WM TRUST I, 485APOS, 1999-12-15

WM TRUST I
485APOS, 1999-12-15

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<PAGE> 1
As filed with the Securities and Exchange Commission on December 15, 1999

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Securities Act of 1933 File #33-27489
Investment Company Act of 1940 File #811-5775
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No.

Post-Effective Amendment No. 32

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 35

WM Trust II

(Exact name of Registrant as specified in Charter)

AND

Securities Act of 1933 File #333-01999
Investment Company Act of 1940 File #811-07577
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No.

Post-Effective Amendment No. 8

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 10

WM Strategic Asset Management Portfolios

(Exact name of Registrant as specified in Charter)

AND

Securities Act of 1933 File #333-36941
Investment Company Act of 9140 File #811-00123
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No.

Post-Effective Amendment No. 77

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 75

WM Trust I

(Exact name of Registrant as specified in Charter)

1201 Third Avenue, 22nd Floor, Seattle, WA 98101

(Address of principal executive offices)

Registrant's telephone number, including area code (206) 461-3800

John T. West
1201 Third Avenue, 22nd Floor, Seattle, WA 98101

(Name and address of agent for service)

With a copy to:

Joseph B. Kittredge, Esq.
Ropes & Gray
One International Place
Boston, MA 02110

It is proposed that this filing will become effective:

[ ] immediately upon filing pursuant to paragraph (b) of Rule 485

[ ] on (date) pursuant to paragraph (b) of Rule 485

[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485

[ ] on (date) pursuant to paragraph (a)(i) of Rule 485

[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485

[X] on March 1, 2000 pursuant to paragraph (a)(ii) of Rule 485

[ ] this post-effective amendment designated a new effective date for a
previously filed post-effective amendment.

<PAGE> 2

WM GROUP OF FUNDS
Prospectus

MARCH 1, 2000

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

Money Funds

+ Money Market Fund
- ----------------------------------------------------------------
+ Tax-Exempt Money Market Fund
- ----------------------------------------------------------------
+ California Money Fund
- ----------------------------------------------------------------
Fixed-Income Funds

+ Short Term Income Fund

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

+ U.S. Government Securities Fund
- ----------------------------------------------------------------
+ Income Fund
- ----------------------------------------------------------------
+ High Yield Fund
- ----------------------------------------------------------------
Municipal Funds

+ Tax-Exempt Bond Fund
- ----------------------------------------------------------------
+ California Municipal Fund
- ----------------------------------------------------------------
+ California Insured Intermediate Municipal Fund
- ----------------------------------------------------------------
+ Florida Insured Municipal Fund
- ----------------------------------------------------------------
Equity Funds

+ Bond & Stock Fund
- ----------------------------------------------------------------
+ Growth & Income Fund
- ----------------------------------------------------------------

+ Growth Fund of the Northwest

- ----------------------------------------------------------------
+ Growth Fund
- ----------------------------------------------------------------

+ Mid Cap Stock Fund

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

+ Small Cap Stock Fund

- ----------------------------------------------------------------
+ International Growth Fund
- ----------------------------------------------------------------
WM Strategic Asset Management Portfolios, LLC

+ Strategic Growth Portfolio
- ----------------------------------------------------------------
+ Conservative Growth Portfolio
- ----------------------------------------------------------------
+ Balanced Portfolio
- ----------------------------------------------------------------
+ Flexible Income Portfolio
- ----------------------------------------------------------------
+ Income Portfolio
- ----------------------------------------------------------------

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

WM Group of Funds provides a broad selection
of investment alternatives to investors.

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a crime.
<PAGE> 3

WM GROUP OF FUNDS

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

CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Risk/Return Summary............................. 2
Money Funds..................................... 3
Fixed-Income Funds............................ 6
Municipal Funds............................... 11
Equity Funds.................................. 15
Strategic Asset Management Portfolios......... 21
Summary of Principal Risks.................... 26
Fees and Expenses of the Funds and Portfolios... 31
Description of the Funds and Portfolios......... 35
Money Funds................................... 35
Fixed-Income Funds............................ 36
Municipal Funds............................... 37
Equity Funds.................................. 39
Strategic Asset Management Portfolios......... 41
Common Investment Practices..................... 41
Ways to Set Up Your Account..................... 50
How Can I Invest in the Funds and Portfolios?... 51
Which Class of Shares is Best for Me?........... 53
Class A Shares................................ 53
Class B Shares................................ 54
Distribution Plans............................ 56
Distribution of Income and Capital Gains........ 56
How Can I Sell Shares?.......................... 56
How Can I Exchange My Shares?................... 57
Dividends, Capital Gains and Taxes.............. 58
Organization.................................... 60
Financial Highlights............................ 64
</TABLE>

<PAGE> 4

RISK/RETURN SUMMARY

WM Group of Funds provides a broad range of investment choices, including asset
allocation strategies available through WM Strategic Asset Management
Portfolios, LLC (the "Portfolios"). This summary identifies the investment
objective, principal investment strategies and principal risks of each Fund and
Portfolio. The principal investment strategies identified in this summary are
not the only investment strategies available to the Funds and Portfolios, and
some of the principal investment strategies may not be available at any given
time. For a discussion of all of the investment strategies available to the
Funds and Portfolios, please see the Statement of Additional Information (the
"SAI").

The principal investment strategies identified in this summary provide specific
information about each of the Funds and Portfolios, but there are some general
principles WM Advisors and the sub-advisors apply in making investment
decisions. When making decisions about whether to buy or sell equity securities,
WM Advisors and the sub-advisors will consider, among other things, a company's
strength in fundamentals, its potential for earnings growth over time, and the
current price of its securities relative to their perceived worth. When making
decisions about whether to buy or sell fixed-income investments, WM Advisors and
the sub-advisors will generally consider, among other things, the strength of
certain sectors of the fixed-income market relative to others, interest rates
and other general market conditions, as well as the credit quality of individual
issuers.

The discussion of each Fund's and Portfolio's principal investment strategies
includes a short discussion of some of the principal risks of investing in such
Fund or Portfolio. You can find additional information about each Fund and
Portfolio, including a more detailed description of these and other principal
risks of an investment in each Fund or Portfolio, after this summary.
Investments mentioned in the summary and described in greater detail under
"Common Investment Practices" below appear in BOLD TYPE. Please be sure to read
the more complete descriptions of the Funds and Portfolios, and the related
risks, before you invest.

Below the description of each Fund or Portfolio is a bar chart showing how the
investment returns of its Class A shares have varied in the past ten years, or
in the years since the Fund or Portfolio began if it is less than ten years old.
The bar chart is intended to provide some indication of the volatility of the
Fund's or Portfolio's returns. The table following each bar chart shows how, for
each Class of shares, average annual returns of the Fund or Portfolio compare to
returns of a broad-based securities market index for the last one, five and ten
years (or, for a newer Fund or Portfolio, for the life of the Fund or
Portfolio). Performance shown in the table reflects the maximum applicable sales
charge, but performance shown in the bar chart does not reflect any sales
charges. PAST PERFORMANCE IS NOT NECESSARILY AN INDICATION OF FUTURE
PERFORMANCE.

There can be no assurance that any Fund or Portfolio will achieve its objective.
It is possible to lose money on investments in the Funds and Portfolios. An
investment in a Fund or Portfolio is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Money Funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Money Funds.

2
<PAGE> 5
- --------------------------------------------------------------------------------
MONEY MARKET fund

OBJECTIVE This Fund seeks to maximize current income while preserving capital
and maintaining liquidity.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests in high-quality
money market instruments, which may include U.S. GOVERNMENT SECURITIES, FLOATING
AND VARIABLE RATE SECURITIES, MUNICIPAL OBLIGATIONS, U.S. dollar denominated
FOREIGN INVESTMENTS, ASSET-BACKED SECURITIES, REPURCHASE AGREEMENTS, and
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Liquidity Risk,
- - Credit Risk, - Management Risk, and
- - Foreign Investment - Money Market Risk.
Risk,
</TABLE>

YEARLY performance of Class A Shares*
[Money Market Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 7.58
1991 5.34
1992 3.06
1993 2.41
1994 3.47
1995 5.33
1996 4.87
1997 5.04
1998 5.00
1999
</TABLE>

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Past Since Class B
(for periods ended December 31, 1999) One Year Five Years Ten Years Inception (5/2/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
MERRILL LYNCH 3-MONTH U.S. TREASURY BILL INDEX**
</TABLE>

* The Fund's performance through December 31, 1997 benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.
Class B share average annual total returns shown in the table reflect the
maximum applicable contingent deferred sales charge.

** This is an unmanaged index that measures the performance of 3-month U.S.
Treasury bills currently available in the marketplace.

3
<PAGE> 6
- --------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET fund

OBJECTIVE This Fund seeks to maximize current income that is exempt from
federal income tax while preserving capital and maintaining liquidity.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
high-quality, short-term, fixed-income MUNICIPAL OBLIGATIONS issued by states,
counties, cities or other governmental entities that generate income exempt from
federal income tax. The Fund's investments may include VARIABLE RATE
OBLIGATIONS, HOLDINGS IN OTHER INVESTMENT COMPANIES, MUNICIPAL LEASES,
WHEN-ISSUED and DELAYED-DELIVERY SECURITIES and ALTERNATIVE MINIMUM TAX ("AMT")-
SUBJECT BONDS.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Management Risk,
- - Credit Risk, - Tax Risk, and
- - Liquidity Risk, - Money Market Risk.
</TABLE>

YEARLY performance of Class A Shares*
[Tax-Exempt Money Market Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 5.76
1991 4.19
1992 2.41
1993 2.06
1994 2.37
1995 4.00
1996 3.05
1997 3.18
1998 3.07
1999
</TABLE>

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Past
(for periods ended December 31, 1999) One Year Five Years Ten Years
<S> <C> <C> <C> <C>
CLASS A SHARES
MERRILL LYNCH 3-MONTH U.S. TREASURY BILL INDEX**
</TABLE>

* The Fund's performance through December 31, 1998 has benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.

** This is an unmanaged index that measures the performance of 3-month U.S.
Treasury bills currently available in the marketplace.

4
<PAGE> 7
- --------------------------------------------------------------------------------
CALIFORNIA MONEY fund

OBJECTIVE This Fund seeks to maximize current income that is exempt from
federal and California state personal income tax, consistent with safety of
principal and maintenance of liquidity.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
high-quality, short-term, fixed-income MUNICIPAL OBLIGATIONS issued by states,
counties, cities or other governmental bodies that generate income exempt from
California state personal income tax. The Fund may also invest in high-quality
instruments that may generate taxable income, including U.S. GOVERNMENT
SECURITIES, MORTGAGE- AND ASSET-BACKED SECURITIES (including collateralized
mortgage obligations) and REPURCHASE AGREEMENTS.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Liquidity Risk,
- - Credit Risk, - Management Risk,
- - Geographic - Tax Risk, and
Concentration Risk, - Money Market Risk.
</TABLE>

The Fund is also "non-diversified," which means that the Fund may invest more of
its assets in the securities of fewer issuers than other mutual funds. Thus, the
Fund is also subject to Non-Diversification Risk.

YEARLY performance of Class A Shares*
[California Money Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990
1991 3.85
1992 2.60
1993 1.85
1994 2.20
1995 3.11
1996 2.76
1997 2.85
1998 2.48
1999
</TABLE>

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A
(for periods ended December 31, 1999) One Year Five Years Inception (7/10/89)
<S> <C> <C> <C> <C>
CLASS A SHARES
MERRILL LYNCH 3-MONTH U.S. TREASURY
BILL INDEX**
</TABLE>

* The Fund's performance through December 31, 1998 has benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.

** This is an unmanaged index that measures the performance of 3-month U.S.
Treasury bills currently available in the marketplace.

5
<PAGE> 8

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

SHORT TERM INCOME fund

OBJECTIVE This Fund (formerly known as Short Term High Quality Bond) seeks as
high a level of current income as is consistent with prudent investment
management and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests in short-term bonds
and other FIXED-INCOME SECURITIES, which are rated in the top four categories by
a nationally recognized statistical rating organization ("investment grade") or
are of comparable quality. Under normal circumstances, the Fund maintains a
dollar-weighted average portfolio duration of three years or less. The Fund's
investments may include corporate securities, U.S. GOVERNMENT SECURITIES,
REPURCHASE AGREEMENTS AND MORTGAGE- AND ASSET-BACKED SECURITIES.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Leveraging Risk,
- - Credit Risk, - Derivatives Risk,
- - Currency Risk, - Liquidity Risk, and
- - Foreign - Management Risk.
Investment Risk,
</TABLE>

YEARLY performance of Class A Shares*
[Yearly Performance Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1994 -2.05
1995 10.03
1996 4.09
1997 5.77
1998 6.30
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1999) One Year Five Years Inception (11/1/93) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS MUTUAL FUND SHORT (1-5)
INVESTMENT GRADE DEBT INDEX**
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charge. The Fund's performance through December 31, 1998 has benefitted from
the agreement of WM Advisors and its affiliates to limit the Fund's expenses.

** This index includes all investment-grade, corporate debt securities with
maturities of one to five years.

6
<PAGE> 9
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES fund

OBJECTIVE This Fund seeks a high level of current income consistent with safety
and liquidity.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in U.S.
GOVERNMENT SECURITIES, including collateralized mortgage obligations and other
MORTGAGE-BACKED SECURITIES. The Fund may also invest in DOLLAR ROLLS, which
involve leverage.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk, and
- - Leveraging Risk, - Management Risk.
</TABLE>

YEARLY performance of Class A Shares*
[Yearly Performance Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 9.45
1991 14.72
1992 6.12
1993 8.12
1994 -4.91
1995 19.45
1996 2.48
1997 9.92
1998 7.21
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was % (for the
quarter ended ), and the lowest was % (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Past Since Class B
(for periods ended December 31, 1999) One Year Five Years Ten Years Inception (3/31/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS GOVERNMENT BOND INDEX**
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges. The Fund's performance through December 31, 1998 has benefitted from
the agreement of WM Advisors and its affiliates to limit the Fund's expenses.

** This index includes all U.S. Government agency and Treasury securities.

7
<PAGE> 10
- --------------------------------------------------------------------------------
INCOME fund

OBJECTIVE This Fund seeks a high level of current income consistent with
preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in a
diversified pool of FIXED-INCOME SECURITIES, including corporate securities,
U.S. GOVERNMENT SECURITIES and MORTGAGE-BACKED SECURITIES (including
collateralized mortgage obligations), up to 35% of which may be in LOWER-RATED
SECURITIES (which are sometimes called "junk bonds"). The Fund may also invest
in convertible securities.

Among the principal risks of investing in the Fund are:
- - Market Risk,
- - Credit Risk,
- - Currency Risk,
- - Foreign Investment Risk,
- - Leveraging Risk,
- - Derivatives Risk,
- - Liquidity Risk, and
- - Management Risk.

YEARLY performance of Class A Shares*
[Income Fund Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 8.21
1991 17.29
1992 7.38
1993 10.82
1994 -4.82
1995 21.58
1996 3.46
1997 10.51
1998 7.15
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Past Since Class B
(for periods ended December 31, 1999) One Year Five Years Ten Years Inception (3/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX*
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges.

** This index is generally considered representative of the U.S. government and
corporate bond markets.

8
<PAGE> 11
- --------------------------------------------------------------------------------
HIGH YIELD fund

OBJECTIVE This Fund seeks to provide a high level of current income.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
high-yielding LOWER-RATED SECURITIES (sometimes called "junk bonds"), which may
include FOREIGN INVESTMENTS. The Fund may also invest in higher-rated
FIXED-INCOME SECURITIES, preferred stock and convertible securities.

YEARLY performance of Class A Shares*

[Income Fund Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1999 0
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter
ended ).

Sales Charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Since
Average Annual Total Returns Past Past Past Inception
(for periods ended December 31, 1999) One Year Five Years Ten Years (1/8/98
<S> <C> <C> <C> <C>
CLASS A SHARES N/A N/A
CLASS B SHARES N/A N/A
LEHMAN BROTHERS HIGH YIELD INDEX**
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges.

** This index includes all below investment-grade, corporate debt securities.

9
<PAGE> 12
- --------------------------------------------------------------------------------
TAX-EXEMPT BOND fund

OBJECTIVE This Fund seeks to provide a high level of income that is exempt from
federal income tax while protecting investors' capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
MUNICIPAL OBLIGATIONS issued by states, counties, cities or other governmental
entities, including MUNICIPAL LEASES, AMT-SUBJECT BONDS and INVERSE FLOATING
RATE OBLIGATIONS, that generate income exempt from federal income tax. The Fund
may also invest in taxable FIXED-INCOME SECURITIES (including junk bonds) and
utilize STRATEGIC TRANSACTIONS (derivatives) such as interest rate futures and
options.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Liquidity Risk,
- - Credit Risk, - Management Risk, and
- - Leveraging Risk, - Tax Risk.
- - Derivatives Risk,
</TABLE>

YEARLY performance of Class A Shares*
YEARLY PERFORMANCE GRAPH

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 6.71
1991 11.36
1992 9.00
1993 12.54
1994 -6.53
1995 18.25
1996 2.52
1997 8.59
1998 5.08
1999
</TABLE>

Sales Charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

* Average annual total returns reflect deduction of the applicable sales
charges.

** This index includes all investment grade, tax-exempt bond issues.

10
<PAGE> 13
- --------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL fund

OBJECTIVE This Fund seeks to provide as high a level of current income that is
exempt from federal and California state income tax as is consistent with
prudent investment management and preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
intermediate-and long-term California MUNICIPAL OBLIGATIONS, including municipal
leases and AMT-SUBJECT BONDS. The Fund may also invest in other municipal
obligations and utilize STRATEGIC TRANSACTIONS (derivatives) such as interest
rate futures and options.
Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Leveraging Risk, - Management Risk, and
- - Geographic - Tax Risk.
Concentration Risk,
</TABLE>

YEARLY performance of Class A Shares*
Yearly Performance Graph

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 6.47
1991 9.65
1992 9.17
1993 13.65
1994 -8.61
1995 18.09
1996 4.42
1997 10.30
1998 6.09
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1998) One Year Five Years Inception (7/25/89) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS MUNICIPAL BOND INDEX**
</TABLE>

** This index includes all investment grade tax-exempt bond issues.

11
<PAGE> 14
- --------------------------------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL fund

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
intermediate-term insured California MUNICIPAL OBLIGATIONS, including MUNICIPAL
LEASES and AMT-SUBJECT BONDS. The weighted average effective maturity of the
Fund's investments is ten years or less, and the maximum effective maturity of
any of its investments is fifteen years. The Fund may also invest in other
municipal obligations and utilize STRATEGIC TRANSACTIONS (derivatives) such as
interest rate futures and options.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Leveraging Risk, - Management Risk, and
- - Geographic Concentra- - Tax Risk.
tion Risk,
</TABLE>

YEARLY performance of Class A Shares*
[California Insured Intermediate Municipal Fund Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1995 16.45
1996 3.91
1997 7.14
1998 5.26
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter
ended ).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1999) One Year Five Years Inception (4/04/94) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS MUNICIPAL BOND INDEX**
</TABLE>

** This index includes all investment grade tax-exempt bond issues.

12
<PAGE> 15
- --------------------------------------------------------------------------------
FLORIDA INSURED MUNICIPAL fund

OBJECTIVE This Fund seeks to provide as high a level of current income that is
exempt from federal income tax as is consistent with prudent investment
management and preservation of capital. The Fund also seeks to ensure that the
value of its shares is exempt from Florida intangible personal property tax.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
intermediate-and long-term insured Florida MUNICIPAL OBLIGATIONS, including
MUNICIPAL LEASES and AMT-SUBJECT BONDS. The Fund may also invest in other
municipal obligations and utilize STRATEGIC TRANSACTIONS (derivatives) such as
interest rate futures and options.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Leveraging Risk, - Management Risk, and
- - Geographic - Tax Risk.
Concentration Risk,
</TABLE>

YEARLY performance of Class A Shares*
[Florida Insured Municipal Fund Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1994 -8.48
1995 17.57
1996 3.41
1997 10.01
1998 5.99
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was 6.99% (for the
quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1999) One Year Five Years Inception (6/7/93) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS MUNICIPAL BOND INDEX**
</TABLE>

** This index includes all investment grade tax-exempt bond issues.

13
<PAGE> 16
- --------------------------------------------------------------------------------
BOND & STOCK fund

OBJECTIVE This Fund seeks to provide continuity of income, conservation of
principal and long-term growth of income and principal.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in common
stocks, preferred stocks, bonds and convertible securities. At least 25% of the
Fund's assets are generally invested in FIXED-INCOME SECURITIES. The Fund's
investments may include U.S. GOVERNMENT SECURITIES, AMERICAN DEPOSITORY RECEIPTS
(ADRs) and EUROPEAN DEPOSITORY RECEIPTS (EDRs), MORTGAGE-BACKED SECURITIES
(including collateralized mortgage obligations), REPURCHASE AGREEMENTS and REAL
ESTATE INVESTMENT TRUSTS (REITs).
In selecting equity investments for the Fund, WM Advisors looks for long-term
potential for growth in "value" stocks currently selling for less than WM
Advisors believes they are worth. In selecting debt investments for the Fund, WM
Advisors looks for investments that provide regular income in addition to some
opportunity for capital appreciation.

Among the risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Currency Risk, - Management Risk, and
- - Foreign Investment - Smaller Company Risk.
Risk,
</TABLE>

YEARLY performance of Class A Shares*
[Yearly Performance Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 0.08
1991 21.75
1992 9.89
1993 9.27
1994 -2.13
1995 31.18
1996 13.60
1997 19.89
1998 6.93
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter
ended ).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Past Since Class B
(for periods ended December 31, 1999) One Year Five Years Ten Years Inception (3/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
STANDARD & POOR'S 500 COMPOSITE INDEX**
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND***
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges.

** This is an index of 500 industrial, transportation, utility and financial
companies widely regarded by investors as representative of the stock
market.

*** This index is generally considered representative of the U.S. Government and
corporate bond markets.

14
<PAGE> 17
- --------------------------------------------------------------------------------
GROWTH & INCOME fund

OBJECTIVE This Fund seeks to provide long-term capital growth. Current income
is a secondary consideration.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in common
stocks. In selecting investments for the Fund, WM Advisors looks for common
stocks that it believes are currently undervalued and whose issuers WM Advisors
believes have the potential to increase earnings over time. WM Advisors seeks
out companies that it believes have solid management, a competitive advantage,
and the resources to maintain superior cash flow and profitability over the long
term.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Leveraging Risk,
- - Credit Risk, - Derivatives Risk,
- - Currency Risk - Liquidity Risk,
- - Foreign - Management Risk, and
Investment Risk - Smaller Company Risk.
</TABLE>

YEARLY performance of Class A Shares*
[Yearly Performance Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 -5.98
1991 27.39
1992 11.01
1993 6.83
1994 2.58
1995 33.15
1996 22.28
1997 29.52
1998 14.41
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was - (for the quarter ended
).

PERFORMANCE TABLE*

* Average annual total returns reflect deduction of the applicable sales
charges.

** This is an index of 500 industrial, transportation, utility and financial
companies widely regarded by investors as representative of the stock market.

15
<PAGE> 18
- --------------------------------------------------------------------------------
GROWTH FUND OF THE NORTHWEST

OBJECTIVE This Fund (formerly known as Northwest) seeks long-term growth of
capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in common
stocks of companies located or doing business in Alaska, Idaho, Montana, Oregon
and Washington. The Fund's investments may include REPURCHASE AGREEMENTS and
REAL ESTATE INVESTMENT TRUSTS (REITS).

In selecting investments for the Fund, WM Advisors looks for equity securities
that it believes are undervalued, yet well-managed, with excellent long-term
growth possibilities.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Foreign Investment - Management Risk, and
Risk, - Smaller Company Risk.
- - Geographic
Concentration Risk,
</TABLE>

YEARLY performance of Class A Shares*
[Yearly Performance Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1990 -1.14
1991 43.98
1992 3.54
1993 2.50
1994 -1.42
1995 26.52
1996 22.56
1997 32.88
1998 22.98
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

* Average annual total returns reflect deduction of the applicable sales
charges. The Fund's performance through October 31, 1997 benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.

** This is an index of 500 industrial, transportation, utility and financial
companies widely regarded by investors as representative of the stock market.

16
<PAGE> 19
- --------------------------------------------------------------------------------
GROWTH fund

OBJECTIVE This Fund seeks long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in common
stocks, including FOREIGN INVESTMENTS, that, in the opinion of WM Advisors or
the sub-advisor, offer potential for growth. The Fund may also invest in
commercial paper and preferred stock.

In selecting investments for the Fund, the Fund's sub-advisor looks for
individual companies that it believes have exceptional potential for growth,
regardless of economic conditions. Companies are evaluated on their individual
merit, their ability to generate earnings growth, and their superior management
teams, rather than on the broad analysis of a particular sector or market trend.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Leveraging Risk,
- - Credit Risk, - Derivatives Risk,
- - Currency Risk, - Liquidity Risk,
- - Foreign Investment - Management Risk, and
Risk, - Smaller Company Risk.
</TABLE>

YEARLY performance of Class A Shares*
[Yearly Performance Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1994 0.65
1995 36.25
1996 16.92
1997 9.78
1998 57.10
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1998) One Year Five Years Inception (4/5/93) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
STANDARD & POOR'S 500 INDEX**
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges.

** This is an index of 500 industrial, transportation, utility and financial
companies widely regarded by investors as representative of the stock market.

17
<PAGE> 20
- --------------------------------------------------------------------------------
MID CAP STOCK fund

OBJECTIVE The Fund seeks to provide long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily (at least
65% of its assets) in common stocks and other equity securities of companies
having market capitalization in the range of companies included in the S&P
MidCap 400 Index at the time of purchase. In selecting investments for the Fund,
WM Advisors looks for equity investments in companies that it believes have
solid management, a competitive advantage, and the resources to maintain
superior cash flow and profitability over the long term.

In determining whether securities should be sold, the Advisor considers factors
such as high valuations relative to other investment opportunities, and
deteriorating short or long-term business fundamentals or future growth
prospects. The Fund will not necessarily dispose of a security merely because
its issuer's market capitalization is no longer in the Mid Cap range.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Leveraging Risk,
- - Credit Risk, - Liquidity Risk,
- - Currency Risk, - Management Risk, and
- - Foreign Investment - Smaller Company Risk.
Risk,
</TABLE>

SHARES FOR THIS FUND WILL NOT BE AVAILABLE UNTIL APPROXIMATELY APRIL 1, 2000.

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE MID CAP STOCK FUND BECAUSE IT
HAS NOT YET COMMENCED OPERATIONS.

18
<PAGE> 21

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

SMALL CAP STOCK fund

OBJECTIVE This Fund (formerly known as Emerging Growth) seeks long-term capital
appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in equity
securities, including FOREIGN INVESTMENTS, of companies with market
capitalizations of less than $1.4 billion. The Fund may also invest in
REPURCHASE AGREEMENTS and utilize STRATEGIC TRANSACTIONS (derivatives) such as
futures and options on futures.

In selecting investments for the Fund, WM Advisors looks for small cap companies
that it expects to achieve growth in earnings and revenues or that it believes
are currently undervalued relative to their true worth.

Among the principal risks of investing in the Fund are:

YEARLY performance of Class A Shares*
[Emerging Growth Fund Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1991 39.29
1992 15.40
1993 22.27
1994 -0.34
1995 32.26
1996 8.50
1997 12.63
1998 4.94
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was % (for the
quarter ended ), and the lowest was % (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1999) One Year Five Years Inception (7/18/90) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
STANDARD & POOR'S 500 INDEX**
RUSSELL 2000 INDEX***
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges.

** This is an index of 500 industrial, transportation, utility and financial
companies widely regarded by investors as representative of the stock
market.
*** This index represents the smallest 2000 companies followed by Russell and is
used to measure the small-cap market.

19
<PAGE> 22
- --------------------------------------------------------------------------------
INTERNATIONAL GROWTH fund

OBJECTIVE This Fund seeks to provide long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in equity
securities of foreign issuers, including issuers located in developing or
emerging market countries. The Fund may also use STRATEGIC TRANSACTIONS
(derivatives) such as FOREIGN CURRENCY EXCHANGE TRANSACTIONS and REPURCHASE
AGREEMENTS.

In selecting investments for the Fund, Capital Guardian Trust Company seeks to
identify foreign stocks that it believes have an attractive valuation, high
return on invested capital, excellent cash flow, strong balance sheets, and
strong owner management. Capital Guardian utilizes a research driven "bottom-up"
approach in that decisions are made based upon extensive field research and
direct company contacts. Capital Guardian blends its basic value-oriented
approach with macroeconomic and political judgments on the outlook for
economies, industries, currencies, and markets.

Among the principal risks of investing in the Fund are:

YEARLY performance of Class A Shares*
[International Growth Fund Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1991 14.42
1992 -10.57
1993 32.35
1994 -1.31
1995 4.87
1996 8.02
1997 -2.49
1998 4.08
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was % (for the
quarter ended ), and the lowest was % (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1998) One Year Five Years Inception (7/18/90) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
MORGAN STANLEY CAPITAL INTERNATIONAL EAFE
INDEX*
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges.

** This index includes stock markets of Europe, Australia and the Far East
weighted by capitalization and represents the equity markets of 18 countries.

20
<PAGE> 23
- --------------------------------------------------------------------------------
STRATEGIC GROWTH portfolio

OBJECTIVE This Portfolio seeks to provide long-term capital appreciation. In
general, relative to the other Portfolios, the Strategic Growth Portfolio should
offer you the potential for a higher level of capital growth while exposing you
to corresponding levels of principal risk.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS All of the Portfolios allocate their
assets among certain of the Funds to achieve their objectives. This Portfolio
generally invests at least 75% of its net assets in the Equity Funds.

The Portfolio may invest up to 25% of its assets in each of the Money Market,
Short-Term Income and High Yield Funds. It may also invest up to 50% of its
assets in each of the Growth & Income, Growth Fund of the Northwest, Growth, Mid
Cap Stock, Small Cap Stock and International Growth Funds.

The Portfolio may also invest in U.S. GOVERNMENT SECURITIES, short-term debt
rated A or higher, commercial paper (including master notes and bank
obligations), REPURCHASE AGREEMENTS and STRATEGIC TRANSACTIONS such as futures
contracts and options.

The Portfolio shares the principal risks of each of the Funds it invests in, as
well as Portfolio Risk.

YEARLY performance of Class A Shares*
[Strategic Growth Portfolio Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1997 12.38
1998 22.63
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was % (for the
quarter ended ), and the lowest was % (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Inception
(for periods ended December 31, 1999) One Year (5/31/95)
<S> <C> <C>
CLASS A SHARES % %
CLASS B SHARES % %
STANDARD & POOR'S 500 COMPOSITE INDEX** % %
RUSSELL 3000 INDEX*** % %
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges. The Portfolio's performance through December 31, 1998 has
benefitted from the agreement of WM Advisors and its affiliates to limit the
Portfolio's expenses. Performance prior to November 1, 1996, represents the
performance of the Sierra Asset Management Account ("SAM Account"),
Aggressive Growth Strategy, a discretionary asset allocation account that
was the predecessor to the Portfolio. The SAM account's performance has been
adjusted to reflect mutual fund fees and expenses, however, it was not
registered as a mutual fund under the Investment Company Act of 1940, and
therefore it was not subject to certain restrictions that might have
affected its performance.

** This is an index of 500 industrial, transportation, utility and financial
companies widely regarded by investors as representative of the stock
market.
*** This index is intended to represent the equity market as a whole.

21
<PAGE> 24
- --------------------------------------------------------------------------------
CONSERVATIVE GROWTH portfolio

OBJECTIVE This Portfolio seeks to provide long-term capital appreciation. In
general, relative to the other Portfolios, the Conservative Growth Portfolio
should offer you the potential for a low level of income and the potential for a
medium to high level of capital growth while exposing you to a medium level of
principal risk.

The Portfolio may invest up to 30% of its assets in each of the Money Market,
Short-Term Income, U.S. Government Securities, Income and High Yield Funds. It
may also invest up to 40% of its assets in each of the Growth & Income, Growth
Fund of the Northwest, Growth, Mid Cap Stock, Small Cap Stock and International
Growth Funds.

The Portfolio shares the principal risks of each of the Funds it invests in, as
well as Portfolio Risk.

YEARLY performance of Class A Shares*
[Conservative Growth Portfolio Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1997 8.65
1998 18.82
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was % (for the
quarter ended ), and the lowest was % (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Since Class A Since Class B
Average Annual Total Returns Past Past Five Inception Inception
(for periods ended December 31, 1999) One Year Years (Since 9/30/90) (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
RUSSELL 3000 INDEX**
CAPITAL MARKET BENCHMARK***
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges. The Portfolio's performance through December 31, 1998 has
benefitted from the agreement of WM Advisors and its affiliates to limit the
Portfolio's expenses. Performance prior to November 1, 1996 represents the
performance of the Sierra Asset Management Account ("SAM Account"), Growth
Strategy, a discretionary asset allocation account that was the predecessor
to the Portfolio. The SAM Account's performance has been adjusted to reflect
mutual fund fees and expenses, however, it was not registered as a mutual
fund under the Investment Company Act of 1940, and therefore it was not
subject to certain restrictions that might have affected its performance.

** This index is intended to represent the equity market as a whole.

*** This is a blended mix of capital market indices that is intended to
represent a proxy for portfolio performance. The benchmark allocation is as
follows: 35% S&P 500, 20% MSCI EAFE + Emerging Markets, 20% Lehman Bros.
Mutual Fund (1-5) Gov/Corp Index, 20% Salomon Bros. 90-day T-Bills, and 5%
Russell 2000 Growth. A description of the components of the Portfolio's
Capital Market Index can be found in the Statement of Additional
Information, which you can obtain free of charge by calling 800-222-5852.

22
<PAGE> 25
- --------------------------------------------------------------------------------
BALANCED portfolio

OBJECTIVE This Portfolio seeks to provide as high a level of total return
(consisting of reinvested income and capital appreciation) as is consistent with
reasonable risk. In general, relative to the other Portfolios, the Balanced
Portfolio should offer you the potential for a medium level of income and the
potential for a medium level of capital growth while exposing you to a medium
level of principal risk.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS All of the Portfolios allocate their
investments among certain of the Funds to achieve their objectives. This
Portfolio invests at least 30% and no more than 70% of its net assets in both
the Equity Funds and the Fixed-Income Funds.

The Portfolio may invest up to 40% of its assets in each of the Money Market,
Short-Term Income Bond, U.S. Government Securities, Income and High Yield Funds.
It may also invest up to 30% of its assets in each of the Growth & Income,
Growth Fund of the Northwest, Growth, Small Cap Stock, Mid Cap Stock and
International Growth Funds.

The Portfolio shares the principal risks of each of the Funds it invests in, as
well as Portfolio Risk.

YEARLY performance of Class A Shares*

[Balanced Portfolio Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1997 10.22
1998 16.27
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was % (for the
quarter ended ), and the lowest was % (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1999) One Year Five Years Inception (9/30/90) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS AGGREGATE BOND INDEX**
RUSSELL 3000 INDEX***
CAPITAL MARKET BENCHMARK****
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges. The Portfolio's performance through December 31, 1998 has
benefitted from the agreement of WM Advisors and its affiliates to limit
the Portfolio's expenses. Performance prior to November 1, 1996 represents
the performance of the Sierra Asset Management Account ("SAM Account")
Balanced Strategy, a discretionary asset allocation account that was the
predecessor to the Portfolio. The SAM Account's performance has been
adjusted to reflect mutual fund fees and expenses, however, it was not
registered as a mutual fund under the Investment Company Act of 1940, and
therefore it was not subject to certain restrictions that might have
affected its performance.

** This index is intended to represent the fixed-income market as a whole.

*** This index is intended to represent the equity market as a whole.

**** This is a blended mix of capital market indices that is intended to
represent a proxy for portfolio performance. The benchmark allocation is as
follows: 25% Lehman Bros Mutual Fund Short (1-5) Gov/Corp Index, 25%
Salomon Bros 90-day T-Bills, 20% Lehman Bros Mortgage Index, 15% S&P 500,
and 15% MSCI EAFE + Emerging Markets. A description of the components of
the Portfolio's Capital Market Index can be found in the Statement of
Additional Information, which you can obtain free of charge by calling
800-222-5852.

23
<PAGE> 26
- --------------------------------------------------------------------------------
FLEXIBLE INCOME portfolio

OBJECTIVE This Portfolio seeks to provide a high level of total return
(consisting of reinvestment of income with some capital appreciation). In
general, relative to the other Portfolios, the Flexible Income Portfolio should
offer you the potential for a medium to high level of reinvestment income and
the potential for a low to medium level of capital growth, while exposing you to
a low to medium level of principal risk.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS All of the Portfolios allocate their
assets among certain of the Funds to achieve their objectives. This Portfolio
generally invests no more than 30% of its net assets in the Equity Funds.

The Portfolio shares the principal risks of the Funds it invests in, as well as
Portfolio Risk.

YEARLY performance of Class A Shares*

[Flexible Income Portfolio Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1997 10.25
1998 9.24
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1999) One Year Five Years Inception (3/31/93) Inception (6/30/94)
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS AGGREGATE BOND INDEX**
CAPITAL MARKET BENCHMARK***
</TABLE>

* Average annual total returns reflect deduction of the applicable sales
charges. The Portfolio's performance through December 31, 1998 has
benefitted from the agreement of WM Advisors and its affiliates to limit the
Portfolio's expenses. Performance prior to November 1, 1996 represents the
performance of the Sierra Asset Management Account ("SAM Account") Value
Strategy, a discretionary asset allocation account that was the predecessor
to the Portfolio. The SAM Account's performance has been adjusted to reflect
mutual fund fees and expenses, however, it was not registered as a mutual
fund under the Investment Company Act of 1940, and therefore it was not
subject to certain restrictions that might have affected its performance.

** This index is intended to represent the fixed-income market as a whole.

*** This is a blended mix of capital market indices that is intended to
represent a proxy for portfolio performance. The benchmark allocation is as
follows: 40% Lehman Bros Mutual Fund Short (1-5) Gov/Corp Index, 40% Salomon
Bros 90-day T-Bills, 10% Lehman Bros Mortgage Index and 10% S&P 500. A
description of the components of the Portfolio's Capital Market Index can be
found in the Statement of Additional Information, which you can obtain free
of charge by calling 800-222-5852.

24
<PAGE> 27
- --------------------------------------------------------------------------------
INCOME portfolio

OBJECTIVE This Portfolio seeks long-term total return through reinvestment of
current income consistent with preservation of capital. In general, relative to
the other Portfolios, the Income Portfolio should offer you the potential for a
high level of income while maintaining principal and exposing you to a low level
of principal risk.

The Portfolio may invest up to 50% of its assets in each of the Money Market,
Short-Term Income and U.S. Government Securities Funds. It may also invest up to
40% of its assets in either of the Income and High Yield Funds.

The Portfolio shares the principal risks of each of the Funds it invests in, as
well as Portfolio Risk.

YEARLY performance of Class A Shares*

[Income Portfolio Bar Chart]

<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL RETURN (%)
- ------------- -----------------
<S> <C>
1997 10.22
1998 16.27
1999
</TABLE>

Sales charges are not included in the returns shown in this bar chart. If those
charges were included, the returns shown would be lower.

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class A Since Class B
(for periods ended December 31, 1999) One Year Five Years Inception (9/30/90) Inception 6/30/94
<S> <C> <C> <C> <C>
CLASS A SHARES N/A
CLASS B SHARES N/A
LEHMAN BROTHERS AGGREGATE BOND INDEX**
CAPITAL MARKET BENCHMARK***
</TABLE>

* Average annual returns reflect deduction of the applicable sales charges.
The Portfolio's performance through December 31, 1998 has benefitted from
the agreement of WM Advisors and its affiliates to limit the Portfolio's
expenses. Performance prior to November 1, 1996 represents the performance
for the Sierra Asset Management Agreement Account ("SAM Account"), Fixed
Strategy, a discretionary asset allocation account that was the predecessor
to the Portfolio. The SAM Account's performance has been adjusted to reflect
mutual fund fees and expenses, however, it was not registered as a mutual
fund under the Investment Company Act of 1940, and therefore it was not
subject to certain restrictions that might have affected its performance.

** This index is intended to represent the fixed-income market as a whole.

*** This is a blended mix of capital market indices that is intended to
represent a proxy for portfolio performance. The benchmark allocation is as
follows: 20% Salomon Bros, 90-day T-Bills, 30% Lehman Bros Mutual Fund Short
(1-5) Gov/Corp Index 10% Lehman Bros Mortgages Index and 10% Lehman Bros BAA
LT Corporate Bond Index. A description of the components of the Portfolio's
Capital Market Index can be found in the Statement of Additional
Information, which you can obtain free of charge by calling 800-222-5852.

25
<PAGE> 28

SUMMARY OF PRINCIPAL RISKS

The value of your investment in a Fund or Portfolio changes with the value of
the investments held by that Fund or Portfolio. Many factors can affect that
value, and it is possible that you may lose money on investments in the Funds
and Portfolios. Factors that may affect a particular Fund or Portfolio as a
whole are called "principal risks." They are summarized in this section. The
chart at the end of this section displays similar information. All Funds and
Portfolios are subject to principal risks. These risks can change over time,
because the types of investments made by the Funds and Portfolios can change
over time. Investments mentioned in this summary and described in greater detail
under "Description of the Funds" or "Common Investment Practices" appear in BOLD
TYPE. Those sections also include more information about the Funds, their
investments and the related risks.

+ MARKET RISK. Each of the Funds and Portfolios is subject to market risk,
which is the general risk of unfavorable changes in the market value of a
Fund's portfolio securities.

One aspect of market risk is interest rate risk. As interest rates rise,
your investment in a Fund or Portfolio is likely to be worth less because
its income-producing equity or debt investments are likely to be worth less.

Even Funds such as the Short Term Income and U.S. Government Securities
Funds and are subject to interest rate risk, even though they generally
invest substantial portions of their assets in the highest quality debt
securities, such as U.S. GOVERNMENT SECURITIES.

Interest rate risk is generally greater for Funds that invest in debt
securities with longer maturities. This risk is usually compounded for Funds
such as the Tax-Exempt Bond, California Municipal, Florida Insured
Municipal, Income and U.S. Government Securities Funds that invest
significantly in GOVERNMENT STRIPPED MORTGAGE-BACKED or other ASSET-BACKED
SECURITIES that may be prepaid. These securities have variable maturities
that tend to lengthen when that is least desirable -- when interest rates
are rising. Increased market risk is also likely for Funds such as the
Income, Short Term Income and that invest in debt securities paying no
interest, such as ZERO-COUPON, PRINCIPAL-ONLY and INTEREST-ONLY SECURITIES.

The Equity Funds, by investing in equity securities, such as common stock,
preferred stock and convertible securities, are exposed to a separate set of
market risks. Those risks include the risks of broader equity market
declines as well as more specific risks affecting the issuer, such as
management performance, financial leverage, industry problems and reduced
demand for the issuer's goods or services.

+ CREDIT RISK. Each of the Funds may be subject to credit risk to the extent it
invests in FIXED-INCOME SECURITIES. This is the risk that the issuer or the
guarantor (or, in the case of the California Insured Intermediate Municipal
Fund and the Florida Insured Municipal Fund, the insurer) of a debt security,
or the counterparty to any of a Fund's portfolio transactions (including
without limitation REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS,
LENDING OF SECURITIES and other over-the-counter transactions), will be unable
or unwilling to make timely principal and/or interest payments, or to
otherwise honor its obligations. Varying degrees of credit risk, often
reflected in Credit Ratings, apply. Credit risk is particularly significant
for Funds such as the Income, High Yield, Tax-Exempt Bond, Bond & Stock,
Growth & Income, Growth, Mid Cap Stock and Small Cap Stock Funds that invest
significantly in LOWER-RATED SECURITIES. These securities and similar unrated
securities (commonly known as "junk bonds") have speculative elements or are
predominantly speculative credit risks. The Short Term Income, Income, High
Yield, Bond & Stock, Growth & Income, Growth Fund of the Northwest, Growth,
Mid Cap Stock, Small Cap Stock and International Growth Funds, which make
FOREIGN INVESTMENTS denominated in U.S. dollars, are also subject to increased
credit risk because of the added difficulties associated with of requiring
foreign entities to honor their contractual commitments, and because a number
of foreign governments and other issuers are already in default. The Money
Market Fund may also make U.S. dollar denominated FOREIGN INVESTMENTS.

26
<PAGE> 29

+ CURRENCY RISK. Funds such as the Short Term Income, Income, High Yield, Bond
& Stock, Growth & Income, Growth, Mid Cap Stock, Small Cap Stock and
International Growth Funds that invest in securities denominated in, and/or
receive revenues in, foreign currencies will be subject to currency risk. This
is the risk that those currencies will decline in value relative to the U.S.
dollar, or, in the case of hedging positions, that the U.S. dollar will
decline in value relative to the currency hedged.

+ FOREIGN INVESTMENT RISK. Each of the Funds with FOREIGN INVESTMENTS such as
the Short Term Income, Income, High Yield, Bond & Stock, Growth & Income,
Growth, Mid Cap Stock, Small Cap Stock and International Growth Funds, may
experience more rapid and extreme changes in value than Funds with investments
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
companies representing a small number of industries. 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
countries differ, in some cases significantly, from U.S. standards. Also,
nationalization, expropriation or confiscatory taxation, currency blockage,
political changes or diplomatic developments could adversely affect a Fund's
investments in a foreign country. In the event of nationalization,
expropriation or other confiscation, a Fund could lose its entire investment.
Adverse developments in certain regions, such as Southeast Asia, may adversely
affect the markets of other countries whose economies appear to be unrelated.
The Money Market, and Growth Fund of the Northwest Funds may also make U.S.
dollar denominated FOREIGN INVESTMENTS.

+ GEOGRAPHIC CONCENTRATION RISK. Funds such as the California Money, Growth
Fund of the Northwest, California Municipal, California Insured Intermediate
Municipal and Florida Insured Municipal Funds that invest significant portions
of their assets in concentrated geographic areas like the northwestern United
States, California or Florida generally have more exposure to regional
economic risks than Funds making investments more broadly.

+ LEVERAGING 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 Income, Short Term Income,
U.S. Government Securities, California Municipal, California Insured
Intermediate Municipal, Florida Insured Municipal, Growth, International
Growth, Mid Cap Stock and Small Cap Stock Funds may achieve leverage by using
REVERSE REPURCHASE AGREEMENTS and/or DOLLAR ROLLS. The Municipal Funds, the
Fixed-Income Funds, and the Growth & Income Fund may achieve leverage through
the use of INVERSE FLOATING RATE INVESTMENTS. Funds such as the California
Money, California Insured Intermediate Municipal, Short Term Income, Mid Cap
Stock, Small Cap Stock, Growth and International Growth Funds may also take on
leveraging risk by investing collateral from securities loans, by using
STRATEGIC TRANSACTIONS (derivatives) and by BORROWING money to meet redemption
requests.

+ NON-DIVERSIFICATION RISK. Most analysts believe that overall risk can be
reduced through diversification, while concentration of investments in a small
number of securities increases risk. Each of the California Money, California
Municipal, California Insured Intermediate Municipal and Florida Insured
Municipal Funds is NON-DIVERSIFIED. This means they can invest a greater
portion of their assets in a relatively small number of issuers and will have
greater concentration of risk. Some of those issuers may present substantial
credit or other risks.

+ DERIVATIVES RISK. Each of the Funds, except the Money Funds, may, subject to
the limitations and restrictions stated elsewhere in this Prospectus and the
SAI, enter into STRATEGIC TRANSACTIONS involving derivatives such as forward
contracts, futures contracts, options, swaps, caps, floors and collars, which
are financial contracts whose value depends on, or is derived from, the value
of something else, such as an underlying asset, reference rate or index. In
addition to other risks such as the credit risk of the counterparty,
derivatives involve the risk of mispricing or improper valuation and the risk
that changes in the value of the derivative may not correlate perfectly with
relevant assets, rates and indices.

27
<PAGE> 30

+ LIQUIDITY RISK. Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing a Fund from selling out of
these ILLIQUID SECURITIES at an advantageous price. All of the Funds may be
subject to liquidity risk. Funds that engage in STRATEGIC TRANSACTIONS, make
FOREIGN INVESTMENTS, or invest in securities involving substantial market
and/or credit risk tend to be subject to greater liquidity risk. In addition,
liquidity risk increases for Funds that hold RESTRICTED SECURITIES.

+ MANAGEMENT RISK. Each Fund and Portfolio is subject to management risk
because it is an actively managed investment portfolio. WM Advisors, or the
sub-advisor if applicable, will apply its investment techniques and risk
analyses in making investment decisions for the Funds or Portfolios, but there
can be no guarantee that they will meet stated objectives or produce desired
results. In some cases derivatives and other investments may be unavailable or
WM Advisors or the sub-advisor may choose not to use them under market
conditions when their use, in hindsight may be determined to have been
beneficial to the Funds or Portfolios.

+ SMALLER COMPANY RISK. Market risk and liquidity risk are particularly
pronounced for stocks of companies with relatively small market
capitalizations. These companies may have limited product lines, markets or
financial resources, or they may depend on a few key employees. The Equity
Funds, the High Yield Fund, and the Small Cap Stock Fund in particular,
generally have the greatest exposure to this risk.

+ TAX RISK. The Tax-Exempt Money Market, California Money and the Municipal
Funds are subject to the risk that some or all of the interest they receive
might become taxable by law or be determined by the Internal Revenue Service
(or the relevant state tax authority) to be taxable. In this event, the value
of the Funds' investments would likely fall, and some or all of the income
distributions paid by the Funds might become taxable. In addition, some or all
of the income distributions paid by these Funds may be subject to federal
alternative minimum income tax.

+ MONEY MARKET RISK. While the Money Funds are designed to be relatively low
risk investments, they are not entirely free of risk. The Money Funds may not
be able to maintain a net asset value of $1.00 per share, as a result of a
deterioration in the credit quality of issuers whose securities the Funds
hold, or an increase in interest rates. In addition, the Money Funds are still
subject to the risk that the value of your investment may be eroded over time
by inflation.

+ PORTFOLIO REALLOCATION RISK. From time to time, one or more of a Portfolio's
underlying Funds may experience relatively large investments or redemptions
due to reallocations or rebalancings by the Portfolios as recommended by WM
Advisors. These transactions will affect such Funds, since the Funds that
experience redemptions as a result of reallocations or rebalancings may have
to sell portfolio securities and Funds that receive additional cash will have
to invest such cash. While it is impossible to predict the overall impact of
these transactions over time, there could be adverse effects on portfolio
management to the extent that the Funds may be required to sell securities or
invest cash at times when they would not otherwise do so. These transactions
could also have tax consequences if sales of securities resulted in gains and
could also increase transaction costs. WM Advisors is committed to minimizing
such impact on the Funds to the extent it is consistent with pursuing the
investment objectives of the Portfolios. WM Advisors may nevertheless face
conflicts in fulfilling its dual responsibilities to the Portfolios and the
Funds. WM Advisors will at all times monitor the impact on the Funds of
transactions by the Portfolios.

+ PORTFOLIO RISK. Each of the Portfolios allocates its assets among the Funds
as determined by its Advisor and in accordance with the investment
restrictions discussed above. As a result, the Portfolios share the risks of
each of the Funds in which they invest, which are described above.

In particular, the Portfolios may be subject to credit risk. For instance,
the Strategic Growth Portfolio can invest up to 50% of its assets in each of
the Growth, Growth & Income, Mid Cap Stock and Small Cap Stock Funds and up
to 25% of its assets in the High Yield Fund. Each of these Funds may invest
significant amounts of its assets in lower-rated securities ("junk bonds").
The Portfolios may also be exposed to FOREIGN INVESTMENT RISK through their
investments in the Growth,

28
<PAGE> 31

Mid Cap Stock or Small Cap Stock Funds. In choosing among the Portfolios,
investors should understand the risks of each of the Funds and the extent to
which each Portfolio invests in each Fund.

Investing in Funds through the Portfolios involves certain additional
expenses and tax results that would not be present in a direct investment in
the Funds. See "Dividends, Capital Gains and Taxes" for additional
information about the tax implications of investing in the Portfolios.

Under certain circumstances, a Fund may determine to pay a redemption
request by a Portfolio wholly or partly by a distribution in kind of
securities from its portfolio, instead of cash. In such cases, the
Portfolios may hold portfolio securities until WM Advisors determines that
it is appropriate to dispose of such securities.

The officers, trustees, advisor, distributor and transfer agent of the
Portfolios serve in the same capacities for the Funds. Conflicts may arise
as these persons and companies seek to fulfill their fiduciary
responsibilities to the Portfolios and the Funds.

29
<PAGE> 32

PRINCIPAL RISKS by fund

The following chart summarizes the Principal Risks of each Fund other than
Market Risk, Credit Risk, Liquidity Risk, Management Risk and Portfolio
Reallocation Risk, which apply to all of the Funds. Risks not marked for a
particular Fund may, however, still apply to some extent to that Fund at various
times.

<TABLE>
<CAPTION>
Foreign Geographic Smaller Money
Currency Investment Concentration Leveraging Non-Diversification Derivatives Company Tax Market
Fund Risk Risk Risk Risk Risk Risk Risk Risk Risk
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY
MARKET X X
fund
TAX-EXEMPT
MONEY MARKET X X
fund
CALIFORNIA
MONEY X X X X
fund
SHORT TERM
INCOME X X X X
fund
U.S. GOVERNMENT
SECURITIES X X
fund
INCOME
fund X X X X
HIGH YIELD
fund X X X X X
TAX-EXEMPT
BOND X X X
fund
CALIFORNIA
MUNICIPAL X X X X X
fund
CALIFORNIA INSURED
INTERMEDIATE X X X X X
MUNICIPAL fund
FLORIDA INSURED
MUNICIPAL X X X X X
fund
BOND &
STOCK X X X X
fund
GROWTH &
INCOME X X X X X
fund
GROWTH FUND OF
THE NORTHWEST X X X X
GROWTH
fund X X X X X
MID CAP
STOCK X X X X X
fund
SMALL CAP
STOCK X X X X X
fund
INTERNATIONAL
GROWTH X X X X X
fund

30
<PAGE> 33

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

FEES AND EXPENSES OF THE FUNDS
AND PORTFOLIOS

This table describes the fees and expenses that you may pay if you invest in
Class A or Class B shares of a Fund or Portfolio. Each of the Funds may offer
other classes of shares that are subject to different fees and expenses. For
information about other classes of shares offered by the Funds, please contact
WM Shareholder Services at 800-222-5852. The Examples on the next two pages are
intended to help you compare the cost of investing in the Funds and Portfolios
with the costs of investing in other mutual funds. The Examples assume that your
investment has a 5% return each year, as required by the Securities and Exchange
Commission, and that the Fund's or Portfolio's operating expenses remain the
same. Your actual costs may be higher or lower than those in the Examples.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES CLASS A CLASS B
(fees paid directly from your investment) SHARES (in %) SHARES (in %)
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price)
Equity Funds and Strategic Growth, Conservative Growth and
Balanced Portfolios 5.50 0.00
----------------------------------------------------------------------------------------------------
Fixed-Income Funds, Municipal Funds and Flexible Income and
Income Portfolios 4.50(1) 0.00
----------------------------------------------------------------------------------------------------
Money Funds 0.00(2) 0.00
----------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage of
original purchase price or redemption proceeds, as
applicable)(5) 0.00(3) 5.00(4)
----------------------------------------------------------------------------------------------------
(1) 3.50% for Short Term Income Fund.
(2) Regular sales charges apply when Class A shares of a Money Market Fund (on which no sales
charge was paid at time of purchase) are exchanged for shares of any other Fund.
(3) Certain investors who purchase Class A shares without paying an initial sales charge may
be subject to a deferred sales charge of 1.00% on redemptions within the first year or 0.50%
on redemptions within the second year after purchase. Class A shares are not otherwise
subject to a deferred sales charge.
(4) The maximum deferred sales charge is imposed on shares redeemed in the first year. For
shares held longer than one year, the deferred sales charge declines according to the
schedules set forth under "Buying Class B Shares -- Contingent deferred sales charge" in
this Prospectus. The maximum deferred sales charge for Class B shares of the Short Term
Income Fund is 4.00%.
(5) A $10 fee may be charged for redemptions made by wire transfer.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

31
<PAGE> 34

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------

ANNUAL FUND
OPERATING EXPENSES
(expenses that are deducted
CLASS A SHARES from Fund assets)
-----------------------------------------------------------------------------------------------------------
Total
Annual
Service Fund
Management (12b-1) Other Operating Expense Net
Fees Fees(4) Expenses Expenses Reimbursement Expenses
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market Fund
-----------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund(1) 0.45 0.00 0.27
-----------------------------------------------------------------------------------------------------------
California Money Fund(1) 0.45 0.00 0.42
-----------------------------------------------------------------------------------------------------------
Short Term Income Fund(1) 0.50 0.25 0.65
-----------------------------------------------------------------------------------------------------------
U.S. Government Securities
Fund(2,3) 0.50 0.25 0.66
-----------------------------------------------------------------------------------------------------------
Income Fund(3) 0.50 0.25 0.19
-----------------------------------------------------------------------------------------------------------
High Yield Fund(1) 0.63 0.25 0.34
-----------------------------------------------------------------------------------------------------------
Tax-Exempt Bond Fund 0.50 0.25 0.09
-----------------------------------------------------------------------------------------------------------
California Municipal Fund(3) 0.50 0.25 0.10
-----------------------------------------------------------------------------------------------------------
California Insured Intermediate
Municipal Fund(3) 0.50 0.25
-----------------------------------------------------------------------------------------------------------
Florida Insured Municipal
Fund(1,3) 0.50 0.25
-----------------------------------------------------------------------------------------------------------
Bond & Stock Fund 0.59 0.25
-----------------------------------------------------------------------------------------------------------
Growth & Income Fund 0.55 0.25
-----------------------------------------------------------------------------------------------------------
Growth Fund of the Northwest 0.63 0.25
-----------------------------------------------------------------------------------------------------------
Growth Fund(2,3) 0.85 0.25
-----------------------------------------------------------------------------------------------------------
Mid Cap Stock Fund 0.75 0.25 0.79 1.89 N/A 1.89
-----------------------------------------------------------------------------------------------------------
Small Cap Stock Fund(3) 0.85 0.25
-----------------------------------------------------------------------------------------------------------
International Growth Fund 1.00 0.25
-----------------------------------------------------------------------------------------------------------
Strategic Growth Portfolio(5) 0.15 0.25
-----------------------------------------------------------------------------------------------------------
Conservative Growth Portfolio(5) 0.15 0.25
-----------------------------------------------------------------------------------------------------------
Balanced Portfolio(5) 0.15 0.25
-----------------------------------------------------------------------------------------------------------
Flexible Income Portfolio(1,5) 0.15 0.25
-----------------------------------------------------------------------------------------------------------
Income Portfolio(1,5) 0.15 0.25
-----------------------------------------------------------------------------------------------------------

<CAPTION>
- ------------------------------------------- ---------------------------------------------
EXAMPLES: You would pay the
following expenses on a $10,000
investment assuming a 5% annual
return and redemption at the end of
CLASS A SHARES each period:
---------------------------------- ---------------------------------------------

One Three Five Ten
Year Years Years Years
---------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund
-------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund(1)
---------------------------------------------------------------------------------------------
California Money Fund(1)
-----------------------------------------------------------------------------------------------------
Short Term Income Fund(1)
-----------------------------------------------------------------------------------------------------------
U.S. Government Securities
Fund(2,3)
-----------------------------------------------------------------------------------------------------------
Income Fund(3)
-----------------------------------------------------------------------------------------------------------
High Yield Fund(1)
-----------------------------------------------------------------------------------------------------------
Tax-Exempt Bond Fund
-----------------------------------------------------------------------------------------------------------
California Municipal Fund(3)
-----------------------------------------------------------------------------------------------------------
California Insured Intermediate
Municipal Fund(3)
-----------------------------------------------------------------------------------------------------------
Florida Insured Municipal
Fund(1,3)
-----------------------------------------------------------------------------------------------------------
Bond & Stock Fund
-----------------------------------------------------------------------------------------------------------
Growth & Income Fund
-----------------------------------------------------------------------------------------------------------
Growth Fund of the Northwest
-----------------------------------------------------------------------------------------------------------
Growth Fund(2,3)
-----------------------------------------------------------------------------------------------------------
Mid Cap Stock Fund 731 1,111 N/A N/A
-----------------------------------------------------------------------------------------------------------
Small Cap Stock Fund(3)
-----------------------------------------------------------------------------------------------------------
International Growth Fund
-----------------------------------------------------------------------------------------------------------
Strategic Growth Portfolio(5)
-----------------------------------------------------------------------------------------------------------
Conservative Growth Portfolio(5)
-----------------------------------------------------------------------------------------------------------
Balanced Portfolio(5)
-----------------------------------------------------------------------------------------------------------
Flexible Income Portfolio(1,5)
-----------------------------------------------------------------------------------------------------------
Income Portfolio(1,5)
-----------------------------------------------------------------------------------------------------------
</TABLE>

(1) Reflects the Advisor's obligation to limit Total Annual Fund Operating
Expenses through October 31, 2000, as described on page 2.

(2) Management fees shown have been restated to reflect current contractual
rates.

(3) 12b-1 fees represent servicing fees which are paid to the Distributor.
See "Which Class of Shares is Best for Me -- Distribution Plans."

(4) Does not include underlying Fund expenses that the Portfolios bear
indirectly.

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

32
<PAGE> 35

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------

ANNUAL FUND
OPERATING EXPENSES
(expenses that are deducted
CLASS B SHARES from Fund assets)
----------------------------------------------------------------------------------------------------------
Distribution Total
and Annual
Service Fund
Management (12b-1) Other Operating Expense Net
Fees Fees(4) Expenses Expenses Reimbursement Expenses
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market Fund 0.45% 1.00% 0.20%
----------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market
Fund(1) 0.45 1.00 0.35
----------------------------------------------------------------------------------------------------------
California Money Fund(1) 0.45 1.00
----------------------------------------------------------------------------------------------------------
Short Term Income Fund(1) 0.50 1.00
----------------------------------------------------------------------------------------------------------
U.S. Government Securities
Fund(2, 3) 0.50 1.00
----------------------------------------------------------------------------------------------------------
Income Fund(3) 0.50 1.00
----------------------------------------------------------------------------------------------------------
High Yield Fund(1) 0.63 1.00
----------------------------------------------------------------------------------------------------------
Tax-Exempt Bond Fund 0.50 1.00
----------------------------------------------------------------------------------------------------------
California Municipal Fund(3) 0.50 1.00
----------------------------------------------------------------------------------------------------------
California Insured
Intermediate Municipal
Fund(3) 0.50 1.00
----------------------------------------------------------------------------------------------------------
Florida Insured Municipal
Fund(1, 3) 0.50 1.00
----------------------------------------------------------------------------------------------------------
Bond & Stock Fund 0.59 1.00
----------------------------------------------------------------------------------------------------------
Growth & Income Fund(1) 0.55 1.00
----------------------------------------------------------------------------------------------------------
Growth Fund of the Northwest 0.63 1.00
----------------------------------------------------------------------------------------------------------
Growth Fund(2, 3) 0.85 1.00
----------------------------------------------------------------------------------------------------------
Mid Cap Stock Fund 0.75 1.00 .97 2.82 N/A 785
----------------------------------------------------------------------------------------------------------
Small Cap Stock Fund(3) 0.85 1.00
----------------------------------------------------------------------------------------------------------
International Growth Fund 1.00 1.00
----------------------------------------------------------------------------------------------------------
Strategic Growth
Portfolio(6) 0.15 1.00
----------------------------------------------------------------------------------------------------------
Conservative Growth
Portfolio(6) 0.15 1.00
----------------------------------------------------------------------------------------------------------
Balanced Portfolio(6) 0.15 1.00
----------------------------------------------------------------------------------------------------------
Flexible Income
Portfolio(1,6) 0.15 1.00
----------------------------------------------------------------------------------------------------------
Income Portfolio(1,6) 0.15 1.00
----------------------------------------------------------------------------------------------------------

<CAPTION>
- --------------------------------- ---------------------------------------------------------------------------
EXAMPLES: You would pay the following
expenses on a $10,000 investment assuming a 5%
annual return and either
a) redemption at the end of each period or
CLASS B SHARES b) no redemption:
---------------------------- -----------------------------------------------------------------------

(a) (b)
One Three Five Ten One Three Five Ten
Year Years Years Years(5) Year Years Years Years(5)
---------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Fund
----------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market
Fund(1)
----------------------------------------------------------------------------------------------------------
California Money Fund(1)
----------------------------------------------------------------------------------------------------------
Short Term Income Fund(1)
----------------------------------------------------------------------------------------------------------
U.S. Government Securities
Fund(2, 3)
----------------------------------------------------------------------------------------------------------
Income Fund(3)
----------------------------------------------------------------------------------------------------------
High Yield Fund(1)
----------------------------------------------------------------------------------------------------------
Tax-Exempt Bond Fund
----------------------------------------------------------------------------------------------------------
California Municipal Fund(3)
----------------------------------------------------------------------------------------------------------
California Insured
Intermediate Municipal
Fund(3)
----------------------------------------------------------------------------------------------------------
Florida Insured Municipal
Fund(1, 3)
----------------------------------------------------------------------------------------------------------
Bond & Stock Fund
----------------------------------------------------------------------------------------------------------
Growth & Income Fund(1)
----------------------------------------------------------------------------------------------------------
Growth Fund of the Northwest
----------------------------------------------------------------------------------------------------------
Growth Fund(2, 3)
----------------------------------------------------------------------------------------------------------
Mid Cap Stock Fund 785 1,174 N/A N/A 285 874 N/A N/A
----------------------------------------------------------------------------------------------------------
Small Cap Stock Fund(3)
----------------------------------------------------------------------------------------------------------
International Growth Fund
----------------------------------------------------------------------------------------------------------
Strategic Growth
Portfolio(6)
----------------------------------------------------------------------------------------------------------
Conservative Growth
Portfolio(6)
----------------------------------------------------------------------------------------------------------
Balanced Portfolio(6)
----------------------------------------------------------------------------------------------------------
Flexible Income
Portfolio(1,6)
----------------------------------------------------------------------------------------------------------
Income Portfolio(1,6)
----------------------------------------------------------------------------------------------------------
</TABLE>

(1) Reflects the Advisor's obligation to limit Total Annual Fund Operating
Express through October 31, 2000, as described on page 2.

(2) Management fees shown have been restated to reflect current contractual
rates.

(3) 0.25% of the 12b-1 fees shown represent servicing fees which are paid to
the Distributor. Long-term Class B shareholders may pay more than the
sales charge paid by Class A shareholders. See "Which Class of Shares is
Best for Me -- Distribution Plans."

(4) Class B shares convert to Class A shares after eight years; accordingly,
the expense amounts for years nine and ten are based on Class A share
expenses.

(5) Does not include underlying Fund expenses that the Portfolios bear
indirectly.

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

33
<PAGE> 36

ESTIMATED AGGREGATE PORTFOLIO EXPENSES

The following table sets forth the estimated aggregate expenses of the
Portfolios, including expenses of the underlying Funds, based upon expenses
shown in the table above for each Portfolio and for each underlying Fund's Class
I shares, which are available only to the Portfolios. These estimates assume a
constant allocation by each Portfolio of its assets among the underlying Funds
identical to the actual allocation of the Portfolio at October 31, 1999. A
Portfolio's actual expenses may be higher as a result of changes in the
allocation of the Portfolio's assets among the underlying Funds, the expenses of
the underlying Funds, and/or the Portfolio's own expenses.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares
------------------------------------------------
Combined Combined
Expenses Expenses
Combined Without Combined Without
Net Waivers or Net Waivers or
PORTFOLIO Expenses Credits Expenses Credits
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Strategic Growth Portfolio(1)
- --------------------------------------------------------------------------------------------------------------
Conservative Growth Portfolio(2)
- --------------------------------------------------------------------------------------------------------------
Balanced Portfolio(3)
- --------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio(4)
- --------------------------------------------------------------------------------------------------------------
Income Portfolio(5)
- --------------------------------------------------------------------------------------------------------------
</TABLE>

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

(1) As of October 31, 1999, the assets of the predecessor to the Strategic
Growth Portfolio were allocated as follows: Money Market Fund %, Growth &
Income Fund %, Growth Fund %, and International Growth Fund.

(2) As of October 31, 1999, the assets of the predecessor to the Conservative
Growth Portfolio were allocated as follows: Money Market Fund %, Growth &
Income Fund %, Growth Fund 25%, Small Cap Fund % and International
Growth Fund %.

(3) As of October 31, 1999, the assets of the predecessor to the Balanced
Portfolio were allocated as follows: Money Market Fund %, U.S. Government
Securities Fund %, Growth & Income Fund %, Growth Fund %,
International Growth Fund % and other assets 2%.

(4) As of October 31, 1999, the assets of the predecessor to the Flexible Income
Portfolio were allocated as follows: Money Market Fund %, U.S. Government
Securities Fund %, Income Fund %, Growth & Income Fund 20%, Growth Fund
% and other assets %.

(5) As of October 31, 1999, the assets of the predecessor to the Income
Portfolio were allocated as follows: Money Market Fund %, Short Term
Income Fund %, U.S. Government Securities Fund %, Income Fund %, High
Yield Fund % and other assets %.

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DESCRIPTION OF THE FUNDS AND PORTFOLIOS

This section provides a more complete description of the principal investment
strategies and risks of each Fund and Portfolio. The "Common Investment
Practices" section that follows provides additional information about the
principal investment strategies of the Funds and identifies the Funds and
Portfolios that may engage in such practices to a significant extent. You can
find additional descriptions of the Funds' strategies and risks in the Statement
of Additional Information ("SAI"). Except for policies explicitly identified as
"fundamental" in this Prospectus or the SAI, the investment objectives and
investment policies set forth in this Prospectus and the SAI are not fundamental
and may be changed at any time without shareholder consent. Except as otherwise
indicated, all policies and limitations are considered at the time of purchase;
the sale of securities is not required in the event of a subsequent change in
valuation or other circumstances.

MONEY FUNDS

The Money Funds invest only in U.S. dollar-denominated short-term, money market
securities. They will only purchase obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or securities that are, or have
issuers that are,

- - rated by at least two nationally recognized statistical rating organizations
("NRSROs"), such as Standard & Poor's ("S&P") or Moody's Investors Service,
Inc. ("Moody's"), in one of the two highest rating categories for short-term
debt securities,

- - rated in one of the two highest categories for short-term debt by the only
NRSRO that has issued a rating, or

- - if not so rated, are determined to be of comparable quality.

A description of the rating systems of S&P and Moody's is contained in Appendix
A to this Prospectus and in the SAI. At the time of investment, no security
purchased by a Money Fund (except U.S. Government Securities subject to
repurchase agreements and variable rate demand notes) will have a maturity
exceeding 397 days, and each Money Fund's average portfolio maturity will not
exceed 90 days. The Money Funds will attempt to maintain a stable net asset
value ("NAV") of $1.00, but there can be no assurance that any Money Fund will
be able to do so.

MONEY MARKET FUND. To accomplish its objective, the Money Market Fund invests
solely in money market instruments that are selected from the following six
general categories:

- - U.S. Government securities;

- - short-term commercial notes (including asset-backed securities) issued
directly by U.S. and foreign businesses, banking institutions, financial
institutions (including brokerage, finance and insurance companies) and state
and local governments and municipalities to finance short-term cash needs;

- - obligations of U.S. and foreign banks with assets of more than $500 million;

- - securities issued by foreign governments, their agencies or instrumentalities
or by supranational entities;

- - short-term corporate obligations rated in one of the two highest rating
categories by Moody's or S&P; and

- - repurchase agreements.

TAX-EXEMPT MONEY MARKET FUND. The Tax-Exempt Money Market Fund invests
primarily in a diversified selection of Municipal Obligations, the income from
which is exempt from federal income tax. These obligations include fixed income
obligations issued by states, counties, cities or other governmental bodies that
generate income exempt from federal income tax. Short-term Municipal Obligations
may include, but are not limited to, tax anticipation notes, bond anticipation
notes, revenue anticipation notes and project notes, or other forms of
short-term municipal loans and obligations. Under normal market conditions, the
Fund will not invest more than 20% of its assets in obligations that pay
interest subject to alternative minimum tax ("AMT-Subject Bonds").

For temporary defensive purposes, the Fund may invest more than 20% of its
assets in instruments eligible for purchase by the Money Market Fund, which may
produce income that is not exempt from federal income taxes.

The Fund may also invest in variable rate demand obligations, stand-by
commitments, when-issued securities and forward commitments.

CALIFORNIA MONEY FUND. To accomplish its objective, the California Money Fund
invests in a portfolio of

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Municipal Obligations. It is a fundamental policy of the Fund to invest, under
normal market conditions, at least 80% of its total assets in Municipal
Obligations. The Fund normally invests at least 80% of its total assets in
Municipal Obligations issued by the State of California and its political
subdivisions and certain other governmental issuers (such as the Commonwealth of
Puerto Rico), which produce income that is exempt from California state personal
income tax. The Fund may also invest in AMT-Subject Bonds.

The Fund may also invest in variable rate demand obligations, stand-by
commitments, when-issued securities and forward commitments.

FIXED-INCOME FUNDS

SHORT TERM INCOME FUND. Although the Short Term High Income Fund maintains a
portfolio duration of three years or less, it may hold individual securities
with remaining maturities of more than three years. Duration is a measure that
relates the price volatility of a security to changes in interest rates. The
duration of a debt security is the weighted average term to maturity, expressed
in years, of the present value of future cash flows, including coupon payments
and principal repayments. Thus, duration involves WM Advisors, judgment with
respect to both interest rates and expected cash flows.

The Fund may invest in obligations issued or guaranteed by domestic and foreign
governments and government agencies and instrumentalities and in high-grade
corporate debt obligations, such as bonds, debentures, notes, equipment lease
and trust certificates, mortgage-backed securities, collateralized mortgage
obligations and asset-backed securities.

The Fund may invest up to 10% of its assets in foreign fixed-income securities,
primarily bonds of foreign governments or their political subdivisions, foreign
companies and supranational organizations, including non-U.S. dollar-denominated
securities and U.S. dollar-denominated debt securities issued by foreign issuers
and foreign branches of U.S. banks. Investment in foreign securities is subject
to special risks. The Fund may invest up to 5% of its assets in preferred stock.
The Fund may engage in certain options transactions, enter into financial
futures contracts and related options for the purpose of portfolio hedging and
enter into currency forwards or futures contracts and related options for the
purpose of currency hedging. The Fund may invest in certain illiquid
investments, such as privately placed obligations, including restricted
securities. The Fund may invest up to 10% of its assets in securities of
unaffiliated mutual funds. The Fund may borrow money or enter into reverse
repurchase agreements or dollar roll transactions in the aggregate up to 33 1/3%
of its total assets. The Fund may invest up to 25% of its total assets in
asset-backed securities, which represent a participation in, or are secured by
and payable from, a stream of payments generated by particular assets, most
often a pool of similar assets.

U.S. GOVERNMENT SECURITIES FUND. The U.S. Government Securities 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
agreements 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) obligations
secured by the full faith and credit of the U.S. Government or its
instrumentalities; 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 total net assets for emergency, non-investment
purposes. The Fund may also enter into dollar roll transactions.

INCOME FUND. The Income Fund invests most of its assets in

- - debt and convertible debt securities;

- - U.S. Government securities, including mortgage-backed securities issued by the
Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), and

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<PAGE> 39

Federal Home Loan Mortgage Corporation ("FHLMC") or similar government
agencies;

- - obligations of U.S. banks that belong to the Federal Reserve System;

- - preferred stocks and convertible preferred stocks;

- - the highest grade commercial paper as rated by S&P or Moody's; and

- - deposits in U.S. banks.

The Fund may also invest in securities denominated in foreign currencies and
receive interest, dividends and sale proceeds in foreign currencies. The Fund
may engage in foreign currency exchange transactions for hedging purposes in
connection with the purchase and sale of foreign securities or to protect
against changes in the value of specific securities held by the Fund. It may
also purchase and sell currencies on a spot (cash) basis, enter into forward
contracts to purchase or sell foreign currencies at a future date, and buy and
sell foreign currency futures contracts. The Fund may borrow up to 5% of its
total net assets for emergency, non-investment purposes, and may enter into
dollar roll transactions. The Fund may purchase securities of issuers which deal
in real estate or securities which are secured by interests in real estate, and
it may acquire and dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt obligations secured by
real estate or interests therein. The Fund may also purchase and sell interest
rate futures and options. The Fund may invest up to 35% of its assets in
lower-rated fixed-income securities (sometimes called "junk bonds").

HIGH YIELD FUND. The High Yield Fund invests, under normal market conditions,
at least 65% of its assets in a diversified portfolio of fixed income securities
(including debt securities, convertible securities and preferred stocks) rated
lower than BBB by S&P or Baa by Moody's or of equivalent quality as determined
by the Advisor. The remainder of the Fund's assets may be invested in any other
securities the Advisor believes are consistent with the Fund's objective. These
may include higher rated fixed-income securities, common stocks and other equity
securities. The Fund may also invest in securities of foreign issuers and engage
in hedging strategies involving options.

MUNICIPAL FUNDS

Each of the Municipal Funds and the California Money Fund, invests most of its
assets in Municipal Obligations. Current federal income tax laws limit the types
and volume of bonds qualifying for the federal income tax exemption of interest
which may affect the ability of a Fund to purchase sufficient amounts of
tax-exempt securities.

TAX-EXEMPT BOND FUND. The Tax-Exempt Bond Fund will invest at least 80% of its
assets in Municipal Obligations, including inverse floating rate obligations,
under normal market conditions.

The Fund specifically limits these investments to: municipal bonds, municipal
notes and securities of unaffiliated tax-exempt mutual funds. The Fund also may
invest up to 35% of its assets in lower-rated securities.

In adverse markets, the Fund may seek to protect its investment position by
investing up to 50% of its portfolio in taxable short-term investments such as:

- - U.S. Government securities;

- - commercial paper rated in the highest grade by either S&P or Moody's;

- - obligations of U.S. banks;

- - time or demand deposits in U.S. banks; and

- - repurchase agreements relating to municipal securities or any of the foregoing
taxable instruments.

Interest income from these investments that is distributed to you by the Fund
may be taxable.

The Fund may also purchase and sell interest rate futures and options. The Fund
may also invest in AMT-Subject Bonds, although, so long as its name includes the
words "tax-exempt" and the SEC so requires, those investments will be limited to
20% of the Fund's total assets.

CALIFORNIA MUNICIPAL FUND. The California Municipal Fund invests primarily in
intermediate- and long-term California municipal obligations which are Municipal
Obligations that generate interest which is exempt from California state
personal income tax. It is a fundamental policy of the Fund that, under normal
market conditions, at least 80% of its total assets will be invested in these
obligations. The Fund may also invest in AMT-Subject Bonds.

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<PAGE> 40

The Fund will invest primarily in investment grade Municipal Obligations. The
Fund may also invest in inverse floating rate obligations, which are generally
more volatile than other types of Municipal Obligations.

The Fund may, under normal circumstances, invest up to 20% of its assets in

- - Municipal Obligations that are not exempt from California personal income tax;

- - short-term Municipal Obligations;

- - taxable cash equivalents, including short-term U.S. Government securities,
certificates of deposit and bankers' acceptances, commercial paper rated
Prime-1 by Moody's or A-1+ or A-1 by S&P, repurchase agreements (collectively
"Short-Term Instruments"); and

- - securities of money market mutual funds (subject to the limitations set forth
under "Common Investment Practices").

The Fund may, for temporary defensive purposes, invest in these securities
without limitation. Also, as a non-diversified investment company under the 1940
Act, the Fund may invest a larger portion of its assets in the securities of a
small number of issuers.

CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND. The California Insured
Intermediate Municipal Fund will invest primarily in insured intermediate-term
California Municipal Obligations. It is a fundamental policy of the Fund that it
will invest at least 80% of the value of its total assets in Insured California
Municipal Obligations (except when maintaining a temporary defensive position).
Under normal market conditions, the dollar-weighted average maturity of the
securities in which the Fund invests will be more than three years but less than
ten years. The maximum effective maturity (the maturity date without regard to
call provisions, except that for pooled single family mortgage securities
effective maturity is the average life of the underlying mortgage obligations)
of any Municipal Obligation in which the Fund invests will be fifteen years.

All of the Municipal Obligations in which the Fund invests, taking into account
any insurance, are investment grade securities. For more information, see "About
Bond Insurance" below.

The Fund may invest without limitation in AMT-Subject Bonds.

Under normal market conditions, the Fund may invest up to 20% of its assets in

- - uninsured Municipal Obligations;

- - Municipal Obligations that are not exempt from California personal income tax;
and

- - short-term Municipal Obligations and taxable cash equivalents, including
Short-Term Instruments and securities of unaffiliated money market mutual
funds (subject to the limitations set forth under "Common Investment
Practices") and may, for temporary defensive purposes, invest in these
securities without limitation.

In addition, the Fund may invest in inverse floating rate obligations. The Fund
may engage in hedging transactions through the use of financial futures and
options thereon. It may also purchase and sell securities on a when-issued or
forward commitment basis, invest in mortgage-backed securities, enter into
repurchase agreements, invest in stand-by commitments and lend portfolio
securities. The Fund may invest in floating rate and variable rate obligations,
including participation interests therein (referred to collectively as "Hedging
Transactions").

FLORIDA INSURED MUNICIPAL FUND. The Florida Insured Municipal Fund will invest
primarily in insured, intermediate- and long-term Municipal Obligations issued
by the State of Florida and its political subdivisions. The Fund will invest
primarily in investment-grade Municipal Obligations. It is a fundamental policy
of the Fund that it will invest at least 80% of the value of its total assets
(except when maintaining a temporary defensive position) in insured Florida
Municipal Obligations. See "About Bond Insurance" below. The Fund may invest
without limitation in AMT-Subject Bonds. The Fund may also invest in inverse
floating rate obligations.

The Fund may invest up to 20% of its total assets in:

- - uninsured Municipal Obligations;

- - Municipal Obligations that are not exempt from Florida intangible personal
property tax; and

- - Short-Term Instruments and securities of unaffiliated money market mutual
funds and, for temporary defensive purposes, invest in these securities
without limitation.

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<PAGE> 41

Florida does not impose an income tax on individuals. Distributions of
investment income and capital gains by the Fund will be subject to Florida
corporate income taxes. Florida imposes a tax on intangible personal property
owned by Florida residents. Based on a ruling the Fund has received from the
Florida Department of Revenue, if the Fund's assets consist, on the last
business day of the calendar year, solely of assets exempt from Florida
intangible personal property tax, shares of the Fund owned by Florida residents
will be exempt from Florida intangible personal property tax. Assets exempt from
Florida intangible personal property tax include Florida Municipal Obligations;
obligations of the U. S. Government or its agencies; and cash.

ABOUT BOND INSURANCE. The insured Municipal Obligations in which the California
Insured Intermediate Municipal and Florida Insured Municipal Funds will invest
and the other Municipal Funds may invest are insured under insurance policies
that relate to the specific Municipal Obligation in question and that are issued
by an insurer having a claims-paying ability rated AAA by S&P or Aaa by Moody's.
This insurance is generally non-cancelable and will continue in force so long as
the Municipal Obligations are outstanding and the insurer remains in business.

The insured Municipal Obligations are insured as to the scheduled payment of all
installments of principal and interest as they fall due. The insurance covers
only credit risk and therefore does not guarantee the market value of the
obligations in a Fund's investment portfolio or a Fund's NAV. The Fund's NAV
will continue to fluctuate in response to fluctuations in interest rates. A
Fund's investment policy requiring investment in insured Municipal Obligations
will not affect the Fund's ability to hold its assets in cash or to invest in
escrow-secured and defeased bonds or in certain short-term tax-exempt
obligations, or affect its ability to invest in uninsured taxable obligations
for temporary or liquidity purposes or on a defensive basis.

EQUITY FUNDS

BOND & STOCK FUND. Under normal market conditions, at least 25% of the Bond &
Stock Fund's assets will be invested in fixed-income securities, including
preferred stocks and that portion of the value of convertible securities which
is not attributable to a conversion feature. The Fund may invest in money market
instruments for temporary or defensive purposes. The Fund may invest in
fixed-income securities of any maturity, including mortgage-backed securities,
U.S. Government securities and asset-backed securities, and may also invest up
to 35% of its assets, in below investment grade bonds (sometimes called junk
bonds). The Fund may purchase or sell U.S. Government securities or
collateralized mortgage obligations on "when-issued" or "delayed-delivery" basis
in an aggregate of up to 20% of the market value of its total net assets. The
Fund may invest up to 25% of its assets in real estate investment trusts, known
as "REITs." The Fund may write (sell) covered call options. The Fund may invest
up to 25% of its assets in U.S. dollar-denominated securities of foreign
issuers.

GROWTH & INCOME FUND. The Growth & Income Fund invests primarily in common
stocks. The Fund may also invest in money market instruments for temporary or
defensive purposes. To limit risk, repurchase agreements maturing in more than
seven days will not exceed 10% of the Fund's total assets. The Fund may invest
up to 25% of its assets in REITs. The Fund may invest in fixed-income securities
of any maturity, including mortgage-backed securities, and may invest up to 35%
of its assets in below investment grade fixed-income securities.

GROWTH FUND OF THE NORTHWEST. Under normal circumstances, at least 65% of the
Fund's total assets will be invested in the common stocks of companies whose
principal executive offices are located in the Northwest States of Alaska,
Idaho, Montana, Oregon and Washington.

The Fund is permitted to invest in money market instruments for temporary or
defensive purposes. The Fund may invest up to 25% of its assets in REITs, and
may write (sell) covered call options.

Because the Fund concentrates its investments in companies located or doing
business in the Northwest, the Fund is not intended as a complete investment
program, and could be adversely impacted by economic trends within the
five-state area.

GROWTH FUND. The Growth Fund invests primarily in common stocks believed to
have significant appreciation potential. The Fund also may invest in debt
securities, bonds, convertible bonds, preferred stock and convertible preferred
stock, including up to 35% of its assets in non-investment-grade debt
securities.

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<PAGE> 42

The Fund may invest up to 25% of its assets in foreign securities, usually
foreign common stocks, and up to 5% of its assets in securities of companies in
(or governments of) developing or emerging countries (sometimes referred to as
"emerging markets"). The Fund may also engage in certain options transactions,
enter into financial futures contracts and related options for the purpose of
portfolio hedging and enter into currency forwards or futures contracts and
related options for the purpose of currency hedging.

MID CAP STOCK FUND. The Mid Cap Stock Fund invests primarily (normally at least
65% of its assets) in common stocks and other equity securities of companies
with market capitalizations in the range represented by companies included in
the S&P Mid Cap 400 Index. The Fund may also invest in money market instruments
for temporary or defensive purposes. To limit risk, repurchase agreements
maturing in more than seven days will not exceed 10% of the Fund's total assets.
The Fund may invest up to 25% of its assets in REITs. The Fund may invest in
fixed-income securities of any maturity, including mortgage-backed securities,
and may invest up to 35% of its assets in below investment grade fixed-income
securities.

The Fund may purchase or sell U.S. Government securities or collateralized
mortgage obligations on a "when-issued" or "delayed-delivery" basis in an
aggregate up to 20% of the market value of its total assets minus total
liabilities (except for the obligations created by these commitments). The Fund
may write (sell) covered call options. The Fund may invest up to 25% of its
assets in U.S. dollar-denominated securities of foreign issuers.

SMALL CAP STOCK FUND. The Small Cap Stock Fund invests primarily in equity
securities of companies with market capitalization of less than $1.4 billion at
the time of purchase. In addition to common stock, the Fund's equity securities
may include convertible bonds, convertible preferred stock and warrants to
purchase common stock, as well as cash and cash equivalents. The Fund may invest
up to 25% of its assets in securities of foreign issuers and up to 5% of its
assets in securities in developing or emerging countries. The Fund may invest up
to 35% of its assets in non-investment-grade debt securities ("junk bonds") if
the Advisor believes that doing so will be consistent with the goal of capital
appreciation.

INTERNATIONAL GROWTH FUND. The International Growth Fund invests primarily in
equity securities of issuers located in foreign countries that the Fund's
sub-advisor believes present attractive investment opportunities. Criteria for
determining the appropriate distribution of investments among various countries
and regions include prospects for relative economic growth, expected levels of
inflation, government policies influencing business conditions, the outlook for
currency relationships and the range of investment opportunities available to
international investors. The relative strength or weakness of a particular
country's currency or economy may dictate whether securities of issuers located
in such country will be purchased or sold. The Fund may invest without limit in
the securities of issuers located in any one country (except as provided below
with respect to emerging markets countries). The Fund will emphasize established
companies, although it may invest in companies of varying sizes as measured by
assets, sales and capitalization.

The Fund invests in common stock and may invest in other securities with equity
characteristics, such as trust or limited partnership interests, preferred
stock, rights and warrants. The Fund may also invest in convertible securities.
The Fund invests in securities listed on foreign or domestic securities
exchanges and securities traded in foreign or domestic over-the-counter markets,
and may invest in restricted or unlisted securities.

The Fund intends to stay fully invested in the securities described above to the
extent practical. Fund assets may be invested in short-term debt instruments to
meet anticipated day-to-day operating expenses, and for temporary defensive
purposes. In addition, when the Fund experiences large cash inflows, it may hold
short-term investments until desirable equity securities become available. These
short-term instruments are generally rated A or higher by Moody's or S&P, or, if
unrated, of comparable quality in the opinion of the Fund's sub-advisor.

The Fund may invest up to 30% of its assets in the securities of companies in or
governments of developing or emerging markets, provided that no more than 5% of
the Fund's total assets are invested in any one emerging markets country. For
temporary defensive purposes, the Fund may invest a major portion of its assets
in securities of U.S. issuers. Furthermore, the Fund may invest up to 5% of its
total assets in investment grade corporate debt securities having

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<PAGE> 43

maturities longer than one year, including Euro-currency instruments and
securities.

STRATEGIC ASSET MANAGEMENT PORTFOLIOS

The Portfolios offer you the opportunity to pursue a variety of specially
constructed asset allocation strategies. The Portfolios are designed for
long-term investors seeking total return for tax-advantaged retirement and other
long-term investment or savings accounts.

In order to achieve its investment objective, each Portfolio typically allocates
its assets, within predetermined percentage ranges, among certain of the Funds.
Even so, the Portfolios may temporarily exceed one or more of the applicable
percentage limits for short periods. The percentages reflect the extent to which
each Portfolio will normally invest in the particular market segment represented
by each underlying Fund, and the varying degrees of potential investment risk
and reward represented by each Portfolio's investments in those market segments
and their corresponding Funds. The Advisor may alter these percentage ranges
when it deems appropriate. The assets of each Portfolio will be allocated among
the Funds in accordance with its investment objective, the Advisor's outlook for
the economy and the financial markets, and the relative market valuations of the
Funds.

In addition, in order to meet liquidity needs or for temporary defensive
purposes, each Portfolio may invest, without limit, directly in cash stock or
bond index futures and options thereon and the following short-term instruments:

- - short-term obligations of the U.S. Government, its agencies,
instrumentalities, authorities or political subdivisions;

- - other short-term debt securities rated A or higher by Moody's or S&P, or if
unrated, of comparable quality in the opinion of the Advisor;

- - commercial paper, including master notes;

- - bank obligations, including negotiable certificates of deposit, time deposits
and bankers' acceptances; and

- - repurchase agreements.

At the time a Portfolio invests in any commercial paper, bank obligations or
repurchase agreements, the issuer must have outstanding debt rated A or higher
by Moody's or S&P; the issuer's parent corporation, if any, must have
outstanding commercial paper rated Prime-1 by Moody's or A-1 by S&P; or, if no
such ratings are available, the investment must be of comparable quality in the
opinion of the Advisor. In addition to purchasing shares of the Funds, a
Portfolio may use futures contracts and options in order to remain effectively
fully invested in proportions consistent with the Advisor's current asset
allocation strategy for the Portfolio. Specifically, each Portfolio may enter
into futures contracts and options thereon, provided that the aggregate deposits
required on these contracts do not exceed 5% of the Portfolio's total assets. A
Portfolio may also use futures contracts and options for bona fide hedging
transactions. Futures contracts and options may also be used to reallocate the
Portfolio's assets among asset categories while minimizing transaction costs, to
maintain cash reserves while simulating full investment, to facilitate trading,
to seek higher investment returns, or to simulate full investment when a futures
contract is priced attractively or is otherwise considered more advantageous
than the underlying security or index. As a fundamental policy, which may not be
changed without shareholder vote, each Portfolio will concentrate its
investments in shares of the Funds.

COMMON INVESTMENT PRACTICES

The next several pages contain more detailed information about types of
securities in which the Funds may invest, and strategies which the Advisor or
the respective sub-advisor may employ in pursuit of that Fund's investment
objective and a summary of risks and restrictions associated with these
securities and investment practices. For more information, see the SAI.

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borrow up to 5% of their total assets for emergency purposes. In addition, the
Money Market and Tax-Exempt Money Market Funds may borrow up to one-third of
their total assets to meet redemption requests. The Short Term Income Fund is
prohibited from borrowing money or entering into reverse repurchase agreements
or dollar roll transactions (described below) in the aggregate in excess of
one-third of the Fund's total assets (after giving effect to such borrowings and
transactions). If a Fund makes additional leverage investments while borrowings
are outstanding, this will have the effect of leveraging the Fund. The
California Money, Short Term Income Fund, California Municipal, California
Insured Intermediate Municipal, Florida Insured Municipal, Growth, International
Growth, Mid Cap Stock and Small Cap Stock Funds, and the Portfolios may not
purchase additional securities when borrowings, including reverse repurchase
agreements, for each of these except the Short Term Income Fund, exceed 5% of
total assets. Leveraging will magnify declines as well as increases in the NAV
of a Fund's or Portfolio's shares and in the yield on a Fund's or Portfolio's
investments. Each of the foregoing percentage limitations on borrowings is a
fundamental policy of the respective Funds and Portfolios.

The Income, Short Term Income Fund and U.S. Government Securities Funds may
enter into DOLLAR ROLLS. A Fund enters into a DOLLAR ROLL by selling securities
for delivery in the current month and simultaneously contracting to repurchase,
typically in 30 or 60 days, substantially similar (same type, coupon and
maturity) securities on a specified future date. Under the Investment Company
Act of 1940, as amended (the "1940 Act"), this may be considered borrowing from
the counterparty and may produce similar leveraging effects. The proceeds of the
initial sale of securities in the dollar roll transactions, for example, may be
used to purchase long-term securities which will be held during the roll period.
To the extent that the proceeds of the initial sale of securities are invested
in bonds, the Fund will be subject to market risk on those bonds as well as
similar risk with respect to the securities the Fund is required to repurchase.

Each of the Short Term Income Fund, California Municipal, California Insured
Intermediate Municipal, Florida Insured Municipal, Growth, International Growth,
Mid Cap Stock and Small Cap Stock Funds may engage in REVERSE REPURCHASE
AGREEMENTS. Reverse repurchase agreements involve the risk that the market value
of the securities sold by a Fund may decline below the repurchase price of the
securities and, if the proceeds from the reverse repurchase agreement are
invested in securities, that the market value of the securities bought may
decline at the same time there is decline in the securities sold (and required
to be repurchased).

FIXED-INCOME SECURITIES. The market value of fixed-income securities held by a
Fund and, consequently, the value of the Fund's shares can be expected to vary
inversely to changes in prevailing interest rates. You should recognize that, in
periods of declining interest rates, the Fund's yield will tend to be somewhat
higher than prevailing market rates and, in periods of rising interest rates,
the Fund's yield will tend to be somewhat lower. Also, when interest rates are
falling, any net inflow of money to the Fund will likely be invested in
instruments producing lower yields than the balance of its assets, thereby
reducing current yield. In periods of rising interest rates, the opposite can be
expected to occur. The prices of longer maturity securities are also subject to
greater market fluctuations as a result of changes in interest rates. In
addition, obligations purchased by a Fund may be subject to the risk of default.
Fixed-Income securities, including Municipal Obligations, rated in the lower end
of the investment-grade category (Baa or BBB) may have speculative
characteristics and may be more sensitive to economic changes and changes in the
financial condition of their issuers.

The fixed-income securities in which the Funds may invest include ZERO-COUPON
SECURITIES, which make no payments of interest or principal until maturity.
Because these securities avoid the need to make current interest payments, they
may involve greater credit risks than other fixed-income securities.

FLOATING RATE, INVERSE FLOATING RATE AND VARIABLE RATE INVESTMENTS. The
Municipal Funds, the Fixed-Income Funds and the Growth & Income Fund may
purchase floating rate, inverse floating rate and variable rate obligations,
including participation interests therein and assignments thereof.

The Money Funds may purchase floating rate and variable rate obligations,
including participation interests therein.

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<PAGE> 45

The Fixed-Income Funds may purchase mortgage-backed securities that are floating
rate, inverse floating rate and variable rate obligations. Municipal Obligations
purchased by the Municipal Funds may include floating rate, inverse floating
rate and variable rate obligations, including variable rate demand notes issued
by industrial development authorities and other governmental entities, as well
as participation interests therein. Although variable rate demand notes are
frequently not rated by credit rating agencies, a Fund may purchase unrated
notes that are determined by the Advisor or the Fund's sub-advisor to be of
comparable quality at the time of purchase to rated instruments that may be
purchased by the Fund. The absence of an active secondary market could make it
difficult for a Fund to dispose of these securities in the event the issuer of
the note were to default on its payment obligations, and the Fund could, for
this or other reasons, suffer a loss as a result of the default.

Each Fund may also invest in securities representing interests in tax-exempt
securities, known as inverse floating obligations or "residual interest bonds,"
which pay interest rates that vary inversely with changes in the interest rates
of specified short-term tax-exempt securities or an index of short-term
tax-exempt securities. The interest rates on inverse floating-rate obligations
or residual interest bonds will typically decline as short-term market interest
rates increase and increase as short-term market rates decline. These securities
have the effect of providing a degree of investment leverage. They will
generally respond to changes in market interest rates more rapidly than
fixed-rate long-term securities (typically twice as fast). As a result, the
market values of inverse floating-rate obligations and residual interest bonds
will generally be more volatile than the market values of fixed-rate tax-exempt
securities.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS AND CURRENCY MANAGEMENT. The Equity
Funds and Fixed-Income Funds (with the exception of the U.S. Government
Securities, Bond & Stock, Growth & Income and Growth Fund of the Northwest) may,
subject to the investment limitations stated elsewhere in this Prospectus and
the SAI, engage in foreign currency exchange transactions. Funds that buy and
sell securities denominated in currencies other than the U.S. dollar, and
receive interest, dividends and sale proceeds in currencies other than the U.S.
dollar, may enter into foreign currency exchange transactions to convert to and
from different foreign currencies and to convert foreign currencies to and from
the U.S. dollar. These Funds either enter into these transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or use forward contracts to purchase or sell foreign currencies.

These Funds also may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a portfolio position
or an anticipated portfolio position. These transactions tend to limit any
potential gain that might be realized should the value of the hedged currency
increase. The precise matching of the forward contract amounts and the value of
the securities involved will not generally be possible because the future value
of these securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of currency market
movements is extremely difficult, and the successful execution of a hedging
strategy is highly uncertain. In addition, when the Advisor or a Fund's
sub-advisor believes that the currency of a specific country may deteriorate
against another currency, it may enter into a forward contract to sell the less
attractive currency and buy the more attractive one. The amount in question
could be less than or equal to the value of the Fund's securities denominated in
the less attractive currency. The Fund may also enter into a forward contract to
sell a currency which is linked to a currency or currencies in which some or all
of the Fund's portfolio securities are or could be denominated, and to buy U.S.
dollars. These practices are referred to as "cross hedging" and "proxy hedging."

Forward currency exchange contracts are agreements to exchange one currency for
another - for example, to exchange a certain amount of U.S. dollars for a
certain amount of Japanese yen - at a future date and specified price. Because
there is a risk of loss to the Fund if the other party does not complete the
transaction, the Advisor or the Fund's sub-advisor will enter into forward
currency exchange contracts only with parties approved by the Trusts' Board of
Trustees or persons acting pursuant to their direction.

Each of the Funds other than the Money Funds (with the exception of the U.S.
Government Securities Bond

43
<PAGE> 46

& Stock, Growth & Income and Growth Fund of the Northwest) may invest in
securities which are indexed to certain specific foreign currency exchange
rates. These securities expose you to the risk of significant changes in rates
of exchange between the U.S. dollar and any foreign currency to which an
exchange rate-related security is linked. In addition, there is no assurance
that sufficient trading interest to create a liquid secondary market will exist
for a particular exchange rate-related security due to conditions in the debt
and foreign currency markets. Illiquidity in the forward foreign exchange market
and the high volatility of the foreign exchange market may from time to time
combine to make it difficult to sell an exchange rate-related security prior to
maturity without incurring a significant loss.

While the foregoing actions are intended to protect the Fund from adverse
currency movements, there is a risk that currency movements involved will not be
properly anticipated, and there can be no assurance that such transactions will
be available or that the Funds will use such transactions even if they are
available. Use of currency hedging techniques may also be limited by the need to
protect the status of the Fund as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code").

FOREIGN INVESTMENTS. The Money Market, Bond & Stock, Growth & Income and Growth
Fund of the Northwest Funds may invest in securities of foreign issuers if such
securities are denominated in U.S. dollars. The High Yield, Income, Short Term
Income, Small Cap Stock, Mid Cap Stock and International Growth Funds may invest
in both U.S. dollar denominated and non-U.S. dollar denominated foreign
securities. There are certain risks involved in investing in foreign securities,
including those resulting from

- - fluctuations in currency exchange rates,

- - devaluation of currencies,

- - future political or economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or
restrictions,

- - reduced availability of public information concerning issuers, and

- - the fact that foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic
companies.

Moreover, securities of many foreign companies may be less liquid and their
prices more volatile than those of securities of comparable domestic companies.
In addition, there is the possibility of expropriation, nationalization,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Funds, including the withholding of dividends. The risks
associated with foreign securities are generally greater for securities of
issuers in emerging markets.

In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains well below
that of the New York Stock Exchange. Accordingly, the Funds' foreign investments
may be less liquid and their prices may be more volatile than comparable
investments in securities of U.S. companies. Moreover, the settlement periods
for foreign securities, which are often longer than those for securities of U.S.
issuers, may affect portfolio liquidity. In buying and selling securities on
foreign exchanges, the Funds normally pay fixed commissions that are generally
higher than the negotiated commissions charged in the United States. In
addition, there is generally less governmental supervision and regulation of
securities exchanges, brokers and issuers in foreign countries than in the
United States. Foreign securities generally are denominated and pay dividends or
interest in foreign currencies, and the value of the Funds' net assets as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates.

The Equity Funds, the Short Term Income Fund, the Income Fund and the High Yield
Fund may invest in securities of foreign issuers directly or in the form of
AMERICAN DEPOSITARY RECEIPTS ("ADRs"), EUROPEAN DEPOSITARY RECEIPTS ("EDRs"),
GLOBAL DEPOSITARY RECEIPTS ("GDRs") or other similar securities representing
securities of foreign issuers. These securities may not be denominated in the
same currency as the securities they represent. ADRs are receipts typically
issued by a United States bank or trust company evidencing ownership of the
underlying foreign securities. EDRs, which are sometimes referred to as
Continental Depositary Receipts ("CDRs"), are receipts issued by a European
financial institution evidencing a similar arrangement. Generally, ADRs, in
registered form, are designed for use in the United

44
<PAGE> 47

States securities markets, and EDRs, in bearer form, are designed for use in
European securities markets.

GEOGRAPHIC CONCENTRATION. Potential investors in the Growth Fund of the
Northwest Fund, the Municipal Funds (other than the Tax-Exempt Bond Fund) and
the California Money Fund should consider the possibly greater risk arising from
the geographic concentration of their investments, as well as the current and
past financial condition of California and Florida municipal issuers in the case
of the Municipal Funds. In addition to factors affecting the state or regional
economy, certain California and Florida constitutional amendments, legislative
measures, executive orders, administrative regulations, court decisions and
voter initiatives could result in certain adverse consequences affecting
California and Florida municipal obligations, respectively. See the SAI for a
more detailed description of these risks.

HOLDINGS IN OTHER INVESTMENT COMPANIES. When the Advisor or a Fund's
sub-advisor believes that it would be beneficial to the Fund, each of the
Tax-Exempt Money Market, California Money, California Insured Intermediate
Municipal, California Municipal, Florida Insured Municipal, Short Term Income,
Tax-Exempt Bond, Small Cap Stock, Mid Cap Stock, Growth and International Growth
Funds may invest up to 10% of its assets in securities of mutual funds that are
not affiliated with the Advisor or the Fund's sub-advisor. As a shareholder in
any such mutual fund, the Fund will bear its ratable share of the mutual fund's
expenses, including management fees, and will remain subject to the Fund's
advisory and administration fees with respect to the assets so invested. In
addition, the Growth Fund may invest Fund assets in money market funds
affiliated with Janus (its sub-advisor), provided that Janus remits to the Fund
the amount of any investment advisory and administrative services fees paid to
Janus as the investment manager of the money market fund.

ILLIQUID SECURITIES AND RESTRICTED SECURITIES. Up to 10% of the net assets of
each Money Fund and up to 15% of the net assets of every other Fund may be
invested in securities that are not readily marketable. Such illiquid securities
may include:

- - repurchase agreements with maturities greater than seven calendar days;

- - time deposits maturing in more than seven calendar days;

- - to the extent a liquid secondary market does not exist for the instruments,
futures contracts and options thereon;

- - certain over-the-counter options, as described in the SAI;

- - certain variable rate demand notes having a demand period of more than seven
days; and

- - securities the disposition of which is restricted under federal securities
laws (excluding certain Rule 144A securities, as described below).

Securities which may be resold pursuant to Rule 144A under the Securities Act of
1933, as amended, will not be included for the purposes of these restrictions,
so long as such securities meet liquidity guideline established by the Trusts'
Board of Trustees.

Each of the Funds may purchase RESTRICTED SECURITIES (provided such securities
are, in the case of the Money Market, Tax-Exempt Money Market, Income, U.S.
Government Securities, Tax-Exempt Bond, Bond & Stock, Growth & Income and Growth
Fund of the Northwest Funds, eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended). Although recent and ongoing developments in
the securities markets have resulted in greater trading of restricted
securities, making restricted securities, in many instances, more liquid than
they once were considered to be, investing in restricted securities could
increase the level of illiquidity of the portfolio securities of a Fund. This
could make it more difficult for a Fund to fulfill shareholder redemption orders
on a timely basis. If a Fund were required to sell these securities on short
notice, it might be unable to obtain fair market value.

LENDING OF SECURITIES. The California Money, California Insured Intermediate
Municipal, Short Term Income, Small Cap Stock, and International Growth Funds
each may lend portfolio securities up to 20% of total assets to brokers and
other financial organizations. The Bond & Stock, Growth & Income and Growth Fund
of the Northwest Funds may lend portfolio securities up to 33% of total assets.
These transactions involve a risk of loss to the Fund if the counterparty should
fail to return such securities to the Fund upon demand.

LOWER-RATED SECURITIES. The Income, Tax-Exempt Bond, Bond & Stock, Small Cap
Stock, Mid Cap Stock, and Growth & Income may each invest up to

45
<PAGE> 48

35% of their total assets, and Growth Fund may invest up to 20% of its total
assets, in non-investment grade debt securities, sometimes referred to as "junk
bonds." The High Yield Fund may invest all of its assets in these securities,
and will generally invest at least 65% of its assets in them.

Non-investment-grade debt securities usually entail greater risk (including the
possibility of default or bankruptcy of the issuers), generally involve greater
price volatility and risk of principal and income, and may be less liquid than
higher-rated securities. Both price volatility and illiquidity may make it
difficult for a Fund to value or to sell certain of these securities under
certain market conditions. These securities are often considered to be
speculative and involve greater risk of default or price changes due to changes
in the issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-rated securities and may decline significantly in
periods of general economic difficulty, which may follow periods of rising
interest rates. For further information, see Appendix A to this Prospectus.

The following table shows, for each indicated Fund, the average percentage of
its total assets that was invested during the past fiscal year in securities
assigned to the various rating categories by S&P, or if unrated by S&P, assigned
to comparable rating categories by another NRSRO, and in unrated securities
determined by the Advisor to be of comparable quality:

<TABLE>
<CAPTION>
Income Tax-Exempt Bond & Stock
S&P RATING Fund Bond Fund Fund
- -----------------------------------------------------------------
<S> <C> <C> <C>
AAA (or US Treasury).......
AA.........................
A..........................
BBB........................
BB.........................
B..........................
Not Rated..................
</TABLE>

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The California Insured
Intermediate Municipal, California Municipal, Florida Insured Municipal, Short
Term Income, U.S. Government Securities, Mid Cap Stock Small Cap Stock and
International Growth Funds may invest in GOVERNMENT STRIPPED MORTGAGE-BACKED
SECURITIES issued or guaranteed by GNMA, FNMA or FHLMC. These securities
represent beneficial ownership interests in either periodic principal
distributions (PRINCIPAL-ONLY SECURITIES or "PO strips") or interest
distributions (INTEREST-ONLY SECURITIES or "IO strips") on mortgage-backed
certificates issued by GNMA, FNMA or FHLMC, as the case may be. The mortgages
backing GNMA certificates include conventional 30-year fixed-rate mortgages,
15-year fixed-rate mortgages, graduated payment mortgages, and adjustable-rate
mortgages.

The U.S. Government guarantees the timely payment of interest and principal for
these securities. However, the guarantees do not extend to the securities' yield
or value, which are likely to vary inversely with fluctuations in interest
rates. Also, the guarantees do not extend to the yield or value of the Fund's
shares. Investing in government stripped mortgage-backed securities involves the
risks normally associated with investing in mortgage-backed securities issued by
government or government-related entities. In addition, the yields on PO and IO
strips are extremely sensitive to prepayments on the underlying PO and IO
strips, mortgage loans. If a decline in the level of prevailing interest rates
results in a higher than anticipated rate of principal prepayment, distributions
of principal will be accelerated, thereby reducing the yield to maturity on IO
strips and increasing the yield to maturity on PO strips. Conversely, if an
increase in the level of prevailing interest rates results in a rate of
principal prepayments lower than anticipated, distributions of principal will be
deferred, thereby increasing the yield to maturity on IO strips and decreasing
the yield to maturity on PO strips. Sufficiently high prepayment rates could
result in the Fund losing some or all of its initial investment in an IO strip.
The Funds will acquire government stripped mortgage-backed securities only if a
liquid secondary market for the securities exists at the time of acquisition.
However, there can be no assurance that the Funds will be able to effect a trade
of a government stripped mortgage-backed security at a time when it wishes to do
so.

In addition, the Income, Bond & Stock and Mid Cap Stock Growth & Income Funds
may invest in commercial mortgage-backed securities, which are similar to those
securities, except that they are not issued or guaranteed by governmental
entities. Commercial mortgage-backed securities include collateralized mortgage
obligations and real estate mortgage investment conduits ("REMICs"). While
commercial mortgage-backed securities are generally structured with one or more
types of credit enhancement, they typically lack a guarantee by an entity having
the credit status of a governmental agency or instrumentality.

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<PAGE> 49

To the extent that a Fund purchases mortgage-backed securities at a premium,
mortgage foreclosures and payments and prepayments of principal (which may be
made at any time without penalty) will tend to result in the loss of that
premium. The yield of a Fund may be affected by reinvestment of prepayments at
higher or lower rates than the original investment. In addition, like other debt
securities, the value of mortgage-related securities, including government and
government-related mortgage pools, will generally fluctuate in response to
market interest rates.

The Money Market, Tax-Exempt Money Market, Short Term Income, Bond & Stock, Mid
Cap Stock, Small Cap Stock and High Yield Funds may purchase asset-backed
securities. These Funds will not invest more than 10% of their total assets in
asset-backed securities, except that the Short Term Income Fund may invest up to
25% of its total assets in such securities. Asset-backed securities are
structured like mortgage-backed securities, but instead of mortgage loans or
interests in mortgage loans, the underlying assets may include such items as
motor vehicle installment sales or installment loan contracts, leases of various
types of real and personal property, including home equity loans, and
receivables from credit card agreements. The ability of an issuer of asset-
backed securities to enforce its security interest in the underlying assets may
be limited.

MUNICIPAL OBLIGATIONS, LEASES AND AMT-SUBJECT BONDS. The two principal
classifications of municipal bonds are "general obligation" and "revenue" bonds.
General obligation bonds are secured by the issuer's pledge of its full faith
and credit, with either limited or unlimited taxing power for the payment of
principal and interest. Revenue bonds are not supported by the issuer's full
taxing authority. Generally, they are payable only from the revenues of a
particular facility, a class of facilities, or the proceeds of another specific
revenue source.

The Tax-Exempt Money Market, California Money and California Insured
Intermediate Municipal Funds may acquire participations in lease obligations or
installment purchase contract obligations (collectively, "lease obligations") of
municipal authorities or entities. Lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power is
pledged. Certain of these lease obligations contain "non-appropriation" clauses,
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. In addition to the "non-appropriation" risk,
these securities represent a relatively new type of financing that has not yet
developed the depth of marketability associated with more conventional bonds. In
the case of a "non-appropriation" lease, the Fund's ability to recover under the
lease in the event of non-appropriation or default will be limited solely to the
repossession of the leased property, and in any event, foreclosure of that
property might prove difficult.

"AMT-Subject Bonds" are Municipal Obligations issued to finance certain "private
activities," such as bonds used to finance airports, housing projects, student
loan programs and water and sewer projects. Interest on AMT-Subject Bonds is a
specific tax preference item for purposes of the federal individual and
corporate alternative minimum taxes. See "Dividends, Capital Gains and Taxes"
for a discussion of the tax consequences of investing in AMT-Subject Bonds.

Current federal income tax laws limit the types and volume of bonds qualifying
for the federal income tax exemption of interest, which may have an effect upon
the ability of the Fund to purchase sufficient amounts of tax-exempt securities.

REAL ESTATE INVESTMENT TRUSTS. The Income, Bond & Stock, Growth & Income, Mid
Cap Stock and Growth Fund of the Northwest Funds may invest in real estate
investment trusts, known as "REITs." REITs involve certain unique risks in
addition to those risks associated with investing in the real estate industry in
general (such as possible declines in the value of real estate, lack of
availability of mortgage funds or extended vacancies of property). Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, risks of default by borrowers, and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax-free pass-through of income under the Code, and failing to
maintain their exemptions from registration under the 1940 Act.

Investment in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and

47
<PAGE> 50

may be subject to more abrupt or erratic price movements than larger company
securities.

REPURCHASE AGREEMENTS. All of the Funds may invest in repurchase agreements,
which are purchases of underlying debt obligations from financial institutions,
such as banks and broker-dealers, subject to the seller's agreement to
repurchase the obligations at an established time and price. Repurchase
agreements can be regarded as loans to the seller, collateralized by the
securities that are the subject of the agreement. Default by the seller would
expose the Fund to possible loss because of adverse market action or delay in
connection with the disposition of the underlying obligations. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the
obligations, the Fund may be delayed or limited in its ability to sell the
collateral. The Tax-Exempt Money Market and California Money Funds' investments
in repurchase agreements are limited by their restrictions on investment in
taxable instruments. Pursuant to an exemptive order granted by the SEC, the
Funds may transfer daily uninvested cash balances into one or more joint trading
accounts. Assets in the joint trading accounts are invested in money market
instruments, and the proceeds are allocated to the participating funds on a pro
rata basis.

STAND-BY COMMITMENTS. The California Money, Tax-Exempt Money Market and the
Municipal Funds may acquire "stand-by commitments" with respect to Municipal
Obligations held in their portfolios. Under a stand-by commitment, a dealer
agrees to purchase, at a Fund's option, specified Municipal Obligations at a
specified price. A Fund may pay for stand-by commitments either separately in
cash or by paying a higher price for the securities acquired with the
commitment, thus increasing the cost of the securities and reducing the yield
otherwise available from them. The Funds will acquire stand-by commitments
solely to facilitate portfolio liquidity and do not intend to exercise their
rights thereunder for trading purposes.

STRATEGIC TRANSACTIONS. Subject to the investment limitations and restrictions
stated elsewhere in this Prospectus and the SAI, each of the Funds and
Portfolios except the Money Funds may utilize various investment strategies as
described below to hedge various market risks, to manage the effective maturity
or duration of fixed-income securities or for other bona fide hedging purposes.
Utilizing these investment strategies, the Fund or Portfolio may purchase and
sell, exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other financial instruments. It may also
purchase and sell financial futures contracts and options thereon, enter into
various interest rate transactions such as swaps, caps, floors or collars, and
enter into various currency transactions such as currency forward contracts,
currency futures contracts, currency swaps or options on currencies or currency
futures. The Funds may write (sell) covered call options as well. A call option
is "covered" if the Fund owns the security underlying the option it has written
or it maintains enough cash, cash equivalents or liquid securities to purchase
the underlying security. All the above are collectively referred to as
"Strategic Transactions."

Strategic Transactions may be used

- - to attempt to protect against possible changes in the market value of
securities held in, or to be purchased for, the Fund's portfolio resulting
from securities markets or currency exchange rate fluctuations,

- - to protect the Fund's unrealized gains in the value of its portfolio
securities,

- - to facilitate the sale of such securities for investment purposes,

- - to manage the effective maturity or duration of the Fund's portfolio, or

- - to establish a position in the derivatives markets as a temporary substitute
for purchasing or selling particular securities.

Some Strategic Transactions may also be used to seek potentially higher returns.
Any or all of these investment techniques may be used at any time, as the use of
any Strategic Transaction is a function of numerous variables including market
conditions.

The use of Strategic Transactions involves special considerations and risks; for
example,

- - the ability of the Fund to utilize Strategic Transactions successfully will
depend on the ability of the Advisor or the sub-advisor to predict pertinent
market movements,

- - the risk that the other party to a Strategic Transaction will fail to meet its
obligations to the Fund,

- - the risk that the Fund will be unable to close out a Strategic Transaction at
a time when it would

48
<PAGE> 51

otherwise do so, due to the illiquidity of the Strategic Transaction and

- - the risk of imperfect correlation, or even no correlation, between price
movements of Strategic Transactions and price movements of the related
portfolio positions.

Strategic Transactions can reduce opportunity for gain by offsetting the
positive effect of favorable price movements in the related portfolio positions.

U.S. GOVERNMENT SECURITIES. All of the Funds may invest in U.S. Government
Securities, which include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes and bonds) and obligations issued or guaranteed by U.S.
Government agencies or instrumentalities. Some obligations issued or guaranteed
by agencies or instrumentalities of the U.S. Government are backed by the full
faith and credit of the U.S. Government (such as GNMA bonds), others are backed
only by the right of the issuer to borrow from the U.S. Treasury (such as
securities of Federal Home Loan Banks) and still others are backed only by the
credit of the instrumentality (such as FNMA and FHLMC bonds).

WHEN-ISSUED SECURITIES, FORWARD COMMITMENTS AND DELAYED-DELIVERY
TRANSACTIONS. In order to secure yields or prices deemed advantageous at the
time, the Funds (with the exception of the Money Funds) may purchase or sell
securities on a when-issued or a delayed-delivery basis. The Funds will enter
into a when-issued transactions only for the purpose of acquiring portfolio
securities. Due to fluctuations in the value of securities purchased on a
when-issued or a delayed-delivery basis, the yields obtained on such securities
may be higher or lower than the yields available in the market on the dates when
the securities are actually delivered to the Fund. Similarly, the sale of
securities for delayed-delivery can involve the risk that the prices available
in the market when delivery is made may actually be higher than those obtained
in the transaction itself. The California Money Fund and the Municipal Funds may
purchase Municipal Obligations offered on a "forward commitment" basis.

When-issued Municipal Obligations may include bonds purchased on a "when, as and
if issued" basis, under which the issuance of the securities depends on the
occurrence of a subsequent event, such as approval of a proposed financing by
appropriate municipal authorities. No when-issued or forward commitments will be
made by the California Money Fund or any Municipal Fund if, as a result, more
than 20% of the value of the Fund's total assets would be committed to such
transactions. A significant commitment of a Fund's assets to the purchase of
securities on a "when, as and if issued" basis may increase the volatility of
the Fund's NAV.

PORTFOLIO TRANSACTIONS AND TURNOVER. Each Fund's turnover rate varies from year
to year, depending on market conditions and investment strategies. High turnover
rates increase transaction costs and may increase taxable capital gains.
Historical portfolio turnover rates for each Fund are shown under "Financial
Highlights" in this prospectus. The Advisor and the sub-advisors will not
consider portfolio turnover rate to be a limiting factor in making investment
decisions consistent with the Funds' investment objectives and policies.

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<PAGE> 52

WAYS TO SET UP YOUR ACCOUNT

+ Individual or Joint Account
Individual accounts are owned by one person. Two types of joint accounts
(having two or more owners) can be opened:

1) in a "joint tenancy" account, the surviving owner(s) automatically
receive(s) the shares of any owner(s) who die(s); and

2) in a "tenants in common" account, the heir(s) of any deceased owner
receive(s) such owner's shares, rather than the surviving owners of the joint
account.

+ Retirement
Retirement plans protect investment income and capital gains from current
taxes. Contributions to these accounts may be tax deductible. Retirement
accounts require special applications and typically have lower minimums.

- INDIVIDUAL RETIREMENT ACCOUNTS ("IRAs") If you are of legal age and under
70 1/2 years old with Adjusted Gross Income ("AGI") of less than $40,000
(or $60,000 if married and filing jointly) you may protect up to $2,000
(subject to certain limitations for single persons with AGI equal to or
greater than $30,000 and married persons who file jointly with AGI equal to
or greater than $50,000) per tax year from certain tax effects. If your
spouse does not work, you can protect up to an additional $2,000 per year
in your spouse's name.

- ROTH IRAs If you are of legal age with AGI not exceeding $110,000 (or
$160,000 if married and filing jointly) you may protect up to $2,000 on a
non-deductible basis (subject to certain limitations for single persons
with AGI equal to or greater than $95,000 and married persons who file
jointly with AGI equal to or greater than $150,000) per tax year from
certain tax effects.

- ROLLOVER IRAs You may transfer money from certain employer-sponsored
retirement plans and keep your tax benefits (often happens when you change
employers).

- SIMPLIFIED EMPLOYEE PENSION PLANS ("SEP-IRAs") If you own a small business
or are self-employed, you and your eligible employees could get many of the
same advantages as a Keogh, but with fewer administrative requirements.

+ Gifts or Transfers to a Minor Child
("UGMA" or "UTMA")
You can give money to a child and obtain certain tax benefits. A parent or
grandparent can give up to $10,000 a year to each child or grandchild without
paying federal gift tax. Depending on state laws, you can set up a custodial
account under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers
to Minors Act (UTMA).

+ Trust
You can use a Trust for many purposes, including charitable contributions and
providing a regular income for a child until a certain age. The trust must be
established before an account can be opened.

+ Corporation or Other Organization
Corporations, associations, partnerships, institutions, or other groups may
invest for many purposes.

50
<PAGE> 53

HOW CAN I INVEST IN THE FUNDS
AND PORTFOLIOS?

<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT: TO ADD TO AN ACCOUNT:
(MINIMUM $1,000*) (MINIMUM $50**)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
+ By Phone -- 800-222-5852 Exchange from another Fund or Exchange from another Fund or
Portfolio account with the same Portfolio account with the same
registration, including name, registration, including name,
address, and taxpayer ID number address, and taxpayer ID
(social security number for an number.
individual).
Call WM Shareholder Services at
Call WM Shareholder Services at 800-222-5852
800-222-5852. (5:00 a.m. to
6:00 p.m., Pacific Time/8:00
a.m. to 9:00 p.m., Eastern
Time, Monday through Friday and
6:00 a.m. to 3:00 p.m., Pacific
Time/9:00 a.m. to 6:00 p.m.,
Eastern Time, on Saturdays)
- ---------------------------------------------------------------------------------------------------------
+ By Mail Complete and sign the Make your check payable to The
application. Make your check or WM Group of Funds. Indicate
negotiable bank draft payable your account number on your
to The WM Group of Funds. check. Include the "next
Checks or any check not payable investment" stub from your pre-
to WM Group of Funds are not vious account statement. Mail
accepted.*** the check and stub to the
address printed on your account
Mail the completed application statement.***
form and check to:
Exchange by mail: call
THE WM GROUP OF FUNDS 800-222-5852 for instructions
P.O. BOX 9757
PROVIDENCE, RI 02940-9757
- ---------------------------------------------------------------------------------------------------------
+ By Wire 1) Telephone WM Shareholder Instruct your bank/financial
Services for an application institution to wire Federal
form and instructions. Funds as described at
2) Instruct your bank to wire
Federal Funds exactly as
follows:
BOSTON SAFE DEPOSIT AND TRUST
BOSTON, MA
ABA# 011-001234
FOR CREDIT TO:
THE WM GROUP OF FUNDS
ACCOUNT #167053
(FUND NAME AND CLASS OF SHARES)
(CUSTOMER'S NAME)
(CUSTOMER'S SOCIAL SECURITY
NUMBER)
3) Mail the completed
application form to:
THE WM GROUP OF FUNDS
P.O. BOX 9757
PROVIDENCE, RI 02940-9757
</TABLE>

51
<PAGE> 54
HOW CAN I INVEST IN THE FUNDS
AND PORTFOLIOS? (CONT.)

<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT:
(MINIMUM $50 FOR AUTOMATIC TO ADD TO AN ACCOUNT:
INVESTMENT PLANS) (MINIMUM $50**)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
+ Automatic Investment Plan 1) Obtain and complete an Pre-authorized periodic
application form. (weekly, bi- monthly, or
(Minimum New Account amount monthly) investments will be
$50+) 2) Attach a voided check or processed automatically.
deposit slip from the bank
account you would like the
investments transferred from
and indicate either the day of
the week or day(s) of the month
when the purchase would occur.
3) Mail the application to the
address listed above.***
- ---------------------------------------------------------------------------------------------------------
</TABLE>

* $10,000 for the Portfolios and $2,000 for IRA accounts investing in the
Portfolios.
** $100 for the Portfolios.
*** Investments paid by check, negotiable bank draft or by Automated Clearing
House transfer may not be available for redemption for up to 15 days after
purchase. See page 60 for additional information.
+ $1,000 for the Portfolios.
++ $100 for the Portfolios.

52
<PAGE> 55

WHICH CLASS OF SHARES IS BEST FOR ME?

This prospectus offers you a choice of two classes of fund shares: Class A and
Class B. The next several pages will expand upon the "Fees and Expenses" (pages
54 - 59) to help you determine which class of shares is best for you. This will
depend upon a number of factors, including the amount you plan to invest and how
long you plan to hold your shares.

CLASS A SHARES

The offering price for Class A shares of the Non-Money Funds is the NAV next
calculated after receipt of a properly completed purchase order, plus an initial
sales charge as shown in the table below. Sales charges may be reduced or waived
as discussed following the table. The final column in each table indicates what
dealers receive for selling Class A shares.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
+ FIXED-INCOME FUNDS
(other than Short Term Income Fund)
+ MUNICIPAL FUNDS
+ Income and Flexible Income
Portfolios
------------------------------------------------------------------------------------
REALLOWED
SALES CHARGE TO DEALERS
------------------------------------------------------------------------------------
Percentage Percentage of Percentage
of Offering Net Amount of Offering
Purchase of Class A Shares Price Invested Price
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00 4.17 3.50
------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50 3.63 3.00
------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50 2.56 2.00
------------------------------------------------------------------------------------
$500,000 to $1,000,000 2.00 2.04 1.75
------------------------------------------------------------------------------------
$1,000,000 or more* .00 .00 .00
------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------

<CAPTION>
- ------------------------------------------- -----------------------------------------------------

+ Equity Funds
+ Strategic Growth,
Conservative Growth and
Balanced Portfolios
---------------------------------- -------------------------------------------------
REALLOWED
SALES CHARGE TO DEALERS
---------------------------------- -------------------------------------------------
Percentage Percentage of Percentage
of Offering Net Amount of Offering
Purchase of Class A Shares Price Invested Price
---------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than $50,000 5.50% 5.82% 4.75%
------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.75 4.99 4.00
------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.75 3.90 3.00
------------------------------------------------------------------------------------
$250,000 but less than $500,000 3.00 3.09 2.50
------------------------------------------------------------------------------------
$500,000 to $1,000,000 2.00 2.04 1.75
------------------------------------------------------------------------------------
$1,000,000 or more* .00 .00 .00
------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
+ Short Term Income Fund
------------------------------------------------------------------------------------
REALLOWED
SALES CHARGE TO DEALERS
------------------------------------------------------------------------------------
Percentage Percentage of Percentage
of Offering Net Amount of Offering
Purchase of Class A Shares Price Invested Price
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 3.50% 3.63% 3.00%
------------------------------------------------------------------------------------
$50,000 but less than $100,000 3.00 3.09 2.50
------------------------------------------------------------------------------------
$100,000 but less than $250,000 2.50 2.56 2.00
------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.25 2.30 2.00
------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 2.00 2.04 1.75
------------------------------------------------------------------------------------
$1,000,000 or more* .00 .00 .00
------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------

<CAPTION>
- ------------------------------------------- -----------

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

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

Purchase of Class A Shares
---------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Less than $50,000
------------------------------------------------------------------------------------
$50,000 but less than $100,000
------------------------------------------------------------------------------------
$100,000 but less than $250,000
------------------------------------------------------------------------------------
$250,000 but less than $500,000
------------------------------------------------------------------------------------
$500,000 but less than $1,000,000
------------------------------------------------------------------------------------
$1,000,000 or more*
------------------------------------------------------------------------------------
- -------------------------------------------
</TABLE>

* See "net asset value purchases" below.

Example: An investor considers putting $1,000 into an Equity Fund's Class A
shares. Based on the first column in the above table, 5.50% of the $1,000 would
pay for a sales charge. The charge would be $55.00, which is 5.82% of the net
investment of $945.00, as the next column shows. The dealer selling the shares
would be paid $47.50 of the $55.00, which is 4.75% of $1,000, as the last column
shows.

53
<PAGE> 56

CUMULATIVE DISCOUNT. This allows your current purchases to qualify for the
foregoing discounts by including the value of shares of the Funds and Portfolios
that were purchased subject to an initial or contingent deferred sales charge.
The discount will be based on current market value. Individuals, immediate
family members and trustees purchasing for single fiduciary accounts are
eligible for this discount.

LETTER OF INTENT. This discount is for purchases made over an extended period.
It provides you with a cumulative discount on the same basis as explained in the
previous paragraph if the following conditions are met: Purchases of Class A
shares must be made within a 13-month period that begins no earlier than 90 days
before the submission of a letter of intent from the investor to the Funds. For
more information about this discount, please contact Shareholder Services or
your Investment Representative.

REINVESTMENT. You can reinvest redemption proceeds of Class A shares that were
subject to a sales charge when first purchased in other Class A shares within
120 days without incurring another initial sales charge. You can also reinvest
any redemption proceeds of Class B shares that were subject to a contingent
deferred sales charge in Class A shares within 120 days without incurring an
initial sales charge.

NET ASSET VALUE PURCHASES. There is no initial sales charge on Class A
purchases of $1 million or more, but such purchases are generally subject to a
contingent deferred sales charge of 1.00% if you redeem them during the first
year after purchase or .50% if you redeem them during the second year after
purchase.

Qualified employee benefit plans (including SEPs and SIMPLEs) that have more
than 100 participants or that have more than $500,000 invested in the Funds and
Portfolios may purchase shares without an initial sales charge. However, a
contingent deferred sales charge of 1% may be imposed on the amount that was
invested through such a plan in Class A shares and that is redeemed (1) if,
within the first two years after the plan's initial investment in the Funds or
Portfolios, the named fiduciary of the plan withdraws the plan from investing in
the Funds and Portfolios in a manner that causes all shares held by the plan's
participants to be redeemed; or (2) by a plan participant within two years of
the plan participant's purchase of such Class A shares. The contingent deferred
sales charge will be waived on redemptions in connection with certain
involuntary distributions, including distributions arising out of the death or
post-purchase disability of a shareholder (including one who owns the shares as
joint tenant).

Class A shares may be purchased at net asset value, and in any amount, by
officers, directors and employees of the Advisor or its affiliates, or companies
which have entered into selling agreements with the Distributor, and to certain
family members of such individuals. The purchase must be for investment purposes
only and may not be resold other than through redemption by the Fund or
Portfolio. The Funds and Portfolios may also offer their shares at net asset
value to certain retirement plans; to investors who purchase shares with the
proceeds of redemptions of shares of other mutual funds advised by WM Advisors
or its affiliates within five business days of such redemptions; and to brokers,
dealers or registered investment advisors who have entered into arrangements
with the Distributor providing specifically for the shares to be used in
particular investment products made available to their clients for which they
may charge a separate fee. No sales charge will be assessed on a purchase by any
other investment company in connection with the combination of such company with
the Trust by merger, acquisition of assets or otherwise. The Distributor will
pay authorized dealers commissions on certain net asset value purchases as
described in the SAI.

EACH FUND AND PORTFOLIO RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES OF
ANY CLASS OF ANY FUND OR PORTFOLIO AT ANY TIME. Each Fund and Portfolio also
reserves the right to reject any specific purchase order, including purchases by
exchange.

CONSULT AN INVESTMENT REPRESENTATIVE OR SEE THE SAI IF YOU THINK YOU MAY QUALIFY
FOR ANY OF THESE PURCHASE PLANS. YOU MUST NOTIFY THE FUND OR PORTFOLIO AT THE
TIME OF PURCHASE WHENEVER A REDUCED SALES CHARGE OR NET ASSET VALUE PURCHASE
APPLIES.

CLASS B SHARES

Class B shares are offered at the NAV next calculated after receipt of a
properly completed purchase order, without an initial sales charge. The entire
amount of the purchase price is invested in the Fund selected. However, Class B
shares have higher distribution and service fees than Class A shares for eight
years. Also, if you redeem Class B shares within five years of purchase (four
years in the case of Class B shares of

54
<PAGE> 57

the Short Term Income Fund), you generally must pay a contingent deferred sales
charge.

The proceeds from any contingent deferred sales charges are paid to the
Distributor to defray expenses for providing distribution services for Class B
shares. Examples of such expenses include compensation to salespeople and
selected dealers. The Distributor currently pays authorized dealers commissions
of 4.00% of the price of Class B shares sold by them (3.00% for Class B shares
of the Short Term Income Fund).

CONTINGENT DEFERRED SALES CHARGE. Class B shares redeemed within five years of
purchase are subject to a contingent deferred sales charge according to the
following schedule. Class B shares purchased by exchange will be subject to a
contingent deferred sales charge using the schedule of the Fund originally
purchased. Shares purchased through reinvestment of dividends or capital gain
distributions are not subject to a contingent deferred sales charge.

Class B shares of all Funds (except for the Short Term Income Fund) and Class B
shares of all Portfolios:

<TABLE>
<CAPTION>
YEAR OF
REDEMPTION Contingent
AFTER PURCHASE Deferred Sales Charge
- -------------------------------------------------------------------
<S> <C>
First....................................... 5.00%
Second...................................... 4.00%
Third....................................... 3.00%
Fourth...................................... 2.00%
Fifth....................................... 1.00%
Sixth and following......................... 0.00%
</TABLE>

Class B shares of the Short Term Income Fund:

<TABLE>
<CAPTION>
YEAR OF
REDEMPTION Contingent
AFTER PURCHASE Deferred Sales Charge
- -------------------------------------------------------------------
<S> <C>
First..................................... 4.00%
Second.................................... 3.00%
Third..................................... 2.00%
Fourth.................................... 1.00%
Fifth and following....................... 0.00%
</TABLE>

Class B shares of certain Funds purchased prior to March 20, 1998, may be
subject to a different contingent deferred sales charge schedule, as described
in the SAI.

The contingent deferred sales charge is calculated by applying the above
percentages to the lesser of (1) the NAV of the redeemed shares at the time they
were purchased or (2) the NAV of the redeemed shares at the time of redemption.
This means that no contingent deferred sales charge will be charged on any NAV
increases above the initial purchase price. Shares are redeemed in the order
that results in the lowest possible rate being charged. Accordingly, they will
be redeemed first from shares purchased through reinvested dividends or capital
gain distributions and then in the order of purchase.

Here is an example:

An investor purchases 100 Class B shares at $10 per share -- for a total cost of
$1,000. In the second year after the purchase, the NAV has risen to $12 per
share, and the investor has acquired 10 more shares through dividend
reinvestment.

At that time, the investor decides to make the first redemption. The transaction
includes 50 shares at $12 per share -- for a total of $600.

The first 10 shares to be redeemed will not be subject to any charge because of
the 10 shares received from dividend reinvestment.

As for the other 40 shares, the charge will be applied only to the original cost
of $10 per share. The NAV increase of $2 per share will not be considered. As a
result, $400 of the redemption proceeds (40 X $10) will be charged a rate of 4%,
which is the second-year rate shown in the table above. The resulting sales
charge will be 4% X $400, which will be $16.

The contingent deferred sales charge may be waived for redemptions of Class B
shares under these circumstances:

- - Following the death or post-purchase disability of a shareholder, as defined
in Section 72(m)(7) of the Code;

- - In connection with distributions from an IRA or other retirement plan made to
shareholders over age 59 1/2 (70 1/2 in the case of Class B shares of certain
Funds purchased prior to March 20, 1998 as described in the SAI);

- - According to a systematic withdrawal plan -- but limited to 12% annually of
the value of the Fund at the time the systematic withdrawal plan is
established; and

- - In connection with the liquidation by the Fund or Portfolio of a shareholder's
account as described under "How to Sell Shares."

YOU MUST NOTIFY THE FUND OR PORTFOLIO WHENEVER YOU ARE ENTITLED TO A WAIVER OR
REIMBURSEMENT OF CDSC.

55
<PAGE> 58

CONVERSION FEATURE. Class B shares that remain outstanding for eight years will
generally convert to Class A shares of the same Fund or Portfolio based on the
relative NAVs at the time of conversion.

DISTRIBUTION PLANS

Each of the Funds (other than the Tax-Exempt Money Market and the California
Money Market Funds, which offers only Class A shares) has adopted distribution
plans, pursuant to Rule 12b-1 under the 1940 Act, applicable to Class A and
Class B and shares of the Fund (each, a "Rule 12b-1 Plan"), respectively. The
Tax-Exempt Money Market and the California Money Market Funds have adopted a
12b-1 Plan applicable to their Class A shares. Under the applicable Rule 12b-1
Plans, WM Funds Distributor, Inc., referred to as the Distributor in this
Prospectus, receives a service fee at an annual rate of 0.25% of the average
daily net assets of each class. In addition, the Distributor is paid a fee as
compensation in connection with the offering and sale of Class B shares at an
annual rate of 0.75% of the average daily net assets of such shares.

The Distributor may, from time to time, pay to other dealers, in connection with
retail sales or the distribution of shares of a Fund or Portfolio, material
compensation in the form of merchandise or trips. Salespersons, including
representatives of WM Financial Services, Inc. (a subsidiary of Washington
Mutual), and any other person entitled to receive any compensation for selling
or servicing Fund or Portfolio shares may receive different compensation with
respect to one particular class of shares over another, and may receive
additional compensation or other incentives for selling Fund or Portfolio
shares.

DISTRIBUTION OF INCOME AND CAPITAL GAINS

The Funds and Portfolios distribute dividends from net investment income (which
is essentially interest and dividends from securities held), minus expenses.
They also make capital gain distributions if realized gains from the sale of
securities exceed realized losses. The amount of dividends of net investment
income and distributions of net realized long- and short-term capital gains
payable to shareholders will be determined separately for each Fund or
Portfolio. Dividends from the net investment income of the Money, Fixed-Income
and Municipal Funds and the Balanced, Flexible Income and Income Portfolios will
normally be declared daily and paid monthly. Dividends from the net investment
income of the Bond & Stock and Growth & Income Funds and the Conservative Growth
Portfolio will normally be declared and paid quarterly. Dividends from the net
investment income of the Growth Fund and the Strategic Growth Portfolio will
normally be declared and paid semiannually. Dividends from the net investment
income of the Northwest, Mid Cap Stock, Small Cap Stock and International Growth
Funds will normally be declared and paid annually. Except as otherwise
specified, the Funds and Portfolios distribute capital gains, if any, at least
annually, normally in December.

You have three choices regarding what you do with dividends and capital gain
distributions. You can make your choice at the time of your initial purchase or
by contacting the Funds' offices or your investment representative. The options
include:

AUTOMATIC REINVESTMENT. This procedure is automatically effective unless you
choose another option. All dividends and capital gain distributions are
reinvested into additional shares of the Fund or Portfolio.

REINVEST DIVIDENDS IN ANOTHER FUND OR PORTFOLIO. Income dividends may be
automatically invested in the same class of shares of another Fund or Portfolio,
provided that Fund or Portfolio is available for sale in your state of
residence.

CASH PAYMENT OF ALL DISTRIBUTIONS. All dividends and capital gain distributions
are deposited to your pre-authorized bank account or paid by check.

Reinvestments of income dividends and capital gain distributions are made at the
closing NAV on the day dividends or distributions are deducted from the Fund's
assets.

If you've chosen to receive dividends or capital gain distributions in cash and
your check is returned as undeliverable, the Funds and Portfolios reserve the
right (but are not obligated) to reinvest your check at the then-current NAV and
to automatically reinvest subsequent dividends and capital gain distributions in
your account. The Funds and Portfolios may also automatically reinvest dividends
or distributions of $10 or less.

HOW CAN I SELL SHARES?

You may redeem shares at any time in the following ways. The price paid per
share will be the NAV next

56
<PAGE> 59

calculated after receipt of a properly completed redemption request (less any
applicable CDSC).

TELEPHONE. You may authorize telephone transactions on your account
application. Provided you have pre-authorized these transactions, you may redeem
or exchange shares by telephoning 800-222-5852. Telephone transaction privileges
may be restricted and generally will not be allowed for amounts totalling more
than $50,000 in a given day. You may also request these transactions through
your investment representative. Proceeds may be directed to a pre-authorized
bank or broker account or to the address of record for the account.

It may be difficult to reach the Trusts' offices by telephone during periods of
unusual economic or market activity. Please be persistent if this occurs. The
Funds' and Portfolios' transfer agent is committed to extending its 5:00 a.m. to
6:00 p.m. Pacific time business hours during such periods.

WRITTEN REQUEST. You may also redeem shares by writing the Trusts' offices.
Written requests, including requests for redemptions exceeding $50,000, may
require a signature guarantee, as described below, and the return of any
outstanding share certificates. Changes in pre-authorized redemption
instructions or your account registration may also require signature guarantees.
For your protection, the signature(s) must be guaranteed by an eligible
guarantor institutions which includes banks, credit unions, broker dealers,
national securities exchanges, savings institutions as well as medallion
signature guarantee.

PROMPT PAYMENT. Payment normally will be made on the next business day after
redemption, but no later than seven days after the transaction, unless you
recently purchased Fund shares by check or Automated Clearing House transfer. In
that case, redemption proceeds may be delayed for up to 15 days after the
purchase transaction, to allow for the collection of funds. Under unusual
circumstance, the Fund may suspend redemption or postpone payment for seven days
as permitted by Federal Securities laws. Redemption proceeds will be sent by
check or Automated Clearing House transfer to your bank account without charge.
Wire redemption proceeds may be subject to a $10 fee. The receiving bank also
may charge a fee.

SYSTEMATIC WITHDRAWAL PLAN. Shareholders may choose to receive specific cash
withdrawals of at least $100 on a periodic basis. A $5,000 minimum balance in
the applicable Fund or $10,000 in the applicable Portfolio is required to
establish a systematic withdrawal plan (the minimum balance requirement is
waived for IRA accounts). Shares of the Fund or Portfolio will be redeemed to
provide the requested payment. Naturally, withdrawals that continually exceed
dividend income and capital gains will eventually exhaust the account. Class B
shareholders may use a systematic withdrawal plan to redeem up to 12% of the
Fund balance annually, without incurring a contingent deferred sales charge. The
beginning balance is the Fund balance at the time the systematic withdrawal plan
is established.

OTHER CONSIDERATIONS. It is costly to maintain small accounts. Accordingly, an
account may be closed after 60 days' written notice if value in an individual
Fund or Portfolio falls below a minimum (currently $10,000 for the Portfolios
and $1,000 for the Funds or, in the case of an IRA account, $2,000 for the
Portfolios and $1,000 for the Funds). Accounts will not be closed if they fall
below the minimum solely because of declines in market values. Shares will be
redeemed at the next calculated NAV, less any applicable CDSC, on the day the
account is closed. To prevent an account closure, you may purchase shares to
bring your account balance above the minimum during the 60-day grace period.

IRAs AND OTHER TAX-SHELTERED RETIREMENT PLANS

Shares of the Funds or Portfolios may be appropriate for many retirement plans,
including IRAs. Retirement plan contributions are tax deductible in some cases,
and earnings compound on a tax-deferred and, in some cases, on a tax-free basis
until withdrawn.

Information about IRAs and other qualified retirement plans is available from
the Trusts' offices or your Investment Representative.

HOW CAN I EXCHANGE MY SHARES?

You may exchange shares of any of the Funds or Portfolios for shares of the same
class of any other of the Funds or Portfolios. Exchanges of shares are sales and
may result in a gain or loss for income tax purposes.

Exchanges are made at the relative NAVs of the shares being exchanged. No
additional sales charge will be incurred when exchanging shares from a Fund

57
<PAGE> 60

which imposes an initial or contingent deferred sales charge. Any contingent
deferred sales charge on the subsequent sale of shares acquired by exchange will
be based on the contingent deferred sales charge schedule of the Fund from which
the shares were initially purchased. Shares exchanged from a Money Fund will be
subject to the acquired Fund's sales charge unless the shares given in exchange
were previously exchanged from a Fund that imposes an initial or contingent
deferred sales charge.

All exchanges are subject to the minimum investment requirements of the Fund or
Portfolio being acquired and to its availability for sale in your state of
residence. You may arrange for automatic monthly exchanges. The Funds and
Portfolios reserve the right to refuse any order for the purchase of shares,
including those by exchange. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to a Fund or
Portfolio and, consequently, may be disallowed.

DIVIDENDS, CAPITAL GAINS AND TAXES

Each Fund and Portfolio will distribute substantially all of its net investment
income and net realized capital gain on a current basis.

You are responsible for federal income tax (and state and local income taxes, if
applicable) on dividends and capital gain distributions. This is true whether
such dividends or distributions are paid in cash or reinvested in additional
shares.

Generally, dividends paid by the Funds and Portfolios from interest, dividends
or net short-term capital gains will be taxed as ordinary income. Distributions
designated by the Fund or Portfolio as deriving from net gains on securities
held for more than one year are taxable as such (generally at a 20% tax rate),
regardless of how long you have held your shares.

A dividend or distribution made shortly after the purchase of shares of a Fund
or Portfolio by a shareholder, although in effect a return of capital to that
particular shareholder, would be taxable to him or her as described above.

Because of tax law requirements, you must provide the Trusts an accurate and
certified taxpayer identification number (for individuals, a Social Security
number) to avoid the 31% "back-up" withholding tax.

Early in each calendar year each Fund and Portfolio will notify you of the
amount and tax status of distributions paid to you for the preceding year.

A Portfolio's use of a fund-of-funds structure could affect the amount, timing
and character of distributions to shareholders. See "Taxes" in the Statement of
Additional Information.

Any gain resulting from the sale or exchange of your shares will generally also
be subject to tax. You should consult your tax advisor for more information on
your own tax situation, including possible foreign, state and local taxes.

ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE MUNICIPAL FUNDS, THE
TAX-EXEMPT MONEY MARKET FUND, AND THE CALIFORNIA MONEY MARKET
FUND. Distributions designated as "exempt-interest dividends" by any of the
Municipal Funds, the Tax-Exempt Money Market Fund or the California Money Market
Fund are not generally subject to federal income tax. However, if you receive
social security or railroad retirement benefits, you should consult your tax
adviser to determine what effect, if any, an investment in the fund may have on
the federal taxation of your benefits. In addition, an investment in the Fund
may result in liability for federal alternative minimum tax, both for individual
and corporate shareholders.

ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE FLORIDA INSURED MUNICIPAL
FUND. It is expected that shares of the Florida Insured Municipal Fund held by
a Florida resident will be exempt from the Florida intangible personal property
tax and that a portion of the dividends paid by the California Money Fund,
California Municipal Fund and the California Insured Intermediate Municipal Fund
will be exempt from California State personal income tax, but not from
California State franchise tax or California State corporate income tax.
Corporate taxpayers should consult their tax advisor concerning the Florida and
California state tax treatment of investments in these funds.

58
<PAGE> 61

addition, the Fund's investments in foreign securities or foreign currencies may
increase or accelerate the Fund's recognition of ordinary income and may affect
the timing or amount of the Fund's distributions.

THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT A COMPLETE DESCRIPTION OF
THE FEDERAL, STATE OR LOCAL TAX CONSEQUENCES OF INVESTING IN THE FUNDS OR
PORTFOLIOS. YOU SHOULD CONSULT YOUR TAX ADVISOR BEFORE INVESTING IN THE FUNDS OR
PORTFOLIOS.

59
<PAGE> 62

ORGANIZATION

HOW NAV IS DETERMINED

Investment securities and other assets are valued primarily on the basis of
market quotations or, if quotations are not readily available, by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates. As a result, changes in the value of those
currencies in relation to the U.S. dollar may affect the Funds' NAV. Because
foreign markets may be open at different times than the New York Stock Exchange,
the value of the Funds' shares may change on days when shareholders are not able
to buy or sell them. If events materially affecting the values of the Funds'
foreign investments occur between the closed foreign markets and the close of
regular trading on the New York Stock Exchange, those investments may be valued
at their fair value. The NAVs are determined at the end of each business day of
the New York Stock Exchange or at 1:00 p.m. Pacific time, whichever is earlier.

ADVISOR AND SUB-ADVISORS

The Funds and Portfolios are managed by WM Advisors, Inc., which is referred to
as the Advisor in this Prospectus. The Advisor's address is 1201 Third Avenue,
22nd Floor, Seattle, Washington 98101. The Advisor has delegated portfolio
management responsibilities in respect of the Growth, International Growth,
California Municipal, Florida Insured Municipal, California Insured Intermediate
Municipal and Tax-Exempt Bond Funds, to a sub-advisor. Each Fund and Portfolio
may, to the extent permitted under the 1940 Act, place portfolio transactions
with (and pay brokerage commissions to) affiliates of the Advisor and the
sub-advisors to the Funds indicated below. For more information see the SAI.

The Advisor has been in the business of investment management since 1944. Its
responsibilities include formulating each Fund's and Portfolio's investment
policies (subject to the terms of this Prospectus), analyzing economic trends,
directing and evaluating the investment services provided by the sub-advisors
and monitoring each Fund's or Portfolio's investment performance and reporting
to the Board of Trustees, as well as providing certain administrative services
to the Funds and Portfolios. In connection with its service as investment
advisor to each Fund and Portfolio, the Advisor may engage one or more
sub-advisors to provide investment advisory services to any of the Funds or
Portfolios and may change or eliminate any such sub-advisor if it deems such
action to be in the best interests of a Fund or Portfolio and its shareholders.
Where the Advisor has not delegated such duties to a sub-advisor, it is
responsible for managing the investment and reinvestment of the Fund's or
Portfolio's assets. The Advisor is an indirect wholly owned subsidiary of
Washington Mutual, Inc. ("Washington Mutual"), a publicly owned financial
services company.

The following organizations, under the supervision of the Advisor, act as
sub-advisors to the Funds indicated below, and are responsible for continuously
reviewing, supervising and administering such Funds' respective investment
programs:

JANUS, 100 Fillmore Street, Denver, Colorado 80206, acts as sub-advisor to the
Growth Fund. Janus is an indirectly majority owned subsidiary of Kansas City
Southern Industries, Inc., a publicly traded holding company whose primary
subsidiaries are engaged in transportation, information processing and financial
services. Janus has been providing investment advice to mutual funds or other
large institutional clients since 1970. As of March 27, 1998, Janus' assets
under management were in excess of $ billion.

VAN KAMPEN, One Parkview Plaza, Oakbrook, Illinois 60181, acts as sub-advisor to
the California Municipal, California Insured Intermediate Municipal, Florida
Insured Municipal Funds and Tax-Exempt Bond Funds. Van Kampen is an indirect
wholly owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co., a
publicly held global financial services company. Van Kampen provides investment
advice to a wide variety of individual, institutional and investment company
clients and, together with its affiliates, had aggregate assets under management
or supervision, as of June 5, 1998, of more than $ billion.

CAPITAL GUARDIAN TRUST COMPANY, 333 South Hope Street, Los Angeles, CA 90071,
acts as sub-advisor to the International Growth Fund. Capital Guardian is a
wholly-owned subsidiary of Capital Group International, Inc. ("CGI"), which is
in turn owned by The Capital Group Companies, Inc. ("CGC"). CGC is also the
parent company of several

60
<PAGE> 63

other subsidiaries, all of which directly or indirectly provide investment
management services. CGC maintains investment management relationships with
several other organizations around the world. Capital Guardian had aggregate
assets under management of approximately $85.9 billion as of March 31, 1999.

INDIVIDUAL FUND MANAGERS

Gary J. Pokrzywinski, CFA, Vice President and Senior Portfolio Manager of the
Advisor, is primarily responsible for the day-to-day management of the High
Yield and Income Funds. He has managed these Funds since March 1998 and 1992,
respectively, and has been employed by the Advisor since 1992. Craig V. Sosey,
CFA, Vice President and Portfolio Manager of the Advisor, has been primarily
responsible for the day-to-day management of the U.S. Government Securities and
Short Term Income Funds since November 1998 and January 2000, respectively. He
has been employed by the Advisor since May 1998. Prior to that, he was the
Assistant Treasurer of California Federal Bank, where he worked for over eight
years. Randall L. Yoakum, CFA, First Vice President and Chairman of the
Investment Committee of the Advisor and Stephen Spencer, CFA, are primarily
responsible for the day-to-day management of the Growth & Income and Mid Cap
Stock Funds. Mr. Yoakum has been Portfolio Manager of the Growth & Income Fund
since February 1999 and beginning April 2000, he will co-manage the Mid Cap
Stock Fund with Mr. Spencer. Prior to assuming these duties, Mr. Yoakum was
Chief Investment Officer for D.A. Davison & Co. (DADCO) for 2 years. From
September 1994 until he joined DADCO, Mr. Yoakum was the Senior Vice President
and Managing Director of Portfolio Management for Boatmen's Trust Company, and,
prior to that, Mr. Yoakum was Senior Vice President and Chief Equity Officer for
Composite Research & Management Co. (the predecessor to WM Advisors, Inc.) for 8
years. Mr. Spencer has been employed by WM Advisors since September 1999. Prior
to that, Mr. Spencer was a portfolio manager and Senior Equity Analyst for
Smoot, Miller, Cheney and Co. since 1985. Jeffrey D. Huffman, CFA, Vice
President and Senior Portfolio Manager of the Advisor, has had primary
responsibility for the day-to-day management of the Bond & Stock Fund since
1995. Prior to 1995, Mr. Huffman was Vice President of Trust Investments for
First Interstate Bank since 1994 and a portfolio manager at Safeco since 1992.
David W. Simpson, CFA, Vice President and Senior Portfolio Manager of the
Advisor, has had primary responsibility for the day-to-day management of the
Growth Fund of the Northwest since 1993. Mr. Simpson has been employed by the
Advisor since 1993. Linda C. Walk, CFA, who is Vice President and Portfolio
Manager of the Advisor, has been primarily responsible for the day-to-day
management of the Small Cap Stock Fund since January 2000. She shared that
responsibility with Mr. Simpson from March 1998 to January 2000. Prior to 1997,
Ms. Walk was a Portfolio Manager at Laird Norton Trust Company since 1996, a
Valuation Consultant for Ernst & Young LLP since 1994, and a Valuation
Consultant for Management Advising Services since 1990. Audrey S. Quaye, CPA,
Vice President and Portfolio Manager of the Advisor, is primarily responsible
for the day-to-day management of the Money Market Fund, the Tax-Exempt Money
Market Fund and the California Money Fund. She has managed such Funds since
1997, 1997, and March 1998, respectively, and has been employed by the Advisor
since 1996. Prior to 1996, Ms. Quaye worked at the Benham Group as a municipal
credit analyst.

Warren B. Lammert has had primary responsibility for the day-to-day management
of the Growth Fund since its inception. Mr. Lammert is a Vice President of
Janus. Mr. Lammert joined Janus in 1987, and his duties at Janus include the
management of separate equity accounts.

Since May 1992, Joseph A. Piraro, Vice President of Van Kampen, has had primary
responsibility for the day-to-day management of the California Municipal Fund.
Mr. Piraro has been employed by Van Kampen since 1992. Mr. Piraro has also had
primary responsibility for the day-to-day management of the California Insured
Intermediate Municipal Fund since the Fund's inception. Since January 1997,
Thomas M. Byron, Vice President of Van Kampen, has had primary responsibility
for the day-to-day management of the Florida Insured Municipal Fund. Mr. Byron
has been at Van Kampen for over 15 years and prior to taking over responsibility
for managing the Fund, Mr. Byron was Head Buyer and Manager of Van Kampen's Unit
Investment Trust desk. David C. Johnson, Senior Vice President of Van Kampen,
has primary responsibility for the day-to-day management of the Tax- was Head
Buyer and Manager of Van Kampen's Unit Investment Trust desk. David C. Johnson,
Senior Vice President

61
<PAGE> 64

of Van Kampen, has had primary responsibility for the day-to-day management of
the Tax-Exempt Bond Fund's portfolio since January 1, 1999. Mr. Johnson has been
employed by Van Kampen since 1989.

Capital Guardian has been sub-advisor for the International Growth Fund since
June 23, 1999. Capital Guardian employs a team of portfolio managers each of
whom can be considered to have primary responsibility for the day-to-day
management of the portion of the Fund assigned to him or her. They are: David I.
Fisher, Harmut Giesecke, Richard N. Havas, Nancy J. Kyle, John McIlwraith,
Robert Ronus, Lionel M. Sauvage, Nilly Sikorsky and Rudolf M. Staehelin. Mr.
Fisher is Chairman of the Board of Capital Group International, Inc. and Capital
Guardian as well as Vice Chairman of Capital International, Inc., Emerging
Markets Growth Fund, Inc. and also a director of the Capital Group Companies,
Inc. He has been employed by the Capital Group organization for 29 years. Mr.
Giesecke is Chairman of the Board of Capital Group's Japanese investment
management subsidiary, Capital International K.K., and Managing Director,
Asia-Pacific, Capital Group International, Inc. Mr. Giesecke, who has been with
the Capital Group organization for 26 years, is also a Senior Vice President and
a Director of Capital International, Inc. as well as a Senior Vice President of
Capital International Research, Inc. and a Vice President of Emerging Markets
Growth Fund. Mr. Havas, who has been with the Capital Group organization for 13
years, is a Senior Vice President and portfolio manager for Capital Guardian and
Capital International Limited as well as a Senior Vice President and Director of
Capital Guardian (Canada), Inc. Ms. Kyle, who has been with the Capital Group
organization for 8 years, is a Senior Vice President and Director of Capital
Guardian. Ms. Kyle is also President and a Director of Capital Guardian
(Canada), Inc. and a Vice President of Emerging Markets Growth Fund. Mr.
McIlwraith is a Senior Vice President and a Director of Capital Guardian as well
as a Director and Senior Vice President of Capital International Limited. Mr.
McIlwraith is also an international equity portfolio manager and has been with
the Capital Group organization for 15 years. Mr. Ronus is President and a
Director of Capital Guardian, as well as Chairman of the Board of Directors of
Capital Guardian (Canada), Inc., a Director of the Capital Group and Capital
Group International, Inc., and a Senior Vice President of Capital International
S.A. and Capital International Limited. Mr. Ronus has been employed by the
Capital Group organization for 26 years. Mr. Sauvage is a Senior Vice President
and portfolio manager for Capital Guardian and a Vice President for Capital
International Research, Inc. Mr. Sauvage has been employed by the Capital Group
organization for 12 years. Ms. Sikorsky is President and Managing Director of
Capital International S.A., Chairman of Capital International Perspective, S.A.,
Managing Director-Europe and a Director of Capital Group International, Inc.,
and serves as a Director of the Capital Group, Capital International Limited and
Capital International K.K. Ms. Sikorsky has been employed by the Capital Group
organization for 36 years. Mr. Staehelin is a Senior Vice President and Director
of Capital International Research, Inc. and Capital International S.A., and has
been employed by the Capital Group organization for 17 years.

MANAGEMENT FEES

During their most recent fiscal years, each of the Funds paid management fees to
the Advisor at the following rates:

<TABLE>
<CAPTION>
Fees Paid as a Percentage
FUNDS of Net Assets
- -----------------------------------------------------------------------
<S> <C>
Money Market Fund.....................
Tax-Exempt Money Market Fund..........
California Money Fund.................
Short Term Income Fund................
U.S. Government Securities Fund.......
Income Fund...........................
High Yield Fund.......................
Tax-Exempt Bond Fund..................
California Municipal Fund.............
California Insured Intermediate
Municipal Fund......................
Florida Insured Municipal Fund........
Bond & Stock Fund.....................
Growth & Income Fund..................
Growth Fund of the Northwest..........
Growth Fund...........................
Small Cap Stock.......................
International Growth Fund.............
Strategic Growth Portfolio............
Conservative Growth Portfolio.........
Balanced Portfolio....................
Flexible Income Portfolio.............
Income Portfolio......................
</TABLE>

*Effective January 1, 1999, management fees were reduced to 0.50% for the U.S.
Government Securities, Income, California Municipal, California Insured
Intermediate Municipal and Florida Insured Municipal Funds. Also effective
January 1, 1999, management fees were reduced to 0.85% for the Growth and
Small Cap Stock Funds.

The Advisor has undertaken to waive its management fees and reimburse expenses
to the extent necessary to limit the total Fund operating expenses for Class A

62
<PAGE> 65

shares of the following funds to the indicated annual rates through October 31,
2000.

<TABLE>
<CAPTION>
Total Fund
FUNDS Operating Expenses
- ------------------------------------------------------------------
<S> <C>
Money Market Fund............................. 0.73%
Tax-Exempt Money Market Fund.................. 0.72%
Short Term Income Fund........................ 1.00%
U.S. Government Securities Fund............... 0.96%
Tax-Exempt Bond Fund.......................... 0.88%
California Municipal Fund..................... 0.88%
Income Fund................................... 1.04%
Growth & Income Fund.......................... 1.00%
Growth Fund................................... 1.30%
</TABLE>

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUNDS'
AND PORTFOLIOS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE
FUNDS' AND PORTFOLIOS' SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS
OR PORTFOLIOS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

63
<PAGE> 66

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

The financial highlights table is intended to help you understand the Funds' and
the Portfolios' financial performance for the past 5 years (or, if shorter, the
period of the Fund's or predecessor Portfolio's operations). Certain information
reflects financial results for a single Fund or Portfolio share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund or the Portfolio (assuming reinvestment of
all dividends and distributions). The information provided below with respect to
each of the Funds within WM Trust I (Money Market, Tax-Exempt Money Market,
Income, U.S. Government Securities, Tax-Exempt Bond, Bond & Stock, Growth &
Income and Growth Fund of the Northwest Funds) for periods prior to October 31,
1998 has been audited by LeMaster & Daniels PLLC. The information provided below
with respect to each of the Funds within WM Trust II (California Money, Short
Term Income, California Municipal, California Insured Intermediate Municipal,
Florida Insured Municipal, Growth, International Growth and Small Cap Stock
Funds) and the predecessor Portfolios for periods prior to October 31, 1998 has
been audited by PricewaterhouseCoopers LLP. The information for the period ended
October 31, 1998 has been audited by Deloitte & Touche LLP. The Reports of
Independent Accountants for each such period, along with the Funds' and
predecessor Portfolios' financial statements, are included in the Annual Reports
to Shareholders for such periods, which are available upon request.

MONEY MARKET FUND CLASS A SHARES(15)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, ---------------------------
1999 1998(1) 1997 1996 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.041 0.0493 0.0476 0.0519
Net Realized & Unrealized Gain on Investments............. - - - -
------- ------- ------- ------- -------
Total From Investment Operations........................ 0.041 0.0493 0.0476 0.0519
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.041) (0.0493) (0.0476) (0.0519)
Distributions from Net Realized Gains..................... - - - -
------- ------- ------- ------- -------
Total Distributions..................................... (0.041) (0.0493) (0.0476) (0.0519)
------- ------- ------- ------- -------
Net Asset Value, End of Period.............................. $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total Return(2)............................................. 4.19% 5.04% 4.88% 5.33%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $403,443 $260,877 $229,355 $171,225
Ratio of Operating Expenses to Average Net Assets(3)...... 0.66%(5) 0.75% 0.79% 0.92%
Ratio of Net Investment Income to Average Net Assets...... 4.94%(5) 4.93% 4.77% 5.19%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 0.67%(5) 0.83% 0.89% 1.04%
</TABLE>

MONEY MARKET FUND CLASS B SHARES(15)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, -----------------------------
1999 1998(1) 1997 1996 1995
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $1.0000 $1.0000 $1.0000 $1.0000
------ ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.035 0.0407 0.0384 0.0421
Net Realized & Unrealized Gain on Investments............. - - - -
------ ------- ------- ------- -------
Total From Investment Operations........................ 0.035 0.0407 0.0384 0.0421
------ ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.035) (0.0407) (0.0384) (0.0421)
Distributions from Net Realized Gains..................... - - - -
------ ------- ------- ------- -------
Total Distributions..................................... (0.035) (0.0407) (0.0384) (0.0421)
------ ------- ------- ------- -------
Net Asset Value, End of Period.............................. $1.0000 $1.0000 $1.0000 $1.0000
====== ======= ======= ======= =======
Total Return(2)............................................. 3.52% 4.15% 3.91% 4.30%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $6,619 $471 $117 $74
Ratio of Operating Expenses to Average Net Assets(3)...... 1.64%(5) 1.59% 1.69% 1.94%
Ratio of Net Investment Income to Average Net Assets...... 3.96%(5) 4.15% 3.87% 4.19%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 1.65%(5) 1.80% 1.90% 2.10%
</TABLE>

Footnotes appear on page 86

64
<PAGE> 67
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

TAX-EXEMPT MONEY MARKET FUND CLASS A SHARES(16)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, -----------------------------
1999 1998(1) 1997 1996 1995
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.026 0.0314 0.0301 0.034
Net Realized & Unrealized Gain on Investments............. - - - 0.000(8)
------- ------- ------- ------- -------
Total From Investment Operations........................ 0.026 0.0314 0.0301 0.034
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.026) (0.0314) (0.0301) (0.034)
Distributions from Net Realized Gains..................... - - - 0.000(8)
------- ------- ------- ------- -------
Total Distributions..................................... (0.026) 0.0314 (0.0301) (0.034)
------- ------- ------- ------- -------
Net Asset Value, End of Period.............................. $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total Return(2)............................................. 2.60% 3.18% 3.05% 4.01%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $25,441 $32,134 $31,974 $30,988
Ratio of Operating Expenses to Average Net Assets(3)...... 0.55%(5) 0.57% 0.57% 0.61%
Ratio of Net Investment Income to Average Net Assets...... 3.09%(5) 3.14% 3.01% 3.39%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 0.72%(5) 0.71% 0.72% 0.81%
</TABLE>

CALIFORNIA MONEY FUND CLASS A SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, -----------------------------
1999 1998(1) 1998(6) 1997 1996
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.008 0.027 0.028 0.029
Net Realized & Unrealized Gain on Investments............. - - - -
------- ------- ------- ------- -------
Total From Investment Operations........................ 0.008 0.027 0.028 0.029
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.008) (0.027) (0.028) (0.029)
Distributions in Excess of Net Investment Income.......... - - - -
Distributions from Net Realized Gains..................... - - - -
Distributions in Excess of Net Realized Gains............. - - - -
Distributions from Capital................................ - - - -
------- ------- ------- ------- -------
Total Distributions..................................... (0.008) (0.027) (0.028) (0.029)
------- ------- ------- ------- -------
Net Asset Value, End of Period.............................. $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total Return(2)............................................. 0.99% 2.73% 2.81% 3.00%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $37,167 $37,403 $42,923 $51,211
Ratio of Operating Expenses to Average Net Assets(3)...... 0.73%(5) 0.82% 0.85% 0.85%
Ratio of Net Investment Income to Average Net Assets...... 2.31%(5) 2.71% 2.75% 2.94%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 0.87%(5) 0.99% 1.14% 1.14%
</TABLE>

Footnotes appear on page 86

65
<PAGE> 68
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

SHORT TERM INCOME FUND CLASS A SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1999 1998(1)
------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period............. $2.32
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.......................... 0.04
Net Realized & Unrealized Gain/(Loss) on
Investments................................... 0.03
------ -------
Total From Investment Operations............. 0.07
------ -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income........... (0.04)
Distributions in Excess of Net Investment
Income........................................ -
Distributions from Net Realized Gains.......... -
Distributions in Excess of Net Realized
Gains......................................... -
Distributions from Capital..................... -
------ -------
Total Distributions.......................... (0.04)
------ -------
Net Asset Value, End of Period................... $2.35
====== =======
Total Return(2).................................. 3.11%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)........... $32,748
Ratio of Operating Expenses to Average Net
Assets(3)..................................... 0.82%(5)
Ratio of Net Investment Income to Average Net
Assets........................................ 5.44%(5)
Portfolio Turnover Rate........................ 19%
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses Absorbed
and/or Credit Allowed by the Custodian........ 1.40%(5)

YEAR ENDED JUNE 30,
---------------------------------------
1998(6) 1997 1996
---------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period............. $2.32 $2.32 $2.35
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.......................... 0.13 0.14 0.15(9)
Net Realized & Unrealized Gain/(Loss) on
Investments................................... 0.00(8) 0.00(8) (0.03)
------- ------- -------
Total From Investment Operations............. 0.13 0.14 0.12
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income........... (0.13) (0.14) (0.15)
Distributions in Excess of Net Investment
Income........................................ - - -
Distributions from Net Realized Gains.......... - - -
Distributions in Excess of Net Realized
Gains......................................... - - -
Distributions from Capital..................... (0.00)(8) - (0.00)(8)
------- ------- -------
Total Distributions.......................... (0.13) (0.14) (0.15)
------- ------- -------
Net Asset Value, End of Period................... $2.32 $2.32 $2.32
======= ======= =======
Total Return(2).................................. 5.91% 6.15% 5.05%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)........... $35,551 $13,685 $32,440
Ratio of Operating Expenses to Average Net
Assets(3)..................................... 0.86% 0.82% 0.75%
Ratio of Net Investment Income to Average Net
Assets........................................ 5.71% 6.50% 6.22%
Portfolio Turnover Rate........................ 138% 51% 225%
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses Absorbed
and/or Credit Allowed by the Custodian........ 1.32%(10) 1.45%(10) 1.42%(10)
</TABLE>

SHORT TERM INCOME FUND CLASS B SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1999 1998(1)
------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period............... $2.32
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income............................ 0.04
Net Realized & Unrealized Gain/(Loss) on
Investments..................................... 0.03
------ ------
Total From Investment Operations............... 0.07
------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income............. (0.04)
Distributions in Excess of Net Investment
Income.......................................... -
Distributions from Net Realized Gains............ -
Distributions in Excess of Net Realized Gains.... -
Distributions from Capital....................... -
------ ------
Total Distributions............................ (0.04)
------ ------
Net Asset Value, End of Period..................... $2.35
====== ======
Total Return(2).................................... 2.85%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)............. $3,747
Ratio of Operating Expenses to Average Net
Assets(3)....................................... 1.57%(5)
Ratio of Net Investment Income to Average Net
Assets.......................................... 4.69%(5)
Portfolio Turnover Rate.......................... 19%
Ratio of Operating Expenses to Average Net Assets
Without Fee Waivers, Expenses Absorbed and/or
Credit Allowed by the Custodian................. 2.18%(5)

YEAR ENDED JUNE 30,
-------------------------------------
1998(6) 1997 1996
-------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period............... $2.32 $2.32 $2.35
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income............................ 0.12 0.12 0.13(9)
Net Realized & Unrealized Gain/(Loss) on
Investments..................................... 0.00(8) 0.00(8) (0.03)
------ ------ ------
Total From Investment Operations............... 0.12 0.12 0.10
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income............. (0.12) (0.12) (0.13)
Distributions in Excess of Net Investment
Income.......................................... - - -
Distributions from Net Realized Gains............ - - -
Distributions in Excess of Net Realized Gains.... - - -
Distributions from Capital....................... (0.00)(8) - (0.00)(8)
------ ------ ------
Total Distributions............................ (0.12) (0.12) (0.13)
------ ------ ------
Net Asset Value, End of Period..................... $2.32 $2.32 $2.32
====== ====== ======
Total Return(2).................................... 5.13% 5.37% 4.27%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)............. $3,459 $2,994 $3,437
Ratio of Operating Expenses to Average Net
Assets(3)....................................... 1.61% 1.57% 1.50%
Ratio of Net Investment Income to Average Net
Assets.......................................... 4.96% 5.75% 5.47%
Portfolio Turnover Rate.......................... 138% 51% 225%
Ratio of Operating Expenses to Average Net Assets
Without Fee Waivers, Expenses Absorbed and/or
Credit Allowed by the Custodian................. 2.07%(10) 2.20%(10) 2.17%(10)
</TABLE>

Footnotes appear on page 86
66
<PAGE> 69
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

U.S. GOVERNMENT SECURITIES FUND CLASS A SHARES(17)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, ------------------------------
1999 1998(1) 1997 1996 1995
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $10.84 $10.46 $10.84 $9.64
------ -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.54 0.62 0.63 0.63
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.14 0.38 (0.38) 1.20
------ -------- -------- -------- --------
Total From Investment Operations........................ 0.68 1.00 0.25 1.83
------ -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.54) (0.62) (0.63) (0.63)
------ -------- -------- -------- --------
Net Asset Value, End of Period.............................. $10.98 $10.84 $10.46 $10.84
====== ======== ======== ======== ========
Total Return(2)............................................. 6.38% 9.92% 2.48% 19.45%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $266,334 $107,054 $138,159 $177,310
Ratio of Operating Expenses to Average Net Assets(3)...... 0.92%(5) 1.05% 0.97% 1.01%
Ratio of Net Investment Income to Average Net Assets...... 5.99%(5) 5.92% 6.01% 6.08%
Portfolio Turnover Rate................................... 12% 6% 16% 8%
Ratio of operating expenses to average net assets w/o fee
waivers or fees reduced by credits allowed by the
custodian................................................ 1.45%(5) 1.05% 0.97% 1.01%
Ratio of operating expenses to average net assets
including interest expense............................... 1.36%(5) N/A N/A N/A
</TABLE>

U.S. GOVERNMENT SECURITIES FUND CLASS B SHARES(17)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, ----------------------------
1999 1998(1) 1997 1996 1995
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $10.84 $10.46 $10.84 $9.64
------- ------- ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.47 0.54 0.54 0.54
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.12 0.38 (0.38) 1.20
------- ------- ------ ------ ------
Total From Investment Operations........................ 0.59 0.92 0.16 1.74
------- ------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.46) (0.54) (0.54) (0.54)
------- ------- ------ ------ ------
Net Asset Value, End of Period.............................. $10.97 $10.84 $10.46 $10.84
======= ======= ====== ====== ======
Total Return(2)............................................. 5.54% 9.03% 1.58% 18.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $28,747 $3,352 $2,963 $2,206
Ratio of Operating Expenses to Average Net Assets(3)...... 1.67%(5) 1.84% 1.85% 1.84%
Ratio of Net Investment Income to Average Net Assets...... 5.24%(5) 5.08% 5.14% 5.20%
Portfolio Turnover Rate................................... 12% 6% 16% 8%
Ratio of operating expenses to average net assets w/o fee
waivers or fees reduced by credits allowed by the
custodian................................................ 2.22%(5) 1.84% 1.85% 1.84%
Ratio of operating expenses to average net assets
including interest expense............................... 2.12%(5) N/A N/A N/A
</TABLE>

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67
<PAGE> 70
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

INCOME FUND CLASS A SHARES(19)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, ---------------------------
1999 1998(1) 1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period:....................... $9.48 $9.15 $9.44 $8.29
----- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.53 0.60 0.59 0.59
Net Realized & Unrealized Gain/(Loss) on Investments...... (0.04)(12) 0.33 (0.29) 1.15
----- -------- ------- ------- -------
Total From Investment Operations........................ 0.49 0.93 0.30 1.74
----- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.53) (0.60) (0.59) (0.59)
----- -------- ------- ------- -------
Net Asset Value, End of Period.............................. $9.44 $9.48 $9.15 $9.44
===== ======== ======= ======= =======
Total Return(2)............................................. 5.21% 10.51% 3.46% 21.58%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $213,397 $77,864 $86,657 $97,534
Ratio of Operating Expenses to Average Net Assets(3)...... 1.07%(5) 1.08% 1.03% 1.08%
Ratio of Net Investment Income to Average Net Assets...... 6.66%(5) 6.47% 6.52% 6.59%
Portfolio Turnover Rate................................... 37% 27% 42% 43%
</TABLE>

INCOME FUND CLASS B SHARES(19)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, ---------------------------
1999 1998(1) 1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period:....................... $9.49 $9.17 $9.46 $8.30
----- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.46 0.53 0.52 0.51
Net Realized & Unrealized Gain/(Loss) on Investments...... (0.04)(12) 0.32 (0.29) 1.16
----- -------- ------- ------- -------
Total From Investment Operations........................ 0.42 0.85 0.23 1.67
----- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.46) (0.53) (0.52) (0.51)
----- -------- ------- ------- -------
Net Asset Value, End of Period.............................. $9.45 $9.49 $9.17 $9.46
===== ======== ======= ======= =======
Total Return(2)............................................. 4.51% 9.51% 2.59% 20.70%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $34,321 $9,691 $7,122 $4,452
Ratio of Operating Expenses to Average Net Assets(3)...... 1.84%(5) 1.86% 1.89% 1.91%
Ratio of Net Investment Income to Average Net Assets...... 5.89%(5) 5.65% 5.69% 5.73%
Portfolio Turnover Rate................................... 37% 27% 42% 43%
</TABLE>

Footnotes appear on page 86

68
<PAGE> 71
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

HIGH YIELD FUND CLASS A SHARES

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED APRIL 8, 1998 -
OCTOBER 31, 1999 OCTOBER 31, 1998(4)
----------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income.................................... 0.47
Net Realized & Unrealized Loss on Investments............. (1.15)
------- -------
Total from Investment Operations........................ (0.68)
------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.45)
Distributions in Excess of Net Investment Income.......... (0.01)
Distributions from Net Realized Gains..................... -
Distributions in Excess of Net Realized Gains............. -
Distributions from Capital................................ -
------- -------
Total Distributions..................................... (0.46)
------- -------
Net Asset Value, End of Period.............................. $8.86
======= =======
Total Return(5)............................................. (6.90)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $10,861
Ratio of Operating Expenses to Average Net Assets(12)..... 0.78%(5)
Ratio of Net Investment Income to Average Net Assets...... 8.80%(5)
Portfolio Turnover Rate................................... 54%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers or fees reduced by Credits Allowed by the
Custodian................................................ 1.22%(5)
</TABLE>

HIGH YIELD FUND CLASS B SHARES

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED MAY 5, 1998 -
OCTOBER 31, 1999 OCTOBER 31, 1998(4)
-----------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income.................................... 0.42
Net Realized & Unrealized Loss on Investments............. (1.09)
------- -------
Total from Investment Operations........................ (0.67)
------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.42)
Distributions in Excess of Net Investment Income.......... (0.01)
Distributions from Net Realized Gains..................... -
Distributions in Excess of Net Realized Gains............. -
Distributions from Capital................................ -
------- -------
Total Distributions..................................... (0.43)
------- -------
Net Asset Value, End of Period.............................. $8.90
======= =======
Total Return(5)............................................. (6.33)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $2,830
Ratio of Operating Expenses to Average Net Assets(12)..... 1.57%(5)
Ratio of Net Investment Income to Average Net Assets...... 8.01%(5)
Portfolio Turnover Rate................................... 54%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers or fees reduced by Credits Allowed by the
Custodian................................................ 2.02%(5)
</TABLE>

Footnotes appear on page 86

69
<PAGE> 72
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

TAX-EXEMPT BOND FUND CLASS A SHARES(21)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, -----------------------
1999 1998(1) 1997 1996 1995
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $8.09 $7.83 $8.02 $7.13
----- ----- ----- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.34 0.38 0.38 0.38
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.02 0.27 (0.19) 0.89
----- ----- ----- ------ ------
Total From Investment Operations........................ 0.36 0.65 0.19 1.27
----- ----- ----- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.34) (0.38) (0.38) (0.38)
Distribution from Capital Gains........................... - (0.01) - -
----- ----- ----- ------ ------
Total Distributions..................................... (0.34) (0.39) (0.38) (0.38)
----- ----- ----- ------ ------
Net Asset Value, End of Period.............................. $8.11 $8.09 $7.83 $8.02
===== ===== ===== ====== ======
Total Return(2)............................................. 4.58% 8.59% 2.52% 18.25%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $301,162 $188,021 $203,606 $230,055
Ratio of Operating Expenses to Average Net Assets(3)...... 0.84%(5) 0.80% 0.75% 0.81%
Ratio of Net Investment Income to Average Net Assets...... 5.14%(5) 4.84% 4.90% 5.03%
Portfolio Turnover Rate................................... 6% 21% 22% 8%
</TABLE>

TAX-EXEMPT BOND FUND CLASS B SHARES(21)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
OCTOBER 31, OCTOBER 31, -------------------------
1999 1998(1) 1997 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $8.09 $7.83 $8.02 $7.13
----- ----- ----- ----- ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.28 0.32 0.31 0.32
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.03 0.27 (0.19) 0.89
----- ----- ----- ----- ------
Total From Investment Operations........................ 0.31 0.59 0.12 1.21
----- ----- ----- ----- ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.29) (0.32) (0.31) (0.32)
Distribution from Capital Gains........................... - (0.01) - -
----- ----- ----- ----- ------
Total Distributions..................................... (0.29) (0.33) - -
----- ----- ----- ----- ------
Net Asset Value, End of Period.............................. $8.11 $8.09 $7.83 $8.02
===== ===== ===== ===== ======
Total Return(2)............................................. 3.88% 7.71% 1.61% 17.30%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $17,344 $8,110 $5,266 $2,682
Ratio of Operating Expenses to Average Net Assets(3)...... 1.62%(5) 1.62% 1.65% 1.62%
Ratio of Net Investment Income to Average Net Assets...... 4.36%(5) 4.00% 4.01% 4.18%
Portfolio Turnover Rate................................... 6% 21% 22% 8%
</TABLE>

Footnotes appear on page 86

70
<PAGE> 73
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CALIFORNIA MUNICIPAL FUND CLASS A SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, -------------------------------------
1999 1998(1) 1998(6) 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $11.33 $10.92 $10.60 $10.53 $10.38
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income.................................... 0.19(9) 0.58(9) 0.59 0.60(9) 0.61
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.13 0.41 0.32 0.07 0.15
------ ------ ------ ------ ------ ------
Total From Investment Operations........................ 0.32 0.99 0.91 0.67 0.76
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.19) (0.58) (0.59) (0.60) (0.61)
Distributions in Excess of Net Investment Income.......... - - - - -
Distributions from Net Realized Gains..................... - - - - (0.00)(8)
Distributions in Excess of Net Realized Gains............. - - - - -
Distributions from Capital................................ - - - - -
------ ------ ------ ------ ------ ------
Total Distributions..................................... (0.19) (0.58) (0.59) (0.60) (0.61)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period.............................. $11.46 $11.33 $10.92 $10.60 $10.53
====== ====== ====== ====== ====== ======
Total Return(2)............................................. 2.82% 9.26% 8.83% 6.40% 7.57%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $287,590 $290,328 $318,251 $372,177 $405,967
Ratio of Operating Expenses to Average Net Assets(3)...... 0.97%(5) 1.00% 0.97% 0.94% 0.85%
Ratio of Net Investment Income to Average Net Assets...... 4.87%(5) 5.18% 5.51% 5.56% 5.89%
Portfolio Turnover Rate................................... 28% 87% 36% 17% 22%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 1.05%(5) 1.19%(10) 1.26%(10) 1.29%(10) 1.29%
</TABLE>

CALIFORNIA MUNICIPAL FUND CLASS B SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, -----------------------------------
1999 1998(1) 1998(6) 1997 1996 1995(7)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $11.33 $10.92 $10.60 $10.53 $10.38
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income.................................... 0.16(9) 0.50(9) 0.51 0.51(9) 0.53
Net Realized & Unrealized Gain on Investments............. 0.13 0.41 0.32 0.07 0.15
------ ------ ------ ------ ------ ------
Total From Investment Operations........................ 0.29 0.91 0.83 0.58 0.68
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.16) (0.50) (0.51) (0.51) (0.53)
Distributions in Excess of Net Investment Income.......... - - - - -
Distributions from Net Realized Gains..................... - - - - (0.00)(8)
Distributions in Excess of Net Realized Gains............. - - - - -
Distributions from Capital................................ - - - - -
------ ------ ------ ------ ------ ------
Total Distributions..................................... (0.16) (0.50) (0.51) (0.51) (0.53)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period.............................. $11.46 $11.33 $10.92 $10.60 $10.53
====== ====== ====== ====== ====== ======
Total Return(2)............................................. 2.56% 8.45% 8.02% 5.61% 6.78%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $49,683 $34,537 $25,219 $20,543 $7,230
Ratio of Operating Expenses to Average Net Assets(3)...... 1.72%(5) 1.75% 1.72% 1.69% 1.60%
Ratio of Net Investment Income to Average Net Assets...... 4.12%(5) 4.42% 4.76% 4.81% 5.14%
Portfolio Turnover Rate................................... 28% 87% 36% 17% 22%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 1.81%(5) 1.95%(10) 2.01%(10) 2.04%(10) 2.04%
</TABLE>

Footnotes appear on page 86

71
<PAGE> 74
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND CLASS A SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, --------------------------------------
1999 1998(1) 1998(6) 1997 1996 1995
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $10.81 $10.74 $10.56 $10.45 $10.10
------ ------ ------ ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income.................................... 0.16 0.49 0.49(9) 0.49 0.50
Net Realized & Unrealized Gain on Investments............. 0.21 0.17 0.23 0.15 0.35
------ ------ ------ ------ ------- ------
Total From Investment Operations........................ 0.37 0.66 0.72 0.64 0.85
------ ------ ------ ------ ------- ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.16) (0.49) (0.49) (0.49) (0.50)
Distributions in Excess of Net Investment Income.......... - (0.00)(8) - - -
Distributions from Net Realized Gains..................... - (0.10) (0.05) (0.04) -
Distributions in Excess of Net Realized Gains............. - - - - -
Distributions from Capital................................ - - - - -
------ ------ ------ ------ ------- ------
Total Distributions..................................... (0.16) (0.59) (0.54) (0.53) (0.50)
------ ------ ------ ------ ------- ------
Net Asset Value, End of Period.............................. $11.02 $10.81 $10.74 $10.56 $10.45
====== ====== ====== ====== ======= ======
Total Return(2)............................................. 3.46% 6.26% 6.97% 6.25% 8.71%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $37,529 $38,724 $45,157 $54,518(10) $54,507
Ratio of Operating Expenses to Average Net Assets(3)...... 0.82%(5) 0.86% 0.82% 0.73% 0.42%
Ratio of Net Investment Income to Average Net Assets...... 4.39%(5) 4.49% 4.61% 4.62% 4.95%
Portfolio Turnover Rate................................... 7% 25% 29% 27% 13%
Ratio of Operating Expenses to Average Net Assets Without
Credits Allowed by the Custodian......................... - 0.86%(10) 0.83%(10) 0.75%(10) N/A
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 1.15%(5) 1.25%(10) 1.31%(10) 1.39%(10) 1.41%
</TABLE>

CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND CLASS B SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, --------------------------------------
1999 1998(1) 1998(6) 1997 1996 1995(7)
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $10.81 $10.74 $10.56 $10.45 $10.10
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income.................................... 0.13 0.41 0.41(9) 0.41 0.43
Net Realized & Unrealized Gain on Investments............. 0.21 0.17 0.23 0.15 0.35
------ ------ ------ ------ ------ ------
Total From Investment Operations........................ 0.34 0.58 0.64 0.56 0.78
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.13) (0.41) (0.41) (0.41) (0.43)
Distributions in Excess of Net Investment Income.......... - (0.00)(8) - - -
Distributions from Net Realized Gains..................... - (0.10) (0.05) (0.04) -
Distributions in Excess of Net Realized Gains............. - - - - -
Distributions from Capital................................ - - - - -
------ ------ ------ ------ ------ ------
Total Distributions..................................... (0.13) (0.51) (0.46) (0.45) (0.43)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period.............................. $11.02 $10.81 $10.74 $10.56 $10.45
====== ====== ====== ====== ====== ======
Total Return(2)............................................. 3.20% 5.47% 6.17% 5.46% 7.90%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $23,960 $21,688 $20,992 $20,948 $12,391
Ratio of Operating Expenses to Average Net Assets(3)...... 1.57%(5) 1.61% 1.57% 1.48% 1.17%
Ratio of Net Investment Income to Average Net Assets...... 3.64%(5) 3.74% 3.86% 3.87% 4.20%
Portfolio Turnover Rate................................... 7% 25% 29% 27% 13%
Ratio of Operating Expenses to Average Net Assets Without
Credits Allowed by the Custodian......................... - 1.61%(10) 1.58%(10) 1.50%(10) N/A
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 1.90%(5) 2.01%(10) 2.06%(10) 2.14%(10) 2.16%
</TABLE>

Footnotes appear on page 86

72
<PAGE> 75
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

FLORIDA INSURED MUNICIPAL FUND CLASS A SHARES

<TABLE>
<CAPTION>
FISCAL
PERIOD
YEAR ENDED ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, -------------------------------------
1999 1998(1) 1998(6) 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $10.35 $9.93 $9.64 $9.43 $9.40
------ ------ ------ ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.17 0.49 0.49(9) 0.50 0.52
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.15 0.42 0.30 0.21 0.03(12)
------ ------ ------ ----- ----- -----
Total From Investment Operations........................ 0.32 0.91 0.79 0.71 0.55
------ ------ ------ ----- ----- -----
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.17) (0.49) (0.50) (0.50) (0.52)
Distributions in Excess of Net Investment Income.......... - - (0.00)(8) - -
Distributions from Net Realized Gains..................... - - - - -
Distributions in Excess of Net Realized Gains............. - - - - -
Distributions from Capital................................ - - - - -
------ ------ ------ ----- ----- -----
Total Distributions..................................... (0.17) (0.49) (0.50) (0.50) (0.52)
------ ------ ------ ----- ----- -----
Net Asset Value, End of Period.............................. $10.50 $10.35 $9.93 $9.64 $9.43
====== ====== ====== ===== ===== =====
Total Return(2)............................................. 3.08% 9.34% 8.43% 7.56% 6.01%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $15,813 $16,538 $22,761 $29,821 $33,714
Ratio of Operating Expenses to Average Net Assets(3)...... 0.82%(5) 0.88% 0.82% 0.63% 0.39%
Ratio of Net Investment Income to Average Net Assets...... 4.76%(5) 4.79% 5.01% 5.08% 5.53%
Portfolio Turnover Rate................................... 40% 51% 53% 52% 44%
Ratio of Operating Expenses to Average Net Assets Without
Credit Allowed by the Custodian.......................... - 0.89%(10) 0.84%(10) 0.66%(10) N/A
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credit Allowed by
the Custodian............................................ 1.40%(5) 1.45%(10) 1.46%(10) 1.46%(10) 1.51%
</TABLE>

FLORIDA INSURED MUNICIPAL FUND CLASS B SHARES

<TABLE>
<CAPTION>
FISCAL
PERIOD
YEAR ENDED ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, --------------------------------------
1999 1998(1) 1998(6) 1997 1996 1995(7)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...................... $10.35 $9.93 $9.64 $9.43 $9.40
------ ------ ------ ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income................................... 0.14 0.41 0.42(9) 0.42 0.45
Net Realized & Unrealized Gain on Investments........... 0.15 0.43 0.30 0.21 0.03(12)
------ ------ ------ ----- ----- -----
Total From Investment Operations...................... 0.29 0.84 0.72 0.63 0.48
------ ------ ------ ----- ----- -----
LESS DISTRIBUTIONS:
Dividends from Net Investment Income.................... (0.14) (0.42) (0.43) (0.42) (0.45)
Distributions in Excess of Net Investment Income........ - - (0.00)(8) - -
Distributions from Net Realized Gains................... - - - - -
Distributions in Excess of Net Realized Gains........... - - - - -
Distributions from Capital.............................. - - - - -
------ ------ ------ ----- ----- -----
Total Distributions................................... (0.14) (0.42) (0.43) (0.42) (0.45)
------ ------ ------ ----- ----- -----
Net Asset Value, End of Period............................ $10.50 $10.35 $9.93 $9.64 $9.43
====== ====== ====== ===== ===== =====
Total Return(2)........................................... 2.82% 8.53% 7.63% 6.76% 5.23%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's).................... $6,054 $5,075 $5,067 $5,428 $3,330
Ratio of Operating Expenses to Average Net Assets(3).... 1.57%(5) 1.63% 1.57% 1.38% 1.14%
Ratio of Net Investment Income to Average Net Assets.... 4.01%(5) 4.04% 4.26% 4.33% 4.78%
Portfolio Turnover Rate................................. 40% 51% 53% 52% 44%
Ratio of Operating Expenses to Average Net Assets
Without Credit Allowed by the Custodian................ - 1.64%(10) 1.59%(10) 1.41%(10) N/A
Ratio of Operating Expenses to Average Net Assets
Without Fee Waivers, Expenses Absorbed and/or Credit
Allowed by the Custodian............................... 2.15%(5) 2.21%(10) 2.21%(10) 2.21%(10) 2.26%
</TABLE>

Footnotes appear on page 86

73
<PAGE> 76
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

BOND & STOCK FUND CLASS A SHARES(22)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ------------------------
1999 1998 1997 1996 1995
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $16.13 $14.71 $13.48 $11.53
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.45(9) 0.50 0.52 0.50
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.21(12) 2.37 1.53 2.02
------ ------ ------ ------ ------
Total From Investment Operations........................ 0.66 2.87 2.05 2.52
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.45) (0.51) (0.50) (0.49)
Distributions from Capital Gains.......................... (2.32) (0.94) (0.32) (0.08)
------ ------ ------ ------ ------
Total Distributions..................................... (2.77) (1.45) (0.82) (0.57)
------ ------ ------ ------ ------
Net Asset Value, End of Period.............................. $14.02 $16.13 $14.71 $13.48
====== ====== ====== ====== ======
Total Return(2)............................................. 4.03% 20.81% 15.66% 22.55%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $298,651 $307,018 $255,414 $208,592
Ratio of Operating Expenses to Average Net Assets(3)...... 0.97% 0.99% 0.98% 1.02%
Ratio of Net Investment Income to Average Net Assets...... 3.09% 3.31% 3.68% 3.98%
Portfolio Turnover Rate................................... 80% 54% 46% 32%
</TABLE>

BOND & STOCK FUND CLASS B SHARES(22)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ------------------------
1999 1998 1997 1996 1995
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $16.10 $14.69 $13.47 $11.51
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.33(9) 0.39 0.41 0.39
Net Realized & Unrealized Gain on Investments............. 0.19(12) 2.36 1.53 2.03
------ ------ ------ ------ ------
Total From Investment Operations........................ 0.52 2.75 1.94 2.42
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.34) (0.40) (0.40) (0.38)
Distributions from Capital Gains.......................... (2.32) (0.94) (0.32) (0.08)
------ ------ ------ ------ ------
Total Distributions..................................... (2.66) (1.34) (0.72) (0.46)
------ ------ ------ ------ ------
Net Asset Value, End of Period.............................. $13.96 $16.10 $14.69 $13.47
====== ====== ====== ====== ======
Total Return(2)............................................. 3.12% 19.86% 14.73% 21.60%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $74,542 $46,556 $22,243 $7,372
Ratio of Operating Expenses to Average Net Assets(3)...... 1.76% 1.79% 1.86% 1.84%
Ratio of Net Investment Income to Average Net Assets...... 2.30% 2.48% 2.80% 3.10%
Portfolio Turnover Rate................................... 80% 54% 46% 32%
</TABLE>

Footnotes appear on page 86

74
<PAGE> 77
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

GROWTH & INCOME FUND CLASS A SHARES(23)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ------------------------
1999 1998 1997 1996 1995
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $21.01 $17.26 $14.65 $12.71
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income..................................... 0.11(9) 0.12 0.20 0.22
Net Realized & Unrealized Gain/(Loss) on Investments...... 1.43 4.98 3.16 2.31
------ ------ ------ ------ ------
Total From Investment Operations........................ 1.54 5.10 3.36 2.53
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.09) (0.14) (0.21) (0.19)
Distributions from Capital Gains.......................... (2.47) (1.21) (0.54) (0.40)
------ ------ ------ ------ ------
Total Distributions..................................... (2.56) (1.35) (0.75) (0.59)
------ ------ ------ ------ ------
Net Asset Value, End of Period.............................. $19.99 $21.01 $17.26 $14.65
====== ====== ====== ====== ======
Total Return(2)............................................. 7.38% 31.24% 23.61% 20.87%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $502,115 $299,928 $178,331 $130,630
Ratio of Operating Expenses to Average Net Assets(3)...... 0.94% 1.05% 1.03% 1.07%
Ratio of Net Investment Income to Average Net Assets...... 0.52% 0.66% 1.26% 1.62%
Portfolio Turnover Rate................................... 79% 71% 52% 39%
</TABLE>

GROWTH & INCOME FUND CLASS B SHARES(23)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, -------------------------
1999 1998 1997 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $20.85 $17.17 $14.59 $12.68
------- -------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).............................. (0.07)(9) (0.02) 0.06 0.11
Net Realized & Unrealized Gain on Investments............. 1.46 4.93 3.14 2.31
------- -------- ------- ------ ------
Total From Investment Operations........................ 1.39 4.91 3.20 2.42
------- -------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.00)(8) (0.02) (0.08) (0.11)
Distributions from Capital Gains.......................... (2.47) (1.21) (0.54) (0.40)
------- -------- ------- ------ ------
Total Distributions..................................... (2.47) (1.23) (0.62) (0.51)
------- -------- ------- ------ ------
Net Asset Value, End of Period.............................. $19.77 $20.85 $17.17 $14.59
======= ======== ======= ====== ======
Total Return(2)............................................. 6.60% 30.20% 22.55% 19.95%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $117,063 $49,994 $22,851 $8,871
Ratio of Operating Expenses to Average Net Assets(3)...... 1.79% 1.88% 1.94% 1.91%
Ratio of Net Investment Income/(Loss) to Average Net
Assets................................................... (0.33)% (0.19)% 0.34% 0.69%
Portfolio Turnover Rate................................... 79% 71% 52% 39%
</TABLE>

Footnotes appear on page 86

75
<PAGE> 78
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

GROWTH FUND OF THE NORTHWEST CLASS A SHARES(24)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, -------------------------
1999 1998 1997 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $25.92 $19.69 $17.40 $14.30
------ ------ ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).............................. (0.02)(9) (0.02) 0.03 0.07
Net Realized & Unrealized Gain/(Loss) on Investments...... (0.76) 8.13 2.47 3.10
------ ------ ------- ------ ------
Total From Investment Operations........................ (0.78) 8.11 2.50 3.17
------ ------ ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... - - (0.03) (0.07)
Distributions from Capital Gains.......................... (4.74) (1.88) (0.18) -
Distributions from Capital................................ (0.03) - - -
------ ------ ------- ------ ------
Total Distributions..................................... (4.77) (1.88) (0.21) (0.07)
------ ------ ------- ------ ------
Net Asset Value, End of Period.............................. $20.37 $25.92 $19.69 $17.40
====== ====== ======= ====== ======
Total Return(2)............................................. (4.81)% 44.47% 14.54% 22.24%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $243,126 $256,908 $176,706 $157,953
Ratio of Operating Expenses to Average Net Assets(3)...... 1.10% 1.05% 1.08% 1.10%
Ratio of Net Investment Income/(Loss) to Average Net
Assets................................................... (0.09)% (0.08)% 0.16% 0.44%
Portfolio Turnover Rate................................... 39% 37% 42% 9%
Ratio of operating expenses to average net assets w/o fee
waivers or fees reduced by credits allowed by the
custodian................................................ 1.10% 1.11% 1.08% 1.10%
</TABLE>

GROWTH FUND OF THE NORTHWEST CLASS B SHARES(24)

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ---------------------------
1999 1998 1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $25.34 $19.45 $17.31 $14.28
----- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss....................................... (0.20)(9) (0.08) (0.08) (0.05)
Net Realized & Unrealized Gain/(Loss) on Investments...... (0.73) 7.85 2.40 3.08
----- ------- ------- ------- -------
Total From Investment Operations........................ (0.93) 7.77 2.32 3.03
----- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... - - - -
Distributions from Capital Gains.......................... (4.74) (1.88) (0.18) -
Distributions from Capital................................ (0.03) - - -
----- ------- ------- ------- -------
Total Distributions..................................... (4.77) (1.88) (0.18) -
----- ------- ------- ------- -------
Net Asset Value, End of Period.............................. $19.64 $25.34 $19.45 $17.31
===== ======= ======= ======= =======
Total Return(2)............................................. (5.63)% 43.17% 13.54% 21.25%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $47,106 $39,627 $14,653 $7,083
Ratio of Operating Expenses to Average Net Assets(3)...... 1.95% 1.91% 1.98% 1.95%
Ratio of Net Investment Loss to Average Net Assets........ (0.94)% (0.94)% (0.76)% (0.45)%
Portfolio Turnover Rate................................... 39% 37% 42% 9%
Ratio of operating expenses to average net assets w/o fee
waivers or fees reduced by credits allowed by the
custodian................................................ 1.95% 1.97% 1.98% 1.95%
</TABLE>

Footnotes appear on page 86

76
<PAGE> 79
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

GROWTH FUND CLASS A SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, -----------------------------
1999 1998(1) 1998(6) 1997 1996
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $18.46 $14.90 $15.69 $14.18
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).................... (0.07)(9) (0.15)(9) (0.03)(9) (0.07)(9)
Net Realized & Unrealized Gain/(Loss) on
Investments.................................... (0.75) 4.99 1.58 3.47
------ ------ ------ ------ ------
Total From Investment Operations.............. (0.82) 4.84 1.55 3.40
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income............ - - - -
Distributions in Excess of Net Investment
Income......................................... - - - -
Distributions from Net Realized Gains........... - (1.28) (2.34) (1.89)
Distributions in Excess of Net Realized Gains... - - - -
Distributions from Capital...................... - - - -
------ ------ ------ ------ ------
Total Distributions........................... - (1.28) (2.34) (1.89)
------ ------ ------ ------ ------
Net Asset Value, End of Period.................... $17.64 $18.46 $14.90 $15.69
====== ====== ====== ====== ======
Total Return(2)................................... (4.44)% 35.43% 10.88% 25.44%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)............ $104,775 $112,153 $111,187 $179,720
Ratio of Operating Expenses to Average Net
Assets(3)...................................... 1.69%(5) 1.66% 1.70% 1.70%
Ratio of Net Investment Income to Average Net
Assets......................................... (1.21)%(5) (0.91)% (0.22)% (0.49)%
Portfolio Turnover Rate......................... 24% 153% 156% 205%
Ratio of Operating Expenses to Average Net
Assets Without Credits Allowed by the
Custodian...................................... - 1.66%(10) 1.70%(10) 1.71%(10)
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses Absorbed
and/or Credits Allowed by the Custodian........ - 1.66%(10) 1.70%(10) 1.71%(10)
</TABLE>

GROWTH FUND CLASS B SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR ENDED PERIOD ENDED YEAR ENDED JUNE 30,
OCTOBER 31, OCTOBER 31, -----------------------------
1999 1998(1) 1998(6) 1997 1996
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $17.82 $14.53 $15.47 $14.10
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss....................................... (0.12)(9) (0.25)(9) (0.14)(9) (0.19)(9)
Net Realized & Unrealized Gain on Investments............. (0.71) 4.82 1.54 3.45
------ ------ ------ ------ ------
Total From Investment Operations........................ (0.83) 4.57 1.40 3.26
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... - - - -
Distributions in Excess of Net Investment Income.......... - - - -
Distributions from Net Realized Gains..................... - (1.28) (2.34) (1.89)
Distributions in Excess of Net Realized Gains............. - - - -
Distributions from Capital................................ - - - -
------ ------ ------ ------ ------
Total Distributions..................................... - (1.28) (2.34) (1.89)
------ ------ ------ ------ ------
Net Asset Value, End of Period.............................. $16.99 $17.82 $14.53 $15.47
====== ====== ====== ====== ======
Total Return(2)............................................. (4.66)% 34.43% 9.99% 24.54%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $39,379 $38,390 $30,397 $25,067
Ratio of Operating Expenses to Average Net Assets(3)...... 2.54%(5) 2.46% 2.45% 2.45%
Ratio of Net Investment Loss to Average Net Assets........ (2.06)%(5) (1.70)% (0.97)% (1.24)%
Portfolio Turnover Rate................................... 24% 153% 156% 205%
Ratio of Operating Expenses to Average Net Assets Without
Credits Allowed by the Custodian......................... - 2.46%(10) 2.45%(10) 2.46%(10)
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ - 2.46%(10) 2.45%(10) 2.46%(10)
</TABLE>

Footnotes appear on page 86

77
<PAGE> 80
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

SMALL CAP STOCK FUND CLASS A SHARES

<TABLE>
<CAPTION>
YEAR FISCAL
ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1999 1998(1)
-------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........ $19.49
------ --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss....................... (0.08)(9)
Net Realized & Unrealized Gain/(Loss) on
Investments.............................. (3.16)
------ --------
Total From Investment Operations........ (3.24)
------ --------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...... -
Distributions in Excess of Net Investment
Income................................... -
Distributions from Net Realized Gains..... -
Distributions in Excess of Net Realized
Gains.................................... -
Distributions from Capital................ -
------ --------
Total Distributions..................... -
------ --------
Net Asset Value, End of Period.............. $16.25
====== ========
Total Return(2)............................. (16.62)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...... $88,502
Ratio of Operating Expenses to Average Net
Assets(3)................................ 1.88%(5)
Ratio of Net Investment Loss to Average
Net Assets............................... (1.43)%(5)
Portfolio Turnover Rate................... 20%
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses
Absorbed and/or Credits Allowed by the
Custodian................................ 1.89%(5)

YEAR ENDED JUNE 30,
-----------------------------------------------
1998(6) 1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $18.28 $20.17 $15.47 $13.02
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss....................... (0.22)(9) (0.21)(9) (0.19)(9) (0.00)(8)(9)
Net Realized & Unrealized Gain/(Loss) on
Investments.............................. 2.50 (0.18) 5.65 2.77
-------- -------- -------- --------
Total From Investment Operations........ 2.28 (0.39) 5.46 2.77
-------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...... - - - -
Distributions in Excess of Net Investment
Income................................... - - - -
Distributions from Net Realized Gains..... (1.07) (1.50) (0.76) (0.32)
Distributions in Excess of Net Realized
Gains.................................... - - - -
Distributions from Capital................ - - - -
-------- -------- -------- --------
Total Distributions..................... (1.07) (1.50) (0.76) (0.32)
-------- -------- -------- --------
Net Asset Value, End of Period.............. $19.49 $18.28 $20.17 $15.47
======== ======== ======== ========
Total Return(2)............................. 12.95% (1.50)% 35.93% 21.54%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...... $118,473 $165,719 $283,747 $185,722
Ratio of Operating Expenses to Average Net
Assets(3)................................ 1.66% 1.64% 1.64% 1.68%
Ratio of Net Investment Loss to Average
Net Assets............................... (1.10)% (1.17)% (1.02)% (0.31)%
Portfolio Turnover Rate................... 112% 81% 131% 181%
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses
Absorbed and/or Credits Allowed by the
Custodian................................ 1.66%(10) 1.64%(10) 1.65%(10) N/A
</TABLE>

SMALL CAP STOCK FUND CLASS B SHARES

<TABLE>
<CAPTION>
YEAR
ENDED
OCTOBER 31,
1999
------------------
<S> <C>
Net Asset Value, Beginning of
Period.............................
---------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).....
Net Realized & Unrealized
Gain/(Loss) on Investments......
---------
Total From Investment
Operations.....................
---------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income..........................
Distributions in Excess of Net
Investment Income...............
Distributions from Net Realized
Gains...........................
Distributions in Excess of Net
Realized Gains..................
Distributions from Capital.......
---------
Total Distributions............
---------
Net Asset Value, End of Period.....
=========
Total Return(2)....................
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
($1,000's)......................
Ratio of Operating Expenses to
Average Net Assets(3)...........
Ratio of Net Investment
Income/Loss to Average Net
Assets..........................
Portfolio Turnover Rate..........
Ratio of Operating Expenses to
Average Net Assets Without Fee
Waivers,
Expenses Absorbed and/or Credits
Allowed by the Custodian........

<CAPTION>
FISCAL
PERIOD ENDED YEAR ENDED JUNE 30,
OCTOBER 31, -------------------------------------------------------------
1998(1) 1998(6) 1997 1996 1995(7)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $18.86 $17.85 $19.88 $15.37 $13.02
--------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss)..... (0.13)(9) (0.36)(9) (0.34)(9) (0.32)(9) (0.10)(9)
Net Realized & Unrealized
Gain/(Loss) on Investments...... (3.06) 2.44 (0.19) 5.59 2.77
--------- ------- ------- ------- -------
Total From Investment
Operations..................... (3.19) 2.08 (0.53) 5.27 2.67
--------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income.......................... - - - - -
Distributions in Excess of Net
Investment Income............... - - - - -
Distributions from Net Realized
Gains........................... - (1.07) (1.50) (0.76) (0.32)
Distributions in Excess of Net
Realized Gains.................. - - - - -
Distributions from Capital....... - - - - -
--------- ------- ------- ------- -------
Total Distributions............ - (1.07) (1.50) (0.76) (0.32)
--------- ------- ------- ------- -------
Net Asset Value, End of Period..... $15.67 $18.86 $17.85 $19.88 $15.37
========= ======= ======= ======= =======
Total Return(2).................... (16.87)% 12.05% (2.26)% 34.93% 20.69%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
($1,000's)...................... $22,172 $28,540 $29,123 $28,920 $10,208
Ratio of Operating Expenses to
Average Net Assets(3)........... 2.84%(5) 2.47% 2.39% 2.39% 2.43%
Ratio of Net Investment
Income/Loss to Average Net
Assets.......................... (2.39)%(5) (1.92)% (1.92)% (1.77)% (1.06)%
Portfolio Turnover Rate.......... 20% 112% 81% 131% 181%
Ratio of Operating Expenses to
Average Net Assets Without Fee
Waivers,
Expenses Absorbed and/or Credits
Allowed by the Custodian........ 2.85%(5) 2.47%(10) 2.39%(10) 2.40%(10) N/A
</TABLE>

Footnotes appear on page 86

78
<PAGE> 81
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

INTERNATIONAL GROWTH FUND CLASS A SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR PERIOD
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1999 1998(1)
----------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period............ $10.20
------ ---------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).................. (0.02)(9)
Net Realized & Unrealized Gain/(Loss) on
Investments.................................. (1.32)
------ ---------
Total From Investment Operations............ (1.34)
------ ---------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income.......... -
Distributions in Excess of Net Investment
Income....................................... -
Distributions from Net Realized Gains......... -
Distributions in Excess of Net Realized
Gains........................................ -
------ ---------
Total Distributions......................... -
------ ---------
Net Asset Value, End of Period.................. $8.86
====== =========
Total Return(2)................................. (13.14)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's).......... $30,117
Ratio of Operating Expenses to Average Net
Assets(3).................................... 1.86%(5)
Ratio of Net Investment Income/(Loss) to
Average Net Assets........................... (0.50)%(5)
Portfolio Turnover Rate....................... 41%
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses Absorbed
and/or Credits Allowed by the Custodian...... 1.86%(5)

YEAR ENDED JUNE 30,
-----------------------------------------
1998(6) 1997 1996 1995
-----------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............ $11.85 $10.49 $9.78 $10.74
------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).................. 0.05(9) 0.04(9) 0.05(9) (0.11)(9)
Net Realized & Unrealized Gain/(Loss) on
Investments.................................. (0.67) 1.55 1.21 (0.31)
------- -------- ------- -------
Total From Investment Operations............ (0.62) 1.59 1.26 (0.42)
------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income.......... (0.50) (0.13) (0.05) (0.04)
Distributions in Excess of Net Investment
Income....................................... (0.03) - (0.04) -
Distributions from Net Realized Gains......... (0.50) (0.10) (0.46) (0.44)
Distributions in Excess of Net Realized
Gains........................................ - - - (0.06)
------- -------- ------- -------
Total Distributions......................... (1.03) (0.23) (0.55) (0.54)
------- -------- ------- -------
Net Asset Value, End of Period.................. $10.20 $11.85 $10.49 $9.78
======= ======== ======= =======
Total Return(2)................................. (4.19)% 15.50% 13.16% (4.01)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's).......... $38,281 $57,776 $116,254 $91,763
Ratio of Operating Expenses to Average Net
Assets(3).................................... 1.67% 1.65% 1.77% 1.69%
Ratio of Net Investment Income/(Loss) to
Average Net Assets........................... 0.50% 0.35% 0.46% 0.62%
Portfolio Turnover Rate....................... 118% 67% 125% 81%
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses Absorbed
and/or Credits Allowed by the Custodian...... 1.67%(10) 1.65%(10) 1.77%(10) N/A
</TABLE>

INTERNATIONAL GROWTH FUND CLASS B SHARES

<TABLE>
<CAPTION>
FISCAL
YEAR PERIOD
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1999 1998(1)
-----------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period............ $10.07
------ ---------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss........................... (0.05)(9)
Net Realized & Unrealized Gain/(Loss) on
Investments.................................. (1.30)
------ ---------
Total From Investment Operations............ (1.35)
------ ---------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income.......... -
Distributions in Excess of Net Investment
Income....................................... -
Distributions from Net Realized Gains......... -
Distributions in Excess of Net Realized
Gains........................................ -
------ ---------
Total Distributions......................... -
------ ---------
Net Asset Value, End of Period.................. $8.72
====== =========
Total Return(2)................................. (13.41)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's).......... $3,552
Ratio of Operating Expenses to Average Net
Assets(3).................................... 2.97%(5)
Ratio of Net Investment Loss to Average Net
Assets....................................... (1.61)%(5)
Portfolio Turnover Rate....................... 41%
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses Absorbed
and/or Credits Allowed by the Custodian...... -

YEAR ENDED JUNE 30,
--------------------------------------------
1998(6) 1997 1996 1995(7)
--------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............ $11.70 $10.39 $9.73 $10.74
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss........................... (0.04)(9) (0.04)(9) (0.03)(9) (0.17)(9)
Net Realized & Unrealized Gain/(Loss) on
Investments.................................. (0.64) 1.53 1.21 (0.31)
-------- -------- -------- --------
Total From Investment Operations............ (0.68) 1.49 1.18 (0.48)
-------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income.......... (0.42) (0.08) (0.02) (0.03)
Distributions in Excess of Net Investment
Income....................................... (0.03) - (0.04) -
Distributions from Net Realized Gains......... (0.50) (0.10) (0.46) (0.44)
Distributions in Excess of Net Realized
Gains........................................ - - - (0.06)
-------- -------- -------- --------
Total Distributions......................... (0.95) (0.18) (0.52) (0.53)
-------- -------- -------- --------
Net Asset Value, End of Period.................. $10.07 $11.70 $10.39 $9.73
======== ======== ======== ========
Total Return(2)................................. (4.95)% 14.66% 12.34% (4.61)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's).......... $4,294 $4,876 $4,447 $2,268
Ratio of Operating Expenses to Average Net
Assets(3).................................... 2.49% 2.40% 2.52% 2.44%
Ratio of Net Investment Loss to Average Net
Assets....................................... (0.35)% (0.40)% (0.29)% (0.13)%
Portfolio Turnover Rate....................... 118% 67% 125% 81%
Ratio of Operating Expenses to Average Net
Assets Without Fee Waivers, Expenses Absorbed
and/or Credits Allowed by the Custodian...... 2.53%(10) 2.40%(10) 2.52%(10) 2.44%
</TABLE>

Footnotes appear on page 86
79
<PAGE> 82
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

STRATEGIC GROWTH PORTFOLIO(25)

<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------
FISCAL
YEAR PERIOD YEAR JULY 25,
ENDED ENDED ENDED 1996 TO
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(1) 1998(6) 1997(4)
-----------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $12.66 $11.26 $10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss)............ (0.02)(9) 0.00(8)(9) (0.02)(9)
Net Realized & Unrealized Gain on
Investments............................ (0.97) 2.12 1.90
------- ------- ------- -------
Total From Investment Operations...... (0.99) 2.12 1.88
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income.... - - -
Distributions in Excess of Net
Investment Income...................... - (0.68) (0.62)
Distributions from Net Realized Gains... - (0.04) (0.00)(8)
------- ------- ------- -------
Total Distributions................... - (0.72) (0.62)
------- ------- ------- -------
Net Asset Value, End of Period............ $11.67 $12.66 $11.26
======= ======= ======= =======
Total Return(2)........................... (7.82)% 20.11% 19.33%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's).... $19,690 $18,330 $14,253
Ratio of Operating Expenses to Average
Net Assets(3).......................... 0.95%(5) 0.94% 0.90%(5)
Ratio of Net Investment Income/(Loss) to
Average Net Assets..................... (0.53)%(5) 0.01% (0.19)%(5)
Portfolio Turnover Rate................. 10% 23% 33%
Ratio of Operating Expenses to Average
Net Assets Without Credits Allowed by
the Custodian(13)...................... - 0.94% 0.91%(5)
Ratio of Operating Expenses to Average
Net Assets Without Fee Waivers,
Expenses Absorbed and/or Credits
Allowed by the Custodian............... 1.13%(5) 1.08% 1.45%(5)

<CAPTION>
CLASS B
-------------------------------------------------
FISCAL
YEAR PERIOD YEAR JULY 25,
ENDED ENDED ENDED 1996 TO
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(1) 1998(6) 1997(4)
-------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $12.53 $11.19 $10.00
----- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss)............ (0.05)(4) (0.09)(9) (0.10)(9)
Net Realized & Unrealized Gain on
Investments............................ (0.96) 2.11 1.90
----- ------- ------- -------
Total From Investment Operations...... (1.01) 2.02 1.80
----- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income.... - - -
Distributions in Excess of Net
Investment Income...................... - (0.64) (0.61)
Distributions from Net Realized Gains... - (0.04) (0.00)(8)
----- ------- ------- -------
Total Distributions................... - (0.68) (0.61)
----- ------- ------- -------
Net Asset Value, End of Period............ $11.52 $12.53 $11.19
===== ======= ======= =======
Total Return(2)........................... (8.06)% 19.24% 18.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's).... $51,752 $51,173 $35,802
Ratio of Operating Expenses to Average
Net Assets(3).......................... 1.70%(5) 1.68% 1.65%(5)
Ratio of Net Investment Income/(Loss) to
Average Net Assets..................... (1.28)%(5) (0.74)% (0.94)%(5)
Portfolio Turnover Rate................. 10% 23% 33%
Ratio of Operating Expenses to Average
Net Assets Without Credits Allowed by
the Custodian(13)...................... - 1.68% 1.66%(5)
Ratio of Operating Expenses to Average
Net Assets Without Fee Waivers,
Expenses Absorbed and/or Credits
Allowed by the Custodian............... 1.88%(5) 1.83% 2.20%(5)
</TABLE>

80
<PAGE> 83
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CONSERVATIVE GROWTH PORTFOLIO(25)

<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------- ---------------------------------------
FISCAL FISCAL
YEAR PERIOD YEAR JULY 25, YEAR PERIOD YEAR
ENDED ENDED ENDED 1996 TO ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30, OCTOBER 31, OCTOBER 31, JUNE 30,
1999 1998(1) 1998(6) 1997(4) 1999 1998(1) 1998(6)
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................... $11.84 $10.86 $10.00 $11.74 $10.80
----- -------- ------- ------ ----- -------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment
Income/(Loss)............ 0.01 0.13(9) 0.08(9) (0.03) 0.04(9)
Net Realized & Unrealized
Gain on Investments...... (0.88) 1.42 1.32 (0.86) 1.43
----- -------- ------- ------ ----- -------- -------
Total From Investment
Operations.............. (0.87) 1.55 1.40 (0.89) 1.47
----- -------- ------- ------ ----- -------- -------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income........ - (0.09) (0.08) - (0.08)
Distributions in Excess of
Net Investment Income.... - (0.42) (0.46) - (0.39)
Distributions from Net
Realized Gains........... - (0.06) - - (0.06)
----- -------- ------- ------ ----- -------- -------
Total Distributions..... - (0.57) (0.54) - (0.53)
----- -------- ------- ------ ----- -------- -------
Net Asset Value, End of
Period...................... $10.97 $11.84 $10.86 $10.85 $11.74
===== ======== ======= ====== ===== ======== =======
Total Return(2)............. (7.35)% 15.18% 14.39% (7.58)% 14.44%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
($1,000's)............... $100,024 $114,946 $136,141 $155,064 $169,269
Ratio of Operating
Expenses to Average Net
Assets(13)(3)............ 0.95%(5) 0.95% 0.92%(5) 1.70%(5) 1.70%
Ratio of Net Investment
Income/(Loss) to Average
Net Assets............... 0.05%(5) 1.17% 0.81%(5) (.70)%(5) 0.40%
Portfolio Turnover Rate... 9% 28% 20% 9% 28%
Ratio of Operating
Expenses to Average Net
Assets Without Credits
Allowed by the
Custodian(13)............ - 0.95% 0.93%(5) - 1.70%
Ratio of Operating
Expenses to Average Net
Assets Without Fee
Waivers, Expenses
Absorbed and/or Credits
Allowed by the
Custodian................ 1.03%(5) 1.00% 1.17%(5) 1.78%(5) 1.74%

<CAPTION>
CLASS B
----------------

JULY 25,
1996 TO
JUNE 30,
1997(4)
----------------
<S> <C>
Net Asset Value, Beginning
of Period................... $10.00
------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment
Income/(Loss)............ 0.01(9)
Net Realized & Unrealized
Gain on Investments...... 1.31
------
Total From Investment
Operations.............. 1.32
------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income........ (0.01)
Distributions in Excess of
Net Investment Income.... (0.51)
Distributions from Net
Realized Gains........... -
------
Total Distributions..... (0.52)
------
Net Asset Value, End of
Period...................... $10.80
======
Total Return(2)............. 13.59%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
($1,000's)............... $158,697
Ratio of Operating
Expenses to Average Net
Assets(13)(3)............ 1.67%(5)
Ratio of Net Investment
Income/(Loss) to Average
Net Assets............... 0.06%(5)
Portfolio Turnover Rate... 20%
Ratio of Operating
Expenses to Average Net
Assets Without Credits
Allowed by the
Custodian(13)............ 1.68%(5)
Ratio of Operating
Expenses to Average Net
Assets Without Fee
Waivers, Expenses
Absorbed and/or Credits
Allowed by the
Custodian................ 1.92%(5)
</TABLE>

Footnotes appear on page 86
81
<PAGE> 84
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

BALANCED PORTFOLIO(25)

<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------- -------------------------------
FISCAL FISCAL
YEAR PERIOD YEAR JULY 25, YEAR PERIOD
ENDED ENDED ENDED 1996 TO ENDED ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30, OCTOBER 31, OCTOBER 31,
1999 1998(1) 1998(6) 1997(4) 1999 1998(1)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.......................... $11.63 $10.95 $10.00 $11.63
------ ------- ------- ------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income......... 0.05 0.22 0.20(9) 0.02
Net Realized & Unrealized
Gain/(Loss) on Investments... (0.61) 1.25 1.27 (0.61)
------ ------- ------- ------- -------- --------
Total From Investment
Operations.................. (0.56) 1.47 1.47 (0.59)
------ ------- ------- ------- -------- --------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income....................... (0.05) (0.23) (0.20) (0.02)
Distributions in Excess of Net
Investment Income............ - (0.45) (0.32) -
Distributions from Net
Realized Gains............... - (0.11) (0.00)(8) -
------ ------- ------- ------- -------- --------
Total Distributions......... (0.05) (0.79) (0.52) (0.02)
------ ------- ------- ------- -------- --------
Net Asset Value, End of
Period.......................... $11.02 $11.63 $10.95 $11.02
====== ======= ======= ======= ======== ========
Total Return(2)................. (4.85)% 14.32% 15.02% (5.09)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
($1,000's)................... $93,491 $101,726 $109,421 $110,626
Ratio of Operating Expenses to
Average Net Assets(13)(3).... 0.95%(5) 0.95% 0.92%(5) 1.70%(5)
Ratio of Net Investment
Income/Loss to Average Net
Assets....................... 1.22%(5) 2.14% 2.48%(5) 0.47%(5)
Portfolio Turnover Rate....... 3% 29% 46% 3%
Ratio of Operating Expenses to
Average Net Assets Without
Credits Allowed by the
Custodian(13)................ - 0.95% 0.93%(5) -
Ratio of Operating Expenses to
Average Net Assets Without
Fee Waivers, Expenses
Absorbed and/or Credits
Allowed by the Custodian..... 1.02%(5) 1.00% 1.17%(5) 1.77%(5)

<CAPTION>
CLASS B
-----------------------------

YEAR JULY 25,
ENDED 1996 TO
JUNE 30, JUNE 30,
1998(6) 1997(4)
-----------------------------
<S> <C> <C>
Net Asset Value, Beginning of
Period.......................... $10.95 $10.00
------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income......... 0.17 0.14(9)
Net Realized & Unrealized
Gain/(Loss) on Investments... 1.22 1.25
------- -------
Total From Investment
Operations.................. 1.39 1.39
------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income....................... (0.20) (0.14)
Distributions in Excess of Net
Investment Income............ (0.40) (0.30)
Distributions from Net
Realized Gains............... (0.11) (0.00)(8)
------- -------
Total Distributions......... (0.71) (0.44)
------- -------
Net Asset Value, End of
Period.......................... $11.63 $10.95
======= =======
Total Return(2)................. 13.47% 14.23%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
($1,000's)................... $114,944 $99,821
Ratio of Operating Expenses to
Average Net Assets(13)(3).... 1.70% 1.67%(5)
Ratio of Net Investment
Income/Loss to Average Net
Assets....................... 1.39% 1.73%(5)
Portfolio Turnover Rate....... 29% 46%
Ratio of Operating Expenses to
Average Net Assets Without
Credits Allowed by the
Custodian(13)................ 1.70% 1.68%(5)
Ratio of Operating Expenses to
Average Net Assets Without
Fee Waivers, Expenses
Absorbed and/or Credits
Allowed by the Custodian..... 1.75% 1.92%(5)
</TABLE>

82
<PAGE> 85
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

FLEXIBLE INCOME PORTFOLIO(25)

<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------- -------------------------------
FISCAL FISCAL
YEAR PERIOD YEAR JULY 25, YEAR PERIOD
ENDED ENDED ENDED 1996 TO ENDED ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30, OCTOBER 31, OCTOBER 31,
1999 1998(1) 1998(6) 1997(4)* 1999 1998(1)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.......................... $10.79 $10.57 $10.00 $10.79
------ ------- ------ ------ ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income......... 0.12 0.45 0.43(9) 0.10
Net Realized & Unrealized
Gain/(Loss) on Investments... (0.15) 0.67 0.70 (0.16)
------ ------- ------ ------ ------- -------
Total From Investment
Operations.................. (0.03) 1.12 1.13 (0.06)
------ ------- ------ ------ ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income....................... (0.13) (0.45) (0.43) (0.10)
Distributions in Excess of Net
Investment Income............ - (0.21) (0.13) -
Distributions from Net
Realized Gains............... - (0.24) (0.00)(8) -
------ ------- ------ ------ ------- -------
Total Distributions......... (0.13) (0.90) (0.56) (0.10)
------ ------- ------ ------ ------- -------
Net Asset Value, End of
Period.......................... $10.63 $10.79 $10.57 $10.63
====== ======= ====== ====== ======= =======
Total Return(2)................. (0.26)% 11.07% 11.58% (0.51)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period
($1,000's)................... $9,766 $8,808 $12,613 $11,142
Ratio of Operating Expenses to
Average Net Assets(13)(3).... 0.95%(5) 0.95% 0.92%(5) 1.70%(5)
Ratio of Net Investment Income
to Average Net Assets........ 3.62%(5) 4.07% 4.95%(5) 2.87%(5)
Portfolio Turnover Rate....... 15% 24% 54% 15%
Ratio of Operating Expenses to
Average Net Assets Without
Credits Allowed by the
Custodian(13)................ - 0.95% 0.93%(5) -
Ratio of Operating Expenses to
Average Net Assets Without
Fee Waivers, Expenses
Absorbed and/or Credits
Allowed by the Custodian..... 1.37%(5) 1.23% 1.67%(5) 2.12%(5)

<CAPTION>
CLASS B
-----------------------------

YEAR JULY 25,
ENDED 1996 TO
JUNE 30, JUNE 30,
1998(6) 1997(4)
-----------------------------
<S> <C> <C>
Net Asset Value, Beginning of
Period.......................... $10.57 $10.00
------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income......... 0.31 0.38(9)
Net Realized & Unrealized
Gain/(Loss) on Investments... 0.73 0.68
------ ------
Total From Investment
Operations.................. 1.04 1.06
------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income....................... (0.37) (0.38)
Distributions in Excess of Net
Investment Income............ (0.21) (0.11)
Distributions from Net
Realized Gains............... (0.24) (0.00)(8)
------ ------
Total Distributions......... (0.82) (0.49)
------ ------
Net Asset Value, End of
Period.......................... $10.79 $10.57
====== ======
Total Return(2)................. 10.24% 10.80%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period
($1,000's)................... $7,684 $7,385
Ratio of Operating Expenses to
Average Net Assets(13)(3).... 1.70% 1.67%(5)
Ratio of Net Investment Income
to Average Net Assets........ 3.32% 4.20%(5)
Portfolio Turnover Rate....... 24% 54%
Ratio of Operating Expenses to
Average Net Assets Without
Credits Allowed by the
Custodian(13)................ 1.70% 1.68%(5)
Ratio of Operating Expenses to
Average Net Assets Without
Fee Waivers, Expenses
Absorbed and/or Credits
Allowed by the Custodian..... 1.98% 2.42%(5)
</TABLE>

Footnotes appear on page 86
83
<PAGE> 86
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

INCOME PORTFOLIO(25)
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------- -------------------------------
FISCAL FISCAL
YEAR PERIOD YEAR JULY 25, YEAR PERIOD
ENDED ENDED ENDED 1996 TO ENDED ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30, OCTOBER 31, OCTOBER 31,
1999 1998(1) 1998(6) 1997(4) 1999 1998(1)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.......................... $10.34 $10.13 $10.00 $10.34
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income......... 0.19 0.64 0.58(9) 0.16
Net Realized & Unrealized
Gain/(Loss) on Investments... (0.09) 0.22 0.14(12) (0.09)
------ ------ ------ ------ ------ ------
Total From Investment
Operations.................. 0.10 0.86 0.72 0.07
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income....................... (0.19) (0.65) (0.58) (0.16)
Distributions in Excess of Net
Investment Income............ - (0.00)(8) (0.01) -
Distributions from Net
Realized Gains............... - - (0.00)(8) -
------ ------ ------ ------ ------ ------
Total Distributions......... (0.19) (0.65) (0.59) (0.16)
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period.......................... $10.25 $10.34 $10.13 $10.25
====== ====== ====== ====== ====== ======
Total Return(2)................. (0.96)% 8.71% 7.38% 0.70%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
($1,000's)................... $7,611 $7,793 $13,410 $5,698
Ratio of Operating Expenses to
Average Net Assets(13)(3).... 0.95%(5) 0.95% 0.93%(5) 1.70%(5)
Ratio of Net Investment
Income/Loss to Average Net
Assets....................... 5.40%(5) 6.23% 6.09%(5) 4.65%(5)
Portfolio Turnover Rate....... 22% 14% 56% 22%
Ratio of Operating Expenses to
Average Net Assets Without
Credits Allowed by the
Custodian(13)................ - 0.95% 0.93%(5) -
Ratio of Operating Expenses to
Average Net Assets Without
Fee Waivers, Expenses
Absorbed and/or Credits
Allowed by the Custodian..... 1.53%(5) 1.25% 1.65%(5) 2.28%(5)

<CAPTION>
CLASS B
-----------------------------

YEAR JULY 25,
ENDED 1996 TO
JUNE 30, JUNE 30,
1998(6) 1997(4)
-----------------------------
<S> <C> <C>
Net Asset Value, Beginning of
Period.......................... $10.13 $10.00
------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income......... 0.56 0.51(9)
Net Realized & Unrealized
Gain/(Loss) on Investments... 0.22 0.14(12)
------ ------
Total From Investment
Operations.................. 0.78 0.65
------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income....................... (0.57) (0.51)
Distributions in Excess of Net
Investment Income............ (0.00)(8) (0.01)
Distributions from Net
Realized Gains............... - (0.00)(8)
------ ------
Total Distributions......... (0.57) (0.52)
------ ------
Net Asset Value, End of
Period.......................... $10.34 $10.13
====== ======
Total Return(2)................. 7.90% 6.63%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
($1,000's)................... $4,084 $4,537
Ratio of Operating Expenses to
Average Net Assets(13)(3).... 1.70% 1.68%(5)
Ratio of Net Investment
Income/Loss to Average Net
Assets....................... 5.48% 5.34%(5)
Portfolio Turnover Rate....... 14% 56%
Ratio of Operating Expenses to
Average Net Assets Without
Credits Allowed by the
Custodian(13)................ 1.71% 1.68%(5)
Ratio of Operating Expenses to
Average Net Assets Without
Fee Waivers, Expenses
Absorbed and/or Credits
Allowed by the Custodian..... 2.01% 2.40%(5)
</TABLE>

Footnotes appear on page 86
84
<PAGE> 87
- --------------------------------------------------------------------------------

FOOTNOTES TO FINANCIAL HIGHLIGHTS

<TABLE>
<C> <S>
(1) Fiscal year end changed to October 31.
(2) Total return is not annualized for periods less than one
year and does not reflect any applicable sales charges. The
total return would have been lower if certain fees had not
been waived and/or expenses absorbed by the investment
advisor or if fees had not been reduced by credits allowed
by the custodian.
(3) Ratio of operating expenses to average net assets includes
expenses paid indirectly beginning in fiscal 1995.
(4) From the commencement of offering shares.
(5) Annualized.
(6) On March 23, 1998, WM Advisors, Inc. replaced Sierra
Investment Advisers Corporation as investment advisor to the
Funds. In the case of the Portfolios, on March 23, 1998, WM
Advisors, Inc. replaced Sierra Investment Services
Corporation as investment advisor to the Portfolio.
(7) On July 1, 1994, the Funds commenced selling Class B shares
in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
(8) Amount represents less than $0.01 per share.
(9) Per share numbers have been calculated using the average
shares method.
(10) The ratio and per share numbers include custodian fees
before reduction by credits allowed by the custodian as
required by amended disclosure requirements effective
September 1, 1995.
(11) Total returns do not reflect a sales charge and are not
annualized.
(12) The amount shown may not accord with the change in aggregate
gains and losses of portfolio securities due to the timing
of sales and redemptions of Fund shares.
(13) The Portfolios will indirectly incur their pro rata share of
the expenses of the Funds when they purchase. Such
underlying Fund expenses are not included in the table.
(14) On May 2, 1994, the Fund commenced selling Class B shares.
Those shares in existence prior to May 2, 1994 were
designated as Class A shares.
(15) Formerly, Composite Cash Management Company Money Market
Portfolio.
(16) Formerly, Composite Cash Management Company Tax-Exempt
Portfolio.
(17) Formerly, Composite U.S. Government Securities, Inc.
(18) On March 30, 1994 the Fund commenced selling Class B shares.
Those shares in existence prior to March 30, 1994 were
designated as Class A shares.
(19) Formerly, Composite Income Fund, Inc.
(20) Amounts distributed in excess of accumulated net investment
income as determined for financial statement purposes have
been reported as distributions from paid-in capital at the
fiscal year end in which the distribution was made. Certain
of these distributions which are reported as being from
paid-in capital for financial statement purposes may be
reported to shareholders as taxable distributions due to
differing tax and accounting rules.
(21) Formerly, Composite Tax-Exempt Bond Fund, Inc.
(22) Formerly, Composite Bond & Stock Fund, Inc.
(23) Formerly, Composite Growth & Income Fund.
(24) Formerly, Composite Northwest Fund, Inc.
(25) The financial information shown for each Portfolio is that
of the corresponding series of WM Strategic Asset Management
Portfolios, the Portfolio's predecessor.
</TABLE>

85
<PAGE> 88
- --------------------------------------------------------------------------------

APPENDIX A

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. BOND RATINGS:

+ Aaa, Aa, A -- Bonds which are rated Aaa or Aa are judged to be of high quality
by all standards and are generally known as high grade bonds. Bonds rated Aa
are rated lower than Aaa securities because margins of protection may not be
as large as in the latter or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities. Bonds which are
rated A possess many favorable investment attributes and are to be considered
as upper medium grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.

+ Baa -- Bonds which are rated Baa are considered medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

+ Ba -- Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well secured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

+ B -- Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

+ Caa -- Bonds which are rated Caa are poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

+ Ca -- Bonds which are rated Ca represent obligations which are speculative in
high degree. Such issues are often in default or have other marked
shortcomings.

+ C -- Bonds which are rated C are the lowest rated class of bonds and can be
regarded as having extremely poor prospectus of ever attaining any real
investment standing.

+ Description of Standard & Poor's bond ratings: AAA, AA, A -- Bonds rated AAA
have the highest rating assigned by S&P to a debt obligation. Capacity to pay
interest and repay principal is extremely strong. Bonds rated AA have a very
strong capacity to pay interest and repay principal and differ from the
highest rated issues only in small degree. Bonds rated A have a strong
capacity to pay interest and repay principal although they are somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than bonds in high rated categories.

+ BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to repay principal and pay
interest for bonds in this category than for bonds in higher rated categories.

+ BB-B-CCC-CC-C -- Bonds rated BB, B, CCC, CC and C are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

+ CI -- The rating CI is reserved for income bonds on which no income is being
paid.

+ D -- Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.

86
<PAGE> 89
- --------------------------------------------------------------------------------

FOR MORE INFORMATION ABOUT THE WM GROUP OF FUNDS

The WM Group's Statement of Additional Information (SAI) and Annual and
Semi-annual Reports to shareholders include additional information about the
Funds and Portfolios. The SAI and the Reports of Independent Accountants, along
with the financial statements, included in the Funds' and Portfolios' two most
recent Annual Reports are incorporated by reference into this prospectus, which
means that they are part of this prospectus for legal purposes. The Funds' and
Portfolio's Annual Reports discuss the market conditions and investment
strategies that significantly affected performance during the last fiscal year.
You may obtain free copies of these materials, request other information about
the WM Group of Funds, or make shareholder inquiries, by contacting your
financial advisor or by calling toll-free 1-800-222-5852.

You may review and copy information about the Funds and Portfolios, including
the SAI, at the Securities and Exchange Commission's public reference room in
Washington, D.C. You may call the Commission at 1-800-SEC-0330 for information
about the operation of the public reference room. You may also access reports
and other information about the Funds and Portfolios on the Commission's
Internet site at http://www.sec.gov. You may obtain copies of this information,
with payment of a duplication fee, by writing the Public Reference Section of
the Commission, Washington, D.C. 20549-6009. You may need to refer to the
following file number:

FILE NO. 811-00123

Money Market Fund
Tax-Exempt Money Market Fund
U.S. Government Securities Fund
Income Fund
High Yield Fund
Tax-Exempt Bond Fund
Bond & Stock Fund
Growth & Income Fund

Growth Fund of the Northwest

FILE NO. 811-05775

California Money Fund

Short Term Income Fund

California Municipal Fund

California Insured Intermediate Municipal Fund
Florida Insured Municipal Fund
Growth Fund

Mid Cap Stock Fund

Small Cap Stock Fund

International Growth Fund

FILE NO. 811-07577

Strategic Growth Portfolio
Conservative Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Income Portfolio
<PAGE> 90

THE WM GROUP OF FUNDS

I Share

Prospectus

MARCH 1, 2000

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

Money Funds

+ Short Term Income Fund

- ----------------------------------------------------------------
+ U.S. Government Securities Fund
- ----------------------------------------------------------------
+ Income Fund
- ----------------------------------------------------------------
+ High Yield Fund
- ----------------------------------------------------------------
Municipal Funds

+ Bond & Stock Fund
- ----------------------------------------------------------------
+ Growth & Income Fund
- ----------------------------------------------------------------

+ Growth Fund of the Northwest

- ----------------------------------------------------------------
+ Growth Fund
- ----------------------------------------------------------------

+ Mid Cap Stock Fund

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

+ Small Cap Stock Fund

- ----------------------------------------------------------------
+ International Growth Fund
- ----------------------------------------------------------------

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

The WM Group of Funds provides a broad selection
of investment alternatives to investors.

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a crime.
<PAGE> 91

THE WM GROUP OF FUNDS

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Risk/Return Summary 2
Money Funds 3
Fixed-Income Funds 6
Municipal Funds 10
Equity Funds 14
Summary of Principal Risks 21
Fees and Expenses of the Funds 25
Description of the Funds 27
Money Funds 27
Fixed-Income Funds 28
Municipal Funds 29
Equity Funds 31
Common Investment Practices 33
Ways to Set Up Your Account 42
How Can I Invest in the Funds? 43
Which Class of Shares is Best For Me?
Class I Shares 45
Distribution Plans
Distribution of Income and Capital Gains 45
How Can I Sell My Shares? 45
How Can I Exchange My Shares? 46
Dividends, Capital Gains and Taxes 47
Organization 48
Financial Highlights 51
</TABLE>

<PAGE> 92

RISK/RETURN SUMMARY

The WM Group of Funds provides a broad range of investment choices. This summary
identifies the investment objective, principal investment strategies and
principal risks of each Fund. The principal investment strategies identified in
this summary are not the only investment strategies available to the Funds, and
any number of principal investment strategies may not be in use at any given
time. For a discussion of all of the investment strategies available to the
Funds, please see the Statement of Additional Information (the "SAI").

The principal investment strategies identified in this summary provide specific
information about each of the Funds, but there are some general principles WM
Advisors and the sub-advisors apply in making investment decisions. When making
decisions about whether to buy or sell equity securities, WM Advisors and the
sub-advisors will consider, among other things, a company's strength in
fundamentals, its potential for earnings growth over time, and the current price
of its securities relative to their perceived worth. When making decisions about
whether to buy or sell fixed-income investments, WM Advisors and the sub-
advisors will generally consider among other things, the strength of certain
sectors of the fixed-income market relative to others, interest rates and other
general market conditions, as well as the credit quality of individual issuers.

The discussion of each Fund's principal investment strategies includes a short
discussion of some of the principal risks of investing in such Fund. You can
find additional information about each Fund, including a more detailed
description of these and other principal risks of an investment in each Fund,
after this summary. Investments mentioned in the summary and described in
greater detail under "Common Investment Practices" below appear in BOLD TYPE.
Please be sure to read the more complete descriptions of the Funds, and the
related risks, before you invest.

Below the description of each Fund is a bar chart showing how the investment
returns of its Class I shares have varied in the past ten years, or in the years
since the Fund began if it is less than ten years old. The bar chart is intended
to provide some indication of the volatility of the Fund's returns. The table
following each bar chart shows how, for Class I shares, average annual returns
of the Fund (other than the Money Funds) compare to returns of a broad-based
securities market index for the last one, five and ten years (or, for a newer
Fund, for the life of the Fund). PAST PERFORMANCE IS NOT NECESSARILY AN
INDICATION OF FUTURE PERFORMANCE.

There can be no assurance that any Fund will achieve its objective. It is
possible to lose money on investments in the Funds. An investment in a Fund is
not a deposit of a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Money Funds
seek to preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the Money Funds.

2
<PAGE> 93

- --------------------------------------------------------------------------------
MONEY MARKET fund

OBJECTIVE This Fund seeks to maximize current income while preserving capital
and maintaining liquidity.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Liquidity Risk,
- - Credit Risk, - Management Risk, and
- - Foreign Investment - Money Market Risk.
Risk,
</TABLE>

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE MONEY MARKET FUND BECAUSE IT HAS
YET TO OFFER CLASS I SHARES FOR A FULL FISCAL YEAR.

3
<PAGE> 94

- --------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET fund

OBJECTIVE This Fund seeks to maximize current income that is exempt from
federal income tax while preserving capital and maintaining liquidity.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
high-quality, short-term, fixed-income MUNICIPAL OBLIGATIONS issued by states,
counties, cities or other governmental entities that generate income exempt from
federal income tax. The Fund's investments may include VARIABLE RATE
OBLIGATIONS, HOLDINGS IN OTHER INVESTMENT COMPANIES, MUNICIPAL LEASES,
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES and ALTERNATIVE MINIMUM TAX
("AMT")--SUBJECT BONDS.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Management Risk,
- - Credit Risk, - Tax Risk, and
- - Liquidity Risk, - Money Market Risk.
</TABLE>

ALTHOUGH ITS CLASS I SHARES ARE OFFERED THROUGH THIS PROSPECTUS, THE TAX-EXEMPT
MONEY MARKET FUND HAS YET TO ISSUE ANY CLASS I SHARES.

4
<PAGE> 95

- --------------------------------------------------------------------------------
CALIFORNIA MONEY fund

OBJECTIVE This Fund seeks to maximize current income that is exempt from
federal and California state personal income tax consistent with safety of
principal and maintenance of liquidity.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
high-quality, short-term, fixed-income MUNICIPAL OBLIGATIONS issued by states,
counties, cities or other governmental bodies that generate income exempt from
California state personal income tax. The Fund may also invest in high-quality
instruments that may generate taxable income, including U.S. GOVERNMENT
SECURITIES, MORTGAGE- AND ASSET-BACKED SECURITIES (including collateralized
mortgage obligations) and REPURCHASE AGREEMENTS.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Liquidity Risk,
- - Credit Risk, - Management Risk,
- - Geographic Concentration Risk, - Tax Risk, and
- Money Market Risk.
</TABLE>

YEARLY performance (Class I Shares)*
[California Money Bar Chart]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1997 0
1998 0
1999 0
</TABLE>

Calendar Year

During the periods shown above, the highest quarterly return was (for
the quarter ended ), and the lowest was (for the quarter ended ).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class I
(for periods ended December 31, 1999) One Year Five Years Inception (7/25/96)
<S> <C> <C> <C>
CLASS I SHARES
MERRILL LYNCH 3-MONTH U.S. TREASURY BILL INDEX**
</TABLE>

* The Fund's performance through December 31, 1998 has benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.
** This is an unmanaged index, that measures the performance of 3-month U.S.
Treasury Bills currently available in the marketplace.

5
<PAGE> 96

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

SHORT TERM INCOME fund

OBJECTIVE This Fund (formerly known as Short Term High Quality Bond) seeks as
high a level of current income as is consistent with prudent investment
management and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
high-quality, short-term, bonds and other FIXED-INCOME SECURITIES, which are
rated in the top four categories by a nationally recognized statistical ratings
organization ("investment grade") or are of comparable quality. Under normal
circumstances, the Fund maintains a dollar-weighted average portfolio duration
of three years or less. The Fund's investments may include corporate securities,
U.S. GOVERNMENT SECURITIES, REPURCHASE AGREEMENTS AND MORTGAGE- AND ASSET-BACKED
SECURITIES.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Leveraging Risk,
- - Credit Risk, - Derivatives Risk,
- - Currency Risk, - Liquidity Risk, and
- - Foreign Investment - Management Risk.
Risk,
</TABLE>

YEARLY performance (Class I Shares)*

[Yearly Performance Chart]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1997 0
1998 0
1999 0
</TABLE>

Calendar Year

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended
).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Class I
(for periods ended December 31, 1999) One Year Five Years Inception (7/25/96)
<S> <C> <C> <C>
CLASS I SHARES
LEHMAN BROTHERS MUTUAL FUND SHORT (1-5 [YEAR]) INVESTMENT
GRADE DEBT INDEX**
</TABLE>

* The Fund's performance through December 31, 1998 has benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.
** This index includes all investment-grade, corporate debt securities with
maturities of one to five years.

6
<PAGE> 97

- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES fund

OBJECTIVE This Fund seeks a high level of current income, consistent with
safety and liquidity.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk, and
- - Leveraging Risk, - Management Risk.
</TABLE>

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE U.S. GOVERNMENT SECURITIES FUND
BECAUSE IT HAS YET TO OFFER CLASS I SHARES FOR A FULL YEAR.

7
<PAGE> 98

- --------------------------------------------------------------------------------
INCOME fund

OBJECTIVE This Fund seeks a high level of current income consistent with
preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in a
diversified pool of FIXED-INCOME SECURITIES including corporate securities, U.S.
GOVERNMENT SECURITIES and MORTGAGE-BACKED SECURITIES (including collateralized
mortgage obligations), up to 35% of which may be in LOWER-RATED SECURITIES
(which are sometimes called "junk bonds"). The Fund may also invest in
convertible securities.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Leveraging Risk,
- - Credit Risk, - Derivatives Risk,
- - Currency Risk, - Liquidity Risk, and
- - Foreign Investment - Management Risk.
Risk,
</TABLE>

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE INCOME FUND BECAUSE IT HAS YET
TO OFFER CLASS I SHARES FOR A FULL YEAR.

8
<PAGE> 99

- --------------------------------------------------------------------------------
HIGH YIELD fund

OBJECTIVE This Fund seeks to provide a high level of current income.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
high-yielding LOWER-RATED SECURITIES (sometimes called "junk bonds"), which may
include FOREIGN INVESTMENTS. The Fund may also invest higher-rated FIXED-INCOME
SECURITIES, preferred stock and convertible securities.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Leveraging Risk,
- - Credit Risk, - Derivatives Risk,
- - Currency Risk, - Liquidity Risk, and
- - Foreign Investment - Management Risk.
Risk,
</TABLE>

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE HIGH YIELD FUND BECAUSE IT HAS
YET TO OFFER CLASS I SHARES FOR A FULL YEAR.

9
<PAGE> 100

- --------------------------------------------------------------------------------
TAX-EXEMPT BOND fund

OBJECTIVE This Fund seeks to provide a high level of income that is exempt from
federal income tax while protecting investors' capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
obligations issued by states, counties, cities or other governmental entities,
including MUNICIPAL LEASES, AMT-SUBJECT BONDS and INVERSE FLOATING RATE
OBLIGATIONS, that generate income exempt from federal income tax. The Fund may
also invest in taxable FIXED-INCOME SECURITIES (including "junk bonds") and
utilize STRATEGIC TRANSACTIONS (derivatives) such as interest rate futures and
options.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Liquidity Risk,
- - Credit Risk, - Management Risk, and
- - Leveraging Risk, - Tax Risk.
- - Derivatives Risk,
</TABLE>

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE TAX-EXEMPT BOND FUND BECAUSE IT
HAS YET TO OFFER CLASS I SHARES FOR A FULL YEAR.

10
<PAGE> 101

- --------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL fund

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
intermediate-and long-term California MUNICIPAL OBLIGATIONS, including MUNICIPAL
LEASES and AMT-SUBJECT BONDS. The Fund may also invest in other municipal
obligations and utilize STRATEGIC TRANSACTIONS (derivatives) such as interest
rate futures and options.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Leveraging Risk, - Management Risk, and
- - Geographic - Tax Risk.
Concentration Risk,
</TABLE>

The Fund is also "non-diversified," which means that the Fund may invest more of
its assets in the securities of fewer issuers than other mutual funds. Thus the
Fund is also subject to Non-Diversification Risk.

YEARLY performance (Class I Shares)*

Yearly Performance Graph

Calendar Year

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended ).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Class I
(for periods ended December 31, 1999) One Year Inception (7/25/96)
<S> <C> <C> <C>
CLASS I SHARES
LEHMAN BROTHERS MUNICIPAL BOND INDEX**
</TABLE>

* The Fund's performance through December 31, 1998 has benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.

** This index includes all investment grade tax-exempt bond issues.

11
<PAGE> 102

- --------------------------------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL fund

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Leveraging Risk, - Management Risk, and
- - Geographic - Tax Risk.
Concentration Risk,
</TABLE>

YEARLY performance (Class I Shares)*
[California Insured Intermediate Municipal Fund Bar Chart]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1997 0
1998 0
1999 0
</TABLE>

Calendar Year

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended ).

PERFORMANCE TABLE*

* The Fund's performance through December 31, 1998 has benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.

** This index includes all investment grade tax-exempt bond issues.

12
<PAGE> 103

- --------------------------------------------------------------------------------
FLORIDA INSURED MUNICIPAL fund

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in
intermediate-and long-term insured Florida MUNICIPAL OBLIGATIONS including
MUNICIPAL LEASES and AMT-SUBJECT BONDS. The Fund may also invest in other
municipal obligations and utilize STRATEGIC TRANSACTIONS (derivatives) such as
interest rate futures and options.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Leveraging Risk, - Management Risk, and
- - Geographic - Tax Risk.
Concentration Risk,
</TABLE>

YEARLY performance (Class I Shares)*
[Florida Insured Municipal Fund Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1997 0
1998 0
1999 0
</TABLE>

Calendar Year

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended ).

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Class I
(for periods ended December 31, 1999) One Year Inception (7/25/96)
<S> <C> <C>
CLASS I SHARES
LEHMAN BROTHERS MUNICIPAL BOND INDEX**
</TABLE>

13
<PAGE> 104

- --------------------------------------------------------------------------------
BOND & STOCK fund

OBJECTIVE This Fund seeks to provide continuity of income, conservation of
principal and long-term growth of income and principal.

In selecting equity investments for the Fund, WM Advisors looks for long-term
potential for growth in "value" stocks currently selling for less than WM
Advisors believes they are worth. In selecting debt investments for the Fund, WM
Advisors looks for investments that provide regular income in addition to some
opportunity for capital appreciation.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Currency Risk, - Management Risk, and
- - Foreign Investment - Smaller Company Risk.
Risk,
</TABLE>

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE BOND & STOCK FUND BECAUSE IT HAS
YET TO OFFER CLASS I SHARES FOR A FULL YEAR.

14
<PAGE> 105

- --------------------------------------------------------------------------------
GROWTH & INCOME fund

OBJECTIVE This Fund seeks to provide long-term capital growth. Current income
is a secondary consideration.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Derivatives Risk,
- - Credit Risk, - Liquidity Risk,
- - Currency Risk, - Management Risk, and
- - Foreign Investment - Smaller Company Risk.
Risk,
- - Leveraging Risk,
</TABLE>

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE GROWTH & INCOME FUND BECAUSE IT
HAS YET TO OFFER CLASS I SHARES FOR A FULL YEAR.

15
<PAGE> 106

- --------------------------------------------------------------------------------
GROWTH FUND OF THE NORTHWEST

OBJECTIVE This Fund (formerly known as Northwest) seeks long-term growth of
capital.

In selecting investments for the Fund, WM Advisors looks for equity securities
that it believes are undervalued, yet well-managed, with excellent long-term
growth possibilities.

Among the principal risks of investing in the Fund are:

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE NORTHWEST FUND BECAUSE IT HAS
YET TO OFFER CLASS I SHARES FOR A FULL YEAR.

16
<PAGE> 107

- --------------------------------------------------------------------------------
GROWTH fund

OBJECTIVE This Fund seeks long-term capital appreciation.

Among the principal risks of investing in the Fund are:

YEARLY performance (Class I Shares)
[Yearly Performance Chart]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1997 0
1998 0
1999 0
</TABLE>

Calendar Year

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended ).

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Class I
(for periods ended December 31, 1999) One Year Inception (7/25/96)
<S> <C> <C>
CLASS I SHARES
STANDARD & POOR'S 500 COMPOSITE INDEX*
</TABLE>

* This is an index of 500 industrial, transportation, utility and financial
companies widely regarded by investors as representative of the stock market.

17
<PAGE> 108

- --------------------------------------------------------------------------------
MID CAP STOCK fund

OBJECTIVE The Fund seeks to provide long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily (at least
65% of its assets) in common stocks and other equity securities of companies
having market capitalizations in the range of companies included in the S&P
MidCap 400 Index at the time of purchase. In selecting investments for the Fund,
WM Advisors looks for equity investments in companies that it believes have
solid management, a competitive advantage, and the resources to maintain
superior cash flow and profitability over the long term.

Among the principal risks of investing in the Fund are:

<TABLE>
<S> <C>
- - Market Risk, - Leveraging Risk,
- - Credit Risk, - Liquidity Risk,
- - Currency Risk, - Management Risk, and
- - Foreign Investment - Smaller Company Risk.
Risk,
</TABLE>

SHARES FOR THIS FUND WILL NOT BE AVAILABLE UNTIL APPROXIMATELY APRIL 1, 2000.

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THIS FUND BECAUSE IT HAS NOT YET
COMMENCED OPERATIONS.

18
<PAGE> 109

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

SMALL CAP STOCK fund

OBJECTIVE This Fund (formerly known as Emerging Growth) seeks long-term capital
appreciation.

In selecting investments for the Fund, WM Advisors looks for small cap companies
that it expects to achieve growth in earnings and revenues, or that it believes
are currently undervalued relative to their true worth.

Among the principal risks of investing in the Fund are:

YEARLY performance (Class I Shares)
[Emerging Growth Fund Bar Chart]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1997 0
1998 0
1999 0
</TABLE>

Calendar Year

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended ).

PERFORMANCE TABLE

* This is an index of 500 industrial, transportation, utility and financial
companies widely regarded by investors as representative of the stock market.
** This index represents the smallest 2000 companies followed by Russell and is
used to measure the small-cap market.

19
<PAGE> 110

- --------------------------------------------------------------------------------
INTERNATIONAL GROWTH fund

OBJECTIVE This Fund seeks to provide long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in equity
securities of foreign issuers, including issuers located in developing or
emerging market countries. The Fund may also utilize STRATEGIC TRANSACTIONS
(derivatives) such as FOREIGN CURRENCY EXCHANGE TRANSACTIONS and REPURCHASE
AGREEMENTS.

Among the principal risks of investing in the Fund are:

YEARLY performance (Class I Shares)
[International Growth Fund Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1997 0
1998 0
1999 0
</TABLE>

Calendar Year

During the periods shown above, the highest quarterly return was (for the
quarter ended ), and the lowest was (for the quarter ended ).

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Class I
(for periods ended December 31, 1999) One Year Inception (7/25/96)
<S> <C> <C>
CLASS I SHARES
MORGAN STANLEY CAPITAL
INTERNATIONAL EAFE INDEX*
</TABLE>

* This index includes stock markets of Europe, Australia and the Far East
weighted by capitalization and represents the equity markets of 18 countries.

20
<PAGE> 111

SUMMARY OF PRINCIPAL RISKS

The value of your investment in a Fund changes with the value of the investments
held by that Fund. Many factors can affect that value, and it is possible that
you may lose money on investments in the Funds. Factors that may affect a
particular Fund as a whole are called "principal risks." They are summarized in
this section. The chart at the end of this section displays similar information.
All Funds are subject to principal risks. These risks can change over time,
because the types of investments made by the Funds can change over time.
Investments mentioned in this summary and described in greater detail under
"Common Investment Practices" appear in BOLD TYPE. That section also includes
more information about the Funds, their investments and the related risks.

+ MARKET RISK. Each of the Funds is subject to market risk, which is the
general risk of unfavorable changes in the market value of a Fund's portfolio
securities.

One aspect of market risk is interest rate risk. As interest rates rise, your
investment in a Fund is likely to be worth less because its income-producing
equity or debt investments are likely to be worth less.

Even Funds such as the Short Term Income and U.S. Government Securities Funds
are subject to interest rate risk, even though they generally invest
substantial portions of their assets in the highest quality debt securities,
such as U.S. GOVERNMENT SECURITIES.

Interest rate risk is generally greater for Funds that invest in debt
securities with longer maturities. This risk is usually compounded for Funds
such as the Tax-Exempt Bond, California Municipal, Florida Insured Municipal,
Income and U.S. Government Securities Funds that invest significantly in
GOVERNMENT STRIPPED MORTGAGE-BACKED or other ASSET-BACKED SECURITIES that may
be prepaid. These securities have variable maturities that tend to lengthen
when that is least desirable -- when interest rates are rising. Increased
market risk is also likely for Funds such as the Income and Short Term Income
Funds that invest in debt securities paying no interest, such as ZERO-COUPON,
PRINCIPAL-ONLY and INTEREST-ONLY SECURITIES.

The Equity Funds, by investing in equity securities, such as common stock and
preferred stock, and convertible securities, are exposed to a separate set of
market risks. Those risks include the risks of broader equity market declines
as well as more specific risks affecting the issuer, such as management
performance, financial leverage, industry problems and reduced demand for the
issuer's goods or services.

+ CREDIT RISK. Each of the Funds may be subject to credit risk to the extent it
invests in FIXED-INCOME SECURITIES. This is the risk that the issuer or the
guarantor (or, in the case of the California Insured Intermediate Municipal
Fund and the Florida Insured Municipal Fund, the insurer) of a debt security,
or the counterparty to any of a Fund's portfolio transactions (including
without limitation REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS,
LENDING OF SECURITIES and other over-the-counter transactions), will be unable
or unwilling to make timely principal and/or interest payments, or to
otherwise honor its obligations. Varying degrees of credit risk, often
reflected in credit ratings, apply. Credit risk is particularly significant
for Funds such as the Income, High Yield, Tax-Exempt Bond, Bond & Stock,
Growth & Income, Growth, Mid Cap Stock and Small Cap Stock Funds that invest
significantly in LOWER-RATED SECURITIES. These securities and similar unrated
securities (commonly known as "junk bonds") have speculative elements or are
predominantly speculative credit risks. The Short Term Income, Income, High
Yield, Bond & Stock, Growth & Income, Growth Fund of the Northwest, Growth,
Mid Cap Stock, Small Cap Stock and International Growth Funds, which make
FOREIGN INVESTMENTS denominated in U.S. dollars, are also subject to increased
credit risk because of the added difficulties associated with requiring
foreign entities to honor their contractual commitments, and because a number
of foreign governments and other issuers are already in default. The Money
Market Fund may also make U.S. Dollar denominated FOREIGN INVESTMENTS.

21
<PAGE> 112

currency risk. This is the risk that those currencies will decline in value
relative to the U.S. dollar, or, in the case of hedging positions, that the
U.S. dollar will decline in value relative to the currency hedged.

+ FOREIGN INVESTMENT RISK. Each of the Funds with FOREIGN INVESTMENTS such as
the Short Term Income Bond, Income, High Yield, Bond & Stock, Growth & Income,
Growth, Mid Cap Stock, Small Cap Stock and International Growth Funds, may
experience more rapid and extreme changes in value than Funds with investments
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
companies representing a small number of industries. 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
countries differ, in some cases significantly, from U.S. standards. Also,
nationalization, expropriation or confiscatory taxation, currency blockage,
political changes or diplomatic developments could adversely affect a Fund's
investments in a foreign country. In the event of nationalization,
expropriation or other confiscation, a Fund could lose its entire investment.
Adverse developments in certain regions, such as Southeast Asia, may adversely
affect the markets of other countries whose economies appear to be unrelated.
The Money Market and Growth Fund of the Northwest Funds may also make U.S.
dollar denominated FOREIGN INVESTMENTS.

+ LEVERAGING 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 Income, Short Term Income
Bond, U.S. Government Securities, California Municipal, California Insured
Intermediate Municipal, Florida Insured Municipal, Growth, Mid Cap Stock
International Growth and Small Cap Stock Funds may achieve leverage by using
REVERSE REPURCHASE AGREEMENTS and/or DOLLAR ROLLS. The Municipal Funds, the
Fixed-Income Funds, and the Growth & Income Fund may achieve leverage through
the use of INVERSE FLOATING RATE INVESTMENTS. Funds such as the California
Money, California Insured Intermediate Municipal, Short Term Income, Small Cap
Stock, Mid Cap Stock, Growth and International Growth Funds may also take on
leveraging risk by investing collateral from securities loans, by using
STRATEGIC TRANSACTIONS (derivatives) and by BORROWING money to meet redemption
requests.

+ DERIVATIVES RISK. Each of the Funds, except the Money Funds, may, subject to
the limitations and restrictions stated elsewhere in this Prospectus and the
SAI, use STRATEGIC TRANSACTIONS involving derivatives such as forward
contracts, futures contracts, options, swaps, caps, floors and collars, which
are financial contracts whose value depends on, or is derived from, the value
of something else, such as an underlying asset, reference rate or index. In
addition to other risks such as the credit risk of the counterparty,
derivatives involve the risk of mispricing or improper valuation and the risk
that changes in the value of the derivative may not correlate perfectly with
relevant assets, rates and indices.

+ LIQUIDITY RISK. Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing a Fund from selling out of
these ILLIQUID SECURITIES at an advantageous price. All of the Funds may be
subject to liquidity risk. Funds that engage in STRATEGIC TRANSACTIONS, make
FOREIGN INVESTMENTS, or that invest in securities involving substantial market
and/or credit risk tend

22
<PAGE> 113

to be subject to greater liquidity risk. In addition, liquidity risk increases
for Funds that hold RESTRICTED SECURITIES.

+ MANAGEMENT RISK. Each Fund is subject to management risk because it is an
actively managed investment portfolio. WM Advisors or the sub-advisor, if
applicable, will apply its investment techniques and risk analyses in making
investment decisions for the Funds, but there can be no guarantee that they
will meet stated objectives or produce desired results. In some cases
derivatives and other investments may be unavailable or the WM Advisors or
sub-advisor may choose not to use them under market conditions when their use
would have been beneficial to the Funds.

+ SMALLER COMPANY RISK. Market risk and liquidity risk are particularly
pronounced for stocks of companies with relatively SMALL MARKET
CAPITALIZATIONS. These companies may have limited product lines, markets or
financial resources, or they may depend on a few key employees. The Equity
Funds, and the Small Cap Stock Fund in particular, generally have the greatest
exposure to this risk.

+ TAX RISK. The Tax-Exempt Money Market, the California Money and the Municipal
Funds are subject to the risk that some or all of the interest they receive
might become taxable by law or be determined by the Internal Revenue Service
(or the relevant state tax authority) to be taxable. In this event, the value
of the Funds' investments would likely fall, and some or all of the income
distributions paid by the Funds might become taxable. In addition, some or all
of the income distributions paid by these Funds may be subject to federal
alternative minimum income tax.

23
<PAGE> 114

PRINCIPAL RISKS by fund

The following chart summarizes the Principal Risks of each Fund. Risks not
marked for a particular Fund may, however, still apply to some extent to that
Fund at various times.

<TABLE>
<CAPTION>
Foreign Geographic Non-
Market Credit Currency Investment Concentration Leveraging Diversification Derivatives Liquidity
Fund Risk Risk Risk Risk Risk Risk Risk Risk Risk
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY
MARKET X X X X
fund
TAX-EXEMPT
MONEY MARKET X X X
fund
CALIFORNIA
MONEY X X X X X
fund
SHORT TERM
INCOME X X X X X X X
fund
U.S. GOVERNMENT
SECURITIES X X X X X
fund
INCOME
fund X X X X X X X
HIGH YIELD
fund X X X X X X X
TAX-EXEMPT
BOND X X X X X
fund
CALIFORNIA
MUNICIPAL X X X X X X X
fund
CALIFORNIA INSURED
INTERMEDIATE X X X X X X X
MUNICIPAL fund
FLORIDA INSURED
MUNICIPAL X X X X X X X
fund
BOND &
STOCK X X X X X X
fund
GROWTH &
INCOME X X X X X X X
fund
GROWTH FUND OF
THE NORTHWEST
fund X X X X X X
GROWTH
fund X X X X X X X
MID CAP STOCK
fund X X X X X X X
SMALL CAP
STOCK X X X X X X X
fund
INTERNATIONAL
GROWTH X X X X X X X
fund

<CAPTION>
Smaller Money
Management Company Tax Market
Risk Risk Risk Risk
<S> <C> <C> <C> <C> <C>
X X
X X X
X X X
X
X
X
X
X X
X X
X X
X X
X X
X X
X X
X X
X X
X X
X X
</TABLE>

24
<PAGE> 115

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

FEES AND EXPENSES OF THE FUNDS

This table describes the fees and expenses that you may pay if you invest in
Class I shares of a Fund. Each of the Funds offers other classes of shares that
are subject to different fees and expenses. For information about other classes
of shares offered by the Funds, please contact WM Shareholder Services at
800-222-5852. The Examples on the next two pages are intended to help you
compare the cost of investing in the Funds with the costs of investing in other
mutual funds. The Examples assume that your investment has a 5% return each
year, as required by the Securities and Exchange Commission, and that the Fund's
operating expenses remain the same. Your actual costs may be higher or lower
than those in the Examples.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES CLASS I
(fees paid directly from your investment) SHARES(in %)
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 0.00
----------------------------------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00
----------------------------------------------------------------------------------------------------
Maximum deferred sales charge ("load") (as a percentage of original purchase price
or redemption proceeds, as applicable)(1) 0.00
----------------------------------------------------------------------------------------------------
Exchange Fee 0.00
----------------------------------------------------------------------------------------------------
(1) A $10 fee may be charged for redemptions made by wire transfer.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

25
<PAGE> 116

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------

ANNUAL FUND
OPERATING EXPENSES
(Expenses that are deducted
CLASS I SHARES from Fund assets)
-----------------------------------------------------------------------------------------------------
Total
Annual Fund
Management Other Operating Expense Net
Fee Expenses Expenses Reimbursement Expenses
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund
-----------------------------------------------------------------------------------------------------
California Money Fund
-----------------------------------------------------------------------------------------------------
Short Term Income Fund
-----------------------------------------------------------------------------------------------------
U.S. Government Securities Fund(2)
-----------------------------------------------------------------------------------------------------
Income Fund(2)
-----------------------------------------------------------------------------------------------------
High Yield Fund
-----------------------------------------------------------------------------------------------------
Tax-Exempt Bond Fund
-----------------------------------------------------------------------------------------------------
California Municipal Fund(2)
-----------------------------------------------------------------------------------------------------
California Insured Intermediate
Municipal Fund(2)
-----------------------------------------------------------------------------------------------------
Florida Insured Municipal Fund(2)
-----------------------------------------------------------------------------------------------------
Growth & Income Fund
-----------------------------------------------------------------------------------------------------
Growth Fund(1,2)
-----------------------------------------------------------------------------------------------------
Mid Cap Stock Fund
-----------------------------------------------------------------------------------------------------
Small Cap Stock Fund(2)
-----------------------------------------------------------------------------------------------------
International Growth Fund
-----------------------------------------------------------------------------------------------------

<CAPTION>
- --- -----------------------------------------
EXAMPLES: You would pay
the following expenses on a
$10,000 investment assuming a
5% annual return and
redemption at the end of each
period:
-----------------------------------------

One Three Five Ten
Year Years Years Years
-------------------------------
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------
-------------------------------------------------------
---------------------------------------------------------------
-----------------------------------------------------------------------
-------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
</TABLE>

(1) Reflects the Advisor's obligation to limit Total Annual Fund Operating
Expenses through October 31, 2000, as described on page 52.

(2) Management Fees shown have been restated to reflect current contractual
rates.

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

26
<PAGE> 117

DESCRIPTION OF THE FUNDS

This section provides a more complete description of the investment strategies
and risks of each Fund. The "Common Investment Practices" section that follows
provides additional information about the principal investment strategies of the
Funds and identifies the Funds that may engage in such practices to a
significant extent. You can find additional descriptions of the Funds'
strategies and risks in the Statement of Additional Information ("SAI"). Except
for policies explicitly identified as "fundamental" in this Prospectus or the
SAI, the investment objectives and investment policies set forth in this
Prospectus and the SAI are not fundamental and may be changed at any time
without shareholder consent. Except as otherwise indicated, all policies and
limitations are considered at the time of purchase; the sale of securities is
not required in the event of a subsequent change in valuation or other
circumstances.

MONEY FUNDS

- - rated in one of the two highest categories for short-term debt by the only
NRSRO that has issued a rating, or

- - if not so rated, are determined to be of comparable quality.

MONEY MARKET FUND. To accomplish its objective, the Money Market Fund invests
solely in money market instruments that are selected from the following six
general categories:

- - U.S. Government Securities;

- - obligations of U.S. and foreign banks with assets of more than $500 million;

- - securities issued by foreign governments, their agencies or instrumentalities
or by supranational entities;

- - short-term corporate obligations rated in one of the two highest rating
categories by Moody's or S&P; and

- - repurchase agreements.

TAX-EXEMPT MONEY MARKET FUND. The Tax-Exempt Money Market Fund invests
primarily in a diversified selection of Municipal Obligations, the income from
which is exempt from federal income tax. "Municipal Obligations" include fixed
income obligations issued by states, counties, cities or other governmental
bodies that generate income exempt from federal income tax. Short-term Municipal
Obligations may include, but are not limited to, tax anticipation notes, bond
anticipation notes, revenue anticipation notes and project notes, or other forms
of short-term municipal loans and obligations. Under normal market conditions,
the Fund will not invest more than 20% of its assets in obligations that pay
interest subject to alternative minimum tax ("AMT-Subject Bonds").

The Fund may also invest in variable rate demand obligations, stand-by
commitments, when-issued securities and forward commitments.

27
<PAGE> 118

CALIFORNIA MONEY FUND. To accomplish its objective, the California Money Fund
invests in a portfolio of Municipal Obligations. It is a fundamental policy of
the Fund to invest, under normal market conditions, at least 80% of its total
assets in Municipal Obligations. The Fund normally invests at least 80% of its
total assets in Municipal Obligations issued by the State of California and its
political subdivisions and certain other governmental issuers such as the
Commonwealth of Puerto Rico ("California Municipal Obligations"), which produce
income that is exempt from California state personal income tax. The Fund may
also invest in AMT-Subject Bonds.

The Fund may also invest in variable rate demand obligations, stand-by
commitments, when-issued securities and forward commitments.

FIXED-INCOME FUNDS

SHORT TERM INCOME FUND. The Short Term Income Fund invests primarily in
short-term bonds and other debt securities. Under normal market conditions the
Fund maintains a dollar-weighted average portfolio duration of three years or
less. The Fund may, however, hold individual securities with remaining
maturities of more than three years. Duration is a measure that relates the
price volatility of a security to changes in interest rates. The duration of a
debt security is the weighted average term to maturity, expressed in years, of
the present value of future cash flows, including coupon payments and principal
repayments. Thus, duration involves WM Advisors judgment with respect to both
interest rates and expected cash flows.

The Fund will invest substantially all of its assets in debt securities that, at
the time of purchase, are rated in one of the top four rating categories by one
or more NRSROs or, if unrated, are judged to be of comparable quality by the
Advisor ("investment grade" securities). All debt securities purchased by the
Fund will be investment grade at the time of purchase. Under normal market
conditions, the Fund will invest at least 65% of its total assets in U.S.
Government securities, corporate debt obligations or mortgage-related securities
rated in one of the two highest categories by an NRSRO or determined by the
Advisor to be of comparable quality.

The Fund may invest up to 10% of its assets in foreign fixed-income securities,
primarily bonds of foreign governments or their political subdivisions, foreign
companies and supranational organizations, including non-U.S. dollar-denominated
securities and U.S. dollar-denominated debt securities issued by foreign issuers
and foreign branches of U.S. banks. Investment in foreign securities is subject
to special risks. The Fund may invest up to 5% of its assets in preferred stock.
The Fund may also invest in high-quality, short-term obligations (with
maturities of 12 months or less). The Fund may engage in certain options
transactions, enter into financial futures contracts and related options for the
purpose of portfolio hedging and enter into currency forwards or futures
contracts and related options for the purpose of currency hedging. The Fund may
invest in certain illiquid investments, such as privately placed obligations,
including restricted securities. The Fund may invest up to 10% of its assets in
securities of unaffiliated mutual funds. The Fund may borrow money or enter into
reverse repurchase agreements or dollar roll transactions in the aggregate up to
33 1/3% of its total assets. The Fund may invest up to 25% of its total assets
in asset-backed securities, which represent a participation in, or are secured
by and payable from, a stream of payments generated by particular assets, most
often a pool of similar assets.

U.S. GOVERNMENT SECURITIES FUND. To accomplish its objective, the U.S.
Government Securities 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 agreements 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) obligations secured by the full faith and credit
of the U.S. Government or its instrumentalities; and (3) collateralized mortgage
obli-

28
<PAGE> 119

gations and repurchase agreements which are secured by obligations identified in
(1) and (2) above. The Fund may borrow up to 5% of its total net assets for
emergency, non-investment purposes. The Fund may also enter into dollar roll
transactions.

INCOME FUND. The Income Fund invests most of its assets in:

- - debt and convertible debt securities;

- - U.S. Government Securities, including mortgage-backed securities issued by the
Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), and Federal Home Loan Mortgage Corporation ("FHLMC") or
similar government agencies;

- - obligations of U.S. banks that belong to the Federal Reserve System;

- - preferred stocks and convertible preferred stocks;

- - the highest grade commercial paper as rated by S&P or Moody's; and

- - deposits in U.S. banks.

The Fund may also invest in securities denominated in foreign currencies and
likewise receive interest, dividends and sale proceeds in foreign currencies.
The Fund may engage in foreign currency exchange transactions for hedging
purposes in connection with the purchase and sale of foreign securities or to
protect against changes in the value of specific securities held by the Fund,
and may purchase and sell currencies on a spot (cash) basis, enter into forward
contracts to purchase or sell foreign currencies at a future date, and buy and
sell foreign currency futures contracts. The Fund may also borrow up to 5% of
its total net assets for emergency, non-investment purposes, and may enter into
dollar roll transactions. The Fund may purchase securities of issuers which deal
in real estate or securities which are secured by interests in real estate, and
it may acquire and dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt obligations secured by
real estate or interests therein. The Fund may also purchase and sell interest
rate futures and options. The Fund may invest up to 35% of its assets in
lower-rated fixed-income securities (sometimes called "junk bonds").

HIGH YIELD FUND. The High Yield Fund invests, under normal market conditions,
at least 65% of its assets in a diversified portfolio of fixed income securities
(including debt securities, convertible securities and preferred stocks) rated
lower than BBB by S&P or Baa by Moody's or of equivalent quality as determined
by the Advisor. The remainder of the Fund's assets may be invested in any other
securities the Advisor believes are consistent with the Fund's objective,
including higher rated fixed-income securities, common stocks and other equity
securities. The Fund may also invest in securities of foreign issuers and engage
in hedging strategies involving options.

MUNICIPAL FUNDS

Each of the Municipal Funds and the California Money Fund, invests most of its
assets in Municipal Obligations. Current federal income tax laws limit the types
and volume of bonds qualifying for the federal income tax exemption of interest,
which may have an effect on the ability of the Fund to purchase sufficient
amounts of tax-exempt securities.

TAX-EXEMPT BOND FUND. The Tax-Exempt Bond Fund will invest at least 80% of its
assets in Municipal Obligations, including inverse floating rate obligations,
under normal market conditions.

In adverse markets, the Fund may seek to protect its investment position by
investing up to 50% of its portfolio in taxable short-term investments such as:

- - U.S. Government Securities;

- - commercial paper rated in the highest grade by either S&P or Moody's;

- - obligations of U.S. banks;

- - time or demand deposits in U.S. banks; and

- - repurchase agreements relating to municipal securities or any of the foregoing
taxable instruments.

Interest income from these short-term investments that is distributed to you may
be taxable.

The Fund may also purchase and sell interest rate futures and options. The Fund
may also invest in AMT-Subject Bonds, although, so long as its name includes the
words "tax-exempt" and the SEC so

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<PAGE> 120

requires, such investments will be limited to 20% of its total assets.

CALIFORNIA MUNICIPAL FUND. The California Municipal Fund invests primarily in
intermediate- and long-term California municipal obligations which are municipal
obligations that generate interest that is exempt from California state personal
income tax. It is a fundamental policy of the Fund that, under normal market
conditions, at least 80% of the Fund's total assets will be invested in
California Municipal Obligations. The Fund may invest in AMT-Subject Bonds.

The Fund will invest primarily in investment grade Municipal Obligations. The
Fund may also invest in inverse floating obligations, which will generally be
more volatile than other types of Municipal Obligations.

The Fund may, under normal circumstances, invest up to 20% of its assets in:

- - Municipal Obligations that are not exempt from California personal income tax;

- - short-term Municipal Obligations;

- - taxable cash equivalents, including short-term U.S. Government Securities,
certificates of deposit and bankers' acceptances, commercial paper rated
Prime-1 by Moody's or A-1+ or A-1 by S&P, repurchase agreements (collectively
"Short-Term Instruments"); and

- - securities of money market mutual funds (subject to the limitations set forth
under "Common Investment Practices").

The Fund may, for temporary defensive purposes, invest in these securities
without limitation. As a non-diversified investment company under the 1940 Act,
the Fund may invest a larger portion of its assets in the securities of a small
number of issuers.

CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND. The California Insured
Intermediate Municipal Fund will invest primarily in insured intermediate-term
California Municipal Obligations. It is a fundamental policy of the Fund that it
will invest at least 80% of the value of its total assets in insured California
Municipal Obligations (except when maintaining a temporary defensive position).
Under normal market conditions, the dollar-weighted average maturity of the
securities in which the Fund invests will be more than three years but less than
ten years. The maximum effective maturity (the maturity date without regard to
call provisions, except that for pooled single family mortgage securities
effective maturity is the average life of the underlying mortgage obligations)
of any Municipal Obligation in which the Fund invests will be fifteen years.

All of the Municipal Obligations in which the Fund will invest, taking into
account any insurance, are investment grade securities. For more information,
see "About Bond Insurance" below.

The Fund may invest without limitation in AMT-Subject Bonds.

Under normal market conditions, the Fund may invest up to 20% of its assets in:

- - uninsured Municipal Obligations;

- - Municipal Obligations that are not exempt from California personal income tax;
and

In addition, the Fund may invest in inverse floating rate obligations. The Fund
may engage in hedging transactions through the use of financial futures and
options thereon, purchase and sell securities on a when-issued or forward
commitment basis, invest in mortgage-backed securities, enter into repurchase
agreements, invest in stand-by commitments and lend portfolio securities. The
Fund may invest in floating rate and variable rate obligations, including
participation interests therein (referred to collectively as "Hedging
Transactions").

FLORIDA INSURED MUNICIPAL FUND. The Florida Insured Municipal Fund will invest
primarily in insured, intermediate- and long-term Municipal Obligations, issued
by the State of Florida and its political subdivisions. The Fund will invest
primarily in investment-grade Municipal Obligations. It is a fundamental policy
of the Fund that it will invest at least 80% of the value of its total assets
(except when maintaining a temporary defensive position) in insured Florida
Municipal Obligations. See "About Bond Insurance" below. The Fund may invest
without limitation in

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<PAGE> 121

AMT-Subject Bonds. The Fund may also invest in inverse floating rate
obligations.

The Fund may invest up to 20% of its total assets in:

- - uninsured Municipal Obligations;

- - Municipal Obligations that are not exempt from Florida intangible personal
property tax; and

- - Short-Term Instruments and securities of unaffiliated money market mutual
funds and, for temporary defensive purposes, invest in these securities
without limitation.

As a non-diversified investment company under the 1940 Act, the Fund may invest
a larger portion of its assets in the securities of a small number of issuers.
See "Common Investment Practices -- Non-Diversified Status."

ABOUT BOND INSURANCE. The insured Municipal Obligations in which the California
Insured Intermediate Municipal and Florida Insured Municipal Funds will invest
and the other Municipal Funds may invest are insured under insurance policies
that relate to the specific Municipal Obligation in question ("Specific Issue
Insurance") and that are issued by an insurer having a claims-paying ability
rated AAA by S&P or Aaa by Moody's. Specific Issue Insurance is generally
non-cancelable and will continue in force so long as the Municipal Obligations
are outstanding and the insurer remains in business.

The insured Municipal Obligations are insured as to the scheduled payment of all
installments of principal and interest as they fall due. Such insurance does not
insure against market risk and therefore does not guarantee the market value of
the obligations in a Fund's investment portfolio or a Fund's NAV. Such market
value and NAV will continue to fluctuate in response to fluctuations in interest
rates. A Fund's investment policy requiring investment in insured Municipal
Obligations will not affect the Fund's ability to hold its assets in cash or to
invest in escrow-secured and defeased bonds or in certain short-term tax-exempt
obligations as set forth herein, or affect its ability to invest in uninsured
taxable obligations for temporary or liquidity purposes or on a defensive basis.

EQUITY FUNDS

BOND & STOCK FUND. Under normal market conditions at least 25% of the Bond &
Stock Fund's assets will be invested in fixed-income securities, including
preferred stocks and that portion of the value of convertible securities which
is not attributable to a conversion feature. The Fund may invest in money market
instruments for temporary or defensive purposes. The Fund may invest in
fixed-income securities of any maturity, including mortgage-backed securities,
U.S. Government Securities and asset-backed securities, and may also invest up
to 35% of its assets, in below investment grade bonds (sometimes called junk
bonds). The Fund may purchase or sell U.S. Government Securities or
collateralized mortgage obligations on "when-issued" or "delayed-delivery" basis
in an aggregate of up to 20% of the market value of its total net assets. The
Fund may invest up to 25% of its assets in real estate investment trusts, known
as "REITs." The Fund may write (sell) covered call options. The Fund may invest
up to 25% of its assets in U.S. dollar-denominated securities of foreign
issuers.

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<PAGE> 122

minus total liabilities (except for the obligations created by these
commitments). The Fund may write (sell) covered call options. The Fund may
invest up to 25% of its assets in U.S. dollar denominated securities of foreign
issuers.

GROWTH FUND OF THE NORTHWEST. Under normal circumstances, at least 65% of the
Fund's total assets will be invested in the common stocks of companies whose
principal executive offices are located in the Northwest states of Alaska,
Idaho, Montana, Oregon and Washington.

The Fund is permitted to invest in money market instruments for temporary or
defensive purposes. The Fund may invest up to 25% of its assets in REITs, and
may write (sell) covered call options.

GROWTH FUND. The Growth Fund invests primarily in common stocks believed to
have significant appreciation potential. The Fund also may invest in debt
securities, bonds, convertible bonds, preferred stock and convertible preferred
stock, including up to 20% of its assets in non-investment-grade debt
securities.

The Fund intends to stay fully invested in the securities described above to the
extent practical. Fund assets may be invested in short-term debt instruments to
meet anticipated day-to-day operating expenses, and for temporary defensive
purposes. In addition, when the Fund experiences large cash inflows, the Fund
may hold short-term investments until desirable equity securities become
available. These short-term instruments are generally rated A or higher by
Moody's or S&P, or, if unrated, of comparable quality in the opinion of the
Fund's sub-advisor.

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<PAGE> 123

Fund may invest up to 5% of its total assets in investment grade corporate debt
securities having maturities longer than one year, including Euro-currency
instruments and securities.

The Fund may also invest in money market instruments for temporary or defensive
purposes. To limit risk, repurchase agreements maturing in more than seven days
will not exceed 10% of the Fund's total assets. The Fund may invest up to 25% of
its assets in REITs. The Fund may invest in fixed-income securities of any
maturity, including mortgage-backed securities, and may invest up to 35% of its
assets in below investment grade fixed-income securities.

COMMON INVESTMENT PRACTICES

BORROWING. The Funds may borrow money from banks solely for temporary or
emergency purposes, subject to various limitations. If a Fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is paid
off. For the California Money, Short Term Income, California Municipal,
California Insured Intermediate Municipal, Florida Insured Municipal, Growth,
International Growth and Small Cap Stock Funds, such borrowings may not exceed
30% of total assets. The Money Market, Tax-Exempt Money Market, U.S. Government
Securities, Income, High Yield, Tax-Exempt Bond, Bond & Stock, Growth & Income
and Growth Fund of the Northwest Funds may borrow up to 5% of total assets for
emergency purposes. In addition, the Money Market and Tax-Exempt Money Market
Funds may borrow up to 33 1/3% of total assets to meet redemption requests. The
Short Term Income Fund is prohibited from borrowing money or entering into
reverse repurchase agreements or dollar roll transactions (described below) in
the aggregate in excess of 33 1/3% of the Fund's total assets (after giving
effect to such borrowings and transactions). If a Fund makes additional
investments while borrowings are outstanding, this will have the effect of
leveraging the Fund. The California Money, Short Term Income, California
Municipal, California Insured Intermediate Municipal, Florida Insured Municipal,
Growth, International Growth Mid Cap Stock and Small Cap Stock Funds may not
purchase additional securities when borrowings, including, for each such Fund
other than the Short Term Income Fund, reverse repurchase agreements, exceed 5%
of total assets. Leveraging will magnify declines as well as increases in the
NAV of a Fund's shares and in the yield on a Fund's investments. Each of the
foregoing percentage limitations on borrowings is a fundamental policy of the
respective Funds.

The Income, Short Term Income and U.S. Government Securities Funds may enter
into DOLLAR ROLLS. A Fund enters into a DOLLAR ROLL by selling securities for
delivery in the current month and simultaneously contracts to repurchase,
typically in 30 or 60 days, substantially similar (same type, coupon and
maturity) securities on a specified future date, which, under the Investment
Company Act of 1940, as amended (the "1940 Act") may be considered borrowings
from the counterparty and may produce similar leveraging effects. The proceeds
of the initial sale of securities in the dollar roll transactions, for example,
may be used to purchase long-term securities which will be held during the roll
period. To the extent that the proceeds of the initial sale of securities are
invested in bonds, the Fund will be subject to market risk on these bonds as
well as similar risk with respect to the securities the Fund is required to
repurchase. See "Fixed-Income Obligations" below.

Each of the Short Term Income, California Municipal, California Insured
Intermediate Municipal, Florida

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<PAGE> 124

Insured Municipal, Growth, International Growth Mid Cap Stock and Small Cap
Stock Funds may engage in REVERSE REPURCHASE AGREEMENTS. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price of the securities and, if the
proceeds from the reverse repurchase agreement are invested in securities, that
the market value of the securities bought may decline at the same time there is
decline in the securities sold (and required to be repurchased).

FIXED-INCOME SECURITIES. The market value of fixed-income securities held by a
Fund and, consequently, the value of the Fund's shares can be expected to vary
inversely to changes in prevailing interest rates. Investors should also
recognize that, in periods of declining interest rates, the yield of the Fund
will tend to be somewhat higher than prevailing market rates and, in periods of
rising interest rates, the Fund's yield will tend to be somewhat lower. Also,
when interest rates are falling, any net inflow of money to the Fund will likely
be invested in instruments producing lower yields than the balance of its
assets, thereby reducing current yield. In periods of rising interest rates, the
opposite can be expected to occur. The prices of longer maturity securities are
also subject to greater market fluctuations as a result of changes in interest
rates. In addition, obligations purchased by a Fund may be subject to the risk
of default. Fixed-Income securities, including Municipal Obligations, rated in
the lower end of the investment-grade category (Baa or BBB) may have speculative
characteristics and may be more sensitive to economic changes and changes in the
financial condition of their issuers.

The fixed-income securities in which the Funds may invest include ZERO COUPON
SECURITIES, which make no payments of interest or principal until maturity.
Because these securities avoid the need to make current interest payments, they
may involve greater credit risks than other fixed-income securities.

The Money Funds may purchase floating rate and variable rate obligations,
including participation interests therein.

Each Fund may also invest in securities representing interests in tax-exempt
securities, known as inverse floating obligations or "residual interest bonds,"
which pay interest rates that vary inversely with changes in the interest rates
of specified short-term tax-exempt securities or an index of short-term
tax-exempt securities. The interest rates on inverse floating obligations or
residual interest bonds will typically decline as short-term market interest
rates increase and increase as short-term market rates decline. These securities
have the effect of providing a degree of investment leverage. They will
generally respond to changes in market interest rates more rapidly than
fixed-rate long-term securities (typically twice as fast). As a result, the
market values of inverse floating obligations and residual interest bonds will
generally be more volatile than the market values of fixed-rate tax-exempt
securities.

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<PAGE> 125

transactions to convert to and from different foreign currencies and to convert
foreign currencies to and from the U.S. dollar. The Fund either enters into
these transactions on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or uses forward contracts to purchase or
sell foreign currencies.

These Funds may enter into foreign currency hedging transactions in an attempt
to protect against changes in foreign currency exchange rates between the trade
and settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated portfolio position. These transactions tend to limit any potential
gain that might be realized should the value of the hedged currency increase.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
these securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of currency market
movements is extremely difficult, and the successful execution of a hedging
strategy is highly uncertain. In addition, when the Advisor or a Fund's
sub-advisor believes that the currency of a specific country may deteriorate
against another currency, it may enter into a forward contract to sell the less
attractive currency and buy the more attractive one. The amount in question
could be less than or equal to the value of the Fund's securities denominated in
the less attractive currency. The Fund may also enter into a forward contract to
sell a currency which is linked to a currency or currencies in which some or all
of the Fund's portfolio securities are or could be denominated, and to buy U.S.
dollars. These practices are referred to as "cross hedging" and "proxy hedging."

Each of the Funds other than the Money Funds (the "Non-Money Funds") (with the
exception of the U.S. Government Securities Bond & Stock, Growth & Income and
Growth Fund of the Northwest Funds) may invest in securities which are indexed
to certain specific foreign currency exchange rates. These securities expose you
to the risk of significant changes in rates of exchange between the U.S. dollar
and any foreign currency to which an exchange rate-related security is linked.
In addition, there is no assurance that sufficient trading interest to create a
liquid secondary market will exist for a particular exchange rate-related
security due to conditions in the debt and foreign currency markets. Illiquidity
in the forward foreign exchange market and the high volatility of the foreign
exchange market may from time to time combine to make it difficult to sell an
exchange rate-related security prior to maturity without incurring a significant
loss.

FOREIGN INVESTMENTS. The Money Market, Bond & Stock, Growth & Income and Growth
Fund of the Northwest Funds may invest in securities of foreign issuers if such
securities are denominated in U.S. dollars. The High Yield, Income, Short Term
Income, Small Cap Stock, Mid Cap Stock Growth and International Growth Funds may
invest in both U.S. dollar denominated and non-U.S. dollar denominated foreign
securities. There are certain risks involved in investing in foreign securities,
including those resulting from:

- - fluctuations in currency exchange rates,

- - devaluation of currencies,

- - future political or economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or
restrictions,

- - reduced availability of public information concerning issuers, and

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<PAGE> 126

In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange. Accordingly, the Funds' foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. Moreover, the settlement
periods for foreign securities, which are often longer than those for securities
of U.S. issuers, may affect portfolio liquidity. In buying and selling
securities on foreign exchanges, the Fund normally pays fixed commissions that
are generally higher than the negotiated commissions charged in the United
States. In addition, there is generally less governmental supervision and
regulation of securities exchanges, brokers and issuers in foreign countries
than in the United States. Foreign securities generally are denominated and pay
dividends or interest in foreign currencies, and the value of the Funds' net
assets as measured in U.S. dollars will be affected favorably or unfavorably by
changes in exchange rates.

The Equity Funds, the Short Term Income Fund, the Income Fund and the High Yield
Fund may invest in securities of foreign issuers directly or in the form of
AMERICAN DEPOSITARY RECEIPTS ("ADRS"), EUROPEAN DEPOSITARY RECEIPTS ("EDRS"),
GLOBAL DEPOSITARY RECEIPTS ("GDRS") or other similar securities representing
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities they represent. ADRs are
receipts typically issued by a United States bank or trust company evidencing
ownership of the underlying foreign securities. EDRs, which are sometimes
referred to as Continental Depositary Receipts ("CDRs"), are receipts issued by
a European financial institution evidencing a similar arrangement. Generally,
ADRs, in registered form, are designed for use in the United States securities
markets, and EDRs, in bearer form, are designed for use in European securities
markets.

HOLDINGS IN OTHER INVESTMENT COMPANIES. When the Advisor or a Fund's
sub-advisor believes that it would be beneficial to the Fund, each of the
Tax-Exempt Money Market, California Money, California Insured Intermediate
Municipal, California Municipal, Florida Insured Municipal, Short Term Income,
Tax-Exempt Bond, Small Cap Stock, Mid Cap Stock, Growth and International Growth
Funds may invest up to 10% of its assets in securities of mutual funds that are
not affiliated with the Advisor or the Fund's sub-advisor, if any. As a
shareholder in any such mutual fund, the Fund will bear its ratable share of the
mutual fund's expenses, including management fees, and will remain subject to
the Fund's advisory and administration fees with respect to the assets so
invested. In addition, the Growth Fund may invest Fund assets in money market
funds affiliated with Janus, provided that Janus remits to the Fund the amount
of any investment advisory and administrative services fees paid to Janus as the
investment manager of the money market fund.

ILLIQUID SECURITIES AND RESTRICTED SECURITIES. Up to 15% of the net assets of
each Non-Money Fund, and up to 10% of the net assets of each Money Fund, may be
invested in securities that are not readily marketable. Such illiquid securities
may include:

- - repurchase agreements with maturities greater than seven calendar days;

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<PAGE> 127

- - time deposits maturing in more than seven calendar days;

- - to the extent a liquid secondary market does not exist for the instruments,
futures contracts and options thereon;

- - certain over-the-counter options, as described in the SAI;

- - certain variable rate demand notes having a demand period of more than seven
days; and

- - securities the disposition of which is restricted under federal securities
laws (excluding certain Rule 144A securities, as described below).

Each of the Funds may purchase RESTRICTED SECURITIES, provided such securities
are, in the case of the Money Market, Tax-Exempt Money Market, Income, U.S.
Government Securities, Tax-Exempt Bond, Bond & Stock, Growth & Income and Growth
Fund of the Northwest Funds, eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended. Although recent and ongoing developments in
the securities markets have resulted in greater trading of restricted
securities, making restricted securities, in many instances, more liquid than
they once were considered to be, investing in restricted securities could have
the effect of increasing the level of illiquidity of the portfolio securities of
a Fund. While such conditions are in effect, it could be more difficult for a
Fund to fulfill shareholder redemption orders on a timely basis. If a Fund were
required to sell these securities on short notice, it might be unable to obtain
fair market value.

LENDING OF SECURITIES. The California Money, California Insured Intermediate
Municipal, Short Term Income, Small Cap Stock, Growth and International Growth
Funds each may lend portfolio securities up to 20% of total assets to brokers
and other financial organizations. The Bond & Stock, Growth & Income and Growth
Fund of the Northwest Funds may lend portfolio securities up to 33% of total
assets. These transactions involve a risk of loss to the Fund if the
counterparty should fail to return such securities to the Fund upon demand.

LOWER-RATED SECURITIES. The Income, Tax-Exempt Bond, Bond & Stock, Small Cap
Stock, Mid Cap Stock, Growth & Income may each invest up to 35% and Growth Fund
may invest up to 20% of its total assets, in non-investment grade debt
securities, sometimes referred to as "junk bonds." The High Yield Fund may
invest all of its assets in such securities and will generally invest at least
65% of its assets in such securities.

Non-investment grade securities usually entail greater risk (including the
possibility of default or bankruptcy of the issuers), generally involve greater
price volatility and risk of principal and income, and may be less liquid than
higher-rated securities. Both price volatility and illiquidity may make it
difficult for the Fund to value or to sell certain of these securities under
certain market conditions. Non-investment-grade debt securities are often
considered to be speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness. The market prices of
these securities may fluctuate more than higher-rated securities and may decline
significantly in periods of general economic difficulty, which may follow
periods of rising interest rates. For further information, see Appendix A to
this Prospectus.

<TABLE>
<CAPTION>
Income Tax-Exempt Bond & Stock
S&P RATING Fund Bond Fund Fund
- -----------------------------------------------------------------
<S> <C> <C> <C>
AAA (or US Treasury)....... 13% 38% 66%
AA......................... 3 26 0
A.......................... 25 16 8
BBB........................ 44 14 22
BB......................... 4 2 4
B.......................... 4 1 0
Not Rated.................. 6 3 0
</TABLE>

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The Short Term Income, U.S.
Government Securities, Income, High Yield, California Insured Intermediate
Municipal, California Municipal, Florida Insured Municipal, Short Term Income,
U.S. Government Securities, Small Cap Stock, Mid Cap Stock and International
Growth Funds may invest in GOVERNMENT STRIPPED MORTGAGE-BACKED SECURITIES issued
or guaranteed by GNMA, FNMA or FHLMC. These securities

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<PAGE> 128

represent beneficial ownership interests in either periodic principal
distributions (PRINCIPAL-ONLY OR SECURITIES "PO STRIPS") or interest
distributions (INTEREST-ONLY SECURITIES OR "IO STRIPS") on mortgage-backed
certificates issued by GNMA, FNMA or FHLMC, as the case may be. The mortgages
backing GNMA certificates include conventional 30-year fixed-rate mortgages,
15-year fixed-rate mortgages, graduated payment mortgages, and adjustable-rate
mortgages.

The U.S. Government guarantees the timely payment of interest and principal for
these securities. However, the guarantees do not extend to the securities' yield
or value, which are likely to vary inversely with fluctuations in interest
rates, nor do the guarantees extend to the yield or value of the Fund's shares.
Investing in government stripped mortgage-backed securities involves the risks
normally associated with investing in mortgage-backed securities issued by
government or government-related entities. In addition, the yields on PO and IO
strips are extremely sensitive to prepayments on the underlying PO and IO strips
mortgage loans. If a decline in the level of prevailing interest rates results
in a higher than anticipated rate of principal prepayment, distributions of
principal will be accelerated, thereby reducing the yield to maturity on IO
strips and increasing the yield to maturity on PO strips. Conversely, if an
increase in the level of prevailing interest rates results in a rate of
principal prepayments lower than anticipated, distributions of principal will be
deferred, thereby increasing the yield to maturity on IO strips and decreasing
the yield to maturity on PO strips. Sufficiently high prepayment rates could
result in the Fund losing some or all of its initial investment in an IO strip.
The Funds will acquire government stripped mortgage-backed securities only if a
liquid secondary market for the securities exists at the time of acquisition.
However, there can be no assurance that the Funds will be able to effect a trade
of a government stripped mortgage-backed security at a time when it wishes to do
so.

In addition, the Income, Bond & Stock and Mid Cap Stock Growth & Income Funds
may invest in commercial mortgage-backed securities, which are similar to the
above mortgage-backed securities, except they are not issued or guaranteed by
governmental entities. Commercial mortgage-backed securities include
collateralized mortgage obligations and real estate mortgage investment conduits
("REMICs"). While commercial mortgage-backed securities are generally structured
with one or more types of credit enhancement, they typically lack a guarantee by
an entity having the credit status of a governmental agency or instrumentality.

To the extent that a Fund purchases mortgage-backed securities at a premium,
mortgage foreclosures and payments and prepayments of principal (which may be
made at any time without penalty) will tend to result in the loss of that
premium. The yield of the Fund may be affected by reinvestment of prepayments at
higher or lower rates than the original investment. In addition, like other debt
securities, the value of mortgage-related securities, including government and
government-related mortgage pools, will generally fluctuate in response to
market interest rates.

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<PAGE> 129

tions of the municipality for which the municipality's taxing power is pledged.
Certain of these lease obligations contain "non-appropriation" clauses, which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. In addition to the "non-appropriation" risk, these securities
represent a relatively new type of financing that has not yet developed the
depth of marketability associated with more conventional bonds. In the case of a
"non-appropriation" lease, the Fund's ability to recover under the lease in the
event of non-appropriation or default will be limited solely to the repossession
of the leased property, and in any event foreclosure of that property might
prove difficult.

NON-DIVERSIFIED STATUS. Each of the California Money, California Municipal,
Florida Insured Municipal and California Insured Intermediate Municipal Funds is
classified as "non-diversified" under the 1940 Act, which means that the Fund is
not limited by the 1940 Act in the proportion of its assets that may be invested
in the obligations of a single issuer. Each of these Funds must, however, meet
certain diversification standards to qualify as a regulated investment company
under the Code. See the "Taxes" section in the SAI. Each of these Funds may
assume large positions in the obligations of a small number of issuers, which
may subject the Fund to greater credit and other risks than a more broadly
diversified portfolio.

STAND-BY COMMITMENTS. The California Money and Tax-Exempt Money Market Funds
and the Municipal Funds may acquire "stand-by commitments" with respect to
Municipal Obligations held in their portfo-

39
<PAGE> 130

lios. Under a stand-by commitment, a dealer agrees to purchase, at a Fund's
option, specified Municipal Obligations at a specified price. A Fund may pay for
stand-by commitments either separately in cash or by paying a higher price for
the securities acquired with the commitment, thus increasing the cost of the
securities and reducing the yield otherwise available from them. The Funds will
acquire stand-by commitments solely to facilitate portfolio liquidity and do not
intend to exercise their rights thereunder for trading purposes.

STRATEGIC TRANSACTIONS. Subject to the investment limitations and restrictions
stated elsewhere in this Prospectus and the SAI, each of the Funds except the
Money Funds may utilize various investment strategies as described below to
hedge various market risks, to manage the effective maturity or duration of
fixed-income securities or for other bona fide hedging purposes. Utilizing these
investment strategies, the Fund may purchase and sell, to the extent not
otherwise limited or restricted for such Fund, exchange-listed and
over-the-counter put and call options on securities, equity and fixed-income
indices and other financial instruments, purchase and sell financial futures
contracts and options thereon, enter into various interest rate transactions
such as swaps, caps, floors or collars, and enter into various currency
transactions such as currency forward contracts, currency futures contracts,
currency swaps or options on currencies or currency futures. The Funds may write
(sell) covered call options as well. A call option is "covered" if the Fund owns
the security underlying the option it has written or it maintains enough cash,
cash equivalents or liquid securities to purchase the underlying security. All
the above are collectively referred to as "Strategic Transactions."

Strategic Transactions may be used:

- - to protect the Fund's unrealized gains in the value of its portfolio
securities,

- - to facilitate the sale of such securities for investment purposes,

- - to manage the effective maturity or duration of the Fund's portfolio, or

- - to establish a position in the derivatives markets as a temporary substitute
for purchasing or selling particular securities.

The use of Strategic Transactions involves special considerations and risks; for
example,

- - the ability of the Fund to utilize Strategic Transactions successfully will
depend on the ability of the Advisor or the sub-advisor to predict pertinent
market movements,

- - the risk that the other party to a Strategic Transaction will fail to meet its
obligations to the Fund,

- - the risk that the Fund will be unable to close out a Strategic Transaction at
a time when it would otherwise do so, due to the illiquidity of the Strategic
Transaction and

- - the risk of imperfect correlation, or even no correlation, between price
movements of Strategic Transactions and price movements of the related
portfolio positions.

Strategic Transactions can reduce opportunity for gain by offsetting the
positive effect of favorable price movements in the related positions.

40
<PAGE> 131

PORTFOLIO TRANSACTIONS AND TURNOVER. Each Fund's turnover rate varies from year
to year, depending on market conditions and investment strategies. High turnover
rates increase transaction costs, and may increase taxable capital gains.
Historical portfolio turnover rates for each Fund are shown under "Financial
Highlights" in this prospectus. The Advisor and the sub-advisors will not
consider portfolio turnover rate a limiting factor in making investment
decisions consistent with the Funds' investment objectives and policies.

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<PAGE> 132

WAYS TO SET UP YOUR ACCOUNT

+ Individual or Joint Account
Individual accounts are owned by one person. Two types of joint accounts
(having two or more owners) can be opened:

1) in a "joint tenancy" account, the surviving owner(s) automatically
receive(s) the shares of any owner(s) who die(s); and

2) in a "tenants in common" account, the heir(s) of any deceased owner
receive(s) such owner's shares, rather than the surviving owners of the joint
account.

- INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS") allow persons of legal age and
under 70 1/2 years old with Adjusted Gross Income ("AGI") of less than
$40,000 (or $60,000 if married and filing jointly) to protect up to $2,000
(subject to certain limitations for single persons with AGI equal to or
greater than $30,000 and married persons who file jointly with AGI equal to
or greater than $50,000) per tax year from certain tax effects. If your
spouse does not work, you can protect up to an additional $2,000 per year
in your spouse's name.

- ROTH IRAS allow persons of legal age with AGI not exceeding $110,000 (or
$160,000 if married and filing jointly) to protect up to $2,000 on a
non-deductible basis (subject to certain limitations for single persons
with AGI equal to or greater than $95,000 and married persons who file
jointly with AGI equal to or greater than $150,000) per tax year from
certain tax effects.

- ROLLOVER IRAS allow persons to retain special tax advantages for certain
transfers from employer-sponsored retirement plans (often occurring when a
person changes employers).

- SIMPLIFIED EMPLOYEE PENSION PLANS ("SEP-IRAS") provide small business
owners or those with self-employed income (and their eligible employees)
with many of the same advantages as a Keogh, but with fewer administrative
requirements.

+ Gifts or Transfers to a Minor Child
("UGMA" or "UTMA")
These gifts or transfers provide a way to give money to a child and obtain
certain tax benefits. A parent or grandparent can give up to $10,000 a year to
each child without paying federal gift tax. Depending on state laws, you can
set up a custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).

+ Trust
Trusts can be used for many purposes, including charitable contributions and
providing a regular income for a child until a certain age. The trust must be
established before an account can be opened.

+ Corporation or Other Organization
Corporations, associations, partnerships, institutions, or other groups may
invest for many purposes.

42
<PAGE> 133

HOW CAN I INVEST IN THE FUNDS?

TO OPEN AN ACCOUNT:
(MINIMUM $1,000*)
TO ADD TO AN ACCOUNT:
(MINIMUM $50**)

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

+ By Phone -- 800-222-5852
Exchange from another Fund account with the same registration, including name,
address, and taxpayer ID number (social security number for an individual).

Call WM Shareholder Services at 800-222-5852. (5:00 a.m. to 6:00 p.m., Pacific
Time/8:00 a.m. to 9:00 p.m., Eastern Time, Monday through Friday and 6:00 a.m.
to 3:00 p.m., Pacific Time/9:00 a.m. to 6:00 p.m., Eastern Time, on Saturdays)
Exchange from another Fund account with the same registration, including name,
address, and taxpayer ID number.

Call WM Shareholder Services at 800-222-5852

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

+ By Mail

Complete and sign the application. Make your check or negotiable bank draft
payable to The WM Group of Funds. Checks or any check not payable to WM Group of
Funds are not accepted.

Mail the completed application form and check to:

THE WM GROUP OF FUNDS
P.O. BOX 9757
PROVIDENCE, RI 02940-9757
Make your check payable to The WM Group of Funds. Indicate your account number
on your check. Include the "next investment" stub from your previous account
statement. Mail the check and stub to the address printed on your account
statement.

Exchange by mail: call 800-222-5852 for instructions

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

+ By Wire
1) Telephone WM Shareholder Services for an application form and instructions.
2) Instruct your bank to wire Federal Funds exactly as follows:
BOSTON SAFE AND DEPOSIT TRUST
BOSTON, MA
ABA# 011-001234
FOR CREDIT TO:
THE WM GROUP OF FUNDS
ACCOUNT #167053
(FUND NAME AND CLASS OF SHARES)
(CUSTOMER'S NAME)
(CUSTOMER'S SOCIAL SECURITY NUMBER)

3) Mail the completed application form to:
THE WM GROUP OF FUNDS
P.O. BOX 9757
PROVIDENCE, RI 02940-9757
Instruct your bank/financial institution to wire Federal Funds as described at
left under paragraph 2.

43
<PAGE> 134

HOW CAN I INVEST IN THE FUNDS?(CONT.)

TO OPEN AN ACCOUNT:

(MINIMUM $50)

TO ADD TO AN ACCOUNT:
(MINIMUM $50)

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

+ Automatic Investment Plan

(Minimum New Account amount $50)
1) Obtain and complete an application form.

2) Attach a voided check or deposit slip from the bank account you would like
the investments transferred from and indicate either the day of the week or
day(s) of the month when the purchase would occur.

3) Mail the application to the address listed above.

Pre-authorized periodic (weekly, bi-monthly, or monthly) investments will be
processed automatically.

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

44
<PAGE> 135

CLASS I SHARES

Class I shares are not available for purchase directly by investors. They are
sold at the net asset value next determined after receipt of a properly
completed purchase order, and are not subject to a contingent defined sales
charge.

EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES OF ANY CLASS AT
ANY TIME. Each Fund also reserves the right to reject any specific purchase
order, including purchases by exchange.

DISTRIBUTION OF INCOME AND CAPITAL GAINS

The Funds distribute dividends from net investment income (which is essentially
interest and dividends from securities held), minus expenses. They also make
capital gain distributions if realized gains from the sale of securities exceed
realized losses. The amount of dividends of net investment income and
distributions of net realized long- and short-term capital gains payable to
shareholders will be determined separately for each Fund. Dividends from the net
investment income of the Money, Fixed-Income and Municipal Funds will normally
be declared daily and paid monthly. Dividends from the net investment income of
the Bond & Stock and Growth & Income Funds will normally be declared and paid
quarterly. Dividends from the net investment income of the Growth Fund and will
normally be declared and paid semiannually. Dividends from the net investment
income of the Growth Fund of the Northwest, Small Cap Stock and International
Growth Funds will normally be declared and paid annually. Except as otherwise
specified, the Funds distribute capital gains, if any, at least annually,
normally in December.

AUTOMATIC REINVESTMENT. This procedure is automatically effective unless you
choose another option. All dividends and capital gain distributions are
reinvested into additional shares of the Fund.

REINVEST DIVIDENDS IN ANOTHER FUND. Income dividends may be automatically
invested in the same class of shares of another Fund, provided that Fund is
available for sale in your state of residence.

CASH PAYMENT OF ALL DISTRIBUTIONS. All dividends and capital gain distributions
are deposited to your pre-authorized bank account or paid by check.

Reinvestments of income dividends and capital gain distributions are made at the
closing NAV on the day dividends or distributions are deducted from the Fund's
assets.

If you've chosen to receive dividends or capital gain distributions in cash and
your check is returned as undeliverable, the Funds reserve the right (but are
not obligated) to reinvest your check at the then-current NAV and to
automatically reinvest subsequent dividends and capital gain distributions in
your account. The Funds may also automatically reinvest dividends or
distributions of $10 or less.

HOW CAN I SELL MY SHARES?

YOU MAY REDEEM SHARES AT ANY TIME. The price paid per share will be the NAV
next calculated after receipt of a properly completed redemption request.

TELEPHONE. You may authorize telephone transactions on your Fund account
application. Provided you have pre-authorized these transactions, you may redeem
or exchange shares by telephoning 800-222-5852. Telephone transaction privileges
may be restricted and generally will not be allowed for amount totalling more
than $50,000 in a given day. You may also request these transactions through
your investment representative. Proceeds may be directed to a pre-authorized
bank or broker account or to the address of record for the account.

It may be difficult to reach the Trusts' offices by telephone during periods of
unusual economic or market activity. Please be persistent if this occurs. The
Funds' transfer agent is committed to extending its hours to 5:00 a.m. to 6:00
p.m. Pacific time during such periods.

For your protection, all telephone instructions are verified by requesting
personal shareholder information, providing written confirmations of each
telephone transaction, and recording telephone instructions. WM Shareholder
Services, Inc. ("Shareholder Services" or the "Transfer Agent") may require a
Letter of Authorization, other documents, or authorization from your broker to
initiate telephone redemptions of $50,000 or more that are not directed to your
pre-authorized bank or broker account. If these or other reasonable procedures
are used, neither the Transfer Agent nor the

45
<PAGE> 136

Funds will be liable for following telephone instructions which they reasonably
believe to be genuine. Shareholders assume the risk of any losses in such cases.
However, the Transfer Agent or the Trusts may be liable for any losses because
of unauthorized or fraudulent telephone instructions if they fail to follow
reasonable procedures.

WRITTEN REQUEST. Redemptions also may be requested by writing the Trusts'
offices. Written requests including requests for redemptions exceeding $50,000,
may require a signature guarantee, as described below, and the return of any
outstanding share certificates. Changes in pre-authorized redemption
instructions or your account registration may also require signature guarantees.
For your protection, the signature(s) must be guaranteed by an eligible
guarantor institutions which includes banks, credit unions, broker dealers,
national securities exchanges, savings institutions as well as medallion
signature guarantee.

PROMPT PAYMENT. Payment normally will be made on the next business day after
redemption, but no later than seven days after the transaction, unless you
recently purchased Fund shares by check or Automated Clearing House transfer. In
that case, redemption proceeds may be delayed for up to 15 days after the
purchase transaction, until the Transfer Agent verifies collection of funds.
Under unusual circumstances, the Fund may suspend redemptions, or postpone
payment for seven days, as permitted by Federal Securities laws. Redemption
proceeds will be sent by check or Automated Clearing House transfer to your bank
account without charge. Wire redemption proceeds may be subject to a $10 fee.
The receiving bank also may charge a fee.

SYSTEMATIC WITHDRAWAL PLAN. Shareholders may choose to receive specific cash
withdrawals of at least $100 on a periodic basis. A $5,000 minimum balance in
the applicable Fund is required to establish a systematic withdrawal plan (the
minimum balance requirement is waived for IRA accounts). Shares of the Fund will
be redeemed to provide the requested payment. Naturally, withdrawals that
continually exceed dividend income and capital gains will eventually exhaust the
account. The beginning balance is the account balance at the time the plan is
established.

OTHER CONSIDERATIONS. It is costly to maintain small accounts. Accordingly, an
account may be closed after 60 days' written notice if the total account value
falls below a minimum (currently $1,000 or, in the case of an IRA account,
$1,000) when any transfer or redemption is made. Shares will be redeemed at the
next calculated NAV, less any applicable CDSC, on the day the account is closed.
To prevent an account closure, investors may purchase shares to bring their
account balance above the minimum during the 60-day grace period.

HOW CAN I EXCHANGE MY SHARES?

You may exchange shares of any of the Funds for shares of the same class of any
other of the Funds. Exchanges of shares are sales and may result in a gain or
loss for income tax purposes.

Exchanges are made at the relative NAVs of the shares being exchanged. No
additional sales charge will be incurred when exchanging shares from a Fund
which imposes an initial or contingent deferred sales charge. Any contingent
deferred sales charge on the subsequent sale of shares acquired by exchange will
be based on the contingent deferred sales charge schedule of the Fund from which
the shares were initially purchased. Shares exchanged from a Money Fund will be
subject to the acquired Fund's sales charge unless the shares given in exchange
were previously exchanged from a Fund that imposes an initial or contingent
deferred sales charge.

All exchanges are subject to the minimum investment requirements of the Fund
being acquired and to its availability for sale in your state of residence. You
may arrange for automatic monthly exchanges. The Funds reserve the right to
refuse any order for the purchase of shares, including those by exchange. In
particular, a pattern of exchanges that coincides with a "market timing"
strategy may be disruptive to a Fund and, consequently, may be disallowed.

DIVIDENDS, CAPITAL GAINS AND TAXES

Each Fund will distribute substantially all of its net investment income and net
realized capital gain on a current basis.

Generally, dividends paid by the Funds from interest, dividends or net
short-term capital gains will be taxed as ordinary income. Distributions
designated by the
46
<PAGE> 137

Fund as deriving from net gains on securities held for more than one year are
taxable as such (generally at a 20% tax rate), regardless of how long you have
held your shares.

A dividend or distribution made shortly after the purchase of shares of a Fund
by a shareholder, although in effect a return of capital to that particular
shareholder, would be taxable to him or her as described above.

Early in each calendar year each Fund will notify you of the amount and tax
status of distributions paid to you for the preceding year.

ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE MUNICIPAL FUNDS, THE
TAX-EXEMPT MONEY MARKET FUND AND THE CALIFORNIA MONEY FUND. Distributions
designated as "exempt-interest" dividends by any of the Municipal Funds, the
Tax-Exempt Money Market Fund or the California Money Fund generally are not
subject to federal income tax.

However, if you receive social security or railroad retirement benefits you
should consult your tax advisor to determine what effect, if any, an investment
in the fund may have on the taxation of your benefits. In addition, an
investment in the Fund may result in liability for federal alternative minimum
tax, both for individual and corporate shareholders.

ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE INTERNATIONAL GROWTH
FUND. The International Growth Fund's investments in foreign securities may be
subject to foreign withholding taxes. In that case, the Fund's yield on those
securities would be decreased. Shareholders may be entitled to claim a credit or
deduction with respect to foreign taxes. In addition, the Fund's investments in
foreign securities or foreign currencies may increase or accelerate the Fund's
recognition of ordinary income and may affect the timing or amount of the Fund's
distributions.

THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT A COMPLETE DESCRIPTION OF
THE FEDERAL, STATE OR LOCAL TAX CONSEQUENCES OF INVESTING IN THE FUNDS. YOU
SHOULD CONSULT YOUR TAX ADVISOR BEFORE INVESTING IN THE FUNDS.

47
<PAGE> 138

ORGANIZATION

HOW NAV IS DETERMINED

Investment securities and other assets are valued primarily on the basis of
market quotations or, if quotations are not readily available, by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates. As a result, changes in the value of those
currencies in relation to the U.S. dollar may affect the Funds' NAV. Because
foreign markets may be open at different times than the New York Stock Exchange,
the value of the Funds' shares may change on days when shareholders are not able
to buy or sell them. If events materially affecting the values of the Funds'
foreign investments occur between the close of foreign markets and the close of
regular trading on the New York Stock Exchange, these instruments may be valued
at their fair value. The NAVs are determined at the end of each business day of
the New York Stock Exchange or at 1:00 p.m. Pacific time, whichever is earlier.

ADVISOR AND SUB-ADVISORS

The Funds are managed by WM Advisors, Inc., which is referred to as the Advisor
in this Prospectus. The Advisor's address is 1201 Third Avenue, 22nd Floor,
Seattle, Washington 98101. The Advisor has delegated portfolio management
responsibilities in respect of the Growth, California Municipal, Florida Insured
Municipal, California Insured Intermediate Municipal, International Growth and
Tax-Exempt Bond Funds to sub-advisors. Each Fund may, to the extent permitted
under the 1940 Act, place portfolio transactions with (and pay brokerage
commissions to) affiliates of the Advisor and the sub-advisors to the Funds
indicated below. For more information, see the SAI.

The Advisor has been in the business of investment management since 1944. Its
responsibilities include formulating each Fund's investment policies (subject to
the terms of this Prospectus), analyzing economic trends, directing and
evaluating the investment services provided by the sub-advisors and monitoring
each Fund's investment performance and reporting to the Board of Trustees, as
well as providing certain administrative services to the Funds. In connection
with its service as investment advisor to each Fund, the Advisor may engage one
or more sub-advisors to provide investment advisory services to any of the Funds
and may change or eliminate any such sub-advisor if it deems such action to be
in the best interests of a Fund and its shareholders. Where the Advisor has not
delegated such duties to a sub-advisor, it is responsible for managing the
investment and reinvestment of the Fund's assets. The Advisor is an indirect
wholly owned subsidiary of Washington Mutual, Inc. ("Washington Mutual"), a
publicly owned financial services company.

VAN KAMPEN, One Parkview Plaza, Oakbrook, Illinois 60181, acts as sub-advisor to
the California Municipal, California Insured Intermediate Municipal and Florida
Insured Municipal Funds. Subject to shareholder approval, it is expected that,
effective January 1, 1999, Van Kampen will become sub-advisor to the Tax-Exempt
Bond Fund. Van Kampen is an indirect wholly owned subsidiary of Morgan Stanley,
Dean Witter, Discover & Co., a publicly held global financial services company.
Van Kampen provides investment advice to a wide variety of individual,
institutional and investment company clients and, together with its affiliates,
had aggregate assets under management or supervision, as of June 5, 1998, of
more than billion.

INDIVIDUAL FUND MANAGERS

48
<PAGE> 139

has been employed by the Advisor since 1992. Craig V. Sosey, CFA Vice President
and Senior Portfolio Manager of the Advisor, has been primarily responsible for
the day-to-day management of the U.S. Government Securities and Short Term
Income Funds since November 1998 and January 2000, respectively. He has been
employed by the Advisor since May 1998. Prior to that, he was the Assistant
Treasurer of California Federal Bank, where he worked for over eight years.
Randall L. Yoakum, CFA, First Vice President and Chairman of the Investment
Committee of the Advisor and Stephen Spencer, CFA, are primarily responsible for
the day-to-day management of the Growth & Income and Mid Cap Stock Funds. Mr.
Yoakum has been Portfolio Manager of the Growth & Income Fund since February
1999 and beginning April 2000, he will co-manage the Mid Cap Stock Fund with Mr.
Spencer. Prior to assuming these duties, Mr. Yoakum was Chief Investment Officer
for D.A. Davison & Co. (DADCO) for 2 years. From September 1994 until he joined
DADCO, Mr. Yoakum was the Senior Vice President and Managing Director of
Portfolio Management for Boatmen's Trust Company, and, prior to that, Mr. Yoakum
was Senior Vice President and Chief Equity Officer for Composite Research &
Management Co. (the predecessor to WM Advisors, Inc.) for 8 years. Mr. Spencer
has been employed by WM Advisors since September 1999. Prior to that, Mr.
Spencer was Portfolio Manager and Senior Equity Analyst for Smoot, Miller,
Cheney and Co. since 1985. Jeffrey D. Huffman, CFA, Vice President and Senior
Portfolio Manager of the Advisor, has had primary responsibility for the
day-to-day management of the Bond & Stock Fund since 1995. Prior to 1995, Mr.
Huffman was Vice President of Trust Investments for First Interstate Bank since
1994 and a portfolio manager at Safeco since 1992. David W. Simpson, CFA, Vice
President and Senior Portfolio Manager of the Advisor, has had primary
responsibility for the day-to-day management of the Growth Fund of the Northwest
since 1993. Mr. Simpson has been employed by the Advisor since 1993. Linda C.
Walk, CFA, who is Vice President and Portfolio Manager of the Advisor, has been
primarily responsible for the day-to-day management of the Small Cap Stock Fund
since January 2000. She shared that responsibility with Mr. Simpson from March
1998 to January 2000. Prior to 1997, Ms. Walk was a Portfolio Manager at Laird
Norton Trust Company since 1996, a Valuation Consultant for Ernst & Young LLP
since 1994, and a Valuation Consultant for Management Advising Services since
1990. Audrey S. Quaye, CPA, CFA, Vice President and Portfolio Manager of the
Advisor, is primarily responsible for the day-to-day management of the Money
Market Fund, the Tax-Exempt Money Market Fund and the California Money Fund. She
has managed such Funds since 1996, 1997, and March 1998, respectively, and has
been employed by the Advisor since 1996. Prior to 1996, Ms. Quaye worked at the
Benham Group as a municipal credit analyst.

Management of the SAM Portfolios is shared by a dedicated investment management
team headed by Gary J. Pokrzywinski, CFA, Vice President and Senior Portfolio
Manager of the Advisor, and Randall L. Yoakum, CFA, First Vice President and
Chairman of the Investment Committee of the Advisor, both of whose prior
experience is discussed above.

Warran B. Lammert has had primary responsibility for the day-to-day management
of the Growth Fund since its inception. Mr. Lammert is a Vice President of
Janus. Mr. Lammert joined Janus in 1987, and his duties at Janus include the
management of separate equity accounts.

Since May 1992, Joseph A. Piraro, Vice President of Van Kampen, has had primary
responsibility for the day-to-day management of the California Municipal Fund.
Mr. Piraro has been employed by Van Kampen since 1992. Mr. Piraro has also had
primary responsibility for the day-to-day management of the California Insured
Intermediate Municipal Fund since the Fund's inception. Since January 1997,
Thomas M. Byron, Vice President of Van Kampen, has had primary responsibility
for the day-to-day management of the Florida Insured Municipal Fund. Mr. Byron
has been at Van Kampen for over 15 years and prior to taking over responsibility
for managing the Fund, Mr. Byron was Head Buyer and Manager of Van Kampen's Unit
Investment Trust desk. David C. Johnson, Senior Vice President of Van Kampen,
has primary responsibility for the day-to-day management of the Tax-Exempt Bond
Fund's portfolio January 1, 1999. Mr. Johnson has been employed by Van Kampen
since 1989.

49
<PAGE> 140

MANAGEMENT FEES

During their most recent fiscal years, each of the Funds paid management fees to
the Advisor at the following rates:

<TABLE>
<CAPTION>
Fees Paid as a Percentage
FUNDS of Net Assets
- -----------------------------------------------------------------------
<S> <C>
Money Market Fund....................
Tax-Exempt Money Market Fund.........
California Money Fund................
Short Term Income Fund...............
U.S. Government Securities Fund......
Income Fund..........................
High Yield Fund......................
Bond & Stock Fund....................
Growth & Income Fund.................
Tax-Exempt Bond Fund.................
California Municipal Fund............
California Insured Intermediate
Municipal Fund.....................
Florida Insured Municipal Fund.......
Growth Fund of the Northwest.........
Growth Fund..........................
Small Cap Stock Fund.................
International Growth Fund............
</TABLE>

The Advisor has undertaken to waive its management fees and reimburse expenses
to the extent necessary to limit the total Fund operating expenses for Class A
shares of the following funds to the indicated annual rates through October 31,
2000.

The waivers are expected to impact Class I indirectly, as any management fees
waived for a Fund's Class A shares will also be waived for the Fund's Class I
shares.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUNDS'
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS' SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

50
<PAGE> 141

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

The financial highlights table is intended to help you understand the Funds'
financial performance for the past 5 years or, if shorter, the period of the
Fund's operations. Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Fund (assuming reinvestment
of all dividends and distributions). The information provided below with respect
to each of the Funds within WM Trust II (California Money, Short Term Income,
California Municipal, California Insured Intermediate Municipal, Florida Insured
Municipal, Growth, International Growth and Small Cap Stock Funds) for periods
prior to October 31, 1998 has been audited by PricewaterhouseCoopers LLP. The
information provided below for the period ended October 31, 1998 has been
audited by Deloitte & Touche LLP. The Reports of Independent Accountants for
each such period, along with the Funds' financial statements, are included in
the Annual Reports to Shareholders for such periods, which are available upon
request.

51
<PAGE> 142

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

MONEY MARKET FUND CLASS I SHARES(9)

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED MARCH 23, 1998 -
OCTOBER 31, 1999 OCTOBER 31, 1998(11)
----------------- ---------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $1.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income/(Loss)............................. 0.031
Net Realized & Unrealized Gain/(Loss) on Investments...... -
------ ------
Total from Investment Operations........................ 0.031
------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.031)
Distributions in Excess of Net Investment Income.......... -
Distributions from Net Realized Gains..................... -
Distributions in Excess of Net Realized Gains............. -
Distributions from Capital................................ -
------ ------
Total Distributions..................................... (0.031)
------ ------
Net Asset Value, End of Period.............................. $1.00
====== ======
Total Return(4)............................................. 3.17%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $108,720
Ratio of Operating Expenses to Average Net Assets(10)..... 0.54%(2)
Ratio of Net Investment Income to Average Net Assets...... 5.06%(2)
Portfolio Turnover Rate................................... -
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 0.55%(2)
</TABLE>

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52
<PAGE> 143
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CALIFORNIA MONEY FUND CLASS I SHARES

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $1.00 $1.00 $1.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).............................. 0.008 0.029 0.028
Net Realized & Unrealized Gain/(Loss) on Investments...... - - -
------ ------ ------ ------
Total From Investment Operations........................ 0.008 0.029 0.028
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.008) (0.029) (0.028)
Distributions in Excess of Net Investment Income.......... - - -
Distributions from Net Realized Gains..................... - - -
------ ------ ------ ------
Distributions in Excess of Net Realized Gains............. - - -
Distributions from Capital................................ - - -
Total Distributions..................................... (0.008) (0.029) (0.028)
------ ------ ------ ------
Net Asset Value, End of Period.............................. $1.00 $1.00 $1.00
====== ====== ====== ======
Total Return(4)............................................. 1.06% 2.99% 2.89%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $1 $1 $1
Ratio of Operating Expenses to Average Net Assets(10)..... 0.60%(2) 0.63% 0.60%(2)
Ratio of Net Investment Income to Average Net Assets...... 2.44%(2) 2.89% 3.00%(2)
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 0.77%(2) 0.81% 0.89%(2)
</TABLE>

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53
<PAGE> 144
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

SHORT TERM INCOME FUND CLASS I SHARES

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $2.32 $2.32 $2.32
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).............................. 0.04 0.14 0.14
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.03 0.00(6) 0.00(6)
------- ------- ------- -------
Total From Investment Operations........................ 0.07 0.14 $0.14
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.04) (0.14) (0.14)
Distributions in Excess of Net Investment Income.......... - - -
Distributions from Net Realized Gains..................... - - -
Distributions in Excess of Net Realized Gains............. - - -
Distributions from Capital................................ - (0.00)(6) -
------- ------- ------- -------
Total Distributions..................................... (0.04) (0.14) (0.14)
------- ------- ------- -------
Net Asset Value, End Of Period.............................. $2.35 $2.32 $2.32
======= ======= ======= =======
Total Return(4)............................................. 3.20% 6.17% 5.94%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $1,631 $3,103 $2,752
Ratio of Operating Expenses to Average Net Assets(10)..... 0.57%(2) 0.53% 0.57%(2)
Ratio of Net Investment Income to Average Net Assets...... 5.69%(2) 6.03% 6.75%(2)
Portfolio Turnover Rate................................... 19% 138% 51%
Ratio of Operating Expenses to Average Net Assets Without
Credit Allowed by the Custodian.......................... - 0.53%(7) 0.57%(7)
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credit Allowed by
the Custodian............................................ 0.96%(2) 1.00%(7) 1.20%(7)
</TABLE>

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54
<PAGE> 145
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

U.S. GOVERNMENT SECURITIES FUND CLASS I SHARES(12)

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED MARCH 23, 1998 -
OCTOBER 31, 1999 OCTOBER 31, 1998(11)
------------------ --------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $ $10.86
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income.................................... 0.42
Net Realized & Unrealized Gain on Investments............. 0.12
------- -------
Total from Investment Operations........................ 0.54
------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.41)
Distributions in Excess of Net Investment Income.......... -
Distributions from Net Realized Gains..................... -
Distributions in Excess of Net Realized Gains............. -
Distributions from Capital................................ -
------- -------
Total Distributions..................................... (0.41)
------- -------
Net Asset Value, End of Period.............................. $ $10.99
======= =======
Total Return(4)............................................. % 5.00%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $ $39,939
Ratio of Operating Expenses to Average Net Assets(10)..... % 0.66%(2)
Ratio of Net Investment Income to Average Net Assets...... % 6.25%(2)
Portfolio Turnover Rate................................... % 12%
Ratio of Operating Expenses to Average Net Assets Without
fee waivers or fees reduced by Credits Allowed by the
Custodian................................................ % 1.11%(2)
Ratio of Operating Expenses to Average Net Assets
including interest expense............................... % 1.10%(2)
</TABLE>

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55
<PAGE> 146
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

INCOME FUND CLASS I SHARES(13)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998(11)
------------------ --------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $9.57
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income/(Loss)............................. 0.41
Net Realized & Unrealized Gain/(Loss) on Investments...... (0.13)(8)
------ ------
Total from Investment Operations........................ 0.28
------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.41)
Distributions in Excess of Net Investment Income.......... -
Distributions from Net Realized Gains..................... -
Distributions in Excess of Net Realized Gains............. -
Distributions from Capital................................ -
------ ------
Total Distributions..................................... (0.41)
------ ------
Net Asset Value, End of Period.............................. $9.44
====== ======
Total Return(4)............................................. 2.84%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $7,342
Ratio of Operating Expenses to Average Net Assets(10)..... 0.71%(2)
Ratio of Net Investment Income to Average Net Assets...... 7.02%(2)
Portfolio Turnover Rate................................... 37%
</TABLE>

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56
<PAGE> 147
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

HIGH YIELD FUND CLASS I SHARES

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998(11)
---------------- ----------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income.................................... 0.22
Net Realized & Unrealized Loss on Investments............. (1.13)
------- -------
Total from Investment Operations........................ (0.91)
------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.23)
Distributions in Excess of Net Investment Income.......... (0.01)
Distributions from Net Realized Gains..................... -
Distributions in Excess of Net Realized Gains............. -
Distributions from Capital................................ -
------- -------
Total Distributions..................................... (0.24)
------- -------
Net Asset Value, End of Period.............................. $8.85
======= =======
Total Return(4)............................................. (9.13)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $1,309
Ratio of Operating Expenses to Average Net Assets(10)..... 0.48%(2)
Ratio of Net Investment Income to Average Net Assets...... 9.10%(2)
Portfolio Turnover Rate................................... 54%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers or fees reduced by Credits Allowed by the
Custodian................................................ 0.97%(2)
</TABLE>

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57
<PAGE> 148
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

TAX EXEMPT BOND FUND CLASS I SHARES(14)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998(11)
---------------- --------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $8.06
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income/(Loss)............................. 0.27
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.05
------ ------
Total from Investment Operations........................ 0.32
------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.27)
Distributions in Excess of Net Investment Income.......... -
Distributions from Net Realized Gains..................... -
Distributions in Excess of Net Realized Gains............. -
Distributions from Capital................................ -
------ ------
Total Distributions..................................... (0.27)
------ ------
Net Asset Value, End of Period.............................. $8.11
====== ======
Total Return(4)............................................. 4.00%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $1
Ratio of Operating Expenses to Average Net Assets(10)..... 0.55%(2)
Ratio of Net Investment Income to Average Net Assets...... 5.43%(2)
Portfolio Turnover Rate................................... 6%
</TABLE>

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58
<PAGE> 149
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CALIFORNIA MUNICIPAL FUND CLASS I SHARES

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....................... $11.33 $10.92 $10.62
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income/(Loss)............................ 0.20(6) 0.61(6) 0.58
Net Realized & Unrealized Gain/(Loss) on Investments..... 0.13 0.41 0.30
------ ------ ------ ------
Total from Investment Operations....................... 0.33 1.02 0.88
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income..................... (0.20) (0.61) (0.58)
Distributions in Excess of Net Investment Income......... - - -
Distributions from Net Realized Gains.................... - - -
Distributions in Excess of Net Realized Gains............ - - -
Distributions from Capital............................... - - -
------ ------ ------ ------
Total Distributions.................................... (0.20) (0.61) (0.58)
------ ------ ------ ------
Net Asset Value, End of Period............................. $11.46 $11.33 $10.92
====== ====== ====== ======
Total Return(4)............................................ 2.90% 9.53% 8.49%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)...................... $1 $1 $1
Ratio of Operating Expenses to Average Net Assets(10).... 0.72%(2) 0.74% 0.72%(2)
Ratio of Net Investment Income to Average Net Assets..... 5.12%(2) 5.44% 5.76%(2)
Portfolio Turnover Rate.................................. 28% 87% 36%
Ratio of Operating Expenses to Average Net Assets Without
Credits Allowed by the Custodian........................ - 0.74%(7) 0.72%(2)(7)
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers and/or fees reduced by Credits Allowed by
the Custodian........................................... 0.76%(2) 0.93%(7) 1.01%(2)(7)
</TABLE>

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59
<PAGE> 150
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND CLASS I SHARES

<TABLE>
<CAPTION>
FISCAL
PERIOD
YEAR ENDED ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $10.81 $10.74 $10.58
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income/(Loss)............................. 0.17 0.51 0.49(7)
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.21 0.17 0.21
------ ------ ------ ------
Total from Investment Operations........................ 0.38 0.68 0.70
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.17) (0.51) (0.49)
Distributions in Excess of Net Investment Income.......... - - -
Distributions from Net Realized Gains..................... - (0.10) (0.05)
Distributions in Excess of Net Realized Gains............. - - -
Distributions from Capital................................ - - -
------ ------ ------ ------
Total Distributions..................................... (0.17) (0.61) (0.54)
------ ------ ------ ------
Net Asset Value, End of Period.............................. $11.02 $10.81 $10.74
====== ====== ====== ======
Total Return(4)............................................. 3.54% 6.53% 6.70%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $1 $1 $1
Ratio of Operating Expenses to Average Net Assets(10)..... 0.57%(2) 0.60% 0.57%(2)
Ratio of Net Investment Income to Average Net Assets...... 4.64%(2) 4.75% 4.86%(2)
Portfolio Turnover Rate................................... 7% 25% 29%
Ratio of Operating Expenses to Average Net Assets Without
Credits Allowed by the Custodian......................... - 0.60%(7) 0.58%(2)(7)
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or Credits Allowed by
the Custodian............................................ 0.86%(2) 0.99%(7) 1.06%(1)(7)
</TABLE>

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60
<PAGE> 151
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

FLORIDA INSURED MUNICIPAL FUND CLASS I SHARES

<TABLE>
<CAPTION>
FISCAL PERIOD PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period:....................... $10.35 $9.93 $9.68
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).............................. 0.19 0.54 0.49(6)
Net Realized & Unrealized Gain/(Loss) on Investments...... 0.14(8) 0.36 0.26
------ ------ ------ ------
Total From Investment Operations........................ 0.33 0.90 0.75
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.18) (0.48) (0.50)
Distributions In Excess Of Net Investment Income.......... - - (0.00)(5)
Distributions from Net Realized Gains..................... - - -
Distributions In Excess Of Net Realized Gains............. - - -
Distributions From Capital................................ - - -
------ ------ ------ ------
Total Distributions..................................... (0.18) (0.48) (0.50)
------ ------ ------ ------
Net Asset Value, End of Period.............................. $10.50 $10.35 $9.93
====== ====== ====== ======
Total Return(4)............................................. 3.17% 9.61% 7.88%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000)......................... $1 $1 $1
Ratio of Operating Expenses to Average Net Assets(10)..... 0.57%(2) 0.62% 0.57%(2)
Ratio of Net Investment Income to Average Net Assets...... 5.01%(2) 5.05% 5.26%(2)
Portfolio Turnover Rate................................... 40% 51% 53%
Ratio of Operating Expenses to Average Net Assets Without
Credit Allowed by the Custodian.......................... - 0.63%(7) 0.59%(2)(7)
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers, Expenses Absorbed and/or fees reduced by
Credits Allowed by the Custodian......................... 1.10%(2) 1.19%(7) 1.21%(2)(7)
</TABLE>

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61
<PAGE> 152
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

GROWTH & INCOME FUND CLASS I SHARES(15)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998(11)
---------------- --------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $21.42
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investments Income/(Loss)............................. 0.11(6)
Net Realized & Unrealized Gain/(Loss) on Investments...... (1.43)(8)
-------- --------
Total from Investment Operations........................ (1.32)
-------- --------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... (0.07)
Distributions in Excess of Net Investment Income.......... -
Distributions from Net Realized Gains..................... -
Distributions in Excess of Net Realized Gains............. -
Distributions from Capital................................ -
-------- --------
Total Distributions..................................... (0.07)
-------- --------
Net Asset Value, End of Period.............................. $20.03
======== ========
Total Return(4)............................................. (6.18)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $185,528
Ratio of Operating Expenses to Average Net Assets(10)..... 0.62%(2)
Ratio of Net Investment Income to Average Net Assets...... 0.84%(2)
Portfolio Turnover Rate................................... 79%
</TABLE>

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62
<PAGE> 153
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

GROWTH FUND CLASS I SHARES

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $18.56 $14.94 $14.21
-------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).............................. (0.05)(6) (0.10)(6) 0.00(5)(6)
Net Realized & Unrealized Gain/(Loss) on Investments...... (0.75) 5.00 3.07
-------- -------- -------- -------
Total From Investment Operations........................ (0.80) 4.90 3.07
-------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... - - -
Distributions in Excess of Net Investment Income.......... - - -
Distributions from Net Realized Gains..................... - (1.28) (2.34)
Distributions in Excess of Net Realized Gains............. - - -
Distributions from Capital................................ - - -
-------- -------- -------- -------
Total Distributions..................................... - (1.28) (2.34)
-------- -------- -------- -------
Net Asset Value, End of Period.............................. $17.76 $18.56 $14.94
======== ======== ======== =======
Total Return(4)............................................. (4.31)% 35.75% 22.73%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $119,351 $115,729 $126,986
Ratio of Operating Expenses to Average Net Assets(10)..... 1.26%(2) 1.36% 1.45%(2)
Ratio of Net Investment Income/(Loss) to Average Net
Assets................................................... (0.78)%(2) (0.61)% 0.03%(2)
Portfolio Turnover Rate................................... 24% 153% 156%
Ratio of Operating Expenses to Average Net Assets Without
Credits Allowed by the Custodian......................... - 1.36%(7) 1.45%(2)(7)
</TABLE>

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63
<PAGE> 154
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

MID CAP STOCK FUND CLASS I SHARES

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
-----------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................
------ -------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss.......................................
Net Realized & Unrealized Gain/(Loss) on Investments......
------ -------- ------ ------
Total From Investment Operations........................
------ -------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income......................
Distributions in Excess of Net Investment Income..........
Distributions from Net Realized Gains.....................
Distributions in Excess of Net Realized Gains.............
Distributions from Capital................................
------ -------- ------ ------
Total Distributions.....................................
------ -------- ------ ------
Net Asset Value, End of Period..............................
====== ======== ====== ======
Total Return(4).............................................
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's).......................
Ratio of Operating Expenses to Average Net Assets(10).....
Ratio of Net Investment Loss to Average Net Assets........
Portfolio Turnover Rate...................................
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers and/or Fees Reduced by Credits Allowed by the
Custodian................................................
</TABLE>

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64
<PAGE> 155
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

SMALL CAP STOCK FUND CLASS I SHARES

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
-----------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $19.60 $18.33 $17.52
------ -------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss....................................... (0.05)(6) (0.16)(6) (0.16)(6)
Net Realized & Unrealized Gain/(Loss) on Investments...... (3.20) 2.50 2.47(8)
------ -------- ------ ------
Total From Investment Operations........................ (3.25) 2.34 2.31
------ -------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... - - -
Distributions in Excess of Net Investment Income.......... - - -
Distributions from Net Realized Gains..................... - (1.07) (1.50)
Distributions in Excess of Net Realized Gains............. - - -
Distributions from Capital................................ - - -
------ -------- ------ ------
Total Distributions..................................... - (1.07) (1.50)
------ -------- ------ ------
Net Asset Value, End of Period.............................. $16.35 $19.60 $18.33
====== ======== ====== ======
Total Return(4)............................................. (16.58)% 13.25% 13.69%
RATIOS/SUPPLEMENTAL DATA:
Net Assets End of Period ($1,000's)....................... $12,651 $33,886 $52,199
Ratio of Operating Expenses to Average Net Assets(10)..... 1.35%(2) 1.36% 1.39%(2)
Ratio of Net Investment Loss to Average Net Assets........ (0.90)%(2) (0.80)% (0.92)%(2)
Portfolio Turnover Rate................................... 20% 112% 81%
Ratio of Operating Expenses to Average Net Assets Without
Fee Waivers and/or Fees Reduced by Credits Allowed by the
Custodian................................................ 1.36%(2) 1.36%(6) 1.39%(2)(7)
</TABLE>

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65
<PAGE> 156
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

INTERNATIONAL GROWTH FUND CLASS I SHARES

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, JUNE 30, JUNE 30,
1999 1998(3) 1998(1) 1997+
------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $10.16 $11.82 $9.88
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income/(Loss).............................. 0.00(6)(7) 0.09(7) 0.06(7)
Net Realized & Unrealized Gain/(Loss) on Investments...... (1.33) (0.69) 2.15
-------- -------- -------- --------
Total From Investment Operations........................ (1.33) (0.60) 2.21
-------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income...................... - (0.53) (0.17)
Distributions in Excess of Net Investment Income.......... - (0.03) -
Distributions from Net Realized Gains..................... - (0.50) (0.10)
Distributions in Excess of Net Realized Gains............. - - -
Distributions from Capital................................ - - -
-------- -------- -------- --------
Total Distributions..................................... - (1.06) (0.27)
-------- -------- -------- --------
Net Asset Value, End of Period.............................. $8.83 $10.16 $11.82
======== ======== ======== ========
Total Return(4)............................................. (13.09)% (3.98)% 22.76%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($1,000's)...................... $98,554 $108,521 $95,512
Ratio of Operating Expenses to Average Net Assets(10)..... 1.32%(2) 1.36% 1.40%(2)
Ratio of Net Investment Income to Average Net Assets...... 0.04%(2) 0.81% 0.60%(2)
Portfolio Turnover Rate................................... 41% 118% 67%
Ratio of Operating Expenses to Average Net Assets Without
Credits Allowed by the Custodian......................... - 1.36%(7) 1.40%(2)(7)
</TABLE>

Footnotes appear on page 69

66
<PAGE> 157
- --------------------------------------------------------------------------------

FOOTNOTES TO FINANCIAL HIGHLIGHTS

<TABLE>
<C> <S>
(1) On March 23, 1998, WM Advisors, Inc. replaced Sierra
Investment Advisers Corporation as investment advisor to the
Funds.
(2) Annualized.
(3) Fiscal year end changed to October 31.
(4) Total return is not annualized for periods less than one
year. The total returns would have been lower if certain
fees had not been waived by the investment advisor or if
fees had not been reduced by credits allowed by the
custodian.
(5) Amount represents less than $0.01 per share.
(6) Per share numbers have been calculated using the average
shares method.
(7) The ratio and per share numbers include custodian fees
before reduction by credits allowed by the custodian as
required by amended disclosure requirements effective
September 1, 1995.
(8) The amount shown may not accord with the change in aggregate
gains and losses of portfolio securities due to the timing
of sales and redemptions of Fund shares.
(9) Formerly, Composite Cash Management Company Money Market
Portfolio.
(10) Ratio of operating expenses to average net assets includes
expenses paid indirectly beginning in fiscal year 1995.
(11) From the commencement of offering shares.
(12) Formerly, Composite U.S. Government Securities, Inc.
(13) Formerly, Composite Income Fund, Inc.
(14) Formerly, Tax-Exempt Bond Fund, Inc.
(15) Formerly, Composite Growth & Income Fund.
+ On July 25, 1996, the Funds commenced selling Class I
shares.
</TABLE>

67
<PAGE> 158
- --------------------------------------------------------------------------------

APPENDIX A

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. BOND RATINGS:

+ Caa -- Bonds which are rated Caa are poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

+ Ca -- Bonds which are rated Ca represent obligations which are speculative in
high degree. Such issues are often in default or have other marked
shortcomings.

+ C -- Bonds which are rated C are the lowest rated class of bonds and can be
regarded as having extremely poor prospectus of ever attaining any real
investment standing.

DESCRIPTION OF STANDARD & POOR'S BOND RATINGS:

+ AAA, AA, A -- Bonds rated AAA have the highest rating assigned by S&P to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong. Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree. Bonds
rated A have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in high rated categories.

+ CI -- The rating CI is reserved for income bonds on which no income is being
paid.

+ D -- Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.

68
<PAGE> 159
- --------------------------------------------------------------------------------

FOR MORE INFORMATION ABOUT THE WM GROUP OF FUNDS

The WM Group's Statement of Additional Information (SAI) and Annual and
Semi-annual Reports to shareholders include additional information about the
Funds. The SAI and the Reports of Independent Accountants, along with the
financial statements, included in the Funds' two most recent Annual Reports are
incorporated by reference into this prospectus, which means that they are part
of this prospectus for legal purposes. The Funds' Annual Reports discuss the
market conditions and investment strategies that significantly affected
performance during the last fiscal year. You may obtain free copies of these
materials, request other information about the WM Group of Funds, or make
shareholder inquiries, by contacting your financial advisor or by calling toll-
free at 1-800-222-5852.

You may review and copy information about the Funds, including the SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the public reference room. You may also access reports and other
information about the Funds on the Commission's Internet site at
http://www.sec.gov. You may obtain copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the following file number:

FILE NO. 333-36941

Money Market Fund

Tax-Exempt Money Market Fund

U.S. Government Securities Fund

Income Fund

High Yield Fund

Tax-Exempt Bond Fund

Bond & Stock Fund

Growth & Income Fund

Growth Fund of the Northwest Fund

FILE NO. 33-27489

California Money Fund

Short Term Income Fund

California Municipal Fund

California Insured Intermediate Municipal Fund

Florida Insured Municipal Fund

Growth Fund

Small Cap Stock Fund

International Growth Fund
<PAGE> 160

WM GROUP OF FUNDS
1201 THIRD AVENUE, 22ND FLOOR
SEATTLE, WASHINGTON 98101
800-222-5852

STATEMENT OF ADDITIONAL INFORMATION

March 1, 2000

MONEY FUNDS
MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
CALIFORNIA MONEY FUND

FIXED-INCOME FUNDS

SHORT TERM INCOME FUND

U.S. GOVERNMENT SECURITIES FUND

INCOME FUND
HIGH YIELD FUND

MUNICIPAL FUNDS
TAX-EXEMPT BOND FUND
CALIFORNIA MUNICIPAL FUND
CALIFORNIA INSURED INTERMEDIATE
MUNICIPAL FUND
FLORIDA INSURED MUNICIPAL FUND
EQUITY FUNDS
BOND & STOCK FUND
GROWTH & INCOME FUND

GROWTH FUND OF THE NORTHWEST

GROWTH FUND

MID CAP STOCK FUND

SMALL CAP STOCK FUND

INTERNATIONAL GROWTH FUND

WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS, LLC
STRATEGIC GROWTH PORTFOLIO
CONSERVATIVE GROWTH PORTFOLIO
BALANCED PORTFOLIO
FLEXIBLE INCOME PORTFOLIO
INCOME PORTFOLIO

This Statement of Additional Information (the "SAI") supplements the
information contained in the current Prospectus of the WM Group of Funds listed
above dated March 1, 2000, (collectively, the "Prospectus"), and should be read
in conjunction with such Prospectus. The Annual Reports of the Funds and the
Portfolios for the fiscal years ended June 30, 1998, October 31, 1998 and
October 31, 1999, respectively are incorporated by reference in this SAI. The
Prospectus may be obtained without charge by writing to WM Shareholder Services,
Inc. ("Shareholder Services") or by calling Shareholder Services at
800-222-5852.

The Money Market, Tax-Exempt Money Market, U.S. Government Securities,
Income, High Yield, Tax-Exempt Bond, Bond & Stock, Growth & Income, Growth Fund
of the Northwest and Mid Cap Stock Funds are series of WM Trust I (the "WM Trust
I Funds"), a Massachusetts business trust organized on September 19, 1997. The
California Money, Short Term Income, California Municipal, California Insured
Intermediate Municipal, Florida Insured Municipal, Growth, International Growth
and Small Cap Stock Funds are series of WM Trust II (the "WM Trust II Funds"), a
Massachusetts business trust organized on February 22, 1989. The WM Trust I
Funds and WM Trust II Funds are collectively referred to in this SAI as the
"Funds." The Strategic Growth, Conservative Growth, Balanced, Flexible Income
and Income Portfolios, collectively referred to in this SAI as the "Portfolios,"
are series of WM Strategic Asset Management Portfolios, LLC, a Massachusetts
limited liability company organized on March 12, 1999.

<PAGE> 161

CONTENTS

<TABLE>
<S> <C>
MANAGEMENT.................................................. 3
INVESTMENT RESTRICTIONS..................................... 35
PORTFOLIO TURNOVER.......................................... 42
PORTFOLIO TRANSACTIONS...................................... 43
NET ASSET VALUE............................................. 45
HOW TO BUY AND REDEEM SHARES................................ 46
PERFORMANCE INFORMATION..................................... 50
DETERMINATION OF PERFORMANCE................................ 52
TAXES....................................................... 58
DISTRIBUTOR................................................. 63
NOTICE...................................................... 66
APPENDIX.................................................... 67
</TABLE>

2
<PAGE> 162

MANAGEMENT

TRUSTEES AND OFFICERS

The Trusts are governed by a common Board of Trustees which oversees the
Trusts' activities and is responsible for protecting the interests of
shareholders. The names, addresses and birthdates of the Trustees and executive
officers of the Trusts, together with information as to their principal business
occupations, are set forth below. The executive officers of the Trusts are
employees of organizations that provide services to the Funds and Portfolios
offered by the Trusts. Each Trustee who is an "interested person" of the Trusts,
as defined in the Investment Company Act of 1940, as amended (the "1940 Act"),
is indicated by an asterisk.

TRUSTEES:

DAVID E. ANDERSON, AGE: 73

Trustee
17960 Seabreeze Drive
Pacific Palisades, California 90272

Retired in 1988 from GTE California, Inc. after 40 years of service.
President and CEO from 1979 to 1988. Director of Barclay's Bank of California
until 1988. Currently involved in the following charitable organizations as a
director on the following boards: Board chairman, Children's Bureau Foundation;
Board member, Upward Bound House of Santa Monica; Past campaign chairman of
United Way; Former chairman, Los Angeles Area Chamber of Commerce.

WAYNE L. ATTWOOD, MD, AGE: 71

Trustee

3 East 40th Avenue

Spokane, Washington 99203

Retired doctor of internal medicine and gastroenterology. Former president,
Medical Staff -- Sacred Heart Medical Center; former president of Spokane
Society of Internal Medicine; and former president of Spokane Physicians for
Social Responsibility.

ARTHUR H. BERNSTEIN, ESQ., AGE: 74

Trustee
11661 San Vicente Blvd., Suite 701
Los Angeles, California 90049

President of Bancorp Capital Group, Inc. and Bancorp Venture Capital, Inc.
Previously served on the board of directors of Great Western Leasing
Corporation, subsidiary of Great Western Financial Corporation ("GWFC"), until
the subsidiary was sold in 1987. Director of Ryder System, Inc.; chairman of the
board of trustees of the California Family Studies Center and Phillips Graduate
Institute since 1984.

KRISTIANNE BLAKE, AGE: 46

Trustee
705 W. 7th, Suite D
Spokane, Washington 99204

CPA specializing in personal financial and tax planning since 1975. Served
as a partner with the accounting firm of Deloitte, Haskins & Sells prior to
starting own firm in 1987. Community activities include: United Way of Spokane
County -- board chair; YMCA of the Inland Northwest -- treasurer; Junior League
of Spokane -- past president; Spokane Intercollegiate Research & Technology
Institute Foundation -- board member; Spokane Joint Center for Higher Education
board member; Spokane Area Chamber of Commerce -- board member; and St. George's
School board member.

3
<PAGE> 163

EDMOND R. DAVIS, ESQ., AGE: 71

Trustee

553 South Marengo Avenue

Pasadena, California 91101

Joined the law firm of Brobeck, Phleger & Harrison as a partner in 1987,
responsible for estate planning, and trusts and estate matters in the Los
Angeles office. Prior to joining the firm, had a similar position for 20 years
with the law firm of Overton, Lyman & Prince in Los Angeles. His expertise has
been recognized in Who's Who in California, the Best Lawyers of America and
Who's Who in American Law.

JOHN W. ENGLISH, AGE: 67

Trustee

50 H New England Avenue

P.O. Box 640
Summit, New Jersey 07902-0640

Retired vice president and chief investment officer of the Ford Foundation
(a non-profit charitable organization). Chairman of the board and director, the
China Fund, Inc., (closed-end mutual fund). Director, Paribas Trust for
Institutions (an open-end mutual fund). Trustee, Retail Property Trust (a
company providing management services for a shopping center).

*ANNE V. FARRELL, AGE: 64

Trustee
425 Pike Street, Suite 510
Seattle, Washington 98101

Joined the Seattle Foundation (a charitable foundation) in 1980 as
executive vice president. Became president in 1984. Also serves on the board of
Washington Mutual, Inc. ("Washington Mutual") and Blue Cross of Washington and
Alaska. Listed in Who's Who in America. Past President of the Nature Conservancy
of Washington, Lakeside School and Seattle Rotary Club. Currently a Regent at
Seattle University and president of the Rainier Club in Seattle.

CARROL R. MCGINNIS, AGE: 55

Trustee
9225 Katy Freeway, Suite 205

Houston, Texas 77024

Founder, McGinnis Investments, since 1994. Prior thereto, served in various
positions with Transamerica Fund Management Company and its predecessor
companies from 1969 - 1993, including as president and chief operating officer.

*MICHAEL K. MURPHY, AGE: 63

Trustee
PO Box 3366
Spokane, Washington 99220-3366

President and CEO of CPM Development Corporation (a holding company which
includes Central Pre-mix Concrete Company Inland Asphalt Co., Central Pre-Mix
Prestress Co., and Interstate Concrete & Asphalt Co.). Member of the board of
directors for Washington Mutual. Former president and director of Inland Empire
Chapter -- Associated General Contractors. Former director of National
Aggregates Associates.

4
<PAGE> 164

ALFRED E. OSBORNE, JR. PH.D., AGE: 55

Trustee
110 Westwood Plaza, Suite C305
Los Angeles, California 90095-1481

University professor, researcher and administrator at University of
California Los Angeles since 1972. Director, Times Mirror Company (newspaper
publisher), United States Filter Corporation, Nordstrom Inc. (clothing retailer)
and Greyhound Lines, Inc. (bus company). Independent general partner, Technology
Funding Venture Partners V, and former Governor of the National Association of
Securities Dealers, Inc.

*WILLIAM G. PAPESH, AGE: 57

President and Trustee
1201 Third Avenue
22nd Floor
Seattle, WA 98101

President and director of WM Advisors, Inc. (the "Advisor"), WM Shareholder
Services, Inc. ("Shareholder Services"), WM Funds Distributor, Inc. (the
"Distributor") and WM Fund Services, Inc. (a registered investment adviser and
broker/dealer).

DANIEL L. PAVELICH, AGE: 55

Trustee

4311 South Madison Road

Spokane, Washington 99206

Chairman and CEO of BDO Seidman, a leading national accounting and
consulting firm. Worked in Seidman's Spokane office for 27 years and is a former
presiding member of the firm's board of directors. A member of the American
Institute of CPAs and served as a vice president of the Washington Society of
CPAs' board of directors.

JAY ROCKEY, AGE: 72

Trustee
2121 Fifth Avenue
Seattle, Washington 98121

Founder and chairman of The Rockey Company, a public relations and
marketing communications consulting firm with headquarters in Seattle and
offices in Portland and Spokane. Founder and director of RXL Pulitzer, an
international multimedia company that is a joint venture with Pulitzer
Publishing Co. of St. Louis. History includes managing New York City public
relations for Aluminum Company of America, director of public relations for the
Seattle World's Fair and the presidency of the Public Relations Society of
America. He is vice president of the Rainier Club and trustee of the Downtown
Seattle Association.

MORTON O. SCHAPIRO, AGE: 46

Trustee
4535 Lenox Avenue

Sherman Oaks, California 91423

Dean of the College of Letters, Arts and Sciences and Professor of
Economics, University of Southern California, since 1991. Prior thereto,
Professor of Economics, Williams College, 1980-1991.

5
<PAGE> 165

RICHARD C. YANCEY, AGE: 73

Lead Trustee

444 Madison Avenue, 19th Floor

New York, New York 10022

Investment Banker -- Warburg Dillon Read LLC, New York City, 1952 through
1992. Served as vice president, managing director and director and senior
advisor at Warburg Dillon Read LLC, Member of the boards of directors of AdMedia
Partners, Inc., CapMAC Holdings Inc., Fiberite, Inc., The Scoreboard, Inc., and
Czech and Slovak American Enterprise Fund.

OFFICERS:

MONTE D. CALVIN, CPA, AGE: 56

First Vice President and Chief Financial Officer

1201 Third Avenue
22nd Floor

Seattle, Washington 98101

First vice president and director of Shareholder Services; Director of the
Advisor and the Distributor.

SANDY CAVANAUGH, AGE: 45

First Vice President

1631 Broadway

Sacramento, California 95818

First vice president and director of the Distributor since September 1997.
Director of Advisor and Shareholder Services. Prior to joining the Distributor,
Ms. Cavanaugh held senior level positions with AIM Funds Distributor, First
Interstate Investments and ASB Financial Services.

JOHN T. WEST, CPA, AGE: 45

Vice President, Secretary and Compliance Officer
1201 Third Avenue
22nd Floor

Seattle, Washington 98101

Vice president of Shareholder Services.

Each of the Trustees and officers of the Trusts listed above holds the same
position(s) with all three Trusts and is also a trustee or officer of WM
Variable Trust (the "Variable Trust"). The Variable Trust is an investment
company advised by the Advisor.

REMUNERATION. No Trustee who is a director, officer or employee of the
Advisor or its affiliates receives any compensation from the Trusts for serving
as Trustee of the Trusts. The Trusts, together with the Variable Trust, pay each
Trustee who is not a director, officer or employee of the Advisor or its
affiliates a fee of $18,000 per annum plus $3,000 per Board meeting attended in
person and $1,000 per Board meeting attended by telephone, and reimburses each
such Trustee for travel and out-of-pocket expenses. The Lead Trustee receives an
additional fee of $500 per month. The Chairman of each committee receives a fee
of $500 per committee meeting. Officers of the Trusts receive no direct
remuneration in such capacity from the Trusts. Officers and Trustees of the
Trusts who are employees of the Advisor or its affiliates may be considered to
have received remuneration indirectly.

Wayne L. Attwood, M.D., Kristianne Blake, Anne V. Farrell, Michael K.
Murphy, William G. Papesh, Daniel L. Pavelich, Jay Rockey and Richard C. Yancey
became Trustees of WM Trust II and WM Strategic Asset Management Portfolios on
December 23, 1997. Arthur H. Bernstein, Esq., David E. Anderson, Edmond R.
Davis, Esq., John W. English and Alfred E. Osborne, Jr. Ph.D. became trustees of
WM Trust I on December 23, 1997. The terms of Carrol R. McGinnis and Morton O.
Schapiro as trustees commenced on March 5, 1999. The WM Trust I Funds other than
the High Yield Fund are successors to the following

6
<PAGE> 166

Washington corporations, or series thereof, which commenced operations in the
years indicated, which made up the group of mutual funds known as the "Composite
Funds."

Composite U.S. Government Securities, Inc. (1982)
Composite Income Fund, Inc. (1975)
Composite Growth & Income Fund, a series of Composite Equity Series, Inc.
(1949)
Composite Money Market Portfolio, a series of Composite Cash Management
Company (predecessor of the Money Market Fund) (1979)
Composite Tax-Exempt Portfolio, a series of Composite Cash Management
Company (predecessor of the Tax-Exempt Money Market Fund) (1979)
Composite Tax-Exempt Bond Fund, Inc. (1976)
Composite Northwest Fund, Inc. (1986)
Composite Bond & Stock Fund, Inc. (1939)

Each of the Composite Funds was reorganized as a series of WM Trust I on
March 20, 1998. In connection with this reorganization, the Trust, whose name
was previously "The Composite Funds" and which conducted no operations prior to
that date, changed its name to its current name. The High Yield fund was
organized on March 23, 1998.

Prior to March 20, 1998, the name of WM Trust II was "Sierra Trust Funds"
and the name of the Predecessor Portfolios was "Sierra Asset Management
Portfolios." These Trusts were part of a family of mutual funds known as the
"Sierra Funds."

The reorganizations and name changes described in the foregoing paragraphs
were part of an overall restructuring of the Composite Funds and the Sierra
Funds into a combined mutual fund family known as the WM Group of Funds. This
restructuring also consisted of the replacement of Sierra Investment Advisors
Corporation as investment advisor to the Sierra Funds with WM Advisors, Inc.
(formerly known as Composite Research & Management Co.), the advisor to the
Composite Funds, the election of the Directors of the Composite Funds as
Trustees of WM Trust I, WM Trust II and the Predecessor Portfolios and the
election of the independent Trustees of WM Trust II and the Predecessor
Portfolios as Trustees of WM Trust I.

On July 16, 1999, each Portfolio succeeded to a corresponding fund
("Portfolio") of the same name that was a series of WM Strategic Asset
Management Portfolios, a Massachusetts business trust, which commenced
operations on July 26, 1996. Where appropriate, the term "Portfolio" shall mean
or include the Predecessor Portfolio. In this SAI, WM Trust I, WM Trust II and
WM Strategic Asset Management Portfolios, LLC are referred to as the "Trusts."

7
<PAGE> 167

The following table shows the aggregate compensation paid to each of the
Trusts' Trustees by each Fund or Portfolio (or, in the case of the WM Trust I
Funds, by the predecessor Composite Funds, and in the case of the Portfolios, by
the Predecessor Portfolios) for the most recent fiscal year and by the "Fund
Complex" for calendar 1999. The Fund Complex consists of the Funds and
Portfolios, together with the Funds within the Variable Trust and Composite
Deferred Series, Inc., an investment company for which WM Advisors, Inc. serves
as advisor. None of the Trusts has any plan which would pay pension or
retirement benefits to any Trustee.

WM GROUP OF FUNDS
COMPENSATION TABLE

<TABLE>
<CAPTION>
TAX-
EXEMPT U.S. TAX-
MONEY MONEY CALIFORNIA SHORT TERM GOVERNMENT HIGH EXEMPT CALIFORNIA
MARKET MARKET MONEY INCOME SECURITIES INCOME YIELD BOND MUNICIPAL
TRUSTEE FUND FUND FUND FUND FUND FUND FUND FUND FUND
------- ------ ------ ---------- ---------- ---------- ------ ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
David E. Anderson..................
Wayne L. Attwood, M.D..............
Arthur H. Bernstein, Esq.+.........
Kristianne Blake...................
Edmond R. Davis, Esq...............
John W. English....................
Anne V. Farrell....................
Michael K. Murphy..................
Alfred E. Osborne, Jr., Ph.D.......
William G. Papesh..................
Daniel L. Pavelich.................
Jay Rockey.........................
Richard C. Yancey..................

<CAPTION>
CALIFORNIA
INSURED FLORIDA BOND
INTERMEDIATE INSURED &
MUNICIPAL MUNICIPAL STOCK
TRUSTEE FUND FUND FUND
------- ------------ --------- ------
<S> <C> <C> <C>
David E. Anderson..................
Wayne L. Attwood, M.D..............
Arthur H. Bernstein, Esq.+.........
Kristianne Blake...................
Edmond R. Davis, Esq...............
John W. English....................
Anne V. Farrell....................
Michael K. Murphy..................
Alfred E. Osborne, Jr., Ph.D.......
William G. Papesh..................
Daniel L. Pavelich.................
Jay Rockey.........................
Richard C. Yancey..................
</TABLE>

8
<PAGE> 168

[TO BE UPDATED]

GROWTH
GROWTH & INTERNATIONAL FUND SMALL CAP STRATEGIC CONSERVATIVE FLEXIBLE
INCOME GROWTH GROWTH OF THE STOCK GROWTH GROWTH BALANCED INCOME
TRUSTEE FUND FUND FUND NORTHWEST FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------- -------- ------ ------------- --------- --------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
David E. Anderson....
Wayne L. Attwood,
M.D................
Arthur H. Bernstein,
Esq.+..............
Kristianne Blake.....
Edmond R. Davis,
Esq................
John W. English......
Anne V. Farrell......
Michael K. Murphy....
Alfred E. Osborne,
Jr., Ph.D..........
William G. Papesh....
Daniel L. Pavelich...
Jay Rockey...........
Richard C. Yancey....

<CAPTION>
TOTAL
TOTAL COMPENSATION
COMPENSATION FROM THE FUND
INCOME FOR FISCAL COMPLEX* FOR
TRUSTEE PORTFOLIO YEAR 1998 CALENDAR 1998
------- --------- ------------ -------------
<S> <C> <C> <C>
David E. Anderson....
Wayne L. Attwood,
M.D................
Arthur H. Bernstein,
Esq.+..............
Kristianne Blake.....
Edmond R. Davis,
Esq................
John W. English......
Anne V. Farrell......
Michael K. Murphy....
Alfred E. Osborne,
Jr., Ph.D..........
William G. Papesh....
Daniel L. Pavelich...
Jay Rockey...........
Richard C. Yancey....
</TABLE>

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

+ Includes compensation deferred pursuant to a deferred compensation plan. The
total amount of deferred compensation payable to Mr. Bernstein as of December
31, 1999 was $ including income earned on deferred amounts.

9
<PAGE> 169

As of December 31, 1999, except as noted below, to the knowledge of the
Trusts, no shareholders owned of record or beneficially 5% or more of the
outstanding shares of the indicated classes of the Funds or Portfolios:

[TO BE UPDATED] -- TOP SHAREHOLDER INFO.

THE FUNDS' SERVICE PROVIDERS

ADVISOR

The Funds and Portfolios are managed by the Advisor. The Advisor has
delegated portfolio management responsibilities in respect of the Tax-Exempt
Bond, California Municipal, California Insured Intermediate Municipal, Florida
Insured Municipal, Growth and International Growth Funds to sub-advisors.

MANAGEMENT FEES. Each Fund and each Portfolio pays a management fee to the
Advisor. The management fee is calculated and paid to the Advisor every month.
The management fee for each Fund and Portfolio is based upon a percentage of the
average net assets of such Fund or Portfolio. Absent fee waivers, the total
management fee for each Fund and Portfolio as provided in the investment
advisory agreement of the Fund or Portfolio is as follows:

<TABLE>
<CAPTION>
FUNDS FEES
----- ----
<S> <C>
Money Market and Tax-Exempt Money Market Funds.............. 0.45% of the first $1 billion,
0.40% thereafter
California Money Fund....................................... 0.45% of the first $500 million,
0.40% thereafter
Short Term Income Fund...................................... 0.50% of the first $200 million,
0.45% of the next $300 million,
0.40% thereafter
U.S. Government Securities and Income Funds................. 0.50% of all assets
High Yield, Bond & Stock and Growth & Income Funds.......... 0.625% of the first $250 million,
0.50% thereafter
Tax-Exempt Bond Fund........................................ 0.50% of the first $250 million,
0.40% thereafter
California Municipal, California Insured Intermediate
Municipal and Florida Insured Municipal Funds............. 0.50% of all assets
Growth Fund of the Northwest Fund........................... 0.625% of the first $500 million,
0.50% of the next $500 million,
0.375% thereafter
Growth Fund................................................. 0.85% of all assets
Small Cap Stock Fund........................................ 1.05% of the first $100 million,
1.00% of the next $400 million,
0.90% thereafter
Mid Cap Stock Fund.......................................... 0.75% of all assets
International Growth Fund................................... 1.10% of the first $50 million,
1.00% of the next $75 million,
0.80% thereafter
Each of the Portfolios...................................... 0.15% of all assets
</TABLE>

Each of the Portfolios, unlike the Funds, also pays an administrative fee
at the annual rate of 0.50% of the average net assets to the Transfer Agent.

10
<PAGE> 170

For the three most recent fiscal years the Funds and Portfolios paid the
Advisor or its affiliates the following management fees:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER 31, 1999
----------------------------------------
FEES BEFORE EXPENSES
WAIVER FEES WAIVED REIMBURSED
----------- ----------- ----------
<S> <C> <C> <C>
Money Market Fund
Tax-Exempt Money Market Fund............................
California Money Fund*..................................
Short Term Income Fund*.................................
U.S. Government Securities Fund.........................
Income Fund.............................................
High Yield Fund**.......................................
Tax-Exempt Bond Fund....................................
California Municipal Fund*..............................
California Insured Intermediate Municipal Fund F*.......
Short Term Income Fund*.................................
Florida Insured Municipal Fund*.........................
Bond & Stock Fund.......................................
Growth & Income Fund....................................
Growth Fund of the Northwest............................
Growth Fund*............................................
Small Cap Stock*........................................
Strategic Growth Portfolio*.............................
Conservative Growth Portfolio*..........................
Balanced Portfolio*.....................................
Flexible Income Portfolio*..............................
Income Portfolio*.......................................
</TABLE>

11
<PAGE> 171

<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER 31, 1998
----------------------------------------
FEES BEFORE EXPENSES
WAIVER FEES WAIVED REIMBURSED
----------- ----------- ----------
<S> <C> <C> <C>
Money Market Fund....................................... $1,648,865 $ 0 $ 0
Tax-Exempt Money Market Fund............................ $ 104,751 $ 37,019 $ 0
California Money Fund*.................................. $ 64,254 $ 18,193 $ 0
Short Term Income Fund*................................. $ 67,678 $ 67,678 $ 9,467
U.S. Government Securities Fund......................... $1,467,714 $202,160 $ 0
Income Fund............................................. $1,124,138 $ 0 $ 0
High Yield Fund**....................................... $ 42,864 $ 29,768 $ 0
Tax-Exempt Bond Fund.................................... $1,213,255 $ 0 $ 0
California Municipal Fund*.............................. $ 778,933 $ 76,222 $ 0
California Insured Intermediate Municipal Fund F*....... $ 142,361 $ 66,654 $ 0
Short Term Income Fund*................................. $ 67,678 $ 67,678 $ 9,467
Florida Insured Municipal Fund*......................... $ 50,825 $ 41,923 $ 0
Bond & Stock Fund....................................... $2,190,790 $ 0 $ 0
Growth & Income Fund.................................... $3,575,552 $ 0 $ 0
Growth Fund of the Northwest............................ $1,920,011 $ 0 $ 0
Growth Fund*............................................ $ 955,950 $ 0 $ 0
Small Cap Stock*........................................ $ 493,746 $ 0 $ 0
International Growth Fund*.............................. $ 497,321 $ 0 $ 0
Strategic Growth Portfolio*............................. $ 34,290 $ 34,290 $ 6,085
Conservative Growth Portfolio*.......................... $ 130,854 $ 66,873 $ 0
Balanced Portfolio*..................................... $ 102,838 $ 46,178 $ 0
Flexible Income Portfolio*.............................. $ 8,801 $ 24,570 $ 0
Income Portfolio*....................................... $ 6,074 $ 6,074 $17,261
</TABLE>

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

* Fiscal period from June 30, 1998 through October 31, 1998.

** Commenced operations on April 8, 1998.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1998
----------------------------------------
FEES BEFORE EXPENSES
WAIVER FEES WAIVED REIMBURSED
----------- ----------- ----------
<S> <C> <C> <C>
California Money Fund................................... $ 188,184 $ 70,002 $ 0
Short Term Income Fund.................................. $ 145,180 $133,982 $ 0
California Municipal Fund............................... $2,010,319 $656,426 $ 0
California Insured Intermediate Municipal Fund.......... $ 380,528 $246,808 $ 0
Florida Insured Municipal Fund.......................... $ 146,555 $140,651 $ 396
Growth Fund............................................. $2,739,222 $ 0 $ 0
International Growth Fund............................... $1,354,934 $ 0 $29,113
Small Cap Stock Fund.................................... $2,214,151 $ 3,472 $ 0
Strategic Growth Portfolio.............................. $ 91,196 $ 86,276 $ 1,754
Conservative Growth Portfolio........................... $ 438,904 $116,516 $19,099
Balanced Portfolio...................................... $ 323,735 $107,755 $11,970
Flexible Income Portfolio............................... $ 26,686 $ 35,116 $13,939
Income Portfolio........................................ $ 22,941 $ 34,864 $11,403
</TABLE>

12
<PAGE> 172

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 1997
---------------------------------------
EXPENSES
FEES PAID FEES WAIVED REIMBURSED
---------- ----------- ----------
<S> <C> <C> <C>
Money Market Fund*...................................... $1,148,906 $ 0 $98,432
Tax-Exempt Money Market Fund*........................... $ 143,965 $ 0 $45,307
California Money Fund**................................. $ 187,084 $ 135,495 $ 0
Short Term Income Fund**................................ $ 153,348 $ 153,348 $40,836
U.S. Government Securities Fund*........................ $ 769,591 $ 0 $ 0
Income Fund*............................................ $ 553,562 $ 0 $ 0
Tax-Exempt Bond Fund*................................... $ 987,356 $ 0 $ 0
California Municipal Fund**............................. $2,063,242 $1,080,813 $ 0
California Insured Intermediate Municipal Fund**........ $ 398,681 $ 350,384 $ 0
Florida Insured Municipal Fund**........................ $ 173,618 $ 173,618 $22,193
Bond & Stock Fund***.................................... $1,912,341 $ 0 $ 0
Growth & Income Fund***................................. $1,630,777 $ 0 $ 0
Growth Fund**........................................... $2,418,645 $ 0 $ 0
International Growth Fund**............................. $1,444,004 $ 0 $ 0
Growth Fund of the Northwest***......................... $1,538,183 $ 137,944 $ 0
Small Cap Stock Fund**.................................. $2,600,399 $ 0 $ 0
Strategic Growth Portfolio**............................ $ 36,642 $ 6,241 $41,371
Conservative Growth Portfolio**......................... $ 260,044 $ 54,435 $98,600
Balanced Portfolio**.................................... $ 188,577 $ 40,744 $82,121
Flexible Income Portfolio**............................. $ 19,886 $ 4,470 $34,312
Income Portfolio**...................................... $ 18,539 $ 4,476 $33,580
</TABLE>

- ---------------
* Fiscal year ended 12/31

** Fiscal year ended 6/30

*** Fiscal year ended 10/31

13
<PAGE> 173

SUB-ADVISORY FEES

The Advisor retains only the net amount of the management fees paid to it
after the sub-advisory fees described below are paid to the sub-advisors. The
Advisor pays to the sub-advisors for the funds listed below a monthly fee at an
annual rate of the following percentages of the average net assets of each such
fund.

<TABLE>
<CAPTION>
SUBADVISOR/FUNDS FEES
---------------- ----
<S> <C>
VAN KAMPEN
California Municipal Fund................................. 0.20% of the first $150 million
0.15% thereafter
Florida Insured Municipal Fund............................ 0.20% of the first $75 million
0.125% thereafter
California Insured Intermediate Municipal Fund............ 0.20% of the first $75 million
0.125% thereafter
Tax-Exempt Bond Fund...................................... 0.10% of average daily net
assets
JANUS
Growth Fund............................................... 0.55% of the first $25 million
0.50% of the next $475 million
0.45% thereafter*
CAPITAL GUARDIAN
International Growth Fund................................. 0.79% of the first $25 million
0.60% of the next $25 million
0.425% of the next $200 million
0.375% thereafter**
</TABLE>

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

* Assets of WM Variable Trust Growth Fund are included with the assets of the
Growth Fund for purposes of determining fees.

** Subject to fee aggregation policies described below.

The sub-advisory agreement for the International Growth Fund with Capital
Guardian took effect on June 23, 1999. The subadvisory agreements for the Growth
Fund with Janus and for California Municipal Fund, the Florida Insured Municipal
Fund and the California Insured Intermediate Fund with Van Kampen each took
effect on March 20, 1998. The subadvisory agreement for the Tax-Exempt Bond Fund
with Van Kampen took effect on January 1, 1999.

FEE AGGREGATION POLICIES

Fee aggregation will apply to all accounts managed by Capital Group
companies, except for emerging markets equity investments and investments in
funds with internally charged fees ("Eligible Accounts"). In order to achieve
the benefit of fee aggregation, the combined actual fees must exceed the
combined total of the minimum fee applicable to each of the client's Eligible
Accounts.

For additional Eligible Accounts with the same investment objectives and
guidelines, all assets for these Eligible Accounts will be aggregated for fee
calculation purposes.

For additional Eligible Accounts with different investment objectives and
guidelines:

1. Each account will be charged on the first $10 million at the
initial breakpoint rate for the appropriate mandate. Any incremental assets
over $10 million will be aggregated and charged at the incremental rate for
the appropriate mandate.

2. Assets invested in commingled funds will be aggregated and charged
at the incremental rate for the appropriate mandate.

3. The first additional account within a new country will be charged
on the first $15 million at the initial breakpoint rate for the appropriate
mandate. Any incremental assets over $15 million will be aggregated and
charged at the incremental rate for the appropriate mandate.

14
<PAGE> 174

For fee aggregation purposes, Eligible Accounts will be aggregated in the
following order: balanced, equity-developed markets, convertible,
fixed-income -- high yield, fixed-income -- emerging markets, and
fixed-income -- developed markets.

Unless otherwise requested, the benefit from fee aggregation for clients
with multiple accounts will be calculated by comparing total aggregated fees to
total unaggregated fees for all Eligible Accounts. The resulting percentage
discount will be applied to each Eligible Account's unaggregated fees.

If all Eligible Accounts are not denominated in the same currency, the
local currency assets of each Eligible Account and the related fees calculated
on any unaggregated basis will be converted to a designated base currency using
the applicable foreign exchange rate. The total of such fees will be compared to
the Eligible Accounts' total aggregated fees. The resulting percentage discount
will then be applied to each Eligible Account's unaggregated fee as determined
in the applicable currency.

FEE DISCOUNTS AND ELIMINATION OF FEE BREAKPOINTS

The following Fee discount will be applied based upon the total aggregated
fees:

<TABLE>
<S> <C>
Clients between $1.25 million to $4 million................. 5% discount
Clients between $4 million to $8 million.................... 7.5% discount
Clients between $8 million to $12 million................... 10% discount
Clients over $12 million.................................... 12.5% discount
</TABLE>

For this purpose, aggregated fees will include all fees from separate
accounts, commingled funds, and funds internally charged fees managed by Capital
Group companies, except for investments in American-Funds' mutual funds. The
resulting fee discount percentage will be applied to each account's fees
(excluding fees related to investments in funds with internally charged fees).

For clients whose total aggregated fees (before discounts) exceed $3
million, fee breakpoints will be eliminated and each account will be charged at
the lowest marginal fee rate applicable to the account's fee schedule.

To determine the applicable fee discount level and breakpoint elimination
threshold, the total aggregated fees for the quarter will be annualized. For
this purpose, all local currency fees will be converted to a designated base
currency.

Fees related to investments in funds with internally charged fees will be
estimated by multiplying the quarter end value of the Investment (adjusted on a
prorated basis for any contributions or withdrawals during the quarter) by the
fund's effective fee. For this purpose, the effective fee will be based on the
value of the fund's quarter end assets and the fund's current fee schedule.

Applicable discount levels and the elimination of fee breakpoints will be
effective beginning the first quarter a discount threshold is exceeded and will
remain in effect unless the total fees fall below the discount threshold due to
a significant withdrawal of assets. A decline in the market alone will not cause
the reinstatement of a lower discount level or fee breakpoints.

15
<PAGE> 175

For the three most recent fiscal years, the Advisor or its affiliates paid
the sub-advisors the following sub-advisory fees:

<TABLE>
<CAPTION>
FEES PAID FEES PAID
FISCAL YEAR FISCAL YEAR FEES PAID
ENDED ENDED FISCAL YEAR
OCTOBER OCTOBER ENDED JUNE
1999 1998* 1998
----------- ----------- -----------
<S> <C> <C> <C>
Tax-Exempt Bond Fund........................................
California Municipal Fund................................... $192,188 $ 580,166
California Insured Intermediate Municipal Fund.............. $ 40,648 $ 126,152
Florida Insured Municipal Fund.............................. $ 14,521 $ 49,884
Growth Fund................................................. $466,728 $1,473,318
International Growth Fund**................................. $247,641 $ 753,964
Small Cap Stock Fund........................................ $ 0 $ 921,864
</TABLE>

- ---------------
* Fiscal period from June 30, 1998 through October 31, 1998.

** Fees shown are those paid to Warburg, which provided sub-advisory services to
the fund until June 23, 1999.

Until March 20, 1998, Sierra Fund Administration Corporation ("Sierra
Administration") served as the administrator, and First Data Investor Services
Group, Inc. ("First Data") served as the sub-administrator to each of the WM
Trust II Funds and each of the Portfolios. Shareholder Services had provided
transfer agency and other shareholder services to each of the WM Trust I Funds
prior to that date, and has provided transfer agency and other shareholder
services to each of the Funds and Portfolios since March 20, 1998.

For the three most recent fiscal years the Trusts paid Shareholder Services
and its affiliates the following administration and/or Transfer Agent fees:

<TABLE>
<CAPTION>
OCTOBER 1999 OCTOBER 1998 JUNE 1998
------------ ------------ ---------
FEES FEES FEES
PAID PAID PAID
------------ ------------ ---------
<S> <C> <C> <C>
Money Market Fund*...................................... $ 586,106 n/a
Tax-Exempt Money Market Fund*........................... $ 16,010 n/a
California Money Fund**................................. $ 13,361 $ 73,762
Short Term Income Fund**................................ $ 24,407 $ 33,910
U.S. Government Securities Fund*........................ $1,290,295 n/a
Income Fund*............................................ $ 195,913 n/a
High Yield Fund......................................... $ 2,519 n/a
Tax-Exempt Bond Fund*................................... $ 98,013 n/a
California Municipal Fund**............................. $ 41,000 $860,498
California Insured Intermediate Municipal Fund**........ $ 8,369 $161,117
Florida Insured Municipal Fund**........................ $ 3,487 $ 65,423
Bond & Stock Fund....................................... $ 248,201 n/a
Growth Income Fund...................................... $ 482,655 n/a
Growth Fund**........................................... $ 106,901 $723,887
International Growth Fund**............................. $ 46,783 $370,136
Growth Fund of the Northwest***......................... $ 394,356 n/a
Small Cap Stock Fund**.................................. $ 132,833 $620,085
Strategic Growth Portfolio++**.......................... $ 129,401 $303,985
Conservative Growth Portfolio++**....................... $ 87,805 $1,463,013
Balanced Portfolio++**.................................. $ 374,761 $1,079,118
Flexible Income Portfolio++**........................... $ 32,391 $ 88,955
Income Portfolio++**.................................... $ 22,302 $ 76,470
</TABLE>

16
<PAGE> 176

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

+ The Portfolios commenced operations on July 25, 1996.

* Fiscal year end changed from 12/31 to 10/31

** Fiscal year end changed from 6/30 to 10/31

For the three most recent fiscal years, Shareholder Services and its
affiliates paid the following amounts to First Data for sub-administrative
services to the Funds and Portfolios.

<TABLE>
<CAPTION>
OCTOBER 1999 OCTOBER 1998 JUNE 1998 1997
------------ ------------ --------- --------
<S> <C> <C> <C> <C>
Money Market Fund*........................ $134,737 n/a n/a
Tax-Exempt Money Market Fund*............. $ 8,464 n/a n/a
California Money Fund**................... $ 5,818 $ 37,008 $ 37,649
Short Term Income Fund**.................. $ 6,151 $ 31,105 $ 24,633
US Government Securities Fund*............ $ 98,252 n/a n/a
Income Fund*.............................. $ 73,599 n/a n/a
High Yield Fund........................... $ 7,768 n/a n/a
Tax-Exempt Bond Fund*..................... $ 89,401 n/a n/a
California Municipal Fund**............... $ 50,611 $243,920 $302,048
California Insured Intermediate Municipal
Fund**.................................. $ 3,302 $249,738 $ 58,360
Florida Insured Municipal Fund**.......... $ 84,519 $ 23,945 $ 25,408
Bond & Stock Fund......................... $212,391 n/a n/a
Growth & Income Fund...................... $ 67,046 n/a n/a
Growth Fund of the Northwest.............. $ 40,745 n/a n/a
Growth Fund*.............................. $ 22,493 $260,697 $213,556
International Growth Fund**............... $ 21,615 $249,221 $141,808
Small Cap Stock Fund**.................... $ 10,291 $193,279 $241,257
Strategic Growth Portfolio**.............. $ 39,627 $ 32,694 $ 1,128
Conservative Growth Portfolio**........... $ 31,153 $ 52,443 $ 1,164
Balanced Portfolio**...................... $ 2,670 $ 45,182 $ 1,257
Flexible Income Portfolio**............... $ 1,842 $ 25,987 $ 1,533
Income Portfolio**........................ ?? $ 25,783 $ 1,249
</TABLE>

- ---------------
* Fiscal year end changed from 12/31 to 10/31.

** Fiscal year end changed from 6/30 to 10/31.

TRANSFER AGENT AND CUSTODIAN

WM Shareholder Services, Inc., provides transfer agency and other services
incidental to issuance and transfer of shares, maintaining shareholder lists,
and issuing and mailing distributions and reports. WM Shareholder Services, Inc.
is an indirect wholly owned subsidiary of Washington Mutual, located at 1201
Third Avenue, 22nd Fl., Seattle, Washington 98101. The Custodian for the Funds
and Portfolios is Boston Safe Deposit and Trust Co., which is located at One
Boston Place, Boston, Massachusetts 02108. WM Shareholder Services, Inc. may
charge a fee for special services, such as providing historical account
documents, that are beyond the normal scope of its services.

COUNSEL

Ropes & Gray, located at One International Place, Boston, Massachusetts
02110, serves as counsel to the Trusts.

17
<PAGE> 177

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS

Deloitte & Touche LLP, 50 Fremont Street, San Francisco, CA 94105, serves
as independent accountants to each of the Funds and Portfolios providing audit
services, tax return review and other tax consulting services and assistance and
consultation in connection with the review of various filings with the
Securities and Exchange Commission. PricewaterhouseCoopers LLP, 160 Federal
Street, Boston, Massachusetts 02110, served as independent accountants to WM
Trust II and the Portfolios for their fiscal year ended June 30, 1998 and for
prior fiscal years. For the fiscal year ended December 31, 1997 and prior fiscal
years of the WM Trust I Funds, LeMaster & Daniels PLLC, 601 West Riverside,
Suite 700, Spokane, Washington 99201, served as independent accountants to WM
Trust I. The financial statements, financial highlights and Report of
Independent Accountants of Deloitte & Touche LLP for each of the Funds and
Portfolios contained in the Funds' and the Portfolios' Annual Report for the
fiscal period ended October 31, 1999 are hereby incorporated by reference. The
financial highlights and Report of Independent Accountants of
PricewaterhouseCoopers LLP for each of the WM Trust II Funds and each of the
Portfolios contained in such Funds' and the Portfolios' Annual Report to
Shareholders for the year ended June 30, 1998 are incorporated herein by
reference. The financial highlights and Report of Independent Accountants of
LeMaster & Daniels PLLC for each of the WM Trust I Funds contained in such
Funds' Annual Reports to Shareholders for the fiscal years ended October 31,
1997 or December 31, 1997, as the case may be, are hereby incorporated by
reference. The financial statements incorporated by reference into this SAI and
the financial highlights in the Prospectus have been audited by Deloitte &
Touche LLP, PricewaterhouseCoopers LLP or LeMaster & Daniels PLLC, as the case
may be, and have been so included in reliance on such independent accountants'
reports, given on the authority of such firms as experts in accounting and
auditing.

ORGANIZATION OF THE TRUST

WM Trust I is an open-end management investment company, organized as a
Massachusetts business trust pursuant to an Agreement and Declaration of Trust
dated September 19, 1997, as amended from time to time (the "WM Trust I
Agreement"). WM Trust II is organized as a Massachusetts business trust pursuant
to a Master Trust Agreement dated February 22, 1989, as amended from time to
time (the "WM Trust II Agreement"). The WM Trust I Agreement and WM Trust II
Agreements are collectively referred to herein as the "Trust Agreements." WM
Strategic Asset Management Portfolios, LLC is an open-end management investment
company, organized as a Massachusetts limited liability company pursuant to a
Limited Liability Company Agreement dated March 12, 1999, as amended from time
to time (the "LLC Agreement"). In the interest of economy and convenience,
certificates representing shares in the Trusts are not physically issued. Boston
Safe Deposit and Trust Co. ("Boston Safe"), the Trusts' Custodian, and
Shareholder Services, the Trusts' Transfer Agent, maintain a record of each
shareholder's ownership of Trust shares. Shares do not have cumulative voting
rights, which means that holders of more than 50% of the shares voting for the
election of Trustees can elect all Trustees. Shares are transferable but have no
preemptive, conversion or subscription rights. Shareholders generally vote by
Fund, Portfolio or Class, except with respect to the election of Trustees and
the selection of independent accountants, for which shareholders of each Trust
as a whole vote together.

Under normal circumstances, there will be no meetings of shareholders for
the purpose of electing Trustees unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders, at
which time the Trustees then in office promptly will call a shareholders'
meeting for the election of Trustees. Under the 1940 Act, shareholders of record
of no less than two-thirds of the outstanding shares of the Trust may remove a
Trustee through a declaration in writing or by vote cast in person or by proxy
at a meeting called for that purpose. Under the Trust Agreements and LLC
Agreement, the Trustees are required to call a meeting of shareholders for the
purpose of voting upon the question of removal of any such Trustee when
requested in writing to do so by the shareholders of record of not less than 10%
of any of a Trust's outstanding shares.

Massachusetts law provides that shareholders, under certain circumstances,
could be held personally liable for the obligations of a business trust, such as
WM Trust I or WM Trust II. However, each Trust Agreement disclaims shareholder
liability for acts or obligations of the Trusts and require that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Trust or a
18
<PAGE> 178

Trustee. Each Trust Agreement provides for indemnification from the Trust's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust would be unable to meet its obligations, a possibility that
the Trusts' management believes is remote. The Trustees intend to conduct the
operations of each Trust in such a way so as to avoid, to the extent possible,
ultimate liability of the shareholders for the liabilities of the Trust.
Massachusetts law provides that shareholders of limited liability companies,
such as WM Strategic Asset Management Portfolios, LLC, may not be held
personally liable for the obligations of the Portfolios.

INVESTMENT OBJECTIVES AND POLICIES

The Prospectus discusses the investment objective or objectives of each of
the Funds and Portfolios and the policies to be employed to achieve such
objectives. This section contains supplemental information concerning the types
of securities and other instruments in which the Funds and Portfolios may
invest, the investment policies and portfolio strategies that the Funds and
Portfolios may utilize and certain risks attendant to such investments, policies
and strategies.

RATINGS AS INVESTMENT CRITERIA. In general, the ratings of nationally
recognized statistical rating organization ("NRSROs"), such as Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's ("S&P"), Duff and Phelps, and
Fitch, represent the opinions of these agencies as to the quality of securities
which they rate. It should be emphasized, however, that such ratings are
relative and subjective and are not absolute standards of quality. These ratings
will be used by the Funds as initial criteria for the selection of portfolio
securities, but the Funds will also rely upon the independent advice of the
Advisor or their respective sub-advisors. The Appendix to this SAI contains
further information concerning the ratings of these services and their
significance.

To the extent that the rating given by Moody's or S&P for securities may
change as a result of changes in such organizations or their rating systems,
each Fund will attempt to use comparable ratings as standards for its
investments in accordance with the investment policies contained in the
Prospectus and in this SAI.

U.S. GOVERNMENT SECURITIES. U.S. Government Securities include debt
obligations of varying maturities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. U.S. Government Securities include, but are
not necessarily limited to, direct obligations of the U.S. Treasury, and
securities issued or guaranteed by the Federal Housing Administration, Farmers
Home Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association ("GNMA"), General
Services Administration, Central Bank for Cooperatives, Federal Farm Credit
Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation
("FHLMC"), Federal Intermediate Credit Banks, Resolution Trust Corporation,
Federal Land Banks, Federal National Mortgage Association ("FNMA"), Maritime
Administration, Tennessee Valley Authority, District of Columbia Armory Board
and Student Loan Marketing Association. Direct obligations of the U.S. Treasury
include a variety of securities that differ in their interest rates, maturities
and dates of issuance. Because the U.S. Government is not obligated by law to
provide support to an instrumentality it sponsors, a Fund will invest in
obligations issued by such an instrumentality only if the Advisor or the Fund's
sub-advisor determines that the credit risk with respect to the instrumentality
does not make its securities unsuitable for investment by the Fund.

ILLIQUID INVESTMENTS. These securities generally cannot be sold or disposed
of in the ordinary course of business at approximately the value at which the
Fund has valued the investments within seven days. This may have an adverse
effect upon the Fund's ability to dispose of the particular securities at fair
market value and may limit the Fund's ability to obtain accurate market
quotations for purposes of valuing the securities and calculating the net asset
value of shares of the Fund. The Funds may also purchase securities that are not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
but that can be sold to qualified institutional buyers in accordance with Rule
144A under that Act ("Rule 144A securities"). Rule 144A securities generally
must be sold to other qualified institutional buyers. If a particular investment
in Rule 144A securities is not determined to be liquid, that investment will be
treated as an illiquid security.

19
<PAGE> 179

COMBINED TRANSACTIONS. To the extent permitted by each Fund's investment
polices and restrictions, the Funds may enter into multiple transactions,
including multiple options transactions, multiple futures transactions, multiple
foreign currency transactions (including forward foreign currency exchange
contracts) and any combination of futures, options and foreign currency
transactions (each separately, a "component" transaction), instead of a single
transaction, as part of a single hedging strategy when, in the opinion of the
Advisor or the sub-advisor, it is in the best interest of the Fund to do so. A
combined transaction, while part of a single hedging strategy, may contain
elements of risk that are present in each of its component transactions.

BANK OBLIGATIONS. Domestic commercial banks organized under federal law are
supervised and examined by the Comptroller of the Currency and are required to
be members of the Federal Reserve System and to be insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks organized under state
law are supervised and examined by state banking authorities but are members of
the Federal Reserve System only if they elect to join. Most state banks are
insured by the FDIC (although such insurance may not be of material benefit to a
Fund, depending upon the principal amount of certificates of deposit ("CDs") of
each state bank held by a Fund) and are subject to federal examination and to a
substantial body of federal law and regulation. As a result of federal and state
laws and regulations, domestic branches of domestic banks are, among other
things, generally required to maintain specific levels of reserves, and are
subject to other supervision and regulation designed to promote financial
soundness.

Obligations of foreign branches of U.S. banks and of foreign branches of
foreign banks, such as CDs and time deposits ("TDs"), may be general obligations
of the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and governmental regulation. Obligations of
foreign branches of U.S. banks and foreign banks are subject to the risks
associated with investing in foreign securities generally. Foreign branches of
U.S. banks and foreign branches of foreign banks are not necessarily subject to
the same or similar regulatory requirements that apply to U.S. banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing and
financial recordkeeping requirements. In addition, less information may be
publicly available about a foreign branch of a U.S. bank or about a foreign bank
than about a U.S. bank.

Obligations of U.S. branches of foreign banks may be general obligations of
the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and by federal and state regulation as well as
governmental action in the country in which the foreign bank has its head
office. A U.S. branch of a foreign bank may or may not be subject to reserve
requirements imposed by the Federal Reserve System or by the state in which the
branch is located if the branch is licensed in that state. The deposits of
branches licensed by certain states may not necessarily be insured by the FDIC.
In addition, there may be less publicly available information about a U.S.
branch of a foreign bank than about a U.S. bank.

In view of the foregoing factors associated with the purchase of CDs and
TDs issued by foreign banks and foreign branches of U.S. banks, the Advisor or
the Funds' respective sub-advisors will carefully evaluate such investments on a
case-by-case basis.

A Fund may purchase a CD, TD or bankers' acceptances issued by a bank,
savings and loan association or other banking institution with less than $1
billion in assets (a "Small Issuer Bank Obligation") only so long as the issuer
is a member of the FDIC or supervised by the Office of Thrift Supervision (the
"OTS") and so long as the principal amount of the Small Issuer Bank Obligation
is fully insured by the FDIC and is no more than $100,000. Each of the Funds
will at any one time hold only one Small Issuer Bank Obligation from any one
issuer.

Savings and loan associations whose CDs, TDs and bankers' acceptances may
be purchased by the Funds are supervised by the OTS and insured by the Savings
Association Insurance Fund, which is administered by the FDIC and is backed by
the full faith and credit of the United States Government. As a result, such
savings and loan associations are subject to regulation and examination.

MORTGAGE-BACKED SECURITIES. The mortgage-backed securities in which the
Funds may invest include these classified as governmental or government-related.
Governmental mortgage-backed securities are backed by the full faith and credit
of the United States. GNMA, the principal U.S. guarantor of such securities, is
a

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wholly-owned U.S. Government corporation within the Department of Housing and
Urban Development. Government-related mortgage-backed securities which are not
backed by the full faith and credit of the United States include those issued by
FNMA and FHLMC. FNMA is a government-sponsored corporation owned entirely by
private stockholders, which is subject to general regulation by the Secretary of
Housing and Urban Development. Pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA. FHLMC is a
corporate instrumentality of the United States, the stock of which is owned by
the Federal Home Loan Banks. Participation certificates representing interests
in mortgages from FHLMC's national portfolio are guaranteed as to the timely
payment of interest and ultimate collection of principal by FHLMC.

Entities may create mortgage loan pools offering pass-through investments
in addition to those described above. The mortgages underlying these securities
may be alternative mortgage instruments, that is, mortgage instruments in which
principal or interest payments may vary or terms to maturity may be shorter than
previously customary. As new types of mortgage-backed securities are developed
and offered to investors, the Funds will, consistent with their respective
investment objectives and policies, consider making investments in such new
types of securities.

The average maturity of pass-through pools of mortgage-backed securities
varies with the maturities of the underlying mortgage instruments. In addition,
a pool's stated maturity may be shortened by unscheduled payments on the
underlying mortgages. Factors affecting mortgage prepayments include the level
of interest rates, general economic and social conditions, the location of the
mortgaged property and the age of the mortgage. Because prepayment rates of
individual mortgage pools vary widely, it is not possible to accurately predict
the average life of a particular pool. Common industry practice, for example, is
to assume that prepayments will result in a 7- to 9-year average life for pools
of fixed-rate 30-year mortgages. Pools of mortgages with other maturities or
different characteristics will have varying average life assumptions.

REPURCHASE AGREEMENTS. The California Money, Short Term Income, High Yield,
California Insured Intermediate Municipal, Florida Insured Municipal, Growth,
International Growth, Mid Cap Stock and Small Cap Stock Funds may invest in
repurchase agreements without limitation. The California Municipal Fund may
invest no more than 20%, in the aggregate, of its assets in repurchase
agreements and certain other securities or instruments, but this 20% limit does
not apply to investments for temporary defensive purposes. The Money Market,
Tax-Exempt Money Market, U.S. Government Securities, Income, Tax-Exempt Bond,
Bond & Stock and Growth & Income Funds and Growth Fund of the Northwest may
enter into repurchase agreements with brokers, dealers and banks to temporarily
invest cash reserves, provided that repurchase agreements maturing in greater
than 7 days cannot exceed 10% of each Fund's total assets.

WHEN ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. A segregated
account in the name of the Fund consisting of cash or other liquid assets equal
to the amount of when-issued or delayed-delivery commitments will be established
at Boston Safe, the Trusts' Custodian. For the purpose of determining the
adequacy of the securities in the accounts, the deposited securities will be
valued at market or fair value. If the market or fair value of the securities
declines, additional cash or securities will be placed in the account daily so
that the value of the account will equal the amount of such commitments by the
Fund. On the settlement date, the Fund will meet its obligations from
then-available cash flow, the sale of securities held in the segregated account,
the sale of other securities or, although it would not normally expect to do so,
from the sale of securities purchased on a when-issued or delayed-delivery basis
themselves (which may have a greater or lesser value than the Fund's payment
obligations).

STRATEGIC TRANSACTIONS. Subject to the investment limitations and
restrictions for each of the Funds stated elsewhere in this SAI and in the
Prospectus, each of the Funds and Portfolios, except for the Money Funds, may
utilize various investment strategies as described below to hedge various market
risks, to manage the effective maturity or duration of fixed-income securities
or for other bona fide hedging purposes. No Fund or Portfolio currently intends
to enter into Strategic Transactions, excluding Strategic Transactions that are
"covered" or entered into for bona fide hedging purposes, that are in the
aggregate principal amount in excess of 15% of the Fund's net assets.

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The Funds and Portfolios may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple foreign
currency transactions (including forward foreign currency exchange contracts)
and any combination of futures, options and foreign currency transactions (each
separately, a "component" transaction), instead of a single transaction, as part
of a single strategy when, in the opinion of the Advisor or the sub-advisor, it
is in the best interest of the Fund or Portfolio to do so. A combined
transaction may contain elements of risk that are present in each of its
component transactions.

The use of Strategic Transactions for asset management purposes involves
special considerations and risks. Additional risks pertaining to particular
strategies that make up Strategic Transactions are described below. Successful
use of most Strategic Transactions depends upon the Advisor or the sub-advisor's
ability to predict movements of the overall securities and interest rate
markets, which requires different skills than predicting changes in the prices
of individual securities. There can be no assurance that any particular strategy
adopted will succeed. There may be imperfect correlation, or even no
correlation, between price movements of Strategic Transactions and price
movements of the related portfolio or currency positions. Such a lack of
correlation might occur due to factors unrelated to the value of the related
portfolio or currency positions, such as speculative or other pressures on the
markets in which Strategic Transactions are traded. In addition, a Fund or
Portfolio might be required to maintain assets as "cover," maintain segregated
accounts or make margin payments when it takes positions in Strategic
Transactions involving obligations to third parties (i.e., Strategic
Transactions other than purchased options). These requirements might impair the
Fund's ability to sell a portfolio security or currency position or make an
investment at a time when it would otherwise be favorable to do so, or require
that the Fund sell a portfolio security or currency position at a
disadvantageous time.

- SWAPS, CAPS, FLOORS AND COLLARS. Among the Strategic Transactions into
which a Fund engaging in Strategic Transactions may enter, consistent with the
Fund's investment policies and restrictions, are interest rate, currency and
index swaps and the purchase or sale of related caps, floors and collars. A Fund
would enter into these transactions primarily to preserve a return or spread on
a particular investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. A Fund will use these transactions as hedges and not speculative
investments and will not sell interest rate caps or floors where it does not own
securities or other instruments providing the income stream the Fund may be
obligated to pay. Interest rate swaps involve the exchange by a Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or value.

A Fund will usually enter into swaps on a net basis, i.e., the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the Advisor
and the Trusts believe that such obligations do not constitute senior securities
under the 1940 Act and, accordingly, will not treat them as being subject to the
Fund's borrowing restrictions. If there is a default by the counterparty, a Fund
may have contractual remedies pursuant to the agreements related to the
transaction. Caps, floors and collars are relatively recent innovations for
which standardized documentation has not yet been fully developed and,
accordingly, they may be less liquid.

- FUTURES ACTIVITIES. Each of the Funds permitted to engage in Strategic
Transactions within WM Trust II, and the High Yield and Mid Cap Stock Funds and
each of the Portfolios may enter into futures

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contracts and options on futures contracts that are traded on a U.S. exchange or
board of trade. These investments may be made by the Fund involved for the
purpose of hedging against changes in the value of its portfolio securities due
to anticipated changes in interest rates and market conditions, and for
otherwise permitted Strategic Transactions. In the case of the California
Municipal, the California Insured Intermediate Municipal and the Florida Insured
Municipal Funds, such investments will be made only in unusual circumstances,
such as when that Funds' sub-advisor anticipates an extreme change in interest
rates or market conditions. The ability of a Fund to trade in futures contracts
and options on futures contracts may be materially limited by the requirement of
the Internal Revenue Code of 1986, as amended (the "Code"), applicable to a
regulated investment company. See "Taxes" below.

- FUTURES CONTRACTS. An interest rate futures contract provides for the
future sale by one party and the purchase by the other party of a certain amount
of a specific financial instrument (debt security) at a specified price, date,
time and place. A bond index futures contract is an agreement pursuant to which
two parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading day
of the contract and the price at which the index contract was originally
written. No physical delivery of the underlying securities in the index is made.

The purpose of entering into a futures contract by a Fund or Portfolio is
to protect the Fund or Portfolio from fluctuations in the value of its
securities caused by anticipated changes in interest rates or market conditions
without necessarily buying or selling the securities. For example, if the
California Municipal Fund, the California Insured Intermediate Municipal Fund or
the Florida Insured Municipal Fund owns long-term bonds and tax-exempt rates are
expected to increase, these Funds might enter into futures contracts to sell a
municipal bond index. Such a transaction would have much the same effect as a
Fund's selling some of the long-term bonds in its portfolio. If tax-exempt rates
increase as anticipated, the value of certain long-term municipal obligations in
the portfolio would decline, but the value of the Fund's futures contracts would
increase at approximately the same rate, thereby keeping the net asset value of
the Fund from declining as much as it otherwise would have. Because the value of
portfolio securities will far exceed the value of the futures contracts entered
into by a Fund, an increase in the value of the futures contract would only
mitigate -- but not totally offset -- the decline in the value of the portfolio.

No consideration is paid or received by a Fund upon entering into a futures
contract. Initially, a Fund or Portfolio would be required to deposit with the
broker an amount of cash or cash equivalents equal to approximately 1% to 10% of
the contract amount (this amount is subject to change by the board of trade on
which the contract is traded and members of such board of trade may charge a
higher amount). This amount is known as "initial margin" and is in its nature
the equivalent of a performance bond or good faith deposit on the contract,
which is returned to a Fund or Portfolio upon termination of the futures
contract, assuming all contractual obligations have been satisfied. Subsequent
payments, known as "variation margin," to and from the broker, will be made
daily as the price of the index or securities underlying the futures contract
fluctuates, making the long and short positions in the futures contract more or
less valuable, a process known as "marking-to-market." At any time prior to the
expiration of a futures contract, a Fund or Portfolio may elect to close the
position by taking an opposite position, which will operate to terminate the
Fund's or Portfolio's existing position in the contract.

There are several risks in connection with the use of futures contracts as
a hedging device. Successful use of futures contracts by a Fund is subject to
the ability of the Advisor or the sub-advisor to correctly predict movements in
the direction of interest rates or changes in market conditions. These
predictions involve skills and techniques that may be different from those
involved in the management of the portfolio being hedged. In addition, there can
be no assurance that there will be a correlation between movements in the price
of the underlying index or securities and movements in the price of the
securities which are the subject of the hedge. A decision of whether, when and
how to hedge involves the exercise of skill and judgment, and even a well-
conceived hedge may be unsuccessful to some degree because of market behavior or
unexpected trends in interest rates.

Although the Funds and the Portfolios intend to enter into futures
contracts only if there is an active market for such contracts, there is no
assurance that an active market will exist for the contracts at any

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particular time. Most U.S. futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a particular contract, no
trades may be made that day at a price beyond that limit. It is possible that
futures contract prices would move to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt liquidation of
futures positions and subjecting some futures traders to substantial losses. In
such event, and in the event of adverse price movements, a Fund or Portfolio
would be required to make daily cash payments of variation margin. In such
circumstances, an increase in the value of the portion of the portfolio being
hedged, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities being hedged will, in fact, correlate with the price movements in
a futures contract and thus provide an offset to losses on the futures contract.

To ensure that transactions constitute bona fide hedges in instances
involving the purchase or sale of a futures contract, the Funds or Portfolios
will be required to either (i) segregate sufficient cash or liquid assets to
cover the outstanding position or (ii) cover the futures contract by either
owning the instruments underlying the futures contract or by holding a portfolio
of securities with characteristics substantially similar to the underlying index
or stock index comprising the futures contract or by holding a separate option
permitting it to purchase or sell the same futures contract. Because of the
imperfect correlation between the movements in the price of underlying indexes
or stock indexes of various futures contracts and the movement of the price of
securities in the Funds' or Portfolio's assets, the Funds and Portfolios will
periodically make adjustments to its index futures contracts positions to
appropriately reflect the relationship between the underlying portfolio and the
indexes. The Funds and Portfolios will not maintain short positions in index or
stock index futures contracts, options written on index or stock index futures
contracts and options written on indexes or stock indexes, if in the aggregate,
the value of these positions exceeds the current market value of its securities
portfolio plus or minus the unrealized gain or loss on those positions, adjusted
for the historical volatility relationship between the portfolio and the index
contracts.

- OPTIONS ON FUTURES CONTRACTS. An option on a futures contract, as
contrasted with the direct investment in such a contract, gives the purchaser
the right, in return for the premium paid, to assume a position in the futures
contract at a specified exercise price at any time prior to the expiration date
of the option. Upon exercise of an option, the delivery of the futures position
by the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account,
which represents the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract. The value of the option
can change daily and that change would be reflected in the net asset value of
the Fund or Portfolio holding the option.

When engaging in Strategic Transactions, the Funds and the Portfolios may
purchase and write put and call options on futures contracts that are traded on
a U.S. exchange or board of trade as a hedge against changes in the value of its
portfolio securities, and may enter into closing transactions with respect to
such options to terminate existing positions. There is no guarantee that such
closing transactions can be effected.

There are several risks relating to options on futures contracts. The
ability to establish and close out positions on such options will be subject to
the existence of a liquid market. In addition, the purchase of put or call
options will be based upon predictions as to anticipated interest rate and
market trends by the Advisor or the sub-advisors, which could prove to be
inaccurate. Even if the expectations of the Advisor or the sub-advisors are
correct, there may be an imperfect correlation between the change in the value
of the options and the portfolio securities hedged.

- OPTIONS ON SECURITIES. The Short Term Income, Bond & Stock, Growth &
Income, Growth, International Growth, Mid Cap Stock, Growth Fund of the
Northwest and Small Cap Stock Funds may buy and sell covered put (except for the
Bond & Stock, Growth & Income and Growth Fund of the Northwest Funds) and call
options on securities.

Options written by a Fund will normally have expiration dates between one
and nine months from the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying securities at the
times the options are written. In the case of call options, these exercise
prices are
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referred to as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. A Fund may write (1) in-the-money call options when the Advisor or
its sub-advisor expects that the price of the underlying security will remain
flat or decline moderately during the option period, (2) at-the-money call
options when the Advisor or its sub-advisor expects that the price of the
underlying security will remain flat or advance moderately during the option
period and (3) out-of-the-money call options when the Advisor or its sub-
advisor expects that the premiums received from writing the call option plus the
appreciation in the market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. In any of the preceding situations, if the market price of the
underlying security declines and the security is sold at this lower price, the
amount of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to market price)
may be utilized in the same market environments as such call options described
above.

So long as the obligation of the Fund as the writer of an option continues,
the Fund may be assigned an exercise notice by the broker-dealer through which
the option was sold, requiring the Fund to deliver, in the case of a call, or
take delivery of, in the case of a put, the underlying security against payment
of the exercise price. This obligation terminates when the option expires or the
Fund effects a closing purchase transaction. The Fund can no longer effect a
closing purchase transaction with respect to an option once it has been assigned
an exercise notice. To secure its obligation to deliver the underlying security
when it writes a call option, or to pay for the underlying security when it
writes a put option, the Fund will be required to deposit in escrow the
underlying security or other assets in accordance with the rules of the Options
Clearing Corporation (the "OCC") and of the securities exchange on which the
option is written.

An option may be closed out only when there exists a secondary market for
an option of the same series on a recognized securities exchange or in the
over-the-counter market. In light of this fact and current trading conditions,
the Fund expects to purchase or write call or put options issued by the OCC,
except that options on U.S. Government Securities may be purchased or written in
the over-the-counter market. Over-the-counter options can be closed out only by
agreement with the primary dealer in the transaction. Any over-the-counter
option written by a Fund will be with a qualified dealer pursuant to an
Agreement under which the Fund may repurchase the option at a formula price at
which the Fund would have the absolute right to repurchase an over-the-counter
option it has sold. Such options will generally be considered illiquid in an
amount equal to the formula price, less the amount by which the option is
"in-the-money." In the event of the insolvency of the primary dealer, the Fund
may not be able to liquidate its position in over-the-counter options, and the
inability of the Fund to enter into closing purchase transactions on options
written by the Fund may result in a material loss to the Fund.

A Fund may realize a profit or loss upon entering into closing
transactions. In cases where the Fund has written an option, it will realize a
profit if the cost of the closing purchase transaction is less than the premium
received upon writing the original option, and will incur a loss if the cost of
the closing purchase transaction exceeds the premium received upon writing the
original option. Similarly, when the Fund has purchased an option and engages in
a closing sale transaction, the Fund will realize a profit or loss to the extent
that the amount received in the closing sale transaction is more or less than
the premium the Fund initially paid for the original option plus the related
transaction costs.

To facilitate closing transactions, a Fund will generally purchase or write
only those options for which the Advisor or its sub-advisor believes there is an
active secondary market although there is no assurance that sufficient trading
interest to create a liquid secondary market on a securities exchange will exist
for any particular option or at any particular time, and for some options no
such secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow, or other unforeseen events, have at
times rendered certain of the facilities of the OCC and the securities exchanges
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such events, it might not be possible to
effect closing transactions in particular options. If as a covered call option
writer the Fund is unable to effect a
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closing purchase transaction in a secondary market, it will not be able to sell
the underlying security until the option expires or it delivers the underlying
security upon exercise.

Securities exchanges have established limitations governing the maximum
number of calls and puts of each class which may be held or written, or
exercised within certain time periods, by an investor or group of investors
acting in concert (regardless of whether the options are written on the same or
different securities exchanges or are held, written or exercised in one or more
accounts or through one or more brokers). It is possible that the particular
Fund and other clients of the Advisor and its sub-advisors and certain of their
affiliates may be considered to be such a group. A securities exchange may order
the liquidation of positions found to be in violation of these limits and it may
impose certain other sanctions.

In the case of options written by a Fund that are deemed covered by virtue
of the Fund's holding convertible or exchangeable preferred stock or debt
securities, the time required to convert or exchange and obtain physical
delivery of the underlying security with respect to which the Fund has written
options may exceed the time within which the Fund must make delivery in
accordance with an exercise notice. In these instances, the Fund may purchase or
temporarily borrow the underlying securities for purposes of physical delivery.
By so doing, the Fund will not bear any market risk, since the Fund will have
the absolute right to receive from the issuer of the underlying security an
equal number of shares to replace the borrowed stock. The Fund may however,
incur additional transaction costs or interest expenses in connection with any
such purchase or borrowing.

Additional risks exist with respect to mortgage-backed U.S. Government
Securities for which the Fund may write covered call options. If a Fund writes
covered call options on a mortgage-backed security, the security that it holds
as cover may, because of scheduled amortization of unscheduled prepayments,
cease to be sufficient cover. In such an instance, the Fund will compensate by
purchasing an appropriate additional amount of mortgage-backed securities.

- OPTIONS ON SECURITIES INDEXES. The Short Term Income, California Insured
Intermediate Municipal, Growth, International Growth, Mid Cap Stock and Small
Cap Stock Funds may also purchase and sell call and put options on securities
indexes. Such options give the holder the right to receive a cash settlement
during the term of the option based upon the difference between the exercise
price and the value of the index.

Options on securities indexes entail risks in addition to the risks of
options on securities. Because exchange trading of options on securities indexes
is relatively new, the absence of a liquid secondary market to close out an
option position is more likely to occur, although the Fund generally will
purchase or write such an option only if the Advisor or its sub-advisor believes
the option can be closed out.

Use of options on securities indexes also entails the risk that trading in
such options may be interrupted if trading in certain securities included in the
index is interrupted. The Fund will not purchase such options unless the Advisor
or its sub-advisor believes the market is sufficiently developed for the risk of
trading in such options to be no greater than the risk of trading in options on
securities.

Price movements in the Fund's portfolio may not correlate precisely with
movements in the level of an index and, therefore, the use of options on
securities indexes cannot serve as a complete hedge. Because options on
securities indexes require settlement in cash, the Fund may be forced to
liquidate portfolio securities to meet settlement obligations.

- FOREIGN CURRENCY EXCHANGE TRANSACTIONS. The Short Term Income, Income,
Growth, Mid Cap Stock, Small Cap Stock, and International Growth Funds may
engage in currency exchange transactions to protect against uncertainty in the
level of future exchange rates. The Funds' dealings in forward currency exchange
contracts will be limited to hedging involving either specific transactions or
portfolio positions. Transaction hedging is the purchase or sale of forward
foreign currency with respect to specific receivables or payables of the Fund
generally arising in connection with the purchase or sale of its portfolio
securities. Position hedging is the sale of forward foreign currency with
respect to portfolio security positions denominated or quoted in such foreign
currency. A Fund may not position a hedge with respect to a particular currency
to an extent greater than the aggregate market value (at the time of making such
sale) of the securities held in its portfolio denominated or quoted in or
currently convertible into that particular currency.

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If a Fund enters into a position hedging transaction, the Trusts' Custodian
will, except in circumstances where segregated accounts are not required by the
1940 Act and the rules adopted thereunder, place cash or other liquid assets in
a segregated account for the Fund in an amount at least equal to the value of
the Fund's total assets committed to the consummation of the forward contract.
For each forward foreign currency exchange contract that is used to hedge a
securities position denominated in a foreign currency, but for which the hedging
position no longer provides, in the opinion of the Advisor or the sub-advisor,
sufficient protection to consider the contract to be a hedge, the Fund maintains
with the Custodian a segregated account of cash or other liquid assets in an
amount at least equal to the portion of the contract that is no longer
sufficiently covered by such hedge. If the value of the securities placed in the
segregated account declines, additional cash or securities will be placed in the
account so that the value of the account will equal the amount of the Fund's
unhedged exposure (in the case of securities denominated in a foreign currency)
or commitment with respect to the contract. Hedging transactions may be made
from any foreign currency into U.S. dollars or into other appropriate
currencies.

At or before the maturity of a forward contract, a Fund may either sell a
portfolio security and make delivery of the currency, or retain the security and
offset its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Fund will obtain, on the same maturity date, the
amount of the currency that it is obligated to deliver. If the Fund retains the
portfolio security and engages in an offsetting transaction, the Fund, at the
time of execution of the offsetting transaction, will incur a gain or a loss to
the extent that movement has occurred in forward contract prices. Should forward
prices decline during the period between the Fund's entering into a forward
contract for the sale of currency and the date it enters into an offsetting
contract for the purchase of the currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.

The cost to a Fund of engaging in currency transactions with factors such
as, the currency involved, the length of the contract period and the prevailing
market conditions. Because transactions in currency exchange are usually
conducted on a principal basis, no fees or commissions are involved. The use of
forward currency contracts does not eliminate fluctuations in the underlying
prices of the securities.

If a devaluation of a currency is generally anticipated, a Fund may not be
able to contract to sell the currency at a price above the devaluation level it
anticipates.

The Funds, in addition, may combine forward currency exchange contracts
with investments in securities denominated in other currencies in an attempt to
create a combined investment position, the overall performance of which will be
similar to that of a security denominated in a Fund's underlying currency. For
instance, a Fund could purchase a U.S. dollar-denominated security and at the
same time enter into a forward currency exchange contract to exchange U.S.
dollars for its underlying currency at a future date. By matching the amount of
U.S. dollars to be exchanged with the anticipated value of the U.S.
dollar-denominated security, the Fund may be able to "lock in" the foreign
currency value of the security and adopt a synthetic investment position whereby
the Fund's overall investment return from the combined position is similar to
the return from purchasing a foreign currency-denominated instrument.

There is a risk in adopting a synthetic investment position. It is
impossible to forecast with absolute precision what the market value of a
particular security will be at any given time. If the value of a security
denominated in the U.S. dollar or other foreign currency is not exactly matched
with a Fund's obligation under a forward currency exchange contract on the date
of maturity, the Fund may be exposed to some risk of loss from fluctuations in
that currency. Although the Advisor and each sub-advisor will attempt to hold
such mismatching to a minimum, there can be no assurance that the Advisor or the
Fund's sub-advisor will be able to do so.

There is less protection against defaults in the forward trading to
currencies than there is in trading such currencies on an exchange because such
forward contracts are not guaranteed by an exchange or clearing house. The
Commodity Futures Trading Commission has indicated that it may assert
jurisdiction over forward contracts in foreign currencies and attempt to
prohibit certain entities from engaging in such transactions. In
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the event that such prohibition included the Fund, it would cease trading such
contracts. Cessation of trading might adversely affect the performance of a
Fund.

- OPTIONS ON FOREIGN CURRENCIES. The Short Term Income, California Insured
Intermediate Municipal, Growth, Mid Cap Stock and International Growth Funds may
purchase and write put and call options on foreign currencies for the purpose of
hedging against declines in the U.S. dollar value of foreign currency-
denominated portfolio securities and against increases in the U.S. dollar cost
of such securities to be acquired. Such hedging includes cross hedging and proxy
hedging where the options to buy or sell currencies involve other currencies
besides the U.S. dollar. As one example, a decline in the U.S. dollar value of a
foreign currency in which securities are denominated will reduce the U.S. dollar
value of the securities, even if their value in the foreign currency remains
constant. To protect against diminutions in the value of securities held by a
Fund in a particular foreign currency, the Fund may purchase put options on the
foreign currency. If the value of the currency does decline, the Fund will have
the right to sell the currency for a fixed amount in U.S. dollars and may
thereby offset, in whole or in part, the adverse effect on its portfolio that
otherwise would have resulted. When an increase in the U.S. dollar value of a
currency in which securities to be acquired are denominated is projected,
thereby increasing the cost of the securities, the Fund conversely may purchase
call options on the currency. The purchase of such options could offset, at
least partially, the effects of the adverse movements in exchange rates. As in
the case of other types of options, however, the benefit to the Fund deriving
from purchases of foreign currency options will be reduced by the amount of the
premium and related transaction costs. In addition, if currency exchange rates
do not move in the direction, or to the extent anticipated, the Fund could
sustain losses on transactions in foreign currency options that would require it
to forego a portion or all of the benefits of advantageous changes in the rates.

The Funds may also write covered call options on foreign currencies for the
types of hedging purposes described above. As one example, when the Advisor or
Fund's sub-advisor anticipates a decline in the U.S. dollar value of foreign
currency-denominated securities due to adverse fluctuations in exchange rates it
could, instead of purchasing a put option, write a covered call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised, and the diminution in value of portfolio securities will be
offset by the amount of the premium received. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a loss
that may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, the Fund may also be required to forego all or a
portion of the benefits that might otherwise have been obtained from favorable
movements in exchange rates.

A call option written on a foreign currency by a Fund is "covered" if the
Fund owns the underlying foreign currency covered by the call or has an absolute
and immediate right to acquire the foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated account
by Boston Safe, the Fund's Custodian, upon conversion or exchange of other
foreign currency held by the Fund). A call option also is covered if the Fund
has a call on the same foreign currency and in the same principal amount as the
call written when the exercise price of the call held (1) is equal to or less
than the exercise price of the call written or (2) is greater than the exercise
price of the call written if the difference is maintained by the Fund in cash,
U.S. Government Securities and other liquid debt securities in a segregated
account with Boston Safe.

Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the SEC, as are other securities traded on those
exchanges. As a result, many of the projections provided to traders on organized
exchanges will be available with respect to those transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the OCC, thereby reducing the risk of
counterparty default. Further, a liquid secondary market in options traded on a
national securities exchange may exist, potentially permitting the Fund to
liquidate open positions at a profit prior to their exercise or expiration, or
to limit losses in the event of adverse market movements.

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The purchase and sale of exchange-traded foreign currency options are
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exercise and settlement of exchange-traded foreign
currency options must be made exclusively through the OCC, which has established
banking relationships in applicable foreign countries for this purpose. As a
result, the OCC may, if it determines that foreign governmental restrictions or
taxes would prevent the orderly settlement of foreign currency option exercises,
or would result in undue burdens on the OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar settlement prices or
prohibitions on exercise.

SECURITIES IN DEVELOPING COUNTRIES. Although most of the investments of the
Bond & Stock, Growth, Mid Cap Stock, Small Cap Stock and International Growth
Funds are made in securities of companies in (or governments of) developed
countries, the Funds set forth above may also invest in securities of companies
in (or governments of) developing or emerging countries (sometimes referred to
as "emerging markets"). The International Growth Fund may invest up to 30%, and
each of the other Funds may invest up to 5%, of its total assets in emerging
markets. A developing or emerging country is generally considered to be a
country that is in the initial stages of its industrialization cycle. Investing
in the equity and fixed-income markets of developing or emerging countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems that can be expected to have less stability
than those of developed countries. Historical experience indicates that the
markets of developing or emerging countries have been more volatile than the
markets of the more mature economies of developed countries.

LENDING OF PORTFOLIO SECURITIES. Each of the California Money, Short Term
Income, California Insured Intermediate Municipal, Growth, Bond & Stock, Growth
& Income, Growth Fund of the Northwest, International Growth and Small Cap Stock
Funds will adhere to the following conditions whenever its portfolio securities
are loaned: (1) the Fund must receive at least 100% cash collateral or
equivalent securities from the borrower; (2) the borrower must increase the
collateral whenever the market value of the securities rises above the level of
the collateral; (3) the Fund must be able to terminate the loan at any time; (4)
the Fund must receive reasonable interest on the loan, as well as any dividends,
interest or other distributions on the loaned securities and any increase in
market value; (5) the Fund may pay only reasonable custodian fees in connection
with the loan; and (6) voting rights on the loaned securities may pass to the
borrower, provided that if a material event adversely affecting the investment
occurs, the Trusts' Board of Trustees must terminate the loan and regain the
right to vote the securities. From time to time, the Funds may pay a part of the
interest earned from the investment of the collateral received for securities
loaned to the borrower and/or a third party that is unaffiliated with the Trust
and that is acting as a "finder." The Funds will not lend more than 20% of their
respective total assets.

MUNICIPAL OBLIGATIONS. Municipal Obligations are securities, the interest
on which qualifies for exclusion from gross income for federal income tax
purposes in the opinion of bond counsel to the issuer. The three principal
classifications of Municipal Obligations are Municipal Bonds, Municipal
Commercial Paper and Municipal Notes.

Municipal Bonds, which generally have a maturity of more than one year when
issued, have two principal classifications: General Obligation Bonds and Revenue
Bonds. An AMT-Subject Bond is a particular kind of Revenue Bond. The
classifications of Municipal Bonds and AMT-Subject Bonds are discussed below.

1. GENERAL OBLIGATION BONDS. The proceeds of these obligations are used to
finance a wide range of public projects, including construction or
improvement of schools, highways and roads, and water and sewer systems.
General Obligation Bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and
interest.
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2. REVENUE BONDS. Revenue Bonds are issued to finance a wide variety of
capital projects, including; electric, gas, water and sewer systems;
highways, bridges and tunnels; port and airport facilities; colleges and
universities; and hospitals. The principal security for a Revenue Bond
is generally the net revenues derived from a particular facility, group
of facilities, or, in some cases, the proceeds of a special excise or
other specific revenue source. Although the principal security behind
these bonds may vary, many provide additional security in the form of a
debt service reserve fund which may be used to make principal and
interest payments on the issuer's obligations. Some authorities provide
further security in the form of a state's ability (without obligation)
to make up deficiencies in the debt service reserve fund.

3. AMT-SUBJECT BONDS. AMT-Subject Bonds are considered Municipal Bonds if
the interest paid on them is excluded from gross income for federal
income tax purposes and if they are issued by or on behalf of public
authorities to raise money to finance, for example, privately operated
manufacturing or housing facilities, publicly operated airport, dock,
wharf, or mass-commuting facilities. The payment of the principal and
interest on these bonds is dependent solely on the ability of the
facility's user to meet its financial obligations and the pledge, if
any, of real and personal property so financed as security for such
payment.

MUNICIPAL COMMERCIAL PAPER issues typically represent short-term,
unsecured, negotiable promissory notes. These obligations are issued by agencies
of state and local governments to finance seasonal working capital needs of
municipalities or to provide interim construction financing, and are paid from
general revenues of municipalities or are refinanced with long-term debt. In
most cases, Municipal Commercial Paper is backed by letters of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions.

MUNICIPAL NOTES generally are used to provide for short-term capital needs
and generally have maturities of one year or less. Municipal Notes include:

1. TAX ANTICIPATION NOTES. Tax Anticipation Notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income, sales,
use and business taxes and are payable from these specific future taxes.

2. REVENUE ANTICIPATION NOTES. Revenue Anticipation Notes are issued in
expectation of receipt of other kinds of revenue, such as federal
revenues available under the Federal Revenue Sharing Program.

3. BOND ANTICIPATION NOTES. Bond Anticipation Notes are issued to provide
interim financing until long-term financing can be arranged. In most
cases, the long-term bonds provide the money for the repayment of the
notes.

4. CONSTRUCTION LOAN NOTES. Construction Loan Notes are sold to provide
construction financing. Permanent financing, the proceeds of which are
applied to the payment of Construction Loan Notes, is sometimes provided
by a commitment by GNMA to purchase the loan, accompanied by a
commitment by the Federal Housing Administration to insure mortgage
advances thereunder. In other instances, permanent financing is provided
by commitments of banks to purchase the loan. The Tax-Exempt Money
Market, California Money, Tax-Exempt Bond, California Municipal,
California Insured Intermediate Municipal and Florida Insured Municipal
Funds (the "Municipal Funds") will only purchase Construction Loan Notes
that are subject to GNMA or bank purchase commitments.

From time to time, proposals to restrict or eliminate the federal income
tax exemption for interest on Municipal Obligations have been introduced before
Congress. Similar proposals may be introduced in the future. If a proposal to
restrict or eliminate the federal tax exemption for interest on Municipal
Obligations were enacted, the availability of Municipal Obligations for
investment by the Municipal Funds would be adversely affected. In such event,
the Municipal Funds would reevaluate their respective investment objectives and
policies and submit possible changes in the structure of the Funds for the
consideration of shareholders.

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PARTICIPATION INTERESTS. The Municipal Funds may invest in participation
interests purchased from banks in floating rate or variable rate municipal
obligations (such as AMT-Subject Bonds) owned by banks. A participation interest
gives the purchaser an undivided interest in the municipal security in the
proportion that the relevant Fund's participation interest bears to the total
principal amount of the municipal security and provides a demand repurchase
feature. Each participation is backed by an irrevocable letter of credit or
guarantee of a bank that meets the prescribed quality standards of the Fund. A
Fund has the right to sell the instrument back to the issuing bank or draw on
the letter of credit on demand for all or any part of the Fund's participation
interest in the municipal security, plus accrued interest. Banks will retain or
receive a service fee, letter of credit fee and a fee for issuing repurchase
commitments in an amount equal to the excess of the interest paid on the
municipal obligations over the negotiated yield at which the instruments were
purchased by the Fund. Participation interests in the form to be purchased by
the Fund are new instruments, and no ruling of the Internal Revenue Service has
been secured relating to their tax-exempt status. The Funds intend to purchase
participation interests based upon opinions of counsel to the issuer to the
effect that income from them is tax-exempt to the Fund.

STAND-BY COMMITMENTS. The Municipal Funds may acquire stand-by commitments
with respect to municipal obligations held in their respective portfolios. Under
a stand-by commitment, a broker-dealer, dealer or bank would agree to purchase,
at the relevant Funds' option, a specified municipal security at a specified
price. Thus, a stand-by commitment may be viewed as the equivalent of a "put"
option acquired by a Fund with respect to a particular municipal security held
in the Fund's portfolio.

The amount payable to a Fund upon its exercise of a stand-by commitment
normally would be (1) the acquisition cost of the municipal security (excluding
any accrued interest that the Fund paid on the acquisition), less any amortized
market premium or plus any amortized market or original issue discount during
the period the Fund owned the security, plus, (2) all interest accrued on the
security since the last interest payment date during the period the security was
owned by the Fund. Absent unusual circumstances, the Fund would value the
underlying municipal security at amortized cost. As a result, the amount payable
by the broker-dealer, dealer or bank during the time a stand-by commitment is
exercisable would be substantially the same as the value of the underlying
municipal obligation.

A Fund's right to exercise a stand-by commitment would be unconditional and
unqualified. Although a Fund could not transfer a stand-by commitment, it could
sell the underlying municipal security to a third party at any time. It is
expected that stand-by commitments generally will be available to the Funds
without the payment of any direct or indirect consideration. The Funds may,
however, pay for stand-by commitments if such action is deemed necessary. In any
event, the total amount paid for outstanding stand-by commitments held in a
Fund's portfolio would not exceed 1/2 of 1% of the value of a Fund's total
assets calculated immediately after each stand-by commitment is acquired.

The Funds intend to enter into stand-by commitments only with
broker-dealers, dealers or banks that the Advisor or their sub-advisor believes
present minimum credit risks. A Fund's ability to exercise a stand-by commitment
will depend upon the ability of the issuing institution to pay for the
underlying securities at the time the stand-by commitment is exercised. The
credit of each institution issuing a stand-by commitment to a Fund will be
evaluated on an ongoing basis by the Advisor or its sub-advisor in accordance
with procedures established by the Board of Trustees.

A Fund intends to acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its right thereunder for
trading purposes. The acquisition of a stand-by commitment would not affect the
valuation of the underlying municipal security. Each stand-by commitment will be
valued at zero in determining net asset value. Should a Fund pay directly or
indirectly for a stand-by commitment, its costs will be reflected in realized
gain or loss when the commitment is exercised or expires. The maturity of a
municipal security purchased by a Fund will not be considered shortened by any
stand-by commitment to which the obligation is subject. Thus, stand-by
commitments will not affect the dollar-weighted average maturity of a Fund's
portfolio.

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SPECIAL CONSIDERATIONS RELATING TO CALIFORNIA MUNICIPAL OBLIGATIONS

The ability of issuers to pay interest on, and repay principal of,
California municipal obligations ("California Municipal Obligations") may be
affected by (1) amendments to the California Constitution and related statutes
that limit the taxing and spending authority of California government entities,
(2) voter initiatives, (3) a wide variety of California laws and regulations,
including laws related to the operation of health care institutions and laws
related to secured interests in real property and (4) the general financial
condition of the State of California. The following information constitutes only
a brief summary, and is not intended as a complete description. The information
has been drawn, in some cases by excerpt, from official statements relating to
securities offerings of the State of California available as of the date of this
Statement of Additional Information. While the information has not been
independently verified by the California Money, California Municipal Fund, or
California Insured Intermediate Municipal Fund (the "California Fund"), the
California Fund has no reason to believe that such information is not correct in
all material respects.

AMENDMENTS TO THE CALIFORNIA CONSTITUTION AND RELATED STATUTES. Since 1978
the California voters have voted to amend the California Constitution in a
number of ways which could affect a governmental entity's ability to budget or
raise sufficient funds to meet debt service on bonds and other obligations.

These amendments, among other things, provide maximum limits on ad valorem
taxes on real property, appropriation limits for state and local governmental
entities, require new local taxes to be submitted to the electorate and make it
generally more difficult for local agencies to levy and maintain fees, charges
and assessments for municipal services and programs. These amendments may
adversely affect the ability of issuers of California Municipal Obligations to
make timely payments of principal and interest, and may adversely affect the
supply of California Municipal Obligations.

OTHER RELEVANT CALIFORNIA LAWS. A wide variety of California laws and
regulations may affect, directly or indirectly, the payment of interest on, or
the repayment of the principal of, California Municipal Obligations in which the
California Money, California Municipal and California Insured Intermediate
Municipal Funds may invest. The impact of such laws and regulations on
particular California Municipal Obligations may vary depending upon numerous
factors including, among others, the particular type of Municipal Security
involved, the public purpose funded by the Municipal Security and the nature and
extent of insurance or other security for payment of principal and interest on
the Municipal Security. For example, California Municipal Obligations which are
payable only from the revenues derived from a particular facility may be
adversely affected by California laws or regulations which make it more
difficult for the particular facility to generate revenues sufficient to pay
such interest and principal, including, among others, laws and regulations which
limit the amount of fees, rates or other charges which may be imposed for use of
the facility or which increase competition among facilities of that type or
which limit or otherwise have the effect of reducing the use of such facilities
generally, thereby reducing the revenues generated by the particular facility.
California Municipal Obligations, the payment of interest and principal on which
is insured in whole or in part by a California governmentally created fund, may
be adversely affected by California laws or regulations which restrict the
aggregate insurance proceeds available for payment of principal and interest in
the event of a default on such Municipal Obligations.

Certain California Municipal Obligations in which the California Money,
California Municipal and California Insured Intermediate Funds may invest may be
obligations that are payable solely from the revenues of health care
institutions. Certain provisions under California law may adversely affect such
revenues and, consequently, payment on those California Municipal Obligations.

Certain California Municipal Obligations in which the California Money,
California Municipal and California Insured Intermediate Municipal Funds may
invest may be obligations which are secured in whole or in part by a mortgage or
deed of trust on real property. California has five principal statutory
provisions which limit the remedies of a creditor secured by a mortgage or deed
of trust, two of which limit the creditor's right to obtain a deficiency
judgment. One of the limitations is based on the method of foreclosure and the
other on the type of debt secured. Under the former, a deficiency judgment is
barred when the foreclosure is accomplished by means of a nonjudicial trustee's
sale. Under the latter, a deficiency judgment is barred when the foreclosed
mortgage or deed of trust secures certain purchase money obligations. Another
California
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statute, commonly known as the "one form of action" rule, requires the creditors
secured by real property to exhaust their real property security by foreclosure
before bringing a personal action against the debtor. The fourth statutory
provision limits any deficiency judgment obtained by a creditor secured by real
property following a judicial sale of such property to the excess of the
outstanding debt over the fair value of the property at the time of the sale,
thus preventing the creditor from obtaining a large deficiency judgment against
the debtor as the result of low bids at a judicial sale. The fifth statutory
provision gives the debtor the right to redeem the real property from any
judicial foreclosure sale as to which a deficiency judgment may be ordered
against the debtor.

Upon the default of a mortgage or deed of trust with respect to California
real property, the creditor's nonjudicial foreclosure rights under the power of
sale contained in the mortgage or deed of trust are subject to the constraints
imposed by California law upon transfers of title to real property by private
power of sale. During the three-month period beginning with the filing of a
formal notice of default, the debtor is entitled to reinstate the mortgage by
making any overdue payments. Under standard loan servicing procedures, the
filing of the formal notice of default does not occur unless at least three full
monthly payments have become due and remain unpaid. The power of sale is
exercised by posting and publishing a notice of sale for at least 20 days after
expiration of the three-month reinstatement period. Therefore, the effective
minimum period for foreclosing on a home mortgage could be in excess of seven
months after the initial default. Such time delays in collections could disrupt
the flow of revenues available to an issuer for the payment of debt service on
the outstanding obligations if such defaults occur with respect to a substantial
number of mortgages or deeds of trust securing an issuer's obligations.

In addition, a court could find that there is sufficient involvement of the
issuer in the nonjudicial sale of property securing a mortgage for such private
sale to constitute "state action," and could hold that the private-
right-of-sale proceedings violate the due process requirements of the Federal or
State Constitutions, consequently preventing an issuer from using the
nonjudicial foreclosure remedy described above.

Certain California Municipal Obligations in which the California Money,
California Municipal and California Insured Intermediate Municipal Funds may
invest may be obligations which finance the acquisition of single family home
mortgages for low and moderate income mortgagors. These obligations may be
payable solely from revenues derived from the home mortgages, and are subject to
the California statutory limitations described above applicable to obligations
secured by real property. Under California anti-deficiency legislation, there is
no personal recourse against a mortgagor of a single family residence purchased
with the loan secured by the mortgage, regardless of whether the creditor
chooses judicial or nonjudicial foreclosure.

Under California law, mortgage loans secured by single family
owner-occupied dwellings may be prepaid at any time. Prepayment charges on such
mortgage loans may be imposed only with respect to voluntary prepayments made
during the first five years during the term of the mortgage loan, and cannot in
any event exceed six months' advance interest on the amount prepaid in any
twelve month period in excess of 20% of the original amount of the mortgage
loan. This limitation could affect the flow of revenues available to an issuer
for debt service on the outstanding debt obligations which financed such home
mortgages.

Because of the diverse nature of such laws and regulations and the
impossibility of either predicting in which specific California Municipal
Obligations the California Money, California Municipal and California Insured
Intermediate Municipal Funds will invest from time to time or predicting the
nature or extent of future changes in existing laws or regulations or the future
enactment or adoption of additional laws or regulations, it is not presently
possible to determine the impact of such laws and regulations on the Municipal
Obligations in which the California Money, California Municipal and California
Insured Intermediate Municipal Funds may invest and, therefore, on the units of
the California Money, California Municipal or California Insured Intermediate
Municipal Funds.

ADDITIONAL CONSIDERATIONS. With respect to Municipal Obligations issued by
the State of California and its political subdivisions, as well as certain other
governmental issuers such as the Commonwealth of Puerto Rico, the Trusts cannot
predict what legislation, if any, may be proposed in the California State
Legislature as regards the California State personal income tax status of
interest on such obligations, or which proposals, if any, might be enacted. Such
proposals, if enacted, might materially adversely affect the availability of
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California Municipal Obligations for investment by the California Money,
California Municipal and California Insured Intermediate Municipal Funds and the
value of the Fund's investments. In such event, the Trustees would reevaluate
the investment objective and policies of the California Money, California
Municipal and California Insured Intermediate Municipal Funds and consider
changes in its investments structure or possible dissolution.

SPECIAL CONSIDERATIONS RELATING TO FLORIDA MUNICIPAL OBLIGATIONS

The following information constitutes only a brief summary, and does not
purport to be a complete description. The information in this section is updated
periodically. While the Fund has not independently verified such information, it
has no reason to believe that such information is not correct in all material
respects. The source of the 1994-95, 1995-96 and 1996-97 figures set forth below
is the Revenue and Economic Analysis Unit of the Executive Office of the
Governor of the State of Florida. Such figures are preliminary and subject to
change without notice.

An amendment to the State Constitution was approved by statewide ballot in
the November 8, 1994 general election which is commonly referred to as the
"Limitation on State Revenues Amendment." This amendment provides that State
revenues collected for any fiscal year shall be limited to State revenues
allowed under the amendment for the prior fiscal year plus an adjustment for
growth. Growth is defined as an amount equal to the average annual rate of
growth in State personal income over the most recent twenty quarters times the
State revenues allowed under the amendment for the prior fiscal year. State
revenues collected for any fiscal year in excess of this limitation are required
to be transferred to the budget stabilization fund until the fund reaches the
maximum balance specified in Section 19(g) of Article III of the State
Constitution, and thereafter is required to be refunded to taxpayers as provided
by general law. The limitation on State revenues imposed by the amendment may be
increased by the Legislature, by a two-thirds vote of each house.

The term "State revenues," as used in the amendment, means taxes, fees,
licenses, and charges for services imposed by the Legislature on individuals,
businesses, or agencies outside State government. However, the term "State
revenues" does not include: (i) revenues that are necessary to meet the
requirements set forth in documents authorizing the issuance of bonds by the
State; (ii) revenues that are used to provide matching funds for the federal
Medicaid program with the exception of the revenues used to support the Public
Medical Assistance Trust Fund or its successor program and with the exception of
State matching funds used to fund elective expansions made after July 1, 1994;
(iii) proceeds from the State lottery returned as prizes; (iv) receipts of the
Florida Hurricane Catastrophe Fund; (v) balances carried forward from prior
fiscal years; (vi) the proceeds from the sale of goods (e.g. land, buildings);
or (vii) revenue from taxes, licenses, fees and charges for services required to
be imposed by any amendment or revision to the State Constitution after July 1,
1994. The amendment took effect on January 1, 1995 and is applicable to State
fiscal year 1995-96.

It should be noted that many of the provisions of the amendment are
ambiguous, and likely will not be clarified until State courts have ruled on
their meanings. Further, it is unclear how the Legislature will implement the
language of the amendment and whether such implementing legislation itself will
be the subject of further court interpretation.

The Fund cannot predict the impact of the amendment on State finances. To
the extent local governments traditionally receive revenues from the State which
are subject to, and limited by, the amendment, the future distribution of such
State revenues may be adversely affected by the amendment.

Hurricanes continue to threaten Florida resulting in significant property
damages. The 1995 hurricane season was especially active. The Fund cannot
predict the impact on state finances resulting from repeated hurricane damage.

LOWER-RATED SECURITIES. The Income, Tax-Exempt Bond, Bond & Stock, Growth &
Income, Small Cap Stock Funds may each invest up to 35%, and Growth Fund up to
20%, of their total assets, respectively, in non-investment grade securities
(rated Ba and lower by Moody's and BB and lower by S&P) or unrated

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securities determined to be of comparable quality. The High Yield Fund may
invest entirely in such securities and will generally invest at least 65% of its
assets in such securities. Such securities carry a high degree of risk
(including the possibility of default or bankruptcy of the issuer of such
securities), generally involve greater volatility of price and risk of principal
and income, and may be less liquid, than securities in the higher rating
categories and are considered speculative. See the Appendix to this SAI for a
more detailed description of the ratings assigned by ratings organizations and
their respective characteristics.

Historically, economic downturns have disrupted the high yield market and
impaired the ability of issuers to repay principal and interest. Also, an
increase in interest rates could adversely affect the value of such obligations
held by any of the Funds set forth above. Prices and yields of high yield
securities will fluctuate over time and may affect a Fund's net asset value. In
addition, investments in high yield zero coupon or pay-in-kind bonds, rather
than income-bearing high yield securities, may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

The trading market for high yield securities may be thin to the extent that
there is no established retail secondary market or because of a decline in the
value of such securities. A thin trading market may limit the ability of the
Trustees to accurately value high yield securities in the Fund's portfolio and
to dispose of those securities. Adverse publicity and investor perceptions may
decrease the value and liquidity of high yield securities. These securities may
also involve special registration responsibilities, liabilities and costs.

Credit quality in the high yield securities market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high yield security. For these reasons, it is
the policy of the Advisor and the sub-advisor of each of the Funds not to rely
exclusively on ratings issued by established credit rating agencies, but to
supplement such ratings with its own independent and ongoing review of credit
quality. The achievement of a Fund's investment objectives by investment in such
securities may be more dependent on the Advisor or its sub-advisor's credit
analysis than is the case for higher quality bonds. Should the rating of a
portfolio security be downgraded the Advisor or the Fund's sub-advisor will
determine whether it is in the best interest of the Fund to retain or dispose of
the security.

Prices for below investment-grade securities may be affected by legislative
and regulatory developments. For example, new federal rules require savings and
loan institutions to gradually reduce their holdings of this type of security.
Also, Congress from time to time has considered legislation which would restrict
or eliminate the corporate tax deduction for interest payments on these
securities and would regulate corporate restructurings. Such legislation may
significantly depress the prices of outstanding securities of this type.

INVESTMENT RESTRICTIONS

Certain of the Funds' and Portfolios' investment restrictions set forth
below are fundamental policies. A fundamental policy may not be changed without
the vote of a majority of the outstanding voting securities of the Fund or
Portfolio, as defined in the 1940 Act. Such a majority is defined in the 1940
Act as the lesser of (a) 67% or more of the shares present at a meeting of
shareholders of the Fund or Portfolio, if the holders of more than 50% of the
outstanding shares of the Fund or Portfolio are present or represented by proxy,
or (b) more than 50% of the outstanding shares of the Fund or Portfolio. A
fundamental policy affecting a particular Fund or Portfolio may not be changed
without the vote of a majority of the outstanding shares of the affected Fund or
Portfolio.

RESTRICTIONS APPLICABLE TO THE CALIFORNIA MONEY, SHORT TERM INCOME,
CALIFORNIA MUNICIPAL, CALIFORNIA INSURED INTERMEDIATE MUNICIPAL, FLORIDA INSURED
MUNICIPAL, GROWTH, INTERNATIONAL GROWTH AND SMALL CAP STOCK FUNDS:

Restrictions 1 through 16 are fundamental policies of the Funds. Investment
restrictions 17 through 26 may be changed by the WM Trust II's Board of Trustees
at any time, without shareholder approval.

35
<PAGE> 195

The above listed Funds are prohibited from:

1. Purchasing the securities of any issuer (other than U.S. Government
securities) if as a result more than 5% of the value of the Fund's
total assets would be invested in the securities of the issuer (the "5%
Limitation"), except that up to 25% of the value of the Fund's total
assets may be invested without regard to the 5% Limitation; provided
that this restriction shall not apply to the California Money,
California Municipal, California Insured Intermediate Municipal and
Florida Insured Municipal Funds.

2. Purchasing more than 10% of the securities of any class of any one
issuer; provided that this limitation shall not apply to investments in
U.S. Government securities; provided further that this restriction
shall not apply to the California Money, California Municipal,
California Insured Intermediate Municipal, Florida Insured Municipal
and Growth Funds; and provided further that the Growth Fund may not own
more than 10% of the outstanding voting securities of a single issuer.

3. Purchasing securities on margin, except that a Fund may obtain any
short-term credits necessary for the clearance of purchases and sales
of securities. For purposes of this restriction, the deposit or payment
of initial or variation margin in connection with futures contracts or
related options will not be deemed to be a purchase of securities on
margin.

4. Making short sales of securities or maintaining a short position;
provided that this restriction shall not apply to the Growth and
International Growth Funds.

5. Borrowing money, except that (a) the Funds may (i) enter into reverse
repurchase agreements or (ii) borrow from banks for temporary or
emergency (not leveraging) purposes including the meeting of redemption
requests that might otherwise require the untimely disposition of
securities in an aggregate amount not exceeding 30% of the value of a
Fund's total assets (including the amount borrowed) valued at market
less liabilities (not including the amount borrowed) at the time the
borrowing is made, (b) the Short Term Income, California Municipal,
California Insured Intermediate Municipal, Florida Insured Municipal,
Growth, International Growth and Small Cap Stock Fund may enter into
futures contracts, and (c) the Short Term Income Fund may engage in
dollar roll transactions; provided that whenever borrowings pursuant to
(a) above (except that whenever borrowings pursuant to (a)(ii) above)
exceed 5% of the value of a Fund's total assets, the Fund will not
purchase any securities; and provided further that the Short Term
Income Fund is prohibited from borrowing money or entering into reverse
repurchase agreements or dollar roll transactions in the aggregate in
excess of 33 1/3% of the Fund's total assets (after giving effect to
any such borrowing).

6. Pledging, hypothecating, mortgaging or otherwise encumbering more than
30% of the value of the Fund's total assets. For purposes of this
restriction, (a) the deposit of assets in escrow in connection with the
writing of covered put or call options and the purchase of securities
on a when-issued or delayed-delivery basis and (b) collateral
arrangements with respect to (i) the purchase and sale of options on
securities, options on indexes and options on foreign currencies, and
(ii) initial or variation margin for futures contracts will not be
deemed to be pledges of a Fund's assets.

7. Underwriting the securities of other issuers, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities.

8. Purchasing or selling real estate or interests in real estate, except
that a Fund may purchase and sell securities that are secured, directly
or indirectly, by real estate and may purchase securities issued by
companies that invest or deal in real estate.

9. Investing in commodities, except that the Short Term Income, California
Municipal, California Insured Intermediate Municipal, Florida Insured
Municipal, Growth, International Growth and Small Cap Stock Funds may
invest in futures contracts and options on futures contracts. The entry

36
<PAGE> 196

into forward foreign currency exchange contracts is not and shall not
be deemed to involve investing in commodities.

10. Investing in oil, gas or other mineral exploration or development
programs.

11. Making loans, except through the purchase of qualified debt
obligations, loans of portfolio securities (except in the case of the
California Municipal and Florida Insured Municipal Funds) and the entry
into repurchase agreements.

12. Investing in securities of other investment companies registered or
required to be registered under the 1940 Act, except as they may be
acquired as part of a consolidation, reorganization, acquisition of
assets or an offer of exchange or as otherwise permitted by law,
including the 1940 Act.

13. Purchasing any securities that would cause more than 25% of the value
of the Fund's total assets at the time of purchase to be invested in
the securities of issuers conducting their principal business
activities in the same industry provided that this limitation shall not
apply to the purchase of (a) U.S. Government securities, (b) municipal
obligations issued by governments or political subdivisions of
governments or (c) with respect to the California Money Fund, U.S.
dollar-denominated bank instruments such as certificates of deposit,
time deposits, bankers' acceptances and letters of credit that have
been issued by U.S. banks.

14. Purchasing, writing or selling puts, calls, straddles, spreads or
combinations thereof; provided that this restriction shall not apply to
the Short Term Income, California Insured Intermediate Municipal and
Growth Funds; and provided further that (a) the International Growth
and Small Cap Stock Funds may purchase, write and sell covered put and
call options on securities, (b) the California Municipal, Florida
Insured Municipal, International Growth and Small Cap Stock Funds may
purchase, write and sell futures contracts and options on futures
contracts, (c) the California Money, California Municipal and Florida
Insured Municipal Funds may acquire stand-by commitments, (d) the
International Growth and Small Cap Stock Funds may purchase and write
put and call options on stock indexes, and (e) the International Growth
Fund may purchase put and call options and write covered call options
on foreign currency contracts.

15. With respect to the Growth Fund, investing more than 20% of the fund's
assets in non-investment grade debt securities.

16. With respect to the Short Term Income Fund, having a dollar-weighted
average portfolio maturity in excess of five years.

17. With respect to the Growth Fund, investing more than 25% of the Fund's
assets in foreign securities.

18. Purchasing securities that are not readily marketable if more than 10%
of the net assets of a Money Fund, or more than 15% of the net assets
of a Non-Money Fund, would be invested in such securities, including,
but not limited to: (1) repurchase agreements with maturities greater
than seven calendar days; (2) time deposits maturing in more than seven
calendar days; (3) to the extent a liquid secondary market does not
exist for the instruments, futures contracts and options thereon; (4)
certain over-the-counter options, as described in this SAI; (5) certain
variable rate demand notes having a demand period of more than seven
days; and (6) certain Rule 144A restricted securities that are deemed
to be illiquid.

19. Investing more than 10% of its total assets in time deposits maturing
in more than seven calendar days; provided that this restriction shall
not apply to the Short Term Income and Growth Funds.

20. Purchasing any security if as a result the Fund would then have more
than 5% of its total assets invested in securities of companies
(including predecessors) that have been in continuous operation for
less than three years; provided that in the case of industrial revenue
bonds purchased for the Municipal Funds, this restriction shall apply
to the entity supplying the revenues from which the issue is to be
paid.

21. Making investments for the purpose of exercising control or management.
37
<PAGE> 197

22. Purchasing or retaining securities of any company if, to the knowledge
of the Company, any of the Company's officers or Trustees or any
officer or director of the Advisor or a sub-advisor individually owns
more than 1/2 of 1% of the outstanding securities of such company and
together they own beneficially more than 5% of the securities.

23. Investing in warrants, (other than warrants acquired by the Fund as
part of a unit or attached to securities at the time of purchase) if,
as a result, the investments (valued at the lower of cost or market)
would exceed 5% of the value of the Fund's net assets or if, as a
result, more than 2% of the Fund's net assets would be invested in
warrants not listed on a recognized United States or foreign stock
exchange, to the extent permitted by applicable state securities laws.

24. Purchasing or selling interests in real estate limited partnerships.

25. Investing in mineral leases.

26. Entering into Strategic Transactions otherwise prohibited by the Fund's
investment restrictions or in the aggregate in excess of 25% of the
Fund's net assets, for purposes other than bona fide hedging positions
or that are not "covered," subject to such greater percentage
limitations as may be imposed by the Advisor from time to time.

For purposes of the investment restrictions described above, the issuer of
a municipal security is deemed to be the entity (public or private) ultimately
responsible for the payment of the principal of and interest on the security.
For purposes of investment restriction Number 13 above, AMT-Subject Bonds and
Revenue Bonds, the payment of principal and interest on which is the ultimate
responsibility of companies within the same industry, are grouped together as an
"industry." The percentage limitations contained in the restrictions listed
above apply at the time of purchase of securities, and shall not be considered
violated unless an excess or deficiency occurs immediately after and as a result
of such purchase.

THE INVESTMENT RESTRICTIONS SET FORTH BELOW HAVE BEEN ADOPTED BY WM TRUST I WITH
RESPECT TO THE FUNDS WITHIN WM TRUST I AS FUNDAMENTAL POLICIES.

EACH OF THE MONEY MARKET AND TAX-EXEMPT MONEY MARKET FUNDS MAY NOT:

1. invest in common stocks or other equity securities(1)

2. borrow money for investment purposes, except that each Fund may borrow
up to 5% of its total assets in emergencies, and may borrow up to
33 1/3% of such assets to meet redemption requests that would otherwise
result in the untimely liquidation of vital parts of its portfolio;

3. buy securities on margin, mortgage or pledge its securities, or engage
in "short" sales;

4. buy or sell options;

5. act as underwriter of securities issued by others;

6. buy securities restricted as to resale under federal securities laws
(other than securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933, as amended, and except in connection with
repurchase agreements);

7. buy or sell real estate, real estate investment trust securities,
commodities, or oil, gas and mineral interests;

8. lend money, except in connection with repurchase agreements and for
investments made in accordance with Fund policies discussed in the
Prospectus;

9. issue senior securities;

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

(1) For purposes of determining compliance with this restriction, the Tax-Exempt
Money market Fund will not consider securities of other money market Funds
to be "common stocks or other equities."

38
<PAGE> 198

10. invest more than 5%* of its total assets in the securities of any
single issuer (except for the United States Government, its agencies or
instrumentalities);

11. invest more than 25%* of its total assets in securities of issuers in
any single industry;

12. invest more than 10%* of its net assets in illiquid securities;

13. invest in companies for the purpose of exercising control.

The Money Market Fund May Not:

1. invest in other investment companies (except as part of a merger).

The Tax-exempt Money Market Fund May Not:

1. invest more than 20%* of its assets in obligations that pay interest
subject to federal alternative minimum tax.

* Percentage at the time the investment is made.

EACH OF THE INCOME, U.S. GOVERNMENT SECURITIES AND TAX-EXEMPT BOND FUNDS
MAY NOT:

1. invest more than 5%* of its total assets in any single issuer other
than U.S. Government Securities, except that up to 25% of a Fund's
assets may be invested without regard to this 5% limitation;

2. acquire more than 10%* of the voting securities of any one company;

3. invest in any company for the purpose of management or exercising
control;

4. invest in real estate or commodities, although the Income Fund may
purchase securities of issuers which deal in real estate, securities
which are secured by interests in real estate, and/or securities which
represent interests in real estate, and it may acquire and dispose of
real estate or interests in real estate acquired through the exercise
of its rights as a holder of debt obligations secured by real estate
interests therein, and the Income and Tax-Exempt Bond Funds may
purchase and sell interest rate futures and options;

5. invest in oil, gas or other mineral leases;

6. invest in securities restricted under federal securities laws other
than securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended;

7. invest more than 20%* of its assets in forward commitments;

8. invest more than 25%* of its assets in any single industry;**

9. invest more than 15%* of its net assets in illiquid securities;

10. buy foreign securities not payable in U.S. dollars (not applicable to
the Income Fund);

11. buy securities on margin, mortgage or pledge its securities, or engage
in "short" sales;

12. invest more than 5%* of its net assets in warrants including not more
than 2%* of such net assets in warrants that are not listed on either
the New York Stock Exchange or American Stock Exchange; however,
warrants acquired in units or attached to securities may be deemed to
be without value for the purpose of this restriction;

13. act as underwriter of securities issued by others;

14. borrow money for investment purposes, although it may borrow up to 5%
of its total net assets for emergency, non-investment purposes and,
except for the Tax-Exempt Bond Fund, may enter into transactions in
which the Fund sells securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar securities
on a specified future date;

15. lend money (except for the execution of repurchase agreements);
39
<PAGE> 199

16. buy or sell put or call options;

17. issue senior securities.

In addition,

The U.S. Government Securities Fund May Not:

1. invest less than 80%* of its assets in obligations guaranteed by the
U.S. Government, its agencies and instrumentalities or in repurchase
agreements or collateralized mortgage obligations secured by these
obligations.

The Tax-exempt Bond Fund May Not:

1. buy or hold securities which directors or officers of the Fund or the
Advisor hold more than .50% of the outstanding securities.

The U.S. Government Securities and Income Funds May Not:

1. invest in other investment companies (except as part of a merger).

The U.S. Government Securities and Tax-Exempt Bond Funds May Not:

1. buy common stocks or other equity securities, except that the Tax-Exempt
Bond Fund may invest in other investment companies.

* Percentage at the time the investment is made.

** It is a policy of the Income Fund to consider electric utilities, electric
and gas utilities, gas utilities, and telephone utilities to be separate
industries. The Fund also considers foreign issues to be a separate industry.
It is a policy of the Tax-Exempt Bond Fund to apply this restriction only to
its assets in non-municipal bond holdings, pollution control revenue bonds
and industrial development revenue bonds. These policies may result in
increased risk.

The High Yield and MidCap Stock Funds May Not:

1. invest more than 5% of its total assets in any single issuer other than
U.S. Government Securities, except that up to 25% of the Fund's assets
may be invested without regard to this 5% limitation;

2. acquire more than 10% of the voting securities of any one company;

3. invest in real estate** or commodities;

4. invest in oil, gas or other mineral leases;

5. invest more than 25% or more of its assets in any single industry;*

6. buy securities on margin, mortgage or pledge its securities;

7. act as underwriter of securities issued by others;

8. borrow money for investment purposes (it may borrow up to 5% of its
total assets for emergency, non-investment purposes);

9. lend money (except for the execution of repurchase agreements);

10. issue senior securities.

* Percentage at the time the investment is made.

** This restriction will not prevent the Fund from purchasing and selling
securities that are secured, directly or indirectly, by real estate or
purchasing securities issued by companies that invest or deal in real estate.

40
<PAGE> 200

Each of the Bond & Stock, Growth & Income and Growth Fund of the Northwest
Funds May Not:

1. invest more than 5%* of its total assets in securities of any single
issuer other than U.S. Government Securities, except that up to 25% of
a Fund's assets may be invested without regard to this 5% limitation;

2. acquire more than 10%* of the voting securities of any one company;

3. invest in any company for the purpose of management or exercising
control;

4. invest in real estate (except publicly traded real estate investment
trusts);

5. invest in commodities;

6. invest in oil, gas or other mineral leases;

7. invest in other investment companies (except as part of a merger);

8. invest more than 20%* of its total assets in forward commitments or
repurchase agreements;

9. invest more than 25%* of its total assets in any single industry;

10. act as underwriter of securities issued by others;

11. borrow money for investment purposes (it may borrow up to 5% of its
total net assets for emergency, non-investment purposes);

12. lend money (except for the execution of repurchase agreements);

13. issue senior securities;

14. buy or sell options, with the exception of covered call options which
must be limited to 20% of total assets;

15. buy or sell futures-related securities;

16. invest in securities restricted under federal securities laws (other
than securities eligible for resale under Rule 144A under the
Securities Act of 1933, as amended);

17. invest more than 15%* of its net assets in illiquid securities;

18. buy securities on margin, mortgage or pledge its securities, or engage
in "short" sales;

19. invest more than 5%* of its net assets in warrants including not more
than 2% of such net assets in warrants that are not listed on either
New York Stock Exchange or American Stock Exchange; however, warrants
acquired in units or attached to securities may be deemed to be without
value for the purpose of this restriction;

20. invest more than 25%* of its total assets in foreign securities and
then only in U.S. dollar-denominated foreign securities.

* Percentage at the time the investment is made.

THE INVESTMENT RESTRICTIONS SET FORTH BELOW HAVE BEEN ADOPTED BY THE WM
STRATEGIC ASSET MANAGEMENT PORTFOLIOS, LLC WITH RESPECT TO THE PORTFOLIOS AS
FUNDAMENTAL POLICIES.

Each of the Strategic Growth, Conservative Growth, Balanced, Flexible
Income and Income Portfolios Will Not

1. purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (except this shall not
prevent the Fund from purchasing or selling options or futures contracts
or from investing in securities or other instruments backed by physical
commodities);

41
<PAGE> 201

2. purchase or sell real estate including limited partnership interests,
although it may purchase and sell securities of companies that deal in
real estate and may purchase and sell securities that are secured by
interests in real estate;

3. make loans to any person, except loans of portfolio securities to the
extent that no more than 33 1/3% of its total assets would be lent to
other parties, but this limitation does not apply to purchases of debt
securities or repurchase agreements;

4. (i) purchase more than 10% of any class of the outstanding voting
securities of any issuer (except other investment companies as defined
in the 1940 Act) and (ii) purchase securities of an issuer (except
obligations of the U.S. Government and its agencies and
instrumentalities and securities of other investment companies as
defined in the 1940 Act) if as a result, with respect to 75% of its
total assets, more than 5% of the Portfolio's total assets, at market
value, would be invested in the securities of such issuer.

5. issue senior securities (as defined in the 1940 Act) except as permitted
by rule, regulation or order of the Securities and Exchange Commission;

6. will not borrow, except from banks for temporary or emergency (not
leveraging) purposes including the meeting of redemption requests that
might otherwise require the untimely disposition of securities in an
aggregate amount not exceeding 30% of the value of the Portfolio's total
assets (including the amount borrowed) at the time the borrowing is
made; and whenever borrowings by a Portfolio, including reverse
repurchase agreements, exceed 5% of the value of a Portfolio's total
assets, the Portfolio will not purchase any securities;

7. underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the
1933 Act in the disposition of restricted securities; and

8. write or acquire options or interests in oil, gas or other mineral
exploration or development programs.

[TO BE UPDATED]

PORTFOLIO TURNOVER

The Money Funds attempt to increase yields by trading to take advantage of
short-term market variations, which result in high portfolio turnover and high
transactions costs. The Short Term Income, U.S. Government Securities, Income
and High Yield Funds, the Tax-Exempt Bond, California Municipal, California
Insured Intermediate Municipal and Florida Insured Municipal Funds and the Bond
& Stock, Growth & Income, Growth, Mid Cap Stock, International Growth, Growth
Fund of the Northwest and Small Cap Stock Funds do not intend to seek profits
through short-term trading. Nevertheless, the Funds will not consider portfolio
turnover rate a limiting factor in making investment decisions.

Under certain market conditions, the Short Term Income, California Insured
Intermediate Municipal, Growth, Mid Cap Stock, International Growth or Small Cap
Stock Funds may experience increased portfolio turnover as a result of such
Fund's options activities. For instance, the exercise of a substantial number of
options written by a Fund (due to appreciation of the underlying security in the
case of call options or depreciation of the underlying security in the case of
put options) could result in a turnover rate in excess of 100%. A portfolio
turnover rate of 100% would occur if all of a Fund's securities that are
included in the computation of turnover were replaced once during a period of
one year. The portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the year by the monthly average
value of portfolio securities. Securities with remaining maturities of one year
or less at the date of acquisition are excluded from the calculation. During
fiscal year 1998, each of the California Municipal, Small Cap Stock and
International Growth Funds experienced a significant increase in portfolio
turnover rate from fiscal year 1997. The California Municipal Fund rose to 87%
from 36%, the Emerging Growth Fund rose to 112% from 87% and the International
Growth Fund rose to 118% from 67%.

42
<PAGE> 202

Certain other practices that may be employed by the Funds could result in
high portfolio turnover. For example, portfolio securities may be sold in
anticipation of a rise in interest rates (market decline) or purchased in
anticipation of a decline in interest rates (market rise) and later sold. In
addition, a security may be sold and another of comparable quality purchased at
approximately the same time to take advantage of what the Advisor or a Fund's
sub-advisor believes to be a temporary disparity in the normal yield
relationship between the two securities. These yield disparities may occur for
reasons not directly related to the investment quality of particular issues or
the general movement of interest rates, such as changes in the overall demand
for, or supply of, various types of securities.

PORTFOLIO TRANSACTIONS

Most of the purchases and sales of securities for a Fund, whether
transacted on a securities exchange or over-the-counter, will be effected in the
primary trading market for the securities. Decisions to buy and sell securities
for a Fund are made by the Advisor or the relevant sub-advisor, which also is
responsible for placing these transactions, subject to the overall review of the
Trusts' Board of Trustees. Although investment decisions for each Fund are made
independently from those of the other accounts managed by the Advisor or the
sub-advisor, investments of the type the Fund may make may also be made by those
other accounts. When a Fund and one or more other accounts managed by the
Advisor or the sub-advisor are prepared to invest in, or desire to dispose of,
the same security, available investments or opportunities for sales will be
allocated in a manner believed by the Advisor or the sub-advisor to be equitable
to each. In some cases, this procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that coordination and the ability
to participate in volume transactions will be to the benefit of the Fund.

Transactions on U.S. exchanges involve the payment of negotiated brokerage
commissions. With respect to exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. There is generally no
stated commission in the case of securities traded in the over-the-counter
markets, but the prices of those securities include undisclosed commissions or
concessions, and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. U.S. Government Securities may
be purchased directly from the U.S. Treasury or from the issuing agency or
instrumentality.

In selecting brokers or dealers to execute portfolio transactions on behalf
of a Fund, the Advisor or the Fund's sub-advisor seeks the best overall terms
available. In assessing the best overall terms available for any transaction,
the Advisor and each sub-advisor will consider the factors that the Advisor or
the sub-advisor deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. In addition, each
advisory agreement among the Trusts authorizes the Advisor, and a sub-advisory
agreement authorizes the sub-advisor, in selecting brokers or dealers to execute
a particular transaction and in evaluating the best overall terms available, to
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
the Trusts, the other Funds and/or other accounts over which the Advisor, the
sub-advisor or their affiliates exercise investment discretion. The fees under
the advisory agreements between the Trusts, the Advisor and the sub-advisors are
not reduced by reason of their receiving such brokerage and research services.
The Trusts' Board of Trustees will periodically review the commissions paid by
the Funds to determine if the commissions paid over representative periods of
time were reasonable in relation to the benefits received by the Trusts.

Consistent with applicable provisions of the 1940 Act, the rules and
exemptions adopted by the Commission thereunder, and relevant interpretive and
"no-action" positions taken by the Commission's staff, the Trusts' Board of
Trustees has adopted procedures pursuant to Rule 17e-1 under the 1940 Act to
ensure that all portfolio transactions with affiliates will be fair and
reasonable. Under the procedures adopted, portfolio transactions for a Fund may
be executed through any affiliated broker (other than affiliated persons of the
Trust solely because the broker is an affiliated person of a sub-advisor of
another Fund) if, subject to other conditions in the Rule 17e-1 procedures, in
the judgment of the Advisor or the Fund's sub-advisor, the

43
<PAGE> 203

use of an affiliated broker is likely to result in price and execution at least
as favorable as those of other qualified broker-dealers, and if, in the
transaction an affiliated broker charges the Fund a rate consistent with those
charged for comparable transactions in comparable accounts of the broker's most
favored unaffiliated clients. Over-the-counter purchases and sales are
transacted directly with principal market makers except in those cases in which
better prices and executions may be obtained elsewhere.

For the years set forth below, the WM Trust I and WM Trust II Funds paid
the following brokerage commissions:

TOTAL BROKERAGE COMMISSIONS PAID

<TABLE>
<CAPTION>
JUNE
OCTOBER OCTOBER ---------------------
FUND 1999 1998 1998 1997
---- -------- ------- ---------- --------
<S> <C> <C> <C> <C>
Money Market Fund*................................... n/a n/a $ 0
Tax-Exempt Money Market.............................. n/a n/a 0
California Money Fund***............................. n/a $ 0 0
Short Term Income Fund***............................ n/a 3,616 6,064
U.S. Government Securities Fund*..................... n/a n/a 0
Income Fund*......................................... n/a n/a 0
High Yield Fund...................................... 757 n/a n/a
Tax-Exempt Bond Fund*................................ n/a n/a 0
California Municipal Fund***......................... n/a 0 0
California Insured Intermediate Municipal Fund....... n/a 4,277 7,102
Florida Insured Municipal Fund***.................... n/a 1,905 7,935
Bond & Stock Fund**.................................. 200,832 n/a 307,372
Growth & Income Fund**............................... 643,715 n/a 502,372
Growth Fund of the Northwest**....................... 59,090 n/a 98,599
Growth Fund***....................................... 63,900 208,497 616,898
Small Cap Stock***................................... 29,914 387,993 480,975
International Growth Fund***......................... 47,507 1,036,609 696,191
</TABLE>

- ---------------
* Fiscal year changed from 12/31 to 10/31 as of 10/31/98

** Fiscal year ended 10/31

*** Fiscal year changed from 6/30 to 10/31/98

44
<PAGE> 204

<TABLE>
<CAPTION>
TOTAL AMOUNT OF
TOTAL BROKERAGE TRANSACTIONS WHERE
COMMISSIONS PAID BROKERAGE COMMISSIONS
TO BROKERS THAT WERE PAID TO BROKERS
PROVIDED RESEARCH THAT PROVIDED RESEARCH
FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND OCTOBER 31, 1998 OCTOBER 31, 1998
---- ------------------ ----------------------
<S> <C> <C>
Money Market Fund.........................................
Tax-Exempt Money Market Fund..............................
California Money Fund.....................................
Short Term Income Fund....................................
U.S. Government Securities Fund...........................
Income Fund...............................................
High Yield Fund...........................................
Tax-Exempt Bond Fund......................................
California Municipal Fund.................................
California Insured Intermediate Municipal Fund............
Florida Insured Municipal Fund............................
Bond & Stock Fund.........................................
Growth & Income Fund......................................
Growth Fund of the Northwest..............................
Growth Fund...............................................
Small Cap Stock...........................................
International Growth Fund.................................
</TABLE>

As of December 31, 1999, none of the Funds held any securities of any
"regular broker or dealer" (as such term is defined in the 1940 Act) of the
Trusts or Portfolios.

NET ASSET VALUE

The Trusts will calculate the net asset value of the Funds' Class A, Class
B, and Class I shares as of the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., New York time), Monday through Friday, exclusive
of national business holidays. The Trusts will be closed on the following
national holidays: New Year's Day, Martin Luther King Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.

A security that is primarily traded on a U.S. exchange (including
securities traded through the NASDAQ National Market System) is valued at the
last sale price on that exchange or, if there were no sales during the day, at
the mean of the current day's bid and asked prices. Over-the-counter securities
that are not traded through the NASDAQ National Market System and U.S.
Government Securities are valued at the mean of the current day's bid and asked
prices. An option is generally valued at the last sale price or, in the absence
of a last sale price, at the mean of the current day's bid and asked prices.
Short term debt securities that mature in 60 days or less are valued at
amortized cost; assets of the Money Funds are also valued at amortized cost. The
value of a foreign security is determined in its national currency as of the
close of trading on the foreign exchange on which it is traded or as of 4:00
p.m. New York Time, if that is earlier, and that value is then converted into
its U.S. dollar equivalent at the foreign exchange rate in effect at noon, New
York time, on the day the value of the foreign security is determined. The value
of a futures contract equals the unrealized gain or loss on the contract, which
is determined by marking the contract to the current settlement price for a like
contract acquired on the day on which the futures contract is being valued. If
the market makes a limit move with respect to the security or index underlying
the futures contract, the futures contract will be valued at a fair market value
as determined by or under the direction of the Board of Trustees.

Debt securities of U.S. issuers (other than U.S. Government Securities and
short-term investments), including Municipal Obligations, are valued by one or
more independent pricing services (each a "Pricing Service") retained by the
Trusts. When, in the judgment of a Pricing Service, market quotations for these

45
<PAGE> 205

securities are readily available, they are valued at the mean between the quoted
bid prices and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by, or under the
direction of, the Board of Trustees, which may rely on the assistance of one or
more Pricing Services. The procedures of each Pricing Service are reviewed
periodically by the officers of the Trusts under the general supervision and
responsibility of the Board of Trustees.

VALUATION OF THE MONEY FUNDS. The valuation of the portfolio securities of
the Money Funds is based upon their amortized cost, which does not take into
account unrealized capital gains or losses. Amortized cost valuation involves
initially valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price a Fund
would receive if it sold the instrument.

The use by the Money Funds of the amortized cost method of valuing their
respective portfolio securities is permitted by a rule adopted by the SEC. Under
this rule, the Money Funds must maintain dollar-weighted average portfolio
maturities of 90 days or less, purchase only instruments having remaining
maturities of thirteen months or less and invest only in securities determined
by the Board of Trustees of the Trusts to present minimal credit risks. Pursuant
to the rule, the Board of Trustees also has established procedures designed to
stabilize, to the extent reasonably possible, the Funds' price per share as
computed for the purpose of sales and redemptions at $1.00. Such procedures
include review of the Funds' portfolio holdings by the Board of Trustees or its
delegate, at such intervals as the Board of Trustees may deem appropriate, to
determine whether the Funds' net asset values calculated by using available
market quotations or market equivalents deviates from $1.00 per share based on
amortized cost.

In the event the Board of Trustees determines that a deviation exists which
may result in material dilution or other unfair results to investors or existing
shareholders, the Board of Trustees will cause the Trusts to take such
corrective action as the Board deems necessary and appropriate including:
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
establishing a net asset value per share by using available market quotations.

HOW TO BUY AND REDEEM SHARES

Class A, Class B and Class I shares of the Funds may be purchased and
redeemed in the manner described in the Prospectus and in this SAI. Class I
shares are currently offered and sold only to the Portfolios.

As stated in the prospectus, each Fund and Portfolio may sell class A
shares at net asset value to brokers, dealers and registered investment advisers
who have entered into arrangements with the Distributor providing specifically
for the shares to be used in particular investment products or programs made
available to their clients for which they may charge a separate fee. This
includes investment products or programs that are available only with respect to
the proceeds of redemptions of shares of other mutual funds on which the client
had paid an initial or contingent deferred sales charge.

COMPUTATION OF PUBLIC OFFERING PRICES

The Funds offer their shares to the public on a continuous basis. The
public offering price per Class A share of the Funds is equal to the net asset
value next computed after receipt of a purchase order, plus the applicable
front-end sales charge, if any, as set forth in the Prospectus. The public
offering price per Class B, or Class I share of the Funds is equal to the net
asset value next computed after receipt of a purchase order.

An illustration of the computation of the public offering price per share
of each Fund and Portfolio is contained in the financial statements incorporated
herein by reference.

COMMISSIONS ON NAV SALES. The Distributor pays authorized dealers
commissions of up to 1% on purchases of Class A shares at net asset value that
are (i) part of a purchase of $1 million or more or (ii) sold

46
<PAGE> 206

to qualified employee benefit plans (including SEPs and SIMPLEs) that have more
than 100 participants or that have more than $500,000 invested in the WM Group
of Funds.

PAYMENT IN SECURITIES

In addition to cash, the Funds and Portfolios may accept securities as
payment for Fund or Portfolio shares at the applicable net asset value.
Generally, the Funds and Portfolios will only consider accepting securities to
increase their holding in a portfolio security or if WM Advisors determines that
the offered securities are a suitable investment for the Fund or Portfolio and
in a sufficient amount for efficient management.

While no minimum has been established, the Funds and Portfolios may decide
not to accept securities as payment for shares at their discretion. The Funds
and Portfolios may reject in whole or in part any or all offers to pay for
purchasers of shares with securities, may require partial payment in cash for
such purchases to provide funds for applicable sales charges, and may
discontinue accepting securities as payment for shares at any time without
notice. The Funds and Portfolios will value accepted securities in the manner
described in the section "Net Asset Value" for valuing shares of the Funds and
Portfolios. The Funds and Portfolios will only accept securities which are
delivered in proper form. The acceptance of securities by certain of the Funds
or Portfolios in exchange for shares is subject to additional requirements. For
federal income tax purposes, a purchase of shares with securities will be
treated as a sale or exchange of such securities on which the investor will
generally realize a taxable gain or loss. The processing of a purchase of Fund
or Portfolio shares with securities involves certain delays while the fund
considers the suitability of such securities and while other requirements are
satisfied. For information regarding procedures for payment in securities,
contact WM Shareholder Services at 1-800-222-5852. Investors should not send
securities to the Funds and Portfolios except when authorized to do so and in
accordance with specific instructions received from WM Shareholder Services.

REDEMPTIONS

The procedures for redemption of Class A and Class B shares of each Fund
and Portfolio are summarized in the Prospectus under "How to Sell Shares." The
right of redemption of Class A and Class B shares of a Fund or Portfolio may be
suspended or the date of payment postponed (1) for any periods during which the
New York Stock Exchange is closed (other than for customary weekend and holiday
closings), (2) when trading in the markets the Fund normally utilizes is
restricted, or an emergency, as defined by the rules and regulations of the SEC,
exists making disposal of a Fund's or Portfolio's investments or determination
of its net asset value not reasonably practicable or (3) for such other periods
as the SEC by order may permit for protection of shareholders.

CERTAIN WAIVERS OF THE CONTINGENT DEFERRED SALES CHARGES. Contingent
deferred sales charges (each, a "CDSC") imposed upon redemptions of Class A and
Class B shares will be waived in certain instances.

APPLICATION OF CLASS A SHARES CDSC. The Class A CDSC of 1.0% or 0.5% may be
imposed on certain redemptions within one or two years of purchase,
respectively, with respect to Class A shares (i) purchased at NAV without a
sales charge at time of purchase due to purchases of $1 million or more, or (ii)
acquired, including Class A shares of a Money Fund acquired, through an exchange
for Class A shares of a Non-Money Fund purchased at NAV without a sales charge
at time of purchase due to purchases of $1 million or more. The CDSCs for Class
A shares are calculated on the lower of the shares' cost or current net asset
value, and in determining whether the CDSC is payable, the Funds will first
redeem shares not subject to any CDSC.

With respect to certain investors who purchase Class A shares through an
authorized dealer and who receive a waiver of the entire initial sales charge on
Class A shares because the Class A shares where purchased through a plan
qualified under Section 401(k) of the Code ("401(k) Plan") or through a plan
qualified under Section 403(b) of the Code ("403(b) Plan") or who hold Class A
shares of a Money Fund that were acquired through an exchange for Non-Money Fund
Class A shares that were purchased at NAV through one of such plans, a CDSC of
1% may be imposed on the amount that was invested through the plan in such Class
A shares and that is redeemed (i) if, within the first two years after the
plan's initial investment
47
<PAGE> 207

Pages 48 through 55 are intentionally left blank.
<PAGE> 208

[TO BE UPDATED]

<TABLE>
<CAPTION>
AGGREGATE
TOTAL RETURN
TEN YEAR OR
SINCE FROM DATE OF
FIVE TEN DATE OF INCEPTION,
FUND AND INCEPTION DATE ONE YEAR YEAR YEAR INCEPTION IF SHORTER
----------------------- -------- ----- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
BOND & STOCK FUND
CLASS A SHARES
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
CLASS B SHARES 3/30/94
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
GROWTH & INCOME FUND
CLASS A SHARES
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
CLASS B SHARES 3/30/94
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
GROWTH FUND
CLASS A SHARES 4/5/93
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
CLASS B SHARES 6/30/94
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
INTERNATIONAL GROWTH FUND
CLASS A SHARES 7/18/90
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
CLASS B SHARES 6/30/94
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
GROWTH FUND OF THE NORTHWEST
CLASS A SHARES
Adjusted for Maximum Sales Charge........
Adjusted for Maximum Sales Charge........
CLASS B SHARES
Not Adjusted for Sales Charge............
SMALL CAP STOCK
CLASS A SHARES 7/18/90
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
CLASS B SHARES 6/30/94
Adjusted for Maximum Sales Charge........
Not Adjusted for Sales Charge............
</TABLE>

56
<PAGE> 209

[TO BE UPDATED]

Each Portfolio is modeled after an investment strategy used by the WM
Strategic Asset Management ("SAM") program, an investment management service
offered by WM Group of Funds, Inc., an affiliate of the Portfolios' Advisor that
allocates investments across a combination of the underlying Funds. Set forth
below is certain performance data for the Portfolios and, prior to the
Portfolios' inception, those strategies. Performance information for the
strategies is deemed relevant because each strategy was managed using virtually
the same investment objectives, policies and restrictions as those used by the
Portfolios. Nonetheless, the performance data is not necessarily indicative of
the future performance of the Portfolios.

Because of certain differences in the expenses applicable to the SAM
program and the Portfolios, the following performance information has been
adjusted by applying the current total expense ratios for the Class A shares of
the Portfolios. The average annual total return of the following investment
strategies for the one-year period, the five-year period and the period from
inception of the strategy, in each case ended October 31, 1999, was as follows:

<TABLE>
<CAPTION>
SINCE
FIVE TEN DATE OF
PORTFOLIO/STRATEGY AND INCEPTION DATE ONE YEAR YEAR YEAR INCEPTION
------------------------------------- -------- ---- ---- ---------
<S> <C> <C> <C> <C>
STRATEGIC GROWTH PORTFOLIO
CLASS A SHARES 5/31/95
Adjusted for Maximum Sales Charge......................
Not Adjusted for Sales Charge..........................
CLASS B SHARES 5/31/95
Adjusted for Maximum Sales Charge......................
Not Adjusted for Sales Charge..........................
CONSERVATIVE GROWTH PORTFOLIO
CLASS A SHARES 9/30/90
Adjusted for Maximum Sales Charge......................
Not Adjusted for Sales Charge..........................
CLASS B SHARES 6/30/94
Adjusted for Maximum Sales Charge......................
Not Adjusted for Sales Charge..........................
BALANCED PORTFOLIO
CLASS A SHARES 9/30/90
Adjusted for Maximum Sales Charge......................
Not Adjusted for Sales Charge..........................
CLASS B SHARES 6/30/94
Adjusted for Maximum Sales Charge......................
Not Adjusted for Sales Charge..........................
FLEXIBLE INCOME PORTFOLIO
CLASS A SHARES 3/31/93
Adjusted for Maximum Sales Charge......................
Not Adjusted for Sales Charge..........................
CLASS B SHARES 6/30/94
Adjusted for Maximum Sales Charge......................
Not Adjusted for Sales Charge..........................
</TABLE>

57
<PAGE> 210

[TO BE UPDATED]

The performance of a Fund's and Portfolio's Class A and Class B shares will
vary from time to time depending upon market conditions, the composition of the
Fund's or Portfolio's portfolio and the Fund's or Portfolio's operating
expenses. Consequently, any given performance quotation should not be considered
representative of the Fund's or Portfolio's performance for any specified period
in the future. In addition, because performance will fluctuate, it may not
provide a basis for comparing an investment in a Fund or Portfolio with certain
bank deposits or other investments that pay a fixed yield or return for a stated
period of time.

Investors should recognize that, because the Funds other than the Equity
Funds and each of the Portfolios will have a high component of fixed-income
securities, in periods of declining interest rates the yields of the Funds will
tend to be somewhat higher than prevailing market rates, and in periods of
rising interest rates yields will tend to be somewhat lower. In addition, when
interest rates are falling, the inflow of net new money to the Funds and
Portfolios from the continuous sale of shares will likely be invested in
portfolio instruments producing lower yields than the balance of the Fund's or
Portfolio's securities, thereby reducing the current yields of the Funds. In
periods of rising interest rates, the opposite can be expected to occur.
Comparative performance information may be used from time to time in advertising
the Trusts' Class A, Class B and Class S shares, including data from Lipper
Analytical Services, Inc., the S&P 500 Composite Stock Price Index, the Dow
Jones Industrial Average and other industry publications. The International
Growth Fund may compare its performance to other investments or relevant indexes
consisting of Morgan Stanley Capital International EAFE Index, the Standard &
Poor's 500 Index, the Lipper International Fund Index and The Financial Times
World Stock Index.

TAXES

The following discussion of federal income tax consequences is based on the
Code and the regulations issued thereunder as in effect on the date of this
Statement of Additional Information and all references to the Funds in this
discussion includes the Portfolios. New legislation, as well as administrative
changes or court decisions, may significantly alter the conclusions expressed
herein, and may have a retroactive effect with respect to the transactions
contemplated herein.

Each Fund is treated as a separate entity for federal income tax purposes
and is not combined with the other funds within a Trust. Each of the Funds
intends to continue qualifying as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. A Fund that is a RIC and distributes to
its shareholders at least 90% of its taxable net investment income (including,
for this purpose, its net realized short-term capital gains) and 90% of its
tax-exempt interest income (reduced by certain expenses), will not be liable for
federal income taxes on that part of its income distributed to its stockholders.

In order to qualify as a RIC under the Code, in addition to satisfying the
distribution requirement described above, each Fund must (a) derive at least 90%
of its gross income each taxable year from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock,
securities, or foreign currencies, and certain other related income, including,
generally, certain gains from options futures, and forward contracts; and (b)
diversify its holdings so that, at the end of each fiscal quarter of the Fund's

58
<PAGE> 211

taxable year, (i) at least 50% of the market value of the Fund's assets is
represented by cash and cash items, U.S. Government Securities, securities of
other RICs, and other securities, with such other securities limited, in respect
to any one issuer, to an amount that does not represent more than 10% of the
outstanding voting securities of such issuer or exceed 5% of the value of the
Fund's total assets and (ii) not more than 25% of the value of its assets is
invested in the securities (other than U.S. Government Securities and securities
of other RICs) of any one issuer or of two or more issuers which the Fund
controls and which are engaged in the same, similar, or related trades or
businesses.

If a Fund fails to qualify as a RIC for any year, all of its income will be
subject to tax at corporate rates, and its distributions (including capital
gains distributions) will in general be taxable as ordinary income dividends to
its shareholders, subject to the dividends received deduction for corporate
shareholders.

Notwithstanding the distribution requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and tax-exempt interest income and does not require any minimum
distribution of net capital gain (the excess of net long-term capital gain over
net short-term capital loss), a Fund will be subject to a nondeductible 4%
federal excise tax to the extent it fails to distribute by the end of any
calendar year at least 98% of its ordinary income for that year and at least 98%
of its capital gain net income (the excess of short- and long-term capital gains
over short- and long-term capital losses) for the one-year period ending on
October 31 of that year, plus certain other amounts. Each Fund intends to make
distributions sufficient to avoid imposition of the 4% excise tax.

The Tax-Exempt Money Market, California Money, Tax-Exempt Bond, California
Municipal, California Insured Intermediate Municipal and Florida Insured
Municipal Funds will be qualified to pay exempt-interest dividends to their
shareholders only if, at the close of each quarter of a Fund's taxable year, at
least 50% of the total value of a Fund's assets consist of obligations the
interest on which is exempt from federal income tax. Part or all of the interest
on indebtedness incurred or continued by a shareholder to purchase or carry
shares of these funds will not be deductible for federal income tax purposes or,
in the case of the California and Florida Funds, for California and Florida
income tax purposes. Any loss on the sale or exchange of shares in these Funds
held for six months or less will be disallowed to the extent of any
exempt-interest dividend received by the shareholders with respect to such
shares. In addition, the Code may require a shareholder who receives
exempt-interest dividends to treat as taxable income a portion of certain
otherwise non-taxable social security and railroad retirement benefit payments.
Municipal funds may not be an appropriate investment for persons (including
corporations and other business entities) who are "substantial users" (or who
are related to substantial users) of facilities financed by "private activity
bonds" or "industrial development bonds." For these purposes, the term
"substantial user" is defined generally to include a "non-exempt person" who
regularly uses in a trade or business a part of a facility financed from the
proceeds of such bonds. Moreover, as noted in the Prospectus, some or all of
these Funds' dividends may be a specific preference item, or a component of an
adjustment item, for purposes of the federal individual and corporate
alternative minimum taxes. Similar rules apply for California State personal
income tax purposes. Shareholders should consult their own tax advisers as to
whether they are (1) "substantial users" with respect to a facility or "related"
to such users within the meaning of the Code or (2) subject to federal
alternative minimum tax, the federal "branch profits" tax, or the federal
"excess net passive income" tax. Issuers of bonds purchased by the Municipal
Funds (or the beneficiary of such bonds) may have made certain representations
or covenants in connection with the issuance of such bonds to satisfy certain
requirements of the Code that must be satisfied subsequent to the issuance of
such bonds. Shareholders should be aware that exempt-interest dividends may
become subject to federal income taxation retroactively to the date of issuance
of the bonds to which such dividends are attributable if such representations
are determined to have been inaccurate or if the issuers (or the beneficiary) of
the bonds fail to comply with certain covenants made at that time.

Distributions made by the Fixed-Income Funds generally will not be eligible
for the dividends received deduction otherwise available to corporate taxpayers.
In addition, the dividends received deduction shall be disallowed with respect
to a dividend from any other Fund unless a corporate shareholder held its shares
on the ex-dividend date and for at least 45 more days during the 90-day period
surrounding the ex-dividend date, without protection from risk of loss.

59
<PAGE> 212

As described above and in the Prospectus, certain of the Funds may invest
in certain types of futures contracts and options. The Funds anticipate that
these investment activities will not prevent the Funds from qualifying as RICs.
As a general rule, these investment activities may accelerate, increase or
decrease the amount of long-term and short-term capital gains or losses realized
by a Fund and, accordingly, will affect the amount of capital gains distributed
to a Fund's shareholders.

A Fund's transactions in foreign currencies, foreign currency-denominated
debt securities and certain foreign currency options, futures contracts and
forward contracts (and similar instruments) may give rise to ordinary income or
loss to the extent such income or loss results from fluctuations in the value of
the foreign currency concerned. In addition, if a Fund engages in hedging
transactions, including hedging transactions in options, futures contracts and
straddles (or other similar transactions), it will be subject to special tax
rules (including mark-to-market, straddle, wash sale, short sale and
constructive sale rules), the effect of which may be to accelerate income to a
Fund, defer losses to a Fund, cause adjustments in the holding periods of a
Fund's securities, or convert short-term capital losses into long-term capital
losses. These rules could therefore affect the amount, timing and character of
distributions to shareholders. Each Fund will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interests of the Fund.

Distributions of net capital gains (i.e., the excess of net gains from
capital assets held for more than one year over net losses from capital assets
held for not more than one year) that are designated by a Fund as capital gain
dividends will generally be taxable to a shareholder receiving such
distributions as long-term capital gain (generally taxed at a 20% tax rate for
noncorporate shareholders) regardless of how long the shareholder has held Fund
shares. If a shareholder held shares six months or less and during that period
received a distribution of net capital gains, any loss realized on the sale of
such shares during such six-month period would be a long-term capital loss to
the extent of such distribution.

While only the Equity Funds expect to realize a significant amount of net
long-term capital gains, any such realized gains will be distributed as
described in the Prospectus and will be designated as such in a written notice
mailed to the shareholder after the close of the Fund's taxable year. Any loss
on the sale or exchange of shares in a Fund that have been held for six months
or less will be treated as a long-term capital loss to the extent of any capital
gain dividend received by the shareholder with respect to such shares. In
addition, all or a portion of any loss realized upon a taxable disposition of
Fund shares will be disallowed if other shares of the same Fund are purchased
within 30 days before or after the disposition. In such a case, the basis of the
newly purchased shares will be adjusted to reflect the disallowed loss.

Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when a Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed. Such realized gains may be required to be
distributed, even when a Fund's net asset value also reflects unrealized losses.

ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE STRATEGIC ASSET MANAGEMENT
PORTFOLIOS

A Portfolio will not be able to offset gains realized by one Fund in which
such Portfolio invests against losses realized by another Fund in which such
Portfolio invests. The Portfolio's use of a fund-of-funds structure could
therefore affect the amount, timing and character of distributions to
shareholders.

Depending on a Portfolio's percentage ownership in an underlying Fund both
before and after a redemption, a Portfolio's redemption of shares of such Fund
may cause the Portfolio to be treated as not receiving capital gain income on
the amount by which the distribution exceeds the Portfolio's tax basis in the
shares of the underlying Fund, but instead to be treated as receiving a dividend
taxable as ordinary income on the full amounts of the distribution. This could
cause shareholders of the Portfolio to recognize higher amounts of ordinary
income than if the shareholders had held the shares of the underlying Funds
directly.

Although a Portfolio may itself be entitled to a deduction for foreign
taxes paid by the International Growth Fund, the Portfolio will not be able to
pass any such credit or deduction through its own shareholders.

60
<PAGE> 213

ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE INTERNATIONAL GROWTH FUND

If at the end of the International Growth Fund's fiscal year more than 50%
of the value of its total assets represents securities of foreign corporations,
the Fund intends to make an election permitted by the Code to treat any foreign
taxes paid by it on securities it has held for at least the minimum period
specified in the Code as having been paid directly by the Fund's shareholders in
connection with the Fund's dividends received by them. In this case,
shareholders generally will be required to include in U.S. taxable income their
pro rata share of such taxes, and those shareholders who are U.S. citizens, U.S.
corporations and, in some cases, U.S. residents will be entitled to deduct their
share of such taxes. Alternatively, such shareholders who hold Fund shares
(without protection from risk of loss) on the ex-dividend date and for at least
15 other days during the 30-day period surrounding the ex-dividend date will be
entitled to claim a foreign tax credit for their share of these taxes.

In addition, investment by a Fund in an entity that qualified as a "passive
foreign investment company" under the Code could subject the Fund to a U.S.
federal income tax or other charge on certain "excess distributions" with
respect to the investment, and on the proceeds from disposition of the
investment. This tax or charge may be avoided, however, by making an election to
mark such investments to market annually or to treat the passive foreign
investment company as a "qualified electing fund."

A "passive foreign investment company" is any foreign corporation: (i) 75
percent or more of the income of which for the taxable year is passive income,
or (ii) the average percentage of the assets of which (generally by value, but
by adjusted tax basis in certain cases) that produce or are held for the
production of passive income is at least 50 percent. Generally, passive income
for this purpose means dividends, interest (including income equivalent to
interest), royalties, rents, annuities, the excess of gains over losses from
certain property transactions and commodities transactions, and foreign currency
gains. Passive income for this purpose does not include rents and royalties
received by the foreign corporation from active business and certain income
received from related persons.

ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE CALIFORNIA MONEY FUND,
CALIFORNIA MUNICIPAL FUND AND CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND

If, at the close of each quarter of its taxable year, at least 50% of the
value of the total assets of each of the California Money Fund, California
Municipal Fund and California Insured Intermediate Municipal Fund (The
"California Funds") consist of obligations the interest on which would be exempt
from California personal income tax if the obligations were held by an
individual ("California Tax-Exempt Obligations"), and if each of the California
Funds continues to qualify as a regulated investment company for federal income
tax purposes, then each respective California Fund will be qualified to pay
dividends, subject to certain limitations, to its shareholders that are exempt
from California State personal income tax, but not from California State
franchise tax or California State corporate income tax ("California
Exempt-Interest Dividends"). However, the total amount of California
Exempt-Interest Dividends paid by each of the California Funds to each of the
California Fund's non-corporate shareholders with respect to any taxable year
cannot exceed the amount of interest received by such California Fund during
such year on California Tax-Exempt Obligations less any expenses and
expenditures (including any dividends paid to corporate shareholders) deemed to
have been paid from such interest. If the aggregate dividends exceed the amount
that may be treated as California Exempt-Interest Dividends, only that
percentage of each dividend distribution equal to the ratio of aggregate
California Exempt-Interest Dividends to aggregate dividends will be treated as a
California Exempt-Interest Dividend. Dividend distributions that do not qualify
for treatment as California Exempt-Interest Dividends will be taxable to
shareholders at ordinary tax rates for California personal income tax purposes.
In addition, shareholders who receive social security or railroad retirement
benefits should consult their tax advisors to determine what effect, if any, an
investment in one of these Funds may have on the taxation of these benefits.

FLORIDA TAXES

TAXATION OF FUND SHARES. Florida does not impose an income tax on
individuals. Thus, dividends and distributions paid by the Florida Insured
Municipal Fund to individuals who are residents of Florida are not

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taxable by Florida. Florida imposes an income tax on corporations and similar
entities at a rate of 5.5%. Distributions of investment income and capital gains
by the Florida Insured Municipal Fund will be subject to Florida corporate
income tax. Accordingly, investors in the Florida Insured Municipal Fund,
including, in particular, investors that may be subject to the Florida corporate
income tax, should consult their tax advisors with respect to the application of
the Florida corporate income tax to the receipt of Fund dividends and
distributions and to the investor's Florida tax situation in general.

Florida imposes a tax on intangible personal property owned by Florida
residents. Shares in the Florida Insured Municipal Fund constitute intangible
personal property for purposes of the Florida intangible personal property tax.
Thus, unless an exemption applies, shares in the Florida Insured Municipal Fund
will be subject to the Florida intangible personal property tax. Florida
provides an exemption for shares in an investment fund if the fund's portfolio
of assets consists solely of assets exempt from the Florida intangible personal
property tax. Assets exempt from Florida intangible personal property tax
include obligations issued by the State of Florida and its political
subdivisions, municipalities, and public authorities; obligations of the United
States Government or its agencies; and cash.

The Florida Insured Municipal Fund has received a ruling from the Florida
Department of Revenue that if, on the last business day of any calendar year,
the Insured Municipal Fund's assets consist solely of assets exempt from the
Florida intangible personal property tax, shares of the Florida Insured
Municipal Fund will be exempt from the Florida intangible personal property tax
in the following year. Based on the ruling, if the Insured Municipal Fund's
assets consist, on the last business day of the calendar year, solely of assets
exempt from the Florida intangible personal property tax, shares of the Florida
Insured Municipal Fund owned by Florida residents will be exempt from the
Florida intangible personal property tax. If shares of the Fund are subject to
the Florida intangible personal property tax because less than 100% of the
Fund's assets on the last business day of the calendar year consists of assets
exempt from the Florida intangible personal property tax, only the portion of
the net asset value of a share of the Florida Insured Municipal Fund that is
attributable to obligations of the United States Government will be exempt from
taxation.

TAXATION OF THE FLORIDA INSURED MUNICIPAL FUND. If the Fund does not have a
taxable nexus to Florida, such as through the location of the Florida Fund's
activities or those of its advisors within the state, under present Florida law,
the Fund is not subject to Florida corporate income taxation. Additionally, if
the Fund's assets do not have a taxable situs in Florida as of January 1 of each
calendar year, the Fund will not be subject to the Florida intangible personal
property tax. If the Fund has a taxable nexus to Florida or the Fund's assets
have a taxable situs in Florida, the Fund will be subject to Florida taxation.
The Florida Insured Municipal Fund intends to operate so as not to be subject to
Florida taxation.

SHAREHOLDER STATEMENTS

Each shareholder will receive after the close of the calendar year an
annual statement and such other written notices as are appropriate as to the
federal income and California State personal income tax status of the
shareholder's dividends and distributions received from the Fund for the prior
calendar year. These statements will also inform shareholders as to the amount
of exempt-interest dividends that is a specific preference item for purposes of
the federal individual and corporate alternative minimum taxes and as to the
exempt portion, if any, of the shareholder's shares of the Florida Insured
Municipal Fund for purposes of the Florida State intangible personal property
tax for the current tax year. Shareholders should consult their tax advisers as
to any other state and local taxes that may apply to these dividends and
distributions. The dollar amount of dividends excluded or exempt from federal
income taxation or California State personal income taxation and the dollar
amount of dividends subject to federal income taxation or California State
personal income taxation, if any, will vary for each shareholder depending upon
the size and duration of each shareholder's investment in a Fund. To the extent
that the Tax-Exempt Money Market, California Money, Tax-Exempt Bond, California
Municipal, California Insured Intermediate Municipal or Florida Insured
Municipal Funds earns taxable net investment income, it intends to designate as
taxable dividends the same percentage of each day's dividend (or of each day's
taxable net investment income) as its taxable net investment income bears to its
total net investment income earned on that day. Therefore, the percentage of
each day's dividend designated as taxable, if any, may vary from day to day.
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If a shareholder fails to furnish a correct taxpayer identification number,
fails to report fully dividend or interest income, or fails to certify that the
taxpayer identification number is correct and that the shareholder is not
subject to "backup withholding," then the shareholder may be subject to a 31%
"backup withholding" tax with respect to (1) taxable dividends and distributions
and (2) the proceeds of any redemptions of Fund shares. An individual's taxpayer
identification number is his or her social security number. The 31% "backup
withholding" tax is not an additional tax and may be credited against a
taxpayer's regular federal income tax liability.

THE FOREGOING IS ONLY A SUMMARY OF CERTAIN TAX CONSIDERATIONS GENERALLY
AFFECTING A FUND AND ITS SHAREHOLDERS, AND IS NOT INTENDED AS A SUBSTITUTE FOR
CAREFUL TAX PLANNING. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH
SPECIFIC REFERENCE TO THEIR OWN TAX SITUATIONS, INCLUDING THEIR STATE AND LOCAL
TAX LIABILITIES.

DISTRIBUTOR

[FINANCIAL INFORMATION TO BE UPDATED]

Prior to March 20, 1998, WM Financial Services Inc. (formerly named Sierra
Investment Services Inc.) served as the distributor for WM Trust II. For the
fiscal years ended June 30, 1998, 1997 and 1996, the Distributor and WM
Financial Services Inc. (formerly Sierra Investment Services Corp.) received
distribution fees totaling (after waivers of fees) $1,839,806, $5,278,281 and
$6,430,836, respectively, in the aggregate, from the WM Trust II Funds under the
Class A Plan. For the fiscal period ended October 31, 1998, the Distributor and
WM Financial Services Inc. received distribution fees totaling $4,490,369. For
the same periods, the Distributor and WM Financial Services Inc. received $0,
$13,944, $0 and $0, respectively, representing contingent deferred sales charges
on redemptions of Class A shares of the Funds. In addition, for the fiscal years
ended June 30, 1998, 1997 and 1996, the Distributor and WM Financial Services
Inc. received $180,165, $303,490 and $637,291, respectively, representing
compensation from front-end sales charges on Class A shares of such Funds sold.
For the fiscal period ended October 31, 1998, the Distributor and WM Financial
Services Inc. received $3,010,621 in front-end sales charges on Class A shares
of such Funds sold. For each fiscal year ended June 30, 1998, 1997 and 1996, and
the discount period ended October 31, 1998, the Distributor and WM Financial
Services Inc. voluntarily waived no distribution fees in the aggregate. During
the fiscal year ended June 30, 1998, the Distributor and WM Financial Services
Inc. incurred distribution and operating expenses with respect to Class A shares
of the Funds totaling $2,420,780 consisting of $426,800 for advertising;
$174,267 for marketing promotion; $58,383 for fulfillment; $1,689,244 in
commissions and additional compensation to the personnel of WM Financial
Services Inc. and $72,085 in other expenses. Those expenses for the fiscal
period ended October 31, 1998, amounted to $1,950,325 consisting of $196,493 for
advertising; $300,290 for fulfillment; $1,208,942 in commissions and additional
compensation to the personnel of WM Fund Services Inc. and $224,600 in other
expenses.

WM Financial Services Inc. also served as distributor of Class B and S
shares of the WM Trust II Funds. For the fiscal year ended June 30, 1998, the
Distributor and WM Financial Services Inc. received distribution fees from the
Funds totaling $1,237,250, in the aggregate under the Class B Distribution Plan
and $312,288, in the aggregate under the Class S Distribution Plan. For the same
period, the Distributor and WM Financial Services Inc. received $653,684,
representing CDSCs on redemptions of Class B shares of the Funds and $1,497,900,
representing CDSCs on redemptions of Class S shares of the Funds. For the fiscal
period ended October 31, 1998, the Distributor and WM Financial Services Inc.
received distribution fees from the Funds totaling $3,013,027, in the aggregate
under the Class B Distribution Plan and $262,619, in the aggregate under the
Class S Distribution Plan. For the same period, the Distributor and WM Financial
Services Inc. received $1,183,085, representing CDSCs on redemptions of Class B
shares. For the fiscal year ended June 30, 1998 and the fiscal period ended
October 31, 1998, WM Financial Services Inc. did not waive any distribution
fees. The Distributor and WM Financial Services Inc. paid out all of the
distribution related fees they received for each of the Class B and Class S
shares to the financier of the sales commissions paid on sale of Class B and S
shares, respectively.

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The Distributor also serves as the distributor for the Portfolios. The
Distributor received $677,720 in total from the Portfolios in connection with
the sales of Class A shares in 1998. For the fiscal period from July 1, 1998
through October 31, 1998, the Distributor received $195,324 in total from the
Portfolios. Such payments totaled $446,143 in 1997.

During the fiscal year ended June 30, 1998, the Distributor incurred
distribution and operating expenses with respect to Class A shares of the
Portfolios totaling $988,175, consisting of $146,319 for advertising; $61,504
for marketing promotion; $6,801 for fulfillment; $742,109 in commissions and
additional compensation to personnel and $31,442 in other expenses. For the
fiscal period from July 1, 1998 through October 31, 1998, the Distributor
incurred distribution and operating expenses with respect to Class A shares of
the Portfolios totaling $325,310, consisting of $14,774 for advertising; $24,277
for fulfillment; $266,538 in commissions and additional compensation to
personnel and $19,721 in other expenses.

[TO BE UPDATED]

For the same time periods, the Distributor and WM Fund Services, Inc.
received $687,805 in total for contingent deferred sales charge payments for
Class B shares from the Portfolios through June 30, 1998 and $1,128,985 in total
for the fiscal period ended October 31, 1998. The Distributor received $497,858
in total from these same Portfolios for 1997.

The Distributor received $3,312,208 in total from the Portfolios in 1998 in
connection with the sales of Class B shares. Such payments totaled $1,104,413
for the fiscal period ended October 31, 1998 and $1,706,671 in 1997.

WM Funds Distributor, Inc. (formerly Composite Funds Distributor, Inc. and
referred to as the Distributor in this SAI) serves as the distributor for the WM
Trust I Funds. The Money Market and Tax-Exempt Money Market Funds reimbursed the
Distributor $50,492 and $0, respectively, for distribution expenses incurred
during 1997. Of this amount, $28,559 was paid for printing and $21,933 was for
other distribution-related expenses. During 1996 the Money Market and Tax-Exempt
Money Market Funds reimbursed the Distributor $20,720 and $0, respectively and
in 1995 each reimbursed the Distributor $18,754 and $0, respectively.

During 1997, the Money Market and Tax-Exempt Money Market Funds compensated
the Distributor $2,233 and $91, respectively, for the sale of Class B shares.
During 1996, the Money Market and Tax-Exempt Funds compensated the Distributor
$1,270 and $16, respectively, for the sale of Class B shares. During 1995, the
Money Market and Tax-Exempt Portfolios compensated the Distributor $702 and $11,
respectively, for the sale of Class B shares.

During the fiscal year ended December 31, 1997, the Distributor received
contingent deferred sales charge payments of $5,618 and $0 upon redemption of
Class B shares of the Money Market Fund and Tax-Exempt Fund, respectively. For
the fiscal year ended December 31, 1996, the Distributor received contingent
deferred sales charge payments of $5,275 and $0 upon redemption of Class B
shares of the Money Market Fund and Tax-Exempt Money Market Fund, respectively.
No brokerage fees were paid by the Fund to the Distributor during the year, but
the Distributor may act as broker on portfolio purchases and sales should it
become a member of a securities exchange.

The U.S. Government Securities, Income, and Tax-Exempt Bond Funds
reimbursed the Distributor in the amounts of $248,837, $169,132 and $407,707,
respectively, for distribution expenses incurred on behalf of Class A shares
during the year ended December 31, 1997. Of this amount, $119,084, $77,335 and
$200,406 was paid on behalf of the U.S. Government Securities, Income, and
Tax-Exempt Bond Funds, respectively, to selected dealers and registered
representatives of the Distributor for their shareholder servicing activities,
and $129,748, $91,797 and $207,301, respectively, was paid for other
distribution related expenses.

During the fiscal years 1996 and 1995, the U.S. Government Securities Fund
reimbursed the Distributor $218,510 and $343,633, respectively; the Income Fund
reimbursed the Distributor $133,600 and $168,531,

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[TO BE UPDATED]

respectively; and the Tax-Exempt Bond Fund reimbursed the Distributor $315,034
and $432,854, respectively, for distribution expenses related to Class A shares.

During the fiscal years ended December 31, 1997 and 1996, respectively, the
U.S. Government Securities Fund compensated the Distributor in the amounts of
$29,872 and $26,484, respectively; the Income Fund compensated the Distributor
in the amounts of $78,016 and $57,828, respectively, and the Tax-Exempt Bond
Fund compensated the Distributor $66,282 and $40,939, respectively, for the sale
of Class B shares.

During the 1997, 1996 and 1995 fiscal years, the Distributor received
$55,967, $89,694 and $150,970, respectively, for the sale of U.S. Government
Securities Fund Class A shares; $102,701, $156,410 and $209,703, respectively,
for the sale of Income Fund Class A shares; and $195,489, $282,768 and $341,454,
respectively, for the sale of Tax-Exempt Bond Fund Class A shares.

During the fiscal year ended December 31, 1997, the Distributor received
contingent deferred sales charge payments of $8,623, $20,754 and $11,543 upon
redemption of Class B shares of the U.S. Government Securities, Income, and
Tax-Exempt Bond Funds, respectively. No brokerage fees were paid by the Funds to
the Distributor during the year, but the Distributor may act as a broker on
portfolio purchases and sales should it become a member of a securities
exchange.

The Bond & Stock, Growth & Income and Growth Fund of the Northwest Funds
reimbursed the Distributor in the amounts of $701,288, $563,809 and $537,269,
respectively, for distribution expenses incurred on behalf of Class A shares
during fiscal 1997. Of this amount, $271,656, $205,286 and $210,705 was paid on
behalf of the Bond & Stock, Growth & Income and Growth Fund of the Northwest
Funds to sales personnel of the Distributor and to selected dealers for their
shareholder servicing activities; $30,762, $57,056 and $46,096, respectively,
was paid for printing; and $195,701, $167,292 and $257,705, respectively, was
paid for other advertising expenses.

During fiscal years 1996 and 1995, the Bond & Stock Fund reimbursed the
Distributor $394,279 and $356,379, respectively; the Growth & Income Fund
reimbursed the Distributor $265,579 and $203,566, respectively; and Growth Fund
of the Northwest reimbursed the Distributor $360,642 and $279,851, respectively,
for distribution expenses related to Class A shares.

During fiscal years 1997, 1996 and 1995, the Bond & Stock Fund compensated
the Distributor in the amounts of $334,855, $148,688 and $46,435, respectively;
the Growth & Income Fund compensated the Distributor $365,290, $151,222 and
$49,988, respectively; and the Growth Fund of the Northwest Fund compensated the
Distributor $247,630, $106,606 and $49,126, respectively, for distribution
expenses related to Class B shares.

During the 1997, 1996 and 1995 fiscal years, the Distributor received
$885,598, $1,064,004 and $471,479, respectively, for the sale of Bond & Stock
Class A shares. The Distributor retained $710,403, $1,047,926 and $471,455,
respectively, for the same time periods, with the balance paid to dealers for
their sales of Bond & Stock Class A shares.

During the 1997, 1996 and 1995 fiscal years, the Distributor received
$825,142, $586,437 and $384,766, respectively, for the sale of Growth & Income
Class A shares. The Distributor retained $666,246, $563,398 and $384,647,
respectively, for the same time periods, with the balance paid to dealers for
their sales of Growth & Income Class A shares.

During the fiscal years 1997, 1996 and 1995 the Distributor received
$799,120, $517,022 and $348,729, respectively, for the sale of Growth Fund of
the Northwest Class A shares. The Distributor retained $551,530, $465,694 and
$337,189, respectively, for the same time periods, with the balance paid to
dealers for their sales of Northwest Class A shares.

During the fiscal year ended October 31, 1997, the Distributor received
contingent deferred sales charge payments of $63,218, $63,310 and $37,195 upon
redemption of Class B shares of Bond & Stock, Growth &

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[TO BE UPDATED]

Income, and Northwest, respectively. No brokerage fees were paid by the Funds to
the Distributor during the year, but the Distributor may act as a broker on
portfolio purchases and sales should it become a member of a securities
exchange.

NOTICE

Copies of the Agreement and Declaration of Trust of both WM Trust I and WM
Trust II are 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 Registrant by an officer and not individually and the obligations
of or arising out of this instrument are not binding upon any of the Trustees,
officers or shareholders individually, but are binding only upon the assets and
property of the Registrant.

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APPENDIX

DESCRIPTION OF BOND, NOTES AND COMMERCIAL PAPER RATINGS

DESCRIPTION OF S&P CORPORATE BOND RATINGS

AAA: Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

A: Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS

Aaa: Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as for Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the issue ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.

DESCRIPTION OF DUFF & PHELPS' CORPORATE BOND RATINGS

Bonds rated AAA by Duff & Phelps are judged by Duff & Phelps to be of the
highest credit quality, with negligible risk factors being only slightly more
than for risk-free U.S. Treasury debt. Bonds rated AA by Duff & Phelps are
judged by Duff & Phelps to be of high credit quality with strong protection
factors and risk that is modest but that may vary slightly from time to time
because of economic conditions. Bonds rated A by Duff & Phelps are judged by
Duff & Phelps to have average but adequate protection factors. However, risk
factors are more variable and greater in periods of economic stress. Bonds rated
BBB by Duff & Phelps are judged by Duff & Phelps as having below average
protection factors but still considered sufficient for prudent investment, with
considerable variability in risk during economic cycles.

DESCRIPTION OF FITCH'S CORPORATE BOND RATINGS

Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA by Fitch are considered to be investment
grade and of very high credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong as bonds rated AAA.
Bonds rated A by Fitch are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more
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vulnerable to adverse changes in economic conditions and circumstances than
bonds with higher ratings. Bonds rated BBB by Fitch are considered to be
investment grade and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more likely to have
adverse impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings.

DESCRIPTION OF S&P MUNICIPAL BOND RATINGS

AAA -- PRIME -- These bonds have the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.

GENERAL OBLIGATION BONDS -- In a period of economic stress, the issuers
will suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements. Quality of
management appears superior.

REVENUE BONDS -- Debt service coverage has been, and is expected to remain,
substantial. Stability of the pledged revenues is also exceptionally strong due
to the competitive position of the municipal enterprise or to the nature of the
revenues. Basic security provisions (including rate covenant, earnings test for
issuance of additional bonds, debt service reserve requirements) are rigorous.
There is evidence of superior management.

AA -- HIGH GRADE -- Bonds in this group have a very strong capacity to pay
interest and repay principal and differ from the highest rated debt only in
small degree.

A -- GOOD GRADE -- Bonds in this category have a strong capacity to pay
interest and repay principal, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than bonds
in higher rated categories. Regarding municipal bonds, the rating differs from
the two higher ratings because:

GENERAL OBLIGATION BONDS -- There is some weakness, either in the local
economic base, in debt burden, in the balance between revenues and expenditures
or in quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.

REVENUE BONDS -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.

BBB -- MEDIUM GRADE -- Bonds in this group are regarded as having an
adequate capacity to pay interest and repay principal. Whereas they normally
exhibit adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for bonds in this category than for bonds in higher rated
categories.

GENERAL OBLIGATION BONDS -- Under certain adverse conditions, several of
the above factors could contribute to a lesser capacity for payment of debt
service. The difference between A and BBB ratings is that the latter shows more
than one fundamental weakness, or one very substantial fundamental weakness,
whereas the former shows only one deficiency among the factors considered.

REVENUE BONDS -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly being
subject to erosion over time. Basic security provisions are no more than
adequate. Management performance could be stronger.

BB, B, CCC, CC AND C -- Bonds rated BB, B, CCC, CC and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the least degree of speculation and C the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposure to adverse
conditions.

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D -- Bonds rated D are in default, or the obligor has filed for bankruptcy.
The D rating is issued when interest or principal payments are not made on the
date due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.

S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.

DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS

Municipal notes with maturities of three years or less are usually given
note ratings (designated SP-1, -2 or -3) to distinguish more clearly the credit
quality of notes as compared to bonds. Notes rated SP-1 have a strong capacity
to pay principal and interest. Those issues determined to possess a very strong
capacity to pay debt service are given the designation of SP-1+. Notes rated
SP-2 have a satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Moody's applies the numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issuer ranks in the
lower end of its generic rating category.

DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS

Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
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long-term risk. Loans bearing the designation MIG 1/VMIG 1 are of the best
quality, enjoying strong protection from established cash flows of funds for
their servicing, from superior liquidity support, or from established and
broad-based access to the market for refinancing, or both. Loans bearing the
designation of MIG 2/VMIG 2 are of high quality, with margins of protection
ample, although not as large as the preceding group. Loans bearing the
designation MIG 3/VMIG 3 are of favorable quality, with all security elements
accounted for but lacking the undeniable strength of the preceding grades.
Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established. Loans bearing the designation
MIG 4/VMIG 4 are of adequate quality. Protection commonly regarded as required
of an investment security is present and although not distinctly or
predominantly speculative, there is specific risk.

DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS

Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payments is strong. Those issues determined to possess
extremely strong safety characteristics are denoted A-1+. Capacity for timely
payment on commercial paper rated A-2 is satisfactory, but the relative degree
of safety is not as high as for issues designated A-1.

DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations. Issuers rated Prime-2 (or related supporting institutions) are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.

DESCRIPTION OF DUFF'S COMMERCIAL PAPER RATINGS

Paper rated Duff-1 is regarded as having very high certainty of timely
payment with excellent liquidity factors which are supported by good fundamental
protection factors. Risk factors are minor. Ratings of Duff-1 are further
refined by the gradations of "1+" and "1-". Issues rated Duff-1+ have the
highest certainty of timely payment, outstanding short term liquidity, and
safety just below risk-free U.S. Treasury short-term obligations. Issues rated
Duff-1- have high certainty of timely payment, strong liquidity factors
supported by good fundamental protection factors, and small risk factors. Paper
rated Duff-2 is regarded as having good certainty of timely payment, good access
to capital markets and sound liquidity factors and company fundamentals. Risk
factors are small.

DESCRIPTION OF FITCH'S COMMERCIAL PAPER RATINGS

The rating F-1+ (Exceptionally Strong Credit Quality) is the highest
commercial rating assigned by Fitch and is assigned to issues regarded as having
the strongest degree of assurance for timely payment. Paper rated F-1 (Very
Strong Credit Quality) is regarded as having an assurance of timely payment only
slightly less in degree than issues rated F-1+. The rating F-2 (Good Credit
Quality) reflects an assurance of timely payment, but the margin of safety is
not as great as for issues assigned F-1+ or F-1 ratings.

70
<PAGE> 223
WM TRUST I
WM TRUST II
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS, LLC
FORM N-1A

PART C
OTHER INFORMATION

Item 23. Exhibits

(a) Charter

(1) WM Trust I

(A) Form of Amended and Restated Agreement and Declaration
of Trust dated as of September 19, 1997 -- incorporated
by reference to Post-Effective Amendment ("PEA") No. 67
to the Registrant's Registration Statement, filed with
the SEC on March 27, 1998.

(B) Amendment No. 1 to Amended and Restated Agreement and
Declaration of Trust dated March 20, 1998 --incorporated
by reference to PEA No. 74 to the Registrant's
Registration Statement.

(C) Amendment No. 2 to Amended and Restated Agreement and
Declaration of Trust dated March 20, 1998 is
incorporated by reference to PEA No. 74 to the
Registrant's Registration Statement.

(2) WM Trust II

(A) Master Trust Agreement of the Registrant dated February
22, 1989 -- incorporated by reference to PEA No. 26 to
the Registrant's Registration Statement, filed with the
SEC on August 28, 1997.

(B) Amendment No. 1 to Master Trust Agreement, dated May 10,
1989 -- incorporated by reference to PEA No. 26 to the
Registrant's Registration Statement.

(C) Amendment No. 2 to Master Trust Agreement, dated May 22,
1989 -- incorporated by reference to PEA No. 26 to the
Registrant's Registration Statement.
<PAGE> 224
(D) Amendment No. 3 to Master Trust Agreement, dated May 24,
1989 -- incorporated by reference to PEA No. 26 to the
Registrant's Registration Statement.

(E) Amendment No. 4 to Master Trust Agreement, dated May 7,
1990 -- incorporated by reference to PEA No. 26 to the
Registrant's Registration Statement.

(F) Amendment No. 5 to Master Trust Agreement, dated
December 4, 1991 -- incorporated by reference to PEA No.
26 to the Registrant's Registration Statement.

(G) Amendment No. 6 to Master Trust Agreement, dated January
30, 1992 -- incorporated by reference to PEA No. 26 to
the Registrant's Registration Statement.

(H) Amendment No. 7 to Master Trust Agreement, dated
September 12, 1992 -- incorporated by reference to PEA
No. 26 to the Registrant's Registration Statement.

(I) Amendment No. 8 to Master Trust Agreement, dated
September 22, 1993 -- incorporated by reference to PEA
No. 26 to the Registrant's Registration Statement.

(J) Amendment No. 9 to Master Trust Agreement, dated March
13, 1994 -- incorporated by reference to PEA No. 26 to
the Registrant's Registration Statement.

(K) Amendment No. 10 to Master Trust Agreement, dated
January 20, 1995 -- incorporated by reference to PEA No.
26 to the Registrant's Registration Statement.

(L) Amendment No. 11 to Master Trust Agreement, dated July
19, 1996 -- incorporated by reference to PEA No. 28 to
the Registrant's Registration Statement, filed with the
SEC on March 27, 1998.

(M) Amendment No. 12 to Master Trust Agreement, dated March
20, 1998 -- incorporated by reference to PEA No. 28 to
the Registrant's Registration Statement.

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<PAGE> 225

(3) WM Strategic Asset Management Portfolios, LLC - LLC Operating
Agreement, dated March 12, 1999 - incorporated by reference to
PEA No. 9 to the Registrant's Registration Statement.

(b) Bylaws

(1) WM Trust I - incorporated by reference to PEA No. 67 to the
Registrant's Registration Statement.

(2) WM Trust II - incorporated by reference to PEA No. 26 to the
Registrant's Registration Statement.

(3) WM Strategic Asset Management Portfolios, LLC - incorporated
by reference to PEA No. 9 to the Registrant's Registration
Statement.

(d) Investment Advisory Contracts

(1) WM Trust I - Investment Management Agreement dated March 20,
1998, as amended as of January 1, 1999 - incorporated by
reference to PEA No. 76 of the Registrant's Registration
Statement.

(2) WM Trust II

(A) Investment Management Agreement dated January 30, 1998
with respect to the Short Term High Quality Bond,
California Money and Target Maturity 2002 Funds --
incorporated by reference to PEA No. 28 to the
Registrant's Registration Statement.

(B) Investment Management Agreement dated March 20, 1998
with respect to the Growth, Emerging Growth,
International Growth, California Municipal, California
Insured Intermediate Municipal and Florida Insured
Municipal Funds, as amended as of January 1, 1999.
Incorporated by reference to PEA No. 31 to the
Registrant's Registration Statement.

-3-
<PAGE> 226
(C) Investment Sub-Advisory Agreement dated March 20, 1998
with respect to the California Municipal and California
Insured Intermediate Municipal Funds --incorporated by
reference to PEA No. 28 to the Registrant's Registration
Statement.

(3) WM Strategic Asset Management Portfolios, LLC - Investment
Management Agreement dated July 16, 1999 -- incorporated
by reference to PEA No. 8 of Registrant's Registration
Statement.

(e) Underwriting Contracts.

(1) WM Trust I

(A) Distribution Contract dated March 20, 1998
--incorporated by reference to PEA No. 74 to the
Registrant's Registration Statement.

(B) Form of Selected Dealer Agreement -- incorporated by
reference to PEA No. 67 to the Registrant's Registration
Statement.

(2) WM Trust II - Distribution Agreement dated March 20, 1998 --
incorporated by reference to PEA No. 28 to the Registrant's
Registration Statement.

(3) WM Strategic Asset Management Portfolios, LLC - Distribution
Contract dated July 16, 1999 -- incorporated by reference
to PEA No. 8 of Registrant's Registration Statement.

(f) Bonus or Profit Sharing Plans - Not Applicable.

(g) Custodian Agreements

(1) WM Trust I - Custody Agreement dated March 20, 1998 --
incorporated by reference to PEA No. 74 to the Registrant's
Registration Statement.

(2) WM Trust II - Custody Agreement dated March 20, 1998
--incorporated by reference to PEA No. 28 to the Registrant's
Registration Statement.

(3) WM Strategic Asset Management Portfolios, LLC - Delegation,
Custody and Information Services Agreement dated July 16, 1999
-- incorporated by reference to PEA No. 8 to the Registrant's
Registration Statement.

-4-
<PAGE> 227
(h) Other Material Contracts

(1) WM Trust I -

(a) Shareholders Service Contract -- incorporated by
reference to PEA No. 67 to the Registrant's Registration
Statement.

(b) Transfer Agent Contract dated September __, 1999.

(2) WM Trust II - Transfer Agency Agreement dated September __,
1999

(3) WM Strategic Asset Management Portfolios, LLC

(a) Administration Agreement dated July 16, 1999
-- incorporated by reference to PEA No. 8 of
Registrant's Registration Statement.

(b) Transfer Agent Agreement dated September __, 1999

(i) Legal Opinion

(1) WM Trust I - Opinion and Consent of Counsel --incorporated by
reference to PEA No. 74 to the Registrant's Registration
Statement.

(2) WM Trust II - Consent and Opinion of Counsel dated June 20,
1998 -- incorporated by reference to PEA No. 26 to the
Registrant's Registration Statement.

(3) WM Strategic Asset Management Portfolios, LLC - Opinion and
Consent of Counsel dated June 25, 1999 - incorporated by
reference to PEA No. 9 of the Registrant's Registration
Statement.

(j) Other Opinions

(1) WM Trust I

-5-
<PAGE> 228

(A) Consent of Deloitte & Touche LLP - to be filed by
Amendment.

(B) Consent of LeMaster & Daniels LLC - to be filed by
Amendment.

(2) WM Trust II

(A) Consent of Deloitte & Touche LLP - to be filed by
Amendment.

(B) Consent of PricewaterhouseCoopers LLP - to be filed by
Amendment.

(3) WM Strategic Asset Management Portfolios, LLC

(A) Consent of Deloitte & Touche LLP - to be filed by
Amendment.

(B) Consent of PricewaterhouseCoopers LLP - to be filed by
Amendment.

(k) Omitted Financial Statements Not Applicable.

(l) Initial Capital Agreements - Not Applicable.

(m) 12b-1 Plan

(1) WM Trust I (B)

(A) Class A Distribution Plan dated March 20, 1998
--incorporated by reference to PEA No. 74 to the
Registrant's Registration Statement.

(B) Class B Distribution Plan dated March 24, 1998
--incorporated by reference to PEA No. 74 to the
Registrant's Registration Statement.

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<PAGE> 229

(2) WM Trust II

(A) Class A Distribution Plan, dated July 7, 1989 and
amended July 1, 1995 -- incorporated by reference to PEA
No. 24 to the Registrant's Registration Statement filed
with the SEC on October 30, 1996.

(B) Class B Distribution Plan, dated March 24, 1998
--incorporated by reference to PEA No. 28 to the
Registrant's Registration Statement.

(3) WM Strategic Asset Management Portfolios, LLC

(A) Class A Distribution Plan, dated July 16, 1999 --
incorporated by reference to PEA No. 8 of Registrant's
Registration Statement.
(B) Class B Distribution Plan, dated July 16, 1999 --
incorporated by reference to PEA No. 8 of Registrant's
Registration Statement.

(n) Rule 18f-3 Plan

(1) WM Trust I - Rule 18f-3 Multiple Class Plan --incorporated by
reference to Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement, filed with the SEC on June 21, 1996.

(2) WM Trust II - Rule 18f-3 Multiple Class Plan dated June 13,
1995 -- incorporated by reference to PEA No. 27 to the
Registrant's Registration Statement, filed with the SEC on
October 30, 1997.

(3) WM Strategic Asset Management Portfolios, LLC - Rule 18f-3
Multiple Class Plan dated July 16, 1999 -- incorporated
by reference to PEA No. 8 of Registrant's Registration
Statement.

-7-

<PAGE> 230

Item 24. Persons Controlled by or Under Common Control with Registrant.

Not applicable.

Item 25. Indemnification.

(a) WM Trust I - Reference is made to Article VIII, Section 1 of the
Amended and Restated Agreement and Declaration of Trust (the "Agreement and
Declaration of Trust") of the Registrant.

Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted to
Trustees, officers and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or paid
by a Trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such Trustee, officer
or controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.

(b) WM Trust II - Under Section 6.4 of Registrant's Master Trust
Agreement, as amended, any past or present Trustee or officer of Registrant
(including persons who serve at Registrant's request as directors, officers or
trustees of another organization in which Registrant has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person"), is indemnified to the fullest extent permitted by law against
liability and all expenses reasonably incurred by him with any action, suit or
proceeding to which he may be a party or otherwise involved by reason of his
being or having been a Covered Person. This provision does not authorize
indemnification when it is determined, in the manner specified in the Master
Trust Agreement, that a Covered Person has not acted in good faith in the
reasonable belief that his actions were in or not opposed to the best interests
of Registrant. Moreover, this provision does not authorize indemnification when
it is determined, in the manner specified in the Master Trust Agreement, that
the Covered Person would otherwise be liable to Registrant or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of his duties. Expenses may be paid by Registrant in advance

-8-
<PAGE> 231
of the final disposition of any action, suit or proceeding upon receipt of an
undertaking by a Covered Person to repay those expenses to Registrant in the
event that it is ultimately determined that indemnification of the expenses is
not authorized under the Master Trust Agreement and the Covered Person either
provides security for such undertaking or insures Registrant against losses from
such advances or the disinterested Trustees or independent legal counsel
determines, in the manner specified in the Master Trust Agreement, that there is
reason to believe the Covered Person will be found to be entitled to
indemnification.

(c) WM Strategic Asset Management Portfolios, LLC - Under Article 8,
Section 1 of Registrant's Limited Liability Company Agreement (the "LLC
Agreement"), any past or present Trustee or officer of Registrant, including
persons who serve at Registrant's request as directors, officers or trustees of
another organization in which Registrant has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person"), is
indemnified to the fullest extent permitted by law against liability and all
expenses reasonably incurred by him in connection with any action, suit or
proceeding to which he may be a party or otherwise involved by reason of his
being or having been a Covered Person. This provision does not authorize
indemnification when it is determined, in the manner specified in the LLC
Agreement, that a Covered Person has not acted in good faith in the reasonable
belief that his actions were in or not opposed to the best interests of
Registrant. Moreover, this provision does not authorize indemnification when it
is determined, in the manner specified in the LLC Agreement, that the Covered
Person would otherwise be liable to Registrant or its shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of his
duties. Expenses may be paid by Registrant in advance of the final disposition
of any action, suit or proceeding upon receipt of an undertaking by a Covered
Person to repay those expenses to Registrant in the event that it is ultimately
determined that indemnification of the expenses is not authorized under the LLC
Agreement and the Covered Person either provides security for such undertaking
or insures Registrant against losses from such advances or the disinterested
Trustees or independent legal counsel determines, in the manner specified in the
LLC Agreement, that there is reason to believe the Covered Person will be found
to be entitled to indemnification.

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<PAGE> 232
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted to
Trustees, officers and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or paid
by a Trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such Trustee, officer
or controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.

Item 26. Business and Other Connections of Investment Advisor.

(a) WM Advisors, Inc.
Directors/Officers Past Two Fiscal Years
- ------------------ ---------------------

Monte D. Calvin WM Shareholder Services, Inc.
First Vice President, Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101
(Treasurer prior to March
1999)
First Vice President, WM Advisors, Inc.
Director (Treasurer prior to 1201 Third Ave., 22nd Floor, Seattle, WA 98101
March 1999)

First Vice President, WM Funds Distributor, Inc.
Director (Treasurer prior to 1201 Third Ave., 22nd Floor, Seattle, WA 98101
March 1999)

Sandra A. Cavanaugh WM Advisors, Inc.
First Vice President, Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

First Vice President, Director WM Shareholder Services, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

First Vice President, Director WM Funds Distributor, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

Craig S. Davis WM Funds Distributor, Inc.
Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Director WM Shareholder Services, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

Director WM Advisors, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

Executive Vice President Washington Mutual, Inc.
1201 Third Ave., Seattle, WA 98101

-10-
<PAGE> 233
Chairman January 1996 - July 1997
ASB Financial Services, Irvine, CA

Sharon L. Howells WM Advisors, Inc.
First Vice President, 1201 Third Ave., 22nd Floor, Seattle, WA 98101
Corporate Secretary
Director

-11-
<PAGE> 234

First Vice President, WM Funds Distributor, Inc.
Corporate Secretary, 1201 Third Avenue, 22nd Floor, Seattle, WA 98101
Director

First Vice President WM Shareholder Services, Inc.
Corporate Secretary, 1201 Third Avenue, 22nd Floor, Seattle, WA 98101
Director

Jeffrey D. Huffman WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Bruce J. King March 1998 - present
Vice President WM Advisors, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

Vice President January 1996 - February 1998
Bennington Capital Management
1420 Fifth Ave., Seattle, WA 98101

Suzanne M. Krahling March 1999 - present
First Vice President, WM Advisors, Inc.
Treasurer 1201 Third Avenue, 22nd Floor, Seattle, WA 98101

First Vice President, WM Shareholder Services, Inc.
Treasurer 1201 Third Avenue, 22nd Floor, Seattle, WA 98101

First Vice President, WM Funds Distributor, Inc.
Treasurer 1201 Third Avenue, 22nd Floor, Seattle, WA 98101

First Vice President, WM Financial Services,
Secretary, Treasurer 1201 Third Avenue, Suite 780, Seattle, WA 98101

Joel Calvo WM Advisors, Inc.
Chairman 1201 Third Ave., 22nd Floor, Seattle, WA 98101

President and Chairman WM Shareholder Services, Inc.
1201 Third Avenue, 22nd Floor, Seattle, WA 98101

WM Financial Services,
1201 Third Avenue, Suite 780, Seattle, WA 98101

William G. Papesh WM Advisors, Inc.
President, Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Director Will Shareholder Services, Inc.
1201 Third Ave., Seattle, WA 98101

Director WM Insurance Services
1201 Third Ave., Seattle, WA 98101

President, Director WM Group of Funds
1201 Third Avenue, 22nd Floor, Seattle, WA 98101

President, Director July 1997 - present
WM Funds Distributor, Inc.
1201 Third Avenue, 22nd Floor, Seattle, WA 98101

Brian L. Placzek WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Gary J. Pokrzywinski WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Audrey S. Quaye WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Brian Applegate November 1998 - present
Assistant Vice President WM Avisors
1201 Third Ave., 22nd Floor, Seattle, WA 98101

July 1997 - November 1998
Freeman Wellwood, Seattle, WA

Jamellah MacLean May 1999 - present
Assistant Vice President WM Advisors
1201 Third Ave., 22nd Floor, Seattle, WA 98101

July 1997 - May 1999
Piper Jaffray, Seattle, WA

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<PAGE> 235
Stephen C. Scott March 1998 - present
Vice President WM Advisors, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

Senior Investment Advisor Sierra Investment Services Corporation
9301 Corbin Ave., Northridge, CA 91324

President Sierra Investment Services Corporation
9301 Corbin Ave., Northridge, CA 91324

David W. Simpson WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Linda C. Walk December 1997 - present
Vice President WM Advisors, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

November 1996 - November 1997
Laid Norton Trust Company
Norton Building, Suite 1600, Seattle, WA 98104

January 1996 - July 1996
Ernst & Young LLP
2001 Market Street, 41st Floor, Philadelphia,
PA 19103

Randall L. Yoakum February 1999 - present
Vice President, WM Advisors, Inc.
Chairman of Investment 1201 Third Ave., 22nd Floor, Seattle, WA 98101
Committee
April 1997 - February 1999
D.A. Davidson & Co., Great Falls, MT

(b) Van Kampen Management, Inc.

Van Kampen Management, Inc. ("Van Kampen"), is a wholly-owned
subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly-owned
subsidiary of Morgan Stanley, Dean Witter, Discover & Co. Van Kampen
provides investment advice to a wide variety of individual, institutional
and investment company clients.

The list required by this Item 26 of officers and directors of Van
Kampen, together with information as to any other business, profession, vocation
of employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Van Kampen pursuant to the Advisers Act (SEC File No.
801-40808).

Janus Capital Corporation ("Janus") is an investment advisor
registered under the Advisers Act, and acts as investment advisor for registered
investment companies, foreign investment companies and for individual,
charitable, corporate and retirement accounts. Janus,

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<PAGE> 236
and its affiliates, provide a variety of trust, investment management and
investment advisory services.

<TABLE>
<CAPTION>
<S> <C>
Laurence Joseph Althoff Senior Vice President & Controller
James K. Ambrosio Vice President
Don J. Andrews Senior Vice President and Chief Compliance Officer
Timothy R. Armstrong Vice President
Brian P. Alcara Vice President
Sara Louise Badler Senior Vice President, Deputy General Counsel and Assistant Secretary
Shakeel Anwar Barkat Vice President
Scott F. Becker Assistant Vice President
Scott C. Bernstiel Vice President
Patricia A. Bettlach First Vice President
Brian E. Bidner Assistant Vice President
Christopher M. Bisaillon Vice President
Carol S. Blegel Vice President
William Edwin Bond Vice President
Michael P. Boos Vice President
James Joseph Boyne Senior Vice President, Deputy General Counsel and Assistant Secretary
Billie J. Bronaugh Assistant Vice President
Robert C. Brooks Vice President
Elizabeth M. Brown Vice President
John Browning Officer
William F. Burke, Jr. Vice President
Loren Burket Vice President
Juanita E. Buss Vice President
Christine Cleary Byrum Vice President
Glenn M. Cackovic First Vice President
Lynn Chadderton Assistant Vice President
Richard J. Charlino Vice President
Deanna Margaret Chiaro Vice President
Scott A. Chriske Vice President
German Clavlio Vice President
Dominick Cogliandro Vice President and Assistant Treasurer
Michael Colston Vice President
Kevin J. Connors Vice President
Amy Cooper Assistant Vice President
Gina Costello Assistant Vice President and Assistant Secretary
Suzanne Cummings Vice President
Gary R. DeMoss Senior Vice President
John E. Doyle Senior Vice President
Michael E. Eccleston Vice President
William J. Fow Vice President
Nicholas J. Foxhoven Vice President
Charles Friday Vice President
Leticia George Officer
Sarah K. Gieser Assistant Vice President
Richard G. Golod Senior Vice President
Walter C. Gray Assistant Vice President
Timothy D. Griffith Vice President
Kyle D. Haas Vice President
Daniel Hamilton Vice President
John G. Hansen Vice President
Eric J. Hargens First Vice President
Joseph Hays Vice President
Gregory Heffington First Vice President
Michael D. Hibsch Vice President
Susan Jean Hill Vice President and Senior Attorney
Thomas R. Hindelang Vice President
David S. Hogaboorn First Vice President
Bryn M. Hoggard Vice President
Michelle Huber Vice President
Michael B. Hughes Vice President
Lowell Jackson Vice President
Kevin G. Jajuga Vice President
Steven T. Johnson Senior Vice President
Laurie L. Jones Assistant Vice President
Robin R. Jordan Assistant Vice President
Dana R. Klein Vice President
Anne S. Kochevar Assistant Vice President
Frederick Kohly Vice President
David Richard Kowalski Vice President and Director of Compliance
Patricia D. Lathrop Vice President
Brian Laux Vice President
Tony E. Leal Vice President
S. William Lehew II Vice President
Johnathan Linstra Vice President
Ivan R. Lowe Assistant Vice President
Richard M. Lundgren Vice President
Walter Lynn Vice President
Linda S. MacAyeal Vice President and Senior Attorney
Kevin Marsh Vice President
Dominic C. Martellaro First Vice President
Carl Mayfield First Vice President
Brooks D. McCartney Vice President
Mark R. McClure First Vice President
Maura A. McGrath First Vice President
Anne Therese McGrath Vice President
William D. McLaughlin Officer
John Mills Vice President
Stuart R. Moehlman Vice President
Ted Morew Vice President
Robert F. Muller, Jr. First Vice President
Rebecca Newman Officer
Peter Nicolas Vice President
Cathy Nopoli Assistant Secretary
Steven R. Norvid Vice President
Barbara A. Novak Assistant Vice President
Allyn Maureen O'Connor Vice President and Associate General Counsel
Gregory S. Parker Vice President
Christopher Petrungaro Vice President
Richard J. Poli Vice President
Richard F. Powers, III Director, Chairman, Chief Executive Officer
Ronald E. Pratt Vice President
Christine K. Putong Assistant Vice President and Assistant Secretary
Daniel D. Reams Vice President
Walter E. Rein Senior Vice President
Theresa M. Renn Officer
Kevin Wayne Reszel Vice President
Leah Richardson Assistant Vice President
David P. Robbins Assistant Vice President
Michael W. Rohr Vice President
Jeffrey L. Rose Vice President
Regina Rosen Assistant Vice President
Suzette N. Rothberg Vice President
Jeffrey L. Rourke Vice President
Thomas Rowley First Vice President
James J. Ryan Senior Vice President
William R. Rybak Director, Executive Vice President, Chief Financial Officer and Treasurer
Heather R. Sabo Vice President
Pamela S. Salley Assistant Vice President
Michael H. Santo Director, Executive Vice President and Chief Operations and Technology Office r
Colette M. Saucedo Executive Vice President & Chief Administrative Officer
Thomas J. Sauerborn Assistant Vice President
Diane Saxon Vice President and Assistant Treasurer
David T. Saylor Assistant Vice President
Stephanie Scarlata Vice President
Andrew J. Scherer First Vice President
Christina L. Schmieder Vice President
Timothy M. Scholten Vice President
Lisa Schultz Assistant Vice President
Ronald J. Schuster Vice President
Gwen L. Shaneyfelt Vice President
Frederick Shepherd Senior Vice President
Jefferey C. Shirk Vice President
Lauren B. Sinai Assistant Vice President
Thomas A. Smith Director
Thomas A. Smith Executive Vice President, General Counsel and Secretary
Traci T. Sorensen Vice President
Darren D. Stabler Vice President
Christopher Staniforth Vice President
Richard Stefanec Vice President
James D. Stevens First Vice President
Scott Stevens Assistant Vice President
William C. Strafford Vice President
Mark A. Syswerda Vice President

</TABLE>

(d) Capital Guardian Trust Company

Directors/Officers Past Two Years
- -------------------- --------------
<S> <C>

Donnalisa Barnum Senior Vice President, Capital Guardian Trust
Company; Vice President, Capital
International Limited

Andrew F. Barth Director, Capital Guardian Trust Company;
Executive Vice President and Research
Manager, Capital Guardian Research Company

Michael D. Beckman Senior Vice President, Treasurer and
Director, Capital Guardian Trust Company;
Director, Capital Guardian Trust Company of
Nevada; Treasurer, Capital Guardian Research
Company

Elizabeth A. Burns Senior Vice President, Capital Guardian Trust
Company

Larry P. Clemmensen Director, Capital Guardian Trust Company and
American Funds Distributors, Inc.; Chairman
of the Board, American Funds Service Company;
Director and President, The Capital Group
Companies, Inc.; Senior Vice President and
Director, Capital Research and Management
Company; President and Director, Capital
Management Services, Inc.; Treasurer, Capital
Strategy Research, Inc.; Senior Vice
President, Capital Income Builder, Inc. and
Capital World Growth & Income Fund, Inc.

Roberta A. Conroy Senior Vice President, Director and Counsel,
Capital Guardian Trust Company; Senior Vice
President and Secretary, Capital
International, Inc. and Emerging Markets
Growth Fund, Inc.; Assistant General Counsel,
The Capital Group Companies, Inc.; Secretary,
Capital Management Services, Inc.

John B. Emerson Senior Vice President, Capital Guardian Trust
Company; Deputy Assistant to the President
for Intergovernmental Affairs, Deputy
Director of Presidential Personnel, The White
House

Michael E. Erickson Senior Vice President, Capital Guardian Trust
Company; Senior Vice President, Capital
International, Limited

David I. Fisher Chairman and Director, The Capital Group
Companies, Inc. and Capital Guardian Trust
Company; Vice Chairman and Director, Capital
International, Inc., Capital International
K.K., Capital International Limited and
Emerging Markets Growth Fund, Inc.; President
and Director, Capital Group International,
Inc. and Capital International Limited
(Bermuda); Presidente du Conseil, Capital
International S.A., Director, Capital Group
Research, Inc., Capital Research
International, EuroPacific Growth Fund and
New Perspective Fund

William Flumenbaum Senior Vice President, Capital Guardian Trust
Company Personal Investment Management
Division; Vice President, Capital Guardian
Trust Company, a Nevada Corporation;
Director, Principal Gifts -- UCLA,
Development; Executive Director, UCLA Jonsson
Cancer Center Foundation; Deputy Director
UCLA Health Science Development

Richard N. Havas Senior Vice President, Capital Guardian Trust
Company, Capital International Limited,
Capital Research International and Capital
Guardian Canada, Inc.

Frederick M. Hughes, Jr. Senior Vice President, Capital Guardian Trust
Company

William H. Hurt Senior Vice President and Director, Capital
Guardian Trust Company; Chairman, Capital
Guardian Trust Company of Nevada and Capital
Strategy Research, Inc.

Robert G. Kirby Chairman Emeritus, Capital Guardian Trust
Company; Senior Partner, The Capital Group
Partners L.P.

Nancy J. Kyle Senior Vice President and Director, Capital
Guardian Trust Company; President, Capital
Guardian Canada, Inc. and Vice President,
Emerging Markets Growth Fund, Inc.

Karin L. Larson Director, Capital Guardian Trust Company and
The Capital Group Companies, Inc.; President,
Director and Director of Research, Capital
Guardian Research Company; Chairperson,
President and Director, Capital Group
Research, Inc.; President, Director and
Director of International Research, Capital
Research International

D. James Martin Director, Capital Guardian Trust Company;
Senior Vice President and Director, Capital
Guardian Research Company

John R. McIlwraith Senior Vice President and Director, Capital
Guardian Trust Company; Senior Vice President
and Director, Capital International Limited

James R. Mulally Senior Vice President and Director, Capital
Guardian Trust Company; Senior Vice
President, Capital International Limited;
Director, Capital Guardian Research Company;
Vice President, Capital Research Company

Shelby Notkin Senior Vice President, Capital Guardian Trust
Company; Director, Capital Guardian Trust
Company of Nevada

Mary M. O'Hern Senior Vice President, Capital Guardian Trust
Company and Capital International Limited;
Vice President, Capital International, Inc.

Jeffrey C. Paster Senior Vice President, Capital Guardian Trust
Company

Robert V. Pennington Senior Vice President, Capital Guardian Trust
Company; President, Capital Guardian Trust
Company of Nevada

Jason M. Pilalas Director, Capital Guardian Trust Company;
Senior Vice President and Director, Capital
Guardian Research Company

Robert Ronus President and Director, Capital Guardian
Trust Company; Chairman and Director, Capital
Guardian Canada, Inc., Capital Guardian
Research Company and Capital Research
International; Director, The Capital Group
Companies, Inc., Capital Group International,
Inc. and Capital International Fund S.A.;
Directeur, Capital International S.A.; Senior
Vice President, Capital International Limited

Theodore R. Samuels Senior Vice President and Director, Capital
Guardian Trust Company; Director, Capital
Guardian Research Company

Lionel A. Sauvage Senior Vice President, Capital Guardian Trust
Company; Director, Capital Guardian Research
Company; Vice President, Capital
International Research, Inc.

John H. Seiter Executive Vice President of Client Relations
& Marketing and Director, Capital Guardian
Trust Company; Senior Vice President, Capital
Group International, Inc.; Vice President,
The Capital Group Companies, Inc.

Robert L. Spare Senior Vice President, Capital Guardian Trust
Company

Eugene P. Stein Executive Vice President and Director,
Capital Guardian Trust Company; Director,
Capital Guardian Research Company

Bente L. Strong Senior Vice President, Capital Guardian Trust
Company Personal Investment Management
Division; Publisher, Capital Publishing's The
American Benefactor Magazine

Philip A. Swan Senior Vice President, Capital Guardian Trust
Company

Shaw B. Wagener Director, Capital Guardian Trust Company,
Capital International Asia Pacific Management
Company, S.A., Capital International
Management Company, Capital International
Emerging Countries Fund and Capital
International Latin American Fund; President
and Director, Capital International, Inc.;
Senior Vice President, Capital Group
International, Inc. and Emerging Markets
Growth Fund, Inc.

Eugene M. Waldron Senior Vice President, Capital Guardian Trust
Company; Vice President, Loomis, Sayles &
Company

N. Dexter Williams Senior Vice President, Capital Guardian Trust
Company Personal Investment Management
Division; Senior Vice President, American
Funds Distributors, Inc.

</TABLE>

Item 27. Principal Underwriters.

(a) The principal underwriter for each Registrant is WM Funds
Distributor, Inc.

(b) The Directors and Officers of WM Funds Distributor, Inc., their
positions with WM Funds Distributor, Inc. and the WM Group of Funds
are set forth in the table below. The principal business address of
WM Funds Distributor, Inc. and each of its directors and officers is
1201 Third Avenue, 22nd Floor, Seattle, Washington 98101.

Name and Position And Positions And
Principal Business Offices With Offices With
Address Underwriter Registrant
------- ----------- ----------

William G. Papesh President President

Sandra A. Cavanaugh First Vice President Senior Vice President

Monte D. Calvin First Vice President, Chief Financial Officer,
Treasurer Senior Vice President
-14-
<PAGE> 237
Sharon L. Howells Vice President, Senior Vice President
Corporate Secretary

Item 28. Location of Accounts and Records.

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules thereunder
will be maintained at the offices of the Registrants, at 1201 Third Avenue,
22nd Floor, Seattle, WA 98101, the offices of the Registrants' custodian, Boston
Safe Deposit and Trust Company, One Boston Place, Boston, MA 02108 and the
offices of the Registrants' sub-advisors, Van Kampen Management, Inc., One
Parkview Plaza, Oakbrook Terrace, Illinois 60181, Janus Capital Corporation, 100
Fillmore Street, Suite 300, Denver, Colorado 80206, and Capital Guard Trust
Co., Investment office, 333 South Hope St., Los Angeles, CA 90071.

Item 29. Management Services.

None of the Registrants is a party to any management related contract,
other than as set forth in the Prospectus.

Item 30. Undertakings.

(a) Each Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.

(b) Each of the Registrants has undertaken to call a meeting of its
shareholders for the purpose of voting upon the question of removal
of a trustee or trustees of the Registrant when requested to do so
by the holders of at least 10% of the Registrant's outstanding
shares. Each Registrant has undertaken further, in connection with
the meeting, to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940, as amended, relating to
communications with the shareholders of certain common-law trusts.

-15-
<PAGE> 238
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Seattle in the State of Washington on the 15th
day of December, 1999.

WM TRUST I
WM TRUST II
WM STRATEGIC ASSET
MANAGEMENT PORTFOLIOS, LLC

WILLIAM G. PAPESH*
----------------------------
William G. Papesh, President

Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

Signature Title Date
<S> <C> <C>
WILLIAM G. PAPESH* President and Trustee December 15, 1999
- -------------------------------
William G. Papesh

/s/MONTE D. CALVIN Chief Financial December 15, 1999
- ------------------------------- Officer
Monte D. Calvin

DAVID E. ANDERSON* Trustee December 15, 1999
- -------------------------------
David E. Anderson

WAYNE L. ATTWOOD, M.D.* Trustee December 15, 1999
- -------------------------------
Wayne L. Attwood, M.D.

ARTHUR H. BERNSTEIN, ESQ.* Trustee December 15, 1999
- -------------------------------
Arthur H. Bernstein, Esq.

KRISTIANNE BLAKE* Trustee December 15, 1999
- -------------------------------
Kristianne Blake

EDMOND R. DAVIS, ESQ.* Trustee December 15, 1999
- -------------------------------
Edmond R. Davis, Esq.

JOHN W. ENGLISH* Trustee December 15, 1999
- -------------------------------
John W. English

ANNE V. FARRELL* Trustee December 15, 1999
- -------------------------------
Anne V. Farrell

CARROL R. MCGINNIS* Trustee December 15, 1999
- -------------------------------
Carrol R. McGinnis

MICHAEL K. MURPHY* Trustee December 15, 1999
- -------------------------------
Michael K. Murphy

ALFRED E. OSBORNE, JR., PH.D.* Trustee December 15, 1999
- -------------------------------
Alfred E. Osborne, Jr., Ph.D.

DANIEL L. PAVELICH* Trustee December 15, 1999
- -------------------------------
Daniel L. Pavelich

JAY ROCKEY* Trustee December 15, 1999
- -------------------------------
Jay Rockey*

MORTON O. SCHAPIRO* Trustee December 15, 1999
- -------------------------------
Morton O. Schapiro

RICHARD C. YANCEY* Trustee December 15, 1999
- -------------------------------
Richard C. Yancey
</TABLE>

*By /s/ William G. Papesh pursuant to Powers of Attorney previously filed.

-2-
<PAGE> 239

Exhibit Index

(h)(1)(b) Transfer Agent contract

-16-

<PAGE> 1

TRANSFER AGENT CONTRACT

TRANSFER AGENT CONTRACT (this "Agreement"), dated September __, 1999,
by and between WM Trust I, WM Trust II and WM Variable Trust (each a "Trust" and
a "Company"), each a Massachusetts business trust, and WM Strategic Asset
Management Portfolios, LLC (the "LLC" and a "Company"), a Massachusetts limited
liability company, and WM Shareholder Services, Inc. (the "Transfer Agent"), a
Washington corporation.

W I T N E S S E T H

WHEREAS, each Company is an investment management company registered
under the Investment Company Act of 1940 (the "1940" Act);

WHEREAS, each Company is authorized to issue shares in separate series
with each series representing a separate portfolio of securities and other
assets (each a "Fund"); and

WHEREAS, each Fund listed on the signature page attached to this
Agreement desires the Transfer Agent to perform the services set forth in
Schedule A attached hereto and incorporated herein by reference, and the
Transfer Agent is willing to perform such services;

NOW THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereto agree as follows:

1. The Transfer Agent shall perform for each Fund the services set forth in
Schedule A for a monthly fee as set forth in Schedule B attached hereto and
incorporated herein by reference.

2. Each Fund agrees to reimburse the Transfer Agent for postage, the procurement
and/or printing of statements, envelopes, checks, reports, tax forms, proxies,
or other forms of printed material required in the performance of its services
to the Fund under this Agreement.

3. Each Fund agrees to reimburse the Transfer Agent for all freight and other
delivery charges and insurance or bonding charges incurred by the Transfer Agent
in delivering materials to and from the Fund and its shareholders
("Shareholders").

4. Each Fund agrees to reimburse the Transfer Agent for all direct telephone
expenses incurred by the Fund in calling Shareholders regarding their Fund
transactions, accounts, and for any other Fund business.

5. Each Fund agrees that all computer programs and procedures developed to
perform services required under this Agreement are the property of the Transfer
Agent and the Transfer

<PAGE> 2

Agent agrees that all records and other data, except computer programs and
procedures, are the property of the Fund. The Transfer Agent agrees that it will
furnish all records and other data as may be requested to a Fund immediately
upon termination of this Agreement for any reason whatsoever.

6. The Transfer Agent agrees to treat all records and other information relative
to a Fund with utmost confidence and further agrees that all records maintained
by the Transfer Agent for the Fund shall be open to inspection and audit at
reasonable times by the officers, agents or auditors employed by the Fund and
that such records shall be preserved and retained by the Transfer Agent so long
as this agreement shall remain in effect.

7. The Transfer Agent shall not be liable for any damage, loss of data, delay or
any other loss caused by any such power failure or machine breakdown, except
that the Transfer Agent shall be liable for actual out-of-pocket costs caused by
any such power failure or machine breakdown, and the Transfer Agent shall
recover the data in process that is assumed lost during any power failure or
machine breakdown.

8. The Transfer Agent will maintain in force through the duration of this
Agreement a fidelity bond in a face amount not less than $1,000,000 written by a
reputable insurance company, covering theft, embezzlement, forgery and other
acts of malfeasance by the Transfer Agent, its employees, or agents in
connection with services performed for a Fund.

9. This agreement may be terminated without the payment of any penalty by any
party upon one hundred eighty (180) days written notice thereof given by a Fund
to the Transfer Agent and upon one hundred eighty (180) days written notice
thereof given by the Transfer Agent to a Fund.

10. Any notice shall be officially given when sent by registered or certified
mail by a party to the appropriate address listed in the Funds' current
registration statement, provided that each party may notify each other by
regular mail of any changed address to which such notices should be sent.

11. This Agreement constitutes the entire Agreement between the parties and
shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Massachusetts and shall inure to the benefit of the parties
hereto and their respective successors.

12. (a) A copy of the Declaration of Trust of each Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this Agreement is executed by an officer of each Trust on behalf of each Fund,
and that the obligations of this Agreement shall be binding upon the assets and
properties of the Fund only and shall not be binding upon the assets and
properties of any other series of any Trust or upon any of the trustees,
officers,

<PAGE> 3

employees, agents or shareholders of the Fund or the Trust individually.

13. (b) A copy of the LLC Certificate of Formation of the LLC is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby given
that this Agreement is executed by an officer of the LLC on behalf of its
trustees, as trustees and not individually, on further behalf of each Fund, and
that the obligations of this Agreement as they relate to each Fund shall be
binding upon the assets and properties of that Fund only and shall not be
binding upon the assets and properties of any other Fund or series of the LLC or
upon any of the trustees, officers, employees, agents or shareholders of a Fund
or the LLC individually.

<PAGE> 4
[Transfer Agency Agreement]

IN WITNESS WHEREOF, the parties hereto cause this Agreement to be executed
by their officers designated below as of the date first above-written.

<TABLE>
<S> <C>
WM TRUST I, on behalf of its series: WM STRATEGIC ASSET MANAGEMENT

Money Market Fund PORTFOLIOS, LLC, on behalf of its series:
Tax-Exempt Money Market Fund Strategic Growth Portfolio
U.S. Government Securities Fund Conservative Growth Portfolio
Income Fund Balanced Portfolio
High Yield Fund Flexible Income Portfolio
Tax-Exempt Bond Fund Income Portfolio
Bond & Stock Fund
Growth & Income Fund WM VARIABLE TRUST,
Northwest Fund on behalf of its series:
Money Market Fund
WM TRUST II, on behalf of its series: Short Term High Quality Bond Fund
California Money Fund U.S. Government Securities Fund
Short Term High Quality Bond Fund Income Fund
Target Maturity 2002 Fund Bond & Stock Fund
California Insured Intermediate Growth & Income Fund
Municipal Fund Northwest Fund
Florida Insured Municipal Fund Growth Fund
Growth Fund Emerging Growth Fund
Emerging Growth Fund International Growth Fund
International Growth Fund Strategic Growth Portfolio
California Municipal Fund Conservative Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Income Portfolio

Each By:

William G. Papesh
President

WM SHAREHOLDER SERVICES, INC.

Monte D. Calvin
First Vice President
</TABLE>

<PAGE> 5
[Transfer Agency Agreement]

SCHEDULE A
SERVICE PROVIDED

I. Shareholder Services

A. Maintain all Shareholder records on electronic data processing
equipment, including:

1. Share balances

2. Account transaction history

3. Names and addresses

4. Distribution records

5. Transfer records

6. Over-all control records

B. New Accounts

1. Deposit all monies received into a Fund custody account maintained
by the Fund's custodian.

2. Set up account according to Shareholders' instructions

3. Issue and mail shareholder confirmations

C. Additional Purchases

1. Deposit monies received into a Fund custody account maintained by
the Fund's custodian.

2. Issue Shareholder confirmations

D. Redemptions

Liquidate shares upon Shareholder request

<PAGE> 6
1. Make payments of redemption proceeds in accordance with the Fund's
then current prospectus.

2. Issue and mail Shareholder confirmation 4.

E. Transfer shares as requested, including obtaining necessary papers
and documents to satisfy transfer requirements. On irregular
transfers requiring special legal opinions, such special legal fees,
if any, are to be paid for by the Fund.

F. Process changes, corrections of addresses and registrations

G. Maintain service with Shareholders as follows:

1. Activity required to receive, process and reply to Shareholders'
correspondence regarding account matters

2. Refer correspondence regarding investment matters to the Fund with
sufficient account data to answer

3. Contact Shareholders directly to settle problems and answer
questions

H. Compute distributions, dividends and capital gains

1. Make payment or reinvest in additional shares as directed by
shareholders according to provisions of the Fund's then current
prospectus

2. Advise each Shareholder of the amount of dividends received and tax
status annually

I. Produce transcripts of shareholder account history as required

J. Maintain the controls associated with the computer programs and
manual systems to arrive at the Fund's total shares outstanding

K. Receive mail and perform other administrative functions relating to
transfer agent work

II. Other Services

A. Mailing services to shareholders

B. Services in connection with any stock splits

C. Develop special reports for Fund officers regarding statistical and
accounting data pertaining to the Fund. Fund shall pay for
out-of-pocket expenses charged by vendors to develop such reports or
portions thereof

<PAGE> 7
[Transfer Agency Agreement]

D. Voice response unit

E. NSCC support

<PAGE> 8
[Transfer Agency Agreement]

SCHEDULE B
MONTHLY SHAREHOLDER SERVICING FEES
September __, 1999

Fee Per Account Per Month*

<TABLE>
<CAPTION>
Open Closed
---- ------
<S> <C> <C>
Money Market
Money Market Fund $1.65 $0.21
Tax-Exempt Money Market Fund
California Money Fund

All Other Funds
$1.35 $0.21
</TABLE>

Fees Include:

X Shareholder and Broker Servicing
X Transaction Processing, Correspondence, and Research
X Settlement and Reconciliation
X Corporate Actions
X Tax Reporting and Compliance
X NSCC Support
X Management Company and Broker/Dealer Support
X Asset Allocation Processing for all distribution channels

Additional charges will be made for out-of-pocket expenses according to
Schedule C.

<PAGE> 9
[Transfer Agency Agreement]

* No fee is paid by WM Variable Trust.

<PAGE> 10
[Transfer Agency Agreement]

SCHEDULE C

OUT-OF-POCKET EXPENSES

The Funds shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:

X NSCC charges

X Banking fees

X Voice response unit

X Microfiche/Microfilm/Image production C Magnetic media tapes and freight

X Printing costs, including certificates, envelopes, checks and stationery

X Postage (bulk, pre-sort, ZIP+4, bar-coding, first class) direct pass
through to the Funds

X Due diligence mailings

X Telephone and telecommunication costs, including all lease, maintenance
and line costs

X Ad hoc reports

X Shareholder transcripts

X Proxy solicitations, mailings and tabulations

X Daily & Distribution advice mailings

X Shipping, Certified and Overnight mail and insurance

X Year-end form production and mailings

X Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines

X Duplicating services

X Courier services

X Incoming and outgoing wire charges

X Federal Reserve charges for check clearance

X Overtime, as approved by the Funds

X Temporary staff, as approved by the Funds

X Travel and entertainment, as approved by the Funds

X Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors

X Third party audit reviews C Ad hoc programming time C Insurance

X Such other miscellaneous expenses reasonably incurred by the Transfer
Agent in performing its duties and responsibilities under this Agreement