WM TRUST I, 497, 1998-12-30

WM TRUST I
497, 1998-12-30

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<PAGE>

THE GRIFFIN FUNDS, INC.

MONEY MARKET FUND
TAX-FREE MONEY MARKET FUND
SHORT-TERM BOND FUND
U.S. GOVERNMENT INCOME FUND
MUNICIPAL BOND FUND
CALIFORNIA TAX-FREE FUND
BOND FUND
GROWTH & INCOME FUND
GROWTH FUND

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

FEBRUARY 26, 1999

To the Shareholders:

Notice is hereby given that a Special Meeting of Shareholders of the Money
Market Fund (the "Griffin Money Market Fund"), the Tax-Free Money Market Fund
(the "Griffin Tax-Free Money Market Fund"), the Short-Term Bond Fund (the
"Griffin Short-Term Bond Fund"), the U.S. Government Income Fund (the "Griffin
U.S. Government Income Fund"), the Municipal Bond Fund (the "Griffin Municipal
Bond Fund"), the California Tax-Free Fund (the "Griffin California Fund"), the
Bond Fund (the "Griffin Bond Fund"), the Growth & Income Fund (the "Griffin
Growth & Income Fund") and the Growth Fund (the "Griffin Growth Fund"), each a
series of The Griffin Funds, Inc., will be held on February 26, 1999 at 10:00
a.m., Pacific Time, at the offices of Griffin Financial Investment Advisers,
5000 Rivergrade Road, Irwindale, California 91706, to consider the following:

1. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin Money Market Fund to the
Money Market Fund series of WM Trust I (the "WM Money Market Fund") in ex-
change for shares of the WM Money Market Fund and the assumption by the WM
Money Market Fund of all of the liabilities of the Griffin Money Market Fund,
and the distribution of such shares to the shareholders of the Griffin Money
Market Fund in complete liquidation of the Griffin Money Market Fund. (TO BE
VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN MONEY MARKET FUND ONLY.)

2. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin Tax-Free Money Market Fund to
the Tax-Exempt Money Market Fund series of WM Trust I (the "WM Tax-Exempt
Money Market Fund") in exchange for shares of the WM Tax-Exempt Money Market
Fund and the assumption by the WM Tax-Exempt Money Market Fund of all of the
liabilities of the Griffin Tax-Free Money Market Fund, and the distribution of
such shares to the shareholders of the Griffin Tax-Free Money Market Fund in
complete liquidation of the Griffin Tax-Free Money Market Fund. (TO BE VOTED
UPON BY THE SHAREHOLDERS OF THE GRIFFIN TAX-FREE MONEY MARKET FUND ONLY.)

3. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin Short-Term Bond Fund to the
Short Term High Quality Bond Fund series of WM Trust II (the "WM Short Term
Fund") in exchange for shares of the WM Short Term Fund and the assumption by
the WM Short Term Fund of all of the liabilities of the Griffin Short-Term
Bond Fund, and the distribution of such shares to the shareholders of the
Griffin Short-Term Bond Fund in complete liquidation of the Griffin Short-Term
Bond Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN SHORT-TERM
BOND FUND ONLY.)

4. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin U.S. Government Income Fund
to the U.S. Government Securities Fund series of WM Trust I (the "WM U.S. Gov-
ernment Fund") in exchange for shares of the WM U.S. Government Fund and the
assumption by the WM U.S. Government Fund of all of the liabilities of the
Griffin U.S. Government Income Fund, and the

1
<PAGE>

distribution of such shares to the shareholders of the Griffin U.S. Government
Income Fund in complete liquidation of the Griffin U.S. Government Income
Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN U.S. GOVERNMENT IN-
COME FUND ONLY.)

5. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin Municipal Bond Fund to the
Tax-Exempt Bond Fund series of WM Trust I (the "WM Tax-Exempt Bond Fund") in
exchange for shares of the WM Tax-Exempt Bond Fund and the assumption by the
WM Tax-Exempt Bond Fund of all of the liabilities of the Griffin Municipal
Bond Fund, and the distribution of such shares to the shareholders of the
Griffin Municipal Bond Fund in complete liquidation of the Griffin Municipal
Bond Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN MUNICIPAL BOND
FUND ONLY.)

6. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin California Fund to the Cali-
fornia Municipal Fund series of WM Trust II (the "WM California Fund") in ex-
change for shares of the WM California Fund and the assumption by the WM Cali-
fornia Fund of all of the liabilities of the Griffin California Fund, and the
distribution of such shares to the shareholders of the Griffin California Fund
in complete liquidation of the Griffin California Fund. (TO BE VOTED UPON BY
THE SHAREHOLDERS OF THE GRIFFIN CALIFORNIA FUND ONLY.)

7. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin Bond Fund to the Income Fund
series of WM Trust I (the "WM Income Fund") in exchange for shares of the WM
Income Fund and the assumption by the WM Income Fund of all of the liabilities
of the Griffin Bond Fund, and the distribution of such shares to the share-
holders of the Griffin Bond Fund in complete liquidation of the Griffin Bond
Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN BOND FUND ONLY.)

8. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin Growth & Income Fund to the
Growth & Income Fund series of WM Trust I (the "WM Growth & Income Fund") in
exchange for shares of the WM Growth & Income Fund and the assumption by the
WM Growth & Income Fund of all of the liabilities of the Griffin Growth & In-
come Fund, and the distribution of such shares to the shareholders of the
Griffin Growth & Income Fund in complete liquidation of the Griffin Growth &
Income Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN GROWTH & IN-
COME FUND ONLY.)

9. To approve an Agreement and Plan of Reorganization, which contemplates the
liquidation and dissolution of The Griffin Funds, Inc., and which provides for
the transfer of all of the assets of the Griffin Growth Fund to the Growth
Fund series of WM Trust II (the "WM Growth Fund") in exchange for shares of
the WM Growth Fund and the assumption by the WM Growth Fund of all of the lia-
bilities of the Griffin Growth Fund, and the distribution of such shares to
the shareholders of the Griffin Growth Fund in complete liquidation of the
Griffin Growth Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN
GROWTH FUND ONLY.)

10. To transact such other business as may properly come before the meeting.

The Directors have fixed the close of business on December 15, 1998 as the
record date for determination of shareholders entitled to notice of, and to
vote at, the Special Meeting.

By order of the Board of Directors,

/s/ Julia D. Whitcup

JULIA D. WHITCUP, SENIOR VICE
PRESIDENT
December 26, 1998

WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE POST-
AGE-PAID ENVELOPE PROVIDED SO THAT YOU WILL BE REPRESENTED AT THE SPECIAL
MEETING.

2
<PAGE>

PROSPECTUS/PROXY STATEMENT

December 26, 1998

<TABLE>
<CAPTION>
ACQUISITION OF THE ASSETS OF: BY AND IN EXCHANGE FOR SHARES OF:
- ----------------------------- -----------------------------------
<S> <C>
Money Market Fund........................... Money Market Fund*
Tax-Free Money Market Fund.................. Tax-Exempt Money Market Fund*
Short-Term Bond Fund........................ Short Term High Quality Bond Fund**
U.S. Government Income Fund................. U.S. Government Securities Fund*
Municipal Bond Fund......................... Tax-Exempt Bond Fund*
California Tax-Free Fund.................... California Municipal Fund**
Bond Fund................................... Income Fund*
Growth & Income Fund........................ Growth & Income Fund*
Growth Fund................................. Growth Fund**
each a series of each a series of
The Griffin Funds, Inc. *WM Trust I
5000 Rivergrade Road **WM Trust II
Irwindale, California 91706 Suite 1400
1-800-676-4450 1201 Third Avenue
Seattle, Washington 98101
1-800-222-5852
</TABLE>

This Prospectus/Proxy Statement relates to the proposed mergers (the "Merg-
ers") of the Money Market Fund (the "Griffin Money Market Fund"), the Tax-Free
Money Market Fund (the "Griffin Tax-Free Money Market Fund"), the Short-Term
Bond Fund (the "Griffin Short-Term Bond Fund"), the U.S. Government Income
Fund (the "Griffin U.S. Government Income Fund"), the Municipal Bond Fund (the
"Griffin Municipal Bond Fund"), the California Tax-Free Fund (the "Griffin
California Fund"), the Bond Fund (the "Griffin Bond Fund"), the Growth & In-
come Fund (the "Griffin Growth & Income Fund") and the Growth Fund (the "Grif-
fin Growth Fund") (each an "Acquired Fund"), each a series of The Griffin
Funds, Inc. ("Griffin"), into, respectively, the Money Market Fund (the "WM
Money Market Fund"), the Tax-Exempt Money Market Fund (the "WM Tax-Exempt
Money Market Fund"), the Short Term High Quality Bond Fund (the "WM Short Term
Fund"), the U.S. Government Securities Fund (the "WM U.S. Government Fund"),
the Tax-Exempt Bond Fund (the "WM Tax-Exempt Bond Fund"), the California Mu-
nicipal Fund (the "WM California Fund"), the Income Fund (the "WM Income
Fund"), the Growth & Income Fund (the "WM Growth & Income Fund") and the
Growth Fund (the "WM Growth Fund") (each an "Acquiring Fund"), each a series
of WM Trust I or WM Trust II, as indicated above. The Acquired Funds and the
Acquiring Funds are sometimes referred to in this Prospectus/Proxy Statement
as the "Funds." The Mergers are to be effected through the transfer of all of
the assets of each Acquired Fund to the corresponding Acquiring Fund in ex-
change for shares of beneficial interest of the corresponding Acquiring Fund
(the "Merger Shares") and the assumption by such Acquiring Fund of all of the
liabilities of the Acquired Fund, followed by the distribution of the Merger
Shares to the shareholders of the Acquired Fund in liquidation of the Acquired
Fund. As a result of each proposed transaction, each shareholder of the Ac-
quired Fund will receive in exchange for his or her Acquired Fund shares a
number of Acquiring Fund shares of the same class equal in value at the date
of the exchange to the aggregate value of the shareholder's Acquired Fund
shares of the same class.

Because shareholders of the Acquired Funds are being asked to approve trans-
actions that will result in their receiving shares of the Acquiring Funds,
this Proxy Statement also serves as a Prospectus for the Merger Shares of each
Acquiring Fund. The investment objective of each Acquiring Fund is as follows:

1. WM MONEY MARKET FUND seeks to provide maximum current income, while pre-
serving capital and maintaining liquidity. Investments are in high-quality
money market instruments.

2. WM TAX-EXEMPT MONEY MARKET FUND seeks to provide maximum current income
that is exempt

3
<PAGE>

from federal tax, while preserving capital and maintaining liquidity. Its
primary investments are high-quality, short-term municipal obligations.

3. WM SHORT TERM FUND seeks to provide as high a level of current income as
is consistent with prudent investment management and stability of principal.
The Fund invests at least 65% of its total assets in investment-grade short-
term bonds and other fixed-income securities.

4. WM U.S. GOVERNMENT FUND seeks to provide a high level of current income,
consistent with safety and liquidity. The Fund invests primarily in U.S. Gov-
ernment securities, including mortgage-backed securities.

5. WM TAX-EXEMPT BOND FUND seeks to provide a high level of income that is
exempt from federal taxes and to protect investors' capital. It invests in
bonds issued by states, counties, cities and other governmental bodies whose
bonds generate income exempt from federal tax. It is expected that Van Kampen
Management Inc. ("Van Kampen") will serve as subadviser to this Fund, effec-
tive January 1, 1999.

6. WM CALIFORNIA FUND seeks to provide investors with as high a level of
current income exempt from federal and California State income tax as is con-
sistent with prudent investment management preservation of capital. The Fund
invests at least 80% of its total assets in intermediate and long-term Cali-
fornia municipal obligations. Van Kampen serves as subadviser to this fund.

7. WM INCOME FUND seeks to provide a high level of current income that is
consistent with protection of shareholders' capital. It pursues this objec-
tive through investment in a diversified pool of debt securities.

8. WM GROWTH & INCOME FUND, established in 1949, seeks long-term capital
growth, with current income as a secondary consideration. The Fund invests
primarily in common stocks. The Fund may also invest in fixed-income obliga-
tions and other securities.

9. WM GROWTH FUND seeks long-term capital appreciation. The Fund invests
primarily in common stocks that offer potential for growth. Janus Capital
Corporation ("Janus") serves as subadviser to this Fund.

Each of WM Trust I and WM Trust II is an open-end series management invest-
ment company organized as a Massachusetts business trust.

This Prospectus/Proxy Statement explains concisely what you should know be-
fore investing in each Acquiring Fund. Please read it carefully and keep it
for future reference.

The following documents have been filed with the Securities and Exchange
Commission (the "SEC") and are incorporated into this Prospectus/Proxy
Statement by reference: (i) the current Prospectus, dated December 23, 1998,
of the Acquired Funds (the "Griffin Prospectus"); (ii) the current Prospectus,
dated November 1, 1998, of the Acquiring Funds (the "WM Prospectus"); (iii)
the current Statement of Additional Information of the Acquired Funds, dated
December 23, 1998 (the "Griffin SAI"); (iv) the Report of Independent Auditors
and financial statements in respect of each Acquired Fund included in the
Acquired Funds' Annual Report to Shareholders for the year ended September 30,
1998 (the "Griffin Annual Reports"); and (v) a Statement of Additional
Information, dated December 26, 1998, relating to the transactions described
in this Prospectus/Proxy Statement (the "Merger SAI").

This Prospectus/Proxy Statement is accompanied by a copy of the WM Prospec-
tus. For a free copy of the current Statement of Additional Information of the
Acquiring Funds, dated November 1, 1998 (the "WM SAI"), the Acquiring Funds'
Annual Reports to Shareholders for the period ended October 31, 1998 (the "WM
Annual Reports"), or the Merger SAI please call 1-800-222-5852 or write to the
WM Group of Funds at:

WM Group of Funds
P. O. Box 5118
Westborough, MA 01581-5118

THE SECURITIES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT HAVE NOT BEEN AP-
PROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. SHARES OF
THE ACQUIRING FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR EN-
DORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND IN-
VOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

4
<PAGE>

- -------------------------------------------------------------------------------
OVERVIEW OF MERGERS

PROPOSED TRANSACTIONS

WM Advisors, Inc. ("WM Advisors"), which has been in the business of invest-
ment management since 1944, is a direct subsidiary of Washington Mutual, Inc.
("Washington Mutual"), a financial services company. Griffin Financial Invest-
ment Advisers ("Griffin Advisers") became an indirect subsidiary of Washington
Mutual as a result of the merger on September 30, 1998 of Griffin Advisers'
former indirect parent, H.F. Ahmanson & Company, with and into a wholly-owned
subsidiary of Washington Mutual (the "Washington Mutual/Ahmanson Merger").

The Trustees of each Acquiring Fund have approved transactions involving, for
each Acquiring Fund, the Merger of the corresponding Acquired Fund into the
Acquiring Fund. Each Merger is proposed to be accomplished pursuant to an
Agreement and Plan of Reorganization providing for the transfer of all of the
assets of the Acquired Fund to the Acquiring Fund in exchange for the assump-
tion by the Acquiring Fund of all of the liabilities of the Acquired Fund and
for shares of the Acquiring Fund, followed by the liquidation of the Acquired
Fund.

WM Advisors is the investment adviser to each Acquiring Fund, although WM Ad-
visors has delegated responsibility for managing the portfolios of the WM Cal-
ifornia Fund and the WM Growth Fund to Van Kampen and Janus, respectively. In
addition, it is expected that WM Advisors will delegate responsibility for
managing the portfolio of the WM Tax-Exempt Bond Fund to Van Kampen, effective
January 1, 1999. Griffin Advisers is the investment adviser to each Acquired
Fund, but investment subadvisers have day-to-day responsibility for selecting
investments for each Acquired Fund's portfolio. These subadvisers are Payden &
Rygel Investment Counsel ("Payden & Rygel") in the case of the Griffin Money
Market Fund, the Griffin Tax-Free Money Market Fund, the Griffin U.S. Govern-
ment Income Fund, the Griffin Municipal Bond Fund and the Griffin California
Fund, T. Rowe Price Associates, Inc. ("T. Rowe Price") in the case of the
Griffin Short-Term Bond Fund and the Griffin Growth Fund, and The Boston Com-
pany Asset Management, Inc. ("TBCAM") in the case of the Griffin Bond Fund and
the Griffin Growth & Income Fund. If shareholders of an Acquired Fund approve
its Merger, such approval will effectively change the party responsible for
managing the assets of the Acquired Fund. However, each Acquiring Fund has an
investment objective similar to that of its corresponding Acquired Fund. These
objectives and certain differences in investment policies are explained fur-
ther below under "Comparison of Investment Objectives, Policies and Restric-
tions."

As a result of each proposed Merger, each Acquired Fund will receive a number
of Class A and Class B shares of the corresponding Acquiring Fund equal in
value to the aggregate value of the net assets of the Acquired Fund being
transferred and attributable to the Class A and Class B shares of the Acquired
Fund, respectively. Following the transfer, (i) the Acquired Fund will dis-
tribute to each of its Class A and Class B shareholders a number of full and
fractional Class A and Class B Merger Shares of the relevant Acquiring Fund
equal in value to the aggregate value of the shareholder's Class A and/or
Class B Acquired Fund shares, as the case may be, and (ii) the Acquired Fund
will be liquidated.

As noted above, the Agreements and Plans of Reorganization also contemplate
the liquidation and dissolution of Griffin in the event all of the Mergers are
consummated, so a vote for or against the approval of such Agreements also in-
cludes a vote for or against the liquidation and dissolution of Griffin.

The Class A and Class B shares of each Acquiring Fund have substantially sim-
ilar characteristics to the corresponding classes of the respective Acquired
Fund. Acquiring Fund Class A shares are generally sold subject to a front-end
sales load and are subject to a servicing fee at an annual rate of 0.25% of
assets attributable to Class A shares. Class A shares are generally not sub-
ject to a contingent deferred sales charge (a "CDSC"), except in the case of
certain purchases of Class A shares without a sales load which are redeemed
within two years after purchase. Acquiring Fund Class B shares are sold at net
asset value, without an initial sales charge but subject to a CDSC at declin-
ing rates if redeemed within six years of purchase. Class B shares are subject
to servicing and distribution fees at an aggregate annual rate of 1.00% of as-
sets attributable to Class B shares and generally convert automatically to
Class A shares approximately eight years after purchase. For purposes of de-
termining the conversion date of Class B Merger Shares to Class A shares, the
Merger Shares will be treated as having been purchased as of the date two

5
<PAGE>

years prior to the date that the Acquired Fund shares exchanged for such
Merger Shares were originally purchased (so that, in effect, the conversion
feature currently enjoyed by Griffin Fund shareholders will be "grand-
fathered"). No sales charge will be charged to Acquired Fund shareholders on
the issuance of the Merger Shares, and no CDSC will be charged by the Acquired
Funds on Acquired Fund shares exchanged for Merger Shares. The Merger Shares
will be subject to a CDSC on redemption to the same extent that the Acquired
Fund shares exchanged were so subject. For purposes of computing the CDSC, if
any, payable on redemption of Class A and Class B Merger Shares, the Merger
Shares will be treated as having been purchased as of the date that, and for
the price (adjusted to reflect the Merger) at which, the Acquired Fund shares
exchanged for such Merger Shares were originally purchased.

As described more fully below, the Directors of the Acquired Funds have ap-
proved the Mergers. For more information about the factors considered by the
Directors, including a discussion of a possible personal interest of one of
the Directors in the Mergers, see "Proposals--Background and Reasons for the
Proposed Mergers."

OPERATING EXPENSES

As the following tables suggest, the Mergers should result in Griffin share-
holders (other than shareholders of the Growth Fund) experiencing lower Fund
expenses than those that are expected to become effective on April 1, 1999
with the reduction in or elimination of fee waivers and expense reimbursements
currently in effect. See "Proposals--Background and Reasons for the Proposed
Mergers." Of course, there can be no assurance that the Mergers will result in
expense savings for shareholders. These tables summarize, for Class A shares
and, for each Fund other than the money market funds, Class B shares, expenses
(i) that each Acquired Fund incurred in its fiscal year ended September 30,
1998, restated to reflect the reduction in or elimination of fee waivers and
expense reimbursements expected to become effective on April 1, 1999, (ii)
that each Acquiring Fund incurred in its fiscal year ended October 31, 1998,
restated to reflect fees, expenses, fee waivers and expense reimbursements in
effect through at least October 31, 1999;* and (iii) that each Acquiring Fund
would have incurred in such fiscal year after giving effect on a pro forma
combined basis to the proposed Merger, as if the Merger had occurred as of the
beginning of such fiscal year (assuming the fees, expenses, fee waivers and
expense reimbursements in effect for the Acquiring Funds had been in place
since the beginning of such fiscal year). The tables are provided to help you
understand an investor's share of the operating expenses which each Fund in-
curs. The examples show the estimated cumulative expenses attributable to a
hypothetical $1,000 investment in each Acquired Fund, each Acquiring Fund and
each Acquiring Fund on a pro forma basis, over specified periods. The examples
should not be considered a representation of past or future expenses, and ac-
tual expenses may differ from those shown.

* WM Advisors has committed to limit, through waivers and/or reimbursements
of fees and expenses, the pro forma Class A total fund operating expenses
of the Acquiring Funds to the following rates through November 1, 2000 (ex-
cept that beginning on November 1, 1999, the waivers and reimbursements for
the WM Tax- Exempt Money Market Fund and the WM Short Term Fund may be ad-
justed, so long as total fund operating expenses as a percentage of assets
do not exceed the annual rate of 0.72% and 1.00%, respectively): WM Money
Market Fund--0.73%; WM Tax-Exempt Money Market Fund--0.57%; WM Short Term
Fund--0.82%; WM U.S. Government Fund--0.96%; WM Tax- Exempt Bond Fund--
0.88%; WM California Fund--0.88%; WM Income Fund--1.04%; WM Growth & Income
Fund--1.00%; and WM Growth Fund--1.30%.

6
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN MONEY MARKET WM MONEY MARKET WM MONEY MARKET
FUND FUND FUND
-------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- ---------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase
(as a percentage of
offering price at the
time of purchase)
Class A................ None None None
- ---------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None None None
- ---------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- ---------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.23% 0.45% 0.45%
- ---------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.20% 0.00%(2) 0.00%(2)
- ---------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.32% 0.22% 0.22%
- ---------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursement)
Class A................ 0.75%(1) 0.67% 0.67%
- ---------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.45% 0.45%
- ---------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.02% 0.67% 0.67%
- ---------------------------------------------------------------------------------
</TABLE>

(1) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Total Fund Operating Expenses for the Griffin
Money Market Fund for the year ended September 30, 1998 were 0.71%.

(2) The applicable Rule 12b-1 plan provides for payments of up to 0.25%. How-
ever, the Board of Trustees of WM Trust I has not currently authorized
any such payments under such plan.

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN MONEY MARKET WM MONEY MARKET WM MONEY MARKET
FUND FUND FUND
-------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A
1 year............... $ 8 $ 7 $ 7
3 years.............. $ 24 $ 21 $ 21
5 years.............. $ 42 $ 37 $ 37
10 years............. $ 93 $ 82 $ 82
- -------------------------------------------------------------------------------
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN TAX-FREE WM TAX-EXEMPT WM TAX-EXEMPT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
----------------- ----------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- --------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ None None None
- --------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None None None
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- --------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.18% 0.30% 0.30%
- --------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.20% 0.00%(2) 0.00%(2)
- --------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.34% 0.27% 0.27%
- --------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................ 0.72%(1) 0.57% 0.57%
- --------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.45% 0.45%
- --------------------------------------------------------------------------------
Other Expenses without
voluntary
reimbursements:
Class A................ 0.56% 0.27% 0.27%
- --------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.26% 0.72% 0.72%
- --------------------------------------------------------------------------------
</TABLE>

(1) Pursuant to a voluntary fee waiver and expense reimbursements presently in
effect but expected to be reduced on April 1, 1999, Total Fund Operating
Expenses for the Griffin Tax-Free Money Market Fund for the year ended
September 30, 1998 were 0.81%.

(2) The applicable Rule 12b-1 plan provides for payments of up to 0.25%. How-
ever, the Board of Trustees of WM Trust I has not currently authorized any
such payments under such plan.

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN TAX- CURRENT EXPENSES WM TAX-
FREE MONEY WM TAX-EXEMPT EXEMPT MONEY
MARKET FUND MONEY MARKET FUND MARKET FUND
---------------- ----------------- ------------------
<S> <C> <C> <C>
Class A
1 year................... $ 7 $ 6 $ 6
3 years.................. $23 $18 $18
5 years.................. $40 $32 $32
10 years................. $89 $71 $71
- --------------------------------------------------------------------------------
</TABLE>

8
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES
GRIFFIN SHORT- WM SHORT TERM PRO FORMA EXPENSES
TERM BOND FUND FUND WM SHORT TERM FUND
---------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- -------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of offering
price at the time of
purchase)
Class A................. 3.50% 3.50% 3.50%
Class B................. None None None
- -------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................. None(1) None(1) None(1)
Class B................. 4.00%(2) 4.00%(2) 4.00%(2)
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- -------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................. 0.31% 0.00% 0.00%
Class B................. 0.31% 0.00% 0.00%
- -------------------------------------------------------------------------------
12b-1 Fees
Class A................. 0.25% 0.25% 0.25%
Class B(4).............. 1.00% 1.00% 1.00%
- -------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................. 0.44% 0.57% 0.57%
Class B................. 0.44% 0.68% 0.68%
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................. 1.00%(3) 0.82% 0.82%
Class B................. 1.75%(3) 1.68% 1.68%
- -------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................. 0.50% 0.50% 0.50%
Class B................. 0.50% 0.50% 0.50%
- -------------------------------------------------------------------------------
Other Expenses without
voluntary
reimbursements:
Class A................. 0.44% 0.65% 0.65%
Class B................. 0.44% 0.68% 0.68%
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT WAIVERS
AND REIMBURSEMENTS:
Class A................. 1.19% 1.40% 1.40%
Class B................. 2.05% 2.18% 2.18%
- -------------------------------------------------------------------------------
</TABLE>

(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Short Term Fund, .50% on re-
demptions of these shares during the second year after purchase.

(2) The maximum CDSC is imposed on shares redeemed in the first year. For
shares held longer than one year, the CDSC declines according to the
schedules set forth in the Griffin Prospectus and the WM Prospectus.

(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Total Fund Operating Expenses for the Griffin
Short-Term Bond Fund for the year ended September 30, 1998 were 0.60% for
Class A shares, and 1.35% for Class B shares.

(4) Because of the ongoing nature of 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the maximum front-end sales
charge allowed by the National Association of Securities Dealers, Inc.

9
<PAGE>

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES
GRIFFIN SHORT- WM SHORT TERM PRO FORMA EXPENSES
TERM BOND FUND FUND WM SHORT TERM FUND
---------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year.................. $ 45 $ 43 $ 43
3 years................. $ 66 $ 61 $ 61
5 years................. $ 89 $ 80 $ 80
10 years................ $153 $134 $134
- ------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year.................. $ 58 $ 57 $ 57
3 years................. $ 75 $ 73 $ 73
5 years................. $ 95 $ 92 $ 92
10 years................ $167(3) $172(4) $152(3)
- ------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year.................. $ 18 $ 17 $ 17
3 years................. $ 55 $ 53 $ 53
5 years................. $ 95 $ 92 $ 92
10 years................ $167(3) $172(4) $152(3)
- ------------------------------------------------------------------------------
</TABLE>

(1)Assumes deduction at time of purchase of the maximum initial sales charge.

(2)Assumes deduction of the maximum CDSC.

(3)Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.

(4)Assumes conversion to Class A shares after eight years; therefore, reflects
Class A expenses in years nine and ten.

(5)Assumes no deduction of CDSC.

10
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN U.S. GOVERNMENT WM U.S. WM U.S. GOVERNMENT
INCOME FUND GOVERNMENT FUND FUND
----------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- -------------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 4.50% 4.50%
Class B................ None None None
- -------------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- -------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- -------------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.35% 0.50% 0.50%
Class B................ 0.35% 0.50% 0.50%
- -------------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- -------------------------------------------------------------------------------------
Other Expenses
Class A................ 0.40% 0.13% 0.13%
Class B................ 0.40% 0.15% 0.15%
- -------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursement)
Class A................ 1.00%(3) 0.88% 0.88%
Class B................ 1.75%(3) 1.65% 1.65%
- -------------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.50% 0.50%
Class B................ 0.50% 0.50% 0.50%
- -------------------------------------------------------------------------------------
Other Expenses without
voluntary
reimbursements:
Class A................ 0.40% 0.13% 0.13%
Class B................ 1.44% 0.15% 0.15%
- -------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.15% 0.88% 0.88%
Class B................ 2.94% 1.65% 1.65%
- -------------------------------------------------------------------------------------
</TABLE>

(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Government Fund, .50% on re-
demptions of these shares during the second year after purchase.

(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Total Fund Operating Expenses for the Griffin
U.S. Government Income Fund for the year ended September 30, 1998 were
0.70% for Class A shares, and 1.45% for Class B shares.

11
<PAGE>

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN U.S. GOVERNMENT WM U.S. WM U.S. GOVERNMENT
INCOME FUND GOVERNMENT FUND FUND
----------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 55 $ 54 $ 54
3 years................ $ 75 $ 72 $ 72
5 years................ $ 98 $ 92 $ 92
10 years............... $162 $149 $149
- ------------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 68 $ 67 $ 67
3 years................ $ 85 $ 82 $ 82
5 years................ $115 $100 $100
10 years............... $168(3) $175(4) $155(3)
- ------------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 18 $ 17 $ 17
3 years................ $ 55 $ 52 $ 52
5 years................ $ 95 $ 90 $ 90
10 years............... $168(3) $175(4) $155(3)
- ------------------------------------------------------------------------------------
</TABLE>

(1) Assumes deduction at time of purchase of the maximum initial sales charge.

(2) Assumes deduction of the maximum CDSC.

(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.

(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.

(5) Assumes no deduction of CDSC.

12
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN MUNICIPAL BOND WM TAX-EXEMPT WM TAX-EXEMPT
FUND BOND FUND BOND FUND
---------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- ------------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 4.50% 4.50%
Class B................ None None None
- ------------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- ------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- ------------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.00% 0.50% 0.50%
Class B................ 0.00% 0.50% 0.50%
- ------------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- ------------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.69% 0.09% 0.09%
Class B................ 0.69% 0.12% 0.12%
- ------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES
(after voluntary
waivers or
reimbursements)
Class A................ 0.94%(3) 0.84% 0.84%
Class B................ 1.69%(3) 1.62% 1.62%
- ------------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.50% 0.50%
Class B................ 0.50% 0.50% 0.50%
- ------------------------------------------------------------------------------------
Other Expenses without
voluntary
reimbursements:
Class A................ 0.76% 0.09% 0.09%
Class B................ 0.76% 0.12% 0.12%
- ------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.51% 0.84% 0.84%
Class B................ 2.26% 1.62% 1.62%
- ------------------------------------------------------------------------------------
</TABLE>

(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Tax-Exempt Fund, .50% on re-
demptions of these shares during the second year after purchase.

(3) Pursuant to a voluntary fee waiver and expense reimbursement presently in
effect but expected to be reduced on April 1, 1999, Total Fund Operating
Expenses for the Griffin Municipal Bond Fund for the year ended September
30, 1998 were 0.68% for Class A shares, and 1.43% for Class B shares.

13
<PAGE>

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN MUNICIPAL BOND WM TAX-EXEMPT WM TAX-EXEMPT
FUND BOND FUND BOND FUND
---------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 54 $ 53 $ 53
3 years................ $ 74 $ 71 $ 71
5 years................ $ 95 $ 90 $ 90
10 years............... $155 $144 $144
- -----------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 67 $ 66 $ 66
3 years................ $ 83 $ 81 $ 81
5 years................ $102 $ 99 $ 99
10 years............... $161(3) $171(4) $152(3)
- -----------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 17 $ 16 $ 16
3 years................ $ 53 $ 51 $ 51
5 years................ $ 92 $ 89 $ 89
10 years............... $161(3) $171(4) $152(3)
- -----------------------------------------------------------------------------------
</TABLE>

(1) Assumes deduction at time of purchase of the maximum initial sales charge.

(2) Assumes deduction of the maximum CDSC.

(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.

(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.

(5) Assumes no deduction of CDSC.

14
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN CALIFORNIA FUND WM CALIFORNIA FUND WM CALIFORNIA FUND
----------------------- ------------------ ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- ---------------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 4.50% 4.50%
Class B................ None None None
- ---------------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- ---------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- ---------------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.22% 0.50% 0.50%
Class B................ 0.22% 0.50% 0.50%
- ---------------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- ---------------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.44% 0.10% 0.10%
Class B................ 0.44% 0.11% 0.11%
- ---------------------------------------------------------------------------------------
TOTAL FUND OPERATING EX-
PENSES
(after voluntary waiv-
ers or reimbursements)
Class A................ 0.91%(3) 0.85% 0.85%
Class B................ 1.66%(3) 1.61% 1.61%
- ---------------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.50% 0.50%
Class B................ 0.50% 0.50% 0.50%
- ---------------------------------------------------------------------------------------
Other Expenses without
voluntary waivers:
Class A................ 0.44% 0.10% 0.10%
Class B................ 1.44% 0.11% 0.11%
- ---------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.19% 0.85% 0.85%
Class B................ 2.94% 1.61% 1.61%
- ---------------------------------------------------------------------------------------
</TABLE>

(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM California Fund, .50% on re-
demptions of these shares during the second year after purchase.

(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Total Fund Operating Expenses for the Griffin
California Fund for the year ended September 30, 1998 were 0.61% for Class
A shares, and 1.36% for Class B shares.

15
<PAGE>

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN CALIFORNIA FUND WM CALIFORNIA FUND WM CALIFORNIA FUND
----------------------- ------------------ ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 54 $ 53 $ 53
3 years................ $ 73 $ 71 $ 71
5 years................ $ 93 $ 90 $ 90
10 years............... $152 $145 $145
- --------------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 67 $ 66 $ 66
3 years................ $ 82 $ 81 $ 81
5 years................ $101 $ 98 $ 98
10 years............... $157(3) $171(4) $152(3)
- --------------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 17 $ 16 $ 16
3 years................ $ 52 $ 51 $ 51
5 years................ $ 91 $ 88 $ 88
10 years............... $157(3) $171(4) $152(3)
- --------------------------------------------------------------------------------------
</TABLE>

(1) Assumes deduction at time of purchase of the maximum initial sales charge.

(2) Assumes deduction of the maximum CDSC.

(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.

(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.

(5) Assumes no deduction of CDSC.

16
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN BOND FUND WM INCOME FUND WM INCOME FUND
----------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- -------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 4.50% 4.50%
Class B................ None None None
- -------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- -------------------------------------------------------------------------------
Management Fees (after
voluntary waivers or
reimbursement)
Class A................ 0.36% 0.50% 0.50%
Class B................ 0.36% 0.50% 0.50%
- -------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- -------------------------------------------------------------------------------
Other Expenses
Class A................ 0.45% 0.19% 0.19%
Class B................ 0.45% 0.21% 0.21%
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................ 1.06%(3) 0.94% 0.94%
Class B................ 1.81%(3) 1.71% 1.71%
- -------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.50% 0.50%
Class B................ 0.50% 0.50% 0.50%
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.20% 0.94% 0.94%
Class B................ 1.95% 1.71% 1.71%
- -------------------------------------------------------------------------------
</TABLE>

(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Income Fund, .50% on redemp-
tions of these shares during the second year after purchase.

(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Total Fund Operating Expenses for the Griffin
Bond Fund for the year ended September 30, 1998 were 0.63% for Class A
shares, and 1.38% for Class B shares.

17
<PAGE>

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN BOND FUND WM INCOME FUND WM INCOME FUND
----------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 55 $ 54 $ 54
3 years................ $ 77 $ 74 $ 74
5 years................ $101 $195 $195
10 years............... $169 $155 $155
- ------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 68 $ 67 $ 67
3 years................ $ 87 $ 84 $ 84
5 years................ $109 $103 $103
10 years............... $174(3) $181(4) $162(3)
- ------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 18 $ 17 $ 17
3 years................ $ 57 $ 54 $ 54
5 years................ $ 99 $ 93 $ 93
10 years............... $174(3) $181(4) $162(3)
- ------------------------------------------------------------------------------
</TABLE>

(1) Assumes deduction at time of purchase of the maximum initial sales charge.

(2) Assumes deduction of the maximum CDSC.

(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.

(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.

(5) Assumes no deduction of CDSC.

18
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN GROWTH & INCOME WM GROWTH & WM GROWTH &
FUND INCOME FUND INCOME FUND
----------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- -------------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 5.50% 5.50%
Class B................ None None None
- -------------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- -------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- -------------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.44% 0.55% 0.55%
Class B................ 0.44% 0.55% 0.55%
- -------------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- -------------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.32% 0.14% 0.14%
Class B................ 0.32% 0.21% 0.22%
- -------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................ 1.01%(3) 0.94% 0.94%
Class B................ 1.76%(3) 1.76% 1.76%
- -------------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.60% 0.55% 0.55%
Class B................ 0.60% 0.55% 0.55%
- -------------------------------------------------------------------------------------
Other Expenses without
voluntary waivers:
Class A................ 0.33% 0.14% 0.14%
Class B................ 0.32% 0.24% 0.24%
- -------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.18% 0.94% 0.94%
Class B................ 1.92% 1.79% 1.79%
- -------------------------------------------------------------------------------------
</TABLE>

(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Growth & Income Fund, .50%
on redemptions of these shares during the second year after purchase.

(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Total Fund Operating Expenses for the Griffin
Growth & Income Fund for the year ended September 30, 1998 were 0.81% for
Class A shares, and 1.56% for Class B shares.

19
<PAGE>

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN GROWTH & INCOME WM GROWTH & WM GROWTH &
FUND INCOME FUND INCOME FUND
----------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 55 $ 64 $ 64
3 years................ $ 76 $ 83 $ 83
5 years................ $ 99 $105 $105
10 years............... $163 $164 $164
- ------------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 68 $ 68 $ 68
3 years................ $ 85 $ 85 $ 85
5 years................ $106 $106 $106
10 years............... $169(3) $185(4) $165(3)
- ------------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 18 $ 18 $ 18
3 years................ $ 55 $ 55 $ 55
5 years................ $ 96 $ 96 $ 96
10 years............... $169(3) $185(4) $165(3)
- ------------------------------------------------------------------------------------
</TABLE>

(1) Assumes deduction at time of purchase of the maximum initial sales charge.

(2) Assumes deduction of the maximum CDSC.

(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.

(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.

(5) Assumes no deduction of CDSC.

20
<PAGE>

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN GROWTH FUND WM GROWTH FUND WM GROWTH FUND
------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- ---------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 5.50% 5.50%
Class B................ None None None
- ---------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- ---------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
- ---------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.60%(3) 0.67% 0.67%
Class B................ 0.60%(3) 0.67% 0.67%
- ---------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- ---------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursement)
Class A................ 0.45%(3) 0.38% 0.38%
Class B................ 0.45%(3) 0.38% 0.38%
- ---------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................ 1.30%(3) 1.30% 1.30%
Class B................ 2.05%(3) 2.05% 2.05%
- ---------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.60% 0.85% 0.85%
Class B................ 0.60% 0.85% 0.85%
- ---------------------------------------------------------------------------------
Other Expenses without
voluntary
reimbursements:
Class A................ 0.45% 0.59% 0.59%
Class B................ 0.45% 0.69% 0.69%
- ---------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.30% 1.69% 1.69%
Class B................ 2.05% 2.54% 2.54%
- ---------------------------------------------------------------------------------
</TABLE>

(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Growth Fund, .50% on redemp-
tions of these shares during the second year after purchase.

(3) Pursuant to a voluntary fee waiver presently in effect but expected to
terminate on April 1, 1999, Total Fund Operating Expenses for the Griffin
Growth Fund for the year ended September 30, 1998 were 0.92% for Class A
shares, and 1.67% for Class B shares.

21
<PAGE>

EXAMPLE OF FUND EXPENSES:

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:

<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN GROWTH FUND WM GROWTH FUND WM GROWTH FUND
------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 58 $ 68 $ 68
3 years................ $ 84 $ 94 $ 94
5 years................ $114 $123 $123
10 years............... $195 $203 $203
- --------------------------------------------------------------------------------
Class B (assuming
redemption)(2)
1 year................. $ 71 $ 71 $ 71
3 years................ $ 94 $ 94 $ 94
5 years................ $121 $121 $121
10 years............... $205(3) $224(4) $205(3)
- --------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 21 $ 21 $ 21
3 years................ $ 64 $ 64 $ 64
5 years................ $111 $111 $111
10 years............... $205(3) $224(4) $205(3)
- --------------------------------------------------------------------------------
</TABLE>

(1) Assumes deduction at time of purchase of the maximum initial sales charge.

(2) Assumes deduction of the maximum CDSC.

(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.

(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.

(5) Assumes no deduction of CDSC.

22
<PAGE>

FEDERAL INCOME TAX CONSEQUENCES

For federal income tax purposes no gain or loss will be recognized by an Ac-
quired Fund or its shareholders as a result of the Merger, and the tax basis
of the Merger Shares received by each Acquired Fund shareholder will be the
same as the tax basis of the shareholder's Acquired Fund shares. See "Informa-
tion About the Mergers--Federal Income Tax Consequences."

- -------------------------------------------------------------------------------

COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Each Acquiring Fund has investment objectives that are similar to those of
the corresponding Acquired Fund. The investment objectives, policies and re-
strictions of the Acquired Funds and the Acquiring Funds, and certain differ-
ences between them, are summarized below. For a more detailed description of
the investment strategies, policies and restrictions of the Acquired Funds and
the Acquiring Funds, please see the WM Prospectus and the Griffin Prospectus.
For information concerning the risks associated with investments in the vari-
ous Funds, see "Risk Factors," below.

Griffin Money Market Fund vs. WM Money Market Fund

The WM Money Market Fund and the Griffin Money Market Fund have similar in-
vestment objectives. The Griffin Money Market Fund seeks to provide as high a
level of current income as is consistent with the preservation of principal
and liquidity. The WM Money Market Fund seeks to provide maximum current in-
come, while preserving capital and maintaining liquidity. The total return for
the Griffin Money Market Fund and the WM Money Market Fund is set forth in the
chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Money Market Fund............... 5.02% N/A N/A 4.86%
WM Money Market Fund.................... 5.11% 4.62% 5.13% 4.64%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation for the Griffin Money Market Fund is not shown, because the Fund com-
menced operations on 10/19/93. For further information about the WM Money
Market Fund's performance, including information about
waivers/reimbursements that affected the Fund's performance, see the WM Pro-
spectus.

Each of the Griffin Money Market Fund and the WM Money Market Fund invests in
high-quality U.S. dollar-denominated money market instruments, including (i)
bank obligations, (ii) U.S. Government securities, (iii) short-term commercial
notes, issued directly by U.S. and foreign businesses, banking institutions,
financial institutions (including brokerage, finance and insurance companies)
and U.S. state and local governments and municipalities to finance short-term
cash needs, (iv) repurchase agreements, (v) short-term corporate obligations,
and (vi) restricted and illiquid securities. In addition, each Fund may buy or
sell securities on a when-issued or delayed-delivery basis.

While the Griffin Money Market Fund may invest in such obligations of U.S. or
foreign banks as certificates of deposit and bankers' acceptances without re-
striction, the WM Money Market Fund may invest in such obligations only where
the bank's assets exceed $500 million. The Griffin Money Market Fund may in-
vest in reverse repurchase agreements and other investment companies, while
the WM Money Market Fund may not. Although each Fund may invest in asset-
backed securities, the WM Money Market Fund may only invest up to 10% of its
total assets in such securities. Moreover, the Griffin Money Market Fund may
lend up to 33 1/3% of its total assets. However, the WM Money Market Fund may
invest in securities issued by foreign governments, their agencies or instru-
mentalities or by supranational entities, whereas the Griffin Money Market
Fund may not. Although each Fund may borrow for temporary defensive purposes,
the Griffin Money Market Fund may borrow up to 10% of its total assets,
whereas the WM Money Market Fund may borrow up to 33 1/3% of its total assets
to meet redemption requests, and may otherwise borrow only up to 5% of its net
assets. The Griffin Money Market Fund, unlike the WM Money Market Fund, is re-
quired to invest at least 25% of its total assets in the financial services
industry at all times.

Audrey S. Quaye, Certified Public Accountant ("CPA"), Vice President and
Portfolio Manager of

23
<PAGE>

WM Advisors, is primarily responsible for the day-to-day management of the WM
Money Market Fund. She has managed the Fund since March 1997, and has been em-
ployed by WM Advisors since 1996. Prior to 1996, Ms. Quaye worked at the Ben-
ham Group as a municipal credit analyst.

Griffin Tax-Free Money Market Fund vs. WM Tax-Exempt Money Market Fund

The Griffin Tax-Free Money Market Fund and the WM Tax-Exempt Money Market
Fund have similar investment objectives. The Griffin Tax-Free Money Market
Fund seeks to provide as high a level of current income, exempt from federal
income taxes, as is consistent with a portfolio of high quality short term mu-
nicipal obligations selected on the basis of liquidity and stability of capi-
tal. The WM Tax-Exempt Money Market Fund seeks to provide maximum current in-
come that is exempt from federal tax, while preserving capital and maintaining
liquidity. Each Fund invests primarily in high quality, short-term municipal
obligations.

The total return for the Griffin Tax-Free Money Market Fund and the WM Tax-
Exempt Money Market Fund is set forth in the chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Tax-Free Money Market Fund..... 2.92% N/A N/A 2.95%
WM Tax-Exempt Money Market Fund........ 3.17% 3.10% 3.66% 3.11%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation for the Griffin Tax-Free Money Market Fund is not shown, because the
Fund commenced operations on 10/19/93. For further information about the WM
Tax-Exempt Money Market Fund's performance, including information about
waivers/reimbursements that affected the Fund's performance, see the WM Pro-
spectus.

Each of the Funds invests primarily in municipal obligations issued by
states, territories and possessions of the United States, the District of Co-
lumbia and their respective authorities, agencies, instrumentalities and po-
litical subdivisions, the income from which is exempt from federal income tax.
These investments may include tax anticipation notes ("TANs"), revenue antici-
pation notes ("RANs"), bond anticipation notes ("BANs"), and project notes
("PNs"), or other forms of short-term municipal loans and obligations. Under
normal market conditions, the WM Tax-Exempt Money Market Fund invests at least
80% of its total assets in instruments that pay interest that is not subject
to the federal alternative minimum tax, and the Griffin Tax-Free Money Market
Fund invests its assets so that at least 80% of its income distributions are
exempt from the federal income tax and the federal alternative minimum tax.
However, for temporary defensive purposes, each of the Funds may hold cash,
and may invest more than 20% of its total assets in obligations the income
from which is not exempt from the federal income tax or the alternative mini-
mum tax. Each of the Funds may also invest in tax-exempt commercial paper, ze-
ro-coupon bonds, restricted and illiquid securities, and may buy or sell secu-
rities on a when-issued or delayed-delivery basis. Both may invest in variable
rate municipal instruments, forward commitments and standby commitments.

The WM Tax-Exempt Money Market Fund may invest up to 10% of its total assets
in securities of mutual funds that are not affiliated with WM Advisors,
whereas the Griffin Tax-Free Money Market Fund's investments in other invest-
ment companies are limited to tax-exempt money market funds that have a funda-
mental policy of investing at least 80% of total assets in obligations the in-
terest from which is exempt from federal income tax and the federal alterna-
tive minimum tax. Although each of the Funds may invest in repurchase agree-
ments, the Griffin Tax-Free Money Market Fund, unlike the WM Tax-Exempt Money
Market Fund, may invest only up to 10% of its total assets in repurchase
agreements. The Griffin Tax-Free Money Market Fund may invest in reverse re-
purchase agreements while the WM Tax-Exempt Money Market Fund may not. Al-
though each of the Funds may borrow for temporary purposes, the Griffin Tax-
Free Money Market Fund may borrow up to 10% of its net assets whereas the WM
Tax-Exempt Money Market Fund may borrow up to 33 1/3% of its total assets to
meet redemption requests, otherwise it may borrow only up to 5% of its net as-
sets.

Audrey S. Quaye, CPA, Vice President and Portfolio Manager of WM Advisors, is
primarily responsible for the day-to-day management of the WM Tax-Exempt Money
Market Fund. She has managed the Fund since March 1997, and has been employed
by WM Advisors since 1996. Prior to 1996, Ms. Quaye worked at the Benham Group
as a municipal credit analyst.

24
<PAGE>

Griffin Short-Term Bond Fund vs. WM Short Term Fund

The Griffin Short-Term Bond Fund and the WM Short Term Fund have similar in-
vestment objectives. The Griffin Short-Term Bond Fund seeks to provide the
highest level of current income consistent with minimal fluctuation of princi-
pal value and liquidity. The WM Short Term Fund seeks to provide as high a
level of current income as is consistent with prudent investment management
and stability of principal.

The total return for the Griffin Short-Term Bond Fund and the WM Short Term
Fund is set forth in the chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
SINCE
6/12/95
1 YEAR ANNUALIZED
------ ----------
<S> <C> <C>
Griffin Short-Term Bond Fund.................................. 4.66% 6.80%
WM Short Term Fund............................................ 3.60% 5.04%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not available for the WM Short Term Fund, which commenced opera-
tions on 11/1/93, or the Griffin Short-Term Bond Fund, which commenced oper-
ations on 6/12/95. The WM Short Term Bond Fund's annualized total return
from 11/1/93 to 9/30/98 is 4.10%. For further information about the WM Short
Term Fund's performance, including information about waivers/reimbursements
that affected the Fund's performance, see the WM Prospectus.

Each of the Funds may invest in mortgage-backed securities, including securi-
ties issued by the Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA"), and Federal Home Loan Mortgage Corpo-
ration ("FHLMC"), bank obligations and collateralized mortgage obligations.
Each may purchase securities on a when-issued or delayed-delivery basis, and
each may invest in illiquid and restricted securities, as well as futures and
related options, and floating and variable rate obligations. Each of the Funds
may also enter into repurchase and reverse repurchase agreements.

Under normal market conditions, the Griffin Short-Term Bond Fund invests at
least 65% of its total assets in bonds, and maintains an average dollar-
weighted effective maturity of 3 years or less, without purchasing any secu-
rity whose effective maturity, average life or tender date exceeds 7 years.
Although the WM Short Term Fund also maintains a weighted effective maturity
of 3 years or less, it is not subject to any such limit with respect to indi-
vidual securities. To the extent that the WM Short Term Fund invests in debt
securities with longer maturities, it may be subject to greater market risk as
described below under "Risk Factors--Market Risk." Although each of the Funds
may borrow for temporary or defensive purposes, the Griffin Short-Term Bond
Fund may borrow up to 33 1/3% of its net assets, while the WM Short Term Fund
may only borrow up to 30% of its net assets and may not purchase additional
securities when borrowings exceed 5% of total assets. The WM Short Term Fund
may enter into dollar roll transactions. The Griffin Short-Term Bond Fund may
invest up to 5% of its total assets in "split-rated" bonds, which are bonds
that one rating organization rates below investment grade but another rates
investment grade. However, the WM Short Term Fund invests substantially all of
its assets in investment grade securities and, under normal market conditions,
at least 65% of securities rated in the top two categories of a nationally
recognized securities rating organization and securities determined by WM Ad-
visors to be of comparable quality.

While each of the Funds may invest in asset-backed securities, the WM Short
Term Fund may only invest up to 25% of its total assets in such securities.
The Griffin Short-Term Bond Fund may invest up to 25% of its total assets in
U.S. dollar-denominated foreign securities, while the WM Short Term Fund may
invest up to 10% of its total assets in foreign securities, including non-U.S.
dollar denominated securities. Each of the Funds may loan its portfolio secu-
rities, but the WM Short Term Fund may only lend up to 20% of its total assets
whereas the Griffin Short-Term Bond Fund may lend up to 33 1/3% of its total
assets. Each of the Funds may purchase securities issued by other investment
companies. The WM Short Term Fund may invest up to 5% of its assets in pre-
ferred stock, whereas the Griffin Short-Term Bond Fund may not.

Gary J. Pokrzywinski, CFA, Vice President and Senior Portfolio Manager of WM
Advisors, is primarily responsible for the day-to-day management of the WM
Short Term Fund. He has managed the Fund since January 1998, and has been em-
ployed by WM Advisors since 1992.

Griffin U.S. Government Income Fund vs. WM U.S. Government Fund

The Griffin U.S. Government Income Fund and the WM U.S. Government Fund have
similar investment objectives. The Griffin U.S. Government Income Fund seeks
to provide current income, while preserving capital. The WM U.S. Government
Fund

25
<PAGE>

seeks to provide a high level of current income, consistent with safety and
liquidity.

The total return for the Griffin U.S. Government Income Fund and the WM U.S.
Government Fund is set forth in the chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin U.S. Government Fund............ 7.15% N/A N/A 6.13%
WM U.S. Government Fund................. 5.16% 5.42% 7.87% 5.41%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not available for the Griffin U.S. Government Income Fund, which
commenced operations on 10/19/93. For further information about the WM U.S.
Government Fund's performance, including information about
waivers/reimbursements that affected the Fund's performance, see the WM Pro-
spectus.

To accomplish its objective, the WM U.S. Government Fund invests primarily in
a selection of obligations of the U.S. Government and its agencies. The Fund
may also invest in collateralized mortgage obligations or repurchase agree-
ments which are secured by those types of obligations. It is a fundamental
policy of the Fund to invest only in the following types of securities: (1)
U.S. Government securities, including mortgage-backed securities; (2) obliga-
tions secured by the full faith and credit of the U.S. Government or its in-
strumentalities; and (3) collateralized mortgage obligations and repurchase
agreements which are secured by obligations identified in (1) and (2) above.
The Fund may borrow up to 5% of its net assets for emergency, non-investment
purposes and may enter into dollar roll transactions.

The Griffin U.S. Government Income Fund may invest in obligations of any ma-
turity, although it invests primarily in a portfolio of intermediate- and
long-term securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. The Griffin U.S. Government Income Fund also may buy and
sell options and futures contracts to generate income for the Fund and for
hedging purposes. The Fund's sales of options contracts will be limited to
covered options.

Each of the WM U.S. Government Fund, subject to the restrictions set forth
above, and the Griffin U.S. Government Income Fund may temporarily invest in
cash and may invest in variable rate, floating rate or inverse floating rate
instruments, mortgage-backed securities, stripped mortgage-backed securities,
collateralized mortgage obligations and repurchase agreements. Each of the
Funds may buy and sell securities on a when-issued or delayed-delivery basis
and may purchase restricted and illiquid securities.

The Griffin U.S. Government Income Fund, unlike the WM U.S. Government Fund,
may invest in asset-backed securities that are not mortgaged-backed securi-
ties, commercial paper, certificates of deposit, foreign index linked invest-
ments, zero-coupon bonds, U.S. dollar-denominated foreign securities, securi-
ties of other investment companies, reverse repurchase agreements and sepa-
rately traded interest and principal components of U.S. Treasury securities
("STRIPs"). In contrast to the Griffin U.S. Government Income Fund, the WM
U.S. Government Fund is not permitted to engage in any foreign currency trans-
actions or make loans of portfolio securities. The WM U.S. Government Fund may
only borrow up to 5% of its net assets for temporary purposes, whereas the
Griffin U.S. Government Income Fund may borrow up to 33 1/3% of its net assets
for such purposes.

Although both Funds have the flexibility to invest some or all of their as-
sets in mortgage-backed securities, from time to time the WM U.S. Government
Fund has had greater investments in such securities. As described below under
the caption "Risk Factors--Market Risk," investments in mortgage-backed secu-
rities may expose a fund to greater interest rate risk.

Craig V. Sosey, Vice President and Portfolio Manager of WM Advisors, is pri-
marily responsible for the day-to-day management of the WM U.S. Government
Fund. He has managed the Fund since November 1, 1998, and has been employed by
WM Advisors since May 1998. Prior to that, he was the Assistant Treasurer of
California Federal Bank, where he worked for over eight years.

Griffin Municipal Bond Fund vs. WM Tax-Exempt Bond Fund

The Griffin Municipal Bond Fund and the WM Tax-Exempt Bond Fund have similar
investment objectives. The Griffin Municipal Bond Fund seeks to provide in-
vestors with a high level of income exempt from federal income taxes, while
preserving capital. It invests primarily in intermediate- to long-term invest-
ment grade municipal securities. The WM Tax-

26
<PAGE>

Exempt Bond Fund seeks to provide a high level of income that is exempt from
federal taxes and to protect investors' capital. The Fund invests primarily in
fixed-income obligations issued by states, counties, cities and other govern-
mental bodies that generate income exempt from federal income tax.

The total return for the Griffin Municipal Bond Fund and the WM Tax-Exempt
Bond Fund is set forth in the chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Municipal Bond Fund............. 3.26% N/A N/A 4.21%
WM Tax-Exempt Bond Fund................. 3.01% 4.45% 7.07% 4.32%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not available for the Griffin Municipal Bond Fund, which commenced
operations on 10/19/93. For further information about the WM Tax-Exempt Bond
Fund's performance including about waivers/reimbursements that affected the
Fund's performance, see the WM Prospectus.

Under normal market conditions, each of the Funds invests at least 80% of its
total assets in municipal obligations such as municipal bonds, municipal
notes, inverse floating rate obligations and securities of unaffiliated tax-
exempt mutual funds. Securities that are subject to the federal alternative
minimum tax do not count toward the 80% total for the Griffin Municipal Bond
Fund. Each Fund normally invests at least 65% of its total assets in invest-
ment grade securities, and the WM Tax-Exempt Bond Fund may invest up to 35% of
its total assets in non-investment grade securities, commonly known as "junk
bonds." Each of the Funds may purchase and sell restricted and illiquid secu-
rities as well as futures and options, although the WM Tax-Exempt Bond Fund is
limited to interest rate futures and options. Each Fund may also enter into
repurchase agreements. Each Fund may purchase securities on a when-issued or
delivery-delayed basis, and each may invest in fixed, variable or floating
rate general obligation and revenue bonds. The Griffin Municipal Bond Fund may
invest in municipal lease obligations, reverse repurchase agreements and re-
source recovery bonds. Each Fund may invest any portion of its assets in in-
dustrial revenue bonds ("IRBs") backed by private issuers, and may invest up
to 25% of its total assets in IRBs related to a single industry. Furthermore,
each Fund may invest 25% or more of its total assets in municipal securities
whose revenue sources are from similar types of projects, e.g., education,
housing, or transportation.

The Griffin Municipal Bond Fund may invest in zero-coupon securities, asset-
backed securities, TANs, BANs, and RANs, mortgage-backed securities and
stripped mortgage-backed securities, whereas the WM Tax-Exempt Bond Fund does
not invest in such securities to a significant extent. The Griffin Municipal
Bond Fund expects the dollar-weighted average maturity of its portfolio to be
greater than 10 years.

Although each of the Funds may temporarily invest in taxable short term in-
vestments such as U.S. Government securities, commercial paper, U.S. bank ob-
ligations, and time or demand deposits in U.S. banks, the WM Tax-Exempt Bond
Fund may only invest up to 50% of its total assets for such temporary purpos-
es, while the Griffin Municipal Bond Fund is not subject to such a limitation.
Moreover, for defensive purposes the Griffin Municipal Bond Fund may also in-
vest in taxable municipal obligations, certificates of deposit, collateralized
mortgage obligations and STRIPs, while the WM Tax-Exempt Bond Fund may not.
Each of the Funds may borrow for temporary defensive purposes, but the Griffin
Municipal Bond Fund may borrow up to 33 1/3% of its net assets while the WM
Tax-Exempt Bond Fund may only borrow up to 5% of its net assets.

Brian Placzek, CFA, Vice President and Portfolio Manager of WM Advisors, has
had primary responsibility for the day-to-day management of the WM Tax-Exempt
Bond Fund since 1995 and has been employed by WM Advisors since 1990. The
Trustees of WM Trust I and the shareholders of WM Tax-Exempt Bond Fund have
approved a sub-advisory agreement between WM Advisors and Van Kampen with re-
gard to the WM Tax-Exempt Bond Fund. It is expected that David C. Johnson, Se-
nior Vice President of Van Kampen, will assume primary responsibility for the
day-to-day management of the Fund's portfolio effective January 1, 1999. Mr.
Johnson has been employed by Van Kampen since 1989.

Griffin California Fund vs. WM California Fund

The Griffin California Fund and the WM California Fund have similar invest-
ment objectives. The

27
<PAGE>

Griffin California Fund seeks to provide a high level of income exempt from
federal income taxes and California personal income taxes, while preserving
capital. The WM California Fund seeks to provide as high a level of current
income exempt from federal and California state income tax as is consistent
with prudent investment management and preservation of capital.

The total return for the Griffin California Fund and the WM California Fund
is set forth in the chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
SINCE
5 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED
------ ---------- ----------
<S> <C> <C> <C>
Griffin California Fund............................ 3.49% N/A 4.16%
WM California Fund................................. 3.86% 4.75% 4.83%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not available for the Griffin California Fund, which commenced op-
erations on 10/19/93. The WM California Fund's total return since 7/25/89,
when it commenced operations, to 9/30/98 is 7.07%. For further information
about the WM California Fund's performance, including information about
waivers/reimbursements that affected the Fund's performance, see the WM Pro-
spectus.

Each of the Funds invests primarily in intermediate- to long-term California
municipal securities. Under normal market conditions, the Griffin California
Fund invests at least 80% of its total assets in municipal securities that pay
interest which is exempt from federal income taxes and which is not subject to
the federal alternative minimum tax. Moreover, under normal market conditions
the Griffin California Fund invests at least 65% of its total assets in munic-
ipal securities that pay interest which is exempt from California personal in-
come taxes. The WM California Fund invests at least 80% of its total assets in
California municipal securities, including securities the interest from which
is subject to the federal alternative minimum tax. Each Fund may invest in op-
tions, futures and restricted and illiquid securities. Furthermore, each of
the Funds may purchase securities on a when-issued or delayed-delivery basis,
although the WM California Fund may invest only up to 20% of its total assets
in when-issued securities. Each of the Funds may also enter into reverse re-
purchase agreements. Both of the Funds are classified as "non-diversified" un-
der the Investment Company Act of 1940, as amended (the "1940 Act") and as
such each may invest a larger portion of its total assets in the securities of
a small number of issuers than a diversified fund.

The Griffin California Fund may also invest in municipal lease obligations,
resource recovery bonds, zero-coupon and asset-backed securities and tax
revenue or bond anticipation notes.

The WM California Fund may invest without limitation in unrated securities,
while the Griffin California Fund may not invest in such securities. As a re-
sult, the WM California Fund may be more dependent on the ability of its ad-
viser or subadviser to determine the credit quality of its securities.

Each Fund has the ability to invest in securities that would be subject to
federal income tax; however, the Griffin California Fund may do so only for
temporary defensive purposes. For temporary defensive purposes the Griffin
California Fund may invest in cash reserves, U.S. Government securities, col-
lateralized mortgage obligations, certificates of deposit, STRIPs, stripped
mortgage-backed securities, commercial paper, taxable municipal securities,
repurchase agreements, interest rate swaps, interest rate caps and floors and
loans of portfolio securities. For temporary defensive purposes the WM Cali-
fornia Fund may invest without limitation in municipal securities not exempt
from the California personal income tax, short term municipal securities, tax-
able cash equivalents (including short term U.S. Government securities, cer-
tificates of deposit, bankers' acceptances, commercial paper rated Prime-1 by
Moody's or A-1+ or A-1 by S&P, and repurchase agreements) and securities of
money market mutual funds. While both Funds may borrow money for temporary or
emergency purposes, the WM California Fund may not purchase additional securi-
ties when borrowings exceed 5% of total assets.

Joseph A. Piraro, Vice President of Van Kampen, has had primary responsibil-
ity for the day-to-day management of the WM California Fund since May 1992.
Mr. Piraro has been employed by Van Kampen since 1992.

Griffin Bond Fund vs. WM Income Fund

The Griffin Bond Fund and the WM Income Fund have similar investment objec-
tives. The Griffin Bond Fund seeks to provide investors with as high a level
of current income as is consistent with prudent investment management, preser-
vation of capital and liquidity. The WM Income Fund seeks to provide a high
level of current income that is consistent with protection of shareholders'
capital. To accomplish its

28
<PAGE>

objective, the WM Income Fund invests in debt issues and obligations that of-
fer high current yields and that are consistent with a moderate degree of
risk.

The total return for the Griffin Bond Fund and the WM Income Fund is set
forth in the chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Bond Fund....................... 5.53% N/A N/A 5.02%
WM Income Fund.......................... 4.27% 6.06% 8.10% 6.01%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year data is not avail-
able for the Griffin Bond Fund, which commenced operations on 10/19/93. For
further information about the WM Income Fund's performance, and expense
waivers/reimbursements that affected its performance, see the WM Prospectus.

The Griffin Bond Fund invests in U.S. dollar-denominated debt obligations of
all types issued by U.S. or foreign corporations, banks or other business or-
ganizations, but generally tends to focus on longer-term bonds. Under normal
market conditions, at least 65% of the Fund's total assets will be invested in
bonds, and at least 65% of its total assets will be invested in debt securi-
ties that are rated investment grade by a nationally recognized statistical
rating organization ("NRSRO") or are unrated but determined by its adviser to
be of comparable quality. The debt obligations in which the Fund invests in-
clude bonds, notes, commercial paper, certificates of deposit, convertible
bonds, options and futures, when-issued and delayed-delivery securities, com-
modity-indexed and foreign index-linked securities, zero coupon bonds and
other types of fixed, floating, inverse floating or variable rate obligations.
The Fund may also invest in other mutual funds and in debt obligations issued
by U.S. or foreign governments or government agencies including mortgage-
backed securities, collateralized mortgage obligations, stripped mortgage-
backed securities, reverse repurchase agreements and restricted securities, as
well as money market instruments such as repurchase agreements. The Fund's in-
vestments in foreign securities denominated in U.S. dollars will be limited to
25% of its total assets.

The WM Income Fund invests most of its assets in (1) debt and convertible
debt securities; (2) U.S. Government securities, including mortgage-backed se-
curities; (3) obligations of U.S. banks that belong to the Federal Reserve
System; (4) preferred stock and convertible preferred stock rated in one of
the four highest ratings of Standard & Poor's ("S&P") or Moody's Investors
Service, Inc. ("Moody's"); (5) the highest grade commercial paper as rated by
S&P or Moody's; and (6) deposits in U.S. banks. The WM Income Fund may also
purchase securities of issuers which deal in real estate or securities which
are secured by interests in real estate, and may purchase and sell interest
rate futures and options.

The Griffin Bond Fund and the WM Income Fund may each invest up to 15% of its
total assets in illiquid securities. Both Funds may purchase securities on a
"when-issued" or "delayed-delivery" basis. However, the WM Income Fund may
only do so with respect to U.S. Government securities or collateralized mort-
gage obligations and only up to 20% of its net assets. Both Funds are also
permitted to borrow money in times of emergency, but the WM Income Fund may
only borrow up to 5% of its net assets, while the Griffin Bond Fund may borrow
up to one-third of its total assets.

Both Funds may also invest in fixed-income securities which are rated below
investment grade (so-called "junk bonds"), and may invest in dollar rolls and
foreign index linked securities. However, the Griffin Bond Fund may only in-
vest 5% of its net assets in junk bonds, while the WM Income Fund may invest
up to 35% of its assets in such securities. To the extent that the WM Income
Fund invests a greater portion of its assets in securities rated BBB and low-
er, the WM Income Fund will be exposed to a greater degree of risk. See "Risk
Factors--Risks of Lower-Rated Securities." Unlike the Griffin Bond Fund, the
WM Income Fund may invest in securities denominated in foreign currencies, and
may engage in foreign currency exchange transactions for hedging purposes. In
addition, while the Griffin Bond Fund may lend up to one-third of its assets,
the WM Income Fund may only lend up to 20% of its assets.

Gary J. Pokrzywinski, CFA, Vice President and Senior Portfolio Manager of WM
Advisors, is primarily responsible for the day-to-day management of the WM In-
come Fund.

Griffin Growth & Income Fund vs. WM Growth & Income Fund

The Griffin Growth & Income Fund and the WM Growth & Income Fund have similar
investment ob-

29
<PAGE>

jectives. The Griffin Growth & Income Fund seeks to provide capital growth and
current income. The WM Growth & Income Fund seeks long-term capital growth,
with current income as a secondary consideration. Both Funds attempt to meet
their investment objectives through investing primarily in common stocks.

The total return for the Griffin Growth & Income Fund and the WM Growth & In-
come Fund is set forth in the chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Growth & Income Fund.......... (12.44)% N/A N/A 14.50%
WM Growth & Income Fund............... (10.05)% 14.97% 12.12% 15.41%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance data is
not yet available for the Griffin Growth & Income Fund, which commenced op-
erations on 10/19/93. For further information about the WM Growth & Income
Fund's performance, and expense waivers/reimbursements that affected the
Fund's performance, see the WM Prospectus.

Under normal market conditions, the Griffin Growth & Income Fund invests at
least 65% of its total assets in common stocks. The Fund may also invest up to
25% of its assets in corporate bonds and notes of investment grade quality,
and may purchase asset-backed securities, preferred stocks, convertible secu-
rities (both debt securities and preferred stocks) and U.S. Government securi-
ties. In addition, the Fund may engage in repurchase transactions, may pur-
chase futures contracts and options on futures contracts, may purchase or
write options on securities, and may invest in U.S. dollar-denominated foreign
securities, although it does not expect to invest more than 10% of its total
assets in such foreign securities. For temporary or defensive purposes, the
Fund may invest without limit in high-quality debt securities or preferred
stocks, or in other securities that its adviser considers consistent with such
defensive strategies.

The WM Growth & Income Fund also invests primarily in common stocks. In addi-
tion, the Fund may invest in fixed income securities of any maturity, includ-
ing mortgage-backed securities. The Fund is also permitted to invest in U.S.
dollar-denominated foreign securities, to purchase commercial mortgage-backed
securities and to invest up to 25% of its assets in real estate investment
trusts ("REITs"). The Fund may also invest in money market instruments for de-
fensive purposes. To limit risk, repurchase agreements maturing in more than
seven days will not exceed 10% of the Fund's total assets.

Both the Griffin Growth & Income Fund and the WM Growth & Income Fund may
purchase securities on a "when-issued" or "delayed-delivery" basis. However,
the WM Growth & Income Fund may only do so with respect to U.S. Government se-
curities or collateralized mortgage obligations and only up to 20% of its net
assets. Both Funds are also permitted to borrow money in times of emergency,
but the WM Growth & Income Fund may only borrow up to 5% of its net assets,
while the Griffin Growth & Income Fund may borrow up to one-third of its total
assets. In addition, both Funds may lend portfolio securities up to one-third
of total assets and may invest up to 15% of their assets in illiquid securi-
ties. While the Griffin Growth & Income Fund may enter into reverse repurchase
transactions, the WM Growth & Income Fund may not.

Unlike the WM Growth & Income Fund, at least 90% of the Griffin Growth & In-
come Fund's equity investments will be issued by large companies. Historical-
ly, the WM Growth & Income Fund has had significant investments in large com-
panies, although it has no formal policy to this effect. Unlike the Griffin
Growth & Income Fund, the WM Growth & Income Fund may also invest up to 35% of
its total assets in non-investment grade debt securities ("junk bonds").

Effective on or about January 1, 1999, a team of investment professionals em-
ployed by WM Advisors will be jointly and primarily responsible for the day-
to-day management of the WM Growth & Income Fund. Previously, the Fund was
managed by a former employee of WM Advisors.

Griffin Growth Fund vs. WM Growth Fund

The Griffin Growth Fund and the WM Growth Fund have similar investment objec-
tives. The Griffin Growth Fund seeks to provide investors with long-term
growth of capital, while the WM Growth Fund seeks to provide investors with
long-term capital appreciation. Both Funds also seek to meet their investment
objectives through investing in common stock. However, unlike the WM Growth
Fund, the Griffin Growth Fund invests at least 65% of its total assets in the
common stock of mid-cap companies.

30
<PAGE>

The total return for the Griffin Growth Fund and the WM Growth Fund is set
forth in the chart below.

TOTAL RETURN COMPARISON
AS OF 9/30/98*

<TABLE>
<CAPTION>
5 YEARS SINCE
1 YEAR ANNUALIZED 6/12/95
------ ---------- -------
<S> <C> <C> <C>
Griffin Growth Fund................................. (15.68)% N/A 11.08%
WM Growth Fund...................................... 8.93% 15.77% 17.71%
</TABLE>

* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance data is
not available for the Griffin Growth Fund, which commenced operations on
6/12/95. The WM Growth Fund's total return since 4/5/93, when it commenced
operations, is 16.75%. For further information about the WM Growth Fund's
performance and expense waivers/reimbursements that affected the Fund's per-
formance, see the WM Prospectus.

In addition to common stocks, the Griffin Growth Fund may invest in preferred
stocks, convertible securities, futures and options, and variable- or floating
rate instruments. The Griffin Growth Fund may also invest in commercial paper,
asset-backed securities, corporate bonds, U.S. Government obligations and se-
curities of other investment companies. The Fund may invest up to 25% of its
total assets in U.S. dollar-denominated foreign securities. For temporary or
defensive purposes, the Fund may invest without limit in high-quality debt se-
curities or preferred stocks, or in other securities that its adviser consid-
ers consistent with such defensive strategies.

In addition to common stocks, the WM Growth Fund may invest in debt securi-
ties, bonds, convertible bonds, preferred stock and convertible preferred
stock, including up to 35% of its assets in below investment-grade debt secu-
rities ("junk bonds"). The Fund may also engage in options transactions, and
enter into financial futures contracts and related options for the purpose of
portfolio hedging. In addition, the Fund is allowed to invest up to 25% of its
assets in foreign securities, including up to 5% of its assets in securities
of developing and emerging countries, and may engage in foreign currency ex-
change transactions. Pursuant to an exemptive order of the SEC, the Fund may
transfer daily uninvested cash balances into one or more joint trading ac-
counts.

Both Funds may enter into reverse repurchase agreements. Both Funds may also
purchase securities on a "when-issued" or "delayed-delivery" basis and may in-
vest up to 15% of their respective assets in illiquid securities. Both Funds
may also borrow money in times of emergency, but the WM Growth Fund may only
borrow up to 5% of its net assets, while the Griffin Growth Fund may borrow up
to one-third of its net assets. In addition, each of the Funds may lend port-
folio securities to brokers and other financial organizations. However, the
Griffin Growth Fund may lend up to one-third of its total assets, while the WM
Growth Fund may only lend up to 20% of its total assets. Also, each Fund may
invest up to 15% of its assets in illiquid securities.

Warren B. Lammert, Vice President of Janus Capital Corporation, is primarily
responsible for the day-to-day management of the WM Growth Fund and has been
since its inception. Mr. Lammert joined Janus in 1987.

For important information about the Griffin Growth Fund and the WM Growth
Fund, and potential capital gain distributions and related tax issues that may
arise following this Merger, see "Information About the Mergers -- Special
Consideration Relating to the Griffin Growth Fund."

COMPARISON OF DISTRIBUTION POLICIES AND PURCHASE, EXCHANGE AND REDEMPTION
PROCEDURES

Each Acquired Fund and each Acquiring Fund declares dividends daily and pays
them monthly, except that the Griffin Growth & Income Fund and the WM Growth &
Income Fund declare and pay dividends quarterly, and the Griffin Growth Fund
and the WM Growth Fund declare and pay dividends annually and semiannually,
respectively. Each Acquired Fund and each Acquiring Fund distributes any net
realized capital gains annually. It is expected that, shortly prior to the Ex-
change Date, each of the Acquired Funds will declare and distribute as a spe-
cial dividend any investment company taxable income (computed without regard
to the deduction for dividends paid) and any net realized capital gains
through the Exchange Date not previously distributed.

The Acquired Funds and the Acquiring Funds have substantially the same proce-
dures for purchasing shares. The Acquired Funds (other than the Griffin Money
Market Funds) offer two classes of shares, Class A and Class B. The Griffin
Money Market and Tax-Free Money Market Funds offer only Class A shares. In ad-
dition to Class A and Class B shares, the Acquiring Funds also offer Class I
shares, which are offered only to certain "funds of funds" managed by WM Advi-
sors, and Class S shares, which are sold exclusively to investors who enter
into separate account management agreements. Class A and Class B shares of the
Acquired Funds may be purchased at their net asset value next determined, plus
applicable sales charges in the case of Class A shares (other than shares of
the Griffin Money Market and Tax-Free Money Market Funds), from Griffin Finan-
cial, the principal underwriter of the Acquired Funds. Class A and Class B
shares of the Acquiring Funds may be purchased at their net asset value next
determined,

31
<PAGE>

plus applicable sales charges in the case of Class A shares (other than shares
of the WM Money Market and Tax-Exempt Money Market Funds), from WM Funds Dis-
tributor, Inc., the principal underwriter of the Acquiring Funds. In addition,
shares of the Acquired Funds and the Acquiring Funds may be purchased through
other broker-dealers that have dealer agreements with Griffin Financial or WM
Funds Distributor, Inc., as the case may be.

Class B shares of the Acquiring Funds are subject to a CDSC at declining
rates if redeemed within six years of purchase. Merger Shares will be subject
to a CDSC on redemption to the same extent that the Acquired Fund Shares were
so subject. No sales charge will be charged to Acquired Fund shareholders on
the issuance of the Merger Shares, and no CDSC will be charged by the Acquired
Funds.

Shares of each Acquired Fund can be exchanged for shares of the same class of
any other Acquired Fund. Shares of the Acquiring Funds can generally be ex-
changed for shares of the same class of any fund in the WM Group of Funds. For
more details, see the WM Prospectus and SAI.
Redemption procedures for the Acquired Funds and the Acquiring Funds are sub-
stantially similar. Shares of a Fund may be redeemed at their net asset value
next determined after receipt of the redemption request, less any applicable
CDSC, on any day the New York Stock Exchange is open. Shares can be redeemed
by contacting the relevant Fund by mail, by telephone, in person (in the case
of the Acquired Funds) or by wire communication.

See the WM Prospectus for further information regarding the Acquiring Funds'
distribution policies and purchase, exchange and redemption procedures.

- -------------------------------------------------------------------------------
RISK FACTORS

Certain risks associated with an investment in the Acquiring Funds are summa-
rized below. Because each Acquiring Fund and the corresponding Acquired Fund
share certain policies described more fully above under "Overview of Mergers--
Comparison of Investment Objectives, Policies and Restrictions," many of the
risks of an investment in the Acquiring Fund are similar to the risks of an
investment in the corresponding Acquired Fund. A more detailed description of
the risks associated with an investment in the Acquiring Fund may be found in
the WM Prospectus under the caption "The Funds' Investments and Risk Consider-
ations" and in the WM SAI under the caption "Investment Objectives and Poli-
cies."

The values of all securities and other instruments held by the Acquiring
Funds vary from time to time in response to a wide variety of market factors.
Consequently, the net asset value per share of the Acquiring Funds will vary,
and may be less at the time of redemption than it was at the time of invest-
ment.

MARKET RISK. Shareholders of both the Acquired and the Acquiring Funds bear
the interest rate risks of investment in fixed income securities. During peri-
ods of rising interest rates, the value of an Acquiring Fund's holdings of
fixed income securities will generally decline. Even the highest quality fixed
income securities, including U.S. Government securities, are subject to market
risk. Market risk is generally greater, however, for the Funds such as the WM
Tax-Exempt Bond Fund, the WM Income Fund, the WM Growth & Income Fund and the
WM Growth Fund that may invest in lower-rated securities and comparable
unrated securities.

Market risk is also generally greater for debt securities with longer matu-
rities. This risk is usually compounded for funds such as the WM U.S. Govern-
ment Fund, the WM Tax-Exempt Bond Fund, the WM California Fund and the WM In-
come Fund that may invest in mortgage-backed securities and asset-backed secu-
rities that may be prepaid. These securities have variable maturities that
tend to lengthen when that is least desirable--when interest rates are rising.
Compounded market risk is also likely for debt securities paying no interest,
such as zero coupon, principal-only or interest-only securities.

CREDIT RISK. Each of the Funds may be subject to credit risk--the risk that
the counterparty to any of a Fund's portfolio transactions (including without
limitation repurchase agreements, reverse repurchase agreements, securities
loans and other over-the-counter transactions) may fail to perform its obliga-
tions to the Fund. In the case of debt obligations, credit risk also refers to
the risk that the issuer of the obligation will be unable to make timely pay-
ments of principal and interest. Each of the Acquiring Funds may invest in
unrated securities, which makes such Funds more dependent on the ability of WM
Advisors or the relevant subadviser to evaluate credit risk. This risk is par-
ticularly significant for Funds that invest in below investment grade securi-
ties, commonly known as "junk bonds," as described below.

32
<PAGE>

LEVERAGE RISK. When a Fund is borrowing money or otherwise leveraging its
portfolio, the value of an investment in that Fund will be more volatile and
all other risks will tend to be compounded. The Funds may take on leveraging
risk by investing collateral from securities loans, by using derivatives and
by borrowing money to repurchase shares or to meet redemption requests. Cer-
tain of the Funds, such as the WM Short Term Fund, the WM Income Fund, the WM
Growth & Income Fund, and the Griffin Bond Fund may also create leverage by
using reverse repurchase agreements and/or dollar rolls. The Griffin Municipal
Bond Fund and the WM Tax-Exempt Bond Fund may also achieve leverage through
the use of inverse floating rate instruments.

ILLIQUIDITY RISK. The Funds share similar risks of investment in illiquid se-
curities, including higher transaction costs, and the risk of not being able
to close out a position when it would be most advantageous to do so. Each Ac-
quired Fund and each Acquiring Fund may invest up to 15% of its net asset
value in illiquid securities, except for the WM Money Market Fund, the WM Tax-
Exempt Money Market Fund, the Griffin Money Market Fund and the Griffin Tax-
Free Money Market Fund, which are limited to 10% of net assets. Certain secu-
rities, including securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933, as amended, may be less liquid than other portfo-
lio securities, even though such securities are not considered "illiquid" for
purposes of the percentage tests described above. If the markets for such se-
curities become less active, it could be more difficult to value the shares of
a Fund and for the Fund to fulfill shareholder redemption orders on a timely
basis.

RISKS OF LOWER-RATED SECURITIES. Certain of the Acquired Funds and certain of
the Acquiring Funds share similar risks due to investment in lower-rated secu-
rities. Funds that invest in these "junk bonds," such as the WM Tax-Exempt
Bond Fund, the WM Income Fund, the WM Growth & Income Fund and the WM Growth
Fund, are subject to the following risks: (i) limited liquidity and secondary
market support; (ii) substantial market price volatility resulting from
changes in prevailing interest rates; (iii) subordination to the prior claims
of banks and other senior lenders; (iv) the operation of mandatory sinking
fund or call/redemption provisions during periods of declining interest rates
whereby the Fund may reinvest premature redemption proceeds in lower yielding
portfolio securities; (v) the possibility that earnings of the issuer may be
insufficient to meet its debt service; and (vi) the issuer's low creditworthi-
ness and potential for insolvency during periods of rising interest rates and
economic downturn.

RISKS OF FOREIGN INVESTMENT. Certain of the Acquired and Acquiring Funds
share similar risks of investment in foreign securities. Investment by a Fund,
such as the WM Money Market Fund, the WM Growth & Income Fund, the WM Income
Fund and the WM Short Term High Quality Bond Fund, in foreign securities in-
volves the risk of more rapid and extreme changes in value than investment
solely in securities of U.S. companies. This is because the securities markets
of many foreign countries are relatively small, with a limited number of com-
panies representing a small number of industries. Adverse developments in cer-
tain regions, such as Southeast Asia, may adversely affect the markets of
other countries whose economies appear to be unrelated. Additionally, foreign
securities issuers are usually not subject to the same degree of regulation as
U.S. issuers. Reporting, accounting and auditing standards of foreign coun-
tries differ, in some cases significantly, from U.S. standards. Also, nation-
alization, expropriation or confiscatory taxation, currency blockage, politi-
cal changes or diplomatic developments could adversely affect a Fund's invest-
ments in a foreign country. Foreign securities are also subject to the risks
of political, social and economic changes in the relevant country. In the
event of nationalization, expropriation or other confiscation, a Fund could
lose its entire investment. In particular, the WM Income Fund, the WM Short
Term Fund and the WM Growth Fund, unlike their corresponding Acquired Funds,
may invest in securities denominated in foreign currencies, and are therefore
subject to the risk of adverse changes in currency exchange rates.

RISKS OF DERIVATIVE INSTRUMENTS. As noted above, a number of the Acquired and
Acquiring Funds may enter into options and futures contracts, and other deriv-
atives, including over-the-counter securities transactions, for hedging pur-
poses or as a part of their investment strategies. Use of derivative instru-
ments may involve certain costs and risks in addition to those associated with
a direct investment, including the risk that the Fund could not close out a
position when it would be most advantageous to do so due to an illiquid mar-
ket, the risk of an imperfect correlation between the value of the securities
being hedged, if any, and the value of the particular derivative instrument,
the risk of bankruptcy or default of counterparties (particularly in the case
of over-the-counter transactions), and the risk that unexpected

33
<PAGE>

changes in interest rates or other market movements may adversely affect the
value of the Fund's investments in particular derivative instruments.

RISKS OF COMMON STOCKS AND OTHER EQUITY SECURITIES. The common stocks and
other equity securities in which the Griffin and WM Growth and Growth and In-
come funds primarily invest are subject to the risks of broad market declines
as well as more specific risks affecting the particular issuer, such as man-
agement performance, financial leverage, industry problems and reduced demand
for the issuer's goods or services.

GEOGRAPHIC CONCENTRATION. The WM California Fund, like the Griffin California
Fund, is subject to certain additional risks as a result of concentrating its
investments in California municipal securities. In addition to factors affect-
ing the California economy, which will likely have a significant impact on the
Funds, certain constitutional amendments, legislative measures, executive or-
ders, administrative regulations, court decisions and voter initiatives could
have an adverse effect on the values of California municipal securities and,
consequently, the Fund's net asset values.

- -------------------------------------------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS

This Prospectus/Proxy Statement is being furnished in connection with a Spe-
cial Meeting of Shareholders of each Acquired Fund to be held on February 26,
1999, or at such later time made necessary by adjournment (the "Meeting"), and
the solicitation of proxies by and on behalf of the shareholders of the Ac-
quired Funds for use at the Meeting. The Meeting is being held to consider the
proposed Mergers of each Acquired Fund with the corresponding Acquiring Fund
by the transfer of all of the Acquired Fund's assets and liabilities to the
Acquiring Fund (Proposals 1 through 9). This Prospectus/Proxy Statement and
the enclosed form of proxy are being mailed to shareholders on or about Decem-
ber 26, 1998.

The Directors of Griffin know of no matters other than those set forth herein
to be brought before the Meeting. If, however, any other matters properly come
before the Meeting, it is the Directors' intention that proxies will be voted
on such matters in accordance with the judgment of the persons named in the
enclosed form of proxy.

34
<PAGE>

- -------------------------------------------------------------------------------
THE PROPOSALS:

APPROVAL OR DISAPPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION

The shareholders of the Griffin Money Market Fund are being asked to approve
or disapprove a Merger between the Griffin Money Market Fund and the WM Money
Market Fund (Proposal 1); the shareholders of the Griffin Tax-Free Money Mar-
ket Fund are being asked to approve or disapprove a Merger between the Griffin
Tax-Free Money Market Fund and the WM Tax-Exempt Money Market Fund (Proposal
2); the shareholders of the Griffin Short-Term Bond Fund are being asked to
approve or disapprove a Merger between the Griffin Short-Term Bond Fund and
the WM Short Term Fund (Proposal 3); the shareholders of the Griffin U.S. Gov-
ernment Income Fund are being asked to approve or disapprove a Merger between
the Griffin U.S. Government Income Fund and the WM U.S. Government Fund (Pro-
posal 4); the shareholders of the Griffin Municipal Bond Fund are being asked
to approve or disapprove a Merger between the Griffin Municipal Bond Fund and
the WM Tax-Exempt Bond Fund (Proposal 5); the shareholders of the Griffin Cal-
ifornia Fund are being asked to approve or disapprove a Merger between the
Griffin California Fund and the WM California Fund (Proposal 6); the share-
holders of the Griffin Bond Fund are being asked to approve or disapprove a
Merger between the Griffin Bond Fund and the WM Income Fund (Proposal 7); the
shareholders of the Griffin Growth & Income Fund are being asked to approve or
disapprove a Merger between the Griffin Growth & Income Fund and the WM Growth
& Income Fund (Proposal 8); and the shareholders of the Griffin Growth Fund
are being asked to approve or disapprove a Merger between the Griffin Growth
Fund and the WM Growth Fund (Proposal 9). Each Merger is proposed to take
place pursuant to an Agreement and Plan of Reorganization between the Acquired
Fund and the Acquiring Fund (the "Agreement"), each of which is in the form
attached to this Prospectus/Proxy Statement as Appendix A.

Each Agreement provides, among other things, for the transfer of all of the
assets of the Acquired Fund to the Acquiring Fund in exchange for (i) the as-
sumption by the Acquiring Fund of all of the liabilities of the Acquired Fund
and (ii) the issuance to the Acquired Fund of the Class A and Class B Merger
Shares, the number of which will be calculated based on the value of the net
assets attributable to the Class A and Class B shares, respectively, of the
Acquired Fund acquired by the Acquiring Fund and the net asset value per Class
A and Class B share of the Acquiring Fund, all as more fully described below
under "Information About the Mergers."

After receipt of the Merger Shares, the Acquired Fund will cause the Class A
Merger Shares to be distributed to its Class A shareholders and the Class B
Merger Shares to be distributed to its Class B shareholders, in complete liq-
uidation of the Acquired Fund. Each shareholder of the Acquired Fund will re-
ceive a number of full and fractional Class A and Class B Merger Shares equal
in value at the date of the exchange to the aggregate value of the sharehold-
er's Class A Acquired Fund shares and Class B Acquired Fund shares, as the
case may be.

As indicated above, shareholders of each Acquired Fund are voting on the ap-
proval of an Agreement and Plan of Reorganization for their specific Acquired
Fund. If all of the Agreements and Plans of Reorganization are approved, and
all of the Mergers are consummated, Griffin will wind up its affairs and apply
to be deregistered as an investment company under the 1940 Act. If the Agree-
ments and Plans of Reorganization are approved, Griffin will close its stock
transfer books as of the close of business on the business day immediately
preceding the closing of the Mergers.

BOARD OF DIRECTOR'S RECOMMENDATIONS. THE BOARD OF DIRECTORS OF THE GRIFFIN
FUNDS, INC. HAS VOTED UNANIMOUSLY TO APPROVE EACH PROPOSED MERGER AND TO REC-
OMMEND THAT SHAREHOLDERS OF EACH ACQUIRED FUND ALSO APPROVE THE MERGER FOR
SUCH FUND.

REQUIRED SHAREHOLDER VOTE. Approval of the proposed Merger for each Acquired
Fund will require the affirmative vote of a majority of the Class A and Class
B shares of the relevant Acquired Fund, voting collectively, that are present
and entitled to vote, provided a quorum is present. The holders of one-third
of the Class A and Class B shares of each Acquired Fund outstanding at the
close of business on the Record Date present in person or represented by proxy
will constitute a quorum for the Meeting with respect to that Fund.

The Agreements and Plans of Reorganization contemplate the liquidation and
dissolution of Griffin in

35
<PAGE>

the event all of the Mergers are consummated, which requires the approval of a
majority of the shares voted at the Meeting, with shareholders of all of the
Acquired Funds voting in the aggregate. A vote for an Agreement and Plan of
Reorganization includes a vote for the liquidation and dissolution of Griffin;
correspondingly, a vote against an Agreement and Plan of Reorganization is a
vote against the liquidation and dissolution of Griffin.

A shareholder of an Acquired Fund objecting to the proposed Merger is not en-
titled under Maryland law to demand payment for or an appraisal of his or her
Acquired Fund shares if the Merger is consummated over his or her objection.
Shareholders may, however, redeem their shares at any time prior to the Merg-
er, and if the Merger is consummated, shareholders will still be free at any
time to redeem their Merger Shares, in each case for cash at net asset at the
time of such redemption, less any applicable CDSC, or to exchange their Merger
Shares for shares of the same class of certain other funds in the WM Group of
Funds, at net asset value at the time of such exchange.

BACKGROUND AND REASONS FOR THE PROPOSED MERGERS

A meeting of the Board of Directors of Griffin was held on August 13, 1998,
at which time the then-pending Washington Mutual/Ahmanson Merger and its po-
tential effects on the Acquired Funds were discussed. The Board met again,
both in-person and telephonically, on several occasions, and, after completing
its due diligence and deliberations, the Board of Directors, including all of
the non-interested members of the Board, unanimously approved the Mergers on
December 14, 1998. At such Meeting, the Board determined that the proposed
Mergers were in the best interests of the shareholders of each class of each
Acquired Fund, and that the interests of such shareholders would not be di-
luted as a result of the Mergers.

In considering the proposed Mergers, the Board of Griffin considered the po-
tential impact of the Mergers on Griffin shareholders and a variety of factors
relating thereto, including among others: 1) that a majority of the Griffin
shareholders were also customers of H.F. Ahmanson, and that as a result of the
Washington Mutual/Ahmanson Merger, such shareholders have become customers of
Washington Mutual; 2) the viability and expense involved in operating any Ac-
quired Fund on a stand-alone basis separately and apart from the WM Group of
Funds; 3) the continuity of management resulting from the anticipated election
of three Griffin Board members to the WM Trust Board of Trustees; 4) that the
Acquired Funds are currently being distributed by WM Funds Distributor, Inc.
(the Acquiring Funds' distributor); 5) the terms and conditions of the Agree-
ments and Plans of Reorganization, including provisions intended to avoid any
dilution of shareholder interests; 6) the capabilities, practices and re-
sources of the organizations that provide investment advisory and other serv-
ices to the Acquiring Funds, and the terms on which these services are provid-
ed; 7) the shareholder services provided to Griffin shareholders compared with
the shareholder services provided to Acquiring Fund shareholders; 8) the in-
vestment objectives, policies and limitations of the Acquired Funds and the
Acquiring Funds, including internal guidelines of WM Advisors in connection
with the management of certain Acquiring Funds; 9) the historical performance
of the Acquired Funds and the Acquiring Funds; 10) the historical and pro-
jected operating expenses of the Acquired Funds and the Acquiring Funds, in-
cluding fee commitments agreed to by WM Advisors; 11) the anticipated tax-free
nature of the Mergers; and 12) that WM Advisors has committed to bear all of
the expenses associated with the Mergers.

The Independent Directors also took into account the fact that William Haw-
kins, the sole director of Griffin who is an "interested person" of Griffin
had entered into an agreement with Washington Mutual in which he agreed to use
his best efforts to assist Washington Mutual and its affiliates to consummate
the Mergers, and that Washington Mutual had agreed to pay him a special com-
pletion fee upon consummation of the Mergers. By virtue of that agreement, Mr.
Hawkins may be deemed to have a substantial personal interest in the Mergers.
In addition, the Board took into account the capital loss carry-forwards for
each Acquired Fund and each Acquiring Fund, and the unrealized capital appre-
ciation in each Acquired Fund and in the corresponding Acquiring Fund, in each
case as a percentage of the Fund's total net assets. Those percentages as of
September 30, 1998 were as follows:

36
<PAGE>

<TABLE>
<CAPTION>
CAPITAL LOSS UNREALIZED CAPITAL
CARRY-FORWARDS (AS A APPRECIATION (DEPRECIATION)
PERCENTAGE OF TOTAL NET ASSETS) (AS A PERCENTAGE OF TOTAL NET
FUND ON SEPTEMBER 30, 1998 ASSETS) ON SEPTEMBER 30, 1998
---- ------------------------------- -----------------------------
<S> <C> <C>
Griffin Money Market
Fund................... * *
WM Money Market Fund.... 0.01% *

Griffin Tax-Free Money
Market Fund............ * *
WM Tax-Exempt Money
Market Fund............ * (0.86)%

Griffin Short-Term Bond
Fund................... * 2.82%
WM Short-Term Fund...... 4.45% 1.92%

Griffin U.S. Government
Income Fund............ * 4.20%
WM U.S. Government
Fund................... 20.77% 3.66%

Griffin Municipal Bond
Fund................... 0.40% 4.54%
WM Tax-Exempt Bond
Fund................... 0.36% 11.18%

Griffin California
Fund................... 0.15% 5.52%
WM California Fund...... * 8.75%

Griffin Bond Fund....... * 3.47%
WM Income Fund.......... 14.81% 7.47%

Griffin Growth & Income
Fund................... * (4.98)%
WM Growth & Income
Fund................... * 9.67%

Griffin Growth Fund..... 1.46% 7.83%
WM Growth Fund.......... * 17.82%
</TABLE>

* Less than $50,000 or less than 0.01% of net assets.

The principal reasons why management of the WM Funds is proposing the Mergers
are as follows:

(i) SUSTAINABLE DECREASES IN OVERALL EXPENSES. The Mergers are expected to
result in aggregate operating expenses that would be lower than those ex-
pected to be borne by most of the Acquired Funds as described more fully in
the Overview under "Operating Expenses." Of course, there can be no assurance
that the Mergers will result in savings in operating expenses to sharehold-
ers.

(ii) APPROPRIATE INVESTMENT OBJECTIVES, DIVERSIFICATION, ETC. The investment
objective, policies, and restrictions of each Acquiring Fund are compatible
with those of the corresponding Acquired Fund, and WM Advisors believes that
an investment in shares of the Acquiring Fund (whose portfolio will have been
combined with that of the Acquired Fund) will provide shareholders with an
investment opportunity comparable to that currently afforded by the Acquired
Fund, with the potential for reduced investment risk because of the opportu-
nities for additional diversification of portfolio investments through in-
creased Fund assets.

(iii) CONTINUED INVESTMENT IN A MUTUAL FUND WITHOUT RECOGNITION OF GAIN OR
LOSS FOR FEDERAL INCOME TAX PURPOSES. The proposed Mergers will permit Ac-
quired Fund shareholders to keep their investment in an open-end mutual fund,
without recognition of gain or loss for federal income tax purposes. If the
Acquired Funds were to liquidate and shareholders were to receive the net as-
set value of their shares in liquidating distributions, gain or loss would be
recognized for federal income tax purposes. See "Information About the Merg-
ers--Federal Income Tax Consequences" below.

(iv) STREAMLINING AND UNIFYING FUND COMPLEX. The Mergers will facilitate the
consolidation of investment advisory and management functions within WM Advi-
sors, Inc. and will streamline and unify fund offerings, fund distribution,
fund compliance and recordkeeping activities. Operating the WM Funds sepa-
rately from the Griffin Funds could lead to inefficiencies and inconsisten-
cies in operations and administration. In addition, maintaining two separate
families that include funds with similar investment objectives could lead to
confusion among investors and intermediaries, particularly as WAMU consoli-
dates its distribution channels.

(v) ELECTION OF THREE GRIFFIN DIRECTORS TO THE WM GROUP OF FUNDS BOARD. It
is anticipated that the Trustees of WM Trust I and WM Trust II will increase
the size of the Board and elect three current Griffin Board members to serve
on the Boards of WM Trust I and WM Trust II. These Directors would only begin
service as Trustees of the WM

37
<PAGE>

Group of Funds after Griffin is liquidated and dissolved.

INFORMATION ABOUT THE MERGERS

AGREEMENT AND PLAN OF REORGANIZATION. Each proposed Agreement and Plan of Re-
organization provides that the relevant Acquiring Fund will acquire all of the
assets of the corresponding Acquired Fund in exchange for the assumption by
the Acquiring Fund for all of the liabilities of the Acquired Fund and for the
issuance of the Class A and Class B Merger Shares, all as of the Exchange Date
(defined in each Agreement to be March 5, 1999 or such other date as may be
agreed upon by the Acquiring Fund and the Acquired Fund). The following dis-
cussion of the Agreements is qualified in its entirety by the full text of
each Agreement, the form of which is attached as Appendix A to this
Prospectus/Proxy Statement.

Each Acquired Fund will sell all of its assets to the corresponding Acquiring
Fund, and, in exchange, the Acquiring Fund will assume all of the liabilities
of the Acquired Fund and deliver to the Acquired Fund (i) a number of full and
fractional Class A Merger Shares having an aggregate net asset value equal to
the value of the assets of the Acquired Fund attributable to its Class A
shares, less the value of the liabilities of the Acquired Fund assumed by the
Acquiring Fund attributable to the Class A shares of the Acquired Fund, and
(ii) a number of full and fractional Class B Merger Shares having an aggregate
net asset value equal to the value of assets of the Acquired Fund attributable
to its Class B shares, less the value of the liabilities of the Acquired Fund
assumed by the Acquiring Fund attributable to the Class B shares of the Ac-
quired Fund.

Immediately following the Exchange Date, each Acquired Fund will distribute
pro rata to its shareholders of record as of the close of business on the Ex-
change Date the full and fractional Merger Shares received by the Acquired
Fund, with Class A Merger Shares being distributed to holders of Class A
shares of the Acquired Fund and Class B Merger Shares being distributed to
holders of Class B shares of the Acquired Fund. As a result of the proposed
transaction, each holder of Class A and Class B shares of the Acquired Fund
will receive a number of Class A and Class B Merger Shares equal in aggregate
value at the Exchange Date to the value of the Class A and Class B shares of
the Acquired Fund held by the shareholder. This distribution will be accom-
plished by the establishment of accounts on the share records of the corre-
sponding Acquiring Fund in the names of the Acquired Fund shareholders, each
account representing the respective number of full and fractional Class A and
Class B Merger Shares due such shareholder. Because the shares of the Acquir-
ing Funds will not be represented by certificates, certificates for Merger
Shares will not be issued.

The consummation of each Merger is subject to the conditions set forth in the
Agreement, any of which may be waived. The Agreement may be terminated and the
Merger abandoned at any time, before or after approval by the shareholders of
each Acquired Fund, prior to the Exchange Date, by mutual consent of the rele-
vant Funds or, if any condition set forth in the Agreement has not been ful-
filled and has not been waived by the party entitled to its benefits, by such
party.

All legal and accounting fees and expenses, printing other fees and expenses
(other than portfolio transfer taxes (if any), brokerage and other similar ex-
penses, all of which will be borne by the relevant Fund, except as provided
below) incurred in connection with the consummation of the transactions con-
templated by the Agreement will be borne by WM Advisors. Notwithstanding the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by any other party of such
expenses would result in the disqualification of the first party as a "regu-
lated investment company" within the meaning of Section 851 of the Internal
Revenue Code of 1986, as amended (the "Code"). To the extent that an Acquiring
Fund disposes of portfolio securities of the Acquired Fund following the rele-
vant Merger, shareholders of the Acquired Fund will bear their portion of the
related brokerage commissions, except for any sale of the portfolio securities
of the Griffin Growth Fund, which expenses shall be borne by WM Advisors
and/or Janus. WM Advisors and Janus have agreed to bear such expenses because
it is currently expected that the WM Growth Fund will dispose of a substantial
portion of the portfolio securities acquired from the Griffin Growth Fund.

SPECIAL CONSIDERATIONS RELATING TO THE GRIFFIN GROWTH FUND. The subadvisers
of the WM Growth Fund and the Griffin Growth Fund have different management
styles. In particular, the WM Growth Fund has at certain times invested in the
securities of a smaller number of issuers than has typically been the case for
the Griffin Growth Fund. In addition, the Griffin Growth Fund invests in mid-
capitalization

38
<PAGE>

stocks, while the WM Growth Fund, although it is not subject to any limitation
based on capitalization, has at times invested more significantly in larger-
capitalization stocks. Janus, the subadviser to the WM Growth Fund, currently
expects to sell, after the Merger, a substantial portion of the portfolio se-
curities currently held by the Griffin Growth Fund in order to more closely
align the holdings of the Griffin Growth Fund with the current holdings of the
WM Growth Fund.

The sale of these securities will result in the realization of any capital
gains on the securities sold, which will be distributed (net of any capital
losses) to the WM Growth Fund shareholders after the Merger (a group that
would include, if the Merger is consummated, current Griffin Growth Fund
shareholders). The amount of any net capital gains, which will be taxable to
the persons who hold Fund shares on the distribution record date (with the ex-
ception of those investors who hold shares through tax-deferred accounts),
will depend, in part, on the price at which the securities are sold, and can-
not be determined in advance.

The Griffin Board, in approving the proposal to reorganize the Griffin Growth
Fund into the WM Growth Fund, considered various aspects of such Merger, in-
cluding the possibility that WM Growth Fund shareholders may experience, after
the Merger, an increased taxable gain distribution as a result of portfolio
securities sales. As part of its consideration, the Board evaluated alterna-
tives for the Griffin Growth Fund, including liquidating the Fund or operating
the Fund as a stand-alone Fund apart from the WM Group of Funds.

DESCRIPTION OF THE MERGER SHARES. Full and fractional Merger Shares will be
issued to each Acquired Fund's shareholders in accordance with the procedure
under the Agreement as described above. The Merger Shares are Class A and
Class B shares of the Acquiring Fund, which have characteristics substantially
similar to those of the corresponding class of Acquired Fund shares with re-
spect to sales charges, CDSCs, conversion and 12b-1 servicing and distribution
fees. Investors purchasing Class A shares of the Acquiring Funds generally pay
a sales charge of up to 5.50% at the time of purchase, but Acquired Funds
shareholders receiving Class A Merger Shares in the Merger will not pay a
sales charge on such shares. Class A shares of the Acquiring Funds are gener-
ally not subject to redemption fees, except that certain purchases of Class A
shares of the Acquiring Funds which are not subject to a front-end sales load
are subject to a CDSC of up to 1% if redeemed within two years after purchase.
Class A shares of the Acquiring Funds are generally subject to a 12b-1 servic-
ing fee at the annual rate of 0.25% of the net assets, attributable to the
Fund's Class A shares. Class B shares of the Acquiring Funds are sold without
a front end sales charge, but are subject to a CDSC of up to 5% if redeemed
within six years of original purchase. Class B shares of the Acquiring Funds
are also subject to a 12b-1 distribution and servicing fees at the annual
rates of 0.75% and 0.25%, respectively, of the Fund's average daily net assets
attributable to Class B shares. Class B shares of the Acquiring Funds will
convert automatically into Class A shares after they have been held for ap-
proximately eight years. For purposes of determining the CDSC payable on re-
demption of Class A or Class B Merger Shares received by holders of Class A or
Class B shares of an Acquired Fund, such shares will be treated as having been
purchased as of the dates that, and for the price (adjusted to reflect the
Merger) at which, such shareholders originally purchased their Class A or
Class B shares, as the case may be, of the Acquired Fund, and the CDSC will be
applied at the same rate as was in effect for the Acquiring Fund at the time
the shares of the Acquired Fund were originally purchased. For purposes of de-
termining the conversion date of Class B Merger Shares to Class A shares, the
Merger Shares will be treated as having been purchased as of the date two
years prior to the date that the Acquired Fund shares exchanged for such
Merger Shares were originally purchased (so that, in effect, the conversion
feature currently enjoyed by Griffin Fund shareholders will be "grand-
fathered"). See the WM Prospectus for more information about the characteris-
tics of Class A and Class B shares of the Acquiring Funds.

ORGANIZATIONAL DOCUMENTS. Each of the Merger Shares will be fully paid and
nonassessable by the Acquiring Fund when issued, will be transferable without
restriction, and will have no preemptive or conversion rights, except that
Class B Merger Shares convert automatically into Class A shares as described
above. The Amended and Restated Agreement and Declaration of Trust of WM Trust
I (the "Declaration of Trust") and the Master Trust Agreement of WM Trust II
(the "Master Trust Agreement" and together with the Declaration of Trust the
"Trust Agreements") permit each of WM Trust I and WM Trust II to divide its
shares, without shareholder approval, into two or more series of shares repre-
senting separate investment portfolios and to further divide any

39
<PAGE>

such series, without shareholder approval, into two or more classes of shares
having such preferences and special or relative rights and privileges as the
Trustees may determine. Each Acquiring Fund's shares are currently divided
into four classes.

The following is a summary of the major differences between the governing
documents and laws applicable to each of the Acquiring Funds and the Acquired
Funds. Griffin is organized as a Maryland corporation, while WM Trust I and WM
Trust II are organized as Massachusetts business trusts. Except as otherwise
noted below, the provisions of Massachusetts law, the Trust Agreements and the
Bylaws of WM Trust I and WM Trust II are substantially similar to those of
Maryland law and the Articles of Incorporation (the "Articles") and Bylaws of
Griffin. Each of the Acquiring Funds and the Acquired Fund is subject to the
1940 Act.

MEETINGS OF SHAREHOLDERS. The Bylaws of Griffin enable a special meeting of
the shareholders to be called (i) by the chairman of the board, the president
in the absence of the chairman, or the chief operating officer in the absence
of the chairman and the president, (ii) by a majority of the board, or (iii)
by shareholders entitled to cast 10% of the votes at such special meeting. By
contrast, the Declaration of Trust for WM Trust I provides that only the
Trustees may call a meeting of the shareholders, while the WM Trust II Master
Trust Agreement gives the Trustees and shareholders holding at least 10% of
the shares then outstanding the right to call (or cause to be called) a meet-
ing of shareholders.

QUORUMS. The Articles provide that one-third of the shares entitled to vote
(in person or by proxy) constitutes a quorum at all meetings of the sharehold-
ers of Griffin. The Declaration of Trust provides that ten percent of WM Trust
I shares entitled to vote constitute a quorum at a shareholders' meeting of WM
Trust I, while the Master Trust Agreement provides that a quorum for WM Trust
II is a majority of the shares entitled to vote. Unlike the Trust Agreements,
which provide that a majority of Trustees constitutes a quorum for a meeting
of Trustees, the Griffin Bylaws provide that one-third of the directors (but
no fewer than two) constitutes a quorum for a meeting of directors.

NUMBER OF DIRECTORS. The Griffin Bylaws provide that the number of directors
shall be no less than two nor greater than fifteen. The WM Trust II Master
Trust Agreement requires a minimum of two Trustees for WM Trust II, while the
WM Trust I Declaration of Trust specifies no minimum number of Trustees.

REMOVAL OF TRUSTEES OR DIRECTORS. Pursuant to Maryland law and the Bylaws of
Griffin, any director may be removed with or without cause at any meeting of
shareholders at which a quorum is present by the affirmative vote of a major-
ity of the votes entitled to be cast. The Declaration of Trust of WM Trust I
provides that a majority of the Trustees may remove Trustees. The Master Trust
Agreement for WM Trust II provides that Trustees may be removed with or with-
out cause (i) by written instrument signed by at least two-thirds the Trust-
ees, (ii) by vote of the shareholders holding not less than two-thirds of the
outstanding shares or (iii) by written declaration signed by shareholders
holding not less than two-thirds of the outstanding shares and filed with WM
Trust II's custodian. In addition, the WM Trust II Master Trust Agreement pro-
vides that the Trustees shall promptly call a meeting to vote upon the removal
of any Trustee when requested to do so in writing by shareholders holding not
less than 10% of the shares then outstanding.

VACANCIES. The Bylaws of Griffin state that (i) immediately after filling a
vacancy in the board of directors, at least two-thirds of the directors then
holding office shall have been elected by the shareholders and (ii) if at any
time after the first annual meeting of shareholders a majority of the direc-
tors consist of directors elected by the board, a meeting of the shareholders
shall be called to elect the entire board, and the terms of the directors then
in office shall terminate. While there is no comparable provisions in the
Trust Agreements, the Acquiring Funds remain subject to the requirements of
the 1940 Act which are identical to the Bylaw provisions described above. Sub-
ject to the 1940 Act, the Trust Agreements and the Bylaws of Griffin enable
vacancies to be filled by a majority of the remaining Trustees or board mem-
bers respectively.

INDEMNIFICATION. Under Maryland law, a corporation may indemnify any director
against liabilities for acts incurred by reason of service as a director un-
less it is established that (i) the act or omission was material to the matter
giving rise to the proceeding and (a) was committed in bad faith or (b) was
the result of active and deliberate dishonesty, (ii) the director actually re-
ceived an improper personal benefit or (iii) in the case of a criminal pro-
ceeding, the director had reasonable cause to believe the act or omission was
unlawful. In addition, indemnification

40
<PAGE>

may not be made (i) in a proceeding by or in the right of the corporation
where the director is found liable to the corporation (a "Corporate liabili-
ty") or (ii) in a proceeding charging improper personal benefit where the di-
rector is found to be liable because such benefit was improperly received,
whether or not involving action in the director's official capacity (a "Per-
sonal liability").

Maryland law also provides that indemnification is not payable by a corpora-
tion unless a determination has been made that the director has met the stan-
dard of conduct noted in the foregoing paragraph. Such determination may be
made by (i) a vote of a majority of a quorum of directors consisting of direc-
tors not, at the time, parties to the proceeding, or, if such a quorum cannot
be obtained, then by a majority vote of a committee of the board (designated
by a majority of the board in which directors who are parties may participate)
consisting solely of two or more directors not, at the time, parties to such
proceeding, (ii) special legal counsel selected by the board or a committee as
set forth in (i) above, or if the quorum of the full board cannot be obtained
and the committee cannot be established, by a majority vote of the full board
in which directors who are parties may participate, or (iii) the stockholders.
Upon the application of a director, a court may order indemnification if it
determines that (i) a director is entitled to reimbursement because such di-
rector has been successful, on the merits or otherwise, in the defense of a
proceeding in which such director has been determined to have met the applica-
ble standards of conduct or (ii) whether or not the director has met the ap-
plicable standards of conduct, the director is entitled to indemnification in
view of all the relevant circumstances, provided that the indemnification pay-
ment shall be limited to the director's expenses in cases involving Corporate
liability or Personal liability.

Similarly, the Trust Agreements provide that the Trustees and officers shall
be indemnified against all liabilities incurred in connection with being or
having been a Trustee or officer except liabilities concerning acts with re-
spect to which it has been determined that such person acted with wilful mis-
feasance, bad faith, gross negligence or reckless disregard of such person's
duties. While the WM Trust II Master Trust Agreement provides that a determi-
nation of indemnification may be made by an independent counsel or a vote of a
majority of a quorum of disinterested trustees, it also enables such decision
to be made by (i) a final decision on the merits by a court or other body that
the indemnified person was not liable or (ii) dismissal of an action for in-
sufficiency of evidence. The WM Trust I Declaration of Trust does not make in-
demnification contingent upon any such determination.

Under Maryland law, indemnification expenses may be paid in advance of the
final disposition if a director provides (a) a written affirmation of his good
faith belief that the standard of conduct necessary for indemnification has
been met and (b) a written undertaking to repay the amount if it is determined
that the standard of conduct has not been met. This undertaking need not be
secured. The Trust Agreements provide that indemnification expenses may be
paid in advance only if (a) there is an undertaking to repay the advance and
appropriate security for such undertaking is given, (b) the relevant trust is
insured against losses arising from any such advance payments or (c) either a
majority of the disinterested Trustees, or independent legal counsel, in a
written opinion, determines that there is reason to believe that the indemni-
fied persons will be found to be entitled to indemnification.

PERSONAL LIABILITY. Under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held personally liable
for the obligations of the trust. However, the Trust Agreements disclaim
shareholder liability for acts or obligations of the trust and/or the Acquir-
ing Funds and require that notice of such disclaimer be given in each agree-
ment, undertaking, or obligation entered into or executed by the trust, the
Acquiring Funds or the Trustees. The Trust Agreements provide for indemnifica-
tion out of Acquiring Fund property for all loss and expense of any share-
holder held personally liable for the obligations of the Acquiring Fund. Thus,
the risk of a shareholder's incurring financial loss from shareholder liabil-
ity is limited to circumstances in which the Acquiring Fund would be unable to
meet its obligations. The likelihood of such a circumstance is considered re-
mote. Under Maryland law, shareholders have no personal liability for acts or
obligations of the corporation.

TERMINATION. Under Maryland law, a corporation may be dissolved by vote of
the majority of the entire board of the directors. In addition, the Griffin
By-laws enable Griffin to be dissolved by a majority vote of all the stock-
holders entitled to vote. The WM Trust I Declaration of Trust provides that WM
Trust

41
<PAGE>

I or any series may be terminated by vote of at least 50% of the shares of
each series entitled to vote (voting separately by series) or by the trustees
upon written notice to the shareholders. The WM Trust II Master Trust Agree-
ment provides that WM Trust II may be terminated only by both a majority vote
of the Trustees and vote of a majority of the outstanding voting securities of
WM Trust II (voting separately by fund).

AMENDMENTS. The Trust Agreements and the Bylaws of both WM Trust I and WM
Trust II may only be amended by a majority of the Trustees. Likewise, the Ar-
ticles of Griffin may only be amended by a majority of the directors, although
the Bylaws may be amended by either a majority of the shareholders or a major-
ity of the board.

FEDERAL INCOME TAX CONSEQUENCES. As a condition to each Acquired Fund's obli-
gation to consummate the Merger, the Acquired Fund will receive an opinion
from Ropes & Gray, counsel to WM Trust I and WM Trust II, to the effect that,
on the basis of the existing provisions of the Code, current administrative
rules and court decisions, for federal income tax purposes: (i) under Section
361 of the Code, no gain or loss will be recognized by the Acquired Fund as a
result of the reorganization; (ii) under Section 354 of the Code, no gain or
loss will be recognized by shareholders of the Acquired Fund on the distribu-
tion of Merger Shares to them in exchange for their shares of the Acquired
Fund; (iii) under Section 358 of the Code, the tax basis of the Merger Shares
that the Acquired Fund's shareholders receive in place of their Acquired Fund
shares will be the same as the basis of the Acquired Fund shares; (iv) under
Section 1223(1) of the Code, a shareholder's holding period for the Merger
Shares received pursuant to the Agreement will be determined by including the
holding period for the Acquired Fund shares exchanged for the Merger Shares,
provided that the shareholder held the Acquired Fund shares as a capital as-
set; (v) under Section 1032 of the Code, no gain or loss will be recognized by
the Acquiring Fund as a result of the reorganization; (vi) under Section
362(b) of the Code, the Acquiring Fund's tax basis in the assets that the Ac-
quiring Fund receives from the Acquired Fund will be the same as the Acquired
Fund's basis in such assets; and (vii) under Section 1223(2) of the Code, the
Acquiring Fund's holding period in such assets will include the Acquired
Fund's holding period in such assets. The opinion will be based on certain
factual statements made by representatives of Griffin, WM Trust I and WM Trust
II, and will also be based on customary assumptions and will include, in the
case of the Merger relating to the Griffin Growth Fund, qualifications noting
and distinguishing adverse authority.

Prior to the Exchange Date, each Acquired Fund will declare a distribution to
shareholders which, together with all previous distributions, will have the
effect of distributing to shareholders of all of its investment company tax-
able income (computed without regard to the deduction for dividends paid) and
net realized capital gains, if any, through the Exchange Date.

CAPITALIZATION. The following tables show the capitalization of each Acquir-
ing Fund and each Acquired Fund as of September 30, 1998, and of each Acquir-
ing Fund on a pro forma basis as of that date, giving effect to the proposed
acquisition by the Acquiring Fund of the assets and liabilities of the Ac-
quired Fund at net asset value:

42
<PAGE>

CAPITALIZATION TABLES

SEPTEMBER 30, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
GRIFFIN WM
MONEY MARKET MONEY MARKET PRO FORMA
FUND FUND COMBINED
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A.................................... $237,590 $409,578 $647,168
Class B.................................... 5,118 5,118
Class I.................................... 110,033 110,033
Class S.................................... 6,516 6,516
- --------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A.................................... 237,590 409,620 647,210
Class B.................................... 5,127 5,127
Class I.................................... 110,044 110,044
Class S.................................... 6,517 6,517
- --------------------------------------------------------------------------------
Net asset value per share
Class A.................................... $ 1.00 $ 1.00 $ 1.00
Class B.................................... 1.00 1.00
Class I.................................... 1.00 1.00
Class S.................................... 1.00 1.00
- --------------------------------------------------------------------------------

<CAPTION>
GRIFFIN WM
TAX-FREE TAX-EXEMPT
MONEY MARKET MONEY MARKET PRO FORMA
FUND FUND COMBINED
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A.................................... $ 23,078 $ 26,365 $49,443
Class B.................................... 13 13
Class I....................................
Class S....................................
- --------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A.................................... 23,083 26,365 49,448
Class B.................................... 13 13
Class I....................................
Class S....................................
- --------------------------------------------------------------------------------
Net asset value per share
Class A.................................... $ 1.00 $ 1.00 $ 1.00
Class B.................................... 1.00 1.00
Class I....................................
Class S....................................
- --------------------------------------------------------------------------------

</TABLE>

43
<PAGE>

<TABLE>
<CAPTION>
GRIFFIN WM
SHORT-TERM SHORT-TERM PRO FORMA
BOND FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $98,176 $33.328 $131,504
Class B............................. 357 3,600 3,957
Class I............................. 1,178 1,178
Class S............................. 760 760
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 9,457 14,134 55,733
Class B............................. 34 1,527 1,678
Class I............................. 500 500
Class S............................. 322 322
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 10.38 $ 2.36 $ 2.36
Class B............................. 10.37 2.36 2.36
Class I............................. 2.36 2.36
Class S............................. 2.36 2.36
- -------------------------------------------------------------------------------

<CAPTION>
GRIFFIN WM
U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA
INCOME FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $108,252 $269,666 $377,918
Class B............................. 5,682 25,782 31,464
Class I............................. 39,358 39,358
Class S............................. 5,510 5,510
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 11,117 24,386 34,173
Class B............................. 583 2,332 2,847
Class I............................. 3,555 3,555
Class S............................. 498 498
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 9.74 $ 11.06 $ 11.06
Class B............................. 9.75 11.05 11.05
Class I............................. 11.07 11.07
Class S............................. 11.07 11.07
- -------------------------------------------------------------------------------

<CAPTION>
GRIFFIN WM
MUNICIPAL BOND TAX-EXEMPT BOND PRO FORMA
FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $21,846 $304,008 $325,854
Class B............................. 568 16,707 17,275
Class I............................. 1 1
Class S............................. 1 1
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 2,267 37,259 39,936
Class B............................. 59 2,047 2,117
Class I............................. 1 1
Class S............................. 1 1
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 9.64 $ 8.16 $ 8.16
Class B............................. 9.64 8.16 8.16
Class I............................. 8.16 8.16
Class S............................. 8.16 8.16
- -------------------------------------------------------------------------------

</TABLE>

44
<PAGE>

<TABLE>
<CAPTION>
GRIFFIN WM
CALIFORNIA CALIFORNIA PRO FORMA
FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $ 41,723 $290,121 $331,844
Class B............................. 7,955 44,360 52,315
Class I............................. 1 1
Class S............................. 7 7
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 4,862 25,166 28,785
Class B............................. 927 3,848 4,538
Class I............................. 1 1
Class S............................. 1 1
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 8.58 $ 11.53 $ 11.53
Class B............................. 8.58 11.53 11.53
Class I............................. 11.53 11.53
Class S............................. 11.53 11.53
- -------------------------------------------------------------------------------

<CAPTION>
GRIFFIN WM PRO FORMA
BOND FUND INCOME FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $ 95,794 $219,172 $314,966
Class B............................. 655 33,794 34,449
Class I............................. 6,841 6,841
Class S............................. 1,681 1,681
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 10,248 22,771 32,729
Class B............................. 70 3,508 3,576
Class I............................. 711 711
Class S............................. 174 174
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 9.35 $ 9.62 $ 9.62
Class B............................. 9.34 9.63 9.63
Class I............................. 9.62 9.62
Class S............................. 9.63 9.63
- -------------------------------------------------------------------------------

<CAPTION>
GRIFFIN WM
GROWTH & INCOME GROWTH & INCOME PRO FORMA
FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $284,576 $467,882 $752,458
Class B............................. 45,107 107,100 152,207
Class I............................. 172,580 172,580
Class S............................. 11,833 11,833
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 16,964 25,452 40,935
Class B............................. 2,697 5,888 8,368
Class I............................. 9,375 9,375
Class S............................. 650 650
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 16.77 $ 18.38 $ 18.38
Class B............................. 16.73 18.19 18.19
Class I............................. 18.41 18.41
Class S............................. 18.21 18.21
- -------------------------------------------------------------------------------
</TABLE>

45
<PAGE>

<TABLE>
<CAPTION>
GRIFFIN WM PRO FORMA
GROWTH FUND GROWTH FUND COMBINED
----------- ----------- ---------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A...................................... $84,020 $ 98,723 $182,743
Class B...................................... 5,290 37,172 42,461
Class I...................................... 116,183 116,183
Class S...................................... 11,749 11,749
- --------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A...................................... 5,684 5,780 10,699
Class B...................................... 364 2,259 2,581
Class I...................................... 6,760 6,760
Class S...................................... 714 714
- --------------------------------------------------------------------------------
Net asset value per share
Class A...................................... $ 14.78 $ 17.08 $ 17.08
Class B...................................... 14.54 16.45 16.45
Class I...................................... 17.19 17.19
Class S...................................... 16.46 16.46
- --------------------------------------------------------------------------------
</TABLE>

Pro forma financial statements of the Acquiring Funds as of and for the fis-
cal years ended December 31, 1997, October 31, 1997, and June 30, 1998, as ap-
plicable, and as of and for the six months ended June 30, 1998 and April 30,
1998 are included in the Merger SAI. Because each Agreement provides that the
Acquiring Fund will be the surviving Fund following the Merger and because the
Acquiring Fund's investment objective and policies will remain unchanged, the
pro forma financial statements reflect the transfer of the assets and liabili-
ties of the Acquired Fund to the Acquiring Fund as contemplated by the Agree-
ment.

- -------------------------------------------------------------------------------

INFORMATION ABOUT THE ACQUIRED FUNDS

Other information regarding the Acquired Funds, including information with
respect to their investment objectives, policies and restrictions and finan-
cial history may be found in the Merger SAI, the Griffin Prospectus, the Grif-
fin SAI and the Griffin Annual Report, which are available upon request by
calling 1-800-676-4450.

Other information filed by the Griffin Funds, Inc. can be inspected and cop-
ied at the Public Reference Facilities maintained by the Securities and Ex-
change Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World
Trade Center, Suite 1300, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also
be obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates.

- -------------------------------------------------------------------------------

INFORMATION ABOUT THE ACQUIRING FUNDS

Other information relating to the Acquiring Funds, including information with
respect to their investment objectives, policies and restrictions and finan-
cial history may be found in the WM Prospectus, which accompanies this
Prospectus/Proxy Statement, and in the Merger SAI, the WM SAI and the WM An-
nual Reports, which are available upon request by calling 1-800-222-5852. To
the extent that any information in respect of the Acquiring Funds found in any
such document is inconsistent with the information contained in this
Prospectus/Proxy Statement, this Prospectus/Proxy Statement should be deemed
to supersede such other document. Certain information and commentary from the
Acquiring Funds' most
46
<PAGE>

recent annual or semi-annual reports relating to the Acquiring Funds' recent
investment performance is set forth in Appendix B to this Prospectus/Proxy
Statement.

Other information filed by the Acquiring Funds can be inspected and copied at
the Public Reference Facilities maintained by the Securities and Exchange Com-
mission at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Cen-
ter, Suite 1300, New York, New York 10048; and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be obtained
from the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549, at pre-
scribed rates.

- -------------------------------------------------------------------------------

VOTING INFORMATION

RECORD DATE, QUORUM AND METHOD OF TABULATION. Shareholders of record of each
Acquired Fund at the close of business on December 15, 1998 (the "Record
Date") will be entitled to notice of and to vote at the Meeting or any ad-
journment thereof. The holders of one-third of the outstanding shares of each
Acquired Fund outstanding at the close of business on the Record Date present
in person or represented by proxy will constitute a quorum for the Meeting
with respect to that Fund. Shareholders are entitled to one vote for each
share held, with fractional shares voting proportionally. Class A and Class B
shareholders of each Acquired Fund vote together as a single class in connec-
tion with the approval or disapproval of the Mergers. Shareholders of each Ac-
quired Fund will vote only on the approval or disapproval of that Fund's Merg-
er. The Agreements and Plans of Reorganization contemplate the liquidation and
dissolution of Griffin in the event all of the Mergers are consummated, which
requires the approval of a majority of votes cast at the Meeting, with all Ac-
quired Fund stockholders voting in the aggregate. A vote for an Agreement and
Plan of Reorganization includes a vote for the liquidation and dissolution of
Griffin; correspondingly, a vote against an Agreement and Plan of Reorganiza-
tion is a vote against the liquidation and dissolution of Griffin.

Votes cast by proxy or in person at the Meeting will be counted by persons
appointed by Griffin as tellers for the Meeting. The tellers will count the
total number of votes cast "for" approval of the Proposal for purposes of de-
termining whether sufficient affirmative votes have been cast. The tellers
will count shares represented by proxies that reflect abstentions and "broker
non-votes" (i.e., shares held by brokers or nominees as to which (i) instruc-
tions have not been received from the beneficial owners or the persons enti-
tled to vote and (ii) the broker or nominee does not have the discretionary
voting power on a particular matter) as shares that are present and entitled
to vote on the matter for purposes of determining the presence of a quorum. So
long as a quorum is present, abstentions and broker non-votes have the effect
of negative votes on the Proposals relating to the Mergers.

SHARES OUTSTANDING AND BENEFICIAL OWNERSHIP. As of the Record Date, as shown
on the books of the Acquired Funds, there were issued and outstanding the fol-
lowing number of shares of beneficial interest of each class of each Acquired
Fund:

<TABLE>
<CAPTION>
CLASS A CLASS B
----------- ---------
<S> <C> <C>
Griffin Money Market Fund................................. 230,419,493 -
Griffin Tax-Free Money Market Fund........................ 24,180,680 -
Griffin Short-Term Bond Fund.............................. 9,228,254 35,239
Griffin U.S. Government Income Fund....................... 11,014,883 662,947
Griffin Municipal Bond Fund............................... 2,298,617 58,859
Griffin California Tax-Free Fund.......................... 4,774,135 974,163
Griffin Bond Fund......................................... 9,967,683 62,871
Griffin Growth & Income Fund.............................. 16,193,871 2,641,974
Griffin Growth Fund....................................... 5,355,055 351,278
</TABLE>

47
<PAGE>

As of the Record Date, the officers and Directors of Griffin and the officers
and Trustees of WM Trust I and WM Trust II as a group beneficially owned less
than 1% of the outstanding shares of each Acquired Fund. As of October 29,
1998 in the case of the Acquired Funds and October 1, 1998 in the case of the
Acquiring Funds, to the best of the knowledge of Griffin, WM Trust I and WM
Trust II, the following persons owned of record or beneficially 5% or more of
the outstanding shares of the Acquired Funds and the Acquiring Funds:

WM MONEY MARKET FUND: BHC Securities, Omnibus Account, Attn: Cash Sweeps
Dept., 2005 Market St., 12th floor, Philadelphia, PA 19103-7042, 19.8%;

Northwestern Trust & Investors, Advisory Company, 1201 3rd Ave., Suite 2010,
Seattle, WA 98101-3026, 15.5%.

SAM Balanced Portfolio, c/o WM Advisors, 5200 E. 2nd St., 2nd floor, Long
Beach, CA 90803, 7.7%;

SAM Conservative Growth Portfolio, c/o. WM Advisors, 5200 E. 2nd St., 2nd
floor, Long Beach, CA 90803, 7.23 %;

WM TAX-EXEMPT MONEY MARKET FUND: BHC Securities, Omnibus Account, Attn: Cash
Sweeps Dept., 2005 Market St., 12th floor, Philadelphia, PA 19103-7042,
13.38%.

WM INCOME FUND: Northwestern Trust & Investors, Advisory Company, 1201 3rd
Ave., Suite 2010, Seattle, WA 98101-3026, 6.81%.

WM GROWTH & INCOME FUND: Northwestern Trust & Investors, Advisory Company,
1201 3rd Ave., Suite 2010, Seattle, WA 98101-3026, 16.57%.

SAM Conservative Growth Portfolio, c/o WM Advisors, 5200 E. 2nd, 2nd floor,
Long Beach, CA 90803, 11.22%;

SAM Balanced Portfolio, c/o WM Advisors, 5200 E. 2nd, 2nd floor, Long Beach,
CA 90803, 7.48%;

WM U.S. GOVERNMENT FUND: SAM Balanced Portfolio, c/o WM Advisors, 5200 E. 2nd
St., 2nd floor, Long Beach, CA 90803, 9.13%;

GRIFFIN MONEY MARKET FUND: Home Savings of America FSB, 4900 Rivergrade Road,
Mail Code 3080, Irwindale, CA 91706-1438, 28.28%;

The Northern Trust Company TR, Ahmanson Advantage Account, 50 S. Lasalle St.,
Chicago, IL 60603-1008, 20.20%.

GRIFFIN TAX-FREE MONEY MARKET FUND : Home Savings of America FSB, 4900
Rivergrade Road, Mail Code 3080, Irwindale, CA 91706-1438, 15.75%.

GRIFFIN U.S. GOVERNMENT INCOME FUND : The Northern Trust Company TR, Ahmanson
Advantage Account, 50 S. Lasalle St., Chicago, IL 60603-1008, 5.07%.

GRIFFIN GROWTH & INCOME FUND: The Northern Trust Company TR, Ahmanson Advan-
tage Account., 50 S. Lasalle St., Chicago, IL 60603-1008, 6.93%.

GRIFFIN GROWTH FUND: The Northern Trust Company TR, Ahmanson Advantage Ac-
count, 50 S. Lasalle St., Chicago, IL 60603-1008, 8.18%.

SOLICITATION OF PROXIES. Solicitation of proxies by personal interview, mail
and facsimile, may be made by officers and Directors of Griffin and the offi-
cers and Trustees of the Trusts and employees of Griffin Advisers, WM Advisors
and their affiliates. In addition, the firm of D.F. King & Co., Inc. ("D.F.
King") may be retained to assist in the solicitation of proxies. The costs for
solicitation of proxies, like the other costs associated with the Merger of
the Griffin/WM Funds, will be borne by WM Advisors. See "Information About the
Mergers."

REVOCATION OF PROXIES. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary of Griffin, c/o Boston Equiserve, P.O.
Box 9389, Boston, MA 02205-9967 or in person at the Meeting, by executing a
superseding proxy, or by submitting a notice of revocation to the Secretary of
Griffin. All properly executed proxies received in time for the Meeting will
be voted as specified in the proxy, or, if no specification is made FOR the
proposal (set forth in Proposals 1-9 of the Notice of Meeting) to implement
the Merger with respect to the relevant Acquired Fund.

SHAREHOLDER PROPOSALS AT FUTURE MEETINGS OF SHAREHOLDERS. The Griffin Arti-
cles of Incorporation do not provide for annual meetings of shareholders, and
the Griffin Funds do not currently intend to hold such a meeting for share-
holders of the Acquired Funds in 1999. Shareholder proposals for inclusion in
a proxy statement for any subsequent meeting of the

48
<PAGE>

Acquired Funds' shareholders must be received by Griffin a reasonable period of
time prior to any such meeting. If the Mergers are consummated, the Acquired
Funds' existence will terminate in March, 1999 or shortly thereafter, after
which there would be no meetings of the shareholders of the Acquired Funds.

ADJOURNMENT. If sufficient votes in favor of any proposal are not received by
the time scheduled for the Meeting, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of prox-
ies. Any adjournment will require the affirmative vote of a plurality of the
votes cast on the question in person or by proxy at the session of the Meeting
to be adjourned. If the Meeting is adjourned with respect to one or more Pro-
posals, any other Proposal may still be acted upon by the shareholders. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the Proposal. They will vote
against any such adjournment those proxies required to be voted against the
Proposal.

December 26, 1998

49
<PAGE>

APPENDIX A

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization (the "Agreement") is made as of
, 1998 by and between The Griffin Funds, Inc., a Maryland corporation,
on behalf of its [ ] Fund series (the "Acquired Fund") and WM Trust I, a
Massachusetts business trust (the "WM Trust"), on behalf of its [ ] Fund
series (the "Acquiring Fund").

PLAN OF REORGANIZATION

(a) On the Exchange Date (as defined in Section 6), the Acquired Fund will
sell, assign, convey, transfer and deliver to the Acquiring Fund all of its
properties and assets. In consideration therefor, the Acquiring Fund shall, on
the Exchange Date, assume all of the liabilities of the Acquired Fund existing
at the Valuation Time (as defined in Section 3(c)) and deliver to the Acquired
Fund (i) a number of full and fractional Class A shares of beneficial interest
of the Acquiring Fund (the "Class A Merger Shares") having an aggregate net
asset value equal to the value of the assets of the Acquired Fund attributable
to Class A shares of the Acquired Fund transferred to the Acquiring Fund on
such date less the value of the liabilities of the Acquired Fund attributable
to Class A shares of the Acquired Fund assumed by the Acquiring Fund on that
date and (ii) a number of full and fractional Class B shares of beneficial in-
terest of the Acquiring Fund (the "Class B Merger Shares") having an aggregate
net asset value equal to the value of the assets of the Acquired Fund attrib-
utable to Class B shares of the Acquired Fund transferred to the Acquiring
Fund on such date less the value of the liabilities of the Acquired Fund at-
tributable to Class B shares of the Acquired Fund assumed by the Acquiring
Fund on that date. (The Class A Merger Shares and the Class B Merger Shares
shall be referred to collectively as the "Merger Shares.") It is intended that
the reorganization described in this Agreement shall be a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").

(b) Upon consummation of the transactions described in paragraph (a) of this
Agreement, the Acquired Fund shall distribute in complete liquidation to its
Class A and Class B shareholders of record as of the Exchange Date the Class A
and Class B Merger Shares of the Acquiring Fund, each such shareholder being
entitled to receive that proportion of such Class A and Class B Merger Shares
which the number of Class A and Class B shares of beneficial interest of the
Acquired Fund held by such shareholder bears to the number of Class A and
Class B shares of the Acquired Fund outstanding on such date. Certificates
representing the Merger Shares will not be issued. All issued and outstanding
shares of the Acquired Fund will simultaneously be canceled on the books of
the Acquired Fund.

(c) As promptly as practicable after the liquidation of the Acquired Fund as
aforesaid, the Acquired Fund shall be dissolved pursuant to the provision of
the Articles of Incorporation of The Griffin Funds, Inc. and applicable law,
and its legal existence terminated. Prior to the Exchange Date, The Griffin
Funds, Inc. and WM Trust shall have filed appropriate Articles of Transfer
pursuant to the laws of the State of Maryland, effective as of the Exchange
Date with respect to the transactions contemplated hereby with the Department
of Assessments and Taxation of the State of Maryland. Any reporting responsi-
bility of the Acquired Fund is and shall remain the responsibility of the Ac-
quired Fund up to and including the Exchange Date and, if applicable, such
later date on which the Acquired Fund is liquidated.

(d) This agreement and the transactions contemplated herein will be approved
by the requisite vote of the holders of the outstanding shares of common stock
of The Griffin Funds, Inc. and of each Acquired Fund, consistent with the pro-
visions of the laws of the State of Maryland, The Griffin Funds, Inc.'s Arti-
cles of Incorporation and By-Laws and the 1940 Act. Approval of this Agreement
by the requisite vote of the holders of the outstanding shares of common stock
in an Acquired Fund shall constitute approval of all of the transactions con-
templated herein, including the reorganization of all investment portfolios of
The Griffin Funds, Inc. as described in the Prospectus/Proxy and the dissolu-
tion, of The Griffin Funds, Inc. upon consummation of each such reorganiza-
tion, subject to the shareholder approval required under Maryland law and the
Articles of Incorporation and By-Laws of The Griffin Funds, Inc.
A-1
<PAGE>

AGREEMENT

The Acquiring Fund and the Acquired Fund agree as follows:

1. Representations, Warranties and Agreements of the Acquiring Fund. The Ac-
quiring Fund and WM Trust represent and warrants to and agrees with the Ac-
quired Fund that:

a. The Acquiring Fund is a series of shares of the WM Trust, a Massachusetts
business trust duly established and validly existing under the laws of The
Commonwealth of Massachusetts, and has power to own all of its properties and
assets and to carry out its obligations under this Agreement. Each of the WM
Trust and the Acquiring Fund is qualified as a foreign association in every
jurisdiction where required, except to the extent that failure to so qualify
would not have a material adverse effect on the WM Trust. Each of the WM
Trust and the Acquiring Fund has all necessary federal, state and local au-
thorizations to carry on its business as now being conducted and to carry out
this Agreement.

b. The WM Trust is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and
such registration has not been revoked or rescinded and is in full force and
effect.

c. The audited statement of assets and liabilities, statements of opera-
tions, statements of changes in net assets and a schedule of investments (in-
dicating their market values) of the Acquiring Fund as of and for the year
ended October 31, 1998 have been or will be furnished to the Acquired Fund.
Such statement of assets and liabilities and schedules fairly present the fi-
nancial positions of the Acquiring Fund as of the dates indicated therein and
said statements of operations and statements of changes in net assets fairly
reflect the results of its operations and changes in net assets for the peri-
ods covered thereby in conformity with generally accepted accounting princi-
ples.

d. The prospectus and statement of additional information of the Acquiring
Fund, each dated November 1, 1998 (collectively, the "WM Prospectus"), previ-
ously furnished to the Acquired Fund, did not as of such date and will not up
to and including the Exchange Date, with respect to the Acquiring Fund, con-
tain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.

e. There are no material legal, administrative or other proceedings pending
or, to the knowledge of the WM Trust or the Acquiring Fund, threatened
against the WM Trust or the Acquiring Fund, which assert liability on the
part of the WM Trust or the Acquiring Fund. The Acquiring Fund knows of no
facts which might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or judg-
ment of any court or governmental body which materially and adversely affects
its business or its ability to consummate the transaction herein contemplat-
ed.

f. The Acquiring Fund has no known liabilities of a material nature, contin-
gent or otherwise, other than those shown belonging to it on its statement of
assets and liabilities as of October 31, 1998 and those incurred in the ordi-
nary course of its business as an investment company since October 31, 1998.
Prior to the Exchange Date, the Acquiring Fund will endeavor to quantify and
to reflect on its balance sheet all of its material known liabilities and
will advise the Acquired Fund of all material liabilities, contingent or oth-
erwise, incurred by it subsequent to October 31, 1998, whether or not in-
curred in the ordinary course of business.

g. As of the Exchange Date, the Acquiring Fund will have filed all federal
and other tax returns and reports which, to the knowledge of the WM Trust's
officers, are required to be filed on or before such date by the Acquiring
Fund and will have paid or will pay all federal and other taxes shown to be
due on said returns or on any assessments received by the Acquiring Fund. All
tax liabilities of the Acquiring Fund have been adequately provided for on
its books, and no tax deficiency or liability of the Acquiring Fund has been
asserted, and no question with respect thereto has been raised or is under
audit, by the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid.

h. No consent, approval, authorization or order of any court or governmental
authority is required for the consummation by the Acquiring Fund of the
transactions contemplated by this Agreement, except such as may be required
under the Securities Act of 1933, as amended (the "1933 Act"), the Securities
Exchange Act of 1934, as amended (the

A-2
<PAGE>

"1934 Act"), the 1940 Act and state securities or blue sky laws (which term
as used herein shall include the laws of the District of Columbia and of
Puerto Rico).

i. The registration statement (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") by the WM Trust on Form
N-14 on behalf of the Acquiring Fund and relating to the Merger Shares issua-
ble hereunder and the proxy statement of the Acquired Fund relating to the
meeting of the Acquired Fund shareholders referred to in Section 7(a) herein
(together with the documents incorporated therein by reference, the "Acquired
Fund Proxy Statement"), on the effective date of the Registration Statement,
(i) will comply in all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the rules and regulations thereunder and
(ii) will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time of the shareholders meet-
ing referred to in Section 7(a) and on the Exchange Date, the Acquired Fund
Proxy Statement will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that none of
the representations and warranties in this subsection shall apply to state-
ments in or omissions from the Registration Statement or the Acquired Fund
Proxy Statement made in reliance upon and in conformity with information fur-
nished in writing by the Acquired Fund to the Acquiring Fund or the WM Trust
specifically for use in the Registration Statement or the Acquired Fund Proxy
Statement.

j. There are no material contracts outstanding to which the Acquiring Fund
is a party, other than as are or will be disclosed in the WM Prospectus, the
Registration Statement or the Acquired Fund Proxy Statement.

k. All of the issued and outstanding shares of beneficial interest of the
Acquiring Fund have been offered for sale and sold in conformity with all ap-
plicable federal and state securities laws (including any applicable exemp-
tions therefrom), or the Acquiring Fund has taken any action necessary to
remedy any prior failure to have offered for sale and sold such shares in
conformity with such laws.

l. The Acquiring Fund qualifies and will at all times through the Exchange
Date qualify for taxation as a "regulated investment company" under Sections
851 and 852 of the Code.

m. The issuance of the Merger Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.

n. The Merger Shares to be issued to the Acquired Fund have been duly autho-
rized and, when issued and delivered pursuant to this Agreement, will be le-
gally and validly issued and will be fully paid and non-assessable by the Ac-
quiring Fund, and no shareholder of the Acquiring Fund will have any preemp-
tive right of subscription or purchase in respect thereof.

o. All issued and outstanding shares of the Acquiring Fund are, and at the
Exchange Date will be, duly authorized, validly issued, fully paid and non-
assessable by the Acquiring Fund. The Acquiring Fund does not have outstand-
ing any options, warrants or other rights to subscribe for or purchase any
Acquiring Fund shares, nor is there outstanding any security convertible into
any Acquiring Fund shares.

p. That prior to the Exchange Date, three (3) members of the Board of Direc-
tors of The Griffin Funds, Inc. shall have been elected to the Board of
Trustees of WM Trust to begin service at the time of the dissolution of The
Griffin Funds, Inc.

2. Representations, Warranties and Agreements of the Acquired Fund. The Ac-
quired Fund and The Griffin Funds, Inc. represent and warrant to and agrees
with the Acquiring Fund that:

a. The Acquired Fund is a series of shares of The Griffin Funds, Inc., a
Maryland corporation duly established and validly existing under the laws of
the State of Maryland, and has power to own all of its properties and assets
and to carry out its obligations under this Agreement. Each of The Griffin
Funds, Inc. and the Acquired Fund is qualified as a foreign association in
every jurisdiction where required, except to the extent that failure to so
qualify would not have a material adverse effect on The Griffin Funds, Inc.
Each of The Griffin Funds, Inc. and the Acquired Fund has all necessary fed-
eral, state and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted and to carry out its ob-
ligations under this Agreement.

A-3
<PAGE>

b. The Griffin Funds, Inc. is registered under the 1940 Act as an open-end
management investment company, and such registration has not been revoked or
rescinded and is in full force and effect.

c. A statement of assets and liabilities, statements of operations, state-
ments of changes in net assets and a schedule of investments (indicating
their market values) of the Acquired Fund as of and for the year ended Sep-
tember 30, 1998 have been or will be furnished to the Acquiring Fund. Such
statement of assets and liabilities and schedule fairly present the financial
position of the Acquired Fund as of their date, and such statements of opera-
tions and statements of changes in net assets fairly reflect the results of
its operations and changes in net assets for the periods covered thereby, in
conformity with generally accepted accounting principles.

d. The current prospectus and statement of additional information of The
Griffin Funds, Inc., dated [December 23, 1998], which has been or will be
furnished to the Acquiring Fund, did not as of such date and does not as of
the date of this Agreement contain, with respect to The Griffin Funds, Inc.
or the Acquired Fund, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.

e. There are no material legal, administrative or other proceedings pending
or, to the knowledge of The Griffin Funds, Inc. or the Acquired Fund, threat-
ened against The Griffin Funds, Inc. or the Acquired Fund, which assert lia-
bility on the part of The Griffin Funds, Inc. or the Acquired Fund. The Ac-
quired Fund knows of no facts which might form the basis for the institution
of such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which materially
and adversely affects its business or its ability to consummate the transac-
tions herein contemplated.

f. There are no material contracts outstanding to which the Acquired Fund is
a party, other than as are disclosed in The Griffin Funds, Inc.'s registra-
tion statement on Form N-1A.

g. The Acquired Fund has no known liabilities of a material nature, contin-
gent or otherwise, other than those shown on the Acquired Fund's statement of
assets and liabilities as of September 30, 1998 referred to above and those
incurred in the ordinary course of its business as an investment company
since such date. Prior to the Exchange Date, the Acquired Fund will endeavor
to quantify and to reflect on its balance sheet all of its material known li-
abilities and will advise the Acquiring Fund of all material liabilities,
contingent or otherwise, incurred by it subsequent to September 30, 1998,
whether or not incurred in the ordinary course of business.

h. As of the Exchange Date, the Acquired Fund will have filed all federal
and other tax returns and reports which, to the knowledge of The Griffin
Funds, Inc.'s officers, are required to be filed on or before such date by
the Acquired Fund and has paid or will pay all federal and other taxes shown
to be due on said returns or on any assessments received by the Acquired
Fund. All tax liabilities of the Acquired Fund have been adequately provided
for on its books, and no tax deficiency or liability of the Acquired Fund has
been asserted, and no question with respect thereto has been raised or is un-
der audit, by the Internal Revenue Service or by any state or local tax au-
thority for taxes in excess of those already paid.

i. At the Exchange Date, The Griffin Funds, Inc., on behalf of the Acquired
Fund, will have full right, power and authority to sell, assign, transfer and
deliver the Investments (as defined below) and any other assets and liabili-
ties of the Acquired Fund to be transferred to the Acquiring Fund pursuant to
this Agreement. At the Exchange Date, subject only to the delivery of the In-
vestments and any such other assets and liabilities as contemplated by this
Agreement, the Acquiring Fund will acquire the Investments and any such other
assets and liabilities subject to no encumbrances, liens or security inter-
ests whatsoever and without any restrictions upon the transfer thereof. As
used in this Agreement, the term "Investments" shall mean the Acquired Fund's
investments shown on the schedule of its investments as of September 30, 1998
referred to in Section 2(c) hereof, as supplemented with such changes in the
portfolio as the Acquired Fund shall make, and changes resulting from stock
dividends, stock split-ups, mergers and similar corporate actions, through
the Exchange Date.

j. No registration under the 1933 Act of any of the Investments would be re-
quired if they were, as of the time of such transfer, the subject of a public
distribution by either of the Acquiring Fund or the

A-4
<PAGE>

Acquired Fund, except as previously disclosed to the Acquiring Fund by the
Acquired Fund.

k. No consent, approval, authorization or order of any court or governmental
authority is required for the consummation by the Acquired Fund of the trans-
actions contemplated by this Agreement, except such as may be required under
the 1933 Act, 1934 Act, the 1940 Act or state securities or blue sky laws.

l. The Registration Statement and the Acquired Fund Proxy Statement, on the
effective date of the Registration Statement, (i) will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act
and the rules and regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and at the time of the shareholders meeting referred to in Section 7(a) and
on the Exchange Date, the Acquired Fund Proxy Statement and the Registration
Statement will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that none of the repre-
sentations and warranties in this subsection shall apply to statements in or
omissions from the Registration Statement or the Acquired Fund Proxy State-
ment made in reliance upon and in conformity with information furnished in
writing by the Acquiring Fund to the Acquired Fund or The Griffin Funds, Inc.
specifically for use in the Registration Statement or the Acquired Fund Proxy
Statement.

m. The Acquired Fund qualifies and will at all times through the Exchange
Date qualify for taxation as a "regulated investment company" under Section
851 and 852 of the Code.

n. At the Exchange Date, the Acquired Fund will have sold such of its as-
sets, if any, as are necessary to assure that, after giving effect to the ac-
quisition of the assets of the Acquired Fund pursuant to this Agreement, the
Acquiring Fund will remain a "diversified company" within the meaning of Sec-
tion 5(b)(l) of the 1940 Act and in compliance with such other mandatory in-
vestment restrictions as are set forth in the WM Prospectus, as amended
through the Exchange Date.

o. All of the issued and outstanding shares of common stock of the Acquired
Fund shall have been offered for sale and sold in conformity with all appli-
cable federal and state securities laws (including any applicable exemptions
therefrom), or the Acquired Fund has taken any action necessary to remedy any
prior failure to have offered for sale and sold such shares in conformity
with such laws.

p. All issued and outstanding shares of the Acquired Fund are, and at the
Exchange Date will be, duly authorized, validly issued, fully paid and non-
assessable by the Acquired Fund. The Acquired Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any of the
Acquired Fund shares, nor is there outstanding any security convertible into
any of the Acquired Fund shares.

3. Reorganization.

a. Subject to the requisite approval of the shareholders of the Acquired
Fund and to the other terms and conditions contained herein (including the
Acquired Fund's obligations to distribute to its shareholders all of its in-
vestment company taxable income and net capital gain as described in Section
8(m)), the Acquired Fund agrees to sell, assign, convey, transfer and deliver
to the Acquiring Fund, and the Acquiring Fund agrees to acquire from the Ac-
quired Fund, on the Exchange Date all of the Investments and all of the cash
and other properties and assets of the Acquired Fund, whether accrued or con-
tingent (including cash received by the Acquired Fund upon the liquidation by
the Acquired Fund of any investments), in exchange for that number of shares
of beneficial interest of the Acquiring Fund provided for in Section 4 and
the assumption by the Acquiring Fund of all of the liabilities of the Ac-
quired Fund, whether accrued or contingent, existing at the Valuation Time
(as defined below) except for the Acquired Fund's liabilities, if any, aris-
ing in connection with this Agreement. Pursuant to this Agreement, the Ac-
quired Fund will, as soon as practicable after the Exchange Date, distribute
all of the Merger Shares received by it to the shareholders of the Acquired
Fund in exchange for their Class A and Class B shares of the Acquired Fund.

b. The Acquired Fund will pay or cause to be paid to the Acquiring Fund any
interest, cash or such dividends, rights and other payments received by it on
or after the Exchange Date with respect to the Investments and other proper-
ties and assets of the Acquired Fund, whether accrued or contingent,

A-5
<PAGE>

received by it on or after the Exchange Date. Any such distribution shall be
deemed included in the assets transferred to the Acquiring Fund at the
Exchange Date and shall not be separately valued unless the securities in re-
spect of which such distribution is made shall have gone "ex" such distribu-
tion prior to the Valuation Time, in which case any such distribution which
remains unpaid at the Exchange Date shall be included in the determination of
the value of the assets of the Acquired Fund acquired by the Acquiring Fund.

c. The Valuation Time shall be 4:00 p.m. Eastern time on the Exchange Date
or such earlier or later day as may be mutually agreed upon in writing by the
parties hereto (the "Valuation Time").

4. Valuation Time. On the Exchange Date, the Acquiring Fund will deliver to
the Acquired Fund (i) a number of full and fractional Class A Merger Shares
having an aggregate net asset value equal to the value of the assets of the
Acquired Fund attributable to Class A shares of the Acquired Fund transferred
to the Acquiring Fund on such date less the value of the liabilities of the
Acquired Fund attributable to Class A shares of the Acquired Fund assumed by
the Acquiring Fund on that date, and (ii) a number of full and fractional
Class B Merger Shares having an aggregate net asset value equal to the value
of the assets of the Acquired Fund attributable to Class B shares of the Ac-
quired Fund transferred to the Acquiring Fund on such date less the value of
the liabilities of the Acquired Fund attributable to Class B shares of the Ac-
quired Fund assumed by the Acquiring Fund on that date, determined as herein-
after provided in this Section 4.

a. The net asset value of the Merger Shares to be delivered to the Acquired
Fund, the value of the assets attributable to the shares of the Acquired
Fund, and the value of the liabilities attributable to the Class A and Class
B shares of the Acquired Fund to be assumed by the Acquiring Fund, shall in
each case be determined as of the Valuation Time.

b. The net asset value of the Class A and Class B Merger Shares shall be
computed in the manner set forth in the WM Prospectus. The value of the as-
sets and liabilities of the Class A and Class B shares of the Acquired Fund
shall be determined by the Acquiring Fund, in cooperation with the Acquired
Fund, pursuant to procedures which the Acquiring Fund would use in determin-
ing the fair market value of the Acquiring Fund's assets and liabilities. For
such purposes, the Acquiring Fund and Acquired Fund agree to develop mutually
acceptable pricing procedures and to implement such procedures prior to the
Valuation Time.

c. No adjustment shall be made in the net asset value of either the Acquired
Fund or the Acquiring Fund to take into account differences in realized and
unrealized gains and losses.

d. The Acquired Fund shall distribute the Class A Merger Shares to the Class
A shareholders of the Acquired Fund by furnishing written instructions to the
Acquiring Fund's transfer agent, which will as soon as practicable set up
open accounts for each Class A Acquired Fund shareholder in accordance with
such written instructions. The Acquired Fund shall distribute the Class B
Merger Shares to the Class B shareholders of the Acquired Fund by furnishing
written instructions to the Acquiring Fund's transfer agent, which will as
soon as practicable set up open accounts for each Class B Acquired Fund
shareholder in accordance with such written instructions.

e. The Acquiring Fund shall assume all liabilities of the Acquired Fund,
whether accrued or contingent, in connection with the acquisition of assets
and subsequent dissolution of the Acquired Fund or otherwise, except for the
Acquired Fund's liabilities, if any, pursuant to this Agreement.

5. Expense, Fees, etc.

a. The parties hereto understand and agree that the transactions contem-
plated by this Agreement are being undertaken contemporaneously with a gen-
eral consolidation of certain of the registered investment companies advised
by WM Advisors, Inc. ("WM Advisors") and Griffin Financial Investment Advis-
ers and their affiliates; and that in connection therewith the costs of all
such transactions are being borne by WM Advisors.

b. In the event the transactions contemplated by this Agreement are not con-
summated by reason of the Acquiring Fund's being either unwilling or unable
to go forward other than by reason of the nonfulfillment or failure of any
condition to the Acquiring Fund's obligations referred to in Section 7(a) or
Section 8, the Acquiring Fund shall pay directly all reasonable fees and ex-
penses incurred by the Acquired Fund in connection with such transactions,
including, without limitation, legal, accounting and filing fees.

A-6
<PAGE>

c. In the event the transactions contemplated by this Agreement are not con-
summated by reason of the Acquired Fund's being either unwilling or unable to
go forward other than by reason of the nonfulfillment or failure of any con-
dition to the Acquired Fund's obligations referred to in Section 7(a) or Sec-
tion 9, the Acquired Fund shall pay directly all reasonable fees and expenses
incurred by the Acquiring Fund in connection with such transactions, includ-
ing, without limitation, legal, accounting and filings fees.

d. In the event the transactions contemplated by this Agreement are not con-
summated for any reason other than (i) the Acquiring Fund's or the Acquired
Fund's being either unwilling or unable to go forward or (ii) the nonfulfill-
ment or failure of any condition to the Acquiring Fund's or the Acquired
Fund's obligations referred to in Section 7(a), Section 8 or Section 9 of
this Agreement, as applicable, then each of the Acquiring Fund and the Ac-
quired Fund shall bear all of its own expenses incurred in connection with
such transactions.

e. Notwithstanding any other provisions of this Agreement, if for any reason
the transactions contemplated by this Agreement are not consummated, no party
shall be liable to the other party for any damages resulting therefrom, in-
cluding, without limitation, consequential damages, except as specifically
set forth above.

6. Exchange Date. Delivery of the assets of the Acquired Fund to be trans-
ferred, assumption of the liabilities of the Acquired Fund to be assumed, and
the delivery of the Merger Shares to be issued shall be made at Boston, Massa-
chusetts as of [March 6, 1999], or at such other date agreed to by an officer
of the Acquiring Fund and the Acquired Fund, the date and time upon which such
delivery is to take place being referred to herein as the "Exchange Date." All
acts taking place at the Exchange Date shall be deemed to take place simulta-
neously as of the 4:00 p.m. Eastern time on the Exchange Date unless otherwise
provided.

7. Meetings of Shareholders; Dissolution.

a. The Griffin Funds, Inc., on behalf of the Acquired Fund, agrees to call a
meeting of the Acquired Fund's shareholders as soon as is practicable after
the effective date of the Registration Statement for the purpose of consider-
ing the sale of all of the Acquired Fund's assets to and the assumption of
all of its liabilities by the Acquiring Fund as herein provided, adopting
this Agreement, and authorizing the liquidation and dissolution of the Ac-
quired Fund.

b. The Acquired Fund agrees that the liquidation and dissolution of the Ac-
quired Fund will be effected in the manner provided in The Griffin Funds,
Inc.'s Articles of Incorporation and Bylaws in accordance with applicable law
and that on and after the Exchange Date, the Acquired Fund shall not conduct
any business except in connection with its liquidation and dissolution.

c. The Acquiring Fund has, in consultation with the Acquired Fund and based
in part on information furnished by the Acquired Fund, filed the Registration
Statement with the Commission. Each of the Acquired Fund and the Acquiring
Fund will cooperate with the other, and each will furnish to the other the
information relating to itself required by the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder to be set forth in the Reg-
istration Statement.

8. Conditions to the Acquiring Fund's Obligations. The obligations of the Ac-
quiring Fund hereunder shall be subject to the following conditions:

a. That this Agreement shall have been adopted and the transactions contem-
plated hereby shall have been approved by the requisite votes of the holders
of the outstanding shares of common stock of the Acquired Fund entitled to
vote.

b. That the Acquired Fund shall have furnished to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, with values deter-
mined as provided in Section 4 of this Agreement, together with a list of In-
vestments with their respective tax costs, all as of the Valuation Time, cer-
tified on the Acquired Fund's behalf by The Griffin Funds, Inc.'s President
(or any Vice President) and Treasurer (or any Assistant Treasurer), and a
certificate of both such officers, dated the Exchange Date, that there has
been no material adverse change in the financial position of the Acquired
Fund since September 30, 1998 other than changes in the Investments and other
assets and properties since that date or changes in the market value of the
Investments and other assets of the Acquired Fund, or changes due to divi-
dends paid or losses from operations.

c. That the Acquired Fund shall have furnished to the Acquiring Fund a
statement, dated the Ex-

A-7
<PAGE>

change Date, signed by The Griffin Funds, Inc.'s President (or any Vice Pres-
ident) and Treasurer (or any Assistant Treasurer) certifying that as of the
Valuation Time and as of the Exchange Date all representations and warranties
of the Acquired Fund made in this Agreement are true and correct in all mate-
rial respects as if made at and as of such dates and the Acquired Fund has
complied with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to such dates.

d. That the Acquired Fund shall have delivered to the Acquiring Fund a let-
ter from KPMG Peat Marwick LLP dated the Exchange Date reporting on the re-
sults of applying certain procedures agreed upon by the Acquiring Fund and
described in such letter, which limited procedures relate to schedules of the
tax provisions and qualifying tests for regulated investment companies as
prepared for the fiscal year ended September 30, 1998 and the period October
1, 1998 to the Exchange Date (the latter period being based on unaudited da-
ta).

e. That there shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.

f. That the Acquiring Fund shall have received an opinion of Morrison &
Foerster LLP, counsel to the Acquired Fund, in form satisfactory to counsel
to the Acquiring Fund, and dated the Exchange Date, to the effect that (i)
The Griffin Funds, Inc. is a Maryland corporation duly formed and is validly
existing under the laws of the State of Maryland and has the power to own all
its properties and to carry on its business as presently conducted; (ii) this
Agreement has been duly authorized, executed and delivered by The Griffin
Funds, Inc. on behalf of the Acquired Fund and, assuming that the Registra-
tion Statement, the WM Prospectus and the Acquired Fund Proxy Statement com-
ply with the 1933 Act, the 1934 Act and the 1940 Act and assuming due autho-
rization, execution and delivery of this Agreement by the WM Trust on behalf
of the Acquiring Fund, is a valid and binding obligation of The Griffin
Funds, Inc. and the Acquired Fund; (iii) The Griffin Funds, Inc., on behalf
of the Acquired Fund, has power to sell, assign, convey, transfer and deliver
the assets contemplated hereby and, upon consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement, the Ac-
quired Fund will have duly sold, assigned, conveyed, transferred and deliv-
ered such assets to the Acquiring Fund; (iv) the execution and delivery of
this Agreement did not, and the consummation of the transactions contemplated
hereby will not, violate The Griffin Funds, Inc.'s Articles of Incorporation
or Bylaws or any provision of any agreement known to such counsel to which
The Griffin Funds, Inc. or the Acquired Fund is a party or by which it is
bound; and (v) no consent, approval, authorization or order of any court or
governmental authority is required for the consummation by The Griffin Funds,
Inc. on behalf of the Acquired Fund of the transactions contemplated hereby,
except such as have been obtained under the 1933 Act, the 1934 Act and the
1940 Act and such as may be required under state securities or blue sky laws.

g. That the Acquiring Fund shall have received an opinion of Ropes & Gray
(which opinion would be based upon certain factual representations and sub-
ject to certain qualifications), dated the Exchange Date, in form satisfac-
tory to the Acquiring Fund and its counsel, with respect to the matters spec-
ified in Section 9(f) of this Agreement.

h. That the Acquiring Fund shall have received an opinion of Ropes & Gray
(which opinion would be based upon certain factual representations provided
in a letter of a duly authorized representative of the Acquiring Fund and
subject to certain qualifications), dated the Exchange Date, in form satis-
factory to the Acquiring Fund and its counsel, to the effect that, on the ba-
sis of the existing provisions of the Code, current administrative rules, and
the court decisions, for federal income tax pur- poses: (i)(a) the Merger
will constitute a "reorganization," within the meaning of Section 368(a) of
the Code, and (b) each of the Acquiring Fund and the Acquired Fund will be a
"party to a reorganization," within the meaning of Section 368(b) of the
Code, with respect to the Merger, and, correspondingly, (c) no gain or loss
will be recognized by the Acquiring Fund upon receipt of the Investments
transferred to the Acquiring Fund pursuant to this Agreement in exchange for
the Merger Shares; (ii) the basis to the Acquiring Fund of the Investments
will be the same as the basis of the Investments in the hands of the Acquired
Fund immediately prior to such exchange; and (iii) the Acquiring Fund's hold-
ing periods with respect to the Investments will include the respective peri-
ods for which the Investments were held by the Acquiring Fund.

A-8
<PAGE>

i. That the assets of the Acquired Fund to be acquired by the Acquiring Fund
will include no assets which the Acquiring Fund, by reason of charter limita-
tions or of investment restrictions disclosed in the Registration Statement
in effect on the Exchange Date, may not properly acquire.

j. That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been in-
stituted or, to the knowledge of The Griffin Funds, Inc. or the Acquiring
Fund, threatened by the Commission.

k. That The Griffin Funds, Inc. and the WM Trust shall have received from
the Commission and any relevant state securities administrator such order or
orders as are reasonably necessary or desirable under the 1933 Act, the 1934
Act, the 1940 Act, and any applicable state securities or blue sky laws in
connection with the transactions contemplated hereby, and that all such or-
ders shall be in full force and effect.

l. That all actions taken by The Griffin Funds, Inc. on behalf of the Ac-
quired Fund in connection with the transactions contemplated by this Agree-
ment and all documents incidental thereto shall be satisfactory in form and
substance to the Acquiring Fund and its counsel.

m. That, prior to the Exchange Date, the Acquired Fund shall have declared a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to the shareholders of the Acquired Fund (i)
all of the excess of (x) the Acquired Fund's investment income excludable
from gross income under Section 103(a) of the Code over (y) the Acquired
Fund's deductions disallowed under Sections 265 and 171 (a) (2) of the Code,
(ii) all of the Acquired Fund's investment company taxable income (as defined
in Section 852 of the Code) (computed without regard to any deduction for
dividends paid), in each case for its taxable years ending on or after Sep-
tember 30, 1998 and on or prior to the Exchange Date, and (iii) all of the
Acquired Fund's net capital gain realized (after reduction for any capital
loss carryover), in each case for both the taxable year ending on September
30, 1998 and the short taxable period ending on October 1, 1998 and ending on
the Exchange Date.

n. That the Acquired Fund shall have furnished to the Acquiring Fund a cer-
tificate, signed by the President (or any Vice President) and the Treasurer
(or any Assistant Treasurer) of The Griffin Funds, Inc., as to the tax cost
to the Acquired Fund of the securities delivered to the Acquiring Fund pursu-
ant to this Agreement, together with any such other evidence as to such tax
cost as the Acquiring Fund may reasonably request.

o. That the Acquired Fund's custodian shall have delivered to the Acquiring
Fund a certificate identifying all of the assets of the Acquired Fund held or
maintained by such custodian as of the Valuation Time.

p. That the Acquired Fund's transfer agent shall have provided to the Ac-
quiring Fund (i) the originals or true copies of all of the records of the
Acquired Fund in the possession of such transfer agent as of the Exchange
Date, (ii) a certificate setting forth the number of shares of the Acquired
Fund outstanding as of the Valuation Time, and (iii) the name and address of
each holder of record of any shares and the number of shares held of record
by each such shareholder.

q. That all of the issued and outstanding shares of common stock of the Ac-
quired Fund shall have been offered for sale and sold in conformity with all
applicable state securities or blue sky laws (including any applicable exemp-
tions therefrom) and, to the extent that any audit of the records of the Ac-
quired Fund or its transfer agent by the Acquiring Fund or its agents shall
have revealed otherwise, either (i) the Acquired Fund shall have taken all
actions that in the opinion of the Acquiring Fund or its counsel are neces-
sary to remedy any prior failure on the part of the Acquired Fund to have of-
fered for sale and sold such shares in conformity with such laws or (ii) the
Acquired Fund shall have furnished (or caused to be furnished) surety, or de-
posited (or caused to be deposited) assets in escrow, for the benefit of the
Acquiring Fund in amounts sufficient and upon terms satisfactory, in the
opinion of the Acquiring Fund or its counsel, to indemnify the Acquiring Fund
against any expense, loss, claim, damage or liability whatsoever that may be
asserted or threatened by reason of such failure on the part of the Acquired
Fund to have offered and sold such shares in conformity with such laws.

r. That the Acquiring Fund shall have received from KPMG Peat Marwick LLP a
letter addressed to the Acquiring Fund dated as of the Exchange

A-9
<PAGE>

Date satisfactory in form and substance to the Acquiring Fund reporting on
the results of applying limited procedures agreed upon by the Acquiring Fund
and described in such letter (but not an examination in accordance with gen-
erally accepted auditing standards), which limited procedures relate as of
the Valuation Time to the procedures customarily utilized by the Acquired
Fund in valuing its assets and issuing its shares.

s. That prior to the Exchange Date, The Griffin Funds, Inc. and WM Trust
shall have filed appropriate Articles of Transfer pursuant to the laws of the
State of Maryland, effective as of the Exchange Date.

t. That prior to the Exchange Date, three (3) members of the Board of Direc-
tors of The Griffin Funds, Inc. shall have been elected to the Board of
Trustees of WM Trust, to begin service at the time of the liquidation of The
Griffin Funds, Inc.

9. Conditions to the Acquired Fund's Obligations. The obligations of the Ac-
quired Fund hereunder shall be subject to the following conditions:

b. That the WM Trust, on behalf of the Acquiring Fund, shall have executed
and delivered to the Acquired Fund an Assumption of Liabilities dated as of
the Exchange Date pursuant to which the Acquiring Fund will assume all of the
liabilities of the Acquired Fund existing at the Valuation Time in connection
with the transactions contemplated by this Agreement, other than liabilities
arising pursuant to this Agreement.

c. That the Acquiring Fund shall have furnished to the Acquired Fund a
statement, dated the Exchange Date, signed by the WM Trust's President (or
any Vice President) and Treasurer (or any Assistant Treasurer) certifying
that as of the Valuation Time and as of the Exchange Date all representations
and warranties of the Acquiring Fund made in this Agreement are true and cor-
rect in all material respects as if made at and as of such dates, and that
the Acquiring Fund has complied with all of the agreements and satisfied all
of the conditions on its part to be performed or satisfied at or prior to
each of such dates; and that WM Advisors shall have furnished to the Acquired
Fund a statement, dated the Exchange Date, signed by an officer of WM Advi-
sors, certifying that as of the Valuation Time and as of the Exchange Date,
to the best of WM Advisors's knowledge, after due inquiry, all representa-
tions and warranties of the Acquiring Fund made in this Agreement are true
and correct in all material respects as if made at and as of such date.

d. That there shall not be any material litigation pending or threatened
with respect to the matters contemplated by this Agreement.

e. That the Acquired Fund shall have received an opinion of Ropes & Gray,
counsel to the Acquiring Fund, in form satisfactory to counsel to the Ac-
quired Fund, and dated the Exchange Date, to the effect that (i) the WM Trust
is a Massachusetts business trust duly formed and is validly existing under
the laws of The Commonwealth of Massachusetts and has the power to own all
its properties and to carry on its business as presently conducted; (ii) the
Merger Shares to be delivered to the Acquired Fund as provided for by this
Agreement are duly authorized and upon such delivery will be validly issued
and will be fully paid and non-assessable by the WM Trust and the Acquiring
Fund and no shareholder of the Acquiring Fund has any preemptive right to
subscription or purchase in respect thereof; (iii) this Agreement has been
duly authorized, executed and delivered by the WM Trust on behalf of the Ac-
quiring Fund and, assuming that the WM Prospectus, the Registration Statement
and the Acquired Fund Proxy Statement comply with the 1933 Act, the 1934 Act
and the 1940 Act and assuming due authorization, execution and delivery of
this Agreement by The Griffin Funds, Inc. on behalf of the Acquired Fund, is
a valid and binding obligation of the WM Trust and the Acquiring Fund; (iv)
the execution and delivery of this Agreement did not, and the consummation of
the transactions contemplated hereby will not, violate the WM Trust's Decla-
ration of Trust or By-Laws, or any provision of any agreement known to such
counsel to which the WM Trust or the Acquiring Fund is a party or by which it
is bound; (v) no consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the WM Trust on
behalf of the Acquiring Fund of the transactions contemplated herein, except
such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act
and

A-10
<PAGE>

such as may be required under state securities or blue sky laws; and (vi) the
Registration Statement has become effective under the 1933 Act, and to best
of the knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the 1933
Act.

f. That the Acquired Fund shall have received an opinion of Ropes & Gray,
dated the Exchange Date (which opinion would be based upon certain factual
representations provided in a letter of a duly authorized representative of
the Acquired Fund and subject to certain qualifications), in form satisfac-
tory to the Acquired Fund and its counsel, to the effect that, on the basis
of the existing provisions of the Code, current administrative rules, and
court decisions, for federal income tax purposes: (i)(a) the Merger will con-
stitute a "reorganization," within the meaning of Section 368(a) of the Code,
and (b) each of the Acquiring Fund and the Acquired Fund will be a "party to
a reorganization," within the meaning of Section 368(b) of the Code, with re-
spect to the Merger, and, correspondingly, (c) no gain or loss will be recog-
nized by the Acquired Fund as a result of the reorganization; (ii) no gain or
loss will be recognized by shareholders of the Acquired Fund on the distribu-
tion of Merger Shares to them in exchange for their shares of the Acquired
Fund; (iii) the tax basis of the Merger Shares that the Acquired Fund's
shareholders receive in place of their Acquired Fund shares will be the same
as the basis of the Acquired Fund shares; and (iv) a shareholder's holding
period for the Merger Shares received pursuant to the Agreement will be de-
termined by including the holding period for the Acquired Fund shares ex-
changed for the Merger Shares, provided that the shareholder held the Ac-
quired Fund shares as a capital asset.

g. That all actions taken by the WM Trust on behalf of the Acquiring Fund in
connection with the transactions contemplated by this Agreement and all docu-
ments incidental thereto shall be satisfactory in form and substance to the
Acquired Fund and its counsel.

h. That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been in-
stituted or, to the knowledge of the WM Trust or the Acquiring Fund, threat-
ened by the Commission.

i. That the WM Trust shall have received from the Commission and any rele-
vant state securities administrator such order or orders as are reasonably
necessary or desirable under the 1933 Act, the 1934 Act, the 1940 Act, and
any applicable state securities or blue sky laws in connection with the
transactions contemplated hereby, and that all such orders shall be in full
force and effect. With respect to the Acquiring Fund, the Board of Trustees,
including a majority of the "non-interested" Trustees, has determined that
the Reorganization is in the best interests of the Acquiring Fund and that
the interests of the existing Shareholders of the Acquiring Fund would not be
diluted as a result of the Reorganization.

j. That for the period beginning at the Exchange Date of the Reorganization
and ending not less than 6 years thereafter, the Acquiring Fund shall pro-
vide, or cause to be provided, liability coverage at least as comparable to
the liability coverage currently applicable to the Directors and officers of
the Acquired Fund, covering the actions of the Directors and officers of the
Acquired Fund for the period they served as such.

k. Prior to the Exchange Date, The Griffin Funds, Inc. and WM Trust shall
have filed appropriate Articles of Transfer pursuant to the laws of the State
of Maryland, effective as of the Exchange Date.

10. Indemnification.

a. The Acquired Fund will indemnify and hold harmless, out of the assets of
the Acquired Fund (which shall be deemed to include the assets of the Acquir-
ing Fund represented by the Merger Shares following the Exchange Date) but no
other assets, the trustees and officers of the WM Trust (for purposes of this
subparagraph, the "Indemnified Parties") against any and all expenses, loss-
es, claims, damages and liabilities at any time imposed upon or reasonably
incurred by any one or more of the Indemnified Parties in connection with,
arising out of, or resulting from any claim, action, suit or proceeding in
which any one or more of the Indemnified Parties may be involved or with
which any one or more of the Indemnified Parties may be threatened by reason
of any untrue statement or alleged untrue statement of a material fact relat-
ing to The Griffin Funds, Inc. or the Acquired Fund contained in the Regis-
tration Statement or the Griffin Prospectus, the Acquired Fund Proxy State-
ment or any

A-11
<PAGE>

amendment or supplement to any of the foregoing, or arising out of or based
upon the omission or alleged omission to state in any of the foregoing a ma-
terial fact relating to The Griffin Funds, Inc. or the Acquired Fund required
to be stated therein or necessary to make the statements relating to The
Griffin Funds, Inc. or the Acquired Fund required to be stated therein or
necessary to make the statements relating to The Griffin Funds, Inc. or the
Acquired Fund therein not misleading, including, without limitation, any
amounts paid by any one or more of the Indemnified Parties in a reasonable
compromise or settlement of any such claim, action, suit or proceeding, or
threatened claim, action, suit or proceeding made with the consent of The
Griffin Funds, Inc. or the Acquired Fund. The Indemnified Parties will notify
The Griffin Funds, Inc. and the Acquired Fund in writing within ten days af-
ter the receipt by any one or more of the Indemnified Parties of any notice
of legal process or any suit brought against or claim made against such In-
demnified Party as to any matters covered by this Section 10(a). The Acquired
Fund shall be entitled to participate at its own expense in the defense of
any claim, action, suit or proceeding covered by this Section 10(a), or, if
it so elects, to assume at its expense by counsel satisfactory to the Indem-
nified Parties the defense of any such claim, action, suit or proceeding, and
if the Acquired Fund elects to assume such defense, the Indemnified Parties
shall be entitled to participate in the defense of any such claim, action,
suit or proceeding at their expense. The Acquired Fund's obligation under
Section 10(a) to indemnify and hold harmless the Indemnified Parties shall
constitute a guarantee of payment so that the Acquired Fund will pay in the
first instance any expenses, losses, claims, damages and liabilities required
to be paid by it under this Section 10(a) without the necessity of the Indem-
nified Parties' first paying the same.

b. The Acquiring Fund will indemnify and hold harmless, out of the assets of
the Acquiring Fund but no other assets, the Directors and officers of The
Griffin Funds, Inc. (for purposes of this subparagraph, the "Indemnified Par-
ties") against any and all expenses, losses, claims, damages and liabilities
at any time imposed upon or reasonably incurred by any one or more of the In-
demnified Parties in connection with, arising out of, or resulting from any
claim, action, suit or proceeding in which any one or more of the Indemnified
Parties may be involved or with which any one or more of the Indemnified Par-
ties may be threatened by reason of any untrue statement or alleged untrue
statement of a material fact relating to the Acquiring Fund contained in the
Registration Statement, the WM Prospectus, the Acquired Fund Proxy Statement
or any amendment or supplement to any of the foregoing, or arising out of or
based upon, the omission or alleged omission to state in any of the foregoing
a material fact relating to the WM Trust or the Acquiring Fund required to be
stated therein or necessary to make the statements relating to the WM Trust
or the Acquiring Fund therein not misleading, including, without limitation,
any amounts paid by any one or more of the Indemnified Parties in a reason-
able compromise or settlement of any such claim, action, suit or proceeding,
or threatened claim, action, suit or proceeding made with the consent of the
WM Trust or the Acquiring Fund. The Indemnified Parties will notify the WM
Trust and the Acquiring Fund in writing within ten days after the receipt by
any one or more of the Indemnified Parties of any notice of legal process or
any suit brought against or claim made against such Indemnified Party as to
any matters covered by this Section 10(b). The Acquiring Fund shall be enti-
tled to participate at its own expense in the defense of any claim, action,
suit, or proceeding covered by this Section 10(b), or, if its so elects, to
assume at its expense by counsel satisfactory to the Indemnified Parties the
defense of any such claim, action, suit or proceeding, and, if the Acquiring
Fund elects to assume such defense, the Indemnified Parties shall be entitled
to participate in the defense of any such claim, action, suit or proceeding
at their own expense. The Acquiring Fund's obligation under this Section
10(b) to indemnify and hold harmless the Indemnified Parties shall constitute
a guarantee of payment so that the Acquiring Fund will pay in the first in-
stance any expenses, losses, claims, damages and liabilities required to be
paid by it under this Section 10(b) without the necessity of the Indemnified
Parties' first paying the same.

c. For the period beginning at the Exchange Date of the last Merger to occur
and ending not less than six years thereafter, WM Trust, its successor or as-
signs shall provide, or cause to be provided, liability coverage comparable
to the liability coverage currently applicable to both former and current Di-
rectors and officers of The Griffin Funds,

A-12
<PAGE>

Inc., covering the actions of such Directors and officers of The Griffin
Funds, Inc. for the period they served as such.

11. No Broker, etc. Each of the Acquired Fund and the Acquiring Fund repre-
sents that there is no person who has dealt with it, the WM Trust or The Grif-
fin Funds, Inc. who by reason of such dealings is entitled to any broker's or
finder's or other similar fee or commission arising out of the transactions
contemplated by this Agreement.

12. Termination. The Acquired Fund and the Acquiring Fund may, by mutual con-
sent of the Directors of The Griffin Funds, Inc. and the Trustees of the WM
Trust on behalf of each Fund, terminate this Agreement, and the Acquired Fund
or the Acquiring Fund, after consultation with counsel and by consent of their
respective Directors/Trustees or an officer authorized by such
Directors/Trustees, may waive any condition to their respective obligations
hereunder. If the transactions contemplated by this Agreement have not been
substantially completed by September 30, 1999, this Agreement shall automati-
cally terminate on that date unless a later date is agreed to by the Acquired
Fund and the Acquiring Fund.

13. Rule 145. Pursuant to Rule 145 under the 1933 Act, the Acquiring Fund
will, in connection with the issuance of any Merger Shares to any person who
at the time of the transaction contemplated hereby is deemed to be an affili-
ate of a party to the transaction pursuant to Rule 145(c), cause to be affixed
upon the certificates issued to such person (if any) a legend as follows:

"THESE SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO WM U.S.
GOVERNMENT SECURITIES FUND OR ITS PRINCIPAL UNDERWRITER UNLESS (I) A REGIS-
TRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (II) IN THE OPINION OF COUNSEL REASONABLY SATISFAC-
TORY TO THE FUND SUCH REGISTRATION IS NOT REQUIRED."

and, further, the Acquiring Fund will issue stop transfer instructions to the
Acquiring Fund's transfer agent with respect to such shares. The Acquired Fund
will provide the Acquiring Fund on the Exchange Date with the name of any Ac-
quired Fund shareholder who is to the knowledge of the Acquired Fund an affil-
iate of the Acquired Fund on such date.

14. Covenants, etc. Deemed Material. All covenants, agreements, representa-
tions and warranties made under this Agreement and any certificates delivered
pursuant to this Agreement shall be deemed to have been material and relied
upon by each of the parties, notwithstanding an investigation made by them or
on their behalf.

15. Sole Agreement; Amendments. This Agreement supersedes all previous corre-
spondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each
party hereto, and shall be construed in accordance with and governed by the
laws of The Commonwealth of Massachusetts.

16. Declaration of Trust. A copy of the Declaration of Trust of the WM Trust
is on file with the Secretary of State of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Trustees of the WM Trust on behalf of the Acquiring Fund, as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees, officers or shareholders of the WM Trust individually but
are binding only upon the assets and property of the Acquiring Fund.

THE GRIFFIN FUNDS, INC.,

on behalf of its [ ] Fund series

By: __________________________________________________________________
[William A. Hawkins, President]

WM TRUST I

on behalf of its [ ] Fund series

By: __________________________________________________________________
William G. Papesh, President

A-13
<PAGE>

money market funds

Appendix B
Excerpts from Semi-Annual Report of WM Trust I dated
April 30, 1998 Regarding Investment Performance

Portfolio Manager

Audrey Quaye has over five years investment experience, is a Certified Public
Accountant, holds an MBA, and has been with WM Advisors, Inc. since 1996. Ms.
Quaye manages the Money Market Fund and the Tax-Exempt Money Market Fund.

Economic Conditions Affecting Fund Performance

During the six-month period ended April 30, 1998, financial markets experienced
the peak of the Asian economic crisis. As currencies and markets collapsed
across that region, investors moved assets to high-quality, domestic holdings
and a strong rally in the U.S. bond market ensued. The U.S. economy remained
healthy and strong during the period, although the pace of growth moderated in
some regions due to a slowdown in manufacturing and export activity. Consumer
confidence was high, the housing market flourished in the low interest rate
environment, and the unemployment rate declined to a 28-year low of 4.3%.

Inflation remained very tame throughout 1997 and into the early part of 1998. As
a result, the Federal Reserve left rates unchanged at its March 31, 1998
meeting. The strength of the U.S. economy was balanced by the slowdown in Asian
activity and did not translate into overall price pressures. The result for the
short-term market was that the benchmark 90-day U.S. Treasury bill yield
declined from a high of 5.48% in December 1997, to 4.98% on April 30, 1998.
Average tax-free daily money market yields also declined from 3.60% in January
1998, to 1.75% in February 1998, and then rose to 4.20% at April 30, 1998. The
volatility was primarily due to change in supply and demand conditions in the
tax-free market.

Economic and Interest Rate Outlook

We expect inflation to remain tame and we anticipate a gradual slowdown in the
U.S economy as exports to Asia continue to decline and cheaper imports from Asia
push down domestic price levels. We also expect the slowdown in the economy to
reduce the risk of inflation, resulting in the possibility for lower interest
rates. However, if the effect of the Asian economic crisis is not as strong as
projected, or if employment costs continue to rise, then an increase in
inflation and interest rates is possible. Nevertheless, we do not anticipate Fed
rate move in the near future.

Portfolio Strategy

Effective March 23, 1998, Sierra money market assets merged with, and into, the
WM Money Market Fund. The Fund's net assets at April 30, 1998, totaled $452.4
million. One effect of the merger was an increase in the Fund's exposure to U.S.
Government and Agency obligations. In addition, in an attempt to lower overall
risk in the portfolio, we reduced the Fund's exposure to the banking and foreign
sectors. We also extended the Portfolio's weighted average maturity in view of
our interest rate outlook.

The WM Tax-Exempt Money Market Fund's net assets at April 30, 1998, totaled
$27.34 million. During the period, we reduced the Fund's exposure to the more
volatile daily variable rate securities when short-term interest rates declined
significantly. However, the Portfolio's weighted average maturity did not change
significantly.

Portfolios' Performance/1/

At April 30, 1998, the seven-day simple yield for Class A shares of the WM Money
Market Fund was 4.90%, or 5.02% on a compounded annual basis. The Fund had a
weighted average maturity of 84 days.

The seven-day simple yield for Class A shares of the WM Tax-Exempt Money Market
Fund was 3.64%, or 3.71% on a compounded annual basis. The Fund had a weighted
average maturity of 63 days.

- --------------------------------------------------------------------------------
30 Day Distribution Rates* A Shares B Shares

Money Market Fund 4.84% 4.10%
Tax-Exempt Money Market Fund 3.38% 2.52%
- --------------------------------------------------------------------------------

* During the period noted, WM Advisors, Inc. waived a portion of its
management fees and absorbed certain other expenses. Without the waiver and
expense absorption, the yields would have been lower.

/1/ All yield information represents past performance, which cannot guarantee
future results. Principal is not guaranteed or insured by the U.S. government,
and yields will fluctuate depending on market conditions. There is no assurance
that the portfolios will maintain their $1.00 per share net asset value.
<PAGE>

u.s. government securities

Portfolio Manager

The U.S. Government Securities Fund is managed by a fixed income team led by
Senior Portfolio Manager Gary Pokrzywinski, who has over 12 years of asset
management experience and has been with WM Advisors, Inc. for more than 5 years.
Mr. Pokrzywinski is a Chartered Financial Analyst and holds a Business Degree
from the University of Wisconsin.

What were the most significant factors contributing to the Fund's performance
over the past 6 months?

The fixed-income market benefited from low inflation and an overall "flight to
quality" stemming from the Asian economic crisis. Many investors worldwide moved
assets from volatile global regions to U.S. government securities. The yield on
the 30-year Treasury dropped to a record low in January of 1998 and closed the
period under 6%. Given this positive economic backdrop, the U.S. Government
Securities Fund's Class A shares total return for the six months ended 4/30/98
was 3.40% (-1.26% adjusted for the maximum sales charge).+

The large percentage of mortgage-backed securities in the Fund produced a

[LINE GRAPH APPEARS HERE]

growth of a $10,000 investment (class A shares)

Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Government
sales charge) sales charge) Bond Index Inflation

Apr 88 10,000 9,550 10,000 10,000
Jan 89 10,452 9,982 10,549 10,341
Jan 90 11,589 11,068 11,731 10,878
Jan 91 12,958 12,375 13,076 11,493
Jan 92 14,440 13,790 14,688 11,793
Jan 93 15,873 15,159 16,340 12,174
Jan 94 17,065 16,298 17,947 12,482
Jan 95 16,401 15,663 17,425 12,832
Jan 96 19,257 18,390 20,366 13,182
Jan 97 19,664 18,779 20,827 13,585
Jan 98 21,809 20,827 23,139 13,801
Apr 98 21,968 20,980 23,245 13,843

The Lehman Brothers Government Bond Index is an unmanaged index of all U.S.
government bonds. The Consumer Price Index is a measurement of inflation for
all urban consumers (CPI-U). The Index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.

+ The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.

++ Represents inflation

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns as of 4/30/98 1 Year 5 Year 10 Year
Class A Shares
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 11.21% 6.24% 8.19%
Fund (adjusted for the maximum 4.5% sales charge) 6.17% 5.27% 7.69%
Lehman Brothers Government Bond Index 11.05% 6.65% 8.80%

<CAPTION>
Average Annual Total Returns as of 4/30/98 1 Year 5 Year Since Inception
Class B Shares March 1994
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 10.27% N/A 6.78%
Fund (adjusted for the maximum contingent deferred sales charge) 5.27% N/A 6.38%
Lehman Brothers Government Bond Index 11.05% N/A 7.70%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was 0.31%, -4.68% adjusted for the maximum CDSC.
<PAGE>

- --------------------------------------------------------------------------------
u.s. government securities portfolio composition*
- --------------------------------------------------------------------------------

relatively high level of income for shareholders. The Class A share SEC Yield
for the 30-days ended April 30, for the Fund was 6.27% (5.77% for Class B
shares). Additionally, because the Fund has an intermediate maturity profile,
the Net Asset Value (NAV or price per share) increased as the general level of
interest rates declined for the period.

What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?

Interest rates dropped marginally during the six-month period, which had
positive effects on the Fund and its total return performance. Because of the
drop in interest rates, mortgage-backed securities tended to underperform other
sectors as investors were nervous about the prospects for increased prepayments.
Lower rates provided an environment conducive to prepayments as refinancing
increased significantly in the early part of January. After rates stabilized and
prepayment expectations waned, the performance of mortgage-backed securities
gained strength relative to other bond sectors as rates then moved within a
trading range. If interest rates remain relatively stable, as seen during these
months, mortgages tend to perform relatively well. In addition, the Fund took
advantage of some low prices of mortgage-backed investments to increase its
overall investment in the sector.

Were there any shifts in the Fund's portfolio holdings/sectors that have had a
significant impact on Fund performance?

Due to the merger with the Sierra U.S. Government Fund and the related inflows
of assets, as well as our outlook for mortgage-backed securities, the Fund
increased its exposure to this sector. Although management's overall outlook
remains the same, the Fund's average maturity and duration--a measurement of
price sensitivity to changes in interest rates, declined slightly in the period.
The Fund remains focused on securities that are non-callable and have a low
probability, we believe, of being prepaid.

What is our intermediate- and long-term outlook for the Fund?

The long-term strategy of the Fund is to have a significant percentage of its
holdings in mortgage-backed securities. Over a complete cycle of interest rates,
mortgage securities should continue to provide a high level of income. The Fund
will maintain its intermediate maturity structure since we believe that type of
structure typically offers the best risk/reward profile on the yield curve (the
distribution of yields ranging from short to long maturities). An intermediate
maturity structure will also provide value given the current outlook for a
continuation of the secular decline of interest rates.

[PIE CHART APPEARS HERE]

- --------------------------------------------------------------------------------
U.S. government SECURITIES portfolio COMPOSITION*

FHLMC ...................................................... 34%
GNMA ....................................................... 27%
FNMA ....................................................... 6%
GNMA II .................................................... 3%
CMOs ....................................................... 6%
U.S. Treasury Notes ........................................ 13%
U.S. Treasury Bonds ........................................ 11%

* Percent of net assets
- --------------------------------------------------------------------------------

What is our overall economic outlook for the next 12 months?

Over the next twelve months we expect the economy to exhibit moderate growth.
The effects of these events in Asia should help keep growth and inflation under
control. Global price competition and the higher levels of imports into the
United States should lend to this scenario. Overall, there continues to be
worldwide structural forces at work (fiscal austerity, demo-graphics, excess
capacity) which should keep inflation under control for the next 3-5 years.
<PAGE>

income fund

Portfolio Manager

The Income Fund is managed by a fixed-income team led by Senior Portfolio
Manager Gary Pokrzywinski, who has over 12 years of asset management experience
and has been with WM Advisors, Inc. for more than 5 years. Mr. Pokrzywinski is a
Chartered Financial Analyst and holds a Business Degree from the University of
Wisconsin.

What were the most significant factors contributing to the Fund's performance
over the past 6 months?

The fixed-income market benefited from low inflation and an overall "flight to
quality" stemming from the Asian economic crisis. Many investors worldwide moved
assets from volatile global regions to U.S. domestic securities. The yield on
the 30-year Treasury dropped to a record low in January of 1998 and closed the
period under 6%. Given this positive economic backdrop, the Income Fund's
performance for the six months ended April 30, 1998 was 3.24% (-1.41% adjusted
for the maximum sales charge).+

The large percentage of corporate and mortgage bond holdings in the Fund
produced a high level of

[LINE GRAPH APPEARS HERE]

growth of a $10,000 investment (class A shares)

Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Government/
sales charge) sales charge) Corporate Index Inflation

Apr 88 10,000 9,550 10,000 10,000
Jan 89 10,453 9,983 10,586 10,341
Jan 90 10,979 10,485 11,771 10,878
Jan 91 12,089 11,545 13,069 11,493
Jan 92 13,860 13,236 14,787 11,793
Jan 93 15,381 14,689 16,498 12,174
Jan 94 16,991 16,226 18,200 12,482
Jan 95 16,188 15,460 17,634 12,832
Jan 96 19,471 18,595 20,759 13,182
Jan 97 20,064 19,161 21,256 13,585
Jan 98 22,312 21,308 23,629 13,801
Apr 98 22,646 21,627 23,773 13,843

++ Represents inflation

Index total returns were calculated from 4/30/88 to 4/30/98. The Lehman Brothers
Government/Corporate Index is unmanaged and represents all government and
corporate bonds. The Consumer Price Index is a measurement of inflation for all
urban consumers (CPI-U). The Index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns as of 4/30/98 1 Year 5 Year 10 Year
Class A Shares
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 12.55% 7.34% 8.52%
Fund (adjusted for the maximum 4.5% sales charge) 7.54% 6.35% 8.02%
Lehman Brothers Government/Corporate Index 11.33% 6.90% 9.05%

Average Annual Total Returns as of 4/30/98 1 Year 5 Year Since Inception
Class B Shares March 1994
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 11.63% N/A 7.86%
Fund (adjusted for the maximum contingent deferred sales charge) 6.63% N/A 7.47%
Lehman Brothers Government/Corporate Index 11.33% N/A 7.99%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was -0.09%, -5.06% adjusted for the maximum CDSC.
<PAGE>

- --------------------------------------------------------------------------------
income fund portfolio composition
- --------------------------------------------------------------------------------

current income during the period. The Fund's Class A share SEC yield for the 30
days ended April 30 was 6.15% (5.66% for Class B shares). However, some of this
income was offset by a general industry-wide price underperformance of corporate
securities and a few specific fund holdings that underperformed relative to the
overall market. Conversely, the intermediate-maturity profile of securities in
the Fund provided positive results as interest rates dropped and prices
correspondingly increased. The high-yield component of the portfolio also
provided strong results for the period as that sector tended to outperform other
fixed-income sectors. Overall, Fund performance was consistent with the growth
levels of the domestic economy and the overall results experienced by
fixed-income investments in general.

What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?

Because of its intermediate maturity and duration--a measurement of sensitivity
to interest rate changes--the Fund performance generally cycles with market
rates. After a significant decline in rates during November and December of
1997, interest rates stabilized and traded in a relatively small range during
the first four months of 1998. Although volatility did exist, as economic
uncertainty and inflation prospects were digested by the market, the overall
effect was positive for the period.

As some corporate holdings lost relative value in the period, the Fund took
advantage of the lower prices of corporate securities and increased the
percentage of the portfolio allocated to this sector.

Were there any shifts in the Fund's portfolio holdings/sectors that have had a
significant impact on Fund performance?

Although there were no major structural changes in the overall portfolio and its
management, the inflow of assets from the merger with Sierra Corporate Income
Fund changed the make-up of the Fund to some extent. There is now a larger
percentage of assets in corporate holdings in an attempt to boost overall yield.
However, the broad aspects of average quality, average maturity and sector
allocation did not change significantly. The Fund remains positioned with an
intermediate average maturity of around 11 years and an average quality of bond
issues at A-./1/

Internal credit research of individual corporate securities is one of the
primary ways the Fund's management seeks to add value to its shareholders. Each
company is scrutinized and its business prospects are analyzed in an attempt to
find value relative to the overall market.

[PIE CHART APPEARS HERE]

- --------------------------------------------------------------------------------
INCOME fund PORTFOLIO composition
- --------------------------------------------------------------------------------

Industrial ................................................. 57%
Financial .................................................. 13%
Yankee Bonds ............................................... 9%
Electric ................................................... 6%
Government Agency and Agency Backed ........................ 6%
CMOs ....................................................... 2%
Treasuries ................................................. 4%
Preferred Stock ............................................ 2%
Cash & Other ............................................... 1%

What is our intermediate- and long-term outlook for the Fund?

We expect the Fund to continue to invest a large percentage of assets in
corporate securities, and to a lesser extent, mortgage-backed and Treasury
securities. Shifts in these sectors will occur dependent upon our overall
outlook for the business cycle. The Fund will continue to position investments
at the longer end of the intermediate maturity range to take advantage of the
prospects of continued market declines in interest rates. The current inflation
environment supports this outlook as global price pressures remain very weak
and real returns (inflation adjusted) remain strong.

What is our overall economic outlook for the next 12 months?

Over the next twelve months we expect the economy to exhibit moderate growth.
The effects of the fallout in Asia should help keep growth and inflation under
control. Global price competition and higher levels of imports into the United
States supports this scenario. Overall, there continues to be worldwide
structural forces at work (fiscal austerity, demographics, excess capacity)
which should keep inflation under control for the next 3-5 years. In this
environment, corporate credit quality should continue to improve at a modest
pace as companies are able to grow and flourish.

/1/ As rated by Standard & Poor's
<PAGE>

tax-exempt bond fund

Portfolio Manager

Brian Placzek of WM Advisors, Inc. is the portfolio manager for the Tax-Exempt
Bond Fund. Mr. Placzek is a Chartered Financial Analyst and has been with WM
Advisors, Inc. for over seven years.

What were the most significant factors contributing to the Fund's performance
over the past 6 months?

The past six months has been a dramatic period for fixed-income investors and
for shareholders of the Tax-Exempt Bond Fund. During the period, interest rates
in the Treasury market declined. As 1997 closed, long-term Treasury yields
experienced significant reductions. A slowdown in growth stemming from the Asian
crisis and low global inflation helped push rates lower. Conversely, municipal
yields ended the period higher. This divergence may lay the foundation for
better relative performance by municipals going forward.

The merger of Sierra National Municipal Fund resulted in a large inflow of
assets, but did not change the style or strategy of the Fund. Overall, the
Fund's total return for Class A shares appreciated 2.37% (-2.24% adjusted for
the maximum sales charge) during the period.+

What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?

In late 1997, a lack of inflation (falling to the

[LINE GRAPH APPEARS HERE]

growth of a $10,000 investment (class A shares)

Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Municipal
sales charge) sales charge) Index Inflation

Apr 88 10,000 9,550 10,000 10,000
Jan 89 10,762 10,278 10,787 10,341
Jan 90 11,344 10,834 11,653 10,878
Jan 91 12,354 11,798 12,730 11,493
Jan 92 13,624 13,010 14,120 11,793
Jan 93 15,004 14,328 15,507 12,174
Jan 94 16,891 16,131 17,407 12,482
Jan 95 16,097 15,373 16,788 12,832
Jan 96 18,554 17,719 19,317 13,182
Jan 97 18,929 18,077 20,057 13,585
Jan 98 20,734 19,801 22,085 13,801
Apr 98 20,552 19,627 22,012 13,843

++ Represents inflation

The Lehman Brothers Municipal Bond Index is unmanaged and includes all
investment grade municipal bond issues. The Consumer Price Index is a
measurement of inflation for all urban consumers (CPI-U). The Index assumes
reinvestment of all dividends/distributions, and does not reflect any
asset-based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/distributions by the shareholder.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Average Annual Total Returns as of 4/30/98 1 Year 5 Year 10 Year
Class A Shares
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 8.36% 5.70% 7.47%
Fund (adjusted for the maximum 4.5% sales charge) 3.48% 4.73% 6.97%
Lehman Brothers Municipal Index 9.30% 6.51% 8.21%

Average Annual Total Returns as of 4/30/98 1 Year 5 Year Since Inception
Class B Shares March 1994
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 7.47% N/A 5.85%
Fund (adjusted for the maximum contingent deferred sales charge) 2.47% N/A 5.44%
Lehman Brothers Municipal Index 9.30% N/A 7.69%
- -------------------------------------------------------------------------------------------------------------
</TABLE>

Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was -0.79%, -5.73% adjusted for the maximum CDSC.
<PAGE>

- --------------------------------------------------------------------------------
tax-exempt bond portfolio composition*
- --------------------------------------------------------------------------------

lowest levels since the 1960s), helped pull bond yields down. This was
compounded by the explosion of the Asian crisis, which culminated with fears
that South Korea would default on its debt at the beginning of 1998. U.S. bond
yields benefited from a general "flight to quality" and from a belief that the
collapse in Asia would slow our strong economy. This slowing could help keep
inflation under control. Bond investors reacted favorably, pushing the yield on
the 30-year Treasury bond to an all-time low of 5.69%.

The panic in Asia eased somewhat after January. Concerns then revived about the
strength of the domestic economy. Confronted with record home sales, soaring
consumer confidence, and unemployment at a 28-year low, market participants
worried about the potential for an increase in inflation. Bond yields rose from
their January lows, but finished the period lower, with the yield on the 30-year
Treasury closing under 6%.

Municipal bonds, however, performed poorly over the same period. Like
Treasuries, municipal bond yields attained their period lows in January when AAA
rated 30-year municipal bond yields fell to 4.88%/1/. However, yields on
municipal bonds ended the period generally higher. This had a negative impact on
Fund performance relative to taxable investments.

The poor performance of municipal bonds can be attributed to lower levels of
demand coupled with an onslaught of supply. Cash flows into municipal bond funds
have been generally weak, but the supply side has driven performance. There has
been a high degree of issuance from municipalities. As rates declined,
municipalities issued new bonds to refinance existing bonds at the lower rates.
Furthermore, whereas federal government issuance has declined, new money
issuance (bonds not issued to refinance bonds) by municipalities rose about 27%
during the first part of 1998 (relative to 1997).

Were there any shifts in the Fund's portfolio holdings/sectors that have had a
significant impact on Fund performance?

The overall look of the Fund changed slightly after the merger with the Sierra
National Municipal Fund. Heavy sector investments in either Fund, such as
hospitals in the Sierra Fund or utilities in the Composite Fund, were offset by
under-representation in its counterpart. Generally, the combination of the two
created a fund that is typical of the industry average. It is noteworthy that
the credit quality remains in the AA category, and we intend to maintain that
average.1 A change for former Composite shareholders who are individuals has
been the addition of bonds subject to the Alternative Minimum Tax (AMT)./2/ Such
bonds comprise about 15% of the overall assets in the Fund. AMT bonds can offer
a higher yield than other bonds from a given issuer. Depending on an individual
shareholder's circumstances, AMT treatment may or may not give rise to
individual tax liabilities.

[PIE CHART APPEARS HERE]

- --------------------------------------------------------------------------------
TAX-EXEMPT bond PORTFOLIO composition*
- --------------------------------------------------------------------------------

AAA ................................................... 39%
AA .................................................... 26%
A ..................................................... 17%
BBB ................................................... 14%
BB & B ................................................ 1%
Cash .................................................. 2%
Not Rated ............................................. 1%

* Percent of net assets

What is our intermediate- and long-term outlook for the Fund?

Although the performance of municipal bonds has been poor relative to
Treasuries, it may have established a basis for strong relative performance
going forward. Municipal bond yields relative to treasuries are now at their
cheapest level since the "Flat Tax Scare" of 1995. The months of June and July
are normally periods of high municipal turnover, when maturities, bond calls,
and coupon payments place a great deal of cash in the hands of investors. This
can then incite demand in the market as reinvestment increases.

We plan to continue to focus investment into bonds that we believe have a low
probability of being called. We intend to maintain our concentration in high
quality bonds, with over one-third of the portfolio invested in insured bonds,
and over two-thirds of the portfolio in AA or better rated securities./1/

What is our overall economic outlook for the next 12 months?

Current low levels of inflation are positive for all fixed-income investors.
Given the effects of the Asian crisis and the corresponding global price
competition, this trend should continue. More specifically, in the municipal
market, the combination of municipal bonds "on sale," and municipal investors
with an inflow of cash may be the right mix to prompt municipal bonds to
outperform Treasury bonds in the coming months.

/1/ As rated by Standard & Poor's

/2/ A portion of the Fund's income may be subject to some state and/or local
tax. In addition, exempt-interest dividends from the Fund will generally
increase a corporate shareholder's exposure to AMT liability.
<PAGE>

growth & income fund

Portfolio Manager

Philip M. Foreman, Senior Portfolio Manager of WM Advisors, Inc. has managed the
Growth & Income Fund since joining the Firm in November, 1991. Mr. Foreman is
both a Chartered Financial Analyst and a Certified Financial Planner, holds an
MBA, and has over 12 years of experience in the investment industry.

What were the most significant factors contributing to the Fund's performance
over the past 6 months?

The period was dominated by strong fundamental performance. Markets advanced on
positive economic news and continued strength in earnings. This was especially
evident in the larger-capitalized companies that dominate the Growth & Income
Fund's portfolio. Although it underperformed relative to the S&P 500, the Fund's
Class A shares total return appreciated 15.42% (9.07% adjusted for the maximum
sales charge) for the period ended April 30, 1998.+

Another trend in domestic equity markets was that of mergers and acquisitions.
Three of our holdings were bought out at substantial premiums to their previous

[LINE GRAPH APPEARS HERE]

growth of a $10,000 investment (class A shares)

Fund (adjusted
Fund (not for the
adjusted for maximum 5.5% S&P 500
sales charge) sales charge) Index Inflation

Apr 88 10,000 9,450 10,000 10,000
Jan 89 11,283 10,663 11,704 10,341
Jan 90 11,446 10,817 13,389 10,878
Jan 91 11,908 11,253 14,511 11,493
Jan 92 14,446 13,651 17,805 11,793
Jan 93 16,057 15,174 19,676 12,174
Jan 94 17,836 16,855 22,205 12,482
Jan 95 17,784 16,805 22,332 12,832
Jan 96 23,967 22,648 30,942 13,182
Jan 97 29,847 28,205 39,102 13,585
Jan 98 36,290 34,294 49,642 13,801
Apr 98 40,682 38,444 56,506 13,843

++ Represents inflation

The Standard & Poor's 500 Composite Index (S&P 500) represents an unmanaged
weighted index of 500 companies. The Consumer Price Index is a measurement of
inflation for all urban consumers (CPI-U). The index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns as of 4/30/98 1 Year 5 Year 10 Year
Class A Shares
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 35.39% 20.41% 14.99%
Fund (adjusted for the maximum 5.5% sales charge) 27.94% 19.05% 14.34%
S&P 500 Index 41.15% 23.25% 18.91%

Average Annual Total Returns as of 4/30/98 1 Year 5 Year Since Inception
Class B Shares March 1994
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 34.50% N/A 23.08%
Fund (adjusted for the maximum contingent deferred sales charge) 29.50% N/A 22.83%
S&P 500 Index 41.15% N/A 27.93%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was 0.56%, -4.44% adjusted for the maximum CDSC.
<PAGE>

- --------------------------------------------------------------------------------
growth & income fund portfolio composition*
- --------------------------------------------------------------------------------

trading prices and subsequently rewarded our shareholders: Zurn Industries,
Greentree Financial and Waste Management. Also, some mega-cap securities
benefited from a "flight to quality" and lack of Asian market exposure (GE,
Merck and Abbott Labs are examples) during the period. The "flight to quality"
transpired as many worldwide investors poured money into more predictable,
large, U.S. corporations after the debacle in the Asian economies.

What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?

Heavy flow of money into large-cap index issues characterized the period.
Larger-company stocks performed better than almost all other classes of
equities. This was driven by economic conditions that produced low interest
rates, slowing economic growth from Asian countries, and record levels of
mergers and acquisitions. We believe most of the holdings in the Fund may
benefit from moderate economic growth conditions as earnings are able to grow
with low inflation and lower costs of capital. The Fund avoided commodity and
basic industry issues during the period, as low cost Asian imports could
negatively impact their profitability. The Fund also owned a number of good
performing franchise businesses that have proved to be attractive for takeovers
in today's business environment.

Were there any shifts in the Fund's portfolio holdings/sectors that have had a
significant impact on Fund performance?

Due to its underweight in retail stocks, the Fund did not fully participate in
the appreciation of this sector. We were, and still are, concerned by the lack
of competitive advantage and barriers to entry in the industry. During the
period, the Fund was overweighted in software at the expense of computer
hardware and semiconductors. This proved to be beneficial, as software sales
held up much better than mainframe computers and chips. This can be attributed
to the lack of Asian competitors who, in these other sectors, greatly increased
their exports into the United States after the currency crisis.

What is our intermediate- and long-term outlook for the Fund?

We continue to believe that we have a portfolio of good businesses that are
trading at attractive prices. We still are finding plenty of companies to buy
that we believe are "on sale," despite the high level of the overall market. We
will maintain our overall value approach, focusing on businesses which are
unique and we expect to generate sustainable cash flows and profitability. Our
outlook calls for slowing economic growth, good money flows, and a continuation
of mergers and acquisitions. All these factors provide a healthy environment for
holdings of the Growth & Income Fund.

[PIE CHART APPEARS HERE]

- --------------------------------------------------------------------------------
GROWTH & INCOME fund PORTFOLIO composition*
- --------------------------------------------------------------------------------

Financials .............................................. 18%
Consumer ................................................ 16%
Capital Goods ........................................... 12%
Technology .............................................. 15%
Healthcare .............................................. 12%
REITS ................................................... 3%
Transportation .......................................... 2%
Utilities ............................................... 7%
Media/Telecom ........................................... 10%
Convertible & Preferred ................................. 5%

* differences from Financials are a result of a consolidation of industries or
sectors.
- --------------------------------------------------------------------------------

What is our overall economic outlook for the next 12 months

We see slowing corporate profits from the basic industry, commodity, and
computer hardware/semiconductor sectors of the market place. Low cost Asian
imports stemming from the currency crisis in these countries should keep prices
and inflation low. Low global inflation should help maintain interest rates at
flat to slightly lower levels, which should be very positive for stocks. Despite
the possible volatility in certain industries, we maintain our positive
long-term outlook for the equity markets and believe that current conditions
continue to provide a strong backdrop for equity investment.
<PAGE>

short term high
quality bond fund

Portfolio Manager:
Gary Pokrzywinski
WM Advisors, Inc.

The Short Term High Quality Bond Fund is managed by a fixed-income team led by
Senior Portfolio Manager Gary Pokrzywinski, who has over 12 years of asset
management experience and has been with WM Advisors, Inc. for more than 5 years.
Mr. Pokrzywinski is a Chartered Financial Analyst and holds a Business Degree
from the University of Wisconsin.

Appendix B
Excerpts from Annual Report of WM Trust II dated June 30, 1998 Regarding
Investment Performance

What were the most significant factors contributing to the Fund's performance
over the past 12 months? The fixed-income market benefited from low inflation
and an overall "flight to quality" stemming from the Asian economic crisis. Many
investors worldwide moved assets from volatile global regions to U.S. Government
securities. The yield on the 30-year Treasury dropped to a record low of 5.57%
in June of 1998. Given this positive economic backdrop, the WM Short Term High
Quality Bond Fund's total return for the 12 months ended June 30, 1998 was
5.91%, for Class A shares (2.38% adjusted for the maximum sales charge). Because
the Fund has a short duration, it is less affected by changes in interest rates,
and is less sensitive to fluctuations as long-term Funds. The Fund is managed to
provide income to its shareholders and the 30-day SEC yield of the portfolio was
5.30% at the close of the period (4.73% for B shares).

growth of a $10,000 investment (class A shares)

[GRAPH APPEARS HERE]

Lehman Brothers
Mutual Fund Short
Fund (Class A shares; Fund (Class A shares; (I-5) Investment
not adjusted for sales adjusted for the maximum Grade Debt
charge) 3.5% sales charge) Index /1/

<S> <C> <C> <C>
Inception/1/
11/01/93 $10,005 $ 9,655 $ 9,991

Mar 94 $ 9,947 $ 9,599 $ 9,831

Jun 94 $ 9,927 $ 9,580 $ 9,816

Sep 94 $ 9,993 $ 9,644 $ 9,933

Dec 94 $ 9,842 $ 9,497 $ 9,910

Mar 95 $10,037 $ 9,685 $10,339

Jun 95 $10,366 $10,003 $10,800

Sep 95 $10,524 $10,156 $10,993

Dec 95 $10,829 $10,450 $11,340

Mar 96 $10,815 $10,437 $11,331

Jun 96 $10,890 $10,509 $11,437

Sep 96 $11,069 $10,682 $11,650

Dec 96 $11,274 $10,879 $11,918

Mar 97 $11,349 $10,952 $11,956

Jun 97 $11,560 $11,156 $12,284

Sep 97 $11,780 $11,368 $12,590

Dec 97 $11,925 $11,508 $12,783

Mar 98 $12,084 $11,661 $12,995

Jun 98 $12,246 $11,817 $13,224
</TABLE>

The performance of the Class B Shares and Class S Shares was different than that
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.

/1/ Index total returns were calculated from 10/31/93 to 6/30/98. The Lehman
Brothers Mutual Fund Short (1-5) Investment Grade Debt Index includes all
investment-grade, corporate debt securities with maturities of one to five
years, assumes reinvestment of all dividends/distributions, and does not
reflect any asset-based charges for investment management or other expenses.
Past performance does not guarantee future performance. The returns shown
for the Fund assume reinvestment of all dividends/distributions by the
shareholder.

During the period noted, the Advisor waived a portion of its management
fees, the Advisor absorbed other expenses, and credits were allowed by the
Custodian. In the absence of the waivers and absorption of other expenses or
credits, yield and total return would have been lower.

================================================================================
<TABLE>
<CAPTION>

Total Returns as of 6/30/98 6 Month 1 Year Since Inception*
(November 1, 1993)
<S> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 2.68% 5.91% 4.44%
Fund (adjusted for the maximum 3.5% sales charge) -0.74% 2.38% 3.65%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index/1/ 3.44% 7.66% 6.17%

CLASS B SHARES 6 Month 1 Year Since Inception*
(June 30, 1994)
Fund (not adjusted for contingent deferred sales charge) 2.30% 5.13% 4.60%
Fund (adjusted for the maximum contingent deferred sales charge) -1.70% 1.13% 4.39%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index/1/ 3.44% 7.66% 7.74%

CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 2.30% 5.13% 4.60%
Fund (adjusted for the maximum contingent deferred sales charge) -2.70% 0.13% 4.17%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index/1/ 3.44% 7.66% 7.74%
</TABLE>
*Annualized
<PAGE>

portfolio composition++

[PIE CHART APPEARS HERE] 1) AAA 64%
2) AA 9%
3) A 4%
4) BBB 23%

What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?

Interest rates dropped during the past year. The effects of this was positive
for the Fund and its total return performance. However, the income stream
provided the largest impact on performance. Our position in asset-backed
securities also helped to boost performance as that class provided relative
strength. Because of the drop in interest rates, mortgage-backed securities
tended to underperform other sectors as investors were nervous about the
prospects for increased prepayments. Corporate yields did not fall as much as
other fixed-income sectors towards the end of the period so we took advantage of
good relative prices to add to these positions.

Were there any shifts in the Fund's portfolio holdings that have had a
significant impact on Fund performance?

During the past 12 months, the Short Term Global Government Fund was merged into
this Fund and WM Advisors took over the management of the merged Fund. Due to
the merger and the inflows of assets, we used the cash to restructure the
portfolio favoring corporate bonds and Treasury notes. We also decreased
exposure to mortgage-backed securities which helped performance in the second
quarter of 1998. Although the overall management outlook remains the same, the
Fund's average maturity and duration--a measurement of price sensitivity to
changes in interest rates--increased slightly in the period. We also maintained
the Fund's position in asset-backed securities during the period.

What is our intermediate- and long-term outlook for the Fund?

The long-term strategy of the Fund is to continue to have a diversified
portfolio of high-quality securities with a yield advantage. The Fund will
invest a significant percentage of its holdings in corporates, asset-backed, and
mortgage-backed securities. Over a complete cycle of interest rates, mortgage
securities should continue to provide a high level of income. The Fund will
maintain its short-term structure to lessen price volatility relative to
long-term assets. We will shift the sector allocations depending upon our
outlook for interest rates and the overall business cycle.

What is our overall economic outlook for the next 12 months?

Over the next 12 months we expect the economy to exhibit moderate growth. The
effects of the fallout in Asia should help keep growth and inflation under
control. Global price competition and the higher levels of imports into the
United States should support this scenario. Overall, there continues to be
worldwide structural forces at work (fiscal austerity, demographics, excess
capacity) which should keep inflation under control for the next 3-5 years.
Although there will be periods of volatility, we believe the overall interest
rate trend is lower. These aforementioned factors should continue to produce
slow growth and keep price pressures at bay.

Note: Bond ratings provided by Standard & Poors.

++ Allocation percentages are based on total investment value of the portfolio
as of 6/30/98.
<PAGE>

california
municipal fund

Portfolio Manager:
Joseph Piraro
Van Kampen Investments

Mr. Piraro joined the company in 1992, and serves as Vice President and
portfolio manager of Van Kampen Investments. He has had primary portfolio
management responsibility for the California Municipal Fund since May 1992.

What were the most significant factors contributing to the Fund's performance
over the past 12 months?

The strength of the economy, the decision by the Federal Reserve Board not to
adjust short-term interest rates, and the financial problems in Asia
significantly affected the U.S. bond markets. As inflation remained benign, the
bond market rallied throughout the reporting period. The yield of the 30-year
Treasury bond, which moves in the opposite direction of its price, fell from
6.79% on June 30, 1997 to 5.63% a year later.

The impact of the Asian financial crisis was evident in the underperformance of
the tax-exempt market relative to treasuries. As problems in Asia have continued
and the U.S. Dollar has risen relative to Asian currencies, demand for
treasuries has increased. This "flight to quality" drove the yield on the
30-year Treasury down to historically low levels. The Federal Government's
surplus also caused a reduction in issuance of treasury securities, resulting in
fewer bonds to meet this strong demand.

growth of a $10,000 investment (class A shares)

[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Date Fund (Class Fund (Class Lehman
A Shares; A Shares; Brothers
Not Adjusted Adjusted for Municipal
For Sales the Maximum Bond
Charge) 4.5% Sales Charge) Index/1/
<S> <C> <C> <C>
Inception/1/
7/25/89 $10,080 $ 9,626 $10,000
Dec-89 $10,325 $ 9,860 $10,251
Jun-90 $10,598 $10,122 $10,537
Dec-90 $10,993 $10,498 $10,998
Jun-91 $11,357 $10,846 $11,487
Dec-91 $12,054 $11,511 $12,334
Jun-92 $12,556 $11,991 $12,841
Dec-92 $13,159 $12,567 $13,421
Jun-93 $14,294 $13,651 $14,375
Dec-93 $14,955 $14,282 $15,069
Jun-94 $13,982 $13,352 $14,400
Dec-94 $13,667 $13,052 $14,290
Jun-95 $15,040 $14,363 $15,670
Dec-95 $16,139 $15,413 $16,785
Jun-96 $16,003 $15,283 $16,710
Dec-96 $16,852 $16,094 $17,528
Jun-97 $17,414 $16,631 $18,089
Dec-97 $18,585 $17,748 $19,140
Jun-98 $19,023 $18,167 $19,654
</TABLE>

/1/ Index total returns were calculated from 7/31/89 to 6/30/98. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for
the long-term, investment-grade, tax-exempt bond market. The index assumes
reinvestment of all dividends/distributions, and does not reflect any asset-
based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/distributions by the shareholder.

During the period noted, the Advisor waived a portion of its fees, absorbed
other expenses, and credits were allowed by the Custodian. In the absence of
the waivers and absorption of other expenses, or credits, yield and total
return would have been lower.

================================================================================
<TABLE>
<CAPTION>

Total Returns as of 6/30/98 6 Month 1 Year 5 Year* Since Inception*
(July 25, 1989)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 2.37% 9.26% 5.89% 7.42%
Fund (adjusted for the maximum 4.5% sales charge) -2.19% 4.38% 4.92% 6.87%
Lehman Brothers Municipal Bond Index1 2.69% 8.66% 6.46% 7.87%

CLASS B SHARES 6 Month 1 Year 5 Year* Since Inception*
(June 30, 1994)
Fund (not adjusted for contingent deferred sales charge) 1.99% 8.45% N/A 7.21%
Fund (adjusted for the maximum contingent deferred sales charge) -3.00% 3.45% N/A 6.80%
Lehman Brothers Municipal Bond Index1 2.69% 8.66% N/A 8.09%

CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 1.99% 8.45% N/A 7.21%
Fund (adjusted for the maximum contingent deferred sales charge) -3.00% 3.45% N/A 6.80%
Lehman Brothers Municipal Bond Index1 2.69% 8.66% N/A 8.09%
</TABLE>
*Annualized
<PAGE>

portfolio composition++

[PIE CHART APPEARS HERE] 1) AAA 61%
2) AA 8%
3) A 7%
4) BBB 6%
5) Not Rated 18%

Because of supply and demand fundamentals, the municipal market did not perform
as well as treasuries during the period. Historically, low interest rates have
fueled refundings as well as new borrowings, resulting in a 51 percent increase
in issuance year-to-date over 1997. Although these lower rates were not quite as
attractive to investors seeking yield, demand did keep pace with supply. The
good ratio of municipal yields to Treasuries attracted some individuals as well
as cross-over buyers (institutions who typically purchase taxable securities).
At the end of the reporting period, the Bond Buyer 40 Index (an index of 40
actively traded, long-term investment grade securities) had a yield of 5.22%, or
93% of long-term treasuries.

What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?

The duration (a measure of the price sensitivity to changes in interest rates)
of the portfolio at the end of the period was 7.3 years, slightly shorter than
our benchmark 8.3 years. As market conditions caused duration to shorten over
the reporting period, we offset the market effect through the acquisition of
long-term discount securities and the sale of premium bonds. While the duration
of the securities in the portfolio was shorter than our target, we felt it was
more beneficial to our shareholders to maintain the core positions in the
portfolio than to lengthen the duration.

As of June 30, 1998, the 30-day SEC yield of the Fund's Class A shares was 4.24%
or 7.74% on a tax-equivalent basis (3.69% and 6.74% for B shares).2 Yield
spreads between credit ratings remain very narrow. As a result, most
acquisitions focused on AAA-rated securities, which we felt had more relative
value than lower-rated paper. While we continue to seek non-rated offerings to
add yield to the Fund, we saw few opportunities that rewarded the investor for
the additional credit risk. On June 30, 1998, over 62 percent of assets were
AAA-rated, up slightly over the period. The quality sector of the market
performed well during the year.

Were there any shifts in the Fund's portfolio holdings/sectors that had a
significant impact on the Fund's performance?

Health care exposure increased by almost 10 percent to 14 percent of assets.
Although most of these bonds are insured, they tend to trade at a small yield
advantage over other sectors. Additionally, health care continues to be the best
performing sector of the revenue bond index. As a result of this increase, we
decreased our exposures to the transportation, tax district, and multi-family
housing sectors. We also decreased our exposure to securities that are subject
to the Alternative Minimum Tax (AMT). As the yield spread between AMT and
non-AMT offerings narrowed, we saw an opportunity to sell several positions at a
profit and, at the same time, use some of the proceeds of these sales to invest
in discount securities to extend duration.

The Fund has excellent diversification, with exposure to 15 industries. Because
of the attractive yields on our current holdings, as well the good balance
between sectors, we do not expect significant changes in the near future. The
credit quality of the portfolio remains very high, and we will maintain that
level given the demand for quality California securities and the relative
attractiveness of these bonds.

What is our overall economic outlook for the next 12 months?

Despite the strong economy, inflation has remained dormant as a result of weak
commodity prices and a strong Dollar. There are, however, hints that the good
news on inflation could be coming to an end. The various domestic factors that
might have prompted serious fears about inflation were offset by the Asian
situation. Currently, the situation overseas could create a dilemma. After the
decision to support the Yen, raising U.S. interest rates would be
counter-productive since it would strengthen the U.S. Dollar. However, if
competition from Asia does not sufficiently cool the U.S. economy, the Fed may
feel compelled to raise short-term rates, which would put upward pressure on
long-term rates. With its status as a shipping and import/export hub, any
ripples that rock Asia are likely to be felt in California.

We will maintain our slightly bullish duration, as we expect the low interest
rate environment to continue in the near term, but we are not overly bullish on
the market as a whole. Unless the taxable market makes a significant move, we
expect municipal yields to remain within their recent trading range. The supply
of municipal issues looks like it will remain strong, possibly setting an annual
record for the industry. As the second largest state issuer, we expect the
California market will play a big role in this surge of volume.

/2/ Tax-equivalent yield is based on Federal income taxes at 39.6% and
California income taxes at 9.3%, and the federal deduction of state taxes
paid. A portion of income may be subject to some State and/or local taxes,
and for certain investors, may be subject to the federal alternative minimum
tax (AMT).

Note: Bond ratings provided by Standard & Poors.

++ Allocation percentages are based on total investment value of the portfolio
as of 6/30/98.
<PAGE>

growth fund

Portfolio Manager:

Warren Lammert

Janus Capital Corporation

Mr. Lammert is a graduate of Yale University and the London School of Economics.
He first joined Janus in January 1987 and has been portfolio manager of the
Growth Fund since its inception. He is a Chartered Financial Analyst.

What were the most significant factors contributing to the Fund's performance
over the past 12 months?

For the past 12 months, the stock market has put up very impressive numbers,
with the S&P 500 Index gaining over 30%. Meanwhile, the Fund returned 35.43%.

Looking back, market performance has been quite volatile over the past year.
After a broad market rally last summer, equities came under pressure by year-end
amid a few disappointing announcements and the growing financial crisis in Asia.
We took this opportunity, however, to expand our positions in several promising
technology stocks, which have performed well for us. Domestic equities posted
impressive gains in the first part of 1998 and managed to build on these results
early in the second quarter. Then the market experienced renewed volatility,
reflecting mounting concerns over Asia and related uncertainty surrounding
corporate profits. Consequently, stocks lost ground in late May and early June.
Equities proved resilient, however, and managed to end the second quarter of
1998 with a strong rally, thanks to a significant drop in long-term interest
rates and a resurgent technology sector.

Portfolio returns benefited as several of our issues came alive at the end of
the period, adding to strong results accumulated since the start of the year.
Robust portfolio performance continues to reflect our emphasis on companies with
dominant franchises and exceptional earnings growth.

growth of a $10,000 investment (class A shares)

Growth Fund (Class A Fund (Class A Standard &
Fund shares; not shares; adjusted Poor's 500
adjusted for for the minimum Composite
sales charge) 5.5% sales charge) Index/1/

Inception/1/
4/5/93 $10,000 $ 9,450
Jun-93 $10,720 $10,130 $10,297
Sep-93 $11,250 $10,631 $10,560
Dec-93 $11,680 $11,038 $10,805
Mar-94 $11,740 $11,094 $10,395
Jun-94 $10,730 $10,140 $10,439
Sep-94 $11,870 $11,217 $10,949
Dec-94 $11,756 $11,109 $10,947
Mar-95 $12,507 $11,819 $12,011
Jun-95 $14,199 $13,418 $13,156
Sep-95 $15,681 $14,819 $14,201
Dec-95 $16,018 $15,137 $15,056
Mar-96 $17,312 $16,360 $15,863
Jun-96 $17,812 $16,832 $16,575
Sep-96 $18,822 $17,787 $17,087
Dec-96 $18,728 $17,698 $18,510
Mar-97 $17,535 $16,570 $19,007

1 Index total returns were calculated from 4/30/93 to 6/30/98. The Standard &
Poor's 500 Composite Index (S&P 500) represents an unmanaged weighted index
of 500 industrial, transportation, utility, and financial companies widely
regarded by investors as representative of the stock market. The index
assumes reinvestment of all dividends/distributions, and does not reflect
any asset-based charges for investment management or other expenses. Past
investment performance does not guarantee future performance. The returns
shown for the Fund assume reinvestment of all dividends/distributions by
the shareholder.

During the period noted, the Advisor waived a portion of its management
fees and absorbed other expenses, and credits were allowed by the
Custodian. In the absence of the waivers and absorption of other expenses
or credits, yield and total return would have been lower.

Total Returns as of 6/30/98 6 Month 1 Year 5 Year* Since Inception*
(April 5, 1993)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 30.09% 35.43% 20.06% 20.67%
Fund (adjusted for the maximum 5.5% sales charge) 22.90% 27.96% 18.72% 19.38%
Standard & Poor's 500 Composite Index/1/ 17.72% 30.21% 23.07% 22.94%

CLASS B SHARES 6 Month 1 Year 5 Year* Since Inception*
(June 30, 1994)
Fund (not adjusted for contingent deferred sales charge) 29.60% 34.43% N/A 24.74%
Fund (adjusted for the maximum contingent deferred sales charge) 24.60% 29.43% N/A 24.48%
Standard & Poor's 500 Composite Index/1/ 17.72% 30.21% N/A 29.18%

CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 29.58% 34.40% N/A 24.74%
Fund (adjusted for the maximum contingent deferred sales charge) 24.58% 29.40% N/A 24.48%
Standard & Poor's 500 Composite Index/1/ 17.72% 30.21% N/A 29.18%
</TABLE>
*Annualized
<PAGE>

portfolio composition++

[PIE CHART APPEARS HERE]

1 Technology 34%
2 Telecommunications 19%
3 Healthcare 13%
4 Financials 10%
5 Media 10%
6 Capital Goods 5%
7 Consumer Stocks 4%
8 Business Services 4%
9 Energy 1%

What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?

The large-stock indices continued to be tough competitors for active managers,
in part because investors are favoring large-capitalization stocks for their
perceived earnings stability and liquidity. Additionally, the trend toward
indexing continues to bolster the stocks that comprise the S&P 500 Index, as new
money chases returns. However, we are starting to see more of an emphasis on
earnings growth, because broad S&P 500 profits are coming under increasing
pressure from Asian weakness and rising labor costs. As a slowdown in corporate
earnings continues to unfold, those companies with more positive earnings
characteristics should receive renewed attention, regardless of their size. We
are confident that our research will continue to identify those companies can
meet or exceed their earnings projections, and these companies will be rewarded
for their performance.

Were there any shifts in the Funds Portfolio's holdings/sectors that have had a
significant impact on performance?

The Portfolio reflects our commitment to a variety of themes, particularly
technology, pharmaceuticals, cable and financial services. In 1998, we created a
more focused portfolio, shortening our list of names and trimming a number of
smaller positions.

Among our technology stocks, our positions in Dell, Microsoft, and America
Online (AOL) have all performed well. Dell continues to exploit its highly-
successful business model, despite a generally weak environment for PC
manufacturers. Meanwhile, Microsoft advanced strongly after overcoming
concerns related to the Justice Department's antitrust suit. The company is
beginning a major new product cycle with the current launch of Windows 98 and
the rollout of Windows NT 5.0 later this year. Additionally, AOL, supported by
the growing acceptance of the Internet as a new media avenue, continues to
perform well.

We have also succeeded with our Internet positions, including Amazon.com, the
leading Internet book and music retailer. Amazon.com was added to the Fund
during the second quarter, and the stock price more than doubled over a
thirteen-day period in June. While we are excited about Amazon.com's prospects,
given its strong brand name and explosive growth, we also realize that such
quick gains can easily reverse themselves. Consequently, we opted to trim the
position at a significant profit.

Several of our pharmaceutical stocks have also performed exceptionally well,
including Warner-Lambert and Pfizer. Both companies continue to experience
strong results from their new product launches, effectively driving revenues
higher. More recently, we also added Cognizant, which owns IMS, a provider of
prescription and market share data for pharmaceutical companies.

During the period, a number of developments helped to validate our thesis on the
cable industry--an area that remains very compelling. After years of equipment
and infrastructure upgrades, cable operators are on the verge of rolling out a
two-way digital platform that will allow a variety of new services, including
telephony data and expanded video offerings. These factors, combined with a
dramatic decline in capital expenditures, create a promising outlook. As a
result, we built positions in Comcast, Time Warner, Media One, and
Tele-Communications, Inc. (TCI), all of which performed very well. In addition,
AT&T's recent decision to purchase TCI highlights the value of the cable
pipeline, and we believe the combined entity will unlock a variety of important
synergies moving ahead.

What is our intermediate- and long-term outlook for the Fund?

We remain generally positive on the outlook for equities; however, Asian
weakness and the impact of the strong Dollar remain a concern. For this reason,
we emphasize companies with robust earnings growth that are well-insulated from
Asia's downturn. As always, we rely on Janus' strategy to find promising
individual companies with strong fundamentals and positive earnings growth
potential. We also continue to follow our disciplined portfolio approach and are
willing to trim positions that are fully priced or where our earnings estimates
appear to be in jeopardy.

What is our overall economic outlook for the next 12 months?

Looking ahead, Asia's continuing economic difficulties contribute an element of
uncertainty to global markets. Japan's economy has moved into a severe
recession, brought about by the Japanese government's failure to enact
meaningful economic reforms and by its fragile banking system. Additionally,
the recent weakness in the Yen versus the U.S. Dollar highlights the currency
risk that still lingers throughout the region. On the positive side, Asia's
slowdown has been an effective brake on the global economy and has helped keep
domestic inflation in check, despite an impressive U.S. expansion. As a result,
domestic interest rates continue to reflect these positive fundamentals and
remain at very low levels.

++ Allocation percentages are based on total investment value of the portfolio
as of 6/30/98.

Differences from financial statements are a result of a consolidation of
industries or sectors.