-----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, I+2coH88yBUqUcNByb8x65RmXkiCXK6fCv4lqs1MqKBBilyKjjRqrU0aFYIv8Iev ktj6CdV39ZmA5gmHpCngXw== 0000891804-03-001471.txt : 20030701 0000891804-03-001471.hdr.sgml : 20030701 20030630173402 ACCESSION NUMBER: 0000891804-03-001471 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030701 EFFECTIVENESS DATE: 20030701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WM TRUST II CENTRAL INDEX KEY: 0000846883 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-05775 FILM NUMBER: 03765744 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 TRUST FUNDS DATE OF NAME CHANGE: 19931206 FORMER COMPANY: FORMER CONFORMED NAME: GW SIERRA TRUST FUNDS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GW INVESTMENT FUNDS DATE OF NAME CHANGE: 19890514 N-CSR 1 file001.txt WM GROUP OF FUNDS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-05775 WM Trust II (Exact name of registrant as specified in charter) 1201 Third Avenue, 22nd Floor, Seattle, WA 98101 (Address of principal executive offices) (Zip code) John T. West 1201 Third Avenue, 22nd Floor, Seattle, WA 98101 (Name and address of agent for service) Registrant's telephone number, including area code: (206) 461-3800 Date of fiscal year end: October 31st Date of reporting period: April 30, 2003 Logo: WM GroupofFunds MONEY MARKET FUNDS Common sense. Uncommon solutions. photo: valley photo: urban buildings SEMI-ANNUAL REPORT for the period ended April 30, 2003 MONEY MARKET FUNDS Money Market Fund Tax-Exempt Money Market Fund California Money Fund TABLE OF CONTENTS Message from the President ............................... 1 Statements of Assets and Liabilities ..................... 2 Statements of Operations ................................. 4 Statements of Changes in Net Assets ...................... 5 Statements of Changes in Net Assets - Capital Stock Activity .......................... 7 Financial Highlights ..................................... 8 Portfolio of Investments .................................10 Notes to Financial Statements (unaudited) ................18 NOT FDIC INSURED o May Lose Value o No Bank Guarantee photo: William G. Papesh Dear Shareholder, The first half of our fiscal year closed with a set of decisive geopolitical events and late-period equity market gains.1 The military conflict in Iraq commenced in March and concluded shortly after period-end, brevity that we hope will inspire a tempering of global tensions. We also saw encouraging signs of improvement in economic and market conditions. Equity markets rallied to conclude the six-month period ended April 30, 2003 as the Standard & Poor's 500 Index gained 4.47%.2 Corporate earnings also showed some signs of change for the better, but true revenue-driven profit growth remains somewhat elusive and difficult to garner for many firms. With these conditions in mind, we feel that time is still needed before we can declare a full economic recovery. Corporate bonds, particularly lower-rated issues, were among the strongest performing major asset classes during the period. Interest rates continued their slide to 40-year lows, while Treasury yields actually dropped slightly during the period. These factors helped to boost the performance of bond investments, where prices generally move in the opposite direction of yields. In fact, bonds have outperformed stocks in each of the past three calendar years, averaging more than 10% per year from 2000 to 2002. Conversely, stocks declined by an average of more than 14% per year over the same time period.3 As a result of positive bond market performance, bond fund investments continued to gain in popularity compared to equity funds during the period, as measured by cash inflows. However, investors should be aware of the pitfalls associated with chasing short-term past performance. Assets that have shown the best results in a certain period may not necessarily repeat this strong performance in the next. For this reason, we have always recommended a strategy that utilizes diversification and asset allocation to help protect investor assets through a variety of financial market conditions. We also suggest that investors regularly elicit the expertise of a financial advisor. With the guidance of these investment professionals, investors can take the actions necessary to keep their investment portfolios aligned with their goals regardless of market fluctuations. To provide additional opportunities for diversification, we introduced the WM REIT Fund in March. The Fund invests primarily in real estate investment trust (REIT) securities and seeks to take advantage of their dividend-producing potential. We believe that the WM REIT Fund adds depth and breadth to the overall WM Group of Funds family and that it has the capability of enhancing risk management opportunities available through the WM Strategic Asset Management Portfolios. At the WM Group of Funds, our focus on risk management has remained in place throughout the past three years of significantly volatile equity market performance. It is a fundamental aspect of our investment philosophy, and we will continue to stress this approach as economic conditions and equity markets change. Our firm and our investment products have evolved over the years, and yet our commitment to a risk management discipline remains at the core of the investment options we offer. As we look toward the second half of our fiscal year, we are unwavering in our belief that the strict investment discipline that has guided us for more than 60 years is the right course through the current market uncertainty. We thank you for your continued confidence and trust in the WM Group of Funds. Sincerely, /s/ William G. Papesh William G. Papesh President 1 As measured by the Standard & Poor's 500 Index. 2 Source: Ibbotson Associates. Index performance information represents total return from November 1, 2002 through April 30, 2003 and includes the reinvestment of dividends and capital gains. 3 Source: Ibbotson Associates. Stocks are measured by the S&P 500 Index. Bonds are measured by the Lehman Brothers Aggregate Bond Index. Index performance information represents average annual total returns from January 1, 2000 through December 31, 2002, and includes the reinvestment of dividends and capital gains. Note: Indices are unmanaged, and an investment cannot be made directly in an index. 1 STATEMENTS of ASSETS and LIABILITIES WM GROUP OF FUNDS APRIL 30, 2003 (UNAUDITED)
TAX-EXEMPT MONEY MONEY CALIFORNIA MARKET MARKET MONEY FUND FUND FUND ------------ ----------- ------------ ASSETS: Investments, at amortized cost and value ............................... $923,935,392 $ 29,023,872 $ 26,341,421 Cash ................................................................... 237 -- -- Interest receivable .................................................... 3,675,791 143,520 104,892 Receivable for Fund shares sold ........................................ 1,677,390 33,402 1,024 Prepaid expenses ....................................................... 6,104 215 209 ------------ ----------- ------------ Total Assets ........................................................ 929,294,914 29,201,009 26,447,546 ------------ ----------- ------------ LIABILITIES: Payable for Fund shares redeemed ....................................... 3,003,346 19,052 430,706 Payable for when-issued securities ..................................... -- 379,846 -- Payable for investment securities purchased ............................ 50,016,835 379,842 -- Investment advisory fee payable ........................................ 331,309 9,598 6,596 Shareholder servicing and distribution fees payable .................... 55,564 -- -- Transfer agent fees payable ........................................... 46,448 1,627 1,689 Dividends payable ...................................................... 111,977 -- 67 Accrued expenses and other payables .................................... 413,046 26,296 25,819 ------------ ----------- ------------ Total Liabilities ................................................... 53,978,525 816,261 464,877 ------------ ----------- ------------ NET ASSETS ............................................................. $875,316,389 $ 28,384,748 $ 25,982,669 ============ =========== ============ See Notes to Financial Statements.
2 STATEMENTS of ASSETS and LIABILITIES (continued) WM GROUP OF FUNDS APRIL 30, 2003 (UNAUDITED)
TAX-EXEMPT MONEY MONEY CALIFORNIA MARKET MARKET MONEY FUND FUND FUND ------------ ----------- ------------ NET ASSETS CONSIST OF: Accumulated net realized loss on investment transactions ............... $ (45,429) $ (163) $ (18,783) Paid-in capital ........................................................ 875,361,818 28,384,911 26,001,452 ------------ ----------- ------------ Total Net Assets .................................................... $ 875,316,389 $ 28,384,748 $ 25,982,669 ============ =========== ============ NET ASSETS: Class A Shares ......................................................... $ 710,905,804 $ 28,384,748 $ 25,982,669 ============ =========== ============ Class B Shares ......................................................... $ 96,863,641 -- -- ============ Class C Shares ......................................................... $ 4,422,730 -- -- ============ Class I Shares ......................................................... $ 63,124,214 -- -- ============ SHARES OUTSTANDING: Class A Shares ......................................................... 710,925,697 28,384,637 26,028,141 ============ Class B Shares ......................................................... 96,861,020 -- -- ============ Class C Shares ......................................................... 4,422,747 -- -- ============ Class I Shares ......................................................... 63,136,553 -- -- ============ CLASS A SHARES: Net asset value, offering and redemption price per share of beneficial interest outstanding * ................................ $ 1.00 $ 1.00 $ 1.00 ============ =========== ============ CLASS B SHARES: Net asset value and offering price per share of beneficial interest outstanding * ....................................................... $ 1.00 -- -- ============ CLASS C SHARES: Net asset value per share of beneficial interest outstanding * ....................................................... $ 1.00 -- -- ============ Maximum sales charge ................................................... 1.00% -- -- ============ Maximum offering price per share of beneficial interest outstanding ................................................ $ 1.01 -- -- ============ CLASS I SHARES: Net asset value, offering and redemption price per share of beneficial interest outstanding .................................. $ 1.00 -- -- ============= - ---------- * Redemption price per share is equal to net asset value per share less any applicable contingent deferred sales charge. See Notes to Financial Statements.
3 STATEMENTS of OPERATIONS WM GROUP OF FUNDS FOR THE SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
TAX-EXEMPT MONEY MONEY CALIFORNIA MARKET MARKET MONEY FUND FUND FUND ----------- --------- --------- INVESTMENT INCOME: Interest ............................................................... $ 6,786,035 $ 200,343 $ 165,535 ----------- --------- --------- EXPENSES: Investment advisory fee ................................................ 1,985,095 68,769 60,181 Custodian fees ......................................................... 24,340 1,442 1,132 Legal and audit fees ................................................... 32,787 14,469 14,353 Registration and filing fees ........................................... 34,090 9,156 5,620 Printing and postage expenses .......................................... 264,284 7,742 8,045 Other .................................................................. 87,349 8,948 5,863 Shareholder servicing and distribution fees: Class B Shares ...................................................... 500,180 -- -- Class C Shares ...................................................... 21,794 -- -- Transfer agent fees: Class A Shares ...................................................... 186,781 11,205 11,687 Class B Shares ...................................................... 68,434 -- -- Class C Shares ...................................................... 1,627 -- -- ----------- --------- --------- Total expenses .................................................... 3,206,761 121,731 106,881 Fees waived by the investment advisor and/or the distributor .............................................. (103,439) (19,231) (22,587) Fees reduced by custodian credits ...................................... (681) (28) (23) ----------- --------- --------- Net expenses ...................................................... 3,102,641 102,472 84,271 ----------- --------- --------- NET INVESTMENT INCOME .................................................. 3,683,394 97,871 81,264 ----------- --------- --------- NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS ........................................................ -- 89 -- ----------- --------- --------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................................................... $ 3,683,394 $ 97,960 $ 81,264 =========== ========= ========= See Notes to Financial Statements.
4 STATEMENTS OF CHANGES IN NET ASSETS WM GROUP OF FUNDS FOR THE SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
TAX-EXEMPT MONEY MONEY CALIFORNIA MARKET MARKET MONEY FUND FUND FUND ------------ ---------- ------------ Net investment income .................................................. $ 3,683,394 $ 97,871 $ 81,264 Net realized gain on investment transactions ........................... -- 89 -- ------------ ----------- ------------ Net increase in net assets resulting from operations ................... 3,683,394 97,960 81,264 Distributions to shareholders from net investment income: Class A Shares ...................................................... (3,218,534) (97,871) (81,264) Class B Shares ...................................................... (27,599) -- -- Class C Shares ...................................................... (1,537) -- -- Class I Shares ...................................................... (435,724) -- -- Net increase/(decrease) in net assets from Fund share transactions: Class A Shares ...................................................... 21,904,256 (4,914,960) (1,689,840) Class B Shares ...................................................... (7,666,694) -- -- Class C Shares ...................................................... 747,198 -- -- Class I Shares ...................................................... (106,170,312) -- -- ------------ ----------- ------------ Net decrease in net assets ............................................. (91,185,552) (4,914,871) (1,689,840) NET ASSETS: Beginning of period .................................................... 966,501,941 33,299,619 27,672,509 ------------ ----------- ------------ End of period .......................................................... $875,316,389 $28,384,748 $ 25,982,669 ============ =========== ============ See Notes to Financial Statements.
5 STATEMENTS of CHANGES in NET assets (continued) WM GROUP OF FUNDS FOR THE YEAR ENDED OCTOBER 31, 2002
TAX-EXEMPT MONEY MONEY CALIFORNIA MARKET MARKET MONEY FUND FUND FUND ------------ ----------- ----------- Net investment income .................................................. $ 10,167,628 $ 320,465 $ 334,232 Net realized loss on investment transactions ........................... (3,396) -- -- ------------ ----------- ----------- Net increase in net assets resulting from operations ................... 10,164,232 320,465 334,232 Distributions to shareholders from net investment income: Class A Shares ...................................................... (9,281,873) (320,465) (334,317) Class B Shares ...................................................... (246,921) -- -- Class C Shares ...................................................... (2,236) -- -- Class I Shares ...................................................... (640,873) -- -- Net increase/(decrease) in net assets from Fund share transactions: Class A Shares ...................................................... 41,056,243 1,772,972 (14,885,593) Class B Shares ...................................................... 29,928,362 -- -- Class C Shares ...................................................... 3,675,549 -- -- Class I Shares ...................................................... 151,540,600 -- -- ------------ ----------- ----------- Net increase/(decrease) in net assets .................................. 226,193,083 1,772,972 (14,885,678) NET ASSETS: Beginning of year ...................................................... 740,308,858 31,526,647 42,558,187 ------------ ----------- ----------- End of year ............................................................ $966,501,941 $33,299,619 $27,672,509 ============ =========== =========== See Notes to Financial Statements.
6 STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY WM GROUP OF FUNDS Since the Funds have sold, issued as reinvestment of dividends and redeemed shares only at a constant net asset value of $1.00 per share, the number of shares represented by such sales, reinvestments and redemptions is the same as the amounts shown below for such transactions.
MONEY MARKET FUND TAX-EXEMPT MONEY MARKET FUND CALIFORNIA MONEY FUND ---------------------------- ---------------------------- --------------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED ENDED ENDED 04/30/03 YEAR ENDED 04/30/03 YEAR ENDED 04/30/03 YEAR ENDED (UNAUDITED) 10/31/02 (UNAUDITED) 10/31/02 (UNAUDITED) 10/31/02 ------------- ------------- ------------ ------------ ------------- ------------ CLASS A: Sold .............................. $ 262,291,404 $ 651,389,983 $ 20,751,942 $ 60,798,797 $ 13,605,613 $ 43,920,297 Issued as reinvestment of dividends .................... 2,502,990 8,782,474 95,304 310,701 80,721 326,567 Redeemed .......................... (242,890,138) (619,116,214) (25,762,206) (59,336,526) (15,376,174) (59,132,457) ------------- ------------- ------------ ------------ ------------- ------------ Net increase/(decrease) ........... $ 21,904,256 $ 41,056,243 $ (4,914,960) $ 1,772,972 $ (1,689,840) $(14,885,593) ============= ============= ============ ============ ============= ============ CLASS B: Sold .............................. $ 38,048,151 $ 118,259,643 -- -- -- -- Issued as reinvestment of dividends .................... 26,204 230,721 -- -- -- -- Redeemed .......................... (45,741,049) (88,562,002) -- -- -- -- ------------- ------------- Net increase/(decrease) ........... $ (7,666,694) $ 29,928,362 -- -- -- -- ============= ============= CLASS C: Sold .............................. $ 5,173,589 $ 6,003,195 -- -- -- -- Issued as reinvestment of dividends .................... 1,453 2,054 -- -- -- -- Redeemed .......................... (4,427,844) (2,329,700) -- -- -- -- ------------- ------------- Net increase ...................... $ 747,198 $ 3,675,549 -- -- -- -- ============= ============= CLASS I: Sold .............................. $ 18,436,000 $ 265,034,485 -- -- -- -- Issued as reinvestment of dividends .................... 435,738 640,376 -- -- -- -- Redeemed .......................... (125,042,050) (114,134,261) -- -- -- -- ------------- ------------- Net increase/(decrease) ........... $(106,170,312) $ 151,540,600 -- -- -- -- ============= ============= See Notes to Financial Statements.
7 FINANCIAL highlights FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
NET DIVIDENDS ASSET VALUE, NET FROM NET NET BEGINNING OF INVESTMENT INVESTMENT ASSET VALUE, TOTAL PERIOD INCOME INCOME END OF PERIOD RETURN(1) ------------ ---------- ---------- ------------- --------- MONEY MARKET FUND CLASS A 04/30/03 (unaudited) $1.00 $0.005 $(0.005) $1.00 0.46% 10/31/02 1.00 0.014 (0.014) 1.00 1.42% 10/31/01 1.00 0.043 (0.043) 1.00 4.40% 10/31/00 1.00 0.056 (0.056) 1.00 5.79% 10/31/99 1.00 0.044 (0.044) 1.00 4.52% 10/31/98(3) 1.00 0.041 (0.041) 1.00 4.19% 12/31/97 1.00 0.049 (0.049) 1.00 5.04% CLASS B 04/30/03 (unaudited) 1.00 0.000(7) (0.000)(7) 1.00 0.03% 10/31/02 1.00 0.003 (0.003) 1.00 0.34% 10/31/01 1.00 0.033 (0.033) 1.00 3.32% 10/31/00 1.00 0.046 (0.046) 1.00 4.68% 10/31/99 1.00 0.034 (0.034) 1.00 3.44% 10/31/98(3) 1.00 0.035 (0.035) 1.00 3.52% 12/31/97 1.00 0.041 (0.041) 1.00 4.15% CLASS C 04/30/03 (unaudited) 1.00 0.000(7) (0.000)(7) 1.00 0.04% 10/31/02(4) 1.00 0.002 (0.002) 1.00 0.17% CLASS I 04/30/03 (unaudited) 1.00 0.005 (0.005) 1.00 0.49% 10/31/02 1.00 0.015 (0.015) 1.00 1.47% 10/31/01 1.00 0.044 (0.044) 1.00 4.46% 10/31/00 1.00 0.057 (0.057) 1.00 5.90% 10/31/99 1.00 0.046 (0.046) 1.00 4.66% 10/31/98(5) 1.00 0.031 (0.031) 1.00 3.17% TAX-EXEMPT MONEY MARKET FUND CLASS A 04/30/03 (unaudited) $1.00 $0.003 $(0.003) $1.00 0.32% 10/31/02 1.00 0.010 (0.010) 1.00 1.00% 10/31/01 1.00 0.025 (0.025) 1.00 2.57% 10/31/00 1.00 0.033 (0.033) 1.00 3.39% 10/31/99 1.00 0.026 (0.026) 1.00 2.65% 10/31/98(3) 1.00 0.026 (0.026) 1.00 2.60% 12/31/97 1.00 0.031 (0.031) 1.00 3.18% CALIFORNIA MONEY FUND CLASS A 04/30/03 (unaudited) $1.00 $0.003 $(0.003) $1.00 0.30% 10/31/02 1.00 0.009 (0.009) 1.00 0.89% 10/31/01 1.00 0.023 (0.023) 1.00 2.32% 10/31/00 1.00 0.028 (0.028) 1.00 2.79% 10/31/99 1.00 0.022 (0.022) 1.00 2.24% 10/31/98(6) 1.00 0.008 (0.008) 1.00 0.99% 06/30/98 1.00 0.027 (0.027) 1.00 2.73% RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA ---------------------------------------------- RATIO OF OPERATING EXPENSES TO AVERAGE NET RATIO OF RATIO OF ASSETS WITHOUT FEE WAIVERS, OPERATING NET INVESTMENT EXPENSES REIMBURSED NET ASSETS, EXPENSES TO INCOME TO AND FEES REDUCED BY END OF PERIOD AVERAGE NET AVERAGE NET CREDITS ALLOWED BY THE (IN 000'S) ASSETS ASSETS CUSTODIAN(2) ------------- ----------- -------------- --------------------------- MONEY MARKET FUND CLASS A 04/30/03 (unaudited) $710,906 0.60%(8) 0.94%(8) 0.60%(8) 10/31/02 689,002 0.59% 1.41% 0.59% 10/31/01 647,951 0.64% 4.21% 0.64% 10/31/00 458,368 0.65% 5.62% 0.65% 10/31/99 460,444 0.72% 4.43% 0.73% 10/31/98(3) 403,443 0.66%(8) 4.94%(8) 0.67%(8) 12/31/97 260,877 0.75% 4.93% 0.83% CLASS B 04/30/03 (unaudited) 96,864 1.49%(8) 0.05%(8) 1.69%(8) 10/31/02 104,530 1.67% 0.33% 1.67% 10/31/01 74,603 1.69% 3.16% 1.69% 10/31/00 23,469 1.71% 4.56% 1.71% 10/31/99 20,452 1.77% 3.38% 1.78% 10/31/98(3) 6,619 1.64%(8) 3.96%(8) 1.65%(8) 12/31/97 471 1.59% 4.15% 1.80% CLASS C 04/30/03 (unaudited) 4,423 1.46%(8) 0.08%(8) 1.63%(8) 10/31/02(4) 3,676 1.64%(8) 0.36%(8) 1.64%(8) CLASS I 04/30/03 (unaudited) 63,124 0.55%(8) 0.99%(8) 0.55%(8) 10/31/02 169,295 0.54% 1.46% 0.54% 10/31/01 17,755 0.58% 4.27% 0.58% 10/31/00 15,885 0.55% 5.72% 0.55% 10/31/99 102,760 0.62% 4.53% 0.63% 10/31/98(5) 108,720 0.54%(8) 5.06%(8) 0.55%(8) TAX-EXEMPT MONEY MARKET FUND CLASS A 04/30/03 (unaudited) $28,385 0.67%(8) 0.64%(8) 0.80%(8) 10/31/02 33,300 0.67% 0.99% 0.78% 10/31/01 31,527 0.74% 2.52% 0.74% 10/31/00 28,596 0.72% 3.33% 0.88% 10/31/99 31,353 0.57% 2.63% 0.89% 10/31/98(3) 25,441 0.55%(8) 3.09%(8) 0.72%(8) 12/31/97 32,134 0.57% 3.14% 0.71% CALIFORNIA MONEY FUND CLASS A 04/30/03 (unaudited) $25,983 0.63%(8) 0.61%(8) 0.80%(8) 10/31/02 27,673 0.63% 0.89% 0.70% 10/31/01 42,558 0.62% 2.27% 0.70% 10/31/00 35,407 0.69% 2.76% 0.69% 10/31/99 34,216 0.81% 2.22% 0.81% 10/31/98(6) 37,167 0.73%(8) 2.31%(8) 0.87%(8) 06/30/98 37,403 0.82% 2.71% 0.99% - ---------- (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 expenses reimbursed by the investment advisor or if fees had not been reduced by credits allowed by the custodian. (2) Ratio of operating expenses to average net assets includes expenses paid indirectly. (3) Fiscal year end changed to October 31 from December 31. (4) On March 1, 2002 the Money Market Fund commenced selling Class C shares. (5) On March 23, 1998 the Money Market Fund commenced selling Class I shares. (6) Fiscal year end changed to October 31 from June 30. (7) Amount represents less than $0.001 per share. (8) Annualized.
See Notes to Financial Statements. spread pp 8-9 PORTFOLIO of INVESTMENTS MONEY MARKET FUND APRIL 30, 2003 (UNAUDITED) PRINCIPAL AMOUNT VALUE - ---------- ------ COMMERCIAL PAPER (DOMESTIC) - 19.4% $ 9,952,000 American Express Credit Corporation, 1.600% due 06/02/2003+++ ........ $ 9,937,846 35,000,000 Bristol-Myers Squibb Company, 1.460% due 07/23/2003+++** ...... 35,000,000 14,228,000 Caterpillar Financial Services Corporation, 1.270% due 08/04/2003+++ ........ 14,180,316 Cooperative Association of Tractor Dealers Inc.: Series A, (MBIA Insured): 8,800,000 1.260% due 05/30/2003+++ ........ 8,791,068 10,100,000 1.260% due 09/15/2003+++ ........ 10,051,571 3,200,000 1.280% due 07/03/2003+++ ........ 3,192,832 1,800,000 1.280% due 08/27/2003+++ ........ 1,792,448 Series B, (AMBAC Insured): 15,000,000 1.270% due 10/21/2003+++ ........ 14,910,571 2,900,000 1.330% due 05/07/2003+++ ........ 2,899,357 33,677,000 International Business Machines Corporation, 1.770% due 05/05/2003+++ ........ 33,670,377 Windmill Funding Corporation, (LOC: ABN AMRO Bank NV): 15,596,000 1.250% due 05/07/2003+++** ...... 15,592,751 19,734,000 1.255% due 05/09/2003+++** ...... 19,728,496 ------------ Total Commercial Paper (Domestic) (Cost $169,747,633) ............. 169,747,633 ------------ COMMERCIAL PAPER (YANKEE) - 9.9% ING (U.S.) Funding LLC: 15,000,000 1.330% due 05/12/2003+++ ........ 14,993,904 12,000,000 1.330% due 05/13/2003+++ ........ 11,994,680 16,593,000 Sharp Electronics Corporation, 1.280% due 05/20/2003+++ ........ 16,581,790 19,150,000 Shell Finance (U.K.) PLC, 1.280% due 09/18/2003+++** ...... 19,054,676 24,070,000 TotalFinaElf Capital SA, 1.360% due 05/02/2003+++ ........ 24,069,091 ------------ Total Commercial Paper (Yankee) (Cost $86,694,141) 86,694,141 ------------ MEDIUM TERM NOTES - 21.0% American Honda Finance Corporation: 10,000,000 1.290% due 09/16/2003++** ....... 10,000,715 10,000,000 1.300% due 02/20/2004++** ....... 10,000,000 15,000,000 1.490% due 05/20/2004++** ....... 15,027,030 6,000,000 1.540% due 02/17/2004++** ....... 6,011,759 7,500,000 Bank One Corporation, Sr. Note, Series C, 1.460% due 06/16/2003++ ......... 7,502,692 16,100,000 Cargill Inc., 1.540% due 08/26/2003++** ....... 16,111,438 Caterpillar Financial Services Corporation, Series F: 20,000,000 1.489% due 08/05/2003++ ......... 20,011,980 6,780,000 6.590% due 05/01/2003 ........... 6,780,000 4,225,000 Citigroup Inc., Sr. Note, Series E, 1.410% due 07/17/2003++ ......... 4,226,323 PRINCIPAL AMOUNT VALUE - ---------- ------ General Electric Capital Corporation, Series A: $15,000,000 1.320% due 01/28/2004++ ......... $ 15,005,736 4,000,000 7.250% due 05/03/2004 ........... 4,234,839 3,500,000 8.090% due 04/01/2004 ........... 3,712,379 20,000,000 MBIA Global Funding LLC, 1.318% due 01/02/2004++** ....... 20,000,000 Merrill Lynch & Company, Series B: 10,000,000 1.600% due 10/01/2003++ ......... 10,013,590 6,000,000 1.610% due 08/15/2003++ ......... 6,005,892 2,000,000 1.720% due 05/30/2003++ ......... 2,000,322 8,500,000 Salomon Smith Barney Holdings Inc., Series K, 1.489% due 12/19/2003++ ......... 8,509,773 15,000,000 Toyota Motor Credit Corporation, 1.261% due 01/16/2004++ ......... 15,000,000 3,170,000 Wells Fargo & Company, Sr. Note, Series C, 4.250% due 08/15/2003 ........... 3,196,595 ------------ Total Medium Term Notes (Cost $183,351,063) 183,351,063 ------------ CORPORATE BONDS AND NOTES - 26.8% 3,000,000 ASSK Properties LC, Note, (LOC: Wells Fargo & Company), 1.500% due 12/01/2017+ .......... 3,000,000 Associates Corporation NA, Sr. Note: 10,000,000 1.600% due 05/08/2003++ ......... 10,000,509 12,060,000 5.800% due 04/20/2004 ........... 12,567,260 12,500,000 Bank of America Corporation, Sr. Note, 7.000% due 05/15/2003 ........... 12,525,247 20,000,000 Bayerische Landesbank NY, Note, Series CD, 1.440% due 02/04/2004++ ......... 20,015,368 20,000,000 BP Capital Markets PLC, Bond, 1.435% due 09/11/2003++ ......... 20,002,192 2,309,000 Citigroup Inc., Sr. Note, 5.800% due 03/15/2004 ........... 2,396,724 1,500,000 Corporate Finance Managers, Note, (LOC: Wells Fargo & Company), 1.400% due 02/02/2043+ .......... 1,500,000 3,300,000 DBSI First Mortgage 1998, Note, (LOC: U.S. Bancorp), 1.400% due 07/01/2023+ .......... 3,300,000 32,000,000 Everett Clinic, P.S., Bond, (LOC: Bank of America Corporation), 1.420% due 05/01/2022+ .......... 32,000,000 14,700,000 Heller Financial Inc., Note, 7.875% due 05/15/2003 ........... 14,733,820 2,000,000 Marsh Enterprises LLC, Note, (LOC: Fifth Third Bancorp), 1.310% due 01/01/2028+ .......... 2,000,000 4,500,000 Medical Properties Inc., Revenue Bonds, (Dakota Clinic Ltd. Project), (LOC: ABN AMRO Bank NV), 1.520% due 12/15/2024+ .......... 4,500,000 7,800,000 Norwest Financial Inc., Sr. Note, 6.125% due 08/01/2003 ........... 7,881,314 See Notes to Financial Statements. 10 PORTFOLIO of INVESTMENTS (continued) MONEY MARKET FUND APRIL 30, 2003 (UNAUDITED) PRINCIPAL AMOUNT VALUE - ---------- ------ CORPORATE BONDS AND NOTES - (CONTINUED) $ 5,000,000 Pineview Estates LC, Note, (LOC: Fifth Third Bancorp), 1.310% due 01/01/2023+** ........ $ 5,000,000 15,000,000 Portland Clinic LLP, Bond, (LOC: U.S. Bancorp), 1.520% due 11/20/2027+ .......... 15,000,000 15,955,000 Presbyterian Homes & Services of New Jersey Obligated Group, Revenue Bonds, Series 1998-B1, (LOC: PNC Financial Services Group, Inc.), 1.350% due 12/01/2028+ .......... 15,955,000 4,750,000 Rise Inc., Note, (LOC: Wells Fargo & Company), 1.500% due 11/01/2022+ .......... 4,750,000 5,000,000 Rockwood Quarry LLC, Note, (LOC: Fifth Third Bancorp), 1.310% due 12/01/2022+ .......... 5,000,000 3,500,000 Salomon Smith Barney Holdings Inc., Note, 6.250% due 05/15/2003 ........... 3,505,701 3,000,000 Tacoma Goodwill Industries, Bond, (LOC: Bank of America Corporation), 1.350% due 02/01/2023+ .......... 3,000,000 12,000,000 Toyota Motor Credit Corporation, Note, 5.625% due 11/13/2003 ........... 12,273,299 1,558,000 Watts Brothers Frozen Foods, Bond, (LOC: U.S. Bancorp), 1.400% due 07/01/2013+ .......... 1,558,000 15,272,000 Wells Fargo & Company, Sr. Note, 7.200% due 05/01/2003 ........... 15,272,000 6,500,000 Wells Fargo Financial Inc., Sr. Note, 7.250% due 07/14/2003 ........... 6,576,689 ------------ Total Corporate Bonds and Notes (Cost $234,313,123) 234,313,123 ------------ TAXABLE MUNICIPAL BONDS - 23.4% 2,000,000 ABAG, California, Finance Authority for Nonprofit Corporations, Revenue Bonds, (Public Policy Institute of California Project), Series B, (LOC: Bank of New York Company, Inc.), 1.450% due 11/01/2031+ .......... 2,000,000 3,725,000 Acworth, Georgia, Downtown Development Authority, IDR, (City of Acworth Cable Fiber Optic Project), (AMBAC Insured), 1.350% due 01/01/2017+ .......... 3,725,000 5,600,000 California Educational Facilities Authority, Loan Agreement Revenue, (University of Judaism), Series B, (LOC: Allied Irish Bank PLC), 1.420% due 12/01/2028+ .......... 5,600,000 43,460,000 California Housing Finance Agency, Home Mortgage Revenue, Series K, (FSA Insured), 1.280% due 08/01/2031+ .......... 43,460,000 Connecticut State Housing Finance Authority, Housing Revenue, (AMBAC Insured): 25,000,000 Subseries B-6, 1.300% due 11/15/2027+ .......... 25,000,000 PRINCIPAL AMOUNT VALUE - ---------- ------ (Housing Mortgage Finance Program): $14,000,000 Series A-4, 1.320% due 05/15/2032+ .......... $ 14,000,000 1,900,000 Series F-1, 1.320% due 11/15/2016+ .......... 1,900,000 6,100,000 Illinois Health Facilities Authority, Health Care Revenue, (Silver Cross Hospital Project), Series B, (LOC: Fifth Third Bancorp), 1.350% due 08/15/2017+ .......... 6,100,000 3,550,000 Kit Carson County, Colorado, Agricultural Development Revenue, (Midwest Farms LLC), (LOC: Wells Fargo & Company), 1.350% due 06/01/2027+ .......... 3,550,000 20,000,000 New York City, GO, Subseries A-11, (FGIC Insured), 1.290% due 11/01/2020+ .......... 20,000,000 14,000,000 New York State Housing Finance Agency, Housing Revenue, (350 West 43rd Street Project), Series B, (LOC: Fleet National Bank), 1.320% due 11/01/2034+ .......... 14,000,000 3,900,000 North Carolina Medical Care Commission, Health Facilities Revenue, (1st Mortgage- Baptist Retirement Homes of North Carolina Inc.), Series C, (LOC: Wachovia Corporation), 1.510% due 10/01/2008+ .......... 3,900,000 25,800,000 Oakland-Alameda County, California, Coliseum Authority, Lease Revenue, (Coliseum Project), Series D, (LOC: Wachovia Corporation), 1.280% due 02/01/2011+ .......... 25,800,000 2,495,000 Plymouth, Minnesota, Health Facilities Revenue, (Westhealth Project), Series B, (FSA Insured), 1.350% due 06/01/2024+ .......... 2,495,000 7,735,000 San Diego County, California, Pension Obligation Revenue, Series A, (FSA Insured), 6.380% due 08/15/2003+ .......... 7,842,357 9,485,000 Santa Rosa, California, Wastewater Revenue, Series A, (LOC: Westdeutsche Landesbank), 1.450% due 09/01/2028+ .......... 9,485,000 11,100,000 South Fulton, Georgia, Municipal Regional Jail Authority, Lease Revenue, (Union City Justice Center Project), (MBIA Insured), 1.320% due 11/01/2017+ .......... 11,100,000 Washington State Housing Finance Commission, MFHR, Series B: 2,010,000 (Boardwalk Apartments Project), (FNMA Collateral), 1.350% due 09/01/2028+ .......... 2,010,000 1,830,000 (Cedar Landing Project), (LOC: U.S. Bancorp), 1.400% due 12/01/2028+ .......... 1,830,000 1,160,000 (Oxford Square Project), (LOC: U.S. Bancorp), 1.400% due 12/01/2028+ .......... 1,160,000 ------------ Total Taxable Municipal Bonds (Cost $204,957,357) ............. 204,957,357 ------------ See Notes to Financial Statements. 11 PORTFOLIO of INVESTMENTS (continued) MONEY MARKET FUND APRIL 30, 2003 (UNAUDITED) PRINCIPAL AMOUNT VALUE - ---------- ------ U.S. GOVERNMENT AGENCY OBLIGATION - 1.1% FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 1.1% (Cost $9,872,075) $10,000,000 1.290% due 04/22/2004+++ .......... $ 9,872,075 ------------ FUNDING AGREEMENT - 4.0% (Cost $35,000,000) 35,000,000 New York Life Insurance Company, 1.380% due 08/05/2003++ ......... 35,000,000 ------------ TOTAL INVESTMENTS (Cost $923,935,392*) ....105.6% 923,935,392 OTHER ASSETS AND LIABILITIES (NET) .........(5.6) (48,619,003) ----- ------------ NET ASSETS ................................100.0% $875,316,389 ===== ============ - ---------- * Aggregate cost for federal tax purposes. ** Security exempt from registration under Rule 144A of the Securities Act of 1933. + Variable rate securities payable upon demand with not more than five business days' notice, and secured by bank letters of credit or guarantees by certain corporations. The interest rate shown reflects the rate in effect at April 30, 2003. ++ Floating rate security whose interest rate is reset periodically based on an index. +++ Rate represents discount rate at the date of purchase. - -------------------------------------------------------------------------------- GLOSSARY OF TERMS AMBAC -- American Municipal Bond Assurance Corporation FGIC -- Federal Guaranty Insurance Corporation FNMA -- Federal National Mortgage Association FSA -- Financial Security Assurance GO -- General Obligation Bond IDR -- Industrial Development Revenue LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance MFHR -- Multi-family Housing Revenue - -------------------------------------------------------------------------------- See Notes to Financial Statements. 12 PORTFOLIO of INVESTMENTS TAX-EXEMPT MONEY MARKET FUND APRIL 30, 2003 (UNAUDITED) PRINCIPAL AMOUNT VALUE - ---------- ------ MUNICIPAL BONDS AND NOTES - 102.3% ALABAMA - 5.3% $ 1,500,000 Daphne-Villa Mercy, Special Care Facilities Finance Authority, Health Care Revenue, (Mercy Medical Project), (LOC: SouthTrust Bank NA), 1.310% due 12/01/2030+ .......... $ 1,500,000 ------------ ARIZONA - 1.6% 455,000 Arizona Health Facilities Authority, Health Care Revenue, (Pooled Loan Program),(FGIC Insured), 1.360% due 10/01/2015+ .......... 455,000 ------------ ARKANSAS - 5.6% 1,600,000 Saline County, PCR, (Alcoa Inc. Project), 1.810% due 08/01/2010+ .......... 1,600,000 ------------ COLORADO - 1.1% 320,000 Metropolitan Football Stadium District, Sales Tax Revenue, Series B, (MBIA Insured), Zero coupon due 01/01/2004 ...... 316,926 ------------ DISTRICT OF COLUMBIA - 1.1% 300,000 District of Columbia, IDR, (Resources for the Future Inc. Project), (LOC: Wachovia Corporation), 1.400% due 08/01/2029++ ......... 300,000 ------------ FLORIDA - 5.3% 200,000 Florida State Board of Regents, Housing Revenue, (University of Central Florida Project), (MBIA Insured), 2.500% due 10/01/2003 ........... 201,041 500,000 Orange County, Health Facilities Authority, Health Care Revenue, (Presbyterian Retirement Project), (LOC: Bank of America Corporation), 1.400% due 11/01/2028+ .......... 500,000 800,000 Orange County, IDR, (Central Florida YMCA Project), Series A, (LOC: Bank of America Corporation), 1.400% due 05/01/2027+ .......... 800,000 ------------ 1,501,041 ------------ GEORGIA - 2.6% 750,000 Dahlonega, Downtown Development Authority, Student Housing Revenue, (North Georgia Student Housing LLC Project), Series A, (LOC: Wachovia Corporation), 1.400% due 06/01/2028+ .......... 750,000 ------------ HAWAII - 2.0% 565,000 Hawaii State, UTGO, Series CE, ETM, 8.000% due 06/01/2003 ........... 568,074 ------------ ILLINOIS - 3.9% 150,000 Calumet City, UTGO, (Corporate Purpose Bonds), Series B, (FGIC Insured), (Pre-refunded to 01/01/2004 @ $100), 6.200% due 01/01/2006 ........... 154,948 PRINCIPAL AMOUNT VALUE - ---------- ------ $ 250,000 Hoffman Estates, Tax Increment & Allocation Revenue, (Economic Development Project), (AMBAC Insured), 5.000% due 11/15/2003 ........... $ 255,138 350,000 IIlinois Health Facilities Authority, Health Care Revenue, (Blessing Hospital Project), Series B, (FSA Insured), 1.400% due 11/15/2029+ .......... 350,000 350,000 Metropolitan Pier & Exposition Authority, Dedicated State Tax Revenue, Series A, ETM, 5.900% due 06/15/2003 ...... 351,929 ------------ 1,112,015 ------------ INDIANA - 8.4% 180,000 Indiana State Educational Facilities Authority, College & University Revenue, (Franklin College Project), (LOC: Bank One Corporation), 1.400% due 10/01/2019+ .......... 180,000 Marion, Economic Development Revenue, (Indiana Wesleyan University Project), (LOC: Bank One Corporation): 500,000 1.350% due 06/01/2030+ .......... 500,000 1,000,000 1.350% due 06/01/2030+ .......... 1,000,000 700,000 Miami County, Economic Development Revenue, (Dukes Memorial Hospital Project), (LOC: Wells Fargo & Company), 1.350% due 10/01/2030+ .......... 700,000 ------------ 2,380,000 ------------ IOWA - 2.1% 600,000 Webster County, Educational Facilities Revenue, (State Edmond Project), (LOC: Wells Fargo & Company), 1.350% due 07/01/2020+ .......... 600,000 ------------ KANSAS - 6.0% 200,000 Anderson County, Unified School District No. 365, UTGO, Series A, (FSA Insured), 3.000% due 09/01/2003 ........... 201,021 1,500,000 Shawnee, IDR, (Shawnee Village Association LP), (LOC: J.P. Morgan Chase & Company), 1.400% due 12/01/2009+ .......... 1,500,000 ------------ 1,701,021 ------------ MASSACHUSETTS - 3.4% 575,000 Massachusetts State Health & Educational Facilities Authority, Revenue Bonds, (Capital Asset Program), Series M-2, (LOC: Fleet National Bank), 1.360% due 07/01/2031+ 575,000 390,000 Massachusetts State, Capital Appreciation, UTGO, (Consolidated Loan), Series A, (FGIC Insured), Zero coupon due 03/01/2004 385,902 ------------ 960,902 ------------ See Notes to Financial Statements. 13 PORTFOLIO of INVESTMENTS (continued) TAX-EXEMPT MONEY MARKET FUND APRIL 30, 2003 (UNAUDITED) PRINCIPAL AMOUNT VALUE - ---------- ------ MUNICIPAL BONDS AND NOTES - (CONTINUED) MICHIGAN - 4.6% $ 200,000 Detroit, Sewer Disposal System Revenue, Series A, (MBIA Insured), 4.700% due 07/01/2003 ........... $ 201,171 900,000 Michigan State Hospital Finance Authority, Health Care Revenue, (Hospital Equipment Loan Program), Series A, (LOC: National City Corporation), 1.370% due 12/01/2023+ .......... 900,000 200,000 Portage, Public Schools, UTGO, (Building & Site Project), (FSA Insured), 2.000% due 05/01/2003 ........... 200,000 ------------ 1,301,171 ------------ MINNESOTA - 1.1% 300,000 Golden Valley, IDR, (Unicare Homes Inc. Project), (LOC: Bank of America Corporation), 1.380% due 09/01/2014+ .......... 300,000 ------------ NEBRASKA - 0.9% 250,000 Nebraska Educational Finance Authority, College & University Revenue, (Creighton University Project), Series A, (AMBAC Insured), 3.800% due 09/01/2003 ........... 251,949 ------------ NEVADA - 1.3% 370,000 Henderson, Special Assessment Revenue, (Local Improvement District No. T-10), Senior Series A, (FSA Insured), 4.000% due 08/01/2003 ........... 372,309 ------------ NEW JERSEY - 1.2% 150,000 Essex County, UTGO, Series A-1, (FGIC Insured), 5.000% due 11/15/2003 ........... 153,051 200,000 Keansburg, UTGO, Series A, (MBIA Insured), 2.500% due 12/01/2003 ........... 201,502 ------------ 354,553 ------------ NEW YORK - 4.0% 100,000 Nassau County, UTGO, (General Improvements Project), Series A, (FGIC Insured), 4.500% due 05/01/2003 ........... 100,000 150,000 New York State Dormitory Authority, College & University Revenue, (Fordham University Project), (MBIA Insured), 4.250% due 07/01/2003 ........... 150,778 220,000 New York State Housing Finance Agency, Revenue Bonds, (Nursing Home and Health Care Project), Series A, (MBIA Insured), 4.250% due 11/01/2003 ........... 223,333 250,000 New York, UTGO, Series E, (MBIA-IBC Insured), 6.000% due 08/01/2003 ........... 253,053 100,000 Rotterdam-Mohonasen, Central School District, UTGO, (FGIC Insured), 4.750% due 06/15/2003 ........... 100,383 PRINCIPAL AMOUNT VALUE - ---------- ------ $ 305,000 Williamson, Central School District, UTGO, (FGIC Insured), 5.000% due 06/15/2003 ........... $ 306,310 ------------ 1,133,857 ------------ NORTH CAROLINA - 1.6% 250,000 Brunswick County, COP, (Water Line Extension Project), (FSA Insured), 6.300% due 05/01/2003 ........... 250,000 200,000 Duplin County, COP, (AMBAC Insured), 2.500% due 09/01/2003 ........... 200,913 ------------ 450,913 ------------ NORTH DAKOTA - 4.4% 1,240,000 Grand Forks, Hospital Facilities Revenue, (The United Hospital Obligated Group Project), (LOC: ABN AMRO Bank NV), 1.310% due 12/01/2016+ .......... 1,240,000 ------------ OHIO - 3.2% 250,000 Ohio State Building Authority, Lease Revenue, (Vern Riffe Center Project), Series A, (AMBAC Insured), 4.500% due 10/01/2003 ........... 253,107 645,000 Warren County, Health Care Facilities Authority, Health Care Revenue, (Otterbein Homes Project), Series A, (LOC: Fifth Third Bancorp), 1.390% due 07/01/2021+ .......... 645,000 ------------ 898,107 ------------ OKLAHOMA - 1.8% 500,000 Oklahoma State Industrial Authority, Health Care Revenue, (Tealridge Manor Corporation Project), (LOC: Bank of America Corporation), 1.400% due 11/01/2018+ .......... 500,000 ------------ PENNSYLVANIA - 4.4% 390,000 Fleetwood, Area School District, UTGO, (FGIC Insured), 2.000% due 05/01/2003 ........... 390,000 300,000 Pennsylvania State, UTGO, (AMBAC Insured), 5.125% due 09/15/2003 ........... 303,916 250,000 Philadelphia, School District, UTGO, Series A, (MBIA Insured), 5.200% due 07/01/2003 ........... 251,423 300,000 Trinity, Area School District, UTGO, (FGIC Insured), (Pre-refunded to 05/01/2003 @ $100), 5.500% due 05/01/2014 ........... 300,000 ------------ 1,245,339 ------------ TENNESSEE - 3.5% 1,000,000 Metropolitan Government Nashville & Davidson County, Industrial Development Board, MFHR, (Chimneytop II Project), (LOC: Bank of America Corporation), 1.410% due 09/01/2006+ .......... 1,000,000 ------------ See Notes to Financial Statements. 14 PORTFOLIO of INVESTMENTS (continued) TAX-EXEMPT MONEY MARKET FUND APRIL 30, 2003 (UNAUDITED) PRINCIPAL AMOUNT VALUE - ---------- ------ MUNICIPAL BONDS AND NOTES - (CONTINUED) TEXAS - 8.5% $ 225,000 Brownsville, Naval District, UTGO, (AMBAC Insured), 2.500% due 03/01/2004 ........... $ 227,225 200,000 Caddo Mills, Independent School District, UTGO, (PSF Guaranteed), 5.750% due 08/15/2003 ........... 202,446 260,000 Coppell, Independent School District, UTGO, (PSF Guaranteed), Zero coupon due 08/15/2003 ...... 258,877 375,000 Deer Park, Waterworks & Sewer System Revenue, (FSA Insured), 2.500% due 03/01/2004*** ........ 378,596 275,000 Hidalgo County, LTGO, (County Buildings Construction & Renovation), (FGIC Insured), 2.000% due 08/15/2003 ........... 275,395 195,000 Mission Bend, Municipal Utility District No.2, Capital Appreciation, UTGO, (FSA Insured), Zero coupon due 09/01/2003 ...... 194,226 310,000 Rockwall, Certificates of Obligation, (Combination Tax and Waterworks & Sewer System), (FSA Insured), 3.000% due 08/01/2003 ........... 311,199 300,000 Texas Public Building Authority, Building Revenue, (MBIA Insured), ETM, Zero coupon due 08/01/2003 ...... 298,792 280,000 Trinity, River Authority, Contract Revenue, (Livingston Regional Water Supply System Project), (MBIA Insured), 3.000% due 08/01/2003 ........... 281,053 ------------ 2,427,809 ------------ WASHINGTON - 12.7% 500,000 Benton County, Public Utility District No. 1, Electric Power & Light Revenue, (AMBAC Insured), 6.000% due 11/01/2003** ......... 512,082 1,000,000 King County, Economic Enterprise Corporation Revenue, (Puget Sound Blood Center Project), (LOC: U.S. Bancorp), 1.400% due 04/01/2023+ .......... 1,000,000 600,000 Port Seattle, Industrial Development Corporation, Airport Revenue, (Alaska Airlines Inc. Project), (LOC: Bank of New York Company, Inc.), 1.400% due 12/01/2009+ .......... 600,000 1,045,000 Seattle, Low Income Housing Assistance Authority, Health Care Revenue, (Bayview Manor Homes Project), Series B, (LOC: U.S. Bancorp), 1.400% due 05/01/2019+ .......... 1,045,000 440,000 Washington State Housing Finance Commission, Elderly Housing Revenue, (Riverview Retirement Project), (LOC: U.S. Bancorp), 1.400% due 07/01/2022+ .......... 440,000 ------------ 3,597,082 ------------ PRINCIPAL AMOUNT VALUE - ---------- ------ WYOMING - 0.7% $ 200,000 Albany County Improvements Statutory Trust, COP, (MBIA Insured), 3.000% due 07/15/2003 $ 200,569 ------------ Total Municipal Bonds and Notes (Cost $29,018,637) 29,018,637 ------------ SHARES - --------- INVESTMENT COMPANY SECURITY - 0.0% +++ (Cost $5,235) 5,235 Dreyfus Tax-Exempt Cash Management Fund 5,235 ------------ TOTAL INVESTMENTS (Cost $29,023,872*) .....102.3% 29,023,872 OTHER ASSETS AND LIABILITIES (NET) .........(2.3) (639,124) ----- ------------ NET ASSETS ................................100.0% $28,384,748 ===== ============ - ---------- * Aggregate cost for federal tax purposes. ** Security segregated as collateral for when-issued securities. *** 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 April 30, 2003. ++ Security exempt from registration under Rule 144A of the Securities Act of 1933. +++ Amount represents less than 0.1% of net assets. - -------------------------------------------------------------------------------- GLOSSARY OF TERMS AMBAC -- American Municipal Bond Assurance Corporation COP -- Certificate of Participation ETM -- Escrowed to Maturity FGIC -- Federal Guaranty Insurance Corporation FSA -- Financial Security Assurance IBC -- Insured Bond Certificate IDR -- Industrial Development Revenue LOC -- Letter of Credit LTGO -- Limited Tax General Obligation Bond MBIA -- Municipal Bond Investors Assurance MFHR -- Multi-family Housing Revenue PCR -- Pollution Control Revenue PSF -- Permanent School Fund Guarantee Program UTGO -- Unlimited Tax General Obligation Bond - -------------------------------------------------------------------------------- See Notes to Financial Statements. 15 PORTFOLIO of INVESTMENTS CALIFORNIA MONEY FUND APRIL 30, 2003 (UNAUDITED) PRINCIPAL AMOUNT VALUE - ---------- ------ MUNICIPAL BONDS AND NOTES - 100.3% CALIFORNIA - 96.1% ABAG Financing Authority For Nonprofit Corporation, Revenue Bonds: $ 1,000,000 (Hamlin School Project), Series A, (LOC: BNP Paribas SA), 1.400% due 08/01/2032+ .......... $ 1,000,000 1,000,000 (Point Loma Nazarene University Project), (LOC: Allied Irish Bank PLC), 1.450% due 10/01/2033+ .......... 1,000,000 1,000,000 (Public Policy Institute of California Project), Series A, (LOC: California State Teachers Retirement System), 1.400% due 11/01/2031+ .......... 1,000,000 Alameda County, IDR, Series A, AMT, (LOC: Wells Fargo & Company): 800,000 (Heat and Control Inc. Project), 1.450% due 11/01/2025+ .......... 800,000 400,000 (JMS Family Partnership Project), 1.400% due 10/01/2025+ .......... 400,000 115,000 Brea Redevelopment Agency, Tax Allocation Revenue, (Redevelopment Project AB), Series A, (AMBAC Insured), 4.000% due 08/01/2003 ........... 115,685 200,000 California Community College Financing Authority, Lease Revenue, Series A, (AMBAC Insured), 1.400% due 08/01/2003 ........... 200,000 1,000,000 California Pollution Control Financing Authority, Solid Waste Disposal Revenue, (Waste Management Project), Series A, AMT, (LOC: ABN AMRO Bank NV), 1.360% due 01/01/2022+ .......... 1,000,000 California State Economic Development Financing Authority, IDR, AMT, (LOC: Wells Fargo & Company): 100,000 (Calco Project), 1.500% due 04/01/2027+ .......... 100,000 1,050,000 (Wesflex Pipe Manufacturing Project), 1.500% due 04/01/2018+ .......... 1,050,000 150,000 California State Public Works Board, Lease Revenue, (Various Community College Projects), (Pre-refunded to 03/01/2004 @ $102), 7.000% due 03/01/2014 ........... 160,216 125,000 California State University, Housing System Revenue, (FGIC Insured), 4.900% due 11/01/2003 ........... 127,324 1,000,000 California State, UTGO, Series B-2, (LOC: Bank of New York Company, Inc.), 1.190% due 05/01/2033+ .......... 1,000,000 California Statewide Communities Development Authority, College & University Revenue: 1,000,000 (Biola University Project), Series A, (LOC: Allied Irish Bank PLC), 1.450% due 10/01/2032+ .......... 1,000,000 1,000,000 (Masters College), (LOC: U.S. Bancorp), 1.350% due 02/01/2032+ .......... 1,000,000 PRINCIPAL AMOUNT VALUE - ---------- ------ $ 700,000 California Statewide Communities Development Authority, COP, (John Muir/ Mt. Diablo Health Center), (AMBAC Insured), 1.260% due 08/15/2027+ .......... $ 700,000 500,000 California Statewide Communities Development Authority, Limited Obligation Revenue, (The Painted Turtle Gang Camp Foundation), (LOC: Allied Irish Bank PLC), 1.400% due 04/01/2033+ .......... 500,000 1,000,000 California Statewide Communities Development Authority, MFHR, (Ivy Hill Apartments Project), Series I, AMT, (LOC: Bank of America Corporation), 1.400% due 02/01/2033+ .......... 1,000,000 180,000 Castro Valley, Unified School District, UTGO, (Election of 2002), (FSA Insured), 6.500% due 08/01/2003 ........... 182,196 280,000 Corona-Norco, Unified School District Public Financing Authority, Special Tax Revenue,(Community Facilities Districts Refinancing), Series A, (MBIA Insured), 5.000% due 09/01/2003 ........... 283,384 175,000 East Bay, Regional Park District, UTGO, Series C, (FGIC Insured), (Pre-refunded to 09/01/2003 @ $102), 6.000% due 09/01/2020 ........... 181,306 200,000 El Dorado, Unified High School District, UTGO, Series A, (FGIC Insured), 8.000% due 08/01/2003 ........... 203,459 1,200,000 Los Angeles County, Industrial Development Authority, IDR, (Tulip Corporation Project), Series A, AMT, (LOC: California State Teachers Retirement System), 1.450% due 07/01/2014+,++ ....... 1,200,000 1,000,000 Los Angeles, Wastewater System Revenue, (Multimodal Project), Series C, (FGIC Insured), 1.250% due 12/01/2031+ .......... 1,000,000 330,000 Merced County, COP, (Juvenile Justice Correction Facilities Project), (AMBAC Insured), 3.000% due 06/01/2003 ........... 330,345 1,200,000 Novato, MFHR, (Nova-Ro III Senior Housing Project), (LOC: BNP Paribas SA), 1.400% due 10/01/2032+ .......... 1,200,000 1,000,000 Paramount, Redevelopment Agency, Tax Allocation Revenue, (Redevelopment Project Area No. 1), Series B, (MBIA Insured), (Pre-refunded to 08/01/2003 @ $21.4282), Zero coupon due 08/01/2026 ...... 213,473 Pasadena, COP: 500,000 (City Hall & Park Improvement Projects), (AMBAC Insured), 1.350% due 02/01/2033+ .......... 500,000 800,000 (Rose Bowl Improvements Project), (LOC: California State Teachers Retirement System), 1.350% due 12/01/2016+ .......... 800,000 1,200,000 Rancho Mirage, Joint Powers Financing Authority, Health Care Revenue, (Eisenhower Medical Center Project), Series A, (LOC: Bank of New York Company, Inc.), 1.280% due 01/01/2026+ .......... 1,200,000 See Notes to Financial Statements. 16 PORTFOLIO of INVESTMENTS (continued) CALIFORNIA MONEY FUND APRIL 30, 2003 (UNAUDITED) PRINCIPAL AMOUNT VALUE - ---------- ------ MUNICIPAL BONDS AND NOTES - (CONTINUED) CALIFORNIA - (CONTINUED) $ 1,000,000 San Diego, MFHR, Issue A, (LOC: Fifth Third Bancorp), 1.350% due 02/01/2009+ .......... $ 1,000,000 200,000 San Diego, Public Facilities Financing Authority, Sewer Revenue, (FGIC Insured), 4.375% due 05/15/2003 ........... 200,227 San Francisco City and County International Airports Commission, Airport Revenue, Second Series: 400,000 Issue 8B, (FGIC Insured), 5.000% due 05/01/2003 ........... 400,000 Issue 15B, (FSA Insured): 250,000 3.900% due 05/01/2003 ........... 250,000 320,000 4.000% due 05/01/2004 ........... 329,043 250,000 Issue 26B, (FGIC Insured), 5.000% due 05/01/2003 ........... 250,000 665,000 San Joaquin Hills, Transportation Corridor Agency, Toll Road Revenue, Series A, (MBIA Insured), Zero coupon due 01/15/2004 ...... 659,436 1,000,000 San Jose, Unified School District, UTGO, (Santa Clara County Project), Series A, (FSA Insured), 4.000% due 08/01/2003 ........... 1,006,482 140,000 San Marcos, Unified School District, Special Tax Revenue, (Community Facilities District No. 4), (FSA Insured), 3.000% due 09/01/2003 ........... 140,698 490,000 San Ramon Valley, Unified School District, UTGO, Series A, (FGIC Insured), Zero coupon due 07/01/2003 ...... 488,900 800,000 Walnut Creek, MFHR, (Creekside Drive Apartments Project), (LOC: Bank of America Corporation), 1.350% due 04/01/2007+ .......... 800,000 ------------ 24,972,174 ------------ PUERTO RICO - 4.2% Puerto Rico Commonwealth, UTGO, (Public Improvement Project): 675,000 (AMBAC Insured), 4.500% due 07/01/2003 ........... 678,473 400,000 (MBIA Insured), 5.000% due 07/01/2003 ........... 402,250 ------------ 1,080,723 ------------ Total Municipal Bonds and Notes (Cost $26,052,897) .............. 26,052,897 ------------ SHARES VALUE - ---------- ------ INVESTMENT COMPANY SECURITY - 1.1% (Cost $288,524) 288,524 Dreyfus Basic California Municipal Money Market Fund ............... $ 288,524 ------------ TOTAL INVESTMENTS (Cost $26,341,421*) .... 101.4% 26,341,421 OTHER ASSETS AND LIABILITIES (NET) ........ (1.4) (358,752) ----- ------------ NET ASSETS ................................100.0% $ 25,982,669 ===== ============ - ---------- * 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 April 30, 2003. ++ Security exempt from registration under Rule 144A of the Securities Act of 1933. - -------------------------------------------------------------------------------- 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 Bond - -------------------------------------------------------------------------------- See Notes to Financial Statements. 17 NOTES to FINANCIAL statements (unaudited) 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 registered under the Investment Company Act of 1940 (the "1940 Act"), as open-end management investment companies. The Money Market Fund and Tax-Exempt Money Market Fund are diversified series of WM Trust I. The California Money Fund is a non-diversified series of WM Trust II. Information presented in this report pertains only to the three named "Funds". Financial statements for the other funds included in the Trusts are presented in a separate report. WMAdvisors, Inc. (the "Advisor" or "WM Advisors") serves as investment manager to the Funds. The Advisor is a wholly-owned subsidiary of Washington Mutual, Inc. ("Washington Mutual"), a publicly owned financial services company. The Trusts are authorized to issue an unlimited number of shares of beneficial interest, each without par value. Each Fund may offer four classes of shares: Class A shares, Class B shares, Class C shares and Class I shares. Class A and Class I shares are not subject to an initial sales charge or, generally, to a contingent deferred sales charge ("CDSC"). Certain Class A shares purchased by exchange from another fund within the Trusts may be subject to a 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 subject to an initial sales charge at the time of purchase and are subject to a CDSC if redeemed within one year from the date of purchase. Class I shares are currently only offered to the WM Strategic Asset Management Portfolios, LLC, an open-end management investment company, and affiliates of Washington Mutual, and are not available for direct purchase by investors. The Tax-Exempt Money Market and California Money Funds are not currently offering Class B, Class C or Class I shares. 2. SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("generally accepted accounting principles") requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. PORTFOLIO VALUATION: Securities are valued on the basis of amortized cost, which approximates market value. Amortized cost valuation involves initially valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium, as long as the amoritized cost fairly reflects the market-based net asset value per share. Certain other assets may be valued by the Advisor under the supervision of the Board of Trustees. REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreement transactions. A repurchase agreement is a purchase of an underlying debt obligation subject to an agreement by the seller to repurchase the obligation at an agreed upon price and time. The value of the collateral is at all times at least equal to the total amount of the repurchase obligation. In the event of counterparty default, the Fund would seek to use the collateral to offset losses incurred. There is potential loss to the Fund in the event the Fund is delayed or prevented from exercising its right to dispose of the collateral securities, including the risk of a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. WM Advisors, acting under the supervision of the Board of Trustees, reviews the value of the collateral and the creditworthiness of those banks and broker-dealers with whom each Fund enters into repurchase agreements. ILLIQUID INVESTMENTS: Each Fund may invest a portion of its net assets in securities that are not readily marketable, including: (1) repurchase agreements with maturities greater than seven calendar days; (2) time deposits maturing in more than seven calendar days; (3) certain futures contracts and options; (4) certain variable rate demand notes having a demand period of more than seven days; and (5) securities, the disposition of which are restricted under Federal securities laws, excluding certain Rule 144A securities, as defined in the following paragraph. Illiquid securities generally cannot be sold or disposed of in the ordinary course of business (within seven days) at approximately the value at which the Funds have valued the investments. This may have an adverse effect on the Fund's ability to dispose of particular illiquid securities at fair market value and may limit the Fund's ability to obtain accurate market quotations for purposes of valuing the securities and calculating the net asset value of shares of the Fund. The Funds may also purchase securities that are not registered under the Securities Act of 1933, as amended (the "Act"), but that can be sold to 18 NOTES to FINANCIAL statements (unaudited) (continued) WM GROUP OF FUNDS qualified institutional buyers in accordance with Rule 144A under the Act ("Rule 144A Securities"). Rule 144A Securities generally may be resold only to other qualified institutional buyers. If a particular investment in Rule 144A Securities is not determined to be liquid under the guidelines established by the Board of Trustees, that investment will be included within a Fund's limitation on investments in illiquid securities. SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis (the date the order to buy or sell is executed). Realized gains and losses from securities sold are recorded on the identified cost basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date; interest income is not accrued until 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. Dividend income is recorded on the ex-dividend date. Each Fund's investment income and realized and unrealized gains and losses are allocated among the classes of that Fund based upon the relative average net assets of each class. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment income of the Funds are declared daily and paid monthly. 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 order to avoid the application of a 4% non-deductible excise tax on certain undistributed amounts of ordinary income and capital gains. 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 timing differences and differing characterizations of distributions made by each Fund. FEDERAL INCOME TAXES: It is each Fund's policy to qualify as a regulated investment company by complying with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and by, among other things, distributing substantially all of its earnings to its shareholders. Therefore, no federal income or excise tax provision is required. EXPENSES: General expenses of the Trusts are allocated to all the Funds 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. 3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS WM Advisors serves as investment advisor to the Funds. The Advisor is entitled to a monthly fee at an annual rate based upon on a percentage of the average daily net assets of each Fund at the following rates:
FEES ON NET ASSETS EXCEEDING FEES ON NET ASSETS $500 MILLION AND FEES ON NET ASSETS UP TO EQUAL TO OR LESS THAN EXCEEDING NAME OF FUND $500 MILLION $1 BILLION $1 BILLION ------------- ------------------ ------------ ----------- Money Market Fund.................. 0.45% 0.45% 0.40% Tax-Exempt Money Market Fund....... 0.45% 0.45% 0.40% California Money Fund.............. 0.45% 0.40% 0.40%
The Advisor has voluntarily waived $19,231 and $22,587 of its advisory fees for the Tax-Exempt Money Market and California Money Funds for the six months ended April 30, 2003, respectively. 19 NOTES to FINANCIAL statements (unaudited) (continued) WM GROUP OF FUNDS 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 $25.01 for Class A, Class B and Class C shareholder accounts. Prior to December 1, 2002, the authorized annual shareholder servicing fee was $21.42 for Class A, Class B and Class C shareholder accounts. Class I shares are not subject to shareholder servicing fees. Custodian fees for certain Funds have been reduced by credits allowed by the custodian for uninvested cash balances. The Funds could have invested this cash in income producing investments. Fees reduced by credits allowed by the custodian for the six months ended April 30, 2003 are shown separately in the Statements of Operations. 4. TRUSTEES' FEES No officer or employee of Washington Mutual or its subsidiaries receives any compensation from the 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 39 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 six months ended April 30, 2003, the Distributor received no commisions (front-end sales charges) on Class C shares and $494,399 representing CDSC fees 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 the 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. The Trustees have not authorized, and the Funds do not currently pay, service fees with respect to Class A shares. In addition, the Distributor is paid a fee as compensation in connection with the offering and sale of Class B and Class C shares at an annual rate of 0.75% of the average daily net assets of each class. These fees may be used to cover the expenses of the Distributor primarily intended to result in the sale of such shares, including payments to the Distributor's representatives or others for selling shares. The service fee is paid by the Fund to the Distributor, which in turn, pays a portion of the service fee to broker/dealers that provide services, such as accepting telephone inquiries and transaction requests and processing correspondences, new account applications and subsequent purchases by check 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 $99,776 and $3,663 of its distribution fees for Class B and Class C shares of the Money Market Fund for the six months ended April 30, 2003, respectively. 6. SHARES OF BENEFICIAL INTEREST OWNED BY AFFILIATES As of April 30, 2003, WM Financial Services, Inc., a wholly-owned subsidiary of Washington Mutual, owns 43,591,274 shares of the Money Market Fund which is approximately 5% of the shares outstanding. 7. GEOGRAPHIC AND INDUSTRY CONCENTRATION RISK FACTORS There are certain risks arising from the concentration of California Money Fund's investments in California municipal securities. The California Money Fund is more susceptible to factors adversely affecting issuers of California municipal securities than a fund that is not concentrated in these issuers to the same extent. Uncertain economic conditions or governmental developments may affect the ability of California municipal securities issuers to meet their financial obligations. 20 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 GroupofFunds P.O. Box 9757 Providence, RI 02940-9757 PRSRT STD U.S. Postage PAID N. READING, MA PERMIT #105 logo: recycled paper Printed on recycled paper WMMMSAR (06/27/03) 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 GroupofFunds P.O. Box 9757 Providence, RI 02940-9757 PRSRT STD U.S. Postage PAID Los Angeles, CA PERMIT #30835 logo: recycled paper Printed on recycled paper WMMMSAR (06/27/03) Item 9. Controls and Procedures: The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report on Form N-CSR, that the design and operation of such procedures are effective to provide reasonable assurance that information required to be disclosed by the registrant in the reports that it files or submits on Form N-CSR is recorded, processed, summarized, and reported within the time periods specified in the Commission's rules and forms. There have been no significant changes in the registrant's internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WM Trust I and Trust II By: /s/William G. Papesh President June 30, 2003 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 I and Trust II /s/John T. West Chief Financial Officer June 30, 2003 /s/William G. Papesh President June 30, 2003 EX-99.CERT 3 file002.txt CERTIFICATIONS CERTIFICATIONS -------------- I, William G. Papesh, certify that: 1. I have reviewed this report on Form N-CSR of WM Trust I and Trust II; 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 information included in this report, and the financial statements on which the financial information is based, 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 30, 2003 /s/William G. Papesh President and Chief Executive Officer CERTIFICATIONS -------------- I, John T. West, certify that: 1. I have reviewed this report on Form N-CSR of WM Trust I and Trust II; 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 information included in this report, and the financial statements on which the financial information is based, 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures 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 as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 30, 2003 /s/John T. West Chief Financial Officer I, William G. Papesh, principal financial officer of the WM Trust I and Trust II Funds (the "Funds"), certify that: 1. The Form N-CSR of the Funds for the period ended April 30, 2003 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 Funds for the period ended April 30, 2003 fairly presents, in all material respects, the financial condition and results of operations of the Funds. Date: June 30, 2003 /s/ William G. Papesh ----------------- William G. Papesh President and Chief Executive Officer Principal Financial Officer I, John T. West, principal financial officer of the WM Trust I and Trust II Funds (the "Funds"), certify that: 1. The Form N-CSR of the Funds for the period ended April 30, 2003 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 Funds for the period ended April 30, 2003 fairly presents, in all material respects, the financial condition and results of operations of the Funds. Date: June 30, 2003 /s/ John T. West - ---------------- John T. West Chief Financial Officer Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----