-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RiHkdA7DTupajPdbypgMCJZ2x7NPnLiaLNRHz0u5s1/NokcGL4gs6uTA9HqJOsMg C3bBWZNH8XssY3gQJIiCDQ== 0001068800-04-000432.txt : 20040702 0001068800-04-000432.hdr.sgml : 20040702 20040701190651 ACCESSION NUMBER: 0001068800-04-000432 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040430 FILED AS OF DATE: 20040702 EFFECTIVENESS DATE: 20040702 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS CENTRAL INDEX KEY: 0001011114 IRS NUMBER: 954584965 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-07577 FILM NUMBER: 04896662 BUSINESS ADDRESS: STREET 1: WM GROUP OF FUNDS STREET 2: 1201 THIRD AVENUE, 22ND FLOOR CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 206-461-2413 MAIL ADDRESS: STREET 1: WM GROUP OF FUNDS STREET 2: 1201 THIRD AVENUE, 22ND FLOOR CITY: SEATTLE STATE: WA ZIP: 98101 FORMER COMPANY: FORMER CONFORMED NAME: SIERRA ASSET MANAGEMENT PORTFOLIOS DATE OF NAME CHANGE: 19960726 FORMER COMPANY: FORMER CONFORMED NAME: SIERRA ASSET MANAGEMENT TRUST DATE OF NAME CHANGE: 19960322 N-CSRS 1 sam.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07577 WM Strategic Asset Management Portfolios, LLC (Exact name of registrant as specified in charter) 1201 Third Avenue, 22nd Floor, Seattle, WA 98101 (Address of principal executive offices) (Zip code) Jeffrey L. Lunzer 1201 Third Avenue, 22nd Floor, Seattle, WA 98101 (Name and address of agent for service) Registrant's telephone number, including area code: (206) 461-3800 Date of fiscal year end: October 31, 2004 Date of reporting period: April 30, 2004 Item 1. Reports to Stockholders [logo] WM GROUPofFUNDS S T R A T E G I C A S S E T M A N A G E M E N T P O R T F O L I O S Common sense. Uncommon solutions. [photo] SEMI-ANNUAL REPORT April 30, 2004 WM Strategic Asset Management Portfolios Flexible Income Portfolio Conservative Balanced Portfolio Balanced Portfolio Conservative Growth Portfolio Strategic Growth Portfolio Table of Contents Message from the President....................1 Portfolios of Investments.....................2 Statements of Assets and Liabilities..........5 Statements of Operations......................6 Statements of Changes in Net Assets...........7 Statements of Changes in Net Assets - Capital Stock Activity...............8 Financial Highlights.........................10 Notes to Financial Statements................16 Not FDIC Insured - -------------------------------------------------- May Lose Value * Not a Deposit * No Bank Guarantee Not Insured by any Federal Government Agency [PHOTO] Dear Shareholder, Since our last shareholder report, the U.S. economy has regained its economic foothold. Corporate profits have improved in an ongoing environment of low inflation and low interest rates. Corporations are showing renewed confidence that is evident through increased capital spending and hiring, accompanied by higher worker productivity. The creation of more jobs in the service and manufacturing sectors is a welcome sign that can have a positive proliferating impact on the economy. We are also seeing the development of more favorable factors outside the U.S. that can drive stronger economic growth. These developments were reflected in the performance of the stock market, which gained 6% for the six-month period ended April 30, 2004.(1) Among the best-performing equity sectors were energy (+22%), telecommunications (+13%), health care (+10%), and consumer staples (+10%).(2) Corporate bonds, particularly lower-quality high-yield issues in sectors such as insurance (+10%), financial institutions (+9%), and basic industry (+8%), were among the top-performing assets during the period.(3) Asset Allocation Shows Its Benefits What makes the investment business so challenging is that we continually see new positive trends that are invariably accompanied by negative news. This combination of events can rapidly alter our well-researched projections. As a result, we continue to embrace asset allocation, which studies have shown accounts for over 90% of an investment's return.(4) In our judgement, this is the most appropriate and time-tested investment philosophy. Our approach to investing is reflected in such variables as portfolio allocations, bond maturities, corporate sector and asset class exposures, equity styles, and capitalizations. As evidence of how important asset allocation is to our investment approach, we launched the WM Small Cap Value Fund, which invests in smaller-sized, undervalued firms, on March 1 of this year. With this new fund, we can now invest in up to 13 separate asset classes within our Strategic Asset Management (SAM) Portfolios. It also provides us with greater investment opportunities and strengthens our ability to spread assets across more well-researched and widely traded investment styles. Celebrating 65 Years of Shared Values This year marks the 65th anniversary of our WM Equity Income Fund, which traces its origins back to 1939 when it was launched as the Composite Bond Fund, one of the first 50 mutual funds in the U.S. Much has changed since then. Today there are over 8,000 U.S. mutual funds,(5) but few can claim a similar heritage and institutional dedication to shareholder interests. I am honored to be only the fourth president of WM Advisors during its 65-year history. My mentor, Lee Sahlin, upheld the corporate culture developed under his predecessor, George Yancey, who worked alongside the founder of the Composite Research & Management Company, R. M. "Pete" Williams. My predecessors had long tenures because they took the values of long-term investing, consistency of purpose, trust, and integrity very seriously. I am proud that these values are still at work today at our staff, management, and board levels. The WM Group of Funds Board of Trustees is comprised of 11 experienced individuals, eight of whom are independent of fund management. The remaining three trustees (myself included) are termed "interested persons" who are connected with fund management or Washington Mutual, Inc. Acting together, the board members represent shareholder interests by striving to ensure that the funds' managers, distributor, transfer agent, and other service providers meet their fiduciary responsibilities. A Time-Tested Investment Approach As the mutual fund industry approaches its 80th anniversary, we note that over a history with nearly the same longevity, WM Advisors has built a venerable record of successful investment management. Our investment philosophy has been tested over decades that have included some extraordinary historic and economic events. We have persevered while also achieving some exceptional results and recognition for our achievements from national publications, such as Barron's. I believe the key to this success can be distilled from our investment process, consistent approach, and teamwork. Our overall approach is aligned with the goals of our shareholders, so we operate with a common purpose. This process has worked exceptionally well for the past 65 years, and we are confident it can produce mutual benefits in the years ahead. Sincerely, /s/ William G. Papesh William G. Papesh President (1) As measured by the S&P 500 Index. Indices are unmanaged, and individuals cannot invest directly in an index. (2) Source: Bloomberg News. (3) Source: Lehman Brothers. (4) Source: Ibbotson Associates. (5) Source: Investment Company Institute. 1 portfolios of investments FLEXIBLE INCOME PORTFOLIO April 30, 2004 (unaudited) Value Shares (000s) ------ ------ INVESTMENT COMPANY SECURITIES -- 99.5% 1,695,182 WM Equity Income Fund ................ $ 28,547 2,700,376 WM Growth & Income Fund .............. 63,378 2,698,974 WM Growth Fund ....................... 39,702 7,211,718 WM High Yield Fund ................... 57,982 21,858,725 WM Income Fund ....................... 203,505 1,448,556 WM Mid Cap Stock Fund ................ 24,162 677,092 WM REIT Fund.......................... 8,660 41,609,852 WM Short Term Income Fund ............ 99,031 565,561 WM Small Cap Growth Fund ............. 8,110 828,652 WM Small Cap Value Fund............... 8,038 24,442,466 WM U.S. Government Securities Fund.... 263,001 386,435 WM West Coast Equity Fund ............ 13,046 -------- Total Investment Company Securities (Cost $784,692) .................... 817,162 -------- Principal Amount (000s) - --------- REPURCHASE AGREEMENT -- 0.3% (Cost $2,404) $ 2,404 Agreement with Morgan Stanley, 0.940% dated 04/30/2004, to be repurchased at $2,404,000 on 05/03/2004 (Collateralized by U.S. Treasury Note, 6.750% due 05/15/2005, market value $2,453,000)............................ 2,404 -------- TOTAL INVESTMENTS (Cost $787,096*).......... 99.8% 819,566 OTHER ASSETS AND LIABILITIES (Net) ......... 0.2 1,523 ----- -------- NET ASSETS.................................. 100.0% $821,089 ===== ======== - -------- * Aggregate cost for federal tax purposes. CONSERVATIVE BALANCED PORTFOLIO April 30, 2004 (unaudited) Value Shares (000s) ------ ------ INVESTMENT COMPANY SECURITIES -- 98.9% 1,401,002 WM Equity Income Fund ................. $ 23,593 1,418,071 WM Growth & Income Fund ............... 33,282 2,115,166 WM Growth Fund ........................ 31,114 3,041,027 WM High Yield Fund .................... 24,450 7,828,509 WM Income Fund ........................ 72,883 1,603,637 WM International Growth Fund .......... 14,369 882,622 WM Mid Cap Stock Fund ................. 14,722 559,413 WM REIT Fund........................... 7,155 9,230,800 WM Short Term Income Fund ............. 21,969 372,543 WM Small Cap Growth Fund .............. 5,342 563,597 WM Small Cap Value Fund................ 5,467 9,822,910 WM U.S. Government Securities Fund..... 105,695 326,558 WM West Coast Equity Fund ............. 11,025 -------- Total Investment Company Securities (Cost $352,525)...................... 371,066 -------- Principal Amount (000s) - --------- REPURCHASE AGREEMENT -- 0.3% (Cost $959) $ 959 Agreement with Morgan Stanley, 0.940% dated 04/30/2004, to be repurchased at $959,000 on 05/03/2004, (Collateralized by U.S. Treasury Note, 6.750% due 05/15/2005, market value $978,000) ............................... 959 -------- TOTAL INVESTMENTS (Cost $353,484*).......... 99.2% 372,025 OTHER ASSETS AND LIABILITIES (Net) ......... 0.8 3,051 ----- -------- NET ASSETS ................................. 100.0% $375,076 ===== ======== - -------- * Aggregate cost for federal tax purposes. See Notes to Financial Statements. 2 portfolios of investments BALANCED PORTFOLIO April 30, 2004 (unaudited) Value Shares (000s) ------ ------ INVESTMENT COMPANY SECURITIES -- 97.5% 16,542,263 WM Equity Income Fund ................ $ 278,572 17,173,241 WM Growth & Income Fund .............. 403,056 24,716,923 WM Growth Fund ....................... 363,586 20,270,332 WM High Yield Fund ................... 162,973 38,964,976 WM Income Fund ....................... 362,764 17,038,725 WM International Growth Fund ......... 152,667 10,121,815 WM Mid Cap Stock Fund ................ 168,832 6,445,387 WM REIT Fund.......................... 82,437 13,936,469 WM Short Term Income Fund ............ 33,169 4,725,906 WM Small Cap Growth Fund ............. 67,769 7,175,791 WM Small Cap Value Fund............... 69,605 46,291,883 WM U.S. Government Securities Fund.... 498,101 4,218,221 WM West Coast Equity Fund ............ 142,407 ---------- Total Investment Company Securities (Cost $2,601,241)................... 2,785,938 ---------- Principal Amount (000s) - --------- REPURCHASE AGREEMENT -- 2.1% (Cost $61,044) $ 61,044 Agreement with Morgan Stanley, 0.940% dated 04/30/2004, to be repurchased at $61,049,000 on 05/03/2004 (Collateralized by U.S. Treasury Note, 6.750% due 05/15/2005, market value $62,284,000)........................... 61,044 ---------- TOTAL INVESTMENTS (Cost $2,662,285*)........ 99.6% 2,846,982 OTHER ASSETS AND LIABILITIES (Net) ......... 0.4 11,541 ----- ---------- NET ASSETS.................................. 100.0% $2,858,523 ===== ========== - -------- * Aggregate cost for federal tax purposes. CONSERVATIVE GROWTH PORTFOLIO April 30, 2004 (unaudited) Value Shares (000s) ------ ------ INVESTMENT COMPANY SECURITIES -- 99.6% 15,884,313 WM Equity Income Fund ................ $ 267,492 18,824,230 WM Growth & Income Fund .............. 441,805 23,787,909 WM Growth Fund ....................... 349,920 14,341,637 WM High Yield Fund ................... 115,307 15,549,703 WM Income Fund ....................... 144,768 18,329,370 WM International Growth Fund ......... 164,231 10,577,885 WM Mid Cap Stock Fund ................ 176,439 6,591,493 WM REIT Fund.......................... 84,305 5,248,668 WM Small Cap Growth Fund ............. 75,266 7,939,909 WM Small Cap Value Fund............... 77,017 18,545,061 WM U.S. Government Securities Fund.... 199,545 4,643,764 WM West Coast Equity Fund ............ 156,773 ---------- Total Investment Company Securities (Cost $2,106,072)................... 2,252,868 ---------- Principal Amount (000s) - --------- REPURCHASE AGREEMENT -- 0.2% (Cost $3,731) $ 3,731 Agreement with Morgan Stanley, 0.940% dated 04/30/2004, to be repurchased at $3,731,000 on 05/03/2004 (Collateralized by U.S. Treasury Note, 6.750% due 05/15/2005, market value $3,807,000)............................ 3,731 ---------- TOTAL INVESTMENTS (Cost $2,109,803*)........ 99.8% 2,256,599 OTHER ASSETS AND LIABILITIES (Net).......... 0.2 4,740 ----- ---------- NET ASSETS.................................. 100.0% $2,261,339 ===== ========== - -------- * Aggregate cost for federal tax purposes. See Notes to Financial Statements. 3 portfolio of investments STRATEGIC GROWTH PORTFOLIO April 30, 2004 (unaudited) Value Shares (000s) ------ ------ INVESTMENT COMPANY SECURITIES -- 99.5% 9,124,920 WM Equity Income Fund ................ $ 153,664 12,791,201 WM Growth & Income Fund .............. 300,209 16,376,604 WM Growth Fund ....................... 240,900 8,467,631 WM High Yield Fund ................... 68,080 12,742,829 WM International Growth Fund ......... 114,176 8,576,293 WM Mid Cap Stock Fund ................ 143,052 3,638,230 WM REIT Fund.......................... 46,533 3,372,754 WM Small Cap Growth Fund ............. 48,365 5,135,659 WM Small Cap Value Fund............... 49,816 3,402,862 WM West Coast Equity Fund ............ 114,881 ---------- Total Investment Company Securities (Cost $1,223,437)................... 1,279,676 ---------- Principal Amount (000s) - --------- REPURCHASE AGREEMENT -- 0.3% (Cost $3,255) $ 3,255 Agreement with Morgan Stanley, 0.940% dated 04/30/2004, to be repurchased at $3,255,000 on 05/03/2004 (Collateralized by U.S. Treasury Note, 6.750% due 05/15/2005, market value $3,321,000)............................ 3,255 ---------- TOTAL INVESTMENTS (Cost $1,226,692*)........ 99.8% 1,282,931 OTHER ASSETS AND LIABILITIES (Net).......... 0.2 3,138 ----- ---------- NET ASSETS.................................. 100.0% $1,286,069 ===== ========== - -------- * Aggregate cost for federal tax purposes. See Notes to Financial Statements. 4 statements of assets and liabilities WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS April 30, 2004 (unaudited) (In thousands)
Flexible Conservative Conservative Strategic Income Balanced Balanced Growth Growth Portfolio Portfolio Portfolio Portfolio Portfolio --------- ------------ --------- ------------ --------- ASSETS: Investments, at value (a) $819,566 $372,025 $2,846,982 $2,256,599 $1,282,931 Receivable for Portfolio shares sold 5,017 4,319 24,550 14,406 8,884 Prepaid expenses and other assets 9 4 30 23 432 -------- -------- ---------- ---------- ---------- Total Assets 824,592 376,348 2,871,562 2,271,028 1,292,247 -------- -------- ---------- ---------- ---------- LIABILITIES: Payable for Portfolio shares redeemed 2,076 439 4,538 4,613 1,773 Payable for investment securities purchased 404 359 5,044 2,231 2,675 Investment advisory fee payable 435 198 1,441 1,157 675 Shareholder servicing and distribution fees payable 484 212 1,595 1,287 758 Transfer agent fees payable 54 27 192 186 145 Accrued expenses and other payables 50 37 229 215 152 -------- -------- ---------- ---------- ---------- Total Liabilities 3,503 1,272 13,039 9,689 6,178 -------- -------- ---------- ---------- ---------- NET ASSETS $821,089 $375,076 $2,858,523 $2,261,339 $1,286,069 ======== ======== ========== ========== ========== (a) Investments, at cost $787,096 $353,484 $2,662,285 $2,109,803 $1,226,692 ======== ======== ========== ========== ========== NET ASSETS consist of: Undistributed net investment income/ (accumulated net investment loss) $ 1,441 $ 455 $ 962 $ (506) $ (3,536) Accumulated net realized loss on investment transactions (3,245) (2,157) (68,014) (78,655) (65,090) Net unrealized appreciation of investments 32,470 18,541 184,697 146,796 56,239 Paid-in capital 790,423 358,237 2,740,878 2,193,704 1,298,456 -------- -------- ---------- ---------- ---------- Total Net Assets $821,089 $375,076 $2,858,523 $2,261,339 $1,286,069 ======== ======== ========== ========== ========== NET ASSETS: Class A Shares $307,326 $151,462 $1,218,316 $ 939,488 $ 489,241 ======== ======== ========== ========== ========== Class B Shares $413,215 $146,383 $1,270,440 $ 957,335 $ 582,805 ======== ======== ========== ========== ========== Class C Shares $100,548 $ 77,231 $ 369,767 $ 364,516 $ 214,023 ======== ======== ========== ========== ========== SHARES OUTSTANDING: Class A Shares 27,794 15,097 99,129 71,584 34,833 ======== ======== ========== ========== ========== Class B Shares 37,429 14,613 103,604 74,765 43,095 ======== ======== ========== ========== ========== Class C Shares 9,142 7,735 30,276 28,612 15,794 ======== ======== ========== ========== ========== CLASS A SHARES:** Net asset value per share of beneficial interest outstanding * $ 11.06 $ 10.03 $ 12.29 $ 13.12 $ 14.05 ======== ======== ========== ========== ========== Maximum sales charge 4.50% 5.50% 5.50% 5.50% 5.50% ======== ======== ========== ========== ========== Maximum offering price per share of beneficial interest outstanding $ 11.58 $ 10.61 $ 13.01 $ 13.88 $ 14.87 ======== ======== ========== ========== ========== CLASS B SHARES:** Net asset value and offering price per share of beneficial interest outstanding * $ 11.04 $ 10.02 $ 12.26 $ 12.80 $ 13.52 ======== ======== ========== ========== ========== CLASS C SHARES:** Net asset value and offering price per share of beneficial interest outstanding * $ 11.00 $ 9.99 $ 12.21 $ 12.74 $ 13.55 ======== ======== ========== ========== ========== - -------- * Redemption price per share is equal to net asset value per share less any applicable contingent deferred sales charge. ** Net asset value and maximum offering price are not shown in thousands. See Notes to Financial Statements.
5 statements of operations WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS For the Six Months Ended April 30, 2004 (unaudited) (In thousands)
Flexible Conservative Conservative Strategic Income Balanced Balanced Growth Growth Portfolio Portfolio Portfolio Portfolio Portfolio --------- ------------ --------- ------------ --------- INVESTMENT INCOME: Dividends from investment company securities $15,670 $6,000 $ 36,241 $ 22,690 $ 9,268 Interest 15 7 324 33 23 ------- ------ -------- -------- -------- Total investment income 15,685 6,007 36,565 22,723 9,291 ------- ------ -------- -------- -------- EXPENSES: Investment advisory fee 2,409 1,044 7,803 6,236 3,588 Custodian fees 2 1 1 1 1 Legal and audit fees 21 16 41 39 24 Other 206 119 689 599 409 Shareholder servicing and distribution fees: Class A Shares 328 157 1,272 991 500 Class B Shares 1,974 661 5,961 4,557 2,745 Class C Shares 419 319 1,542 1,457 826 Transfer agent fees: Class A Shares 77 41 313 314 238 Class B Shares 136 54 451 407 318 Class C Shares 27 21 100 112 79 ------- ------ -------- -------- -------- Total expenses 5,599 2,433 18,173 14,713 8,728 Fees reduced by custodian credits --* --* --* --* --* ------- ------ -------- -------- -------- Net expenses 5,599 2,433 18,173 14,713 8,728 ------- ------ -------- -------- -------- NET INVESTMENT INCOME 10,086 3,574 18,392 8,010 563 ------- ------ -------- -------- -------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain/(loss) on investment transactions 3,239 704 (20,125) (30,411) (24,716) Capital gain distributions received 82 52 619 633 435 Net change in unrealized appreciation/ depreciation of investments 3,554 4,210 94,421 112,328 80,203 ------- ------ -------- -------- -------- Net realized and unrealized gain on investments 6,875 4,966 74,915 82,550 55,922 ------- ------ -------- -------- -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $16,961 $8,540 $ 93,307 $ 90,560 $ 56,485 ======= ====== ======== ======== ======== - -------- * Amount represents less than $500. See Notes to Financial Statements.
6 statements of changes in net assets WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS For the Six Months Ended April 30, 2004 (unaudited) (In thousands)
Flexible Conservative Conservative Strategic Income Balanced Balanced Growth Growth Portfolio Portfolio Portfolio Portfolio Portfolio --------- ------------ --------- ------------ --------- Net investment income $ 10,086 $ 3,574 $ 18,392 $ 8,010 $ 563 Net realized gain/(loss) on investment transactions 3,239 704 (20,125) (30,411) (24,716) Capital gain distributions received 82 52 619 633 435 Net change in unrealized appreciation/depreciation of investments 3,554 4,210 94,421 112,328 80,203 -------- -------- ---------- ---------- ---------- Net increase in net assets resulting from operations 16,961 8,540 93,307 90,560 56,485 Distributions to shareholders from: Net investment income: Class A Shares (4,415) (1,728) (10,028) (3,971) -- Class B Shares (5,088) (1,306) (7,246) (3,187) -- Class C Shares (1,116) (641) (1,971) (1,027) -- Net increase in net assets from Portfolio share transactions: Class A Shares 81,474 55,910 399,062 292,409 170,797 Class B Shares 37,329 27,242 156,300 88,640 68,058 Class C Shares 31,367 25,028 127,675 159,546 99,395 -------- -------- ---------- ---------- ---------- Net increase in net assets 156,512 113,045 757,099 622,970 394,735 NET ASSETS: Beginning of period 664,577 262,031 2,101,424 1,638,369 891,334 -------- -------- ---------- ---------- ---------- End of period $821,089 $375,076 $2,858,523 $2,261,339 $1,286,069 ======== ======== ========== ========== ========== Undistributed net investment income/ (accumulated net investment loss) at end of period $ 1,441 $ 455 $ 962 $ (506) $ (3,536) ======== ======== ========== ========== ========== For The Year Ended October 31, 2003 Net investment income/(loss) $ 16,979 $ 4,114 $ 23,759 $ 9,132 $ (1,375) Net realized loss on investment transactions (4,679) (1,915) (23,365) (27,792) (18,516) Net change in unrealized appreciation/depreciation of investments 43,834 19,838 258,639 267,163 170,878 -------- -------- ---------- ---------- ---------- Net increase in net assets resulting from operations 56,134 22,037 259,033 248,503 150,987 Distributions to shareholders from: Net investment income: Class A Shares (6,392) (1,486) (10,917) (5,264) -- Class B Shares (8,956) (1,756) (11,375) (3,864) -- Class C Shares (1,284) (605) (1,556) (519) -- Net realized gains on investments: Class A Shares (226) -- -- (1,176) (1,363) Class B Shares (389) -- -- (2,123) (2,912) Class C Shares (37) -- -- (182) (240) Net increase in net assets from Portfolio share transactions: Class A Shares 66,490 56,926 284,390 182,874 84,392 Class B Shares 104,021 49,644 200,435 74,140 48,369 Class C Shares 44,830 37,641 159,237 126,407 68,120 -------- -------- ---------- ---------- ---------- Net increase in net assets 254,191 162,401 879,247 618,796 347,353 NET ASSETS: Beginning of year 410,386 99,630 1,222,177 1,019,573 543,981 -------- -------- ---------- ---------- ---------- End of year $664,577 $262,031 $2,101,424 $1,638,369 $ 891,334 ======== ======== ========== ========== ========== Undistributed net investment income/ (accumulated net investment loss) at end of year $ 1,974 $ 556 $ 1,815 $ (331) $ (4,099) ======== ======== ========== ========== ========== See Notes to Financial Statements.
7 statements of changes in net assets -- capital stock activity WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS (In thousands)
Conservative Flexible Income Portfolio Balanced Portfolio Balanced Portfolio ------------------------- ------------------------ ------------------------- Six Months Six Months Six Months Ended Ended Ended 04/30/04 Year Ended 04/30/04 Year Ended 04/30/04 Year Ended (unaudited) 10/31/03 (unaudited) 10/31/03 (unaudited) 10/31/03 ----------- ---------- ----------- ---------- ----------- ---------- AMOUNT Class A: Sold $116,450 $132,626 $ 74,924 $ 77,203 $465,301 $ 388,253 Issued as reinvestment of dividends 4,003 6,038 1,603 1,400 9,621 10,557 Redeemed (38,979) (72,174) (20,617) (21,677) (75,860) (114,420) -------- -------- -------- -------- -------- --------- Net increase $ 81,474 $ 66,490 $ 55,910 $ 56,926 $399,062 $ 284,390 ======== ======== ======== ======== ======== ========= Class B: Sold $ 84,952 $188,101 $ 42,043 $ 77,595 $238,063 $ 363,002 Issued as reinvestment of dividends 4,578 8,565 1,210 1,659 6,955 11,004 Redeemed (52,201) (92,645) (16,011) (29,610) (88,718) (173,571) -------- -------- -------- -------- -------- --------- Net increase $ 37,329 $104,021 $ 27,242 $ 49,644 $156,300 $ 200,435 ======== ======== ======== ======== ======== ========= Class C: Sold $ 41,705 $ 66,013 $ 31,031 $ 48,833 $146,835 $ 178,337 Issued as reinvestment of dividends 982 1,207 592 574 1,862 1,494 Redeemed (11,320) (22,390) (6,595) (11,766) (21,022) (20,594) -------- -------- -------- -------- -------- --------- Net increase $ 31,367 $ 44,830 $ 25,028 $ 37,641 $127,675 $ 159,237 ======== ======== ======== ======== ======== ========= SHARES Class A: Sold 10,394 12,528 7,386 8,237 37,566 35,203 Issued as reinvestment of dividends 359 574 159 150 786 977 Redeemed (3,489) (6,804) (2,032) (2,322) (6,119) (10,622) -------- -------- -------- -------- -------- --------- Net increase 7,264 6,298 5,513 6,065 32,233 25,558 ======== ======== ======== ======== ======== ========= Class B: Sold 7,601 17,920 4,151 8,360 19,242 33,351 Issued as reinvestment of dividends 411 816 120 179 571 1,031 Redeemed (4,675) (8,770) (1,581) (3,199) (7,170) (16,183) -------- -------- -------- -------- -------- --------- Net increase 3,337 9,966 2,690 5,340 12,643 18,199 ======== ======== ======== ======== ======== ========= Class C: Sold 3,743 6,291 3,078 5,256 11,952 16,269 Issued as reinvestment of dividends 88 115 59 62 153 138 Redeemed (1,017) (2,120) (655) (1,258) (1,707) (1,895) -------- -------- -------- -------- -------- --------- Net increase 2,814 4,286 2,482 4,060 10,398 14,512 ======== ======== ======== ======== ======== ========= See Notes to Financial Statements. 8 Conservative Growth Portfolio Strategic Growth Portfolio ------------------------- -------------------------- Six Months Six Months Ended Ended 04/30/04 Year Ended 04/30/04 Year Ended (unaudited) 10/31/03 (unaudited) 10/31/03 ----------- ---------- ----------- ---------- AMOUNT Class A: Sold $341,081 $ 255,874 $199,021 $125,879 Issued as reinvestment of dividends 3,855 6,302 -- 1,345 Redeemed (52,527) (79,302) (28,224) (42,832) -------- --------- -------- -------- Net increase $292,409 $ 182,874 $170,797 $ 84,392 ======== ========= ======== ======== Class B: Sold $150,308 $ 209,247 $100,750 $109,265 Issued as reinvestment of dividends 3,091 5,859 -- 2,863 Redeemed (64,759) (140,966) (32,692) (63,759) -------- --------- -------- -------- Net increase $ 88,640 $ 74,140 $ 68,058 $ 48,369 ======== ========= ======== ======== Class C: Sold $175,642 $ 141,969 $108,145 $ 75,726 Issued as reinvestment of dividends 960 678 -- 236 Redeemed (17,056) (16,240) (8,750) (7,842) -------- --------- -------- -------- Net increase $159,546 $ 126,407 $ 99,395 $ 68,120 ======== ========= ======== ======== SHARES Class A: Sold 25,905 22,560 14,139 10,682 Issued as reinvestment of dividends 300 581 -- 124 Redeemed (3,995) (7,272) (2,007) (3,815) -------- --------- -------- -------- Net increase 22,210 15,869 12,132 6,991 ======== ========= ======== ======== Class B: Sold 11,658 19,061 7,427 9,686 Issued as reinvestment of dividends 246 570 -- 271 Redeemed (5,037) (13,258) (2,403) (5,899) -------- --------- -------- -------- Net increase 6,867 6,373 5,024 4,058 ======== ========= ======== ======== Class C: Sold 13,738 12,791 7,970 6,566 Issued as reinvestment of dividends 77 65 -- 22 Redeemed (1,328) (1,524) (640) (706) -------- --------- -------- -------- Net increase 12,487 11,332 7,330 5,882 ======== ========= ======== ======== See Notes to Financial Statements.
9 financial highlights For a Portfolio share outstanding throughout each period.
Income from Investment Operations Less Distributions ------------------------------------ --------------------------------------- Net Realized Net Asset and Dividends Distributions Value, Net Unrealized Total from from Net from Net Beginning Investment Gain/(Loss) Investment Investment Net Realized Total Asset Value, of Period Income on Investments Operations Income(1) Capital Gains Distributions End of Period --------- ---------- -------------- ---------- ---------- ------------- ------------- ------------- FLEXIBLE INCOME PORTFOLIO Class A 04/30/04 (unaudited) $10.92 $0.17 $ 0.16 $ 0.33 $(0.19) $ -- $(0.19) $11.06 10/31/03 10.17 0.38(6) 0.77 1.15 (0.38) (0.02) (0.40) 10.92 10/31/02 10.71 0.45(6) (0.48) (0.03) (0.43) (0.08) (0.51) 10.17 10/31/01 11.06 0.50(6) (0.04) 0.46 (0.61) (0.20) (0.81) 10.71 10/31/00 10.75 0.47(6) 0.42 0.89 (0.55) (0.03) (0.58) 11.06 10/31/99 10.63 0.40(6) 0.57(7) 0.97 (0.48) (0.37) (0.85) 10.75 Class B 04/30/04 (unaudited) 10.90 0.13 0.15 0.28 (0.14) -- (0.14) 11.04 10/31/03 10.15 0.30(6) 0.77 1.07 (0.30) (0.02) (0.32) 10.90 10/31/02 10.71 0.38(6) (0.50) (0.12) (0.36) (0.08) (0.44) 10.15 10/31/01 11.06 0.42(6) (0.04) 0.38 (0.53) (0.20) (0.73) 10.71 10/31/00 10.75 0.39(6) 0.42 0.81 (0.47) (0.03) (0.50) 11.06 10/31/99 10.63 0.33(6) 0.56(7) 0.89 (0.40) (0.37) (0.77) 10.75 Class C 04/30/04 (unaudited) 10.86 0.13 0.16 0.29 (0.15) -- (0.15) 11.00 10/31/03 10.13 0.30(6) 0.76 1.06 (0.31) (0.02) (0.33) 10.86 10/31/02(5) 10.54 0.24(6) (0.43) (0.19) (0.22) -- (0.22) 10.13 CONSERVATIVE BALANCED PORTFOLIO Class A 04/30/04 (unaudited) $ 9.81 $0.13 $ 0.23 $ 0.36 $(0.14) $ -- $(0.14) $10.03 10/31/03 8.83 0.28(6) 0.97 1.25 (0.27) -- (0.27) 9.81 10/31/02 9.43 0.33 (0.61) (0.28) (0.32) -- (0.32) 8.83 10/31/01 9.96 0.34(6) (0.44) (0.10) (0.43) -- (0.43) 9.43 10/31/00 9.94 0.51(6) 0.02(7) 0.53 (0.50) (0.01) (0.51) 9.96 10/31/99 10.25 0.56 (0.27) 0.29 (0.58) (0.02) (0.60) 9.94 Class B 04/30/04 (unaudited) 9.79 0.09 0.24 0.33 (0.10) -- (0.10) 10.02 10/31/03 8.82 0.21(6) 0.96 1.17 (0.20) -- (0.20) 9.79 10/31/02 9.43 0.27 (0.62) (0.35) (0.26) -- (0.26) 8.82 10/31/01 9.96 0.27(6) (0.44) (0.17) (0.36) -- (0.36) 9.43 10/31/00 9.94 0.44(6) 0.02(7) 0.46 (0.43) (0.01) (0.44) 9.96 10/31/99 10.25 0.50 (0.29) 0.21 (0.50) (0.02) (0.52) 9.94 Class C 04/30/04 (unaudited) 9.76 0.09 0.24 0.33 (0.10) -- (0.10) 9.99 10/31/03 8.80 0.21(6) 0.97 1.18 (0.22) -- (0.22) 9.76 10/31/02(5) 9.39 0.16 (0.60) (0.44) (0.15) -- (0.15) 8.80 See Notes to Financial Statements. 10 Ratio to Average Net Assets/Supplemental Data ------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets Without Fee Ratio of Ratio of Waivers, Expenses Reimbursed Operating Net Investment and/or Fees Net Assets, Expenses to Income to Portfolio Reduced by Credits End of Period Average Net Average Net Turnover Allowed by the Total Return(2) (in 000's) Assets(3) Assets Rate Custodian(3)(4) --------------- ------------- ----------- -------------- --------- ---------------------------- FLEXIBLE INCOME PORTFOLIO Class A 04/30/04 (unaudited) 3.00% $307,326 1.02%(8) 3.21%(8) 1% 1.02%(8) 10/31/03 11.49% 224,192 1.04% 3.64% 3% 1.04% 10/31/02 (0.37)% 144,710 1.06% 4.41% 9% 1.06% 10/31/01 3.67% 110,680 1.06% 4.61% 7% 1.06% 10/31/00 8.56% 129,386 1.06% 4.28% 27% 1.06% 10/31/99 9.39% 194,404 1.00% 3.86% 31% 1.06% Class B 04/30/04 (unaudited) 2.59% 413,215 1.78%(8) 2.45%(8) 1% 1.78%(8) 10/31/03 10.60% 371,639 1.79% 2.89% 3% 1.79% 10/31/02 (1.08)% 244,999 1.81% 3.66% 9% 1.81% 10/31/01 2.92% 146,555 1.79% 3.88% 7% 1.79% 10/31/00 7.76% 77,238 1.80% 3.54% 27% 1.80% 10/31/99 8.60% 46,821 1.75% 3.11% 31% 1.81% Class C 04/30/04 (unaudited) 2.64% 100,548 1.78%(8) 2.45%(8) 1% 1.78%(8) 10/31/03 10.63% 68,746 1.79% 2.89% 3% 1.79% 10/31/02(5) (1.78)% 20,677 1.81%(8) 3.66%(8) 9% 1.81%(8) CONSERVATIVE BALANCED PORTFOLIO Class A 04/30/04 (unaudited) 3.67% $151,462 1.05%(8) 2.69%(8) 2% 1.05%(8) 10/31/03 14.38% 94,005 1.05% 2.99% 4% 1.09% 10/31/02 (3.06)% 31,070 1.05% 3.67% 9% 1.17% 10/31/01 (0.99)% 12,257 1.16% 3.65% 18% 1.30% 10/31/00 5.52% 4,557 1.32% 5.16% 59% 1.32% 10/31/99 2.89% 7,297 1.00% 5.57% 51% 1.24% Class B 04/30/04 (unaudited) 3.37% 146,383 1.82%(8) 1.92%(8) 2% 1.82%(8) 10/31/03 13.46% 116,742 1.82% 2.22% 4% 1.86% 10/31/02 (3.77)% 58,054 1.80% 2.92% 9% 1.92% 10/31/01 (1.71)% 30,554 1.89% 2.92% 18% 2.03% 10/31/00 4.76% 10,947 2.04% 4.44% 59% 2.04% 10/31/99 2.05% 13,443 1.74% 4.83% 51% 1.98% Class C 04/30/04 (unaudited) 3.41% 77,231 1.80%(8) 1.94%(8) 2% 1.80%(8) 10/31/03 13.53% 51,284 1.80% 2.24% 4% 1.84% 10/31/02(5) (4.70)% 10,505 1.78%(8) 2.94%(8) 9% 1.90%(8) See Notes to Financial Statements.
11 financial highlights For a Portfolio share outstanding throughout each period.
Income from Investment Operations Less Distributions ---------------------------------------- -------------------------------------- Net Realized Net Asset and Dividends Distributions Value, Net Unrealized Total from from Net from Net Beginning Investment Gain/(Loss) Investment Investment Net Realized Total Asset Value, of Period Income/(Loss) on Investments Operations Income(1) Capital Gains Distributions End of Period --------- ------------- -------------- ---------- ---------- ------------- ------------- ------------- BALANCED PORTFOLIO Class A 04/30/04 (unaudited) $11.85 $0.12 $0.45 $0.57 $(0.13) $ -- $(0.13) $12.29 10/31/03 10.24 0.22 1.62 1.84 (0.23) -- (0.23) 11.85 10/31/02 11.63 0.28 (1.08) (0.80) (0.33) (0.26) (0.59) 10.24 10/31/01 13.55 0.33(6) (1.27) (0.94) (0.51) (0.47) (0.98) 11.63 10/31/00 12.22 0.28(6) 1.53 1.81 (0.48) -- (0.48) 13.55 10/31/99 11.02 0.19(6) 2.39 2.58 (0.44) (0.94) (1.38) 12.22 Class B 04/30/04 (unaudited) 11.82 0.07 0.45 0.52 (0.08) -- (0.08) 12.26 10/31/03 10.22 0.14 1.61 1.75 (0.15) -- (0.15) 11.82 10/31/02 11.62 0.20 (1.09) (0.89) (0.25) (0.26) (0.51) 10.22 10/31/01 13.54 0.23(6) (1.27) (1.04) (0.41) (0.47) (0.88) 11.62 10/31/00 12.21 0.18(6) 1.55 1.73 (0.40) -- (0.40) 13.54 10/31/99 11.02 0.11(6) 2.38 2.49 (0.36) (0.94) (1.30) 12.21 Class C 04/30/04 (unaudited) 11.78 0.07 0.44 0.51 (0.08) -- (0.08) 12.21 10/31/03 10.20 0.14 1.60 1.74 (0.16) -- (0.16) 11.78 10/31/02(5) 11.35 0.13 (1.15) (1.02) (0.13) -- (0.13) 10.20 CONSERVATIVE GROWTH PORTFOLIO Class A 04/30/04 (unaudited) $12.47 $0.09 $0.63 $0.72 $(0.07) $ -- $(0.07) $13.12 10/31/03 10.37 0.14(6) 2.14 2.28 (0.14) (0.04) (0.18) 12.47 10/31/02 12.35 0.16(6) (1.52) (1.36) (0.22) (0.40) (0.62) 10.37 10/31/01 15.52 0.20(6) (2.34) (2.14) (0.58) (0.45) (1.03) 12.35 10/31/00 13.43 0.12(6) 2.40 2.52 (0.43) -- (0.43) 15.52 10/31/99 10.97 0.06(6) 3.70 3.76 (0.42) (0.88) (1.30) 13.43 Class B 04/30/04 (unaudited) 12.18 0.03 0.64 0.67 (0.05) -- (0.05) 12.80 10/31/03 10.14 0.05(6) 2.09 2.14 (0.06) (0.04) (0.10) 12.18 10/31/02 12.10 0.08(6) (1.50) (1.42) (0.14) (0.40) (0.54) 10.14 10/31/01 15.17 0.09(6) (2.28) (2.19) (0.43) (0.45) (0.88) 12.10 10/31/00 13.21 0.00(6)(9) 2.37 2.37 (0.41) -- (0.41) 15.17 10/31/99 10.85 (0.03)(6) 3.61 3.58 (0.34) (0.88) (1.22) 13.21 Class C 04/30/04 (unaudited) 12.13 0.04 0.62 0.66 (0.05) -- (0.05) 12.74 10/31/03 10.10 0.06(6) 2.08 2.14 (0.07) (0.04) (0.11) 12.13 10/31/02(5) 11.79 0.05(6) (1.66) (1.61) (0.08) -- (0.08) 10.10 See Notes to Financial Statements. 12 Ratios to Average Net Assets/Supplemental Data ------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets Without Fee Ratio of Ratio of Waivers, Expenses Reimbursed Operating Net Investment and/or Fees Net Assets, Expenses to Income/(Loss) Portfolio Reduced by Credits End of Period Average Net to Average Turnover Allowed by the Total Return(2) (in 000's) Assets(3) Net Assets Rate Custodian(3)(4) --------------- ------------- ----------- -------------- --------- ---------------------------- BALANCED PORTFOLIO Class A 04/30/04 (unaudited) 4.86% $1,218,316 0.99%(8) 1.91%(8) 2% 0.99%(8) 10/31/03 18.07% 792,423 1.02% 2.03% 5% 1.02% 10/31/02 (7.32)% 423,478 1.04% 2.55% 19% 1.04% 10/31/01 (7.28)% 380,681 1.02% 2.63% 6% 1.02% 10/31/00 15.11% 391,655 1.03% 2.05% 22% 1.03% 10/31/99 25.16% 333,639 1.03% 1.66% 39% 1.04% Class B 04/30/04 (unaudited) 4.37% 1,270,440 1.75%(8) 1.15%(8) 2% 1.75%(8) 10/31/03 17.25% 1,074,925 1.78% 1.27% 5% 1.78% 10/31/02 (8.03)% 743,953 1.80% 1.79% 19% 1.80% 10/31/01 (7.98)% 670,318 1.78% 1.87% 6% 1.78% 10/31/00 14.26% 549,849 1.77% 1.31% 22% 1.77% 10/31/99 24.22% 237,438 1.77% 0.92% 39% 1.78% Class C 04/30/04 (unaudited) 4.44% 369,767 1.74%(8) 1.16%(8) 2% 1.74%(8) 10/31/03 17.15% 234,076 1.76% 1.29% 5% 1.76% 10/31/02(5) (9.00)% 54,745 1.80%(8) 1.79%(8) 19% 1.80%(8) CONSERVATIVE GROWTH PORTFOLIO Class A 04/30/04 (unaudited) 5.89% $939,488 1.02%(8) 1.26%(8) 3% 1.02%(8) 10/31/03 22.12% 615,501 1.05% 1.24% 7% 1.05% 10/31/02 (11.72)% 347,297 1.06% 1.41% 14% 1.06% 10/31/01 (14.31)% 319,583 1.03% 1.45% 5% 1.03% 10/31/00 18.89% 341,685 1.02% 0.76% 17% 1.02% 10/31/99 36.54% 249,650 1.02% 0.48% 16% 1.03% Class B 04/30/04 (unaudited) 5.48% 957,335 1.78%(8) 0.50%(8) 3% 1.78%(8) 10/31/03 21.24% 827,312 1.81% 0.48% 7% 1.81% 10/31/02 (12.46)% 623,852 1.82% 0.65% 14% 1.82% 10/31/01 (14.93)% 636,145 1.79% 0.69% 5% 1.79% 10/31/00 18.07% 604,460 1.77% 0.01% 17% 1.77% 10/31/99 34.98% 263,911 1.77% (0.27)% 16% 1.78% Class C 04/30/04 (unaudited) 5.47% 364,516 1.77%(8) 0.51%(8) 3% 1.77%(8) 10/31/03 21.41% 195,556 1.79% 0.50% 7% 1.79% 10/31/02(5) (13.72)% 48,424 1.82%(8) 0.65%(8) 14% 1.82%(8) See Notes to Financial Statements.
13 financial highlights For a Portfolio share outstanding throughout each period.
Income from Investment Operations Less Distributions ---------------------------------------- -------------------------------------- Net Realized Net Asset and Dividends Distributions Value, Net Unrealized Total from from Net from Net Beginning Investment Gain/(Loss) Investment Investment Net Realized Total Asset Value, of Period Income/(Loss) on Investments Operations Income(1) Capital Gains Distributions End of Period --------- ------------- -------------- ---------- ---------- ------------- ------------- ------------- STRATEGIC GROWTH PORTFOLIO Class A 04/30/04 (unaudited) $13.16 $0.04(6) $ 0.85 $0.89 $ -- $ -- $ -- $14.05 10/31/03 10.59 0.03(6) 2.63 2.66 -- (0.09) (0.09) 13.16 10/31/02 13.10 0.03(6) (1.92) (1.89) (0.14) (0.48) (0.62) 10.59 10/31/01 17.11 0.05(6) (3.21) (3.16) (0.47) (0.38) (0.85) 13.10 10/31/00 14.61 (0.04)(6) 3.07 3.03 (0.53) -- (0.53) 17.11 10/31/99 11.67 (0.03)(6) 4.36 4.33 (0.41) (0.98) (1.39) 14.61 Class B 04/30/04 (unaudited) 12.73 (0.01)(6) 0.80 0.79 -- -- -- 13.52 10/31/03 10.32 (0.05)(6) 2.55 2.50 -- (0.09) (0.09) 12.73 10/31/02 12.78 (0.06)(6) (1.88) (1.94) (0.04) (0.48) (0.52) 10.32 10/31/01 16.75 (0.06)(6) (3.14) (3.20) (0.39) (0.38) (0.77) 12.78 10/31/00 14.40 (0.16)(6) 3.02 2.86 (0.51) -- (0.51) 16.75 10/31/99 11.52 (0.13)(6) 4.31 4.18 (0.32) (0.98) (1.30) 14.40 Class C 04/30/04 (unaudited) 12.74 (0.01)(6) 0.82 0.81 -- -- -- 13.55 10/31/03 10.32 (0.05)(6) 2.56 2.51 -- (0.09) (0.09) 12.74 10/31/02(5) 12.50 (0.04)(6) (2.14) (2.18) -- -- -- 10.32 - -------- (1) Includes dividends paid from the short-term portion of capital gain distributions received from the Underlying Funds. (2) Total return is not annualized for periods less than one year and does not reflect any applicable sales charges. The total return would have been lower if certain fees had not been waived and/or expenses reimbursed by the investment advisor or if fees had not been reduced by credits allowed by the custodian. (3) The Portfolio also will indirectly bear its prorated share of expenses of the Underlying Funds. (4) Ratio of operating expenses to average net assets includes expenses paid indirectly. (5) The Portfolios commenced selling Class C shares on March 1, 2002. (6) Per share numbers have been calculated using the average shares method. (7) The amount shown may not agree with the change in the aggregate gains and losses of portfolio securities due to the timing of sales and redemptions of Portfolio shares. (8) Annualized. (9) Amount represents less than $0.01 per share. See Notes to Financial Statements. 14 Ratios to Average Net Assets/Supplemental Data ------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets Without Fee Ratio of Ratio of Waivers, Expenses Reimbursed Operating Net Investment and/or Fees Net Assets, Expenses to Income/(Loss) Portfolio Reduced by Credits End of Period Average Net to Average Turnover Allowed by the Total Return(2) (in 000's) Assets(3) Net Assets Rate Custodian(3)(4) --------------- ------------- ----------- -------------- --------- ---------------------------- STRATEGIC GROWTH PORTFOLIO Class A 04/30/04 (unaudited) 6.69% $489,241 1.09%(8) 0.58%(8) 3% 1.09%(8) 10/31/03 25.24% 298,852 1.13% 0.30% 7% 1.13% 10/31/02 (15.45)% 166,354 1.13% 0.23% 10% 1.13% 10/31/01 (19.03)% 153,857 1.08% 0.34% 2% 1.08% 10/31/00 20.84% 142,241 1.06% (0.21)% 15% 1.06% 10/31/99 39.55% 74,678 1.07% (0.21)% 20% 1.09% Class B 04/30/04 (unaudited) 6.21% 582,805 1.84%(8) (0.17)%(8) 3% 1.84%(8) 10/31/03 24.35% 484,656 1.88% (0.45)% 7% 1.88% 10/31/02 (16.04)% 350,982 1.87% (0.51)% 10% 1.87% 10/31/01 (19.70)% 384,566 1.84% (0.42)% 2% 1.84% 10/31/00 19.95% 363,910 1.81% (0.96)% 15% 1.81% 10/31/99 38.60% 130,522 1.83% (0.97)% 20% 1.85% Class C 04/30/04 (unaudited) 6.36% 214,023 1.82%(8) (0.15)%(8) 3% 1.82%(8) 10/31/03 24.44% 107,826 1.84% (0.41)% 7% 1.84% 10/31/02(5) (17.44)% 26,645 1.85%(8) (0.49)%(8) 10% 1.85%(8) See Notes to Financial Statements.
15 notes to financial statements (unaudited) WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS 1. Organization and Business WM Strategic Asset Management Portfolios, LLC (the "LLC") was organized under the laws of the Commonwealth of Massachusetts on March 12, 1999 as a limited liability company. The LLC is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company. The LLC offers five portfolios: Flexible Income, Conservative Balanced, Balanced, Conservative Growth and Strategic Growth Portfolios (each a "Portfolio" and collectively, the "Portfolios"). The LLC is authorized to issue an unlimited number of shares of beneficial interest, each without par value. Each Portfolio offers three classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are generally subject to an initial sales charge at the time of purchase. Certain Class A shares purchased without an initial sales charge may be subject to a contingent deferred sales charge ("CDSC") if redeemed within eighteen months from the date of purchase. Class B shares are not subject to an initial sales charge although they are generally subject to a CDSC if redeemed within five years from the date of purchase. Class C shares are not subject to an initial sales charge although they are subject to a CDSC if redeemed within one year from the date of purchase. Prior to January 1, 2004, Class C shares were subject to an initial sales charge at the time of purchase. Each of the Portfolios invests, within certain percentage ranges, in Class I shares of various funds in the WM Group of Funds (collectively, the "Underlying Funds"). WM Advisors, Inc. (the "Advisor" or "WM Advisors"), a wholly-owned subsidiary of Washington Mutual, Inc. ("Washington Mutual"), a publicly owned financial services company, serves as investment advisor to the Portfolios. The Advisor may alter these percentage ranges when it deems appropriate. The assets of each Portfolio will be allocated among the Underlying Funds in accordance with its investment objective based on the Advisor's outlook for the economy, the financial markets and the relative market valuations of the Underlying Funds. In addition, in order to meet liquidity needs or for temporary defensive purposes, each Portfolio may invest its assets directly in cash, stock or bond index futures, options, money market securities and certain short-term debt instruments, including repurchase agreements. 2. Significant Accounting Policies The following is a summary of significant accounting policies, in conformity with accounting principles generally accepted in the United States of America ("generally accepted accounting principles"), which are consistently followed by the Portfolios in the preparation of their financial statements. Portfolio valuation: Investments in the Underlying Funds are valued at net asset value per Class I share of the respective Underlying Funds determined as of the close of the New York Stock Exchange on each valuation date. Short-term debt securities that mature in 60 days or less are valued at amortized cost which approximates market value. Repurchase agreements: Each Portfolio may enter into repurchase agreement transactions. A repurchase agreement is a purchase of an underlying debt obligation subject to an agreement by the seller to repurchase the obligation at an agreed upon price and time. The value of the collateral is at all times at least equal to the total amount of the repurchase obligation. In the event of counterparty default, the Portfolio would seek to use the collateral to offset losses incurred. There is potential loss to the Portfolio in the event the Portfolio is delayed or prevented from exercising its right to dispose of the collateral securities, including the risk of a possible decline in the value of the underlying securities during the period while the Portfolio seeks to assert its rights. WM Advisors, acting under the supervision of the Board of Trustees, reviews the value of the collateral and the creditworthiness of those banks and broker-dealers with whom each Portfolio enters into repurchase agreements. Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities sold are recorded on the identified cost basis. Interest income on debt securities is accrued daily. Dividend income is recorded on the ex-dividend date. Each Portfolio's investment income and realized and unrealized gains and losses are allocated among the classes of that Portfolio based upon the relative average net assets of each class. 16 notes to financial statements (unaudited) (continued) WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS Dividends and distributions to shareholders: Dividends from net investment income of the Flexible Income, Conservative Balanced, Balanced and Conservative Growth Portfolios are declared and paid quarterly. Dividends from any net investment income of the Strategic Growth Portfolio are declared and paid annually. Distributions of any net capital gains earned by a Portfolio are distributed no less frequently than annually at the discretion of the Board of Trustees. Additional distributions of net investment income and capital gains for each Portfolio may be made at the discretion of the Board of Trustees in accordance with federal income tax regulations. Distributions from income and capital gains are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investments held by the Portfolios, redesignated distributions and differing characterization of distributions made by each Portfolio. Federal income taxes: It is each Portfolio's policy to qualify as a regulated investment company by complying with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and by distributing substantially all of its earnings to its shareholders. Therefore, no federal income or excise tax provision is required. Expenses: General expenses of the LLC are allocated to all the Portfolios based upon the relative average net assets of each Portfolio except printing and postage expenses, which are allocated to all the Portfolios based upon the relative number of shareholder accounts of each Portfolio. In addition, the Portfolios will indirectly bear their prorated share of expenses of the Underlying Funds. Operating expenses directly attributable to a class of shares are charged to the operations of that class of shares. Expenses of each Portfolio 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 WM Advisors serves as investment advisor to the LLC. As such, WM Advisors provides its proprietary asset allocation services to the Portfolios, formulates the Portfolios' investment policies, analyzes economic and market trends, exercises investment discretion over the assets of the Portfolios and monitors the allocation of each Portfolio's assets and each Portfolio's performance. For its investment advisory services to the Portfolios, WM Advisors is entitled to a monthly fee at an annual rate of 0.65% of each Portfolio's average daily net assets up to $1 billion, 0.60% of the next $2 billion of each Portfolio's average daily net assets and 0.55% of each Portfolio's average daily net assets over $3 billion. WM Shareholder Services, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of Washington Mutual, serves as the transfer agent of the Portfolios. 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 for Class A, Class B and Class C shareholder accounts, with the exception of the Flexible Income Portfolio, for which the fee is $21.15. Prior to December 1, 2003, the authorized annual shareholder servicing fee was $19.68 for Class A, Class B and Class C shareholder accounts, with the exception of the Flexible Income Portfolio, for which the fee was $20.21. Custodian fees for certain Portfolios have been reduced by credits allowed by the Portfolio's custodian for uninvested cash balances. The Portfolios could have invested this cash in income producing investments. Fees reduced by credits allowed by the custodian for the six months ended April 30, 2004, are shown separately in the "Statements of Operations". 17 notes to financial statements (unaudited) (continued) WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS 4. Trustees' Fees No officer or employee of Washington Mutual or its subsidiaries receives any compensation from the LLC for serving as an officer or Trustee of the LLC. The LLC, together with other mutual funds advised by WM Advisors, pays each Trustee who is not an officer or employee of Washington Mutual or its subsidiaries, a per annum retainer plus attendance fees for each meeting at which they are present. The Lead Trustee, Committee Chairs and Committee Members receive additional remuneration for these services to the LLC. Trustees are also reimbursed for travel and out-of-pocket expenses. Each Trustee serves in the same capacity for all 41 funds within the WM Group of Funds. 5. Distribution Plans WM Funds Distributor, Inc. (the "Distributor"), a registered broker-dealer and a wholly-owned subsidiary of Washington Mutual, serves as distributor for Class A, Class B and Class C shares of the Portfolios. For the six months ended April 30, 2004, the Distributor has received $4,085,185 representing commissions (front end sales charges) on Class A and Class C shares and $2,817,394 representing CDSCs on Class A, Class B and Class C shares. Each of the Portfolios 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 Portfolio (each, a "Rule 12b-1 Plan"), respectively. 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 Portfolio 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 LLC, as defined in the 1940 Act, and who have no direct or indirect financial interest in the operation of such distribution plans, or any agreements related to such plans, respectively. 6. Purchases and Sales of Investments The aggregate cost of purchases and proceeds from sales of Underlying Funds for the six months ended April 30, 2004, are as follows:
Purchases Sales Name of Portfolio (000s) (000s) ----------------- --------- -------- Flexible Income Portfolio $161,410 $ 10,855 Conservative Balanced Portfolio 111,032 4,830 Balanced Portfolio 730,971 52,861 Conservative Growth Portfolio 598,092 56,282 Strategic Growth Portfolio 377,598 37,500
7. Unrealized Appreciation/(Depreciation) At April 30, 2004, the aggregate gross unrealized appreciation/(depreciation) on a tax basis are as follows:
(In thousands) ------------------------------------------------------------ Flexible Conservative Conservative Strategic Income Balanced Balanced Growth Growth Portfolio Portfolio Portfolio Portfolio Portfolio --------- ------------ --------- ------------ --------- Tax basis unrealized appreciation $36,353 $20,806 $189,766 $155,588 $ 82,592 Tax basis unrealized depreciation (3,883) (2,265) (5,069) (8,792) (26,353) ------- ------- -------- -------- -------- Net tax basis unrealized appreciation $32,470 $18,541 $184,697 $146,796 $ 56,239 ======= ======= ======== ======== ========
18 notes to financial statements (unaudited) (continued) WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS 8. Risk Factors of the Portfolios Investing in the Underlying Funds through the Portfolios involves certain additional expenses and tax results that would not be present in a direct investment in the Underlying Funds. For example, under certain circumstances, an Underlying Fund may determine to make payment of a redemption request by a Portfolio wholly or partly by a distribution in kind of securities from its portfolio, instead of cash, in accordance with the rules of the Securities and Exchange Commission. In such cases, the Portfolios may hold securities distributed by an Underlying Fund until the Advisor determines that it is appropriate to dispose of such securities. Certain Underlying Funds may invest a portion of their assets in foreign securities; enter into forward foreign currency transactions; lend their portfolio securities; enter into stock index, interest rate and currency futures contracts, and options on such contracts; enter into interest rate swaps or purchase or sell interest rate caps or floors; enter into other types of options transactions; make short sales; purchase zero coupon and payment-in-kind bonds; enter into repurchase or reverse repurchase agreements; purchase and sell "when-issued" securities and enter into "delayed-delivery" transactions; and enter into various other investment practices, each with inherent risks. In addition, the REIT Fund could be adversely impacted by economic trends in the real estate industry; the West Coast Equity Fund by economic trends in the West Coast region; and the High Yield Fund by the conditions affecting issuers of lower rated securities. The officers and Trustees, the Advisor, the Distributor and Transfer Agent of the Portfolios serve in the same capacity for the Underlying Funds. Conflicts may arise as these persons and companies seek to fulfill their fiduciary responsibilities to both the Portfolios and the Underlying Funds. From time to time, one or more of the Underlying Funds used for investment by a Portfolio may experience relatively large investments or redemptions due to reallocations or rebalancings by the Portfolios. These transactions will affect the Underlying Funds, since the Underlying Funds that experience redemptions as a result of the reallocations or rebalancings may have to sell portfolio securities and the Underlying Funds that receive additional cash will have to invest such cash. While it is impossible to predict the overall impact of these transactions over time, there could be adverse effects on portfolio management to the extent that the Underlying Funds may be required to sell securities or invest cash at times when they would not otherwise do so. These transactions could also have tax consequences if sales of securities resulted in gains and could also increase transaction costs. The Advisor is committed to minimizing such impact on the Underlying Funds to the extent it is consistent with pursuing the investment objectives of the Portfolios. The Advisor may nevertheless face conflicts in fulfilling its responsibilities. The Advisor will, at all times, monitor the impact on the Underlying Funds of transactions by the Portfolios. 9. Proxy Voting Information A description of the policies and procedures that the LLC uses to determine how to vote proxies relating to portfolio securities held by the Portfolio is available, without charge and upon request, by calling 1-800-222-5852. This information is also available from the EDGAR database or the Securities and Exchange Commission's internet site at http://www.sec.gov. 19 [This Page Intentionally Left Blank] Before investing, you should carefully consider a fund's investment objectives, risks, charges, and expenses. Contact your Investment Representative or call 800-222-5852 to obtain a prospectus containing this and other information. Read the prospectus carefully before investing. This Semi-Annual Report is published for the general information of the shareholders of the WM Group of Funds. It is authorized for distribution to prospective investors only when preceded or accompanied by a current WM Group of Funds prospectus. 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. The WM Group of Funds are not insured by the FDIC. They are not deposits or obligations of, nor are they guaranteed by, any bank. These securities are subject to investment risk, including possible loss of principal amount invested. Distributed by: WM Funds Distributor, Inc. Member NASD - ---------------------------------------------------------------------------- [logo]WM P R S R T S T D GROUPofFUNDS U.S. POSTAGE PAID P.O. Box 9757 N. READING, MA Providence, RI 02940-9757 PERMIT #105 [logo]Printed on recycled paper WMSAMSAR (6/29/04) Item 2. Code of Ethics. Not applicable for this filing. Item 3. Audit Committee Financial Expert. Not applicable for this filing. Item 4. Principal Accountant Fees and Services. Not applicable for this filing. Item 5. Audit Committee of Listed Registrants Not applicable for this filing. Item 6. Schedule of Investments. Not applicable. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Submission of Matters to a Vote of Security Holders. None. Item 10. 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 last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WM Strategic Asset Management Portfolios, LLC By: /s/ William G. Papesh --------------------- William G. Papesh President and Chief Executive Officer July 2, 2004 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. WM Strategic Asset Management Portfolios, LLC By: /s/ Jeffery L. Lunzer --------------------- Jeffery L. Lunzer Treasurer and Chief Financial Officer July 2, 2004 By: /s/ William G. Papesh --------------------- William G. Papesh President and Chief Executive Officer July 2, 2004 EX-99.906 CERT 2 ex99p906.txt Exhibit 99.906 CERTIFICATION PURSUANT TO SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, William G. Papesh, President and Chief Executive Officer of the WM Strategic Asset Management Portfolios, LLC (the "Portfolios"), certify that to my knowledge: 1. The Form N-CSR of the Portfolios for the period ended April 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR of the Portfolios for the period ended April 30, 2004 fairly presents, in all material respects, the financial condition and results of operations of the Portfolios. Date: July 2, 2004 By: /s/ William G. Papesh ---------------------- William G. Papesh President and Chief Executive Officer CERTIFICATION PURSUANT TO SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Jeffery L. Lunzer, Treasurer and Chief Financial Officer of WM Strategic Asset Management Portfolios, LLC (the "Portfolios"), certify that to my knowledge: 1. The Form N-CSR of the Portfolios for the period ended April 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR of the Portfolios for the period ended April 30, 2004 fairly presents, in all material respects, the financial condition and results of operations of the Portfolios. Date: July 2, 2004 By: /s/ Jeffery L. Lunzer ---------------------- Jeffery L. Lunzer Treasurer and Chief Financial Officer EX-99.CERT 3 ex99pcert.txt Exhibit 99.CERT CERTIFICATIONS -------------- I, William G. Papesh, certify that: 1. I have reviewed this report on Form N-CSR of WM Strategic Asset Management Portfolios, LLC; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: July 2, 2004 /s/ William G. Papesh President and Chief Executive Officer CERTIFICATIONS -------------- I, Jeffery L. Lunzer, certify that: 1. I have reviewed this report on Form N-CSR of WM Strategic Asset Management Portfolios, LLC; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: July 2, 2004 /s/ Jeffery L. Lunzer Treasurer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----