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 811-07462
WM Variable Trust
(Exact name of registrant as specified in charter)
1201 Third Avenue, 22nd Floor, Seattle, WA 98101
(Address of principal executive offices) (Zip code)
John T. West
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: December 31st
Date of reporting period: June 30, 2003
[WM VARIABLE TRUST LOGO]
WM VARIABLE TRUST
- Equity Funds
- Fixed-Income Funds
Common sense. Uncommon solutions.
[1st Photo: Valley with trees in the early
morning fog.]
[2nd Photo: Bridge leading into a forest of tall
trees - body of water in the background.]
SEMI-ANNUAL REPORT
for the period ended
June 30, 2003
EQUITY FUNDS
REIT Fund
Equity Income Fund
Growth & Income Fund
West Coast Equity Fund
Mid Cap Stock Fund
Growth Fund
Small Cap Stock Fund
International Growth Fund
FIXED-INCOME FUNDS
Short Term Income Fund
U.S. Government Securities Fund
Income Fund
Money Market Fund
TABLE OF CONTENTS
Message from the President..................... 1
Statements of Assets and Liabilities........... 2
Statements of Operations....................... 6
Statements of Changes in Net Assets............ 8
Statements of Changes in Net
Assets - Capital Stock Activity................ 12
Financial Highlights........................... 14
Portfolio of Investments....................... 21
Notes to Financial Statements (unaudited)...... 48
NOT FDIC OR NCUA/NCUSIF INSURED
May Lose Value - Not a Deposit - No Bank or Credit Union
Guarantee - Not insured by any federal government agency
DEAR INVESTOR,
During the first half of 2003, we experienced a set of decisive geopolitical
events, as well as equity market gains.(1) The military conflict in Iraq
commenced in March and concluded relatively quickly, brevity that we hope will
inspire a tempering of global tensions. We also saw some encouraging signs of
improvement in economic and market conditions, as well as the passage of the
Jobs and Growth Tax Relief Reconciliation Act of 2003. Equity markets rallied to
conclude the six-month period ended June 30, 2003 as the Standard & Poor's 500
Index gained 11.77%.(2) Corporate earnings also showed some signs of change for
the better, but true revenue-driven profit growth remains somewhat more
difficult for many firms to garner. With these conditions in mind, we feel that
time is still needed before we can declare a full economic recovery.
Corporate bonds, particularly lower-rated issues, were among the strongest
performing major asset classes during the period. Short-term interest rates
continued their slide to 45-year lows, while Treasury yields dropped slightly
during the period. These factors helped to boost the performance of bond
investments, where prices generally move in the opposite direction of yields.
Although stocks generated strong gains in the second quarter of 2003, bonds
outperformed stocks in each of the past three years, averaging more than 10% per
year for the three years ended June 30, 2003. Conversely, stocks declined by an
average of more than 11% per year over the same time period.(3)
As a result of positive bond market performance, bond fund investments were
significantly more popular than equity funds in the first quarter, as measured
by cash inflows. With the rebound in equity markets in the second quarter, stock
fund asset flows gained momentum, reversing the prior trend.(4) These swings
lead us to caution investors to be aware of the pitfalls associated with chasing
short-term past performance. Assets that have shown the best results in a
certain period may not necessarily repeat this strong performance in the next.
For this reason, we have always recommended a strategy that utilizes
diversification and asset allocation to help protect investor assets through a
variety of market conditions. We also suggest that investors regularly elicit
the expertise of a financial advisor. With the guidance of these investment
professionals, investors can take the actions necessary to keep their investment
portfolios aligned with their goals regardless of market fluctuations. To
provide additional opportunities for diversification, we introduced the WM VT
REIT Fund as an underlying investment within the WM VT Strategic Asset
Management (SAM) Portfolios in May. The Fund invests primarily in real estate
investment trust (REIT) securities and seeks to take advantage of their
dividend-producing potential. We believe that the WM VT REIT Fund adds depth and
breadth to the overall Fund family and that it has the capability of enhancing
risk management opportunities available through the SAM Portfolios.
At the WM Group of Funds, our focus on risk management has remained in place
throughout the past three years of significantly volatile equity market
performance. It is a fundamental aspect of our investment philosophy, and we
will continue to stress this approach as economic conditions and equity markets
change. Our firm and our investment products have evolved over the years, and
yet our commitment to a risk management discipline remains at the core of the
investment options we offer.
As we look toward the second half of our fiscal year, we are unwavering in our
belief that the strict investment discipline that has guided us for more than 60
years is the right course through the current market uncertainty. We thank you
for your continued confidence and trust in the WM Variable Trust Funds.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
(1) As measured by the Standard & Poor's 500 Index.
(2) Source: Ibbotson Associates. Index performance information represents total
return from January 1, 2003 through June 30, 2003 and includes the
reinvestment of dividends and capital gains.
(3) Source: Ibbotson Associates. Stocks are measured by the S&P 500 Index.
Bonds are measured by the Lehman Brothers Aggregate Bond Index. Index
performance information represents average annual total returns from
June 30, 2000 through June 30, 2003 and includes the reinvestment of
dividends and capital gains.
(4) Source: AMG Data Services, Wall Street Journal, July 7, 2003.
Note: Indices are unmanaged, and an investment cannot be made directly in an
index.
1
STATEMENTS of ASSETS and LIABILITIES
WM VARIABLE TRUST
JUNE 30, 2003 (UNAUDITED)
EQUITY GROWTH & WEST COAST MID CAP
REIT INCOME INCOME EQUITY STOCK
FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------
ASSETS:
Investments, at value (a)........................ $ 28,945,665 $128,306,983 $206,743,130 $ 82,154,445 $ 68,178,592
Cash............................................. 225 579 808 437 986
Cash held as collateral for securities loaned.... -- 10,213,960 12,215,000 3,911,137 4,026,000
Unrealized appreciation of forward
foreign currency contracts..................... -- -- -- -- --
Dividends and/or interest receivable............. 135,338 336,702 203,781 44,758 45,028
Receivable for Fund shares sold.................. -- 54,044 4,996 22,683 13,244
Receivable for investment securities sold........ -- -- -- 9,959 520,483
Prepaid expenses................................. -- 1,781 3,041 1,042 974
------------ ------------ ------------ ------------ ------------
Total Assets................................... 29,081,228 138,914,049 219,170,756 86,144,461 72,785,307
------------ ------------ ------------ ------------ ------------
LIABILITIES:
Payable upon return of securities loaned......... -- 10,213,960 12,215,000 3,911,137 4,026,000
Unrealized depreciation of forward
foreign currency contracts..................... -- -- -- -- --
Payable for Fund shares redeemed................. -- -- 43,465 -- 31,355
Payable for when-issued securities............... -- -- -- -- --
Payable for investment securities purchased...... 188,567 649,091 -- 148,827 289,483
Investment advisory fee payable.................. 18,893 65,858 131,749 42,007 42,315
Distribution fees payable........................ -- 1,606 354 570 489
Accrued legal and audit fees..................... 7,251 17,589 17,389 16,086 14,331
Accrued expenses and other payables.............. 2,674 20,216 26,879 10,486 11,245
------------ ------------ ------------ ------------ ------------
Total Liabilities.............................. 217,385 10,968,320 12,434,836 4,129,113 4,415,218
------------ ------------ ------------ ------------ ------------
NET ASSETS....................................... $ 28,863,843 $127,945,729 $206,735,920 $ 82,015,348 $ 68,370,089
============ ============ ============ ============ ============
(a) Investments, at cost......................... $ 27,286,115 $127,148,568 $189,869,602 $ 80,249,437 $ 55,234,022
============ ============ ============ ============ ============
GROWTH
FUND
------------
ASSETS:
Investments, at value (a)....................... $159,194,583
Cash............................................ 44,309
Cash held as collateral for securities loaned... 6,282,748
Unrealized appreciation of forward
foreign currency contracts.................... 7,857
Dividends and/or interest receivable............ 66,699
Receivable for Fund shares sold................. 10,798
Receivable for investment securities sold....... 1,090,824
Prepaid expenses................................ 2,151
------------
Total Assets.................................. 166,699,969
------------
LIABILITIES:
Payable upon return of securities loaned........ 6,282,748
Unrealized depreciation of forward
foreign currency contracts.................... 44,470
Payable for Fund shares redeemed................ 23,186
Payable for when-issued securities.............. --
Payable for investment securities purchased..... 1,301,973
Investment advisory fee payable................. 116,983
Distribution fees payable....................... 169
Accrued legal and audit fees.................... 17,063
Accrued expenses and other payables............. 37,489
------------
Total Liabilities............................. 7,824,081
------------
NET ASSETS...................................... $158,875,888
============
(a) Investments, at cost........................ $154,545,187
============
See Notes to Financial Statements.
2
U.S.
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT MONEY
STOCK GROWTH INCOME SECURITIES INCOME MARKET
FUND FUND FUND FUND FUND FUND
- ------------ ------------ ------------ ------------ ------------ ------------
$ 61,049,602 $ 55,064,050 $ 45,630,857 $204,924,327 $204,629,176 $ 29,365,875
655 734 150 156 967 651,854
8,441,088 2,662,431 6,176,629 52,475,581 29,876,163 --
-- 174,197 -- -- -- --
19,145 131,197 548,771 1,292,446 2,857,896 115,485
38,582 523 76,388 227,020 183,956 17,466
793,672 141,491 94 -- -- --
649 739 713 2,947 2,913 566
- ------------ ------------ ------------ ------------ ------------ ------------
70,343,393 58,175,362 52,433,602 258,922,477 237,551,071 30,151,246
- ------------ ------------ ------------ ------------ ------------ ------------
8,441,088 2,662,431 6,176,629 52,475,581 29,876,163 --
-- 5,973 -- -- -- --
12,295 9,615 4,262 15,027 43,061 35,012
-- -- -- 3,634,106 -- --
945,564 141,103 -- -- -- 500,496
44,740 92,198 18,812 82,880 85,120 11,034
301 20 428 3,560 3,333 702
17,228 17,089 15,956 16,644 16,648 15,078
6,081 29,348 17,989 22,456 24,822 6,226
- ------------ ------------ ------------ ------------ ------------ ------------
9,467,297 2,957,777 6,234,076 56,250,254 30,049,147 568,548
- ------------ ------------ ------------ ------------ ------------ ------------
$ 60,876,096 $ 55,217,585 $ 46,199,526 $202,672,223 $207,501,924 $ 29,582,698
============ ============ ============ ============ ============ ============
$ 72,654,444 $ 57,688,563 $ 43,236,908 $198,114,140 $187,786,564 $ 29,365,875
============ ============ ============ ============ ============ ============
See Notes to Financial Statements.
3
STATEMENTS of ASSETS and LIABILITIES (continued)
WM VARIABLE TRUST
JUNE 30, 2003 (UNAUDITED)
EQUITY GROWTH & WEST COAST MID CAP
REIT INCOME INCOME EQUITY STOCK
FUND FUND FUND FUND FUND
------------- ------------- ------------- ------------- -------------
NET ASSETS CONSIST OF:
Undistributed net investment income/
(accumulated net investment loss)........ $ 219,253 $ 1,671,763 $ 1,258,794 $ 134,985 $ 138,545
Accumulated net realized gain/(loss)
on investment transactions............... 61,384 (1,503,204) (34,848,226) (5,789,621) (2,085,652)
Net unrealized appreciation/(depreciation)
of investments........................... 1,659,550 1,158,415 16,873,528 1,905,008 12,944,570
Paid-in capital............................ 26,923,656 126,618,755 223,451,824 85,764,976 57,372,626
------------- ------------- ------------- ------------- -------------
Total Net Assets......................... $ 28,863,843 $ 127,945,729 $ 206,735,920 $ 82,015,348 $ 68,370,089
============= ============= ============= ============= =============
NET ASSETS:
Class 1 Shares............................ $ 28,863,843 $ 119,795,951 $ 204,921,943 $ 79,158,399 $ 65,860,237
============= ============= ============= ============= =============
Class 2 Shares............................ -- $ 8,149,778 $ 1,813,977 $ 2,856,949 $ 2,509,852
============= ============= ============= =============
SHARES OUTSTANDING:
Class 1 Shares............................ 2,690,368 9,992,779 13,735,785 5,375,910 5,268,251
============= ============= ============= ============= =============
Class 2 Shares............................ -- 681,595 121,905 194,470 201,260
============= ============= ============= =============
CLASS 1 SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding............................. $ 10.73 $ 11.99 $ 14.92 $ 14.72 $ 12.50
============= ============= ============= ============= =============
CLASS 2 SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding............................ -- $ 11.96 $ 14.88 $ 14.69 $ 12.47
============= ============= ============= =============
GROWTH
FUND
-------------
NET ASSETS CONSIST OF:
Undistributed net investment income/
(accumulated net investment loss)........ $ 45,546
Accumulated net realized gain/(loss)
on investment transactions............... (120,374,264)
Net unrealized appreciation/(depreciation)
of investments........................... 4,612,775
Paid-in capital............................ 274,591,831
-------------
Total Net Assets......................... $ 158,875,888
=============
NET ASSETS:
Class 1 Shares............................. $ 158,031,804
=============
Class 2 Shares............................. $ 844,084
=============
SHARES OUTSTANDING:
Class 1 Shares............................. 15,109,257
=============
Class 2 Shares............................. 80,967
=============
CLASS 1 SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding.............................. $ 10.46
=============
CLASS 2 SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding.............................. $ 10.43
=============
See Notes to Financial Statements.
4
U.S.
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT MONEY
STOCK GROWTH INCOME SECURITIES INCOME MARKET
FUND FUND FUND FUND FUND FUND
- ------------ ------------ ------------ ------------ ------------ ------------
$ (29,278) $ 351,375 $ 980,613 $ 4,647,537 $ 5,789,702 $ --
(29,946,958) (14,142,721) (726,700) (1,542,463) (1,975,593) (946)
(11,604,842) (2,455,063) 2,389,329 6,810,187 16,842,612 --
102,457,174 71,463,994 43,556,284 192,756,962 186,845,203 29,583,644
- ------------ ------------ ------------ ------------ ------------ ------------
$ 60,876,096 $ 55,217,585 $ 46,199,526 $202,672,223 $207,501,924 $ 29,582,698
============ ============ ============ ============ ============ ============
$ 59,418,122 $ 55,114,173 $ 43,897,074 $184,004,234 $190,571,504 $ 26,124,905
============ ============ ============ ============ ============ ============
$ 1,457,974 $ 103,412 $ 2,302,452 $ 18,667,989 $ 16,930,420 $ 3,457,793
============ ============ ============ ============ ============ ============
8,564,853 6,092,466 16,860,354 17,201,502 17,304,268 26,139,786
============ ============ ============ ============ ============ ============
211,265 11,455 886,537 1,750,494 1,542,785 3,460,134
============ ============ ============ ============ ============ ============
$ 6.94 $ 9.05 $ 2.60 $ 10.70 $ 11.01 $ 1.00
============ ============ ============ ============ ============ ============
$ 6.90 $ 9.03 $ 2.60 $ 10.66 $ 10.97 $ 1.00
============ ============ ============ ============ ============ ============
See Notes to Financial Statements.
5
STATEMENTS of OPERATIONS
WM VARIABLE TRUST
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
EQUITY GROWTH & WEST COAST MID CAP
REIT INCOME INCOME EQUITY STOCK GROWTH
FUND* FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------ ------------
INVESTMENT INCOME:
Dividends ............................. $ 261,249 $ 1,564,061 $ 2,077,173 $ 377,683 $ 380,669 $ 670,874
Interest .............................. 5,548 535,378 31,079 16,582 26,338 49,610
Foreign withholding taxes ............. -- (10,578) (21,068) -- -- (17,235)
Securities lending income ............. -- 9,072 583 1,773 4,748 10,412
------------ ------------ ------------ ------------ ------------ ------------
Total investment income ............. 266,797 2,097,933 2,087,767 396,038 411,755 713,661
------------ ------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fee ............... 37,126 371,312 769,336 224,387 239,835 635,594
Custodian fees ........................ 1,085 4,579 7,112 4,164 3,828 27,759
Legal and audit fees .................. 7,251 18,933 20,164 16,392 14,598 18,815
Other ................................. 2,281 18,720 26,023 9,241 9,234 35,065
Class 2 Shares distribution fees ...... -- 8,623 1,814 3,025 2,649 887
------------ ------------ ------------ ------------ ------------ ------------
Total expenses ...................... 47,743 422,167 824,449 257,209 270,144 718,120
Fees reduced by custodian credits ..... (199) (105) (202) (67) (117) (522)
------------ ------------ ------------ ------------ ------------ ------------
Net expenses ........................ 47,544 422,062 824,247 257,142 270,027 717,598
------------ ------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME/(LOSS) .......... 219,253 1,675,871 1,263,520 138,896 141,728 (3,937)
------------ ------------ ------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on
investment transactions ............. 61,384 (1,238,967) (10,058,350) (644,195) (641,636) (6,648,242)
Net change in unrealized appreciation/
(depreciation) of investments ....... 1,659,550 13,462,580 31,136,514 11,832,346 6,157,371 24,151,460
------------ ------------ ------------ ------------ ------------ ------------
Net realized and unrealized gain/(loss)
on investments ...................... 1,720,934 12,223,613 21,078,164 11,188,151 5,515,735 17,503,218
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........... $ 1,940,187 $ 13,899,484 $ 22,341,684 $ 11,327,047 $ 5,657,463 $ 17,499,281
============ ============ ============ ============ ============ ============
- -------------------------
* The REIT Fund commenced operations on May 1, 2003.
See Notes to Financial Statements.
6
U.S.
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT MONEY
STOCK GROWTH INCOME SECURITIES INCOME MARKET
FUND FUND FUND FUND FUND FUND
- ------------ ------------ ----------- ------------ ------------ ---------
$ 124,129 $ 866,264 $ -- $ -- $ -- $ --
4,421 7,468 1,119,211 5,193,730 6,322,076 229,704
(783) (94,915) -- -- -- --
81,713 26,744 4,298 20,641 23,814 --
- ------------ ------------ ----------- ------------ ------------ ---------
209,480 805,561 1,123,509 5,214,371 6,345,890 229,704
- ------------ ------------ ----------- ------------ ------------ ---------
209,672 237,610 109,015 482,326 484,437 75,780
7,634 35,010 4,193 8,895 6,310 1,976
17,123 17,017 15,736 19,334 19,299 14,740
2,957 27,151 9,359 27,544 28,855 5,465
1,473 123 2,172 19,084 15,307 4,935
- ------------ ------------ ----------- ------------ ------------ ---------
238,859 316,911 140,475 557,183 554,208 102,896
(101) (19) (122) (2) (245) (46)
- ------------ ------------ ----------- ------------ ------------ ---------
238,758 316,892 140,353 557,181 553,963 102,850
- ------------ ------------ ----------- ------------ ------------ ---------
(29,278) 488,669 983,156 4,657,190 5,791,927 126,854
- ------------ ------------ ----------- ------------ ------------ ---------
(14,242,358) (2,308,307) (176,626) (264,608) 305,006 --
27,137,728 5,747,827 1,151,332 (1,271,243) 9,161,157 --
- ------------ ------------ ----------- ------------ ------------ ---------
12,895,370 3,439,520 974,706 (1,535,851) 9,466,163 --
- ------------ ------------ ----------- ------------ ------------ ---------
$ 12,866,092 $ 3,928,189 $ 1,957,862 $ 3,121,339 $ 15,258,090 $ 126,854
============ ============ =========== ============ ============ =========
See Notes to Financial Statements.
7
STATEMENTS of CHANGES in NET ASSETS
WM VARIABLE TRUST
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
EQUITY GROWTH & WEST COAST MID CAP
REIT INCOME INCOME EQUITY STOCK
FUND* FUND FUND FUND FUND
------------- ------------- ------------- ------------- -------------
Net investment income/(loss).................. $ 219,253 $ 1,675,871 $ 1,263,520 $ 138,896 $ 141,728
Net realized gain/(loss) on
investment transactions..................... 61,384 (1,238,967) (10,058,350) (644,195) (641,636)
Net change in unrealized appreciation/
(depreciation) of investments............... 1,659,550 13,462,580 31,136,514 11,832,346 6,157,371
------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations................... 1,940,187 13,899,484 22,341,684 11,327,047 5,657,463
Distributions to shareholders from:
Net investment income:
Class 1 Shares............................ -- (3,032,178) (2,490,625) (224,271) (209,369)
Class 2 Shares............................ -- (196,711) (19,945) (4,649) (4,334)
Net realized gains on investments:
Class 1 Shares............................ -- (550,427) -- -- --
Class 2 Shares............................ -- (37,375) -- -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class 1 Shares............................ 26,923,656 (1,987,250) (24,081,895) 215,212 (2,502,354)
Class 2 Shares............................ -- 1,086,224 348,659 161,660 347,173
------------- ------------- ------------- ------------- -------------
Net increase/(decrease) in net assets......... 28,863,843 9,181,767 (3,902,122) 11,474,999 3,288,579
NET ASSETS:
Beginning of period........................... -- 118,763,962 210,638,042 70,540,349 65,081,510
------------- ------------- ------------- ------------- -------------
End of period................................. $ 28,863,843 $ 127,945,729 $ 206,735,920 $ 82,015,348 $ 68,370,089
============= ============= ============= ============= =============
Undistributed net investment income/
(accumulated net investment loss)
at end of period............................ $ 219,253 $ 1,671,763 $ 1,258,794 $ 134,985 $ 138,545
============= ============= ============= ============= =============
GROWTH
FUND
-------------
Net investment income/(loss).................. $ (3,937)
Net realized gain/(loss) on
investment transactions..................... (6,648,242)
Net change in unrealized appreciation/
(depreciation) of investments............... 24,151,460
-------------
Net increase in net assets
resulting from operations................... 17,499,281
Distributions to shareholders from:
Net investment income:
Class 1 Shares............................ --
Class 2 Shares............................ --
Net realized gains on investments:
Class 1 Shares............................ --
Class 2 Shares............................ --
Net increase/(decrease) in net assets from
Fund share transactions:
Class 1 Shares............................ 5,200,388
Class 2 Shares............................ 132,573
-------------
Net increase/(decrease) in net assets......... 22,832,242
NET ASSETS:
Beginning of period........................... 136,043,646
-------------
End of period................................. $ 158,875,888
=============
Undistributed net investment income/
(accumulated net investment loss)
at end of period............................ $ 45,546
=============
- ------------------------
* The REIT Fund commenced operations on May 1, 2003.
See Notes to Financial Statements.
8
U.S.
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT MONEY
STOCK GROWTH INCOME SECURITIES INCOME MARKET
FUND FUND FUND FUND FUND FUND
- ------------- ------------- ------------- ------------- ------------- -------------
$ (29,278) $ 488,669 $ 983,156 $ 4,657,190 $ 5,791,927 $ 126,854
(14,242,358) (2,308,307) (176,626) (264,608) 305,006 --
27,137,728 5,747,827 1,151,332 (1,271,243) 9,161,157 --
- ------------- ------------- ------------- ------------- ------------- -------------
12,866,092 3,928,189 1,957,862 3,121,339 15,258,090 126,854
-- (748,064) (2,609,526) (8,730,607) (10,778,144) (116,368)
-- (1,186) (129,176) (855,708) (925,011) (10,486)
-- -- -- -- -- --
-- -- -- -- -- --
7,375,832 1,316,874 3,031,456 16,073,574 7,208,373 (7,641,127)
89,916 3,806 1,169,249 7,029,351 8,708,691 (1,220,823)
- ------------- ------------- ------------- ------------- ------------- -------------
20,331,840 4,499,619 3,419,865 16,637,949 19,471,999 (8,861,950)
40,544,256 50,717,966 42,779,661 186,034,274 188,029,925 38,444,648
- ------------- ------------- ------------- ------------- ------------- -------------
$ 60,876,096 $ 55,217,585 $ 46,199,526 $ 202,672,223 $ 207,501,924 $ 29,582,698
============= ============= ============= ============= ============= =============
$ (29,278) $ 351,375 $ 980,613 $ 4,647,537 $ 5,789,702 $ --
============= ============= ============= ============= ============= =============
See Notes to Financial Statements.
9
STATEMENTS of CHANGES in NET ASSETS (continued)
WM VARIABLE TRUST
FOR THE YEAR ENDED DECEMBER 31, 2002
EQUITY GROWTH & WEST COAST MID CAP
INCOME INCOME EQUITY STOCK GROWTH
FUND FUND FUND FUND FUND
------------- ------------- ------------- ------------ ------------
Net investment income/(loss).......................... $ 3,426,660 $ 2,508,035 $ 321,062 $ 220,738 $ (79,096)
Net realized gain/(loss) on investment transactions... 129,512 (11,120,216) (4,844,003) (939,495) (33,280,451)
Net increase from payments by a related party......... -- -- -- -- 1,200,830
Net change in unrealized appreciation/(depreciation)
of investments....................................... (20,096,387) (48,916,763) (14,983,644) (6,934,878) (26,836,320)
------------- ------------- ------------- ------------ ------------
Net increase/(decrease) in net assets
resulting from operations............................ (16,540,215) (57,528,944) (19,506,585) (7,653,635) (58,995,037)
Distributions to shareholders from:
Net investment income:
Class 1 Shares..................................... (2,386,136) (1,688,757) (435,209) (142,737) --
Class 2 Shares..................................... (79,496) (6,836) (8,862) (2,510) --
Net realized gains on investments:
Class 1 Shares..................................... (228,156) -- (1,033,012) (1,640,257) --
Class 2 Shares..................................... (7,632) -- (21,065) (34,173) --
Net increase/(decrease) in net assets from
Fund share transactions:
Class 1 Shares..................................... 32,939,549 (50,799,197) 4,987,751 415,163 26,780,552
Class 2 Shares..................................... 6,425,466 1,379,138 2,663,519 1,483,526 743,261
------------- ------------- ------------- ------------ ------------
Net increase/(decrease) in net assets................. 20,123,380 (108,644,596) (13,353,463) (7,574,623) (31,471,224)
NET ASSETS:
Beginning of year..................................... 98,640,582 319,282,638 83,893,812 72,656,133 167,514,870
------------- ------------- ------------- ------------ ------------
End of year........................................... $ 118,763,962 $ 210,638,042 $ 70,540,349 $ 65,081,510 $136,043,646
============= ============= ============= ============ ============
Undistributed net investment income at end of year.... $ 3,224,781 $ 2,505,844 $ 225,009 $ 210,520 $ 49,483
============= ============= ============= ============ ============
See Notes to Financial Statements.
10
U.S.
SMALL CAP INTERNATIONAL SHORT TERM GOVERNMENT MONEY
STOCK GROWTH INCOME SECURITIES INCOME MARKET
FUND FUND FUND FUND FUND FUND
- ------------- ------------- ------------- ------------- ------------- -------------
$ (156,963) $ 244,847 $ 2,705,057 $ 8,943,785 $ 11,536,429 $ 446,945
(13,535,362) (5,022,254) 242,440 747,715 786,709 --
-- -- -- -- -- --
(20,656,458) (4,006,847) 6,150 4,415,678 4,146,634 --
- ------------- ------------- ------------- ------------- ------------- -------------
(34,348,783) (8,784,254) 2,953,647 14,107,178 16,469,772 446,945
-- (599,905) (2,079,342) (5,949,742) (7,749,262) (427,932)
-- (1,239) (21,807) (166,367) (103,921) (37,952)
(3,782,168) -- -- -- -- --
(74,473) -- -- -- -- --
3,781,632 10,814,232 (9,585,048) 29,155,370 16,673,364 5,220,086
1,161,205 111,271 1,149,602 11,230,233 7,552,746 4,491,731
- ------------- ------------- ------------- ------------- ------------- -------------
(33,262,587) 1,540,105 (7,582,948) 48,376,672 32,842,699 9,692,878
73,806,843 49,177,861 50,362,609 137,657,602 155,187,226 28,751,770
- ------------- ------------- ------------- ------------- ------------- -------------
$ 40,544,256 $ 50,717,966 $ 42,779,661 $ 186,034,274 $ 188,029,925 $ 38,444,648
============= ============= ============= ============= ============= =============
$ -- $ 611,956 $ 2,736,159 $ 9,576,662 $ 11,700,930 $ --
============= ============= ============= ============= ============= =============
See Notes to Financial Statements.
11
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM VARIABLE TRUST
REIT FUND* EQUITY INCOME FUND GROWTH & INCOME FUND
-------------- ----------------------------- -----------------------------
PERIOD SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
06/30/03 06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) (UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
-------------- ------------- ------------- -------------- ------------
AMOUNT
CLASS 1:
Sold.................................. $ 26,975,656 $ 7,110,328 $ 39,712,894 $ 6,290,561 $ 30,722,792
Issued as reinvestment of dividends... -- 3,582,605 2,614,292 2,490,625 1,688,757
Redeemed.............................. (52,000) (12,680,183) (9,387,637) (32,863,081) (83,210,746)
-------------- ------------- ------------- -------------- ------------
Net increase/(decrease)............... $ 26,923,656 $ (1,987,250) $ 32,939,549 $ (24,081,895) $(50,799,197)
============== ============= ============= ============== ============
CLASS 2:
Sold.................................. -- $ 1,195,683 $ 6,869,265 $ 351,325 $ 1,520,994
Issued as reinvestment of dividends... -- 234,086 87,128 19,945 6,836
Redeemed.............................. -- (343,545) (530,927) (22,611) (148,692)
------------- ------------- -------------- ------------
Net increase.......................... -- $ 1,086,224 $ 6,425,466 $ 348,659 $ 1,379,138
============= ============= ============== ============
SHARES
CLASS 1:
Sold.................................. 2,695,275 634,067 3,208,368 455,020 2,239,100
Issued as reinvestment of dividends... -- 294,622 215,879 164,506 112,284
Redeemed.............................. (4,907) (1,132,928) (841,306) (2,442,381) (5,369,452)
-------------- ------------- ------------- -------------- ------------
Net increase/(decrease)............... 2,690,368 (204,239) 2,582,941 (1,822,855) (3,018,068)
============== ============= ============= ============== ============
CLASS 2:
Sold.................................. -- 106,012 576,668 25,298 100,954
Issued as reinvestment of dividends... -- 19,298 7,201 1,321 455
Redeemed.............................. -- (31,300) (47,432) (1,622) (10,992)
------------- ------------- -------------- ------------
Net increase.......................... -- 94,010 536,437 24,997 90,417
============= ============= ============== ============
U.S. GOVERNMENT
INTERNATIONAL GROWTH FUND SHORT TERM INCOME FUND SECURITIES FUND
--------------------------- ---------------------- ---------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
06/30/03 YEAR ENDED 06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
------------ ------------ ------------ ------------ ------------ ------------
AMOUNT
CLASS 1:
Sold................................. $ 2,369,826 $ 17,054,909 $ 4,840,165 $ 14,162,873 $ 19,388,791 $ 60,239,869
Issued as reinvestment of dividends 748,064 599,905 2,609,526 2,079,342 8,730,607 5,949,742
Redeemed............................. (1,801,016) (6,840,582) (4,418,235) (25,827,263) (12,045,824) (37,034,241)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease).............. $ 1,316,874 $ 10,814,232 $ 3,031,456 $ (9,585,048) $ 16,073,574 $ 29,155,370
============ ============ ============ ============ ============ ============
CLASS 2:
Sold................................. $ 15,253 $ 145,836 $ 1,382,843 $ 1,233,319 $ 6,577,060 $ 11,791,953
Issued as reinvestment of dividends 1,186 1,239 129,176 21,807 855,708 166,367
Redeemed............................. (12,633) (35,804) (342,770) (105,524) (403,417) (728,087)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease).............. $ 3,806 $ 111,271 $ 1,169,249 $ 1,149,602 $ 7,029,351 $ 11,230,233
============ ============ ============ ============ ============ ============
SHARES
CLASS 1:
Sold................................. 281,539 1,823,960 1,788,299 5,464,381 1,747,663 5,608,343
Issued as reinvestment of dividends 79,751 62,752 999,818 812,243 815,183 563,957
Redeemed............................. (217,189) (753,488) (1,638,333) (9,939,647) (1,087,133) (3,427,606)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease).............. 144,101 1,133,224 1,149,784 (3,663,023) 1,475,713 2,744,694
============ ============ ============ ============ ============ ============
CLASS 2:
Sold................................. 1,785 14,761 514,226 473,870 594,347 1,092,316
Issued as reinvestment of dividends 127 130 49,683 8,518 80,122 15,784
Redeemed............................. (1,463) (3,888) (126,671) (40,793) (36,612) (66,904)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease).............. 449 11,003 437,238 441,595 637,857 1,041,196
============ ============ ============ ============ ============ ============
- -------------------
* The REIT Fund commenced operations on May 1, 2003.
See Notes to Financial Statements.
12
WEST COAST
EQUITY FUND MID CAP STOCK FUND GROWTH FUND SMALL CAP STOCK FUND
- --------------------------- --------------------------- --------------------------- ---------------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
06/30/03 YEAR ENDED 06/30/03 YEAR ENDED 06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 3,993,352 $ 13,303,200 $ 3,142,021 $ 8,084,591 $ 15,190,641 $ 59,345,256 $ 9,899,971 $ 7,657,820
224,271 1,468,221 209,369 1,782,994 -- -- -- 3,782,168
(4,002,411) (9,783,670) (5,853,744) (9,452,422) (9,990,253) (32,564,704) (2,524,139) (7,658,356)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 215,212 $ 4,987,751 $ (2,502,354) $ 415,163 $ 5,200,388 $ 26,780,552 $ 7,375,832 $ 3,781,632
============ ============ ============ ============ ============ ============ ============ ============
$ 415,113 $ 2,930,439 $ 433,652 $ 1,621,992 $ 166,551 $ 839,312 $ 164,410 $ 1,203,215
4,649 29,927 4,334 36,683 -- -- -- 74,473
(258,102) (296,847) (90,813) (175,149) (33,978) (96,051) (74,494) (116,483)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 161,660 $ 2,663,519 $ 347,173 $ 1,483,526 $ 132,573 $ 743,261 $ 89,916 $ 1,161,205
============ ============ ============ ============ ============ ============ ============ ============
302,714 979,125 270,840 685,991 1,650,534 5,267,778 1,821,797 1,253,887
15,174 99,947 16,564 139,405 -- -- -- 602,256
(316,828) (724,826) (514,356) (809,887) (1,070,227) (3,133,991) (445,083) (1,120,035)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1,060 354,246 (226,952) 15,509 580,307 2,133,787 1,376,714 736,108
============ ============ ============ ============ ============ ============ ============ ============
31,713 199,763 37,456 132,529 17,639 74,659 28,132 162,957
315 2,040 344 2,873 -- -- -- 11,918
(20,187) (22,667) (7,813) (15,020) (3,503) (10,156) (12,108) (18,308)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
11,841 179,136 29,987 120,382 14,136 64,503 16,024 156,567
============ ============ ============ ============ ============ ============ ============ ============
INCOME FUND MONEY MARKET FUND
- --------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
- ------------ ------------ ------------ ------------
$ 12,207,652 $ 47,668,056 $ 7,705,041 $ 24,565,211
10,778,144 7,749,262 116,368 427,932
(15,777,423) (38,743,954) (15,462,536) (19,773,057)
- ------------ ------------ ------------ ------------
$ 7,208,373 $ 16,673,364 $ (7,641,127) $ 5,220,086
============ ============ ============ ============
$ 8,416,126 $ 7,596,829 $ 1,324,711 $ 7,722,999
925,011 103,921 10,486 37,952
(632,446) (148,004) (2,556,020) (3,269,220)
- ------------ ------------ ------------ ------------
$ 8,708,691 $ 7,552,746 $ (1,220,823) $ 4,491,731
============ ============ ============ ============
1,090,777 4,609,771 7,705,041 24,565,211
971,880 758,245 116,368 427,932
(1,422,589) (3,726,837) (15,462,536) (19,773,057)
- ------------ ------------ ------------ ------------
640,068 1,641,179 (7,641,127) 5,220,086
============ ============ ============ ============
755,868 729,528 1,324,711 7,722,999
83,711 10,178 10,486 37,952
(57,228) (14,368) (2,556,020) (3,269,220)
- ------------ ------------ ------------ ------------
782,351 725,338 (1,220,823) 4,491,731
============ ============ ============ ============
See Notes to Financial Statements.
13
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------
NET REALIZED
NET ASSET VALUE, AND UNREALIZED TOTAL FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS
---------------- -------------- -------------- ----------
REIT FUND
CLASS 1
06/30/03(3) (unaudited) $ 10.00 $ 0.08 $ 0.65 $ 0.73
EQUITY INCOME FUND
CLASS 1
06/30/03 (unaudited) $ 11.01 $ 0.16(6) $ 1.19 $ 1.35
12/31/02 12.87 0.36(6) (1.95) (1.59)
12/31/01 12.11 0.42(6) 0.54 0.96
12/31/00 10.50 0.36(6) 1.42 1.78
12/31/99 10.27 0.33(6) (0.07)(8) 0.26
12/31/98(4) 10.00 0.16(6) 0.14 0.30
CLASS 2
06/30/03 (unaudited) 10.99 0.15(6) 1.18 1.33
12/31/02 12.87 0.32(6) (1.93) (1.61)
12/31/01(5) 12.64 0.22(6) 0.21 0.43
GROWTH & INCOME FUND
CLASS 1
06/30/03 (unaudited) $ 13.45 $ 0.09(6) $ 1.56 $ 1.65
12/31/02 17.18 0.15(6) (3.77) (3.62)
12/31/01 18.23 0.09 (0.70) (0.61)
12/31/00 18.58 0.07(6) 0.37 0.44
12/31/99 16.97 0.06(6) 2.93 2.99
12/31/98 16.92 0.06 2.97 3.03
CLASS 2
06/30/03 (unaudited) 13.42 0.07(6) 1.56 1.63
12/31/02 17.18 0.11(6) (3.76) (3.65)
12/31/01(5) 16.59 0.00(7) 0.59(8) 0.59
WEST COAST EQUITY FUND
CLASS 1
06/30/03 (unaudited) $ 12.69 $ 0.03 $ 2.04 $ 2.07
12/31/02 16.70 0.06(6) (3.79) (3.73)
12/31/01 16.01 0.10(6) 1.03 1.13
12/31/00 15.14 0.13(6) 0.84 0.97
12/31/99 10.94 (0.00)(7) 4.37 4.37
12/31/98(4) 10.00 0.00(7) 0.94 0.94
CLASS 2
06/30/03 (unaudited) 12.67 0.01 2.03 2.04
12/31/02 16.70 0.02(6) (3.77) (3.75)
12/31/01(5) 15.52 0.01(6) 1.17 1.18
LESS
DISTRIBUTIONS
--------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM FROM
NET INVESTMENT NET REALIZED TOTAL NET ASSET VALUE,
INCOME CAPITAL GAINS DISTRIBUTIONS END OF PERIOD
-------------- ------------- ------------- ----------------
REIT FUND
CLASS 1
06/30/03(3) (unaudited) $ -- $ -- $ -- $ 10.73
EQUITY INCOME FUND
CLASS 1
06/30/03 (unaudited) $ (0.31) $ (0.06) $ (0.37) $ 11.99
12/31/02 (0.25) (0.02) (0.27) 11.01
12/31/01 (0.12) (0.08) (0.20) 12.87
12/31/00 (0.17) -- (0.17) 12.11
12/31/99 (0.03) -- (0.03) 10.50
12/31/98(4) (0.03) -- (0.03) 10.27
CLASS 2
06/30/03 (unaudited) (0.30) (0.06) (0.36) 11.96
12/31/02 (0.25) (0.02) (0.27) 10.99
12/31/01(5) (0.12) (0.08) (0.20) 12.87
GROWTH & INCOME FUND
CLASS 1
06/30/03 (unaudited) $ (0.18) $ -- $ (0.18) $ 14.92
12/31/02 (0.11) -- (0.11) 13.45
12/31/01 (0.06) (0.38) (0.44) 17.18
12/31/00 (0.04) (0.75) (0.79) 18.23
12/31/99 (0.04) (1.34) (1.38) 18.58
12/31/98 (0.09) (2.89) (2.98) 16.97
CLASS 2
06/30/03 (unaudited) (0.17) -- (0.17) 14.88
12/31/02 (0.11) -- (0.11) 13.42
12/31/01(5) -- -- -- 17.18
WEST COAST EQUITY FUND
CLASS 1
06/30/03 (unaudited) $ (0.04) $ -- $ (0.04) $ 14.72
12/31/02 (0.08) (0.20) (0.28) 12.69
12/31/01 (0.09) (0.35) (0.44) 16.70
12/31/00 -- (0.10) (0.10) 16.01
12/31/99 (0.00)(7) (0.17) (0.17) 15.14
12/31/98(4) -- -- -- 10.94
CLASS 2
06/30/03 (unaudited) (0.02) -- (0.02) 14.69
12/31/02 (0.08) (0.20) (0.28) 12.67
12/31/01(5) -- -- -- 16.70
See Notes to Financial Statements.
14
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE
NET ASSETS WITHOUT
FEE WAIVERS, EXPENSES
REIMBURSED AND/OR FEES
NET ASSETS, RATIO OF RATIO OF NET REDUCED BY CREDITS
END OF PERIOD OPERATING EXPENSES INVESTMENT INCOME/(LOSS)TO PORTFOLIO ALLOWED BY THE
TOTAL RETURN(1) (IN OOO'S) TO AVERAGE NET ASSETS AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN(2)
- --------------- ------------- --------------------- -------------------------- ------------- ----------------------
7.30% $ 28,864 1.02%(9) 4.72%(9) 5% 1.03%(9)
12.22% $119,796 0.70%(9) 2.92%(9) 13% 0.70%(9)
(12.51)% 112,304 0.70% 3.04% 16% 0.70%
7.92% 97,982 0.70% 3.29% 15% 0.70%
17.19% 46,744 0.98% 3.31% 40% 0.99%
2.49% 11,797 1.17% 3.22% 25% 1.19%
3.02% 2,586 1.50%(9) 2.26%(9) 28% 2.49%(9)
12.03% 8,150 0.95%(9) 2.67%(9) 13% 0.95%(9)
(12.67)% 6,460 0.95% 2.79% 16% 0.95%
3.40% 658 0.94%(9) 3.05%(9) 15% 0.94%(9)
12.28% $204,922 0.83%(9) 1.27%(9) 3% 0.83%(9)
(21.16)% 209,337 0.81% 1.01% 20% 0.81%
(3.51)% 319,171 0.78% 0.54% 25% 0.78%
2.36% 309,992 0.97% 0.39% 31% 0.97%
18.11% 205,960 1.05% 0.34% 38% 1.05%
18.98% 125,295 1.06% 0.37% 78% 1.06%
12.10% 1,814 1.08%(9) 1.02%(9) 3% 1.08%(9)
(21.33)% 1,301 1.06% 0.76% 20% 1.06%
3.56% 112 1.03%(9) 0.29%(9) 25% 1.03%(9)
16.33% $ 79,158 0.71%(9) 0.40%(9) 8% 0.71%(9)
(22.55)% 68,227 0.71% 0.42% 20% 0.71%
6.88% 83,835 0.70% 0.59% 19% 0.70%
6.30% 71,307 0.91% 0.76% 33% 0.91%
40.37% 20,429 1.27% (0.02)% 36% 1.28%
9.40% 2,313 1.50%(9) 0.03%(9) 28% 2.76%(9)
16.13% 2,857 0.96%(9) 0.15%(9) 8% 0.96%(9)
(22.67)% 2,313 0.96% 0.17% 20% 0.96%
7.60% 58 0.95%(9) 0.34%(9) 19% 0.95%(9)
See Notes to Financial Statements.
15
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
INCOME FROM INVESTMENT OPERATIONS
--------------------------------------------
NET REALIZED
NET ASSET VALUE, AND UNREALIZED TOTAL FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS
---------------- -------------- -------------- ----------
MID CAP STOCK FUND
CLASS 1
06/30/03 (unaudited) $ 11.49 $ 0.03(6) $ 1.02 $ 1.05
12/31/02 13.14 0.04(6) (1.36) (1.32)
12/31/01 11.74 0.03(6) 1.38 1.41
12/31/00(10) 10.00 0.01(6) 1.73 1.74
CLASS 2
06/30/03 (unaudited) 11.46 0.01(6) 1.02 1.03
12/31/02 13.13 0.01(6) (1.36) (1.35)
12/31/01(5) 12.35 (0.00)(6)(7) 0.79 0.79
GROWTH FUND
CLASS 1
06/30/03 (unaudited) $ 9.32 $ (0.00)(7) $ 1.14 $ 1.14
12/31/02 13.51 (0.01)(6) (4.18) (4.19)
12/31/01 22.99 0.02(6) (6.24) (6.22)
12/31/00 38.54 (0.03)(6) (6.61) (6.64)
12/31/99 22.36 (0.19) 19.89 19.70
12/31/98 15.41 (0.09) 8.81 8.72
CLASS 2
06/30/03 (unaudited) 9.30 (0.01) 1.14 1.13
12/31/02 13.51 (0.03)(6) (4.18) (4.21)
12/31/01(5) 12.81 (0.00)(6)(7) 0.70(8) 0.70
SMALL CAP STOCK FUND
CLASS 1
06/30/03 (unaudited) $ 5.49 $ (0.00)(7) $ 1.45 $ 1.45
12/31/02 11.37 (0.02)(6) (5.27) (5.29)
12/31/01 16.03 (0.06)(6) (1.69) (1.75)
12/31/00 19.13 (0.10) (1.65) (1.75)
12/31/99 14.59 (0.10)(6) 8.07 7.97
12/31/98 15.63 (0.07) 1.21 1.14
CLASS 2
06/30/03 (unaudited) 5.47 (0.01) 1.44 1.43
12/31/02 11.36 (0.03)(6) (5.27) (5.30)
12/31/01(5) 14.41 (0.05)(6) (0.09) (0.14)
INTERNATIONAL GROWTH FUND
CLASS 1
06/30/03 (unaudited) $ 8.51 $ 0.08 $ 0.59 $ 0.67
12/31/02 10.21 0.04(6) (1.63) (1.59)
12/31/01 13.65 0.04 (2.39) (2.35)
12/31/00 17.63 0.02(6) (3.42) (3.40)
12/31/99 11.61 0.12 5.91 6.03
12/31/98 12.26 0.07(6) 0.64 0.71
CLASS 2
06/30/03 (unaudited) 8.49 0.07 0.58 0.65
12/31/02 10.21 0.02(6) (1.63) (1.61)
12/31/01(5) 9.78 0.00(7) 0.43(8) 0.43
LESS DISTRIBUTIONS
----------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM FROM
NET INVESTMENT NET REALIZED TOTAL NET ASSET VALUE,
INCOME CAPITAL GAINS DISTRIBUTIONS END OF PERIOD
-------------- ------------- ------------- ------------------
MID CAP STOCK FUND
CLASS 1
06/30/03 (unaudited) $ (0.04) $ -- $ (0.04) $ 12.50
12/31/02 (0.03) (0.30) (0.33) 11.49
12/31/01 (0.01) -- (0.01) 13.14
12/31/00(10) -- -- -- 11.74
CLASS 2
06/30/03 (unaudited) (0.02) -- (0.02) 12.47
12/31/02 (0.02) (0.30) (0.32) 11.46
12/31/01(5) (0.01) -- (0.01) 13.13
GROWTH FUND
CLASS 1
06/30/03 (unaudited) $ -- $ -- $ -- $ 10.46
12/31/02 -- -- -- 9.32
12/31/01 (0.37) (2.89) (3.26) 13.51
12/31/00 (0.02) (8.89) (8.91) 22.99
12/31/99 -- (3.52) (3.52) 38.54
12/31/98 (0.07) (1.70) (1.77) 22.36
CLASS 2
06/30/03 (unaudited) -- -- -- 10.43
12/31/02 -- -- -- 9.30
12/31/01(5) -- -- -- 13.51
SMALL CAP STOCK FUND
CLASS 1
06/30/03 (unaudited) $ -- $ -- $ -- $ 6.94
12/31/02 -- (0.59) (0.59) 5.49
12/31/01 -- (2.91) (2.91) 11.37
12/31/00 -- (1.35) (1.35) 16.03
12/31/99 -- (3.43) (3.43) 19.13
12/31/98 -- (2.18) (2.18) 14.59
CLASS 2
06/30/03 (unaudited) -- -- -- 6.90
12/31/02 -- (0.59) (0.59) 5.47
12/31/01(5) -- (2.91) (2.91) 11.36
INTERNATIONAL GROWTH FUND
CLASS 1
06/30/03 (unaudited) $ (0.13) $ -- $ (0.13) $ 9.05
12/31/02 (0.11) -- (0.11) 8.51
12/31/01 (0.09) (1.00) (1.09) 10.21
12/31/00 (0.43) (0.15) (0.58) 13.65
12/31/99 (0.01) -- (0.01) 17.63
12/31/98 (0.72) (0.64) (1.36) 11.61
CLASS 2
06/30/03 (unaudited) (0.11) -- (0.11) 9.03
12/31/02 (0.11) -- (0.11) 8.49
12/31/01(5) -- -- -- 10.21
See Notes to Financial Statements.
16
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE
NET ASSETS WITHOUT
FEE WAIVERS,EXPENSES
REIMBURSED AND/OR FEES
NET ASSETS, RATIO OF RATIO OF NET REDUCED BY CREDITS
END OF PERIOD OPERATING EXPENSES INVESTMENT INCOME/(LOSS) TO PORTFOLIO ALLOWED BY THE
TOTAL RETURN(1) (IN 000'S) TO AVERAGE NET ASSETS AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN(2)
- --------------- ------------- --------------------- --------------------------- ------------- ----------------------
9.13% $ 65,860 0.84%(9) 0.45%(9) 18% 0.84%(9)
(10.35)% 63,119 0.84% 0.32% 28% 0.84%
11.99% 71,988 0.82% 0.21% 30% 0.82%
17.40% 56,717 1.04%(9) 0.14%(9) 13% 1.04%(9)
9.00% 2,510 1.09%(9) 0.20%(9) 18% 1.09%(9)
(10.54)% 1,962 1.09% 0.07% 28% 1.09%
6.38% 668 1.07%(9) (0.04)%(9) 30% 1.07%(9)
12.23% $158,032 1.00%(9) (0.00)%(9)(11) 42% 1.00%(9)
(31.01)% 135,422 1.00% (0.05)% 171% 1.00%
(29.05)% 167,483 0.94% 0.11% 92% 0.94%
(22.04)% 306,551 1.10% (0.10)% 83% 1.11%
97.09% 369,952 1.15% (0.78)% 129% 1.15%
59.04% 162,967 1.16% (0.55)% 112% 1.17%
12.15% 844 1.25%(9) (0.25)%(9) 42% 1.25%(9)
(31.16)% 622 1.25% (0.30)% 171% 1.25%
5.46% 31 1.19%(9) (0.14)%(9) 92% 1.19%(9)
26.41% $ 59,418 0.99%(9) (0.12)%(9) 22% 0.99%(9)
(47.15)% 39,476 1.00% (0.31)% 29% 1.00%
(12.73)% 73,367 0.95% (0.44)% 46% 0.95%
(10.58)% 82,288 1.11% (0.61)% 49% 1.11%
71.09% 53,616 1.19% (0.75)% 52% 1.19%
8.09% 44,380 1.19% (0.48)% 108% 1.20%
26.14% 1,458 1.24%(9) (0.37)%(9) 22% 1.24%(9)
(47.28)% 1,068 1.25% (0.56)% 29% 1.25%
(3.00)% 440 1.20%(9) (0.69)%(9) 46% 1.20%(9)
7.76% $ 55,114 1.26%(9) 1.95%(9) 9% 1.26%(9)
(15.71)% 50,625 1.26% 0.49% 30% 1.26%
(17.78)% 49,178 1.19% 0.33% 34% 1.19%
(19.84)% 67,227 1.31% 0.11% 40% 1.31%
51.96% 86,632 1.39% 0.87% 161% 1.40%
5.20% 60,360 1.36% 0.61% 118% 1.48%
7.58% 103 1.51%(9) 1.70%(9) 9% 1.51%(9)
(15.91)% 93 1.51% 0.24% 30% 1.51%
4.40% 0(12) 1.40%(9) 0.12%(9) 34% 1.40%(9)
See Notes to Financial Statements.
17
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
INCOME FROM INVESTMENT OPERATIONS LESS
---------------------------------------------- DISTRIBUTIONS
NET REALIZED -------------
NET ASSET VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT NET ASSET VALUE,
PERIOD INCOME INVESTMENTS OPERATIONS INCOME END OF PERIOD
---------------- -------------- -------------- ---------- -------------- ----------------
SHORT TERM INCOME FUND
CLASS 1
06/30/03 (unaudited) $ 2.65 $ 0.06(6) $ 0.06 $ 0.12 $ (0.17) $ 2.60
12/31/02 2.60 0.14(6) 0.02 0.16 (0.11) 2.65
12/31/01 2.44 0.15(6) 0.05 0.20 (0.04) 2.60
12/31/00 2.39 0.14 0.05 0.19 (0.14) 2.44
12/31/99 2.44 0.12 (0.05) 0.07 (0.12) 2.39
12/31/98 2.43 0.12 0.01 0.13 (0.12) 2.44
CLASS 2
06/30/03 (unaudited) 2.64 0.06(6) 0.06 0.12 (0.16) 2.60
12/31/02 2.60 0.13(6) 0.02 0.15 (0.11) 2.64
12/31/01(5) 2.60 0.02(6) (0.02)(8) 0.00(7) -- 2.60
U.S. GOVERNMENT
SECURITIES FUND
CLASS 1
06/30/03 (unaudited) $ 11.05 $ 0.27(6) $ (0.09) $ 0.18 $ (0.53) $ 10.70
12/31/02 10.55 0.59(6) 0.33 0.92 (0.42) 11.05
12/31/01 9.93 0.61(6) 0.16 0.77 (0.15) 10.55
12/31/00 9.62 0.62(6) 0.29 0.91 (0.60) 9.93
12/31/99 10.11 0.54 (0.49) 0.05 (0.54) 9.62
12/31/98 10.04 0.63 0.06 0.69 (0.62) 10.11
CLASS 2
06/30/03 (unaudited) 11.02 0.25(6) (0.09) 0.16 (0.52) 10.66
12/31/02 10.55 0.56(6) 0.33 0.89 (0.42) 11.02
12/31/01(5) 10.70 0.09(6) (0.24)(8) (0.15) -- 10.55
INCOME FUND
CLASS 1
06/30/03 (unaudited) $ 10.79 $ 0.33(6) $ 0.55 $ 0.88 $ (0.66) $ 11.01
12/31/02 10.31 0.69(6) 0.27 0.96 (0.48) 10.79
12/31/01 9.70 0.67(6) 0.11 0.78 (0.17) 10.31
12/31/00 9.35 0.65(6) 0.30 0.95 (0.60) 9.70
12/31/99 10.24 0.67 (0.89) (0.22) (0.67) 9.35
12/31/98 10.19 0.70 0.04 0.74 (0.69) 10.24
CLASS 2
06/30/03 (unaudited) 10.77 0.31(6) 0.55 0.86 (0.66) 10.97
12/31/02 10.31 0.65(6) 0.29 0.94 (0.48) 10.77
12/31/01(5) 10.45 0.10(6) (0.24)(8) (0.14) -- 10.31
MONEY MARKET FUND
CLASS 1
06/30/03 (unaudited) $ 1.00 $ 0.004 $ -- $ 0.004 $ (0.004) $ 1.00
12/31/02 1.00 0.014(6) -- 0.014 (0.014) 1.00
12/31/01 1.00 0.036 (0.000)(13) 0.036 (0.036) 1.00
12/31/00 1.00 0.056 -- 0.056 (0.056) 1.00
12/31/99 1.00 0.045 (0.000)(13) 0.045 (0.045) 1.00
12/31/98 1.00 0.049 (0.000)(13) 0.049 (0.049) 1.00
CLASS 2
06/30/03 (unaudited) 1.00 0.003 -- 0.003 (0.003) 1.00
12/31/02 1.00 0.011(6) -- 0.011 (0.011) 1.00
12/31/01(5) 1.00 0.002 (0.000)(13) 0.002 (0.002) 1.00
See Notes to Financial Statements.
18
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------
NET ASSETS, RATIO OF RATIO OF NET
END OF PERIOD OPERATING EXPENSES INVESTMENT INCOME/(LOSS) TO
TOTAL RETURN(1) (IN 000'S) TO AVERAGE NET ASSETS AVERAGE NET ASSETS
- ------------ ------------- --------------------- ---------------------------
4.32% $ 43,897 0.63%(9) 4.52%(9)
6.26% 41,592 0.62% 5.42%
8.15% 50,343 0.60% 5.77%
8.23% 43,479 0.80% 5.66%
2.89% 53,144 0.80% 5.26%
5.28% 37,399 0.85% 5.45%
4.66% 2,302 0.88%(9) 4.27%(9)
5.86% 1,188 0.87% 5.17%
0.00% 20 0.85%(9) 5.52%(9)
1.66% $184,004 0.56%(9) 4.85%(9)
8.87% 173,770 0.56% 5.45%
7.79% 136,904 0.56% 5.89%
9.73% 108,848 0.76% 6.35%
0.51% 80,015 0.83% 6.02%
7.03% 41,914 0.89% 5.85%
1.49% 18,668 0.81%(9) 4.60%(9)
8.57% 12,264 0.81% 5.20%
(1.40)% 753 0.81%(9) 5.64%(9)
8.11% $190,572 0.56%(9) 5.99%(9)
9.61% 179,844 0.56% 6.64%
8.08% 154,826 0.55% 6.69%
10.45% 127,505 0.74% 6.81%
(2.16)% 55,556 0.85% 6.84%
7.45% 49,654 0.96% 6.69%
7.90% 16,930 0.81%(9) 5.74%(9)
9.40% 8,186 0.81% 6.39%
(1.34)% 362 0.80%(9) 6.44%(9)
0.39% $ 26,125 0.58%(9) 0.78%(9)
1.39% 33,766 0.57% 1.32%
3.68% 28,563 0.62% 3.41%
5.79% 18,265 0.76% 5.57%
4.56% 31,105 0.71% 4.47%
5.01% 31,862 0.65% 4.90%
0.26% 3,458 0.83%(9) 0.53%(9)
1.13% 4,679 0.82% 1.07%
0.22% 189 0.87%(9) 3.16%(9)
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
- -------------------------------------------------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE RATIO OF
NET ASSETS WITHOUT OPERATING
FEE WAIVERS, EXPENSES EXPENSES
REIMBURSED AND/OR FEES TO AVERAGE
REDUCED BY CREDITS NET ASSETS
PORTFOLIO ALLOWED BY THE INCLUDING INTEREST
TURNOVER RATE CUSTODIAN(2) EXPENSE(2)
- ------------- ---------------------- ------------------
24% 0.63%(9) 0.63%(9)
41% 0.62% 0.62%
44% 0.60% 0.60%
17% 0.81% 0.81%
42% 0.81% 0.81%
27% 0.89% 0.89%
24% 0.88%(9) 0.88%(9)
41% 0.87% 0.87%
44% 0.85%(9) 0.85%(9)
24% 0.56%(9) 0.56%(9)
41% 0.56% 0.56%
31% 0.56% 0.56%
10% 0.76% 0.76%
15% 0.83% 0.83%
22% 1.03% 1.02%
24% 0.81%(9) 0.81%(9)
41% 0.81% 0.81%
31% 0.81%(9) 0.81%(9)
12% 0.56%(9) 0.56%(9)
21% 0.56% 0.56%
33% 0.55% 0.55%
2% 0.75% 0.74%
12% 0.85% 0.85%
4% 0.96% 0.96%
12% 0.81%(9) 0.81%(9)
21% 0.81% 0.81%
33% 0.80%(9) 0.80%(9)
- 0.58%(9) 0.58%(9)
- 0.57% 0.57%
- 0.62% 0.62%
- 0.78% 0.76%
- 0.78% 0.71%
- 0.81% 0.65%
- 0.83%(9) 0.83%(9)
- 0.82% 0.82%
- 0.87%(9) 0.87%(9)
See Notes to Financial Statements.
19
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL HIGHLIGHTS
(1) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and/ or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The REIT Fund commenced operations on May 1, 2003.
(4) The Equity Income Fund and the West Coast Equity Fund commenced operations
on April 28, 1998.
(5) All Funds commenced selling Class 2 shares on November 6, 2001, with the
exception of the Equity Income, Mid Cap Stock and Small Cap Stock Funds
which commenced selling Class 2 shares on May 1, 2001.
(6) Per share numbers have been calculated using the average shares method.
(7) Amount represents less than $0.01 per share.
(8) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
(9) Annualized.
(10) The Mid Cap Stock Fund commenced operations on May 1, 2000.
(11) Amount represents less than 0.01%.
(12) Amount represents less than $1,000.
(13) Amount represents less than $0.001 per share.
See Notes to Financial Statements.
20
PORTFOLIO of INVESTMENTS
REIT FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
REAL ESTATE INVESTMENT TRUSTS - 91.8%
DIVERSIFIED - 6.1%
24,000 iStar Financial Inc. ............................ $ 876,000
20,000 Vornado Realty Trust ............................ 872,000
-------------
Total Diversified ............................... 1,748,000
-------------
HEALTH CARE - 4.7%
20,700 Health Care Property Investors, Inc. ............ 876,645
16,500 Healthcare Realty Trust, Inc. ................... 480,975
-------------
Total Health Care ............................... 1,357,620
-------------
INDUSTRIAL/OFFICE - 27.1%
INDUSTRIAL - 7.4%
26,500 AMB Property Corporation ........................ 746,505
9,000 CenterPoint Properties Trust .................... 551,250
31,000 ProLogis ........................................ 846,300
-------------
2,144,055
-------------
MIXED - 2.8%
29,000 Duke Realty Corporation ......................... 798,950
-------------
OFFICE - 16.9%
22,500 Arden Realty, Inc. .............................. 583,875
16,500 Boston Properties, Inc. ......................... 722,700
26,000 CarrAmerica Realty Corporation .................. 723,060
53,000 Corporate Office Properties Trust ............... 897,290
51,300 Equity Office Properties Trust .................. 1,385,613
16,500 SL Green Realty Corporation ..................... 575,685
-------------
4,888,223
-------------
Total Industrial/Office ......................... 7,831,228
-------------
LODGING/RESORTS - 6.1%
38,300 FelCor Lodging Trust, Inc. ...................... 300,655
32,000 Hospitality Properties Trust .................... 1,000,000
51,300 Host Marriott Corporation+ ...................... 469,395
-------------
Total Lodging/Resorts ........................... 1,770,050
-------------
MORTGAGE - 2.4%
35,600 Annaly Mortgage Management, Inc. ................ 708,796
-------------
RESIDENTIAL - 12.6%
APARTMENTS - 12.6%
26,200 Apartment Investment & Management
Company, Class A .............................. 906,520
20,000 AvalonBay Communities, Inc. ..................... 852,800
48,500 Equity Residential .............................. 1,258,575
35,500 United Dominion Realty Trust, Inc. .............. 611,310
-------------
Total Residential ............................... 3,629,205
-------------
RETAIL - 23.0%
REGIONAL MALLS - 16.5%
21,500 General Growth Properties, Inc. ................. 1,342,460
32,500 Macerich Company ................................ 1,141,725
30,200 Mills Corporation ............................... 1,013,210
32,500 Simon Property Group, Inc. ...................... 1,268,475
-------------
4,765,870
-------------
SHOPPING CENTERS - 6.5%
27,000 Developers Diversified Realty Corporation ....... 767,880
29,000 Kimco Realty Corporation ........................ 1,099,100
-------------
1,866,980
-------------
Total Retail .................................... 6,632,850
-------------
SELF STORAGE - 3.4%
16,500 Public Storage, Inc. ............................ 558,855
12,700 Shurgard Storage Centers, Inc., Class A ......... 420,116
-------------
Total Self Storage .............................. 978,971
-------------
SPECIALTY - 6.4%
30,500 Capital Automotive REIT ......................... 853,695
38,000 Plum Creek Timber Company, Inc. ................. 986,100
-------------
Total Specialty ................................. 1,839,795
-------------
Total Real Estate Investment Trusts
(Cost $24,845,713) ............................ 26,496,515
-------------
COMMON STOCKS - 3.5%
CONSUMER DISCRETIONARY - 3.5%
CONSUMER DURABLES & APPAREL - 1.6%
17,000 D.R. Horton, Inc. ............................... 477,700
-------------
HOTELS, RESTAURANTS & LEISURE - 1.9%
17,000 Mandalay Resort Group ........................... 541,450
-------------
Total Consumer Discretionary .................... 1,019,150
-------------
Total Common Stocks
(Cost $1,010,402) ............................. 1,019,150
-------------
PRINCIPAL
AMOUNT
- --------
REPURCHASE AGREEMENT - 5.0%
(Cost $1,430,000)
$ 1,430,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated 06/30/2003,
to be repurchased at $1,430,032 on
07/01/2003, collateralized by
$1,417,840 U.S. Treasury Notes, having
various interest rates and maturities
(Market Value $1,458,908) ................. 1,430,000
-------------
TOTAL INVESTMENTS (Cost $27,286,115*) ................... 100.3% 28,945,665
OTHER ASSETS AND LIABILITIES (Net) ...................... (0.3) (81,822)
----- -------------
NET ASSETS .............................................. 100.0% $ 28,863,843
===== =============
- ----------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
See Notes to Financial Statements.
21
PORTFOLIO of INVESTMENTS
EQUITY INCOME FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
COMMON STOCKS - 79.1%
CONSUMER DISCRETIONARY - 9.9%
AUTOMOBILES & COMPONENTS - 2.6%
25,200 General Motors Corporation.................... $ 907,200
36,000 Magna International Inc., Class A............. 2,421,720
------------
3,328,920
------------
CONSUMER DURABLES & APPAREL - 2.5%
35,000 D.R. Horton, Inc. ............................ 983,500
45,500 Mattel, Inc. ................................. 860,860
26,000 Nike Inc., Class B**.......................... 1,390,740
------------
3,235,100
------------
HOTELS, RESTAURANTS & LEISURE - 4.0%
51,000 Carnival Corporation**........................ 1,658,010
50,000 Mandalay Resort Group......................... 1,592,500
82,500 McDonald's Corporation ....................... 1,819,950
------------
5,070,460
------------
RETAILING - 0.8%
43,500 May Department Stores Company**............... 968,310
------------
Total Consumer Discretionary.................. 12,602,790
------------
CONSUMER STAPLES - 7.1%
FOOD & STAPLES RETAILING - 3.4%
82,000 Supervalu Inc................................. 1,748,240
87,200 Wal-Mart de Mexico SAde CV, ADR............... 2,583,300
------------
4,331,540
------------
FOOD, BEVERAGE & TOBACCO - 3.0%
35,000 Altria Group, Inc............................. 1,590,400
41,500 ConAgra Foods, Inc............................ 979,400
18,000 Hershey Foods Corporation..................... 1,253,880
------------
3,823,680
------------
HOUSEHOLD & PERSONAL PRODUCTS - 0.7%
10,500 Procter & Gamble Company...................... 936,390
------------
Total Consumer Staples........................ 9,091,610
------------
ENERGY - 5.7%
35,000 BP PLC, Sponsored ADR......................... 1,470,700
16,742 ChevronTexaco Corporation..................... 1,208,772
26,480 ConocoPhillips Company........................ 1,451,104
27,100 Royal Dutch Petroleum Company (F)............. 1,263,402
21,500 Schlumberger Ltd. ............................ 1,022,755
23,697 Valero Energy Corporation..................... 860,912
------------
Total Energy.................................. 7,277,645
------------
FINANCIALS - 20.3%
BANKS - 5.9%
30,700 Bank of America Corporation................... 2,426,221
42,000 FleetBoston Financial Corporation............. 1,247,820
25,400 PNC Financial Services Group, Inc. ........... 1,239,774
39,700 U.S. Bancorp.................................. 972,650
33,000 Wells Fargo & Company......................... 1,663,200
------------
7,549,665
------------
DIVERSIFIED FINANCIALS - 9.6%
69,500 Citigroup Inc. ............................... 2,974,600
37,000 Fannie Mae.................................... 2,495,280
32,000 Franklin Resources, Inc. ..................... 1,250,240
72,000 J.P. Morgan Chase & Company................... 2,460,960
39,500 Morgan Stanley Dean Witter & Company.......... 1,688,625
37,600 T. Rowe Price Group, Inc. .................... 1,419,400
------------
12,289,105
------------
INSURANCE - 4.8%
58,000 ACE Ltd. ..................................... 1,988,820
36,000 AFLAC Inc. ................................... 1,107,000
29,500 Allstate Corporation.......................... 1,051,675
24,000 XL Capital Ltd., Class A...................... 1,992,000
------------
6,139,495
------------
Total Financials.............................. 25,978,265
------------
HEALTH CARE - 8.3%
HEALTH CARE EQUIPMENT & SERVICES - 1.3%
43,500 Becton, Dickinson & Company................... 1,689,975
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 7.0%
34,000 Abbott Laboratories........................... 1,487,840
65,000 Bristol-Myers Squibb Company.................. 1,764,750
20,000 Johnson & Johnson............................. 1,034,000
23,500 Merck & Company, Inc. ........................ 1,422,925
64,000 Mylan Laboratories Inc. ...................... 2,225,280
51,200 Schering-Plough Corporation................... 952,320
------------
8,887,115
------------
Total Health Care............................. 10,577,090
------------
INDUSTRIALS - 9.5%
CAPITAL GOODS - 9.5%
48,500 Boeing Company................................ 1,664,520
18,000 Emerson Electric Company...................... 919,800
28,800 General Dynamics Corporation.................. 2,088,000
69,000 General Electric Company...................... 1,978,920
43,000 Genuine Parts Company......................... 1,376,430
49,000 Honeywell International Inc. ................. 1,315,650
149,700 Tyco International Ltd.**..................... 2,841,306
------------
Total Industrials............................. 12,184,626
------------
INFORMATION TECHNOLOGY - 7.2%
COMMUNICATIONS EQUIPMENT - 0.9%
124,000 Motorola, Inc. ................................ 1,169,320
------------
See Notes to Financial Statements.
22
PORTFOLIO of INVESTMENTS (continued)
EQUITY INCOME FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
COMPUTERS & PERIPHERALS - 2.0%
55,300 Hewlett-Packard Company....................... $ 1,177,890
16,000 International Business Machines
Corporation................................. 1,320,000
------------
2,497,890
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.4%
72,000 Diebold, Inc. ................................ 3,114,000
------------
IT SERVICES - 0.7%
44,500 Electronic Data Systems Corporation........... 954,525
------------
SOFTWARE - 1.2%
67,000 Computer Associates International, Inc. ...... 1,492,760
------------
Total Information Technology.................. 9,228,495
------------
MATERIALS - 1.9%
29,200 Alcoa Inc. ................................... 744,600
25,000 Dow Chemical Company.......................... 774,000
11,700 E.I. Du Pont de Nemours & Company............. 487,188
9,500 PPG Industries, Inc. ......................... 482,030
------------
Total Materials............................... 2,487,818
------------
TELECOMMUNICATION SERVICES - 3.9%
44,000 Alltel Corporation............................ 2,121,680
3,000 Metromedia Fiber Network, Inc., Class A+...... 51
36,800 SBC Communications Inc. ...................... 940,240
49,500 Verizon Communications Inc. .................. 1,952,775
------------
Total Telecommunication Services.............. 5,014,746
------------
UTILITIES - 5.3%
80,000 Duke Energy Corporation....................... 1,596,000
102,000 El Paso Corporation........................... 824,160
30,000 FPL Group, Inc. .............................. 2,005,500
36,500 Pinnacle West Capital Corporation............. 1,366,925
31,000 Southern Company.............................. 965,960
------------
Total Utilities............................... 6,758,545
------------
Total Common Stocks
(Cost $102,354,146)......................... 101,201,630
------------
REAL ESTATE INVESTMENT TRUSTS - 8.7%
35,300 AMB Property Corporation...................... 994,401
16,400 Apartment Investment & Management
Company, Class A............................ 567,440
12,900 Arden Realty, Inc. ........................... 334,755
7,600 CarrAmerica Realty Corporation................ 211,356
18,500 Corporate Office Properties Trust............. 313,205
8,000 Developers Diversified Realty Corporation..... 227,520
12,200 Duke Realty Corporation....................... 336,110
36,000 Equity Office Properties Trust................ 972,360
39,500 Equity Residential............................ 1,025,025
17,000 General Growth Properties, Inc. .............. 1,061,480
20,100 Health Care Property Investors, Inc. ......... 851,235
18,000 Hospitality Properties Trust.................. 562,500
6,500 Kimco Realty Corporation...................... 246,350
14,000 Macerich Company.............................. 491,820
28,500 Plum Creek Timber Company, Inc. .............. 739,575
15,200 ProLogis...................................... 414,960
22,800 Shurgard Storage Centers, Inc., Class A +..... 754,224
25,500 Simon Property Group, Inc. ................... 995,265
------------
Total Real Estate Investment Trusts
(Cost $9,838,423)........................... 11,099,581
------------
PRINCIPAL
AMOUNT
------
CONVERTIBLE SECURITIES - 5.1%
CONVERTIBLE BONDS AND NOTES - 5.1%
$ 600,000 Analog Devices, Inc., Conv. Sub. Note,
4.750% due 10/01/2005**..................... 613,500
700,000 LSI Logic Corporation, Conv. Sub. Note,
4.000% due 02/15/2005**..................... 693,000
1,500,000 Omnicare, Inc., Conv. Sub. Deb.,
5.000% due 12/01/2007**..................... 1,543,125
850,000 RadiSys Corporation, Conv. Sub. Note,
5.500% due 08/15/2007....................... 803,250
1,750,000 TriQuint Semiconductor, Inc., Conv.
Sub. Note,
4.000% due 03/01/2007**..................... 1,456,875
1,500,000 Vitesse Semiconductor Corporation, Conv.
Sub. Deb.,
4.000% due 03/15/2005**..................... 1,400,625
------------
Total Convertible Bonds and Notes
(Cost $5,889,055)........................... 6,510,375
------------
SHARES
- ------
CONVERTIBLE PREFERRED STOCK - 0.0% ***
(Cost $57,500)
230 Global Crossing Ltd., Conv. Pfd., (in arrears)
7.000% due 12/31/2049+ ..................... 2
------------
Total Convertible Securities
(Cost $5,946,555)........................... 6,510,377
------------
PRINCIPAL
AMOUNT
------
FIXED INCOME SECURITIES - 3.1%
CORPORATE BONDS AND NOTES - 2.9%
$ 100,000 Aetna Inc., Company Guarantee,
7.125% due 08/15/2006....................... 113,483
500,000 Aetna Inc., Sr. Note,
7.875% due 03/01/2011....................... 608,544
45,000 Baxter International Inc., Note,
7.125% due 02/01/2007....................... 51,765
300,000 CBS Corporation, Sr. Note,
7.150% due 05/20/2005....................... 329,463
1,000,000 ERAC USA Finance Company, Note,
7.350% due 06/15/2008++ .................... 1,171,526
See Notes to Financial Statements.
23
PORTFOLIO of INVESTMENTS (continued)
EQUITY INCOME FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
FIXED INCOME SECURITIES (CONTINUED)
CORPORATE BONDS AND NOTES (CONTINUED)
$ 100,000 Raytheon Company, Sr. Note,
6.150% due 11/01/2008....................... $ 113,203
1,000,000 TELUS Corporation, Note,
8.000% due 06/01/2011....................... 1,160,000
100,000 Texas-New Mexico Power Company,
Sr. Note,
6.250% due 01/15/2009....................... 101,241
------------
Total Corporate Bonds and Notes
(Cost $3,184,510)........................... 3,649,225
------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES - 0.2%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 0.2%
175,912 6.500% due 09/01/2030......................... 183,141
101,766 7.000% due 09/01/2030......................... 106,745
-----------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $268,486)............................. 289,886
------------
COLLATERALIZED MORTGAGE OBLIGATION (CMO) - 0.0% ***
(Cost $36,445)
36,209 Federal Home Loan Mortgage Corporation,
Series 1638, Class K,
6.500% due 03/15/2023......................... 36,281
------------
Total Fixed Income Securities
(Cost $3,489,441)........................... 3,975,392
------------
SHARES
- ------
WARRANTS - 0.0% ***
(Cost $3)
250 V2 Music Holdings PLC,
Expires 05/07/2008+,++ ..................... 3
------------
PRINCIPAL
AMOUNT VALUE
------ -----
REPURCHASE AGREEMENT - 4.3%
(Cost $5,520,000)
$ 5,520,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased at
$5,520,123 on 07/01/2003,
collateralized by $5,473,061 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $5,631,590).......... $ 5,520,000
------------
TOTAL INVESTMENTS (Cost $127,148,568*)............ 100.3% 128,306,983
OTHER ASSETS AND LIABILITIES (Net).................. (0.3) (361,254)
----- ------------
NET ASSETS.......................................... 100.0% $127,945,729
===== ============
- -----------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $9,883,210, representing 7.7% of the total net
assets of the Fund (Collateral Value $10,213,960).
*** Amount represents less than 0.1% of total net assets.
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933.
GLOSSARY OF TERMS
ADR -- American Depository Receipt
(F) -- Foreign Shares
See Notes to Financial Statements.
24
PORTFOLIO of INVESTMENTS
GROWTH & INCOME FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
COMMON STOCKS - 96.9%
CONSUMER DISCRETIONARY - 9.8%
CONSUMER DURABLES & APPAREL - 1.2%
125,000 Mattel, Inc................................... $ 2,365,000
------------
HOTELS, RESTAURANTS & LEISURE - 3.4%
215,000 Carnival Corporation.......................... 6,989,650
------------
MEDIA - 5.2%
74,000 Comcast Corporation, Class A+................. 2,233,320
104,000 Comcast Corporation, Special Class A+......... 2,998,320
284,000 Liberty Media Corporation, Class A+........... 3,283,040
53,000 Viacom Inc., Class A+......................... 2,316,100
------------
10,830,780
------------
Total Consumer Discretionary.................. 20,185,430
------------
CONSUMER STAPLES - 10.2%
FOOD & STAPLES RETAILING - 3.6%
54,000 Costco Wholesale Corporation+................. 1,976,400
327,000 Kroger Company+............................... 5,454,360
------------
7,430,760
------------
FOOD, BEVERAGE & TOBACCO - 1.4%
67,000 PepsiCo Inc................................... 2,981,500
------------
HOUSEHOLD & PERSONAL PRODUCTS - 5.2%
77,000 Avon Products, Inc............................ 4,789,400
67,000 Kimberly-Clark Corporation.................... 3,493,380
27,000 Procter & Gamble Company...................... 2,407,860
------------
10,690,640
------------
Total Consumer Staples........................ 21,102,900
------------
ENERGY - 7.6%
84,000 BPP LC, Sponsored ADR......................... 3,529,680
88,000 Exxon Mobil Corporation....................... 3,160,080
80,000 Royal Dutch Petroleum Company (F)............. 3,729,600
48,000 Schlumberger Ltd.............................. 2,283,360
109,000 Unocal Corporation............................ 3,127,210
------------
Total Energy.................................. 15,829,930
------------
FINANCIALS - 23.7%
BANKS - 11.1%
62,000 Bank of America Corporation................... 4,899,860
146,000 FleetBoston Financial Corporation............. 4,337,660
90,000 PNC Financial Services Group, Inc............. 4,392,900
103,000 Wachovia Corporation.......................... 4,115,880
105,000 Wells Fargo & Company......................... 5,292,000
------------
23,038,300
------------
DIVERSIFIED FINANCIALS - 8.1%
120,000 Citigroup Inc................................. 5,136,000
100,000 Freddie Mac................................... 5,077,000
188,000 J.P. Morgan Chase & Company................... 6,425,840
------------
16,638,840
------------
INSURANCE - 4.5%
150,000 Allstate Corporation.......................... 5,347,500
71,000 American International Group Inc.............. 3,917,780
------------
9,265,280
------------
Total Financials.............................. 48,942,420
------------
HEALTH CARE - 17.7%
HEALTH CARE EQUIPMENT & SERVICES - 5.8%
63,000 Baxter International Inc...................... 1,638,000
85,000 Cardinal Health Inc.**........................ 5,465,500
110,000 Guidant Corporation........................... 4,882,900
------------
11,986,400
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 11.9%
126,000 Bristol-Myers Squibb Company.................. 3,420,900
48,000 Johnson & Johnson............................. 2,481,600
55,000 Merck & Company, Inc.......................... 3,330,250
234,000 Mylan Laboratories Inc........................ 8,136,180
130,000 Pfizer Inc.................................... 4,439,500
146,000 Schering-Plough Corporation................... 2,715,600
------------
24,524,030
------------
Total Health Care............................. 36,510,430
------------
INDUSTRIALS - 9.0%
CAPITAL GOODS - 9.0%
130,000 Boeing Company................................ 4,461,600
106,000 General Electric Company...................... 3,040,080
186,000 Honeywell International Inc................... 4,994,100
326,000 Tyco International Ltd.**..................... 6,187,480
------------
Total Industrials............................. 18,683,260
------------
INFORMATION TECHNOLOGY - 11.4%
COMMUNICATIONS EQUIPMENT - 1.6%
349,000 Motorola, Inc................................. 3,291,070
------------
COMPUTERS & PERIPHERALS - 3.6%
110,000 Hewlett-Packard Company....................... 2,343,000
63,000 International Business Machines
Corporation................................. 5,197,500
------------
7,540,500
------------
IT SERVICES - 2.0%
99,000 First Data Corporation........................ 4,102,560
------------
SOFTWARE - 4.2%
199,000 Computer Associates International, Inc........ 4,433,720
166,000 Microsoft Corporation......................... 4,251,260
------------
8,684,980
------------
Total Information Technology ................. 23,619,110
------------
TELECOMMUNICATION SERVICES - 1.6%
131,000 SBC Communications Inc........................ 3,347,050
------------
See Notes to Financial Statements.
25
PORTFOLIO of INVESTMENTS (continued)
GROWTH & INCOME FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
COMMON STOCKS (CONTINUED)
UTILITIES - 5.9%
157,000 Duke Energy Corporation....................... $ 3,132,150
62,000 FPL Group, Inc................................ 4,144,700
111,000 NiSource Inc.................................. 2,109,000
75,000 Pinnacle West Capital Corporation............. 2,808,750
------------
Total Utilities............................... 12,194,600
------------
Total Common Stocks
(Cost $183,541,602)......................... 200,415,130
------------
PRINCIPAL
AMOUNT VALUE
------ -----
REPURCHASE AGREEMENT - 3.1%
(Cost $6,328,000)
$ 6,328,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased at
$6,328,141 on 07/01/2003,
collateralized by $6,274,190 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $6,455,924)............ $ 6,328,000
------------
TOTAL INVESTMENTS (Cost $189,869,602*)................ 100.0% 206,743,130
OTHER ASSETS AND LIABILITIES (Net).................... 0.0 (7,210)
----- ------------
NET ASSETS............................................ 100.0% $206,735,920
===== ============
- -------------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $11,652,980, representing 5.6% of the total net
assets of the Fund (Collateral Value $12,215,000).
+ Non-income producing security.
GLOSSARY OF TERMS
ADR -- American Depository Receipt
(F) -- Foreign Shares
See Notes to Financial Statements.
26
PORTFOLIO of INVESTMENTS
WEST COAST EQUITY FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS - 94.0%
CONSUMER DISCRETIONARY - 17.3%
AUTOMOBILES & COMPONENTS - 2.9%
112,300 Monaco Coach+ ................................ $ 1,721,559
15,000 Superior Industries International, Inc........ 625,500
------------
2,347,059
------------
CONSUMER DURABLES & APPAREL - 4.1%
15,124 Columbia Sportswear+ ......................... 777,525
15,800 KB Home....................................... 979,284
39,000 Mattel, Inc................................... 737,880
16,225 Nike Inc., Class B**.......................... 867,875
------------
3,362,564
------------
HOTELS, RESTAURANTS & LEISURE - 1.9%
4,100 Jack in the Box Inc.+ ........................ 91,430
35,270 Starbucks Corporation+ ....................... 864,820
127,460 WestCoast Hospitality+ ....................... 644,948
------------
1,601,198
------------
MEDIA - 4.4%
37,000 Getty Images, Inc.+ .......................... 1,528,100
17,300 Knight-Ridder, Inc............................ 1,192,489
29,100 Univision Communications Inc.,
Class A+** ................................. 884,640
------------
3,605,229
------------
RETAILING - 4.0%
106,285 Building Materials Holding Corporation........ 1,574,081
100,000 Hollywood Entertainment+ ..................... 1,720,000
------------
3,294,081
------------
Total Consumer Discretionary.................. 14,210,131
------------
CONSUMER STAPLES - 4.0%
FOOD & STAPLES RETAILING - 4.0%
44,620 Costco Wholesale Corporation+................. 1,633,092
96,590 Kroger Company+............................... 1,611,121
------------
Total Consumer Staples........................ 3,244,213
------------
ENERGY - 3.4%
6,100 Apache Corporation............................ 396,866
20,300 ChevronTexaco Corporation..................... 1,465,660
24,500 Nabors Industries Ltd.+....................... 968,975
------------
Total Energy.................................. 2,831,501
------------
FINANCIALS - 18.9%
BANKS - 15.0%
27,950 Bank of America Corporation................... 2,208,888
34,300 Banner Corporation............................ 702,807
9,400 East West Bancorp, Inc........................ 339,716
25,300 Greater Bay Bancorp........................... 516,626
8,600 KeyCorp....................................... 217,322
58,900 Pacific Northwest Bancorp..................... 2,047,364
95,500 U.S. Bancorp.................................. 2,339,750
79,335 Washington Federal, Inc.+..................... 1,835,019
41,500 Wells Fargo & Company......................... 2,091,600
------------
12,299,092
------------
DIVERSIFIED FINANCIALS - 1.0%
84,900 Charles Schwab Corporation.................... 856,641
------------
INSURANCE - 2.9%
17,100 RenaissanceRe Holdings Ltd. .................. 778,392
30,300 StanCorp Financial Group, Inc. ............... 1,582,266
------------
2,360,658
------------
Total Financials.............................. 15,516,391
------------
HEALTH CARE - 12.9%
HEALTH CARE EQUIPMENT & SERVICES - 5.0%
14,200 Applera Corporation-Applied Biosystems
Group....................................... 270,226
4,000 Caremark Rx, Inc.+ ........................... 102,720
22,680 Health Net, Inc.+ ............................ 747,306
195,100 OraSure Technologies, Inc.+ .................. 1,455,446
76,825 SonoSite, Inc.+............................... 1,532,659
------------
4,108,357
------------
PHARMACEUTICALS & BIOTECHNOLOGY - 7.9%
19,800 Allergan, Inc................................. 1,526,580
12,407 Amgen, Inc.+ ................................. 824,321
132,155 Corixa Corporation+** ........................ 1,021,558
36,700 Dendreon Corporation+**....................... 217,998
48,025 EDEN Bioscience Corporation+.................. 77,320
11,000 Genentech, Inc.+** ........................... 793,320
30,655 ICOS Corporation+ ............................ 1,126,571
25,800 Pfizer Inc.................................... 881,070
------------
6,468,738
------------
Total Health Care............................. 10,577,095
------------
INDUSTRIALS - 13.0%
CAPITAL GOODS - 9.7%
53,811 Boeing Company................................ 1,846,794
51,900 Electro Scientific Industries, Inc.+ ......... 786,804
90,600 Greenbrier Companies, Inc.+ .................. 983,010
11,250 Northrop Grumman Corporation.................. 970,762
34,167 PACCAR Inc.................................... 2,308,323
20,200 Precision Castparts Corporation............... 628,220
12,800 Simpson Manufacturing Company, Inc.+ ......... 468,480
------------
7,992,393
------------
COMMERCIAL SERVICES & SUPPLIES - 0.8%
33,100 Robert Half International Inc.+ .............. 626,914
------------
See Notes to Financial Statements.
27
PORTFOLIO of INVESTMENTS (continued)
WEST COAST EQUITY FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED)
INDUSTRIALS (CONTINUED)
TRANSPORTATION - 2.5%
26,160 Alaska Air Group, Inc.+ ...................... $ 561,132
41,700 Expeditors International of Washington,
Inc......................................... 1,444,488
------------
2,005,620
------------
Total Industrials............................. 10,624,927
------------
INFORMATION TECHNOLOGY - 17.0%
COMPUTERS & PERIPHERALS - 2.7%
126,600 Advanced Digital Information
Corporation+ ............................... 1,264,734
33,100 Hewlett-Packard Company....................... 705,030
59,000 InFocus Corporation+ ......................... 278,480
------------
2,248,244
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.9%
61,090 Microvision, Inc.+** ......................... 378,758
54,020 Tektronix, Inc.+ ............................. 1,166,832
------------
1,545,590
------------
INTERNET SOFTWARE & SERVICES - 1.2%
306,600 Primus Knowledge Solutions, Inc.+ .......... 401,646
129,000 WatchGuard Technologies, Inc.+ ............. 593,400
------------
995,046
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.3%
14,025 Applied Materials, Inc.+ ..................... 222,437
21,300 Atmel Corporation+ ........................... 53,889
53,900 Credence Systems Corporation+ ................ 456,533
31,790 FEI Company+ ................................. 596,380
5,700 Genesis Microchip, Inc.+ ..................... 77,178
49,530 Intel Corporation............................. 1,029,432
8,000 KLA-Tencor Corporation+** .................... 371,920
68,680 Lattice Semiconductor Corporation+ ........... 565,236
20,900 LSI Logic Corporation+ ....................... 147,972
117,700 Pixelworks, Inc.+ ............................ 699,138
32,300 TriQuint Semiconductor, Inc.+ ................ 134,368
------------
4,354,483
------------
SOFTWARE - 5.9%
13,600 Actuate Corporation+ ......................... 37,808
24,200 Adobe Systems Inc.**.......................... 776,094
106,900 BSQUARE Corporation+ ......................... 87,658
5,000 Fair Isaac Corporation........................ 257,250
90,730 Microsoft Corporation......................... 2,323,595
267,950 ONYX Software Corporation+ ................... 259,912
11,800 Quest Software, Inc.+ ........................ 140,420
40,790 RadiSys Corporation+ ......................... 538,428
19,300 Siebel Systems, Inc.+ ........................ 184,112
13,700 Sybase, Inc.+ ................................ 190,567
------------
4,795,854
------------
Total Information Technology.................. 13,939,217
------------
MATERIALS - 6.1%
169,300 Louisiana-Pacific Corporation+ ............... 1,835,212
154,000 Oregon Steel Mills, Inc.+ .................... 446,600
32,410 Schnitzer Steel Industries, Inc., Class A..... 1,429,929
23,635 Weyerhaeuser Company.......................... 1,276,290
------------
Total Materials............................... 4,988,031
------------
TELECOMMUNICATION SERVICES - 1.4%
142,100 AT&T Wireless Services, Inc.+................. 1,166,641
------------
Total Common Stocks
(Cost $75,258,307).......................... 77,098,147
------------
REAL ESTATE INVESTMENT TRUSTS - 2.5%
55,400 Plum Creek Timber Company, Inc................ 1,437,630
17,100 Shurgard Storage Centers, Inc., Class A....... 565,668
------------
Total Real Estate Investment Trusts
(Cost $1,938,130)........................... 2,003,298
------------
PRINCIPAL
AMOUNT
------
REPURCHASE AGREEMENT - 3.7%
(Cost $3,053,000)
$ 3,053,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased at
$3,053,068 on 07/01/2003,
collateralized by $3,027,039 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $3,114,718)............... 3,053,000
------------
TOTAL INVESTMENTS (Cost $80,249,437*).................... 100.2% 82,154,445
OTHER ASSETS AND LIABILITIES (Net)....................... (0.2) (139,097)
----- ------------
NET ASSETS............................................... 100.0% $ 82,015,348
===== ============
- ----------------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $3,686,368, representing 4.5% of the total net
assets of the Fund (Collateral Value $3,911,137).
+ on-income producing security.
See Notes to Financial Statements.
28
PORTFOLIO of INVESTMENTS
MID CAP STOCK FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS - 92.5%
CONSUMER DISCRETIONARY - 16.3%
AUTOMOBILES & COMPONENTS - 0.5%
8,100 Superior Industries International, Inc............... $ 337,770
-----------
CONSUMER DURABLES & APPAREL - 6.7%
48,900 Jones Apparel Group, Inc.+ .......................... 1,430,814
79,800 Mattel, Inc. ........................................ 1,509,816
30,200 Nike Inc., Class B** ................................ 1,615,398
-----------
4,556,028
-----------
HOTELS, RESTAURANTS & LEISURE - 5.0%
21,400 Mandalay Resort Group ............................... 681,590
36,500 Papa John's International, Inc.+ .................... 1,023,825
57,200 Yum! Brands, Inc.+ .................................. 1,690,832
-----------
3,396,247
-----------
RETAILING - 4.1%
37,800 J.C. Penney Company, Inc.
(Holding Company) ................................ 636,930
16,900 Neiman Marcus Group Inc., Class A+................... 618,540
48,200 Tiffany & Company ................................... 1,575,176
-----------
2,830,646
-----------
Total Consumer Discretionary ........................ 11,120,691
-----------
CONSUMER STAPLES - 6.2%
FOOD, BEVERAGE & TOBACCO - 3.1%
36,300 Dean Foods Company+ ................................. 1,143,450
13,700 Hershey Foods Corporation ........................... 954,342
-----------
2,097,792
-----------
HOUSEHOLD & PERSONAL PRODUCTS - 3.1%
17,700 Avon Products, Inc. ................................. 1,100,940
30,200 Estee Lauder Companies Inc., Class A ................ 1,012,606
-----------
2,113,546
-----------
Total Consumer Staples .............................. 4,211,338
-----------
ENERGY - 7.4%
43,600 Baker Hughes Inc. ................................... 1,463,652
12,600 ConocoPhillips Company .............................. 690,480
28,999 Devon Energy Corporation ............................ 1,548,547
17,100 Nabors Industries Ltd.+.............................. 676,305
22,600 Unocal Corporation .................................. 648,394
-----------
Total Energy ........................................ 5,027,378
FINANCIALS - 16.8%
BANKS - 7.0%
43,775 Charter One Financial, Inc. ......................... 1,364,904
37,800 GreenPoint Financial Corporation .................... 1,925,532
37,800 TCF Financial Corporation ........................... 1,505,952
-----------
4,796,388
-----------
DIVERSIFIED FINANCIALS - 6.5%
39,800 A.G. Edwards, Inc. .................................. 1,361,160
26,700 Ambac Financial Group, Inc. ......................... 1,768,875
19,100 Countrywide Financial Corporation ................... 1,328,787
-----------
4,458,822
-----------
INSURANCE - 3.3%
43,125 Fidelity National Financial, Inc. ................... 1,326,525
34,800 PMI Group, Inc. ..................................... 934,032
-----------
2,260,557
-----------
Total Financials . .................................. 11,515,767
-----------
HEALTH CARE - 14.0%
HEALTH CARE EQUIPMENT & SERVICES - 11.4%
22,600 AmerisourceBergen Corporation** ..................... 1,567,310
80,500 Covance Inc.+ ....................................... 1,457,050
20,100 Express Scripts, Inc., Class A+ ..................... 1,373,232
30,900 Guidant Corporation ................................. 1,371,651
73,102 IMS Health Inc. ..................................... 1,315,105
8,100 WellPoint Health Networks, Inc.+ .................... 682,830
-----------
7,767,178
-----------
PHARMACEUTICALS & BIOTECHNOLOGY - 2.6%
51,650 Mylan Laboratories Inc. ............................. 1,795,870
-----------
Total Health Care ................................... 9,563,048
-----------
INDUSTRIALS - 8.8%
CAPITAL GOODS - 6.4%
56,500 Federal Signal Corporation .......................... 992,705
61,300 Lincoln Electric Holdings, Inc. ..................... 1,251,133
18,700 Lockheed Martin Corporation ......................... 889,559
28,900 Teleflex Inc. .................................... 1,229,695
-----------
4,363,092
-----------
COMMERCIAL SERVICES & SUPPLIES - 2.4%
73,700 Republic Services, Inc.+ ............................ 1,670,779
-----------
Total Industrials ................................... 6,033,871
-----------
INFORMATION TECHNOLOGY - 14.6%
COMPUTERS & PERIPHERALS - 1.4%
48,800 Electronics for Imaging, Inc.+ ...................... 990,152
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.9%
24,500 Arrow Electronics, Inc.+ ............................ 373,380
21,300 Diebold, Inc. ....................................... 921,225
-----------
1,294,605
-----------
IT SERVICES - 2.6%
101,400 Acxiom Corporation+ ................................. 1,530,126
17,700 Convergys Corporation+ .............................. 283,200
-----------
1,813,326
-----------
See Notes to Financial Statements.
29
PORTFOLIO of INVESTMENTS (continued)
MID CAP STOCK FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.4%
66,250 Microchip Technology Inc. ........................... $ 1,631,738
-----------
SOFTWARE - 6.3%
21,700 Adobe Systems Inc.** ................................ 695,919
74,900 BMC Software Inc.+ .................................. 1,223,117
39,300 PeopleSoft Inc.+ .................................... 691,287
27,100 Synopsys, Inc.+ ..................................... 1,676,135
-----------
4,286,458
-----------
Total Information Technology ........................ 10,016,279
-----------
MATERIALS - 1.9%
25,100 Cabot Corporation ................................... 720,370
14,500 Valspar Corporation ................................. 612,190
-----------
Total Materials ..................................... 1,332,560
-----------
TELECOMMUNICATION SERVICES - 0.7%
19,500 United States Cellular Corporation+ ................. 496,275
-----------
UTILITIES - 5.8%
22,400 FPL Group, Inc. ..................................... 1,497,440
49,800 NiSource Inc. ....................................... 946,200
40,100 Pinnacle West Capital Corporation ................... 1,501,745
-----------
Total Utilities ..................................... 3,945,385
-----------
Total Common Stocks
(Cost $50,318,022) ................................ 63,262,592
-----------
PRINCIPAL
AMOUNT VALUE
------ -----
REPURCHASE AGREEMENT - 7.2%
(Cost $4,916,000)
$ 4,916,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased
at $4,916,109 on 07/01/2003,
collateralized by $4,874,197
U.S. Treasury Notes, having
various interest rates and
maturities (Market Value
$5,015,379) ....................... $ 4,916,000
-----------
TOTAL INVESTMENTS (Cost $55,234,022*) ................. 99.7% 68,178,592
OTHER ASSETS AND LIABILITIES (Net) .................... 0.3 191,497
----- -----------
NET ASSETS ............................................ 100.0% $68,370,089
===== ===========
- -----------------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $3,878,627, representing 5.7% of the total net
assets of the Fund (Collateral Value $4,026,000).
+ Non-income producing security.
See Notes to Financial Statements.
30
PORTFOLIO of INVESTMENTS
GROWTH FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
COMMON STOCKS - 94.0%
CONSUMER DISCRETIONARY - 21.8%
AUTOMOBILES & COMPONENTS - 0.2%
9,200 Harley-Davidson, Inc.** ............................. $ 366,712
-----------
CONSUMER DURABLES & APPAREL - 0.5%
10,700 Ethan Allen Interiors Inc.+ ......................... 376,212
3,500 Mattel, Inc. ........................................ 66,220
7,100 Nike Inc., Class B** ................................ 379,779
-----------
822,211
-----------
HOTELS, RESTAURANTS & LEISURE - 4.0%
20,600 Brinker International, Inc.+ ........................ 742,012
61,000 Carnival Corporation** .............................. 1,983,110
34,160 Hilton Hotels Corporation ........................... 436,906
6,700 International Game Technology+ ...................... 685,611
7,000 Mandalay Resort Group ............................... 222,950
61,400 Royal Caribbean Cruises Ltd. ........................ 1,422,024
6,300 Starwood Hotels & Resorts Worldwide Inc. ............ 180,117
4,600 Wendy's International, Inc. ......................... 133,262
15,980 Yum! Brands, Inc.+ .................................. 472,369
-----------
6,278,361
-----------
MEDIA - 13.5%
192,487 AOL Time Warner Inc.+** ............................. 3,097,116
52,998 Cablevision Systems Corporation - New York
Group, Class A+ ................................... 1,100,238
42,050 Clear Channel Communications, Inc.+ ................. 1,782,499
3,900 Comcast Corporation, Class A+ ....................... 117,702
131,460 Comcast Corporation, Special Class A+ ............... 3,789,992
5,900 Cox Communications Inc., Class A+ ................... 188,210
12,400 EchoStar Communications Corporation,
Class A+ .......................................... 429,288
1,500 Gannett Company, Inc. ............................... 115,215
14,200 Hispanic Broadcasting Corporation+ .................. 361,390
236,673 Liberty Media Corporation, Class A+ ................. 2,735,940
10,100 McGraw-Hill Companies, Inc. ......................... 626,200
12,900 New York Times Company, Class A ..................... 586,950
38,700 News Corporation Ltd., Sponsored ADR ................ 1,171,449
6,600 Omnicom Group Inc. .................................. 473,220
14,400 Univision Communications Inc., Class A+ ............. 437,760
98,400 Viacom Inc., Class B+ ............................... 4,296,144
10,800 XM Satellite Radio Holdings Inc.,
Class A+** ........................................ 119,340
-----------
21,428,653
-----------
RETAILING - 3.6%
5,950 Bed Bath & Beyond Inc.+ ............................. 230,920
11,200 Chico's FAS, Inc.+ .................................. 235,760
2,300 eBay Inc.+ .......................................... 239,614
35,200 Gap, Inc.** ......................................... 660,352
6,000 Gymboree Corporation+ ............................... 100,680
13,600 Home Depot, Inc. .................................... 450,432
6,300 InterActiveCorp+ .................................... 249,291
18,690 Kohl's Corporation+ ................................. 960,292
7,700 Lowe's Companies, Inc. .............................. 330,715
10,300 Pier 1 Imports, Inc. ................................ 210,120
23,320 Staples, Inc.+ ...................................... 427,922
36,800 Target Corporation .................................. 1,392,512
15,495 TJX Companies, Inc. ................................. 291,926
-----------
5,780,536
-----------
Total Consumer Discretionary ........................ 34,676,473
-----------
CONSUMER STAPLES - 6.2%
FOOD & STAPLES RETAILING - 1.2%
25,455 Costco Wholesale Corporation+ ....................... 931,653
6,600 Sysco Corporation ................................... 198,264
13,700 Wal-Mart Stores Inc. ................................ 735,279
1,500 Whole Foods Market, Inc.+ ........................... 71,295
-----------
1,936,491
-----------
FOOD, BEVERAGE & TOBACCO - 3.8%
10,200 Altria Group, Inc. .................................. 463,488
44,650 Anheuser-Busch Companies, Inc. ...................... 2,279,382
6,200 Coca-Cola Company . ................................. 287,742
5,900 Dean Foods Company+ ................................. 185,850
16,500 General Mills, Inc. ................................. 782,265
43,150 PepsiCo Inc. ........................................ 1,920,175
2,050 Wm. Wrigley Jr. Company ............................. 115,272
-----------
6,034,174
-----------
HOUSEHOLD & PERSONAL PRODUCTS - 1.2%
4,100 Alberto-Culver Company, Class B** ................... 209,510
11,010 Avon Products, Inc. ................................. 684,822
11,500 Estee Lauder Companies Inc., Class A ................ 385,595
8,800 Gillette Company .................................... 280,368
3,000 Procter & Gamble Company ............................ 267,540
-----------
1,827,835
-----------
Total Consumer Staples .............................. 9,798,500
-----------
ENERGY - 5.8%
2,200 Apache Corporation .................................. 143,132
31,400 BJ Services Company+ ................................ 1,173,104
10,700 ConocoPhillips Company .............................. 586,360
30,053 EnCana Corporation .................................. 1,143,507
65,180 Exxon Mobil Corporation ............................. 2,340,614
12,200 Halliburton Company ................................. 280,600
15,379 Kinder Morgan Management, LLC+ ...................... 576,097
11,525 Murphy Oil Corporation .............................. 606,215
4,850 Nabors Industries Ltd.+ ............................. 191,818
10,950 Noble Drilling Corporation+ ......................... 375,585
4,400 Patterson-UTI Energy, Inc.+** ....................... 142,560
11,600 Rowan Companies, Inc.+ .............................. 259,840
3,600 Schlumberger Ltd. ................................... 171,252
10,710 Smith International Inc.+ ........................... 393,485
8,600 TotalFinaElf SA, Sponsored ADR ...................... 651,880
7,300 Varco International, Inc.+ .......................... 143,080
-----------
Total Energy ........................................ 9,179,129
-----------
See Notes to Financial Statements.
31
PORTFOLIO of INVESTMENTS (continued)
GROWTH FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
COMMON STOCKS (CONTINUED)
FINANCIALS - 12.8%
BANKS - 1.6%
14,000 Bank of America Corporation ......................... $ 1,106,420
29,200 Bank One Corporation ................................ 1,085,656
6,400 Fifth Third Bancorp ................................. 366,976
-----------
2,559,052
-----------
DIVERSIFIED FINANCIALS - 8.3%
47,175 American Express Company ............................ 1,972,387
51,400 Charles Schwab Corporation .......................... 518,626
98,826 Citigroup Inc. ...................................... 4,229,753
27,235 Fannie Mae .......................................... 1,836,728
17,150 Goldman Sachs Group, Inc.** ......................... 1,436,312
11,600 J.P. Morgan Chase & Company ......................... 396,488
12,700 Merrill Lynch & Company, Inc. ....................... 592,836
45,540 Morgan Stanley Dean Witter & Company ................ 1,946,835
4,350 SLM Corporation ..................................... 170,390
-----------
13,100,355
-----------
INSURANCE - 2.9%
24,775 Allstate Corporation ................................ 883,229
29,050 American International Group Inc. ................... 1,602,979
404 Berkshire Hathaway, Class B+ ........................ 981,720
2,000 Everest Re Group Ltd. ............................... 153,000
2,600 Marsh & McLennan Companies, Inc. .................... 132,782
5,500 St. Paul Companies, Inc. ............................ 200,805
7,675 XL Capital Ltd., Class A ............................ 637,025
-----------
4,591,540
-----------
Total Financials . .................................. 20,250,947
-----------
HEALTH CARE - 17.0%
HEALTH CARE EQUIPMENT & SERVICES - 6.8%
10,000 Aetna Inc. .......................................... 602,000
3,200 Alcon, Inc. ......................................... 146,240
15,770 Anthem, Inc.+ ....................................... 1,216,655
20,000 Applera Corporation-Applied Biosystems
Group ............................................. 380,600
3,800 Apria Healthcare Group Inc.+ ........................ 94,544
6,500 Baxter International Inc. ........................... 169,000
6,000 Becton, Dickinson & Company . ....................... 233,100
4,750 Boston Scientific Corporation+ ...................... 290,225
5,500 Caremark Rx, Inc.+ .................................. 141,240
1,600 Covance Inc.+ ....................................... 28,960
12,170 Guidant Corporation ................................. 540,226
1,100 IDEXX Laboratories, Inc.+ ........................... 36,894
2,300 Lincare Holdings Inc.+ .............................. 72,473
11,365 McKesson Corporation ................................ 406,185
56,915 Medtronic Inc. ...................................... 2,730,213
13,400 Millipore Corporation+ .............................. 594,558
4,600 Oxford Health Plans, Inc.+ .......................... 193,338
5,200 St. Jude Medical, Inc.+ ............................. 299,000
7,300 STERIS Corporation+ ................................. 168,557
27,660 UnitedHealth Group Inc. ............................. 1,389,915
6,900 Varian Medical Systems, Inc.+ ....................... 397,233
8,300 WellPoint Health Networks, Inc.+ .................... 699,690
-----------
10,830,846
-----------
PHARMACEUTICALS & BIOTECHNOLOGY - 10.2%
22,550 Abbott Laboratories ................................. 986,788
31,400 Amgen, Inc.+ ........................................ 2,086,216
8,700 Barr Laboratories Inc.+ ............................. 569,850
5,700 Biovail Corporation+ ................................ 268,242
12,400 Bristol-Myers Squibb Company ........................ 336,660
19,000 Celgene Corporation+ ................................ 577,600
7,300 Chiron Corporation+ ................................. 319,156
16,575 Forest Laboratories, Inc.+ .......................... 907,481
5,300 Genentech, Inc.+ .................................... 382,236
500 IDEC Pharmaceuticals Corporation+ ................... 17,000
14,450 Johnson & Johnson ................................... 747,065
3,800 Medicis Pharmaceutical Corporation,
Class A ........................................... 215,460
14,200 Merck & Company, Inc. ............................... 859,810
14,535 Mylan Laboratories Inc. ............................. 505,382
2,960 OSI Pharmaceuticals, Inc.+ .......................... 95,342
23,800 Perrigo Company ..................................... 372,232
133,835 Pfizer Inc. ......................................... 4,570,465
19,200 Serono SA, ADR ...................................... 279,552
12,600 SICOR, Inc.+ ........................................ 256,284
25,200 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR ..................................... 1,434,636
7,800 Wyeth ............................................... 355,290
-----------
16,142,747
-----------
Total Health Care ................................... 26,973,593
-----------
INDUSTRIALS - 5.0%
CAPITAL GOODS - 2.8%
3,500 Danaher Corporation** ............................... 238,175
5,800 Dover Corporation ................................... 173,768
35,100 General Electric Company ............................ 1,006,668
23,300 Honeywell International Inc. ........................ 625,605
10,800 Ingersoll-Rand Company, Class A ..................... 511,056
13,005 Lockheed Martin Corporation ......................... 618,648
10,535 Northrop Grumman Corporation ........................ 909,065
16,800 Tyco International Ltd. ............................. 318,864
-----------
4,401,849
-----------
COMMERCIAL SERVICES & SUPPLIES - 0.7%
22,810 Monster Worldwide Inc.+ ............................. 450,041
31,700 Waste Management Inc. ............................... 763,653
-----------
1,213,694
-----------
TRANSPORTATION - 1.5%
8,540 Canadian National Railway Company ................... 412,141
11,000 Expeditors International of Washington, Inc. ........ 381,040
17,200 FedEx Corporation ................................... 1,066,916
See Notes to Financial Statements.
32
PORTFOLIO of INVESTMENTS (continued)
GROWTH FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
COMMON STOCKS (CONTINUED)
INDUSTRIALS (CONTINUED)
TRANSPORTATION (CONTINUED)
22,080 Southwest Airlines Company .......................... $ 379,776
2,400 United Parcel Service, Inc., Class B ................ 152,880
-----------
2,392,753
-----------
Total Industrials ................................... 8,008,296
-----------
INFORMATION TECHNOLOGY - 23.4%
COMMUNICATIONS EQUIPMENT - 4.4%
10,300 Brocade Communications Systems, Inc.+ ............... 60,667
160,280 Cisco Systems Inc.+ ................................. 2,675,073
3,100 Comverse Technology, Inc.+ .......................... 46,593
2,100 Juniper Networks, Inc.+ ............................. 25,977
99,600 Lucent Technologies Inc.+ ........................... 202,188
13,200 Motorola, Inc. ...................................... 124,476
171,294 Nokia Oyj, Sponsored ADR ............................ 2,814,361
11,700 Sonus Networks, Inc.+ ............................... 58,851
28,000 UTStarcom, Inc.+** .................................. 995,960
-----------
7,004,146
-----------
COMPUTERS & PERIPHERALS - 3.0%
30,530 Apple Computer, Inc.+ ............................... 583,734
57,440 Dell Computer Corporation+ .......................... 1,835,782
35,990 EMC Corporation+ .................................... 376,815
16,800 International Business Machines Corporation ......... 1,386,000
6,900 Lexmark International, Inc.+ ........................ 488,313
-----------
4,670,644
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5%
2,300 Garmin Ltd.+ ........................................ 91,701
63,500 Sanmina-SCI Corporation+ ............................ 400,685
26,500 Vishay Intertechnology, Inc.+ ....................... 349,800
-----------
842,186
-----------
INTERNET SOFTWARE & SERVICES - 1.2%
6,030 Symantec Corporation+ ............................... 264,476
49,060 Yahoo! Inc.+ ........................................ 1,607,206
-----------
1,871,682
-----------
IT SERVICES - 1.1%
16,955 Accenture Ltd., Class A+ ............................ 306,716
19,100 Concord EFS, Inc.+ .................................. 281,152
28,500 First Data Corporation .............................. 1,181,040
-----------
1,768,908
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.6%
11,900 Analog Devices, Inc.+ ............................... 414,358
35,535 Applied Materials, Inc.+ ............................ 563,585
11,700 Applied Micro Circuits Corporation+ ................. 70,785
6,300 ASML Holding NV (F)+ ................................ 60,228
21,700 Broadcom Corporation, Class A+** .................... 540,547
6,000 Cabot Microelectronics Corporation+ ................. 302,820
33,600 Cypress Semiconductor Corporation+ .................. 403,200
19,500 Infineon Technologies AG, ADR ....................... 187,005
101,250 Intel Corporation ................................... 2,104,380
14,800 International Rectifier Corporation+ ................ 396,936
16,300 Intersil Corporation, Class A+ ...................... 433,743
8,025 Linear Technology Corporation ....................... 258,485
15,300 Marvell Technology Group Ltd.+ ...................... 525,861
1,200 Maxim Integrated Products Inc. ...................... 41,028
3,890 Microchip Technology Inc. ........................... 95,811
7,700 Micron Technology Inc.+ ............................. 89,551
18,200 National Semiconductor Corporation+ ................. 358,904
14,500 NVIDIA Corporation+ ................................. 333,645
25,500 PMC-Sierra, Inc.+ ................................... 299,115
30,400 Taiwan Semiconductor Manufacturing
Company Ltd., Sponsored ADR ....................... 306,432
65,885 Texas Instruments Inc. .............................. 1,159,576
-----------
8,945,995
-----------
SOFTWARE - 7.6%
16,700 Adobe Systems Inc.** ................................ 535,569
27,400 Cadence Design Systems, Inc.+ ....................... 330,444
34,020 Computer Associates International, Inc. ............. 757,966
22,980 Electronic Arts Inc.+ ............................... 1,700,290
15,470 Intuit Inc.+ ........................................ 688,879
234,890 Microsoft Corporation ............................... 6,015,533
50,510 Oracle Corporation+ ................................. 607,130
4,700 PeopleSoft Inc.+ .................................... 82,673
2,500 Reynolds and Reynolds Company, Class A .............. 71,400
13,600 SAP AG, Sponsored ADR ............................... 397,392
32,760 VERITAS Software Corporation+ ....................... 939,229
-----------
12,126,505
-----------
Total Information Technology ........................ 37,230,066
-----------
MATERIALS - 1.2%
9,500 Air Products & Chemicals, Inc. ...................... 395,200
4,900 International Flavors & Fragrances, Inc. ............ 156,457
15,000 International Paper Company ......................... 535,950
12,400 Praxair, Inc. ....................................... 745,240
-----------
Total Materials ..................................... 1,832,847
-----------
TELECOMMUNICATION SERVICES - 0.8%
24,100 AT&T Corporation .................................... 463,925
7,800 AT&T Wireless Services, Inc.+ ....................... 64,038
1,600 Mobile Telesystems OJSC,
Sponsored ADR+ .................................... 94,400
7,500 Sprint Corporation-PCS Group+** ..................... 43,125
12,900 Telefonos de Mexico SA de CV, Class L,
Sponsored ADR ..................................... 405,318
13,600 Vodafone Group PLC, Sponsored ADR ................... 267,240
-----------
Total Telecommunication Services .................... 1,338,046
-----------
UTILITIES - 0.0%***
2,500 Philadelphia Suburban Corporation ................... 60,950
-----------
Total Common Stocks
(Cost $144,652,757) ............................... 149,348,847
-----------
See Notes to Financial Statements.
33
PORTFOLIO of INVESTMENTS (continued)
GROWTH FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
REAL ESTATE INVESTMENT TRUSTS - 0.2%
(Cost $463,319)
41,200 Host Marriott Corporation+ ............. $ 376,980
-----------
INVESTMENT COMPANY SECURITY - 0.3%
(Cost $374,284)
13,300 Nasdaq-100 Index Tracking Stock+** ..... 398,335
-----------
PREFERRED STOCK - 0.1%
(Cost $132,827)
5,925 News Corporation Ltd., Sponsored ADR ... 148,421
-----------
PRINCIPAL
AMOUNT
------
COMMERCIAL PAPER - 0.9%
$ 800,000 Prudential Funding LLC,
1.210% due 07/01/2003 .................. 800,000
700,000 General Electric Capital Corporation,
1.320% due 07/01/2003 .................. 700,000
-----------
Total Commercial Paper
(Cost $1,500,000) .................... 1,500,000
-----------
REPURCHASE AGREEMENT - 4.7%
(Cost $7,422,000)
7,422,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased
at $7,422,165 on 07/01/2003,
collateralized by $7,358,887
U.S. Treasury Notes, having various
interest rates and maturities
(Market Value $7,572,039) .............. 7,422,000
-----------
TOTAL INVESTMENTS (Cost $154,545,187*) ............... 100.2% 159,194,583
OTHER ASSETS AND LIABILITIES (Net) ................... (0.2) (318,695)
----- ------------
NET ASSETS ........................................... 100.0% $158,875,888
----- ------------
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE
NET
UNREALIZED
EXPIRATION LOCAL VALUE IN IN EXCHANGE APPRECIATION
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- --------------- -------- ----------- ------------
07/31/2003 EUR 40,000 45,891 43,803 $ 2,088
09/26/2003 EUR 85,000 97,356 92,221 5,135
10/17/2003 EUR 40,000 45,789 45,155 634
------------
$ 7,857
------------
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER
NET
UNREALIZED
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- --------------- -------- ----------- -------------
07/31/2003 EUR 280,00 321,235 300,048 $ (21,187)
09/26/2003 EUR 225,00 257,708 238,947 (18,761)
10/17/2003 EUR 40,000 45,789 42,600 (3,189)
11/12/2003 KRW 25,000,000 20,681 20,456 (225)
11/21/2003 KRW 345,000,000 285,175 284,067 (1,108)
-------------
$ (44,470)
-------------
Net Unrealized Depreciation of Forward Foreign
Currency Contracts ............................................. $ (36,613)
GLOSSARY OF TERMS
ADR -- American Depository Receipt
EUR -- Euro
KRW -- South Korean Won
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $6,136,345, representing 3.9% of the total net
assets of the Fund (Collateral Value $6,282,748).
*** Amount represents less than 0.1% of total net assets.
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933.
See Notes to Financial Statements.
34
PORTFOLIO of INVESTMENTS
SMALL CAP STOCK FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS - 99.8%
CONSUMER DISCRETIONARY - 17.5%
CONSUMER DURABLES & APPAREL - 1.5%
50,500 Cutter & Buck Inc.+ ................................ $ 257,045
41,300 Quiksilver, Inc.+ .................................. 681,037
-----------
938,082
-----------
HOTELS, RESTAURANTS & LEISURE -4.1%
173,100 Intrawest Corporation .............................. 2,281,458
37,100 WestCoast Hospitality Corporation+ ................. 187,726
-----------
2,469,184
-----------
MEDIA - 3.4%
28,200 Getty Images, Inc.+ ................................ 1,164,660
544,700 Sirius Satellite Radio Inc.+** ..................... 920,543
-----------
2,085,203
-----------
RETAILING - 8.5%
62,700 AnnTaylor Stores Corporation+ ...................... 1,815,165
113,400 Building Materials Holding Corporation ............. 1,679,454
96,000 West Marine, Inc.+ ................................. 1,680,960
-----------
5,175,579
-----------
Total Consumer Discretionary ....................... 10,668,048
-----------
CONSUMER STAPLES - 2.4%
FOOD & STAPLES RETAILING - 2.4%
47,900 United Natural Foods, Inc.+ ........................ 1,347,906
2,100 Whole Foods Market, Inc.+ .......................... 99,813
-----------
Total Consumer Staples ............................. 1,447,719
-----------
ENERGY - 2.3%
27,428 Hanover Compressor Company+ ........................ 309,936
74,400 Headwaters Inc.+ ................................... 1,092,936
-----------
Total Energy ....................................... 1,402,872
-----------
FINANCIALS - 8.9%
DIVERSIFIED FINANCIALS - 8.9%
11,200 Affiliated Managers Group, Inc.+ ................... 682,640
85,408 American Capital Strategies Ltd.** ................. 2,130,075
34,400 First Albany Companies Inc. ........................ 427,592
73,900 Investors Financial Services Corporation ........... 2,143,839
-----------
Total Financials ................................... 5,384,146
-----------
HEALTH CARE - 21.4%
HEALTH CARE EQUIPMENT & SERVICES - 3.6%
18,900 Accredo Health, Inc.+ .............................. 412,020
11,000 Affymetrix, Inc.+ .................................. 216,810
77,800 SonoSite, Inc.+ .................................... 1,552,110
-----------
2,180, 940
-----------
PHARMACEUTICALS & BIOTECHNOLOGY - 17.8%
61,100 Antigenics Inc.+ ................................... 703,872
182,700 Corixa Corporation+** .............................. 1,412,271
260,900 Dendreon Corporation+** ............................ 1,549,746
63,600 DUSA Pharmaceuticals, Inc.+ ........................ 159,636
194,000 Emisphere Technologies, Inc.+....................... 698,400
9,400 Incyte Corporation+ ................................ 43,616
32,700 Medicis Pharmaceutical Corporation. Class A ........ 1,854,090
53,400 Myriad Genetics, Inc.+ ............................. 726,774
75,900 Neose Technologies, Inc.+** ........................ 759,759
173,100 Pain Therapeutics, Inc.+ ........................... 1,118,226
150,600 Pharmacyclics, Inc.+ ............................... 713,844
93,800 Zymogenetics, Inc.+** .............................. 1,091,832
-----------
10,832,066
-----------
Total Health Care .................................. 13,013,006
-----------
INDUSTRIALS- 7.1%
COMMERCIAL SERVICES & SUPPLIES - 6.0%
154,100 Digimarc Corporation+ .............................. 2,419,370
491,400 Edison Schools Inc.+ ............................... 737,100
107,277 First Consulting Group, Inc.+ ...................... 500,984
-----------
3,657,454
-----------
TRANSPORTATION -1.1%
19,700 Expediters International of Washington, Inc. 682,408
-----------
Total Industrials .................................. 4,339,862
-----------
INFORMATION TECHNOLOGY - 38.7%++
COMPUTERS & PERIPHERALS - 2.8%
44,100 Advanced Digital Information Corporation+ .......... 440,559
15,800 Avid Technology, Inc.+ ............................. 554,106
723,320
-----------
67,600 Pinnacle Systems, Inc.+ ............................ 1,717,985
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5%
47,300 Microvision, Inc.+** ............................... 293,260
-----------
INTERNET SOFTWARE & SERVICES - 7.6%
7,800 aQuantive, Inc.+ ................................... 81,900
562,812 Click21earn, Inc.+ ................................. 973,665
757,000 Corillian Corporation+ ............................. 1,286,900
252,200 Interwoven, Inc.+ .................................. 559,884
1,075,000 Intraware, Inc.+ ................................... 1,343,750
15,400 Online Resources Corporation+ ...................... 98,098
207,900 Primus Knowledge Solutions, Inc.+ .................. 272,349
-----------
4,616,546
-----------
IT SERVICES - 4.7%
559,200 Lionbridge Technologies, Inc.+** ................... 2,846,328
-----------
See Notes to Financial Statements.
35
PORTFOLIO of INVESTMENTS (continued)
SMALL CAP STOCK FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.1%
61,740 Credence Systems Corporation+ ...................... 522,938
73,820 FEI Company+ ....................................... 1,384,863
215,800 Pixelworks, Inc.+ .................................. 1,281,852
32,500 Rudolph Technologies, Inc.+ ........................ 518,700
-----------
3,708,353
-----------
SOFTWARE - 17.0%
604,800 BSQUARE Corporation+ ............................... 495,936
73,100 Business Objects SA, Sponsored ADR+ ................ 1,604,545
79,100 E.piphany, Inc.+ ................................... 404,201
239,300 Informatica Corporation+ ........................... 1,653,563
26,348 Made2Manage Systems, Inc.+ ......................... 147,839
129,342 NetIQ Corporation+ ................................. 1,999,627
235,900 Nuance Communications Inc.+ ........................ 1,273,860
767,600 ONYX Software Corporation+ ......................... 744,572
112,800 PDF Solutions, Inc.+ ............................... 1,302,840
141,400 ScanSoft, Inc.+ .................................... 767,802
-----------
10,394,785
-----------
Total Information Technology ....................... 23,577,257
-----------
TELECOMMUNICATION SERVICES - 1.5%
24,870 Gilat Satellite Networks Ltd.+ ..................... 126,588
426,400 Latitude Communications, Inc.+ ..................... 793,104
-----------
Total Telecommunication Services ................... 919,692
-----------
Total Common Stocks
(Cost $72,357,444) .............................. 60,752,602
-----------
PRINCIPAL
AMOUNT VALUE
------ -----
REPURCHASE AGREEMENT - 0.5%
(Cost $297,000)
$ 297,000 Agreement with Goldman Sachs Group, Inc., 0.800% dated
06/30/2003, to be repurchased at $297,007 on
07/01/2003, collateralized by $294,474 U.S. Treasury
Notes, having various interest rates and maturities
(Market Value $303,004) ............................. $ 297,000
------------
TOTAL INVESTMENTS (Cost $72,654,444*) ........................... 100.3% 61,049,602
OTHER ASSETS AND LIABILITIES (Net) .............................. (0.3) (173,506)
----- ------------
NET ASSETS ...................................................... 100.0% $ 60,876,096
===== ============
- -----------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $6,772,431, representing 11.1% of the total net
assets of the Fund (Collateral Value $8,441,088).
+ Non-income producing security.
++ Investments in the Information Technology sector as of June 30, 2003 are
38.7% of the total net assets of the Fund.
See Notes to Financial Statements.
36
PORTFOLIO of INVESTMENTS
INTERNATIONAL GROWTH FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS - 96.1%
UNITED KINGDOM - 18.8%
31,000 ARM Holdings PLC+ .................................. $ 34,274
10,300 AstraZeneca PLC (F) ................................ 417,536
36,300 AstraZeneca PLC .................................... 1,455,594
138,010 BAE SYSTEMS PLC .................................... 324,528
39,400 Barclays PLC ....................................... 292,574
104,600 BG Group PLC ....................................... 463,451
85,237 BHP Billiton PLC ................................... 448,690
10,200 BOC Group PLC ...................................... 130,866
12,900 Brambles Industries PLC ............................ 34,911
52,200 Centrica PLC ....................................... 151,389
15,200 Compass Group PLC .................................. 81,957
5,600 GlaxoSmithKline PLC ................................ 113,017
19,100 HBOS PLC ........................................... 247,260
42,400 HSBC Holdings PLC+ ................................. 500,964
32,900 Marks & Spencer Group PLC .......................... 171,422
169,000 mmO(2) PLC+ ........................................ 158,263
43,600 National Grid Group PLC ............................ 295,703
49,000 Pearson PLC ........................................ 457,657
22,100 Prudential PLC ..................................... 133,840
5,700 Reckitt Benckiser PLC .............................. 104,594
14,800 Reed Elsevier PLC .................................. 123,150
34,900 Reuters Group PLC .................................. 101,216
33,300 Royal Bank of Scotland Group PLC ................... 934,158
45,180 Smiths Group PLC ................................... 524,118
33,100 Standard Chartered PLC ............................. 402,007
11,900 Unilever PLC ....................................... 94,748
1,043,298 Vodafone Group PLC ................................. 2,040,112
20,000 Xstrata PLC ........................................ 132,838
-----------
10,370,837
-----------
JAPAN - 16.0%+++
4,900 Advantest Corporation .............................. 217,098
21,000 AEON Company Ltd. .................................. 480,949
2,280 Aiful Corporation++ ................................ 97,219
6,000 Canon Inc. ......................................... 275,328
15,073 Chugai Pharmaceutical Company Ltd. ................. 171,223
34,000 Daiwa Securities Group Inc. ........................ 195,378
3,600 Hirose Electric Company Ltd. ....................... 297,714
26,000 Hitachi Ltd. ....................................... 110,214
4,000 Hoya Corporation .................................. 275,494
40,000 Japan Airlines System Corporation+** ............... 87,279
30 Japan Telecom Company Ltd. ......................... 91,193
8,300 Kansai Electric Power Company, Inc. ................ 130,920
748 Keyence Corporation ................................ 137,048
6,000 Mitsubishi Corporation ............................. 41,624
26,000 Mitsubishi Estate Company Ltd. ..................... 176,040
44,000 Mitsubishi Heavy Industries Ltd. ................... 113,962
69,000 Mitsubishi Motors Corporation+** ................... 155,728
41,000 Mitsui Fudosan Company Ltd. ........................ 261,895
26,000 Mitsui Sumitomo Insurance Company Ltd. ............. 120,608
3,300 Murata Manufacturing Company Ltd. .................. 129,719
57,000 NEC Corporation+ ................................... 284,822
54,000 Nikko Cordial Corporation .......................... 216,765
500 Nintendo Company Ltd. .............................. 36,352
71,000 Nissan Motor Company Ltd. .......................... 678,809
4,900 Nitto Denko Corporation** .......................... 160,375
20,000 Nomura Securities Company Ltd. ..................... 253,841
62 NTT DoCoMo Inc. .................................... 134,249
5,500 ORIX Corporation ................................... 304,143
3,500 Rohm Company Ltd. .................................. 381,553
10,000 Sankyo Company Ltd. ................................ 119,425
31,000 Sekisui House Ltd. ................................. 234,937
1,600 Shimamura Company Ltd. ............................. 88,345
3,000 Shin-Etsu Chemical Company Ltd. .................... 102,436
24,000 Shionogi & Company Ltd. ............................ 325,197
300 SMC Corporation .................................... 25,259
8,142 Sony Corporation ................................... 229,190
31,000 Suzuki Motor Corporation ........................... 403,265
4,100 TDK Corporation .................................... 202,482
12,100 Tokyo Electron Ltd. ................................ 573,383
41,000 Tokyu Corporation .................................. 132,142
66,000 Toray Industries Inc. .............................. 153,354
2,000 Tostem Corporation ................................. 28,815
6 Yahoo Japan Corporation+ ........................... 97,439
8,000 Yamato Transport Company Ltd. ...................... 88,545
-----------
8,821,756
-----------
FRANCE - 11.6%
3,800 Accor SA ........................................... 137,457
18,100 BNP Paribas SA ..................................... 919,737
20,400 Bouygues SA++ ...................................... 563,166
2,500 Carrefour SA ....................................... 122,528
4,100 Essilor International SA ........................... 165,164
12,500 France Telecom SA+ ................................. 306,607
2,500 Groupe Danone ...................................... 345,938
2,437 L'Air Liquide SA ................................... 361,288
2,900 L'Oreal SA ......................................... 204,474
9,500 Renault SA ......................................... 502,262
26,100 Sanofi-Synthelabo SA ............................... 1,528,559
7,800 Schneider Electric SA .............................. 366,703
14,500 STMicroelectronics NV .............................. 304,047
3,000 STMicroelectronics NV (F) .......................... 62,370
27,800 Vivendi Universal SA+ .............................. 505,994
-----------
6,396,294
-----------
NETHERLANDS - 10.6%
43,105 ABN AMRO Holding NV ................................ 824,164
76,193 AEGON NV ........................................... 762,962
11,300 ASML Holding NV (F)+ ............................... 108,028
5,000 Heineken Holding NV, Class A ....................... 143,773
19,400 Heineken NV ........................................ 688,386
24,000 ING Groep NV ....................................... 416,986
See Notes to Financial Statements.
37
PORTFOLIO of INVESTMENTS (continued)
INTERNATIONAL GROWTH FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED)
NETHERLANDS (CONTINUED)
80,200 Koninklijke (Royal) KPN NV+ ........................ $ 568,239
10,500 Koninklijke (Royal) Philips Electronics NV ......... 199,674
1,500 Koninklijke (Royal) Philips Electronics NV (F) ..... 28,665
5,300 Koninklijke Numico NV+ ............................. 81,555
4,200 Reed Elsevier NV ................................... 49,533
30,200 Royal Dutch Petroleum Company ...................... 1,401,764
2,900 Royal Dutch Petroleum Company (F) .................. 135,198
5,700 Unilever NV ........................................ 305,808
4,839 VNU NV ............................................. 149,090
-----------
5,863,825
-----------
SWITZERLAND - 8.9%
30,194 Compagnie Financiere Richemont AG, A Units ......... 488,172
7,417 Credit Suisse Group ................................ 195,207
12,170 Holcim Ltd. ........................................ 449,679
3,147 Nestle SA .......................................... 649,362
23,952 Novartis AG ........................................ 947,796
3,439 Roche Holding AG ................................... 269,755
13,603 Swiss Reinsurance Company .......................... 753,691
2,127 Swisscom AG ........................................ 604,556
170 Synthes-Stratec, Inc. .............................. 122,115
7,740 UBS AG ............................................. 430,559
-----------
4,910,892
-----------
GERMANY - 4.9%
2,600 Allianz AG+ ........................................ 216,104
4,800 Bayerische Motoren Werke (BMW) AG .................. 184,654
5,600 DaimlerChrysler AG ................................. 195,494
5,100 Deutsche Bank AG** ................................. 330,778
28,000 Deutsche Telekom AG+ ............................... 427,321
3,700 Epcos AG+ .......................................... 47,672
4,500 Metro AG ........................................... 145,466
2,300 Muenchener Rueckversicherungs-
Gesellschaft AG ................................. 234,485
2,000 SAP AG ............................................. 235,870
1,200 SAP AG, Sponsored ADR .............................. 35,064
11,600 Siemens AG ......................................... 569,064
9,400 ThyssenKrupp AG .................................... 108,376
-----------
2,730,348
-----------
CANADA - 3.8%
21,700 Abitibi -Consolidated Inc.** ....................... 137,347
2,700 Alcan Inc. ......................................... 83,479
21,400 BCE Inc.** ......................................... 489,188
98,300 Bombardier Inc., Class B ........................... 330,621
8,900 Suncor Energy Inc. ................................. 165,980
16,100 TELUS Corporation .................................. 264,828
20,200 Thomson Corporation ................................ 630,344
-----------
2,101,787
-----------
SPAIN - 3.1%
3,800 Altadis SA ......................................... 96,132
52,200 Banco Bilbao Vizcaya Argentaria SA** ............... 548,483
20,300 Industria de Diseno Textil SA (Inditex) ............ 510,519
10,400 Repsol YPF SA** .................................... 168,632
34,790 Telefonica SA+ ..................................... 403,903
-----------
1,727,669
-----------
HONG KONG - 2.9%+++
35,000 Cheung Kong Holdings Ltd. .......................... 210,499
176,500 Hang Lung Properties Ltd. .......................... 159,567
21,200 Hang Seng Bank Ltd. ................................ 224,285
68,000 Hongkong Land Holdings Ltd. ........................ 85,000
36 000 Hutchison Whampoa Ltd. ............................. 219 283
168,000 Johnson Electric Holdings Ltd. ..................... 207,896
170,000 Li & Fung Ltd. ..................................... 219,091
160,000 Shangri-La Asia Ltd.++ ............................. 101,563
18,000 Sung Hung Kai Properties Ltd. ...................... 90,945
25,000 Swire Pacific Ltd, Class A ......................... 109,321
-----------
1,627,450
-----------
AUSTRALIA - 2.8%+++
26,000 Alumina Ltd. ....................................... 70,969
18,600 Australia & New Zealand Banking Group Ltd. ......... 232,146
12,772 BHP Billiton Ltd. .................................. 74,007
20 000 Brambles Industries Ltd. ** ........................ 61 298
89,512 Foster's Brewing Group Ltd. ........................ 252,735
9,200 National Australia Bank Ltd. ....................... 206,697
13,880 News Corporation Ltd. .............................. 104,258
23,641 QBE Insurance Group Ltd.++ ......................... 147,769
26,000 WMC Resources Ltd.+ ................................ 61,205
41,000 Woolworths Ltd ..................................... 344,263
-----------
1,555,347
-----------
SINGAPORE - 2.3%+++
17,000 DBS Group holdings Ltd. ............................ 99,431
23,000 DBS Group Holdings Ltd., ADR++ ..................... 134,524
22,000 Singapore Airlines Ltd. ............................ 129,925
14,000 Singapore Press Holdings Ltd. ...................... 145,484
139,000 Singapore Technologies Engineering Ltd. ............ 137,341
723,000 Singapore Telecommunications Ltd. (F)++ ............ 621,780
-----------
1,268,485
-----------
FINLAND - 1.5%
38,200 Nokia Oyj .......................................... 629,048
15,000 UPM-Kymmene Oyj .................................... 218,932
-----------
847,980
-----------
SWEDEN - 1.4%
21,900 Assa Abloy AB, B Shares ............................ 212,026
22,500 ForeningsSparbanken AB ............................. 310,590
4,000 Sandvik AB ......................................... 104,685
8,200 Svenska Handlesbanken AB, A Shares ................. 134,192
-----------
761,493
-----------
See Notes to Financial Statements.
38
PORTFOLIO of INVESTMENTS (continued)
INTERNATIONAL GROWTH FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED)
Italy - 1.4%
4,700 Assicurazioni Generali SpA** ....................... $ 108,916
42,450 Eni SpA** .......................................... 642,000
-----------
750,916
-----------
NORWAY - 1.3%
6,200 Norsk Hydro ASA** .................................. 304,915
5,100 Norske Skogindustrier ASA* ......................... 76,305
39,300 Statoil ASA** ...................................... 334,832
-----------
716,052
-----------
SOUTH KOREA - 1.2%+++
8,820 Hyundai Motor Company Ltd., GDR++ .................. 119,511
1,565 Samsung Electronics Company Ltd. ................... 465,111
330 Samsung Electronics Company Ltd., GDR .............. 49,088
-----------
633,710
-----------
MEXICO - 1.0%
11,600 America Movil SA de C.V., Series L, ADR ............ 217,500
10,900 Telefonos de Mexico SA de CV, Class L.
Sponsored ADR ................................... 342,478
-----------
559,978
-----------
BRAZIL - 0.6%
5,100 Companhia Vale do Rio Doce, ADR+ ................... 151,266
6,000 Companhia Vale do Rio Doce, Sponsored ADR .......... 166,500
-----------
317,766
-----------
TAIWAN - 0.5%+++
29,399 Taiwan Semiconductor Manufacturing Company Ltd.,
Sponsored ADR ................................... 296,342
-----------
IRELAND - 0.4%
14,785 CRH PLC ............................................ 231,753
-----------
DENMARK - 0.3%
4,500 Novo Nordisk A/S, Class B .......................... 157,532
-----------
CHINA - 0.2%+++
46,000 China Mobile (Hong Kong) Ltd. ...................... 108,539
-----------
NEW ZEALAND - 0.2%+++
34,622 Telecom Corporation of New Zealand Ltd. ............ 106,212
-----------
PORTUGAL - 0.2%
14,300 Portugal Telecom SGPS SA ........................... 102,469
-----------
BELGIUM - 0.2%
13,600 SES GLOBAL, FDR .................................... 88,239
-----------
Total Common Stocks
(Cost$55,823,440) ............................... 53,053,671
-----------
PREFERRED STOCK - 0.4%
(Cost $111,396)
SOUTH KOREA - 0.4%+++
1,580 Samsung Electronics Company Ltd. ................... 225,525
-----------
CONVERTIBLE PREFERRED STOCK - 0.3%
(Cost $171,406)
JAPAN - 0.3%+++
24,000,000 Sumitomo Mitsui Finance Group Inc. (F).
Conv. Pfd., 2.250% due 07/ll/2005++ ............. 185,884
-----------
PRINCIPAL
AMOUNT VALUE
------ -----
CONVERTIBLE BOND - 0.1%
(Cost $64,321)
SWITZERLAND - 0.1%
$ 95,000 Credit Suisse Group Financial, Conv. Jr.
Bond,6.000% due 12/23/2005 ........... $ 80,970
----------
REPURCHASE AGREEMENT - 2.8%
(Cost $1,518,000)
1,518,000 Agreement with Goldman Sachs Group, Inc.,
0.800% dated 06/30/2003, to be
repurchased at $1,518,034 on 07/01/2003,
collateralized by $1,505,092 U.S.
Treasury Notes, having various interest
rates and maturities (Market Value
$1,548,687) ............................. 1,518,000
----------
TOTAL INVESTMENTS (Cost$57,688,563*) ............................. 99.7% 55,064,050
OTHER ASSETS AND LIABILITIES (Net) ............................... 0.3 153,535
----- ----------
NET ASSETS ....................................................... 100.0% 55,217,585
===== ==========
- -----------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003 and have an
aggregate market value of $2,295,902, representing 4.2% of the total net
assets of the Fund (Collateral Value $2,662,431).
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933.
+++ Investments in the areas of the Pacific Rim as of June 30, 2003 are 26.8% of
the total net assets of the Fund.
See Notes to Financial Statements.
39
PORTFOLIO of INVESTMENTS (continued)
INTERNATIONAL GROWTH FUND
JUNE 30, 2003 (UNAUDITED)
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE NET
------------------------------------------------- UNREALIZED
APPRECIATION
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- ------------- --------- ----------- --------------
07/01/2003 EUR 12,434 14,278 14,209 $ 69
07/01/2003 JPY 2,495,078 20,779 20,902 (123)
07/02/2003 EUR 12,523 14,380 14,311 69
07/02/2003 GBP 10,257 16,926 16,931 (5)
07/02/2003 JPY 2,503,988 20,854 20,920 (66)
07/03/2003 CHF 24,509 18,094 18,130 (36)
07/03/2003 EUR 9,305 10,685 10,702 (17)
07/14/2003 CAD 424,142 311,883 290,032 21,851
07/17/2003 CAD 569,027 418,337 388,234 30,103
09/05/2003 AUD 334,198 222,662 218,945 3,717
09/12/2003 EUR 63,772 73,072 69,649 3,423
09/30/2003 EUR 884,815 1,013,325 936,754 76,571
10/16/2003 EUR 301,005 344,578 315,426 29,152
---------
$ 164,708
---------
FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER NET
--------------------------------------------- UNREALIZED
APPRECIATION/
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- --------------- -------- ----------- --------------
07/01/2003 GBP 6,291 10,380 10,378 $ (2)
07/02/2003 CHF 32,174 23,753 23,799 46
07/02/2003 GBP 6,818 11,251 11,223 (28)
07/02/2003 JPY 2,847,336 23,713 23,788 75
07/03/2003 JPY 2,885,005 24,027 24,061 34
07/14/2003 CHF 400,432 295,728 290,032 (5,696)
07/17/2003 JPY 46,341,570 386,191 388,234 2,043
09/05/2003 JPY 26,010,630 217,109 218,945 1,836
09/12/2003 JPY 8,120,700 67,798 69,649 1,851
09/30/2003 JPY 112,106,035 936,464 936,754 290
10/16/2003 HKD 2,459,992 312,359 315,426 3,067
-----------
$ 3,516
-----------
Net Unrealized Appreciation of Forward Foreign
Currency Contracts................................................ $ 168,224
===========
AS OF JUNE 30, 2003, SECTOR DIVERSIFICATION IS AS FOLLOWS:
%OF
SECTOR DIVERSIFICATION NET ASSETS VALUE
---------------------- ---------- -----
COMMON STOCKS:
Telecommunication Services................. 13.7% $ 7,550,603
Banks...................................... 12.6 6,967,756
Pharmaceuticals & Biotechnology............ 10.0 5,505,634
Energy..................................... 6.6 3,616,772
Materials.................................. 6.1 3,348,480
Capital Goods.............................. 5.8 3,177,110
Food Beverage & Tobacco ................... 4.8 2,658,437
Semiconductors & Semiconductor Equipment... 4.4 2,491,294
Insurance.................................. 4.5 2,478,375
Media...................................... 4.3 2,354,965
Automobiles & Components................... 4.1 2,239,723
Retailing.................................. 2.9 1,615,792
Diversified Financials..................... 2.9 1,593,653
Consumer Durables & Apparel ............... 2.2 1,216,990
Electronic Equipment & Instruments......... 2.2 1,200,343
Real Estate Investment Trusts.............. 1.8 983,946
Communications Equipment................... 1.1 629,048
Utilities.................................. 1.0 578,012
Food & Staples Retailing................... 0.8 466,791
Other...................................... 4.3 2,379,947
----- -----------
TOTAL COMMON STOCKS........................ 96.1 53,053,671
PREFERRED STOCK............................ 0.4 225,525
CONVERTIBLE PREFERRED STOCK................ 0.3 185,884
CONVERTIBLE BOND........................... 0.1 80,970
REPURCHASE AGREEMENT....................... 2.8 1,518,000
----- -----------
TOTAL INVESTMENTS.......................... 99.7 55,064,050
OTHER ASSETS AND LIABILITIES (Net)......... 0.3 153,535
----- -----------
NET ASSETS................................. 100.0% $55,217,585
===== ===========
GLOSSARY OF TERMS
ADR - American Depository Receipt
AUD - Australian Dollar
CAD - Canadian Dollar
CHF - Swiss Franc
EUR - EURO
(F) - Foreign Shares
FDR - Fiduciary Depository Receipt
GBP - Great Britain Pound Sterling
GDR - Global Depository Receipt
HKD - Hong Kong Dollar
JPY - Japanese Yen
See Notes to Financial Statements.
40
PORTFOLIO of INVESTMENTS
SHORT TERM INCOME FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
CORPORATE BONDS AND NOTES - 72.8%
FINANCIAL SERVICES - 12.9%
CIT Group Inc., Sr. Note:
$ 1,000,000 7.375% due 04/02/2007......................... $ 1,142,718
500,000 7.625% due 08/16/2005......................... 550,870
500,000 Goldman Sachs Group, Inc., Note,
4.125% due 01/15/2008......................... 525,969
Household Finance Corporation, Note:
1,500,000 5.750% due 01/30/2007......................... 1,656,807
250,000 7.875% due 03/01/2007......................... 294,894
1,500,000 Rollins Truck Leasing Corporation, Deb.,
8.375% due 02/15/2007***...................... 1,769,826
-------------
5,941,084
-------------
REAL ESTATE INVESTMENT TRUSTS/PROPERTY - 8.8%
800,000 Duke-Weeks Realty Corporation, Note,
7.375% due 08/01/2007......................... 914,681
1,000,000 Health Care Property Investors Inc., Note,
6.875% due 06/08/2005......................... 1,071,428
1,000,000 Nationwide Health Properties Inc., Note,
9.750% due 03/20/2008......................... 1,192,514
750,000 Shurgard Storage Centers Inc., Note.
7.500% due 04/25/2004......................... 779,288
100,000 SUSA Partnership L.P., Note,
7.125% due 11/01/2003......................... 101,824
-------------
4,059,735
-------------
BANKS - 8.2%
1,000,000 J.P. Morgan Chase & Company, Note,
5.350% due 03/01/2007......................... 1,095,909
1,500,000 MBNA America Bank N.A., Note,
6.500% due 06/20/2006......................... 1,656,040
1,000,000 Wachovia Corporation, Sr. Note,
6.700% due 06/21/2004**....................... 1,053,045
-------------
3,804,994
-------------
UTILITIES - 6.3%
1,000,000 Constellation Energy Group, Inc., Note,
6.350% due 04/01/2007......................... 1,118,590
750,000 Texas-New Mexico Power Company, Sr. Note,
6.250% due 01/15/2009......................... 759,307
1,000,000 United Illuminating Company, Note,
6.000% due 12/15/2003......................... 1,016,399
-------------
2,894,296
-------------
TELECOMMUNICATIONS - 5.3%
750,000 Deutsche Telekom International Finance BV,
Company Guarantee,
8.250% due 06/15/2005......................... 836,805
500,000 TELUS Corporation, Note,
7.500% due 06/01/2007**....................... 560,000
1,000,000 Verizon Global Funding Corporation, Note,
4.000% due 01/15/2008......................... 1,045,322
-------------
2,442,127
-------------
FOOD - 4.9%
1,000,000 ConAgra Inc., Sr. Note,
9.875% due 11/15/2005***...................... 1,175,268
1,000,000 Safeway Inc., Sr. Note,
6.150% due 03/01/2006......................... 1,083,282
-------------
2,258,550
-------------
AIRLINES - 4.7%
2,000,000 Southwest Airlines Company
Pass-thru Certificates,
5.496% due 11/01/2006......................... 2,171,155
-------------
INFORMATION TECHNOLOGY - 4.7%
1,000,000 Analog Devices, Inc., Conv. Sub. Note,
4.750% due 10/01/2005***...................... 1,022,500
1,000,000 Computer Science Corporation, Note,
6.750% due 06/15/2006......................... 1,131,315
-------------
2,153,815
-------------
CABLE TV-3.0%
1,250,000 AOL Time Warner Inc., Note,
6.150% due 05/01/2007**....................... 1,407,617
-------------
SERVICES - 2.3%
1,000,000 PHH Corporation, Note,
6.000% due 03/01/2008......................... 1,076,511
-------------
AUTO MANUFACTURING & PARTS - 2.3%
1,000,000 Ford Motor Credit Company, Note,
6.500% due 01/25/2007**....................... 1,052,957
-------------
MEDIA - 2.2%
1,000,000 Cox Enterprises, Inc., Note,
4.375% due 05/01/2008++....................... 1,040,978
-------------
CHEMICALS/MINING/MACHINERY - 2.0%
750,000 Consolidated Coal Company, Company Guarantee,
8.210% due 06/21/2004......................... 784,807
150,000 Lyondell Petrochemical Company, MTN,
9.750% due 09/04/2003++....................... 152,462
-------------
937,269
-------------
INDUSTRIAL PRODUCTS - 1.3%
500,000 Sealed Air Corporation, Company Guarantee
8.750% due 07/01/2008++**...................... 591,990
-------------
PAPER/FOREST PRODUCTS - 1.2%
500,000 Weyerhaeuser Company, Note,
6.000% due 08/01/2006......................... 548,864
-------------
AEROSPACE/DEFENSE - 1.2%
500,000 Boeing Capital Corporation, Sr. Note,
5.650% due 05/15/2006......................... 540,697
-------------
HEALTH CARE - 0.9%
500,000 Athena Neurosciences Finance LLC,
Company Guarantee,
7.250% due 02/21/2008......................... 423,125
-------------
RETAIL - 0.6%
250,000 Federated Department Stores Inc., Bond,
6.790% due 07/15/2027......................... 276,888
-------------
Total Corporate Bonds and Notes
(Cost $31,288,551)............................ 33,622,652
-------------
See Notes to Financial Statements.
41
PORTFOLIO of INVESTMENTS (continued)
SHORT TERM INCOME FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
ASSET-BACKED SECURITIES - 3.4%
$ 530,929 FFCA Secured Lending Corporation.
Series 1999-2, Class WA1A,
7.130% due 02/18/2009++....................... 536,238
520,516 GMAC Mortgage Corporation Loan Trust.
Series 2002-HE2, Class A3,
5.290% due 06/25/2027......................... 523,106
Green Tree Financial Corporation:
250,000 Series 1995-1, Class B2, (in default).
9.200% due 06/15/2025......................... 82,656
80,318 Series 1995-6, Class Bl.
7.700% due 09/15/2026......................... 48,241
165,000 Green Tree Home Improvement, Series
1995-D, Class B2,
7.450% due 09/15/2025......................... 165,465
183,310 Mid-State Trust, Series 4, Class A.
8.330% due 04/01/2030........................ 200,381
-------------
Total Asset-Backed Securities
(Cost $1,743,039) 1,556,087
-------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 10.2%
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 5.0%
1,000,000 4.250% due 06/15/2027 ......................... 1,019,906
640,616 6.500% due 01/01/2014 ......................... 676,551
482,619 8.000% due 05/01/2027 ......................... 526,749
61,470 8.500% due 11/01/2017 ......................... 67,280
-------------
Total FNMAs
(Cost $2,216,925)............................. 2,290,486
-------------
ADJUSTABLE RATE MORTGAGE-BACKED SECURITIES (ARMS) - 2.2%
27,055 Federal Home Loan Mortgage Corporation (FHLMC),
4.089% due 11/01/20211 27,850
Federal National Mortgage Association (FNMA):
2,455 3.952% due 11/01/2022+ 2,510
17,810 4.125% due 11/01/2021+ 18,236
873,525 4.663% due 11/01/2032+ 900,397
44,138 4.932% due 11/01/2035+ 45,266
15,612 5.467% due 01/01/2019+ 16,177
27,341 5.596% due 04/01/2019+ 28,228
-------------
Total ARMSs
(Cost $1,035,559) 1,038,664
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 1.8%
755,202 6.000% due 05/01/2017.......................... 785,593
39,340 9.500% due 08/01/2016.......................... 43,736
-------------
Total FHLMCs
(Cost $807,783).............................. 829,329
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 1.2%
83,718 8.000% due 06/15/2009-08/15/2012............... 90,449
59,686 9.000% due 12/15/2020-04/20/2025............... 66,500
303,517 10.000% due 12/15/2017-04/15/2025.............. 351,063
30,290 11.000% due 12/15/2015......................... 35,429
-------------
Total GNMAs
(Cost $507,822)............................... 543,441
-------------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $4,568,089)............................. 4,701,920
-------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.4%
1,000,000 Federal Home Loan Mortgage
Corporation. Bond,
3.250% due 02/25/2008**....................... 1,023,071
1,000,000 Federal National Mortgage Association, Note.
4.750% due 03/15/2004......................... 1,025,926
-------------
Total U.S. Government Agency Obligations
(Cost $1,994,357)............................. 2,048,997
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 1.9%
465,797 Deutsche Mortgage Securities, Inc.
Series 2002-1, Class A13,
8.500% due 01/25/2033......................... 484,946
395,432 Federal Home Loan Mortgage Corporation Series
2586, Class LT,
3.500% due 03/15/2033......................... 395,681
-------------
Total CMOs (Cost $892,495)..................... 880,627
-------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) - 1.5%
540,319 GMAC Commercial Mortgage Securities Inc.,
Series 1999-CTL1, Class A,
7.151% due 02/15/2008++....................... 594,199
82,062 Morgan Stanley Capital I, Series
1999-CAMI, Class Al,
6.540% due 04/15/2004......................... 82,680
-------------
Total CMBSs (Cost $620,548).................... 676,879
-------------
U.S. TREASURY NOTE - 1.1%
(Cost $513,829)
500,000 6.000% due 08/15/2004**,***.................... 527,695
-------------
REPURCHASE AGREEMENT - 3.5%
(Cost $1,616,000)
1,616,000 Agreement with Goldman
Sachs Group, Inc., 0.800% dated
06/30/2003, to be repurchased at
$1,616,036 on 07/01/2003,
collateralized by $1,602,258 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $1,648,668)..................... 1,616,000
-------------
TOTAL INVESTMENTS (Cost $43,236,908*)............................ 98.8% 45,630,857
OTHER ASSETS AND LIABILITIES (Net)............................... 1.2 568,669
-------- -------------
NET ASSETS....................................................... 100.0% $ 46,199,526
======== =============
- ------------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $5,976,675, representing 12.9% of the total net
assets of the Fund (Collateral Value $6,176,629).
*** A portion or all of these securities are segregated as collateral for
futures contracts.
+ Variable rate security. The interest rate shown reflects the rate in effect
at June 30, 2003.
++ Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933.
NUMBER OF UNREALIZED
CONTRACTS VALUE DEPRECIATION
--------- ------------- ------------
FUTURES CONTRACTS-SHORT POSITION
35 U.S. 5 Year Treasury Note,
September 2003................................ $ 4,029,375 $ (4,620)
============
GLOSSARY OF TERMS
MTN -- Medium Term Note
See Notes to Financial Statements.
42
PORTFOLIO of INVESTMENTS
U.S. GOVERNMENT SECURITIES FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 64.7%
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 32.0%
$ 1,973,636 4.500% due 03/01/2018.......................... $ 2,017,221
6,475,321 5.000% due 04/01/2018-06/01/2018***............ 6,698,990
13,007,982 5.500% due 01/01/2017-06/01/2033+.............. 13,487,970
17,078,080 6.000% due 12/01/2016-03/01/2033**............. 17,790,821
17,726,394 6.500% due 09/01/2024-12/01/2032**............. 18,509,157
2,023,653 7.000% due 08/01/2028-04/01/2029............... 2,147,363
707,311 7.500% due 11/01/2029.......................... 755,683
1,236,102 8.000% due 05/01/2022-09/01/2027............... 1,346,235
1,211,493 8.500% due 02/01/2023-10/01/2027............... 1,318,775
724,851 9.000% due 09/01/2030.......................... 785,894
-------------
Total FNMAs (Cost $63,652,565)................. 64,858,109
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 26.5%
8,901,638 5.000% due 04/01/2018-06/01/2033**............. 9,108,576
8,951,430 5.500% due 12/01/2008-04/01/2033............... 9,254,045
15,295,654 6.000% due 01/01/2013-09/01/2032**............. 15,888,625
10,106,476 6.500% due 11/01/2016-01/01/2032............... 10,569,124
6,848,684 7.000% due 04/01/2008-04/01/2032**............. 7,189,829
450,425 7.500% due 02/01/2031.......................... 479,073
585,829 8.000% due 07/01/2007-12/01/2030............... 625,227
353,541 8.500% due 07/01/2029.......................... 379,769
156,083 8.750% due 01/01/2013.......................... 164,117
-------------
Total FHLMCs (Cost $52,975,863)................ 53,658,385
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) - 6.2%
2,701,171 6.000% due 02/20/2029-05/20/2032**............. 2,817,201
5,201,143 6.500% due 03/20/2031-07/15/2032**............. 5,451,412
1,906,729 7.000% due 01/15/2028-06/20/2031............... 2,013,404
1,374,214 7.500% due 01/15/2023-11/15/2023............... 1,471,606
248,186 7.750% due 12/15/2029.......................... 266,920
649,033 8.000% due 07/15/2026-06/20/2030............... 695,972
-------------
Total GNMAs (Cost $12,145,839)................. 12,716,515
-------------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $128,774,267)........................... 131,233,009
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 12.3%
1,381,750 Federal Home Loan Mortgage Corporation,
Series 2551, Class QK,
5.500% due 01/15/2033......................... 1,445,140
Federal National Mortgage Association:
3,000,000 Grantor Trust, Series 2000-T5, Class B,
7.300% due 05/25/2010......................... 3,706,094
3,500,000 Series 2002-16, Class TM,
7.000% due 04/25/2032......................... 3,839,431
Federal National Mortgage Association,
REMIC, Pass-through Certificates:
111,642 Series 1989-90, Class E,
8.700% due 12/25/2019......................... 119,974
2,497,972 Series 1992-55, Class DZ,
8.000% due 04/25/2022......................... 2,643,986
1,496,909 Series 1992-83, Class X,
7.000% due 02/25/2022......................... 1,507,087
175,043 Series 2000-31, Class PC,
7.500% due 08/25/2029......................... 175,228
1,411,297 Government National Mortgage Association,
Series 2000-16, Class PB,
7.500% due 02/16/2028......................... 1,466,740
176,763 Residential Funding Mortgage Security,
Series 1992-S39, Class A8,
7.500% due 11/25/2007......................... 176,612
Vendee Mortgage Trust:
3,853,000 Series 2000-2, Class G,
7.500% due 10/15/2009......................... 4,231,785
5,000,000 Series 2000-3, Class 2H,
7.500% due 11/15/2014......................... 5,550,827
-------------
Total CMOs (Cost $23,449,549).................. 24,862,904
-------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 8.7%
Federal Home Loan Bank, Bond:
4,000,000 4.875% due 04/16/2004**........................ 4,119,904
2,000,000 5.125% due 03/06/2006.......................... 2,178,802
2,500,000 6.500% due 08/14/2009.......................... 2,993,317
3,000,000 7.375% due 02/12/2010**........................ 3,744,120
2,000,000 Federal National Mortgage Association,
Sub. Note,
6.250% due 02/01/2011**....................... 2,309,998
2,000,000 Housing Urban Development, Series 99-A,
Government Guarantee,
6.160% due 08/01/2011......................... 2,259,650
-------------
Total U.S. Government Agency Obligations
(Cost $15,831,106)............................ 17,605,791
-------------
U.S. TREASURY OBLIGATIONS - 7.9%
U.S. TREASURY NOTES - 6.9%
2,500,000 3.625% due 03/31/2004**........................ 2,550,100
3,000,000 4.375% due 05/15/2007**........................ 3,260,157
3,000,000 5.000% due 08/15/2011**........................ 3,366,096
2,000,000 5.750% due 08/15/2010**........................ 2,341,642
2,000,000 5.875% due 11/15/2004**........................ 2,129,142
350,000 6.250% due 02/15/2007**........................ 402,610
-------------
14,049,747
-------------
U.S. TREASURY BONDS - 1.0%
1,300,000 6.250% due 08/15/2023**........................ 1,592,805
300,000 12.750% due 11/15/2010**....................... 378,071
-------------
1,970,876
-------------
Total U.S. Treasury Obligations
(Cost $14,857,218)............................ 16,020,623
-------------
REPURCHASE AGREEMENT - 7.5%
(Cost $15,202,000)
15,202,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased at
$15,202,338 on 07/01/2003,
collateralized by $15,072,730 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $15,509,316).................... 15,202,000
-------------
TOTAL INVESTMENTS (Cost $198,114,140*).......................... 101.1% 204,924,327
OTHER ASSETS AND LIABILITIES (Net).............................. (1.1) (2,252,104)
-------- -------------
NET ASSETS ............................................. 100.0% $ 202,672,223
======== =============
- ------------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30,2003, and have an
aggregate market value of $48,725,502, representing 24.0% of the total net
assets of the Fund (Collateral Value $52,475,581).
*** A portion of these securities are purchased on a when-issued basis.
+ A portion of these securities are segregated as collateral for when -issued
securities.
GLOSSARY OF TERMS
REMIC -- Real Estate Mortgage Investment Conduit
See Notes to Financial Statements.
43
PORTFOLIO of INVESTMENTS
INCOME FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
CORPORATE BONDS AND NOTES - 68.2%
FINANCIAL SERVICES/BANKS - 9.7%
$ 1,000,000 Abbey National PLC, Sub. Note,
6.690% due 10/17/2005......................... $ 1,108,303
500,000 American General Corporation, Note,
7.500% due 07/15/2025......................... 624,897
400,000 Banc One Corporation, Sub. Note,
10.000% due 08/15/2010........................ 540,630
1,000,000 Bank of America Corporation, Sub. Note,
7.800% due 02/15/2010......................... 1,234,572
500,000 CIT Group Inc., Sr. Note,
7.750% due 04/02/2012**....................... 597,155
3,000,000 Citigroup, Inc., Note,
6.500% due 01/18/2011......................... 3,515,256
2,500,000 Goldman Sachs Group, Inc., Bond,
6.875% due 01/15/2011**....................... 2,954,315
1,000,000 Hartford Life Insurance Company, Deb.,
7.650% due 06/15/2027......................... 1,207,476
1,500,000 Jefferies Group, Inc., Sr. Note,
7.750% due 03/15/2012......................... 1,753,902
1,000,000 Legg Mason, Inc., Sr. Note,
6.750% due 07/02/2008......................... 1,146,781
2,000,000 Merrill Lynch & Company Inc., Note,
6.000% due 02/17/2009......................... 2,251,032
1,500,000 Morgan Stanley Dean Witter & Company, Bond,
6.750% due 04/15/2011......................... 1,757,240
1,100,000 NCNB Corporation, Sub. Note,
9.375% due 09/15/2009......................... 1,435,280
-------------
20,126,839
-------------
OIL & GAS - 8.0%
1,200,000 ANR Pipeline Company, Deb.,
9.625% due 11/01/2021......................... 1,422,000
1,750,000 Consolidated Natural Gas Company, Sr. Note,
6.850% due 04/15/2011......................... 2,083,076
2,500,000 El Paso Natural Gas Company, Deb.,
7.500% due 11/15/2026......................... 2,462,500
1,461,000 Express Pipeline LP, Sub. Note,
7.390% due 12/31/2017+........................ 1,529,322
2,000,000 PDVSA Finance Ltd., Note,
8.500% due 11/16/2012......................... 1,835,000
500,000 Petro-Canada, Deb.,
9.250% due 10/15/2021......................... 693,689
2,500,000 Petrobras International Finance Company,
Sr. Note,
9.750% due 07/06/2011**....................... 2,768,750
1,000,000 Southern Natural Gas Company, Sr. Note,
8.000% due 03/01/2032......................... 1,086,250
500,000 Tesoro Petroleum Corporation, Sr. Note,
8.000% due 04/15/2008+........................ 515,000
500,000 Trans-Canada Pipeline Corporation, Deb.,
8.500% due 03/20/2023......................... 520,863
1,500,000 XTO Energy, Inc., Sr. Note,
6.250% due 04/15/2013+........................ 1,601,250
-------------
16,517,700
-------------
TRANSPORTATION/AUTO - 7.6%
2,000,000 Burlington Northern Santa Fe Corporation, Deb.,
8.125% due 04/15/2020......................... 2,508,028
1,000,000 Consolidated Rail Corporation, Deb.,
9.750% due 06/15/2020......................... 1,382,600
570,401 Continental Airlines Inc., Pass-through
Certificates, Series 1997-4C,
6.800% due 07/02/2007......................... 485,275
400,000 Ford Holdings Inc., Company Guarantee,
9.300% due 03/01/2030......................... 420,138
Ford Motor Company, Deb.:
600,000 8.875% due 11/15/2022......................... 625,321
250,000 8.900% due 01/15/2032......................... 255,093
2,000,000 Ford Motor Credit Company, Note,
7.375% due 10/28/2009......................... 2,099,796
1,000,000 General Motors Corporation, Deb.,
9.400% due 07/15/2021......................... 1,076,906
Norfolk Southern Corporation:
1,000,000 Bond,
7.800% due 05/15/2027......................... 1,257,571
2,500,000 Sr. Note,
6.200% due 04/15/2009......................... 2,849,430
2,000,000 Southwest Airlines Company, Pass-through
Certificates, Series A-4,
9.150% due 07/01/2016......................... 2,427,810
1,300,000 United Air Lines Inc., Pass-through
Certificates, (in default),
9.560% due 10/19/2018......................... 466,473
-------------
15,854,441
-------------
CONSUMER PRODUCTS/SERVICES - 6.5%
1,750,000 Carnival Corporation, Deb.,
7.200% due 10/01/2023......................... 1,940,309
1,000,000 Cendant Corporation, Note,
6.875% due 08/15/2006......................... 1,119,499
2,500,000 ConAgra, Inc., Sr. Note,
7.125% due 10/01/2026......................... 3,027,775
Mattel, Inc., Note:
500,000 6.125% due 07/15/2005......................... 531,412
1,000,000 7.300% due 06/13/2011......................... 1,046,805
1,500,000 Reed Elsevier Capital Inc., Company Guarantee,
6.750% due 08/01/2011......................... 1,749,769
1,000,000 Royal Caribbean Cruises Ltd., Sr. Note,
8.000% due 05/15/2010**....................... 1,045,000
500,000 S3 Inc., Conv. Sub. Note, (in default),
5.750% due 10/01/2003......................... 7,500
1,000,000 Sealed Air Corporation, Company Guarantee,
8.750% due 07/01/2008+........................ 1,183,980
1,500,000 Waste Management Inc., Sr. Note,
7.375% due 08/01/2010**....................... 1,802,444
-------------
13,454,493
-------------
TELECOMMUNICATIONS - 6.0%
4,000,000 Deutsche Telekom International Finance BV,
Company Guarantee,
8.500% due 06/15/2010......................... 4,921,540
1,601,250
1,700,000 Northern Telecom Capital Inc.,
Company Guarantee,
7.400% due 06/15/2006......................... 1,678,750
2,000,000 Qwest Corporation, Note,
8.875% due 03/15/2012+........................ 2,245,000
See Notes to Financial Statements.
44
PORTFOLIO of INVESTMENTS (continued)
INCOME FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- --------- -------------
CORPORATE BONDS AND NOTES (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
$ 1,000,000 TELUS Corporation, Note,
8.000% due 06/01/2011 ............................... $ 1,160,000
2,000,000 Vodafone Group PLC, Note,
7.750% due 02/15/2010 ............................... 2,464,816
-------------
12,470,106
-------------
HEALTH CARE - 5.4%
1,500,000 Aetna Inc., Sr. Note,
7.375% due 03/01/2006 ............................... 1,687,037
2,000,000 Cardinal Health, Inc., Note,
6.750% due 02/15/2011 ............................... 2,377,176
DVI, Inc., Sr. Note:
1,000,000 9.875% due 02/01/2004 ............................... 805,000
500,000 9.875% due 02/01/2004 ............................... 402,500
2,000,000 HCA - The Healthcare Company, Note,
8.750% due 09/01/2010 ............................... 2,332,928
250,000 HIH Capital Ltd., Conv. Note,
7.500% due 09/25/2006 ............................... 182,500
750,000 IVAX Corporation, Conv. Sr. Sub. Note,
4.500% due 05/15/2008 ............................... 731,250
3,000,000 Tenet Healthcare Corporation, Sr. Note,
6.375% due 12/01/2011 ............................... 2,790,000
-------------
11,308,391
-------------
INFORMATION TECHNOLOGY - 4.3%
3,250,000 Analog Devices, Inc., Conv. Sub. Note,
4.750% due 10/01/2005 ............................... 3,323,125
1,000,000 BEA Systems Inc., Conv. Sub. Note,
4.000% due 12/15/2006 ............................... 968,750
2,500,000 Conexant Systems Inc., Conv. Sub. Note,
4.000% due 02/01/2007 ............................... 1,975,000
1,000,000 Extreme Networks, Inc., Conv. Sub. Note,
3.500% due 12/01/2006 ............................... 908,750
500,000 Siebel Systems Inc., Conv. Sub. Note,
5.500% due 09/15/2006 ............................... 504,375
1,000,000 TriQuint Semiconductor, Inc., Conv. Sub. Note,
4.000% due 03/01/2007 ............................... 832,500
500,000 Vitesse Semiconductor Corporation, Conv. Sub. Deb.,
4.000% due 03/15/2005** ............................. 466,875
-------------
8,979,375
-------------
REAL ESTATE INVESTMENT TRUSTS - 4.3%
2,000,000 Health Care Property Investors, Inc., Note,
6.000% due 03/01/2015 ............................... 2,077,744
2,500,000 Healthcare Realty Trust, Inc., Sr. Note,
8.125% due 05/01/2011 ............................... 2,783,880
Nationwide Health Properties Inc., Note:
1,000,000 7.060% due 12/05/2006 ............................... 1,098,015
2,500,000 9.750% due 03/20/2008 ............................... 2,981,285
-------------
8,940,924
-------------
UTILITIES - 4.1%
1,500,000 Arizona Public Service Company, Note,
6.500% due 03/01/2012** ............................. 1,717,926
200,000 Duke Energy Corporation, First and
Refundable Mortgage,
6.875% due 08/01/2023 ............................... 204,682
700,000 Florida Power & Light Company, First
Mortgage,
7.050% due 12/01/2026 ............................... 732,812
1,100,000 Illinois Power Company, First Mortgage,
7.500% due 06/15/2009** ............................. 1,116,500
1,500,000 Southwestern Electric Power Company, Note,
5.375% due 04/15/2015 ............................... 1,582,746
1,500,000 Texas Utilities Electric Company,
First Mortgage,
7.875% due 04/01/2024 ............................... 1,569,159
1,500,000 Texas-New Mexico Power Company,
Sr. Note,
6.250% due 01/15/2009 ............................... 1,518,613
-------------
8,442,438
-------------
MEDIA - 3.3%
1,500,000 Comcast Cable Communications Inc.,
Sr. Note,
7.125% due 06/15/2013 ............................... 1,756,428
2,500,000 Cox Communications Inc., Note,
7.875% due 08/15/2009 ............................... 3,073,158
1,200,000 News America Holdings Inc., Sr. Deb.,
8.000% due 10/17/2016 ............................... 1,533,440
300,000 Time Warner Inc., Deb.,
9.150% due 02/01/2023 ............................... 380,370
-------------
6,743,396
-------------
AEROSPACE/DEFENSE - 2.7%
1,000,000 Boeing Company, Deb.,
8.750% due 08/15/2021 ............................... 1,316,490
Lockheed Martin Corporation:
1,500,000 Company Guarantee,
7.250% due 05/15/2006 ............................... 1,709,388
2,000,000 Note,
8.200% due 12/01/2009 ............................... 2,532,514
-------------
5,558,392
-------------
RETAIL - 2.3%
1,000,000 Fred Meyer Inc., Company Guarantee,
7.450% due 03/01/2008 ............................... 1,166,350
600,000 May Department Stores Company, Deb.,
8.375% due 08/01/2024 ............................... 640,018
2,500,000 Safeway Inc., Note,
7.500% due 09/15/2009 ............................... 2,958,090
-------------
4,764,458
-------------
GAMING - 2.3%
500,000 Harrah's Operating Company Inc.,
Company Guarantee,
8.000% due 02/01/2011 ............................... 603,639
2,000,000 Park Place Entertainment Corporation,
Sr. Note,
7.500% due 09/01/2009** ............................. 2,200,000
2,000,000 Riviera Holdings Corporation,
Company Guarantee,
11.000% due 06/15/2010 .............................. 1,920,000
-------------
4,723,639
-------------
See Notes to Financial Statements.
45
PORTFOLIO OF INVESTMENTS (continued)
INCOME FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- --------- -------------
CORPORATE BONDS AND NOTES (CONTINUED)
FOREIGN GOVERNMENT (U.S. DOLLAR DENOMINATED) - 1.1%
$ 1,231,410 Federative Republic of Brazil, C-Bond,
8.000% due 04/15/2014** ...................... $ 1,081,769
1,000,000 United Mexican States, Bond,
9.875% due 02/01/2010 ........................ 1,285,000
-------------
2,366,769
-------------
INDUSTRIAL PRODUCTS - 0.6%
200,000 Ogden Corporation, Deb., (in default),
9.250% due 03/01/2022 ........................ 124,000
Weyerhaeuser Company:
500,000 Deb.,
7.375% due 03/15/2032 ........................ 576,615
500,000 Note,
6.750% due 03/15/2012** ...................... 568,553
-------------
1,269,168
-------------
Total Corporate Bonds and Notes
(Cost $127,114,196) .......................... 141,520,529
-------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES - 23.3%
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 10.8%
2,920,602 5.000% due 01/01/2018 ........................... 3,021,484
7,456,085 5.500% due 03/01/2033-06/01/2033 ................ 7,721,999
3,371,982 6.000% due 04/01/2032 ........................... 3,506,574
5,182,653 6.500% due 05/01/2031-05/01/2032 ................ 5,406,253
329,066 7.000% due 01/01/2030 ........................... 346,809
2,000,000 7.630% due 02/01/2010 ........................... 2,415,347
-------------
Total FNMAs
(Cost $21,611,984) ............................ 22,418,466
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 10.5%
7,450,849 5.000% due 04/01/2018-05/01/2033** .............. 7,623,886
5,441,987 5.500% due 11/01/2017-05/01/2031 ................ 5,641,217
5,122,389 6.000% due 03/01/2031-05/01/2032 ................ 5,312,723
1,562,885 6.500% due 06/01/2029-08/01/2029 ................ 1,628,524
1,383,657 7.000% due 01/01/2032 ........................... 1,451,040
46,077 9.000% due 01/01/2025 ........................... 51,143
-------------
Total FHLMCs
(Cost $21,254,671) ........................... 21,708,533
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) - 2.0%
1,881,297 6.000% due 05/20/2032** ......................... 1,961,820
2,056,626 7.000% due 06/20/2031 ........................... 2,163,800
73,965 9.000% due 02/15/2025 ........................... 82,105
-------------
Total GNMAs
(Cost $4,022,087) ............................ 4,207,725
-------------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $46,888,742) ............................ 48,334,724
-------------
U.S. TREASURY OBLIGATIONS - 5.7%
U.S. TREASURY NOTES - 4.1%
4,500,000 4.000% due 11/15/2012** ...................... 4,684,045
1,000,000 4.375% due 08/15/2012** ...................... 1,072,540
2,500,000 5.625% due 05/15/2008** ...................... 2,866,798
-------------
8,623,383
-------------
U.S. TREASURY BOND - 1.6%
3,000,000 5.250% due 02/15/2029** ......................... 3,267,540
-------------
Total U.S. Treasury Obligations
(Cost $10,900,626) ........................... 11,890,923
-------------
REPURCHASE AGREEMENT - 1.4%
Cost $2,883,000)
2,883,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased at
$2,883,064 on 07/01/2003,
collateralized by $2,858,485 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $2,941,281) .................... 2,883,000
-------------
TOTAL INVESTMENTS (Cost $187,786,564*) ......................... 98.6% 204,629,176
OTHER ASSETS AND LIABILITIES (Net) ............................. 1.4 2,872,748
----- -------------
NET ASSETS ..................................................... 100.0% $ 207,501,924
===== =============
- -----------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $28,714,431, representing 13.8% of the total net
assets of the Fund (Collateral Value $29,876,163).
+ Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933.
46
See Notes to Financial Statements.
PORTFOLIO OF INVESTMENTS
MONEY MARKET FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- ---------- -------------
COMMERCIAL PAPER (DOMESTIC) - 28.5%
$ 1,500,000 AIG Funding Inc.,
1.190% due 07/30/2003+++ ..................... $ 1,498,562
1,500,000 Bank of America Corporation,
1.220% due 07/01/2003+++ ..................... 1,500,000
1,000,000 Cooperative Association of Tractor
Dealers Inc., Series B, (AMBAC Insured),
1.250% due 07/24/2003+++ ..................... 997,048
1,700,000 Goldman Sachs Group, Inc.,
1.260% due 07/07/2003+++ ..................... 1,699,643
1,500,000 International Business Machines Corporation,
1.240% due 09/08/2003+++ ..................... 1,496,435
1,240,000 Windmill Funding Corporation,
(LOC: ABN AMBRO Bank NV),
1.190% due 09/16/2003+++**.................... 1,236,844
-------------
Total Commercial Paper (Domestic)
(Cost $8,428,532) ........................... 8,428,532
-------------
COMMERCIAL PAPER (YANKEE) - 21.0%
1,100,000 ANZ (Delaware) Inc.,
1.220% due 07/30/2003+++ ..................... 1.098,913
1,725,000 Royal Bank of Canada,
1.310% due 07/21/2003+++ ..................... 1,723,745
1,300,000 Royal Bank of Scotland,
1.000% due 07/16/2003+++ ..................... 1,299,458
588,000 Sharp Electronics Corporation,
1.050% due 07/24/2003+++ ..................... 587,606
1,500,000 Societe Generale North America Inc.,
1.250% due 08/12/2003+++ ..................... 1,497,812
-------------
Total Commercial Paper (Yankee)
(Cost $6,207,540) ............................ 6,207,540
-------------
MEDIUM TERM NOTES - 18.2%
800,000 Bank One Corporation, Sr. Note, Series A,
5.625% due 02/17/2004 ........................ 823,294
1,500,000 Caterpillar Financial Services Corporation,
Series F,
1.430% due 08/05/2003+++ ..................... 1,500,292
1,000,000 General Electric Capital Corporation,
Series A,
7.250% due 05/03/2004 ........................ 1,049,047
1,000,000 Morgan Stanley Dean Witter & Company,
Sr. Note, Series C,
7.125% due 08/15/2003 ........................ 1,007,292
1,000,000 Wells Fargo & Company, Series C,
4.250% due 08/15/2003 ........................ 1,003,783
-------------
Total Medium Term Notes
(Cost $5,383,708) ............................ 5,383,708
-------------
CORPORATE BONDS AND NOTES - 23.1%
1,245,000 Associates Corporation NA, Sr. Note,
5.800% due 04/20/2004 ........................ 1,292,829
1,284,000 Everett Clinic, P.S., Note, (LOC: Bank of
America Corporation),
1.130% due 05/01/2022++ ...................... 1,284,000
1,400,000 National City Bank, Note,
1.310% due 11/14/2003++ ...................... 1,400,797
1,350,000 Northern Trust Company, Note,
6.625% due 10/01/2003 ........................ 1,367,997
1,500,000 U.S. Bank NA, Note,
1.108% due 11/21/2003++ ...................... 1,500,472
-------------
Total Corporate Bonds and Notes
(Cost $6,846,095) ............................ 6,846,095
-------------
TAXABLE MUNICIPAL BONDS - 8.5%
900,000 Blair County Industrial Development
Authority, Pennsylvania, IDR,
(The Village at Pennsylvania State
Retirement Community), Series D,
(LOC: BNP Paribas SA),
1.050% due 01/01/2011+ ....................... 900,000
100,000 North Carolina Medical Care Commission,
Health Care Facilities Revenue,
(1st Mortgage-Baptist Retirement Homes of
North Carolina Inc.), Series C,
(LOC: Wachovia Corporation),
1.200% due 10/01/2008+ ....................... 100,000
500,000 Shelby County, Tennessee, Health,
Educational & Housing Facilities Board,
MFHR, Series A-T, (LOC: Bank of
America Corporation),
1.050% due 07/01/2022+ ....................... 500,000
1,000,000 Washington State Housing Finance
Community, MFHR, Series B,
(Bremerton Project), (FNMA Collateral),
1.100% due 05/15/2033+ ....................... 1,000,000
-------------
Total Taxable Municipal Bonds
(Cost $2,500,000) ............................ 2,500,000
-------------
TOTAL INVESTMENTS (Cost $29,365,875*) .......................... 99.3% 29,365,875
OTHER ASSETS AND LIABILITIES (Net) ............................. 0.7 216,823
----- -------------
NET ASSETS ..................................................... 100.0% $ 29,582,698
===== =============
- --------------
* Aggregate cost for federal tax purposes.
** Security acquired in a transaction exempt from registration under Rule
144A of the Securities Act of 1933.
+ Variable rate securities payable upon demand with not more that five
business days' notice, and secured by bank letters of credit or guarantees
by certain corporations. The interest rate shown reflects the rate in
effect at June 30, 2003.
++ Floating rate security whose interest rate is reset periodically based on
an index.
+++ Rate represents discount rate at the date of purchase.
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
FNMA -- Federal National Mortgage Association
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MFHR -- Multi-family Housing Revenue
See Notes to Financial Statements.
47
NOTES TO FINANCIAL STATEMENTS (unaudited)
WM VARIABLE TRUST
1. ORGANIZATION AND BUSINESS
WM Variable Trust (the "Trust") was organized as a Massachusetts business trust
on January 29, 1993. The Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company.
The Trust consists of 12 funds ("Funds") and 5 portfolios ("Portfolios"). The
following Funds are included in this report: REIT, Equity Income, Growth &
Income, West Coast Equity, Mid Cap Stock, Growth, Small Cap Stock, International
Growth, Short Term Income, U.S. Government Securities, Income and Money Market.
WM Advisors, Inc. (the "Advisor" or "WM Advisors") serves as investment manager
to the Funds. The Advisor is a wholly-owned subsidiary of Washington Mutual,
Inc. ("Washington Mutual"), a publicly-owned financial services company.
The Trust is authorized to issue an unlimited number of shares of beneficial
interest, each without par value. Each Fund may offer two classes of shares:
Class 1 shares and Class 2 shares. These shares are issued and redeemed only in
connection with investments in, and payments under, variable annuity and
variable life insurance contracts (collectively "Variable Insurance Contracts"),
as well as certain qualified retirement plans. The REIT Fund is not currently
offering Class 2 shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("generally accepted
accounting principles") requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Funds in the
preparation of their financial statements.
PORTFOLIO VALUATION:
Securities 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 close price) are valued at the last sale price on that exchange or, if
there were no sales during the day, at the mean of the current day's bid and
asked prices. Securities traded only on over-the-counter markets (other than the
Nasdaq National Market System and the U.S. Government Securities System) are
valued at the mean of the current bid and asked prices.
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, and 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) are valued
by one or more independent pricing services (each a "Pricing Service") retained
by the Trust. When, in the judgment of a Pricing Service, market quotations for
these securities are readily available, they are valued at the mean between the
quoted bid prices and asked prices. 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 Board of Trustees.
The investments of the Money Market Fund are valued on the basis of amortized
cost, which approximates market value. Amortized cost valuation involves
initially valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, as long as the amortized
cost fairly reflects the market-based net asset value per share. Certain other
assets may be valued by the Advisor under the supervision of the Board of
Trustees.
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. The
value of the collateral is at all times at least equal to the total amount of
the repurchase obligation. In the event of counterparty default, the Fund would
seek to use the collateral to offset losses incurred. There is potential loss 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. WM Advisors, acting under the supervision of
the Board of Trustees, reviews the value of the collateral and the
creditworthiness of those banks and broker-dealers with whom each 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."
48
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST
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 move 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.
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.
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. The 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. These instruments involve market risk, credit risk, or both kinds of
risks, in excess of the amount recognized in the Statements of Assets and
Liabilities. Risks arise from the possible inability of counterparties to meet
the terms of their contracts and from movement in currency and securities values
and interest rates.
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 days; and (5) securities,
the disposition of which are restricted under Federal securities laws, excluding
certain Rule 144A securities, as defined below.
Illiquid securities generally cannot be sold or disposed of in the ordinary
course of business (within seven days) at approximately the value at which the
Funds have valued the investments. This may have an adverse effect on the Fund's
ability to dispose of particular illiquid securities at fair market value and
may limit the Fund's ability to obtain accurate market quotations for purposes
of valuing the securities and calculating the net asset value of shares of the
Fund. The Funds may also purchase securities that are not registered under the
Securities Act of 1933, as amended (the "Act"), but that can be sold to
qualified institutional buyers in accordance with Rule 144A under the Act ("Rule
144A Securities"). Rule 144A Securities generally may be resold only to other
qualified institutional buyers. If a particular investment in Rule 144A
Securities is not determined to be liquid under the guidelines established by
the Board of Trustees, that investment will be included within a Fund's
limitation on investment in illiquid securities.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date (the date the order to
buy or sell is executed). Realized gains and losses from securities sold are
recorded on the identified cost basis. 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 the 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
49
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST
income is recorded on the ex-dividend date, except certain dividends from
foreign securities are recorded as soon as the Funds are informed of the
ex-dividend date. Each Fund's investment income and realized and unrealized
gains and losses are allocated among the classes of that Fund based upon the
relative average net assets of each class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and distributions of any net capital gains
of the Funds are declared and paid annually, with the exception of the Money
Market Fund from which dividends from net investment income are declared daily
and paid monthly.
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,
redesignated distributions and differing characterizations of distributions made
by each Fund.
FEDERAL INCOME TAXES:
It is each Fund's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies by, among other things,
distributing substantially all of its earnings to its shareholders. Therefore,
no federal income tax provision is required.
It is each Fund's policy to meet the diversification requirements of the Code so
that variable annuity and variable life contracts funded by the Trust will not
fail to qualify as annuities and life insurance contracts for tax purposes.
EXPENSES:
General expenses of the Trust are allocated to all the Funds and Portfolios of
the Trust based upon the relative average net assets of each Fund and Portfolio.
Operating expenses directly attributable to a class of shares are charged to the
operation of that class of shares. Expenses of each Fund not directly
attributable to the operation 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.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
WM Advisors serves as investment advisor to the Trust. The Advisor is entitled
to a monthly fee at an annual rate based upon a percentage of daily net assets
of each Fund at the following rates:
FROM $0 FROM $25 FROM $50 FROM $100 FROM $125 FROM $200
TO $25 TO $50 TO $100 TO $125 TO $200 TO $250
NAME OF FUND MILLION MILLION MILLION MILLION MILLION MILLION
- --------------------------------------------------------------------------------------
REIT Fund .......... 0.800% 0.800% 0.800% 0.800% 0.800% 0.800%
Equity Income
Fund ............. 0.625% 0.625% 0.625% 0.625% 0.625% 0.625%
Growth & Income
Fund ............ 0.800% 0.800% 0.800% 0.750% 0.750% 0.700%
West Coast Equity
Fund ............. 0.625% 0.625% 0.625% 0.625% 0.625% 0.625%
Mid Cap Stock
Fund ............. 0.750% 0.750% 0.750% 0.750% 0.750% 0.750%
Growth Fund ........ 0.950% 0.875% 0.875% 0.875% 0.875% 0.875%
Small Cap Stock
Fund ............. 0.900% 0.850% 0.850% 0.850% 0.850% 0.850%
International
Growth Fund ...... 0.950% 0.950% 0.850% 0.850% 0.750% 0.750%
Short Term
Income Fund ...... 0.500% 0.500% 0.500% 0.500% 0.500% 0.450%
U.S. Government
Securities Fund .. 0.500% 0.500% 0.500% 0.500% 0.500% 0.500%
Income Fund ........ 0.500% 0.500% 0.500% 0.500% 0.500% 0.500%
Money Market
Fund ............. 0.450% 0.450% 0.450% 0.450% 0.450% 0.450%
FROM $250 FROM $400 FROM $500 FROM $2
TO $400 TO $500 MILLION TO TO $3 OVER
NAME OF FUND MILLION MILLION $2 BILLION BILLION $3 BILLION
- ------------------------------------------------------------------------------
REIT Fund .......... 0.800% 0.800% 0.750% 0.700% 0.650%
Equity Income
Fund ............. 0.625% 0.625% 0.500% 0.500% 0.500%
Growth & Income
Fund ............ 0.700% 0.650% 0.575% 0.575% 0.575%
West Coast Equity
Fund ............. 0.625% 0.625% 0.500% 0.500% 0.500%
Mid Cap Stock
Fund ............. 0.750% 0.750% 0.750% 0.750% 0.700%
Growth Fund ........ 0.825% 0.825% 0.750% 0.700% 0.650%
Small Cap Stock
Fund ............. 0.850% 0.850% 0.750% 0.750% 0.750%
International
Growth Fund ...... 0.750% 0.750% 0.750% 0.750% 0.700%
Short Term
Income Fund ...... 0.450% 0.450% 0.400% 0.400% 0.400%
U.S. Government
Securities Fund .. 0.500% 0.500% 0.500% 0.500% 0.450%
Income Fund ........ 0.500% 0.500% 0.500% 0.500% 0.450%
Money Market
Fund ............. 0.450% 0.450% 0.450% 0.450% 0.450%
Custodian fees for certain Funds have been reduced by credits allowed by the
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 six months ended June 30, 2003 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 Trust for serving as an officer or Trustee of the Trust.
The Trust, together with other mutual funds advised by WM Advisors, pays each
Trustee who is not
50
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST
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 Trust. Trustees are also reimbursed for
travel and out-of-pocket expenses. Each Trustee serves in the same capacity for
all 40 funds within the WM Group of Funds.
5. DISTRIBUTION PLAN
Each of the Funds has adopted a distribution plan, pursuant to Rule 12b-1 under
the 1940 Act, applicable to Class 2 shares of the Funds (a "Rule 12b-1 Plan").
Under the Rule 12b-1 Plan, WM Funds Distributor, Inc. (the "Distributor") may
receive a fee at an annual rate of 0.25% of the average daily net assets
attributable to Class 2 shares. This fee 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 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
Trust, as defined in the 1940 Act, and who have no direct or indirect financial
interest in the operation of the distribution plan or any agreements related to
the plan.
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 six months ended June 30,
2003, are as follows:
NAME OF FUND PURCHASES SALES
------------ --------- -----
REIT Fund.......................................................... $ 26,744,392 $ 923,022
Equity Income Fund ................................................ 14,300,769 14,098,779
Growth & Income Fund............................................... 6,189,821 35,740,846
West Coast Equity Fund ............................................ 5,856,114 5,844,516
Mid Cap Stock Fund................................................. 10,800,457 12,333,123
Growth Fund........................................................ 59,559,469 57,421,618
Small Cap Stock Fund............................................... 18,078,890 10,469,373
International Growth Fund.......................................... 4,760,273 4,663,839
Short Term Income Fund............................................. 8,680,617 8,540,609
U.S. Government Securities Fund.................................... 5,581,250 28,652
Income Fund........................................................ 14,986,971 5,432,971
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities, excluding short-term investments, for the six months ended June 30,
2003, are as follows:
NAME OF FUND PURCHASES SALES
------------ --------- -----
Equity Income Fund................................................. $ -- $ 1,887,042
Short Term Income Fund............................................. 4,030,893 1,468,944
U.S. Government Securities Fund.................................... 56,117,541 43,502,774
Income Fund........................................................ 23,619,260 16,893,275
At June 30, 2003, aggregate gross unrealized appreciation for all securities in
which there was an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
value are as follows:
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF FUND APPRECIATION DEPRECIATION
------------ ------------ ------------
REIT Fund.......................................................... $ 1,793,865 $ 134,315
Equity Income Fund................................................. 12,095,738 10,937,323
Growth & Income Fund............................................... 33,881,183 17,007,655
West Coast Equity Fund............................................. 16,872,235 14,967,227
Mid Cap Stock Fund................................................. 14,663,894 1,719,324
Growth Fund........................................................ 11,864,882 7,215,486
Small Cap Stock Fund............................................... 10,729,372 22,334,214
International Growth Fund.......................................... 4,971,358 7,595,871
Short Term Income Fund............................................. 2,709,013 315,064
U.S. Government Securities Fund.................................... 6,957,067 146,880
Income Fund........................................................ 19,092,618 2,250,006
51
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST
7. LENDING OF SECURITIES
Certain Funds may lend securities to brokers, dealers and other financial
organizations to earn additional income. Each security loan is collateralized
with collateral assets in an amount equal to or greater than the current market
value of the loaned securities. There is a risk of delay in receiving
collateral, 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 June 30, 2003, 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.
8. TRANSACTIONS WITH AFFILIATES
At June 30, 2003, the Variable Trust Portfolios hold investments in a number of
the Funds. The figures presented below represent the percentage of shares
outstanding in each of the Underlying Funds owned by the Portfolios:
PORTFOLIOS
--------------------------------------------------------------------
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
NAME OF FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
REIT Fund......................... 5.8% 2.0% 43.4% 36.7% 12.1%
Equity Income Fund................ 4.0% 1.3% 30.4% 24.5% 8.4%
Growth & Income Fund.............. 6.3% 1.4% 29.1% 25.5% 10.5%
West Coast Equity Fund............ 3.0% 1.2% 26.7% 23.6% 10.0%
Mid Cap Stock Fund................ 5.9% 1.5% 33.6% 28.8% 14.6%
Growth Fund....................... 4.1% 1.3% 28.5% 24.7% 9.2%
Small Cap Stock Fund.............. 5.7% 1.3% 31.3% 28.1% 11.9%
International Growth Fund......... -- 1.5% 37.9% 32.5% 13.8%
Short Term Income Fund............ 43.0% 4.4% 12.1% -- --
U.S. Government Securities Fund... 19.4% 2.9% 27.9% 7.5% --
Income Fund....................... 22.8% 3.7% 33.7% 12.8% --
9. 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. The REIT Fund could be adversely impacted by economic
trends within the real estate industry.
The West Coast Equity Fund concentrates its investments in companies located or
doing business in Alaska, California, Idaho, Montana, Oregon and Washington. The
West Coast Equity Fund could be adversely impacted by economic trends within
this region.
Certain Funds may invest a portion of their assets in foreign securities;
developing or emerging markets countries; enter into forward foreign currency
transactions; lend their portfolio securities; enter into stock index, interest
rate and currency futures contracts, and options on such contracts; enter into
interest rate swaps or purchase or sell interest rate caps or floors; 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 enter into "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.
52
This Semi-Annual Report is published for the general information of the
shareholders of the WM Variable Trust. It is authorized for distribution to
prospective investors only when preceded or accompanied by a current prospectus.
Share prices and investment return will vary with market conditions, and the
principal value of an investment when you sell your shares may be more or less
than the original cost.
Shares of the WM Variable Trust are not federally insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board, National Credit Union
Association (NCUA), National Credit Union Share Insurance Fund (NCUSIF), or any
other Federal government agency. The purchase of WM Variable Trust shares is not
required for and is not a term of the provision of any banking service or
activity. They are not deposits or obligations of, nor are they guaranteed by,
any bank. These securities are subject to investment risk, including possible
loss of principal amount invested.
Distributed by:
WM Funds Distributor, Inc.
Member NASD
[WM VARIABLE TRUST LOGO] PRSRT STD
WM Funds Distributor, Inc. U.S. Postage
12009 Foundation Place, Suite 350 PAID
Gold River, CA 95670 LOS ANGELES, CA
PERMIT #30835
[RECYCLE LOGO]
Printed on recycled paper
VTSAR (08/28/03)
[WM VARIABLE TRUST LOGO]
WM VARIABLE TRUST
- Strategic Asset Management Portfolios
Common sense. Uncommon solutions.
[1st Photo: Stream with tall brush along the sides
and mountains in the distance.]
[2nd Photo: Photo of bridge over water.]
SEMI-ANNUAL REPORT
for the period ended
June 30, 2003
WM Strategic Asset Management Portfolios
Flexible Income Portfolio
Conservative Balanced Portfolio
Balanced Portfolio
Conservative Growth Portfolio
Strategic Growth Portfolio
Table of Contents
Message from the President .................................. 1
Statements of Assets and Liabilities ........................ 2
Statements of Operations .................................... 3
Statements of Changes in Net Assets ......................... 4
Statements of Changes in Net
Assets - Capital Stock Activity ............................. 5
Financial Highlights ........................................ 6
Portfolio of Investments .................................... 10
Notes to Financial Statements (unaudited) ................... 13
Not FDIC or NCUA/NCUSIF Insured
- ------------------------------------------------------
May Lose Value-Not a Deposit-No Bank or Credit Union
Guarantee-Not Insured by any federal government agency
- ------------------------------------------------------
Dear Investor,
During the first half of 2003, we experienced a set of decisive geopolitical
events, as well as equity market gains.(1) The military conflict in Iraq
commenced in March and concluded relatively quickly, brevity that we hope will
inspire a tempering of global tensions. We also saw some encouraging signs of
improvement in economic and market conditions, as well as the passage of the
Jobs and Growth Tax Relief Reconciliation Act of 2003. Equity markets rallied to
conclude the six-month period ended June 30, 2003 as the Standard & Poor's 500
Index gained 11.77%.(2) Corporate earnings also showed some signs of change for
the better, but true revenue-driven profit growth remains somewhat more
difficult for many firms to garner. With these conditions in mind, we feel that
time is still needed before we can declare a full economic recovery.
Corporate bonds, particularly lower-rated issues, were among the strongest
performing major asset classes during the period. Short-term interest rates
continued their slide to 45-year lows, while Treasury yields dropped slightly
during the period. These factors helped to boost the performance of bond
investments, where prices generally move in the opposite direction of yields.
Although stocks generated strong gains in the second quarter of 2003, bonds
outperformed stocks in each of the past three years, averaging more than 10% per
year for the three years ended June 30, 2003. Conversely, stocks declined by an
average of more than 11% per year over the same time period.(3)
As a result of positive bond market performance, bond fund investments were
significantly more popular than equity funds in the first quarter, as measured
by cash inflows. With the rebound in equity markets in the second quarter, stock
fund asset flows gained momentum, reversing the prior trend.(4) These swings
lead us to caution investors to be aware of the pitfalls associated with chasing
short-term past performance. Assets that have shown the best results in a
certain period may not necessarily repeat this strong performance in the next.
For this reason, we have always recommended a strategy that utilizes
diversification and asset allocation to help protect investor assets through a
variety of market conditions. We also suggest that investors regularly elicit
the expertise of a financial advisor. With the guidance of these investment
professionals, investors can take the actions necessary to keep their investment
portfolios aligned with their goals regardless of market fluctuations.
To provide additional opportunities for diversification, we introduced the WM VT
REIT Fund as an underlying investment within the WM VT Strategic Asset
Management (SAM) Portfolios in May. The Fund invests primarily in real estate
investment trust (REIT) securities and seeks to take advantage of their
dividend-producing potential. We believe that the WM VT REIT Fund adds depth and
breadth to the overall Fund family and that it has the capability of enhancing
risk management opportunities available through the SAM Portfolios.
At the WM Group of Funds, our focus on risk management has remained in place
throughout the past three years of significantly volatile equity market
performance. It is a fundamental aspect of our investment philosophy, and we
will continue to stress this approach as economic conditions and equity markets
change. Our firm and our investment products have evolved over the years, and
yet our commitment to a risk management discipline remains at the core of the
investment options we offer.
As we look toward the second half of our fiscal year, we are unwavering in our
belief that the strict investment discipline that has guided us for more than 60
years is the right course through the current market uncertainty. We thank you
for your continued confidence and trust in the WM Variable Trust Funds.
Sincerely,
/s/ William G. Papesh
- ----------------------
William G. Papesh
President
(1) As measured by the Standard & Poor's 500 Index.
(2) Source: Ibbotson Associates. Index performance information represents
total return from January 1, 2003 through June 30, 2003 and includes the
reinvestment of dividends and capital gains.
(3) Source: Ibbotson Associates. Stocks are measured by the S&P 500 Index.
Bonds are measured by the Lehman Brothers Aggregate Bond Index. Index
performance information represents average annual total returns from June
30, 2000 through June 30, 2003 and includes the reinvestment of dividends
and capital gains.
(4) Source: AMG Data Services, Wall Street Journal, July 7, 2003. Note:
Indices are unmanaged, and an investment cannot be made directly in an
index.
1
STATEMENTS of ASSETS and LIABILITIES
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
JUNE 30, 2003 (UNAUDITED)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
ASSETS:
Investments, at value (a) ................ $ 155,171,285 $ 28,980,304 $ 413,962,470 $ 266,352,009 $ 89,337,977
Receivable for Portfolio shares sold ..... 510,003 112,259 793,711 640,941 618,135
Prepaid expenses and other assets ........ 1,579 1,110 4,135 2,749 1,280
------------- ------------- ------------- ------------- -------------
Total Assets ............................ 155,682,867 29,093,673 414,760,316 266,995,699 89,957,392
------------- ------------- ------------- ------------- -------------
LIABILITIES:
Payable for Portfolio shares redeemed .... 22,067 13,902 129,249 474,265 112,551
Investment advisory fee payable .......... 12,784 439 33,971 22,029 7,395
Administration fee payable ............... 19,176 3,529 50,957 33,043 11,093
Distribution fees payable ................ 3,627 902 9,740 4,537 972
Accrued legal and audit fees ............. 12,753 12,212 13,846 13,256 12,466
Accrued printing and postage expenses .... 15,983 3,016 42,070 31,699 13,607
Accrued expenses and other payables ...... 739 584 1,980 3,563 1,590
------------- ------------- ------------- ------------- -------------
Total Liabilities ....................... 87,129 34,584 281,813 582,392 159,674
------------- ------------- ------------- ------------- -------------
NET ASSETS ............................... $ 155,595,738 $ 29,059,089 $ 414,478,503 $ 266,413,307 $ 89,797,718
============= ============= ============= ============= =============
(a) Investments, at cost ................. $ 148,046,178 $ 28,046,889 $ 423,866,062 $ 312,480,604 $ 109,057,099
============= ============= ============= ============= =============
NET ASSETS CONSIST OF:
Undistributed net investment income ...... $ 6,312,659 $ 969,620 $ 9,667,190 $ 4,339,467 $ 790,444
Accumulated net realized loss on
investment transactions ................. (1,336,188) (809,572) (22,847,689) (21,187,966) (8,996,352)
Net unrealized appreciation/(depreciation)
of investments .......................... 7,125,107 933,415 (9,903,592) (46,128,595) (19,719,122)
Paid-in capital .......................... 143,494,160 27,965,626 437,562,594 329,390,401 117,722,748
----------- ---------- ----------- ----------- -----------
Total Net Assets ........................ $ 155,595,738 $ 29,059,089 $ 414,478,503 $ 266,413,307 $ 89,797,718
============= ============= ============= ============= =============
NET ASSETS:
Class 1 Shares ........................... $ 137,563,393 $ 24,191,747 $ 362,441,547 $ 243,405,816 $ 84,539,364
============= ============= ============= ============= =============
Class 2 Shares ........................... $ 18,032,345 $ 4,867,342 $ 52,036,956 $ 23,007,491 $ 5,258,354
============= ============= ============= ============= =============
SHARES OUTSTANDING:
Class 1 Shares ........................... 10,565,245 2,336,248 27,153,313 18,273,240 6,051,343
============= ============= ============= ============= =============
Class 2 Shares ........................... 1,389,087 471,383 3,909,465 1,732,332 376,770
============= ============= ============= ============= =============
CLASS 1 SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding ............................. $ 13.02 $ 10.35 $ 13.35 $ 13.32 $ 13.97
============= ============= ============= ============= =============
CLASS 2 SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding ............................. $ 12.98 $ 10.33 $ 13.31 $ 13.28 $ 13.96
============= ============= ============= ============= =============
See Notes to Financial Statements.
2
STATEMENTS of OPERATIONS
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
INVESTMENT INCOME:
Dividends from investment company securities ....... $ 6,543,507 $1,011,052 $10,187,011 $ 4,720,594 $ 917,616
Interest ........................................... 3,676 1,650 64,924 2,598 3,113
----------- ---------- ----------- ----------- -----------
Total investment income ............................ 6,547,183 1,012,702 10,251,935 4,723,192 920,729
----------- ---------- ----------- ----------- -----------
EXPENSES:
Investment advisory fee ............................ 71,180 12,579 187,319 122,216 39,513
Administration fee ................................. 106,770 18,868 280,979 183,323 59,269
Custodian fees ..................................... 1,312 1,223 1,539 1,210 1,274
Legal and audit fees ............................... 14,469 11,666 19,859 16,748 12,895
Printing and postage expenses ...................... 10,809 1,818 28,681 22,502 7,145
Other .............................................. 6,220 1,252 14,310 6,835 2,722
Class 2 Shares distribution fees ................... 16,826 4,090 49,006 22,616 4,466
----------- ---------- ----------- ----------- -----------
Total expenses .................................... 227,586 51,496 581,693 375,450 127,284
Fees waived by the investment advisor .............. -- (9,698) -- -- --
Fees reduced by custodian credits .................. (36) (43) (260) (57) (28)
----------- ---------- ----------- ----------- -----------
Net expenses ...................................... 227,550 41,755 581,433 375,393 127,256
----------- ---------- ----------- ----------- -----------
NET INVESTMENT INCOME .............................. 6,319,633 970,947 9,670,502 4,347,799 793,473
----------- ---------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized loss on investment transactions ....... (626,438) (303,591) (7,040,889) (7,668,255) (2,853,673)
Capital gain distributions received ................ 23,893 7,619 178,222 144,433 49,204
Net change in unrealized appreciation/(depreciation)
of investments .................................... 5,016,100 1,474,797 34,399,401 31,144,373 12,058,347
----------- ---------- ----------- ----------- -----------
Net realized and unrealized gain on
investments ....................................... 4,413,555 1,178,825 27,536,734 23,620,551 9,253,878
----------- ---------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ......................... $10,733,188 $2,149,772 $37,207,236 $27,968,350 $10,047,351
=========== ========== =========== =========== ===========
See Notes to Financial Statements.
3
STATEMENTS of CHANGES in NET assets
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
Net investment income .............................. $ 6,319,633 $ 970,947 $ 9,670,502 $ 4,347,799 $ 793,473
Net realized loss on investment transactions ....... (626,438) (303,591) (7,040,889) (7,668,255) (2,853,673)
Capital gain distributions received ................ 23,893 7,619 178,222 144,433 49,204
Net change in unrealized appreciation/(depreciation)
of investments .................................... 5,016,100 1,474,797 34,399,401 31,144,373 12,058,347
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 10,733,188 2,149,772 37,207,236 27,968,350 10,047,351
Distributions to shareholders from:
Net investment income:
Class 1 Shares ................................... (3,460,159) (518,485) (8,744,950) (5,269,929) (1,232,972)
Class 2 Shares ................................... (438,028) (91,829) (1,166,801) (480,104) (69,502)
Net increase/(decrease) in net assets from
Portfolio share transactions:
Class 1 Shares ................................... 5,360,897 2,092,821 3,550,303 (6,603,804) 2,306,762
Class 2 Shares ................................... 7,991,668 2,424,287 17,692,404 6,624,978 2,134,036
------------ ------------ ------------ ------------ ------------
Net increase in net assets ......................... 20,187,566 6,056,566 48,538,192 22,239,491 13,185,675
NET ASSETS:
Beginning of period ................................ 135,408,172 23,002,523 365,940,311 244,173,816 76,612,043
End of period ...................................... $155,595,738 $ 29,059,089 $414,478,503 $266,413,307 $ 89,797,718
============ ============ ============ ============ ============
Undistributed net investment income at end of period $ 6,312,659 $ 969,620 $ 9,667,190 $ 4,339,467 $ 790,444
============ ============ ============ ============ ============
FOR THE YEAR ENDED DECEMBER 31, 2002
Net investment income .............................. $ 3,805,331 $ 590,811 $ 9,130,316 $ 4,870,951 $ 912,394
Net realized loss on investment transactions ....... (741,052) (451,761) (11,940,686) (11,856,130) (5,626,057)
Capital gain distributions received ................ 172,069 44,955 1,732,750 1,991,426 855,980
Net change in unrealized depreciation
of investments .................................... (140,557) (512,304) (33,727,705) (45,520,460) (17,546,627)
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting from
operations ........................................ 3,095,791 (328,299) (34,805,325) (50,514,213) (21,404,310)
Distributions to shareholders from:
Net investment income:
Class 1 Shares ................................... (656,784) (124,559) (7,468,015) (8,654,688) (3,357,202)
Class 2 Shares ................................... (20,517) (8,500) (365,608) (266,944) (49,923)
Net realized gains on investments:
Class 1 Shares ................................... -- (23,662) -- (432,049) (256,745)
Class 2 Shares ................................... -- (1,637) -- (13,328) (3,819)
Net increase/(decrease) in net assets from
Portfolio share transactions:
Class 1 Shares ................................... 32,909,851 7,002,340 21,599,458 (21,656,792) 1,274,805
Class 2 Shares ................................... 9,038,551 2,060,871 31,445,476 14,977,022 2,689,617
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in net assets .............. 44,366,892 8,576,554 10,405,986 (66,560,992) (21,107,577)
NET ASSETS:
Beginning of year .................................. 91,041,280 14,425,969 355,534,325 310,734,808 97,719,620
------------ ------------ ------------ ------------ ------------
End of year ........................................ $135,408,172 $ 23,002,523 $365,940,311 $244,173,816 $ 76,612,043
============ ============ ============ ============ ============
Undistributed net investment income at end of year . $ 3,891,213 $ 608,987 $ 9,908,439 $ 5,741,701 $ 1,299,445
============ ============ ============ ============ ============
See Notes to Financial Statements.
4
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
FLEXIBLE INCOME PORTFOLIO CONSERVATIVE BALANCED PORTFOLIO BALANCED PORTFOLIO
------------------------- ------------------------------- ------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
06/30/03 YEAR ENDED 06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
----------- -------- ----------- -------- ----------- --------
AMOUNT
CLASS 1:
Sold ...................... $ 16,223,552 $ 51,872,915 $ 4,807,256 $ 10,841,387 $ 30,065,364 $ 86,014,194
Issued as reinvestment of
dividends ................ 3,460,159 656,784 518,485 148,221 8,744,950 7,468,015
Redeemed ................. (14,322,814) (19,619,848) (3,232,920) (3,987,268) (35,260,011) (71,882,751)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .............. $ 5,360,897 $ 32,909,851 $ 2,092,821 $ 7,002,340 $ 3,550,303 $ 21,599,458
============ ============ ============ ============ ============ ============
CLASS 2:
Sold ...................... $ 7,853,475 $ 9,245,821 $ 2,385,497 $ 2,574,231 $ 17,665,565 $ 32,720,894
Issued as reinvestment of
dividends ................ 438,028 20,517 91,829 10,137 1,166,801 365,608
Redeemed ................. (299,835) (227,787) (53,039) (523,497) (1,139,962) (1,641,026)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .............. $ 7,991,668 $ 9,038,551 $ 2,424,287 $ 2,060,871 $ 17,692,404 $ 31,445,476
============ ============ ============ ============ ============ ============
SHARES
CLASS 1:
Sold ...................... 1,275,346 4,286,637 479,693 1,117,129 2,360,655 6,659,042
Issued as reinvestment of
dividends ................ 263,933 54,012 49,663 15,186 647,774 580,717
Redeemed ................. (1,127,959) (1,616,512) (325,655) (415,646) (2,804,677) (5,752,794)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .............. 411,320 2,724,137 203,701 716,669 203,752 1,486,965
============ ============ ============ ============ ============ ============
CLASS 2:
Sold ...................... 618,445 762,913 236,910 266,035 1,383,193 2,527,168
Issued as reinvestment of
dividends ................ 33,514 1,689 8,821 1,040 86,687 28,452
Redeemed ................. (23,445) (18,887) (5,362) (56,501) (90,154) (130,316)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .............. 628,514 745,715 240,369 210,574 1,379,726 2,425,304
============ ============ ============ ============ ============ ============
CONSERVATIVE
GROWTH PORTFOLIO STRATEGIC GROWTH PORTFOLIO
---------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
----------- -------- ----------- --------
AMOUNT
CLASS 1:
Sold ................................. $ 18,700,717 $ 39,872,387 $ 10,705,426 $ 19,153,211
Issued as reinvestment of
dividends ........................... 5,269,929 9,086,737 1,232,972 3,613,947
Redeemed ............................. (30,574,450) (70,615,916) (9,631,636) (21,492,353)
------------ ------------ ------------ ------------
Net increase/(decrease) .............. $ (6,603,804) $(21,656,792) $ 2,306,762 $ 1,274,805
============ ============ ============ ============
CLASS 2:
Sold ................................. $ 7,819,444 $ 15,345,219 $ 2,163,079 $ 3,164,200
Issued as reinvestment of
dividends ........................... 480,104 280,272 69,502 53,742
Redeemed ............................. (1,674,570) (648,469) (98,545) (528,325)
------------ ------------ ------------ ------------
Net increase ......................... $ 6,624,978 $ 14,977,022 $ 2,134,036 $ 2,689,617
============ ============ ============ ============
SHARES
CLASS 1:
Sold ................................. 1,493,837 3,019,159 835,867 1,358,720
Issued as reinvestment of
dividends ........................... 390,365 694,705 86,890 259,064
Redeemed ............................. (2,485,622) (5,662,333) (763,671) (1,646,443)
------------ ------------ ------------ ------------
Net increase/(decrease) ............. (601,420) (1,948,469) 159,086 (28,659)
============ ============ ============ ============
CLASS 2:
Sold ................................. 623,257 1,162,455 166,123 232,142
Issued as reinvestment of
dividends ........................... 35,669 21,443 4,901 3,858
Redeemed ............................. (130,810) (55,466) (7,645) (42,000)
------------ ------------ ------------ ------------
Net increase ......................... 528,116 1,128,432 163,379 194,000
============ ============ ============ ============
See Notes to Financial Statements.
5
FINANCIAL highlights
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------------- -------------------------------------------
NET
ASSET NET REALIZED DISTRIBUTIONS
VALUE, AND UNREALIZED DIVIDENDS FROM NET ASSET
BEGINNING NET GAIN/(LOSS) TOTAL FROM FROM NET NET REALIZED VALUE,
OF INVESTMENT ON INVESTMENT INVESTMENT CAPITAL TOTAL END OF
PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) GAINS DISTRIBUTIONS PERIOD
------ ------ ----------- ---------- --------- ----- ------------- ------
FLEXIBLE INCOME
PORTFOLIO
CLASS 1
06/30/03 (unaudited) $12.41 $ 0.56(7) $ 0.39 $ 0.95 $(0.34) $ -- $(0.34) $13.02
12/31/02 12.23 0.41(7) (0.15) 0.26 (0.08) -- (0.08) 12.41
12/31/01 11.90 0.17(7) 0.40 0.57 (0.15) (0.09) (0.24) 12.23
12/31/00 11.86 0.58(7) 0.10 0.68 (0.58) (0.06) (0.64) 11.90
12/31/99 11.38 0.58(7) 0.41 0.99 (0.50) (0.01) (0.51) 11.86
12/31/98 10.23 0.48(7) 0.69 1.17 (0.02) -- (0.02) 11.38
CLASS 2
06/30/03 (unaudited) 12.38 0.54(7) 0.39 0.93 (0.33) -- (0.33) 12.98
12/31/02 12.23 0.38(7) (0.15) 0.23 (0.08) -- (0.08) 12.38
12/31/01(5) 12.18 0.02(7) 0.03 0.05 -- -- -- 12.23
CONSERVATIVE BALANCED
PORTFOLIO
CLASS 1
06/30/03 (unaudited) $ 9.73 $ 0.38(7) $ 0.47 $ 0.85 $(0.23) $ -- $(0.23) $10.35
12/31/02 10.04 0.31(7) (0.54) (0.23) (0.07) (0.01) (0.08) 9.73
12/31/01 9.90 0.13 0.10 0.23 (0.09) -- (0.09) 10.04
12/31/00 9.90 0.49(7) (0.00)(8) 0.49 (0.49) (0.00)(8) (0.49) 9.90
12/31/99 10.42 0.71(7) (0.52) 0.19 (0.70) (0.01) (0.71) 9.90
12/31/98(6) 10.00 0.56(7) (0.14) 0.42 -- -- -- 10.42
12/31/97(6) 10.00 -- -- -- -- -- -- 10.00
CLASS 2
06/30/03 (unaudited) 9.71 0.37(7) 0.47 0.84 (0.22) -- (0.22) 10.33
12/31/02 10.04 0.29(7) (0.54) (0.25) (0.07) (0.01) (0.08) 9.71
12/31/01(5) 9.92 0.01 0.11 0.12 -- -- -- 10.04
BALANCED PORTFOLIO
CLASS 1
06/30/03 (unaudited) $12.42 $ 0.33(7) $ 0.93 $ 1.26 $(0.33) $ -- $(0.33) $13.35
12/31/02 13.91 0.32(7) (1.53) (1.21) (0.28) -- (0.28) 12.42
12/31/01 14.50 0.17(7) (0.15) 0.02 (0.25) (0.36) (0.61) 13.91
12/31/00 14.92 0.41(7) (0.32) 0.09 (0.43) (0.08) (0.51) 14.50
12/31/99 12.20 0.34(7) 2.95 3.29 (0.48) (0.09) (0.57) 14.92
12/31/98 10.47 0.31(7) 1.49 1.80 (0.07) -- (0.07) 12.20
CLASS 2
06/30/03 (unaudited) 12.39 0.31(7) 0.93 1.24 (0.32) -- (0.32) 13.31
12/31/02 13.91 0.29(7) (1.53) (1.24) (0.28) -- (0.28) 12.39
12/31/01(5) 13.52 0.02(7) 0.37(9) 0.39 -- -- -- 13.91
See Notes to Financial Statements.
6
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE
RATIO NET ASSETS WITHOUT FEE
RATIO OF OF NET WAIVERS, EXPENSES
OPERATING INVESTMENT REIMBURSED AND/OR FEES
NET ASSETS, EXPENSES INCOME TO PORTFOLIO REDUCED BY CREDITS
TOTAL END OF PERIOD TO AVERAGE AVERAGE TURNOVER ALLOWED BY THE
RETURN(2) (IN 000'S) NET ASSETS(3) NET ASSETS RATE CUSTODIAN(3)(4)
--------- ---------- ------------- ---------- ---- ---------------
7.60% $137,563 0.30%(10) 8.90%(10) 4% 0.30%(10)
2.14% 125,992 0.30% 3.37% 9% 0.30%
4.84% 90,860 0.33% 1.43% 1% 0.33%
5.79% 40,049 0.31% 4.84% 14% 0.31%
8.58% 25,846 0.35% 5.09% 4% 0.41%
11.75% 1,107 0.35% 4.90% 78% 1.51%
7.47% 18,032 0.55%(10) 8.65%(10) 4% 0.55%(10)
1.89% 9,416 0.55% 3.12% 9% 0.55%
0.41% 182 0.58%(10) 1.18%(10) 1% 0.58%(10)
8.69% $ 24,192 0.30%(10) 7.75%(10) 7% 0.38%(10)
(2.26)% 20,759 0.30% 3.20% 9% 0.41%
2.40% 14,221 0.41% 1.36% 2% 0.53%
5.03% 8,736 0.37% 4.99% 67% 0.44%
1.88% 7,206 0.35% 7.07% 17% 0.59%
4.23% 829 0.35%(10) 7.39%(10) 61% 5.37%(10)
0.00% 0 0.35%(10) 0.00%(10) 99% 7,567.04%(10)
8.62% 4,867 0.55%(10) 7.50%(10) 7% 0.63%(10)
(2.47)% 2,244 0.55% 2.95% 9% 0.66%
1.21% 205 0.66%(10) 1.11%(10) 2% 0.78%(10)
10.12% $362,442 0.28%(10) 5.19%(10) 7% 0.28%(10)
(8.78)% 334,605 0.29% 2.52% 22% 0.29%
0.13% 354,082 0.28% 1.22% 8% 0.28%
0.49% 305,399 0.29% 2.76% 15% 0.29%
27.71% 170,527 0.35% 2.70% 13% 0.35%
17.18% 11,161 0.35% 2.79% 33% 0.54%
9.98% 52,037 0.53%(10) 4.94%(10) 7% 0.53%(10)
(9.00)% 31,335 0.54% 2.27% 22% 0.54%
2.88% 1,452 0.53%(10) 0.97%(10) 8% 0.53%(10)
See Notes to Financial Statements.
7
FINANCIAL highlights
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------------- ------------------------------------------
NET
ASSET NET REALIZED DISTRIBUTIONS
VALUE, AND UNREALIZED DIVIDENDS FROM NET ASSET
BEGINNING NET GAIN/(LOSS) TOTAL FROM FROM NET NET REALIZED VALUE,
OF INVESTMENT ON INVESTMENT INVESTMENT CAPITAL TOTAL END OF
PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) GAINS DISTRIBUTIONS PERIOD
------ ------ ----------- ---------- --------- ----- ------------- ------
CONSERVATIVE GROWTH
PORTFOLIO
CLASS 1
06/30/03 (unaudited) $12.16 $ 0.22(7) $ 1.23 $ 1.45 $(0.29) $ -- $(0.29) $13.32
12/31/02 14.87 0.23(7) (2.51) (2.28) (0.41) (0.02) (0.43) 12.16
12/31/01 16.46 0.17(7) (0.72) (0.55) (0.61) (0.43) (1.04) 14.87
12/31/00 17.10 0.27(7) (0.69) (0.42) (0.07) (0.15) (0.22) 16.46
12/31/99 12.54 0.12(7) 4.76 4.88 (0.16) (0.16) (0.32) 17.10
12/31/98 10.49 0.20(7) 1.89 2.09 (0.03) (0.01) (0.04) 12.54
CLASS 2
06/30/03 (unaudited) 12.13 0.20(7) 1.23 1.43 (0.28) -- (0.28) 13.28
12/31/02 14.87 0.19(7) (2.50) (2.31) (0.41) (0.02) (0.43) 12.13
12/31/01(5) 14.24 0.01(7) 0.62(9) 0.63 -- -- -- 14.87
STRATEGIC GROWTH
PORTFOLIO
CLASS 1
06/30/03 (unaudited) $12.55 $ 0.13(7) $ 1.50 $ 1.63 $(0.21) $ -- $(0.21) $13.97
12/31/02 16.45 0.15(7) (3.47) (3.32) (0.54) (0.04) (0.58) 12.55
12/31/01 18.61 0.16(7) (1.27) (1.11) (0.57) (0.48) (1.05) 16.45
12/31/00 19.59 0.13(7) (0.84) (0.71) (0.11) (0.16) (0.27) 18.61
12/31/99 13.46 0.05(7) 6.35 6.40 (0.16) (0.11) (0.27) 19.59
12/31/98 10.70 0.17(7) 2.63 2.80 (0.03) (0.01) (0.04) 13.46
CLASS 2
06/30/03 (unaudited) 12.54 0.12(7) 1.50 1.62 (0.20) -- (0.20) 13.96
12/31/02 16.45 0.11(7) (3.44) (3.33) (0.54) (0.04) (0.58) 12.54
12/31/01(5) 15.54 0.01(7) 0.90(9) 0.91 -- -- -- 16.45
- --------------------
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(3) The Portfolio will indirectly bear its pro rata share of expenses of the
Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) All Portfolios commenced selling Class 2 shares on November 6, 2001.
(6) The Conservative Balanced Portfolio commenced operations on October 22,
1997, ceased operations on November 4, 1997, and re-commenced operations
on April 23, 1998.
(7) Per share numbers have been calculated using the average shares method.
(8) Amount represents less than $0.01 per share.
(9) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Portfolio shares.
(10) Annualized.
See Notes to Financial Statements.
8
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE
RATIO NET ASSETS WITHOUT FEE
RATIO OF OF NET WAIVERS, EXPENSES
OPERATING INVESTMENT REIMBURSED AND/OR FEES
NET ASSETS, EXPENSES INCOME TO PORTFOLIO REDUCED BY CREDITS
TOTAL END OF PERIOD TO AVERAGE AVERAGE TURNOVER ALLOWED BY THE
RETURN(2) (IN 000'S) NET ASSETS(3) NET ASSETS RATE CUSTODIAN(3)(4)
--------- ---------- ------------- ---------- ---- ---------------
11.93% $243,406 0.29%(10) 3.58%(10) 10% 0.29%(10)
(15.52)% 229,564 0.29% 1.77% 19% 0.29%
(3.56)% 309,608 0.28% 1.11% 7% 0.28%
(2.49)% 293,442 0.28% 1.59% 13% 0.28%
39.36% 155,790 0.35% 0.85% 12% 0.36%
19.91% 10,072 0.35% 1.79% 35% 0.57%
11.78% 23,007 0.54%(10) 3.33%(10) 10% 0.54%(10)
(15.72)% 14,610 0.54% 1.52% 19% 0.54%
4.42% 1,127 0.53%(10) 0.86%(10) 7% 0.53%(10)
12.94% $ 84,539 0.31%(10) 2.02%(10) 9% 0.31%(10)
(20.53)% 73,936 0.32% 1.06% 16% 0.32%
(6.25)% 97,401 0.31% 0.95% 5% 0.31%
(3.73)% 98,431 0.30% 0.67% 12% 0.30%
47.95% 35,500 0.35% 0.35% 7% 0.43%
26.19% 4,949 0.35% 1.42% 39% 0.80%
12.87% 5,258 0.56%(10) 1.77%(10) 9% 0.56%(10)
(20.59)% 2,676 0.57% 0.81% 16% 0.57%
5.86% 319 0.56%(10) 0.70%(10) 5% 0.56%(10)
See Notes to Financial Statements.
9
PORTFOLIOS of INVESTMENTS
FLEXIBLE INCOME PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 99.6%
431,951 WM VT Equity Income Fund ................. $ 5,179,090
867,284 WM VT Growth & Income Fund ............... 12,939,874
628,359 WM VT Growth Fund ........................ 6,572,630
1,541,480 WM High Yield Fund ....................... 11,977,297
4,301,847 WM VT Income Fund ........................ 47,363,340
321,556 WM VT Mid Cap Stock Fund ................. 4,019,451
155,102 WM VT REIT Fund .......................... 1,664,240
7,629,059 WM VT Short Term Income Fund ............. 19,835,553
502,413 WM VT Small Cap Stock Fund ............... 3,486,747
3,684,510 WM VT U.S. Government Securities Fund .... 39,424,255
168,601 WM VT West Coast Equity Fund ............. 2,481,808
------------
Total Investment Company Securities
(Cost $147,819,178) ..................... 154,944,285
------------
PRINCIPAL
AMOUNT
------
REPURCHASE AGREEMENT -- 0.1%
(Cost $227,000)
$ 227,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003, to be
repurchased at $227,005 on 07/01/2003,
collateralized by $225,070 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $231,589) ...................... 227,000
---------
TOTAL INVESTMENTS
(Cost $148,046,178*) .......................... 99.7% 155,171,285
OTHER ASSETS AND LIABILITIES (NET) ................. 0.3 424,453
----- ------------
NET ASSETS .......................................... 100.0% $155,595,738
===== ============
- --------------
* Aggregate cost for federal tax purposes.
CONSERVATIVE BALANCED PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
- ------ -----
INVESTMENT COMPANY SECURITIES -- 98.8%
139,646 WM VT Equity Income Fund ................... $ 1,674,361
191,399 WM VT Growth & Income Fund ................. 2,855,672
196,412 WM VT Growth Fund .......................... 2,054,470
289,653 WM High Yield Fund ......................... 2,250,607
705,317 WM VT Income Fund .......................... 7,765,537
88,769 WM VT International Growth Fund ............ 803,358
82,674 WM VT Mid Cap Stock Fund ................... 1,033,426
54,681 WM VT REIT Fund ............................ 586,732
781,670 WM VT Short Term Income Fund ............... 2,032,342
113,307 WM VT Small Cap Stock Fund ................. 786,349
553,206 WM VT U.S. Government Securities Fund ...... 5,919,308
64,548 WM VT West Coast Equity Fund ............... 950,142
----------
Total Investment Company Securities
(Cost $27,778,889) ..................... 28,712,304
----------
PRINCIPAL
AMOUNT
------
REPURCHASE AGREEMENT -- 0.9%
(Cost $268,000)
$ 268,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003, to be
repurchased at $268,006 on 07/01/2003,
collateralized by $265,721 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $273,418) ...................... 268,000
---------
TOTAL INVESTMENTS
(Cost $28,046,889*) .......................... 99.7% 28,980,304
OTHER ASSETS AND LIABILITIES (NET) .................. 0.3 78,785
----- -------------
NET ASSETS .......................................... 100.0% $ 29,059,089
===== =============
- ---------------
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements.
10
PORTFOLIOS of INVESTMENTS
BALANCED PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 96.9%
3,245,789 WM VT Equity Income Fund ................. $ 38,917,016
4,035,087 WM VT Growth & Income Fund ............... 60,203,497
4,329,634 WM VT Growth Fund ........................ 45,287,976
3,540,084 WM High Yield Fund ....................... 27,506,456
6,344,240 WM VT Income Fund ........................ 69,850,078
2,312,114 WM VT International Growth Fund .......... 20,924,630
1,840,370 WM VT Mid Cap Stock Fund ................. 23,004,629
1,166,784 WM VT REIT Fund .......................... 12,519,593
2,153,576 WM VT Short Term Income Fund ............. 5,599,299
2,743,153 WM VT Small Cap Stock Fund ............... 19,037,480
5,295,446 WM VT U.S. Government Securities Fund .... 56,661,269
1,488,624 WM VT West Coast Equity Fund ............. 21,912,547
-----------
Total Investment Company Securities
(Cost $411,328,062) ..................... 401,424,470
-----------
PRINCIPAL
AMOUNT
------
REPURCHASE AGREEMENT--3.0%
(Cost $12,538,000)
$ 12,538,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003 to be
repurchased at $12,538,279 on 07/01/2003,
collateralized by $12,431,384 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $12,791,462) ................... 12,538,000
----------
TOTAL INVESTMENTS
(Cost $423,866,062*) .............................. 99.9% 413,962,470
----- ------------
OTHER ASSETS AND LIABILITIES (NET) ................. 0.1 516,033
NET ASSETS ......................................... 100.0% $414,478,503
===== ============
- --------------
* Aggregate cost for federal tax purposes.
CONSERVATIVE GROWTH PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 99.8%
2,612,602 WM VT Equity Income Fund ................. $ 31,325,097
3,536,348 WM VT Growth & Income Fund ............... 52,762,309
3,753,545 WM VT Growth Fund ........................ 39,262,085
2,089,686 WM High Yield Fund ....................... 16,236,860
2,408,152 WM VT Income Fund ........................ 26,513,752
1,983,427 WM VT International Growth Fund .......... 17,950,011
1,575,802 WM VT Mid Cap Stock Fund ................. 19,697,525
987,084 WM VT REIT Fund .......................... 10,591,407
2,465,528 WM VT Small Cap Stock Fund ............... 17,110,763
1,412,476 WM VT U.S. Government Securities Fund .... 15,113,491
1,311,869 WM VT West Coast Equity Fund ............. 19,310,709
-----------
Total Investment Company Securities
(Cost $312,002,604) ..................... 265,874,009
-----------
PRINCIPAL
AMOUNT
------
REPURCHASE AGREEMENT -- 0.2%
(Cost $478,000)
$ 478,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003, to be
repurchased at $478,011 on 07/01/2003,
collateralized by $473,935 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $487,663) ...................... 478,000
-------
TOTAL INVESTMENTS
(Cost $312,480,604*) .......................... 100.0% 266,352,009
OTHER ASSETS AND LIABILITIES (NET) .................. 0.0 61,298
----- ------------
NET ASSETS .......................................... 100.0% $266,413,307
===== ============
- --------------
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements.
11
PORTFOLIO of INVESTMENTS
STRATEGIC GROWTH PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 99.1%
891,571 WM VT Equity Income Fund .................. $ 10,689,939
1,458,695 WM VT Growth & Income Fund ................ 21,763,732
1,400,528 WM VT Growth Fund ......................... 14,649,523
678,888 WM High Yield Fund ........................ 5,274,961
842,770 WM VT International Growth Fund ........... 7,627,071
800,289 WM VT Mid Cap Stock Fund .................. 10,003,607
326,716 WM VT REIT Fund ........................... 3,505,668
1,042,215 WM VT Small Cap Stock Fund ................ 7,232,975
558,458 WM VT West Coast Equity Fund .............. 8,220,501
----------
Total Investment Company Securities
(Cost $108,687,099) ..................... 88,967,977
----------
PRINCIPAL
AMOUNT
------
REPURCHASE AGREEMENT -- 0.4%
(Cost $370,000)
$ 370,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003, to be
repurchased at $370,008 on 07/01/2003,
collateralized by $366,854 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $377,480) ...................... 370,000
-------
TOTAL INVESTMENTS
(Cost $109,057,099*) .......................... 99.5% 89,337,977
OTHER ASSETS AND LIABILITIES (NET) ................. 0.5 459,741
----- ------------
NET ASSETS .......................................... 100.0% $ 89,797,718
===== ============
- --------------
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements.
12
NOTES to FINANCIAL statements (unaudited)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
1. ORGANIZATION AND BUSINESS
WM Variable Trust (the "Trust") was organized as a Massachusetts business trust
on January 29, 1993. The Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company.
The Trust consists of 12 funds and 5 portfolios. The following Portfolios are
included in this report: Flexible Income, Conservative Balanced, Balanced,
Conservative Growth, and Strategic Growth (each a "Portfolio" and collectively,
the "Portfolios").
The Trust is authorized to issue an unlimited number of shares of beneficial
interest, each without par value. Each Portfolio offers two classes of shares:
Class 1 shares and Class 2 shares. These shares are issued and redeemed only in
connection with investments in, and payments under, variable annuity contracts
and variable life insurance contracts (collectively "Variable Insurance
Contracts"), as well as certain qualified retirement plans including affiliated
plans of Washington Mutual, Inc. ("Washington Mutual"), a publicly owned
financial services company. At June 30, 2003, "The Washington Mutual Retirement
Savings and Investment Plan" held approximately 36%, 18%, 6%, 5% and 19% of the
outstanding shares in the Flexible Income, Conservative Balanced, Balanced,
Conservative Growth and Strategic Growth Portfolios, respectively.
Each of the Portfolios invests, within certain percentage ranges, in Class 1
shares of various funds in the Trust and Class I shares of WM High Yield Fund
(collectively, the "Underlying Funds"). WM Advisors, Inc. (the "Advisor" or "WM
Advisors"), a wholly-owned subsidiary of Washington Mutual, Inc. serves as
investment advisor to the Portfolios. The Advisor may alter these percentage
ranges when it deems appropriate. The assets of each Portfolio will be allocated
among the Underlying Funds in accordance with its investment objective based on
the Advisor's outlook for the economy, the financial markets and the relative
market valuations of the Underlying Funds. In addition, in order to meet
liquidity needs or for temporary defensive purposes, each Portfolio may invest
its assets directly in cash, stock or bond index futures, options, money market
securities and certain short-term debt instruments.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("generally accepted
accounting principles") requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Portfolios in the
preparation of their financial statements.
PORTFOLIO VALUATION:
Investments in the Underlying Funds are valued at net asset value per Class 1
share or Class I share of the respective Underlying Funds determined as of the
close of the New York Stock Exchange on each valuation date. Short-term debt
securities that mature in 60 days or less are valued at amortized cost, which
approximates market value.
REPURCHASE AGREEMENTS:
Each Portfolio 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. The
value of the collateral is at all times at least equal to the total amount of
the repurchase obligation. In the event of counterparty default, the Portfolio
would seek to use the collateral to offset losses incurred. There is potential
loss to the Portfolio in the event the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral securities, including the risk
of a possible decline in the value of the underlying securities during the
period while the Portfolio seeks to assert its rights. WM Advisors, acting under
the supervision of the Board of Trustees, reviews the value of the collateral
and the creditworthiness of those banks and broker-dealers with whom each
Portfolio enters into repurchase agreements.
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.
13
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
Interest income on debt securities is accrued daily. Dividend income is recorded
on the ex-dividend date. Each Portfolio's investment income and realized and
unrealized gains and losses are allocated among the classes of that Portfolio
based upon the relative average net assets of each class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and distributions of any net capital gains
of the Portfolios are declared and paid annually. Distributions from income and
capital gains are determined in accordance with income tax regulations, which
may differ from generally accepted accounting principles. These differences are
primarily due to differing treatments of income and gains on various investments
held by the Portfolios, redesignated distributions and differing
characterization of distributions made by each Portfolio.
FEDERAL INCOME TAXES:
It is each Portfolio's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by, among other
things, distributing substantially all of its earnings to its shareholders.
Therefore, no federal income or excise tax provision is required. It is each
Portfolio's policy to meet the diversification requirements of the Code so that
variable annuity and variable life contracts funded by the Trust will not fail
to qualify as annuities and life insurance contracts for tax purposes.
EXPENSES:
General expenses of the Trust are allocated to all the Portfolios and Funds of
the Trust based upon the relative average net assets of each Portfolio and Fund.
In addition, the Portfolios will indirectly bear their pro rata share of the
expenses of the Underlying Funds. Operating expenses directly attributable to a
class of shares are charged to the operations of that class of shares. Expenses
of each Portfolio 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.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
WM Advisors serves as investment advisor to the Trust. As such, WM Advisors
provides its proprietary asset allocation services to the Portfolios, formulates
the Portfolios' investment policies, analyzes economic and market trends,
exercises investment discretion over the assets of the Portfolios and monitors
the allocation of each Portfolio's assets and each Portfolio's performance. For
its investment advisory services to the Portfolios, WM Advisors is entitled to a
monthly fee at an annual rate of 0.10% of each Portfolio's average daily net
assets. The Advisor has voluntarily waived $9,698 of its advisory fees for the
Conservative Balanced Portfolio for the six months ended June 30, 2003.
WM Shareholder Services, Inc. (the "Administrator"), a wholly-owned subsidiary
of Washington Mutual, serves as administrator to each of the Portfolios. For its
administrative services to the Portfolios, the Administrator is entitled to a
monthly fee at an annual rate of 0.15% of each Portfolio's average daily net
assets.
Custodian fees for certain Portfolios have been reduced by credits allowed by
the custodian for uninvested cash balances. The Portfolios could have invested
this cash in income producing investments. Fees reduced by credits allowed by
the custodian for the six months ended June 30, 2003 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 Trust for serving as an officer or Trustee of the Trust.
The Trust, together with other mutual funds advised by WM Advisors, pays each
Trustee who is not an officer or employee of Washington Mutual or its
subsidiaries, a per annum retainer plus attendance fees for each meeting at
which they are present. The Lead Trustee, Committee Chairs and Committee Members
receive additional remuneration for these services to the Trust. Trustees are
also reimbursed for travel and out-of-pocket expenses. Each Trustee serves in
the same capacity for all 40 funds within the WM Group of Funds.
14
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
5. DISTRIBUTION PLAN
Each of the Portfolios has adopted a distribution plan, pursuant to Rule 12b-1
under the 1940 Act, applicable to the Class 2 shares of the Portfolios (a "Rule
12b-1 Plan"). Under the Rule 12b-1 Plan, WM Funds Distributor, Inc. (the
"Distributor") may receive a fee at an annual rate of 0.25% of the average daily
net assets attributable to Class 2 shares. This fee 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 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
Trust, as defined in the 1940 Act, and who have no direct or indirect financial
interest in the operation of the distribution plan or any agreements related to
the plan.
6. PURCHASES AND SALES OF INVESTMENTS
The aggregate cost of purchases and proceeds from sales of shares of the
Underlying Funds for the six months ended June 30, 2003, are as follows:
NAME OF PORTFOLIO PURCHASES SALES
- ----------------- --------- -----
Flexible Income Portfolio .......... $20,602,600 $ 5,226,000
Conservative Balanced Portfolio..... 6,601,671 1,734,000
Balanced Portfolio ................. 44,533,233 24,257,300
Conservative Growth Portfolio ...... 25,041,827 25,854,900
Strategic Growth Portfolio ......... 10,649,219 6,739,000
At June 30, 2003, aggregate gross unrealized appreciation for all Underlying
Funds in which there was an excess of value over tax cost and aggregate gross
unrealized depreciation for all Underlying Funds in which there was an excess of
tax cost over value are as follows:
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF PORTFOLIO APPRECIATION DEPRECIATION
- ----------------- ------------ ------------
Flexible Income Portfolio .......... $ 7,727,935 $ 602,828
Conservative Balanced Portfolio..... 1,181,271 247,856
Balanced Portfolio ................. 19,026,596 28,930,188
Conservative Growth Portfolio ...... 10,561,553 56,690,148
Strategic Growth Portfolio ......... 2,863,785 22,582,907
7. RISK FACTORS OF THE PORTFOLIOS
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and tax results that would not be present in a direct
investment in the Underlying Funds. For example, under certain circumstances, an
Underlying Fund may determine to make payment of a redemption request by a
Portfolio wholly or partly by a distribution in kind of securities from its
portfolio, instead of cash, in accordance with the rules of the Securities and
Exchange Commission. In such cases, the Portfolios may hold securities
distributed by an Underlying Fund until the Advisor determines that it is
appropriate to dispose of such securities.
Certain Underlying Funds may invest a portion of their assets in foreign
securities; enter into forward foreign currency transactions; lend their
portfolio securities; enter into stock index, interest rate and currency futures
contracts, and options on such contracts; enter into interest rate swaps or
purchase or sell interest rate caps or floors; 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 enter into "delayed-delivery" transactions; and
enter into various other investment practices each with inherent risks. The REIT
Fund could be adversely impacted by economic trends within the real estate
industry. The West Coast Equity Fund could be adversely impacted by economic
trends within the West Coast region.
The officers and Trustees, Advisor, Distributor and Transfer Agent of the
Portfolios serve in the same capacity for the Underlying Funds. Conflicts may
arise as these persons and companies seek to fulfill their fiduciary
responsibilities to both the Portfolios and the Underlying Funds.
15
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
From time to time, one or more of the Underlying Funds used for investment by a
Portfolio may experience relatively large investments or redemptions due to
reallocations or rebalancings by the Portfolios. These transactions will affect
the Underlying Funds, since the Underlying Funds that experience redemptions as
a result of the reallocations or rebalancings may have to sell portfolio
securities and the Underlying Funds that receive additional cash will have to
invest such cash. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management
to the extent that the Underlying Funds may be required to sell securities or
invest cash at times when they would not otherwise do so. These transactions
could also have tax consequences if sales of securities resulted in gains and
could also increase transaction costs. The Advisor is committed to minimizing
such impact on the Underlying Funds to the extent it is consistent with pursuing
the investment objectives of the Portfolios. The Advisor may nevertheless face
conflicts in fulfilling its responsibilities. The Advisor will, at all times,
monitor the impact on the Underlying Funds of transactions by the Portfolios.
16
This Semi-Annual Report is published for the general information of the
shareholders of the WM Variable Trust. It is authorized for distribution to
prospective investors only when preceded or accompanied by a current prospectus.
Share prices and investment return will vary with market conditions, and the
principal value of an investment when you sell your shares may be more or less
than the original cost.
Shares of the WM Variable Trust are not federally insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board, National Credit Union
Association (NCUA), National Credit Union Share Insurance Fund (NCUSIF), or any
other federal government agency. The purchase of WM Variable Trust shares is not
required for and is not a term of the provision of any banking service or
activity. They are not deposits or obligations of, nor are they guaranteed by,
any bank. These securities are subject to investment risk, including possible
loss of principal amount invested.
Distributed by:
WM Funds Distributor, Inc.
Member NASD
[WM VARIABLE TRUST LOGO] PRSRT STD
WM Funds Distributor, Inc. U.S. Postage
12009 Foundation Place, Suite 350 PAID
Gold River, CA 95670 LOS ANGELES, CA
PERMIT #30835
[RECYCLE LOGO]
Printed on recycled paper
VTSAMSAR (8/28/03)
[WM VARIABLE TRUST LOGO]
WM VARIABLE TRUST
- Equity Funds
Common sense. Uncommon solutions.
[1st Photo: Valley with trees in the early
morning fog.]
[2nd Photo: Bridge leading into a forest of tall
trees - body of water in the background.]
SEMI-ANNUAL REPORT
for the period ended
June 30, 2003
DEAR INVESTOR,
During the first half of 2003, we experienced a set of decisive geopolitical
events, as well as equity market gains.(1) The military conflict in Iraq
commenced in March and concluded relatively quickly, brevity that we hope will
inspire a tempering of global tensions. We also saw some encouraging signs of
improvement in economic and market conditions, as well as the passage of the
Jobs and Growth Tax Relief Reconciliation Act of 2003. Equity markets rallied to
conclude the six-month period ended June 30, 2003 as the Standard & Poor's 500
Index gained 11.77%.(2) Corporate earnings also showed some signs of change for
the better, but true revenue-driven profit growth remains somewhat more
difficult for many firms to garner. With these conditions in mind, we feel that
time is still needed before we can declare a full economic recovery.
Corporate bonds, particularly lower-rated issues, were among the strongest
performing major asset classes during the period. Short-term interest rates
continued their slide to 45-year lows, while Treasury yields dropped slightly
during the period. These factors helped to boost the performance of bond
investments, where prices generally move in the opposite direction of yields.
Although stocks generated strong gains in the second quarter of 2003, bonds
outperformed stocks in each of the past three years, averaging more than 10% per
year for the three years ended June 30, 2003. Conversely, stocks declined by an
average of more than 11% per year over the same time period.(3)
As a result of positive bond market performance, bond fund investments were
significantly more popular than equity funds in the first quarter, as measured
by cash inflows. With the rebound in equity markets in the second quarter, stock
fund asset flows gained momentum, reversing the prior trend.(4) These swings
lead us to caution investors to be aware of the pitfalls associated with chasing
short-term past performance. Assets that have shown the best results in a
certain period may not necessarily repeat this strong performance in the next.
For this reason, we have always recommended a strategy that utilizes
diversification and asset allocation to help protect investor assets through a
variety of market conditions. We also suggest that investors regularly elicit
the expertise of a financial advisor. With the guidance of these investment
professionals, investors can take the actions necessary to keep their investment
portfolios aligned with their goals regardless of market fluctuations. To
provide additional opportunities for diversification, we introduced the WM VT
REIT Fund as an underlying investment within the WM VT Strategic Asset
Management (SAM) Portfolios in May. The Fund invests primarily in real estate
investment trust (REIT) securities and seeks to take advantage of their
dividend-producing potential. We believe that the WM VT REIT Fund adds depth and
breadth to the overall Fund family and that it has the capability of enhancing
risk management opportunities available through the SAM Portfolios.
At the WM Group of Funds, our focus on risk management has remained in place
throughout the past three years of significantly volatile equity market
performance. It is a fundamental aspect of our investment philosophy, and we
will continue to stress this approach as economic conditions and equity markets
change. Our firm and our investment products have evolved over the years, and
yet our commitment to a risk management discipline remains at the core of the
investment options we offer.
As we look toward the second half of our fiscal year, we are unwavering in our
belief that the strict investment discipline that has guided us for more than 60
years is the right course through the current market uncertainty. We thank you
for your continued confidence and trust in the WM Variable Trust Funds.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
(1) As measured by the Standard & Poor's 500 Index.
(2) Source: Ibbotson Associates. Index performance information represents total
return from January 1, 2003 through June 30, 2003 and includes the
reinvestment of dividends and capital gains.
(3) Source: Ibbotson Associates. Stocks are measured by the S&P 500 Index.
Bonds are measured by the Lehman Brothers Aggregate Bond Index. Index
performance information represents average annual total returns from
June 30, 2000 through June 30, 2003 and includes the reinvestment of
dividends and capital gains.
(4) Source: AMG Data Services, Wall Street Journal, July 7, 2003.
Note: Indices are unmanaged, and an investment cannot be made directly in an
index.
1
STATEMENTS of ASSETS and LIABILITIES
WM VARIABLE TRUST
JUNE 30, 2003 (UNAUDITED)
EQUITY MID CAP SMALL CAP
INCOME STOCK STOCK
FUND FUND FUND
-------------- -------------- --------------
ASSETS:
Investments, at value (a) .................................. $ 128,306,983 $ 68,178,592 $ 61,049,602
Cash ....................................................... 579 986 655
Cash held as collateral for securities loaned .............. 10,213,960 4,026,000 8,441,088
Dividends and/or interest receivable ....................... 336,702 45,028 19,145
Receivable for Fund shares sold ............................ 54,044 13,244 38,582
Receivable for investment securities sold .................. -- 520,483 793,672
Prepaid expenses ........................................... 1,781 974 649
-------------- -------------- --------------
Total Assets ........................................... 138,914,049 72,785,307 70,343,393
-------------- -------------- --------------
LIABILITIES:
Payable upon return of securities loaned ................... 10,213,960 4,026,000 8,441,088
Payable for Fund shares redeemed ........................... -- 31,355 12,295
Payable for investment securities purchased ................ 649,091 289,483 945,564
Investment advisory fee payable ............................ 65,858 42,315 44,740
Distribution fees payable .................................. 1,606 489 301
Accrued legal and audit fees ............................... 17,589 14,331 17,228
Accrued expenses and other payables ........................ 20,216 11,245 6,081
-------------- -------------- --------------
Total Liabilities ...................................... 10,968,320 4,415,218 9,467,297
-------------- -------------- --------------
NET ASSETS ................................................. $ 127,945,729 $ 68,370,089 $ 60,876,096
============== ============== ==============
(a) Investments, at cost ................................... $ 127,148,568 $ 55,234,022 $ 72,654,444
============== ============== ==============
See Notes to Financial Statements.
2
STATEMENTS of ASSETS and LIABILITIES (continued)
WM VARIABLE TRUST
JUNE 30, 2003 (UNAUDITED)
EQUITY MID CAP SMALL CAP
INCOME STOCK STOCK
FUND FUND FUND
-------------- -------------- --------------
NET ASSETS CONSIST OF:
Undistributed net investment income/
(accumulated net investment loss) ...................... $ 1,671,763 $ 138,545 $ (29,278)
Accumulated net realized loss
on investment transactions ............................. (1,503,204) (2,085,652) (29,946,958)
Net unrealized appreciation/(depreciation)
of investments ......................................... 1,158,415 12,944,570 (11,604,842)
Paid-in capital ............................................ 126,618,755 57,372,626 102,457,174
-------------- -------------- --------------
Total Net Assets ....................................... $ 127,945,729 $ 68,370,089 $ 60,876,096
============== ============== ==============
NET ASSETS:
Class 1 Shares ............................................. $ 119,795,951 $ 65,860,237 $ 59,418,122
============== ============== ==============
Class 2 Shares ............................................. $ 8,149,778 $ 2,509,852 $ 1,457,974
============== ============== ==============
SHARES OUTSTANDING:
Class 1 Shares ............................................. 9,992,779 5,268,251 8,564,853
============== ============== ==============
Class 2 Shares ............................................. 681,595 201,260 211,265
============== ============== ==============
CLASS 1 SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding ............................................ $ 11.99 $ 12.50 $ 6.94
============== ============== ==============
CLASS 2 SHARES:
Net asset value, offering and redemption
price per share of beneficial interest
outstanding ............................................ $ 11.96 $ 12.47 $ 6.90
============== ============== ==============
See Notes to Financial Statements.
3
STATEMENTS of OPERATIONS
WM VARIABLE TRUST
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
EQUITY MID CAP SMALL CAP
INCOME STOCK STOCK
FUND FUND FUND
-------------- -------------- --------------
INVESTMENT INCOME:
Dividends .................................................. $ 1,564,061 $ 380,669 $ 124,129
Interest ................................................... 535,378 26,338 4,421
Foreign withholding taxes .................................. (10,578) -- (783)
Securities lending income .................................. 9,072 4,748 81,713
-------------- -------------- --------------
Total investment income ............................. 2,097,933 411,755 209,480
-------------- -------------- --------------
EXPENSES:
Investment advisory fee .................................... 371,312 239,835 209,672
Custodian fees ............................................. 4,579 3,828 7,634
Legal and audit fees ....................................... 18,933 14,598 17,123
Other ...................................................... 18,720 9,234 2,957
Class 2 Shares distribution fees ........................... 8,623 2,649 1,473
-------------- -------------- --------------
Total expenses ...................................... 422,167 270,144 238,859
Fees reduced by custodian credits .......................... (105) (117) (101)
-------------- -------------- --------------
Net expenses ........................................ 422,062 270,027 238,758
-------------- -------------- --------------
NET INVESTMENT INCOME/(LOSS) 1,675,871 141,728 (29,278)
-------------- -------------- --------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized loss on
investment transactions ................................ (1,238,967) (641,636) (14,242,358)
Net change in unrealized appreciation/
(depreciation) of investments .......................... 13,462,580 6,157,371 27,137,728
-------------- -------------- --------------
Net realized and unrealized gain
on investments ......................................... 12,223,613 5,515,735 12,895,370
-------------- -------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 13,899,484 $ 5,657,463 $ 12,866,092
============== ============== ==============
See Notes to Financial Statements.
4
STATEMENTS of CHANGES in NET assets
WM VARIABLE TRUST
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
EQUITY MID CAP SMALL CAP
INCOME STOCK STOCK
FUND FUND FUND
-------------- -------------- --------------
Net investment income/(loss) ............................... $ 1,675,871 $ 141,728 $ (29,278)
Net realized loss on investment
transactions ........................................... (1,238,967) (641,636) (14,242,358)
Net change in unrealized appreciation/
(depreciation) of investments .......................... 13,462,580 6,157,371 27,137,728
-------------- -------------- --------------
Net increase in net assets
resulting from operations .............................. 13,899,484 5,657,463 12,866,092
Distributions to shareholders from:
Net investment income:
Class 1 Shares ..................................... (3,032,178) (209,369) --
Class 2 Shares ..................................... (196,711) (4,334) --
Net realized gains on investments:
Class 1 Shares ..................................... (550,427) -- --
Class 2 Shares ..................................... (37,375) -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class 1 Shares ..................................... (1,987,250) (2,502,354) 7,375,832
Class 2 Shares ..................................... 1,086,224 347,173 89,916
-------------- -------------- --------------
Net increase in net assets ................................. 9,181,767 3,288,579 20,331,840
NET ASSETS:
Beginning of period ........................................ 118,763,962 65,081,510 40,544,256
-------------- -------------- --------------
End of period .............................................. $ 127,945,729 $ 68,370,089 $ 60,876,096
============== ============== ==============
Undistributed net investment income/
(accumulated net investment loss)
at end of period ....................................... $ 1,671,763 $ 138,545 $ (29,278)
============== ============== ==============
See Notes to Financial Statements.
5
STATEMENTS of CHANGES in NET assets (continued)
WM VARIABLE TRUST
FOR THE YEAR ENDED DECEMBER 31, 2002
EQUITY MID CAP SMALL CAP
INCOME STOCK STOCK
FUND FUND FUND
-------------- -------------- --------------
Net investment income/(loss) ............................... $ 3,426,660 $ 220,738 $ (156,963)
Net realized gain/(loss) on investment transactions ........ 129,512 (939,495) (13,535,362)
Net change in unrealized appreciation/(depreciation)
of investments ......................................... (20,096,387) (6,934,878) (20,656,458)
-------------- -------------- --------------
Net decrease in net assets
resulting from operations .............................. (16,540,215) (7,653,635) (34,348,783)
Distributions to shareholders from:
Net investment income:
Class 1 Shares ..................................... (2,386,136) (142,737) --
Class 2 Shares ..................................... (79,496) (2,510) --
Net realized gains on investments:
Class 1 Shares ..................................... (228,156) (1,640,257) (3,782,168)
Class 2 Shares ..................................... (7,632) (34,173) (74,473)
Net increase in net assets from
Fund share transactions:
Class 1 Shares ..................................... 32,939,549 415,163 3,781,632
Class 2 Shares ..................................... 6,425,466 1,483,526 1,161,205
-------------- -------------- --------------
Net increase/(decrease) in net assets ...................... 20,123,380 (7,574,623) (33,262,587)
NET ASSETS:
Beginning of year .......................................... 98,640,582 72,656,133 73,806,843
-------------- -------------- --------------
End of year ................................................ $ 118,763,962 $ 65,081,510 $ 40,544,256
============== ============== ==============
Undistributed net investment income at end of year ......... $ 3,224,781 $ 210,520 $ --
============== ============== ==============
See Notes to Financial Statements.
6
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM VARIABLE TRUST
EQUITY INCOME FUND MID CAP STOCK FUND SMALL CAP STOCK FUND
---------------------------- --------------------------- ---------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
06/30/03 YEAR ENDED 06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
------------ ------------ ------------ ------------ ------------ ------------
AMOUNT
CLASS 1
Sold ................................ $ 7,110,328 $ 39,712,894 $ 3,142,021 $ 8,084,591 $ 9,899,971 $ 7,657,820
Issued as reinvestment of dividends.. 3,582,605 2,614,292 209,369 1,782,994 -- 3,782,168
Redeemed............................. (12,680,183) (9,387,637) (5,853,744) (9,452,422) (2,524,139) (7,658,356)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease).............. $ (1,987,250) $ 32,939,549 $ (2,502,354) $ 415,163 $ 7,375,832 $ 3,781,632
============ ============ ============ ============ ============ ============
CLASS 2
Sold ................................ $ 1,195,683 $ 6,869,265 $ 433,652 $ 1,621,992 $ 164,410 $ 1,203,215
Issued as reinvestment of dividends.. 234,086 87,128 4,334 36,683 -- 74,473
Redeemed ............................ (343,545) (530,927) (90,813) (175,149) (74,494) (116,483)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ........................ $ 1,086,224 $ 6,425,466 $ 347,173 $ 1,483,526 $ 89,916 $ 1,161,205
============ ============ ============ ============ ============ ============
SHARES
CLASS 1
Sold ................................ 634,067 3,208,368 270,840 685,991 1,821,797 1,253,887
Issued as reinvestment of dividends.. 294,622 215,879 16,564 139,405 -- 602,256
Redeemed ............................ (1,132,928) (841,306) (514,356) (809,887) (445,083) (1,120,035)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) ............. (204,239) 2,582,941 (226,952) 15,509 1,376,714 736,108
============ ============ ============ ============ ============ ============
CLASS 2
Sold ................................ 106,012 576,668 37,456 132,529 28,132 162,957
Issued as reinvestment of dividends.. 19,298 7,201 344 2,873 -- 11,918
Redeemed ............................ (31,300) (47,432) (7,813) (15,020) (12,108) (18,308)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ........................ 94,010 536,437 29,987 120,382 16,024 156,567
============ ============ ============ ============ ============ ============
See Notes to Financial Statements.
7
FINANCIAL Highlights
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------- ----------------------------------------------
NET REALIZED DISTRIBUTIONS
NET ASSET VALUE, AND UNREALIZED TOTAL FROM DIVIDENDS FROM FROM
BEGINNING OF NET INVESTMENT GAIN/(LOSS) ON INVESTMENT NET INVESTMENT NET REALIZED TOTAL
PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS
---------------- -------------- --------------- ---------- -------------- ------------- -------------
EQUITY INCOME FUND
CLASS 1
06/30/03 (unaudited) $ 11.01 $ 0.16 (6) $ 1.19 $ 1.35 $ (0.31) $ (0.06) $ (0.37)
12/31/02 12.87 0.36 (6) (1.95) (1.59) (0.25) (0.02) (0.27)
12/31/01 12.11 0.42 (6) 0.54 0.96 (0.12) (0.08) (0.20)
12/31/00 10.50 0.36 (6) 1.42 1.78 (0.17) -- (0.17)
12/31/99 10.27 0.33 (6) (0.07) (8) 0.26 (0.03) -- (0.03)
12/31/98(3) 10.00 0.16 (6) 0.14 0.30 (0.03) -- (0.03)
CLASS 2
06/30/03 (unaudited) 10.99 0.15 (6) 1.18 1.33 (0.30) (0.06) (0.36)
12/31/02 12.87 0.32 (6) (1.93) (1.61) (0.25) (0.02) (0.27)
12/31/01(4) 12.64 0.22 (6) 0.21 0.43 (0.12) (0.08) (0.20)
MID CAP STOCK FUND
CLASS 1
06/30/03 (unaudited) $ 11.49 $ 0.03 (6) $ 1.02 $ 1.05 $ (0.04) $ -- $ (0.04)
12/31/02 13.14 0.04 (6) (1.36) (1.32) (0.03) (0.30) (0.33)
12/31/01 11.74 0.03 (6) 1.38 1.41 (0.01) -- (0.01)
12/31/00(5) 10.00 0.01 (6) 1.73 1.74 -- -- --
CLASS 2
06/30/03 (unaudited) 11.46 0.01 (6) 1.02 1.03 (0.02) -- (0.02)
12/31/02 13.13 0.01 (6) (1.36) (1.35) (0.02) (0.30) (0.32)
12/31/01(4) 12.35 (0.00)(6)(7) 0.79 0.79 (0.01) -- (0.01)
SMALL CAP STOCK FUND
CLASS 1
06/30/03 (unaudited) $ 5.49 $ (0.00)(7) $ 1.45 $ 1.45 $ -- $ -- $ --
12/31/02 11.37 (0.02)(6) (5.27) (5.29) -- (0.59) (0.59)
12/31/01 16.03 (0.06)(6) (1.69) (1.75) -- (2.91) (2.91)
12/31/00 19.13 (0.10) (1.65) (1.75) -- (1.35) (1.35)
12/31/99 14.59 (0.10)(6) 8.07 7.97 -- (3.43) (3.43)
12/31/98 15.63 (0.07) 1.21 1.14 -- (2.18) (2.18)
CLASS 2
06/30/03 (unaudited) 5.47 (0.01) 1.44 1.43 -- -- --
12/31/02 11.36 (0.03)(6) (5.27) (5.30) -- (0.59) (0.59)
12/31/01(4) 14.41 (0.05)(6) (0.09) (0.14) -- (2.91) (2.91)
NET ASSET VALUE,
END OF PERIOD
----------------
EQUITY INCOME FUND
CLASS 1
06/30/03 (unaudited) $ 11.99
12/31/02 11.01
12/31/01 12.87
12/31/00 12.11
12/31/99 10.50
12/31/98(3) 10.27
CLASS 2
06/30/03 (unaudited) 11.96
12/31/02 10.99
12/31/01(4) 12.87
MID CAP STOCK FUND
CLASS 1
06/30/03 (unaudited) $ 12.50
12/31/02 11.49
12/31/01 13.14
12/31/00(5) 11.74
CLASS 2
06/30/03 (unaudited) 12.47
12/31/02 11.46
12/31/01(4) 13.13
SMALL CAP STOCK FUND
CLASS 1
06/30/03 (unaudited) $ 6.94
12/31/02 5.49
12/31/01 11.37
12/31/00 16.03
12/31/99 19.13
12/31/98 14.59
CLASS 2
06/30/03 (unaudited) 6.90
12/31/02 5.47
12/31/01(4) 11.36
See Notes to Financial Statements.
8
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE
NET ASSETS WITHOUT
FEE WAIVERS, EXPENSES
REIMBURSED AND/OR FEES
NET ASSETS, RATIO OF RATIO OF NET REDUCED BY CREDITS
END OF PERIOD OPERATING EXPENSES INVESTMENT INCOME/(LOSS) TO PORTFOLIO ALLOWED BY THE
TOTAL RETURN(1) (IN 000'S) TO AVERAGE NET ASSETS AVERAGE NET ASSETS TURNOVER RATE CUSTODIAN(2)
- ---------------- ------------- --------------------- --------------------------- ------------- ----------------------
12.22% $119,796 0.70%(9) 2.92%(9) 13% 0.70%(9)
(12.51)% 112,304 0.70% 3.04% 16% 0.70%
7.92% 97,982 0.70% 3.29% 15% 0.70%
17.19% 46,744 0.98% 3.31% 40% 0.99%
2.49% 11,797 1.17% 3.22% 25% 1.19%
3.02% 2,586 1.50%(9) 2.26%(9) 28% 2.49%(9)
12.03% 8,150 0.95%(9) 2.67%(9) 13% 0.95%(9)
(12.67)% 6,460 0.95% 2.79% 16% 0.95%
3.40% 658 0.94%(9) 3.05%(9) 15% 0.94%(9)
9.13% $ 65,860 0.84%(9) 0.45%(9) 18% 0.84%(9)
(10.35)% 63,119 0.84% 0.32% 28% 0.84%
11.99% 71,988 0.82% 0.21% 30% 0.82%
17.40% 56,717 1.04%(9) 0.14%(9) 13% 1.04%(9)
9.00% 2,510 1.09%(9) 0.20%(9) 18% 1.09%(9)
(10.54)% 1,962 1.09% 0.07% 28% 1.09%
6.38% 668 1.07%(9) (0.04)%(9) 30% 1.07%(9)
26.41% $ 59,418 0.99%(9) (0.12)%(9) 22% 0.99%(9)
(47.15)% 39,476 1.00% (0.31)% 29% 1.00%
(12.73)% 73,367 0.95% (0.44)% 46% 0.95%
(10.58)% 82,288 1.11% (0.61)% 49% 1.11%
71.09% 53,616 1.19% (0.75)% 52% 1.19%
8.09% 44,380 1.19% (0.48)% 108% 1.20%
26.14% 1,458 1.24%(9) (0.37)%(9) 22% 1.24%(9)
(47.28)% 1,068 1.25% (0.56)% 29% 1.25%
(3.00)% 440 1.20%(9) (0.69)%(9) 46% 1.20%(9)
See Notes to Financial Statements.
9
FINANCIAL Highlights
NOTES TO FINANCIAL HIGHLIGHTS
(1) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(3) The Equity Income Fund commenced operations on April 28, 1998.
(4) All Funds commenced selling Class 2 shares on May 1, 2001.
(5) The Mid Cap Stock Fund commenced operations on May 1, 2000.
(6) Per share numbers have been calculated using the average shares method.
(7) Amount represents less than $0.01 per share.
(8) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
(9) Annualized.
See Notes to Financial Statements.
10
PORTFOLIO of INVESTMENTS
EQUITY INCOME FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS - 79.1%
CONSUMER DISCRETIONARY - 9.9%
AUTOMOBILES & COMPONENTS - 2.6%
25,200 General Motors Corporation ............................. $ 907,200
36,000 Magna International Inc., Class A ...................... 2,421,720
-------------
3,328,920
-------------
CONSUMER DURABLES & APPAREL - 2.5%
35,000 D.R. Horton, Inc. ...................................... 983,500
45,500 Mattel, Inc. ........................................... 860,860
26,000 Nike Inc., Class B** ................................... 1,390,740
-------------
3,235,100
-------------
HOTELS, RESTAURANTS & LEISURE - 4.0%
51,000 Carnival Corporation** ................................. 1,658,010
50,000 Mandalay Resort Group .................................. 1,592,500
82,500 McDonald's Corporation ................................. 1,819,950
-------------
5,070,460
-------------
RETAILING - 0.8%
43,500 May Department Stores Company** ........................ 968,310
-------------
Total Consumer Discretionary ........................... 12,602,790
-------------
CONSUMER STAPLES - 7.1%
FOOD & STAPLES RETAILING - 3.4%
82,000 Supervalu Inc. ......................................... 1,748,240
87,200 Wal-Mart de Mexico SA de CV,ADR ........................ 2,583,300
-------------
4,331,540
-------------
FOOD, BEVERAGE & TOBACCO - 3.0%
35,000 Altria Group, Inc. ..................................... 1,590,400
41,500 ConAgra Foods, Inc. .................................... 979,400
18,000 Hershey Foods Corporation .............................. 1,253,880
-------------
3,823,680
-------------
HOUSEHOLD & PERSONAL PRODUCTS - 0.7%
10,500 Procter & Gamble Company ............................... 936,390
-------------
Total Consumer Staples ................................. 9,091,610
-------------
ENERGY - 5.7%
35,000 BP PLC, Sponsored ADR .................................. 1,470,700
16,742 ChevronTexaco Corporation .............................. 1,208,772
26,480 ConocoPhillips Company ................................. 1,451,104
27,100 Royal Dutch Petroleum Company (F) ...................... 1,263,402
21,500 Schlumberger Ltd. ...................................... 1,022,755
23,697 Valero Energy Corporation .............................. 860,912
-------------
Total Energy ........................................... 7,277,645
-------------
FINANCIALS - 20.3%
BANKS - 5.9%
30,700 Bank of America Corporation ............................ 2,426,221
42,000 FleetBoston Financial Corporation ...................... 1,247,820
25,400 PNC Financial Services Group, Inc. ..................... 1,239,774
39,700 U.S. Bancorp ........................................... 972,650
33,000 Wells Fargo & Company .................................. 1,663,200
-------------
7,549,665
-------------
DIVERSIFIED FINANCIALS - 9.6%
69,500 Citigroup Inc. ......................................... 2,974,600
37,000 Fannie Mae ............................................. 2,495,280
32,000 Franklin Resources, Inc. ............................... 1,250,240
72,000 J.P. Morgan Chase & Company ............................ 2,460,960
39,500 Morgan Stanley Dean Witter & Company ................... 1,688,625
37,600 T. Rowe Price Group, Inc. .............................. 1,419,400
-------------
12,289,105
-------------
INSURANCE - 4.8%
58,000 ACE Ltd. ............................................... 1,988,820
36,000 AFLAC Inc. ............................................. 1,107,000
29,500 Allstate Corporation ................................... 1,051,675
24,000 XL Capital Ltd., Class A ............................... 1,992,000
-------------
6,139,495
-------------
Total Financials ....................................... 25,978,265
-------------
HEALTH CARE - 8.3%
HEALTH CARE EQUIPMENT & SERVICES - 1.3%
43,500 Becton, Dickinson & Company ............................ 1,689,975
-------------
PHARMACEUTICALS & BIOTECHNOLOGY - 7.0%
34,000 Abbott Laboratories .................................... 1,487,840
65,000 Bristol-Myers Squibb Company ........................... 1,764,750
20,000 Johnson & Johnson ...................................... 1,034,000
23,500 Merck & Company, Inc. .................................. 1,422,925
64,000 Mylan Laboratories Inc. ................................ 2,225,280
51,200 Schering-Plough Corporation ............................ 952,320
-------------
8,887,115
-------------
Total Health Care ...................................... 10,577,090
-------------
INDUSTRIALS - 9.5%
CAPITAL GOODS - 9.5%
48,500 Boeing Company ......................................... 1,664,520
18,000 Emerson Electric Company ............................... 919,800
28,800 General Dynamics Corporation ........................... 2,088,000
69,000 General Electric Company ............................... 1,978,920
43,000 Genuine Parts Company .................................. 1,376,430
49,000 Honeywell International Inc. ........................... 1,315,650
149,700 Tyco International Ltd.** .............................. 2,841,306
-------------
Total Industrials ...................................... 12,184,626
-------------
INFORMATION TECHNOLOGY - 7.2%
COMMUNICATIONS EQUIPMENT - 0.9%
124,000 Motorola, Inc. ......................................... 1,169,320
-------------
See Notes to Financial Statements.
11
PORTFOLIO of INVESTMENTS (Continued)
EQUITY INCOME FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
COMPUTERS & PERIPHERALS - 2.0%
55,300 Hewlett-Packard Company ................................ $ 1,177,890
16,000 International Business Machines Corporation ............ 1,320,000
-------------
2,497,890
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.4%
72,000 Diebold, Inc. .......................................... 3,114,000
-------------
IT SERVICES - 0.7%
44,500 Electronic Data Systems Corporation .................... 954,525
-------------
SOFTWARE - 1.2%
67,000 Computer Associates International, Inc. ................ 1,492,760
-------------
Total Information Technology ........................... 9,228,495
-------------
MATERIALS - 1.9%
29,200 Alcoa Inc. ............................................. 744,600
25,000 Dow Chemical Company ................................... 774,000
11,700 E.I. Du Pont de Nemours & Company ...................... 487,188
9,500 PPG Industries, Inc. ................................... 482,030
-------------
Total Materials ........................................ 2,487,818
-------------
TELECOMMUNICATION SERVICES - 3.9%
44,000 Alltel Corporation ..................................... 2,121,680
3,000 Metromedia Fiber Network, Inc., Class A+ ............... 51
36,800 SBC Communications Inc. ................................ 940,240
49,500 Verizon Communications Inc. ............................ 1,952,775
-------------
Total Telecommunication Services ....................... 5,014,746
-------------
UTILITIES - 5.3%
80,000 Duke Energy Corporation ................................ 1,596,000
102,000 El Paso Corporation .................................... 824,160
30,000 FPL Group, Inc. ........................................ 2,005,500
36,500 Pinnacle West Capital Corporation ...................... 1,366,925
31,000 Southern Company ....................................... 965,960
-------------
Total Utilities ........................................ 6,758,545
-------------
Total Common Stocks
(Cost $102,354,146) .................................. 101,201,630
-------------
REAL ESTATE INVESTMENT TRUSTS - 8.7%
35,300 AMB Property Corporation ............................... 994,401
16,400 Apartment Investment & Management Company, Class A ..... 567,440
12,900 Arden Realty, Inc. ..................................... 334,755
7,600 CarrAmerica Realty Corporation ......................... 211,356
18,500 Corporate Office Properties Trust ...................... 313,205
8,000 Developers Diversified Realty Corporation .............. 227,520
12,200 Duke Realty Corporation ................................ 336,110
36,000 Equity Office Properties Trust ......................... 972,360
39,500 Equity Residential ..................................... 1,025,025
17,000 General Growth Properties, Inc. ........................ 1,061,480
20,100 Health Care Property Investors, Inc. ................... 851,235
18,000 Hospitality Properties Trust ........................... 562,500
6,500 Kimco Realty Corporation ............................... 246,350
14,000 Macerich Company ....................................... 491,820
28,500 Plum Creek Timber Company, Inc. ........................ 739,575
15,200 ProLogis ............................................... 414,960
22,800 Shurgard Storage Centers, Inc., Class A ................ 754,224
25,500 Simon Property Group, Inc. ............................. 995,265
-------------
Total Real Estate Investment Trusts
(Cost $9,838,423) .................................... 11,099,581
-------------
PRINCIPAL
AMOUNT
------
CONVERTIBLE SECURITIES - 5.1%
CONVERTIBLE BONDS AND NOTES - 5.1%
$ 600,000 Analog Devices, Inc.,Conv. Sub. Note,
4.750% due 10/01/2005** .............................. 613,500
700,000 LSI Logic Corporation, Conv. Sub. Note,
4.000% due 02/15/2005** .............................. 693,000
1,500,000 Omnicare, Inc., Conv. Sub. Deb.,
5.000% due 12/01/2007** .............................. 1,543,125
850,000 RadiSys Corporation,Conv. Sub. Note,
5.500% due 08/15/2007 ................................ 803,250
1,750,000 TriQuint Semiconductor, Inc., Conv.
Sub. Note,
4.000% due 03/01/2007** .............................. 1,456,875
1,500,000 Vitesse Semiconductor Corporation, Conv.
Sub. Deb.,
4.000% due 03/15/2005** .............................. 1,400,625
-------------
Total Convertible Bonds and Notes
(Cost $5,889,055) .................................... 6,510,375
-------------
SHARES
------
CONVERTIBLE PREFERRED STOCK - 0.0%***
(Cost $57,500)
230 Global Crossing Ltd., Conv. Pfd., (in arrears)
7.000% due 12/31/2049+ ............................... 2
-------------
Total Convertible Securities
(Cost $5,946,555) .................................... 6,510,377
-------------
PRINCIPAL
AMOUNT
------
FIXED INCOME SECURITIES - 3.1%
CORPORATE BONDS AND NOTES - 2.9%
$ 100,000 Aetna Inc., Company Guarantee,
7.125% due 08/15/2006 ................................ 113,483
500,000 Aetna Inc., Sr. Note,
7.875% due 03/01/2011 ................................ 608,544
45,000 Baxter International Inc., Note,
7.125% due 02/01/2007 ................................ 51,765
300,000 CBS Corporation, Sr. Note,
7.150% due 05/20/2005 ................................ 329,463
1,000,000 ERAC USA Finance Company, Note,
7.350% due 06/15/2008++ .............................. 1,171,526
See Notes to Financial Statements.
12
PORTFOLIO of INVESTMENTS (Continued)
EQUITY INCOME FUND
JUNE 30, 2003 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
FIXED INCOME SECURITIES (CONTINUED)
CORPORATE BONDS AND NOTES (CONTINUED)
$ 100,000 Raytheon Company, Sr. Note,
6.150% due 11/01/2008 ................................ $ 113,203
1,000,000 TELUS Corporation, Note,
8.000% due 06/01/2011 ................................ 1,160,000
100,000 Texas-New Mexico Power Company,
Sr. Note,
6.250% due 01/15/2009 ................................ 101,241
-------------
Total Corporate Bonds and Notes
(Cost $3,184,510) .................................... 3,649,225
-------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES - 0.2%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 0.2%
175,912 6.500% due 09/01/2030 .................................. 183,141
101,766 7.000% due 09/01/2030 .................................. 106,745
-------------
Total U.S. Government Agency
Mortgage-Backed Securities
(Cost $268,486) ...................................... 289,886
-------------
COLLATERALIZED MORTGAGE OBLIGATION (CMO) - 0.0%***
(Cost $36,445)
36,209 Federal Home Loan Mortgage Corporation,
Series 1638, Class K,
6.500% due 03/15/2023 ................................ 36,281
-------------
Total Fixed Income Securities
(Cost $3,489,441) .................................... 3,975,392
-------------
SHARES
------
WARRANTS - 0.0%***
(Cost $3)
250 V2 Music Holdings PLC,
Expires 05/07/2008+,++ ............................... 3
-------------
PRINCIPAL
AMOUNT
------
REPURCHASE AGREEMENT - 4.3%
(Cost $5,520,000)
$ 5,520,000 Agreement with Goldman Sachs Group, Inc.,
0.800% dated 06/30/2003, to be repurchased
at $5,520,123 on 07/01/2003, collateralized
by $5,473,061 U.S. Treasury Notes, having
various interest rates and maturities
(Market Value $5,631,590) ............................. $ 5,520,000
-------------
TOTAL INVESTMENTS (Cost $127,148,568*) ......................... 100.3% 128,306,983
OTHER ASSETS AND LIABILITIES (Net) ............................. (0.3) (361,254)
----- -------------
NET ASSETS ..................................................... 100.0% $ 127,945,729
===== =============
- --------------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $9,883,210, representing 7.7% of the total net
assets of the Fund (Collateral Value $10,213,960).
*** Amount represents less than 0.1% of total net assets.
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under Rule 144A
of the Securities Act of 1933.
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
(F) -- Foreign Shares
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
13
PORTFOLIO of INVESTMENTS
MID CAP STOCK FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS - 92.5%
CONSUMER DISCRETIONARY - 16.3%
AUTOMOBILES & COMPONENTS - 0.5%
8,100 Superior Industries International, Inc. ................ $ 337,770
-------------
CONSUMER DURABLES & APPAREL - 6.7%
48,900 Jones Apparel Group, Inc.+ ............................. 1,430,814
79,800 Mattel, Inc. ........................................... 1,509,816
30,200 Nike Inc., Class B** ................................... 1,615,398
-------------
4,556,028
-------------
HOTELS, RESTAURANTS & LEISURE - 5.0%
21,400 Mandalay Resort Group .................................. 681,590
36,500 Papa John's International, Inc.+ ....................... 1,023,825
57,200 Yum! Brands, Inc.+ ..................................... 1,690,832
-------------
3,396,247
-------------
RETAILING - 4.1%
37,800 J.C. Penney Company, Inc.
(Holding Company) .................................... 636,930
16,900 Neiman Marcus Group Inc., Class A+ ..................... 618,540
48,200 Tiffany & Company ...................................... 1,575,176
-------------
2,830,646
-------------
Total Consumer Discretionary ........................... 11,120,691
-------------
CONSUMER STAPLES - 6.2%
FOOD, BEVERAGE & TOBACCO - 3.1%
36,300 Dean Foods Company+ .................................... 1,143,450
13,700 Hershey Foods Corporation .............................. 954,342
-------------
2,097,792
-------------
HOUSEHOLD & PERSONAL PRODUCTS - 3.1%
17,700 Avon Products, Inc. .................................... 1,100,940
30,200 Estee Lauder Companies Inc., Class A ................... 1,012,606
-------------
2,113,546
-------------
Total Consumer Staples ................................. 4,211,338
-------------
ENERGY - 7.4%
43,600 Baker Hughes Inc. ...................................... 1,463,652
12,600 ConocoPhillips Company ................................. 690,480
28,999 Devon Energy Corporation ............................... 1,548,547
17,100 Nabors Industries Ltd.+ ................................ 676,305
22,600 Unocal Corporation ..................................... 648,394
-------------
Total Energy ........................................... 5,027,378
-------------
FINANCIALS - 16.8%
BANKS - 7.0%
43,775 Charter One Financial, Inc. ............................ 1,364,904
37,800 GreenPoint Financial Corporation ....................... 1,925,532
37,800 TCF Financial Corporation .............................. 1,505,952
-------------
4,796,388
-------------
DIVERSIFIED FINANCIALS - 6.5%
39,800 A.G. Edwards, Inc. ..................................... 1,361,160
26,700 Ambac Financial Group, Inc. ............................ 1,768,875
19,100 Countrywide Financial Corporation ...................... 1,328,787
-------------
4,458,822
-------------
INSURANCE - 3.3%
43,125 Fidelity National Financial, Inc. ...................... 1,326,525
34,800 PMI Group, Inc. ........................................ 934,032
-------------
2,260,557
-------------
Total Financials ....................................... 11,515,767
-------------
HEALTH CARE - 14.0%
HEALTH CARE EQUIPMENT & SERVICES - 11.4%
22,600 AmerisourceBergen Corporation** ........................ 1,567,310
80,500 Covance Inc.+ .......................................... 1,457,050
20,100 Express Scripts, Inc., Class A+ ........................ 1,373,232
30,900 Guidant Corporation .................................... 1,371,651
73,102 IMS Health Inc. ........................................ 1,315,105
8,100 WellPoint Health Networks, Inc.+ ....................... 682,830
-------------
7,767,178
-------------
PHARMACEUTICALS & BIOTECHNOLOGY - 2.6%
51,650 Mylan Laboratories Inc. ................................ 1,795,870
-------------
Total Health Care ...................................... 9,563,048
-------------
INDUSTRIALS - 8.8%
CAPITAL GOODS - 6.4%
56,500 Federal Signal Corporation ............................. 992,705
61,300 Lincoln Electric Holdings, Inc. ........................ 1,251,133
18,700 Lockheed Martin Corporation ............................ 889,559
28,900 Teleflex Inc. .......................................... 1,229,695
-------------
4,363,092
-------------
COMMERCIAL SERVICES & SUPPLIES - 2.4%
73,700 Republic Services, Inc.+ ............................... 1,670,779
-------------
Total Industrials ...................................... 6,033,871
-------------
INFORMATION TECHNOLOGY - 14.6%
COMPUTERS & PERIPHERALS - 1.4%
48,800 Electronics for Imaging, Inc.+ ......................... 990,152
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.9%
24,500 Arrow Electronics, Inc.+ ............................... 373,380
21,300 Diebold, Inc. .......................................... 921,225
-------------
1,294,605
-------------
IT SERVICES - 2.6%
101,400 Acxiom Corporation+ .................................... 1,530,126
17,700 Convergys Corporation+ ................................. 283,200
-------------
1,813,326
-------------
See Notes to Financial Statements.
14
PORTFOLIO of INVESTMENTS (continued)
MID CAP STOCK FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.4%
66,250 Microchip Technology Inc. ......................... $ 1,631,738
-----------
SOFTWARE - 6.3%
21,700 Adobe Systems Inc.** .............................. 695,919
74,900 BMC Software Inc.+ ................................ 1,223,117
39,300 PeopleSoft Inc.+ .................................. 691,287
27,100 Synopsys, Inc.+ ................................... 1,676,135
-----------
4,286,458
-----------
Total Information Technology ...................... 10,016,279
-----------
MATERIALS - 1.9%
25,100 Cabot Corporation ................................. 720,370
14,500 Valspar Corporation ............................... 612,190
-----------
Total Materials ................................... 1,332,560
-----------
TELECOMMUNICATION SERVICES - 0.7%
19,500 United States Cellular Corporation+ ............... 496,275
-----------
UTILITIES - 5.8%
22,400 FPL Group, Inc. ................................... 1,497,440
49,800 NiSource Inc. .................................... 946,200
40,100 Pinnacle West Capital Corporation ................. 1,501,745
-----------
Total Utilities ................................... 3,945,385
-----------
Total Common Stocks
(Cost $50,318,022) ............................... 63,262,592
-----------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 7.2%
(Cost $4,916,000)
$ 4,916,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased at
$4,916,109 on 07/01/2003,
collateralized by $4,874,197 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $5,015,379) .......................... $ 4,916,000
-----------
TOTAL INVESTMENTS (Cost $55,234,022*) ...................... 99.7% 68,178,592
OTHER ASSETS AND LIABILITIES (Net) ......................... 0.3 191,497
----- -----------
NET ASSETS ................................................. 100.0% $68,370,089
===== ===========
- ----------------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $3,878,627, representing 5.7% of the total net
assets of the Fund (Collateral Value $4,026,000).
+ Non-income producing security.
See Notes to Financial Statements.
15
PORTFOLIO of INVESTMENTS
SMALL CAP STOCK FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS - 99.8%
CONSUMER DISCRETIONARY - 17.5%
CONSUMER DURABLES & APPAREL - 1.5%
50,500 Cutter & Buck Inc.+ ............................ $ 257,045
41,300 Quiksilver, Inc.+ .............................. 681,037
----------
938,082
----------
HOTELS, RESTAURANTS & LEISURE - 4.1%
173,100 Intrawest Corporation .......................... 2,281,458
37,100 WestCoast Hospitality Corporation+ ............. 187,726
----------
2,469,184
----------
MEDIA - 3.4%
28,200 Getty Images, Inc.+ ............................ 1,164,660
544,700 Sirius Satellite Radio Inc.+** ................. 920,543
----------
2,085,203
----------
RETAILING - 8.5%
62,700 AnnTaylor Stores Corporation+ .................. 1,815,165
113,400 Building Materials Holding Corporation ......... 1,679,454
96,000 West Marine, Inc.+ ............................. 1,680,960
----------
5,175,579
----------
Total Consumer Discretionary .................. 10,668,048
----------
CONSUMER STAPLES - 2.4%
FOOD & STAPLES RETAILING - 2.4%
47,900 United Natural Foods, Inc.+ .................... 1,347,906
2,100 Whole Foods Market, Inc.+ ...................... 99,813
----------
Total Consumer Staples ......................... 1,447,719
----------
ENERGY - 2.3%
27,428 Hanover Compressor Company+ .................... 309,936
74,400 Headwaters Inc.+ ............................... 1,092,936
----------
Total Energy ................................... 1,402,872
----------
FINANCIALS - 8.9%
DIVERSIFIED FINANCIALS - 8.9%
11,200 Affiliated Managers Group, Inc.+ ............... 682,640
85,408 American Capital Strategies Ltd.** ............. 2,130,075
34,400 First Albany Companies Inc. .................... 427,592
73,900 Investors Financial Services Corporation ....... 2,143,839
----------
Total Financials ............................... 5,384,146
----------
HEALTH CARE - 21.4%
HEALTH CARE EQUIPMENT & SERVICES - 3.6%
18,900 Accredo Health, Inc.+ .......................... 412,020
11,000 Affymetrix, Inc.+ .............................. 216,810
77,800 SonoSite, Inc.+ ................................ 1,552,110
----------
2,180,940
----------
PHARMACEUTICALS & BIOTECHNOLOGY - 17.8%
61,100 Antigenics Inc.+ ............................... 703,872
182,700 Corixa Corporation+** .......................... 1,412,271
260,900 Dendreon Corporation+** ........................ 1,549,746
63,600 DUSA Pharmaceuticals, Inc.+ .................... 159,636
194,000 Emisphere Technologies, Inc.+ .................. 698,400
9,400 Incyte Corporation+ ............................ 43,616
32,700 Medicis Pharmaceutical Corporation,
Class A ...................................... 1,854,090
53,400 Myriad Genetics, Inc.+ ......................... 726,774
75,900 Neose Technologies, Inc.+** .................... 759,759
173,100 Pain Therapeutics, Inc.+ ....................... 1,118,226
150,600 Pharmacyclics, Inc.+ ........................... 713,844
93,800 Zymogenetics, Inc.+** .......................... 1,091,832
----------
10,832,066
----------
Total Health Care .............................. 13,013,006
----------
INDUSTRIALS - 7.1%
COMMERCIAL SERVICES & SUPPLIES - 6.0%
154,100 Digimarc Corporation+ .......................... 2,419,370
491,400 Edison Schools Inc.+ ........................... 737,100
107,277 First Consulting Group, Inc.+ .................. 500,984
----------
3,657,454
----------
TRANSPORTATION - 1.1%
19,700 Expeditors International of Washington, Inc. ... 682,408
----------
Total Industrials .............................. 4,339,862
----------
INFORMATION TECHNOLOGY - 38.7% ++
COMPUTERS & PERIPHERALS - 2.8%
44,100 Advanced Digital Information Corporation+ 440,559
15,800 Avid Technology, Inc.+ .......................... 554,106
67,600 Pinnacle Systems, Inc.+ ......................... 723,320
----------
1,717,985
----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5%
47,300 Microvision, Inc.+** ........................... 293,260
----------
INTERNET SOFTWARE & SERVICES - 7.6%
7,800 aQuantive, Inc.+ ............................... 81,900
562,812 Click2learn, Inc.+ ............................. 973,665
757,000 Corillian Corporation+ ......................... 1,286,900
252,200 Interwoven, Inc.+ .............................. 559,884
1,075,000 Intraware, Inc.+ ............................... 1,343,750
15,400 Online Resources Corporation+ .................. 98,098
207,900 Primus Knowledge Solutions, Inc.+ .............. 272,349
----------
4,616,546
----------
IT SERVICES - 4.7%
559,200 Lionbridge Technologies, Inc.+** ............... 2,846,328
----------
See Notes to Financial Statements.
16
PORTFOLIO of INVESTMENTS (continued)
SMALL CAP STOCK FUND
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED)
INFORMATION TECHNOLOGY (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.1%
61,740 Credence Systems Corporation+ .............. $ 522,938
73,820 FEI Company+ ............................... 1,384,863
215,800 Pixelworks, Inc.+ .......................... 1,281,852
32,500 Rudolph Technologies, Inc.+ ................ 518,700
-----------
3,708,353
-----------
SOFTWARE - 17.0%
604,800 BSQUARE Corporation+ ....................... 495,936
73,100 Business Objects SA, Sponsored ADR+ ........ 1,604,545
79,100 E.piphany, Inc.+ ........................... 404,201
239,300 Informatica Corporation+ ................... 1,653,563
26,348 Made2Manage Systems, Inc.+ ................. 147,839
129,342 NetIQ Corporation+ ......................... 1,999,627
235,900 Nuance Communications Inc.+ ................ 1,273,860
767,600 ONYX Software Corporation+ ................. 744,572
112,800 PDF Solutions, Inc.+ ....................... 1,302,840
141,400 ScanSoft, Inc.+ ............................ 767,802
-----------
10,394,785
-----------
Total Information Technology ............... 23,577,257
-----------
TELECOMMUNICATION SERVICES - 1.5%
24,870 Gilat Satellite Networks Ltd.+ ............. 126,588
426,400 Latitude Communications, Inc.+ ............. 793,104
-----------
Total Telecommunication Services ........... 919,692
-----------
Total Common Stocks
(Cost $72,357,444) ........................ 60,752,602
-----------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT - 0.5%
(Cost $297,000)
$ 297,000 Agreement with Goldman Sachs
Group, Inc., 0.800% dated
06/30/2003, to be repurchased at
$297,007 on 07/01/2003,
collateralized by $294,474 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $303,004) ........................... $ 297,000
-----------
TOTAL INVESTMENTS (Cost $72,654,444*) ..................... 100.3% 61,049,602
OTHER ASSETS AND LIABILITIES (Net) ........................ (0.3) (173,506)
NET ASSETS ................................................ 100.0% $60,876,096
===== ===========
- -----------------------
* Aggregate cost for federal tax purposes.
** Some or all of these securities are on loan at June 30, 2003, and have an
aggregate market value of $6,772,431, representing 11.1% of the total net
assets of the Fund (Collateral Value $8,441,088).
+ Non-income producing security.
++ Investments in the Information Technology sector as of June 30, 2003 are
38.7% of the total net assets of the Fund.
See Notes to Financial Statements.
17
NOTES to FINANCIAL statements (unaudited)
WM VARIABLE TRUST
1. ORGANIZATION AND BUSINESS
WM Variable Trust (the "Trust") was organized as a Massachusetts business trust
on January 29, 1993. The Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company.
The Trust consists of 12 funds ("Funds") and 5 portfolios ("Portfolios"). The
following Funds are included in this report: Equity Income, Mid Cap Stock and
Small Cap Stock.
WM Advisors, Inc. (the "Advisor" or "WM Advisors") serves as investment manager
to the Funds. The Advisor is a wholly-owned subsidiary of Washington Mutual,
Inc. ("Washington Mutual"), a publicly-owned financial services company.
The Trust is authorized to issue an unlimited number of shares of beneficial
interest, each without par value. Each Fund may offer two classes of shares:
Class 1 shares and Class 2 shares. These shares are issued and redeemed only in
connection with investments in, and payments under, variable annuity and
variable life insurance contracts (collectively "Variable Insurance Contracts"),
as well as certain qualified retirement plans.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("generally accepted
accounting principles") requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Funds in the
preparation of their financial statements.
PORTFOLIO VALUATION:
Securities 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 close price) are valued at the last sale price on that exchange or, if
there were no sales during the day, at the mean of the current day's bid and
asked prices. Securities traded only on over-the-counter markets (other than the
Nasdaq National Market System and the U.S. Government Securities System) are
valued at the mean of the current bid and asked prices.
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, and 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) are valued
by one or more independent pricing services (each a "Pricing Service") retained
by the Trust. When, in the judgment of a Pricing Service, market quotations for
these securities are readily available, they are valued at the mean between the
quoted bid prices and asked prices. 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 Board of Trustees.
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. The
value of the collateral is at all times at least equal to the total amount of
the repurchase obligation. In the event of counterparty default, the Fund would
seek to use the collateral to offset losses incurred. There is potential loss 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. WM Advisors, acting under the supervision of
the Board of Trustees, reviews the value of the collateral and the
creditworthiness of those banks and broker-dealers with whom each Fund enters
into repurchase agreements.
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 days; and (5) securities,
the disposition of which are restricted under Federal securities laws, excluding
certain Rule 144A securities, as defined below.
18
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST
Illiquid securities generally cannot be sold or disposed of in the ordinary
course of business (within seven days) at approximately the value at which the
Funds have valued the investments. This may have an adverse effect on the Fund's
ability to dispose of particular illiquid securities at fair market value and
may limit the Fund's ability to obtain accurate market quotations for purposes
of valuing the securities and calculating the net asset value of shares of the
Fund. The Funds may also purchase securities that are not registered under the
Securities Act of 1933, as amended (the "Act"), but that can be sold to
qualified institutional buyers in accordance with Rule 144A under the Act ("Rule
144A Securities"). Rule 144A Securities generally may be resold only to other
qualified institutional buyers. If a particular investment in Rule 144A
Securities is not determined to be liquid under the guidelines established by
the Board of Trustees, that investment will be included within a Fund's
limitation on investment in illiquid securities.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date (the date the order to
buy or sell is executed). Realized gains and losses from securities sold are
recorded on the identified cost basis. 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 the 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 Funds are informed of the
ex-dividend date. Each Fund's investment income and realized and unrealized
gains and losses are allocated among the classes of that Fund based upon the
relative average net assets of each class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and distributions of any net capital gains
of the Funds are declared and paid annually.
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,
redesignated distributions and differing characterizations of distributions made
by each Fund.
FEDERAL INCOME TAXES:
It is each Fund's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies by, among other things,
distributing substantially all of its earnings to its shareholders. Therefore,
no federal income tax provision is required.
It is each Fund's policy to meet the diversification requirements of the Code so
that variable annuity and variable life contracts funded by the Trust will not
fail to qualify as annuities and life insurance contracts for tax purposes.
EXPENSES:
General expenses of the Trust are allocated to all the Funds and Portfolios of
the Trust based upon the relative average net assets of each Fund and Portfolio.
Operating expenses directly attributable to a class of shares are charged to the
operation of that class of shares. Expenses of each Fund not directly
attributable to the operation 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.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
WM Advisors serves as investment advisor to the Trust. The Advisor is entitled
to a monthly fee at an annual rate based upon a percentage of daily net assets
of each Fund at the following rates:
FROM $0 FROM $25 FROM $500
TO $25 TO $500 MILLION TO OVER
NAME OF FUND MILLION MILLION $3 BILLION $3 BILLION
- ------------ ------- ------- ---------- ----------
Equity Income Fund....................... 0.625% 0.625% 0.500% 0.500%
Mid Cap Stock Fund....................... 0.750% 0.750% 0.750% 0.700%
Small Cap Stock Fund..................... 0.900% 0.850% 0.750% 0.750%
19
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST
Custodian fees for certain Funds have been reduced by credits allowed by the
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 six months ended June 30, 2003 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 Trust for serving as an officer or Trustee of the Trust.
The Trust, together with other mutual funds advised by WM Advisors, pays each
Trustee who is not an officer or employee of Washington Mutual or its
subsidiaries, a per annum retainer plus attendance fees for each meeting at
which they are present. The Lead Trustee, Committee Chairs and Committee Members
receive additional remuneration for these services to the Trust. Trustees are
also reimbursed for travel and out-of-pocket expenses. Each Trustee serves in
the same capacity for all 40 funds within the WM Group of Funds.
5. DISTRIBUTION PLAN
Each of the Funds has adopted a distribution plan, pursuant to Rule 12b-1 under
the 1940 Act, applicable to Class 2 shares of the Funds (a "Rule 12b-1 Plan").
Under the Rule 12b-1 Plan, WM Funds Distributor, Inc. (the "Distributor") may
receive a fee at an annual rate of 0.25% of the average daily net assets
attributable to Class 2 shares. This fee 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 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
Trust, as defined in the 1940 Act, and who have no direct or indirect financial
interest in the operation of the distribution plan or any agreements related to
the plan.
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 six months ended June 30,
2003, are as follows:
NAME OF FUND PURCHASES SALES
- ------------ --------- -----
Equity Income Fund......................... $14,300,769 $ 14,098,779
Mid Cap Stock Fund......................... 10,800,457 12,333,123
Small Cap Stock Fund....................... 18,078,890 10,469,373
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities, excluding short-term investments, for the six months ended June 30,
2003, are as follows:
NAME OF FUND PURCHASES SALES
- ------------ --------- -----
Equity Income Fund......................... $ -- $ 1,887,042
At June 30, 2003, aggregate gross unrealized appreciation for all securities in
which there was an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
value are as follows:
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF FUND APPRECIATION DEPRECIATION
- ------------ ------------ ------------
Equity Income Fund......................... $12,095,738 $ 10,937,323
Mid Cap Stock Fund......................... 14,663,894 1,719,324
Small Cap Stock Fund....................... 10,729,372 22,334,214
7. LENDING OF SECURITIES
Certain Funds may lend securities to brokers, dealers and other financial
organizations to earn additional income. Each security loan is collateralized
with collateral assets in an amount equal to or greater than the current market
value of the loaned securities. There is a risk of delay in receiving
collateral, 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 June 30, 2003, 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.
20
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST
8. TRANSACTIONS WITH AFFILIATES
At June 30, 2003, the Variable Trust Portfolios hold investments in a number of
the Funds. The figures presented below represent the percentage of shares
outstanding in each of the Underlying Funds owned by the Portfolios:
PORTFOLIOS
---------------------------------------------------------------------------
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
NAME OF FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------ --------- --------- --------- --------- ---------
Equity Income Fund...................... 4.0% 1.3% 30.4% 24.5% 8.4%
Mid Cap Stock Fund...................... 5.9% 1.5% 33.6% 28.8% 14.6%
Small Cap Stock Fund.................... 5.7% 1.3% 31.3% 28.1% 11.9%
9. INDUSTRY AND GEOGRAPHIC CONCENTRATION AND OTHER RISK FACTORS
Certain Funds may invest a portion of their assets in foreign securities;
developing or emerging markets countries; enter into forward foreign currency
transactions; lend their portfolio securities; enter into stock index, interest
rate and currency futures contracts, and options on such contracts; enter into
interest rate swaps or purchase or sell interest rate caps or floors; 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 enter into "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.
21
[WM VARIABLE TRUST LOGO]
WM VARIABLE TRUST
- Strategic Asset Management Portfolios
Common sense. Uncommon solutions.
[1st Photo: Stream with tall brush along the sides
and mountains in the distance.]
[2nd Photo: Photo of bridge over water.]
SEMI-ANNUAL REPORT
for the period ended
June 30, 2003
Dear Investor,
During the first half of 2003, we experienced a set of decisive geopolitical
events, as well as equity market gains.(1) The military conflict in Iraq
commenced in March and concluded relatively quickly, brevity that we hope will
inspire a tempering of global tensions. We also saw some encouraging signs of
improvement in economic and market conditions, as well as the passage of the
Jobs and Growth Tax Relief Reconciliation Act of 2003. Equity markets rallied to
conclude the six-month period ended June 30, 2003 as the Standard & Poor's 500
Index gained 11.77%.(2) Corporate earnings also showed some signs of change for
the better, but true revenue-driven profit growth remains somewhat more
difficult for many firms to garner. With these conditions in mind, we feel that
time is still needed before we can declare a full economic recovery.
Corporate bonds, particularly lower-rated issues, were among the strongest
performing major asset classes during the period. Short-term interest rates
continued their slide to 45-year lows, while Treasury yields dropped slightly
during the period. These factors helped to boost the performance of bond
investments, where prices generally move in the opposite direction of yields.
Although stocks generated strong gains in the second quarter of 2003, bonds
outperformed stocks in each of the past three years, averaging more than 10% per
year for the three years ended June 30, 2003. Conversely, stocks declined by an
average of more than 11% per year over the same time period.(3)
As a result of positive bond market performance, bond fund investments were
significantly more popular than equity funds in the first quarter, as measured
by cash inflows. With the rebound in equity markets in the second quarter, stock
fund asset flows gained momentum, reversing the prior trend.(4) These swings
lead us to caution investors to be aware of the pitfalls associated with chasing
short-term past performance. Assets that have shown the best results in a
certain period may not necessarily repeat this strong performance in the next.
For this reason, we have always recommended a strategy that utilizes
diversification and asset allocation to help protect investor assets through a
variety of market conditions. We also suggest that investors regularly elicit
the expertise of a financial advisor. With the guidance of these investment
professionals, investors can take the actions necessary to keep their investment
portfolios aligned with their goals regardless of market fluctuations.
To provide additional opportunities for diversification, we introduced the WM VT
REIT Fund as an underlying investment within the WM VT Strategic Asset
Management (SAM) Portfolios in May. The Fund invests primarily in real estate
investment trust (REIT) securities and seeks to take advantage of their
dividend-producing potential. We believe that the WM VT REIT Fund adds depth and
breadth to the overall Fund family and that it has the capability of enhancing
risk management opportunities available through the SAM Portfolios.
At the WM Group of Funds, our focus on risk management has remained in place
throughout the past three years of significantly volatile equity market
performance. It is a fundamental aspect of our investment philosophy, and we
will continue to stress this approach as economic conditions and equity markets
change. Our firm and our investment products have evolved over the years, and
yet our commitment to a risk management discipline remains at the core of the
investment options we offer.
As we look toward the second half of our fiscal year, we are unwavering in our
belief that the strict investment discipline that has guided us for more than 60
years is the right course through the current market uncertainty. We thank you
for your continued confidence and trust in the WM Variable Trust Funds.
Sincerely,
/s/ William G. Papesh
- ----------------------
William G. Papesh
President
(1) As measured by the Standard & Poor's 500 Index.
(2) Source: Ibbotson Associates. Index performance information represents
total return from January 1, 2003 through June 30, 2003 and includes the
reinvestment of dividends and capital gains.
(3) Source: Ibbotson Associates. Stocks are measured by the S&P 500 Index.
Bonds are measured by the Lehman Brothers Aggregate Bond Index. Index
performance information represents average annual total returns from June
30, 2000 through June 30, 2003 and includes the reinvestment of dividends
and capital gains.
(4) Source: AMG Data Services, Wall Street Journal, July 7, 2003. Note:
Indices are unmanaged, and an investment cannot be made directly in an
index.
1
STATEMENTS of ASSETS and LIABILITIES
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
JUNE 30, 2003 (UNAUDITED)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
ASSETS:
Investments, at value (a) ........................ $155,171,285 $28,980,304 $413,962,470 $266,352,009 $ 89,337,977
Receivable for Portfolio shares sold ............. 510,003 112,259 793,711 640,941 618,135
Prepaid expenses and other assets ................ 1,579 1,110 4,135 2,749 1,280
------------ ----------- ------------ ------------ ------------
Total Assets .................................. 155,682,867 29,093,673 414,760,316 266,995,699 89,957,392
------------ ----------- ------------ ------------ ------------
LIABILITIES:
Payable for Portfolio shares redeemed ............ 22,067 13,902 129,249 474,265 112,551
Investment advisory fee payable .................. 12,784 439 33,971 22,029 7,395
Administration fee payable ....................... 19,176 3,529 50,957 33,043 11,093
Distribution fees payable ........................ 3,627 902 9,740 4,537 972
Accrued legal and audit fees ..................... 12,753 12,212 13,846 13,256 12,466
Accrued printing and postage expenses ............ 15,983 3,016 42,070 31,699 13,607
Accrued expenses and other payables .............. 739 584 1,980 3,563 1,590
------------ ----------- ------------ ------------ ------------
Total Liabilities ............................. 87,129 34,584 281,813 582,392 159,674
------------ ----------- ------------ ------------ ------------
NET ASSETS ....................................... $155,595,738 $29,059,089 $414,478,503 $266,413,307 $ 89,797,718
============ =========== ============ ============ ============
(a) Investments, at cost ......................... $148,046,178 $28,046,889 $423,866,062 $312,480,604 $109,057,099
============ =========== ============ ============ ============
NET ASSETS CONSIST OF:
Undistributed net investment income .............. $ 6,312,659 $ 969,620 $ 9,667,190 $ 4,339,467 $ 790,444
Accumulated net realized loss on
investment transactions ....................... (1,336,188) (809,572) (22,847,689) (21,187,966) (8,996,352)
Net unrealized appreciation/(depreciation)
of investments ................................ 7,125,107 933,415 (9,903,592) (46,128,595) (19,719,122)
Paid-in capital .................................. 143,494,160 27,965,626 437,562,594 329,390,401 117,722,748
------------ ----------- ------------ ------------ ------------
Total Net Assets .............................. $155,595,738 $29,059,089 $414,478,503 $266,413,307 $ 89,797,718
============ =========== ============ ============ ============
NET ASSETS:
Class 1 Shares ................................... $137,563,393 $24,191,747 $362,441,547 $243,405,816 $ 84,539,364
============ =========== ============ ============ ============
Class 2 Shares ................................... $ 18,032,345 $ 4,867,342 $ 52,036,956 $ 23,007,491 $ 5,258,354
============ =========== ============ ============ ============
SHARES OUTSTANDING:
Class 1 Shares ................................... 10,565,245 2,336,248 27,153,313 18,273,240 6,051,343
============ =========== ============ ============ ============
Class 2 Shares ................................... 1,389,087 471,383 3,909,465 1,732,332 376,770
============ =========== ============ ============ ============
CLASS 1 SHARES:
Net asset value, offering and redemption price per
share of beneficial interest outstanding ...... $ 13.02 $ 10.35 $ 13.35 $ 13.32 $ 13.97
============ =========== ============ ============ ============
CLASS 2 SHARES:
Net asset value, offering and redemption price per
share of beneficial interest outstanding ...... $ 12.98 $ 10.33 $ 13.31 $ 13.28 $ 13.96
============ =========== ============ ============ ============
See Notes to Financial Statements.
2
STATEMENTS of OPERATIONS
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
INVESTMENT INCOME:
Dividends from investment company securities ....... $ 6,543,507 $1,011,052 $ 10,187,011 $ 4,720,594 $ 917,616
Interest ........................................... 3,676 1,650 64,924 2,598 3,113
------------ ---------- ------------ ----------- -----------
Total investment income ......................... 6,547,183 1,012,702 10,251,935 4,723,192 920,729
------------ ---------- ------------ ----------- -----------
EXPENSES:
Investment advisory fee ............................ 71,180 12,579 187,319 122,216 39,513
Administration fee ................................. 106,770 18,868 280,979 183,323 59,269
Custodian fees ..................................... 1,312 1,223 1,539 1,210 1,274
Legal and audit fees ............................... 14,469 11,666 19,859 16,748 12,895
Printing and postage expenses ...................... 10,809 1,818 28,681 22,502 7,145
Other .............................................. 6,220 1,252 14,310 6,835 2,722
Class 2 Shares distribution fees ................... 16,826 4,090 49,006 22,616 4,466
------------ ---------- ------------ ----------- -----------
Total expenses .................................. 227,586 51,496 581,693 375,450 127,284
Fees waived by the investment advisor .............. -- (9,698) -- -- --
Fees reduced by custodian credits .................. (36) (43) (260) (57) (28)
------------ ---------- ------------ ----------- -----------
Net expenses ................................... 227,550 41,755 581,433 375,393 127,256
------------ ---------- ------------ ----------- -----------
NET INVESTMENT INCOME .............................. 6,319,633 970,947 9,670,502 4,347,799 793,473
------------ ---------- ------------ ----------- -----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized loss on investment transactions ....... (626,438) (303,591) (7,040,889) (7,668,255) (2,853,673)
Capital gain distributions received ................ 23,893 7,619 178,222 144,433 49,204
Net change in unrealized appreciation/(depreciation)
of investments .................................. 5,016,100 1,474,797 34,399,401 31,144,373 12,058,347
------------ ---------- ------------ ----------- -----------
Net realized and unrealized gain on
investments ..................................... 4,413,555 1,178,825 27,536,734 23,620,551 9,253,878
------------ ---------- ------------ ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $ 10,733,188 $2,149,772 $ 37,207,236 $27,968,350 $10,047,351
============ ========== ============ =========== ===========
See Notes to Financial Statements.
3
STATEMENTS of CHANGES in NET assets
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
FLEXIBLE CONSERVATIVE CONSERVATIVE STRATEGIC
INCOME BALANCED BALANCED GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
Net investment income .......................... $ 6,319,633 $ 970,947 $ 9,670,502 $ 4,347,799 $ 793,473
Net realized loss on investment transactions ... (626,438) (303,591) (7,040,889) (7,668,255) (2,853,673)
Capital gain distributions received ............ 23,893 7,619 178,222 144,433 49,204
Net change in unrealized appreciation/
(depreciation) of investments ................ 5,016,100 1,474,797 34,399,401 31,144,373 12,058,347
------------- ----------- ------------- ------------- -------------
Net increase in net assets resulting
from operations .............................. 10,733,188 2,149,772 37,207,236 27,968,350 10,047,351
Distributions to shareholders from:
Net investment income:
Class 1 Shares ............................. (3,460,159) (518,485) (8,744,950) (5,269,929) (1,232,972)
Class 2 Shares ............................. (438,028) (91,829) (1,166,801) (480,104) (69,502)
Net increase/(decrease) in net assets from
Portfolio share transactions:
Class 1 Shares ............................. 5,360,897 2,092,821 3,550,303 (6,603,804) 2,306,762
Class 2 Shares ............................. 7,991,668 2,424,287 17,692,404 6,624,978 2,134,036
------------- ----------- ------------- ------------- -------------
Net increase in net assets ..................... 20,187,566 6,056,566 48,538,192 22,239,491 13,185,675
NET ASSETS:
Beginning of period ............................ 135,408,172 23,002,523 365,940,311 244,173,816 76,612,043
------------- ----------- ------------- ------------- -------------
End of period .................................. $ 155,595,738 $29,059,089 $ 414,478,503 $ 266,413,307 $ 89,797,718
============= =========== ============= ============= =============
Undistributed net investment income
at end of period ............................. $ 6,312,659 $ 969,620 $ 9,667,190 $ 4,339,467 $ 790,444
============= =========== ============= ============= =============
FOR THE YEAR ENDED DECEMBER 31, 2002
Net investment income .......................... $ 3,805,331 $ 590,811 $ 9,130,316 $ 4,870,951 $ 912,394
Net realized loss on investment transactions ... (741,052) (451,761) (11,940,686) (11,856,130) (5,626,057)
Capital gain distributions received ............ 172,069 44,955 1,732,750 1,991,426 855,980
Net change in unrealized depreciation
of investments ............................... (140,557) (512,304) (33,727,705) (45,520,460) (17,546,627)
------------- ----------- ------------- ------------- -------------
Net increase/(decrease) in net assets
resulting from operations .................... 3,095,791 (328,299) (34,805,325) (50,514,213) (21,404,310)
Distributions to shareholders from:
Net investment income:
Class 1 Shares ............................. (656,784) (124,559) (7,468,015) (8,654,688) (3,357,202)
Class 2 Shares ............................. (20,517) (8,500) (365,608) (266,944) (49,923)
Net realized gains on investments:
Class 1 Shares ............................. -- (23,662) -- (432,049) (256,745)
Class 2 Shares ............................. -- (1,637) -- (13,328) (3,819)
Net increase/(decrease) in net assets from
Portfolio share transactions:
Class 1 Shares ............................. 32,909,851 7,002,340 21,599,458 (21,656,792) 1,274,805
Class 2 Shares ............................. 9,038,551 2,060,871 31,445,476 14,977,022 2,689,617
------------- ----------- ------------- ------------- -------------
Net increase/(decrease) in net assets .......... 44,366,892 8,576,554 10,405,986 (66,560,992) (21,107,577)
NET ASSETS:
Beginning of year .............................. 91,041,280 14,425,969 355,534,325 310,734,808 97,719,620
------------- ----------- ------------- ------------- -------------
End of year .................................... $ 135,408,172 $23,002,523 $ 365,940,311 $ 244,173,816 $ 76,612,043
============= =========== ============= ============= =============
Undistributed net investment income
at end of year ............................... $ 3,891,213 $ 608,987 $ 9,908,439 $ 5,741,701 $ 1,299,445
============= =========== ============= ============= =============
See Notes to Financial Statements.
4
STATEMENTS of CHANGES in NET assets -- CAPITAL stock ACTIVITY
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
FLEXIBLE INCOME PORTFOLIO CONSERVATIVE BALANCED PORTFOLIO BALANCED PORTFOLIO
------------------------- ------------------------------- ------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
06/30/03 YEAR ENDED 06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
----------- -------- ----------- -------- ----------- --------
AMOUNT
CLASS 1:
Sold ............................ $ 16,223,552 $ 51,872,915 $ 4,807,256 $ 10,841,387 $ 30,065,364 $ 86,014,194
Issued as reinvestment of
dividends ..................... 3,460,159 656,784 518,485 148,221 8,744,950 7,468,015
Redeemed ........................ (14,322,814) (19,619,848) (3,232,920) (3,987,268) (35,260,011) (71,882,751)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .................... $ 5,360,897 $ 32,909,851 $ 2,092,821 $ 7,002,340 $ 3,550,303 $ 21,599,458
============ ============ ============ ============ ============ ============
CLASS 2:
Sold ............................ $ 7,853,475 $ 9,245,821 $ 2,385,497 $ 2,574,231 $ 17,665,565 $ 32,720,894
Issued as reinvestment of
dividends ..................... 438,028 20,517 91,829 10,137 1,166,801 365,608
Redeemed ........................ (299,835) (227,787) (53,039) (523,497) (1,139,962) (1,641,026)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .................... $ 7,991,668 $ 9,038,551 $ 2,424,287 $ 2,060,871 $ 17,692,404 $ 31,445,476
============ ============ ============ ============ ============ ============
SHARES
CLASS 1:
Sold ............................ 1,275,346 4,286,637 479,693 1,117,129 2,360,655 6,659,042
Issued as reinvestment of
dividends ..................... 263,933 54,012 49,663 15,186 647,774 580,717
Redeemed ........................ (1,127,959) (1,616,512) (325,655) (415,646) (2,804,677) (5,752,794)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .................... 411,320 2,724,137 203,701 716,669 203,752 1,486,965
============ ============ ============ ============ ============ ============
CLASS 2:
Sold ............................ 618,445 762,913 236,910 266,035 1,383,193 2,527,168
Issued as reinvestment of
dividends ..................... 33,514 1,689 8,821 1,040 86,687 28,452
Redeemed ........................ (23,445) (18,887) (5,362) (56,501) (90,154) (130,316)
------------ ------------ ------------ ------------ ------------ ------------
Net increase .................... 628,514 745,715 240,369 210,574 1,379,726 2,425,304
============ ============ ============ ============ ============ ============
CONSERVATIVE
GROWTH PORTFOLIO STRATEGIC GROWTH PORTFOLIO
---------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
06/30/03 YEAR ENDED 06/30/03 YEAR ENDED
(UNAUDITED) 12/31/02 (UNAUDITED) 12/31/02
----------- -------- ----------- --------
AMOUNT
CLASS 1:
Sold ................................ $ 18,700,717 $ 39,872,387 $ 10,705,426 $ 19,153,211
Issued as reinvestment of dividends.. 5,269,929 9,086,737 1,232,972 3,613,947
Redeemed ............................ (30,574,450) (70,615,916) (9,631,636) (21,492,353)
------------ ------------ ------------ ------------
Net increase/(decrease) ............. $ (6,603,804) $(21,656,792) $ 2,306,762 $ 1,274,805
============ ============ ============ ============
CLASS 2:
Sold ................................ $ 7,819,444 $ 15,345,219 $ 2,163,079 $ 3,164,200
Issued as reinvestment of dividends.. 480,104 280,272 69,502 53,742
Redeemed ............................ (1,674,570) (648,469) (98,545) (528,325)
------------ ------------ ------------ ------------
Net increase ........................ $ 6,624,978 $ 14,977,022 $ 2,134,036 $ 2,689,617
============ ============ ============ ============
SHARES
CLASS 1:
Sold ................................ 1,493,837 3,019,159 835,867 1,358,720
Issued as reinvestment of dividends.. 390,365 694,705 86,890 259,064
Redeemed ............................ (2,485,622) (5,662,333) (763,671) (1,646,443)
------------ ------------ ------------ ------------
Net increase/(decrease) ............. (601,420) (1,948,469) 159,086 (28,659)
============ ============ ============ ============
CLASS 2:
Sold ................................ 623,257 1,162,455 166,123 232,142
Issued as reinvestment of dividends.. 35,669 21,443 4,901 3,858
Redeemed ............................ (130,810) (55,466) (7,645) (42,000)
------------ ------------ ------------ ------------
Net increase ........................ 528,116 1,128,432 163,379 194,000
============ ============ ============ ============
See Notes to Financial Statements.
5
FINANCIAL highlights
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- ------------------
NET
REALIZED DISTRIBUTIONS
AND DIVIDENDS FROM NET
NET ASSET UNREALIZED FROM NET ASSET
VALUE, NET GAIN/(LOSS) TOTAL FROM NET REALIZED VALUE,
BEGINNING OF INVESTMENT ON INVESTMENT INVESTMENT CAPITAL TOTAL END OF
PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) GAINS DISTRIBUTIONS PERIOD
------ ------ ----------- ---------- --------- ----- ------------- ------
FLEXIBLE INCOME PORTFOLIO
CLASS 1
06/30/03 (unaudited) .... $12.41 $ 0.56(7) $ 0.39 $ 0.95 $(0.34) $ -- $(0.34) $13.02
12/31/02 ................ 12.23 0.41(7) (0.15) 0.26 (0.08) -- (0.08) 12.41
12/31/01 ................ 11.90 0.17(7) 0.40 0.57 (0.15) (0.09) (0.24) 12.23
12/31/00 ................ 11.86 0.58(7) 0.10 0.68 (0.58) (0.06) (0.64) 11.90
12/31/99 ................ 11.38 0.58(7) 0.41 0.99 (0.50) (0.01) (0.51) 11.86
12/31/98 ................ 10.23 0.48(7) 0.69 1.17 (0.02) -- (0.02) 11.38
CLASS 2
06/30/03 (unaudited) .... 12.38 0.54(7) 0.39 0.93 (0.33) -- (0.33) 12.98
12/31/02 ................ 12.23 0.38(7) (0.15) 0.23 (0.08) -- (0.08) 12.38
12/31/01(5) ............. 12.18 0.02(7) 0.03 0.05 -- -- -- 12.23
CONSERVATIVE BALANCED
PORTFOLIO
CLASS 1
06/30/03 (unaudited) .... $ 9.73 $ 0.38(7) $ 0.47 $ 0.85 $(0.23) $ -- $(0.23) $10.35
12/31/02 ................ 10.04 0.31(7) (0.54) (0.23) (0.07) (0.01) (0.08) 9.73
12/31/01 ................ 9.90 0.13 0.10 0.23 (0.09) -- (0.09) 10.04
12/31/00 ................ 9.90 0.49(7) (0.00)(8) 0.49 (0.49) (0.00)(8) (0.49) 9.90
12/31/99 ................ 10.42 0.71(7) (0.52) 0.19 (0.70) (0.01) (0.71) 9.90
12/31/98(6) ............. 10.00 0.56(7) (0.14) 0.42 -- -- -- 10.42
12/31/97(6) ............. 10.00 -- -- -- -- -- -- 10.00
CLASS 2
06/30/03 (unaudited) .... 9.71 0.37(7) 0.47 0.84 (0.22) -- (0.22) 10.33
12/31/02 ................ 10.04 0.29(7) (0.54) (0.25) (0.07) (0.01) (0.08) 9.71
12/31/01(5) ............. 9.92 0.01 0.11 0.12 -- -- -- 10.04
BALANCED PORTFOLIO
CLASS 1
06/30/03 (unaudited) .... $12.42 $ 0.33(7) $ 0.93 $ 1.26 $(0.33) $ -- $(0.33) $13.35
12/31/02 ................ 13.91 0.32(7) (1.53) (1.21) (0.28) -- (0.28) 12.42
12/31/01 ................ 14.50 0.17(7) (0.15) 0.02 (0.25) (0.36) (0.61) 13.91
12/31/00 ................ 14.92 0.41(7) (0.32) 0.09 (0.43) (0.08) (0.51) 14.50
12/31/99 ................ 12.20 0.34(7) 2.95 3.29 (0.48) (0.09) (0.57) 14.92
12/31/98 ................ 10.47 0.31(7) 1.49 1.80 (0.07) -- (0.07) 12.20
CLASS 2
06/30/03 (unaudited) .... 12.39 0.31(7) 0.93 1.24 (0.32) -- (0.32) 13.31
12/31/02 ................ 13.91 0.29(7) (1.53) (1.24) (0.28) -- (0.28) 12.39
12/31/01(5) ............. 13.52 0.02(7) 0.37(9) 0.39 -- -- -- 13.91
See Notes to Financial Statements.
6
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE
RATIO OF NET ASSETS WITHOUT FEE
OPERATING RATIO OF NET WAIVERS, EXPENSES
EXPENSES INVESTMENT REIMBURSED AND/OR FEES
NET ASSETS, TO AVERAGE INCOME TO REDUCED BY CREDITS
END OF PERIOD NET AVERAGE PORTFOLIO ALLOWED BY THE
TOTAL RETURN(2) (IN 000'S) ASSETS(3) NET ASSETS TURNOVER RATE CUSTODIAN(3)(4)
--------------- ---------- --------- ---------- ------------- ---------------
7.60% $137,563 0.30%(10) 8.90%(10) 4% 0.30%(10)
2.14% 125,992 0.30% 3.37% 9% 0.30%
4.84% 90,860 0.33% 1.43% 1% 0.33%
5.79% 40,049 0.31% 4.84% 14% 0.31%
8.58% 25,846 0.35% 5.09% 4% 0.41%
11.75% 1,107 0.35% 4.90% 78% 1.51%
7.47% 18,032 0.55%(10) 8.65%(10) 4% 0.55%(10)
1.89% 9,416 0.55% 3.12% 9% 0.55%
0.41% 182 0.58%(10) 1.18%(10) 1% 0.58%(10)
8.69% $ 24,192 0.30%(10) 7.75%(10) 7% 0.38%(10)
(2.26)% 20,759 0.30% 3.20% 9% 0.41%
2.40% 14,221 0.41% 1.36% 2% 0.53%
5.03% 8,736 0.37% 4.99% 67% 0.44%
1.88% 7,206 0.35% 7.07% 17% 0.59%
4.23% 829 0.35%(10) 7.39%(10) 61% 5.37%(10)
0.00% 0 0.35%(10) 0.00%(10) 99% 7,567.04%(10)
8.62% 4,867 0.55%(10) 7.50%(10) 7% 0.63%(10)
(2.47)% 2,244 0.55% 2.95% 9% 0.66%
1.21% 205 0.66%(10) 1.11%(10) 2% 0.78%(10)
10.12% $362,442 0.28%(10) 5.19%(10) 7% 0.28%(10)
(8.78)% 334,605 0.29% 2.52% 22% 0.29%
0.13% 354,082 0.28% 1.22% 8% 0.28%
0.49% 305,399 0.29% 2.76% 15% 0.29%
27.71% 170,527 0.35% 2.70% 13% 0.35%
17.18% 11,161 0.35% 2.79% 33% 0.54%
9.98% 52,037 0.53%(10) 4.94%(10) 7% 0.53%(10)
(9.00)% 31,335 0.54% 2.27% 22% 0.54%
2.88% 1,452 0.53%(10) 0.97%(10) 8% 0.53%(10)
See Notes to Financial Statements.
7
FINANCIAL highlights
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- ------------------
NET
NET REALIZED DISTRIBUTIONS
ASSET AND DIVIDENDS FROM NET
VALUE, UNREALIZED TOTAL FROM NET ASSET
BEGINNING NET GAIN/ FROM NET REALIZED VALUE,
OF INVESTMENT (LOSS) ON INVESTMENT INVESTMENT CAPITAL TOTAL END OF
PERIOD INCOME INVESTMENTS OPERATIONS INCOME(1) GAINS DISTRIBUTIONS PERIOD
------ ------ ----------- ---------- --------- ----- ------------- ------
CONSERVATIVE GROWTH
PORTFOLIO
CLASS 1
06/30/03 (unaudited) $12.16 $ 0.22(7) $ 1.23 $ 1.45 $(0.29) $ -- $(0.29) $13.32
12/31/02 14.87 0.23(7) (2.51) (2.28) (0.41) (0.02) (0.43) 12.16
12/31/01 16.46 0.17(7) (0.72) (0.55) (0.61) (0.43) (1.04) 14.87
12/31/00 17.10 0.27(7) (0.69) (0.42) (0.07) (0.15) (0.22) 16.46
12/31/99 12.54 0.12(7) 4.76 4.88 (0.16) (0.16) (0.32) 17.10
12/31/98 10.49 0.20(7) 1.89 2.09 (0.03) (0.01) (0.04) 12.54
CLASS 2
06/30/03 (unaudited) 12.13 0.20(7) 1.23 1.43 (0.28) -- (0.28) 13.28
12/31/02 14.87 0.19(7) (2.50) (2.31) (0.41) (0.02) (0.43) 12.13
12/31/01(5) 14.24 0.01(7) 0.62(9) 0.63 -- -- -- 14.87
STRATEGIC GROWTH
PORTFOLIO
CLASS 1
06/30/03 (unaudited) $12.55 $ 0.13(7) $ 1.50 $ 1.63 $(0.21) $ -- $(0.21) $13.97
12/31/02 16.45 0.15(7) (3.47) (3.32) (0.54) (0.04) (0.58) 12.55
12/31/01 18.61 0.16(7) (1.27) (1.11) (0.57) (0.48) (1.05) 16.45
12/31/00 19.59 0.13(7) (0.84) (0.71) (0.11) (0.16) (0.27) 18.61
12/31/99 13.46 0.05(7) 6.35 6.40 (0.16) (0.11) (0.27) 19.59
12/31/98 10.70 0.17(7) 2.63 2.80 (0.03) (0.01) (0.04) 13.46
CLASS 2
06/30/03 (unaudited) 12.54 0.12(7) 1.50 1.62 (0.20) -- (0.20) 13.96
12/31/02 16.45 0.11(7) (3.44) (3.33) (0.54) (0.04) (0.58) 12.54
12/31/01(5) 15.54 0.01(7) 0.90(9) 0.91 -- -- -- 16.45
- -------------------
(1) Includes dividends paid from the short-term portion of capital gain
distributions received from the Underlying Funds.
(2) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
(3) The Portfolio will indirectly bear its pro rata share of expenses of the
Underlying Funds.
(4) Ratio of operating expenses to average net assets includes expenses paid
indirectly.
(5) All Portfolios commenced selling Class 2 shares on November 6, 2001.
(6) The Conservative Balanced Portfolio commenced operations on October 22,
1997, ceased operations on November 4, 1997, and re-commenced operations
on April 23, 1998.
(7) Per share numbers have been calculated using the average shares method.
(8) Amount represents less than $0.01 per share.
(9) The amount shown may not agree with the change in the aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Portfolio shares.
(10) Annualized.
See Notes to Financial Statements.
8
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
----------------------------------------------
RATIO OF OPERATING
EXPENSES TO AVERAGE
NET ASSETS WITHOUT FEE
WAIVERS, EXPENSES
RATIO OF RATIO OF NET REIMBURSED AND/OR FEES
NET ASSETS, OPERATING EXPENSES INVESTMENT INCOME REDUCED BY CREDITS
END OF PERIOD TO AVERAGE NET TO AVERAGE PORTFOLIO ALLOWED BY THE
TOTAL RETURN(2) (IN 000'S) ASSETS(3) NET ASSETS TURNOVER RATE CUSTODIAN(3)(4)
- --------------- ---------- --------- ---------- ------------- ---------------
11.93% $243,406 0.29%(10) 3.58%(10) 10% 0.29%(10)
(15.52)% 229,564 0.29% 1.77% 19% 0.29%
(3.56)% 309,608 0.28% 1.11% 7% 0.28%
(2.49)% 293,442 0.28% 1.59% 13% 0.28%
39.36% 155,790 0.35% 0.85% 12% 0.36%
19.91% 10,072 0.35% 1.79% 35% 0.57%
11.78% 23,007 0.54%(10) 3.33%(10) 10% 0.54%(10)
(15.72)% 14,610 0.54% 1.52% 19% 0.54%
4.42% 1,127 0.53%(10) 0.86%(10) 7% 0.53%(10)
12.94% $ 84,539 0.31%(10) 2.02%(10) 9% 0.31%(10)
(20.53)% 73,936 0.32% 1.06% 16% 0.32%
(6.25)% 97,401 0.31% 0.95% 5% 0.31%
(3.73)% 98,431 0.30% 0.67% 12% 0.30%
47.95% 35,500 0.35% 0.35% 7% 0.43%
26.19% 4,949 0.35% 1.42% 39% 0.80%
12.87% 5,258 0.56%(10) 1.77%(10) 9% 0.56%(10)
(20.59)% 2,676 0.57% 0.81% 16% 0.57%
5.86% 319 0.56%(10) 0.70%(10) 5% 0.56%(10)
See Notes to Financial Statements.
9
PORTFOLIOS of INVESTMENTS
FLEXIBLE INCOME PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 99.6%
431,951 WM VT Equity Income Fund ............................ $ 5,179,090
867,284 WM VT Growth & Income Fund .......................... 12,939,874
628,359 WM VT Growth Fund ................................... 6,572,630
1,541,480 WM High Yield Fund .................................. 11,977,297
4,301,847 WM VT Income Fund ................................... 47,363,340
321,556 WM VT Mid Cap Stock Fund ............................ 4,019,451
155,102 WM VT REIT Fund ..................................... 1,664,240
7,629,059 WM VT Short Term Income Fund ........................ 19,835,553
502,413 WM VT Small Cap Stock Fund .......................... 3,486,747
3,684,510 WM VT U.S. Government Securities Fund ............... 39,424,255
168,601 WM VT West Coast Equity Fund ........................ 2,481,808
------------
Total Investment Company Securities
(Cost $147,819,178) ............................... 154,944,285
------------
PRINCIPAL
AMOUNT
--------
REPURCHASE AGREEMENT -- 0.1%
(Cost $227,000)
$ 227,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003, to be
repurchased at $227,005 on 07/01/2003,
collateralized by $225,070 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $231,589) ............................ 227,000
------------
TOTAL INVESTMENTS
(Cost $148,046,178*) .............................................. 99.7% 155,171,285
OTHER ASSETS AND LIABILITIES (NET) .................................. 0.3 424,453
----- ------------
NET ASSETS .......................................................... 100.0% $155,595,738
===== ============
- -------------------
* Aggregate cost for federal tax purposes.
CONSERVATIVE BALANCED PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 98.8%
139,646 WM VT Equity Income Fund ................................ $ 1,674,361
191,399 WM VT Growth & Income Fund .............................. 2,855,672
196,412 WM VT Growth Fund ....................................... 2,054,470
289,653 WM High Yield Fund ...................................... 2,250,607
705,317 WM VT Income Fund ....................................... 7,765,537
88,769 WM VT International Growth Fund ......................... 803,358
82,674 WM VT Mid Cap Stock Fund ................................ 1,033,426
54,681 WM VT REIT Fund ......................................... 586,732
781,670 WM VT Short Term Income Fund ............................ 2,032,342
113,307 WM VT Small Cap Stock Fund .............................. 786,349
553,206 WM VT U.S. Government Securities Fund ................... 5,919,308
64,548 WM VT West Coast Equity Fun ............................. 950,142
-----------
Total Investment Company Securities
(Cost $27,778,889) ................................ 28,712,304
-----------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT -- 0.9%
(Cost $268,000)
$ 268,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003, to be
repurchased at $268,006 on 07/01/2003,
collateralized by $265,721 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $273,418) ................................ 268,000
-----------
TOTAL INVESTMENTS
(Cost $28,046,889*) ................................................... 99.7% 28,980,304
OTHER ASSETS AND LIABILITIES (NET) ...................................... 0.3 78,785
----- -----------
NET ASSETS .............................................................. 100.0% $29,059,089
===== ===========
- -------------------
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements.
10
PORTFOLIOS of INVESTMENTS
BALANCED PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 96.9%
3,245,789 WM VT Equity Income Fund .............................. $ 38,917,016
4,035,087 WM VT Growth & Income Fund ............................ 60,203,497
4,329,634 WM VT Growth Fund ..................................... 45,287,976
3,540,084 WM High Yield Fund .................................... 27,506,456
6,344,240 WM VT Income Fund ..................................... 69,850,078
2,312,114 WM VT International Growth Fund ....................... 20,924,630
1,840,370 WM VT Mid Cap Stock Fund .............................. 23,004,629
1,166,784 WM VT REIT Fund ....................................... 12,519,593
2,153,576 WM VT Short Term Income Fund .......................... 5,599,299
2,743,153 WM VT Small Cap Stock Fund ............................ 19,037,480
5,295,446 WM VT U.S. Government Securities Fund ................. 56,661,269
1,488,624 WM VT West Coast Equity Fund .......................... 21,912,547
------------
Total Investment Company Securities
(Cost $411,328,062) ................................. 401,424,470
------------
PRINCIPAL
AMOUNT
----------
REPURCHASE AGREEMENT -- 3.0%
(Cost $12,538,000)
$ 12,538,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003 to be
repurchased at $12,538,279 on 07/01/2003,
collateralized by $12,431,384 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $12,791,462) ........................... 12,538,000
------------
TOTAL INVESTMENTS
(Cost $423,866,062*) ................................................ 99.9% 413,962,470
OTHER ASSETS AND LIABILITIES (NET) .................................... 0.1 516,033
----- ------------
NET ASSETS ............................................................ 100.0% $414,478,503
===== ============
- -------------------
* Aggregate cost for federal tax purposes.
CONSERVATIVE GROWTH PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 99.8%
2,612,602 WM VT Equity Income Fund .............................. $ 31,325,097
3,536,348 WM VT Growth & Income Fund ............................ 52,762,309
3,753,545 WM VT Growth Fund ..................................... 39,262,085
2,089,686 WM High Yield Fund .................................... 16,236,860
2,408,152 WM VT Income Fund ..................................... 26,513,752
1,983,427 WM VT International Growth Fund ....................... 17,950,011
1,575,802 WM VT Mid Cap Stock Fund .............................. 19,697,525
987,084 WM VT REIT Fund ....................................... 10,591,407
2,465,528 WM VT Small Cap Stock Fund ............................ 17,110,763
1,412,476 WM VT U.S. Government Securities Fund ................. 15,113,491
1,311,869 WM VT West Coast Equity Fund .......................... 19,310,709
------------
Total Investment Company Securities
(Cost $312,002,604) ................................. 265,874,009
------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT -- 0.2%
(Cost $478,000)
$ 478,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003, to be
repurchased at $478,011 on 07/01/2003,
collateralized by $473,935 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $487,663) .............................. 478,000
------------
TOTAL INVESTMENTS
(Cost $312,480,604*) ................................................ 100.0% 266,352,009
OTHER ASSETS AND LIABILITIES (NET) .................................... 0.0 61,298
----- ------------
NET ASSETS ............................................................ 100.0% $266,413,307
===== ============
- -------------------
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements.
11
PORTFOLIO of INVESTMENTS
STRATEGIC GROWTH PORTFOLIO
JUNE 30, 2003 (UNAUDITED)
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES -- 99.1%
891,571 WM VT Equity Income Fund ................................ $10,689,939
1,458,695 WM VT Growth & Income Fund .............................. 21,763,732
1,400,528 WM VT Growth Fund ....................................... 14,649,523
678,888 WM High Yield Fund ...................................... 5,274,961
842,770 WM VT International Growth Fund ......................... 7,627,071
800,289 WM VT Mid Cap Stock Fund ................................ 10,003,607
326,716 WM VT REIT Fund ......................................... 3,505,668
1,042,215 WM VT Small Cap Stock Fund .............................. 7,232,975
558,458 WM VT West Coast Equity Fund ............................ 8,220,501
-----------
Total Investment Company Securities
(Cost $108,687,099) ................................... 88,967,977
-----------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT -- 0.4%
(Cost $370,000)
$ 370,000 Agreement with Goldman Sachs Group,
Inc., 0.800% dated 06/30/2003, to be
repurchased at $370,008 on 07/01/2003,
collateralized by $366,854 U.S.
Treasury Notes, having various
interest rates and maturities
(Market Value $377,480) ................................ 370,000
-----------
TOTAL INVESTMENTS
(Cost $109,057,099*) .................................................. 99.5% 89,337,977
OTHER ASSETS AND LIABILITIES (NET) ..................................... 0.5 459,741
----- -----------
NET ASSETS ............................................................. 100.0% $89,797,718
===== ===========
- -------------------
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements.
12
NOTES to FINANCIAL statements (unaudited)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
1. ORGANIZATION AND BUSINESS
WM Variable Trust (the "Trust") was organized as a Massachusetts business trust
on January 29, 1993. The Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company.
The Trust consists of 12 funds and 5 portfolios. The following Portfolios are
included in this report: Flexible Income, Conservative Balanced, Balanced,
Conservative Growth, and Strategic Growth (each a "Portfolio" and collectively,
the "Portfolios").
The Trust is authorized to issue an unlimited number of shares of beneficial
interest, each without par value. Each Portfolio offers two classes of shares:
Class 1 shares and Class 2 shares. These shares are issued and redeemed only in
connection with investments in, and payments under, variable annuity contracts
and variable life insurance contracts (collectively "Variable Insurance
Contracts"), as well as certain qualified retirement plans including affiliated
plans of Washington Mutual, Inc. ("Washington Mutual"), a publicly owned
financial services company. At June 30, 2003, "The Washington Mutual Retirement
Savings and Investment Plan" held approximately 36%, 18%, 6%, 5% and 19% of the
outstanding shares in the Flexible Income, Conservative Balanced, Balanced,
Conservative Growth and Strategic Growth Portfolios, respectively.
Each of the Portfolios invests, within certain percentage ranges, in Class 1
shares of various funds in the Trust and Class I shares of WM High Yield Fund
(collectively, the "Underlying Funds"). WM Advisors, Inc. (the "Advisor" or "WM
Advisors"), a wholly-owned subsidiary of Washington Mutual, Inc. serves as
investment advisor to the Portfolios. The Advisor may alter these percentage
ranges when it deems appropriate. The assets of each Portfolio will be allocated
among the Underlying Funds in accordance with its investment objective based on
the Advisor's outlook for the economy, the financial markets and the relative
market valuations of the Underlying Funds. In addition, in order to meet
liquidity needs or for temporary defensive purposes, each Portfolio may invest
its assets directly in cash, stock or bond index futures, options, money market
securities and certain short-term debt instruments.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("generally accepted
accounting principles") requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Portfolios in the
preparation of their financial statements.
PORTFOLIO VALUATION:
Investments in the Underlying Funds are valued at net asset value per Class 1
share or Class I share of the respective Underlying Funds determined as of the
close of the New York Stock Exchange on each valuation date. Short-term debt
securities that mature in 60 days or less are valued at amortized cost, which
approximates market value.
REPURCHASE AGREEMENTS:
Each Portfolio 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. The
value of the collateral is at all times at least equal to the total amount of
the repurchase obligation. In the event of counterparty default, the Portfolio
would seek to use the collateral to offset losses incurred. There is potential
loss to the Portfolio in the event the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral securities, including the risk
of a possible decline in the value of the underlying securities during the
period while the Portfolio seeks to assert its rights. WM Advisors, acting under
the supervision of the Board of Trustees, reviews the value of the collateral
and the creditworthiness of those banks and broker-dealers with whom each
Portfolio enters into repurchase agreements.
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.
13
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
Interest income on debt securities is accrued daily. Dividend income is recorded
on the ex-dividend date. Each Portfolio's investment income and realized and
unrealized gains and losses are allocated among the classes of that Portfolio
based upon the relative average net assets of each class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and distributions of any net capital gains
of the Portfolios are declared and paid annually.
Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investments held by the Portfolios, redesignated
distributions and differing characterization of distributions made by each
Portfolio.
FEDERAL INCOME TAXES:
It is each Portfolio's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by, among other
things, distributing substantially all of its earnings to its shareholders.
Therefore, no federal income or excise tax provision is required.
It is each Portfolio's policy to meet the diversification requirements of the
Code so that variable annuity and variable life contracts funded by the Trust
will not fail to qualify as annuities and life insurance contracts for tax
purposes.
EXPENSES:
General expenses of the Trust are allocated to all the Portfolios and Funds of
the Trust based upon the relative average net assets of each Portfolio and Fund.
In addition, the Portfolios will indirectly bear their pro rata share of the
expenses of the Underlying Funds. Operating expenses directly attributable to a
class of shares are charged to the operations of that class of shares. Expenses
of each Portfolio 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.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
WM Advisors serves as investment advisor to the Trust. As such, WM Advisors
provides its proprietary asset allocation services to the Portfolios, formulates
the Portfolios' investment policies, analyzes economic and market trends,
exercises investment discretion over the assets of the Portfolios and monitors
the allocation of each Portfolio's assets and each Portfolio's performance. For
its investment advisory services to the Portfolios, WM Advisors is entitled to a
monthly fee at an annual rate of 0.10% of each Portfolio's average daily net
assets. The Advisor has voluntarily waived $9,698 of its advisory fees for the
Conservative Balanced Portfolio for the six months ended June 30, 2003.
WM Shareholder Services, Inc. (the "Administrator"), a wholly-owned subsidiary
of Washington Mutual, serves as administrator to each of the Portfolios. For its
administrative services to the Portfolios, the Adminstrator is entitled to a
monthly fee at an annual rate of 0.15% of each Portfolio's average daily net
assets.
Custodian fees for certain Portfolios have been reduced by credits allowed by
the custodian for uninvested cash balances. The Portfolios could have invested
this cash in income producing investments. Fees reduced by credits allowed by
the custodian for the six months ended June 30, 2003 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 Trust for serving as an officer or Trustee of the Trust.
The Trust, together with other mutual funds advised by WM Advisors, pays each
Trustee who is not an officer or employee of Washington Mutual or its
subsidiaries, a per annum retainer plus attendance fees for each meeting at
which they are present. The Lead Trustee, Committee Chairs and Committee Members
receive additional remuneration for these services to the Trust. Trustees are
also reimbursed for travel and out-of-pocket expenses. Each Trustee serves in
the same capacity for all 40 funds within the WM Group of Funds.
14
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
5. DISTRIBUTION PLAN
Each of the Portfolios has adopted a distribution plan, pursuant to Rule 12b-1
under the 1940 Act, applicable to the Class 2 shares of the Portfolios (a "Rule
12b-1 Plan"). Under the Rule 12b-1 Plan, WM Funds Distributor, Inc. (the
"Distributor") may receive a fee at an annual rate of 0.25% of the average daily
net assets attributable to Class 2 shares. This fee 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 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
Trust, as defined in the 1940 Act, and who have no direct or indirect financial
interest in the operation of the distribution plan or any agreements related to
the plan.
6. PURCHASES AND SALES OF INVESTMENTS
The aggregate cost of purchases and proceeds from sales of shares of the
Underlying Funds for the six months ended June 30, 2003, are as follows:
NAME OF PORTFOLIO PURCHASES SALES
- ----------------- --------- -----
Flexible Income Portfolio ................ $ 20,602,600 $ 5,226,000
Conservative Balanced Portfolio .......... 6,601,671 1,734,000
Balanced Portfolio ....................... 44,533,233 24,257,300
Conservative Growth Portfolio ............ 25,041,827 25,854,900
Strategic Growth Portfolio ............... 10,649,219 6,739,000
At June 30, 2003, aggregate gross unrealized appreciation for all Underlying
Funds in which there was an excess of value over tax cost and aggregate gross
unrealized depreciation for all Underlying Funds in which there was an excess of
tax cost over value are as follows:
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF PORTFOLIO APPRECIATION DEPRECIATION
- ----------------- ------------ ------------
Flexible Income Portfolio ................ $ 7,727,935 $ 602,828
Conservative Balanced Portfolio .......... 1,181,271 247,856
Balanced Portfolio ....................... 19,026,596 28,930,188
Conservative Growth Portfolio ............ 10,561,553 56,690,148
Strategic Growth Portfolio ............... 2,863,785 22,582,907
7. RISK FACTORS OF THE PORTFOLIOS
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and tax results that would not be present in a direct
investment in the Underlying Funds. For example, under certain circumstances, an
Underlying Fund may determine to make payment of a redemption request by a
Portfolio wholly or partly by a distribution in kind of securities from its
portfolio, instead of cash, in accordance with the rules of the Securities and
Exchange Commission. In such cases, the Portfolios may hold securities
distributed by an Underlying Fund until the Advisor determines that it is
appropriate to dispose of such securities.
Certain Underlying Funds may invest a portion of their assets in foreign
securities; enter into forward foreign currency transactions; lend their
portfolio securities; enter into stock index, interest rate and currency futures
contracts, and options on such contracts; enter into interest rate swaps or
purchase or sell interest rate caps or floors; 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 enter into "delayed-delivery" transactions; and
enter into various other investment practices each with inherent risks. The REIT
Fund could be adversely impacted by economic trends within the real estate
industry. The West Coast Equity Fund could be adversely impacted by economic
trends within the West Coast region.
The officers and Trustees, Advisor, Distributor and Transfer Agent of the
Portfolios serve in the same capacity for the Underlying Funds. Conflicts may
arise as these persons and companies seek to fulfill their fiduciary
responsibilities to both the Portfolios and the Underlying Funds.
15
NOTES to FINANCIAL statements (unaudited) (continued)
WM VARIABLE TRUST STRATEGIC ASSET MANAGEMENT PORTFOLIOS
From time to time, one or more of the Underlying Funds used for investment by a
Portfolio may experience relatively large investments or redemptions due to
reallocations or rebalancings by the Portfolios. These transactions will affect
the Underlying Funds, since the Underlying Funds that experience redemptions as
a result of the reallocations or rebalancings may have to sell portfolio
securities and the Underlying Funds that receive additional cash will have to
invest such cash. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management
to the extent that the Underlying Funds may be required to sell securities or
invest cash at times when they would not otherwise do so. These transactions
could also have tax consequences if sales of securities resulted in gains and
could also increase transaction costs. The Advisor is committed to minimizing
such impact on the Underlying Funds to the extent it is consistent with pursuing
the investment objectives of the Portfolios. The Advisor may nevertheless face
conflicts in fulfilling its responsibilities. The Advisor will, at all times,
monitor the impact on the Underlying Funds of transactions by the Portfolios.
16
Item 9. Controls and Procedures:
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 Commission's rules and forms.
There have been no significant changes in the registrant's internal controls or
in other factors that could significantly affect those controls subsequent to
the date of their evaluation.
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 Variable Trust
By: /s/William G. Papesh
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President and Chief Executive Officer
August 29, 2003
SIGNATURES
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.
WM Variable Trust
/s/John T. West
- --------------------
Treasurer and Chief Financial Officer
August 29, 2003
/s/William G. Papesh
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President and Chief Executive Officer
August 29, 2003