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 811-00123
WM Trust II
(Exact name of registrant as specified in charter)
1201 Third Avenue, 22nd Floor, Seattle, WA 98101
(Address of principal executive offices) (Zip code)
Jeffrey L. Lunzer
1201 Third Avenue, 22nd Floor, Seattle, WA 98101
(Name and address of agent for service)
Registrant's telephone number, including area code: (206) 461-3800
Date of fiscal year end: October 31, 2004
Date of reporting period: October 31, 2004
ITEM 1.
[logo] wm
GroupofFunds
ANNUAL REPORT
October 31, 2004
WM GROUP OF FUNDS
WM Group of Funds
Equity Funds
REIT Fund
Equity Income Fund
Growth & Income Fund
West Coast Equity Fund
Mid Cap Stock Fund
Growth Fund
Small Cap Value Fund
Small Cap Growth Fund
International Growth Fund
Fixed-Income Funds
Short Term Income Fund
U.S. Government Securities Fund
Income Fund
High Yield Fund
Municipal Funds
Tax-Exempt Bond Fund
California Municipal Fund
California Insured Intermediate
Municipal Fund
Money Funds
Money Market Fund
Tax-Exempt Money Market Fund
California Money Fund
At the WM Group of Funds, our passion is piecing together individual
investments into comprehensive portfolios to make your financial plan more
effective.
Table of Contents
1 Message from the President
2 Economy & Financial Markets: Review & Outlook
WM Group of Funds Investment Strategy
6 REIT Fund
8 Equity Income Fund
10 Growth & Income Fund
12 West Coast Equity Fund
14 Mid Cap Stock Fund
16 Growth Fund
18 Small Cap Value Fund
20 Small Cap Growth Fund
22 International Growth Fund
24 Short Term Income Fund
26 U.S. Government Securities Fund
28 Income Fund
30 High Yield Fund
32 Tax-Exempt Bond Fund
34 California Municipal Fund
36 California Insured Intermediate Municipal Fund
38 Money Funds
40 Expense Information
42 Financial Statements
142 Notes to Financial Statements
152 Report of Independent Registered Public
Accounting Firm
153 Other Information
Not FDIC Insured
- --------------------------------------------------
May Lose Value * Not a Deposit * No Bank Guarantee
Not Insured by any Federal Government Agency
Dear Shareholder,
[PHOTO] During my 36 years in the investment management business, I have
seen many changes--some caused a lasting impact and others came into fashion
but then quickly faded. Thankfully, there have also been a few things that
have remained the same. Among the most important of these is our long-term
investment philosophy.
One test of our consistent investment approach can be found in the
performance of our Strategic Asset Management (SAM) Portfolios. We believe
these results validate our forecasting, portfolio construction, risk
management, and asset allocation processes, which have taken years to build.
We are thankful to the important partners who have helped us deliver our
investment promise to shareholders so successfully: our investment
management, fund distribution, and shareholder servicing teams, as well as
the WM Group of Funds Board of Trustees.
EXPANDING OUR CAPABILITIES, RECOGNIZING OUR HERITAGE
Our fund family is committed to seeking ways to improve our investment
process. As part of these ongoing efforts, in March of this year we launched
our new WM Small Cap Value Fund, which invests in undervalued smaller
companies. (Note that small-cap stocks may have additional risks, including
greater price volatility.) With the addition of this new Fund, our SAM
Portfolios can invest in up to 14 distinct asset classes, which expands our
choice of investments while increasing our portfolio diversification
opportunities.
During this fiscal year, we also celebrated two major anniversaries: the
65th anniversary of the WM Equity Income Fund and the 55th anniversary of
the WM Growth & Income Fund. The WM Equity Income Fund was one of the first
50 mutual funds in the U.S. and has been in continuous operation since 1939.
The WM Growth & Income Fund was among the first 100 mutual funds in the U.S.
Just to keep these milestones in perspective, today there are over 8,000
mutual funds operating in the U.S., according to the Investment Company
Institute.
BENEFITING FROM A STRONG FOUNDATION
I am proud to be only the fourth president of our mutual fund family, which
can trace its roots back more than six decades. From my vantage point, I
believe our strong heritage has been built on trust and integrity. Although
these characteristics are intangible, they are essential to building strong
shareholder relationships and are the foundation of our organization.
Our heritage includes producing positive results guided by a fund's stated
investment objective. The powerful combination of consistent fund
performance and quality shareholder services has produced shareholder
satisfaction that has resulted in a very low redemption rate relative to our
peers in the mutual fund industry. We will continue striving to meet the
expectations of our existing shareholders while attracting new investors and
assets under management.
Based on our achievements this year and our continuous efforts to improve
our processes, I am extremely positive about our direction and ability to
assist you in meeting your financial goals. On behalf of the entire company,
we thank you for your continued support and confidence.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
Economy & Financial Markets: Review & Outlook
MODERATE ECONOMIC GROWTH AMID AN ABNORMAL RECOVERY
Fiscal year 2004--the 12 months from November 1, 2003 through October 31,
2004--was a transition period for the U.S. economy, which experienced a
cyclical rebound accompanied by a shift from consumer to business spending.
Improved corporate productivity, stronger cash flows, and profit growth all
indicated that a cyclical recovery was underway as the fiscal year
progressed. This rebound was powered by the Federal Reserve's very
successful reflation policy, which allowed the economy to benefit from the
lowest interest rates seen in 45 years.
While we believe the economy continues to improve, this recovery has shown
some unusual characteristics. Historically, in a normal recovery, businesses
add more jobs, which in turn gives individuals the confidence to increase
spending. In this recovery, businesses restrained both capital expenditures
and new hiring for most of the period. Despite the bad news, consumers kept
spending even as layoffs continued. What allowed consumers to keep spending
were record levels of home refinancings and a general willingness to assume
debt.
What also made this period unusual was that the economic slowdown was not
restricted to the U.S. In addition, Europe and Asia (with the exception of
Japan and China) suffered from slow economic growth, which reduced demand
for U.S. imports. Furthermore, news about terrorism, the war in Iraq, and
scandals involving some major U.S. corporations reduced investor confidence.
REFLATION POLICY AND TAX CUTS HELP PROFITABILITY
The economy began the period on a firm footing thanks to the Federal
Reserve's powerful reflation policy, accompanied by the third largest
federal tax cut in 50 years. These factors helped propel corporate
profitability to its highest levels in 20 years and allowed businesses to
repair their balance sheets.
[VALUE OF A $10,000 INVESTMENT OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
VALUE OF $10,000
- -----------------------------------------------------------
Lehman Brothers
Date Aggregate S&P 500 Inflation
Bond Index
- -----------------------------------------------------------
10/31/94 10,000 10,000 10,000
11/30/94 9,978 9,633 10,013
12/31/94 10,047 9,774 10,013
1/31/95 10,246 10,028 10,053
2/28/95 10,490 10,417 10,093
3/31/95 10,554 10,725 10,127
4/30/95 10,701 11,037 10,160
5/31/95 11,116 11,473 10,180
6/30/95 11,197 11,743 10,201
7/31/95 11,172 12,134 10,201
8/31/95 11,307 12,167 10,227
9/30/95 11,417 12,676 10,248
10/31/95 11,565 12,632 10,281
11/30/95 11,739 13,188 10,274
12/31/95 11,903 13,432 10,267
1/31/96 11,982 13,894 10,328
2/29/96 11,773 14,027 10,361
3/31/96 11,691 14,162 10,415
4/30/96 11,625 14,370 10,455
5/31/96 11,602 14,741 10,475
6/30/96 11,758 14,801 10,481
7/31/96 11,789 14,143 10,501
8/31/96 11,769 14,443 10,521
9/30/96 11,974 15,254 10,555
10/31/96 12,240 15,672 10,589
11/30/96 12,449 16,862 10,609
12/31/96 12,333 16,531 10,609
1/31/97 12,372 17,558 10,643
2/28/97 12,403 17,700 10,676
3/31/97 12,265 16,964 10,702
4/30/97 12,449 17,976 10,715
5/31/97 12,567 19,080 10,709
6/30/97 12,717 19,931 10,722
7/31/97 13,060 21,514 10,735
8/31/97 12,949 20,317 10,755
9/30/97 13,141 21,431 10,782
10/31/97 13,331 20,715 10,809
11/30/97 13,392 21,674 10,802
12/31/97 13,528 22,047 10,789
1/31/98 13,701 22,292 10,810
2/28/98 13,690 23,899 10,830
3/31/98 13,737 25,123 10,851
4/30/98 13,808 25,376 10,870
5/31/98 13,939 24,940 10,890
6/30/98 14,058 25,952 10,903
7/31/98 14,087 25,677 10,916
8/31/98 14,317 21,964 10,929
9/30/98 14,652 23,372 10,942
10/31/98 14,574 25,272 10,969
11/30/98 14,657 26,804 10,969
12/31/98 14,701 28,348 10,962
1/31/99 14,806 29,533 10,988
2/28/99 14,546 28,614 11,002
3/31/99 14,626 29,759 11,035
4/30/99 14,673 30,911 11,115
5/31/99 14,544 30,181 11,115
6/30/99 14,498 31,856 11,115
7/31/99 14,437 30,862 11,148
8/31/99 14,429 30,708 11,175
9/30/99 14,597 29,867 11,229
10/31/99 14,651 31,757 11,249
11/30/99 14,649 32,402 11,256
12/31/99 14,579 34,310 11,256
1/31/00 14,531 32,588 11,283
2/29/00 14,707 31,972 11,349
3/31/00 14,901 35,099 11,442
4/30/00 14,858 34,042 11,449
5/31/00 14,850 33,344 11,456
6/30/00 15,159 34,165 11,523
7/31/00 15,297 33,632 11,542
8/31/00 15,519 35,720 11,556
9/30/00 15,617 33,834 11,616
10/31/00 15,720 33,692 11,636
11/30/00 15,978 31,037 11,643
12/31/00 16,275 31,189 11,636
1/31/01 16,540 32,296 11,709
2/28/01 16,684 29,351 11,756
3/31/01 16,767 27,493 11,783
4/30/01 16,697 29,629 11,830
5/31/01 16,797 29,828 11,883
6/30/01 16,861 29,103 11,904
7/31/01 17,239 28,818 11,870
8/31/01 17,437 27,014 11,870
9/30/01 17,639 24,831 11,924
10/31/01 18,008 25,305 11,883
11/30/01 17,759 27,246 11,863
12/31/01 17,646 27,486 11,817
1/31/02 17,789 27,085 11,844
2/28/02 17,961 26,562 11,891
3/31/02 17,663 27,561 11,958
4/30/02 18,006 25,891 12,025
5/31/02 18,159 25,699 12,025
6/30/02 18,317 23,869 12,032
7/31/02 18,538 22,007 12,045
8/31/02 18,852 22,153 12,085
9/30/02 19,157 19,745 12,106
10/31/02 19,069 21,482 12,126
11/30/02 19,063 22,748 12,126
12/31/02 19,458 21,410 12,100
1/31/03 19,475 20,849 12,153
2/28/03 19,744 20,536 12,246
3/31/03 19,728 20,735 12,320
4/30/03 19,892 22,444 12,293
5/31/03 20,262 23,627 12,273
6/30/03 20,221 23,929 12,287
7/31/03 19,542 24,350 12,300
8/31/03 19,671 24,825 12,347
9/30/03 20,192 24,562 12,388
10/31/03 20,004 25,952 12,374
11/30/03 20,052 26,181 12,341
12/31/03 20,257 27,553 12,327
1/31/04 20,419 28,060 12,387
2/29/04 20,640 28,450 12,454
3/31/04 20,794 28,020 12,534
4/30/04 20,254 27,580 12,574
5/31/04 20,173 27,958 12,648
6/30/04 20,288 28,500 12,689
7/31/04 20,488 27,557 12,668
8/31/04 20,880 27,667 12,675
9/30/04 20,936 27,966 12,701
10/31/04 21,112 28,394 12,718
Data shown is past performance and does not guarantee future results.
Source: Ibbotson Associates. The S&P 500 is a broad-based index intended to
represent the U.S. equity market. The Lehman Brothers Aggregate Bond Index
is a broad-based index intended to represent the U.S. fixed-income market.
Returns shown for indices assume reinvestment of all dividends and
distributions. Inflation is measured by the Consumer Price Index for all
urban consumers. Indices are unmanaged, and individuals cannot invest
directly in an index.
This economic and financial market analysis represents the opinions of WM
Advisors, Inc. It should not be considered as investment advice. No forecast
based on the opinions expressed can be guaranteed, and they may be subject
to change without notice.
2
Within this environment, stocks began the year with a strong rally and,
despite short-term volatility, finished the fiscal year with the S&P 500
posting a total return of 9.4%. As the fiscal year progressed, geopolitical
concerns, slow job growth, the U.S. presidential campaign, and rising oil
prices added to equity market uncertainty. Companies in cyclical growth
sectors, such as energy and industrials, performed best. At the style level,
value stocks outpaced growth stocks, while small-cap stocks significantly
outperformed large-cap stocks.
With bond markets concerned about inflation and Federal Reserve policy
shifts, bonds had a volatile year. They benefited early in the period from
historically low short-term interest rates and low inflation, which
effectively created 0% inflation-adjusted interest rates. The second quarter
was the worst for the Treasury market since 1980, but in the third quarter,
Treasuries rebounded strongly. That exceptional reversal was attributed to
concerns that the increase in oil prices, which moved to over $50 per barrel
in late September, would curb consumer spending and further reduce growth in
an already slowing economy.
LOOKING AHEAD
Looking ahead, we continue to be concerned about several factors: global
excess capacity, which curtails corporate pricing power; the large federal
deficit, which can raise interest rates and curb individual savings; the
declining U.S. dollar, which makes U.S. financial assets less attractive;
rising oil prices; and the timing of future interest rate hikes.
Our fixed-income outlook assumes the Federal Reserve (the Fed) will continue
its stated policy of gradual short-term interest rate increases. As a
result, we expect the yield curve will continue to flatten with short-term
rates moving up more than longer-term rates. As the Fed moves to increase
short-term interest rates, our long-term interest rate scenario remains
positive. Given these competing factors, we are positioned neutrally with
respect to interest rate risk. From a sector standpoint, we view mortgages
as offering the best value followed by high-yield and investment-grade
corporate bonds. Mortgages should do well in a stable to modestly rising
interest rate environment, while high-yield securities should continue to
benefit from a growing economy.
Our equity outlook is for the economy to continue to grow, but at a slow
pace, accompanied by moderate inflation. In this environment, we continue to
focus on companies that we believe can generate organic growth and not only
pay dividends, but also increase them. In a slow-growth environment,
dividends can become a larger component of total return, which makes these
companies more attractive.
We also believe an important element of a sustained recovery is higher
employment, rather than increases in consumer debt.
MARKET PERFORMANCE AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year
- -----------------------------------------------------------------------------
S&P 500 9.41% -2.22% 11.00%
Energy 44.52% 8.37% 13.02%
Industrials 18.04% 2.38% 11.96%
Consumer Staples 3.85% 2.94% 10.55%
Telecommunication Services 20.95% -15.43% 4.04%
Utilities 24.11% 0.98% 7.53%
Financials 8.07% 4.27% 16.24%
Health Care 1.76% -0.45% 14.38%
Consumer Discretionary 9.08% -0.18% 10.83%
Materials 16.76% 5.23% 7.19%
Information Technology -0.86% -12.52% 12.14%
Lehman Brothers Aggregate Bond Index 5.54% 7.58% 7.76%
Data shown is past performance and does not guarantee future results.
Source: Ibbotson Associates. Equity sectors are represented by S&P 500
sector categories. Returns shown for indices and sectors are annualized
returns and assume reinvestment of all dividends and distributions. Indices
are unmanaged, and individuals cannot invest directly in an index.
3
Economy & Financial Markets: Review & Outlook
AFTER 65 YEARS, WM GROUP OF FUNDS CONTINUES TO BUILD ON ITS HISTORY
While this fiscal year was memorable for important events in both the
financial markets and political arena--the end of the Federal Reserve's
historically low interest rate policy and the re-election of President
George W. Bush--it also marked two important anniversaries in the history of
the WM Group of Funds. These anniversaries help illustrate our approach to
investing and our commitment to long-term investment principles.
The two anniversaries celebrated this year were the 65th anniversary of the
WM Equity Income Fund and the 55th anniversary of the WM Growth & Income
Fund.
The WM Equity Income Fund began to sell shares to the public in 1939 as the
Composite Bond Fund, one of the first 50 mutual funds in the U.S. Prior to
that, it was organized as a bond unit trust, which was a popular type of
investment vehicle in the early 1930s. These unit trusts consisted of a set
number of securities in a fixed trust that could not be changed. Units of
such a trust were called "composite units" which was appropriate since
"composite" means "made up of disparate components." An employee of Murphey
Favre and Co. (founded in 1888 and a predecessor to WM Advisors, Inc.)
suggested that "composite" be included in the Fund's name since it would be
comprised of different elements which were complementary but part of a
structure having different properties than any one of its single components.
[MAJOR MARKET EVENTS OCTOBER 31, 2003 - OCTOBER 31, 2004 GRAPH]
Closing Value
of the
Date S&P 500
---- -------
10/31/2003 1050.71
11/3/2003 1059.02
11/4/2003 1053.25
11/5/2003 1051.81
11/6/2003 1058.05
11/7/2003 1053.21
11/10/2003 1047.11
11/11/2003 1046.57
11/12/2003 1058.56
11/13/2003 1058.41
11/14/2003 1050.35
11/17/2003 1043.63
11/18/2003 1034.15
11/19/2003 1042.44
11/20/2003 1033.65
11/21/2003 1035.28
11/24/2003 1052.08
11/25/2003 1053.89
11/26/2003 1058.45
11/28/2003 1058.2
12/1/2003 1070.12
12/2/2003 1066.62
12/3/2003 1064.73
12/4/2003 1069.72
12/5/2003 1061.5
12/8/2003 1069.3
12/9/2003 1060.18
12/10/2003 1059.05
12/11/2003 1071.21
12/12/2003 1074.14
12/15/2003 1068.04
12/16/2003 1075.13
12/17/2003 1076.48
12/18/2003 1089.18
12/19/2003 1088.67
12/22/2003 1092.94
12/23/2003 1096.02
12/24/2003 1094.04
12/26/2003 1095.89
12/29/2003 1109.48
12/30/2003 1109.64
12/31/2003 1111.92
1/2/2004 1108.48
1/5/2004 1122.22
1/6/2004 1123.67
1/7/2004 1126.33
1/8/2004 1131.92
1/9/2004 1121.86
1/12/2004 1127.23
1/13/2004 1121.22
1/14/2004 1130.52
1/15/2004 1132.05
1/16/2004 1139.83
1/20/2004 1138.77
1/21/2004 1147.62
1/22/2004 1143.94
1/23/2004 1141.55
1/26/2004 1155.37
1/27/2004 1144.05
1/28/2004 1128.48
1/29/2004 1134.11
1/30/2004 1131.13
2/2/2004 1135.26
2/3/2004 1136.03
2/4/2004 1126.52
2/5/2004 1128.59
2/6/2004 1142.76
2/9/2004 1139.81
2/10/2004 1145.54
2/11/2004 1157.76
2/12/2004 1152.11
2/13/2004 1145.81
2/17/2004 1156.99
2/18/2004 1151.82
2/19/2004 1147.06
2/20/2004 1144.11
2/23/2004 1140.99
2/24/2004 1139.09
2/25/2004 1143.67
2/26/2004 1144.91
2/27/2004 1144.94
3/1/2004 1155.97
3/2/2004 1149.1
3/3/2004 1151.04
3/4/2004 1154.88
3/5/2004 1156.86
3/8/2004 1147.2
3/9/2004 1140.58
3/10/2004 1123.89
3/11/2004 1106.78
3/12/2004 1120.57
3/15/2004 1104.49
3/16/2004 1110.7
3/17/2004 1123.75
3/18/2004 1122.32
3/19/2004 1109.78
3/22/2004 1095.4
3/23/2004 1093.95
3/24/2004 1091.33
3/25/2004 1109.19
3/26/2004 1108.06
3/29/2004 1122.47
3/30/2004 1127
3/31/2004 1126.21
4/1/2004 1132.17
4/2/2004 1141.81
4/5/2004 1150.57
4/6/2004 1148.16
4/7/2004 1140.53
4/8/2004 1139.32
4/12/2004 1145.2
4/13/2004 1129.44
4/14/2004 1128.17
4/15/2004 1128.84
4/16/2004 1134.61
4/19/2004 1135.82
4/20/2004 1118.15
4/21/2004 1124.09
4/22/2004 1139.93
4/23/2004 1140.6
4/26/2004 1135.53
4/27/2004 1138.11
4/28/2004 1122.41
4/29/2004 1113.89
4/30/2004 1107.3
MAJOR MARKET EVENTS
- -------------------
NOVEMBER
Unemployment hits an eight-month low of 5.9%.
NOVEMBER 20
S&P 500 low for the fiscal year: 1033.65.
DECEMBER 9
Federal Reserve (the Fed) votes to hold fed funds rate at 45-year low of 1.00%.
DECEMBER 31
S&P 500 closes the year at 1111.92.
JANUARY 5
One day after Federal Reserve Governor suggests rates should remain low,
S&P 500 closes at 1122.22.
JANUARY 14
Commerce Dept. announces that trade deficit shrank to $38 billion in Nov. '03.
JANUARY 28
Fed releases statement that market interprets as moving closer to raising
interest rates.
JANUARY 30
Estimates for 4th quarter '03 consumer spending growth released. Down
significantly from prior quarter.
FEBRUARY
U.S. dollar falls to record lows against the euro.
FEBRUARY 11
Fed says the economy is continuing to expand. S&P 500 closes at 1157.76,
its high for the fiscal year.
MARCH 1
WM Small Cap Value Fund is launched.
MARCH 8-15
Terror attack on a train in Madrid, Spain is linked to al Qaeda. S&P 500
begins slide from 1147.20 to 1104.49.
MARCH 16
Fed meeting leaves rates unchanged.
MARCH 25
Corporate profits report strong as economy gains 4.1% in 4th quarter '03.
Source: Bloomberg L.P. (S&P 500 data). Indices are unmanaged, and
individuals cannot invest directly in an index.
4
Thus, in 1939, the Fund was cleared for distribution to the public by the
recently established Securities and Exchange Commission. The Fund's
objective changed in 1948 to allow, in addition to senior securities,
investment in preferred stocks. In 1949, the Fund's mandate changed again to
allow the inclusion of common stocks. The Fund's name changed each time to
reflect the expanded mandates: first to the Composite Bond and Preferred
Stock Fund and then later to the Composite Bond and Stock Fund. In 1998 the
Fund's name changed again to the WM Bond & Stock Fund. With a modification
to fund objectives and strategies, the Fund assumed its current name, the WM
Equity Income Fund, in August 2000. Today, it has total net assets of $1.526
billion.*
As the U.S. economy continued to expand during and after World War II, a
companion mutual fund called the Composite Stock Fund was started in October
1949. This Fund could invest in stocks or, as conditions changed, bonds and
cash. After one year in existence, the Fund had assets totaling $781,000
invested in a portfolio comprised of 64 company securities. In 1951, the
Fund's name was changed to the Composite Fund. Today the Fund is called the
WM Growth & Income Fund, and it has total net assets of $2.075 billion.*
"There is great continuity here, not only in terms of operating funds that
have such a long history, but also in terms of how our fund management and
oversight practices have advanced as the entire financial services industry
has evolved," says William G. Papesh, President of WM Advisors. "While we
have strived to keep pace with changes in market conditions, the financial
services industry, and the regulatory environment, we also still follow many
of the same investment principles that these Funds and our founders
developed many decades ago."
For more information about these and other WM Funds, please see the
following pages.
<FN>
*As of October 31, 2004.
[MAJOR MARKET EVENTS OCTOBER 31, 2003 - OCTOBER 31, 2004 GRAPH]
Closing Value
of the
Date S&P 500
---- -------
5/3/2004 1117.49
5/4/2004 1119.55
5/5/2004 1121.53
5/6/2004 1113.99
5/7/2004 1098.7
5/10/2004 1087.12
5/11/2004 1095.45
5/12/2004 1097.28
5/13/2004 1096.44
5/14/2004 1095.7
5/17/2004 1084.1
5/18/2004 1091.49
5/19/2004 1088.68
5/20/2004 1089.19
5/21/2004 1093.56
5/24/2004 1095.41
5/25/2004 1113.05
5/26/2004 1114.94
5/27/2004 1121.28
5/28/2004 1120.68
6/1/2004 1121.2
6/2/2004 1124.99
6/3/2004 1116.64
6/4/2004 1122.5
6/7/2004 1140.42
6/8/2004 1142.18
6/9/2004 1131.33
6/10/2004 1136.47
6/14/2004 1125.29
6/15/2004 1132.01
6/16/2004 1133.56
6/17/2004 1132.05
6/18/2004 1135.02
6/21/2004 1130.3
6/22/2004 1134.41
6/23/2004 1144.06
6/24/2004 1140.65
6/25/2004 1134.43
6/28/2004 1133.35
6/29/2004 1136.2
6/30/2004 1140.84
7/1/2004 1128.94
7/2/2004 1125.38
7/6/2004 1116.21
7/7/2004 1118.33
7/8/2004 1109.11
7/9/2004 1112.81
7/12/2004 1114.35
7/13/2004 1115.14
7/14/2004 1111.47
7/15/2004 1106.69
7/16/2004 1101.39
7/19/2004 1100.9
7/20/2004 1108.67
7/21/2004 1093.88
7/22/2004 1096.84
7/23/2004 1086.2
7/26/2004 1084.07
7/27/2004 1094.83
7/28/2004 1095.42
7/29/2004 1100.43
7/30/2004 1101.72
8/2/2004 1106.62
8/3/2004 1099.69
8/4/2004 1098.63
8/5/2004 1080.7
8/6/2004 1063.97
8/9/2004 1065.22
8/10/2004 1079.04
8/11/2004 1075.79
8/12/2004 1063.23
8/13/2004 1064.8
8/16/2004 1079.34
8/17/2004 1081.71
8/18/2004 1095.17
8/19/2004 1091.23
8/20/2004 1098.35
8/23/2004 1095.68
8/24/2004 1096.19
8/25/2004 1104.96
8/26/2004 1105.09
8/27/2004 1107.77
8/30/2004 1099.15
8/31/2004 1104.24
9/1/2004 1105.91
9/2/2004 1118.31
9/3/2004 1113.63
9/7/2004 1121.3
9/8/2004 1116.27
9/9/2004 1118.38
9/10/2004 1123.92
9/13/2004 1125.82
9/14/2004 1128.33
9/15/2004 1120.37
9/16/2004 1123.5
9/17/2004 1128.55
9/20/2004 1122.2
9/21/2004 1129.3
9/22/2004 1113.56
9/23/2004 1108.36
9/24/2004 1110.11
9/27/2004 1103.52
9/28/2004 1110.06
9/29/2004 1114.8
9/30/2004 1114.58
10/1/2004 1131.5
10/4/2004 1135.17
10/5/2004 1134.48
10/6/2004 1142.05
10/7/2004 1130.65
10/8/2004 1122.14
10/11/2004 1124.39
10/12/2004 1121.84
10/13/2004 1113.65
10/14/2004 1103.29
10/15/2004 1108.2
10/18/2004 1114.02
10/19/2004 1103.23
10/20/2004 1103.66
10/21/2004 1106.49
10/22/2004 1095.74
10/25/2004 1094.81
10/26/2004 1111.09
10/27/2004 1125.4
10/28/2004 1127.44
10/29/2004 1130.2
11/1/2004 1130.51
11/2/2004 1130.54
11/3/2004 1143.2
11/4/2004 1161.67
11/5/2004 1166.17
11/8/2004 1164.89
11/9/2004 1164.08
11/10/2004 1162.91
MAY 4
Fed keeps short-term interest rates at 1.00%.
MAY 7
Strong employment report fuels speculation that the Fed will raise rates.
MAY 31
65th anniversary of the WM Equity Income Fund.
JUNE 1
Oil prices spike higher.
JUNE 23
S&P 500 closes at 1144.06, its high for the quarter.
JUNE 30
Fed increases short-term interest rates for the first time in 4 years by
1/4 point to 1.25%.
AUGUST 10
Fed hikes rates again by 1/4 point.
SEPTEMBER 21
Fed raises rates for third time this year to 1.75%. Says it will
continue tightening policy at a "measured" pace.
SEPTEMBER 27
Fannie Mae reaches agreement with its regulator to address improper
accounting procedures.
SEPTEMBER 28
Oil hits $50 per barrel.
OCTOBER 29
Estimates for 3rd quarter '04 consumer spending growth released. Up
strongly from prior quarter.
OCTOBER 31
55th anniversary of the WM Growth & Income Fund.
5
REIT Fund
INVESTMENT STRATEGY
Real estate investment trusts (REITs) turned in strong results during the
period primarily due to historically low interest rates and solid growth in
funds from operations (FFO). (FFO defines a REIT's operating record and
provides an indication of cash performance.) With their solid yields and
earnings growth, REITs performed very strongly through March, only to fall
sharply in April as interest rates rose. However, as the year progressed,
investors moved back into REITs. The asset class (as measured by the NAREIT
All REIT Index(3) rose over 28% for the one-year period.
Other factors that contributed to Fund performance included:
* Rising dividends: REIT returns are comprised of dividend income and price
appreciation, and rising cash flow generally means higher dividends
passed on to shareholders.
* Increased attractiveness as REITs are considered more stable and
typically less impacted by election results compared to equities. As a
result, they became a preferred equity sector during this presidential
election year.
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
REIT securities are subject to risk factors associated with the real estate
industry and tax factors of REIT registration.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year Since Inception Inception Date
- --------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 28.71% 33.82% 3/1/03
With Sales Charge 21.59% 29.38%
Class B Shares Net Asset Value(2) 27.76% 32.87% 3/1/03
With Sales Charge 22.76% 30.38%
Class C Shares Net Asset Value(2) 27.95% 33.00% 3/1/03
With Sales Charge 26.95% 33.00%
NAREIT All REIT Index(3) 28.52% 35.86%
[VALUE OF A $10,000 INVESTMENT(1),(4) MARCH 1, 2003 - OCTOBER 31, 2004 GRAPH]
- ---------------------------------------------------------------
CLASS A CLASS A SHARES NAREIT
SHARES AT WITH MAXIMUM ALL REIT
DATE NAV(2) SALES CHARGE INDEX(3)
- ---------------------------------------------------------------
Feb-03 10,000 9,450 10,000
Mar-03 10,070 9,516 10,207
Apr-03 10,460 9,884 10,694
May-03 11,030 10,423 11,348
Jun-03 11,248 10,630 11,643
Jul-03 11,884 11,230 12,254
Aug-03 11,964 11,306 12,306
Sep-03 12,339 11,660 12,694
Oct-03 12,644 11,948 12,967
Nov-03 13,171 12,447 13,553
Dec-03 13,640 12,890 14,018
Jan-04 14,226 13,444 14,620
Feb-04 14,555 13,754 14,941
Mar-04 15,366 14,521 15,777
Apr-04 13,176 12,451 13,370
May-04 13,940 13,174 14,314
Jun-04 14,446 13,652 14,742
Jul-04 14,478 13,682 14,748
Aug-04 15,453 14,603 15,910
Sep-04 15,513 14,660 15,940
Oct-04 16,273 15,378 16,664
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The National Association of Real Estate Investment Trust (NAREIT) All
REIT Index reflects the aggregate performance of all publicly traded
REITs that own, develop, and manage properties. Returns shown for the
index assume reinvestment of all dividends and distributions, and
since-inception returns shown for the index are calculated from 2/28/03.
Indices are unmanaged, and individuals cannot invest directly in an
index.
(4) Performance of Class B shares (offered as of 3/03) and C shares (offered
as of 3/03) will differ.
6
PORTFOLIO MANAGER
-----------------------
Richard E. Helm, CFA
WM Advisors, Inc.
* Heightened investor interest as several new REIT initial public offerings
were launched.
* Greater demand from institutional investors looking for diversification
opportunities and exposure to a different, liquid asset class.
The Fund benefited from solid performance in most REIT sectors, particularly
retail REITs. Non-REIT gaming company Mandalay Resort Group was the
strongest performer, followed by mall owner Macerich, and New York office
building REIT, SL Green Realty. Apartment owner AvalonBay Communities was
also up strongly during the year. Mortgage REIT firm Friedman Billings
Ramsey, apartment REIT company Apartment Investment & Management Company,
and Capital Automotive all detracted from Fund performance.
Historically low interest rates led the Fund to become defensive in key
sectors and to underweight mortgage REITs during most of the fiscal year.
With slower U.S. economic growth and modestly rising employment, cash flow
at real estate companies should continue to strengthen. If interest rates
continue to rise at a measured pace in response to a moderately growing
economy, we believe REITs as a whole may perform well as rising demand for
commercial real estate will support cash flow growth. Relative valuations
among sectors (office, retail, housing, etc.) will determine the best
opportunities, with retail REITs the likeliest to show the most significant
growth.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- ---------------------------------------------------------------------------
General Growth Properties Inc. 4.66% 34.99%
Simon Property Group Inc. 4.48% 37.17%
Equity Residential Properties 4.32% 20.73%
The Macerich Company 4.21% 56.82%
The Mills Corporation 3.93% 42.90%
Corporate Office Properties Trust 3.88% 47.55%
Equity Office Properties Trust 3.87% 7.78%
Developers Diversified Realty Corp. 3.48% 52.35%
Kimco Realty Corp. 3.48% 37.26%
ProLogis 3.26% 38.24%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- -------------------------------------------------
Weighted Average Market
Capitalization: $5.1 billion
Weighted Average P/E
(based on trailing earnings): 27.2
Turnover: 5%
Number of Securities: 40
Total Net Assets: $336.0 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- --------------------------------------------------------------------------
[PIE CHART] Industrial/Office 26% 25% +1%
Retail 25% 23% +2%
Residential 13% 13% 0%
Common Stocks 6% 6% 0%
Lodging/Resorts 5% 6% -1%
Specialty 5% 6% -1%
Diversified 4% 5% -1%
Health Care 4% 5% -1%
Self Storage 3% 3% 0%
Mortgage 2% 3% -1%
Cash Equivalents 7% 5% +2%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance for the fiscal year ended 10/31/04. The Fund
may not have held these securities throughout the entire period.
7
Equity Income Fund*
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +29.22%
2002 -12.82%
2001 +7.41%
2000 +14.64%
1999 +4.83%
1998 +6.93%
1997 +19.89%
1996 +13.60%
1995 +31.18%
1994 -2.13%
INVESTMENT STRATEGY
Our value discipline of buying stocks on dips and selling into euphoric
rallies to reduce volatility was rewarded during the past fiscal year. That
core philosophy, combined with our traditionally low turnover to contain
fund costs, again proved profitable for the period.
Assisting the Fund's returns during the period were real estate investment
trust (REIT) securities. REITs have been among the top-performing equity
market sectors over the past few years. Historically low interest rates,
rising funds from operations, and continued interest from both retail and
institutional investors have fueled their rise.
The Fund also benefited from maintaining its core focus on common stocks
with growing dividends, and we saw numerous companies initiate and/or raise
their dividends substantially during the period. Many industries, such as
gaming, that traditionally paid little or no dividends enjoyed strong cash
flows and returned some of that cash to shareholders, boosting their share
prices as well. The Fund's positions in the market's higher-yielding
<FN>
* As of 8/1/00, the WM Bond & Stock Fund became the WM Equity Income Fund,
and the Fund's objectives and strategies changed. This information should be
considered when reviewing past performance. Please review the prospectus for
detailed information.
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
REIT securities are subject to risk factors associated with the real estate
industry and tax factors of REIT registration.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- ------------------------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 17.06% 9.48% 11.64% 8.96% 5/31/39
With Sales Charge 10.62% 8.25% 11.01% 8.87%
Class B Shares Net Asset Value(2) 16.04% 8.52% 10.91% 10.53% 3/30/94
With Sales Charge 11.04% 8.23% 10.91% 10.53%
Class C Shares Net Asset Value(2) 16.16% - - 7.61% 3/1/02
With Sales Charge 15.16% - - 7.61%
S&P 500/Barra Value Index(3) 14.46% 1.49% 11.03% -
S&P 500(3) 9.41% -2.22% 11.00% 11.58%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- -----------------------------------------------------------------------------
CLASS A CLASS A SHARES
SHARES AT WITH MAXIMUM S&P 500/BARRA
DATE NAV(2) SALES CHARGE S&P 500(3) VALUE INDEX(3)
- -----------------------------------------------------------------------------
Oct-94 10,000 9,450 10,000 10,000
Nov-94 9,783 9,245 9,633 9,595
Dec-94 9,892 9,348 9,774 9,713
Jan-95 10,060 9,507 10,028 9,976
Feb-95 10,361 9,791 10,417 10,363
Mar-95 10,613 10,029 10,725 10,649
Apr-95 10,881 10,282 11,037 11,000
May-95 11,256 10,637 11,473 11,489
Jun-95 11,484 10,852 11,743 11,577
Jul-95 11,718 11,074 12,134 11,976
Aug-95 11,835 11,184 12,167 12,078
Sep-95 12,210 11,538 12,676 12,498
Oct-95 12,255 11,581 12,632 12,303
Nov-95 12,628 11,934 13,188 12,948
Dec-95 12,976 12,263 13,432 13,306
Jan-96 13,343 12,609 13,894 13,704
Feb-96 13,287 12,556 14,027 13,833
Mar-96 13,309 12,577 14,162 14,157
Apr-96 13,395 12,658 14,370 14,301
May-96 13,594 12,846 14,741 14,517
Jun-96 13,675 12,923 14,801 14,447
Jul-96 13,321 12,588 14,143 13,838
Aug-96 13,503 12,760 14,443 14,220
Sep-96 13,981 13,212 15,254 14,828
Oct-96 14,174 13,395 15,672 15,331
Nov-96 14,820 14,005 16,862 16,504
Dec-96 14,741 13,931 16,531 16,233
Jan-97 15,104 14,274 17,558 16,981
Feb-97 15,270 14,431 17,700 17,105
Mar-97 14,998 14,173 16,964 16,520
Apr-97 15,270 14,430 17,976 17,140
May-97 15,950 15,072 19,080 18,215
Jun-97 16,430 15,526 19,931 18,910
Jul-97 17,231 16,283 21,514 20,423
Aug-97 16,672 15,755 20,317 19,500
Sep-97 17,347 16,393 21,431 20,643
Oct-97 17,124 16,182 20,715 19,885
Nov-97 17,506 16,543 21,674 20,643
Dec-97 17,674 16,702 22,047 21,101
Jan-98 17,674 16,702 22,292 20,842
Feb-98 18,303 17,296 23,899 22,405
Mar-98 18,673 17,646 25,123 23,541
Apr-98 18,798 17,764 25,376 23,818
May-98 18,497 17,480 24,940 23,483
Jun-98 18,638 17,612 25,952 23,661
Jul-98 17,894 16,910 25,677 23,148
Aug-98 16,040 15,158 21,964 19,425
Sep-98 16,746 15,825 23,372 20,606
Oct-98 17,813 16,833 25,272 22,220
Nov-98 18,664 17,637 26,804 23,378
Dec-98 18,897 17,858 28,348 24,198
Jan-99 19,103 18,053 29,533 24,687
Feb-99 18,358 17,349 28,614 24,156
Mar-99 18,755 17,723 29,759 24,888
Apr-99 19,828 18,737 30,911 27,033
May-99 20,008 18,908 30,181 26,555
Jun-99 20,486 19,359 31,856 27,575
Jul-99 19,978 18,879 30,862 26,725
Aug-99 19,381 18,315 30,708 26,049
Sep-99 18,638 17,613 29,867 25,031
Oct-99 19,123 18,071 31,757 26,442
Nov-99 19,333 18,270 32,402 26,286
Dec-99 19,809 18,720 34,310 27,275
Jan-00 19,086 18,036 32,588 26,407
Feb-00 18,800 17,766 31,972 24,757
Mar-00 19,978 18,880 35,099 27,339
Apr-00 19,937 18,840 34,042 27,156
May-00 20,102 18,996 33,344 27,240
Jun-00 19,979 18,880 34,165 26,164
Jul-00 19,909 18,814 33,632 26,687
Aug-00 20,616 19,482 35,720 28,478
Sep-00 20,979 19,825 33,834 28,473
Oct-00 21,747 20,551 33,692 29,005
Nov-00 21,399 20,222 31,037 27,520
Dec-00 22,709 21,460 31,189 28,937
Jan-01 23,254 21,975 32,296 30,158
Feb-01 23,072 21,803 29,351 28,159
Mar-01 22,807 21,552 27,493 27,047
Apr-01 23,630 22,331 29,629 28,880
May-01 24,119 22,793 29,828 29,184
Jun-01 24,016 22,695 29,103 28,238
Jul-01 24,462 23,117 28,818 27,749
Aug-01 24,308 22,971 27,014 26,146
Sep-01 23,115 21,843 24,831 23,662
Oct-01 23,036 21,769 25,305 23,662
Nov-01 24,013 22,692 27,246 25,164
Dec-01 24,392 23,051 27,486 25,547
Jan-02 24,297 22,961 27,085 24,847
Feb-02 24,202 22,871 26,562 24,623
Mar-02 25,330 23,937 27,561 25,884
Apr-02 24,512 23,164 25,891 24,587
May-02 24,608 23,254 25,699 24,685
Jun-02 23,316 22,033 23,869 23,128
Jul-02 21,576 20,390 22,007 20,628
Aug-02 21,995 20,785 22,153 20,770
Sep-02 19,857 18,765 19,745 18,396
Oct-02 20,651 19,515 21,482 19,925
Nov-02 21,884 20,681 22,748 21,325
Dec-02 21,263 20,093 21,410 20,216
Jan-03 20,754 19,613 20,849 19,663
Feb-03 20,395 19,274 20,536 19,128
Mar-03 20,579 19,447 20,735 19,103
Apr-03 22,092 20,877 22,444 20,992
May-03 23,408 22,121 23,627 22,537
Jun-03 23,815 22,506 23,929 22,702
Jul-03 23,996 22,677 24,350 23,206
Aug-03 24,361 23,021 24,825 23,707
Sep-03 24,600 23,247 24,562 23,278
Oct-03 25,697 24,284 25,952 24,870
Nov-03 26,113 24,677 26,181 25,094
Dec-03 27,479 25,968 27,553 26,645
Jan-04 28,199 26,648 28,060 27,116
Feb-04 28,918 27,328 28,450 27,729
Mar-04 28,961 27,368 28,020 27,538
Apr-04 28,272 26,717 27,580 26,858
May-04 28,557 26,987 27,958 27,166
Jun-04 29,334 27,721 28,500 27,756
Jul-04 28,642 27,066 27,557 27,229
Aug-04 28,997 27,402 27,667 27,523
Sep-04 29,661 28,030 27,966 28,046
Oct-04 30,084 28,429 28,394 28,469
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The S&P 500/Barra Value Index is constructed by ranking the securities
in the S&P 500 by price-to-book ratio and including the securities with
the lowest price-to-book ratios that represent approximately half of the
market capitalization of the S&P 500. The S&P 500 is a broad-based index
intended to represent the U.S. equity market. Returns shown for the
indices assume reinvestment of all dividends and distributions, and
since-inception returns shown for the S&P 500 are calculated from
5/31/39. Indices are unmanaged, and individuals cannot invest directly
in an index.
(4) Performance of Class B shares (offered as of 3/94) and C shares (offered
as of 3/02) will differ.
8
PORTFOLIO MANAGER
-----------------------
Richard E. Helm, CFA
WM Advisors, Inc.
equity sectors, such as energy, telecommunications, and utilities, also made
positive contributions.
Asset allocation shifts during the year were modest, though REITs were
reduced as prices rose and valuations became less attractive. The Fund
remained underweighted in financial stocks during the year as interest rates
rose. We also had overweighted positions in consumer staples and non-chip
technology stocks.
In terms of individual holdings, Mandalay Resort Group (gaming), Harris
Corporation (technology), Valero Energy (oil refining), and Monsanto
(agriculture) experienced stronger returns. Underperformers included AU
Optronics (technology), Sears (retail), and Mylan Laboratories
(pharmaceuticals).
Looking ahead, we expect the U.S. economy to continue its moderate upward
trend. As the Fund's investment process seeks to capitalize on the impact of
the market's gyrations, high stock market volatility provides the Fund with
opportunities to add or reduce holdings as valuations fluctuate. This
includes not only building long-term core positions, but also complementing
these core holdings with smaller investments in more opportunistic
situations. Just as we expect mixed economic and corporate news to continue,
we likewise expect higher market volatility to continue, and we believe the
Fund is well-positioned to capitalize on the opportunities such moves may
present.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- ---------------------------------------------------------------------
Harrah's Entertainment Inc. 2.17% 38.00%
The Neiman Marcus Group Inc. 2.17% 29.15%
Citigroup Inc. 2.14% -3.13%
FPL Group Inc. 2.08% 12.33%
Bank of America Corp. 2.03% 23.12%
Magna International Inc. 1.91% -7.38%
Valero Energy Corp. 1.84% 103.16%
ACE Ltd. 1.76% 7.79%
Harris Corp. 1.71% 66.89%
Wells Fargo & Co. 1.69% 9.50%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- -----------------------------------------------------
Weighted Average Market
Capitalization: $54.5 billion
Weighted Average P/E
(based on estimated earnings): 13.5
Beta:(7) 0.79
Fund Standard Deviation:(8) 12.49
S&P 500 Standard Deviation:(8) 16.23
Turnover: 20%
Number of Securities: 103
Total Net Assets: $1,525.6 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- -----------------------------------------------------------------------------------
[PIE CHART] Financials 23% 23% 0%
Consumer Discretionary 14% 14% 0%
Energy 9% 7% +2%
Industrials 8% 8% 0%
Information Technology 8% 7% +1%
Consumer Staples 7% 7% 0%
REITs 7% 7% 0%
Health Care 5% 7% -2%
Materials 4% 3% +1%
Utilities 4% 5% -1%
Telecommunication Services 2% 3% -1%
Convertibles 1% 3% -2%
Corporate Bonds 1% 2% -1%
Cash Equivalents 7% 4% +3%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance for the fiscal year ended 10/31/04. The Fund
may not have held these securities throughout the entire period.
(7) Source: Lipper, Inc. Beta is a quantitative measure of the Fund's
volatility relative to the overall market (S&P 500). A beta above 1
indicates more volatility than the market, and a beta below 1 indicates
less volatility. Results are calculated using three-month rolling
returns for Class A shares for the three-year period ended 10/31/04.
(8) Source: Ibbotson Associates and Lipper, Inc. Standard deviation measures
the fluctuation of returns around the arithmetic average return of the
investment. The higher the standard deviation, the greater the
variability (and thus risk) of the investment returns. Results are
calculated for the three-year period ended 10/31/04, and Fund results
are for Class A shares.
9
Growth & Income Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +26.15%
2002 -20.37%
2001 -3.28%
2000 +1.53%
1999 +18.26%
1998 +14.41%
1997 +29.52%
1996 +22.28%
1995 +33.15%
1994 +2.58%
INVESTMENT STRATEGY
Anticipating a strong earnings trend in 2004, equity markets rallied early
in the fiscal year. The S&P 500 peaked in early March and then settled into
an uneasy trading range for the remainder of the year. Rising interest
rates, the Iraqi war, and the U.S. presidential campaign were factors that
contributed to volatility from March through October. While overall market
volatility was not excessive for the year, there were significant swings at
the individual stock level. In general, a company that produced
better-than-expected results saw its stock price rise proportionately but a
company that produced lower-than-expected results saw its stock price drop
disproportionately.
These conditions resulted in less emphasis on sector selection and more
focus on individual stock selection. We continued our undeviating discipline
of identifying good companies and purchasing them when their valuations
become attractive.
Energy was the best performing sector during the fiscal year and the Fund
benefited from an overweighted position in this sector.
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- -------------------------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 9.45% 1.38% 10.79% 10.13% 10/31/49
With Sales Charge 3.42% 0.24% 10.17% 10.02%
Class B Shares Net Asset Value(2) 8.39% 0.42% 10.05% 10.15% 3/30/94
With Sales Charge 3.39% 0.03% 10.05% 10.15%
Class C Shares Net Asset Value(2) 8.45% - - 1.99% 3/1/02
With Sales Charge 7.45% - - 1.99%
S&P 500(3) 9.41% -2.22% 11.00% 12.04%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- ------------------------------------------------------------
CLASS A CLASS A SHARES
SHARES AT WITH MAXIMUM
DATE NAV(2) SALES CHARGE S&P 500(3)
- ------------------------------------------------------------
Oct-94 10,000 9,450 10,000
Nov-94 9,709 9,175 9,633
Dec-94 9,738 9,203 9,774
Jan-95 9,894 9,350 10,028
Feb-95 10,229 9,666 10,417
Mar-95 10,527 9,948 10,725
Apr-95 10,781 10,188 11,037
May-95 11,051 10,444 11,473
Jun-95 11,269 10,649 11,743
Jul-95 11,672 11,030 12,134
Aug-95 11,762 11,115 12,167
Sep-95 12,161 11,493 12,676
Oct-95 12,087 11,422 12,632
Nov-95 12,582 11,890 13,188
Dec-95 12,964 12,251 13,432
Jan-96 13,334 12,600 13,894
Feb-96 13,514 12,771 14,027
Mar-96 13,642 12,892 14,162
Apr-96 13,961 13,193 14,370
May-96 14,263 13,478 14,741
Jun-96 14,280 13,495 14,801
Jul-96 13,563 12,817 14,143
Aug-96 13,969 13,201 14,443
Sep-96 14,777 13,964 15,254
Oct-96 14,941 14,119 15,672
Nov-96 16,032 15,150 16,862
Dec-96 15,852 14,980 16,531
Jan-97 16,605 15,692 17,558
Feb-97 16,698 15,779 17,700
Mar-97 16,120 15,234 16,964
Apr-97 16,716 15,797 17,976
May-97 17,825 16,844 19,080
Jun-97 18,737 17,707 19,931
Jul-97 20,146 19,038 21,514
Aug-97 19,250 18,192 20,317
Sep-97 20,337 19,219 21,431
Oct-97 19,609 18,531 20,715
Nov-97 20,207 19,096 21,674
Dec-97 20,532 19,403 22,047
Jan-98 20,190 19,079 22,292
Feb-98 21,734 20,539 23,899
Mar-98 22,538 21,299 25,123
Apr-98 22,633 21,388 25,376
May-98 22,044 20,832 24,940
Jun-98 22,651 21,405 25,952
Jul-98 21,745 20,549 25,677
Aug-98 17,913 16,928 21,964
Sep-98 19,361 18,296 23,372
Oct-98 21,057 19,898 25,272
Nov-98 22,425 21,192 26,804
Dec-98 23,490 22,198 28,348
Jan-99 24,397 23,055 29,533
Feb-99 23,892 22,578 28,614
Mar-99 24,587 23,235 29,759
Apr-99 26,203 24,762 30,911
May-99 25,865 24,442 30,181
Jun-99 27,161 25,667 31,856
Jul-99 26,240 24,797 30,862
Aug-99 25,468 24,068 30,708
Sep-99 24,814 23,449 29,867
Oct-99 26,020 24,589 31,757
Nov-99 26,738 25,267 32,402
Dec-99 27,781 26,253 34,310
Jan-00 26,369 24,919 32,588
Feb-00 25,549 24,144 31,972
Mar-00 28,408 26,846 35,099
Apr-00 28,374 26,814 34,042
May-00 28,823 27,237 33,344
Jun-00 28,506 26,938 34,165
Jul-00 27,665 26,143 33,632
Aug-00 29,557 27,931 35,720
Sep-00 28,939 27,348 33,834
Oct-00 29,651 28,020 33,692
Nov-00 27,507 25,994 31,037
Dec-00 28,209 26,657 31,189
Jan-01 30,584 28,902 32,296
Feb-01 29,208 27,601 29,351
Mar-01 27,794 26,265 27,493
Apr-01 29,148 27,544 29,629
May-01 29,847 28,206 29,828
Jun-01 29,235 27,627 29,103
Jul-01 29,200 27,594 28,818
Aug-01 27,626 26,107 27,014
Sep-01 25,355 23,961 24,831
Oct-01 25,677 24,265 25,305
Nov-01 27,079 25,590 27,246
Dec-01 27,280 25,779 27,486
Jan-02 26,369 24,918 27,085
Feb-02 25,786 24,368 26,562
Mar-02 27,116 25,625 27,561
Apr-02 25,283 23,893 25,891
May-02 25,610 24,201 25,699
Jun-02 23,822 22,512 23,869
Jul-02 21,919 20,713 22,007
Aug-02 22,234 21,011 22,153
Sep-02 19,991 18,891 19,745
Oct-02 21,544 20,359 21,482
Nov-02 22,619 21,375 22,748
Dec-02 21,723 20,529 21,410
Jan-03 21,322 20,149 20,849
Feb-03 20,803 19,659 20,536
Mar-03 20,862 19,714 20,735
Apr-03 22,547 21,307 22,444
May-03 23,810 22,500 23,627
Jun-03 24,317 22,980 23,929
Jul-03 24,305 22,968 24,350
Aug-03 24,599 23,246 24,825
Sep-03 24,552 23,202 24,562
Oct-03 25,461 24,060 25,952
Nov-03 25,792 24,373 26,181
Dec-03 27,404 25,896 27,553
Jan-04 27,880 26,347 28,060
Feb-04 28,332 26,774 28,450
Mar-04 27,856 26,324 28,020
Apr-04 27,856 26,324 27,580
May-04 28,060 26,516 27,958
Jun-04 28,666 27,089 28,500
Jul-04 27,510 25,997 27,557
Aug-04 27,772 26,244 27,667
Sep-04 27,866 26,334 27,966
Oct-04 27,866 26,334 28,394
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The S&P 500 is a broad-based index intended to represent the U.S. equity
market. Returns shown for the index assume reinvestment of all dividends
and distributions, and since-inception returns shown for the index are
calculated from 10/31/49. Indices are unmanaged, and individuals cannot
invest directly in an index.
(4) Performance of Class B shares (offered as of 3/94) and C shares (offered
as of 3/02) will differ.
10
PORTFOLIO MANAGER
--------------------------
Stephen Q. Spencer, CFA
WM Advisors, Inc.
Holdings in BP (+42%), Exxon Mobil (+38%) and Schlumberger (+36%) far
outpaced the overall market as the price of oil exceeded $50 per barrel.(6)
The industrial sector was also a strong performer and Tyco was the Fund's
top-performing stock (+49%), complemented by Boeing (+32%). The Fund was
underweighted in technology, which helped performance since technology was
the worst-performing sector of the market. However, some of the Fund's
technology holdings, especially Motorola (+29%) and Computer Associates
(+18%), produced returns well above those of the sector.
The most significant detriment to performance was in health care. Several
health care holdings were hurt by isolated events: a recall of the
blockbuster drug Vioxx (Merck; -27%), a poorly conceived plan to acquire
King Pharmaceutical (Mylan Laboratories; -28%), and change of supplier terms
(Cardinal Health; -21%).
Our overall economic outlook is positive. We believe the economy is showing
appropriate growth at this stage of the economic cycle and should continue
to grow within a moderate inflation environment, albeit at a slower pace
than over the past year. This outlook does not suggest that we change our
strategy. We will continue to focus on companies that we believe can
generate organic growth and not only pay dividends, but also grow dividends.
In a slow-growth environment, dividends can become a larger component of
total return, which may improve the attractiveness of these companies. We
remain poised to take advantage of any opportunities as they become
attractively priced.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- --------------------------------------------------------------------
Bank of America Corp. 4.16% 23.12%
Carnival Corp. 3.88% 46.63%
Tyco International Ltd. 2.89% 49.44%
J.P. Morgan Chase & Co. 2.84% 11.33%
The Allstate Corporation 2.74% 24.74%
Freddie Mac 2.68% 20.93%
Avon Products Inc. 2.62% 17.99%
Microsoft Corp. 2.47% 7.32%
Honeywell International Inc. 2.46% 12.54%
First Data Corp. 2.32% 15.85%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ----------------------------------------------------
Weighted Average Market
Capitalization: $87.6 billion
Weighted Average P/E
(based on estimated earnings): 14.9
Beta:(7) 0.93
Fund Standard Deviation:(8) 14.51
S&P 500 Standard Deviation:(8) 16.23
Turnover: 6%
Number of Securities: 54
Total Net Assets: $2,074.8 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- -------------------------------------------------------------------------------------
[PIE CHART] Financials 24% 25% -1%
Health Care 13% 16% -3%
Information Technology 13% 11% +2%
Consumer Discretionary 12% 10% +2%
Consumer Staples 10% 10% 0%
Industrials 10% 9% +1%
Energy 8% 7% +1%
Utilities 3% 5% -2%
Telecommunication Services 1% 1% 0%
Materials 0% 1% -1%
Cash Equivalents 6% 5% +1%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance for the fiscal year ended 10/31/04. The Fund
may not have held these securities throughout the entire period.
(7) Source: Lipper, Inc. Beta is a quantitative measure of the Fund's
volatility relative to the overall market (S&P 500). A beta above 1
indicates more volatility than the market, and a beta below 1 indicates
less volatility. Results are calculated using three-month rolling
returns for Class A shares for the three-year period ended 10/31/04.
(8) Source: Ibbotson Associates and Lipper, Inc. Standard deviation measures
the fluctuation of returns around the arithmetic average return of the
investment. The higher the standard deviation, the greater the
variability (and thus risk) of the investment returns. Results are
calculated for the three-year period ended 10/31/04, and Fund results
are for Class A shares.
11
West Coast Equity Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +41.36%
2002 -22.45%
2001 +6.34%
2000 +6.65%
1999 +42.27%
1998 +22.98%
1997 +32.88%
1996 +22.56%
1995 +26.52%
1994 -1.42%
INVESTMENT STRATEGY
For the fiscal year ended October 31, 2004, the Fund benefited from
positions in energy and materials stocks. These were the big winners this
period as increased world demand and a weaker U.S. dollar helped exporters
in the Fund's geographic area.
In October 2003, the Fund began to increase its market weighting in oil
stocks while reducing exposure to health care, technology, and materials.
Our exposure to the sector paid off as prices for oil increased due to
supply pressures stemming in part from a disruption of oil production in
Iraq. Two energy stocks we own, ChevronTexaco and Nabors Industries, were up
over 30% for the fiscal year.
China's demand for goods and services continues to heat up, and while there
remains a question of how strong a future player it may be, we believe it
will continue to impact the U.S. market in the coming year. Our position in
Oregon Steel Mills saw a dramatic turnaround in return versus last year
primarily due to anticipation of strong Chinese
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
Small-cap and mid-cap stocks may have additional risks, including greater
price volatility. There may be additional investment risks due to the Fund's
concentration in the West Coast region of the United States.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- -------------------------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 9.06% 8.61% 16.43% 14.72% 11/24/86
With Sales Charge 3.06% 7.39% 15.77% 14.36%
Class B Shares Net Asset Value(2) 8.03% 7.61% 15.62% 14.65% 3/30/94
With Sales Charge 3.03% 7.31% 15.62% 14.65%
Class C Shares Net Asset Value(2) 8.12% - - 5.16% 3/1/02
With Sales Charge 7.12% - - 5.16%
Russell 3000(R) Index(3) 9.51% -0.99% 10.87% 11.20%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- ------------------------------------------------------------
CLASS A CLASS A SHARES RUSSELL
SHARES AT WITH MAXIMUM 3000(R)
DATE NAV(2) SALES CHARGE INDEX(3)
- ------------------------------------------------------------
Oct-94 10,000 9,450 10,000
Nov-94 9,832 9,291 9,635
Dec-94 9,890 9,346 9,784
Jan-95 9,841 9,299 9,999
Feb-95 10,191 9,631 10,407
Mar-95 10,536 9,957 10,666
Apr-95 10,838 10,242 10,944
May-95 10,845 10,248 11,341
Jun-95 11,478 10,847 11,669
Jul-95 11,885 11,232 12,138
Aug-95 12,061 11,398 12,246
Sep-95 12,505 11,818 12,721
Oct-95 12,224 11,552 12,612
Nov-95 12,393 11,711 13,172
Dec-95 12,512 11,824 13,387
Jan-96 12,455 11,770 13,775
Feb-96 12,747 12,046 13,977
Mar-96 13,042 12,325 14,117
Apr-96 13,995 13,225 14,385
May-96 14,372 13,581 14,754
Jun-96 13,767 13,010 14,706
Jul-96 12,836 12,130 13,936
Aug-96 13,639 12,889 14,358
Sep-96 14,030 13,259 15,139
Oct-96 14,002 13,232 15,416
Nov-96 14,969 14,146 16,503
Dec-96 15,335 14,492 16,305
Jan-97 16,295 15,399 17,207
Feb-97 16,256 15,362 17,226
Mar-97 15,616 14,757 16,447
Apr-97 16,163 15,274 17,258
May-97 17,880 16,896 18,437
Jun-97 18,707 17,678 19,203
Jul-97 19,987 18,887 20,709
Aug-97 19,706 18,622 19,868
Sep-97 21,345 20,171 20,995
Oct-97 20,229 19,116 20,289
Nov-97 20,736 19,596 21,066
Dec-97 20,378 19,257 21,488
Jan-98 20,414 19,292 21,599
Feb-98 22,254 21,030 23,144
Mar-98 22,574 21,333 24,292
Apr-98 22,678 21,431 24,530
May-98 21,458 20,278 23,924
Jun-98 21,033 19,876 24,733
Jul-98 19,624 18,545 24,282
Aug-98 15,654 14,793 20,562
Sep-98 17,252 16,303 21,965
Oct-98 19,257 18,198 23,632
Nov-98 22,103 20,887 25,078
Dec-98 25,063 23,684 26,673
Jan-99 25,752 24,336 27,580
Feb-99 24,070 22,746 26,604
Mar-99 24,742 23,381 27,580
Apr-99 26,236 24,793 28,824
May-99 27,493 25,981 28,276
Jun-99 29,978 28,330 29,704
Jul-99 29,742 28,106 28,804
Aug-99 29,837 28,196 28,476
Sep-99 28,751 27,169 27,747
Oct-99 30,292 28,626 29,486
Nov-99 31,491 29,759 30,312
Dec-99 35,654 33,693 32,246
Jan-00 35,398 33,451 30,982
Feb-00 40,736 38,495 31,270
Mar-00 41,811 39,511 33,719
Apr-00 38,884 36,746 32,532
May-00 37,399 35,342 31,618
Jun-00 40,896 38,646 32,553
Jul-00 40,765 38,523 31,977
Aug-00 44,307 41,870 34,350
Sep-00 41,263 38,994 32,794
Oct-00 38,994 36,849 32,328
Nov-00 35,613 33,654 29,348
Dec-00 38,028 35,936 29,841
Jan-01 41,207 38,940 30,861
Feb-01 37,197 35,152 28,040
Mar-01 35,218 33,281 26,212
Apr-01 38,864 36,726 28,314
May-01 41,942 39,635 28,541
Jun-01 45,712 43,198 28,016
Jul-01 42,435 40,101 27,554
Aug-01 41,514 39,230 25,928
Sep-01 34,224 32,342 23,641
Oct-01 36,445 34,441 24,192
Nov-01 39,372 37,206 26,055
Dec-01 40,446 38,222 26,422
Jan-02 39,989 37,790 26,092
Feb-02 39,102 36,951 25,559
Mar-02 41,205 38,939 26,679
Apr-02 39,846 37,654 25,278
May-02 38,383 36,272 24,985
Jun-02 36,621 34,607 23,186
Jul-02 32,769 30,967 21,343
Aug-02 31,592 29,855 21,443
Sep-02 29,122 27,520 19,189
Oct-02 31,003 29,298 20,717
Nov-02 33,421 31,583 21,970
Dec-02 31,369 29,644 20,729
Jan-03 30,874 29,176 20,221
Feb-03 30,534 28,855 19,888
Mar-03 30,128 28,471 20,096
Apr-03 32,364 30,584 21,738
May-03 35,551 33,596 23,051
Jun-03 36,294 34,298 23,362
Jul-03 37,641 35,571 23,897
Aug-03 39,354 37,189 24,428
Sep-03 38,830 36,694 24,162
Oct-03 41,991 39,681 25,623
Nov-03 42,881 40,523 25,977
Dec-03 44,343 41,904 27,164
Jan-04 45,350 42,856 27,732
Feb-04 45,690 43,177 28,106
Mar-04 45,283 42,793 27,772
Apr-04 43,744 41,338 27,197
May-04 44,474 42,028 27,591
Jun-04 46,200 43,659 28,140
Jul-04 43,821 41,410 27,077
Aug-04 43,650 41,249 27,188
Sep-04 45,007 42,532 27,606
Oct-04 45,792 43,273 28,059
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Russell 3000(R) Index measures the performance of the 3,000 largest
U.S. companies based on total market capitalization, which represents
approximately 98% of the investable U.S. equity market. Returns shown
for the index assume reinvestment of all dividends and distributions,
and since-inception returns shown for the index are calculated from
11/30/86. Indices are unmanaged, and individuals cannot invest directly
in an index.
(4) Performance of Class B shares (offered as of 3/94) and C shares (offered
as of 3/02) will differ.
12
PORTFOLIO MANAGER
-------------------------
Philip M. Foreman, CFA
WM Advisors, Inc.
interest in the company's oil and gas piping. Steel prices also doubled this
period, which helped to boost returns. Technology stocks, in which we had a
2% overweighted position, had a volatile year and ended the period lower as
customers over-ordered semiconductor components in the fourth quarter of
2003 while 2004 saw decreasing demand. Our underweighting in utilities, due
to the unfavorable West Coast regulatory environment, was a slight detriment
to performance.
The Fund is well-diversified with exposure to all current benchmark sectors
except utilities and consumer non-durables. We are overweighted in
industrials, due to a desire to be exposed to projected capital spending
trends on the West Coast. The Fund's strategy of being invested nearly
equally in small-, mid-, and large-sized companies has the potential to
benefit in any market advance.
Looking ahead, we anticipate slow U.S. economic growth in a low inflation
environment. Job growth will be slow, but we anticipate it to gradually
increase. Positive Social Security reform could have significant
implications for the health care and financial services industries. While a
post-presidential election rally occurred after the fiscal year ended, we
believe the market should eventually reflect more of a low-growth,
low-inflation environment.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- ----------------------------------------------------------------------
Wells Fargo & Co. 3.75% 9.50%
Microsoft Corp. 3.15% 7.32%
PACCAR Inc. 2.78% 35.10%
ChevronTexaco Corp. 2.77% 47.85%
The Boeing Company 2.30% 31.84%
U.S. Bancorp 2.08% 10.24%
Expeditors Intl. of Wash. Inc. 2.03% 52.78%
Bank of America Corp. 1.98% 23.12%
Costco Wholesale Corp. 1.87% 35.94%
Starbucks Corp. 1.77% 67.34%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ------------------------------------------------------
Weighted Average Market
Capitalization: $40.1 billion
Weighted Average P/E
(based on estimated earnings): 16.8
Beta:(7) 0.98
Fund Standard Deviation:(8) 16.46
S&P 500 Standard Deviation:(8) 16.23
Turnover: 12%
Number of Securities: 114
Total Net Assets: $1,287.5 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- ----------------------------------------------------------------------------------------
[PIE CHART] Financials 19% 19% 0%
Information Technology 17% 21% -4%
Consumer Discretionary 16% 17% -1%
Industrials 15% 13% +2%
Health Care 12% 11% +1%
Energy 7% 4% +3%
Consumer Staples 3% 3% 0%
Materials 3% 5% -2%
REITs 2% 2% 0%
Telecommunication Services 1% 1% 0%
Cash Equivalents 5% 4% +1%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance for the fiscal year ended 10/31/04. The Fund
may not have held these securities throughout the entire period.
(7) Source: Lipper, Inc. Beta is a quantitative measure of the Fund's
volatility relative to the overall market (S&P 500). A beta above 1
indicates more volatility than the market, and a beta below 1 indicates
less volatility. Results are calculated using three-month rolling
returns for Class A shares for the three-year period ended 10/31/04.
(8) Source: Ibbotson Associates and Lipper, Inc. Standard deviation measures
the fluctuation of returns around the arithmetic average return of the
investment. The higher the standard deviation, the greater the
variability (and thus risk) of the investment returns. Results are
calculated for the three-year period ended 10/31/04, and Fund results
are for Class A shares.
13
Mid Cap Stock Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +26.78%
2002 -10.48%
2001 +10.69%
INVESTMENT STRATEGY
During the fiscal year, the Fund benefited from the continued economic
recovery that began in 2003. Although this recovery has moderated, it still
provided strong tailwinds that allowed the majority of companies in the
portfolio to record double-digit earnings growth. Stocks of all risk
profiles performed moderately well in 2004, but the value category continued
to outpace the growth category.
Consumer discretionary stocks provided mixed results. Our position in
Tiffany & Co. (-38%) hampered Fund results as strong comparable store sales
in Tiffany's U.S. operation could not offset weak results achieved in Japan,
which resulted in an earnings shortfall.(6) Also, sluggish traditional toy
demand continued to moderate Mattel's (-8%) performance. Better results
within the consumer discretionary sector came from YUM! Brands (+28%), a
fast food restaurant chain, and Neiman Marcus Group (+29%), a high-end
fashion retailer.
The Fund benefited from its underweighted position in the information
technology sector, which fell dramatically in 2004 as earnings growth
expectations declined. The Fund benefited from an overweighted position in
energy stocks as strong oil and gas prices caused a dramatic increase in
share prices.
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
Small-cap and mid-cap stocks may have additional risks, including greater
price volatility.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year Since Inception Inception Date
- -------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 11.57% 13.14% 3/1/00
With Sales Charge 5.46% 11.78%
Class B Shares Net Asset Value(2) 10.54% 12.08% 3/1/00
With Sales Charge 5.54% 11.80%
Class C Shares Net Asset Value(2) 10.60% 7.26% 3/1/02
With Sales Charge 9.60% 7.26%
S&P MidCap 400(3) 11.04% 7.05%
[VALUE OF A $10,000 INVESTMENT(1),(4) MARCH 1, 2000 - OCTOBER 31, 2004 GRAPH]
- ---------------------------------------------------------------
CLASS A CLASS A SHARES
SHARES AT WITH MAXIMUM S&P MIDCAP
DATE NAV(2) SALES CHARGE 400(3)
- ---------------------------------------------------------------
Feb-00 10,000 9,450 10,000
Mar-00 11,210 10,593 10,837
Apr-00 11,271 10,651 10,459
May-00 11,681 11,038 10,328
Jun-00 11,420 10,792 10,480
Jul-00 11,650 11,009 10,645
Aug-00 12,450 11,765 11,833
Sep-00 12,351 11,671 11,752
Oct-00 12,580 11,888 11,353
Nov-00 12,221 11,548 10,496
Dec-00 13,460 12,719 11,299
Jan-01 13,892 13,128 11,551
Feb-01 13,842 13,080 10,892
Mar-01 13,339 12,606 10,082
Apr-01 14,072 13,298 11,194
May-01 14,553 13,752 11,455
Jun-01 15,014 14,188 11,409
Jul-01 14,924 14,103 11,239
Aug-01 14,482 13,686 10,872
Sep-01 13,088 12,368 9,519
Oct-01 13,550 12,804 9,940
Nov-01 14,101 13,326 10,680
Dec-01 14,898 14,078 11,232
Jan-02 14,399 13,607 11,174
Feb-02 14,389 13,597 11,187
Mar-02 15,252 14,413 11,987
Apr-02 15,138 14,305 11,930
May-02 15,272 14,432 11,729
Jun-02 14,481 13,685 10,870
Jul-02 13,430 12,691 9,817
Aug-02 13,566 12,819 9,866
Sep-02 12,514 11,826 9,071
Oct-02 12,888 12,180 9,464
Nov-02 13,555 12,809 10,012
Dec-02 13,336 12,603 9,600
Jan-03 13,098 12,377 9,320
Feb-03 12,931 12,220 9,098
Mar-03 12,994 12,279 9,174
Apr-03 13,420 12,682 9,840
May-03 14,429 13,635 10,656
Jun-03 14,502 13,705 10,792
Jul-03 14,742 13,931 11,175
Aug-03 15,116 14,285 11,682
Sep-03 14,929 14,108 11,503
Oct-03 15,959 15,081 12,373
Nov-03 16,396 15,494 12,803
Dec-03 16,909 15,979 13,020
Jan-04 17,117 16,176 13,302
Feb-04 17,598 16,630 13,622
Mar-04 17,410 16,452 13,680
Apr-04 17,243 16,294 13,231
May-04 17,660 16,689 13,505
Jun-04 18,223 17,221 13,813
Jul-04 17,482 16,520 13,168
Aug-04 17,282 16,332 13,134
Sep-04 17,595 16,628 13,523
Oct-04 17,804 16,825 13,739
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The S&P MidCap 400 is a weighted index of the common stocks of 400
mid-size companies. Returns shown for the index assume reinvestment of
all dividends and distributions, and since-inception returns shown for
the index are calculated from 2/29/00. Indices are unmanaged, and
individuals cannot invest directly in an index.
(4) Performance of Class B shares (offered as of 3/00) and C shares (offered
as of 3/02) will differ.
14
PORTFOLIO MANAGER
--------------------
Daniel R. Coleman
WM Advisors, Inc.
Our investment style favors quality firms that we believe are priced
attractively and have the potential for strong long-term investment
performance over many years. In 2004, our focus on these good companies
began to be recognized by the market again and helped the Fund to slightly
outperform its benchmark, the S&P MidCap 400.(3)
We did not make any dramatic shifts in the sector allocations of the Fund
during 2004. However, the market's shift from rewarding the information
technology sector toward rewarding the energy and materials sectors altered
the Fund's weightings during the year.
There were several strong performers during the period. Mandalay Resort
Group (+78%), benefited from increased convention business and its mid-year
agreement to merge with MGM Mirage. Devon Energy (+53%), an exploration and
production company, benefited from higher oil prices and continued growth of
oil and gas reserves.
In addition, Charter One Financial and GreenPoint Financial Corp. were
acquired at 30% premiums to their stock price.
On the negative side, the sale of J.C. Penney early in 2004 detracted from
performance. We thought the turnaround story at J.C. Penney had played out
and sold our investment too soon. Also, our investment in Synopsys and
Electronics for Imaging fell due to weaker-than-expected earnings.
We are optimistic about the Fund's outlook and believe many of our holdings
are poised to show strong earnings growth that hopefully will be rewarded by
the market. We continue to sell investments that appreciate through our
capitalization ceiling and reinvest in smaller companies that we believe can
grow as quickly for a longer period of time.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- ------------------------------------------------------------------------
North Fork Bancorporation Inc. 2.73% 16.63%
Microchip Technology Inc. 2.68% -7.28%
The Neiman Marcus Group Inc. 2.65% 29.15%
HCC Insurance Holdings Inc. 2.36% 2.92%
Tiffany & Co. 2.33% -37.82%
Nabors Industries Ltd. 2.24% 29.95%
Cabot Corp. 2.23% 24.32%
YUM! Brands Inc. 2.23% 28.06%
Fidelity National Financial Inc. 2.19% 36.92%
Jones Apparel Group Inc. 2.16% 3.29%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ----------------------------------------------------
Weighted Average Market
Capitalization: $5.9 billion
Weighted Average P/E
(based on estimated earnings): 15.4
Beta:(7) 0.69
Fund Standard Deviation:(8) 12.24
S&P 500 Standard Deviation:(8) 16.23
Turnover: 23%
Number of Securities: 61
Total Net Assets: $697.3 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- -------------------------------------------------------------------------------------
[PIE CHART] Financials 18% 19% -1%
Consumer Discretionary 15% 16% -1%
Industrials 13% 9% +4%
Information Technology 13% 14% -1%
Health Care 9% 12% -3%
Energy 7% 8% -1%
Utilities 5% 5% 0%
Consumer Staples 4% 5% -1%
Materials 4% 3% +1%
REITs 2% 0% +2%
Telecommunication Services 1% 1% 0%
Cash Equivalents 9% 8% +1%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance for the fiscal year ended 10/31/04. The Fund
may not have held these securities throughout the entire period.
(7) Source: Lipper, Inc. Beta is a quantitative measure of the Fund's
volatility relative to the overall market (S&P 500). A beta above 1
indicates more volatility than the market, and a beta below 1 indicates
less volatility. Results are calculated using three-month rolling
returns for Class A shares for the three-year period ended 10/31/04.
(8) Source: Ibbotson Associates and Lipper, Inc. Standard deviation measures
the fluctuation of returns around the arithmetic average return of the
investment. The higher the standard deviation, the greater the
variability (and thus risk) of the investment returns. Results are
calculated for the three-year period ended 10/31/04, and Fund results
are for Class A shares.
15
Growth Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +27.68%
2002 -31.82%
2001 -29.45%
2000 -22.00%
1999 +94.42%
1998 +57.10%
1997 +9.78%
1996 +16.92%
1995 +36.25%
1994 +0.65%
INVESTMENT STRATEGY
The following three firms share management responsibilities for the WM
Growth Fund: Columbia Management Advisors, Inc., Janus Capital Management,
and OppenheimerFunds, Inc.
Columbia cited strong stock selection in consumer staples, health care, and
industrials as primary drivers of Fund performance during the period. Its
overweighting in the consumer discretionary and materials sectors
contributed positively to total return. Columbia's best performers included
QUALCOMM, eBay, Symantec, Yahoo, and XM Satellite Radio.
Janus attributed the Fund's outperformance as partly due to several
well-chosen investments in the health care and consumer discretionary
industries. Moderating these gains was the Fund's lack of exposure to
telecommunications and utilities, which did well during the period.
Janus maintained a stock-by-stock focus during the period while also
moderating risk by eliminating redundant positions and making tactical
reductions in select sectors. In the process, it streamlined holdings to
reflect its strongest convictions. Weak performers included wireless handset
and semiconductor
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
International investing involves increased risks due to currency
fluctuations, political or social instability, and differences in accounting
standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 5.32% -8.58% 9.48% 10.02% 4/5/93
With Sales Charge -0.48% -9.61% 8.87% 9.48%
Class B Shares Net Asset Value(2) 4.40% -9.35% 8.81% 9.88% 7/1/94
With Sales Charge -0.60% -9.95% 8.81% 9.88%
Class C Shares Net Asset Value(2) 4.62% - - -0.98% 3/1/02
With Sales Charge 3.62% - - -0.98%
Russell 1000(R) Growth Index(3) 3.38% -7.85% 8.63% 8.15%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- -----------------------------------------------------------------
CLASS A CLASS A SHARES RUSSELL 1000(R)
SHARES AT WITH MAXIMUM GROWTH
DATE NAV(2) SALES CHARGE INDEX(3)
- -----------------------------------------------------------------
Oct-94 10,000 9,450 10,000
Nov-94 9,631 9,101 9,680
Dec-94 9,636 9,106 9,843
Jan-95 9,743 9,207 10,052
Feb-95 10,046 9,494 10,473
Mar-95 10,252 9,688 10,780
Apr-95 10,605 10,021 11,016
May-95 11,007 10,401 11,401
Jun-95 11,639 10,999 11,841
Jul-95 12,394 11,712 12,334
Aug-95 12,484 11,798 12,347
Sep-95 12,854 12,147 12,916
Oct-95 12,509 11,821 12,925
Nov-95 13,067 12,348 13,428
Dec-95 13,130 12,407 13,505
Jan-96 13,437 12,698 13,957
Feb-96 14,088 13,313 14,213
Mar-96 14,190 13,410 14,231
Apr-96 14,953 14,131 14,605
May-96 15,251 14,412 15,115
Jun-96 14,600 13,797 15,136
Jul-96 13,576 12,830 14,249
Aug-96 14,479 13,683 14,617
Sep-96 15,428 14,579 15,681
Oct-96 14,916 14,095 15,775
Nov-96 15,456 14,606 16,960
Dec-96 15,351 14,506 16,627
Jan-97 16,100 15,214 17,793
Feb-97 15,383 14,537 17,672
Mar-97 14,373 13,582 16,716
Apr-97 14,590 13,787 17,826
May-97 15,589 14,732 19,113
Jun-97 16,186 15,296 19,877
Jul-97 17,565 16,599 21,634
Aug-97 16,620 15,706 20,369
Sep-97 17,597 16,630 21,371
Oct-97 17,108 16,167 20,580
Nov-97 17,033 16,096 21,455
Dec-97 16,851 15,924 21,695
Jan-98 17,373 16,418 22,344
Feb-98 18,999 17,954 24,024
Mar-98 19,913 18,818 24,983
Apr-98 20,662 19,525 25,327
May-98 20,032 18,930 24,608
Jun-98 21,921 20,715 26,114
Jul-98 21,826 20,626 25,942
Aug-98 18,098 17,103 22,048
Sep-98 20,283 19,167 23,741
Oct-98 20,948 19,796 25,650
Nov-98 22,362 21,132 27,602
Dec-98 26,474 25,018 30,092
Jan-99 29,982 28,333 31,858
Feb-99 28,990 27,395 30,402
Mar-99 32,512 30,724 32,004
Apr-99 34,167 32,288 32,046
May-99 32,250 30,477 31,062
Jun-99 34,834 32,918 33,237
Jul-99 33,465 31,624 32,180
Aug-99 34,392 32,500 32,704
Sep-99 36,073 34,089 32,017
Oct-99 38,746 36,615 34,435
Nov-99 42,985 40,621 36,291
Dec-99 51,475 48,644 40,065
Jan-00 51,562 48,726 38,186
Feb-00 57,889 54,705 40,053
Mar-00 58,902 55,662 42,921
Apr-00 53,560 50,614 40,878
May-00 48,787 46,104 38,818
Jun-00 50,168 47,409 41,760
Jul-00 49,375 46,660 40,019
Aug-00 53,044 50,127 43,640
Sep-00 50,402 47,630 39,512
Oct-00 48,124 45,477 37,643
Nov-00 40,270 38,056 32,094
Dec-00 40,146 37,938 31,080
Jan-01 42,028 39,717 33,228
Feb-01 34,026 32,155 27,586
Mar-01 30,464 28,788 24,585
Apr-01 35,947 33,970 27,694
May-01 34,919 32,998 27,287
Jun-01 33,582 31,735 26,654
Jul-01 31,661 29,919 25,988
Aug-01 28,507 26,939 23,862
Sep-01 25,765 24,348 21,481
Oct-01 26,090 24,655 22,608
Nov-01 27,785 26,257 24,781
Dec-01 28,316 26,759 24,734
Jan-02 27,424 25,916 24,296
Feb-02 24,959 23,586 23,288
Mar-02 25,730 24,315 24,094
Apr-02 24,052 22,729 22,128
May-02 23,658 22,357 21,592
Jun-02 21,396 20,219 19,595
Jul-02 19,648 18,567 18,517
Aug-02 19,888 18,794 18,573
Sep-02 18,209 17,208 16,647
Oct-02 19,648 18,567 18,173
Nov-02 20,813 19,668 19,160
Dec-02 19,306 18,244 17,836
Jan-03 18,912 17,872 17,403
Feb-03 18,604 17,581 17,323
Mar-03 18,792 17,758 17,645
Apr-03 20,299 19,183 18,949
May-03 21,413 20,236 19,894
Jun-03 21,533 20,349 20,169
Jul-03 22,082 20,868 20,671
Aug-03 22,751 21,500 21,186
Sep-03 22,290 21,064 20,959
Oct-03 23,489 22,197 22,137
Nov-03 23,764 22,457 22,369
Dec-03 24,655 23,299 23,143
Jan-04 25,118 23,737 23,615
Feb-04 25,186 23,801 23,767
Mar-04 24,929 23,558 23,325
Apr-04 24,381 23,040 23,054
May-04 24,810 23,445 23,483
Jun-04 25,274 23,884 23,776
Jul-04 24,144 22,816 22,433
Aug-04 23,922 22,606 22,323
Sep-04 24,350 23,011 22,535
Oct-04 24,744 23,383 22,887
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Russell 1000(R) Growth Index measures the performance of those
Russell 1000(R) Index securities with higher price-to-book ratios and
higher forecasted growth values. Returns shown for the index assume
reinvestment of all dividends and distributions, and since-inception
returns shown for the index are calculated from 3/31/93. Indices are
unmanaged, and individuals cannot invest directly in an index.
(4) Performance of Class B shares (offered as of 7/94) and C shares (offered
as of 3/02) will differ.
16
PORTFOLIO MANAGERS
--------------------------------------
Alexander S. Macmillan III, CFA and
Paul J. Berlinguet
Columbia Management Advisors, Inc.
E. Marc Pinto, CFA
Janus Capital Management
Jane Putnam, CFA
OppenheimerFunds, Inc.
manufacturers, such as Nokia. Strong performers included biotech and
Internet stocks, such as OSI Pharmaceuticals and Yahoo.
Oppenheimer reported strong returns from health care stocks in
biotechnology, health insurance, medical products (Johnson & Johnson), and
certain European pharmaceutical firms. Other sectors that contributed
positively to performance included industrials (General Electric) and
consumer staples (PepsiCo). On the negative side, Viacom and Intel detracted
from performance. As prices declined for technology stocks, Oppenheimer
trimmed holdings in relatively small-cap cyclical technology names and
increased exposure to stable, bellwether companies, such as Cisco Systems.
Looking forward, Oppenheimer is generally optimistic about economic
fundamentals. Although the shift from recovery to sustainable growth makes
earnings and revenue comparisons less robust, the environment still appears
favorable. Over time, such conditions tend to favor growth-oriented stocks,
and valuations of many growth stocks stand at attractive levels. Oppenheimer
believes continued economic growth may set the stage for broad-based,
earnings-driven gains among growth-oriented stocks.
Columbia expects economic and corporate earnings growth to slow modestly in
2005. Inflation should be contained, but there are concerns about higher
energy prices. The firm remains focused on holding well-positioned growth
issues.
Janus is fairly upbeat about the economy and notes the recent deceleration
doesn't mean the economy has stopped growing. Consumer spending remains
strong, aided by continued low interest rates, and the employment landscape
looks better. Janus continues to refine its holdings, seeking an optimal
blend of well-established growth companies.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- ------------------------------------------------------------
Microsoft Corp. 4.15% 7.32%
General Electric Co. 3.91% 20.54%
Pfizer Inc. 2.72% -6.62%
Cisco Systems Inc. 2.13% -8.22%
Medtronic Inc. 2.06% 12.87%
Yahoo! Inc. 2.02% 65.59%
Exxon Mobil Corp. 1.94% 38.02%
Comcast Corp. 1.76% -10.62%
Time Warner Inc. 1.70% 8.83%
American Express Co. 1.67% 14.01%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ------------------------------------------------------------
Weighted Average Market
Capitalization: $91.0 billion
Weighted Average P/E
(based on estimated earnings): 18.9
Beta:(7) 1.01
Fund Standard Deviation:(8) 16.14
S&P 500 Standard Deviation:(8) 16.23
Turnover: 56%
Number of Securities: 186
Total Net Assets: $1,519.4 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- -------------------------------------------------------------------------------------
[PIE CHART] Information Technology 24% 27% -3%
Consumer Discretionary 18% 19% -1%
Health Care 18% 16% +2%
Industrials 12% 7% +5%
Financials 9% 11% -2%
Consumer Staples 7% 6% +1%
Energy 5% 5% 0%
Materials 2% 1% +1%
Telecommunication Services 1% 1% 0%
Cash Equivalents 4% 7% -3%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance for the fiscal year ended 10/31/04. The Fund
may not have held these securities throughout the entire period.
(7) Source: Lipper, Inc. Beta is a quantitative measure of the Fund's
volatility relative to the overall market (S&P 500). A beta above 1
indicates more volatility than the market, and a beta below 1 indicates
less volatility. Results are calculated using three-month rolling
returns for Class A shares for the three-year period ended 10/31/04.
(8) Source: Ibbotson Associates and Lipper, Inc. Standard deviation measures
the fluctuation of returns around the arithmetic average return of the
investment. The higher the standard deviation, the greater the
variability (and thus risk) of the investment returns. Results are
calculated for the three-year period ended 10/31/04, and Fund results
are for Class A shares.
17
Small Cap Value Fund
INVESTMENT STRATEGY
Small-cap stocks, and small-cap value stocks in particular, performed well
from the Fund's commencement date on March 1, 2004 through the fiscal year
end. During this period, the Fund benefited from a significant overweighting
in energy stocks. High oil prices provided a meaningful boost to earnings
and cash flow for the exploration and production companies held by the Fund.
We also had positive relative performance from overweightings in the raw
materials and industrial sectors. Strong global demand for raw materials
helped raw materials stocks, as well as transportation companies that
benefited from charging higher rates for moving raw materials around the
globe.
The Fund was significantly underweighted in financial stocks, which was a
slight disadvantage as that sector performed well. Concern over the
flattening yield curve has led us to remain underweighted in this sector.
We were also underweighted in technology, which was a weak-performing sector
for the period. We are gradually increasing our exposure to the sector as we
see valuations improve.
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
Small-cap and mid-cap stocks may have additional risks, including greater
price volatility. International investing involves increased risks due to
currency fluctuations, political or social instability, and differences in
accounting standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
Since Inception Inception Date
- -----------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 8.10% 3/1/04
With Sales Charge 2.17%
Class B Shares Net Asset Value(2) 7.40% 3/1/04
With Sales Charge 2.40%
Class C Shares Net Asset Value(2) 7.60% 3/1/04
With Sales Charge 5.60%
Russell 2000(R) Value Index(3) 3.99%
[VALUE OF A $10,000 INVESTMENT(1),(4) MARCH 1, 2004 - OCTOBER 31, 2004 GRAPH]
- -----------------------------------------------------------------
CLASS A CLASS A SHARES RUSSELL 2000(R)
SHARES AT WITH MAXIMUM VALUE
DATE NAV(2) SALES CHARGE INDEX(3)
- -----------------------------------------------------------------
Feb-04 10,000 9,450 10,000
Mar-04 10,190 9,630 10,138
Apr-04 9,690 9,157 9,614
May-04 9,650 9,119 9,730
Jun-04 10,050 9,498 10,224
Jul-04 9,970 9,422 9,754
Aug-04 10,070 9,516 9,850
Sep-04 10,580 9,998 10,240
Oct-04 10,810 10,216 10,399
<FN>
(1) Periods less than one year are not annualized. Performance reflects
ongoing expenses and assumes reinvestment of all dividends and capital
gains. It also reflects investment advisory fees, which may include the
effects of expense reimbursement. Performance does not reflect the
impact of federal, state, or municipal taxes. If it did, performance
would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Russell 2000(R) Value Index measures the performance of those
Russell 2000(R) Index securities with lower price-to-book ratios and
lower forecasted growth values. Returns shown for the index assume
reinvestment of all dividends and distributions, and since-inception
returns shown for the index are calculated from 2/29/04. Indices are
unmanaged, and individuals cannot invest directly in an index.
(4) Performance of Class B shares (offered as of 3/04) and C shares (offered
as of 3/04) will differ.
18
PORTFOLIO MANAGER
------------------------
David W. Simpson, CFA
WM Advisors, Inc.
The Fund has gradually trimmed its energy exposure as those stocks
outperformed, although we remain significantly overweighted in the sector as
we think fundamentals favor strong energy prices. We see improved valuations
in technology and health care, both areas where the Fund has small exposure,
and we are modestly adding to those positions. We are not very enamored with
consumer stocks since we think high energy prices erode consumer purchasing
power.
For the period, the Fund held about 22% in non-U.S. stocks. Stocks that
contributed positively to performance included Bonavista, Vermilion, and
Peyto (Canadian income trusts); Tesma (auto parts); Stelmar (shipping); and
Asia Satellite (telecommunications).
Stocks that detracted from performance included Independence Air
(transportation) and Atari (electronics).
Small-cap stocks have outperformed the larger stock indices for six
consecutive years. While we believe small-cap stocks offer decent returns
for the long-term investor, we caution that outperformance is unlikely to
continue uninterrupted. Valuations appear quite rich, although earnings have
been steadily growing. Issues that face the investor include the "twin
deficits" (federal and trade), but we do not see any immediate catalyst that
could lead to a major correction or bear market. However, as observers of
stock market history, we are aware that such catalysts are often apparent
only in hindsight.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- --------------------------------------------------------------------------
Hutchinson Technology Inc. 2.47% 18.05%
Geac Computer Corp. Ltd. 2.10% 17.89%
Cimarex Energy Co. 2.10% 29.06%
Jarden Corp. 2.05% -1.07%
Entertainment Properties Trust 1.91% 9.90%
A/S Dampskibsselskabet TORM 1.87% 6.60%
Comstock Resources Inc. 1.87% 13.99%
Randgold Resources Ltd. 1.76% 9.51%
Oriental Financial Group Inc. 1.75% 0.10%
OmniVision Technologies Inc. 1.68% -43.72%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- -----------------------------------------------------
Weighted Average Market
Capitalization: $940 million
Weighted Average P/E
(based on estimated earnings): 12.5
Turnover: 36%
Number of Securities: 76
Total Net Assets: $272.3 million
PORTFOLIO COMPOSITION(5)
As of As of
10/31/04 10/31/04
- ---------------------------------------------------------------
[PIE CHART] Industrials 15%
Energy 14%
Financials 11%
Materials 10%
Information Technology 9%
Consumer Discretionary 8%
Consumer Staples 7%
REITs 7%
Health Care 3%
Options 3%
Telecommunication Services 3%
Utilities 2%
Cash Equivalents 8%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance from 3/1/04 to 10/31/04. The Fund may not
have held these securities throughout the entire period.
19
Small Cap Growth Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +69.47%
2002 -47.41%
2001 -13.15%
2000 -11.53%
1999 +71.61%
1998 +4.94%
1997 +12.63%
1996 +8.50%
1995 +32.26%
1994 -0.34%
INVESTMENT STRATEGY
The stock market turned increasingly defensive as 2004 progressed with value
stocks significantly outperforming their growth counterparts.
During the year, growth performance hit a 10-year relative low compared to
value. This dramatic shift in sentiment negatively affected the Fund. With
its high beta(8) and small-cap growth holdings, the Fund posted a total return
of -3.13% for the one-year period ended October 31, 2004.
The Fund was fairly close to benchmark sector weightings during the period.
As the year progressed, the Fund became overweighted in technology stocks as
we found opportunities to purchase select names during the summer downturn.
At the close of the period, the Fund's top holdings were primarily
industrial and consumer companies.
The Fund was also overweighted in health care stocks because of favorable
demographic trends that we believe will cause increased demand for health
care products and services. These included biotechnology stocks, which
should do well as investors increase their risk tolerance.
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
Small-cap and mid-cap stocks may have additional risks, including greater
price volatility.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) -3.13% -1.55% 5.72% 7.93% 7/18/90
With Sales Charge -8.45% -2.65% 5.12% 7.50%
Class B Shares Net Asset Value(2) -4.18% -2.51% 5.02% 6.37% 7/1/94
With Sales Charge -9.18% -2.96% 5.02% 6.37%
Class C Shares Net Asset Value(2) -3.90% - - 0.26% 3/1/02
With Sales Charge -4.90% - - 0.26%
Russell 2000(R) Growth Index(3) 5.53% -0.71% 5.69% 7.13%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- -----------------------------------------------------------------
CLASS A CLASS A SHARES RUSSELL 2000(R)
SHARES AT WITH MAXIMUM GROWTH
DATE NAV(2) SALES CHARGE INDEX(3)
- -----------------------------------------------------------------
Oct-94 10,000 9,450 10,000
Nov-94 9,304 8,792 9,595
Dec-94 9,490 8,968 9,821
Jan-95 9,545 9,020 9,621
Feb-95 9,762 9,225 10,066
Mar-95 9,748 9,212 10,359
Apr-95 9,660 9,129 10,515
May-95 9,673 9,141 10,653
Jun-95 10,487 9,910 11,387
Jul-95 11,253 10,634 12,274
Aug-95 11,605 10,967 12,425
Sep-95 12,127 11,460 12,681
Oct-95 11,639 10,999 12,057
Nov-95 11,816 11,166 12,588
Dec-95 12,552 11,861 12,868
Jan-96 12,368 11,688 12,761
Feb-96 13,025 12,309 13,343
Mar-96 13,866 13,104 13,607
Apr-96 14,262 13,478 14,652
May-96 14,813 13,998 15,404
Jun-96 14,255 13,471 14,403
Jul-96 12,516 11,828 12,644
Aug-96 13,513 12,770 13,580
Sep-96 13,979 13,210 14,279
Oct-96 13,519 12,776 13,664
Nov-96 13,682 12,929 14,043
Dec-96 13,617 12,868 14,317
Jan-97 13,195 12,469 14,675
Feb-97 12,880 12,171 13,789
Mar-97 11,866 11,213 12,815
Apr-97 11,912 11,257 12,667
May-97 13,341 12,607 14,570
Jun-97 14,040 13,268 15,064
Jul-97 14,148 13,370 15,836
Aug-97 14,287 13,501 16,311
Sep-97 15,224 14,386 17,612
Oct-97 14,931 14,110 16,554
Nov-97 15,008 14,182 16,160
Dec-97 15,336 14,493 16,170
Jan-98 15,157 14,323 15,955
Feb-98 16,410 15,508 17,363
Mar-98 17,159 16,215 18,093
Apr-98 17,037 16,100 18,203
May-98 15,791 14,923 16,880
Jun-98 15,856 14,984 17,052
Jul-98 14,653 13,847 15,628
Aug-98 11,309 10,687 12,021
Sep-98 12,326 11,648 13,240
Oct-98 13,221 12,494 13,931
Nov-98 14,612 13,808 15,012
Dec-98 16,093 15,208 16,371
Jan-99 15,987 15,108 17,107
Feb-99 14,487 13,691 15,542
Mar-99 14,383 13,592 16,095
Apr-99 15,038 14,210 17,517
May-99 16,066 15,182 17,545
Jun-99 17,355 16,400 18,469
Jul-99 17,873 16,890 17,898
Aug-99 17,575 16,608 17,229
Sep-99 17,930 16,944 17,562
Oct-99 18,853 17,816 18,011
Nov-99 21,795 20,596 19,915
Dec-99 27,618 26,099 23,424
Jan-00 29,670 28,038 23,206
Feb-00 39,351 37,187 28,606
Mar-00 34,924 33,004 25,600
Apr-00 27,803 26,274 23,014
May-00 25,546 24,141 20,998
Jun-00 31,416 29,688 23,711
Jul-00 29,930 28,284 21,679
Aug-00 33,088 31,268 23,960
Sep-00 30,950 29,248 22,769
Oct-00 28,954 27,361 20,920
Nov-00 24,310 22,973 17,121
Dec-00 24,436 23,092 18,169
Jan-01 28,241 26,688 19,639
Feb-01 22,813 21,558 16,946
Mar-01 19,122 18,070 15,406
Apr-01 21,944 20,737 17,291
May-01 23,379 22,093 17,693
Jun-01 26,000 24,570 18,176
Jul-01 21,793 20,595 16,625
Aug-01 20,281 19,165 15,586
Sep-01 15,267 14,428 13,072
Oct-01 17,132 16,189 14,330
Nov-01 19,612 18,534 15,526
Dec-01 21,224 20,057 16,493
Jan-02 19,079 18,029 15,906
Feb-02 17,012 16,077 14,877
Mar-02 19,212 18,155 16,170
Apr-02 16,515 15,606 15,821
May-02 14,582 13,780 14,895
Jun-02 13,349 12,615 13,632
Jul-02 10,961 10,358 11,537
Aug-02 10,518 9,939 11,531
Sep-02 9,861 9,318 10,698
Oct-02 11,014 10,408 11,240
Nov-02 12,584 11,892 12,354
Dec-02 11,162 10,548 11,501
Jan-03 11,282 10,662 11,188
Feb-03 10,786 10,193 10,890
Mar-03 10,584 10,002 11,054
Apr-03 11,724 11,079 12,100
May-03 13,803 13,044 13,464
Jun-03 14,004 13,234 13,723
Jul-03 15,024 14,198 14,761
Aug-03 15,843 14,971 15,554
Sep-03 15,936 15,060 15,160
Oct-03 18,001 17,011 16,470
Nov-03 18,405 17,392 17,007
Dec-03 18,914 17,874 17,083
Jan-04 20,377 19,256 17,980
Feb-04 20,295 19,179 17,953
Mar-04 20,148 19,039 18,038
Apr-04 18,725 17,695 17,132
May-04 18,590 17,568 17,473
Jun-04 18,912 17,872 18,055
Jul-04 16,378 15,477 16,434
Aug-04 16,257 15,362 16,080
Sep-04 17,102 16,161 16,969
Oct-04 17,437 16,478 17,382
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Russell 2000(R) Growth Index measures the performance of those
Russell 2000(R) Index securities with higher price-to-book ratios and
higher forecasted growth values. Returns shown for the index assume
reinvestment of all dividends and distributions, and since-inception
returns shown for the index are calculated from 7/31/90. Indices are
unmanaged, and individuals cannot invest directly in an index.
(4) Performance of Class B shares (offered as of 7/94) and C shares (offered
as of 3/02) will differ.
20
PORTFOLIO MANAGER
----------------------
Linda C. Olson, CFA
WM Advisors, Inc.
Companies that contributed positively to performance during the period were:
Pharmacyclics (+108%), a biotech company developing a new class of drugs to
treat cancer and atherosclerosis; Building Materials Holding Corp. (+109%),
which specializes in providing construction services; and Headwaters (+68%),
a company that develops and commercializes technologies that enhance the
value of coal, gas, oil, and other natural resources.(6)
Companies that did not perform as expected included: Digimarc (-45%), a
supplier of secure personal identification systems and digital watermarking
technology; Intraware (-57%), a provider of global electronic software
delivery and management services for the enterprise software industry; and
BSQUARE (-63%), a provider of software, professional services, and hardware
offerings to the smart device marketplace.
The relative valuation contraction that growth stocks exhibited over the
last several months of the period could make growth investing increasingly
more attractive on a fundamental basis relative to value. While it is too
soon to determine if it is a turning point, risk-taking made a comeback in
September after a few dormant months.
We continue to diligently search for and invest in companies that we believe
have strong management teams, superior products and services, and high
barriers to entry. We also seek companies that are perceived market leaders
and attractively valued. We believe these qualities represent companies that
could be strong long-term holdings for our shareholders.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- ---------------------------------------------------------------------
Digimarc Corp. 2.95% -44.73%
Euronet Worldwide Inc. 2.61% 61.18%
Hewitt Associates Inc. 2.38% 9.07%
SonoSite Inc. 2.33% 46.25%
West Marine Inc. 2.33% 10.70%
Gevity HR Inc. 2.23% 19.14%
SumTotal Systems Inc.(7) 2.21% -32.92%
Affiliated Managers Group Inc. 2.06% 15.53%
QUANTUM Fuel Systems Tech. 1.99% -18.86%
Intrawest Corp. 1.97% 16.53%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ---------------------------------------------------------
Weighted Average Market
Capitalization: $760 million
Weighted Average P/E
(based on estimated earnings): 19.6
Beta:(8) 1.70
Fund Standard Deviation:(9) 31.36
S&P 500 Standard Deviation:(9) 16.23
Turnover: 53%
Number of Securities: 74
Total Net Assets: $343.6 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- ----------------------------------------------------------------------------------------------------
[PIE CHART] Health Care 22% 20% +2%
Consumer Discretionary 15% 15% 0%
Industrials 12% 6% +6%
Software 11% 14% -3%
Financials 8% 9% -1%
Internet Software & Services 8% 11% -3%
Communications Equipment 4% 2% +2%
Consumer Staples 4% 4% 0%
Electronic Equipment & Instruments 4% 0% +4%
Energy 3% 4% -1%
Materials 3% 1% +2%
IT Services 2% 6% -4%
Semiconductors & Semiconductor Equipment 2% 6% -4%
Computers & Peripherals 1% 1% 0%
Telecommunication Services 1% 1% 0%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance for the fiscal year ended 10/31/04. The Fund
may not have held these securities throughout the entire period.
(7) Due to a merger, the total return listed for this company is for the
period from 3/19/04 to 10/31/04.
(8) Source: Lipper, Inc. Beta is a quantitative measure of the Fund's
volatility relative to the overall market (S&P 500). A beta above 1
indicates more volatility than the market, and a beta below 1 indicates
less volatility. Results are calculated using three-month rolling
returns for Class A shares for the three-year period ended 10/31/04.
(9) Source: Ibbotson Associates and Lipper, Inc. Standard deviation measures
the fluctuation of returns around the arithmetic average return of the
investment. The higher the standard deviation, the greater the
variability (and thus risk) of the investment returns. Results are
calculated for the three-year period ended 10/31/04, and Fund results
are for Class A shares.
21
International Growth Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +33.33%
2002 -15.61%
2001 -18.72%
2000 -21.15%
1999 +49.91%
1998 +4.08%
1997 -2.49%
1996 +8.02%
1995 +4.87%
1994 -1.31%
INVESTMENT STRATEGY
Concerns about global economic growth and future corporate profits kept a
lid on international equities, although some non-U.S. markets broke through
desultory summer trading patterns to post positive returns. As the fiscal
year ended, emerging market stocks outperformed their developed market
counterparts. Returns for U.S. dollar-based investors were slightly enhanced
by dollar weakness against several currencies. Rising oil and raw materials
prices helped the energy and materials sectors post solid gains. The
technology sector fell the hardest.
Countries with euro-based economies continued to rely on exports for their
main source of growth as domestic demand in the region remained anemic. A
combination of weak income growth and high unemployment left the euro area
with a very cautious consumer. As the year ended, Japan's economic recovery
slowed in conjunction with the global slowdown. This raised some concerns
about the sustainability of Japan's nascent domestic growth.
Holdings in energy, metals, and mining were particularly helpful. Many of
our long-held
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 5.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge reflects the maximum sales charge noted
above.
International investing involves increased risks due to currency
fluctuations, political or social instability, and differences in accounting
standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 10.89% -1.79% 1.91% 2.34% 7/18/90
With Sales Charge 4.76% -2.89% 1.34% 1.94%
Class B Shares Net Asset Value(2) 9.59% -2.73% 1.25% 1.57% 7/1/94
With Sales Charge 4.59% -3.18% 1.25% 1.57%
Class C Shares Net Asset Value(2) 9.87% - - 6.27% 3/1/02
With Sales Charge 8.87% - - 6.27%
Morgan Stanley Capital
International EAFE Index(3) 19.27% -0.58% 4.35% 4.83%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- -----------------------------------------------------------------
MORGAN STANLEY
CLASS A CLASS A SHARES CAPITAL
SHARES AT WITH MAXIMUM INTERNATIONAL
DATE NAV(2) SALES CHARGE EAFE INDEX(3)
- -----------------------------------------------------------------
Oct-94 10,000 9,450 10,000
Nov-94 9,577 9,051 9,522
Dec-94 9,460 8,940 9,584
Jan-95 8,968 8,474 9,218
Feb-95 8,844 8,358 9,194
Mar-95 9,005 8,510 9,770
Apr-95 9,290 8,779 10,141
May-95 9,375 8,859 10,022
Jun-95 9,271 8,761 9,849
Jul-95 9,678 9,146 10,464
Aug-95 9,555 9,030 10,067
Sep-95 9,631 9,101 10,267
Oct-95 9,432 8,913 9,994
Nov-95 9,527 9,003 10,275
Dec-95 9,921 9,375 10,691
Jan-96 10,271 9,706 10,737
Feb-96 10,191 9,631 10,775
Mar-96 10,281 9,716 11,007
Apr-96 10,431 9,857 11,329
May-96 10,391 9,820 11,123
Jun-96 10,491 9,914 11,189
Jul-96 9,991 9,442 10,864
Aug-96 10,111 9,555 10,890
Sep-96 10,341 9,772 11,182
Oct-96 10,271 9,706 11,071
Nov-96 10,731 10,141 11,513
Dec-96 10,717 10,128 11,368
Jan-97 10,768 10,176 10,973
Feb-97 10,860 10,263 11,155
Mar-97 10,778 10,186 11,198
Apr-97 10,942 10,340 11,260
May-97 11,627 10,988 11,995
Jun-97 12,118 11,451 12,660
Jul-97 12,528 11,839 12,867
Aug-97 11,464 10,833 11,909
Sep-97 12,077 11,413 12,578
Oct-97 10,738 10,147 11,615
Nov-97 10,503 9,925 11,498
Dec-97 10,450 9,875 11,602
Jan-98 10,530 9,951 12,136
Feb-98 11,201 10,585 12,917
Mar-98 11,805 11,156 13,318
Apr-98 12,102 11,436 13,425
May-98 11,999 11,339 13,364
Jun-98 11,611 10,972 13,468
Jul-98 11,736 11,091 13,608
Aug-98 10,075 9,521 11,925
Sep-98 9,585 9,058 11,562
Oct-98 10,086 9,532 12,770
Nov-98 10,644 10,059 13,428
Dec-98 10,877 10,279 13,961
Jan-99 10,996 10,391 13,923
Feb-99 10,664 10,077 13,595
Mar-99 11,068 10,459 14,166
Apr-99 11,460 10,829 14,742
May-99 10,999 10,394 13,986
Jun-99 11,724 11,079 14,534
Jul-99 12,199 11,528 14,970
Aug-99 12,377 11,696 15,029
Sep-99 12,638 11,943 15,184
Oct-99 13,232 12,504 15,756
Nov-99 14,277 13,492 16,307
Dec-99 16,310 15,413 17,773
Jan-00 15,457 14,607 16,647
Feb-00 15,950 15,073 17,098
Mar-00 16,359 15,459 17,765
Apr-00 15,590 14,732 16,834
May-00 14,869 14,052 16,426
Jun-00 15,698 14,834 17,072
Jul-00 14,797 13,983 16,360
Aug-00 15,073 14,244 16,506
Sep-00 13,860 13,098 15,705
Oct-00 13,175 12,451 15,338
Nov-00 12,635 11,940 14,765
Dec-00 12,861 12,154 15,294
Jan-01 13,156 12,432 15,286
Feb-01 12,016 11,356 14,141
Mar-01 11,339 10,715 13,205
Apr-01 12,337 11,658 14,131
May-01 11,812 11,163 13,643
Jun-01 11,262 10,642 13,091
Jul-01 10,904 10,304 12,854
Aug-01 10,558 9,977 12,531
Sep-01 9,329 8,816 11,264
Oct-01 9,752 9,215 11,553
Nov-01 10,302 9,735 11,979
Dec-01 10,454 9,879 12,051
Jan-02 9,964 9,416 11,411
Feb-02 10,042 9,489 11,492
Mar-02 10,610 10,026 12,120
Apr-02 10,597 10,014 12,207
May-02 10,623 10,038 12,373
Jun-02 10,145 9,587 11,885
Jul-02 9,150 8,647 10,713
Aug-02 9,021 8,525 10,692
Sep-02 8,095 7,650 9,547
Oct-02 8,742 8,261 10,061
Nov-02 9,285 8,774 10,518
Dec-02 8,823 8,338 10,166
Jan-03 8,472 8,006 9,742
Feb-03 8,277 7,822 9,519
Mar-03 8,004 7,564 9,339
Apr-03 8,772 8,289 10,265
May-03 9,240 8,732 10,897
Jun-03 9,435 8,916 11,166
Jul-03 9,786 9,248 11,438
Aug-03 10,059 9,506 11,716
Sep-03 10,241 9,678 12,079
Oct-03 10,905 10,305 12,833
Nov-03 11,047 10,440 13,121
Dec-03 11,763 11,116 14,147
Jan-04 11,868 11,216 14,348
Feb-04 12,052 11,389 14,682
Mar-04 12,118 11,451 14,770
Apr-04 11,724 11,079 14,448
May-04 11,737 11,091 14,510
Jun-04 11,855 11,203 14,834
Jul-04 11,462 10,831 14,355
Aug-04 11,553 10,918 14,421
Sep-04 11,724 11,079 14,800
Oct-04 12,092 11,427 15,306
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance does
not reflect the impact of federal, state, or municipal taxes. If it did,
performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Morgan Stanley Capital International (MSCI) EAFE Index is a
broad-based, capitalization-weighted index of equity markets
representing 21 countries in Europe, Australasia, and the Far East.
Returns shown for the index assume reinvestment of all dividends and
distributions, and since-inception returns shown for the index are
calculated from 7/31/90. Indices are unmanaged, and individuals cannot
invest directly in an index.
(4) Performance of Class B shares (offered as of 7/94) and C shares (offered
as of 3/02) will differ.
22
PORTFOLIO MANAGER
---------------------------------
International Equity Team
Capital Guardian Trust Company
positions in areas such as wireless telecommunications and European banks
were top contributors as the market sought stocks of cash-generating
companies.
Significant positions in Japanese technology, financial, and retail stocks
hurt returns as did holdings in the European insurance and reinsurance
areas. The overall overweighting in the weak information technology sector
and underweighting in the strong utilities sector negatively impacted
relative returns. Positions in global pharmaceutical companies detracted
from Fund performance despite a rebound in several key holdings. During the
period, the Fund was underweighted in Europe and the Pacific Basin and
overweighted in Canada and emerging markets.
There was a slowdown this year in global demand, particularly from China,
accompanied by energy price fluctuations. Although there were fears of
escalating inflation, there has been no evidence of a sustained rise in
prices based on economic data. We expect more modest, but still reasonable
economic growth rates. The U.S. and U.K. economies have been growing for
some time and are now slowing, but we believe the expansion in Japan will
continue. We also find anecdotal signs of improvement in the euro-based
economies. China also continues to require more capacity for electric power
grids, roads, rail, and urban infrastructure.
Although many of our largest holdings have produced the earnings we
expected, their stock prices have not followed suit. We believe many of
these stocks are attractive based on their price-to-earnings, cash flows,
and dividend yields, and the companies could create more value for
shareholders through higher dividends and stock repurchases. These
characteristics should position the Fund well for the future.
TOP 10 HOLDINGS(5),(6) AS OF OCTOBER 31, 2004
% of Net Assets Total Return
- ----------------------------------------------------------------------
Vodafone Group PLC 3.92% 23.72%
Sanofi-Aventis SA 3.08% 20.03%
Royal Dutch Petroleum Co. 2.44% 27.40%
Novartis AG 1.97% 26.91%
BNP Paribas SA 1.72% 32.85%
AstraZeneca PLC (F) 1.45% -11.20%
Banco Bilbao Vizcaya Argentaria 1.44% 41.31%
Royal Bank of Scotland 1.36% 13.29%
Nestle SA 1.32% 9.41%
UFJ Holdings Inc. 1.23% 7.01%
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ------------------------------------------------------
Weighted Average Market
Capitalization: $43.8 billion
Weighted Average P/E
(based on trailing earnings): 17.2
Beta:(7) 0.93
Fund Standard Deviation:(8) 15.58
S&P 500 Standard Deviation:(8) 16.23
Turnover: 20%
Number of Securities: 248
Total Net Assets: $582.4 million
GEOGRAPHIC BREAKDOWN(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- --------------------------------------------------------------------------
[PIE CHART] Japan 22% 21% +1%
United Kingdom 18% 17% +1%
France 11% 11% 0%
Switzerland 10% 8% +2%
Netherlands 8% 10% -2%
Germany 5% 5% 0%
Canada 4% 4% 0%
Spain 4% 3% +1%
Australia 3% 2% +1%
Hong Kong 2% 3% -1%
South Korea 1% 1% 0%
Sweden 1% 1% 0%
Other Countries 7% 9% -2%
Cash Equivalents 4% 5% -1%
<FN>
(5) May not reflect the current portfolio composition.
(6) Performance information provided for individual securities held by the
Fund represents performance for the fiscal year ended 10/31/04. The Fund
may not have held these securities throughout the entire period.
(7) Source: Lipper, Inc. Beta is a quantitative measure of the Fund's
volatility relative to the overall market (S&P 500). A beta above 1
indicates more volatility than the market, and a beta below 1 indicates
less volatility. Results are calculated using three-month rolling
returns for Class A shares for the three-year period ended 10/31/04.
(8) Source: Ibbotson Associates and Lipper, Inc. Standard deviation measures
the fluctuation of returns around the arithmetic average return of the
investment. The higher the standard deviation, the greater the
variability (and thus risk) of the investment returns. Results are
calculated for the three-year period ended 10/31/04, and Fund results
are for Class A shares.
23
Short Term Income Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +4.60%
2002 +5.63%
2001 +7.96%
2000 +7.61%
1999 +2.92%
1998 +6.30%
1997 +5.77%
1996 +4.09%
1995 +10.03%
1994 -2.05%
INVESTMENT STRATEGY
This fiscal year was characterized by sluggish economic growth early on,
followed by strong jobs reports and a spike in interest rates between April
and May. Rates peaked during May and June, and then gradually declined as
concerns about lackluster job growth dragged on the market.
At its June meeting, the Federal Reserve (the Fed) raised short-term interest
rates for the first time in four years. Its statement signaled that the Fed
planned to gradually alter its accommodative monetary policy.
As a result, rates on the front end of the yield curve rose, which flattened
the yield curve. For the one-year period ended October 31, 2004, the two-year
U.S. Treasury note was up 76 basis points in yield, while the five-year
Treasury note was up only 9 basis points.
This created a challenging environment in the front end of the yield curve as
rates increased substantially. Fund performance was driven by an overweighting
in corporate bond positions that did well as spreads tightened. This was
especially true in lower
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 3.5%; Class B
shares: contingent deferred sales charge of 4%, which declines over 4 years
(4-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge or at maximum offering price reflects
the maximum sales charge noted above.
Fixed-income investments are subject to interest rate risk, and their value
will decline as interest rates rise. There may be additional credit and
default risks associated with lower-rated securities. REIT securities are
subject to risk factors associated with the real estate industry and tax
factors of REIT registration.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- ------------------------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 2.87% 5.62% 5.49% 4.98% 11/1/93
With Sales Charge -0.86% 4.90% 5.10% 4.64%
Class B Shares Net Asset Value(2) 2.11% 4.88% 4.86% 4.77% 7/1/94
With Sales Charge -1.89% 4.88% 4.86% 4.77%
Class C Shares Net Asset Value(2) 2.10% -- -- 3.43% 3/1/02
With Sales Charge 1.10% -- -- 3.43%
Citigroup Broad Investment-Grade
Credit 1-3 Years Index(3) 2.99% 6.44% 6.66% 6.23%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- ------------------------------------------------------------------
CITIGROUP BROAD
CLASS A CLASS A SHARES INVESTMENT-GRADE
SHARES AT WITH MAXIMUM CREDIT 1-3
DATE NAV(2) SALES CHARGE YEARS INDEX(3)
- ------------------------------------------------------------------
Oct-94 10,000 9,650 10,000
Nov-94 10,008 9,658 9,958
Dec-94 9,848 9,503 9,981
Jan-95 9,857 9,512 10,124
Feb-95 9,948 9,600 10,273
Mar-95 10,042 9,691 10,342
Apr-95 10,136 9,782 10,444
May-95 10,363 10,001 10,641
Jun-95 10,372 10,009 10,704
Jul-95 10,381 10,018 10,757
Aug-95 10,478 10,111 10,829
Sep-95 10,530 10,162 10,885
Oct-95 10,631 10,259 10,980
Nov-95 10,732 10,357 11,079
Dec-95 10,835 10,456 11,170
Jan-96 10,938 10,556 11,271
Feb-96 10,858 10,477 11,232
Mar-96 10,820 10,442 11,230
Apr-96 10,781 10,404 11,239
May-96 10,791 10,413 11,274
Jun-96 10,895 10,514 11,357
Jul-96 10,956 10,572 11,403
Aug-96 10,968 10,584 11,446
Sep-96 11,074 10,687 11,557
Oct-96 11,176 10,785 11,697
Nov-96 11,273 10,879 11,789
Dec-96 11,279 10,884 11,792
Jan-97 11,284 10,889 11,858
Feb-97 11,342 10,945 11,885
Mar-97 11,355 10,957 11,883
Apr-97 11,409 11,010 11,979
May-97 11,512 11,109 12,066
Jun-97 11,566 11,161 12,157
Jul-97 11,726 11,315 12,311
Aug-97 11,733 11,322 12,316
Sep-97 11,785 11,373 12,418
Oct-97 11,846 11,431 12,498
Nov-97 11,851 11,437 12,519
Dec-97 11,931 11,513 12,600
Jan-98 12,039 11,618 12,729
Feb-98 12,036 11,615 12,746
Mar-98 12,090 11,667 12,808
Apr-98 12,144 11,719 12,877
May-98 12,198 11,771 12,953
Jun-98 12,252 11,823 13,019
Jul-98 12,307 11,876 13,088
Aug-98 12,469 12,033 13,189
Sep-98 12,631 12,189 13,367
Oct-98 12,634 12,192 13,386
Nov-98 12,631 12,189 13,430
Dec-98 12,684 12,240 13,494
Jan-99 12,740 12,294 13,582
Feb-99 12,680 12,236 13,539
Mar-99 12,785 12,338 13,658
Apr-99 12,838 12,389 13,721
May-99 12,783 12,335 13,703
Jun-99 12,783 12,335 13,745
Jul-99 12,839 12,390 13,766
Aug-99 12,843 12,393 13,802
Sep-99 12,976 12,522 13,907
Oct-99 12,994 12,540 13,952
Nov-99 13,053 12,596 13,998
Dec-99 13,056 12,599 14,035
Jan-00 13,058 12,601 14,045
Feb-00 13,117 12,658 14,149
Mar-00 13,179 12,717 14,221
Apr-00 13,181 12,720 14,218
May-00 13,243 12,780 14,263
Jun-00 13,422 12,952 14,440
Jul-00 13,485 13,013 14,559
Aug-00 13,550 13,076 14,685
Sep-00 13,672 13,193 14,829
Oct-00 13,736 13,255 14,835
Nov-00 13,861 13,376 14,975
Dec-00 14,049 13,558 15,156
Jan-01 14,238 13,739 15,444
Feb-01 14,302 13,801 15,569
Mar-01 14,433 13,928 15,714
Apr-01 14,501 13,994 15,766
May-01 14,571 14,061 15,909
Jun-01 14,639 14,127 15,982
Jul-01 14,833 14,313 16,211
Aug-01 14,963 14,439 16,344
Sep-01 15,092 14,564 16,517
Oct-01 15,288 14,753 16,664
Nov-01 15,080 14,552 16,647
Dec-01 15,146 14,616 16,641
Jan-02 15,212 14,679 16,694
Feb-02 15,272 14,738 16,729
Mar-02 15,146 14,615 16,650
Apr-02 15,339 14,803 16,787
May-02 15,470 14,928 16,933
Jun-02 15,535 14,991 16,992
Jul-02 15,471 14,930 17,089
Aug-02 15,603 15,057 17,229
Sep-02 15,731 15,180 17,403
Oct-02 15,598 15,052 17,358
Nov-02 15,756 15,205 17,486
Dec-02 15,997 15,437 17,754
Jan-03 16,128 15,564 17,827
Feb-03 16,251 15,682 17,976
Mar-03 16,239 15,671 18,038
Apr-03 16,429 15,854 18,202
May-03 16,551 15,972 18,376
Jun-03 16,601 16,020 18,452
Jul-03 16,445 15,869 18,321
Aug-03 16,422 15,847 18,352
Sep-03 16,671 16,088 18,568
Oct-03 16,576 15,996 18,511
Nov-03 16,619 16,038 18,531
Dec-03 16,732 16,147 18,672
Jan-04 16,777 16,190 18,743
Feb-04 16,892 16,300 18,852
Mar-04 17,008 16,413 18,937
Apr-04 16,772 16,185 18,745
May-04 16,747 16,161 18,715
Jun-04 16,722 16,136 18,730
Jul-04 16,840 16,251 18,822
Aug-04 16,960 16,366 18,999
Sep-04 16,935 16,342 18,999
Oct-04 17,054 16,457 19,069
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance
does not reflect the impact of federal, state, or municipal taxes. If
it did, performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Citigroup Broad Investment-Grade Credit 1-3 Years Index measures
the performance of bonds, including U.S. and non-U.S. corporate
securities and non-U.S. sovereign and provincial securities, with
maturities between one and three years. Returns shown for the index
assume reinvestment of all dividends and distributions, and
since-inception returns shown for the index are calculated from
10/31/93. Indices are unmanaged, and individuals cannot invest directly
in an index.
(4) Performance of Class B shares (offered as of 7/94) and C shares
(offered as of 3/02) will differ.
24
PORTFOLIO MANAGER
-------------------
Craig V. Sosey
WM Advisors, Inc.
quality (BBB-rated) bonds that tightened much more than A or higher-rated
bonds. Positive contributions also came from asset- and mortgage-backed
securities, especially in the shorter-end maturities (between one and five
years). Positions in real estate investment trusts and the gaming and
leisure sectors also boosted Fund performance.
The Fund maintained its overall portfolio weightings, but continued to
overweight corporate bonds. Since spreads between lower- and higher-quality
rated corporates compressed during the period, we capitalized on that
situation to add higher-quality names without sacrificing much yield. The
Fund also increased its positions in asset-backed securities at attractive
spreads.
We believe the economy will continue growing slowly, accompanied by measured
increases in short-term interest rates. In this environment, we remain
defensive and expect weaker corporate securities to underperform
higher-quality names. As a result, we favor high-quality corporate issues.
Asset-backed and mortgage-backed securities could also perform well in this
environment, and we will look to add to these positions as appropriate. We
anticipate steady returns, despite a challenging outlook characterized by
compression in corporate spreads and the likelihood that rates will
increase.
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ------------------------------------------------------
Weighted Average Maturity (Years): 2.2
Weighted Average Duration (Years): 1.8
Turnover: 14%
Number of Securities: 92
Total Net Assets: $273.8 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- ---------------------------------------------------------------------------------------
[PIE CHART] Domestic Corporate Bonds 53% 47% +6%
Government Agency 13% 13% 0%
Mortgage-Backed Bonds 11% 13% -2%
Asset-Backed Bonds 7% 5% +2%
Foreign Corporate
Bonds (U.S. $) 4% 4% 0%
U.S. Treasuries 4% 3% +1%
Cash Equivalents 8% 15% -7%
<FN>
(5) May not reflect the current portfolio composition.
(6) Ratings are provided by Moody's Investors Service (Moody's). The
ratings represent Moody's opinion of the credit quality of securities
and are intended to reflect the issuer's ability to pay back principal
and interest.
25
U.S. Government Securities Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +1.83%
2002 +8.37%
2001 +7.16%
2000 +10.27%
1999 +0.13%
1998 +7.21%
1997 +9.92%
1996 +2.48%
1995 +19.45%
1994 -4.91%
INVESTMENT STRATEGY
The main performance drivers for the Fund during this fiscal year were low
interest rates and the resulting high level of mortgage refinancing. As the
period began, economic growth was slow and interest rates were near
historical lows. In this environment, mortgages, which represent the
majority of the Fund's holdings, prepaid extremely fast as homeowners
refinanced their existing loans. This detracted from Fund performance as
premium-priced mortgage securities were repaid at par and the proceeds had
to be invested at lower rates.
In addition, the Fund's duration (a measure of price sensitivity to interest
rate movements) was slightly long at the start of the period, so as rates
spiked up quickly in April, performance was hurt. Expecting flat-to-higher
rates, we then shortened duration to be more defensive. However, the Fund
slightly underperformed as rates drifted back down due to sluggish job
growth.
The Fund increased its exposure to mortgage instruments mainly because
mortgages offer attractive spreads and generally perform well
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 4.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge or at maximum offering price reflects
the maximum sales charge noted above.
Fixed-income investments are subject to interest rate risk, and their value
will decline as interest rates rise. Neither the principal of government
bond funds nor their yields are guaranteed by the U.S. government.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- ------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 4.26% 6.06% 6.98% 7.93% 5/4/84
With Sales Charge -0.41% 5.08% 6.48% 7.69%
Class B Shares Net Asset Value(2) 3.50% 5.31% 6.30% 5.72% 3/30/94
With Sales Charge -1.50% 4.98% 6.30% 5.72%
Class C Shares Net Asset Value(2) 3.53% -- -- 3.51% 3/1/02
With Sales Charge 2.53% -- -- 3.51%
Citigroup Mortgage Index(3) 5.68% 7.06% 7.57% 9.53%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- ---------------------------------------------------------------
CLASS A CLASS A SHARES CITIGROUP
SHARES AT WITH MAXIMUM MORTGAGE
DATE NAV(2) SALES CHARGE INDEX(3)
- ---------------------------------------------------------------
Oct-94 10,000 9,550 10,000
Nov-94 9,983 9,534 9,964
Dec-94 10,080 9,626 10,047
Jan-95 10,313 9,849 10,272
Feb-95 10,579 10,103 10,534
Mar-95 10,656 10,177 10,577
Apr-95 10,807 10,321 10,719
May-95 11,280 10,772 11,066
Jun-95 11,347 10,836 11,125
Jul-95 11,284 10,776 11,147
Aug-95 11,427 10,913 11,249
Sep-95 11,538 11,018 11,349
Oct-95 11,704 11,177 11,454
Nov-95 11,871 11,337 11,588
Dec-95 12,040 11,498 11,732
Jan-96 12,109 11,564 11,822
Feb-96 11,832 11,299 11,728
Mar-96 11,711 11,184 11,689
Apr-96 11,634 11,111 11,635
May-96 11,602 11,080 11,620
Jun-96 11,752 11,223 11,768
Jul-96 11,777 11,247 11,816
Aug-96 11,733 11,205 11,818
Sep-96 11,944 11,407 12,016
Oct-96 12,238 11,687 12,250
Nov-96 12,510 11,947 12,419
Dec-96 12,339 11,784 12,364
Jan-97 12,365 11,809 12,469
Feb-97 12,378 11,821 12,483
Mar-97 12,203 11,654 12,379
Apr-97 12,421 11,862 12,567
May-97 12,533 11,969 12,684
Jun-97 12,693 12,122 12,830
Jul-97 13,084 12,495 13,067
Aug-97 12,927 12,345 13,044
Sep-97 13,137 12,546 13,199
Oct-97 13,361 12,760 13,342
Nov-97 13,412 12,808 13,387
Dec-97 13,563 12,953 13,509
Jan-98 13,714 13,097 13,634
Feb-98 13,700 13,084 13,675
Mar-98 13,732 13,114 13,729
Apr-98 13,814 13,192 13,806
May-98 13,935 13,308 13,902
Jun-98 14,057 13,424 13,963
Jul-98 14,102 13,467 14,032
Aug-98 14,275 13,633 14,160
Sep-98 14,462 13,811 14,329
Oct-98 14,427 13,778 14,314
Nov-98 14,513 13,860 14,380
Dec-98 14,542 13,887 14,451
Jan-99 14,624 13,966 14,551
Feb-99 14,507 13,855 14,497
Mar-99 14,590 13,934 14,597
Apr-99 14,631 13,973 14,669
May-99 14,537 13,883 14,571
Jun-99 14,441 13,792 14,537
Jul-99 14,372 13,725 14,438
Aug-99 14,359 13,713 14,430
Sep-99 14,570 13,915 14,675
Oct-99 14,629 13,970 14,753
Nov-99 14,629 13,970 14,764
Dec-99 14,561 13,906 14,716
Jan-00 14,480 13,828 14,602
Feb-00 14,639 13,980 14,775
Mar-00 14,784 14,119 14,933
Apr-00 14,788 14,123 14,940
May-00 14,778 14,113 14,952
Jun-00 15,071 14,392 15,275
Jul-00 15,163 14,480 15,373
Aug-00 15,357 14,666 15,600
Sep-00 15,507 14,809 15,767
Oct-00 15,600 14,898 15,884
Nov-00 15,812 15,101 16,119
Dec-00 16,056 15,333 16,377
Jan-01 16,285 15,553 16,631
Feb-01 16,395 15,657 16,722
Mar-01 16,473 15,732 16,831
Apr-01 16,460 15,719 16,850
May-01 16,523 15,779 16,954
Jun-01 16,569 15,823 16,978
Jul-01 16,862 16,103 17,294
Aug-01 17,002 16,237 17,451
Sep-01 17,250 16,474 17,707
Oct-01 17,532 16,743 17,948
Nov-01 17,312 16,533 17,783
Dec-01 17,205 16,431 17,719
Jan-02 17,363 16,582 17,893
Feb-02 17,553 16,763 18,088
Mar-02 17,312 16,533 17,905
Apr-02 17,646 16,852 18,238
May-02 17,773 16,973 18,371
Jun-02 17,917 17,111 18,520
Jul-02 18,125 17,309 18,729
Aug-02 18,285 17,462 18,894
Sep-02 18,444 17,614 19,032
Oct-02 18,473 17,642 19,104
Nov-02 18,434 17,605 19,087
Dec-02 18,645 17,806 19,288
Jan-03 18,672 17,832 19,342
Feb-03 18,814 17,968 19,473
Mar-03 18,788 17,943 19,467
Apr-03 18,861 18,013 19,541
May-03 18,931 18,079 19,551
Jun-03 18,916 18,065 19,592
Jul-03 18,473 17,642 19,238
Aug-03 18,592 17,755 19,363
Sep-03 18,936 18,083 19,694
Oct-03 18,833 17,986 19,627
Nov-03 18,848 18,000 19,684
Dec-03 18,986 18,132 19,877
Jan-04 19,107 18,248 20,004
Feb-04 19,247 18,381 20,178
Mar-04 19,316 18,447 20,267
Apr-04 19,015 18,159 19,910
May-04 18,941 18,088 19,846
Jun-04 19,079 18,220 20,019
Jul-04 19,235 18,370 20,207
Aug-04 19,501 18,623 20,538
Sep-04 19,515 18,636 20,567
Oct-04 19,637 18,754 20,744
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance
does not reflect the impact of federal, state, or municipal taxes. If
it did, performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Citigroup Mortgage Index represents the mortgage-backed securities
component of Citigroup's Broad Investment-Grade Bond Index. It consists
of 30- and 15-year agency-issued (GNMA, FNMA, and FHLMC) pass-through
securities as well as FNMA and FHLMC balloon mortgages. Returns shown
for the index assume reinvestment of all dividends and distributions,
and since-inception returns shown for the index are calculated from
4/30/84. Indices are unmanaged, and individuals cannot invest directly
in an index.
(4) Performance of Class B shares (offered as of 3/94) and C shares
(offered as of 3/02) will differ.
26
PORTFOLIO MANAGER
-------------------
Craig V. Sosey
WM Advisors, Inc.
in a slowly rising interest rate environment. In March, we began adding
non-agency mortgages, after shareholder approval of an amendment to Fund
investment policies that allowed such purchases to a limited extent.
Non-agency mortgages comprised about 10% of the Fund's holdings at the end
of the period. These securities add yield while also increasing
diversification and reducing exposure to Fannie Mae and Freddie Mac. As a
defensive measure, the Fund also added higher-coupon mortgages.
The Fund is defensively positioned because we anticipate slowly rising
interest rates in a low-growth economy. We continue to hold a near-
benchmark weighting in mortgages, and we expect to maintain a
short-to-neutral duration position to limit interest rate risk. We will look
to add higher-coupon mortgages. We believe these issues should perform well
and limit duration extension in a rising rate environment, as prepayments on
these mortgages do not slow as dramatically as those on lower-coupon
mortgages.
In addition, we plan to continue selectively adding non-agency mortgages to
potentially increase returns.
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ---------------------------------------------------------
Weighted Average Maturity (Years): 4.1
Weighted Average Duration (Years): 3.3
Turnover: 30%
Number of Securities: 353
Total Net Assets: $1,559.2 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- ------------------------------------------------------------------------------
[PIE CHART] FHLMC/FGLMC 34% 29% +5%
FNMA 27% 35% -8%
CMOs 17% 11% +6%
GNMA 10% 9% +1%
U.S. Treasuries 6% 4% +2%
Government Agency 3% 5% -2%
Cash Equivalents 3% 7% -4%
<FN>
(5) May not reflect the current portfolio composition.
27
Income Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +8.95%
2002 +8.11%
2001 +8.09%
2000 +9.05%
1999 +0.09%
1998 +7.15%
1997 +10.51%
1996 +3.46%
1995 +21.58%
1994 -4.82%
INVESTMENT STRATEGY
During this fiscal year, the Fund was generally more aggressive in corporate
credit quality compared to its peer group, and this strategy proved
beneficial as lower-rated companies improved their balance sheets. Within
sectors, we maintained overweighted positions in health care, utilities, and
gaming, which we favor as long-term holdings. Financial services and banking
presented less relative value than other sectors, and we underweighted these
issues. We favored mortgages, which have generally done well in a
stable-to-rising interest-rate environment. As a consequence of
overweightings in corporates and mortgages, we minimized holdings in U.S.
Treasury securities.
The Fund saw price appreciation from non-Treasury sectors--mortgages and
corporates--which contributed to relative performance. Corporate securities
benefited from a gradually strengthening economy. Mortgages presented a
favorable risk-reward profile and benefited from tighter spreads as interest
rates remained relatively stable. Steady intermediate-maturity interest
rates
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 4.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge or at maximum offering price reflects
the maximum sales charge noted above.
Fixed-income investments are subject to interest rate risk, and their value
will decline as interest rates rise. Lower-rated securities are subject to
additional credit and default risks. International investing involves
increased risks due to currency fluctuations, political or social
instability, and differences in accounting standards.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- ----------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 6.68% 7.71% 8.09% 8.68% 12/15/75
With Sales Charge 1.89% 6.73% 7.59% 8.51%
Class B Shares Net Asset Value(2) 6.03% 6.99% 7.42% 6.82% 3/30/94
With Sales Charge 1.03% 6.68% 7.42% 6.82%
Class C Shares Net Asset Value(2) 6.02% -- -- 6.57% 3/1/02
With Sales Charge 5.02% -- -- 6.57%
Citigroup Broad Investment-Grade
Bond Index(3) 5.70% 7.61% 7.78% --
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004 GRAPH]
- --------------------------------------------------------------------
CLASS A CLASS A SHARES CITIGROUP BROAD
SHARES AT WITH MAXIMUM INVESTMENT-
DATE NAV(2) SALES CHARGE GRADE INDEX(3)
- --------------------------------------------------------------------
Oct-94 10,000 9,550 10,000
Nov-94 9,988 9,538 9,973
Dec-94 10,064 9,611 10,049
Jan-95 10,246 9,785 10,257
Feb-95 10,498 10,026 10,497
Mar-95 10,585 10,109 10,558
Apr-95 10,768 10,284 10,702
May-95 11,340 10,830 11,127
Jun-95 11,436 10,922 11,205
Jul-95 11,359 10,847 11,183
Aug-95 11,522 11,003 11,311
Sep-95 11,671 11,146 11,418
Oct-95 11,824 11,292 11,571
Nov-95 12,016 11,476 11,751
Dec-95 12,236 11,685 11,913
Jan-96 12,324 11,770 11,994
Feb-96 11,996 11,456 11,790
Mar-96 11,892 11,357 11,706
Apr-96 11,810 11,279 11,619
May-96 11,797 11,266 11,612
Jun-96 11,940 11,403 11,762
Jul-96 11,965 11,426 11,793
Aug-96 11,964 11,426 11,777
Sep-96 12,193 11,645 11,982
Oct-96 12,521 11,957 12,251
Nov-96 12,809 12,232 12,454
Dec-96 12,659 12,090 12,344
Jan-97 12,699 12,128 12,392
Feb-97 12,722 12,149 12,406
Mar-97 12,555 11,990 12,280
Apr-97 12,737 12,163 12,456
May-97 12,910 12,329 12,573
Jun-97 13,135 12,544 12,723
Jul-97 13,621 13,008 13,068
Aug-97 13,436 12,832 12,955
Sep-97 13,666 13,051 13,146
Oct-97 13,885 13,260 13,335
Nov-97 13,944 13,316 13,398
Dec-97 13,990 13,360 13,534
Jan-98 14,123 13,487 13,709
Feb-98 14,178 13,540 13,699
Mar-98 14,287 13,644 13,753
Apr-98 14,334 13,689 13,824
May-98 14,504 13,852 13,957
Jun-98 14,615 13,957 14,071
Jul-98 14,593 13,936 14,101
Aug-98 14,650 13,990 14,317
Sep-98 14,915 14,244 14,655
Oct-98 14,718 14,056 14,589
Nov-98 14,968 14,295 14,669
Dec-98 14,989 14,315 14,714
Jan-99 15,138 14,456 14,823
Feb-99 14,786 14,121 14,564
Mar-99 14,868 14,199 14,647
Apr-99 15,045 14,368 14,695
May-99 14,920 14,248 14,560
Jun-99 14,826 14,159 14,510
Jul-99 14,818 14,152 14,452
Aug-99 14,814 14,147 14,442
Sep-99 14,955 14,282 14,616
Oct-99 15,011 14,336 14,659
Nov-99 15,016 14,340 14,658
Dec-99 15,005 14,330 14,591
Jan-00 15,026 14,350 14,550
Feb-00 15,177 14,494 14,720
Mar-00 15,366 14,675 14,911
Apr-00 15,280 14,593 14,867
May-00 15,163 14,480 14,853
Jun-00 15,530 14,831 15,164
Jul-00 15,676 14,970 15,302
Aug-00 15,997 15,277 15,520
Sep-00 15,983 15,263 15,626
Oct-00 15,936 15,219 15,726
Nov-00 16,067 15,344 15,981
Dec-00 16,364 15,628 16,283
Jan-01 16,826 16,068 16,551
Feb-01 16,863 16,104 16,699
Mar-01 16,836 16,078 16,786
Apr-01 16,785 16,030 16,707
May-01 16,846 16,088 16,815
Jun-01 16,905 16,144 16,871
Jul-01 17,359 16,578 17,260
Aug-01 17,569 16,779 17,450
Sep-01 17,494 16,707 17,665
Oct-01 17,882 17,077 18,022
Nov-01 17,809 17,007 17,773
Dec-01 17,689 16,893 17,668
Jan-02 17,888 17,083 17,808
Feb-02 18,020 17,209 17,979
Mar-02 17,870 17,066 17,682
Apr-02 18,208 17,389 18,018
May-02 18,294 17,471 18,171
Jun-02 18,257 17,436 18,306
Jul-02 18,120 17,305 18,524
Aug-02 18,426 17,597 18,848
Sep-02 18,631 17,793 19,147
Oct-02 18,530 17,697 19,061
Nov-02 18,732 17,889 19,057
Dec-02 19,124 18,263 19,454
Jan-03 19,244 18,378 19,469
Feb-03 19,568 18,687 19,746
Mar-03 19,630 18,747 19,728
Apr-03 20,003 19,103 19,902
May-03 20,547 19,623 20,270
Jun-03 20,539 19,615 20,233
Jul-03 19,806 18,915 19,549
Aug-03 19,907 19,011 19,684
Sep-03 20,460 19,540 20,200
Oct-03 20,405 19,487 20,014
Nov-03 20,544 19,619 20,072
Dec-03 20,838 19,900 20,273
Jan-04 21,042 20,095 20,441
Feb-04 21,219 20,264 20,660
Mar-04 21,445 20,480 20,817
Apr-04 20,823 19,886 20,276
May-04 20,671 19,741 20,189
Jun-04 20,830 19,893 20,308
Jul-04 21,013 20,068 20,509
Aug-04 21,446 20,481 20,915
Sep-04 21,562 20,592 20,969
Oct-04 21,771 20,791 21,154
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance
does not reflect the impact of federal, state, or municipal taxes. If
it did, performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Citigroup Broad Investment-Grade Bond Index measures the
performance of bonds, including U.S. and non-U.S. corporate securities
and non-U.S. sovereign and provincial securities. It includes
institutionally traded U.S. Treasury, government-sponsored, mortgage,
asset-backed, and investment-grade securities. Returns shown for the
index assume reinvestment of all dividends and distributions. Indices
are unmanaged, and individuals cannot invest directly in an index.
(4) Performance of Class B shares (offered as of 3/94) and C shares
(offered as of 3/02) will differ.
28
PORTFOLIO MANAGER
---------------------------
Gary J. Pokrzywinski, CFA
WM Advisors, Inc.
caused price change to play a small part in return from U.S. Treasuries.
The Fund's corporate bond sector benefited from overweightings in utilities,
oil and gas, and gaming. Positive contributions came from El Paso Natural
Gas, a natural gas pipeline company, which sold assets, paid down debt, and
improved its access to funding. Our position in Petroleos de Venezuela, an
oil company, benefited significantly from high oil prices. Riviera, a Las
Vegas casino operator, saw continued positive operating performance from the
strong gaming market.
Negative performance came from the Fund's underweighting in industrial
products, a sector that benefited from an improving economy and a falling
dollar. Other positions that adversely affected Fund performance included
DVI, a bankrupt health care company that received less from asset sales than
expected, and Great Lakes Dredge & Dock Co., which was hurt by federal
budget delays and funding cuts. Rising oil prices hurt our position in
United Air Lines.
Looking ahead, we continue to expect an environment characterized by slow,
relatively modest growth accompanied by contained inflation, which is
typically beneficial for financial assets. Given the Federal Reserve's
intent to normalize short-term interest rates, we believe the yield curve
will continue to flatten, with short-term rates moving up more than those of
10-year Treasury bonds. (The yield curve is the distribution of yields
relative to maturities.) Because of structural deflationary forces, our
long-term interest rate scenario remains positive. Given these competing
factors, we are positioned neutrally with respect to interest rate risk.
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- -------------------------------------------------------
Weighted Average Maturity (Years): 7.1
Weighted Average Duration (Years): 4.9
Turnover: 24%
Number of Securities: 196
Total Net Assets: $1,146.1 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- ------------------------------------------------------------------------------
[PIE CHART] Domestic Corporate Bonds 57% 55% +2%
Mortgage-Backed Bonds 23% 25% -2%
Foreign Corporate
Bonds (U.S. $) 6% 7% -1%
U.S. Treasuries 6% 5% +1%
Foreign Government
Bonds (U.S. $) 2% 1% +1%
Cash Equivalents 6% 7% -1%
<FN>
(5) May not reflect the current portfolio composition.
29
High Yield Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +28.10%
2002 +3.66%
2001 +3.14%
2000 -1.53%
1999 +12.02%
INVESTMENT STRATEGY
The high-yield market benefited from a strengthening economy that helped
companies with lower-rated bonds improve their financial condition and
consequently reduced the bond default rate. This improved environment helped
significantly boost high-yield bond prices to the benefit of Fund
performance. The Fund also benefited by maintaining its overweightings in
certain sectors that we believe show long-term strength: health care,
technology, gaming, and telecommunications/media. In contrast, we continued
to underweight industrials (due to the capital needs of these issuers) and
retailing (due to concerns about overcapacity).
Our investment strategy continues to reflect holdings in a basket of core
companies and research concentrated on a handful of companies at the higher
end of the risk scale. We term this a "barbell" approach. On one side of the
barbell, we hold positions that have relatively low risk but consequently
produce a lower yield. On the other side, we invest in higher-risk companies
with the potential to produce a much higher yield. This strategy is
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 4.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge or at maximum offering price reflects
the maximum sales charge noted above.
Fixed-income investments are subject to interest rate risk, and their value
will decline as interest rates rise. Lower-rated securities are subject to
additional credit and default risks. International investing involves
increased risks due to currency fluctuations, political or social
instability, and differences in accounting standards. REIT securities are
subject to risk factors associated with the real estate industry and tax
factors of REIT registration.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year Since Inception Inception Date
- ----------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 13.23% 8.64% 7.23% 4/8/98
With Sales Charge 8.15% 7.65% 6.48%
Class B Shares Net Asset Value(2) 12.50% 7.84% 6.63% 5/5/98
With Sales Charge 7.50% 7.54% 6.63%
Class C Shares Net Asset Value(2) 12.51% -- 12.51% 3/1/02
With Sales Charge 11.51% -- 12.51%
Citigroup High Yield Market Index(3) 12.28% 7.18% 5.23%
[VALUE OF A $10,000 INVESTMENT(1),(4) APRIL 8, 1998 - OCTOBER 31, 2004 GRAPH]
- -----------------------------------------------------------------
CLASS A CLASS A SHARES CITIGROUP
SHARES AT WITH MAXIMUM HIGH YIELD
DATE NAV(2) SALES CHARGE MARKET INDEX(3)
- -----------------------------------------------------------------
Mar-98 10,000 9,550 10,000
Apr-98 9,997 9,547 10,054
May-98 9,965 9,517 10,081
Jun-98 9,918 9,471 10,103
Jul-98 9,892 9,447 10,184
Aug-98 9,345 8,925 9,502
Sep-98 9,336 8,916 9,619
Oct-98 9,310 8,891 9,486
Nov-98 9,686 9,250 9,962
Dec-98 9,670 9,235 9,955
Jan-99 9,834 9,391 10,104
Feb-99 9,722 9,284 10,020
Mar-99 9,899 9,453 10,105
Apr-99 10,259 9,798 10,316
May-99 10,269 9,807 10,154
Jun-99 10,366 9,900 10,132
Jul-99 10,499 10,026 10,154
Aug-99 10,397 9,929 10,033
Sep-99 10,456 9,986 9,957
Oct-99 10,451 9,981 9,889
Nov-99 10,628 10,149 10,044
Dec-99 10,832 10,344 10,129
Jan-00 10,897 10,406 10,045
Feb-00 10,981 10,487 10,069
Mar-00 11,051 10,554 9,864
Apr-00 11,144 10,642 9,904
May-00 10,949 10,456 9,766
Jun-00 11,052 10,554 9,986
Jul-00 11,237 10,732 10,095
Aug-00 11,353 10,842 10,170
Sep-00 11,276 10,768 10,061
Oct-00 11,004 10,509 9,763
Nov-00 10,570 10,094 9,364
Dec-00 10,666 10,186 9,555
Jan-01 11,419 10,905 10,199
Feb-01 11,249 10,742 10,320
Mar-01 10,827 10,340 10,132
Apr-01 10,823 10,336 9,983
May-01 10,773 10,288 10,143
Jun-01 10,683 10,202 9,864
Jul-01 10,764 10,280 10,049
Aug-01 10,896 10,405 10,186
Sep-01 10,564 10,089 9,453
Oct-01 10,786 10,301 9,767
Nov-01 11,011 10,515 10,138
Dec-01 11,001 10,506 10,073
Jan-02 11,261 10,755 10,116
Feb-02 11,312 10,803 10,006
Mar-02 11,545 11,026 10,272
Apr-02 11,579 11,058 10,440
May-02 11,513 10,995 10,311
Jun-02 11,066 10,568 9,403
Jul-02 10,707 10,226 8,978
Aug-02 10,752 10,269 9,320
Sep-02 10,527 10,053 9,136
Oct-02 10,735 10,252 9,105
Nov-02 11,284 10,776 9,800
Dec-02 11,405 10,892 9,919
Jan-03 11,643 11,119 10,288
Feb-03 11,775 11,246 10,426
Mar-03 12,070 11,527 10,777
Apr-03 12,649 12,080 11,447
May-03 13,118 12,528 11,522
Jun-03 13,400 12,797 11,881
Jul-03 13,341 12,741 11,705
Aug-03 13,246 12,650 11,825
Sep-03 13,538 12,929 12,175
Oct-03 13,972 13,344 12,459
Nov-03 14,228 13,588 12,632
Dec-03 14,611 13,953 12,957
Jan-04 15,050 14,373 13,181
Feb-04 15,084 14,405 13,109
Mar-04 15,247 14,560 13,191
Apr-04 14,803 14,137 13,146
May-04 14,656 13,997 12,919
Jun-04 14,838 14,170 13,111
Jul-04 14,912 14,241 13,281
Aug-04 15,230 14,544 13,524
Sep-04 15,475 14,779 13,707
Oct-04 15,820 15,109 13,991
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance
does not reflect the impact of federal, state, or municipal taxes. If
it did, performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Citigroup High Yield Market Index measures the performance of
below-investment-grade debt issued by corporations domiciled in the
U.S. or Canada. Returns shown for the index assume reinvestment of all
dividends and distributions, and since-inception returns shown for the
index are calculated from 3/31/98. Indices are unmanaged, and
individuals cannot invest directly in an index.
(4) Performance of Class B shares (offered as of 5/98) and C shares
(offered as of 3/02) will differ.
30
PORTFOLIO MANAGER
---------------------------
Gary J. Pokrzywinski, CFA
WM Advisors, Inc.
designed to balance risk and return within an environment of relatively
tight yield spreads.
Individual positions that advanced performance included Athena/Elan, a
pharmaceutical company that sold assets, paid down debt, and introduced a
successful new drug. We also benefited from our positions in Reliant
Resources, an electric power company that rebounded with new management, and
Petroleos de Venezuela, an oil company that benefited significantly from
high oil prices. Riviera, a Las Vegas casino operator, saw continued
positive operating performance from the strong gaming market.
Holdings that detracted from performance included Great Lakes Dredge & Dock
Co., which was hurt by federal budget delays and funding cuts. DVI, a
bankrupt health care company, faltered when it received less from asset
sales than expected. OED/Diamond Joe, a small gaming company, stumbled after
its new casino in Louisiana suffered a slow start.
We maintain a positive outlook for the high-yield market, but the last two
years of above-average performance may be difficult to repeat. We have
detected some excesses in the market in the form of more issuances from
lesser-quality companies, as well as leveraged buyouts. However, these
developments generally take several years to become significant factors and
can be counteracted by an improving economy.
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ------------------------------------------------------
Weighted Average Maturity (Years): 7.1
Weighted Average Duration (Years): 4.8
Turnover: 82%
Number of Securities: 74
Total Net Assets: $724.6 million
PORTFOLIO COMPOSITION(5)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- --------------------------------------------------------------------------------
[PIE CHART] Domestic Corporate Bonds 79% 75% +4%
Equities 8% 8% 0%
Foreign Corporate
Bonds (U.S. $) 6% 11% -5%
Foreign Government
Bonds (U.S. $) 5% 5% 0%
Cash Equivalents 2% 1% +1%
<FN>
(5) May not reflect the current portfolio composition.
31
Tax-Exempt Bond Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +5.19%
2002 +9.81%
2001 +3.92%
2000 +11.49%
1999 -4.40%
1998 +5.08%
1997 +8.59%
1996 +2.52%
1995 +18.25%
1994 -6.53%
INVESTMENT STRATEGY
During this fiscal year, the municipal market was marked by two periods of
steadily declining yields separated by a significant sell-off. Yields fell
until March, when they reversed direction and increased as bond prices fell.
These losses were steepest in April, as a surprisingly strong employment
report plus signals from Federal Open Market Committee members caused
investors to expect a near-term rate increase. After the Federal Reserve
(the Fed) raised rates in June, it indicated that it planned to gradually
alter its accommodative monetary policy. Yields also declined from May
through the end of the period as the market digested the Fed's new stance.
Unusually, longer-maturity securities outperformed during this period of Fed
tightening. The typical pattern in such periods is for yields to rise across
all maturities. During this fiscal year, however, yields of shorter maturity
bonds rose while those of longer maturity bonds declined slightly.
Lower-quality municipal bonds performed strongly in this environment, as the
difference
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 4.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge or at maximum offering price reflects
the maximum sales charge noted above.
Fixed-income investments are subject to interest rate risk, and their value
will decline as interest rates rise. A portion of the Fund's income may be
subject to state and/or local taxes, and it may be subject to federal
alternative minimum tax (AMT) for certain investors.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- -------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 5.35% 6.66% 6.31% 6.03% 1/3/77
With Sales Charge 0.55% 5.68% 5.81% 5.86%
Class B Shares Net Asset Value(2) 4.57% 5.87% 5.64% 5.15% 3/30/94
With Sales Charge -0.43% 5.55% 5.64% 5.15%
Class C Shares Net Asset Value(2) 4.58% -- -- 4.95% 3/1/02
With Sales Charge 3.58% -- -- 4.95%
Lehman Brothers Municipal Bond Index(3) 6.02% 7.18% 7.05% --
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004
GRAPH]
- -----------------------------------------------------------------
CLASS A CLASS A SHARES LEHMAN BROTHERS
SHARES AT WITH MAXIMUM MUNICIPAL BOND
DATE NAV(2) SALES CHARGE INDEX(3)
- -----------------------------------------------------------------
Oct-94 10,000 9,550 10,000
Nov-94 9,794 9,353 9,819
Dec-94 10,081 9,627 10,035
Jan-95 10,397 9,929 10,322
Feb-95 10,739 10,256 10,622
Mar-95 10,816 10,329 10,745
Apr-95 10,818 10,331 10,757
May-95 11,196 10,692 11,101
Jun-95 11,082 10,583 11,004
Jul-95 11,172 10,669 11,109
Aug-95 11,277 10,769 11,250
Sep-95 11,337 10,827 11,321
Oct-95 11,531 11,012 11,485
Nov-95 11,769 11,239 11,675
Dec-95 11,921 11,384 11,787
Jan-96 11,984 11,445 11,877
Feb-96 11,865 11,331 11,796
Mar-96 11,674 11,148 11,645
Apr-96 11,601 11,079 11,613
May-96 11,603 11,081 11,608
Jun-96 11,710 11,183 11,734
Jul-96 11,818 11,287 11,841
Aug-96 11,821 11,289 11,839
Sep-96 11,961 11,423 12,005
Oct-96 12,073 11,530 12,140
Nov-96 12,278 11,725 12,362
Dec-96 12,222 11,672 12,311
Jan-97 12,226 11,676 12,334
Feb-97 12,336 11,781 12,447
Mar-97 12,167 11,619 12,282
Apr-97 12,249 11,698 12,385
May-97 12,428 11,869 12,571
Jun-97 12,542 11,978 12,705
Jul-97 12,930 12,348 13,057
Aug-97 12,755 12,181 12,935
Sep-97 12,884 12,304 13,088
Oct-97 12,968 12,384 13,172
Nov-97 13,035 12,449 13,250
Dec-97 13,273 12,675 13,443
Jan-98 13,392 12,789 13,582
Feb-98 13,359 12,757 13,586
Mar-98 13,367 12,765 13,598
Apr-98 13,274 12,677 13,537
May-98 13,467 12,861 13,751
Jun-98 13,525 12,916 13,804
Jul-98 13,534 12,925 13,839
Aug-98 13,763 13,144 14,053
Sep-98 13,906 13,280 14,229
Oct-98 13,880 13,255 14,229
Nov-98 13,903 13,278 14,279
Dec-98 13,946 13,319 14,315
Jan-99 14,110 13,475 14,485
Feb-99 14,045 13,413 14,421
Mar-99 14,036 13,405 14,441
Apr-99 14,078 13,445 14,478
May-99 13,964 13,336 14,394
Jun-99 13,705 13,088 14,186
Jul-99 13,729 13,111 14,237
Aug-99 13,577 12,966 14,123
Sep-99 13,529 12,920 14,129
Oct-99 13,357 12,756 13,977
Nov-99 13,435 12,830 14,125
Dec-99 13,333 12,733 14,019
Jan-00 13,232 12,636 13,958
Feb-00 13,455 12,850 14,120
Mar-00 13,738 13,120 14,430
Apr-00 13,633 13,020 14,344
May-00 13,549 12,939 14,270
Jun-00 13,906 13,281 14,648
Jul-00 14,100 13,465 14,852
Aug-00 14,331 13,686 15,080
Sep-00 14,203 13,564 15,002
Oct-00 14,361 13,715 15,165
Nov-00 14,477 13,826 15,281
Dec-00 14,863 14,194 15,658
Jan-01 14,980 14,306 15,813
Feb-01 15,035 14,359 15,864
Mar-01 15,154 14,472 16,007
Apr-01 14,922 14,251 15,834
May-01 15,100 14,420 16,005
Jun-01 15,218 14,533 16,112
Jul-01 15,457 14,761 16,350
Aug-01 15,755 15,046 16,620
Sep-01 15,656 14,951 16,564
Oct-01 15,817 15,105 16,752
Nov-01 15,618 14,915 16,612
Dec-01 15,443 14,748 16,454
Jan-02 15,667 14,962 16,739
Feb-02 15,886 15,171 16,941
Mar-02 15,541 14,842 16,609
Apr-02 15,864 15,151 16,933
May-02 15,964 15,246 17,036
Jun-02 16,126 15,400 17,217
Jul-02 16,351 15,616 17,439
Aug-02 16,557 15,812 17,648
Sep-02 16,970 16,206 18,035
Oct-02 16,613 15,866 17,735
Nov-02 16,567 15,821 17,661
Dec-02 16,959 16,196 18,033
Jan-03 16,829 16,072 17,988
Feb-03 17,118 16,348 18,240
Mar-03 17,115 16,345 18,251
Apr-03 17,281 16,503 18,372
May-03 17,687 16,891 18,802
Jun-03 17,551 16,761 18,721
Jul-03 16,875 16,116 18,065
Aug-03 17,066 16,298 18,201
Sep-03 17,607 16,814 18,736
Oct-03 17,494 16,707 18,642
Nov-03 17,709 16,912 18,836
Dec-03 17,839 17,036 18,993
Jan-04 17,880 17,075 19,101
Feb-04 18,232 17,411 19,389
Mar-04 18,070 17,256 19,321
Apr-04 17,589 16,797 18,864
May-04 17,540 16,750 18,796
Jun-04 17,603 16,811 18,863
Jul-04 17,851 17,048 19,110
Aug-04 18,213 17,394 19,493
Sep-04 18,323 17,498 19,596
Oct-04 18,434 17,604 19,764
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance
does not reflect the impact of federal, state, or municipal taxes. If
it did, performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Lehman Brothers Municipal Bond Index is a total return performance
benchmark for the long-term, investment-grade, tax-exempt bond market.
Returns shown for the index assume reinvestment of all dividends and
distributions. Indices are unmanaged, and individuals cannot invest
directly in an index.
(4) Performance of Class B shares (offered as of 3/94) and C shares
(offered as of 3/02) will differ.
32
PORTFOLIO MANAGER
-----------------------------
Thomas M. Byron
Van Kampen Asset Management
in yields between AAA and BBB-rated bonds decreased for 20-year bonds. As a
result, sectors with heavy exposure to lower-rated debt, such as hospitals
and industrial revenue bonds, posted higher total returns than sectors
dominated by higher-rated debt.
The Fund's duration remained slightly shorter than the benchmark due to the
historical steepness of the yield curve. This shorter duration hindered the
Fund's performance.
The portfolio's overall credit quality remained unchanged with the
percentage of Aa-rated and higher securities at 91.8% at the end of the
period.(6) The high quality and liquidity of the portfolio positively impacted
performance during most of the period. Adjustments to sector concentrations
included increases in the transportation, water and sewer, and power
sectors, along with decreases in the general purpose and general obligation
sectors.
Our outlook is for the Fed to maintain its measured pace of monetary
tightening through the remainder of 2004 and into 2005. Market consensus
expects the federal funds rate to be around 4% by the end of 2005, which
would be 2.25 percentage points higher than its level as of October 31,
2004. We believe a likely result will be a flattening of the municipal yield
curve. Yields are hovering near historical lows partly due to modest
increases in inflation. However, strong global demand, higher commodity
prices, and a weaker dollar are factors that increase the risk of inflation
and higher yields. To offset this risk, we will continue to keep the Fund's
duration lower than that of its benchmark.
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- ------------------------------------------------------
Weighted Average Maturity (Years): 10.1
Weighted Average Duration (Years): 7.5
Turnover: 25%
Number of Securities: 132
Total Net Assets: $223.8 million
PORTFOLIO COMPOSITION(5),(6)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- ------------------------------------------------------------------------
[PIE CHART] Aaa 73% 70% +3%
Aa 19% 23% -4%
A 4% 3% +1%
Baa 2% 3% -1%
Ba or lower 1% 0% +1%
Not Rated/Other 1% 1% 0%
<FN>
(5) May not reflect the current portfolio composition.
(6) Ratings are provided by Moody's Investors Service (Moody's). If an
issue is not rated by Moody's, its Standard & Poor's rating is
converted to the equivalent Moody's rating and incorporated (non-rated
issues are not classified by either rating service). The ratings
represent the company's opinion of the credit quality of securities and
are intended to reflect the issuer's ability to pay back principal and
interest.
33
California Municipal Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +3.70%
2002 +8.87%
2001 +4.05%
2000 +12.97%
1999 -4.53%
1998 +6.09%
1997 +10.30%
1996 +4.42%
1995 +18.09%
1994 -8.61%
INVESTMENT STRATEGY
The municipal market during this fiscal year was marked by two periods of
steadily declining yields separated by a significant sell-off. Yields fell
until March, when they reversed direction and increased as bond prices fell.
These losses were steepest in April, as a surprisingly strong employment
report plus signals from Federal Open Market Committee members caused
investors to expect a near-term rate increase. After the Federal Reserve
(the Fed) raised rates in June, it indicated that it planned to gradually
alter its accommodative monetary policy. Yields also declined from May
through the end of the period as the market digested the Fed's new stance.
California's credit rating continued its roller coaster ride. In December
2003, Moody's downgraded the state's bonds from a rating of A3 to Baa1,
while Standard and Poor's lowered its California bond rating from A to BBB.
In May 2004, California sold $7 billion in economic recovery bonds, which
were well-received in the market. Subsequently, Moody's upgraded California
bonds from Baa1 to A3, while Standard and Poor's later raised its rating on
California general
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 4.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge or at maximum offering price reflects
the maximum sales charge noted above.
Fixed-income investments are subject to interest rate risk, and their value
will decline as interest rates rise. A portion of the Fund's income may be
subject to state and/or local taxes, and it may be subject to federal
alternative minimum tax (AMT) for certain investors.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- ------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 6.25% 6.74% 6.57% 6.47% 7/25/89
With Sales Charge 1.46% 5.76% 6.09% 6.15%
Class B Shares Net Asset Value(2) 5.47% 5.95% 5.94% 5.60% 7/1/94
With Sales Charge 0.47% 5.63% 5.94% 5.60%
Class C Shares Net Asset Value(2) 5.46% -- -- 4.55% 3/1/02
With Sales Charge 4.46% -- -- 4.55%
Lehman Brothers Municipal Bond Index(3) 6.02% 7.18% 7.05% 7.02%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004
GRAPH]
- -----------------------------------------------------------------
CLASS A CLASS A SHARES LEHMAN BROTHERS
SHARES AT WITH MAXIMUM MUNICIPAL BOND
DATE NAV(2) SALES CHARGE INDEX(3)
- -----------------------------------------------------------------
Oct-94 10,000 9,550 10,000
Nov-94 9,751 9,313 9,819
Dec-94 9,912 9,466 10,035
Jan-95 10,245 9,784 10,322
Feb-95 10,559 10,084 10,622
Mar-95 10,681 10,201 10,745
Apr-95 10,702 10,221 10,757
May-95 11,041 10,544 11,101
Jun-95 10,908 10,417 11,004
Jul-95 10,960 10,467 11,109
Aug-95 11,096 10,597 11,250
Sep-95 11,179 10,676 11,321
Oct-95 11,357 10,846 11,485
Nov-95 11,568 11,047 11,675
Dec-95 11,705 11,178 11,787
Jan-96 11,758 11,229 11,877
Feb-96 11,693 11,167 11,796
Mar-96 11,521 11,002 11,645
Apr-96 11,509 10,991 11,613
May-96 11,509 10,991 11,608
Jun-96 11,606 11,084 11,734
Jul-96 11,726 11,198 11,841
Aug-96 11,770 11,240 11,839
Sep-96 11,924 11,387 12,005
Oct-96 12,056 11,514 12,140
Nov-96 12,256 11,705 12,362
Dec-96 12,222 11,672 12,311
Jan-97 12,244 11,693 12,334
Feb-97 12,344 11,789 12,447
Mar-97 12,218 11,669 12,282
Apr-97 12,309 11,755 12,385
May-97 12,469 11,908 12,571
Jun-97 12,630 12,061 12,705
Jul-97 13,022 12,436 13,057
Aug-97 12,917 12,336 12,935
Sep-97 13,068 12,480 13,088
Oct-97 13,161 12,569 13,172
Nov-97 13,266 12,669 13,250
Dec-97 13,478 12,872 13,443
Jan-98 13,584 12,972 13,582
Feb-98 13,601 12,989 13,586
Mar-98 13,601 12,989 13,598
Apr-98 13,537 12,928 13,537
May-98 13,753 13,134 13,751
Jun-98 13,797 13,176 13,804
Jul-98 13,806 13,185 13,839
Aug-98 14,012 13,381 14,053
Sep-98 14,215 13,575 14,229
Oct-98 14,185 13,547 14,229
Nov-98 14,252 13,611 14,279
Dec-98 14,296 13,653 14,315
Jan-99 14,459 13,808 14,485
Feb-99 14,403 13,755 14,421
Mar-99 14,427 13,778 14,441
Apr-99 14,436 13,786 14,478
May-99 14,332 13,687 14,394
Jun-99 14,085 13,452 14,186
Jul-99 14,146 13,509 14,237
Aug-99 13,932 13,305 14,123
Sep-99 13,916 13,289 14,129
Oct-99 13,637 13,024 13,977
Nov-99 13,774 13,154 14,125
Dec-99 13,650 13,035 14,019
Jan-00 13,553 12,943 13,958
Feb-00 13,771 13,151 14,120
Mar-00 14,128 13,492 14,430
Apr-00 14,027 13,396 14,344
May-00 13,929 13,302 14,270
Jun-00 14,329 13,684 14,648
Jul-00 14,568 13,913 14,852
Aug-00 14,890 14,220 15,080
Sep-00 14,787 14,122 15,002
Oct-00 14,906 14,235 15,165
Nov-00 15,009 14,333 15,281
Dec-00 15,418 14,724 15,658
Jan-01 15,440 14,745 15,813
Feb-01 15,497 14,800 15,864
Mar-01 15,616 14,914 16,007
Apr-01 15,352 14,662 15,834
May-01 15,527 14,829 16,005
Jun-01 15,604 14,901 16,112
Jul-01 15,853 15,140 16,350
Aug-01 16,288 15,555 16,620
Sep-01 16,234 15,503 16,564
Oct-01 16,398 15,660 16,752
Nov-01 16,242 15,511 16,612
Dec-01 16,045 15,323 16,454
Jan-02 16,269 15,536 16,739
Feb-02 16,443 15,703 16,941
Mar-02 16,079 15,356 16,609
Apr-02 16,390 15,652 16,933
May-02 16,540 15,796 17,036
Jun-02 16,674 15,924 17,217
Jul-02 16,869 16,110 17,439
Aug-02 17,139 16,368 17,648
Sep-02 17,633 16,839 18,035
Oct-02 17,150 16,378 17,735
Nov-02 17,146 16,375 17,661
Dec-02 17,470 16,684 18,033
Jan-03 17,301 16,522 17,988
Feb-03 17,540 16,750 18,240
Mar-03 17,569 16,779 18,251
Apr-03 17,736 16,938 18,372
May-03 18,109 17,294 18,802
Jun-03 17,935 17,128 18,721
Jul-03 17,216 16,441 18,065
Aug-03 17,405 16,622 18,201
Sep-03 17,830 17,028 18,736
Oct-03 17,784 16,983 18,642
Nov-03 18,004 17,194 18,836
Dec-03 18,117 17,302 18,993
Jan-04 18,183 17,364 19,101
Feb-04 18,517 17,684 19,389
Mar-04 18,391 17,563 19,321
Apr-04 17,924 17,117 18,864
May-04 17,877 17,073 18,796
Jun-04 17,974 17,165 18,863
Jul-04 18,220 17,400 19,110
Aug-04 18,597 17,760 19,493
Sep-04 18,696 17,854 19,596
Oct-04 18,895 18,045 19,764
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance
does not reflect the impact of federal, state, or municipal taxes. If
it did, performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Lehman Brothers Municipal Bond Index is a total return performance
benchmark for the long-term, investment-grade, tax-exempt bond market.
Returns shown for the index assume reinvestment of all dividends and
distributions, and since-inception returns shown for the index are
calculated from 7/31/89. Indices are unmanaged, and individuals cannot
invest directly in an index.
(4) Performance of Class B shares (offered as of 7/94) and C shares
(offered as of 3/02) will differ.
34
PORTFOLIO MANAGER
-----------------------------
Joseph A. Piraro
Van Kampen Asset Management
obligation (GO) bonds from BBB to A. Holdings in GOs benefited Fund
performance as credit spreads went from historical highs to more normal
relationships.
Lower-quality municipal bonds also performed well in this environment, as
the difference in yields between AAA and BBB-rated issues decreased for
20-year bonds.
Our strategy during this period was to keep Fund duration slightly shorter
than the benchmark due to the historical steepness of the yield curve.
Through October 2004, approximately 65% of new issues in the state were
insured bonds. The Fund maintained its credit rating mix, with insured
holdings remaining at 65%. (Insurance applies only to the timely repayment
of principal and interest of the underlying securities and does not protect
the market value of the Fund.) We increased exposure to insured GOs, insured
general purpose, and transportation holdings, while we decreased exposure to
insured industrial development holdings. Looking forward, we plan to
emphasize the essential services sector, which is currently in strong
demand.
Our outlook is for the Fed to maintain its measured pace of monetary
tightening through the remainder of 2004 and into 2005. We believe a likely
result will be a flattening of the municipal yield curve. Yields are
hovering near historical lows partly due to modest increases in inflation.
However, strong global demand, higher commodity prices, and a weaker dollar
are factors that increase the risk of inflation and higher yields. To offset
this risk, we will continue to keep the Fund's duration lower than that of
its benchmark.
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- -------------------------------------------------------
Weighted Average Maturity (Years): 10.8
Weighted Average Duration (Years): 7.8
Turnover: 27%
Number of Securities: 177
Total Net Assets: $433.4 million
PORTFOLIO COMPOSITION(5),(6)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- --------------------------------------------------------------------------
[PIE CHART] Aaa 68% 71% -3%
Aa 4% 3% +1%
A 9% 7% +2%
Baa 11% 10% +1%
Ba 0% 1% -1%
Not Rated/Other 8% 8% 0%
<FN>
(5) May not reflect the current portfolio composition.
(6) Ratings are provided by Moody's Investors Service (Moody's). If an
issue is not rated by Moody's, its Standard & Poor's rating is
converted to the equivalent Moody's rating and incorporated (non-rated
issues are not classified by either rating service). The ratings
represent the company's opinion of the credit quality of securities and
are intended to reflect the issuer's ability to pay back principal and
interest.
35
California Insured Intermediate Municipal Fund
ANNUAL TOTAL RETURNS(1)
Class A shares at net asset value(2)
(Calendar Year)
2003 +3.58%
2002 +9.28%
2001 +4.79%
2000 +9.46%
1999 -0.83%
1998 +5.26%
1997 +7.14%
1996 +3.91%
1995 +16.45%
INVESTMENT STRATEGY
The municipal market during this fiscal year was marked by two periods of
steadily declining yields separated by a significant sell-off. Yields fell
until March, when they reversed direction and increased as bond prices fell.
These losses were steepest in April, as a surprisingly strong employment
report plus signals from Federal Open Market Committee members caused
investors to expect a near-term rate increase. After the Federal Reserve
(the Fed) raised rates in June, it indicated that it planned to gradually
alter its accommodative monetary policy. Yields also declined from May
through the end of the period as the market digested the Fed's new stance.
Unusually, longer-maturity securities outperformed during this period of Fed
tightening. The typical pattern in such periods is for yields to rise across
all maturities. During this fiscal year, however, yields of shorter maturity
bonds rose while those of longer maturity bonds declined slightly.
California's credit rating continued its roller coaster ride. In December
2003, Moody's downgraded the state's bonds from a rating of A3 to Baa1,
while Standard and Poor's
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower than the data shown, can be obtained by calling
800-222-5852. An investment's return and principal value will fluctuate, so
it may be worth more or less upon redemption. A sales charge may apply as
follows: Class A shares: maximum up-front sales charge of 4.5%; Class B
shares: contingent deferred sales charge of 5%, which declines over 5 years
(5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on
redemptions made during the first 12 months. See the prospectus for details.
Performance listed with sales charge or at maximum offering price reflects
the maximum sales charge noted above.
Fixed-income investments are subject to interest rate risk, and their value
will decline as interest rates rise. A portion of the Fund's income may be
subject to state and/or local taxes, and it may be subject to federal
alternative minimum tax (AMT) for certain investors.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
1 Year 5 Year 10 Year Since Inception Inception Date
- ------------------------------------------------------------------------------------------------------------
Class A Shares Net Asset Value(2) 4.02% 5.94% 6.06% 5.90% 4/4/94
With Sales Charge -0.62% 4.96% 5.57% 5.44%
Class B Shares Net Asset Value(2) 3.24% 5.15% 5.42% 5.20% 7/1/94
With Sales Charge -1.76% 4.82% 5.42% 5.20%
Class C Shares Net Asset Value(2) 3.24% -- -- 3.87% 3/1/02
With Sales Charge 2.24% -- -- 3.87%
Lehman Brothers Municipal Bond Index(3) 6.02% 7.18% 7.05% 6.65%
[VALUE OF A $10,000 INVESTMENT(1),(4) OCTOBER 31, 1994 - OCTOBER 31, 2004
GRAPH]
- -----------------------------------------------------------------
CLASS A CLASS A SHARES LEHMAN BROTHERS
SHARES AT WITH MAXIMUM MUNICIPAL BOND
DATE NAV(2) SALES CHARGE INDEX(3)
- -----------------------------------------------------------------
Oct-94 10,000 9,550 10,000
Nov-94 9,860 9,417 9,819
Dec-94 9,995 9,545 10,035
Jan-95 10,282 9,819 10,322
Feb-95 10,602 10,125 10,622
Mar-95 10,717 10,235 10,745
Apr-95 10,719 10,237 10,757
May-95 11,053 10,555 11,101
Jun-95 10,919 10,428 11,004
Jul-95 11,057 10,560 11,109
Aug-95 11,227 10,722 11,250
Sep-95 11,302 10,794 11,321
Oct-95 11,441 10,926 11,485
Nov-95 11,590 11,069 11,675
Dec-95 11,639 11,115 11,787
Jan-96 11,747 11,219 11,877
Feb-96 11,727 11,199 11,796
Mar-96 11,565 11,045 11,645
Apr-96 11,545 11,025 11,613
May-96 11,524 11,006 11,608
Jun-96 11,602 11,080 11,734
Jul-96 11,713 11,186 11,841
Aug-96 11,725 11,197 11,839
Sep-96 11,815 11,283 12,005
Oct-96 11,938 11,400 12,140
Nov-96 12,139 11,593 12,362
Dec-96 12,093 11,549 12,311
Jan-97 12,128 11,582 12,334
Feb-97 12,197 11,648 12,447
Mar-97 12,073 11,530 12,282
Apr-97 12,131 11,585 12,385
May-97 12,281 11,729 12,571
Jun-97 12,409 11,851 12,705
Jul-97 12,699 12,128 13,057
Aug-97 12,608 12,041 12,935
Sep-97 12,725 12,153 13,088
Oct-97 12,774 12,199 13,172
Nov-97 12,822 12,245 13,250
Dec-97 12,957 12,374 13,443
Jan-98 13,066 12,478 13,582
Feb-98 13,086 12,498 13,586
Mar-98 13,041 12,454 13,598
Apr-98 12,981 12,397 13,537
May-98 13,164 12,571 13,751
Jun-98 13,187 12,594 13,804
Jul-98 13,224 12,629 13,839
Aug-98 13,433 12,829 14,053
Sep-98 13,641 13,028 14,229
Oct-98 13,641 13,028 14,229
Nov-98 13,652 13,038 14,279
Dec-98 13,637 13,024 14,315
Jan-99 13,785 13,164 14,485
Feb-99 13,725 13,108 14,421
Mar-99 13,746 13,127 14,441
Apr-99 13,753 13,134 14,478
May-99 13,685 13,070 14,394
Jun-99 13,502 12,894 14,186
Jul-99 13,579 12,968 14,237
Aug-99 13,564 12,954 14,123
Sep-99 13,610 12,998 14,129
Oct-99 13,490 12,883 13,977
Nov-99 13,616 13,003 14,125
Dec-99 13,525 12,916 14,019
Jan-00 13,521 12,912 13,958
Feb-00 13,645 13,031 14,120
Mar-00 13,854 13,230 14,430
Apr-00 13,794 13,173 14,344
May-00 13,764 13,144 14,270
Jun-00 14,082 13,448 14,648
Jul-00 14,254 13,612 14,852
Aug-00 14,466 13,815 15,080
Sep-00 14,392 13,745 15,002
Oct-00 14,484 13,833 15,165
Nov-00 14,549 13,895 15,281
Dec-00 14,803 14,137 15,658
Jan-01 15,008 14,333 15,813
Feb-01 15,014 14,339 15,864
Mar-01 15,080 14,402 16,007
Apr-01 14,880 14,210 15,834
May-01 15,047 14,369 16,005
Jun-01 15,155 14,473 16,112
Jul-01 15,337 14,647 16,350
Aug-01 15,631 14,928 16,620
Sep-01 15,639 14,935 16,564
Oct-01 15,791 15,080 16,752
Nov-01 15,652 14,947 16,612
Dec-01 15,514 14,816 16,454
Jan-02 15,767 15,057 16,739
Feb-02 15,942 15,225 16,941
Mar-02 15,594 14,893 16,609
Apr-02 15,909 15,193 16,933
May-02 16,064 15,341 17,036
Jun-02 16,171 15,444 17,217
Jul-02 16,398 15,660 17,439
Aug-02 16,624 15,876 17,648
Sep-02 17,013 16,247 18,035
Oct-02 16,596 15,849 17,735
Nov-02 16,641 15,892 17,661
Dec-02 16,952 16,189 18,033
Jan-03 16,788 16,032 17,988
Feb-03 16,998 16,233 18,240
Mar-03 16,999 16,234 18,251
Apr-03 17,135 16,364 18,372
May-03 17,487 16,700 18,802
Jun-03 17,329 16,549 18,721
Jul-03 16,820 16,063 18,065
Aug-03 16,990 16,225 18,201
Sep-03 17,358 16,577 18,736
Oct-03 17,311 16,532 18,642
Nov-03 17,479 16,693 18,836
Dec-03 17,562 16,771 18,993
Jan-04 17,605 16,813 19,101
Feb-04 17,868 17,064 19,389
Mar-04 17,705 16,908 19,321
Apr-04 17,303 16,525 18,864
May-04 17,302 16,523 18,796
Jun-04 17,362 16,581 18,863
Jul-04 17,569 16,778 19,110
Aug-04 17,839 17,036 19,493
Sep-04 17,898 17,093 19,596
Oct-04 18,008 17,198 19,764
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance
does not reflect the impact of federal, state, or municipal taxes. If
it did, performance would be lower.
(2) Net asset value is not adjusted for sales charge.
(3) The Lehman Brothers Municipal Bond Index is a total return performance
benchmark for the long-term, investment-grade, tax-exempt bond market.
Returns shown for the index assume reinvestment of all dividends and
distributions, and since-inception returns shown for the index are
calculated from 3/31/94. Indices are unmanaged, and individuals cannot
invest directly in an index.
(4) Performance of Class B shares (offered as of 7/94) and C shares
(offered as of 3/02) will differ.
36
PORTFOLIO MANAGER
-----------------------------
Joseph A. Piraro
Van Kampen Asset Management
lowered its California bond rating from A to BBB. In May 2004, California
sold $7 billion in economic recovery bonds, which were well-received in the
market. Subsequently, Moody's upgraded California bonds from Baa1 to A3,
while Standard and Poor's later raised its rating on California general
obligation (GO) bonds from BBB to A. Holdings in GOs benefited Fund
performance as credit spreads went from historical highs to more normal
relationships.
Through October 2004, approximately 65% of new issues in the state were
insured bonds. The percentage of insured California municipal obligations
within the Fund was well over the Fund's 80% requirement. (Insurance applies
only to the timely repayment of principal and interest of the underlying
securities and does not protect the market value of the Fund.) During the
period, the Fund added to Aaa-rated holdings.(6) We increased exposure to
insured securities in the general purpose, water and sewer, and education
sectors, while we decreased holdings in insured GOs. Looking forward, we
plan to emphasize the essential services sector, which is currently in
strong demand.
Our outlook is for the Fed to maintain its measured pace of monetary
tightening through the remainder of 2004 and into 2005. We believe a likely
result will be a flattening of the municipal yield curve. Yields are
hovering near historical lows partly due to modest increases in inflation.
However, strong global demand, higher commodity prices, and a weaker dollar
are factors that increase the risk of inflation and higher yields. To offset
this risk, we will continue to keep the Fund's duration lower than that of
its benchmark.
FUND CHARACTERISTICS
AS OF OCTOBER 31, 2004
- -------------------------------------------------------
Weighted Average Maturity (Years): 6.5
Weighted Average Duration (Years): 5.3
Turnover: 37%
Number of Securities: 97
Total Net Assets: $146.0 million
PORTFOLIO COMPOSITION(5),(6)
As of As of As of
10/31/04 10/31/04 10/31/03 Change
- ------------------------------------------------------------------
[PIE CHART] Aaa 95% 96% -1%
Aa 2% 1% +1%
Baa 2% 2% 0%
Not Rated 1% 1% 0%
<FN>
(5) May not reflect the current portfolio composition.
(6) Ratings are provided by Moody's Investors Service (Moody's). If an
issue is not rated by Moody's, its Standard & Poor's rating is
converted to the equivalent Moody's rating and incorporated (non-rated
issues are not classified by either rating service). The ratings
represent the company's opinion of the credit quality of securities and
are intended to reflect the issuer's ability to pay back principal and
interest.
37
Money Funds
FEDERAL RESERVE POLICIES: REVIEW & OUTLOOK
Because money market investments are closely tied to the federal funds rate,
the actions of the Federal Reserve (the Fed) have a substantial impact on
the performance of the WM Money Funds. After keeping interest rates steady
for one year, the Fed raised its target rate from 1.00% to 1.25% on June 30,
2004. Following the expectations of many economists and investors, the Fed
continued raising rates by 0.25% increments in August and September, as well
as in November (to 2.00%) after the fiscal year ended. The Fed continues to
state that additional rate hikes will be implemented at a measured pace,
depending on changes in economic conditions. The futures market is now
predicting a 25 basis point rate hike in December 2004, and another in
February or March 2005.
Data shown is past performance and does not guarantee future results.
Current performance, including the most recent month-end results, which may
be higher or lower, can be obtained by calling 800-222-5852. An investment's
return and principal value will fluctuate, so it may be worth more or less
upon redemption. For shares of the Money Market Fund, a contingent deferred
sales charge may apply as follows: Class B shares: 5%, which declines over 5
years (5-5-4-3-2-0%); Class C shares: 1% on redemptions made during the
first 12 months. See the prospectus for details. Performance listed with
sales charge reflects the maximum sales charge noted above.
An investment in the Funds is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Funds seek to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Funds. A portion of the
Tax-Exempt Money Market and California Money Funds' income may be subject to
state and/or local taxes, and it may be subject to federal alternative
minimum tax (AMT) for certain investors.
The 7-day simple yield more closely reflects current Fund earnings than the
total return data.
AVERAGE ANNUAL TOTAL RETURNS(1) AS OF OCTOBER 31, 2004
Since Inception
1 Year 5 Year 10 Year of Class C Shares Inception Date
- --------------------------------------------------------------------------------------------------------------
Money Market Fund
Class A Shares Net Asset Value(2) 0.74% 2.61% 3.77% N/A 11/19/79
Class B Shares Net Asset Value(2) 0.06% 1.67% 2.97% N/A 5/2/94
With Sales Charge -4.95% 1.29% 2.97% N/A
Class C Shares Net Asset Value(2) 0.06% -- -- 0.11% 3/1/02
With Sales Charge -0.94% -- -- 0.11%
Tax-Exempt Money Market Fund
Class A Shares Net Asset Value(2) 0.39% 1.57% 2.38% N/A 1/28/88
California Money Fund
Class A Shares Net Asset Value(2) 0.57% 1.41% 2.06% N/A 7/10/89
FUND YIELDS AND AVERAGE MATURITY(3) AS OF OCTOBER 31, 2004
7-Day 7-Day Weighted
Simple Yield Effective Yield Average Maturity
(Class A Shares) (Class A Shares) (Days)
- ---------------------------------------------------------------------------------------
Money Market Fund 1.23% 1.24% 41
Tax-Exempt Money Market Fund 0.93% 0.94% 30
California Money Fund 1.09% 1.10% 33
<FN>
(1) Performance reflects ongoing expenses and assumes reinvestment of all
dividends and capital gains. It also reflects investment advisory fees,
which may include the effects of expense reimbursement. Performance
does not reflect the impact of federal, state, or municipal taxes. If
it did, performance would be lower. Performance results benefited from
an agreement between WM Advisors and its affiliates to limit the Funds'
expenses.
(2) Net asset value is not adjusted for sales charge.
(3) The 7-day simple yield is calculated based on the income generated by
an investment in the Fund over a 7-day period and is expressed as an
annual percentage rate. The 7-day effective yield is calculated
similarly to the 7-day simple yield but assumes that income earned from
the Fund's investments is reinvested and compounded.
38
PORTFOLIO MANAGER
------------------------
Scott J. Peterson, CFA
WM Advisors, Inc.
MONEY MARKET FUND
During this fiscal year, the Fund's 7-day simple yield (annualized)
increased from 0.58% on October 31, 2003 to 1.23% on October 31, 2004 as the
Fed increased its target rate from 1.00% to 1.75% during the period. Some of
the difference between the Fund's yield and the Fed's target rate was due to
Fund expenses. The Fund's assets decreased substantially from $817 million
on October 31, 2003 to $683 million on October 31, 2004, due to shareholder
redemptions.
TAX-EXEMPT MONEY MARKET FUND
During this fiscal year, the Fund's 7-day simple yield (annualized)
increased from 0.38% on October 31, 2003 to 0.93% on October 31, 2004 as the
Fed increased its target rate from 1.00% to 1.75% during the period. Some of
the difference between the Fund's yield and the Fed's target rate was due to
Fund expenses. The Fund's assets decreased from $30 million on October 31,
2003 to $27 million on October 31, 2004, due to shareholder redemptions.
CALIFORNIA MONEY FUND
During this fiscal year, the Fund's 7-day simple yield (annualized)
increased from 0.40% on October 31, 2003 to 1.09% on October 31, 2004 as the
Fed increased its target rate from 1.00% to 1.75% during the period. Some of
the difference between the Fund's yield and the Fed's target rate was due to
Fund expenses. The Fund's assets decreased substantially from $25 million on
October 31, 2003 to $20 million on October 31, 2004, due to shareholder
redemptions.
MONEY MARKET FUND PORTFOLIO COMPOSITION(4)
As of
10/31/04
- ------------------------------------------------------
Corporate Bonds and Notes 34%
Taxable Municipal Bonds 29%
Medium Term Notes 14%
Commercial Paper (Domestic and Yankee) 9%
U.S. Government Agency Obligations 9%
Other 5%
TAX-EXEMPT MONEY MARKET FUND PORTFOLIO COMPOSITION(4)
As of
10/31/04
- ------------------------------------------------------
Washington 13%
Arizona 8%
California 8%
Illinois 7%
Tennessee 7%
Ohio 6%
Florida 5%
Kansas 4%
Kentucky 4%
Texas 4%
Colorado 3%
Georgia 3%
Hawaii 3%
Nevada 3%
North Dakota 3%
New Jersey 2%
Oklahoma 2%
Oregon 2%
Utah 2%
Other 11%
CALIFORNIA MONEY FUND PORTFOLIO COMPOSITION(4)
As of
10/31/04
- ------------------------------------------------------
California 94%
Other California Money Market Funds 2%
Puerto Rico 1%
Other 3%
<FN>
(4) May not reflect the current portfolio composition.
39
Expense Information
- ------------------------------------------------------------------------------
WM GROUP OF FUNDS
- ------------------------------------------------------------------------------
As a shareholder of the REIT Fund, Equity Income Fund, Growth & Income Fund,
West Coast Equity Fund, Mid Cap Stock Fund, Growth Fund, Small Cap Value
Fund, Small Cap Growth Fund, International Growth Fund, Short Term Income Fund,
U.S. Government Securities Fund, High Yield Fund, Tax-Exempt Bond
Fund, California Municipal Fund, California Insured Intermediate Municipal
Fund, Money Market Fund, Tax-Exempt Money Market Fund or California Money Fund
(the "Funds"), you incur two types of costs: (1) transaction costs,
including sales charges (loads) on purchase of Class A and, if applicable,
contingent deferred sales charges on redemption of shares and redemption
fees and (2) ongoing costs, including management fees, distribution and/or
service fees, and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Funds and to
compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period May 1, 2004 to October 31, 2004.
Actual Expenses:
The first section of the table below provides information about actual
account values and actual expenses. You may use the information in these
columns, together with the amount you invested, to estimate the expenses
that you paid over the period. Simply divide your account value by $1,000
(for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the third column under the heading
entitled "Expenses Paid During Period" to estimate the expenses you paid on
your account during this period.
Hypothetical Example for Comparison Purposes:
The second section of the table below provides information about
hypothetical account values and hypothetical expenses based on each Fund's
actual expense ratios and an assumed rate of return of 5% per year before
expenses (rather than each Fund's actual rate of return). The hypothetical
account values and expenses may not be used to estimate the actual ending
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Funds and other funds. To do
so, compare this 5% hypothetical example with the 5% hypothetical examples
that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the hypothetical section of the table is useful
in comparing ongoing costs only, and will not help you compare the relative
total costs of owning different funds. In addition, if these transactional
costs were included, the cost shown would have been higher.
Hypothetical
Actual Expenses (5% Return Before Expenses)
----------------------------------------- -----------------------------------------
Expenses Expenses
Beginning Ending Paid During Beginning Ending Paid During
Account Account Period* Account Account Period*
Value Value 05/01/2004- Value Value 05/01/2004- Expense
05/01/2004 10/31/2004 10/31/2004 05/01/2004 10/31/2004 10/31/2004 Ratio
---------- ---------- ---------- ---------- ---------- ---------- -------
REIT Fund
Class A $1,000 $1,235 $ 7.42 $1,000 $1,019 $ 6.70 1.32%
Class B 1,000 1,230 11.66 1,000 1,015 10.53 2.08%
Class C 1,000 1,231 11.05 1,000 1,015 9.98 1.97%
Class I 1,000 1,238 4.78 1,000 1,021 4.32 0.85%
Equity Income Fund
Class A $1,000 $1,064 $ 4.72 $1,000 $1,021 $ 4.62 0.91%
Class B 1,000 1,059 9.27 1,000 1,016 9.07 1.79%
Class C 1,000 1,060 8.75 1,000 1,017 8.57 1.69%
Class I 1,000 1,066 3.06 1,000 1,022 3.00 0.59%
Growth & Income Fund
Class A $1,000 $1,000 $ 4.48 $1,000 $1,021 $ 4.52 0.89%
Class B 1,000 995 9.43 1,000 1,016 9.53 1.88%
Class C 1,000 996 9.28 1,000 1,016 9.37 1.85%
Class I 1,000 1,002 2.87 1,000 1,022 2.90 0.57%
West Coast Equity Fund
Class A $1,000 $1,047 $ 4.84 $1,000 $1,020 $ 4.77 0.94%
Class B 1,000 1,042 9.60 1,000 1,016 9.48 1.87%
Class C 1,000 1,042 9.29 1,000 1,016 9.17 1.81%
Class I 1,000 1,048 3.14 1,000 1,022 3.10 0.61%
Mid Cap Stock Fund
Class A $1,000 $1,033 $ 5.77 $1,000 $1,019 $ 5.74 1.13%
Class B 1,000 1,028 10.70 1,000 1,015 10.63 2.10%
Class C 1,000 1,028 10.20 1,000 1,015 10.13 2.00%
Class I 1,000 1,035 4.09 1,000 1,021 4.06 0.80%
40
Expense Information (continued)
- ------------------------------------------------------------------------------
WM GROUP OF FUNDS
- ------------------------------------------------------------------------------
Hypothetical
Actual Expenses (5% Return Before Expenses)
----------------------------------------- -----------------------------------------
Expenses Expenses
Beginning Ending Paid During Beginning Ending Paid During
Account Account Period* Account Account Period*
Value Value 05/01/2004- Value Value 05/01/2004- Expense
05/01/2004 10/31/2004 10/31/2004 05/01/2004 10/31/2004 10/31/2004 Ratio
---------- ---------- ---------- ---------- ---------- ---------- -------
Growth Fund
Class A $1,000 $1,015 $ 7.19 $1,000 $1,018 $ 7.20 1.42%
Class B 1,000 1,010 11.77 1,000 1,013 11.79 2.33%
Class C 1,000 1,011 10.82 1,000 1,014 10.84 2.14%
Class I 1,000 1,017 4.36 1,000 1,021 4.37 0.86%
Small Cap Value Fund
Class A $1,000 $1,116 $ 6.97 $1,000 $1,019 $ 6.65 1.31%
Class B 1,000 1,110 11.82 1,000 1,014 11.29 2.23%
Class C 1,000 1,112 11.20 1,000 1,015 10.68 2.11%
Class I 1,000 1,117 5.00 1,000 1,020 4.77 0.94%
Small Cap Growth Fund
Class A $1,000 $ 931 $ 7.18 $1,000 $1,018 $ 7.51 1.48%
Class B 1,000 926 12.54 1,000 1,012 13.10 2.59%
Class C 1,000 928 11.44 1,000 1,013 11.94 2.36%
Class I 1,000 934 4.71 1,000 1,020 4.93 0.97%
International Growth Fund
Class A $1,000 $1,031 $ 7.45 $1,000 $1,018 $ 7.41 1.46%
Class B 1,000 1,026 13.09 1,000 1,012 13.00 2.57%
Class C 1,000 1,026 12.12 1,000 1,013 12.04 2.38%
Class I 1,000 1,033 5.06 1,000 1,020 5.03 0.99%
Short Term Income Fund
Class A $1,000 $1,017 $ 4.21 $1,000 $1,021 $ 4.22 0.83%
Class B 1,000 1,013 7.99 1,000 1,017 8.01 1.58%
Class C 1,000 1,013 7.99 1,000 1,017 8.01 1.58%
Class I 1,000 1,018 2.94 1,000 1,022 2.95 0.58%
U.S. Government Securities Fund
Class A $1,000 $1,033 $ 4.70 $1,000 $1,021 $ 4.67 0.92%
Class B 1,000 1,029 8.36 1,000 1,017 8.31 1.64%
Class C 1,000 1,029 8.21 1,000 1,017 8.16 1.61%
Class I 1,000 1,035 2.81 1,000 1,022 2.80 0.55%
Income Fund
Class A $1,000 $1,045 $ 4.73 $1,000 $1,021 $ 4.67 0.92%
Class B 1,000 1,042 8.42 1,000 1,017 8.31 1.64%
Class C 1,000 1,042 8.42 1,000 1,017 8.31 1.64%
Class I 1,000 1,047 2.88 1,000 1,022 2.85 0.56%
High Yield Fund
Class A $1,000 $1,069 $ 4.78 $1,000 $1,021 $ 4.67 0.92%
Class B 1,000 1,065 8.72 1,000 1,017 8.52 1.68%
Class C 1,000 1,065 8.67 1,000 1,017 8.47 1.67%
Class I 1,000 1,070 3.17 1,000 1,022 3.10 0.61%
Tax-Exempt Bond Fund
Class A $1,000 $1,048 $ 4.79 $1,000 $1,020 $ 4.72 0.93%
Class B 1,000 1,044 8.58 1,000 1,017 8.47 1.67%
Class C 1,000 1,044 8.58 1,000 1,017 8.47 1.67%
California Municipal Fund
Class A $1,000 $1,003 $ 4.28 $1,000 $1,021 $ 4.32 0.85%
Class B 1,000 1,054 8.26 1,000 1,017 8.11 1.60%
Class C 1,000 1,050 8.25 1,000 1,017 8.11 1.60%
California Insured Intermediate
Municipal Fund
Class A $1,000 $1,041 $ 4.36 $1,000 $1,021 $ 4.32 0.85%
Class B 1,000 1,037 8.24 1,000 1,017 8.16 1.61%
Class C 1,000 1,037 8.24 1,000 1,017 8.16 1.61%
Money Market Fund
Class A $1,000 $1,004 $ 2.83 $1,000 $1,022 $ 2.85 0.57%
Class B 1,000 1,000 6.88 1,000 1,018 6.94 1.39%
Class C 1,000 1,000 6.97 1,000 1,018 7.03 1.41%
Class I 1,000 1,005 2.58 1,000 1,022 2.60 0.52%
Tax-Exempt Money Market Fund
Class A $1,000 $1,002 $ 3.91 $1,000 $1,021 $ 3.95 0.79%
California Money Fund
Class A $1,000 $1,003 $ 2.87 $1,000 $1,022 $ 2.90 0.58%
<FN>
* Expenses are equal to each Fund's annualized expense ratio, multiplied by
the average account value over the period, multiplied by the 184 days in the
most recent fiscal half-year, divided by 366 days in the year (to reflect
the one-half year period).
41
Financial Statements:
Portfolio of Investments
- ------------------------------------------------------------------------------
REIT FUND
October 31, 2004
-------------------------------------------------------------------------
Value
Shares (000s)
------ ------
REAL ESTATE INVESTMENT TRUSTS - 88.0%
Diversified - 4.2%
163,000 iStar Financial Inc. $ 6,751
110,000 Vornado Realty Trust 7,392
----------
Total Diversified 14,143
----------
Health Care - 4.2%
280,000 Health Care Property Investors, Inc. 7,792
154,000 Healthcare Realty Trust, Inc. 6,214
----------
Total Health Care 14,006
----------
Industrial/Office - 26.4%
Industrial 6.4%
166,200 AMB Property Corporation 6,232
92,200 CenterPoint Properties Trust 4,269
281,000 ProLogis 10,953
----------
21,454
----------
Mixed - 1.7%
168,000 Duke Realty Corporation 5,729
----------
Office - 18.3%
157,000 Alexandria Real Estate Equities, Inc. 10,370
143,000 Arden Realty, Inc. 4,873
126,000 Boston Properties, Inc. 7,525
180,000 CarrAmerica Realty Corporation 5,801
475,000 Corporate Office Properties Trust 13,025
462,000 Equity Office Properties Trust 12,991
125,000 SL Green Realty Corporation 6,853
----------
61,438
----------
Total Industrial/Office 88,621
----------
Lodging/Resorts - 5.2%
400,000 Equity Inns Inc. 3,800
110,500 FelCor Lodging Trust, Inc.+ 1,284
195,000 Hospitality Properties Trust 8,356
283,500 Host Marriott Corporation+ 4,125
----------
Total Lodging/Resorts 17,565
----------
Mortgage/Financial - 2.4%
215,300 Annaly Mortgage Management, Inc. 3,871
122,000 Friedman, Billings, Ramsey Group, Inc.,
Class A 2,091
34,500 Redwood Trust, Inc. 2,076
----------
Total Mortgage/Financial 8,038
----------
Residential - 12.5%
Apartments - 12.5%
275,000 Apartment Investment & Management
Company, Class A 10,090
151,000 AvalonBay Communities, Inc. 9,886
435,000 Equity Residential 14,507
362,000 United Dominion Realty Trust, Inc. 7,631
----------
Total Residential 42,114
----------
Value
Shares (000s)
------ ------
Retail - 25.2%
Regional Malls - 17.8%
475,000 General Growth Properties, Inc. $ 15,670
237,000 Macerich Company 14,161
238,000 Mills Corporation 13,197
288,000 Simon Property Group, Inc. 16,796
----------
59,824
----------
Shopping Centers - 7.4%
280,000 Developers Diversified Realty Corporation 11,704
214,200 Kimco Realty Corporation 11,685
27,100 Pan Pacific Retail Properties, Inc. 1,535
----------
24,924
----------
Total Retail 84,748
----------
Self Storage - 2.6%
116,000 Public Storage, Inc. 6,061
65,000 Shurgard Storage Centers, Inc., Class A 2,581
----------
Total Self Storage 8,642
----------
Specialty - 5.3%
307,000 Capital Automotive REIT 9,904
215,000 Plum Creek Timber Company, Inc. 7,802
----------
Total Specialty 17,706
----------
Total Real Estate Investment Trusts
(Cost $215,600) 295,583
----------
COMMON STOCKS - 6.1%
Consumer Discretionary - 4.4%
Consumer Durables & Apparel - 1.8%
202,500 D.R. Horton, Inc. 6,075
----------
Hotels, Restaurants & Leisure - 2.6%
147,000 Harrah's Entertainment, Inc. 8,603
----------
Total Consumer Discretionary 14,678
----------
Financials - 1.7%
Insurance - 1.7%
152,700 Fidelity National Financial, Inc. 5,763
----------
Total Common Stocks
(Cost $15,575) 20,441
----------
RIGHTS - 0.0%++
(Cost $0)
47,500 General Growth Properties, Inc.,
Expires 11/09/2004 0**
----------
42 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
REIT FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
REPURCHASE AGREEMENT - 6.3%
(Cost $21,302)
$ 21,302 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $21,305,000 on
11/01/2004 (Collateralized by U.S.
Treasury Obligations, having various
interest rates and maturities,
market value $21,984,000) $ 21,302
----------
TOTAL INVESTMENTS (Cost $252,477*) 100.4% 337,326
OTHER ASSETS AND LIABILITIES (Net) (0.4) (1,314)
----- ----------
NET ASSETS 100.0% $ 336,012
===== ==========
<FN>
- --------
* Aggregate cost for federal tax purposes is $252,481.
** Value of security is $0.
+ Non-income producing security.
++ Amount represents less than 0.1% of the net assets.
See Notes to Financial Statements. 43
Portfolio of Investments
- ------------------------------------------------------------------------------
EQUITY INCOME FUND
October 31, 2004
-------------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - 84.0%
Consumer Discretionary - 14.4%
Automobiles & Components - 3.0%
440,000 General Motors Corporation** $ 16,962
400,000 Magna International Inc., Class A 29,180
----------
46,142
----------
Consumer Durables & Apparel - 3.8%
540,000 D.R. Horton, Inc. 16,200
1,060,000 Mattel, Inc. 18,561
277,000 NIKE Inc., Class B** 22,523
----------
57,284
----------
Hotels, Restaurants & Leisure - 3.9%
260,000 Carnival Corporation** 13,146
565,000 Harrah's Entertainment, Inc.** 33,064
475,000 McDonald's Corporation 13,846
----------
60,056
----------
Retailing - 3.7%
395,000 May Department Stores Company 10,294
543,000 Neiman Marcus Group Inc., Class A 33,030
370,000 Sears, Roebuck & Company** 12,950
----------
56,274
----------
Total Consumer Discretionary 219,756
----------
Consumer Staples - 6.8%
Food & Staples Retailing - 1.5%
720,000 Wal-Mart de Mexico SA de CV, ADR** 23,562
----------
Food, Beverage & Tobacco - 4.6%
405,000 Altria Group, Inc. 19,626
460,000 ConAgra Foods, Inc. 12,144
471,300 Diageo PLC, Sponsored ADR 25,347
250,000 Hershey Foods Corporation** 12,672
----------
69,789
----------
Household/Personal Care Products - 0.7%
215,000 Procter & Gamble Company 11,004
----------
Total Consumer Staples 104,355
----------
Energy - 8.5%
585,000 Baker Hughes Inc. 25,056
330,000 BP PLC, Sponsored ADR 19,223
304,000 ChevronTexaco Corporation 16,130
182,000 ConocoPhillips Company 15,344
235,000 Royal Dutch Petroleum Company (F) 12,746
195,000 Schlumberger Ltd. 12,273
652,234 Valero Energy Corporation 28,027
----------
Total Energy 128,799
----------
Value
Shares (000s)
------ ------
Financials - 23.3%
Banks - 7.6%
715,096 Bank of America Corporation $ 32,029
605,998 Countrywide Financial Corporation 19,349
720,400 TCF Financial Corporation 22,707
560,000 U.S. Bancorp 16,022
432,000 Wells Fargo & Company 25,799
----------
115,906
----------
Diversified Financials - 7.4%
400,000 Allied Capital Corporation** 10,636
735,333 Citigroup Inc. 32,627
275,000 Fannie Mae 19,291
177,000 Franklin Resources, Inc. 10,730
385,000 JPMorgan Chase & Company 14,861
310,000 Morgan Stanley 15,838
155,000 T. Rowe Price Group, Inc. 8,644
----------
112,627
----------
Insurance - 8.3%
705,000 ACE Ltd. 26,832
710,000 AFLAC Inc. 25,475
395,000 Allstate Corporation 18,996
510,000 Fidelity National Financial, Inc. 19,247
527,800 HCC Insurance Holdings, Inc. 15,676
290,000 XL Capital Ltd., Class A 21,025
----------
127,251
----------
Total Financials 355,784
----------
Health Care - 5.4%
Health Care Equipment & Services - 0.8%
240,000 Becton Dickinson & Company 12,600
----------
Pharmaceuticals & Biotechnology - 4.6%
500,000 Abbott Laboratories 21,315
410,000 Johnson & Johnson 23,936
825,000 Pfizer Inc. 23,884
----------
69,135
----------
Total Health Care 81,735
----------
Industrials - 8.2%
Capital Goods - 6.9%
266,000 Boeing Company 13,273
180,000 General Dynamics Corporation 18,382
560,000 General Electric Company 19,107
370,000 Northrop Grumman Corporation 19,148
340,000 PACCAR Inc. 23,565
355,000 Tyco International Ltd.** 11,058
----------
104,533
----------
Transportation - 1.3%
250,000 United Parcel Service, Inc., Class B** 19,795
----------
Total Industrials 124,328
----------
44 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
EQUITY INCOME FUND
October 31, 2004
-------------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Information Technology - 7.5%
Communications Equipment - 3.0%
425,000 Harris Corporation $ 26,150
1,266,000 Nokia Oyj, Sponsored ADR 19,522
----------
45,672
----------
Computers & Peripherals - 1.4%
530,000 Hewlett-Packard Company 9,890
124,000 International Business Machines
Corporation 11,129
----------
21,019
----------
Electronic Equipment & Instruments - 2.0%
1,308,500 AU Optronics Corporation, ADR** 13,739
336,000 Diebold, Inc. 16,078
----------
29,817
----------
Semiconductors & Semiconductor Equipment - 1.1%
571,000 Microchip Technology Inc. 17,272
----------
Total Information Technology 113,780
----------
Materials - 4.0%
295,000 Alcoa Inc. 9,587
550,000 Cemex SA de CV, Sponsored ADR 15,939
350,000 Dow Chemical Company 15,729
470,000 Monsanto Company 20,093
----------
Total Materials 61,348
----------
Telecommunication Services - 2.2%
376,000 Verizon Communications Inc. 14,702
745,000 Vodafone Group PLC, Sponsored ADR** 19,213
----------
Total Telecommunication Services 33,915
----------
Utilities - 3.7%
460,000 FPL Group, Inc. 31,694
290,000 Pinnacle West Capital Corporation 12,360
410,000 Southern Company** 12,952
----------
Total Utilities 57,006
----------
Total Common Stocks
(Cost $1,075,582) 1,280,806
----------
REAL ESTATE INVESTMENT TRUSTS - 6.9%
196,000 AMB Property Corporation 7,350
157,500 Apartment Investment & Management
Company, Class A 5,779
92,000 Arden Realty, Inc. 3,135
77,000 CarrAmerica Realty Corporation 2,482
180,000 Corporate Office Properties Trust 4,936
105,000 Developers Diversified Realty Corporation 4,389
81,000 Duke Realty Corporation 2,762
270,000 Equity Office Properties Trust 7,592
228,000 Equity Residential 7,604
364,000 General Growth Properties, Inc. 12,008
276,000 Health Care Property Investors, Inc.** 7,681
Value
Shares (000s)
------ ------
140,000 Hospitality Properties Trust $ 5,999
80,000 Kimco Realty Corporation 4,364
90,000 Macerich Company 5,378
193,900 Plum Creek Timber Company, Inc. 7,037
110,500 ProLogis 4,307
103,000 Shurgard Storage Centers, Inc., Class A 4,089
157,000 Simon Property Group, Inc. 9,156
----------
Total Real Estate Investment Trusts
(Cost $73,524) 106,048
----------
Principal
Amount
(000s)
---------
CONVERTIBLE SECURITIES - 1.3%
Convertible Bonds and Notes - 1.3%
$ 5,500 RadiSys Corporation, Conv. Sub. Note,
5.500% due 08/15/2007 5,356
8,000 TriQuint Semiconductor, Inc., Conv. Sub.
Note, 4.000% due 03/01/2007 7,750
6,500 Vitesse Semiconductor Corporation, Conv.
Sub. Deb., 4.000% due 03/15/2005 6,532
----------
Total Convertible Securities
(Cost $17,527) 19,638
----------
FIXED INCOME SECURITIES - 1.4%
Corporate Bonds and Notes - 1.3%
1,500 Aetna Inc., Company Guarantee,
7.625% due 08/15/2026 1,812
1,250 American Home Products Corporation, Deb.,
7.250% due 03/01/2023 1,384
4,000 ERAC USA Finance Company, Note,
7.350% due 06/15/2008++ 4,487
1,000 Medpartners Inc., Sr. Note,
7.375% due 10/01/2006 1,072
500 Merrill Lynch & Company, Inc., Note,
6.375% due 10/15/2008 547
4,000 TELUS Corporation, Note,
8.000% due 06/01/2011 4,736
2,000 Texas-New Mexico Power Company,
Sr. Note, 6.250% due 01/15/2009 2,135
2,000 Time Warner Inc., Deb.,
9.150% due 02/01/2023 2,642
1,000 Westinghouse Electric Corporation, Deb.,
7.875% due 09/01/2023 1,218
----------
Total Corporate Bonds and Notes
(Cost $17,425) 20,033
----------
Collateralized Mortgage Obligation (CMO) - 0.1%
(Cost $790)
788 Reilly Mortgage FHA, Series 1982,
(Partial default),
7.430% due 08/01/2022 788
----------
See Notes to Financial Statements. 45
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
EQUITY INCOME FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
FIXED INCOME SECURITIES - (continued)
U.S. Government Agency Mortgage-Backed
Securities - 0.0% +++
Federal Home Loan Mortgage Corporation
(FHLMC) - 0.0% +++
$ 410 6.500% due 09/01/2030 $ 432
207 7.000% due 09/01/2030 220
----------
Total U.S. Government Agency Mortgage-
Backed Securities
(Cost $599) 652
----------
Total Fixed Income Securities
(Cost $18,814) 21,473
----------
Shares
------
WARRANTS - 0.0% +++
(Cost $0)
4,500 V2 Music Holdings PLC,
Expires 05/07/2008+,++ 0***
----------
RIGHTS - 0.0% +++
(Cost $0)
36,400 General Growth Properties, Inc.,
Expires 11/09/2004+ 0****
----------
Principal
Amount Value
(000s) (000s)
--------- ------
REPURCHASE AGREEMENT - 6.6%
(Cost $100,970)
$ 100,970 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $100,985,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $104,201,000) $ 100,970
----------
SHORT-TERM INVESTMENT - 6.4%
(Cost $96,996)
96,996 Mellon GSL DBT II
Collateral Fund++++ 96,996
----------
TOTAL INVESTMENTS (Cost $1,383,413*) 106.6% 1,625,931
OTHER ASSETS AND LIABILITIES (Net) (6.6) (100,316)
----- ----------
NET ASSETS 100.0% $1,525,615
===== ==========
<FN>
- --------
* Aggregate cost for federal tax purposes is $1,383,513.
** Some or all of these securities are on loan at October 31, 2004,
and have an aggregate market value of $94,227,000, representing
6.2% of the total net assets of the Fund (Collateral Value $96,996,000).
*** Value of security is less than $500.
**** Value of security is $0.
+ Non-income producing security.
++ Security acquired in a transaction exempt from registration under
Rule 144A of the Securities Act of 1933, as amended.
+++ Amount represents less than 0.1% of the net assets of the Fund.
++++ Represents investment purchased with cash collateral for securities
loaned.
- -----------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
(F) -- Foreign Shares
FHA -- Federal Housing Authority
- -----------------------------------------------------------------------------
46 See Notes to Financial Statements.
Portfolio of Investments
- -----------------------------------------------------------------------------
GROWTH & INCOME FUND
October 31, 2004
------------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - 93.8%
Consumer Discretionary - 11.6%
Consumer Durables & Apparel - 1.3%
1,605,000 Mattel, Inc. $ 28,104
----------
Hotels, Restaurants & Leisure - 3.9%
1,593,000 Carnival Corporation** 80,542
----------
Media - 5.4%
891,999 Comcast Corporation, Class A+ 26,314
790,000 Comcast Corporation, Special Class A+** 22,941
2,622,300 Liberty Media Corporation, Class A+ 23,391
1,059,000 Viacom Inc., Class B 38,643
----------
111,289
----------
Retailing - 1.0%
1,027,000 Gap, Inc. 20,519
----------
Total Consumer Discretionary 240,454
----------
Consumer Staples - 9.9%
Food & Staples Retailing - 3.1%
592,000 Costco Wholesale Corporation 28,381
2,376,000 Kroger Company+ 35,901
----------
64,282
----------
Food, Beverage & Tobacco - 1.8%
745,000 PepsiCo Inc. 36,937
----------
Household & Personal Products - 5.0%
1,474,000 Avon Products, Inc. 58,297
442,000 Kimberly-Clark Corporation 26,374
394,000 Procter & Gamble Company 20,165
----------
104,836
----------
Total Consumer Staples 206,055
----------
Energy - 7.6%
719,000 BP PLC, Sponsored ADR 41,882
662,000 Exxon Mobil Corporation 32,584
605,000 Royal Dutch Petroleum Company (F) 32,815
363,000 Schlumberger Ltd. 22,847
672,000 Unocal Corporation 28,056
----------
Total Energy 158,184
----------
Financials - 23.6%
Banks - 10.0%
1,925,834 Bank of America Corporation 86,258
681,000 PNC Financial Services Group, Inc. 35,617
787,000 Wachovia Corporation 38,728
803,000 Wells Fargo & Company 47,955
----------
208,558
----------
Value
Shares (000s)
------ ------
Diversified Financials - 7.8%
1,054,000 Citigroup Inc. $ 46,766
836,000 Freddie Mac 55,677
1,525,000 JPMorgan Chase & Company 58,865
----------
161,308
----------
Insurance - 5.8%
713,600 ACE Ltd. 27,160
1,182,000 Allstate Corporation 56,842
591,000 American International Group Inc. 35,880
----------
119,882
----------
Total Financials 489,748
----------
Health Care - 12.7%
Health Care Equipment & Services - 4.1%
757,000 Baxter International Inc. 23,285
655,000 Cardinal Health Inc. 30,621
598,000 Medtronic, Inc. 30,564
----------
84,470
----------
Pharmaceuticals & Biotechnology - 8.6%
952,000 Bristol-Myers Squibb Company 22,305
584,000 Johnson & Johnson 34,094
490,000 Merck & Company, Inc. 15,342
2,340,000 Mylan Laboratories Inc.** 40,295
1,507,000 Pfizer Inc. 43,628
896,000 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR 23,296
----------
178,960
----------
Total Health Care 263,430
----------
Industrials - 10.0%
Capital Goods - 10.0%
906,000 Boeing Company 45,209
928,000 General Electric Company 31,663
1,517,000 Honeywell International Inc. 51,093
367,000 Lockheed Martin Corporation 20,218
1,923,000 Tyco International Ltd. 59,902
----------
Total Industrials 208,085
----------
Information Technology - 13.2%
Communications Equipment - 1.9%
2,314,000 Motorola, Inc. 39,940
----------
Computers & Peripherals - 3.3%
1,394,000 Hewlett-Packard Company 26,012
474,000 International Business Machines
Corporation 42,541
----------
68,553
----------
IT Services - 2.3%
1,167,000 First Data Corporation 48,174
----------
See Notes to Financial Statements. 47
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
GROWTH & INCOME FUND
October 31, 2004
-------------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Information Technology - (continued)
Semiconductors & Semiconductor Equipment - 1.3%
1,239,000 Intel Corporation $ 27,580
----------
Software - 4.4%
1,402,000 Computer Associates International, Inc. 38,849
1,831,000 Microsoft Corporation 51,250
----------
90,099
----------
Total Information Technology 274,346
----------
Materials - 0.5%
279,000 Alcoa Inc. 9,067
----------
Telecommunication Services - 1.2%
978,000 SBC Communications Inc. 24,704
----------
Utilities - 3.5%
465,000 FPL Group, Inc.** 32,039
794,000 NiSource Inc. 17,031
566,000 Pinnacle West Capital Corporation 24,123
----------
Total Utilities 73,193
----------
Total Common Stocks
(Cost $1,584,877) 1,947,266
----------
Principal
Amount Value
(000s) (000s)
--------- ------
REPURCHASE AGREEMENT - 6.1%
(Cost $125,733)
$ 125,733 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $125,752,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $129,757,000) $ 125,733
----------
SHORT-TERM INVESTMENT - 5.0%
(Cost $103,919)
103,919 Mellon GSL DBT II
Collateral Fund++ 103,919
----------
TOTAL INVESTMENTS (Cost $1,814,529*) 104.9% 2,176,918
OTHER ASSETS AND LIABILITIES (Net) (4.9) (102,104)
----- ----------
NET ASSETS 100.0% $2,074,814
===== ==========
<FN>
- --------
* Aggregate cost for federal tax purposes is $1,825,541.
** Some or all of these securities are on loan at October 31, 2004, and have
an aggregate market value of $100,428,000 representing 4.8% of the total
net assets of the Fund (Collateral Value $103,919,000).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
- ------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
(F) -- Foreign Shares
- ------------------------------------------------------------------------------
48 See Notes to Financial Statements.
Portfolio of Investments
- ------------------------------------------------------------------------------
WEST COAST EQUITY FUND
October 31, 2004
-------------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - 93.1%
Consumer Discretionary - 16.2%
Automobiles & Components - 1.7%
761,700 Monaco Coach Corporation $ 13,520
87,600 Superior Industries International, Inc.** 2,389
79,300 Toyota Motor Corporation,
Sponsored ADR 6,153
----------
22,062
----------
Consumer Durables & Apparel - 3.9%
168,000 Columbia Sportswear Company+ 10,140
163,400 KB Home 13,440
470,600 Mattel, Inc. 8,240
217,400 NIKE Inc., Class B** 17,677
----------
49,497
----------
Hotels, Restaurants & Leisure - 3.7%
894,400 Hilton Hotels Corporation 17,798
431,100 Starbucks Corporation+ 22,797
1,239,585 WestCoast Hospitality Corporation+ 6,533
----------
47,128
----------
Media - 5.4%
338,600 Getty Images, Inc.+** 20,021
237,400 Knight-Ridder, Inc.** 16,269
49,700 McClatchy Company, Class A 3,454
574,900 Univision Communications Inc.,
Class A+** 17,799
486,600 Walt Disney Company 12,272
----------
69,815
----------
Retailing - 1.5%
580,425 Building Materials Holding Corporation 16,774
240,500 Hollywood Entertainment Corporation+ 2,338
112,000 Restoration Hardware, Inc.+ 577
----------
19,689
----------
Total Consumer Discretionary 208,191
----------
Consumer Staples - 3.3%
Food & Staples Retailing - 2.4%
503,640 Costco Wholesale Corporation 24,144
420,500 Kroger Company+ 6,354
----------
30,498
----------
Household & Personal Products - 0.9%
111,800 Clorox Company 6,104
142,000 Estee Lauder Companies Inc., Class A 6,099
----------
12,203
----------
Total Consumer Staples 42,701
----------
Energy - 6.6%
390,700 Apache Corporation 19,809
671,300 ChevronTexaco Corporation 35,619
411,000 Nabors Industries Ltd.+** 20,188
158,500 Occidental Petroleum Corporation $ 8,849
----------
Total Energy 84,465
----------
Value
Shares (000s)
------ ------
Financials - 18.7%
Banks - 14.0%
568,700 Bank of America Corporation 25,472
343,900 Banner Corporation 10,283
155,300 City National Corporation** 10,700
418,500 East West Bancorp, Inc. 16,757
311,000 Greater Bay Bancorp 9,717
136,700 KeyCorp 4,592
86,533 Pacific Capital Bancorp 2,754
938,200 U.S. Bancorp 26,842
59,400 UCBH Holdings, Inc. 2,560
39,300 United PanAm Financial Corporation+ 757
853,414 Washington Federal, Inc. 21,779
809,016 Wells Fargo & Company 48,314
----------
180,527
----------
Diversified Financials - 2.8%
998,400 Charles Schwab Corporation 9,135
278,000 Citigroup Inc. 12,335
71,400 Countrywide Financial Corporation 2,280
179,800 Franklin Resources, Inc. 10,899
16,032 Piper Jaffray Companies, Inc.+ 701
----------
35,350
----------
Insurance - 1.9%
86,800 RenaissanceRe Holdings Ltd. 4,064
276,315 StanCorp Financial Group, Inc. 20,829
----------
24,893
----------
Total Financials 240,770
----------
Health Care - 12.0%
Health Care Equipment & Services - 4.9%
40,700 Affymetrix, Inc.+ 1,241
213,000 Applera Corporation-Applied Biosystems
Group 4,064
162,100 Caremark Rx, Inc.+** 4,858
90,060 Health Net, Inc.+ 2,185
1,484,400 OraSure Technologies, Inc.+ 10,020
112,700 ResMed Inc.+ 5,297
723,563 SonoSite, Inc.+ 20,900
323,000 Varian Medical Systems, Inc.+ 12,969
39,000 VCA Antech, Inc.+ 874
16,600 Zimmer Holdings, Inc.+ 1,288
----------
63,696
----------
Pharmaceuticals & Biotechnology - 7.1%
232,800 Allergan, Inc. 16,659
291,439 Amgen, Inc.+ 16,554
55,800 Amylin Pharmaceuticals, Inc.+** 1,189
1,349,400 Corixa Corporation+** 5,364
405,800 Dendreon Corporation+ 4,196
See Notes to Financial Statements. 49
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
WEST COAST EQUITY FUND
October 31, 2004
-------------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Health Care - (continued)
Pharmaceuticals & Biotechnology - (continued)
469,975 EDEN Bioscience Corporation+ $ 226
208,600 Genentech, Inc.+ 9,498
279,720 ICOS Corporation+** 6,299
91,000 Neurocrine Biosciences, Inc.+ 4,236
551,200 Pfizer Inc. 15,957
378,100 Watson Pharmaceuticals, Inc.+ 10,598
----------
90,776
----------
Total Health Care 154,472
----------
Industrials - 15.5%
Capital Goods - 11.7%
592,533 Boeing Company 29,567
189,000 Cascade Corporation 5,613
256,000 Dionex Corporation+ 14,336
430,330 Electro Scientific Industries, Inc.+ 7,298
702,900 Greenbrier Companies, Inc. 17,355
283,100 Northrop Grumman Corporation 14,651
515,987 PACCAR Inc.** 35,763
226,450 Precision Castparts Corporation 13,587
191,800 Simpson Manufacturing Company, Inc. 12,329
----------
150,499
----------
Commercial Services & Supplies - 1.0%
476,400 Robert Half International Inc.** 12,639
----------
Transportation - 2.8%
371,410 Alaska Air Group, Inc.+** 9,783
458,520 Expeditors International of
Washington, Inc.** 26,181
----------
35,964
----------
Total Industrials 199,102
----------
Information Technology - 16.6%
Communications Equipment - 1.2%
815,000 Cisco Systems, Inc.+ 15,656
----------
Computers & Peripherals - 1.8%
1,248,100 Advanced Digital Information Corporation+ 11,170
615,000 Hewlett-Packard Company 11,476
117,200 InFocus Corporation+ 755
----------
23,401
----------
Electronic Equipment & Instruments - 1.4%
224,735 Microvision, Inc.+** 1,196
513,000 Tektronix, Inc. 15,559
45,400 Trimble Navigation Ltd.+ 1,303
----------
18,058
----------
Value
Shares (000s)
------ ------
Internet Software & Services - 0.5%
1,830,000 Primus Knowledge Solutions, Inc.+ $ 2,196
959,000 WatchGuard Technologies, Inc.+ 3,817
----------
6,013
----------
Semiconductors & Semiconductor Equipment - 4.4%
304,300 Applied Materials, Inc.+ 4,899
361,900 Credence Systems Corporation+** 2,732
324,825 FEI Company+ 6,289
784,100 Intel Corporation 17,454
90,000 KLA-Tencor Corporation+** 4,098
797,980 Lattice Semiconductor Corporation+** 3,966
489,300 LSI Logic Corporation+ 2,226
50,100 Novellus Systems, Inc.+ 1,298
1,085,900 Pixelworks, Inc.+** 12,260
468,740 TriQuint Semiconductor, Inc.+ 1,669
----------
56,891
----------
Software - 7.3%
529,700 Actuate Corporation+ 1,311
325,100 Adobe Systems Inc. 18,215
70,100 Electronic Arts Inc.+ 3,149
366,150 Fair Isaac Corporation 11,058
1,450,878 Microsoft Corporation 40,610
323,000 Quest Software, Inc.+ 4,738
454,708 RadiSys Corporation+ 6,039
420,000 Siebel Systems, Inc.+ 3,990
196,600 SupportSoft, Inc.+ 997
250,500 Sybase, Inc.+ 3,965
----------
94,072
----------
Total Information Technology 214,091
----------
Materials - 3.5%
578,530 Oregon Steel Mills, Inc.+ 8,400
620,040 Schnitzer Steel Industries, Inc., Class A 17,516
314,700 Weyerhaeuser Company 19,713
----------
Total Materials 45,629
----------
Telecommunication Services - 0.7%
513,900 Nextel Partners, Inc., Class A+ 8,654
----------
Total Common Stocks
(Cost $899,457) 1,198,075
----------
REAL ESTATE INVESTMENT TRUSTS - 2.5%
244,000 AMB Property Corporation 9,150
540,400 Plum Creek Timber Company, Inc. 19,611
74,300 Shurgard Storage Centers, Inc., Class A 2,950
----------
Total Real Estate Investment Trusts
(Cost $24,447) 31,711
----------
50 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
WEST COAST EQUITY FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
REPURCHASE AGREEMENT - 4.7%
(Cost $60,851)
$ 60,851 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $60,860,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $62,798,000) $ 60,851
----------
SHORT-TERM INVESTMENT - 4.3%
(Cost $55,999)
55,999 Mellon GSL DBT II
Collateral Fund++ 55,999
----------
TOTAL INVESTMENTS (Cost $1,040,754*) 104.6% 1,346,636
OTHER ASSETS AND LIABILITIES (Net) (4.6) (59,114)
----- ----------
NET ASSETS 100.0% $1,287,522
===== ==========
<FN>
- --------
* Aggregate cost for federal tax purposes is $1,041,574.
** Some or all of these securities are on loan at October 31, 2004,
and have an aggregate market value of $54,257,000, representing 4.2% of
the total net assets of the Fund (Collateral Value $55,999,000).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for securities loaned.
- ------------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
- ------------------------------------------------------------------------------
See Notes to Financial Statements. 51
Portfolio of Investments
- ----------------------------------------------------------------------------
MID CAP STOCK FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - 89.6%
Consumer Discretionary - 15.5%
Automobiles & Components - 2.4%
200,200 Magna International Inc., Class A $ 14,604
83,300 Superior Industries International, Inc.** 2,272
----------
16,876
----------
Consumer Durables & Apparel - 4.1%
427,500 Jones Apparel Group, Inc. 15,091
775,500 Mattel, Inc. 13,579
----------
28,670
----------
Hotels, Restaurants & Leisure - 3.4%
50,000 Mandalay Resort Group 3,440
138,000 Papa John's International, Inc.+** 4,455
357,000 Yum! Brands, Inc. 15,529
----------
23,424
----------
Retailing - 5.6%
304,200 Neiman Marcus Group Inc., Class A** 18,505
554,600 Tiffany & Company 16,266
121,000 Weight Watchers International, Inc.+** 4,346
----------
39,117
----------
Total Consumer Discretionary 108,087
----------
Consumer Staples - 3.6%
Food, Beverage & Tobacco - 2.2%
288,550 Dean Foods Company+ 8,613
140,000 Hershey Foods Corporation** 7,097
----------
15,710
----------
Household/Personal Care Products - 1.4%
224,000 Estee Lauder Companies Inc., Class A 9,621
----------
Total Consumer Staples 25,331
----------
Energy - 7.5%
271,600 Baker Hughes Inc.** 11,633
157,800 Devon Energy Corporation 11,672
317,500 Nabors Industries Ltd.+** 15,596
263,000 Tidewater Inc. 8,135
118,000 Unocal Corporation 4,926
----------
Total Energy 51,962
----------
Financials - 18.2%
Banks - 6.5%
432,141 North Fork Bancorporation, Inc. 19,057
467,600 TCF Financial Corporation 14,739
462,000 Washington Federal, Inc. 11,790
----------
45,586
----------
Diversified Financials - 4.6%
392,300 A.G. Edwards, Inc. 14,225
176,400 Ambac Financial Group, Inc. 13,770
Value
Shares (000s)
------ ------
124,800 Countrywide Financial Corporation $ 3,985
----------
31,980
----------
Insurance - 7.1%
405,320 Fidelity National Financial, Inc. 15,297
554,700 HCC Insurance Holdings, Inc. 16,474
164,200 MGIC Investment Corporation** 10,560
183,100 PMI Group, Inc.** 7,108
----------
49,439
----------
Total Financials 127,005
----------
Health Care - 8.8%
Health Care Equipment & Services - 7.9%
135,000 AmerisourceBergen Corporation** 7,430
266,900 Covance Inc.+ 10,601
181,900 Express Scripts, Inc., Class A+** 11,642
560,982 IMS Health Inc. 11,882
328,600 Universal Health Services, Inc., Class B 13,657
----------
55,212
----------
Pharmaceuticals & Biotechnology - 0.9%
364,425 Mylan Laboratories Inc.** 6,275
----------
Total Health Care 61,487
----------
Industrials - 12.5%
Capital Goods - 6.2%
463,100 Federal Signal Corporation 7,697
328,300 Lincoln Electric Holdings, Inc. 10,958
18,600 Lockheed Martin Corporation 1,025
169,400 PACCAR Inc. 11,741
266,200 Teleflex Inc. 11,657
----------
43,078
----------
Commercial Services & Supplies - 4.1%
336,300 HNI Corporation 13,586
485,800 Republic Services, Inc. 14,963
----------
28,549
----------
Transportation - 2.2%
440,500 Alaska Air Group, Inc.+ 11,603
475,700 AMR Corporation+** 3,672
----------
15,275
----------
Total Industrials 86,902
----------
Information Technology - 13.3%
Computers & Peripherals - 1.0%
390,800 Electronics for Imaging, Inc.+ 7,050
----------
Electronic Equipment & Instruments - 1.7%
215,800 Arrow Electronics, Inc.+ 5,170
147,100 Diebold, Inc. 7,039
----------
12,209
----------
52 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
MID CAP STOCK FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Information Technology - (continued)
IT Services - 1.7%
398,500 Acxiom Corporation** $ 9,963
129,300 Convergys Corporation+ 1,682
----------
11,645
----------
Semiconductors & Semiconductor Equipment - 2.7%
618,000 Microchip Technology Inc. 18,694
----------
Software - 6.2%
167,300 Adobe Systems Inc. 9,374
727,700 BMC Software Inc.+ 13,768
311,000 PeopleSoft Inc.+ 6,459
1,108,500 Siebel Systems, Inc.+ 10,531
194,000 Synopsys, Inc.+** 3,151
----------
43,283
----------
Total Information Technology 92,881
----------
Materials - 4.3%
473,500 Cabot Corporation 16,137
292,600 Valspar Corporation 13,652
----------
Total Materials 29,789
----------
Telecommunication Services - 0.6%
98,000 United States Cellular Corporation+ 4,082
----------
Utilities - 5.3%
194,400 FPL Group, Inc.** 13,394
463,700 NiSource Inc.** 9,947
326,000 Pinnacle West Capital Corporation 13,894
----------
Total Utilities 37,235
----------
Total Common Stocks
(Cost $503,847) 624,761
----------
REAL ESTATE INVESTMENT TRUST - 1.8%
(Cost $9,958)
369,600 General Growth Properties, Inc. 12,193
----------
RIGHTS - 0.0% +++
(Cost $0)
36,960 General Growth Properties, Inc.,
Expires 11/09/2004 0***
----------
Principal
Amount Value
(000s) (000s)
------ ------
REPURCHASE AGREEMENT - 9.1%
(Cost $63,702)
$ 63,702 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $63,711,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $65,741,000) $ 63,702
----------
SHORT-TERM INVESTMENT - 8.4%
(Cost $58,773)
58,773 Mellon GSL DBT II
Collateral Fund++ 58,773
----------
TOTAL INVESTMENTS (Cost $636,280*) 108.9% 759,429
OTHER ASSETS AND LIABILITIES (Net) (8.9) (62,159)
----- ----------
NET ASSETS 100.0% $ 697,270
===== ==========
<FN>
- ---------
* Aggregate cost for federal tax purposes is $639,598.
** Some or all of these securities are on loan at October
31, 2004, and have an aggregate market value of $57,160,000,
representing 8.2% of the total net assets of the Fund
(Collateral Value $58,773,000).
*** Value of security is $0.
+ Non-income producing security.
++ Represents investment purchased with cash collateral for
securities loaned.
+++ Amount represents less than 0.1% of total net assets.
See Notes to Financial Statements. 53
Portfolio of Investments
- ----------------------------------------------------------------------------
GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - 94.7%
Consumer Discretionary - 17.5%
Consumer Durables & Apparel - 0.7%
48,200 Coach, Inc.+ $ 2,247
97,255 NIKE Inc., Class B 7,908
----------
10,155
----------
Hotels, Restaurants & Leisure - 2.7%
206,900 Carnival Corporation** 10,461
371,615 Hilton Hotels Corporation 7,395
57,000 Marriott International, Inc., Class A 3,106
170,385 McDonald's Corporation 4,967
317,275 Royal Caribbean Cruises Ltd.** 14,785
----------
40,714
----------
Media - 7.9%
224,700 Clear Channel Communications, Inc. 7,505
922,200 Comcast Corporation, Special Class A+ 26,781
488,495 Gemstar-TV Guide International, Inc.+ 2,809
401,181 Liberty Media Corporation, Class A+ 3,579
325,700 News Corporation Ltd., Sponsored ADR** 10,507
67,800 Omnicom Group Inc. 5,349
1,555,040 Time Warner Inc.+ 25,876
215,535 Univision Communications Inc., Class A+** 6,673
600,970 Viacom Inc., Class B 21,929
315,900 Walt Disney Company 7,967
51,200 XM Satellite Radio Holdings Inc.,
Class A+** 1,655
----------
120,630
----------
Retailing - 6.2%
61,300 Bed Bath & Beyond Inc.+ 2,501
220,395 Best Buy Company, Inc. 13,052
127,500 Chico's FAS, Inc.+** 5,104
26,400 eBay Inc.+ 2,577
104,000 Federated Department Stores, Inc. 5,247
399,200 Gap, Inc.** 7,976
416,680 Home Depot, Inc. 17,117
66,900 J.C. Penney Company, Inc. (Holding
Company)** 2,314
142,400 Lowe's Companies, Inc. 8,014
372,710 Staples, Inc. 11,084
382,855 Target Corporation 19,150
----------
94,136
----------
Total Consumer Discretionary 265,635
----------
Consumer Staples - 6.6%
Food & Staples Retailing - 1.6%
145,500 Costco Wholesale Corporation 6,975
54,000 Sysco Corporation 1,743
206,400 Wal-Mart Stores Inc. 11,129
134,600 Walgreen Company 4,831
----------
24,678
----------
Value
Shares (000s)
------ ------
Food, Beverage & Tobacco - 2.5%
57,000 Altria Group, Inc. $ 2,762
214,700 Anheuser-Busch Companies, Inc. 10,725
91,100 Coca-Cola Company 3,704
42,100 Hershey Foods Corporation** 2,134
387,500 PepsiCo Inc.** 19,212
----------
38,537
----------
Household & Personal Products - 2.5%
55,075 Alberto-Culver Company, Class B 2,471
72,300 Avon Products, Inc. 2,859
3,000 Clorox Company 164
124,500 Estee Lauder Companies Inc., Class A 5,347
34,700 Kimberly-Clark Corporation 2,070
472,875 Procter & Gamble Company 24,202
----------
37,113
----------
Total Consumer Staples 100,328
----------
Energy - 4.9%
39,400 Amerada Hess Corporation 3,180
85,200 BJ Services Company 4,345
95,800 Burlington Resources Inc.** 3,976
25,800 Devon Energy Corporation 1,908
17,700 EOG Resources, Inc. 1,178
599,675 Exxon Mobil Corporation 29,516
239,665 Halliburton Company 8,877
120,165 Kinder Morgan Management LLC+ 4,957
34,500 Murphy Oil Corporation 2,761
31,400 National-Oilwell, Inc.+ 1,059
109,500 Schlumberger Ltd. 6,892
13,300 Smith International, Inc.+** 772
52,200 Total SA, Sponsored ADR 5,443
----------
Total Energy 74,864
----------
Financials - 8.8%
Banks - 0.2%
17,300 Commerce Bancorp, Inc. 1,025
17,900 North Fork Bancorporation, Inc. 789
34,000 Wells Fargo & Company 2,031
----------
3,845
----------
Diversified Financials - 6.5%
477,205 American Express Company 25,325
55,100 Bear Stearns Companies Inc.** 5,221
517,050 Citigroup Inc. 22,941
42,100 Goldman Sachs Group, Inc. 4,142
321,440 JPMorgan Chase & Company 12,408
32,700 MBNA Corporation 838
20,200 Merrill Lynch & Company, Inc. 1,090
406,555 Morgan Stanley 20,771
30,000 Providian Financial Corporation+** 466
129,025 SLM Corporation 5,840
----------
99,042
----------
54 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Financials - (continued)
Insurance - 2.1%
51,525 Allstate Corporation $ 2,478
256,295 American International Group Inc. 15,560
24,250 Chubb Corporation 1,749
155,200 Prudential Financial, Inc. 7,212
51,200 RenaissanceRe Holdings Ltd. 2,397
31,400 XL Capital Ltd., Class A 2,276
----------
31,672
----------
Total Financials 134,559
----------
Health Care - 17.7%
Health Care Equipment & Services - 6.5%
29,350 Alcon, Inc. 2,090
99,800 Applera Corporation-Applied Biosystems
Group 1,904
94,420 Biomet, Inc. 4,407
60,700 Boston Scientific Corporation+ 2,143
243,005 Caremark Rx, Inc.+** 7,283
20,800 Kinetic Concepts, Inc.+ 1,036
37,900 Laboratory Corporation of America
Holdings+ 1,736
610,760 Medtronic, Inc. 31,216
180,400 Millipore Corporation+ 8,297
10,300 Quest Diagnostics Inc. 902
21,100 St. Jude Medical, Inc.+ 1,616
140,600 Stryker Corporation 6,058
244,550 UnitedHealth Group Inc. 17,705
116,800 Varian Medical Systems, Inc.+ 4,689
40,300 Waters Corporation+** 1,664
20,700 WellPoint Health Networks, Inc.+ 2,022
51,200 Zimmer Holdings, Inc.+ 3,973
----------
98,741
----------
Pharmaceuticals & Biotechnology - 11.2%
359,335 Amgen, Inc.+ 20,410
56,700 Biogen Idec Inc.+ 3,298
87,700 Digene Corporation+ 2,206
229,890 Eli Lilly & Company 12,623
337,150 Genentech, Inc.+ 15,350
209,000 Gilead Sciences, Inc.+ 7,238
60,700 ImClone Systems+ 2,659
401,000 Johnson & Johnson 23,410
8,400 Martek Biosciences Corporation+ 395
60,900 Medimmune, Inc.+ 1,731
194,836 Merck & Company, Inc. 6,100
247,268 Novartis AG 11,752
1,427,540 Pfizer Inc. 41,327
54,000 Pharmaceutical Product Development, Inc.+ 2,280
22,395 Roche Holding AG-Genusschein 2,281
205,440 Sanofi-Aventis, ADR 7,499
Value
Shares (000s)
------ ------
357,562 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR** $ 9,297
----------
169,856
----------
Total Health Care 268,597
----------
Industrials - 12.1%
Capital Goods - 8.8%
30,200 3M Company 2,343
66,600 Boeing Company 3,323
136,600 Empresa Brasileira de Aeronautica SA,
ADR 3,625
1,740,075 General Electric Company 59,371
122,100 Honeywell International Inc. 4,112
121,700 Ingersoll-Rand Company, Class A 8,329
43,500 ITT Industries, Inc. 3,530
138,900 Lockheed Martin Corporation 7,652
54,600 Northrop Grumman Corporation 2,826
65,500 Rockwell Automation, Inc. 2,731
18,400 Rockwell Collins, Inc. 653
678,535 Tyco International Ltd. 21,136
153,475 United Technologies Corporation 14,246
----------
133,877
----------
Commercial Services & Supplies - 1.0%
68,095 Apollo Group, Inc., Class A+ 4,494
86,500 Cendant Corporation 1,781
47,100 Manpower Inc. 2,131
225,900 Waste Management Inc. 6,434
----------
14,840
----------
Transportation - 2.3%
85,500 Expeditors International of
Washington, Inc.** 4,882
237,195 FedEx Corporation** 21,613
103,600 United Parcel Service, Inc., Class B** 8,203
----------
34,698
----------
Total Industrials 183,415
----------
Information Technology - 24.3%
Communications Equipment - 4.8%
72,900 Avaya Inc.+ 1,050
1,687,025 Cisco Systems, Inc.+ 32,408
565,000 Lucent Technologies Inc.+ 2,006
1,100,325 Motorola, Inc. 18,992
470,200 Nokia Oyj, Sponsored ADR 7,250
110,700 QUALCOMM Inc. 4,628
208,200 Telefonaktiebolaget LM Ericsson,
Sponsored ADR+ 6,019
----------
72,353
----------
Computers & Peripherals - 3.8%
497,385 Dell Computer Corporation+ 17,438
201,500 EMC Corporation+ 2,593
See Notes to Financial Statements. 55
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Information Technology - (continued)
Computers & Peripherals - (continued)
267,300 International Business Machines
Corporation $ 23,990
160,420 Lexmark International, Inc.+ 13,333
209,500 Sun Microsystems, Inc.+ 949
----------
58,303
----------
Electronic Equipment & Instruments - 1.6%
244,400 Agilent Technologies, Inc.+ 6,125
91,500 Flextronics International Ltd.+** 1,102
68,100 L-3 Communications Holdings, Inc.** 4,490
184,100 PerkinElmer, Inc. 3,781
175,900 Tektronix, Inc. 5,335
69,300 Thermo Electron Corporation+ 2,010
129,900 Vishay Intertechnology, Inc.+** 1,680
----------
24,523
----------
Internet Software & Services - 2.1%
7,200 Symantec Corporation+ 410
847,170 Yahoo! Inc.+ 30,659
----------
31,069
----------
IT Services - 0.4%
152,600 Accenture Ltd., Class A+ 3,695
18,700 Automatic Data Processing, Inc. 811
59,700 Cognizant Technology Solutions Corporation+ 2,030
----------
6,536
----------
Semiconductors & Semiconductor Equipment - 4.1%
49,000 Altera Corporation+ 1,114
118,100 Analog Devices, Inc. 4,755
300,520 Applied Materials, Inc.+ 4,838
947,850 Intel Corporation 21,099
12,900 Linear Technology Corporation 489
36,400 Marvell Technology Group Ltd.+ 1,040
22,200 Microchip Technology Inc. 671
36,287 Samsung Electronics Company Ltd., GDR 7,123
32,700 Teradyne, Inc.+ 541
820,980 Texas Instruments Inc. 20,073
----------
61,743
----------
Software - 7.5%
228,200 Adobe Systems Inc. 12,786
64,700 Amdocs Ltd.+ 1,627
19,300 Autodesk, Inc. 1,018
251,500 Cadence Design Systems, Inc.+** 3,129
187,300 Citrix Systems, Inc.+ 4,520
129,530 Electronic Arts Inc.+ 5,818
80,195 Intuit Inc.+ 3,638
99,000 Mercury Interactive Corporation+ 4,300
2,253,065 Microsoft Corporation 63,063
Value
Shares (000s)
------ ------
135,000 Novell, Inc.+ $ 971
161,000 Oracle Corporation+ 2,038
269,100 SAP AG, Sponsored ADR 11,477
----------
114,385
----------
Total Information Technology 368,912
----------
Materials - 2.2%
100,700 Air Products & Chemicals, Inc. 5,355
79,000 Alcoa Inc. 2,568
63,500 Dow Chemical Company 2,854
74,300 E.I. du Pont de Nemours & Company 3,185
334,300 Praxair, Inc. 14,107
55,370 Rio Tinto PLC, Sponsored ADR 5,886
----------
Total Materials 33,955
----------
Telecommunication Services - 0.6%
221,300 Sprint Corporation-FON Group 4,636
143,100 Telefonos de Mexico SA de CV, Class L,
Sponsored ADR 4,900
----------
Total Telecommunication Services 9,536
----------
Total Common Stocks
(Cost $1,344,621) 1,439,801
----------
PREFERRED STOCK - 0.1%
(Cost $2,027)
61,300 News Corporation Ltd., Sponsored ADR** 1,927
----------
56 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
------ ------
COMMERCIAL PAPER - 1.2%
(Cost $18,800)
$ 18,800 Prudential Funding LLC,
1.780% due 11/01/2004 $ 18,800
----------
U.S. GOVERNMENT AGENCY DISCOUNT NOTE - 1.0%
(Cost $14,700)
Federal Home Loan Bank (FHLB) - 1.0%
14,700 1.690% due 11/01/2004++ 14,700
----------
REPURCHASE AGREEMENT - 3.5%
(Cost $52,770)
52,770 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $52,778,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $54,459,000) 52,770
----------
SHORT-TERM INVESTMENT - 4.4%
(Cost $66,413)
66,413 Mellon GSL DBT II
Collateral Fund+++ 66,413
----------
TOTAL INVESTMENTS (Cost $1,499,331*) 104.9% 1,594,411
OTHER ASSETS AND LIABILITIES (Net) (4.9) (74,981)
----- ----------
NET ASSETS 100.0% $1,519,430
===== ==========
<FN>
- ---------
* Aggregate cost for federal tax purposes is $1,513,479.
** Some or all of these securities are on loan at October
31, 2004, and have an aggregate market value of $63,512,000
representing 4.2% of the net assets of the Fund (Collateral
Value $66,413,000).
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
+++ Represents investment purchased with cash collateral for
securities loaned.
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
Forward Foreign Currency Contracts to Sell
Contracts to Deliver
(000s) Net
---------------------------------- Unrealized
In Appreciation/
Expiration Local Value in Exchange (Depreciation)
Date Currency U.S. $ for U.S. $ of Contracts
- ---------- ----------- -------- ---------- --------------
11/01/2004 CAD 402 329 325 $ (4)
11/02/2004 CAD 1,083 888 886 (2)
03/04/2005 EUR 50 64 60 (4)
04/15/2005 EUR 1,175 1,495 1,447 (48)
----------
Net Unrealized Depreciation of Forward Foreign
Currency Contracts $ (58)
==========
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
CAD -- Canadian Dollars
EUR -- EURO
GDR -- Global Depository Receipt
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 57
Portfolio of Investments
- ----------------------------------------------------------------------------
SMALL CAP VALUE FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - 73.2%
Consumer Discretionary - 7.9%
Automobiles & Components - 1.2%
103,000 Tesma International Inc., Class A (F) $ 3,241
----------
Consumer Durables & Apparel - 1.6%
63,700 Kellwood Company 2,004
83,500 RC2 Corporation+ 2,326
----------
4,330
----------
Media - 2.2%
97,100 Carmike Cinemas, Inc. 3,476
180,700 Reader's Digest Association, Inc. 2,545
----------
6,021
----------
Retailing - 2.9%
351,600 Blockbuster Inc., Class A** 2,391
248,500 Blockbuster Inc., Class B** 1,610
240,200 Movie Gallery, Inc. 3,887
----------
7,888
----------
Total Consumer Discretionary 21,480
----------
Consumer Staples - 5.9%
Food & Staples Retailing - 1.3%
142,000 Fresh Del Monte Produce Inc. (F) 3,730
----------
Food, Beverage & Tobacco - 0.8%
259,000 National Beverage Corporation 2,098
----------
Household & Personal Products - 3.8%
86,700 Central Garden & Pet Company+ 3,097
52,200 CSS Industries, Inc. 1,610
158,900 Jarden Corporation+** 5,581
----------
10,288
----------
Total Consumer Staples 16,116
----------
Energy - 10.5%
48,200 Berry Petroleum Company, Class A 1,839
159,200 Cimarex Energy Company+ 5,712
230,800 Comstock Resources, Inc.+ 5,078
90,600 Patina Oil & Gas Corporation 2,591
116,800 Plains Exploration & Production Company+ 2,920
101,200 St. Mary Land & Exploration Company 3,990
90,400 Stone Energy Corporation+ 3,722
89,100 Tesoro Petroleum Corporation+ 2,698
----------
Total Energy 28,550
----------
Financials - 10.7%
Banks - 6.9%
178,500 Dime Community Bancshares 2,867
189,200 Flagstar Bancorp, Inc.** 3,952
111,500 Harbor Florida Bancshares, Inc. 3,573
168,300 Oriental Financial Group Inc. 4,768
136,140 U.S.B. Holding Company, Inc. 3,700
----------
18,860
----------
Value
Shares (000s)
------ ------
Insurance - 3.8%
101,000 Navigators Group, Inc.+ $ 2,978
100,200 Stewart Information Services Corporation 4,250
255,900 Universal American Financial Corporation+ 3,112
----------
10,340
----------
Total Financials 29,200
----------
Health Care - 3.1%
Health Care Equipment & Services - 3.1%
56,600 Biosite Inc.+** 2,763
640,600 Gene Logic Inc.+ 2,114
141,100 Owens & Minor, Inc.** 3,695
----------
Total Health Care 8,572
----------
Industrials - 14.6%
Capital Goods - 4.8%
122,100 Cubic Corporation 2,686
115,100 DRS Technologies, Inc.+ 4,169
24,700 Esterline Technologies Corporation+ 781
147,000 Griffon Corporation+** 3,271
152,100 Lennox International Inc. 2,199
----------
13,106
----------
Commercial Services & Supplies - 2.8%
214,700 Duratek Inc.+ 4,342
44,800 ESCO Technologies Inc.+ 3,127
----------
7,469
----------
Transportation - 7.0%
153,900 Alaska Air Group, Inc.+ 4,054
219,300 AMR Corporation+** 1,693
156,500 Continental Airlines, Inc., Class B+ 1,452
160,400 Dampskibsselskabet Torm A/S, ADR** 5,091
108,200 Genesee & Wyoming Inc., Class A+ 2,740
223,600 OMI Corporation 4,013
----------
19,043
----------
Total Industrials 39,618
----------
Information Technology - 9.0%
Computers & Peripherals - 2.5%
200,300 Hutchinson Technology Inc.+** 6,732
----------
Semiconductors & Semiconductor Equipment - 3.0%
481,000 Credence Systems Corporation+** 3,631
286,900 OmniVision Technologies, Inc.+** 4,562
----------
8,193
----------
Software - 3.5%
2,538,400 Atari, Inc.+** 3,808
829,000 Geac Computer Corporation Ltd. (F)+ 5,720
----------
9,528
----------
Total Information Technology 24,453
----------
58 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
SMALL CAP GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Materials - 7.1%
112,000 Albemarle Corporation $ 4,015
64,000 Headwaters Inc.+ 2,016
241,600 Metal Management, Inc.+ 4,397
439,900 Randgold Resources Ltd., ADR+ 4,786
1,267,200 Wheaton River Minerals Ltd. (F)+ 4,119
----------
Total Materials 19,333
----------
Telecommunication Services - 2.5%
105,500 Arch Wireless, Inc.+ 3,016
200,100 Asia Satellite Telecommunications
Holdings Ltd., Sponsored ADR 3,862
----------
Total Telecommunication Services 6,878
----------
Utilities - 1.9%
53,000 Energen Corporation 2,851
71,400 Suburban Propane Partners LP** 2,381
----------
Total Utilities 5,232
----------
Total Common Stocks
(Cost $185,438) 199,432
----------
CANADIAN INCOME TRUSTS - 8.3%
Energy - 3.9%
170,900 Bonavista Energy Trust** 3,566
96,100 Peyto Energy Trust** 3,230
245,500 Vermilion Energy Trust** 3,937
----------
Total Energy 10,733
----------
Food, Beverage & Tobacco - 1.5%
315,700 Connors Brothers Income Fund 4,214
----------
Materials - 2.9%
73,500 Fording Canadian Coal Trust 4,336
48,200 Labrador Iron Ore Royalty Trust 729
226,800 TimberWest Forest Corporation 2,752
----------
Total Materials 7,817
----------
Total Canadian Income Trusts
(Cost $17,871) 22,764
----------
REAL ESTATE INVESTMENT TRUSTS - 6.8%
41,800 Alexandria Real Estate Equities, Inc. 2,761
146,700 Cedar Shopping Centers Inc. 1,985
130,100 Entertainment Properties Trust 5,191
386,500 Equity Inns Inc. 3,672
58,900 Sovran Self Storage, Inc. 2,301
227,500 Winston Hotels, Inc. 2,514
----------
Total Real Estate Investment Trusts
(Cost $17,496) 18,424
----------
Value
Contracts (000s)
--------- ------
PURCHASED PUT OPTIONS - 3.1%
6,975 iShares Russell 2000 Index,
Expires January 2006 @ $95 $ 2,860
2,625 iShares Russell 2000 Index,
Expires January 2007 @ $95 1,719
20,000 Nasdaq 100 Index,
Expires January 2007 @ $29 3,800
----------
Total Purchased Put Options
(Cost $9,513) 8,379
----------
Principal
Amount
(000s)
------
REPURCHASE AGREEMENT - 7.9%
(Cost $21,479)
$ 21,479 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $21,482,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $22,166,000) 21,479
----------
SHORT-TERM INVESTMENT - 12.8%
(Cost $34,910)
34,910 Mellon GSL DBT II
Collateral Fund++ 34,910
----------
TOTAL INVESTMENTS (Cost $286,707*) 112.1% 305,388
OTHER ASSETS AND LIABILITIES (Net) (12.1) (33,055)
----- ----------
NET ASSETS 100.0% $ 272,333
===== ==========
<FN>
- ---------
* Aggregate cost for federal tax purposes is $286,794.
** Some or all of these securities are on loan at October
31, 2004, and have an aggregate market value of $30,547,000,
representing 11.2% of the total net assets of the Fund
(Collateral Value $34,910,000).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for
securities loaned.
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
(F) -- Foreign Shares
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 59
Portfolio of Investments
- ----------------------------------------------------------------------------
SMALL CAP GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - 99.3%
Consumer Discretionary - 15.3%
Consumer Durables & Apparel - 1.3%
167,900 Quiksilver, Inc.+ $ 4,576
----------
Hotels, Restaurants & Leisure - 3.1%
348,300 Intrawest Corporation 6,774
154,600 Steiner Leisure Ltd.+ 3,771
----------
10,545
----------
Media - 3.2%
714,300 aQuantive, Inc.+ 6,393
30,600 Getty Images, Inc.+** 1,809
1,138,000 NTN Communications, Inc.+** 3,016
----------
11,218
----------
Retailing - 7.7%
245,150 AnnTaylor Stores Corporation+ 5,506
76,300 Blue Nile, Inc.+** 1,854
186,700 Building Materials Holding Corporation 5,396
243,700 Pacific Sunwear of California, Inc.+ 5,712
325,800 West Marine, Inc.+ 7,992
----------
26,460
----------
Total Consumer Discretionary 52,799
----------
Consumer Staples - 3.5%
Food & Staples Retailing - 3.5%
958,600 SunOpta Inc.+ 6,030
221,500 United Natural Foods, Inc.+ 6,022
----------
Total Consumer Staples 12,052
----------
Energy - 3.4%
1,010,900 Hydrogenics Corporation+** 4,812
920,600 Quantum Fuel Systems Technologies
Worldwide, Inc.+ 6,812
----------
Total Energy 11,624
----------
Financials - 7.5%
Banks - 1.4%
19,300 First Mutual Bancshares, Inc. 477
101,600 Frontier Financial Corporation 3,911
33,375 Pacific Continental Corporation 509
----------
4,897
----------
Diversified Financials - 6.1%
126,700 Affiliated Managers Group, Inc.+** 7,075
186,817 American Capital Strategies Ltd. 5,782
325,600 First Albany Companies Inc. 2,793
135,900 Investors Financial Services Corporation** 5,231
----------
20,881
----------
Total Financials 25,778
----------
Health Care - 22.4%
Health Care Equipment & Services - 7.6%
250,800 Accredo Health, Inc.+ $ 5,776
199,300 Advanced Neuromodulation Systems, Inc.+ 6,344
201,000 Affymetrix, Inc.+** 6,130
277,200 SonoSite, Inc.+ 8,007
----------
26,257
----------
Pharmaceuticals & Biotechnology - 14.8%
681,600 Antigenics Inc.+** 4,615
623,200 Cell Genesys, Inc.+ 4,088
1,025,500 Corixa Corporation+** 4,076
571,500 Dendreon Corporation+ 5,909
838,400 Emisphere Technologies, Inc.+ 2,591
142,200 Medicis Pharmaceutical Corporation,
Class A** 5,783
258,100 Myriad Genetics, Inc.+ 4,574
542,500 Neose Technologies, Inc.+ 3,893
564,500 Pain Therapeutics, Inc.+ 3,923
441,400 Pharmacyclics, Inc.+ 5,169
258,500 Sangamo BioSciences, Inc.+ 985
273,500 Zymogenetics, Inc.+ 5,166
----------
50,772
----------
Total Health Care 77,029
----------
Industrials - 12.0%
Commercial Services & Supplies - 12.0%
1,119,100 Digimarc Corporation+ 10,385
366,600 Euronet Worldwide, Inc.+ 8,403
287,395 First Consulting Group, Inc.+ 1,351
430,900 Gevity HR, Inc. 7,674
291,239 Hewitt Associates, Inc., Class A+ 8,163
703,000 Wireless Facilities, Inc.+ 5,188
----------
Total Industrials 41,164
----------
Information Technology - 31.6%
Communications Equipment - 3.7%
330,400 InterDigital Communications Corporation+ 5,253
483,000 REMEC, Inc.+ 2,661
254,600 ViaSat, Inc.+ 4,810
----------
12,724
----------
Computers & Peripherals - 0.8%
575,500 Immersion Corporation+ 2,670
----------
Electronic Equipment & Instruments - 3.7%
269,700 Microvision, Inc.+** 1,435
313,800 Photon Dynamics, Inc.+ 5,742
195,350 Trimble Navigation Ltd.+** 5,605
----------
12,782
----------
Internet Software & Services - 8.6%
252,700 Ariba, Inc.+ 3,879
1,109,000 Corillian Corporation+ 5,457
60 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
SMALL CAP GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Information Technology - (continued)
Internet Software & Services - (continued)
5,324,100 Intraware, Inc.+ $ 5,537
815,800 Online Resources Corporation+ 5,923
1,009,400 Primus Knowledge Solutions, Inc.+ 1,211
1,426,325 SumTotal Systems, Inc.+** 7,645
----------
29,652
----------
IT Services - 1.7%
1,236,500 Lionbridge Technologies, Inc.+ 5,799
----------
Semiconductors & Semiconductor Equipment - 2.4%
86,100 FEI Company+ 1,667
246,000 Pixelworks, Inc.+** 2,777
177,900 Power Integrations, Inc.+ 3,807
----------
8,251
----------
Software - 10.7%
169,900 ANSYS, Inc.+ 4,689
3,771,000 BSQUARE Corporation+ 2,413
213,089 NetIQ Corporation+ 2,702
777,900 Nuance Communications Inc.+ 3,135
1,354,250 ONYX Software Corporation+ 4,764
466,500 PDF Solutions, Inc.+ 6,065
177,700 Quest Software, Inc.+ 2,607
1,633,300 ScanSoft, Inc.+** 6,329
577,300 SkillSoft PLC, ADR+ 3,955
----------
36,659
----------
Total Information Technology 108,537
----------
Materials - 3.0%
213,800 Headwaters Inc.+** 6,735
1,710,800 Liquidmetal Technologies Inc.+** 3,481
----------
Total Materials 10,216
----------
Telecommunication Services - 0.6%
123,885 Gilat Satellite Networks Ltd.+** 710
729,100 Primus Telecommunications Group, Inc.+** 1,392
----------
Total Telecommunication Services 2,102
----------
Total Common Stocks
(Cost $375,101) 341,301
----------
Principal
Amount Value
(000s) (000s)
------ ------
REPURCHASE AGREEMENT - 0.8%
(Cost $2,714)
$ 2,714 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $2,714,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $2,801,000) $ 2,714
----------
SHORT-TERM INVESTMENT - 8.4%
(Cost $28,827)
28,827 Mellon GSL DBT II
Collateral Fund++ 28,827
----------
TOTAL INVESTMENTS (Cost $406,642*) 108.5% 372,842
OTHER ASSETS AND LIABILITIES (Net) (8.5) (29,289)
----- ----------
NET ASSETS 100.0% $ 343,553
===== ==========
<FN>
* Aggregate cost for federal tax purposes is $415,700.
** Some or all of these securities are on loan at October
31, 2004, and have an aggregate market value of $26,322,000,
representing 7.7% of the total net assets of the Fund
(Collateral Value $28,827,000).
+ Non-income producing security.
++ Represents investment purchased with cash collateral for
securities loaned.
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depository Receipt
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 61
Portfolio of Investments
- ----------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - 96.4%
Japan - 22.1% +++
19,410 Advantest Corporation $ 1,354
246,000 AEON Company Ltd. 3,929
10,165 Aiful Corporation 1,013
37,000 Canon Inc. 1,822
3,000 Dai Nippon Printing Company Ltd. 41
9,900 Daito Trust Construction Company, Ltd. 418
87,000 Daiwa House Industry Company Ltd. 888
210 East Japan Railway Company 1,101
55,000 FANUC Ltd. 3,315
246,000 Furukawa Electric Company Ltd.+ 1,029
17,900 Hirose Electric Company Ltd. 1,772
14,700 Hoya Corporation 1,506
368,000 Japan Airlines System Corporation+** 1,005
125,200 Kansai Electric Power Company Inc.** 2,344
5,500 Keyence Corporation 1,237
193,500 Konica Minolta Holdings Inc. 2,577
5,900 Kyocera Corporation 427
322 Millea Holdings, Inc. 4,245
183,000 Mitsubishi Corporation 2,018
483,000 Mitsubishi Estate Company Ltd. 5,090
202,000 Mitsubishi Heavy Industries Ltd. 567
444 Mitsubishi Tokyo Financial Group, Inc. 3,763
139,000 Mitsui Fudosan Company Ltd. 1,473
403,000 Mitsui Sumitomo Insurance Company Ltd. 3,302
23,000 Murata Manufacturing Company Ltd. 1,094
663,000 NEC Corporation 3,671
15,500 Nidec Corporation 1,676
363,000 Nikko Cordial Corporation 1,620
106,000 Nikon Corporation** 1,039
18,000 Nintendo Company Ltd. 2,027
342 Nippon Telegraph & Telephone Corporation 1,449
594,500 Nissan Motor Company Ltd.** 6,690
1,000 Nissin Food Products Company Ltd. 24
25,700 Nitto Denko Corporation 1,217
50,000 OMRON Corporation 1,132
32,400 ORIX Corporation 3,793
60,000 Ricoh Company, Ltd. 1,119
15,800 Rohm Company Ltd. 1,619
186,600 Sankyo Company Ltd.** 3,866
274,000 Sekisui House Ltd. 2,823
12,100 Shimamura Company Ltd. 885
173,000 Shionogi & Company Ltd. 2,680
25,700 SMC Corporation 2,747
30,600 SOFTBANK Corporation 1,383
157,000 Sompo Japan Insurance Inc. 1,366
37,190 Sony Corporation** 1,292
447,000 Sumitomo Chemical Company Ltd. 2,164
869 Sumitomo Mitsui Financial Group, Inc.** 5,638
150,000 Suzuki Motor Corporation 2,647
53,400 Takeda Pharmaceutical Company Ltd. 2,575
13,100 TDK Corporation 908
62,500 Tokyo Electron Ltd. 3,384
407,000 TOKYO GAS Company Ltd.** 1,514
Value
Shares (000s)
------ ------
112,900 Toyota Motor Corporation $ 4,391
1,546 UFJ Holdings, Inc.+ 7,163
22,900 Unicharm Corporation 1,156
260 Yahoo! Japan Corporation+** 1,157
24,300 Yamada Denki Company, Ltd. 860
26,100 Yamanouchi Pharmaceutical Company Ltd. 956
201,500 Yamato Transport Company Ltd. 2,712
----------
128,673
----------
United Kingdom - 18.3%
50,900 Anglo American PLC 1,114
437,000 ARM Holdings PLC** 779
59,700 Associated British Foods PLC 760
156,400 AstraZeneca PLC 6,396
205,400 AstraZeneca PLC (F) 8,417
259,969 BAE SYSTEMS PLC 1,135
106,900 Barclays PLC 1,042
891,100 BG Group PLC 5,796
199,384 BHP Billiton PLC 2,022
27,300 Brambles Industries PLC 132
333,810 Centrica PLC** 1,473
295,200 Diageo PLC 3,940
21,400 GlaxoSmithKline PLC 450
359,400 HBOS PLC 4,804
306,600 HSBC Holdings PLC 4,941
105,600 Johnston Press PLC 1,065
129,600 Lloyds TSB Group PLC 1,023
359,700 National Grid Group PLC 3,121
288,800 Pearson PLC 3,164
70,100 Prudential PLC 514
35,900 Reckitt Benckiser PLC 983
419,700 Reed Elsevier PLC 3,741
222,000 Rentokill Initial PLC 631
73,800 Rio Tinto PLC 1,926
268,700 Royal Bank of Scotland Group PLC++ 7,902
449,200 Shell Transport & Trading Company PLC 3,529
214,540 Smiths Group PLC 2,931
178,800 Standard Chartered PLC 3,189
194,000 TI Automotive Ltd., Class A+ 0***
455,800 Unilever PLC 3,833
8,934,419 Vodafone Group PLC 22,837
71,600 Wolseley PLC 1,235
119,500 Xstrata PLC 1,850
----------
106,675
----------
France - 10.9%
50,200 Accor SA 2,078
147,900 BNP Paribas SA 10,037
175,600 Bouygues SA++** 6,898
9,400 Carrefour SA 411
19,600 Compagnie Generale des Etablissements
Michelin, Class B 1,063
21,500 Dassault Systemes SA 1,088
28,100 Essilor International SA 1,902
11,200 France Telecom SA 320
46,800 Groupe Danone 3,905
62 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
France - (continued)
26,998 L'Air Liquide SA $ 4,348
27,700 L'Oreal SA 1,883
29,300 Renault SA 2,445
246,300 Sanofi-Aventis** 17,952
10,667 Sanofi-Aventis (F) 787
40,800 Schneider Electric SA 2,694
17,900 Societe Generale Group 1,655
69,300 STMicroelectronics NV 1,274
14,600 STMicroelectronics NV (F) 270
93,200 Vivendi Universal SA+ 2,538
----------
63,548
----------
Switzerland - 9.9%
19,900 Adecco SA 955
236,782 Compagnie Financiere Richemont AG, A
Units 6,691
97,701 Credit Suisse Group+ 3,330
114,166 Holcim Ltd. 6,081
32,570 Nestle SA 7,679
241,857 Novartis AG 11,494
13,397 Roche Holding AG-Genusschein 1,365
2,010 Serono SA 1,246
106,325 Swiss Reinsurance Company 6,505
18,781 Swisscom AG 6,741
17,120 Syngenta AG+ 1,627
10,500 Synthes, Inc. 1,115
41,956 UBS AG 3,014
----------
57,843
----------
Netherlands - 8.4%
255,840 ABN AMRO Holding NV 6,102
313,968 AEGON NV 3,427
85,625 Heineken Holding NV, Class A 2,397
132,006 Heineken NV 4,137
130,314 ING Groep NV 3,440
870,200 Koninklijke (Royal) KPN NV 6,941
31,000 Koninklijke (Royal) Numico NV+ 1,042
37,800 Koninklijke (Royal) Philips Electronics NV 892
19,000 Reed Elsevier NV 249
262,000 Royal Dutch Petroleum Company 14,194
14,900 Royal Dutch Petroleum Company (F) 808
75,500 TPG NV 1,819
26,200 Unilever NV** 1,520
63,662 VNU NV 1,734
----------
48,702
----------
Germany - 5.5%
35,500 Allianz AG 3,765
104,900 Bayerische Hypo-und Vereinsbank AG+ 2,046
35,500 Bayerische Motoren Werke (BMW) AG 1,497
130,200 DaimlerChrysler AG 5,363
23,400 Deutsche Bank AG 1,774
53,637 Deutsche Boerse AG 2,671
32,800 E.ON AG 2,661
Value
Shares (000s)
------ ------
122,000 Infineon Technologies AG+ $ 1,325
17,100 Metro AG 814
18,142 Muenchener Rueckversicherungs-
Gesellschaft AG++ 1,770
10,400 SAP AG 1,766
5,200 SAP AG, Sponsored ADR 222
56,600 Siemens AG 4,201
53,400 ThyssenKrupp AG 999
27,500 Volkswagen AG 1,218
----------
32,092
----------
Canada - 3.7%
96,900 Abitibi-Consolidated Inc.** 578
119,900 Alcan Inc.** 5,539
136,000 Bombardier Inc., Class B++** 312
15,500 Cameco Corporation 1,255
31,800 Great-West Lifeco Inc.** 663
68,500 Inco Ltd. (F)+ 2,425
25,800 Manulife Financial Corporation** 1,203
30,100 National Bank of Canada** 1,204
44,800 Suncor Energy Inc. 1,530
66,100 TELUS Corporation** 1,501
154,700 Thomson Corporation 5,362
----------
21,572
----------
Spain - 3.6%
535,700 Banco Bilbao Vizcaya Argentaria SA 8,382
118,900 Banco Santander Central Hispano SA** 1,323
54,800 Iberdrola SA** 1,196
155,200 Industria de Diseno Textil SA (Inditex)** 3,933
367,741 Telefonica SA 6,053
----------
20,887
----------
Australia - 3.0% +++
195,100 Amcor Ltd. 1,112
136,862 Australia & New Zealand Banking Group Ltd. 2,086
228,138 Brambles Industries Ltd.** 1,208
319,702 Foster's Group Ltd. 1,206
296,500 Insurance Australia Group Ltd. 1,194
58,837 National Australia Bank Ltd. 1,242
169,100 Promina Group Ltd. 573
174,887 QBE Insurance Group Ltd. 1,794
223,256 Rinker Group Ltd. 1,448
55,300 Wesfarmers Ltd. 1,435
81,200 Westpac Banking Corporation 1,145
282,700 WMC Resources Ltd. 1,425
132,000 Woolworths Ltd. 1,319
----------
17,187
----------
Hong Kong - 1.5% +++
112,000 Cheung Kong Holdings Ltd. 928
251,600 Esprit Holdings Ltd.++ 1,345
1,249,000 Hang Lung Properties Ltd. 1,853
79,000 Hang Seng Bank Ltd. 1,051
911,500 Johnson Electric Holdings Ltd. 908
1,294,000 Li & Fung Ltd. 1,912
See Notes to Financial Statements. 63
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
COMMON STOCKS - (continued)
Hong Kong - (continued)
117,800 Swire Pacific Ltd., Class A $ 832
----------
8,829
----------
South Korea - 1.2% +++
17,616 Samsung Electronics Company Ltd. 6,916
----------
Sweden - 1.2%
92,100 Assa Abloy AB, B Shares 1,240
100,000 ForeningsSparbanken AB 2,094
29,800 Scania AB, Class B 1,079
511,000 Telefonaktiebolaget LM Ericsson,
B Shares+ 1,480
34,000 Telefonaktiebolaget LM Ericsson,
Sponsored ADR+ 983
----------
6,876
----------
Italy - 1.0%
157,350 Eni SpA 3,563
435,800 UniCredito Italiano SpA 2,334
----------
5,897
----------
Norway - 1.0%
127,700 DnB Holding ASA 1,079
21,000 Norsk Hydro ASA 1,541
53,700 Norske Skogindustrier ASA 974
158,600 Statoil ASA 2,289
----------
5,883
----------
Singapore - 1.0% +++
3,252,675 Singapore Telecommunications, Ltd.++ 4,716
122,000 United Overseas Bank Ltd. 989
----------
5,705
----------
Denmark - 0.7%
39,300 Novo Nordisk A/S, Class B 1,948
51,200 TDC A/S 1,889
----------
3,837
----------
Ireland - 0.6%
93,268 CRH PLC 2,219
58,000 Elan Corporation PLC, ADR+ 1,496
----------
3,715
----------
Mexico - 0.5%
47,600 America Movil SA de CV, Series L, ADR 2,094
28,700 Telefonos de Mexico SA de CV, Class L,
Sponsored ADR 983
----------
3,077
----------
Finland - 0.5%
181,100 Nokia Oyj 2,785
5,300 UPM-Kymmene Oyj 105
----------
2,890
----------
Value
Shares (000s)
------ ------
Taiwan - 0.5% +++
360,788 Taiwan Semiconductor Manufacturing
Company Ltd., Sponsored ADR $ 2,731
----------
Brazil - 0.4%
60,591 Companhia Vale do Rio Doce, ADR 1,282
51,300 Companhia Vale do Rio Doce, Sponsored
ADR 934
----------
2,216
----------
Belgium - 0.3%
63,600 SES GLOBAL, FDR 655
25,600 UCB Group SA 1,349
----------
2,004
----------
India - 0.3%
24,000 Infosys Technologies Ltd., Sponsored
ADR** 1,596
----------
Austria - 0.2%
23,600 Erste Bank der oesterreichischen
Sparkassen AG 1,047
----------
Russia - 0.1%
38,100 YUKOS, ADR+** 637
----------
South Africa - 0.0% ****
13,000 Sasol Ltd. 256
----------
Total Common Stocks
(Cost $489,158) 561,291
----------
CONVERTIBLE PREFERRED STOCKS - 0.5%
Japan - 0.5% +++
99,000,000 Sumitomo Mitsui Finance Group Inc. (F),
Conv. Pfd., 2.250% due 07/11/2005++ 1,902
69,000,000 Sumitomo Mitsui Finance Group Inc. (F),
Conv. Pfd., 2.250% due 07/11/2005 1,325
----------
Total Convertible Preferred Stocks
(Cost $1,880) 3,227
----------
PREFERRED STOCKS - 0.2%
Australia - 0.2% +++
120,395 News Corporation Ltd.** 944
----------
South Korea - 0.0% +++****
900 Samsung Electronics Company Ltd. 241
----------
Total Preferred Stocks
(Cost $1,035) 1,185
----------
Principal
Amount
(000s)
------
CONVERTIBLE BONDS - 0.1%
(Cost $657)
Switzerland - 0.1%
$ 826 Credit Suisse Group Financial, Conv. Jr.
Bond, 6.000% due 12/23/2005 836
----------
64 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
------ ------
RIGHTS - 0.0% ****
(Cost $0)
United Kingdom - 0.0% ****
17,000 Prudential PLC, Expires 11/10/2004+ $ 29
----------
Principal
Amount
(000s)
------
REPURCHASE AGREEMENT - 3.8%
(Cost $21,900)
$ 21,900 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $21,903,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $22,601,000) 21,900
----------
SHORT-TERM INVESTMENT - 8.9%
(Cost $51,885)
51,885 Mellon GSL DBT II
Collateral Fund++++ 51,885
----------
TOTAL INVESTMENTS (Cost $566,515*) 109.9% 640,353
OTHER ASSETS AND LIABILITIES (Net) (9.9) (57,943)
----- ----------
NET ASSETS 100.0% $ 582,410
===== ==========
<FN>
- ---------
* Aggregate cost for federal tax purposes is $572,222.
** Some or all of these securities are on loan at October 31, 2004,
and have an aggregate market value of $49,324,000, representing
8.5% of the net assets of the Fund (Collateral Value $51,885,000).
*** Value of security is $0.
**** 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, as amended.
+++ Investments in the areas of the Pacific Rim at October 31,
2004 are 30.0% of the net assets of the Fund.
++++ Represents investment purchased with cash collateral for
securities loaned.
See Notes to Financial Statements. 65
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
October 31, 2004
-----------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
Forward Foreign Currency Contracts to Buy
Contracts to Receive
(000s)
------------------------------------- Net
Unrealized
In Appreciation/
Expiration Local Value in Exchange (Depreciation)
Date Currency U.S. $ for U.S. $ of Contracts
- ---------- -------------- -------- ---------- --------------
11/01/2004 CAD 503 412 411 $ 1
11/01/2004 EUR 1,660 2,112 2,109 3
11/01/2004 GBP 622 1,139 1,137 2
11/01/2004 JPY 258,695 2,436 2,430 6
11/01/2004 SEK 1,617 227 227 -- ***
11/02/2004 CAD 99 81 81 -- ***
11/02/2004 EUR 45 58 58 -- ***
11/02/2004 SEK 623 88 88 -- ***
11/03/2004 AUD 51 38 38 -- ***
11/03/2004 SEK 726 102 103 (1)
---------
$ 11
---------
Forward Foreign Currency Contracts to Sell
Contracts to Deliver
(000s)
------------------------------------- Net
Unrealized
In Appreciation/
Expiration Local Value in Exchange (Depreciation)
Date Currency U.S. $ for U.S. $ of Contracts
- ---------- -------------- -------- ---------- --------------
11/01/2004 NOK 183 28 28 $ -- ***
11/02/2004 EUR 46 59 59 -- ***
11/02/2004 GBP 77 141 141 -- ***
11/02/2004 JPY 15,630 147 147 -- ***
11/03/2004 GBP 26 47 47 -- ***
11/03/2004 SEK 45 6 6 -- ***
11/04/2004 JPY 18,811 177 178 1
11/17/2004 CHF 1,073 894 853 (41)
12/01/2004 CHF 8,708 7,257 6,919 (338)
12/07/2004 JPY 190,053 1,794 1,721 (73)
01/24/2005 JPY 355,589 3,366 3,259 (107)
---------
$ (558)
---------
Net Unrealized Depreciation of Forward
Foreign Currency Contracts $ (547)
=========
<FN>
- ---------
*** Amount represents less than $500.
As of October 31, 2004, sector diversification is as follows (unaudited):
% of Value
Sector Diversification Net Assets (000s)
---------------------- ---------- ------
COMMON STOCKS:
Banks 15.7% $ 91,399
Pharmaceuticals & Biotechnology 10.8 62,977
Telecommunication Services 10.7 62,422
Materials 7.6 44,079
Energy 5.9 34,143
Food, Beverage & Tobacco 5.2 30,443
Insurance 5.2 30,321
Automobiles & Components 4.3 25,314
Capital Goods 4.2 24,176
Semiconductors & Semiconductor Equipment 3.7 21,823
Consumer Durables & Apparel 3.2 18,535
Media 3.2 18,508
Retailing 2.3 13,568
Diversified Financials 2.3 13,369
Utilities 2.1 12,309
Real Estate Investment Trusts 1.7 9,762
Electronic Equipment & Instruments 1.6 8,620
Transportation 1.1 6,637
Commercial Services & Supplies 1.0 5,908
Other 4.6 26,978
----- ----------
TOTAL COMMON STOCKS 96.4 561,291
CONVERTIBLE PREFERRED STOCKS 0.5 3,227
PREFERRED STOCKS 0.2 1,185
CONVERTIBLE BONDS 0.1 836
RIGHTS 0.0**** 29
REPURCHASE AGREEMENT 3.8 21,900
SHORT-TERM INVESTMENTS 8.9 51,885
----- ----------
TOTAL INVESTMENTS 109.9 640,353
OTHER ASSETS AND LIABILITIES (NET) (9.9) (57,943)
----- ----------
NET ASSETS 100.0% $ 582,410
===== ==========
<FN>
- ---------
**** Amount represents less than 0.1% of total net assets.
- ----------------------------------------------------------------------------
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
JPY -- Japanese Yen
NOK -- Norwegian Krone
SEK -- Swedish Krona
- ----------------------------------------------------------------------------
66 See Notes to Financial Statements.
Portfolio of Investments
- ----------------------------------------------------------------------------
SHORT TERM INCOME FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
------ ------
CORPORATE BONDS AND NOTES - 56.4%
Financial Services - 10.8%
$ 6,000 Berkshire Hathaway Inc. Note,
3.375% due 10/15/2008 $ 5,985
CIT Group Inc., Sr. Note:
1,500 7.375% due 04/02/2007 1,644
2,000 7.625% due 08/16/2005 2,078
3,750 Countrywide Home Loans, Inc., Company
Guarantee, Series K,
5.500% due 02/01/2007 3,929
2,500 Goldman Sachs Group, Inc., Note,
4.125% due 01/15/2008 2,559
Household Finance Corporation, Note:
3,500 5.750% due 01/30/2007 3,702
1,500 7.875% due 03/01/2007 1,659
3,500 Rollins Truck Leasing Corporation, Deb.,
8.375% due 02/15/2007 3,889
4,000 SLM Corporation, MTN,
4.000% due 01/15/2009 4,026
----------
29,471
----------
Real Estate Investment Trusts/Property - 8.8%
4,000 CPG Partners LP, Note,
3.500% due 03/15/2009 3,894
4,250 Developers Diversified Realty Corporation,
Sr. Note,
6.625% due 01/15/2008 4,595
4,000 Duke-Weeks Realty Corporation, Note,
7.375% due 08/01/2007 4,445
3,750 EOP Operating LP, Note,
7.750% due 11/15/2007 4,196
3,500 Health Care Property Investors, Inc.,
Note,
6.875% due 06/08/2005 3,584
3,000 Nationwide Health Properties Inc., Note,
9.750% due 03/20/2008 3,475
----------
24,189
----------
Banks - 8.0%
4,250 Capital One Bank, Sr. Note,
8.250% due 06/15/2005 4,392
5,750 Fifth Third Bank, Note,
2.700% due 01/30/2007 5,720
3,000 J.P. Morgan Chase & Company, Note,
5.350% due 03/01/2007 3,151
3,500 MBNA America Bank N.A., Note,
6.500% due 06/20/2006 3,698
5,000 U.S. Bank N.A., Note,
2.850% due 11/15/2006 4,999
----------
21,960
----------
Gaming - 4.0%
5,750 Carnival Corporation, Company Guarantee,
3.750% due 11/15/2007 5,799
5,000 Harrah's Operating Company, Inc.,
Company Guarantee,
5.500% due 07/01/2010 5,224
----------
11,023
----------
Principal
Amount Value
(000s) (000s)
------ ------
Utilities - 3.9%
$ 4,000 Constellation Energy Group, Inc., Note,
6.350% due 04/01/2007 $ 4,283
1,650 Pacific Gas & Electric Company, First
Mortgage,
3.600% due 03/01/2009 1,640
1,650 Sempra Energy, Note,
4.750% due 05/15/2009 1,696
2,750 Texas-New Mexico Power Company,
Sr. Note,
6.250% due 01/15/2009 2,936
----------
10,555
----------
Auto Manufacturing & Parts - 3.5%
4,000 Ford Motor Credit Company, Note,
6.500% due 01/25/2007 4,205
5,000 Toyota Motor Credit Corporation, Note,
5.650% due 01/15/2007 5,283
----------
9,488
----------
Telecommunications - 3.1%
3,250 Deutsche Telekom International Finance BV,
Company Guarantee,
8.250% due 06/15/2005 3,362
1,500 TELUS Corporation, Note,
7.500% due 06/01/2007 1,649
3,500 Verizon Global Funding Corporation, Note,
4.000% due 01/15/2008 3,565
----------
8,576
----------
Cable TV - 3.0%
4,000 AOL Time Warner Inc., Note,
6.150% due 05/01/2007 4,281
4,000 Cox Enterprises, Inc., Note,
4.375% due 05/01/2008** 3,970
----------
8,251
----------
Consumer Products/Services - 2.5%
3,500 PHH Corporation, Note,
6.000% due 03/01/2008 3,750
3,000 Sealed Air Corporation,
Conv. Sr. Note,
3.000% due 06/30/2033** 3,068
----------
6,818
----------
Food - 2.3%
2,000 ConAgra Inc., Sr. Note,
9.875% due 11/15/2005 2,133
4,000 Safeway Inc., Sr. Note,
6.150% due 03/01/2006 4,168
----------
6,301
----------
Health Care - 1.5%
4,000 Cardinal Health, Inc., Note,
6.250% due 07/15/2008 4,230
----------
See Notes to Financial Statements. 67
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
SHORT TERM INCOME FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
------ ------
CORPORATE BONDS AND NOTES - (continued)
Airlines - 1.5%
$ 4,000 Southwest Airlines Company, Pass-thru
Certificates,
5.496% due 11/01/2006 $ 4,169
----------
Paper/Forest Products - 1.3%
3,500 Weyerhaeuser Company, Note,
6.000% due 08/01/2006 3,683
----------
Information Technology - 1.2%
3,000 Computer Science Corporation, Note,
6.750% due 06/15/2006 3,182
----------
Retail - 0.6%
1,500 CVS Corporation, Note,
4.000% due 09/15/2009** 1,509
----------
Aerospace/Defense - 0.4%
1,000 Boeing Capital Corporation, Sr. Note,
5.650% due 05/15/2006 1,043
----------
Total Corporate Bonds and Notes
(Cost $150,393) 154,448
----------
ASSET-BACKED SECURITIES - 7.0%
3,636 Atlantic City Electric Transition Funding
LLC, Series 2003-1, Class A1,
2.890% due 07/20/2011 3,609
5,000 Capital One Multi-Asset Execution Trust,
Series 2003-A6, Class A6,
2.950% due 08/17/2009 5,008
FFCA Secured Lending Corporation:
2,180 Series 1999-1A , Class A1A,
6.370% due 09/18/2025** 2,180
314 Series 1999-2, Class WA1A,
7.130% due 05/18/2026** 317
120 Green Tree Financial Corporation, Series
1995-6, Class B1,
7.700% due 09/15/2026 83
3,200 Residential Asset Mortgage Products, Inc.,
Series 2003-RS4, Class AI3,
2.742% due 11/25/2028 3,193
4,750 WFS Financial Owner Trust, Series 2004-3,
Class A4,
3.930% due 02/17/2012 4,815
----------
Total Asset-Backed Securities
(Cost $19,197) 19,205
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 12.4%
Federal Home Loan Bank, Bond:
4,000 1.625% due 04/15/2005 3,991
4,000 1.875% due 06/15/2006 3,952
4,000 2.500% due 12/15/2005 4,004
Federal Home Loan Mortgage Corporation:
3,500 Bond,
3.250% due 02/25/2008 3,483
Note:
2,000 4.250% due 06/15/2005 2,024
4,000 6.875% due 01/15/2005 4,039
Principal
Amount Value
(000s) (000s)
------ ------
Federal National Mortgage Association:
Note:
$ 4,000 4.250% due 07/15/2007 $ 4,132
3,000 5.500% due 02/15/2006 3,113
5,000 Sub. Note,
4.000% due 09/02/2008 5,089
----------
Total U.S. Government Agency Obligations
(Cost $33,616) 33,827
----------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 2.2%
Adjustable Rate Mortgage-Backed Securities (ARMS) - 0.9%
91 Federal Home Loan Mortgage Corporation
(FHLMC),
3.451% due 11/01/2021+ 94
Federal National Mortgage Association
(FNMA):
20 3.250% due 11/01/2021+ 20
9 3.655% due 11/01/2022+ 9
42 3.982% due 01/01/2019+ 43
74 4.619% due 11/01/2035+ 75
2,268 4.658% due 11/01/2032+ 2,318
21 5.555% due 04/01/2019+ 22
----------
Total ARMS
(Cost $2,609) 2,581
----------
Federal Home Loan Mortgage Corporation (FHLMC) - 0.7%
1,699 6.000% due 04/01/2017-05/01/2017 1,785
38 9.500% due 08/01/2016 43
----------
Total FHLMC
(Cost $1,770) 1,828
----------
Federal National Mortgage Association (FNMA) - 0.4%
1,027 6.500% due 01/01/2012-01/01/2014 1,091
51 8.500% due 11/01/2017 57
30 10.000% due 05/01/2022 34
----------
Total FNMA
(Cost $1,113) 1,182
----------
Government National Mortgage Association (GNMA) - 0.2%
14 8.000% due 03/15/2012 15
14 9.000% due 04/20/2025 16
176 10.000% due 01/15/2019-02/15/2019 199
167 11.000% due 02/15/2010-08/15/2020 189
----------
Total GNMA
(Cost $399) 419
----------
Total U.S. Government Agency Mortgage-
Backed Securities
(Cost $5,891) 6,010
----------
68 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
SHORT TERM INCOME FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 8.0%
Federal Home Loan Mortgage Corporation:
$ 5,000 Series 2442, Class PG,
6.000% due 06/15/2030 $ 5,136
576 Series 2541, Class LU,
4.000% due 12/15/2027 577
5,000 Series 2552, Class KB,
4.250% due 06/15/2027 5,052
2,993 Series 2575, Class LM,
4.500% due 05/15/2032 3,031
3,572 Federal National Mortgage Association,
Series 2002-58, Class HB,
5.500% due 11/25/2015 3,632
4,369 Government National Mortgage Association,
Series 2002-70, Class PA,
4.500% due 08/20/2032 4,408
----------
Total CMO
(Cost $21,927) 21,836
----------
U.S. TREASURY NOTES - 4.0%
5,000 1.500% due 02/28/2005 4,993
6,000 2.000% due 05/15/2006 5,968
----------
Total U.S. Treasury Notes
(Cost $10,999) 10,961
----------
COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) - 0.6%
(Cost $1,577)
1,577 GMAC Commercial Mortgage Securities Inc.,
Series 1999-CTL1, Class A,
7.151% due 12/15/2016** 1,671
----------
REPURCHASE AGREEMENT - 8.4%
(Cost $23,082)
23,082 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $23,085,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $23,821,000) 23,082
----------
TOTAL INVESTMENTS++ (Cost $266,682*) 99.0% 271,040
OTHER ASSETS AND LIABILITIES (Net) 1.0 2,771
----- ----------
NET ASSETS 100.0% $ 273,811
===== ==========
<FN>
- ---------
* Aggregate cost for federal tax purposes.
** Security acquired in a transaction exempt from registration
under Rule 144A of the Securities Act of 1933, as amended.
+ Variable rate security. The interest rate shown reflects the rate
in effect at October 31, 2004.
++ All securities segregated as collateral for futures contracts.
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
MTN -- Medium Term Note
- ----------------------------------------------------------------------------
Unrealized
Number of Value Depreciation
Contracts (000s) (000s)
- ---------- ------- ------------
Futures Contracts-Short Position
100 U.S. 5 Year Treasury Note,
December 2004 $11,138 $ (109)
==========
See Notes to Financial Statements. 69
Portfolio of Investments
- ----------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 70.9%
Federal Home Loan Mortgage Corporation (FHLMC) - 33.9%
$ 18,872 4.000% due 08/01/2018 $ 18,597
66,648 4.500% due 04/01/2018-08/01/2033 66,589
125,970 5.000% due 04/01/2018-05/01/2034 126,215
164,130 5.500% due 11/01/2018-11/01/2034 167,944
77,771 6.000% due 04/01/2017-05/01/2034 80,856
43,210 6.500% due 02/01/2011-01/01/2032 45,622
13,762 7.000% due 07/01/2024-04/01/2032 14,660
6,230 7.500% due 12/01/2006-02/01/2031 6,630
330 8.000% due 12/01/2030 358
668 8.500% due 04/01/2019-07/01/2029 728
71 8.750% due 01/01/2013 75
139 9.000% due 12/01/2008-08/01/2022 154
106 9.500% due 06/01/2016-05/01/2017 118
----------
Total FHLMC
(Cost $523,159) 528,546
----------
Federal National Mortgage Association (FNMA) - 27.1%
17,864 4.500% due 12/01/2018 17,965
93,683 5.000% due 04/01/2018-06/01/2034 95,115
142,274 5.500% due 02/01/2009-07/01/2034 145,798
66,029 6.000% due 12/01/2016-03/01/2034 68,830
71,082 6.500% due 09/01/2024-07/01/2034 74,970
3,095 6.820% due 02/01/2011 3,245
11,089 7.000% due 06/01/2010-07/01/2032 11,788
3,532 7.500% due 12/01/2024-02/01/2030 3,804
461 8.000% due 05/01/2022-01/01/2025 490
66 8.500% due 02/01/2023-09/01/2025 71
624 9.000% due 02/01/2017-09/01/2030 689
----------
Total FNMA
(Cost $419,787) 422,765
----------
Government National Mortgage Association (GNMA) - 9.9%
59,646 5.500% due 07/20/2033-03/20/2034 61,038
53,606 6.000% due 04/20/2026-06/15/2034 55,853
23,065 6.500% due 03/15/2024-05/20/2034 24,366
220 6.800% due 04/20/2025 234
4,453 7.000% due 07/15/2008-06/20/2031 4,757
3,837 7.500% due 03/15/2024-11/15/2029 4,133
176 7.750% due 12/15/2029 191
880 8.000% due 04/15/2022-06/20/2030 958
695 9.000% due 11/15/2021 783
1,476 9.500% due 04/15/2016-08/15/2021 1,674
12 13.500% due 09/15/2014-12/15/2014 15
----------
Total GNMA
(Cost $151,648) 154,002
----------
Adjustable Rate Mortgage-Backed Securities
(ARMS) - 0.0% +++
(Cost $168)
167 Federal National Mortgage Association
(FNMA),
3.445% due 03/01/2028+ 172
----------
Total U.S. Government Agency Mortgage-
Backed Securities
(Cost $1,094,762) 1,105,485
----------
Principal
Amount Value
(000s) (000s)
--------- ------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 16.7%
$ 19,802 Banc of America Mortgage Securities, Inc.,
Pass-through Certificates, Series 2004-4,
Class 2A1,
5.500% due 05/25/2034 $ 19,988
13,427 Countrywide Alternative Loan Trust, Series
2003-13T1, Class A1,
4.000% due 08/25/2033 13,364
Countrywide Home Loans:
20,582 Series 2003-50, Class A1,
5.000% due 11/25/2018 20,605
21,500 Series 2004-4, Class A5,
5.250% due 05/25/2034 21,833
Credit Suisse First Boston Mortgage
Securities Corporation:
21,000 Series 2003-11, Class 1A3,
4.500% due 06/25/2033 21,275
17,281 Series 2003-8, Class 1A1,
5.750% due 04/25/2033 17,694
Federal Home Loan Mortgage Corporation:
280 Series 1049, Class F,
2.775% due 02/15/2021++ 280
2,000 Series 1652, Class PL,
7.000% due 01/15/2024 2,156
1,133 Series 1981, Class C,
6.500% due 08/15/2027 1,189
10,000 Series 2435, Class GE,
6.500% due 06/15/2031 10,393
5,500 Series 2442, Class PG,
6.000% due 06/15/2030 5,649
24,000 Series 2449, Class ND,
6.500% due 05/15/2030 24,748
12,122 Series 2481, Class VC,
6.000% due 06/15/2017 12,632
9,000 Series 2551, Class QK,
5.500% due 01/15/2033 9,234
10,175 Series 2575, Class LM,
4.500% due 05/15/2032 10,304
Federal National Mortgage Association:
7,000 Grantor Trust, Series 2000-T5, Class B,
7.300% due 05/25/2010 8,120
19,509 Series 2002-16, Class TM,
7.000% due 04/25/2032 20,466
770 Trust 259 STRIP,
7.000% due 04/01/2024 147
Federal National Mortgage Association,
REMIC, Pass-through Certificates:
192 Series 1990-49, Class G,
9.000% due 05/25/2020 207
212 Series 1993-162, Class E,
6.000% due 08/25/2023 214
168 Series 1997-32, Class FA,
2.538% due 04/25/2027++ 170
1,397 Government National Mortgage Association,
Series 2000-16, Class PB,
7.500% due 02/16/2028 1,423
21,000 GSR Mortgage Loan Trust, Series 2003-4F,
Class 2A3,
5.000% due 05/25/2033 21,125
108 L.F. Rothschild Mortgage Trust, Series 3,
Class Z,
9.950% due 09/01/2017 118
70 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
COLLATERALIZED MORTGAGE OBLIGATIONS
(CMO) - (continued)
$ 17,000 Residential Funding Mortgage Security,
Series 2003-S20, Class 1A4,
5.500% due 12/25/2033 $ 16,927
----------
Total CMO
(Cost $258,960) 260,261
----------
U.S. TREASURY NOTES - 5.5%
15,000 3.000% due 11/15/2007 15,082
20,000 3.250% due 08/15/2007 20,265
17,000 4.000% due 02/15/2014 17,006
18,000 4.250% due 11/15/2013 18,371
15,000 4.250% due 08/15/2014 15,270
----------
Total U.S. Treasury Notes
(Cost $85,767) 85,994
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.3%
10,000 Federal Home Loan Bank, Bond,
2.875% due 09/15/2006 10,033
10,000 Federal Home Loan Mortgage Corporation,
Sub. Note,
5.875% due 03/21/2011 10,943
Federal National Mortgage Association:
10,000 Bond,
3.250% due 01/15/2008 10,030
1,250 Deb.,
6.210% due 08/06/2038 1,433
7,500 Note,
6.000% due 05/15/2008 8,185
10,000 Sub. Note,
6.250% due 02/01/2011 11,118
----------
Total U.S. Government Agency Obligations
(Cost $48,663) 51,742
----------
REPURCHASE AGREEMENT - 3.2%
(Cost $49,184)
49,184 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $49,191,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $50,758,000) 49,184
----------
TOTAL INVESTMENTS (Cost $1,537,336*) 99.6% 1,552,666
OTHER ASSETS AND LIABILITIES (Net) 0.4 6,513
----- ----------
NET ASSETS 100.0% $1,559,179
===== ==========
<FN>
- ---------
* Aggregate cost for federal tax purposes is $1,537,536.
+ Variable rate security. The interest rate shown reflects the rate
in effect at October 31, 2004.
++ Floating rate security whose interest rate is reset periodically
based on an index.
+++ Amount represents less than 0.1% of total net assets.
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
REMIC -- Real Estate Mortgage Investment Conduit
STRIP -- Separate trading of registered interest and
principal of securities
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 71
Portfolio of Investments
- ----------------------------------------------------------------------------
INCOME FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
CORPORATE BONDS AND NOTES - 64.3%
Utilities - 10.3%
$ 5,000 Arizona Public Service Company, Note,
6.500% due 03/01/2012 $ 5,600
10,000 Constellation Energy Group, Inc., Note,
7.000% due 04/01/2012 11,456
10,000 Dominion Resources, Inc., Sr. Note,
5.000% due 03/15/2013 10,133
Illinois Power Company, First Mortgage:
9,000 7.500% due 06/15/2009 10,330
1,000 11.500% due 12/15/2010 1,186
7,000 Metropolitan Edison Company, Sr. Note,
4.950% due 03/15/2013 7,026
NiSource Finance Corporation:
5,000 Bond,
5.400% due 07/15/2014 5,173
5,000 Sr. Note,
6.150% due 03/01/2013 5,473
5,000 Ohio Power Company, Sr. Note,
5.500% due 02/15/2013 5,288
Oncor Electric Delivery Company, Deb.:
1,000 5.000% due 09/01/2007 1,043
8,000 7.000% due 09/01/2022 9,115
10,250 Pacific Gas & Electric Company, First
Mortgage,
4.200% due 03/01/2011 10,213
7,500 PacifiCorp, First Mortgage,
4.950% due 08/15/2014 7,678
5,000 PPL Energy Supply LLC, Sr. Note,
6.400% due 11/01/2011 5,526
2,000 Public Service Company of New Mexico,
Sr. Note,
4.400% due 09/15/2008 2,025
5,000 Sempra Energy, Note,
6.000% due 02/01/2013 5,360
6,500 Southwestern Electric Power Company,
Note,
5.375% due 04/15/2015 6,705
6,845 Texas-New Mexico Power Company,
Sr. Note,
6.250% due 01/15/2009 7,308
1,000 WPD Holdings UK, Jr. Note,
6.750% due 12/15/2004** 1,003
----------
117,641
----------
Financial Services/Banks - 9.7%
1,500 Aetna Inc., Company Guarantee,
7.625% due 08/15/2026 1,812
4,000 American General Finance, Inc.,
MTN, Series I,
4.625% due 05/15/2009 4,112
400 Banc One Corporation, Sub. Note,
10.000% due 08/15/2010 514
5,000 Bank of America Corporation, Sub. Note,
7.800% due 02/15/2010 5,896
1,000 BankAmerica Corporation, Sub. Note,
6.625% due 08/01/2007 1,087
690 BB&T Corporation, Sub. Note,
7.250% due 06/15/2007 758
2,500 CIT Group Inc., Sr. Note,
7.750% due 04/02/2012 2,980
Principal
Amount Value
(000s) (000s)
--------- ------
$ 10,000 Citigroup Inc., Note,
6.000% due 02/21/2012 $ 11,112
6,000 Farmers Insurance Exchange, Note,
6.000% due 08/01/2014** 6,097
1,000 First Nationwide Bank, Sub. Deb.,
10.000% due 10/01/2006 1,124
995 Fleet Financial Group, Inc., Sub. Deb.,
6.875% due 01/15/2028 1,143
10,000 Goldman Sachs Group, Inc., Note,
6.600% due 01/15/2012 11,251
7,500 Jefferies Group, Inc., Sr. Note,
7.750% due 03/15/2012 8,755
1,000 Key Bank NA, Sub. Deb.,
6.950% due 02/01/2028 1,138
3,000 Legg Mason, Inc., Sr. Note,
6.750% due 07/02/2008 3,314
5,000 MBNA America Bank NA, Sub. Note,
7.125% due 11/15/2012 5,762
MBNA Corporation:
3,000 Note,
6.250% due 01/17/2007 3,189
2,000 Sr. Note,
7.500% due 03/15/2012 2,341
Merrill Lynch & Company Inc., Note:
5,000 6.000% due 02/17/2009 5,432
1,450 6.500% due 07/15/2018 1,617
2,000 6.750% due 06/01/2028 2,234
7,500 Morgan Stanley Dean Witter & Company,
Unsub. Note,
6.750% due 04/15/2011 8,524
670 NationsBank Corporation, Sub. Note,
6.800% due 03/15/2028 764
Paine Webber Group, Inc., Sr. Note:
415 7.390% due 10/16/2017 490
830 8.060% due 01/17/2017 996
500 PNC Institute Capital B, Company
Guarantee,
8.315% due 05/15/2027** 579
1,750 SB Treasury Company LLC, Bond,
9.400% to 06/30/2008;
10.925% due 12/29/2049** 2,042
5,000 U.S. Bank NA, Sub. Note,
6.375% due 08/01/2011 5,614
11,000 Wells Fargo & Company, Sub. Note,
4.625% due 04/15/2014 10,977
----------
111,654
----------
Oil & Gas - 6.7%
1,600 Burlington Resources Inc., Deb.,
9.125% due 10/01/2021 2,186
7,500 Consolidated Natural Gas Company, Sr. Note,
6.850% due 04/15/2011 8,498
10,000 El Paso Natural Gas Company, Deb.,
7.500% due 11/15/2026 10,150
6,000 Enterprise Products Partners LP,
Company Guarantee,
6.375% due 02/01/2013 6,499
5,216 Express Pipeline LP, Sub. Note,
7.390% due 12/31/2017** 5,434
72 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
INCOME FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
CORPORATE BONDS AND NOTES - (continued)
Oil & Gas - (continued)
$ 1,500 Hanover Compressor Company,
Conv. Sr. Note,
4.750% due 03/15/2008 $ 1,449
Petro-Canada:
8,500 Deb.,
9.250% due 10/15/2021 11,614
3,000 Note,
4.000% due 07/15/2013 2,836
8,000 Petrobras International Finance Company,
Sr. Note,
9.750% due 07/06/2011 9,320
Southern Natural Gas Company, Sr. Note:
4,000 8.000% due 03/01/2032 4,240
1,000 8.875% due 03/15/2010 1,131
2,000 Tennessee Gas Pipeline Company, Bond,
8.375% due 06/15/2032 2,170
4,500 Tesoro Petroleum Corporation, Note,
8.000% due 04/15/2008 4,916
5,750 Trans-Canada Pipeline Corporation, Deb.,
8.500% due 03/20/2023 5,945
----------
76,388
----------
Consumer Products/Services - 6.2%
1,000 Allied Waste North America, Inc., Sr. Note,
7.875% due 04/15/2013 1,022
4,000 Cendant Corporation, Note,
6.875% due 08/15/2006 4,264
5,000 ConAgra, Inc., Sr. Note,
7.125% due 10/01/2026 5,947
6,000 Corn Products International, Inc., Sr. Note,
8.450% due 08/15/2009 6,900
350 CPC International, Inc., Note,
6.150% due 01/15/2006 364
1,300 Dex Media East LLC, Company Guarantee,
12.125% due 11/15/2012 1,622
1,250 Great Lakes Dredge & Dock Company,
Sr. Sub. Note,
7.750% due 12/15/2013 1,125
Mattel, Inc., Note:
1,750 6.125% due 07/15/2005 1,780
1,000 7.300% due 06/13/2011 1,137
10,000 Reed Elsevier Capital, Company Guarantee,
6.750% due 08/01/2011 11,413
Royal Caribbean Cruises Ltd.:
2,000 Deb.,
7.250% due 03/15/2018 2,185
Sr. Note:
1,250 8.000% due 05/15/2010 1,438
3,000 8.750% due 02/02/2011 3,585
Sealed Air Corporation:
6,500 Company Guarantee,
8.750% due 07/01/2008** 7,573
7,250 Conv. Sr. Note,
3.000% due 06/30/2033** 7,413
4,000 Note,
5.625% due 07/15/2013** 4,124
USA Waste Services, Inc., Sr. Note:
1,000 7.000% due 07/15/2028 1,119
495 7.125% due 10/01/2007 546
Principal
Amount Value
(000s) (000s)
--------- ------
Waste Management Inc.:
$ 3,450 Company Guarantee,
6.875% due 05/15/2009 $ 3,872
3,500 Sr. Note,
7.375% due 08/01/2010 4,060
----------
71,489
----------
Real Estate Investment Trusts - 5.4%
2,000 American Health Properties, Inc., Note,
7.500% due 01/15/2007 2,153
3,000 Arden Realty LP, Note,
5.200% due 09/01/2011 3,057
10,000 Developers Diversified Realty Corporation,
Note,
4.625% due 08/01/2010 10,038
Franchise Finance Corporation:
3,000 MTN,
7.070% due 01/15/2008 3,378
1,100 Sr. Note,
7.875% due 11/30/2005 1,162
Health Care Property Investors, Inc.:
Note:
1,750 6.000% due 03/01/2015 1,844
1,000 6.875% due 06/08/2005 1,024
Sr. Note:
3,000 6.450% due 06/25/2012 3,292
1,000 6.500% due 02/15/2006 1,040
5,000 Health Care REIT, Inc., Sr. Note,
7.500% due 08/15/2007 5,472
7,500 Healthcare Realty Trust, Inc., Sr. Note,
8.125% due 05/01/2011 8,818
Nationwide Health Properties Inc., Note:
1,500 7.060% due 12/05/2006 1,591
8,500 9.750% due 03/20/2008 9,846
9,000 Shurgard Storage Centers, Inc., Note,
5.875% due 03/15/2013 9,319
----------
62,034
----------
Health Care - 4.5%
4,500 Aetna Inc., Sr. Note,
7.375% due 03/01/2006 4,745
1,500 American Home Products Corporation, Deb.,
7.250% due 03/01/2023 1,661
2,000 Athena Neurosciences Finance LLC,
Company Guarantee,
7.250% due 02/21/2008 2,093
10,000 Cardinal Health, Inc., Note,
6.750% due 02/15/2011 10,934
DVI, Inc., Sr. Note, (in default):
8,125 9.875% due 02/01/2004++ 1,381
400 9.875% due 02/01/2004++ 68
HCA Inc.:
3,000 Note,
5.250% due 11/06/2008 3,025
5,000 Sr. Note,
6.950% due 05/01/2012 5,280
4,850 HIH Capital Ltd., Conv. Note,
7.500% due 09/25/2006 4,583
7,350 IVAX Corporation, Conv. Sr. Sub. Note,
4.500% due 05/15/2008 7,396
See Notes to Financial Statements. 73
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
INCOME FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
CORPORATE BONDS AND NOTES - (continued)
Health Care - (continued)
$ 12,000 Tenet Healthcare Corporation, Sr. Note,
6.375% due 12/01/2011 $ 11,010
----------
52,176
----------
Transportation/Auto - 3.9%
Burlington Northern Santa Fe:
5,000 Deb.,
8.125% due 04/15/2020 6,363
1,500 Note,
8.750% due 02/25/2022 1,961
1,273 CSX Transportation, Inc., Deb.,
9.750% due 06/15/2020 1,773
2,000 Ford Holdings Inc., Company Guarantee,
9.300% due 03/01/2030 2,272
Ford Motor Company, Deb.:
825 7.400% due 11/01/2046 779
3,750 8.900% due 01/15/2032 4,205
5,000 Ford Motor Credit Company, Sr. Note,
5.800% due 01/12/2009 5,163
8,000 General Motors Corporation, Deb.,
9.400% due 07/15/2021 9,064
Norfolk Southern Corporation:
1,757 Deb.,
9.750% due 06/15/2020 2,470
5,000 Sr. Note,
6.200% due 04/15/2009 5,480
United Air Lines Inc.:
5,000 Equipment Trust Certificates, (in default),
10.850% due 07/05/2014 2,025
Pass-through Certificates, (in default):
3,000 9.080% due 10/26/2015 910
5,500 9.560% due 10/19/2018 2,224
----------
44,689
----------
Telecommunications - 2.9%
5,000 Deutsche Telephone Finance, Bond,
8.500% due 06/15/2010 6,031
8,000 Qwest Corporation, Note,
9.125% due 03/15/2012** 9,060
7,000 TELUS Corporation, Note,
8.000% due 06/01/2011 8,288
8,000 Vodafone Group PLC, Note,
7.750% due 02/15/2010 9,423
----------
32,802
----------
Information Technology - 2.7%
5,000 BEA Systems Inc., Conv. Sub. Note,
4.000% due 12/15/2006 5,025
11,250 Conexant Systems Inc., Conv. Sub. Note,
4.000% due 02/01/2007 9,689
5,000 Extreme Networks, Inc., Conv. Sub. Note,
3.500% due 12/01/2006 4,931
11,250 TriQuint Semiconductor, Inc., Conv. Sub.
Note,
4.000% due 03/01/2007 10,899
----------
30,544
----------
Principal
Amount Value
(000s) (000s)
--------- ------
Gaming - 2.5%
$ 5,000 Circus Circus Enterprise Inc., Deb.,
7.000% due 11/15/2036 $ 5,325
3,500 Harrah's Operating Company Inc.,
Company Guarantee,
8.000% due 02/01/2011 4,120
3,000 Mandalay Resort Group, Sr. Sub. Note,
Series B,
10.250% due 08/01/2007 3,435
Park Place Entertainment Corporation,
Sr. Note:
1,500 7.500% due 09/01/2009 1,702
5,000 8.500% due 11/15/2006 5,525
7,900 Riviera Holdings Corporation,
Company Guarantee,
11.000% due 06/15/2010 8,809
----------
28,916
----------
Media - 2.5%
Comcast Cable Communications Inc.:
550 Note,
6.200% due 11/15/2008 600
7,000 Sr. Note,
7.125% due 06/15/2013 8,050
7,500 Cox Communications, Inc., Note,
6.750% due 03/15/2011 8,249
2,000 FrontierVision Operating Partners LP,
Sr. Sub. Note, (in default),
11.000% due 10/15/2006 2,520
2,000 Tele-Communications, Inc., Deb.,
7.875% due 08/01/2013 2,369
5,260 Time Warner Inc., Deb.,
9.150% due 02/01/2023 6,947
----------
28,735
----------
Industrial/Product - 1.8%
5,000 Champion International Corporation, Deb.,
7.200% due 11/01/2026 5,821
3,029 Covanta Energy Corporation, Sr. Sec. Note,
8.250% due 03/15/2011 2,855
250 Lennar Corporation, Sr. Note,
7.625% due 03/01/2009 284
8,000 Noranda Inc., Note,
6.000% due 10/15/2015 8,526
Weyerhaeuser Company:
1,500 Deb.,
7.375% due 03/15/2032 1,756
1,500 Note,
6.750% due 03/15/2012 1,700
----------
20,942
----------
Foreign Government (U.S. Dollar Denominated) - 1.7%
4,457 Federative Republic of Brazil, C-Bond,
8.000% due 04/15/2014 4,444
10,000 Republic of Ecuador, Bond,
8.000% to 08/15/2005;
9.000% to 08/15/2006;
10.000% due 08/15/2030 8,412
5,000 United Mexican States, Bond,
9.875% due 02/01/2010 6,218
----------
19,074
----------
74 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
INCOME FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
CORPORATE BONDS AND NOTES - (continued)
Index Product - 1.5%
$ 16,250 Dow Jones CDX High Yield Series 3 Trust 1,
Credit-Linked Trust Certificate,
7.750% due 12/29/2009** $ 16,727
----------
Retail - 1.0%
5,000 Fred Meyer Inc., Company Guarantee,
7.450% due 03/01/2008 5,597
5,000 Safeway Inc., Note,
7.500% due 09/15/2009 5,738
690 Saks Inc., Company Guarantee,
7.000% due 12/01/2013 704
----------
12,039
----------
Aerospace/Defense - 1.0%
Lockheed Martin Corporation:
955 Company Guarantee,
7.750% due 05/01/2026 1,180
5,000 Note,
8.200% due 12/01/2009 5,966
1,000 Loral Corporation, Deb.,
7.625% due 06/15/2025 1,210
2,750 Orbital Sciences Corporation, Sr. Note,
9.000% due 07/15/2011 3,107
----------
11,463
----------
Total Corporate Bonds and Notes
(Cost $692,362) 737,313
----------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 22.7%
Federal Home Loan Mortgage Corporation (FHLMC) - 11.8%
48,637 4.500% due 08/01/2033 47,291
55,806 5.000% due 04/01/2018-05/01/2033 56,544
16,217 5.500% due 11/01/2017-05/01/2031 16,769
5,670 6.000% due 03/01/2031-05/01/2032 5,880
5,808 6.500% due 01/01/2029-08/01/2029 6,118
1,748 7.000% due 01/01/2032 1,857
----------
Total FHLMC
(Cost $132,909) 134,459
----------
Federal National Mortgage Association (FNMA) - 10.2%
47,160 4.000% due 09/01/2018-10/01/2018 46,417
13,840 5.000% due 01/01/2018-10/01/2032 14,038
35,221 5.500% due 03/01/2033-06/01/2033 35,977
2,285 6.000% due 04/01/2032 2,374
8,299 6.500% due 09/01/2028-05/01/2032 8,746
163 7.000% due 01/01/2030 174
192 7.451% due 06/01/2016 203
8,000 7.630% due 02/01/2010 9,112
----------
Total FNMA
(Cost $115,809) 117,041
----------
Principal
Amount Value
(000s) (000s)
--------- ------
Government National Mortgage Association (GNMA) - 0.7%
$ 6,755 6.000% due 05/20/2032 $ 7,034
1,019 7.000% due 06/20/2031 1,085
----------
Total GNMA
(Cost $7,738) 8,119
----------
Total U.S. Government Agency Mortgage-
Backed Securities
(Cost $256,456) 259,619
----------
U.S. TREASURY NOTES - 5.7%
20,000 2.625% due 03/15/2009 19,561
44,000 4.000% due 06/15/2009 45,449
----------
Total U.S. Treasury Notes
(Cost $64,678) 65,010
----------
COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) - 0.1%
(Cost $1,507)
1,504 Reilly Mortgage FHA, Series 1982,
(Partial default),
7.430% due 08/01/2022 1,504
----------
Shares
------
CONVERTIBLE PREFERRED STOCK - 0.4%
(Cost $5,100)
100,000 Ford Motor Company Capital Trust II,
Conv. Pfd.,
6.500% due 01/15/2032 4,999
----------
RIGHTS - 0.1%
(Cost $539)
153,563 Danielson Holding Corporation-Rights+ 866
----------
Principal
Amount
(000s)
---------
REPURCHASE AGREEMENT - 6.2%
(Cost $70,828)
$ 70,828 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $70,838,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $73,095,000) 70,828
----------
TOTAL INVESTMENTS (Cost $1,091,470*) 99.5% 1,140,139
OTHER ASSETS AND LIABILITIES (Net) 0.5 5,927
----- ----------
NET ASSETS 100.0% $1,146,066
===== ==========
<FN>
- ---------
* Aggregate cost for federal tax purposes is $1,094,159.
** Security acquired in a transaction exempt from registration
under Rule 144A of the Securities Act of 1933, as amended.
+ Non-income producing security.
++ Defaulted security is past maturity but continues to be valued
by an independent pricing service in recognition of future potential
worth.
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
FHA -- Federal Housing Authority
MTN -- Medium Term Note
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 75
Portfolio of Investments
- ----------------------------------------------------------------------------
HIGH YIELD FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
CORPORATE BONDS AND NOTES - 87.3%
Health Care - 13.9%
$ 21,500 Athena Neurosciences Finance LLC,
Company Guarantee,
7.250% due 02/21/2008 $ 22,494
6,000 CV Therapeutics, Inc., Conv. Sr. Sub. Deb.,
2.000% due 05/16/2023 4,740
DVI, Inc., Sr. Note, (in default):
10,375 9.875% due 02/01/2004++ 1,764
2,850 9.875% due 02/01/2004++ 484
HEALTHSOUTH Corporation:
14,250 Note,
7.625% due 06/01/2012 13,894
5,000 Sr. Note,
8.500% due 02/01/2008 5,125
HIH Capital Ltd., Conv. Note:
3,500 7.500% due 09/25/2006 3,307
10,050 7.500% due 09/25/2006** 9,497
5,000 Inhale Therapeutic Systems, Inc., Conv.
Sub. Note,
5.000% due 02/08/2007 4,988
14,850 IVAX Corporation, Conv. Sr. Sub. Note,
4.500% due 05/15/2008 14,943
5,000 Omnicare, Inc., Sr. Sub. Note,
6.125% due 06/01/2013 5,075
5,000 Quintiles Transnational Corporation,
Sr. Sub. Note,
10.000% due 10/01/2013 5,475
4,000 Sepracor Inc., Conv. Sub. Deb.,
5.000% due 02/15/2007 4,115
4,750 Vertex Pharmaceuticals Inc., Conv. Sub.
Note,
5.000% due 09/19/2007 4,590
---------
100,491
---------
Telecommunications - 11.4%
16,250 Extreme Networks, Inc., Conv. Sub. Note,
3.500% due 12/01/2006 16,026
17,500 Nortel Networks Corporation, Conv.
Company Guarantee,
4.250% due 09/01/2008 16,909
13,500 Qwest Corporation, Note,
9.125% due 03/15/2012** 15,289
17,710 TriQuint Semiconductor, Inc., Conv. Sub.
Note,
4.000% due 03/01/2007 17,157
16,000 Western Wireless Corporation, Sr. Note,
9.250% due 07/15/2013 17,120
---------
82,501
---------
Oil/Energy - 9.4%
El Paso Natural Gas:
12,500 Bond,
8.375% due 06/15/2032 13,469
2,750 Sr. Note,
7.625% due 08/01/2010 2,987
Principal
Amount Value
(000s) (000s)
--------- ------
Hanover Compressor Company:
$ 7,950 Conv. Sr. Note,
4.750% due 03/15/2008 $ 7,682
10,250 Sr. Note,
8.625% due 12/15/2010 11,326
11,000 Petrobras International Finance Company,
Sr. Note,
9.750% due 07/06/2011 12,815
7,500 Southern Natural Gas Company, Sr. Note,
8.000% due 03/01/2032 7,950
10,000 Tesoro Petroleum Corporation, Sr. Sub.
Note,
9.625% due 04/01/2012 11,725
---------
67,954
---------
Index Product - 9.5%
33,750 Dow Jones CDX High Yield Series 3 Trust 1,
Credit-Linked Trust Certificate,
7.750% due 12/29/2009** 34,741
31,351 TRAINS (Targeted Return Index Securities)
Trust Series HY-2004-1, Grantor Trust,
8.211% due 08/01/2015** 34,235
---------
68,976
---------
Information Technology - 6.1%
14,000 BEA Systems Inc., Conv. Sub. Note,
4.000% due 12/15/2006 14,070
19,500 Conexant Systems Inc., Conv. Sub. Note,
4.000% due 02/01/2007 16,794
10,000 Electronic Data Systems Corporation,
Sr. Note, Series B,
6.500% due 08/01/2013 10,230
2,950 Komag, Inc., Conv. Sub. Note,
2.000% due 02/01/2024 2,873
---------
43,967
---------
Gaming - 5.5%
14,250 Diamond Jo, LLC/Peninsula Gaming
Corporation, Company Guarantee,
8.750% due 04/15/2012** 13,466
10,000 MGM Grand, Inc., Sr. Note,
6.000% due 10/01/2009** 10,400
14,000 Riviera Holdings Corporation,
Company Guarantee,
11.000% due 06/15/2010 15,610
---------
39,476
---------
Utilities - 5.1%
Illinois Power Company, First Mortgage:
13,500 7.500% due 06/15/2009 15,494
3,000 11.500% due 12/15/2010 3,560
16,000 Reliant Resources, Inc., Sr. Note,
9.500% due 07/15/2013 18,080
---------
37,134
---------
76 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
HIGH YIELD FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
CORPORATE BONDS AND NOTES - (continued)
Foreign Government (U.S. Dollar Denominated) - 4.9%
$ 17,548 Federative Republic of Brazil, C-Bond,
8.000% due 04/15/2014 $ 17,497
21,500 Republic of Ecuador, Bond,
8.000% to 08/15/2005;
9.000% to 08/15/2006;
10.000% due 08/15/2030 18,087
---------
35,584
---------
Consumer Products/Leisure - 4.3%
14,000 Carmike Cinemas, Inc., Sr. Sub. Note,
7.500% due 02/15/2014 14,437
Royal Caribbean Cruises Ltd.:
3,000 Deb.,
7.250% due 03/15/2018 3,278
11,500 Sr. Note,
8.750% due 02/02/2011 13,743
---------
31,458
---------
Services - 3.8%
16,500 Allied Waste North America, Inc., Sr. Note,
7.875% due 04/15/2013 16,871
12,050 Great Lakes Dredge & Dock Company,
Sr. Sub. Note,
7.750% due 12/15/2013 10,845
---------
27,716
---------
Aerospace/Defense - 3.6%
14,000 Orbital Sciences Corporation, Sr. Note,
9.000% due 07/15/2011 15,820
10,000 Primus International Inc., Sr. Note,
10.500% due 04/15/2009** 10,250
---------
26,070
---------
Cable/TV - 2.6%
5,500 Century Communications Corporation,
Sr. Note, (in default),
8.750% due 10/01/2007 5,720
5,250 FrontierVision Holdings LP, Sr. Disc. Note,
(in default),
11.875% due 09/15/2007 6,720
5,000 Olympus Communications LP, Sr. Note,
Series B, (in default),
10.625% due 11/15/2006 6,375
---------
18,815
---------
Paper/Containers - 2.0%
Jefferson Smurfit Corporation:
Company Guarantee:
7,000 7.500% due 06/01/2013 7,665
6,000 8.250% due 10/01/2012 6,690
---------
14,355
---------
Principal
Amount Value
(000s) (000s)
--------- ------
Transportation/Auto - 1.9%
Northwest Airlines, Inc., Pass-through Certificates:
$ 8,894 Series 1999-2, Class B,
7.950% due 03/01/2015 $ 6,938
8,762 Series 2001-1, Class B,
7.691% due 04/01/2017 6,752
---------
13,690
---------
Media - 1.6%
XM Satellite Radio Holdings Inc., Sr. Note:
5,877 12.000% due 06/15/2010 6,950
4,717 Zero coupon to 12/31/2005;
14.000% due 12/31/2009 4,770
---------
11,720
---------
Retailing - 1.4%
10,000 Southern States Cooperative, Inc., Sr. Note,
10.500% due 11/01/2010** 10,050
----------
Manufacturing - 0.3%
2,589 Covanta Energy Corporation, Sr. Sec. Note,
8.250% due 03/15/2011 2,440
---------
Total Corporate Bonds and Notes
(Cost $592,564) 632,397
---------
Units
-----
LIMITED PARTNERSHIP - 0.9%
(Cost $7,223)
8,026,750 TexCal, Series A, Common Units 6,943
----------
Shares
------
COMMON STOCKS - 7.8%
57,845 Credence Systems Corporation+ 437
518,800 Health Care Property Investors, Inc. 14,438
404,500 Health Care REIT, Inc. 14,562
180,460 ICO Global Communications Holdings Ltd.+ 19
206,173 Komag Inc.+ 3,500
123,430 Life Sciences Research, Inc.+ 1,055
985,100 Nationwide Health Properties Inc. 22,234
---------
Total Common Stocks
(Cost $40,067) 56,245
---------
CONVERTIBLE PREFERRED STOCK - 0.5%
(Cost $3,609)
75,000 Omnicare, Inc., Conv. Pfd,
4.000% due 06/15/2033 3,511
---------
RIGHTS - 0.1%
(Cost $461)
131,250 Danielson Holding Corporation-Rights+ 740
---------
See Notes to Financial Statements. 77
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
HIGH YIELD FUND
October 31, 2004
-----------------------------------------------------------------------
Value
Shares (000s)
--------- ------
WARRANTS - 0.1%
45,327 ICO Global Communications Holdings Ltd.,
Expires 05/16/2006+ $ 0***
45,870 Komag Inc., Expires 06/30/2005+ 390
5,000 Mikohn Gaming Corporation,
Expires 08/15/2008+** 6
---------
Total Warrants
(Cost $12) 396
---------
Principal
Amount
(000s)
------
REPURCHASE AGREEMENT - 1.5%
(Cost $11,212)
$ 11,212 Agreement with Morgan Stanley,
1.770% dated 10/29/2004, to be
repurchased at $11,214,000 on
11/01/2004 (Collateralized by
U.S. Treasury Obligations, having
various interest rates and maturities,
market value $11,571,000) 11,212
---------
TOTAL INVESTMENTS (Cost $655,148*) 98.2% 711,444
OTHER ASSETS AND LIABILITIES (Net) 1.8 13,195
----- ---------
NET ASSETS 100.0% $ 724,639
===== =========
<FN>
- ---------
* Aggregate cost for federal tax purposes is $655,836.
** Security acquired in a transaction exempt from registration
under Rule 144A of the Securities Act of 1933, as amended.
*** Value of security is less than $500.
+ Non-income producing security.
++ Defaulted security is past maturity but continues to be valued by
an independent pricing service in recognition of future potential
worth.
78 See Notes to Financial Statements.
Portfolio of Investments
- ----------------------------------------------------------------------------
TAX-EXEMPT BOND FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - 98.7%
Alaska - 3.8%
$ 4,500 Alaska State International Airports, Airport &
Marina Revenue, Series B, (AMBAC
Insured),
5.250% due 10/01/2027 $ 4,758
1,235 Anchorage, Electric Utilities, Power & Light
Revenue, Sr. Lien, (MBIA Insured),
6.500% due 12/01/2013 1,522
2,000 Anchorage, Ice Rink, Recreational Revenue,
6.375% due 01/01/2020 2,339
----------
8,619
----------
Arizona - 3.7%
Arizona School Facilities Board, COP:
1,000 Series A, (MBIA Insured),
5.250% due 09/01/2017 1,105
1,500 Series B, (FSA Insured),
5.250% due 09/01/2019 1,662
2,000 Arizona Tourism & Sports Authority,
Recreational Revenue, (Multipurpose
Stadium Facility Project), Series A,
(MBIA Insured),
5.375% due 07/01/2019 2,224
3,000 Salt River Project, Agricultural Improvement
& Power District, Electric Systems
Revenue, Series A,
5.750% due 01/01/2009 3,384
----------
8,375
----------
California - 10.4%
1,000 Alameda County, Fremont Unified School
District, GO, Series A, (FGIC Insured),
5.000% due 08/01/2025 1,046
California State Department of Water
Resources, Power Supply Revenue,
Series A:
1,000 6.000% due 05/01/2015 1,171
(AMBAC Insured):
2,000 5.375% due 05/01/2018 2,218
1,000 5.500% due 05/01/2016 1,142
3,000 (Inverse Floater), (MBIA-IBC Insured),
8.170% due 05/01/2011+** 3,541
2,000 Center Unified School District, Capital
Appreciation, GO, Series C, (MBIA
Insured),
Zero coupon due 09/01/2018 1,077
2,000 El Dorado Irrigation District, COP, Series A,
(FGIC Insured),
5.000% due 03/01/2021 2,127
2,000 Foothill Eastern Transportation Corridor
Agency, Capital Appreciation, Toll Road
Revenue, (MBIA Insured),
Zero coupon due 01/15/2018 1,025
2,700 Jurupa, Unified School District, GO, (FGIC
Insured),
5.125% due 08/01/2022 2,881
2,000 Orange County, COP, Series A, (MBIA
Insured),
6.000% due 07/01/2026 2,161
1,180 Palmdale, COP, (Park Improvement &
Avenue S Construction Project), (MBIA
Insured),
5.250% due 09/01/2018 1,305
Principal
Amount Value
(000s) (000s)
--------- ------
$ 2,000 San Francisco City and County, International
Airports Commission, Airport Revenue,
Second Series, Issue 29B, (FGIC Insured),
5.125% due 05/01/2020 $ 2,159
7,000 San Joaquin Hills, Transportation Corridor
Agency, Toll Road Revenue, Series A,
(MBIA Insured),
Zero coupon due 01/15/2034 1,482
----------
23,335
----------
Colorado - 0.8%
1,650 Lakewood, COP, (AMBAC Insured),
5.350% due 12/01/2017 1,836
----------
Connecticut - 1.2%
1,500 Connecticut State Special Obligation Parking,
Airport & Marina Revenue, (Bradley
International Airport), Series A, AMT,
(ACA Insured),
6.600% due 07/01/2024 1,626
995 Mashantucket Western Pequot Tribe, Special
Revenue, Series A, ETM,
6.500% due 09/01/2005** 1,034
----------
2,660
----------
District of Columbia - 0.3%
500 District of Columbia, Water & Sewer
Authority, Public Utilities Revenue, (FSA
Insured),
5.500% due 10/01/2017 590
----------
Florida - 7.6%
250 Bay County, Water Systems Revenue,
AMBAC Insured),
5.700% due 09/01/2030 279
500 Brevard County, School Board Authority,
COP, Series B, (AMBAC Insured),
5.500% due 07/01/2021 535
1,000 Escambia County, Health Facilities
Authority, Health Facilities Revenue,
(Florida Health Care Facilities Loan-VHA
Program), (AMBAC Insured),
5.950% due 07/01/2020 1,027
650 Escambia County, Utilities Authority, Utility
Systems Revenue, (FGIC Insured),
5.250% due 01/01/2029 683
900 Florida Housing Finance Agency, Housing
Revenue, (Spinnaker Cove Apartments
Project), Series G, AMT, (AMBAC
Insured),
6.500% due 07/01/2036 935
800 Florida State Board of Education, Lottery
Revenue, Series A, (FGIC Insured),
5.250% due 07/01/2017 889
675 Florida State Municipal Power Agency,
Power & Light Revenue, (Stanton Project),
(FSA Insured),
5.500% due 10/01/2014 772
1,000 Hillsborough County, Port District Revenue,
(Tampa Port Authority Project), Series A,
AMT, (MBIA Insured),
5.375% due 06/01/2027 1,056
600 Jacksonville, Water & Sewer Revenue,
(United Waterworks Inc. Project), AMT,
(AMBAC Insured),
6.350% due 08/01/2025 630
See Notes to Financial Statements. 79
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
TAX-EXEMPT BOND FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
Florida - (continued)
$ 140 Manatee County, Housing Finance Authority,
SFMR, Series 94-4, AMT, (GNMA/FNMA
Collateral),
6.875% due 11/01/2026 $ 140
1,095 Marion County, School Board, COP, (FSA
Insured),
5.250% due 06/01/2018 1,210
500 Orange County, Housing Finance Authority,
MFHR, (Hands Inc. Project), Series A,
7.000% due 10/01/2025** 535
5,000 Orlando, Utilities Commission, Water &
Electric Revenue,
6.000% due 10/01/2010 5,824
1,300 Osceola County, School Board, COP, Series A,
(AMBAC Insured),
5.125% due 06/01/2022 1,394
900 Pasco County, Solid Waste Disposal &
Resource Recovery System, Resource
Recovery Revenue, AMT, (AMBAC
Insured),
6.000% due 04/01/2011 1,015
----------
16,924
----------
Georgia - 5.7%
5,000 Georgia State, GO, Series B,
6.300% due 03/01/2009 5,758
Monroe County, Development Authority, PCR,
(Oglethorpe Power Corporation Project),
Series A, (MBIA-IBC Insured):
2,500 6.700% due 01/01/2009 2,897
3,410 6.750% due 01/01/2010 4,028
----------
12,683
----------
Hawaii - 1.0%
Honolulu City and County, GO, Series A:
1,270 (Unrefunded Balance),
6.000% due 01/01/2012 1,487
730 ETM,
6.000% due 01/01/2012 863
----------
2,350
----------
Idaho - 1.2%
2,000 Idaho Health Facilities Authority, Health
Care Revenue, (IHC Hospitals Inc. Project),
(Inverse Floater), ETM,
6.650% due 02/15/2021+** 2,607
----------
Illinois - 6.3%
5,000 Chicago, O'Hare International Airport,
Airport Revenue, (Inverse Floater), AMT,
(FSA Insured),
9.604% due 01/01/2020+** 6,109
Chicago, O'Hare International Airport,
Special Facilities Revenue, Series B:
965 (Second Lien Passenger Facility),
(AMBAC Insured),
5.500% due 01/01/2017 1,078
1,000 (United Airlines Project), AMT,
(in default),
6.100% due 11/01/2035 150
Principal
Amount Value
(000s) (000s)
--------- ------
$ 2,570 Cook County, Oak Lawn School District No.
122, Capital Appreciation, GO, (FGIC
Insured),
Zero coupon due 12/01/2016 $ 1,522
Metropolitan Pier & Exposition Authority,
Capital Appreciation, Dedicated State
Tax Revenue, Series A, (FGIC Insured):
(Unrefunded Balance):
85 Zero coupon due 06/15/2008 77
130 Zero coupon due 06/15/2009 113
ETM:
5,055 Zero coupon due 06/15/2009 4,399
815 Zero coupon due 06/15/2009 709
----------
14,157
----------
Indiana - 3.1%
6,000 Indiana Municipal Power Agency, Power
Supply System Revenue, Series A, ETM,
(MBIA Insured),
6.125% due 01/01/2013 6,924
----------
Kentucky - 0.8%
1,500 Kentucky State Turnpike Authority,
Economic Development Road Revenue,
(Revitalization Project), (FSA Insured),
(Pre-refunded to 01/01/2011),
5.625% due 07/01/2013 1,702
----------
Louisiana - 1.6%
2,680 Lafayette, Utility Revenue, (MBIA Insured),
5.250% due 11/01/2023 2,918
1,500 Louisiana Public Facilities Authority,
Customer Receipts Revenue, Series B,
ETM,
Zero coupon due 12/01/2019 737
----------
3,655
----------
Maryland - 1.5%
2,000 Baltimore, Port Facilities, Industrial Revenue,
(Consolidated Coal Sales Project), Series B,
6.500% due 10/01/2011 2,162
1,150 Maryland State Economic Development
Corporation, Student Housing Revenue,
(University of Maryland College Park
Project),
5.625% due 06/01/2035 1,188
----------
3,350
----------
Massachusetts - 1.7%
1,000 Massachusetts State Development Finance
Agency, Revenue Bonds, (Hillcrest
Educational Centers Inc. Project),
6.375% due 07/01/2029 968
1,000 Massachusetts State Health & Educational
Facilities Authority, Health Care Revenue,
(Health Care System-Covenant Health),
6.000% due 07/01/2031 1,055
1,500 Massachusetts State, Federal Highway Grant
Anticipation Notes Revenue, Series A,
5.750% due 06/15/2015 1,700
----------
3,723
----------
80 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
TAX-EXEMPT BOND FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
Michigan - 0.5%
$ 1,000 Michigan State Strategic Fund, Limited
Obligation Revenue, (Detroit Edison
Company Exempt Facilities Project),
Series C, AMT, (XLCA Insured),
5.450% due 12/15/2032 $ 1,047
----------
Missouri - 3.3%
2,250 Bi-State Development Agency of the
Missouri-Illinois Metropolitan District,
Mass Transit Sales Tax Revenue,
(Metrolink Cross County Extension Project),
Series B, (FSA Insured),
5.250% due 10/01/2019 2,473
1,000 Cape Girardeau County, Industrial
Development Authority, Health Care
Facilities Revenue, (Southeast Hospital
Association Project),
5.625% due 06/01/2027 1,019
600 Fenton, Tax Increment Revenue, (Gravois
Bluffs Improvement Project),
7.000% due 10/01/2021 650
1,000 Missouri State Health and Education
Facilities Authority, Education Facilities
Revenue, (University of Missouri-
Columbia Arena Project),
5.000% due 11/01/2018 1,086
St. Louis County, Pattonville School District
No. R-3, GO, (Missouri Direct Deposit
Program), (FGIC Insured):
1,000 5.750% due 03/01/2017 1,153
880 5.750% due 03/01/2018 1,015
----------
7,396
----------
Nebraska - 3.6%
7,000 Omaha Public Power District, Electric
Revenue, Series B, ETM,
6.150% due 02/01/2012 8,137
Nevada - 0.9%
1,000 Clark County, Airport Systems Subordinate
Lien Revenue , Series A-2, (FGIC Insured),
5.000% due 07/01/2036 1,019
1,000 Reno, Sales & Room Tax Revenue, Sr. Lien,
(ReTrac-Reno Transportation Rail Access
Corridor Project), (AMBAC Insured),
5.125% due 06/01/2037 1,028
----------
2,047
----------
New Jersey - 3.0%
1,000 New Jersey Economic Development
Authority, Cigarette Tax Revenue,
5.500% due 06/15/2031 1,007
1,000 New Jersey Economic Development
Authority, Economic Development
Revenue, (Kapkowski Road Landfill
Project),
5.750% due 04/01/2031 989
Principal
Amount Value
(000s) (000s)
--------- ------
$ 1,340 New Jersey Educational Facilities Authority,
Government Fund Grant Revenue, (Higher
Education Capital Improvement Project),
Series A, (AMBAC Insured),
5.250% due 09/01/2020 $ 1,474
New Jersey Transportation Trust Fund
Authority, Transportation System Revenue:
2,000 Series A,
5.250% due 06/15/2019 2,218
1,000 Series C, (FSA Insured),
5.500% due 06/15/2020 1,111
----------
6,799
----------
New York - 5.0%
1,265 Metropolitan Transportation Authority,
Service Contract Revenue,
(Transportation Facilities Project), Series 7,
4.750% due 07/01/2019 1,388
1,500 Metropolitan Transportation Authority,
Transportation Revenue, Series A, (FGIC
Insured),
5.250% due 11/15/2031 1,594
2,000 Nassau County, Interim Finance Authority,
Sales Tax Revenue, Series A,
5.750% due 11/15/2013 2,320
1,000 New York State Dormitory Authority, College
& University Revenue, (State University
Educational Facilities Project), (MBIA
Insured),
6.000% due 05/15/2016 1,159
535 New York State Housing Finance Agency,
MFHR, (Secured Mortgage Program),
Series F, AMT,
6.625% due 08/15/2012 538
735 New York State Mortgage Agency,
Homeowner Mortgage Revenue, Series 82,
AMT,
5.650% due 04/01/2030 774
1,000 New York State Urban Development
Corporation, Personal Income Tax
Revenue, Series C-1, (FGIC Insured),
5.500% due 03/15/2019 1,134
New York State, GO:
1,000 Series B, ETM, (FSA Insured),
7.000% due 06/01/2014 1,136
1,000 Series H,
5.750% due 03/15/2013 1,132
----------
11,175
----------
North Carolina - 1.5%
1,000 Charlotte, COP, (Convention Facility Project),
Series A,
5.500% due 08/01/2019 1,124
2,000 North Carolina Municipal Power Agency
No. 1, Catawba Electric Revenue, Series A,
(MBIA Insured),
5.250% due 01/01/2018 2,190
----------
3,314
----------
See Notes to Financial Statements. 81
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
TAX-EXEMPT BOND FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
Ohio - 2.1%
$ 1,000 Cuyahoga County, Hospital Facilities Revenue,
(Canton Inc. Project),
7.500% due 01/01/2030 $ 1,108
2,175 Ohio State Building Authority, Lease Revenue,
(Administrative Building Fund Projects),
Series A, (FSA Insured),
5.500% due 04/01/2015 2,466
1,000 Ohio State University, General Receipts
Revenue, Series A,
5.125% due 12/01/2031 1,040
----------
4,614
----------
Oklahoma - 0.7%
330 Oklahoma Housing & Finance Authority,
SFMR, Series B, AMT, (GNMA Collateral),
7.997% due 08/01/2018 340
1,000 Tulsa County, Public Facilities Authority,
Capital Improvement Revenue, (AMBAC
Insured),
6.250% due 11/01/2022 1,168
----------
1,508
----------
Oregon - 2.5%
1,000 Oregon Health Sciences University, College
& University Revenue, Series A, (MBIA
Insured),
5.250% due 07/01/2022 1,081
1,000 Oregon State Department of Administrative
Services, COP, Series C, (MBIA Insured),
5.250% due 11/01/2018 1,110
2,000 Portland, Sewer System Revenue, Second
Lien, Series A, (FSA Insured),
5.250% due 06/01/2020 2,187
1,000 Portland, Tax Allocation Revenue,
(Downtown Waterfront Urban Renewal &
Redevelopment Project), Series A,
(AMBAC Insured),
5.750% due 06/15/2016 1,140
----------
5,518
----------
Pennsylvania - 3.9%
Philadelphia, Gas Works Revenue,
(FSA Insured):
(1998 General Ordinance):
1,000 Fourth Series,
5.250% due 08/01/2020 1,086
2,500 Second Series,
5.250% due 07/01/2029 2,637
2,500 (Inverse Floater), Series 384,
8.695% due 07/01/2011+** 2,960
820 Philadelphia, Parking Authority, Auto Parking
Revenue, Series A, (AMBAC Insured),
5.250% due 02/15/2029 865
1,000 Philadelphia, Redevelopment Authority Revenue,
(Neighborhood Transformation Project),
Series A, (FGIC Insured),
5.500% due 04/15/2017 1,131
----------
8,679
----------
Puerto Rico - 0.5%
1,000 Puerto Rico Municipal Finance Agency,
Revenue Bonds, Series A, (FSA Insured),
5.250% due 08/01/2021 1,110
----------
Principal
Amount Value
(000s) (000s)
--------- ------
South Carolina - 2.1%
$ 1,300 Chesterfield County, School District, GO,
(FSA Insured),
5.375% due 03/01/2018 $ 1,459
1,955 Greenville, Waterworks System Revenue,
5.250% due 02/01/2019 2,149
1,000 South Carolina Jobs-Economic Development
Authority, IDR, (Electric & Gas Company
Project), Series A, (AMBAC Insured),
5.200% due 11/01/2027 1,053
----------
4,661
----------
South Dakota - 0.6%
1,250 South Dakota Health and Educational
Facilities Authority, Health Care Revenue,
(Sioux Valley Hospitals and Health
System), Series A,
5.250% due 11/01/2034 1,269
----------
Tennessee - 1.0%
1,000 Johnson City, Health & Educational Facility
Board, Hospital Revenue, (Mountain States
Health Care Facilities First Mortgage
Project), Series A,
7.500% due 07/01/2033 1,175
990 Tennessee Housing Development Agency,
Housing Revenue, (Homeownership
Program), Series 2A, AMT,
5.700% due 07/01/2031 1,028
----------
2,203
----------
Texas - 6.8%
1,500 Austin, Water & Wastewater System
Revenue, (MBIA Insured),
5.250% due 11/15/2019 1,642
1,000 Corpus Christi, GO, (FSA Insured),
5.750% due 03/01/2018 1,131
1,500 Dallas-Fort Worth International Airport
Board, Airport & Marina Revenue,
Series A, AMT, (FGIC Insured),
5.500% due 11/01/2031 1,570
Houston, GO, (Public Improvement Project),
(FSA Insured):
915 (Pre-refunded to 09/01/2010),
5.750% due 03/01/2015 1,046
85 (Unrefunded Balance),
5.750% due 03/01/2015 97
1,000 Houston, Hotel Occupancy Tax & Special
Revenue, (Convention & Entertainment
Project), Series B, (AMBAC Insured),
5.750% due 09/01/2015 1,144
2,050 Houston, Water & Sewer System Revenue, Jr.
Lien, Series C, (FGIC Insured),
5.375% due 12/01/2027 2,263
1,100 Metro Health Facilities Development
Corporation, Health Care Revenue,
(Wilson N. Jones Memorial Hospital
Project),
7.200% due 01/01/2021 1,100
North Central, Health Facilities Development
Corporation Revenue:
1,000 (Baylor Health Care System Project),
Series A,
5.125% due 05/15/2029 1,016
82 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ----------------------------------------------------------------------------
TAX-EXEMPT BOND FUND
October 31, 2004
-----------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
Texas - (continued)
$ 1,000 (Children's Medical Center of Dallas
Project), (AMBAC Insured),
5.250% due 08/15/2032 $ 1,044
1,000 Texas Tech University System, Financing
System Revenue, Seventh Series, (MBIA
Insured),
5.000% due 08/15/2025 1,035
2,000 University of Texas Financing System,
College & University Revenue, Series A,
5.250% due 08/15/2019 2,198
----------
15,286
----------
Virginia - 0.8%
Richmond, GO, (FSA Insured):
600 5.125% due 01/15/2008 654
1,000 5.500% due 01/15/2010 1,131
----------
1,785
----------
Washington - 7.6%
2,500 Energy Northwest, Electric Revenue,
(Nuclear Project 3), Series A , (FSA
Insured),
5.500% due 07/01/2017 2,810
5,000 Franklin County, Pasco School District No.1,
GO, (FSA Insured),
5.250% due 12/01/2019 5,468
4,500 King County, Kent School District No. 415,
GO, Series C,
6.300% due 12/01/2008 5,131
3,000 Washington State, GO, Series B & AT-7,
6.400% due 06/01/2017 3,728
----------
17,137
----------
West Virginia - 1.1%
2,500 Harrison County, County Community Solid
Waste Disposal Authority, IDR,
(Monongahela Power Company Project),
Series A, AMT, (MBIA-IBC Insured),
6.875% due 04/15/2022 2,510
----------
Wisconsin - 0.5%
Wisconsin State Health & Educational
Facilities Authority, Health Care Revenue,
Series A:
600 (Beaver Dam Community Hospitals, Inc.
Project),
6.000% due 08/15/2019 596
555 (Waukesha Memorial Hospital Project),
(AMBAC Insured),
7.125% due 08/15/2007 557
----------
1,153
----------
Total Municipal Bonds and Notes
(Cost $201,028) 220,838
----------
Value
(000s)
------
TOTAL INVESTMENTS++ (Cost $201,028*) 98.7% $ 220,838
OTHER ASSETS AND LIABILITIES (Net) 1.3 2,947
----- ----------
NET ASSETS 100.0% $ 223,785
===== ==========
<FN>
- ---------
* Aggregate cost for federal tax purposes is $201,114.
** Security deemed illiquid by Management.
+ Variable rate security. The interest rate shown reflects the rate
in effect at October 31, 2004.
++ All securities segregated as collateral for futures contracts.
Unrealized
Number of Value Depreciation
Contracts (000s) (000s)
- ------------- --------- ------------
Futures Contracts-Short Position
63 U.S. 5 Year Treasury Note,
December 2004 $ 7,017 $ (39)
14 U.S. 10 Year Treasury Note,
December 2004 1,590 (16)
----------
Net Unrealized Depreciation of
Futures Contracts $ (55)
==========
Tax-Exempt Bond Fund had the following industry concentrations greater than
10% at October 31, 2004 (as a percentage of net assets) (unaudited):
Power 17.1%
General Obligation 16.3%
Transportation 15.3%
General Purpose 10.3%
Tax-Exempt Bond Fund had the following insurance concentrations greater than
10% at October 31, 2004 (as a percentage of net assets)
(unaudited):
MBIA 19.7%
FSA 19.2%
FGIC 12.3%
AMBAC 11.8%
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificate of Participation
ETM -- Escrowed to Maturity
FGIC -- Federal Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation
IBC -- Insured Bond Certificate
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
SFMR -- Single Family Mortgage Revenue
VHA -- Veterans Housing Authority
XLCA -- XL Capital Assurance Inc.
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 83
Portfolio of Investments
- ------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - 99.3%
California - 98.8%
$ ABAG Financing Authority for Nonprofit
Corporations, COP:
340 (Episcopal Homes Foundation),
5.000% due 07/01/2007 $ 356
(O'Connor Woods Obligation Group),
(ACA Insured):
700 5.400% due 11/01/2009 745
2,530 5.700% due 11/01/2013 2,753
1,240 ABAG Financing Authority for Nonprofit
Corporations, Revenue Bonds, (California
School of Mechanical Arts),
5.250% due 10/01/2026 1,286
5,360 Alhambra, Improvement Board Act of 1915,
Special Tax Revenue, (Public Works
Assessment District No. 1), (MBIA
Insured),
6.125% due 09/02/2018 5,439
2,000 Anaheim, Public Financing Authority, Tax
Allocation Revenue, (Inverse Floater),
(MBIA Insured),
10.870% due 12/28/2018+ 2,573
2,210 Azusa, Community Facilities District No. 1,
Special Tax Revenue, (Mountain Cove),
Series A,
6.000% due 09/01/2026 2,304
Baldwin Park, Public Financing Authority,
Lease Revenue, (Community Center
Project), (AMBAC Insured):
2,635 5.000% due 08/01/2027 2,731
3,000 5.000% due 08/01/2034 3,073
2,000 Barstow, Redevelopment Agency, Tax
Allocation Revenue, (Central
Redevelopment Project), Series A,
(MBIA Insured),
7.000% due 09/01/2014 2,400
3,155 Burbank, Waste Disposal Revenue, Series B,
(FSA Insured),
5.250% due 05/01/2024 3,375
2,000 California Department of Veteran Affairs,
Home Purchase Revenue, Series A,
(AMBAC Insured),
5.400% due 12/01/2018 2,123
California Educational Facilities Authority,
College & University Revenue:
1,000 (Pooled College & University), Series B,
6.625% due 06/01/2020 1,109
1,000 (University of San Diego), Series A,
5.250% due 10/01/2030 1,035
1,000 California Educational Facilities Authority,
Student Loan Revenue, (California Loan
Program), Series A, AMT, (MBIA Insured),
5.100% due 03/01/2014 1,062
995 California Financing Authority for Resource
Efficiency, Multiple Utility Revenue, (First
Resource Efficiency Program), (AMBAC
Insured),
6.000% due 07/01/2017 1,018
Principal
Amount Value
(000s) (000s)
--------- ------
$ 500 California Health Facilities Financing
Authority, Health Care Revenue,
(Adventist Health System Project),
Series A,
5.000% due 03/01/2028 $ 503
California Housing Finance Agency, Home
Ownership & Improvement Revenue,
AMT, (MBIA Insured):
10 Series B,
5.200% due 08/01/2026 10
2,630 Series F,
6.800% due 08/01/2014 2,695
1,000 California Infrastructure & Economic
Development Bank, Health Care Revenue,
(The J. David Gladstone Institute Project),
5.500% due 10/01/2015 1,093
3,855 California Infrastructure & Economic
Development Bank, Lease Revenue,
(Asian Art Museum of San Francisco
Project), (MBIA Insured),
5.500% due 06/01/2017 4,330
2,500 California Pollution Control Financing
Authority, PCR, (San Diego Gas and
Electric Company), Series A, AMT,
(AMBAC Insured),
5.850% due 06/01/2021 2,531
140 California Rural Home Mortgage Finance
Authority, SFMR, (Mortgage-Backed
Securities Program), Issue A, Series 2,
AMT, (GNMA/FHLMC Collateral),
7.950% due 12/01/2024 141
6,320 California State Department of Transportation,
COP, Series A, (MBIA Insured),
5.250% due 03/01/2016 6,843
California State Department of Water
Resources, Power Supply Revenue,
Series A:
5,000 5.750% due 05/01/2017 5,678
5,500 5.875% due 05/01/2016 6,308
7,000 (MBIA-IBC Insured),
5.125% due 05/01/2018 7,622
3,000 (XLCA Insured),
5.375% due 05/01/2017 3,340
2,000 California State Department of Water
Resources, Water Revenue, Series W,
(FSA Insured),
5.000% due 12/01/2018 2,174
8,000 California State Economic Recovery, Sales
Tax Revenue, Series A,
5.000% due 07/01/2016 8,622
California State Public Works Board, Lease
Revenue:
1,500 (California Community Colleges), Series A,
5.250% due 12/01/2014 1,590
3,000 (California State University), Series C,
5.400% due 10/01/2022 3,193
1,980 (Department of Corrections - Kern County
at Delano II State Prison), Series C,
5.500% due 06/01/2023 2,156
1,750 (Department of Corrections Program),
Series A, (MBIA-IBC Insured),
5.000% due 09/01/2018 1,875
84 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
California - (continued)
$ 4,330 (Department of Corrections-Ten
Administrative Segregation Housing
Units), Series A, (AMBAC Insured),
5.250% due 03/01/2019 $ 4,707
(Department of Mental Health - Coalinga
State Hospital), Series A:
3,000 5.000% due 06/01/2024 3,107
1,750 5.000% due 06/01/2025 1,803
4,200 (UC M.I.N.D. Institute), Series A,
5.000% due 04/01/2023 4,354
California State University, Fresno
Association Inc. Revenue, (Auxiliary
Organization Event Center):
1,500 6.000% due 07/01/2022 1,590
1,500 6.000% due 07/01/2031 1,584
California State, GO:
1,000 (AGC-ICC Insured),
5.750% due 10/01/2010 1,137
2,000 (CIFG-TCRS Insured),
5.000% due 10/01/2022 2,112
4,430 (FGIC-TCRS Insured),
5.500% due 06/01/2025 4,822
(Veterans), AMT:
1,280 Series BJ,
5.700% due 12/01/2032 1,313
2,510 Series BT,
5.000% due 12/01/2012 2,561
3,050 (XLCA Insured),
6.750% due 08/01/2012 3,718
2,815 California Statewide Communities
Development Authority, COP, (Cedars-
Sinai Medical Center), (MBIA-IBC
Insured),
6.500% due 08/01/2012 3,202
California Statewide Communities
Development Authority, MFHR, (Equity
Residential Housing):
1,000 Series B,
5.200% due 12/01/2029 1,070
3,300 Series C,
5.200% due 06/15/2009 3,537
975 Carson, Improvement Board Act of 1915, GO,
7.375% due 09/02/2022 993
1,000 Carson, Redevelopment Agency, Tax
Allocation Revenue, (Area No. 1 Project),
(MBIA Insured),
5.500% due 10/01/2016 1,168
3,195 Castaic Lake, Water Agency, COP, (1994
Refunding Project), Series A, (AMBAC
Insured),
5.000% due 08/01/2019 3,463
1,000 Chino Valley, Unified School District, COP,
Series A, (FSA Insured),
5.250% due 09/01/2014 1,128
3,000 Chula Vista, COP, (MBIA Insured),
5.000% due 08/01/2027 3,109
1,200 Chula Vista, IDR, (San Diego Gas and
Electric Company), Series A, AMT,
4.900% due 03/01/2023 1,202
Principal
Amount Value
(000s) (000s)
--------- ------
$ 1,825 Chula Vista, Public Financing Authority,
Special Tax Revenue, (Assessment
Districts Refinancing), Sr. Lien, Series A,
(FSA Insured),
4.700% due 09/02/201 $ 1,982
2,665 Chula Vista, Redevelopment Agency, Tax
Allocation Revenue,
8.625% due 09/01/2024 2,997
2,000 Coachella, Redevelopment Agency, Tax
Allocation Revenue, (Area No. 3 Project),
5.875% due 12/01/2028 2,046
2,160 Contra Costa County, Public Financing
Authority, Lease Revenue, (Capital
Projects), Series B, (MBIA Insured),
5.250% due 06/01/2027 2,268
5,000 Contra Costa, Community College District,
GO, (Election of 2002), (MBIA Insured),
5.000% due 08/01/2029 5,177
Contra Costa, Water District Revenue,
Series K, (FSA Insured):
1,445 5.000% due 10/01/2017 1,576
1,520 5.000% due 10/01/2018 1,651
1,285 Corona, COP, (Clearwater Cogeneration
Project), (MBIA Insured),
5.000% due 09/01/2017 1,396
1,500 Culver City, Redevelopment Finance
Authority, Tax Allocation Revenue,
Series B,
6.250% due 11/01/2025 1,528
1,665 Davis, Public Facilities Finance Authority
Local Agency, Special Tax Revenue, (Mace
Ranch Area), Series A,
6.600% due 09/01/2025 1,753
1,985 El Cajon, COP, (Helix View Nursing Home
Project), AMT, (FHA Insured),
7.750% due 02/01/2029 1,994
1,215 Fairfield, Housing Authority, Mortgage
Revenue, (Creekside Estates Mobile
Homes),
5.625% due 09/01/2023 1,224
1,000 Fontana, Redevelopment Agency, Tax
Allocation Revenue, (Southwest Industrial
Park Project), (MBIA Insured),
5.200% due 09/01/2030 1,048
Foothill Eastern Transportation Corridor
Agency, Toll Road Revenue:
9,000 Zero coupon due 01/15/2026 7,158
20,000 Zero coupon due 01/15/2030 4,480
10,000 Zero coupon due 01/15/2032 1,981
10,000 Zero coupon due 01/15/2033 1,865
10,000 Zero coupon due 01/15/2034 1,753
10,000 Zero coupon due 01/15/2036 1,550
10,000 Zero coupon due 01/15/2037 1,460
9,000 Zero coupon due 01/15/2038 1,235
2,000 Fresno, Joint Powers Financing Authority,
Lease Revenue, Series A, (FSA Insured),
5.750% due 06/01/2026 2,256
1,000 Hi Desert, Members Health Care District,
Health Care Revenue,
5.500% due 10/01/2015 1,001
See Notes to Financial Statements. 85
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
California - (continued)
$ 3,000 Highland, Redevelopment Agency, Tax
Allocation Revenue, (Highland
Redevelopment Project Area No. 1),
Series A, (AMBAC Insured),
5.000% due 12/01/2028 $ 3,104
Huntington Beach, Union High School
District, GO, (Election of 2004), (FSA
Insured):
2,000 5.000% due 08/01/2027 2,081
5,000 5.000% due 08/01/2029 5,177
2,000 Huntington Park, Public Financing Authority,
Lease Revenue, (Wastewater System
Project),
6.200% due 10/01/2025 2,089
5,000 Imperial Irrigation District, COP, (Water
System Projects), (AMBAC Insured),
5.500% due 07/01/2029 5,410
1,250 Imperial, Water Facilities Revenue, COP,
(FGIC Insured),
5.000% due 10/15/2020 1,335
1,000 Irvine, Meadows Mobile Home Park,
Mortgage Revenue, Series A,
5.700% due 03/01/2018 1,009
Irvine, Public Facilities & Infrastructure
Authority, Assessment Revenue,
(AMBAC Insured):
Series B:
1,455 5.000% due 09/02/2020 1,509
3,630 5.000% due 09/02/2021 3,765
2,000 Series C,
5.000% due 09/02/2023 2,062
1,825 La Canada, Unified School District, GO,
(Election of 2004), Series A, (MBIA
Insured),
5.500% due 08/01/2028 2,005
La Quinta, Financing Authority, Local
Agency Revenue, Series A, (AMBAC
Insured):
2,000 5.000% due 09/01/2029 2,065
1,000 5.250% due 09/01/2024 1,083
1,500 La Verne, Public Financing Authority,
Revenue Bonds, (Capital Improvement
Projects),
7.250% due 09/01/2026 1,576
1,000 Laguna Hills, COP, (Community Center
Project), (MBIA Insured),
5.000% due 12/01/2017 1,085
1,975 Lake Elsinore, Public Financing Authority,
Local Agency Revenue, Series G,
5.800% due 09/02/2015 2,097
2,000 Long Beach, Community Facilities District
No. 5, Special Tax Revenue, (Towne
Center),
6.875% due 10/01/2025 2,092
1,315 Long Beach, Redevelopment Agency, Tax
Allocation Revenue, (North Long Beach
Redevelopment Projects), Series A,
(AMBAC Insured),
5.000% due 08/01/2022 1,386
Principal
Amount Value
(000s) (000s)
--------- ------
$ 1,425 Los Angeles, Community Redevelopment
Agency, Financing Authority Revenue,
(Grand Central Square Multi-family
Housing Project), Series A, AMT,
5.850% due 12/01/2026 $ 1,429
370 Los Angeles, Community Redevelopment
Agency, Housing Revenue, Series C,
(AMBAC Insured),
6.750% due 07/01/2014 378
2,500 Los Angeles, Community Redevelopment
Agency, Tax Allocation Revenue, (North
Hollywood Project), Series E, (MBIA
Insured),
5.400% due 07/01/2024 2,722
25 Los Angeles, Home Mortgage Revenue,
(Mortgage-Backed Securities Project),
(GNMA Collateral),
8.100% due 05/01/2017 26
1,000 Los Angeles, MFHR, (Ridgecroft Apartments
Project), Series E, AMT, (GNMA
Collateral),
6.250% due 09/20/2039 1,042
1,445 Los Angeles, Special Assessment Revenue,
(Landscaping & Lighting District No. 96-1
Project), (AMBAC Insured),
5.000% due 03/01/2022 1,520
6,660 Los Angeles, Unified School District, GO,
(Election of 1997), Series E, (MBIA
Insured),
5.500% due 07/01/2018 7,573
1,405 Los Gatos-Saratoga, Joint Unified High
School District, GO, (Election of 1998),
Series B,
5.750% due 12/01/2021 1,608
1,490 Mountain View, Shoreline Regional Park
Community, Tax Allocation Revenue,
Series A, (MBIA Insured),
5.250% due 08/01/2015 1,661
2,785 Needles, Public Utilities Authority, Utilities
Revenue, (Utilities System Acquisition
Project), Series A,
6.500% due 02/01/2022 2,868
Oakland, Alameda County Unified School
District, COP, (Energy Retrofit Project):
1,825 (Pre-refunded to 11/15/2005),
7.000% due 05/15/2011** 1,959
3,445 (Pre-refunded to 11/15/2006),
6.750% due 11/15/2014** 3,842
1,300 Oakland, Revenue Bonds, (YMCA East Bay
Project),
7.100% due 06/01/2010 1,354
1,565 Oakland, Unified School District, GO,
(Alameda County School Improvements),
(FSA Insured),
5.000% due 08/01/2017 1,642
1,500 Oceanside, COP, Series A, (AMBAC
Insured),
5.250% due 04/01/2018 1,653
4,000 Orange County, COP, Series A, (MBIA
Insured),
5.800% due 07/01/2016 4,327
86 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
California - (continued)
Oxnard, Harbor District, Revenue Bonds:
$ 1,200 Series A, AMT,
5.750% due 08/01/2020 $ 1,250
1,000 Series B,
6.000% due 08/01/2024 1,057
1,090 Pacifica, Wastewater Revenue, (AMBAC
Insured),
5.000% due 10/01/2024 1,150
1,280 Palm Desert, Financing Authority, Tax
Allocation Revenue, (Project Area No. 2),
Series A, (MBIA Insured),
5.000% due 08/01/2022 1,364
1,995 Pomona, COP, (Mission Promenade Project),
Series AE, (AMBAC Insured),
5.375% due 10/01/2032 2,124
5,000 Pomona, Public Financing Authority, Tax
Allocation Revenue, (Merged
Redevelopment Project), Series AD,
(MBIA Insured),
5.000% due 02/01/2021 5,247
1,000 Pomona, Unified School District, GO,
(MBIA Insured),
6.150% due 08/01/2030 1,191
5,000 Port of Oakland, Airport & Marina Revenue,
Series K, AMT, (FGIC Insured),
5.750% due 11/01/2029 5,418
1,000 Poway, Housing Revenue, (Poinsettia Mobile
Home Park Project),
5.000% due 05/01/2023 1,000
1,000 Poway, Redevelopment Agency, Tax
Allocation Revenue, (Paguay
Redevelopment Project), (AMBAC
Insured),
5.375% due 06/15/2019 1,112
2,750 Redding, Electrical Systems, COP, (Inverse
Floater), (MBIA Insured),
10.728% due 07/01/2022+ 4,155
1,000 Redondo Beach, Public Financing Authority,
Revenue Bonds, (South Bay Center
Redevelopment Project),
7.125% due 07/01/2026 1,053
Riverside County, Public Financing
Authority, COP:
1,500 5.750% due 05/15/2019 1,559
2,100 5.800% due 05/15/2029 2,141
Rocklin, Unified School District, Capital
Appreciation, GO, (FGIC Insured):
1,030 Zero coupon due 08/01/2014 644
1,210 Zero coupon due 08/01/2016 672
1,255 Zero coupon due 08/01/2017 659
1,360 Zero coupon due 08/01/2019 637
1,415 Zero coupon due 08/01/2020 626
1,225 Zero coupon due 08/01/2023 457
Sacramento County, Airport System Revenue,
Series A, (FSA Insured):
2,425 5.250% due 07/01/2019 2,655
2,550 5.250% due 07/01/2020 2,785
Principal
Amount Value
(000s) (000s)
--------- ------
$ 2,000 Sacramento County, Sanitation District
Financing Authority, Sewer Revenue,
ETM,
5.000% due 12/01/2016 $ 2,046
Saddleback Valley, Unified School District,
GO, (Election of 2004), Series A, (FSA
Insured):
3,000 5.000% due 08/01/2027 3,121
4,000 5.000% due 08/01/2029 4,142
Salinas Valley, Solid Waste Authority,
Resource Recovery Revenue, AMT,
(AMBAC Insured):
2,475 5.250% due 08/01/2027 2,575
2,000 5.250% due 08/01/2031 2,070
San Bernardino, Redevelopment Agency,
Tax Allocation Revenue, (San Sevaine
Redevelopment Project), Series A:
1,000 6.900% due 09/01/2018 1,094
2,000 7.100% due 09/01/2029 2,155
1,885 San Buenaventura, COP, Series B, (AMBAC
Insured),
5.500% due 01/01/2017 2,131
San Diego, Redevelopment Agency, Auto
Parking Revenue:
1,000 (Centre City Redevelopment Project),
Series A,
6.400% due 09/01/2019 1,080
1,085 (Southcrest Redevelopment Project),
6.500% due 10/01/2025 1,179
4,000 San Diego, Water Authority Revenue, COP,
Series B, (Inverse Floater), (MBIA
Insured),
10.820% due 04/08/2021+ 4,668
1,000 San Dimas, Housing Authority Revenue,
(Charter Oak Mobile Home Project),
Series A,
5.700% due 07/01/2028 984
San Francisco City and County,
International Airports Commission,
Airport Revenue, Second Series, AMT,
(MBIA Insured):
4,000 Issue 27A,
5.250% due 05/01/2026 4,130
4,070 Issue 28A,
5.250% due 05/01/2020 4,317
2,645 San Francisco City and County,
Redevelopment Agency, Lease Revenue,
(George R. Moscone Convention Center
Project), (XLCA Insured),
Zero coupon due 07/01/2013 1,882
San Francisco City and County,
Redevelopment Financing Authority, Tax
Allocation Revenue, (San Francisco
Redevelopment Projects), Series A, (FSA
Insured):
3,150 5.000% due 08/01/2017 3,379
3,320 5.000% due 08/01/2018 3,562
4,815 San Jose, Airport Revenue, Series A, (FSA
Insured),
5.375% due 03/01/2017 5,402
See Notes to Financial Statements. 87
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
California - (continued)
$ 9,310 San Jose, Financing Authority, Lease
Revenue, (Convention Center Project),
Series F, (MBIA Insured),
5.000% due 09/01/2018 $ 10,067
1,000 San Jose, MFHR, (Sixth & Martha Family
Apartments), AMT, (FNMA Collateral),
5.875% due 03/01/2033 1,045
795 San Juan, Basin Authority, Lease Revenue,
(Ground Water Recovery Project),
(AMBAC Insured),
5.000% due 12/01/2022 840
3,780 San Juan, Unified School District, GO,
(Election of 2002), Series A, (MBIA
Insured),
5.000% due 08/01/2027 3,932
4,000 San Marcos, Public Facilities Authority, Sr.
Tax Incremental Revenue, (Project Area
No. 3-A), (AMBAC Insured),
5.000% due 10/01/2034 4,093
3,000 San Ramon Valley, Unified School District,
GO, (Election of 2002), (FSA Insured),
5.000% due 08/01/2024 3,172
1,350 Santa Monica-Malibu, Unified School
District, GO,
5.750% due 08/01/2025 1,534
4,565 Santa Rosa, Mortgage Revenue, (Channate
Lodge), (FHA Insured),
6.700% due 12/01/2024 4,659
3,000 Semitropic Improvement District of
Semitropic Water Storage District, Water
Banking Revenue, Series A, (XLCA
Insured),
5.125% due 12/01/2035 3,122
1,880 Simi Valley, Community Development
Agency, Commonwealth Mortgage
Revenue, (Sycamore Plaza II),
6.000% due 09/01/2012** 1,968
South Gate, Public Financing Authority, Tax
Allocation Revenue, (South Gate
Redevelopment Project No. 1):
2,090 (AMBAC Insured),
5.250% due 09/01/2022 2,267
1,500 (XLCA Insured),
5.000% due 09/01/2016 1,633
1,780 Stockton-East, Water District, COP, (1975 &
1990 Projects), Series A, (FGIC Insured),
5.250% due 04/01/2022 1,922
3,270 Temecula, Redevelopment Agency, Tax
Allocation Revenue, (Redevelopment
Project No.1), (MBIA Insured),
5.250% due 08/01/2036 3,419
1,000 Torrance, Hospital Revenue, (Torrance
Memorial Medical Center), Series A,
6.000% due 06/01/2022 1,119
Principal
Amount Value
(000s) (000s)
--------- ------
University of California, College &
University Revenue, (Multi-Purpose
Projects), (FGIC Insured):
Series M:
$ 2,260 5.125% due 09/01/2017 $ 2,473
4,635 5.125% due 09/01/2018 5,071
2,035 Vallejo City, Unified School District, GO,
Series A, (MBIA Insured),
5.900% due 02/01/2021 2,475
1,815 Vallejo, Public Financing Authority, Revenue
Bonds, (Fairgrounds Drive Assessment
District),
5.700% due 09/02/2011 1,840
3,040 Ventura County, COP, (Public Financing
Authority I), Series A, (FSA Insured),
5.250% due 08/15/2016 3,341
Walnut, Public Financing Authority, Tax
Allocation Revenue, (Walnut Improvement
Project), (AMBAC Insured):
1,660 5.375% due 09/01/2018 1,858
2,305 5.375% due 09/01/2022 2,527
1,350 West Contra Costa, Unified School District,
GO, Series A, (MBIA Insured),
5.350% due 02/01/2017 1,563
----------
428,492
----------
Virgin Islands - 0.5%
Virgin Islands, Public Finance Authority,
Revenue Bonds, (Gross Receipts of Taxes
on Loan Notes), Series A:
900 5.625% due 10/01/2010 967
1,000 6.375% due 10/01/2019 1,158
----------
2,125
----------
Total Municipal Bonds and Notes
(Cost $404,790) 430,617
----------
SHORT-TERM MUNICIPAL BONDS - 0.5%
(Cost $2,100)
2,100 Irvine Ranch, Water District, GO,
(Consolidated Improvement Districts No.
140, 240, 105 & 250),
1.700% due 04/01/2033++ 2,100
----------
TOTAL INVESTMENTS (Cost $406,890*) 99.8% 432,717
OTHER ASSETS AND LIABILITIES (Net) 0.2 727
----- ----------
NET ASSETS 100.0% $ 433,444
===== ==========
<FN>
- --------------------
* Aggregate cost for federal tax purposes is $406,957.
** Security deemed illiquid by Management.
+ Variable rate security. The interest rate shown reflects the
rate in effect at October 31, 2004.
++ Variable rate securities payable upon demand with not more than
five business days notice, and secured by bank letters of credit
or guarantees by certain corporations. The interest rate shown
reflects the rate in effect at October 31, 2004.
88 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
California Municipal Fund had the following industry concentrations greater
than 10% at October 31, 2004 (as a percentage of net assets) (unaudited):
General Purpose 40.5%
General Obligation 17.4%
Transportation 11.3%
California Municipal Fund had the following insurance concentrations greater
than 10% at October 31, 2004 (as a percentage of net assets) (unaudited):
MBIA 27.3%
AMBAC 15.3%
FSA 12.6%
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
ACA -- ACA Financial Guaranty Corporation
AGC -- ACE Guaranty Corporation
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
CIFG -- CDC IXIS Financial Guaranty North America, Inc.
COP -- Certificate of Participation
ETM -- Escrowed to Maturity
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation
IBC -- Insured Bond Certificate
ICC -- Insured Custody Certificates
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
SFMR -- Single Family Mortgage Revenue
TCRS -- Transferable Custodial Receipts
XLCA -- XL Capital Assurance Inc.
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 89
Portfolio of Investments
- ------------------------------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - 98.3%
California - 95.3%
$ 1,000 ABAG Financing Authority for Nonprofit
Corporations, COP, (Episcopal Homes
Foundation),
6.250% due 08/15/2030 $ 1,095
1,000 Alameda County, COP, (MBIA Insured),
(Santa Rita Jail Project),
5.375% due 06/01/2009 1,076
1,000 Alameda County, Public Financing Authority,
Lease Revenue,
5.000% due 09/02/2008 1,027
Anaheim Public Financing Authority,
Distribution System Revenue, (City of
Anaheim Electric System Distribution
Facilities), (MBIA Insured):
2,080 2.500% due 10/01/2005 2,094
1,025 3.000% due 10/01/2006 1,047
2,000 Anaheim, Public Financing Authority, Lease
Revenue, (Convention Center Project),
Series A, (AMBAC Insured),
5.250% due 08/01/2013 2,261
Anaheim, Public Financing Authority, Power
& Light Revenue, (Electric System
Generation Project), Series B, (FSA
Insured):
2,000 5.000% due 10/01/2015 2,188
2,000 5.250% due 10/01/2014 2,266
1,130 Baldwin Park Public Financing Authority,
Sales Tax & Tax Allocation Revenue,
(Puente Merced Redevelopment Project),
4.625% due 08/01/2016 1,162
1,000 California Educational Facilities Authority,
Student Loan Revenue, (California Loan
Program), Series A, AMT, (MBIA Insured),
5.100% due 03/01/2014 1,062
1,000 California Health Facilities Financing
Authority, Health Care Revenue, (Insured
De Las Companas Project), Series A,
(AMBAC Insured),
5.875% due 07/01/2009 1,045
California Housing Finance Agency,
Mortgage Revenue:
445 Series E, (MBIA Insured),
6.050% due 08/01/2006 458
Series N, AMT, (AMBAC Insured):
1,000 5.000% due 08/01/2008 1,065
1,000 5.100% due 02/01/2009 1,069
2,000 California State Department of Transportation,
Federal Highway Grant Anticipation
Revenue, Series A, (AMBAC Insured),
4.000% due 02/01/2010 2,113
California State Department of Water
Resources, Power Supply Revenue,
Series A:
1,675 (MBIA-IBC Insured),
5.250% due 05/01/2015 1,864
4,000 (XLCA Insured),
5.375% due 05/01/2017 4,453
Principal
Amount Value
(000s) (000s)
--------- ------
$ 3,000 California State Department of Water
Resources, Water System Revenue,
(Central Valley Project), Series Y, (FGIC
Insured),
5.250% due 12/01/2014 $ 3,390
California State Public Works Board, Lease
Revenue:
1,000 (California Community Colleges), Series A,
(AMBAC Insured),
5.250% due 12/01/2012 1,101
2,000 (California State University), Series A,
(AMBAC Insured),
5.375% due 10/01/2017 2,161
2,000 (Department of Corrections Program),
5.250% due 06/01/2012 2,263
1,000 (Department of Corrections-Ten
Administrative Segregation Housing Units),
Series A, (AMBAC Insured),
5.250% due 03/01/2016 1,099
2,750 (Department of General Services), (Capitol
East End Complex-Blocks 171-174 & 225),
Series A, (AMBAC Insured),
5.250% due 12/01/2014 3,079
California State, GO:
2,000 (FGIC-TCRS Insured),
7.000% due 10/01/2010 2,433
1,000 (FSA Insured),
5.500% due 03/01/2012 1,126
(MBIA-IBC Insured):
2,000 5.750% due 10/01/2010 2,303
2,000 6.250% due 09/01/2012 2,401
1,985 (XLCA Insured),
5.500% due 03/01/2011 2,248
1,600 California Statewide Communities
Development Authority, COP, (Children's
Hospital of Los Angeles Project), (MBIA
Insured),
6.000% due 06/01/2007 1,757
California Statewide Communities
Development Authority, Water Revenue,
(Pooled Financing Program), (FSA
Insured):
1,600 Series A,
3.000% due 10/01/2005 1,618
1,845 Series C,
5.250% due 10/01/2015 2,070
1,240 Chino Valley, Unified School District, COP,
Series A, (FSA Insured),
5.250% due 09/01/2013 1,397
1,195 Chula Vista, Public Financing Authority,
Special Tax Revenue, (Assessment
Districts Refinancing), Sr. Lien, Series A,
(FSA Insured),
4.500% due 09/02/2013 1,290
1,875 Corona, COP, (Clearwater Cogeneration and
Recycled Water Projects), (MBIA Insured),
5.000% due 09/01/2016 2,049
Emeryville, Public Financing Authority,
Revenue Bonds, (Emeryville
Redevelopment Project), Series A, (MBIA
Insured):
1,265 5.250% due 09/01/2015 1,423
1,400 5.250% due 09/01/2017 1,564
90 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
California - (continued)
$ 1,000 Fresno, Unified School District, GO,
Series B, (MBIA Insured),
5.000% due 02/01/2018** $ 1,109
685 Golden West Schools Financing Authority,
Revenue Bonds, Series A, (MBIA Insured),
5.650% due 02/01/2012 791
1,295 Grand Terrace, Community Redevelopment
Agency, Tax Allocation Revenue,
(Community Redevelopment Project),
(AMBAC Insured),
2.000% due 09/01/2005 1,298
1,075 Hartnell, Community College District, GO,
(Election of 2002), Series A, (MBIA Insured),
5.000% due 08/01/2016 1,182
1,615 Inglewood, Unified School District, GO,
(Election of 1998), Series C, (FSA
Insured),
5.250% due 10/01/2017 1,803
1,195 Kings Canyon, Joint Unified School District,
GO, (FGIC Insured),
5.375% due 08/01/2015 1,344
La Quinta Financing Authority, Local
Agency Revenue, Series A, (AMBAC
Insured):
520 3.000% due 09/01/2006 531
520 3.000% due 09/01/2007 533
1,080 Long Beach, Bond Financing Authority,
Lease Revenue, (Public Safety Facilities
Projects), (AMBAC Insured),
5.250% due 11/01/2013 1,224
450 Los Angeles, Community College District,
GO, Series A, (FSA Insured),
3.000% due 08/01/2005 454
1,300 Los Angeles, Department of Water & Power,
Power System Revenue, Series A-2,
(MBIA Insured),
5.000% due 07/01/2017 1,421
2,500 Los Angeles, Harbor Department Revenue,
Series B, AMT,
5.500% due 08/01/2008 2,643
1,045 Los Angeles, Municipal Improvement
Corporation, Lease Revenue, (City of Los
Angeles Central Library Project), Series
AT, (MBIA Insured),
5.500% due 06/01/2017 1,187
1,500 Los Angeles, State Building Authority, Lease
Revenue, (State of California Department
of General Services Lease Project),
Series A, (MBIA-IBC Insured),
5.625% due 05/01/2011 1,686
760 Los Angeles, Unified School District, COP,
(Capital Project I), Series B, (AMBAC
Insured),
5.000% due 08/01/2017 830
4,000 Los Angeles, Unified School District, GO,
(Election of 2004), Series B, (FSA
Insured),
5.000% due 07/01/2008 4,394
2,105 M-S-R Public Power Agency, San Juan
Project Revenue, Series I, (MBIA
Insured),
5.000% due 07/01/2015 2,290
Principal
Amount Value
(000s) (000s)
--------- ------
$ 51 Modesto, Mortgage Revenue, (Stonebridge
Project), Series A, (GNMA Collateral),
5.875% due 12/01/2004 $ 51
1,015 Nevada Irrigation District, COP, (FGIC
Insured),
5.000% due 01/01/2013 1,126
1,000 North Orange County, Community College
District, GO, Series A, (MBIA Insured),
5.250% due 08/01/2014 1,134
1,575 Oceanside, COP, Series A, (AMBAC
Insured),
5.250% due 04/01/2016 1,745
Ontario, Redevelopment Financing Authority,
Lease Revenue:
1,055 (Capital Projects), (AMBAC Insured),
5.500% due 08/01/2016 1,191
1,060 (Project No.1, Center City & Cimarron
Projects), (MBIA Insured),
5.250% due 08/01/2016 1,180
1,000 Orange County, Public Financing Authority,
Lease Revenue, (Juvenile Justice Center
Facility Project), (AMBAC Insured),
5.375% due 06/01/2016 1,127
795 Palm Desert, Financing Authority, Tax
Allocation Revenue, (Project Area No. 2),
Series A, (MBIA Insured),
5.000% due 08/01/2012 888
1,000 Port of Oakland, Airport & Marina Revenue,
Series N, AMT, (MBIA Insured),
5.000% due 11/01/2011 1,096
1,590 Redlands, COP, (AMBAC Insured),
5.000% due 09/01/2017 1,728
385 Redondo Beach, Public Financing Authority,
Revenue Bonds, (South Bay Center
Redevelopment Project),
6.750% due 07/01/2006 403
2,090 Richmond, Joint Powers Financing Authority,
Tax Allocation Revenue, Series A, (MBIA
Insured),
5.500% due 09/01/2017 2,333
2,725 Riverside, Murrieta Valley Unified School
District, GO, (FSA Insured),
3.000% due 09/01/2005 2,754
1,100 Riverside, Special Tax Revenue,
(Community Facilities District No. 90-1-A),
(MBIA Insured),
5.500% due 09/01/2013 1,253
1,000 San Bernardino County, COP, (West Valley
Detention Center Refinancing Project),
Series B, (MBIA Insured),
5.000% due 11/01/2009 1,108
1,840 San Diego County, COP, (Motorola),
(AMBAC Insured),
5.000% due 02/01/2011 2,036
San Francisco City and County,
International Airports Commission, Airport
Revenue, Second Series, AMT:
1,000 Issue 22, (AMBAC Insured),
6.000% due 05/01/2008 1,108
2,490 Issue 28A, (MBIA Insured),
5.000% due 05/01/2012 2,698
2,000 Issue 30, (XLCA Insured),
5.250% due 05/01/2015 2,249
See Notes to Financial Statements. 91
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
California - (continued)
$ 1,000 San Francisco City and County, Public
Utilities Commission, Water Revenue,
Series A, (FSA Insured),
5.000% due 11/01/2016 $ 1,094
900 San Francisco City and County,
Redevelopment Agency, Tax Allocation
Revenue, (San Francisco Redevelopment
Projects), Series B, (FGIC Insured),
5.250% due 08/01/2017 1,000
710 San Francisco State Building Authority, Lease
Revenue, (State of California San Francisco
Civic Center Complex Project), Series A,
(AMBAC Insured),
6.000% due 12/01/2006 769
1,555 San Joaquin County, COP, (Solid Waste
System Facilities Project), (MBIA Insured),
5.000% due 04/01/2016 1,694
1,200 San Jose, Financing Authority, Lease
Revenue, (Convention Center Project),
Series F, (MBIA Insured),
5.000% due 09/01/2016 1,308
850 Santa Ana Financing Authority, Lease
Revenue, (Police Administration and
Holding Facility), Series A, (MBIA
Insured),
4.000% due 07/01/2006 880
1,050 Santa Ana, COP, (Santa Ana Recycling
Project), Series A, AMT, (AMBAC
Insured),
5.400% due 05/01/2007 1,087
2,000 Santa Clara Valley Transportation Authority,
Sales Tax Revenue, Series A, (AMBAC
Insured),
5.500% due 04/01/2036 2,135
Santa Maria, Redevelopment Agency, Lease
Revenue, (Town Center & Westside
Parking Facilities Project), (AMBAC
Insured):
165 5.000% due 06/01/2013 184
1,085 5.250% due 06/01/2015 1,213
1,160 Shasta, Joint Powers Financing Authority,
Lease Revenue, (County Administration
Building Project), Series A, (MBIA
Insured),
5.250% due 04/01/2017 1,280
1,000 South Gate, Public Financing Authority, Tax
Allocation Revenue, (South Gate
Redevelopment Project No. 1),
(XLCA Insured),
5.000% due 09/01/2016 1,089
1,300 South Orange County, Public Financing
Authority, Special Tax Revenue, (Foothill
Area-Mello Roos), Series C, (FGIC
Insured),
6.500% due 08/15/2010 1,538
995 Southern California Home Financing
Authority, MFHR, (The Fountains Project),
Series A, AMT, (FNMA Collateral),
5.400% due 01/01/2027 1,015
Principal
Amount Value
(000s) (000s)
--------- ------
$ 940 Stanton, MFHR, (Continental Gardens LP
Project), AMT, (FNMA Collateral),
5.625% due 08/01/2029 $ 1,008
1,305 Stockton, Community Facilities District
No. 1, Supplemental Tax Revenue, (Mello
Roos-Weston Ranch), Series A,
5.500% due 09/01/2009 1,395
Sunnyvale, Solid Waste Revenue, (AMBAC
Insured):
1,000 5.250% due 10/01/2012 1,104
1,000 5.500% due 10/01/2014 1,116
1,000 5.500% due 10/01/2016 1,106
1,000 Tracy, Area Public Facilities Financing
Agency, Special Tax Revenue,
(Community Facilities District No. 87-1-H),
(MBIA Insured),
5.875% due 10/01/2013 1,087
----------
139,147
----------
Guam - 0.8%
1,000 Guam Government, GO, Series A, (FSA
Insured),
5.500% due 12/01/2011 1,152
----------
Puerto Rico - 2.2%
2,000 Puerto Rico Commonwealth, GO, Series E,
(MBIA Insured),
5.000% due 07/01/2028 2,176
1,000 Puerto Rico Public Building Authority,
Government Facilities Revenue, Series K,
(MBIA Insured),
4.000% due 07/01/2026 1,049
----------
3,225
----------
Total Municipal Bonds and Notes
(Cost $138,274) 143,524
----------
SHORT-TERM MUNICIPAL BONDS - 1.5%
500 M-S-R Public Power Agency, San Juan
Project Revenue, Sub. Lien, Series F,
(MBIA Insured),
1.700% due 07/01/2022+ 500
1,700 Orange County, COP, (Sanitation Districts
Nos. 1-3, 5-7 & 11), (AMBAC Insured),
1.700% due 08/01/2016+ 1,700
----------
Total Short-Term Municipal Bonds
(Cost $2,200) 2,200
----------
TOTAL INVESTMENTS++ (Cost $140,474*) 99.8% 145,724
OTHER ASSETS AND LIABILITIES (Net) 0.2 313
----- ----------
NET ASSETS 100.0% $ 146,037
===== ==========
<FN>
- --------------------
* Aggregate cost for federal tax purposes is $140,476.
** Security purchased on a when-issued basis.
+ Variable rate securities payable upon demand with not more than
five business days notice, and secured by bank letters of credit
or guarantees by certain corporations. The interest rate shown
reflects the rate in effect at October 31, 2004.
++ All securities segregated as collateral for when-issued
securities.
92 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
October 31, 2004
-------------------------------------------------------------------------
California Insured Intermediate Municipal Fund had the following industry
concentrations greater than 10% at October 31, 2004 (as a percentage of net
assets) (unaudited):
General Purpose 37.0%
General Obligation 16.5%
California Insured Intermediate Municipal Fund had the following insurance
concentrations greater than 10% at October 31, 2004 (as a percentage of net
assets) (unaudited):
MBIA 34.5%
AMBAC 26.5%
FSA 16.2%
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificates of Participation
FGIC -- Federal Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation
IBC -- Insured Bond Certificate
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
TCRS -- Transferable Custodial Receipts
XLCA -- XL Capital Assurance
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 93
Portfolio of Investments
- ------------------------------------------------------------------------------
MONEY MARKET FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
COMMERCIAL PAPER (DOMESTIC) - 2.3%
Cooperative Association of Tractor Dealers Inc.:
$ 3,000 Series A,
2.180% due 03/04/2005+++ $ 2,978
Series B:
4,073 1.510% due 11/03/2004+++ 4,073
5,300 1.620% due 11/04/2004+++ 5,299
3,000 1.830% due 11/12/2004+++ 2,998
----------
Total Commercial Paper (Domestic)
(Cost $15,348) 15,348
----------
COMMERCIAL PAPER (YANKEE) - 6.5%
15,000 ABN AMRO Bank NV North America,
1.770% due 11/08/2004+++ 14,995
29,561 UBS Finance (D.E.) LLC,
1.840% due 11/01/2004+++ 29,561
----------
Total Commercial Paper (Yankee)
(Cost $44,556) 44,556
----------
MEDIUM TERM NOTES - 14.1%
2,000 American Express Credit Corporation,
Series B,
4.250% due 02/07/2005 2,016
American Honda Finance Corporation:
15,000 1.780% due 02/11/2005++** 15,007
10,000 2.010% due 07/11/2005++** 10,000
General Electric Capital Corporation,
Series A:
10,200 1.760% due 05/12/2005++ 10,207
5,200 1.925% due 12/15/2004++ 5,200
6,035 4.250% due 01/28/2005 6,077
8,778 7.250% due 02/01/2005 8,909
3,500 J.P. Morgan Chase & Company, Sr. Note,
2.070% due 03/07/2005++ 3,503
10,000 MBIA Global Funding LLC,
1.800% due 02/07/2005++** 10,000
10,000 Merrill Lynch & Company, Inc., Note,
2.210% due 07/11/2005++ 10,014
5,000 National City Bank, Note,
1.700% due 05/19/2005++ 4,999
10,000 U.S. Bancorp, Sr. Note, Series J,
6.875% due 12/01/2004 10,046
----------
Total Medium Term Notes
(Cost $95,978) 95,978
----------
CORPORATE BONDS AND NOTES - 33.6%
1,150 2440 LLC, Note, (LOC: Fifth Third Bank),
1.960% due 05/01/2024+** 1,150
3,250 2880 Stevens Creek LLC, Bond,
(LOC: Bank of the West),
1.940% due 11/01/2033+ 3,250
2,915 ASSK Properties LC, Note,
(LOC: Wells Fargo Bank),
2.000% due 12/01/2017+ 2,915
Principal
Amount Value
(000s) (000s)
--------- ------
Associates Corporation NA, Sr. Note:
$ 3,950 6.200% due 05/16/2005 $ 4,031
14,625 7.750% due 02/15/2005 14,898
1,750 Avatar Corporation, Note,
(LOC: Fifth Third Bank),
1.960% due 05/01/2039+** 1,750
1,000 Banaba Properties LLC, Note,
(LOC: Fifth Third Bank),
1.960% due 03/01/2020+ 1,000
1,400 Bedford Hills Golf Club, Note,
(LOC: Fifth Third Bank),
1.960% due 04/01/2013+ 1,400
2,445 Boardwalk Enterprises, Note,
(LOC: Fifth Third Bank),
1.960% due 04/01/2024+** 2,445
2,010 BP Canada Energy Company, Deb.,
6.750% due 02/15/2005 2,041
4,750 BP Capital Markets PLC, Note,
4.000% due 04/29/2005 4,791
1,450 Brookville Enterprises, Note,
(LOC: Fifth Third Bank),
1.960% due 10/01/2025+ 1,450
3,000 Campus Research Corporation, Note, Series A,
(LOC: Wells Fargo Bank),
2.050% due 06/01/2013+ 3,000
4,000 Chatham Capital Corporation, Note,
(LOC: Fifth Third Bank),
1.910% due 11/01/2026+ 4,000
12,315 Commercial Credit Corporation, Note,
(LOC: Citigroup),
6.500% due 06/01/2005 12,625
2,000 Community Housing Development, Bond,
(LOC: Wells Fargo Bank),
1.900% due 08/01/2024+ 2,000
3,140 Corporate Finance Managers, Note,
(LOC: Wells Fargo Bank),
1.900% due 02/02/2043+ 3,140
1,150 Corvasc Real Estate, Note,
(LOC: Fifth Third Bank),
1.960% due 05/01/2024+ 1,150
1,000 Crestmont Nursing Home, Note,
(LOC: Fifth Third Bank),
1.910% due 03/01/2024+** 1,000
1,600 DBSI First Mortgage 1998, Note,
(LOC: U.S. Bank),
1.920% due 07/01/2023+ 1,600
200 Derby Fabricating LLC, Bond,
(LOC: Fifth Third Bank),
1.960% due 06/01/2024+ 200
1,000 Elmhurst Memorial Healthcare, Note,
(LOC: Fifth Third Bank),
1.940% due 01/01/2034+** 1,000
28,031 Everett Clinic, P.S., Bond,
(LOC: Bank of America),
1.990% due 05/01/2022+ 28,031
1,000 Exal Corporation, Note,
(LOC: Fifth Third Bank),
1.960% due 03/01/2009+ 1,000
94 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
MONEY MARKET FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
CORPORATE BONDS AND NOTES - (continued)
$ 1,000 Family Express LLC, Note,
(LOC: Fifth Third Bank),
1.910% due 04/01/2028+ $ 1,000
1,100 Fifth Third Bank, Note,
(LOC: Fifth Third Bank),
1.960% due 06/01/2018+** 1,100
5,000 First Union National Bank, Note,
7.700% due 02/15/2005 5,091
7,490 Foster Schweihofer Real Estate Holdings
Company, LLC, Note,
(LOC: Fifth Third Bank),
1.910% due 09/20/2033+ 7,490
9,000 General Electric Capital Corporation, Deb.,
8.850% due 04/01/2005 9,279
1,630 Gold Key Processing Limited, Note,
(LOC: Fifth Third Bank),
1.960% due 07/01/2024+ 1,630
11,815 Goldman Sachs Group,
6.625% due 12/01/2004** 11,863
2,000 Gulf Gate Apartments, Bond,
(LOC: Wells Fargo Bank),
1.900% due 09/01/2028+** 2,000
1,000 Henderson Regional Authority, Bond,
(LOC: Fifth Third Bank),
1.960% due 07/01/2023+ 1,000
4,800 Iowa 80 Group Inc., Note,
(LOC: Wells Fargo Bank),
1.890% due 06/01/2016+ 4,800
1,000 ISO Building LLC, Note,
(LOC: Fifth Third Bank),
1.960% due 03/01/2023+** 1,000
1,000 JUL-Mark Investments LLC, Note,
(LOC: Fifth Third Bank),
1.960% due 10/01/2025+** 1,000
2,146 KAT LLC, Note, (LOC: Fifth Third Bank),
1.960% due 06/01/2029+ 2,146
1,935 KL Morris Family LP, Note,
(LOC: Fifth Third Bank),
1.960% due 02/01/2020+ 1,935
1,000 LAL Holding Company, Note,
(LOC: Fifth Third Bank),
1.960% due 08/01/2019+ 1,000
955 Lauren Company LLC, Bond,
(LOC: Wells Fargo Bank),
1.900% due 07/01/2033+** 955
1,000 Lee Family Partnership, Note,
(LOC: Fifth Third Bank),
1.960% due 06/01/2034+ 1,000
2,200 Lincoln Parkway LLC, Note,
(LOC: Fifth Third Bank),
1.960% due 06/01/2044+ 2,200
1,900 Marsh Enterprises LLC, Note,
(LOC: Fifth Third Bank),
1.910% due 01/01/2028+ 1,900
900 Martin Road Investments, Bond,
(LOC: Fifth Third Bank),
1.960% due 10/01/2027+ 900
10,000 MBIA Global Funding, Note,
1.860% due 04/08/2005++** 10,002
Principal
Amount Value
(000s) (000s)
--------- ------
$ 4,900 Medical Properties Inc., Revenue Bonds,
(Dakota Clinic Ltd. Project),
(LOC: ABN AMRO Bank NV),
1.990% due 12/15/2024+ $ 4,900
Michigan Equity Group, Note,
(LOC: Fifth Third Bank):
1,000 1.960% due 04/01/2034+ 1,000
2,530 Series B,
1.960% due 04/01/2034+** 2,530
2,300 NO S Properties LLC, Note,
(LOC: Fifth Third Bank),
1.960% due 08/01/2024+ 2,300
1,390 Northern Trust Company, Note,
6.650% due 11/09/2004 1,392
4,800 Pineview Estates LC, Note,
(LOC: Fifth Third Bank),
1.910% due 01/01/2023+ 4,800
14,526 Portland Clinic LLP, Bond,
(LOC: U.S. Bank),
1.990% due 11/20/2027+ 14,526
1,000 R.O. Davis Real Estate, Note,
(LOC: Fifth Third Bank),
1.960% due 04/01/2023+ 1,000
1,610 Realty Holding Company LLC, Note,
(LOC: Fifth Third Bank),
1.960% due 05/01/2024+** 1,610
4,615 Rise Inc., Note, (LOC: Wells Fargo Bank),
2.000% due 11/01/2022+ 4,615
4,800 Rockwood Quarry LLC, Note,
(LOC: Fifth Third Bank),
1.910% due 12/01/2022+ 4,800
900 Sanders CRS Exchange LLC, Note,
(LOC: Wells Fargo Bank),
2.090% due 10/01/2023+** 900
1,000 SJD Service Company LLC, Note,
(LOC: Fifth Third Bank),
1.960% due 10/01/2023+ 1,000
1,000 Skeletal Properties, Note,
(LOC: Fifth Third Bank),
1.960% due 11/01/2014+ 1,000
3,000 SouthTrust Bank NA, Note,
1.754% due 05/02/2005++ 3,000
1,250 Spartan Medical Facility, Note,
(LOC: Fifth Third Bank),
1.960% due 12/01/2026+** 1,250
2,900 Tacoma Goodwill Industries, Bond,
(LOC: Bank of America),
1.930% due 02/01/2023+ 2,900
2,000 Titan Holdings Group LLC, Note,
(LOC: Fifth Third Bank),
1.960% due 05/01/2012+ 2,000
1,125 United Transportation Union, Bond,
(LOC: Fifth Third Bank),
1.960% due 06/01/2009+ 1,125
1,393 Watts Brothers Frozen Foods, Bond,
(LOC: U.S. Bank),
1.920% due 07/01/2013+ 1,393
2,500 Wells Fargo & Company, Sr. Note,
7.500% due 04/15/2005 2,567
----------
Total Corporate Bonds and Notes
(Cost $229,766) 229,766
----------
See Notes to Financial Statements. 95
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
MONEY MARKET FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
TAXABLE MUNICIPAL BONDS - 29.3%
$ 2,000 ABAG, California, Finance Authority for
Nonprofit Corporations, Revenue Bonds,
(Public Policy Institute of California
Project), Series B,
(LOC: Bank of New York),
2.040% due 11/01/2031+ $ 2,000
7,450 Acworth, Georgia, Downtown Development
Authority, IDR, (City of Acworth Cable
Fiber Optic Project), (AMBAC Insured),
1.930% due 01/01/2017+ 7,450
10,000 Brooks County, Georgia, Development
Authority, IDR, (Langboard Inc. Project),
(LOC: Bank of America),
1.960% due 05/01/2018+ 10,000
200 California Educational Facilities Authority,
Loan Agreement Revenue, (University of
Judaism), Series B, (LOC: Allied Irish
Bank PLC),
2.030% due 12/01/2028+ 200
1,400 California Statewide Communities
Development Authority, MFHR, (Pavilions
at Sunrise Apartments), Series M-T,
(LOC: Fannie Mae),
1.960% due 08/15/2034+ 1,400
2,085 Collier County, Florida, MFHR, (Brittany Bay
Apartments Project), Series B,
(FNMA Collateral),
1.930% due 07/15/2034+ 2,085
1,225 Colorado Housing & Finance Authority,
Economic Development Revenue, (G.A.
Wright Asset Management, LLC Project),
(LOC: Wells Fargo Bank),
1.900% due 04/01/2029+ 1,225
25,000 Connecticut State Housing Finance Authority,
Housing Revenue, (Housing Mortgage
Finance Program), Subseries B-6,
(AMBAC Insured),
1.930% due 11/15/2027+ 25,000
4,250 Four Dam Pool Power Agency, Alaska,
Electric Revenue, Series B,
(LOC: Dexia Bank),
1.850% due 07/01/2026+ 4,250
1,400 Illinois Health Facilities Authority, Health
Care Revenue, (West Suburban Hospital
Medical Center Project), Series B,
(LOC: American National Bank),
1.950% due 07/01/2024+ 1,400
2,900 Kern Water Bank Authority, California,
Water Revenue, Series B,
(LOC: Wells Fargo Bank),
1.900% due 07/01/2028+ 2,900
3,000 Kit Carson County, Colorado, Agricultural
Development Revenue,
(Midwest Farms LLC),
(LOC: Wells Fargo Bank),
1.870% due 06/01/2027+ 3,000
3,000 Long Beach, California, Revenue Bonds,
Long Beach Towne Center Site
Refinancing Project), Series A,
(LOC: Allied Irish Bank PLC),
1.940% due 11/01/2030+ 3,000
Principal
Amount Value
(000s) (000s)
--------- ------
$ 4,340 Los Angeles, California, Community
Redevelopment Agency, Financing
Authority Revenue, (Bunker Hill Project),
Series B, (AMBAC Insured),
1.490% due 12/01/2004 $ 4,340
2,450 Massachusetts State Development Finance
Agency, Solid Waste Disposal Revenue,
(The Newark Group Project), Series D,
(LOC: JPMorgan Chase Bank),
1.930% due 07/01/2016+ 2,450
2,000 Memorial Health System, Illinois, Health
Care Revenue, (LOC: Bank One NA),
1.870% due 10/01/2024+ 2,000
3,005 Michigan State Strategic Fund, Limited
Obligation Revenue, (Environmental
Research Institute of Michigan Project),
Series B, (LOC: Fifth Third Bank),
1.860% due 10/01/2025+ 3,005
1,000 Montrose County, Colorado, Economic
Development Revenue, (Gordon
Development Project), Series A,
(LOC: Wells Fargo Bank),
1.900% due 06/01/2010+ 1,000
4,215 New Hampshire State Housing Finance
Authority, MFHR, (Pheasant Run
Properties Limited Partnership Project),
(FNMA Collateral),
1.950% due 04/15/2016+ 4,215
2,500 New York City Housing Development
Corporation, MFHR, Series B,
(LOC: KeyBank National Association),
1.950% due 07/01/2035+ 2,500
20,000 New York City, GO, Subseries A-11,
(FGIC Insured),
1.930% due 11/01/2020+ 20,000
4,800 New York State Housing Finance Agency,
Housing Revenue, (West 33rd Street
Project), Series B, (FNMA Collateral),
1.850% due 11/15/2036+ 4,800
33,000 Oakland-Alameda County, California,
Coliseum Authority, Lease Revenue,
(Coliseum Project), Series D,
(LOC: Wachovia Bank),
1.930% due 02/01/2011+ 33,000
Orange County, Florida, Housing Finance
Authority, MFHR, Series B:
2,320 (Northbridge At Millenia - Phase II
Project), (LOC: SouthTrust Bank),
1.990% due 08/15/2036+ 2,320
1,550 (The Landings on Millenia Blvd.
Apartments), (LOC: Fannie Mae),
1.990% due 08/15/2035+ 1,550
2,375 Plymouth, Minnesota, Health Facilities
Revenue, (Westhealth Project), Series B,
(FSA Insured),
1.870% due 06/01/2024+ 2,375
3,200 Richmond, California, MFHR, (Bay Cliff
Apartments Project), Series B,
(FNMA Collateral),
1.950% due 08/15/2037+ 3,200
96 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
MONEY MARKET FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
TAXABLE MUNICIPAL BONDS - (continued)
$ 5,250 Santa Rosa, California, Pension Obligation,
Revenue Bonds, Series A,
(LOC: Landesbank Hessen-Thuringen),
2.040% due 09/01/2024+ $ 5,250
3,000 Savannah College of Art & Design, Inc.,
Georgia, Revenue Bonds, (LOC: Bank of
America),
1.960% due 04/01/2024+ 3,000
10,700 South Fulton, Georgia, Municipal Regional
Jail Authority, Lease Revenue, (Union City
Justice Center Project), (MBIA Insured),
1.950% due 11/01/2017+ 10,700
5,750 Union County Improvement Authority, New
Jersey, Revenue Bonds, (Cedar Glen
Housing Corporation - Hanover Township
Housing Project), Series B,
(FNMA Collateral),
1.950% due 12/15/2014+ 5,750
1,445 University of Illinois, College & University
Revenue, (UIC South Campus
Development Project), (FGIC Insured),
7.620% due 01/15/2005 1,463
7,000 Utah Telecommunication Open Infrastructure
Agency, Telecommunications Revenue,
(LOC: Bank of America Corporation),
1.930% due 07/01/2026+ 7,000
3,600 Val Verde Unified School District, California,
COP, (Land Bank Program), Series B,
(LOC: Bank of America),
1.930% due 09/01/2010+ 3,600
Washington State Housing Finance
Commission, MFHR, Series B:
1,910 (Boardwalk Apartments Project),
(FNMA Collateral),
1.930% due 09/01/2028+ 1,910
1,725 (Cedar Landing Project), (LOC: U.S. Bank),
1.920% due 12/01/2028+ 1,725
1,070 (Oxford Square Project), (LOC: U.S. Bank),
1.920% due 12/01/2028+ 1,070
5,250 (Silver Creek Apartment Project),
1.950% due 12/20/2037+ 5,250
2,730 (Washington Terrace Senior Apartments
Project), (FNMA Collateral),
1.930% due 09/15/2037+ 2,730
----------
Total Taxable Municipal Bonds
(Cost $200,113) 200,113
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 9.2%
Federal Home Loan Bank, Bond:
18,000 1.260% due 04/08/2005 17,929
15,000 1.400% due 03/29/2005 15,000
5,000 1.500% due 03/08/2005 5,000
Principal
Amount Value
(000s) (000s)
--------- ------
Federal National Mortgage Association, Note:
$ 5,000 1.610% due 05/13/2005 $ 5,000
5,000 1.750% due 05/23/2005 5,000
5,000 1.800% due 05/27/2005 5,000
10,000 1.850% due 06/03/2005 10,000
----------
Total U.S. Government Agency Obligations
(Cost $62,929) 62,929
----------
FUNDING AGREEMENT - 4.7%
(Cost $32,000)
32,000 New York Life Insurance,
1.720% due 08/03/2005*** 32,000
----------
TOTAL INVESTMENTS (Cost $680,690*) 99.7% 680,690
OTHER ASSETS AND LIABILITIES (Net) 0.3 2,325
----- ----------
NET ASSETS 100.0% $ 683,015
===== ==========
<FN>
- --------------------
* Aggregate cost for federal tax purposes.
** Security acquired in a transaction exempt from registration under
Rule 144A of the Securities Act of 1933, as amended.
*** Security is restricted and illiquid. It was acquired on August 4,
2004, and has a value of $0.05 per Fund share at October 31,
2004.
+ Variable rate securities payable upon demand with not more than
five business days notice, and secured by bank letters of credit
or guarantees by certain corporations. The interest rate shown
reflects the rate in effect at October 31, 2004.
++ Floating rate security whose interest rate is reset periodically
based on an index.
+++ Rate represents discount rate on purchase date.
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
COP -- Certificate of Participation
FGIC -- Federal Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GO -- General Obligation
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
- ----------------------------------------------------------------------------
See Notes to Financial Statements. 97
Portfolio of Investments
- ------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - 100.0%
Arizona - 8.0%
$ 1,200 Apache County, Industrial Development
Authority, IDR, Tucson Electric Power
Company, (LOC: Toronto Dominion Bank),
1.820% due 12/01/2020+ $ 1,200
655 Arizona Health Facilities Authority, Health
Care Revenue, (Pooled Loan Program),
(FGIC Insured),
1.770% due 10/01/2015+ 655
315 Maricopa County, Mesa Unified School
District No. 4, UTGO, (FSA Insured),
2.000% due 07/01/2005 316
----------
2,171
----------
California - 7.6%
800 California State Department of Water
Resources, Power Supply Revenue, Series
B-5, (LOC: Bayerische Landesbank &
Westdeutsche Landesbank),
1.700% due 05/01/2022+ 800
1,250 Los Angeles, Regional Airports Improvement
Corporation, Lease Revenue, (LAX Two
Corporation Project), (LOC: Societe
Generale Group),
1.740% due 12/01/2025+ 1,250
----------
2,050
----------
Colorado - 3.1%
645 Boulder County, Revenue Bonds, (The
Humane Society of Boulder Valley, Inc.
Project), (LOC: Wells Fargo Bank),
1.890% due 05/01/2020+ 645
200 Colorado Educational & Cultural Facilities
Authority, College & University Revenue,
(University of Denver Project), (AMBAC
Insured),
5.000% due 03/01/2005 202
----------
847
----------
Connecticut - 0.9%
250 State of Connecticut, Regional School
District No. 15, UTGO, (MBIA Insured),
(Pre-refunded to 02/15/2005 @ $101),
5.000% due 02/15/2015 255
----------
District of Columbia - 1.1%
300 District of Columbia, IDR, (Resources for the
Future Inc. Project), (LOC: Wachovia
Bank),
1.820% due 08/01/2029+,++ 300
----------
Florida - 5.3%
250 Gulf Breeze, Revenue Bonds, (Local
Government Loan Program), (FGIC
Insured),
2.000% due 12/01/2020+ 251
Principal
Amount Value
(000s) (000s)
--------- ------
$ 500 Orange County, Health Facilities Authority,
Health Care Revenue, (Presbyterian
Retirement Community Project),
(LOC: Bank of America),
1.820% due 11/01/2028+ $ 500
700 Orange County, IDR, (Central Florida YMCA
Project), Series A, (LOC: Bank of America),
1.820% due 05/01/2027+ 700
----------
1,451
----------
Georgia - 2.8%
750 Dahlonega, Downtown Development
Authority, Student Housing Revenue,
(North Georgia Student Housing LLC
Project), Series A, (LOC: Wachovia Bank),
1.780% due 06/01/2028+ 750
----------
Hawaii - 2.5%
200 Hawaii County, UTGO, Series C, (MBIA
Insured),
2.000% due 07/15/2005 201
475 Hawaii State, UTGO, Series CJ, (FGIC-
TCRS Insured), (Pre-refunded to
01/01/2005 @ $100),
6.250% due 01/01/2015 479
----------
680
----------
Illinois - 6.5%
350 IIlinois Health Facilities Authority, Health
Care Revenue, (Blessing Hospital Project),
Series B, (FSA Insured),
1.820% due 11/15/2029+ 350
1,000 Illinois International Port District Facilities,
Revenue Bonds, (LOC: ABN AMRO
Bank NV),
1.780% due 01/01/2023+ 1,000
400 Warren County, Health Care Revenue,
(Community Medical Center of Western
Illinois, Inc. Project), (Wells Fargo Bank),
1.890% due 12/01/2013+ 400
----------
1,750
----------
Indiana - 1.0%
260 Bloomington, Waterworks Revenue, (MBIA
Insured), (Pre-refunded to 01/01/2005 @
$102),
5.800% due 01/01/2020 267
----------
Kansas - 4.4%
1,200 Shawnee, IDR, (Shawnee Village
Association LP), (LOC: JPMorgan Chase
Bank),
1.750% due 12/01/2009+ 1,200
----------
Kentucky - 3.9%
415 Kenton County, Industrial Building Revenue,
(Baptist Convalescent Center Project),
(LOC: Fifth Third Bank),
1.860% due 07/01/2018+,++ 415
98 See Notes to Financial Statements.
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
Kentucky - (continued)
$ 500 Lexington-Fayette Urban County
Government, Educational Facilities
Revenue, (Lexington School Project),
(LOC: Fifth Third Bank),
1.780% due 05/01/2025+ $ 500
140 Louisville & Jefferson County, Metropolitan
Sewer District, Sewer & Drainage System
Revenue, Series A, (FGIC Insured),
9.000% due 05/15/2005 146
----------
1,061
----------
Michigan - 0.4%
100 Gogebic-Iron Wastewater Authority, Sewer
Revenue, (MBIA Insured), (Pre-refunded
to 01/01/2005 @ $100),
6.050% due 01/01/2025 101
----------
Minnesota - 1.1%
300 Golden Valley, IDR, (Unicare Homes Inc.
Project), (LOC: Bank of America),
1.790% due 09/01/2014+ 300
----------
Mississippi - 0.8%
225 Pearl, Public School District, UTGO, (FGIC
Insured),
5.000% due 03/01/2005 228
----------
Missouri - 1.2%
335 Jackson County, Public Facilities Authority,
Leasehold Revenue, (Capital
Improvements Project), (MBIA Insured),
(Pre-refunded to 12/01/2004 @ $100),
6.125% due 12/01/2015 336
----------
Nebraska - 0.6%
150 Nebraska Investment Finance Authority,
Health Facilities Revenue, (Nebraska
Methodist Health System), (MBIA
Insured),
5.000% due 11/01/2004 150
----------
Nevada - 3.3%
390 Clark County, Economic Development
Revenue, (University of Nevada - Las
Vegas Project), (LOC: Wells Fargo Bank),
1.790% due 08/01/2019+ 390
500 Washoe County, Economic Development
Revenue, (Sierra Nevada College Project),
(LOC: Wells Fargo Bank),
1.890% due 07/01/2025+ 500
----------
890
----------
New Jersey - 1.5%
400 Dover Township, UTGO, (General
Improvement - Golf Course Utility),
(FGIC Insured),
2.750% due 03/01/2005 402
----------
Principal
Amount Value
(000s) (000s)
--------- ------
North Carolina - 1.4%
$ 380 North Carolina Capital Facilities Finance
Agency, Capital Facilities Revenue, (The
O'Neal School Project), (LOC: Wachovia
Bank),
1.840% due 09/01/2023+ $ 380
----------
North Dakota - 3.3%
900 Grand Forks, Hospital Facilities Revenue,
(The United Hospital Obligated Group
Project), (LOC: Lasalle National Bank),
1.740% due 12/01/2025+ 900
----------
Ohio - 6.2%
480 Kettering, City School District, UTGO,
(FSA Insured),
2.000% due 12/01/2004 480
1,200 Mercer County, Healthcare Facilities Revenue,
(Grand Lake Cancer Center), Series A,
(LOC: Fifth Third Bank),
1.780% due 04/01/2023+ 1,200
----------
1,680
----------
Oklahoma - 1.8%
500 Oklahoma State Industrial Authority, Health
Care Revenue, (Tealridge Manor
Corporation Project), (LOC: Bank of
America),
1.820% due 11/01/2018+ 500
----------
Oregon - 1.7%
460 Port of Portland, Portland International
Airport Revenue, Series Fifteen A,
(FGIC Insured),
5.000% due 07/01/2005 471
----------
South Dakota - 1.1%
290 Lower Brule Sioux Tribe, UTGO, (Tribal
Purpose Project), (LOC: Wells Fargo
Bank),
1.790% due 12/01/2011+ 290
----------
Tennessee - 7.4%
1,000 Memphis, Health, Educational & Housing
Facility Board, MFHR, (Brookside
Apartments Project), (FHLMC Collateral),
1.770% due 05/01/2034+ 1,000
1,000 Metropolitan Government Nashville &
Davidson County, Industrial Development
Board, MFHR, (Chimneytop II Project),
(LOC: Bank of America),
1.810% due 09/01/2006+ 1,000
----------
2,000
----------
Texas - 3.6%
200 Ames, Higher Education Facilities
Corporation, Private Schools Revenue,
(Saint Gabriel's Catholic School Project),
(LOC: Allied Irish Bank PLC),
1.840% due 12/01/2033+ 200
See Notes to Financial Statements. 99
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
Texas - (continued)
$ 200 Austin, Electric Utility System Revenue,
(Travis and Williamson Counties), Series A,
(AMBAC Insured),
5.000% due 11/15/2004 $ 200
310 Floresville, Independent School District,
UTGO, (PSF-GTD Insured), (Pre-refunded
to 02/01/2005 @ $100),
6.200% due 02/01/2008 314
150 Fort Worth, LTGO, (Tarrant and Denton
Counties), Series A, (FSA Insured),
6.000% due 03/01/2005 152
100 Richmond, LTGO, (AMBAC Insured),
5.500% due 03/01/2005 101
----------
967
----------
Utah - 2.3%
620 Salt Lake County, Training Facilities
Revenue, (Community Foundation for the
Disabled, Inc. Project), (LOC: Wells Fargo
Bank),
1.890% due 08/01/2030+ 620
----------
Virginia - 1.3%
350 Norfolk Industrial Development Authority,
IDR, (Children's Hospital of the King's
Daughters Inc. Project), (LOC: Wachovia
Bank),
1.770% due 06/01/2020+ 350
----------
Washington - 13.0%
1,000 King County, Economic Enterprise
Corporation Revenue, (Puget Sound Blood
Center Project), (LOC: U.S. Bank),
1.820% due 04/01/2023+ 1,000
970 Seattle, Low Income Housing Assistance
Authority, Health Care Revenue, (Bayview
Manor Homes Project), Series B,
(LOC: U.S. Bank),
1.820% due 05/01/2019+ 970
Washington State Health Care Facilities
Authority, Health Care Revenue:
500 (Empire Health Services), (LOC: U.S.
Bank),
1.770% due 11/01/2023+ 500
275 (Virginia Mason Medical Center), Series A,
(MBIA Insured),
6.000% due 08/15/2005 284
335 Washington State Housing Finance
Commission, Elderly Housing Revenue,
(Riverview Retirement Project),
(LOC: U.S. Bank),
1.820% due 07/01/2022+ 335
190 Washington State Public Power Supply
System, Nuclear Project No. 3 Revenue,
Series B, (FGIC Insured),
Zero coupon due 07/01/2005 188
245 Yakima, LTGO, (AMBAC Insured),
(Pre-refunded to 12/01/2004 @ $100),
5.150% due 12/01/2010 246
----------
3,523
----------
Principal
Amount Value
(000s) (000s)
--------- ------
Wisconsin - 0.9%
$ 250 Racine, UTGO, Series A, (Pre-refunded to
12/01/2004 @ $100),
4.750% due 12/01/2006 $ 251
----------
Total Municipal Bonds and Notes
(Cost $27,121) 27,121
----------
Shares
------
INVESTMENT COMPANY SECURITIES - 0.1%
28,965 Dreyfus Tax-Exempt Cash
Management Fund 29
1,000 Wells Fargo Tax Free Institutional
Money Market Fund 1
----------
Total Investment Company Securities
(Cost $30) 30
----------
TOTAL INVESTMENTS (Cost $27,151*) 100.1% 27,151
OTHER ASSETS AND LIABILITIES (Net) (0.1) (29)
----- ----------
NET ASSETS 100.0% $ 27,122
===== ==========
<FN>
- --------------------
* Aggregate cost for federal tax purposes.
+ Variable rate securities payable upon demand with not more than
five business days notice, and secured by bank letters of credit
or guarantees by certain corporations. The interest rate shown
reflects the rate in effect at October 31, 2004.
++ Security is a private placement.
Tax-Exempt Money Market Fund had the following insurance concentrations greater
than 10% at October 31, 2004 (as a percentage of net assets) (unaudited):
FGIC 10.4%
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
FHLMC -- Federal Home Loan Mortgage Corporation
FSA -- Financial Security Assurance
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
LTGO -- Limited Tax General Obligation
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PSF-GTD -- Permanent School Fund Guaranteed
TCRS -- Transferable Custodial Receipts
UTGO -- Unlimited Tax General Obligation
- ----------------------------------------------------------------------------
100 See Notes to Financial Statements.
Portfolio of Investments
- ------------------------------------------------------------------------------
CALIFORNIA MONEY FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - 95.1%
California - 94.2%
ABAG Financing Authority For Nonprofit
Corporation, Revenue Bonds:
$ 1,000 (Hamlin School Project), Series A,
(LOC: BNP Paribas SA),
1.800% due 08/01/2032+ $ 1,000
1,000 (Point Loma Nazarene University Project),
(LOC: Allied Irish Bank PLC),
1.850% due 10/01/2033+ 1,000
1,000 (Public Policy Institute of California
Project), Series A, (LOC: California State
Teachers Retirement System),
1.800% due 11/01/2031+ 1,000
Alameda County, IDR, AMT:
1,000 (Bema Electronic Manufacturing, Inc.
Project), Series A, (LOC: Comerica Bank),
1.860% due 04/01/2034+ 1,000
700 (Heat and Control Inc. Project), Series A,
(LOC: Wells Fargo Bank),
1.850% due 11/01/2025+ 700
1,000 (P.J.'s Lumber, Inc. Project),
(LOC: Comerica Bank),
1.860% due 12/01/2033+ 1,000
200 Antelope Valley Healthcare District,
Hospital & Nursing Home Revenue,
Series A, (FSA Insured),
5.000% due 01/01/2005 201
995 California State Economic Development
Financing Authority, IDR, (Wesflex Pipe
Manufacturing Project), AMT,
(LOC: Wells Fargo Bank),
1.850% due 04/01/2018+ 995
California State, UTGO:
800 Series A-3, (LOC: WestLB AG &
JPMorgan Chase Bank),
1.700% due 05/01/2033+ 800
1,200 Series C-1, (LOC: Bank of America),
1.760% due 05/01/2033+ 1,200
900 California Statewide Communities
Development Authority, College &
University Revenue, (Biola University
Project), Series A, (LOC: Allied Irish
Bank PLC),
1.850% due 10/01/2032+ 900
500 California Statewide Communities
Development Authority, Limited
Obligation Revenue, (The Painted Turtle
Gang Camp Foundation), (LOC: Allied
Irish Bank PLC),
1.800% due 04/01/2033+ 500
125 Compton, Unified School District, UTGO,
(Election of 2002), Series B, (MBIA
Insured),
4.000% due 06/01/2005 127
250 Contra Costa Transportation Authority, Sales
Tax Revenue, Series A, (FGIC Insured),
6.000% due 03/01/2005 254
Principal
Amount Value
(000s) (000s)
--------- ------
$ 125 Desert Sands, Unified School District, COP,
(Measure O Project), Series F, (MBIA
Insured),
4.000% due 03/01/2005 $ 126
235 Enterprise, School District, UTGO, Series A,
(MBIA Insured),
3.000% due 03/01/2005 236
220 Garden Grove, Public Financing Authority,
COP, (Water Services Capital
Improvement Project), (FSA Insured),
2.000% due 12/15/2004 220
600 Hesperia, Public Financing Authority,
Revenue Bonds, (1993 Street
Improvement Project), (LOC: Bank of
America),
1.720% due 10/01/2023+ 600
200 Intermodal Container Transfer Facility, Joint
Powers Authority, Revenue Bonds,
(Refunding Project), Series A, (AMBAC
Insured),
4.250% due 11/01/2004 200
900 Irvine Ranch, Water District, UTGO,
(Improvement District No. 105, 140, 240
& 250), (LOC: State Street Bank & Trust),
1.700% due 01/01/2021+ 900
500 Los Angeles, Community Redevelopment
Agency, MFHR, (Views at 270 Project),
Series A, AMT, (LOC: Citibank NA),
1.830% due 09/01/2019+ 500
1,000 Los Angeles, Wastewater System Revenue,
(Multimodal Project), Series C, (FGIC
Insured),
1.150% due 12/01/2031+ 1,000
150 Mountain View Los Altos, Unified High
School District, UTGO, Series B, (FSA
Insured),
2.000% due 05/01/2005 151
1,000 Novato, MFHR, (Nova-Ro III Senior
Housing Project), (LOC: BNP Paribas SA),
1.770% due 10/01/2032+ 1,000
500 Orange County, Local Transportation
Authority, Sales Tax Revenue, (Second
Senior-Measure M), (FGIC Insured),
5.800% due 02/15/2005 507
800 Pasadena, COP, (Rose Bowl Improvements
Project), (LOC: California State Teachers
Retirement System),
1.770% due 12/01/2016+ 800
230 Rancho Cucamonga, Redevelopment Agency,
Tax Allocation Revenue, (Rancho
Redevelopment Project), (AMBAC Insured),
2.000% due 09/01/2005 231
1,000 San Francisco City & County
Redevelopment Agency, Economic
Development Revenue, (Community
Facilities District No. 4), (LOC: Bank of
America),
1.800% due 08/01/2031+ 1,000
See Notes to Financial Statements. 101
Portfolio of Investments (continued)
- ------------------------------------------------------------------------------
CALIFORNIA MONEY FUND
October 31, 2004
-------------------------------------------------------------------------
Principal
Amount Value
(000s) (000s)
--------- ------
MUNICIPAL BONDS AND NOTES - (continued)
California - (continued)
$ 185 Santa Clara County Financing Authority,
Lease Revenue, (VMC Facility
Replacement Project), Series A,
(AMBAC Insured),
7.500% due 11/15/2004 $ 185
570 Vallejo, Public Financing Authority, Revenue
Bonds, (Glen Cove Project), Series A,
(AMBAC Insured),
1.500% due 09/02/2005 570
----------
18,903
----------
Puerto Rico - 0.9%
180 Puerto Rico Commonwealth, Electric Power
Authority, Electric Power Revenue, Series
W, (MBIA Insured),
6.500% due 07/01/2005 186
----------
Total Municipal Bonds and Notes
(Cost $19,089) 19,089
----------
Shares
------
INVESTMENT COMPANY SECURITIES - 2.0%
10,306 Dreyfus Basic California Municipal
Money Market Fund 10
380,000 Wells Fargo California Tax-Free
Money Market Fund 380
----------
Total Investment Company Securities
(Cost $390) 390
----------
TOTAL INVESTMENTS (Cost $19,479*) 97.1% 19,479
OTHER ASSETS AND LIABILITIES (Net) 2.9 587
----- ----------
NET ASSETS 100.0% $ 20,066
===== ==========
<FN>
- --------------------
* Aggregate cost for federal tax purposes.
+ Variable rate securities payable upon demand with not more than
five business days notice, and secured by bank letters of credit
or guarantees by certain corporations. The interest rate shown
reflects the rate in effect at October 31, 2004.
- ----------------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificate of Participation
FGIC -- Federal Guaranty Insurance Corporation
FSA -- Financial Security Assurance
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
UTGO -- Unlimited Tax General Obligation
- ----------------------------------------------------------------------------
102 See Notes to Financial Statements.
Statements of Assets and Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
October 31, 2004
(In thousands)
------------------------------------------------------------------------------------------------------------------------------
Equity Growth & West Coast Mid Cap Small Cap
REIT Income Income Equity Stock Growth Value
Fund Fund Fund Fund Fund Fund Fund
--------- ----------- ----------- ----------- --------- ----------- ---------
ASSETS:
Investments, at value:
Securities $ 337,326 $ 1,528,935 $ 2,072,999 $ 1,290,637 $ 700,656 $ 1,527,998 $ 270,478
Investments held as collateral
for securities loaned -- 96,996 103,919 55,999 58,773 66,413 34,910
--------- ----------- ----------- ----------- --------- ----------- ---------
Total Investments (a) 337,326 1,625,931 2,176,918 1,346,636 759,429 1,594,411 305,388
Cash 1 561 --* --* -- 73 --*
Dividends and/or interest
receivable 601 2,340 2,320 344 530 709 336
Receivable for Fund shares sold 162 6,516 2,084 2,313 1,021 1,374 149
Receivable for investment
securities sold -- -- 6,728 3,523 1,061 10,660 2,301
Prepaid expenses 1 7 14 8 4 7 --
--------- ----------- ----------- ----------- --------- ----------- ---------
Total Assets 338,091 1,635,355 2,188,064 1,352,824 762,045 1,607,234 308,174
--------- ----------- ----------- ----------- --------- ----------- ---------
LIABILITIES:
Payable upon return of
securities loaned -- 96,996 103,919 55,999 58,773 66,413 34,910
Unrealized depreciation of forward
foreign currency contracts -- -- -- -- -- 58 --
Payable for Fund shares
redeemed 40 802 601 971 62 515 4
Payable for investment securities
purchased 1,750 10,727 7,215 7,140 3,128 19,241 663
Investment advisory fee payable 223 660 898 561 436 968 194
Shareholder servicing and
distribution fees payable 10 238 206 255 31 122 1
Transfer agent fees payable 2 34 55 55 7 67 --*
Due to custodian -- -- -- -- 2,229 -- --
Accrued printing and postage
expenses 9 163 224 235 35 295 1
Accrued legal and audit fees 30 40 45 38 36 40 33
Accrued expenses and other
payables 15 80 87 48 38 85 35
--------- ----------- ----------- ----------- --------- ----------- ---------
Total Liabilities 2,079 109,740 113,250 65,302 64,775 87,804 35,841
--------- ----------- ----------- ----------- --------- ----------- ---------
NET ASSETS $ 336,012 $ 1,525,615 $ 2,074,814 $ 1,287,522 $ 697,270 $1,519,430 $ 272,333
========= =========== =========== =========== ========= ========== =========
(a) Investments, at cost $ 252,477 $ 1,383,413 $ 1,814,529 $ 1,040,754 $ 636,280 $1,499,331 $ 286,707
========= =========== =========== =========== ========= ========== =========
<FN>
- --------------------
* Amount represents less than $500.
See Notes to Financial Statements. 103
Statements of Assets and Liabilities (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
October 31, 2004
(In thousands)
------------------------------------------------------------------------------------------------------------------------------
U.S.
Small Cap International Short Term Government High
Growth Growth Income Securities Income Yield
Fund Fund Fund Fund Fund Fund
--------- ------------- ----------- ----------- ----------- ---------
ASSETS:
Investments, at value:
Securities $ 344,015 $ 588,468 $ 271,040 $ 1,552,666 $ 1,140,139 $ 711,444
Investments held as collateral for
securities loaned 28,827 51,885 -- -- -- --
--------- --------- --------- ----------- ----------- ---------
Total Investments (a) 372,842 640,353 271,040 1,552,666 1,140,139 711,444
Cash --* --* 1 1 -- --
Unrealized appreciation of forward
foreign currency contracts -- 14 -- -- -- --
Dividends and/or interest receivable 35 1,036 3,126 7,776 13,207 10,615
Receivable for Fund shares sold 710 673 350 769 828 3,845
Receivable for investment securities sold 1,152 1,193 --* --* 757 647
Prepaid expenses 4 3 2 9 9 5
--------- --------- --------- ----------- ----------- ---------
Total Assets 374,743 643,272 274,519 1,561,221 1,154,940 726,556
--------- --------- --------- ----------- ----------- ---------
LIABILITIES:
Payable upon return of securities loaned 28,827 51,885 -- -- -- --
Unrealized depreciation of forward
foreign currency contracts -- 561 -- -- -- --
Payable for Fund shares redeemed 132 42 384 759 1,104 737
Payable for investment securities purchased 1,808 7,329 -- -- 6,262 --
Investment advisory fee payable 241 886 112 655 481 326
Shareholder servicing and distribution
fees payable 30 11 55 169 171 111
Transfer agent fees payable 27 8 -- 28 24 8
Variation margin -- -- 22 -- -- --
Dividends payable -- -- 68 218 472 582
Due to custodian -- -- -- -- 195 50
Accrued printing and postage expenses 83 35 25 80 90 38
Accrued legal and audit fees 34 36 32 39 38 37
Accrued expenses and other payables 8 69 10 94 37 28
--------- --------- --------- ----------- ----------- ---------
Total Liabilities 31,190 60,862 708 2,042 8,874 1,917
--------- --------- --------- ----------- ----------- ---------
NET ASSETS $ 343,553 $ 582,410 $ 273,811 $ 1,559,179 $ 1,146,066 $ 724,639
========= ========= ========= =========== =========== =========
(a) Investments, at cost $ 406,642 $ 566,515 $ 266,682 $ 1,537,336 $ 1,091,470 $ 655,148
========= ========= ========= =========== =========== =========
<FN>
- --------------------
* Amount represents less than $500.
104 See Notes to Financial Statements.
Statements of Assets and Liabilities (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
October 31, 2004
(In thousands)
------------------------------------------------------------------------------------------------------------------------------
California
Insured Tax-Exempt
Tax-Exempt California Intermediate Money Money California
Bond Municipal Municipal Market Market Money
Fund Fund Fund Fund Fund Fund
---------- ---------- ------------ --------- ---------- ----------
ASSETS:
Investments, at value (a) $ 220,838 $ 432,717 $ 145,724 $ 680,690 $ 27,151 $ 19,479
Cash 177 45 193 1 --* --
Dividends and/or interest receivable 3,309 5,654 1,707 3,059 117 68
Receivable for Fund shares sold 266 287 108 802 --* 62
Receivable for investment securities sold -- 1,582 -- -- -- 500
Prepaid expenses 2 4 1 6 --* --*
--------- --------- --------- --------- -------- --------
Total Assets 224,592 440,289 147,733 684,558 27,268 20,109
--------- --------- --------- --------- -------- --------
LIABILITIES:
Payable for Fund shares redeemed 250 1,726 312 909 102 6
Payable for when-issued securities purchased -- -- 1,101 -- -- --
Payable for investment securities purchased -- 4,105 -- -- -- --
Investment advisory fee payable 95 184 62 261 11 3
Shareholder servicing and distribution
fees payable 72 220 82 53 -- --
Transfer agent fees payable 8 13 4 34 1 2
Variation margin 19 -- -- -- -- --
Dividends payable 267 514 95 13 --* --*
Accrued printing and postage expenses 41 33 4 221 2 3
Accrued legal and audit fees 31 32 30 34 28 28
Accrued expenses and other payables 24 18 6 18 2 1
--------- --------- --------- --------- -------- --------
Total Liabilities 807 6,845 1,696 1,543 146 43
--------- --------- --------- --------- -------- --------
NET ASSETS $ 223,785 $ 433,444 $ 146,037 $ 683,015 $ 27,122 $ 20,066
========= ========= ========= ========= ======== ========
(a) Investments, at cost $ 201,028 $ 406,890 $ 140,474 $ 680,690 $ 27,151 $ 19,479
========= ========= ========= ========= ======== ========
<FN>
- --------------------
* Amount represents less than $500.
See Notes to Financial Statements. 105
Statements of Assets and Liabilities (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
October 31, 2004
(In thousands)
------------------------------------------------------------------------------------------------------------------------------
Equity Growth & West Coast Mid Cap Small Cap
REIT Income Income Equity Stock Growth Value
Fund Fund Fund Fund Fund Fund Fund
--------- ---------- ---------- ---------- --------- ---------- ---------
NET ASSETS consist of:
Undistributed net investment
income $ 1,069 $ 1,513 $ 16,668 $ 1,509 $ 1,624 $ 58 $ 1,739
Accumulated net realized
gain/(loss) on investment
transactions 7,209 (5,503) (98,524) 15,108 21,460 (386,762) 945
Net unrealized appreciation
of investments 84,849 242,518 362,389 305,882 123,149 95,022 18,682
Paid-in capital 242,885 1,287,087 1,794,281 965,023 551,037 1,811,112 250,967
--------- ---------- ---------- ---------- --------- ---------- ---------
Total Net Assets $ 336,012 $1,525,615 $2,074,814 $1,287,522 $ 697,270 $1,519,430 $ 272,333
========= ========== ========== ========== ========= ========== =========
NET ASSETS:
Class A Shares $ 9,376 $ 438,776 $ 582,866 $ 621,924 $ 59,491 $ 124,755 $ 2,978
========= ========== ========== ========== ========= ========== =========
Class B Shares $ 6,060 $ 144,144 $ 95,528 $ 141,134 $ 19,958 $ 110,794 $ 631
========= ========== ========== ========== ========= ========== =========
Class C Shares $ 3,672 $ 33,770 $ 1,537 $ 9,000 $ 1,769 $ 1,981 $ 414
========= ========== ========== ========== ========= ========== =========
Class I Shares $ 316,904 $ 908,925 $1,394,883 $ 515,464 $ 616,052 $1,281,900 $ 268,310
========= ========== ========== ========== ========= ========== =========
SHARES OUTSTANDING:
Class A Shares 600 24,664 24,895 17,746 3,487 8,642 276
========= ========== ========== ========== ========= ========== =========
Class B Shares 389 8,156 4,251 4,484 1,222 8,500 59
========= ========== ========== ========== ========= ========== =========
Class C Shares 236 1,922 69 285 108 151 38
========= ========== ========== ========== ========= ========== =========
Class I Shares 20,253 51,103 59,310 14,563 35,702 85,665 24,772
========= ========== ========== ========== ========= ========== =========
CLASS A SHARES:**
Net asset value per share of
beneficial interest
outstanding * $ 15.62 $ 17.79 $ 23.41 $ 35.04 $ 17.06 $ 14.44 $ 10.81
========= ========== ========== ========== ========= ========== =========
Maximum sales charge 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50%
========= ========== ========== ========== ========= ========== =========
Maximum offering price per
share of beneficial interest
outstanding $ 16.53 $ 18.83 $ 24.77 $ 37.08 $ 18.05 $ 15.28 $ 11.44
========= ========== ========== ========== ========= ========== =========
CLASS B SHARES:**
Net asset value and offering price
per share of beneficial interest
outstanding * $ 15.58 $ 17.67 $ 22.47 $ 31.48 $ 16.33 $ 13.03 $ 10.74
========= ========== ========== ========== ========= ========== =========
CLASS C SHARES:**
Net asset value and offering price
per share of beneficial interest
outstanding * $ 15.58 $ 17.57 $ 22.22 $ 31.56 $ 16.36 $ 13.13 $ 10.76
========= ========== ========== ========== ========= ========== =========
CLASS I SHARES:**
Net asset value, offering and
redemption price per share of
beneficial interest outstanding $ 15.65 $ 17.79 $ 23.52 $ 35.39 $ 17.26 $ 14.96 $ 10.83
========= ========== ========== ========== ========= ========== =========
<FN>
- --------------------
* Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge and/or applicable redemption
fees for Class A Shares of the International Growth Fund.
** Net asset value and maximum offering price are not shown in thousands.
106 See Notes to Financial Statements.
Statements of Assets and Liabilities (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
October 31, 2004
(In thousands)
------------------------------------------------------------------------------------------------------------------------------
U.S.
Small Cap International Short Term Government High
Growth Growth Income Securities Income Yield
Fund Fund Fund Fund Fund Fund
--------- ------------- ---------- ---------- ---------- ---------
NET ASSETS consist of:
Undistributed net investment income $ -- $ 4,599 $ 78 $ 292 $ 485 $ 981
Accumulated net realized gain/(loss) on
investment transactions (19,430) (36,957) (4,601) (18,451) (14,917) (39,960)
Net unrealized appreciation/(depreciation)
of investments (33,800) 73,333 4,249 15,330 48,669 56,296
Paid-in capital 396,783 541,435 274,085 1,562,008 1,111,829 707,322
--------- --------- --------- ---------- ---------- ---------
Total Net Assets $ 343,553 $ 582,410 $ 273,811 $1,559,179 $1,146,066 $ 724,639
========= ========= ========= ========== ========== =========
NET ASSETS:
Class A Shares $ 92,919 $ 38,864 $ 54,082 $ 134,896 $ 147,695 $ 85,190
========= ========= ========= ========== ========== =========
Class B Shares $ 12,181 $ 3,630 $ 31,812 $ 157,900 $ 152,065 $ 80,036
========= ========= ========= ========== ========== =========
Class C Shares $ 871 $ 445 $ 18,970 $ 6,279 $ 11,580 $ 33,318
========= ========= ========= ========== ========== =========
Class I Shares $ 237,582 $ 539,471 $ 168,947 $1,260,104 $ 834,726 $ 526,095
========= ========= ========= ========== ========== =========
SHARES OUTSTANDING:
Class A Shares 7,147 4,220 22,768 12,399 15,614 10,288
========= ========= ========= ========== ========== =========
Class B Shares 1,063 412 13,390 14,523 16,027 9,621
========= ========= ========= ========== ========== =========
Class C Shares 75 51 7,982 578 1,221 4,006
========= ========= ========= ========== ========== =========
Class I Shares 17,742 58,231 71,101 115,791 88,072 63,631
========= ========= ========= ========== ========== =========
CLASS A SHARES:**
Net asset value per share of beneficial interest
outstanding * $ 13.00 $ 9.21 $ 2.38 $ 10.88 $ 9.46 $ 8.28
========= ========= ========= ========== ========== =========
Maximum sales charge 5.50% 5.50% 3.50% 4.50% 4.50% 4.50%
========= ========= ========= ========== ========== =========
Maximum offering price per share of beneficial
interest outstanding $ 13.76 $ 9.75 $ 2.47 $ 11.39 $ 9.91 $ 8.67
========= ========= ========= ========== ========== =========
CLASS B SHARES:**
Net asset value and offering price per share of
beneficial interest outstanding * $ 11.46 $ 8.80 $ 2.38 $ 10.87 $ 9.49 $ 8.32
========= ========= ========= ========== ========== =========
CLASS C SHARES:**
Net asset value and offering price per share of
beneficial interest outstanding * $ 11.59 $ 8.75 $ 2.38 $ 10.86 $ 9.49 $ 8.32
========= ========= ========= ========== ========== =========
CLASS I SHARES:**
Net asset value, offering and redemption price per
share of beneficial interest outstanding $ 13.39 $ 9.26 $ 2.38 $ 10.88 $ 9.48 $ 8.27
========= ========= ========= ========== ========== =========
<FN>
- --------------------
* Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge and/or applicable redemption
fees for Class A Shares of the International Growth Fund.
** Net asset value and maximum offering price are not shown in thousands.
See Notes to Financial Statements. 107
Statements of Assets and Liabilities (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
October 31, 2004
(In thousands)
------------------------------------------------------------------------------------------------------------------------------
California
Insured Tax-Exempt
Tax-Exempt California Intermediate Money Money California
Bond Municipal Municipal Market Market Money
Fund Fund Fund Fund Fund Fund
---------- ---------- ------------ --------- ---------- ----------
NET ASSETS consist of:
Undistributed net investment income $ 207 $ 134 $ 61 $ -- $ -- $ --
Accumulated net realized gain/(loss) on
investment transactions 2,489 1,184 64 (45) --* --*
Net unrealized appreciation of investments 19,755 25,827 5,250 -- -- --
Paid-in capital 201,334 406,299 140,662 683,060 27,122 20,066
--------- --------- --------- --------- -------- --------
Total Net Assets $ 223,785 $ 433,444 $ 146,037 $ 683,015 $ 27,122 $ 20,066
========= ========= ========= ========= ======== ========
NET ASSETS:
Class A Shares $ 184,711 $ 232,239 $ 65,772 $ 530,052 $ 27,122 $ 20,066
========= ========= ========= ========= ======== ========
Class B Shares $ 35,433 $ 195,930 $ 71,502 $ 52,764
========= ========= ========= =========
Class C Shares $ 3,641 $ 5,275 $ 8,763 $ 8,480
========= ========= ========= =========
Class I Shares $ 91,719
=========
SHARES OUTSTANDING:
Class A Shares 23,227 20,343 5,904 530,072 27,122 20,112
========= ========= ========= ========= ======== ========
Class B Shares 4,455 17,161 6,419 52,761
========= ========= ========= =========
Class C Shares 458 462 786 8,480
========= ========= ========= =========
Class I Shares 91,732
=========
CLASS A SHARES:***
Net asset value per share of beneficial
interest outstanding ** $ 7.95 $ 11.42 $ 11.14 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ======== ========
Maximum sales charge 4.50% 4.50% 4.50% -- -- --
========= ========= =========
Maximum offering price per share of beneficial
interest outstanding $ 8.32 $ 11.96 $ 11.66 -- -- --
========= ========= =========
CLASS B SHARES:***
Net asset value and offering price per
share of beneficial interest outstanding ** $ 7.95 $ 11.42 $ 11.14 $ 1.00
========= ========= ========= =========
CLASS C SHARES:***
Net asset value and offering price per
share of beneficial interest outstanding ** $ 7.95 $ 11.42 $ 11.14 $ 1.00
========= ========= ========= =========
CLASS I SHARES:***
Net asset value, offering and redemption price per
share of beneficial interest outstanding $ 1.00
=========
<FN>
- --------------------
* Amount represents less than $500.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge and/or applicable redemption
fees for Class A Shares of the International Growth Fund.
*** Net asset value and maximum offering price are not shown in thousands.
108 See Notes to Financial Statements.
Statements of Operations
- -------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2004
(In thousands)
--------------------------------------------------------------------------------------------------------------
Equity Growth & West Coast Mid Cap Small Cap
REIT Income Income Equity Stock Growth Value
Fund Fund Fund Fund Fund Fund Fund**
------- -------- -------- ---------- ------- ------- ---------
INVESTMENT INCOME:
Dividends $10,770 $ 27,518 $ 33,837 $12,315 $ 6,779 $11,810 $ 3,112
Interest 214 4,698 1,308 665 596 910 191
Foreign withholding taxes -- (198) (266) -- (19) (174) (193)
Securities lending income -- 721 234 101 45 178 98
------- -------- -------- ------- ------- ------- -------
Total investment income 10,984 32,739 35,113 13,081 7,401 12,724 3,208
------- -------- -------- ------- ------- ------- -------
EXPENSES:
Investment advisory fee 2,117 6,494 9,882 6,265 4,419 9,672 1,300
Custodian fees 10 39 57 47 22 108 15
Legal and audit fees 28 62 79 61 47 63 34
Trustees' fees 6 30 49 30 14 31 3
Registration and filing fees 57 118 87 79 66 77 82
Printing and postage expenses 18 366 496 558 83 653 4
Other 39 161 249 149 80 162 21
Shareholder servicing and
distribution fees:
Class A Shares 14 868 1,467 1,464 128 308 3
Class B Shares 42 1,229 1,088 1,330 192 1,223 2
Class C Shares 26 184 13 65 12 14 2
Transfer agent fees:
Class A Shares 12 248 450 462 42 416 2
Class B Shares 9 268 353 362 61 606 1
Class C Shares 3 21 3 12 3 4 --*
------- -------- -------- ------- ------- ------- -------
Total expenses 2,381 10,088 14,273 10,884 5,169 13,337 1,469
Fees reduced by custodian credits --* (3) (1) (1) (1) (7) (4)
------- -------- -------- ------- ------- ------- -------
Net expenses 2,381 10,085 14,272 10,883 5,168 13,330 1,465
------- -------- -------- ------- ------- ------- -------
NET INVESTMENT
INCOME/(LOSS) 8,603 22,654 20,841 2,198 2,233 (606) 1,743
------- -------- -------- ------- ------- ------- -------
NET REALIZED AND
UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain/(loss) on:
Security transactions 5,453 (3,204) (17,060) 28,703 24,345 40,147 943
Forward foreign currency
contracts and foreign currency
transactions -- -- -- -- -- (230) (2)
------- -------- -------- ------- ------- ------- -------
Net realized gain/(loss) on
investment transactions 5,453 (3,204) (17,060) 28,703 24,345 39,917 941
------- -------- -------- ------- ------- ------- -------
Capital gain distributions
received 32 -- -- -- -- -- --
------- -------- -------- ------- ------- ------- -------
Net change in unrealized
appreciation/depreciation of:
Securities 55,284 164,274 153,422 65,518 32,323 14,217 18,681
Forward foreign currency
contracts -- -- -- -- -- 1 --
Foreign currency, futures
contracts and other assets and
liabilities -- -- -- -- -- --* 1
------- -------- -------- ------- ------- ------- -------
Net change in unrealized
appreciation/depreciation of
investment transactions 55,284 164,274 153,422 65,518 32,323 14,218 18,682
------- -------- -------- ------- ------- ------- -------
Net realized and unrealized gain
on investments 60,769 161,070 136,362 94,221 56,668 54,135 19,623
------- -------- -------- ------- ------- ------- -------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $69,372 $183,724 $157,203 $96,419 $58,901 $53,529 $21,366
======= ======== ======== ======= ======= ======= =======
<FN>
- --------
* Amount represents less than $500.
** The Small Cap Value Fund commenced operations on March 1, 2004.
See Notes to Financial Statements. 109
Statements of Operations (continued)
- ---------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2004
(In thousands)
----------------------------------------------------------------------------------------------------------------
U.S.
Small Cap International Short Term Government High
Growth Growth Income Securities Income Yield
Fund Fund Fund Fund Fund Fund
--------- ------------- ---------- ---------- ------- -------
INVESTMENT INCOME:
Dividends $ 1,250 $10,938 $ -- $ -- $ 325 $ 1,841
Interest 26 277 10,781 62,674 64,504 51,905
Foreign withholding taxes (4) (1,158) -- -- -- --
Securities lending income 335 373 -- -- -- --
-------- ------- ------- ------- ------- -------
Total investment income 1,607 10,430 10,781 62,674 64,829 53,746
-------- ------- ------- ------- ------- -------
EXPENSES:
Investment advisory fee 3,033 4,096 1,298 6,850 5,564 3,656
Custodian fees 28 373 13 62 40 34
Legal and audit fees 43 45 38 64 98 91
Trustees' fees 10 12 7 34 29 17
Registration and filing fees 34 51 45 96 59 62
Printing and postage expenses 188 75 74 241 201 91
Other 54 102 56 212 169 100
Shareholder servicing and distribution fees:
Class A Shares 238 85 151 383 377 160
Class B Shares 164 41 360 1,949 1,719 821
Class C Shares 8 3 177 91 131 292
Transfer agent fees:
Class A Shares 243 84 58 192 177 48
Class B Shares 97 26 45 201 158 68
Class C Shares 3 1 14 8 13 22
-------- ------- ------- ------- ------- -------
Total expenses 4,143 4,994 2,336 10,383 8,735 5,462
Fees waived by the transfer agent -- -- (117) -- -- --
Fees reduced by custodian credits (1) --* --* (8) (1) (4)
-------- ------- ------- ------- ------- -------
Net expenses 4,142 4,994 2,219 10,375 8,734 5,458
-------- ------- ------- ------- ------- -------
NET INVESTMENT INCOME/(LOSS) (2,535) 5,436 8,562 52,299 56,095 48,288
-------- ------- ------- ------- ------- -------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on:
Security transactions 49,045 4,783 365 171 1,713 17,497
Forward foreign currency
contracts and foreign currency
transactions -- (3) -- -- -- --
Futures contracts -- -- (580) -- -- --
-------- ------- ------- ------- ------- -------
Net realized gain/(loss) on
investment transactions 49,045 4,780 (215) 171 1,713 17,497
-------- ------- ------- ------- ------- -------
Net change in unrealized
appreciation/depreciation of:
Securities (45,470) 36,601 (1,627) 7,630 14,882 16,305
Forward foreign currency
contracts -- (622) -- -- -- --
Foreign currency, futures
contracts and other assets and
liabilities -- 32 120 -- -- --
-------- ------- ------- ------- ------- -------
Net change in unrealized
appreciation/depreciation of
investment transactions (45,470) 36,011 (1,507) 7,630 14,882 16,305
-------- ------- ------- ------- ------- -------
Net realized and unrealized gain
on investments 3,575 40,791 (1,722) 7,801 16,595 33,802
-------- ------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,040 $46,227 $ 6,840 $60,100 $72,690 $82,090
======== ======= ======= ======= ======= =======
<FN>
- --------
* Amount represents less than $500.
110 See Notes to Financial Statements.
Statements of Operations (continued)
- ---------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2004
(In thousands)
----------------------------------------------------------------------------------------------------------------
California
Insured Tax-Exempt
Tax-Exempt California Intermediate Money Money California
Bond Municipal Municipal Market Market Money
Fund Fund Fund Fund Fund Fund
---------- ---------- ------------ ------- ---------- ----------
INVESTMENT INCOME:
Dividends $ -- $ -- $ -- $ -- $ 5 $ 3
Interest 12,328 24,361 6,288 10,298 311 261
------- ------- ------- ------- ---- ----
Total investment income 12,328 24,361 6,288 10,298 316 264
------- ------- ------- ------- ---- ----
EXPENSES:
Investment advisory fee 1,201 2,358 812 3,575 121 104
Custodian fees 11 18 8 27 2 2
Legal and audit fees 35 40 34 47 29 29
Trustees' fees 7 13 4 22 1 1
Registration and filing fees 64 27 26 64 17 11
Printing and postage expenses 82 85 17 309 10 12
Other 74 100 41 122 13 9
Shareholder servicing and distribution fees:
Class A Shares 491 602 179 -- -- --
Class B Shares 401 2,245 815 614 -- --
Class C Shares 41 64 94 61 -- --
Transfer agent fees:
Class A Shares 85 87 18 328 18 21
Class B Shares 16 71 29 97 -- --
Class C Shares 2 2 3 7 -- --
------- ------- ------- ------- ---- ----
Total expenses 2,510 5,712 2,080 5,273 211 189
Fees waived by the investment advisor or
the distributor -- -- -- (290) -- (55)
Fees reduced by custodian credits (1) (1) (1) (2) --* --*
------- ------- ------- ------- ---- ----
Net expenses 2,509 5,711 2,079 4,981 211 134
------- ------- ------- ------- ---- ----
NET INVESTMENT INCOME 9,819 18,650 4,209 5,317 105 130
------- ------- ------- ------- ---- ----
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain/(loss) on:
Security transactions 3,325 1,691 557 1 -- --
Forward foreign currency
contracts and foreign currency
transactions -- -- -- -- -- --
Futures contracts (716) (27) (1,133) -- -- --
------- ------- ------- ------- ---- ----
Net realized gain/(loss) on
investment transactions 2,609 1,664 (576) 1 -- --
------- ------- ------- ------- ---- ----
Net change in unrealized
appreciation/depreciation of:
Securities (453) 4,795 789 -- -- --
Forward foreign currency
contracts -- -- -- -- -- --
Foreign currency, futures
contracts and other
assets and liabilities 148 626 651 -- -- --
------- ------- ------- ------- ---- ----
Net change in unrealized
appreciation/depreciation of
investment transactions (305) 5,421 1,440 -- -- --
------- ------- ------- ------- ---- ----
Net realized and unrealized gain
on investments 2,304 7,085 864 1 -- --
------- ------- ------- ------- ---- ----
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $12,123 $25,735 $ 5,073 $ 5,318 $105 $130
======= ======= ======= ======= ==== ====
<FN>
- --------
* Amount represents less than $500.
See Notes to Financial Statements. 111
Statements of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2004
(In thousands)
-------------------------------------------------------------------------------------------------------------------
Equity Growth & West Coast Mid Cap Small Cap
REIT Income Income Equity Stock Growth Value
Fund Fund Fund Fund Fund Fund Fund*
-------- ---------- ---------- ---------- -------- ---------- ---------
Net investment income/(loss) $ 8,603 $ 22,654 $ 20,841 $ 2,198 $ 2,233 $ (606) $ 1,743
Net realized gain/(loss) on
investment transactions 5,453 (3,204) (17,060) 28,703 24,345 39,917 941
Capital gain distributions
received 32 -- -- -- -- -- --
Net change in unrealized
appreciation/depreciation of
investments 55,284 164,274 153,422 65,518 32,323 14,218 18,682
-------- ---------- ---------- ---------- -------- ---------- --------
Net increase in net assets
resulting from operations 69,372 183,724 157,203 96,419 58,901 53,529 21,366
Distributions to shareholders from:
Net investment income:
Class A Shares (107) (5,891) (5,188) -- (35) -- --
Class B Shares (51) (973) -- -- -- -- --
Class C Shares (35) (188) (6) -- -- -- --
Class I Shares (6,014) (14,964) (12,393) (437) (1,465) -- --
Net realized gains on investments:
Class A Shares (26) -- -- -- (101) -- --
Class B Shares (21) -- -- -- (46) -- --
Class C Shares (12) -- -- -- (2) -- --
Class I Shares (1,358) -- -- -- (974) -- --
Net increase/(decrease) in net
assets from Fund share
transactions:
Class A Shares 4,940 124,517 (4,444) 50,313 15,975 4,016 2,784
Class B Shares 2,357 23,611 (29,486) 9,013 738 (24,063) 585
Class C Shares 1,774 25,693 640 4,987 1,132 1,389 389
Class I Shares 75,766 282,071 414,954 128,742 196,744 575,664 247,209
-------- ---------- ---------- ---------- -------- ---------- --------
Net increase in net assets 146,585 617,600 521,280 289,037 270,867 610,535 272,333
NET ASSETS:
Beginning of year 189,427 908,015 1,553,534 998,485 426,403 908,895 --
-------- ---------- ---------- ---------- -------- ---------- --------
End of year $336,012 $1,525,615 $2,074,814 $1,287,522 $697,270 $1,519,430 $272,333
======== ========== ========== ========== ======== ========== ========
Undistributed net investment
income at end of year $ 1,069 $ 1,513 $ 16,668 $ 1,509 $ 1,624 $ 58 $ 1,739
======== ========== ========== ========== ======== ========== ========
<FN>
* The Small Cap Value Fund commenced operations on March 1, 2004.
112 See Notes to Financial Statements.
Statements of Changes in Net Assets (continued)
- ------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2004
(In thousands)
-------------------------------------------------------------------------------------------------------------------
U.S.
Small Cap International Short Term Government High
Growth Growth Income Securities Income Yield
Fund Fund Fund Fund Fund Fund
--------- ------------- ---------- ---------- ---------- --------
Net investment income/(loss) $ (2,535) $ 5,436 $ 8,562 $ 52,299 $ 56,095 $ 48,288
Net realized gain/(loss) on
investment transactions 49,045 4,780 (215) 171 1,713 17,497
Net change in unrealized appreciation/
depreciation of investments (45,470) 36,011 (1,507) 7,630 14,882 16,305
--------- -------- -------- ---------- ---------- --------
Net increase in net assets
resulting from operations 1,040 46,227 6,840 60,100 72,690 82,090
Distributions to shareholders from:
Net investment income:
Class A Shares -- (249) (1,965) (6,550) (8,004) (4,750)
Class B Shares -- -- (898) (6,926) (7,906) (5,554)
Class C Shares -- (1) (442) (328) (602) (1,966)
Class I Shares -- (4,799) (5,343) (46,885) (44,097) (38,653)
Net realized gains on investments:
Class A Shares -- -- -- -- -- --
Class B Shares -- -- -- -- -- --
Class C Shares -- -- -- -- -- --
Class I Shares -- -- -- -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares 16,352 9,571 (17,456) (41,621) (7,529) 33,689
Class B Shares (5,355) (757) (12,276) (92,848) (44,155) (7,690)
Class C Shares 551 333 1,258 (7,036) (3,811) 7,493
Class I Shares (105,981) 184,051 40,577 601,231 147,017 78,376
Redemption fees -- 1 -- -- -- --
--------- -------- -------- ---------- ---------- --------
Net increase/(decrease) in net assets (93,393) 234,377 10,295 459,137 103,603 143,035
NET ASSETS:
Beginning of year 436,946 348,033 263,516 1,100,042 1,042,463 581,604
--------- -------- -------- ---------- ---------- --------
End of year $ 343,553 $582,410 $273,811 $1,559,179 $1,146,066 $724,639
========= ======== ======== ========== ========== ========
Undistributed net investment income at
end of year $ -- $ 4,599 $ 78 $ 292 $ 485 $ 981
========= ======== ======== ========== ========== ========
See Notes to Financial Statements. 113
Statements of Changes in Net Assets (continued)
- ------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2004
(In thousands)
-------------------------------------------------------------------------------------------------------------------
California
Insured Tax-Exempt
Tax-Exempt California Intermediate Money Money California
Bond Municipal Municipal Market Market Money
Fund Fund Fund Fund Fund Fund
---------- ---------- ------------ -------- ---------- ----------
Net investment income $ 9,819 $ 18,650 $ 4,209 $ 5,317 $ 105 $ 130
Net realized gain/(loss) on
investment transactions 2,609 1,664 (576) 1 -- --
Net change in unrealized appreciation/
depreciation of investments (305) 5,421 1,440 -- -- --
-------- -------- -------- -------- ------- -------
Net increase in net assets
resulting from operations 12,123 25,735 5,073 5,318 105 130
Distributions to shareholders from:
Net investment income:
Class A Shares (8,313) (10,374) (2,155) (4,740) (105) (130)
Class B Shares (1,394) (8,010) (1,842) (34) -- --
Class C Shares (142) (227) (212) (4) -- --
Class I Shares -- -- -- (539) -- --
Net realized gains on investments:
Class A Shares (2,309) -- (696) -- -- --
Class B Shares (496) -- (847) -- -- --
Class C Shares (50) -- (94) -- -- --
Class I Shares -- -- -- -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares (22,261) (24,046) (8,913) (177,905) (3,040) (4,664)
Class B Shares (9,517) (62,790) (21,746) (26,548) -- --
Class C Shares (682) (2,993) (1,527) 3,434 -- --
Class I Shares -- -- -- 66,839 -- --
-------- -------- -------- -------- ------- -------
Net decrease in net assets (33,041) (82,705) (32,959) (134,179) (3,040) (4,664)
NET ASSETS:
Beginning of year 256,826 516,149 178,996 817,194 30,162 24,730
-------- -------- -------- -------- ------- -------
End of year $223,785 $433,444 $146,037 $683,015 $27,122 $20,066
======== ======== ======== ======== ======= =======
Undistributed net investment income
at end of year $ 207 $ 134 $ 61 $ -- $ -- $ --
======== ======== ======== ======== ======= =======
114 See Notes to Financial Statements.
Statements of Changes in Net Assets (continued)
- ------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2003
(In thousands)
-------------------------------------------------------------------------------------------------------------------
Equity Growth & West Coast Mid Cap
REIT Income Income Equity Stock Growth
Fund* Fund Fund Fund Fund Fund
-------- -------- ---------- ---------- -------- --------
Net investment income/(loss) $ 3,943 $ 17,884 $ 16,097 $ 891 $ 1,017 $ (2,473)
Net realized gain/(loss) on
investment transactions 351 (1,976) (48,720) (2,358) 2,758 (22,380)
Net change in unrealized appreciation/
depreciation of investments 29,565 142,701 251,269 249,254 68,840 163,238
-------- -------- ---------- -------- -------- --------
Net increase in net assets
resulting from operations 33,859 158,609 218,646 247,787 72,615 138,385
Distributions to shareholders from:
Net investment income:
Class A Shares (25) (5,278) (4,443) -- -- --
Class B Shares (20) (1,310) -- -- -- --
Class C Shares (7) (45) (2) -- -- --
Class I Shares (2,428) (10,743) (8,955) -- (731) --
Net realized gains on investments:
Class A Shares -- -- -- -- -- --
Class B Shares -- -- -- -- -- --
Class C Shares -- -- -- -- -- --
Class I Shares -- -- -- -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares 2,871 24,812 (13,099) 13,010 3,423 1,597
Class B Shares 2,536 4,186 (25,890) (11,883) 1,097 (19,346)
Class C Shares 1,223 3,615 499 1,627 433 284
Class I Shares 151,418 101,118 116,890 73,546 76,625 207,625
-------- -------- ---------- -------- -------- --------
Net increase in net assets 189,427 274,964 283,646 324,087 153,462 328,545
NET ASSETS:
Beginning of year -- 633,051 1,269,888 674,398 272,941 580,350
-------- -------- ---------- -------- -------- --------
End of year $189,427 $908,015 $1,553,534 $998,485 $426,403 $908,895
======== ======== ========== ======== ======== ========
Undistributed net investment income
at end of year $ 939 $ 2,013 $ 13,414 $ 432 $ 893 $ 59
======== ======== ========== ======== ======== ========
<FN>
- --------
* The REIT Fund commenced operations on March 1, 2003.
See Notes to Financial Statements. 115
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2003
(In thousands)
---------------------------------------------------------------------------------------------------------------------
U.S.
Small Cap International Short Term Government High
Growth Growth Income Securities Income Yield
Fund** Fund Fund Fund Fund Fund
--------- ------------- ---------- ---------- ---------- ---------
Net investment income/(loss) $ (1,131) $ 2,540 $ 6,961 $ 35,146 $ 51,298 $ 36,042
Net realized gain/(loss) on
investment transactions (39,625) (12,285) (120) 3,661 (554) (16,228)
Net change in unrealized appreciation/
depreciation of investments 198,438 73,387 3,462 (22,244) 34,433 88,798
-------- -------- -------- ---------- ---------- ---------
Net increase in net assets
resulting from operations 157,682 63,642 10,303 16,563 85,177 108,612
Distributions to shareholders from:
Net investment income:
Class A Shares -- (132) (1,634) (9,254) (8,813) (2,848)
Class B Shares -- -- (1,127) (11,697) (9,963) (5,361)
Class C Shares -- --* (365) (645) (702) (926)
Class I Shares -- (2,398) (4,377) (23,771) (37,421) (30,363)
Net realized gains on investments:
Class A Shares -- -- -- -- -- --
Class B Shares -- -- -- -- -- --
Class C Shares -- -- -- -- -- --
Class I Shares -- -- -- -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares 8,514 (33) 43,313 (13,689) 18,854 30,461
Class B Shares (3,193) (1,504) 19,193 (11,451) 47,302 29,384
Class C Shares 246 24 12,002 2,282 7,310 20,399
Class I Shares 92,786 77,066 38,527 306,496 172,935 127,185
Redemption fees -- 128 -- -- -- --
-------- -------- -------- ---------- ---------- ---------
Net increase in net assets 256,035 136,793 115,835 254,834 274,679 276,543
NET ASSETS:
Beginning of year 180,911 211,240 147,681 845,208 767,784 305,061
-------- -------- -------- ---------- ---------- ---------
End of year $436,946 $348,033 $263,516 $1,100,042 $1,042,463 $ 581,604
======== ======== ======== ========== ========== =========
Undistributed net investment income
at end of year $ -- $ 4,050 $ 18 $ 530 $ 883 $ 617
======== ======== ======== ========== ========== =========
<FN>
- --------
* Amount represents less than $500.
** Formerly the Small Cap Stock Fund.
116 See Notes to Financial Statements.
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
For the Year Ended October 31, 2003
(In thousands)
---------------------------------------------------------------------------------------------------------------------
California
Insured Tax-Exempt
Tax-Exempt California Intermediate Money Money California
Bond Municipal Municipal Market Market Money
Fund Fund Fund Fund Fund Fund
---------- ---------- ------------ --------- ---------- ----------
Net investment income $ 10,797 $ 21,643 $ 4,981 $ 6,191 $ 160 $ 132
Net realized gain/(loss) on
investment transactions 3,451 (585) 2,643 --* --* --
Net change in unrealized appreciation/
depreciation of investments (1,438) (2,957) (1,578) -- -- --
-------- -------- -------- --------- ------- -------
Net increase in net assets
resulting from operations 12,810 18,101 6,046 6,191 160 132
Distributions to shareholders from:
Net investment income:
Class A Shares (9,009) (11,448) (2,332) (5,447) (160) (132)
Class B Shares (1,677) (9,904) (2,389) (49) -- --
Class C Shares (117) (299) (256) (3) -- --
Class I Shares -- -- -- (692) -- --
Net realized gains on investments:
Class A Shares (1,785) (1,820) (290) -- -- --
Class B Shares (397) (1,892) (455) -- -- --
Class C Shares (21) (45) (43) -- -- --
Class I Shares -- -- -- -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares (6,143) (30,048) 18,113 18,955 (3,138) (2,942)
Class B Shares (2,166) (36,607) 3,952 (25,219) -- --
Class C Shares 1,955 1,689 2,355 1,370 -- --
Class I Shares -- -- -- (144,414) -- --
-------- -------- -------- --------- ------- -------
Net increase/(decrease) in net assets (6,550) (72,273) 24,701 (149,308) (3,138) (2,942)
NET ASSETS:
Beginning of year 263,376 588,422 154,295 966,502 33,300 27,672
-------- -------- -------- --------- ------- -------
End of year $256,826 $516,149 $178,996 $ 817,194 $30,162 $24,730
======== ======== ======== ========= ======= =======
Undistributed net investment income
at end of year $ 119 $ 39 $ 62 $ -- $ -- $ --
======== ======== ======== ========= ======= =======
<FN>
- --------
* Amount represents less than $500.
See Notes to Financial Statements. 117
Statements of Changes in Net Assets -- Capital Stock Activity
- ----------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
(In thousands)
-----------------------------------------------------------------------------------------------------------------
Growth &
REIT Fund** Equity Income Fund Income Fund
---------------------- ---------------------- ----------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/04 10/31/03 10/31/04 10/31/03 10/31/04 10/31/03
---------- ---------- ---------- ---------- ---------- ----------
AMOUNT
Class A:
Sold $ 7,159 $ 2,955 $162,748 $ 56,481 $ 72,979 $ 66,365
Issued as reinvestment of dividends 116 22 5,448 4,956 5,039 4,315
Redeemed (2,335) (106) (43,679) (36,625) (82,462) (83,779)
------- -------- -------- -------- -------- --------
Net increase/(decrease) $ 4,940 $ 2,871 $124,517 $ 24,812 $ (4,444) $(13,099)
======= ======== ======== ======== ======== ========
Class B:
Sold $ 4,003 $ 2,702 $ 45,625 $ 26,991 $ 9,828 $ 10,310
Issued as reinvestment of dividends 56 15 911 1,258 -- --
Redeemed (1,702) (181) (22,925) (24,063) (39,314) (36,200)
------- -------- -------- -------- -------- --------
Net increase/(decrease) $ 2,357 $ 2,536 $ 23,611 $ 4,186 $(29,486) $(25,890)
======= ======== ======== ======== ======== ========
Class C:
Sold $ 2,929 $ 1,369 $ 28,418 $ 4,653 $ 1,005 $ 650
Issued as reinvestment of dividends 43 6 154 36 6 2
Redeemed (1,198) (152) (2,879) (1,074) (371) (153)
------- -------- -------- -------- -------- --------
Net increase $ 1,774 $1,223 $ 25,693 $ 3,615 $ 640 $ 499
======= ======== ======== ======== ======== ========
Class I:
Sold $70,279 $149,045 $267,857 $129,517 $409,181 $200,685
Issued as reinvestment of dividends 7,372 2,428 14,964 10,743 12,393 8,955
Redeemed (1,885) (55) (750) (39,142) (6,620) (92,750)
------- -------- -------- -------- -------- --------
Net increase $75,766 $151,418 $282,071 $101,118 $414,954 $116,890
======= ======== ======== ======== ======== ========
SHARES
Class A:
Sold 508 261 9,548 4,099 3,128 3,449
Issued as reinvestment of dividends 8 2 322 365 229 232
Redeemed (170) (9) (2,574) (2,707) (3,552) (4,358)
------- -------- -------- -------- -------- --------
Net increase/(decrease) 346 254 7,296 1,757 (195) (677)
======= ======== ======== ======== ======== ========
Class B:
Sold 284 241 2,704 1,956 440 545
Issued as reinvestment of dividends 4 1 54 93 -- --
Redeemed (125) (16) (1,368) (1,791) (1,757) (1,942)
------- -------- -------- -------- -------- --------
Net increase/(decrease) 163 226 1,390 258 (1,317) (1,397)
======= ======== ======== ======== ======== ========
Class C:
Sold 213 118 1,695 322 46 33
Issued as reinvestment of dividends 3 1 9 3 --* --*
Redeemed (86) (13) (172) (76) (17) (8)
------- -------- -------- -------- -------- --------
Net increase 130 106 1,532 249 29 25
======= ======== ======== ======== ======== ========
Class I:
Sold 5,257 14,399 15,991 9,118 17,733 9,825
Issued as reinvestment of dividends 532 209 885 789 561 480
Redeemed (139) (5) (45) (3,141) (284) (5,242)
------- -------- -------- -------- -------- --------
Net increase 5,650 14,603 16,831 6,766 18,010 5,063
======= ======== ======== ======== ======== ========
<FN>
- --------
* Amount represents less than 500 shares.
** The REIT Fund commenced operations on March 1, 2003.
*** The Small Cap Value Fund commenced operations on March 1, 2004.
118 See Notes to Financial Statements.
- ---------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Small Cap
West Coast Equity Fund Mid Cap Stock Fund Growth Fund Value Fund***
---------------------- ---------------------- ---------------------- -------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
10/31/04 10/31/03 10/31/04 10/31/03 10/31/04 10/31/03 10/31/04
---------- ---------- ---------- ---------- ---------- ---------- -------------
AMOUNT
Class A:
Sold $116,678 $ 74,984 $ 25,203 $ 13,942 $ 28,670 $ 22,793 $ 2,899
Issued as reinvestment of dividend -- -- 133 -- -- -- --
Redeemed (66,365) (61,975) (9,361) (10,519) (24,654) (21,196) (115)
-------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) $ 50,313 $ 13,009 $ 15,975 $ 3,423 $ 4,016 $ 1,597 $ 2,784
======== ======== ======== ======== ======== ======== ========
Class B:
Sold $ 34,227 $ 19,122 $ 3,822 $ 4,263 $ 6,706 $ 8,554 $ 706
Issued as reinvestment of dividends -- -- 45 -- -- -- --
Redeemed (25,214) (31,005) (3,129) (3,166) (30,769) (27,900) (121)
-------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) $ 9,013 $(11,883) $ 738 $ 1,097 $(24,063) $(19,346) $ 585
======== ======== ======== ======== ======== ======== ========
Class C:
Sold $ 7,311 $ 2,289 $ 1,293 $ 535 $ 1,636 $ 868 $ 473
Issued as reinvestment of dividends -- -- 2 -- -- -- --
Redeemed (2,324) (662) (163) (102) (247) (584) (84)
-------- -------- -------- -------- -------- -------- --------
Net increase $ 4,987 $ 1,627 $ 1,132 $ 433 $ 1,389 $ 284 $ 389
======== ======== ======== ======== ======== ======== ========
Class I:
Sold $133,663 $ 76,832 $195,470 $ 89,217 $575,894 $221,664 $247,359
Issued as reinvestment of dividends 437 -- 2,440 731 -- -- --
Redeemed (5,358) (3,286) (1,166) (13,323) (230) (14,039) (150)
-------- -------- -------- -------- -------- -------- --------
Net increase $128,742 $ 73,546 $196,744 $ 76,625 $575,664 $207,625 $247,209
======== ======== ======== ======== ======== ======== ========
SHARES
Class A:
Sold 3,420 2,844 1,521 1,031 1,994 1,869 287
Issued as reinvestment of dividends -- -- 8 -- -- -- --
Redeemed (1,955) (2,401) (563) (790) (1,724) (1,764) (11)
-------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) 1,465 443 966 241 270 105 276
======== ======== ======== ======== ======== ======== ========
Class B:
Sold 1,114 780 241 326 515 765 70
Issued as reinvestment of dividends -- -- 3 -- -- -- --
Redeemed (824) (1,290) (197) (245) (2,363) (2,551) (11)
-------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) 290 (510) 47 81 (1,848) (1,786) 59
======== ======== ======== ======== ======== ======== ========
Class C:
Sold 238 87 81 40 125 77 46
Issued as reinvestment of dividends -- -- --* -- -- -- --
Redeemed (76) (26) (10) (7) (19) (51) (8)
-------- -------- -------- -------- -------- -------- --------
Net increase 162 61 71 33 106 26 38
======== ======== ======== ======== ======== ======== ========
Class I:
Sold 3,925 2,740 11,766 6,369 38,649 17,849 24,787
Issued as reinvestment of dividends 13 -- 153 57 -- -- --
Redeemed (160) (139) (71) (1,069) (16) (1,249) (15)
-------- -------- -------- -------- -------- -------- --------
Net increase 3,778 2,601 11,848 5,357 38,633 16,600 24,772
======== ======== ======== ======== ======== ======== ========
See Notes to Financial Statements. 119
Statements of Changes in Net Assets -- Capital Stock Activity
- --------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
(In thousands)
---------------------------------------------------------------------------------------------------------
Small Cap International Short Term
Growth Fund+ Growth Fund Income Fund
---------------------- ---------------------- ----------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/04 10/31/03 10/31/04 10/31/03 10/31/04 10/31/03
---------- ---------- ---------- ---------- ---------- ----------
AMOUNT
Class A:
Sold $ 39,482 $ 24,009 $ 17,317 $ 24,133 $ 27,980 $ 71,736
Issued as reinvestment of
dividends -- -- 245 129 1,356 1,216
Redeemed (23,130) (15,495) (7,991) (24,295) (46,792) (29,639)
--------- -------- -------- -------- -------- --------
Net increase/(decrease) $ 16,352 $ 8,514 $ 9,571 $ (33) $(17,456) $ 43,313
========= ======== ======== ======== ======== ========
Class B:
Sold $ 4,111 $ 2,742 $ 1,369 $ 498 $ 8,280 $ 36,739
Issued as reinvestment of
dividends -- -- -- -- 739 961
Redeemed (9,466) (5,935) (2,126) (2,002) (21,295) (18,507)
--------- -------- -------- -------- -------- --------
Net increase/(decrease) $ (5,355) $ (3,193) $ (757) $ (1,504) $(12,276) $ 19,193
========= ======== ======== ======== ======== ========
Class C:
Sold $ 956 $ 253 $ 639 $ 46 $ 14,060 $ 20,332
Issued as reinvestment of
dividends -- -- 1 --* 366 297
Redeemed (405) (7) (307) (22) (13,168) (8,627)
--------- -------- -------- -------- -------- --------
Net increase/(decrease) $ 551 $ 246 $ 333 $ 24 $ 1,258 $ 12,002
========= ======== ======== ======== ======== ========
Class I:
Sold $ 53,652 $ 94,896 $179,477 $ 75,087 $ 35,609 $ 43,564
Issued as reinvestment of
dividends -- -- 4,799 2,398 5,343 4,377
Redeemed (159,633) (2,110) (225) (419) (375) (9,414)
--------- -------- -------- -------- -------- --------
Net increase/(decrease) $(105,981) $ 92,786 $184,051 $ 77,066 $ 40,577 $ 38,527
========= ======== ======== ======== ======== ========
SHARES
Class A:
Sold 2,794 2,424 1,935 3,439 11,724 29,949
Issued as reinvestment of
dividends -- -- 29 19 567 508
Redeemed (1,699) (1,609) (896) (3,460) (19,591) (12,377)
--------- -------- -------- -------- -------- --------
Net increase/(decrease) 1,095 815 1,068 (2) (7,300) 18,080
========= ======== ======== ======== ======== ========
Class B:
Sold 326 284 158 71 3,475 15,353
Issued as reinvestment of
dividends -- -- -- -- 310 402
Redeemed (771) (700) (246) (298) (8,916) (7,735)
--------- -------- -------- -------- -------- --------
Net increase/(decrease) (445) (416) (88) (227) (5,131) 8,020
========= ======== ======== ======== ======== ========
Class C:
Sold 74 25 75 6 5,891 8,484
Issued as reinvestment of
dividends -- -- --** --** 154 124
Redeemed (33) (1) (35) (3) (5,520) (3,601)
--------- -------- -------- -------- -------- --------
Net increase/(decrease) 41 24 40 3 525 5,007
========= ======== ======== ======== ======== ========
Class I:
Sold 3,920 9,921 20,051 10,121 14,915 18,183
Issued as reinvestment of
dividends -- -- 563 353 2,240 1,829
Redeemed (10,697) (201) (26) (62) (158) (3,958)
--------- -------- -------- -------- -------- --------
Net increase/(decrease) (6,777) 9,720 20,588 10,412 16,997 16,054
========= ======== ======== ======== ======== ========
<FN>
- --------
* Amount represents less than $500.
** Amount represents less than 500 shares.
+ Formerly the Small Cap Stock Fund.
120 See Notes to Financial Statements.
- -------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
U.S. Government
Securities Fund Income Fund High Yield Fund Tax-Exempt Bond Fund
---------------------- ---------------------- ---------------------- ----------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/04 10/31/03 10/31/04 10/31/03 10/31/04 10/31/03 10/31/04 10/31/03
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
AMOUNT
Class A:
Sold $ 14,876 $ 69,243 $ 35,193 $ 60,366 $ 66,774 $ 82,999 $ 13,239 $ 37,452
Issued as reinvestment of
dividends 4,770 6,886 5,097 5,763 2,383 1,486 7,522 7,653
Redeemed (61,267) (89,818) (47,819) (47,275) (35,468) (54,024) (43,022) (51,248)
--------- --------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) $ (41,621) $ (13,689) $ (7,529) $ 18,854 $ 33,689 $ 30,461 $(22,261) $ (6,143)
========= ========= ======== ======== ======== ======== ======== ========
Class B:
Sold $ 7,088 $ 113,475 $ 23,555 $110,302 $ 20,058 $ 45,952 $ 1,559 $ 12,667
Issued as reinvestment of
dividends 5,486 9,525 4,768 6,133 2,426 2,344 1,299 1,402
Redeemed (105,422) (134,451) (72,478) (69,133) (30,174) (18,912) (12,375) (16,235)
--------- --------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) $ (92,848) $ (11,451) $(44,155) $ 47,302 $ (7,690) $ 29,384 $ (9,517) $ (2,166)
========= ========= ======== ======== ======== ======== ======== ========
Class C:
Sold $ 1,945 $ 18,299 $ 4,123 $ 15,209 $ 19,533 $ 22,849 $ 1,645 $ 3,001
Issued as reinvestment of
dividends 245 498 411 493 995 494 150 118
Redeemed (9,226) (16,515) (8,345) (8,392) (13,035) (2,944) (2,477) (1,164)
--------- --------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) $ (7,036) $ 2,282 $ (3,811) $ 7,310 $ 7,493 $ 20,399 $ (682) $ 1,955
========= ========= ======== ======== ======== ======== ======== ========
Class I:
Sold $ 557,045 $ 288,492 $147,970 $167,205 $ 77,684 $107,483
Issued as reinvestment of
dividends 46,885 23,771 44,097 37,421 38,653 30,363
Redeemed (2,699) (5,767) (45,050) (31,691) (37,961) (10,661)
--------- --------- -------- -------- -------- --------
Net increase/(decrease) $ 601,231 $ 306,496 $147,017 $172,935 $ 78,376 $127,185
========= ========= ======== ======== ======== ========
SHARES
Class A:
Sold 1,367 6,234 3,736 6,421 8,227 11,040 1,669 4,702
Issued as reinvestment of
dividends 440 622 542 617 293 198 953 962
Redeemed (5,655) (8,146) (5,105) (5,074) (4,404) (7,111) (5,470) (6,452)
--------- --------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) (3,848) (1,290) (827) 1,964 4,116 4,127 (2,848) (788)
========= ========= ======== ======== ======== ======== ======== ========
Class B:
Sold 651 10,189 2,495 11,762 2,460 6,182 196 1,587
Issued as reinvestment of
dividends 506 861 506 654 298 313 164 176
Redeemed (9,721) (12,238) (7,711) (7,403) (3,708) (2,527) (1,569) (2,047)
--------- --------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) (8,564) (1,188) (4,710) 5,013 (950) 3,968 (1,209) (284)
========= ========= ======== ======== ======== ======== ======== ========
Class C:
Sold 179 1,646 436 1,623 2,395 3,042 209 375
Issued as reinvestment of
dividends 22 45 44 53 122 65 19 14
Redeemed (852) (1,503) (888) (899) (1,613) (389) (314) (146)
--------- --------- -------- -------- -------- -------- -------- --------
Net increase/(decrease) (651) 188 (408) 777 904 2,718 (86) 243
========= ========= ======== ======== ======== ======== ======== ========
Class I:
Sold 51,228 26,164 15,782 17,970 9,657 14,436
Issued as reinvestment of
dividends 4,324 2,152 4,687 4,001 4,768 4,104
Redeemed (251) (518) (4,919) (3,401) (4,803) (1,513)
--------- --------- -------- -------- -------- --------
Net increase/(decrease) 55,301 27,798 15,550 18,570 9,622 17,027
========= ========= ======== ======== ======== ========
See Notes to Financial Statements. 121
Statements of Changes in Net Assets -- Capital Stock Activity
- ----------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
(In thousands)
-----------------------------------------------------------------------------------------------------------
California Insured
California Intermediate
Municipal Fund Municipal Fund Money Market Fund
----------------------- ---------------------- ------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/04 10/31/03 10/31/04 10/31/03 10/31/04 10/31/03
---------- ---------- ---------- ---------- ----------- ----------
AMOUNT
Class A:
Sold $ 24,927 $ 40,491 $ 23,303 $ 57,345 $ 847,283 $ 540,768
Issued as reinvestment of
dividends 6,426 8,684 2,055 1,916 4,517 4,207
Redeemed (55,399) (79,223) (34,271) (41,148) (1,029,705) (526,020)
-------- --------- -------- -------- ----------- ----------
Net increase/(decrease) $(24,046) $ (30,048) $ (8,913) $ 18,113 $ (177,905) $ 18,955
======== ========= ======== ======== =========== ==========
Class B:
Sold $ 4,784 $ 32,825 $ 4,663 $ 32,897 $ 36,057 $ 72,301
Issued as reinvestment of
dividends 5,344 8,456 2,142 2,258 30 46
Redeemed (72,918) (77,888) (28,551) (31,203) (62,635) (97,566)
-------- --------- -------- -------- ----------- ----------
Net increase/(decrease) $(62,790) $ (36,607) $(21,746) $ 3,952 $ (26,548) $ (25,219)
======== ========= ======== ======== =========== ==========
Class C:
Sold $ 636 $ 5,866 $ 1,901 $ 7,940 $ 14,376 $ 13,554
Issued as reinvestment of
dividends 169 279 231 238 3 2
Redeemed (3,798) (4,456) (3,659) (5,823) (10,945) (12,186)
-------- --------- -------- -------- ----------- ----------
Net increase/(decrease) $ (2,993) $ 1,689 $ (1,527) $ 2,355 $ 3,434 $ 1,370
======== ========= ======== ======== =========== ==========
Class I:
Sold $ 134,300 $ 43,936
Issued as reinvestment of
dividends 539 692
Redeemed (68,000) (189,042)
----------- ----------
Net increase/(decrease) $ 66,839 $ (144,414)
=========== ==========
SHARES
Class A:
Sold 2,208 3,569 2,102 5,143 847,283 540,768
Issued as reinvestment of
dividends 570 768 186 172 4,517 4,207
Redeemed (4,937) (7,049) (3,137) (3,713) (1,029,705) (526,020)
-------- --------- -------- -------- ----------- ----------
Net increase/(decrease) (2,159) (2,712) (849) 1,602 (177,905) 18,955
======== ========= ======== ======== =========== ==========
Class B:
Sold 424 2,891 422 2,949 36,057 72,301
Issued as reinvestment of
dividends 474 748 194 203 30 46
Redeemed (6,500) (6,933) (2,586) (2,814) (62,635) (97,566)
-------- --------- -------- -------- ----------- ----------
Net increase/(decrease) (5,602) (3,294) (1,970) 338 (26,548) (25,219)
======== ========= ======== ======== =========== ==========
Class C:
Sold 56 516 171 712 14,376 13,554
Issued as reinvestment of
dividends 15 25 21 21 3 2
Redeemed (339) (398) (332) (524) (10,945) (12,186)
-------- --------- -------- -------- ----------- ----------
Net increase/(decrease) (268) 143 (140) 209 3,434 1,370
======== ========= ======== ======== =========== ==========
Class I:
Sold 134,300 43,936
Issued as reinvestment of
dividends 539 692
Redeemed (68,000) (189,042)
----------- ----------
Net increase/(decrease) 66,839 (144,414)
=========== ==========
122 See Notes to Financial Statements.
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Tax-Exempt California
Money Market Fund Money Fund
---------------------- ----------------------
Year Ended Year Ended Year Ended Year Ended
10/31/04 10/31/03 10/31/04 10/31/03
---------- ---------- ---------- ----------
AMOUNT
Class A:
Sold $ 45,203 $ 40,843 $ 35,029 $ 31,012
Issued as reinvestment of
dividends 103 155 129 132
Redeemed (48,346) (44,136) (39,822) (34,086)
-------- -------- -------- --------
Net increase/(decrease) $ (3,040) $ (3,138) $ (4,664) $ (2,942)
======== ======== ======== ========
Class B:
Sold
Issued as reinvestment of
dividends
Redeemed
Net increase/(decrease)
Class C:
Sold
Issued as reinvestment of
dividends
Redeemed
Net increase/(decrease)
Class I:
Sold
Issued as reinvestment of
dividends
Redeemed
Net increase/(decrease)
SHARES
Class A:
Sold 45,203 40,843 35,029 31,012
Issued as reinvestment of
dividends 103 155 129 132
Redeemed (48,346) (44,136) (39,822) (34,086)
-------- -------- -------- --------
Net increase/(decrease) (3,040) (3,138) (4,664) (2,942)
======== ======== ======== ========
Class B:
Sold
Issued as reinvestment of
dividends
Redeemed
Net increase/(decrease)
Class C:
Sold
Issued as reinvestment of
dividends
Redeemed
Net increase/(decrease)
Class I:
Sold
Issued as reinvestment of
dividends
Redeemed
Net increase/(decrease)
See Notes to Financial Statements. 123
Financial Highlights
- --------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
---------------------------------------------------------------------------------------------------
REIT Fund Class A
--------------------
Years Ended October 31 2004 2003(3)
--------------------
Net asset value, beginning of period $ 12.46 $ 10.00
-------- --------
Income from investment operations:
Net investment income 0.39(4) 0.28(4)
Net realized and unrealized gain on
investments 3.13 2.35
-------- --------
Total from investment operations 3.52 2.63
-------- --------
Less distributions:
Dividends from net investment income (0.31) (0.17)
Distributions from net realized
capital gains (0.05) --
-------- --------
Total distributions (0.36) (0.17)
-------- --------
Net asset value, end of period $ 15.62 $ 12.46
======== ========
Total Return(1) 28.71% 26.43%
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's) $ 9,376 $ 3,159
Ratio of operating expenses to
average net assets 1.33% 1.41%(5)
Ratio of net investment income to
average net assets 2.82% 3.60%(5)
Portfolio turnover rate 5% 7%
Ratio of operating expenses to
average net assets without fee
waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 1.33% 1.41%(5)
Equity Income Fund Class A
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------
Net asset value, beginning of
period $ 15.46 $ 12.73 $ 14.85 $ 15.59 $ 14.60
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.29(4) 0.33(4) 0.40(4) 0.48(4) 0.49(4)
Net realized and unrealized gain/
(loss) on investments 2.33 2.73 (1.85) 0.37 1.42
-------- -------- -------- -------- --------
Total from investment operations 2.62 3.06 (1.45) 0.85 1.91
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.29) (0.33) (0.35) (0.46) (0.48)
Distributions from net realized
capital gains -- -- (0.32) (1.13) (0.44)
-------- -------- -------- -------- --------
Total distributions (0.29) (0.33) (0.67) (1.59) (0.92)
-------- -------- -------- -------- --------
Net asset value, end of period $ 17.79 $ 15.46 $ 12.73 $ 14.85 $ 15.59
======== ======== ======== ======== ========
Total Return(1) 17.06% 24.43% (10.35)% 5.92% 13.73%
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's) $438,776 $268,489 $198,756 $211,445 $191,850
Ratio of operating expenses to
average net assets 0.91% 0.95% 0.97% 0.96% 1.05%
Ratio of net investment income
to average net assets 1.74% 2.43% 2.77% 3.17% 3.39%
Portfolio turnover rate 20% 18% 16% 17% 84%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 0.91% 0.95% 0.97% 0.97% 1.05%
<FN>
- --------
(1) Total return is not annualized for periods less than one year and does
not reflect any applicable sales charges. The total returns would have
been lower if certain fees had not been waived and/or expenses
reimbursed by the investment advisor or if fees had not been reduced by
credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The REIT Fund commenced operations on March 1, 2003.
(4) Per share numbers have been calculated using the average shares method.
(5) Annualized.
(6) The Equity Income Fund commenced selling Class C shares on March 1, 2002.
(7) The Equity Income Fund commenced selling Class I shares on August 1, 2000.
124 See Notes to Financial Statements.
REIT Fund Class B
------------------
Years Ended October 31 2004 2003(3)
------------------
Net asset value, beginning of period $12.43 $10.00
------ ------
Income from investment operations:
Net investment income 0.29(4) 0.22(4)
Net realized and unrealized gain on
investments 3.12 2.35
------ ------
Total from investment operations 3.41 2.57
------ ------
Less distributions:
Dividends from net investment income (0.21) (0.14)
Distributions from net realized
capital gains (0.05) --
------ ------
Total distributions (0.26) (0.14)
------ ------
Net asset value, end of period $15.58 $12.43
====== ======
Total Return(1) 27.76% 25.86%
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's) $6,060 $2,808
Ratio of operating expenses to
average net assets 2.08% 2.13%(5)
Ratio of net investment income to
average net assets 2.07% 2.88%(5)
Portfolio turnover rate 5% 7%
Ratio of operating expenses to
average net assets without fee
waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 2.08% 2.13%(5)
Equity Income Fund Class B
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------
Net asset value, beginning of
period $ 15.36 $ 12.65 $ 14.78 $ 15.52 $ 14.53
-------- -------- -------- ------- -------
Income from investment operations:
Net investment income 0.14(4) 0.20(4) 0.27(4) 0.35(4) 0.37(4)
Net realized and unrealized gain/
(loss) on investments 2.30 2.71 (1.85) 0.38 1.42
-------- -------- -------- ------- -------
Total from investment operations 2.44 2.91 (1.58) 0.73 1.79
-------- -------- -------- ------- -------
Less distributions:
Dividends from net investment income (0.13) (0.20) (0.23) (0.34) (0.36)
Distributions from net realized
capital gains -- -- (0.32) (1.13) (0.44)
-------- -------- -------- ------- -------
Total distributions (0.13) (0.20) (0.55) (1.47) (0.80)
-------- -------- -------- ------- -------
Net asset value, end of period $ 17.67 $ 15.36 $ 12.65 $ 14.78 $ 15.52
======== ======== ======== ======= =======
Total Return(1) 16.04% 23.19% (11.20)% 5.09% 12.84%
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's) $144,144 $103,888 $82,330 $68,549 $47,386
Ratio of operating expenses to
average net assets 1.81% 1.89% 1.88% 1.81% 1.85%
Ratio of net investment income
to average net assets 0.84% 1.49% 1.86% 2.32% 2.59%
Portfolio turnover rate 20% 18% 16% 17% 84%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 1.81% 1.89% 1.88% 1.82% 1.85%
REIT Fund Class C
-------------------
Years Ended October 31 2004 2003(3)
-------------------
Net asset value, beginning of period $12.43 $10.00
------ ------
Income from investment operations:
Net investment income 0.31(4) 0.23(4)
Net realized and unrealized gain on
investments 3.12 2.35
------ ------
Total from investment operations 3.43 2.58
------ ------
Less distributions:
Dividends from net investment income (0.23) (0.15)
Distributions from net realized
capital gains 0.05) --
------ ------
Total distributions (0.28) (0.15)
------ ------
Net asset value, end of period $15.58 $12.43
====== ======
Total Return(1) 27.95% 25.88%
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's) $3,672 $1,322
Ratio of operating expenses to
average net assets 1.98% 2.06%(5)
Ratio of net investment income to
average net assets 2.17% 2.95%(5)
Portfolio turnover rate 5% 7%
Ratio of operating expenses to
average net assets without fee
waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 1.98% 2.06%(5)
Equity Income Fund Class C
--------------------------------
Years Ended October 31 2004 2003 2002(6)
--------------------------------
Net asset value, beginning of
period $ 15.29 $12.62 $ 15.09
------- ------ --------
Income from investment operations:
Net investment income 0.16(4) 0.22(4) 0.18(4)
Net realized and unrealized gain/
(loss) on investments 2.30 2.68 (2.43)
------- ------ --------
Total from investment operations 2.46 2.90 (2.25)
------- ------ --------
Less distributions:
Dividends from net investment income (0.18) (0.23) (0.22)
Distributions from net realized
capital gains -- -- --
------- ------ --------
Total distributions (0.18) (0.23) (0.22)
------- ------ --------
Net asset value, end of period $ 17.57 $15.29 $ 12.62
======= ====== ========
Total Return(1) 16.16% 23.29% (15.07)%
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's) $33,770 $5,973 $ 1,780
Ratio of operating expenses to
average net assets 1.70% 1.78% 1.80%(5)
Ratio of net investment income
to average net assets 0.95% 1.60% 1.94%(5)
Portfolio turnover rate 20% 18% 16%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 1.70% 1.78% 1.80%(5)
REIT Fund Class I
--------------------
Years Ended October 31 2004 2003(3)
--------------------
Net asset value, beginning of period $ 12.47 $ 10.00
-------- --------
Income from investment operations:
Net investment income 0.46(4) 0.34(4)
Net realized and unrealized gain on
investments 3.14 2.32
-------- --------
Total from investment operations 3.60 2.66
-------- --------
Less distributions:
Dividends from net investment income (0.37) (0.19)
Distributions from net realized
capital gains (0.05) --
-------- --------
Total distributions (0.42) (0.19)
-------- --------
Net asset value, end of period $ 15.65 $ 12.47
======== ========
Total Return(1) 29.40% 26.76%
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's) $316,904 $182,138
Ratio of operating expenses to
average net assets 0.86% 0.92%(5)
Ratio of net investment income to
average net assets 3.29% 4.09%(5)
Portfolio turnover rate 5% 7%
Ratio of operating expenses to
average net assets without fee
waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 0.86% 0.92%(5)
Equity Income Fund Class I
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000(7)
--------------------------------------------------------
Net asset value, beginning of
period $ 15.45 $ 12.73 $ 14.85 $ 15.59 $ 14.47
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.35(4) 0.38(4) 0.45(4) 0.54(4) 0.11(4)
Net realized and unrealized gain/
(loss) on investments 2.33 2.72 (1.85) 0.35 1.13
-------- -------- -------- -------- -------
Total from investment operations 2.68 3.10 (1.40) 0.89 1.24
-------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.34) (0.38) (0.40) (0.50) (0.12)
Distributions from net realized
capital gains -- -- (0.32) (1.13) --
-------- -------- -------- -------- -------
Total distributions (0.34) (0.38) (0.72) (1.63) (0.12)
-------- -------- -------- -------- -------
Net asset value, end of period $ 17.79 $ 15.45 $ 12.73 $ 14.85 $ 15.59
======== ======== ======== ======== =======
Total Return(1) 17.51% 24.77% (10.04)% 6.26% 8.63%
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's) $908,925 $529,665 $350,185 $252,453 $96,436
Ratio of operating expenses to
average net assets 0.59% 0.61% 0.63% 0.64% 0.72%(5)
Ratio of net investment income
to average net assets 2.06% 2.77% 3.11% 3.49% 3.72%(5)
Portfolio turnover rate 20% 18% 16% 17% 84%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 0.59% 0.61% 0.63% 0.65% 0.72%(5)
See Notes to Financial Statements. 125
Financial Highlights
- --------------------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
---------------------------------------------------------------------------------------------------------------
Growth & Income Fund Class A
----------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------
Net asset value, beginning of period $ 21.59 $ 18.44 $ 22.34 $ 27.11 $ 24.61
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) 0.22(4) 0.22(4) 0.17(4) 0.10 0.06
Net realized and unrealized gain/(loss)
on investments 1.81 3.11 (3.68) (3.63) 3.30
-------- -------- -------- -------- --------
Total from investment operations 2.03 3.33 (3.51) (3.53) 3.36
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.21) (0.18) (0.03) (0.07) (0.03)
Distributions from net realized capital
gains -- -- (0.36) (1.17) (0.83)
-------- -------- -------- -------- --------
Total distributions (0.21) (0.18) (0.39) (1.24) (0.86)
-------- -------- -------- -------- --------
Net asset value, end of period $ 23.41 $ 21.59 $ 18.44 $ 22.34 $ 27.11
======== ======== ======== ======== ========
Total Return(1) 9.45% 18.18% (16.10)% (13.40)% 13.95%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $582,866 $541,707 $475,010 $560,226 $662,086
Ratio of operating expenses to
average net assets 0.90% 0.93% 0.94% 0.92% 0.94%
Ratio of net investment income/(loss)
to average net assets 0.94% 1.12% 0.79% 0.40% 0.21%
Portfolio turnover rate 6% 17% 22% 35% 35%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 0.90% 0.93% 0.94% 0.92% 0.94%
West Coast Equity Fund Class A
----------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------
Net asset value, beginning of period $ 32.14 $ 23.73 $ 28.89 $ 36.23 $ 32.04
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) 0.06(4) 0.04(4) 0.02(4) 0.11 0.10(4)
Net realized and unrealized gain/(loss)
on investments 2.84 8.37 (4.09) (2.35) 8.22
-------- -------- -------- -------- --------
Total from investment operations 2.90 8.41 (4.07) (2.24) 8.32
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- (0.07) (0.03) --
Distributions from net realized capital
gains -- -- (1.02) (5.07) (4.13)
-------- -------- -------- -------- --------
Total distributions -- -- (1.09) (5.10) (4.13)
-------- -------- -------- -------- --------
Net asset value, end of period $ 35.04 $ 32.14 $ 23.73 $ 28.89 $ 36.23
======== ======== ======== ======== ========
Total Return(1) 9.06% 35.44% (14.94)% (6.55)% 28.73%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $621,924 $523,308 $375,821 $427,215 $442,253
Ratio of operating expenses to average
net assets 0.94% 1.02% 1.05% 1.01% 1.02%
Ratio of net investment income/(loss)
to average net assets 0.17% 0.14% 0.07% 0.38% 0.27%
Portfolio turnover rate 12% 14% 16% 27% 42%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 0.94% 1.02% 1.05% 1.01% 1.02%
<FN>
- --------
(1) Total return is not annualized for periods less than one year and does
not reflect any applicable sales charges. The total returns would have
been lower if certain fees had not been waived and/or expenses
reimbursed by the investment advisor or if fees had not been reduced by
credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses
paid indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Amount represents less than $0.01 per share.
(6) Annualized.
(7) Ratio represents less than 0.01%.
126 See Notes to Financial Statements.
Growth & Income Fund Class B
------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
------------------------------------------------------------
Net asset value, beginning of period $ 20.74 $ 17.72 $ 21.67 $ 26.49 $ 24.24
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) (0.01)(4) 0.02(4) (0.04)(4) (0.13) (0.17)
Net realized and unrealized gain/(loss)
on investments 1.74 3.00 (3.55) (3.52) 3.25
-------- -------- -------- -------- --------
Total from investment operations 1.73 3.02 (3.59) (3.65) 3.08
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- (0.00)(5) -- --
Distributions from net realized capital
gains -- -- (0.36) (1.17) (0.83)
-------- -------- -------- -------- --------
Total distributions -- -- (0.36) (1.17) (0.83)
-------- -------- -------- -------- --------
Net asset value, end of period 22.47 $ 20.74 $ 17.72 $ 21.67 $ 26.49
======== ======== ======== ======== ========
Total Return(1) 8.39% 16.99% (16.94)% (14.20)% 13.01%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 95,528 $115,457 $123,423 $186,247 $242,611
Ratio of operating expenses to
average net assets 1.89% 1.96% 1.91% 1.82% 1.78%
Ratio of net investment income/(loss)
to average net assets (0.05)% 0.09% (0.18)% (0.50)% (0.63)%
Portfolio turnover rate 6% 17% 22% 35% 35%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 1.89% 1.96% 1.91% 1.82% 1.78%
West Coast Equity Fund Class B
------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
------------------------------------------------------------
Net asset value, beginning of period $ 29.14 $ 21.73 $ 26.71 $ 34.12 $ 30.63
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) (0.24)(4) (0.20)(4) (0.23)(4) (0.15) (0.19)(4)
Net realized and unrealized gain/(loss)
on investments 2.58 7.61 (3.73) (2.19) 7.81
-------- -------- -------- -------- --------
Total from investment operations 2.34 7.41 (3.96) (2.34) 7.62
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- (0.00)(5) -- --
Distributions from net realized capital
gains -- -- (1.02) (5.07) (4.13)
-------- -------- -------- -------- --------
Total distributions -- -- (1.02) (5.07) (4.13)
-------- -------- -------- -------- --------
Net asset value, end of period $ 31.48 $ 29.14 $ 21.73 $ 26.71 $ 34.12
======== ======== ======== ======== ========
Total Return(1) 8.03% 34.10% (15.73)% (7.40)% 27.67%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $141,134 $122,221 $102,208 $109,655 $116,672
Ratio of operating expenses to average
net assets 1.89% 2.01% 2.00% 1.89% 1.84%
Ratio of net investment income/(loss)
to average net assets (0.78)% (0.85)% (0.88)% (0.50)% (0.55)%
Portfolio turnover rate 12% 14% 16% 27% 42%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 1.89% 2.01% 2.00% 1.89% 1.84%
Growth & Income Fund Class C
---------------------------------------
Years Ended October 31 2004 2003 2002(3)
---------------------------------------
Net asset value, beginning of period $ 20.62 $ 17.73 $ 21.36
--------- -------- ---------
Income from investment operations:
Net investment income/(loss) 0.00(4)(5) (0.03)(4) (0.01)(4)
Net realized and unrealized gain/(loss)
on investments 1.73 2.98 (3.62)
--------- -------- ---------
Total from investment operations 1.73 3.01 (3.63)
--------- -------- ---------
Less distributions:
Dividends from net investment income (0.13) (0.12) --
Distributions from net realized capital
gains -- -- --
--------- -------- ---------
Total distributions (0.13) (0.12) --
--------- -------- ---------
Net asset value, end of period $ 22.22 $ 20.62 $ 17.73
========= ======== =========
Total Return(1) 8.45% 17.08% (17.00)%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 1,537 $ 823 $ 264
Ratio of operating expenses to
average net assets 1.84% 1.89% 1.83%(6)
Ratio of net investment income/(loss)
to average net assets (0.00)%(7) 0.16% (0.10)%(6)
Portfolio turnover rate 6% 17% 22%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 1.84% 1.89% 1.83%(6)
West Coast Equity Fund Class C
-------------------------------------
Years Ended October 31 2004 2003 2002(3)
-------------------------------------
Net asset value, beginning of period $ 29.20 $ 21.74 $ 27.59
--------- -------- ---------
Income from investment operations:
Net investment income/(loss) 0.21(4) (0.18)(4) (0.14)(4)
Net realized and unrealized gain/(loss)
on investments 2.57 7.64 (5.71)
--------- -------- ---------
Total from investment operations 2.36 7.46 (5.85)
--------- -------- ---------
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized capital
gains -- -- --
--------- -------- ---------
Total distributions -- -- --
--------- -------- ---------
Net asset value, end of period $ 31.56 $ 29.20 $ 21.74
========= ======== =========
Total Return(1) 8.12% 34.27% (21.20)%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $ 9,000 $ 3,593 $ 1,341
Ratio of operating expenses to average
net assets 1.80% 1.90% 1.96%(6)
Ratio of net investment income/(loss)
to average net assets (0.69)% (0.74)% (0.84)%(6)
Portfolio turnover rate 12% 14% 16%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 1.80% 1.90% 1.96%(6)
Growth & Income Fund Class I
-------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
-------------------------------------------------------------------
Net asset value, beginning of period $ 21.68 $ 18.52 $ 22.39 $ 27.16 $ 24.65
---------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) 0.30(4) 0.29(4) 0.24(4) 0.18 0.14
Net realized and unrealized gain/(loss)
on investments 1.82 3.12 (3.70) (3.64) 3.31
---------- -------- -------- -------- --------
Total from investment operations 2.12 3.41 (3.46) (3.46) 3.45
---------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.28) (0.25) (0.05) (0.14) (0.11)
Distributions from net realized capital
gains -- -- (0.36) (1.17) (0.83)
---------- -------- -------- -------- --------
Total distributions (0.28) (0.25) (0.41) (1.31) (0.94)
---------- -------- -------- -------- --------
Net asset value, end of period $ 23.52 $ 21.68 $ 18.52 $ 22.39 $ 27.16
========== ======== ======== ======== ========
Total Return(1) 9.85% 18.61% (15.84)% (13.12)% 14.35%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $1,394,883 $895,547 $671,191 $768,550 $725,241
Ratio of operating expenses to
average net assets 0.57% 0.59% 0.60% 0.58% 0.60%
Ratio of net investment income/(loss)
to average net assets 1.27% 1.46% 1.13% 0.74% 0.55%
Portfolio turnover rate 6% 17% 22% 35% 35%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 0.57% 0.59% 0.60% 0.58% 0.60%
West Coast Equity Fund Class I
-------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
-------------------------------------------------------------------
Net asset value, beginning of period $ 32.39 $ 23.83 $ 29.00 $ 36.34 $ 32.04
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) 0.17(4) 0.13(4) 0.12(4) 0.20 0.22(4)
Net realized and unrealized gain/(loss)
on investments 2.87 8.43 (4.10) (2.34) 8.21
-------- -------- -------- -------- --------
Total from investment operations 3.04 8.56 (3.98) (2.14) 8.43
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.04) -- (0.17) (0.13) --
Distributions from net realized capital
gains -- -- (1.02) (5.07) (4.13)
-------- -------- -------- -------- --------
Total distributions (0.04) -- (1.19) (5.20) (4.13)
-------- -------- -------- -------- --------
Net asset value, end of period $ 35.39 $ 32.39 $ 23.83 $ 29.00 $ 36.34
======== ======== ======== ======== ========
Total Return(1) 9.39% 35.92% (14.65)% (6.22)% 29.11%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $515,464 $349,363 $195,029 $176,303 $148,954
Ratio of operating expenses to average
net assets 0.61% 0.67% 0.70% 0.68% 0.70%
Ratio of net investment income/(loss)
to average net assets 0.50% 0.49% 0.42% 0.71% 0.59%
Portfolio turnover rate 12% 14% 16% 27% 42%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 0.61% 0.67% 0.70% 0.68% 0.70%
See Notes to Financial Statements. 127
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
-------------------------------------------------------------------------------------------------------------
Mid Cap Stock Fund Class A
----------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000(3)
----------------------------------------------------------------
Net asset value, beginning of period $ 15.34 $ 12.39 $ 13.50 $ 12.58 $ 10.00
-------- -------- ------- -------- --------
Income from investment operations:
Net investment income/(loss) 0.02(5) 0.01(5) (0.01)(5) (0.03)(5) (0.02)(5)
Net realized and unrealized gain/(loss)
on investments 1.75 2.94 (0.60) 1.00 2.60
-------- -------- ------- -------- --------
Total from investment operations 1.77 2.95 (0.61) 0.97 2.58
-------- -------- ------- -------- --------
Less distributions:
Dividends from net investment income (0.01) -- -- -- --
Distributions from net realized capital
gains (0.04) -- (0.50) (0.05) --
-------- -------- ------- -------- --------
Total distributions (0.05) -- (0.50) (0.05) --
-------- -------- ------- -------- --------
Net asset value, end of period $ 17.06 $ 15.34 $ 12.39 $ 13.50 $ 12.58
======== ======== ======= ======== ========
Total Return(1) 11.57% 23.81% (4.86)% 7.71% 25.80%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $ 59,491 $ 38,676 $28,248 $ 6,165 $ 2,451
Ratio of operating expenses to average
net assets 1.14% 1.16% 1.25% 1.36% 1.40%(6)
Ratio of net investment income/(loss)
to average net assets 0.12% 0.07% (0.10)% (0.25)% (0.29)%(6)
Portfolio turnover rate 23% 28% 27% 33% 9%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 1.14% 1.16% 1.25% 1.36% 1.40%(6)
Growth Fund Class A
----------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------
Net asset value, beginning of period $ 13.71 $ 11.47 $ 15.23 $ 32.78 $ 29.71
-------- -------- ------- -------- --------
Income from investment operations:
Net investment income/(loss) (0.06)(5) (0.08)(5) (0.10)(5) (0.09)(5) (0.14)(5)
Net realized and unrealized gain/(loss)
on investments 0.79 2.32 (3.66) (13.13) 7.04
-------- -------- ------- -------- --------
Total from investment operations 0.73 2.24 (3.76) (13.22) 6.90
-------- -------- ------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- (0.20) --
Distributions from net realized capital
gains -- -- -- (4.13) (3.83)
-------- -------- ------- -------- --------
Total distributions -- -- -- (4.33) (3.83)
-------- -------- ------- -------- --------
Net asset value, end of period $ 14.44 $ 13.71 $ 11.47 $ 15.23 $ 32.78
======== ======== ======= ======== ========
Total Return(1) 5.32% 19.53% (24.69)% (45.77)% 24.21%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $124,755 $114,757 $94,848 $151,893 $341,777
Ratio of operating expenses to average
net assets 1.44% 1.62% 1.69% 1.52% 1.30%
Ratio of net investment income/(loss)
to average net assets (0.43)% (0.66)% (0.74)% (0.43)% (0.39)%
Portfolio turnover rate 56% 71% 170% 99% 92%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 1.44% 1.62% 1.69% 1.52% 1.36%
<FN>
- --------
(1) Total return is not annualized for periods less than one year and does
not reflect any applicable sales charges. The total returns would have
been lower if certain fees had not been waived and/or expenses
reimbursed by the investment advisor or if fees had not been reduced by
credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses
paid indirectly through custodian credits.
(3) The Mid Cap Stock Fund commenced operations on March 1, 2000.
(4) The Funds commenced selling Class C shares on March 1, 2002.
(5) Per share numbers have been calculated using the average shares method.
(6) Annualized.
(7) Amount represents less than $0.01 per share.
128 See Notes to Financial Statements.
Mid Cap Stock Fund Class B
----------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000(3)
----------------------------------------------------------------
Net asset value, beginning of period $ 14.82 $ 12.09 $ 13.31 $ 12.51 $ 10.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) (0.14)(5) (0.13)(5) (0.15)(5) (0.15)(5) (0.08)(5)
Net realized and unrealized gain/(loss)
on investments 1.69 2.86 (0.57) 1.00 2.59
-------- -------- -------- -------- --------
Total from investment operations 1.55 2.73 (0.72) 0.85 2.51
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- -- --
Distributions from net realized capital
gains (0.04) -- (0.50) (0.05) --
-------- -------- -------- -------- --------
Total distributions (0.04) -- (0.50) (0.05) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 16.33 $ 14.82 $ 12.09 $ 13.31 $ 12.51
======== ======== ======== ======== ========
Total Return(1) 10.54% 22.50% (5.79)% 6.79% 25.10%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $ 19,958 $ 17,405 $ 13,229 $ 10,271 $ 3,778
Ratio of operating expenses to average
net assets 2.12% 2.24% 2.26% 2.17% 2.16%(6)
Ratio of net investment income/(loss) to
average net assets (0.86)% (1.01)% (1.11)% (1.06)% (1.05)%(6)
Portfolio turnover rate 23% 28% 27% 33% 9%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 2.12% 2.24% 2.26% 2.17% 2.16%(6)
Growth Fund Class B
----------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------
Net asset value, beginning of period $ 12.49 $ 10.55 $ 14.13 $ 30.78 $ 28.29
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) (0.17)(5) (0.18)(5) (0.21)(5) (0.24)(5) (0.38)(5)
Net realized and unrealized gain/(loss)
on investments 0.71 2.12 (3.37) (12.24) 6.70
-------- -------- -------- -------- --------
Total from investment operations 0.54 1.94 (3.58) (12.48) 6.32
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- (0.04) --
Distributions from net realized capital
gains -- -- -- (4.13) (3.83)
-------- -------- -------- -------- --------
Total distributions -- -- -- (4.17) (3.83)
-------- -------- -------- -------- --------
Net asset value, end of period $ 13.03 $ 12.49 $ 10.55 $ 14.13 $ 30.78
======== ======== ======== ======== ========
Total Return(1) 4.40% 18.39% (25.34)% (46.19)% 23.28%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $110,794 $129,239 $128,007 $220,108 $481,935
Ratio of operating expenses to average
net assets 2.35% 2.54% 2.54% 2.31% 2.05%
Ratio of net investment income/(loss)
to average net assets (1.34)% (1.58)% (1.59)% (1.22)% (1.14)%
Portfolio turnover rate 56% 71% 170% 99% 92%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 2.35% 2.54% 2.54% 2.31% 2.11%
Mid Cap Stock Fund Class C
---------------------------------
Years Ended October 31 2004 2003 2002(4)
---------------------------------
Net asset value, beginning of period $ 14.83 $ 12.10 $ 13.60
-------- ------- --------
Income from investment operations:
Net investment income/(loss) (0.13)(5) (0.12)(5) (0.10)(5)
Net realized and unrealized gain/(loss)
on investments 1.70 2.85 (1.40)
-------- ------- --------
Total from investment operations 1.57 2.73 (1.50)
-------- ------- --------
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized capital
gains (0.04) -- --
-------- ------- --------
Total distributions (0.04) -- --
-------- ------- --------
Net asset value, end of period $ 16.36 $ 14.83 $ 12.10
======== ======= ========
Total Return(1) 10.60% 22.56% (11.03)%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $ 1,769 $ 550 $ 55
Ratio of operating expenses to average
net assets 2.04% 2.15% 2.24%(6)
Ratio of net investment income/(loss) to
average net assets (0.79)% (0.92)% (1.09)%(6)
Portfolio turnover rate 23% 28% 27%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 2.04% 2.15% 2.24%(6)
Growth Fund Class C
-------------------------------
Years Ended October 31 2004 2003 2002(4)
-------------------------------
Net asset value, beginning of period $ 12.55 $ 10.56 $ 13.48
------- ------- --------
Income from investment operations:
Net investment income/(loss) (0.15)(5) (0.14)(5) (0.11)(5)
Net realized and unrealized gain/(loss)
on investments 0.73 2.13 (2.81)
------- ------- --------
Total from investment operations 0.58 1.99 (2.92)
------- ------- --------
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized capital
gains -- -- --
------- ------- --------
Total distributions -- -- --
------- ------- --------
Net asset value, end of period $ 13.13 $ 12.55 $ 10.56
======= ======= ========
Total Return(1) 4.62% 18.85% (21.66)%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $ 1,981 $ 565 $ 199
Ratio of operating expenses to average
net assets 2.14% 2.19% 2.38%(6)
Ratio of net investment income/(loss) to
average net assets (1.13)% (1.23)% (1.43)%(6)
Portfolio turnover rate 56% 71% 170%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2) 2.14% 2.19% 2.38%(6)
Mid Cap Stock Fund Class I
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000(4)
--------------------------------------------------------
Net asset value, beginning of period $ 15.50 $ 12.51 $ 13.59 $ 12.62 $ 10.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) 0.08(5) 0.06(5) 0.04(5) 0.04(5) 0.02(5)
Net realized and unrealized gain/(loss)
on investments 1.78 2.97 (0.60) 1.00 2.60
-------- -------- -------- -------- --------
Total from investment operations 1.86 3.03 (0.56) 1.04 2.62
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.06) (0.04) (0.02) (0.02) --
Distributions from net realized capital
gains (0.04) -- (0.50) (0.05) --
-------- -------- -------- -------- --------
Total distributions (0.10) (0.04) (0.52) (0.07) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 17.26 $ 15.50 $ 12.51 $ 13.59 $ 12.62
======== ======== ======== ======== ========
Total Return(1) 12.02% 24.27% (4.44)% 8.29% 26.20%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $616,052 $369,772 $231,409 $220,052 $176,653
Ratio of operating expenses to average
net assets 0.80% 0.81% 0.83% 0.81% 0.88%(6)
Ratio of net investment income/(loss)
to average net assets 0.45% 0.42% 0.32% 0.30% 0.23%(6)
Portfolio turnover rate 23% 28% 27% 33% 9%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2) 0.80% 0.81% 0.83% 0.81% 0.88%(6)
Growth Fund Class I
----------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------------
Net asset value, beginning of period $ 14.13 $ 11.74 $ 15.48 $ 33.23 $ 29.96
---------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) 0.02(5) 0.00(5)(7) (0.01)(5) 0.02(5) 0.01(5)
Net realized and unrealized gain/(loss)
on investments 0.81 2.39 (3.73) (13.31) 7.09
---------- -------- -------- -------- --------
Total from investment operations 0.83 2.39 (3.74) (13.29) 7.10
---------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- (0.33) --
Distributions from net realized capital
gains -- -- -- (4.13) (3.83)
---------- -------- -------- -------- --------
Total distributions -- -- -- (4.46) (3.83)
---------- -------- -------- -------- --------
Net asset value, end of period $ 14.96 $ 14.13 $ 11.74 $ 15.48 $ 33.23
========== ======== ======== ======== ========
Total Return(1) 5.95% 20.27% (24.16)% (45.50)% 24.73%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $1,281,900 $664,334 $357,296 $203,646 $399,028
Ratio of operating expenses to average
net assets 0.86% 0.92% 1.03% 1.00% 0.90%
Ratio of net investment income/(loss) to
average net assets 0.15% 0.04% (0.08)% 0.09% 0.01%
Portfolio turnover rate 56% 71% 170% 99% 92%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2) 0.86% 0.92% 1.03% 1.00% 0.96%
See Notes to Financial Statements. 129
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund Class A
-------
Year Ended October 31 2004(3)
-------
Net asset value, beginning of period $10.00
------
Income from investment operations:
Net investment income/(loss) 0.05(4)
Net realized and unrealized gain on investments 0.76
------
Total from investment operations 0.81
------
Less distributions:
Dividends from net investment income --
Distributions from net realized capital gains --
------
Total distributions --
------
Net asset value, end of period $10.81
======
Total Return(1) 8.10%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $2,978
Ratio of operating expenses to average net assets 1.33%(6)
Ratio of net investment income/(loss) to
average net assets 0.77%(6)
Portfolio turnover rate 36%
Ratio of operating expenses to average net
assets without fee waivers, expenses reimbursed
and/or fees reduced by credits allowed by the
custodian(2) 1.33%(6)
Small Cap Growth Fund (7) Class A
---------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
---------------------------------------------------------
Net asset value, beginning of period $ 13.42 $ 8.21 $ 13.60 $ 26.67 $ 19.61
------- ------- ------- ------- --------
Income from investment operations:
Net investment loss (0.14)(4) (0.09)(4) (0.14)(4) (0.20) (0.27)(4)
Net realized and unrealized gain/(loss) on
investments (0.28) 5.30 (4.28) (9.56) 10.01
------- ------- ------- ------- --------
Total from investment operations (0.42) 5.21 (4.42) (9.76) 9.74
------- ------- ------- ------- --------
Less distributions:
Dividends from net investment income -- -- -- -- --
Distributions from net realized capital gains -- -- (0.97) (3.31) (2.68)
------- ------- ------- ------- --------
Total distributions -- -- (0.97) (3.31) (2.68)
------- ------- ------- ------- --------
Net asset value, end of period $ 13.00 $ 13.42 $ 8.21 $ 13.60 $ 26.67
======= ======= ======= ======= ========
Total Return(1) (3.13)% 63.46% (35.71)% (40.84)% 53.57%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $92,919 $81,234 $42,984 $66,262 $132,274
Ratio of operating expenses to average net assets 1.46% 1.64% 1.68% 1.52% 1.42%
Ratio of net investment loss to average net assets (1.01)% (0.86)% (1.20)% (1.03)% (0.96)%
Portfolio turnover rate 53% 40% 21% 46% 49%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2) 1.46% 1.64% 1.68% 1.52% 1.43%
<FN>
- --------
(1) Total return is not annualized for periods less than one year and does
not reflect any applicable sales charges. The total returns would have
been lower if certain fees had not been waived and/or expenses
reimbursed by the investment advisor or if fees had not been reduced by
credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses
paid indirectly through custodian credits.
(3) The Small Cap Value Fund commenced operations on March 1, 2004.
(4) Per share numbers have been calculated using the average shares method.
(5) Amount represents less than $0.01 per share.
(6) Annualized.
(7) Formerly the Small Cap Stock Fund.
(8) The Small Cap Growth Fund commenced selling Class C shares on March 1, 2002.
(9) The Small Cap Growth Fund commenced selling Class I shares on January 5, 2000.
130 See Notes to Financial Statements.
Small Cap Value Fund Class B
-------
Year Ended October 31 2004(3)
-------
Net asset value, beginning of period $ 10.00
-------
Income from investment operations:
Net investment income/(loss) (0.01)(4)
Net realized and unrealized gain on investments 0.75
-------
Total from investment operations 0.74
-------
Less distributions:
Dividends from net investment income --
Distributions from net realized capital gains --
-------
Total distributions --
-------
Net asset value, end of period $ 10.74
=======
Total Return(1) 7.40%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 631
Ratio of operating expenses to average net assets 2.23%(6)
Ratio of net investment income/(loss) to
average net assets (0.13)%(6)
Portfolio turnover rate 36%
Ratio of operating expenses to average net
assets without fee waivers, expenses reimbursed
and/or fees reduced by credits allowed by the
custodian(2) 2.23%(6)
Small Cap Growth Fund (7) Class B
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------
Net asset value, beginning of period $ 11.96 $ 7.40 $ 12.46 $ 24.93 $ 18.61
------- ------- ------- ------- -------
Income from investment operations:
Net investment loss (0.26)(4) (0.18)(4) (0.23)(4) (0.32) (0.47)(4)
Net realized and unrealized gain/(loss) on
investments (0.24) 4.74 (3.86) (8.84) 9.47
------- ------- ------- ------- -------
Total from investment operations (0.50) 4.56 (4.09) (9.16) 9.00
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income -- -- -- -- --
Distributions from net realized capital gains -- -- (0.97) (3.31) (2.68)
------- ------- ------- ------- -------
Total distributions -- -- (0.97) (3.31) (2.68)
------- ------- ------- ------- -------
Net asset value, end of period $ 11.46 $ 11.96 $ 7.40 $ 12.46 $ 24.93
======= ======= ======= ======= =======
Total Return(1) (4.18)% 61.62% (36.36)% (41.35)% 52.34%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $12,181 $18,037 $14,238 $29,346 $54,407
Ratio of operating expenses to average net assets 2.54% 2.81% 2.64% 2.42% 2.24%
Ratio of net investment loss to average net assets (2.09)% (2.03)% (2.16)% (1.93)% (1.78)%
Portfolio turnover rate 53% 40% 21% 46% 49%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2) 2.54% 2.81% 2.64% 2.42% 2.25%
Small Cap Value Fund Class C
-------
Year Ended October 31 2004(3)
-------
Net asset value, beginning of period $10.00
------
Income from investment operations:
Net investment income/(loss) (0.00)(4)(5)
Net realized and unrealized gain on investments 0.76
------
Total from investment operations 0.76
------
Less distributions:
Dividends from net investment income --
Distributions from net realized capital gains --
------
Total distributions --
------
Net asset value, end of period $10.76
======
Total Return(1) 7.60%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 414
Ratio of operating expenses to average net assets 2.13%(6)
Ratio of net investment income/(loss) to
average net assets (0.03)%(6)
Portfolio turnover rate 36%
Ratio of operating expenses to average net
assets without fee waivers, expenses reimbursed
and/or fees reduced by credits allowed by the
custodian(2) 2.13%(6)
Small Cap Growth Fund (7) Class C
------------------------------
Years Ended October 31 2004 2003 2002(8)
------------------------------
Net asset value, beginning of period $12.06 $ 7.42 $ 11.51
------ ------ -------
Income from investment operations:
Net investment loss (0.23)(4) (0.14)(4) (0.10)(4)
Net realized and unrealized gain/(loss) on
investments (0.24) 4.78 (3.99)
------ ------ -------
Total from investment operations (0.47) 4.64 (4.09)
------ ------ -------
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized capital gains -- -- --
------ ------ -------
Total distributions -- -- --
------ ------ -------
Net asset value, end of period $11.59 $12.06 $ 7.42
====== ====== =======
Total Return(1) (3.90)% 62.53% (35.53)%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 871 $ 404 $ 69
Ratio of operating expenses to average net assets 2.28% 2.28% 2.25%(6)
Ratio of net investment loss to average net assets (1.83)% (1.50)% (1.77)%(6)
Portfolio turnover rate 53% 40% 21%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2) 2.28% 2.28% 2.25%(6)
Small Cap Value Fund Class I
-------
Year Ended October 31 2004(3)
-------
Net asset value, beginning of period $ 10.00
--------
Income from investment operations:
Net investment income/(loss) 0.08(4)
Net realized and unrealized gain on investments 0.75
--------
Total from investment operations 0.83
--------
Less distributions:
Dividends from net investment income --
Distributions from net realized capital gains --
--------
Total distributions --
--------
Net asset value, end of period $ 10.83
========
Total Return(1) 8.30%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $268,310
Ratio of operating expenses to average net assets 0.95%(6)
Ratio of net investment income/(loss) to
average net assets 1.15%(6)
Portfolio turnover rate 36%
Ratio of operating expenses to average net
assets without fee waivers, expenses reimbursed
and/or fees reduced by credits allowed by the
custodian(2) 0.95%(6)
Small Cap Growth Fund (7) Class I
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000(9)
--------------------------------------------------------
Net asset value, beginning of period $ 13.76 $ 8.35 $ 13.74 $ 26.77 $ 24.98
-------- -------- -------- -------- --------
Income from investment operations:
Net investment loss (0.07)(4) (0.02)(4) (0.06)(4) (0.06) (0.15)(4)
Net realized and unrealized gain/(loss) on
investments (0.30) 5.43 (4.36) (9.66) 1.94
-------- -------- -------- -------- --------
Total from investment operations (0.37) 5.41 (4.42) (9.72) 1.79
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- -- --
Distributions from net realized capital gains -- -- (0.97) (3.31) --
-------- -------- -------- -------- --------
Total distributions -- -- (0.97) (3.31) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 13.39 $ 13.76 $ 8.35 $ 13.74 $ 26.77
======== ======== ======== ======== ========
Total Return(1) (2.62)% 64.67% (35.32)% (40.49)% 7.21%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $237,582 $337,271 $123,620 $134,462 $150,073
Ratio of operating expenses to average net assets 0.95% 0.96% 1.00% 0.97% 0.98%(6)
Ratio of net investment loss to average net assets (0.50)% (0.18)% (0.52)% (0.48)% (0.52)%(6)
Portfolio turnover rate 53% 40% 21% 46% 49%
Ratio of operating expenses to average net assets
without fee waivers, expenses reimbursed and/or
fees reduced by credits allowed by the custodian(2) 0.95% 0.96% 1.00% 0.97% 0.99%(6)
See Notes to Financial Statements. 131
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
------------------------------------------------------------------------------------------------------------------
International Growth Fund Class A
----------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------
Net asset value, beginning of period $ 8.38 $ 6.76 $ 7.61 $ 10.97 $ 11.14
------- ------- ------- ------- -------
Income from investment operations:
Net investment income/(loss) 0.06(4) 0.03(4) (0.02)(4) (0.02) (0.03)(4)
Net realized and unrealized gain/(loss)
on investments 0.85 1.63 (0.75) (2.67) 0.00(5)
------- ------- ------- ------- -------
Total from investment operations 0.91 1.66 (0.77) (2.69) (0.03)
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.08) (0.04) (0.08) (0.01) (0.14)
Distributions from net realized capital
gains -- -- -- (0.66) (0.00)(5)
------- ------- ------- ------- -------
Total distributions (0.08) (0.04) (0.08) (0.67) (0.14)
------- ------- ------- ------- -------
Redemption Fees 0.00(5) 0.00(5) 0.00(5) -- --
------- ------- ------- ------- -------
Net asset value, end of period $ 9.21 $ 8.38 $ 6.76 $ 7.61 $ 10.97
======= ======= ======= ======= =======
Total Return(1) 10.89% 24.75% (10.36)% (25.99)% (0.43)%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $38,864 $26,429 $21,317 $16,636 $28,997
Ratio of operating expenses to average
net assets 1.49% 1.70% 1.93% 1.93% 1.78%
Ratio of net investment income/(loss)
to average net assets 0.68% 0.47% (0.20)% (0.25)% (0.25)%
Portfolio turnover rate 20% 19% 25% 27% 37%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 1.49% 1.70% 1.93% 1.93% 1.78%
Short Term Income Fund Class A
----------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------
Net asset value, beginning of period $ 2.39 $ 2.34 $ 2.41 $ 2.29 $ 2.29
------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.08 0.09 0.12 0.13 0.13
Net realized and unrealized gain/(loss)
on investments (0.01) 0.06 (0.07) 0.12 (0.00)(5)
------- ------- ------- ------- -------
Total from investment operations 0.07 0.15 0.05 0.25 0.13
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.08) (0.10) (0.12) (0.13) (0.13)
------- ------- ------- ------- -------
Net asset value, end of period $ 2.38 $ 2.39 $ 2.34 $ 2.41 $ 2.29
======= ======= ======= ======= =======
Total Return(1) 2.87% 6.28% 2.18% 11.31% (5.70)%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $54,082 $71,920 $28,106 $18,929 $20,224
Ratio of operating expenses to average
net assets 0.83% 0.84% 0.96% 0.83% 0.99%
Ratio of net investment income to average
net assets 3.23% 3.58% 5.03% 5.63% 5.55%
Portfolio turnover rate 14% 33% 28% 27% 14%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 0.92% 0.97% 1.09% 1.15% 1.29%
<FN>
- -----------
(1) Total return is not annualized for periods less than one year and does
not reflect any applicable sales charges. The total returns would have
been lower if certain fees had not been waived and/or expenses reimbursed
by the investment advisor or if fees had not been reduced by credits
allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Amount represents less than $0.01 per share.
(6) Annualized.
132 See Notes to Financial Statements.
- ---------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
International Growth Fund Class B
--------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value, beginning of period $ 8.03 $ 6.51 $ 7.35 $ 10.70 $ 10.87
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) (0.04)(4) (0.05)(4) (0.09)(4) (0.10) (0.12)(4)
Net realized and unrealized gain/(loss)
on investments 0.81 1.57 (0.73) (2.58) 0.02
-------- -------- -------- -------- --------
Total from investment operations 0.77 1.52 (0.82) (2.68) (0.10)
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- (0.02) (0.01) (0.07)
Distributions from net realized capital
gains -- -- -- (0.66) (0.00)(5)
-------- -------- -------- -------- --------
Total distributions -- -- (0.02) (0.67) (0.07)
-------- -------- -------- -------- --------
Redemption Fees 0.00(5) 0.00(5) 0.00(5) -- --
-------- -------- -------- -------- --------
Net asset value, end of period $ 8.80 $ 8.03 $ 6.51 $ 7.35 $ 10.70
======== ======== -------- -------- --------
Total Return(1) 9.59% 23.35% (11.23)% (26.68)% (1.03)%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 3,630 $ 4,020 $ 4,732 $ 7,172 $ 12,272
Ratio of operating expenses to average
net assets 2.62% 2.91% 2.91% 2.74% 2.48%
Ratio of net investment income/(loss)
to average net assets (0.45)% (0.74)% (1.18)% (1.06)% (0.95)%
Portfolio turnover rate 20% 19% 25% 27% 37%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 2.62% 2.91% 2.91% 2.74% 2.48%
Short Term Income Fund Class B
--------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value, beginning of period $ 2.39 $ 2.34 $ 2.41 $ 2.29 $ 2.29
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.06 0.07 0.10 0.12 0.11
Net realized and unrealized gain/(loss)
on investments (0.01) 0.06 (0.07) 0.12 (0.00)(5)
-------- -------- -------- -------- --------
Total from investment operations 0.05 0.13 0.03 0.24 0.11
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.06) (0.08) (0.10) (0.12) (0.11)
-------- -------- -------- -------- --------
Net asset value, end of period $ 2.38 $ 2.39 $ 2.34 $ 2.41 $ 2.29
======== ======== ======== ======== ========
Total Return(1) 2.11% 5.49% 1.41% 10.52% 5.12%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 31,812 $ 44,310 $ 24,621 $ 6,595 $ 3,461
Ratio of operating expenses to average
net assets 1.58% 1.59% 1.71% 1.54% 1.55%
Ratio of net investment income to average
net assets 2.48% 2.83% 4.28% 4.92% 4.99%
Portfolio turnover rate 14% 33% 28% 27% 14%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 1.70% 1.70% 1.77% 1.86% 1.85%
International Growth Fund Class C
---------------------------------
Years Ended October 31 2004 2003 2002(3)
---------------------------------
Net asset value, beginning of period $ 8.02 $ 6.53 $ 7.55
------- ------- --------
Income from investment operations:
Net investment income/(loss) (0.02)(4) (0.03)(4) (0.05)(4)
Net realized and unrealized gain/(loss)
on investments 0.81 1.56 (0.96)
------- ------- --------
Total from investment operations 0.79 1.53 (1.01)
------- ------- --------
Less distributions:
Dividends from net investment income (0.06) (0.04) (0.01)
Distributions from net realized capital
gains -- -- --
------- ------- --------
Total distributions (0.06) (0.04) (0.01)
------- ------- --------
Redemption Fees 0.00(5) 0.00(5) 0.00(5)
------- ------- --------
Net asset value, end of period $ 8.75 $ 8.02 $ 6.53
======= ======= ========
Total Return(1) 9.87% 23.57% (13.34)%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 445 $ 91 $ 53
Ratio of operating expenses to average
net assets 2.36% 2.64% 2.67%(6)
Ratio of net investment income/(loss)
to average net assets (0.19)% (0.47)% (0.94)%(6)
Portfolio turnover rate 20% 19% 25%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2) 2.36% 2.64% 2.67%(6)
Short Term Income Fund Class C
---------------------------------
Years Ended October 31 2004 2003 2002(3)
---------------------------------
Net asset value, beginning of period $ 2.39 $ 2.34 $ 2.37
------- ------- -------
Income from investment operations:
Net investment income 0.06 0.07 0.07
Net realized and unrealized gain/(loss)
on investments (0.01) 0.06 (0.03)
------- ------- -------
Total from investment operations 0.05 0.13 0.04
------- ------- -------
Less distributions:
Dividends from net investment income (0.06) (0.08) (0.07)
------- ------- -------
Net asset value, end of period $ 2.38 $ 2.39 $ 2.34
======= ======= =======
Total Return(1) 2.10% 5.48% 1.61%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $18,970 $17,843 $ 5,743
Ratio of operating expenses to average
net assets 1.58% 1.59% 1.68%(6)
Ratio of net investment income to average
net assets 2.48% 2.83% 4.31%(6)
Portfolio turnover rate 14% 33% 28%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 1.66% 1.65% 1.68%(6)
International Growth Fund Class I
--------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value, beginning of period $ 8.43 $ 6.80 $ 7.69 $ 11.00 $ 11.16
------- -------- -------- -------- --------
Income from investment operations:
Net investment income/(loss) 0.11(4) 0.08(4) 0.04(4) 0.04 0.05(4)
Net realized and unrealized gain/(loss)
on investments 0.84 1.64 (0.75) (2.68) 0.00(5)
------- -------- -------- -------- --------
Total from investment operations 0.95 1.72 (0.71) (2.64) 0.05
------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.12) (0.09) (0.18) (0.01) (0.21)
Distributions from net realized capital
gains -- -- -- (0.66) (0.00)(5)
------- -------- -------- -------- --------
Total distributions (0.12) (0.09) (0.18) (0.67) (0.21)
------- -------- -------- -------- --------
Redemption Fees 0.00(5) 0.00(5) 0.00(5) -- --
------- -------- -------- -------- --------
Net asset value, end of period $ 9.26 $ 8.43 $ 6.80 $ 7.69 $ 11.00
======= ======== ======== ======== ========
Total Return(1) 11.38% 25.56% (9.61)% (25.53)% 0.26%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $539,471 $317,493 $185,137 $124,886 $145,176
Ratio of operating expenses to average
net assets 0.99% 1.07% 1.19% 1.18% 1.14%
Ratio of net investment income/(loss)
to average net assets 1.18% 1.10% 0.54% 0.50% 0.39%
Portfolio turnover rate 20% 19% 25% 27% 37%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 0.99% 1.07% 1.19% 1.18% 1.14%
Short Term Income Fund Class I
-------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
-------------------------------------------------------------------
Net asset value, beginning of period $ 2.39 $ 2.34 $ 2.41 $ 2.29 $ 2.29
-------- -------- ------- -------- -------
Income from investment operations:
Net investment income 0.08 0.09 0.13 0.15 0.14
Net realized and unrealized gain/(loss)
on investments (0.01) 0.06 (0.07) 0.12 (0.00)(5)
-------- -------- ------- -------- -------
Total from investment operations 0.07 0.15 0.06 0.27 0.14
-------- -------- ------- -------- -------
Less distributions:
Dividends from net investment income (0.08) (0.10) (0.13) (0.15) (0.14)
-------- -------- ------- -------- -------
Net asset value, end of period $ 2.38 $ 2.39 $ 2.34 $ 2.41 $ 2.29
======== ======== ======= ======== =======
Total Return(1) 3.13% 6.55% 2.53% 11.93% 6.43%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $168,947 $129,443 $89,210 $110,710 $93,741
Ratio of operating expenses to average
net assets 0.58% 0.59% 0.61% 0.27% 0.30%
Ratio of net investment income to average
net assets 3.48% 3.83% 5.38% 6.19% 6.24%
Portfolio turnover rate 14% 33% 28% 27% 14%
Ratio of operating expenses to average
net assets without fee waivers, expenses
reimbursed and/or fees reduced by
credits allowed by the custodian(2) 0.58% 0.59% 0.61% 0.59% 0.60%
See Notes to Financial Statements. 133
Financial Highlights
- -------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
--------------------------------------------------------------------------------------------------
U.S. Government Securities Fund Class A
------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
------------------------------------------------------
Net asset value, beginning of
period $ 10.89 $ 11.19 $ 11.20 $ 10.55 $ 10.51
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.40(4) 0.40(4) 0.54 0.62 0.63
Net realized and unrealized
gain/(loss) on investments 0.05 (0.19) 0.04 0.65 0.04
-------- -------- -------- -------- --------
Total from investment operations 0.45 0.21 0.58 1.27 0.67
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.46) (0.51) (0.59) (0.62) (0.63)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.88 $ 10.89 $ 11.19 $ 11.20 $ 10.55
======== ======== ======== ======== ========
Total Return(1) 4.26% 1.94% 5.37% 12.39% 6.65%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $134,896 $176,859 $196,222 $174,047 $168,728
Ratio of operating expenses to
average net assets 0.93% 0.93% 0.96% 0.95% 0.96%
Ratio of net investment income
to average net assets 3.64% 3.59% 4.91% 5.71% 6.12%
Portfolio turnover rate 30% 62% 48% 30% 13%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 0.93% 0.93% 0.96% 0.95% 0.99%
Income Fund Class A
------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
------------------------------------------------------
Net asset value, beginning of period $ 9.35 $ 9.02 $ 9.32 $ 8.90 $ 8.99
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.46 0.51 0.60 0.62 0.62
Net realized and unrealized
gain/(loss) on investments 0.15 0.38 (0.28) 0.43 (0.09)
-------- -------- -------- -------- --------
Total from investment operations 0.61 0.89 0.32 1.05 0.53
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.50) (0.56) (0.62) (0.63) (0.62)
Distributions from net realized
capital gains -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions (0.50) (0.56) (0.62) (0.63) (0.62)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.46 $ 9.35 $ 9.02 $ 9.32 $ 8.90
======== ======== ======== ======== ========
Total Return(1) 6.68% 10.10% 3.63% 12.21% 6.16%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $147,695 $153,654 $130,512 $120,508 $131,665
Ratio of operating expenses to
average net assets 0.92% 0.94% 0.97% 0.97% 1.02%
Ratio of net investment income to
average net assets 4.90% 5.42% 6.61% 6.86% 6.98%
Portfolio turnover rate 24% 33% 20% 35% 32%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 0.92% 0.94% 0.97% 0.97% 1.03%
<FN>
- -----------
(1) Total return is not annualized for periods less than one year and does
not reflect any applicable sales charges. The total returns would have
been lower if certain fees had not been waived and/or expenses
reimbursed by the investment advisor or if fees had not been reduced by
credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses
paid indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Annualized.
134 See Notes to Financial Statements.
- -------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
U.S. Government Securities Fund Class B
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------
Net asset value, beginning of
period $ 10.88 $ 11.18 $ 11.19 $ 10.54 $ 10.50
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.32(4) 0.32(4) 0.46 0.54 0.56
Net realized and unrealized
gain/(loss) on investments 0.05 (0.19) 0.04 0.65 0.04
-------- -------- -------- -------- -------
Total from investment operations 0.37 0.13 0.50 1.19 0.60
-------- -------- -------- -------- -------
Less distributions:
Dividends from net investment
income (0.38) (0.43) (0.51) (0.54) (0.56)
-------- -------- -------- -------- -------
Net asset value, end of period $ 10.87 $ 10.88 $ 11.18 $ 11.19 $ 10.54
======== ======== ======== ======== =======
Total Return(1) 3.50% 1.20% 4.62% 11.59% 5.91%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $157,900 $251,153 $271,440 $128,155 $55,071
Ratio of operating expenses to
average net assets 1.65% 1.66% 1.68% 1.67% 1.66%
Ratio of net investment income
to average net assets 2.92% 2.86% 4.19% 4.99% 5.42%
Portfolio turnover rate 30% 62% 48% 30% 13%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 1.65% 1.66% 1.68% 1.67% 1.69%
Income Fund Class B
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------
Net asset value, beginning of period $ 9.37 $ 9.04 $ 9.35 $ 8.92 $ 9.00
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.39 0.44 0.54 0.56 0.56
Net realized and unrealized
gain/(loss) on investments 0.16 0.38 (0.29) 0.44 (0.08)
-------- -------- -------- -------- -------
Total from investment operations 0.55 0.82 0.25 1.00 0.48
-------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.43) (0.49) (0.56) (0.57) (0.56)
Distributions from net realized
capital gains -- -- -- -- --
-------- -------- -------- -------- -------
Total distributions (0.43) (0.49) (0.56) (0.57) (0.56)
-------- -------- -------- -------- -------
Net asset value, end of period $ 9.49 $ 9.37 $ 9.04 $ 9.35 $ 8.92
======== ======== ======== ======== =======
Total Return(1) 6.03% 9.31% 2.79% 11.52% 5.53%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $152,065 $194,396 $142,186 $ 72,472 $39,347
Ratio of operating expenses to
average net assets 1.65% 1.65% 1.68% 1.69% 1.73%
Ratio of net investment income to
average net assets 4.17% 4.71% 5.90% 6.14% 6.27%
Portfolio turnover rate 24% 33% 20% 35% 32%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 1.65% 1.65% 1.68% 1.69% 1.74%
U.S. Government Securities Fund Class C
-------------------------------
Years Ended October 31 2004 2003 2002(3)
-------------------------------
Net asset value, beginning of period $ 10.87 $ 11.18 $ 11.00
-------- -------- --------
Income from investment operations:
Net investment income 0.32(4) 0.32(4) 0.33
Net realized and unrealized gain/
(loss) on investments 0.05 (0.20) 0.18
-------- -------- --------
Total from investment operations 0.37 0.12 0.51
-------- -------- --------
Less distributions:
Dividends from net investment income (0.38) (0.43) (0.33)
-------- -------- --------
Net asset value, end of period $ 10.86 $ 10.87 $ 11.18
======== ======== ========
Total Return(1) 3.53% 1.12% 4.74%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $ 6,279 $ 13,354 $ 11,634
Ratio of operating expenses to
average net assets 1.64% 1.64% 1.63%(5)
Ratio of net investment income
to average net assets 2.93% 2.88% 4.24%(5)
Portfolio turnover rate 30% 62% 48%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 1.64% 1.64% 1.63%(5)
Income Fund Class C
-------------------------------
Years Ended October 31 2004 2003 2002(3)
-------------------------------
Net asset value, beginning of period $ 9.37 $ 9.04 $ 9.21
-------- -------- --------
Income from investment operations:
Net investment income 0.39 0.45 0.37
Net realized and unrealized
gain/(loss) on investments 0.16 0.38 (0.17)
-------- -------- --------
Total from investment operations 0.55 0.83 0.20
-------- -------- --------
Less distributions:
Dividends from net investment income (0.43) (0.50) (0.37)
Distributions from net realized
capital gains -- -- --
-------- -------- --------
Total distributions (0.43) (0.50) (0.37)
-------- -------- --------
Net asset value, end of period $ 9.49 $ 9.37 $ 9.04
======== ======== ========
Total Return(1) 6.02% 9.33% 2.25%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $ 11,580 $ 15,274 $ 7,710
Ratio of operating expenses
to average net assets 1.65% 1.63% 1.62%(5)
Ratio of net investment income
to average net assets 4.17% 4.73% 5.96%(5)
Portfolio turnover rate 24% 33% 20%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 1.65% 1.63% 1.62%(5)
U.S. Government Securities Fund Class I
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------
Net asset value, beginning of period $ 10.89 $ 11.19 $ 11.20 $ 10.55 $ 10.51
---------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.44(4) 0.44(4) 0.58 0.66 0.67
Net realized and unrealized gain/
(loss) on investments 0.05 (0.19) 0.04 0.65 0.04
---------- -------- -------- -------- --------
Total from investment operations 0.49 0.25 0.62 1.31 0.71
---------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.50) (0.55) (0.63) (0.66) (0.67)
---------- -------- -------- -------- --------
Net asset value, end of period $ 10.88 $ 10.89 $ 11.19 $ 11.20 $ 10.55
========== ======== ======== ======== ========
Total Return(1) 4.65% 2.32% 5.77% 12.81% 7.07%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $1,260,104 $658,676 $365,912 $301,656 $247,204
Ratio of operating expenses to
average net assets 0.55% 0.57% 0.58% 0.57% 0.56%
Ratio of net investment income
to average net assets 4.02% 3.95% 5.29% 6.09% 6.52%
Portfolio turnover rate 30% 62% 48% 30% 13%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 0.55% 0.57% 0.58% 0.57% 0.59%
Income Fund Class I
--------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------
Net asset value, beginning of period $ 9.36 $ 9.03 $ 9.34 $ 8.91 $ 8.99
---------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.50 0.55 0.64 0.66 0.66
Net realized and unrealized
gain/(loss) on investments 0.16 0.38 (0.29) 0.44 (0.08)
---------- -------- -------- -------- --------
Total from investment operations 0.66 0.93 0.35 1.10 0.58
---------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.54) (0.60) (0.66) (0.67) (0.66)
Distributions from net realized
capital gains -- -- -- -- --
---------- -------- -------- -------- --------
Total distributions (0.54) (0.60) (0.66) (0.67) (0.66)
---------- -------- -------- -------- --------
Net asset value, end of period $ 9.48 $ 9.36 $ 9.03 $ 9.34 $ 8.91
========== ======== ======== ======== ========
Total Return(1) 7.18% 10.51% 3.94% 12.78% 6.72%
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) $ 834,726 $679,139 $487,376 $387,998 $286,979
Ratio of operating expenses
to average net assets 0.55% 0.56% 0.56% 0.56% 0.60%
Ratio of net investment income
to average net assets 5.27% 5.80% 7.02% 7.27% 7.40%
Portfolio turnover rate 24% 33% 20% 35% 32%
Ratio of operating expenses to
average net assets without
fee waivers, expenses reimbursed
and/or fees reduced by credits
allowed by the custodian(2) 0.55% 0.56% 0.56% 0.56% 0.61%
See Notes to Financial Statements. 135
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
- -----------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Class A
----------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------------
Net asset value, beginning of period $ 7.88 $ 6.63 $ 7.44 $ 8.50 $ 8.92
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.58 0.61(4) 0.71 0.84 0.90(4)
Net realized and unrealized gain/(loss)
on investments 0.43 1.31 (0.72) (1.00) (0.43)
-------- -------- -------- -------- --------
Total from investment operations 1.01 1.92 (0.01) (0.16) 0.47
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.61) (0.67) (0.80) (0.90) (0.89)
Distributions from net realized capital
gains -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions (0.61) (0.67) (0.80) (0.90) (0.89)
-------- -------- -------- -------- --------
Net asset value, end of period $ 8.28 $ 7.88 $ 6.63 $ 7.44 $ 8.50
======== ======== ======== ======== ========
Total Return(1) 13.23% 30.13% (0.48)% (1.97)% 5.28%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 85,190 $ 48,618 $ 13,563 $ 9,035 $ 8,182
Ratio of operating expenses to average
net assets 0.93% 0.97% 1.03% 1.08% 1.08%
Ratio of net investment income to average
net assets 7.11% 8.24% 9.72% 10.47% 10.08%
Portfolio turnover rate 82% 61% 60% 27% 40%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 0.93% 0.97% 1.03% 1.09% 1.08%
Tax-Exempt Bond Fund Class A
----------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
----------------------------------------------------------------------
Net asset value, beginning of period $ 7.96 $ 7.95 $ 7.93 $ 7.55 $ 7.41
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.33 0.34 0.35 0.37 0.40
Net realized and unrealized gain on
investments 0.08 0.08 0.03 0.38 0.14
-------- -------- -------- -------- --------
Total from investment operations 0.41 0.42 0.38 0.75 0.54
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.33) (0.34) (0.35) (0.37) (0.40)
Distributions from net realized capital
gains (0.09) (0.07) (0.01) -- --
-------- -------- -------- -------- --------
Total distributions (0.42) (0.41) (0.36) (0.37) (0.40)
-------- -------- -------- -------- --------
Net asset value, end of period $ 7.95 $ 7.96 $ 7.95 $ 7.93 $ 7.55
======== ======== ======== ======== ========
Total Return(1) 5.35% 5.31% 5.02% 10.16% 7.52%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $184,711 $207,433 $213,673 $219,883 $207,309
Ratio of operating expenses to average
net assets 0.90% 0.88% 0.90% 0.89% 0.88%
Ratio of net investment income to average
net assets 4.22% 4.20% 4.49% 4.75% 5.41%
Portfolio turnover rate 25% 47% 46% 44% 28%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 0.90% 0.88% 0.90% 0.89% 0.90%
High Yield Fund Class B
-------------------------
Years Ended October 31 2004 2003
-------------------------
Net asset value, beginning of period $ 7.91 $ 6.66
-------- --------
Income from investment operations:
Net investment income 0.52 0.56(4)
Net realized and unrealized gain/(loss)
on investments 0.44 1.31
-------- --------
Total from investment operations 0.96 1.87
-------- --------
Less distributions:
Dividends from net investment income (0.55) (0.62)
Distributions from net realized capital
gains -- --
-------- --------
Total distributions (0.55) (0.62)
-------- --------
Net asset value, end of period $ 8.32 $ 7.91
======== ========
Total Return(1) 12.50% 29.08%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 80,036 $ 83,665
Ratio of operating expenses to average
net assets 1.69% 1.73%
Ratio of net investment income to average
net assets 6.35% 7.48%
Portfolio turnover rate 82% 61%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 1.69% 1.73%
Tax-Exempt Bond Fund Class B
-------------------------
Years Ended October 31 2004 2003
-------------------------
Net asset value, beginning of period $ 7.96 $ 7.95
-------- --------
Income from investment operations:
Net investment income 0.27 0.28
Net realized and unrealized gain on
investments 0.08 0.08
-------- --------
Total from investment operations 0.35 0.36
-------- --------
Less distributions:
Dividends from net investment income (0.27) (0.28)
Distributions from net realized capital
gains (0.09) (0.07)
-------- --------
Total distributions (0.36) (0.35)
-------- --------
Net asset value, end of period $ 7.95 $ 7.96
======== ========
Total Return(1) 4.57% 4.53%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 35,433 $ 45,061
Ratio of operating expenses to average
net assets 1.65% 1.62%
Ratio of net investment income to average
net assets 3.47% 3.46%
Portfolio turnover rate 25% 47%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 1.65% 1.62%
<FN>
- ----------------------------------
(1) Total return is not annualized for periods less than one year and does not reflect any applicable sales charges.
The total returns would have been lower if certain fees had not been waived and/or expenses reimbursed by the investment
advisor or if fees had not been reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Per share numbers have been calculated using the average shares method.
(5) Annualized.
136 See Notes to Financial Statements.
High Yield Fund Class B Class C
-----------------------------------------------------------------------------------
Years Ended October 31 2002 2001 2000 2004 2003 2002 (3)
--------------------------------------- -------------------------------------
Net asset value, beginning of period $ 7.47 $ 8.54 $ 8.97 $ 7.91 $ 6.67 $ 7.55
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.66 0.78 0.84(4) 0.52 0.56(4) 0.46
Net realized and unrealized gain/(loss)
on investments (0.72) (1.01) (0.43) 0.44 1.30 (0.86)
-------- -------- -------- -------- -------- --------
Total from investment operations (0.06) (0.23) 0.41 0.96 1.86 (0.40)
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.75) (0.84) (0.84) (0.55) (0.62) (0.48)
Distributions from net realized capital
gains -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions (0.75) (0.84) (0.84) (0.55) (0.62) (0.48)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 6.66 $ 7.47 $ 8.54 $ 8.32 $ 7.91 $ 6.67
======== ======== ======== ======== ======== ========
Total Return(1) (1.17)% (2.72)% 4.46% 12.51% 29.08% (5.66)%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 44,004 $ 35,391 $ 32,881 $ 33,318 $ 24,540 $ 2,556
Ratio of operating expenses to average
net assets 1.78% 1.77% 1.78% 1.68% 1.71% 1.78%(5)
Ratio of net investment income to
average net assets 8.97% 9.78% 9.38% 6.36% 7.50% 8.97%(5)
Portfolio turnover rate 60% 27% 40% 82% 61% 60%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees reduced
by credits allowed by the custodian(2) 1.78% 1.78% 1.78% 1.68% 1.71% 1.78%(5)
Tax-Exempt Bond Fund Class B Class C
-----------------------------------------------------------------------------------
Years Ended October 31 2002 2001 2000 2004 2003 2002 (3)
--------------------------------------- -------------------------------------
Net asset value, beginning of period $ 7.93 $ 7.55 $ 7.41 $ 7.96 $ 7.95 $ 7.83
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.29 0.31 0.34 0.27 0.28 0.20
Net realized and unrealized gain on
investments 0.03 0.38 0.14 0.08 0.08 0.12
-------- -------- -------- -------- -------- --------
Total from investment operations 0.32 0.69 0.48 0.35 0.36 0.32
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.29) (0.31) (0.34) (0.27) (0.28) (0.20)
Distributions from net realized capital
gains (0.01) -- -- (0.09) (0.07) --
-------- -------- -------- -------- -------- --------
Total distributions (0.30) (0.31) (0.34) (0.36) (0.35) (0.20)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 7.95 $ 7.93 $ 7.55 $ 7.95 $ 7.96 $ 7.95
======== ======== ======== ======== ======== ========
Total Return(1) 4.25% 9.35% 6.73% 4.58% 4.54% 4.06%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 47,308 $ 43,978 $ 26,332 $ 3,641 $ 4,332 $ 2,395
Ratio of operating expenses to average
net assets 1.64% 1.63% 1.61% 1.65% 1.61% 1.61%(5)
Ratio of net investment income to
average net assets 3.75% 4.01% 4.68% 3.47% 3.47% 3.78%(5)
Portfolio turnover rate 46% 44% 28% 25% 47% 46%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees reduced
by credits allowed by the custodian(2) 1.64% 1.63% 1.63% 1.65% 1.61% 1.61%(5)
High Yield Fund Class I
-------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
-------------------------------------------------------------------
Net asset value, beginning of period $ 7.86 $ 6.62 $ 7.43 $ 8.48 $ 8.91
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.60 0.63(4) 0.73 0.87 0.93(4)
Net realized and unrealized gain/(loss)
on investments 0.44 1.30 (0.72) (0.99) (0.43)
-------- -------- -------- -------- --------
Total from investment operations 1.04 1.93 0.01 (0.12) 0.50
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.63) (0.69) (0.82) (0.93) (0.93)
Distributions from net realized capital
gains -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions (0.63) (0.69) (0.82) (0.93) (0.93)
-------- -------- -------- -------- --------
Net asset value, end of period $ 8.27 $ 7.86 $ 6.62 $ 7.43 $ 8.48
======== ======== ======== ======== ========
Total Return(1) 13.75% 30.44% (0.15)% (1.49)% 5.54%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $526,095 $424,781 $244,937 $201,385 $168,097
Ratio of operating expenses to average
net assets 0.61% 0.64% 0.68% 0.68% 0.72%
Ratio of net investment income to average
net assets 7.43% 8.57% 10.07% 10.87% 10.44%
Portfolio turnover rate 82% 61% 60% 27% 40%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced
by credits allowed by the custodian(2) 0.61% 0.64% 0.68% 0.69% 0.72%
See Notes to Financial Statements. 137
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
- ------------------------------------------------------------------------------------------------------------------------------------
California Municipal Fund Class A Class B
-------------------------------------------------------- --------------------
Years Ended October 31 2004 2003 2002 2001 2000 2004 2003
-------------------------------------------------------- --------------------
Net asset value, beginning of period $ 11.22 $ 11.35 $ 11.34 $ 10.81 $ 10.43 $ 11.22 $ 11.35
-------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.49 0.47 0.50 0.53 0.55 0.40 0.38
Net realized and unrealized
gain/(loss) on investments 0.20 (0.06) 0.00(4) 0.53 0.38 0.20 (0.06)
-------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.69 0.41 0.50 1.06 0.93 0.60 0.32
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.49) (0.47) (0.49) (0.53) (0.55) (0.40) (0.38)
Distributions from net realized
capital gains -- (0.07) -- -- -- -- (0.07)
-------- -------- -------- -------- -------- -------- --------
Total distributions (0.49) (0.54) (0.49) (0.53) (0.55) (0.40) (0.45)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 11.42 $ 11.22 $ 11.35 $ 11.34 $ 10.81 $ 11.42 $ 11.22
======== ======== ======== ======== ======== ======== ========
Total Return(1) 6.25% 3.69% 4.57% 9.99% 9.33% 5.47% 2.92%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $232,239 $252,511 $286,095 $291,132 $248,941 $195,930 $255,445
Ratio of operating expenses to average
net assets 0.85% 0.85% 0.86% 0.85% 0.87% 1.59% 1.59%
Ratio of net investment income to
average net assets 4.32% 4.14% 4.39% 4.74% 5.30% 3.58% 3.40%
Portfolio turnover rate 27% 34% 48% 52% 40% 27% 34%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 0.85% 0.85% 0.86% 0.86% 0.88% 1.59% 1.59%
California Insured Intermediate Municipal Fund Class A Class B
-------------------------------------------------------- --------------------
Years Ended October 31 2004 2003 2002 2001 2000 2004 2003
-------------------------------------------------------- --------------------
Net asset value, beginning of period $ 11.14 $ 11.08 $ 10.98 $ 10.58 $ 10.30 $ 11.14 $ 11.08
-------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.33 0.35 0.39 0.44 0.44 0.25 0.27
Net realized and unrealized gain on
investments 0.10 0.12 0.15 0.49 0.31 0.10 0.12
-------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.43 0.47 0.54 0.93 0.75 0.35 0.39
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.33) (0.35) (0.39) (0.44) (0.44) (0.25) (0.27)
Distributions from net realized
capital gains (0.10) (0.06) (0.05) (0.09) (0.03) (0.10) (0.06)
-------- -------- -------- -------- -------- -------- --------
Total distributions (0.43) (0.41) (0.44) (0.53) (0.47) (0.35) (0.33)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 11.14 $ 11.14 $ 11.08 $ 10.98 $ 10.58 $ 11.14 $ 11.14
======== ======== ======== ======== ======== ======== ========
Total Return(1) 4.02% 4.29% 5.12% 9.00% 7.37% 3.24% 3.51%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 65,772 $ 75,231 $ 57,102 $ 39,996 $ 29,657 $ 71,502 $ 93,448
Ratio of operating expenses to average
net assets 0.85% 0.77% 0.70% 0.73% 0.91% 1.61% 1.53%
Ratio of net investment income to
average net assets 3.02% 3.15% 3.59% 4.09% 4.19% 2.26% 2.39%
Portfolio turnover rate 37% 65% 28% 23% 45% 37% 65%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 0.86% 0.86% 0.89% 0.92% 0.93% 1.62% 1.62%
<FN>
- --------------------
(1) Total return is not annualized for periods less than one year and does not
reflect any applicable sales charges. The total returns would have been
lower if certain fees had not been waived and/or expenses reimbursed by
the investment advisor or if fees had not been reduced by credits allowed
by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid
indirectly through custodian credits.
(3) The Funds commenced selling Class C shares on March 1, 2002.
(4) Amount represents less than $0.01 per share.
(5) Annualized.
138 See Notes to Financial Statements.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
California Municipal Fund Class C
---------------------------------- ----------------------------------
Years Ended October 31 2002 2001 2000 2004 2003 2002 (3)
---------------------------------- ----------------------------------
Net asset value, beginning of period $ 11.34 $ 10.81 $ 10.43 $ 11.22 $ 11.35 $ 11.20
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.42 0.44 0.48 0.40 0.38 0.28
Net realized and unrealized
gain/(loss) on investments 0.00(4) 0.53 0.38 0.20 (0.06) 0.14
-------- -------- -------- -------- -------- --------
Total from investment operations 0.42 0.97 0.86 0.60 0.32 0.42
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.41) (0.44) (0.48) (0.40) (0.38) (0.27)
Distributions from net realized
capital gains -- -- -- -- (0.07) --
-------- -------- -------- -------- -------- --------
Total distributions (0.41) (0.44) (0.48) (0.40) (0.45) (0.27)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 11.35 $ 11.34 $ 10.81 $ 11.42 $ 11.22 $ 11.35
======== ======== ======== ======== ======== ========
Total Return(1) 3.79% 9.19% 8.53% 5.46% 2.92% 3.77%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $295,662 $237,594 $160,086 $ 5,275 $ 8,193 $ 6,665
Ratio of operating expenses to average
net assets 1.60% 1.58% 1.60% 1.60% 1.59% 1.58%(5)
Ratio of net investment income to
average net assets 3.65% 4.01% 4.57% 3.57% 3.40% 3.67%(5)
Portfolio turnover rate 48% 52% 40% 27% 34% 48%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 1.60% 1.59% 1.61% 1.60% 1.59% 1.58%(5)
California Insured Intermediate Municipal Fund Class C
---------------------------------- ----------------------------------
Years Ended October 31 2002 2001 2000 2004 2003 2002 (3)
---------------------------------- ----------------------------------
Net asset value, beginning of period $ 10.98 $ 10.58 $ 10.30 $ 11.14 $ 11.08 $ 10.90
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.31 0.36 0.36 0.25 0.27 0.21
Net realized and unrealized gain on
investments 0.15 0.49 0.31 0.10 0.12 0.18
-------- -------- -------- -------- -------- --------
Total from investment operations 0.46 0.85 0.67 0.35 0.39 0.39
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.31) (0.36) (0.36) (0.25) (0.27) (0.21)
Distributions from net realized
capital gains (0.05) (0.09) (0.03) (0.10) (0.06) --
-------- -------- -------- -------- -------- --------
Total distributions (0.36) (0.45) (0.39) (0.35) (0.33) (0.21)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 11.08 $ 10.98 $ 10.58 $ 11.14 $ 11.14 $ 11.08
======== ======== ======== ======== ======== ========
Total Return(1) 4.32% 8.19% 6.57% 3.24% 3.50% 3.58%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 89,240 $ 51,525 $ 35,685 $ 8,763 $ 10,317 $ 7,953
Ratio of operating expenses to average
net assets 1.46% 1.48% 1.66% 1.61% 1.53% 1.45%(5)
Ratio of net investment income to
average net assets 2.83% 3.34% 3.44% 2.26% 2.39% 2.84%(5)
Portfolio turnover rate 28% 23% 45% 37% 65% 28%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees
reduced by credits allowed by the
custodian(2) 1.65% 1.67% 1.68% 1.62% 1.62% 1.64%(5)
See Notes to Financial Statements. 139
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
For a Fund share outstanding throughout each period.
- -----------------------------------------------------------------------------------------------------------------------------------
Money Market Fund Class A
--------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income 0.007 0.008 0.014 0.043 0.056
Dividends from net investment income (0.007) (0.008) (0.014) (0.043) (0.056)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(1) 0.74% 0.78% 1.42% 4.40% 5.79%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $530,052 $707,954 $689,002 $647,951 $458,368
Ratio of operating expenses to average
net assets 0.57% 0.59% 0.59% 0.64% 0.65%
Ratio of net investment income to average
net assets 0.72% 0.78% 1.41% 4.21% 5.62%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2) 0.57% 0.59% 0.59% 0.64% 0.65%
Money Market Fund Class B
-----------------------
Years Ended October 31 2004 2003
-----------------------
Net asset value, beginning of period $ 1.00 $ 1.00
-------- --------
Net investment income 0.001 0.001
Dividends from net investment income (0.001) (0.001)
-------- --------
Net asset value, end of period $ 1.00 $ 1.00
======== ========
Total Return(1) 0.06% 0.05%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 52,764 $ 79,314
Ratio of operating expenses to average
net assets 1.24% 1.33%
Ratio of net investment income to average
net assets 0.06% 0.04%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2) 1.68% 1.71%
Tax-Exempt Money Market Fund Class A
--------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income 0.004 0.005 0.010 0.025 0.033
Dividends from net investment income (0.004) (0.005) (0.010) (0.025) (0.033)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(1) 0.39% 0.52% 1.00% 2.57% 3.39%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 27,122 $ 30,162 $ 33,300 $ 31,527 $ 28,596
Ratio of operating expenses to average
net assets 0.78% 0.67% 0.67% 0.74% 0.72%
Ratio of net investment income to average
net assets 0.39% 0.53% 0.99% 2.52% 3.33%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2) 0.78% 0.79% 0.78% 0.74% 0.88%
California Money Fund Class A
--------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income 0.006 0.005 0.009 0.023 0.028
Dividends from net investment income (0.006) (0.005) (0.009) (0.023) (0.028)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(1) 0.57% 0.50% 0.89% 2.32% 2.79%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 20,066 $ 24,730 $27,673 $ 42,558 $3 5,407
Ratio of operating expenses to average
net assets 0.58% 0.63% 0.63% 0.62% 0.69%
Ratio of net investment income to average
net assets 0.56% 0.50% 0.89% 2.27% 2.76%
Ratio of operating expenses to average net
assets without fee waivers, expenses
reimbursed and/or fees reduced by credits
allowed by the custodian(2) 0.82% 0.80% 0.70% 0.70% 0.69%
<FN>
- ----------------------------------
(1) Total return is not annualized for periods less than one year and does not reflect any applicable sales charges.
The total returns would have been lower if certain fees had not been waived and/or expenses reimbursed by the investment
advisor or if fees had not been reduced by credits allowed by the custodian.
(2) Ratio of operating expenses to average net assets includes expenses paid indirectly through custodian credits.
(3) The Money Market Fund commenced selling Class C shares on March 1, 2002.
(4) Annualized.
140 See Notes to Financial Statements.
Money Market Fund Class B Class C
------------------------------------ --------------------------------------
Years Ended October 31 2002 2001 2000 2004 2003 2002(3)
------------------------------------ --------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Net investment income 0.003 0.033 0.046 0.001 0.001 0.002
Dividends from net investment income (0.003) (0.033) (0.046) (0.001) (0.001) (0.002)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return(1) 0.34% 3.32% 4.68% 0.06% 0.06% 0.17%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $104,530 $ 74,603 $ 23,469 $ 8,480 $ 5,046 $ 3,676
Ratio of operating expenses to average
net assets 1.67% 1.69% 1.71% 1.30% 1.29% 1.64%(4)
Ratio of net investment income to
average net assets 0.33% 3.16% 4.56% 0.07% 0.08% 0.36%(4)
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees reduced
by credits allowed by the custodian(2) 1.67% 1.69% 1.71% 1.65% 1.67% 1.64%(4)
Money Market Fund Class I
--------------------------------------------------------------------
Years Ended October 31 2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income 0.008 0.008 0.015 0.044 0.057
Dividends from net investment income (0.008) (0.008) (0.015) (0.044) (0.057)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(1) 0.79% 0.84% 1.47% 4.46% 5.90%
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $ 91,719 $ 24,880 $169,295 $ 17,755 $ 15,885
Ratio of operating expenses to average
net assets 0.52% 0.54% 0.54% 0.58% 0.55%
Ratio of net investment income to
average net assets 0.83% 0.83% 1.46% 4.27% 5.72%
Ratio of operating expenses to average
net assets without fee waivers,
expenses reimbursed and/or fees reduced
by credits allowed by the custodian(2) 0.52% 0.54% 0.54% 0.58% 0.55%
See Notes to Financial Statements. 141
Notes to Financial Statements
- --------------------------------------------------------------------------------
WM GROUP OF FUNDS
---------------------------------------------------------------------------
1. Organization and Business
WM Trust I ("Trust I") and WM Trust II ("Trust II") (collectively, the
"Trusts") were organized as Massachusetts business trusts on September 19,
1997 and February 22, 1989, respectively. The Trusts are each registered
under the Investment Company Act of 1940, as amended ("1940 Act"), as
open-end management investment companies. Trust I and Trust II consist of 19
funds (each a "Fund," collectively, the "Funds"). The Trust I Money Market
Funds are diversified and the Trust II Money Market Fund is non-diversified.
The Small Cap Value Fund commenced operations on March 1, 2004.
Trust I Trust II
Equity Funds Equity Funds
REIT Fund Growth Fund
Equity Income Fund Small Cap Growth Fund
Growth & Income Fund (formerly, Small Cap Stock Fund)
West Coast Equity Fund International Growth Fund
Mid Cap Stock Fund
Small Cap Value Fund
Fixed-Income Funds Fixed-Income Fund
U.S. Government Securities Fund Short Term Income Fund
Income Fund
High Yield Fund
Municipal Funds
Municipal Fund California Municipal Fund
Tax-Exempt Bond Fund California Insured Intermediate Municipal Fund
Money Market Funds Money Market Fund
Money Market Fund California Money Fund
Tax-Exempt Money Market Fund
WM Advisors, Inc. (the "Advisor" or "WM Advisors") serves as investment
advisor to the Trusts. The Advisor is a wholly-owned subsidiary of
Washington Mutual, Inc. ("Washington Mutual"), a publicly owned financial
services company.
The Trusts are authorized to issue an unlimited number of shares of
beneficial interest, each without par value. Each of the Fixed-Income Funds
and the Equity Funds offer four classes of shares: Class A shares, Class B
shares, Class C shares and Class I shares. Each of the Municipal Funds
currently offer Class A shares, Class B shares and Class C shares. Each of
the Money Market Funds may offer four classes of shares: Class A shares,
Class B shares, Class C shares and Class I shares. Class A shares of the
Funds are generally subject to an initial sales charge at the time of
purchase. Certain Class A shares purchased without an initial sales charge
may be subject to a contingent deferred sales charge ("CDSC") if redeemed
within eighteen months from the date of purchase. Class B shares are not
subject to an initial sales charge although they are generally subject to a
CDSC if redeemed within five years from the date of purchase. Class C shares
are not subject to an initial sales charge although they are subject to a
CDSC if redeemed within one year from the date of purchase. Prior to January
1, 2004, Class C shares were subject to an initial sales charge at the time
of purchase. In addition, redemptions from International Growth Fund, Class
A shares, including exchange redemptions, within 90 days of purchase are
subject to a redemption fee equal to 2.00% of the redemption proceeds, which
will be retained by the Fund. Class I shares are sold exclusively to the
various investment portfolios of the WM Strategic Asset Management
Portfolios, LLC (the "Portfolios"), an affiliated open-end management
investment company, and affiliates of Washington Mutual and are not
available for direct purchase by investors. Class I shares are not subject
to an initial sales charge or CDSC.
2. Significant Accounting Policies
The following is a summary of significant accounting policies, in conformity
with accounting principles generally accepted in the United States of
America ("generally accepted accounting principles"), which are consistently
followed by the Funds in the preparation of their financial statements.
142
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
WM GROUP OF FUNDS
---------------------------------------------------------------------------
Portfolio valuation:
Securities that are primarily traded on a U.S. exchange (excluding
securities traded through the Nasdaq National Market System, which are
valued at the Nasdaq official closing price) are valued at the last sale
price on that exchange or, if there were no sales during the day (and no
official closing price on such day), at the mean of the current day's bid
and asked prices. Securities traded only on over-the-counter markets (other
than the Nasdaq National Market System and the U.S. Government Securities
System) are valued at the mean of the current 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, or if there
has been movement in the U.S. market and/or other economic indicators that
exceed a specified threshold, the foreign security is fair valued. The value
is then converted into its U.S. dollar equivalent using prevailing exchange
rates on the day the value of the foreign security is determined.
Options are generally valued at the last sale price or, in the absence of a
last sale price, at the mean of the current day's bid and asked prices. The
value of a futures contract equals the unrealized gain or loss on the
contract, which is determined by marking the contract to the current
settlement price for a like contract acquired on the day on which the
futures contract is being valued.
Debt securities of U.S. issuers (other than short-term investments),
including municipal securities, are valued by one or more independent
pricing services (each a "Pricing Service") retained by the Trusts. When, in
the judgment of a Pricing Service, market quotations for these securities
are readily available, they are valued at the mean between the quoted bid
and asked prices. Short-term debt securities that mature in 60 days or less
are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued
at fair value as determined by or under the direction of the Board of
Trustees.
The investments of the Money Market Funds are valued on the basis of
amortized cost in accordance with Rule 2a-7 of the 1940 Act, 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 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. It is each Fund's policy that its custodian take possession of the
underlying collateral securities. The fair value of the collateral is at all
times at least equal to the total amount of the repurchase obligation. In
the event of counterparty default, the Fund would seek to use the collateral
to offset losses incurred. There is potential loss to the Fund in the event
the Fund is delayed or prevented from exercising its right to dispose of the
collateral securities, including the risk of a possible decline in the value
of the underlying securities during the period while the Fund seeks to
assert its rights. 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 for the purposes of
hedging. The underlying value of a futures contract is incorporated within
the unrealized appreciation/(depreciation) shown in the Portfolio of
Investments under the caption "Futures Contracts."
Upon entering into a futures contract, the Fund is required to deposit with
the broker an amount of cash or cash equivalents equal to a certain
percentage of the contract amount (known as an initial margin deposit).
Subsequent payments (known as variation margins) are made or received by the
Fund each day, depending on the daily fluctuation of the value of the
contract. The daily changes in contract value are recorded as unrealized
gains or losses and the Fund recognizes a realized gain or loss when the
contract is closed. Should market conditions change unexpectedly, the Funds
may not achieve the anticipated benefits of the futures contracts and may
realize a loss. The use of futures transactions involves the risk of
imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets.
143
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
WM GROUP OF FUNDS
---------------------------------------------------------------------------
Purchased option contracts:
Certain Funds may enter into put and call option contracts. These Funds may
use option contracts to manage their exposure to the stock and bond markets
and to fluctuations in interest rates and currency values. Upon entering
into a put or call option, the premium paid is recorded as an investment.
The daily changes in contract value are recorded as unrealized gains or
losses. When a purchased option expires, the Fund will realize a loss in the
amount of the cost of the option. When the Fund enters into a closing sale
transaction, the Fund will realize a gain or loss depending on whether the
sales proceeds from the closing sale transaction are greater or less than
the cost of the option plus related transaction costs. When the Fund
exercises a put option, the Fund will realize a gain or loss from the sale
of the underlying security and the proceeds from such sale will be decreased
by the premium originally paid. When the Fund exercises a call option, the
cost of the security, which the Fund purchases upon exercise, will be
increased by the premium originally paid. The risk associated with
purchasing options is limited to the premium originally paid.
Foreign currency:
The books and records of the Funds are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars on a daily basis using prevailing exchange rates. Purchases and
sales of investment securities, income and expenses are translated on the
respective dates of such transactions.
Unrealized gains and losses, not relating to securities, which result from
changes in foreign currency exchange rates have been included in unrealized
appreciation/(depreciation) of investments. Unrealized gains and losses of
securities, which result from changes in foreign currency exchange rates as
well as changes in market prices of securities, have been included in
unrealized appreciation/(depreciation) of investments. Net realized foreign
currency gains and losses, which result from changes in exchange rates
between trade date and settlement date on investment transactions as well as
the difference between the amounts of interest and dividends recorded on the
books of the Funds and the amount actually received, have been included in
realized gains/(losses) on investment transactions. Foreign currency gains
and losses, which result from fluctuations in exchange rates between the
initial purchase trade date and subsequent sale trade date, have been
included in realized gains/(losses) on investment transactions.
Forward foreign currency contracts:
Certain Funds may enter into forward foreign currency contracts. Forward
foreign currency contracts are agreements to exchange one currency for
another at a future date and at a specified price. These Funds may use
forward foreign currency contracts to facilitate transactions in foreign
securities and to manage the Funds' foreign currency exposure. These
contracts are valued daily, and a Fund's net equity therein, representing
unrealized gain or loss on the contracts as measured by the difference
between the forward foreign exchange rates at the dates of entry into the
contracts and the forward rates at the reporting date, is included in the
"Statements of Assets and Liabilities". Realized and unrealized gains and
losses are included in the "Statements of Operations". 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. Due
to the risks, the Funds could incur losses up to the entire contract amount,
which may exceed the net unrealized value shown in the "Statements of Assets
and Liabilities".
Illiquid investments:
Each Fund may invest a portion of its net assets in securities that are not
readily marketable, including: (1) repurchase agreements with maturities
greater than seven calendar days; (2) time deposits maturing in more than
seven calendar days; (3) certain futures contracts and options; (4) certain
variable rate demand notes having a demand period of more than seven
calendar days; and (5) securities, the disposition of which are restricted
under Federal securities laws, excluding certain Rule 144A Securities, as
defined in the following paragraph.
Illiquid securities generally cannot be sold or disposed of in the ordinary
course of business (within seven calendar days) at approximately the value
at which the 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 must be sold only to other qualified institutional buyers. If a
particular investment in Rule 144A Securities is not determined to be liquid
under the guidelines established by the Board of Trustees, that investment
will be subject to a Fund's limitation on investment in illiquid securities.
144
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
WM GROUP OF FUNDS
---------------------------------------------------------------------------
Securities transactions and investment income:
Securities transactions are recorded on a trade date basis. Realized gains
and losses from securities sold are recorded on the identified cost basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may
be settled a month or more after the trade date; interest income is not
accrued until settlement date. Each Fund instructs the custodian to
segregate assets of the Fund with a current value at least equal to the
amount of its when-issued purchase commitments.
Interest income on debt securities is accrued daily. Premiums and discounts
are amortized using the interest method. Paydown gains and losses on
mortgage-backed and asset-backed securities are presented as an adjustment
to interest income. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities are recorded as soon as the
information is available to the Funds if informed after the ex-dividend
date. The Funds estimate components of distributions from Real Estate
Investment Trusts (REITs). Distributions received in excess of income are
recorded as a reduction of the cost of the related investments. Each Fund's
investment income and realized and unrealized gains and losses are allocated
among the classes of that Fund based upon the relative average net assets of
each class.
Dividends and distributions to shareholders:
Dividends from net investment income of the Fixed-Income Funds, Municipal
Funds and Money Market Funds are declared daily and paid monthly. Dividends
from net investment income of the REIT and Equity Income Funds are declared
and paid quarterly. Dividends from any net investment income of the Growth &
Income, West Coast Equity, Mid Cap Stock, Growth, Small Cap Value, Small Cap
Growth and International Growth Funds are declared and paid annually.
Distributions of any net capital gains earned by a Fund are distributed no
less frequently than annually at the discretion of the Board of Trustees.
Additional distributions of net investment income and capital gains for each
Fund may be made at the discretion of the Board of Trustees in accordance
with federal income tax regulations.
Distributions from income and capital gains are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities held by the
Funds, dividends payable, redesignated distributions and differing
characterization of distributions made by each Fund. At October 31, 2004,
the following adjustments have been reflected in the components of net
assets on the "Statements of Assets and Liabilities" to present these
balances on an income tax basis, excluding certain temporary differences:
Increase/ Increase/
(Decrease) (Decrease)
Increase/ Undistributed Accumulated
(Decrease) Net Investment Net Realized
Paid-in Capital Income/(Loss) Gain/(Loss)
(000s) (000s) (000s)
--------------- -------------- ------------
REIT Fund $ -- $ (2,266) $ 2,266
Equity Income Fund -- (1,138) 1,138
West Coast Equity Fund 543 (684) 141
Mid Cap Stock Fund 275 (2) (273)
Growth Fund (798) 605 193
Small Cap Value Fund -- (4) 4
Small Cap Growth Fund (2,535) 2,535 --
International Growth Fund -- 162 (162)
Short Term Income Fund (672) 146 526
U.S. Government Securities Fund (3,198) 8,152 (4,954)
Income Fund (677) 4,116 (3,439)
High Yield Fund (1) 2,999 (2,998)
Tax-Exempt Bond Fund 283 118 (401)
California Municipal Fund 154 56 (210)
California Insured Intermediate
Municipal Fund 13 (1) (12)
The above adjustments are not reflected in the calculation of net investment
income per share presented in the Financial Highlights.
Federal income taxes:
It is each Fund's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended (the "Code"), applicable to regulated investment companies and by
distributing substantially all of its earnings to its shareholders.
Therefore, no federal income or excise tax provision is required.
145
Notes to Financial Statements (continued)
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WM GROUP OF FUNDS
-------------------------------------------------------------------------
Expenses:
General expenses of the Trusts are allocated to all the Funds based upon the
relative average net assets of each Fund except printing and postage
expenses, which are allocated to all the Funds based upon the relative
number of shareholder accounts of each Fund. Operating expenses directly
attributable to a class of shares are charged to the operations of that
class of shares. Expenses of each Fund not directly attributable to the
operations of any class of shares are prorated among the classes to which
the expenses relate based on the relative average net assets of each class
of shares.
Use of estimates:
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
3. Investment Advisory and Other Transactions
The Advisor is entitled to a monthly fee at an annual rate based upon a
percentage of the average daily net assets of each Fund at the following
rates:
From $0 From $125 From $200 From $250 From $500 From $1 From $2
to $125 to $200 to $250 to $500 million to to $2 to $3 Over
Name of Fund million million million million $1 billion billion billion $3 billion
------------ -------------------------------------------------------------------------------------------------
REIT Fund 0.800% 0.800% 0.800% 0.800% 0.750% 0.750% 0.700% 0.650%
Equity Income Fund 0.625% 0.625% 0.625% 0.500% 0.500% 0.500% 0.500% 0.500%
Growth & Income Fund 0.625% 0.625% 0.625% 0.500% 0.500% 0.500% 0.500% 0.500%
West Coast Equity Fund 0.625% 0.625% 0.625% 0.625% 0.500% 0.375% 0.375% 0.375%
Mid Cap Stock Fund 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.750% 0.700%
Growth Fund 0.800% 0.800% 0.800% 0.800% 0.750% 0.750% 0.700% 0.650%
Small Cap Value Fund 0.850% 0.850% 0.850% 0.850% 0.850% 0.850% 0.850% 0.850%
Small Cap Growth Fund 0.850% 0.850% 0.850% 0.850% 0.850% 0.850% 0.850% 0.800%
International Growth Fund 1.000% 0.800% 0.800% 0.800% 0.800% 0.750% 0.750% 0.700%
Short Term Income Fund 0.500% 0.500% 0.450% 0.450% 0.400% 0.400% 0.400% 0.400%
U.S. Government Securities Fund 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.450%
Income Fund 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.500% 0.450%
High Yield Fund 0.625% 0.625% 0.625% 0.500% 0.500% 0.500% 0.500% 0.500%
Tax-Exempt Bond Fund 0.500% 0.500% 0.500% 0.400% 0.400% 0.400% 0.400% 0.400%
California Municipal Fund 0.500% 0.500% 0.500% 0.500% 0.500% 0.450% 0.450% 0.450%
California Insured Intermediate
Municipal Fund 0.500% 0.500% 0.500% 0.500% 0.500% 0.450% 0.450% 0.450%
Money Market Fund 0.450% 0.450% 0.450% 0.450% 0.450% 0.400% 0.400% 0.400%
Tax-Exempt Money Market Fund 0.400% 0.450% 0.450% 0.450% 0.450% 0.450% 0.400% 0.400%
California Money Fund 0.450% 0.450% 0.450% 0.450% 0.400% 0.400% 0.400% 0.400%
The Advisor has voluntarily waived $55,469 of its advisory fees for the
California Money Fund for the year ended October 31, 2004.
Effective November 1, 2004, the Advisor will change its monthly fee based
upon average daily net assets for the indicated Funds to the following
rates:
From $0 From $500 From $1 From $2
to $500 million to to $2 to $3 Over
million $1 billion billion billion $3 billion
--------------------------------------------------------------
Mid Cap Stock Fund 0.750% 0.750% 0.700% 0.650% 0.600%
Small Cap Value Fund 0.850% 0.750% 0.750% 0.750% 0.700%
Small Cap Growth Fund 0.850% 0.750% 0.750% 0.750% 0.700%
U.S. Government Securities Fund 0.500% 0.500% 0.500% 0.450% 0.450%
Income Fund 0.500% 0.500% 0.500% 0.450% 0.450%
WM Shareholder Services, Inc. (the "Transfer Agent"), a wholly owned
subsidiary of Washington Mutual, serves as the transfer agent of the Funds.
Fees were paid to the Transfer Agent for services related to the issuance
and transfer of shares, maintaining shareholder lists, and issuing and
mailing distributions and reports. The authorized annual shareholder
servicing fee is $20.40,
146
Notes to Financial Statements (continued)
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WM GROUP OF FUNDS
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$21.15, $21.15 and $24.19 for Class A, Class B and Class C shareholder
accounts for the Equity Funds, Fixed-Income Funds, Municipal Funds and Money
Market Funds, respectively. Prior to December 1, 2003, the authorized annual
shareholder servicing fee was $19.68, $20.21, $20.21 and $25.01 for Class A,
Class B and Class C shareholder accounts for the Equity Funds, Fixed-Income
Funds, Municipal Funds and Money Market Funds, respectively. Class I shares
are not subject to shareholder servicing fees. The Transfer Agent has
voluntarily waived $57,665, $45,155 and $14,412 of its transfer agent fees
for Class A, Class B and Class C shares, respectively, of the Short Term
Income Fund for the year ended October 31, 2004.
Custodian fees for certain Funds have been reduced by credits allowed by the
Funds' custodian for uninvested cash balances. The Funds could have invested
this cash in income producing securities. Fees reduced by credits allowed by
the custodian for the year ended October 31, 2004 are shown separately in
the "Statements of Operations".
4. Trustees' Fees
No officer or employee of Washington Mutual or its subsidiaries receives any
compensation from the Trusts for serving as an officer or Trustee of the
Trusts. The Trusts, together with other mutual funds advised by WM Advisors,
pay each Trustee who is not an officer or employee of Washington Mutual or
its subsidiaries, a per annum retainer plus attendance fees for each meeting
at which they are present. The Lead Trustee, Committee Chairs and Committee
Members receive additional remuneration for these services to the Trusts.
Trustees are also reimbursed for travel and out-of-pocket expenses. Each
Trustee serves in the same capacity for all 42 funds within the WM Group of
Funds.
5. Distribution Plans
WM Funds Distributor, Inc. (the "Distributor"), a registered broker-dealer
and a wholly owned subsidiary of Washington Mutual, serves as distributor
for Class A, Class B and Class C shares. For the year ended October 31,
2004, the Distributor has received $1,214,229 representing commissions
(front-end sales charges) on Class A and Class C shares and $3,898,610
representing CDSCs from Class A, Class B and Class C shares.
Each of the Funds has adopted three distribution plans, pursuant to Rule
12b-1 under the 1940 Act, applicable to Class A, Class B and Class C shares
of the Fund (each, a "Rule 12b-1 Plan"), respectively. There are no 12b-1
Plans applicable to Class I shares of the Funds. Under the applicable Rule
12b-1 Plans, the Distributor may receive a service fee at an annual rate of
0.25% of the average daily net assets of each class. In addition, the
Distributor is paid a fee as compensation in connection with the offering
and sale of Class B and Class C shares at an annual rate of 0.75% of the
average daily net assets of each class. These fees may be used to cover the
expenses of the Distributor primarily intended to result in the sale of such
shares, including payments to the Distributor's representatives or others
for selling shares. The service fee is paid by the Fund to the Distributor,
which in turn, pays service fees to broker/dealers that provide services,
such as accepting telephone inquiries and transaction requests and
processing correspondence, new account applications and subsequent purchases
for the shareholders. Under their terms, each Rule 12b-1 plan shall remain
in effect from year to year, provided such continuance is approved annually
by vote of the Board of Trustees, including a majority of those Trustees who
are not "interested persons" of the Trusts, as defined in the 1940 Act, and
who have no direct or indirect financial interest in the operation of such
distribution plans, or any agreements related to such plans, respectively.
The Distributor has voluntarily waived $269,084 and $20,949 of its
distribution fees for Class B and Class C shares of the Money Market Fund
for the year ended October 31, 2004, respectively.
6. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities,
excluding U.S. Government and short-term investments, for the year ended
October 31, 2004, are as follows:
Purchases Sales
Name of Fund (000s) (000s)
- ------------ --------- --------
REIT Fund $ 89,094 $ 13,186
Equity Income Fund 625,813 226,921
Growth & Income Fund 444,401 106,272
West Coast Equity Fund 312,608 136,981
Mid Cap Stock Fund 313,155 125,173
147
Notes to Financial Statements (continued)
- ------------------------------------------------------------------------------
WM GROUP OF FUNDS
-------------------------------------------------------------------------
Purchases Sales
Name of Fund (000s) (000s)
- ------------ ----------- ---------
Growth Fund $ 1,200,747 $ 662,494
Small Cap Value Fund* 301,941 72,566
Small Cap Growth Fund 187,831 284,692
International Growth Fund 286,255 90,451
Short Term Income Fund 53,567 23,086
U.S. Government Securities Fund 158,625 3
Income Fund 151,685 82,518
High Yield Fund 626,362 534,547
Tax-Exempt Bond Fund 59,346 96,664
California Municipal Fund 128,134 210,798
California Insured Intermediate Municipal Fund 56,682 79,729
<FN>
*The Small Cap Value Fund commenced operations on March 1, 2004.
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities, excluding short-term investments, for the year ended October 31,
2004, are as follows:
Purchases Sales
Name of Fund (000s) (000s)
- ------------ --------- --------
Equity Income Fund $ -- $ 454
Short Term Income Fund 12,318 12,178
U.S. Government Securities Fund 699,484 389,900
Income Fund 186,452 168,964
7. Lending of Securities
Certain Funds may lend securities to brokers, dealers and other financial
organizations to earn additional income. The Funds also continue to receive
interest or dividends on the securities loaned. Each security loan is
collateralized with collateral assets in an amount equal to or greater than
the current market value of the loaned securities. There is a risk of delay
in receiving collateral, that the collateral could lose value or become
valueless, or in recovering the securities loaned or even a loss of rights
in collateral should the borrower fail financially.
At October 31, 2004, each of the Funds with outstanding loans of securities
to certain brokers, dealers or other financial institutions has segregated
cash and/or securities at least equal to the market value of securities
loaned with the Funds' custodian. The Funds currently invest the segregated
cash in the Mellon GSL DBT II which is a common collective trust that
invests in high grade short term investments.
8. Transactions with Affiliates
At October 31, 2004, the WM Strategic Asset Management Portfolios, LLC hold
investments in a number of the Funds. The figures presented below represent
the percentage of shares outstanding of each Fund owned by the Portfolios:
Portfolios
- ----------------------------------------------------------------------------------------------------
Flexible Conservative Conservative Strategic
Income Balanced Balanced Growth Growth
Name of Fund Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------ --------- ------------ --------- ------------ ----------
REIT Fund 3.1% 3.1% 33.9% 34.5% 19.7%
Equity Income Fund 2.1% 2.0% 22.3% 21.1% 12.0%
Growth & Income Fund 3.0% 2.0% 22.0% 23.9% 16.1%
West Coast Equity Fund 0.7% 1.1% 12.9% 14.2% 10.4%
Mid Cap Stock Fund 3.8% 2.6% 28.5% 29.8% 23.4%
Growth Fund 3.2% 2.5% 28.9% 30.4% 18.2%
Small Cap Value Fund 3.6% 2.7% 32.6% 36.3% 23.3%
Small Cap Growth Fund 2.5% 2.0% 22.5% 25.0% 16.2%
International Growth Fund -- 3.2% 31.9% 34.0% 23.4%
Short Term Income Fund 39.3% 9.9% 12.5% -- --
U.S. Government Securities Fund 19.0% 8.2% 38.6% 15.1% --
Income Fund 19.9% 8.1% 35.4% 9.4% --
High Yield Fund 9.0% 3.9% 24.2% 15.2% 10.5%
148
Notes to Financial Statements (continued)
- ------------------------------------------------------------------------------
WM GROUP OF FUNDS
-------------------------------------------------------------------------
9. Capital Loss Carryforwards
At October 31, 2004, the following Funds have available for federal income
tax purposes unused capital losses as follows:
(In thousands)
------------------------------------------------------------------------------------------
Expiring Expiring Expiring Expiring Expiring Expiring Expiring Expiring
Name of Fund in 2005 in 2006 in 2007 in 2008 in 2009 in 2010 in 2011 in 2012
------------ -------- -------- -------- -------- -------- -------- -------- --------
Equity Income Fund $ -- $ -- $ -- $ -- $ -- $ 2,643 $ -- $ 2,760
Growth & Income Fund -- -- -- -- -- 26,587 43,461 17,463
Growth Fund -- -- -- -- 197,013 151,706 23,894 --
Small Cap Growth Fund -- -- -- -- -- -- 10,372 --
International Growth Fund -- -- -- -- 4,816 15,436 14,786 --
Short Term Income Fund 774 75 313 1,103 381 1,139 684 241
U.S. Government Securities Fund 504 -- 254 1,967 -- 852 6,859 7,815
Income Fund -- -- -- -- -- 4,333 2,668 892
High Yield Fund -- -- -- -- -- 15,583 17,646 --
Money Market Fund -- 42 -- -- -- 3 --* --
Tax-Exempt Money Market Fund -- --* -- -- -- -- -- --
California Money Fund -- -- --* -- -- -- -- --
<FN>
- --------
*Amount represents less than $500.
10. Components of Distributable Earnings
At October 31, 2004, the components of distributable earnings on a tax basis
and the tax character of distributions paid during 2004 and 2003 are as
follows:
(In thousands)
-------------------------------------------------------------------------------------------
Equity Growth & West Coast Mid Cap Small Cap Small Cap
REIT Income Income Equity Stock Growth Value Growth
Fund Fund Fund Fund Fund Fund Fund Fund
------- -------- -------- ---------- -------- -------- --------- ---------
Gross tax unrealized appreciation $84,913 $267,083 $418,502 $389,174 $126,881 $122,015 $27,695 $ 75,514
Gross tax unrealized depreciation (68) (24,665) (67,125) (84,112) (7,050) (41,083) (9,101) (118,372)
------- -------- -------- -------- -------- -------- ------- ---------
Net tax unrealized appreciation/
(depreciation) $84,845 $242,418 $351,377 $305,062 $119,831 $ 80,932 $18,594 $ (42,858)
======= ======== ======== ======== ======== ======== ======= =========
Undistributed ordinary income $ 3,172 $ 1,513 $ 16,668 $ 1,509 $ 3,266 $ -- $ 2,393 $ --
Undistributed accumulated gains $ 5,110 $ -- $ -- $ 15,928 $ 23,136 $ -- $ -- $ --
Tax Composition of Distributions:
2004
Ordinary income $ 6,601 $ 22,016 $ 17,587 $ 437 $ 1,715 $ -- $ -- $ --
Long-term capital gain $ 1,023 $ -- $ -- $ -- $ 908 $ -- $ -- $ --
2003
Ordinary income $ 2,480 $ 17,376 $ 13,400 $ -- $ 731 $ -- $ -- $ --
Long-term capital gain $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
149
Notes to Financial Statements (continued)
- ------------------------------------------------------------------------------
WM GROUP OF FUNDS
-------------------------------------------------------------------------
(In thousands)
------------------------------------------------------------------------------------------------
California
U.S. Insured
International Short Term Government High Tax-Exempt California Intermediate
Growth Income Securities Income Yield Bond Municipal Municipal
Fund Fund Fund Fund Fund Fund Fund Fund
------------- ---------- ---------- -------- -------- ---------- ---------- ------------
Gross tax unrealized appreciation $ 82,415 $5,163 $20,111 $ 64,826 $ 72,331 $20,622 $25,793 $5,276
Gross tax unrealized depreciation $(14,284) $ (805) $(4,981) $(18,846) $(16,723) $ (898) $ (33) $ (28)
-------- ------ ------- -------- -------- ------- ------- ------
Net tax unrealized appreciation $ 68,131 $4,358 $15,130 $ 45,980 $ 55,608 $19,724 $25,760 $5,248
======== ====== ======= ======== ======== ======= ======= ======
Undistributed ordinary income $ 7,828 $ 145 $ 511 $ 957 $ 1,563 $ 474 $ 648 $ 156
Undistributed accumulated gains $ -- $ -- $ -- $ -- $ -- $ 2,473 $ 1,117 $ 62
Tax Composition of Distributions:
2004
Ordinary income $ 5,049 $8,648 $60,689 $ 60,609 $ 50,923 $10,157 $18,611 $4,513
Long-term capital gain $ -- $ -- $ -- $ -- $ -- $ 2,547 $ -- $1,333
2003
Ordinary income $ 2,530 $7,503 $45,367 $ 56,899 $ 39,498 $11,329 $21,619 $4,977
Long-term capital gain $ -- $ -- $ -- $ -- $ -- $ 1,677 $ 3,790 $ 788
Tax-Exempt
Money Money California
Market Market Money
Fund Fund Fund
------ ---------- ----------
Undistributed ordinary income $ 13 $ --* $ --*
Undistributed accumulated gains -- -- --
Tax Composition of Distributions:
2004
Ordinary income $5,317 $105 $130
2003
Ordinary income $6,191 $160 $132
<FN>
- --------
*Amount represents less than $500.
11. Industry and Geographic Concentration and Other Risk Factors
While no individual fund is intended as a complete investment program, this
is especially true for funds that concentrate their investments such as
those investing in particular industries or regions.
The REIT Fund concentrates its investments in real estate investment trust
("REIT") securities or debt securities of issuers that are principally
engaged in the U.S. real estate or related industries. The REIT Fund could
be adversely impacted by economic trends within this industry.
The West Coast Equity Fund concentrates its investments in companies located
or doing business in Alaska, California, Idaho, Montana, Oregon and
Washington. The West Coast Equity Fund could be adversely impacted by
economic trends within this region.
The High Yield Fund invests in lower rated debt securities, which may be
more susceptible to adverse economic conditions than investment grade
holdings. These securities are often subordinated to the prior claims of
other senior lenders, and uncertainties exist as to an issuer's ability to
meet principal and interest payments.
150
Notes to Financial Statements (continued)
- ------------------------------------------------------------------------------
WM GROUP OF FUNDS
-------------------------------------------------------------------------
The California Municipal, California Insured Intermediate Municipal and
California Money Funds are more susceptible to factors adversely affecting
issuers of California municipal securities than is a municipal bond fund
that is not concentrated in these issuers. Uncertain economic conditions or
governmental developments may affect the ability of California municipal
securities issuers to meet their financial obligations.
Certain Funds may invest a portion of their assets in foreign securities of
developing or emerging markets countries; enter into forward foreign
currency transactions; lend their portfolio securities; enter into a stock
index, interest rate and currency futures contracts, and options on such
contracts; enter into interest rate swaps or purchase or sell interest rate
caps or floors; enter into other types of options transactions; make short
sales; purchase zero coupon and payment-in-kind bonds; enter into repurchase
or reverse repurchase agreements; purchase and sell "when-issed" securities
and engage in "delayed-delivery" transactions; and enter into various other
investment practices, each with inherent risks. The risks involved in
investing in foreign securities include those resulting from future adverse
political and economic developments and the possible imposition of currency
exchange restrictions or other foreign laws or restrictions. The risks
involved in investing in a high concentration of a single sector include
those resulting from future adverse political and economic developments or
regulatory occurrences and the potential for adverse effects to the
financial conditions of the industries within the sector due to market
fluctuations.
From time to time, one or more of the Funds used for investment by a
Portfolio may experience relatively large investments or redemptions due to
reallocations or rebalancings by the Portfolios. These transactions will
affect the Funds, since the Funds that experience redemptions as a result of
the reallocations or rebalancings may have to sell portfolio securities and
the 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 Funds may be required to sell securities or invest cash at times
when they would not otherwise do so. These transactions could also have tax
consequences if sales of securities resulted in gains and could also
increase transaction costs. The Advisor is committed to minimizing such
impact on the Funds to the extent it is consistent with pursuing the
investment objectives of the Portfolios. The Advisor may nevertheless face
conflicts in fulfilling its responsibilities. The Advisor will, at all
times, monitor the impact on the Funds of transactions by the Portfolios.
151
Report of Independent Registered Public Accounting Firm
- ------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF
WM TRUST I AND WM TRUST II
-------------------------------------------------------------------------
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of WM REIT Fund, WM Equity Income
Fund, WM Growth & Income Fund, WM High Yield Fund, WM Income Fund, WM Mid
Cap Stock Fund, WM Money Market Fund, WM Small Cap Value Fund, WM Tax-Exempt
Bond Fund, WM Tax-Exempt Money Market Fund, WM U.S. Government Securities
Fund and WM West Coast Equity Fund (all funds of WM Trust I) and WM
California Insured Intermediate Municipal Fund, WM California Money Fund, WM
California Municipal Fund, WM Growth Fund, WM International Growth Fund, WM
Short Term Income Fund, and WM Small Cap Growth Fund (all funds of WM Trust
II) (collectively the "Funds") as of October 31, 2004, and the related
statements of operations for the period then ended, the statements of
changes in net assets for each of the two years in the period then ended,
and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 2004,
by correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned Funds as of October 31, 2004, the results of
their operations for the period then ended, the changes in their net assets
for each of the two years in the period then ended, and the financial
highlights for the periods presented, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
December 17, 2004
152
Other Information (unaudited)
- ------------------------------------------------------------------------------
WM GROUP OF FUNDS
-------------------------------------------------------------------------
1. Tax Information
The following tax information represents fiscal year end disclosures of
various tax benefits passed through to shareholders at calendar year end.
The amounts of long term capital gains designated are as follows (in
thousands):
Name of Fund
------------
REIT Fund $ 5,611
West Coast Equity Fund 16,471
Mid Cap Stock Fund 23,393
Tax-Exempt Bond Fund 2,757
California Municipal Fund 1,272
California Insured Intermediate Municipal Fund 1,333
Of the distributions made from investment income, the following percentages
are tax exempt for regular Federal income tax purposes.
Name of Fund
------------
Tax-Exempt Bond Fund 99.25%
California Municipal Fund 99.60%
California Insured Intermediate Municipal Fund 100.00%
Tax-Exempt Money Market Fund 100.00%
California Money Fund 100.00%
A portion of this income may be subject to alternative minimum tax.
Of the distributions made by the following Funds, the corresponding
percentages represent the amount of each distribution which may qualify for
the dividends received deduction available to corporate shareholders.
Name of Fund
------------
REIT Fund 3.38%
Equity Income Fund 97.85%
Growth & Income Fund 100.00%
West Coast Equity Fund 100.00%
Mid Cap Stock Fund 100.00%
Income Fund 0.54%
High Yield Fund 0.32%
If the Fund meets the requirements of Section 853 of the Code, the Fund may
elect to pass through to its shareholders credits for foreign taxes paid.
The total amount of income received by the International Growth Fund from
sources within foreign countries and possessions of the United States is
$0.1739 per share (representing a total of $10,938,277). The total amount of
taxes paid to such countries is $0.0184 per share (representing a total of
$1,157,503).
The following tax information represents fiscal year end percentages and may
differ from those provided to shareholders at calendar year end.
Of the distributions made by the following Funds, the corresponding
percentages represent the amount of each distribution which will qualify for
the 15% dividend income tax rate.
Name of Fund
------------
REIT Fund 3.71%
Equity Income Fund 93.01%
Growth & Income Fund 100.00%
West Coast Equity Fund 100.00%
Mid Cap Stock Fund 100.00%
International Growth Fund 83.35%
The above figures may differ from those cited elsewhere in this report due
to differences in the calculation of income and capital gains for generally
accepted accounting principles (book) purposes and federal income tax (tax)
purposes.
153
Other Information (unaudited) (continued)
- ------------------------------------------------------------------------------
WM GROUP OF FUNDS
-------------------------------------------------------------------------
2. Trustees and Officers Information
Trustees and Officers:
Name, Age, and Address (1) Length of Principal Occupation(s) During Other Directorships
Of Non-Interested Trustee(4) Time Served (2) Past 5 Years Held by Trustee
====================================================================================================================================
Wayne L. Attwood, M.D. Composite Funds-11 years Retired doctor of internal medicine and None.
Age 75 WM Group of gastroenterology.
Funds-6 years
- ------------------------------------------------------------------------------------------------------------------------------------
Kristianne Blake Composite Funds-3 years CPA specializing in personal financial Frank Russell Investment Company;
Age 50 WM Group of and tax planning. Russell Insurance Funds; Avista
Funds-6 years Corporation; St. George's School
- ------------------------------------------------------------------------------------------------------------------------------------
Edmond R. Davis, Esq. Sierra Funds-8 years Partner at the law firm of Davis & Whalen Braille Institute of America, Inc;
Age 76 WM Group of LLP. Prior thereto, partner at the law Children's Bureau of Southern
Funds-6 years firm of Brobeck, Phlegar & Harrison, LLP. California, Children's Bureau
Foundation; Fifield Manors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Carrol R. McGinnis Griffin Funds-3 years Founder of McGinnis Investments. Baptist Foundation of Texas;
Age 61 WM Group of Prior thereto, President and Chief Concord Trust Company.
Funds-5 years Operating Officer of Transamerica Fund
Management Company.
- ------------------------------------------------------------------------------------------------------------------------------------
Alfred E. Osborne, Jr., Ph.D. Sierra Funds-7 years Senior Associate Dean, University of Nordstrom Inc.; K2, Inc.; First
Age 59 WM Group of California at Los Angeles Anderson Pacific Advisors' Capital,
Funds-6 years Graduate School of Management, and Crescent and New Income Funds;
Faculty Director of the Harold Price EMAK Worldwide, Inc.; Member of
Center for Entreprenurial Studies, the Investment Company Institute
University of California at Los Angeles. Board of Governors; Director of
Independent Directors Council and
member of Communication &
Education Committee.
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel L. Pavelich Composite Funds-1 year Retired Chairman and CEO of BDO Catalytic, Inc.; Vaagen Bros.
Age 60 WM Group of Seidman, LLP. Lumber, Inc.
Funds-6 years
- ------------------------------------------------------------------------------------------------------------------------------------
Jay Rockey Composite Funds-3 years Founder and Senior Counsel of The Rockey Downtown Seattle Association;
Age 76 WM Group of Company, now Rockey, Hill & Knowlton. The Rainier Club; WSU Foundation
Funds-6 years
- ------------------------------------------------------------------------------------------------------------------------------------
Richard C. Yancey Composite Funds-23 years Retired Managing Director of AdMedia Partners Inc.; Czech
(Lead Trustee) WM Group of Dillon, Read & Co., an Investment Bank and Slovak American Enterprise
Age 78 Funds-6 years now part of UBS. Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Name, Age, and Address (1) Length of Principal Occupation(s) During Other Directorships
Of Interested Trustee(3)(4) Time Served (2) Past 5 Years Held by Trustee
====================================================================================================================================
Anne V. Farrell Composite Funds-4 years President Emeritus of the Seattle Washington Mutual, Inc.; REI
Age 69 WM Group of Foundation.
Funds-6 years
- ------------------------------------------------------------------------------------------------------------------------------------
Michael K. Murphy Composite Funds-3 years Chairman of CPM Development Washington Mutual, Inc.
Age 67 WM Group of Corporation.
Funds-6 years
- ------------------------------------------------------------------------------------------------------------------------------------
William G. Papesh, Composite Funds-9 years President and Director of the Advisor, Member of Investment Company
President and CEO WM Group of Transfer Agent and Distributor. Institute Board of Governors.
Age 61 Funds-6 years
- ------------------------------------------------------------------------------------------------------------------------------------
154
Other Information (unaudited) (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
WM GROUP OF FUNDS
-------------------------------------------------------------------------------------------------------------------------------
Name, Age, and Address (1) Position(s) Held with Registrant & Principal Occupation(s) During
Of Officer (4) Length of Time Served Past 5 Years
====================================================================================================================================
Wendi B. Bernard Assistant Vice President Assistant Vice President of the Advisor.
Age 36 and Assistant Secretary since 2003.
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey L. Lunzer, CPA First Vice President, Chief Financial First Vice President of the Advisor, Transfer Agent and
Age 43 Officer and Treasurer since 2003. Distributor. Prior to 2003, senior level positions at
the Columbia Funds and Columbia Management Co.
- ------------------------------------------------------------------------------------------------------------------------------------
William G. Papesh President and CEO since 1987. Prior to 1987, President and Director of the Advisor, Transfer Agent
Age 61 other officer positions since 1972. and Distributor.
- ------------------------------------------------------------------------------------------------------------------------------------
Gary Pokrzywinski Senior Vice President since 2004. Senior Vice President and Director of the Advisor,
Age 43 Prior to 2004, other officer positions held Transfer Agent and Distributor.
since 1999.
- ------------------------------------------------------------------------------------------------------------------------------------
Debra Ramsey Senior Vice President since 2004. Senior Vice President and Director of the Advisor,
Age 51 Transfer Agent and Distributor.
- ------------------------------------------------------------------------------------------------------------------------------------
John T. West First Vice President, Secretary, Chief First Vice President of the Advisor, Transfer Agent and
Age 49 Compliance Officer and Anti-Money Laundering Distributor.
Compliance Officer since 2004. Prior to 2004,
other officer positions held since 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
Randall L. Yoakum Senior Vice President since 2001. Senior Vice President, Chief Investment Strategist of
Age 44 Prior to 2001, other officer positions held the Advisor. Director of the Advisor, Transfer Agent and
since 1999. Distributor from 1999 to 2004. Prior thereto, senior
positions at D.A. Davidson and Boatmen's Trust.
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
- --------
Note: The Statement of Additional Information includes additional
information about Fund Trustees and Officers and is available, without
charge, upon request by calling 1-800-222-5852.
(1) The address for all Trustees and Officers is 1201 Third Avenue, 22nd
Floor, Seattle, WA, 98101.
(2) The Sierra Funds merged with the Composite Funds on March 23, 1998 to
form the WM Group of Funds. The Griffin Funds merged with the WM Group
of Funds on March 5, 1999.
(3) Trustees are considered interested due to their affiliation with
Washington Mutual, Inc. or the Funds.
(4) The Trustees oversee 42 Portfolios and Funds in the Fund Complex. Each
Trustee and executive officer shall hold the indicated positions until
his or her resignation or removal.
3. Portfolio Information
Schedules of Investments
The Trusts file their complete schedules of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters
of each fiscal year on Form N-Q. The Trusts' Forms N-Q are available,
without charge and upon request, by calling 1-800-222-5852. The Trusts'
Forms N-Q are also available at http://www.sec.gov and also may be reviewed
and copied at the SEC's Public Reference Room ("PRR") in Washington, DC.
Information regarding the operation of the PRR may be obtained by calling
1-800-SEC-0330.
Proxy Voting Information
The policies and procedures that the Trusts use to determine how to vote
proxies relating to portfolio securities held by the Fund are included in
the Trusts' Statement of Additional Information which is available, without
charge and upon request, by calling 1-800-222-5852. Information regarding
how the Fund voted proxies relating to portfolio securities during the most
recent twelve-month period ended June 30 is available at
http://www.wmgroupoffunds.com. This information is also available at
http://www.sec.gov.
155
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GroupofFunds
- ------------------------------------------------------------------------------
A mutual fund's share price and investment return will vary with market
conditions, and the principal value of an investment when you sell your
shares may be more or less than the original cost.
This annual report is published for the general information of the
shareholders of the WM Group of Funds. This material is not authorized for
distribution unless preceded or accompanied by a current prospectus that
includes more information regarding the risk factors, expenses, policies,
and objectives of the funds. Investors should read the prospectus carefully
before investing. To obtain an additional prospectus, please contact your
Investment Representative or call 800-222-5852.
The WM Group of mutual funds is advised by WM Advisors, Inc., distributed by
WM Funds Distributor, Inc., and sold through WM Financial Services, Inc.
(all affiliates of Washington Mutual, Inc.) and independent broker/dealers.
Distributed by:
WM Funds Distributor, Inc.
Member NASD
[logo] wm PRSRT STD
GroupofFunds U.S. POSTAGE
PAID
P.O. Box 9757 N. READING, MA
Providence, RI 02940-9757 PERMIT #105
WMGAR (12/27/04)
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer, a copy of which is attached hereto.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that there is at
least one Trustee who is an audit committee financial expert serving on its
Audit Committee and has designated Daniel L. Pavelich as an "audit committee
financial expert." Mr. Pavelich is "independent," as such term has been
defined by the Securities and Exchange Commission (the "SEC") for purposes
of implementing Section 407 of the Sarbanes Oxley Act of 2002. The SEC has
stated that the designation or identification of a person as an audit
committee financial expert pursuant to this Item 3 of Form N-CSR does not
impose on such person any duties, obligations or liability that are greater
than the duties, obligations and liability imposed on such person as a
member of the Audit Committee and the Board of Trustees in the absence of
such designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
2003 2004
- ---- ----
$184,070 $194,000
(b) Audit-Related Fees
2003 2004
- ---- ----
None None
For the last two fiscal years, no audit-related fees were required to be
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(c) Tax Fees
2003 2004
- ---- ----
$16,167 $16,156
The tax fees consist of fees billed in connection with reviewing the federal
regulated investment company income tax returns for WM Trust II for the tax
years ended December 31, 2003 and December 31, 2004.
For the last two fiscal years, no tax fees were required to be approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(d) All Other Fees
For the last two fiscal years, no other fees were required to be approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
- ----------------------------------------------------------------------------
(e) (1) Pre-approval Policies and Procedures Pursuant to the Audit Committee
charter, the Audit Committee of the registrant will review and pre-approve
or disapprove its principal accountant's engagement for all services with
the registrant and its principal accountant's engagement for non-audit
services with the registrant's investment advisor (not including a
sub-advisor whose role is primarily portfolio management and is
sub-contracted or overseen by another investment advisor) and any entity
controlling, controlled by or under common control with the investment
advisor that provides ongoing services to the funds in accordance with
paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X, if the engagement
relates directly to the operations and financial reporting of the
registrant.
(2) None of the services described in paragraphs (b) through (d) of this
Item 4 were approved by the Audit Committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) For the fiscal year ended December 31, 2004, the registrant's principal
accountant billed aggregate non-audit fees in the amount of $92,210 for
services rendered to the registrant, WM Advisors, Inc., WM Funds
Distributor, Inc., WM Shareholder Services, Inc. and WM Financial Services,
Inc. For the fiscal year ended December 31, 2003, the registrant's principal
accountant billed aggregate non-audit fees in the amount of $487,871 for
services rendered to the registrant, WM Advisors, Inc., WM Funds
Distributor, Inc., WM Shareholder Services, Inc. and WM Financial Services,
Inc.
(h) The Audit Committee has considered whether the provision of non-audit
services that were rendered to the registrant's investment advisor (not
including any subadvisor whose role is primarily portfolio management and is
subcontracted with or overseen by another investment advisor), and any
entity controlling, controlled by, or under common control with the
investment advisor that provides ongoing services to the registrant that
were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X
is compatible with maintaining the principal accountant's independence.
- ----------------------------------------------------------------------------
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANIES AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 11. CONTROLS AND PROCEDURES:
(a) The registrant's principal executive officer and principal financial
officer have concluded, based on their evaluation of the effectiveness of
the design and operation of the registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report on
Form N-CSR, that the design and operation of such procedures are effective
to provide reasonable assurance that information required to be disclosed by
the registrant in the reports that it files or submits on Form N-CSR is
recorded, processed, summarized, and reported within the time periods
specified in the SEC's rules and forms.
(b) There have been no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940, as amended) that occurred during the registrant's
second fiscal half-year that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 12. EXHIBITS
(a) Registrant's Code of Ethics. The registrant's code of ethics required to
be disclosed under Item 2 of Form N-CSR attached hereto at Exhibit 99.CODE ETH.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2 of
the Investment Company Act of 1940 attached hereto as Exhibit 99.CERT.
(c) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
attached hereto as Exhibit 99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
WM TRUST II
By: /s/ William G. Papesh
---------------------
William G. Papesh, President and Chief Executive Officer
Date: January 7, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ Jeffrey L. Lunzer
---------------------
Jeffrey L. Lunzer, Treasurer and Chief Financial Officer
Date: January 7, 2005
By: /s/ William G. Papesh
---------------------
William G. Papesh, President and Chief Executive Officer
Date: January 7, 2005