13,341 12,741 11,705
Aug-03 13,246 12,650 11,825
Sep-03 13,538 12,929 12,175
Oct-03 13,972 13,344 12,459
Nov-03 14,228 13,588 12,632
Dec-03 14,611 13,953 12,957
Jan-04 15,050 14,373 13,181
Feb-04 15,084 14,405 13,109
Mar-04 15,247 14,560 13,191
Apr-04 14,803 14,137 13,146
May-04 14,656 13,997 12,919
Jun-04 14,838 14,170 13,111
Jul-04 14,912 14,241 13,281
Aug-04 15,230 14,544 13,524
Sep-04 15,475 14,779 13,707
Oct-04 15,820 15,109 13,991
Nov-04 16,010 15,290 14,152
Dec-04 16,279 15,547 14,356
Jan-05 16,199 15,471 14,336
Feb-05 16,324 15,590 14,551
Mar-05 15,950 15,233 14,142
Apr-05 15,887 15,172 13,947
May-05 16,181 15,452 14,234
Jun-05 16,454 15,714 14,472
Jul-05 16,772 16,017 14,682
Aug-05 16,971 16,207 14,743
Sep-05 16,885 16,125 14,596
Oct-05 16,858 16,099 14,486
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance between 1998 and 1999
benefited from the agreement of WM Advisors and its affiliates to limit the
Fund's expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 3/31/98. Indices are unmanaged, and individuals cannot
invest directly in an index.
30
(GRAPHIC)
(PHOTO OF GARY J. POKRZYWINSKI) PORTFOLIO MANAGER
Gary J. Pokrzywinski, CFA
WM Advisors, Inc.
costs. Adelphia Communications, a cable television and high-speed internet
provider, sank as valuations within the cable market generally declined.
With regard to sector allocation, the Fund benefited from its underweighted
position in auto related companies. The sector was hurt by Ford and General
Motors, which continued to struggle with profitability. The Fund also benefited
from its holdings in emerging markets, most notably Ecuador, as these
securities gained on the rise in oil prices.
During the period, the Fund reduced its holdings in telecommunications, taking
profits as prices rose. The same occurred in the utilities sector. The Fund
increased its holdings in the oil and gas industry on the belief that energy
prices will remain at or above what the market is currently valuing companies in
that sector. The Fund also added to its holdings in gaming as demographics
continue to be a secular positive for this sector.
Looking forward, we have a neutral view with regard to market risk. We
anticipate that the Federal Reserve will continue its monetary tightening
campaign for a few months into fiscal 2006. Meanwhile, we believe that economic
growth and inflation will be more muted than expected, leaving the Fed room to
halt its tightening campaign relatively early in the upcoming fiscal year.
Against this backdrop, we have positioned the Fund to take advantage of
opportunities in a falling rate environment.
PORTFOLIO QUALITY(4)
As of As of
Rating 10/31/05 10/31/04 Change
- --------- -------- -------- ------
Aaa 1% 2% -1%
Baa 2% 4% -2%
Ba 14% 11% +3%
B 45% 39% +6%
Caa 10% 16% -6%
C 0% 1% -1%
Not Rated 18% 19% -1%
Equities 10% 8% +2%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Maturity (years): 6.5
Weighted Average Duration (years): 4.5
Portfolio Turnover (for fiscal year): 94%
Number of Securities: 74
Expense Ratio
(Class A shares for fiscal year): 0.92%
Total Net Assets: $811.7 million
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Asset Class 10/31/05 10/31/04 Change
- ------------------------ -------- -------- ------
Domestic Corporate Bonds 81% 79% +2%
Equities 10% 8% +2%
Foreign Corporate
Bonds (U.S.$) 4% 6% -2%
Foreign Government
Bonds (U.S.$) 2% 5% -3%
Foreign Corporate
Bonds (Non-U.S.$) 1% 0% +1%
Foreign Government
Bonds (Non-U.S.$) 1% 0% +1%
Cash Equivalents 1% 2% -1%
(4) May not reflect the current portfolio composition.
31
(GRAPHIC)
Tax-Exempt Bond Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 3.89%
2003 5.19%
2002 9.81%
2001 3.92%
2000 11.49%
1999 -4.40%
1998 5.08%
1997 8.59%
1996 2.52%
1995 18.25%
INVESTMENT STRATEGY
During the 2005 fiscal year, the economy grew at a solid pace, with reasonable
gains in employment and sustained strength in consumer spending. Although oil
prices soared, core inflation (which excludes food and energy) remained
relatively benign. Continuing with the course it began in June 2004, the Federal
Reserve (the Fed) raised the federal funds target rate eight times during the
period, bringing the target rate to 3.75% by the end of the fiscal year. While
short- and intermediate-term bond yields moved upward in conjunction with the
Fed's actions, long-term bond yields ended the period virtually unchanged.
Against this backdrop, total returns across the municipal bond market varied
dramatically, with long maturity bonds outperforming short-term issues by a wide
margin. As investors sought income in an environment of historically low rates,
Baa-rated and non-rated bonds significantly outperformed high-quality debt, and
credit spreads tightened markedly. Tobacco settlement bonds were by far the
best-performing sector, supported by overall spread tightening as well as
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. Your
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 (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 noted above.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. A portion of the Fund's income may be subject to
state and/or local taxes, and it may be subject to federal alternative minimum
tax (AMT) for certain investors.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 2.19% 5.58% 5.03% 5.90% 1/3/77
With Sales Charge -2.36% 4.60% 4.55% 5.73%
CLASS B SHARES Net Asset Value(2) 1.43% 4.80% 4.38% 4.89% 3/30/94
With Sales Charge -3.57% 4.46% 4.38% 4.89%
CLASS C SHARES Net Asset Value(2) 1.41% -- -- 3.97% 3/1/02
With Sales Charge 0.41% -- -- 3.97%
Lehman Brothers Municipal Bond Index(3) 2.56% 5.97% 5.85% --
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
LEHMAN
BROTHERS
MUNICIPAL
DATE NAV MOP BOND INDEX
- ------ ------ ------ ----------
OCT-95 10,000 9,550 10,000
Nov-95 10,206 9,747 10,166
Dec-95 10,338 9,873 10,264
Jan-96 10,393 9,925 10,342
Feb-96 10,290 9,826 10,271
Mar-96 10,124 9,668 10,140
Apr-96 10,060 9,608 10,111
May-96 10,063 9,610 10,107
Jun-96 10,155 9,698 10,218
Jul-96 10,249 9,788 10,311
Aug-96 10,251 9,790 10,308
Sep-96 10,373 9,906 10,453
Oct-96 10,470 9,999 10,571
Nov-96 10,648 10,168 10,764
Dec-96 10,599 10,122 10,719
Jan-97 10,603 10,126 10,739
Feb-97 10,698 10,216 10,838
Mar-97 10,551 10,077 10,694
Apr-97 10,623 10,145 10,784
May-97 10,778 10,293 10,946
Jun-97 10,877 10,387 11,063
Jul-97 11,213 10,708 11,369
Aug-97 11,061 10,564 11,262
Sep-97 11,174 10,671 11,396
Oct-97 11,246 10,740 11,469
Nov-97 11,305 10,796 11,537
Dec-97 11,510 10,992 11,705
Jan-98 11,614 11,091 11,826
Feb-98 11,585 11,064 11,830
Mar-98 11,592 11,070 11,840
Apr-98 11,512 10,994 11,787
May-98 11,679 11,153 11,973
Jun-98 11,729 11,201 12,020
Jul-98 11,737 11,209 12,050
Aug-98 11,936 11,399 12,237
Sep-98 12,060 11,517 12,390
Oct-98 12,037 11,495 12,390
Nov-98 12,057 11,515 12,433
Dec-98 12,095 11,550 12,464
Jan-99 12,236 11,686 12,612
Feb-99 12,180 11,632 12,557
Mar-99 12,173 11,625 12,575
Apr-99 12,209 11,660 12,606
May-99 12,110 11,565 12,533
Jun-99 11,885 11,350 12,352
Jul-99 11,906 11,371 12,397
Aug-99 11,774 11,244 12,298
Sep-99 11,733 11,205 12,303
Oct-99 11,584 11,063 12,170
Nov-99 11,651 11,127 12,299
Dec-99 11,563 11,042 12,206
Jan-00 11,475 10,958 12,154
Feb-00 11,669 11,144 12,295
Mar-00 11,914 11,378 12,564
Apr-00 11,823 11,291 12,490
May-00 11,750 11,221 12,425
Jun-00 12,060 11,517 12,754
Jul-00 12,228 11,677 12,932
Aug-00 12,428 11,869 13,131
Sep-00 12,318 11,763 13,063
Oct-00 12,454 11,894 13,205
Nov-00 12,555 11,990 13,305
Dec-00 12,889 12,309 13,634
Jan-01 12,991 12,406 13,769
Feb-01 13,039 12,452 13,813
Mar-01 13,142 12,551 13,937
Apr-01 12,941 12,359 13,787
May-01 13,095 12,506 13,936
Jun-01 13,197 12,603 14,029
Jul-01 13,404 12,801 14,237
Aug-01 13,663 13,048 14,472
Sep-01 13,577 12,966 14,422
Oct-01 13,717 13,100 14,587
Nov-01 13,544 12,935 14,464
Dec-01 13,392 12,790 14,327
Jan-02 13,587 12,975 14,575
Feb-02 13,777 13,157 14,751
Mar-02 13,478 12,871 14,462
Apr-02 13,758 13,139 14,744
May-02 13,845 13,222 14,834
Jun-02 13,985 13,355 14,991
Jul-02 14,180 13,542 15,185
Aug-02 14,359 13,713 15,367
Sep-02 14,717 14,054 15,703
Oct-02 14,408 13,759 15,443
Nov-02 14,367 13,721 15,378
Dec-02 14,708 14,046 15,702
Jan-03 14,594 13,938 15,663
Feb-03 14,846 14,177 15,882
Mar-03 14,843 14,175 15,892
Apr-03 14,987 14,312 15,997
May-03 15,339 14,648 16,371
Jun-03 15,221 14,536 16,301
Jul-03 14,635 13,976 15,730
Aug-03 14,800 14,134 15,848
Sep-03 15,269 14,582 16,314
Oct-03 15,171 14,489 16,232
Nov-03 15,358 14,667 16,401
Dec-03 15,470 14,774 16,537
Jan-04 15,506 14,808 16,632
Feb-04 15,811 15,100 16,883
Mar-04 15,670 14,965 16,824
Apr-04 15,254 14,567 16,425
May-04 15,211 14,526 16,366
Jun-04 15,266 14,579 16,425
Jul-04 15,481 14,784 16,640
Aug-04 15,795 15,084 16,973
Sep-04 15,890 15,175 17,063
Oct-04 15,986 15,267 17,209
Nov-04 15,820 15,108 17,068
Dec-04 16,076 15,353 17,277
Jan-05 16,235 15,505 17,439
Feb-05 16,143 15,416 17,381
Mar-05 15,975 15,256 17,272
Apr-05 16,238 15,508 17,545
May-05 16,401 15,663 17,669
Jun-05 16,501 15,758 17,779
Jul-05 16,413 15,675 17,699
Aug-05 16,578 15,832 17,878
Sep-05 16,445 15,705 17,758
Oct-05 16,336 15,601 17,650
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance in 2000 benefited
from the agreement of WM Advisors and its affiliates to limit the Fund's
expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions. Indices are unmanaged, and individuals cannot invest
directly in an index.
32
(GRAPHIC)
(PHOTO OF THOMAS M. BYRON) PORTFOLIO MANAGER
Thomas M. Byron
Van Kampen Asset Management
increasing investor comfort with the future litigation risk of tobacco
companies.
At the outset of the fiscal year, our view was that rates would move higher and
short-term bond yields would rise faster than those of longer-term
bonds. Accordingly, our purchases during the period emphasized longer-term
bonds, generally those with maturities of 25 years or longer. To fund these
purchases, we sold short-term and intermediate-term issues, including some that
had been pre-refunded over time. This strategy benefited performance of the WM
Tax-Exempt Bond Fund.
While maintaining our focus on quality bonds, we enhanced total returns by
adding higher yielding securities. Over the course of the fiscal period, we
pared Aaa- and Aa-rated securities by nearly 13 percentage points to 79%. We
increased non-rated securities and those rated Baa and below by 9 percentage
points to 13%. Tobacco settlement bonds were among those areas that were
particularly beneficial.
The Fund remained well diversified across the major sectors of the municipal
market. As of the end of the period, the largest sector allocations were:
transportation (15.1% this year versus 15.3% in the previous fiscal year); power
(15.0% versus 17.1%); and general obligation (14.1% versus 16.3%). We note that
the Fund held a small position in Louisiana issuers. To our knowledge, these
bonds were not directly affected by the Gulf Coast hurricanes as of the end of
the period.
(GRAPHIC)
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Maturity (years): 10.2
Weighted Average Duration (years): 6.9
Portfolio Turnover (for fiscal year): 28%
Number of Securities: 130
Expense Ratio
(Class A shares for fiscal year): 0.87%
Total Net Assets: $207.6 million
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Rating 10/31/05 10/31/04 Change
- --------------- -------- -------- ------
Aaa 64% 73% -9%
Aa 15% 19% -4%
A 8% 4% +4%
Baa 8% 2% +6%
Ba or lower 2% 1% +1%
Not Rated/Other 3% 1% +2%
(4) May not reflect the current portfolio composition.
33
(GRAPHIC)
California Municipal Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 4.76%
2003 3.70%
2002 8.87%
2001 4.05%
2000 12.97%
1999 -4.53%
1998 6.09%
1997 10.30%
1996 4.42%
1995 18.09%
INVESTMENT STRATEGY
During the 2005 fiscal year, the economy grew at a solid pace, with reasonable
gains in employment and sustained strength in consumer spending. Although oil
prices soared, core inflation (which excludes food and energy) remained
relatively benign. Continuing with the course it began in June 2004, the Federal
Reserve (the Fed) raised the federal funds target rate eight times during the
period, bringing the target rate to 3.75% by the end of the fiscal year. While
short- and intermediate-term bond yields moved upward in conjunction with the
Fed's actions, long-term bond yields ended the period virtually unchanged.
Against this backdrop, total returns across the municipal bond market varied
dramatically, with long maturity bonds outperforming short-term issues by a wide
margin. As investors sought income in an environment of historically low rates,
Baa-rated and non-rated bonds significantly outperformed high-quality debt, and
credit spreads tightened markedly. Tobacco settlement bonds were by far the
best-performing sector,
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. Your
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 (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 noted above.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. A portion of the Fund's income may be subject to
state and/or local taxes, and it may be subject to federal alternative minimum
tax (AMT) for certain investors.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 2.90% 5.45% 5.52% 6.25% 7/25/89
With Sales Charge -1.76% 4.48% 5.04% 5.95%
CLASS B SHARES Net Asset Value(2) 2.13% 4.67% 4.90% 5.36% 7/1/94
With Sales Charge -2.87% 4.34% 4.90% 5.36%
CLASS C SHARES Net Asset Value(2) 2.13% -- -- 3.89% 3/1/02
With Sales Charge 1.13% -- -- 3.89%
Lehman Brothers Municipal Bond Index(3) 2.56% 5.97% 5.85% 6.74%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
LEHMAN
BROTHERS
MUNICIPAL
DATE NAV MOP BOND INDEX
- ------ ------ ------ ----------
OCT-95 10,000 9,550 10,000
Nov-95 10,185 9,727 10,166
Dec-95 10,306 9,843 10,264
Jan-96 10,353 9,887 10,342
Feb-96 10,296 9,832 10,271
Mar-96 10,144 9,687 10,140
Apr-96 10,134 9,678 10,111
May-96 10,133 9,677 10,107
Jun-96 10,219 9,759 10,218
Jul-96 10,325 9,860 10,311
Aug-96 10,363 9,897 10,308
Sep-96 10,499 10,026 10,453
Oct-96 10,615 10,138 10,571
Nov-96 10,792 10,306 10,764
Dec-96 10,761 10,277 10,719
Jan-97 10,781 10,296 10,739
Feb-97 10,869 10,380 10,838
Mar-97 10,758 10,274 10,694
Apr-97 10,838 10,350 10,784
May-97 10,979 10,485 10,946
Jun-97 11,120 10,620 11,063
Jul-97 11,466 10,950 11,369
Aug-97 11,373 10,862 11,262
Sep-97 11,506 10,989 11,396
Oct-97 11,588 11,067 11,469
Nov-97 11,681 11,155 11,537
Dec-97 11,868 11,334 11,705
Jan-98 11,960 11,422 11,826
Feb-98 11,976 11,437 11,830
Mar-98 11,976 11,437 11,840
Apr-98 11,920 11,383 11,787
May-98 12,109 11,564 11,973
Jun-98 12,148 11,601 12,020
Jul-98 12,156 11,609 12,050
Aug-98 12,337 11,782 12,237
Sep-98 12,516 11,953 12,390
Oct-98 12,490 11,928 12,390
Nov-98 12,549 11,984 12,433
Dec-98 12,588 12,021 12,464
Jan-99 12,731 12,158 12,612
Feb-99 12,682 12,111 12,557
Mar-99 12,703 12,131 12,575
Apr-99 12,711 12,139 12,606
May-99 12,619 12,051 12,533
Jun-99 12,402 11,844 12,352
Jul-99 12,455 11,895 12,397
Aug-99 12,267 11,715 12,298
Sep-99 12,253 11,701 12,303
Oct-99 12,008 11,467 12,170
Nov-99 12,128 11,582 12,299
Dec-99 12,019 11,478 12,206
Jan-00 11,933 11,396 12,154
Feb-00 12,125 11,580 12,295
Mar-00 12,439 11,880 12,564
Apr-00 12,351 11,795 12,490
May-00 12,265 11,713 12,425
Jun-00 12,617 12,049 12,754
Jul-00 12,827 12,250 12,932
Aug-00 13,111 12,521 13,131
Sep-00 13,020 12,434 13,063
Oct-00 13,125 12,534 13,205
Nov-00 13,215 12,620 13,305
Dec-00 13,576 12,965 13,634
Jan-01 13,595 12,983 13,769
Feb-01 13,645 13,031 13,813
Mar-01 13,750 13,131 13,937
Apr-01 13,518 12,910 13,787
May-01 13,672 13,057 13,936
Jun-01 13,739 13,121 14,029
Jul-01 13,959 13,331 14,237
Aug-01 14,341 13,696 14,472
Sep-01 14,294 13,651 14,422
Oct-01 14,438 13,789 14,587
Nov-01 14,301 13,658 14,464
Dec-01 14,128 13,492 14,327
Jan-02 14,324 13,680 14,575
Feb-02 14,478 13,826 14,751
Mar-02 14,158 13,521 14,462
Apr-02 14,431 13,782 14,744
May-02 14,564 13,908 14,834
Jun-02 14,682 14,021 14,991
Jul-02 14,853 14,185 15,185
Aug-02 15,091 14,412 15,367
Sep-02 15,526 14,827 15,703
Oct-02 15,100 14,421 15,443
Nov-02 15,097 14,418 15,378
Dec-02 15,383 14,690 15,702
Jan-03 15,233 14,548 15,663
Feb-03 15,444 14,749 15,882
Mar-03 15,470 14,774 15,892
Apr-03 15,617 14,914 15,997
May-03 15,945 15,227 16,371
Jun-03 15,792 15,081 16,301
Jul-03 15,159 14,476 15,730
Aug-03 15,325 14,636 15,848
Sep-03 15,699 14,993 16,314
Oct-03 15,658 14,954 16,232
Nov-03 15,853 15,139 16,401
Dec-03 15,952 15,235 16,537
Jan-04 16,010 15,289 16,632
Feb-04 16,304 15,571 16,883
Mar-04 16,193 15,464 16,824
Apr-04 15,782 15,072 16,425
May-04 15,741 15,032 16,366
Jun-04 15,826 15,114 16,425
Jul-04 16,043 15,321 16,640
Aug-04 16,375 15,638 16,973
Sep-04 16,461 15,721 17,063
Oct-04 16,637 15,888 17,209
Nov-04 16,447 15,707 17,068
Dec-04 16,712 15,960 17,277
Jan-05 16,904 16,144 17,439
Feb-05 16,840 16,082 17,381
Mar-05 16,722 15,970 17,272
Apr-05 17,005 16,240 17,545
May-05 17,155 16,383 17,669
Jun-05 17,242 16,466 17,779
Jul-05 17,152 16,381 17,699
Aug-05 17,350 16,569 17,878
Sep-05 17,213 16,438 17,758
Oct-05 17,121 16,351 17,650
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance between 1995 and 1999
benefited from the agreement of WM Advisors and its affiliates to limit the
Fund's expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 7/31/89. Indices are unmanaged, and individuals cannot
invest directly in an index.
34
(GRAPHIC)
(PHOTO OF JOSEPH A. PIRARO) PORTFOLIO MANAGER
Joseph A. Piraro
Van Kampen Asset Management
supported by overall spread tightening, as well as increasing investor comfort
with the future litigation risk of tobacco companies.
Throughout the period, California made notable progress in shoring up its fiscal
and credit conditions, and its economy remained robust. Ratings agencies
upgraded California debt, while increased market interest resulted in broad
price appreciation.
At the outset of the period, our view was that rates would move higher and that
short-term bond yields would rise faster than those of longer-term bonds. This
proved to be the case, as the representative yields for one-year California
municipals rose roughly twice as much as those of 10-year issues. Within this
environment, the WM California Municipal Fund benefited from our decision to
sell bonds with shorter maturities in order to purchase bonds with maturities of
25 years and longer. An emphasis on high-quality bonds tempered relative
performance.
Within the parameters of our quality-focused discipline, we sought opportunities
to increase exposure to higher yielding bonds. The Fund's allocation to
Baa-rated securities rose from 11% at the start of the period to 14% at the
close. Bonds rated Aaa declined from 68% to 65% of Fund assets, while bonds
rated Aa dipped from 4% to 1%.
As mentioned, we increased exposure to long-term bonds. As of the close of the
period, 97% of the Fund's long-term assets were invested in bonds with
maturities of more than five years. The Fund remained well diversified across
the major sectors of the municipal bond market.
(GRAPHIC)
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Maturity (years): 10.4
Weighted Average Duration (years): 7.4
Portfolio Turnover (for fiscal year): 26%
Number of Securities: 175
Expense Ratio (Class A shares for fiscal year): 0.84%
Total Net Assets: $409.1 million
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Rating 10/31/05 10/31/04 Change
- --------------- -------- -------- ------
Aaa 65% 68% -3%
Aa 1% 4% -3%
A 11% 9% +2%
Baa 14% 11% +3%
Not Rated/Other 9% 8% +1%
(4) May not reflect the current portfolio composition.
35
(GRAPHIC)
California Insured Intermediate Municipal Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2004 2.65%
2003 3.58%
2002 9.28%
2001 4.79%
2000 9.46%
1999 -0.83%
1998 5.26%
1997 7.14%
1996 3.91%
1995 16.45%
INVESTMENT STRATEGY
During the 2005 fiscal year, the economy grew at a solid pace, with reasonable
gains in employment and sustained strength in consumer spending. Although oil
prices soared, core inflation (which excludes food and energy) remained
relatively benign. Continuing with the course it began in June 2004, the Federal
Reserve (the Fed) raised the federal funds target rate eight times during the
period, bringing the target rate to 3.75% by the end of the fiscal year. While
short- and intermediate-term bond yields moved upward in conjunction with the
Fed's actions, long-term bond yields ended the period virtually unchanged.
Against this backdrop, total returns across the municipal bond market varied
dramatically, with long maturity bonds outperforming short-term issues by a wide
margin. As investors sought income in an environment of historically low rates,
Baa-rated and non-rated bonds significantly outperformed high-quality debt, and
credit spreads tightened markedly. Tobacco settlement bonds were by far the
best-performing sector,
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. Your
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 (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 noted above.
Fixed-income investments are subject to interest rate risk, and their value will
decline as interest rates rise. A portion of the Fund's income may be subject to
state and/or local taxes, and it may be subject to federal alternative minimum
tax (AMT) for certain investors.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2005
1-Year 5-Year 10-Year Since Inception Inception Date
------ ------ ------- --------------- --------------
CLASS A SHARES Net Asset Value(2) 0.52% 4.56% 4.69% 5.42% 4/4/94
With Sales Charge -3.96% 3.60% 4.21% 5.01%
CLASS B SHARES Net Asset Value(2) -0.24% 3.77% 4.06% 4.77% 7/1/94
With Sales Charge -5.24% 3.42% 4.06% 4.77%
CLASS C SHARES Net Asset Value(2) -0.24% -- -- 2.73% 3/1/02
With Sales Charge -1.24% -- -- 2.73%
Lehman Brothers Municipal Bond Index(3) 2.56% 5.97% 5.85% 6.29%
VALUE OF A $10,000 INVESTMENT(1) OCTOBER 31, 1995 - OCTOBER 31, 2005
(LINE CHART)
LEHMAN
BROTHERS
MUNICIPAL
DATE NAV MOP BOND INDEX
- ------ ------ ------ ----------
OCT-95 10,000 9,550 10,000
Nov-95 10,131 9,675 10,166
Dec-95 10,173 9,715 10,264
Jan-96 10,268 9,806 10,342
Feb-96 10,250 9,789 10,271
Mar-96 10,109 9,654 10,140
Apr-96 10,091 9,637 10,111
May-96 10,073 9,620 10,107
Jun-96 10,141 9,685 10,218
Jul-96 10,238 9,777 10,311
Aug-96 10,249 9,787 10,308
Sep-96 10,327 9,862 10,453
Oct-96 10,434 9,965 10,571
Nov-96 10,611 10,133 10,764
Dec-96 10,570 10,095 10,719
Jan-97 10,601 10,124 10,739
Feb-97 10,661 10,182 10,838
Mar-97 10,553 10,078 10,694
Apr-97 10,603 10,126 10,784
May-97 10,735 10,252 10,946
Jun-97 10,846 10,358 11,063
Jul-97 11,100 10,601 11,369
Aug-97 11,020 10,524 11,262
Sep-97 11,123 10,622 11,396
Oct-97 11,165 10,663 11,469
Nov-97 11,208 10,703 11,537
Dec-97 11,325 10,816 11,705
Jan-98 11,420 10,906 11,826
Feb-98 11,439 10,924 11,830
Mar-98 11,399 10,886 11,840
Apr-98 11,346 10,836 11,787
May-98 11,506 10,988 11,973
Jun-98 11,527 11,008 12,020
Jul-98 11,559 11,039 12,050
Aug-98 11,742 11,213 12,237
Sep-98 11,924 11,387 12,390
Oct-98 11,924 11,387 12,390
Nov-98 11,933 11,396 12,433
Dec-98 11,920 11,384 12,464
Jan-99 12,049 11,507 12,612
Feb-99 11,997 11,457 12,557
Mar-99 12,015 11,474 12,575
Apr-99 12,021 11,480 12,606
May-99 11,962 11,424 12,533
Jun-99 11,802 11,271 12,352
Jul-99 11,869 11,335 12,397
Aug-99 11,856 11,323 12,298
Sep-99 11,896 11,361 12,303
Oct-99 11,792 11,261 12,170
Nov-99 11,901 11,366 12,299
Dec-99 11,822 11,290 12,206
Jan-00 11,818 11,286 12,154
Feb-00 11,927 11,390 12,295
Mar-00 12,109 11,564 12,564
Apr-00 12,057 11,515 12,490
May-00 12,031 11,489 12,425
Jun-00 12,309 11,755 12,754
Jul-00 12,459 11,898 12,932
Aug-00 12,644 12,075 13,131
Sep-00 12,580 12,014 13,063
Oct-00 12,660 12,091 13,205
Nov-00 12,717 12,145 13,305
Dec-00 12,939 12,356 13,634
Jan-01 13,119 12,528 13,769
Feb-01 13,124 12,533 13,813
Mar-01 13,182 12,588 13,937
Apr-01 13,006 12,421 13,787
May-01 13,152 12,560 13,936
Jun-01 13,247 12,650 14,029
Jul-01 13,406 12,802 14,237
Aug-01 13,663 13,048 14,472
Sep-01 13,670 13,055 14,422
Oct-01 13,802 13,181 14,587
Nov-01 13,681 13,065 14,464
Dec-01 13,561 12,950 14,327
Jan-02 13,782 13,161 14,575
Feb-02 13,935 13,307 14,751
Mar-02 13,631 13,017 14,462
Apr-02 13,906 13,280 14,744
May-02 14,041 13,409 14,834
Jun-02 14,135 13,499 14,991
Jul-02 14,333 13,688 15,185
Aug-02 14,531 13,877 15,367
Sep-02 14,871 14,202 15,703
Oct-02 14,506 13,854 15,443
Nov-02 14,546 13,891 15,378
Dec-02 14,818 14,151 15,702
Jan-03 14,674 14,014 15,663
Feb-03 14,857 14,189 15,882
Mar-03 14,859 14,190 15,892
Apr-03 14,978 14,304 15,997
May-03 15,285 14,597 16,371
Jun-03 15,147 14,465 16,301
Jul-03 14,702 14,040 15,730
Aug-03 14,850 14,182 15,848
Sep-03 15,173 14,490 16,314
Oct-03 15,132 14,451 16,232
Nov-03 15,278 14,591 16,401
Dec-03 15,350 14,659 16,537
Jan-04 15,389 14,696 16,632
Feb-04 15,618 14,915 16,883
Mar-04 15,476 14,779 16,824
Apr-04 15,124 14,444 16,425
May-04 15,123 14,442 16,366
Jun-04 15,176 14,493 16,425
Jul-04 15,356 14,665 16,640
Aug-04 15,593 14,891 16,973
Sep-04 15,644 14,940 17,063
Oct-04 15,740 15,032 17,209
Nov-04 15,581 14,880 17,068
Dec-04 15,756 15,047 17,277
Jan-05 15,839 15,127 17,439
Feb-05 15,733 15,025 17,381
Mar-05 15,603 14,901 17,272
Apr-05 15,843 15,130 17,545
May-05 15,929 15,212 17,669
Jun-05 15,999 15,279 17,779
Jul-05 15,867 15,153 17,699
Aug-05 16,026 15,305 17,878
Sep-05 15,922 15,205 17,758
Oct-05 15,820 15,108 17,650
See Glossary on page 38 for definitions of indices and terms.
(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 Fund's performance between 1995 and 2003
benefited from the agreement of WM Advisors and its affiliates to limit the
Fund's expenses.
(2) Net asset value is not adjusted for sales charge.
(3) Returns shown for the index assume reinvestment of all dividends and
distributions, and the since-inception return shown for the index is
calculated from 3/31/94. Indices are unmanaged, and individuals cannot
invest directly in an index.
36
(GRAPHIC)
(PHOTO OF JOSEPH A. PIRARO) PORTFOLIO MANAGER
Joseph A. Piraro
Van Kampen Asset Management
supported by overall spread tightening, as well as increasing investor comfort
with the future litigation risk of tobacco companies.
Throughout the period, California made notable progress in shoring up its fiscal
and credit conditions, and its economy remained robust. Ratings agencies
upgraded California debt, while increased market interest resulted in broad
price appreciation.
At the outset of the period, our view was that rates would move higher and that
short-term bond yields would rise faster than those of longer-term bonds. This
proved to be the case, as the representative yields for one-year California
municipals rose roughly twice as much as those of 10-year issues. We sold bonds
with shorter maturities to purchase bonds with maturities of 12 to 15 years.
Under its investment guidelines, the WM California Insured Intermediate
Municipal Fund invests at least 80% of its assets in insured bonds. This quality
bias tempered relative performance as the market rewarded lower quality credits.
However, we did find opportunities to add higher-yielding Baa-rated bonds,
including tobacco settlement bonds. As a result, we were able to increase the
income of the Fund within the parameters of our criteria. In contrast, bonds
rated Aaa declined from 95% to 92% of Fund assets.
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2005
Weighted Average Maturity (years): 6.5
Weighted Average Duration (years): 5.1
Portfolio Turnover (for fiscal year): 27%
Number of Securities: 84
Expense Ratio (Class A shares for fiscal year): 0.87%
Total Net Assets: $132.7 million
PORTFOLIO COMPOSITION(4)
(PIE CHART)
As of As of
Rating 10/31/05 10/31/04 Change
- --------- -------- -------- ------
Aaa 92% 95% -3%
Aa 2% 2% 0%
Baa 5% 2% +3%
Not Rated 1% 1% 0%
(4) May not reflect the current portfolio composition.
37
(GRAPHIC)
Glossary
DEFINITIONS OF INDICES
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.
CITIGROUP BROAD INVESTMENT-GRADE CREDIT 1-3 YEARS INDEX:
Measures the performance of bonds, including U.S. and non-U.S. corporate
securities and non-U.S. sovereign and provincial securities, with maturities
between one and three years.
CITIGROUP HIGH YIELD MARKET INDEX:
Measures the performance of below-investment-grade debt issued by corporations
domiciled in the U.S. or Canada.
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.
LEHMAN BROTHERS AGGREGATE BOND INDEX:
A broad-based index intended to represent the U.S. fixed-income market.
LEHMAN BROTHERS MUNICIPAL BOND INDEX:
A total return performance benchmark for the long-term, investment-grade,
tax-exempt bond market.
MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EAFE INDEX:
A broad-based, capitalization-weighted index of equity markets representing 21
countries in Europe, Australasia, and the Far East.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUST (NAREIT) ALL REIT INDEX:
Reflects the aggregate performance of all publicly traded REITs that own,
develop, and manage properties.
RUSSELL 1000(R) GROWTH INDEX:
Measures the performance of those Russell 1000(R) Index securities with higher
price-to-book ratios and higher forecasted growth values.
RUSSELL 2000(R) GROWTH INDEX:
Measures the performance of those Russell 2000(R) Index securities with higher
price-to-book ratios and higher forecasted growth values.
RUSSELL 2000(R) VALUE INDEX:
Measures the performance of those Russell 2000(R) Index securities with lower
price-to-book ratios and lower forecasted growth values.
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.
S&P 500:
A broad-based index intended to represent the U.S. equity market.
S&P 500/BARRA VALUE INDEX:
An index constructed by ranking the securities in the S&P 500 by price-to-book
ratio and including the securities with the lowest price-to-book ratios that
represent approximately half of the market capitalization of the S&P 500.
S&P MIDCAP 400:
A weighted index of the common stocks of 400 mid-size companies.
DEFINITIONS OF TERMS
BETA:
A quantitative measure of a Fund's historical volatility relative to the overall
market (S&P 500). A beta above 1 indicates more volatility than the market, and
a beta below 1 indicates less volatility. Results are calculated using
three-month rolling returns for Class A shares for the three-year period ended
10/31/05. Source: Lipper, Inc.
BOND RATINGS:
Provided by Moody's Investors Service (Moody's). If an issue is not rated by
Moody's, its Standard & Poor's rating or Fitch rating is converted to the
equivalent Moody's rating and incorporated (non-rated issues are not classified
by these rating services). The ratings represent the company's opinion of the
credit quality of securities and are intended to reflect the issuer's ability to
pay back principal and interest.
STANDARD DEVIATION:
Measures the historical fluctuation of returns around the arithmetic average
return of the investment. The higher the standard deviation (as one measure of
risk), the greater the variability of the investment returns. Results are
calculated for the three-year period ended 10/31/05, and Fund results are for
Class A shares. Source: Ibbotson Associates and Lipper, Inc.
38
(GRAPHIC)
Expense Information
WM GROUP OF FUNDS
As a shareholder of the REIT Fund, Equity Income Fund, Growth & Income Fund,
West Coast Equity Fund, Mid Cap Stock Fund, Growth Fund, Small Cap Value Fund,
Small Cap Growth Fund, International Growth Fund, Short Term Income Fund, U.S.
Government Securities Fund, Income Fund, High Yield Fund, Tax-Exempt Bond Fund,
California Municipal Fund or California Insured Intermediate Municipal Fund
(collectively, the "Funds"), you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase of Class A and, if
applicable, contingent deferred sales charges on redemption of shares and
redemption fees and (2) ongoing costs, including management fees, distribution
and/or service fees, and other Fund expenses. The example below is intended to
help you understand your ongoing costs (in dollars) of investing in the Funds
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 May 1, 2005 to October 31, 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 Fund's actual expense
ratios and an assumed rate of return of 5% per year before expenses (rather than
each 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 Funds and other mutual funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other mutual 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 mutual 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 5/1/05- VALUE VALUE 5/1/05- EXPENSE
5/1/05 10/31/05 10/31/05 5/1/05 10/31/05 10/31/05 RATIO
--------- -------- ----------- --------- -------- ----------- -------
REIT Fund
Class A ................. $1,000 $1,086 $ 6.89 $1,000 $1,019 $ 6.67 1.31%
Class B ................. 1,000 1,082 11.02 1,000 1,015 10.66 2.10%
Class C ................. 1,000 1,083 10.50 1,000 1,015 10.16 2.00%
Class I ................. 1,000 1,089 4.42 1,000 1,021 4.28 0.84%
Equity Income Fund
Class A ................. $1,000 $1,065 $ 4.74 $1,000 $1,021 $ 4.63 0.91%
Class B ................. 1,000 1,060 9.24 1,000 1,016 9.05 1.78%
Class C ................. 1,000 1,060 8.72 1,000 1,017 8.54 1.68%
Class I ................. 1,000 1,066 3.02 1,000 1,022 2.96 0.58%
Growth & Income Fund
Class A ................. $1,000 $1,022 $ 4.54 $1,000 $1,021 $ 4.53 0.89%
Class B ................. 1,000 1,017 9.66 1,000 1,016 9.65 1.90%
Class C ................. 1,000 1,017 9.46 1,000 1,016 9.45 1.86%
Class I ................. 1,000 1,024 2.86 1,000 1,022 2.85 0.56%
West Coast Equity Fund
Class A ................. $1,000 $1,112 $ 4.90 $1,000 $1,021 $ 4.69 0.92%
Class B ................. 1,000 1,107 9.83 1,000 1,016 9.40 1.85%
Class C ................. 1,000 1,108 9.40 1,000 1,016 9.00 1.77%
Class I ................. 1,000 1,115 3.14 1,000 1,022 3.01 0.59%
Mid Cap Stock Fund
Class A ................. $1,000 $1,103 $ 5.99 $1,000 $1,020 $ 5.75 1.13%
Class B ................. 1,000 1,098 11.00 1,000 1,015 10.56 2.08%
Class C ................. 1,000 1,099 10.42 1,000 1,015 10.01 1.97%
Class I ................. 1,000 1,105 4.24 1,000 1,021 4.08 0.80%
40
Expense Information (continued)
WM GROUP OF FUNDS
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 5/1/05- VALUE VALUE 5/1/05- EXPENSE
5/1/05 10/31/05 10/31/05 5/1/05 10/31/05 10/31/05 RATIO
--------- -------- ----------- --------- -------- ----------- -------
Growth Fund
Class A ....................... $1,000 $1,076 $ 7.22 $1,000 $1,018 $ 7.02 1.38%
Class B ....................... 1,000 1,071 12.16 1,000 1,013 11.82 2.33%
Class C ....................... 1,000 1,072 11.23 1,000 1,014 10.92 2.15%
Class I ....................... 1,000 1,080 4.35 1,000 1,021 4.23 0.83%
Small Cap Value Fund
Class A ....................... $1,000 $1,001 $ 6.51 $1,000 $1,019 $ 6.56 1.29%
Class B ....................... 1,000 996 11.12 1,000 1,014 11.22 2.21%
Class C ....................... 1,000 997 10.42 1,000 1,015 10.51 2.07%
Class I ....................... 1,000 1,002 4.54 1,000 1,021 4.58 0.90%
Small Cap Growth Fund
Class A ....................... $1,000 $1,183 $ 8.25 $1,000 $1,018 $ 7.63 1.50%
Class B ....................... 1,000 1,176 14.65 1,000 1,012 13.54 2.67%
Class C ....................... 1,000 1,177 12.73 1,000 1,014 11.77 2.32%
Class I ....................... 1,000 1,186 5.40 1,000 1,020 4.99 0.98%
International Growth Fund
Class A ....................... $1,000 $1,113 $ 7.40 $1,000 $1,018 $ 7.07 1.39%
Class B ....................... 1,000 1,107 13.49 1,000 1,012 12.88 2.54%
Class C ....................... 1,000 1,108 12.01 1,000 1,014 11.47 2.26%
Class I ....................... 1,000 1,116 5.12 1,000 1,020 4.89 0.96%
Short Term Income Fund
Class A ....................... $1,000 $1,005 $ 3.99 $1,000 $1,021 $ 4.02 0.79%
Class B ....................... 1,000 1,001 7.77 1,000 1,017 7.83 1.54%
Class C ....................... 1,000 1,001 7.77 1,000 1,017 7.83 1.54%
Class I ....................... 1,000 1,006 2.78 1,000 1,022 2.80 0.55%
U.S. Government Securities Fund
Class A ....................... $1,000 $1,000 $ 4.59 $1,000 $1,021 $ 4.63 0.91%
Class B ....................... 1,000 996 8.25 1,000 1,017 8.34 1.64%
Class C ....................... 1,000 997 8.26 1,000 1,017 8.34 1.64%
Class I ....................... 1,000 1,002 2.67 1,000 1,023 2.70 0.53%
Income Fund
Class A ....................... $1,000 $1,003 $ 4.54 $1,000 $1,021 $ 4.58 0.90%
Class B ....................... 1,000 1,000 8.27 1,000 1,017 8.34 1.64%
Class C ....................... 1,000 1,000 8.42 1,000 1,017 8.49 1.67%
Class I ....................... 1,000 1,005 2.73 1,000 1,022 2.75 0.54%
High Yield Fund
Class A ....................... $1,000 $1,061 $ 4.83 $1,000 $1,021 $ 4.74 0.93%
Class B ....................... 1,000 1,057 8.71 1,000 1,017 8.54 1.68%
Class C ....................... 1,000 1,057 8.61 1,000 1,017 8.44 1.66%
Class I ....................... 1,000 1,063 3.02 1,000 1,022 2.96 0.58%
Tax-Exempt Bond Fund
Class A ....................... $1,000 $1,006 $ 4.30 $1,000 $1,021 $ 4.33 0.85%
Class B ....................... 1,000 1,002 8.07 1,000 1,017 8.13 1.60%
Class C ....................... 1,000 1,002 8.28 1,000 1,017 8.34 1.64%
California Municipal Fund
Class A ....................... $1,000 $1,009 $ 4.25 $1,000 $1,021 $ 4.28 0.84%
Class B ....................... 1,000 1,007 8.04 1,000 1,017 8.08 1.59%
Class C ....................... 1,000 1,003 8.08 1,000 1,017 8.13 1.60%
California Insured Intermediate
Municipal Fund
Class A ....................... $1,000 $ 999 $ 4.38 $1,000 $1,021 $ 4.43 0.87%
Class B ....................... 1,000 995 8.25 1,000 1,017 8.34 1.64%
Class C ....................... 1,000 995 8.15 1,000 1,017 8.24 1.62%
* Expenses are equal to each Fund's annualized expense ratio, multiplied by
the average account value over the period, multiplied by the 184 days in
the most recent fiscal half-year, divided by 365 days in the year (to
reflect the one-half year period).
41
Financial Statements:
Portfolio of Investments
REIT FUND
October 31, 2005
VALUE
SHARES (000S)
- ------- --------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 88.8%
DIVERSIFIED - 3.9%
5,800 Colonial Properties Trust ................................. $ 253
163,000 iStar Financial, Inc. ..................................... 6,010
127,000 Vornado Realty Trust ...................................... 10,287
--------
Total Diversified ......................................... 16,550
--------
HEALTH CARE - 4.9%
320,000 Health Care Property Investors, Inc.** .................... 8,144
219,000 Healthcare Realty Trust, Inc. ............................. 8,287
179,800 Nationwide Health Properties, Inc. ........................ 4,170
--------
Total Health Care ......................................... 20,601
--------
INDUSTRIAL/OFFICE - 26.1%
INDUSTRIAL - 5.3%
183,200 AMB Property Corporation .................................. 8,094
30,100 EastGroup Properties, Inc. ................................ 1,315
303,000 ProLogis .................................................. 13,029
--------
22,438
--------
MIXED - 2.0%
253,300 Duke Realty Corporation** ................................. 8,637
--------
OFFICE - 18.8%
207,000 Alexandria Real Estate Equities, Inc. ..................... 16,736
143,000 Arden Realty, Inc.** ...................................... 6,455
148,000 Boston Properties, Inc. ................................... 10,245
228,000 CarrAmerica Realty Corporation ............................ 7,508
495,000 Corporate Office Properties Trust ......................... 17,206
261,700 Equity Office Properties Trust ............................ 8,060
189,000 SL Green Realty Corporation** ............................. 12,858
--------
79,068
--------
Total Industrial/Office ................................... 110,143
--------
LODGING/RESORTS - 5.7%
572,900 Equity Inns, Inc. ......................................... 7,471
110,500 FelCor Lodging Trust, Inc.+ ............................... 1,649
195,000 Hospitality Properties Trust** ............................ 7,741
415,000 Host Marriott Corporation ................................. 6,968
--------
Total Lodging/Resorts ..................................... 23,829
--------
MORTGAGE/FINANCIAL - 1.4%
215,300 Annaly Mortgage Management, Inc. .......................... 2,471
70,500 Redwood Trust, Inc.** ..................................... 3,282
--------
Total Mortgage/Financial .................................. 5,753
--------
RESIDENTIAL - 11.4%
APARTMENTS - 11.4%
200,000 AvalonBay Communities, Inc. ............................... 17,250
481,000 Equity Residential ........................................ 18,879
541,000 United Dominion Realty Trust, Inc.** ...................... 11,973
--------
Total Residential ......................................... 48,102
--------
RETAIL - 25.8%
REGIONAL MALLS - 15.5%
350,000 General Growth Properties, Inc.** ......................... $ 14,868
261,000 Macerich Company .......................................... 16,774
253,000 Mills Corporation** ....................................... 13,536
281,200 Simon Property Group, Inc. ................................ 20,140
--------
65,318
--------
SHOPPING CENTERS - 10.3%
313,000 Developers Diversified Realty Corporation ................. 13,672
180,000 Equity One, Inc. .......................................... 4,221
465,400 Kimco Realty Corporation .................................. 13,785
187,000 Pan Pacific Retail Properties, Inc. ....................... 11,874
--------
43,552
--------
Total Retail .............................................. 108,870
--------
SELF STORAGE - 2.1%
135,000 Public Storage, Inc.** .................................... 8,937
--------
SPECIALTY - 7.5%
312,800 Capital Automotive REIT ................................... 12,080
145,400 Entertainment Properties Trust ............................ 5,831
124,500 Global Signal, Inc. ....................................... 5,161
215,000 Plum Creek Timber Company, Inc. ........................... 8,363
--------
Total Specialty ........................................... 31,435
--------
Total REITs (Cost $258,881) ............................... 374,220
--------
COMMON STOCKS - 6.2%
CONSUMER DISCRETIONARY - 2.4%
CONSUMER DURABLES & APPAREL - 0.9%
127,566 D.R. Horton, Inc. ......................................... 3,915
--------
CONSUMER SERVICES - 1.5%
99,800 Harrah's Entertainment, Inc. .............................. 6,036
--------
Total Consumer Discretionary .............................. 9,951
--------
FINANCIALS - 3.8%
DIVERSIFIED FINANCIALS - 2.2%
181,000 Countrywide Financial Corporation ......................... 5,751
54,000 St. Joe Company ........................................... 3,561
--------
9,312
--------
INSURANCE - 1.6%
163,700 Fidelity National Financial, Inc.** ....................... 6,132
28,647 Fidelity National Title Group, Inc., Class A ............. 623
--------
6,755
--------
Total Financials ....................................... 16,067
--------
Total Common Stocks (Cost $21,986) ..................... 26,018
--------
See Notes to Financial Statements.
42
Portfolio of Investments (continued)
REIT FUND
October 31, 2005
VALUE
SHARES (000S)
- ------- --------
CANADIAN INCOME TRUST - 0.5%
(Cost $2,031)
ENERGY - 0.5%
47,200 Enerplus Resources Fund .................................. $ 1,983
--------
PRINCIPAL
AMOUNT
(000S)
- ---------
REPURCHASE AGREEMENT - 4.5%
(Cost $18,847)
$18,847 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005, to be
repurchased at $18,849,000 on 11/01/2005
(Collateralized by U.S. Treasury Obligations,
having various interest rates and maturities,
market value $19,240,000) ..................... 18,847
--------
SHORT-TERM INVESTMENT - 4.6%
(Cost $19,418)
19,418 Mellon GSL DBT II
Collateral Fund++ ............................. 19,418
--------
TOTAL INVESTMENTS (Cost $321,163*) ......................... 104.6% 440,486
OTHER ASSETS (LIABILITIES) (NET) ........................... (4.6) (19,340)
----- --------
NET ASSETS ................................................. 100.0% $421,146
===== ========
- ----------
* Aggregate cost for federal tax purposes is $321,167.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $18,982,000, representing 4.5% of the total
net assets of the Fund (Collateral value $19,418,000) (See Note 7 to
Financial Statements).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
See Notes to Financial Statements.
43
Portfolio of Investments
EQUITY INCOME FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS - 84.3%
CONSUMER DISCRETIONARY - 5.7%
AUTOMOBILES & COMPONENTS - 1.1%
401,500 Johnson Controls, Inc. .................................. $ 27,322
--------
CONSUMER DURABLES & APPAREL - 1.4%
421,800 D.R. Horton, Inc. ....................................... 12,945
283,000 NIKE Inc., Class B ...................................... 23,786
--------
36,731
--------
CONSUMER SERVICES - 1.9%
340,000 Carnival Corporation** .................................. 16,888
961,200 McDonald's Corporation .................................. 30,374
--------
47,262
--------
MEDIA - 0.9%
151,300 Gannett Company, Inc. ................................... 9,480
722,800 Time Warner Inc. ........................................ 12,888
--------
22,368
--------
RETAILING - 0.4%
186,900 Federated Department Stores, Inc. ....................... 11,470
--------
Total Consumer Discretionary ............................ 145,153
--------
CONSUMER STAPLES - 6.6%
FOOD & STAPLES RETAILING - 1.5%
17,800 Albertson's, Inc. ....................................... 447
816,700 Wal-Mart Stores, Inc.** ................................. 38,638
--------
39,085
--------
FOOD, BEVERAGE & TOBACCO - 3.1%
405,000 Altria Group, Inc. ...................................... 30,396
309,600 Anheuser-Busch Companies, Inc. .......................... 12,774
460,000 ConAgra Foods, Inc. ..................................... 10,704
396,300 Diageo PLC, Sponsored ADR** ............................. 23,552
--------
77,426
--------
HOUSEHOLD & PERSONAL PRODUCTS - 2.0%
432,200 Colgate-Palmolive Company ............................... 22,889
500,000 Procter & Gamble Company ................................ 27,995
--------
50,884
--------
Total Consumer Staples .................................. 167,395
--------
ENERGY - 11.7%
757,000 Baker Hughes Inc. ....................................... 41,605
360,000 BP PLC, Sponsored ADR ................................... 23,904
330,000 Chevron Corporation** ................................... 18,833
406,000 ConocoPhillips Company .................................. 26,544
411,600 EnCana Corporation ...................................... 18,876
149,400 Enterprise Products Partners LP** ....................... 3,863
920,800 GlobalSantaFe Corporation** ............................. 41,022
93,800 Kinder Morgan Energy Partners LP** ...................... 4,887
280,000 Murphy Oil Corporation .................................. 13,118
213,600 Peabody Energy Corporation .............................. 16,695
440,000 Schlumberger Ltd.** ..................................... $ 39,939
441,234 Valero Energy Corporation ............................... 46,435
--------
Total Energy ............................................ 295,721
--------
FINANCIALS - 24.2%
BANKS - 7.4%
1,139,096 Bank of America Corporation ............................. 49,824
316,200 Fifth Third Bancorp ..................................... 12,702
410,700 Mellon Financial Corporation** .......................... 13,015
1,181,000 North Fork Bancorporation, Inc. ......................... 29,926
176,500 SunTrust Banks, Inc. .................................... 12,793
348,000 TCF Financial Corporation** ............................. 9,431
560,000 U.S. Bancorp ............................................ 16,565
744,000 Wells Fargo & Company ................................... 44,789
--------
189,045
--------
DIVERSIFIED FINANCIALS - 7.0%
400,000 Allied Capital Corporation** ............................ 10,808
1,035,333 Citigroup Inc. .......................................... 47,398
222,000 Franklin Resources, Inc. ................................ 19,618
310,000 Freddie Mac ............................................. 19,018
209,600 Goldman Sachs Group, Inc. ............................... 26,487
775,000 JPMorgan Chase & Company ................................ 28,380
310,000 Morgan Stanley .......................................... 16,867
155,000 T. Rowe Price Group, Inc. ............................... 10,156
--------
178,732
--------
INSURANCE - 9.8%
986,000 ACE Ltd. ................................................ 51,370
1,051,000 AFLAC Inc. .............................................. 50,217
633,000 Allstate Corporation .................................... 33,416
593,400 American International Group, Inc. ...................... 38,452
750,000 Fidelity National Financial, Inc. ....................... 28,095
131,250 Fidelity National Title Group, Inc., Class A ............ 2,855
1,034,600 HCC Insurance Holdings, Inc. ............................ 31,038
246,200 MetLife, Inc. ........................................... 12,165
--------
247,608
--------
Total Financials 615,385
--------
HEALTH CARE - 6.8%
HEALTH CARE EQUIPMENT & SERVICES - 3.9%
375,000 Becton Dickinson & Company .............................. 19,031
200,700 Cardinal Health, Inc. ................................... 12,546
900,000 HCA, Inc. ............................................... 43,371
162,300 Roche Holding Ltd., Sponsored ADR ....................... 12,106
246,700 Wyeth ................................................... 10,993
--------
98,047
--------
PHARMACEUTICALS & BIOTECHNOLOGY - 2.9%
500,000 Abbott Laboratories ..................................... 21,525
215,200 Eli Lilly & Company ..................................... 10,715
681,000 Johnson & Johnson ....................................... 42,644
--------
74,884
--------
Total Health Care ....................................... 172,931
--------
See Notes to Financial Statements.
44
Portfolio of Investments (continued)
EQUITY INCOME FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- ----------
COMMON STOCKS (CONTINUED)
INDUSTRIALS - 10.6%
CAPITAL GOODS - 7.3%
400,300 3M Company ............................................ $ 30,415
266,000 Boeing Company ........................................ 17,194
776,300 Dover Corporation ..................................... 30,260
180,000 General Dynamics Corporation .......................... 20,934
560,000 General Electric Company .............................. 18,989
337,300 Honeywell International Inc. .......................... 11,536
420,000 Northrop Grumman Corporation .......................... 22,533
340,000 PACCAR Inc. ........................................... 23,807
185,000 Rockwell Automation, Inc. ............................. 9,833
----------
185,501
----------
COMMERCIAL SERVICES & SUPPLIES - 1.5%
555,000 Paychex, Inc. ......................................... 21,512
555,000 Waste Management Inc. ................................. 16,378
----------
37,890
----------
TRANSPORTATION - 1.8%
1,000,000 Cathay Pacific Airways Ltd., ADR ...................... 7,836
245,400 Union Pacific Corporation ............................ 16,977
277,000 United Parcel Service, Inc., Class B .................. 20,204
----------
45,017
----------
Total Industrials ..................................... 268,408
----------
INFORMATION TECHNOLOGY - 8.3%
COMMUNICATIONS EQUIPMENT - 2.2%
850,000 Harris Corporation** .................................. 34,935
1,266,000 Nokia Oyj, Sponsored ADR** ............................ 21,294
----------
56,229
----------
COMPUTERS & PERIPHERALS - 1.8%
805,000 Hewlett-Packard Company ............................... 22,572
275,000 International Business Machines Corporation ........... 22,517
----------
45,089
----------
IT SERVICES - 0.3%
137,000 Automatic Data Processing, Inc. ....................... 6,393
----------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 2.0%
750,000 Intel Corporation ..................................... 17,625
765,000 Microchip Technology Inc.** ........................... 23,080
40,800 Samsung Electronics Company Ltd., GDR++ ............... 10,826
----------
51,531
----------
SOFTWARE - 2.0%
2,010,900 Microsoft Corporation ................................. 51,680
----------
Total Information Technology .......................... 210,922
----------
MATERIALS - 2.9%
550,000 Cemex SA de CV, Sponsored ADR ......................... $ 28,638
400,000 Dow Chemical Company .................................. 18,344
435,200 Weyerhaeuser Company .................................. 27,566
----------
Total Materials ....................................... 74,548
----------
TELECOMMUNICATION SERVICES - 2.9%
904,800 BellSouth Corporation ................................. 23,543
1,014,700 SBC Communications Inc. ............................... 24,201
940,000 Vodafone Group PLC, Sponsored ADR ..................... 24,684
----------
Total Telecommunication Services ...................... 72,428
----------
UTILITIES - 4.6%
202,800 Dominion Resource Inc.** .............................. 15,429
1,110,000 FPL Group, Inc.** ..................................... 47,797
420,000 Progress Energy, Inc.** ............................... 18,308
980,000 Southern Company** .................................... 34,290
----------
Total Utilities ....................................... 115,824
----------
Total Common Stocks
(Cost $1,805,151) .................................. 2,138,715
----------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 6.8%
286,000 AMB Property Corporation** ............................ 12,635
67,000 AvalonBay Communities, Inc.** ......................... 5,779
180,000 Developers Diversified Realty Corporation ............. 7,862
131,000 Duke Realty Corporation** ............................. 4,467
370,000 Equity Office Properties Trust ........................ 11,396
398,000 Equity Residential** .................................. 15,622
234,000 General Growth Properties, Inc. ....................... 9,940
356,000 Health Care Property Investors, Inc.** ................ 9,060
756,500 Host Marriott Corporation** ........................... 12,702
226,000 Kimco Realty Corporation** ............................ 6,694
130,000 Macerich Company ...................................... 8,355
285,000 Plum Creek Timber Company, Inc. ....................... 11,087
421,300 ProLogis .............................................. 18,116
188,500 Public Storage, Inc. .................................. 12,479
217,000 Simon Property Group, Inc.** .......................... 15,542
144,400 Vornado Realty Trust .................................. 11,696
----------
Total REITs
(Cost $140,494) .................................... 173,432
----------
PRINCIPAL
AMOUNT
(000S)
- ---------
CONVERTIBLE SECURITIES - 1.9%
CONVERTIBLE BONDS AND NOTES - 1.9%
$ 12,550 Continental Airlines, Inc., Conv. Sr. Note,
5.000% due 06/15/2023 .............................. 10,510
10,375 CV Therapeutics, Inc., Conv. Sr. Sub. Deb.,
2.000% due 05/16/2023 .............................. 8,858
8,000 deCODE genetics, Inc., Conv. Sr. Note,
3.500% due 04/15/2011 .............................. 6,780
11,650 Echostar Communications, Conv. Sub. Note,
5.750% due 05/15/2008 .............................. 11,461
See Notes to Financial Statements.
45
Portfolio of Investments (continued)
EQUITY INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- -------
CONVERTIBLE SECURITIES (CONTINUED)
CONVERTIBLE BONDS AND NOTES (CONTINUED)
$ 3,500 ICOS Corporation, Conv. Sub. Note,
2.000% due 07/01/2023 ................................. $ 2,874
8,000 TriQuint Semiconductor, Inc., Conv. Sub. Note,
4.000% due 03/01/2007 ................................. 7,830
-------
Total Convertible Securities
(Cost $47,918) ........................................ 48,313
-------
FIXED INCOME SECURITIES - 2.5%
U.S. TREASURY NOTES - 1.7%
30,000 3.000% due 12/31/2006 .................................... 29,536
15,000 4.250% due 11/15/2014 .................................... 14,638
-------
Total U.S. Treasury Notes
(Cost $44,958) ........................................ 44,174
-------
CORPORATE BONDS AND NOTES - 0.8%
1,500 Aetna Inc., Company Guarantee, 7.625% due 08/15/2026 ..... 1,811
1,250 American Home Products Corporation, Deb.,
7.250% due 03/01/2023 ................................. 1,441
4,000 ERAC USA Finance Company, Note,
7.350% due 06/15/2008++ ............................... 4,214
1,000 Medpartners Inc., Sr. Note, 7.375% due 10/01/2006 ........ 1,020
500 Merrill Lynch & Company, Inc., Note,
6.375% due 10/15/2008 ................................. 520
4,000 TELUS Corporation, Note, 8.000% due 06/01/2011 ........... 4,503
2,000 Texas-New Mexico Power Company, Sr. Note,
6.250% due 01/15/2009 ................................. 2,057
2,000 Time Warner Inc., Deb., 9.150% due 02/01/2023 ............ 2,527
1,000 Westinghouse Electric Corporation, Deb.,
7.875% due 09/01/2023 ................................. 1,117
-------
Total Corporate Bonds and Notes
(Cost $17,409) ........................................ 19,210
-------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 0.0%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC) - 0.0%
213 6.500% due 09/01/2030 .................................... 219
138 7.000% due 09/01/2030 .................................... 144
-------
Total U.S. Government Agency Mortgage-
Backed Securities (Cost $341) ......................... 363
-------
COLLATERALIZED MORTGAGE OBLIGATION (CMO) - 0.0%
(Cost $253)
253 Reilly Mortgage FHA, Series 1982, (Partial default),
7.430% due 08/01/2022 ................................. 253@
-------
Total Fixed Income Securities
(Cost $62,961) ........................................ 64,000
-------
VALUE
SHARES (000S)
- --------- ----------
WARRANTS - 0.0%
(Cost $0)
4,500 V2 Music Holdings PLC,
Expires 05/07/2008+, ++ .................... $ 0
----------
PRINCIPAL
AMOUNT
(000S)
- ---------
REPURCHASE AGREEMENT - 4.2%
(Cost $105,499)
$ 105,499 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005, to be
repurchased at $105,511,000 on 11/01/2005
(Collateralized by U.S. Treasury
Obligations, having various interest rates
and maturities, market value
$107,701,000) .............................. 105,499
----------
SHORT-TERM INVESTMENT - 4.6%
(Cost $117,812)
117,812 Mellon GSL DBT II Collateral Fund+++ .......... 117,812
----------
TOTAL INVESTMENTS (Cost $2,279,835*) ...................... 104.3% 2,647,771
OTHER ASSETS (LIABILITIES) (NET) .......................... (4.3) (110,226)
----- ----------
NET ASSETS ................................................ 100.0% $2,537,545
===== ==========
- ----------
* Aggregate cost for federal tax purposes is $2,279,942.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $115,563,000, representing 4.6% of the total
net assets of the Fund (Collateral value $117,812,000) (See Note 7 to
Financial Statements).
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933, as amended.
+++ Represents investment purchased with cash collateral for securities loaned.
@ Represents fair value as determined in good faith under the direction of
the Board of Trustees.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
FHA -- Federal Housing Authority
GDR -- Global Depositary Receipt
See Notes to Financial Statements.
46
Portfolio of Investments
GROWTH & INCOME FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS - 94.3%
CONSUMER DISCRETIONARY - 10.6%
CONSUMER DURABLES & APPAREL - 0.9%
1,593,000 Mattel, Inc. ............................................ $ 23,497
--------
CONSUMER SERVICES - 4.9%
700,300 Apollo Group, Inc., Class A+** .......................... 44,133
1,674,000 Carnival Corporation** .................................. 83,148
--------
127,281
--------
MEDIA - 3.3%
984,999 Comcast Corporation, Class A+** ......................... 27,412
873,000 Comcast Corporation, Special Class A+ ................... 23,929
1,170,000 Viacom Inc., Class B .................................... 36,235
--------
87,576
--------
RETAILING - 1.5%
1,090,000 Gap, Inc. ............................................... 18,835
422,000 Kohl's Corporation+ ..................................... 20,311
--------
39,146
--------
Total Consumer Discretionary ............................ 277,500
--------
CONSUMER STAPLES - 9.9%
FOOD & STAPLES RETAILING - 4.3%
714,000 Costco Wholesale Corporation ............................ 34,529
2,006,000 Kroger Company+ ......................................... 39,919
790,000 Wal-Mart Stores, Inc. ................................... 37,375
--------
111,823
--------
FOOD, BEVERAGE & TOBACCO - 2.0%
901,000 PepsiCo, Inc. ........................................... 53,231
--------
HOUSEHOLD & PERSONAL PRODUCTS - 3.6%
820,000 Avon Products, Inc. ..................................... 22,132
488,000 Kimberly-Clark Corporation .............................. 27,738
770,000 Procter & Gamble Company ................................ 43,112
--------
92,982
--------
Total Consumer Staples .................................. 258,036
--------
ENERGY - 9.2%
794,000 BP PLC, Sponsored ADR ................................... 52,721
269,477 Chevron Corporation ..................................... 15,379
549,000 ENSCO International Inc. ................................ 25,029
969,000 ExxonMobil Corporation .................................. 54,400
1,312,000 GlobalSantaFe Corporation** ............................. 58,450
400,000 Schlumberger Ltd. ....................................... 36,308
--------
Total Energy ............................................ 242,287
--------
FINANCIALS - 21.7%
BANKS - 7.9%
1,997,000 Bank of America Corporation** ........................... $ 87,349
892,000 North Fork Bancorporation, Inc. ......................... 22,603
869,000 Wachovia Corporation .................................... 43,902
887,000 Wells Fargo & Company ................................... 53,397
--------
207,251
--------
DIVERSIFIED FINANCIALS - 7.0%
1,291,000 Citigroup Inc. .......................................... 59,102
1,005,000 Freddie Mac ............................................. 61,657
1,685,000 JPMorgan Chase & Company ................................ 61,705
--------
182,464
--------
INSURANCE - 6.8%
1,120,800 ACE Ltd. ................................................ 58,394
1,266,000 Allstate Corporation .................................... 66,832
755,000 American International Group, Inc. ...................... 48,924
81,000 Fidelity National Financial, Inc. ....................... 3,034
14,175 Fidelity National Title Group, Inc., Class A ............ 308
--------
177,492
--------
Total Financials ........................................ 567,207
--------
HEALTH CARE - 11.0%
HEALTH CARE EQUIPMENT & SERVICES - 4.7%
673,000 Baxter International Inc. ............................... 25,729
653,000 Cardinal Health, Inc. ................................... 40,819
980,000 Medtronic, Inc. ......................................... 55,527
--------
122,075
--------
PHARMACEUTICALS & BIOTECHNOLOGY - 6.3%
1,052,000 Bristol-Myers Squibb Company ............................ 22,271
813,000 Johnson & Johnson ....................................... 50,910
1,444,000 Pfizer Inc. ............................................. 31,393
1,620,000 Teva Pharmaceutical Industries Ltd., Sponsored ADR** .... 61,754
--------
166,328
--------
Total Health Care ....................................... 288,403
--------
INDUSTRIALS - 11.2%
CAPITAL GOODS - 11.2%
600,000 Boeing Company .......................................... 38,784
260,000 Caterpillar, Inc. ....................................... 13,673
2,147,000 General Electric Company ................................ 72,805
1,698,000 Honeywell International Inc. ............................ 58,072
540,000 Lockheed Martin Corporation** ........................... 32,702
251,000 Rockwell Automation, Inc. ............................... 13,341
2,468,000 Tyco International Ltd.** ............................... 65,130
--------
Total Industrials ....................................... 294,507
--------
See Notes to Financial Statements.
47
Portfolio of Investments (continued)
GROWTH & INCOME FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- ----------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY - 13.1%
COMMUNICATIONS EQUIPMENT - 2.0%
2,297,000 Motorola, Inc. ........................................ $ 50,902
----------
COMPUTERS & PERIPHERALS - 3.4%
1,651,000 Hewlett-Packard Company ............................... 46,294
523,000 International Business Machines Corporation ........... 42,823
----------
89,117
----------
IT SERVICES - 2.0%
1,289,000 First Data Corporation ................................ 52,140
----------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 1.8%
283,500 Freescale Semiconductor Inc., Class B+ ................ 6,770
1,694,000 Intel Corporation ..................................... 39,809
----------
46,579
----------
SOFTWARE - 3.9%
1,558,045 Computer Associates International, Inc. ............... 43,578
2,317,000 Microsoft Corporation ................................. 59,547
----------
103,125
----------
Total Information Technology .......................... 341,863
----------
MATERIALS - 1.7%
1,247,000 Alcoa Inc. ............................................ 30,290
326,000 E.I. du Pont de Nemours & Company** ................... 13,591
----------
Total Materials ....................................... 43,881
----------
TELECOMMUNICATION SERVICES - 1.2%
1,320,000 SBC Communications Inc. ............................... 31,482
----------
UTILITIES - 4.7%
994,000 FPL Group, Inc.** ..................................... 42,802
722,000 NiSource Inc. ......................................... 17,075
700,000 Pinnacle West Capital Corporation ..................... 29,232
954,000 Southern Company** .................................... 33,380
----------
Total Utilities ....................................... 122,489
----------
Total Common Stocks
(Cost $2,051,592) .................................. 2,467,655
----------
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ----------
REPURCHASE AGREEMENT - 6.1%
(Cost $159,528)
$ 159,528 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005, to
be repurchased at $159,545,000 on
11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities, market
value $162,857,000) ........................ $ 159,528
----------
SHORT-TERM INVESTMENT - 3.5%
(Cost $92,358)
92,358 Mellon GSL DBT II Collateral Fund++ ........... 92,358
----------
TOTAL INVESTMENTS (Cost $2,303,478*) ...................... 103.9% 2,719,541
OTHER ASSETS (LIABILITIES) (NET) .......................... (3.9) (100,891)
----- ----------
NET ASSETS ................................................ 100.0% $2,618,650
===== ==========
- ----------
* Aggregate cost for federal tax purposes is $2,314,345.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $90,260,000, representing 3.4% of the total
net assets of the Fund (Collateral value $92,358,000) (See Note 7 to
Financial Statements).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
See Notes to Financial Statements.
48
Portfolio of Investments
WEST COAST EQUITY FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS - 93.5%
CONSUMER DISCRETIONARY - 12.2%
AUTOMOBILES & COMPONENTS - 1.3%
804,900 Monaco Coach Corporation** .............................. $ 9,875
112,000 Toyota Motor Corporation, Sponsored ADR ................. 10,395
--------
20,270
--------
CONSUMER DURABLES & APPAREL - 2.5%
156,800 Columbia Sportswear Company+** .......................... 6,653
140,300 KB Home** ............................................... 9,169
392,100 Mattel, Inc.** .......................................... 5,783
204,600 NIKE Inc., Class B ...................................... 17,197
--------
38,802
--------
CONSUMER SERVICES - 3.4%
58,000 Ambassadors Group, Inc. ................................. 1,507
819,800 Hilton Hotels Corporation ............................... 15,945
1,267,185 Red Lion Hotels Corporation+*** ......................... 9,795
862,200 Starbucks Corporation+ .................................. 24,383
--------
51,630
--------
MEDIA - 4.3%
279,600 Getty Images, Inc.+** ................................... 23,210
233,800 Knight-Ridder, Inc.** ................................... 12,480
57,300 McClatchy Company, Class A .............................. 3,591
587,800 Univision Communications Inc., Class A+** ............... 15,365
492,600 Walt Disney Company ..................................... 12,005
--------
66,651
--------
RETAILING - 0.7%
68,000 Blue Nile, Inc.+** ...................................... 2,439
91,525 Building Materials Holding Corporation .................. 7,781
88,000 Restoration Hardware, Inc.+ ............................. 522
--------
10,742
--------
Total Consumer Discretionary ............................ 188,095
--------
CONSUMER STAPLES - 4.5%
FOOD & STAPLES RETAILING - 2.1%
541,440 Costco Wholesale Corporation ............................ 26,184
348,800 Kroger Company+ ......................................... 6,941
--------
33,125
--------
FOOD, BEVERAGE & TOBACCO - 0.4%
95,500 PepsiCo, Inc. ........................................... 5,642
--------
HOUSEHOLD & PERSONAL PRODUCTS - 2.0%
9,600 Central Garden & Pet Company+ ........................... 411
271,130 Clorox Company** ........................................ 14,674
54,400 Colgate-Palmolive Company ............................... 2,881
223,000 Estee Lauder Companies Inc., Class A .................... 7,397
90,800 Procter & Gamble Company ................................ 5,084
--------
30,447
--------
Total Consumer Staples .................................. 69,214
--------
ENERGY - 7.2%
257,000 Apache Corporation ...................................... $ 16,404
9,700 Berry Petroleum Company, Class A ........................ 581
44,200 CARBO Ceramics Inc. ..................................... 2,615
672,026 Chevron Corporation ..................................... 38,353
80,000 ExxonMobil Corporation .................................. 4,491
436,600 Nabors Industries Ltd.+** ............................... 29,964
228,200 Occidental Petroleum Corporation ........................ 18,000
--------
Total Energy ............................................ 110,408
--------
FINANCIALS - 17.7%
BANKS - 11.3%
529,800 Bank of America Corporation ............................. 23,174
343,200 Banner Corporation ...................................... 10,303
160,300 City National Corporation ............................... 11,763
420,300 East West Bancorp, Inc. ................................. 16,093
304,000 Greater Bay Bancorp** ................................... 7,627
28,300 KeyCorp** ............................................... 912
89,233 Pacific Capital Bancorp ................................. 3,219
923,700 U.S. Bancorp ............................................ 27,323
145,000 UCBH Holdings, Inc.** ................................... 2,523
59,200 United PanAm Financial Corporation+ ..................... 1,320
938,755 Washington Federal, Inc.** .............................. 21,582
806,316 Wells Fargo & Company ................................... 48,540
--------
174,379
--------
DIVERSIFIED FINANCIALS - 4.6%
1,375,200 Charles Schwab Corporation .............................. 20,903
443,300 Citigroup Inc. .......................................... 20,294
101,100 Countrywide Financial Corporation ....................... 3,212
274,000 Franklin Resources, Inc. ................................ 24,213
41,832 Piper Jaffray Companies, Inc.+ .......................... 1,437
--------
70,059
--------
INSURANCE - 1.8%
38,700 Safeco Corporation ...................................... 2,155
269,715 StanCorp Financial Group, Inc. .......................... 24,841
--------
26,996
--------
Total Financials ........................................ 271,434
--------
HEALTH CARE - 16.5%
HEALTH CARE EQUIPMENT & SERVICES - 7.1%
73,600 Affymetrix, Inc.+** ..................................... 3,344
218,400 Applera Corporation-Applied Biosystems Group** .......... 5,301
172,000 Caremark Rx, Inc.+ ...................................... 9,013
10,000 Cooper Companies, Inc.** ................................ 688
159,000 DaVita, Inc.+** ......................................... 7,820
75,660 Health Net, Inc.+ ....................................... 3,544
38,000 McKesson Corporation .................................... 1,726
1,135,800 OraSure Technologies, Inc.+ ............................. 12,505
289,800 ResMed Inc.+** .......................................... 11,050
689,763 SonoSite, Inc.+ ......................................... 20,272
46,000 Sybron Dental Specialties, Inc.+ ........................ 1,973
See Notes to Financial Statements.
49
Portfolio of Investments (continued)
WEST COAST EQUITY FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
HEALTH CARE EQUIPMENT & SERVICES (CONTINUED)
384,000 Varian Medical Systems, Inc.+** ......................... $ 17,495
290,700 VCA Antech, Inc.+** ..................................... 7,500
107,400 Zimmer Holdings, Inc.+** ................................ 6,849
--------
109,080
--------
PHARMACEUTICALS & BIOTECHNOLOGY - 9.4%
253,950 Abbott Laboratories ..................................... 10,933
255,700 Allergan, Inc.** ........................................ 22,834
338,539 Amgen, Inc.+ ............................................ 25,648
109,300 Amylin Pharmaceuticals, Inc.+** ......................... 3,673
88,800 CV Therapeutics, Inc.+ .................................. 2,225
424,400 Dendreon Corporation+** ................................. 2,614
432,675 EDEN Bioscience Corporation+ ............................ 277
228,000 Genentech, Inc.+ ........................................ 20,657
272,620 ICOS Corporation+** ..................................... 7,355
247,700 Johnson & Johnson ....................................... 15,511
59,000 Martek Biosciences Corporation+** ....................... 1,821
101,500 Neurocrine Biosciences, Inc.+** ......................... 5,361
581,000 Pfizer Inc. ............................................. 12,631
400,200 Watson Pharmaceuticals, Inc.+** ......................... 13,831
--------
145,371
--------
Total Health Care ....................................... 254,451
--------
INDUSTRIALS - 15.3%
CAPITAL GOODS - 11.5%
487,433 Boeing Company .......................................... 31,508
179,200 Cascade Corporation ..................................... 8,727
292,000 Dionex Corporation+ ..................................... 14,142
380,430 Electro Scientific Industries, Inc.+ .................... 8,358
27,700 Granite Construction Inc. ............................... 945
517,800 Greenbrier Companies, Inc. .............................. 14,265
293,100 Jacobs Engineering Group Inc.+** ........................ 18,685
309,400 Northrop Grumman Corporation ............................ 16,599
507,687 PACCAR Inc. ............................................. 35,548
238,400 Precision Castparts Corporation ......................... 11,291
421,000 Simpson Manufacturing Company, Inc. ..................... 16,613
--------
176,681
--------
COMMERCIAL SERVICES & SUPPLIES - 1.4%
36,700 Avery Dennison Corporation** ............................ 2,079
142,300 Copart, Inc.+** ......................................... 3,328
442,000 Robert Half International Inc.** ........................ 16,301
--------
21,708
--------
TRANSPORTATION - 2.4%
387,310 Alaska Air Group, Inc.+ ................................. 12,212
413,120 Expeditors International of Washington, Inc.** .......... 25,064
--------
37,276
--------
Total Industrials ....................................... 235,665
--------
INFORMATION TECHNOLOGY - 15.6%
COMMUNICATIONS EQUIPMENT - 1.2%
961,000 Cisco Systems, Inc.+ .................................... $ 16,769
100,000 Polycom, Inc.+ .......................................... 1,530
--------
18,299
--------
COMPUTERS & PERIPHERALS - 1.8%
1,149,400 Advanced Digital Information Corporation+ ............... 10,505
606,200 Hewlett-Packard Company ................................. 16,998
136,100 InFocus Corporation+ .................................... 436
--------
27,939
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.9%
11,200 Microvision, Inc.+** .................................... 56
508,700 Tektronix, Inc. ......................................... 11,690
79,700 Trimble Navigation Ltd.+** .............................. 2,301
--------
14,047
--------
INTERNET SOFTWARE & SERVICES - 0.7%
2,482,761 Art Technology Group, Inc.+ ............................. 3,004
8,000 Google Inc., Class A+ ................................... 2,977
869,700 WatchGuard Technologies, Inc.+ .......................... 3,027
89,100 WebEx Communications, Inc.+ ............................. 2,041
--------
11,049
--------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 3.7%
300,400 Applied Materials, Inc.** ............................... 4,920
311,400 Credence Systems Corporation+ ........................... 2,398
324,825 FEI Company+** .......................................... 6,139
849,000 Intel Corporation ....................................... 19,951
84,600 KLA-Tencor Corporation** ................................ 3,916
818,880 Lattice Semiconductor Corporation+ ...................... 3,587
503,800 LSI Logic Corporation+** ................................ 4,086
129,000 Novellus Systems, Inc.+** ............................... 2,820
25,600 NVIDIA Corporation+ ..................................... 859
992,300 Pixelworks, Inc.+** ..................................... 5,468
435,640 TriQuint Semiconductor, Inc.+ ........................... 1,830
--------
55,974
--------
SOFTWARE - 7.3%
614,600 Actuate Corporation+ .................................... 1,752
633,700 Adobe Systems Inc.** .................................... 20,437
93,000 Electronic Arts Inc.+ ................................... 5,290
370,150 Fair Isaac Corporation .................................. 15,457
40,000 Mentor Graphics Corporation+ ............................ 331
1,690,878 Microsoft Corporation ................................... 43,456
462,000 Quest Software, Inc.+** ................................. 6,426
438,608 RadiSys Corporation+ .................................... 7,048
220,500 Siebel Systems, Inc. .................................... 2,282
279,700 SupportSoft, Inc.+ ...................................... 1,122
250,500 Sybase, Inc.+** ......................................... 5,574
109,578 Symantec Corporation+ ................................... 2,613
--------
111,788
--------
Total Information Technology ............................ 239,096
--------
See Notes to Financial Statements.
50
Portfolio of Investments (continued)
WEST COAST EQUITY FUND
October 31, 2005
VALUE
SHARES (000S)
- ------- ----------
COMMON STOCKS (CONTINUED)
MATERIALS - 3.3%
12,000 Cemex SAde CV, Sponsored ADR ............................. $ 625
487,830 Oregon Steel Mills, Inc.+ ................................ 12,386
562,840 Schnitzer Steel Industries, Inc., Class A ................ 17,955
322,300 Weyerhaeuser Company** ................................... 20,414
----------
Total Materials 51,380
----------
TELECOMMUNICATION SERVICES - 1.1%
694,100 Nextel Partners, Inc., Class A+** ........................ 17,457
----------
UTILITIES - 0.1%
30,000 Sempra Energy ............................................ 1,329
----------
Total Common Stocks
(Cost $1,017,677) ..................................... 1,438,529
----------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 2.9%
358,700 AMB Property Corporation** ............................... 15,847
32,400 Essex Property Trust, Inc.** ............................. 2,912
230,000 Health Care Property Investors, Inc.** ................... 5,854
521,600 Plum Creek Timber Company, Inc. .......................... 20,290
----------
Total REITs
(Cost $34,926) ........................................ 44,903
----------
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ----------
REPURCHASE AGREEMENT - 3.5%
(Cost $53,808)
$ 53,808 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005, to be
repurchased at $53,814,000 on 11/01/2005
(Collateralized by U.S. Treasury Obligations,
having various interest rates and maturities,
market value $54,931,000) ..................... $ 53,808
----------
SHORT-TERM INVESTMENT - 8.0%
(Cost $121,873)
121,873 Mellon GSLDBT II
Collateral Fund++ .......................... 121,873
----------
TOTAL INVESTMENTS (Cost $1,228,284*) ..................... 107.9% 1,659,113
OTHER ASSETS (LIABILITIES) (NET) ......................... (7.9) (120,939)
----- ----------
NET ASSETS ............................................... 100.0% $1,538,174
===== ==========
- ----------
* Aggregate cost for federal tax purposes is $1,229,345.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $117,773,000, representing 7.7% of the total
net assets of the Fund (Collateral value $121,873,000) (See Note 7 to
Financial Statements).
*** Affiliated issuer as defined by the Investment Company Act of 1940 (the
Fund controls 5.0% or more of the outstanding voting shares of the com-
any). Total cost of such securities is $10,960,000 and the total value is
$9,795,000 or 0.6% of the total net assets of the Fund (See Note 12 to
Financial Statements).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
See Notes to Financial Statements.
51
Portfolio of Investments
MID CAP STOCK FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS - 91.3%
CONSUMER DISCRETIONARY - 11.8%
AUTOMOBILES & COMPONENTS - 2.2%
283,400 Magna International Inc., Class A .......................... $ 19,759
--------
CONSUMER DURABLES & APPAREL - 2.9%
437,600 Jones Apparel Group, Inc. ................................. 11,938
924,700 Mattel, Inc. .............................................. 13,639
--------
25,577
--------
CONSUMER SERVICES - 2.5%
138,000 Papa John's International, Inc.+ .......................... 7,166
296,500 Yum! Brands, Inc. ......................................... 15,083
--------
22,249
--------
RETAILING - 4.2%
275,300 Nordstrom, Inc. ........................................... 9,539
437,900 Tiffany & Company** ....................................... 17,253
202,700 Weight Watchers International, Inc.+ ...................... 10,656
--------
37,448
--------
Total Consumer Discretionary .............................. 105,033
--------
CONSUMER STAPLES - 2.5%
FOOD, BEVERAGE & TOBACCO - 1.4%
91,550 Dean Foods Company+ 3,310
197,400 J.M. Smucker Company 9,023
18,310 TreeHouse Foods, Inc.+ 473
--------
12,806
--------
HOUSEHOLD & PERSONAL PRODUCTS - 1.1%
296,100 Estee Lauder Companies Inc., Class A ...................... 9,821
--------
Total Consumer Staples .................................... 22,627
--------
ENERGY - 8.3%
211,900 Cimarex Energy Company+ ................................... 8,319
9,081 Hanover Compressor Company+ ............................... 117
292,600 Nabors Industries Ltd.+ ................................... 20,081
444,800 Noble Energy, Inc. ........................................ 17,814
144,000 Tesoro Corporation ........................................ 8,806
405,300 Tidewater Inc.** .......................................... 18,628
--------
Total Energy 73,765
--------
FINANCIALS - 18.4%
BANKS - 6.1%
765,111 North Fork Bancorporation, Inc. ........................... 19,388
646,000 TCF Financial Corporation ................................. 17,506
763,750 Washington Federal, Inc. .................................. 17,559
--------
54,453
--------
DIVERSIFIED FINANCIALS - 3.4%
397,000 A.G. Edwards, Inc. ........................................ 16,801
183,400 Ambac Financial Group, Inc. ............................... 13,001
--------
29,802
--------
INSURANCE - 8.9%
563,020 Fidelity National Financial, Inc.** ....................... $ 21,091
98,528 Fidelity National Title Group, Inc., Class A ............. 2,143
861,100 HCC Insurance Holdings, Inc. .............................. 25,833
280,300 Max Re Capital Ltd.** ..................................... 6,702
246,400 MGIC Investment Corporation ............................... 14,597
222,300 PMI Group, Inc. ........................................... 8,865
--------
79,231
--------
Total Financials .......................................... 163,486
--------
HEALTH CARE - 12.2%
HEALTH CARE EQUIPMENT & SERVICES - 10.4%
84,300 AmerisourceBergen Corporation ............................. 6,430
428,300 Covance Inc.+ ............................................. 20,837
323,900 Edwards Lifesciences Corporation+ ......................... 13,403
280,300 Express Scripts, Inc., Class A+ ........................... 21,137
459,882 IMS Health Inc. ........................................... 10,683
427,800 Universal Health Services, Inc., Class B** ................ 20,167
--------
92,657
--------
PHARMACEUTICALS & BIOTECHNOLOGY - 1.8%
434,100 Andrx Corporation+ ........................................ 6,715
457,925 Mylan Laboratories Inc. ................................... 8,797
--------
15,512
--------
Total Health Care 108,169
--------
INDUSTRIALS - 14.9%
CAPITAL GOODS - 6.6%
538,300 Federal Signal Corporation ................................ 8,731
548,600 Lincoln Electric Holdings, Inc. ........................... 21,708
219,100 PACCAR Inc. ............................................... 15,342
194,500 Teleflex Inc. ............................................. 12,874
--------
58,655
--------
COMMERCIAL SERVICES & SUPPLIES - 5.0%
785,000 Allied Waste Industries, Inc.+** .......................... 6,390
396,300 HNI Corporation ........................................... 19,379
522,800 Republic Services, Inc. ................................... 18,481
--------
44,250
--------
TRANSPORTATION - 3.3%
301,200 Alaska Air Group, Inc.+ ................................... 9,497
898,200 AMR Corporation+** ........................................ 12,134
579,900 Continental Airlines, Inc., Class B+** .................... 7,510
--------
29,141
--------
Total Industrials ......................................... 132,046
--------
See Notes to Financial Statements.
52
Portfolio of Investments (continued)
MID CAP STOCK FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY - 11.6%
COMPUTERS & PERIPHERALS - 2.9%
506,700 Electronics for Imaging, Inc.+ .......................... $ 12,723
463,000 Network Appliance, Inc.+ ................................ 12,668
--------
25,391
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.0%
328,900 Arrow Electronics, Inc.+ ................................ 9,706
233,700 Diebold, Inc. ........................................... 8,446
--------
18,152
--------
IT SERVICES - 1.3%
452,300 Acxiom Corporation ...................................... 9,652
129,300 Convergys Corporation+ .................................. 2,101
--------
11,753
--------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 2.5%
719,600 Microchip Technology Inc. ............................... 21,710
--------
SOFTWARE - 2.9%
43,700 Adobe Systems Inc. ...................................... 1,409
729,300 BMC Software Inc.+ ...................................... 14,287
690,900 Siebel Systems, Inc. .................................... 7,151
169,800 Synopsys, Inc.+ ......................................... 3,218
--------
26,065
--------
Total Information Technology ............................ 103,071
--------
MATERIALS - 5.4%
437,000 Cabot Corporation ....................................... 14,906
349,200 Lubrizol Corporation .................................... 14,523
841,200 Valspar Corporation ..................................... 18,549
--------
Total Materials ......................................... 47,978
--------
TELECOMMUNICATION SERVICES - 0.5%
95,200 United States Cellular Corporation+ ..................... 4,855
--------
UTILITIES - 5.7%
388,800 FPL Group, Inc. ......................................... 16,742
718,100 NiSource Inc. ........................................... 16,983
401,900 Pinnacle West Capital Corporation ....................... 16,783
--------
Total Utilities ......................................... 50,508
--------
Total Common Stocks
(Cost $638,513) ...................................... 811,538
--------
REAL ESTATE INVESTMENT TRUST (REIT) - 1.7%
(Cost $9,332)
348,900 General Growth Properties, Inc. ......................... $ 14,821
--------
PRINCIPAL
AMOUNT
(000S)
- ---------
REPURCHASE AGREEMENT - 7.0%
(Cost $62,294)
$62,294 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005, to
be repurchased at $62,301,000 on
11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities, market
value $63,594,000) ........................... 62,294
--------
SHORT-TERM INVESTMENT - 7.0%
(Cost $62,210)
62,210 Mellon GSLDBT II Collateral Fund++ .............. 62,210
--------
TOTAL INVESTMENTS (Cost $772,349*) .......................... 107.0% 950,863
OTHER ASSETS (LIABILITIES) (NET) ............................ (7.0) (62,464)
----- --------
NET ASSETS .................................................. 100.0% $888,399
===== ========
- ----------
* Aggregate cost for federal tax purposes is $775,518.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $61,526,000, representing 6.9% of the total
net assets of the Fund (Collateral value $62,210,000) (See Note 7 to
Financial Statements).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
See Notes to Financial Statements.
53
Portfolio of Investments
GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS - 98.4%
CONSUMER DISCRETIONARY - 19.8%
AUTOMOBILES & COMPONENTS - 0.7%
181,550 Harley-Davidson, Inc. ................................... $ 8,992
55,900 Toyota Motor Corporation (F) ............................ 2,592
--------
11,584
--------
CONSUMER DURABLES & APPAREL - 1.2%
41,900 Coach, Inc.+ ............................................ 1,348
36,400 Lennar Corporation, Class A ............................. 2,023
179,420 NIKE Inc., Class B ...................................... 15,080
89,100 Toll Brothers, Inc.+ .................................... 3,289
--------
21,740
--------
CONSUMER SERVICES - 2.7%
245,490 Apollo Group, Inc., Class A+ ............................ 15,471
166,100 Carnival Corporation** .................................. 8,250
15,900 Corporate Executive Board Company ....................... 1,314
313,980 Hilton Hotels Corporation ............................... 6,107
570,230 Starbucks Corporation+ .................................. 16,126
--------
47,268
--------
MEDIA - 3.7%
424,000 Comcast Corporation, Special Class A+ ................... 11,622
1,528,100 Time Warner Inc. ........................................ 27,246
89,635 Univision Communications Inc., Class A+** ............... 2,343
51,200 Viacom Inc., Class B .................................... 1,586
742,800 Walt Disney Company ..................................... 18,102
128,400 XM Satellite Radio Holdings Inc., Class A+** ............ 3,702
--------
64,601
--------
RETAILING - 11.5%
779,800 Amazon.com Inc.+ ........................................ 31,099
206,500 Bed Bath & Beyond Inc.+ ................................. 8,368
258,047 Best Buy Company, Inc.** ................................ 11,421
641,460 eBay Inc.+ .............................................. 25,402
714,547 Expedia, Inc.+** ........................................ 13,426
1,274,710 Home Depot, Inc. ........................................ 52,314
744,972 IAC/ InterActiveCorp+** ................................. 19,071
59,700 J.C. Penney Company, Inc. (Holding Company) ............. 3,057
90,000 Kohl's Corporation+ ..................................... 4,332
105,500 Lowe's Companies, Inc. .................................. 6,411
58,500 Michaels Stores, Inc. ................................... 1,935
672,515 Staples, Inc. ........................................... 15,286
56,300 Target Corporation ...................................... 3,135
83,200 Williams-Sonoma, Inc.+ .................................. 3,254
--------
198,511
--------
Total Consumer Discretionary ............................ 343,704
--------
CONSUMER STAPLES - 8.0%
FOOD & STAPLES RETAILING - 0.8%
52,300 Costco Wholesale Corporation ............................ $ 2,529
171,300 CVS Corporation ......................................... 4,182
66,700 Sysco Corporation ....................................... 2,128
107,800 Wal-Mart Stores, Inc. ................................... 5,100
--------
13,939
--------
FOOD, BEVERAGE & TOBACCO - 4.3%
373,230 Cadbury Schweppes PLC (F) ............................... 3,678
345,300 Coca-Cola Company ....................................... 14,772
15,567 Nestle SA(F) ............................................ 4,635
633,350 PepsiCo, Inc. ........................................... 37,419
195,600 Wm. Wrigley Jr. Company ................................. 13,594
--------
74,098
--------
HOUSEHOLD & PERSONAL PRODUCTS - 2.9%
850,657 Procter & Gamble Company ................................ 47,628
123,330 Reckitt Benckiser PLC (F) ............................... 3,727
--------
51,355
--------
Total Consumer Staples .................................. 139,392
--------
ENERGY - 4.0%
36,400 Apache Corporation ...................................... 2,323
41,300 EOG Resources, Inc. ..................................... 2,799
277,640 ExxonMobil Corporation .................................. 15,587
181,395 Halliburton Company ..................................... 10,721
69,273 Kinder Morgan Management LLC+ ........................... 3,352
202,855 Occidental Petroleum Corporation ........................ 16,001
96,200 Schlumberger Ltd ........................................ 8,732
147,200 Smith International, Inc. ............................... 4,769
73,000 Transocean Inc.+ ........................................ 4,197
--------
Total Energy ............................................ 68,481
--------
FINANCIALS - 9.6%
BANKS - 0.2%
59,800 Bank of America Corporation ............................. 2,615
--------
DIVERSIFIED FINANCIALS - 6.7%
558,270 American Express Company ................................ 27,785
12,900 Chicago Mercantile Exchange Holdings Inc. ............... 4,711
79,300 Citigroup Inc. .......................................... 3,630
259,880 Fannie Mae .............................................. 12,350
39,700 Franklin Resources, Inc. ................................ 3,508
51,500 Goldman Sachs Group, Inc. ............................... 6,508
35,900 Legg Mason, Inc. ........................................ 3,852
16,400 Lehman Brothers Holdings Inc. ........................... 1,963
360,670 Merrill Lynch & Company, Inc. ........................... 23,350
459,430 Morgan Stanley .......................................... 24,998
142,300 Nomura Holdings, Inc. (F) ............................... 2,195
18,000 T. Rowe Price Group, Inc. ............................... 1,179
--------
116,029
--------
See Notes to Financial Statements.
54
Portfolio of Investments (continued)
GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS (CONTINUED)
FINANCIALS (CONTINUED)
INSURANCE - 2.7%
345,040 American International Group, Inc. ...................... $ 22,359
195 Berkshire Hathaway, Inc., Class A+ ...................... 16,750
37,000 Hartford Financial Services Group, Inc. ................. 2,951
76,000 Prudential Financial, Inc. .............................. 5,532
--------
47,592
--------
Total Financials ........................................ 166,236
--------
HEALTH CARE - 21.0%
HEALTH CARE EQUIPMENT & SERVICES - 7.7%
45,300 Aetna Inc. .............................................. 4,012
241,340 Biomet, Inc.** .......................................... 8,406
287,825 Caremark Rx, Inc.+ ...................................... 15,082
44,100 Fisher Scientific International Inc.+ ................... 2,492
9,700 Laboratory Corporation of America Holdings+ ............. 468
42,700 Medco Health Solutions, Inc.+ ........................... 2,412
740,185 Medtronic, Inc. ......................................... 41,939
63,200 Millipore Corporation+ .................................. 3,869
19,300 Quest Diagnostics Inc. .................................. 901
37,583 Roche Holding AG-Genusschein (F) ........................ 5,615
62,200 Stryker Corporation ..................................... 2,555
723,210 UnitedHealth Group Inc. ................................. 41,867
71,500 Varian Medical Systems, Inc.+ ........................... 3,257
37,400 Waters Corporation+ ..................................... 1,354
--------
134,229
--------
PHARMACEUTICALS & BIOTECHNOLOGY - 13.3%
743,410 Amgen, Inc.+ ............................................ 56,321
395,340 Biogen Idec Inc.+ ....................................... 16,063
420,700 Eli Lilly & Company ..................................... 20,947
553,685 Genentech, Inc.+ ........................................ 50,164
71,900 Genzyme Corporation+ .................................... 5,198
42,000 Gilead Sciences, Inc.+ .................................. 1,984
361,540 Johnson & Johnson ....................................... 22,640
44,300 MedImmune, Inc.+ ........................................ 1,549
234,825 Novartis AG (F) ......................................... 12,630
711,820 Pfizer Inc. ............................................. 15,475
55,630 Sanofi-Aventis Group (F) ................................ 4,457
396,840 Sanofi-Aventis, ADR ..................................... 15,921
170,362 Teva Pharmaceutical Industries Ltd., Sponsored ADR** .... 6,494
--------
229,843
--------
Total Health Care 364,072
--------
INDUSTRIALS - 6.1%
CAPITAL GOODS - 5.4%
55,300 3M Company .............................................. 4,202
91,500 Danaher Corporation ..................................... 4,767
93,400 Empresa Brasileira de Aeronautica SA, ADR ............... 3,623
34,400 General Dynamics Corporation ............................ 4,001
1,894,408 General Electric Company ................................ $ 64,239
22,900 Ingersoll-Rand Company, Class A ......................... 865
90,600 Lockheed Martin Corporation ............................. 5,487
21,800 Tyco International Ltd .................................. 575
97,400 United Technologies Corporation ......................... 4,995
--------
92,754
--------
TRANSPORTATION - 0.7%
50,700 Expeditors International of Washington, Inc.** .......... 3,076
80,115 FedEx Corporation ....................................... 7,365
120,800 Southwest Airlines Company .............................. 1,934
--------
12,375
--------
Total Industrials ....................................... 105,129
--------
INFORMATION TECHNOLOGY - 27.1%
COMMUNICATIONS EQUIPMENT - 8.0%
2,205,345 Cisco Systems, Inc.+ .................................... 38,483
174,700 Corning Inc.+ ........................................... 3,510
558,500 Juniper Networks, Inc.+ ................................. 13,030
1,983,545 Motorola, Inc. .......................................... 43,955
22,900 Nokia Oyj, Sponsored ADR** .............................. 385
455,670 QUALCOMM Inc. ........................................... 18,118
281,500 Research In Motion Ltd.+** .............................. 17,310
97,300 Telefonaktiebolaget LM Ericsson, Sponsored ADR .......... 3,192
--------
137,983
--------
COMPUTERS & PERIPHERALS - 2.4%
49,100 Apple Computer, Inc.+ ................................... 2,828
865,830 Dell Inc.+ .............................................. 27,602
273,500 EMC Corporation+ ........................................ 3,818
67,600 International Business Machines Corporation ............. 5,535
78,500 Network Appliance, Inc.+ ................................ 2,148
--------
41,931
--------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.4%
44,500 L-3 Communications Holdings, Inc.** ..................... 3,463
130,600 PerkinElmer, Inc. ....................................... 2,882
21,000 Tektronix, Inc. ......................................... 483
--------
6,828
--------
INTERNET SOFTWARE & SERVICES - 3.8%
438,300 Akamai Technologies, Inc.+ .............................. 7,600
23,500 Google Inc., Class A+ ................................... 8,745
120,100 VeriSign Inc.+ .......................................... 2,838
1,282,505 Yahoo! Inc.+** .......................................... 47,414
--------
66,597
--------
IT SERVICES - 0.7%
170,300 Automatic Data Processing, Inc. ......................... 7,946
92,900 Cognizant Technology Solutions Corporation, Class A+ .... 4,086
--------
12,032
--------
See Notes to Financial Statements.
55
Portfolio of Investments (continued)
GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- ----------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 5.6%
106,100 Advanced Micro Devices, Inc.+ ......................... $ 2,464
78,000 Analog Devices, Inc.** ................................ 2,713
157,100 Broadcom Corporation, Class A+ ........................ 6,670
656,050 Intel Corporation ..................................... 15,417
65,600 International Rectifier Corporation+ .................. 1,941
135,800 Linear Technology Corporation ......................... 4,510
48,600 Marvell Technology Group Ltd.+** ...................... 2,256
101,000 Microchip Technology Inc. ............................. 3,047
37,550 Samsung Electronics Company Ltd., GDR** ............... 9,963
1,359,750 Texas Instruments Inc. ................................ 38,821
345,724 Xilinx, Inc. .......................................... 8,280
----------
96,082
----------
SOFTWARE - 6.2%
181,200 Adobe Systems Inc. .................................... 5,844
61,900 Autodesk, Inc. ........................................ 2,793
13,700 Cadence Design Systems, Inc.+** ....................... 219
271,800 Electronic Arts Inc.+ ................................. 15,460
85,200 Mercury Interactive Corporation+ ...................... 2,964
2,064,112 Microsoft Corporation ................................. 53,048
508,000 Red Hat, Inc.+ ........................................ 11,796
363,745 SAPAG, Sponsored ADR .................................. 15,619
----------
107,743
----------
Total Information Technology .......................... 469,196
----------
MATERIALS - 1.7%
50,000 Air Products & Chemicals, Inc. ........................ 2,862
83,000 Monsanto Company ...................................... 5,230
158,800 Praxair, Inc. ......................................... 7,846
82,600 Rio Tinto PLC, Sponsored ADR .......................... 12,607
----------
Total Materials ....................................... 28,545
----------
TELECOMMUNICATION SERVICES - 1.1%
102,800 American Tower Corporation, Class A+ .................. 2,452
401,420 China Mobile (Hong Kong) Ltd .......................... 9,012
209,700 Sprint Nextel Corporation** ........................... 4,888
1,124,930 Vodafone Group PLC (F) ................................ 2,954
----------
Total Telecommunication Services ...................... 19,306
----------
Total Common Stocks
(Cost $1,526,610) .................................. 1,704,061
----------
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ----------
COMMERCIAL PAPER - 1.3%
(Cost $22,500)
$22,500 Prudential Funding LLC,
3.930% due 11/01/2005++ .............................. $ 22,500
----------
REPURCHASE AGREEMENT - 0.4%
(Cost $7,491)
7,491 Agreement with Credit Suisse First Boston Corporation,
3.930% dated 10/31/2005, to be repurchased at
$7,492,000 on 11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various interest rates
and maturities, market value $7,647,000) ............. 7,491
----------
SHORT-TERM INVESTMENT - 3.6%
(Cost $62,919)
62,919 Mellon GSLDBT II
Collateral Fund+++ ................................... 62,919
----------
TOTAL INVESTMENTS (Cost $1,619,520*) ..................... 103.7% 1,796,971
OTHER ASSETS (LIABILITIES) (NET) ......................... (3.7) (64,591)
----- ----------
NET ASSETS ............................................... 100.0% $1,732,380
===== ==========
- ----------
* Aggregate cost for federal tax purposes is $1,635,481.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $61,557,000, representing 3.6% of the total
net assets of the Fund (Collateral value $62,919,000) (See Note 7 to
Financial Statements).
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
+++ Represents investment purchased with cash collateral for
securities loaned.
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
FORWARD FOREIGN CURRENCY
CONTRACTS TO RECEIVE
(000S)
---------------------------------
NET
IN UNREALIZED
EXPIRATION LOCAL VALUE IN EXCHANGE DEPRECIATION
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- --------- -------- ---------- ------------
11/02/2005 CHF 2,235 1,734 1,748 $(14)
====
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
CHF -- Swiss Franc
(F) -- Foreign Shares
GDR -- Global Depositary Receipt
See Notes to Financial Statements.
56
Portfolio of Investments
SMALL CAP VALUE FUND
October 31, 2005
VALUE
SHARES (000S)
- ------- -------
COMMON STOCKS - 79.7%
CONSUMER DISCRETIONARY - 11.1%
AUTOMOBILES & COMPONENTS - 2.8%
301,000 Accuride Corporation+ ...................................... $ 3,822
351,800 Tenneco, Inc.+ ............................................. 5,812
-------
9,634
-------
CONSUMER DURABLES & APPAREL - 2.4%
444,800 Department 56, Inc.+ ....................................... 4,848
136,800 Rocky Shoes & Boots, Inc.+ ................................. 3,382
-------
8,230
-------
MEDIA - 1.8%
70,500 Carmike Cinemas, Inc. ...................................... 1,556
296,000 Reader's Digest Association, Inc. .......................... 4,535
-------
6,091
-------
RETAILING - 4.1%
121,600 Children's Place Retail Stores, Inc.+ ...................... 5,220
698,200 Movie Gallery, Inc. ........................................ 4,860
108,000 RC2 Corporation+ ........................................... 3,778
-------
13,858
-------
Total Consumer Discretionary .............................. 37,813
-------
CONSUMER STAPLES - 5.0%
FOOD & STAPLES RETAILING - 3.2%
216,100 Fresh Del Monte Produce, Inc.** ............................ 5,633
275,700 John B. Sanfilippo & Son, Inc.+ ............................ 5,040
-------
10,673
-------
HOUSEHOLD & PERSONAL PRODUCTS - 1.8%
74,100 Central Garden & Pet Company+ .............................. 3,177
90,800 Jarden Corporation+** ...................................... 3,068
-------
6,245
-------
Total Consumer Staples ..................................... 16,918
-------
ENERGY - 7.5%
163,400 Cimarex Energy Company+ .................................... 6,415
135,100 Comstock Resources, Inc.+ .................................. 4,068
103,300 Encore Acquisition Company+ ................................ 3,544
33,500 Giant Industries, Inc.+ .................................... 1,916
126,800 St. Mary Land & Exploration Company** ...................... 4,313
83,600 Tesoro Corporation ......................................... 5,112
-------
Total Energy ............................................... 25,368
-------
FINANCIALS - 12.7%
BANKS - 5.5%
121,500 Capital Corporation of the West ............................ 4,010
237,800 Dime Community Bancshares .................................. 3,424
366,230 Oriental Financial Group, Inc.** ........................... 4,549
142,947 U.S.B. Holding Company, Inc. ............................... 3,030
157,100 Washington Federal, Inc. ................................... 3,612
-------
18,625
-------
INSURANCE - 7.2%
152,900 Navigators Group, Inc.+ .................................... $ 5,932
101,800 Safety Insurance Group, Inc.** ............................. 3,829
119,600 State Auto Financial Corporation ........................... 3,940
107,100 Stewart Information Services Corporation ................... 5,454
121,700 United Fire & Casualty Company ............................. 5,479
-------
24,634
-------
Total Financials ........................................... 43,259
-------
HEALTH CARE - 5.8%
HEALTH CARE EQUIPMENT & SERVICES - 2.6%
547,900 Gene Logic, Inc.+ .......................................... 2,071
173,300 Kindred Healthcare, Inc.+ .................................. 4,853
100,200 Molina Healthcare Inc.+ .................................... 2,059
-------
8,983
-------
PHARMACEUTICALS & BIOTECHNOLOGY - 3.2%
207,200 Andrx Corporation+ ......................................... 3,205
479,400 Bradley Pharmaceuticals, Inc.+** ........................... 5,772
366,000 Lannett Company, Inc.+** ................................... 1,830
-------
10,807
-------
Total Health Care .......................................... 19,790
-------
INDUSTRIALS - 12.6%
CAPITAL GOODS - 4.5%
203,900 Cubic Corporation** ........................................ 3,346
105,400 DRS Technologies, Inc. ..................................... 5,192
147,000 Griffon Corporation+** ..................................... 3,234
119,500 Lennox International, Inc. ................................. 3,333
-------
15,105
-------
COMMERCIAL SERVICES & SUPPLIES - 0.8%
191,900 Duratek, Inc.+ ............................................. 2,738
-------
TRANSPORTATION - 7.3%
112,700 Alaska Air Group, Inc.+ .................................... 3,553
374,200 AMR Corporation+** ......................................... 5,056
302,100 Continental Airlines, Inc., Class B+** ..................... 3,912
97,600 Dampskibsselskabet TORM A/S, ADR** ......................... 5,214
108,200 Genesee & Wyoming Inc., Class A+ ........................... 3,468
204,300 OMI Corporation** .......................................... 3,694
-------
24,897
-------
Total Industrials .......................................... 42,740
-------
INFORMATION TECHNOLOGY - 11.0%
COMMUNICATIONS EQUIPMENT - 0.9%
97,300 Bel Fuse Inc., Class B ..................................... 2,929
-------
COMPUTERS & PERIPHERALS - 1.5%
202,000 Hutchinson Technology, Inc.+** ............................. 5,009
-------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.1%
254,600 LeCroy Corporation+ ........................................ 3,911
-------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 4.3%
845,100 Axcelis Technologies, Inc.+ ................................ 3,676
551,100 Credence Systems Corporation+ .............................. 4,244
See Notes to Financial Statements.
57
Portfolio of Investments (continued)
SMALL CAP VALUE FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT (CONTINUED)
223,500 Mattson Technology, Inc.+ ............................... $ 1,763
380,500 OmniVision Technologies, Inc.+** ........................ 4,905
--------
14,588
--------
SOFTWARE - 3.2%
786,200 Geac Computer Corporation Ltd. (F)+ ..................... 6,982
519,400 RealNetworks, Inc.+ ..................................... 4,051
--------
11,033
--------
Total Information Technology ............................ 37,470
--------
MATERIALS - 10.4%
207,200 Century Aluminum Company+ ............................... 3,767
64,000 Headwaters, Inc.+** ..................................... 2,038
199,300 Inmet Mining Corporation (F) ............................ 3,332
2,632,700 Kingsgate Consolidated Ltd. (F) ......................... 8,064
298,800 Metal Management, Inc. .................................. 7,234
3,773,400 Minara Resources Ltd. (F) ............................... 4,781
439,900 Randgold Resources Ltd., ADR+ ........................... 5,991
--------
Total Materials ......................................... 35,207
--------
TELECOMMUNICATION SERVICES - 2.9%
270,400 Asia Satellite Telecommunications
Holdings Ltd., Sponsored ADR ............................ 4,637
202,800 USA Mobility, Inc.+ ..................................... 5,072
--------
Total Telecommunication Services ........................ 9,709
--------
UTILITIES - 0.7%
81,700 Suburban Propane Partners LP** .......................... 2,297
--------
Total Common Stocks
(Cost $251,347) ...................................... 270,571
--------
CANADIAN INCOME TRUSTS - 6.0%
ENERGY - 3.2%
150,400 Harvest Energy Trust (F)** .............................. 4,268
217,500 Vermilion Energy Trust (F) .............................. 4,814
67,200 Zargon Energy Trust (F) ................................. 1,661
--------
Total Energy ............................................ 10,743
--------
CONSUMER DISCRETIONARY - 2.1%
FOOD, BEVERAGE & TOBACCO - 2.1%
366,300 Arctic Glacier Income Fund .............................. 2,977
460,400 Connors Brothers Income Fund (F) ........................ 4,292
--------
Total Consumer Discretionary ............................ 7,269
--------
MATERIALS - 0.7%
218,200 TimberWest Forest Corporation (F) ....................... 2,483
--------
Total Canadian Income Trusts
(Cost $18,570) ....................................... 20,495
--------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 4.3%
22,200 Alexandria Real Estate Equities, Inc. ................... 1,795
106,000 Entertainment Properties Trust .......................... 4,251
290,800 Equity Inns, Inc. ....................................... 3,792
50,300 Sovran Self Storage, Inc.** ............................. $ 2,340
227,500 Winston Hotels, Inc. .................................... 2,345
--------
Total REITs
(Cost $12,056) ....................................... 14,523
--------
INCOME DEPOSIT SECURITIES - 1.9%
CAPITAL GOODS - 1.9%
770,000 New Flyer Industries Inc. (F)++ ......................... 5,379
129,600 New Flyer Industries Inc. (F) ........................... 905
--------
6,284
--------
Total Income Deposit Securities
(Cost $7,456) ........................................ 6,284
--------
CONTRACTS
- ---------
PURCHASED PUT OPTIONS - 2.9%
10,730 iShares Russell 2000 Index,
Expires January 2007 @ $56 ........................... 2,522
29,250 iShares Russell 2000 Index,
Expires January 2007 @ $49 ........................... 3,144
10,300 iShares Russell 2000 Index,
Expires January 2008 @ $55 ........................... 3,090
20,000 NASDAQ-100 Index,
Expires January 2007 @ $30 ........................... 1,200
--------
Total Purchased Put Options
(Cost $10,830) ....................................... 9,956
--------
PRINCIPAL
AMOUNT
(000S)
- ---------
REPURCHASE AGREEMENT - 4.5%
(Cost $15,121)
$15,121 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005, to be
repurchased at $15,123,000 on 11/01/2005
(Collateralized by U.S. Treasury Obligations,
having various interest rates and maturities,
market value $15,437,000) .............................. 15,121
--------
SHORT-TERM INVESTMENT - 11.7%
(Cost $39,799)
39,799 Mellon GSLDBT II
Collateral Fund+++ ..................................... 39,799
--------
TOTAL INVESTMENTS (Cost $355,179*) ......................... 111.0% 376,749
OTHER ASSETS (LIABILITIES) (NET) ........................... (11.0) (37,447)
----- --------
NET ASSETS ................................................. 100.0% $339,302
===== ========
- ----------
* Aggregate cost for federal tax purposes is $354,358.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $38,356,000, representing 11.3% of the total
net assets of the Fund (Collateral value $39,799,000) (See Note 7 to
Financial Statements).
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule
144Aof the Securities Act of 1933, as amended.
+++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
(F) -- Foreign Shares
See Notes to Financial Statements.
58
Portfolio of Investments
SMALL CAP GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- ------- -------
COMMON STOCKS - 96.2%
CONSUMER DISCRETIONARY - 14.4%
CONSUMER DURABLES & APPAREL - 4.7%
50,880 Carter's, Inc.+ ............................................ $ 3,213
44,748 Charles & Colvard Ltd.** ................................... 1,038
175,248 Coach, Inc.+ ............................................... 5,640
58,469 Desarrolladora Homex SA de CV, ADR+ ........................ 1,748
57,200 Volcom, Inc.+ .............................................. 1,749
114,341 Warnaco Group, Inc.+ ....................................... 2,593
-------
15,981
-------
CONSUMER SERVICES - 2.7%
70,500 BJ's Restaurants Inc.+ ..................................... 1,530
65,300 Cheesecake Factory, Inc.+** ................................ 2,241
55,912 Ctrip.com International Ltd., ADR+ ......................... 3,217
78,646 Sonic Corporation+ ......................................... 2,276
-------
9,264
-------
MEDIA - 1.3%
163,500 Focus Media Holding Ltd., ADR+ ............................. 4,293
-------
RETAILING - 5.7%
55,119 America's Car-Mart, Inc.+ .................................. 891
17,709 Audible, Inc.+** ........................................... 185
51,252 Blue Nile, Inc.+** ......................................... 1,838
57,239 Guitar Center, Inc.+ ....................................... 2,983
176,859 Hibbett Sporting Goods, Inc.+ .............................. 4,639
107,381 Stamps.com, Inc.+ .......................................... 2,165
33,089 Tractor Supply Company+ .................................... 1,605
169,164 Urban Outfitters, Inc.+ .................................... 4,792
-------
19,098
-------
Total Consumer Discretionary ............................... 48,636
-------
CONSUMER STAPLES - 1.9%
FOOD & STAPLES RETAILING - 1.1%
96,314 Central European Distribution Corporation+** .............. 3,834
-------
HOUSEHOLD & PERSONAL PRODUCTS - 0.8%
44,247 Parlux Fragrances, Inc.+** ................................ 1,025
36,662 USANA Health Sciences, Inc.+ .............................. 1,614
-------
2,639
-------
Total Consumer Staples ..................................... 6,473
-------
ENERGY - 6.1%
81,224 ATPOil & Gas Corporation+** ................................ 2,577
93,100 Bronco Drilling Company, Inc.+ ............................. 2,257
178,061 Carrizo Oil & Gas, Inc.+ ................................... 4,619
37,900 Dril-Quip, Inc.+ ........................................... 1,550
215,100 Input/Output, Inc.+** ...................................... 1,652
15,500 Lufkin Industries, Inc. .................................... 721
21,700 SEACOR Holdings Inc.+ ...................................... 1,554
86,037 Veritas DGC, Inc.+ ......................................... $ 2,771
43,500 W-H Energy Services, Inc.+ ................................. 1,318
36,056 Whiting Petroleum Corporation+ ............................. 1,462
-------
Total Energy ............................................... 20,481
-------
FINANCIALS - 4.4%
BANKS - 1.7%
79,900 Brookline Bancorp, Inc. .................................... 1,123
21,157 Mercantile Bank Corporation ................................ 807
70,300 Midwest Banc Holdings, Inc.** .............................. 1,578
80,500 Signature Bank+ ............................................ 2,334
-------
5,842
-------
DIVERSIFIED FINANCIALS - 1.1%
86,384 First Cash Financial Services, Inc.+ ....................... 2,265
156,600 TradeStation Group, Inc.+ .................................. 1,563
-------
3,828
-------
INSURANCE - 1.6%
152,700 American Equity Investment Life
Holding Company** .......................................... 1,778
73,706 Delphi Financial Group, Inc., Class A ...................... 3,452
-------
5,230
-------
Total Financials .......................................... 14,900
-------
HEALTH CARE - 28.1%
HEALTH CARE EQUIPMENT & SERVICES - 13.9%
122,591 Adeza Biomedical Corporation+ .............................. 2,090
50,214 Advisory Board Company+ .................................... 2,423
188,700 Align Technology, Inc.+** .................................. 1,393
39,022 American Healthways, Inc.+ ................................. 1,583
155,231 Animas Corporation+** ...................................... 2,554
73,416 ArthroCare Corporation+** .................................. 2,697
58,080 Aspect Medical Systems, Inc.+ .............................. 1,895
36,329 Centene Corporation+** ..................................... 732
153,132 Conceptus, Inc.+** ......................................... 1,573
55,000 Conor Medsystems, Inc.+ .................................... 1,234
88,700 HealthExtras, Inc.+ ........................................ 1,867
23,053 Hologic, Inc.+ ............................................. 1,278
101,800 Immucor, Inc.+ ............................................. 2,639
62,207 IntraLase Corporation+ ..................................... 962
82,852 Kyphon, Inc.+ .............................................. 3,321
32,284 Laserscope+ ................................................ 872
71,684 LCA-Vision, Inc. ........................................... 3,011
77,558 LHC Group, Inc.+ ........................................... 1,256
90,852 Merge Technologies, Inc.+** ................................ 2,096
84,900 Micrus Endovascular Corporation+ ........................... 727
8,000 Quidel Corporation+ ........................................ 93
115,795 SFBC International, Inc.+ .................................. 4,937
64,125 Syneron Medical Ltd.+ ...................................... 2,305
82,817 Ventiv Health, Inc.+ ....................................... 2,090
127,619 VNUS Medical Technologies, Inc.+** ......................... 1,305
-------
46,933
-------
See Notes to Financial Statements.
59
Portfolio of Investments (continued)
SMALL CAP GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- ------- -------
COMMON STOCKS (CONTINUED)
HEALTH CARE (CONTINUED)
PHARMACEUTICALS & BIOTECHNOLOGY - 14.2%
81,600 Adams Respiratory Therapeutics, Inc.+ ...................... $ 3,052
46,000 Amylin Pharmaceuticals, Inc.+** ............................ 1,546
121,573 Anika Therapeutics, Inc.+ .................................. 1,500
139,400 CV Therapeutics, Inc.+** ................................... 3,493
55,938 Digene Corporation+ ........................................ 1,689
169,900 Encysive Pharmaceuticals, Inc.+ ............................ 1,784
82,235 First Horizon Pharmaceutical Corporation+ .................. 1,187
28,200 ICU Medical, Inc.+ ......................................... 984
122,700 Keryx Biopharmaceuticals, Inc.+** .......................... 1,773
93,329 Kos Pharmaceuticals, Inc.+ ................................. 5,600
228,809 LifeCell Corporation+ ...................................... 3,707
36,321 Medicis Pharmaceutical Corporation, Class A** .............. 1,071
132,844 MGI Pharma, Inc.+** ........................................ 2,492
143,700 Nastech Pharmaceutical Company Inc.+ ....................... 1,917
129,534 Nektar Therapeutics+** ..................................... 1,951
92,157 Protein Design Labs, Inc.+** ............................... 2,582
72,747 Rigel Pharmaceuticals, Inc.+ ............................... 1,633
106,916 Salix Pharmaceuticals Ltd.+** .............................. 1,918
46,200 SeraCare Life Sciences, Inc.+ .............................. 941
95,639 United Therapeutics Corporation+** ......................... 7,064
-------
47,884
-------
Total Health Care .......................................... 94,817
-------
INDUSTRIALS - 11.2%
CAPITAL GOODS - 6.6%
147,720 A.S.V., Inc.+** ............................................ 3,448
40,964 American Science & Engineering, Inc.+ ...................... 2,355
35,800 Bucyrus International, Inc. ................................ 1,487
143,980 Ceradyne, Inc.+ ............................................ 5,644
36,200 ESCO Technologies Inc.+ .................................... 1,566
57,975 Lincoln Electric Holdings, Inc. ............................ 2,294
13,623 MTC Technologies, Inc.+ .................................... 440
70,100 NCI Building Systems, Inc.+ ................................ 2,883
151,821 TurboChef Technologies, Inc.+** ............................ 2,065
-------
22,182
-------
COMMERCIAL SERVICES & SUPPLIES - 2.9%
38,658 CRA International Inc.+ .................................... 1,711
91,216 LECG Corporation+ .......................................... 2,015
57,300 Portfolio Recovery Associates, Inc.+ ....................... 2,229
103,200 Resources Connection, Inc.+ ................................ 2,947
75,300 TRM Corporation+** ......................................... 1,017
-------
9,919
-------
TRANSPORTATION - 1.7%
71,816 Knight Transportation, Inc. ................................ 1,954
48,872 Old Dominion Freight Line, Inc.+ ........................... 1,730
94,300 Universal Truckload Services, Inc.+ ........................ 1,900
-------
5,584
-------
Total Industrials .......................................... 37,685
-------
INFORMATION TECHNOLOGY - 28.8%
COMMUNICATIONS EQUIPMENT - 6.8%
176,499 AudioCodes Ltd.+** ......................................... $ 1,989
53,682 Blue Coat Systems, Inc.+ ................................... 2,523
43,117 Comtech Telecommunications Corporation+ .................... 1,654
439,273 Glenayre Technologies, Inc.+ ............................... 1,656
152,482 Ixia+ ...................................................... 1,924
186,900 NMS Communications Corporation+ ............................ 654
141,262 Openwave Systems Inc.+ ..................................... 2,524
89,106 Orckit Communications Ltd.+** .............................. 1,906
124,400 Polycom, Inc.+ ............................................. 1,903
173,400 Redback Networks Inc.+ ..................................... 1,823
52,812 SafeNet, Inc.+ ............................................. 1,752
184,300 Symmetricom, Inc.+ ......................................... 1,469
94,800 Tekelec+ ................................................... 1,301
-------
23,078
-------
COMPUTERS & PERIPHERALS - 0.8%
81,911 M-Systems Flash Disk Pioneers Ltd.+ 2,596
-------
INTERNET SOFTWARE & SERVICES - 8.6%
128,500 Akamai Technologies, Inc.+** ............................... 2,228
299,899 aQuantive, Inc.+** ......................................... 6,493
39,700 F5 Networks, Inc.+ ......................................... 2,066
108,400 HouseValues, Inc.+** ....................................... 1,596
137,679 Jupitermedia Corporation+ .................................. 2,340
123,091 Marchex, Inc., Class B+** .................................. 2,074
285,032 MatrixOne, Inc.+ ........................................... 1,437
143,500 Secure Computing Corporation+ .............................. 1,719
220,172 ValueClick, Inc.+ .......................................... 3,853
62,000 Websense, Inc.+ ............................................ 3,663
97,900 WebSideStory, Inc.+ ........................................ 1,702
-------
29,171
-------
IT SERVICES - 2.1%
162,124 Euronet Worldwide, Inc.+ ................................... 4,556
160,024 RightNow Technologies, Inc.+ ............................... 2,435
-------
6,991
-------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 5.7%
50,755 Cymer, Inc.+ ............................................... 1,769
51,700 FormFactor Inc.+ ........................................... 1,273
11,200 Ikanos Communications+ ..................................... 176
137,100 Integrated Device Technology, Inc.+ ........................ 1,354
146,852 O2Micro International Ltd.+ ................................ 1,924
81,724 Power Integrations, Inc.+ .................................. 1,725
45,000 Semtech Corporation+ ....................................... 679
140,100 Silicon Motion Technology Corporation, ADR+ ................ 2,015
62,000 SiRF Technology Holdings, Inc.+ ............................ 1,599
13,400 Supertex, Inc.+ ............................................ 491
109,884 Tessera Technologies, Inc.+ ................................ 3,066
101,400 Trident Microsystems, Inc.+ ................................ 3,068
-------
19,139
-------
See Notes to Financial Statements.
60
Portfolio of Investments (continued)
SMALL CAP GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- ------- --------
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SOFTWARE - 4.8%
159,056 Agile Software Corporation+ ............................... $ 1,129
138,600 Concur Technologies, Inc.+ ................................ 1,872
87,100 Informatica Corporation+ .................................. 1,037
133,900 Micromuse Inc.+ ........................................... 960
198,336 Online Resources Corporation+ ............................. 2,380
115,093 PDF Solutions, Inc.+ ...................................... 1,714
84,700 SERENA Software, Inc.+ .................................... 1,854
194,471 SupportSoft, Inc.+ ........................................ 780
43,587 TALX Corporation .......................................... 1,723
238,700 TIBCO Software Inc.+ ...................................... 1,812
90,000 VASCO Data Security International, Inc.+ .................. 961
-------
16,222
-------
-------
Total Information Technology .............................. 97,197
-------
TELECOMMUNICATION SERVICES - 1.3%
158,339 InPhonic, Inc.+** ......................................... 2,289
105,203 JAMDAT Mobile Inc.+** ..................................... 1,938
-------
Total Telecommunication Services .......................... 4,227
-------
Total Common Stocks (Cost $285,049) ....................... 324,416
-------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.0%
52,740 RAIT Investment Trust ..................................... 1,401
112,600 Strategic Hotel Capital, Inc. ............................. 1,913
-------
Total REITs (Cost $3,466) ................................. 3,314
-------
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
REPURCHASE AGREEMENT - 2.6%
(Cost $8,629)
$ 8,629 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005,
to be repurchased at $8,630,000 on
11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities,
market value $8,809,000) ............................. $ 8,629
--------
SHORT-TERM INVESTMENT - 13.8%
(Cost $46,741)
46,741 Mellon GSL DBT II
Collateral Fund++ .................................... 46,741
--------
TOTAL INVESTMENTS (Cost $343,885*) ......................... 113.6% 383,100
OTHER ASSETS (LIABILITIES) (NET) ........................... (13.6) (45,727)
----- --------
NET ASSETS ................................................. 100.0% $337,373
===== ========
- ----------
* Aggregate cost for federal tax purposes is $345,337.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $45,581,000, representing 13.5% of the total
net assets of the Fund (Collateral value $46,741,000) (See Note 7 to
Financial Statements).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
See Notes to Financial Statements.
61
Portfolio of Investments
INTERNATIONAL GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS - 96.9%
JAPAN - 28.8% ***
29,310 Advantest Corporation ................................... $ 2,126
246,000 AEON Company Ltd. ....................................... 5,111
15,247 Aiful Corporation ....................................... 1,141
65,800 Astellas Pharma Inc. .................................... 2,350
29,000 Bridgestone Corporation ................................. 592
65,800 Canon Inc. .............................................. 3,483
32,700 Chubu Electric Power Company Inc.** ..................... 810
186,600 Daiichi Sankyo Company, Ltd. ............................ 3,382
87,000 Daiwa House Industry Company Ltd. ....................... 1,166
210 East Japan Railway Company .............................. 1,248
79,400 FANUC Ltd. .............................................. 6,257
17,900 Hirose Electric Company Ltd. ............................ 2,047
70,800 Hoya Corporation ........................................ 2,458
190,700 Kansai Electric Power Company Inc. ...................... 4,194
61,000 Kao Corporation ......................................... 1,461
341 Millea Holdings, Inc. ................................... 6,169
279,300 Mitsubishi Corporation .................................. 5,431
833,000 Mitsubishi Estate Company Ltd.** ........................ 12,314
1,764 Mitsubishi UFG Financial Group** ........................ 22,171
167,000 Mitsui & Company, Ltd.** ................................ 2,051
89,000 Mitsui Fudosan Company Ltd. ............................. 1,457
247,000 Mitsui Sumitomo Insurance Company Ltd. .................. 3,163
693 Mizuho Financial Group, Inc. ............................ 4,626
23,000 Murata Manufacturing Company Ltd. ....................... 1,153
118,000 NGK Spark Plug Company, Ltd., of Japan .................. 1,896
32,000 Nidec Corporation ....................................... 1,825
106,000 Nikon Corporation** ..................................... 1,360
32,900 Nintendo Company Ltd. ................................... 3,689
205,000 Nippon Electric Glass Company, Ltd. ..................... 3,924
1,133 Nippon Telegraph & Telephone Corporation ................ 5,416
517,000 Nissan Motor Company Ltd. ............................... 5,420
69,000 Nitto Denko Corporation ................................. 4,178
916 NTT DoCoMo, Inc. ........................................ 1,582
101,000 Obayashi Corporation .................................... 740
50,000 OMRON Corporation ....................................... 1,180
37,200 ORIX Corporation ........................................ 6,975
180,000 Ricoh Company, Ltd. ..................................... 2,861
43,200 Rohm Company Ltd. ....................................... 3,501
39,000 SECOM Company Ltd. ...................................... 1,946
233,000 Sekisui House Ltd.** .................................... 2,902
12,100 Shimamura Company Ltd. .................................. 1,552
66,200 Shin-Etsu Chemical Company Ltd. ......................... 3,174
49,500 SMC Corporation ......................................... 6,587
189,200 SOFTBANK Corporation** .................................. 10,727
241,000 Sompo Japan Insurance Inc. .............................. 3,622
37,190 Sony Corporation ........................................ 1,215
498,000 Sumitomo Corporation .................................... 5,567
2,383 Sumitomo Mitsui Financial Group, Inc.** ................. 22,008
317,500 Suzuki Motor Corporation ................................ 5,459
24,950 T&D Holdings, Inc. ...................................... 1,569
76,900 Takeda Pharmaceutical Company Ltd. ...................... 4,215
29,400 TDK Corporation ......................................... 1,982
69,600 Tokyo Electric Power Company Inc. ....................... $ 1,731
87,900 Tokyo Electron Ltd. ..................................... 4,419
407,000 Tokyo Gas Company Ltd.** ................................ 1,601
37,100 Toyota Motor Corporation (F) ............................ 1,720
81,000 Trend Micro Inc. ........................................ 2,541
45,200 Unicharm Corporation .................................... 2,042
83,700 USHIO Inc. .............................................. 1,560
3,024 Yahoo! Japan Corporation ................................ 3,225
58,500 Yamada Denki Company, Ltd.** ............................ 5,167
297,500 Yamato Transport Company Ltd. ........................... 4,900
--------
242,339
--------
UNITED KINGDOM - 15.8%
50,900 Anglo American PLC ...................................... 1,507
437,000 ARM Holdings PLC ........................................ 838
156,400 AstraZeneca PLC ......................................... 6,997
152,000 AstraZeneca PLC (F) ..................................... 6,816
110,084 BHP Billiton PLC ........................................ 1,620
212,500 Bradford & Bingley PLC .................................. 1,307
137,300 Brambles Industries PLC ................................. 794
101,100 British Land Company PLC ................................ 1,593
174,563 Cadbury Schweppes PLC (F) ............................... 1,720
32,200 Carnival PLC ............................................ 1,633
114,500 Diageo PLC .............................................. 1,691
633,900 HBOS PLC ................................................ 9,364
253,600 HSBC Holdings PLC ....................................... 3,985
105,600 Johnston Press PLC ...................................... 876
278,400 Lloyds TSB Group PLC .................................... 2,277
92,000 Northern Rock PLC ....................................... 1,294
426,200 Pearson PLC ............................................. 4,740
35,900 Reckitt Benckiser PLC (F) ............................... 1,085
672,500 Reed Elsevier PLC ....................................... 6,143
239,000 Rolls-Royce Group PLC ................................... 1,545
7,155,689 Rolls-Royce Group PLC, B Shares ......................... 13
422,900 Royal Bank of Scotland Group PLC++ ...................... 11,711
466,948 Royal Dutch Shell PLC, AShares** ........................ 14,399
163,435 Royal Dutch Shell PLC, B Shares ......................... 5,331
14,900 Royal Dutch Shell PLC, Class A, ADR ..................... 924
140,200 Scottish & Southern Energy PLC .......................... 2,433
224,000 Standard Chartered PLC .................................. 4,704
233,900 Tesco PLC ............................................... 1,245
194,000 TI Automotive Ltd., Class A+# ........................... 0
530,500 Unilever PLC ............................................ 5,367
9,022,019 Vodafone Group PLC (F) .................................. 23,688
71,600 Wolseley PLC ............................................ 1,457
119,500 Xstrata PLC ............................................. 2,738
153,300 Yell Group PLC .......................................... 1,201
--------
133,036
--------
FRANCE - 9.0%
54,995 Accor SA ................................................ 2,747
61,500 AXAGroup ................................................ 1,781
193,700 BNPParibas SA** ......................................... 14,692
193,500 Bouygues SA++ ........................................... 9,550
26,300 Carrefour SA ............................................ 1,170
See Notes to Financial Statements.
62
Portfolio of Investments (continued)
INTERNATIONAL GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- ------- -------
COMMON STOCKS (CONTINUED)
FRANCE (CONTINUED)
24,800 Dassault Systemes SA ....................................... $ 1,281
28,100 Essilor International SA** ................................. 2,314
33,900 Groupe Danone** ............................................ 3,446
14,698 L'Air Liquide SA ........................................... 2,673
35,000 L'Oreal SA ................................................. 2,574
33,300 Lafarge SA ................................................. 2,734
3,600 Safran SA .................................................. 72
10,667 Sanofi-Aventis Group (F) ................................... 850
170,800 Sanofi-Aventis Group (F)** ................................. 13,684
82,587 Schneider Electric SA ...................................... 6,787
17,900 Societe Generale Group** ................................... 2,045
70,100 STMicroelectronics NV ...................................... 1,155
6,700 Total SA ................................................... 1,686
53,600 Veolia Environnement SA .................................... 2,231
62,300 Vivendi Universal SA ....................................... 1,961
-------
75,433
-------
SWITZERLAND - 8.5%
31,000 Adecco SA .................................................. 1,323
236,782 Compagnie Financiere Richemont AG, A Units ................. 9,008
115,462 Credit Suisse Group ........................................ 5,107
151,076 Holcim Ltd. ................................................ 9,406
25,131 Nestle SA(F) ............................................... 7,483
296,387 Novartis AG (F) ............................................ 15,941
53,326 Roche Holding AG-Genusschein (F) ........................... 7,967
100,291 Swiss Reinsurance Company .................................. 6,769
11,589 Swisscom AG ................................................ 3,812
10,500 Synthes, Inc. .............................................. 1,112
41,956 UBS AG ..................................................... 3,577
-------
71,505
-------
GERMANY - 6.9%
56,800 Allianz AG ................................................. 8,050
29,400 Altana AG .................................................. 1,661
149,200 Bayer AG ................................................... 5,195
28,500 Bayerische Motoren Werke (BMW) AG .......................... 1,236
84,500 DaimlerChrysler AG ......................................... 4,229
32,200 Deutsche Bank AG ........................................... 3,022
16,137 Deutsche Boerse AG ......................................... 1,520
97,600 Deutsche Post AG ........................................... 2,177
60,400 E.ON AG .................................................... 5,480
193,900 Infineon Technologies AG+ .................................. 1,812
42,700 SAP AG ..................................................... 7,304
20,300 SAP AG, Sponsored ADR ...................................... 872
154,300 Siemens AG ................................................. 11,514
81,000 Volkswagen AG** ............................................ 4,422
-------
58,494
-------
NETHERLANDS - 6.0%
439,135 ABN AMRO Holding NV ........................................ 10,387
320,944 AEGON NV ................................................... 4,840
37,100 Euronext NV ................................................ 1,577
85,625 Heineken Holding NV ........................................ 2,535
198,106 Heineken NV ................................................ $ 6,279
220,614 ING Groep NV ............................................... 6,363
958,800 Koninklijke (Royal) KPN NV ................................. 9,111
50,700 Koninklijke (Royal) Numico NV+ ............................. 2,054
79,400 Reed Elsevier NV ........................................... 1,069
75,500 TNT NV ..................................................... 1,780
35,200 Unilever NV** .............................................. 2,477
53,649 VNU NV ..................................................... 1,707
-------
50,179
-------
SPAIN - 4.6%
40,300 Altadis, SA ................................................ 1,710
506,900 Banco Bilbao Vizcaya Argentaria SA** ....................... 8,939
573,000 Banco Santander Central Hispano SA** ....................... 7,297
85,000 Iberdrola SA ............................................... 2,276
61,300 Industria de Diseno Textil SA (Inditex) .................... 1,815
321,700 Repsol YPF SA .............................................. 9,582
454,174 Telefonica SA .............................................. 7,250
-------
38,869
-------
CANADA - 4.5%
153,900 Abitibi-Consolidated Inc.** ................................ 476
220,500 Alcan Inc. ................................................. 6,947
72,800 Cameco Corporation ......................................... 3,500
49,800 Canadian Natural Resources Ltd. ............................ 2,036
109,131 Falconbridge Ltd.** ........................................ 3,062
86,400 Inco Ltd. (F) .............................................. 3,475
14,200 Magna International Inc., Class A** ........................ 986
25,800 Manulife Financial Corporation** ........................... 1,343
81,100 Methanex Corporation ....................................... 1,312
30,100 National Bank of Canada** .................................. 1,507
64,400 Potash Corporation of Saskatchewan Inc. .................... 5,279
44,800 Suncor Energy Inc. ......................................... 2,397
134,900 TELUS Corporation** ........................................ 5,061
19,000 Thomson Corporation** ...................................... 645
-------
38,026
-------
AUSTRALIA - 1.9% ***
195,100 Amcor Ltd. ................................................. 976
52,082 Australia & New Zealand Banking Group Ltd. ................. 919
130,278 Brambles Industries Ltd.** ................................. 826
147,209 Insurance Australia Group Ltd. ............................. 572
169,100 Promina Group Ltd. ......................................... 614
176,757 QBE Insurance Group Ltd. ................................... 2,359
329,460 Rinker Group Ltd. .......................................... 3,738
55,300 Wesfarmers Ltd. ............................................ 1,480
81,200 Westpac Banking Corporation ................................ 1,262
264,991 Woolworths Ltd. ............................................ 3,238
-------
15,984
-------
SWEDEN - 1.5%
92,100 Assa Abloy AB, B Shares .................................... 1,319
128,100 Atlas Copco AB, Class A .................................... 2,341
35,400 Sandvik AB ................................................. 1,703
See Notes to Financial Statements.
63
Portfolio of Investments (continued)
INTERNATIONAL GROWTH FUND
October 31, 2005
VALUE
SHARES (000S)
- --------- --------
COMMON STOCKS (CONTINUED)
SWEDEN (CONTINUED)
2,012,000 Telefonaktiebolaget LM Ericsson, B Shares ............... $ 6,593
34,000 Telefonaktiebolaget LM Ericsson, Sponsored ADR .......... 1,116
--------
13,072
--------
HONG KONG - 1.5% ***
2,608,000 CNOOC Ltd. .............................................. 1,715
836,000 Hang Lung Group Ltd. .................................... 1,545
850,000 Hang Lung Properties Ltd. ............................... 1,222
911,500 Johnson Electric Holdings Ltd. .......................... 825
1,780,000 Li & Fung Ltd. .......................................... 3,820
2,408,000 PCCW Ltd. ............................................... 1,477
181,000 Sung Hung Kai Properties Ltd. ........................... 1,718
--------
12,322
--------
MEXICO - 1.2%
387,000 America Movil SA de CV, Series L, ADR ................... 10,159
--------
SOUTH KOREA - 1.1% ***
17,616 Samsung Electronics Company Ltd. ........................ 9,379
--------
SOUTH AFRICA - 1.0%
258,000 Sasol Ltd. .............................................. 8,145
--------
SINGAPORE - 0.8% ***
149,000 DBS Group Holdings Ltd. ................................. 1,349
3,252,675 Singapore Telecommunications Ltd.++ ..................... 4,456
122,000 United Overseas Bank Ltd. ............................... 996
12,200 United Overseas Land Ltd.** ............................. 17
--------
6,818
--------
DENMARK - 0.6%
51,800 Novo Nordisk A/S, Class B ............................... 2,659
38,300 TDC A/S ................................................. 2,146
--------
4,805
--------
BELGIUM - 0.5%
31,200 Fortis .................................................. 888
63,600 SES GLOBAL, FDR ......................................... 996
51,400 UCB Group SA ............................................ 2,542
--------
4,426
--------
AUSTRIA - 0.4%
23,600 Erste Bank der oesterreichischen Sparkassen AG .......... 1,228
11,900 Raiffeisen International Bank Holding AG+** ............. 749
58,808 Telekom Austria AG ...................................... 1,217
--------
3,194
--------
FINLAND - 0.3%
101,100 Nokia Oyj ............................................... 1,694
95,500 Stora Enso Oyj - R Shares ............................... 1,222
--------
2,916
--------
ITALY - 0.3%
108,850 Eni SpA** ............................................... $ 2,914
--------
TAIWAN - 0.3% ***
351,596 Taiwan Semiconductor Manufacturing
Company Ltd., Sponsored ADR .......................... 2,841
--------
NORWAY - 0.3%
127,700 DnB NOR ASA ............................................. 1,305
76,714 Norske Skogindustrier ASA** ............................. 1,092
--------
2,397
--------
IRELAND - 0.3%
93,268 CRH PLC ................................................. 2,332
--------
BRAZIL - 0.2%
43,591 Companhia Vale do Rio Doce, ADR ......................... 1,802
--------
INDIA - 0.2%
24,000 Infosys Technologies Ltd., Sponsored ADR ................ 1,632
--------
GREECE - 0.2%
52,000 Opap SA ................................................. 1,505
--------
PORTUGAL - 0.1%
100,000 Portugal Telecom, SGPS, SA .............................. 904
--------
UNITED STATES - 0.1%
60,197 News Corporation (F), CDI ............................... 846
--------
RUSSIA - 0.0%
10,700 YUKOS, ADR+** ........................................... 47
--------
Total Common Stocks (Cost $656,645) ..................... 816,321
--------
PREFERRED STOCK - 0.0%
(Cost $51)
SOUTH KOREA - 0.0% ***
900 Samsung Electronics Company Ltd. ........................ 369
--------
See Notes to Financial Statements.
64
Portfolio of Investments (continued)
INTERNATIONAL GROWTH FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
CONVERTIBLE BONDS - 0.1%
(Cost $605)
SWITZERLAND - 0.1%
$ 826 Credit Suisse Group Financial,
Conv. Jr. Bond,
6.000% due 12/23/2005 ................................ $ 987
--------
REPURCHASE AGREEMENT - 2.7%
(Cost $22,400)
22,400 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005,
to be repurchased at $22,402,000 on
11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities,
market value $22,867,000) ............................ 22,400
--------
SHORT-TERM INVESTMENT - 13.4%
(Cost $112,523)
112,523 Mellon GSL DBT II
Collateral Fund+++ ................................... 112,523
--------
TOTAL INVESTMENTS (Cost $792,224*) ......................... 113.1% 952,600
OTHER ASSETS (LIABILITIES) (NET) ........................... (13.1) (110,462)
----- --------
NET ASSETS ................................................. 100.0% $842,138
===== ========
- ----------
* Aggregate cost for federal tax purposes is $801,531.
** Some or all of these securities are on loan at October 31, 2005, and have
an aggregate market value of $95,563,000, representing 11.4% of the total
net assets of the Fund (Collateral value $112,523,000) (See Note 7 to
Financial Statements).
*** Investments in the areas of the Pacific Rim at October 31, 2005, are 34.4%
of the total net assets of the Fund.
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933, as amended.
+++ Represents investment purchased with cash collateral for securities loaned.
# Security is restricted and illiquid. It was acquired on October 30, 2001,
and has a value of $0.00 per Fund share at October 31, 2005.
See Notes to Financial Statements.
65
Portfolio of Investments (continued)
INTERNATIONAL GROWTH FUND
October 31, 2005
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE
(000S)
NET
UNREALIZED
IN APPRECIATION/
EXPIRATION LOCAL VALUE IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- ----------- -------- ---------- --------------
11/01/2005 CAD 315 267 269 $ (2)
11/01/2005 JPY 18,206 156 157 (1)
11/02/2005 JPY 17,801 153 154 (1)
12/20/2005 GBP 4,033 7,135 7,092 43
01/10/2006 JPY 437,454 3,790 4,050 (260)
01/12/2006 GBP 827 1,462 1,443 19
01/24/2006 GBP 3,074 5,438 5,434 4
--
-----
$(198)
=====
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
(000S)
NET
UNREALIZED
IN APPRECIATION/
EXPIRATION LOCAL VALUE IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- ------------- -------- ---------- --------------
11/01/2005 CAD 70 59 59 $ --
11/01/2005 EUR 885 1,060 1,074 14
11/01/2005 GBP 12 21 21 --
11/02/2005 CAD 36 31 31 --
11/04/2005 AUD 283 212 212 --
11/04/2005 JPY 36,375 312 312 --
12/19/2005 CHF 2,146 1,672 1,727 55
12/20/2005 CHF 13,138 10,239 10,238 (1)
01/10/2006 JPY 437,454 3,790 3,991 201
01/12/2006 CHF 1,845 1,441 1,443 2
01/24/2006 CAD 6,435 5,462 5,434 (28)
04/07/2006 EUR 3,253 3,933 3,931 (2)
----
$241
----
Net Unrealized Appreciation of Forward Foreign
Currency Contracts............................. $ 43
====
AT OCTOBER 31, 2005, SECTOR DIVERSIFICATION IS AS FOLLOWS (UNAUDITED):
% OF VALUE
SECTOR DIVERSIFICATION NET ASSETS (000S)
- --------------------------------------------------- ---------- ---------
COMMON STOCKS:
Banks ............................................. 17.6% $ 147,828
Telecommunication Services ........................ 10.0 84,352
Materials ......................................... 8.8 73,842
Pharmaceuticals & Biotechnology ................... 7.9 67,403
Energy ............................................ 5.8 49,176
Capital Goods ..................................... 5.6 47,185
Insurance ......................................... 4.9 40,851
Food, Beverage & Tobacco .......................... 3.9 33,042
Semiconductors & Semiconductor Equipment .......... 3.4 28,611
Automobiles & Components .......................... 2.9 24,064
Utilities ......................................... 2.5 20,756
Media ............................................. 2.4 20,184
Real Estate Investment Trusts (REITs) ............. 2.4 19,849
Retailing ......................................... 2.2 18,922
Internet Software & Services ...................... 2.2 18,125
Consumer Durables & Apparel ....................... 2.1 17,980
Diversified Financials ............................ 2.1 17,576
Commercial Services & Supplies .................... 1.8 14,854
Electronic Equipment & Instruments ................ 1.3 11,025
Software .......................................... 1.1 9,457
Communications Equipment .......................... 1.1 9,403
Transportation .................................... 0.9 7,928
Other ............................................. 4.0 33,908
----- ---------
TOTAL COMMON STOCKS ............................... 96.9 816,321
PREFERRED STOCK ................................... 0.0 369
CONVERTIBLE BONDS ................................. 0.1 987
REPURCHASE AGREEMENT .............................. 2.7 22,400
SHORT-TERM INVESTMENT ............................. 13.4 112,523
----- ---------
TOTAL INVESTMENTS ................................. 113.1 952,600
OTHER ASSETS (LIABILITIES) (NET) .................. (13.1) (110,462)
----- ---------
NET ASSETS ........................................ 100.0% $ 842,138
===== =========
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
AUD -- Australian Dollar
CAD -- Canadian Dollar
CDI -- CHESS Depositary Interest
CHF -- Swiss Franc
EUR -- EURO
(F) -- Foreign Shares
FDR -- Fiduciary Depositary Receipt
GBP -- Great Britain Pound Sterling
JPY -- Japanese Yen
See Notes to Financial Statements.
66
Portfolio of Investments
SHORT TERM INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- -------
CORPORATE BONDS AND NOTES - 53.3%
FINANCIAL SERVICES - 10.5%
$6,000 Berkshire Hathaway Inc., Note,
3.375% due 10/15/2008 .................................... $ 5,766
1,500 CIT Group Inc., Sr. Note,
7.375% due 04/02/2007 .................................... 1,552
3,750 Countrywide Home Loans, Inc.,
Company Guarantee, Series K,
5.500% due 02/01/2007 .................................... 3,777
2,500 Goldman Sachs Group, Inc., Note,
4.125% due 01/15/2008 .................................... 2,463
Household Finance Corporation, Note:
3,500 5.750% due 01/30/2007 .................................... 3,540
1,500 7.875% due 03/01/2007 .................................... 1,558
2,000 Nuveen Investments, Sr. Note,
5.000% due 09/15/2010 .................................... 1,961
3,500 Rollins Truck Leasing Corporation, Deb.,
8.375% due 02/15/2007 .................................... 3,640
4,000 SLM Corporation, MTN,
4.000% due 01/15/2009 .................................... 3,885
-------
28,142
-------
BANKS - 8.4%
5,750 Fifth Third Bank, Note,
2.700% due 01/30/2007 .................................... 5,600
3,000 JPMorgan Chase & Company, Note,
5.350% due 03/01/2007 .................................... 3,023
3,500 MBNA America Bank N.A., Note,
6.500% due 06/20/2006 .................................... 3,541
5,000 SB Treasury Company LLC, Bond,
9.400% to 06/30/2008;
10.925% due 12/29/2049** ................................. 5,481
5,000 U.S. Bank N.A., Note,
2.850% due 11/15/2006 .................................... 4,889
-------
22,534
-------
REAL ESTATE INVESTMENT TRUSTS/PROPERTY - 6.0%
4,000 CPG Partners LP, Note,
3.500% due 03/15/2009 .................................... 3,799
4,250 Developers Diversified Realty Corporation,
Sr. Note,
6.625% due 01/15/2008 .................................... 4,367
4,000 Duke-Weeks Realty Corporation, Note,
7.375% due 08/01/2007 .................................... 4,165
3,750 EOP Operating LP, Note,
7.750% due 11/15/2007 .................................... 3,953
-------
16,284
-------
CABLE TV - 4.2%
4,000 AOL Time Warner Inc., Note,
6.150% due 05/01/2007 .................................... 4,071
4,000 Cox Enterprises, Inc., Note,
4.375% due 05/01/2008** .................................. 3,911
3,000 Univision Communications Inc.,
Company Guarantee,
7.850% due 07/15/2011 .................................... 3,294
-------
11,276
-------
GAMING/LEISURE - 3.9%
$5,750 Carnival Corporation, Company Guarantee,
3.750% due 11/15/2007 .................................... $ 5,626
5,000 Harrah's Operating Company, Inc., Company Guarantee,
5.500% due 07/01/2010 .................................... 4,970
-------
10,596
-------
UTILITIES - 3.8%
4,000 Constellation Energy Group, Inc., Note,
6.350% due 04/01/2007 .................................... 4,077
1,650 Pacific Gas & Electric Company,
First Mortgage,
3.600% due 03/01/2009 .................................... 1,579
1,650 Sempra Energy, Note,
4.750% due 05/15/2009 .................................... 1,621
2,750 Texas-New Mexico Power Company,
Sr. Note,
6.250% due 01/15/2009 .................................... 2,829
-------
10,106
-------
HEALTH CARE - 3.5%
5,500 Amgen Inc., Sr. Note,
4.000% due 11/18/2009 .................................... 5,329
4,000 Cardinal Health, Inc., Note,
6.250% due 07/15/2008 .................................... 4,110
-------
9,439
-------
AUTO MANUFACTURING & PARTS - 3.3%
4,000 Ford Motor Credit Company, Note,
6.500% due 01/25/2007 .................................... 3,954
5,000 Toyota Motor Credit Corporation, Note,
5.650% due 01/15/2007 .................................... 5,036
-------
8,990
-------
FOOD - 2.8%
2,000 ConAgra Inc., Sr. Note,
9.875% due 11/15/2005 .................................... 2,004
1,500 CVS Corporation, Note,
4.000% due 09/15/2009 .................................... 1,444
4,000 Safeway Inc., Sr. Note,
6.150% due 03/01/2006 .................................... 4,010
-------
7,458
-------
SERVICES - 2.4%
3,500 PHH Corporation, Note,
6.000% due 03/01/2008 .................................... 3,550
3,000 Sealed Air Corporation,
Conv. Sr. Note,
3.000% due 06/30/2033** .................................. 2,914
-------
6,464
-------
TELECOMMUNICATIONS - 1.9%
1,500 TELUS Corporation, Note,
7.500% due 06/01/2007 .................................... 1,558
3,500 Verizon Global Funding Corporation, Note,
4.000% due 01/15/2008 .................................... 3,435
-------
4,993
-------
See Notes to Financial Statements.
67
Portfolio of Investments (continued)
SHORT TERM INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
CORPORATE BONDS AND NOTES (CONTINUED)
AIRLINES - 1.5%
$4,000 Southwest Airlines Company,
Pass-through Certificates,
5.496% due 11/01/2006 ................................... $ 4,030
--------
DIVERSIFIED MANUFACTURING - 0.7%
2,000 United Technologies Corporation, Note,
4.375% due 05/01/2010 ................................... 1,962
--------
AEROSPACE/DEFENSE - 0.4%
1,000 Boeing Capital Corporation, Sr. Note,
5.650% due 05/15/2006 ................................... 1,007
--------
Total Corporate Bonds and Notes
(Cost $145,113) ......................................... 143,281
--------
COLLATERALIZED MORTGAGE
OBLIGATIONS (CMOS) - 16.2%
4,000 Banc of America Mortgage Securities, Inc.,
Pass-through Certificates,
Series 2003-6, Class 1A30,
4.750% due 08/25/2033 ................................... 3,912
4,654 Cendant Mortgage Corporation,
Series 2003-3P, Class A1,
5.500% due 04/25/2020** ................................. 4,639
4,840 Chase Mortgage Finance Corporation,
Series 2005-S1, Class 1A8,
5.500% due 05/25/2035 ................................... 4,838
2,820 Credit Suisse First Boston Mortgage
Securities Corporation, Pass-through
Certificates, Series 2003-29, Class 4A1,
6.000% due 12/25/2033 ................................... 2,850
Federal Home Loan Mortgage Corporation:
4,022 Series 2442, Class PG,
6.000% due 06/15/2030 ................................... 4,061
3,102 Series 2552, Class KB,
4.250% due 06/15/2027 ................................... 3,083
1,999 Series 2575, Class LM,
4.500% due 05/15/2032 ................................... 1,972
5,000 Series 2811, Class NU,
4.500% due 05/15/2030 ................................... 4,824
Federal National Mortgage Association:
1,549 Series 2002-58, Class HB,
5.500% due 11/25/2015 ................................... 1,553
5,401 Series 2005-100, Class QA,
5.000% due 11/25/2035 ................................... 5,322
2,727 Government National Mortgage
Association, Series 2002-70, Class PA,
4.500% due 08/20/2032 ................................... 2,651
3,860 GSR Mortgage Loan Trust,
Pass-through Certificates,
Series 2005-1F, Class 2A1,
6.000% due 02/25/2035 ................................... 3,897
--------
Total CMOs
(Cost $44,370) .......................................... 43,602
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 10.1%
Federal Home Loan Bank, Bond:
$4,000 1.875% due 06/15/2006 ................................... $ 3,938
4,000 2.500% due 12/15/2005 ................................... 3,991
Federal Home Loan Mortgage Corporation:
3,500 Bond,
3.250% due 02/25/2008 ................................... 3,390
1,000 Note,
4.125% due 07/12/2010 ................................... 973
Federal National Mortgage Association:
Note:
4,000 4.250% due 07/15/2007 ................................... 3,977
3,000 5.500% due 02/15/2006 ................................... 3,010
3,000 3.000% to 07/16/2006;
5.800% due 07/16/2013 ................................... 2,944
5,000 Sub. Note,
4.000% due 09/02/2008 ................................... 4,901
--------
Total U.S. Government Agency Obligations
(Cost $27,524) .......................................... 27,124
--------
U.S. TREASURY NOTES - 6.1%
6,000 2.000% due 05/15/2006 ...................................... 5,931
6,000 2.625% due 03/15/2009 ...................................... 5,664
5,000 3.250% due 08/15/2008 ...................................... 4,849
--------
Total U.S. Treasury Notes
(Cost $16,601) .......................................... 16,444
--------
ASSET-BACKED SECURITIES (ABSS) - 4.6%
2,890 Atlantic City Electric Transition
Funding LLC, Series 2003-1, Class A1,
2.890% due 07/20/2011 ................................... 2,791
5,000 Capital One Multi-Asset Execution Trust,
Series 2003-A6, Class A6,
2.950% due 08/17/2009 ................................... 4,922
120 Green Tree Financial Corporation,
Series 1995-6, Class B1,
7.700% due 09/15/2026 ................................... 109
4,750 WFS Financial Owner Trust, Series 2004-3,
Class A4, 3.930% due 02/17/2012 ......................... 4,645
--------
Total ABSs
(Cost $12,757) .......................................... 12,467
--------
U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES - 1.5%
ADJUSTABLE RATE MORTGAGE-BACKED
SECURITIES (ARMS) - 0.6%
80 Federal Home Loan Mortgage
Corporation (FHLMC),
5.020% due 11/01/2021+ .................................. 82
Federal National Mortgage
Association (FNMA):
19 4.000% due 11/01/2021+ .................................. 19
32 4.616% due 01/01/2019+ .................................. 32
1,370 4.641% due 11/01/2032+ .................................. 1,367
54 4.928% due 11/01/2035+ .................................. 55
7 5.253% due 11/01/2022+ .................................. 8
10 5.610% due 04/01/2019+ .................................. 10
--------
Total ARMs
(Cost $1,630) ........................................... 1,573
--------
See Notes to Financial Statements.
68
Portfolio of Investments (continued)
SHORT TERM INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES (CONTINUED)
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC) - 0.5%
$1,271 6.000% due 04/01/2017-05/01/2017 ........................... $ 1,300
26 9.500% due 08/01/2016 ...................................... 28
--------
Total FHLMC
(Cost $1,319) ........................................... 1,328
--------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA) - 0.3%
692 6.500% due 01/01/2012-01/01/2014 ........................... 715
37 8.500% due 11/01/2017 ...................................... 40
24 10.000% due 05/01/2022 ..................................... 27
--------
Total FNMA
(Cost $755) ............................................. 782
--------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) - 0.1%
6 8.000% due 03/15/2012 ...................................... 6
8 9.000% due 04/20/2025 ...................................... 8
139 10.000% due 01/15/2019-02/15/2019 .......................... 155
135 11.000% due 02/15/2010-08/15/2020 .......................... 149
--------
Total GNMA
(Cost $309) ............................................. 318
--------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $4,013) ........................................... 4,001
--------
COMMERCIAL MORTGAGE-BACKED
SECURITIES (CMBS) - 0.4%
(Cost $1,124)
1,125 GMAC Commercial Mortgage
Securities Inc., Series 1999-CTL1,
Class A, 7.150% due 12/15/2016** ........................ 1,149
--------
REPURCHASE AGREEMENT - 9.1%
(Cost $24,379)
24,379 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005,
to be repurchased at $24,382,000
on 11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities,
market value $24,888,000) ............................... 24,379
--------
TOTAL INVESTMENTS++ (Cost $275,881*) ........................ 101.3% 272,447
OTHER ASSETS (LIABILITIES) (NET) ............................ (1.3) (3,459)
----- --------
NET ASSETS .................................................. 100.0% $268,988
===== ========
UNREALIZED
NUMBER OF VALUE APPRECIATION
CONTRACTS (000S) (000S)
- --------- ------- ------------
FUTURES CONTRACTS-SHORT POSITION
100 U.S. 5 Year Treasury Note,
December 2005 ................................ $10,589 $165
======= ====
GLOSSARY OF TERMS
MTN -- Medium-Term Note
- ----------
* Aggregate cost for federal tax purposes is $275,881.
** Security acquired in a transaction exempt from registration under Rule
144Aof the Securities Act of 1933, as amended.
+ Variable rate security. The interest rate shown reflects the rate in effect
at October 31, 2005.
++ All securities segregated as collateral for futures contracts.
See Notes to Financial Statements.
69
Portfolio of Investments
U.S. GOVERNMENT SECURITIES FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ----------
U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES - 68.5%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC) - 33.0%
$ 16,453 4.000% due 08/01/2018 .................................. $ 15,583
87,247 4.500% due 04/01/2018-06/01/2035 ....................... 83,185
209,157 5.000% due 04/01/2018-10/01/2035** ..................... 201,866
187,295 5.500% due 11/01/2018-09/01/2035 ....................... 185,682
91,151 6.000% due 04/01/2017-02/01/2035 ....................... 92,267
30,489 6.500% due 02/01/2011-01/01/2032 ....................... 31,504
9,146 7.000% due 07/01/2024-04/01/2032 ....................... 9,573
4,079 7.500% due 12/01/2006-02/01/2031 ....................... 4,290
226 8.000% due 12/01/2030 .................................. 240
497 8.500% due 04/01/2019-07/01/2029 ....................... 536
35 8.750% due 01/01/2013 .................................. 36
99 9.000% due 12/01/2008-08/01/2022 ....................... 105
82 9.500% due 06/01/2016-04/01/2017 ....................... 89
----------
Total FHLMC
(Cost $640,285) ..................................... 624,956
----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA) - 29.1%
39,692 4.500% due 12/01/2018-11/01/2019 ....................... 38,455
119,562 5.000% due 04/01/2018-06/01/2035 ....................... 116,982
239,410 5.500% due 02/01/2009-08/01/2035 ....................... 236,889
99,094 6.000% due 12/01/2016-10/01/2035** ..................... 100,216
45,726 6.500% due 09/01/2024-07/01/2034 ....................... 47,048
6,694 7.000% due 06/01/2010-07/01/2032 ....................... 7,010
1,987 7.500% due 12/01/2024-02/01/2030 ....................... 2,106
276 8.000% due 05/01/2022-01/01/2025 ....................... 286
43 8.500% due 02/01/2023-09/01/2025 ....................... 45
344 9.000% due 03/01/2017-09/01/2030 ....................... 378
----------
Total FNMA
(Cost $562,255) ..................................... 549,415
----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) - 6.4%
45,346 5.500% due 07/20/2033-03/20/2034 ....................... 45,234
52,978 6.000% due 04/20/2026-08/15/2034 ....................... 53,942
13,521 6.500% due 03/15/2024-05/20/2034 ....................... 13,967
169 6.800% due 04/20/2025 .................................. 176
2,747 7.000% due 07/15/2008-06/20/2031 ....................... 2,883
2,500 7.500% due 03/15/2024-11/15/2029 ....................... 2,651
89 7.750% due 12/15/2029 .................................. 95
137 8.000% due 04/15/2022 .................................. 147
546 9.000% due 11/15/2021 .................................. 596
992 9.500% due 04/15/2016-08/15/2021 ....................... 1,097
11 13.500% due 09/15/2014-12/15/2014 ...................... 14
----------
Total GNMA
(Cost $122,132) ..................................... 120,802
----------
ADJUSTABLE RATE MORTGAGE-BACKED
SECURITIES (ARMS) - 0.0%
(Cost $134)
$ 133 Federal National Mortgage Association,
4.989% due 03/01/2028+ .............................. $ 137
----------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $1,324,806) ................................... 1,295,310
----------
COLLATERALIZED MORTGAGE
OBLIGATIONS (CMOS) - 18.2%
Banc of America Mortgage Securities, Inc.,
Pass-through Certificates:
21,500 Series 2003-6, Class 1A30,
4.750% due 08/25/2033 ............................... 21,030
15,138 Series 2004-4, Class 2A1,
5.500% due 05/25/2034 ............................... 15,007
21,000 Chase Mortgage Finance Corporation,
Series 2005-S1, Class 1A15,
6.000% due 05/25/2035 ............................... 21,104
6,935 Countrywide Alternative Loan Trust,
Series 2003-13T1, Class A1,
4.000% due 08/25/2033 ............................... 6,791
Countrywide Home Loans:
16,749 Series 2003-50, Class A1,
5.000% due 11/25/2018 ............................... 16,440
21,500 Series 2004-4, Class A5,
5.250% due 05/25/2034 ............................... 21,170
Credit Suisse First Boston Mortgage
Securities Corporation,
Pass-through Certificates:
15,176 Series 2003-11, Class 1A3,
4.500% due 06/25/2033 ............................... 15,074
9,544 Series 2003-29, Class 4A1,
6.000% due 12/25/2033 ............................... 9,645
12,154 Series 2003-8, Class 1A1,
5.750% due 04/25/2033 ............................... 12,053
Federal Home Loan Mortgage Corporation:
238 Series 1049, Class F,
4.900% due 02/15/2021++ ............................. 239
828 Series 1981, Class C,
6.500% due 08/15/2027 ............................... 851
9,621 Series 2435, Class GE,
6.500% due 06/15/2031 ............................... 9,780
4,425 Series 2442, Class PG,
6.000% due 06/15/2030 ............................... 4,467
24,000 Series 2449, Class ND,
6.500% due 05/15/2030 ............................... 24,330
12,122 Series 2481, Class VC,
6.000% due 06/15/2017 ............................... 12,348
9,000 Series 2551, Class QK,
5.500% due 01/15/2033 ............................... 8,981
6,798 Series 2575, Class LM,
4.500% due 05/15/2032 ............................... 6,705
29,061 Series 2634, Class IN,
5.000% due 09/15/2027 ............................... 3,595
25,000 Series 2981, Class PC,
5.500% due 10/15/2031 ............................... 24,864
See Notes to Financial Statements.
70
Portfolio of Investments (continued)
U.S. GOVERNMENT SECURITIES FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ----------
COLLATERALIZED MORTGAGE
OBLIGATIONS (CMOS) (CONTINUED)
Federal National Mortgage Association:
$ 7,000 Grantor Trust, Series 2000-T5, Class B,
7.300% due 05/25/2010 ............................... $ 7,677
12,461 Series 2002-16, Class TM,
7.000% due 04/25/2032 ............................... 12,714
21,000 Series 2003-58, Class PI,
5.000% due 02/25/2027 ............................... 1,623
554 Trust 259 STRIP,
7.000% due 04/01/2024 ............................... 119
Federal National Mortgage Association,
REMIC, Pass-through Certificates:
132 Series 1990-49, Class G,
9.000% due 05/25/2020 ............................... 140
83 Series 1993-162, Class E,
6.000% due 08/25/2023 ............................... 83
115 Series 1997-32, Class FA,
4.660% due 04/25/2027++ ............................. 116
GSR Mortgage Loan Trust,
Pass-through Certificates:
12,709 Series 2003-4F, Class 2A3,
5.000% due 05/25/2033 ............................... 12,670
16,984 Series 2005-1F, Class 2A1,
6.000% due 02/25/2035 ............................... 17,146
79 L.F. Rothschild Mortgage Trust,
Series 3, Class Z,
9.950% due 09/01/2017 ............................... 84
22,274 Prime Mortgage Trust,
Series 2004-2, Class A2,
4.750% due 11/25/2019 ............................... 21,966
17,000 Residential Funding Mortgage Security,
Series 2003-S20, Class 1A4,
5.500% due 12/25/2033 ............................... 16,695
20,636 Structured Asset Securities Corporation,
Series 2005-6, Class 4A1,
5.000% due 05/25/2035 ............................... 19,784
----------
Total CMOs
(Cost $350,418) ..................................... 345,291
----------
U.S. TREASURY NOTES - 4.5%
10,000 3.250% due 08/15/2007 .................................. 9,809
25,000 3.500% due 12/15/2009 .................................. 24,111
37,000 4.000% due 04/15/2010-02/15/2014 ....................... 35,966
15,000 4.250% due 08/15/2014 .................................. 14,651
----------
Total U.S. Treasury Notes
(Cost $87,256) ...................................... 84,537
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.0%
10,000 Federal Home Loan Bank, Bond,
2.875% due 09/15/2006 ............................... 9,862
10,000 Federal Home Loan Mortgage Corporation,
Sub. Note,
5.875% due 03/21/2011 ............................... 10,409
Federal National Mortgage Association:
$ 10,000 Bond,
3.250% due 01/15/2008 ............................... $ 9,709
1,250 Deb.,
6.210% due 08/06/2038 ............................... 1,453
Note:
7,500 6.000% due 05/15/2008 ............................... 7,742
20,000 6.000% due 02/03/2020 ............................... 19,741
18,000 3.000% to 07/16/2006;
5.800% due 07/16/2013 ............................... 17,665
----------
Total U.S. Government Agency Obligations
(Cost $76,187) ...................................... 76,581
----------
REPURCHASE AGREEMENT - 7.0%
(Cost $132,877)
132,877 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005,
to be repurchased at $132,892,000 on
11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities,
market value $135,650,000) .......................... 132,877
----------
TOTAL INVESTMENTS (Cost $1,971,544*) ...................... 102.2% 1,934,596
OTHER ASSETS (LIABILITIES) (NET) .......................... (2.2) (42,442)
----- ----------
NET ASSETS ................................................ 100.0% $1,892,154
===== ==========
- ----------
* Aggregate cost for federal tax purposes is $1,971,929.
** A portion of these securities has been purchased on a when-issued basis.
+ Variable rate security. The interest rate shown reflects the rate in effect
at October 31, 2005.
++ Floating rate security whose interest rate is reset periodically based on
an index.
GLOSSARY OF TERMS
REMIC -- Real Estate Mortgage Investment Conduit
STRIP -- Separate trading of registered interest and principal of securities
See Notes to Financial Statements.
71
Portfolio of Investments
INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
CORPORATE BONDS AND NOTES - 63.5%
FINANCIAL SERVICES/BANKS - 11.6%
$ 1,500 Aetna Inc., Company Guarantee,
7.625% due 08/15/2026 .................................. $ 1,810
6,500 American General Finance, Inc.,
MTN, Series I,
4.625% due 05/15/2009 .................................. 6,407
400 Banc One Corporation, Sub. Note,
10.000% due 08/15/2010 ................................. 479
5,000 Bank of America Corporation, Sub. Note,
7.800% due 02/15/2010 .................................. 5,525
1,000 BankAmerica Corporation, Sub. Note,
6.625% due 08/01/2007 .................................. 1,030
690 BB&T Corporation, Sub. Note,
7.250% due 06/15/2007 .................................. 716
CIT Group Inc., Sr. Note:
2,000 5.000% due 02/01/2015 .................................. 1,927
2,500 7.750% due 04/02/2012 .................................. 2,832
10,000 Citigroup Inc., Note,
6.000% due 02/21/2012 .................................. 10,518
6,000 Farmers Insurance Exchange,
Note,
6.000% due 08/01/2014** ................................ 5,996
1,000 First Nationwide Bank, Sub. Deb.,
10.000% due 10/01/2006 ................................. 1,044
995 Fleet Financial Group, Inc., Sub. Deb.,
6.875% due 01/15/2028 .................................. 1,130
10,000 Goldman Sachs Group, Inc., Note,
6.600% due 01/15/2012 .................................. 10,702
7,500 Jefferies Group, Inc., Sr. Note,
7.750% due 03/15/2012 .................................. 8,308
10,000 JPMorgan Chase & Company, Sub. Note,
5.125% due 09/15/2014 .................................. 9,804
3,000 Legg Mason, Inc., Sr. Note,
6.750% due 07/02/2008 .................................. 3,137
5,000 MBNA America Bank NA, Sub. Note,
7.125% due 11/15/2012 .................................. 5,562
MBNA Corporation:
3,000 Note,
6.250% due 01/17/2007 .................................. 3,048
2,000 Sr. Note,
7.500% due 03/15/2012 .................................. 2,246
Merrill Lynch & Company Inc., Note:
5,000 6.000% due 02/17/2009 .................................. 5,160
1,450 6.500% due 07/15/2018 .................................. 1,590
2,000 6.750% due 06/01/2028 .................................. 2,217
7,500 Morgan Stanley Dean Witter & Company,
Note,
6.750% due 04/15/2011 .................................. 8,051
3,000 Morgan Stanley, Sub. Note,
4.750% due 04/01/2014 .................................. 2,835
670 NationsBank Corporation, Sub. Note,
6.800% due 03/15/2028 .................................. 753
Paine Webber Group, Inc., Sr. Note:
415 7.390% due 10/16/2017 .................................. 482
830 8.060% due 01/17/2017 .................................. 1,022
500 PNC Institute Capital B, Company Guarantee,
8.315% due 05/15/2027** ................................ 540
$10,000 SB Treasury Company LLC, Bond,
9.400% to 06/30/2008;
10.925% due 12/29/2049** ............................... $ 10,963
U.S. Bank NA, Sub. Note:
6,000 4.950% due 10/30/2014 .................................. 5,908
5,000 6.375% due 08/01/2011 .................................. 5,332
11,000 Wells Fargo & Company, Sub. Note,
4.625% due 04/15/2014 .................................. 10,588
--------
137,662
--------
UTILITIES - 9.4%
5,000 Arizona Public Service Company, Note,
6.500% due 03/01/2012 .................................. 5,337
10,000 Dominion Resources, Inc., Sr. Note,
5.000% due 03/15/2013 .................................. 9,709
9,000 Illinois Power Company, First Mortgage,
7.500% due 06/15/2009 .................................. 9,591
7,000 Metropolitan Edison Company, Sr. Note,
4.950% due 03/15/2013 .................................. 6,837
NiSource Finance Corporation:
5,000 Bond,
5.400% due 07/15/2014 .................................. 4,947
5,000 Sr. Note,
6.150% due 03/01/2013 .................................. 5,200
4,000 Ohio Edison Company, Sr. Note,
5.450% due 05/01/2015 .................................. 3,975
5,000 Ohio Power Company, Sr. Note,
5.500% due 02/15/2013 .................................. 5,055
Oncor Electric Delivery Company, Deb.:
1,000 5.000% due 09/01/2007 .................................. 999
9,000 7.000% due 09/01/2022 .................................. 9,814
10,250 Pacific Gas & Electric Company,
First Mortgage,
4.200% due 03/01/2011 .................................. 9,768
PacifiCorp, First Mortgage:
7,500 4.950% due 08/15/2014 .................................. 7,351
3,000 5.250% due 06/15/2035 .................................. 2,776
5,000 PPL Energy Supply LLC, Sr. Note,
6.400% due 11/01/2011 .................................. 5,244
2,000 Public Service Company of New Mexico,
Sr. Note,
4.400% due 09/15/2008 .................................. 1,958
9,000 Sempra Energy, Note,
6.000% due 02/01/2013 .................................. 9,220
6,500 Southwestern Electric Power Company, Note,
5.375% due 04/15/2015 .................................. 6,472
6,845 Texas-New Mexico Power Company, Sr. Note,
6.250% due 01/15/2009 .................................. 7,041
--------
111,294
--------
OIL & GAS - 6.5%
7,500 Consolidated Natural Gas Company, Sr. Note,
6.850% due 04/15/2011 .................................. 8,079
10,000 El Paso Natural Gas Company, Deb.,
7.500% due 11/15/2026 .................................. 10,204
6,000 Enterprise Products Partners LP,
Company Guarantee,
6.375% due 02/01/2013 .................................. 6,221
See Notes to Financial Statements.
72
Portfolio of Investments (continued)
INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- -------
CORPORATE BONDS AND NOTES (CONTINUED)
OIL & GAS (CONTINUED)
$ 5,078 Express Pipeline LP, Sub. Note,
7.390% due 12/31/2017** ............................... $ 5,388
Hanover Compressor Company:
1,500 Conv. Sr. Note,
4.750% due 03/15/2008 ................................. 1,434
9,000 Sr. Note,
8.625% due 12/15/2010 ................................. 9,585
Petro-Canada:
8,500 Deb.,
9.250% due 10/15/2021 ................................. 11,331
3,000 Note,
4.000% due 07/15/2013 ................................. 2,759
8,000 Petrobras International Finance Company,
Sr. Note,
9.750% due 07/06/2011 ................................. 9,440
Southern Natural Gas Company, Sr. Note:
4,000 8.000% due 03/01/2032 ................................. 4,318
1,000 8.875% due 03/15/2010 ................................. 1,078
2,000 Tennessee Gas Pipeline Company, Bond,
8.375% due 06/15/2032 ................................. 2,247
4,500 Tesoro Petroleum Corporation, Note,
8.000% due 04/15/2008 ................................. 4,702
-------
76,786
-------
CONSUMER PRODUCTS/SERVICES - 6.1%
Allied Waste North America, Inc., Sr. Note:
9,000 7.250% due 03/15/2015** ............................... 8,955
1,000 7.875% due 04/15/2013 ................................. 1,030
4,000 Cendant Corporation, Note,
6.875% due 08/15/2006 ................................. 4,052
5,000 ConAgra, Inc., Sr. Note,
7.125% due 10/01/2026 ................................. 5,452
10,200 Corn Products International, Inc., Sr. Note,
8.450% due 08/15/2009 ................................. 11,271
350 CPC International, Inc., Note,
6.150% due 01/15/2006 ................................. 351
1,000 Mattel, Inc., Note,
7.300% due 06/13/2011 ................................. 1,077
10,000 Reed Elsevier Capital Inc.,
Company Guarantee,
6.750% due 08/01/2011 ................................. 10,751
Royal Caribbean Cruises Ltd.:
2,000 Deb.,
7.250% due 03/15/2018 ................................. 2,092
Sr. Note:
3,000 6.875% due 12/01/2013 ................................. 3,120
1,250 8.000% due 05/15/2010 ................................. 1,356
3,000 8.750% due 02/02/2011 ................................. 3,360
Sealed Air Corporation:
7,250 Conv. Sr. Note,
3.000% due 06/30/2033** ............................... 7,042
4,000 Note,
5.625% due 07/15/2013** ............................... 3,912
USA Waste Services, Inc., Sr. Note:
$ 1,000 7.000% due 07/15/2028 ................................. $ 1,105
495 7.125% due 10/01/2007 ............................... 514
Waste Management Inc.:
3,450 Company Guarantee,
6.875% due 05/15/2009 ................................. 3,643
3,500 Sr. Note,
7.375% due 08/01/2010 .................................... 3,809
-------
72,892
-------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 5.1%
2,000 American Health Properties, Inc., Note,
7.500% due 01/15/2007 ................................. 2,057
Arden Realty LP, Note:
3,000 5.200% due 09/01/2011 ................................. 2,936
7,000 5.250% due 03/01/2015 ................................. 6,767
10,000 Developers Diversified Realty Corporation, Note,
4.625% due 08/01/2010 ................................. 9,669
Franchise Finance Corporation:
3,000 MTN,
7.070% due 01/15/2008 ................................. 3,155
1,100 Sr. Note,
7.875% due 11/30/2005 ................................. 1,103
Health Care Property Investors, Inc.:
1,750 Note,
6.000% due 03/01/2015 ................................. 1,778
Sr. Note:
3,000 6.450% due 06/25/2012 ................................. 3,130
1,000 6.500% due 02/15/2006 ................................. 1,006
2,250 7.072% due 06/08/2015 ................................. 2,451
Health Care REIT, Inc.:
Sr. Note:
8,000 6.000% due 11/15/2013 ................................. 7,946
1,500 7.500% due 08/15/2007 ................................. 1,554
7,500 Healthcare Realty Trust, Inc., Sr. Note,
8.125% due 05/01/2011 ................................. 8,301
9,000 Shurgard Storage Centers, Inc., Note,
5.875% due 03/15/2013 ................................. 8,998
-------
60,851
-------
HEALTH CARE - 4.4%
4,500 Aetna Inc., Sr. Note,
7.375% due 03/01/2006 ................................. 4,540
11,000 Athena Neurosciences Finance LLC,
Company Guarantee,
7.250% due 02/21/2008 ................................. 10,670
10,000 Cardinal Health, Inc., Note,
6.750% due 02/15/2011 ................................. 10,652
DVI, Inc., Sr. Note, (in default):
400 9.875% due 02/01/2004++ ............................... 36
8,125 9.875% due 02/01/2004++ ............................... 731
HCA Inc.:
3,000 Note,
5.250% due 11/06/2008 ................................. 2,957
5,000 Sr. Note,
6.950% due 05/01/2012 ................................. 5,119
See Notes to Financial Statements.
73
Portfolio of Investments (continued)
INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- -------
CORPORATE BONDS AND NOTES (CONTINUED)
HEALTH CARE (CONTINUED)
$ 7,350 IVAX Corporation, Conv. Sr. Sub. Note,
4.500% due 05/15/2008 ................................. $ 7,387
12,000 Tenet Healthcare Corporation, Sr. Note,
6.375% due 12/01/2011 ................................. 10,530
-------
52,622
-------
TRANSPORTATION/AUTO - 4.3%
Burlington Northern Santa Fe Corporation:
5,000 Deb.,
8.125% due 04/15/2020 ................................. 6,219
1,500 Note,
8.750% due 02/25/2022 ................................. 1,975
1,273 CSX Transportation, Inc., Deb.,
9.750% due 06/15/2020 ................................. 1,753
2,000 Ford Holdings Inc., Company Guarantee,
9.300% due 03/01/2030 ................................. 1,685
Ford Motor Company, Deb.:
825 7.400% due 11/01/2046 ................................. 565
3,750 8.900% due 01/15/2032 ................................. 3,084
5,000 Ford Motor Credit Company, Sr. Note,
5.800% due 01/12/2009 ................................. 4,583
8,000 General Motors Corporation, Deb.,
9.400% due 07/15/2021 ................................. 6,060
Norfolk Southern Corporation:
1,757 Deb.,
9.750% due 06/15/2020 ................................. 2,436
5,000 Sr. Note,
6.200% due 04/15/2009 ................................. 5,201
7,500 Trailer Bridge, Inc.,
Sr. Sec. Note,
9.250% due 11/15/2011 ................................. 7,744
5,000 Union Pacific Corporation,
3.875% due 02/15/2009 ................................. 4,825
United Air Lines Inc.:
5,000 Equipment Trust Certificates, (in default),
10.850% due 07/05/2014 ................................ 2,125
Pass-through Certificates, (in default):
3,000 9.080% due 10/26/2015 ................................. 857
4,806 9.560% due 10/19/2018 ................................. 1,972
-------
51,084
-------
GAMING - 3.8%
6,250 CCM Merger Inc., Note,
8.000% due 08/01/2013** ............................... 6,219
5,000 Circus Circus Enterprise Inc., Deb.,
7.000% due 11/15/2036 ................................. 5,200
3,500 Harrah's Operating Company Inc.,
Company Guarantee,
8.000% due 02/01/2011 ................................. 3,862
3,000 Mandalay Resort Group, Sr. Sub. Note, Series B,
10.250% due 08/01/2007 ................................ 3,210
12,000 Old Evangeline Downs LLC / Diamond Jo
LLC, Company Guarantee,
8.750% due 04/15/2012 ................................. 11,700
Park Place Entertainment Corporation,
Sr. Note:
$ 1,500 7.500% due 09/01/2009 ................................. $ 1,598
5,000 8.500% due 11/15/2006 ................................. 5,164
7,900 Riviera Holdings Corporation,
Company Guarantee,
11.000% due 06/15/2010 ................................ 8,631
-------
45,584
-------
TELECOMMUNICATIONS - 2.8%
5,000 Deutsche Telephone Finance, Bond,
8.500% due 06/15/2010 ................................. 5,585
8,000 Qwest Corporation, Note,
8.875% due 03/15/2012 ................................. 8,820
9,000 TELUS Corporation, Note,
8.000% due 06/01/2011 ................................. 10,132
8,000 Vodafone Group PLC, Note,
7.750% due 02/15/2010 ................................. 8,808
-------
33,345
-------
MEDIA - 2.6%
Comcast Cable Communications Inc.:
550 Note, 6.200% due 11/15/2008 ........................... 567
7,000 Sr. Note, 7.125% due 06/15/2013 ....................... 7,589
8,000 Cox Communications, Inc., Note, 6.750% due 03/15/2011 .... 8,406
2,500 FrontierVision Holdings LP, Sr. Disc. Note, (in default),
11.875% due 09/15/2007 ................................ 3,087
2,000 FrontierVision Operating Partners LP,
Sr. Sub. Note, (in default),
11.000% due 10/15/2006 ................................ 2,730
2,000 Tele-Communications, Inc., Sr. Deb.,
7.875% due 08/01/2013 ................................. 2,257
5,260 Time Warner Inc., Deb.,
9.150% due 02/01/2023 ................................. 6,647
-------
31,283
-------
INDUSTRIAL PRODUCTS - 1.6%
5,000 Champion International Corporation, Deb.,
7.200% due 11/01/2026 ................................. 5,374
11,000 Noranda Inc., Note,
6.000% due 10/15/2015 ................................. 11,013
Weyerhaeuser Company:
1,500 Deb.,
7.375% due 03/15/2032 ................................. 1,621
1,500 Note,
6.750% due 03/15/2012 ................................. 1,590
-------
19,598
-------
INDEX PRODUCT - 1.3%
16,088 Dow Jones CDX High Yield Series 4 Trust 1,
Pass-through Certificates,
8.250% due 06/29/2010** ............................... 15,887
-------
See Notes to Financial Statements.
74
Portfolio of Investments (continued)
INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
CORPORATE BONDS AND NOTES (CONTINUED)
INFORMATION TECHNOLOGY - 1.3%
$11,250 Conexant Systems Inc., Conv. Sub. Note,
4.000% due 02/01/2007 ................................ $ 10,857
5,000 Extreme Networks, Inc., Conv. Sub. Note,
3.500% due 12/01/2006 ................................ 4,906
--------
15,763
--------
RETAIL - 0.9%
5,000 Fred Meyer Inc., Company Guarantee,
7.450% due 03/01/2008 ................................ 5,234
5,000 Safeway Inc., Note, 7.500% due 09/15/2009 ............... 5,332
--------
10,566
--------
FOREIGN GOVERNMENT - 0.9%
Federal Republic of Brazil:
2,750 Bond, 9.250% due 10/22/2010 ............................. 3,026
1,500 Note, 8.750% due 02/04/2025 ............................. 1,537
5,000 United Mexican States, Bond, 9.875% due 02/01/2010 ...... 5,893
--------
10,456
--------
AEROSPACE/DEFENSE - 0.9%
3,000 Lockheed Martin Corporation, Company Guarantee,
7.750% due 05/01/2026 ................................ 3,700
1,000 Loral Corporation, Deb., 7.625% due 06/15/2025 .......... 1,214
4,750 Orbital Sciences Corporation, Sr. Note,
9.000% due 07/15/2011 ................................ 5,166
--------
10,080
--------
Total Corporate Bonds and Notes
(Cost $750,798) ...................................... 755,753
--------
U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES - 23.1%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC) - 12.8%
43,446 4.500% due 08/01/2033 ................................... 40,679
67,249 5.000% due 04/01/2018-11/01/2035 ........................ 65,511
36,596 5.500% due 11/01/2017-06/01/2035 ........................ 36,348
3,671 6.000% due 03/01/2031-05/01/2032 ........................ 3,712
4,331 6.500% due 01/01/2029-08/01/2029 ........................ 4,457
999 7.000% due 01/01/2032 ................................... 1,043
--------
Total FHLMC
(Cost $154,957) ...................................... 151,750
--------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA) - 9.9%
$41,142 4.000% due 09/01/2018-10/01/2018 ........................ $ 39,054
11,178 5.000% due 01/01/2018-10/01/2032 ........................ 10,949
52,611 5.500% due 03/01/2033-02/01/2035 ........................ 52,000
1,789 6.000% due 04/01/2032 ................................... 1,806
5,444 6.500% due 09/01/2028-05/01/2032 ........................ 5,599
111 7.000% due 01/01/2030 ................................... 117
189 7.451% due 06/01/2016 ................................... 209
8,000 7.630% due 02/01/2010 ................................... 8,666
--------
Total FNMA
(Cost $120,977) ...................................... 118,400
--------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) - 0.4%
4,511 6.000% due 05/20/2032 ................................... 4,580
614 7.000% due 06/20/2031 ................................... 643
--------
Total GNMA
(Cost $5,101) ........................................ 5,223
--------
Total U.S. Government Agency Mortgage- Backed Securities
(Cost $281,035) ...................................... 275,373
--------
U.S. TREASURY OBLIGATIONS - 6.8%
U.S. TREASURY NOTES - 5.7%
25,000 4.250% due 08/15/2014 ................................... 24,418
44,000 4.000% due 06/15/2009 ................................... 43,357
--------
Total U.S. Treasury Notes ............................... 67,775
--------
U.S. TREASURY BOND - 1.1%
12,000 5.375% due 02/15/2031 ................................... 13,091
--------
Total U.S. Treasury Obligations
(Cost $83,581) ....................................... 80,866
--------
COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) - 0.0%
(Cost $484)
483 Reilly Mortgage FHA, Series 1982, (Partial default),
7.430% due 08/01/2022 ................................ 483@
--------
UNITS
- ---------
LIMITED PARTNERSHIP - 0.7%
(Cost $8,403)
2,925 TexCal, Series A, Common Units .......................... 8,775
-----
SHARES
- ---------
RIGHTS - 0.2%
(Cost $539)
153,563 Danielson Holding Corporation, Rights+ .................. 1,711@
-----
See Notes to Financial Statements.
75
Portfolio of Investments (continued)
INCOME FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ----------
REPURCHASE AGREEMENT - 6.4%
(Cost $75,751)
$75,751 Agreement with Credit Suisse First Boston
Corporation, 3.930% dated 10/31/2005,
to be repurchased at $75,759,000 on
11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities,
market value $77,332,000) .................. $ 75,751
----------
TOTAL INVESTMENTS (Cost $1,200,591*) ...................... 100.7% 1,198,712
OTHER ASSETS (LIABILITIES) (NET) .......................... (0.7) (8,448)
----- ----------
NET ASSETS ................................................ 100.0% $1,190,264
===== ==========
- ----------
* Aggregate cost for federal tax purposes is $1,209,929.
** Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933, as amended.
+ Non-income producing security.
++ Defaulted security is past maturity but continues to be valued in
recognition of future potential worth.
@ Represents fair value as determined in good faith under the direction of
the Board of Trustees.
GLOSSARY OF TERMS
FHA -- Federal Housing Authority
MTN -- Medium-Term Note
See Notes to Financial Statements.
76
Portfolio of Investments
HIGH YIELD FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
CORPORATE BONDS AND NOTES - 87.6%
HEALTH CARE - 18.7%
$21,500 Athena Neurosciences Finance LLC, Company Guarantee,
7.250% due 02/21/2008 ................................ $ 20,855
14,000 CV Therapeutics, Inc., Conv. Sr. Sub. Deb.,
2.000% due 05/16/2023 ................................ 11,952
DVI, Inc., Sr. Note, (in default):
10,375 9.875% due 02/01/2004++ .............................. 934
6,850 9.875% due 02/01/2004++ .............................. 617
10,000 HCA Inc., Note,
6.375% due 01/15/2015 ................................ 9,862
HEALTHSOUTH Corporation:
15,250 Note, 7.625% due 06/01/2012 .......................... 14,411
5,000 Sr. Note, 8.500% due 02/01/2008 ...................... 4,925
16,000 ICOS Corporation, Conv. Sub. Note,
2.000% due 07/01/2023 ................................ 13,140
5,000 Inhale Therapeutic Systems, Inc., Conv. Sub. Note,
5.000% due 02/08/2007 ................................ 4,975
14,850 IVAX Corporation, Conv. Sr. Sub. Note,
4.500% due 05/15/2008 ................................ 14,924
11,350 Omnicare, Inc., Sr. Sub. Note,
6.125% due 06/01/2013 ................................ 10,953
18,000 Quintiles Transnational Corporation, Sr. Sub. Note,
10.000% due 10/01/2013 ............................... 19,958
4,000 Sepracor Inc., Conv. Sub. Deb.,
5.000% due 02/15/2007 ................................ 3,995
16,000 Tenet Healthcare Corporation, Sr. Note,
9.250% due 02/01/2015** .............................. 15,240
4,750 Vertex Pharmaceuticals Inc., Conv. Sub. Note,
5.000% due 09/19/2007 ................................ 4,744
--------
151,485
--------
INDEX PRODUCT - 8.6%
40,343 Dow Jones CDX High Yield Series 4 Trust 1,
Pass-through Certificates,
8.250% due 06/29/2010** .............................. 39,838
29,200 TRAINS (Targeted Return Index Securities
Trust), Series HY-2005-1, Grantor Trust,
7.651% due 06/15/2015** .............................. 29,614
--------
69,452
--------
OIL/ENERGY - 8.3%
El Paso Natural Gas:
12,500 Bond, 8.375% due 06/15/2032 .......................... 13,883
2,750 Sr. Note, 7.625% due 08/01/2010 ...................... 2,900
Hanover Compressor Company:
7,950 Conv. Sr. Note,
4.750% due 03/15/2008 ................................ 7,602
10,250 Sr. Note,
8.625% due 12/15/2010 ................................ 10,916
$11,000 Petrobras International Finance Company, Sr. Note,
9.750% due 07/06/2011 ................................ $ 12,980
7,500 Southern Natural Gas Company, Sr. Note,
8.000% due 03/01/2032 ................................ 8,096
10,000 Tesoro Petroleum Corporation, Sr. Sub. Note,
9.625% due 04/01/2012 ................................ 10,975
--------
67,352
--------
GAMING - 8.1%
7,500 155E Tropicana Hooters LLC, Sr. Note,
8.750% due 04/01/2012 ................................. 7,219
7,500 CCM Merger Inc., Note,
8.000% due 08/01/2013** ............................... 7,462
17,500 MGM Grand, Inc., Sr. Note,
6.000% due 10/01/2009 ................................. 17,281
19,250 Old Evangeline Downs LLC / Diamond Jo
LLC, Company Guarantee,
8.750% due 04/15/2012 ................................. 18,769
14,000 Riviera Holdings Corporation,
Company Guarantee,
11.000% due 06/15/2010 ................................ 15,295
--------
66,026
--------
TELECOMMUNICATIONS - 7.5%
14,250 Extreme Networks, Inc., Conv. Sub. Note,
3.500% due 12/01/2006 ................................ 13,983
18,500 Nortel Networks Corporation, Conv. Company Guarantee,
4.250% due 09/01/2008 ................................ 17,367
13,500 Qwest Corporation, Note,
8.875% due 03/15/2012 ................................ 14,884
14,710 TriQuint Semiconductor, Inc., Conv. Sub. Note,
4.000% due 03/01/2007 ................................ 14,397
--------
60,631
--------
INFORMATION TECHNOLOGY - 6.3%
14,000 BEA Systems Inc., Conv. Sub. Note,
4.000% due 12/15/2006 ................................ 13,860
20,500 Conexant Systems Inc., Conv. Sub. Note,
4.000% due 02/01/2007 ................................ 19,783
17,500 Electronic Data Systems Corporation, Sr. Note, Series B,
6.500% due 08/01/2013 ................................ 17,672
--------
51,315
--------
LEISURE - 5.6%
16,000 Blockbuster Inc., Sr. Sub. Note,
9.500% due 09/01/2012 ................................ 13,280
15,400 Carmike Cinemas, Inc., Sr. Sub. Note,
7.500% due 02/15/2014 ................................ 13,244
Royal Caribbean Cruises Ltd.:
3,000 Deb., 7.250% due 03/15/2018 .......................... 3,139
14,000 Sr. Note, 8.750% due 02/02/2011 ...................... 15,680
--------
45,343
--------
See Notes to Financial Statements.
77
Portfolio of Investments (continued)
HIGH YIELD FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
CORPORATE BONDS AND NOTES (CONTINUED)
CABLE TV - 3.7%
$ 5,650 Adelphia Communications, Sr. Note, (in default),
10.250% due 06/15/2011 ............................... $ 3,912
8,250 Echostar Communications, Conv. Sub. Note,
5.750% due 05/15/2008 ................................ 8,116
9,250 FrontierVision Holdings LP, Sr. Disc. Note, (in default),
11.875% due 09/15/2007 ............................... 11,424
5,000 FrontierVision Operating Partners LP, Sr. Sub. Note,
(in default), 11.000% due 10/15/2006 ................. 6,825
--------
30,277
--------
AEROSPACE/DEFENSE - 3.7%
18,000 Orbital Sciences Corporation, Sr. Note,
9.000% due 07/15/2011 ................................ 19,575
10,000 Primus International Inc., Sr. Note,
11.500% due 04/15/2009** ............................. 10,650
--------
30,225
--------
TRANSPORTATION - 3.6%
10,750 Continental Airlines, Inc., Conv. Sr. Note,
5.000% due 06/15/2023 ................................ 9,003
9,000 New Flyer Industries Inc. (F), Sub. Note,
14.000% due 08/19/2020 ............................... 7,772
Northwest Airlines, Inc., Pass-through
Certificates, (in default):
8,629 Series 1999-2, Class B, 7.950% due 09/01/2016 ........ 6,897
8,480 Series 2001-1, Class B, 7.691% due 04/01/2017 ........ 5,973
--------
29,645
--------
SERVICES - 3.4%
19,500 Allied Waste North America, Inc., Sr. Note,
7.875% due 04/15/2013 ................................ 20,085
7,800 Great Lakes Dredge & Dock Company, Sr. Sub. Note,
7.750% due 12/15/2013 ................................ 7,254
--------
27,339
--------
UTILITIES - 2.6%
Reliant Energy Inc., Sr. Note:
4,000 6.750% due 12/15/2014 ................................ 3,740
16,000 9.500% due 07/15/2013 ................................ 17,120
--------
20,860
--------
FOREIGN GOVERNMENT - 2.4%
Federal Republic of Brazil:
6,500 Bond, 9.250% due 10/22/2010 .......................... 7,153
6,000 Note, 8.750% due 02/04/2025 .......................... 6,150
--------
13,303
--------
$ 15,000 Federal Republic of Brazil (F), Bond,
12.500% due 01/01/2016 ............................... $ 6,215
--------
PAPER/CONTAINERS - 2.0%
400 Crown European Holdings SA, Sr. Note,
9.500% due 03/01/2011 ................................ 440
Jefferson Smurfit Corporation, Company Guarantee:
11,500 7.500% due 06/01/2013 ................................ 10,408
6,000 8.250% due 10/01/2012 ................................ 5,685
--------
16,533
--------
RETAILING - 1.8%
13,500 Southern States Cooperative, Inc., Sr. Note,
10.500% due 11/01/2010** ............................. 14,276
--------
MEDIA - 1.3%
XM Satellite Radio Holdings Inc., Sr. Note:
5,111 12.000% due 06/15/2010 ............................... 5,737
4,717 Zero coupon to 12/31/2005;
14.000% due 12/31/2009 ............................... 4,953
--------
10,690
--------
Total Corporate Bonds and Notes
(Cost $703,580) ...................................... 710,967
--------
UNITS
- ----------
LIMITED PARTNERSHIP - 4.3%
(Cost $12,768)
11,641,750 TexCal, Series A, Common Units ......................... 34,925
--------
SHARES
- ---------
COMMON STOCKS - 4.1%
7,851 Hanover Compressor Company+ ............................. 101
313,800 Health Care Property Investors, Inc. .................... 7,986
210,000 Health Care REIT, Inc. .................................. 7,401
189,757 ICO Global Communications Holdings Ltd.+ ................ 764
735,100 Nationwide Health Properties, Inc. ...................... 17,047
--------
Total Common Stocks
(Cost $19,785) ....................................... 33,299
--------
CONVERTIBLE PREFERRED STOCK - 0.9%
(Cost $7,737)
150,000 Crown Castle International Corporation .................. 7,515
--------
INCOME DEPOSIT SECURITY - 0.7%
(Cost $6,306)
801,400 New Flyer Industries Inc. (F), .......................... 5,598
--------
RIGHTS - 0.2%
(Cost $461)
131,250 Danielson Holding Corporation, Rights+ .................. 1,462@
--------
WARRANTS - 0.0%
(Cost $12)
46,875 ICO Global Communications Holdings Ltd.,
Expires 05/16/2006+ .................................. 2
--------
See Notes to Financial Statements.
78
Portfolio of Investments (continued)
HIGH YIELD FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
REPURCHASE AGREEMENT - 1.0%
(Cost $8,486)
$8,486 Agreement with Credit Suisse First
Boston, 3.930% dated 10/31/2005, to
be repurchased at $8,487,000 on
11/01/2005 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities,
market value $8,663,000) ..................... $ 8,486
--------
TOTAL INVESTMENTS (Cost $759,135*) .......................... 98.8% 802,254
OTHER ASSETS (LIABILITIES) (NET) ............................ 1.2 9,461
----- --------
NET ASSETS .................................................. 100.0% $811,715
===== ========
- ----------
* Aggregate cost for federal tax purposes is $763,333.
** Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933, as amended.
+ Non-income producing security.
++ Defaulted security is past maturity but continues to be valued in
recognition of future potential worth.
@ Represents fair value as determined in good faith under the direction of
the Board of Trustees.
GLOSSARY OF TERMS
(F) -- Foreign Shares
See Notes to Financial Statements.
79
Portfolio of Investments
TAX-EXEMPT BOND FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- -------
MUNICIPAL BONDS AND NOTES - 98.3%
ALASKA - 4.6%
$1,000 Alaska State Housing Finance Corporation,
Housing Revenue, Series A, (FGIC Insured),
5.250% due 12/01/2041 ................................. $ 1,043
4,500 Alaska State International Airports, Airport &
Marina Revenue, Series B, (AMBAC Insured),
5.250% due 10/01/2027 ................................. 4,722
1,235 Anchorage, Electric Utilities, Power & Light
Revenue, Sr. Lien, (MBIA Insured),
6.500% due 12/01/2013 ................................. 1,451
2,000 Anchorage, Ice Rink, Recreational Revenue,
6.375% due 01/01/2020 ................................. 2,226
-------
9,442
-------
ARIZONA - 1.5%
2,000 Arizona Tourism & Sports Authority, Recreational Revenue,
(Multipurpose Stadium Facility Project), Series A,
(MBIA Insured), 5.375% due 07/01/2019 ................. 2,173
1,000 University Medical Center Corporation, Hospital Revenue,
5.000% due 07/01/2035*** .............................. 993
-------
3,166
-------
CALIFORNIA - 11.4%
1,000 Alameda County, Fremont Unified School District, GO,
Series A, (FGIC Insured), 5.000% due 08/01/2025 ....... 1,040
1,000 California County, Tobacco Securitization Agency,
Tobacco Settlement Asset-Backed Revenue,
(Merced County Tobacco Funding Corporation), Series A,
5.125% due 06/01/2038 ................................. 966
1,000 California Educational Facilities Authority, College &
University Revenue, (Pepperdine University), Series A,
5.000% due 09/01/2033 ................................. 1,028
2,000 California Health Facilities Financing Authority, Health
Care Revenue, (Cedars-Sinai Medical Center Project),
5.000% due 11/15/2034 ................................. 2,016
California State Department of Water Resources, Power
Supply Revenue, Series A:
1,000 6.000% due 05/01/2015 ................................. 1,132
(AMBAC Insured):
2,000 5.375% due 05/01/2018 ................................. 2,161
1,000 5.500% due 05/01/2016 ................................. 1,106
3,000 (Inverse Floater), (MBIA-IBC Insured),
7.082% due 05/01/2011+** .............................. 3,449
1,000 California Statewide Communities Development Authority,
Health Care Revenue, (Adventist Health System),
Series A, 5.000% due 03/01/2035 ....................... 1,000
$2,000 Foothill Eastern Transportation Corridor Agency, Capital
Appreciation, Toll Road Revenue, (MBIA Insured),
Zero coupon due 01/15/2018 ............................ $ 1,077
2,000 Golden State Tobacco Securitization
Corporation, Enhanced Tobacco
Settlement Asset-Backed Bonds, Series A,
5.000% due 06/01/2045 ................................. 2,007
2,700 Jurupa, Unified School District, GO,
(FGIC Insured),
5.125% due 08/01/2022 ................................. 2,851
2,000 San Francisco City and County,
International Airports Commission, Airport
Revenue, Second Series, Issue 29B,
(FGIC Insured),
5.125% due 05/01/2020 ................................. 2,104
7,000 San Joaquin Hills, Transportation Corridor
Agency, Toll Road Revenue, Series A,
(MBIA Insured), Zero coupon due 01/15/2034 ............ 1,693
-------
23,630
-------
COLORADO - 1.4%
1,250 Colorado Health Facilities Authority, Lease Revenue,
(Covenant Retirement Communities, Inc.),
5.000% due 12/01/2035 ................................. 1,220
1,650 Lakewood, COP, (AMBAC Insured), 5.350% due 12/01/2017 1,770
-------
2,990
-------
CONNECTICUT - 0.8%
1,500 Connecticut State Special Obligation Parking, Airport &
Marina Revenue, (Bradley International Airport),
Series A, AMT, (ACA Insured), 6.600% due 07/01/2024 ... 1,627
-------
DISTRICT OF COLUMBIA - 0.3%
500 District of Columbia, Water & Sewer Authority, Public
Utilities Revenue, (FSA Insured),
5.500% due 10/01/2017 ................................. 565
-------
FLORIDA - 6.0%
110 Escambia County, Health Facilities Authority, Health
Facilities Revenue, (Florida Health Care Facilities
Loan-VHA Program), (AMBAC Insured),
5.950% due 07/01/2020 ................................. 117
650 Escambia County, Utilities Authority, Utility Systems
Revenue, (FGIC Insured), 5.250% due 01/01/2029 ........ 681
900 Florida Housing Finance Agency, Housing Revenue,
(Spinnaker Cove Apartments Project), Series G, AMT,
(AMBAC Insured), 6.500% due 07/01/2036 ................ 925
800 Florida State Board of Education, Lottery Revenue,
Series A, (FGIC Insured), 5.250% due 07/01/2017 ....... 857
See Notes to Financial Statements.
80
Portfolio of Investments (continued)
TAX-EXEMPT BOND FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- -------
MUNICIPAL BONDS AND NOTES (CONTINUED)
FLORIDA (CONTINUED)
$1,000 Hillsborough County, Port District Revenue, (Tampa Port
Authority Project), Series A, AMT, (MBIA Insured),
5.375% due 06/01/2027 ................................. $ 1,051
70 Manatee County, Housing Finance Authority, SFMR, Series
94-4, AMT, (GNMA/FNMA Collateral),
6.875% due 11/01/2026 ................................. 71
500 Orange County, Housing Finance Authority, MFHR,
(Hands Inc. Project), Series A,
7.000% due 10/01/2025** ............................... 527
5,000 Orlando, Utilities Commission, Water & Electric Revenue,
6.000% due 10/01/2010 ................................. 5,551
1,300 Osceola County, School Board, COP, Series A,
(AMBAC Insured), 5.125% due 06/01/2022 ................ 1,366
1,275 UCF Athletics Association, Inc., COP, (Master Lease
Program), Series A, (FGIC Insured),
5.000% due 10/01/2035 ................................. 1,313
-------
12,459
-------
GEORGIA - 5.8%
5,000 Georgia State, GO, Series B, 6.300% due 03/01/2009 ....... 5,471
Monroe County, Development Authority, PCR, (Oglethorpe
Power Corporation Project), Series A,
(MBIA-IBC Insured):
2,500 6.700% due 01/01/2009 ................................. 2,741
3,410 6.750% due 01/01/2010 ................................. 3,821
-------
12,033
-------
HAWAII - 1.1%
Honolulu City and County, GO, Series A:
1,270 (Unrefunded Balance),
6.000% due 01/01/2012 ................................. 1,423
730 ETM,
6.000% due 01/01/2012 ................................. 822
-------
2,245
-------
IDAHO - 1.2%
2,000 Idaho Health Facilities Authority, Health Care Revenue,
(IHC Hospitals Inc. Project), (Inverse Floater), ETM,
6.650% due 02/15/2021+** .............................. 2,533
-------
ILLINOIS - 6.7%
5,000 Chicago, O'Hare International Airport, Airport Revenue,
(Inverse Floater), AMT, (FSA Insured),
8.650% due 01/01/2020+** .............................. 5,906
Chicago, O'Hare International Airport, Special Facilities
Revenue, Series B:
$ 965 (Second Lien Passenger Facility), (AMBAC Insured),
5.500% due 01/01/2017 ................................. $ 1,041
1,000 (United Airlines Project), AMT, (in default),
6.100% due 11/01/2035 ................................. 136
500 Illinois Finance Authority, Health Care Revenue,
(Friendship Village Schaumburg), Series A,
5.625% due 02/15/2037 ................................. 498
Metropolitan Pier & Exposition Authority, Capital
Appreciation, Dedicated State Tax Revenue, Series A,
(FGIC Insured):
(Unrefunded Balance):
85 Zero coupon due 06/15/2008 ............................ 78
130 Zero coupon due 06/15/2009 ............................ 114
ETM:
815 Zero coupon due 06/15/2009 ............................ 715
5,055 Zero coupon due 06/15/2009 ............................ 4,435
1,000 Village of Pingree Grove, Special Service Area Number One,
Special Tax, (Cambridge Lakes Project), Series 1,
5.250% due 03/01/2015 ................................. 1,004
-------
13,927
-------
INDIANA - 3.2%
6,000 Indiana Municipal Power Agency, Power Supply System
Revenue, Series A, ETM, (MBIA Insured),
6.125% due 01/01/2013 ................................. 6,638
-------
IOWA - 0.2%
490 Tobacco Settlement Authority Iowa, Tobacco Settlement
Asset-Backed Revenue, Series B,
5.300% due 06/01/2025 ................................. 497
-------
LOUISIANA - 2.7%
2,000 Ernest N. Morial, New Orleans Exhibit Hall Authority,
Special Tax, Series A, (AMBAC Insured),
5.000% due 07/15/2033 ................................. 2,016
2,680 Lafayette, Utility Revenue, (MBIA Insured),
5.250% due 11/01/2023 ................................. 2,836
1,500 Louisiana Public Facilities Authority, Customer Receipts
Revenue, Series B, ETM, Zero coupon due 12/01/2019 .... 782
-------
5,634
-------
MARYLAND - 1.8%
2,000 Baltimore, Port Facilities, Industrial Revenue,
(Consolidated Coal Sales Project), Series B,
6.500% due 10/01/2011 ................................. 2,108
1,150 Maryland State Economic Development Corporation, Student
Housing Revenue, (University of Maryland College Park
Project), 5.625% due 06/01/2035 ....................... 1,195
500 Prince Georges County, Special Obligation Bonds,
(National Harbor Project), 5.200% due 07/01/2034 ...... 502
-------
3,805
-------
See Notes to Financial Statements.
81
Portfolio of Investments (continued)
TAX-EXEMPT BOND FUND
October 31, 2005
Principal
AMOUNT VALUE
(000S) (000S)
- --------- ------
MUNICIPAL BONDS AND NOTES (CONTINUED)
MASSACHUSETTS - 3.4%
$2,000 Massachusetts Bay Transportation Authority,
Sales Tax Revenue, Series A,
5.000% due 07/01/2035 .................................. $2,042
2,000 Massachusetts State Health & Educational
Facilities Authority, College & University
Revenue, (UMass Memorial Issue), Series D,
5.000% due 07/01/2033 .................................. 1,972
1,000 Massachusetts State Development Finance
Agency, Revenue Bonds, (Hillcrest
Educational Centers Inc. Project),
6.375% due 07/01/2029 .................................. 1,007
1,000 Massachusetts State Health & Educational
Facilities Authority, Health Care Revenue,
(Health Care System-Covenant Health),
6.000% due 07/01/2031 .................................. 1,060
1,000 Massachusetts State Water Resources Authority,
Water Revenue, Series J, (FSA Insured),
5.000% due 08/01/2032 .................................. 1,024
------
7,105
------
MICHIGAN - 1.0%
1,000 Kent Hospital Finance Authority, Revenue Bonds,
(Metropolitan Hospital Project), Series A,
5.250% due 07/01/2030 .................................. 998
1,000 Michigan State Strategic Fund, Limited
Obligation Revenue, (Detroit Edison
Company Exempt Facilities Project),
Series C, AMT, (XLCA Insured),
5.450% due 12/15/2032 .................................. 1,043
------
2,041
------
MINNESOTA - 0.5%
1,000 St. Paul Housing and Redevelopment
Authority, Hospital Facility Revenue,
(HealthEast Project),
6.000% due 11/15/2030 .................................. 1,070
------
MISSOURI - 2.8%
2,250 Bi-State Development Agency of the
Missouri-Illinois Metropolitan District,
Mass Transit Sales Tax Revenue,
(Metrolink Cross County Extension Project),
Series B, (FSA Insured),
5.250% due 10/01/2019 .................................. 2,430
1,000 Cape Girardeau County, Industrial
Development Authority, Health Care
Facilities Revenue, (Southeast Hospital
Association Project),
5.625% due 06/01/2027 .................................. 1,029
750 Carthage, Hospital Revenue,
6.000% due 04/01/2038*** ............................... 737
600 Fenton, Tax Increment Revenue, (Gravois
Bluffs Improvement Project),
7.000% due 10/01/2021 .................................. 642
1,000 Missouri State Health and Education
Facilities Authority, Education Facilities
Revenue, (University of Missouri-Columbia
Arena Project),
5.000% due 11/01/2018 .................................. 1,052
------
5,890
------
NEBRASKA - 3.2%
$6,000 Omaha Public Power District, Electric
Revenue, Series B, ETM,
6.150% due 02/01/2012 .................................. $6,659
------
NEVADA - 1.0%
1,000 Clark County, Airport Systems Subordinate
Lien Revenue, Series A-2, (FGIC Insured),
5.000% due 07/01/2036 .................................. 1,024
1,000 Reno, Sales & Room Tax Revenue, Sr. Lien,
(ReTrac-Reno Transportation Rail Access
Corridor Project), (AMBAC Insured),
5.125% due 06/01/2037 .................................. 1,027
------
2,051
------
NEW JERSEY - 3.7%
2,000 Bergen County, Improvement Authority,
School Improvement Revenue, (Wyckoff Township
Board of Education Project), (County Guaranteed),
5.000% due 04/01/2032 .................................. 2,080
1,000 New Jersey Economic Development Authority, Cigarette Tax
Revenue, 5.500% due 06/15/2031 ......................... 1,029
1,000 New Jersey Economic Development Authority, Economic
Development Revenue, (Kapkowski Road Landfill Project),
5.750% due 04/01/2031 .................................. 1,082
1,340 New Jersey Educational Facilities Authority, Government
Fund Grant Revenue, (Higher Education Capital
Improvement Project), Series A, (AMBAC Insured),
5.250% due 09/01/2020 .................................. 1,438
2,000 New Jersey State Turnpike Authority, Transit Revenue,
Series C-1, (AMBAC Insured), 5.000% due 01/01/2035 ..... 2,051
------
7,680
------
NEW YORK - 6.2%
1,000 Erie County, Tobacco Asset Securitization Corporation,
Tobacco Settlement Asset-Backed Revenue, Series A,
5.000% due 06/01/2045 .................................. 951
1,265 Metropolitan Transportation Authority, Service Contract
Revenue, (Transportation Facilities Project), Series 7,
4.750% due 07/01/2019 .................................. 1,336
1,500 Metropolitan Transportation Authority, Transportation
Revenue, Series A, (FGIC Insured),
5.250% due 11/15/2031 .................................. 1,583
1,000 New York City Industrial Development Agency, Liberty
Revenue Bonds, (7 World Trade Center, LLC Project),
Series A, 6.250% due 03/01/2015 ........................ 1,063
2,500 New York City Municipal Water Finance Authority, Water &
Sewer Revenue, PA 1289 Project, (MBIA Insured),
6.605% due 06/15/2027+** ............................... 2,711
1,000 New York Counties Tobacco Trust IV, Tobacco Settlement
Revenue, Series A, 5.000% due 06/01/2042 ............... 952
See Notes to Financial Statements.
82
Portfolio of Investments (continued)
TAX-EXEMPT BOND FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- -------
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW YORK (CONTINUED)
$1,000 New York State Dormitory Authority, College
& University Revenue, (State University
Educational Facilities Project), (MBIA Insured),
6.000% due 05/15/2016 ................................. $ 1,116
1,000 New York State Dormitory Authority, Mount
Sinai NYU Health Revenue,
5.500% due 07/01/2026 ................................. 1,011
415 New York State Housing Finance Agency,
MFHR, (Secured Mortgage Program),
Series F, AMT,
6.625% due 08/15/2012 ................................. 416
560 New York State Mortgage Agency,
Homeowner Mortgage Revenue, Series 82, AMT,
5.650% due 04/01/2030 ................................. 570
1,000 New York State, GO, Series H,
5.750% due 03/15/2013 ................................. 1,096
-------
12,805
-------
NORTH CAROLINA - 1.6%
1,000 Charlotte, COP, (Convention Facility Project), Series A,
5.500% due 08/01/2019 ................................. 1,084
2,000 North Carolina Municipal Power Agency
No. 1, Catawba Electric Revenue, Series A,
(MBIA Insured),
5.250% due 01/01/2018 ................................. 2,136
-------
3,220
-------
OHIO - 1.5%
1,000 Adams County, Hospital Facilities
Improvement Revenue, (Adams County Hospital Project),
6.250% due 09/01/2020 ................................. 998
1,000 Cuyahoga County, Hospital Facilities Revenue,
(Canton Inc. Project),
7.500% due 01/01/2030 ................................. 1,113
1,000 Ohio State University, General Receipts
Revenue, Series A,
5.125% due 12/01/2031 ................................. 1,034
-------
3,145
-------
OKLAHOMA - 0.7%
255 Oklahoma Housing & Finance Authority,
SFMR, Series B, AMT, (GNMA Collateral),
7.997% due 08/01/2018 ................................. 275
1,000 Tulsa County, Public Facilities Authority,
Capital Improvement Revenue, (AMBAC Insured),
6.250% due 11/01/2022 ................................. 1,111
-------
1,386
-------
OREGON - 2.1%
1,000 Oregon Health Sciences University, College &
University Revenue, Series A, (MBIA Insured),
5.250% due 07/01/2022 ................................. 1,072
$2,000 Portland, Sewer System Revenue, Second
Lien, Series A, (FSA Insured),
5.250% due 06/01/2020 ................................. $ 2,150
1,000 Portland, Tax Allocation Revenue, (Downtown
Waterfront Urban Renewal & Redevelopment Project),
Series A, (AMBAC Insured),
5.750% due 06/15/2016 ................................. 1,101
-------
4,323
-------
PENNSYLVANIA - 4.6%
1,000 Delaware County, IDR, (Resource Recovery
Facility), Series A,
6.100% due 07/01/2013 ................................. 1,049
Philadelphia, Gas Works Revenue,
(FSA Insured):
(1998 General Ordinance):
1,000 Fourth Series,
5.250% due 08/01/2020 ................................. 1,065
2,500 Second Series,
5.250% due 07/01/2029 ................................. 2,636
2,500 (Inverse Floater), Series 384,
7.727% due 07/01/2011+** .............................. 2,856
820 Philadelphia, Parking Authority, Auto Parking
Revenue, Series A, (AMBAC Insured),
5.250% due 02/15/2029 ................................. 854
1,000 Philadelphia, Redevelopment Authority
Revenue, (Neighborhood Transformation
Project), Series A, (FGIC Insured),
5.500% due 04/15/2017 ................................. 1,087
-------
9,547
-------
PUERTO RICO - 0.5%
1,000 Puerto Rico Municipal Finance Agency,
Revenue Bonds, Series A, (FSA Insured),
5.250% due 08/01/2021 ................................. 1,079
-------
SOUTH CAROLINA - 0.5%
1,000 South Carolina Jobs-Economic Development
Authority, IDR, (Electric & Gas Company
Project), Series A, (AMBAC Insured),
5.200% due 11/01/2027 ................................. 1,058
-------
SOUTH DAKOTA - 0.6%
1,250 South Dakota Health and Educational
Facilities Authority, Health Care Revenue,
(Sioux Valley Hospitals and Health System), Series A,
5.250% due 11/01/2034 ................................. 1,283
-------
TENNESSEE - 1.2%
590 Chattanooga, Health, Educational & Housing
Facility Board, College & University
Revenue, (CDFI Phase I, LLC Project), Series B,
5.500% due 10/01/2020 ................................. 585
1,000 Johnson City, Health & Educational Facility
Board, Hospital Revenue, (Mountain States
Health Care Facilities First Mortgage Project), Series A,
7.500% due 07/01/2033 ................................. 1,166
See Notes to Financial Statements.
83
Portfolio of Investments (continued)
TAX-EXEMPT BOND FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
MUNICIPAL BONDS AND NOTES (CONTINUED)
TENNESSEE (CONTINUED)
$ 710 Tennessee Housing Development Agency,
Housing Revenue, (Homeownership
Program), Series 2A, AMT,
5.700% due 07/01/2031 ................................ $ 719
--------
2,470
--------
TEXAS - 5.9%
1,500 Dallas-Fort Worth International Airport
Board, Airport & Marina Revenue,
Series A, AMT, (FGIC Insured),
5.500% due 11/01/2031 ................................ 1,564
2,000 Harris County, Houston Sports Authority,
Special Revenue, Jr. Lien, Series B,
(MBIA Insured),
5.250% due 11/15/2040 ................................ 2,064
85 Houston, GO, (Public Improvement Project),
(FSA Insured), (Unrefunded Balance),
5.750% due 03/01/2015 ................................ 93
1,000 Houston, Hotel Occupancy Tax & Special
Revenue, (Convention & Entertainment
Project), Series B, (AMBAC Insured),
5.750% due 09/01/2015 ................................ 1,102
1,000 Lower Colorado River Authority,
Transmission Contract Revenue, (LCRA
Transmission Services Corporation Project),
(FGIC Insured),
5.000% due 05/15/2033 ................................ 1,017
1,100 Metro Health Facilities Development
Corporation, Health Care Revenue,
(Wilson N. Jones Memorial Hospital Project),
7.200% due 01/01/2021 ................................ 1,137
North Central, Health Facilities Development
Corporation Revenue:
1,000 (Baylor Health Care System Project), Series A,
5.125% due 05/15/2029 ................................ 1,016
1,000 (Children's Medical Center of Dallas
Project), (AMBAC Insured),
5.250% due 08/15/2032 ................................ 1,040
1,000 Texas Tech University System, Financing
System Revenue, Seventh Series, (MBIA Insured),
5.000% due 08/15/2025 ................................ 1,031
2,000 University of Texas Financing System,
College & University Revenue, Series A,
5.250% due 08/15/2019 ................................ 2,148
--------
12,212
--------
VIRGINIA - 0.3%
500 Virginia Beach Development Authority,
Residential Care Facility Mortgage
Revenue, (Westminster & Canterbury of
Hampton Roads Inc.),
5.375% due 11/01/2032 ................................ 504
--------
WASHINGTON - 6.6%
5,000 Franklin County, Pasco School District
No. 1, GO, (FSAInsured),
5.250% due 12/01/2019 ................................ 5,361
$4,500 King County, Kent School District No. 415,
GO, Series C,
6.300% due 12/01/2008 ................................ $ 4,785
3,000 Washington State, GO, Series B & AT-7,
6.400% due 06/01/2017 ................................ 3,549
--------
13,695
--------
WEST VIRGINIA - 1.2%
2,500 Harrison County, County Community Solid
Waste Disposal Authority, IDR,
(Monongahela Power Company Project),
Series A, AMT, (MBIA-IBC Insured),
6.875% due 04/15/2022 ................................ 2,507
--------
WISCONSIN - 0.5%
Wisconsin State Health & Educational
Facilities Authority, Health Care Revenue,
Series A:
600 (Beaver Dam Community Hospitals, Inc. Project),
6.000% due 08/15/2019 ................................ 625
380 (Waukesha Memorial Hospital Project),
(AMBAC Insured),
7.125% due 08/15/2007 ................................ 381
--------
1,006
--------
Total Municipal Bonds and Notes
(Cost $192,515) ...................................... 203,927
--------
SHORT-TERM MUNICIPAL BONDS - 1.6%
(Cost $3,400)
3,400 Delaware County, Industrial Development
Authority, IDR, (United Parcel Service
Project),
2.690% due 12/01/2015++ ...................... 3,400
--------
TOTAL INVESTMENTS+++ (Cost $195,915*) ....................... 99.9% 207,327
OTHER ASSETS (LIABILITIES) (NET) ............................ 0.1 252
----- --------
NET ASSETS .................................................. 100.0% $207,579
===== ========
- ----------
* Aggregate cost for federal tax purposes is $195,999.
** Security deemed illiquid by the Portfolio Manager.
*** Security purchased on a when-issued basis.
+ Variable rate security. The interest rate shown reflects the rate in effect
at October 31, 2005.
++ Securities with a maturity date of more than thirteen months have variable
rates and/or demand features which qualify them as short-term securities.
Securities are secured by bank letters of credit or guarantees by certain
corporations. The interest rates shown are those in effect at October 31,
2005. These rates change periodically based on specified market rates or
indices.
+++ All securities segregated as collateral for futures contracts or when-
issued securities.
UNREALIZED
NUMBER OF VALUE APPRECIATION
CONTRACTS (000S) (000S)
- --------- ------- ------------
FUTURES CONTRACTS-SHORT POSITION
312 U.S. 5 Year Treasury Note,
December 2005 .......................... $33,038 $278
======= ====
See Notes to Financial Statements.
84
Portfolio of Investments (continued)
TAX-EXEMPT BOND FUND
October 31, 2005
The Tax-Exempt Bond Fund had the following industry concentrations greater than
10.0% at October 31, 2005 (as a percentage of the total net assets of the Fund)
(unaudited):
Transportation 15.1%
Power 15.0%
General Obligation 14.1%
Hospital 11.9%
The Tax-Exempt Bond Fund had the following insurance concentrations greater than
10.0% at October 31, 2005 (as a percentage of the total net assets of the Fund)
(unaudited):
MBIA 19.1%
AMBAC 12.7%
FSA 12.1%
FGIC 10.4%
GLOSSARY OF TERMS
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificate of Participation
ETM -- Escrowed to Maturity
FGIC -- Federal Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation
IBC -- Insured Bond Certificate
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
SFMR -- Single Family Mortgage Revenue
VHA -- Veterans Housing Authority
XLCA -- XL Capital Assurance Inc.
See Notes to Financial Statements.
85
Portfolio of Investments
CALIFORNIA MUNICIPAL FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ------
MUNICIPAL BONDS AND NOTES - 100.0%
CALIFORNIA - 99.7%
ABAG Financing Authority for Nonprofit
Corporations, COP:
$ 340 (Episcopal Homes Foundation),
5.000% due 07/01/2007 .................................. $ 346
(O'Connor Woods Obligation Group),
(ACA Insured):
700 5.400% due 11/01/2009 .................................. 718
2,280 5.700% due 11/01/2013 .................................. 2,408
1,240 ABAG Financing Authority for Nonprofit
Corporations, Revenue Bonds, (California
School of Mechanical Arts),
5.250% due 10/01/2026 .................................. 1,275
5,360 Alhambra, Improvement Board Act of 1915,
Special Tax Revenue, (Public Works
Assessment District No. 1), (MBIA Insured),
6.125% due 09/02/2018 .................................. 5,413
2,000 Anaheim, Public Financing Authority, Tax
Allocation Revenue, (Inverse Floater),
(MBIA Insured),
10.120% due 12/28/2018+ ................................ 2,343
2,210 Azusa, Community Facilities District No. 1,
Special Tax Revenue, (Mountain Cove),
Series A,
6.000% due 09/01/2026 .................................. 2,289
Baldwin Park, Public Financing Authority,
Lease Revenue, (Community Center
Project), (AMBAC Insured):
2,635 5.000% due 08/01/2027 .................................. 2,719
3,000 5.000% due 08/01/2034 .................................. 3,075
Barstow, Redevelopment Agency, Tax
Allocation Revenue, (Central
Redevelopment Project), Series A,
(MBIA Insured):
635 (Unrefunded Balance),
7.000% due 09/01/2014 .................................. 731
1,225 ETM,
7.000% due 09/01/2014 .................................. 1,426
2,000 Bay Area Government Association, Tax
Allocation Revenue, (California
Redevelopment Agency Pool), Series A,
(XLCA Insured),
5.250% due 09/01/2029 .................................. 2,097
2,000 Burbank, Glendale & Pasadena Airport
Authority, Airport Revenue, Series B, AMT,
(AMBAC Insured),
5.000% due 07/01/2025 .................................. 2,044
3,155 Burbank, Waste Disposal Revenue, Series B,
(FSA Insured),
5.250% due 05/01/2024 .................................. 3,355
California County, Tobacco Securitization
Agency, Tobacco Settlement Asset-Backed
Revenue:
2,000 (Merced County Tobacco Funding
Corporation), Series A,
5.125% due 06/01/2038 .................................. 1,932
(Sonoma County Securitization Corporation):
2,000 5.125% due 06/01/2038 .................................. 1,932
5,000 5.250% due 06/01/2045 .................................. 4,842
2,000 California Department of Veteran Affairs,
Home Purchase Revenue, Series A,
(AMBAC Insured),
5.400% due 12/01/2018 .................................. 2,043
California Educational Facilities Authority,
College & University Revenue:
$5,000 (Pomona College), Series A,
5.000% due 07/01/2045 .................................. $5,135
1,000 (Pooled College & University), Series B,
6.625% due 06/01/2020 .................................. 1,090
1,000 California Educational Facilities Authority,
Student Loan Revenue, (California Loan
Program), Series A, AMT, (MBIA Insured),
5.100% due 03/01/2014 .................................. 1,040
995 California Financing Authority for Resource
Efficiency, Multiple Utility Revenue, (First
Resource Efficiency Program), (AMBAC
Insured),
6.000% due 07/01/2017 .................................. 1,006
California Health Facilities Financing
Authority, Health Care Revenue:
150 (Adventist Health System Project), Series A,
5.000% due 03/01/2028 .................................. 151
3,000 (Cedars-Sinai Medical Center Project),
5.000% due 11/15/2034 .................................. 3,024
1,000 California Infrastructure & Economic
Development Bank, Health Care Revenue,
(The J. David Gladstone Institute Project),
5.500% due 10/01/2015 .................................. 1,064
2,500 California Pollution Control Financing
Authority, PCR, (San Diego Gas and
Electric Company), Series A, AMT,
(AMBAC Insured),
5.850% due 06/01/2021 .................................. 2,505
California Pollution Control Financing
Authority, Solid Waste Disposal Revenue,
(Waste Management Inc. Project), AMT:
1,500 Series B,
5.000% due 07/01/2027 .................................. 1,478
2,500 Series C,
5.125% due 11/01/2023** ................................ 2,499
65 California Rural Home Mortgage Finance
Authority, SFMR, (Mortgage-Backed
Securities Program), Issue A, Series 2,
AMT, (GNMA/FHLMC Collateral),
7.950% due 12/01/2024 .................................. 66
6,320 California State Department of Transportation,
COP, Series A, (MBIA Insured),
5.250% due 03/01/2016 .................................. 6,609
California State Department of Water
Resources, Power Supply Revenue, Series A:
5,000 5.750% due 05/01/2017 .................................. 5,500
5,500 5.875% due 05/01/2016 .................................. 6,104
7,000 (MBIA-IBC Insured),
5.125% due 05/01/2018 .................................. 7,461
3,000 (XLCA Insured),
5.375% due 05/01/2017 .................................. 3,241
1,670 California State Department of Water
Resources, Water Revenue, Series W, (FSA
Insured), (Unrefunded Balance),
5.000% due 12/01/2018 .................................. 1,763
California State Public Works Board, Lease
Revenue:
3,000 (California State University), Series C,
5.400% due 10/01/2022 .................................. 3,130
1,980 (Department of Corrections - Kern County
at Delano II State Prison), Series C,
5.500% due 06/01/2023 .................................. 2,132
See Notes to Financial Statements.
86
Portfolio of Investments (continued)
CALIFORNIA MUNICIPAL FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 1,750 (Department of Corrections Program),
Series A, (MBIA-IBC Insured),
5.000% due 09/01/2018 .................................. $1,824
4,330 (Department of Corrections-Ten
Administrative Segregation Housing Units),
Series A, (AMBAC Insured),
5.250% due 03/01/2019 .................................. 4,579
(Department of Mental Health - Coalinga
State Hospital), Series A:
3,000 5.000% due 06/01/2024 .................................. 3,094
1,750 5.000% due 06/01/2025 .................................. 1,810
4,200 (UC M.I.N.D. Institute), Series A,
5.000% due 04/01/2023 .................................. 4,295
2,000 California State University, Systemwide
Revenue, Series C, (MBIA Insured),
5.000% due 11/01/2038 .................................. 2,068
California State, GO:
2,000 (CIFG-TCRS Insured),
5.000% due 10/01/2022 .................................. 2,061
4,430 (FGIC-TCRS Insured),
5.500% due 06/01/2025 .................................. 4,748
1,280 (Veterans), Series BJ, AMT,
5.700% due 12/01/2032 .................................. 1,313
3,050 (XLCA Insured),
6.750% due 08/01/2012 .................................. 3,571
1,500 California Statewide Communities
Development Authority, College &
University Revenue, (Thomas Jefferson
School of Law), Series A,
4.875% due 10/01/2035 .................................. 1,472
2,600 California Statewide Communities
Development Authority, COP, (Cedars-Sinai
Medical Center), (MBIA-IBC Insured),
6.500% due 08/01/2012 .................................. 2,845
California Statewide Communities
Development Authority, Health Care
Revenue:
2,000 (Adventist Health System), Series A,
5.000% due 03/01/2035 .................................. 2,000
1,260 (Daughters of Charity Health System
Project), Series A,
5.000% due 07/01/2039 .................................. 1,238
5,085 (Sutter Health), Series A,
5.000% due 11/15/2043 .................................. 5,085
California Statewide Communities
Development Authority, MFHR, (Equity
Residential Housing):
1,000 Series B,
5.200% due 12/01/2029 .................................. 1,046
3,300 Series C,
5.200% due 06/15/2009 .................................. 3,453
1,000 Carson, Redevelopment Agency, Tax
Allocation Revenue, (Area No. 1 Project),
(MBIA Insured),
5.500% due 10/01/2016 .................................. 1,112
3,195 Castaic Lake, Water Agency, COP, (1994
Refunding Project), Series A, (AMBAC
Insured),
5.000% due 08/01/2019 .................................. 3,358
Cathedral City, Improvement Board Act of
1915, Special Tax Revenue, (Cove
Improvement District No. 04-02):
$ 1,000 5.000% due 09/02/2030 .................................. $ 978
1,350 5.050% due 09/02/2035 .................................. 1,327
2,800 Cerritos, Community College District, GO,
(AMBAC Insured),
5.000% due 08/01/2021 .................................. 2,951
3,000 Chula Vista, COP, (MBIA Insured),
5.000% due 08/01/2027 .................................. 3,095
150 Chula Vista, IDR, (San Diego Gas and
Electric Company), Series A, AMT,
4.900% due 03/01/2023 .................................. 148
1,725 Chula Vista, Public Financing Authority,
Special Tax Revenue, (Assessment Districts
Refinancing), Sr. Lien, Series A, (FSA
Insured),
4.700% due 09/02/2014 .................................. 1,815
2,610 Chula Vista, Redevelopment Agency, Tax
Allocation Revenue,
8.625% due 09/01/2024 .................................. 2,769
2,000 Coachella, Redevelopment Agency, Tax
Allocation Revenue, (Area No. 3 Project),
5.875% due 12/01/2028 .................................. 2,037
2,160 Contra Costa County, Public Financing
Authority, Lease Revenue, (Capital
Projects), Series B, (MBIA Insured),
5.250% due 06/01/2027 .................................. 2,279
5,000 Contra Costa, Community College District,
GO, (Election of 2002), (MBIA Insured),
5.000% due 08/01/2029 .................................. 5,181
Contra Costa, Water District Revenue,
Series K, (FSA Insured):
1,445 5.000% due 10/01/2017 .................................. 1,531
1,520 5.000% due 10/01/2018 .................................. 1,603
1,500 Culver City, Redevelopment Finance Authority,
Tax Allocation Revenue, Series B,
6.250% due 11/01/2025 .................................. 1,517
1,665 Davis, Public Facilities Finance Authority
Local Agency, Special Tax Revenue, (Mace
Ranch Area), Series A,
6.600% due 09/01/2025 .................................. 1,732
1,215 Fairfield, Housing Authority, Mortgage
Revenue, (Creekside Estates Mobile
Homes),
5.625% due 09/01/2023 .................................. 1,241
1,000 Fontana, Redevelopment Agency, Tax
Allocation Revenue, (Southwest Industrial
Park Project), (MBIA Insured),
5.200% due 09/01/2030 .................................. 1,048
Foothill Eastern Transportation Corridor
Agency, Toll Road Revenue:
9,000 Zero coupon due 01/15/2026 ............................. 7,641
20,000 Zero coupon due 01/15/2030 ............................. 4,873
10,000 Zero coupon due 01/15/2032 ............................. 2,152
10,000 Zero coupon due 01/15/2033 ............................. 2,026
10,000 Zero coupon due 01/15/2034 ............................. 1,904
10,000 Zero coupon due 01/15/2036 ............................. 1,681
10,000 Zero coupon due 01/15/2037 ............................. 1,582
9,000 Zero coupon due 01/15/2038 ............................. 1,340
2,000 Fresno, Joint Powers Financing Authority,
Lease Revenue, Series A, (FSA Insured),
5.750% due 06/01/2026 .................................. 2,191
See Notes to Financial Statements.
87
Portfolio of Investments (continued)
CALIFORNIA MUNICIPAL FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$2,500 Golden State Tobacco Securitization
Corporation, Enhanced Tobacco Settlement
Asset-Backed Bonds, Series A,
5.000% due 06/01/2045 .................................. $2,508
1,000 Hi Desert, Members Health Care District,
Health Care Revenue,
5.500% due 10/01/2015 .................................. 1,010
3,000 Highland, Redevelopment Agency, Tax
Allocation Revenue, (Highland
Redevelopment Project Area No. 1), Series
A, (AMBAC Insured),
5.000% due 12/01/2028 .................................. 3,096
Huntington Beach, Union High School District,
GO, (Election of 2004), (FSA Insured):
2,000 5.000% due 08/01/2027 .................................. 2,075
5,000 5.000% due 08/01/2029 .................................. 5,181
2,000 Huntington Park, Public Financing Authority,
Lease Revenue, (Wastewater System
Project),
6.200% due 10/01/2025 .................................. 2,066
5,000 Imperial Irrigation District, COP, (Water
System Projects), (AMBAC Insured),
5.500% due 07/01/2029 .................................. 5,427
1,250 Imperial, Water Facilities Revenue, COP,
(FGIC Insured),
5.000% due 10/15/2020 .................................. 1,303
Irvine, Improvement Board Act of 1915,
Special Tax Revenue:
1,295 (Assessment District No. 00-18), Group 5,
5.000% due 09/02/2026 .................................. 1,282
1,125 (Assessment District No. 03-19), Group 3,
5.000% due 09/02/2025 .................................. 1,120
990 Irvine, Meadows Mobile Home Park,
Mortgage Revenue, Series A,
5.700% due 03/01/2018 .................................. 1,029
Irvine, Public Facilities & Infrastructure
Authority, Assessment Revenue, (AMBAC
Insured):
Series B:
1,455 5.000% due 09/02/2020 .................................. 1,506
3,630 5.000% due 09/02/2021 .................................. 3,757
2,000 Series C,
5.000% due 09/02/2023 .................................. 2,045
1,825 La Canada, Unified School District, GO,
(Election of 2004), Series A, (MBIA
Insured),
5.500% due 08/01/2028 .................................. 1,991
La Quinta, Financing Authority, Local
Agency Revenue, Series A, (AMBAC
Insured):
2,000 5.000% due 09/01/2029 .................................. 2,070
1,000 5.250% due 09/01/2024 .................................. 1,070
1,500 La Verne, Public Financing Authority,
Revenue Bonds, (Capital Improvement
Projects),
7.250% due 09/01/2026 .................................. 1,551
1,000 Laguna Hills, COP, (Community Center
Project), (MBIA Insured),
5.000% due 12/01/2017 .................................. 1,056
$1,840 Lake Elsinore, Public Financing Authority,
Local Agency Revenue, Series G,
5.800% due 09/02/2015 .................................. $1,918
1,000 Loma Linda, Hospital Revenue, (Loma Linda
University Medical Center), Series A,
5.000% due 12/01/2022 .................................. 1,015
3,135 Long Beach, Bond Finance Authority,
Economic Development Revenue,
(Redevelopment, Housing & Gas Utility
Financings), Series A-1, (AMBAC Insured),
5.000% due 08/01/2035 .................................. 3,199
1,315 Long Beach, Bond Finance Authority, Tax
Allocation Revenue, (North Long Beach
Redevelopment Projects), Series A,
(AMBAC Insured),
5.000% due 08/01/2022 .................................. 1,359
2,000 Long Beach, Community Facilities District
No. 5, Special Tax Revenue, (Towne Center),
6.875% due 10/01/2025 .................................. 2,085
2,000 Long Beach, Harbor Revenue, Series A, AMT,
(MBIA Insured),
5.000% due 05/15/2025 .................................. 2,053
265 Los Angeles, Community Redevelopment
Agency, Housing Revenue, Series C,
(AMBAC Insured),
6.750% due 07/01/2014 .................................. 268
2,500 Los Angeles, Community Redevelopment
Agency, Tax Allocation Revenue, (North
Hollywood Project), Series E, (MBIA
Insured),
5.400% due 07/01/2024 .................................. 2,683
1,000 Los Angeles, MFHR, (Ridgecroft Apartments
Project), Series E, AMT, (GNMA Collateral),
6.250% due 09/20/2039 .................................. 1,031
1,445 Los Angeles, Special Assessment Revenue,
(Landscaping & Lighting District No. 96-1
Project), (AMBAC Insured),
5.000% due 03/01/2022 .................................. 1,490
Moreno Valley, Unified School District, COP,
(FSA Insured):
1,600 5.000% due 03/01/2025 .................................. 1,653
1,760 5.000% due 03/01/2027 .................................. 1,814
1,490 Mountain View, Shoreline Regional Park
Community, Tax Allocation Revenue,
Series A, (MBIA Insured),
5.250% due 08/01/2015 .................................. 1,611
2,785 Needles, Public Utilities Authority, Utilities
Revenue, (Utilities System Acquisition
Project), Series A,
6.500% due 02/01/2022 .................................. 2,915
1,100 Oakland, Revenue Bonds, (YMCA East Bay
Project),
7.100% due 06/01/2010 .................................. 1,127
1,565 Oakland, Unified School District, GO,
(Alameda County School Improvements),
(FSA Insured),
5.000% due 08/01/2017 .................................. 1,641
1,485 Oceanside, Community Facilities District
No. 01-1, Special Tax Revenue, (Morro Hills
Development Project), Series A,
5.500% due 09/01/2029 .................................. 1,508
1,500 Oceanside, COP, Series A, (AMBAC Insured),
5.250% due 04/01/2018 .................................. 1,602
See Notes to Financial Statements.
88
Portfolio of Investments (continued)
CALIFORNIA MUNICIPAL FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
Oxnard, Harbor District, Revenue Bonds:
$1,200 Series A, AMT,
5.750% due 08/01/2020 .................................. $1,230
1,000 Series B,
6.000% due 08/01/2024 .................................. 1,044
1,090 Pacifica, Wastewater Revenue,
(AMBAC Insured),
5.000% due 10/01/2024 .................................. 1,133
1,280 Palm Desert, Financing Authority, Tax
Allocation Revenue, (Project Area No. 2),
Series A, (MBIA Insured),
5.000% due 08/01/2022 .................................. 1,333
1,995 Pomona, COP, (Mission Promenade Project),
Series AE, (AMBAC Insured),
5.375% due 10/01/2032 .................................. 2,116
5,000 Pomona, Public Financing Authority, Tax
Allocation Revenue, (Merged
Redevelopment Project), Series AD,
(MBIA Insured),
5.000% due 02/01/2021 .................................. 5,140
1,000 Pomona, Unified School District, GO,
(MBIA Insured),
6.150% due 08/01/2030 .................................. 1,191
5,000 Port of Oakland, Airport & Marina Revenue,
Series K, AMT, (FGIC Insured),
5.750% due 11/01/2029 .................................. 5,333
1,000 Poway, Redevelopment Agency, Tax
Allocation Revenue, (Paguay
Redevelopment Project), (AMBAC Insured),
5.375% due 06/15/2019 .................................. 1,085
2,750 Redding, Electrical Systems, COP, (Inverse
Floater), (MBIA Insured),
10.069% due 07/01/2022+ ................................ 3,782
1,000 Redondo Beach, Public Financing Authority,
Revenue Bonds, (South Bay Center
Redevelopment Project),
7.125% due 07/01/2026 .................................. 1,033
1,160 Riverside County, COP, (Capital
Improvement & Family Law Court
Refunding Projects), Series A, (FGIC Insured),
5.000% due 11/01/2025 .................................. 1,203
2,100 Riverside County, Public Financing Authority, COP,
5.800% due 05/15/2029 .................................. 2,160
Rocklin, Unified School District, Capital
Appreciation, GO, (FGIC Insured):
1,030 Zero coupon due 08/01/2014 ............................. 668
1,210 Zero coupon due 08/01/2016 ............................. 699
1,255 Zero coupon due 08/01/2017 ............................. 687
1,360 Zero coupon due 08/01/2019 ............................. 666
1,415 Zero coupon due 08/01/2020 ............................. 656
1,225 Zero coupon due 08/01/2023 ............................. 482
2,000 Sacramento County, Sanitation District
Financing Authority, Sewer Revenue, ETM,
5.000% due 12/01/2016 .................................. 2,019
Saddleback Valley, Unified School District,
GO, (Election of 2004), Series A, (FSA Insured):
3,000 5.000% due 08/01/2027 .................................. 3,113
4,000 5.000% due 08/01/2029 .................................. 4,145
Salinas Valley, Solid Waste Authority,
Resource Recovery Revenue, AMT,
(AMBAC Insured):
$2,475 5.250% due 08/01/2027 .................................. $2,564
2,000 5.250% due 08/01/2031 .................................. 2,062
San Bernardino, Redevelopment Agency,
Tax Allocation Revenue, (San Sevaine
Redevelopment Project), Series A:
1,000 6.900% due 09/01/2018 .................................. 1,079
2,000 7.100% due 09/01/2029 .................................. 2,171
1,885 San Buenaventura, COP, Series B,
(AMBAC Insured),
5.500% due 01/01/2017 .................................. 2,071
3,520 San Diego County, COP, (Edgemoor &
Regional Communications System
Refunding Project), (AMBAC Insured),
5.000% due 02/01/2027 .................................. 3,629
3,000 San Diego, Community College District, GO,
(Election of 2002), (FSA Insured),
5.000% due 05/01/2030 .................................. 3,111
San Diego, Redevelopment Agency, Auto
Parking Revenue:
1,000 (Centre City Redevelopment Project),
Series A,
6.400% due 09/01/2019 .................................. 1,060
1,060 (Southcrest Redevelopment Project),
6.500% due 10/01/2025 .................................. 1,157
4,000 San Diego, Water Authority Revenue, COP,
Series B, (Inverse Floater), (MBIA Insured),
9.670% due 04/08/2021+ ................................. 4,285
San Francisco City and County, International
Airports Commission, Airport Revenue,
Second Series, AMT, (MBIA Insured):
4,000 Issue 27A,
5.250% due 05/01/2026 .................................. 4,114
4,070 Issue 28A,
5.250% due 05/01/2020 .................................. 4,242
1,950 San Francisco City and County,
Redevelopment Agency, Lease Revenue,
(George R. Moscone Convention Center
Project), (XLCA Insured),
Zero coupon due 07/01/2013 ............................. 1,427
9,310 San Jose, Financing Authority, Lease
Revenue, (Convention Center Project),
Series F, (MBIA Insured),
5.000% due 09/01/2018 .................................. 9,800
1,000 San Jose, MFHR, (Sixth & Martha Family
Apartments), AMT, (FNMA Collateral),
5.875% due 03/01/2033 .................................. 1,036
3,780 San Juan, Unified School District, GO,
(Election of 2002), Series A, (MBIA
Insured),
5.000% due 08/01/2027 .................................. 3,922
4,000 San Marcos, Public Facilities Authority, Sr.
Tax Incremental Revenue, (Project Area
No. 3-A), (AMBAC Insured),
5.000% due 10/01/2034 .................................. 4,098
4,475 San Marcos, Public Facilities Authority, Tax
Allocation Revenue, (Project Areas No. 2
& 3 Financing Project), Series C, (AMBAC Insured),
5.000% due 08/01/2028 .................................. 4,626
1,350 Santa Monica-Malibu, Unified School District, GO,
5.750% due 08/01/2025 .................................. 1,492
See Notes to Financial Statements.
89
Portfolio of Investments (continued)
CALIFORNIA MUNICIPAL FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$4,440 Santa Rosa, Mortgage Revenue, (Channate
Lodge), (FHA Insured),
6.700% due 12/01/2024 ................................ $ 4,446
2,000 Semitropic Improvement District of
Semitropic Water Storage District, Water
Banking Revenue, Series A,
(XLCA Insured),
5.125% due 12/01/2035 ................................ 2,051
South Gate, Public Financing Authority, Tax
Allocation Revenue, (South Gate
Redevelopment Project No. 1):
2,090 (AMBAC Insured),
5.250% due 09/01/2022 ................................ 2,227
1,500 (XLCA Insured),
5.000% due 09/01/2016 ................................ 1,580
1,780 Stockton-East, Water District, COP, (1975 &
1990 Projects), Series A, (FGIC Insured),
5.250% due 04/01/2022 ................................ 1,891
3,270 Temecula, Redevelopment Agency, Tax
Allocation Revenue, (Redevelopment
Project No. 1), (MBIA Insured),
5.250% due 08/01/2036 ................................ 3,418
1,000 Torrance, Hospital Revenue, (Torrance
Memorial Medical Center), Series A,
6.000% due 06/01/2022 ................................ 1,093
1,900 Turlock, COP, (Emanuel Medical Center Inc.
Project), Series A,
5.375% due 10/15/2034 ................................ 1,915
1,000 Tustin, Community Facilities District No. 04-1,
Special Tax Revenue, (Tustin Legacy/John
Laing Homes Project),
5.375% due 09/01/2029 ................................ 1,018
University of California, College &
University Revenue, (Multi-Purpose
Projects), Series M, (FGIC Insured):
2,260 5.125% due 09/01/2017 ................................ 2,413
4,635 5.125% due 09/01/2018 ................................ 4,942
2,035 Vallejo City, Unified School District, GO,
Series A, (MBIA Insured),
5.900% due 02/01/2021 ................................ 2,398
2,305 Walnut, Public Financing Authority, Tax
Allocation Revenue, (Walnut Improvement
Project), (AMBAC Insured),
5.375% due 09/01/2022 ................................ 2,478
1,350 West Contra Costa, Unified School District,
GO, Series A, (MBIA Insured),
5.350% due 02/01/2017 ................................ 1,492
--------
407,941
--------
VIRGIN ISLANDS - 0.3%
$1,000 Virgin Islands, Public Finance Authority,
Revenue Bonds, (Gross Receipts of Taxes
on Loan Notes), Series A,
6.375% due 10/01/2019 ................................ $ 1,119
--------
Total Municipal Bonds and Notes
(Cost $393,895) ...................................... 409,060
--------
TOTAL INVESTMENTS++ (Cost $393,895*) ........................ 100.0% 409,060
OTHER ASSETS (LIABILITIES) (NET) ............................ 0.0 (6)
----- --------
NET ASSETS .................................................. 100.0% $409,054
===== ========
- ----------
* Aggregate cost for federal tax purposes is $393,875.
** Security purchased on a when-issued basis.
+ Variable rate security. The interest rate shown reflects the rate in effect
at October 31, 2005.
++ All securities segregated as collateral for futures or when-issued
securities.
UNREALIZED
NUMBER OF VALUE APPRECIATION
CONTRACTS (000S) (000S)
- --------- ------- ------------
FUTURES CONTRACTS-SHORT POSITION
168 U.S. 5 Year Treasury Note,
December 2005 .......................... $17,790 $63
======= ===
The California Municipal Fund had the following industry concentrations greater
than 10.0% at October 31, 2005 (as a percentage of the total net assets of the
Fund) (unaudited):
General Purpose 37.5%
General Obligation 13.4%
Transportation 10.1%
The California Municipal Fund had the following insurance concentrations greater
than 10.0% at October 31, 2005 (as a percentage of the total net assets of the
Fund) (unaudited):
MBIA 24.2%
AMBAC 19.4%
GLOSSARY OF TERMS
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
CIFG -- CDC IXIS Financial Guaranty North America, Inc.
COP -- Certificate of Participation
ETM -- Escrowed to Maturity
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation
IBC -- Insured Bond Certificate
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
SFMR -- Single Family Mortgage Revenue
TCRS -- Transferable Custodial Receipts
XLCA -- XL Capital Assurance Inc.
See Notes to Financial Statements.
90
Portfolio of Investments
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ------
MUNICIPAL BONDS AND NOTES - 90.7%
CALIFORNIA - 88.3%
$1,000 ABAG Financing Authority for Nonprofit
Corporations, COP, (Episcopal Homes
Foundation),
6.250% due 08/15/2030 .................................. $1,060
905 Alameda County, COP, (Santa Rita Jail
Project), (MBIA Insured),
5.375% due 06/01/2009 .................................. 939
1,000 Alameda County, Public Financing Authority,
Lease Revenue,
5.000% due 09/02/2008 .................................. 1,025
2,000 Anaheim, Public Financing Authority, Lease
Revenue, (Convention Center Project),
Series A, (AMBAC Insured),
5.250% due 08/01/2013 .................................. 2,175
Anaheim, Public Financing Authority, Power
& Light Revenue, (Electric System
Generation Project), Series B, (FSA Insured):
2,000 5.000% due 10/01/2015 .................................. 2,118
2,000 5.250% due 10/01/2014 .................................. 2,179
1,130 Baldwin Park Public Financing Authority,
Sales Tax & Tax Allocation Revenue,
(Puente Merced Redevelopment Project),
4.625% due 08/01/2016 .................................. 1,142
1,000 California Educational Facilities Authority,
Student Loan Revenue, (California Loan
Program), Series A, AMT, (MBIA Insured),
5.100% due 03/01/2014 .................................. 1,040
1,000 California Health Facilities Financing
Authority, Health Care Revenue, (Insured
De Las Companas Project), Series A,
(AMBAC Insured),
5.875% due 07/01/2009 .................................. 1,022
California Housing Finance Agency, Mortgage
Revenue, Series N, AMT, (AMBAC Insured):
1,000 5.000% due 08/01/2008 .................................. 1,037
1,000 5.100% due 02/01/2009 .................................. 1,039
California State Department of Water
Resources, Power Supply Revenue, Series A:
1,675 (MBIA-IBC Insured),
5.250% due 05/01/2015 .................................. 1,806
4,000 (XLCA Insured),
5.375% due 05/01/2017 .................................. 4,321
3,000 California State Department of Water
Resources, Water System Revenue, (Central
Valley Project), Series Y, (FGIC Insured),
5.250% due 12/01/2014 .................................. 3,273
1,000 California State Economic Recovery, GO,
Series A, (FGIC-TCRS Insured),
5.000% due 07/01/2016 .................................. 1,077
California State Public Works Board, Lease
Revenue:
1,000 (California Community Colleges), Series A,
(AMBAC Insured),
5.250% due 12/01/2012 .................................. 1,059
2,000 (California State University), Series A,
(AMBAC Insured),
5.375% due 10/01/2017 .................................. 2,078
$2,000 (Department of Corrections Program),
Series A, (AMBAC Insured),
5.250% due 06/01/2012 .................................. $2,181
1,000 (Department of Corrections-Ten
Administrative Segregation Housing Units),
Series A, (AMBAC Insured),
5.250% due 03/01/2016 .................................. 1,064
2,750 (Department of General Services), (Capitol
East End Complex-Blocks 171-174 & 225),
Series A, (AMBAC Insured),
5.250% due 12/01/2014 .................................. 2,967
California State, GO:
2,000 (FGIC-TCRS Insured),
7.000% due 10/01/2010 .................................. 2,315
1,000 (FSA Insured),
5.500% due 03/01/2012 .................................. 1,088
(MBIA-IBC Insured):
2,000 5.750% due 10/01/2010 .................................. 2,208
2,000 6.250% due 09/01/2012 .................................. 2,299
1,845 California Statewide Communities
Development Authority, Water Revenue,
(Pooled Financing Program), Series C,
(FSA Insured),
5.250% due 10/01/2015 .................................. 1,995
1,240 Chino Valley, Unified School District, COP,
Series A, (FSA Insured),
5.250% due 09/01/2013 .................................. 1,345
645 Chula Vista, Public Financing Authority,
Special Tax Revenue, (Assessment Districts
Refinancing), Sr. Lien, Series A, (FSA Insured),
4.500% due 09/02/2013 .................................. 674
1,325 Cotati-Rohnert Park, Unified School District,
GO, Series B, (FGIC Insured),
5.000% due 08/01/2017 .................................. 1,417
Emeryville, Public Financing Authority,
Revenue Bonds, (Emeryville
Redevelopment Project), Series A,
(MBIA Insured):
1,265 5.250% due 09/01/2015 .................................. 1,376
1,400 5.250% due 09/01/2017 .................................. 1,518
1,000 Fresno, Unified School District, GO, Series B,
(MBIA Insured),
5.000% due 02/01/2018 .................................. 1,071
2,000 Golden State Tobacco Securitization
Corporation, Tobacco Settlement Revenue,
Series A, (AMBAC Insured),
5.000% due 06/01/2013 .................................. 2,151
685 Golden West Schools Financing Authority,
Revenue Bonds, Series A, (MBIA Insured),
5.650% due 02/01/2012 .................................. 762
1,230 Huntington Beach, City School District, GO,
(FGIC Insured),
5.250% due 08/01/2016 .................................. 1,352
1,615 Inglewood, Unified School District, GO,
(Election of 1998), Series C, (FSA Insured),
5.250% due 10/01/2017 .................................. 1,748
1,195 Kings Canyon, Joint Unified School District,
GO, (FGIC Insured),
5.375% due 08/01/2015 .................................. 1,308
See Notes to Financial Statements.
91
Portfolio of Investments (continued)
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- ------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$2,000 Loma Linda, Hospital Revenue,
5.000% due 12/01/2017 .................................. $2,050
1,080 Long Beach, Bond Financing Authority,
Lease Revenue, (Public Safety Facilities
Projects), (AMBAC Insured),
5.250% due 11/01/2013 .................................. 1,176
3,000 Long Beach, Harbor Department Revenue,
Series B, (FGIC Insured),
5.000% due 05/15/2016 .................................. 3,204
1,300 Los Angeles, Department of Water & Power,
Power System Revenue, Series A-2,
(MBIA Insured),
5.000% due 07/01/2017 .................................. 1,381
2,500 Los Angeles, Harbor Department Revenue,
Series B, AMT,
5.500% due 08/01/2008 .................................. 2,565
1,045 Los Angeles, Municipal Improvement
Corporation, Lease Revenue, (City of Los
Angeles Central Library Project), Series AT,
(MBIA Insured),
5.500% due 06/01/2017 .................................. 1,149
1,500 Los Angeles, State Building Authority, Lease
Revenue, (State of California Department
of General Services Lease Project), Series A,
(MBIA-IBC Insured),
5.625% due 05/01/2011 .................................. 1,634
2,105 M-S-R Public Power Agency, San Juan Project
Revenue, Series I, (MBIA Insured),
5.000% due 07/01/2015 .................................. 2,242
1,500 Merced, Irrigation District, Revenue Bonds,
Warrants,
4.000% due 07/01/2009 .................................. 1,511
2,000 Oakland, Joint Powers Financing Authority,
Revenue Bonds, (City of Oakland General
Obligation Bond Program), (AMBAC
Insured),
5.000% due 06/15/2017 .................................. 2,133
1,575 Oceanside, COP, Series A, (AMBAC Insured),
5.250% due 04/01/2016 .................................. 1,687
Ontario, Redevelopment Financing Authority,
Lease Revenue:
1,055 (Capital Projects), (AMBAC Insured),
5.500% due 08/01/2016 .................................. 1,164
1,060 (Project No. 1, Center City & Cimarron
Projects), (MBIA Insured),
5.250% due 08/01/2016 .................................. 1,149
1,000 Orange County, Public Financing Authority,
Lease Revenue, (Juvenile Justice Center
Facility Project), (AMBAC Insured),
5.375% due 06/01/2016 .................................. 1,096
1,000 Orange County, Water District Revenue, COP,
Series B, (MBIA Insured),
5.000% due 08/15/2018 .................................. 1,056
795 Palm Desert, Financing Authority, Tax
Allocation Revenue, (Project Area No. 2),
Series A, (MBIA Insured),
5.000% due 08/01/2012 .................................. 856
$1,000 Port of Oakland, Airport & Marina Revenue,
Series N, AMT, (MBIA Insured),
5.000% due 11/01/2011 .................................. $1,061
1,210 Redding, Joint Powers Financing Authority,
Lease Revenue, (2004 Civic Center
Refunding and Parks Project), Series B,
(AMBAC Insured),
5.000% due 03/01/2015 .................................. 1,292
1,590 Redlands, COP, (AMBAC Insured),
5.000% due 09/01/2017 .................................. 1,672
200 Redondo Beach, Public Financing Authority,
Revenue Bonds, (South Bay Center
Redevelopment Project),
6.750% due 07/01/2006 .................................. 204
2,090 Richmond, Joint Powers Financing Authority,
Tax Allocation Revenue, Series A, (MBIA
Insured),
5.500% due 09/01/2017 .................................. 2,276
Riverside County, COP, (Historic Courthouse
Refunding Project), Series B, (FGIC Insured):
1,015 5.000% due 11/01/2018 .................................. 1,075
1,105 5.000% due 11/01/2019 .................................. 1,166
2,000 Riverside, Community College District, GO,
(FSA Insured),
5.000% due 08/01/2018 .................................. 2,131
1,100 Riverside, Special Tax Revenue, (Community
Facilities District No. 90-1-A), (MBIA
Insured),
5.500% due 09/01/2013 .................................. 1,206
1,840 San Diego County, COP, (Motorola),
(AMBAC Insured),
5.000% due 02/01/2011 .................................. 1,965
1,000 San Francisco City and County, Public
Utilities Commission, Water Revenue,
Series A, (FSA Insured),
5.000% due 11/01/2016 .................................. 1,063
1,200 San Jose, Financing Authority, Lease Revenue,
(Convention Center Project), Series F,
(MBIA Insured),
5.000% due 09/01/2016 .................................. 1,273
Santa Maria, Redevelopment Agency, Lease
Revenue, (Town Center & Westside Parking
Facilities Project), (AMBAC Insured):
165 5.000% due 06/01/2013 .................................. 178
1,085 5.250% due 06/01/2015 .................................. 1,170
1,160 Shasta, Joint Powers Financing Authority,
Lease Revenue, (County Administration
Building Project), Series A, (MBIA Insured),
5.250% due 04/01/2017 .................................. 1,240
1,000 South Gate, Public Financing Authority, Tax
Allocation Revenue, (South Gate
Redevelopment Project No. 1),
(XLCA Insured),
5.000% due 09/01/2016 .................................. 1,053
995 Southern California Home Financing Authority,
MFHR, (The Fountains Project), Series A,
AMT, (FNMA Collateral),
5.400% due 01/01/2027 .................................. 1,003
1,430 Southern California Public Power Authority,
San Juan Power Revenue, (San Juan Unit 3
Project), Series A, (FSA Insured),
5.000% due 01/01/2020 .................................. 1,508
See Notes to Financial Statements.
92
Portfolio of Investments (continued)
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
October 31, 2005
PRINCIPAL
AMOUNT VALUE
(000S) (000S)
- --------- --------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 925 Stanton, MFHR, (Continental Gardens LP
Project), AMT, (FNMA Collateral),
5.625% due 08/01/2029 ............................... $ 966
1,305 Stockton, Community Facilities District No. 1,
Supplemental Tax Revenue, (Mello Roos-
Weston Ranch), Series A,
5.500% due 09/01/2009 ............................... 1,354
Sunnyvale, Solid Waste Revenue,
(AMBAC Insured):
1,000 5.250% due 10/01/2012 ............................... 1,068
1,000 5.500% due 10/01/2014 ............................... 1,077
1,000 5.500% due 10/01/2016 ............................... 1,075
1,000 Tracy, Area Public Facilities Financing
Agency, Special Tax Revenue, (Community
Facilities District No. 87-1-H), (MBIA
Insured),
5.875% due 10/01/2013 ............................... 1,044
1,000 Victor Valley, Union High School District,
COP, (Victor Valley Junior High School
Project), (AMBAC Insured),
5.000% due 11/15/2017 ............................... 1,067
1,535 Westlands, Water District, COP, Series A,
(MBIA Insured),
5.000% due 09/01/2018 ............................... 1,623
--------
117,092
--------
GUAM - 0.8%
1,000 Guam Government, GO, Series A,
(FSA Insured),
5.500% due 12/01/2011 ............................... 1,102
--------
PUERTO RICO - 1.6%
1,000 Puerto Rico Commonwealth, Highway &
Transportation Authority, Highway
Revenue, Series L, (CIFG Insured),
5.250% due 07/01/2018 ............................... 1,098
1,000 Puerto Rico Public Building Authority,
Government Facilities Revenue, Series K,
(MBIA Insured),
4.000% due 07/01/2026 ............................... 1,014
--------
2,112
--------
Total Municipal Bonds and Notes
(Cost $118,949) ..................................... 120,306
--------
SHORT-TERM MUNICIPAL BONDS - 7.2%
$5,400 Adelanto, Public Utility Authority, Water &
Sewer Revenue, (Utility System Project),
Series A, (AMBAC Insured),
2.700% due 11/01/2034+ .............................. $ 5,400
4,230 California Housing Finance Agency, Housing
Revenue, (Home Mortgages), Series U,
AMT, (MBIA Insured),
2.800% due 08/01/2032+ .............................. 4,230
--------
Total Short-Term Municipal Bonds
(Cost $9,630) ....................................... 9,630
--------
TOTAL INVESTMENTS++ (Cost $128,579*) ....................... 97.9% 129,936
OTHER ASSETS (LIABILITIES) (NET) ........................... 2.1 2,769
----- --------
NET ASSETS ................................................. 100.0% $132,705
===== ========
- ----------
* Aggregate cost for federal tax purposes is $128,581.
+ Securities with a maturity date of more than thirteen months have variable
rates and/or demand features which qualify them as short-term securities.
Securities are secured by bank letters of credit or guarantees by certain
corporations. The interest rates shown are those in effect at October 31,
2005. These rates change periodically based on specified market rates or
indices.
++ All securities segregated as collateral for futures.
UNREALIZED
NUMBER OF VALUE APPRECIATION
CONTRACTS (000S) (000S)
- --------- ------- ------------
FUTURES CONTRACTS-SHORT POSITION
49 U.S. 5 Year Treasury Note,
December 2005 .................... $5,189 $18
====== ===
The California Insured Intermediate Municipal Fund had the following industry
concentrations greater than 10.0% at October 31, 2005 (as a percentage of the
total net assets of the Fund) (unaudited):
General Purpose 33.1%
General Obligation 16.7%
Power 13.1%
The California Insured Intermediate Municipal Fund had the following insurance
concentrations greater than 10.0% at October 31, 2005 (as a percentage of the
total net assets of the Fund) (unaudited):
AMBAC 30.1%
MBIA 28.2%
FSA 12.8%
FGIC 12.2%
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
CIFG -- CDC IXIS Financial Guaranty North America, Inc.
COP -- Certificates of Participation
FGIC -- Federal Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GO -- General Obligation
IBC -- Insured Bond Certificate
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
TCRS -- Transferable Custodial Receipts
XLCA -- XL Capital Assurance
See Notes to Financial Statements.
93
Statements of Assets and Liabilities
WM GROUP OF FUNDS
October 31, 2005
(In thousands)
EQUITY GROWTH & WEST COAST MID CAP SMALL CAP
REIT INCOME INCOME EQUITY STOCK GROWTH VALUE
FUND FUND FUND FUND FUND FUND FUND
-------- ---------- ---------- ---------- -------- ---------- ---------
ASSETS:
Investments, at cost .................. $321,163 $2,279,835 $2,303,478 $1,228,284 $772,349 $1,619,520 $355,179
======== ========== ========== ========== ======== ========== ========
Investments, at value:
Unaffiliated securities ............ $421,068 $2,529,959 $2,627,183 $1,527,445 $888,653 $1,734,052 $336,950
Affiliated securities .............. -- -- -- 9,795 -- -- --
Investments held as collateral for
securities loaned ............... 19,418 117,812 92,358 121,873 62,210 62,919 39,799
-------- ---------- ---------- ---------- -------- ---------- --------
Total Investments .................. 440,486 2,647,771 2,719,541 1,659,113 950,863 1,796,971 376,749
Cash .................................. 2 1 1 1 38 537 1
Unrealized appreciation of forward
foreign currency contracts ......... -- -- -- -- -- -- --
Dividends and/or interest receivable .. 392 3,951 1,881 364 735 726 581
Receivable for Fund shares sold ....... 77 13,654 4,156 3,026 1,034 346 562
Receivable for investment
securities sold .................... -- 11,207 9,226 733 5,012 27,523 4,835
Prepaid expenses ...................... 3 15 18 12 7 14 3
-------- ---------- ---------- ---------- -------- ---------- --------
Total Assets ....................... 440,960 2,676,599 2,734,823 1,663,249 957,689 1,826,117 382,731
-------- ---------- ---------- ---------- -------- ---------- --------
LIABILITIES:
Payable upon return of
securities loaned .................. 19,418 117,812 92,358 121,873 62,210 62,919 39,799
Unrealized depreciation of forward
foreign currency contracts ......... -- -- -- -- -- 14 --
Payable for Fund shares redeemed ...... 37 1,404 1,062 541 62 638 70
Payable for when-issued securities
purchased .......................... -- -- -- -- -- -- --
Payable for investment securities
purchased .......................... -- 17,734 20,919 1,251 6,266 28,402 3,235
Investment advisory fee payable ....... 282 1,073 1,117 640 555 1,112 247
Shareholder servicing and
distribution fees payable .......... 15 473 190 304 43 110 8
Transfer agent fees payable ........... 5 87 68 84 11 83 2
Variation margin ...................... -- -- -- -- -- -- --
Dividends payable ..................... -- -- -- -- -- -- --
Due to custodian ...................... -- -- -- -- -- -- --
Accrued printing and postage
expenses ........................... 13 299 333 298 86 374 21
Accrued legal and audit fees .......... 33 45 47 41 39 43 36
Accrued expenses and
other payables ..................... 11 127 79 43 18 42 11
-------- ---------- ---------- ---------- -------- ---------- --------
Total Liabilities .................. 19,814 139,054 116,173 125,075 69,290 93,737 43,429
-------- ---------- ---------- ---------- -------- ---------- --------
NET ASSETS ............................ $421,146 $2,537,545 $2,618,650 $1,538,174 $888,399 $1,732,380 $339,302
======== ========== ========== ========== ======== ========== ========
See Notes to Financial Statements.
94
CALIFORNIA
U.S. INSURED
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT HIGH TAX-EXEMPT CALIFORNIA INTERMEDIATE
GROWTH GROWTH INCOME SECURITIES INCOME YIELD BOND MUNICIPAL MUNICIPAL
FUND FUND FUND FUND FUND FUND FUND FUND FUND
- --------- ------------- ---------- ---------- ---------- -------- ---------- ---------- ------------
$343,885 $792,224 $275,881 $1,971,544 $1,200,591 $759,135 $195,915 $393,895 $128,579
======== ======== ======== ========== ========== ======== ======== ======== ========
$336,359 $840,077 $272,447 $1,934,596 $1,198,712 $802,254 $207,327 $409,060 $129,936
-- -- -- -- -- -- -- -- --
46,741 112,523 -- -- -- -- -- -- --
-------- -------- -------- ---------- ---------- -------- -------- -------- --------
383,100 952,600 272,447 1,934,596 1,198,712 802,254 207,327 409,060 129,936
51 1 -- -- 5,278 33 80 -- 19
-- 397 -- -- -- -- -- -- --
73 1,655 2,991 9,216 15,111 13,386 3,174 5,020 1,559
471 719 12 297 810 1,299 61 630 10
2,908 2,462 4 4 -- 2,193 -- -- 1,487
3 6 2 13 10 6 2 4 1
-------- -------- -------- ---------- ---------- -------- -------- -------- --------
386,606 957,840 275,456 1,944,126 1,219,921 819,171 210,644 414,714 133,012
-------- -------- -------- ---------- ---------- -------- -------- -------- --------
46,741 112,523 -- -- -- -- -- -- --
-- 354 -- -- -- -- -- -- --
44 16 875 800 718 440 822 1,239 35
-- -- -- 49,823 -- -- 1,732 2,500 --
1,997 1,329 5,323 -- 27,653 5,749 -- -- --
239 1,300 111 801 507 371 89 175 57
27 17 41 137 151 120 65 195 71
27 9 -- 29 28 15 8 13 4
-- -- 1 -- -- -- 5 3 1
-- -- 47 186 427 636 267 487 90
-- -- -- -- -- -- -- 981 --
109 47 30 93 110 67 40 24 14
36 39 34 42 39 39 33 34 33
13 68 6 61 24 19 4 9 2
-------- -------- -------- ---------- ---------- -------- -------- -------- --------
49,233 115,702 6,468 51,972 29,657 7,456 3,065 5,660 307
-------- -------- -------- ---------- ---------- -------- -------- -------- --------
$337,373 $842,138 $268,988 $1,892,154 $1,190,264 $811,715 $207,579 $409,054 $132,705
======== ======== ======== ========== ========== ======== ======== ======== ========
See Notes to Financial Statements.
95
Statements of Assets and Liabilities (continued)
WM Group of Funds
October 31, 2005
(In thousands)
EQUITY GROWTH & WEST COAST MID CAP SMALL CAP
REIT INCOME INCOME EQUITY STOCK GROWTH VALUE
FUND FUND FUND FUND FUND FUND FUND
-------- ---------- ---------- ---------- -------- ---------- ---------
NET ASSETS CONSIST OF:
Undistributed net investment income/
(accumulated net investment loss) ..... $ 1,637 $ 4,952 $ 26,036 $ 3,183 $ 11,458 $ 1,476 $ 1,812
Accumulated net realized gain/(loss)
on investment transactions ............ 9,864 82,421 (52,885) 37,818 53,190 (319,884) 19,484
Net unrealized appreciation/(depreciation)
of investments ........................ 119,323 367,936 416,063 430,829 178,514 177,446 21,566
Paid-in capital .......................... 290,322 2,082,236 2,229,436 1,066,344 645,237 1,873,342 296,440
-------- ---------- ---------- ---------- -------- ---------- --------
Total Net Assets ................... $421,146 $2,537,545 $2,618,650 $1,538,174 $888,399 $1,732,380 $339,302
======== ========== ========== ========== ======== ========== ========
NET ASSETS:
Class A Shares ........................... $ 18,234 $ 887,828 $ 572,128 $ 735,037 $ 93,180 $ 127,677 $ 14,302
======== ========== ========== ========== ======== ========== ========
Class B Shares ........................... $ 8,898 $ 226,390 $ 80,957 $ 167,531 $ 24,218 $ 96,044 $ 2,955
======== ========== ========== ========== ======== ========== ========
Class C Shares ........................... $ 5,100 $ 128,523 $ 1,835 $ 13,613 $ 4,303 $ 2,158 $ 2,414
======== ========== ========== ========== ======== ========== ========
Class I Shares ........................... $388,914 $1,294,804 $1,963,730 $ 621,993 $766,698 $1,506,501 $319,631
======== ========== ========== ========== ======== ========== ========
SHARES OUTSTANDING:
Class A Shares ........................... 1,058 44,245 23,226 18,850 4,845 8,095 1,224
======== ========== ========== ========== ======== ========== ========
Class B Shares ........................... 518 11,360 3,423 4,809 1,329 6,801 256
======== ========== ========== ========== ======== ========== ========
Class C Shares ........................... 297 6,495 79 390 235 151 208
======== ========== ========== ========== ======== ========== ========
Class I Shares ........................... 22,521 64,519 79,350 15,791 39,386 91,686 27,219
======== ========== ========== ========== ======== ========== ========
CLASS A SHARES:**
Net asset value per share of beneficial
interest outstanding* ................. $ 17.23 $ 20.07 $ 24.63 $ 38.99 $ 19.23 $ 15.77 $ 11.68
======== ========== ========== ========== ======== ========== ========
Maximum sales charge ..................... 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50%
======== ========== ========== ========== ======== ========== ========
Maximum offering price per share of
beneficial interest outstanding ....... $ 18.23 $ 21.24 $ 26.06 $ 41.26 $ 20.35 $ 16.69 $ 12.36
======== ========== ========== ========== ======== ========== ========
CLASS B SHARES:**
Net asset value and offering price per
share of beneficial interest
outstanding* .......................... $ 17.18 $ 19.93 $ 23.65 $ 34.84 $ 18.23 $ 14.12 $ 11.55
======== ========== ========== ========== ======== ========== ========
CLASS C SHARES:**
Net asset value and offering price per
share of beneficial interest
outstanding* .......................... $ 17.18 $ 19.79 $ 23.33 $ 34.94 $ 18.28 $ 14.25 $ 11.58
======== ========== ========== ========== ======== ========== ========
CLASS I SHARES:**
Net asset value, offering and redemption
price per share of beneficial interest
outstanding ........................... $ 17.27 $ 20.07 $ 24.75 $ 39.39 $ 19.47 $ 16.43 $ 11.74
======== ========== ========== ========== ======== ========== ========
- ----------
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge and/or applicable redemption fees for the
International Growth Fund.
** Net asset values and maximum offering prices are not shown in thousands.
See Notes to Financial Statements.
96
CALIFORNIA
U.S. INSURED
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT HIGH TAX-EXEMPT CALIFORNIA INTERMEDIATE
GROWTH GROWTH INCOME SECURITIES INCOME YIELD BOND MUNICIPAL MUNICIPAL
FUND FUND FUND FUND FUND FUND FUND FUND FUND
- --------- ------------- ---------- ---------- ---------- -------- ---------- ---------- ------------
$ -- $ 7,985 $ 55 $ 583 $ 77 $ 868 $ 210 $ 134 $ 60
(66,097) (19,435) (4,101) (23,186) (16,857) (31,836) 3,588 5,163 284
39,215 160,372 (3,269) (36,948) (1,879) 43,099 11,690 15,228 1,376
364,255 693,216 276,303 1,951,705 1,208,923 799,584 192,091 388,529 130,985
-------- -------- -------- ---------- ---------- -------- -------- -------- --------
$337,373 $842,138 $268,988 $1,892,154 $1,190,264 $811,715 $207,579 $409,054 $132,705
======== ======== ======== ========== ========== ======== ======== ======== ========
$ 87,252 $ 55,628 $ 36,287 $ 120,615 $ 147,521 $111,164 $175,146 $241,879 $ 65,667
======== ======== ======== ========== ========== ======== ======== ======== ========
$ 9,859 $ 4,822 $ 23,617 $ 122,147 $ 128,067 $ 73,667 $ 30,073 $162,534 $ 59,562
======== ======== ======== ========== ========== ======== ======== ======== ========
$ 954 $ 1,169 $ 13,477 $ 6,775 $ 10,761 $ 38,475 $ 2,360 $ 4,641 $ 7,476
======== ======== ======== ========== ========== ======== ======== ======== ========
$239,308 $780,519 $195,607 $1,642,617 $ 903,915 $588,409
======== ======== ======== ========== ========== ========
6,263 5,180 15,684 11,453 16,302 13,505 22,741 21,523 6,050
======== ======== ======== ========== ========== ======== ======== ======== ========
812 471 10,207 11,606 14,109 8,907 3,904 14,462 5,488
======== ======== ======== ========== ========== ======== ======== ======== ========
78 115 5,823 645 1,186 4,653 306 413 689
======== ======== ======== ========== ========== ======== ======== ======== ========
16,590 72,217 84,538 155,936 99,689 71,587
======== ======== ======== ========== ========== ========
$ 13.93 $ 10.74 $ 2.31 $ 10.53 $ 9.05 $ 8.23 $ 7.70 $ 11.24 $ 10.85
======== ======== ======== ========== ========== ======== ======== ======== ========
5.50% 5.50% 3.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%
======== ======== ======== ========== ========== ======== ======== ======== ========
$ 14.74 $ 11.37 $ 2.39 $ 11.03 $ 9.48 $ 8.62 $ 8.06 $ 11.77 $ 11.36
======== ======== ======== ========== ========== ======== ======== ======== ========
$ 12.14 $ 10.24 $ 2.31 $ 10.52 $ 9.08 $ 8.27 $ 7.70 $ 11.24 $ 10.85
======== ======== ======== ========== ========== ======== ======== ======== ========
$ 12.31 $ 10.14 $ 2.31 $ 10.51 $ 9.08 $ 8.27 $ 7.70 $ 11.24 $ 10.85
======== ======== ======== ========== ========== ======== ======== ======== ========
$ 14.43 $ 10.81 $ 2.31 $ 10.53 $ 9.07 $ 8.22
======== ======== ======== ========== ========== ========
See Notes to Financial Statements.
97
Statements of Operations
WM GROUP OF FUNDS
For the Year Ended October 31, 2005
(In thousands)
EQUITY GROWTH & WEST COAST MID CAP SMALL CAP
REIT INCOME INCOME EQUITY STOCK GROWTH VALUE
FUND FUND FUND FUND FUND FUND FUND
------- -------- -------- ---------- -------- -------- ---------
INVESTMENT INCOME:
Dividends from unaffiliated securities ..... $13,833 $ 51,739 $ 50,935 $ 21,359 $ 17,936 $ 23,658 $ 5,120
Interest ................................... 617 9,489 3,177 1,415 1,791 1,222 647
Foreign withholding taxes .................. -- (320) (302) (11) (56) (172) (363)
Securities lending income .................. 324 832 139 197 252 112 524
------- -------- -------- -------- -------- -------- -------
Total investment income .............. 14,774 61,740 53,949 22,960 19,923 24,820 5,928
------- -------- -------- -------- -------- -------- -------
EXPENSES:
Investment advisory fee .................... 3,102 10,507 12,388 7,293 6,140 12,897 2,783
Custodian fees ............................. 12 62 67 50 28 78 23
Legal and audit fees ....................... 37 73 80 60 49 67 39
Registration and filing fees ............... 46 174 90 63 49 41 42
Printing and postage expenses .............. 26 657 630 685 166 740 30
Other ...................................... 50 271 308 219 101 253 44
Shareholder servicing and distribution fees:
Class A Shares .......................... 36 1,627 1,485 1,718 186 319 24
Class B Shares .......................... 78 1,873 910 1,575 221 1,051 19
Class C Shares .......................... 46 734 17 116 27 24 12
Transfer agent fees:
Class A Shares .......................... 32 481 481 563 57 419 13
Class B Shares .......................... 19 385 324 430 68 555 6
Class C Shares .......................... 7 79 5 23 5 7 3
------- -------- -------- -------- -------- -------- -------
Total expenses ....................... 3,491 16,923 16,785 12,795 7,097 16,451 3,038
Fees waived by the transfer agent .......... -- -- -- -- -- -- --
Fees reduced by custodian credits .......... (1) (15) (3) (1) (3) (47) (2)
------- -------- -------- -------- -------- -------- -------
Net expenses ......................... 3,490 16,908 16,782 12,794 7,094 16,404 3,036
------- -------- -------- -------- -------- -------- -------
NET INVESTMENT INCOME/(LOSS) ............... 11,284 44,832 37,167 10,166 12,829 8,416 2,892
------- -------- -------- -------- -------- -------- -------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on:
Unaffiliated security transactions ...... 7,623 86,726 45,639 37,872 56,510 66,878 18,538
Forward foreign currency contracts
and foreign currency transactions .... -- -- -- -- -- (119) 49
Futures contracts ....................... -- -- -- -- -- -- --
------- -------- -------- -------- -------- -------- -------
Net realized gain/(loss) on
investment transactions ........... 7,623 86,726 45,639 37,872 56,510 66,759 18,587
------- -------- -------- -------- -------- -------- -------
Capital gain distributions received ........ 2,695 1,209 -- 1,036 2 -- 1
------- -------- -------- -------- -------- -------- -------
Net increase from payment by the
Advisor** ............................... -- -- -- -- -- -- --
------- -------- -------- -------- -------- -------- -------
Net change in unrealized
appreciation/depreciation of:
Securities .............................. 34,474 125,418 53,674 124,947 55,365 82,371 2,889
Forward foreign currency contracts ...... -- -- -- -- -- 44 --
Foreign currency, futures contracts and
other assets and liabilities ......... -- -- -- -- -- 9 (5)
------- -------- -------- -------- -------- -------- -------
Net change in unrealized appreciation/
depreciation of investment
transactions ............................ 34,474 125,418 53,674 124,947 55,365 82,424 2,884
------- -------- -------- -------- -------- -------- -------
Net realized and unrealized gain/(loss) on
investments ............................. 44,792 213,353 99,313 163,855 111,877 149,183 21,472
------- -------- -------- -------- -------- -------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............... $56,076 $258,185 $136,480 $174,021 $124,706 $157,599 $24,364
======= ======== ======== ======== ======== ======== =======
- ----------
* Amount represents less than $500.
** See Note 3 in Notes to Financial Statements.
See Notes to Financial Statements.
98
CALIFORNIA
U.S. INSURED
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT HIGH TAX-EXEMPT CALIFORNIA INTERMEDIATE
GROWTH GROWTH INCOME SECURITIES INCOME YIELD BOND MUNICIPAL MUNICIPAL
FUND FUND FUND FUND FUND FUND FUND FUND FUND
- --------- ------------- ---------- ---------- -------- -------- ---------- ---------- ------------
$ 789 $ 17,652 $ -- $ -- $ 244 $ 2,367 $ -- $ -- $ --
281 806 11,277 81,869 67,876 57,820 11,048 21,162 5,592
(4) (1,605) -- -- -- (40) -- -- --
672 463 -- -- -- -- -- -- --
-------- -------- ------- -------- -------- -------- ------- -------- -------
1,738 17,316 11,277 81,869 68,120 60,147 11,048 21,162 5,592
-------- -------- ------- -------- -------- -------- ------- -------- -------
2,886 5,997 1,318 8,599 5,931 4,228 1,086 2,102 703
33 554 13 63 43 52 10 39 5
44 47 36 65 65 59 35 38 32
38 48 38 81 53 58 35 27 25
272 100 60 184 188 119 52 74 39
61 110 44 218 161 103 28 65 25
223 118 112 320 369 258 454 589 166
109 43 273 1,390 1,406 771 330 1,800 658
9 8 167 62 114 373 27 49 82
245 90 56 174 177 84 81 84 18
73 24 38 165 149 74 14 60 24
3 3 15 7 13 29 1 2 4
-------- -------- ------- -------- -------- -------- ------- -------- -------
3,996 7,142 2,170 11,328 8,669 6,208 2,153 4,929 1,781
-- -- (109) -- -- -- -- -- --
(7) --* (4) (3) (10) (23) (3) (3) (2)
-------- -------- ------- -------- -------- -------- ------- -------- -------
3,989 7,142 2,057 11,325 8,659 6,185 2,150 4,926 1,779
-------- -------- ------- -------- -------- -------- ------- -------- -------
(2,251) 10,174 9,220 70,544 59,461 53,962 8,898 16,236 3,813
-------- -------- ------- -------- -------- -------- ------- -------- -------
(47,989) 17,698 574 2,784 1,785 9,562 3,605 5,076 282
-- 1,126 -- -- -- 61 -- -- --
-- -- 69 -- -- -- 11 -- --
-------- -------- ------- -------- -------- -------- ------- -------- -------
(47,989) 18,824 643 2,784 1,785 9,623 3,616 5,076 282
-------- -------- ------- -------- -------- -------- ------- -------- -------
1 -- -- -- -- -- -- -- --
-------- -------- ------- -------- -------- -------- ------- -------- -------
1,321 -- -- -- -- -- -- -- --
-------- -------- ------- -------- -------- -------- ------- -------- -------
73,015 86,539 (7,791) (52,278) (50,548) (13,177) (8,398) (10,662) (3,892)
-- 590 -- -- -- -- -- -- --
-- (90) 273 -- -- (20) 333 63 18
-------- -------- ------- -------- -------- -------- ------- -------- -------
73,015 87,039 (7,518) (52,278) (50,548) (13,197) (8,065) (10,599) (3,874)
-------- -------- ------- -------- -------- -------- ------- -------- -------
26,348 105,863 (6,875) (49,494) (48,763) (3,574) (4,449) (5,523) (3,592)
-------- -------- ------- -------- -------- -------- ------- -------- -------
$ 24,097 $116,037 $ 2,345 $ 21,050 $ 10,698 $ 50,388 $ 4,449 $ 10,713 $ 221
======== ======== ======= ======== ======== ======== ======= ======== =======
See Notes to Financial Statements.
99
Statements of Changes in Net Assets
WM GROUP OF FUNDS
(In thousands)
GROWTH &
REIT FUND EQUITY INCOME FUND INCOME FUND
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
---------- ---------- ---------- ---------- ---------- ----------
Net investment income/(loss) ............. $ 11,284 $ 8,603 $ 44,832 $ 22,654 $ 37,167 $ 20,841
Net realized gain/(loss) on
investment transactions ............... 7,623 5,453 86,726 (3,204) 45,639 (17,060)
Capital gain distributions received ...... 2,695 32 1,209 -- --
Net change in unrealized appreciation/
depreciation of investments ........... 34,474 55,284 125,418 164,274 53,674 153,422
-------- -------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations ............. 56,076 69,372 258,185 183,724 136,480 157,203
Distributions to shareholders from:
Net investment income:
Class AShares ...................... (345) (107) (12,793) (5,891) (6,506) (5,188)
Class B Shares ..................... (127) (51) (2,100) (973) (25) --
Class C Shares ..................... (79) (35) (978) (188) (4) (6)
Class I Shares ..................... (10,165) (6,014) (25,533) (14,964) (21,264) (12,393)
Net realized gains on investments:
Class AShares ...................... (240) (26) -- -- -- --
Class B Shares ..................... (144) (21) -- -- -- --
Class C Shares ..................... (86) (12) -- -- -- --
Class I Shares ..................... (7,193) (1,358) -- -- -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class AShares ...................... 7,655 4,940 383,168 124,517 (41,061) (4,444)
Class B Shares ..................... 2,109 2,357 62,131 23,611 (19,614) (29,486)
Class C Shares ..................... 1,002 1,774 88,699 25,693 218 640
Class I Shares ..................... 36,671 75,766 261,151 282,071 495,612 414,954
-------- -------- ---------- ---------- ---------- ----------
Net increase in net assets ............... 85,134 146,585 1,011,930 617,600 543,836 521,280
NET ASSETS:
Beginning of year ........................ 336,012 189,427 1,525,615 908,015 2,074,814 1,553,534
-------- -------- ---------- ---------- ---------- ----------
End of year .............................. $421,146 $336,012 $2,537,545 $1,525,615 $2,618,650 $2,074,814
======== ======== ========== ========== ========== ==========
Undistributed net investment income
at end of year ........................ $ 1,637 $ 1,069 $ 4,952 $ 1,513 $ 26,036 $ 16,668
======== ======== ========== ========== ========== ==========
TAX CHARACTER OF DISTRIBUTIONS PAID:
Ordinary income .......................... $ 12,826 $ 6,601 $ 41,404 $ 22,016 $ 27,799 $ 17,587
Long-term capital gains .................. 5,553 1,023 -- -- -- --
-------- -------- ---------- ---------- ---------- ----------
Total ................................. $ 18,379 $ 7,624 $ 41,404 $ 22,016 $ 27,799 $ 17,587
======== ======== ========== ========== ========== ==========
- ----------
* The Small Cap Value Fund commenced operations on March 1, 2004.
See Notes to Financial Statements.
100
WEST COAST EQUITY FUND MID CAP STOCK FUND GROWTH FUND SMALL CAP VALUE FUND*
- ----------------------- ----------------------- ----------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------
$ 10,166 $ 2,198 $ 12,829 $ 2,233 $ 8,416 $ (606) $ 2,892 $ 1,743
37,872 28,703 56,510 24,345 66,759 39,917 18,587 941
1,036 -- 2 -- -- -- 1 --
124,947 65,518 55,365 32,323 82,424 14,218 2,884 18,682
- ---------- ---------- -------- -------- ---------- ---------- -------- --------
174,021 96,419 124,706 58,901 157,599 53,529 24,364 21,366
(3,556) -- (100) (35) (460) -- (55) --
-- -- -- -- (280) -- (6) --
(3) -- -- -- (7) -- (2) --
(4,933) (437) (2,895) (1,465) (6,132) -- (2,805) --
(7,696) -- (2,119) (101) -- -- -- --
(1,922) -- (732) (46) -- -- -- --
(126) -- (69) (2) -- -- -- --
(6,454) -- (21,862) (974) -- -- -- --
41,184 50,313 25,110 15,975 (8,352) 4,016 11,566 2,784
10,799 9,013 1,870 738 (23,335) (24,063) 2,358 585
3,521 4,987 2,289 1,132 (6) 1,389 2,082 389
45,817 128,742 64,931 196,744 93,923 575,664 29,467 247,209
- ---------- ---------- -------- -------- ---------- ---------- -------- --------
250,652 289,037 191,129 270,867 212,950 610,535 66,969 272,333
1,287,522 998,485 697,270 426,403 1,519,430 908,895 272,333 --
- ---------- ---------- -------- -------- ---------- ---------- -------- --------
$1,538,174 $1,287,522 $888,399 $697,270 $1,732,380 $1,519,430 $339,302 $272,333
========== ========== ======== ======== ========== ========== ======== ========
$ 3,183 $ 1,509 $ 11,458 $ 1,624 $ 1,476 $ 58 $ 1,812 $ 1,739
========== ========== ======== ======== ========== ========== ======== ========
$ 8,492 $ 437 $ 4,637 $ 1,715 $ 6,879 $ -- $ 2,868 $ --
16,198 -- 23,140 908 -- -- -- --
- ---------- ---------- -------- -------- ---------- ---------- -------- --------
$ 24,690 $ 437 $ 27,777 $ 2,623 $ 6,879 $ -- $ 2,868 $ --
========== ========== ======== ======== ========== ========== ======== ========
See Notes to Financial Statements.
101
Statements of Changes in Net Assets (continued)
WM GROUP OF FUNDS
(In thousands)
SMALL CAP INTERNATIONAL SHORT TERM
GROWTH FUND GROWTH FUND INCOME FUND
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
---------- ---------- ---------- ---------- ---------- ----------
Net investment income/(loss) ................ $ (2,251) $ (2,535) $ 10,174 $ 5,436 $ 9,220 $ 8,562
Net realized gain/(loss) on
investment transactions .................. (47,989) 49,045 18,824 4,780 643 (215)
Capital gain distributions received ......... 1 -- -- -- -- --
Net Increase from payment by the Advisor* ... 1,321 -- -- -- -- --
Net change in unrealized appreciation/
depreciation of investments .............. 73,015 (45,470) 87,039 36,011 (7,518) (1,507)
-------- --------- -------- --------- -------- --------
Net increase in net assets resulting from
operations ............................... 24,097 1,040 116,037 46,227 2,345 6,840
Distributions to shareholders from:
Net investment income:
Class A Shares ........................ -- -- (364) (249) (1,541) (1,965)
Class B Shares ........................ -- -- -- -- (742) (898)
Class C Shares ........................ -- -- (4) (1) (453) (442)
Class I Shares ........................ -- -- (7,523) (4,799) (6,799) (5,343)
Net realized gains on investments:
Class A Shares ........................ -- -- -- -- -- --
Class B Shares ........................ -- -- -- -- -- --
Class C Shares ........................ -- -- -- -- -- --
Class I Shares ........................ -- -- -- -- -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class A Shares ........................ (12,015) 16,352 9,765 9,571 (16,583) (17,456)
Class B Shares ........................ (2,939) (5,355) 579 (757) (7,458) (12,276)
Class C Shares ........................ 42 551 634 333 (5,044) 1,258
Class I Shares ........................ (15,365) (105,981) 140,594 184,051 31,452 40,577
Redemption fees ....................... -- -- 10 1 -- --
-------- --------- -------- --------- -------- --------
Net increase/(decrease) in net assets ....... (6,180) (93,393) 259,728 234,377 (4,823) 10,295
NET ASSETS:
Beginning of year ........................... 343,553 436,946 582,410 348,033 273,811 263,516
-------- --------- -------- --------- -------- --------
End of year ................................. $337,373 $ 343,553 $842,138 $ 582,410 $268,988 $273,811
======== ========= ======== ========= ======== ========
Undistributed net investment income at end
of year .................................. $ -- $ -- $ 7,985 $ 4,599 $ 55 $ 78
======== ========= ======== ========= ======== ========
TAX CHARACTER OF DISTRIBUTIONS PAID:
Ordinary income ............................. $ -- $ -- $ 7,891 $ 5,049 $ 9,535 $ 8,648
Tax-exempt income ........................... -- -- -- -- -- --
Long-term capital gains ..................... -- -- -- -- -- --
-------- --------- -------- --------- -------- --------
Total .................................... $ -- $ -- $ 7,891 $ 5,049 $ 9,535 $ 8,648
======== ========= ======== ========= ======== ========
- ----------
* See Note 3 in Notes to Financial Statements.
See Notes to Financial Statements.
102
U.S. GOVERNMENT
SECURITIES FUND INCOME FUND HIGH YIELD FUND TAX-EXEMPT BOND FUND
- ----------------------- ----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 70,544 $ 52,299 $ 59,461 $ 56,095 $ 53,962 $ 48,288 $ 8,898 $ 9,819
2,784 171 1,785 1,713 9,623 17,497 3,616 2,609
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
(52,278) 7,630 (50,548) 14,882 (13,197) 16,305 (8,065) (305)
- ---------- ---------- ---------- ---------- -------- -------- -------- --------
21,050 60,100 10,698 72,690 50,388 82,090 4,449 12,123
(5,482) (6,550) (7,648) (8,004) (7,174) (4,750) (7,693) (8,313)
(4,948) (6,926) (6,248) (7,906) (4,795) (5,554) (1,151) (1,394)
(222) (328) (504) (602) (2,317) (1,966) (95) (142)
(67,624) (46,885) (49,194) (44,097) (41,288) (38,653) -- --
-- -- -- -- -- -- (2,041) (2,309)
-- -- -- -- -- -- (392) (496)
-- -- -- -- -- -- (40) (50)
-- -- -- -- -- -- -- --
(10,238) (41,621) 6,391 (7,529) 26,776 33,689 (3,754) (22,261)
(31,325) (92,848) (17,900) (44,155) (5,927) (7,690) (4,309) (9,517)
700 (7,036) (310) (3,811) 5,421 7,493 (1,180) (682)
431,064 601,231 108,913 147,017 65,992 78,376 -- --
-- -- -- -- -- -- -- --
- ---------- ---------- ---------- ---------- -------- -------- -------- --------
332,975 459,137 44,198 103,603 87,076 143,035 (16,206) (33,041)
1,559,179 1,100,042 1,146,066 1,042,463 724,639 581,604 223,785 256,826
- ---------- ---------- ---------- ---------- -------- -------- -------- --------
$1,892,154 $1,559,179 $1,190,264 $1,146,066 $811,715 $724,639 $207,579 $223,785
========== ========== ========== ========== ======== ======== ======== ========
$ 583 $ 292 $ 77 $ 485 $ 868 $ 981 $ 210 $ 207
========== ========== ========== ========== ======== ======== ======== ========
$ 78,276 $ 60,689 $ 63,594 $ 60,609 $ 55,574 $ 50,923 $ -- $ 378
-- -- -- -- -- -- 8,939 9,779
-- -- -- -- -- -- 2,473 2,547
- ---------- ---------- ---------- ---------- -------- -------- -------- --------
$ 78,276 $ 60,689 $ 63,594 $ 60,609 $ 55,574 $ 50,923 $ 11,412 $ 12,704
========== ========== ========== ========== ======== ======== ======== ========
See Notes to Financial Statements.
103
Statements of Changes in Net Assets (continued)
WM GROUP OF FUNDS
(In thousands)
CALIFORNIA CALIFORNIA INSURED
MUNICIPAL FUND INTERMEDIATE MUNICIPAL FUND
----------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04
---------- ---------- ------------ ------------
Net investment income........................ $ 16,236 $ 18,650 $ 3,813 $ 4,209
Net realized gain/(loss) on
investment transactions................... 5,076 1,664 282 (576)
Net change in unrealized appreciation/
depreciation of investments............... (10,599) 5,421 (3,874) 1,440
-------- -------- -------- --------
Net increase in net assets resulting from
operations................................ 10,713 25,735 221 5,073
Distributions to shareholders from:
Net investment income:
Class A Shares......................... (9,845) (10,374) (2,071) (2,155)
Class B Shares......................... (6,202) (8,010) (1,549) (1,842)
Class C Shares......................... (168) (227) (194) (212)
Net realized gains on investments:
Class A Shares......................... (601) -- (29) (696)
Class B Shares......................... (503) -- (30) (847)
Class C Shares......................... (14) -- (3) (94)
Net increase/(decrease) in net assets from
Fund share transactions:
Class A Shares......................... 13,478 (24,046) 1,650 (8,913)
Class B Shares......................... (30,692) (62,790) (10,250) (21,746)
Class C Shares......................... (556) (2,993) (1,077) (1,527)
-------- -------- -------- --------
Net decrease in net assets................... (24,390) (82,705) (13,332) (32,959)
NET ASSETS:
Beginning of year............................ 433,444 516,149 146,037 178,996
-------- -------- -------- --------
End of year.................................. $409,054 $433,444 $132,705 $146,037
======== ======== ======== ========
Undistributed net investment income
at end of year............................ $ 134 $ 134 $ 60 $ 61
======== ======== ======== ========
TAX CHARACTER OF DISTRIBUTIONS PAID:
Ordinary income.............................. $ -- $ 73 $ -- $ 304
Tax-exempt income............................ 16,215 18,538 3,814 4,209
Long-term capital gains...................... 1,118 -- 62 1,333
-------- -------- -------- --------
Total..................................... $ 17,333 $ 18,611 $ 3,876 $ 5,846
======== ======== ======== ========
See Notes to Financial Statements.
104
Statements of Changes in Net Assets -- Capital Stock Activity
WM GROUP OF FUNDS
(In thousands)
GROWTH &
REIT FUND EQUITY INCOME FUND INCOME FUND
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
---------- ---------- ---------- ---------- ---------- ----------
AMOUNT
CLASS A:
Sold.................................. $12,754 $ 7,159 $467,759 $162,748 $ 39,189 $ 72,979
Issued as reinvestment of dividends... 508 116 11,158 5,448 6,275 5,039
Redeemed.............................. (5,607) (2,335) (95,749) (43,679) (86,525) (82,462)
------- ------- -------- -------- -------- --------
Net increase/(decrease)............... $ 7,655 $ 4,940 $383,168 $124,517 $(41,061) $ (4,444)
======= ======= ======== ======== ======== ========
CLASS B:
Sold.................................. $ 4,183 $ 4,003 $ 94,639 $ 45,625 $ 5,243 $ 9,828
Issued as reinvestment of dividends... 224 56 1,809 911 24 --
Redeemed.............................. (2,298) (1,702) (34,317) (22,925) (24,881) (39,314)
------- ------- -------- -------- -------- --------
Net increase/(decrease)............... $ 2,109 $ 2,357 $ 62,131 $ 23,611 $(19,614) $(29,486)
======= ======= ======== ======== ======== ========
CLASS C:
Sold.................................. $ 2,480 $ 2,929 $ 96,461 $ 28,418 $ 729 $ 1,005
Issued as reinvestment of dividends... 150 43 766 154 4 6
Redeemed.............................. (1,628) (1,198) (8,528) (2,879) (515) (371)
------- ------- -------- -------- -------- --------
Net increase.......................... $ 1,002 $ 1,774 $ 88,699 $ 25,693 $ 218 $ 640
======= ======= ======== ======== ======== ========
CLASS I:
Sold.................................. $21,378 $70,279 $237,093 $267,857 $474,848 $409,181
Issued as reinvestment of dividends... 17,358 7,372 25,533 14,964 21,264 12,393
Redeemed.............................. (2,065) (1,885) (1,475) (750) (500) (6,620)
------- ------- -------- -------- -------- --------
Net increase.......................... $36,671 $75,766 $261,151 $282,071 $495,612 $414,954
======= ======= ======== ======== ======== ========
SHARES
CLASS A:
Sold.................................. 768 508 23,884 9,548 1,595 3,128
Issued as reinvestment of dividends... 31 8 573 322 253 229
Redeemed.............................. (341) (170) (4,876) (2,574) (3,517) (3,552)
------- ------- -------- -------- -------- --------
Net increase/(decrease)............... 458 346 19,581 7,296 (1,669) (195)
======= ======= ======== ======== ======== ========
CLASS B:
Sold.................................. 255 284 4,886 2,704 220 440
Issued as reinvestment of dividends... 14 4 94 54 1 --
Redeemed.............................. (140) (125) (1,776) (1,368) (1,049) (1,757)
------- ------- -------- -------- -------- --------
Net increase/(decrease)............... 129 163 3,204 1,390 (828) (1,317)
======= ======= ======== ======== ======== ========
CLASS C:
Sold.................................. 150 213 4,973 1,695 32 46
Issued as reinvestment of dividends... 9 3 40 9 -- --
Redeemed.............................. (98) (86) (440) (172) (22) (17)
------- ------- -------- -------- -------- --------
Net increase.......................... 61 130 4,573 1,532 10 29
======= ======= ======== ======== ======== ========
CLASS I:
Sold.................................. 1,337 5,257 12,184 15,991 19,204 17,733
Issued as reinvestment of dividends... 1,056 532 1,313 885 856 561
Redeemed.............................. (125) (139) (81) (45) (20) (284)
------- ------- -------- -------- -------- --------
Net increase.......................... 2,268 5,650 13,416 16,831 20,040 18,010
======= ======= ======== ======== ======== ========
See Notes to Financial Statements.
105
Statements of Changes in Net Assets -- Capital Stock Activity (continued)
WM GROUP OF FUNDS
(In thousands)
WEST COAST EQUITY FUND MID CAP STOCK FUND GROWTH FUND
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
---------- ---------- ---------- ---------- ---------- ----------
AMOUNT
CLASS A:
Sold ...................................... $111,137 $116,678 $31,725 $ 25,203 $ 17,252 $ 28,670
Issued as reinvestment of dividends ....... 10,883 -- 2,131 133 448 --
Redeemed .................................. (80,836) (66,365) (8,746) (9,361) (26,052) (24,654)
-------- -------- ------- -------- -------- --------
Net increase/(decrease) ................... $ 41,184 $ 50,313 $25,110 $ 15,975 $ (8,352) $ 4,016
======== ======== ======= ======== ======== ========
CLASS B:
Sold ...................................... $ 29,204 $ 34,227 $ 4,988 $ 3,822 $ 3,252 $ 6,706
Issued as reinvestment of dividends ....... 1,832 -- 701 45 270 --
Redeemed .................................. (20,237) (25,214) (3,819) (3,129) (26,857) (30,769)
-------- -------- ------- -------- -------- --------
Net increase/(decrease) ................... $ 10,799 $ 9,013 $ 1,870 $ 738 $(23,335) $(24,063)
======== ======== ======= ======== ======== ========
CLASS C:
Sold ...................................... $ 5,584 $ 7,311 $ 2,699 $ 1,293 $ 1,024 $ 1,636
Issued as reinvestment of dividends ....... 118 -- 61 2 6 --
Redeemed .................................. (2,181) (2,324) (471) (163) (1,036) (247)
-------- -------- ------- -------- -------- --------
Net increase/(decrease) ................... $ 3,521 $ 4,987 $ 2,289 $ 1,132 $ (6) $ 1,389
======== ======== ======= ======== ======== ========
CLASS I:
Sold ...................................... $ 36,035 $133,663 $46,690 $195,470 $100,416 $575,894
Issued as reinvestment of dividends ....... 11,387 437 24,756 2,440 6,132 --
Redeemed .................................. (1,605) (5,358) (6,515) (1,166) (12,625) (230)
-------- -------- ------- -------- -------- --------
Net increase/(decrease) ................... $ 45,817 $128,742 $64,931 $196,744 $ 93,923 $575,664
======== ======== ======= ======== ======== ========
SHARES
CLASS A:
Sold ...................................... 2,980 3,420 1,718 1,521 1,129 1,994
Issued as reinvestment of dividends ....... 291 -- 122 8 29 --
Redeemed .................................. (2,167) (1,955) (482) (563) (1,705) (1,724)
-------- -------- ------- -------- -------- --------
Net increase/(decrease) ................... 1,104 1,465 1,358 966 (547) 270
======== ======== ======= ======== ======== ========
CLASS B:
Sold ...................................... 875 1,114 285 241 237 515
Issued as reinvestment of dividends ....... 55 -- 42 3 19 --
Redeemed .................................. (605) (824) (220) (197) (1,955) (2,363)
-------- -------- ------- -------- -------- --------
Net increase/(decrease) ................... 325 290 107 47 (1,699) (1,848)
======== ======== ======= ======== ======== ========
CLASS C:
Sold ...................................... 166 238 150 81 74 125
Issued as reinvestment of dividends ....... 4 -- 4 -- -- --
Redeemed .................................. (65) (76) (27) (10) (74) (19)
-------- -------- ------- -------- -------- --------
Net increase/(decrease) ................... 105 162 127 71 -- 106
======== ======== ======= ======== ======== ========
CLASS I:
Sold ...................................... 970 3,925 2,637 11,766 6,423 38,649
Issued as reinvestment of dividends ....... 301 13 1,394 153 383 --
Redeemed .................................. (43) (160) (347) (71) (785) (16)
-------- -------- ------- -------- -------- --------
Net increase/(decrease) ................... 1,228 3,778 3,684 11,848 6,021 38,633
======== ======== ======= ======== ======== ========
- ----------
+ The Small Cap Value Fund commenced operations on March 1, 2004.
See Notes to Financial Statements.
106
SMALL CAP INTERNATIONAL SHORT TERM
SMALL CAP VALUE FUND+ GROWTH FUND GROWTH FUND INCOME FUND
- ----------------------- ----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$16,188 $ 2,899 $ 11,769 $ 39,482 $ 16,974 $ 17,317 $ 14,092 $ 27,980
43 -- -- -- 356 245 1,042 1,356
(4,665) (115) (23,784) (23,130) (7,565) (7,991) (31,717) (46,792)
------- -------- -------- --------- -------- -------- -------- --------
$11,566 $ 2,784 $(12,015) $ 16,352 $ 9,765 $ 9,571 $(16,583) $(17,456)
======= ======== ======== ========= ======== ======== ======== ========
$ 2,833 $ 706 $ 811 $ 4,111 $ 1,979 $ 1,369 $ 2,089 $ 8,280
4 -- -- -- -- -- 592 739
(479) (121) (3,750) (9,466) (1,400) (2,126) (10,139) (21,295)
------- -------- -------- --------- -------- -------- -------- --------
$ 2,358 $ 585 $ (2,939) $ (5,355) $ 579 $ (757) $ (7,458) $(12,276)
======= ======== ======== ========= ======== ======== ======== ========
$ 2,506 $ 473 $ 555 $ 956 $ 929 $ 639 $ 3,121 $ 14,060
2 -- -- -- 3 1 389 366
(426) (84) (513) (405) (298) (307) (8,554) (13,168)
------- -------- -------- --------- -------- -------- -------- --------
$ 2,082 $ 389 $ 42 $ 551 $ 634 $ 333 $ (5,044) $ 1,258
======= ======== ======== ========= ======== ======== ======== ========
$27,162 $247,359 $ 35,485 $ 53,652 $133,171 $179,477 $ 24,653 $ 35,609
2,805 -- -- -- 7,523 4,799 6,799 5,343
(500) (150) (50,850) (159,633) (100) (225) -- (375)
------- -------- -------- --------- -------- -------- -------- --------
$29,467 $247,209 $(15,365) $(105,981) $140,594 $184,051 $ 31,452 $ 40,577
======= ======== ======== ========= ======== ======== ======== ========
1,333 287 873 2,794 1,684 1,935 6,020 11,724
3 -- -- -- 36 29 445 567
(388) (11) (1,757) (1,699) (760) (896) (13,549) (19,591)
------- -------- -------- --------- -------- -------- -------- --------
948 276 (884) 1,095 960 1,068 (7,084) (7,300)
======= ======== ======== ========= ======== ======== ======== ========
237 70 68 326 205 158 891 3,475
-- -- -- -- -- -- 253 310
(40) (11) (319) (771) (146) (246) (4,327) (8,916)
------- -------- -------- --------- -------- -------- -------- --------
197 59 (251) (445) 59 (88) (3,183) (5,131)
======= ======== ======== ========= ======== ======== ======== ========
207 46 46 74 95 75 1,330 5,891
-- -- -- -- -- -- 166 154
(37) (8) (43) (33) (31) (35) (3,655) (5,520)
------- -------- -------- --------- -------- -------- -------- --------
170 38 3 41 64 40 (2,159) 525
======= ======== ======== ========= ======== ======== ======== ========
2,255 24,787 2,536 3,920 13,246 20,051 10,528 14,915
236 -- -- -- 749 563 2,909 2,240
(44) (15) (3,688) (10,697) (9) (26) -- (158)
------- -------- -------- --------- -------- -------- -------- --------
2,447 24,772 (1,152) (6,777) 13,986 20,588 13,437 16,997
======= ======== ======== ========= ======== ======== ======== ========
See Notes to Financial Statements.
107
Statements of Changes in Net Assets -- Capital Stock Activity (continued)
WM GROUP OF FUNDS
(In thousands)
U.S. GOVERNMENT
SECURITIES FUND INCOME FUND HIGH YIELD FUND
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
---------- ---------- ---------- ---------- ---------- ----------
AMOUNT
CLASS A:
Sold ................................. $ 20,979 $ 14,876 $ 37,224 $ 35,193 $ 65,936 $ 66,774
Issued as reinvestment of dividends... 4,035 4,770 4,859 5,097 3,681 2,383
Redeemed ............................. (35,252) (61,267) (35,692) (47,819) (42,841) (35,468)
-------- --------- -------- -------- -------- --------
Net increase/(decrease) .............. $(10,238) $ (41,621) $ 6,391 $ (7,529) $ 26,776 $ 33,689
======== ========= ======== ======== ======== ========
CLASS B:
Sold ................................. $ 4,266 $ 7,088 $ 11,034 $ 23,555 $ 9,556 $ 20,058
Issued as reinvestment of dividends .. 3,945 5,486 3,740 4,768 2,103 2,426
Redeemed ............................. (39,536) (105,422) (32,674) (72,478) (17,586) (30,174)
-------- --------- -------- -------- -------- --------
Net decrease ......................... $(31,325) $ (92,848) $(17,900) $(44,155) $ (5,927) $ (7,690)
======== ========= ======== ======== ======== ========
CLASS C:
Sold ................................. $ 3,171 $ 1,945 $ 3,712 $ 4,123 $ 14,492 $ 19,533
Issued as reinvestment of dividends .. 175 245 349 411 1,133 995
Redeemed ............................. (2,646) (9,226) (4,371) (8,345) (10,204) (13,035)
-------- --------- -------- -------- -------- --------
Net increase/(decrease) .............. $ 700 $ (7,036) $ (310) $ (3,811) $ 5,421 $ 7,493
======== ========= ======== ======== ======== ========
CLASS I:
Sold ................................. $363,440 $ 557,045 $ 69,059 $147,970 $ 35,769 $ 77,684
Issued as reinvestment of dividends .. 67,624 46,885 49,194 44,097 41,288 38,653
Redeemed ............................. -- (2,699) (9,340) (45,050) (11,065) (37,961)
-------- --------- -------- -------- -------- --------
Net increase ......................... $431,064 $ 601,231 $108,913 $147,017 $ 65,992 $ 78,376
======== ========= ======== ======== ======== ========
SHARES
CLASS A:
Sold ................................. 1,956 1,367 4,000 3,736 7,984 8,227
Issued as reinvestment of dividends .. 376 440 523 542 445 293
Redeemed ............................. (3,278) (5,655) (3,835) (5,105) (5,212) (4,404)
-------- --------- -------- -------- -------- --------
Net increase/(decrease) .............. (946) (3,848) 688 (827) 3,217 4,116
======== ========= ======== ======== ======== ========
CLASS B:
Sold ................................. 397 651 1,180 2,495 1,153 2,460
Issued as reinvestment of dividends .. 367 506 401 506 253 298
Redeemed ............................. (3,681) (9,721) (3,499) (7,711) (2,120) (3,708)
-------- --------- -------- -------- -------- --------
Net decrease ......................... (2,917) (8,564) (1,918) (4,710) (714) (950)
======== ========= ======== ======== ======== ========
CLASS C:
Sold ................................. 296 179 397 436 1,743 2,395
Issued as reinvestment of dividends .. 17 22 37 44 136 122
Redeemed ............................. (246) (852) (469) (888) (1,232) (1,613)
-------- --------- -------- -------- -------- --------
Net increase/(decrease) .............. 67 (651) (35) (408) 647 904
======== ========= ======== ======== ======== ========
CLASS I:
Sold ................................. 33,841 51,228 7,342 15,782 4,296 9,657
Issued as reinvestment of dividends .. 6,304 4,324 5,280 4,687 5,005 4,768
Redeemed ............................. -- (251) (1,005) (4,919) (1,345) (4,803)
-------- --------- -------- -------- -------- --------
Net increase ......................... 40,145 55,301 11,617 15,550 7,956 9,622
======== ========= ======== ======== ======== ========
See Notes to Financial Statements.
108
CALIFORNIA INSURED
CALIFORNIA INTERMEDIATE
TAX-EXEMPT BOND FUND MUNICIPAL FUND MUNICIPAL FUND
- ----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/05 10/31/04 10/31/05 10/31/04 10/31/05 10/31/04
- ---------- ---------- ---------- --------- ---------- ----------
$ 15,149 $ 13,239 $ 35,403 $ 24,927 $ 13,962 $ 23,303
6,593 7,522 6,596 6,426 1,383 2,055
(25,496) (43,022) (28,521) (55,399) (13,695) (34,271)
-------- -------- -------- -------- -------- --------
$ (3,754) $(22,261) $ 13,478 $(24,046) $ 1,650 $ (8,913)
======== ======== ======== ======== ======== ========
$ 829 $ 1,559 $ 3,770 $ 4,784 $ 1,211 $ 4,663
1,001 1,299 4,531 5,344 1,190 2,142
(6,139) (12,375) (38,993) (72,918) (12,651) (28,551)
-------- -------- -------- -------- -------- --------
$ (4,309) $ (9,517) $(30,692) $(62,790) $(10,250) $(21,746)
======== ======== ======== ======== ======== ========
$ 1,798 $ 1,645 $ 801 $ 636 $ 785 $ 1,901
103 150 129 169 140 231
(3,081) (2,477) (1,486) (3,798) (2,002) (3,659)
-------- -------- -------- -------- -------- --------
$ (1,180) $ (682) $ (556) $ (2,993) $ (1,077) $ (1,527)
======== ======== ======== ======== ======== ========
1,928 1,669 3,108 2,208 1,264 2,102
844 953 580 570 126 186
(3,258) (5,470) (2,508) (4,937) (1,244) (3,137)
-------- -------- -------- -------- -------- --------
(486) (2,848) 1,180 (2,159) 146 (849)
======== ======== ======== ======== ======== ========
105 196 330 424 109 422
128 164 399 474 108 194
(784) (1,569) (3,428) (6,500) (1,148) (2,586)
-------- -------- -------- -------- -------- --------
(551) (1,209) (2,699) (5,602) (931) (1,970)
======== ======== ======== ======== ======== ========
231 209 70 56 71 171
13 19 11 15 13 21
(396) (314) (130) (339) (181) (332)
-------- -------- -------- -------- -------- --------
(152) (86) (49) (268) (97) (140)
======== ======== ======== ======== ======== ========
See Notes to Financial Statements.
109
Financial Highlights
For a Fund share outstanding throughout each period.
REIT FUND CLASS A CLASS B
- --------- ------------------------------- -----------------
YEARS ENDED OCTOBER 31 2005 2004 2003(3) 2005 2004
- ---------------------- ------- ------ -------- ------ ------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 15.62 $12.46 $10.00 $15.58 $12.43
------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.42(4) 0.39(4) 0.28(4) 0.29(4) 0.29(4)
Net realized and unrealized gain on investments.......... 1.95 3.13 2.35 1.94 3.12
------- ------ ------ ------ ------
Total from investment operations......................... 2.37 3.52 2.63 2.23 3.41
------- ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.42) (0.31) (0.17) (0.29) (0.21)
Distributions from net realized capital gains............ (0.34) (0.05) -- (0.34) (0.05)
------- ------ ------ ------ ------
Total distributions...................................... (0.76) (0.36) (0.17) (0.63) (0.26)
------- ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD................................. $ 17.23 $15.62 $12.46 $17.18 $15.58
======= ====== ====== ====== ======
TOTAL RETURN(1)................................................ 15.46% 28.71% 26.43% 14.57% 27.76%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $18,234 $9,376 $3,159 $8,898 $6,060
Ratio of operating expenses to average net assets........ 1.31% 1.33% 1.41%(5) 2.09% 2.08%
Ratio of net investment income to average net assets..... 2.50% 2.82% 3.60%(5) 1.72% 2.07%
Portfolio turnover rate.................................. 11% 5% 7% 11% 5%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.31% 1.33% 1.41%(5) 2.09% 2.08%
EQUITY INCOME FUND CLASS A
- ------------------ ------------------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 17.79 $ 15.46 $ 12.73 $ 14.85 $ 15.59
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.41(4) 0.29(4) 0.33(4) 0.40(4) 0.48(4)
Net realized and unrealized gain/(loss) on investments... 2.25 2.33 2.73 (1.85) 0.37
-------- -------- -------- -------- --------
Total from investment operations......................... 2.66 2.62 3.06 (1.45) 0.85
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.38) (0.29) (0.33) (0.35) (0.46)
Distributions from net realized capital gains............ -- -- -- (0.32) (1.13)
-------- -------- -------- -------- --------
Total distributions...................................... (0.38) (0.29) (0.33) (0.67) (1.59)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 20.07 $ 17.79 $ 15.46 $ 12.73 $ 14.85
======== ======== ======== ======== ========
TOTAL RETURN(1)................................................ 15.06% 17.06% 24.43% (10.35)% 5.92%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000s)............................ $887,828 $438,776 $268,489 $198,756 $211,445
Ratio of operating expenses to average net assets........ 0.90% 0.91% 0.95% 0.97% 0.96%
Ratio of net investment income to average net assets..... 2.13% 1.74% 2.43% 2.77% 3.17%
Portfolio turnover rate.................................. 32% 20% 18% 16% 17%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 0.90% 0.91% 0.95% 0.97% 0.97%
EQUITY INCOME FUND CLASS B
- ------------------ ---------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 17.67 $ 15.36
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.24(4) 0.14(4)
Net realized and unrealized gain/(loss) on investments... 2.24 2.30
-------- --------
Total from investment operations......................... 2.48 2.44
-------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.22) (0.13)
Distributions from net realized capital gains............ -- --
-------- --------
Total distributions...................................... (0.22) (0.13)
-------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 19.93 $ 17.67
======== ========
TOTAL RETURN(1)................................................ 14.07% 16.04%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000s)............................ $226,390 $144,144
Ratio of operating expenses to average net assets........ 1.78% 1.81%
Ratio of net investment income to average net assets..... 1.25% 0.84%
Portfolio turnover rate.................................. 32% 20%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.78% 1.81%
- ----------
(1) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total returns would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The REIT Fund commenced operations on March 1, 2003.
(4) Per share numbers have been calculated using the average shares method.
(5) Annualized.
(6) The Equity Income Fund commenced selling Class C shares on March 1, 2002.
See Notes to Financial Statements.
110
CLASS C CLASS I
- -------- ------------------------------- ----------------------------------
2003(3) 2005 2004 2003(3) 2005 2004 2003(3)
- -------- ------ ------ --------- -------- -------- --------
$10.00 $15.58 $12.43 $10.00 $ 15.65 $ 12.47 $ 10.00
- ------ ------ ------ ------ -------- -------- --------
0.22(4) 0.30(4) 0.31(4) 0.23(4) 0.49(4) 0.46(4) 0.34(4)
2.35 1.94 3.12 2.35 1.96 3.14 2.32
- ------ ------ ------ ------ -------- -------- --------
2.57 2.24 3.43 2.58 2.45 3.60 2.66
- ------ ------ ------ ------ -------- -------- --------
(0.14) (0.30) (0.23) (0.15) (0.49) (0.37) (0.19)
-- (0.34) (0.05) -- (0.34) (0.05) --
- ------ ------ ------ ------ -------- -------- --------
(0.14) (0.64) (0.28) (0.15) (0.83) (0.42) (0.19)
- ------ ------ ------ ------ -------- -------- --------
$12.43 $17.18 $15.58 $12.43 $ 17.27 $ 15.65 $ 12.47
====== ====== ====== ====== ======== ======== ========
25.86% 14.66% 27.95% 25.88% 15.99% 29.40% 26.76%
$2,808 $5,100 $3,672 $1,322 $388,914 $316,904 $182,138
2.13%(5) 2.00% 1.98% 2.06%(5) 0.84% 0.86% 0.92%(5)
2.88%(5) 1.81% 2.17% 2.95%(5) 2.97% 3.29% 4.09%(5)
7% 11% 5% 7% 11% 5% 7%
2.13%(5) 2.00% 1.98% 2.06%(5) 0.84% 0.86% 0.92%(5)
CLASS C
- -------------------------------- -------------------------------------------
2003 2002 2001 2005 2004 2003 2002(6)
- -------- ------- ------- -------- ------- ------ -------
$ 12.65 $ 14.78 $ 15.52 $ 17.57 $ 15.29 $12.62 $ 15.09
- -------- ------- ------- -------- ------- ------ -------
0.20(4) 0.27(4) 0.35(4) 0.26(4) 0.16(4) 0.22(4) 0.18(4)
2.71 (1.85) 0.38 2.22 2.30 2.68 (2.43)
- -------- ------- ------- -------- ------- ------ -------
2.91 (1.58) 0.73 2.48 2.46 2.90 (2.25)
- -------- ------- ------- -------- ------- ------ -------
(0.20) (0.23) (0.34) (0.26) (0.18) (0.23) (0.22)
-- (0.32) (1.13) -- -- -- --
- -------- ------- ------- -------- ------- ------ -------
(0.20) (0.55) (1.47) (0.26) (0.18) (0.23) (0.22)
- -------- ------- ------- -------- ------- ------ -------
$ 15.36 $ 12.65 $ 14.78 $ 19.79 $ 17.57 $15.29 $ 12.62
======== ======= ======= ======== ======= ====== =======
23.19% (11.20)% 5.09% 14.16% 16.16% 23.29% (15.07)%
$103,888 $82,330 $68,549 $128,523 $33,770 $5,973 $ 1,780
1.89% 1.88% 1.81% 1.68% 1.70% 1.78% 1.80%(5)
1.49% 1.86% 2.32% 1.35% 0.95% 1.60% 1.94%(5)
18% 16% 17% 32% 20% 18% 16%
1.89% 1.88% 1.82% 1.68% 1.70% 1.78% 1.80%(5)
CLASS I
- --------------------------------------------------------------
2005 2004 2003 2002 2001
- ---------- -------- -------- -------- --------
$ 17.79 $ 15.45 $ 12.73 $ 14.85 $ 15.59
- ---------- -------- -------- -------- --------
0.48(4) 0.35(4) 0.38(4) 0.45(4) 0.54(4)
2.24 2.33 2.72 (1.85) 0.35
- ---------- -------- -------- -------- --------
2.72 2.68 3.10 (1.40) 0.89
- ---------- -------- -------- -------- --------
(0.44) (0.34) (0.38) (0.40) (0.50)
-- -- -- (0.32) (1.13)
- ---------- -------- -------- -------- --------
(0.44) (0.34) (0.38) (0.72) (1.63)
- ---------- -------- -------- -------- --------
$ 20.07 $ 17.79 $ 15.45 $ 12.73 $ 14.85
========== ======== ======== ======== ========
15.39% 17.51% 24.77% (10.04)% 6.26%
$1,294,804 $908,925 $529,665 $350,185 $252,453
0.58% 0.59% 0.61% 0.63% 0.64%
2.45% 2.06% 2.77% 3.11% 3.49%
32% 20% 18% 16% 17%
0.58% 0.59% 0.61% 0.63% 0.65%
See Notes to Financial Statements.
111
Financial Highlights
For a Fund share outstanding throughout each period.
GROWTH & INCOME FUND CLASS A
- -------------------- ------------------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $ 23.41 $ 21.59 $ 18.44 $ 22.34 $ 27.11
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ............................. 0.33(4) 0.22(4) 0.22(4) 0.17(4) 0.10
Net realized and unrealized gain/(loss) on investments ... 1.16 1.81 3.11 (3.68) (3.63)
-------- -------- -------- -------- --------
Total from investment operations ......................... 1.49 2.03 3.33 (3.51) (3.53)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ..................... (0.27) (0.21) (0.18) (0.03) (0.07)
Distributions from net realized capital gains ............ -- -- -- (0.36) (1.17)
-------- -------- -------- -------- --------
Total distributions ...................................... (0.27) (0.21) (0.18) (0.39) (1.24)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD ................................. $ 24.63 $ 23.41 $ 21.59 $ 18.44 $ 22.34
======== ======== ======== ======== ========
TOTAL RETURN(1) ............................................... 6.34% 9.45% 18.18% (16.10)% (13.40)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) ...................... $572,128 $582,866 $541,707 $475,010 $560,226
Ratio of operating expenses to average net assets ........ 0.89% 0.90% 0.93% 0.94% 0.92%
Ratio of net investment income/(loss)
to average net assets ................................. 1.34% 0.94% 1.12% 0.79% 0.40%
Portfolio turnover rate .................................. 15% 6% 17% 22% 35%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2) ... 0.89% 0.90% 0.93% 0.94% 0.92%
GROWTH & INCOME FUND CLASS B
- -------------------- -------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $ 22.47 $ 20.74
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ............................. 0.08(4) (0.01)(4)
Net realized and unrealized gain/(loss) on investments ... 1.11 1.74
------- -------
Total from investment operations ......................... 1.19 1.73
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ..................... (0.01) --
Distributions from net realized capital gains ............ -- --
------- -------
Total distributions ...................................... (0.01) --
-------- -------
NET ASSET VALUE, END OF PERIOD ................................. $ 23.65 $ 22.47
======= =======
TOTAL RETURN(1) ............................................... 5.28% 8.39%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) ...................... $80,957 $95,528
Ratio of operating expenses to average net assets ........ 1.92% 1.89%
Ratio of net investment income/(loss)
to average net assets ................................. 0.31% (0.05)%
Portfolio turnover rate .................................. 15% 6%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2) ... 1.92% 1.89%
WEST COAST EQUITY FUND CLASS A
- ---------------------- ------------------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $ 35.04 $ 32.14 $ 23.73 $ 28.89 $ 36.23
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) ............................. 0.25 0.06(4) 0.04(4) 0.02(4) 0.11
Net realized and unrealized gain/(loss) on investments ... 4.33 2.84 8.37 (4.09) (2.35)
-------- -------- -------- -------- --------
Total from investment operations ......................... 4.58 2.90 8.41 (4.07) (2.24)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ..................... (0.20) -- -- (0.07) (0.03)
Distributions from net realized capital gains ............ (0.43) -- -- (1.02) (5.07)
-------- -------- -------- -------- --------
Total distributions ...................................... (0.63) -- -- (1.09) (5.10)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD ................................. $ 38.99 $ 35.04 $ 32.14 $ 23.73 $ 28.89
======== ======== ======== ======== ========
TOTAL RETURN(1) ............................................... 13.13% 9.06% 35.44% (14.94)% (6.55)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) ...................... $735,037 $621,924 $523,308 $375,821 $427,215
Ratio of operating expenses to average net assets ........ 0.91% 0.94% 1.02% 1.05% 1.01%
Ratio of net investment income/(loss)
to average net assets ................................. 0.68% 0.17% 0.14% 0.07% 0.38%
Portfolio turnover rate .................................. 13% 12% 14% 16% 27%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2) ... 0.91% 0.94% 1.02% 1.05% 1.01%
WEST COAST EQUITY FUND CLASS B
- ---------------------- --------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $ 31.48 $ 29.14
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) ............................. (0.09) (0.24)(4)
Net realized and unrealized gain/(loss) on investments ... 3.88 2.58
-------- --------
Total from investment operations ......................... 3.79 2.34
-------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ..................... -- --
Distributions from net realized capital gains ............ (0.43) --
-------- --------
Total distributions ...................................... (0.43) --
-------- --------
NET ASSET VALUE, END OF PERIOD ................................. $ 34.84 $ 31.48
======== ========
TOTAL RETURN(1) ............................................... 12.09% 8.03%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) ...................... $167,531 $141,134
Ratio of operating expenses to average net assets ........ 1.85% 1.89%
Ratio of net investment income/(loss)
to average net assets ................................. (0.26)% (0.78)%
Portfolio turnover rate .................................. 13% 12%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2) ... 1.85% 1.89%
- ----------
(1) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total returns would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Amount represents less than $0.01 per share.
(6) Annualized.
See Notes to Financial Statements.
112
CLASS C
- ----------------------------------- --------------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- -------- -------- -------- ------ ------ ------ -------
$ 17.72 $ 21.67 $ 26.49 $22.22 $20.62 $17.73 $ 21.36
- -------- -------- -------- ------ ------ ------ -------
0.02(4) (0.04)(4) (0.13) 0.08(4) (0.00)(4)(5) 0.03(4) (0.01)(4)
3.00 (3.55) (3.52) 1.10 1.73 2.98 (3.62)
- -------- -------- -------- ------ ------ ------ -------
3.02 (3.59) (3.65) 1.18 1.73 3.01 (3.63)
- -------- -------- -------- ------ ------ ------ -------
-- (0.00)(5) -- (0.07) (0.13) (0.12) --
-- (0.36) (1.17) -- -- -- --
- -------- -------- -------- ------ ------ ------ -------
-- (0.36) (1.17) (0.07) (0.13) (0.12) --
- -------- -------- -------- ------ ------ ------ -------
$ 20.74 $ 17.72 $ 21.67 $23.33 $22.22 $20.62 $ 17.73
======== ======== ======== ====== ====== ====== =======
16.99% (16.94)% (14.20)% 5.30% 8.45% 17.08% (17.00)%
$115,457 $123,423 $186,247 $1,835 $1,537 $ 823 $ 264
1.96% 1.91% 1.82% 1.88% 1.84% 1.89% 1.83%(6)
0.09% (0.18)% (0.50)% 0.35% (0.00)% 0.16% (0.10)%(6)
17% 22% 35% 15% 6% 17% 22%
1.96% 1.91% 1.82% 1.88% 1.84% 1.89% 1.83%(6)
CLASS I
- ----------------------------------------------------------------
2005 2004 2003 2002 2001
- ---------- ---------- -------- -------- --------
$ 23.52 $ 21.68 $ 18.52 $ 22.39 $ 27.16
- ---------- ---------- -------- -------- --------
0.41(4) 0.30(4) 0.29(4) 0.24(4) 0.18
1.17 1.82 3.12 (3.70) (3.64)
- ---------- ---------- -------- -------- --------
1.58 2.12 3.41 (3.46) (3.46)
- ---------- ---------- -------- -------- --------
(0.35) (0.28) (0.25) (0.05) (0.14)
-- -- -- (0.36) (1.17)
- ---------- ---------- -------- -------- --------
(0.35) (0.28) (0.25) (0.41) (1.31)
- ---------- ---------- -------- -------- --------
$ 24.75 $ 23.52 $ 21.68 $ 18.52 $ 22.39
========== ========== ======== ======== ========
6.70% 9.85% 18.61% (15.84)% (13.12)%
$1,963,730 $1,394,883 $895,547 $671,191 $768,550
0.56% 0.57% 0.59% 0.60% 0.58%
1.67% 1.27% 1.46% 1.13% 0.74%
15% 6% 17% 22% 35%
0.56% 0.57% 0.59% 0.60% 0.58%
CLASS C
- ------------------------------------ ------------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- -------- -------- -------- ------- ------ ------ -------
$ 21.73 $ 26.71 $ 34.12 $ 31.56 $29.20 $21.74 $ 27.59
- -------- -------- -------- ------- ------ ------ -------
(0.20)(4) (0.23)(4) (0.15) (0.06) (0.21)(4) (0.18)(4) (0.14)(4)
7.61 (3.73) (2.19) 3.88 2.57 7.64 (5.71)
- -------- -------- -------- ------- ------ ------ -------
7.41 (3.96) (2.34) 3.82 2.36 7.46 (5.85)
- -------- -------- -------- ------- ------ ------ -------
-- (0.00)(5) -- (0.01) -- -- --
-- (1.02) (5.07) (0.43) -- -- --
- -------- -------- -------- ------- ------ ------ -------
-- (1.02) (5.07) (0.44) -- -- --
- -------- -------- -------- ------- ------ ------ -------
$ 29.14 $ 21.73 $ 26.71 $ 34.94 $31.56 $29.20 $ 21.74
======== ======== ======== ======= ====== ====== =======
34.10% (15.73)% (7.40)% 12.18% 8.12% 34.27% (21.20)%
$122,221 $102,208 $109,655 $13,613 $9,000 $3,593 $ 1,341
2.01% 2.00% 1.89% 1.78% 1.80% 1.90% 1.96%(6)
(0.85)% (0.88)% (0.50)% (0.19)% (0.69)% (0.74)% (0.84)%(6)
14% 16% 27% 13% 12% 14% 16%
2.01% 2.00% 1.89% 1.78% 1.80% 1.90% 1.96%(6)
CLASS I
- ----------------------------------------------------------
2005 2004 2003 2002 2001
- -------- -------- -------- -------- --------
$ 35.39 $ 32.39 $ 23.83 $ 29.00 $ 36.34
- -------- -------- -------- -------- --------
0.39 0.17(4) 0.13(4) 0.12(4) 0.20
4.37 2.87 8.43 (4.10) (2.34)
- -------- -------- -------- -------- --------
4.76 3.04 8.56 (3.98) (2.14)
- -------- -------- -------- -------- --------
(0.33) (0.04) -- (0.17) (0.13)
(0.43) -- -- (1.02) (5.07)
- -------- -------- -------- -------- --------
(0.76) (0.04) -- (1.19) (5.20)
- -------- -------- -------- -------- --------
$ 39.39 $ 35.39 $ 32.39 $ 23.83 $ 29.00
======== ======== ======== ======== ========
13.55% 9.39% 35.92% (14.65)% (6.22)%
$621,993 $515,464 $349,363 $195,029 $176,303
0.58% 0.61% 0.67% 0.70% 0.68%
1.01% 0.50% 0.49% 0.42% 0.71%
13% 12% 14% 16% 27%
0.58% 0.61% 0.67% 0.70% 0.68%
See Notes to Financial Statements.
113
Financial Highlights
For a Fund share outstanding throughout each period.
MID CAP STOCK FUND CLASS A CLASS B
- ------------------ --------------------------------------------------- ------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001 2005 2004
- ---------------------- ------- ------- ------- ------- ------ ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD............... $ 17.06 $ 15.34 $ 12.39 $ 13.50 $12.58 $ 16.33 $ 14.82
------- ------- ------- ------- ------ ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss)................. 0.24(4) 0.02(4) 0.01(4) (0.01)(4) (0.03)(4) 0.06(4) (0.14)(4)
Net realized and unrealized gain/(loss) on
investments............................... 2.56 1.75 2.94 (0.60) 1.00 2.44 1.69
------- ------- ------- ------- ------ ------- -------
Total from investment operations............. 2.80 1.77 2.95 (0.61) 0.97 2.50 1.55
------- ------- ------- ------- ------ ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income......... (0.03) (0.01) -- -- -- -- --
Distributions from net realized capital
gains..................................... (0.60) (0.04) -- (0.50) (0.05) (0.60) (0.04)
------- ------- ------- ------- ------ ------- -------
Total distributions.......................... (0.63) (0.05) -- (0.50) (0.05) (0.60) (0.04)
------- ------- ------- ------- ------ ------- -------
NET ASSET VALUE, END OF PERIOD..................... $ 19.23 $ 17.06 $ 15.34 $ 12.39 $13.50 $ 18.23 $ 16.33
======= ======= ======= ======= ====== ======= =======
TOTAL RETURN(1).................................... 16.75% 11.57% 23.81% (4.86)% 7.71% 15.63% 10.54%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s).......... $93,180 $59,491 $38,676 $28,248 $6,165 $24,218 $19,958
Ratio of operating expenses to average net
assets.................................... 1.12% 1.14% 1.16% 1.25% 1.36% 2.11% 2.12%
Ratio of net investment income/(loss)
to average net assets..................... 1.32% 0.12% 0.07% (0.10)% (0.25)% 0.33% (0.86)%
Portfolio turnover rate...................... 28% 23% 28% 27% 33% 28% 23%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2)............... 1.12% 1.14% 1.16% 1.25% 1.36% 2.11% 2.12%
GROWTH FUND CLASS A CLASS B
- ----------- --------------------------------------------------------- ------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001 2005 2004
- ---------------------- -------- -------- --------- ------- -------- ------- --------
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 14.44 $ 13.71 $ 11.47 $ 15.23 $ 32.78 $ 13.03 $ 12.49
-------- -------- -------- ------- -------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss)....... 0.01 (0.06)(4) (0.08)(4) (0.10)(4) (0.09)(4) (0.14) (0.17)(4)
Net realized and unrealized gain/
(loss) on investments........... 1.37 0.79 2.32 (3.66) (13.13) 1.26 0.71
-------- -------- -------- ------- -------- ------- --------
Total from investment operations... 1.38 0.73 2.24 (3.76) (13.22) 1.12 0.54
-------- -------- -------- ------- -------- ------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income.......................... (0.05) -- -- -- (0.20) (0.03) --
Distributions from net realized
capital gains................... -- -- -- -- (4.13) -- --
-------- -------- -------- ------- -------- ------- --------
Total distributions................ (0.05) -- -- -- (4.33) (0.03) --
-------- -------- -------- ------- -------- ------- --------
NET ASSET VALUE, END OF PERIOD........... $ 15.77 $ 14.44 $ 13.71 $ 11.47 $ 15.23 $ 14.12 $ 13.03
======== ======== ======== ======= ======== ======= ========
TOTAL RETURN(1).......................... 9.59% 5.32% 19.53% (24.69)% (45.77)% 8.55% 4.40%
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period
(in 000s)....................... $127,677 $124,755 $114,757 $94,848 $151,893 $96,044 $110,794
Ratio of operating expenses to
average net assets.............. 1.41% 1.44% 1.62% 1.69% 1.52% 2.36% 2.35%
Ratio of net investment income/
(loss) to average net assets.... 0.06% (0.43)% (0.66)% (0.74)% (0.43)% (0.89)% (1.34)%
Portfolio turnover rate............ 78% 56% 71% 170% 99% 78% 56%
Ratio of operating expenses to
average net assets without fee
waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2)..... 1.41% 1.44% 1.62% 1.69% 1.52% 2.36% 2.35%
- ----------
(1) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total returns would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Annualized.
(6) Amount represents less than $0.01 per share.
See Notes to Financial Statements.
114
CLASS C
- ------------------------------- ---------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- ------- ------- ------- ------ ------ ------ -------
$ 12.09 $ 13.31 $ 12.51 $16.36 $14.83 $12.10 $ 13.60
- ------- ------- ------- ------ ------ ------ -------
(0.13)(4) (0.15)(4) (0.15)(4) 0.08(4) (0.13)(4) (0.12)(4) (0.10)(4)
2.86 (0.57) 1.00 2.44 1.70 2.85 (1.40)
- ------- ------- ------- ------ ------ ------ -------
2.73 (0.72) 0.85 2.52 1.57 2.73 (1.50)
- ------- ------- ------- ------ ------ ------ -------
-- -- -- -- -- -- --
-- (0.50) (0.05) (0.60) (0.04) -- --
- ------- ------- ------- ------ ------ ------ -------
-- (0.50) (0.05) (0.60) (0.04) -- --
- ------- ------- ------- ------ ------ ------ -------
$ 14.82 $ 12.09 $ 13.31 $18.28 $16.36 $14.83 $ 12.10
======= ======= ======= ====== ====== ====== =======
22.50% (5.79)% 6.79% 15.73% 10.60% 22.56% (11.03)%
$17,405 $13,229 $10,271 $4,303 $1,769 $ 550 $ 55
2.24% 2.26% 2.17% 1.99% 2.04% 2.15% 2.24%(5)
(1.01)% (1.11)% (1.06)% 0.45% (0.79)% (0.92)% (1.09)%(5)
28% 27% 33% 28% 23% 28% 27%
2.24% 2.26% 2.17% 1.99% 2.04% 2.15% 2.24%(5)
CLASS I
- --------------------------------------------------------
2005 2004 2003 2002 2001
- -------- -------- -------- -------- --------
$ 17.26 $ 15.50 $ 12.51 $ 13.59 $ 12.62
- -------- -------- -------- -------- --------
0.30(4) 0.08(4) 0.06(4) 0.04(4) 0.04(4)
2.59 1.78 2.97 (0.60) 1.00
- -------- -------- -------- -------- --------
2.89 1.86 3.03 (0.56) 1.04
- -------- -------- -------- -------- --------
(0.08) (0.06) (0.04) (0.02) (0.02)
(0.60) (0.04) -- (0.50) (0.05)
- -------- -------- -------- -------- --------
(0.68) (0.10) (0.04) (0.52) (0.07)
- -------- -------- -------- -------- --------
$ 19.47 $ 17.26 $ 15.50 $ 12.51 $ 13.59
======== ======== ======== ======== ========
17.11% 12.02% 24.27% (4.44)% 8.29%
$766,698 $616,052 $369,772 $231,409 $220,052
0.80% 0.80% 0.81% 0.83% 0.81%
1.64% 0.45% 0.42% 0.32% 0.30%
28% 23% 28% 27% 33%
0.80% 0.80% 0.81% 0.83% 0.81%
CLASS C
- ---------------------------------- --------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- -------- -------- -------- ------ ------ ------ -------
$ 10.55 $ 14.13 $ 30.78 $13.13 $12.55 $10.56 $ 13.48
(0.18)(4) (0.21)(4) (0.24)(4) (0.11) (0.15)(4) (0.14)(4) (0.11)(4)
2.12 (3.37) (12.24) 1.27 0.73 2.13 (2.81)
- -------- -------- -------- ------ ------ ------ -------
1.94 (3.58) (12.48) 1.16 0.58 1.99 (2.92)
- -------- -------- -------- ------ ------ ------ -------
-- -- (0.04) (0.04) -- -- --
-- -- (4.13) -- -- -- --
- -------- -------- -------- ------ ------ ------ -------
-- -- (4.17) (0.04) -- -- --
- -------- -------- -------- ------ ------ ------ -------
$ 12.49 $ 10.55 $ 14.13 $14.25 $13.13 $12.55 $ 10.56
======== ======== ======== ====== ====== ====== =======
18.39% (25.34)% (46.19)% 8.85% 4.62% 18.85% (21.66)%
$129,239 $128,007 $220,108 $2,158 $1,981 $ 565 $ 199
2.54% 2.54% 2.31% 2.13% 2.14% 2.19% 2.38%(5)
(1.58)% (1.59)% (1.22)% (0.66)% (1.13)% (1.23)% (1.43)%(5)
71% 170% 99% 78% 56% 71% 170%
2.54% 2.54% 2.31% 2.13% 2.14% 2.19% 2.38%(5)
CLASS I
- ---------------------------------------------------------------
2005 2004 2003 2002 2001
- ---------- ---------- -------- -------- --------
$ 14.96 $ 14.13 $ 11.74 $ 15.48 $ 33.23
0.10 0.02(4) 0.00(4)(6) (0.01)(4) 0.02(4)
1.44 0.81 2.39 (3.73) (13.31)
- ---------- ---------- -------- -------- --------
1.54 0.83 2.39 (3.74) (13.29)
- ---------- ---------- -------- -------- --------
(0.07) -- -- -- (0.33)
-- -- -- -- (4.13)
- ---------- ---------- -------- -------- --------
(0.07) -- -- -- (4.46)
- ---------- ---------- -------- -------- --------
$ 16.43 $ 14.96 $ 14.13 $ 11.74 $ 15.48
========== ========== ======== ======== ========
10.30% 5.95% 20.27% (24.16)% (45.50)%
$1,506,501 $1,281,900 $664,334 $357,296 $203,646
0.83% 0.86% 0.92% 1.03% 1.00%
0.64% 0.15% 0.04% (0.08)% 0.09%
78% 56% 71% 170% 99%
0.83% 0.86% 0.92% 1.03% 1.00%
See Notes to Financial Statements.
115
Financial Highlights
For a Fund share outstanding throughout each period.
SMALL CAP VALUE FUND CLASS A CLASS B
- -------------------- ------------------- -------------------
YEARS ENDED OCTOBER 31 2005 2004(3) 2005 2004(3)
- ---------------------- ------- ------- ------ -------
NET ASSET VALUE, BEGINNING OF PERIOD............................. $ 10.81 $10.00 $10.74 $10.00
------- ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss)............................... 0.06(4) 0.05(4) (0.05)(4) (0.01)(4)
Net realized and unrealized gain on investments............ 0.91 0.76 0.92 0.75
------- ------ ------ ------
Total from investment operations........................... 0.97 0.81 0.87 0.74
------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income....................... (0.10) -- (0.06) --
Distributions from net realized capital gains.............. -- -- -- --
------- ------ ------ ------
Total distributions........................................ (0.10) -- (0.06) --
------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD................................... $ 11.68 $10.81 $11.55 $10.74
======= ====== ====== ======
TOTAL RETURN(1).................................................. 9.04% 8.10% 8.08% 7.40%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)........................ $14,302 $2,978 $2,955 $ 631
Ratio of operating expenses to average net assets.......... 1.29% 1.33%(6) 2.20% 2.23%(6)
Ratio of net investment income/(loss) to
average net assets...................................... 0.52% 0.77%(6) (0.39)% (0.13)%(6)
Portfolio turnover rate.................................... 54% 36% 54% 36%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)..... 1.29% 1.33%(6) 2.20% 2.23%(6)
SMALL CAP GROWTH FUND CLASS A
- --------------------- -----------------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- ------- ------- ------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD ................... $ 13.00 $ 13.42 $ 8.21 $ 13.60 $ 26.67
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .............................. (0.13)(4) (0.14)(4) (0.09)(4) (0.14)(4) (0.20)
Net realized and unrealized gain/(loss)
on investments ................................ 1.06 (0.28) 5.30 (4.28) (9.56)
------- ------- ------- ------- -------
Total from investment operations ................. 0.93 (0.42) 5.21 (4.42) (9.76)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. -- -- -- -- --
Distributions from net realized capital gains .... -- -- -- (0.97) (3.31)
------- ------- ------- ------- -------
Total distributions .............................. -- -- -- (0.97) (3.31)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD ......................... $ 13.93 $ 13.00 $ 13.42 $ 8.21 $ 13.60
======= ======= ======= ======= =======
TOTAL RETURN(1) ........................................ 7.15%(8) (3.13)% 63.46% (35.71)% (40.84)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) .............. $87,252 $92,919 $81,234 $42,984 $66,262
Ratio of operating expenses to average
net assets .................................... 1.51% 1.46% 1.64% 1.68% 1.52%
Ratio of net investment loss to average
net assets .................................... (1.00)% (1.01)% (0.86)% (1.20)% (1.03)%
Portfolio turnover rate .......................... 251% 53% 40% 21% 46%
Ratio of operating expenses to average net
assets without fee waivers, expenses reimbursed
and/or fees reduced by credits allowed by the
custodian(2) .................................. 1.51% 1.46% 1.64% 1.68% 1.52%
SMALL CAP GROWTH FUND CLASS B
- --------------------- -------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- ------ -------
NET ASSET VALUE, BEGINNING OF PERIOD ................... $11.46 $ 11.96
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .............................. (0.25)(4) (0.26)(4)
Net realized and unrealized gain/(loss)
on investments ................................ 0.93 (0.24)
------ -------
Total from investment operations ................. 0.68 (0.50)
------ -------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. -- --
Distributions from net realized capital gains .... -- --
------ -------
Total distributions .............................. -- --
------ -------
NET ASSET VALUE, END OF PERIOD ......................... $12.14 $ 11.46
====== =======
TOTAL RETURN(1) ........................................ 5.93%(8) (4.18)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s) .............. $9,859 $12,181
Ratio of operating expenses to average
net assets .................................... 2.65% 2.54%
Ratio of net investment loss to average
net assets .................................... (2.14)% (2.09)%
Portfolio turnover rate .......................... 251% 53%
Ratio of operating expenses to average net
assets without fee waivers, expenses reimbursed
and/or fees reduced by credits allowed by the
custodian(2) .................................. 2.65% 2.54%
- ----------
(1) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total returns would have
been lower if certain fees had not been waived and/or expenses reimbursed
by the investment advisor or if fees had not been reduced by credits
allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Small Cap Value Fund commenced operations on March 1, 2004.
(4) Per share numbers have been calculated using the average shares method.
(5) Amount represents less than $0.01 per share.
(6) Annualized.
(7) The Small Cap Growth Fund commenced selling Class C shares on March 1,
2002.
(8) In 2005, 0.46%, 0.52%, 0.52%, and 0.45% of the Small Cap Growth Fund's
total return for Class A, Class B, Class C and Class I shares,
respectively, consists of reimbursements by the Advisor. Excluding the
reimbursements, the total return would have been 6.69%, 5.47%, 5.69% and
7.32% for Class A, Class B, Class C and Class I shares, respectively. (See
Note 3 in Notes to Financial Statements.)
See Notes to Financial Statements.
116
CLASS C CLASS I
- -------------------- ---------------------
2005 2004(3) 2005 2004(3)
- ------ -------- -------- --------
$10.76 $10.00 $ 10.83 $ 10.00
- ------ ------ -------- --------
(0.03)(4) (0.00)(4)(5) 0.11(4) 0.08(4)
0.90 0.76 0.91 0.75
- ------ ------ -------- --------
0.87 0.76 1.02 0.83
- ------ ------ -------- --------
(0.05) -- (0.11) --
-- -- -- --
- ------ ------ -------- --------
(0.05) -- (0.11) --
- ------ ------ -------- --------
$11.58 $10.76 $ 11.74 $ 10.83
====== ====== ======== ========
8.08% 7.60% 9.42% 8.30%
$2,414 $ 414 $319,631 $268,310
2.10% 2.13%(6) 0.90% 0.95%(6)
(0.29)% (0.03)%(6) 0.91% 1.15%(6)
54% 36% 54% 36%
2.10% 2.13%(6) 0.90% 0.95%(6)
CLASS C
-------------------------------------------
2003 2002 2001 2005 2004 2003 2002(7)
- ------- ------- ------- ------ ------ ------ -------
$ 7.40 $ 12.46 $ 24.93 $11.59 $12.06 $ 7.42 $ 11.51
- ------- ------- ------- ------ ------ ------ -------
(0.18)(4) (0.23)(4) (0.32) (0.22)(4) (0.23)(4) (0.14)(4) (0.10)(4)
4.74 (3.86) (8.84) 0.94 (0.24) 4.78 (3.99)
- ------- ------- ------- ------ ------ ------ -------
4.56 (4.09) (9.16) 0.72 (0.47) 4.64 (4.09)
- ------- ------- ------- ------ ------ ------ -------
-- -- -- -- -- -- --
-- (0.97) (3.31) -- -- -- --
- ------- ------- ------- ------ ------ ------ -------
-- (0.97) (3.31) -- -- -- --
- ------- ------- ------- ------ ------ ------ -------
$ 11.96 $ 7.40 $ 12.46 $12.31 $11.59 $12.06 $ 7.42
======= ======= ======= ====== ====== ====== =======
61.62% (36.36)% (41.35)% 6.21%(8) (3.90)% 62.53% (35.53)%
$18,037 $14,238 $29,346 $ 954 $ 871 $ 404 $ 69
2.81% 2.64% 2.42% 2.33% 2.28% 2.28% 2.25%(6)
(2.03)% (2.16)% (1.93)% (1.82)% (1.83)% (1.50)% (1.77)%(6)
40% 21% 46% 251% 53% 40% 21%
2.81% 2.64% 2.42% 2.33% 2.28% 2.28% 2.25%(6)
CLASS I
- ----------------------------------------------------------------
2005 2004 2003 2002 2001
- -------- -------- -------- -------- --------
$ 13.39 $ 13.76 $ 8.35 $ 13.74 $ 26.77
- -------- -------- -------- -------- --------
(0.07)(4) (0.07)(4) (0.02)(4) (0.06)(4) (0.06)
1.11 (0.30) 5.43 (4.36) (9.66)
- -------- -------- -------- -------- --------
1.04 (0.37) 5.41 (4.42) (9.72)
- -------- -------- -------- -------- --------
-- -- -- -- --
-- -- -- (0.97) (3.31)
- -------- -------- -------- -------- --------
-- -- -- (0.97) (3.31)
- -------- -------- -------- -------- --------
$ 14.43 $ 13.39 $ 13.76 $ 8.35 $ 13.74
======== ======== ======== ======== ========
7.77%(8) (2.62)% 64.67% (35.32)% (40.49)%
$239,308 $237,582 $337,271 $123,620 $134,462
0.98% 0.95% 0.96% 1.00% 0.97%
(0.47)% (0.50)% (0.18)% (0.52)% (0.48)%
251% 53% 40% 21% 46%
0.98% 0.95% 0.96% 1.00% 0.97%
See Notes to Financial Statements.
117
Financial Highlights
For a Fund share outstanding throughout each period.
INTERNATIONAL GROWTH FUND CLASS A
- ------------------------- --------------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- ------- ------- ------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 9.21 $ 8.38 $ 6.76 $ 7.61 $ 10.97
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss)............................. 0.10(4) 0.06(4) 0.03(4) (0.02)(4) (0.02)
Net realized and unrealized gain/(loss) on investments... 1.52 0.85 1.63 (0.75) (2.67)
------- ------- ------- ------- -------
Total from investment operations......................... 1.62 0.91 1.66 (0.77) (2.69)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.09) (0.08) (0.04) (0.08) (0.01)
Distributions from net realized capital gains............ -- -- -- -- (0.66)
------- ------- ------- ------- -------
Total distributions...................................... (0.09) (0.08) (0.04) (0.08) (0.67)
------- ------- ------- ------- -------
Redemption Fees.......................................... -- 0.00(5) 0.00(5) 0.00(5) --
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD................................. $ 10.74 $ 9.21 $ 8.38 $ 6.76 $ 7.61
======= ======= ======= ======= =======
TOTAL RETURN(1)................................................ 17.60% 10.89% 24.75% (10.36)% (25.99)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $55,628 $38,864 $26,429 $21,317 $16,636
Ratio of operating expenses to average net assets........ 1.39% 1.49% 1.70% 1.93% 1.93%
Ratio of net investment income/(loss)
to average net assets................................. 1.02% 0.68% 0.47% (0.20)% (0.25)%
Portfolio turnover rate.................................. 24% 20% 19% 25% 27%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.39% 1.49% 1.70% 1.93% 1.93%
INTERNATIONAL GROWTH FUND CLASS B
- ------------------------- -------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- ------ -------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 8.80 $ 8.03
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss)............................. (0.01)(4) (0.04)(4)
Net realized and unrealized gain/(loss) on investments... 1.45 0.81
------ ------
Total from investment operations......................... 1.44 0.77
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... -- --
Distributions from net realized capital gains............ -- --
------ ------
Total distributions...................................... -- --
------ ------
Redemption Fees.......................................... -- 0.00(5)
------ ------
NET ASSET VALUE, END OF PERIOD................................. $10.24 $ 8.80
====== ======
TOTAL RETURN(1)................................................ 16.36% 9.59%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $4,822 $3,630
Ratio of operating expenses to average net assets........ 2.51% 2.62%
Ratio of net investment income/(loss)
to average net assets................................. (0.10)% (0.45)%
Portfolio turnover rate.................................. 24% 20%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 2.51% 2.62%
SHORT TERM INCOME FUND CLASS A
- ---------------------- -----------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- ------- ------- ------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 2.38 $ 2.39 $ 2.34 $ 2.41 $ 2.29
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.08 0.08 0.09 0.12 0.13
Net realized and unrealized gain/(loss) on investments... (0.07) (0.01) 0.06 (0.07) 0.12
------- ------- ------- ------- -------
Total from investment operations......................... 0.01 0.07 0.15 0.05 0.25
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.08) (0.08) (0.10) (0.12) (0.13)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD................................. $ 2.31 $ 2.38 $ 2.39 $ 2.34 $ 2.41
======= ======= ======= ======= =======
TOTAL RETURN(1)................................................ 0.49% 2.87% 6.28% 2.18% 11.31%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $36,287 $54,082 $71,920 $28,106 $18,929
Ratio of operating expenses to average net assets........ 0.81% 0.83% 0.84% 0.96% 0.83%
Ratio of net investment income to average net assets..... 3.36% 3.23% 3.58% 5.03% 5.63%
Portfolio turnover rate.................................. 13% 14% 33% 28% 27%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 0.93% 0.92% 0.97% 1.09% 1.15%
SHORT TERM INCOME FUND CLASS B
- ---------------------- ------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 2.38 $ 2.39
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.06 0.06
Net realized and unrealized gain/(loss) on investments... (0.07) (0.01)
------- -------
Total from investment operations......................... (0.01) 0.05
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.06) (0.06)
------- -------
NET ASSET VALUE, END OF PERIOD................................. $ 2.31 $ 2.38
======= =======
TOTAL RETURN(1)................................................ (0.26)% 2.11%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $23,617 $31,812
Ratio of operating expenses to average net assets........ 1.56% 1.58%
Ratio of net investment income to average net assets..... 2.61% 2.48%
Portfolio turnover rate.................................. 13% 14%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.70% 1.70%
- ----------
(1) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total returns would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Amount represents less than $0.01 per share.
(6) Annualized.
See Notes to Financial Statements.
118
CLASS C
------------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- ------ ------- ------- ------ ------ ------ -------
$ 6.51 $ 7.35 $ 10.70 $ 8.75 $ 8.02 $ 6.53 $ 7.55
- ------ ------- ------- ------ ------ ------ -------
(0.05)(4) (0.09)(4) (0.10) 0.01(4) (0.02)(4) (0.03)(4) (0.05)(4)
1.57 (0.73) (2.58) 1.44 0.81 1.56 (0.96)
- ------ ------- ------- ------ ------ ------ -------
1.52 (0.82) (2.68) 1.45 0.79 1.53 (1.01)
- ------ ------- ------- ------ ------ ------ -------
-- (0.02) (0.01) (0.06) (0.06) (0.04) (0.01)
-- -- (0.66) -- -- -- --
- ------ ------- ------- ------ ------ ------ -------
-- (0.02) (0.67) (0.06) (0.06) (0.04) (0.01)
- ------ ------- ------- ------ ------ ------ -------
0.00(5) 0.00(5) -- -- 0.00(5) 0.00(5) 0.00(5)
- ------ ------- ------- ------ ------ ------ -------
$ 8.03 $ 6.51 $ 7.35 $10.14 $ 8.75 $ 8.02 $ 6.53
====== ======= ======= ====== ====== ====== =======
23.35% (11.23)% (26.68)% 16.60% 9.87% 23.57% (13.34)%
$4,020 $ 4,732 $ 7,172 $1,169 $ 445 $ 91 $ 53
2.91% 2.91% 2.74% 2.29% 2.36% 2.64% 2.67%(6)
(0.74)% (1.18)% (1.06)% 0.12% (0.19)% (0.47)% (0.94)%(6)
19% 25% 27% 24% 20% 19% 25%
2.91% 2.91% 2.74% 2.29% 2.36% 2.64% 2.67%(6)
CLASS I
- ------------------------------------------------------------
2005 2004 2003 2002 2001
- -------- -------- -------- -------- --------
$ 9.26 $ 8.43 $ 6.80 $ 7.69 $ 11.00
- -------- -------- -------- -------- --------
0.15(4) 0.11(4) 0.08(4) 0.04(4) 0.04
1.53 0.84 1.64 (0.75) (2.68)
- -------- -------- -------- -------- --------
1.68 0.95 1.72 (0.71) (2.64)
- -------- -------- -------- -------- --------
(0.13) (0.12) (0.09) (0.18) (0.01)
-- -- -- -- (0.66)
- -------- -------- -------- -------- --------
(0.13) (0.12) (0.09) (0.18) (0.67)
- -------- -------- -------- -------- --------
-- 0.00(5) 0.00(5) 0.00(5) --
- -------- -------- -------- -------- --------
$ 10.81 $ 9.26 $ 8.43 $ 6.80 $ 7.69
======== ======== ======== ======== ========
18.19% 11.38% 25.56% (9.61)% (25.53)%
$780,519 $539,471 $317,493 $185,137 $124,886
0.95% 0.99% 1.07% 1.19% 1.18%
1.46% 1.18% 1.10% 0.54% 0.50%
24% 20% 19% 25% 27%
0.95% 0.99% 1.07% 1.19% 1.18%
CLASS C
--------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- ------- ------- ------ ------- ------- ------- -------
$ 2.34 $ 2.41 $ 2.29 $ 2.38 $ 2.39 $ 2.34 $ 2.37
- ------- ------- ------ ------- ------- ------- ------
0.07 0.10 0.12 0.06 0.06 0.07 0.07
0.06 (0.07) 0.12 (0.07) (0.01) 0.06 (0.03)
- ------- ------- ------ ------- ------- ------- ------
0.13 0.03 0.24 (0.01) 0.05 0.13 0.04
- ------- ------- ------ ------- ------- ------- ------
(0.08) (0.10) (0.12) (0.06) (0.06) (0.08) (0.07)
- ------- ------- ------ ------- ------- ------- ------
$ 2.39 $ 2.34 $ 2.41 $ 2.31 $ 2.38 $ 2.39 $ 2.34
======= ======= ====== ======= ======= ======= ======
5.49% 1.41% 10.52% (0.26)% 2.10% 5.48% 1.61%
$44,310 $24,621 $6,595 $13,477 $18,970 $17,843 $5,743
1.59% 1.71% 1.54% 1.56% 1.58% 1.59% 1.68%(6)
2.83% 4.28% 4.92% 2.61% 2.48% 2.83% 4.31%(6)
33% 28% 27% 13% 14% 33% 28%
1.70% 1.77% 1.86% 1.65% 1.66% 1.65% 1.68%(6)
CLASS I
- ---------------------------------------------------
2005 2004 2003 2002 2001
- -------- -------- -------- ------- --------
$ 2.38 $ 2.39 $ 2.34 $ 2.41 $ 2.29
- -------- -------- -------- ------- --------
0.09 0.08 0.09 0.13 0.15
(0.07) (0.01) 0.06 (0.07) 0.12
- -------- -------- -------- ------- --------
0.02 0.07 0.15 0.06 0.27
- -------- -------- -------- ------- --------
(0.09) (0.08) (0.10) (0.13) (0.15)
- -------- -------- -------- ------- --------
$ 2.31 $ 2.38 $ 2.39 $ 2.34 $ 2.41
======== ======== ======== ======= ========
0.74% 3.13% 6.55% 2.53% 11.93%
$195,607 $168,947 $129,443 $89,210 $110,710
0.56% 0.58% 0.59% 0.61% 0.27%
3.61% 3.48% 3.83% 5.38% 6.19%
13% 14% 33% 28% 27%
0.56% 0.58% 0.59% 0.61% 0.59%
See Notes to Financial Statements.
119
Financial Highlights
For a Fund share outstanding throughout each period.
U.S. GOVERNMENT SECURITIES FUND CLASS A
- ------------------------------- ----------------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 10.88 $ 10.89 $ 11.19 $ 11.20 $ 10.55
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.41(4) 0.40(4) 0.40(4) 0.54 0.62
Net realized and unrealized gain/(loss) on investments... (0.30) 0.05 (0.19) 0.04 0.65
-------- -------- -------- -------- --------
Total from investment operations......................... 0.11 0.45 0.21 0.58 1.27
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.46) (0.46) (0.51) (0.59) (0.62)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 10.53 $ 10.88 $ 10.89 $ 11.19 $ 11.20
======== ======== ======== ======== ========
TOTAL RETURN(1)................................................ 1.02% 4.26% 1.94% 5.37% 12.39%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $120,615 $134,896 $176,859 $196,222 $174,047
Ratio of operating expenses to average net assets........ 0.92% 0.93% 0.93% 0.96% 0.95%
Ratio of net investment income to average net assets..... 3.84% 3.64% 3.59% 4.91% 5.71%
Portfolio turnover rate.................................. 34% 30% 62% 48% 30%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 0.92% 0.93% 0.93% 0.96% 0.95%
U.S. GOVERNMENT SECURITIES FUND CLASS B
- ------------------------------- ---------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 10.87 $ 10.88
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.33(4) 0.32(4)
Net realized and unrealized gain/(loss) on investments... (0.30) 0.05
-------- --------
Total from investment operations......................... 0.03 0.37
-------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.38) (0.38)
-------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 10.52 $ 10.87
======== ========
TOTAL RETURN(1)................................................ 0.28% 3.50%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $122,147 $157,900
Ratio of operating expenses to average net assets........ 1.65% 1.65%
Ratio of net investment income to average net assets..... 3.11% 2.92%
Portfolio turnover rate.................................. 34% 30%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.65% 1.65%
INCOME FUND CLASS A
- ----------- ----------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 9.46 $ 9.35 $ 9.02 $ 9.32 $ 8.90
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.45 0.46 0.51 0.60 0.62
Net realized and unrealized gain/(loss) on investments... (0.38) 0.15 0.38 (0.28) 0.43
-------- -------- -------- -------- --------
Total from investment operations......................... 0.07 0.61 0.89 0.32 1.05
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.48) (0.50) (0.56) (0.62) (0.63)
Distributions from net realized capital gains............ -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions...................................... (0.48) (0.50) (0.56) (0.62) (0.63)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 9.05 $ 9.46 $ 9.35 $ 9.02 $ 9.32
======== ======== ======== ======== ========
TOTAL RETURN(1)................................................ 0.75% 6.68% 10.10% 3.63% 12.21%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $147,521 $147,695 $153,654 $130,512 $120,508
Ratio of operating expenses to average net assets........ 0.91% 0.92% 0.94% 0.97% 0.97%
Ratio of net investment income to average net assets..... 4.83% 4.90% 5.42% 6.61% 6.86%
Portfolio turnover rate.................................. 20% 24% 33% 20% 35%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 0.91% 0.92% 0.94% 0.97% 0.97%
INCOME FUND CLASS B
- ----------- -------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 9.49 $ 9.37
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.38 0.39
Net realized and unrealized gain/(loss) on investments... (0.38) 0.16
-------- --------
Total from investment operations......................... 0.00 0.55
-------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.41) (0.43)
Distributions from net realized capital gains............ -- --
-------- --------
Total distributions...................................... (0.41) (0.43)
-------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 9.08 $ 9.49
======== ========
TOTAL RETURN(1)................................................ 0.02% 6.03%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $128,067 $152,065
Ratio of operating expenses to average net assets........ 1.65% 1.65%
Ratio of net investment income to average net assets..... 4.09% 4.17%
Portfolio turnover rate.................................. 20% 24%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.65% 1.65%
- ----------
(1) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges.
The total returns would have been lower if certain fees had not been waived
and/or expenses reimbursed by the investment advisor or if fees had not
been reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Annualized.
See Notes to Financial Statements.
120
CLASS C
- -------------------------------- -----------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- -------- -------- -------- ------ ------ ------- -------
$ 11.18 $ 11.19 $ 10.54 $10.86 $10.87 $ 11.18 $ 11.00
- -------- -------- -------- ------ ------ ------- -------
0.32(4) 0.46 0.54 0.33(4) 0.32(4) 0.32(4) 0.33
(0.19) 0.04 0.65 (0.30) 0.05 (0.20) 0.18
- -------- -------- -------- ------ ------ ------- -------
0.13 0.50 1.19 0.03 0.37 0.12 0.51
- -------- -------- -------- ------ ------ ------- -------
(0.43) (0.51) (0.54) (0.38) (0.38) (0.43) (0.33)
- -------- -------- -------- ------ ------ ------- -------
$ 10.88 $ 11.18 $ 11.19 $10.51 $10.86 $ 10.87 $ 11.18
======== ======== ======== ====== ====== ======= =======
1.20% 4.62% 11.59% 0.29% 3.53% 1.12% 4.74%
$251,153 $271,440 $128,155 $6,775 $6,279 $13,354 $11,634
1.66% 1.68% 1.67% 1.64% 1.64% 1.64% 1.63%(5)
2.86% 4.19% 4.99% 3.12% 2.93% 2.88% 4.24%(5)
62% 48% 30% 34% 30% 62% 48%
1.66% 1.68% 1.67% 1.64% 1.64% 1.64% 1.63%(5)
CLASS I
- --------------------------------------------------------------
2005 2004 2003 2002 2001
- ---------- ---------- -------- -------- --------
$ 10.88 $ 10.89 $ 11.19 $ 11.20 $ 10.55
- ---------- ---------- -------- -------- --------
0.45(4) 0.44(4) 0.44(4) 0.58 0.66
(0.30) 0.05 (0.19) 0.04 0.65
- ---------- ---------- -------- -------- --------
0.15 0.49 0.25 0.62 1.31
- ---------- ---------- -------- -------- --------
(0.50) (0.50) (0.55) (0.63) (0.66)
- ---------- ---------- -------- -------- --------
$ 10.53 $ 10.88 $ 10.89 $ 11.19 $ 11.20
========== ========== ======== ======== ========
1.41% 4.65% 2.32% 5.77% 12.81%
$1,642,617 $1,260,104 $658,676 $365,912 $301,656
0.54% 0.55% 0.57% 0.58% 0.57%
4.22% 4.02% 3.95% 5.29% 6.09%
34% 30% 62% 48% 30%
0.54% 0.55% 0.57% 0.58% 0.57%
CLASS C
- ----------------------------- -------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- -------- -------- ------- ------- ------- ------- -------
$ 9.04 $ 9.35 $ 8.92 $ 9.49 $ 9.37 $ 9.04 $ 9.21
- -------- -------- ------- ------- ------- ------- ------
0.44 0.54 0.56 0.38 0.39 0.45 0.37
0.38 (0.29) 0.44 (0.38) 0.16 0.38 (0.17)
- -------- -------- ------- ------- ------- ------- ------
0.82 0.25 1.00 0.00 0.55 0.83 0.20
- -------- -------- ------- ------- ------- ------- ------
(0.49) (0.56) (0.57) (0.41) (0.43) (0.50) (0.37)
-- -- -- -- -- -- --
- -------- -------- ------- ------- ------- ------- ------
(0.49) (0.56) (0.57) (0.41) (0.43) (0.50) (0.37)
- -------- -------- ------- ------- ------- ------- ------
$ 9.37 $ 9.04 $ 9.35 $ 9.08 $ 9.49 $ 9.37 $ 9.04
======== ======== ======= ======= ======= ======= ======
9.31% 2.79% 11.52% 0.01% 6.02% 9.33% 2.25%
$194,396 $142,186 $72,472 $10,761 $11,580 $15,274 $7,710
1.65% 1.68% 1.69% 1.66% 1.65% 1.63% 1.62%(5)
4.71% 5.90% 6.14% 4.08% 4.17% 4.73% 5.96%(5)
33% 20% 35% 20% 24% 33% 20%
1.65% 1.68% 1.69% 1.66% 1.65% 1.63% 1.62%(5)
CLASS I
- ----------------------------------------------------
2005 2004 2003 2002 2001
- -------- -------- -------- -------- --------
$ 9.48 $ 9.36 $ 9.03 $ 9.34 $ 8.91
- -------- -------- -------- -------- --------
0.49 0.50 0.55 0.64 0.66
(0.38) 0.16 0.38 (0.29) 0.44
- -------- -------- -------- -------- --------
0.11 0.66 0.93 0.35 1.10
- -------- -------- -------- -------- --------
(0.52) (0.54) (0.60) (0.66) (0.67)
-- -- -- -- --
- -------- -------- -------- -------- --------
(0.52) (0.54) (0.60) (0.66) (0.67)
- -------- -------- -------- -------- --------
$ 9.07 $ 9.48 $ 9.36 $ 9.03 $ 9.34
======== ======== ======== ======== ========
1.13% 7.18% 10.51% 3.94% 12.78%
$903,915 $834,726 $679,139 $487,376 $387,998
0.54% 0.55% 0.56% 0.56% 0.56%
5.20% 5.27% 5.80% 7.02% 7.27%
20% 24% 33% 20% 35%
0.54% 0.55% 0.56% 0.56% 0.56%
See Notes to Financial Statements.
121
Financial Highlights
For a Fund share outstanding throughout each period.
HIGH YIELD FUND CLASS A
- --------------- --------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- -------- ------- ------- ------- ------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 8.28 $ 7.88 $ 6.63 $ 7.44 $ 8.50
-------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.56 0.58 0.61(4) 0.71 0.84
Net realized and unrealized gain/(loss) on investments... (0.03) 0.43 1.31 (0.72) (1.00)
-------- ------- ------- ------- ------
Total from investment operations......................... 0.53 1.01 1.92 (0.01) (0.16)
-------- ------- ------- ------- ------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.58) (0.61) (0.67) (0.80) (0.90)
Distributions from net realized capital gains............ -- -- -- -- --
-------- ------- ------- ------- ------
Total distributions...................................... (0.58) (0.61) (0.67) (0.80) (0.90)
-------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD................................. $ 8.23 $ 8.28 $ 7.88 $ 6.63 $ 7.44
======== ======= ======= ======= ======
TOTAL RETURN(1)................................................ 6.56% 13.23% 30.13% (0.48)% (1.97)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $111,164 $85,190 $48,618 $13,563 $9,035
Ratio of operating expenses to average net assets........ 0.92% 0.93% 0.97% 1.03% 1.08%
Ratio of net investment income to average net assets..... 6.76% 7.11% 8.24% 9.72% 10.47%
Portfolio turnover rate.................................. 94% 82% 61% 60% 27%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 0.92% 0.93% 0.97% 1.03% 1.09%
HIGH YIELD FUND CLASS B
- --------------- -----------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 8.32 $ 7.91
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.50 0.52
Net realized and unrealized gain/(loss) on investments... (0.03) 0.44
------- -------
Total from investment operations......................... 0.47 0.96
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.52) (0.55)
Distributions from net realized capital gains............ -- --
------- -------
Total distributions...................................... (0.52) (0.55)
------- -------
NET ASSET VALUE, END OF PERIOD................................. $ 8.27 $ 8.32
======= =======
TOTAL RETURN(1)................................................ 5.75% 12.50%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $73,667 $80,036
Ratio of operating expenses to average net assets........ 1.68% 1.69%
Ratio of net investment income to average net assets..... 6.00% 6.35%
Portfolio turnover rate.................................. 94% 82%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.68% 1.69%
TAX-EXEMPT BOND FUND CLASS A
- -------------------- ----------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 7.95 $ 7.96 $ 7.95 $ 7.93 $ 7.55
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.33 0.33 0.34 0.35 0.37
Net realized and unrealized gain/(loss) on investments... (0.16) 0.08 0.08 0.03 0.38
-------- -------- -------- -------- --------
Total from investment operations......................... 0.17 0.41 0.42 0.38 0.75
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.33) (0.33) (0.34) (0.35) (0.37)
Distributions from net realized capital gains............ (0.09) (0.09) (0.07) (0.01) --
-------- -------- -------- -------- --------
Total distributions...................................... (0.42) (0.42) (0.41) (0.36) (0.37)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 7.70 $ 7.95 $ 7.96 $ 7.95 $ 7.93
======== ======== ======== ======== ========
TOTAL RETURN(1)................................................ 2.19% 5.35% 5.31% 5.02% 10.16%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $175,146 $184,711 $207,433 $213,673 $219,883
Ratio of operating expenses to average net assets........ 0.87% 0.90% 0.88% 0.90% 0.89%
Ratio of net investment income to average net assets..... 4.22% 4.22% 4.20% 4.49% 4.75%
Portfolio turnover rate.................................. 28% 25% 47% 46% 44%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 0.87% 0.90% 0.88% 0.90% 0.89%
TAX-EXEMPT BOND FUND CLASS B
- -------------------- -----------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 7.95 $ 7.96
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.27 0.27
Net realized and unrealized gain/(loss) on investments... (0.16) 0.08
------- -------
Total from investment operations......................... 0.11 0.35
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.27) (0.27)
Distributions from net realized capital gains............ (0.09) (0.09)
------- -------
Total distributions...................................... (0.36) (0.36)
------- -------
NET ASSET VALUE, END OF PERIOD................................. $ 7.70 $ 7.95
======= =======
TOTAL RETURN(1)................................................ 1.43% 4.57%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $30,073 $35,433
Ratio of operating expenses to average net assets........ 1.62% 1.65%
Ratio of net investment income to average net assets..... 3.47% 3.47%
Portfolio turnover rate.................................. 28% 25%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.62% 1.65%
- ----------
(1) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges. The total returns would have been
lower if certain fees had not been waived and/or expenses reimbursed by the
investment advisor or if fees had not been reduced by credits allowed by
the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Annualized.
See Notes to Financial Statements.
122
CLASS C
- ------------------------------ ----------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- ------- ------- ------- ------- ------- ------- --------
$ 6.66 $ 7.47 $ 8.54 $ 8.32 $ 7.91 $ 6.67 $ 7.55
- ------- ------- ------- ------- ------- ------- ------
0.56(4) 0.66 0.78 0.50 0.52 0.56(4) 0.46
1.31 (0.72) (1.01) (0.03) 0.44 1.30 (0.86)
- ------- ------- ------- ------- ------- ------- ------
1.87 (0.06) (0.23) 0.47 0.96 1.86 (0.40)
- ------- ------- ------- ------- ------- ------- ------
(0.62) (0.75) (0.84) (0.52) (0.55) (0.62) (0.48)
-- -- -- -- -- -- --
- ------- ------- ------- ------- ------- ------- ------
(0.62) (0.75) (0.84) (0.52) (0.55) (0.62) (0.48)
- ------- ------- ------- ------- ------- ------- ------
$ 7.91 $ 6.66 $ 7.47 $ 8.27 $ 8.32 $ 7.91 $ 6.67
======= ======= ======= ======= ======= ======= ======
29.08% (1.17)% (2.72)% 5.77% 12.51% 29.08% (5.66)%
$83,665 $44,004 $35,391 $38,475 $33,318 $24,540 $2,556
1.73% 1.78% 1.77% 1.66% 1.68% 1.71% 1.78%(5)
7.48% 8.97% 9.78% 6.02% 6.36% 7.50% 8.97%(5)
61% 60% 27% 94% 82% 61% 60%
1.73% 1.78% 1.78% 1.66% 1.68% 1.71% 1.78%(5)
CLASS I
- --------------------------------------------------------
2005 2004 2003 2002 2001
- -------- -------- -------- -------- --------
$ 8.27 $ 7.86 $ 6.62 $ 7.43 $ 8.48
- -------- -------- -------- -------- --------
0.58 0.60 0.63(4) 0.73 0.87
(0.03) 0.44 1.30 (0.72) (0.99)
- -------- -------- -------- -------- --------
0.55 1.04 1.93 0.01 (0.12)
- -------- -------- -------- -------- --------
(0.60) (0.63) (0.69) (0.82) (0.93)
-- -- -- -- --
- -------- -------- -------- -------- --------
(0.60) (0.63) (0.69) (0.82) (0.93)
- -------- -------- -------- -------- --------
$ 8.22 $ 8.27 $ 7.86 $ 6.62 $ 7.43
======== ======== ======== ======== ========
6.91% 13.75% 30.44% (0.15)% (1.49)%
$588,409 $526,095 $424,781 $244,937 $201,385
0.59% 0.61% 0.64% 0.68% 0.68%
7.09% 7.43% 8.57% 10.07% 10.87%
94% 82% 61% 60% 27%
0.59% 0.61% 0.64% 0.68% 0.69%
CLASS C
- --------------------------- ------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- ------- ------- ------- ------ ------ ------ --------
$ 7.95 $ 7.93 $ 7.55 $ 7.95 $ 7.96 $ 7.95 $ 7.83
- ------- ------- ------- ------ ------ ------ ------
0.28 0.29 0.31 0.27 0.27 0.28 0.20
0.08 0.03 0.38 (0.16) 0.08 0.08 0.12
- ------- ------- ------- ------ ------ ------ ------
0.36 0.32 0.69 0.11 0.35 0.36 0.32
- ------- ------- ------- ------ ------ ------ ------
(0.28) (0.29) (0.31) (0.27) (0.27) (0.28) (0.20)
(0.07) (0.01) -- (0.09) (0.09) (0.07) --
- ------- ------- ------- ------ ------ ------ ------
(0.35) (0.30) (0.31) (0.36) (0.36) (0.35) (0.20)
- ------- ------- ------- ------ ------ ------ ------
$ 7.96 $ 7.95 $ 7.93 $ 7.70 $ 7.95 $ 7.96 $ 7.95
======= ======= ======= ====== ====== ====== ======
4.53% 4.25% 9.35% 1.41% 4.58% 4.54% 4.06%
$45,061 $47,308 $43,978 $2,360 $3,641 $4,332 $2,395
1.62% 1.64% 1.63% 1.63% 1.65% 1.61% 1.61%(5)
3.46% 3.75% 4.01% 3.46% 3.47% 3.47% 3.78%(5)
47% 46% 44% 28% 25% 47% 46%
1.62% 1.64% 1.63% 1.63% 1.65% 1.61% 1.61%(5)
See Notes to Financial Statements.
123
Financial Highlights
For a Fund share outstanding throughout each period.
CALIFORNIA MUNICIPAL FUND CLASS A
- ------------------------- ------------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 11.42 $ 11.22 $ 11.35 $ 11.34 $ 10.81
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.48 0.49 0.47 0.50 0.53
Net realized and unrealized gain/(loss) on investments... (0.15) 0.20 (0.06) 0.00(4) 0.53
-------- -------- -------- -------- --------
Total from investment operations......................... 0.33 0.69 0.41 0.50 1.06
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.48) (0.49) (0.47) (0.49) (0.53)
Distributions from net realized capital gains............ (0.03) -- (0.07) -- --
-------- -------- -------- -------- --------
Total distributions...................................... (0.51) (0.49) (0.54) (0.49) (0.53)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 11.24 $ 11.42 $ 11.22 $ 11.35 $ 11.34
======== ======== ======== ======== ========
TOTAL RETURN(1)................................................ 2.90% 6.25% 3.69% 4.57% 9.99%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $241,879 $232,239 $252,511 $286,095 $291,132
Ratio of operating expenses to average net assets........ 0.84% 0.85% 0.85% 0.86% 0.85%
Ratio of net investment income to average net assets..... 4.19% 4.32% 4.14% 4.39% 4.74%
Portfolio turnover rate.................................. 26% 27% 34% 48% 52%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 0.84% 0.85% 0.85% 0.86% 0.86%
CALIFORNIA MUNICIPAL FUND CLASS B
- ------------------------- -------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- -------- --------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 11.42 $ 11.22
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.39 0.40
Net realized and unrealized gain/(loss) on investments... (0.15) 0.20
-------- --------
Total from investment operations......................... 0.24 0.60
-------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.39) (0.40)
Distributions from net realized capital gains............ (0.03) --
-------- --------
Total distributions...................................... (0.42) (0.40)
-------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 11.24 $ 11.42
======== ========
TOTAL RETURN(1)................................................ 2.13% 5.47%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $162,534 $195,930
Ratio of operating expenses to average net assets........ 1.59% 1.59%
Ratio of net investment income to average net assets..... 3.44% 3.58%
Portfolio turnover rate.................................. 26% 27%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.59% 1.59%
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND CLASS A
- ---------------------------------------------- --------------------------------------------------
YEARS ENDED OCTOBER 31 2005 2004 2003 2002 2001
- ---------------------- ------- ------- ------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 11.14 $ 11.14 $ 11.08 $ 10.98 $ 10.58
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.34 0.33 0.35 0.39 0.44
Net realized and unrealized gain/(loss) on investments... (0.29) 0.10 0.12 0.15 0.49
------- ------- ------- ------- -------
Total from investment operations......................... 0.05 0.43 0.47 0.54 0.93
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.34) (0.33) (0.35) (0.39) (0.44)
Distributions from net realized capital gains............ (0.00)(4) (0.10) (0.06) (0.05) (0.09)
------- ------- ------- ------- -------
Total distributions...................................... (0.34) (0.43) (0.41) (0.44) (0.53)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD................................. $ 10.85 $ 11.14 $ 11.14 $ 11.08 $ 10.98
======= ======= ======= ======= =======
TOTAL RETURN(1)................................................ 0.52% 4.02% 4.29% 5.12% 9.00%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $65,667 $65,772 $75,231 $57,102 $39,996
Ratio of operating expenses to average net assets........ 0.87% 0.85% 0.77% 0.70% 0.73%
Ratio of net investment income to average net assets..... 3.11% 3.02% 3.15% 3.59% 4.09%
Portfolio turnover rate.................................. 27% 37% 65% 28% 23%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 0.87% 0.86% 0.86% 0.89% 0.92%
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND CLASS B
- ---------------------------------------------- --------------------
YEARS ENDED OCTOBER 31 2005 2004
- ---------------------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 11.14 $ 11.14
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.26 0.25
Net realized and unrealized gain/(loss) on investments... (0.29) 0.10
------- -------
Total from investment operations......................... (0.03) 0.35
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.26) (0.25)
Distributions from net realized capital gains............ (0.00)(4) (0.10)
------- -------
Total distributions...................................... (0.26) (0.35)
------- -------
NET ASSET VALUE, END OF PERIOD................................. $ 10.85 $ 11.14
======= =======
TOTAL RETURN(1)................................................ (0.24)% 3.24%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)...................... $59,562 $71,502
Ratio of operating expenses to average net assets........ 1.63% 1.61%
Ratio of net investment income to average net assets..... 2.35% 2.26%
Portfolio turnover rate.................................. 27% 37%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2)... 1.63% 1.62%
- ----------
(1) Total return is not annualized for periods of less than one year and does
not reflect any applicable sales charges.
The total returns would have been lower if certain fees had not been waived
and/or expenses reimbursed by the investment advisor or if fees had not
been reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Amount represents less than $0.01 per share.
(5) Annualized.
See Notes to Financial Statements.
124
CLASS C
- -------------------------------- -----------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- -------- -------- -------- ------ ------ ------ --------
$ 11.35 $ 11.34 $ 10.81 $11.42 $11.22 $11.35 $11.20
- -------- -------- -------- ------ ------ ------ ------
0.38 0.42 0.44 0.39 0.40 0.38 0.28
(0.06) 0.00(4) 0.53 (0.15) 0.20 (0.06) 0.14
- -------- -------- -------- ------ ------ ------ ------
0.32 0.42 0.97 0.24 0.60 0.32 0.42
- -------- -------- -------- ------ ------ ------ ------
(0.38) (0.41) (0.44) (0.39) (0.40) (0.38) (0.27)
(0.07) -- -- (0.03) -- (0.07) --
- -------- -------- -------- ------ ------ ------ ------
(0.45) (0.41) (0.44) (0.42) (0.40) (0.45) (0.27)
- -------- -------- -------- ------ ------ ------ ------
$ 11.22 $ 11.35 $ 11.34 $11.24 $11.42 $11.22 $11.35
======== ======== ======== ====== ====== ====== ======
2.92% 3.79% 9.19% 2.13% 5.46% 2.92% 3.77%
$255,445 $295,662 $237,594 $4,641 $5,275 $8,193 $6,665
1.59% 1.60% 1.58% 1.59% 1.60% 1.59% 1.58%(5)
3.40% 3.65% 4.01% 3.44% 3.57% 3.40% 3.67%(5)
34% 48% 52% 26% 27% 34% 48%
1.59% 1.60% 1.59% 1.59% 1.60% 1.59% 1.58%(5)
CLASS C
- --------------------------- ---------------------------------------
2003 2002 2001 2005 2004 2003 2002(3)
- ------- ------- ------- ------ ------ ------- --------
$ 11.08 $ 10.98 $ 10.58 $11.14 $11.14 $ 11.08 $10.90
- ------- ------- ------- ------ ------ ------- ------
0.27 0.31 0.36 0.26 0.25 0.27 0.21
0.12 0.15 0.49 (0.29) 0.10 0.12 0.18
- ------- ------- ------- ------ ------ ------- ------
0.39 0.46 0.85 (0.03) 0.35 0.39 0.39
- ------- ------- ------- ------ ------ ------- ------
(0.27) (0.31) (0.36) (0.26) (0.25) (0.27) (0.21)
(0.06) (0.05) (0.09) (0.00)(4) (0.10) (0.06) --
- ------- ------- ------- ------ ------ ------- ------
(0.33) (0.36) (0.45) (0.26) (0.35) (0.33) (0.21)
- ------- ------- ------- ------ ------ ------- ------
$ 11.14 $ 11.08 $ 10.98 $10.85 $11.14 $ 11.14 $11.08
======= ======= ======= ====== ====== ======= ======
3.51% 4.32% 8.19% (0.24)% 3.24% 3.50% 3.58%
$93,448 $89,240 $51,525 $7,476 $8,763 $10,317 $7,953
1.53% 1.46% 1.48% 1.63% 1.61% 1.53% 1.45%(5)
2.39% 2.83% 3.34% 2.35% 2.26% 2.39% 2.84%(5)
65% 28% 23% 27% 37% 65% 28%
1.62% 1.65% 1.67% 1.63% 1.62% 1.62% 1.64%(5)
See Notes to Financial Statements.
125
Notes to Financial Statements
WM GROUP OF FUNDS
1. ORGANIZATION AND BUSINESS
WM Trust I ("Trust I") and WM Trust II ("Trust II") (collectively, the "Trusts")
were organized as Massachusetts business trusts on September 19, 1997 and
February 22, 1989, respectively. The Trusts are each registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as open-end management
investment companies. Trust I and Trust II consist of 16 funds (each a "Fund"
and collectively, the "Funds"), 16 of which are presented in this report. The
Funds being reported on are as follows:
TRUST I
EQUITY FUNDS
REIT Fund
Equity Income Fund
Growth & Income Fund
West Coast Equity Fund
Mid Cap Stock Fund
Small Cap Value Fund
FIXED-INCOME FUNDS
U.S. Government Securities Fund
Income Fund
High Yield Fund
MUNICIPAL FUND
Tax-Exempt Bond Fund
TRUST II
EQUITY FUNDS
Growth Fund
Small Cap Growth Fund
International Growth Fund
FIXED-INCOME FUND
Short Term Income Fund
MUNICIPAL FUNDS
California Municipal Fund
California Insured Intermediate Municipal Fund
WM Advisors, Inc. (the "Advisor") serves as investment advisor to the Trusts.
The Advisor is a wholly owned subsidiary of Washington Mutual, Inc. ("Washington
Mutual"), a publicly owned financial services company.
The Trusts are authorized to issue an unlimited number of shares of beneficial
interest, each without par value. Each of the Fixed-Income Funds and the Equity
Funds offer four classes of shares: Class A shares, Class B shares, Class C
shares and Class I shares. Each of the Municipal Funds currently offer Class A
shares, Class B shares and Class C shares. Class A shares of the Funds 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. In addition, redemptions from the International
Growth Fund, including exchange redemptions, within 90 days of purchase are
subject to a redemption fee equal to 2.00% of the redemption proceeds, which are
retained by the Fund. Class I shares are sold exclusively to the various
investment portfolios of the WM Strategic Asset Management Portfolios, LLC (the
"Portfolios"), an affiliated open-end management investment company, and
affiliates of Washington Mutual and are not available for direct purchase by
investors. Class I shares are not subject to an initial sales charge, CDSC or
redemption fee.
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 the Funds in the preparation of their financial statements.
PORTFOLIO VALUATION:
Securities that are primarily traded on a U.S. exchange (excluding securities
traded through the NASDAQ National Market System, which are valued at the NASDAQ
official closing price) are valued at the last reported sales price on that
exchange or, if there were no sales during the day (and no official closing
price on such day), at the mean of the current day's bid and asked prices.
Securities traded only on over-the-counter markets (other than the NASDAQ
National Market System and the U.S. Government Securities System) are valued at
the mean of the current day's bid and asked prices.
126
Notes to Financial Statements (continued)
WM GROUP OF FUNDS
The value of a foreign security is determined in its functional currency as of
the close of trading on the foreign exchange on which it is traded or at the
close of the New York Stock Exchange, if that is earlier, or if there has been
movement in the U.S. market and/or other economic indicators that exceed a
specified threshold, the foreign security is fair valued. The value is then
converted into its U.S. dollar equivalent using prevailing exchange rates on the
day the value of the foreign security is determined.
Options are generally valued at the last sale price or, in the absence of a last
sale price, at the mean of the current day's bid and asked prices. The value of
a futures contract equals the unrealized gain or loss on the contract, which is
determined by marking the contract to the current settlement price for a like
contract acquired on the day on which the futures contract is being valued.
Debt securities of U.S. issuers (other than short-term investments), including
municipal securities, are valued by one or more independent pricing services
retained by the Trusts. When, in the judgment of a pricing service, market
quotations for these securities are readily available, they are valued at the
mean between the quoted bid and asked prices. Short-term debt securities that
mature in 60 days or less are valued at amortized cost, which approximates
market value.
Securities for which market quotations are not readily available are valued at
fair value as determined by, or under the direction of, the Funds' Board of
Trustees which may rely on the assistance of one or more pricing services.
REPURCHASE AGREEMENTS:
Each 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 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 Fund would seek to use the collateral to offset losses
incurred. There is potential loss to the Fund in the event the Fund is delayed
or prevented from exercising its right to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period while the Fund seeks to assert its rights. The
Advisor, acting under the supervision of the Board of Trustees of the Trust,
reviews the value of the collateral and the creditworthiness of those banks and
broker-dealers with whom each Fund enters into repurchase agreements.
FUTURES CONTRACTS:
Certain Funds may enter into futures transactions. The underlying value of a
futures contract is incorporated within the unrealized
appreciation/(depreciation) shown in the Portfolio of Investments under the
caption "Futures Contracts."
Upon entering into a futures contract, the Fund is required to deposit with the
broker an amount of cash or cash equivalents equal to a certain percentage of
the contract amount (known as an initial margin deposit). Subsequent payments
(known as variation margins) are made or received by the Fund each day,
depending on the daily fluctuation of the value of the contract. The daily
changes in contract value are recorded as unrealized gains or losses and the
Fund recognizes a realized gain or loss when the contract is closed. Should
market conditions change unexpectedly, the Funds may not achieve the anticipated
benefits of the futures contracts and may realize a loss. The use of futures
transactions involves the risk of imperfect correlation in movements in the
price of futures contracts, interest rates and the underlying hedged assets.
PURCHASED OPTION CONTRACTS:
Certain Funds may enter into put and call option contracts. These Funds may use
option contracts to manage their exposure to the stock and bond markets and to
fluctuations in interest rates and currency values. Upon entering into a put or
call option, the premium paid is recorded as an investment. The daily changes in
contract value are recorded as unrealized gains or losses. When a purchased
option expires, the Fund will realize a loss in the amount of the cost of the
option. When the Fund enters into a closing sale transaction, the Fund will
realize a gain or loss depending on whether the sales proceeds from the closing
sale transaction are greater or less than the cost of the option plus related
transaction costs. When the Fund exercises a put option, the Fund will realize a
gain or loss from the sale of the underlying security and the proceeds from such
sale will be decreased by the premium originally paid. When the Fund exercises a
call option, the cost of the security, which the Fund purchases upon exercise,
will be increased by the premium originally paid. The risk associated with
purchasing options is limited to the premium originally paid.
FOREIGN CURRENCY:
The books and records of the Funds are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars on a daily basis using prevailing exchange rates. Purchases and
sales of investment securities, income and expenses are translated on the
respective dates of such transactions.
127
Notes to Financial Statements (continued)
WM GROUP OF FUNDS
Unrealized gains and losses, not relating to securities, which result from
changes in foreign currency exchange rates have been included in unrealized
appreciation/(depreciation) of investments. Unrealized gains and losses of
securities, which result from changes in foreign currency exchange rates as well
as changes in market prices of securities, have been included in unrealized
appreciation/(depreciation) of investments. Net realized foreign currency gains
and losses, which result from changes in exchange rates between trade date and
settlement date on investment transactions as well as the difference between the
amounts of interest and dividends recorded on the books of the Funds and the
amount actually received, have been included in realized gains/(losses) on
investment transactions. Foreign currency gains and losses, which result from
fluctuations in exchange rates between the initial purchase trade date and
subsequent sale trade date, have been included in realized gains/(losses) on
investment transactions.
FORWARD FOREIGN CURRENCY CONTRACTS:
Certain Funds may enter into forward foreign currency contracts. Forward foreign
currency contracts are agreements to exchange one currency for another at a
future date and at a specified price. These Funds may use forward foreign
currency contracts to facilitate transactions in foreign securities and to
manage the Funds' foreign currency exposure. These contracts are valued daily,
and a Fund's net equity therein, representing unrealized gain or loss on the
contracts as measured by the difference between the forward foreign exchange
rates at the dates of entry into the contracts and the forward rates at the
reporting date, is included in the "Statements of Assets and Liabilities".
Realized and unrealized gains and losses are included in the "Statements of
Operations". Due to the risks, the Funds could incur losses up to the entire
contract amount, which may exceed the net unrealized value shown in the
"Statements of Assets and Liabilities".
ILLIQUID INVESTMENTS:
Each 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 each Fund has valued the investments. This may have an adverse effect on
each 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 per share
of the Fund. The Funds may also purchase securities that are not registered
under the Securities Act of 1933, as amended (the "Act"), but that can be sold
to qualified institutional buyers in accordance with Rule 144A under the Act
("Rule 144A Securities"). Rule 144A Securities generally 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, the 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. Each Fund instructs the custodian to segregate assets of
the Fund with a current value at least equal to the amount of its when-issued
purchase commitments.
Interest income on debt securities is accrued daily. Premiums and discounts are
amortized using the interest method. Paydown gains and losses on mortgage-backed
and asset-backed securities are presented as an adjustment to interest income.
Dividend income is recorded on the ex-dividend date, except certain dividends
from foreign securities are recorded as soon as the information is available to
the Funds if informed after the ex-dividend date. The Funds estimate components
of distributions from Real Estate Investment Trusts ("REITs"). Distributions
received in excess of income are recorded as a reduction of the cost of the
related investments. Each Fund's investment income and realized and unrealized
gains and losses are allocated among the classes of that Fund based upon the
relative average net assets of each class.
128
Notes to Financial Statements (continued)
WM GROUP OF FUNDS
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income for the Fixed-Income Funds and the
Municipal Funds are declared daily and paid monthly. Dividends from net
investment income for the REIT and Equity Income Funds are declared and paid
quarterly. Dividends from any net investment income for the Growth & Income,
West Coast Equity, Mid Cap Stock, Growth, Small Cap Value, Small Cap Growth and
International Growth Funds are declared and paid annually. Distributions of any
net capital gains earned by a Fund are distributed no less frequently than
annually at the discretion of the Board of Trustees. Additional distributions of
net investment income and capital gains for each Fund may be made at the
discretion of the Board of Trustees of the Trusts 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 investment securities held by the Funds, dividends
payable, redesignated distributions and differing characterization of
distributions made by each Fund. At October 31, 2005, the following adjustments
have been reflected in the components of net assets on the "Statements of Assets
and Liabilities" to present these balances on an income tax basis, excluding
certain temporary differences:
INCREASE/ INCREASE/
(DECREASE) (DECREASE)
INCREASE/ UNDISTRIBUTED ACCUMULATED
(DECREASE) NET INVESTMENT NET REALIZED
PAID-IN CAPITAL INCOME/(LOSS) GAIN/(LOSS)
(000S) (000S) (000S)
--------------- -------------- ------------
Equity Income Fund .................... $ -- $ 11 $ (11)
Growth Fund ........................... -- (119) 119
Small Cap Value Fund .................. -- 49 (49)
Small Cap Growth Fund ................. (2,251) 2,251 --
International Growth Fund ............. 199 1,103 (1,302)
Short Term Income Fund ................ (149) 292 (143)
U.S. Government Securities Fund ....... (504) 8,023 (7,519)
Income Fund ........................... -- 3,725 (3,725)
High Yield Fund ....................... -- 1,499 (1,499)
Tax-Exempt Bond Fund .................. -- 44 (44)
California Municipal Fund ............. -- (21) 21
The above adjustments are not reflected in the calculation of net investment
income per share presented in the Financial Highlights.
FEDERAL INCOME TAXES:
It is each Fund's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), 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 Trusts are allocated to all the Funds of the Trusts
based upon the relative average net assets of each Fund except printing and
postage expenses, which are allocated to all the Funds based upon the relative
number of shareholder accounts of each Fund. Operating expenses directly
attributable to a class of shares are charged to the operations of that class of
shares. Expenses of each Fund not directly attributable to the operations of any
class of shares are prorated among the classes to which the expenses relate
based on the relative average net assets of each class of shares.
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.
129
Notes to Financial Statements (continued)
WM GROUP OF FUNDS
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
The Advisor is entitled to a monthly fee at an annual rate based upon a
percentage of the average daily net assets of each Fund at the following rates:
FROM $0 FROM $125 FROM $200 FROM $250 FROM $500 FROM $1 FROM $2
TO $125 TO $200 TO $250 TO $500 MILLION TO TO $2 TO $3 OVER $3
NAME OF FUND MILLION MILLION MILLION MILLION $1 BILLION BILLION BILLION BILLION
------------ ------- --------- --------- --------- ---------- ------- ------- -------
REIT Fund ......................... 0.800% 0.800% 0.800% 0.800% 0.750% 0.750% 0.700% 0.650%
Equity Income Fund ................ 0.625% 0.625% 0.625% 0.500% 0.500% 0.500% 0.500% 0.500%
Growth & Income Fund .............. 0.625% 0.625% 0.625% 0.500% 0.500% 0.500% 0.500% 0.500%
West Coast Equity Fund ............ 0.625% 0.625% 0.625% 0.625% 0.500% 0.375% 0.375% 0.375%
Mid Cap Stock Fund ................ 0.750% 0.750% 0.750% 0.750% 0.750% 0.700% 0.650% 0.600%
Growth Fund ....................... 0.800% 0.800% 0.800% 0.800% 0.750% 0.750% 0.700% 0.650%
Small Cap Value Fund .............. 0.850% 0.850% 0.850% 0.850% 0.750% 0.750% 0.750% 0.700%
Small Cap Growth Fund ............. 0.850% 0.850% 0.850% 0.850% 0.750% 0.750% 0.750% 0.700%
International Growth Fund ......... 1.000% 0.800% 0.800% 0.800% 0.800% 0.750% 0.750% 0.700%
Short Term Income Fund ............ 0.500% 0.500% 0.450% 0.450% 0.400% 0.400% 0.400% 0.400%
U.S. Government Securities Fund ... 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.450% 0.450%
Income Fund ....................... 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.450% 0.450%
High Yield Fund ................... 0.625% 0.625% 0.625% 0.500% 0.500% 0.500% 0.500% 0.500%
Tax-Exempt Bond Fund .............. 0.500% 0.500% 0.500% 0.400% 0.400% 0.400% 0.400% 0.400%
California Municipal Fund ......... 0.500% 0.500% 0.500% 0.500% 0.500% 0.450% 0.450% 0.450%
California Insured Intermediate
Municipal Fund ................. 0.500% 0.500% 0.500% 0.500% 0.500% 0.450% 0.450% 0.450%
During the period, the Small Cap Growth Fund received payments from the Advisor
totaling $1,321,381 in connection with a trading error. This error occurred
during the transition to new sub-advisors in April 2005.
Effective November 1, 2005, the Advisor's monthly fee based upon average daily
net assets for the Growth Fund was changed to 0.750% of the first $500 million
of average daily net assets, 0.700% of the next $1.5 billion of average daily
net assets, 0.650% of the next $1 billion of average daily net assets and 0.600%
of average daily net assets over $3 billion.
WM Shareholder Services, Inc. (the "Transfer Agent"), a wholly owned subsidiary
of Washington Mutual, serves as the transfer agent of the Funds. 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
$20.00 per open account for all Class A, Class B and Class C shareholder
accounts. Prior to June 1, 2005, the Transfer Agent was entitled to a monthly
fee based upon an annual rate of $20.40, $21.15 and $21.15 per open account for
Class A, Class B and Class C shareholder accounts for the Equity Funds,
Fixed-Income Funds and Municipal Funds, respectively. Class I shares are not
subject to shareholder servicing fees. For the year ended October 31, 2005, the
Transfer Agent has voluntarily waived $55,973, $37,930 and $14,784 of its
transfer agent fees for Class A, Class B and Class C shares, respectively of the
Short Term Income Fund.
Custodian fees for certain Funds have been reduced by credits allowed by the
Funds' custodian for uninvested cash balances. The Funds could have invested
this cash in income producing securities. Fees reduced by credits allowed by the
custodian for the year ended October 31, 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 Trusts for serving as an officer or Trustee of the Trusts.
The Trusts, together with other mutual funds advised by the Advisor, pay 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 Trusts. 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.
130
Notes to Financial Statements (continued)
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. For the year ended October 31, 2005, the Distributor
received $7,988,263 representing commissions (front-end sales charges) on Class
A shares and $1,374,187 representing CDSCs from Class A, Class B and Class C
shares.
Each of the Funds has adopted three distribution plans, pursuant to Rule 12b-1
under the 1940 Act, applicable to Class A, Class B and Class C shares of each
Fund (each, a "Rule 12b-1 Plan"), respectively. There are no 12b-1 Plans
applicable to Class I shares of the Funds. Under the applicable Rule 12b-1
Plans, the Distributor may receive a service fee at an annual rate of 0.25% of
the average daily net assets of each class. 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 Fund to the Distributor, which in turn, pays service fees to
broker/dealers that provide services, such as accepting telephone inquiries,
transaction requests, 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 Trusts, as defined in the
1940 Act, and who have no direct or indirect financial interest in the operation
of such distribution plans, or any agreements related to such plans,
respectively.
6. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, excluding
U.S. government and short-term investments, for the year ended October 31, 2005,
are as follows:
PURCHASES SALES
NAME OF FUND (000S) (000S)
- ------------ ---------- ----------
REIT Fund ........................................ $ 83,046 $ 38,946
Equity Income Fund ............................... 1,439,914 616,161
Growth & Income Fund ............................. 775,267 354,191
West Coast Equity Fund ........................... 276,830 186,003
Mid Cap Stock Fund ............................... 288,241 210,711
Growth Fund ...................................... 1,381,878 1,268,662
Small Cap Value Fund ............................. 222,015 170,611
Small Cap Growth Fund ............................ 832,082 870,679
International Growth Fund ........................ 309,541 162,615
Short Term Income Fund ........................... 57,946 21,589
U.S. Government Securities Fund .................. 147,604 76,086
Income Fund ...................................... 199,833 142,961
High Yield Fund .................................. 802,818 713,766
Tax-Exempt Bond Fund ............................. 61,157 73,422
California Municipal Fund ........................ 108,071 125,015
California Insured Intermediate Municipal Fund ... 37,025 55,589
The aggregate cost of purchases and proceeds from sales of U.S. government
securities, excluding short-term investments, for the year ended October 31,
2005, are as follows:
PURCHASES SALES
NAME OF FUND (000S) (000S)
- ------------ --------- --------
Equity Income Fund ................ $ -- $ 794
Short Term Income Fund ............ 10,550 10,346
U.S. Government Securities Fund ... 767,060 489,679
Income Fund ....................... 117,593 73,273
131
Notes to Financial Statements (continued)
WM GROUP OF FUNDS
7. LENDING OF SECURITIES
Certain Funds may lend securities to brokers, dealers and other financial
organizations to earn additional income. The Funds also continue to receive
interest or dividends on the securities loaned. Each security loan is
collateralized with collateral assets in an amount equal to or greater than the
current market value of the loaned securities. There is a risk of delay in
receiving collateral, that the collateral could lose value or become valueless,
or in recovering the securities loaned or even a loss of rights in collateral
should the borrower fail financially.
At October 31, 2005, each of the Funds with outstanding loans of securities to
certain brokers, dealers or other financial institutions has segregated cash
and/or securities at least equal to the market value of securities loaned with
the Funds' custodian. The Funds currently invest the segregated cash in Mellon
GSL DBT II which is a common collective trust that invests in high grade short
term investments.
8. PORTFOLIO OWNERSHIP AND OTHER FACTORS
At October 31, 2005, the WM Strategic Asset Management Portfolios hold
investments in a number of the 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 ......................... 2.5% 3.0% 33.5% 33.5% 19.9% 92.4%
Equity Income Fund ................ 1.6% 1.9% 19.0% 17.6% 10.9% 51.0%
Growth & Income Fund .............. 2.9% 2.6% 24.9% 26.1% 18.2% 74.7%
West Coast Equity Fund ............ 0.7% 1.1% 13.0% 14.2% 10.7% 39.7%
Mid Cap Stock Fund ................ 3.3% 2.5% 27.9% 29.2% 23.2% 86.1%
Growth Fund ....................... 2.8% 2.6% 29.9% 31.5% 19.1% 85.9%
Small Cap Value Fund .............. 3.1% 2.7% 31.5% 34.3% 22.5% 94.1%
Small Cap Growth Fund ............. 3.0% 1.9% 22.3% 25.0% 17.7% 69.9%
International Growth Fund ......... -- 3.3% 32.6% 33.9% 22.8% 92.6%
Short Term Income Fund ............ 44.4% 13.0% 15.3% -- -- 72.7%
U.S. Government Securities Fund ... 17.9% 9.6% 43.4% 15.9% -- 86.8%
Income Fund ....................... 19.2% 9.1% 37.0% 10.7% -- 76.0%
High Yield Fund ................... 8.0% 3.9% 24.4% 15.2% 11.8% 63.3%
From time to time, one or more of the Funds used for investment by a Portfolio
may experience relatively large investments or redemptions due to reallocations
or rebalancings by the Portfolios as recommended by the Advisor. These
transactions will affect the Funds, since the Funds that experience redemptions
as a result of the reallocations or rebalancings may have to sell portfolio
securities and since the Funds that receive additional cash will have to invest
such cash. This may be particularly important when one or more portfolios owns a
substantial portion of any underlying Fund. 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 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 Funds to the extent it is consistent
with pursuing the investment objectives of the Portfolios. The Advisor may
nevertheless face conflicts in fulfilling its dual responsibilities of the
Portfolios and the Funds. The Advisor will, at all times, monitor the impact on
the Funds of transactions by the Portfolios.
9. CAPITAL LOSS CARRYFORWARDS
At October 31, 2005, the following Funds have available for federal income tax
purposes unused capital losses as follows:
(IN THOUSANDS)
-------------------------------------------------------------------------------------
EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
NAME OF FUND IN 2006 IN 2007 IN 2008 IN 2009 IN 2010 IN 2011 IN 2012 IN 2013
- ----------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Growth & Income Fund............... $-- $-- $-- $-- $-- $24,555 $17,463 $--
132
Notes to Financial Statements (continued)
WM GROUP OF FUNDS
(IN THOUSANDS)
-------------------------------------------------------------------------------------
EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING EXPIRING
NAME OF FUND IN 2006 IN 2007 IN 2008 IN 2009 IN 2010 IN 2011 IN 2012 IN 2013
- ------------ -------- -------- -------- -------- -------- -------- -------- --------
Growth Fund ....................... -- -- -- 128,323 151,706 23,894 -- --
Small Cap Growth Fund ............. -- -- -- -- -- 10,372 -- 54,274
International Growth Fund ......... -- -- -- -- 2,731 14,786 -- --
Short Term Income Fund ............ 75 313 1,103 381 1,139 684 241 --
U.S. Government Securities Fund ... -- 254 1,967 -- 852 6,859 7,815 5,054
Income Fund ....................... -- -- -- -- 3,959 2,668 892 --
High Yield Fund ................... -- -- -- -- 10,429 17,646 -- --
10. COMPONENTS OF DISTRIBUTABLE EARNINGS
At October 31, 2005, the components of distributable earnings on a tax basis are
as follows:
(IN THOUSANDS)
---------------------------------------------------------------------------------------
WEST
EQUITY GROWTH & COAST MID CAP SMALL CAP SMALL CAP
REIT INCOME INCOME EQUITY STOCK GROWTH VALUE GROWTH
FUND FUND FUND FUND FUND FUND FUND FUND
-------- -------- -------- -------- -------- -------- --------- ---------
Gross tax unrealized appreciation ... $123,188 $390,701 $492,558 $501,991 $184,031 $196,649 $ 50,399 $ 49,190
Gross tax unrealized depreciation ... (3,869) (22,872) (87,362) (72,223) (8,686) (35,159) (28,008) (11,427)
-------- -------- -------- -------- -------- -------- -------- --------
Net tax unrealized appreciation ..... $119,319 $367,829 $405,196 $429,768 $175,345 $161,490 $ 22,391 $ 37,763
======== ======== ======== ======== ======== ======== ======== ========
Undistributed ordinary income ....... $ 3,267 $ 4,952 $ 26,036 $ 3,183 $ 17,182 $ 1,476 $ 14,340 $ --
Undistributed accumulated gains ..... $ 8,238 $ 82,528 $ -- $ 38,880 $ 50,635 $ -- $ 6,136 $ --
Net unrealized appreciation* ........ $119,319 $367,829 $405,196 $429,768 $175,345 $161,485 $ 22,387 $ 37,763
SHORT U.S.
TERM GOVERNMENT HIGH
INTERNATIONAL INCOME SECURITIES INCOME YIELD
GROWTH FUND FUND FUND FUND FUND
------------- ------- ---------- -------- --------
Gross tax unrealized appreciation ... $163,499 $ 764 $ 4,420 $ 36,528 $ 65,358
Gross tax unrealized depreciation ... (12,430) (4,198) (41,753) (47,745) (26,437)
-------- ------- -------- -------- --------
Net tax unrealized appreciation/
(depreciation) ................... $151,069 $(3,434) $(37,333) $(11,217) $ 38,921
======== ======= ======== ======== ========
Undistributed ordinary income ....... $ 15,407 $ 101 $ 770 $ 504 $ 1,942
Undistributed tax-exempt income ..... $ -- $ -- $ -- $ -- $ --
Undistributed accumulated gains ..... $ -- $ -- $ -- $ -- $ --
Net unrealized appreciation/
(depreciation)* ................... $151,032 $(3,434) $(37,333) $(11,217) $ 38,901
CALIFORNIA
INSURED
CALIFORNIA INTERMEDIATE
TAX- EXEMPT MUNICIPAL MUNICIPAL
BOND FUND FUND FUND
----------- ---------- ------------
Gross tax unrealized appreciation ... $12,510 $16,142 $1,918
Gross tax unrealized depreciation ... (1,182) (957) (563)
------- ------- ------
Net tax unrealized appreciation/
(depreciation) ................... $11,328 $15,185 $1,355
======= ======= ======
Undistributed ordinary income ....... $ 240 $ 242 $ --
Undistributed tax-exempt income ..... $ 475 $ 621 $ 151
Undistributed accumulated gains ..... $ 3,712 $ 4,898 $ 300
Net unrealized appreciation/
(depreciation)* .................. $11,328 $15,185 $1,355
- ----------
* Net unrealized appreciation/(depreciation) may not tie due to foreign
currency.
11. INDUSTRY AND GEOGRAPHIC CONCENTRATION AND OTHER RISK FACTORS
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.
133
Notes to Financial Statements (continued)
WM Group of Funds
The West Coast Equity Fund, which invests significant portions of its assets in
Alaska, California, Oregon and Washington, generally has more exposure to
regional economic risks than a fund making investments more broadly.
The High Yield Fund concentrates its investments 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.
The California Municipal and California Insured Intermediate Municipal Funds are
more susceptible to factors adversely affecting issuers of California municipal
securities than is a municipal bond fund that is not concentrated in these
issuers. Uncertain economic conditions or governmental developments may affect
the ability of California municipal securities issuers to meet their financial
obligations.
Certain 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.
12. INVESTMENTS IN AFFILIATED SECURITIES
The company listed below is an affiliate of the West Coast Equity Fund because
the Fund owns at least 5.0% of the company's voting securities.
MARKET VALUE
SHARES SHARES OF INVESTMENTS
AT BEGINNING AT END REALIZED IN AFFILIATES AT
(IN THOUSANDS) OF PERIOD ADDITIONS REDUCTIONS OF PERIOD DIVIDENDS GAIN/(LOSS) OCTOBER 31, 2005
- ---------------------------------- ------------ --------- ---------- --------- --------- ----------- ----------------
Red Lion Hotels Corporation* ..... 1,240 27 -- 1,267 $-- $-- $9,795
=== === ======
- ----------
* Formerly WestCoast Hospitality Corporation
13. SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders of the Growth Fund of the WM Trust II was
convened on October 27, 2005, at which shareholders approved the following:
A sub-advisory agreement for the Fund among the Fund, WM Advisors, Inc. and
Salomon Brothers Assets Management, Inc.
AFFIRMATIVE AGAINST ABSTAIN TOTAL
-------------- ------------- ------------- --------------
Voted Shares ................. 81,113,285.580 5,846,767.506 6,062,862.504 93,022,915.590
% of Outstanding Shares ...... 75.711% 5.457% 5.659% 86.827%
% of Shares Voted ............ 87.197% 6.285% 6.518% 100.000%
A policy allowing the Board of Trustees and the Advisor to appoint sub-advisors
and to approve amendments to sub-advisory agreements without shareholder
approval.
AFFIRMATIVE AGAINST ABSTAIN TOTAL
-------------- -------------- ------------- --------------
Voted Shares ................. 72,212,573.995 14,220,690.596 6,589,650.999 93,022,915.590
% of Outstanding Shares ...... 67.403% 13.274% 6.151% 86.828%
% of Shares Voted ............ 77.629% 15.287% 7.084% 100.000%
134
Report of Independent Registered Public Accounting Firm
TO THE TRUSTEES AND SHAREHOLDERS OF WM TRUST I AND WM TRUST II:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of WM Equity Income Fund, WM Growth & Income
Fund, WM High Yield Fund, WM Income Fund, WM Mid Cap Stock Fund, WM REIT Fund,
WM Small Cap Value Fund, WM Tax-Exempt Bond Fund, WM U.S. Government Securities
Fund, and WM West Coast Equity Fund (all funds of WM Trust I) and WM California
Insured Intermediate Municipal Fund, WM California Municipal Fund, WM Growth
Fund, WM International Growth Fund, WM Short Term Income Fund, and WM Small Cap
Growth Fund (all funds of WM Trust II) (collectively the "Funds") as of October
31, 2005, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Funds
are not required to have, nor were we engaged to perform, an audit of their
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Funds' internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2005, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of October 31, 2005, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and their financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
December 22, 2005
135
Supplemental Information (unaudited)
WM GROUP OF FUNDS
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
Each year, the Board of Trustees of the Trusts (the "Board"), including a
majority of the Trustees who are not interested persons of the Trusts (the
"Independent Trustees"), is required to determine whether to continue the
Trusts' advisory agreements. The Investment Company Act of 1940, as amended,
requires that the Board request and evaluate, and that the investment manager
furnish, such information as may reasonably be necessary to evaluate the terms
of the Trust's advisory agreements. In May 2005, the Board and the Independent
Trustees approved the continuation of the Trusts' Amended and Restated
Investment Management Agreement with the Advisor and Investment Sub-Advisory
Agreements with Capital Guardian Trust Company ("Capital Guardian"), Janus
Capital Management LLC ("Janus"), OppenheimerFunds, Inc. ("Oppenheimer") Van
Kampen Asset Management and in August 2005, the Board and the Independent
Trustees approved a new Sub-Advisory Agreement with Salomon Brothers Asset
Management, Inc. ("Salomon") in connection with its sale to Legg Mason, Inc.,
(collectively, the "Agreements") for an additional one-year term beginning July
1, 2005, in each case following the recommendation of the Investment Committee
(the "Committee"), a majority of the members of which are Independent Trustees,
and the recommendations of the Independent Trustees as a whole. The material
factors and conclusions that formed the basis for the Committee's recommendation
and the subsequent approval by the Board and the Independent Trustees are
required to be in this report and are discussed below.
REVIEW PROCESS:
The Independent Trustees received assistance and advice, including a written
memorandum, regarding the legal standards applicable to the consideration of
advisory arrangements from independent counsel to the Trusts and the Independent
Trustees. The Independent Trustees discussed the continuation of the Agreement
with representatives of the Advisor and in private session with independent
legal counsel at which no representatives of the Advisor were present. The
Committee, in deciding to recommend continuation of the Agreement, and the Board
and the Independent Trustees, in approving such continuation, did not identify
any particular information that was all-important or controlling, and each
Trustee attributed different weights to the various factors. The Trustees
evaluated all information available to them on a Fund-by-Fund basis, and their
deliberations were made separately in respect of each Fund. This summary
describes the most important, but not all, of the factors considered by the
Board, the Independent Trustees and the Committee.
MATERIALS REVIEWED:
During the course of each year, the Board receives a wide variety of materials
relating to the services provided by the Advisor and its affiliates, including
reports on: each Fund's investment results; portfolio construction; portfolio
composition; portfolio trading practices; performance attribution; shareholder
services; the Advisor's views on the economy and capital markets; and other
information relating to the nature, extent and quality of services provided by
the Advisor and its affiliates to the Funds. In addition, in connection with its
annual consideration of the Agreement, the Board requests and reviews
supplementary information regarding the terms of the Agreement, the
Funds' investment results, advisory fee and total expense comparisons, financial
and profitability information regarding the Advisor and its affiliates,
descriptions of various functions undertaken by the Advisor, such as compliance
monitoring, and information about the personnel providing investment management
and administrative services to the Funds. The Board requested and evaluated
performance and expense information for other investment companies compiled by
Lipper Inc., a third-party data provider ("Lipper"). The Board, the Independent
Trustees and the Committee also considered information regarding "revenue
sharing" arrangements that the Advisor and its affiliates have entered into with
various intermediaries that sell shares of the Funds. The Board also requested
and reviewed information relating to other services provided to the Fund by the
Advisor and its affiliates under other agreements, including information
regarding so-called "fall-out" benefits to the Advisor and its affiliates due to
their other relationships with the Funds. The Board, the Independent Trustees
and the Committee also received and reviewed comparative performance information
regarding the retail Funds at each of the quarterly Board and Committee
meetings.
NATURE, EXTENT AND QUALITY OF SERVICES:
Nature and Extent of Services -- In considering the approval and continuation of
the Agreements for the current year, the Board, the Independent Trustees and the
Committee evaluated the nature and extent of the services provided by the
Advisor, its affiliates and the sub-advisors. The Advisor or the relevant
sub-advisor, as applicable, formulates the Fund's investment policies (subject
to the terms of the prospectus), analyzes economic trends and capital market
developments, evaluates the risk/return characteristics of the Fund, constructs
the Fund's portfolio, monitors the Fund's investment performance, and reports to
the Board, the Independent Trustees and the Committee. Capital Guardian provides
sub-advisory services to the International
136
Supplemental Information (unaudited)(continued)
WM GROUP OF FUNDS
Growth Fund. Janus, Oppenheimer, and Salomon each provide sub-advisory services
to the Growth Fund. The Board, the Independent Trustees and the Committee
considered information concerning the investment philosophy and investment
process used by the Advisor and the sub-advisors in managing the Funds. In this
context, the Board, the Independent Trustees and the Committee considered the
in-house research capabilities of the Advisor and the sub-advisors as well as
other sources available to the Advisor and the sub-advisors, including research
services available to the Advisor and the sub-advisors as a result of securities
transactions effected for the Funds and other investment advisory clients of the
Advisor and the sub-advisors. The Board, the Independent Trustees and the
Committee considered the managerial and financial resources available to the
Advisor and the Sub-Advisors and concluded that they would be sufficient to meet
any reasonably foreseeable obligations under the Agreements. The Board, the
Independent Trustees and the Committee noted that the standard of care under the
Agreements was comparable to that found in many investment advisory agreements,
and considered the record of the Advisor in resolving potential disputes arising
under its investment advisory agreement with the WM Group of Funds in the best
interests of shareholders.
Quality of Services -- The Board, the Independent Trustees and the Committee
considered the quality of the services provided by the Advisor and the quality
of its resources that are available to the Funds. The Board, the Independent
Trustees and the Committee considered the investment experience and professional
qualifications of the personnel of the Advisor, its affiliates and the
Sub-Advisors, and the size and functions of their staffs as well as the
reputation of the Advisor and the Sub-Advisors. The Board, the Independent
Trustees and the Committee considered the complexity of managing the Funds
relative to other types of funds. The Board, the Independent Trustees and the
Committee also received and reviewed information regarding the quality of
non-investment advisory services provided to the Funds by the Advisor and its
affiliates under other agreements.
The Board, the Independent Trustees and the Committee concluded that the
services provided by the Advisor and the Sub-Advisors have benefited and should
continue to benefit the Funds and its shareholders. The Board, the Independent
Trustees and the Committee concluded that the investment philosophies,
processes, and research capabilities of the Advisor and the Sub-Advisors were
well suited to the Funds, given their investment objectives and policies. The
Board, the Independent Trustees and the Committee concluded that the scope of
the services provided to the Funds by the Advisor, its affiliates and the
Sub-Advisors were consistent with the Funds' operational requirements,
including, in addition to its investment objectives, compliance with the
Funds' investment restrictions, tax and reporting requirements and related
shareholder services. The Board, the Independent Trustees and the Committee
concluded that the nature, scope and quality of the services provided by the
Advisor, its affiliates and the Sub-Advisors were sufficient, in light of the
resources dedicated by the Advisor and the Sub-Advisors and their integrity,
personnel, systems and financial resources, to merit approval of the
continuation of the Agreements.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE:
In their evaluation of the quality of the portfolio management services provided
by the Advisor and the sub-advisor, the Board, the Independent Trustees and the
Committee considered the professional credentials and investment experience of
the Funds' portfolio managers. The Board and the Independent Trustees considered
whether the Funds operated within their investment objectives and their record
of compliance with investment restrictions. The Board, the Independent Trustees
and the Committee reviewed information comparing the Funds' historical
performance to relevant market indices for the 1-, 3- and 5-year periods ended
March 31, 2005 and to performance information for other investment companies
with similar investment objectives over the 1-, 3-, 5-, 10-year and since
inception periods, derived from data compiled by Lipper. The Board, the
Independent Trustees and the Committee reviewed performance for the period ended
March 31, 2005, for the Funds. The Board, the Independent Trustees and the
Committee concluded that the Advisor's and the Sub-Advisors performance record
and investment processes used in managing the Funds were sufficient to merit
approval of the continuation of the Agreements.
MANAGEMENT FEES AND EXPENSES:
The Board, the Independent Trustees and the Committee reviewed information,
including comparative information provided by Lipper, regarding the advisory,
transfer agent, and service and distribution fees paid to the Advisor, its
affiliates and the Sub-Advisors, and the total expenses borne by the Funds. The
Board, the Independent Trustees and the Committee reviewed the transfer agency
fees paid by the Funds to WM Shareholder Services, Inc. (the "Transfer Agent"),
an affiliate of the Advisor, as well as the distribution (12b-1) fees paid to
the Distributor. They considered the Funds' management fees relative to their
respective peer group as determined by Lipper. The Board, the Independent
Trustees and the Investment Committee considered the fees paid to the Advisor by
other clients, and the services provided to such clients relative to the fees
paid by, and services provided to, the Funds. They discussed the general
downward trend in total expense ratio for the Funds. The Board, the Independent
Trustees and the Committee concluded that the fees to be charged under the
Agreements bore a reasonable relationship to the scope and quality of the
services provided.
137
Supplemental Information (unaudited)(continued)
WM GROUP OF FUNDS
PROFITABILITY AND ECONOMIES OF SCALE:
Profitability -- The Board, the Independent Trustees and the Committee reviewed
information regarding the cost of services provided by the Advisor and its
affiliates and the profitability (before and after distribution expenses and
prior to taxes) of the Advisor's relationship with the Funds. The Board, the
Independent Trustees and the Committee considered trends in the profitability of
the Advisor and its affiliates, and information provided by Lipper regarding the
pre- and post-marketing profitability of other investment advisers with
publicly-traded parent companies. The Board, the Independent Trustees and the
Committee considered that the Advisor must be able to pay and retain experienced
professional personnel at competitive rates to provide services to the Funds
(and in connection therewith reviewed and considered changes in the structure of
compensation of the investment professionals of the Advisor including a change
in the performance-based component of the compensation and the introduction of
options and restricted stock rather than vesting periods for cash bonuses) and
that maintaining the financial viability of the Advisor is important in order
for it to continue to provide significant services to the Funds and its
shareholders. The Board, the Independent Trustees and the Committee considered
the impact of previously-negotiated fee reductions on the profitability of the
Advisor and the year-to-year trends in pre-distribution margins for the Advisor
over a four-year period in which complex-wide assets more than doubled. The
Board, the Independent Trustees and the Committee considered various breakpoint
schedules and reviewed a graph showing the effective fees for the Advisor at
different asset levels. In addition, the Board, the Independent Trustees and the
Committee considered information regarding the direct and indirect benefits the
Advisor receives as a result of its relationships with the Funds, including
compensation paid to the Advisor and its affiliates, including transfer agency
fees to the Transfer Agent and 12b-1 fees to the Distributor as well as research
provided to the Advisor in connection with portfolio transactions effected on
behalf of the Funds (soft dollar arrangements), and reputational benefits. The
Trustees considered the fact that the structure of breakpoints for the Advisor's
fees and the fees of the sub-advisors for Funds with multiple sub-advisors was
such that, assuming relatively equal allocation of Fund assets among all
sub-advisors, the Advisor's fee would be reduced by breakpoints at lower asset
levels than those at which the Advisor might benefit from breakpoints in the
fees of the sub-advisors. The Trustees did not evaluate the profitability to the
sub-advisors of its relationship with the Fund because they concluded that
negotiations between the Advisor and the sub-advisors had been entirely at
arm's- length.
Economies of Scale -- The Board, the Independent Trustees and the Committee
reviewed the extent to which the Advisor may realize economies of scale in
managing and supporting the Funds and the current level of Funds assets in
relation to the breakpoints in the Funds' advisory fees. The Board, the
Independent Trustees and the Committee considered the extent to which any
economies of scale might be realized (if at all) by the Advisor across a variety
of products and services, and not only in respect of a single Fund. The Board,
the Independent Trustees and the Committee considered the savings for the Funds
that had been achieved due to breakpoints previously implemented as a result of
negotiations between the Advisor and the Board.
The Board, the Independent Trustees and the Committee concluded that the
Funds' cost structure was reasonable given the scope and quality of the services
provided to the Funds and that the Advisor was sharing any economies of scale
with the Funds and its shareholders.
ADDITIONAL CONSIDERATIONS:
The Board, the Independent Trustees and the Committee also considered possible
conflicts of interest associated with the provision of investment advisory
services by the Advisor to other clients and the fact that such clients of the
Advisor were then limited to those affiliated with AIG Asset Management and
Transamerica Life Insurance Company (representing approximately $5.5 billion and
$2.5 million in assets under management as of October 31, 2005, respectively).
The Trustees considered the procedures of the Advisor designed to fulfill its
fiduciary duties to advisory clients with respect to possible conflicts of
interest, including the codes of ethics, the integrity of the systems in place
to ensure compliance with the foregoing, and the record of the Advisor in these
matters. The Board, the Independent Trustees and the Committee also received and
considered information concerning procedures of the Advisor with respect to the
execution of portfolio transactions. In reviewing the Sub-Advisory Agreement
with Salomon, the Trustees considered, among other things, representations by
Salomon that, subsequent to its acquisition by Legg Mason, Inc. there is not
expected to be any reduction in the nature, quality and extent of services
provided to the Growth Fund by Salomon; the fact that the substantive terms of
the Sub-advisory agreement, including the sub-advisory fees paid to Salomon,
were not changing as a result of the acquisition; and representations by Salomon
that no changes were expected in either the composition of the Salomon
investment professionals who would be providing services to the Growth Fund or
the amount of time and attention that would be devoted by such investment
professionals to the Growth Fund.
138
Supplemental Information (unaudited)(continued)
WM GROUP OF FUNDS
CONCLUSIONS:
Based on their review, including their consideration of each of the factors
referred to above, the Board, the Independent Trustees and the Committee
concluded that the Agreements, including the fees payable to the Advisor and the
Sub-Advisors, are fair and reasonable to the Funds and their shareholders given
the scope and quality of the services provided to the Funds and such other
considerations as the Trustees considered relevant in the exercise of their
reasonable business judgment and that the continuation of the Agreements was in
the best interests of the Funds and their shareholders. The Board and
Independent Trustees unanimously approved the continuation of the Agreements.
OTHER FUND INFORMATION
TAX INFORMATION:
The following tax information for the fiscal year ended October 31, 2005 is
provided pursuant to the provisions of the Internal Revenue Code.
The amounts of long term capital gains designated are as follows (in thousands):
NAME OF FUND
- ------------
REIT Fund ............................................................ $21,677
Equity Income Fund ................................................... 86,657
West Coast Equity Fund ............................................... 40,558
Mid Cap Stock Fund ................................................... 51,200
Small Cap Value Fund ................................................. 6,136
Tax-Exempt Bond Fund ................................................. 3,712
California Municipal Fund ............................................ 4,899
California Insured Intermediate Municipal Fund ....................... 301
Of the distributions made from investment income, the following percentages are
tax exempt for regular Federal income tax purposes.
NAME OF FUND
- ------------
Tax-Exempt Bond Fund ................................................. 100.00%
California Municipal Fund ............................................ 100.00%
California Insured Intermediate Municipal Fund ....................... 100.00%
Of the distributions made by the following Funds, the corresponding percentages
represent the amount of each distribution which may qualify for the dividends
received deduction available to corporate shareholders.
NAME OF FUND
- ------------
REIT Fund ............................................................ 20.95%
Equity Income Fund ................................................... 100.00%
Growth & Income Fund ................................................. 100.00%
West Coast Equity Fund ............................................... 100.00%
Mid Cap Stock Fund ................................................... 100.00%
Growth Fund .......................................................... 100.00%
Small Cap Value Fund ................................................. 100.00%
Income Fund .......................................................... 0.38%
High Yield Fund ...................................................... 0.47%
If the Fund meets the requirements of Section 853 of the Code, the Fund may
elect to pass through to its shareholders credits for foreign taxes paid. The
total amount of income received by the International Growth Fund from sources
within foreign countries and possessions of the United States is $0.2264 per
share (representing a total of $17,651,858). The total amount of taxes paid to
such countries is $0.0206 per share (representing a total of $1,605,652).
The following tax information represents fiscal year end percentages and may
differ from those provided to shareholders at calendar year end.
Of the distributions made by the following Funds, the corresponding percentages
represent the amount of each distribution which will qualify for the 15%
dividend income tax rate.
139
Supplemental Information (unaudited)(continued)
WM GROUP OF FUNDS
NAME OF FUND
- ------------
REIT Fund ............................................................ 23.15%
Equity Income Fund ................................................... 94.72%
Growth & Income Fund ................................................. 100.00%
West Coast Equity Fund ............................................... 100.00%
Mid Cap Stock Fund ................................................... 100.00%
Growth Fund .......................................................... 100.00%
Small Cap Value Fund ................................................. 100.00%
International Growth Fund ............................................ 62.25%
The above figures may differ from those cited elsewhere in this report due to
differences in the calculation of income and capital gains for generally
accepted accounting principles (book) purposes and federal income tax (tax)
purposes.
SCHEDULES OF INVESTMENTS:
The Trusts 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 Trusts' Forms N-Q are 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 800-SEC-0330.
PROXY VOTING INFORMATION:
The policies and procedures that the Trusts use to determine how to vote proxies
relating to portfolio securities held by the Funds are included in the Trusts'
Statement of Additional Information which is available, without charge and upon
request, by calling 800-222-5852. Information regarding how the Funds 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.
140
Supplemental Information (unaudited)(continued)
WM GROUP OF FUNDS
TRUSTEES AND OFFICERS INFORMATION
NAME, AGE, AND ADDRESS(1) PRINCIPAL OCCUPATION(S)
OF NON-INTERESTED TRUSTEE(4) LENGTH OF TIME SERVED(2) DURING PAST 5 YEARS OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ----------------------------- ------------------------- ----------------------- ----------------------------------------------
Wayne L. Attwood, M.D. Composite Funds-11 years Retired doctor of None.
Age 76 WM Group of Funds-7 years internal medicine and
(Retired February 2005) gastroenterology.
Kristianne Blake Composite Funds-3 years CPA specializing in Avista Corporation; Frank Russell
Age 51 WM Group of Funds-7 years personal financial Investment Company; Russell
and tax planning. Investment Funds.
Edmond R. Davis, Esq. Sierra Funds-8 years Partner at the law Braille Institute of America, Inc; Children's
Age 77 WM Group of Funds-7 years firm of Davis & Bureau of Southern California, Children's
Whalen LLP. Prior Bureau Foundation; Fifield Manors, Inc.
thereto, partner at
the law firm of
Brobeck, Phlegar &
Harrison, LLP.
Carrol R. McGinnis Griffin Funds-3 years Private investor Baptist Foundation of Texas; Concord
Age 62 WM Group of Funds-6 years since 1994. Prior Trust Company.
thereto, President
and Chief Operating
Officer of
Transamerica Fund
Management Company.
Alfred E. Osborne, Jr.,
Ph.D. Age 60 Sierra Funds-7 years Senior Associate Nordstrom Inc.; K2, Inc.; First Pacific
WM Group of Funds-7 years Dean, University of Advisors' Funds, EMAK Worldwide, Inc.;
California at Los Member of Investment Company
Angeles Anderson Institute National Board of Directors;
Graduate School of Director of Independent Directors
Management, and Council and Member of Communication
Faculty Director of & Education Committees.
the Harold Price
Center for
Entrepreneurial
Studies, University
of California at Los
Angeles.
Daniel L. Pavelich Composite Funds-1 year Retired Chairman and Catalytic, Inc.; Vaagen Bros.
Age 61 WM Group of Funds-7 years CEO of BDO Seidman. Lumber, Inc.
Jay Rockey Composite Funds-3 years Founder and Senior Downtown Seattle Association;
Age 77 WM Group of Funds-7 years Counsel of The WSU Foundation
Rockey Company, now
Rockey, Hill &
Knowlton.
Richard C. Yancey Composite Funds-23 years Retired Managing AdMedia Partners Inc.; Czech and
(Lead Trustee) WM Group of Funds-7 years Director of Dillon Slovak American Enterprise Fund
Age 79 Read & Co., an
investment bank now
part of UBS.
NAME, AGE, AND ADDRESS(1) PRINCIPAL OCCUPATION(S)
OF INTERESTED TRUSTEE(3)(4) LENGTH OF TIME SERVED(2) DURING PAST 5 YEARS OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ----------------------------- ------------------------- ----------------------- -------------------------------------
Anne V. Farrell Composite Funds-4 years President Emeritus Washington Mutual, Inc.; Recreational
Age 70 WM Group of Funds-7 years of the Seattle Equipment Inc.
Foundation.
Michael K. Murphy Composite Funds-3 years Chairman of CPM Washington Mutual, Inc.
Age 68 WM Group of Funds-7 years Development
(Retired November 2005) Corporation.
William G. Papesh Composite Funds-9 years President and Member of Investment Company
(President and CEO) WM Group of Funds-7 years Director of the Institute Board of Governors.
Age 62 Advisor, Transfer
Agent and
Distributor.
NAME, AGE, AND ADDRESS(1) POSITION(S) HELD WITH REGISTRANT & PRINCIPAL OCCUPATION(S)
OF OFFICER(4) LENGTH OF TIME SERVED DURING PAST 5 YEARS
- ------------------------- ---------------------------------- ---------------------------------------------------------
Wendi B. Bernard Assistant Vice President and Assistant Vice President of the Advisor.
Age 37 Assistant Secretary since 2003.
Jeffrey L. Lunzer, CPA First Vice President, Chief First Vice President of the Advisor, Transfer Agent and
Age 44 Financial Officer and Treasurer Distributor. Prior to 2003, senior level positions at the
since 2003. Columbia Funds and Columbia Management Company.
William G. Papesh President and CEO since 1987. President and Director of the Advisor, Transfer Agent
Age 62 Prior to 1987, other officer and Distributor.
positions since 1972.
Gary Pokrzywinski Senior Vice President since 2004. Senior Vice President and Director of the Advisor,
Age 44 First Vice President since 2001. Transfer Agent and Distributor.
Prior to 2001, Vice President
since 1999.
Debra Ramsey Senior Vice President since 2004. Senior Vice President and Director of the Advisor,
Age 52 Transfer Agent and Distributor.
John T. West First Vice President, First Vice President of the Advisor, Transfer Agent
Age 50 Secretary, Chief Compliance and Distributor.
Officer and Anti-Money
Laundering Compliance Officer
since 2004. Prior to 2004,
various other officer
positions since 1993.
Randall L. Yoakum Senior Vice President since 2001. Senior Vice President and Chief Investment Strategist of
Age 45 Prior to 2001, First Vice the Advisor.
President since 1999.
Note: The Statement of Additional Information includes additional information
about Fund Trustees and Officers and is available, without charge, upon request
by calling 800-222-5852.
(1) The address for all Trustees and Officers is 1201 Third Avenue, 22nd Floor,
Seattle, WA, 98101.
(2) The Sierra Funds merged with the Composite Funds on March 23, 1998, to form
the WM Group of Funds. The Griffin Funds merged with the WM Group of Funds
on March 5, 1999.
(3) Trustees are considered interested due to their affiliation with Washington
Mutual, Inc.
(4) The Trustees and Officers serve in these capacities for the 42 Portfolios
and Funds in the Fund Complex. Each Trustee and officer shall hold the
indicated positions until his or her resignation, retirement or removal.
141
(WM GroupofFunds LOGO)
A mutual fund's share price This annual report is published as general The WM Group of mutual funds is advised
and investment return will information for the shareholders of by WM Advisors, Inc., distributed by WM
vary with market conditions, the WM Group of Funds. This material is Funds Distributor, Inc., and sold through
and the principal value of not authorized for distribution unless WM Financial Services, Inc. (all affiliates of
an investment when you sell preceded or accompanied by a current Washington Mutual, Inc.) and independent
your shares may be more or prospectus that includes more information broker/dealers.
less than the original cost. regarding the risk factors, expenses,
policies, and objectives of the funds. Distributed by:
Investors should read the prospectus WM Funds Distributor, Inc.
carefully before investing. To obtain an
additional prospectus, please contact Member NASD
your Investment Representative or call
800-222-5852.
(WM GroupofFunds LOGO) PRESORTED
P.O. Box 8024 STANDARD
Boston, MA 02266-8024 US POSTAGE PAID
LOS ANGELES, CA
PERMIT #1831
ITEM 1. REPORTS TO STOCKHOLDERS
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer, a copy of which is attached hereto.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that there is at least
one Trustee who is an audit committee financial expert serving on its Audit
Committee and has designated Daniel L. Pavelich as an "audit committee financial
expert." Mr. Pavelich is "independent," as such term has been defined by the
Securities and Exchange Commission (the "SEC") for purposes of implementing
Section 407 of the Sarbanes Oxley Act of 2002. The SEC has stated that the
designation or identification of a person as an audit committee financial expert
pursuant to this Item 3 of Form N-CSR does not impose on such person any duties,
obligations or liability that are greater than the duties, obligations and
liability imposed on such person as a member of the Audit Committee and the
Board of Trustees in the absence of such designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
2004 2005
---- ----
$194,000 $200,700
(b) Audit-Related Fees
2004 2005
- ---- ----
None None
For the last two fiscal years, no audit-related fees were required to be
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(c) Tax Fees
2004 2005
---- ----
$16,156 $16,688
The tax fees consist of fees billed in connection with reviewing the federal
regulated investment company income tax returns for WM Trust II for the tax
years ended October 31, 2004 and October 31, 2005.
(d) All Other Fees
For the last two fiscal years, no other fees were required to be approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(e) (1) Pre-approval Policies and Procedures
Pursuant to the Audit Committee charter, the Audit Committee of the registrant
will review and pre-approve or disapprove its principal accountant's engagement
for all services with the registrant and its principal accountant's engagement
for non-audit services with the registrant's investment advisor (not including a
sub-advisor whose role is primarily portfolio management and is sub-contracted
or overseen by another investment advisor) and any entity controlling,
controlled by or under common control with the investment advisor that provides
ongoing services to the funds in accordance with paragraph (c)(7)(i) of Rule
2-01 of Regulation S-X, if the engagement relates directly to the operations and
financial reporting of the registrant.
(2) None of the services described in paragraphs (b) through (d) of this Item 4
were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X.
(f) Not applicable.
(g) For the fiscal year ended October 31, 2005, the registrant's principal
accountant billed aggregate non-audit fees in the amount of $16,688 for services
rendered to the registrant, WM Advisors, Inc., WM Funds Distributor, Inc., WM
Shareholder Services, Inc. and WM Financial Services, Inc. For the fiscal year
ended October 31, 2004, the registrant's principal accountant billed aggregate
non-audit fees in the amount of $55,156 for services rendered to the registrant,
WM Advisors, Inc., WM Funds Distributor, Inc., WM Shareholder Services, Inc. and
WM Financial Services, Inc.
(h) The Audit Committee has considered whether the provision of non-audit
services that were rendered to the registrant's investment advisor (not
including any subadvisor whose role is primarily portfolio management and is
subcontracted with or overseen by another investment advisor), and any entity
controlling, controlled by, or under common control with the investment advisor
that provides ongoing services to the registrant that were not pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule is included as part of the report to shareholders filed under Item 1 of
this Form.
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
Not Applicable.
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 registrant's second fiscal
half-year that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS
(a) Registrant's Code of Ethics. The registrant's code of ethics required to be
disclosed under Item 2 of Form N-CSR attached hereto at Exhibit 99.CODE ETH.
(b) 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.
(c) 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 Trust II
By: /s/ William G. Papesh
William G. Papesh
President and Chief Executive Officer
Date: January 6, 2006
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 an on the
dates indicated.
By: /s/ Jeffrey L. Lunzer
Jeffrey L. Lunzer
Treasurer and Chief Financial Officer
Date: January 6, 2006
By: /s/ William G. Papesh
William G. Papesh
President and Chief Executive Officer
Date: January 6, 2006