<PAGE>
As filed with the Securities and Exchange Commission on October 30, 1998
Registration No. ____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. __
[ ] Post-Effective Amendment No. __
WM Trust II
(Exact name of Registrant as Specified in Charter)
1201 Third Avenue, Suite 1400
Seattle, Washington 98101
(Address of Principal Executive Offices)
(206) 461-3800
(Area Code and Telephone Number)
____________
John T. West
1201 Third Avenue, Suite 1400
Seattle, Washington 98101
(Name and Address of Agent for Service)
Copies to:
Lawrence R. Small, Esq. Joseph B. Kittredge, Esq.
Paine, Hamblen, Coffin, Ropes & Gray
Brooke & Miller One International Place
717 West Sprague Avenue, Suite 1200 Boston, MA 02110
Spokane, WA 99201
____________
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
____________
It is proposed that this filing will become effective on November 30, 1998
pursuant to Rule 488.
____________
The Registrant has registered an indefinite amount of its securities under
the Securities Act of 1933, pursuant to Rule 24f-2 under the Investment Company
Act of 1940. In reliance upon Rule 24f-2, no filing fee is being paid at this
time.
<PAGE>
WM TRUST II
Cross-Reference Sheet
as required by Rule 481(a)
FORM N-14 ITEM CAPTION IN PROSPECTUS/PROXY STATEMENT
1 Cross-Reference Sheet; Outside Front Cover of Prospectus
2 Outside Back Cover Page of Prospectus; Table of Contents
3 Overview of Mergers; Risk Factors
4 Approval or Disapproval of Agreement and Plan of Reorganization
5 Information about the Acquiring Funds
6 Information about the Acquired Funds
7 Voting Information
8,9 Not Applicable
FORM N-14 ITEM CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
10 Cover Page
11 Table of Contents
12, 13 Additional Information about the Acquiring and Acquired
Funds
14 Financial Statements
FORM N-14 ITEM CAPTION IN PART C
15 Indemnification
16 Exhibits
17 Undertakings
<PAGE>
THE GRIFFIN FUNDS, INC.
MONEY MARKET FUND
TAX-FREE MONEY MARKET FUND
SHORT-TERM BOND FUND
U.S. GOVERNMENT INCOME FUND
MUNICIPAL BOND FUND
CALIFORNIA TAX-FREE FUND
BOND FUND
GROWTH & INCOME FUND
GROWTH FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
[ ], 1998
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of the Money
Market Fund (the "Griffin Money Market Fund"), the Tax-Free Money Market Fund
(the "Griffin Tax-Free Money Market Fund"), the Short-Term Bond Fund (the
"Griffin Short-Term Bond Fund"), the U.S. Government Income Fund (the "Griffin
U.S. Government Income Fund"), the Municipal Bond Fund (the "Griffin Municipal
Bond Fund"), the California Tax-Free Fund (the "Griffin California Fund"), the
Bond Fund (the "Griffin Bond Fund"), the Growth & Income Fund (the "Griffin
Growth & Income Fund") and the Growth Fund (the "Griffin Growth Fund"), each a
series of The Griffin Funds, Inc., will be held on [ ], 1999 at [ :00
.m.], Pacific Time, at the offices of Griffin Financial Investment Advisers,
5000 Rivergrade Road, Irwindale, California 91706, to consider the following:
1. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin Money Market Fund to the
Money Market Fund series of WM Trust I (the "WM Money Market Fund") in ex-
change for shares of the WM Money Market Fund and the assumption by the WM
Money Market Fund of all of the liabilities of the Griffin Money Market Fund,
and the distribution of such shares to the shareholders of the Griffin Money
Market Fund in complete liquidation of the Griffin Money Market Fund. (TO BE
VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN MONEY MARKET FUND ONLY.)
2. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin Tax-Free Money Market
Fund to the Tax-Exempt Money Market Fund series of WM Trust I (the "WM Tax-Ex-
empt Money Market Fund") in exchange for shares of the WM Tax-Exempt Money
Market Fund and the assumption by the WM Tax-Exempt Money Market Fund of all
of the liabilities of the Griffin Tax-Free Money Market Fund, and the distri-
bution of such shares to the shareholders of the Griffin Tax-Free Money Market
Fund in complete liquidation of the Griffin Tax-Free Money Market Fund. (TO BE
VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN TAX-FREE MONEY MARKET FUND ON-
LY.)
3. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin Short-Term Bond Fund to
the Short Term High Quality Bond Fund series of WM Trust II (the "WM Short
Term Fund") in exchange for shares of the WM Short Term Fund and the assump-
tion by the WM Short Term Fund of all of the liabilities of the Griffin Short-
Term Bond Fund, and the distribution of such shares to the shareholders of the
Griffin Short-Term Bond Fund in complete liquidation of the Griffin Short-Term
Bond Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN SHORT-TERM
BOND FUND ONLY.)
4. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin U.S. Government Income
Fund to the U.S. Government Securities Fund series of WM Trust I (the "WM U.S.
Government Fund") in exchange for shares of the WM U.S. Government Fund and
the assumption by the WM U.S. Government Fund of all of the liabilities of the
Griffin U.S. Government Income Fund, and the distribution of such shares to
the shareholders of the Griffin U.S. Government Income Fund in
1
<PAGE>
complete liquidation of the Griffin U.S. Government Income Fund. (TO BE VOTED
UPON BY THE SHAREHOLDERS OF THE GRIFFIN U.S. GOVERNMENT INCOME FUND ONLY.)
5. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin Municipal Bond Fund to
the Tax-Exempt Bond Fund series of WM Trust I (the "WM Tax-Exempt Bond Fund")
in exchange for shares of the WM Tax-Exempt Bond Fund and the assumption by
the WM Tax-Exempt Bond Fund of all of the liabilities of the Griffin Municipal
Bond Fund, and the distribution of such shares to the shareholders of the
Griffin Municipal Bond Fund in complete liquidation of the Griffin Municipal
Bond Fund. (TO BE VOTED UPON BY SHAREHOLDERS OF THE GRIFFIN MUNICIPAL BOND
FUND ONLY.)
6. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin California Fund to the
California Municipal Fund series of WM Trust II (the "WM California Fund") in
exchange for shares of the WM California Fund and the assumption by the WM
California Fund of all of the liabilities of the Griffin California Fund, and
the distribution of such shares to the shareholders of the Griffin California
Fund in complete liquidation of the Griffin California Fund. (TO BE VOTED UPON
BY THE SHAREHOLDERS OF THE GRIFFIN CALIFORNIA FUND ONLY.)
7. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin Bond Fund to the Income
Fund series of WM Trust I (the "WM Income Fund") in exchange for shares of the
WM Income Fund and the assumption by the WM Income Fund of all of the liabili-
ties of the Griffin Bond Fund, and the distribution of such shares to the
shareholders of the Griffin Bond Fund in complete liquidation of the Griffin
Bond Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN BOND FUND ON-
LY.)
8. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin Growth & Income Fund to
the Growth & Income Fund series of WM Trust I (the "WM Growth & Income Fund")
in exchange for shares of the WM Growth & Income Fund and the assumption by
the WM Growth & Income Fund of all of the liabilities of the Griffin Growth &
Income Fund, and the distribution of such shares to the shareholders of the
Griffin Growth & Income Fund in complete liquidation of the Griffin Growth &
Income Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN GROWTH & IN-
COME FUND ONLY.)
9. To approve or disapprove an Agreement and Plan of Reorganization providing
for the transfer of all of the assets of the Griffin Growth Fund to the Growth
Fund series of WM Trust II (the "WM Growth Fund") in exchange for shares of
the WM Growth Fund and the assumption by the WM Growth Fund of all of the lia-
bilities of the Griffin Growth Fund, and the distribution of such shares to
the shareholders of the Griffin Growth Fund in complete liquidation of the
Griffin Growth Fund. (TO BE VOTED UPON BY THE SHAREHOLDERS OF THE GRIFFIN
GROWTH FUND ONLY.)
10. To transact such other business as may properly come before the meeting.
The Directors have fixed the close of business on [ ], 1998 as the rec-
ord date for determination of shareholders entitled to notice of, and to vote
at, the Special Meeting.
By order of the Board of Directors
[ ]
[ ], 1998
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE POST-
AGE-PAID ENVELOPE PROVIDED SO THAT YOU WILL BE REPRESENTED AT THE SPECIAL
MEETING.
2
<PAGE>
PROSPECTUS/PROXY STATEMENT
[ ], 1998
<TABLE>
<CAPTION>
ACQUISITION OF THE ASSETS OF: BY AND IN EXCHANGE FOR SHARES OF:
- ----------------------------- -----------------------------------
<S> <C>
Money Market Fund........................... Money Market Fund*
Tax-Free Money Market Fund.................. Tax-Exempt Money Market Fund*
Short-Term Bond Fund........................ Short Term High Quality Bond Fund**
U.S. Government Income Fund................. U.S. Government Securities Fund*
Municipal Bond Fund......................... Tax-Exempt Bond Fund*
California Tax-Free Fund.................... California Municipal Fund**
Bond Fund................................... Income Fund*
Growth & Income Fund........................ Growth & Income Fund*
Growth Fund................................. Growth Fund**
each a series of each a series of
The Griffin Funds, Inc. *WM Trust I
5000 Rivergrade Road **WM Trust II
Irwindale, California 91706 Suite 1400
1-800-676-4450 1201 Third Avenue
Seattle, Washington 98101
1-800-222-5852
</TABLE>
This Prospectus/Proxy Statements relates to the proposed mergers (the "Merg-
ers") of the Money Market Fund (the "Griffin Money Market Fund"), the Tax-Free
Money Market Fund (the "Griffin Tax-Free Money Market Fund"), the Short-Term
Bond Fund (the "Griffin Short-Term Bond Fund"), the U.S. Government Income
Fund (the "Griffin U.S. Government Income Fund"), the Municipal Bond Fund (the
"Griffin Municipal Bond Fund"), the California Tax-Free Fund (the "Griffin
California Fund"), the Bond Fund (the "Griffin Bond Fund"), the Growth & In-
come Fund (the "Griffin Growth & Income Fund") and the Growth Fund (the "Grif-
fin Growth Fund") (each an "Acquired Fund"), each a series of The Griffin
Funds, Inc., into, respectively, the Money Market Fund (the "WM Money Market
Fund"), the Tax-Exempt Money Market Fund (the "WM Tax-Exempt Money Market
Fund"), the Short Term High Quality Bond Fund (the "WM Short Term Fund"), the
U.S. Government Securities Fund (the "WM U.S. Government Fund"), the Tax-Ex-
empt Bond Fund (the "WM Tax-Exempt Bond Fund"), the California Municipal Fund
(the "WM California Fund"), the Income Fund (the "WM Income Fund"), the Growth
& Income Fund (the "WM Growth & Income Fund") and the Growth Fund (the "WM
Growth Fund") (each an "Acquiring Fund"), each a series of WM Trust I or WM
Trust II, as indicated above. The Acquired Funds and the Acquiring Funds are
sometimes referred to in this Prospectus/Proxy Statement as the "Funds." The
Mergers are to be effected through the transfer of all of the assets of each
Acquired Fund to the corresponding Acquiring Fund in exchange for shares of
beneficial interest of the corresponding Acquiring Fund (the "Merger Shares")
and the assumption by such Acquiring Fund of all of the liabilities of the Ac-
quired Fund, followed by the distribution of the Merger Shares to the share-
holders of the Acquired Fund in liquidation of the Acquired Fund. As a result
of each proposed transaction, each shareholder of the Acquired Fund will re-
ceive in exchange for his or her Acquired Fund shares a number of Acquiring
Fund shares of the same class equal in value at the date of the exchange to
the aggregate value of the shareholder's Acquired Fund shares of the same
class.
Because shareholders of the Acquired Funds are being asked to approve trans-
actions that will result in their receiving shares of the Acquiring Funds,
this Proxy Statement also serves as a Prospectus for the Merger Shares of each
Acquiring Fund. The investment objective of each Acquiring Fund is as follows:
1. WM MONEY MARKET FUND seeks to provide maximum current income, while pre-
serving capital and maintaining liquidity. Investments are in high-quality
money market instruments.
2. WM TAX-EXEMPT MONEY MARKET FUND seeks to provide maximum current income
that is exempt
3
<PAGE>
from federal tax, while preserving capital and maintaining liquidity. Its
primary investments are high-quality, short-term municipal obligations.
3. WM SHORT TERM FUND seeks to provide as high a level of current income as
is consistent with prudent investment management and stability of principal.
The Fund invests at least 65% of its total assets in investment-grade short-
term bonds and other fixed-income securities.
4. WM U.S. GOVERNMENT FUND seeks to provide a high level of current income,
consistent with safety and liquidity. The Fund invests primarily in U.S. Gov-
ernment securities, including mortgage-backed securities.
5. WM TAX-EXEMPT BOND FUND seeks to provide a high level of income that is
exempt from federal taxes and to protect investors' capital. It invests in
bonds issued by states, counties, cities and other governmental bodies whose
bonds generate income exempt from federal tax. Subject to shareholder approv-
al, it is expected that Van Kampen American Capital Management, Inc. ("Van
Kampen") will serve as subadviser to this Fund, effective January 1, 1999.
6. WM CALIFORNIA FUND seeks to provide investors with as high a level of
current income exempt from federal and California State income tax as is con-
sistent with prudent investment management preservation of capital. The Fund
invests at least 80% of its total assets in intermediate and long-term Cali-
fornia municipal obligations. Van Kampen serves as subadviser to this fund.
7. WM INCOME FUND seeks to provide a high level of current income that is
consistent with protection of shareholders' capital. It pursues this objec-
tive through investment in a diversified pool of debt securities.
8. WM GROWTH & INCOME FUND, established in 1949, seeks long-term capital
growth, with current income as a secondary consideration. The Fund invests
primarily in common stocks. The Fund may also invest in fixed-income obliga-
tions and other securities.
9. WM GROWTH FUND seeks long-term capital appreciation. The Fund invests
primarily in common stocks that offer potential for growth. Janus Capital
Corporation ("Janus") serves as subadviser to this Fund.
Each of WM Trust I and WM Trust II is an open-end series management invest-
ment company organized as a Massachusetts business trust.
This Prospectus/Proxy Statement explains concisely what you should know be-
fore investing in each Acquiring Fund. Please read it carefully and keep it
for future reference.
The following documents have been filed with the Securities and Exchange Com-
mission (the "SEC") and are incorporated into this Prospectus/Proxy Statement
by reference: (i) the current Prospectus, dated January 31, 1998, of the Ac-
quired Funds (the "Griffin Prospectus"); (ii) the Prospectus, dated March 23,
1998 and the Prospectus dated November 1, 1998, of the Acquiring Funds (the
"WM Prospectuses"); (iii) the current Statement of Additional Information of
the Acquired Funds, dated January 31, 1998 (the "Griffin SAI"); (iv) the cur-
rent Statement of Additional Information of the Acquiring Funds, dated March
23, 1998, as revised April 16, 1998 and the Statement of Additional Informa-
tion dated November 1, 1998 (the "WM SAI"); (v) the Report of Independent Au-
ditors and financial statements in respect of each Acquired Fund included in
the Acquired Funds' Annual Reports to Shareholders for the year ended Septem-
ber 30, 1997 [and for the year ended September 30, 1998] (the "Griffin Annual
Reports"); (vi) the Report of Independent Accountants and financial statements
included in the Annual Report to Shareholders (A) in respect of each of the WM
Money Market Fund, the WM Tax-Exempt Money Market Fund, the WM U.S. Government
Fund, the WM Tax-Exempt Bond Fund and the WM Income Fund for the year ended
December 31, 1997, (B) in respect of each of the WM Short Term Fund, WM Cali-
fornia Fund and the WM Growth Fund for the year ended June 30, 1998, (C) in
respect of the WM Growth & Income Fund for the year ended October 31, 1997 and
(D) in respect of each Acquiring Fund for the period ended October 31, 1998
(the "WM Annual Reports"); (vii) the unaudited financial statements in respect
of each Acquired Fund contained in the Acquired Funds' Semi-Annual Report to
Shareholders for the six months ended March 31, 1998 (the "Griffin Semi-Annual
Report"); and (vii) the unaudited financial statements contained in the Semi-
Annual Reports to Shareholders in respect of each of the WM Money Market Fund,
the WM Tax-Exempt Money Market Fund, the WM U.S. Government Fund, the WM Tax-
Exempt Bond Fund, the WM Income Fund and the WM Growth & Income Fund for the
period ended April 30, 1998 (the "WM Semi-Annual Report").
This Prospectus/Proxy Statement is accompanied by a copy of each of the WM
Prospectuses. For a free
4
<PAGE>
copy of the WM SAI, WM Annual Reports or WM Semi-Annual Report referred to in
the foregoing paragraph, please call 1-800-222-5852 or write to the WM Group
of Funds at:
WM Group of Funds
P. O. Box 5118
Westborough, MA 01581-5118
THE SECURITIES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT HAVE NOT BEEN AP-
PROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. SHARES OF
THE ACQUIRING FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR EN-
DORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND IN-
VOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- -------------------------------------------------------------------------------
OVERVIEW OF MERGERS
PROPOSED TRANSACTIONS
WM Advisors, Inc. ("WM Advisors"), which has been in the business of invest-
ment management since 1944, is a direct subsidiary of Washington Mutual, Inc.
("Washington Mutual"), a financial services company. Griffin Financial Invest-
ment Advisers ("Griffin Advisers") became an indirect subsidiary of Washington
Mutual as a result of the merger on September 30, 1998, of Griffin Advisers'
former indirect parent, H.F. Ahmanson & Company, with and into a wholly-owned
subsidiary of Washington Mutual (the "Washington Mutual/Ahmanson Merger").
The Trustees of each Acquiring Fund have approved transactions involving, for
each Acquiring Fund, the Merger of the Acquired Fund into the Acquiring Fund.
Each Merger is proposed to be accomplished pursuant to an Agreement and Plan
of Reorganization providing for the transfer of all of the assets of the Ac-
quired Fund to the Acquiring Fund in exchange for the assumption by the Ac-
quiring Fund of all the liabilities of the Acquired Fund and for shares of the
Acquiring Fund, followed by the liquidation of the Acquired Fund.
WM Advisors is the investment adviser to each Acquiring Fund, although WM Ad-
visors has delegated responsibility for managing the portfolios of the WM Cal-
ifornia Fund and the WM Growth Fund to Van Kampen and Janus, respectively. In
addition, it is expected that, subject to shareholder approval, WM Advisors
will delegate responsibility for managing the portfolio of the WM Tax-Exempt
Bond Fund to Van Kampen, effective January 1, 1999. Griffin Advisers is the
investment adviser to each Acquired Fund, but investment sub-advisers have
primary responsibility for selecting investments for each Acquired Fund's
portfolio. These subadvisers are Payden & Rygel Investment Counsel ("Payden &
Rygel") in the case of the Griffin Money Market Fund, the Griffin Tax-Free
Money Market Fund, the Griffin U.S. Government Income Fund, the Griffin Munic-
ipal Bond Fund and the Griffin California Fund, T. Rowe Price Associates, Inc.
("T. Rowe Price") in the case of the Griffin Short-Term Bond Fund and the
Griffin Growth Fund, and The Boston Company Asset Management, Inc. ("TBCAM")
in the case of the Griffin Bond Fund and the Griffin Growth & Income Fund. If
shareholders of an Acquired Fund approve its Merger, such approval will effec-
tively change the party responsible for managing the assets of the Acquired
Fund. However, each Acquiring Fund has an investment objective similar to its
corresponding Acquired Fund. These objectives and certain differences in in-
vestment policies are explained further below under "Comparison of Investment
Objectives, Policies and Restrictions."
As a result of each proposed Merger, each Acquired Fund will receive a number
of Class A and Class B shares of the corresponding Acquiring Fund equal in
value to the aggregate value of the net assets of the Acquired Fund being
transferred and attributable to the Class A and Class B shares of the Acquired
Fund, respectively. Following the transfer, (i) the Acquired Fund will dis-
tribute to each of its Class A and Class B shareholders a number of full and
fractional Class A and Class B Merger Shares of the relevant Acquiring Fund
equal in value to the aggregate value of the shareholder's Class A and/or
Class B Acquired Fund shares, as the case may be, and (ii) the Acquired Fund
will be liquidated.
The Class A and Class B shares of each Acquiring Fund have substantially sim-
ilar characteristics to the
5
<PAGE>
corresponding classes of the respective Acquired Fund. Acquiring Fund Class A
shares are generally sold subject to a front-end sales load and are subject to
a servicing fee at an annual rate of 0.25% of assets attributable to Class A
shares. Class A shares are generally not subject to a contingent deferred
sales charge (a "CDSC"), except in the case of certain purchases of Class A
shares without a sales load which are redeemed within two years after pur-
chase. Acquiring Fund Class B shares are sold at net asset value, without an
initial sales charge but subject to a CDSC at declining rates if redeemed
within six years of purchase. Class B shares are subject to servicing and dis-
tribution fees at an aggregate annual rate of 1.00% of assets attributable to
Class B shares and generally convert automatically to Class A shares approxi-
mately eight years after purchase. For purposes of determining the conversion
date of Class B Merger Shares to Class A shares, the Merger Shares will be
treated as having been purchased as of the date two years prior to the date
that the Acquired Fund shares exchanged for such Merger Shares were originally
purchased (so that, in effect, the conversion feature currently enjoyed by
Griffin Fund shareholders will be "grandfathered"). No sales charge will be
charged to Acquired Fund shareholders on the issuance of the Merger Shares,
and no CDSC will be charged by the Acquired Funds on Acquired Fund shares ex-
changed for Merger Shares. The Merger Shares will be subject to a CDSC on re-
demption to the same extent that the Acquired Fund shares exchanged were so
subject. For purposes of computing the CDSC if any, payable on redemption of
Class A and Class B Merger Shares the Merger Shares will be treated as having
been purchased as of the date that, and for the price (adjusted to reflect the
Merger) at which, the Acquired Fund shares exchanged for such Merger Shares
were originally purchased.
[As described more fully below, the Directors of the Acquired Funds are ex-
pected to approve the Mergers based on an evaluation of the Acquiring Funds
and among other things, a careful review of the investment capabilities, phi-
losophy and performance of WM Advisors, Van Kampen and Janus. The Directors of
the Griffin Funds unanimously recommend that shareholders of each Acquired
Fund approve the Merger for such Fund. In reaching that conclusion, the Direc-
tors considered that each merger offers shareholders the opportunity to pursue
a similar investment objective in a larger Fund, which may offer economies of
scale and opportunities for greater diversification of risk; that the Mergers
will offer broader exchange privileges; that WM Advisors has estimated that
the Mergers should result in Fund operating expenses that are sustainable at
lower rates than the Griffin Funds, except for the Griffin Growth & Income and
Growth Funds, for which sustainable operating expenses are not expected to be
significantly different than for the WM Growth & Income and Growth Fund, re-
spectively; and that WM Advisors will be bearing the expense of the Mergers.
See "Proposals--Background and Reasons for the Proposed Mergers."]
OPERATING EXPENSES
As the following tables suggest, the Mergers should result in Griffin share-
holders (other than shareholders of the Growth Fund) experiencing lower Fund
expenses than those that are expected to become effective on April 1, 1999
with the reduction in or elimination of fee waivers and expense reimbursements
currently in effect. See "Proposals--Background and Reasons for the Proposed
Mergers." Of course, there can be no assurance that the Mergers will result in
expense savings for shareholders. These tables summarize, for Class A shares
and, for each Fund other than the money market funds, Class B shares, expenses
(i) that each Acquired Fund incurred in its fiscal year ended September 30,
1998, restated to reflect the reduction in or elimination of fee waivers and
expense reimbursements expected to become effective on April 1, 1999, (ii)
that each Acquiring Fund incurred in its fiscal year ended October 31, 1997,
December 31, 1997, or June 30, 1998, as the case may be, restated to reflect
fees, expenses, fee waivers and expense reimbursements in effect through at
least October 31, 1999, and (iii) that each Acquiring Fund would have incurred
in its most recent fiscal year after giving effect on a pro forma combined ba-
sis to the proposed Merger, as if the Merger had occurred as of the beginning
of such fiscal year (assuming the fees, expenses, fee waivers and expense re-
imbursements in effect for the Funds had been in place since the beginning of
such fiscal year). The tables are provided to help you understand an invest-
or's share of the operating expenses which each Fund incurs. The examples show
the estimated cumulative expenses attributable to a hypothetical $1,000 in-
vestment in each Acquired Fund, each Acquiring Fund and each Acquiring Fund on
a pro forma basis, over specified periods. The examples should not be consid-
ered a representation of past or future expenses, and actual expenses may dif-
fer from those shown.
6
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN MONEY MARKET WM MONEY MARKET WM MONEY MARKET
FUND FUND FUND
-------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- ---------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase
(as a percentage of
offering price at the
time of purchase)
Class A................ None None None
- ---------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None None None
- ---------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- ---------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.23%(1) 0.45% 0.45%
- ---------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.20% 0.00%(2) 0.00%(2)
- ---------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.32% 0.28% 0.28%
- ---------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursement)
Class A................ 0.75%(1) 0.73% 0.73%
- ---------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.45% 0.45%
- ---------------------------------------------------------------------------------
Other Expenses without
voluntary
reimbursements:
Class A................ 0.32% 0.38% 0.38%
- ---------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.02% 0.83% 0.83%
- ---------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Management Fees and Total Fund Operating Ex-
penses for the Griffin Money Market Fund were % and %, respectively, for
the fiscal year ended September 30, 1998.
(2) The applicable Rule 12b-1 plan provides for payments of up to 0.25%. How-
ever, the Board of Trustees of WM Trust I has not currently authorized
any such payments under such plan.
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN MONEY MARKET WM MONEY MARKET WM MONEY MARKET
FUND FUND FUND
-------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A
1 year............... $ 8 $ 7 $ 7
3 years.............. $ 24 $ 23 $ 23
5 years.............. $ 42 $ 41 $ 41
10 years............. $ 93 $ 91 $ 91
- -------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN TAX-FREE WM TAX-EXEMPT WM TAX-EXEMPT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
----------------- ----------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- --------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ None None None
- --------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None None None
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- --------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.00%(1) 0.31% 0.31%
- --------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.20% 0.00%(2) 0.00%(2)
- --------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.52%(1) 0.26% 0.26%
- --------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................ 0.72% 0.57% 0.57%
- --------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.45% 0.45%
- --------------------------------------------------------------------------------
Other Expenses without
voluntary
reimbursements:
Class A................ 0.72% 0.26% 0.26%
- --------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.42% 0.71% 0.71%
- --------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to a voluntary fee waiver and expense reimbursements presently in
effect but expected to be reduced on April 1, 1999, Management Fees, Other
Expenses and Total Fund Operating Expenses for the Griffin Tax-Free Money
Market Fund were %, % and %, respectively, for the fiscal year ended
September 30, 1998.
(2) The applicable Rule 12b-1 plan provides for payments of up to 0.25%. How-
ever, the Board of Trustees of WM Trust I has not currently authorized any
such payments under such plan.
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN TAX- CURRENT EXPENSES WM TAX-
FREE MONEY WM TAX-EXEMPT EXEMPT MONEY
MARKET FUND MONEY MARKET FUND MARKET FUND
---------------- ----------------- ------------------
<S> <C> <C> <C>
Class A
1 year................... $ 7 $ 6 $ 6
3 years.................. $23 $18 $18
5 years.................. $40 $32 $32
10 years................. $89 $71 $71
- --------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES
GRIFFIN SHORT- WM SHORT TERM PRO FORMA EXPENSES
TERM BOND FUND FUND WM SHORT TERM FUND
---------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- -------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of offering
price at the time of
purchase)
Class A................. 3.50% 3.50% 3.50%
Class B................. None None None
- -------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................. None(1) None(1) None(1)
Class B................. 4.00%(2) 4.00%(2) 4.00%(2)
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- -------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................. 0.17%(3) 0.00% 0.00%
Class B................. 0.17%(3) 0.00% 0.00%
- -------------------------------------------------------------------------------
12b-1 Fees
Class A................. 0.25% 0.25% 0.25%
Class B(4).............. 1.00% 1.00% 1.00%
- -------------------------------------------------------------------------------
Other Expenses
Class A................. 0.58% 0.57% 0.57%
Class B................. 0.58% 0.57% 0.57%
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................. 1.00% 0.82% 0.82%
Class B................. 1.75% 1.57% 1.57%
- -------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................. 0.50% 0.50% 0.50%
Class B................. 0.50% 0.50% 0.50%
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT WAIVERS
AND REIMBURSEMENTS:
Class A................. 1.33% 1.32% 1.32%
Class B................. 2.08% 2.07% 2.07%
- -------------------------------------------------------------------------------
</TABLE>
(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Short Term Fund, .50% on re-
demptions of these shares during the second year after purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For
shares held longer than one year, the CDSC declines according to the
schedules set forth in the Griffin Prospectus and the WM Prospectus.
(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Management Fees and Total Fund Operating Ex-
penses for the Griffin Short-Term Bond Fund were % and %, respective-
ly, for Class A shares, and % and %, respectively, for Class B shares
for the fiscal year ended September 30, 1998.
(4) Because of the ongoing nature of 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the maximum front-end sales
charge allowed by the National Association of Securities Dealers, Inc.
9
<PAGE>
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES
GRIFFIN SHORT- WM SHORT TERM PRO FORMA EXPENSES
TERM BOND FUND FUND WM SHORT TERM FUND
---------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year.................. $ 45 $ 43 $ 43
3 years................. $ 66 $ 60 $ 60
5 years................. $ 89 $ 79 $ 79
10 years................ $153 $133 $133
- ------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year.................. $ 58 $ 56 $ 56
3 years................. $ 75 $ 70 $ 70
5 years................. $ 95 $ 86 $ 86
10 years................ $167(3) $166(4) $149(3)
- ------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year.................. $ 18 $ 16 $ 16
3 years................. $ 55 $ 50 $ 50
5 years................. $ 95 $ 86 $ 86
10 years................ $167(3) $166(4) $149(3)
- ------------------------------------------------------------------------------
</TABLE>
(1)Assumes deduction at time of purchase of the maximum initial sales
charge.
(2)Assumes deduction of the maximum CDSC.
(3)Assumes conversion to Class A shares after six years; therefore, re-
flects Class A expenses in years seven through ten.
(4)Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.
(5)Assumes no deduction of CDSC.
10
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN U.S. GOVERNMENT WM U.S. WM U.S. GOVERNMENT
INCOME FUND GOVERNMENT FUND FUND
----------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- -------------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 4.50% 4.50%
Class B................ None None None
- -------------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- -------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- -------------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.28%(3) 0.50% 0.50%
Class B................ 0.28%(3) 0.50% 0.50%
- -------------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- -------------------------------------------------------------------------------------
Other Expenses
Class A................ 0.47% 0.17% 0.17%
Class B................ 0.47% 0.21% 0.21%
- -------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursement)
Class A................ 1.00%(3) 0.92% 0.92%
Class B................ 1.75%(3) 1.71% 1.71%
- -------------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.63% 0.63%
Class B................ 0.50% 0.63% 0.63%
- -------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.22% 1.05% 1.05%
Class B................ 1.97% 1.84% 1.84%
- -------------------------------------------------------------------------------------
</TABLE>
(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Government Fund, .50% on re-
demptions of these shares during the second year after purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For
shares held longer than one year, the CDSC declines according to the
schedules set forth in the Griffin Prospectus and the WM Prospectus.
(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Management Fees and Total Fund Operating Ex-
penses for the Griffin U.S. Government Income Fund were % and %, re-
spectively, for Class A shares, and % and %, respectively, for Class B
shares for the fiscal year ended September 30, 1998.
(4) Because of the ongoing nature of 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the maximum front-end sales
charge allowed by the National Association of Securities Dealers, Inc.
11
<PAGE>
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN U.S. GOVERNMENT WM U.S. WM U.S. GOVERNMENT
INCOME FUND GOVERNMENT FUND FUND
----------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 55 $ 54 $ 54
3 years................ $ 75 $ 73 $ 73
5 years................ $ 98 $ 94 $ 94
10 years............... $162 $153 $153
- ------------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 68 $ 67 $ 67
3 years................ $ 85 $ 84 $ 84
5 years................ $115 $103 $103
10 years............... $168(3) $181(4) $162(3)
- ------------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 18 $ 17 $ 17
3 years................ $ 55 $ 54 $ 54
5 years................ $ 95 $ 93 $ 93
10 years............... $168(3) $181(4) $162(3)
- ------------------------------------------------------------------------------------
</TABLE>
(1) Assumes deduction at time of purchase of the maximum initial sales charge.
(2) Assumes deduction of the maximum CDSC.
(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.
(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.
(5) Assumes no deduction of CDSC.
12
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN MUNICIPAL BOND WM TAX-EXEMPT WM TAX-EXEMPT
FUND BOND FUND BOND FUND
---------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- ------------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 4.50% 4.50%
Class B................ None None None
- ------------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- ------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- ------------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.00%(3) 0.50% 0.50%
Class B................ 0.00%(3) 0.50% 0.50%
- ------------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- ------------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.69%(3) 0.10% 0.10%
Class B................ 0.69%(3) 0.12% 0.12%
- ------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES
(after voluntary
waivers or
reimbursements)
Class A................ 0.94%(3) 0.85% 0.85%
Class B................ 1.69%(3) 1.62% 1.62%
- ------------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.50% 0.50%
Class B................ 0.50% 0.50% 0.50%
- ------------------------------------------------------------------------------------
Other Expenses without
voluntary
reimbursements:
Class A................ 0.96% 0.10% 0.10%
Class B................ 0.96% 0.12% 0.12%
- ------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.71% 0.85% 0.85%
Class B................ 2.46% 1.62% 1.62%
- ------------------------------------------------------------------------------------
</TABLE>
(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Tax-Exempt Fund, .50% on re-
demptions of these shares during the second year after purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For
shares held longer than one year, the CDSC declines according to the
schedules set forth in the Griffin Prospectus and the WM Prospectus.
(3) Pursuant to a voluntary fee waiver and expense reimbursement presently in
effect but expected to be reduced on April 1, 1999, Management Fees and
Total Fund Operating Expenses for the Griffin Municipal Bond Fund were %
and %, respectively, for Class A shares, and % and %, respectively,
for Class B shares for the fiscal year ended September 30, 1998.
(4) Because of the ongoing nature of 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the maximum front-end sales
charge allowed by the National Association of Securities Dealers, Inc.
13
<PAGE>
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN MUNICIPAL BOND WM TAX-EXEMPT WM TAX-EXEMPT
FUND BOND FUND BOND FUND
---------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 54 $ 53 $ 53
3 years................ $ 74 $ 71 $ 71
5 years................ $ 95 $ 90 $ 90
10 years............... $155 $145 $145
- -----------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 67 $ 66 $ 66
3 years................ $ 83 $ 81 $ 81
5 years................ $102 $ 99 $ 99
10 years............... $161(3) $171(4) $152(3)
- -----------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 17 $ 16 $ 16
3 years................ $ 53 $ 51 $ 51
5 years................ $ 92 $ 89 $ 89
10 years............... $161(3) $171(4) $152(3)
- -----------------------------------------------------------------------------------
</TABLE>
(1) Assumes deduction at time of purchase of the maximum initial sales charge.
(2) Assumes deduction of the maximum CDSC.
(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.
(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.
(5) Assumes no deduction of CDSC.
14
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN CALIFORNIA FUND WM CALIFORNIA FUND WM CALIFORNIA FUND
----------------------- ------------------ ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- ---------------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 4.50% 4.50%
Class B................ None None None
- ---------------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- ---------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- ---------------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.19%(3) 0.39% 0.39%
Class B................ 0.19%(3) 0.39% 0.39%
- ---------------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 1.00% 1.00%
- ---------------------------------------------------------------------------------------
Other Expenses
Class A................ 0.47% 0.24% 0.24%
Class B................ 0.47% 0.25% 0.25%
- ---------------------------------------------------------------------------------------
TOTAL FUND OPERATING EX-
PENSES
(after voluntary waiv-
ers or reimbursements)
Class A................ 0.91%(3) 0.88% 0.88%
Class B................ 1.66%(3) 1.64% 1.64%
- ---------------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.70% 0.70%
Class B................ 0.50% 0.70% 0.70%
- ---------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.22% 1.19% 1.19%
Class B................ 1.97% 1.95% 1.95%
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM California Fund, .50% on re-
demptions of these shares during the second year after purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For
shares held longer than one year, the CDSC declines according to the
schedules set forth in the Griffin Prospectus and the WM Prospectus.
(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Management Fees and Total Fund Operating Ex-
penses for the Griffin California Fund were % and %, respectively, for
Class A shares, and % and %, respectively, for Class B shares for the
fiscal year ended September 30, 1998.
(4) Because of the ongoing nature of 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the maximum front-end sales
charge allowed by the National Association of Securities Dealers, Inc.
15
<PAGE>
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN CALIFORNIA FUND WM CALIFORNIA FUND WM CALIFORNIA FUND
----------------------- ------------------ ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 54 $ 54 $ 54
3 years................ $ 73 $ 72 $ 72
5 years................ $ 93 $ 92 $ 92
10 years............... $152 $149 $149
- --------------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 67 $ 67 $ 67
3 years................ $ 82 $ 82 $ 82
5 years................ $101 $100 $100
10 years............... $157(3) $174(4) $155(3)
- --------------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 17 $ 17 $ 17
3 years................ $ 52 $ 52 $ 52
5 years................ $ 91 $ 90 $ 90
10 years............... $157(3) $174(4) $155(3)
- --------------------------------------------------------------------------------------
</TABLE>
(1) Assumes deduction at time of purchase of the maximum initial sales charge.
(2) Assumes deduction of the maximum CDSC.
(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.
(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.
(5) Assumes no deduction of CDSC.
16
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN BOND FUND WM INCOME FUND WM INCOME FUND
----------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- -------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 4.50% 4.50%
Class B................ None None None
- -------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- -------------------------------------------------------------------------------
Management Fees (after
voluntary waivers or
reimbursement)
Class A................ 0.23%(3) 0.63% 0.60%
Class B................ 0.23%(3) 0.63% 0.60%
- -------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 0.97% 0.97%
- -------------------------------------------------------------------------------
Other Expenses
Class A................ 0.58% 0.20% 0.20%
Class B................ 0.58% 0.23% 0.23%
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................ 1.06%(3) 1.08% 1.05%
Class B................ 1.81%(3) 1.83% 1.80%
- -------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.50% 0.63% 0.60%
Class B................ 0.50% 0.63% 0.60%
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.33% 1.08% 1.05%
Class B................ 2.08% 1.83% 1.80%
- -------------------------------------------------------------------------------
</TABLE>
(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Income Fund, .50% on redemp-
tions of these shares during the second year after purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For
shares held longer than one year, the CDSC declines according to the
schedules set forth in the Griffin Prospectus and the WM Prospectus.
(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Management Fees and Total Fund Operating Ex-
penses for the Griffin Bond Fund were % and %, respectively, for Class
A shares, and % and %, respectively, for Class B shares for the fiscal
year ended September 30, 1998.
(4) Because of the ongoing nature of 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the maximum front-end sales
charge allowed by the National Association of Securities Dealers, Inc.
17
<PAGE>
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN BOND FUND WM INCOME FUND WM INCOME FUND
----------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 55 $ 56 $ 55
3 years................ $ 77 $ 78 $ 77
5 years................ $101 $102 $101
10 years............... $169 $171 $167
- ------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 68 $ 69 $ 68
3 years................ $ 87 $ 88 $ 87
5 years................ $109 $110 $108
10 years............... $174(3) $195(4) $173(3)
- ------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 18 $ 19 $ 18
3 years................ $ 57 $ 58 $ 57
5 years................ $ 99 $100 $ 98
10 years............... $174(3) $195(4) $173(3)
- ------------------------------------------------------------------------------
</TABLE>
(1) Assumes deduction at time of purchase of the maximum initial sales charge.
(2) Assumes deduction of the maximum CDSC.
(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.
(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.
(5) Assumes no deduction of CDSC.
18
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN GROWTH & INCOME WM GROWTH & WM GROWTH &
FUND INCOME FUND INCOME FUND
----------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- -------------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 5.50% 5.50%
Class B................ None None None
- -------------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- -------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
- -------------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.39%(3) 0.57% 0.57%
Class B................ 0.39%(3) 0.57% 0.57%
- -------------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 0.92% 0.92%
- -------------------------------------------------------------------------------------
Other Expenses (after
voluntary
reimbursements)
Class A................ 0.37% 0.19% 0.19%
Class B................ 0.37% 0.19% 0.19%
- -------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................ 1.01%(3) 1.01% 1.01%
Class B................ 1.76%(3) 1.76% 1.76%
- -------------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.60% 0.61% 0.61%
Class B................ 0.60% 0.61% 0.61%
- -------------------------------------------------------------------------------------
OTHER EXPENSES WITHOUT
VOLUNTARY WAIVERS:
Class A................ 0.37% 0.19% 0.19%
Class B................ 0.37% 0.27% 0.27%
- -------------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.22% 1.05% 1.05%
Class B................ 1.97% 1.88% 1.88%
- -------------------------------------------------------------------------------------
</TABLE>
(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Growth & Income Fund, .50%
on redemptions of these shares during the second year after purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For
shares held longer than one year, the CDSC declines according to the
schedules set forth in the Griffin Prospectus and the WM Prospectus.
(3) Pursuant to a voluntary fee waiver presently in effect but expected to be
reduced on April 1, 1999, Management Fees and Total Fund Operating Ex-
penses for the Griffin Growth & Income Fund were % and %, respective-
ly, for Class A shares, and % and %, respectively, for Class B shares
for the fiscal year ended September 30, 1998.
(4) Because of the ongoing nature of 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the maximum front-end sales
charge allowed by the National Association of Securities Dealers, Inc.
19
<PAGE>
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN GROWTH & INCOME WM GROWTH & WM GROWTH &
FUND INCOME FUND INCOME FUND
----------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 55 $ 65 $ 65
3 years................ $ 76 $ 85 $ 85
5 years................ $ 99 $108 $108
10 years............... $163 $172 $172
- ------------------------------------------------------------------------------------
Class B (assuming
redemption at end of
period)(2)
1 year................. $ 68 $ 68 $ 68
3 years................ $ 85 $ 85 $ 85
5 years................ $106 $106 $106
10 years............... $169(3) $187(4) $169(3)
- ------------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 18 $ 18 $ 18
3 years................ $ 55 $ 35 $ 35
5 years................ $ 96 $ 96 $ 96
10 years............... $169(3) $187(4) $169(3)
- ------------------------------------------------------------------------------------
</TABLE>
(1) Assumes deduction at time of purchase of the maximum initial sales charge.
(2) Assumes deduction of the maximum CDSC.
(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.
(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.
(5) Assumes no deduction of CDSC.
20
<PAGE>
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN GROWTH FUND WM GROWTH FUND WM GROWTH FUND
------------------- ---------------- ------------------
<S> <C> <C> <C>
SHAREHOLDER EXPENSES
- ---------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Purchase (as
a percentage of
offering price at the
time of purchase)
Class A................ 4.50% 5.50% 5.50%
Class B................ None None None
- ---------------------------------------------------------------------------------
Maximum Contingent
Deferred Sales Charge
Class A................ None(1) None(1) None(1)
Class B................ 5.00%(2) 5.00%(2) 5.00%(2)
- ---------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES (as a
percentage of average
net assets)
- ---------------------------------------------------------------------------------
Management Fees (after
voluntary waivers)
Class A................ 0.51%(3) 0.70% 0.70%
Class B................ 0.51%(3) 0.70% 0.70%
- ---------------------------------------------------------------------------------
12b-1 Fees
Class A................ 0.25% 0.25% 0.25%
Class B(4)............. 1.00% 0.95% 0.95%
- ---------------------------------------------------------------------------------
Other Expenses
Class A................ 0.54% 0.35% 0.35%
Class B................ 0.54% 0.40% 0.40%
- ---------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES (after
voluntary waivers or
reimbursements)
Class A................ 1.30%(3) 1.30% 1.30%
Class B................ 2.05%(3) 2.05% 2.05%
- ---------------------------------------------------------------------------------
Management Fees without
voluntary waivers:
Class A................ 0.60% 1.06% 1.06%
Class B................ 0.60% 1.06% 1.06%
- ---------------------------------------------------------------------------------
TOTAL FUND OPERATING
EXPENSES WITHOUT
WAIVERS AND
REIMBURSEMENTS:
Class A................ 1.39% 1.66% 1.66%
Class B................ 2.14% 2.46% 2.46%
- ---------------------------------------------------------------------------------
</TABLE>
(1) Certain investors who purchase Class A shares at net asset value may be
subject to a CDSC of 1.00% on redemptions of these shares during the first
year after purchase or, in the case of the WM Growth Fund, .50% on redemp-
tions of these shares during the second year after purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For
shares held longer than one year, the CDSC declines according to the
schedules set forth in the Griffin Prospectus and the WM Prospectus.
(3) Pursuant to a voluntary fee waiver presently in effect but expected to
terminate on April 1, 1999, Management Fees and Total Fund Operating Ex-
penses for the Griffin Growth Fund were % and %, respectively, for
Class A shares and % and %, respectively for Class B shares for the
fiscal year ended September 30, 1998.
(4) Because of the ongoing nature of 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the maximum front-end sales
charge allowed by the National Association of Securities Dealers, Inc.
21
<PAGE>
EXAMPLE OF FUND EXPENSES:
An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) unless otherwise indicated, redemption at the end of
each time period:
<TABLE>
<CAPTION>
CURRENT EXPENSES CURRENT EXPENSES PRO FORMA EXPENSES
GRIFFIN GROWTH FUND WM GROWTH FUND WM GROWTH FUND
------------------- ---------------- ------------------
<S> <C> <C> <C>
Class A(1)
1 year................. $ 58 $ 68 $ 68
3 years................ $ 84 $ 94 $ 94
5 years................ $114 $123 $123
10 years............... $195 $203 $203
- --------------------------------------------------------------------------------
Class B (assuming
redemption)(2)
1 year................. $ 71 $ 71 $ 71
3 years................ $ 94 $ 94 $ 94
5 years................ $121 $121 $121
10 years............... $205(3) $224(4) $205(3)
- --------------------------------------------------------------------------------
Class B (assuming no
redemption)(5)
1 year................. $ 21 $ 21 $ 21
3 years................ $ 64 $ 64 $ 64
5 years................ $111 $111 $111
10 years............... $205(3) $224(4) $205(3)
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes deduction at time of purchase of the maximum initial sales charge.
(2) Assumes deduction of the maximum CDSC.
(3) Assumes conversion to Class A shares after six years; therefore, reflects
Class A expenses in years seven through ten.
(4) Assumes conversion to Class A shares after eight years; therefore, re-
flects Class A expenses in years nine and ten.
(5) Assumes no deduction of CDSC.
22
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes no gain or loss will be recognized by an Ac-
quired Fund or its shareholders as a result of the Merger, and the tax basis
of the Merger Shares received by each Acquired Fund shareholder will be the
same as the tax basis of the shareholder's Acquired Fund shares. See Informa-
tion about the Mergers--Federal Income Tax Consequences."
- -------------------------------------------------------------------------------
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
Each Acquiring Fund has investment objectives that are similar to those of
the corresponding Acquired Fund. The investment objectives, policies and re-
strictions of the Acquired Funds and the Acquiring Funds, and certain differ-
ences between them, are summarized below. For a more detailed description of
the investment techniques used by the Acquired Funds and the Acquiring Funds,
please see the WM Prospectus and the Griffin Prospectus. For information con-
cerning the risks associated with investments in the various Funds, see "Risk
Factors," below.
Griffin Money Market Fund vs. WM Money Market Fund
The WM Money Market Fund and the Griffin Money Market Fund have similar in-
vestment objectives. The Griffin Money Market Fund seeks to provide as high a
level of current income as is consistent with the preservation of principal
and liquidity. The WM Money Market Fund seeks to provide maximum current in-
come, while preserving capital and maintaining liquidity. The total return for
the Griffin Money Market Fund and the WM Money Market Fund is set forth in the
chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Money Market Fund............... [ ]% N/A N/A [ ]%
WM Money Market Fund.................... 5.13% 4.49% 5.18% 4.59%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not shown, because the Griffin Money Market Fund commenced opera-
tions on 10/19/93. For further information about the WM Money Market Fund's
performance, including information about waivers/reimbursements that af-
fected the Fund's performance, see the WM Prospectus.
Each of the Griffin Money Market Fund and the WM Money Market Fund invests in
high-quality U.S. dollar-denominated money market instruments, including (i)
bank obligations, (ii) U.S. Government securities, (iii) short-term commercial
notes, issued directly by U.S. and foreign businesses, banking institutions,
financial institutions (including brokerage, finance and insurance companies)
and U.S. state and local governments and municipalities to finance short-term
cash needs, (iv) repurchase agreements, (v) short-term corporate obligations,
and (vi) restricted and illiquid securities. In addition, each Fund may buy or
sell securities on a when-issued or delayed-delivery basis.
While the Griffin Money Market Fund may invest in such obligations of U.S. or
foreign banks as certificates of deposit and bankers' acceptances without re-
striction, the WM Money Market Fund may invest in such obligations only where
the bank's assets exceed $500 million. The Griffin Money Market Fund may in-
vest in reverse repurchase agreements and other investment companies, while
the WM Money Market Fund may not. Although each Fund may invest in asset-
backed securities, the WM Money Market Fund may only invest up to 10% of its
total assets in such securities. Moreover, the Griffin Money Market Fund may
lend up to 33 1/3% of its total assets. However, the WM Money Market Fund may
invest in securities issued by foreign governments, their agencies or instru-
mentalities or by supranational entities, whereas the Griffin Money Market
Fund may not. Although each Fund may borrow for temporary defensive purposes,
the Griffin Money Market Fund may borrow up to 10% of its total assets,
whereas the WM Money Market Fund may borrow up to 33 1/3% of its total assets
to meet redemption requests, and may otherwise borrow only up to 5% of its net
assets. The Griffin Money Market Fund, unlike the WM Money Market Fund, is re-
quired to invest at least 25% of its total assets in the financial services
industry at all times.
Audrey S. Quaye, Certified Public Accountant ("CPA"), Vice President and
Portfolio Manager of
23
<PAGE>
WM Advisors, is primarily responsible for the day-to-day management of the WM
Money Market Fund. She has managed the Fund since March 1997, and has been em-
ployed by WM Advisors since 1996. Prior to 1996, Ms. Quaye worked at the Ben-
ham Group as a municipal credit analyst.
Griffin Tax-Free Money Market Fund vs. WM Tax-Exempt Money Market Fund
The Griffin Tax-Free Money Market Fund and the WM Tax-Exempt Money Market
Fund have similar investment objectives. The Griffin Tax-Free Money Market
Fund seeks to provide as high a level of current income, exempt from federal
income taxes, as is consistent with a portfolio of high quality short term mu-
nicipal obligations selected on the basis of liquidity and stability of capi-
tal. The WM Tax-Exempt Money Market Fund seeks to provide maximum current in-
come that is exempt from federal tax, while preserving capital and maintaining
liquidity. Each Fund invests primarily in high quality, short-term municipal
obligations.
The total return for the Griffin Tax-Free Money Market Fund and the WM Tax-
Exempt Money Market Fund is set forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Tax-Free Money Market Fund..... [ ]% [ ]% N/A [ ]%
WM Tax-Exempt Money Market Fund........ 3.20% 3.04% 3.69% 3.10%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not shown, because the Griffin Tax-Free Money Market Fund com-
menced operations on 10/19/93. For further information about the WM Tax-Ex-
empt Money Market Fund's performance, including information about
waivers/reimbursements that affected the Fund's performance, see the WM Pro-
spectus.
Each of the Funds invests primarily in municipal obligations issued by
states, territories and possessions of the United States, the District of Co-
lumbia and their respective authorities, agencies, instrumentalities and po-
litical subdivisions, the income from which is exempt from federal income tax.
These investments may include tax anticipation notes ("TANs"), revenue antici-
pation notes ("RANs"), bond anticipation notes ("BANs"), and project notes
("PNs"), or other forms of short-term municipal loans and obligations. Under
normal market conditions, the WM Tax-Exempt Money Market Fund invests at least
80% of its total assets in instruments that pay interest that is not subject
to the federal alternative minimum tax, and the Griffin Tax-Free Money Market
Fund invests its assets so that at least 80% of its income distributions are
exempt from the federal income tax and the federal alternative minimum tax.
However, for temporary defensive purposes, each of the Funds may hold cash,
and may invest more than 20% of its total assets in obligations the income
from which is not exempt from the federal income tax or the alternative mini-
mum tax. Each of the Funds may also invest in tax-exempt commercial paper, ze-
ro-coupon bonds, restricted and illiquid securities, and may buy or sell secu-
rities on a when-issued or delayed-delivery basis. Both may invest in variable
rate municipal instruments, forward commitments and standby commitments.
The WM Tax-Exempt Money Market Fund may invest up to 10% of its total assets
in securities of mutual funds that are not affiliated with WM Advisors,
whereas the Griffin Tax-Free Money Market Fund's investments in other invest-
ment companies are limited to tax-exempt money market funds that have a funda-
mental policy of investing at least 80% of total assets in obligations the in-
terest from which is exempt from federal income tax and the federal alterna-
tive minimum tax. Although each of the Funds may invest in repurchase agree-
ments, the Griffin Tax-Free Money Market Fund, unlike the WM Tax-Exempt Money
Market Fund, may invest only up to 10% of its total assets in repurchase
agreements. The Griffin Tax-Free Money Market Fund may invest in reverse re-
purchase agreements while the WM Tax-Exempt Money Market Fund may not. Al-
though each of the Funds may borrow for temporary purposes, the Griffin Tax-
Free Money Market Fund may borrow up to 10% of its net assets whereas the WM
Tax-Exempt Money Market Fund may borrow up to 33 1/3% of its total assets to
meet redemption requests, otherwise it may borrow only up to 5% of its net as-
sets.
Audrey S. Quaye, CPA, Vice President and Portfolio Manager of WM Advisors, is
primarily responsible for the day-to-day management of the WM Money Market
Fund. She has managed the Fund since March 1997, and has been employed by WM
Advisors since 1996. Prior to 1996, Ms. Quaye worked at the Benham Group as a
municipal credit analyst.
24
<PAGE>
Griffin Short-Term Bond Fund vs. WM Short Term Fund
The Griffin Short-Term Bond Fund and the WM Short Term Fund have similar in-
vestment objectives. The Griffin Short-Term Bond Fund seeks to provide the
highest level of current income consistent with minimal fluctuation of princi-
pal value and liquidity. The WM Short Term Fund seeks to provide as high a
level of current income as is consistent with prudent investment management
and stability of principal.
The total return for the Griffin Short-Term Bond Fund and the WM Short Term
Fund is set forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
SINCE
11/1/93
1 YEAR ANNUALIZED
------ ----------
<S> <C> <C>
Griffin Short-Term Bond Fund.................................. 3.06% 4.85%
WM Short Term Fund............................................ 2.38% 3.65%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Expenses reflect the voluntary
waivers/reimbursements in effect through at least October 1, 1999. Five- and
ten-year performance information is not available for the WM Short Term
Fund, which commenced operations on 11/1/93, or the Griffin Short-Term Bond
Fund, which commenced operations on 10/19/93. The Griffin Short-Term Bond
Fund's total return since 10/19/93 is %. For further information about
the WM Short Term Fund's performance, including information about
waivers/reimbursements that affected the Fund's performance, see the WM Pro-
spectus.
Each of the Funds may invest in mortgage-backed securities, including securi-
ties issued by the Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA"), and Federal Home Loan Mortgage Corpo-
ration ("FHLMC"), bank obligations and collateralized mortgage obligations.
Each may purchase securities on a when-issued or delayed-delivery basis, and
each may invest in illiquid and restricted securities, as well as futures and
related options, and floating and variable rate obligations. Each of the Funds
may also enter into repurchase and reverse repurchase agreements.
Under normal market conditions, the Griffin Short-Term Bond Fund invests at
least 65% of its total assets in bonds, and maintains an average dollar-
weighted effective maturity of 3 years or less, without purchasing any secu-
rity whose effective maturity, average life or tender date exceeds 7 years.
Although the WM Short Term Fund also maintains a weighted effective maturity
of 3 years or less, it is not subject to any such limit with respect to indi-
vidual securities. To the extent that the WM Short Term Fund invests in debt
securities with longer maturities, it may be subject to greater market risk as
described below under "Risk Factors--Market Risk." Although each of the Funds
may borrow for temporary or defensive purposes, the Griffin Short-Term Bond
Fund may borrow up to 33 1/3% of its net assets, while the WM Short Term Fund
may only borrow up to 30% of its net assets. The Griffin Short-Term Bond Fund
may invest up to 5% of its total assets in "split-rated" bonds, which are
bonds that one rating organization rates below investment grade but another
rates investment grade. However, the WM Short Term Fund invests substantially
all of its assets in investment grade securities and, under normal market con-
ditions, at least 65% of securities rated in the top two categories of a na-
tionally recognized securities rating organization and securities determined
by WM Advisors to be of comparable quality.
While each of the Funds may invest in asset-backed securities, the WM Short
Term Fund may only invest up to 25% of its total assets in such securities.
The Griffin Short-Term Bond Fund may invest up to 25% of its total assets in
U.S. dollar-denominated foreign securities, while the WM Short Term Fund may
invest up to 10% of its total assets in foreign securities, including non-U.S.
dollar denominated securities. Each of the Funds may loan its portfolio secu-
rities, but the WM Short Term Fund may only lend up to 20% of its total assets
whereas the Griffin Short-Term Bond Fund may lend up to 33 1/3% of its total
assets. Each of the Funds may purchase securities issued by other investment
companies. The WM Short Term Fund may invest up to 5% of its assets in pre-
ferred stock, whereas the Griffin Short-Term Bond Fund may not.
Gary J. Pokrzywinski, CFA, Vice President and Senior Portfolio Manager of WM
Advisors, is primarily responsible for the day-to-day management of the WM
Short Term Fund. He has managed the Fund since January 1998, and has been em-
ployed by WM Advisors since 1992.
Griffin U.S. Government Income Fund vs. WM U.S. Government Fund
The Griffin U.S. Government Income Fund and the WM U.S. Government Fund have
similar investment objectives. The Griffin U.S. Government Income Fund seeks
to provide current income, while preserving capital. The WM U.S. Government
Fund
25
<PAGE>
seeks to provide a high level of current income, consistent with safety and
liquidity.
The total return for the Griffin U.S. Government Income Fund and the WM U.S.
Government Fund is set forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin U.S. Government Fund............ 4.98% N/A N/A 5.37%
WM U.S. Government Fund................. 5.79% 5.25% 7.72% 5.08%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not available for the Griffin U.S. Government Income Fund, which
commenced operations on 10/19/93. For further information about the WM U.S.
Government Fund's performance, including information about
waivers/reimbursements that affected the Fund's performance, see the WM Pro-
spectus.
To accomplish its objective, the WM U.S. Government Fund invests primarily in
a selection of obligations of the U.S. Government and its agencies. The Fund
may also invest in collateralized mortgage obligations or repurchase agree-
ments which are secured by those types of obligations. It is a fundamental
policy of the Fund to invest only in the following types of securities: (1)
U.S. Government securities, including mortgage-backed securities; (2) obliga-
tions secured by the full faith and credit of the U.S. Government or its in-
strumentalities; and (3) collateralized mortgage obligations and repurchase
agreements which are secured by obligations identified in (1) and (2) above.
The Fund may borrow up to 5% of its net assets for emergency, non-investment
purposes and may enter into dollar roll transactions.
The Griffin U.S. Government Income Fund may invest in obligations of any ma-
turity, although it invests primarily in a portfolio of intermediate- and
long-term securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. The Griffin U.S. Government Income Fund also may buy and
sell options and futures contracts to generate income for the Fund and for
hedging purposes. The Fund's sales of options contracts will be limited to
covered options.
Each of the WM U.S. Government Fund, subject to the restrictions set forth
above, and the Griffin U.S. Government Income Fund may temporarily invest in
cash and may invest in variable rate, floating rate or inverse floating rate
instruments, mortgage-backed securities, stripped mortgage-backed securities,
collateralized mortgage obligations and repurchase agreements. Each of the
Funds may buy and sell securities on a when-issued or delayed-delivery basis
and may purchase restricted and illiquid securities.
The Griffin U.S. Government Income Fund, unlike the WM U.S. Government Fund,
may invest in asset-backed securities that are not mortgaged-backed securi-
ties, commercial paper, certificates of deposit, foreign index linked invest-
ments, zero-coupon bonds, U.S. dollar-denominated foreign securities, securi-
ties of other investment companies, reverse repurchase agreements and sepa-
rately traded interest and principal components of U.S. Treasury securities
("STRIPs"). In contrast to the Griffin U.S. Government Income Fund, the WM
U.S. Government Fund is not permitted to engage in any foreign currency trans-
actions or make loans of portfolio securities. The WM U.S. Government Fund may
only borrow up to 5% of its net assets for temporary purposes, whereas the
Griffin U.S. Government Income Fund may borrow up to 33 1/3% of its net assets
for such purposes.
Although both Funds have the flexibility to invest some or all of their as-
sets in mortgage-backed securities, from time to time the WM U.S. Government
Fund has had greater investments in such securities. As described below under
the caption "Risk Factors--Market Risk," investments in mortgage-backed secu-
rities may expose a fund to greater interest rate risk.
Gary J. Pokrzywinski, Chartered Financial Analyst ("CFA"), Vice President and
Senior Portfolio Manager of WM Advisors, is primarily responsible for the day-
to-day management of the WM U.S. Government Income Fund. He has managed the
Fund since March 1992, and has been employed by WM Advisors since 1992.
Griffin Municipal Bond Fund vs. WM Tax-Exempt Bond Fund
The Griffin Municipal Bond Fund and the WM Tax-Exempt Bond Fund have similar
investment objectives. The Griffin Municipal Bond Fund seeks to provide in-
vestors with a high level of income exempt from federal income taxes, while
preserving capital. It invests primarily in intermediate- to long-term invest-
ment grade municipal securities. The WM Tax-
26
<PAGE>
Exempt Bond Fund seeks to provide a high level of income that is exempt from
federal taxes and to protect investors' capital. The Fund invests primarily in
fixed-income obligations issued by states, counties, cities and other govern-
mental bodies that generate income exempt from federal income tax.
The total return for the Griffin Municipal Bond Fund and the WM Tax-Exempt
Bond Fund is set forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Municipal Bond Fund............. 3.42% N/A N/A 3.78%
WM Tax-Exempt Bond Fund................. 2.98% 4.62% 7.00% 4.06%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not available for the Griffin Municipal Bond Fund, which commenced
operations on 10/19/93. For further information about the WM Tax-Exempt Bond
Fund's performance including about waivers/reimbursements that affected the
Fund's performance, see the WM Prospectus.
Under normal market conditions, each of the Funds invests at least 80% of its
total assets in municipal obligations such as municipal bonds, municipal
notes, inverse floating rate obligations and securities of unaffiliated tax-
exempt mutual funds. Securities that are subject to the federal alternative
minimum tax do not count toward the 80% total for the Griffin Municipal Bond
Fund. Each Fund normally invests at least 65% of its total assets in invest-
ment grade securities, and the WM Tax-Exempt Bond Fund may invest up to 35% of
its total assets in non-investment grade securities, commonly known as "junk
bonds." Each of the Funds may purchase and sell restricted and illiquid secu-
rities as well as futures and options, although the WM Tax-Exempt Bond Fund is
limited to interest rate futures and options. Each Fund may also enter into
repurchase agreements. Each Fund may purchase securities on a when-issued or
delivery-delayed basis, and each may invest in fixed, variable or floating
rate general obligation and revenue bonds. The Griffin Municipal Bond Fund may
invest in municipal lease obligations, reverse repurchase agreements and re-
source recovery bonds. Each Fund may invest any portion of its assets in in-
dustrial revenue bonds ("IRBs") backed by private issuers, and may invest up
to 25% of its total assets in IRBs related to a single industry. Furthermore,
each Fund may invest 25% or more of its total assets in municipal securities
whose revenue sources are from similar types of projects, e.g., education,
housing, or transportation.
The Griffin Municipal Bond Fund may invest in zero-coupon securities, asset-
backed securities, TANs, BANs, and RANs, mortgage-backed securities and
stripped mortgage-backed securities, whereas the WM Tax-Exempt Bond Fund does
not invest in such securities to a significant extent. The Griffin Municipal
Bond Fund expects the dollar-weighted average maturity of its portfolio to be
greater than 10 years.
Although each of the Funds may temporarily invest in taxable short term in-
vestments such as U.S. Government securities, commercial paper, U.S. bank ob-
ligations, and time or demand deposits in U.S. banks, the WM Tax-Exempt Bond
Fund may only invest up to 50% of its total assets for such temporary purpos-
es, while the Griffin Municipal Bond Fund is not subject to such a limitation.
Moreover, for defensive purposes the Griffin Municipal Bond Fund may also in-
vest in taxable municipal obligations, certificates of deposit, collateralized
mortgage obligations and STRIPs, while the WM Tax-Exempt Bond Fund may not.
Each of the Funds may borrow for temporary defensive purposes, but the Griffin
Municipal Bond Fund may borrow up to 33 1/3% of its net assets while the WM
Tax-Exempt Bond Fund may only borrow up to 5% of its net assets.
Brian Placzek, CFA, Vice President and Portfolio Manager of WM Advisors, has
had primary responsibility for the day-to-day management of the WM Tax-Exempt
Bond Fund since 1995 and has been employed by WM Advisors since 1990. The
Trustees of WM Trust I have approved a sub-advisory agreement between WM Advi-
sors and Van Kampen with regard to the WM Tax-Exempt Bond Fund. It is expected
that, assuming shareholder approval of the sub-advisory agreement, David C.
Johnson, Senior Vice President of Van Kampen, will assume primary responsibil-
ity for the day-to-day management of the Fund's portfolio. Mr. Johnson has
been employed by Van Kampen since 1989.
Griffin California Fund vs. WM California Fund
The Griffin California Fund and the WM California Fund have similar invest-
ment objectives. The
27
<PAGE>
Griffin California Fund seeks to provide a high level of income exempt from
federal income taxes and California personal income taxes, while preserving
capital. The WM California Fund seeks to provide as high a level of current
income exempt from federal and California state income tax as is consistent
with prudent investment management and preservation of capital.
The total return for the Griffin California Fund and the WM California Fund
is set forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin California Fund................. 3.20% N/A N/A 3.64%
WM California Fund...................... 4.38% 4.92% 6.87% [ ]%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance infor-
mation is not available for the Griffin California Fund, which commenced op-
erations on 10/19/93. For further information about the WM California Fund's
performance, including information about waivers/reimbursements that af-
fected the Fund's performance, see the WM Prospectus.
Each of the Funds invests primarily in intermediate- to long-term California
municipal securities. Under normal market conditions, the Griffin California
Fund invests at least 80% of its total assets in municipal securities that pay
interest which is exempt from federal income taxes and which is not subject to
the federal alternative minimum tax. Moreover, under normal market conditions
the Griffin California Fund invests at least 65% of its total assets in munic-
ipal securities that pay interest which is exempt from California personal in-
come taxes. The WM California Fund invests at least 80% of its total assets in
California municipal securities, including securities the interest from which
is subject to the federal alternative minimum tax. Each Fund may invest in op-
tions, futures and restricted and illiquid securities. Furthermore, each of
the Funds may purchase securities on a when-issued or delayed-delivery basis,
although the WM California Fund may invest only up to 20% of its total assets
in when-issued securities. Both of the Funds are classified as "non-diversi-
fied" under the Investment Company Act of 1940, and as such each may invest a
larger portion of its total assets in the securities of a small number of is-
suers than a diversified fund.
[The Griffin California Fund may also invest in municipal lease obligations,
resource recovery bonds, zero-coupon and asset-backed securities and tax
revenue or bond anticipation notes.]
The WM California Fund may invest without limitation in unrated securities,
while the Griffin California Fund may not invest in such securities. As a re-
sult, the WM California Fund may be more dependent on the ability of its ad-
viser or sub-adviser to determine the credit quality of its securities.
Each Fund has the ability to invest in securities that would be subject to
federal income tax; however, the Griffin California Fund may do so only for
temporary defensive purposes. For temporary defensive purposes the Griffin
California Fund may invest in cash reserves, U.S. Government securities, col-
lateralized mortgage obligations, certificates of deposit, STRIPs, stripped
mortgage-backed securities, commercial paper, taxable municipal securities,
repurchase agreements, interest rate swaps, interest rate caps and floors and
loans of portfolio securities. For temporary defensive purposes the WM Cali-
fornia Fund may invest without limitation in municipal securities not exempt
from the California personal income tax, short term municipal securities, tax-
able cash equivalents (including short term U.S. Government securities, cer-
tificates of deposit, bankers' acceptances, commercial paper rated Prime-1 by
Moody's or A-1+ or A-1 by S&P, and repurchase agreements) and securities of
money market mutual funds.
Joseph A. Piraro, Vice President of Van Kampen, has had primary responsibil-
ity for the day-to-day management of the WM California Fund since May 1992.
Griffin Bond Fund vs. WM Income Fund
The Griffin Bond Fund and the WM Income Fund have similar investment objec-
tives. The Griffin Bond Fund seeks to provide investors with as high a level
of current income as is consistent with prudent investment management, preser-
vation of capital and liquidity. The WM Income Fund seeks to provide a high
level of current income that is consistent with protection of shareholders'
capital. To accomplish its
28
<PAGE>
objective, the Fund invests in debt issues and obligations that offer high
current yields and that are consistent with a moderate degree of risk.
The total return for the Griffin Bond Fund and the WM Income Fund is set
forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Bond Fund....................... 5.17% N/A N/A 4.52%
WM Income Fund.......................... 6.30% 6.40% 8.04% 5.93%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year data is not avail-
able for the Griffin Bond Fund, which commenced operations on 10/19/93. For
further information about the WM Income Fund's performance, and expense
waivers/reimbursements that affected its performance, see the WM Prospectus.
The Griffin Bond Fund invests in U.S. dollar-denominated debt obligations of
all types issued by U.S. or foreign corporations, banks or other business or-
ganizations, but generally tends to focus on longer-term bonds. Under normal
market conditions, at least 65% of the Fund's total assets will be invested in
bonds, and at least 65% of its total assets will be invested in debt securi-
ties that are rated investment grade by a nationally recognized statistical
rating organization ("NRSRO") or are unrated but determined by its adviser to
be of comparable quality. The debt obligations in which the Fund invests in-
clude bonds, notes, commercial paper, certificates of deposit, convertible
bonds, options and futures, when-issued and delayed-delivery securities, com-
modity-indexed and foreign index-linked securities, zero coupon bonds and
other types of fixed, floating, inverse floating or variable rate obligations.
The Fund may also invest in other mutual funds and in debt obligations issued
by U.S. or foreign governments or government agencies including mortgage-
backed securities, collateralized mortgage obligations, stripped mortgage-
backed securities, reverse repurchase agreements and restricted securities, as
well as money market instruments such as repurchase agreements. The Fund's in-
vestments in foreign securities denominated in U.S. dollars will be limited to
25% of its total assets.
The WM Income Fund invests most of its assets in (1) debt and convertible
debt securities; (2) U.S. Government Securities, including mortgage-backed se-
curities; (3) obligations of U.S. banks that belong to the Federal Reserve
System; (4) preferred stock and convertible preferred stock rated in one of
the four highest ratings of Standard & Poor's ("S&P") or Moody's Investors
Service, Inc. ("Moody's"); (5) the highest grade commercial paper as rated by
S&P or Moody's; and (6) deposits in U.S. banks. The WM Income Fund may also
purchase securities of issuers which deal in real estate or securities which
are secured by interests in real estate, and may purchase and sell interest
rate futures and options.
The Griffin Bond Fund and the WM Income Fund may each invest up to 15% of its
total assets in illiquid securities. Both Funds may purchase securities on a
"when-issued" or "delayed-delivery" basis. However, the WM Income Fund may
only do so with respect to U.S. Government securities or collateralized mort-
gage obligations and only up to 20% of its net assets. Both Funds are also
permitted to borrow money in times of emergency, but the WM Income Fund may
only borrow up to 5% of its net assets, while the Griffin Bond Fund may borrow
up to one-third of its total assets.
Both Funds may also invest in fixed-income securities which are rated below
investment grade (so-called "junk bonds"), and may invest in dollar rolls and
foreign index linked securities. However, the Griffin Bond Fund may only in-
vest 5% of its net assets in junk bonds, while the WM Income Fund may invest
up to 35% of its assets in such securities. To the extent that the WM Income
Fund invests a greater portion of its assets in securities rated BBB and low-
er, the WM Income Fund will be exposed to a greater degree of risk. See "Risk
Factors--Risks of Lower-Rated Securities." Unlike the Griffin Bond Fund, the
WM Income Fund may invest in securities denominated in foreign currencies, and
may engage in foreign currency exchange transactions for hedging purposes. In
addition, while the Griffin Bond Fund may lend up to one-third of its assets,
the WM Income Fund may only lend up to 20% of its assets.
Gary J. Pokrzywinski, CFA, Vice President and Senior Portfolio Manager of WM
Advisors, is primarily responsible for the day-to-day management of the WM In-
come Fund.
Griffin Growth & Income Fund vs. WM Growth & Income Fund
The Griffin Growth & Income Fund and the WM Growth & Income Fund have similar
investment ob-
29
<PAGE>
jectives. The Griffin Growth & Income Fund seeks to provide capital growth and
current income. The WM Growth & Income Fund seeks long-term capital growth,
with current income as a secondary consideration. Both Funds attempt to meet
their investment objectives through investing primarily in common stocks.
The total return for the Griffin Growth & Income Fund and the WM Growth & In-
come Fund is set forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
SINCE
5 YEARS 10 YEARS 10/19/93
1 YEAR ANNUALIZED ANNUALIZED ANNUALIZED
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Griffin Growth & Income Fund........... 10.78% N/A N/A 19.17%
WM Growth & Income Fund................ 14.22% 18.73% 14.05% 19.62%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance data is
not yet available for the Griffin Growth & Income Fund, which commenced op-
erations on 10/19/93. For further information about the WM Growth & Income
Fund's performance, and expense waivers/ reimbursements that affected the
Fund's performance, see the WM Prospectus.
Under normal market conditions, the Griffin Growth & Income Fund invests at
least 65% of its total assets in common stocks. The Fund may also invest up to
25% of its assets in corporate bonds and notes of investment grade quality,
and may purchase asset-backed securities, preferred stocks, convertible secu-
rities (both debt securities and preferred stocks) and U.S. Government securi-
ties. In addition, the Fund may engage in repurchase and reverse repurchase
transactions, may purchase futures contracts and options on futures contracts,
may purchase or write options on securities, and may invest in U.S. dollar-de-
nominated foreign securities, although it does not expect to invest more than
10% of its total assets in such foreign securities. For temporary or defensive
purposes, the Fund may invest without limit in high-quality debt securities or
preferred stocks, or in other securities that its adviser considers consistent
with such defensive strategies.
The WM Growth & Income Fund also invests primarily in common stocks. In addi-
tion, the Fund may invest in fixed income securities of any maturity, includ-
ing mortgage-backed securities. The Fund is also permitted to invest in U.S.
dollar-denominated foreign securities, to purchase commercial mortgage-backed
securities and to invest up to 25% of its assets in real estate investment
trusts ("REITs"). The Fund may also invest in money market instruments for de-
fensive purposes. To limit risk, repurchase agreements maturing in more than
seven days will not exceed 10% of the Fund's total assets.
Both the Griffin Growth & Income Fund and the WM Growth & Income Fund may
purchase securities on a "when-issued" or "delayed-delivery" basis. However,
the WM Growth & Income Fund may only do so with respect to U.S. Government se-
curities or collateralized mortgage obligations and only up to 20% of its net
assets. Both Funds are also permitted to borrow money in times of emergency,
but the WM Growth & Income Fund may only borrow up to 5% of its net assets,
while the Griffin Growth & Income Fund may borrow up to one-third of its total
assets. In addition, both Funds may lend portfolio securities up to one-third
of total assets and may invest up to 15% of their assets in illiquid securi-
ties.
Unlike the WM Growth & Income Fund, at least 90% of the Griffin Growth & In-
come Fund's equity investments will be issued by large companies. Historical-
ly, the WM Growth & Income Fund has had significant investments in large com-
panies, although it has no formal policy to this effect. Unlike the Griffin
Growth & Income Fund, the WM Growth & Income Fund may also invest up to 35% of
its total assets in non-investment grade debt securities.
Philip M. Foreman, CFA, Vice President and Senior Portfolio Manager of WM Ad-
visors, is primarily responsible for the day-to-day management of the WM
Growth & Income Fund.
Griffin Growth Fund vs. WM Growth Fund
The Griffin Growth Fund and the WM Growth Fund have similar investment objec-
tives. The Griffin Growth Fund seeks to provide investors with long-term
growth of capital, while the WM Growth Fund seeks to provide investors with
long-term capital appreciation. Both Funds also seek to meet their investment
objectives through investing in common stock. However, unlike the WM Growth
Fund, the Griffin Growth Fund invests at least 65% of its total assets in the
common stock of mid-cap companies.
30
<PAGE>
The total return for the Griffin Growth Fund and the WM Growth Fund is set
forth in the chart below.
TOTAL RETURN COMPARISON
AS OF 6/30/98*
<TABLE>
<CAPTION>
5 YEARS SINCE
1 YEAR ANNUALIZED 10/19/93
------ ---------- --------
<S> <C> <C> <C>
Griffin Growth Fund.................................. 16.24% N/A 19.86%
WM Growth Fund....................................... 27.96% 18.72% 19.38%
</TABLE>
* Performance is for Class A shares of both Funds. Fund performance data is
after all expenses and sales charges. Five- and ten-year performance data is
not available for the Griffin Growth Fund, which commenced operations on
10/19/93. The WM Growth Fund's total return since 4/5/93, when it commenced
operations is 19.38%. For further information about the WM Growth Fund's
performance and expense waivers/reimbursements that affected the Fund's per-
formance, see the WM Prospectus.
In addition to common stocks, the Griffin Growth Fund may invest in preferred
stocks, convertible securities, futures and options and variable- or floating
rate instruments. The Griffin Growth Fund may also invest in commercial paper,
asset-backed securities, corporate bonds, U.S. government obligations and se-
curities of other investment companies. The Fund may invest up to 25% of its
total assets in U.S. dollar-denominated foreign securities. For temporary or
defensive purposes, the Fund may invest without limit in high-quality debt se-
curities or preferred stocks, or in other securities that its adviser consid-
ers consistent with such defensive strategies.
In addition to common stocks, the WM Growth Fund may invest in debt securi-
ties, bonds, convertible bonds, preferred stock and convertible preferred
stock, including up to 35% of its assets in below investment-grade debt secu-
rities ("junk bonds"). The Fund may also engage in options transactions, and
enter into financial futures contracts and related options for the purpose of
portfolio hedging. In addition, the Fund is allowed to invest up to 25% of its
assets in foreign securities, including up to 5% of its assets in securities
of developing and emerging countries, and may engage in foreign currency ex-
change transactions. Pursuant to an exemptive order of the SEC, the Fund may
transfer daily uninvested cash balances into one or more joint trading ac-
counts.
Both Funds may purchase securities on a "when-issued" or "delayed-delivery"
basis and may invest up to 15% of their respective assets in illiquid securi-
ties. Both Funds may also borrow money in times of emergency, but the WM
Growth Fund may only borrow up to 5% of its net assets, while the Griffin
Growth Fund may borrow up to one-third of its net assets. In addition, each of
the Funds may lend portfolio securities to brokers and other financial organi-
zations. However, the Griffin Growth Fund may lend up to one-third of its to-
tal assets, while the WM Growth Fund may only lend up to 20% of its total as-
sets. Also, each Fund may invest up to 15% of its assets in illiquid securi-
ties.
Warren B. Lammert, Vice President of Janus Capital Corporation, is primarily
responsible for the day-to-day management of the WM Growth Fund.
COMPARISON OF DISTRIBUTION POLICIES AND PURCHASE, EXCHANGE AND REDEMPTION
PROCEDURES
Each Acquired Fund and each Acquiring Fund declares dividends daily and pays
them monthly, except that the Griffin Growth & Income Fund and the WM Growth &
Income Fund declare and pay dividends quarterly, and the Griffin Growth Fund
and the WM Growth Fund declare and pay dividends annually and semiannually,
respectively. Each Acquired Fund and each Acquiring Fund distributes any net
realized capital gains annually. It is expected that, shortly prior to the Ex-
change Date each of the Acquiring and Acquired Funds will declare and distrib-
ute as a special dividend any investment company taxable income (computed
without regard to the deduction for dividends paid) and any net realized capi-
tal gains through the Exchange Date not previously distributed.
The Acquired Funds and the Acquiring Funds have substantially the same proce-
dures for purchasing shares. The Acquired Funds (other than the Griffin Money
Market Funds) offer two classes of shares, Class A and Class B. The Griffin
Money Market and Tax-Free Money Market Funds offer only Class A shares. In ad-
dition to Class A and Class B shares, the Acquiring Funds also offer Class I
shares, which are offered only to certain "funds of funds" managed by WM Advi-
sors, and Class S shares, which are sold exclusively to investors who enter
into separate account management agreements. Class A and Class B shares of the
Acquired Funds may be purchased at their net asset value next determined, plus
applicable sales charges in the case of Class A shares (other than shares of
the Griffin Money Market and Tax-Free Money Market Funds), from Griffin Finan-
cial, the principal underwriter of the Acquired Funds. Class A and Class B
shares of the Acquiring Funds may be purchased at their net asset value next
determined, plus applicable sales charges in the case of Class A shares (other
than shares of the WM Money Market and Tax-Exempt Money Market Funds), from WM
31
<PAGE>
Funds Distributor, Inc., the principal underwriter of the Acquiring Funds. In
addition, shares of the Acquired Funds and the Acquiring Funds may be pur-
chased through other broker-dealers that have dealer agreements with Griffin
Financial or WM Funds Distributor, Inc., as the case may be.
Class B shares of the Acquiring Funds are subject to a CDSC at declining
rates if redeemed within six years of purchase. Merger Shares will be subject
to a CDSC on redemption to the same extent that the Acquired Fund Shares were
so subject. No sales charge will be charged to Acquired Fund shareholders on
the issuance of the Merger Shares, and no CDSC will be charged by the Acquired
Funds.
Shares of each Acquired Fund can be exchanged for shares of the same class of
any other Acquired Fund. Shares of the Acquiring Funds can generally be ex-
changed for shares of the same class of any fund in the WM Group of Funds. For
more details, see the WM Prospectus and SAI.
Redemption procedures for the Acquired Funds and the Acquiring Funds are sub-
stantially similar. Shares of a Fund may be redeemed at their net asset value
next determined after receipt of the redemption request, less any applicable
CDSC, on any day the New York Stock Exchange is open. Shares can be redeemed
by contacting the relevant Fund by mail, by telephone, in person (in the case
of the Acquired Funds) or by wire communication.
See the WM Prospectus for further information regarding the Acquiring Funds'
distribution policies and purchase, exchange and redemption procedures.
- -------------------------------------------------------------------------------
RISK FACTORS
Certain risks associated with an investment in the Acquiring Funds are summa-
rized below. Because each Acquiring Fund and the corresponding Acquired Fund
share certain policies described more fully above under "Overview of Mergers--
Comparison of Investment Objectives, Policies and Restrictions," many of the
risks of an investment in the Acquiring Fund are similar to the risks of an
investment in the corresponding Acquired Fund. A more detailed description of
the risks associated with an investment in the Acquiring Fund may be found in
the WM Prospectus under the caption "The Funds' Investments and Risk Consider-
ations" and in the WM SAI under the caption "Investment Objectives and Poli-
cies."
The values of all securities and other instruments held by the Acquiring
Funds vary from time to time in response to a wide variety of market factors.
Consequently, the net asset value per share of the Acquiring Funds will vary,
and may be less at the time of redemption than it was at the time of invest-
ment.
MARKET RISK. Shareholders of both the Acquired and the Acquiring Funds bear
the interest rate risks of investment in fixed income securities. During peri-
ods of rising interest rates, the value of an Acquiring Fund's holdings of
fixed income securities will generally decline. Even the highest quality fixed
income securities, including U.S. Government securities, are subject to market
risk. Market risk is generally greater, however, for the Funds such as the WM
Tax-Exempt Bond Fund, the WM Income Fund, the WM Growth & Income Fund and the
WM Growth Fund that may invest in lower-rated securities and comparable
unrated securities.
Market risk is also generally greater for debt securities with longer maturi-
ties. This risk is usually compounded for funds such as the WM U.S. Government
Fund, the WM Tax-Exempt Bond Fund, the WM California Fund and the WM Income
Fund that may invest in mortgage-backed securities and 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. Com-
pounded market risk is also likely for debt securities paying no interest,
such as zero coupon, principal-only or interest-only securities.
CREDIT RISK. Each of the Funds may be subject to credit risk--the risk that
the counterparty to any of a Fund's portfolio transactions (including without
limitation repurchase agreements, reverse repurchase agreements, securities
loans and other over-the-counter transactions) may fail to perform its obliga-
tions to the Fund. In the case of debt obligations, credit risk also refers to
the risk that the issuer of the obligation will be unable to make timely pay-
ments of principal and interest. This risk is particularly significant for
Funds that invest in below investment grade securities, commonly known as
"junk bonds," as described below.
32
<PAGE>
LEVERAGE RISK. When a Fund is borrowing money or otherwise leveraging its
portfolio, the value of an investment in that Fund will be more volatile and
all other risks will tend to be compounded. The Funds may take on leveraging
risk by investing collateral from securities loans, by using derivatives and
by borrowing money to repurchase shares or to meet redemption requests. Cer-
tain of the Funds, such as the WM Short-Term Fund, the WM Income Fund, the WM
Growth & Income Fund, and the Griffin Bond Fund may also create leverage by
using reverse repurchase agreements and/or dollar rolls. The Griffin Municipal
Bond Fund and the WM Tax-Exempt Bond Fund may also achieve leverage through
the use of inverse floating rate instruments.
ILLIQUIDITY RISK. The Funds share similar risks of investment in illiquid se-
curities, including higher transaction costs, and the risk of not being able
to close out a position when it would be most advantageous to do so. Each Ac-
quired Fund and each Acquiring Fund may invest up to 15% of its net asset
value in illiquid securities, except for the WM Money Market Fund, the WM Tax-
Exempt Money Market Fund, the Griffin Money Market Fund and the Griffin Tax-
Free Money Market Fund, which are limited to 10% of net assets. Certain secu-
rities, including securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933, as amended, may be less liquid than other portfo-
lio securities, even though such securities are not considered "illiquid" for
purposes of the percentage tests described above. If the markets for such se-
curities become less active, it could be more difficult to value the shares of
a Fund and for the Fund to fulfill shareholder redemption orders on a timely
basis.
RISKS OF LOWER-RATED SECURITIES. Certain of the Acquired Funds and certain of
the Acquiring Funds share similar risks due to investment in lower-rated secu-
rities. Funds that invest in these "junk bonds," such as the WM Tax-Exempt
Bond Fund, the WM Income Fund, the WM Growth & Income Fund and the WM Growth
Fund, are subject to the following risks: (i) limited liquidity and secondary
market support; (ii) substantial market price volatility resulting from
changes in prevailing interest rates; (iii) subordination to the prior claims
of banks and other senior lenders; (iv) the operation of mandatory sinking
fund or call/redemption provisions during periods of declining interest rates
whereby the Fund may reinvest premature redemption proceeds in lower yielding
portfolio securities; (v) the possibility that earnings of the issuer may be
insufficient to meet its debt service; and (vi) the issuer's low creditworthi-
ness and potential for insolvency during periods of rising interest rates and
economic downturn.
RISKS OF FOREIGN INVESTMENT. Certain of the Acquired and Acquiring Funds
share similar risks of investment in foreign securities. Investment by a Fund,
such as the WM Money Market Fund, the WM Growth & Income Fund, the WM Income
Fund and the WM Short Term High Quality Bond Fund, in foreign securities in-
volves the risk of more rapid and extreme changes in value than investment
solely in securities of U.S. companies. This is because the securities markets
of many foreign countries are relatively small, with a limited number of com-
panies representing a small number of industries. Adverse developments in cer-
tain regions, such as Southeast Asia, may adversely affect the markets of
other countries whose economies appear to be unrelated. Additionally, foreign
securities issuers are usually not subject to the same degree of regulation as
U.S. issuers. Reporting, accounting and auditing standards of foreign coun-
tries differ, in some cases significantly, from U.S. standards. Also, nation-
alization, expropriation or confiscatory taxation, currency blockage, politi-
cal changes or diplomatic developments could adversely affect a Fund's invest-
ments in a foreign country. Foreign securities are also subject to the risks
of political, social and economic changes in the relevant country. In the
event of nationalization, expropriation or other confiscation, a Fund could
lose its entire investment. In particular, the WM Income Fund, the WM Short
Term Fund and the WM Growth Fund, unlike their corresponding Acquired Funds,
may invest in securities denominated in foreign currencies, and are therefore
subject to the risk of adverse changes in currency exchange rates.
RISKS OF DERIVATIVE INSTRUMENTS. As noted above, a number of the Acquired and
Acquiring Funds may enter into options and futures contracts, and other deriv-
atives, including over-the-counter securities transactions, for hedging pur-
poses or as a part of their investment strategies. Use of derivative instru-
ments may involve certain costs and risks in addition to those associated with
a direct investment, including the risk that the Fund could not close out a
position when it would be most advantageous to do so due to an illiquid mar-
ket, the risk of an imperfect correlation between the value of the securities
being hedged, if any, and the value of the particular derivative instrument,
the risk of bankruptcy or default of counterparties (particularly in the case
of over-the-counter transactions), and the risk that unexpected
33
<PAGE>
changes in interest rates or other market movements may adversely affect the
value of the Fund's investments in particular derivative instruments.
RISKS OF COMMON STOCKS AND OTHER EQUITY SECURITIES. The common stocks and
other equity securities in which the Griffin and WM Growth and Growth and In-
come funds primarily invest are subject to the risks of broad market declines
as well as more specific risks affecting the particular issuer, such as man-
agement performance, financial leverage, industry problems and reduced demand
for the issuer's goods or services.
GEOGRAPHIC CONCENTRATION. The WM California Fund, like the Griffin California
Fund, is subject to certain additional risks as a result of concentrating its
investments in California municipal securities. In addition to factors affect-
ing the California economy, which will likely have a significant impact on the
Funds, certain constitutional amendments, legislative measures, executive or-
ders, administrative regulations, court decisions and voter initiatives could
have an adverse effect on the values of California municipal securities and,
consequently, the Fund's net asset values.
- -------------------------------------------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
This Prospectus/Proxy Statement is being furnished in connection with a Spe-
cial Meeting of Shareholders of each Acquired Fund to be held on [ ,
1998], or at such later time made necessary by adjournment (the "Meeting"),
and the solicitation of proxies by and on behalf of the shareholders of the
Acquired Funds for use at the Meeting. The Meeting is being held to consider
the proposed Mergers of each Acquired Fund with the corresponding Acquiring
Fund by the transfer of all of the Acquired Fund's assets and liabilities to
the Acquiring Fund (Proposals 1 through 9). This Prospectus/Proxy Statement
and the enclosed form of proxy are being mailed to shareholders on or about
[ , 1998].
The Directors of the Griffin Funds, Inc. know of no matters other than those
set forth herein to be brought before the Meeting. If, however, any other mat-
ters properly come before the Meeting, it is the Directors' intention that
proxies will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
34
<PAGE>
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THE PROPOSALS:
APPROVAL OR DISAPPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
The shareholders of the Griffin Money Market Fund are being asked to approve
or disapprove a Merger between the Griffin Money Market Fund and the WM Money
Market Fund (Proposal 1); the shareholders of the Griffin Tax-Free Money Mar-
ket Fund are being asked to approve or disapprove a Merger between the Griffin
Tax-Free Money Market Fund and the WM Tax-Exempt Money Market Fund (Proposal
2); the shareholders of the Griffin Short-Term Bond Fund are being asked to
approve or disapprove a Merger between the Griffin Short-Term Bond Fund and
the WM Short Term Fund (Proposal 3); the shareholders of the Griffin U.S. Gov-
ernment Income Fund are being asked to approve or disapprove a Merger between
the Griffin U.S. Government Income Fund and the WM U.S. Government Fund (Pro-
posal 4); the shareholders of the Griffin Municipal Bond Fund are being asked
to approve or disapprove a Merger between the Griffin Municipal Bond Fund and
the WM Tax-Exempt Bond Fund (Proposal 5); the shareholders of the Griffin Cal-
ifornia Fund are being asked to approve or disapprove a Merger between the
Griffin California Fund and the WM California Fund (Proposal 6); the share-
holders of the Griffin Bond Fund are being asked to approve or disapprove a
Merger between the Griffin Bond Fund and the WM Income Fund (Proposal 7); the
shareholders of the Griffin Growth & Income Fund are being asked to approve or
disapprove a Merger between the Griffin Growth & Income Fund and the WM Growth
& Income Fund (Proposal 8); and the shareholders of the Griffin Growth Fund
are being asked to approve or disapprove a Merger between the Griffin Growth
Fund and the WM Growth Fund (Proposal 9). Each Merger is proposed to take
place pursuant to an Agreement and Plan of Reorganization between the Acquired
Fund and the Acquiring Fund (the "Agreement"), each of which is in the form
attached to this Prospectus/Proxy Statement as Appendix A.
Each Agreement provides, among other things, for the transfer of all of the
assets of the Acquired Fund to the Acquiring Fund in exchange for (i) the as-
sumption by the Acquiring Fund of all of the liabilities of the Acquired Fund
and (ii) the issuance to the Acquired Fund of the Class A and Class B Merger
Shares, the number of which will be calculated based on the value of the net
assets attributable to the Class A and Class B shares, respectively, of the
Acquired Fund acquired by the Acquiring Fund and the net asset value per Class
A and Class B share of the Acquiring Fund, all as more fully described below
under "Information About the Mergers."
After receipt of the Merger Shares, the Acquired Fund will cause the Class A
Merger Shares to be distributed to its Class A shareholders and the Class B
Merger Shares to be distributed to its Class B shareholders, in complete liq-
uidation of the Acquired Fund. Each shareholder of the Acquired Fund will re-
ceive a number of full and fractional Class A and Class B Merger Shares equal
in value at the date of the exchange to the aggregate value of the sharehold-
er's Class A Acquired Fund shares and Class B Acquired Fund shares, as the
case may be.
[BOARD OF DIRECTOR'S RECOMMENDATIONS. THE BOARD OF DIRECTORS OF THE GRIFFIN
FUNDS, INC. HAS VOTED UNANIMOUSLY TO APPROVE EACH PROPOSED MERGER AND TO REC-
OMMEND THAT SHAREHOLDERS OF EACH ACQUIRED FUND ALSO APPROVE THE MERGER FOR
SUCH FUND.]
REQUIRED SHAREHOLDER VOTE. Approval of each proposed Merger for each Acquired
Fund will require the affirmative vote of a majority of the Class A and Class
B shares of the relevant Acquired Fund, voting collectively, that are present
and entitled to vote, provided a quorum is present. The holders of one-third
of the Class A and Class B shares of each Acquired Fund outstanding at the
close of business on the Record Date present in person or represented by proxy
will constitute a quorum for the Meeting with respect to that Fund.
A shareholder of an Acquired Fund objecting to the proposed Merger is not en-
titled under Maryland law to demand payment for or an appraisal of his or her
Acquired Fund shares if the Merger is consummated over his or her objection.
Shareholders may, however, redeem their shares at any time prior to the Merg-
er, and if the Merger is consummated, shareholders will still be free at any
time to redeem their Merger Shares, in each case for cash at net asset at the
time of such redemption, less any applicable CDSC, or to exchange their Merger
Shares for shares of the same class of certain other funds in the WM Group of
Funds, at net asset value at the time of such exchange.
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BACKGROUND AND REASONS FOR THE PROPOSED MERGERS
[The Board of Directors of the Griffin Funds Inc., including all of its Di-
rectors who are not "interested persons" of The Griffin Funds, Inc., (the "In-
dependent Directors"), has unanimously determined that each Merger would be in
the best interests of the relevant Acquired Fund, and that the interests of
the Acquired Fund's shareholders would not be diluted as a result of effecting
the Merger. At a meeting held on [ , 1998], the Board unanimously ap-
proved each proposed Merger and recommended its approval by shareholders. Be-
fore reaching their conclusions, the Board conducted an extensive "due dili-
gence" review. Among other things, the Directors received reports relating to
WM Advisors' ability to manage the Acquiring Funds, reviewed the ability of WM
Advisors' affiliates to provide or procure administrative and distribution
services, met with portfolio managers at WM Advisors and met with certain
Trustees of the Acquiring Funds. The Board took into account the fact that WM
Advisors will be bearing the expenses associated with the Mergers, including
those described under "Information about the Mergers." The Board also took
into account the depth and strength of staffing of investment professionals
and administrative personnel at WM Advisors, the portfolio managers of the Ac-
quiring Funds and the other service providers to the Acquiring Funds, as well
as Washington Mutual's plans for distribution of the Funds following the Merg-
ers. The Board also took into account that Griffin Advisers planned to reduce
fee waivers and expense reimbursements with respect to the Acquired Funds, ef-
fective April 1, 1999, to the levels indicated under "Overview of Mergers--Op-
erating Expenses," and the related fact that existing fee waivers and expense
reimbursements for the Funds (which had substantially reduced net investment
advisory revenues) were unlikely to be sustainable. The Independent Directors
also took into account the fact that William Hawkins, the sole director of the
Griffin Funds, Inc., who is an "interested person" of the Griffin Funds, Inc.,
had entered into an agreement with Washington Mutual in which he agreed to use
his best efforts to [reach agreement on a merger], and that Washington Mutual
had agreed to pay him a special completion fee upon consummation of the Merg-
ers. By virtue of that agreement, Mr. Hawkins may be deemed to have a personal
interest in the mergers. In addition, the Board took into account the relative
historical investment performance of the Acquiring Funds, on the one hand, and
the Acquired Funds, on the other hand. Furthermore, Directors took into ac-
count the capital loss carry-forwards for each Acquired Fund and each Acquir-
ing Fund, and the unrealized capital appreciation in each Acquired Fund and in
the corresponding Acquiring Fund, in each case as a percentage of the Fund's
total net assets.] Those percentages as of [June 30, 1998] were as follows:
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<TABLE>
<CAPTION>
CAPITAL LOSS UNREALIZED CAPITAL
CARRY-FORWARDS (AS A APPRECIATION (DEPRECIATION)
PERCENTAGE OF TOTAL NET ASSETS) (AS A PERCENTAGE OF TOTAL NET
FUND ON [JUNE 30, 1998] ASSETS) ON [JUNE 30, 1998]
---- ------------------------------- -----------------------------
<S> <C> <C>
Griffin Money Market
Fund................... * *
WM Money Market Fund.... * *
Griffin Tax-Free Money
Market Fund............ * *
WM Tax-Exempt Money
Market Fund............ * *
Griffin Short-Term Bond
Fund................... 0.05% 0.54%
WM Short-Term Fund...... 3.97% 0.38%
Griffin U.S. Government
Income Fund............ 0.30% 1.75%
WM U.S. Government
Fund................... 1.40% 2.66%
Griffin Municipal Bond
Fund................... 0.87% 3.36%
WM Tax-Exempt Bond
Fund................... * 9.08%
Griffin California
Fund................... 0.58% 3.72%
WM California Fund...... * 7.54%
Griffin Bond Fund....... 0.24% 1.03%
WM Income Fund.......... 3.57% 6.89%
Griffin Growth & Income
Fund................... * 12.40%
WM Growth & Income
Fund................... * 21.90%
Griffin Growth Fund..... 0.35% 29.33%
WM Growth Fund.......... * 23.72%
</TABLE>
* Less than $50,000 or less than 0.01% of net assets.
[The principal reasons why the Board of Directors is recommending the Mergers
are as follows:
(i) SUSTAINABLE DECREASES IN OVERALL EXPENSES. The Mergers are expected to
result in aggregate operating expenses that would be lower than those ex-
pected to be borne by most of the Acquired Funds as described more fully in
the Overview under "Operating Expenses." Of course, there can be no assurance
that the Mergers will result in savings in operating expenses to sharehold-
ers.
(ii) APPROPRIATE INVESTMENT OBJECTIVES, DIVERSIFICATION, ETC. The investment
objective, policies, and restrictions of each Acquiring Fund are compatible
with those of the corresponding Acquired Fund, and the Directors believe that
an investment in shares of the Acquiring Fund (whose portfolio will have been
combined with that of the Acquired Fund) will provide shareholders with an
investment opportunity comparable to that currently afforded by the Acquired
Fund, with the potential for reduced investment risk because of the opportu-
nities for additional diversification of portfolio investments through in-
creased Fund assets.
(iii) CONTINUED INVESTMENT IN A MUTUAL FUND WITHOUT RECOGNITION OF GAIN OR
LOSS FOR FEDERAL INCOME TAX PURPOSES. The proposed reorganization will permit
Acquired Fund shareholders to keep their investment in an open-end mutual
fund, without recognition of gain or loss for federal income tax purposes. If
the Acquired Funds were to liquidate and shareholders were to receive the net
asset value of their shares in liquidating distributions, gain or loss would
be recognized for federal income tax purposes. See "Information About the
Mergers--Federal Income Tax Consequences" below.
(iv) STREAMLINING AND UNIFYING FUND COMPLEX. The Mergers will facilitate the
consolidation of investment advisory and management functions within WM Advi-
sors, Inc. and will streamline and unify fund offerings, fund distribution,
fund compliance and recordkeeping activities. Operating the WM Funds sepa-
rately from the Griffin Funds could lead to inefficiencies and inconsisten-
cies in operations and administration. In addition, maintaining two separate
families that include funds with similar investment objectives could lead to
confusion among investors and intermediaries, particularly as WAMU consoli-
dates its distribution channels.
INFORMATION ABOUT THE MERGERS
AGREEMENT AND PLAN OF REORGANIZATION. Each proposed Agreement and Plan of Re-
organization provides that the relevant Acquiring Fund will acquire all of the
assets of the corresponding Acquired Fund in
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exchange for the assumption by the Acquiring Fund for all of the liabilities
of the Acquired Fund and for the issuance of the Class A and Class B Merger
Shares, all as of the Exchange Date (defined in each Agreement to be March 5,
1999 or such other date as may be agreed upon by the Acquiring Fund and the
Acquired Fund). The following discussion of the Agreements is qualified in its
entirety by the full text of each Agreement, the form of which is attached as
Appendix A to this Prospectus/Proxy Statement.
Each Acquired Fund will sell all of its assets to the corresponding Acquiring
Fund, and, in exchange, the Acquiring Fund will assume all of the liabilities
of the Acquired Fund and deliver to the Acquired Fund (i) a number of full and
fractional Class A Merger Shares having an aggregate net asset value equal to
the value of the assets of the Acquired Fund attributable to its Class A
shares, less the value of the liabilities of the Acquired Fund assumed by the
Acquiring Fund attributable to the Class A shares of the Acquired Fund, and
(ii) a number of full and fractional Class B Merger Shares having an aggregate
net asset value equal to the value of assets of the Acquired Fund attributable
to its Class B shares, less the value of the liabilities of the Acquired Fund
assumed by the Acquiring Fund attributable to the Class B shares of the Ac-
quired Fund.
Immediately following the Exchange Date, each Acquired Fund will distribute
pro rata to its shareholders of record as of the close of business on the Ex-
change Date the full and fractional merger Shares received by the Acquired
Fund, with Class A Merger Shares being distributed to holders of Class A
shares of the Acquired Fund and Class B Merger Shares being distributed to
holders of Class B shares of the Acquired Fund. As a result of the proposed
transaction, each holder of Class A and Class B shares of the Acquired Fund
will receive a number of Class A and Class B Merger Shares equal in aggregate
value at the Exchange Date to the value of the Class A and Class B shares of
the Acquired Fund held by the shareholder. This distribution will be accom-
plished by the establishment of accounts on the share records of the corre-
sponding Acquiring Fund in the names of the Acquired Fund shareholders, each
account representing the respective number of full and fractional Class A and
Class B Merger Shares due such shareholder. Because the shares of the Acquir-
ing Funds will not be represented by certificates, certificates for Merger
Shares will not be issued.
The consummation of each Merger is subject to the conditions set forth in the
Agreement, any of which may be waived. The Agreement may be terminated and the
Merger abandoned at any time, before or after approval by the shareholders of
each Acquired Fund, prior to the Exchange Date, by mutual consent of the rele-
vant Funds or, if any condition set forth in the Agreement has not been ful-
filled and has not been waived by the party entitled to its benefits, by such
party.
All legal and accounting fees and expenses, printing other fees and expenses
(other than portfolio transfer taxes (if any), brokerage and other similar ex-
penses, all of which will be borne by the relevant Fund) incurred in connec-
tion with the consummation of the transactions contemplated by the Agreement
will be borne by WM Advisors. Notwithstanding the foregoing, expenses will in
any event be paid by the party directly incurring such expenses if and to the
extent that the payment by any other party of such expenses would result in
the disqualification of the first party as a "regulated investment company"
within the meaning of Section 851 of the Internal Revenue Code of 1986, as
amended (the "Code"). To the extent that an Acquiring Fund disposes of portfo-
lio securities of the Acquired Fund following the relevant Merger, sharehold-
ers of the Acquired Fund will bear their portion of the related brokerage com-
missions. It is currently expected that the WM Growth Fund will dispose of a
substantial portion of the portfolio securities acquired from the Griffin
Growth Fund.
DESCRIPTION OF THE MERGER SHARES. Full and fractional Merger Shares will be
issued to each Acquired Fund's shareholders in accordance with the procedure
under the Agreement as described above. The Merger Shares are Class A and
Class B shares of the Acquiring Fund, which have characteristics substantially
similar to those of the corresponding class of Acquired Fund shares with re-
spect to sales charges, CDSCs, conversion and 12b-1 servicing and distribution
fees. Investors purchasing Class A shares of the Acquiring Funds generally pay
a sales charge of up to 5.75% at the time of purchase, but Acquired Funds
shareholders receiving Class A Merger Shares in the Merger will not pay a
sales charge on such shares. Class A shares of the Acquiring Funds are gener-
ally not subject to redemption fees, except that certain purchases of Class A
shares of the Acquiring Funds which are not subject to a front-end sales load
are subject to a CDSC of up to 1% if redeemed within two years after purchase.
Class A shares of the Acquiring Funds are generally subject to a 12b-1 servic-
ing fee at the annual rate of 0.25% of the net assets
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attributable to the Fund's Class A shares. Class B shares of the Acquiring
Funds are sold without a front end sales charge, but are subject to a CDSC of
up to 5% if redeemed within six years of original purchase. Class B shares of
the Acquiring Funds are also subject to a 12b-1 distribution and servicing
fees at the annual rates of 0.75% and 0.25%, respectively, of the Fund's aver-
age daily net assets attributable to Class B shares. Class B shares of the Ac-
quiring Funds will convert automatically into Class A shares after they have
been held for approximately eight years. For purposes of determining the CDSC
payable on redemption of Class A or Class B Merger Shares received by holders
of Class A or Class B shares of the Acquired Fund such shares will be treated
as having been purchased as of the dates that, and for the price (adjusted to
reflect the Merger) at which, such shareholders originally purchased their
Class A or Class B shares, as the case may be, of the Acquired Fund, and the
CDSC will be applied at the same rate as was in effect for the Acquiring Fund
at the time the shares of the Acquired Fund were originally purchased. For
purposes of determining the conversion date of Class B Merger Shares to Class
A shares, the Merger Shares will be treated as having been purchased as of the
date two years prior to the date that the Acquired Fund shares exchanged for
such Merger Shares were originally purchased (so that, in effect, the conver-
sion feature currently enjoyed by Griffin Fund shareholders will be "grand-
fathered"). See the WM Prospectus for more information about the characteris-
tics of Class A and Class B shares of the Acquiring Funds.
CERTAIN PAYMENTS BY THE DISTRIBUTOR. In connection with the sale of Class B
shares of the Acquired Funds, Griffin Advisers pays commissions to broker-
dealers from its own assets that it expects to recover over time through the
receipt of distribution fees in connection with the Acquired Funds' Class B
shares and the receipt of any CDSCs on Class B shares. The total amount of
such commissions paid by Griffin Advisers with respect to the Acquired Funds
before the consummation of the proposed Mergers will likely exceed the amounts
recovered by Griffin Advisers by that time. Such unrecovered amounts do not
represent a liability of the Acquired Funds and, consequently, the Acquiring
Funds will not assume any such liability in connection with the consummation
of the Mergers. However, to the extent Griffin Advisers has not fully recov-
ered such commissions before the consummation of the proposed Mergers, it is
anticipated that the Trustees of the Acquiring Funds will consider such unre-
covered amounts, among other factors, in determining whether to continue pay-
ments of distribution fees in the future with respect to Class B shares of the
Acquiring Funds.
As of [ , 1998], the expenses incurred by Griffin Advisers in distribut-
ing shares of the Griffin Funds were approximately $000,000 in excess of pay-
ments under the [Griffin Distribution and Servicing Plan] with respect to
Class B shares.
ORGANIZATIONAL DOCUMENTS. Each of the Merger Shares will be fully paid and
nonassessable by the Acquiring Fund when issued, will be transferable without
restriction, and will have no preemptive or conversion rights, except that
Class B Merger Shares convert automatically into Class A shares as described
above. The Amended and Restated Agreement and Declaration of Trust of WM Trust
I (the "Declaration of Trust") and the Master Trust Agreement of WM Trust II
(the "Master Trust Agreement" and together with the Declaration of Trust the
"Trust Agreements") permit each of WM Trust I and WM Trust II to divide its
shares, without shareholder approval, into two or more series of shares repre-
senting separate investment portfolios and to further divide any such series,
without shareholder approval, into two or more classes of shares having such
preferences and special or relative rights and privileges as the Trustees may
determine. Each Acquiring Fund's shares are currently divided into four clas-
ses.
The following is a summary of the major differences between the governing
documents and laws applicable to each of the Acquiring Funds and the Acquired
Fund. The Griffin Funds, Inc. is organized as a Maryland corporation, while WM
Trust I and WM Trust II are organized as Massachusetts business trusts. Except
as otherwise noted below, the provisions of Massachusetts law, the Trust
Agreements and the Bylaws of WM Trust I and WM Trust II are substantially sim-
ilar to those of Maryland law and the Articles of Incorporation (the "Arti-
cles") and Bylaws of The Griffin Funds, Inc. Each of the Acquiring Funds and
the Acquired Fund are subject to the 1940 Act.
MEETINGS OF SHAREHOLDERS. The Bylaws of The Griffin Funds, Inc. enable a spe-
cial meeting of the shareholders to be called (i) by the chairman of the
board, the president in the absence of the chairman or the chief operating of-
ficer in the absence of the chairman and the president, (ii) a majority of the
board, or (iii) shareholders entitled to cast 10% of the votes at such special
meeting. By contrast, the Decla-
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ration of Trust for WM Trust I provides that only the Trustees may call a
meeting of the shareholders, while the WM Trust II Master Trust Agreement
gives the Trustees and shareholders holding at least 10% of the shares then
outstanding the right to call (or cause to be called) a meeting of sharehold-
ers.
QUORUMS. The Articles provide that one-third of the shares entitled to vote
(in person or by proxy) constitutes a quorum at all meetings of the sharehold-
ers of The Griffin Funds, Inc. The Declaration of Trust provides that ten per-
cent of WM Trust I shares entitled to vote constitute a quorum at a sharehold-
ers meeting of WM Trust I, while the Master Trust Agreement provides that a
quorum for WM Trust II is a majority of the shares entitled to vote. Unlike
the Trust Agreements, which provide that a majority of Trustees constitutes a
quorum for a meeting of Trustees, The Griffin Funds, Inc. Bylaws provide that
one-third of the directors (but no fewer than two) constitutes a quorum for a
meeting of directors.
NUMBER OF DIRECTORS. The Griffin Funds, Inc. Bylaws provide that the number
of directors shall be no less than two nor greater than fifteen. The WM Trust
II Master Trust Agreement requires a minimum of two Trustees for WM Trust II,
while the WM Trust I Declaration of Trust specifies no minimum number of
Trustees.
REMOVAL OF TRUSTEES OR DIRECTORS. Pursuant to Maryland law and the Bylaws of
The Griffin Funds, Inc., any director may be removed with or without cause at
any meeting of shareholders at which a quorum is present by the affirmative
vote of a majority of the votes entitled to be cast. The Declaration of Trust
of WM Trust I provides that a majority of the Trustees may remove Trustees.
The Master Trust Agreement for WM Trust II provides that Trustees may be re-
moved with or without cause (i) by written instrument signed by at least two-
thirds the Trustees, (ii) by vote of the shareholders holding not less than
two-thirds of the outstanding shares or (iii) by written declaration signed by
shareholders holding not less than two thirds of the outstanding shares and
filed with WM Trust II's custodian. In addition, the WM Trust II Master Trust
Agreement provides that the Trustees shall promptly call a meeting to vote
upon the removal of any Trustee when requested to do so in writing by share-
holders holding not less than 10% of the shares then outstanding.
VACANCIES. The Bylaws of The Griffin Fund, Inc. state that (i) immediately
after filling a vacancy in the board of directors, at least two-thirds of the
directors then holding office shall have been elected by the shareholders and
(ii) if at any time after the first annual meeting of shareholders a majority
of the directors consist of directors elected by the board, a meeting of the
shareholders shall be called to elect the entire board, and the terms of the
directors then in office shall terminate. While there is no comparable provi-
sions in the Trust Agreements, the Acquiring Funds remain subject to the re-
quirements of the 1940 Act which are identical to the Bylaw provisions de-
scribed above. Subject to the 1940 Act, the Trust Agreements and the Bylaws of
The Griffin Funds, Inc. enable vacancies to be filled by a majority of the re-
maining Trustees or board members respectively.
INDEMNIFICATION. Under Maryland law, a corporation may indemnify any director
against liabilities for acts incurred by reason of service as a director un-
less it is established that (i) the act or omission was material to the matter
giving rise to the proceeding and (a) was committed in bad faith or (b) was
the result of active and deliberate dishonesty, (ii) the director actually re-
ceived an improper personal benefit or (ii) in the case of a criminal proceed-
ing, the director had reasonable cause to believe the act or omission was un-
lawful. In addition, indemnification may not be made (i) in a proceeding by or
in the right of the corporation where the director is found liable to the cor-
poration (a "Corporate liability") or (ii) in a proceeding charging improper
personal benefit where the director is found to be liable because such benefit
was improperly received, whether or not involving action in the director's of-
ficial capacity (a "Personal liability").
Maryland law also provides that indemnification is not payable by a corpora-
tion unless a determination has been made that the director has met the stan-
dard of conduct noted in the foregoing paragraph. Such determination may be
made by (i) a vote of a majority of a quorum of directors consisting of direc-
tors not, at the time, parties to the proceeding, or, if such a quorum cannot
be obtained, then by a majority vote of a committee of the board (designated
by a majority of the board in which directors who are parties may participate)
consisting solely of two or more directors not, at the time, parties to such
proceeding, (ii) special legal counsel selected by the board or a committee as
set forth in (i) above, or if the quorum of the full board cannot be obtained
and the committee cannot be established, by a majority vote of the full board
in which directors who are parties may
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<PAGE>
participate, or (iii) the stockholders. Upon the application of a director, a
court may order indemnification if it determines that (i) a director is enti-
tled to reimbursement because such director has been successful, on the merits
or otherwise, in the defense of a proceeding in which such director has been
determined to have met the applicable standards of conduct or (ii) whether or
not the director has met the applicable standards of conduct, the director is
entitled to indemnification in view of all the relevant circumstances, pro-
vided that the indemnification payment shall be limited to the director's ex-
penses in cases involving Corporate liability or Personal liability.
Similarly, the Trust Agreements provide that the Trustees and officers shall
be indemnified against all liabilities incurred in connection with being or
having been a Trustee or officer except liabilities concerning acts with re-
spect to which it has been determined that such person acted with wilful mis-
feasance, bad faith, gross negligence or reckless disregard of such person's
duties. While the WM Trust II Master Trust Agreement provides that a determi-
nation of indemnification may be made by an independent counsel or a vote of a
majority of a quorum of disinterested trustees, it also enables such decision
to be made by (i) a final decision on the merits by a court or other body that
the indemnified person was not liable or (ii) dismissal of an action for in-
sufficiency of evidence. The WM Trust I Declaration of Trust does not make in-
demnification contingent upon any such determination.
Under Maryland law, indemnification expenses may be paid in advance of the
final disposition if a director provides (a) a written affirmation of his good
faith belief that the standard of conduct necessary for indemnification has
been met and (b) a written undertaking to the repay the amount if it is deter-
mined that the standard of conduct has not been met. This undertaking need not
be secured. The Trust Agreements provide that indemnification expenses may be
paid in advance only if (a) there is an undertaking to repay the advance and
appropriate security for such undertaking is given, (b) the relevant trust is
insured against losses arising from any such advance payments or (c) either a
majority of the disinterested Trustees, or independent legal counsel, in a
written opinion, determines that there is reason to believe that the indemni-
fied persons will be found to be entitled to indemnification.
PERSONAL LIABILITY. Under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held personally liable
for the obligations of the trust. However, the Trust Agreements disclaim
shareholder liability for acts or obligations of the trust and/or the Acquir-
ing Funds and require that notice of such disclaimer be given in each agree-
ment, undertaking, or obligation entered into or executed by the trust, the
Acquiring Funds or the Trustees. The Trust Agreements provide for indemnifica-
tion out of Acquiring Fund property for all loss and expense of any share-
holder held personally liable for the obligations of the Acquiring Fund. Thus,
the risk of a shareholder's incurring financial loss from shareholder liabil-
ity is limited to circumstances in which the Acquiring Fund would be unable to
meet its obligations. The likelihood of such a circumstance is considered re-
mote. Under Maryland law, shareholders have no personal liability for acts or
obligations of the corporation.
TERMINATION. Under Maryland law, a corporation may be dissolved by vote of
the majority of the entire board of the directors and an affirmative vote of
two-thirds of all the votes of stockholders entitled to be cast. The WM Trust
I Declaration of Trust provides that WM Trust I or any series may be termi-
nated by vote of at least 50% of the shares of each series entitled to vote
(voting separately by series) or by the trustees upon written notice to the
shareholders. The WM Trust II Master Trust Agreement provides that WM Trust II
may be terminated only by both a majority vote of the Trustees and vote of a
majority of the outstanding voting securities of the WM Trust II (voting sepa-
rately by fund).
AMENDMENTS. The Trust Agreements and the Bylaws of both WM Trust I and WM
Trust II may only be amended by a majority of the Trustees. Likewise, the Ar-
ticles of The Griffin Funds, Inc. may only be amended by a majority of the di-
rectors, although the Bylaws may be amended by either a majority of the share-
holders or a majority of the board.
FEDERAL INCOME TAX CONSEQUENCES. As a condition to each Acquired Fund's obli-
gation to consummate the Merger, the Acquired Fund will receive an opinion
from Ropes & Gray, counsel to WM Trust I and WM Trust II, to the effect that,
on the basis of the existing provisions of the Code, current administrative
rules and court decisions, for federal income tax purposes: (i) under Section
361 of the Code, no gain or loss will be recognized by the Acquired Fund as a
result of the reorganization; (ii) under Section
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<PAGE>
354 of the Code, no gain or loss will be recognized by shareholders of the Ac-
quired Fund on the distribution of Merger Shares to them in exchange for their
shares of the Acquired Fund; (iii) under Section 358 of the Code, the tax ba-
sis of the Merger Shares that the Acquired Fund's shareholders receive in
place of their Acquired Fund shares will be the same as the basis of the Ac-
quired Fund shares; (iv) under Section 1223(1) of the Code, a shareholder's
holding period for the Merger Shares received pursuant to the Agreement will
be determined by including the holding period for the Acquired Fund shares ex-
changed for the Merger Shares, provided that the shareholder held the Acquired
Fund shares as a capital asset; (v) under Section 1032 of the Code, no gain or
loss will be recognized by the Acquiring Fund as a result of the reorganiza-
tion; (vi) under Section 362(b) of the Code, the Acquiring Fund's tax basis in
the assets that the Acquiring Fund receives from the Acquired Fund will be the
same as the Acquired Fund's basis in such assets; and (vii) under Section
1223(2) of the Code, the Acquiring Fund's holding period in such assets will
include the Acquired Fund's holding period in such assets. The opinion will be
based on certain factual statements made by representatives of The Griffin
Funds, Inc., WM Trust I and WM Trust II, and will also be based on customary
assumptions and will include, in the case of the Merger relating to the Grif-
fin Growth Fund, qualifications noting and distinguishing adverse authority.
Prior to the Exchange Date, each Acquired Fund [and each Acquiring Fund] will
declare a distribution to shareholders which, together with all previous dis-
tributions, will have the effect of distributing to shareholders of all of its
investment company taxable income (computed without regard to the deduction
for dividends paid) and net realized capital gains, if any, through the Ex-
change Date.
CAPITALIZATION. The following tables show the capitalization of each Acquir-
ing Fund and each Acquired Fund as of [June 30, 1998] and of each Acquiring
Fund on a pro forma basis as of that date, giving effect to the proposed ac-
quisition by the Acquiring Fund of the assets and liabilities of the Acquired
Fund at net asset value:
42
<PAGE>
CAPITALIZATION TABLES
[JUNE 30, 1998]
(UNAUDITED)
<TABLE>
<CAPTION>
GRIFFIN WM
MONEY MARKET MONEY MARKET PRO FORMA
FUND FUND COMBINED
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A.................................... $230,835 $365,725 $596,560
Class B.................................... 0 3,119 3,119
Class I.................................... 0 83,296 83,296
Class S.................................... 0 6,550 6,550
- --------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A.................................... 230,835 365,725 596,560
Class B.................................... 0 3,119 3,119
Class I.................................... 0 83,296 83,296
Class S.................................... 0 6,550 6,550
- --------------------------------------------------------------------------------
Net asset value per share
Class A.................................... $ 1.00 $ 1.00 $ 1.00
Class B.................................... 0.00 1.00 1.00
Class I.................................... 0.00 1.00 1.00
Class S.................................... 0.00 1.00 1.00
- --------------------------------------------------------------------------------
<CAPTION>
GRIFFIN WM
TAX-FREE TAX-EXEMPT
MONEY MARKET MONEY MARKET PRO FORMA
FUND FUND COMBINED
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A.................................... $ 30,994 $ 26,369 $ 57,363
Class B.................................... 0 12 12
Class I.................................... 0 0 0
Class S.................................... 0 0 0
- --------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A.................................... 30,996 26,369 57,363
Class B.................................... 0 12 12
Class I.................................... 0 0 0
Class S.................................... 0 0 0
- --------------------------------------------------------------------------------
Net asset value per share
Class A.................................... $ 1.00 $ 1.00 $ 1.00
Class B.................................... 0.00 1.00 1.00
Class I.................................... 0.00 0.00 0.00
Class S.................................... 0.00 0.00 0.00
- --------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
GRIFFIN WM
SHORT-TERM SHORT-TERM PRO FORMA
BOND FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $94,955 $35,511 $130,506
Class B............................. 146 3,459 3,605
Class I............................. 0 3,103 3,103
Class S............................. 0 850 850
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 9,370 15,301 56,230
Class B............................. 14 1,487 1,550
Class I............................. 0 1,336 1,336
Class S............................. 0 366 366
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $10.13 $2.32 $2.32
Class B............................. 10.13 2.32 2.32
Class I............................. 0.00 2.32 2.32
Class S............................. 0.00 2.32 2.32
- -------------------------------------------------------------------------------
<CAPTION>
GRIFFIN WM
U.S. GOVERNMENT U.S. GOVERNMENT PRO FORMA
INCOME FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $109,517 $281,115 $390,632
Class B............................. 4,250 22,057 26,307
Class I............................. 0 56,446 56,446
Class S............................. 0 6,546 6,546
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 11,645 25,767 35,805
Class B............................. 452 2,022 2,411
Class I............................. 0 5,169 5,169
Class S............................. 0 599 599
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $9.40 $10.91 $10.91
Class B............................. 9.41 10.91 10.91
Class I............................. 0.00 10.92 10.92
Class S............................. 0.00 10.92 10.92
- -------------------------------------------------------------------------------
<CAPTION>
GRIFFIN WM
MUNICIPAL BOND TAX-EXEMPT BOND PRO FORMA
FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $19,994 $308,962 $328,956
Class B............................. 545 15,159 15,704
Class I............................. 0 1 1
Class S............................. 0 1 1
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 2,117 38,428 40,915
Class B............................. 58 1,885 1,953
Class I............................. 0 0 0
Class S............................. 0 0 0
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $9.45 $8.04 $8.04
Class B............................. 9.45 8.04 8.04
Class I............................. 0.00 8.04 8.04
Class S............................. 0.00 8.04 8.04
- -------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
GRIFFIN WM
CALIFORNIA CALIFORNIA PRO FORMA
FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $ 38,503 $289,655 $328,158
Class B............................. 7,092 34,537 41,629
Class I............................. 0 1 1
Class S............................. 0 8 8
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 4,593 25,624 29,022
Class B............................. 846 3,048 3,674
Class I............................. 0 0 0
Class S............................. 0 1 1
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 8.38 $ 11.33 $ 11.33
Class B............................. 8.39 11.33 11.33
Class I............................. 0.00 11.33 11.33
Class S............................. 0.00 11.33 11.33
- -------------------------------------------------------------------------------
<CAPTION>
GRIFFIN WM PRO FORMA
BOND FUND INCOME FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $ 96,152 $215,707 $311,859
Class B............................. 626 31,928 32,554
Class I............................. 0 5,856 5,856
Class S............................. 0 1,740 1,740
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 10,506 22,493 32,519
Class B............................. 68 3,326 3,391
Class I............................. 0 611 611
Class S............................. 0 181 181
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 9.15 $ 9.59 $ 9.59
Class B............................. 9.15 9.60 9.60
Class I............................. 0.00 9.59 9.59
Class S............................. 0.00 9.60 9.60
- -------------------------------------------------------------------------------
<CAPTION>
GRIFFIN WM
GROWTH & INCOME GROWTH & INCOME PRO FORMA
FUND FUND COMBINED
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A............................. $311,794 $504,239 $816,033
Class B............................. 53,736 122,422 176,158
Class I............................. 0 195,555 195,555
Class S............................. 0 14,667 14,667
- -------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A............................. 15,905 23,431 37,920
Class B............................. 2,749 5,739 8,259
Class I............................. 0 9,070 9,070
Class S............................. 0 687 687
- -------------------------------------------------------------------------------
Net asset value per share
Class A............................. $ 19.60 $ 21.52 $ 21.52
Class B............................. 19.55 21.33 21.33
Class I............................. 0.00 21.56 21.56
Class S............................. 0.00 21.35 21.35
- -------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
GRIFFIN WM PRO FORMA
GROWTH FUND GROWTH FUND COMBINED
----------- ----------- ---------
<S> <C> <C> <C>
Net assets (000's omitted)
Class A...................................... $90,836 $112,153 $202,989
Class B...................................... 6,590 38,390 44,980
Class I...................................... 0 115,729 115,729
Class S...................................... 0 13,283 13,283
- --------------------------------------------------------------------------------
Shares outstanding (000's omitted)
Class A...................................... 5,001 6,076 10,997
Class B...................................... 368 2,154 2,524
Class I...................................... 0 6,234 6,234
Class S...................................... 0 745 745
- --------------------------------------------------------------------------------
Net asset value per share
Class A...................................... $ 18.16 $ 18.46 $ 18.46
Class B...................................... 17.90 17.82 17.82
Class I...................................... 0.00 18.56 18.56
Class S...................................... 0.00 17.83 17.83
- --------------------------------------------------------------------------------
</TABLE>
Pro forma financial statements of the Acquiring Funds as of and for the fis-
cal years ended [December 31, 1997], [October 31, 1997], and [June 30, 1998],
as applicable, and as of and for the six months ended [June 30, 1998] and
[April 30,1998] are included in the Merger SAI. Because each Agreement pro-
vides that the Acquiring Fund will be the surviving Fund following the Merger
and because the Acquiring Fund's investment objective and policies will remain
unchanged, the pro forma financial statements reflect the transfer of the as-
sets and liabilities of the Acquired Fund to the Acquiring Fund as contem-
plated by the Agreement.
- -------------------------------------------------------------------------------
INFORMATION ABOUT THE ACQUIRED FUNDS
Other information regarding the Acquired Funds, including information with
respect to their investment objectives, policies and restrictions and finan-
cial history may be found in the Merger SAI, the Griffin Prospectus, the Grif-
fin SAI and the Griffin Annual Report, which are available upon request by
calling 1-800-676-4450.
Other information filed by the Griffin Funds with respect to the Acquired
Funds can be inspected and copied at the Public Reference Facilities main-
tained by the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York
10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Cop-
ies of such material can also be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
- -------------------------------------------------------------------------------
INFORMATION ABOUT THE ACQUIRING FUNDS
Other information relating to the Acquiring Funds, including information in
respect of their investment objectives, policies and restrictions and finan-
cial history may be found in the WM Prospectus, which accompanies this
Prospectus/Proxy Statement, and in the Merger SAI, the WM SAI, the WM Annual
Reports and the WM Semi-Annual Reports, which are available upon request by
calling 1-800-222-5852. To the extent that any information in respect of the
Acquiring Funds found in any such document is inconsistent with the informa-
tion contained in this Prospectus/Proxy Statement, this Prospectus/Proxy
Statement should be deemed to supersede such other document. Certain informa-
tion and commentary
46
<PAGE>
from the WM Annual Reports relating to the Acquiring Funds' recent investment
performance is set forth in Appendix B to this Prospectus/Proxy Statement.
Other information filed by the Acquiring Funds can be inspected and copied at
the Public Reference Facilities maintained by the Securities and Exchange Com-
mission at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Cen-
ter, Suite 1300, New York, New York 10048; and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be obtained
from the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549, at pre-
scribed rates.
- -------------------------------------------------------------------------------
VOTING INFORMATION
RECORD DATE, QUORUM AND METHOD OF TABULATION. Shareholders of record of each
Acquired Fund at the close of business on [ , 1998] (the "Record Date")
will be entitled to notice of and to vote at the Meeting or any adjournment
thereof. The holders of one-third of the outstanding shares of each Acquired
Fund outstanding at the close of business on the Record Date present in person
or represented by proxy will constitute a quorum for the Meeting with respect
to that Fund. Shareholders are entitled to one vote for each share held, with
fractional shares voting proportionally. Class A and Class B shareholders of
each Acquired Fund vote together as a single class in connection with the ap-
proval or disapproval of the Mergers. Shareholders of each Acquired Fund will
vote only on the approval or disapproval of that Fund's Merger.
Votes cast by proxy or in person at the Meeting will be counted by persons
appointed by The Griffin Funds, Inc. as tellers for the Meeting. The tellers
will count the total number of votes cast "for" approval of the Proposal for
purposes of determining whether sufficient affirmative votes have been cast.
The tellers will count shares represented by proxies that reflect abstentions
and "broker non-votes" (i.e., shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or the per-
sons entitled to vote and (ii) the broker or nominee does not have the discre-
tionary voting power on a particular matter) as shares that are present and
entitled to vote on the matter for purposes of determining the presence of a
quorum. So long as a quorum is present, abstentions and broker non-votes have
the effect of negative votes on the Proposals relating to the Mergers.
SHARES OUTSTANDING AND BENEFICIAL OWNERSHIP. As of the Record Date, as shown
on the books of the Acquired Funds, there were issued and outstanding the fol-
lowing number of shares of beneficial interest of each class of each Acquired
Fund:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------- -------------
<S> <C> <C>
Griffin Money Market Fund.......................... 00,000,000.000 0,000,000.000
Griffin Tax-Free Money Market Fund................. 00,000,000.000 0,000,000.000
Griffin Short-Term Bond Fund....................... 00,000,000.000 0,000,000.000
Griffin U.S. Government Income Fund................ 00,000,000.000 0,000,000.000
Griffin Municipal Bond Fund........................ 00,000,000.000 0,000,000.000
Griffin California Tax-Free Fund................... 00,000,000.000 000,000.000
Griffin Bond Fund.................................. 00,000,000.000 000,000.000
Griffin Growth & Income Fund....................... 00,000,000.000 000,000.000
Griffin Growth Fund................................ 00,000,000.000 000,000.000
</TABLE>
47
<PAGE>
As of the Record Date, the officers and Directors of The Griffin Funds, Inc.
and the officers and Trustees of WM Trust I and WM Trust II as a group benefi-
cially owned less than 1% of the outstanding shares of each class of each Ac-
quired Fund. As of [ , 1998] in the case of the Acquired Funds and [Octo-
ber 1, 1998] in the case of the Acquiring Funds, to the best of the knowledge
of The Griffin Funds, Inc., WM Trust I and WM Trust II, the following persons
owned of record or beneficially 5% or more of the outstanding shares of the
Acquired Funds and the Acquiring Funds:
WM MONEY MARKET FUND CLASS A: BHC Securities, Omnibus Account, Attn: Cash
Sweeps Dept., 2005 Market St., 12th floor, Philadelphia, PA 19103-7042, 25.68%
Northwestern Trust & Investors, Advisory company, 1201 3rd Ave., Suite 2010,
Seattle, WA 98101-3026, 20.12%
WM MONEY MARKET FUND CLASS I: SAM Balanced Portfolio, c/o WM Advisors, 5200
E. 2nd St., 2nd floor, Long Beach, CA 90803, 37.28%
SAM Conservative Portfolio, c/o. WM Advisors, 5200 E. 2nd St., 2nd floor,
Long Beach, CA 90803, 34.98%
WM Funds Distributor, Inc., 601 W. Main Ave., Suite 300, Spokane, WA 99201,
6.37%
WM Advisors, Inc., 601 W. Main Ave., Suite 300, Spokane, WA 99201, 6.06%
SAM Flexible Income Portfolio, c/o WM Advisors, 5200 E. 2nd St., 2nd floor,
Long Beach, CA 90803, 5.79%
WM TAX-EXEMPT MONEY MARKET FUND CLASS A: BHC Securities, Omnibus Account,
Attn: Cash Sweeps Dept., 2005 Market St., 12th floor, Philadelphia, PA 19103-
7042, 13.49%
WM TAX-EXEMPT MONEY MARKET FUND CLASS B: Southwest Securities, Inc., FBO Da-
vid C. Gobin & Bonnie Gobin JTWROS, Acct. 35454616, P.O. Box 509002, Dallas,
TX 75250, 4.71%
Genevieve Odegard, 5702 N. 33rd St., #13D, Tacoma, WA 98407-2513, 5.07%
WM SHORT TERM BOND FUND CLASS B: KY Cabinet for Human Resources, TTEE FBO The
Marian K. Burns Irrevocable Charitable Remainder Trust, 275 E. Main St., 6th
Floor West, Frankfort, KY 40621, 27.58%
Harold P. Jewell and Oveta B. Jewell JTWROS, 1001 Urell Place NE, Washington,
D.C. 20017-2140, 11.97%
Carole Hurst & Judith Chinello & Stan R. Mandell Trust, The Frederick S. To-
bias Non-Marital Trust U/A DTD 11/04/81, 411 N. Central Ave., Ste. #200, Glen-
dale, CA 91203-2020, 10.86%
WM SHORT TERM BOND FUND CLASS I: SAM Income Portfolio, c/o WM Advisors, 5200
E. 2nd St., 2nd floor, Long Beach, CA 90803, 100.00%
WM INCOME FUND CLASS A: Northwestern Trust & Investors, Advisory Company,
1201 3rd Ave., Suite 2010, Seattle, WA 98101-3026, 8.12%
WM INCOME FUND CLASS I: SAM Income Portfolio, c/o WM Advisors, 5200 E. 2nd,
2nd floor, Long Beach, CA 90803, 59.87%
WM INCOME FUND CLASS S: KY Cabinet for Human Resources, TTEE FBO The Marian
K. Burns Irrevocable Charitable Remainder Trust, 275 E. Main St., 6th Floor
West, Frankfort, KY 40621, 9.41%
WM CALIFORNIA FUND CLASS I: WM Shareholder Services, Inc., 601 W. Main, Suite
300, Spokane, WA 99201, 100.00%
WM CALIFORNIA FUND CLASS S: Josefina F. Parungao and Reynaldo Fernando,
JTWROS, 5480 Avenida El Cid, Yorba Linda, CA 92686, 74.29%
WM Funds Administration, 601 W. Main, Suite 300, Spokane, WA 99201, 12.96%
WM Shareholder Services, Inc., 601 W. Main, Suite 300, Spokane, WA 99201,
12.75%
WM GROWTH & INCOME FUND CLASS A: Northwestern Trust & Investors, Advisory
Company, 1201 3rd Ave., Suite 2010, Seattle, WA 98101-3026, 26.93%
WM GROWTH & INCOME FUND CLASS I: SAM Conservative Growth Portfolio, c/o WM
Advisors, 5200 E. 2nd, 2nd floor, Long Beach, CA 90803, 49.55%
SAM Balanced Portfolio, c/o WM Advisors, 5200 E. 2nd, 2nd floor, Long Beach,
CA 90803, 33.04%
SAM Strategic Growth Portfolio, c/o WM Advisors, 5200 E. 2nd, 2nd floor, Long
Beach, CA 90803, 15.40%
SAM Flexible Income Portfolio, c/o WM Advisors, 5200 E. 2nd, 2nd floor, Long
Beach, CA 90803. 40.13%
48
<PAGE>
WM GROWTH FUND CLASS I: SAM Conservative Growth Portfolio, c/o WM Advisors,
5200 E. 2nd St., 2nd floor, Long Beach, CA 90803, 53.35%
SAM Balanced Portfolio, c/o WM Advisors, 5200 E. 2nd St., 2nd floor, Long
Beach, CA 90803, 25.29%
SAM Strategic Growth Portfolio, c/o WM Advisors, 5200 E. 2nd Str., 2nd floor,
Long Beach, CA 90803, 20.59%
WM TAX-EXEMPT BOND FUND CLASS I: WM Shareholder Services, 601 W. Main Ave.,
Suite 300, Spokane, WA 99201, 100.00%
WM TAX-EXEMPT BOND FUND CLASS S: WM Funds Administration, 601 W. Main, Suite
300, Spokane, WA 99201, 50.52%
WM Shareholder Services, Inc., 601 W. Main, Suite 300, Spokane, WA 99201,
49.48%
Eliana J. Kross, 5221 Cribari Dale, San Jose, CA 95135-1315, 5.37%
WM U.S. GOVERNMENT FUND CLASS I: SAM Balanced Portfolio, c/o WM Advisors,
5200 E. 2nd St., 2nd floor, Long Beach, CA 90803, 79.30%
SAM Flexible Income Portfolio, c/o WM Advisors, 5200 E. 2nd St., 2nd floor,
Long Beach, CA 90803, 11.72%
SAM Income Portfolio, c/o WM Advisors, 5200 2nd St., 2nd floor, Long Beach,
CA 90803, 8.98%. A number of shareholders of record of the Acquired Funds own
more than 5%, and in some cases up to [42%], of the outstanding Class A and/or
Class B shares of the Acquired Funds, as follows:
[INSERT OWNERSHIP FOR GRIFFIN]
SOLICITATION OF PROXIES. Solicitation of proxies by personal interview, mail,
and facsimile, may be made by officers and Directors of The Griffin Funds,
Inc. and the officers and Trustees of the Trusts and employees of Griffin Ad-
visers, WM Advisors and their affiliates. In addition, the firm of [D.F. King
& Co., Inc. ("D.F. King")] has been retained to assist in the solicitation of
proxies. The costs for solicitation of proxies, like the other costs associ-
ated with the Merger of the Griffin/WM Funds, will be borne by WM Advisors.
See "Information About the Mergers."
REVOCATION OF PROXIES. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary of The Griffin Funds, Inc. [at the
principal office of the Griffin Funds, Inc. at 5000 Rivergrade Road,
Irwindale, CA 91706)] or in person at the Meeting, by executing a superseding
proxy, or by submitting a notice of revocation to the Secretary of The Griffin
Funds, Inc. All properly executed proxies received in time for the Meeting
will be voted as specified in the proxy, or, if no specification is made FOR
the proposal (set forth in Proposals 1-9 of the Notice of Meeting) to imple-
ment the Merger with respect to the relevant Acquired Fund.
SHAREHOLDER PROPOSALS AT FUTURE MEETINGS OF SHAREHOLDERS. The Griffin Funds'
Articles of Incorporation do not provide for annual meetings of shareholders,
and the Griffin Funds do not currently intend to hold such a meeting for
shareholders of the Acquired Funds in 1998. Shareholder proposals for inclu-
sion in a proxy statement for any subsequent meeting of the Acquired Funds'
shareholders must be received by The Griffin Funds, Inc. a reasonable period
of time prior to any such meeting. If the Mergers are consummated, the Ac-
quired Funds' existence will terminate in [March, 1999] or shortly thereafter,
after which there would be no meetings of the shareholders of the Acquired
Funds.
ADJOURNMENT. If sufficient votes in favor of any proposal are not received by
the time scheduled for the Meeting, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any adjournment will require the affirmative vote of a plurality of
the votes cast on the question in person or by proxy at the session of the
Meeting to be adjourned. If the Meeting is adjourned with respect to one or
more Proposals, any other Proposal may still be acted upon by the sharehold-
ers. The persons named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of the Proposal. They will
vote against any such adjournment those proxies required to be voted against
the Proposal.
[ , 1998]
49
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
, 1998 by and between The Griffin Funds, Inc, a Maryland corporation, on
behalf of its U.S. Government Income Fund series (the "Acquired Fund") and WM
Trust I, a Massachusetts business trust (the "WM Trust"), on behalf of its
U.S. Government Securities Fund series (the "Acquiring Fund").
PLAN OF REORGANIZATION
(a) On the Exchange Date (as defined in Section 6), the Acquired Fund will
sell, assign, convey, transfer and deliver to the Acquiring Fund all of its
properties and assets. In consideration therefor, the Acquiring Fund shall, on
the Exchange Date, assume all of the liabilities of the Acquired Fund existing
at the Valuation Time (as defined in Section 3(c)) and deliver to the Acquired
Fund (i) a number of full and fractional Class A shares of beneficial interest
of the Acquiring Fund (the "Class A Merger Shares") having an aggregate net
asset value equal to the value of the assets of the Acquired Fund attributable
to Class A shares of the Acquired Fund transferred to the Acquiring Fund on
such date less the value of the liabilities of the Acquired Fund attributable
to Class A shares of the Acquired Fund assumed by the Acquiring Fund on that
date and (ii) a number of full and fractional Class B shares of beneficial in-
terest of the Acquiring Fund (the "Class B Merger Shares") having an aggregate
net asset value equal to the value of the assets of the Acquired Fund attrib-
utable to Class B shares of the Acquired Fund transferred to the Acquiring
Fund on such date less the value of the liabilities of the Acquired Fund at-
tributable to Class B shares of the Acquired Fund assumed by the Acquiring
Fund on that date. (The Class A Merger Shares and the Class B Merger Shares
shall be referred to collectively as the "Merger Shares.") It is intended that
the reorganization described in this Agreement shall be a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of this
Agreement, the Acquired Fund shall distribute in complete liquidation to its
Class A and Class B shareholders of record as of the Exchange Date the Class A
and Class B Merger Shares of the Acquiring Fund, each such shareholder being
entitled to receive that proportion of such Class A and Class B Merger Shares
which the number of Class A and Class B shares of beneficial interest of the
Acquired Fund held by such shareholder bears to the number of Class A and
Class B shares of the Acquired Fund outstanding on such date. Certificates
representing the Merger Shares will not be issued. All issued and outstanding
shares of the Acquired Fund will simultaneously be canceled on the books of
the Acquired Fund.
(c) As promptly as practicable after the liquidation of the Acquired Fund as
aforesaid, the Acquired Fund shall be dissolved pursuant to the provision of
the Articles of Incorporation of The Griffin Funds, Inc. and applicable law,
and its legal existence terminated. Any reporting responsibility of the Ac-
quired Fund is and shall remain the responsibility of the Acquired Fund up to
and including the Exchange Date and, if applicable, such later date on which
the Acquired Fund is liquidated.
AGREEMENT
The Acquiring Fund and the Acquired Fund agree as follows:
1. Representations, Warranties and Agreements of the Acquiring Fund. The Ac-
quiring Fund represents and warrants to and agrees with the Acquired Fund
that:
a. The Acquiring Fund is a series of shares of the WM Trust, a Massachusetts
business trust duly established and validly existing under the laws of The
Commonwealth of Massachusetts, and has power to own all of its properties and
assets and to carry out its obligations under this Agreement. Each of the WM
Trust and the Acquiring Fund is qualified as a foreign association in every
jurisdiction where required, except to the extent that failure to so qualify
would not have a material adverse effect on the WM Trust. Each of the WM
Trust and the Acquiring Fund has all necessary federal, state and local au-
thorizations to carry on its business as now being conducted and to carry out
this Agreement.
b. The WM Trust is registered under the Investment Company Act of 1940, as
amended (the
A-1
<PAGE>
"1940 Act"), as an open-end management investment company, and such registra-
tion has not been revoked or rescinded and is in full force and effect.
c. The audited statement of assets and liabilities, statements of opera-
tions, statements of changes in net assets and a schedule of investments (in-
dicating their market values) of the Acquiring Fund as of and for the year
ended October 31, 1998 have been or will be furnished to the Acquired Fund.
Such statement of assets and liabilities and schedules fairly present the fi-
nancial positions of the Acquiring Fund as of the dates indicated therein and
said statements of operations and statements of changes in net assets fairly
reflect the results of its operations and changes in net assets for the peri-
ods covered thereby in conformity with generally accepted accounting princi-
ples.
d. The prospectus and statement of additional information of the Acquiring
Fund, each dated November 1, 1998 (collectively, the "WM Prospectus"), previ-
ously furnished to the Acquired Fund, did not as of such date and will not up
to and including the Exchange Date, with respect to the Acquiring Fund, con-
tain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
e. There are no material legal, administrative or other proceedings pending
or, to the knowledge of the WM Trust or the Acquiring Fund, threatened
against the WM Trust or the Acquiring Fund, which assert liability on the
part of the WM Trust or the Acquiring Fund. The Acquiring Fund knows of no
facts which might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or judg-
ment of any court or governmental body which materially and adversely affects
its business or its ability to consummate the transaction herein contemplat-
ed.
f. The Acquiring Fund has no known liabilities of a material nature, contin-
gent or otherwise, other than those shown belonging to it on its statement of
assets and liabilities as of October 31, 1998 and those incurred in the ordi-
nary course of its business as an investment company since October 31, 1998.
Prior to the Exchange Date, the Acquiring Fund will endeavor to quantify and
to reflect on its balance sheet all of its material known liabilities and
will advise the Acquired Fund of all material liabilities, contingent or oth-
erwise, incurred by it subsequent to October 31, 1998, whether or not in-
curred in the ordinary course of business.
g. As of the Exchange Date, the Acquiring Fund will have filed all federal
and other tax returns and reports which, to the knowledge of the WM Trust's
officers, are required to be filed on or before such date by the Acquiring
Fund and will have paid or will pay all federal and other taxes shown to be
due on said returns or on any assessments received by the Acquiring Fund. All
tax liabilities of the Acquiring Fund have been adequately provided for on
its books, and no tax deficiency or liability of the Acquiring Fund has been
asserted, and no question with respect thereto has been raised or is under
audit, by the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid.
h. No consent, approval, authorization or order of any court or governmental
authority is required for the consummation by the Acquiring Fund of the
transactions contemplated by this Agreement, except such as may be required
under the Securities Act of 1933, as amended (the "1933 Act"), the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act and state se-
curities or blue sky laws (which term as used herein shall include the laws
of the District of Columbia and of Puerto Rico).
i. The registration statement (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") by the WM Trust on Form
N-14 on behalf of the Acquiring Fund and relating to the Merger Shares issua-
ble hereunder and the proxy statement of the Acquired Fund relating to the
meeting of the Acquired Fund shareholders referred to in Section 7(a) herein
(together with the documents incorporated therein by reference, the "Acquired
Fund Proxy Statement"), on the effective date of the Registration Statement,
(i) will comply in all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the rules and regulations thereunder and
(ii) will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time of the shareholders meet-
ing referred to in Section 7(a) and on the Exchange Date, the Acquired Fund
Proxy Statement will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
A-2
<PAGE>
make the statements therein not misleading; provided, however, that none of
the representations and warranties in this subsection shall apply to state-
ments in or omissions from the Registration Statement or the Acquired Fund
Proxy Statement made in reliance upon and in conformity with information fur-
nished in writing by the Acquired Fund to the Acquiring Fund or the WM Trust
specifically for use in the Registration Statement or the Acquired Fund Proxy
Statement.
j. There are no material contracts outstanding to which the Acquiring Fund
is a party, other than as are or will be disclosed in the WM Prospectus, the
Registration Statement or the Acquired Fund Proxy Statement.
k. All of the issued and outstanding shares of beneficial interest of the
Acquiring Fund have been offered for sale and sold in conformity with all ap-
plicable federal and state securities laws (including any applicable exemp-
tions therefrom), or the Acquiring Fund has taken any action necessary to
remedy any prior failure to have offered for sale and sold such shares in
conformity with such laws.
l. The Acquiring Fund qualifies and will at all times through the Exchange
Date qualify for taxation as a "regulated investment company" under Sections
851 and 852 of the Code.
m. The issuance of the Merger Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
n. The Merger Shares to be issued to the Acquired Fund have been duly autho-
rized and, when issued and delivered pursuant to this Agreement, will be le-
gally and validly issued and will be fully paid and non-assessable by the Ac-
quiring Fund, and no shareholder of the Acquiring Fund will have any preemp-
tive right of subscription or purchase in respect thereof.
o. All issued and outstanding shares of the Acquiring Fund are, and at the
Exchange Date will be, duly authorized, validly issued, fully paid and non-
assessable by the Acquiring Fund. The Acquiring Fund does not have outstand-
ing any options, warrants or other rights to subscribe for or purchase any
Acquiring Fund shares, nor is there outstanding any security convertible into
any Acquiring Fund shares.
2. Representations, Warranties and Agreements of the Acquired Fund. The Ac-
quired Fund represents and warrants to and agrees with the Acquiring Fund
that:
a. The Acquired Fund is a series of shares of The Griffin Funds, Inc., a
Maryland corporation duly established and validly existing under the laws of
the State of Maryland, and has power to own all of its properties and assets
and to carry out its obligations under this Agreement. Each of the Griffin
Funds, Inc. and the Acquired Fund is qualified as a foreign association in
every jurisdiction where required, except to the extent that failure to so
qualify would not have a material adverse effect on The Griffin Funds, Inc.
Each of The Griffin Funds, Inc. and the Acquired Fund has all necessary fed-
eral, state and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted and to carry out its ob-
ligations under this Agreement.
b. The Griffin Funds, Inc. is registered under the 1940 Act as an open-end
management investment company, and such registration has not been revoked or
rescinded and is in full force and effect.
c. A statement of assets and liabilities, statements of operations, state-
ments of changes in net assets and a schedule of investments (indicating
their market values) of the Acquired Fund as of and for the year ended Sep-
tember 30, 1998 have been or will be furnished to the Acquiring Fund. Such
statement of assets and liabilities and schedule fairly present the financial
position of the Acquired Fund as of their date, and such statements of opera-
tions and statements of changes in net assets fairly reflect the results of
its operations and changes in net assets for the periods covered thereby, in
conformity with generally accepted accounting principles.
d. The current prospectus and statement of additional information of The
Griffin Funds, Inc., dated [November 30, 1998], which has been or will be
furnished to the Acquiring Fund, did not as of such dates and does not as of
the date of this Agreement contain, with respect to The Griffin Funds, Inc.
or the Acquired Fund, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
e. There are no material legal, administrative or other proceedings pending
or, to the knowledge of The Griffin Funds, Inc. or the Acquired Fund, threat-
ened against The Griffin Funds, Inc. or the
A-3
<PAGE>
Acquired Fund, which assert liability on the part of The Griffin Funds, Inc.
or the Acquired Fund. The Acquired Fund knows of no facts which might form
the basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated.
f. There are no material contracts outstanding to which the Acquired Fund is
a party, other than as are disclosed in The Griffin Funds, Inc.'s registra-
tion statement on Form N-1A.
g. The Acquired Fund has no known liabilities of a material nature, contin-
gent or otherwise, other than those shown on the Acquired Fund's statement of
assets and liabilities as of September 30, 1998 referred to above and those
incurred in the ordinary course of its business as an investment company
since such date. Prior to the Exchange Date, the Acquired Fund will endeavor
to quantify and to reflect on its balance sheet all of its material known li-
abilities and will advise the Acquiring Fund of all material liabilities,
contingent or otherwise, incurred by it subsequent to September 30, 1998,
whether or not incurred in the ordinary course of business.
h. As of the Exchange Date, the Acquired Fund will have filed all federal
and other tax returns and reports which, to the knowledge of The Griffin
Funds, Inc.'s officers, are required to be filed on or before such date by
the Acquired Fund and has paid or will pay all federal and other taxes shown
to be due on said returns or on any assessments received by the Acquired
Fund. All tax liabilities of the Acquired Fund have been adequately provided
for on its books, and no tax deficiency or liability of the Acquired Fund has
been asserted, and no question with respect thereto has been raised or is un-
der audit, by the Internal Revenue Service or by any state or local tax au-
thority for taxes in excess of those already paid.
i. At the Exchange Date, The Griffin Funds, Inc., on behalf of the Acquired
Fund, will have full right, power and authority to sell, assign, transfer and
deliver the Investments (as defined below) and any other assets and liabili-
ties of the Acquired Fund to be transferred to the Acquiring Fund pursuant to
this Agreement. At the Exchange Date, subject only to the delivery of the In-
vestments and any such other assets and liabilities as contemplated by this
Agreement, the Acquiring Fund will acquire the Investments and any such other
assets and liabilities subject to no encumbrances, liens or security inter-
ests whatsoever and without any restrictions upon the transfer thereof. As
used in this Agreement, the term "Investments" shall mean the Acquired Fund's
investments shown on the schedule of its investments as of September 30, 1998
referred to in Section 2(c) hereof, as supplemented with such changes in the
portfolio as the Acquired Fund shall make, and changes resulting from stock
dividends, stock split-ups, mergers and similar corporate actions, through
the Exchange Date.
j. No registration under the 1933 Act of any of the Investments would be re-
quired if they were, as of the time of such transfer, the subject of a public
distribution by either of the Acquiring Fund or the Acquired Fund, except as
previously disclosed to the Acquiring Fund by the Acquired Fund.
k. No consent, approval, authorization or order of any court or governmental
authority is required for the consummation by the Acquired Fund of the trans-
actions contemplated by this Agreement, except such as may be required under
the 1933 Act, 1934 Act, the 1940 Act or state securities or blue sky laws.
l. The Registration Statement and the Acquired Fund Proxy Statement, on the
effective date of the Registration Statement, (i) will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act
and the rules and regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and at the time of the shareholders meeting referred to in Section 7(a) and
on the Exchange Date, the Acquired Fund Proxy Statement and the Registration
Statement will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that none of the repre-
sentations and warranties in this subsection shall apply to statements in or
omissions from the Registration Statement or the Acquired Fund Proxy State-
ment made in reliance upon and in conformity with information furnished in
writing by the Acquiring Fund to the Acquired Fund or The Griffin Funds,
A-4
<PAGE>
Inc. specifically for use in the Registration Statement or the Acquired Fund
Proxy Statement.
m. The Acquired Fund qualifies and will at all times through the Exchange
Date qualify for taxation as a "regulated investment company" under Section
851 and 852 of the Code.
n. At the Exchange Date, the Acquired Fund will have sold such of its as-
sets, if any, as are necessary to assure that, after giving effect to the ac-
quisition of the assets of the Acquired Fund pursuant to this Agreement, the
Acquiring Fund will remain a "diversified company" within the meaning of Sec-
tion 5(b)(l) of the 1940 Act and in compliance with such other mandatory in-
vestment restrictions as are set forth in the WM Prospectus, as amended
through the Exchange Date.
o. All of the issued and outstanding shares of common stock of the Acquired
Fund shall have been offered for sale and sold in conformity with all appli-
cable federal and state securities laws (including any applicable exemptions
therefrom), or the Acquired Fund has taken any action necessary to remedy any
prior failure to have offered for sale and sold such shares in conformity
with such laws.
p. All issued and outstanding shares of the Acquired Fund are, and at the
Exchange Date will be, duly authorized, validly issued, fully paid and non-
assessable by the Acquired Fund. The Acquired Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any of the
Acquired Fund shares, nor is there outstanding any security convertible into
any of the Acquired Fund shares.
3. Reorganization.
a. Subject to the requisite approval of the shareholders of the Acquired
Fund and to the other terms and conditions contained herein (including the
Acquired Fund's obligations to distribute to its shareholders all of its in-
vestment company taxable income and net capital gain as described in Section
8(m)), the Acquired Fund agrees to sell, assign, convey, transfer and deliver
to the Acquiring Fund, and the Acquiring Fund agrees to acquire from the Ac-
quired Fund, on the Exchange Date all of the Investments and all of the cash
and other properties and assets of the Acquired Fund, whether accrued or con-
tingent (including cash received by the Acquired Fund upon the liquidation by
the Acquired Fund of any investments), in exchange for that number of shares
of beneficial interest of the Acquiring Fund provided for in Section 4 and
the assumption by the Acquiring Fund of all of the liabilities of the Ac-
quired Fund, whether accrued or contingent, existing at the Valuation Time
(as defined below) except for the Acquired Fund's liabilities, if any, aris-
ing in connection with this Agreement. Pursuant to this Agreement, the Ac-
quired Fund will, as soon as practicable after the Exchange Date, distribute
all of the Merger Shares received by it to the shareholders of the Acquired
Fund in exchange for their Class A and Class B shares of the Acquired Fund.
b. The Acquired Fund will pay or cause to be paid to the Acquiring Fund any
interest, cash or such dividends, rights and other payments received by it on
or after the Exchange Date with respect to the Investments and other proper-
ties and assets of the Acquired Fund, whether accrued or contingent, received
by it on or after the Exchange Date. Any such distribution shall be deemed
included in the assets transferred to the Acquiring Fund at the Exchange Date
and shall not be separately valued unless the securities in respect of which
such distribution is made shall have gone "ex" such distribution prior to the
Valuation Time, in which case any such distribution which remains unpaid at
the Exchange Date shall be included in the determination of the value of the
assets of the Acquired Fund acquired by the Acquiring Fund.
c. The Valuation Time shall be 4:00 p.m. Eastern time on the Exchange Date
or such earlier or later day as may be mutually agreed upon in writing by the
parties hereto (the "Valuation Time").
4. Valuation Time. On the Exchange Date, the Acquiring Fund will deliver to
the Acquired Fund (i) a number of full and fractional Class A Merger Shares
having an aggregate net asset value equal to the value of the assets of the
Acquired Fund attributable to Class A shares of the Acquired Fund transferred
to the Acquiring Fund on such date less the value of the liabilities of the
Acquired Fund attributable to Class A shares of the Acquired Fund assumed by
the Acquiring Fund on that date, and (ii) a number of full and fractional
Class B Merger Shares having an aggregate net asset value equal to the value
of the assets of the Acquired Fund attributable to Class B shares of the Ac-
quired Fund transferred to the Acquiring Fund on such date less the value of
the liabilities of the Acquired Fund attributable to Class B shares of the
A-5
<PAGE>
Acquired Fund assumed by the Acquiring Fund on that date, determined as here-
inafter provided in this Section 4.
a. The net asset value of the Merger Shares to be delivered to the Acquired
Fund, the value of the assets attributable to the shares of the Acquired
Fund, and the value of the liabilities attributable to the Class A and Class
B shares of the Acquired Fund to be assumed by the Acquiring Fund, shall in
each case be determined as of the Valuation Time.
b. The net asset value of the Class A and Class B Merger Shares shall be
computed in the manner set forth in the WM Prospectus. The value of the as-
sets and liabilities of the Class A and Class B shares of the Acquired Fund
shall be determined by the Acquiring Fund, in cooperation with the Acquired
Fund, pursuant to procedures which the Acquiring Fund would use in determin-
ing the fair market value of the Acquiring Fund's assets and liabilities. For
such purposes, the Acquiring Fund and Acquired Fund agree to develop mutually
acceptable pricing procedures and to implement such procedures prior to the
Valuation Time.
c. No adjustment shall be made in the net asset value of either the Acquired
Fund or the Acquiring Fund to take into account differences in realized and
unrealized gains and losses.
d. The Acquired Fund shall distribute the Class A Merger Shares to the Class
A shareholders of the Acquired Fund by furnishing written instructions to the
Acquiring Fund's transfer agent, which will as soon as practicable set up
open accounts for each Class A Acquired Fund shareholder in accordance with
such written instructions. The Acquired Fund shall distribute the Class B
Merger Shares to the Class B shareholders of the Acquired Fund by furnishing
written instructions to the Acquiring Fund's transfer agent, which will as
soon as practicable set up open accounts for each Class B Acquired Fund
shareholder in accordance with such written instructions.
e. The Acquiring Fund shall assume all liabilities of the Acquired Fund,
whether accrued or contingent, in connection with the acquisition of assets
and subsequent dissolution of the Acquired Fund or otherwise, except for the
Acquired Fund's liabilities, if any, pursuant to this Agreement.
5. Expense, Fees, etc.
a. The parties hereto understand and agree that the transactions contem-
plated by this Agreement are being undertaken contemporaneously with a gen-
eral consolidation of certain of the registered investment companies advised
by WM Advisors, Inc. ("WM Advisors") and Griffin Financial Investment Advis-
ers and their affiliates; and that in connection therewith the costs of all
such transactions are being borne by WM Advisors.
b. In the event the transactions contemplated by this Agreement are not con-
summated by reason of the Acquiring Fund's being either unwilling or unable
to go forward other than by reason of the nonfulfillment or failure of any
condition to the Acquiring Fund's obligations referred to in Section 7(a) or
Section 8, the Acquiring Fund shall pay directly all reasonable fees and ex-
penses incurred by the Acquired Fund in connection with such transactions,
including, without limitation, legal, accounting and filing fees.
c. In the event the transactions contemplated by this Agreement are not con-
summated by reason of the Acquired Fund's being either unwilling or unable to
go forward other than by reason of the nonfulfillment or failure of any con-
dition to the Acquired Fund's obligations referred to in Section 7(a) or Sec-
tion 9, the Acquired Fund shall pay directly all reasonable fees and expenses
incurred by the Acquiring Fund in connection with such transactions, includ-
ing, without limitation, legal, accounting and filings fees.
d. In the event the transactions contemplated by this Agreement are not con-
summated for any reason other than (i) the Acquiring Fund's or the Acquired
Fund's being either unwilling or unable to go forward or (ii) the nonfulfill-
ment or failure of any condition to the Acquiring Fund's or the Acquired
Fund's obligations referred to in Section 7(a), Section 8 or Section 9 of
this Agreement, as applicable, then each of the Acquiring Fund and the Ac-
quired Fund shall bear all of its own expenses incurred in connection with
such transactions.
e. Notwithstanding any other provisions of this Agreement, if for any reason
the transactions contemplated by this Agreement are not consummated, no party
shall be liable to the other party for any damages resulting therefrom, in-
cluding, without limitation, consequential damages, except as specifically
set forth above.
A-6
<PAGE>
6. Exchange Date. Delivery of the assets of the Acquired Fund to be trans-
ferred, assumption of the liabilities of the Acquired Fund to be assumed, and
the delivery of the Merger Shares to be issued shall be made at Boston, Massa-
chusetts as of [March 6, 1999], or at such other date agreed to by an officer
of the Acquiring Fund and the Acquired Fund, the date and time upon which such
delivery is to take place being referred to herein as the "Exchange Date." All
acts taking place at the Exchange Date shall be deemed to take place simulta-
neously as of the 4:00 p.m. Eastern time on the Exchange Date unless otherwise
provided.
7. Meetings of Shareholders; Dissolution.
a. The Griffin Funds, Inc., on behalf of the Acquired Fund, agrees to call a
meeting of the Acquired Fund's shareholders as soon as is practicable after
the effective date of the Registration Statement for the purpose of consider-
ing the sale of all of the Acquired Fund's assets to and the assumption of
all of its liabilities by the Acquiring Fund as herein provided, adopting
this Agreement, and authorizing the liquidation and dissolution of the Ac-
quired Fund.
b. The Acquired Fund agrees that the liquidation and dissolution of the Ac-
quired Fund will be effected in the manner provided in The Griffin Funds,
Inc.'s Articles of Incorporation and Bylaws in accordance with applicable law
and that on and after the Exchange Date, the Acquired Fund shall not conduct
any business except in connection with its liquidation and dissolution.
c. The Acquiring Fund has, in consultation with the Acquired Fund and based
in part on information furnished by the Acquired Fund, filed the Registration
Statement with the Commission. Each of the Acquired Fund and the Acquiring
Fund will cooperate with the other, and each will furnish to the other the
information relating to itself required by the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder to be set forth in the Reg-
istration Statement.
8. Conditions to the Acquiring Fund's Obligations. The obligations of the Ac-
quiring Fund hereunder shall be subject to the following conditions:
a. That this Agreement shall have been adopted and the transactions contem-
plated hereby shall have been approved by the requisite votes of the holders
of the outstanding shares of common stock of the Acquired Fund entitled to
vote.
b. That the Acquired Fund shall have furnished to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, with values deter-
mined as provided in Section 4 of this Agreement, together with a list of In-
vestments with their respective tax costs, all as of the Valuation Time, cer-
tified on the Acquired Fund's behalf by The Griffin Funds, Inc.'s President
(or any Vice President) and Treasurer (or any Assistant Treasurer), and a
certificate of both such officers, dated the Exchange Date, that there has
been no material adverse change in the financial position of the Acquired
Fund since [September 30], 1998 other than changes in the Investments and
other assets and properties since that date or changes in the market value of
the Investments and other assets of the Acquired Fund, or changes due to div-
idends paid or losses from operations.
c. That the Acquired Fund shall have furnished to the Acquiring Fund a
statement, dated the Exchange Date, signed by The Griffin Funds, Inc.'s Pres-
ident (or any Vice President) and Treasurer (or any Assistant Treasurer) cer-
tifying that as of the Valuation Time and as of the Exchange Date all repre-
sentations and warranties of the Acquired Fund made in this Agreement are
true and correct in all material respects as if made at and as of such dates
and the Acquired Fund has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to such
dates.
d. That the Acquired Fund shall have delivered to the Acquiring Fund a let-
ter from [KPMG Peat Marwick LLP] dated the Exchange Date reporting on the re-
sults of applying certain procedures agreed upon by the Acquiring Fund and
described in such letter, which limited procedures relate to schedules of the
tax provisions and qualifying tests for regulated investment companies as
prepared for the fiscal year ended [September 30], 1998 and the period [Octo-
ber 1], 1998 to the Exchange Date (the latter period being based on unaudited
data).
e. That there shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
f. That the Acquiring Fund shall have received an opinion of [Morrison &
Foerster LLP], counsel to the Acquired Fund, in form satisfactory to counsel
to the Acquiring Fund, and dated the Exchange Date, to the effect that (i)
The Griffin Funds, Inc.
A-7
<PAGE>
is a Maryland corporation duly formed and is validly existing under the laws
of the State of Maryland and has the power to own all its properties and to
carry on its business as presently conducted; (ii) this Agreement has been
duly authorized, executed and delivered by The Griffin Funds, Inc. on behalf
of the Acquired Fund and, assuming that the Registration Statement, the WM
Prospectus and the Acquired Fund Proxy Statement comply with the 1933 Act,
the 1934 Act and the 1940 Act and assuming due authorization, execution and
delivery of this Agreement by the WM Trust on behalf of the Acquiring Fund,
is a valid and binding obligation of The Griffin Funds, Inc. and the Acquired
Fund; (iii) The Griffin Funds, Inc., on behalf of the Acquired Fund, has
power to sell, assign, convey, transfer and deliver the assets contemplated
hereby and, upon consummation of the transactions contemplated hereby in ac-
cordance with the terms of this Agreement, the Acquired Fund will have duly
sold, assigned, conveyed, transferred and delivered such assets to the Ac-
quiring Fund; (iv) the execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, violate
The Griffin Funds, Inc.'s Articles of Incorporation or Bylaws or any provi-
sion of any agreement known to such counsel to which The Griffin Funds, Inc.
or the Acquired Fund is a party or by which it is bound; and (v) no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by The Griffin Funds, Inc. on behalf of the Ac-
quired Fund of the transactions contemplated hereby, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws.
g. That the Acquiring Fund shall have received an opinion of Ropes & Gray
(which opinion would be based upon certain factual representations and sub-
ject to certain qualifications), dated the Exchange Date, in form satisfac-
tory to the Acquiring Fund and its counsel, with respect to the matters spec-
ified in Section 9(f) of this Agreement.
h. That the Acquiring Fund shall have received an opinion of Ropes & Gray
(which opinion would be based upon certain factual representations provided
in a letter of a duly authorized representative of the Acquiring Fund and
subject to certain qualifications), dated the Exchange Date, in form satis-
factory to the Acquiring Fund and its counsel, to the effect that, on the ba-
sis of the existing provisions of the Code, current administrative rules, and
the court decisions, for federal income tax pur- poses: (i)(a) the Merger
will constitute a "reorganization," within the meaning of Section 368(a) of
the Code, and (b) each of the Acquiring Fund and the Acquired Fund will be a
"party to a reorganization," within the meaning of Section 368(b) of the
Code, with respect to the Merger, and, correspondingly, (c) no gain or loss
will be recognized by the Acquiring Fund upon receipt of the Investments
transferred to the Acquiring Fund pursuant to this Agreement in exchange for
the Merger Shares; (ii) the basis to the Acquiring Fund of the Investments
will be the same as the basis of the Investments in the hands of the Acquired
Fund immediately prior to such exchange; and (iii) the Acquiring Fund's hold-
ing periods with respect to the Investments will include the respective peri-
ods for which the Investments were held by the Acquiring Fund.
i. That the assets of the Acquired Fund to be acquired by the Acquiring Fund
will include no assets which the Acquiring Fund, by reason of charter limita-
tions or of investment restrictions disclosed in the Registration Statement
in effect on the Exchange Date, may not properly acquire.
j. That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been in-
stituted or, to the knowledge of The Griffin Funds, Inc. or the Acquiring
Fund, threatened by the Commission.
k. That The Griffin Funds, Inc. and The WM Trust shall have received from
the Commission and any relevant state securities administrator such order or
orders as are reasonably necessary or desirable under the 1933 Act, the 1934
Act, the 1940 Act, and any applicable state securities or blue sky laws in
connection with the transactions contemplated hereby, and that all such or-
ders shall be in full force and effect.
l. That all actions taken by The Griffin Funds, Inc. on behalf of the Ac-
quired Fund in connection with the transactions contemplated by this Agree-
ment and all documents incidental thereto shall be satisfactory in form and
substance to the Acquiring Fund and its counsel.
m. That, prior to the Exchange Date, the Acquired Fund shall have declared a
dividend or divi-
A-8
<PAGE>
dends which, together with all previous such dividends, shall have the effect
of distributing to the shareholders of the Acquired Fund (i) all of the ex-
cess of (x) the Acquired Fund's investment income excludable from gross in-
come under Section 103(a) of the Code over (y) the Acquired Fund's deductions
disallowed under Sections 265 and 171 (a) (2) of the Code, (ii) all of the
Acquired Fund's investment company taxable income (as defined in Section 852
of the Code) (computed without regard to any deduction for dividends paid),
in each case for its taxable years ending on or after September 30, 199[8]
and on or prior to the Exchange Date, and (iii) all of the Acquired Fund's
net capital gain realized (after reduction for any capital loss carryover),
in each case for both the taxable year ending on September 30, 199[8] and the
short taxable period ending on October 1, 199[8] and ending on the Exchange
Date.
n. That the Acquired Fund shall have furnished to the Acquiring Fund a cer-
tificate, signed by the President (or any Vice President) and the Treasurer
(or any Assistant Treasurer) of The Griffin Funds, Inc., as to the tax cost
to the Acquired Fund of the securities delivered to the Acquiring Fund pursu-
ant to this Agreement, together with any such other evidence as to such tax
cost as the Acquiring Fund may reasonably request.
o. That the Acquired Fund's custodian shall have delivered to the Acquiring
Fund a certificate identifying all of the assets of the Acquired Fund held or
maintained by such custodian as of the Valuation Time.
p. That the Acquired Fund's transfer agent shall have provided to the Ac-
quiring Fund (i) the originals or true copies of all of the records of the
Acquired Fund in the possession of such transfer agent as of the Exchange
Date, (ii) a certificate setting forth the number of shares of the Acquired
Fund outstanding as of the Valuation Time, and (iii) the name and address of
each holder of record of any shares and the number of shares held of record
by each such shareholder.
q. That all of the issued and outstanding shares of common stock of the Ac-
quired Fund shall have been offered for sale and sold in conformity with all
applicable state securities or blue sky laws (including any applicable exemp-
tions therefrom) and, to the extent that any audit of the records of the Ac-
quired Fund or its transfer agent by the Acquiring Fund or its agents shall
have revealed otherwise, either (i) the Acquired Fund shall have taken all
actions that in the opinion of the Acquiring Fund or its counsel are neces-
sary to remedy any prior failure on the part of the Acquired Fund to have of-
fered for sale and sold such shares in conformity with such laws or (ii) the
Acquired Fund shall have furnished (or caused to be furnished) surety, or de-
posited (or caused to be deposited) assets in escrow, for the benefit of the
Acquiring Fund in amounts sufficient and upon terms satisfactory, in the
opinion of the Acquiring Fund or its counsel, to indemnify the Acquiring Fund
against any expense, loss, claim, damage or liability whatsoever that may be
asserted or threatened by reason of such failure on the part of the Acquired
Fund to have offered and sold such shares in conformity with such laws.
r. That the Acquiring Fund shall have received from [KPMG Peat Marwick LLP]
a letter addressed to the Acquiring Fund dated as of the Exchange Date satis-
factory in form and substance to the Acquiring Fund reporting on the results
of applying limited procedures agreed upon by the Acquiring Fund and de-
scribed in such letter (but not an examination in accordance with generally
accepted auditing standards), which limited procedures relate as of the Valu-
ation Time to the procedures customarily utilized by the Acquired Fund in
valuing its assets and issuing its shares.
9. Conditions to the Acquired Fund's Obligations. The obligations of the Ac-
quired Fund hereunder shall be subject to the following conditions:
a. That this Agreement shall have been adopted and the transactions contem-
plated hereby shall have been approved by the requisite votes of the holders
of the outstanding shares of common stock of the Acquired Fund entitled to
vote.
b. That the WM Trust, on behalf of the Acquiring Fund, shall have executed
and delivered to the Acquired Fund an Assumption of Liabilities dated as of
the Exchange Date pursuant to which the Acquiring Fund will assume all of the
liabilities of the Acquired Fund existing at the Valuation Time in connection
with the transactions contemplated by this Agreement, [other than liabilities
arising pursuant to this Agreement.]
c. That the Acquiring Fund shall have furnished to the Acquired Fund a
statement, dated the Exchange Date, signed by the WM Trust's President
A-9
<PAGE>
(or any Vice President) and Treasurer (or any Assistant Treasurer) certifying
that as of the Valuation Time and as of the Exchange Date all representations
and warranties of the Acquiring Fund made in this Agreement are true and cor-
rect in all material respects as if made at and as of such dates, and that
the Acquiring Fund has complied with all of the agreements and satisfied all
of the conditions on its part to be performed or satisfied at or prior to
each of such dates; and that WM Advisors shall have furnished to the Acquired
Fund a statement, dated the Exchange Date, signed by an officer of WM Advi-
sors, certifying that as of the Valuation Time and as of the Exchange Date,
to the best of WM Advisors's knowledge, after due inquiry, all representa-
tions and warranties of the Acquiring Fund made in this Agreement are true
and correct in all material respects as if made at and as of such date.
d. That there shall not be any material litigation pending or threatened
with respect to the matters contemplated by this Agreement.
e. That the Acquired Fund shall have received an opinion of Ropes & Gray,
counsel to the Acquiring Fund, in form satisfactory to counsel to the Ac-
quired Fund, and dated the Exchange Date, to the effect that (i) the WM Trust
is a Massachusetts business trust duly formed and is validly existing under
the laws of The Commonwealth of Massachusetts and has the power to own all
its properties and to carry on its business as presently conducted; (ii) the
Merger Shares to be delivered to the Acquired Fund as provided for by this
Agreement are duly authorized and upon such delivery will be validly issued
and will be fully paid and non-assessable by the WM Trust and the Acquiring
Fund and no shareholder of the Acquiring Fund has any preemptive right to
subscription or purchase in respect thereof; (iii) this Agreement has been
duly authorized, executed and delivered by the WM Trust on behalf of the Ac-
quiring Fund and, assuming that the WM Prospectus, the Registration Statement
and the Acquired Fund Proxy Statement comply with the 1933 Act, the 1934 Act
and the 1940 Act and assuming due authorization, execution and delivery of
this Agreement by The Griffin Funds, Inc. on behalf of the Acquired Fund, is
a valid and binding obligation of the WM Trust and the Acquiring Fund; (iv)
the execution and delivery of this Agreement did not, and the consummation of
the transactions contemplated hereby will not, violate the WM Trust's Decla-
ration of Trust or By-Laws, or any provision of any agreement known to such
counsel to which the WM Trust or the Acquiring Fund is a party or by which it
is bound; (v) no consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the WM Trust on
behalf of the Acquiring Fund of the transactions contemplated herein, except
such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act
and such as may be required under state securities or blue sky laws; and (vi)
the Registration Statement has become effective under the 1933 Act, and to
best of the knowledge of such counsel, no stop order suspending the effec-
tiveness of the Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under the
1933 Act.
f. That the Acquired Fund shall have received an opinion of Ropes & Gray,
dated the Exchange Date (which opinion would be based upon certain factual
representations provided in a letter of a duly authorized representative of
the Acquired Fund and subject to certain qualifications), in form satisfac-
tory to the Acquired Fund and its counsel, to the effect that, on the basis
of the existing provisions of the Code, current administrative rules, and
court decisions, for federal income tax purposes: (i)(a) the Merger will con-
stitute a "reorganization," within the meaning of Section 368(a) of the Code,
and (b) each of the Acquiring Fund and the Acquired Fund will be a "party to
a reorganization," within the meaning of Section 368(b) of the Code, with re-
spect to the Merger, and, correspondingly, (c) no gain or loss will be recog-
nized by the Acquired Fund as a result of the reorganization; (ii) no gain or
loss will be recognized by shareholders of the Acquired Fund on the distribu-
tion of Merger Shares to them in exchange for their shares of the Acquired
Fund; (iii) the tax basis of the Merger Shares that the Acquired Fund's
shareholders receive in place of their Acquired Fund shares will be the same
as the basis of the Acquired Fund shares; and (iv) a shareholder's holding
period for the Merger Shares received pursuant to the Agreement will be de-
termined by including the holding period for the Acquired Fund shares ex-
changed for the Merger Shares, provided that the shareholder held the Ac-
quired Fund shares as a capital asset.
g. That all actions taken by the WM Trust on behalf of the Acquiring Fund in
connection with
A-10
<PAGE>
the transactions contemplated by this Agreement and all documents incidental
thereto shall be satisfactory in form and substance to the Acquired Fund and
its counsel.
h. That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been in-
stituted or, to the knowledge of the WM Trust or the Acquiring Fund, threat-
ened by the Commission.
i. That the WM Trust shall have received from the Commission and any rele-
vant state securities administrator such order or orders as are reasonably
necessary or desirable under the 1933 Act, the 1934 Act, the 1940 Act, and
any applicable state securities or blue sky laws in connection with the
transactions contemplated hereby, and that all such orders shall be in full
force and effect. With respect to the Acquiring Fund, the Board of Trustees,
including a majority of the "non-interested" Trustees, has determined that
the Reorganization is in the best interests of the Acquiring Fund and that
the interests of the existing Shareholders of the Acquiring Fund would not be
diluted as a result of the Reorganization.
j. That for the period beginning at the Exchange Date of the Reorganization
and ending not less than years thereafter, the Acquiring Fund shall pro-
vide, or cause to be provided, liability coverage at least as comparable to
the liability coverage currently applicable to the Directors and officers of
the Acquired Fund, covering the actions of the Directors and officers of the
Acquired Fund for the period they served as such.
10. Indemnification.
a. The Acquired Fund will indemnify and hold harmless, out of the assets of
the Acquired Fund (which shall be deemed to include the assets of the Acquir-
ing Fund represented by the Merger Shares following the Exchange Date) but no
other assets, the trustees and officers of the WM Trust (for purposes of this
subparagraph, the "Indemnified Parties") against any and all expenses, loss-
es, claims, damages and liabilities at any time imposed upon or reasonably
incurred by any one or more of the Indemnified Parties in connection with,
arising out of, or resulting from any claim, action, suit or proceeding in
which any one or more of the Indemnified Parties may be involved or with
which any one or more of the Indemnified Parties may be threatened by reason
of any untrue statement or alleged untrue statement of a material fact relat-
ing to The Griffin Funds, Inc. or the Acquired Fund contained in the Regis-
tration Statement or the Griffin Prospectus, the Acquired Fund Proxy State-
ment or any amendment or supplement to any of the foregoing, or arising out
of or based upon the omission or alleged omission to state in any of the
foregoing a material fact relating to The Griffin Funds, Inc. or the Acquired
Fund required to be stated therein or necessary to make the statements relat-
ing to The Griffin Funds, Inc. or the Acquired Fund required to be stated
therein or necessary to make the statements relating to The Griffin Funds,
Inc. or the Acquired Fund therein not misleading, including, without limita-
tion, any amounts paid by any one or more of the Indemnified Parties in a
reasonable compromise or settlement of any such claim, action, suit or pro-
ceeding, or threatened claim, action, suit or proceeding made with the con-
sent of The Griffin Funds, Inc. or the Acquired Fund. The Indemnified Parties
will notify The Griffin Funds, Inc. and the Acquired Fund in writing within
ten days after the receipt by any one or more of the Indemnified Parties of
any notice of legal process or any suit brought against or claim made against
such Indemnified Party as to any matters covered by this Section 10(a). The
Acquired Fund shall be entitled to participate at its own expense in the de-
fense of any claim, action, suit or proceeding covered by this Section 10(a),
or, if it so elects, to assume at its expense by counsel satisfactory to the
Indemnified Parties the defense of any such claim, action, suit or proceed-
ing, and if the Acquired Fund elects to assume such defense, the Indemnified
Parties shall be entitled to participate in the defense of any such claim,
action, suit or proceeding at their expense. The Acquired Fund's obligation
under Section 10(a) to indemnify and hold harmless the Indemnified Parties
shall constitute a guarantee of payment so that the Acquired Fund will pay in
the first instance any expenses, losses, claims, damages and liabilities re-
quired to be paid by it under this Section 10(a) without the necessity of the
Indemnified Parties' first paying the same.
b. The Acquiring Fund will indemnify and hold harmless, out of the assets of
the Acquiring Fund but no other assets, the directors and officers of The
Griffin Funds, Inc. (for purposes of this subparagraph, the "Indemnified Par-
ties") against any and all expenses, losses, claims, damages and liabil-
A-11
<PAGE>
ities at any time imposed upon or reasonably incurred by any one or more of
the Indemnified Parties in connection with, arising out of, or resulting from
any claim, action, suit or proceeding in which any one or more of the Indem-
nified Parties may be involved or with which any one or more of the Indemni-
fied Parties may be threatened by reason of any untrue statement or alleged
untrue statement of a material fact relating to the Acquiring Fund contained
in the Registration Statement, the WM Prospectus, the Acquired Fund Proxy
Statement or any amendment or supplement to any of the foregoing, or arising
out of or based upon, the omission or alleged omission to state in any of the
foregoing a material fact relating to the WM Trust or the Acquiring Fund re-
quired to be stated therein or necessary to make the statements relating to
the WM Trust or the Acquiring Fund therein not misleading, including, without
limitation, any amounts paid by any one or more of the Indemnified Parties in
a reasonable compromise or settlement of any such claim, action, suit or pro-
ceeding, or threatened claim, action, suit or proceeding made with the con-
sent of the WM Trust or the Acquiring Fund. The Indemnified Parties will no-
tify the WM Trust and the Acquiring Fund in writing within ten days after the
receipt by any one or more of the Indemnified parties of any notice of legal
process or any suit brought against or claim made against such Indemnified
Party as to any matters covered by this Section 10(b). The Acquiring Fund
shall be entitled to participate at its own expense in the defense of any
claim, action, suit, or proceeding covered by this Section 10(b), or, if its
so elects, to assume at its expense by counsel satisfactory to the Indemni-
fied Parties the defense of any such claim, action, suit or proceeding, and,
if the Acquiring Fund elects to assume such defense, the Indemnified Parties
shall be entitled to participate in the defense of any such claim, action,
suit or proceeding at their own expense. The Acquiring Fund's obligation un-
der this Section 10(b) to indemnify and hold harmless the Indemnified Parties
shall constitute a guarantee of payment so that the Acquiring Fund will pay
in the first instance any expenses, losses, claims, damages and liabilities
required to be paid by it under this Section 10(b) without the necessity of
the Indemnified Parties' first paying the same.
11. No Broker, etc. Each of the Acquired Fund and the Acquiring Fund repre-
sents that there is no person who has dealt with it, the WM Trust or The Grif-
fin Funds, Inc. who by reason of such dealings is entitled to any broker's or
finder's or other similar fee or commission arising out of the transactions
contemplated by this Agreement.
12. Termination. The Acquired Fund and the Acquiring Fund may, by mutual con-
sent of the directors of The Griffin Funds, Inc. and the trustees of the WM
Trust on behalf of each Fund, terminate this Agreement, and the Acquired Fund
or the Acquiring Fund, after consultation with counsel and by consent of their
respective directors/trustees or an officer authorized by such
directors/trustees, may waive any condition to their respective obligations
hereunder. If the transactions contemplated by this Agreement have not been
substantially completed by [September 30], 1999, this Agreement shall automat-
ically terminate on that date unless a later date is agreed to by the Acquired
Fund and the Acquiring Fund.
13. Rule 145. Pursuant to Rule 145 under the 1933 Act, the Acquiring Fund
will, in connection with the issuance of any Merger Shares to any person who
at the time of the transaction contemplated hereby is deemed to be an affili-
ate of a party to the transaction pursuant to Rule 145(c), cause to be affixed
upon the certificates issued to such person (if any) a legend as follows:
"THESE SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO WM U.S.
GOVERNMENT SECURITIES FUND OR ITS PRINCIPAL UNDERWRITER UNLESS (I) A REGIS-
TRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (II) IN THE OPINION OF COUNSEL REASONABLY SATISFAC-
TORY TO THE FUND SUCH REGISTRATION IS NOT REQUIRED."
and, further, the Acquiring Fund will issue stop transfer instructions to the
Acquiring Fund's transfer agent with respect to such shares. The Acquired Fund
will provide the Acquiring Fund on the Exchange Date with the name of any Ac-
quired Fund shareholder who is to the knowledge of the Acquired Fund an affil-
iate of the Acquired Fund on such date.
14. Covenants, etc. Deemed Material. All covenants, agreements, representa-
tions and warranties made under this Agreement and any certificates delivered
pursuant to this Agreement shall be deemed to have been material and relied
upon by each of the
A-12
<PAGE>
parties, notwithstanding an investigation made by them or on their behalf.
15. Sole Agreement; Amendments. This Agreement supersedes all previous corre-
spondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.
16. Declaration of Trust. A copy of the Declaration of Trust of the WM Trust
is on file with the Secretary of State of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
trustees of the WM Trust on behalf of the Acquiring Fund, as trustees and not
individually and that the obligations of this instrument are not binding upon
any of the trustees, officers or shareholders of the WM Trust individually but
are binding only upon the assets and property of the Acquiring Fund.
THE GRIFFIN FUNDS, INC.,
on behalf of its U.S. Government Income Fund series
By: __________________________________________________________________
WM TRUST I
on behalf of its U.S. Government Securities Fund series
By: __________________________________________________________________
William G. Papesh, President
A-13
<PAGE>
money market funds
Appendix B
Excerpts from Semi-Annual Report of WM Trust I dated
April 30, 1998 Regarding Investment Performance
Portfolio Manager
Audrey Quaye has over five years investment experience, is a Certified Public
Accountant, holds an MBA, and has been with WM Advisors, Inc. since 1996. Ms.
Quaye manages the Money Market Fund and the Tax-Exempt Money Market Fund.
Economic Conditions Affecting Fund Performance
During the six-month period ended April 30, 1998, financial markets experienced
the peak of the Asian economic crisis. As currencies and markets collapsed
across that region, investors moved assets to high-quality, domestic holdings
and a strong rally in the U.S. bond market ensued. The U.S. economy remained
healthy and strong during the period, although the pace of growth moderated in
some regions due to a slowdown in manufacturing and export activity. Consumer
confidence was high, the housing market flourished in the low interest rate
environment, and the unemployment rate declined to a 28-year low of 4.3%.
Inflation remained very tame throughout 1997 and into the early part of 1998. As
a result, the Federal Reserve left rates unchanged at its March 31, 1998
meeting. The strength of the U.S. economy was balanced by the slowdown in Asian
activity and did not translate into overall price pressures. The result for the
short-term market was that the benchmark 90-day U.S. Treasury bill yield
declined from a high of 5.48% in December 1997, to 4.98% on April 30, 1998.
Average tax-free daily money market yields also declined from 3.60% in January
1998, to 1.75% in February 1998, and then rose to 4.20% at April 30, 1998. The
volatility was primarily due to change in supply and demand conditions in the
tax-free market.
Economic and Interest Rate Outlook
We expect inflation to remain tame and we anticipate a gradual slowdown in the
U.S economy as exports to Asia continue to decline and cheaper imports from Asia
push down domestic price levels. We also expect the slowdown in the economy to
reduce the risk of inflation, resulting in the possibility for lower interest
rates. However, if the effect of the Asian economic crisis is not as strong as
projected, or if employment costs continue to rise, then an increase in
inflation and interest rates is possible. Nevertheless, we do not anticipate Fed
rate move in the near future.
Portfolio Strategy
Effective March 23, 1998, Sierra money market assets merged with, and into, the
WM Money Market Fund. The Fund's net assets at April 30, 1998, totaled $452.4
million. One effect of the merger was an increase in the Fund's exposure to U.S.
Government and Agency obligations. In addition, in an attempt to lower overall
risk in the portfolio, we reduced the Fund's exposure to the banking and foreign
sectors. We also extended the Portfolio's weighted average maturity in view of
our interest rate outlook.
The WM Tax-Exempt Money Market Fund's net assets at April 30, 1998, totaled
$27.34 million. During the period, we reduced the Fund's exposure to the more
volatile daily variable rate securities when short-term interest rates declined
significantly. However, the Portfolio's weighted average maturity did not change
significantly.
Portfolios' Performance/1/
At April 30, 1998, the seven-day simple yield for Class A shares of the WM Money
Market Fund was 4.90%, or 5.02% on a compounded annual basis. The Fund had a
weighted average maturity of 84 days.
The seven-day simple yield for Class A shares of the WM Tax-Exempt Money Market
Fund was 3.64%, or 3.71% on a compounded annual basis. The Fund had a weighted
average maturity of 63 days.
- --------------------------------------------------------------------------------
30 Day Distribution Rates* A Shares B Shares
Money Market Fund 4.84% 4.10%
Tax-Exempt Money Market Fund 3.38% 2.52%
- --------------------------------------------------------------------------------
* During the period noted, WM Advisors, Inc. waived a portion of its
management fees and absorbed certain other expenses. Without the waiver and
expense absorption, the yields would have been lower.
/1/ All yield information represents past performance, which cannot guarantee
future results. Principal is not guaranteed or insured by the U.S. government,
and yields will fluctuate depending on market conditions. There is no assurance
that the portfolios will maintain their $1.00 per share net asset value.
<PAGE>
u.s. government securities
Portfolio Manager
The U.S. Government Securities Fund is managed by a fixed income team led by
Senior Portfolio Manager Gary Pokrzywinski, who has over 12 years of asset
management experience and has been with WM Advisors, Inc. for more than 5 years.
Mr. Pokrzywinski is a Chartered Financial Analyst and holds a Business Degree
from the University of Wisconsin.
What were the most significant factors contributing to the Fund's performance
over the past 6 months?
The fixed-income market benefited from low inflation and an overall "flight to
quality" stemming from the Asian economic crisis. Many investors worldwide moved
assets from volatile global regions to U.S. government securities. The yield on
the 30-year Treasury dropped to a record low in January of 1998 and closed the
period under 6%. Given this positive economic backdrop, the U.S. Government
Securities Fund's Class A shares total return for the six months ended 4/30/98
was 3.40% (-1.26% adjusted for the maximum sales charge).+
The large percentage of mortgage-backed securities in the Fund produced a
[LINE GRAPH APPEARS HERE]
growth of a $10,000 investment (class A shares)
Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Government
sales charge) sales charge) Bond Index Inflation
Apr 88 10,000 9,550 10,000 10,000
Jan 89 10,452 9,982 10,549 10,341
Jan 90 11,589 11,068 11,731 10,878
Jan 91 12,958 12,375 13,076 11,493
Jan 92 14,440 13,790 14,688 11,793
Jan 93 15,873 15,159 16,340 12,174
Jan 94 17,065 16,298 17,947 12,482
Jan 95 16,401 15,663 17,425 12,832
Jan 96 19,257 18,390 20,366 13,182
Jan 97 19,664 18,779 20,827 13,585
Jan 98 21,809 20,827 23,139 13,801
Apr 98 21,968 20,980 23,245 13,843
The Lehman Brothers Government Bond Index is an unmanaged index of all U.S.
government bonds. The Consumer Price Index is a measurement of inflation for
all urban consumers (CPI-U). The Index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.
+ The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.
++ Represents inflation
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns as of 4/30/98 1 Year 5 Year 10 Year
Class A Shares
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 11.21% 6.24% 8.19%
Fund (adjusted for the maximum 4.5% sales charge) 6.17% 5.27% 7.69%
Lehman Brothers Government Bond Index 11.05% 6.65% 8.80%
<CAPTION>
Average Annual Total Returns as of 4/30/98 1 Year 5 Year Since Inception
Class B Shares March 1994
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 10.27% N/A 6.78%
Fund (adjusted for the maximum contingent deferred sales charge) 5.27% N/A 6.38%
Lehman Brothers Government Bond Index 11.05% N/A 7.70%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was 0.31%, -4.68% adjusted for the maximum CDSC.
<PAGE>
- --------------------------------------------------------------------------------
u.s. government securities portfolio composition*
- --------------------------------------------------------------------------------
relatively high level of income for shareholders. The Class A share SEC Yield
for the 30-days ended April 30, for the Fund was 6.27% (5.77% for Class B
shares). Additionally, because the Fund has an intermediate maturity profile,
the Net Asset Value (NAV or price per share) increased as the general level of
interest rates declined for the period.
What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?
Interest rates dropped marginally during the six-month period, which had
positive effects on the Fund and its total return performance. Because of the
drop in interest rates, mortgage-backed securities tended to underperform other
sectors as investors were nervous about the prospects for increased prepayments.
Lower rates provided an environment conducive to prepayments as refinancing
increased significantly in the early part of January. After rates stabilized and
prepayment expectations waned, the performance of mortgage-backed securities
gained strength relative to other bond sectors as rates then moved within a
trading range. If interest rates remain relatively stable, as seen during these
months, mortgages tend to perform relatively well. In addition, the Fund took
advantage of some low prices of mortgage-backed investments to increase its
overall investment in the sector.
Were there any shifts in the Fund's portfolio holdings/sectors that have had a
significant impact on Fund performance?
Due to the merger with the Sierra U.S. Government Fund and the related inflows
of assets, as well as our outlook for mortgage-backed securities, the Fund
increased its exposure to this sector. Although management's overall outlook
remains the same, the Fund's average maturity and duration--a measurement of
price sensitivity to changes in interest rates, declined slightly in the period.
The Fund remains focused on securities that are non-callable and have a low
probability, we believe, of being prepaid.
What is our intermediate- and long-term outlook for the Fund?
The long-term strategy of the Fund is to have a significant percentage of its
holdings in mortgage-backed securities. Over a complete cycle of interest rates,
mortgage securities should continue to provide a high level of income. The Fund
will maintain its intermediate maturity structure since we believe that type of
structure typically offers the best risk/reward profile on the yield curve (the
distribution of yields ranging from short to long maturities). An intermediate
maturity structure will also provide value given the current outlook for a
continuation of the secular decline of interest rates.
[PIE CHART APPEARS HERE]
- --------------------------------------------------------------------------------
U.S. government SECURITIES portfolio COMPOSITION*
FHLMC ...................................................... 34%
GNMA ....................................................... 27%
FNMA ....................................................... 6%
GNMA II .................................................... 3%
CMOs ....................................................... 6%
U.S. Treasury Notes ........................................ 13%
U.S. Treasury Bonds ........................................ 11%
* Percent of net assets
- --------------------------------------------------------------------------------
What is our overall economic outlook for the next 12 months?
Over the next twelve months we expect the economy to exhibit moderate growth.
The effects of these events in Asia should help keep growth and inflation under
control. Global price competition and the higher levels of imports into the
United States should lend to this scenario. Overall, there continues to be
worldwide structural forces at work (fiscal austerity, demo-graphics, excess
capacity) which should keep inflation under control for the next 3-5 years.
<PAGE>
income fund
Portfolio Manager
The Income Fund is managed by a fixed-income team led by Senior Portfolio
Manager Gary Pokrzywinski, who has over 12 years of asset management experience
and has been with WM Advisors, Inc. for more than 5 years. Mr. Pokrzywinski is a
Chartered Financial Analyst and holds a Business Degree from the University of
Wisconsin.
What were the most significant factors contributing to the Fund's performance
over the past 6 months?
The fixed-income market benefited from low inflation and an overall "flight to
quality" stemming from the Asian economic crisis. Many investors worldwide moved
assets from volatile global regions to U.S. domestic securities. The yield on
the 30-year Treasury dropped to a record low in January of 1998 and closed the
period under 6%. Given this positive economic backdrop, the Income Fund's
performance for the six months ended April 30, 1998 was 3.24% (-1.41% adjusted
for the maximum sales charge).+
The large percentage of corporate and mortgage bond holdings in the Fund
produced a high level of
[LINE GRAPH APPEARS HERE]
growth of a $10,000 investment (class A shares)
Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Government/
sales charge) sales charge) Corporate Index Inflation
Apr 88 10,000 9,550 10,000 10,000
Jan 89 10,453 9,983 10,586 10,341
Jan 90 10,979 10,485 11,771 10,878
Jan 91 12,089 11,545 13,069 11,493
Jan 92 13,860 13,236 14,787 11,793
Jan 93 15,381 14,689 16,498 12,174
Jan 94 16,991 16,226 18,200 12,482
Jan 95 16,188 15,460 17,634 12,832
Jan 96 19,471 18,595 20,759 13,182
Jan 97 20,064 19,161 21,256 13,585
Jan 98 22,312 21,308 23,629 13,801
Apr 98 22,646 21,627 23,773 13,843
+ The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.
++ Represents inflation
Index total returns were calculated from 4/30/88 to 4/30/98. The Lehman Brothers
Government/Corporate Index is unmanaged and represents all government and
corporate bonds. The Consumer Price Index is a measurement of inflation for all
urban consumers (CPI-U). The Index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns as of 4/30/98 1 Year 5 Year 10 Year
Class A Shares
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 12.55% 7.34% 8.52%
Fund (adjusted for the maximum 4.5% sales charge) 7.54% 6.35% 8.02%
Lehman Brothers Government/Corporate Index 11.33% 6.90% 9.05%
<CAPTION>
Average Annual Total Returns as of 4/30/98 1 Year 5 Year Since Inception
Class B Shares March 1994
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 11.63% N/A 7.86%
Fund (adjusted for the maximum contingent deferred sales charge) 6.63% N/A 7.47%
Lehman Brothers Government/Corporate Index 11.33% N/A 7.99%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was -0.09%, -5.06% adjusted for the maximum CDSC.
<PAGE>
- --------------------------------------------------------------------------------
income fund portfolio composition
- --------------------------------------------------------------------------------
current income during the period. The Fund's Class A share SEC yield for the 30
days ended April 30 was 6.15% (5.66% for Class B shares). However, some of this
income was offset by a general industry-wide price underperformance of corporate
securities and a few specific fund holdings that underperformed relative to the
overall market. Conversely, the intermediate-maturity profile of securities in
the Fund provided positive results as interest rates dropped and prices
correspondingly increased. The high-yield component of the portfolio also
provided strong results for the period as that sector tended to outperform other
fixed-income sectors. Overall, Fund performance was consistent with the growth
levels of the domestic economy and the overall results experienced by
fixed-income investments in general.
What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?
Because of its intermediate maturity and duration--a measurement of sensitivity
to interest rate changes--the Fund performance generally cycles with market
rates. After a significant decline in rates during November and December of
1997, interest rates stabilized and traded in a relatively small range during
the first four months of 1998. Although volatility did exist, as economic
uncertainty and inflation prospects were digested by the market, the overall
effect was positive for the period.
As some corporate holdings lost relative value in the period, the Fund took
advantage of the lower prices of corporate securities and increased the
percentage of the portfolio allocated to this sector.
Were there any shifts in the Fund's portfolio holdings/sectors that have had a
significant impact on Fund performance?
Although there were no major structural changes in the overall portfolio and its
management, the inflow of assets from the merger with Sierra Corporate Income
Fund changed the make-up of the Fund to some extent. There is now a larger
percentage of assets in corporate holdings in an attempt to boost overall yield.
However, the broad aspects of average quality, average maturity and sector
allocation did not change significantly. The Fund remains positioned with an
intermediate average maturity of around 11 years and an average quality of bond
issues at A-./1/
Internal credit research of individual corporate securities is one of the
primary ways the Fund's management seeks to add value to its shareholders. Each
company is scrutinized and its business prospects are analyzed in an attempt to
find value relative to the overall market.
[PIE CHART APPEARS HERE]
- --------------------------------------------------------------------------------
INCOME fund PORTFOLIO composition
- --------------------------------------------------------------------------------
Industrial ................................................. 57%
Financial .................................................. 13%
Yankee Bonds ............................................... 9%
Electric ................................................... 6%
Government Agency and Agency Backed ........................ 6%
CMOs ....................................................... 2%
Treasuries ................................................. 4%
Preferred Stock ............................................ 2%
Cash & Other ............................................... 1%
What is our intermediate- and long-term outlook for the Fund?
We expect the Fund to continue to invest a large percentage of assets in
corporate securities, and to a lesser extent, mortgage-backed and Treasury
securities. Shifts in these sectors will occur dependent upon our overall
outlook for the business cycle. The Fund will continue to position investments
at the longer end of the intermediate maturity range to take advantage of the
prospects of continued market declines in interest rates. The current inflation
environment supports this outlook as global price pressures remain very weak
and real returns (inflation adjusted) remain strong.
What is our overall economic outlook for the next 12 months?
Over the next twelve months we expect the economy to exhibit moderate growth.
The effects of the fallout in Asia should help keep growth and inflation under
control. Global price competition and higher levels of imports into the United
States supports this scenario. Overall, there continues to be worldwide
structural forces at work (fiscal austerity, demographics, excess capacity)
which should keep inflation under control for the next 3-5 years. In this
environment, corporate credit quality should continue to improve at a modest
pace as companies are able to grow and flourish.
/1/ As rated by Standard & Poor's
<PAGE>
tax-exempt bond fund
Portfolio Manager
Brian Placzek of WM Advisors, Inc. is the portfolio manager for the Tax-Exempt
Bond Fund. Mr. Placzek is a Chartered Financial Analyst and has been with WM
Advisors, Inc. for over seven years.
What were the most significant factors contributing to the Fund's performance
over the past 6 months?
The past six months has been a dramatic period for fixed-income investors and
for shareholders of the Tax-Exempt Bond Fund. During the period, interest rates
in the Treasury market declined. As 1997 closed, long-term Treasury yields
experienced significant reductions. A slowdown in growth stemming from the Asian
crisis and low global inflation helped push rates lower. Conversely, municipal
yields ended the period higher. This divergence may lay the foundation for
better relative performance by municipals going forward.
The merger of Sierra National Municipal Fund resulted in a large inflow of
assets, but did not change the style or strategy of the Fund. Overall, the
Fund's total return for Class A shares appreciated 2.37% (-2.24% adjusted for
the maximum sales charge) during the period.+
What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?
In late 1997, a lack of inflation (falling to the
[LINE GRAPH APPEARS HERE]
growth of a $10,000 investment (class A shares)
Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Municipal
sales charge) sales charge) Index Inflation
Apr 88 10,000 9,550 10,000 10,000
Jan 89 10,762 10,278 10,787 10,341
Jan 90 11,344 10,834 11,653 10,878
Jan 91 12,354 11,798 12,730 11,493
Jan 92 13,624 13,010 14,120 11,793
Jan 93 15,004 14,328 15,507 12,174
Jan 94 16,891 16,131 17,407 12,482
Jan 95 16,097 15,373 16,788 12,832
Jan 96 18,554 17,719 19,317 13,182
Jan 97 18,929 18,077 20,057 13,585
Jan 98 20,734 19,801 22,085 13,801
Apr 98 20,552 19,627 22,012 13,843
+ The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.
++ Represents inflation
The Lehman Brothers Municipal Bond Index is unmanaged and includes all
investment grade municipal bond issues. The Consumer Price Index is a
measurement of inflation for all urban consumers (CPI-U). The Index assumes
reinvestment of all dividends/distributions, and does not reflect any
asset-based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/distributions by the shareholder.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Average Annual Total Returns as of 4/30/98 1 Year 5 Year 10 Year
Class A Shares
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 8.36% 5.70% 7.47%
Fund (adjusted for the maximum 4.5% sales charge) 3.48% 4.73% 6.97%
Lehman Brothers Municipal Index 9.30% 6.51% 8.21%
<CAPTION>
Average Annual Total Returns as of 4/30/98 1 Year 5 Year Since Inception
Class B Shares March 1994
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 7.47% N/A 5.85%
Fund (adjusted for the maximum contingent deferred sales charge) 2.47% N/A 5.44%
Lehman Brothers Municipal Index 9.30% N/A 7.69%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was -0.79%, -5.73% adjusted for the maximum CDSC.
<PAGE>
- --------------------------------------------------------------------------------
tax-exempt bond portfolio composition*
- --------------------------------------------------------------------------------
lowest levels since the 1960s), helped pull bond yields down. This was
compounded by the explosion of the Asian crisis, which culminated with fears
that South Korea would default on its debt at the beginning of 1998. U.S. bond
yields benefited from a general "flight to quality" and from a belief that the
collapse in Asia would slow our strong economy. This slowing could help keep
inflation under control. Bond investors reacted favorably, pushing the yield on
the 30-year Treasury bond to an all-time low of 5.69%.
The panic in Asia eased somewhat after January. Concerns then revived about the
strength of the domestic economy. Confronted with record home sales, soaring
consumer confidence, and unemployment at a 28-year low, market participants
worried about the potential for an increase in inflation. Bond yields rose from
their January lows, but finished the period lower, with the yield on the 30-year
Treasury closing under 6%.
Municipal bonds, however, performed poorly over the same period. Like
Treasuries, municipal bond yields attained their period lows in January when AAA
rated 30-year municipal bond yields fell to 4.88%/1/. However, yields on
municipal bonds ended the period generally higher. This had a negative impact on
Fund performance relative to taxable investments.
The poor performance of municipal bonds can be attributed to lower levels of
demand coupled with an onslaught of supply. Cash flows into municipal bond funds
have been generally weak, but the supply side has driven performance. There has
been a high degree of issuance from municipalities. As rates declined,
municipalities issued new bonds to refinance existing bonds at the lower rates.
Furthermore, whereas federal government issuance has declined, new money
issuance (bonds not issued to refinance bonds) by municipalities rose about 27%
during the first part of 1998 (relative to 1997).
Were there any shifts in the Fund's portfolio holdings/sectors that have had a
significant impact on Fund performance?
The overall look of the Fund changed slightly after the merger with the Sierra
National Municipal Fund. Heavy sector investments in either Fund, such as
hospitals in the Sierra Fund or utilities in the Composite Fund, were offset by
under-representation in its counterpart. Generally, the combination of the two
created a fund that is typical of the industry average. It is noteworthy that
the credit quality remains in the AA category, and we intend to maintain that
average.1 A change for former Composite shareholders who are individuals has
been the addition of bonds subject to the Alternative Minimum Tax (AMT)./2/ Such
bonds comprise about 15% of the overall assets in the Fund. AMT bonds can offer
a higher yield than other bonds from a given issuer. Depending on an individual
shareholder's circumstances, AMT treatment may or may not give rise to
individual tax liabilities.
[PIE CHART APPEARS HERE]
- --------------------------------------------------------------------------------
TAX-EXEMPT bond PORTFOLIO composition*
- --------------------------------------------------------------------------------
AAA ................................................... 39%
AA .................................................... 26%
A ..................................................... 17%
BBB ................................................... 14%
BB & B ................................................ 1%
Cash .................................................. 2%
Not Rated ............................................. 1%
* Percent of net assets
What is our intermediate- and long-term outlook for the Fund?
Although the performance of municipal bonds has been poor relative to
Treasuries, it may have established a basis for strong relative performance
going forward. Municipal bond yields relative to treasuries are now at their
cheapest level since the "Flat Tax Scare" of 1995. The months of June and July
are normally periods of high municipal turnover, when maturities, bond calls,
and coupon payments place a great deal of cash in the hands of investors. This
can then incite demand in the market as reinvestment increases.
We plan to continue to focus investment into bonds that we believe have a low
probability of being called. We intend to maintain our concentration in high
quality bonds, with over one-third of the portfolio invested in insured bonds,
and over two-thirds of the portfolio in AA or better rated securities./1/
What is our overall economic outlook for the next 12 months?
Current low levels of inflation are positive for all fixed-income investors.
Given the effects of the Asian crisis and the corresponding global price
competition, this trend should continue. More specifically, in the municipal
market, the combination of municipal bonds "on sale," and municipal investors
with an inflow of cash may be the right mix to prompt municipal bonds to
outperform Treasury bonds in the coming months.
/1/ As rated by Standard & Poor's
/2/ A portion of the Fund's income may be subject to some state and/or local
tax. In addition, exempt-interest dividends from the Fund will generally
increase a corporate shareholder's exposure to AMT liability.
<PAGE>
growth & income fund
Portfolio Manager
Philip M. Foreman, Senior Portfolio Manager of WM Advisors, Inc. has managed the
Growth & Income Fund since joining the Firm in November, 1991. Mr. Foreman is
both a Chartered Financial Analyst and a Certified Financial Planner, holds an
MBA, and has over 12 years of experience in the investment industry.
What were the most significant factors contributing to the Fund's performance
over the past 6 months?
The period was dominated by strong fundamental
performance. Markets advanced on positive economic news and continued strength
in earnings. This was especially evident in the larger-capitalized companies
that dominate the Growth & Income Fund's portfolio. Although it underperformed
relative to the S&P 500, the Fund's Class A shares total return appreciated
15.42% (9.07% adjusted for the maximum sales charge) for the period ended April
30, 1998.+
Another trend in domestic equity markets was that of mergers and acquisitions.
Three of our holdings were bought out at substantial premiums to their previous
[LINE GRAPH APPEARS HERE]
growth of a $10,000 investment (class A shares)
Fund (adjusted
Fund (not for the
adjusted for maximum 5.5% S&P 500
sales charge) sales charge) Index Inflation
Apr 88 10,000 9,450 10,000 10,000
Jan 89 11,283 10,663 11,704 10,341
Jan 90 11,446 10,817 13,389 10,878
Jan 91 11,908 11,253 14,511 11,493
Jan 92 14,446 13,651 17,805 11,793
Jan 93 16,057 15,174 19,676 12,174
Jan 94 17,836 16,855 22,205 12,482
Jan 95 17,784 16,805 22,332 12,832
Jan 96 23,967 22,648 30,942 13,182
Jan 97 29,847 28,205 39,102 13,585
Jan 98 36,290 34,294 49,642 13,801
Apr 98 40,682 38,444 56,506 13,843
+ The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.
++ Represents inflation
The Standard & Poor's 500 Composite Index (S&P 500) represents an unmanaged
weighted index of 500 companies. The Consumer Price Index is a measurement of
inflation for all urban consumers (CPI-U). The index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns as of 4/30/98 1 Year 5 Year 10 Year
Class A Shares
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 35.39% 20.41% 14.99%
Fund (adjusted for the maximum 5.5% sales charge) 27.94% 19.05% 14.34%
S&P 500 Index 41.15% 23.25% 18.91%
<CAPTION>
Average Annual Total Returns as of 4/30/98 1 Year 5 Year Since Inception
Class B Shares March 1994
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 34.50% N/A 23.08%
Fund (adjusted for the maximum contingent deferred sales charge) 29.50% N/A 22.83%
S&P 500 Index 41.15% N/A 27.93%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was 0.56%, -4.44% adjusted for the maximum CDSC.
<PAGE>
- --------------------------------------------------------------------------------
growth & income fund portfolio composition*
- --------------------------------------------------------------------------------
trading prices and subsequently rewarded our shareholders: Zurn Industries,
Greentree Financial and Waste Management. Also, some mega-cap securities
benefited from a "flight to quality" and lack of Asian market exposure (GE,
Merck and Abbott Labs are examples) during the period. The "flight to quality"
transpired as many worldwide investors poured money into more predictable,
large, U.S. corporations after the debacle in the Asian economies.
What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?
Heavy flow of money into large-cap index issues characterized the period.
Larger-company stocks performed better than almost all other classes of
equities. This was driven by economic conditions that produced low interest
rates, slowing economic growth from Asian countries, and record levels of
mergers and acquisitions. We believe most of the holdings in the Fund may
benefit from moderate economic growth conditions as earnings are able to grow
with low inflation and lower costs of capital. The Fund avoided commodity and
basic industry issues during the period, as low cost Asian imports could
negatively impact their profitability. The Fund also owned a number of good
performing franchise businesses that have proved to be attractive for takeovers
in today's business environment.
Were there any shifts in the Fund's portfolio holdings/sectors that have had a
significant impact on Fund performance?
Due to its underweight in retail stocks, the Fund did not fully participate in
the appreciation of this sector. We were, and still are, concerned by the lack
of competitive advantage and barriers to entry in the industry. During the
period, the Fund was overweighted in software at the expense of computer
hardware and semiconductors. This proved to be beneficial, as software sales
held up much better than mainframe computers and chips. This can be attributed
to the lack of Asian competitors who, in these other sectors, greatly increased
their exports into the United States after the currency crisis.
What is our intermediate- and long-term outlook for the Fund?
We continue to believe that we have a portfolio of good businesses that are
trading at attractive prices. We still are finding plenty of companies to buy
that we believe are "on sale," despite the high level of the overall market. We
will maintain our overall value approach, focusing on businesses which are
unique and we expect to generate sustainable cash flows and profitability. Our
outlook calls for slowing economic growth, good money flows, and a continuation
of mergers and acquisitions. All these factors provide a healthy environment for
holdings of the Growth & Income Fund.
[PIE CHART APPEARS HERE]
- --------------------------------------------------------------------------------
GROWTH & INCOME fund PORTFOLIO composition*
- --------------------------------------------------------------------------------
Financials .............................................. 18%
Consumer ................................................ 16%
Capital Goods ........................................... 12%
Technology .............................................. 15%
Healthcare .............................................. 12%
REITS ................................................... 3%
Transportation .......................................... 2%
Utilities ............................................... 7%
Media/Telecom ........................................... 10%
Convertible & Preferred ................................. 5%
* differences from Financials are a result of a consolidation of industries or
sectors.
- --------------------------------------------------------------------------------
What is our overall economic outlook for the next 12 months
We see slowing corporate profits from the basic industry, commodity, and
computer hardware/semiconductor sectors of the market place. Low cost Asian
imports stemming from the currency crisis in these countries should keep prices
and inflation low. Low global inflation should help maintain interest rates at
flat to slightly lower levels, which should be very positive for stocks. Despite
the possible volatility in certain industries, we maintain our positive
long-term outlook for the equity markets and believe that current conditions
continue to provide a strong backdrop for equity investment.
<PAGE>
short term high
quality bond fund
Portfolio Manager:
Gary Pokrzywinski
WM Advisors, Inc.
The Short Term High Quality Bond Fund is managed by a fixed-income team led by
Senior Portfolio Manager Gary Pokrzywinski, who has over 12 years of asset
management experience and has been with WM Advisors, Inc. for more than 5 years.
Mr. Pokrzywinski is a Chartered Financial Analyst and holds a Business Degree
from the University of Wisconsin.
Appendix B
Excerpts from Annual Report of WM Trust II dated June 30, 1998 Regarding
Investment Performance
What were the most significant factors contributing to the Fund's performance
over the past 12 months? The fixed-income market benefited from low inflation
and an overall "flight to quality" stemming from the Asian economic crisis. Many
investors worldwide moved assets from volatile global regions to U.S. Government
securities. The yield on the 30-year Treasury dropped to a record low of 5.57%
in June of 1998. Given this positive economic backdrop, the WM Short Term High
Quality Bond Fund's total return for the 12 months ended June 30, 1998 was
5.91%, for Class A shares (2.38% adjusted for the maximum sales charge). Because
the Fund has a short duration, it is less affected by changes in interest rates,
and is less sensitive to fluctuations as long-term Funds. The Fund is managed to
provide income to its shareholders and the 30-day SEC yield of the portfolio was
5.30% at the close of the period (4.73% for B shares).
growth of a $10,000 investment (class A shares)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers
Mutual Fund Short
Fund (Class A shares; Fund (Class A shares; (I-5) Investment
not adjusted for sales adjusted for the maximum Grade Debt
charge) 3.5% sales charge) Index /1/
<S> <C> <C> <C>
Inception/1/
11/01/93 $10,005 $ 9,655 $ 9,991
Mar 94 $ 9,947 $ 9,599 $ 9,831
Jun 94 $ 9,927 $ 9,580 $ 9,816
Sep 94 $ 9,993 $ 9,644 $ 9,933
Dec 94 $ 9,842 $ 9,497 $ 9,910
Mar 95 $10,037 $ 9,685 $10,339
Jun 95 $10,366 $10,003 $10,800
Sep 95 $10,524 $10,156 $10,993
Dec 95 $10,829 $10,450 $11,340
Mar 96 $10,815 $10,437 $11,331
Jun 96 $10,890 $10,509 $11,437
Sep 96 $11,069 $10,682 $11,650
Dec 96 $11,274 $10,879 $11,918
Mar 97 $11,349 $10,952 $11,956
Jun 97 $11,560 $11,156 $12,284
Sep 97 $11,780 $11,368 $12,590
Dec 97 $11,925 $11,508 $12,783
Mar 98 $12,084 $11,661 $12,995
Jun 98 $12,246 $11,817 $13,224
</TABLE>
The performance of the Class B Shares and Class S Shares was different than that
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
/1/ Index total returns were calculated from 10/31/93 to 6/30/98. The Lehman
Brothers Mutual Fund Short (1-5) Investment Grade Debt Index includes all
investment-grade, corporate debt securities with maturities of one to five
years, assumes reinvestment of all dividends/distributions, and does not
reflect any asset-based charges for investment management or other expenses.
Past performance does not guarantee future performance. The returns shown
for the Fund assume reinvestment of all dividends/distributions by the
shareholder.
During the period noted, the Advisor waived a portion of its management
fees, the Advisor absorbed other expenses, and credits were allowed by the
Custodian. In the absence of the waivers and absorption of other expenses or
credits, yield and total return would have been lower.
================================================================================
<TABLE>
<CAPTION>
Total Returns as of 6/30/98 6 Month 1 Year Since Inception*
(November 1, 1993)
<S> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 2.68% 5.91% 4.44%
Fund (adjusted for the maximum 3.5% sales charge) -0.74% 2.38% 3.65%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index/1/ 3.44% 7.66% 6.17%
CLASS B SHARES 6 Month 1 Year Since Inception*
(June 30, 1994)
Fund (not adjusted for contingent deferred sales charge) 2.30% 5.13% 4.60%
Fund (adjusted for the maximum contingent deferred sales charge) -1.70% 1.13% 4.39%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index/1/ 3.44% 7.66% 7.74%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 2.30% 5.13% 4.60%
Fund (adjusted for the maximum contingent deferred sales charge) -2.70% 0.13% 4.17%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index/1/ 3.44% 7.66% 7.74%
</TABLE>
*Annualized
<PAGE>
portfolio composition++
[PIE CHART APPEARS HERE] 1) AAA 64%
2) AA 9%
3) A 4%
4) BBB 23%
What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?
Interest rates dropped during the past year. The effects of this was positive
for the Fund and its total return performance. However, the income stream
provided the largest impact on performance. Our position in asset-backed
securities also helped to boost performance as that class provided relative
strength. Because of the drop in interest rates, mortgage-backed securities
tended to underperform other sectors as investors were nervous about the
prospects for increased prepayments. Corporate yields did not fall as much as
other fixed-income sectors towards the end of the period so we took advantage of
good relative prices to add to these positions.
Were there any shifts in the Fund's portfolio holdings that have had a
significant impact on Fund performance?
During the past 12 months, the Short Term Global Government Fund was merged into
this Fund and WM Advisors took over the management of the merged Fund. Due to
the merger and the inflows of assets, we used the cash to restructure the
portfolio favoring corporate bonds and Treasury notes. We also decreased
exposure to mortgage-backed securities which helped performance in the second
quarter of 1998. Although the overall management outlook remains the same, the
Fund's average maturity and duration--a measurement of price sensitivity to
changes in interest rates--increased slightly in the period. We also maintained
the Fund's position in asset-backed securities during the period.
What is our intermediate- and long-term outlook for the Fund?
The long-term strategy of the Fund is to continue to have a diversified
portfolio of high-quality securities with a yield advantage. The Fund will
invest a significant percentage of its holdings in corporates, asset-backed, and
mortgage-backed securities. Over a complete cycle of interest rates, mortgage
securities should continue to provide a high level of income. The Fund will
maintain its short-term structure to lessen price volatility relative to
long-term assets. We will shift the sector allocations depending upon our
outlook for interest rates and the overall business cycle.
What is our overall economic outlook for the next 12 months?
Over the next 12 months we expect the economy to exhibit moderate growth. The
effects of the fallout in Asia should help keep growth and inflation under
control. Global price competition and the higher levels of imports into the
United States should support this scenario. Overall, there continues to be
worldwide structural forces at work (fiscal austerity, demographics, excess
capacity) which should keep inflation under control for the next 3-5 years.
Although there will be periods of volatility, we believe the overall interest
rate trend is lower. These aforementioned factors should continue to produce
slow growth and keep price pressures at bay.
Note: Bond ratings provided by Standard & Poors.
++ Allocation percentages are based on total investment value of the portfolio
as of 6/30/98.
<PAGE>
california
municipal fund
Portfolio Manager:
Joseph Piraro
Van Kampen Investments
Mr. Piraro joined the company in 1992, and serves as Vice President and
portfolio manager of Van Kampen Investments. He has had primary portfolio
management responsibility for the California Municipal Fund since May 1992.
What were the most significant factors contributing to the Fund's performance
over the past 12 months?
The strength of the economy, the decision by the Federal Reserve Board not to
adjust short-term interest rates, and the financial problems in Asia
significantly affected the U.S. bond markets. As inflation remained benign, the
bond market rallied throughout the reporting period. The yield of the 30-year
Treasury bond, which moves in the opposite direction of its price, fell from
6.79% on June 30, 1997 to 5.63% a year later.
The impact of the Asian financial crisis was evident in the underperformance of
the tax-exempt market relative to treasuries. As problems in Asia have continued
and the U.S. Dollar has risen relative to Asian currencies, demand for
treasuries has increased. This "flight to quality" drove the yield on the
30-year Treasury down to historically low levels. The Federal Government's
surplus also caused a reduction in issuance of treasury securities, resulting in
fewer bonds to meet this strong demand.
growth of a $10,000 investment (class A shares)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Date Fund (Class Fund (Class Lehman
A Shares; A Shares; Brothers
Not Adjusted Adjusted for Municipal
For Sales the Maximum Bond
Charge) 4.5% Sales Charge) Index/1/
<S> <C> <C> <C>
Inception/1/
7/25/89 $10,080 $ 9,626 $10,000
Dec-89 $10,325 $ 9,860 $10,251
Jun-90 $10,598 $10,122 $10,537
Dec-90 $10,993 $10,498 $10,998
Jun-91 $11,357 $10,846 $11,487
Dec-91 $12,054 $11,511 $12,334
Jun-92 $12,556 $11,991 $12,841
Dec-92 $13,159 $12,567 $13,421
Jun-93 $14,294 $13,651 $14,375
Dec-93 $14,955 $14,282 $15,069
Jun-94 $13,982 $13,352 $14,400
Dec-94 $13,667 $13,052 $14,290
Jun-95 $15,040 $14,363 $15,670
Dec-95 $16,139 $15,413 $16,785
Jun-96 $16,003 $15,283 $16,710
Dec-96 $16,852 $16,094 $17,528
Jun-97 $17,414 $16,631 $18,089
Dec-97 $18,585 $17,748 $19,140
Jun-98 $19,023 $18,167 $19,654
</TABLE>
The performance of the Class B Shares and Class S Shares was different than that
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
/1/ Index total returns were calculated from 7/31/89 to 6/30/98. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for
the long-term, investment-grade, tax-exempt bond market. The index assumes
reinvestment of all dividends/distributions, and does not reflect any asset-
based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/distributions by the shareholder.
During the period noted, the Advisor waived a portion of its fees, absorbed
other expenses, and credits were allowed by the Custodian. In the absence of
the waivers and absorption of other expenses, or credits, yield and total
return would have been lower.
================================================================================
<TABLE>
<CAPTION>
Total Returns as of 6/30/98 6 Month 1 Year 5 Year* Since Inception*
(July 25, 1989)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 2.37% 9.26% 5.89% 7.42%
Fund (adjusted for the maximum 4.5% sales charge) -2.19% 4.38% 4.92% 6.87%
Lehman Brothers Municipal Bond Index1 2.69% 8.66% 6.46% 7.87%
CLASS B SHARES 6 Month 1 Year 5 Year* Since Inception*
(June 30, 1994)
Fund (not adjusted for contingent deferred sales charge) 1.99% 8.45% N/A 7.21%
Fund (adjusted for the maximum contingent deferred sales charge) -3.00% 3.45% N/A 6.80%
Lehman Brothers Municipal Bond Index1 2.69% 8.66% N/A 8.09%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 1.99% 8.45% N/A 7.21%
Fund (adjusted for the maximum contingent deferred sales charge) -3.00% 3.45% N/A 6.80%
Lehman Brothers Municipal Bond Index1 2.69% 8.66% N/A 8.09%
</TABLE>
*Annualized
<PAGE>
portfolio composition++
[PIE CHART APPEARS HERE] 1) AAA 61%
2) AA 8%
3) A 7%
4) BBB 6%
5) Not Rated 13%
Because of supply and demand fundamentals, the municipal market did not perform
as well as treasuries during the period. Historically, low interest rates have
fueled refundings as well as new borrowings, resulting in a 51 percent increase
in issuance year-to-date over 1997. Although these lower rates were not quite as
attractive to investors seeking yield, demand did keep pace with supply. The
good ratio of municipal yields to Treasuries attracted some individuals as well
as cross-over buyers (institutions who typically purchase taxable securities).
At the end of the reporting period, the Bond Buyer 40 Index (an index of 40
actively traded, long-term investment grade securities) had a yield of 5.22%, or
93% of long-term treasuries.
What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?
The duration (a measure of the price sensitivity to changes in interest rates)
of the portfolio at the end of the period was 7.3 years, slightly shorter than
our benchmark 8.3 years. As market conditions caused duration to shorten over
the reporting period, we offset the market effect through the acquisition of
long-term discount securities and the sale of premium bonds. While the duration
of the securities in the portfolio was shorter than our target, we felt it was
more beneficial to our shareholders to maintain the core positions in the
portfolio than to lengthen the duration.
As of June 30, 1998, the 30-day SEC yield of the Fund's Class A shares was 4.24%
or 7.74% on a tax-equivalent basis (3.69% and 6.74% for B shares).2 Yield
spreads between credit ratings remain very narrow. As a result, most
acquisitions focused on AAA-rated securities, which we felt had more relative
value than lower-rated paper. While we continue to seek non-rated offerings to
add yield to the Fund, we saw few opportunities that rewarded the investor for
the additional credit risk. On June 30, 1998, over 62 percent of assets were
AAA-rated, up slightly over the period. The quality sector of the market
performed well during the year.
Were there any shifts in the Fund's portfolio holdings/sectors that had a
significant impact on the Fund's performance?
Health care exposure increased by almost 10 percent to 14 percent of assets.
Although most of these bonds are insured, they tend to trade at a small yield
advantage over other sectors. Additionally, health care continues to be the best
performing sector of the revenue bond index. As a result of this increase, we
decreased our exposures to the transportation, tax district, and multi-family
housing sectors. We also decreased our exposure to securities that are subject
to the Alternative Minimum Tax (AMT). As the yield spread between AMT and
non-AMT offerings narrowed, we saw an opportunity to sell several positions at a
profit and, at the same time, use some of the proceeds of these sales to invest
in discount securities to extend duration.
The Fund has excellent diversification, with exposure to 15 industries. Because
of the attractive yields on our current holdings, as well the good balance
between sectors, we do not expect significant changes in the near future. The
credit quality of the portfolio remains very high, and we will maintain that
level given the demand for quality California securities and the relative
attractiveness of these bonds.
What is our overall economic outlook for the next 12 months?
Despite the strong economy, inflation has remained dormant as a result of weak
commodity prices and a strong Dollar. There are, however, hints that the good
news on inflation could be coming to an end. The various domestic factors that
might have prompted serious fears about inflation were offset by the Asian
situation. Currently, the situation overseas could create a dilemma. After the
decision to support the Yen, raising U.S. interest rates would be
counter-productive since it would strengthen the U.S. Dollar. However, if
competition from Asia does not sufficiently cool the U.S. economy, the Fed may
feel compelled to raise short-term rates, which would put upward pressure on
long-term rates. With its status as a shipping and import/export hub, any
ripples that rock Asia are likely to be felt in California.
We will maintain our slightly bullish duration, as we expect the low interest
rate environment to continue in the near term, but we are not overly bullish on
the market as a whole. Unless the taxable market makes a significant move, we
expect municipal yields to remain within their recent trading range. The supply
of municipal issues looks like it will remain strong, possibly setting an annual
record for the industry. As the second largest state issuer, we expect the
California market will play a big role in this surge of volume.
/2/ Tax-equivalent yield is based on Federal income taxes at 39.6% and
California income taxes at 9.3%, and the federal deduction of state taxes
paid. A portion of income may be subject to some State and/or local taxes,
and for certain investors, may be subject to the federal alternative minimum
tax (AMT).
Note: Bond ratings provided by Standard & Poors.
++ Allocation percentages are based on total investment value of the portfolio
as of 6/30/98.
<PAGE>
growth fund
Portfolio Manager:
Warren Lammert
Janus Capital Corporation
Mr. Lammert is a graduate of Yale University and the London School of Economics.
He first joined Janus in January 1987 and has been portfolio manager of the
Growth Fund since its inception. He is a Chartered Financial Analyst.
What were the most significant factors contributing to the Fund's performance
over the past 12 months?
For the past 12 months, the stock market has put up very impressive numbers,
with the S&P 500 Index gaining over 30%. Meanwhile, the Fund returned 35.43%.
Looking back, market performance has been quite volatile over the past year.
After a broad market rally last summer, equities came under pressure by year-end
amid a few disappointing announcements and the growing financial crisis in Asia.
We took this opportunity, however, to expand our positions in several promising
technology stocks, which have performed well for us. Domestic equities posted
impressive gains in the first part of 1998 and managed to build on these results
early in the second quarter. Then the market experienced renewed volatility,
reflecting mounting concerns over Asia and related uncertainty surrounding
corporate profits. Consequently, stocks lost ground in late May and early June.
Equities proved resilient, however, and managed to end the second quarter of
1998 with a strong rally, thanks to a significant drop in long-term interest
rates and a resurgent technology sector.
Portfolio returns benefited as several of our issues came alive at the end of
the period, adding to strong results accumulated since the start of the year.
Robust portfolio performance continues to reflect our emphasis on companies with
dominant franchises and exceptional earnings growth.
growth of a $10,000 investment (class A shares)
Growth Fund (Class A Fund (Class A Standard &
Fund shares; not shares; adjusted Poor's 500
adjusted for for the minimum Composite
sales charge) 5.5% sales charge) Index/1/
Inception/1/
4/5/93 $10,000 $ 9,450
Jun-93 $10,720 $10,130 $10,297
Sep-93 $11,250 $10,631 $10,560
Dec-93 $11,680 $11,038 $10,805
Mar-94 $11,740 $11,094 $10,395
Jun-94 $10,730 $10,140 $10,439
Sep-94 $11,870 $11,217 $10,949
Dec-94 $11,756 $11,109 $10,947
Mar-95 $12,507 $11,819 $12,011
Jun-95 $14,199 $13,418 $13,156
Sep-95 $15,681 $14,819 $14,201
Dec-95 $16,018 $15,137 $15,056
Mar-96 $17,312 $16,360 $15,863
Jun-96 $17,812 $16,832 $16,575
Sep-96 $18,822 $17,787 $17,087
Dec-96 $18,728 $17,698 $18,510
Mar-97 $17,535 $16,570 $19,007
The performance of the Class B Shares and Class S Shares was different than that
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
1 Index total returns were calculated from 4/30/93 to 6/30/98. The Standard &
Poor's 500 Composite Index (S&P 500) represents an unmanaged weighted index
of 500 industrial, transportation, utility, and financial companies widely
regarded by investors as representative of the stock market. The index
assumes reinvestment of all dividends/distributions, and does not reflect
any asset-based charges for investment management or other expenses. Past
investment performance does not guarantee future performance. The returns
shown for the Fund assume reinvestment of all dividends/distributions by
the shareholder.
During the period noted, the Advisor waived a portion of its management
fees and absorbed other expenses, and credits were allowed by the
Custodian. In the absence of the waivers and absorption of other expenses
or credits, yield and total return would have been lower.
<TABLE>
<CAPTION>
Total Returns as of 6/30/98 6 Month 1 Year 5 Year* Since Inception*
(April 5, 1993)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 30.09% 35.43% 20.06% 20.67%
Fund (adjusted for the maximum 5.5% sales charge) 22.90% 27.96% 18.72% 19.38%
Standard & Poor's 500 Composite Index1 17.72% 30.21% 23.07% 22.94%
CLASS B SHARES 6 Month 1 Year 5 Year* Since Inception*
(June 30, 1994)
Fund (not adjusted for contingent deferred sales charge) 29.60% 34.43% N/A 24.74%
Fund (adjusted for the maximum contingent deferred sales charge) 24.60% 29.43% N/A 24.48%
Standard & Poor's 500 Composite Index1 17.72% 30.21% N/A 29.18%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 29.58% 34.40% N/A 24.74%
Fund (adjusted for the maximum contingent deferred sales charge) 24.58% 29.40% N/A 24.48%
Standard & Poor's 500 Composite Index1 17.72% 30.21% N/A 29.18%
</TABLE>
*Annualized
<PAGE>
portfolio composition++
[PIE CHART APPEARS HERE]
1 Technology 34%
2 Telecommunications 19%
3 Healthcare 13%
4 Financials 10%
5 Media 10%
6 Capital Goods 5%
7 Consumer Stocks 4%
8 Business Services 4%
9 Energy 1%
What market conditions affected the Fund's performance during the period, and
what investment techniques were used to address those conditions?
The large-stock indices continued to be tough competitors for active managers,
in part because investors are favoring large-capitalization stocks for their
perceived earnings stability and liquidity. Additionally, the trend toward
indexing continues to bolster the stocks that comprise the S&P 500 Index, as new
money chases returns. However, we are starting to see more of an emphasis on
earnings growth, because broad S&P 500 profits are coming under increasing
pressure from Asian weakness and rising labor costs. As a slowdown in corporate
earnings continues to unfold, those companies with more positive earnings
characteristics should receive renewed attention, regardless of their size. We
are confident that our research will continue to identify those companies can
meet or exceed their earnings projections, and these companies will be rewarded
for their performance.
Were there any shifts in the Funds Portfolio's holdings/sectors that have had a
significant impact on performance?
The Portfolio reflects our commitment to a variety of themes, particularly
technology, pharmaceuticals, cable and financial services. In 1998, we created a
more focused portfolio, shortening our list of names and trimming a number of
smaller positions.
Among our technology stocks, our positions in Dell, Microsoft, and America
Online (AOL) have all performed well. Dell continues to exploit its highly-
successful business model, despite a generally weak environment for PC
manufacturers. Meanwhile, Microsoft advanced strongly after overcoming
concerns related to the Justice Department's antitrust suit. The company is
beginning a major new product cycle with the current launch of Windows 98 and
the rollout of Windows NT 5.0 later this year. Additionally, AOL, supported by
the growing acceptance of the Internet as a new media avenue, continues to
perform well.
We have also succeeded with our Internet positions, including Amazon.com, the
leading Internet book and music retailer. Amazon.com was added to the Fund
during the second quarter, and the stock price more than doubled over a
thirteen-day period in June. While we are excited about Amazon.com's prospects,
given its strong brand name and explosive growth, we also realize that such
quick gains can easily reverse themselves. Consequently, we opted to trim the
position at a significant profit.
Several of our pharmaceutical stocks have also performed exceptionally well,
including Warner-Lambert and Pfizer. Both companies continue to experience
strong results from their new product launches, effectively driving revenues
higher. More recently, we also added Cognizant, which owns IMS, a provider of
prescription and market share data for pharmaceutical companies.
During the period, a number of developments helped to validate our thesis on the
cable industry--an area that remains very compelling. After years of equipment
and infrastructure upgrades, cable operators are on the verge of rolling out a
two-way digital platform that will allow a variety of new services, including
telephony data and expanded video offerings. These factors, combined with a
dramatic decline in capital expenditures, create a promising outlook. As a
result, we built positions in Comcast, Time Warner, Media One, and
Tele-Communications, Inc. (TCI), all of which performed very well. In addition,
AT&T's recent decision to purchase TCI highlights the value of the cable
pipeline, and we believe the combined entity will unlock a variety of important
synergies moving ahead.
What is our intermediate- and long-term outlook for the Fund?
We remain generally positive on the outlook for equities; however, Asian
weakness and the impact of the strong Dollar remain a concern. For this reason,
we emphasize companies with robust earnings growth that are well-insulated from
Asia's downturn. As always, we rely on Janus' strategy to find promising
individual companies with strong fundamentals and positive earnings growth
potential. We also continue to follow our disciplined portfolio approach and are
willing to trim positions that are fully priced or where our earnings estimates
appear to be in jeopardy.
What is our overall economic outlook for the next 12 months?
Looking ahead, Asia's continuing economic difficulties contribute an element of
uncertainty to global markets. Japan's economy has moved into a severe
recession, brought about by the Japanese government's failure to enact
meaningful economic reforms and by its fragile banking system. Additionally,
the recent weakness in the Yen versus the U.S. Dollar highlights the currency
risk that still lingers throughout the region. On the positive side, Asia's
slowdown has been an effective brake on the global economy and has helped keep
domestic inflation in check, despite an impressive U.S. expansion. As a result,
domestic interest rates continue to reflect these positive fundamentals and
remain at very low levels.
++ Allocation percentages are based on total investment value of the portfolio
as of 6/30/98.
Differences from financial statements are a result of a consolidation of
industries or sectors.
<PAGE>
WM TRUST I
WM TRUST II
FORM N-14
PART B
STATEMENT OF ADDITIONAL INFORMATION
October 30, 1998
This Joint Statement of Additional Information (the "SAI") relates to
proposed mergers (the "Mergers") of the Money Market Fund (the "Griffin Money
Market Fund"), the Tax-Free Money Market Fund (the "Griffin Tax-Free Money
Market Fund"), the Short-Term Bond Fund (the "Griffin Short-Term Bond Fund"),
the U.S. Government Income Fund (the "Griffin U.S. Government Fund"), the
Municipal Bond Fund (the "Griffin Municipal Bond Fund"), the California Tax-Free
Fund (the "Griffin California Tax-Free Fund"), the Bond Fund (the "Griffin Bond
Fund"), the Growth & Income Fund (the "Griffin Growth & Income Fund") and the
Growth Fund, (the "Griffin Growth Fund") (each an "Acquired Fund"), each a
series of The Griffin Funds, Inc., a Maryland corporation, into, respectively,
the Money Market Fund (the "WM Money Market Fund"), the Tax-Exempt Money Market
Fund (the "WM Tax-Exempt Money Market Fund"), the Short Term High Quality Bond
Fund (the "WM Short Term Fund"), the U.S. Government Securities Fund (the "WM
U.S. Government Fund"), the Tax-Exempt Bond Fund (the "WM Tax-Exempt Bond
Fund"), the California Municipal Fund (the WM California Fund"), the Income Fund
(the "WM Income Fund"), the Growth & Income Fund (the "WM Growth & Income Fund")
and the Growth Fund (the "WM Growth Fund") (each an "Acquiring Fund"), each a
series of WM Trust I or WM Trust II, each a Massachusetts business trust.
This SAI contains information which may be of interest to shareholders but
which is not included in the Prospectus/Proxy Statement dated October 30, 1998
(the "Prospectus/Proxy Statement") of the Acquiring Funds which relates to the
Mergers. As described in the Prospectus/Proxy Statement, the Mergers would
involve the transfer of all the assets of each Acquired Fund in exchange for
shares of the corresponding Acquiring Fund and the assumption of all the
liabilities of the Acquired Fund. Each Acquired Fund would distribute the
Acquiring Fund shares it receives to its shareholders in complete liquidation of
the Acquired Fund.
This SAI is not a prospectus and should be read in conjunction with the
Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with
the Securities and Exchange Commission and is available upon request and without
charge by writing to the WM Group Funds, P.O. Box 5118, Westborough, MA 01581-
5118 or by calling 1-800-222-5852.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Item Page
- ------ -----
<S> <C>
I. Additional Information about the Acquiring and the Acquired Funds..................
II. Financial Statements...............................................................
</TABLE>
<PAGE>
I. Additional Information about the Acquiring and the Acquired Funds.
This SAI is accompanied by the Prospectus and Statement of Additional
Information of The Griffin Funds, Inc. dated January 31, 1998, which provide
further information relating to the Acquired Funds. This SAI is also accompanied
by the Statement of Additional Information dated March 23, 1998, as revised
April 16, 1998 and the Statement of Additional Information dated November 1,
1998 of the Acquiring Funds, which provides further information about
the Acquiring Funds.
The following documents, which have previously been filed with the Securities
and Exchange Commission, have been incorporated by reference into Part A of this
Registration Statement:
(1) Prospectus of the Acquiring Funds dated March 23, 1998 (filed on March 27,
1998 pursuant to Rule 497 under the Securities Act of 1933) and the
Prospectus of the Acquiring Funds dated November 1, 1998 (filed on November
__, 1998 pursuant to Rule 497 under the Securities Act of 1933)
(Registration Nos. 002-10766 and 811-00123 (WM Trust I) and 33-27489 and
811-05775 (WM Trust II)).
(2) Prospectus of the Acquiring Funds dated November 1, 1998 (filed on
November -, 1998 pursuant to Rule 497 under the Securities Act of 1933)
(3) Statement of Additional Information of the Acquiring Funds dated March 23,
1998, as revised April 16, 1998 and the Statement of Additional Information
dated November 1, 1998 (filed on November __, 1998 pursuant to Rule 497
under the Securities Act of 1933) (filed on April 16, 1998 pursuant to Rule
497 under the Securities Act of 1933) (Registration Nos. 33-27489 and 811-
05775).
(4) Annual Report of WM Short Term Fund, WM California Fund and WM Growth Fund
dated June 30, 1998 (filed on September 3, 1998) (Registration Nos. 33-
27489 and 811-05775).
(5) Annual Report of WM Money Market Fund, WM Tax-Exempt Money Market Fund, WM
U.S. Government Fund, WM Tax-Exempt Bond Fund and WM Income Fund, dated
December 31, 1997 (filed on February 26, 1998) (Registration Nos. 33-27489
and 8112-05775).
(6) Annual Report of WM Growth & Income Fund dated October 31, 1997 (filed on
December 29, 1997) (Registration Nos. 002-10766 and 811-00123).
(7) Annual Report of the Acquiring Funds dated October 31, 1998 (filed on ___,
1998)
(8) Semi-Annual Report of WM Growth & Income Fund, WM Money Market Fund, WM
Tax-Exempt Money Market Fund, WM U.S. Government Fund, WM Tax-Exempt Bond
Fund and WM Income Fund, dated April 30, 1998 (filed on June 30, 1998)
(Registration Nos. 002-10766 and 811-00123).
II. Financial Statements.
This Statement of Additional Information is accompanied by (a) the Semi-Annual
Report for the period ended April 30, 1998 and the Annual Reports for the year
ended December 31, 1997 of the WM Money Market Fund, WM Tax-Exempt Money Market
Fund, WM U.S. Government Fund, WM Tax-Exempt Bond Fund and WM Income Fund, (b)
the Semi-Annual Report for the period ended April 30, 1998 and the Annual Report
for the year ended October 31, 1997 of the WM Growth & Income Fund, (c) the
Annual Report for the year ended June 30, 1998 of the WM Short Term Fund, WM
California Fund and WM Growth Fund, and (d) the Annual Report for the year ended
October 31, 1998 of the Acquiring Fund's which respectively contain historical
financial information regarding such Funds. Such reports have been filed with
the Securities and Exchange Commission and are incorporated herein by
reference.
Pro forma financial statements are provided on the following pages for each of
the Acquiring Funds.
<PAGE>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES AT APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GRIFFIN WM
MONEY MONEY PRO FORMA PRO FORMA
MARKET FUND MARKET FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $ 228,112,250 $462,721,142 $ 690,833,392
---------------------------------------------------------------
Total Investments 228,112,250 462,721,142 - 690,833,392
Cash/Cash Equivalents - 2,784,902 2,784,902
Receivable for dollar roll fee income - -
Dividends and/or interest receivable 856,910 1,753,805 2,610,715
Receivable for Fund shares Sold 1,992,430 1,992,430
Receivable for investment securities sold - -
Unamortized organization costs 8,021 - 8,021
Receivable from investment advisor - -
Prepaid expenses and other assets 91,280 91,280
---------------------------------------------------------------
Total Assets 228,977,181 469,343,559 - 698,320,740
LIABILITIES:
Payable for dollar roll transactions - -
Variation margin payable - -
Reverse repurchase agreements - -
Payable for Fund shares redeemed - 6,317,015 6,317,015
Payable for investment securities purchased - 10,000,000 10,000,000
Investment advisory fee payable 175,564 175,564
Administration fee payable - -
Shareholder servicing and distribution fees payable 77,111 77,111
Dividends payable 929,035 12,673 941,708
Accrued legal and audit fees 4,800 4,800
Accrued Trustees' fees and expenses 2,101 2,101
Accrued registration and filing fees payable 813 813
Due to Custodian - -
Net unrealized depreciation of fwd for curr cts -
Accrued Expenses and other payables 217,835 336,491 554,326
---------------------------------------------------------------
Total Liabilities 1,146,870 16,926,568 - 18,073,438
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL NET ASSETS $ 227,830,311 $452,416,991 $ - $ 680,247,302
===============================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) - - -
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions (196) 24,896 24,700
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities - - -
Paid-in capital 227,830,507 452,392,095 680,222,602
---------------------------------------------------------------
TOTAL NET ASSETS $ 227,830,311 $452,416,991 $ - $ 680,247,302
===============================================================
NET ASSETS:
Class A Shares $ 227,830,311 $354,347,547 $ 582,177,858
===============================================================
Class B Shares $ 3,216,131 $ 3,216,131
===============================================================
Class S Shares $ 7,020,240 $ 7,020,240
===============================================================
Class I Shares $ 87,833,073 $ 87,833,073
===============================================================
SHARES OUTSTANDING:
Class A Shares 227,830,507 354,328,956 (12,149.22) (a) 582,147,314
===============================================================
Class B Shares 3,215,931 - 3,215,931
===============================================================
Class S Shares 7,019,731 - 7,019,731
===============================================================
Class I Shares 87,827,477 - 87,827,477
===============================================================
NET ASSET VALUE PER SHARE:
Class A Shares $ 1.00 $ 1.00 $ 1.00
===============================================================
Class B Shares $ 1.00 $ 1.00
===============================================================
Class S Shares $ 1.00 $ 1.00
===============================================================
Class I Shares $ 1.00 $ 1.00
===============================================================
</TABLE>
See accompanying notes to pro forma financial statemets
- --------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of WM Group
shares at April 30, 1998.
<PAGE>
WM Money Market Fund
Pro Forma Combined Statement of Operations
For the Period Ended 4/30/98
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
MONEY MONEY PRO FORMA PRO FORMA
MARKET FUND MARKET FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - - -
Foreign w/holding tax on dividend income -
Interest Income $ 4,281,137 $ 6,246,427 $10,527,564
Fee Income - -
-----------------------------------------------------------
Total Investment Income 4,281,137 6,246,427 $10,527,564
-----------------------------------------------------------
EXPENSES:
Investment Advisory Fees 381,440 492,639 (22,401) (A) 851,678
Administration Fees 152,576 - (152,576) (B) -
Custodian Fees 38,565 26,286 64,851
Legal and audit fees 17,383 4,800 22,183
Trustees' fees and expenses 2,604 2,101 4,705
Amortization of Organization Costs 5,578 - 5,578
Registration and filing fees 6,372 813 7,185
Other 17,663 180,293 197,956
-----------------------------------------------------------
Subtotal 622,181 706,932 (174,977) 1,154,136
Shareholder servicing and distribution Fees
Class A Shares 152,576 67,066 (70,137) (C) 149,505
Class B Shares 4,165 4,165
Class S Shares 9,451 9,451
Interest expense - -
Fees waived and/or expenses absorbed by investment
Advisor (224,885) - 224,885 (D) -
-----------------------------------------------------------
Subtotal 549,872 787,614 (20,229) 1,317,257
Fees Reduced by credits allowed by the custodian (17,619) (17,619)
-----------------------------------------------------------
Net expenses 549,872 769,995 (20,229) 1,299,638
-----------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 3,731,265 5,476,432 20,229 9,227,926
-----------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains from:
Security transactions - 24,896 24,896
Forward foreign currency contracts and
Foreign currency transactions - - -
Futures contracts - - -
Net unrealized appreciation/(depreciation) of:
Securities - - -
Forward foreign currency contracts - - -
Foreign currency, written options, futures
contracts and other assets and liabilities - - -
-----------------------------------------------------------
Net Realized and unrealized Gain/(Loss) on investment - 24,896 - 24,896
-----------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,731,265 $ 5,501,328 $ 20,229 $ 9,252,822
===========================================================
</TABLE>
(A) Decrease in management fees for Griffin shareholders to reflect the new fee
structure. Fees are based on .45% of average daily net assets up to
$1,000,000,000 and .40% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Elimination of Griffin 12b-1 fees and addition of shareholder servicing fee
at a monthly rate of $1.85 per shareholder account.
(D) Fees waived and/or expense absorbed by investment advisor has been
eliminated
<PAGE>
WM Money Market Fund
Pro Forma Combined Statement of Operations
For the Year Ended 12/31/97
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
MONEY MONEY PRO FORMA PRO FORMA
MARKET FUND MARKET FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - -
Foreign w/holding tax on dividend income -
Interest Income $11,954,635 $14,420,370 $26,375,005
Fee Income - -
-------------------------------------------------------------
Total Investment Income 11,954,635 14,420,370 - 26,375,005
-------------------------------------------------------------
EXPENSES:
Investment Advisory Fee 1,068,226 1,148,906 (106,855) (A) 2,110,277
Administration Fee 427,290 - (427,290) (B) -
Custodian Fee 111,001 120,711 231,712
Legal and audit fees 32,560 10,537 43,097
Trustees' fees and expenses 8,213 8,499 16,712
Amortization of Org. Cost 17,108 - 17,108
Registration and filing fees 21,017 147,863 168,880
Other 44,272 155,875 200,147
-------------------------------------------------------------
Subtotal 1,729,687 1,592,391 (534,145) 2,787,933
Shareholder servicing and distribution fees:
Class A Shares 427,290 526,840 (179,948) (C) 774,182
Class B Shares 2,660 2,660
Class S Shares - -
Interest expense - -
Fees waived and /or expenses absorbed by
investment advisor (923,459) (198,432) 1,121,891 (D) -
-------------------------------------------------------------
Subtotal 1,233,518 1,923,459 407,798 3,564,775
Fees reduced by credits allowed by the custodian - (88,033) (88,033)
-------------------------------------------------------------
Net expenses 1,233,518 1,835,426 407,798 3,476,742
-------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 10,721,117 12,584,944 (407,798) 22,898,263
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains from:
Security transactions (241) - (241)
Forward foreign currency contracts and
foreign currency transactions - - -
Futures contracts - - -
Net unrealized appreciation/(depreciation) of:
Securities - - -
Forward foreign currency contracts - - -
Foreign currency, written options, futures
contracts and other assets and liabilities - - -
-------------------------------------------------------------
Net Real. And unreal G/(L) on investments (241) - - (241)
-------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $10,720,876 $12,584,944 $ (407,798) $22,898,022
=============================================================
</TABLE>
(A) Decrease in management fees for Griffin shareholders to reflect the new fee
structure. Fees are based on .45% of average daily net assets up to
$1,000,000,000 and .40% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Elimination of Griffin 12b-1 fees and addition of shareholder servicing fee
at a monthly rate of $1.85 per shareholder account.
(D) Fees waived and/or expense absorbed by investment advisor has been
eliminated.
<PAGE>
Portfolio of Investments
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
Principal Amount April 30, 1998 (Unaudited) Market Value
- ----------------------------------------- --------------------------------------------
WM Group Griffin WM Group Griffin
Money Market Money Market Pro Forma Money Market Money Market Pro Forma
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
CERTIFICATE OF DEPOSIT - 2.9%
Bankers Trust New York Corporation,
5,000,000 - 5,000,000 5.970% due 08/28/1998................ 4,999,844 - 4,999,844
5,000,000 - 5,000,000 5.940% due 09/10/1998................ 4,998,946 - 4,998,946
5,000,000 - 5,000,000 PNC Bank National, - - -
- - - 5.25% due 06/05/1998................. 5,000,230 - 5,000,230
- 5,000,000 5,000,000 Morgan Guaranty, 5.71%, 01/08/99....... - 4,998,688 4,998,688
--------------------------------------------
Total Certificates of Deposit 14,999,020 4,998,688 19,997,708
CERTIFICATE OF DEPOSIT (YANKEE) - 7.2%
2,000,000 - 2,000,000 Bank of Nova Scotia, - - -
- - - 5.675% due 03/04/1999................ 1,999,433 - 1,999,433
3,000,000 - 3,000,000 Barclays Bank PLC, - - -
- - - 5.940% due 06/19/1998................ 2,999,135 - 2,999,135
7,000,000 - 7,000,000 Credit Anstalt NU YC, - - -
- - - 5.890% due 11/17/1998................ 7,005,355 - 7,005,355
7,000,000 - 7,000,000 Credit Suisse First Boston, NY, - - -
- - - 5.740% due 01/07/1999................ 7,000,000 - 7,000,000
- 7,000,000 7,000,000 Dresdner U.S. Bank, 5.51%, 01/15/99.... - 6,998,093 6,998,093
5,000,000 - 5,000,000 Societe Generale, New York, - - -
- - - 5.665% due 03/23/1999................ 4,997,101 - 4,997,101
5,000,000 - 5,000,000 Swiss Bank, - - -
- - - 5.825% due 04/29/1999................ 4,998,765 - 4,998,765
- 11,000,000 11,000,000 Swiss Bank Corporation, New York, 5.69%,
01/07/99............................ - 10,997,825 10,997,825
2,000,000 - 2,000,000 Swiss Bank Corporation, New York, - - -
- - - 5.820% due 06/04/1998................ 2,000,424 - 2,000,424
--------------------------------------------
Total Certificates of Deposit (Yankee) 31,000,213 17,995,918 48,996,131
COMMERCIAL PAPER (YANKEE) - 18.0%
American Honda Finance Corporation, - - -
7,000,000 - 7,000,000 5.520% due 05/15/1998................ 6,984,973 - 6,984,973
6,500,000 - 6,500,000 5.500% due 05/21/1998................ 6,480,139 - 6,480,139
3,700,000 - 3,700,000 British Gas Capital Inc., - - -
- - - 5.520% due 08/24/1998................ 3,634,747 - 3,634,747
7,500,000 - 7,500,000 Caisse D'Amortissement de la
ette Sociale (CADES) - - -
- - - 5.450% due 08/03/1998................ 7,393,256 - 7,393,256
- - - Den Norske Stats Oljeselskap A/S, - - -
5,000,000 - 5,000,000 5.500% due 05/18/1998................ 4,987,014 - 4,987,014
7,500,000 - 7,500,000 5.520% due 06/04/1998................ 7,460,900 - 7,460,900
- 11,000,000 11,000,000 Deustche Bank, 5.50%, 06/12/98 (d)..... - 10,929,481 10,929,481
8,000,000 - 8,000,000 Halifax Building Society, - - -
- - - 5.690% due 05/15/1998................ 7,982,308 - 7,982,308
- - - Sharp Electronics Corporation, - - -
5,000,000 - 5,000,000 5.570% due 05/06/1998................ 4,996,132 - 4,996,132
5,000,000 - 5,000,000 5.550% due 05/14/1998................ 4,989,979 - 4,989,979
5,000,000 - 5,000,000 Societe Generale North America, Inc., - - -
- - - 5.510% due 05/27/1998................ 4,980,103 - 4,980,103
- - - Toshiba International, - - -
1,800,000 - 1,800,000 5.550% due 05/07/1998................ 1,798,335 - 1,798,335
5,000,000 - 5,000,000 5.550% due 05/26/1998................ 4,980,729 - 4,980,729
- - - Toyota Motor Credit Corporation, - - -
- 11,000,000 11,000,000 5.46%, 06/24/98 (d).................. - 10,909,910 10,909,910
- - - Toyota Motor Credit Corporation, - - -
4,080,000 - 4,080,000 5.550% due 05/01/1998................ 4,080,000 - 4,080,000
5,000,000 - 5,000,000 5.500% due 05/18/1998................ 4,987,014 - 4,987,014
3,500,000 - 3,500,000 5.500% due 05/21/1998................ 3,489,306 - 3,489,306
10,500,000 - 10,500,000 5.510% due 05/29/1998................ 10,454,982 - 10,454,982
- 11,000,000 11,000,000 UBS Financial, 5.48%, 06/02/98 (d)..... - 10,946,418 10,946,418
--------------------------------------------
Total Commercial Paper (Yankee) 89,679,917 32,785,809 122,465,726
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Amount Pro Forma Combined Portfolio of Investments Market Value
- ----------------------------------------- ------------------------------------------
WM Group Griffin April 30, 1998 (Unaudited) WM Group Griffin
Money Market Money Market Pro Forma Money Market Money Market Pro Forma
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C>
COMMERCIAL PAPER (DOMESTIC) - 51.9%
- 11,000,000 11,000,000 Abbey National, 5 49%, 07/02/98 (d) - 10,895,995 10,895,995
- 11,000,000 11,000,000 American Express Credit, 5.52%, 06/18/98 (d) - 11,000,000 11,000,000
- - - American General Finance Corporation, - - -
- 11,000,000 11,000,000 5.55%, 05/12/98 (d)............. - 11,000,000 11,000,000
7,500,000 - 7,500,000 Bear Sterns Companies Inc., - - -
- - - 5.550% due 05/08/1998...............................7,491,906 - 7,491,906
- - - Bell Atlantic Financial Services Inc., - - -
- 11,000,000 11,000,000 5.48%, 05/19/98 (d)............. - 10,969,860 10,969,860
5,000,000 - 5,000,000 Beneficial Corporation, - - -
- - - 5.520% due 06/16/1998...............................4,964,733 - 4,964,733
- - - Caterpillar Finance Corporation, - - -
- 11,000,000 11,000,000 5.44%, 07/23/98 (d)............. - 10,862,036 10,862,036
- - - Caterpillar Financial Services Inc., - - -
7,500,000 - 7,500,000 5.520% due 05/14/1998...............................7,485,050 - 7,485,050
- 11,000,000 11,000,000 Chevron Oil Finance, 5.50%, 06/02/98 (d).... - 11,000,000 11,000,000
- - - Chrysler Financial Corporation, - - -
5,000,000 - 5,000,000 5.510% due 05/18/1998...............................4,986,990 - 4,986,990
7,500,000 - 7,500,000 5.530% due 06/11/1998...............................7,452,765 - 7,452,765
2,000,000 - 2,000,000 Columbia University, - - -
- - - 5.530% due 05/08/1998...............................1,997,849 - 1,997,849
5,000,000 - 5,000,000 Dean Witter Discover & Company, - - -
- - - 6.000% due 08/10/1998...............................5,001,083 - 5,001,083
5,000,000 - 5,000,000 Deere & Company, - - -
- - - 5.500% due 05/15/1998...............................4,989,306 - 4,989,306
- 11,000,000 11,000,000 Dupont E.I. Nemour, 5.47%, 05/26/98 (d).... - 10,958,215 10,958,215
- 11,000,000 11,000,000 Emerson Electric, 5.47%, 06/04/98 (d) - 10,943,173 10,943,173
- 11,100,000 11,100,000 First of America Bank, 5.52%, 05/11/98 (d). - 11,100,000 11,100,000
- - - Ford Motor Credit Company, - - -
3,500,000 - 3,500,000 5.510% due 05/13/1998...............................3,493,572 - 3,493,572
4,900,000 - 4,900,000 5.500% due 05/20/1998...............................4,885,776 - 4,885,776
- - - Ford Motor Credit Corporation, - - -
- 11,000,000 11,000,000 5.55%, 05/12/98 (d)............. - 11,000,000 11,000,000
- 11,500,000 11,500,000 GECC, 5.52%, 06/05/98 (d) - 11,500,000 11,500,000
5,000,000 - 5,000,000 General Electric Capital Corporation, - - -
- - - 5.500% due 05/14/1998...............................4,990,069 - 4,990,069
- - - General Electric Company, - - -
5,000,000 - 5,000,000 5.530% due 05/18/1998...............................4,986,943 - 4,986,943
8,000,000 - 8,000,000 5.380% due 08/19/1998...............................7,866,725 - 7,866,725
- - - General Motors Acceptance Corporation, - - -
5,000,000 - 5,000,000 5.510% due 05/08/1998...............................4,994,643 - 4,994,643
5,000,000 - 5,000,000 5.510% due 05/18/1998...............................4,986,990 - 4,986,990
- - - General Motors Acceptance Corporation, - - -
- 11,000,000 11,000,000 5.53%, 06/19/98 (d)............. - 11,000,000 11,000,000
10,000,000 - 10,000,000 Goldman Sachs & Company, - - -
- - - 5.510% due 05/15/1998...............................9,978,592 - 9,978,592
5,000,000 - 5,000,000 Hitachi America Limited, - - -
- - - 5.520% due 05/13/1998...............................4,990,800 - 4,990,800
12,000,000 - 12,000,000 Household Finance Corporation, - - -
- - - 5.520% due 05/22/1998..............................11,961,378 - 11,961,378
- - - International Business Machines Credit - - -
- 11,000,000 11,000,000 Corporation, 5.44%, 06/19/98 (d).... - 10,918,551 10,918,551
7,500,000 - 7,500,000 International Business Machines Credit Corporation, - - -
- - - 5.500% due 05/14/1998...............................7,485,104 - 7,485,104
- - - International Lease Finance Corporation, - - -
3,000,000 - 3,000,000 5.520% due 05/06/1998...............................2,997,700 - 2,997,700
4,234,000 - 4,234,000 6.500% due 07/15/1998...............................4,240,722 - 4,240,722
5,000,000 - 5,000,000 John Deere Capital Corp. - - -
5.500% due 05/22/1998...............................4,983,958 - 4,983,958
Merrill Lynch & Company Inc., - - -
5,000,000 - 5,000,000 5.500% due 06/15/1998...............................4,965,313 - 4,965,313
7,500,000 - 7,500,000 Monsanto Company, - - -
5.500% due 05/14/1998...............................7,485,104 - 7,485,104
7,500,000 - 7,500,000 Morgan Stanley, Dean Witter, Discover, - - -
5.500% due 05/27/1998...............................7,470,208 - 7,470,208
Sears Roebuck Acceptance Corporation, - - -
5,000,000 - 5,000,000 5.520% due 05/20/1998...............................4,985,433 - 4,985,433
7,500,000 - 7,500,000 5.540% due 06/15/1998...............................7,448,063 - 7,448,063
8,700,000 - 8,700,000 Trident Capital Inc., - - -
5.660% due 06/12/1998(c)............................8,642,589 - 8,642,589
Weyerhauser Real Estate Company, - - -
5,000,000 - 5,000,000 5.550% due 05/04/1998...............................5,000,000 - 5,000,000
5,000,000 - 5,000,000 5.500% due 05/22/1998...............................4,983,958 - 4,983,958
8,700,000 - 8,700,000 Windmill Funding Corporation, - - -
5.090% due 05/15/1998(c)............................8,626,231 - 8,626,231
Xerox Credit Corporation, 5.46%, - - -
- 8,000,000 8,000,000 05/04/98 (d).................... - 7,996,360 7,996,360
7,500,000 - 7,500,000 Xerox Corporation, - - -
- - - 5.500% due 05/21/1998...............................7,477,083 - 7,477,083
7,500,000 - 7,500,000 Xerox Credit Corporation, - - -
5.510% due 06/12/1998...............................7,451,788 - 7,451,788
-----------------------------------------
Total Commercial Paper (Domestic) 201,748,424 151,144,190 352,892,614
</TABLE>
<PAGE>
WM GROUP MONEY MARKET FUND & GRIFFIN MONEY MARKET FUND
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the combined financial
position of the WM Group Money Market Fund and the Griffin Money Market
Fund at April 30, 1998 and the pro forma combined results of operations for
the year ended December 30, 1997 and the four month period ended April 30,
1998 as though the reorganization had occurred on January 1, 1997.
The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of how
the pro forma combined financial statements would have appeared had the
reorganization actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds incorporated by
reference in the Statement of Additional Information.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the Griffin Money Market Fund in exchange for
shares of WM Group Money Market Fund. Under generally accepted accounting
principles, the historical cost of investment securities will be carried
forward to the surviving entity.
The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are stated at amortized cost
which approximates fair value. Historical cost amounts represent the
combined cost basis of the securities.
3. Pro Forma Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of the WM Group
shares at April 30, 1998.
4. Pro Forma Statements of Operations
<PAGE>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES AT APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GRIFFIN WM
TAX-FREE TAX-EXEMPT
MONEY MONEY PRO FORMA PRO FORMA
MARKET FUND MARKET FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $26,518,425 $28,730,172 $55,248,597
-
------------------------------------------------------------
Total Investments 26,518,425 28,730,172 - 55,248,597
Cash/Cash Equivalents 609 211,908 212,517
Receivable for dollar roll fee income - -
Dividends and/or interest receivable 301,676 274,864 576,540
Receivable for Fund shares Sold 138,756 138,756
Receivable for investment securities sold - -
Unamortized organization costs 8,021 - 8,021
Prepaid expenses and other assets 15,887 15,887
------------------------------------------------------------
Total Assets 26,828,731 29,371,587 - 56,200,318
LIABILITIES:
Payable for dollar roll transactions - -
Variation margin payable - -
Reverse repurchase agreements - -
Payable for Fund shares redeemed - 230,658 230,658
Payable for investment securities purchased - 1,691,103 1,691,103
Investment advisory fee payable 10,620 10,620
Administration fee payable -
Shareholder servicing and distribution fees payable 2,284 2,284
Dividends payable 64,923 79,434 144,357
Accrued legal and audit fees 5,235 5,235
Accrued transfer agent fees - -
Accrued Trustees' fees and expenses 5,182 5,182
Accrued registration and filing fees payable 136 136
Due to Custodian -
Net unrealized depreciation of fwd for curr cts - -
Accrued Expenses and other payables 32,626 5,172 37,798
------------------------------------------------------------
Total Liabilities 97,549 2,029,824 - 2,127,373
------------------------------------------------------------
------------------------------------------------------------
TOTAL NET ASSETS 26,731,182 27,341,763 - 54,072,945
============================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) - - -
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions (4,692) - (4,692)
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities - - -
Paid-in capital $26,735,874 27,341,763 54,077,637
------------------------------------------------------------
TOTAL NET ASSETS 26,731,182 27,341,763 - 54,072,945
============================================================
NET ASSETS:
Class A Shares $26,731,182 $27,329,668 54,060,850
============================================================
Class B Shares $ 12,095 12,095
============================================================
SHARES OUTSTANDING:
Class A Shares 26,736,874 27,329,668 (5,692.00) (a) 54,060,850
============================================================
Class B Shares 12,095 - 12,095
============================================================
NET ASSET VALUE PER SHARE:
Class A Shares $ 1.00 $ 1.00 $ 1.00
============================================================
Class B Shares $ 1.00 $ 1.00
============================================================
</TABLE>
See accompanying notes to pro forma financial statemets
- --------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of WM Group
shares at April 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
Principal Amount April 30, 1998 (Unaudited) Market Value
- ------------------------------------------- -------------------------------------------
WM Tax-Exempt Griffin Tax-Free WM Tax-Exempt Griffin Tax-Free
Money Market Money Market Pro Forma Money Market Money Market Pro Forma
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
STATE AND MUNICIPAL SECURITIES - (100.9%)
ALABAMA
500,000 - 500,000 Alabama State Special Care Authority
Facilities Financing (Montgomery Hospital
Depreciable Assets), Series 1985, 4.10% ,
due 4/01/2015, (a) 500,000 - 500,000
500,000 - 500,000 Athens, AL, Industrial Development Board - - -
(Coilplus, Inc. Project), 500,000 - 500,000
Series 1984, 4.75% , due 9/19/1999, (a) --------------------------------------
1,000,000 _ 1,000,000
ALASKA
Alaska Municipal Power
_ 340,000 340,000 5.00%, 12/01/26............. - 340,000 340,000
ARIZONA
Phoenix, Arizona Industrial Development
_ 300,000 300,000 Authority -
4.00%, 10/15/06.......... - 300,000 300,000
300,000 - 300,000 Arizona State Health Facilities Authority - - -
Revenue (Pooled Loan Program), Series 1985,
4.10%, due 10/01/2015, (a)
500,000 - 500,000 Tempe, AZ, Unified High School District
Unlimited Tax Note, 14.35%, - - -
due 7/01/1998 508,457 - 508,457
--------------------------------------
808,457 300,000 1,108,457
CALIFORNIA
- California State Revenue Anticipation
- 1,000,000 1,000,000 Notes, 4.50%, 06/30/98 .......... - 1,001,502 1,001,502
- Los Angeles County, California Tax & Revenue - - -
- Anticipation Notes, Series A, - - -
- 600,000 600,000 4.50%, 06/30/98 ......................
- Santa Clara Tax & Revenue Anticipation Notes, - 600,617 600,617
- 800,000 800,000 4.75%, 10/01/98 ...................... - 802,880 802,880
500,000 - 500,000 Auburn, CA, Unified School District, 1997
Tax and Revenue
- - - Anticipation Notes, 4.25%, due 10/13/1998 500,932 500,932
300,000 - 300,000 Los Angeles Regional Airport (American
Airlines/LA International), - - -
- - - Series E, 3.95%, due 12/01/2024, (a) 300,000 - 300,000
100,000 - 100,000 Los Angeles Regional Airport (American
Airlines/LA International), - - -
- - - Series G, 3.95%, due 12/01/2024, (a) 100,000 - 100,000
200,000 - 200,000 Los Angeles Regional Improvement
Corporation Sublease Revenue (LA - - -
- - - International), LAX2, 3.95%, due
12/01/2025, (a) 200,000 - 200,000
245,000 - 245,000 Monterey County, CA, Natividad Medical
Center, Series E, - - -
- - - 4.00%, due 8/01/1998 245,182 - 245,182
500,000 - 500,000 Oxnard, CA, School District 1997 Tax and
Revenue Anticipation Notes, - - -
- - - 4.50%, due 8/13/1998 500,891 - 500,891
--------------------------------------
1,847,005 2,404,999 4,252,004
COLORADO
210,000 - 210,000 University of Northern Colorado, Refunding
Revenue Bonds (Auxiliary Facilities
- - - System) Series A, 3.50%, due 6/1/1998 210,000 _ 210,000
DISTRICT OF COLUMBIA
1,500,000 - 1,500,000 District of Columbia Revenue Bonds,
Georgetown University, Series B
- - - 3.75%, due 4/1/1999 1,500,000 _ 1,500,000
FLORIDA
- - - Citrus Park Community Development District,
- 600,000 600,000 Capital Improvements, 3.35%, 11/01/16..... - 600,000 600,000
- - - State of Florida Board of Regents
University System - - -
- 470,000 470,000 Improvement Revenue, 7.00%, 07/01/98 ..... - 472,718 472,187
--------------------------------------
- 1,072,187 1,072,187
GEORGIA
- - - Municipal Electric Authority of Georgia,
- 700,000 700,000 5.00%, 06/01/20......... - 700,000 700,000
- - - Municipal Gas Authority of Georgia, - - -
- 1,000,000 1,000,000 Gas Revenue, 3.50%, 07/08/98 ........... - 1,000,000 1,000,000
200,000 - 200,000 Albany/Dougherty County Hospital Authority,
GA, Hospital
- - - Revenue Anticipation Certificates, Series 1990A, - - -
- - - 6.70%, due 9/01/1998. 201,834 - 201,834
200,000 - 200,000 Georgia State Unlimited General Obligation,
Series C, - - -
- - - 4.50%, due 8/01/1998 200,328 - 200,328
--------------------------------------
402,162 1,700,000 2,102,162
ILLINOIS
- - - Illinois Development Financing Authority
- 800,000 800,000 Revenue, 5.00%, 09/01/08 ............... - 800,000 800,000
- - - Illinois Health System, Sherman Health - - -
- 720,000 720,000 Facilities Revenue, 3.90%, 08/01/98 .... - 720,000 720,000
- - - Will County, Illinois Exempt Facilities - - -
- 800,000 800,000 Revenue, 5.00%, 03/01/28 ............... - 800,000 800,000
400,000 - 400,000 Chicago O'Hare International Airport
General Airport Second Lien Revenue - - -
- - - Bonds, 1984 Series B, 4.10%, due 1/01/2015,
(a) 400,000 - 400,000
</TABLE>
<PAGE>
Pro Forma Combined Portfolio of Investments
April 30, 1938 (UNAUDITED)
<TABLE>
<CAPTION>
Principal Amount
WM Griffin
Tax-Exempt Tax-Free
Money Market Money Market Pro Forma
Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
NEBRASKA
- - - Nebraska Higher Education Loan Program,
- 400,000 400,000 5.00%, 12/01/16................................ - 400,000 400,000
- 350,000 350,000 3.95%, 08/01/18................................ - 350,000 350,000
--------------------------------
- 750,000 750,000
NEVADA
- - - Clark County, Nevada Airport System
- - - Subordinated Lien Revenue, Series A-1,
- 800,000 800,000 5.00%, 07/01/25................................ - 800,000 800,000
NEW JERSEY
250,000 - 250,000 New Jersey Housing and Mortgage Finance Agency,
(Multifamily 250,000 - 250,000
- - - Housing Revenue Bonds) 1995 Series A, 4.15%,
due 5/01/1998 - - -
100,000 - 100,000 New Jersey State Transportation Trust Fund, Series A - - -
- - - 5.00%, due 12/15/1998 100,757 - 100,757
--------------------------------
350,757 - 350,757
NEW MEXICO
- - - New Mexico State Tax & Revenue Anticipation
- 480,000 480,000 Notes, 4.50%, 06/30/98 ........................ - 480,484 480,484
NEW YORK
300,000 - 300,000 Jefferson County, N.Y., Industrial Development
Agency, Watertown-Carthage TV,
- - - 3.60%, due 12/01/2012, (a) 300,000 - 300,000
300,000 - 300,000 New York, N.Y. Series B, Subseries B4, - - -
- - - 3.90%, due 8/15/2023, (a) 300,000 - 300,000
130,000 - 130,000 Shenendehowa Central School District, N.Y.
Clifton Park - - -
- - - 5.30%, due 8/15/1998 130,610 - 130,610
--------------------------------
730,610 - 730,610
NORTH CAROLINA
- - - North Carolina Educational Facilities Finance
- - - Agency Bowman Gray School,
- 400,000 400,000 5.00%, 09/01/20................................ - 400,000 400,000
200,000 - 200,000 Cumberland County NC Industrial Facility &
Pollution Control, - - -
- - - (Monsanto Company Project), 4.10%, due 6/1/2012, (a) 200,000 - 200,000
--------------------------------
200,000 400,000 600,000
NORTH DAKOTA
125,000 - 125,000 Grand Forks, ND, Sales Tax Revenue, Aurora
Project, Series A,
- - - 3.90%, due 12/15/1998 125,074 - 125,074
OHIO
- - - Student Loan Funding Corporation Cincinnati,
- - - Ohio Student Loan Revenue, Series A,
- 200,000 200,000 5.00%, 01/01/07................................ - 200,000 200,000
100,000 - 100,000 Columbus, OH, Limited General Obligation, Series A,
- - - 3.60%, due 5/15/98 100,000 - 100,000
100,000 - 100,000 Columbus Ohio, Unlimited General Obligation, Series 1, - - -
- - - 3.90%, due 6/01/2016* 100,000 - 100,000
145,000 - 145,000 Little Miami, OH, Local School District - - -
- - - 3.60%, due 12/01/1998 145,000 - 145,000
505,000 - 505,000 Toledo, OH, Limited Tax General Obligation Bonds,
Various Purpose - - -
- - - Improvement Bonds, Series 1997, 3.90%, due 12/01/1998 505,223 - 505,223
--------------------------------
850,223 200,000 1,050,223
OREGON
- - - Oregon State General Obligation,
- 880,000 880,000 4.50%, 08/01/98 ............................... - 881,910 881,910
100,000 - 100,000 Klamath Falls, OR, Electric Revenue, Salt Caves
Hydroelectric, Series C - - -
- - - 3.80%, due 5/1/2023 (Mandatory Put Bonds) 100,000 - 100,000
500,000 - 500,000 Oregon State, Series 73E, 4.15%, due 12/01/2016, (a) 500,000 - 500,000
200,000 - 200,000 Portland, OR, Limited Tax Improvement Bonds, 1995 Series A
8.00%, due 6/01/98 200,699 - 200,699
350,000 - 350,000 Portland, OR, Water System Revenue Bonds, Series 1995,
4.10%, due 8/01/1998 350,250 - 501,301
500,000 - 500,000 Washington County, OR, School District # 48J (Beaverton),
Unlimited Tax - - -
- - - General Obligation, 7.40%, due 6/01/1998,
Pre-refunded at 100 501,301 - 501,301
--------------------------------
1,652,250 881,910 2,534,160
PENNSYLVANIA
- - - Allegheny County, Pennsylvania Hospital
- - - Development Authority Hospital Revenue,
- 500,000 500,000 Series B, 5.00%, 09/01/20 ..................... - 500,000 500,000
- - - Delaware Valley, Pennsylvania Regional - - -
- - - Finance Authority, Local Government - - -
- 300,000 300,000 Revenue, 5.00%, 12/01/18 ...................... - 300,000 300,000
- 500,000 500,000 5.00%, 12/01/20................................ - 500,000 500,000
100,000 - 100,000 Pennsylvania State Unlimited General Obligation Bonds, - - -
- - - Second Series A of 1988, 6.80%, due 5/15/1998 100,111 - 100,111
--------------------------------
100,111 1,300,000 1,400,111
RHODE ISLAND
250,000 - 250,000 Providence, RI, Unlimited Tax General Obligation
Refunding Bonds,
- - - 6.10%, due 9/01/1998 251,833 - 251,833
TENNESSEE
- - - Health & Educational Facilities Board of the
- - - Metropolitan Government of Nashville &
- 350,000 350,000 Davidson County, 4.50%, 07/01/98 .............. - 350,311 350,311
570,000 - 570,000 Hendersonville Industrial Development Board, Multifamily
Housing Revenue - - -
- - - Bonds (Windsor Park), 4.15%, due 2/15/2028, (a) 570,000 - 570,000
600,000 - 600,000 Metro Government Nashville/Davidson County, TN,
Industrial Development - - -
- - - Multifamily Housing Revenue Bonds (Chimneytop II), - - -
- - - 4.375%, due 9/01/2006, (a) 600,000 - 600,000
--------------------------------
1,170,000 350,311 1,520,311
</TABLE>
<PAGE>
WM Tax-Exempt Money Market Fund
Pro Forma Combined Statement of Operations
For the Period Ended 4/30/98
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
TAX-FREE TAX-EXEMPT PRO FORMA PRO FORMA
MONEY MARKET MONEY MARKET ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income $ - $ - $ - $ -
Foreign Withholding Tax on Dividend Income - - - -
Interest Income 267,938 367,152 - 635,090
Fee Income - - - -
-----------------------------------------------------------
Total Investment Income 267,938 367,152 - 635,090
-----------------------------------------------------------
EXPENSES:
Investment Advisory Fees 37,414 45,025 (3,414) (A) 79,025
Administration Fees 14,785 - (14,966) (B) -
Custodian Fees 9,243 2,683 - 11,926
Legal and Audit Fees 9,018 4,993 - 14,011
Trustees' Fees and Expenses 2,604 4,823 - 7,427
Amortization of Organization Costs 5,577 - - 5,577
Registration and Filing Fees 1,257 4,694 - 5,951
Other 1,925 6,589 - 8,514
-----------------------------------------------------------
Subtotal 82,004 68,807 (18,380) 132,431
Shareholder Servicing and Distribution Fees
Class A Shares 14,966 6,787 (6,730) (C) 15,023
Class B Shares - 56 - 56
Class S Shares - - - -
Interest Expense - - - -
Fees Waived and/or Expenses Absorbed by Investment
Advisor (43,451) (19,515) 12,748 (C) (50,218)
-----------------------------------------------------------
Subtotal 53,519 56,135 (12,362) 97,292
Fees Reduced by Credits Allowed by the Custodian - (705) - (705)
-----------------------------------------------------------
Net Expenses 53,519 56,135 (12,362) 97,292
-----------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 24,419 311,772 12,362 538,503
-----------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains/(Loss) from:
Security Transactions - - - -
Forward Foreign Currency Contracts and
Foreign Currency Transactions - - - -
Futures Contracts - - - -
Net Unrealized Appreciation/(Depreciation) of:
Securities - - - -
Forward Foreign Currency Contracts - - - -
Foreign Currency, Written Options, Futures -
Contracts and Other Assets and Liabilities - - - -
-----------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investment - - - -
-----------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 214,419 $ 311,722 $ 12,362 $ 538,503
===========================================================
</TABLE>
(A) Decrease in management fees for Griffin shareholders to reflect the new fee
structure. Fees are based on .45% of average daily net assets up to
$100,000,000 and .40% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Elimination of Griffin 12b-1 fees and addition of shareholder servicing
fee at a monthly rate of $1.85 per shareholder account.
(D) Fees waived and/or expense absorbed by investment advisor adjusted to .14%
of average daily net assets.
<PAGE>
WM Tax-Exempt Money Market Fund
Pro Forma Combined Statement of Operations
For the Year Ended 12/31/98
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
TAX-FREE TAX-EXEMPT
MONEY MONEY PRO FORMA PRO FORMA
MARKET FUND MARKET FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income $ - $ - $ - $ -
Foreign w/holding tax on dividend income - - - -
Interest Income 562,713 1,186,528 - 1,749,241
Fee Income - - - -
--------------------------------------------------------------------------------
Total Investment Income 562,713 1,186,528 - 1,749,241
--------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fee 75,566 143,965 (6,670) (A) 212,861
Administration Fee 30,226 - (30,226) (B) -
Custodian Fee 26,015 13,859 - 39,874
Legal and audit fees 12,623 6,331 - 18,954
Trustees' fees and expenses 8,213 8,499 - 16,712
Amortization of Org. Cost 17,107 - - 17,107
Registration and filing fees 2,007 18,754 - 20,761
Other 4,865 11,996 - 16,861
--------------------------------------------------------------------------------
Subtotal 176,622 203,404 (36,896) 343,130
Shareholder servicing and distribution fees:
Class A Shares 30,226 26,630 (5,517) (C) 51,339
Class B Shares - 149 - 149
Class S Shares - - - -
Interest expense - - - -
Fees waived and /or expenses absorbed by
investment advisor (101,804) (45,307) 20,408 (D) (126,703)
--------------------------------------------------------------------------------
Subtotal 105,044 184,876 (22,005) 267,915
Fees reduced by credits allowed by the custodian - (7,751) - (7,751)
--------------------------------------------------------------------------------
Net expenses 105,044 177,125 (22,005) 260,164
-------------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 457,669 1,009,403 22,005 1,489,077
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains from:
Security transactions - - - -
Forward foreign currency contracts and
foreign currency transactions - - - -
Futures contracts - - - -
Net unrealized appreciation/(depreciation) of:
Securities - - - -
Forward foreign currency contracts - - - -
Foreign currency, written options, futures
contracts and other assets and liabilities - - - -
--------------------------------------------------------------------------------
Net Real. And unreal G/(L) on investments - - - -
--------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 457,669 $ 1,009,403 $ 22,005 $ 1,489,077
================================================================================
</TABLE>
(A) Decrease in management fees for Griffin shareholders to reflect the new
fee structure. Fees are based on .45% of average daily net assets up to
$1,000,000,000 and .40% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Elimination of Griffin 12b-1 fees and addition of shareholder servicing
fee at a monthly rate of $1.85 per shareholder account.
(D) Fees waived and/or expense absorbed by investment advisor adjusted to .14%
of average daily net assets.
<PAGE>
WM GROUP TAX-EXEMPT MONEY MARKET FUND & GRIFFIN TAX-FREE MONEY MARKET FUND
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the combined financial
position of the WM Tax-Exempt Money Market Fund and the Griffin Tax-Free
Money Market Fund at April 30, 1998 and the pro forma combined results of
operations for the year ended December 30, 1997 and the four month period
ended April 30, 1998 as though the reorganization had occurred on January 1,
1997.
The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of how
the pro forma combined financial statements would have appeared had the
reorganization actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds incorporated by
reference in the Statement of Additional Information.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the Griffin Tax-Free Money Market Fund in exchange
for shares of the WM Tax-Exempt Money Market Fund. Under generally accepted
accounting principles, the historical cost of investment securities will be
carried forward to the surviving entity.
The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are stated at amortized cost
which approximates fair value. Historical cost amounts represent the
combined cost basis of the securities.
3. Pro Forma Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of the WM Group
shares at April 30, 1998.
4. Pro Forma Statements of Operations
<PAGE>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
WM
GRIFFIN SHORT-TERM
SHORT-TERM HIGH QUALITY PRO FORMA PRO FORMA
BOND FUND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $94,148,234 $42,544,286 $136,692,520
------------------------------------------------------------
Total Investments 94,148,234 42,544,286 - 136,692,520
Cash/Cash Equivalents (96,860) 138,548 41,688
Receivable for dollar roll fee income - -
Dividends and/or interest receivable 1,508,905 444,756 1,953,661
Receivable for Fund shares Sold 2,000 2,000
Receivable for investment securities sold 19,132 19,132
Unamortized organization costs 1,182 1,182
Receivable from investment advisor 23,039 23,039
Prepaid expenses and other assets 8,594 1,397 9,991
------------------------------------------------------------
Total Assets 95,568,873 43,174,340 - 138,743,213
LIABILITIES:
Payable for dollar roll transactions - -
Variation margin payable 1,688 1,688
Reverse repurchase agreements - -
Payable for Fund shares redeemed - 82,015 82,015
Payable for investment securities purchased - - -
Investment advisory fee payable - -
Administration fee payable - -
Shareholder servicing and distribution fees payable 11,029 11,029
Dividends payable 388,722 66,483 455,205
Accrued legal and audit fees - -
Accrued transfer agent fees - -
Accrued Trustees' fees and expenses - -
Accrued registration and filing fees payable - -
Due to Custodian - -
Net unrealized depreciation of fwd for curr cts - -
Accrued Expenses and other payables 79,199 50,349 129,548
------------------------------------------------------------
Total Liabilities 467,921 211,564 - 679,485
------------------------------------------------------------
------------------------------------------------------------
TOTAL NET ASSETS $95,100,952 $42,962,776 $ - $138,063,728
============================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) - (650) (650)
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions 14,746 (1,743,719) (1,728,973)
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities 508,300 158,236 666,536
Paid-in capital 94,577,906 44,548,909 139,126,815
------------------------------------------------------------
TOTAL NET ASSETS $95,100,952 $42,962,776 $ - $138,063,728
============================================================
NET ASSETS:
Class A Shares $94,954,919 $35,551,039 $130,505,958
============================================================
Class B Shares $ 146,033 $ 3,458,674 $ 3,604,707
============================================================
Class S Shares $ 850,463 $ 850,463
============================================================
Class I Shares $ 3,102,600 $ 3,102,600
============================================================
SHARES OUTSTANDING:
Class A Shares 9,369,850 15,300,501 31,496,968 (a) 56,167,319
============================================================
Class B Shares 14,420 1,488,540 48,430 (a) 1,551,390
============================================================
Class S Shares 366,038 - 366,038
============================================================
Class I Shares 1,335,530 - 1,335,530
============================================================
NET ASSET VALUE PER SHARE:
Class A Shares $ 10.13 $ 2.32 $ 2.32
============================================================
Class B Shares $ 10.13 $ 2.32 $ 2.32
============================================================
Class S Shares $ 2.32 $ 2.32
============================================================
Class I Shares $ 2.32 $ 2.32
============================================================
</TABLE>
See accompanying notes to pro forma financial statemets
- --------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of WM Group
shares at June 30, 1998.
<PAGE>
WM Short Term High Quality Bond Fund
Pro Forma Combined Statement of Operations
For the Year Ended June 30, 1998
(unaudited)
<TABLE>
<CAPTION>
WM
GRIFFIN SHORT TERM
SHORT-TERM HIGH QUALITY PRO FORMA PRO FORMA
BOND FUND BOND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - -
Foreign w/holding tax on dividend income -
Interest Income $ 3,734,214 $ 1,898,116 $ 5,632,330
Fee Income - -
----------------------------------------------------------
Total Investment Income 3,734,214 1,898,116 - 5,632,330
----------------------------------------------------------
EXPENSES:
Investment Advisory Fee 308,099 145,180 453,279
Administration Fee 123,240 33,910 (157,150) (A) -
Custodian Fee 75,696 8,438 84,134
Legal and audit fees 29,852 23,529 53,381
Trustees' fees and expenses 7,943 3,790 11,733
Amortization of Org. Cost 5,103 3,545 8,648
Registration and filing fees 13,915 25,417 39,332
Transfer agent fee - 19,227 203,412 (B) 222,689
Other 35,990 44,537 80,527
----------------------------------------------------------
Subtotal 599,838 288,346 (46,262) 953,723
Shareholder servicing and distribution fees:
Class A Shares 153,647 55,796 209,448
Class B Shares 1,610 30,496 32,106
Class S Shares 6,400 6,400
Interest expense - -
Fees waived and /or expenses absorbed by
investment advisor (347,704) (133,982) 27,957 (C) (453,729)
----------------------------------------------------------
Subtotal 407,391 266,333 74,219 747,943
Fees reduced by credits allowed by the custodian (428) (428)
----------------------------------------------------------
Net expenses 407,391 265,905 74,219 747,515
----------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 3,326,823 1,632,211 (74,219) 4,884,815
----------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains from:
Security transactions 59,758 (108,783) (49,025)
Forward foreign currency contracts and
foreign currency transactions - -
Futures contracts (105,817) (105,817)
Net unrealized appreciation/(depreciation) of:
Securities 524,692 63,850 588,542
Forward foreign currency contracts - -
Foreign currency, written options, futures
contracts and other assets and liabilities 8,262 8,262
----------------------------------------------------------
Net Real. And unreal G/(L) on investments 584,450 (142,488) - 441,962
----------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,911,273 $ 1,489,72 $ (74,219) $ 5,326,777
==========================================================
</TABLE>
(A) Elimination of the administration fees, now incorporated in the management
fee structure.
(B) Addition of transfer agent fee at a monthly rate of $1.45 per Class A
shareholder account and $1.55 per Class B and Class S shareholder account.
(C) Fees waived and/or expense absorbed by investment advisor adjusted to .50%
of average daily net assets.
<PAGE>
Short Term Bond Fund 3rd Pro Forma 2nd Period
[To come]
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments Pro Forma Combined Portfolio of Investments
30-Jun-98
Principal Amount (Unaudited) Market Value
- -------------------------------------------------- -------------------------------------------
WM Griffin WM Griffin
Short-Term High Short-Term Pro Forma Short-Term High Short-Term Pro Forma
Quality Bond Fund Bond Fund Combined Quality Bond Fund Bond Fund Combined
CORPORATE BONDS - 22 9%
<S> <C> <C> <C> <C> <C> <C> <C>
Banking
- 470,000 470,000 Bankers Trust - New York, 9.50%, 06/14/00.... - 498,788 498,788
- 30,000 30,000 First Chicago, 9.00%, 06/15/99........... - 30,788 30,788
- - - MBNA Corporation - - -
- 450,000 450,000 6.10%, 12/15/00................. - 448,313 448,313
- 210,000 210,000 6.88%, 10/01/99................. - 211,838 211,838
- - - Northern Trust - - -
- 1,000,000 1,000,000 6.50%, 05/01/03................. - 1,018,750 1,018,750
-----------------------------------
- 2,208,477 2,208,477
Financial Services
Associates Corporation, N.A......... - - -
- 250,000 250,000 6.00%, 03/15/00............. - 250,313 250,313
- 16,000 16,000 6.75%, 10/15/99............. - 16,141 16,141
- 1,000,000 1,000,000 Bear Stearns Company, 6.20%, 03/30/03...... - 996,250 996,250
- 1,000,000 1,000,000 CIT Group Holdings, 6.38%, 11/15/02....... - 1,011,250 1,011,250
- - - Donaldson Lufkin & Jennrette, - - -
- 1,000,000 1,000,000 6.38%, 05/26/00................... - 1,005,000 1,005,000
- 1,000,000 1,000,000 Fairfax Financial Holdings, 7.75%, 12/15/03 - 1,055,000 1,055,000
- 1,000,000 1,000,000 Finova Capital Corporation, 6.28%, 11/01/99 - 1,003,000 1,003,000
- - - General Motors Acceptance Corporation - - -
- 200,000 200,000 5.63%, 02/15/01.................... - 198,750 198,750
- 500,000 500,000 7.75%, 01/15/99.................... - 505,310 505,310
- 255,000 255,000 Golden West Financial, 10.25%, 12/01/00... - 278,906 278,906
- 100,000 100,000 Heller Financial, 9.13%, 08/01/99...... - 103,171 103,171
- - - Lehman Brothers Holdings Corporation, - - -
- 150,000 150,000 8.88%, 11/01/98.................... - 151,325 151,325
- 717,000 717,000 Paine Webber Group, 9.25%, 12/15/01...... - 780,634 780,634
- 1,200,000 1,200,000 PDVSA Finance 144A, 6.45%, 02/15/04 - 1,185,000 1,185,000
- 750,000 750,000 Penske Truck Leasing, 6.65%, 11/01/00... - 762,188 762,188
- 1,000,000 1,000,000 Salomon Smith Barney Hld, 6.13%, 01/15/03 - 990,000 990,000
-----------------------------------
- 10,292,238 10,292,238
Food Products
- 1,000,000 1,000,000 Tyson Foods Incorporated, 6.00%, 01/15/03.. - 991,250 991,250
Industrial Conglomerate
- 100,000 100,000 Anheuser Busch Company, 8.75%, 12/01/99... - 103,875 103,875
- 603,000 603,000 Boise Cascade Company, 9.90%, 03/15/00.... - 634,658 634,658
- 600,000 600,000 Continental Cablevision, 8.50%, 09/15/01.. - 639,000 639,000
- - - Cox Communications Incorporated - New, - - -
- 40,000 40,000 8.55%, 06/01/00................... - 41,750 41,750
- - - Cox Communications Incorporated, - - -
- 100,000 100,000 6.38%, 06/15/00................... - 100,625 100,625
- 750,000 750,000 Eaton Off Shore, 9.00%, 02/15/01........ - 805,313 805,313
- 710,000 710,000 Enron Corporation, 9.13%, 04/01/03.... - 793,425 793,425
- - - General Motors Acceptance Corporation, - - -
- 300,000 300,000 6.88%, 07/15/01.................. - 306,375 306,375
- 1,000,000 1,000,000 Hertz Corporation, 7.38%, 06/15/01..... - 1,030,000 1,030,000
- 1,000,000 1,000,000 Ingersoll-Rand, 6.26%, 02/15/01...... - 1,007,500 1,007,500
- - - International Paper Company, - - -
- 150,000 150,000 9.70%, 03/15/00.................. - 159,000 159,000
- 1,000,000 1,000,000 Lehman Brothers Inc , 6.13%, 02/01/01 - 998,750 998,750
- 71,000 71,000 Lockheed Corporation, 9.38%, 10/15/99... - 73,840 73,840
- 100,000 100,000 Pepsico Incorporated, 7.75%, 10/01/98.. - 100,330 100,330
- 2,000,000 2,000,000 Philip Morris, 7.50%, 04/01/04....... - 2,105,000 2,105,000
- 1,000,000 1,000,000 Sony Corporation, 6.13%, 03/04/03..... - 1,003,750 1,003,750
- 65,000 65,000 Texaco Capital Incorporated, 9.00%, 12/15/99 - 67,763 67,763
-----------------------------------
- 9,970,954 9,970,954
Retailing
- 450,000 450,000 Penney J C & Company, 6.95%, 04/01/00...... - 457,875 457,875
- 100,000 100,000 Wal-Mart Stores, 6.75%, 05/15/02......... - 103,000 103,000
-----------------------------------
- 560,875 560,875
Transportation
- 1,000,000 1,000,000 Praxair, 6.15%, 0?/15/03 - 997,500 997,500
- 150,000 150,000 Southwest Airlines, 9.40%, 07/01/01...... - 162,930 162,930
- 1,000,000 1,000,000 Union Pacific Co , 9.63%, 12/15/02 - 1,125,000 1,125,000
-----------------------------------
- 2,285,430 2,285,430
Utilities
- 30,000 30,000 Alabama Power Company, 6.38%, 08/01/99...... - 30,150 30,150
- 100,000 100,000 Baltimore Gas & Electric, 8.93%, 07/16/98.. - 100,125 100,125
- 465,000 465,000 Consolidated Natural Gas, 8.75%, 06/01/99.. - 476,044 476,044
- 300,000 300,000 National Rural Utilities, 6.75%, 09/01/01.. - 306,750 306,750
- 275,000 275,000 Orange & Rockland Utility, 9.38%, 03/15/00. - 289,781 289,781
- 1,000,000 1,000,000 Philadelphia Electric, 8.00%, 04/01/02... - 1,062,500 1,062,500
- 1,000,000 1,000,000 Potomac Capital Investment, 6.80%, 09/12/01 - 1,007,500 1,007,500
- - - Public Service Electric & Gas, - - -
- 1,000,000 1,000,000 8.75%, 07/01/99................. - 1,026,250 1,026,250
- 60,000 60,000 Southern California Edison, 8 25%, 02/01/00 - 62,100 62,100
- 1,000,000 1,000,000 Union Texas Petroleum, 6 60%, 12/04/02 - 1,002,500 1,002,500
-----------------------------------
- 5,363,700 5,363,700
Total Corporate Bonds - 31,672,924 31,672,924
</TABLE>
<PAGE>
Portfolio of Investments
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
30-Jun-98 (Unaudited)
Principal Amount Market Value
- -------------------------------------------------- -----------------------------------------------
WM Griffin WM Griffin
Short-Term High Short-Term Pro Forma Short-Term High Short-Term Pro Forma
Quality Bond Fund Bond Fund Combined Quality Bond Fund Bond Fund Combined
<S> <C> <C> <C> <C> <C> <C>
CORPORATE NOTES - 9.3%
400,000 - 400,000 Colonial Realty, Sr. Note, - - -
- - - 7.500% due 07/15/2001............................ 414,000 - 414,000
1,000,000 - 1,000,000 Crane Company, Note, - - -
- - - 7.250% due 06/15/1999............................ 1,011,510 - 1,011,510
1,220,000 - 1,220,000 CSX Corp, Deb., - - -
- - - 9.500% due 08/01/2000............................ 1,298,666 - 1,298,666
400,000 - 400,000 ERP Operating LP, - - -
- - - 8.500% due 05/15/1999(c)......................... 407,544 - 407,544
500,000 - 500,000 Federated Department Stores, - - -
- - - 6.790% due 07/15/2027............................ 511,525 - 511,525
1,500,000 - 1,500,000 General Electric Capital Corporation, Series A, MTN, - - -
- - - 5.800% due 04/24/2000............................ 1,500,000 - 1,500,000
1,500,000 - 1,500,000 McDonald Douglas Finance Corp., Series X, MTN, - - -
- - - 6.710% due 07/19/2000............................ 1,516,215 - 1,516,215
1,500,000 - 1,500,000 Merrill Lynch Finance Corp., Series B, MTN, - - -
- - - 6.100% due 10/04/1999............................ 1,506,870 - 1,506,870
200,000 - 200,000 Nabisco Inc., Industrial Note, - - -
- - - 6.300% due 08/26/1999(c)......................... 199,840 - 199,840
1,500,000 - 1,500,000 Sun Communities Inc., Sr. Note, - - -
- - - 7.625% due 05/01/2003............................ 1,554,210 - 1,554,210
- - - Taubman Realty Corporation, MTN: - - -
300,000 - 300,000 7.400% due 06/10/2002............................ 314,037 - 314,037
500,000 - 500,000 7.500% due 06/15/2002............................ 516,395 - 516,395
100,000 - 100,000 Time Warner Inc., - - -
- - - 7.950% due 02/01/2000............................ 102,756 - 102,756
1,500,000 - 1,500,000 Travelers Inc., Notes, - - -
- - - 6.125% due 06/15/2000............................ 1,507,500 - 1,507,500
500,000 - 500,000 US West Capital Funding Inc., - - -
- - - 6.125% due 07/15/2002............................ 500,010 - 500,010
---------------------------------------
Total Corporate Notes 12,861,078 - 12,861,078
COLLATERALIZED MORTGAGE OBLIGATIONS - 2.8%
29,058 - 29,058 Chemical Mortgage Securities Inc., 1993-1-A4, - - -
- - - 7.450% due 02/25/2023............................ 29,022 - 29,022
92,587 - 92,587 Countrywide Funding Corporation, 1994-1-A3, - - -
- - - 6.250% due 03/25/2024............................ 91,747 - 91,747
170,000 - 170,000 1994-C-A5, - - -
- - - 6.375% due 03/25/2024............................ 169,308 - 169,308
353,610 - 353,610 Federal Home Loan Mortgage Corporation (FHLMC), P/O, - - -
- - - REMIC, #1719-C, - - -
- - - Zero coupon due 04/15/1999................... 43,002 - 343,002
- - - General Electric Capital Mortgage Association: - - -
296,558 - 296,558 1994-27-A1, - - -
- - - 6.500% due 07/25/2024............................ 295,942 - 295,942
1,850,000 - 1,850,000 1996-HE3-A3, - - -
- - - 7.150% due 09/25/2026............................ 1901,295 - 1,901,295
580,220 - 580,220 Norwest Asset Securities Corporation, 1996-5-A13, - - -
- - - 7.500% due 11/25/2026............................ 583,665 - 583,665
427,049 - 427,049 Prudential Home Mortgage Securities, - - -
- - - 1993-43-A1, - - -
- - - 5.400% due 10/25/2023............................ 23,978 - 423,978
31,654 - 31,654 Ryland Acceptance Corporation, - - -
- - - 8.950% due 08/20/2019............................ 31,683 - 31,683
---------------------------------------
Total Collateralized Mortgage Obligations 3,869,642 - 3,869,642
ADJUSTABLE RATE MORTGAGE-BACKED SECURITIES - 1.6%
412,145 - 412,145 Federal Home Loan Mortgage Corporation (FHLMC), #845988, - - -
- - - 7.859% due 11/01/2021(b)......................... 428,824 - 428,824
- - - Federal National Mortgage Association (FNMA): - - -
404,600 - 404,600 #82247, - - -
- - - 6.250% due 04/01/2019(b)......................... 407,129 - 407,129
178,197 - 178,197 #124571, - - -
- - - 7.649% due 11/01/2022(b)......................... 184,323 - 184,323
219,707 - 219,707 #152205, - - -
- - - 7.398% due 01/01/2019(b)......................... 226,812 - 226,812
294,219 - 294,219 #141461, - - -
- - - 7.577% due 11/01/2021(b)......................... 299,229 - 299,229
592,492 - 592,492 #313257, - - -
- - - 6.258% due 11/01/2035(b)......................... 596,195 - 596,195
-----------------------------------------
Total Adjusted Rate Mortgage- Backed Securities 2,142,512 - 2,142,512
</TABLE>
<PAGE>
Portfolio of Investments
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
Principal Amount April 30, 1998 (Unaudited) Market Value
- ----------------------------------------------- ------------------------------------------
WM Short-Term Griffin WM Short-Term Griffin
High-Quality Bond Short-Term Bond Pro Forma High-Quality Bond Short-Term Bond Pro Forma
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
ASSET-BACKED SECURITIES - 5 2%
300,000 - 300,000 Conti-Mortgage Home Equity Loan Trust, - - -
- - - 1996-4-A6, - - -
- - - 6.710% due 06/15/2014...................... 302,529 - 302,529
300,000 - 300,000 Green Tree Financial Corporation, - - -
- - - 1995-6-B1, - - -
- - - 7.700% due 09/15/2026...................... 305,413 - 305,413
300,000 - 300,000 Green Tree Home Equity Loan Trust,
1997-B-A5, - - -
- - - 7.150% due 04/15/2027...................... 306,500 - 306,500
1,962,628 - 1,962,628 Green Tree Security Mortgage Trust,
1994-A, - - -
- - - 6.900% due 02/15/2004...................... 1,968,761 - 1,968,761
300,000 - 300,000 H & T Master Trust, - - -
- - - 8.430% due 08/15/2002(c)................... 300,422 - 300,422
600,000 - 600,000 MBNA Master Credit Card Trust, 1995-E-A, - - -
- - - 5.876% due 01/15/2005(b)................... 602,808 - 602,808
- - - Merrill Lynch Mortgage Investors, Inc : - - -
13,787 - 13,787 1991-B-A, - - -
- - - 9.200% due 04/15/2011...................... 13,858 - 13,858
269,248 - 269,248 1992-B-A4, - - -
- - - 7.850% due 04/15/2012...................... 276,528 - 276,528
71,120 - 71,120 Old Stone Credit Corporation, 1992-4A, - - -
- - - 6.550% due 11/15/2007...................... 71,009 - 71,009
1,000,000 - 1,000,000 Standard Credit Card Master Trust,
1994-4A, - - -
- - - 8.250% due 11/07/2003...................... 1,065,620 - 1,065,620
1,200,000 - 1,200,000 The Money Store Home Equity Trust,
1997-C-AF, - - -
- - - 6.307% due 08/15/2012...................... 1,201,500 - 1,201,500
696,423 - 696,423 World Omni Automobile Lease Securitization,
1996-B, - - -
- - - 6.850% due 11/15/2002(c)................... 707,305 - 707,305
--------------------------------------
Total Asset-Backed Securities 7,122,253 - 7,122,253
U S GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 7 0%
FEDERAL HOME LOAN BANK
- 200,000 200,000 5.89%, 07/24/00.............................. - 200,874 200,874
- 200,000 200,000 5.94%, 06/13/00.............................. - 201,046 201,046
FEDERAL HOME LOAN MORTGAGE CORPORATION
326,612 - 326,612 #A01226, Seasoned, - - -
- - - 9.500% due 08/01/2016........................ 354,051 - 354,051
- 188,613 188,613 5.50% due 05/01/01........................... - 186,137 186,137
- 172,018 172,018 5.50% due 06/01/01........................... - 169,760 169,760
- 87,781 87,781 6.00% due 06/01/01........................... - 87,836 87,836
- 358,975 358,975 6.00% due 06/01/01........................... - 359,198 359,198
- 107,783 107,783 6.00% due 04/01/99........................... - 107,851 107,851
- 331,179 331,179 6.50% due 05/01/01........................... - 334,509 334,509
- 296,179 296,179 6.50% due 12/01/99........................... - 300,897 300,897
- 256,631 256,631 7.00% due 09/01/01........................... - 260,720 260,720
- 175,000 175,000 7.13% due 07/21/99........................... - 177,599 177,599
- 50,000 50,000 7.75% due 11/07/01........................... - 53,080 53,080
FEDERAL NATIONAL MORTGAGE ASSOCIATION
250,657 - 250,657 #250235, 7 Year Balloon, - - -
- - - 8.500% due 02/01/2002...................... 256,266 - 256,266
317,745 - 317,745 #313030, Seasoned, - - -
- - - 10.000% due 05/01/2022**................... 349,265 - 349,265
588,127 - 588,127 #313641,Seasoned - - -
- - - 8.500% due 11/01/2017...................... 617,163 - 617,163
- 989,211 989,211 6.00% due 03/01/05........................... - 986,422 986,422
- 1,500,000 1,500,000 7.50% due 02/11/02........................... - 1,588,350 1,588,350
- 225,000 225,000 8.25% due 12/18/00........................... - 238,111 238,111
- 475,000 475,000 9.05% due 04/10/00........................... - 501,833 501,833
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
169,725 - 169,725 #038720, Seasoned, - - -
- - - 11.000% due 02/15/2010 (a)................. 189,479 - 189,479
52,647 - 52,647 #130183, Seasoned, - - -
- - - 11.000% due 05/15/2015 (a)................. 59,171 - 59,171
171,295 - 171,295 #131917, Seasoned, - - -
- - - 11.000% due 10/15/2015 (a)................. 192,522 - 192,522
22,348 - 22,348 #132833, Seasoned, - -
- - - 11.000% due 12/15/2015 (a)................. 25,167 - 25,167
54,327 - 54,327 #139704, Seasoned, - - -
- - - 11.000% due 11/15/2015 (a)................. 61,059 - 61,059
174,076 - 174,076 #140835, Seasoned, - - -
- - - 11.000% due 11/15/2015 (a)................. 195,287 - 195,287
134,075 - 134,075 #153965, Seasoned, - - -
- - - 10.000% due 02/15/2019..................... 147,243 - 147,243
64,698 - 64,698 #189482, Seasoned, - - -
- - - 11.000% due 04/15/2020 (a)................. 72,962 - 72,962
709,111 - 709,111 #262996, Seasoned, - - -
- - - 10.000% due 01/15/2019..................... 778,072 - 778,072
152,846 - 152,846 #291375, Seasoned, - - -
- - - 11.000% due 08/15/2020 (a)................. 172,943 - 172,943
84,676 - 84,676 #377550, Seasoned, - - -
- - - 8.000% due 03/15/2012...................... 87,745 - 87,745
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION II
250,190 - 250,190 9.000% due 04/20/2025...................... 266,243 - 266,243
Total U S Government Agency
Mortgage-Backed Securities 3,824,638 5,754,223 9,578,861
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments Pro Forma Combined Portfolio of Investments
30-Jun-98
Principal Amount (Unaudited) Market Value
---------------------------------------------- ---------------------------------------------
WM Griffin WM Griffin
Short-Term High Short-Term Pro Forma Short-Term High Short-Term Pro Forma
Quality Bond Fund Bond Fund Combined Quality Bond Fund Bond Fund Combined
<S> <C> <C> <C> <C> <C>
U.S. TREASURY BONDS - 0 8%
- 1,100,000 1,100,000 5 75% due 10/31/00....................... - 1,105,115 1,105,115
U.S. TREASURY NOTES - 46 3%
- 600,000 600,000 5 13% due 11/30/98....................... - 599,562 599,562
650,000 - 650,000 5 250% due 01/31/2001.................... 645,938 - 645,938
- 1,600,000 1,600,000 5 50% due 04/15/00....................... - 1,600,384 1,600,384
- 2,800,000 2,800,000 5 50% due 12/31/00....................... - 2,798,040 2,798,040
3,000,000 - 3,000,000 5 625% due 02/15/2006.................... 3,012,180 - 3,012,180
500,000 - 500,000 5 625% due 02/28/2001.................... 501,250 - 501,250
2,000,000 - 2,000,000 5 625% due 11/30/1999.................... 2,002,500 - 2,002,500
3,000,000 - 3,000,000 5 750% due 11/15/2000.................... 3,015,000 - 3,015,000
- 5,200,000 5,200,000 5 88% due 11/15/99....................... - 5,223,608 5,223,608
- 1,750,000 1,750,000 6 00% due 08/15/99....................... - 1,759,240 1,759,240
500,000 - 500,000 6 000% due 08/15/2000.................... 504,765 - 504,765
- 3,500,000 3,500,000 6 13% due 07/31/00....................... - 3,540,880 3,540,880
- 4,300,000 4,300,000 6 25% due 04/30/01....................... - 4,378,561 4,378,561
- 4,000,000 4,000,000 6 25% due 10/31/01....................... - 4,081,280 4,081,280
2,000,000 - 2,000,000 6 250% due 04/30/2001.................... 2,037,180 - 2,037,180
- 5,500,000 5,500,000 6 63% due 04/30/02....................... - 5,697,065 5,697,065
- 5,650,000 5,650,000 6 63% due 06/30/01....................... - 5,812,381 5,812,381
- 550,000 550,000 6 88% due 03/31/00....................... - 562,106 562,106
- 1,200,000 1,200,000 7 00% due 04/15/99....................... - 1,213,644 1,213,644
- 650,000 650,000 7 13% due 02/29/00....................... - 666,166 666,166
- 4,550,000 4,550,000 7 50% due 05/15/02....................... - 4,853,258 4,853,258
- 650,000 650,000 7 50% due 10/31/99....................... - 666,081 666,081
- 1,950,000 1,950,000 7 75% due 01/31/00....................... - 2,014,604 2,014,604
- 1,500,000 1,500,000 7 75% due 12/31/99....................... - 1,547,295 1,547,295
- 700,000 700,000 8 50% due 02/15/00....................... - 731,750 731,750
- 1,150,000 1,150,000 8 88% due 05/15/00....................... - 1,218,230 1,218,230
- 3,200,000 3,200,000 9 13% due 05/15/99....................... - 3,297,376 3,297,376
-------------------------------------
Total U.S. Treasury Notes 11,718,813 52,261,511 63,980,324
FOREIGN GOVERNMENT BONDS - 0 7%
1,000,000 - 1,000,000 Ontario (Province of Canada),
6 125% due 06/28/2000.................. 1,005,350 - 1,005,350
REPURCHASE AGREEMENT - 2 4%
State Street Bank & Trust Co ,
Master Repurchase Agreement, 4 25%,
Dated 3/31/98 due 4/1/98, Collateralized
by U S Government Securities
- 3,354,461 3.354.461 (delivery value $392,493)............... - 3,354,461 3,354,461
TOTAL INVESTMENTS - 99.0%,
(COST $136,019,255) 42,544,286 94,148,234 136,692,520
OTHER ASSETS AND LIABILITIES, NET - 1.0% 418,490 952,718 1,371,208
TOTAL NET ASSETS - 100.0% 42,962,776 95,100,952 138,063,728
</TABLE>
_____________________________________
(a) A portion or all of these securities are pledged as collateral for futures
contracts
(b) Variable rate security The interest rate shown reflects the rate
currently in effect
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933 This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers
<PAGE>
WM SHORT-TERM HIGH QUALITY BOND FUND & GRIFFIN SHORT-TERM BOND FUND
Notes to Pro Forma Combined Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the combined financial
position of the WM Short-Term High Quality Bond Fund and the Griffin Short-
Term Bond Fund at June 30, 1998 and the pro forma combined results of
operations for the year ended June 30, 1998 as though the reorganization had
occurred on July 1, 1997.
The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of how
the pro forma combined financial statements would have appeared had the
reorganization actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds which are incorporated
by reference in the Statement of Additional Information.
The pro forma combined statements give effect to the proposed transfer of
the assets and stated liabilities of the Griffin Short-Term Bond Fund in
exchange for shares of WM Short-Term High Quality Bond Fund. Under generally
accepted accounting principles, the historical cost of investment securities
will be carried forward to the surviving entity.
The pro forma combined statements do not reflect the expenses of either fund
in carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are valued using the pricing
procedures and policies of the respective Acquiring Fund or Acquired Fund,
as applicable. For more information see the WM Annual Reports or the
Griffin Annual Report. Historical cost amounts represent the combined cost
basis of the securities.
3. Pro Forma Combined Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
Short-Term Bond Fund shares into WM shares based upon the net asset value of
the WM Short-Term Highly Quality Bond Fund shares at June 30, 1998.
<PAGE>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES AT APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GRIFFIN WM
US GOVERNMENT US GOVERNMENT PRO FORMA PRO FORMA
INCOME FUND SECURITIES FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $123,818,655 $465,802,730 $589,621,385
-
-------------------------------------------------------------------
Total Investments 123,818,655 465,802,730 - 589,621,385
Cash/Cash Equivalents 264,292 315,010 579,302
Receivable for dollar roll fee income 2,406 2,406
Dividends and/or interest receivable 1,109,878 3,877,005 4,986,883
Receivable for Fund shares Sold 7,334 310,533 317,867
Receivable for investment securities sold - -
Unamortized organization costs - -
Receivable from investment advisor - -
Prepaid expenses and other assets 4,812 19,656 24,468
-------------------------------------------------------------------
Total Assets 125,204,971 470,327,340 - 595,532,311
LIABILITIES:
Payable for dollar roll transactions 6,114,042 6,114,042
Variation margin payable 114,844 114,844
Reverse repurchase agreements 80,498,224 80,498,224
Payable for Fund shares redeemed - 925,923 925,923
Payable for investment securities purchased 17,287,840 - 17,287,840
Investment advisory fee payable 162,374 162,374
Administration fee payable - -
Shareholder servicing and distribution fees payable 120,598 120,598
Dividends payable 491,309 879,523 1,370,832
Accrued legal and audit fees 5,335 5,335
Accrued Trustees' fees and expenses 2,101 2,101
Accrued registration and filing fees payable - -
Due to Custodian - -
Net unrealized depreciation of fwd for curr cts - -
Accrued Expenses and other payables 126,142 244,271 370,413
-------------------------------------------------------------------
Total Liabilities 17,905,291 89,067,235 - 106,972,526
-------------------------------------------------------------------
-------------------------------------------------------------------
TOTAL NET ASSETS 107,299,680 381,260,105 - 488,559,785
===================================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) - 41,000 41,000
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions (27,002) (7,136,028) (7,163,030)
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities 1,815,354 10,153,451 11,968,805
Paid-in capital $105,511,328 378,201,682 483,713,010
-------------------------------------------------------------------
TOTAL NET ASSETS $107,299,680 $381,260,105 $ - $488,559,785
===================================================================
NET ASSETS:
Class A Shares $103,063,684 $294,038,697 $397,102,381
===================================================================
Class B Shares $ 4,235,996 $ 22,081,393 $ 26,317,389
===================================================================
Class S Shares $ 6,748,647 $ 6,748,647
===================================================================
Class I Shares $ 58,391,368 $ 58,391,368
===================================================================
SHARES OUTSTANDING:
Class A Shares 11,046,945 27,148,122 (1,531,240.11) (a) 36,663,827
===================================================================
Class B Shares 453,649 2,039,590 (62,383.15) (a) 2,430,856
===================================================================
Class S Shares 622,636 622,636
===================================================================
Class I Shares 5,386,588 5,386,588
===================================================================
NET ASSET VALUE PER SHARE:
Class A Shares $ 9.33 $ 10.83 $ 10.83
===================================================================
Class B Shares $ 9.34 $ 10.83 $ 10.83
===================================================================
Class S Shares $ 10.84 $ 10.84
===================================================================
Class I Shares $ 10.84 $ 10.84
===================================================================
</TABLE>
See accompanying notes to pro forma financial statements
- --------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of WM Group
shares at April 30, 1998.
<PAGE>
WM U.S. Government Securities Fund
Pro Forma Combined Statement of Operations
For the ______ Ended ______
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
US GOVERNMENT US GOVERNMENT PRO FORMA PRO FORMA
INCOME FUND SECURITIES FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - -
Foreign w/holding tax on dividend income -
Interest Income $2,086,469 $ 4,835,822 $ 6,922,291
Fee Income 69,825 69,825
----------------------------------------------------------------------------------
Total Investment Income 2,086,469 4,905,647 - 6,992,116
----------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fee 157,785 428,132 39,447 (A) 625,364
Administration Fee 63,114 - (63,114) (B) -
Custodian Fee 24,427 9,279 33,706
Legal and audit fees 11,988 5,335 17,323
Trustees' fees and expenses 2,604 2,101 4,705
Amortization of Org. Cost 5,578 - 5,578
Registration and filing fees 4,197 - 4,197
Other 11,363 - 11,363
----------------------------------------------------------------------------------
Subtotal 281,056 444,847 (23,667) 702,236
Shareholder servicing and distribution fees:
Class A Shares 75,452 172,323 49,590 (C) 297,365
Class B Shares 13,763 35,009 933 (D) 49,705
Class S Shares 9,666 9,666
Interest expense 188,227 188,227
Fees waived and /or expenses absorbed by
investment advisor (125,129) (35,103) 35,159 (E) (125,073)
----------------------------------------------------------------------------------
Subtotal 245,142 814,969 62,015 1,122,126
Fees reduced by credits allowed by the custodian (690)
----------------------------------------------------------------------------------
Net expenses 245,142 814,279 62,015 1,122,126
----------------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 1,841,327 4,091,368 (62,015) 5,869,990
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains from:
Security transactions 186,854 192,670 379,524
Forward foreign currency contracts and
foreign currency transactions - -
Futures contracts - -
Net unrealized appreciation/(depreciation) of:
Securities (166,179) 6,701,181 6,535,002
Forward foreign currency contracts - -
Foreign currency, written options, futures
contracts and other assets and liabilities 2,732 2,732
----------------------------------------------------------------------------------
Net Real. And unreal G/(L) on investments 20,675 6,896,583 - 6,917,258
----------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,862,002 $10,987,951 $(62,015) $12,787,248
==================================================================================
</TABLE>
(A) Increase in management fees for Griffin shareholders to reflect the new
fee structure. Fees are based on .625% of average daily net assets up to
$250,000,000 and .50% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Addition of shareholder servicing fee at a monthly rate of $1.45 per
shareholder account.
(D) Addition of shareholder servicing fee at a monthly rate of $1.55 per
shareholder account.
(E) Fees waived and/or expense absorbed by investment advisor adjusted to .13%
of average daily net assets.
<PAGE>
WN U.S. Government Securities
Pro Forma Combined Statement of Operations
For the Year Ended 12/31
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
US GOVERNMENT US GOVERNMENT PRO FORMA PRO FORMA
INCOME FUND SECURITIES FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - -
Foreign w/holding tax on dividend income -
Interest Income $4,819,481 $ 8,575,819 $13,395,300
Fee Income - -
-------------------------------------------------------------------------------
Total Investment Income 4,819,481 8,575,819 - 13,395,300
-------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fee 350,449 769,591 87,600 (A) 1,207,640
Administration Fee 140,180 - (140,180) (B) -
Custodian Fee 76,972 43,651 120,623
Legal and audit fees 22,793 11,787 34,580
Trustees' fees and expenses 8,213 8,499 16,712
Amortization of Org. Cost 17,108 - 17,108
Registration and filing fees 12,114 22,077 34,191
Other 28,507 73,838 102,345
-------------------------------------------------------------------------------
Subtotal 656,336 929,443 (52,580) 1,533,199
Shareholder servicing and distribution fees:
Class A Shares 165,827 352,539 148,770 (C) 667,136
Class B Shares 37,591 32,614 2,800 (D) 73,005
Class S Shares - -
Interest expense - -
Fees waived and /or expenses absorbed by
investment advisor (360,340) - 118,812 (E) (241,528)
-------------------------------------------------------------------------------
Subtotal 499,414 1,314,596 217,802 2,031,812
Fees reduced by credits allowed by the custodian (2,671)
-------------------------------------------------------------------------------
Net expenses 499,414 1,311,925 217,802 2,031,812
-------------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 4,320,067 7,263,894 (217,802) 11,363,488
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains from:
Security transactions 463,908 (493,856) (29,948)
Forward foreign currency contracts and
foreign currency transactions - -
Futures contracts - -
Net unrealized appreciation/(depreciation) of:
Securities 1,667,350 4,371,425 6,038,775
Forward foreign currency contracts - -
Foreign currency, written options, futures
contracts and other assets and liabilities - -
-------------------------------------------------------------------------------
Net Real. And unreal G/(L) on investments 2,131,258 3,877,569 - 6,008,827
-------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $6,451,325 $11,141,463 $(217,802) $17,372,315
===============================================================================
</TABLE>
(A) Increase in management fees for Griffin shareholders to reflect the new fee
structure. Fees are based on .625% of average daily net assets up to
$250,000,000 and .50% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Addition of shareholder servicing fee at a monthly rate of $1.45 per
shareholder account.
(D) Addition of shareholder servicing fee at a monthly rate of $1.55 per
shareholder account.
(E) Fees waived and/or expense absorbed by investment advisor adjusted to .13%
of average daily net assets.
<PAGE>
Portfolio of Investments
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
Principal Amount April 30, 1998 (Unaudited) Market Value
- -------------------------------------------------- -----------------------------------------------
WM Griffin WM Griffin
US Government US Government Pro Forma US Government US Government Pro Forma
Securities Fund Income Fund Combined Securities Fund Income Fund Combined
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 77.3%
Federal Home Loan Mortgage Corporation (FHLMC)
2,958,745 2,958,745 6.01% due 05/15/26................. - 2,963,68 2,963,368
21,632,862 - 21,632,862 6.500% due 02/01/2011
- 02/01/2028 ........................ 21,739,953 - 21,739,953
- 3,550,000 3,550,000 6.59% due 02/15/21 .................. - 3,639,859 3,639,859
- 2,000,000 2,000,000 7.00% due 01/15/24 .................. - 2,045,360 2,045,360
1,909,896 - 1,909,896 7.000% due 07/01/2024
- 2/01/2026 ......................... 1,935,561 - 1,935,561
59,809,141 - 59,809,141 7.500% due 01/01/2007
- 03/01/2013 ........................ 61,663,037 - 61,663,037
962,942 - 962,942 8.750% due 01/01/2013 ............... 1,010,058 - 1,010,058
1,614,792 - 1,614,792 9.000% due 12/01/2008
- 08/01/2022 ........................ 1,706,663 - 1,706,663
677,141 - 677,141 9.500% due 06/01/2016
- 05/01/2017 ........................ 720,944 - 720,944
1,769,573 - 1,769,573 15 Year Converted GOLD, 7.500%
due 05/01/2003 ...................... 1,824,320 - 1,824,320
- - - GOLD:
247,057 - 247,057 6.500% due 04/01/2027 ............... 245,127 - 245,127
63,854,459 - 63,854,459 7.500% due 07/01/2002
- 04/01/2013 ........................ 65,839,108 - 65,839,108
3,179,841 - 3,179,841 8.500% due 04/01/2019 ............... 3,322,934 - 3,322,934
----------------------------------------------------
Total Federal Home Loan Mortgage
Corporation (FHLMC) 160,007,675 8,648,587 168,656,262
Government National Mortgage Association (GNMA)
4,706,279 - 4,706,279 6.000% due 04/20/2026 ............... 4,529,794 - 4,529,794
13,999,033 - 13,999,033 6.500% due 08/15/2023
- 03/15/2024 ........................ 13,889,700 - 13,889,700
- 7,000,000 7,000,000 7.00% due 02/15/28 (d) .............. - 7,072,170 7,072,170
15,791,208 - 15,791,208 7.000% due 07/15/2008
- 08/15/2023 ........................ 16,019,161 - 16,019,161
- 2,861,271 2,861,271 7.50% due 03/15/24 .................. - 2,950,686 2,950,686
- 828,110 828,110 7.50% due 03/15/26 .................. - 850,884 850,884
- 3,528,199 3,528,199 7.50% due 06/15/27 .................. - 3,625,224 3,625,224
67,479,707 - 67,479,707 7.500% due 12/15/2022
- 12/15/2023 ........................ 69,405,254 - 69,405,254
- 1,730,590 1,730,590 8.00% due 02/15/27 .................. 69,405,254 - 69,405,254
- 1,486,106 1,486,106 8.00% due 05/15/26 .................. - 1,796,024 1,796,024
- 720,152 720,152 8.00% due 06/15/26 .................. - 1,542,296 1,542,296
- 319,602 319,602 8.00% due 10/15/24 .................. - 747,382 747,382
- 228,579 228,579 8.00% due 12/15/24 .................. - 331,687 331,687
1,380,873 - 1,380,873 8.000% due 04/15/2022 ............... - 237,222 237,222
1,525,813 - 1,525,813 8.500% due 05/15/2022 ............... 1,433,954 - 1,433,954
6,868,536 - 6,868,536 9.000% due 10/15/2008 1,610,210 - 1,610,210
- 06/15/2022 ........................ 7,362,212 - 7,362,212
6,237,702 - 6,237,702 9.500% due 04/15/2016
- 09/15/2020 ........................ 6,754,265 - 6,754,265
15,734 - 15,734 11.500% due 07/15/2015 .............. 17,705 - 17,705
- 28,985 28,985 12.50% due 06/15/14 ................. - 33,749 33,749
- 16,803 16,803 12.50% due 06/15/15 ................. - 19,566 19,566
- 24,185 24,185 12.50% due 12/15/10 ................. - 28,161 28,161
- 28,544 28,544 13.00% due 08/15/12 ................. - 33,380 33,380
40,496 - 40,496 13.500% due 09/15/2014
- 12/15/2014 ........................ 46,951 - 46,951
17,580 - 17,580 14.000% due 06/15/2011 .............. 20,426 - 20,426
6,000,000 - 6,000,000 30 Year TBA, 13.500% due 6,076,878 - 6,076,878
12/17/2020 ..........................
Total Government National Mortgage
----------------------------------------------------
Association (GNMA) 127,166,510 19,268,431 146,434,941
Federal National Mortgage Association (FNMA)
34,304 - 34,304 5.500% due 02/01/2009 ............... 33,146 - 33,146
2,230,000 - 2,230,000 6.000% due 08/25/2007 ............... 2,224,392 - 2,224,392
- 2,000,000 2,000,000 6.50% due 03/01/28 .................. - 1,976,240 1,976,240
- 3,000,000 3,000,000 6.50% due 05/01/13................... - 3,010,290 3,010,290
- 6,000,000 6,000,000 6.75% due 07/18/19 .................. - 6,067,680 6,067,680
- 4,789,189 4,789,189 7.00% due 03/01/27 .................. - 4,855,041 4,855,041
4,476,046 - 4,476,046 7.000% due 06/01/2010
-05/01/2012 ......................... 4,562,769 - 4,562,769
- 5,000,000 5,000,000 7.50% due 02/01/28 (d) .............. - 5,129,650 5,129,650
1,950,000 - 1,950,000 7.500% due 08/25/2001 ............... 2,003,598 - 2,003,598
4,499,374 - 4,499,374 8.000% due 05/01/2022
-01/01/2025 ......................... 4,665,289 - 4,665,289
- 1,000,000 1,000,000 8.10% due 08/12/19 .................. - 1,215,940 1,215,940
707,927 - 707,927 8.500% due 02/01/2023
-09/01/2025 ......................... 740,447 - 740,447
- 3,000,000 3,000,000 9.00% due 05/25/20................... - 3,240,330 3,240,330
437,908 - 437,908 9.000% due 06/01/2016
-06/01/2021 ......................... 463,635 - 463,635
825,342 - 825,342 ACES, 13.500% due 12/15/2014 ........ 835,539 - 835,539
12,445,920 - 12,445,920 STRIP, Zero Coupon due
10/01/2025 .......................... 10,056,602 - 10,056,602
----------------------------------------------------
Total Federal National Mortgage
Association (FNMA) 25,585,417 25,495,171 51,080,588
Government National Mortgage Association II (GNMA II)
1,036,681 - 1,036,681 9.500% due 02/20/2017
-03/20/2021 ......................... 1,113,461 - 1,113,461
- - - Adjustable Rate Mortgage (ARM): - - -
8,596,869 - 8,596,869 7.000% due 03/20/2022
-12/20/2022(b) ...................... 8,829,878 - 8,829,878
1,507,395 - 1,507,395 7.375% due 05/20/2022(b) ........... 1,554,501 - 1,554,501
----------------------------------------------------
Government National Mortgage
Association II (GNMA II) 11,497,840 - 11,497,840
Total U.S. Government Agency
Mortgage-Backed Securities 324,257,442 53,412,189 377,669,631
</TABLE>
<PAGE>
Portfolio of Investments
Pro Forma Combined Portfolio of Investments
Principal Amount April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
WM Griffin
US Government US Government Pro Forma
Securities Fund Income Fund Combined
<S> <C> <C> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS - 8.5%
- - - REMIC, Pass-through certificates:
4,000,000 - 4,000,000 Trust 89-18, Class-C, - - -
- - - 9.500% due 04/25/2004 ..................... 4,245,664 - 4,245,664
1,493,811 - 1,493,811 Trust 92-83, Class X, - - -
- - - 7.000% due 02/25/2022 ..................... 1,493,391 - 1,493,391
5,255,853 - 5,255,853 Trust 93-162, Class E, - - -
- - - 6.000% due 08/25/2023 ..................... 5,113,388 - 5,113,388
2,527,000 - 2,527,000 Federal Home Loan Mortgage Corp.,
Series 1288, Class HA, 5.500% due 11/15/2020... 2,479,505 - 2,479,505
8,500,000 - 8,500,000 Federal Home Loan Mortgage Corp.,
6.850% due 07/25/2018 ......................... 8,555,803 - 8,555,803
4,900,000 - 4,900,000 Merrill Lynch Trust, 6.50% due 8/25/15 ........ 4,908,036 - 4,908,036
683,251 - 683,251 Mortgage Capital Trust, 9.25% due 6/1/17 ...... 692,283 - 692,283
- 2,947,362 2,947,362 Federal Home Loan Mortgage Corp.,
6.35%, 03/15/25 ............................... - 2,960,717 2,960,717
- 4,200,000 4,200,000 Federal National Mortgage Association,
6.25%, 06/25/19 ............................... - 4,198,992 4,198,992
- 1,439,787 1,439,787 Federal National Mortgage Association,
6.20%, 06/25/19 ............................... - 1,446,122 1,446,122
- 4,183,207 4,183,207 Federal National Mortgage Association,
6.35%, 04/25/27 (d) ........................... - 4,227,654 4,227,654
- 1,118,777 1,118,777 L. F. Rothschild Mortgage Trust, Series 3,
Class Z, 9.95%, 09/01/17 ...................... - 1,242,369 1,242,369
-------------------------------------
Total Collateralized Mortgage Obligations 27,488,070 14,075,854 41,563,924
U.S. TREASURY OBLIGATIONS - 33.7%
U.S. Treasury Notes
- 2,400,000 2,400,000 5.75% due 11/15/00 ............................ - 2,407,752 2,407,752
2,000,000 - 2,000,000 5.750% due 08/15/2003 ......................... 2,006,252 - 2,006,252
- 5,000,000 5,000,000 6.13% due 08/15/07 ............................ - 5,132,950 5,132,950
- 4,000,000 4,000,000 6.13% due 12/31/01 ............................ - 4,061,720 4,061,720
- 1,000,000 11,000,000 6.25% due 08/31/02 ............................ - 11,240,900 11,240,900
350,000 - 350,000 6.250% due 02/15/2007 ......................... 361,922 - 361,922
400,000 - 400,000 6.250% due 06/30/2002.......................... 408,375 - 408,375
21,400,000 - 21,400,000 6.375% due 09/30/2001 ......................... 21,868,144 - 21,868,144
4,750,000 - 4,750,000 6.500% due 10/15/2006 ......................... 4,981,567 - 4,981,567
- 2,500,000 2,500,000 7.00% due 07/15/06 ............................ - 2,698,425 2,698,425
30,000,000 - 30,000,000 7.000% due 07/15/2006 (a) ..................... 32,400,027 - 32,400,027
-------------------------------------
Total U.S. Treasury Notes 62,026,287 25,541,747 87,568,034
U.S. Treasury Bonds
- 10,850,000 10,850,000 12.00% due 08/15/13 ........................... - 15,908,815 15,908,815
1,500,000 - 1,500,000 6.000% due 02/15/2026 ........................ 1,496,719 - 1,496,719
5,285,000 - 5,285,000 6.125% due 11/15/2027.......................... 5,413,827 - 5,413,827
- 5,000,000 5,000,000 6.25% due 08/15/23 ............................ - 5,141,150 5,141,150
15,195,000 - 15,195,000 6.250% due 08/15/2023.......................... 15,636,611 - 15,636,611
1,888,000 - 1,888,000 6.625% due 02/15/2027.......................... 2,045,531 - 2,045,531
12,000,000 - 12,000,000 7.250% due 05/15/2016.......................... 13,631,255 - 13,631,255
3,250,000 - 3,250,000 7.250% due 08/15/2022.......................... 3,746,642 - 3,746,642
6,500,000 - 6,500,000 7.500% due 11/15/2016 (a)...................... 7,562,346 - 7,562,346
- 5,000,000 5,000,000 8.13% due 08/15/19 ............................ - 6,238,900 6,238,900
-------------------------------------
Total U.S. Treasury Bonds 49,532,931 27,288,865 76,821,796
Total U.S. Treasury Obligations 111,559,218 52,830,612 164,389,830
SHORT-TERM SECURITIES - 0.7%
- 3,500,000 3,500,000 Federal Home Loan Mortgage Corporation,
5.45% due 05/01/98............................. - 3,500,000 3,500,000
PURCHASE AGREEMENT - 0.5%
2,498,000 - 2,498,000 Agreement with Goldman Sachs, 5.30% dated
4/30/98, to be repurchased at
$2,498,36 on 5/1/98, collateralized
by $2,430,053 U.S. Treasury Note, 6.50%
due 8/15/05 (Market Value $2,570,612)........ 2,498,000 - 2,498,000
TOTAL INVESTMENTS (120.7%),
(COST $) 465,802,730 123,818,655 589,621,385
OTHER ASSETS AND LIABILITIES,
NET ( -20.7%) (84,542,625) (16,518,975)(101,061,600)
TOTAL NET ASSETS (100.00%) 381,260,105 107,299,680 488,559,785
</TABLE>
___________________________
(a) A portion or all of these securities are pledged as collateral for futures
contracts and dollar roll transactions.
(b) Variable rate security. The interest rate shown reflects the rate currently
in effect.
(c) Settlement is on a delayed delivery or when issued basis with final
maturity to be announced (TBA) in the future.
(d) Rate represents annualized yield to maturity at April 30, 1998.
<PAGE>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES AT APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GRIFFIN WM
MUNICIPAL TAX-EXEMPT PRO FORMA PRO FORMA
BOND FUND BOND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $16,050,011 $326,874,303 $342,924,314
-------------------------------------------------------------
Total Investments 16,050,011 326,874,303 - 342,924,314
Cash/Cash Equivalents 113,191 - 113,191
Receivable for dollar roll fee income - -
Dividends and/or interest receivable 201,916 5,397,398 5,599,314
Receivable for Fund shares Sold 66,816 66,816
Receivable for investment securities sold - -
Unamortized organization costs - -
Receivable from investment advisor - -
Prepaid expenses and other assets 12,360 37,997 50,357
-------------------------------------------------------------
Total Assets 16,377,478 332,376,514 - 348,753,992
LIABILITIES:
Payable for dollar roll transactions - -
Variation margin payable - -
Reverse repurchase agreements - -
Payable for Fund shares redeemed - 815,566 815,566
Payable for investment securities purchased 488,870 509 489,379
Investment advisory fee payable 138,740 138,740
Administration fee payable - -
Shareholder servicing and distribution fees payable 29,231 29,231
Dividends payable 48,756 459,121 507,877
Accrued legal and audit fees 2,128 2,128
Accrued transfer agent fees - -
Accrued Trustees' fees and expenses 2,101 2,101
Accrued registration and filing fees payable 5,502 5,502
Due to Custodian 53,829 53,829
Net Unrealized Depreciation of Fwd For Curr Cts - -
Accrued Expenses and other payables 16,953 169,156 186,109
-------------------------------------------------------------
Total Liabilities 554,579 1,675,883 - 2,230,462
TOTAL NET ASSETS $15,822,899 $330,700,631 $ - $346,523,530
=============================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) - (1,632) (1,632)
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions (106,519) 784,442 677,923
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities 344,577 30,033,786 30,378,363
Paid-in capital $ 1,584,841 299,884,035 301,468,876
-------------------------------------------------------------
TOTAL NET ASSETS 1,822,899 330,700,631 - 332,523,530
=============================================================
NET ASSETS:
Class A Shares $15,287,168 $316,112,406 $331,399,574
=============================================================
Class B Shares $ 535,731 $ 14,585,662 $ 15,121,393
=============================================================
Class S Shares $ 1,409 $ 1,409
=============================================================
Class I Shares $ 1,154 $ 1,154
=============================================================
SHARES OUTSTANDING:
Class A Shares 1,640,269 39,703,825 279,804.47 (a) 41,623,898
=============================================================
Class B Shares 57,465 1,831,801 9,817.00 (a) 1,899,083
=============================================================
Class S Shares 177 - 177
=============================================================
Class I Shares 145 - 145
=============================================================
NET ASSET VALUE PER SHARE:
Class A Shares $ 9.32 $ 7.96 $ 7.96
=============================================================
Class B Shares $ 9.32 $ 7.96 $ 7.96
=============================================================
Class S Shares $ 7.96 $ 7.96
=============================================================
Class I Shares $ 7.96 $ 7.96
=============================================================
</TABLE>
See accompanying notes to pro forma financial statemets
- -------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of WM Group
shares at April 30, 1998.
<PAGE>
WM Tax-Exempt Bond Fund
Pro Forma Combined Statement of Operations
For the ______ Ended ______
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
MUNICIPAL TAX-EXEMPT PRO FORMA PRO FORMA
BOND FUND BOND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - -
- -
Interest Income $ 204,396 $ 4,682,293 $ 4,886,689
Fee Income - -
------------------------------------------------------------
Total Investment Income 204,396 4,682,293 - 4,886,689
------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 21,111 398,621 419,732
Administration Fees 8,444 - (8,444) (A) -
Custodian Fees 5,985 8,427 14,412
Legal and Audit Fees 9,085 2,128 11,213
Trustees' Fees and Expenses 2,604 2,101 4,705
Amortization of Organization Costs 5,578 - 5,578
Registration and Filing Fees 663 5,502 6,165
Other 1,905 965 2,870
------------------------------------------------------------
Subtotal 55,375 417,744 (8,444) 464,675
Shareholder Servicing and Distribution Fees
Class A Shares 10,168 191,079 5,965 (B) 207,212
Class B Shares 1,548 34,623 87 (C) 36,258
Class S Shares 2 2
Interest Expense - -
Fees Waived and/or Expenses Absorbed by Investment -
Advisor (36,629) - 36,629 (D) -
------------------------------------------------------------
Subtotal 30,462 643,448 34,237 708,147
Fees Reduced by Credits Allowed by the Custodian (596) (596)
------------------------------------------------------------
Net Expenses 30,462 642,852 34,237 707,551
------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 173,934 4,039,441 (34,237) 4,179,138
------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/ -
(LOSS) ON INVESTMENTS -
Realized Gains/(Loss) from: -
Security Transactions 3,983 784,442 788,425
Forward Foreign Currency Contracts and -
Foreign Currency Transactions - -
Futures Contracts 2,577 - 2,577
Net Unrealized Appreciation/(Depreciation) of: -
Securities (196,851) 10,844,992 10,648,141
Forward Foreign Currency Contracts - -
Foreign Currency, Written Options, Futures -
Contracts and Other Assets and - -
Liabilities
------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments (190,291) 11,629,434 - 11,439,143
------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS -
RESULTING FROM OPERATIONS $ (16,357) $15,668,875 $ (34,237) $15,618,281
============================================================
</TABLE>
(A) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(B) Addition of shareholder servicing fee at a monthly rate of $1.45 per
shareholder account.
(C) Addition of shareholder servicing fee at a monthly rate of $1.55 per
shareholder account.
(D) Fees waived and/or expense absorbed by investment advisor has been
eliminated.
<PAGE>
WM Tax-Exempt Bond Fund
Pro Forma Combined Statement of Operations
For the _____ Ended ____
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
MUNICIPAL TAX-EXEMPT PRO FORMA PRO FORMA
BOND FUND BOND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - -
- -
Interest Income $ 439,683 $ 11,310,385 $ 11,750,068
Fee Income - -
-----------------------------------------------------------
Total Investment Income 439,683 $ 11,310,385 - $ 11,750,068
-----------------------------------------------------------
EXPENSES: -
Investment Advisory Fees 43,603 987,356 1,030,959
Administration Fees 17,441 - (17,441) (A) -
Custodian Fees 14,921 18,650 33,571
Legal and Audit Fees 12,071 12,426 24,497
Trustees' Fees and Expenses 8,213 8,499 16,712
Amortization of Organization Costs 17,107 - 17,107
Registration and Filing Fees 1,666 18,037 19,703
Other 5,201 60,994 66,195
----------------------------------------------------------
Subtotal 120,223 1,105,962 (17,441) 1,208,744
Shareholder Servicing and Distribution Fees
Class A Shares 20,793 487,713 17,896 (B) 526,402
Class B Shares 4,031 70,823 260 (C) 75,114
Class S Shares - -
Interest Expense - -
Fees Waived and/or Expenses Absorbed by Investment -
Advisor (89,645) - 89,645 (D) -
-----------------------------------------------------------
Subtotal 55,402 1,664,498 90,360 1,810,260
Fees Reduced by Credits Allowed by the Custodian (3,033) (3,033)
-----------------------------------------------------------
Net Expenses 55,402 1,661,465 90,360 1,807,227
-----------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 384,281 9,648,920 (90,360) 9,942,841
-----------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains/(Loss) from:
Security Transactions 8,768 2,286,826 2,295,594
Forward Foreign Currency Contracts and
Foreign Currency Transactions
Futures Contracts 15,098 - 15,098
Net Unrealized Appreciation/(Depreciation) of:
Securities 368,238 4,270,931 4,639,169
Forward Foreign Currency Contracts - -
Foreign Currency, Written Options, Futures
Contracts and Other Assets and Liabilities - -
-----------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments 392,104 6,557,757 - 6,949,861
-----------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 776,385 $ 16,206,677 $ (90,360) $ 16,892,702
===========================================================
</TABLE>
(A) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(B) Addition of shareholder servicing fee at a monthly rate of $1.45 per
shareholder account.
(C) Addition of shareholder servicing fee at a monthly rate of $1.55 per
shareholder account.
(D) Fees waived and/or expense absorbed by investment advisor has been
eliminated.
<PAGE>
Municipal Bond Fund 3rd ProForma 2nd Period
[To come]
<PAGE>
Pro Forma Combined Portfolio of Investments
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Amount Market Value
- -------------------------------------------- --------------------------------------------
WM Group Griffin WM Group Griffin
Tax-Exempt Bond Municipal Bond Pro Forma Tax-Exempt Bond Municipal Bond Pro Forma
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM STATE AND MUNICIPAL SECURITIES - 94.8%
ALABAMA
4,000,000 - 4,000,000 Courtland, Industrial Development Board
of Solid Waste, (Champion International
Corporation Project), Disposal Revenue,
AMT, 7.750% due 01/01/2020................ 4,244,680 - 4,244,680
1,000,000 - 1,000,000 Mobile, Industrial Development Board,
Solid Waste Disposal Revenue,
6.950% due 01/01/2020.................... - - -
--------------------------------------------
5,354,560 - -
ALASKA
Alaska Student Loan Revenue,
- 500,000 500,000 5.25%, 07/01/07 .......................... - 515,625 515,625
1,235,000 - 1,235,000 Anchorage Alaska Electric Utility, (MBIA
Insured) - - -
6.500% due 12/01/2013.................... 1,439,701 - 1,439,701
--------------------------------------------
1,439,701 515,625 1,955,326
ARIZONA
Arizona State University Revenue System,
- 250,000 250,000 7.00%, Pre-refunded to 07/01/02........... - 276,875 276,875
- - - Phoenix, Arizona, Series A, General - - -
- 200,000 200,000 Obligation, 6.25%, 07/01/17 .............. - 227,750 227,750
- - - Salt River Project Agricultural
Improvement & Power District, - - -
3,000,000 - 3,000,000 Series A, - - -
- - - 5.750% due 01/01/2009.................... 3,263,040 - 3,263,040
5,000,000 - 5,000,000 Series C, - - -
- - - 6.250% due 01/01/2019.................... 5,344,100 - 5,344,100
740,000 - 740,000 Tucson, Airport Authority Inc.,
Supplemental Facilities Revenue, AMT, - - -
- - - 8.700% due 09/01/2019.................... 822,621 - 822,621
--------------------------------------------
9,429,761 504,625 9,934,386
CALIFORNIA
15,000,000 - 15,000,000 Anaheim California Public Financing
Authority Lease,
- - - Capital Appreciation Subordinated Public
Improvements, Project-C, (FSA Insured)
- - - Zero coupon due 09/01/2034............... 2,102,850 - 2,102,850
- - - California State Department of Water - - -
- 100,000 100,000 Resources, 5.00%, 12/01/22................ - 95,250 95,250
5,000,000 - 5,000,000 California State General Obligation,
(FGIC Insured), - - -
- - - 5.625% due 10/01/2023................... 5,120,550 - 5,120,550
- - - California State General Obligation, - - -
- 500,000 500,000 5.00%, 10/01/18 .......................... - 481,250 481,25
1,250,000 - 1,250,000 California State Public Works Board Lease, - - -
- - - Department of Corrections , State Prison,
Series E, - - -
- - - 5.500% due 06/01/2015................... 1,305,050 - 1,305,050
2,000,000 - 2,000,000 Center Unified School District
California, - - -
- - - Capital Appreciation-Series C, (MBIA
Insured), GO, - - -
- - - Zero coupon, due 09/01/2018.............. 675,420 - 675,420
2,000,000 - 2,000,000 Foothill/Eastern Corridor Agency,
California Toll Road, - - -
- - - Sr. Lien-Series A, - - -
- - - 5.000% due 01/01/2035.................... 1,839,960 - 1,839,960
550,000 - 550,000 Los Angeles, Regional Airport Improvement,
Series A, AMT, - - -
- - - 6.700% due 01/01/2022.................... 586,872 - 586,872
3,000,000 - 3,000,000 Orange County Recovery Certificate of
Participation, Series A, (MBIA Insured) - - -
- - - 6.000% due 07/01/2026.................... 3,204,570 - 3,204,570
1,173,000 - 1,173,000 Sacramento, California Certificate of
Participation, - - -
- - - Centrex System Lease, Series A, - - -
- - - 5.550% due 09/15/2004.................... 1,178,478 - 1,178,478
5,000,000 - 5,000,000 San Francisco, California City & County
Airport Commission, International Airport, - - -
- - - Second Series-Issue 12-B, (FGIC Insured), - - -
- - - 5.625% due 05/01/2021.................... 5,107,950 - 5,107,950
5,000,000 - 5,000,000 San Joaquin Hills, California
Transportation Corridor, Agency Toll Road, - - -
- - - 5.000% due 01/01/2033.................... 4,628,850 - 4,628,850
800,000 - 800,000 Simi Valley, California Unified School
District Certificate of Participation, - - -
Refunding & Capital Improvement Projects,
(AMBAC Insured), - - -
5.250% due 08/01/2022... 804,312 - 804,312
--------------------------------------------
26,554,862 576,500 27,131,362
COLORADO
Arapahoe County, Colorado Capital
Improvement Trust Fund Highway
Revenue,
- 125,000 125,000 6.90%, Pre-refunded to 08/31/03 .......... - 146,250 146,250
2,225,000 - 2,225,000 Colorado Springs Utilities System Revenue,
Prerefunded, - - -
- - - 6.750% due 11/15/2021.................... 2,447,878 - 2,447,878
2,775,000 - 2,775,000 Colorado Springs Utilities System,
Series C, Unrefunded - - -
- - - 6.750% due 11/15/2021.................... 3,010,376 - 3,010,376
- - - Denver City and County, Airport Revenue,
AMT: - - -
- - - Series A: Prerefunded, - - -
530,000 - 530,000 8.875% due 11/15/2012.................... 618,070 - 618,070
95,000 - 95,000 8.500% due 11/15/2023.................... 106,587 - 106,587
165,000 - 165,000 8.000% due 11/15/2025.................... 183,155 - 183,155
- - - Series A: Unrefunded, - - -
1,470,000 - 1,470,000 8.875% due 11/15/2012.................... 1,682,591 - 1,682,591
1,045,000 - 1,045,000 8.500% due 11/15/2023.................... 1,154,976 - 1,154,976
1,835,000 - 1,835,000 8.000% due 11/15/2025.................... 2,004,095 - 2,004,095
1,920,000 - 1,920,000 Series C, - - -
- - - 6.600% due 11/15/2004.................... 2,080,838 - 2,080,838
4,500,000 - 4,500,000 Meridian Metropolitan District, GO, - - -
7.500% due 12/01/2011 ................... 4,890,240 - 4,890,240
--------------------------------------------
18,178,806 146,250 18,325,056
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
Principal Amount April 30, 1998 (Unaudited) Market Value
-------------------------------------- ---------------------------------------
WM Group Griffin WM Group Griffin
Tax-Exempt Municipal Pro Forma Tax-Exempt Municipal Pro Forma
Bond Fund Bond Fund Combined Bond Fund Bond Fund Combined
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM STATE AND MUNICIPAL SECURITIES - 94.8%
Connecticut
995,000 - 995,000 Mashantucket Western Pequot Tribe,
Special Revenue, Series A, Prerefunded,
- - - 6.500% due 09/01/2005(b) .................. 1,112,490 - 1,112,490
1,005,000 - 1,005,000 Mashantucket Western Pequot Tribe,
Special Revenue, Series A, Unrefunded, - - -
6.500% due 09/01/2005(b)................... 1,106,254 - 1,106,254
-------------------------------------
2,218,744 - 2,218,744
DIST OF COLUMBIA
- - - District of Columbia Water & Sewer Authority
- - - Public Utility Revenue Bond, - 517,500 517,500
- 500,000 500,000 5.50%, 10/01/17 .............................. - - -
- - - District of Columbia, American Association - - -
- - - for the Advancement of Science, Revenue, - 164,813 164,813
- 150,000 150,000 6.00%, 01/01/09 .............................. - - -
990,000 - 990,000 District of Columbia, COP, - -
- - - 6.875% due 01/01/2003...................... 1,034,114 - 1,034,114
1,500,000 - 1,500,000 Metropolitan District, Washington D.C., Airport
Authority, General Airport - - -
Revenue, Series A, AMT, (MBIA Insured), - - -
6.625% due 10/01/2019...................... 1,629,600 - 1,629,600
-------------------------------------
2,663,714 682,313 3,346,027
FLORIDA
Dade County, Florida Aviation Revenue,
- 200,000 200,000 5.50%, 10/01/07 .............................. - 211,250 211,250
- - - Dade County, Florida General Obligation, - - -
- 200,000 200,000 7.70%, 10/01/08 .............................. - 249,750 249,750
22,520,000 - 22,520,000 Dade County, Guaranteed Entitlement Revenue,
Capital Appreciation, - - -
- - - Series A, (MBIA Insured), - - -
- - - Zero coupon due 02/01/2018................. 7,381,606 - 7,381,606
425,000 - 425,000 Dade County, Seaport Authority, Refunding,
(MBIA Insured), - - -
- - - 6.500% due 10/01/2008...................... 487,624 - 487,624
- - - Florida State Board of Education Capital - - -
- 150,000 150,000 Outlay Public Education, 5.75%, 06/01/15 ..... - 157,688 157,688
5,000,000 - 5,000,000 Orlando Utilities Commission Water & Electric, - - -
6.000% due 10/01/2010...................... 5,591,050 - 5,591,050
-------------------------------------
13,460,280 618,688 14,078,968
GEORGIA
1,000,000 - 1,000,000 Atlanta, Airport Facilities Revenue, AMT,
- - - 7.250% due 01/01/2017 ..................... 1,079,800 - 1,079,800
6,000,000 - 6,000,000 Georgia Municipal Electric Authority Power,
Series Z, (MBIA Insured), - - -
- - - 5.500% due 01/01/2020...................... 6,231,900 - 6,231,900
- - - Georgia State General Obligation, - - -
- 150,000 150,000 7.20%, 03/01/08 .............................. - 179,813 179,813
5,000,000 - 5,000,000 Georgia State, Series B, GO, - - -
- - - 6.300% due 03/01/2009...................... 5,711,700 - 5,711,700
- - - Monroe, PCR, (Oglethorpe Power Company): - - -
5,000,000 - 5,000,000 6.700% due 01/01/2009...................... 5,724,800 - 5,724,800
3,410,000 - 3,410,000 6.750% due 01/01/2010...................... 3,934,080 - 3,934,080
-------------------------------------
22,682,280 179,813 22,862,093
HAWAII
5,555,000 - 5,555,000 Hawaii State, Series BW, GO,
- - - 6.400% due 03/01/2009...................... 6,281,150 - 6,281,150
2,000,000 - 2,000,000 Honolulu, Hawaii City & County, Series A, GO, - - -
- - - 6.000% due 01/01/2012...................... 2,192,020 - 2,192,020
- - - State of Hawaii, General Obligation, - - -
- 150,000 150,000 6.00%, 09/01/09 .............................. - 165,188 165,188
-------------------------------------
8,473,170 165,188 8,638,358
IDAHO
2,000,000 - 2,000,000 Idaho Health Facilities Authority Revenue,
(Inverse Floater),
- - - Escrowed to Maturity,
- - - 7.820% due 02/15/2021 (a).................. 2,384,540 - 2,384,540
- - - Idaho Housing & Finance Association, Single - - -
- 200,000 200,000 Family Mortgage, 5.20%, 07/01/27 ............. - 203,000 203,000
-------------------------------------
2,384,540 203,000 2,587,540
ILLINOIS
3,665,000 - 3,665,000 Chicago Gas Supply (People Gas),
- - - 6.875% due 03/01/2015...................... 3,994,740 - 3,994,740
- - - Chicago, O'Hare Airport Supplemental
Facilities, AMT: - - -
700,000 - 700,000 American Airlines, Special Series A, - - -
- - - 7.875% due 11/01/2025...................... 761,936 - 761,936
6,000,000 - 6,000,000 International Term, (MBIA Insured), - - -
- - - 6.750% due 01/01/2012 ..................... 6,451,800 - 6,451,800
- - - United Air Lines: - - -
615,000 - 615,000 8.400% due 05/01/2004 ..................... 662,380 - 662,380
775,000 - 775,000 8.950% due 05/01/2018 ..................... 870,255 - 870,255
150,000 - 150,000 Special Series B, - - -
- - - 8.500% due 05/01/2018...................... 162,996 - 162,996
4,000,000 - 4,000,000 Chicago Wastewater Transmission Revenue,
Prerefunded, - - -
- - - 6.750% due 11/15/2020...................... 4,326,760 - 4,326,760
- #VALUE! Cook County, Community High School, Number 217,
(AMBAC Insured): - - -
1,090,000 - 1,090,000 6.400% due 12/01/2003..................... 1,161,918 - 1,161,918
1,130,000 - 1,130,000 6.500% due 12/01/2004..................... 1,208,264 - 1,208,264
1,370,000 - 1,370,000 6.600% due 12/01/2005..................... 1,469,394 - 1,469,394
- - - Cook County, School District, Number 026,
(MBIA Insured): - - -
1,445,000 - 1,445,000 Zero coupon due 12/01/2003................. 1,118,372 - 1,118,372
1,020,000 - 1,020,000 Zero coupon due 12/01/2004................. 751,628 - 751,628
- - - Du Page County, Illinois General Obligation - - -
- - - Revenue Bond, Stormwater Project, - - -
- 250,000 250,000 5.60%, 01/01/21 .............................. - 266,563 266,563
- - - Illinois Educational Facilities Authority - - -
- - - Revenue, Northwestern University, - - -
- 450,000 450,000 5.10%, 11/01/32 .............................. - 457,875 457,875
- - - Illinois Health Facilities Authority Revenue: - - -
- - - Glenoak Medical Center, Series D,
Pre-refunded, - - -
210,000 - 210,000 9.500% due 11/15/2015 ..................... 240,603 - 240,603
260,000 - 260,000 Glenoak Medical Center, Series D,
Escrowed to Maturity, - - -
- - - 9.500% due 11/15/2015 ..................... 302,338 - 302,338
4,570,000 - 4,570,000 Hindsdale Hospital, Series B,
Escrowed to Maturity, - - -
- - - 9.000% due 11/15/2015...................... 5,208,658 - 5,208,658
300,000 - 300,000 Riverside Senior Living Center Project,
Prerefunded, - - -
- - - 7.500% due 11/01/2020...................... 328,734 - 328,734
3,000,000 - 3,000,000 Rush Presbyterian - St. Luke's Medical,
Residual Interest Bond, (MBIA Insured), - - -
- - - 9.615% due 10/01/2024 (a)................. 3,517,500 - 3,517,500
1,230,000 - 1,230,000 Servantcor, Series A, Prerefunded, - - -
- - - 8.000% due 08/15/2021...................... 1,386,112 - 1,386,112
5,000,000 - 5,000,000 Sister Services Hospital, Residual Interest
Bond, (MBIA Insured), - - -
- - - 9.267% due 06/19/2015 (a).................. 5,912,500 - 5,912,500
365,000 - 365,000 Illinois Housing Development Authority,
Series A, AMT, - - -
- - - 7.350% due 08/01/2010 ..................... 384,122 - 384,122
5,000,000 - 5,000,000 Illinois State Sales Tax Revenue, Series N,
Prerefunded, - - -
- - - 7.000% due 06/15/2020...................... 5,487,150 - 5,487,150
- - - Metropolitan Pier and Exposition Authority
Dedicated State Tax, (FGIC Insured), - - -
4,000,000 - 4,000,000 Zero coupon due 06/15/2008................. 2,440,480 - 2,440,480
6,000,000 - 6,000,000 Zero coupon due 06/15/2009................. 3,459,960 - 3,459,960
- - - Metropolitan Pier & Exposition Authority - - -
- - - Dedicated State Tax Revenue, - - -
- 400,000 400,000 4.30%, 06/15/01 (c) .......................... - 348,500 348,500
-------------------------------------
51,608,600 1,072,938 52,681,538
</TABLE>
<PAGE>
Portfolio of Investments
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
Principal Amount April 30, 1998 (Unaudited) Market Value
- ----------------------------------------- --------------------------------------------
WM Group Griffin WM Group Griffin
Tax-Exempt Bond Municipal Bond Pro Forma Tax-Exempt Bond Municipal Bond Pro Forma
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Indiana
6,000,000 - 6,000,000 Indiana Municipal Power Agency,
Series A, (MBIA Insured)
- - - 6.125% due 01/01/2013 6,721,920 - 6,721,920
2,000,000 - 2,000,000 Indianapolis, Public Improvement Board,
Series D, (LOC INB National Bank), - - -
- - - 6.500% due 02/01/2022 2,003,520 - 2,003,520
- - - Wa-Nee Elementary/High School Building - - -
- - - Corporation, Revenue, 6.50%, - - -
- 100,000 100,000 pre-refunded to 01/15/04 - 111,250 111,250
---------------------------------------
8,725,440 111,250 8,836,690
Kentucky
3,000,000 - 3,000,000 Jefferson County, Hospital Revenue,
Residual Interest Bond,
(MBIA Insured),
8.607% due 10/01/2008 (a) 3,506,250 - 3,506,250
Louisiana
1,500,000 - 1,500,000 Louisiana Public Facility Authority
Revenue, Series B, ETM,
Zero coupon due 12/01/2019 473,370 - 473,370
Maryland
5,000,000 - 5,000,000 Mayor & City Council of Baltimore Port
Facility (DuPont),
- - - 6.500% due 10/01/2011 5,439,750 - 5,439,750
930,000 - 930,000 State of Maryland, Community Development
Administration,
Department of Housing Revenue, Single
Family Project, AMT,
7.450% due 04/01/2032 979,671 - 979,671
---------------------------------------
6,419,421 - 6,419,421
Massachusetts
750,000 - 750,000 Commonwealth of Massachusetts, GO,
Consolidated Loan, Series A, Prerefunded,
7.625% due 06/01/2008 836,130 - 836,130
Commonwealth of Massachusetts, Health
and Educational - - -
Facilities Authority Revenue: - - -
500,000 - 500,000 Framingham Union Hospital, Series B, - - -
- - - 8.500% due 07/01/2010 553,725 - 553,725
2,000,000 - 2,000,000 Saint Memorial Medical Center, Series A, - - -
- - - 6.000% due 10/01/2023................... 2,002,240 - 2,002,240
250,000 - 250,000 Commonwealth of Massachusetts, GO,
Pre-refunded, - - -
- - - 7.500% due 12/01/2007 .................. 275,210 - 275,210
- - - Massachusetts Bay Transportation Authority - - -
- - - General Transportation System, - - -
- 200,000 200,000 5.60%, 03/01/08 ......................... - 213,750 213,750
- - - Massachusetts State General Obligation, - - -
- 500,000 500,000 5.00%, 06/01/10 ......................... - 507,500 507,500
- - - Massachusetts State Water Resources Authori - - -
- 100,000 100,000 6.00%, 08/01/14 ......................... - 109,500 109,500
1,000,000 - 1,000,000 Plymouth County, COP, Series A, - - -
7.000% due 04/01/2022 ................... 1,115,140 - 1,115,140
----------------------------------------
4,782,445 830,750 5,613.195
Michigan
Michigan Municipal Bond Authority Revenue,
- 200,000 200,000 6.00%, 10/01/07 ........................... - 222,500 222,500
- - - Michigan State Hospital Financing Authority - - -
- 75,000 75,000 Metropolitan Hospital, 5.88%, 07/01/14 .... - 77,906 77,906
1,500,000 - 1,500,000 Michigan State Hospital Finance Authority
Revenue, - - -
Detroit Medical, Series A, Prerefunded, - - -
7.500% due 08/15/2011..................... 1,673,040 - 1,673,040
Michigan State Underground Storage Tank - - -
Financial Assurance Authority Revenue, - - -
- 300,000 300,000 6.00%, 05/01/05 ........................... - 325,875 325,875
----------------------------------------
1,673,040 626,281 2,299,321
Minnesota
Minnesota Public Facilities Authority Water
- 200,000 200,000 Pollution Control Revenue, 6.00%, 03/01/07 - 222,250 222,250
University of Minnesota, Series A, Revenue - - -
- 200,000 200,000 Bond, 4.75%, 07/01/03 ..................... - 203,750 203,750
---------------------------------------
- 426,000 426,000
Mississippi
Lowndes County, Solid Waste Disposal, PCR,
Residual Interest Bond,
(Weyerhauser Company),
4,000,000 - 4,000,000 6.800% due 04/01/2022.................... 4,796,840 - 4,796,840
5,000,000 - 5,000,000 8.200% due 04/01/2022.................... 5,888,550 - 5,888,550
200,000 - 200,000 Warren County, Solid Waste Disposal Revenue, - - -
(International Paper Project), Series A,
AMT, - - -
7.700% due 11/15/2009 ....................... 212,102 - 212,102
---------------------------------------
10,897,492 - 10,897,492
Missouri
1,000,000 - 1,000,000 Missouri State, Health and Educational
Facilities Authority Revenue,
- - - Bethesda Eye Institute, Prerefunded,
- - - 6.800% due 11/01/2016..................... 1,098,100 - 1,098,100
3,000,000 - 3,000,000 St. Louis, Parking Facilities Revenue, - - -
Prerefunded,
6.625% due 12/15/2021..................... 3,311,250 - 3,311,250
---------------------------------------
4,490,350 - 4,409,350
</TABLE>
<PAGE>
Portfolio of Investments
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
Principal Amount April 30, 1998 (Unaudited) Market Value
- ------------------------------------------- --------------------------------------------
WM Group Griffin WM Group Griffin
Tax-Exempt Bond Municipal Bond Pro Forma Tax-Exempt Bond Municipal Bond Pro Forma
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
MONTANA
1,000,000 - 1,000,000 Forsyth, PCR, Series B, AMT, Puget Sound
Power & Light, (AMBAC Insured),
7.250% due 08/01/2021...................... 1,090,640 - 1,090,640
NEBRASKA
Douglas County, Hospital Authority Revenue,
Alegent Health, Immanuel Medical Center:
1,000,000 - 1,000,000 5.250% due 09/01/2021...................... 982,760 - 982,760
600,000 - 600,000 Nebraska Investment Finance Authority,
Single Family Housing Revenue, - - -
Residual Interest Bond, AMT, (GNMA Insured), - - -
9.159% due 09/15/2024 (a).................. 670,500 - 670,500
Omaha Public Power District Electric, - - -
7,000,000 - 7,000,000 Series B, Escrowed to Maturity, - - -
6.150% due 02/01/2012...................... 7,823,970 - 7,823,970
Series C, - - -
5.500% due 02/01/2014...................... 2,107,960 - 2,107,960
-----------------------------------------
11,585,190 - 11,585,190
NEVADA
4,000,000 - 4,000,000 Clark County, IDR, Series A, Nevada Power
Company, AMT, (FGIC Insured),
6.700% due 06/01/2022...................... 4,324,480 - 4,324,480
Nevada State General Obligation, - - -
- 100,000 100,000 5.80%, 07/15/08.............................. - 106,625 106,625
-----------------------------------------
4,324,480 106,625 4,431,105
NEW JERSEY
New Jersey State General Obligation,
- 350,000 350,000 6.00%, 02/15/11.............................. - 387,625 387,625
NEW MEXICO
1,000,000 - 1,000,000 Bernaillo County New Mexico, Gross Receipts
of Tax Revenue,
5.250% due 04/01/2027...................... 1,013,400 - 1,013,400
1,500,000 - 1,500,000 Lordsburg Pollution Control (Phelps Dodge), - - -
6.500% due 04/01/2013...................... 1,639,365 - 1,639,365
1,500,000 - 1,500,000 Santa Fe County, New Mexico Correctional
System, (FSA Insured), - - -
6.000% due 02/01/2027...................... 1,682,730 - 1,682,730
-----------------------------------------
4,335,495 - 4,335,495
NEW YORK
1,265,000 - 1,265,000 Metropolitan Transportation Authority,
Service Contract Transportation Facilities,
Series 7,
4.750% due 07/01/2019...................... 1,145,635 - 1,145,635
New York, GO, Unrefunded: - - -
Series B, (FSA Insured), - - -
1,000,000 - 1,000,000 7.000% due 06/01/2014...................... 1,083,410 - 1,083,410
160,000 - 160,000 8.250% due 11/15/2018...................... 180,197 - 180,197
1,000,000 - 1,000,000 New York, NY, Series B, (FGIC Insured) - - -
6.000% due 08/01/2007...................... 1,091,850 - 1,091,850
New York State Medical Care Facilities
Finance Agency Revenue, - - -
170,000 - 170,000 Prerefunded, - - -
7.750% due 08/15/2011...................... 188,705 - 188,705
105,000 - 105,000 Refunded, - - -
7.750% due 08/15/2011...................... 115,266 - 115,266
2,000,000 - 2,000,000 New York State Housing Finance Agency
Revenue, Multi-family Housing, - - -
Second Mortgage, Series F, AMT, - - -
6.625% due 08/15/2012...................... 2,122,540 - 2,122,540
New York State Environmental Facilities - - -
Corporation Pollution Control Revenue, - - -
- 200,000 200,000 5.50%, 06/15/09.............................. - 211,750 211,750
New York State Environmental Facilities, - - -
State Clean Water & Drinking, Revolving - - -
- 500,000 500,000 Funds, Series C, 500%, 06/15/19.............. - 480,625 480,625
New York, New York General Obligation, - - -
- 200,000 200,000 6.00%, 02/01/04.............................. - 212,250 212,250
New York City TFA Future, - - -
- 500,000 500,000 5.00%, 05/01/ 18............................. - 479,375 479,375
-----------------------------------------
5,927,603 1,384,000 7,311,603
NORTH CAROLINA
5,000,000 - 5,000,000 North Carolina Eastern Municipal Power
Agency, Power Systems Revenue,
Series A,
5.700% due 01/01/2013...................... 5,701,200 - 5,701,200
NORTH DAKOTA
4,370,000 - 4,370,000 Mercer County Pollution Control
(Otter Trail Power),
6.900% due 02/01/2019...................... 4,676,774 - 4,676,774
OHIO
Cleveland, Ohio General Obligation, - - -
- 350,000 350,000 5.38%, 09/01/09.............................. - 370,563 370,563
Franklin County, Ohio Hospital Revenue, Holy - - -
Cross Health Systems Corporation, - - -
- 300,000 300,000 5.50%, 06/01/01.............................. - 310,500 310,500
1,240,000 - 1,240,000 Lorain County, Hospital Revenue, Series B,
Humility of Mary Health Care, - - -
Escrowed to Maturity, - - -
7.200% due 12/15/2011...................... 1,381,596 - 1,381,596
Ohio State Water Department Authority Revenue - - -
Fresh Water Series, Revenue, - - -
- 200,000 200,000 5.70%, 06/01/09.............................. - 213,250 213,250
University of Cincinnati, General Receipts, - - -
- 500,000 500,000 Series AA, 5.00%, 06/01/18................... - 480,625 480,625
-----------------------------------------
1,381,596 1,374,938 2,756,534
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
PRINCIPAL AMOUNT APRIL 30, 1998 (UNAUDITED) MARKET VALUE
------------------------------------------ --------------------------------------------
WM TAX-EXEMPT GRIFFIN MUNICIPAL PRO FORMA WM TAX-EXEMPT GRIFFIN MUNICIPAL PRO FORMA
BOND FUND BOND FUND COMBINED BOND FUND BOND FUND COMBINED
SHORT-TERM STATE AND MUNICIPAL SECURITIES - 0.6%
<S> <C> <C> <C>
FLORIDA
Citrus Park Community Development District
Florida, Capital Improvements,
- 400,000 400,000 3.35%, 11/01/16............................... - 400,000 400,000
KANSAS
Kansas City, Kansas Industrial Revenue,
- 100,000 100,000 5.00%, 08/01/15............................... - 100,000 100,000
LOUISIANA
Louisiana Loops VRUM UG
- 100,000 100,000 5.00%, 09/01/08............................... - 100,000 100,000
MICHIGAN
Michigan State Hospital Financing Authority,
- 400,000 400,000 Kent Hospital, 5.00%, 01/15/20................ - 400,000 400,000
NEW MEXICO
Albuquerque, New Mexico lodgers tax,
- 100,000 100,000 3.00%, 07/01/22............................... - 100,000 100,000
OHIO
Ohio State Water Development Authority,
- 200,000 200,000 5.00%, 07/01/32............................... - 200,000 200,000
TEXAS
Guadalupe Blanco River Authority Texas
Pollution Control Revenue, Central Power &
- 300,000 300,000 Light Project, 5.00%, 11/01/15................ - 300,000 300,000
WYOMING
Kemerer County, Wyoming Pollution Control
- 100,000 100,000 Revenue, 5.00%, 11/01/14 ..................... - 100,000 100,000
Kemerer County, Wyoming Pollution Control
- 200,000 200,000 Revenue, 5.00%, 11/01/14 ..................... - 200,000 200,000
Total Short-Term State and Municipal Securities - 1,900,000 1,900,000
INVESTMENT COMPANIES - 1.8%
Seven Seas Tax Free Money Market Fund,
- 98,876 98,876 3.39%, 05/01/98 .............................. - 98,876 98,876
6,363,404 - 6,363,404 Nuveen Tax Exempt Money Market Fund
(Cost $6,363,404)............................. 6,363,404 - 6,363,404
---------------------------------------
6,363,404 98,876 6,462,280
TOTAL INVESTMENTS - 97.2% (COST $312,545,951) 326,874,303 16,050,011 342,924,314
OTHER ASSETS AND LIABILITIES, NET - 2.8% 10,189,732 (227,112) 9,962,620
TOTAL NET ASSETS - 100.0% 330,700,631 15,822,899 352,886,934
</TABLE>
- --------------------------------------------------------------------------------
(a) Floating rate note. The interest rate shown reflects the rate currently in
effect.
(b) Securities exempt from registration under section 4(2) of the Securities
Act of 1993, as amended. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
(c) Rate on this zero coupon bonds represents annualized yield to maturity at
April 30, 1998.
<PAGE>
WM GROUP TAX-EXEMPT BOND FUND & GRIFFIN MUNICIPAL BOND FUND
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the combined financial
position of the WM Group Tax-Exempt Bond Fund and the Griffin Municipal
Bond Fund at April 30, 1998 and the pro forma combined
results of operations for the year ended December 30, 1997 and the four
month period ended April 30, 1998 as though the reorganization had occurred
on January 1, 1997.
The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of how
the pro forma combined financial statements would have appeared had the
reorganization actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds incorporated by
reference in the Statement of Additional Information.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the Griffin Municipal Bond Fund in exchange for
shares of WM Group Tax-Exempt Bond Fund. Under generally accepted
accounting principles, the historical cost of investment securities will be
carried forward to the surviving entity.
The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are stated at amortized cost
which approximates fair value. Historical cost amounts represent the
combined cost basis of the securities.
3. Pro Forma Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the asset value of the WM Group
shares at April 30, 1998.
4. Pro Forma Statements of Operations
<PAGE>
WM California Municipal Fund & Griffin California Tax-Free Fund
Pro Forma Combined Statement of Assets and Liabilities at
June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
CALIFORNIA CALIFORNIA PRO FORMA PRO FORMA
TAX-FREE FUND MUNICIPAL FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $ 46,256,980 $ 331,858,243 $ 378,115,223
----------------------------------------------------------------------
Total Investments 46,256,980 331,858,243 - 378,115,223
Cash/Cash Equivalents 308,408 - 308,408
Receivable for dollar roll fee income - -
Dividends and/or interest receivable 725,260 5,043,338 5,768,598
Receivable for Fund shares Sold - 773,513 773,513
Receivable for investment securities sold - 9,172,268 9,172,268
Unamortized organization costs - - -
Receivable from investment advisor - - -
Prepaid expenses and other assets 8,203 2,984 11,187
----------------------------------------------------------------------
Total Assets 47,298,851 346,850,346 - 394,149,197
======================================================================
LIABILITIES:
Payable for dollar roll transactions - -
Variation margin payable - -
Reverse repurchase agreements - -
Payable for Fund shares redeemed - 182,853 182,853
Payable for investment securities purchase 1,511,595 19,646,770 21,158,365
Investment advisory fee payable 178,669 178,669
Administration fee payable - -
Shareholder servicing and distribution fees payable 86,945 86,945
Dividends payable 148,984 492,746 641,730
Accrued legal and audit fees - -
Accrued transfer agent fees - -
Accrued Trustees' fees and expenses - -
Accrued registration and filing fees payable - -
Due to Custodian 1,262,975 1,262,975
Net unrealized depreciation of fwd for cur cts - -
Accrued Expenses and other payables 42,914 125,434 168,348
----------------------------------------------------------------------
Total Liabilities 1,703,493 21,976,392 23,679,885
----------------------------------------------------------------------
----------------------------------------------------------------------
TOTAL NET ASSETS $ 45,595,358 $ 324,873,954 $ - $ 370,469,312
======================================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) - (6,864) (6,864)
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions (132,408) 581,668 449,260
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities 1,637,081 24,496,679 26,133,760
Paid-in capital 44,090,358 299,802,471 343,893,156
----------------------------------------------------------------------
TOTAL NET ASSETS $ 45,595,358 $ 324,873,954 $ - $ 370,469,312
======================================================================
NET ASSETS:
Class A Shares $ 38,503,430 $ 290,328,335 $ 328,831,765
======================================================================
Class B Shares $ 7,091,928 $ 34,536,784 $ 41,628,712
======================================================================
Class S Shares $ 7,645 $ 7,645
======================================================================
Class I Shares $ 1,190 $ 1,190
======================================================================
SHARES OUTSTANDING:
Class A Shares 4,593,384 25,624,319 (1,195,079) (a) 29,022,624
======================================================================
Class B Shares 845,712 3,048,310 (219,759.25) (a) 3,674,263
======================================================================
Class S Shares 675 675
======================================================================
Class I Shares 105 105
======================================================================
NET ASSET VALUE PER SHARE:
Class A Shares $ 8.38 $ 11.33 $ 11.33
======================================================================
Class B Shares $ 8.39 $ 11.33 $ 11.33
======================================================================
Class S Shares $ 11.33 $ 11.33
======================================================================
Class I Shares $ 11.33 $ 11.33
======================================================================
</TABLE>
See accompanying notes to pro forma financial statements
- --------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group based upon the net asset value of WM Group shares at
June 30, 1998.
<PAGE>
WM Group California Municipal Fund
Pro Forma Combined Statement of Operations
For the Year Ended June 30, 1998
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM GROUP
CALIFORNIA CALIFORNIA PRO FORMA PRO FORMA
TAX-FREE FUND MUNICIPAL FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - -
Foreign withholding tax on dividend income - -
Interest Income 1,735,944 20,795,207 22,531,151
Fee Income - -
---------------------------------------------------------------------------
Total Investment Income 1,735,944 20,795,207 - 22,531,151
---------------------------------------------------------------------------
EXPENSES:
Investment Advisory fee 173,723 2,010,319 416,614 (A) 2,600,656
Administration fee 69,489 860,498 (929,987) (B) -
Custodian fee 15,635 17,049 32,684
Legal and Audit fees 24,073 37,650 61,723
Trustees' fees and expenses 8,198 25,532 33,730
Amortization of organization costs 17,108 - 17,108
Registration and filing fees 5,143 15,775 20,918
Transfer agent fees - 34,691 108,554 (C) 143,245
Other 3,929 180,228 184,157
---------------------------------------------------------------------------
Subtotal 317,298 3,147,051 (513,373) 2,950,976
Shareholder servicing and distribution fees -
Class A Shares 73,250 771,965 845,215
Class B Shares 54,446 279,831 334,277
Class S Shares 75 75
Interest expense -
Fees waived and/or expenses absorbed by
investment advisor (177,998) (656,426) (317,295) (D) (1,151,719)
---------------------------------------------------------------------------
Subtotal 266,996 3,577,187 (722,114) 3,122,069
Fees reduced by credits allowed by the custodian (13,157) (13,157)
---------------------------------------------------------------------------
Net expenses 266,996 3,564,030 (722,114) 3,108,912
---------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 1,468,948 17,231,177 722,114 19,422,239
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized gain from security transactions
Security transactions 243,856 7,849,255 8,093,111
Forward foreign currency contracts and
foreign currency transactions - -
Futures contracts 51,511 994,551 1,046,062
Net unrealized appreciation/(depreciation) of:
Securities 792,224 3,864,365 4,656,589
Forward foreign currency contracts - -
Foreign currency, written options, futures
contracts and other assets and
liabilities - -
---------------------------------------------------------------------------
Net realized/unrealized gains/(losses) on invsts 1,087,591 12,708,171 - 13,795,762
---------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS -
RESULTING FROM OPERATIONS 2,556,539 29,939,348 722,114 33,218,001
===========================================================================
</TABLE>
(A) Increase in management fees for Griffin shareholders to reflect the new fee
structure. Fees are based on .70% of average daily net assets up to
$500,000,000 and .55% of average daily net assets over that amount.
(B) Elimination of the administration fees, now incorporated in the management
fee structure.
(C) Addition of transfer agent fee at a monthly rate of $1.45 per Class A
shareholder account and $1.55 per Class B shareholder account.
(D) Fees waived and/or expense absorbed by investment advisor adjusted to .31%
of average daily net assets.
<PAGE>
<TABLE>
<CAPTION>
WM CALIFORNIA MUNICIPAL FUND
PRINCIPAL AMOUNT PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS VALUE
- -------------------------------------------- --------------------------------------
WM GRIFFIN JUNE 30, 1998 (UNAUDITED) WM GRIFFIN
CALIFORNIA CALIFORNIA PRO FORMA CALIFORNIA CALIFORNIA PRO FORMA
MUNICIPAL FUND TAX-FREE FUND COMBINED MUNICIPAL FUND TAX-FREE FUND COMBINED
LONG-TERM MUNICIPAL BONDS AND NOTES - 100.6%
CALIFORNIA - 99.7%
<S> <C> <C> <C> <C> <C> <C>
$ 5,360,000 - $ 5,360,000 Alhambra, Improvement Board Act of 1915,
- - - Assessment District No. 1, Public Works,
(MBIA Insured),
- - - 6.125% due 09/02/2018......................... $ 5,755,300 - $ 5,755,300
3,000,000 - 2,000,000 Anaheim, Public Financing Authority Revenue,
Residual Interest
- - - Bond, (MBIA Insured),
- - - 8.930% due 12/28/2018 (a)..................... 2,565,000 - 2,565,000
1,000,000 - 1,000,000 Arcadia, Hospital Revenue Authority, (Methodist
Hospital),
- - - 6.500% due 11/15/2012......................... 1,070,000 - 1,070,000
2,000,000 - 2,000,000 Barstow Redevelopment Agency, Central
- - - Redevelopment Project, Tax Allocation, Series
- - - A, (MBIA Insured), 7.000% due 09/01/2014...... 2,465,000 - 2,465,000
1,000,000 - 1,000,000 Brawley, Wastewater Treatment Facility,
- - - (AMBAC Insured),
- - - 5.000% due 07/01/2016......................... 1,006,250 - 1,006,250
1,000,000 - 1,000,000 Brea & Olinda, Unified School District, (High
- - - School Refinancing Project), COP, Series A,
(FSA Insured),
- - - 6.000% due 08/01/2009......................... 1,076,250 - 1,076,250
- $1,100,000 1,100,000 CA ABAG COP Episcopal Ho
- - - 5.00%, 07/01/07 ......................... - $1,116,500 1,116,500
- 500,000 500,000 California Educational Facilities Authority
- - - Revenue Bond, Pooled College & University
- - - Project, Series A, 5.15%, 12/01/04............ - 520,000 520,000
4,715,000 - 4,715,000 California Educational Facilities Authority
- - - Revenue, (College of Osteopathic Medicine),
(Pre-refunded to 06/01/2003),
- - - 7.500% due 06/01/2018......................... 5,428,144 - 5,428,144
- 1,000,000 1,000,000 California Educational Facilities Authority
- - - Revenue, University of San Diego,
- - - 5.00%, 10/01/22 - 976,250 976,250
- - - California Health Facilities Authority Revenue:
1,000,000 - 1,000,000 (Kaiser Permanent), Series A, (FSA Insured)
- - - 7.000% due 12/01/2010......................... 1,080,000 - 1,080,000
10,250,000 - 10,250,000 (Enloe Health Systems), Series A, -
- - - 5.000% due 11/15/2028......................... 9,916,875 - 9,916,875
- 500,000 500,000 California Health Facilities Financing
- - - Authority Revenue, Downey Community
- - - Hospital, 5.20%, 05/15/03.................... - 514,375 514,375
- 300,000 300,000 California Health Facilities Financing
- - - Authority Revenue, Kaiser Permanente,
- - - Series C, 5.60%, 05/01/33.................... - 301,500 301,500
- - - California Housing Finance Agency, Home Mortgage,
AMT:
- - - Series A, (Multi-family Housing III), (MBIA
Insured):
1,000,000 - 1,000,000 5.850% due 08/01/2017........................ 1,056,250 - 1,056,250
3,000,000 - 3,000,000 5.950% due 08/01/2028........................ 3,153,750 - 3,153,750
- - - Series B, (MBIA Insured):
- 500,000 500,000 5.200% due 08/01/2026........................ - 510,625 510,625
1,000,000 - 1,000,000 6.000% due 08/01/2016........................ 1,062,500 - 1,062,500
2,000,000 - 2,000,000 6.100% due 02/01/2028........................ 2,122,500 - 2,122,500
1,000,000 - 1,000,000 Series N, (FHA/VA Insured),
- - - 6.375% due 02/01/2027........................ 1,078,750 - 1,078,750
- - - California Housing Finance Agency, Home
- - - Ownership & Improvement Revenue:
1,500,000 - 1,500,000 Series 1988G, AMT, (FHA Insured),
- - - 8.150% due 08/01/2019....................... 1,531,305 - 1,531,305
2,150,000 - 2,150,000 Series 1989D, AMT, (FHA Insured),
- - - 7.500% due 08/01/2020....................... 2,227,701 - 2,227,701
5,010,000 - 5,010,000 Series C, AMT, (FHA Insured),
- - - 6.650% due 08/01/2014....................... 5,423,325 - 5,423,325
665,000 - 665,000 Series D, AMT, (MBIA Insured),
- - - 6.300% due 08/01/2014....................... 709,888 - 709,888
2,630,000 - 2,630,000 Series F, AMT, (MBIA Insured),
- - - 6.800% due 08/01/2014....................... 2,889,712 - 2,889,712
3,385,000 - 3,385,000 Series F-2, (FHA Insured),
- - - 7.250% due 08/01/2016....................... 3,698,113 - 3,698,113
- - - California, Pollution Control Financing Authority,
1,000,000 - 1,000,000 PCR (Keller Canyon Landfill Company Project),
AMT,
- - - 6.875% due 11/01/2027............................ 1,101,250 - 1,101,250
2,890,000 - 2,890,000 (Mobile Oil Corporation Project),
- - - 5.500% due 12/01/2029............................ 2,944,188 - 2,944,188
2,500,000 - 2,500,000 (San Diego Gas and Electric), Series A, AMT,
(AMBAC Insured),
- - - 5.850% due 06/01/2021.......................... 2,621,875 - 2,621,875
- - - (Southern California Edison Company):
13,250,000 - 13,250,000 Series B, AMT, (AMBAC Insured),
- - - 6.400% due 12/01/2024.......................... 14,492,188 - 14,492,188
5,000,000 - 5,000,000 Series B, AMT, (FGIC Insured),
- - - 6.400% due 12/01/2024.......................... 5,468,750 - 5,468,750
6,565,000 - 6,565,000 (Tracy Material Recovery Project), Series A, AMT,
- - - 6.600% due 08/01/2014.......................... 6,664,854 - 6,664,854
5,000,000 - 5,000,000 (Waste Management), Series A, AMT,
- - - 7.150% due 02/01/2011.......................... 5,425,000 - 5,425,000
3,100,000 - 3,100,000 (Waste Removal Systems), Series A, AMT,
- - - 7.100% due 11/01/2009.......................... 3,266,625 - 3,266,625
2,250,000 - 2,250,000 California Residential Efficiency Financing
- - - Authority (First Resource Efficiency),
- - - (AMBAC Insured), 6.000% due 07/01/2017......... 2,424,375 - 2,424,375
1,355,000 - 1,355,000 California Rural Home Mortgage Finance Authority,
- - - SFM Mortgage-Backed Securities Project, Series
A-2, AMT, (GNMA Insured),
- - - 7.950% due 12/01/2024.......................... 1,549,781 - 1,549,781
- - - California State Department of Water - -
- - - Resources,
- 300,000 300,000 5.00%, 12/01/22 - 292,875 292,875
- 500,000 500,000 6.00%, 12/01/06 - 556,875 556,875
- 500,000 500,000 6.00%, 12/01/09 - 566,875 566,875
415,000 - 415,000 California State, GO, (MBIA Insured),
- - - 6.000% due 10/01/2014.......................... 448,200 - 448,200
- - - California Statewide Communities Development
Authority COP:
3,000,000 - 3,000,000 (Cedars-Sinai Medical Center), (MBIA Insured),
- - - 6.500% due 08/01/2012.......................... 3,483,750 - 3,483,750
735,000 - 735,000 (Childrens Campus),
- - - 6.500% due 09/01/2022.......................... 790,125 - 790,125
14,800,000 - 14,800,000 California Statewide Communities Development
Authority Revenue,
- - - (Sherman Oaks Project), Series A, (AMBAC
Insured),
- - - 5.000% due 08/01/2022.......................... 14,467,000 - 14,467,000
5,715,000 - 5,715,000 Carson, Improvement Board Act of 1915, GO,
- - - 7.375% due 09/02/2022.......................... 6,150,769 - 6,150,769
4,675,000 - 4,675,000 Chula Vista, IDR, (San Diego Gas and Electric),
Series A, AMT,
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WM CALIFORNIA MUNICIPAL FUND
PRINCIPAL AMOUNT PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS VALUE
- -------------------------------------------- --------------------------------------
WM GRIFFIN JUNE 30, 1998 (UNAUDITED) WM GRIFFIN
CALIFORNIA CALIFORNIA PRO FORMA CALIFORNIA CALIFORNIA PRO FORMA
MUNICIPAL FUND TAX-FREE FUND COMBINED MUNICIPAL FUND TAX-FREE FUND COMBINED
<S> <C> <C> <C> <C> <C> <C>
- - - (AMBAC Insured),
- - - 6.400% due 12/01/2027.......................... 5,113,281 - 5,113,281
2,950,000 - 2,950,000 Chula Vista, Redevelopment Agency, Tax Allocation
Revenue,
- - - 8.625% due 09/01/2024.......................... 3,606,375 - 3,606,375
- - - Contra Costa County, Finance Authority, Tax
Allocation Revenue,
- - - Series A:
$1,595,000 - $1,595,000 7.000% due 08/01/2009.......................... $1,746,525 - $1,746,525
1,000,000 - 1,000,000 7.100% due 08/01/2022.......................... 1,092,500 - 1,092,500
- $ 500,000 500,000 Contra Costa, California Transportation
- - - Authority Sales Tax Revenue,
- - - 6.00%, 03/01/07 - $ 556,250 556,250
2,500,000 - 2,500,000 Davis, Public Facilities Finance Authority,
- - - Mace Ranch Area, Series A,
- - - 6.600% due 09/01/2025......................... 2,609,375 - 2,609,375
3,215,000 - 3,215,000 Delano, COP, Series A,
- - - 9.250% due 01/01/2022......................... 3,721,363 - 3,721,363
8,985,000 - 8,985,000 East Bay Regional Parks District, GO, Series D,
- - - 5.000% due 09/01/2023.......................... 8,906,381 - 8,906,381
1,985,000 - 1,985,000 El Cajon, COP, (Helix View Nursing Hospital),
- - - Limited Obligation, Series 1990, AMT, (FHA
Insured),
- - - 7.750% due 02/01/2029......................... 2,020,333 - 2,020,333
4,785,000 - 4,785,000 Fairfield Housing Authority Revenue, Mortgage
Revenue,
- - - (Creekside Estates Project),
- - - 7.875% due 02/01/2015......................... 5,000,325 - 5,000,325
- 300,000 300,000 Folsom, California School Facilities Project
- - - - Series B, 6.00%, 08/01/10 - 329,625 329,625
5,000,000 - 5,000,000 Foothill Eastern Transportation Corridor Agency,
Series A,
- - - Zero coupon due 01/01/2008.................... 3,775,000 - 3,775,000
2,000,000 - 2,000,000 Gilroy, Unified School District, COP,
- - - (Measure J Capital Projects), (FSA Insured),
- - - 6.250% due 09/01/2012......................... 2,225,000 - 2,225,000
- 1,060,000 1,060,000 Home Mortgage, Series F-1, 6.50%, 02/01/08..... - 1,168,650 1,168,650
2,000,000 - 2,000,000 Huntington Park, Public Financing Authority Lease
Revenue,
- - - (Waste Water System Project),
- - - 6.200% due 10/01/2025......................... 2,027,500 - 2,027,500
5,000,000 - 5,000,000 Imperial Irrigation District, Electric Revenue,
(MBIA Insured)
- - - 5.000% due 11/01/2018........................ 4,931,250 - 4,931,250
2,000,000 - 2,000,000 Irvine, Meadows Mobile Home Park Revenue, Series A,
(GNMA Collateral)
- - - 5.700% due 03/01/2018......................... 2,000,000 - 2,000,000
1,250,000 - 1,250,000 Kings County, Waste Management Authority, Solid
Waste Revenue, AMT,
- - - 7.200% due 10/01/2014........................ 1,396,875 - 1,396,875
1,500,000 - 1,500,000 La Verne, Public Financing Authority, Capital
Improvement,
- - - 7.250% due 09/01/2026........................ 1,642,500 - 1,642,500
- 250,000 250,000 Los Angeles, California Harbor Department
- - - Revenue, 5.38%, 11/01/23..................... - 251,250 251,250
- 1,000,000 1,000,000 Long Beach, California Harbor Revenue,
- - - 5.25%, 05/15/25 - 997,500 997,500
- 1,000,000 1,000,000 Los Angeles, California Unified School
- - - District, 6.00%, 07/01/11.................... - 1,132,500 1,132,500
- 1,445,000 1,445,000 Los Angeles, California Unified School
- - - District, 6.00%, 07/01/13.................... - 1,631,044 1,631,044
- - - Los Angeles, Community Redevelopment Agency, AMT:
1,425,000 - 1,425,000 5.850% due 12/01/2026......................... 1,425,000 - 1,425,000
2,055,000 - 2,055,000 (Hollywood Redevelopment Project), Series C,
(MBIA Insured),
- - - 5.000% due 07/01/2022......................... 2,008,762 - 2,008,762
3,490,000 - 3,490,000 Series C, (AMBAC Insured),
- - - 6.750% due 07/01/2014......................... 3,804,100 - 3,804,100
- 1,000,000 1,000,000 Los Angeles, California Department of
- - - Airports, 5.50%, 05/15/08.................... - 1,067,500 1,067,500
- 600,000 600,000 Los Angeles, California Department of Water &
- - - Power, Water Works Revenue,
- - - 6.20%, 07/01/12 - 666,750 666,750
1,000,000 - 1,000,000 Los Angeles County, Master Refunding Project,
(Inverse Floater),
- - - 9.330% due 06/01/2015(a)..................... 1,192,500 - 1,192,500
- - - Los Angeles County, MFHR, AMT, (GNMA Insured):
3,000,000 - 3,000,000 (Park Parthenia Project),
- - - 7.400% due 01/20/2022........................ 3,076,560 - 3,076,560
1,000,000 - 1,000,000 (Ridgecroft Apartments Project), Series E, (GNMA
Collateral),
- - - 6.250% due 09/20/2039........................ 1,058,750 - 1,058,750
- - - Los Angeles County, Residual Interest Bond:
3,740,000 - 3,740,000 (Edmund D. Edelman Children's Center), COP, (AMBAC
Insured),
- - - 6.000% due 04/01/2012........................ 3,997,125 - 3,997,125
6,110,000 - 6,110,000 (Pension Obligation), COP, (MBIA Insured),
- - - 6.900% due 06/30/2008........................ 7,309,087 - 7,309,087
1,360,000 - 1,360,000 Los Angeles County, Single Family Housing Revenue,
Series B, (GNMA Insured),
- - - 7.600% due 08/01/2016........................ 1,513,000 - 1,513,000
- 1,000,000 1,000,000 Los Angeles County Transportation,
- - - 7.00%, 07/01/19 ............................ - 1,052,450 1,052,450
395,000 - 395,000 Los Angeles Home Mortgage Revenue, Mortgage-Backed
Securities Project,
- - - (GNMA Insured),
- - - 8.100% due 05/01/2017.............................. 445,856 - 445,856
- 1,000,000 1,000,000 Los Angeles Pub Sp Cos
- - - 5.00%, 10/01/16 ........................ - 987,500 987,500
415,000 - 415,000 Los Angeles, SFMR, Program 1990, Issue A, AMT,
GNMA collateralized,
- - - 7.550% due 12/01/2023.............................. 432,638 - 432,638
- - - Metropolitan Water District of Southern California:
- 200,000 200,000 5.00%, 07/01/10 - 206,250 206,250
- 750,000 750,000 5.75%, 07/01/09 - 830,625 830,625
- 100,000 100,000 6.00%, 07/01/07 - 112,000 112,000
- 1,000,000 1,000,000 Monterey County, California Certificate of
- - - Participation, Natividad Medical Center
- - - Improvements, Series E, 4.75%, 08/01/17............ - 952,500 952,500
- 500,000 500,000 Multi-Unit Rental Housing, 6.88%, 08/01/24.......... - 531,875 531,875
2,785,000 - 2,785,000 Needles, Public Utilities Authority Revenue,
- - - (Utilities System Aquisition Project), Series A,
- - - 6.500% due 02/01/2022.............................. 2,913,806 - 2,913,806
3,500,000 - 3,500,000 Novato, Special Tax Revenue, (Community Facilities
District),
- - - 7.200% due 08/01/2015.............................. 3,775,625 - 3,775,625
2,000,000 - 2,000,000 Oakland, Revenue Bonds, (YMCA East Bay Project),
- - - 7.100% due 06/01/2010............................... 2,202,500 - 2,202,500
- - - Oakland, Unified School District:
2,645,000 - 2,645,000 7.000% due 11/15/2011.............................. 2,892,969 - 2,892,969
3,445,000 - 3,445,000 COP, Energy Retrofit,
- - - 6.750% due 11/15/2014.............................. 3,711,988 - 3,711,988
4,500,000 - 4,500,000 Palm Desert, Financing Authority, Tax Allocation
Revenue,
- - - (MBIA Insured), (Inverse Floater),
- - - 8.705% due 04/01/2022 (a)......................... 5,315,625 - 5,315,625
1,150,000 - 1,150,000 Palm Springs, Financing Authority, (Convention Center
Project),
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WM CALIFORNIA MUNICIPAL FUND
PRINCIPAL AMOUNT PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS VALUE
- -------------------------------------------- --------------------------------------
WM GRIFFIN JUNE 30, 1998 (UNAUDITED) WM WM
CALIFORNIA CALIFORNIA PRO FORMA CALIFORNIA CALIFORNIA
MUNICIPAL FUND TAX-FREE FUND COMBINED MUNICIPAL FUND TAX-FREE FUND
<S> <C> <C> <C> <C> <C>
- - - Series A, (MBIA Insured),
- - - 6.750% due 11/01/2021................................... 1,256,375 -
- - - Port Oakland, AMT,
- - - (Mitsu Osk Lines Ltd.), Series A:
3,030,000 - 3,030,000 6.750% due 01/01/2012................................... 3,242,100 -
2,300,000 - 2,300,000 6.800% due 01/01/2019................................... 2,452,375 -
3,000,000 - 3,000,000 Rancho, Water District Financing Authority,
Residual Interest Bond,
- - - (AMBAC Insured), (Pre-refunded to 09/11/2001),
- - - 9.024% due 08/17/2021 (a)............................... 3,521,250 -
2,750,000 - 2,750,000 Redding, Electrical Systems Revenue, COP,
(Inverse Floater), (MBIA Insured),
- - - 8.670% due 07/08/2022 (a)............................... 3,746,875 -
1,000,000 - 1,000,000 Redondo Beach, Public Financing Authority Revenue,
- - - (South Bay Center Redevelopment Project),
- - - 7.125% due 07/01/2026................................... $ 1,116,250 -
- $ 500,000 $ 500,000 Riverside County, California Transportation
- - - Community Sales Tax Revenue, Series A,
- - - 5.75%, 06/01/08......................................... - $ 551,250
$ 1,500,000 - 1,500,000 Riverside, School District, Special Project,
- - - 7.250% due 09/01/2018................................... 1,620,000 -
- 1,000,000 1,000,000 Sacramento CA Mun Util D,
- - - 5.13%, 07/01/22 ........................................ - 987,500 987,500
6,500,000 - 6,500,000 Sacramento County, Airport System Revenue,
- - - Series 1989, AMT, (AMBAC Insured),
- - - 7.000% due 07/01/2020................................... 6,804,525 -
- 750,000 750,000 Sacramento, California Certificate of
- - - Participation, Public Facilities Project,
- - - 6.00%, 07/01/12......................................... - 793,125
1,000,000 - 1,000,000 Salinas, California Improvement Board, Act 1915,
- - - Special Assesment District #90-1, Series C-185,
- - - 5.400% due 09/02/2012................................... 990,000 -
- 1,500,000 1,500,000 San Bernardino County CA,
- - - 4.50%, 09/30/99 ........................................ - 1,510,905 1,510,905
10,000,000 - 10,000,000 San Bernardino County, COP, (MBIA Insured),
- - - Residual Interest Bond,
- - - 7.450% due 07/01/2016 (a)............................... 10,675,000 -
- 765,000 765,000 San Diego County, California Regional
- - - Transportation Commission Sales Tax
- - - Revenue, Series A, 4.75%, 04/01/08...................... - 782,213
4,000,000 - 4,000,000 San Diego County, Residual Interest Bond, COP,
- - - Series B, (MBIA Insured), (Pre-refunded to
- - - 04/27/2006), 8.520% due 04/08/2021 (a).................. 5,200,000 -
1,000,000 - 1,000,000 San Dimas, Housing Authority Revenue,
- - - (Charter Oak Mobile Home Project), Series A,
(FNMA Collateral)
- - - 5.700% due 07/01/2028................................... 970,000 -
- - - San Francisco, California Bay Area Rapid
- - - Transit District Sales Tax Revenue:
- 1,000,000 1,000,000 5.00%, 07/01/28......................................... - 975,000
- 500,000 500,000 5.35%, 07/01/07......................................... - 531,250
- 705,000 705,000 San Francisco, California City & County
- - - Airports, Second Series Issue 12-B,
- - - 5.50%, 05/01/09......................................... - 755,231
- 1,000,000 1,000,000 San Francisco, California City & County
- - - Airport Commission, International Airport
- - - Revenue Bonds, Series 15A,
- - - 5.00%, 05/01/21......................................... - 968,750
- - - San Francisco, City and County, Multi-family
- - - Mortgage Revenue, Series A, (FNMA Insured):
1,000,000 - 1,000,000 6.350% due 02/15/2012................................... 1,046,250 -
1,250,000 - 1,250,000 6.450% due 02/15/2024................................... 1,301,563 -
- - - San Francisco, City and County, Redevelopment
Agency, Lease Revenue, Capital
- - - Appreciation, (George R. Moscone Project):
3,750,000 - 3,750,000 Zero coupon due 07/01/2011............................. 1,964,062 -
4,250,000 - 4,250,000 Zero coupon due 07/01/2013............................. 1,960,313 -
- 600,000 600,000 San Francisco, California City & County Sewer
- - - Revenue, 5.90%, 10/01/08................................ - 645,750
270,000 - 270,000 San Francisco, City and County, SFMR, AMT,
- - - GNMA and FNMA Mortgage-Backed Securities Program,
- - - 7.450% due 01/01/2024................................... 282,487 -
- 1,000,000 1,000,000 San Joaquin Hills, California Transportation
- - - Corridor Agency Toll Road Revenue,
- - - 4.90%, 01/15/07......................................... - 680,000
- - - San Jose, California Redevelopment Agency Tax Allocation:
- 250,000 250,000 5.38%, 08/01/11......................................... - 264,063
- 1,000,000 1,000,000 6.00%, 08/01/10......................................... - 1,133,750
2,370,000 - 2,370,000 San Jose, Financing Authority Revenue, Series C,
- - - 7.000% due 09/02/2015................................... 2,424,036 -
- 500,000 500,000 Santa Barbara County, California Certificate
- - - of Participation, 6.40%, pre-refunded
- - - to 02/01/01............................................. - 538,125
3,000,000 - 3,000,000 Santa Clarita, Community Development Authority,
- - - 7.500% due 11/15/2012................................... 3,195,000 -
4,765,000 - 4,765,000 Santa Rosa, Mortgage Revenue, (Channate Lodge),
- - - (FHA Insured), 6.700% due 12/01/2024.................... 5,128,331 -
3,050,000 - 3,050,000 Shasta, Joint Powers Financing Authority, Lease Revenue,
- - - (County Courthouse Improvement Project), Series A,
- - - (MBIA Insured), 5.000% due 06/01/2023................... 2,981,375 -
2,000,000 - 2,000,000 Shasta Lake, COP, (FSA Insured),
- - - 6.000% due 04/01/2016................................... 2,167,500 -
5,000,000 - 5,000,000 Sierra View, Healthcare District Revenue, (ACA Insured),
- - - 5.250% due 07/01/2018................................... 4,900,000 -
- 500,000 500,000 South Orange County, California Public
- - - Financing Authority Special Tax Revenue,
- - - 7.00%, 09/01/08 ........................................ - 602,500 602,500
5,000,000 - 5,000,000 South Orange County, Public Financing Authority,
- - - Special Tax Revenue, Sr. Lien, Series A, (MBIA Insured),
- - - 6.200% due 09/01/2013................................... 5,468,750 -
- - - Southern California, Housing Finance Agency, SFMR,
- - - GNMA and FNMA Mortgage-Backed Securities Program:
1,035,000 - 1,035,000 Series 1988A, AMT, GNMA collateralized,
- - - 8.125% due 02/01/2021................................... 1,183,781 -
1,545,000 - 1,545,000 Series A, (GNMA Collateral),
- - - 7.350% due 09/01/2024................................... 1,622,250 -
195,000 - 195,000 Series B, (GNMA Collateral),
- - - 6.900% due 10/01/2024................................... 206,944 -
- - - State of California:
- 2,000,000 2,000,000 5.50%, 04/01/13................... - 2,147,500
- 1,000,000 1,000,000 6.60%, 02/01/10................... - 1,181,250
- 1,000,000 1,000,000 6.75%, 02/01/08................... - 1,181,250
<CAPTION>
- ------------
PRO FORMA
COMBINED
1,256,375
3,242,100
2,452,375
3,521,25
3,746,87
$ 1,116,250
551,250
1,620,000
987,500
6,804,525
793,125
990,000
1,510,905
10,675,000
782,213
5,200,000
970,000
975,000
531,250
755,231
968,750
1,046,250
1,301,563
1,964,062
1,960,313
645,750
282,487
680,000
264,063
1,133,750
2,424,036
538,125
3,195,000
5,128,331
2,981,375
2,167,500
4,900,000
602,500
5,468,750
1,183,781
1,622,250
206,944
2,147,500
1,181,250
1,181,250
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WM CALIFORNIA MUNICIPAL FUND
PRINCIPAL AMOUNT PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS VALUE
-------------------------------------------- ----------------------------------
WM GRIFFIN JUNE 30, 1998 (UNAUDITED) WM GRIFFIN
CALIFORNIA CALIFORNIA PRO FORMA CALIFORNIA CALIFORNIA
MUNICIPAL FUND TAX-FREE FUND COMBINED MUNICIPAL FUND TAX-FREE FUND
<S> <C> <C> <C> <C> <C>
- 1,500,000 1,500,000 5.00%, 10/01/18 ...... - 1,477,500
55,000 - 55,000 Stockton, Community Facilities Supplemental
Tax #90-2, SFMR,
- - - GNMA Mortgage-Backed Securities Program,
- - - (Brookside Estates), AMT,
- - - 7.450% due 08/01/2010 ...... 61,325 -
1,305,000 - 1,305,000 Stockton, Community Facilities Supplemental
Tax #90-1,
- - - (Mello Roos-Weston Ranch), Series A,
- - - 6.000% due 09/01/2018 ...... 1,303,369 -
- 1,250,000 1,250,000 Turlock, California Irrigation District
- - - Revenue Bond, Series A, 5.00%, 01/01/17 ...... - 1,235,938
- 400,000 400,000 University of California Certificate of
- - - Participation, UCLA Center Chiller/
- - - Cogeneration Project, 6.00%, 11/01/21 ...... - 431,500
- - - University of California, Refunding Revenue:
10,000,000 - 10,000,000 Multi-Purpose Projects, Series F, (FGIC Insured),
- - - 5.000% due 09/01/2022 ...... 9,775,000 -
5,760,000 - 5,760,000 Research Facilities, Series C, (FSA Insured),
- - - 5.000% due 09/01/2024 ...... 5,630,400 -
$ 7,885,000 - 7,885,000 Research Facilities, Series D, (FSA Insured),
- - - 5.000% due 09/01/2024 ...... $ 7,707,587 -
2,025,000 - 2,025,000 Vallejo, Public Financing Authority Revenue,
- - - (Fairgrounds Drive Assesment District),
- - - 5.700% due 09/02/2011 ...... 2,004,750 -
- - - West & Central Basin Financing Authority Revenue:
- $ 1,035,000 $ 1,035,000 5.00%, 08/01/09 ...... - $ 1,078,988
- 1,500,000 $ 1,500,000 5.13%, 08/01/22 ...... 1,490,625
----------------------------------
329,415,640 39,774,107
PUERTO RICO - 0.9%
1,647,018 - 1,647,018 Centro de Recaudaciones de Ingresos Municipales,
6.850% due 10/17/2003 ...... 1,737,603 -
- 750,000 750,000 Puerto Rico Electric Power Authority
Revenue, Series U, 6.00%, 07/01/14 ...... - 811,873
- 800,000 800,000 Puerto Rico Commonwealth, 5.65%, 07/01/15 ...... - 871,000
----------------------------------
1,737,603 1,682,873
Total Long-Term Municipal Bonds and Notes 331,153,243 41,456,980
SHORT-TERM MUNICIPAL BONDS AND NOTES - 1.5%
California Pollution Control, Shell Proj A,
- 100,000 100,000 5.00%, 10/01/08 ..... - 100,000
- 100,000 100,000 5.00%, 10/01/10 ... - 100,000
- 100,000 100,000 5.00%, 10/01/06 ... - 100,000
- 300,000 300,000 California Pollution Control Financing, Shell,
5.00%, 10/01/11 ... - 300,000
- 300,000 300,000 CA PCR Shell Oil Project,
5.00%, 11/01/00 ... - 300,000
CA Pollution Control Financing,
- 600,000 600,000 5.00%, 12/01/12 ... - 600,000
- 500,000 500,000 5.00%, 12/01/16 ... - 500,000
- 500,000 500,000 California Statewide Communities Development
Authority, Certificate of Participation,
5.00%, 04/01/28 ... - 500,000
- 1,100,000 1,100,000 CA Statewide Community Development,
5.00%, 12/01/15 ... - 1,100,000
- 200,000 200,000 CA Statewide Community Development Corp,
5.00%, 03/01/03 ... - 200,000
700,000 - 700,000 Irvine Ranch, Water District Revenue,
3.300% due 04/01/2033 (a)...... 700,000 -
- 100,000 100,000 Ontario, California, Winsford Partners
Revenue, 5.00%, 09/01/08 ...... - 100,000
- 200,000 200,000 CA San Jose Mtg,
5.00%, 11/01/17 ...... - 200,000
- 200,000 200,000 CA Foothill East Corr,
3.75%, 01/02/35 ..... - 200,000
- 300,000 300,000 Los Angeles Multirev,
5.00%, 11/01/09 ...... - 300,000
5,000 - 5,000 Los Angeles, Regional Airports Improvement,
Corporate Lease Revenue, (Los Angeles
International Airport),
4.000% due 12/01/2025 (a) ...... 5,000 -
- 200,000 200,000 Simi Vy Calif Mf Hsg Rev, - -
5.00%, 07/01/23 ...... - 200,000
----------------------------------
Total Short-Term Municipal Bonds and Notes 705,000 4,800,000
TOTAL INVESTMENTS - 102.1% (COST $351,978,586) $ 331,858,243 $ 46,256,980
OTHER ASSETS AND LIABILITIES, NET - (2.1%) (6,984,289) (661,622)
----------------------------------
TOTAL NET ASSETS - 100.0% $ 324,873,954 $ 45,595,358
==================================
<CAPTION>
WM CALIFORNIA MUNICIPAL FUND
PRINCIPAL AMOUNT PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
-------------------------------------------- ----------------
WM GRIFFIN JUNE 30, 1998 (UNAUDITED)
CALIFORNIA CALIFORNIA PRO FORMA PRO FORMA
MUNICIPAL FUND TAX-FREE FUND COMBINED COMBINED
<S> <C> <C> <C> <C>
- 1,500,000 1,500,000 5.00%, 10/01/18 ....................................... 1,477,500
55,000 - 55,000 Stockton, Community Facilities Supplemental
Tax #90-2, SFMR,
- - - GNMA Mortgage-Backed Securities Program,
- - - (Brookside Estates), AMT,
- - - 7.450% due 08/01/2010 ................................. 61,325
1,305,000 - 1,305,000 Stockton, Community Facilities Supplemental
Tax #90-1,
- - - (Mello Roos-Weston Ranch), Series A,
- - - 6.000% due 09/01/2018 ................................. 1,303,369
- 1,250,000 1,250,000 Turlock, California Irrigation District
- - - Revenue Bond, Series A, 5.00%, 01/01/17 ............... 1,235,938
- 400,000 400,000 University of California Certificate of
- - - Participation, UCLA Center Chiller/
- - - Cogeneration Project, 6.00%, 11/01/21 ................. 431,500
- - - University of California, Refunding Revenue:
10,000,000 - 10,000,000 Multi-Purpose Projects, Series F, (FGIC Insured)
- - - 5.000% due 09/01/2022 ................................. 9,775,000
5,760,000 - 5,760,000 Research Facilities, Series C, (FSA Insured),
- - - 5.000% due 09/01/2024 ................................. 5,630,400
$ 7,885,000 - 7,885,000 Research Facilities, Series D, (FSA Insured),
- - - 5.000% due 09/01/2024 ................................. $ 7,707,587
2,025,000 - 2,025,000 Vallejo, Public Financing Authority Revenue,
- - - (Fairgrounds Drive Assesment District),
- - - 5.700% due 09/02/2011 ................................. 2,004,750
- - - West & Central Basin Financing Authority Revenue:
- $ 1,035,000 $ 1,035,000 5.00%, 08/01/09 ....................................... 1,078,988
- 1,500,000 $ 1,500,000 5.13%, 08/01/22 ....................................... 1,490,625
-------------
369,189,747 99.7%
PUERTO RICO - 0.9%
1,647,018 - 1,647,018 Centro de Recaudaciones de Ingresos Municipales,
6.850% due 10/17/2003 ................................. 1,737,603
- 750,000 750,000 Puerto Rico Electric Power Authority
Revenue, Series U, 6.00%, 07/01/14 .................... 811,873
- 800,000 800,000 Puerto Rico Commonwealth, 5.65%, 07/01/15 .............. 871,000
-------------
3,420,476 0.9%
Total Long-Term Municipal Bonds and Notes 372,610,223 100.6%
SHORT-TERM MUNICIPAL BONDS AND NOTES - 1.5%
California Pollution Control, Shell Proj A,
- 100,000 100,000 5.00%, 10/01/08 ....................................... 100,000
- 100,000 100,000 5.00%, 10/01/10 ....................................... 100,000
- 100,000 100,000 5.00%, 10/01/06 ....................................... 100,000
- 300,000 300,000 California Pollution Control Financing, Shell,
5.00%, 10/01/11 ....................................... 300,000
- 300,000 300,000 CA PCR Shell Oil Project,
5.00%, 11/01/00 ....................................... 300,000
CA Pollution Control Financing,
- 600,000 600,000 5.00%, 12/01/12 ....................................... 600,000
- 500,000 500,000 5.00%, 12/01/16 ... 500,000
- 500,000 500,000 California Statewide Communities Development
Authority, Certificate of Participation,
5.00%, 04/01/28 ....................................... 500,000
- 1,100,000 1,100,000 CA Statewide Community Development,
5.00%, 12/01/15 ....................................... 1,100,000
- 200,000 200,000 CA Statewide Community Development Corp,
5.00%, 03/01/03 ....................................... 200,000
700,000 - 700,000 Irvine Ranch, Water District Revenue,
3.300% due 04/01/2033 (a)...... 700,000
- 100,000 100,000 Ontario, California, Winsford Partners
Revenue, 5.00%, 09/01/08 ...... 100,000
- 200,000 200,000 CA San Jose Mtg,
5.00%, 11/01/17 ....................................... 200,000
- 200,000 200,000 CA Foothill East Corr,
3.75%, 01/02/35 ....................................... 200,000
- 300,000 300,000 Los Angeles Multirev,
5.00%, 11/01/09 ....................................... 300,000
5,000 - 5,000 Los Angeles, Regional Airports Improvement,
Corporate Lease Revenue, (Los Angeles
International Airport),
4.000% due 12/01/2025 (a) ...... 5,000
- 200,000 200,000 Simi Vy Calif Mf Hsg Rev, -
5.00%, 07/01/23 ....................................... 200,000
-------------
Total Short-Term Municipal Bonds and Notes 5,505,000 1.5%
TOTAL INVESTMENTS - 102.1% (COST $351,978,586) $378,115,223 102.1%
OTHER ASSETS AND LIABILITIES, NET - (2.1%) (7,645,911) -2.1%
-------------
TOTAL NET ASSETS - 100.0%
$370,469,312 100.0%
=============
</TABLE>
- --------------------------------------------------------------------------------
(a) Floating rate security. The interest rate shown reflects the rate currently
in effect.
<PAGE>
WM CALIFORNIA MUNICIPAL FUND & GRIFFIN CALIFORNIA TAX-FREE FUND
Notes to Pro Forma Combined Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the combined financial
position of the WM California Municipal Fund and the Griffin California
Tax-Free Fund at June 30, 1998 and the pro forma combined results of
operations for the year ended June 30, 1998 as though the reorganization had
occurred on July 1, 1997.
The pro forma combined financial statements are presented for the information
of the reader and may not necessarily be representative of how the pro forma
combined financial statements would have appeared had the reorganization
actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds which are incorporated
by reference in the Statement of Additional Information.
The pro forma combined statements give effect to the proposed transfer of the
assets and stated liabilities of the Griffin California Tax-Free Fund in
exchange for shares of WM Group California Municipal Fund. Under generally
accepted accounting principles, the historical cost of investment securities
will be carried forward to the surviving entity.
The pro forma combined statements do not reflect the expenses of either fund
in carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are valued using the pricing
procedures and policies of the respective Acquiring Fund or Acquired Fund as
applicable. For more information, see the WM Annual Reports or the Griffin
Annual Reports. Historical cost amounts represent the combined cost basis of
the securities.
3. Pro Forma Combined Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM California Municipal Fund shares based upon the net asset
value of the WM California Tax-Free Fund shares at June 30, 1998.
<PAGE>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES AT APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GRIFFIN WM PRO FORMA PRO FORMA
BOND FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $ 87,316,676 $259,977,644 $347,294,320
-
---------------------------------------------------------------
Total Investments 87,316,676 259,977,644 - 347,294,320
Cash/Cash Equivalents 249,040 130,468 379,508
Receivable for dollar roll fee income - -
Dividends and/or interest receivable 1,273,317 4,338,150 5,611,467
Receivable for Fund shares Sold 3,903 483,097 487,000
Receivable for investment securities sold 419,319 - 419,319
Unamortized organization costs - -
Receivable from investment advisor - -
Prepaid expenses and other assets 5,895 158,036 163,931
---------------------------------------------------------------
Total Assets 89,268,150 265,087,395 - 354,355,545
LIABILITIES:
Payable for dollar roll transactions - -
Variation margin payable - -
Reverse repurchase agreements - -
Payable for Fund shares redeemed - 1,290,359 1,290,359
Payable for investment securities purchased 4,770,480 278,663 5,049,143
Investment advisory fee payable 187,543 187,543
Administration fee payable - -
Shareholder servicing and distribution fees payable 108,328 108,328
Dividends payable 370,264 551,524 921,788
Accrued legal and audit fees 4,133 4,133
Accrued Trustees' fees and expenses 2,101 2,101
Accrued registration and filing fees payable 5,502 5,502
Due to Custodian - -
Net Unrealized Depreciation of Fwd For Curr Cts - -
Accrued Expenses and other payables 99,297 134,618 233,915
---------------------------------------------------------------
Total Liabilities 5,240,041 2,562,771 - 7,802,812
TOTAL NET ASSETS $ 84,028,109 $262,524,624 $ - $346,552,733
===============================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) - - -
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions 449,592 (9,939,629) (9,490,037)
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities 796,827 18,088,461 18,885,288
Paid-in capital 82,781,690 254,375,792 337,157,482
---------------------------------------------------------------
TOTAL NET ASSETS $ 84,028,109 $262,524,624 $ - $346,552,733
===============================================================
NET ASSETS:
Class A Shares $ 83,338,025 $223,059,662 $306,397,687
===============================================================
Class B Shares $ 690,084 $ 31,311,087 $ 32,001,171
===============================================================
Class S Shares $ 1,778,697 $ 1,778,697
===============================================================
Class I Shares $ 6,375,178 $ 6,375,178
===============================================================
SHARES OUTSTANDING:
Class A Shares 9,191,290 23,445,893 (431,595.85) (a) 32,205,587
===============================================================
Class B Shares 76,163 3,287,948 (3,697.92) (a) 3,360,413
===============================================================
Class S Shares 186,812 - 186,812
===============================================================
Class I Shares 670,315 - 670,315
===============================================================
NET ASSET VALUE PER SHARE:
Class A Shares $ 9.07 $ 9.51 $ 9.51
===============================================================
Class B Shares $ 9.06 $ 9.52 $ 9.52
===============================================================
Class S Shares $ 9.52 $ 9.52
===============================================================
Class I Shares $ 9.51 $ 9.51
===============================================================
</TABLE>
See accompanying notes to pro forma financial statemets
- --------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of WM Group
shares at April 30, 1998.
<PAGE>
WM Income Fund
Pro Forma Combined Statement of Operations
For the ____Ended____
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM PRO FORMA PRO FORMA
BOND FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income $ 26,728 26,728
- -
Interest Income 1,517,210 3,700,523 5,217,733
Fee Income - -
-------------------------------------------------------------------------
Total Investment Income 1,517,210 3,727,251 - 5,244,461
-------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 118,446 308,288 31,025 (A) 457,759
Administration Fees 47,378 - (47,378) (B) -
Custodian Fees 25,711 8,562 34,273
Legal and Audit Fees 11,142 4,133 15,275
Trustees' Fees and Expenses 2,604 2,101 4,705
Amortization of Organization Costs 5,578 - 5,578
Registration and Filing Fees 3,618 5,502 9,120
Other 10,054 21,942 31,996
-------------------------------------------------------------------------
Subtotal 224,531 350,528 (16,353) 558,706
Shareholder Servicing and Distribution Fees
Class A Shares 58,745 135,987 47,974 (C) 242,706
Class B Shares 1,914 62,743 329 (D) 64,986
Class S Shares 2,412 2,412
Interest Expense - -
Fees Waived and/or Expenses Absorbed by Investment -
Advisor (109,865) - 109,865 (E) -
-------------------------------------------------------------------------
Subtotal 175,325 551,670 141,815 868,810
Fees Reduced by Credits Allowed by the Custodian (731) (731)
-------------------------------------------------------------------------
Net Expenses 175,325 550,939 141,815 868,079
-------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 1,341,885 3,176,312 (141,815) 4,376,383
-------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/ -
(LOSS) ON INVESTMENTS -
Realized Gains/(Loss) from: -
Security Transactions 305,222 3,598,084 3,903,306
Forward Foreign Currency Contracts and -
Foreign Currency Transactions - -
Futures Contracts - -
Net Unrealized Appreciation/(Depreciation) of: -
Securities (279,147) 14,279,432 14,000,285
Forward Foreign Currency Contracts - -
Foreign Currency, Written Options, Futures -
Contracts and Other Assets and - -
Liabilities
-------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments 26,075 17,877,516 - 17,903,591
-------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS -
RESULTING FROM OPERATIONS $1,367,960 $21,053,828 $(141,815) $22,279,974
=========================================================================
</TABLE>
(A) Increase in management fees for Griffin shareholders to reflect the new
fee structure. Fees are based on .625% of average daily net assets up to
$250,000,000 and .50% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Addition of shareholder servicing fee at a monthly rate of $1.45 per
shareholder account.
(D) Addition of shareholder servicing fee at a monthly rate of $1.55 per
shareholder account.
(E) Fees waived and/or expense absorbed by investment advisor has been
eliminated.
<PAGE>
WM Income Fund
Pro Forma Combined Statement of Operations
For the Year Ended 12/31/1998
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
GROWTH & GROWTH & PRO FORMA PRO FORMA
INCOME FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income - -
- -
Interest Income 3,223,440 $ 6,681,231 9,904,671
Fee Income - -
-----------------------------------------------------------
Total Investment Income 3,223,440 $ 6,681,231 9,904,671
-----------------------------------------------------------
EXPENSES:
Investment Advisory Fees 240,899 553,562 60,213) (A) 854,674
Administration Fees 96,359 - 96,359) (B) -
Custodian Fees 81,076 23,081 104,157
Legal and Audit Fees 19,831 11,192 31,023
Trustees' Fees and Expenses 8,213 8,499 16,712
Amortization of Organization Costs 17,108 - 17,108
Registration and Filing Fees 9,493 22,666 32,159
Other 31,433 55,224 86,657
-----------------------------------------------------------
Subtotal 504,412 674,224 (36,146) 2,142,490
Shareholder Servicing and Distribution Fees
Class A Shares 119,332 254,139 143,924 (C) 517,395
Class B Shares 4,471 86,531 986 (D) 91,988
Class S Shares - -
Interest Expense - -
Fees Waived and/or Expenses Absorbed by Investment -
Advisor (302,697) - 302,697 (E) -
-----------------------------------------------------------
Subtotal 325,518 1,014,894 411,461 1,751,873
Fees Reduced by Credits Allowed by the Custodian (2,840) (2,840)
-----------------------------------------------------------
Net Expenses 325,518 1,012,054 411,461) 1,749,033
-----------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 2,897,922 5,669,177 (411,461) 8,155,638
-----------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains/(Loss) from:
Security Transactions 592,366 1,059,244 1,651,610
Forward Foreign Currency Contracts and -
Foreign Currency Transactions - -
Futures Contracts - -
Net Unrealized Appreciation/(Depreciation) of:
Securities 928,173 1,919,907 2,848,080
Forward Foreign Currency Contracts - -
Foreign Currency, Written Options, Futures
Contracts and Other Assets and Liabilities - -
-----------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investment 1,520,539 2,979,151 - 4,499,690
-----------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS -
RESULTING FROM OPERATIONS $ 4,418,461 $ 8,648,328 $(411,461) $ 12,655,328
===========================================================
</TABLE>
(A) Increase in management fees for Griffin shareholders to reflect the new fee
structure. Fees are based on .625% of average daily net assets up to
$250,000,000 and .50% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Addition of shareholder servicing fee at a monthly rate of $1.45 per
shareholder account.
(D) Addition of shareholder servicing fee at a monthly rate of $1.55 per
shareholder account.
(E) Fees waived and/or expense absorbed by investment advisor has been
eliminated.
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
PRINCIPAL AMOUNT APRIL 30, 1998 (UNAUDITED) MARKET VALUE
--------------------------------------- -----------------------------------------
WM GROUP GRIFFIN PRO FORMA WM GROUP GRIFFIN PRO FORMA
INCOME FUND BOND FUND COMBINED INCOME FUND BOND FUND COMBINED
CORPORATE BONDS AND NOTES - 80.5%
<S> <C> <C> <C> <C> <C> <C>
AUTOS
Ford Motor Credit Corp.
- 825,000 825,000 7.40%, 11/01/46....................... - 874,500 874,500
- 500,000 500,000 8.20%, 01/15/02....................... - 533,750 533,750
- 250,000 250,000 6.85%, 08/15/00....................... - 254,375 254,375
- 820,000 820,000 6.13%, 04/28/03....................... - 815,900 815,900
- - - General Motors Acceptance Corporation - - -
- 455,000 455,000 6.63%, 09/19/02....................... - 460,688 460,688
- 100,000 100,000 9.63%, 05/15/00....................... - 106,625 106,625
- 215,000 215,000 6.88%, 07/15/01....................... - 219,300 219,300
- 2,110,000 2,110,000 7.13%, 05/01/01....................... - 2,165,388 2,165,388
- 690,000 690,000 6.13%, 01/22/08....................... - 673,613 673,613
- 350,000 350,000 9.63%, 12/01/00....................... - 378,875 378,875
-----------------------------------------
- 6,483,014 6,483,014
BANKS
- - - Abbey National First Capital Corporation,
- 175,000 175,000 8.20%, 10/15/04 (a) .......................... - 192,063 192,063
- 200,000 200,000 Abitibi-Consolidated, 7.50%, 04/01/28 - 200,000 200,000
- - - BankAmerica Corporation - - -
- 1,000,000 1,000,000 6.63%, 08/01/07 .............................. - 1,017,500 1,017,500
- 95,000 95,000 6.63%, 10/15/07 .............................. - 96,069 96,069
- 150,000 150,000 7.50%, 10/15/02 .............................. - 157,125 157,125
400,000 - 400,000 Banc One Corporation, Sub. Note, - - -
- - - 10.000% due 08/15/2010..................... 513,336 - 513,336
1,000,000 - 1,000,000 Bank of New York, Sub Note, - - -
- - - 7.875% due 11/15/2002......................... 1,064,942 - 1,064,942
1,000,000 - 1,000,000 Barnett Banks, Florida, Inc , Sub Note, - - -
- - - 10.875% due 03/15/2003........................ 1,188,190 - 1,188,190
- 690,000 690,000 Branch Banking & Trust, 7.25%, 06/15/07....... - 723,638 723,638
- 300,000 300,000 Capital One Bank, 6 83%, 08/16/99............. - 301,500 301,500
- 400,000 400,000 Chase Manhattan Bank, 7.13%, 03/01/05......... - 414,000 414,000
- 1,000,000 1,000,000 Citicorp, 8 00%, 02/01/03..................... - 1,066,250 1,066,250
- 440,000 440,000 Equitable COS, 7.00%, 04/01/28................ - 438,350 438,350
1,100,000 - 1,100,000 First Interstate Bancorp, Sub Note,........... - - -
- - - 9.125% due 02/01/2004...................... 1,244,802 - 1,244,802
1,000,000 - 1,000,000 First Nationwide Bank, Sub. Deb., - - -
- - - 10.000% due 10/01/2006..................... 1,199,370 - 1,199,370
- 270,000 270,000 First National Bank of Boston, 7.38%, 09/15/06 - 286,200 286,200
- 155,000 155,000 First Security Corporation, 6.88%, 11/15/06 - 158,294 158,294
200,000 - 200,000 First State Banc, Conv Sub. Deb., - - -
- - - 7.500% due 04/30/2017...................... 294,500 - 294,500
- 246,000 246,000 First Union Corporation, 9.45%, 08/15/01 - 269,985 269,985
- 335,000 335,000 Fleet Financial Group, 7.13%, 04/15/06 - 347,563 347,563
- 250,000 250,000 Golden West Financial, 7.88%, 01/15/02 - 262,188 262,188
1,000,000 - 1,000,000 Manufacturers and Trade Trust Company, Sub
Note, - - -
- - - 8.125% due 12/01/2002...................... 1,065,839 - 1,065,839
- 495,000 495,000 MBNA Corporation, 6.92%, 05/30/00 - 501,188 501,188
1,000,000 - 1,000,000 Mellon Financial Company, Sub. Deb., - - -
- - - 9.750% due 06/15/2001...................... 1,102,678 - 1,102,678
500,000 - 500,000 Mercantile Bank, Sub. Note, - - -
- - - 7.625% due 10/15/2002...................... 526,370 - 526,370
- - - Morgan J.P. & Company - - -
- 250,000 250,000 7.63%, 09/15/04....................... - 266,250 266,250
- 250,000 250,000 7.63%, 11/15/98....................... - 251,995 251,995
- - - NationsBank Corporation - - -
- 300,000 300,000 5.38%, 04/15/00....................... - 296,250 296,250
- 680,000 680,000 6.38%, 02/15/08....................... - 678,300 678,300
- 465,000 465,000 6.80%, 03/15/28....................... - 463,838 463,838
- 275,000 275,000 7.25%, 10/15/25....................... - 290,469 290,469
1,000,000 - 1,000,000 Norwest Bancorp, Sub Deb., - - -
- - - 6.650% due 10/15/2023...................... 978,293 - 978,293
- 500,000 500,000 PNC Institute Capital Cl.B, 8.32%, 05/15/27... - 540,625 540,625
- 400,000 400,000 Shawmut Bank, 8.63%, 02/15/05................. - 448,500 448,500
500,000 - 500,000 Summit Bancorp, Sub. Notes, - - -
- - - 8.625% due 12/10/2002...................... 545,577 - 545,577
-----------------------------------------
9,723,897 9,668,140 19,392,037
COMMUNICATIONS
- - - 360 Communications Company, 7.60%,
- 100,000 100,000 04/01/09...................................... - 107,375 107,375
- - - Cable & Wireless Communications, 6.38%, - - -
- 180,000 180,000 03/06/03...................................... - 179,775 179,775
- 250,000 250,000 GTE South, 6.00%, 02/15/08.................... - 242,188 242,188
- - - WorldCom Incorporated - - -
- 675,000 675,000 7.55%, 04/01/04............................... - 707,906 707,906
- 390,000 390,000 7.75%, 04/01/07............................... - 420,225 420,225
-----------------------------------------
- 1,657,469 1,657,469
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WM Group Griffin Pro Forma WM Group Griffin Pro Forma
Income Fund Bond Fund Combined Income Fund Bond Fund Combined
<S> <C> <C> <C> <C> <C> <C> <C>
Electric
- - - Avon Energy Partners Holdings, 6.73%,
- 300,000 300,000 12/11/02 ...................... - 303,000 303,000
5,000,000 - 5,000,000 Mississippi Power & Light Company, First and
Refundable Mortgage, - - -
- - - 8.650% due 01/15/2023...........................5,322,835 - 5,322,835
- - - Niagara Mohawk Power, Deb.: - - -
1,000,000 - 1,000,000 9.750% due 11/01/2005...........................1,180,716 - 1,180,716
1,430,000 - 1,430,000 8.770% due 10/01/2018...........................1,520,046 - 1,520,046
2,000,000 - 2,000,000 Philadelphia Electric Company, First and
Refundable Mortgage, - - -
- - - 8.250% due 09/01/2022...........................2,109,502 - 2,109,502
- - - Texas Utilities Electric Company, First Mortgage: - - -
1,200,000 - 1,200,000 9.500% due 08/01/1999...........................1,243,335 - 1,243,335
1,200,000 - 1,200,000 8.875% due 02/01/2022...........................1,318,724 - 1,318,724
3,000,000 - 3,000,000 8.750% due 11/01/2023...........................3,264,849 - 3,264,849
---------------------------------------
15,960,007 303,000 16,263,007
Financial
- 314,000 314,000 Aegon, 8.00%, 08/15/06 (a)................ - 345,793 345,793
- - - American Telephone & Telegraph Capital - - -
- 390,000 390,000 Corporation, 5.65%, 01/15/99.......... - 388,729 388,729
- - - Associates Corporation, N.A............... - - -
- 80,000 80,000 6.63%, 05/15/01................ - 81,200 81,200
- 104,000 104,000 6.75%, 07/15/01................ - 105,950 105,950
9,000,000 - 9,000,000 Barclays North American Capital Corporation,
Capital Note, - - -
- - - 9.750% due 05/15/2021..........................10,202,597 - 10,202,597
- - - Bear Stearns Company - - -
- 225,000 225,000 6.50%, 06/15/00................ - 226,969 226,969
- 250,000 250,000 7.63%, 09/15/99................ - 255,043 255,043
2,000,000 - 2,000,000 Continental Corporation, - - -
- - - 7.250% due 03/01/2003...........................2,047,932 - 2,047,932
500,000 - 500,000 Developers Diversified Realty, MTN, Sr. Note, - - -
- - - 6.580% due 02/06/2001.............................502,686 - 502,686
- 294,000 294,000 Donaldson Lufkin & Jenrette, 6.88%, 11/01/05 - 301,350 301,350
- - - Finova Capital Corporation - - -
- 1,146,000 1,146,000 5.98%, 02/27/01................ - 1,137,405 1,137,405
- 745,000 745,000 6.22%, 03/01/00................ - 745,000 745,000
- - - Franchise Finance Corporation, - - -
900,000 - 900,000 7.000% due 11/30/2000, Sr. Note...................909,999 - 909,999
1,100,000 - 1,100,000 7.875% due 11/30/2005, Sr Note..................1,165,896 - 1,165,896
3,000,000 - 3,000,000 7.070% due 01/15/2008 MTN, Note.................3,000,000 - 3,000,000
1,000,000 - 1,000,000 GATX Leasing Corporation, MTN, - - -
- - - 10.000% due 03/21/2001..........................1,102,656 - 1,102,656
- 435,000 435,000 Household Finance Company, 6.58%, 05/17/99 - 436,827 436,827
- - - Jefferson-Pilot Capital Trust Cl A, 8.14%, - - -
- 500,000 500,000 01/15/46....................... - 523,125 523,125
- - - Jefferson-Pilot Capital Trust Cl B, 8.29%, - - -
- 100,000 100,000 03/01/46....................... - 106,375 106,375
1,250,000 - 1,250,000 Kemper Corporation, Note, - - -
- - - 6.875% due 09/15/2003...........................1,276,929 - 1,276,929
- - - Lehman Brothers Incorporated - - -
- 550,000 550,000 6.13%, 02/01/01................ - 549,313 549,313
- 502,000 502,000 6.65%, 11/08/00................ - 508,275 508,275
- 950,000 950,000 8.50%, 05/01/07................ - 1,075,875 1,075,875
- 165,000 165,000 Lincoln National Corporation, 7.25%, 05/15/05... - 173,044 173,044
3,750,000 - 3,750,000 MBI Metrobank Finance Ltd., Conv. Bond, - - -
- - - Zero coupon due 12/18/2001......................2,400,000 - 2,400,000
- - - Merrill Lynch & Company Incorporated - - -
- 1,000,000 1,000,000 6.00%, 02/12/03................ - 992,500 992,500
- 230,000 230,000 6.25%, 01/15/06................ - 228,563 228,563
- 200,000 200,000 7.38%, 08/17/02................ - 208,250 208,250
- 300,000 300,000 Morgan Stanley Group, 8.88%, 10/15/01.......... - 324,375 324,375
- - - Paine Webber Group - - -
- 375,000 375,000 6.79%, 07/01/03................ - 378,281 378,281
- 415,000 415,000 7.39%, 10/16/17................ - 424,856 424,856
- 40,000 40,000 7.63%, 10/15/08................ - 42,450 42,450
- 165,000 165,000 7.81%, 02/13/17................ - 175,313 175,313
- 255,000 255,000 8.06%, 01/17/17................ - 279,544 279,544
- 200,000 200,000 8.25%, 05/01/02................ - 212,250 212,250
- 500,000 500,000 Safeco Capital Trust, 8.07%, 07/15/37.......... - 523,750 523,750
- - - Salomon Incorporated - - -
- 182,000 182,000 6.50%, 03/01/00................ - 183,365 183,365
- 280,000 280,000 7.00%, 05/15/99................ - 282,822 282,822
- 300,000 300,000 7.59%, 01/28/00................ - 307,500 307,500
- - - Salomon Smith Barney Holdings, 7.13%, - - -
- 345,000 345,000 10/01/06....................... - 359,231 359,231
- 1,075,000 1,075,000 Sears Roebuck Acceptance, 6.00%, 03/20/03......... - 1,061,563 1,061,563
2,500,000 - 2,500,000 Superior Financial Acquisition Corporation, Sr.
Note, - - -
- - - 8.650% due 04/01/2003...........................2,486,915 - 2,486,915
- - - Travelers Property Casualty Corp........... - - -
- 500,000 500,000 6.75%, 04/15/01................ - 508,750 508,750
- 230,000 230,000 6.75%, 11/15/06................ - 234,888 234,888
- 505,000 505,000 US Leasing International, 8.75%, 12/01/01.... - 546,663 546,663
- 575,000 575,000 USF&G Corporation, 8.38%, 06/15/01............ - 605,906 605,906
- 665,000 665,000 Zurich Capital Trust I, 8.38%, 06/01/37.... - 725,681 725,681
---------------------------------
25,095,610 15,566,774 40,662,384
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Combined Portfolio of Investments
PPRINCIPAL AMOUNT April 30, 1998 (Unaudited) MARKET VALUE
----------------------------------------- --------------------------------------
WM Group Griffin Pro Forma WM Group Griffin Pro Forma
Income Fund Bond Fund Combined Income Fund Bond Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Industrial
1,500,000 - 1,500,000 Aetna Services Inc.,
- - - 7.625% due 08/15/26.......................... 1,563,468 - 1,563,468
1,500,000 - 1,500,000 American Home Products Corporation, Deb., - - -
- - - 7.25% due 03/01/23........................... 1,594,342 - 1,594,342
1,000,000 - 1,000,000 AMR Corporation, Deb., - - -
- - - 9.75% due 03/15/2000......................... 1,063,763 - 1,063,763
250,000 - 250,000 Battle Mountain Gold Company, - - -
- - - 6.000% due 01/04/2005........................ 200,000 - 200,000
- 525,000 525,000 B F Goodrich, 7.00%, 04/15/38 - 525,000 525,000
- - - Black & Decker - - -
- 50,000 50,000 7.00%, 02/01/06................................. - 51,438 51,438
- 185,000 185,000 7.50%, 04/01/03................................. - 193,094 193,094
- 700,000 700,000 Brunswick Corporation, 7.13%, 08/01/27.......... - 712,250 712,250
- 500,000 500,000 Burlington Industries, 7.25%, 08/01/27.......... - 510,625 510,625
1,500,000 - 1,500,000 Burlington Northern, Note, - - -
- - - 8.750% due 02/25/2022........................ 1,839,246 - 1,839,246
1,600,000 - 1,600,000 Burlington Resources, Deb., - - -
- - - 9.125% due 10/01/2021........................ 2,043,692 - 2,043,692
1,000,000 - 1,000,000 CII Financial, Conv., - - -
- - - 7.500% due 09/15/01.......................... 961,250 - 961,250
- 165,000 165,000 Coastal Corporation, 8 13%, 09/15/02............ - 175,725 175,725
- 200,000 200,000 Coca Cola Company, 7.88%, 09/15/98.............. - 201,248 201,248
- - - Columbia/HCA Healthcare - - -
- 300,000 300,000 6.91%, 06/15/05................................. - 283,125 283,125
- 250,000 250,000 7.15%, 03/30/04................................. - 239,688 239,688
- 210,000 210,000 Comdisco Incorporated, 6 36%, 01/25/99.......... - 210,263 210,263
- - - Conagra Inc., Sr Note, - - -
750,000 - 750,000 9.750% due 03/01/2021........................ 970,221 - 970,221
500,000 - 500,000 6.700% due 08/01/2027........................ 520,368 - 520,368
- 343,000 343,000 ConAgra Incorporated, 6 70%, 08/01/27........... - 350,718 350,718
- - - CPC International Incorporated, 6.15%, - - -
- 350,000 350,000 01/15/06........................................ - 346,500 346,500
3,030,000 - 3,030,000 Conrail Inc., Deb., - - -
- - - 9.750% due 06/15/2020........................ 3,974,804 - 3,974,804
2,000,000 - 2,000,000 Corporate Express Inc., - - -
- - - 4.500% due 07/01/2000........................ 1,817,500 - 1,817,500
- - - Crane Company, Note: - - -
1,000,000 - 1,000,000 7.250% due 06/15/1999........................ 1,013,379 - 1,013,379
500,000 - 500,000 8.500% due 03/15/2004........................ 553,854 - 553,854
- 300,000 300,000 CSR America Incorporated, 6.88%, 07/21/05....... - 308,625 308,625
2,000,000 - 2,000,000 Dart & Kraft finance NV, - - -
- - - 7.750% due 11/30/1998........................ 2,022,514 - 2,022,514
5,000,000 - 5,000,000 du Pont (E I ) de Nemours & Company, Deb., - - -
- - - 8.250% due 01/15/2022........................ 5,435,429 - 5,435,429
- 560,000 560,000 Embotelladora Andina SA, 7.00%, 10/01/07 (a).... - 547,400 547,400
250,000 - 250,000 Equimar Shipholdings, - - -
- - - 9.875% due 07/01/2007........................ 235,625 - 235,625
- 355,000 355,000 Federated Department Stores, 8.13%, 10/15/02.... - 378,963 378,963
3,000,000 - 3,000,000 FHP International Corporation, Sr Note, - - -
- - - 7.000% due 09/15/2003........................ 3,073,236 - 3,073,236
1,000,000 - 1,000,000 Fleming Companies, Inc , MTN, Note, - - -
- - - 5.770% due 08/06/1998........................ 997,596 - 997,596
2,000,000 - 2,000,000 Ford Holdings, Inc. Deb., - - -
- - - 9.375% due 03/01/2020........................ 2,561,148 - 2,561,148
3,750,000 - 3,750,000 Ford Motor Company, Deb., - - -
- - - 8.875% due 01/15/2022........................ 4,597,395 - 4,597,395
- 615,000 615,000 Fort James Corporation, 6.88%, 09/15/07......... - 624,225 624,225
- 120,000 120,000 Fortune Brands Incorporated, 7.50%, 05/15/99..... - 121,650 121,650
8,000,000 - 8,000,000 General Motors Corporation, Deb., - - -
- - - 9.400% due 07/15/2021........................ 10,472,566 - 10,472,566
850,000 - 850,000 Golden Books Publishing, Sr Note, - - -
- - - 7.650% due 09/15/2002........................ 818,125 - 818,125
- - - Hearst-Argyle Television Incorporated, 7.50%, - - -
- 725,000 725,000 11/15/27........................................ - 734,969 734,969
2,500,000 - 2,500,000 HIH Capital Ltd , Conv., - - -
- - - 7.500% due 09/25/2006........................ 1,975,000 - 1,975,000
- 369,000 369,000 Hilton Hotels Corporation, 7.38%, 06/01/02...... - 374,996 374,996
- 400,000 400,000 Honeywell Incorporated, 6 60%, 04/15/01......... - 406,000 406,000
- 1,000,000 1,000,000 Hyder PLC, 6.75%, 12/15/04 (a).................. - 1,003,750 1,003,750
- 675,000 675,000 Ingersoll-Rand, 6.26%, 02/15/01................. - 677,531 677,531
1,400,000 - 1,400,000 Integrated Device Technology Inc., Conv. Sub.
Note - - -
- - - 5..00% due 06/01/2002........................ 1,225,000 - 1,225,000
- - - International Business Machines Corporation, - - -
- 200,000 200,000 6.38%, 06/15/00................................. - 201,750 201,750
- 160,000 160,000 International Paper Company, 9.70%, 03/15/00.... - 170,400 170,400
- 600,000 600,000 Interpool Incorporated, 7.20%, 08/01/07......... - 600,000 600,000
6,000,000 - 6,000,000 James River Corporation, Deb., - - -
- - - 9.250% due 11/15/2021........................ 7,418,105 - 7,418,105
1,000,000 - 1,000,000 Jackson Products Inc., - - -
- - - 9.500% due 04/15/2005........................ 1,012,500 - 1,012,500
- - - Lockheed Martin Corporation - - -
- 145,000 145,000 7.25%, 05/15/06................................. - 152,613 152,613
- 520,000 520,000 7.75%, 05/01/26................................. - 580,450 580,450
- - - Loral Corporation, Deb., - - -
1,000,000 - 1,000,000 8.375% due 06/15/2024........................ 1,181,220 - 1,181,220
1,000,000 - 1,000,000 7.625% due 06/15/2025........................ 1,087,832 - 1,087,832
1,800,000 - 1,800,000 Medical Care International (Columbia), Conv
Sub Deb., - - -
- - - 6.750% due 10/01/2006........................ 1,644,750 - 1,644,750
- 540,000 540,000 Nabisco Incorporated, 6.00%, 02/15/11........... - 535,275 535,275
- 325,000 325,000 News America Holdings, 7.50%, 03/01/00.......... - 332,719 332,719
- 625,000 625,000 Noble Drilling Corporation, 9.13%, 07/01/06..... - 692,188 692,188
- 120,000 120,000 Norcen Energy Resources, 7.38%, 05/15/06........ - 126,000 126,000
- 65,000 65,000 Occidental Petroleum, 7.09%, 09/08/99........... - 65,731 65,731
8,700,000 - 8,700,000 Occidental Petroleum Corporation, Sr Deb., - - -
- - - 11.125% due 08/01/2010....................... 11,786,836 - 11,786,836
6,500,000 - 6,500,000 Ogden Corporation, Deb., - - -
- - - 9.250% due 03/01/2022........................ 8,181,575 - 8,181,575
2,500,000 - 2,500,000 Panhandle Eastern Pipe Line Company, Deb., - - -
- - - 8.625% due 04/15/2025........................ 2,781,497 - 2,781,497
- 300,000 300,000 Pepsico Incorporated, 7.75%, 10/01/98........... - 301,818 301,818
5,950,000 - 5,950,000 Phillips Petroleum Company, Deb., - - -
- - - 9.180% due 09/15/2021........................ 6,659,536 - 6,659,536
- - - Potash Corporation Saskatchewan, 7.13%, - - -
- 330,000 330,000 06/15/07 (a).................................... - 337,838 337,838
6,860,000 - 6,860,000 Praxair, Inc, Deb., - - -
- - - 8.700% due 07/15/2022........................ 7,468,159 - 7,468,159
- - - Raytheon Co - - -
- 730,000 730,000 5.95%, 03/15/01................................. - 727,263 727,263
- 1,070,000 1,070,000 6.45%, 08/15/02................................. - 1,078,025 1,078,025
750,000 - 750,000 Raytheon Company, First Mortgage, Deb., - - -
- - - 7.200% due 8/15/2027............................ 778,394 - 778,394
500,000 - 500,000 Riviera Holdings Corporation, - - -
- - - 10.000% 8/15/2004............................ 502,500 - 502,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Amount Pro Former Combined Portfilo Of Investments Market Value
--------------------------------- ------------------------------------------
April 30, 1998 (Unaudited)
WM Group Griffin Pro Forma WM Group Griffin Pro Forma
Income Fund Bond Fund Combined Income Fund Bond Fund Combined
<S> <C> <C> <C> <C> <C> <C>
1,400,000 - 1,400,000 Riviera Holdings Corporation, DFSD, First Mortgage, - - -
- - - 11.000% due 12/31/2002............................. 1,470,000 - 1,470,000
- - - Royal Caribbean Cruises - - -
- 426,000 426,000 7.13%, 09/18/02....................................... - 434,520 434,520
- 111,000 111,000 7.25%, 08/15/06....................................... - 115,301 115,301
- 850,000 850,000 7.50%, 10/15/27....................................... - 864,875 864,875
- - - Sears Roebuck & Company - - -
- 100,000 100,000 9.35%, 07/06/98....................................... - 100,505 100,505
1,500,000 - 1,500,000 SoftKey International, Conv., Sr. Note, - - -
- - - 5.500% due 11/01/2000.............................. 1,438,125 - 1,438,125
- 100,000 100,000 Sony Corporation, 6.13%, 03/04/03..................... - 99,875 99,875
4,675,000 - 4,675,000 Spectrum Holobyt, Microprose Inc., Conv. Sub. Note, - - -
- - - 6.500% due 09/15/2002.............................. 3,132,250 - 3,132,250
2,290,000 - 2,290,000 Ssangyong Oil Refining, Conv. Deb., - - -
- - - 3.750% due 12/31/2008.............................. 1,912,150 - 1,912,150
- 775,000 775,000 Staples Incorporated, 7.13%, 08/15/07................. - 795,344 795,344
1,500,000 - 1,500,000 Tatneft Finance, - - -
- - - 9.000% due 10/29/2002.............................. 1,357,500 - 1,357,500
7,800,000 - 7,800,000 Textron Inc., Deb., - - -
- - - 8.750% due 07/01/2022.............................. 8,578,580 - 8,578,580
8,260,000 - 8,260,000 Time Warner Inc., Deb., - - -
- - - 9.150% due 02/01/2023.............................. 10,162,920 - 10,162,920
- - - United Air Lines Inc.: - - -
5,000,000 - 5,000,000 Equipment Trust certificates, - - -
- - - 10.850% due 07/05/2014............................ 6,467,815 - 6,467,815
- - - Pass-through certificates: - - -
3,000,000 - 3,000,000 9.080% due 10/26/2015.............................. 3,563,730 - 3,563,730
5,500,000 - 5,500,000 9.560% due 10/19/2018.............................. 6,801,630 - 6,801,630
- 1,012,000 1,012,000 USG Corporation, 9.25%, 09/15/01...................... - 1,098,020 1,098,020
- 495,000 495,000 U.S.A Waste Services, 7.13%, 10/01/07................ - 513,563 513,563
300,000 - 300,000 US West Capital Funding, Inc., - - -
- - - 6.950% due 01/15/2037.............................. 315,901 - 315,901
1,200,000 - 1,200,000 Veterinary Centers of America, Conv. Sub. Deb , - - -
- - - 5.250% due 05/01/2006.............................. 1,032,000 - 1,032,000
1,000,000 - 1,000,000 V.F. Corporation, Note, - - -
- - - 9.500% due 05/01/2001.............................. 1,094,796 - 1,094,796
- 350,000 350,000 Wal-Mart Stores, 8.63%, 04/01/01...................... - 374,500 374,500
- - - WMX Technology Incorporated - - -
- 1,145,000 1,145,000 7.70%, 10/01/02....................................... - 1,195,094 1,195,094
- 200,000 200,000 8.25%, 11/15/99....................................... - 205,000 205,000
---------------------------------------
149,359,822 20,676,450 170,036,272
Transportation
- 200,000 200,000 Southwest Airlines, 7.88%, 09/01/07................... - 219,250 219,250
- - Union Pacific Corporation - - -
- 250,000 250,000 7.38%, 05/15/01....................................... - 258,125 258,125
- 200,000 200,000 9.63%, 12/15/02....................................... - 224,250 224,250
---------------------------------------
- 701,625 701,625
Utilities
- 305,000 305,000 Florida Power & Light, 5.38%, 04/01/00................ - 301,950 301,950
- 125,000 125,000 Virginia Electric & Power, 8.88%, 06/01/99............ - 128,750 128,750
---------------------------------------
- 430,700 430,700
Yankee (U S Dollar Denominated)
1,000,000 - 1,000,000 Alberta Province,
- - - 9.250% due 04/01/2000.............................. 1,061,880 - 1,061,880
8,500,000 - 8,500,000 Petro-Canada, Deb., - - -
- - - 9.250% due 10/15/2021.............................. 10,778,340 - 10,778,340
500,000 - 500,000 Peregrine Investment Finance, - - -
- - - 4.500% due 12/01/2000.............................. 52,500 - 52,500
1,650,000 - 1,650,000 Republic of Korea, Unsub., - - -
- - - 8.875% due 04/15/2008.............................. 1,622,722 - 1,622,722
1,750,000 - 1,750,000 SB Treasury Company, - - -
- - - 9.400% due 12/29/2049.............................. 1,779,713 - 1,779,713
1,500,000 - 1,500,000 Tokai PFD Capital company, - - -
- - - 9.980% due 12/29/2049.............................. 1,481,865 - 1,481,865
500,000 - 500,000 Total Access Communications, - - -
- - - 2.000% due 05/31/2006.............................. 412,500 - 412,500
5,750,000 - 5,750,000 Trans-Canada Pipeline Corporation, Deb., - - -
- - - 8.500% due 03/20/2023.............................. 6,331,095 - 6,331,095
---------------------------------------
23,520,615 - 23,520,615
Total Corporate Bonds and Notes 223,659,951 55,487,172 279,147,123
MORTGAGE-BACKED SECURITIES - 9 2%
Governemet Agency
Federal Home Loan Mortgage Corporation (FHLMC)
386,241 - 386,241 8.750% due 06/15/2005.............................. 391,457 - 391,457
1,000,000 - 1,000,000 7.500% due 07/15/2020.............................. 1,013,998 - 1,013,998
- - - GOLD: - - -
1,438,160 - 1,438,160 #C00362, - - -
- - - 9.000% due 06/01/2024............................. 1,519,956 - 1,519,956
727,003 - 727,003 #C80253, - - -
- - - 9.000% due 01/01/2025............................. 768,351 - 768,351
2,886,671 - 2,886,671 Weyerhauser 1982-C FHA Putable, - - -
7.430% due 06/01/2022.............................. 2,946,881 - 2,946,881
---------------------------------------
6,640,643 - 6,640,643
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FROMA COMBINED PORTFOLIO INVESTMENTS
PRINCIPAL AMOUNT APRIL 30, 1998 (UNAUDITED) MARKET VALUE
--------------------------------------- -----------------------------------------
WM GROUP GRIFFIN PRO FORMA WM GROUP GRIFFIN PRO FORMA
INCOME FUND BOND FUND COMBINED INCOME FUND BOND FUND COMBINED
CORPORATE BONDS AND NOTES - 80.5%
<S> <C> <C> <C> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION
- 350,382 350,382 6.00%, 04/01/04................................ - 347,755 347,755
- 1,057,000 1,057,000 6.50%, 04/01/13 (b)............................ - 1,060,626 1,060,626
- 150,000 150,000 6.86%, 06/17/11................................ - 153,281 153,281
- 74,904 74,904 7.00%, 07/01/22................................ - 75,723 75,723
- 212,595 212,595 7.00%, 07/01/23................................ - 214,919 214,919
- 93,853 93,853 7.00%, 08/01/26................................ - 94,879 94,879
- 159,877 159,877 7.00%, 09/01/26................................ - 161,625 161,625
- 23,768 23,768 7.00%, 11/01/26................................ - 24,028 24,028
- 78,437 78,437 7.50%, 09/01/11................................ - 80,667 80,667
- 320,499 320,499 7.54%, 06/01/16................................ - 339,128 339,128
- 1,609,000 1,609,000 7.00%, 05/01/13................................ - 1,635,645 1,635,645
--------------------------------------
- 4,188,276 4,188,276
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)
2,382,790 - 2,382,790 6.000% due 02/15/2024.......................... 2,309,066 - 2,309,066
1,961,789 - 1,961,789 6.500% due 03/15/2024.......................... 1,946,467 - 1,946,467
1,723,504 - 1,723,504 6.500% due 07/15/2024.......................... 1,717,401 - 1,717,401
718,135 - 718,135 6.500% due 08/15/2023.......................... 712,527 - 712,527
1,972,532 - 1,972,532 6.500% due 12/15/2023.......................... 1,957,126 - 1,957,126
- 310,659 310,659 7.00%, 11/15/23................................ - 314,347 314,347
1,399,007 - 1,399,007 7.000% due 07/15/2023.......................... 1,417,376 - 1,417,376
- 1,607,000 1,607,000 7.50%, 05/01/28................................ - 1,648,670 1,648,670
- 548,024 548,024 7.50%, 12/15/23................................ - 565,151 565,151
- 233,804 233,804 8.00%, 06/15/27................................ - 242,644 242,644
- 313,051 313,051 8.00%, 07/15/17................................ - 326,062 326,062
- 1,877,536 1,877,536 8.00%, 08/15/27................................ - 1,948,526 1,948,526
181,726 - 181,726 9.000% due 12/01/2004.......................... 189,960 - 189,960
--------------------------------------
10,249,923 5,045,400 15,295,323
Total Government Agency............................ 16,890,566 9,233,676 26,124,242
Collateralized Mortgage Obligations (CMO)
- 519,000 519,000 Capital Equipment Receivable Trust, 6 28%,
06/15/00..................................... - 522,062 522,062
- 504,000 504,000 CIT Revenue Trust, 6.20%, 10/15/06............ - 505,562 505,562
1,750,000 - 1,750,000 Donaldson, Lufkin & Jenrette, Acceptance
Corporation, 1993-MF17,...................... - - -
- - - 7.350% due 12/18/2003...................... 1,789,979 - 1,789,979
1,403,751 - 1,403,751 Donaldson, Lufkin & Jenrette, Acceptance
Corporation, 1995-Q10,....................... - - -
- - - 8.3534% due 01/25/2026..................... 1,305,489 - 1,305,489
851,443 - 851,443 Resolution Trust Corporation-1991-M2 - A-2,... - - -
- - - 7.5062% due 09/25/2020..................... 724,659 - 724,659
850,000 - 850,000 Ryland Mortgage Securities Corporation -
1992-12A,.................................... - - -
- - - 6.500% due 09/25/2023...................... 837,305 - 837,305
--------------------------------------
Total Collateralized Mortgage Obligations..... 4,657,432 1,027,624 5,685,056
Total Mortgage-Backed Securities.............. 21,547,998 10,261,300 31,809,298
U.S. TREASURY OBLIGATIONS - 7.0%
U.S. Treasury Bonds
2,500,000 - 2,500,000 6.250% due 08/15/2023......................... 2,572,657 - 2,572,657
5,000,000 - 5,000,000 6.125% due 11/15/2027......................... 5,121,880 - 5,121,880
- 4,936,000 4,936,000 7.25%, 08/15/22............................... - 5,684,150 5,684,150
--------------------------------------
7,694,537 5,684,150 13,378,687
U.S. Treasury Notes
- 3,636,000 3,636,000 5.88%, 11/15/99............................... - 3,651,453 3,651,453
500,000 - 500,000 6.375% due 03/31/2001......................... 509,844 - 509,844
- 419,000 419,000 6.38%, 08/15/02............................... - 417,609 417,609
- 1,514,000 1,514,000 6.50%, 10/15/06............................... - 1,587,051 1,587,051
- 3,738,000 3,738,000 6.75%, 05/31/99............................... - 3,784,650 3,784,650
1,000,000 - 1,000,000 9.000% due 05/15/1998......................... 1,001,876 - 1,001,876
--------------------------------------
1,511,720 9,440,763 10,952,483
Total U.S. Treasury Obligations.................... 9,206,257 15,124,913 24,331,170
PREFERRED STOCK - 1.2%
2,000 - 2,000 California Federal Bank, Series B............. 217,813 - 217,813
15,100 - 15,100 First Industrial Realty Trust, Series A....... 396,375 - 396,375
28,000 - 28,000 Microsoft Corporation, Conv................... 2,607,500 - 2,607,500
15,000 - 15,000 Penncorp Financial Group...................... 903,750 - 903,750
--------------------------------------
Total Preferred Stock......................... 4,125,438 - 4,125,438
REPURCHASE AGREEMENT - 2.3%
1,438,000 - 1,438,000 Agreement with Goldman Sachs, 5.30% dated
4/30/98, to be repurchased at $1,438,212 on
5/1/98, collateralized by $1,398,886 U.S.
Treasury Note,
6.50% due 8/15/05 (Market Value $1,479,800)..... 1,438,000 - 1,438,000
- 6,443,304 6,443,304 State Street Bank & Trust Co.,
Master Repurchase Agreement, 4.25%,
Dated 4/30/98 due 5/1/98, Collateralized
by U.S. Government Securities - 6,443,291 6,443,291
--------------------------------------
Total Repurchase Agreement 1,438,000 6,443,291 7,881,291
Total Investments - 100.2%, (Cost $) 259,977,644 87,316,676 347,294,320
Other Assets and Liabilities, Net - (0.2%) 2,546,980 (3,288,567) (741,587)
TOTAL NET ASSETS - 100.0% 262,524,624 84,028,109 346,552,733
</TABLE>
- --------------------------------------------------------------------------------
(a) U.S. dollar denominated securities issued by foreign corporations and/or
governments
(b) Settlement is on a delayed delivery or when issued basis with final
maturity to be announced (TBA) in the future
The total cost basis of such securities is $1,155,096.
<PAGE>
WM GROUP INCOME FUND & GRIFFIN BOND FUND
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the combined financial
position of the WM Group Income Fund and the Griffin Bond Fund at April 30,
1998 and the pro forma combined results of operations for the year ended
December 30, 1997 and the four month period ended April 30, 1998 as though
the reorganization had occurred on January 1, 1997.
The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of how
the pro forma combined financial statements would have appeared had the
reorganization actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds incorporated by
reference in the Statement of Additional Information.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the Griffin Bond Fund in exchange for shares of
WM Group Income Fund. Under generally accepted accounting principles, the
historical cost of investment securities will be carried forward to the
surviving entity.
The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are stated at amortized cost
which approximates fair value. Historical cost amounts represent the
combined cost basis of the securities.
3. Pro Forma Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of the WM Group
shares at April 30, 1998.
4. Pro Forma Statements of Operations
<PAGE>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES AT APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GRIFFIN WM
GROWTH & GROWTH & PROFORMA PRO FORMA
INCOME FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $358,552,211 $851,615,589 $1,210,167,800
-
----------------------------------------------------------------
Total Investments 358,552,211 851,615,589 - 1,210,167,800
Cash/Cash Equivalents 628,677 97,112 725,789
Receivable for dollar roll fee income - -
Dividends and/or interest receivable 329,687 575,668 905,355
Receivable for Fund shares Sold 273,792 1,803,374 2,077,166
Receivable for investment securities sold 5,135,137 4,056,290 9,191,427
Unamortized organization costs - -
Prepaid expenses and other assets 40,894 55,086 95,980
----------------------------------------------------------------
Total Assets 364,960,398 858,203,119 - 1,223,163,517
LIABILITIES: -
Payable for dollar roll transactions - -
Variation margin payable - -
Reverse repurchase agreements - -
Payable for Fund shares redeemed - 1,427,330 1,427,330
Payable for investment securities purchased 8,090,892 8,118,105 16,208,997
Investment advisory fee payable 507,092 507,092
Administration fee payable - -
Shareholder servicing and distribution fees payable 147,766 147,766
Dividends payable - 14,192 14,192
Accrued legal and audit fees 15,000 15,000
Accrued Trustees' fees and expenses 4,556 4,556
Accrued registration and filing fees payable 67,000 67,000
Due to Custodian - -
Net Unrealized Depreciation of Fwd For Curr Cts - -
Accrued Expenses and other payables 360,179 425,671 785,850
----------------------------------------------------------------
Total Liabilities 8,451,071 10,726,712 - 19,177,783
TOTAL NET ASSETS 356,509,327 847,476,407 - 1,203,985,734
================================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) 113,589 $ (139,329) (25,740)
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions 23,572,875 14,101,909 37,674,784
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities 41,224,259 185,565,186 226,789,445
Paid-in capital 291,598,604 647,948,641 939,547,245
----------------------------------------------------------------
TOTAL NET ASSETS $356,509,327 $847,476,407 $ - $1,203,985,734
================================================================
NET ASSETS:
Class A Shares $302,118,157 $515,796,138 $ 817,914,295
================================================================
Class B Shares $ 54,391,170 $118,479,313 $ 172,870,483
================================================================
Class S Shares $ - $ 15,138,449 $ 15,138,449
================================================================
Class I Shares $ - $198,062,507 $ 198,062,507
================================================================
SHARES OUTSTANDING:
Class A Shares 14,866,688 23,965,982 (829,052.24) (a) 38,003,618
================================================================
Class B Shares 2,686,109 5,552,497 (137,083.35) (a) 8,101,523
================================================================
Class S Shares 708,785 - 708,785
================================================================
Class I Shares 9,182,243 - 9,182,243
================================================================
NET ASSET VALUE PER SHARE:
Class A Shares $ 20.32 $ 21.52 $ 21.52
================================================================
Class B Shares $ 20.25 $ 21.34 $ 21.34
================================================================
Class S Shares $ 21.36 $ 21.36
================================================================
Class I Shares $ 21.57 $ 21.57
================================================================
</TABLE>
See accompanying notes to pro forma financial statemets
- --------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of WM Group
shares at April 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT Pro Forma Combined Portfolio of Investments MARKET VALUE
---------------------------------------------- -----------------------------------------
WM GROUP GRIFFIN APRIL 30, 1998 (Unaudited) WM GROUP GRIFFIN
GROWTH & GROWTH & PRO FORMA GROWTH & GROWTH & PRO FORMA
INCOME FUND INCOME FUND COMBINED INCOME FUND INCOME FUND COMBINED
<S> <C> <C> <C> <C> <C>
COMMON STOCK - 94 3%
AEROSPACE / DEFENSE
50,000 - 50,000 Boeing Company............................ 2,503,125 -- 2,503,125
71,719 - 71,719 Lockheed Martin Corporation............... 7,987,704 -- 7,987,704
127,900 - 127,900 Northrop Grumman Corporation.............. 13,517,431 -- 13,517,431
- 30,900 30,900 Raytheon Company, Series A................ -- 1,705,294 1,705,294
-----------------------------------------
24,008,260 1,705,294 25,713,554
BANKS / SAVING & LOANS
- 50,100 50,100 BankAmerica Corp.......................... -- 4,258,500 4,258,500
62,800 - 62,800 Bank of New York Company Inc.............. 3,709,125 -- 3,709,125
- 27,600 27,600 Chase Manhattan........................... -- 3,824,325 3,824,325
57,400 - 57,400 Citicorp.................................. 8,638,700 -- 8,638,700
240,000 - 240,000 First Union Corporation................... 14,490,000 -- 14,490,000
92,500 - 92,500 KeyCorp................................... 3,671,094 -- 3,671,094
74,000 - 74,000 Mellon Bank Corporation................... 5,328,000 -- 5,328,000
159,924 - 159,924 Norwest Corporation....................... 6,346,984 -- 6,346,984
240,000 - 240,000 Prime Bancshares Inc...................... 6,420,000 -- 6,420,000
15,025 - 15,025 Wells Fargo & Company..................... 5,536,713 -- 5,536,713
54,140,616 8,082,825 62,223,441
BASIC INDUSTRIES -----------------------------------------
102,900 - 102,900 Albemarle Corporation..................... 2,559,638 -- 2,559,638
267,100 - 267,100 Allegheny Teledyne Inc.................... 6,777,650 -- 6,777,650
- 123,400 123,400 Bethlehem Steel Corp (a)................ -- 1,920,413 1,920,413
- 67,200 67,200 British Steel PLC......................... -- 1,827,000 1,827,000
- 128,000 128,000 Broken Hill Proprietary Company Limited ADR -- 2,528,000 2,528,000
94,165 - 94,165 Commscope Inc (a)........................ 1,530,186 -- 1,530,186
- 79,600 79,600 Crown Cork & Seal......................... -- 4,144,175 4,144,175
62,100 - 62,100 Du Pont (E I ) de Nemours & Company....... 4,521,656 -- 4,521,656
- 75,400 75,400 IMC Global Inc............................ -- 2,714,400 2,714,400
- 75,900 75,900 Inco Limited.............................. -- 1,332,994 1,332,994
- 111,500 111,500 Louisiana Pacific Corp.................... -- 2,439,063 2,439,063
- 31,100 31,100 Phelps Dodge.............................. -- 2,087,588 2,087,588
- 45,600 45,600 Reynolds Metals Co........................ -- 3,009,600 3,009,600
- 64,500 64,500 Union Carbide............................. -- 3,128,250 3,128,250
614,000 226,400 840,400 Waste Management Inc...................... 20,569,000 7,584,400 28,153,400
98,600 - 98,600 Weyerhaeuser Company...................... 5,681,825 - 5,681,828
-----------------------------------------
41,639,955 32,715,883 74,355,838
BUSINESS SERVICES
200,733 - 200,733 ACNielson Corporation..................... 5,620,524 - 5,620,524
257,829 - 257,829 Cendant Corporation....................... 6,445,725 - 6,445,725
110,000 - 110,000 Cognizant Corporation..................... 5,658,125 - 5,658,125
17,724,374 - 17,724,374
CAPITAL GOODS
- 87,600 87,600 Alcatel Alsthom ADR....................... - 3,175,500 3,175,500
135,700 - 135,700 Allied Signal Inc......................... 5,945,355 - 5,945,355
- 18,500 18,500 Case Corporation.......................... - 1,175,906 1,175,906
80,000 - 80,000 Cooper Industries Inc..................... 5,350,000 - 5,350,000
81,450 - 81,450 Crane Company............................. 4,383,028 - 4,383,028
297,848 - 297,848 Donaldson Company Inc..................... 7,557,893 - 7,557,893
153,000 - 153,000 International Game Technology............. 4,255,313 - 4,255,313
- 43,200 43,200 Litton Industries Inc (a)............... - 2,592,000 2,592,000
- 31,100 31,100 Lockheed Martin Corp...................... - 3,463,763 3,463,763
- 47,100 47,100 LucasVarity PLC........................... - 2,119,500 2,119,500
- 26,900 26,900 Northrop Grumman Corporation.............. - 2,842,994 2,842,994
180,001 - 180,001 Tyco International Limited................ 9,810,031 - 9,810,031
- 41,200 41,200 United Technologies....................... - 4,055,625 4,055,625
-----------------------------------------
37,301,620 19,425,288 56,726,908
COMPUTER / SYSTEMS
235,800 - 235,800 Bay Networks Inc (a)..................... 5,526,563 - 5,526,563
120,800 - 120,800 Cabletron Systems, Inc (a)............... 1,600,600 - 1,600,600
97,250 - 97,250 Cisco Systems Inc (a)..................... 7,123,563 - 7,123,563
193,500 - 193,500 EMC Corporation (a)....................... 8,925,189 - 8,925,189
62,000 - 62,000 Hewlett-Packard Company................... 4,669,375 - 4,669,375
71,600 - 71,600 International Business Machines Corporation 8,296,650 - 8,296,650
-----------------------------------------
36,141,940 - 36,141,940
COMPUTER SOFTWARE
124,700 - 124,700 Adobe Systems Inc (a)..................... 6,242,794 - 6,242,794
385,950 - 385,950 Barra Inc................................. 9,262,800 - 9,262,800
67,000 - 67,000 Computer Associates International Inc..... 3,923,687 - 3,923,687
259,000 - 259,000 First Data Corporation.................... 8,773,625 - 8,773,625
173,000 - 173,000 Microsoft Corporation..................... 15,591,624 - 15,591,624
260,000 - 260,000 Oracle Corporation(a)..................... 6,727,500 - 6,727,500
-----------------------------------------
50,522,030 - 50,522,030
CONSUMER DURABLES
50,800 - 50,800 Goodyear Tire & Rubber Company............ 3,556,000 - 3,556,000
- 48,900 48,900 Hasbro Inc................................ - 1,800,134 1,800,134
- 82,900 82,900 Lear Corporation (a)..................... - 4,440,331 4,440,331
29,500 - 29,500 Miller Industries, Inc.................... 226,781 - 226,781
- 52,500 52,500 Philips Electronics N V ADR.............. - 4,725,000 4,725,000
161,900 - 161,900 Sony Corporation, ADR..................... 13,751,381 - 13,751,381
- 69,700 69,700 Whirlpool Corporation..................... - 5,018,400 5,018,400
252,400 - 252,400 Zurn Industries Inc....................... 10,884,750 - 10,884,750
28,418,912 15,983,865 44,402,777
</TABLE>
<PAGE>
WM Growth & Income Fund
Pro Forma Combined Statement of Operations
For the Period Ended 4/30/98
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
GROWTH & GROWTH & PRO FORMA PRO FORMA
INCOME FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income 2,500,784 $ 3,125,551 5,626,335
Foreign Withholding Tax on Dividend Income - -
Interest Income 286,452 $ 61,677 348,129
Fee Income - -
-----------------------------------------------------------
Total Investment Income 2,787,236 3,187,228 - 5,974,464
-----------------------------------------------------------
EXPENSES:
Investment Advisory Fees 887,355 1,454,583 (266,264) (A) 2,075,674
Administration Fees 295,785 - (295,785) (B) -
Custodian Fees 65,218 81,674 146,892
Legal and Audit Fees 31,684 15,700 47,384
Trustees' Fees and Expenses 3,919 11,600 15,519
Amortization of Organization Costs 8,390 - 8,390
Registration and Filing Fees 20,722 67,000 87,722
Other 54,117 371,262 425,379
----------------------------------------------------------
Subtotal 1,367,190 2,001,819 (562,049) 2,806,960
Shareholder Servicing and Distribution Fees
Class A Shares 314,902 241,491 90,814 (C) 647,207
Class B Shares 219,316 192,380 25,783 (D) 437,479
Class S Shares 19,027 19,027
Interest Expense - -
Fees Waived and/or Expenses Absorbed by Investment -
Advisor (507,185) - 353,528 (E) (153,657)
-----------------------------------------------------------
Subtotal 1,394,223 2,454,717 (91,925) 3,757,016
Fees Reduced by Credits Allowed by the Custodian (5,633) (5,633)
-----------------------------------------------------------
Net Expenses 1,394,223 2,449,084 (91,925) 3,751,383
-----------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 1,393,013 738,144 91,925 2,223,082
-----------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains/(Loss) from:
Security Transactions 23,225,718 29,807,768 53,033,486
Forward Foreign Currency Contracts and
Foreign Currency Transactions - -
Futures Contracts - -
Net Unrealized Appreciation/(Depreciation) of:
Securities 23,374,245 99,087,021 122,461,266
Forward Foreign Currency Contracts - -
Foreign Currency, Written Options, Futures -
Contracts and Other Assets and Liabilities - -
-----------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investment 46,599,963 128,894,789 - 175,494,752
-----------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS -
RESULTING FROM OPERATIONS $47,992,976 $129,632,933 $ 91,925 $177,717,834
===========================================================
</TABLE>
(A) Decrease in management fees for Griffin shareholders to reflect the new fee
structure. Fees are based on .625% of average daily net assets up to
$250,000,000 and .50% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Addition of shareholder servicing fee at a monthly rate of $1.25 per
shareholder account.
(D) Addition of shareholder servicing fee at a monthly rate of $1.35 per
shareholder account.
(E) Fees waived and/or expense absorbed by investment advisor adjusted to .04%
of average daily net assets.
<PAGE>
WM Growth & Income Fund
Pro Forma Combined Statement of Operations
For the Year Ended 10/31/98
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM
GROWTH & GROWTH & PRO FORMA PRO FORMA
INCOME FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income 3,216,803 $4,332,639 7,549,442
Foreign Withholding Tax on Dividend Income - -
Interest Income 414,585 $ 188,590 603,175
Fee Income - -
------------------------------------------------------------
Total Investment Income 3,631,388 4,521,229 - 8,152,617
------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 1,180,997 1,630,777 (185,014) (A) 2,626,760
Administration Fees 393,666 - (393,666) (B) -
Custodian Fees 115,440 55,954 171,394
Legal and Audit Fees 49,825 15,587 65,412
Trustees' Fees and Expenses 8,128 8,745 16,873
Amortization of Organization Costs 17,201 - 17,201
Registration and Filing Fees 33,872 80,933 114,805
Other 105,067 128,843 233,910
------------------------------------------------------------
Subtotal 1,904,196 1,920,839 (578,680) 3,246,355
Shareholder Servicing and Distribution Fees -
Class A Shares 423,312 752,248 181,628 (C) 1,357,188
Class B Shares 275,080 422,208 51,565 (D) 748,853
Class S Shares - -
Interest Expense - -
Fees Waived and/or Expenses Absorbed by Investment -
Advisor (971,544) - 786,403 (E) (185,141)
------------------------------------------------------------
Subtotal 1,631,044 3,095,295 440,915 5,167,254
Fees Reduced by Credits Allowed by the Custodian (10,113) (10,113)
------------------------------------------------------------
Net Expenses 1,631,044 3,085,182 440,915 5,157,141
------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) 2,000,344 1,436,047 (440,915) 2,995,476
------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized Gains/(Loss) from:
Security Transactions 33,527,632 26,629,017 60,156,649
Forward Foreign Currency Contracts and -
Foreign Currency Transactions - -
Futures Contracts - -
Net Unrealized Appreciation/(Depreciation) of: -
Securities 8,827,962 37,406,069 46,234,031
Forward Foreign Currency Contracts - -
Foreign Currency, Written Options, Futures -
Contracts and Other Assets and - -
Liabilities
------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments 42,355,594 64,035,086 - 106,390,680
------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $44,355,938 $65,471,133 $(440,915) $109,386,156
============================================================
</TABLE>
(A) Decrease in management fees for Griffin shareholders to reflect the new
fee structure. Fees are based on .625% of average daily net assets up to
$250,000,000 and .50% of average daily net assets over that amount.
(B) Elimination of the Griffin administration fees, now incorporated in the
management fee structure.
(C) Addition of shareholder servicing fee at a monthly rate of $1.25 per
shareholder account.
(D) Addition of shareholder servicing fee at a monthly rate of $1.35 per
shareholder account.
(E) Fees waived and/or expense absorbed by investment advisor adjusted to .04%
of average daily net assets.
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS MARKET VALUE
------------------------------------- --------------------------------------------
WM GROUP GRIFFIN APRIL 30, 1998 (UNAUDITED) WM GROUP GRIFFIN
GROWTH & GROWTH & PRO FORMA GROWTH & GROWTH & PRO FORMA
INCOME FUND INCOME FUND COMBINED INCOME FUND INCOME FUND COMBINED
COMMON STOCK - 94.3%
<S> <C> <C> <C> <C> <C> <C>
CONSUMER SERVICES
- 117,566 117,566 ACNielsen Corporation (a)............... - 3,291,848 3,291,848
- 140,300 140,300 American Stores Company.................. - 3,367,200 3,367,200
- 132,700 132,700 Circuit City Stores Inc.................. - 5,390,938 5,390,938
- 69,500 69,500 Deluxe Corp.............................. - 2,328,250 2,328,250
- 75,400 75,400 Federated Department Stores (a)......... - 3,708,738 3,708,738
- 115,800 115,800 Limited.................................. - 3,886,538 3,886,538
- 74,800 74,800 McDonald's Corp.......................... - 4,628,250 4,628,250
- 23,053 23,053 Reuters Holdings PLC ADR................. - 1,494,123 1,494,123
- 123,800 123,800 Toys R Us Holdings (a).................. - 3,412,238 3,412,238
- 166,000 166,000 Tricon Global Restaurants (a)........... - 5,270,500 5,270,500
- 71,900 71,900 Viacom Inc - Class B (a)................ - 4,170,200 4,170,200
- 152,500 152,500 Woolworth (a)........................... - 3,507,500 3,507,500
------------------------------------------
- 44,456,323 44,456,323
CONSUMER STAPLES
39,150 - 39,150 Alberto Culver Company, Class A.......... 1,047,263 - 1,047,263
157,800 - 157,800 Anheuser-Busch Companies Inc............. 7,229,213 - 7,229,213
87,300 - 87,300 Campbell Soup Company.................... 4,479,581 - 4,479,581
34,700 - 34,700 General Mills Inc........................ 2,344,419 - 2,344,419
121,900 - 121,900 Kimberly Clark Corporation............... 6,186,425 - 6,186,425
436,600 - 436,600 Kimberly Clark De Mexico, ADR............10,715,608 - 10,715,608
230,000 - 230,000 Pepsico Inc.............................. 9,128,125 - 9,128,125
170,000 - 170,000 Philip Morris Companies Inc.............. 6,343,125 - 6,343,125
90,000 - 90,000 Procter & Gamble Company................. 7,396,875 - 7,396,875
88,400 - 88,400 Ralston Purina Company................... 9,370,400 - 9,370,400
97,000 - 97,000 Sara Lee Corporation..................... 5,777,563 - 5,777,563
117,200 - 117,200 Unilever NV.............................. 8,746,050 - 8,746,050
------------------------------------------
78,764,647 - 78,764,647
CONSUMER/STAPLES
- 171,780 171,780 Archer Daniels Midland................... - 3,693,270 3,693,270
- 132,200 132,200 Harcourt General......................... - 6,899,188 6,899,188
- 67,600 67,600 Kimberly-Clark Corp...................... - 3,430,700 3,430,700
- 69,900 69,900 Loews Corp............................... - 6,994,369 6,994,369
- 177,600 177,600 Philip Morris Companies Inc.............. - 6,626,700 6,626,700
- 136,000 136,000 RJR Nabisco Holdings Corp................ - 3,782,500 3,782,500
------------------------------------------
- 31,426,727 31,426,727
ELECTRICAL EQUIPMENT
116,850 - 116,850 Emerson Electric Company................. 7,434,581 - 7,434,581
106,000 - 106,000 General Electric Company................. 9,023,250 - 9,023,250
------------------------------------------
16,457,831 - 16,457,831
ELECTRONICS / SEMICONDUCTORS
337,425 - 337,425 General Semiconductor, Inc............... 4,618,505 - 4,618,505
180,800 - 180,800 Intel Corporation........................14,610,900 - 14,610,900
------------------------------------------
19,229,405 - 19,229,405
ENERGY
- 18,000 18,000 British Petroleum ADR.................... - 1,701,000 1,701,000
- 77,608 77,608 Burlington Resources..................... - 3,647,200 3,647,200
- 58,900 58,900 ELF Aquitaine ADR........................ - 3,824,819 3,824,819
- 87,800 87,800 Mobil Corp............................... - 6,936,200 6,936,200
- 66,600 66,600 Oryx Energy (a)......................... - 1,739,925 1,739,925
- 103,800 103,800 Phillips Petroleum....................... - 5,144,588 5,144,588
- 130,900 130,900 Tosco Corp............................... - 4,663,313 4,663,313
- 115,300 115,300 Unocal Corp.............................. - 4,720,094 4,720,094
------------------------------------------
- 32,377,139 32,377,139
FINANCIAL SERVICES
- 42,000 42,000 Allmerica Financial Corp................. - 2,630,250 2,630,250
63,900 - 63,900 AMBAC Financial Group Inc................ 3,622,331 - 3,622,331
24,300 - 24,300 Capital One Financial Corporation........ 2,334,319 - 2,334,319
- 24,200 24,200 CIGNA Corp............................... - 5,007,888 5,007,888
- 49,100 49,100 Equitable Companies...................... - 3,013,513 3,013,513
- 86,500 86,500 Everest Reinsurance Hold................. - 3,568,125 3,568,125
208,000 - 208,000 Federal Home Loan Mortgage Corporation... 9,633,000 - 9,633,000
144,400 - 144,400 Federal National Mortgage Association.... 8,645,950 - 8,645,950
- 87,070 87,070 First Union Corporation.................. - 5,256,851 5,256,851
- 14,100 14,100 General RE Corporation................... - 3,152,231 3,152,231
267,850 - 267,850 Green Tree Financial Corporation.........10,914,888 - 10,914,888
68,650 - 68,650 Heller Financial Inc..................... 1,853,550 - 1,853,550
- 16,100 16,100 ITT Hartford Group....................... - 1,783,075 1,783,075
227,950 - 227,950 Liberty Financial Companies.............. 9,132,247 - 9,132,247
69,600 - 69,600 Marsh and McLennan Companies, Inc........ 6,342,300 - 6,342,300
- 89,112 89,112 NationsBank Corp......................... - 6,750,234 6,750,234
90,000 - 90,000 Providian Financial Corporation.......... 5,416,875 - 5,416,875
- 17,300 17,300 Republic New York Corp................... - 2,313,875 2,313,875
- 70,800 70,800 SAFECO Corp.............................. - 3,535,575 3,535,575
- 74,150 74,150 SLM Holding Corp......................... - 3,165,278 3,165,278
137,499 - 137,499 Travelers Group Inc...................... 8,413,220 - 8,413,220
- 48,330 48,330 Washington Mutual Inc.................... - 3,386,121 3,386,121
------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Amount Pro Forma Combined Portfolio of Investments Market Value
--------------------------------------- ------------------------------------------
April 30, 1998 (Unaudited)
WM Group Griffin WM Group Griffin
Growth & Growth & Pro Forma Growth & Growth & Pro Forma
Income Fund Income Fund Combined Income Fund Income Fund Combined
<S> <C> <C> <C> <C> <C>
66,308,680 43,563,016 109,871,696
Health Care
150,100 - 150,100 Abbott Laboratories........................ 10,976,063 - 10,976,063
- 36,200 36,200 Aetna Inc.................................. - 2,925,413 2,925,413
100,000 - 100,000 ALZA Corporation (a)....................... 4,793,750 - 4,793,750
40,000 - 40,000 American Home Products Corporation......... 3,725,000 - 3,725,000
- 60,300 60,300 Amgen (a)................................. - 3,595,388 3,595,388
95,600 - 95,600 Bristol-Myers Squibb Company............... 10,121,650 - 10,121,650
183,750 - 183,750 Columbia HCA Healthcare Corporation........ 6,052,266 - 6,052,266
- 238,300 238,300 Columbia/HCA Healthcare.................... - 7,849,006 7,849,006
- 127,550 127,550 Foundation Health Systems (a)............. - 3,690,978 3,690,978
- 81,100 81,100 Humana (a)................................ - 2,189,700 2,189,700
341,500 - 341,500 Humana Inc. (a)............................ 9,220,500 - 9,220,500
146,550 - 146,550 Johnson & Johnson.......................... 10,460,006 - 10,460,006
97,400 - 97,400 Manor Care Inc............................. 3,415,087 - 3,415,087
275,000 - 275,000 Medpartners Inc............................ 2,818,750 - 2,818,750
117,000 - 117,000 Merck & Company, Inc....................... 14,098,500 - 14,098,500
123,033 - 123,033 Pacificare Health Systems-A................ 8,643,068 - 8,643,068
20,000 - 20,000 Pacificare Health Systems-B................ 1,432,500 - 1,432,500
80,000 - 80,000 Perkin Elmer Corporation................... 5,470,000 - 5,470,000
- 49,000 49,000 Pharmacia & Upjohn Inc..................... - 2,061,063 2,061,063
- 71,300 71,300 Tenet Healthcare Inc. (a)................. - 2,669,294 2,669,294
35,000 - 35,000 United Healthcare Corporation.............. 2,458,750 - 2,458,750
60,000 - 60,000 Warner Lambert Company..................... 11,351,250 - 11,351,250
-----------------------------------------
105,037,140 24,980,842 130,017,982
Insurance
77,598 - 77,598 American International Group, Inc (a)..... 10,208,987 - 10,208,987
161,400 - 161,400 Penncorp Financial Group Inc............... 4,196,400 - 4,196,400
-----------------------------------------
14,405,387 - 14,405,387
Lodging
523,515 - 523,515 Choice Hotels International Inc............ 8,965,194 - 8,965,194
374,505 - 374,505 Sunburst Hospitality Corporation........... 3,019,447 - 3,019,447
11,984,641 - 11,984,641
Media
194,800 72,200 267,000 Dun & Bradstreet Corporation............... 6,915,400 2,563,100 9,478,500
119,600 - 119,600 Lee Enterprises Inc........................ 3,744,975 3,744,975
205,000 - 205,000 Seagram Company Limited.................... 8,750,938 - 8,750,938
765,601 - 765,601 Tele-Communications TCI Ventures Group..... 12,488,866 - 12,488,866
191,075 - 191,075 Viacom Inc., Class A....................... 11,034,581 - 11,034,581
-----------------------------------------
42,934,760 2,563,100 45,497,860
Real Estate Investment Trusts (REITS)
117,500 - 117,500 CCA Prison Realty Trust.................... 4,163,906 - 4,163,906
90,000 - 90,000 Corrections Corporation of American........ 2,497,500 - 2,497,500
83,199 - 83,199 Equity Office Properties Trust (a)......... 2,365,974 - 2,365,974
136,600 - 136,600 Health Care Property Investors Inc......... 4,610,250 - 4,610,250
152,900 - 152,900 Starwood Hotel & Resort.................... 7,673,669 - 7,673,669
-----------------------------------------
21,311,299 - 21,311,299
Retail Sales
84,600 - 84,600 Federated Department Stores, Inc. (a)...... 4,177,125 - 4,177,125
311,500 - 311,500 Intimate Brands Inc........................ 9,033,500 - 9,033,500
51,000 - 51,000 Wal-Mart Stores Inc........................ 2,578,688 - 2,578,688
-----------------------------------------
15,789,313 - 15,789,313
Technology
- 92,000 92,000 Adaptec Incorporated (a).................. - 2,179,250 2,179,250
- 110,700 110,700 Applied Materials Inc. (a)................ - 3,999,038 3,999,038
- 138,000 138,000 Compaq Computer Corp....................... - 3,872,625 3,872,625
- 88,100 88,100 DSC Communications (a).................... - 1,585,800 1,585,800
- 118,800 118,800 First Data................................. - 4,024,350 4,024,350
- 70,800 70,800 Intel Corporation.......................... - 5,721,525 5,721,525
- 57,100 57,100 International Business Machines Corporation - 6,616,463 6,616,463
- 141,100 141,100 Lam Research Corp. (a).................... - 4,374,100 4,374,100
- 168,300 168,300 National Semiconductor (a)................ - 3,702,600 3,702,600
- 84,900 84,900 Sun Microsystems Inc....................... - 3,496,819 3,496,819
- 92,200 92,200 Teradyne (a).............................. - 3,365,300 3,365,300
-----------------------------------------
- 42,937,870 42,937,870
Transportation
- 105,200 105,200 Canadian Pacific Limited ORD PAR........... - 3,096,825 3,096,825
219,200 - 219,200 Expeditors International of Washington Inc. 9,316,000 - 9,316,000
- 122,800 122,800 Republic Industries Inc.................... - 3,415,375 3,415,375
- 130,300 130,300 Union Pacific.............................. - 7,133,925 7,133,925
130,100 - 130,100 Union Pacific Corporation.................. 7,122,975 - 7,122,975
-----------------------------------------
16,438,975 13,646,125 30,085,100
Utilities
- 51,000 51,000 A T & T Corporation........................ - 3,063,188 3,063,188
- 32,172 32,172 Bell Atlantic.............................. - 3,010,093 3,010,093
49,472 - 49,472 British Petroleum ADR...................... 4,675,058 - 4,675,058
- 64,600 64,600 CMS Energy Corp............................ - 2,822,213 2,822,213
120,900 - 120,900 Comcast Corporation-Special Class A........ 4,329,731 - 4,329,731
- 35,900 35,900 Duke Power................................. - 2,077,713 2,077,713
- 82,300 82,300 Edison International....................... - 2,453,569 2,453,569
222,900 - 222,900 Enron Corporation.......................... 10,963,894 - 10,963,894
143,660 - 143,660 Exxon Corporation.......................... 10,478,201 - 10,478,201
- 55,300 55,300 GTE Corporation............................ - 3,231,594 3,231,594
- 86,100 86,100 Illinova Corp.............................. - 2,631,431 2,631,431
97,400 - 97,400 Mobil Corporation.......................... 7,694,600 - 7,694,600
103,800 - 103,800 Pennzoil Company........................... 6,649,687 - 6,649,687
- 60,400 60,400 Pinnacle West Capital Corp................. - 2,672,700 2,672,700
145,600 - 145,600 Royal Dutch Petroleum...................... 8,235,500 - 8,235,500
182,900 - 182,900 SBC Communications Inc..................... 7,578,919 - 7,578,919
- 89,000 89,000 Southern Company........................... - 2,358,500 2,358,500
249,600 - 249,600 Sprint Corporation......................... 17,050,800 - 17,050,800
333,700 - 333,700 Tosco Corporation.......................... 11,888,062 - 11,888,062
230,000 - 230,000 WorldCom Inc. (a).......................... 9,839,687 - 9,839,687
-----------------------------------------
99,384,139 24,321,001 123,705,140
Total Common Stocks 797,943,924 338,185,298 1,136,129,222
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Amount Pro Forma Combined Portfolio of Investments Market Value
-------------------------------------- ---------------------------------------
WM Group Griffin April 30, 1998 (Unaudited) WM Group Griffin
Growth & Growth & Pro Forma Growth & Growth &
Income Fund Income Fund Combined Income Fund Income Fund
<S> <C> <C> <C> <C> <C>
CONVERTIBLE NOTES - 0.5%
580,000 - 580,000 Alberto-Culver Corporation
- - - 5.500% due 06/30/2005............................. 960,625 -
2,662,000 - 2,662,000 Berkshire Hathaway, Conv. Sr. Note, - -
- - - 1.000% due 12/03/2001............................. 4,934,683 -
1,000 - 1,000 Lehman Brothers Holdings, - -
- - - 5.000% due 02/26/2001............................. 69,000 -
------------- ------------
Total Convertible Notes 5,964,308 -
PREFERRED STOCK - 3.5%
36,000 - 36,000 Cendant Corporation, Conv. Pfd.,
- - - 7.500% due 02/16/2001............................. 1,482,750 -
110,000 - 110,000 Loral Space & Communication, 3.000%.................. 9,267,500 -
220,500 - 220,500 Medpartners Inc -"TAPS".............................. 2,907,844 -
- 109,500 109,500 News Corporation, Ltd. ADR........................... - 2,552,719
135,000 - 135,000 Nextlink Communications, Conv. Pfd., - -
- - - 6.500% due 03/31/2010............................. 6,361,875 -
128,900 - 128,900 Pacificare Health Systems-Pfd........................ 3,560,863 -
158,100 - 158,100 Penncorp Financial Group, $3.375, Series............. 9,525,525 -
94,600 - 94,600 Sinclair Broadcast Group............................. 6,149,000 -
-----------------------------
Total Preferred Stocks 39,255,357 2,552,719
REPURCHASE AGREEMENT - 2.2%
8,452,000 - 8,452,000 Agreement with Goldman Sachs, 5.30% dated
4/30/98, to be repurchased
at $8,453,244 on 5/1/98, collateralized by
$8,222,101 U.S. Treasury Note,
6.50% due 8/15/05 (value $8,697,682)............... 8,452,000 -
- 17,814,208 17,814,208 Agreement withi State Street Bank & Trust Co.
Master Repurchase Agreement, 4.25%, dated
4/30/98 due 5/1/98, Collateralized by
U.S. Government Securities
(delivery value $17,814,208)......................... - 17,814,208
-----------------------------
Total Repurchase Agreements 8,452,000 17,814,208
Total Investments - 100.5% (Cost $983,378,354) 851,615,589 358,552,225
Other Assets and Liabilities, Net - (0.5%) (4,139,182) (2,042,898)
TOTAL NET ASSETS - 100.0% 847,476,407 356,509,327
<CAPTION>
PRO FORMA
COMBINED
CONVERTIBLE NOTES - 0.5%
<S> <C> <C> <C> <C>
580,000 - 580,000 Alberto-Culver Corporation
- - - 5.500% due 06/30/2005............................. 960,625
2,662,000 - 2,662,000 Berkshire Hathaway, Conv. Sr. Note, -
- - - 1.000% due 12/03/2001............................. 4,934,683
1,000 - 1,000 Lehman Brothers Holdings, -
- - - 5.000% due 02/26/2001............................. 69,000
-------------
Total Convertible Notes 5,964,308
PREFERRED STOCK - 3.5%
36,000 - 36,000 Cendant Corporation, Conv. Pfd.,
- - - 7.500% due 02/16/2001............................. 1,482,750
110,000 - 110,000 Loral Space & Communication, 3.000%.................. 9,267,500
220,500 - 220,500 Medpartners Inc -"TAPS".............................. 2,907,844
- 109,500 109,500 News Corporation, Ltd. ADR........................... 2,552,719
135,000 - 135,000 Nextlink Communications, Conv. Pfd.,................. -
- - - 6.500% due 03/31/2010 6,361,875
128,900 - 128,900 Pacificare Health Systems-Pfd. 3,560,863
158,100 - 158,100 Penncorp Financial Group, $3.375, Series 9,525,525
94,600 - 94,600 Sinclair Broadcast Group 6,149,000
--------------
Total Preferred Stocks 41,808,076
REPURCHASE AGREEMENT - 2.2%
8,452,000 - 8,452,000 Agreement with Goldman Sachs, 5.30% dated
4/30/98, to be repurchased
at $8,453,244 on 5/1/98, collateralized by
$8,222,101 U.S. Treasury Note,
6.50% due 8/15/05 (value $8,697,682) 8,452,000
- 17,814,208 17,814,208 Agreement withi State Street Bank & Trust Co.
Master Repurchase Agreement, 4.25%, dated
4/30/98 due 5/1/98, Collateralized by
U.S. Government Securities
(delivery value $17,814,208) 17,814,208
--------------
Total Repurchase Agreements 26,266,208
TOTAL INVESTMENTS - 100.5% (COST $983,378,354) 1,210,167,814
OTHER ASSETS AND LIABILITIES, NET - (0.5%) (6,182,080)
TOTAL NET ASSETS - 100.0% 1,203,985,734
</TABLE>
- --------------------------------------------------------------------------------
(a) Non-Income Producing Security
<PAGE>
WM GROUP GROWTH & INCOME FUND AND GRIFFIN GROWTH & INCOME FUND
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the combined financial
position of the WM Group Growth & Income Fund and the Griffin Growth & Income
Fund at April 30, 1998 and the pro forma combined results of operations for
the year ended October 30, 1997 and the four month period ended April 30,
1998 as though the reorganization had occurred on November 1, 1996.
The pro forma combined financial statements are presented for the information
of the reader and may not necessarily be representative of how the pro forma
combined financial statements would have appeared had the reorganization
actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds incorporated by
reference in the Statement of Additional Information.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the Griffin Growth & Income Fund in exchange for
shares of WM Group Growth & Income Fund. Under generally accepted accounting
principles, the historical cost of investment securities will be carried
forward to the surviving entity.
The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are stated at amortized cost
which approximates fair value. Historical cost amounts represent the combined
cost basis of the securities.
3. Pro Forma Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of the WM Group
shares at April 30, 1998.
4. Pro Forma Statements of Operations
<PAGE>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
GRIFFIN WM PRO FORMA PRO FORMA
GROWTH FUND GROWTH FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investments at value $98,207,349 $279,047,749 $377,255,098
-
--------------------------------------------------------------
Total Investments 98,207,349 279,047,749 - 377,255,098
Cash/Cash Equivalents 90,910 - 90,910
Receivable for dollar roll fee income - -
Dividends and/or interest receivable 36,088 78,502 114,590
Receivable for Fund shares Sold 6,955 124,357 131,312
Receivable for investment securities sold 65,721 3,837,149 3,902,870
Unamortized organization costs - -
Receivable from investment advisor - -
Prepaid expenses and other assets 13,091 3,648 16,739
--------------------------------------------------------------
Total Assets 98,420,114 283,091,405 - 381,511,519
==============================================================
LIABILITIES: -
Payable for dollar roll transactions - -
Variation margin payable - -
Reverse repurchase agreements - -
Payable for Fund shares redeemed - 1,343,140 1,343,140
Payable for investment securities purchased 890,591 431,425 1,322,016
Investment advisory fee payable 264,023 264,023
Administration fee payable - -
Shareholder servicing and distribution fees payable 9,924 9,924
Dividends payable - 204 204
Accrued legal and audit fees - -
Accrued transfer agent fees - -
Accrued Trustees' fees and expenses - -
Accrued registration and filing fees payable - -
Due to Custodian 1,225,485 1,225,485
Net unrealized depreciation of fwd for cur cts 37,644 37,644
Accrued Expenses and other payables 102,717 225,391 328,108
--------------------------------------------------------------
Total Liabilities 993,308 3,537,236 - 4,530,544
--------------------------------------------------------------
--------------------------------------------------------------
TOTAL NET ASSETS $97,426,806 $279,554,169 $ - $376,980,975
==============================================================
NET ASSETS:
Undistributed net investment income/
(accumulated net investment loss/distributions
in excess of net investment income) (437,403) (12,382) (449,785)
Accumulated net realized gain/(loss)
on investments sold, futures contracts,
closed written options, forward foreign currency
contracts and foreign currency transactions (3,841,529) 45,367,823 41,526,294
Net unrealized app./(dep.) of investments,
foreign currency, written options, futures
contracts, forward foreign currency contracts
and other assets and liabilities 24,497,727 66,535,577 91,033,304
Paid-in capital 77,208,011 167,663,151 244,871,162
--------------------------------------------------------------
TOTAL NET ASSETS $97,426,806 $279,554,169 $ - $376,980,975
==============================================================
NET ASSETS:
Class A Shares $90,836,380 $112,153,051 $202,989,431
==============================================================
Class B Shares $ 6,590,426 $ 38,389,530 $ 44,979,956
==============================================================
Class S Shares $ 13,282,870 $ 13,282,870
==============================================================
Class I Shares $115,728,718 $115,728,718
==============================================================
SHARES OUTSTANDING:
Class A Shares 5,000,777 6,075,731 (79,846.14) (a) 10,996,662
==============================================================
Class B Shares 368,221 2,154,124 1,582.82 (a) 2,523,928
==============================================================
Class S Shares 745,165 - 745,165
==============================================================
Class I Shares 6,234,430 - 6,234,430
==============================================================
NET ASSET VALUE PER SHARE:
Class A Shares $18.16 $18.46 $18.46
==============================================================
Class B Shares $17.90 $17.82 $17.82
==============================================================
Class S Shares $17.83 $17.83
==============================================================
Class I Shares $18.56 $18.56
==============================================================
</TABLE>
See accompanying notes to pro forma financial statemets
- --------------------------------------------------------------------------------
(a) Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of WM Group
shares at June 30, 1998.
<PAGE>
WM Group Growth Fund
Pro Forma Combined Statement of Operations
For the Year Ended June 30, 1998
(unaudited)
<TABLE>
<CAPTION>
GRIFFIN WM GROUP PRO FORMA PRO FORMA
GROWTH FUND GROWTH FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend Income $ 322,886 $ 1,382,894 $ 1,705,780
Foreign withholding tax on dividend income (16,446) (16,446)
Interest Income 59,579 774,473 834,052
Fee Income - -
------------------------------------------------------------------------
Total Investment Income 382,465 2,140,921 - 2,523,386
------------------------------------------------------------------------
EXPENSES:
Investment Advisory fee 434,066 2,739,222 586,044 (A) 3,759,332
Administration fee 144,689 723,887 (868,576) (B) -
Custodian fee 94,870 64,008 158,878
Legal and Audit fees 37,738 34,992 72,730
Trustees' fees and expenses 7,943 18,682 26,625
Amortization of organization costs 5,103 9,110 14,213
Registration and filing fees 9,309 33,132 42,441
Other 43,457 257,676 301,133
------------------------------------------------------------------------
Subtotal 777,175 3,880,709 (282,532) 4,375,352
Shareholder servicing and distribution fees
Class A Shares 168,889 326,313 271,822 (C) 767,024
Class B Shares 47,886 350,784 84,990 (D) 483,660
Class S Shares 142,061 3,890 (E) 145,951
Interest expense - -
Fees waived and/or expenses absorbed by -
investment advisor (223,015) - (1,062,214) (F) (1,285,229)
------------------------------------------------------------------------
Subtotal 770,935 4,699,867 (984,044) 4,486,758
Fees reduced by credits allowed by the custodian (6,149) (6,149)
------------------------------------------------------------------------
Net expenses 770,935 4,693,718 (984,044) 4,480,609
------------------------------------------------------------------------
NET INVESTMENT INCOME/(LOSS) (388,470) (2,552,797) 984,044 (1,957,223)
------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized gain from security transactions
Security transactions (2,148,446) 57,657,686 55,509,240
Forward foreign currency contracts and -
foreign currency transactions 776,368 776,368
Futures contracts -
Net unrealized appreciation/(depreciation) of:
Securities 15,830,547 33,821,257 49,651,804
Forward foreign currency contracts (333,137) (333,137)
Foreign currency, written options, futures
contracts and other assets and liabilities 13,146 13,146
------------------------------------------------------------------------
Net realized/unrealized gains/(losses) on invsts 13,682,101 91,935,320 - 105,617,421
------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS -
RESULTING FROM OPERATIONS $ 13,293,631 $ 89,382,523 984,044 $ 103,660,198
========================================================================
</TABLE>
(A) Increase in management fees for Griffin shareholders to reflect the new fee
structure. Fees are based on 1.10% of average daily net assets up to
$100,000,000 and 1.05% of average daily net assets up to $200,000,000 and
1.025% over that amount.
(B) Elimination of the administration fees, now incorporated in the management
fee structure.
(C) Addition of shareholder servicing fee at a monthly rate of $1.25 per
shareholder account.
(D) Addition of shareholder servicing fee at a monthly rate of $1.35 per
shareholder account.
(E) Addition of shareholder servicing fee at a monthly rate of $1.35 per
shareholder account.
(F) Fees waived and/or expense absorbed by investment advisor adjusted to .36%
of average daily net assets.
<PAGE>
WM GROWTH FUND & GRIFFIN GROWTH FUND
Notes to Pro Forma Combined Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the pro forma combined
financial position of the WM Growth Fund and the Griffin Growth Fund at
June 30, 1998 and the pro forma combined results of operations for the year
ended June 30, 1998 as though the reorganization had occurred on July 1,
1997.
The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of how
the pro forma combined financial statements would have appeared had the
reorganization actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds which are
incorporated by reference in the Statement of Additional Information.
The pro forma combined statements give effect to the proposed transfer of
the assets and stated liabilities of the Griffin Growth Fund in exchange
for shares of WM Growth Fund. Under generally accepted accounting
principles, the historical cost of investment securities will be carried
forward to the surviving entity.
The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are valued using the pricing
procedures and policies of the respective Acquiring Fund or Acquired Fund,
as applicable. For more information, see the WM Annual Reports or the
Griffin Annual Reports. Historical cost amounts represent the combined cost
basis of the securities. A substantial portion of the Griffin Growth Fund's
portfolio securities are expected to be sold in connection with the
Mergers.
3. Pro Forma Combined Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
Growth shares into WM shares based upon the net asset value of the WM
Growth Fund shares at April 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
SHARES VALUE
------------------------------------- ------------------
WM GRIFFIN PRO FORMA WM
GROWTH FUND GROWTH FUND COMBINED GROWTH FUND
<S> <C> <C> <C> <C> <C>
COMMON STOCK - 99.6%
BANKS / SAVINGS & LOANS
12,690 - 12,690 Ambanc Holding Company, Inc.................. 225,247
44,580 - 44,580 Bank of New York Company, Inc................ 2,705,449
62,035 - 62,035 BankAmerica Corporation...................... 5,362,150
18,615 - 18,615 First Defiance Financial Corporation......... 260,610
11,050 - 11,050 Provident Financial Holdings, Inc. (a)....... 229,287
28,245 - 28,245 Star Banc Corporation........................ 1,804,149
66,255 - 66,255 U.S. Bancorp (a)............................. 2,848,965
- 6,000 6,000 Zions Bancorporation -
-------------
13,435,857
BUSINESS SERVICES
- 8,500 8,500 AccuStaff Inc. (a).......................... -
- 11,600 11,600 Air Express International.................... -
15,640 10,500 26,140 Apollo Group Incorporated (a)............... 517,098
- 14,600 14,600 Carnival Corp................................ -
- 5,100 5,100 Catalina Marketing Corp. (a)................ -
- 19,191 19,191 Cendant Corporation (a)..................... -
48,940 7,300 56,240 Cognizant Corporation........................ 3,089,338
- 15,025 15,025 Comair Holdings Inc.......................... -
- 9,200 9,200 Equifax Inc.................................. -
- 7,200 7,200 Equity Corporation International (a)........ -
- 8,700 8,700 Interim Services Incorporated (a)........... -
- 6,500 6,500 Interpublic Group of Companies Inc........... -
- 9,800 9,800 Kansas City Southern Industries Inc.......... -
58,030 - 58,030 Lamar Advertising Company (a)................ 2,081,826
- 11,300 11,300 LaSalle Partners Incorporated (a)........... -
- 5,900 5,900 Manpower Inc................................. -
- 18,200 18,200 Mutual Risk Management LTD................... -
- 7,200 7,200 Omnicom Group Incorporated................... -
93,309 - 93,309 Outdoor Systems, Inc. (a).................... 2,612,652
- 10,050 10,050 Paychex Inc.................................. -
- 8,400 8,400 Primark Corporation (a)..................... -
- 7,600 7,600 Quintiles Transnational Corporation (a)..... -
- 2,686 2,686 Reuters Holdings PLC ADR..................... -
- 10,850 10,850 Robert Half International Inc (a)........... -
- 14,900 14,900 Romac International (a)..................... -
36,605 - 36,605 Sapient Corporation (a)...................... 1,930,914
- 14,200 14,200 Security Capital Group, Series B (a)........ -
- 8,000 8,000 Service Corporation International............ -
35,600 - 35,600 Snyder Communications (a).................... 1,566,400
- 10,300 10,300 Superior Services (a)....................... -
- 6,525 6,525 Sylvan Learning Systems (a)................. -
- 10,250 10,250 The Vincam Group (a)........................ -
<CAPTION>
VALUE
---------------------------
GRIFFIN PRO FORMA
GROWTH FUND COMBINED
<S> <C> <C>
Ambanc Holding Company, Inc.................. - 225,247
Bank of New York Company, Inc................ - 2,705,449
BankAmerica Corporation...................... - 5,362,150
First Defiance Financial Corporation......... - 260,610
Provident Financial Holdings, Inc. (a)....... - 1,804,149
Star Banc Corporation........................ - 2,848,965
U.S. Bancorp (a)............................. 318,750 318,750
---------------------------
Zions Bancorporation 318,750 13,754,607 X
AccuStaff Inc. (a).......................... 265,625 265,625
Air Express International.................... 310,300 310,300
Apollo Group Incorporated (a)............... 347,156 864,254
Carnival Corp................................ 578,525 578,525
Catalina Marketing Corp. (a)................ 264,881 264,881
Cendant Corporation (a)..................... 400,612 400,612
Cognizant Corporation........................ 459,900 3,549,238
Comair Holdings Inc.......................... 463,897 463,897
Equifax Inc.................................. 334,075 334,075
Equity Corporation International (a)........ 172,800 172,800
Interim Services Incorporated (a)........... 279,488 279,488
Interpublic Group of Companies Inc........... 394,469 394,469
Kansas City Southern Industries Inc.......... 486,325 486,325
Lamar Advertising Company (a)................ - 2,081,826
LaSalle Partners Incorporated (a)........... 502,850 502,850
Manpower Inc................................. 169,256 169,256
Mutual Risk Management LTD................... 663,163 663,163
Omnicom Group Incorporated................... 359,100 359,100
Outdoor Systems, Inc. (a).................... - 2,612,652
Paychex Inc.................................. 408,909 408,909
Primark Corporation (a)..................... 263,025 263,025
Quintiles Transnational Corporation (a)..... 373,825 373,825
Reuters Holdings PLC ADR..................... 183,991 183,991
Robert Half International Inc (a)........... 606,244 606,244
Romac International (a)..................... 452,588 452,588
Sapient Corporation (a)...................... - 1,930,914
Security Capital Group, Series B (a)........ 378,075 378,075
Service Corporation International............ 343,000 343,000
Snyder Communications (a).................... - 1,566,400
Superior Services (a)....................... 309,644 309,644
Sylvan Learning Systems (a)................. 213,694 213,694
The Vincam Group (a)........................ 201,156 201,156
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- 11,300 11,300 U.S.A. Waste Services (a).................... -
- 10,437 10,437 Werner Enterprise Inc. ...................... -
------------
11,798,228
CAPITAL GOODS
- 7,400 7,400 Agco Corp.................................... -
- 8,950 8,950 Cable Design Technologies (a)............... -
- 11,800 11,800 Danaher Corp................................. -
- 11,700 11,700 Donaldson Company, Inc....................... -
- 5,000 5,000 EVI Weatherford Corporation -
68,620 - 68,620 Federal-Mogul Corporation.................... 4,631,850
- 8,050 8,050 IDEX Corporation............................. -
- 4,900 4,900 Kennametal Inc............................... -
- 7,000 7,000 Littlelfuse Inc. (a)........................ -
85,210 - 85,210 Monsanto Company............................. 4,761,109
- 11,800 11,800 MSC Industrial Direct Company................ -
- 6,950 6,950 Parker-Hannifin.............................. -
- 9,300 9,300 Roper Industries............................. -
82,150 - 82,150 Solutia Inc.................................. 2,356,678
- 4,000 4,000 SPX Corporation.............................. -
59,085 - 59,085 Tyco International Ltd....................... 3,722,355
- 5,200 5,200 U.S. Filter Corporation...................... -
------------
15,471,992
COMMUNICATIONS EQUIPMENT
- 7,600 7,600 Ascend Communications Inc. -
- 8,500 8,500 Aspect Telecommunications Corp. (a)......... -
- 8,300 8,300 Coherent Communications Systems Corp. (a)... -
- 6,300 6,300 Comverse Technology Incorporated (a)........ -
- 8,200 8,200 DSP Communications Incorporated (a)......... -
- 11,200 11,200 Ericsson L.M. Telephone Co. ADR.............. -
- 11,200 11,200 Powertel Incorporated (a)................... -
- 10,200 10,200 WorldCom Incorporated (a)................... -
------------
-
COMPUTER / SYSTEMS
113,862 7,400 121,262 Cisco Systems Inc. (a)...................... 10,482,420
47,090 - 47,090 Dell Computer Corporation (a)................ 4,370,541
65,045 - 65,045 General Instrument Corporation (a)........... 1,768,411
74,475 - 74,475 HBO & Company................................ 2,625,244
- 11,400 11,400 Intermedia Communications (a)............... -
------------
19,246,616
COMPUTER SOFTWARE / SERVICES
- 8,800 8,800 ABR Information Services Incorporated (a)... -
- 5,800 5,800 Adobe Systems Inc............................ -
- 10,700 10,700 Affiliated Computer Services (a)............ -
29,700 - 29,700 Amazon.com, Inc. (a)......................... 2,962,575
91,527 7,600 99,127 America Online Delaware Inc. (a)............ 9,701,862
7,035 - 7,035 Aspect Development, Inc. (a)................. 532,022
115,910 - 115,910 Aspen Technology, Inc. (a)................... 5,853,455
- 16,800 16,800 BMC Software Inc. (a)....................... -
161,765 16,600 178,365 Cadence Design Systems (a).................. 5,055,156
<CAPTION>
<S> <C> <C>
U.S.A. Waste Services (a).................... 557,938 557,938
Werner Enterprise Inc. ...................... 198,955 198,955
--------------------------
10,943,466 22,741,694 X
Agco Corp.................................... 152,163 152,163
Cable Design Technologies (a)............... 184,594 184,594
Danaher Corp................................. 432,913 432,913
Donaldson Company, Inc....................... 276,413 276,413
EVI Weatherford Corporation 185,625 185,625
Federal-Mogul Corporation.................... - 4,631,850
IDEX Corporation............................. 277,725 277,725
Kennametal Inc............................... 204,575 204,575
Littlelfuse Inc. (a)........................ 176,750 176,750
Monsanto Company............................. - 4,761,109
MSC Industrial Direct Company................ 336,300 336,300
Parker-Hannifin.............................. 264,969 264,969
Roper Industries............................. 242,963 242,963
Solutia Inc.................................. - 2,356,678
SPX Corporation.............................. 257,500 257,500
Tyco International Ltd....................... - 3,722,355
U.S. Filter Corporation...................... 145,925 145,925
--------------------------
3,138,415 18,610,407 X
Ascend Communications Inc. 376,675 376,675
Aspect Telecommunications Corp. (a)......... 232,688 232,688
Coherent Communications Systems Corp. (a)... 388,544 388,544
Comverse Technology Incorporated (a)........ 326,813 326,813
DSP Communications Incorporated (a)......... 112,750 112,750
Ericsson L.M. Telephone Co. ADR.............. 320,600 320,600
Powertel Incorporated (a)................... 207,200 207,200
WorldCom Incorporated (a)................... 494,063 494,063
--------------------------
2,459,333 2,459,333 X
Cisco Systems Inc. (a)...................... 681,263 11,163,683
Dell Computer Corporation (a)................ - 4,370,541
General Instrument Corporation (a)........... - 1,768,411
HBO & Company................................ - 2,625,244
Intermedia Communications (a)............... 478,088 478,088
--------------------------
1,159,351 20,405,967 X
ABR Information Services Incorporated (a)... 209,000 209,000
Adobe Systems Inc............................ 246,138 246,138
Affiliated Computer Services (a)............ 411,950 411,950
Amazon.com, Inc. (a)......................... - 2,962,575
America Online Delaware Inc. (a)............ 805,600 10,507,462
Aspect Development, Inc. (a)................. - 532,022
Aspen Technology, Inc. (a)................... - 5,853,455
BMC Software Inc. (a)....................... 872,550 872,550
Cadence Design Systems (a).................. 518,750 5,573,906
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- 8,700 8,700 Cambridge Technology Partners................ - 475,238 475,238
- 7,600 7,600 CBT Group PLC ADR (a)....................... - 406,600 406,600
- 8,200 8,200 Citrix Systems (a).......................... - 560,675 560,675
- 15,500 15,500 Compuware Corp. (a)......................... - 792,438 792,438
- 6,400 6,400 DST Systems Incorporated (a)................ - 358,400 358,400
- 9,000 9,000 Electronic Arts (a)......................... - 486,000 486,000
- 24,600 24,600 HBO & Co..................................... - 867,150 867,150
- 7,400 7,400 IDX Systems Corporation (a)................. - 340,863 340,863
57,145 7,500 64,645 Intuit (a).................................. 3,500,131 459,375 3,959,506
50,905 - 50,905 JDA Software Group, Inc. (a)................. 2,227,094 - 2,227,094
122,070 - 122,070 Microsoft Corporation (a).................... 13,229,336 - 13,229,336
- 13,287 13,287 Network Associates Incorporated (a)......... - 636,115 636,115
- 10,750 10,750 Oracle Corp. (a)............................ - 264,047 264,047
359,935 10,200 370,135 Parametric Technology Company (a)............ 9,763,237 276,675 10,039,912
58,170 12,400 70,570 People Soft Inc. (a)........................ 2,733,990 582,800 3,316,790
- 12,200 12,200 Saville Systems Ireland PLC.................. - 611,525 611,525
- 5,500 5,500 Shared Medical Systems Corp.................. - 403,906 403,906
- 10,500 10,500 Sterling Commerce Inc. (a).................. - 509,250 509,250
48 - 48 Structural Dynamics Research Corporation (a). 1,110 - 1,110
- 8,000 8,000 SunGard Data Systems Incorporated (a)....... - 307,000 307,000
- 11,300 11,300 Symantec Corp. (a).......................... - 295,213 295,213
- 4,800 4,800 Synopsys Inc. (a)........................... - 219,600 219,600
- 8,000 8,000 Visio Corporation (a)....................... - 382,000 382,000
41,917 - 41,917 Wind River Systems (a)....................... 1,503,772 - 1,503,772
-----------------------------------
57,063,740 12,298,858 69,362,598
COMPUTER/ELECTRONIC EQUIPMENT
- 9,940 9,940 Dionex Corporation (a)...................... - 262,168 262,168
- 8,000 8,000 Sanmina Corporation (a)..................... - 347,000 347,000
- 15,450 15,450 Symbol Technologies.......................... - 583,238 583,238
- 9,600 9,600 Tellabs (a)................................. - 687,600 687,600
- 4,600 4,600 Teradyne Inc. (a)........................... - 123,050 123,050
- 5,650 5,650 Thermo Electron Corporation.................. - 193,159 193,159
- 10,500 10,500 Vitesse Semiconductor - 324,188 324,188
-----------------------------------
- 2,520,403 2,520,403
CONSUMER CYCLICALS
- 10,700 10,700 Bed Bath & Beyond (a)....................... - 554,394 554,394
- 7,100 7,100 Gulfstream Aerospace Corporation (a)........ - 330,150 330,150
- 8,800 8,800 Harley-Davidson Inc.......................... - 341,000 341,000
- 5,000 5,000 Harman International - 192,500 192,500
- 14,000 14,000 Leggett & Platt Inc. - 350,000 350,000
- 6,400 6,400 Lennar Corp.................................. - 188,800 188,800
- 11,800 11,800 Lilly Industries Inc......................... - 255,175 255,175
- 6,900 6,900 LNR Property Corporation..................... - 176,813 176,813
- 5,600 5,600 National Health Investors.................... - 186,200 186,200
- 10,700 10,700 Oakwood Homes Corp........................... - 321,000 321,000
- 6,700 6,700 Rouse Company................................ - 210,631 210,631
- 9,500 9,500 Security Capital Pacific Trust............... - 213,750 213,750
- 9,600 9,600 Sherwin-Williams Co.......................... - 318,000 318,000
- 6,500 6,500 TCA Cable TV Inc. - 390,000 390,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- 9,000 9,000 Univision Communications - 335,250 335,250
- 12,300 12,300 Valspar...................................... - 487,388 487,388
- 15,000 15,000 Williams-Sonoma Inc. (a).................... - 477,188 477,188
-----------------------------------
- 5,328,239 5,328,239
CONSUMER STAPLES
53,660 - 53,660 Delta and Pine Land Company.................. 2,387,870 - 2,387,870
260,340 - 260,340 Raisio Group Plc. (a)........................ 4,731,684 - 4,731,684
-----------------------------------
7,119,554 - 7,119,554
CONSUMER/ DURABLE
- 6,100 6,100 American Standard Companies (a)............. - 272,594 272,594
CONSUMER/ NON-DURABLE
- 6,200 6,200 Alberto-Culver Company....................... - 179,800 179,800
- 7,500 7,500 Harcourt General............................. - 446,250 446,250
- 8,500 8,500 International Multifoods Corporation......... - 233,750 233,750
- 9,200 9,200 Jones Apparel Group Inc...................... - 336,375 336,375
- 9,447 9,447 Lancaster Colony Inc......................... - 357,805 357,805
- 9,525 9,525 Mattel Inc................................... - 403,027 403,027
- 8,300 8,300 Nautica Enterprises Inc. (a)................ - 222,544 222,544
- 8,800 8,800 Pioneer Hi-Bred International................ - 364,100 364,100
- 12,000 12,000 Quiksilver Incorporated (a)................. - 239,250 239,250
- 4,800 4,800 Sealed Air Corporation (a).................. - 176,400 176,400
- 5,753 5,753 Tootsie Roll Industries Inc.................. - 441,543 441,543
- 6,500 6,500 Unifi Inc.................................... - 222,625 222,625
- 6,600 6,600 Warnaco Group Inc............................ - 280,088 280,088
- 8,500 8,500 Westwood One Inc. (a)....................... - 214,359 214,359
- 9,600 9,600 Wolverine World Wide......................... - 208,200 208,200
-----------------------------------
- 4,326,116 4,326,116
ELECTRONICS / SEMICONDUCTORS
- 9,100 9,100 Altera Corporation (a)...................... - 269,019 269,019
- 10,500 10,500 Applied Materials Inc. - 309,750 309,750
27,989 10,800 38,789 Analog Devices (a).......................... 687,480 265,275 952,755
- 7,500 7,500 Gateway 2000 Incorporated (a)............... - 379,688 379,688
- 7,000 7,000 Hubbell Incorporated, Series B............... - 291,375 291,375
- 4,000 4,000 Lattice Semiconductor Co. - 113,625 113,625
- 8,200 8,200 Linear Technology Corp....................... - 494,563 494,563
66,845 18,200 85,045 Maxim Integrated Products Inc. (a).......... 2,118,151 576,713 2,694,864
- 6,400 6,400 Microchip Technology Inc. (a)............... - 167,200 167,200
- 11,726 11,726 Molex Inc CL A............................... - 274,095 274,095
123,140 - 123,140 Nokia Corporation, Class A, Sponsored ADR.... 8,935,346 - 8,935,346
- 7,300 7,300 Raychem Corp................................. - 215,806 215,806
- 8,700 8,700 SCI Systems Inc. (a)........................ - 327,338 327,338
- 7,100 7,100 SDL Incorporated (a)........................ - 169,513 169,513
- 7,700 7,700 Tyco International........................... - 485,100 485,100
- 7,500 7,500 Xilinx Inc. (a)............................. - 255,000 255,000
-----------------------------------
11,740,977 4,594,060 16,335,037
FINANCIAL SERVICES
- 13,300 13,300 ACE Limited.................................. - 518,700 518,700
- 7,700 7,700 Ambac Financial Group Inc.................... - 450,450 450,450
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
55,750 - 55,750 Associates First Capital Corporation, Class A 4,285,781 - 4,285,781
- 8,100 8,100 Bank of New York Co. Inc..................... - 491,569 491,569
- 8,500 8,500 Charter One Financial Securities - 286,344 286,344
- 11,100 11,100 City National Corp........................... - 410,006 410,006
- 9,100 9,100 Finova Group Inc............................. - 515,288 515,288
- 11,600 11,600 First American Corp., Tennessee.............. - 558,250 558,250
- 14,100 14,100 Franklin Resources Inc....................... - 761,400 761,400
58,335 - 58,335 Household International...................... 2,902,166 - 2,902,166
- 11,500 11,500 Investment Technology Group (a)............. - 316,250 316,250
- 7,200 7,200 JSB Financial Inc............................ - 421,650 421,650
- 5,100 5,100 Legg Mason Inc. - 293,569 293,569
- 4,868 4,868 Mercantile Bancorporation Inc................ - 245,226 245,226
- 7,900 7,900 Mercury General Corporation.................. - 508,069 508,069
- 6,400 6,400 MGIC Investment Corporation.................. - 365,200 365,200
- 7,400 7,400 Northern Trust Corporation................... - 564,250 564,250
- 4,500 4,500 Progressive Corporation...................... - 634,500 634,500
- 12,700 12,700 Protective Life Corporation.................. - 465,931 465,931
- 6,500 6,500 Providian Financial Corporation - 510,656 510,656
- 14,925 14,925 Raymond James Financial lnc.................. - 446,817 446,817
- 13,800 13,800 Schwab (Charles) Corp........................ - 448,500 448,500
- 14,000 14,000 Silicon Valley Bancshares (a)............... - 498,313 498,313
- 9,300 9,300 State Street Boston Corporation.............. - 646,350 646,350
- 9,900 9,900 SunAmerica Incorporated...................... - 568,631 568,631
- 10,000 10,000 TCF Financial................................ - 295,000 295,000
- 11,500 11,500 U.S. Bancorp................................. - 494,500 494,500
- 6,400 6,400 UICI (a).................................... - 174,400 174,400
-----------------------------------
7,187,947 11,889,819 19,077,766
HEALTH CARE PRODUCTS
- 5,100 5,100 Agouron Pharmaceuticals Incorporated (a).... - 154,594 154,594
82,330 - 82,330 ALZA Corporation (a)......................... 3,560,772 - 3,560,772
- 4,600 4,600 Amgen (a)................................... - 300,725 300,725
- 10,600 10,600 Arterial Vascular Engineering Inc. (a)...... - 378,950 378,950
- 7,000 7,000 Biochem Pharma Inc. (a)..................... - 185,500 185,500
- 6,400 6,400 Biogen Inc. (a)............................. - 313,600 313,600
- 4,500 4,500 Boston Scientific Corporation (a)........... - 322,313 322,313
- 6,050 6,050 Cardinal Health Inc.......................... - 567,188 567,188
35,275 - 35,275 Centocor, Inc. (a)........................... 1,278,719 - 1,278,719
- 175 175 Clinichen Development Inc. - 1,006 1,006
- 5,600 5,600 Elan PLC ADR (a)............................ - 360,150 360,150
83,350 - 83,350 Eli Lilly and Company (a).................... 5,506,309 - 5,506,309
- 5,800 5,800 Gilead Sciences Inc. (a).................... - 185,963 185,963
- 9,300 9,300 Guidant Corporation.......................... - 663,206 663,206
- 5,700 5,700 Guilford Pharmaceuticals Inc. (a)........... - 100,463 100,463
- 7,200 7,200 Henry Schein Incorporated.................... - 332,100 332,100
- 6,000 6,000 Human Genome Sciences Inc. (a).............. - 214,125 214,125
- 7,800 7,800 Incyte Pharmaceuticals Incorporated (a)..... - 266,175 266,175
- 5,800 5,800 Isis Pharmaceuticals (a).................... - 79,388 79,388
- 7,700 7,700 Life Technologies Inc........................ - 241,588 241,588
- 6,000 6,000 Medtronic Inc................................ - 382,500 382,500
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- 15,000 15,000 Millennium Pharmaceuticals Inc (a).......... - 211,875 211,875
75,104 11,000 86,104 Omnicare Inc................................. 2,863,340 419,375 3,282,715
46,725 - 46,725 Pfizer Inc. (a).............................. 5,078,423 - 5,078,423
- 9,900 9,900 Physio-Control International Corp. (a)...... - 260,494 260,494
- 5,700 5,700 Protein Design Labs Incorporated (a)........ - 137,334 137,334
43,400 - 43,400 Sofamor Danek Group, Inc. (a)................ 3,756,813 - 3,756,813
- 5,700 5,700 Sola International Inc. (a)................. - 186,319 186,319
- 8,900 8,900 Teleflex Inc................................. - 338,200 338,200
2,070 - 2,070 United States Surgical Corporation........... 94,444 - 94,444
208,175 - 208,175 Warner Lambert Company....................... 14,442,141 - 14,442,141
- 8,000 8,000 Watson Pharmaceuticals Incorporated (a)..... - 373,500 373,500
-----------------------------------
36,580,961 6,976,631 43,557,592
HMO/HOSPITAL MANAGEMENT
- 10,500 10,500 Concentra Managed Care Incorporated (a)..... - 273,000 273,000
- 6,100 6,100 Genesis Health Ventures (a)................. - 152,500 152,500
- 16,662 16,662 Health Management Association CL A (a)...... - 557,136 557,136
- 8,950 8,950 Healthcare & Retirement Corp. (a)........... - 352,966 352,966
- 14,300 14,300 HealthSouth Corp. (a)....................... - 381,631 381,631
- 9,400 9,400 Lincare Holdings Incorporated (a)........... - 395,388 395,388
- 11,500 11,500 Orthodontic Centers of America Inc (a)...... - 240,781 240,781
- 2,100 2,100 PacifiCare Health Systems (a)............... - 185,588 185,588
- 8,600 8,600 PhyCor Inc. (a)............................. - 142,438 142,438
- 12,150 12,150 Quorum Health Group Incorporated (a)........ - 321,975 321,975
- 8,915 8,915 Tenet Healthcare Corp. (a).................. - 278,594 278,594
- 18,279 18,279 Total Renal Care Holdings Incorporated (a).. - 630,626 630,626
- 6,100 6,100 United HealthCare Corp....................... - 387,350 387,350
- 7,800 7,800 Universal Health Services (a)............... - 455,325 455,325
-----------------------------------
- 4,755,298 4,755,298
MEDIA
- 9,000 9,000 360 Communications Company (a).............. - 288,000 288,000
- 12,200 12,200 Belo (A.H.) Corp............................. - 297,375 297,375
126,430 - 126,430 CBS Corporation (a).......................... 4,014,153 - 4,014,153
- 5,100 5,100 Centennial Cellular Corp. (a)............... - 190,294 190,294
- 3,600 3,600 Central Newspaper Inc........................ - 251,100 251,100
59,405 9,200 68,605 Chancellor Media Corporation (a)............ 2,949,830 456,838 3,406,668
- 9,300 9,300 Clear Channel Communications Inc. (a)....... - 1,014,863 1,014,863
- 9,800 9,800 Cox Communications (a)...................... - 474,688 474,688
- 6,400 6,400 Emmis Broadcasting Corp. (a)................ - 306,000 306,000
- 7,600 7,600 Jacor Communications Inc. (a)............... - 448,400 448,400
- 9,000 9,000 Meredith Corporation......................... - 422,438 422,438
- 27,600 27,600 Outdoor Systems.............................. - 772,800 772,800
328,421 - 328,421 TCI Ventures, Class A (a).................... 6,588,943 - 6,588,943
173,702 - 173,702 Time Warner Inc.............................. 14,840,665 - 14,840,665
- 3,900 3,900 U.S. Cellular Corp. (a)..................... - 119,925 119,925
7,295 - 7,295 United International Holdings, Inc. (a)...... 116,720 - 116,720
- 8,700 8,700 Valassis Communications (a)................. - 335,494 335,494
- 7,100 7,100 Vodafone Group PLC ADR....................... - 895,044 895,044
------------------------------------
28,510,311 6,273,259 34,783,570
OIL & GAS
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- 3,500 3,500 Cooper Cameron Corporation - 178,500 178,500
1,731,236 - 1,731,236 Ocean Rig ASA (a)...................... 1,287,668 1,287,668
- 4,500 4,500 Sonat Inc. - 173,813 173,813
- 6,000 6,000 Veritas DGC Inc. - 299,625 299,625
-------------------------------
1,287,668 651,938 1,939,606 X
OTHER TECHNOLOGY
- 8,500 8,500 BE Aerospace (a)...................... - 247,563 247,563
- 7,500 7,500 Cognex Corp. (a)...................... - 138,750 138,750
- 6,500 6,500 Diebold Incorporated................... - 187,688 187,688
- 13,200 13,200 EMC Corp-Mass (a)..................... - 591,525 591,525
- 5,500 5,500 First Data Corporation - 183,219 183,219
- 13,200 13,200 Sun Microsystems Inc. (a)............. - 573,375 573,375
-------------------------------
- 1,922,120 1,922,120 X
RESOURCES
- 11,600 11,600 AES Corp. (a)......................... - 609,725 609,725
- 6,800 6,800 Apache Corp............................ - 214,200 214,200
- 9,300 9,300 B J Services Co. (a).................. - 270,281 270,281
- 5,900 5,900 Barrett Resources Corporation Inc. (a) - 220,881 220,881
- 6,100 6,100 Camco International Inc................ - 475,038 475,038
- 6,600 6,600 Devon Energy Corporation............... - 230,588 230,588
- 11,900 11,900 Ecolab................................. - 368,900 368,900
- 6,700 6,700 Noble Affiliates....................... - 254,600 254,600
- 10,000 10,000 Noble Drilling Corporation............. - 240,625 240,625
- 4,600 4,600 Nuevo Energy Co. (a).................. - 147,775 147,775
- 8,000 8,000 Ocean Energy Incorporated (a)......... - 156,500 156,500
- 12,000 12,000 Pride International Inc. (a).......... - 203,250 203,250
- 12,000 12,000 Sigma-Aldrich Corporation.............. - 421,500 421,500
- 8,200 8,200 Smith International (a)............... - 285,463 285,463
- 17,200 17,200 Sybron International Corp. (a)........ - 434,300 434,300
- 11,100 11,100 Tosco Corp............................. - 326,063 326,063
- 7,500 7,500 Waters Corporation (a)................ - 442,031 442,031
-------------------------------
- 5,301,720 5,301,720 X
RETAIL SALES
- 12,900 12,900 Autozone Inc. - 411,994 411,994
- 9,000 9,000 BJS Wholesale Club Inc. - 365,625 365,625
- 9,400 9,400 CVS Corporation - 366,013 366,013
- 12,100 12,100 Borders Group Incorporated (a)........ - 447,700 447,700
- 4,000 4,000 CDW Computer Centers Inc............... - 200,000 200,000
- 8,700 8,700 Circuit City Stores Inc................ - 407,813 407,813
- 9,500 9,500 CompUSA Inc. (a)...................... - 171,594 171,594
- 7,600 7,600 Consolidated Stores (a)............... - 275,500 275,500
51,335 - 51,335 Costco Companies, Inc. (a)............. 3,237,313 - 3,237,313
- 22,891 22,891 Dollar General Corp.................... - 905,625 905,625
- 8,030 8,030 Fred Meyer Incorporated (a)........... - 341,275 341,275
- 10,800 10,800 Host Marriott (a)..................... - 192,375 192,375
- 9,000 9,000 Kohls Corporation - 466,875 466,875
- 10,800 10,800 Land's End Inc. (a)................... - 341,550 341,550
- 8,700 8,700 Mirage Resorts (a)................... - 185,419 185,419
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- 9,000 9,000 Office Depot Inc. - 284,063 284,063
- 14,300 14,300 OfficeMax Incorporated (a)........... - 235,950 235,950
- 6,800 6,800 Outback Steakhouse Inc. (a).......... - 265,200 265,200
- 9,600 9,600 Richfood Holdings..................... - 198,600 198,600
- 13,400 13,400 Safeway Inc. (a)..................... - 545,213 545,213
- 6,200 6,200 Starbucks Corp. (a).................. - 331,313 331,313
- 13,650 13,650 The Men's Wearhouse Inc. (a)......... - 450,450 450,450
- 9,100 9,100 Tiffany & Company..................... - 436,800 436,800
- 19,600 19,600 TJX Companies......................... - 472,850 472,850
- 10,200 10,200 Viking Office Products (a)........... - 320,025 320,025
- 10,500 10,500 Zale Corp. (a)....................... - 334,031 334,031
----------------------------------
3,237,313 8,953,853 12,191,166 X
TECHNOLOGY
- 6,900 6,900 McLeod USA Inc. - 268,238 268,238
- 9,000 9,000 Nextel Communication Inc. - 223,875 223,875
25,675 - 25,675 Orbital Sciences Corporation (a)...... 959,603 - 959,603
80,570 - 80,570 Pittway Corporation, Class A.......... 5,952,109 - 5,952,109
- 5,000 5,000 Sofamor Danex Group - 432,813 432,813
114,710 - 114,710 UNUM Corporation...................... 6,366,405 - 6,366,405
- 8,000 8,000 VISX Inc. - 476,000 476,000
----------------------------------
13,278,117 1,400,926 14,679,043 X
UTILITIES /
TELECOMMUNICATIONS
77,790 - 77,790 At Home Corporation (a)............... 3,680,439 - 3,680,439
335,745 - 335,745 Comcast Corporation, Class A.......... 13,629,149 - 13,629,149
77,665 - 77,665 Cox Communications, Inc., Class A (a). 3,761,898 - 3,761,898
60,920 - 60,920 Liberty Media Group (a)............... 2,364,458 - 2,364,458
266,790 - 266,790 MediaOne Group Inc. (a)............... 11,722,086 - 11,722,086
337,589 - 337,589 Tele-Communications, Inc., Class A (a) 12,976,080 - 12,976,080
362,722 - 362,722 Telecom Italia SPA.................... 2,671,292 - 2,671,292
1 - 1 US West, Inc.......................... 23 - 23
114,510 - 114,510 Western Wireless Corporation (a)...... 2,283,043 - 2,283,043
----------------------------------
53,088,468 - 53,088,468 X
MISCELLANEOUS
- 13,000 13,000 Allied Waste Industries Inc. - 312,000 312,000
- 8,300 8,300 ASA Holding Inc. - 411,857 411,857
----------------------------------
- 723,857 723,857 X
Total Common Stocks 279,047,749 96,209,006 375,256,755
PRINCIPAL AMOUNT
REPURCHASE
AGREEMENT - 0.5%
- 1,998,343 1,998,343 State Street Bank & Trust Co. Master
Repurchase Agreement, 4.25%, dated
6/30/98 due 7/1/98, Collateralized
by U.S. Government Securities - 1,998,343 1,998,343
TOTAL INVESTMENTS - 100.1% (COST
$286,195,572) 279,047,749 98,207,349 377,255,098
OTHER ASSETS AND LIABILITIES,
NET - (0.1%) 506,420 (780,543) (274,123)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL NET ASSETS - 100.0% 279,554,169 97,426,806 376,980,975
(a) Non-Income
producing security.
212,485,953.00
73,709,619.00
286,195,572.00
</TABLE>
<PAGE>
WM GROUP U.S. GOVERNMENT SECURITIES FUND & GRIFFIN U.S. GOVERNMENT INCOME FUND
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination
The pro forma combined financial statements reflect the combined financial
position of the WM Group U.S. Government Securities Fund and the Griffin
U.S. Government Income Fund at April 30, 1998 and the pro forma combined
results of operations for the year ended December 30, 1997 and the four
month period ended April 30, 1998 as though the reorganization had occurred
on January 1, 1997.
The pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of how
the pro forma combined financial statements would have appeared had the
reorganization actually occurred.
The Pro Forma Combined Portfolio of Investments, Statement of Assets and
Liabilities, and the Statement of Operations should be read in conjunction
with the historical financial statements of the funds incorporated by
reference in the Statement of Additional Information.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the Griffin U.S. Government Income Fund in
exchange for shares of WM Group U.S. Government Securities Fund. Under
generally accepted accounting principles, the historical cost of investment
securities will be carried forward to the surviving entity.
The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the proposed Agreement and Plan of
Reorganization.
2. Pro Forma Combined Portfolio of Investments
Securities held by the two funds have been combined in the accompanying
Combined Portfolio of Investments. Securities are stated at amortized cost
which approximates fair value. Historical cost amounts represent the
combined cost basis of the securities.
3. Pro Forma Statements of Assets and Liabilities
Shares outstanding have been adjusted to reflect the conversion of Griffin
shares into WM Group shares based upon the net asset value of the WM Group
shares at April 30, 1998.
4. Pro Forma Statements of Operations
<PAGE>
WM TRUST II
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
---------------
Incorporated by reference to Post-Effective Amendment No. 28 to the
Registrant's Registration Statement Form N-1A (filed on March 27, 1998)
(Registration Nos. 033-27489 and 811-05775).
Item 16. Exhibits
--------
<TABLE>
<C> <S>
1 (a) Master Trust Agreement, dated February 22, 1989.(1)
1 (b)-1 Amendment No. 1 to the Trust's Master Trust Agreement, dated May 10, 1989.(1)
1 (b)-2 Amendment No. 2 to the Trust's Master Trust Agreement, dated May 22, 1989.(1)
1 (b)-3 Amendment No. 3 to the Trust's Master Trust Agreement dated May 24, 1989.(1)
1 (b)-4 Amendment No. 4 to the Trust's Master Trust Agreement dated May 7, 1990.(1)
1 (b)-5 Amendment No. 5 to the Trust's Master Trust Agreement dated December 4, 1991.(1)
1 (b)-6 Amendment No. 6 to the Trust's Master Trust Agreement dated January 30, 1992.(1)
1 (b)-7 Amendment No. 7 to the Trust's Master Trust Agreement dated September 10, 1992.(1)
1 (b)-8 Amendment No. 8 to the Trust's Master Trust Agreement dated September 22,
1993.(1)
1 (b)-9 Amendment No. 9 to the Trust's Master Trust Agreement dated March 13, 1994.(1)
1 (b)-10 Amendment No. 10 to the Trust's Master Trust Agreement dated January 20, 1995.(1)
1 (b)-11 Amendment No. 11 to the Trust's Master Trust Agreement dated July 19, 1996.(1)
1 (b)-12 Amendment No. 12 to the Trust's Agreement and Declaration of Trust, dated March
20, 1998.(2)
2 By-Laws of the Trust.(1)
</TABLE>
1
<PAGE>
<TABLE>
<C> <S>
3 Not Applicable.
4 Form of Agreement and Plan of Reorganization is filed herewith as Appendix A to the
Prospectus/Proxy Statement set forth as Part A hereof.
5 Article V, Shareholders' Voting Powers and Meetings, of the Agreement and
Declaration of Trust, as amended and Article 11, Shareholders' Voting Powers and
Meetings, of the By-laws.(1)
6 (a)-1 Investment Management Agreement, dated January 30, 1998, between the Trust and
WM Advisors, Inc. ("WM Advisors"), with respect to the Short Term High Quality
Bond, California Money and Target Maturity 2002 Funds.(2)
6 (a)-2 Investment Management Agreement, dated March 20, 1998, between the Trust and
WM Advisors, with respect to the Growth, Emerging Growth, International Growth,
California Municipal, California Insured Intermediate Municipal and Florida Insured
Municipal Funds.(2)
6 (b)-1 Investment Sub-Advisory Agreement between WM Advisors and Janus Capital
Corporation, dated March 20, 1998 with respect to the Growth Fund.(2)
6 (b)-2 Investment Sub-Advisory Agreement, dated March 20, 1998 between the Trust and
Van Kampen American Capital Management, Inc., with respect to the California
Municipal Fund, Florida Insured Municipal Fund and California Insured Intermediate
Municipal Fund.(2)
7 (a) Distribution Agreement, dated March 20, 1998, between the Trust and WM Funds
Distributor, Inc.(2)
7 (b) Transfer Agent Contract, dated March 20, 1998, between the Trust, WM Strategic
Asset Management Portfolios, and WM Prime Income Funds and WM Shareholder
Services, Inc.(2)
8 Not Applicable.
9 (a)-1 Custody Agreement, dated as of March 20, 1998, between the Trust and Boston Safe
Deposit & Trust Company.(2)
10 (a) Distribution Plan for Class A shares dated March 24, 1998.(3)
10 (b) Distribution Plan for Class B shares dated March 24, 1998.(2)
11 Opinion and Consent of Counsel as to legality of securities being registered is
filed herewith.
</TABLE>
-2-
<PAGE>
<TABLE>
<C> <S>
12 Opinion of counsel as to tax matters to be filed by amendment.
13 Not Applicable.
14 Consent of Independent Auditor is filed herewith.
15 Not Applicable.
16 Powers of Attorney are filed herewith.
</TABLE>
_______
(1) Incorporated by reference to Post-Effective Amendment No. 26 to the
Registrant's Registration Statement on Form N-1A (File Nos. 033-27489 and
811-05775), filed on August 28, 1997.
(2) Incorporated by reference to Post-Effective Amendment No. 28 to the
Registrant's Registration Statement on Form N-1A (File Nos. 033-27489 and
811-05775), filed on March 27, 1998.
(3) Incorporated by reference to Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on Form N-1A (File Nos. 033-27489 and
811-05775), filed on October 30, 1996.
Item 17. Undertakings
------------
(1) The registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus
which is a part of this registration statement by any person
or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for
by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable
form.
(2) The registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining
any liability under the Securities Act of 1933, each post-
effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file, by post-
effective amendment, an opinion of counsel or a copy of an
Internal Revenue Service ruling supporting the tax
consequences of the proposed mergers described in this
Registration Statement within a reasonable time after receipt
of such opinion or ruling.
-3-
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant, in the City of Seattle and State of
Washington on the 30th day of October, 1998.
WM TRUST II
/s/ William G. Papesh
By:____________________________________
William G. Papesh
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title(s) Date
--------- ----- ----
/s/ William G. Papesh President and October 30, 1998
- ------------------------ Trustee
William G. Papesh
/s/ William G. Papesh Vice President and October 30, 1998
- ------------------------ Treasurer
Monte D. Calvin
/s/ David E. Anderson* Trustee October 30, 1998
- ------------------------
David E. Anderson
/s/ Wayne L. Attwood* Trustee October 30, 1998
- ------------------------
Wayne L. Attwood, M.D.
/s/ Arthur H. Bernstein, Esq.* Trustee October 30, 1998
- ------------------------------
Arthur H. Bernstein
/s/ Kristianne Blake* Trustee October 30, 1998
- ------------------------
Kristianne Blake
/s/ Edmond R. Davis* Trustee October 30, 1998
- ---------------------
Edmond R. Davis
-4-
<PAGE>
Trustee October ___, 1998
- ----------------------
John W. English
/s/ Anne V. Farrell* Trustee October 30, 1998
- ----------------------
Anne V. Farrell
/s/ Michael K. Murphy* Trustee October 30, 1998
- ----------------------
Michael K. Murphy
/s/ Daniel L. Pavelich* Trustee October 30, 1998
- -----------------------
Daniel L. Pavelich
/s/ Alfred E. Osborne, Jr. Ph.D.* Trustee October 30, 1998
- ---------------------------------
Alfred E. Osborne, Jr. Ph.D.
Trustee October ___, 1998
- -----------------------
Jay Rockey
/s/ Richard C. Yancey* Trustee October 30, 1998
- -----------------------
Richard C. Yancey
*By: /s/ Monte D. Calvin
---------------------------------
Monte D. Calvin
Attorney-in-Fact
-5-
<PAGE>
[ROPES & GRAY LETTERHEAD APPEARS HERE]
Exhibit 11
October 30, 1998
WM Trust II (formerly, The GW Investment Funds)
601 West Main Avenue
Spokane, Washington 99201
Ladies and Gentlemen:
You have informed us that you propose to register under the Securities Act
of 1933, as amended (the "Act"), on Form N-14 and offer and sell shares of
beneficial interest, without par value, of your Short-Term High Quality Bond
Fund, California Municipal Fund and Growth Fund (the "Shares"), at not less than
net asset value.
We have examined an executed copy of your Master Trust Agreement dated
February 22, 1989, as amended (the "Master Trust Agreement"), and certified
copies of resolutions adopted by your trustees to authorize the issue and
exchange of Shares for the assets of certain series of The Griffin Funds, Inc.
We have further examined a copy of your By-Laws and such other documents and
records as we have deemed necessary for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that upon receipt of the
authorized consideration therefor in an amount not less than the applicable net
asset value, the Shares so issued will be validly issued, fully paid and
nonassessable by the Trust.
WM Trust II (the "Trust") is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders could,
under certain circumstances, be held personally liable for the obligations of
the Trust. However, the Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
the Trust or its trustees. The Declaration of Trust provides for
indemnification out of the property of each series of the Trust (the "Series")
for all loss and expense of any shareholder of the Series held personally liable
solely by reason of his or her being or having been such a shareholder. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Series itself would be unable
to meet its obligations.
<PAGE>
WM Trust II -2- October 30, 1998
We understand that this opinion is to be used in connection with the
registration of an indefinite number of shares for offering and sale pursuant to
the Act. We consent to the filing of this opinion with and as part of your
Registration Statement on Form N-14 relating to such offering and sale.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE>
Exhibit 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus/Proxy
Statement constituting part of this Registration Statement on Form N-14 (the
"Registration Statement") of our report dated August 14, 1998, relating to the
financial statements and financial highlights appearing in the June 30, 1998
Annual Report to Shareholders of WM Short Term High Quality Bond Fund, WM
California Municipal Fund and WM Growth Fund, each a series of WM Trust II
(formerly known as Sierra Trust Funds), collectively the "Funds," which
financial statements and financial highlights are also incorporated by reference
into the Prospectus/Proxy Statement and included in the Registration Statement.
We also consent to the incorporation by reference in the Prospectus and
Statement of Additional Information of the Funds dated March 23, 1998, of our
report dated August 12, 1997, relating to the financial statements and financial
highlights appearing in the June 30, 1997 Annual Report to Shareholders of the
Funds, which Prospectus and Statement of Information are also included and
incorporated by reference in the Registration Statement. We also consent to the
incorporation by reference in the Prospectus and Statement of Additional
Information of the Funds dated November 1, 1998, of our report dated August 14,
1998, relating to the financial statements and financial highlights appearing in
the June 30, 1998 Annual Report to Shareholders of the Funds, which Prospectus
and Statement of Information are also included and incorporated by reference in
the Registration Statement. We also consent to the references to us under the
headings "Financial Highlights" in the Prospectuses dated March 23, 1998 and
November 1, 1998 for the Funds and under the headings "Independent Accountants
and Financial Statements" in the Statements of Additional Information dated
March 23, 1998 and November 1, 1998 for the Funds.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 30, 1998
<PAGE>
Exhibit 14(a)
-------------
CONSENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
THE GRIFFIN FUNDS, INC.
We consent to use of our report dated November 7, 1997, on the financial
statements and Financial highlights of the Griffin Money Market Fund, Griffin
Tax-Free Money Market Fund, Griffin Short-Term Bond Fund, Griffin U.S.
Government Income Fund, Griffin Bond Fund, Griffin Municipal Bond Fund, Griffin
California Tax-Free Fund, Griffin Growth & Income Fund, and the Griffin Growth
Fund, constituting The Griffin Funds, Inc. as of September 30, 1997 and for the
periods indicated therein, which has been incorporated by reference into the
Registration Statements on Form N-14 filed by WM Trust I and WM Trust II.
We also consent to the reference to our firm under the heading "Financial
Highlights" in the Griffin Funds Prospectus dated January 31, 1998 and under the
headings "Independent Auditors" and "Financial Statements" in the Griffin Funds
Statement of Additional Information dated January 31, 1998 which are also
incorporated by reference into the Registration Statements on Form N-14 filed by
WM Trust I and WM Trust II.
KPMG Peat Marwick LLP
Los Angeles, California
October 30, 1998
<PAGE>
Exhibit 16
WM TRUST I
WM TRUST II
POWER OF ATTORNEY
-----------------
Each of the undersigned does hereby constitute and appoint Monte D.
Calvin, Sandra A. Cavanaugh, William G. Papesh and John T. West, and each of
them acting alone, as his/her true and lawful attorney and agent, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorney and agent may deem necessary or
advisable or which may be required to enable each of WM Trust I and WM Trust II
(collectively, the "Registrants") to comply with the Securities Act of 1933, as
amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the
"1940 Act"), and any rules, regulations or requirements of the Securities and
Exchange Commission in respect thereof, in connection with each Registrant's
Registration Statement(s) on Form N-14 pursuant to the 1933 Act and/or the 1940
Act, together with any and all amendments thereto, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a trustee of each
Registrant each such Registration Statement and any and all such amendments
filed with the Securities and Exchange Commission under the 1933 Act and/or the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney and agent
shall do or cause to be done by virtue hereof.
/s/ David E. Anderson /s/ Wayne L. Attwood, M.D.
- ------------------------------- ---------------------------------
David E. Anderson Wayne L. Attwood, M.D.
/s/ Arthur H. Bernstein, Esq. /s/ Kristianne Blake
- ------------------------------- ---------------------------------
Arthur H. Bernstein, Esq. Kristianne Blake
/s/ Edmond R. Davis, Esq.
- ------------------------------- ----------------------------------
Edmond R. Davis, Esq. John W. English
/s/ Anne V. Farrell /s/ Michael K. Murphy
- ------------------------------- ------------------------------------
Anne V. Farrell Michael K. Murphy
/s/ Alfred E. Osborne, Jr. Ph.D /s/ William G. Papesh
- ------------------------------- --------------------------------------
Alfred E. Osborne, Jr. Ph.D William G. Papesh
/s/ Daniel L. Pavelich
- ------------------------------- --------------------------------------
Daniel L. Pavelich Jay Rockey
/s/ Richard C. Yancey
- -------------------------------
Richard C. Yancey
Date: September 22, 1998
