WM VARIABLE TRUST, 485BPOS, 2000-05-01

WM VARIABLE TRUST
485BPOS, 2000-05-01

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<PAGE> 1

As filed with the Securities and Exchange Commission on May 1, 2000

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Securities Act of 1933 File #033-57732
Investment Company Act of 1940 File #811-07462
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X

Post-Effective Amendment No. 19

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 20
WM Variable Trust

(Exact name of Registrant as specified in Charter)

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

(Address of principal executive offices)

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

John T. West
1201 Third Avenue, 22nd Floor, Seattle, WA 98101
(Name and address of agent for service)

With a copy to:

Joseph B. Kittredge, Esq.
Ropes & Gray
One International Place
Boston, MA 02110
<PAGE> 2
It is proposed that this filing will become effective:

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

X on May 1, 2000 pursuant to paragraph (b) of Rule 485

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

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

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

on (date) pursuant to paragraph (a)(ii) of Rule 485

this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE> 3

WM VARIABLE TRUST
Prospectus
MAY 1, 2000
- --------------------------------------------------------------------------------

PORTFOLIOS

+ Strategic Growth Portfolio

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

+ Conservative Growth Portfolio

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

+ Balanced Portfolio

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

+ Flexible Income Portfolio

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

+ Income Portfolio

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

EQUITY FUNDS

+ Bond & Stock Fund
- -------------------------------------------------------
+ Growth & Income Fund
- -------------------------------------------------------
+ Growth Fund of the Northwest
- -------------------------------------------------------
+ Growth Fund
- -------------------------------------------------------
+ Mid Cap Stock Fund
- -------------------------------------------------------
+ Small Cap Stock Fund
- -------------------------------------------------------
+ International Growth Fund
- -------------------------------------------------------

FIXED-INCOME FUNDS

+ Short Term Income Fund

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

+ U.S. Government Securities Fund

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

+ Income Fund

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

+ Money Market Fund

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

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

Effective May 1, 2000, the names of the following funds have changed: Short Term
High Quality Bond Fund has changed to Short Term Income Fund, Northwest Fund has
changed to Growth Fund of the Northwest, and Emerging Growth Fund has changed to
Small Cap Stock Fund.

This Prospectus describes the Funds and Portfolios that are available as
underlying investments through your variable annuity contract. For information
about your variable annuity contract, including

information about insurance-related expenses, see the prospectus for your
variable

annuity contract, which accompanies this Prospectus.

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a crime.
<PAGE> 4

WM VARIABLE TRUST

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Risk/Return Summary 2
Strategic Growth Portfolio 3
Conservative Growth Portfolio 4
Balanced Portfolio 5
Flexible Income Portfolio 6
Income Portfolio 7
Bond & Stock Fund 8
Growth & Income Fund 9
Growth Fund of the Northwest 10
Growth Fund 11
Mid Cap Stock Fund 12
Small Cap Stock Fund 13
International Growth Fund 14
Short Term Income Fund 15
U.S. Government Securities Fund 16
Income Fund 17
Money Market Fund 18
Summary of Principal Risks 19
Description of the Portfolios and Funds 23
Portfolios 23
Equity Funds 24
Fixed-Income Funds 25
Common Investment Practices 27
How Can I Invest in the Portfolios and Funds? 34
Dividends, Distributions and Taxes 34
Organization 36
Financial Highlights 39
Appendix A 54
</TABLE>

<PAGE> 5

RISK/RETURN SUMMARY

WM Variable Trust provides a broad range of investment choices, including asset
allocation strategies available through the Strategic Growth, Conservative
Growth, Balanced, Flexible Income and Income Portfolios (the "Portfolios"). This
summary identifies the investment objective, principal investment strategies,
and principal risks of each Fund and Portfolio. The principal investment
strategies contained in this summary are not the only investment strategies
available to the Funds and Portfolios, and some of the principal investment
strategies may not be available at any given time. For a discussion of
additional investment strategies available to the Funds and Portfolios, please
see the Statement of Additional Information (the "SAI").

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

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

Below the description of each Fund or Portfolio is a bar chart showing how the
investment returns of its shares have varied in the years since the Fund or
Portfolio began. The bar chart is intended to provide some indication of the
volatility of the Fund's or Portfolio's returns. The table following each bar
chart shows how average annual total returns of the Fund or Portfolio compare to
returns of a broad-based securities market index for the past one and five years
and for the life of the Fund or Portfolio. Performance shown does not reflect
any insurance-related charges or expenses. If insurance-related charges or
expenses had been included, the performance shown would have been lower. PAST
PERFORMANCE IS NOT NECESSARILY AN INDICATION OF FUTURE PERFORMANCE.

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

2
<PAGE> 6

STRATEGIC GROWTH portfolio

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

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

The Portfolio may invest up to 25% of its assets in each of the Money Market or
Short Term Income Funds. It may also invest up to 50% of its assets in each of
the Growth & Income, Growth, Mid Cap Stock, Small Cap Stock or International
Growth Funds or the Growth Fund of the Northwest. The Portfolio may also invest
up to 25% of its assets in the WM High Yield Fund (see page 23).

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

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

YEARLY performance*
[Strategic Growth Portfolio Bar Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1998 26.19
1999 47.95
</TABLE>

During the periods shown above, the highest quarterly return was 25.82% (for the
quarter ended 12/31/99), and the lowest was -11.32% (for the quarter ended
9/30/98). Performance of an investment in the Portfolio through a variable
annuity contract will be lower than that shown because the performance shown
does not reflect insurance-related charges or expenses. See the accompanying
annuity contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Inception
(for periods ended December 31, 1999) One Year (6/3/97)
<S> <C> <C>
PORTFOLIO SHARES 47.95% 30.75%
STANDARD & POOR'S 500 INDEX** 21.04% 25.41%
RUSSELL 3000 INDEX*** 20.90% 24.10%
CAPITAL MARKET BENCHMARK**** 21.04% 27.00%
</TABLE>

* The Portfolio's performance through December 31, 1999 has benefitted from
the agreement of WM Advisors and its affiliates to limit the Portfolio's
expenses.

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

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

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

3
<PAGE> 7

CONSERVATIVE GROWTH portfolio

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

The Portfolio may invest up to 30% of its assets in each of the Money Market,
Short Term Income, U.S. Government Securities or Income Funds. It may also
invest up to 40% of its assets in each of the Growth & Income, Growth, Mid Cap
Stock, Small Cap Stock or International Growth Funds or the Growth Fund of the
Northwest. The Portfolio may also invest up to 40% of its assets in the WM High
Yield Fund (see page 23).

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

YEARLY performance*
[Conservative Growth Portfolio Bar Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1998 19.91
1999 39.36
</TABLE>

During the periods shown above, the highest quarterly return was 21.54% (for the
quarter ended 12/31/99), and the lowest was -11.25% (for the quarter ended
9/30/98). Performance of an investment in the Portfolio through a variable
annuity contract will be lower than that shown because the performance shown
does not reflect insurance-related charges or expenses. See the accompanying
annuity contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past One Since Inception
(for periods ended December 31, 1999) Year (6/3/97)
<S> <C> <C>
PORTFOLIO SHARES 39.36% 24.29%
RUSSELL 3000 INDEX** 20.90% 24.10%
CAPITAL MARKET BENCHMARK*** 16.46% 15.21%
</TABLE>

* The Portfolio's performance through December 31, 1999 has benefitted from
the agreement of WM Advisors and its affiliates to limit the Portfolio's
expenses.

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

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

4
<PAGE> 8

BALANCED portfolio

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

PRINCIPAL INVESTMENT STRATEGIES AND RISKS All of the Portfolios allocate their
investments among certain of the Funds to achieve their objectives. This
Portfolio invests between 30% and 70% of its net assets in a combination of the
Short Term Income, U.S. Government Securities and Income Funds and the WM High
Yield Fund, and between 30% and 70% of its net assets in the Equity Funds.

The Portfolio may invest up to 40% of its assets in each of the Short Term
Income, U.S. Government Securities or Income Funds. It may also invest up to 30%
of its assets in each of the Growth & Income, Growth, Small Cap Stock, Mid Cap
Stock and International Growth Funds and the Growth Fund of the Northwest. The
Portfolio may also invest up to 30% of its assets in the WM High Yield Fund (see
page 23).

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

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

YEARLY performance*
[Balanced Portfolio Bar Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1998 17.18
1999 27.71
</TABLE>

During the periods shown above, the highest quarterly return was 15.37% (for the
quarter ended 12/31/99), and the lowest was -8.02% (for the quarter ended
9/30/98). Performance of an investment in the Portfolio through a variable
annuity contract will be lower than that shown because the performance shown
does not reflect insurance-related charges or expenses. See the accompanying
annuity contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past One Since Inception
(for periods ended December 31, 1999) Year (6/3/97)
<S> <C> <C>
PORTFOLIO SHARES 27.71% 19.00%
LEHMAN BROTHERS AGGREGATE BOND INDEX** -0.82% 5.90%
RUSSELL 3000 INDEX*** 20.90% 24.10%
CAPITAL MARKET BENCHMARK**** 9.35% 10.01%
</TABLE>

* The Portfolio's performance through December 31, 1999 has benefitted from
the agreement of WM Advisors and its affiliates to limit the Portfolio's
expenses.

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

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

5
<PAGE> 9

FLEXIBLE INCOME portfolio

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

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

The Portfolio may invest up to 40% of its assets in each of the Money Market,
Short Term Income, U.S. Government Securities or Income Funds. It may also
invest up to 30% of its assets in each of the Growth & Income, Growth, Mid Cap
Stock and Small Cap Stock Funds and the Growth Fund of the Northwest. The
Portfolio may also invest up to 30% of its assets in the WM High Yield Fund (see
page 23).

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

YEARLY performance*
[Flexible Income Portfolio Bar Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1998 11.75
1999 8.58
</TABLE>

During the periods shown above, the highest quarterly return was 6.14% (for the
quarter ended 12/31/98), and the lowest was -0.92% (for the quarter ended
9/30/98). Performance of an investment in the Portfolio through a variable
annuity contract will be lower than that shown because the performance shown
does not reflect insurance-related charges or expenses. See the accompanying
annuity contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Inception
(for periods ended December 31, 1999) One Year (9/8/97)
<S> <C> <C>
PORTFOLIO SHARES 8.58% 9.81%
LEHMAN BROTHERS AGGREGATE BOND INDEX** -0.82% 5.23%
CAPITAL MARKET BENCHMARK*** 4.99% 7.19%
</TABLE>

* The Portfolio's performance through December 31, 1999 has benefitted from
the agreement of WM Advisors and its affiliates to limit the Portfolio's
expenses.

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

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

6
<PAGE> 10

INCOME portfolio

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

PRINCIPAL INVESTMENT STRATEGIES AND RISKS All of the Portfolios allocate their
assets among certain of the Funds to achieve their objectives. This Portfolio
generally invests exclusively in the Short Term Income, U.S. Government
Securities and Income Funds and the WM High Yield Fund.

The Portfolio may invest up to 50% of its assets in each of the Money Market,
Short Term Income and U.S. Government Securities Funds. It may
also invest up to 40% of its assets in the Income Fund and 30% of its assets in
the WM High Yield Fund (see page 23).

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

YEARLY performance*
[Income Portfolio Bar Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1999 1.88
</TABLE>

During the period shown above, the highest quarterly return was 0.92% (for the
quarter ended 9/30/99), and the lowest was -0.22% (for the quarter ended
3/31/99). Performance of an investment in the Portfolio through a variable
annuity contract will be lower than that shown because the performance shown
does not reflect insurance-related charges or expenses. See the accompanying
annuity contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Inception
(for periods ended December 31, 1999) One Year (4/23/98)
<S> <C> <C>
PORTFOLIO SHARES 1.88% 3.61%
LEHMAN BROTHERS AGGREGATE BOND INDEX** -0.82% 6.00%
CAPITAL MARKET BENCHMARK*** 2.81% 4.27%
</TABLE>

* The Portfolio's performance through December 31, 1999 has benefitted from
the agreement of WM Advisors and its affiliates to limit the Portfolio's
expenses.

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

7
<PAGE> 11

BOND & STOCK fund

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

PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund invests primarily in common
stocks, preferred stocks, bonds and convertible securities. At least 25% of the
Fund's assets are generally invested in FIXED-INCOME SECURITIES. The Fund's
investments may include U.S. GOVERNMENT SECURITIES, AMERICAN DEPOSITORY RECEIPTS
(ADRS) AND EUROPEAN DEPOSITORY RECEIPTS (EDRS), MORTGAGE-BACKED SECURITIES
(including collateralized mortgage obligations), REPURCHASE AGREEMENTS and REAL
ESTATE INVESTMENT TRUSTS (REITS).

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance*
[Income Fund Bar Chart]

During the period shown above, the highest quarterly return was 4.58% (for the
quarter ended 12/31/99), and the lowest was -5.90% (for the quarter ended
9/30/99). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Inception
(for periods ended December 31, 1999) One Year (4/28/98)
<S> <C> <C>
FUND SHARES 2.49% 3.29%
STANDARD & POORS 500 INDEX** 21.04% 19.80%
LEHMAN BROTHERS GOV/CORP BOND INDEX*** -2.15% 2.96%
</TABLE>

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

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

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

8
<PAGE> 12

GROWTH & INCOME fund

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance
[Growth & Income Fund Annual Return Bar Chart]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
'1995' 32.41
'1996' 21.81
'1997' 28.50
'1998' 18.98
</TABLE>

During the periods shown above, the highest quarterly return was 21.74% (for the
quarter ended 12/31/98), and the lowest was -13.74% (for the quarter ended
9/30/98). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Since
Average Annual Total Returns Past Past Inception
(for periods ended December 31, 1999) One Year Five Years (1/12/94)
<S> <C> <C> <C>
FUND SHARES 18.11% 23.84% 19.28%
STANDARD & POOR'S 500 INDEX* 21.04% 28.54% 28.54%
</TABLE>

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

9
<PAGE> 13

GROWTH FUND OF THE NORTHWEST

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

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance*
[Income Fund Bar Chart]

During the periods shown above, the highest quarterly return was 22.87% (for the
quarter ended 12/31/99), and the lowest was -2.76% (for the quarter ended
9/30/99). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Since Inception
(for periods ended December 31, 1999) One Year (4/28/98)
<S> <C> <C>
FUND SHARES 40.37% 29.15%
STANDARD & POORS 500 INDEX** 21.04% 19.80%
</TABLE>

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

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

10
<PAGE> 14

GROWTH fund

OBJECTIVE This Fund seeks long-term capital appreciation.

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance
[Yearly Performance Chart]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1994 2.69
1995 37.34
1996 16.15
1997 11.24
1998 59.04
1999 97.09
</TABLE>

During the periods shown above, the highest quarterly return was 43.43% (for the
quarter ended 12/31/99), and the lowest was -7.29% (for the quarter ended
6/30/94). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Inception
(for periods ended December 31, 1999) One Year Five Years (5/7/93)
<S> <C> <C> <C>
FUND SHARES 97.09% 40.95% 32.16%
STANDARD & POOR'S 500 INDEX* 21.04% 28.54% 22.36%
</TABLE>

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

11
<PAGE> 15

MID CAP STOCK fund

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

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

In determining whether securities should be sold, the Advisor considers factors
such as high valuations relative to other investment opportunities, and
deteriorating short or long-term business fundamentals or future growth
prospects. The Fund will not necessarily dispose of a security merely because
its issuer's market capitalization is no longer in the range represented by the
S&P MidCap 400 Index.

Among the principal risks of investing in the Fund are:

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

NO PERFORMANCE INFORMATION IS AVAILABLE FOR THE MID CAP STOCK FUND BECAUSE IT
HAD NOT YET COMMENCED OPERATIONS AS OF THE DATE OF THIS PROSPECTUS.

12
<PAGE> 16

SMALL CAP STOCK fund

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

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance
[Emerging Growth Fund Bar Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1995 30.99
1996 10.04
1997 12.59
1998 8.09
1999 71.09
</TABLE>

During the periods shown above, the highest quarterly return was 54.03% (for the
quarter ended 12/31/99), and the lowest was -20.64% (for the quarter ended
9/30/98). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Inception
(for periods ended December 31, 1999) One Year Five Years (1/12/94)
<S> <C> <C> <C>
FUND SHARES 71.09% 24.54% 21.24%
RUSSELL 2000 INDEX** 21.26% 16.69% 16.69%
STANDARD & POOR'S 500 INDEX* 21.04% 28.54% 28.54%
</TABLE>

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

** This index represents the smallest 2000 companies in the Russell 3000 Index
and is used to measure the small-cap market.

13
<PAGE> 17

INTERNATIONAL GROWTH fund

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

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance
[International Growth Fund Bar Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1994 1.88
1995 6.61
1996 9.04
1997 -2.64
1998 5.20
1999 51.96
</TABLE>

During the periods shown above, the highest quarterly return was 28.87% (for the
quarter ended 12/31/99), and the lowest was -17.33% (for the quarter ended
9/30/98). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Inception
(for periods ended December 31, 1999) One Year Five Years (5/7/93)
<S> <C> <C> <C>
FUND SHARES 51.96% 12.59% 11.68%
MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX* 26.96% 12.83% 12.01%
</TABLE>

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

14
<PAGE> 18

SHORT TERM INCOME fund

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance*
[Short Term High Quality Bond Fund Performance Graph]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1995 9.30
1996 3.74
1997 5.90
1998 5.28
1999 2.89
</TABLE>

During the periods shown above, the highest quarterly return was 3.31% (for the
quarter ended 6/30/95), and the lowest was -0.40% (for the quarter ended
3/31/96). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Inception
(for periods ended December 31, 1999) One Year Five Years (1/12/94)
<S> <C> <C> <C>
FUND SHARES 2.89% 5.40% 4.22%
LEHMAN BROTHERS MUTUAL FUND SHORT (1-5)
INVESTMENT GRADE DEBT INDEX** 2.49% 7.30% 5.99%
</TABLE>

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

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

15
<PAGE> 19

U.S. GOVERNMENT SECURITIES fund

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance*
[U.S. Government Securities Fund Bar Chart]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1994 -4.04
1995 16.89
1996 3.69
1997 9.42
1998 7.03
1999 0.51
</TABLE>

During the periods shown above, the highest quarterly return was 5.29% (for the
quarter ended 6/30/95), and the lowest was -2.99% (for the quarter ended
3/31/94). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Inception
(for periods ended December 31, 1999) One Year Five Years (5/6/93)
<S> <C> <C> <C>
FUND SHARES 0.51% 7.37% 5.19%
LEHMAN BROTHERS U.S. GOVERNMENT INDEX** -2.23% 7.44% 5.65%
</TABLE>

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

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

16
<PAGE> 20

INCOME fund

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance

[Income Fund Bar Chart]

During the periods shown above, the highest quarterly return was 8.47% (for the
quarter ended 6/30/95), and the lowest was -5.22% (for the quarter ended
3/31/94). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Inception
(for periods ended December 31, 1999) One Year Five Years (5/7/93)
<S> <C> <C> <C>
FUND SHARES -2.16% 8.02% 5.49%
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX* -2.15% 7.61% 5.90%
LEHMAN BROTHERS CORPORATE DEBT BBB-RATED INDEX** -0.82% 8.49% 6.76%
</TABLE>

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

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

17
<PAGE> 21

MONEY MARKET fund

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

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

Among the principal risks of investing in the Fund are:

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

YEARLY performance*
[Money Market Fund Bar Graph]

During the periods shown above, the highest quarterly return was 1.38% (for the
quarter ended 6/30/95), and the lowest was 0.68% (for the quarter ended
3/31/94). Performance of an investment in the Fund through a variable annuity
contract will be lower than that shown because the performance shown does not
reflect insurance-related charges or expenses. See the accompanying annuity
contract prospectus for more information.

PERFORMANCE TABLE*

<TABLE>
<CAPTION>
Average Annual Total Returns Past Past Since Inception
(for periods ended December 31, 1999) One Year Five Years (5/10/93)
<S> <C> <C> <C>
FUND SHARES 4.56% 5.00% 4.56%
MERRILL LYNCH 3-MONTH U.S. TREASURY BILL INDEX** 4.85% 5.35% 4.96%
</TABLE>

* The Fund's performance through December 31, 1999 has benefitted from the
agreement of WM Advisors and its affiliates to limit the Fund's expenses.

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

18
<PAGE> 22

SUMMARY OF PRINCIPAL RISKS

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

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

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

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

Interest rate risk is generally greater for Funds that invest in debt
securities with longer maturities. This risk may be compounded for Funds such
as the U.S. Government Securities and Income Funds that invest in
MORTGAGE-BACKED or other ASSET-BACKED SECURITIES that may be prepaid. These
securities have variable maturities that tend to lengthen when that is least
desirable -- when interest rates are rising. Increased market risk is also
likely for Funds such as the Short Term Income and Income Funds that invest
in debt securities paying no interest, such as ZERO-COUPON and pay-in-kind
securities.

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

+ CREDIT RISK. Each of the Funds and Portfolios may be subject to credit risk
to the extent it invests in FIXED-INCOME SECURITIES. This is the risk that the
issuer or the guarantor of a debt security, or the counterparty to any of a
Fund's portfolio transactions (including REPURCHASE AGREEMENTS, REVERSE
REPURCHASE AGREEMENTS, LENDING OF SECURITIES, and other over-the-counter
transactions), will be unable or unwilling to make timely principal and/or
interest payments, or to otherwise honor its obligations. Varying degrees of
credit risk, often reflected in CREDIT RATINGS, apply. Credit risk is
particularly significant for Funds such as the Income, Bond & Stock, Growth &
Income, Growth, Mid Cap Stock and Small Cap Stock Funds that invest
significantly in LOWER-RATED SECURITIES. These securities and similar unrated
securities (commonly known as "junk bonds") have speculative elements or are
predominantly speculative credit risks.

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

+ FOREIGN INVESTMENT RISK. Each of the Funds with FOREIGN INVESTMENTS, such as
the Money Market, Short Term Income, Income, Bond & Stock, Growth & Income,
Growth, Mid Cap Stock, Small Cap Stock and International Growth Funds, and the
Growth Fund of the Northwest may experience more rapid and extreme changes in
value than Funds with investments solely in securities of U.S. companies. This
is because the securities markets of many foreign countries are relatively
small, with

19
<PAGE> 23

a limited number of companies representing a small number of industries.
Additionally, foreign issuers are usually not subject to the same degree of
regulation as U.S. issuers. Reporting, accounting and auditing standards of
foreign countries differ, in some cases significantly, from U.S. standards.
Also, nationalization, expropriation or confiscatory taxation, currency
blockage, political changes or diplomatic developments could adversely affect
a Fund's investments in a foreign country. In the event of nationalization,
expropriation or other confiscation, a Fund could lose its entire investment.
Adverse developments in certain regions, such as southeast Asia, may adversely
affect the markets of other countries whose economies appear to be unrelated.

+ GEOGRAPHIC CONCENTRATION RISK. The Growth Fund of the Northwest Fund invests
significant portions of its assets in the concentrated geographic area of the
northwestern United States, and thus generally has more exposure to regional
economic risks than Funds making investments more broadly.

+ LEVERAGING RISK. When a Fund is BORROWING money or otherwise leveraging its
portfolio, the value of an investment in that Fund will be more volatile and
all other risks will tend to be compounded. The Short Term Income, U.S.
Government Securities, Income, Growth, Mid Cap Stock, Small Cap Stock and
International Growth Funds may achieve leverage by using REVERSE REPURCHASE
AGREEMENTS and/or DOLLAR ROLLS. The Short Term Income, U.S. Government
Securities, Income and Growth & Income Funds may achieve leverage through the
use of INVERSE FLOATING RATE INVESTMENTS. The Short Term Income, Mid Cap
Stock, Growth, Small Cap Stock and International Growth Funds may also take on
leveraging risk by investing collateral from securities loans, by using
STRATEGIC TRANSACTIONS (derivatives) and by BORROWING money to meet redemption
requests.

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

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

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

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

+ MONEY MARKET RISK. While the Money Market Fund is designed to be a relatively
low risk investment, it is not entirely free of risk. The Money Market Fund,
as a result of a deterioration in the credit quality of issuers whose
securities the Fund holds or an increase in interest rates, may not be able to
maintain a net asset value of $1.00 per share. In addition, the Money Market
Fund is particularly subject to the risk that the purchasing

20
<PAGE> 24

power of your investment may be eroded over time by inflation.

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

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

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

In addition to the expenses of the underlying Funds, which are indirectly
borne by investors in the Portfolio, investment in the Funds through the
Portfolios involves certain expenses that would not be present in a direct
investment in the Funds. See "Dividends, Distributions and Taxes" for
additional information about tax implications of investing in the Funds and
Portfolios.

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

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

21
<PAGE> 25

PRINCIPAL RISKS by fund

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

<TABLE>
<CAPTION>
Foreign Geographic Smaller Money Portfolio
Currency Investment Leveraging Concentration Derivatives Company Market Reallocation
Risk Risk Risk Risk Risk Risk Risk Risk
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BOND &
STOCK X X X X
fund
GROWTH &
INCOME X X X X X X
fund
GROWTH FUND OF
THE NORTHWEST X X X X X
GROWTH
fund X X X X X X
MID CAP STOCK
fund X X X X X X
SMALL CAP
STOCK X X X X X X
fund
INTERNATIONAL
GROWTH X X X X X X
fund
SHORT TERM INCOME X X X X X
fund
U.S. GOVERNMENT
SECURITIES X X X
fund
INCOME
fund X X X X X
MONEY
MARKET X X X
fund
</TABLE>

22
<PAGE> 26

DESCRIPTION OF THE PORTFOLIOS AND FUNDS

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

THE PORTFOLIOS

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

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

Each of the Portfolios may invest in the WM High Yield Fund, a diversified
mutual fund managed by WM Advisors. The Fund, which is not available for direct
purchase through a variable annuity contract, invests primarily in below
investment grade bonds (sometimes referred to as "junk bonds"). It is subject to
the same principal risks as the Income Fund with a higher degree of credit risk,
foreign investment risk and smaller company risk.

In addition, in order to meet liquidity needs or for temporary defensive
purposes, each Portfolio may invest directly in stock or bond index futures and
options thereon and the following short-term instruments:

- - short-term securities issued by the U.S. Government, its agencies,
instrumentalities, authorities or political subdivisions;

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

- - commercial paper, including master notes;

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

- - repurchase agreements.

At the time a Portfolio invests in any commercial paper, bank obligations or
repurchase agreements, the issuer must have outstanding debt rated A or higher
by Moody's or S&P; the issuer's parent corporation, if any, must have
outstanding commercial paper rated Prime-1 by Moody's or A-1 by S&P; or, if no
such ratings are available, the investment must be of comparable quality in the
opinion of WM Advisors. In addition to purchasing shares of the Funds, a
Portfolio may use futures contracts and options in order to remain effectively
fully invested in proportions consistent with WM Advisors' current asset
allocation strategy for the Portfolio. Specifically, each Portfolio may enter
into futures contracts and options thereon, provided that the aggregate deposits
required on these contracts do not exceed 5% of the Portfolio's total assets. A
Portfolio may use futures contracts and options only for bona fide hedging
transactions. Futures contracts and options may be used to reallocate

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<PAGE> 27

the Portfolio's assets among asset categories while minimizing transaction
costs, to maintain cash reserves while simulating full investment, to facilitate
trading, to seek higher investment returns, or to simulate full investment when
a futures contract is priced attractively or is otherwise considered more
advantageous than the underlying security or index. As a fundamental policy,
which may not be changed without shareholder approval, each Portfolio will
concentrate its investments in shares of the Funds.

EQUITY FUNDS

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

GROWTH & INCOME FUND. The Growth & Income Fund invests primarily in common
stocks. The Fund may also invest in money market instruments for temporary or
defensive purposes. The Fund may invest up to 25% of its assets in REITs. The
Fund may invest in fixed-income securities of any maturity, including
mortgage-backed securities, and may invest up to 35% of its assets in below
investment grade bonds fixed-income securities.

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

The Fund is permitted to invest in money market instruments for temporary or
defensive purposes. The Fund may invest up to 25% of its assets in REITs.

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

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

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

MID CAP STOCK FUND. The Mid Cap Stock Fund invests primarily (normally at least
65% of its assets) in common stocks of companies with market capitalizations in
the range represented by companies included in the S&P MidCap 400 Index. The
Fund may also invest in money market instruments for temporary or defensive
purposes. The Fund may invest in fixed income securities of any maturity,
including mortgage-backed securities, and may invest up to 35% of its assets in
below investment grade bonds.

The Fund may purchase or sell U.S. Government securities or collateralized
mortgage obligations on a "when-issued" or "delayed-delivery" basis in an
aggregate up to 20% of its total net assets. The Fund may invest up to 25% of
its assets in securities of foreign issuers.

SMALL CAP STOCK FUND. The Small Cap Stock Fund invests primarily in equity
securities of companies with market capitalization of less than $1.4 billion at
the time of purchase. In addition to common stock, the Fund's equity securities
may include convertible bonds,

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<PAGE> 28

convertible preferred stock and warrants to purchase common stock. The Fund may
also invest in money market instruments for temporary or defensive purposes. The
Fund may invest up to 25% of its assets in securities of foreign issuers and up
to 5% of its assets in securities in developing or emerging countries. The Fund
may invest up to 35% of its assets in below investment grade bonds if WM
Advisors believes that doing so will be consistent with the goal of capital
appreciation.

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

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

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

FIXED-INCOME FUNDS

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

The Fund will invest substantially all of its assets in debt securities that, at
the time of purchase, are rated in one of the top four rating categories by one
or more NRSROs or, if unrated, are judged to be of comparable quality by WM
Advisors ("investment grade" securities). All debt securities purchased by the
Fund will be investment grade at the time of purchase.

The Fund may invest in securities issued or guaranteed by domestic and foreign
governments and government agencies and instrumentalities and in high-grade
corporate debt securities, such as bonds, debentures, notes, equipment lease and
trust certificates, mortgage-backed securities, collateralized mortgage
obligations and asset-backed securities. The Fund may invest up to 5% of its
assets in preferred stock.

The Fund may invest up to 10% of its assets in foreign fixed-income securities,
primarily bonds of foreign governments or their political subdivisions, foreign
companies and supranational organizations, including non-U.S. dollar-denominated
securities and U.S. dollar-denominated debt securities issued by foreign issuers
and foreign branches of U.S. banks. Investment in foreign securities is subject
to special risks.

The Fund may engage in certain options transactions, enter into financial
futures contracts and related options for the purpose of portfolio hedging and
enter into currency forwards or futures contracts and related options for the
purpose of currency hedging. The Fund may invest in certain illiquid
investments, such as privately placed securities, including restricted
securities. The Fund may invest up to 10% of its assets in securities of
unaffiliated mutual funds. The Fund may borrow money or enter into reverse
repurchase agreements or dollar roll transactions in the aggregate up to 33 1/3%
of its total assets. The Fund may invest up to 25% of its total assets in
asset-backed securities, which

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<PAGE> 29

represent a participation in, or are secured by and payable from, a stream of
payments generated by particular assets, most often a pool of similar assets.

U.S. GOVERNMENT SECURITIES FUND. It is a policy of the Fund to invest only in
U.S. Government securities, including mortgage-backed securities and
collateralized mortgage obligations and repurchase agreements which are secured
by U.S. Government securities. The Fund may borrow up to 30% of its total net
assets for emergency, non-investment purposes and may enter into dollar roll
transactions.

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

- - debt and convertible debt securities;

- - U.S. Government securities, including mortgage-backed securities issued by the
Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), and Federal Home Loan Mortgage Corporation ("FHLMC") or
similar government agencies;

- - Commercial mortgage-backed securities;

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

- - preferred stocks and convertible preferred stocks;

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

- - deposits in U.S. banks.

The Fund may invest in securities denominated in foreign currencies and receive
interest, dividends and sale proceeds in foreign currencies. The Fund may engage
in foreign currency exchange transactions for hedging purposes in connection
with the purchase and sale of foreign securities or to protect against changes
in the value of specific securities held by the Fund.

The Fund may borrow up to 5% of its total net assets for emergency,
non-investment purposes, and may enter into dollar roll transactions. The Fund
may purchase securities of issuers which deal in real estate or securities which
are secured by interests in real estate, and it may acquire and dispose of real
estate or interests in real estate acquired through the exercise of its rights
as a holder of debt securities secured by real estate or interests therein. The
Fund may also purchase and sell interest rate futures and options. The Fund may
invest up to 35% of its assets in lower-rated fixed-income securities (sometimes
called "junk bonds").

MONEY MARKET FUND. To accomplish its objective, the Money Market Fund invests
only in U.S. dollar-denominated short-term, money market securities. It will
only purchase securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, or securities that are, or have issuers that are:

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

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

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

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

The Fund invests solely in money market instruments that are selected from the
following six general categories:

- - U.S. Government securities;

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

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

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

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

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<PAGE> 30

- - repurchase agreements.

COMMON INVESTMENT PRACTICES

The next several pages contain more detailed information about types of
securities in which the Funds and Portfolios may invest, and strategies which WM
Advisors or the respective sub-advisor may employ in pursuit of that Fund's or
Portfolio's investment objective and a summary of risks and restrictions
associated with these securities and investment practices. Although the WM High
Yield Fund is not mentioned specifically below because it is not available for
direct purchase through the Contracts, some of the practices listed below may
apply to the WM High Yield Fund in which the Portfolios may invest. For more
information, see the SAI.

BORROWING. The Funds and Portfolios may borrow money from banks solely for
temporary or emergency purposes, subject to various limitations. If a Fund
borrows money, its share price and yield may be subject to greater fluctuation
until the borrowing is paid off. For the Money Market, Short Term Income, U.S.
Government Securities, Income, Growth & Income, Growth, Mid Cap Stock, Small Cap
Stock and International Growth Funds, and for the Portfolios, such borrowings
may not exceed 30% of total assets. The Bond & Stock Fund and Growth Fund of the
Northwest may borrow up to 5% of their total assets for emergency,
non-investment purposes. Each of the foregoing percentage limitations on
borrowings is a fundamental policy of the respective Funds and Portfolios.

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

Each of the Funds may engage in REVERSE REPURCHASE AGREEMENTS. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Fund may decline below the repurchase price of the securities and, if
the proceeds from the reverse repurchase agreement are invested in securities,
that the market value of the securities bought may decline at the same time
there is decline in the securities sold (and required to be repurchased).

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

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

FLOATING RATE, INVERSE FLOATING RATE AND VARIABLE RATE INVESTMENTS. The Short
Term Income, U.S. Government Securities, Income, and Growth & Income Funds may
purchase floating rate, inverse floating rate and variable rate investments,
including participation interests therein.

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

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<PAGE> 31

Although variable rate demand notes are frequently not rated by credit rating
agencies, a Fund may purchase unrated notes that are determined by WM Advisors
or the Fund's sub-advisor to be of comparable quality at the time of purchase to
rated instruments that may be purchased by the Fund. The absence of an active
secondary market could make it difficult for a Fund to dispose of these
securities in the event the issuer of the note were to default on its payment
obligations, and the Fund could, for this or other reasons, suffer a loss as a
result of the default.

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

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

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

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

Each of the Funds other than the Money Market, U.S. Government Securities, Bond
& Stock and Growth & Income Funds and Growth Fund of the Northwest may invest in
securities which are indexed to certain specific foreign currency exchange
rates. These securities expose the Funds to the risk of significant changes in
rates of exchange between the U.S. dollar and any foreign currency to which an
exchange rate-related security is linked. In addition, there is no assurance
that sufficient trading interest to create a liquid secondary market will exist
for a

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<PAGE> 32

particular exchange rate-related security due to conditions in the debt and
foreign currency markets. Illiquidity in the forward foreign exchange market and
the high volatility of the foreign exchange market may from time to time combine
to make it difficult to sell an exchange rate-related security prior to maturity
without incurring a significant loss.

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

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

- - fluctuations in currency exchange rates;

- - devaluation of currencies;

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

- - reduced availability of public information concerning issuers; and

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

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

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

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

GEOGRAPHIC CONCENTRATION. Potential investors in the Growth Fund of the
Northwest should consider the greater risk arising from the geographic
concentration of their investments, as well as the current and past financial
condition of the States in the Northwest. See the SAI for a more detailed
description of these risks.

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<PAGE> 33

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

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

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

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

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

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

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

- - securities which are restricted under federal securities laws with respect to
disposition (excluding certain Rule 144A securities, as described below).

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

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

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

LOWER-RATED SECURITIES. The Income, Bond & Stock, Mid Cap Stock, Small Cap
Stock, Growth and Growth & Income Funds may each invest up to 35% of their total
assets in below-investment grade debt securities, sometimes referred to as "junk
bonds."

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

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The Short Term Income, U.S.
Government Securities, Income, Bond & Stock, Growth & Income and Mid

30
<PAGE> 34

Cap Stock Funds may invest in mortgage-backed securities, which represent
participations in, or are secured by mortgage loans and include collateralized
mortgage obligations and stripped mortgage-backed securities.

Traditional debt investments typically pay a fixed rate of interest until
maturity, when the entire principal amount is due. By contrast, payments on
mortgage-backed securities typically include both interest and a partial payment
of principal. Principal may also be prepaid voluntarily, or as a result of
refinancing or foreclosure. The fund may have to invest the proceeds from
prepaid investments under less attractive terms and yields.

Prepayments are particularly common during periods of declining interest rates,
when property owners seek to refinance their mortgages on more favorable terms;
the reverse is true during periods of rising interest rates. Mortgage-backed
securities are therefore less likely to increase in value during periods of
declining interest rates than other debt of comparable maturities. In addition,
they have a higher risk of decline in value during periods of rising interest
rates because declining prepayment rates effectively increase the average
maturity of the fund's investments (and, therefore, its sensitivity to changes
in interest rates) at times when that is least desirable. These investments can
increase the volatility of the fund.

The Short Term Income, U.S. Government Securities, and Income Funds may also
invest in GOVERNMENT STRIPPED MORTGAGE-BACKED SECURITIES issued or guaranteed by
GNMA, FNMA or FHLMC. These securities represent beneficial ownership interests
in either periodic principal distributions (PRINCIPAL-ONLY SECURITIES OR "PO
STRIPS") or interest distributions (INTEREST-ONLY SECURITIES OR "IO STRIPS") on
mortgage-backed certificates issued by GNMA, FNMA or FHLMC, as the case may be.

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

In addition, the U.S. Government Securities, Income, Bond & Stock, Mid Cap Stock
and Growth & Income Funds may also invest in commercial mortgage-backed
securities, which are similar to government mortgage-backed securities, except
that they may not be issued or guaranteed by governmental entities. Commercial
mortgage-backed securities include collateralized mortgage obligations and real
estate mortgage investment conduits ("REMICs"). Commercial mortgage-backed
securities typically lack a guarantee by an entity having the credit status of a
governmental agency or instrumentality.

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

The Money Market, Short Term Income, Bond & Stock, Mid Cap Stock and Small Cap
Stock Funds may purchase asset-backed securities. These Funds will not invest
more than 10% of their total assets in asset-backed securities, except that the
Short Term Income Fund may invest up to 25% of its total assets

31
<PAGE> 35

in such securities. Asset-backed securities are structured like mortgage-backed
securities, but instead of mortgage loans or interests in mortgage loans, the
underlying assets may include such items as motor vehicle installment sales or
installment loan contracts, leases of various types of real and personal
property, including home equity loans, and receivables from credit card
agreements. The ability of an issuer of asset-backed securities to enforce its
security interest in the underlying assets may be limited.

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

Investment in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities.

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

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

Strategic Transactions may be used:

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

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

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

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

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

32
<PAGE> 36

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

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

- - the ability of the Fund or Portfolio to utilize Strategic Transactions
successfully will depend on the ability of WM Advisors or the sub-advisor to
predict pertinent market movements:

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

- - the risk that the Fund or Portfolio will be unable to close out a Strategic
Transaction at a time when it would otherwise do so, due to the illiquidity of
the Strategic Transaction; and

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

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

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

WHEN-ISSUED SECURITIES, FORWARD COMMITMENTS AND DELAYED-DELIVERY
TRANSACTIONS. In order to secure yields or prices deemed advantageous at the
time, the Funds may purchase or sell securities on a when-issued or a
delayed-delivery basis. Due to fluctuations in the value of securities purchased
on a when-issued or a delayed-delivery basis, the yields obtained on such
securities may be higher or lower than the yields available in the market on the
dates when the securities are actually delivered to the Fund. Similarly, the
sale of securities for delayed-delivery can involve the risk that the prices
available in the market when delivery is made may actually be higher than those
obtained in the transaction itself.

When-issued securities may include bonds purchased on a "when, as and if issued"
basis, under which the issuance of the securities depends on the occurrence of a
subsequent event, such as approval of a proposed financing by appropriate
municipal authorities. A significant commitment of a Fund's assets to the
purchase of securities on a "when, as and if issued" basis may increase the
volatility of the Fund's NAV.

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

33
<PAGE> 37

HOW CAN I INVEST IN THE PORTFOLIOS

AND FUNDS?

Shares of the Portfolios and Funds are currently offered only to American
General Life Insurance Company ("AGL") for the purpose of providing investment
choices under its variable annuity contracts. AGL is the sole record Shareholder
of the Funds and Portfolios (except for certain "seed money" holdings by WM
Shareholder Services, Inc. an affiliate of WM Advisors). AGL therefore may be
deemed to control the Funds and Portfolios. All of the Funds and Portfolios are
investment choices under the WM Strategic Asset Manager variable annuity
contract and the WM Advantage Variable Annuity Contract, both of which are
issued by AGL (the "WM Strategic Asset Manager Contract" and the "WM Advantage
Contract," together, the "Contracts"). WM Variable Trust has filed an
application with the Securities and Exchange Commission to permit shares of the
Funds and Portfolios to be sold through variable life insurance contracts,
insurance contracts of other insurance companies, and to certain tax-qualified
retirement and benefit plans.

PURCHASE AND REDEMPTION

The shares of the Funds and Portfolios are sold in a continuous offering to AGL
for its separate account to fund Contracts. Net purchase payments under the
Contracts are placed in one or more of the divisions of the insurance company
separate account and are invested in the shares of the Funds corresponding to
such divisions. Shares of the Funds and Portfolios are purchased and redeemed by
AGL at net asset value without sales or redemption charges. Shares may, in the
future, be sold to other insurance companies for their separate accounts and to
qualified retirement plans on similar terms.

For each day on which a Fund's or Portfolio's net asset value is calculated,
each separate account transmits to the Trust any orders to purchase or redeem
shares of the Fund(s) and Portfolio(s) based on the purchase payments,
redemption (surrender) requests and transfer requests from Contract owners,
annuitants or beneficiaries which are priced as of that day. Purchases and
redemptions are effected at the net asset value next-determined after receipt by
the Trust of a properly completed purchase or redemption order.

All purchase and redemption orders will be processed in accordance with
applicable regulations. The Trust may also suspend redemption, if permitted
under the 1940 Act, for any period during which the New York Stock Exchange is
closed, when trading is restricted by the SEC, or when the SEC declares that an
emergency exists. Redemption may also be suspended during other periods
permitted by the SEC for the protection of the Trust's shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The tax consequences of your investment in the Trust depend upon the specific
provisions of your Contract. For more tax information regarding your Contract,
see the attached prospectus for that Contract. The following discussion is only
a brief summary of the federal income tax consequences to the Funds and
Portfolios and their insurance company shareholders based on current tax laws
and regulations, which may be changed by subsequent legislative, judicial, or
administrative action.

Each Fund and Portfolio intends to qualify separately each year as a "regulated
investment company" and, thus, does not expect to pay any federal income tax on
income and capital gain distributed to shareholders.

Although the Trust intends that it and each Fund and Portfolio will be operated
so that they will have no federal income tax liability, if any such liability is
nevertheless incurred, the investment performance of the Fund or Portfolio
incurring such liability will be adversely affected. In addition, Funds or
Portfolios investing in foreign securities and currencies may be subject to
foreign taxes. These taxes would reduce the investment performance of such Funds
or Portfolios.

Because the Trust funds certain types of variable annuities, each Fund or
Portfolio also intends to meet the investment diversification requirements of
subchapter L of the Code. Were any Fund or Portfolio to fail to comply with
those requirements, owners of annuity contracts (other than certain
tax-qualified

34
<PAGE> 38

retirement Contracts) funded through the Trust would be taxed immediately on
investment earnings, including accumulated investment earnings, under their
Contracts and would thereby lose any benefit of tax deferral. Accordingly, the
Trust will carefully monitor compliance with the diversification requirements.
For additional tax information, see "Taxes" in the SAI.

Distributions of net investment income (i.e., all income other than capital
gains) and of net realized capital gains on securities will be determined
separately for each Fund and Portfolio. Dividends and distributions paid by a
Fund or Portfolio will be automatically reinvested (at current net asset value)
in additional full and fractional shares of that Fund or Portfolio. The Money
Market Fund intends to distribute its net income as dividends for each day that
net asset value is determined. Such dividends will be declared daily and paid
monthly. The Short Term Income, U.S. Government Securities and Income Funds will
declare and pay quarterly dividends from net investment income, and the Bond &
Stock, Growth & Income, Growth, Mid Cap Stock, Small Cap Stock and International
Growth Funds and Growth Fund of the Northwest will declare and pay such
dividends annually. Each of the Balanced, Flexible Income and Income Portfolios
will declare and pay dividends quarterly. Both the Strategic Growth Portfolio
and Conservative Growth Portfolio will declare and pay dividends annually. All
Funds and Portfolios will distribute annually any net realized capital gains on
securities held for more than one year ("long-term capital gain"). Distributions
of any net short-term capital gains earned by a Fund or Portfolio will be
distributed no less frequently than annually at the discretion of the Board of
Trustees.

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

35
<PAGE> 39

ORGANIZATION

HOW NAV IS DETERMINED

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

ADVISOR AND SUB-ADVISORS

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

WM Advisors has been in the business of investment management since 1944, and
its predecessor advised a mutual fund beginning in 1939. Its responsibilities
include formulating each Fund's and Portfolio's investment policies (subject to
the terms of this Prospectus), analyzing economic trends, directing and
evaluating the investment services provided by the sub-advisors and monitoring
each Fund's or Portfolio's investment performance and reporting to the Board of
Trustees, as well as providing certain administrative services to the Funds and
Portfolios. In connection with its service as investment advisor to each Fund
and Portfolio, WM Advisors may engage one or more sub-advisors to provide
investment advisory services to any of the Funds or Portfolios and may change or
eliminate any such sub-advisor if it deems such action to be in the best
interests of a Fund or Portfolio and its shareholders. Where WM Advisors has not
delegated such duties to a sub-advisor, it is responsible for managing the
investment and reinvestment of the Fund's or Portfolio's assets. WM Advisors is
an indirect wholly owned subsidiary of Washington Mutual, Inc. ("Washington
Mutual"), a publicly owned financial services company.

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

JANUS CAPITAL CORPORATION, 100 Fillmore Street, Denver, Colorado 80206, also
called "Janus" in this Prospectus, acts as sub-advisor to the Growth Fund. Janus
is an indirectly majority owned subsidiary of Kansas City Southern Industries,
Inc., a publicly traded holding company whose primary subsidiaries are engaged
in transportation, information processing and financial services. Janus has been
providing investment advice to mutual funds or other large institutional clients
since 1970. As of December 31, 1999, Janus' assets under management were in
excess of $249 billion.

CAPITAL GUARDIAN TRUST COMPANY, 333 South Hope Street, Los Angeles, CA 90071,
also called "Capital Guardian" in this Prospectus, acts as sub-advisor to the
International Growth Fund. Capital Guardian is a wholly-owned subsidiary of
Capital Group International, Inc. ("GCI"), which is in turn owned by the Capital
Group Companies, Inc. ("CGC"). CGC is also the parent company of several other
subsidiaries, all of which directly or indirectly provide investment management
services. CGC maintains investment management relationships with several other
organizations around the world. Capital Guardian had aggregate assets under
management of approximately $123 billion as of December 31, 1999.

INDIVIDUAL FUND MANAGERS

Gary J. Pokrzywinski, CFA, Vice President and Senior Portfolio Manager of WM
Advisors, has been primarily responsible for the day-to-day management of the
Income Fund since March 1992, and has been

36
<PAGE> 40

employed by WM Advisors since 1992. Craig V. Sosey, Vice President and Senior
Portfolio Manager of WM Advisors, has been primarily responsible for the
day-to-day management of the U.S. Government Securities and Short Term Income
Funds since November 1998 and January 2000, respectively. He has been employed
by WM Advisors since May 1998. Prior to that, he was the Assistant Treasurer of
California Federal Bank, where he worked for over eight years. Randall L.
Yoakum, CFA, First Vice President and Chief Investment Officer of the WM
Advisors and Stephen Spencer, CFA, Vice President and Portfolio Manager of WM
Advisors, are primarily responsible for the day-to-day management of the Growth
& Income and Mid Cap Stock Funds. Mr. Yoakum has been Portfolio Manager of the
Growth & Income Fund since February 1999 and co-manager of the Mid Cap Stock
Fund since March 2000. Mr. Yoakum also leads a team of investment professionals
in managing each of the Portfolios and has done so since January 2000. Prior to
assuming these duties, Mr. Yoakum was Chief Investment Officer for D.A. Davison
& Co. (DADCO) for 2 years. From September 1994 until he joined DADCO, Mr. Yoakum
was the Senior Vice President and Managing Director of Portfolio Management for
Boatmen's Trust Company. Prior to that, Mr. Yoakum was Senior Vice President and
Chief Equity Officer for Composite Research & Management Co. (the predecessor to
WM Advisors) for 8 years. Mr. Spencer has been employed by WM Advisors since
September 1999. Prior to that, Mr. Spencer was a Portfolio Manager and Senior
Equity Analyst for Smoot, Miller, Cheney and Co. since 1985. The Bond & Stock
Fund has been managed by a team of investment professionals of WM Advisors, Inc.
since March 24, 2000. David W. Simpson, CFA, Vice President and Senior Portfolio
Manager of WM Advisors, has had primary responsibility for the day-to-day
management of the Growth Fund of the Northwest since 1993. Mr. Simpson has been
employed by WM Advisors since 1993. Linda C. Walk, CFA, is Vice President and
Senior Portfolio Manager of the Advisor, has been primarily responsible for the
day-to-day management of the Small Cap Stock Fund since January 2000. She shared
that responsibility with Mr. Simpson from March 1998 to January 2000. Prior to
1997, Ms. Walk was a Portfolio Manager at Laird Norton Trust Company since 1996,
and prior to that was a valuation consultant for Ernst & Young LLP since 1994.
Audrey S. Quaye, CFA, CPA, Vice President and Portfolio Manager of WM Advisors,
has been primarily responsible for the day-to-day management of the Money Market
Fund since March 1998 and has been employed by WM Advisors since 1996. Prior to
1996, Ms. Quaye worked at the Benham Group as a municipal credit analyst and the
California Health Facilities Financing Authority as a program officer.

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

Capital Guardian Trust Company ("Capital Guardian") has been sub-advisor for the
International Growth Fund since June 23, 1999. Capital Guardian employs a team
of portfolio managers each of whom can be considered to have primary
responsibility for the day-to-day management of a portion of the Fund assigned
to him or her. They are: David I. Fisher, Harmut Giesecke, Richard N. Havas,
Nancy J. Kyle, Robert Ronus, Lionel M. Sauvage, Nilly Sikorsky and Rudolf M.
Staehelin. Mr. Fisher is Chairman of the Board of Capital Group International,
Inc. and Capital Guardian as well as Vice Chairman of Capital International,
Inc., Emerging Markets Growth Fund, Inc. and also a director of The Capital
Group Companies, Inc. He has been employed by the Capital Group Organization
since 1969. Mr. Giesecke is Chairman of the Board of Capital Group's Japanese
investment management subsidiary, Capital International K.K., and Managing
Director, Asia-Pacific, Capital Group International, Inc. Mr. Giesecke, who has
been with the Capital Group Organization since 1972, is also a Senior Vice
President and a Director of Capital International, Inc. as well as a Senior Vice
President of Capital International Research, Inc. and a Vice President of
Emerging Markets Growth Fund. Mr. Havas, who has been with the Capital Group
Organization since 1986, is a Senior Vice President and Portfolio Manager for
Capital Guardian and Capital International Limited as well as a Senior Vice
President and Director of Capital Guardian (Canada), Inc. Ms. Kyle, who has been
with the Capital Group Organization since 1991, is a Senior Vice President and
Director of Capital Guardian. Ms. Kyle is also President and a Director of
Capital Guardian (Canada), Inc. and a Vice President of Emerging Markets Growth
Fund. Mr. Ronus, is a President and

37
<PAGE> 41

a Director of Capital Guardian, as well as Chairman of the Board of Directors of
Capital Guardian (Canada), Inc., a Director of the Capital Group Companies, Inc.
and Capital Group International, Inc., and a Senior Vice President of Capital
International S.A. and Capital International Limited. Mr. Ronus has been
employed by The Capital Group Organization since 1972. Mr. Sauvage is a Senior
Vice President and Portfolio Manager for Capital Guardian and a Vice President
for Capital International Research, Inc. Mr. Sauvage has been employed by The
Capital Group Organization since 1987. Ms. Sikorsky is President and Managing
Director of Capital International S.A., Chairman of Capital International
Perspective, S.A., Managing Director-Europe and a Director of Capital Group
International, Inc., as well as serving as a Director of the Capital Group
Companies, Inc., Capital International Limited and Capital International K.K.
Ms. Sikorsky has been employed by The Capital Group Organization since 1962. Mr.
Staehelin is a Senior Vice President and Director of Capital International
Research, Inc. and Capital International S.A., and has been employed by The
Capital Group Organization since 1981.

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

MANAGEMENT FEES

During their most recent fiscal years, each of the Funds and Portfolios paid
management fees to WM Advisors at the following rates:

<TABLE>
<CAPTION>
Fees Paid as a Percentage
FUNDS of Net Assets
- -------------------------------------------------------------------
<S> <C>
Money Market Fund................. 0.48%
Short Term Income Fund............ 0.50%
U.S. Government Securities Fund... 0.54%
Income Fund....................... 0.57%
Bond & Stock Fund................. 0.63%
Growth & Income Fund.............. 0.78%
Growth Fund of the Northwest...... 0.63%
Growth Fund....................... 0.88%
Mid Cap Stock Fund*............... 0.75%
Small Cap Stock Fund.............. 0.88%
International Growth Fund......... 0.93%
Strategic Growth Portfolio........ 0.10%
Conservative Growth Portfolio..... 0.10%
Balanced Portfolio................ 0.10%
Flexible Income Portfolio......... 0.10%
Income Portfolio.................. 0.10%
</TABLE>

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

* The Mid Cap Stock Fund has not completed a full fiscal year. The rate shown is
the rate it has agreed to pay WM Advisors.

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<PAGE> 42

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

The Financial Highlights Table is intended to help you understand the Funds' and
Portfolios' financial performance for the past 5 years (or, if shorter, the
period of the Fund's or Portfolio's operations). Certain information reflects
financial results for a single Fund or Portfolio share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund or Portfolio (assuming reinvestment of all dividends and
distributions). The information provided below for periods ended December 31,
1998 and 1999 has been audited by Deloitte & Touche LLP. The information
provided below for periods prior to December 31, 1998 has been audited by other
auditors. The Reports of Independent Accountants for each such period, along
with the Funds' and Portfolios' financial statements, are included in the
respective Annual Reports to Shareholders, which are available upon request.

STRATEGIC GROWTH PORTFOLIO

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
----------------- -------------
1999 1998 1997*
---------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $13.46 $10.70 $10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.05++ 0.17++ 0.10
Net realized and unrealized gain on investments........... 6.35 2.63 0.60#
------- ------- -------
Total from investment operations........................ 6.40 2.80 0.70
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.16) (0.03) -
Distributions from net realized gains..................... (0.11) (0.01) -
------- ------- -------
Total distributions..................................... (0.27) (0.04) -
------- ------- -------
Net asset value, end of period.............................. $19.59 $13.46 $10.70
======= ======= =======
Total return+............................................... 47.95% 26.19% 7.00%
======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................... $35,500 $4,949 $591
Ratio of operating expenses to average net assets
(a)(b).................................................... 0.35% 0.35% 0.35%**
Ratio of net investment income to average net assets...... 0.35% 1.42% 0.51%**
Portfolio turnover rate................................... 7% 39% 11%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and fees reduced by
credits allowed by the custodian (b)..................... 0.43% 0.80% 15.54%**
</TABLE>

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

* The Portfolio commenced operations on June 3, 1997.
** Annualized.
+ Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and/or administrator or if
fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# The amount shown may not accord with the change in the aggregate gains and
losses of portfolio securities due to timing of sales and redemptions of
Portfolio shares.
(a) Ratio of operations expenses to average net assets includes expenses paid
indirectly.

(b) The Portfolio will also indirectly bear its prorated share of expenses of
the underlying funds.

39
<PAGE> 43
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD

CONSERVATIVE GROWTH PORTFOLIO

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
------------------ -------------
1999 1998 1997*
----------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $12.54 $10.49 $10.00
-------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.12++ 0.20++ 0.07
Net realized and unrealized gain on investments........... 4.76 1.89 0.42#
-------- ------- -------
Total from investment operations........................ 4.88 2.09 0.49
-------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.16) (0.03) -
Distributions from net realized gains..................... (0.16) (0.01) -
-------- ------- -------
Total distributions..................................... (0.32) (0.04) -
-------- ------- -------
Net asset value, end of period.............................. $17.10 $12.54 $10.49
======== ======= =======
Total return+............................................... 39.36% 19.91% 4.90%
======== ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................... $155,790 $10,072 $1,374
Ratio of operating expenses to average net assets
(a)(b).................................................... 0.35% 0.35% 0.35%**
Ratio of net investment income to average net assets...... 0.85% 1.79% 1.24%**
Portfolio turnover rate................................... 12% 35% 42%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and fees reduced by
credits allowed by the custodian (b)..................... 0.36% 0.57% 6.67%**
</TABLE>

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

* The Portfolio commenced operations on June 3, 1997.
** Annualized.
+ Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and/or
expenses reimbursed by the investment advisor and/or administrator or if
fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# The amount shown may not accord with the change in the aggregate gains and
losses of portfolio securities due to timing of sales and redemptions of
Portfolio shares.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

(b) The Portfolio will indirectly bear its prorated share of expenses of the
underlying funds.

40
<PAGE> 44
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD

BALANCED PORTFOLIO

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
------------------ -------------
1999 1998 1997*
----------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $12.20 $10.47 $10.00
-------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.34++ 0.31++ 0.13
Net realized and unrealized gain on investments........... 2.95 1.49 0.34#
-------- ------- ---------
Total from investment operations........................ 3.29 1.80 0.47
-------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.48) (0.07) --
Distributions from net realized gains..................... (0.09) -- --
-------- ------- ---------
Total distributions..................................... (0.57) (0.07) --
-------- ------- ---------
Net asset value, end of period.............................. $14.92 $12.20 $10.47
======== ======= =========
Total return+............................................... 27.71% 17.18% 4.70%
======== ======= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in)............................ $170,527 $11,161 $2,354
Ratio of operating expenses to average net assets
(a)(b).................................................... 0.35% 0.35% 0.35%**
Ratio of net investment income to average net assets...... 2.70% 2.79% 2.34%**
Portfolio turnover rate................................... 13% 33% 15%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and fees reduced by
credits allowed by the custodian (b)..................... 0.35% 0.54% 3.97%**
</TABLE>

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

* The Portfolio commenced operations on June 3, 1997.
** Annualized.
+ Total return represents aggregate total return for the periods less than one
year. The total return would have been lower if certain fees had not been
waived and/or expenses reimbursed by the investment advisor and/or
administrator of if fees had not been reduced by credits allowed by the
custodian.
++ Per share numbers have been calculated using the average shares method.
# The amount shown may not accord with the change in the aggregate gains and
losses of portfolio securities due to time of sales and redemptions of
Portfolio shares.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

(b) The Portfolio will indirectly bear its prorated share of expenses of the
underlying funds.

41
<PAGE> 45

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

FLEXIBLE INCOME PORTFOLIO

<TABLE>
<CAPTION>
FISCAL PERIOD
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
----------------- -------------
1999 1998 1997*
---------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $11.38 $10.23 $10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.58++ 0.48++ 0.04
Net realized and unrealized gain on investments........... 0.41 0.69 0.19#
------- ------- -------
Total from investment operations........................ 0.99 1.17 0.23
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.50) (0.02) -
Distributions from net realized gains..................... (0.01) - -
------- ------- -------
Total distributions..................................... (0.51) (0.02) -
------- ------- -------
Net asset value, end of period.............................. $11.86 $11.38 $10.23
======= ======= =======
Total return+............................................... 8.58% 11.75% 2.30%
======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................... $25,846 $1,107 $100
Ratio of operating expenses to average net assets
(a)(b).................................................... 0.35% 0.35% 0.34%**
Ratio of net investment income to average net assets...... 5.09% 4.90% 7.04%**
Portfolio turnover rate................................... 4% 78% 5%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and fees reduced by
credits allowed by the custodian (b)..................... 0.41% 1.51% 116.19%**
</TABLE>

- ---------------------
* The Portfolio commenced operations on September 9, 1997.
** Annualized.
+ Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and/or administrator or if
fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# The amount shown may not accord with the change in the aggregate gains and
losses of portfolio securities due to timing of sales and redemptions of
Portfolio shares.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

(b) The Portfolio will also bear its prorated share of expenses of the
underlying funds.

42
<PAGE> 46

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

INCOME PORTFOLIO

<TABLE>
<CAPTION>
FISCAL PERIOD ENDED
YEAR ENDED DECEMBER 31,
DECEMBER 31, ---------------------
1999 1998 1997*
------------ ---------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $10.42 $10.00 $10.00
------- ------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.71++ 0.56++ -
Net realized and unrealized loss on investments........... (0.52) (0.14) -
------- ------- ----------
Total from investment operations........................ 0.19 0.42 -
------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.70) - -
Distributions from net realized gains..................... (0.01) - -
Distributions in excess of net realized gains............. (0.00)## - -
------- ------- ----------
Total distributions..................................... (0.71) - -
------- ------- ----------
Net asset value, end of period.............................. $9.90 $10.42 $10.00#
======= ======= ==========
Total return+............................................... 1.88% 4.23% 0.00%
======= ======= ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................... $7,206 $829 $0
Ratio of operating expenses to average net assets
(a)(b).................................................... 0.35% 0.35%** 0.35%**
Ratio of net investment income to average net assets...... 7.07% 7.39%** 0.00%**
Portfolio turnover rate................................... 17% 61% 99%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and fees reduced by
credits allowed by the custodian (b)..................... 0.59% 5.37%** 7,567.04%**
</TABLE>

- ---------------------
* The Income Portfolio commenced operations on October 22, 1997, ceased
operations on November 4, 1997, and re-commenced operations on April 23,
1998.
** Annualized.
+ Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and/or administrator or if
fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Represents offering share price.
## Amount represents less than $0.01 per share.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

(b) The Portfolio will indirectly bear its prorated share of expenses of the
underlying funds.

43
<PAGE> 47

FINANCIAL HIGHLIGHTS

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

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD

BOND & STOCK FUND

<TABLE>
<CAPTION>
PERIOD
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
1999 1998*
---------------------------
<S> <C> <C>
Net asset value, beginning of period........................ $10.27 $10.00
--------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.33++ 0.16++
Net realized and unrealized gain/(loss) on investments.... (0.07)# 0.14
--------- ------
Total from investment operations........................ 0.26 0.30
--------- ------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.03) (0.03)
--------- ------
Total distributions..................................... (0.03) (0.03)
--------- ------
Net asset value, end of period.............................. $10.50 $10.27
========= ======
Total return+............................................... 2.49% 3.02%
========= ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................... $11,797 $2,586
Ratio of operating expenses to average net assets (a)..... 1.17% 1.50%**
Ratio of net investment income to average net assets...... 3.22% 2.26%**
Portfolio turnover rate................................... 25% 28%
Ratio of operating expenses to average net assets without
fee waivers and fees reduced by credits allowed by the
custodian................................................ 1.19% 2.49%**
</TABLE>

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

* The Fund commenced operations on April 28, 1998.
** Annualized.
+ Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived by the
investment advisor or if fees had not been reduced by credits allowed by the
custodian.
++ Per share numbers have been calculated using the average shares method.
# The amount shown may not accord with the change in the aggregate gains and
losses of portfolio securities due to timing of sales and redemptions of Fund
shares.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

44
<PAGE> 48

FINANCIAL HIGHLIGHTS

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

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR

GROWTH & INCOME FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $16.97 $16.92 $14.29 $12.83 $9.83
-------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.06++ 0.06 0.06 0.12++ 0.12
Net realized and unrealized gain on investments........... 2.93 2.97 3.90 2.54 3.05
-------- -------- -------- ------- -------
Total from investment operations........................ 2.99 3.03 3.96 2.66 3.17
-------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.04) (0.09) (0.10) (0.12) (0.07)
Distributions from net realized gains..................... (1.34) (2.89) (1.23) (1.08) (0.10)
-------- -------- -------- ------- -------
Total distributions..................................... (1.38) (2.98) (1.33) (1.20) (0.17)
-------- -------- -------- ------- -------
Net asset value, end of year................................ $18.58 $16.97 $16.92 $14.29 $12.83
======== ======== ======== ======= =======
Total return+............................................... 18.11% 18.98% 28.50% 21.81% 32.41%
======== ======== ======== ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................ $205,960 $125,295 $101,794 $62,445 $46,362
Ratio of operating expenses to average net assets (a)..... 1.05% 1.06% 1.08% 1.13% 1.06%
Ratio of net investment income to average net assets...... 0.34% 0.37% 0.55% 0.93% 1.31%
Portfolio turnover rate................................... 38% 78% 109% 83% 70%
Ratio of operating expenses to average net assets without
fee waivers and/or fees reduced by credits allowed by the
custodian................................................ 1.05% 1.06% 1.08% 1.13% 1.16%
</TABLE>

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

+ The total return would have been lower if certain fees had not been waived
by the investment advisor or if fees had not been reduced by credits allowed
by the custodian.
++ Per share numbers have been calculated using the average shares method.

(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

45
<PAGE> 49

FINANCIAL HIGHLIGHTS

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

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD

GROWTH FUND OF THE NORTHWEST

<TABLE>
<CAPTION>
PERIOD
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
1999 1998*
---------------------------
<S> <C> <C>
Net asset value, beginning of period........................ $10.94 $10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss).............................. (0.00)# 0.00#
Net realized and unrealized gain on investments........... 4.37 0.94
------- -------
Total from investment operations........................ 4.37 0.94
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.00)# -
Distributions from net realized gains..................... (0.17) -
------- -------
Total distributions..................................... (0.17) -
------- -------
Net asset value, end of period.............................. $15.14 $10.94
======= =======
Total return+............................................... 40.37% 9.40%
======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................... $20,429 $2,313
Ratio of operating expenses to average net assets (a)..... 1.27% 1.50%**
Ratio of net investment income/(loss) to average net
assets.................................................. (0.02)% 0.03%**
Portfolio turnover rate................................... 36% 28%
Ratio of operating expenses to average net assets without
fee waivers and fees reduced by credits allowed by the
custodian................................................ 1.28% 2.76%**
</TABLE>

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

46
<PAGE> 50

FINANCIAL HIGHLIGHTS

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

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR

GROWTH FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $22.36 $15.41 $16.01 $15.72 $11.48
-------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss).............................. (0.19) (0.09) 0.07 0.00++# 0.04++
Net realized and unrealized gain on investments........... 19.89 8.81 1.60 2.42 4.24
-------- -------- -------- -------- -------
Total from investment operations........................ 19.70 8.72 1.67 2.42 4.28
-------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... - (0.07) (0.02) - (0.04)
Distributions from net realized gains..................... (3.52) (1.70) (2.25) (2.13) (0.00)#
-------- -------- -------- -------- -------
Total distributions..................................... (3.52) (1.77) (2.27) (2.13) (0.04)
-------- -------- -------- -------- -------
Net asset value, end of year................................ $38.54 $22.36 $15.41 $16.01 $15.72
======== ======== ======== ======== =======
Total return+............................................... 97.09% 59.04% 11.24% 16.15% 37.34%
======== ======== ======== ======== =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................ $369,952 $162,967 $121,766 $116,064 $99,699
Ratio of operating expenses to average net assets (a)..... 1.15% 1.16% 1.18% 1.22% 1.24%
Ratio of net investment income/(loss) to average net
assets.................................................. (0.78)% (0.55)% 0.07% 0.01% 0.29%
Portfolio turnover rate................................... 129% 112% 158% 169% 187%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and/or fees reduced by
credits allowed by the custodian......................... 1.15% 1.17% 1.19% 1.22% 1.24%
</TABLE>

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

+ The total return would have been lower if certain fees had not been waived
and/or expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

47
<PAGE> 51

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR

SMALL CAP STOCK FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1999 1998 1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $14.59 $15.63 $14.70 $13.74 $10.53
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss....................................... (0.10)++ (0.07) (0.03) (0.12)++ (0.01)
Net realized and unrealized gain on investments........... 8.07 1.21 1.80 1.52 3.26
------- ------- ------- ------- -------
Total from investment operations........................ 7.97 1.14 1.77 1.40 3.25
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... - - - - (0.04)
Distributions from net realized gains..................... (3.43) (2.18) (0.84) (0.44) (0.00)#
------- ------- ------- ------- -------
Total distributions..................................... (3.43) (2.18) (0.84) (0.44) (0.04)
------- ------- ------- ------- -------
Net asset value, end of year................................ $19.13 $14.59 $15.63 $14.70 $13.74
======= ======= ======= ======= =======
Total return+............................................... 71.09% 8.09% 12.59% 10.04% 30.99%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................ $53,616 $44,380 $45,362 $55,887 $46,058
Ratio of operating expenses to average net assets (a)..... 1.19% 1.19% 1.20% 1.20% 1.20%
Ratio of net investment loss to average net assets........ (0.75)% (0.48)% (0.58)% (0.82)% (0.35)%
Portfolio turnover rate................................... 52% 108% 116% 97% 135%
Ratio of operating expenses to average net assets without
fee waivers and/or fees reduced by credits allowed by the
custodian................................................ 1.19% 1.20% 1.21% 1.21% 1.28%
</TABLE>

- ---------------------
+ The total return would have been lower if certain fees had not been waived
by the investment advisor or if fees had not been reduced by credits allowed
by the custodian.
++ Per share numbers have been calculated using the average shares method.
# Amount represents less than $0.01 per share.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

48
<PAGE> 52
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR

INTERNATIONAL GROWTH FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $11.61 $12.26 $13.02 $12.11 $11.47
------- ------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.12 0.07++ 0.71 0.07++ 0.18
Net realized and unrealized gain/(loss) on investments.... 5.91 0.64 (0.97) 1.01 0.58
------- ------- -------- -------- --------
Total from investment operations........................ 6.03 0.71 (0.26) 1.08 0.76
------- ------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.01) (0.72) (0.26) (0.17) (0.00)#
Distributions from net realized gains..................... - (0.64) (0.24) - (0.12)
------- ------- -------- -------- --------
Total distributions..................................... (0.01) (1.36) (0.50) (0.17) (0.12)
------- ------- -------- -------- --------
Net asset value, end of year................................ $17.63 $11.61 $12.26 $13.02 $12.11
======= ======= ======== ======== ========
Total return+............................................... 51.96% 5.20% (2.64)% 9.04% 6.61%
======= ======= ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................ $86,632 $60,360 $49,636 $62,355 $45,909
Ratio of operating expenses to average net assets (a)..... 1.39% 1.36% 1.35% 1.39% 1.47%
Ratio of net investment income to average net assets...... 0.87% 0.61% 0.52% 0.56% 0.91%
Portfolio turnover rate................................... 161% 118% 84% 98% 72%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and/or fees reduced by
credits allowed by the custodian......................... 1.40% 1.48% 1.36% 1.39% 1.48%
</TABLE>

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

49
<PAGE> 53

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR

SHORT TERM INCOME FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1999 1998 1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $2.44 $2.43 $2.43 $2.49 $2.39
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.12 0.12 0.14 0.15 0.12
Net realized and unrealized gain/(loss) on investments.... (0.05) 0.01 0.00# (0.06) 0.10
------- ------- ------- ------- -------
Total from investment operations........................ 0.07 0.13 0.14 0.09 0.22
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.12) (0.12) (0.14) (0.15) (0.12)
------- ------- ------- ------- -------
Total distributions..................................... (0.12) (0.12) (0.14) (0.15) (0.12)
------- ------- ------- ------- -------
Net asset value, end of year................................ $2.39 $2.44 $2.43 $2.43 $2.49
======= ======= ======= ======= =======
Total return+............................................... 2.89% 5.28% 5.90% 3.74% 9.30%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................ $53,144 $37,399 $11,944 $12,402 $12,365
Ratio of operating expenses to average net assets (a)..... 0.80% 0.85% 1.00% 0.98% 0.85%
Ratio of net investment income to average net assets...... 5.26% 5.45% 6.04% 6.08% 6.14%
Portfolio turnover rate................................... 42% 27% 43% 125% 188%
Ratio of operating expenses to average net assets without
fee waivers and/or fees reduced by credits allowed by the
custodian................................................ 0.81% 0.89% 1.03% 1.06% 1.01%
</TABLE>

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

+ The total return would have been lower if certain fees had not been waived
by the investment advisor or if fees had not been reduced by credits allowed
by the custodian.
# Amount represents less than $0.01 per share.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

50
<PAGE> 54
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR

U.S. GOVERNMENT SECURITIES FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $10.11 $10.04 $9.77 $10.00 $9.13
------- ------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.54 0.63 0.63 0.58 0.64
Net realized and unrealized gain/(loss) on investments.... (0.49) 0.06 0.26 (0.23) 0.87#
------- ------- -------- -------- --------
Total from investment operations........................ 0.05 0.69 0.89 0.35 1.51
------- ------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.54) (0.62) (0.62) (0.58) (0.64)
------- ------- -------- -------- --------
Total distributions..................................... (0.54) (0.62) (0.62) (0.58) (0.64)
------- ------- -------- -------- --------
Net asset value, end of year................................ $9.62 $10.11 $10.04 $9.77 $10.00
======= ======= ======== ======== ========
Total return+............................................... 0.51% 7.03% 9.42% 3.69% 16.89%
======= ======= ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................ $80,015 $41,914 $61,656 $66,563 $52,303
Ratio of operating expenses to average net assets (a)..... 0.83% 0.89% 0.90% 0.94% 1.00%
Ratio of net investment income to average net assets...... 6.02% 5.85% 6.28% 6.18% 6.68%
Portfolio turnover rate................................... 15% 22% 194% 282% 273%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and/or fees reduced by
credits allowed by the custodian......................... 0.83% 1.03% 0.91% 0.94% 1.03%
Ratio of operating expenses to average net assets
including interest expense............................... - 1.02% 1.54% 1.08% 1.76%
</TABLE>

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

+ The total return would have been lower if certain fees had not been waived
and/or expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
# The amount shown may not accord with the change in the aggregate gains and
losses of portfolio securities due to timing of sales and redemptions of Fund
shares.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

51
<PAGE> 55
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR

INCOME FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1999 1998 1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $10.24 $10.19 $9.82 $10.48 $9.06
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.67 0.70 0.70 0.68 0.70
Net realized and unrealized gain/(loss) on investments.... (0.89) 0.04 0.37 (0.66) 1.50
------- ------- ------- ------- -------
Total from investment operations........................ (0.22) 0.74 1.07 0.02 2.20
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.67) (0.69) (0.70) (0.68) (0.78)
------- ------- ------- ------- -------
Total distributions..................................... (0.67) (0.69) (0.70) (0.68) (0.78)
------- ------- ------- ------- -------
Net asset value, end of year................................ $9.35 $10.24 $10.19 $9.82 $10.48
======= ======= ======= ======= =======
Total return+............................................... (2.16)% 7.45% 11.35% 0.43% 25.09%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................ $55,556 $49,654 $51,670 $59,883 $60,676
Ratio of operating expenses to average net assets (a)..... 0.85% 0.96% 0.96% 0.98% 0.99%
Ratio of net investment income to average net assets...... 6.84% 6.69% 6.95% 6.92% 7.00%
Portfolio turnover rate................................... 12% 4% 36% 30% 42%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and/or fees reduced by
credits allowed by the custodian......................... 0.85% 0.96% 0.96% 0.98% 0.99%
Ratio of operating expenses to average net assets
including interest expense............................... - - - - 0.99%
</TABLE>

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

52
<PAGE> 56

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR

MONEY MARKET FUND

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.045 0.049 0.049 0.049 0.053
Net realized gain/(loss) on investments................... (0.000)# (0.000)# 0.000# 0.000# (0.000)#
------- ------- -------- -------- --------
Total from investment operations........................ 0.045 0.049 0.049 0.049 0.053
------- ------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... (0.045) (0.049) (0.049) (0.049) (0.053)
Distributions from net realized capital gains............. - - - (0.000)# -
------- ------- -------- -------- --------
Total distributions..................................... (0.045) (0.049) (0.049) (0.049) (0.053)
------- ------- -------- -------- --------
Net asset value, end of year................................ $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======== ======== ========
Total return+............................................... 4.56% 5.01% 4.99% 4.97% 5.46%
======= ======= ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)........................ $31,105 $31,862 $32,864 $23,266 $20,373
Ratio of operating expenses to average net assets (a)..... 0.71% 0.65% 0.75% 0.58% 0.50%
Ratio of net investment income to average net assets...... 4.47% 4.90% 4.88% 4.86% 5.30%
Ratio of operating expenses to average net assets without
fee waivers, expenses reimbursed and/or fees reduced by
credits allowed by the custodian......................... 0.78% 0.81% 0.85% 0.88% 1.01%
</TABLE>

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

+ The total return would have been lower if certain fees had not been waived
and/or expenses reimbursed by the investment advisor or if fees had not been
reduced by credits allowed by the custodian.
# Amount represents less than $0.001 per share.
(a) Ratio of operating expenses to average net assets includes expenses paid
indirectly.

53
<PAGE> 57

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

APPENDIX A

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

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

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

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

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

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

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

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

DESCRIPTION OF STANDARD & POOR'S BOND RATINGS:

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

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

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

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

54
<PAGE> 58

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

FOR MORE INFORMATION ABOUT THE WM VARIABLE TRUST

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

You may review and copy information about WM Variable Trust, including the SAI,
at the Securities and Exchange Commission's public reference room in Washington,
D.C. You may call the Commission at 1-202-942-8070 for information about the
operation of the public reference room. You may also access reports and other
information about WM Variable Trust on the Edgar database or the Commission's
Internet site at http://www.sec.gov. You may obtain copies of this information,
with payment of a duplication fee, by electronic request at the following email
address: [email protected] or by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009. You may need to refer to file number
811-07462.

<PAGE> 59

WM VARIABLE TRUST
1201 THIRD AVENUE, 22ND FLOOR
SEATTLE, WASHINGTON 98101
STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 2000

<TABLE>
<S> <C>
FIXED INCOME FUNDS EQUITY FUNDS
SHORT TERM INCOME FUND BOND & STOCK FUND
U.S. GOVERNMENT SECURITIES FUND GROWTH & INCOME FUND
INCOME FUND GROWTH FUND
MONEY MARKET FUND MID CAP STOCK FUND
GROWTH FUND OF THE NORTHWEST
PORTFOLIOS SMALL CAP STOCK FUND
INTERNATIONAL GROWTH FUND
STRATEGIC GROWTH PORTFOLIO
CONSERVATIVE GROWTH PORTFOLIO
BALANCED PORTFOLIO
FLEXIBLE INCOME PORTFOLIO
</TABLE>

This Statement of Additional Information ("SAI") is not a prospectus but
supplements the information contained in the Prospectus relating to the Money
Market Fund, Short Term Income Fund, U.S. Government Securities Fund, Income
Fund, Bond & Stock Fund, Growth & Income Fund, Growth Fund, Mid Cap Stock Fund,
Growth Fund of the Northwest, Small Cap Stock Fund and International Growth Fund
(the "Funds"), and Income Portfolio, Flexible Income Portfolio, Balanced
Portfolio, Conservative Growth Portfolio and Strategic Growth Portfolio (the
"Portfolios") of WM Variable Trust (the "Trust"), dated May 1, 2000, as revised
from time to time. The SAI should be read in conjunction with the Prospectus, as
amended or supplemented from time to time. The Trust's Annual Reports for the
years ended December 31, 1997 and December 31, 1998 are incorporated by
reference into this SAI. With respect to the High Yield Fund, which is a series
of WM Trust I, the Annual Report for WM Trust I for the year ended October 31,
1998 is incorporated by reference into this SAI. The Trust's Prospectus and
Annual Reports incorporated by reference may be obtained without charge by
writing to American General Life Insurance Company ("AGL"), Attention: Annuity
Administration, P.O. Box 1401, Houston, Texas 77251-1401 or by calling AGL at
800-247-6584.

<PAGE> 60

TABLE OF CONTENTS

<TABLE>
<S> <C>
GENERAL INFORMATION AND HISTORY............................. 3
MANAGEMENT OF THE TRUST..................................... 3
INVESTMENT ADVISOR.......................................... 8
CUSTODIAN, ADMINISTRATOR, TRANSFER AGENT AND DISTRIBUTOR.... 12
INVESTMENT OBJECTIVES AND POLICIES.......................... 14
INVESTMENT RESTRICTIONS..................................... 28
PERFORMANCE................................................. 37
TAXES....................................................... 41
FINANCIAL STATEMENTS........................................ 43
DESCRIPTION OF S&P, MOODY'S, DUFF & PHELPS AND FITCH IBCA
RATINGS................................................... 44
</TABLE>

2
<PAGE> 61

GENERAL INFORMATION AND HISTORY

The Trust is an open-end management investment company, and each Fund is
diversified. Except for "seed money" held by WM Shareholder Services, Inc.,
American General Life is the sole record holder of shares of the Trust, and to
the knowledge of the Trust, no other person is the beneficial holder of more
than 5% of the shares of the Trust. As discussed in the Prospectus, the five
Portfolios invest in various of the Funds. Certain of the Portfolios may also
invest in the High Yield Fund, a series of WM Trust I (the "High Yield Fund").

MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS OF THE TRUST

The Trust is governed by a Board of Trustees which oversees the Trust's
activities and is responsible for protecting the interests of shareholders. The
names of the Trustees and executive officers of the Trust, together with
information as to their ages and principal business occupations during the past
five years, are set forth below. The executive officers of the Trust are
employees of organizations that provide services to the Trust.

TRUSTEES:

DAVID E. ANDERSON (Age: 73)

Trustee
17960 Seabreeze Drive
Pacific Palisades, California 90272
Former President and CEO of GTE California, Inc. from 1979 to 1988; retired in
1988. Director of Barclay's Bank of California until 1988. Currently involved in
the following charitable organizations as a director on the following boards:
Board chairman, Children's Bureau Foundation; Board member, Upward Bound House
of Santa Monica; Past campaign chairman of United Way, former chairman, Los
Angeles Area Chamber of Commerce.

WAYNE L. ATTWOOD, MD (Age: 71)

Trustee

3 East 40th Avenue

Spokane, Washington 99203
Retired doctor of internal medicine and gastroenterology. Former president,
Medical Staff -- Sacred Heart Medical Center; former president of Spokane
Society of Internal Medicine; and former president of Spokane Physicians for
Social Responsibility.

ARTHUR H. BERNSTEIN, ESQ. (Age: 74)

Trustee
11661 San Vicente Blvd., Suite 701
Los Angeles, California 90049
President of Bancorp Capital Group, Inc., and Bancorp Venture Capital, Inc.
Previously served on the board of directors of Great Western Leasing
Corporation, subsidiary of Great Western Financial Corporation ("GWFC"), until
the subsidiary was sold in 1987. Director of Ryder System, Inc., chairman of the
board of trustees of the California Family Studies Center and Phillips Graduate
Institute since 1984.

3
<PAGE> 62

KRISTIANNE BLAKE (Age: 46)

Trustee

Post Office Box 28338

Spokane, Washington 99228-8338

CPA specializing in personal financial and tax planning since 1975. Served as a
partner with the accounting firm of Deloitte, Haskins & Sells prior to starting
own firm in 1987. Community activities include: board chair, United Way of
Spokane County; treasurer, YMCA of the Inland Northwest; past president, Junior
League of Spokane; board member, Spokane Intercollegiate Research & Technology
Institute Foundation; board member, Spokane Joint Center for Higher Education;
board member, Spokane Area Chamber of Commerce; and board member, St. George's
School.

EDMOND R. DAVIS, ESQ. (Age: 71)

Trustee

553 South Marengo Avenue

Pasadena, California 91101

Joined the law firm of Brobeck, Phleger & Harrison as a partner in 1987 and
responsible for estate planning, and trusts and estate matters in the Los
Angeles office. Prior to joining the firm, had a similar position for 20 years
with the law firm of Overton, Lyman & Prince in Los Angeles. His expertise has
been recognized in Who's Who in California, the Best Lawyers of America, and
Who's Who in American Law.

JOHN W. ENGLISH (Age: 67)

Trustee

50-H New England Ave.

P.O. Box 640
Summit, New Jersey 07902-0640
Retired vice president and chief investment officer of the Ford Foundation (a
non-profit charitable organization). Chairman of the board and director, the
China Fund, Inc., (closed-end mutual fund). Director, Paribas Trust for
Institutions (an open-end mutual fund). Trustee, Retail Property Trust (a
company providing management services for a shopping center).

*ANNE V. FARRELL (Age: 64)

Trustee
425 Pike Street, Suite 510
Seattle, Washington 98101

Joined the Seattle Foundation (a charitable foundation) in 1980 as executive
vice president. Became president in 1984. Also serves on the board of Washington
Mutual, Inc. and Blue Cross of Washington and Alaska and PREMERA.

CARROL R. MCGINNIS (Age: 55)

Trustee
9225 Katy Freeway, Suite 205
Houston, Texas 77024
Founder, McGinnis Investments, since 1994. Prior thereto, served in various
positions with Transamerica Fund Management Company and its predecessor
companies from 1969-1993, including as president and chief operating officer.

4
<PAGE> 63

*MICHAEL K. MURPHY (Age: 63)

Trustee
PO Box 3366
Spokane, Washington 99220-3366

President and CEO of CPM Development Corporation (a holding company which
includes Central Pre-mix Concrete Company) and Inland Asphalt Company. Member of
the board of directors for Washington Mutual, Inc. Former president and director
of Inland Empire Chapter -- Associated General Contractors, and former director
of National Aggregates Associates.

ALFRED E. OSBORNE, JR., PH.D. (Age: 55)

Trustee
110 Westwood Plaza, Suite C305
Los Angeles, California 90095-1481
University professor, researcher and administrator at University of California
Los Angeles since 1972. Director, Times Mirror Company (newspaper publisher),
United States Filer Corporation, Nordstrom Inc. (clothing retailer) and
Greyhound Lines, Inc. (bus company). Independent general partner, Technology
Funding Venture Partners V, and former Governor of the National Association of
Securities Dealers, Inc.

*WILLIAM G. PAPESH (Age: 57)

President and Trustee
1201 Third Avenue
22nd Floor

Seattle, Washington 98101

President and director of WM Advisors, Inc. ("WM Advisors" or the "Advisor") and
WM Funds Distributor, Inc. (the "Distributor"). Currently Governor of the
Investment Company Institute; member of the Washington State Securities Advisory
Committee; former Governor of the National Association of Securities Dealers,
Inc. (Vice-Chairman, Finance Committee); former Governor of the Securities
Industry Association.

DANIEL L. PAVELICH (Age: 55)

Trustee

4311 South Madison Road

Spokane, Washington 99206

Retired Chairman and CEO of BDO Seidman, a leading national accounting and
consulting firm. Worked in Seidman's Spokane office for 27 years and is a former
presiding member of the firm's board of directors. A member of the American
Institute of CPAs and served as a vice president of the Washington Society of
CPAs' board of directors.

JAY ROCKEY (Age: 72)

Trustee
2121 Fifth Avenue
Seattle, Washington 98121
Founder and chairman of The Rockey Company, a public relations and marketing
communications consulting firm with headquarters in Seattle and offices in
Portland and Spokane. Founder and director of RXL Pulitzer, an international
multimedia company that is a joint venture with Pulitzer Publishing Co. of St.
Louis. History includes managing New York City public relations

5
<PAGE> 64

for Aluminum Company of America, director of public relations for the Seattle
World's Fair and the presidency of the Public Relations Society of America.

MORTON O. SCHAPIRO (Age: 46)

Trustee
4535 Lenox Avenue
Sherman Oaks, California 91423
Dean of the College of Letters, Arts and Sciences and Professor of Economics,
University of Southern California, since 1991. Prior thereto, Professor of
Economics, Williams College, 1980-1991.

RICHARD C. YANCEY (Age: 73)

Lead Trustee

444 Madison Avenue, 19th Floor

New York, New York 10022
Investment Banker -- SBC Warburg, Dillion, Read & Co., Inc., New York City, 1952
through 1992. Served as vice president, managing director and director and
senior advisor at Dillion, Read & Co. Member of the boards of directors of
AdMedia Partners Inc. (business and financial advisory services company), CapMAC
Holdings Inc. (financial guarantee and reinsurance company), Fiberite, Inc
(manufacturer of high temperature composite materials), The Scoreboard, Inc.
(sports and entertainment products distributor), and Czech and Slovak American
Enterprise Fund (investment fund).
OFFICERS:

MONTE D. CALVIN, CPA (Age: 56)

First Vice President and Chief Financial Officer

1201 Third Avenue
22nd Floor
Seattle, WA 98101

Mr. Calvin is First Vice President of Shareholder Services, Chief Financial
Officer of the Trust and First Vice President and Director of the Advisor and
the Distributor.

SANDY CAVANAUGH (Age: 45)

First Vice President

1631 Broadway

Sacramento, California 95818

Ms. Cavanaugh is a First Vice President and Director of the Distributor since
September 1997.

First Vice President and Director of Advisor and Shareholder Services. Prior to
joining the Distributor, Ms. Cavanaugh held senior level positions with AIM
Funds Distributor, First Interstate Investments and ASB Financial Services.

SHARON L. HOWELLS (Age: 49)

First Vice President

1201 Third Avenue

22nd Floor

Seattle, Washington 98101

Ms. Howells is First Vice President and Director of the Advisor, Distributor and
Shareholder Services.

6
<PAGE> 65

GARY POKRZYWINSKI (Age: 38)

Vice President

1201 Third Avenue

22nd Floor

Seattle, WA 98101

Mr. Pokrzywinski is a Vice President of the Advisor.

JOHN T. WEST (Age: 45)

Vice President, Secretary and Compliance Officer
1201 Third Avenue
22nd Floor
Seattle, WA 98101

Mr. West is a Vice President of Shareholder Services.

RANDALL L. YOAKUM (Age: 40)

First Vice President

1201 Third Avenue

22nd Floor

Seattle, Washington 98101

Mr. Yoakum is a First Vice President and Chief Investment Officer of the Advisor
since January 1, 2000. Vice President of the Advisor since February 11, 1999.

The Trustees and certain Officers of the Trust are also Trustees or Officers of
WM Trust I, WM Trust II and WM Strategic Asset Management Portfolios ("SAMP").
WM Trust I, WM Trust II and SAMP are investment companies advised by WM
Advisors.

Remuneration. No director, officer or employee of WM Advisors, the advisor to
the Funds and Portfolios, the sub-advisors of the Funds (the "sub-advisors"), or
any of their affiliates will receive any compensation from the Trust for serving
as an Officer or Trustee of the Trust. The Trust pays each Trustee who is not a
director, officer or employee of WM Advisors, the sub-advisors, or any of their
affiliates, a fee of $3,000 per day for each Board meeting attended (except that
the lead Trustee, presently Mr. Yancey, receives an additional $6,000 per annum
and each committee chairman receives $500 per committee meeting attended), and
reimburses them for travel and out-of-pocket expenses.

As of December 31, 1999, the Trustees and Officers of the Trust owned, in the
aggregate, less than 1% of the outstanding shares of each of the Funds and
Portfolios.

The Compensation Table which follows shows the aggregate compensation paid to
each of the Trust's Trustees by the Trust and the WM Group of Funds,
respectively, during the fiscal year ended December 31, 1999.

* Each Trustee who is an "interested person" of the Trust, as defined in the
Investment Act of 1940, as amended (the "1940 Act").

7
<PAGE> 66

COMPENSATION TABLE

<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION RETIREMENT THE WM GROUP OF FUNDS*
FROM THE TRUST FOR BENEFITS ACCRUED AS ESTIMATED PAID TO TRUSTEES
FISCAL YEAR ENDED PART OF FUND BENEFITS UPON FOR FISCAL YEAR ENDED
NAME OF TRUSTEE DECEMBER 31, 1999 EXPENSES RETIREMENT DECEMBER 31, 1999
- --------------- ---------------------- ------------------- ------------- -----------------------
<S> <C> <C> <C> <C>
David E. Anderson............ $5,888 $0 $0 $41,500
Wayne L. Attwood, M.D. ...... $5,817 $0 $0 $41,000
Arthur H. Bernstein, Esq. ... $6,030 $0 $0 $42,500
Kristianne Blake............. $6,172 $0 $0 $43,500
Edmond R. Davis, Esq. ....... $5,675 $0 $0 $40,000
John W. English.............. $5,817 $0 $0 $41,000
Anne V. Farrell***........... $5,817 $0 $0 $41,000
Carrol R. McGinnis**......... $4,398 $0 $0 $31,000
Michael K. Murphy***......... $4,398 $0 $0 $31,000
Alfred E. Osborne, Jr.,
Ph.D. ..................... $5,817 $0 $0 $41,000
William G. Papesh***......... $ 0 $0 $0 $ 0
Daniel L. Pavelich........... $4,327 $0 $0 $30,500
Jay Rockey................... $5,817 $0 $0 $41,000
Morton O. Schapiro**......... $4,398 $0 $0 $31,000
Richard C. Yancey............ $7,094 $0 $0 $50,000
</TABLE>

- ---------------
* The WM Group of Funds consists of the Trust, WM Trust I, WM Trust II and
SAMP.
** Messrs. McGinnis and Schapiro began serving as Trustees of the Trust, WM
Trust I, WM Trust II and WM SAMP on March 5, 1999.
*** A Trustee who is an "interested person" of the Trust as defined in the 1940
Act.

INVESTMENT ADVISOR

WM Advisors serves as investment advisor to each of the Funds and Portfolios,
and each sub-advisor serves as investment sub-advisor to one or more Funds,
pursuant to separate written agreements. Certain of the services provided by,
and the fees paid to, WM Advisors and the sub-advisors are described in the
Prospectus under "Organization." WM Advisors and the sub-advisors each (i)
compensates its respective directors and pays the salaries of its respective
officers and employees, (ii) compensates its respective officers and employees
that serve as officers of the Trust, and (iii) maintains office facilities for
the Trust.

"The Trust, WM Advisors and the subadvisers have adopted codes of ethics which
generally permit personal securities trading by their personnel, subject to
certain conditions that are intended to prevent such personnel from defrauding
the Trust."

MANAGEMENT FEES
Each Fund and Portfolio pays a management fee to the Advisor. The management fee
is calculated and paid every month. It is based upon a percentage of the average
net assets of the Fund or Portfolio. Absent fee waivers, the total management
fee for each Fund and Portfolio as provided in the investment advisory agreement
of the Fund or Portfolio is as follows:

<TABLE>
<CAPTION>
FUND FEES
- ---- -----------------------------------
<S> <C>
Money Market Fund........................................... 0.45% of all assets
Short Term Income Fund...................................... 0.50% of the first $200 million
0.45% on the next $300 million
0.40% thereafter
U.S. Government Securities Fund............................. 0.50% of all assets
Income Fund................................................. 0.50% of all assets
Bond & Stock Fund........................................... 0.625% of the first $500 million
0.50% thereafter
</TABLE>

8
<PAGE> 67

<TABLE>
<CAPTION>
FUND FEES
- ---- -----------------------------------
<S> <C>
Growth & Income Fund........................................ 0.80% of the first $100 million
0.75% of the next $100 million
0.70% of the next $200 million
0.65% of the next $100 million
0.575% thereafter
Mid Cap Stock Fund.......................................... 0.75% of all assets
Growth Fund................................................. 0.95% of the first $25 million
0.875% thereafter
Growth Fund of the Northwest................................ 0.625% of the first $500 million
0.50% thereafter
Small Cap Stock Fund........................................ 0.90% of the first $25 million
0.85% of the next $475 million
0.75% thereafter
International Growth Fund................................... 0.95% of the first $50 million
0.85% of the next $75 million
0.75% thereafter
</TABLE>

SUB-ADVISORY FEES
The Advisor retains only the net amount of the management fees paid to it after
the sub-advisory fees described below are paid to the sub-advisors. The Advisor
pays to the sub-advisors for the funds listed below a monthly fee at an annual
rate of the following percentages of the average net assets of each such fund.

<TABLE>
<CAPTION>
SUB-ADVISOR/FUNDS FEES
- ----------------- ---------------------------------
<S> <C>
JANUS Capital Corporation
Growth Fund............................................... 0.55% of the first $25 million
0.50% of the next $47.5 million
0.45% thereafter
CAPITAL GUARDIAN TRUST COMPANY
International Growth Fund................................. 0.75% of the first $25 million
0.60% of the next $25 million
0.425% of the next $200 million
0.375% thereafter
</TABLE>

FEE AGGREGATION POLICIES

Fee aggregation will apply to all account managed by Capital Group companies
(affiliates of Capital Guardian), except for emerging markets equity investments
and investments in funds with internally charged fees ("Eligible Accounts"). In
order to achieve the benefit of fee aggregation, the combined actual fees must
exceed the combined total of the minimum fee applicable to each of the client's
Eligible Accounts.

For additional Eligible Accounts with the same investment objectives and
guidelines, all assets for these Eligible Accounts will be aggregated for fee
calculation purposes.

For additional Eligible Accounts with different investment objectives and
guidelines:

1. Each account will be charged on the first $10 million at the
initial breakpoint rate for the appropriate mandate. Any incremental assets
over $10 million will be aggregated and charged at the incremental rate for
the appropriate mandate.

2. Assets invested in commingled funds will be aggregated and charged
at the incremental rate for the appropriate mandate.
3. The first additional account within a new country will be charged
on the first $15 million at the initial breakpoint rate for the appropriate
mandate. Any incremental assets over $15 million will be aggregated and
charged at the incremental rate for the appropriate mandate.

9
<PAGE> 68

For fee aggregation purposes, Eligible Accounts will be aggregated in the
following order: balanced, equity-developed markets, convertible,
fixed-income -- high yield, fixed-income -- emerging markets, and
fixed-income -- developed markets.
Unless otherwise requested, the benefit from fee aggregation for clients with
multiple accounts will be calculated by comparing total aggregated fees to total
unaggregated fees for all Eligible Accounts. The resulting percentage discount
will be applied to each Eligible Account's unaggregated fees.
If all Eligible Accounts are not denominated in the same currency, the local
currency assets of each Eligible Account and the related fees calculated on any
unaggregated basis will be converted to a designated base currency using the
applicable foreign exchange rate. The total of such fees will be compared to the
Eligible Accounts' total aggregated fees. The resulting percentage discount will
then be applied to each Eligible Account's unaggregated fee as determined in the
applicable currency.
FEE DISCOUNTS AND ELIMINATION OF FEE BREAKPOINTS

The following fee discount will be applied based upon the total aggregated fees:

<TABLE>
<S> <C>
Clients between $1.25 million to $4 million................. 5% discount
Clients between $4 million to $8 million.................... 7.5% discount
Clients between $8 million to $12 million................... 10% discount
Clients over $12 million.................................... 12.5% discount
</TABLE>

For this purpose, aggregated fees will include all fees from separate accounts,
commingled funds, and funds internally charged fees managed by Capital Group
companies, except for investments in American-Funds' mutual funds. The resulting
fee discount percentage will be applied to each account's fees (excluding fees
related to investments in funds with internally charged fees).
For clients whose total aggregated fees (before discounts) exceed $3 million,
fee breakpoints will be eliminated and each account will be charged at the
lowest marginal fee rate applicable to the account's fee schedule.
To determine the applicable fee discount level and breakpoint elimination
threshold, the total aggregated fees for the quarter will be annualized. For
this purpose, all local currency fees will be converted to a designated base
currency.

Fees related to investments in funds with internally charged fees will be
estimated by multiplying the quarter end value of the investment (adjusted on a
prorated basis for any contributions or withdrawals during the quarter) by the
fund's effective fee. For this purpose, the effective fee will be based on the
value of the fund's quarter end assets and the fund's current fee schedule.

Applicable discount levels and the elimination of fee breakpoints will be
effective beginning the first quarter a discount threshold is exceeded and will
remain in effect unless the total fees fall below the discount threshold due to
a significant withdrawal of assets. A decline in the market alone will not cause
the reinstatement of a lower discount level or fee breakpoints.

10
<PAGE> 69

The tables below show the investment advisory fees paid for the years ended
December 31, 1997, 1998 and 1999. WM Advisors received investment advisory fees
from the Funds and Portfolios for periods after January 30, 1998, while prior to
that time, the Funds paid Sierra Investment Advisors Corporation ("Sierra
Advisors"), the investment advisor to the Funds prior to January 30, 1998, and
the Portfolios paid Sierra Investment Services Corporation, the investment
advisor to the Portfolios prior to January 30, 1998, the following advisory
fees*:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------ ------------------------ ------------------------
FEES PAID FEES WAIVED FEES PAID FEES WAIVED FEES PAID FEES WAIVED
---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund........... $ 134,499 18$,577... $ 174,936 $55,203 $ 121,580 $29,077
Short Term Income Fund...... $ 217,194 0.$....... $ 141,693 $ 0 $ 57,289 $ 3,755
U.S. Government Securities
Fund...................... $ 341,645 0.$....... $ 324,028 $ 0 $ 376,599 $ 0
Income Fund................. $ 302,783 0.$....... $ 325,996 $ 0 $ 345,006 $ 0
Bond & Stock Fund........... $ 44,743 0.$....... $ 6,017 $ 9,347 N/A N/A
Growth & Income Fund........ $1,224,123 0.$....... $ 874,439 $ 0 $ 697,411 $ 0
Growth Fund of the
Northwest................. $ 42,575 0.$....... $ 5,624 $11,191 N/A N/A
Growth Fund................. $2,049,006 $ 0 $1,175,431 $ 0 $1,055,947 $ 0
Small Cap Stock Fund........ $ 330,726 $ 0 $ 365,112 $ 0 $ 419,081 $ 0
International Growth Fund... $ 578,444 $ 0 $ 537,004 $63,408 $ 567,918 $ 0
Strategic Growth
Portfolio................. 14,323 $10,815 $ 2,303 $ 9,366 $ 177 $ 0
Conservative Growth
Portfolio................. $ 39,271 $ 4,733 $ 4,897 $ 8,854 $ 433 $ 0
Balanced Portfolio.......... $ 48,073 $ 0 $ 5,610 $ 9,201 $ 849 $ 0
Flexible Income Portfolio... $ 10,665 $ 5,629 $ 329 $ 3,655 $ 17 $ 0
Income Portfolio............ $ 3,575 $ 3,575 $ 240,000 $ 0 N/A N/A
</TABLE>

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

* Each of the Strategic Growth, Conservative Growth and Balanced Portfolios
commenced operations on June 3, 1997. The Flexible Income Portfolio commenced
operations on September 9, 1997. The Income Portfolio commenced operations on
October 22, 1997, ceased operations on November 4, 1997 and re-commenced
operations on April 23, 1998. The Bond & Stock Fund and Growth Fund of the
Northwest commenced operations on April 28, 1998.

Sub-advisory fees were paid by the Funds' advisor for the fiscal years ended
December 31, 1997, 1998 and 1999 in the following amounts*:

<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ----------------------- -----------------------
FEES PAID FEES WAIVED FEES PAID FEES WAIVED FEES PAID FEES WAIVED
---------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund.............. $ 0 $0 $ 4,173 $0 $ 45,197 $0
Short Term Income Fund......... $ 0 $0 $ 787 $0 $ 18,313 $0
U.S. Government Securities
Fund......................... $ 0 $0 $ 9,761 $0 $116,118 $0
Income Fund.................... $ 0 $0 $ 13,245 $0 $159,233 $0
Growth & Income Fund........... $ 0 $0 $ 38,279 $0 $392,279 $0
Growth Fund.................... $1,172,646 $673,461 $0 $605,184 $0
Small Cap Stock Fund........... $ 0 $0 $ 38,713 $0 $116,118 $0
International Growth Fund...... $ 317,545 $0 $286,524 $0 $304,657 $0
</TABLE>

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

* The sub-advisory agreements for the Money Market, Short Term Income, U.S.
Government Securities, Income, Growth & Income and Small Cap Stock Funds
which required the payment of the fees shown in this table are no longer in
effect. The only sub-advisory agreements in effect as of May 1, 2000 are
those for the Growth and International Growth Funds described at the
beginning of this section.

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<PAGE> 70

CUSTODIAN, ADMINISTRATOR, TRANSFER AGENT AND DISTRIBUTOR
The assets of the Trust are held under bank custodianship in accordance with the
1940 Act. Boston Safe Deposit and Trust Company, located at One Boston Place,
Boston, Massachusetts 02108, serves as custodian for the Funds (the
"Custodian"). In addition, the Trust may employ foreign sub-custodians that are
approved by the Board of Trustees to hold foreign assets. Shareholder Services,
located at 1201 Third Avenue, 22nd Floor, Seattle, Washington 98101, serves as
the Trust's administrator and transfer agent. Prior to December 23, 1997, Sierra
Fund Administration Corporation ("Sierra Administration") served as the
administrator to the Trust.
For periods prior to January 30, 1998, the Funds and Portfolios paid to Sierra
Administration, the administrator for the Funds and the Portfolios at that time,
and for periods after January 30, 1998 the Funds and Portfolios paid to
Shareholder Services, the following administration fees*:

<TABLE>
<CAPTION>
1999 1998 1997
----------------------- ----------------------- -----------------------
FEES PAID FEES WAIVED FEES PAID FEES WAIVED FEES PAID FEES WAIVED
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund.............. $ 50,834 $0 $ 62,977 $ 0 $ 54,236 $ 0
Short Term Income Fund......... $ 78,190 $0 $ 51,010 $ 0 $ 21,976 $ 0
U.S. Government Securities
Fund......................... $113,608 $0 $ 97,208 $ 0 $112,980 $ 0
Income Fund.................... $ 95,755 $0 $ 90,276 $ 0 $ 95,540 $ 0
Bond & Stock Fund.............. $ 12,886 $0 $ 1,733 $ 0 N/A N/A
Growth & Income Fund........... $281,789 $0 $197,865 $ 0 $156,925 $ 0
Growth Fund of the Northwest... $ 12,262 $0 $ 1,620 $ 0 N/A N/A
Growth Fund.................... $417,653 $0 $237,946 $ 0 $213,366 $ 0
Small Cap Stock Fund........... $ 67,389 $0 $ 74,671 $ 0 $ 86,099 $ 0
International Growth Fund...... $111,906 $0 $103,148 $ 0 $109,677 $ 0
Strategic Growth Portfolio**... $ 21,485 $0 $ 3,455 $ 0 $ 0 $ 265
Conservative Growth
Portfolio**.................. $ 58,907 $0 $ 7,343 $ 0 $ 0 $ 665
Balanced Portfolio**........... $ 72,109 $0 $ 8,416 $ 0 $ 0 $1,274
Flexible Income Portfolio**.... $ 15,998 $0 $ 496 $ 0 $ 0 $ 25
Income Portfolio**............. $ 5,362 $0 $ 360 $ 0 N/A N/A
</TABLE>

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

** In addition, Sierra Administration absorbed expenses for each of the
Portfolios for the year ended December 31, 1997, as follows: Strategic Growth
-- $26,463, Conservative Growth -- $27,116, Balanced Portfolio -- $29,258,
Flexible Income Portfolio -- $19,620, and the Income Portfolio -- $5,469.

WM Funds Distributor, Inc. (the Distributor) will purchase and resell shares of
the Funds' and Portfolios' capital stock to fill orders placed with it by
separate accounts of AGL. Currently, shares of the Funds and Portfolios may only
be sold to the WM Advantage Contract and the WM Strategic Asset Manager Contract
or to any future separate account developed by AGL.

The Distributor has not received any earnings or profits from the redemption of
Fund or Portfolio shares. No brokerage fees were paid by the Funds or Portfolios
to the Distributor during the year. The Distributor may act as broker for
portfolio purchases and sales should it become a member of a national securities
exchange.

12
<PAGE> 71

COUNSEL AND INDEPENDENT ACCOUNTANTS
Ropes & Gray, located at One International Place, Boston, Massachusetts 02110
serves as counsel to the Trust.
Deloitte & Touche LLP, located at 50 Fremont Street, San Francisco, CA 94105,
serves as independent accountants to the Trust. PricewaterhouseCoopers LLP,
located at 160 Federal Street, Boston, Massachusetts 02110, served as
independent accountants to the Trust prior to March 24, 1998.
ORGANIZATION OF THE TRUST
The Trust is an open-end management investment company that is organized as a
"Massachusetts business trust" under the laws of The Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated January
27, 1993, as amended from time to time (the "Declaration of Trust"). Prior to
March 20, 1998, the Trust was known as The Sierra Variable Trust. Certificates
representing shares in the Trust are not physically issued. The Trust's
custodian and the Trust's transfer agent maintain a record of each shareholder's
ownership of Trust shares. Shares do not have cumulative voting rights, which
means that holders of more than 50% of the shares voting for the election of
Trustees can elect all Trustees. Shares are transferable but have no preemptive,
conversion or subscription rights. Shareholders generally vote by Fund or
Portfolio except with respect to the election of Trustees and the selection of
independent accountants.
Under normal circumstances, there will be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a majority
of the Trustees holding office have been elected by shareholders, at which time
the Trustees then in office promptly will call a shareholders' meeting for the
election of Trustees. Under the 1940 Act, shareholders of record of no less than
two-thirds of the outstanding shares of the Trust may remove a Trustee through a
declaration in writing or by vote cast in person or by proxy at a meeting called
for that purpose. Under the Declaration of Trust, the Trustees are required to
call a meeting of shareholders for the purpose of voting upon the question of
removal of any such Trustee when requested in writing to do so by the
shareholders of record of not less than 10% of the Trust's outstanding shares.

The Trust has the power to issue separate series of shares and has authorized
the following sixteen separate series: Money Market Fund, Short Term Income
Fund, U.S. Government Securities Fund, Income Fund, Bond & Stock Fund, Growth &
Income Fund, Growth Fund of the Northwest, Growth Fund, Mid Cap Stock, Small Cap
Stock Fund, International Growth Fund, Strategic Growth Portfolio, Conservative
Growth Portfolio, Balanced Portfolio, Flexible Income Portfolio and Income
Portfolio. The Trust offers shares of beneficial interest, each without par
value. Additional series may be established. Prior to January 30, 1998, the
Money Market Fund was known as the Global Money Fund. Prior to March 20, 1998,
the U.S. Government Securities Fund was known as the U.S. Government Fund, the
Income Fund was known as the Corporate Income Fund, the Growth & Income Fund was
known as the Growth and Income Fund, the Strategic Growth Portfolio was known as
the Capital Growth Portfolio, the Conservative Growth Portfolio was known as the
Growth Portfolio and the Flexible Income Portfolio was known as the Value
Portfolio.

Currently, the shares of the Funds and Portfolios are sold only to AGL and its
separate accounts to fund Contracts, or to other series of the Trust, which are
sold to AGL and its separate accounts. In the future, the Trust may, subject to
receipt of an order from the Securities and

13
<PAGE> 72

Exchange Commission, offer its shares to separate accounts funding variable
annuities of insurance companies affiliated or unaffiliated with AGL and to
separate accounts which fund variable life insurance or other variable funding
arrangements. Should shares ever be sold to anyone other than AGL and its
separate accounts, the Trust's Board of Trustees will monitor potential
conflicts between variable life insurance policies and variable annuity
contracts or among insurance company shareholders and will determine what, if
any, action should be taken to resolve any conflicts.

Until other insurance companies have made investments in the series of the
Trust, AGL will be, directly or indirectly, the sole shareholder of the Trust
and therefore may be deemed to control the Trust, respectively, and as a result,
control of those funds). However, Contract owners may be deemed to have
beneficial ownership of shares allocable to their Contracts. As of December 31,
1999, to the Trust's knowledge, no Contract owner had shares allocable to
Contracts equal to more than 5% of any Fund.

Massachusetts law provides that the shareholders, under certain circumstances,
could 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 a
Trustee. The Declaration of Trust provides for indemnification from the Trust's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust would be unable to meet its obligations, a possibility that
the Trust's management believes is remote. Upon payment of any liability
incurred by the Trust, the shareholder paying the liability will be entitled to
reimbursement from the assets of the relevant Fund or Portfolio. The Trustees
intend to conduct the operations of the Trust in such a way so as to avoid, to
the extent possible, ultimate liability of the shareholders for liabilities of
the Trust.
INVESTMENT OBJECTIVES AND POLICIES

The Prospectus discusses the investment objective or objectives of each of the
Funds and Portfolios, and the policies to be employed to achieve such
objectives. This section contains supplemental information concerning the types
of securities and other instruments in which the Funds and the Portfolios may
invest, the investment policies and portfolio strategies that each may utilize
and certain risks attendant to such investments, policies and strategies.
Although the WM High Yield Fund is not mentioned specifically below because it
is not available for direct investment through the Contracts, some of the
strategies discussed below may apply to the WM High Yield Fund, which is an
allowable investment of the Portfolios.

STRATEGIES AVAILABLE TO ALL FUNDS AND PORTFOLIOS
RATINGS AS INVESTMENT CRITERIA. In general, the ratings of nationally
recognized statistical rating organizations ("NRSROs"), such as Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's ("S&P"), and Duff &
Phelps and Fitch IBCA, represent the opinions of these agencies as to the
quality of securities which they rate. It should be emphasized, however, that
such ratings are relative and subjective and are not absolute standards of
quality. These ratings will be used by the Funds and the Portfolios as initial
criteria for the selection of portfolio securities, but the Funds and the
Portfolios will also rely upon the independent advice of WM Advisors or their
respective sub-advisors to evaluate potential investments. Additional
information concerning the ratings of these services and their significance can
be found beginning on page 46 of this SAI.

14
<PAGE> 73

To the extent that the rating given by an NRSRO for securities may change as a
result of changes in such organization or its rating system, each of the Funds
and the Portfolios will attempt to use comparable ratings as standards for its
investments in accordance with the investment policies contained in the
Prospectus and in this SAI.
U.S. GOVERNMENT SECURITIES. U.S. Government Securities include debt obligations
of varying maturities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. U.S. Government Securities include direct obligations of
the U.S. Treasury, and securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association
("GNMA"), General Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation ("FHLMC"), Federal Intermediate Credit Banks, Resolution Trust
Corporation, Federal Land Banks, Federal National Mortgage Association ("FNMA"),
Maritime Administration, Tennessee Valley Authority, District of Columbia Armory
Board and Student Loan Marketing Association. Direct obligations of the U.S.
Treasury include a variety of securities that differ in their interest rates,
maturities and dates of issuance. Because the U.S. Government is not obligated
by law to provide support to an instrumentality it sponsors, a Fund or Portfolio
will invest in obligations issued by such an instrumentality only if WM Advisors
or the relevant sub-advisor determines that the credit risk with respect to the
instrumentality does not make its securities unsuitable for investment.
BANK OBLIGATIONS. Domestic commercial banks organized under federal law are
supervised and examined by the Comptroller of the Currency and are required to
be members of the Federal Reserve System and to be insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks organized under state
law are supervised and examined by state banking authorities but are members of
the Federal Reserve System only if they elect to join. Most state banks are
insured by the FDIC (although such insurance may not be of material benefit to a
Fund or Portfolio, depending upon the principal amount of certificates of
deposit ("CDs") of each state bank held by a Fund or Portfolio) and are subject
to federal examination and to a substantial body of federal law and regulation.
As a result of federal and state laws and regulations, domestic branches of
domestic banks are, among other things, generally required to maintain specific
levels of reserves, and are subject to other supervision and regulation designed
to promote financial soundness.
Obligations of foreign branches of U.S. banks and of foreign branches of foreign
banks, such as CDs and time deposits ("TDs"), may be general obligations of the
parent bank in addition to the issuing branch, or may be limited by the terms of
a specific obligation and governmental regulation. Obligations of foreign
branches of U.S. banks and foreign banks are subject to the risks associated
with investing in foreign securities generally. Foreign branches of U.S. banks
and foreign branches of foreign banks are not necessarily subject to the same or
similar regulatory requirements that apply to U.S. banks, such as mandatory
reserve requirements, loan limitations, and accounting, auditing and financial
recordkeeping requirements. In addition, less information may be publicly
available about a foreign branch of a U.S. bank or about a foreign bank than
about a U.S. bank.
Obligations of U.S. branches of foreign banks may be general obligations of the
parent bank in addition to the issuing branch, or may be limited by the terms of
a specific obligation and by federal and state regulation as well as
governmental action in the country in which the foreign

15
<PAGE> 74

bank has its head office. A U.S. branch of a foreign bank may or may not be
subject to reserve requirements imposed by the Federal Reserve System or by the
state in which the branch is located if the branch is licensed in that state.
The deposits of branches licensed by certain states may not necessarily be
insured by the FDIC.
In view of the foregoing factors associated with the purchase of CDs and TDs
issued by foreign banks and foreign branches of U.S. banks, WM Advisors or the
relevant sub-advisors will carefully evaluate such investments on a case-by-case
basis.
A Fund or a Portfolio may purchase a CD, TD or bankers' acceptances issued by a
bank, savings and loan association or other banking institution with less than
$1 billion in assets (a "Small Issuer Bank Obligation") only so long as the
issuer is a member of the FDIC or supervised by the Office of Thrift Supervision
(the "OTS") and so long as the principal amount of the Small Issuer Bank
Obligation is fully insured by the FDIC and is no more than $100,000. Each of
the Funds and Portfolios will at any one time hold only one Small Issuer Bank
Obligation from any one issuer.

MORTGAGE-BACKED SECURITIES. The mortgage-backed securities in which the Funds
and Portfolios may invest may be classified as governmental or
government-related, depending on the issuer or guarantor. Governmental
mortgage-backed securities are backed by the full faith and credit of the United
States. GNMA, the principal U.S. guarantor of such securities, is a wholly-
owned U.S. Government corporation within the Department of Housing and Urban
Development. Government-related mortgage-backed securities which are not backed
by the full faith and credit of the United States include those issued by FNMA
and FHLMC. FNMA/FHLMC are government-sponsored corporation owned entirely by
private stockholders, which is subject to general regulation by the Secretary of
Housing and Urban Development. Pass-through securities issued by FNMA/FHLMC are
guaranteed as to timely payment of principal and interest by FNMA/FHLMC.
Participation certificates representing interests in mortgages from FHLMC's
national portfolio are guaranteed as to the timely payment of interest and
ultimate collection of principal by FHLMC.

Entities may create mortgage loan pools offering pass-through investments in
addition to those described above. The mortgages underlying these securities may
be alternative mortgage instruments, that is, mortgage instruments in which
principal or interest payments may vary or terms to maturity may be shorter than
previously customary. As new types of mortgage-backed securities are developed
and offered to investors, the Funds and the Portfolios will, consistent with
their respective investment objectives and policies, consider making investments
in such new types of securities.
The average maturity of pass-through pools of mortgage-backed securities varies
with the maturities of the underlying mortgage instruments. In addition, a
pool's stated maturity may be shortened by unscheduled payments on the
underlying mortgages. Factors affecting mortgage prepayments include the level
of interest rates, general economic and social conditions, the location of the
mortgaged property and the age of the mortgage. Because prepayment rates of
individual mortgage pools vary widely, it is not possible to accurately predict
the average life of a particular pool. Common industry practice, for example, is
to assume that prepayments will result in a 7- to 9-year average life for pools
of fixed-rate 30-year mortgages. Pools of mortgages with other maturities of
different characteristics will have varying average life assumptions.

16
<PAGE> 75

REPURCHASE AGREEMENTS. The Short Term Income, Growth, Small Cap Stock and
International Growth Funds and the Portfolios may invest in repurchase
agreements. The Money Market, U.S. Government Securities, Income, Bond & Stock,
Mid Cap Stock, and Growth & Income Funds and Growth Fund of the Northwest may
enter into repurchase agreements with brokers, dealers and banks to temporarily
invest cash reserves provided that repurchase agreements maturing in greater
than 7 days cannot exceed 10% of each Fund's total assets.

STRATEGIES AVAILABLE TO ALL FUNDS (EXCEPT THE MONEY MARKET FUND) AND THE
PORTFOLIOS WHERE NOTED

OVER-THE-COUNTER OPTIONS. An over-the-counter option (an option not traded on a
national securities exchange) may be closed out only with the other party to the
original option transaction. While a Fund will seek to enter into
over-the-counter options only with dealers who agree to or are expected to be
capable of entering into closing transactions with the Fund, there can be no
assurance that the Fund will be able to liquidate an over-the-counter option at
a favorable price at any time prior to its expiration. Accordingly, the Fund
might have to exercise an over-the-counter option it holds in order to realize
any profit thereon and thereby would incur transactions costs on the purchase or
sale of the underlying assets. If the Fund cannot close out a covered call
option written by it, it will not be able to sell the underlying security until
the option expires or is exercised. Furthermore, over-the-counter options are
not subject to the protections afforded purchasers of listed options by the
Options Clearing Corporation or other clearing organizations.

WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. In order to secure
yields or prices deemed advantageous at the time, each of the Funds may purchase
or sell securities on a when-issued or a delayed-delivery basis. The Fund will
enter into when-issued transactions for the purpose of acquiring portfolio
securities and not for the purpose of leverage. Due to fluctuations in the value
of securities purchased on a when-issued or a delayed-delivery basis, the yields
obtained on such securities may be higher or lower than the yields available in
the market on the dates when the securities are actually delivered to the Fund.
Similarly, the sale of securities for delayed delivery can involve the risk that
the prices available in the market when delivery is made may actually be higher
than those obtained in the transaction itself.

A segregated account in the name of the Fund consisting of cash or other liquid
assets equal to the amount of when-issued or delayed-delivery commitments will
be established at the Custodian. For the purpose of determining the adequacy of
the securities in the accounts, the deposited securities will be valued at
market or fair value. If the market or fair value of the securities declines,
additional cash or securities will be placed in the account daily so that the
value of the account will equal the amount of such commitments by the Fund. On
the settlement date, the Fund will meet its obligations from then-available cash
flow, the sale of securities held in the segregated account, the sale of other
securities or, although it would not normally expect to do so, from the sale of
securities purchased on a when-issued or delayed-delivery basis themselves
(which may have a greater or lesser value than the Fund's payment obligations).

STRATEGIC TRANSACTIONS. Subject to the investment limitations and restrictions
stated elsewhere in this SAI and in the Prospectus, each of the Funds and
Portfolios, except for the Money Market Fund, may utilize various other
investment strategies as described below to hedge various market risks, to
manage the effective maturity or duration of fixed-income securities or for
other bona fide hedging purposes. None of the Funds currently intends to enter
into strategic

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transactions, excluding strategic transactions that are "covered" or entered
into for bona fide hedging purposes, that are in the aggregate principal amount
in excess of 15% of the Fund's net assets. Strategic transactions have
associated risks including possible default by the other party to the
transaction, illiquidity and, to the extent that WM Advisors or the
sub-advisor's view as to certain market movements is incorrect, losses greater
than if they had not been used. Use of put and call options, currency
transactions or options and futures transactions entails certain risks as
described herein and in the Prospectus in sections relating to such investment
or instruments. Losses resulting from the use of strategic transactions would
reduce net asset value, and possibly income, and such losses can be greater than
if the strategic transactions had not been utilized.

The use of strategic transactions for portfolio management purposes involves
special considerations and risks. Additional risks pertaining to particular
strategies that make up strategic transactions are described in other sections
of this SAI. Successful use of most strategic transactions depends upon WM
Advisors' or the sub-advisor's ability to predict movements of the overall
securities and interest rate markets, which requires different skills than
predicting changes in the prices of individual securities. There can be no
assurance that any particular strategy adopted will succeed. There may be
imperfect correlation, or even no correlation, between price movements of
strategic transactions and price movements of the related portfolio or currency
positions. Such a lack of correlation might occur due to factors unrelated to
the value of the related portfolio or currency positions, such as speculative or
other pressures on the markets in which strategic transactions are traded.
Strategic transactions, if successful, can reduce risk of loss or enhance
income, by wholly or partially offsetting the negative effect of, or accurately
predicting, unfavorable price movements or currency fluctuations in the related
portfolio or currency position. However, strategic transactions can also reduce
the opportunity for gain by offsetting the positive effect of favorable price
movements in the related positions. In addition, a Fund might be required to
maintain assets as "cover," maintain segregated accounts or make margin payments
when it takes positions in strategic transactions involving obligations to third
parties (i.e., strategic transactions other than purchased options). These
requirements might impair the Fund's ability to sell a portfolio security or
currency position or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security or
currency position at a disadvantageous time. Certain provisions of the Internal
Revenue Code of 1986, as amended (the "Code") may accelerate or adversely impact
the character of certain strategic transactions.

Swaps, Caps, Floors and Collars. Among the strategic transactions into which a
Fund may enter, to the extent consistent with its investment policies and
restrictions, are interest rate, currency and index swaps and the purchase or
sale of related caps, floors and collars. A Fund would enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, to protect against currency fluctuations, as a
duration management technique or to protect against any increase in the price of
securities the Fund anticipates purchasing at a later date. A Fund will use
these transactions as hedges and not speculative investments and will not sell
interest rate caps or floors where it does not own securities or other
instruments providing the income stream the Fund may be obligated to pay.
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A currency swap is an agreement to exchange cash flows on a notional
amount of two or more currencies based on the relative value

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<PAGE> 77

differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or value.
A Fund will usually enter into swaps on a net basis, i.e., the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, WM Advisors
and the Trusts believe that such obligations do not constitute senior securities
under the 1940 Act and, accordingly, will not treat them as being subject to the
Fund's borrowing restrictions. The swap market has grown substantially in recent
years with a large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap documentation. Caps, floors
and collars are more recent innovations for which standardized documentation has
not yet been fully developed and, accordingly, they are less liquid than swaps.
Futures Activities. Each of the Funds is permitted to engage in strategic
transactions and each of the Portfolios may enter into futures contracts and
options on futures contracts that are traded on a U.S. exchange or board of
trade. These investments may be made for the purpose of hedging against changes
in the value of its portfolio securities due to anticipated changes in interest
rates and market conditions, and for otherwise permitted strategic transactions.
Futures Contracts. An interest rate futures contract provides for the future
sale by one party and the purchase by the other party of a certain amount of a
specific financial instrument (debt security) at a specified price, date, time
and place. A bond index futures contract is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading day
of the contract and the price at which the index contract was originally
written. No physical delivery of the underlying securities in the index is made.
The purpose of entering into a futures contract is to protect the Fund or
Portfolio from fluctuations in the value of its securities caused by anticipated
changes in interest rates or market conditions without necessarily buying or
selling the securities.
No consideration is paid or received by a Fund or Portfolio upon entering into a
futures contract. Initially, a Fund or Portfolio would be required to deposit
with the broker an amount of cash or cash equivalents equal to approximately 1%
to 10% of the contract amount (this amount is subject to change by the board of
trade on which the contract is traded and members of such board of trade may
charge a higher amount). This amount is known as "initial margin" and is the
equivalent of a performance bond or good faith deposit on the contract, which is
returned to the Fund or Portfolio upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Subsequent payments,
known as "variation margin," to and from the broker, will be made daily as the
price of the index or securities underlying the futures contract fluctuates,
making the long and short positions in the futures contract more or less
valuable, a process known as "marking-to-market." At any time prior to the
expiration of a

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<PAGE> 78

futures contract, a Fund or Portfolio may elect to close the position by taking
an opposite position, which will operate to terminate its existing position in
the contract.
There are several risks in connection with the use of futures contracts as a
hedging device. Successful use of futures contracts is subject to the ability of
WM Advisors or the relevant sub-advisor to correctly predict movements in the
direction of interest rates or changes in market conditions. These predictions
involve skills and techniques that may be different from those involved in the
management of the portfolio being hedged. In addition, there can be no assurance
that there will be a correlation between movements in the price of the
underlying index or securities and movements in the price of the securities
which are the subject of the hedge. The decision as to whether, when and how to
hedge involves the exercise of skill and judgment, and even a well-conceived
hedge may be unsuccessful to some degree because of market behavior or
unexpected trends in interest rates.
Although the Funds and Portfolios intend to enter into futures contracts only if
there is an active market for such contracts, there is no assurance that an
active market will exist for the contracts at any particular time. Most U.S.
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a price
beyond that limit. It is possible that futures contract prices would move to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses. In such event, and in the event of
adverse price movements, a Fund or Portfolio would be required to make daily
cash payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may partially or
completely offset losses on the futures contract. However, as described above,
there is no guarantee that the price of the securities being hedged will, in
fact, correlate with the price movements in a futures contract and thus provide
an offset to losses on the futures contract.
To ensure that transactions constitute bona fide hedges in instances involving
the purchase or sale of a futures contract, the Funds and the Portfolios will be
required to either (i) segregate sufficient cash or liquid assets to cover the
outstanding position or (ii) cover the futures contract by either owning the
instruments underlying the futures contract or by holding a portfolio of
securities with characteristics substantially similar to the underlying index or
stock index comprising the futures contract or by holding a separate option
permitting it to purchase or sell the same futures contract. Because of the
imperfect correlation between the movements in the price of underlying indexes
or stock indexes of various futures contracts and the movement of the price of
securities in their portfolios, the Funds and the Portfolios will periodically
make adjustments to its index futures contracts positions to appropriately
reflect the relationship between the underlying portfolio and the indexes. The
Funds and the Portfolios will not maintain short positions in index or stock
index futures contracts, options written on index or stock index futures
contracts and options written on indexes or stock indexes, if in the aggregate,
the value of these positions exceeds the current market value of their
portfolios plus or minus the unrealized gain or loss on those positions.
Options on Futures Contracts. An option on a futures contract, as contrasted
with the direct investment in such a contract, gives the purchaser the right, in
return for the premium paid, to assume a position in the futures contract at a
specified exercise price at any time prior to the expiration date of the option.
Upon exercise of an option, the delivery of the futures position by

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<PAGE> 79

the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account,
which represents the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract. The potential loss related
to the purchase of an option on futures contracts is limited to the premium paid
for the option (plus transaction costs). Because the price of the option to the
purchaser is fixed at the point of sale, there are no daily cash payments to
reflect changes in the value of the underlying contract. The value of the option
does however change daily and that change would be reflected in the net asset
value of the Fund or the Portfolio holding the option.
When engaging in strategic transactions, the Funds and the Portfolios may
purchase and write put and call options on futures contracts that are traded on
a U.S. exchange or board of trade as a hedge against changes in the value of its
portfolio securities, and may enter into closing transactions with respect to
such options to terminate existing positions. There is no guarantee that such
closing transactions can be effected.
There are several risks relating to options on futures contracts. The ability to
establish and close out positions on such options will be subject to the
existence of a liquid market. In addition, the purchase of put or call options
will be based upon predictions as to anticipated interest rate and market trends
by WM Advisors or the relevant sub-advisor, which could prove to be inaccurate.
Even if the expectations of WM Advisors or the sub-advisors are correct, there
may be an imperfect correlation between the change in the value of the options
and the portfolio securities hedged.

STRATEGIES AVAILABLE TO THE SHORT TERM INCOME, BOND & STOCK, GROWTH & INCOME,
GROWTH, MID CAP STOCK, INTERNATIONAL GROWTH AND SMALL CAP STOCK FUNDS AND GROWTH
FUND OF THE NORTHWEST

Options on Securities. The Short Term Income, Bond & Stock, Growth & Income,
Growth, Mid Cap Stock, International Growth and Small Cap Stock Funds and Growth
Fund of the Northwest may write covered put options and covered call options on
securities, purchase put and call options on securities and enter into closing
transactions.

Options written by these Funds will normally have expiration dates between one
and nine months from the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying securities at the
times the options are written. In the case of call options, these exercise
prices are referred to as "in-the-money," "at-the-money" and "out-of-the-
money," respectively. The Funds may write (1) in-the-money call options when WM
Advisors or their sub-advisor expects that the price of the underlying security
will remain flat or decline moderately during the option period, (2)
at-the-money call options when WM Advisors or their sub-advisor expects that the
price of the underlying security will remain flat or advance moderately during
the option period and (3) out-of-the-money call options when WM Advisors or
their sub-advisor expects that the premiums received from writing the call
option plus the appreciation in the market price of the underlying security up
to the exercise price will be greater than the appreciation in the price of the
underlying security alone. In any of the preceding situations, if the market
price of the underlying security declines and the security is sold at this lower
price, the amount of any realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-money put options
(the reverse of call options as to the relation of exercise price to market
price) may be utilized in the same market environments as such call options
described above.

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<PAGE> 80

So long as the Fund's obligation as the writer of an option continues, each of
the Short Term Income, Bond & Stock, Growth & Income, Growth, Mid Cap Stock,
International Growth, and Small Cap Stock Funds and Growth Fund of the Northwest
may be assigned an exercise notice by the broker-dealer through which the option
was sold, requiring the Fund to deliver, in the case of a call, or take delivery
of, in the case of a put, the underlying security against payment of the
exercise price. This obligation terminates when the option expires or the
relevant Fund effects a closing purchase transaction. The Fund can no longer
effect a closing purchase transaction with respect to an option once it has been
assigned an exercise notice. To secure its obligation to deliver the underlying
security when it writes a call option, or to pay for the underlying security
when it writes a put option, each Fund will be required to deposit in escrow the
underlying security or other assets in accordance with the rules of the Options
Clearing Corporation (the "OCC") and of the securities exchange on which the
option is written.

An option may be closed out only when there exists a secondary market for an
option of the same series on a recognized securities exchange or in the
over-the-counter market. In light of this fact, and current trading conditions,
each Fund expects to purchase or write call or put options issued by the OCC,
except that options on U.S. Government Securities may be purchased or written in
the over-the-counter market. Over-the-counter options can be closed out only by
agreement with the primary dealer in the transaction. National securities
exchanges on which options are traded are: The Chicago Board Options Exchange
(CBOE), The Board of Trade of the City of Chicago (CBT), American Stock Exchange
(AMEX), Philadelphia Stock Exchange (PHLX), Pacific Stock Exchange (PSE) and the
New York Stock Exchange (NYSE). Any over-the-counter option written by the Fund
will be with a qualified dealer pursuant to an agreement under which the Fund
would have the absolute right to repurchase an over-the-counter option it has
sold. Such options will be considered illiquid in an amount equal to the formula
price, less the amount by which the option is "in-the-money." In the event of
the insolvency of the primary dealer, the Fund may not be able to liquidate its
position in over-the-counter options, or to enter into closing purchase
transactions on options written by it.
The Fund may realize a profit or loss upon entering into closing transactions.
In cases where the Fund has written an option, it will realize a profit if the
cost of the closing purchase transaction is less than the premium received upon
writing the original option, and will incur a loss if the cost of the closing
purchase transaction exceeds the premium received upon writing the original
option. Similarly, when the Fund has purchased an option and engages in a
closing sale transaction, it will realize a profit or loss to the extent that
the amount received in the closing sale transaction is more or less than the
premium it initially paid for the original option plus the related transaction
costs.
To facilitate closing transactions, the Fund will generally purchase or write
only those options for which WM Advisors or its sub-advisor believes there is an
active secondary market although there is no assurance that sufficient trading
interest to create a liquid secondary market on a securities exchange will exist
for any particular option or at any particular time, and for some options no
such secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow, or other unforeseen events, have at
times rendered certain of the facilities of the OCC and the securities exchanges
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that

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<PAGE> 81

may otherwise interfere with the timely execution of customers' orders, will not
recur. In such events, it might not be possible to effect closing transactions
in particular options. If as a covered call option writer the Fund is unable to
effect a closing purchase transaction in a secondary market, it will not be able
to sell the underlying security until the option expires or it delivers the
underlying security upon exercise.
Securities exchanges have established limitations governing the maximum number
of calls and puts of each class which may be held or written, or exercised
within certain time periods, by an investor or group of investors acting in
concert (regardless of whether the options are written on the same or different
securities exchanges or are held, written or exercised in one or more accounts
or through one or more brokers). It is possible that the particular Fund and
other clients of WM Advisors and its sub-advisors and certain of their
affiliates may be considered to be such a group. A securities exchange may order
the liquidation of positions found to be in violation of these limits and it may
impose certain other sanctions.
In the case of options written by a Fund that are deemed covered by virtue of
the Fund's holding convertible or exchangeable preferred stock or debt
securities, the time required to convert or exchange and obtain physical
delivery of the underlying security with respect to which the Fund has written
options may exceed the time within which it must make delivery in accordance
with an exercise notice. In these instances, the Fund may purchase or
temporarily borrow the underlying securities for purposes of physical delivery.
By so doing, the Fund will not bear any market risk, since the Fund will have
the absolute right to receive from the issuer of the underlying security an
equal number of shares to replace the borrowed stock. The Fund may however,
incur additional transaction costs or interest expenses in connection with any
such purchase or borrowing.
Additional risks exist with respect to mortgage-backed U.S. Government
Securities for which the Fund may write covered call options. If the Fund writes
covered call options on a mortgage-backed security, the security that it holds
as cover may, because of scheduled amortization of unscheduled prepayments,
cease to be sufficient cover. In such an instance, the Fund will compensate by
purchasing an appropriate additional amount of mortgage-backed securities.

STRATEGIES AVAILABLE TO SHORT TERM INCOME, INCOME, GROWTH, MID CAP STOCK,
INTERNATIONAL GROWTH AND SMALL CAP STOCK FUNDS

Options on Securities Indexes. The Short Term Income, Income, Growth, Mid Cap
Stock, International Growth and Small Cap Stock Funds may also purchase and sell
call and put options on securities indexes. Such options give the holder the
right to receive a cash settlement during the term of the option based upon the
difference between the exercise price and the value of the index.

Options on securities indexes entail risks in addition to the risks of options
on securities. Because exchange trading of options on securities indexes is
relatively new, the absence of a liquid secondary market to close out an option
position is more likely to occur, although the Fund generally will purchase or
write such an option only if WM Advisors or its sub-advisor believes the option
can be closed out.
Use of options on securities indexes also entails the risk that trading in such
options may be interrupted if trading in certain securities included in the
index is interrupted. The Fund will not purchase such options unless WM Advisors
or its sub-advisor believes the market is sufficiently developed for the risk of
trading in such options to be no greater than the risk of trading in options on
securities.

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<PAGE> 82

Price movements in the Fund's portfolio may not correlate precisely with
movements in the level of an index and, therefore, the use of options on
securities indexes cannot serve as a complete hedge. Because options on
securities indexes require settlement in cash, the Fund may be forced to
liquidate portfolio securities to meet settlement obligations.
STRATEGIES AVAILABLE TO SHORT TERM INCOME, INCOME, GROWTH, MID CAP STOCK,
INTERNATIONAL GROWTH AND SMALL CAP STOCK FUNDS
Foreign Currency Exchange Transactions. The Short Term Income, Income, Growth,
Mid Cap Stock, International Growth and Small Cap Stock Funds may engage in
currency exchange transactions to protect against uncertainty in the level of
future exchange rates. The Funds' dealings in forward currency exchange
contracts will be limited to hedging involving either specific transactions or
portfolio positions. Transaction hedging is the purchase or sale of forward
foreign currency with respect to specific receivables or payables of the Fund
generally arising in connection with the purchase or sale of its portfolio
securities. Position hedging is the sale of forward foreign currency with
respect to portfolio security positions denominated or quoted in such foreign
currency. A Fund may not position hedge with respect to a particular currency to
an extent greater than the aggregate market value (at the time of making such
sale) of the securities held in its portfolio denominated or quoted in or
currently convertible into that particular currency.
If a Fund enters into a position hedging transaction, the Custodian will, except
in circumstances where segregated accounts are not required by the 1940 Act and
the rules adopted thereunder, place cash or other liquid assets in a segregated
account for the Fund in an amount at least equal to the value of the Fund's
total assets committed to the consummation of the forward contract. For each
forward foreign currency exchange contract that is used to hedge a securities
position denominated in a foreign currency, but for which the hedging position
no longer provides, in the opinion of WM Advisors or the sub-advisor, sufficient
protection to consider the contract to be a hedge, the Fund maintains with the
Custodian a segregated account of cash or other liquid assets in an amount at
least equal to the portion of the contract that is no longer sufficiently
covered by such hedge. If the value of the securities placed in the segregated
account declines, additional cash or securities will be placed in the account so
that the value of the account will equal the amount of the Fund's unhedged
exposure (in the case of securities denominated in a foreign currency) or
commitment with respect to the contract. Hedging transactions may be made from
any foreign currency into U.S. dollars or into other appropriate currencies.
At or before the maturity of a forward contract, a Fund may either sell a
portfolio security and make delivery of the currency, or retain the security and
offset its contractual obligation to deliver the currency by purchasing a second
contract pursuant to which the Fund will obtain, on the same maturity date, the
amount of the currency that it is obligated to deliver. If the Fund retains the
portfolio security and engages in an offsetting transaction, the Fund, at the
time of execution of the offsetting transaction, will incur a gain or a loss to
the extent that movement has occurred in forward contract prices. Should forward
prices decline during the period between the Fund's entering into a forward
contract for the sale of currency and the date it enters into an offsetting
contract for the purchase of the currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.

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<PAGE> 83

The cost to a Fund of engaging in currency transactions with factors such as,
the currency involved, the length of the contract period and the prevailing
market conditions. Because transactions in currency exchange are usually
conducted on a principal basis, no fees or commissions are involved. The use of
forward currency contracts does not eliminate fluctuations in the underlying
prices of the securities, but it does establish a rate of exchange that can be
achieved in the future. In addition, forward currency contracts may limit the
risk of loss due to a decline in the value of the hedged currency increase.
If a devaluation of a currency is generally anticipated, a Fund may not be able
to contract to sell the currency at a price above the devaluation level it
anticipates.
The Funds, in addition, may combine forward currency exchange contracts with
investments in securities denominated in other currencies in an attempt to
create a combined investment position, the overall performance of which will be
similar to that of a security denominated in a Fund's underlying currency. For
instance, a Fund could purchase a U.S. dollar-denominated security and at the
same time enter into a forward currency exchange contract to exchange U.S.
dollars for its underlying currency at a future date. By matching the amount of
U.S. dollars to be exchanged with the anticipated value of the U.S.
dollar-denominated security, the Fund may be able to "lock in" the foreign
currency value of the security and adopt a synthetic investment position whereby
the Fund's overall investment return from the combined position is similar to
the return from purchasing a foreign currency-denominated instrument.
There is a risk in adopting a synthetic investment position. It is impossible to
forecast with absolute precision what the market value of a particular security
will be at any given time. If the value of a security denominated in the U.S.
dollar or other foreign currency is not exactly matched with a Fund's obligation
under a forward currency exchange contract on the date of maturity, the Fund may
be exposed to some risk of loss from fluctuations in that currency. Although WM
Advisors and each sub-advisor will attempt to hold such mismatching to a
minimum, there can be no assurance that WM Advisors or the Fund's sub-advisor
will be able to do so.
Although the foreign currency market is not believed to be necessarily more
volatile than the market in other commodities, there is less protection against
defaults in the forward trading to currencies than there is in trading such
currencies on an exchange because such forward contracts are not guaranteed by
an exchange or clearing house. The CFTC has indicated that it may assert
jurisdiction over forward contracts in foreign currencies and attempt to
prohibit certain entities from engaging in such transactions. In the event that
such prohibition included the Fund, it would cease trading such contracts.
Cessation of trading might adversely affect the performance of a Fund.

STRATEGIES AVAILABLE TO SHORT TERM INCOME, INCOME, GROWTH, MID CAP STOCK,
INTERNATIONAL GROWTH AND SMALL CAP STOCK FUNDS

Options on Foreign Currencies. The Short Term Income, Income, Growth, Mid Cap
Stock, International Growth and Small Cap Stock Funds may purchase and write put
and call options on foreign currencies for the purpose of hedging against
declines in the U.S. dollar value of foreign currency-denominated portfolio
securities and against increases in the U.S. dollar cost of such securities to
be acquired. Such hedging includes cross hedging and proxy hedging where the
options to buy or sell currencies involve other currencies besides the U.S.
dollar. As one example, a decline in the U.S. dollar value of a foreign currency
in which securities are denominated will reduce the U.S. dollar value of the
securities, even if their value in the foreign

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<PAGE> 84

currency remains constant. To protect against diminutions in the value of
securities held by a Fund in a particular foreign currency, the Fund may
purchase put options on the foreign currency. If the value of the currency does
decline, the Fund will have the right to sell the currency for a fixed amount in
U.S. dollars and will thereby offset, in whole or in part, the adverse effect on
its portfolio that otherwise would have resulted. When an increase in the U.S.
dollar value of a currency in which securities to be acquired are denominated is
projected, thereby increasing the cost of the securities, the Fund conversely
may purchase call options on the currency. The purchase of such options could
offset, at least partially, the effects of the adverse movements in exchange
rates. As in the case of other types of options, however, the benefit to the
Fund deriving from purchases of foreign currency options will be reduced by the
amount of the premium and related transaction costs. In addition, if currency
exchange rates do not move in the direction, or to the extent anticipated, the
Fund could sustain losses on transactions in foreign currency options that would
require it to forego a portion or all of the benefits of advantageous changes in
the rates.
The Funds may also write covered call options on foreign currencies for the
types of hedging purposes described above. As one example, when WM Advisors or a
sub-advisor anticipates a decline in the U.S. dollar value of foreign
currency-denominated securities due to adverse fluctuations in exchange rates it
could, instead of purchasing a put option, write a covered call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised, and the diminution in value of portfolio securities will be
offset by the amount of the premium received. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a loss
that may not be offset-by the amount of the premium. Through the writing of
options on foreign currencies, the Fund may also be required to forego all or a
portion of the benefits that might otherwise have been obtained from favorable
movements in exchange rates.
A call option written on a foreign currency by a Fund is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute and
immediate right to acquire the foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated account
by the Custodian upon conversion or exchange of other foreign currency held by
the Fund. A call option also is covered if the Fund has a call on the same
foreign currency and in the same principal amount as the call written when the
exercise price of the call held (1) is equal to or less than the exercise price
of the call written or (2) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash, U.S. Government
Securities and other liquid debt securities in a segregated account with the
Custodian.
The purchase and sale of exchange-traded foreign currency options are subject to
the risks of the availability of a liquid secondary market described above, as
well as the risks regarding adverse market movements, margining of options
written, the nature of the foreign currency market, possible intervention by
governmental authorities and the effects of other political and economic events.
In addition, exercise and settlement of exchange-traded foreign currency options
must be made exclusively through the OCC, which has established banking
relationships in applicable foreign countries for this purpose. As a result, the
OCC may, if it determines that foreign governmental restrictions or taxes would
prevent the orderly settlement of foreign currency option

26
<PAGE> 85

exercises, or would result in undue burdens on the OCC or its clearing member,
impose special procedures on exercise and settlement, such as technical changes
in the mechanics of delivery of currency, the fixing of dollar settlement prices
or prohibitions on exercise.

SPECIAL CONSIDERATIONS RELATING TO INCOME, BOND & STOCK, GROWTH, MID CAP STOCK,
INTERNATIONAL GROWTH AND SMALL CAP STOCK FUNDS

SECURITIES IN DEVELOPING COUNTRIES. Although most of the investments of the
Income, Bond & Stock, Growth, Mid Cap Stock, International Growth and Small Cap
Stock Funds are made in securities of companies in (or governments of) developed
countries, each may invest in securities of companies in (or governments of)
developing or emerging countries (sometimes referred to as "emerging markets")
as well. The Income, Growth, Mid Cap Stock, and Small Cap Stock Funds may invest
up to 5% of their total assets in emerging markets and the International Growth
Fund may invest up to 30% of total assets in emerging markets and up to 5% of
total assets in any one country. A developing or emerging country is generally
considered to be a country that is in the initial stages of its
industrialization cycle. "Developing or Emerging Markets," for the WM Group of
Funds, include all countries in Latin America and the Caribbean, all countries
in Asia (except Australia, Hong Kong, Japan, New Zealand, and Singapore), all
countries in Africa and the Middle East (except Israel), all former Eastern bloc
countries, Russia and the Commonwealth of Independent States, Greece, Portugal
and Turkey. Investing in the equity and fixed-income markets of developing or
emerging countries involves exposure to economic structures that are generally
less diverse and mature, and to political systems that can be expected to have
less stability than those of developed countries. Historical experience
indicates that the markets of developing or emerging countries have been more
volatile than the markets of the more mature economies of developed countries;
however, such markets often have provided higher rates of return to investors.

STRATEGY AVAILABLE TO SHORT TERM INCOME, INCOME, GROWTH, BOND & STOCK, GROWTH &
INCOME INTERNATIONAL GROWTH, AND SMALL CAP STOCK FUNDS AND GROWTH FUND OF THE
NORTHWEST

LENDING OF PORTFOLIO SECURITIES. Each of the Short Term Income, Growth, Bond &
Stock, Growth & Income, International Growth and Small Cap Stock Funds and
Growth Fund of the Northwest will adhere to the following conditions whenever
its portfolio securities are loaned: (1) the Fund must receive at least 100%
cash collateral or equivalent securities from the borrower; (2) the borrower
must increase the collateral whenever the market value of the securities rises
above the level of the collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions on the loaned securities
and any increase in market value; (5) the Fund may pay only reasonable custodian
fees in connection with the loan; and (6) voting rights on the loaned securities
may pass to the borrower, provided that if a material event adversely affecting
the investment occurs, the Trust's Board of Trustees must terminate the loan and
regain the right to vote the securities. From time to time, the Funds may pay a
part of the interest earned from the investment of the collateral received for
securities loaned to the borrower and/or a third party that is unaffiliated with
the Trust and that is acting as a "finder." The Bond & Stock and Growth &
Income, Mid Cap Stock Funds and Growth Fund of the Northwest will not lend more
than 33% of their respective total assets, and the remaining Funds will not lend
more than 20% of their respective total assets.

27
<PAGE> 86

SPECIAL CONSIDERATIONS RELATING TO INCOME, BOND & STOCK, GROWTH & INCOME,
GROWTH, MID CAP STOCK AND SMALL CAP STOCK FUNDS

LOWER-RATED SECURITIES. The Income, Bond & Stock, Growth & Income, Growth, Mid
Cap Stock and Small Cap Stock Funds may each invest up to 35% of its respective
total assets in non-investment grade securities (rated Ba and lower by Moody's
and BB and lower by Standard & Poor's) or unrated securities of comparable
quality ("junk bonds"). Such securities carry a high degree of risk (including
the possibility of default or bankruptcy of the issuer of such securities),
generally involve greater volatility of price and risk of principal and income,
and may be less liquid, than securities in the higher rating categories and are
considered speculative. See the Appendix to this Statement of Additional
Information for a more complete description of the ratings assigned by ratings
organizations and their respective characteristics.

Historically, economic downturns have disrupted the high yield market and
impaired the ability of issuers to repay principal and interest. Also, an
increase in interest rates could adversely affect the value of such obligations
held by any of the Funds. Prices and yields of high yield securities will
fluctuate over time and may affect a Fund's net asset value. In addition,
investments in high yield zero coupon or pay-in-kind bonds, rather than
income-bearing high yield securities, may be more speculative and may be subject
to greater fluctuations in value due to changes in interest rates.
The trading market for high yield securities may be thin to the extent that
there is no established retail secondary market or because of a decline in the
value of such securities. A thin trading market may limit the ability of the
Trustees to accurately value high yield securities in the Fund's portfolio and
to dispose of those securities. Adverse publicity and investor perceptions may
decrease the value and liquidity of high yield securities. These securities may
also involve special registration responsibilities, liabilities and costs.
Credit quality in the high yield securities market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high yield security. For these reasons, it is
the policy of WM Advisors and the sub-advisor of each of the Funds not to rely
exclusively on ratings issued by established credit rating agencies, but to
supplement such ratings with its own independent and ongoing review of credit
quality. The achievement of a Fund's investment objectives by investment in such
securities may be more dependent on WM Advisors or its sub-advisor's credit
analysis than is the case for higher quality bonds. Should the rating of a
portfolio security be downgraded WM Advisors or the Fund's sub-advisor will
determine whether it is in the best interest of the Fund to retain or dispose of
the security.
Prices for below investment-grade securities may be affected by legislative and
regulatory developments. For example, new federal rules require savings and loan
institutions to gradually reduce their holdings of this type of security. Also,
Congress from time to time has considered legislation which would restrict or
eliminate the corporate tax deduction for interest payments on these securities
and would regulate corporate restructurings. Such legislation may significantly
depress the prices of outstanding securities of this type.
INVESTMENT RESTRICTIONS
The following section discusses the investment policies and restrictions of the
Funds and Portfolios. A fundamental policy affecting a particular Fund or
Portfolio may not be changed without the vote of a majority of the outstanding
shares of the affected Fund or Portfolio. Majority is defined in the 1940 Act as
the lesser of (a) 67% or more of the shares present at a

28
<PAGE> 87

shareholder meeting, if the holders of more than 50% of the outstanding shares
of the relevant Fund or Portfolio are present or represented by proxy, or (b)
more than 50% of the outstanding shares.
The 1940 Act prohibits a registered open-end investment company such as the
Trust from issuing "senior securities" other than borrowings from a bank.

INVESTMENT RESTRICTIONS OF THE FUNDS, OTHER THAN THE BOND & STOCK AND MID CAP
STOCK FUNDS AND GROWTH FUND OF THE NORTHWEST

The investment restrictions numbered 1 through 15 below have been adopted by the
Trust with respect to the Funds (other than the Bond & Stock and Mid Cap Stock
Funds and Growth Fund of the Northwest) as fundamental policies. The investment
policies adopted by the Trust prohibit a Fund (other than the Bond & Stock Fund
and Growth Fund of the Northwest) from:

1. Purchasing the securities of any issuer (other than U.S. Government
securities) if as a result more than 5% of the value of the Fund's total
assets would be invested in the securities of the issuer (the "5%
Limitation"), except that up to 25% of the value of the Fund's total assets
may be invested without regard to the 5% Limitation; provided that the
entire investment portfolio of the Money Market Fund is subject to the 5%
Limitation. However, the Money Market Fund will be able to invest more than
5% of its total assets in the securities of a single issuer for a period of
up to three Business Days after the purchase thereof; provided that the
Money Market Fund may not hold more than one such investment at any time.
2. Purchasing more than 10% of the securities of any class of any one issuer;
provided that this limitation shall not apply to investments in U.S.
Government securities; provided further that this restriction shall not
apply to the Growth Fund; and provided further that the Growth Fund shall
not own more than 10% of the outstanding voting securities of a single
issuer.
3. Purchasing securities on margin, except that the Fund may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts or related
options will not be deemed to be a purchase of securities on margin.
4. Making short sales of securities or maintaining a short position; provided
that this restriction shall not apply to the Growth and International
Growth Funds.
5. Borrowing money, except that (a) the Fund may (i) enter into reverse
repurchase agreements or (ii) borrow from banks for temporary (not
leveraging) purposes, including the meeting of redemption requests that
might otherwise require the untimely disposition of securities or pending
settlement of securities transactions or for emergency or extraordinary
purposes in an aggregate amount not exceeding 30% of the value of the
Fund's total assets (including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) at the time the borrowing
is made, (b) all of the Funds except the Money Market Fund may enter into
(i) futures contracts, and (ii) dollar roll transactions. Whenever
borrowings pursuant to (a) above (except that with respect to the Short
Term Income, U.S. Government Securities, Income, Growth & Income and Small
Cap Stock Funds, pursuant to (a)(ii) above) exceed 5% of the value of a
Fund's total assets, (w) continuous asset coverage of at least 300% is
required; (x) in the event such asset coverage falls below 300% due to
market fluctuations or otherwise, the Fund must within 3 days reduce the
amount of its borrowings so that asset coverage will again be at least

29
<PAGE> 88

300%, even if disadvantageous from an investment standpoint; (y) borrowing
pursuant to (a) over 5% must be repaid before making additional
investments; and (z) any interest paid on such borrowings will reduce
income. The Short Term Income, U.S. Government Securities, Income, Growth &
Income, Mid Cap Stock and Small Cap Stock Funds may not borrow money or
enter into reverse repurchase agreements or dollar roll transactions in the
aggregate in excess of 33 1/3% of the Fund's total assets (after giving
effect to any such transaction).
6. Pledging, hypothecating, mortgaging or otherwise encumbering more than 30%
of the value of the Fund's total assets. For purposes of this restriction,
(a) the deposit of assets in escrow in connection with the writing of
covered put or call options and the purchase of securities on a when-issued
or delayed-delivery basis and (b) collateral arrangements with respect to
(i) the purchase and sale of options on securities, options on indexes and
options on foreign currencies, and (ii) initial or variation margin for
futures contracts will not be deemed to be pledges of a Fund's assets.
7. Underwriting the securities of other issuers, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933, as amended,
by virtue of disposing of portfolio securities.
8. Purchasing or selling real estate or interests in real estate, except that
the Fund may purchase and sell securities that are secured, directly or
indirectly, by real estate and may purchase securities issued by companies
that invest or deal in real estate.
9. Investing in commodities, except that all of the Funds except the Money
Market Fund may invest in futures contracts and options on futures
contracts. The entry into forward foreign currency exchange contracts is
not and shall not be deemed to involve investing in commodities.
10. Investing in oil, gas or other mineral exploration or development programs.
11. Making loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities (except in the case of the U.S.
Government Securities Fund) and the entry into repurchase agreements.
12. Purchasing any securities that would cause more than 25% of the value of
the Fund's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the
same industry, except in the case of the Money Market Fund, which under
normal market conditions shall have at least 25% of its total assets
invested in bank obligations; provided that this limitation shall not apply
to the purchase of U.S. Government Securities.
13. With respect to the Money Market Fund, purchasing, writing or selling puts,
calls, straddles, spreads or combinations thereof.
14. With respect to the Growth and Small Cap Stock Funds, investing more than
35% of the Fund's assets in non-investment grade debt securities.
15. With respect to the Short Term Income Fund, having a dollar-weighted
average portfolio maturity in excess of five years.

In addition, each of the Funds (other than the Bond & Stock and Mid Cap Stock
Funds and Growth Fund of the Northwest) has adopted non-fundamental investment
limitations as stated below and in its prospectus. Such limitations may be
changed without shareholder approval.

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<PAGE> 89

EACH OF THE FUNDS (OTHER THAN THE BOND & STOCK AND MID CAP STOCK FUNDS AND
GROWTH FUND OF THE NORTHWEST) MAY NOT:

1. With respect to the Growth and Small Cap Stock Funds, invest more than 25%
of the Fund's assets in foreign securities.

2. Purchase securities that are not readily marketable if more than 10% of the
net assets of the Money Market Fund, or more than 15% of the net assets of
the Short Term Income, U.S. Government Securities, Income, Growth & Income,
Growth, Small Cap Stock and International Growth Funds, would be invested
in such securities, including, but not limited to: (1) repurchase
agreements with maturities greater than seven calendar days; (2) time
deposits maturing in more than seven calendar days; (3) to the extent a
liquid secondary market does not exist for the instruments, futures
contracts and options thereon; (4) certain over-the-counter options; (5)
certain variable rate demand notes having a demand period of more than
seven days; and (6) certain Rule 144A restricted securities that are deemed
to be illiquid.

3. Make investments for the purpose of exercising control or management.
4. Purchase or sell interests in real estate limited partnerships.
The percentage limitations contained in the restrictions listed above, except
with respect to "illiquid securities," apply at the time of purchases of
securities.

INVESTMENT RESTRICTIONS OF THE BOND & STOCK AND MID CAP STOCK FUNDS AND GROWTH
FUND OF THE NORTHWEST

The Bond & Stock and Mid Cap Stock Funds and Growth Fund of the Northwest have
adopted the fundamental investment restrictions below.

EACH OF THE BOND & STOCK AND MID CAP STOCK FUNDS AND GROWTH FUND OF THE
NORTHWEST MAY NOT:

1. Invest more than 5%* of its total assets in securities of any single issuer
other than U.S. Government Securities, except that up to 25% of a Fund's
assets may be invested without regard to this 5% limitation.
2. Acquire more than 10%* of the voting securities of any one company.
3. Invest in real estate (except publicly traded real estate investment
trusts) or commodities.
4. Invest in oil, gas or other mineral leases.
5. Invest more than 25%* of its total assets in any single industry.
6. Act as underwriter of securities issued by others.
7. Buy securities on margin, mortgage or pledge its securities.

8. Borrow money for investment purposes (it may borrow up to 5% of its total
assets for emergency, non-investment purposes).

9. Lend money (except for the execution of repurchase agreements).
10. Issue senior securities (as defined in the 1940 Act) except as permitted by
rule, regulation or order of the SEC.
- ------------------------
* Percentage at the time the investment is made.
INVESTMENT RESTRICTIONS OF THE PORTFOLIOS
The following investment restrictions have been adopted by the Trust with
respect to the Portfolios as fundamental policies.

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<PAGE> 90

EACH PORTFOLIO WILL NOT:
1. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (except this shall not prevent
the Portfolio from purchasing or selling options or futures contracts or
from investing in securities or other instruments backed by physical
commodities);
2. Purchase or sell real estate including limited partnership interests,
although it may purchase and sell securities of companies that deal in real
estate and may purchase and sell securities that are secured by interests
in real estate;
3. Make loans to any person, except loans of portfolio securities to the
extent that no more than 33 1/3% of its total assets would be lent to other
parties, but this limitation does not apply to purchases of debt securities
or repurchase agreements;
4. (i) Purchase more than 10% of any class of the outstanding voting
securities of any issuer (except other investment companies as defined in
the 1940 Act) and (ii) purchase securities of an issuer (except obligations
of the U.S. Government and its agencies and instrumentalities and
securities of other investment companies as defined in the 1940 Act) if as
a result, with respect to 75% of its total assets, more than 5% of the
Portfolio's total assets, at market value, would be invested in the
securities of such issuer;
5. Issue senior securities (as defined in the 1940 Act) except as permitted by
rule, regulation or order of the SEC;
6. Borrow, except from banks for temporary or emergency (not leveraging)
purposes including the meeting of redemption requests that might otherwise
require the untimely disposition of securities in an aggregate amount not
exceeding 30% of the value of the Portfolio's total assets (including the
amount borrowed) valued at market less liabilities (not including the
amount borrowed) at the time the borrowing is made; and whenever borrowings
by a Portfolio, including reverse repurchase agreements, exceed 5% of the
value of a Portfolio's total assets, the Portfolio will not purchase any
securities;
7. Underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the 1933
Act in the disposition of restricted securities; and
8. Write or acquire options or interests in oil, gas or other mineral
exploration or development programs.
In addition, each Portfolio has adopted non-fundamental investment limitations
as stated below and in its prospectus. Such limitations may be changed without
shareholder approval.
EACH PORTFOLIO WILL NOT:
1. Pledge, mortgage, or hypothecate any of its assets except to secure
borrowings permitted by the Portfolio's fundamental limitation on
borrowing;
2. Invest for the purpose of exercising control over management of any
company;
3. Invest its assets in securities of any investment company, except (i) by
purchase in the open market involving only customary brokers' commissions;
(ii) in connection with mergers, acquisitions of assets or consolidations;
(iii) as permitted by SEC exemptive order; or (iv) as otherwise permitted
by the 1940 Act;
4. Purchase warrants if, by reason of such purchase, more than 5% of the value
of the Portfolio's net assets (taken at market value) would be invested in
warrants, valued at the lower of cost or market; included within this
amount, but not to exceed 2% of the value of the Fund's net assets, may be
warrants that are not listed on a recognized stock exchange;

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<PAGE> 91

5. Purchase or hold illiquid securities, which are securities that cannot be
disposed of for their approximate market value in seven days or less (which
terms include repurchase agreements and time deposits maturing in more than
seven days) if, in the aggregate, more than 15% of its net assets would be
invested in illiquid securities; and
6. Purchase securities on margin, except that a Portfolio may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts or related
options will not be deemed to be a purchase of securities on margin.
PORTFOLIO TURNOVER

Portfolio turnover considerations for the Portfolios are addressed in the
Trust's Prospectus. The Money Market Fund, attempts to increase yields by
trading to take advantage of short-term market variations, which results in high
portfolio turnover. Because purchases and sales of money market instruments are
usually effected as principal transactions, this policy does not result in high
brokerage commissions to the Fund. The Growth & Income, Bond & Stock, Growth,
Mid Cap Stock, Small Cap Stock and International Growth Funds and Growth Fund of
the Northwest (together, the "Equity Funds") and the Short Term Income, the U.S.
Government Securities and Income Funds (collectively, the "Bond Funds") do not
intend to seek profits through short-term trading. Nevertheless, the Funds will
not consider portfolio turnover rate a limiting factor in making investment
decisions.

Under certain market conditions, the Equity Funds and the Bond Funds may
experience increased portfolio turnover as a result of such Fund's options
activities. For instance, the exercise of a substantial number of options
written by the Fund (due to appreciation of the underlying security in the case
of call options or depreciation of the underlying security in the case of put
options) could result in a turnover rate in excess of 100%. A portfolio turnover
rate of 100% would occur if all of the Fund's securities that are included in
the computation of turnover were replaced once during a period of one year. The
portfolio turnover rate is calculated by dividing the lesser of purchases or
sales of portfolio securities for the year by the monthly average value of
portfolio securities. Securities with remaining maturities of one year or less
at the date of acquisition are excluded from the calculation.
Certain other practices that may be employed by the Funds could result in high
portfolio turnover. For example, portfolio securities may be sold in
anticipation of a rise in interest rates (market decline) or purchased in
anticipation of a decline in interest rates (market rise) and later sold. In
addition, a security may be sold and another of comparable quality purchased at
approximately the same time to take advantage of what WM Advisors or a Fund's
sub-advisor believes to be a temporary disparity in the normal yield
relationship between the two securities. These yield disparities may occur for
reasons not directly related to the investment quality of particular issues or
the general movement of interest rates, such as changes in the overall demand
for, or supply of, various types of securities.
PORTFOLIO TRANSACTIONS

Purchases and sales of underlying Fund shares by a Portfolio are effected
directly through the Distributor. In addition, all decisions to buy and sell
securities, including Fund shares, are made by WM Advisors, subject to the
overall review of the Trustees.

Most of the purchases and sales of securities for a Fund, whether transacted on
a securities exchange or over-the-counter, will be effected in the primary
trading market for the securities. Decisions to buy and sell securities for a
Fund are made by WM Advisors or the Fund's sub-

33
<PAGE> 92

advisor, which also is responsible for placing these transactions, subject to
the overall review of the Trust's Trustees. Although investment decisions for
each Fund are made independently from those of the other accounts managed by WM
Advisors or its sub-advisor, those other accounts may make investments of the
same type as the Fund. When a Fund and one or more other accounts managed by WM
Advisors or its sub-advisor are prepared to invest in, or desire to dispose of,
the same security, available investments or opportunities for sales will be
allocated in a manner believed by WM Advisors or the sub-advisor to be equitable
to each. In some cases, this procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that the coordination and the
ability to participate in volume transactions will be to the benefit of the
Fund.
Transactions on U.S. exchanges involve the payment of negotiated brokerage
commissions. With respect to exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. There is generally no
stated commission in the case of securities traded in the over-the-counter
markets, but the prices of those securities include undisclosed commissions or
concessions, and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. U.S. Government Securities may
be purchased directly from the U.S. Treasury or from the issuing agency or
instrumentality.
In selecting brokers or dealers to execute portfolio transactions on behalf of a
Fund, WM Advisors or the Fund's sub-advisor seeks the best overall terms
available. In assessing the best overall terms available for any transaction, WM
Advisors or the sub-advisor will consider the factors WM Advisors or the
sub-advisor deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer and the reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In addition, each Advisory
agreement between the Trust and WM Advisors and each sub-advisory agreement
between WM Advisors and a sub-advisor authorizes WM Advisors or sub-advisor, in
selecting brokers or dealers to execute a particular transaction and in
evaluating the best overall terms available, to consider the brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Trust, the other Funds and/or
other accounts over which WM Advisors or the sub-advisors or its affiliates
exercise investment discretion. Research services provided to WM Advisors
include, for example, written and electronic reports analyzing economic and
financial characteristics, telephone conversations between brokerage securities
analysts and members of WM Advisor's staff, and personal visits by such
analysts, brokerage strategists and economists to WM Advisor's office. Some of
these services are useful to WM Advisors in advising clients, although not all
of these services are necessarily useful and of value in managing the Funds and
Portfolios.
WM Advisors or a sub-advisor may cause a Fund to pay a broker-dealer, which
provides brokerage and research services to WM Advisors or the sub-advisor, an
amount of disclosed commission for effecting a securities transaction in excess
of the commission that another broker-dealer would have charged for effecting
that transaction. The fees under the Advisory agreements between the Trust and
WM Advisors are not reduced by reason of the receipt by WM Advisors or
sub-advisors of brokerage and research services. The Trust's Trustees will
periodically review the commissions paid by the Funds to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits received by the Trust.

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<PAGE> 93

Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions may be
obtained elsewhere.

For the past three fiscal years, the Portfolios paid no brokerage commissions.
During the 1998 and 1999 fiscal years, the Funds paid no commissions to
affiliated broker-dealers. During 1998 and 1999, the Funds placed transactions
with broker-dealers who provided research services to WM Advisors as follows:

<TABLE>
<CAPTION>
1999 1999 1998 1998
BROKERAGE AGGREGATE BROKERAGE AGGREGATE
FUND COMMISSIONS TRANSACTION AMOUNT COMMISSIONS TRANSACTION AMOUNT
---- ----------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C>
Money Market Fund.............. $ 0 $ 0 $ 0 $ 0
Short Term Income Fund......... $ 0 $ 0 $ 0 $ 0
U.S. Government Securities
Fund......................... $ 0 $ 0 $ 0 $ 0
Income Fund.................... $ 0 $ 0 $ 0 $ 0
Bond & Stock Fund.............. $ 10,869 $386,041,846 $ 1,445 $ 793,478
Growth & Income Fund........... $160,925 $172,131,003 $37,474 $ 5,524,142
Growth Fund of the Northwest... $ 16,180 $ 47,535,499 $ 1,630 $ 968,185
Growth Fund.................... $355,627 $583,345,439 $65,905 $218,453,870
Small Cap Stock Fund........... $ 17,297 $327,093,254 $ 6,874 $ 6,585,764
International Growth Fund...... $393,068 $449,209,395 $53,141 $ 1,491,625
</TABLE>

For the fiscal years ended December 31, 1997, 1998 and 1999 the Funds paid the
following brokerage commissions:

<TABLE>
<CAPTION>
1999 1998 1997
BROKERAGE BROKERAGE BROKERAGE
FUND COMMISSIONS COMMISSIONS COMMISSIONS
---- ----------- ----------- ------------
<S> <C> <C> <C>
Money Market Fund.................................... $ 0 $ 0 $ 0
Short Term Income Fund............................... $ 0 $ 0 $ 3,690
U.S. Government Securities Fund...................... $ 0 $ 0 $ 0
Income Fund.......................................... $ 0 $ 0 $ 0
Bond & Stock Fund.................................... $ 11,133 $ 1,725 N/A
Growth & Income Fund................................. $174,062 $ 42,231 $ 159,577
Growth Fund of the Northwest......................... $ 16,715 $ 1,758 N/A
Growth Fund.......................................... $355,627 $ 65,905 $ 277,280
Small Cap Stock Growth Fund.......................... $ 19,539 $ 12,200 $ 104,980
International Growth Fund............................ $393,068 $ 53,141 $ 307,998
</TABLE>

The Trust is required to identify any securities of its "regular brokers or
dealers" (as defined in the 1940 Act), which the Trust has acquired during its
most recent fiscal year. As of December 31, 1999, these Funds had the following
holdings fitting the above description:

<TABLE>
<CAPTION>
SHORT TERM
MONEY MARKET INCOME BOND & STOCK GROWTH
FUND FUND FUND FUND
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Goldman Sachs......................... $987,564 $1,010,174 -- --
Household Finance..................... $992,267 -- -- $16,895,775
Merrill Lynch & Company............... $995,033 $ 343,694 $89,787 --
Morgan Stanley........................ $994,333 $ 935,197 -- --
</TABLE>

REDEMPTIONS
The right of redemption of shares of a Fund may be suspended or the date of
payment postponed (1) for any periods during which the NYSE is closed (other
than for customary weekend and holiday closings), (2) when trading in the
markets a Fund normally utilizes is restricted, or an emergency, as defined by
the rules and regulations of the SEC, exists making disposal of the Fund's
investments or determination of its net asset value not reasonably practicable
or (3) for such other periods as the SEC by order may permit for protection of
the Fund's shareholders.

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<PAGE> 94

DISTRIBUTIONS IN KIND. If the Board of Trustees determines that it would be
detrimental to the best interests of the shareholders of a Fund to make a
redemption payment wholly in cash, the Trust may pay any portion of a redemption
by distribution in kind of portfolio securities in lieu of cash. Securities
issued in a distribution in kind will be readily marketable, although
shareholders receiving distributions in kind may incur brokerage commissions
when subsequently redeeming shares of those securities.
NET ASSET VALUE
The Trust will not calculate the net asset value of the Funds and Portfolios on
certain holidays. On those days, securities held by a Fund may nevertheless be
actively traded, and the value of the Fund's or Portfolio's shares could be
significantly affected.
The assets of each Fund and Portfolio are valued according to generally accepted
accounting principles and applicable law. Generally, a Fund's or Portfolio's
investments are valued at market value or, in the absence of a market value with
respect to any portfolio securities, at fair value as determined by or under the
direction of the Trust's Board of Trustees:

-- A security that is primarily traded on a U.S. or foreign exchange
(including securities traded through the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System) is
valued at the last sale price on that exchange or, if there were no
sales during the day, at the current quoted bid price.

-- Securities that are primarily traded on foreign exchanges are generally
valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the
time a value was so established is determined by the Trust's Board of
Trustees or its delegates.
-- Over-the-counter securities that are not reported on the NASDAQ System
and securities listed or traded on certain foreign exchanges whose
operations are similar to the U.S. over-the-counter market are valued on
the basis of the bid price at the close of business on each day.
-- An option is generally valued at the last sale price or, in the absence
of a last sale price, the last offer price.
-- Investments in U.S. Government securities (other than short-term
securities) are valued at the average of the quoted bid and asked prices
in the over-the-counter market.
-- Short-term investments that mature in 60 days or less are valued at
amortized cost when the Board of Trustees determines that this
constitutes fair value; assets of the Money Market Fund are also valued
at amortized cost.
-- The value of a futures contract equals the unrealized gain or loss on
the contract, which is determined by marking the contract to the current
settlement price for a like contract acquired on the day on which the
futures contract is being valued. A settlement price may not be used if
the market makes a limited move with respect to the security or index
underlying the futures contract. In such event, the futures contract
will be valued at a fair market price to be determined by or under the
direction of the Trust's Board of Trustees.
-- Shares of open-end investment companies are valued at the net asset
value per share last or contemporaneously calculated.
In carrying out the Board's valuation policies, PFPC Inc., as sub-administrator,
may consult with one or more independent pricing services ("Pricing Services")
retained by the Trust. Debt securities of U.S. issuers (other than U.S.
Government securities and short-term investments)

36
<PAGE> 95

are valued by FDISG, as sub-administrator, after consultation with a Pricing
Service. The procedures of the Pricing Services are reviewed periodically by the
officers of the Trust under the general supervision and responsibility of the
Board of Trustees.
VALUATION OF THE MONEY MARKET FUND. The valuation of the portfolio securities
of the Money Market Fund is based upon amortized costs, which does not take into
account unrealized capital gains or losses. Amortized cost valuation involves
initially valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Fund would receive if it sold the instrument.
The use by the Money Market Fund of the amortized cost method of valuing its
respective portfolio securities is permitted by a rule adopted by the SEC. Under
this rule, the Money Market Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of thirteen months or less and invest only in securities
determined by the Board of Trustees of the Trust to present minimal credit risks
and meet certain rating criteria described in the Prospectus above. Pursuant to
the rule, the Board of Trustees also has established procedures designed to
stabilize, to the extent reasonably possible, the Fund's price per share as
computed for the purpose of sales and redemptions at $1.00. Such procedures
include review of the Fund's portfolio holdings by the Board of Trustees, at
such intervals as it may deem appropriate, to determine whether the Fund's net
asset values calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost.
The rule also provides that the extent of any deviation between the Fund's net
asset values based upon available market quotations or market equivalents and
the $1.00 per share net asset values based on amortized cost must be examined by
the Board of Trustees. In the event the Board of Trustees determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, pursuant to the rule the Board of
Trustees must cause the Trust to take such corrective action as the Board deems
necessary and appropriate including: selling portfolio instruments prior to
maturity to realize capital gains or losses or shorten average portfolio
maturity; withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per share by
using available market quotations.
PERFORMANCE
From time to time, the Trust may quote the performance of a Portfolio or Fund in
terms of yield, effective yield, actual distributions, total return or capital
appreciation in reports or other communications to shareholders or in
advertising material. Fund or Portfolio performance will be advertised only if
accompanied by the comparable performance for the corresponding separate
account.

ANNUITY CONTRACT OWNER VALUES WILL DEPEND NOT ONLY ON THE PERFORMANCE OF THE
FUNDS AND PORTFOLIOS, BUT ALSO ON THE MORTALITY AND EXPENSE RISK CHARGES, THE
ADMINISTRATIVE CHARGES, AND ANY APPLICABLE SALES CHARGES UNDER THE ANNUITY
CONTRACTS. THE TOTAL RETURNS OF THE FUNDS AND PORTFOLIOS REFLECT THE AGREEMENT
OF THE FUNDS' AND PORTFOLIOS' INVESTMENT ADVISOR TO VOLUNTARILY WAIVE FEES AND
BEAR CERTAIN EXPENSES. TOTAL RETURNS WOULD HAVE BEEN LOWER IF THESE FEES AND
EXPENSES HAD NOT BEEN WAIVED.

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<PAGE> 96

MONEY MARKET FUND YIELD INFORMATION
The "yield" of the Money Market Fund refers to the income generated by an
investment in the Fund over a 7-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in an Underlying Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.
The yield for the Money Market Fund is computed by: (1) determining the net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account in the Fund having a balance of one share at the beginning
of a seven calendar day period for which yield is to be quoted, (2) subtracting
a hypothetical charge reflecting deductions from shareholder accounts, (3)
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return, and (4) annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of the
account reflects the value of additional share purchased with dividends declared
on the original share and any such additional shares and income received or
accrued but not declared as a dividend, but does not include realized gains and
losses or unrealized appreciation or depreciation. In addition, the Money Market
Fund may calculate a compounded effective annualized yield by adding 1 to the
base period return (calculated as described above), raising the sum to a power
equal to 365/7 and subtracting 1.

Based upon the foregoing calculation, for the 7-day period ended December 31,
1999, the yield for the Money Market Fund was 5.23%, and the effective yield for
the Money Market Fund for the same period was 5.37%.

The Money Market Fund yield may be compared with the yields of other
investments. It should not, however, be compared to the return on fixed rate
investments which guarantee rates of interest for specified periods, such as the
interest guarantees in an annuity contract or bank deposits.
PORTFOLIO YIELD INFORMATION

In the Risk/Return Summary of the Prospectus, each of the Portfolio's
performance is compared to a Capital Market Benchmark. Each such benchmark is a
blended mix of component indices. Descriptions of each such component index are
as follows:

-- The Salomon Brothers U.S. 90-day T-Bill Index measures performance of
U.S. Treasury Bills with maturities of three months.

-- The Lehman Brothers Mutual Fund Short (1-5) Government/Corporate Bond
Index is represented by all U.S. Government agency and Treasury
securities and all investment-grade corporate debt securities with
maturities of one to five years.

-- The Lehman Brothers Mortgage-Backed Securities Index includes 15- and
30-year fixed rate securities backed by mortgage pools of the Government
National Mortgage Association (GNMA), Federal Home Loan Mortgage
Corporation (FHLMC), and Federal National Mortgage Association (FNMA).
Balloons are included in the index; graduated payment mortgages (GPMs),
buydowns, manufactured home mortgages, and graduated equity mortgages
(GEMs) are not.

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<PAGE> 97

-- The Lehman Brothers BAA Long-Term Corporate Bond Index includes all
publicly issued, fixed rate, nonconvertible BAA rated,
dollar-denominated, SEC-registered corporate debt with maturities
greater than ten years.

-- The Lehman Brothers Aggregate Bond Index is an all-inclusive bond index
which contains government, corporate, mortgage and asset-backed
securities.

-- The Standard & Poor's 500 Index is a capitalization-weighted index of
500 stocks designed to measure performance of the broad domestic economy
and all economic sectors.

-- The Russell 2000 Index measures the performance of the 2,000 smallest
companies (approximately 10% of the total market capitalization) of the
Russell 3000 Index.
-- The Russell 2000 Growth Index measures the performance of the companies
with higher price-to-book ratios and higher forecasted growth values
within the Russell 2000 Index.
-- The Russell 3000 Index is comprised of the 3,000 largest U.S. companies
based on total market capitalization, which represents approximately 98%
of the investable U.S. equity market.

-- The Morgan Stanley Capital International (MSCI) Europe, Australasia, and
the Far East Plus Emerging Markets Free Index is a market capitalization
weighted index composed of companies representative of the market
structure of 48 developed and emerging market countries. The index is
calculated with gross dividends reinvested and in United States dollars.

TOTAL RETURN INFORMATION
From time to time, a Fund, other than the Money Market Fund, or Portfolio may
advertise its "average annual total return" or "aggregate total return" over
various periods of time. Such average annual total return figures show the
average percentage change in value of an investment in the Fund or Portfolio
from the beginning date of the measuring period to the end of the measuring
period. These figures reflect changes in the price of the Fund's or Portfolio's
shares and assume that any income dividends and/or capital gains distributions
made by the Fund or Portfolio during the period were reinvested in shares of
that Fund or Portfolio. Figures will be given for recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well
(such as from commencement of the Fund's or Portfolio's operations, or on a
year-by-year basis).
When considering "average" total return figures for periods longer than one
year, it is important to note that the relevant Fund's or Portfolio's annual
total return for any one year in the period might have been greater or less than
the average for the entire period. An Fund or Portfolio may also use "aggregate"
total return figures for various periods representing the cumulative change in
value of an investment in the Fund or Portfolio for a specific period (again
reflecting changes in the Fund's or Portfolio's share prices and assuming
reinvestment of dividends and distributions). Aggregate total returns may be
shown by means of schedules, charts or graphs and may indicate subtotals of the
various components of total return (i.e., change in value of initial investment,
income dividends and capital gains distributions).
Average annual total return is computed according to a formula prescribed by the
SEC. The formula can be expressed as follows:

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<PAGE> 98

P(1+T)(n) = ERV

<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the designated time period as of
the end of such period or the life of the Fund or Portfolio.
</TABLE>

The formula for calculating aggregate total return can be expressed as
(ERV/P) -- 1.

Based on the foregoing, the average annual total returns through December 31,
1999, were as follows*:

<TABLE>
<CAPTION>
ONE FIVE SINCE
FUND YEAR YEARS INCEPTION
- ---- ------ ------ ---------
<S> <C> <C> <C>
Money Market Fund........................................... 4.56% 5.00% 4.56%
Short Term Income Fund...................................... 2.89% 5.40% 4.22%
U.S. Government Securities Fund............................. 0.51% 7.37% 5.19%
Income Fund................................................. (2.16)% 8.02% 5.49%
Bond & Stock Fund........................................... 2.49% N/A 3.29%
Growth & Income Fund........................................ 18.11% 23.84% 19.28%
Growth Fund................................................. 97.09% 40.95% 32.16%
Growth Fund of the Northwest................................ 40.37% N/A 29.15%
Small Cap Stock............................................. 71.09% 24.54% 21.24%
International Growth Fund................................... 51.96% 12.59% 11.68%
Strategic Growth Portfolio.................................. 47.95% N/A 30.75%
Conservative Growth Portfolio............................... 39.36% N/A 24.29%
Balanced Portfolio.......................................... 27.71% N/A 19.00%
Flexible Income Portfolio................................... 8.58% N/A 9.81%
Income Portfolio............................................ 1.88% N/A 3.61%
</TABLE>

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

* THE BOND & STOCK FUND AND GROWTH FUND OF THE NORTHWEST COMMENCED OPERATIONS ON
APRIL 28, 1998. THE SHORT TERM INCOME, GROWTH & INCOME AND SMALL CAP STOCK
FUNDS COMMENCED OPERATIONS ON JANUARY 12, 1994. THE STRATEGIC GROWTH,
CONSERVATIVE GROWTH AND THE BALANCED PORTFOLIOS COMMENCED OPERATIONS ON JUNE
3, 1997 AND THE FLEXIBLE INCOME PORTFOLIO COMMENCED OPERATIONS ON SEPTEMBER 6,
1997. THE INCOME PORTFOLIO COMMENCED OPERATIONS ON OCTOBER 22, 1997, CEASED
OPERATIONS ON NOVEMBER 4, 1997 AND RE-COMMENCED OPERATIONS ON APRIL 23, 1998.

The total returns shown for the Funds and Portfolios are not an estimate or
guarantee of future performance and do not take into account charges at the
annuity and separate account level.
The performance of any or all of the Funds and Portfolios may be compared in
advertisements and sales literature to the performance of other variable annuity
issuers in general and to the performance of particular types of variable
annuities investing in mutual funds, or series of mutual funds, with investment
objectives similar to each of the Funds. Lipper Analytical Services, Inc.
("Lipper") and the Variable Annuity Research and Data Service ("VARDS(R)") are
independent services which monitor and rank the performance of variable annuity
issuers in each of the major categories of investment objectives on an
industry-wide basis. Lipper's rankings include variable life issuers as well as
variable annuity issuers. VARDS(R) rankings compare only variable annuity
issuers. The performance analyses prepared by Lipper and VARDS(R) rank such
issuers on the basis of total return, assuming reinvestment of dividends and
distributions, but do not take sales charges, redemption fees or certain expense
deductions at the separate account level into consideration. In addition,
VARDS(R) prepares risk adjusted rankings, which consider the effects of market
risk on total return performance.

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<PAGE> 99

In addition, performance of each Fund or Portfolio may be compared in
advertisements and sales literature to the following benchmarks: (1) the
Standard & Poor's 500 Index, which represents an unmanaged weighted index of 500
industrial, transportation, utility and financial companies that represent
approximately 80% of the market capitalization of the U.S. equity markets,
widely regarded by investors as representative of the stock market; (2) the
Consumer Price Index, published by the U.S. Bureau of Labor Statistics, a
statistical measure of change, over time, in the prices of goods and services in
major expenditure groups and generally considered to be a measure of inflation;
(3) the Lehman Brothers Mutual Fund Short World Multi-Market Index, which
includes all debt instruments of the United States and 12 major countries
(determined by Lehman) denominated in dollars with maturities of one to five
years; (4) the Lehman Brothers Mutual Fund U.S. Mortgage Index, which includes
all agency mortgage-backed securities; (5) the Lehman Brothers Corporate Debt
BBB-Rated Index, which represents all investment-grade corporate debt
securities; (6) the Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index, which includes 1050 companies representing the
stock markets of Europe, Australia, New Zealand and the Far East; and (7) the
U.S. Government 90-Day Treasury Bill rate. Generally, an index represents the
market value of an unmanaged group of securities, regarded by investors as
representative of a particular market. An index does not reflect any asset-based
charges for investment management or other expenses. The performance information
may also include evaluations of the funds published by nationally recognized
ranking services and by financial publications that are nationally recognized,
such as Business Week, Forbes, Institutional Investor, Money and The Wall Street
Journal.

TAXES
The following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder as in effect on the date of this SAI. New
legislation, as well as administrative changes or court decisions, may
significantly change the conclusions expressed herein and may have a retroactive
effect with respect to the transactions contemplated herein.
Each of the Funds and Portfolios intends to qualify as a "regulated investment
company" ("RIC") under Subchapter M of the Code. A Fund or Portfolio that is a
RIC and distributes to its shareholders at least 90% of its taxable net
investment income (including, for this purpose, its net realized short-term
capital gains) and 90% of its tax-exempt interest income (reduced by certain
expenses), will not be liable for federal income taxes to the extent its taxable
net investment income and its net realized long-term and short-term capital
gains, if any, are distributed to its shareholders.
A number of technical rules are prescribed for computing net investment income
and net capital gains. For example, the Fund or Portfolio is generally treated
as receiving dividends on the ex-dividend date. Also, certain foreign currency
losses and capital losses arising after October 31 of a given year may be
treated as if they arise on the first day of the next taxable year.
In order to qualify as a RIC under the Code, in addition to satisfying the
distribution requirement described above, each Fund or Portfolio must (a) derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities, or foreign currencies, and certain other
related income, including, generally, certain gains from options, futures, and
forward contracts; and (b) diversify its holdings so that, at the end of each
fiscal quarter of the Fund's or Portfolio's taxable year, (i) at least 50% of
the market value of the Fund's or Portfolio's assets is represented by cash and
cash items, U.S. Government Securities, securities of other RICs, and

41
<PAGE> 100

other securities, with such other securities limited, in respect of any one
issuer, to an amount that does not exceed 10% of the voting securities of such
issuer or 5% of the value of the Fund's or Portfolio's total assets; and (ii)
not more than 25% of the value of its assets is invested in the securities
(other than U.S. Government Securities and securities of other RICs) of any one
issuer or two or more issuers which the Fund or Portfolio controls and which are
engaged in the same, similar or related trades or businesses.
If a Fund or Portfolio fails to qualify as a RIC for any year, all of its income
will be subject to tax at corporate rates, and its distributions (including
capital gain distributions) will be taxable as ordinary income dividends to its
shareholders to the extent of the Fund's or Portfolio's current and accumulated
earnings and profits.
In addition to qualifying under subchapter M by meeting the requirements
described above, each Fund and Portfolio intends to meet the diversification
requirements of Subchapter L of the Code so that non-qualified variable annuity
contracts funded by the Trust will not fail to qualify as annuities for tax
purposes. In general, for a Fund or Portfolio to meet the investment
diversification requirements of Subchapter L of the Code, Treasury regulation
1.817-5 requires that no more than 55% of the total value of the assets of the
Fund or Portfolio be represented by any one investment, no more than 70% by any
two investments, no more than 80% by three investments and no more than 90% by
four investments. Generally, for purposes of the regulations, all securities of
the same issuer are treated as one investment. In the context of U.S. Government
securities (including any security that is issued, guaranteed or insured by the
United States or an instrumentality of the United States), each U.S. Government
agency or instrumentality is treated as a separate issuer. In the context of
shares of registered investment companies (including shares of the Trust), each
series, fund or portfolio is treated as a separate issuer. Compliance with the
Subchapter L regulations is tested on the last day of each calendar year
quarter.
Notwithstanding the distribution requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gain, a regulated investment company is generally subject to a nondeductible 4%
excise tax to the extent it fails to distribute by the end of any calendar year
at least 98% of its ordinary income for that year and 98% of its capital gain
net income for the one-year period ending on October 31 of that year, plus
certain other amounts.
The excise tax is inapplicable to any RIC all of the shareholders of which are
either tax-exempt pension trusts or separate accounts of life insurance
companies funding variable contracts. Although each Fund and Portfolio believes
that it is not subject to the excise tax, each Fund and Portfolio intends to
make the distributions required to avoid the imposition of the tax, provided
such payments and distributions are determined to be in the best interest of
such Fund's or Portfolio's shareholders.
Dividends declared by Fund or Portfolio in October, November, or December of any
year and payable to shareholders of record on a date in such month will be
deemed to have been paid by the Fund or Portfolio and received by the
shareholders on December 31 of that year if paid by the Fund at any time during
the following January.
ADDITIONAL CONSIDERATIONS FOR SHAREHOLDERS OF THE INTERNATIONAL GROWTH FUND
The International Growth Fund's investments in foreign securities may be subject
to foreign withholding taxes. In that case, the Fund's yield on those securities
would be decreased. Shareholders may be entitled to claim a credit or deduction
with respect to foreign taxes. In

42
<PAGE> 101

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

The Trust's financial statements for the fiscal year ended December 31, 1998 and
December 31, 1999, including notes thereto and the Report of Deloitte & Touche
LLP, Independent Accountants, are incorporated by reference to the Trust's
Annual Reports, as filed with the Securities and Exchange Commission by the
Trust. The audited financial statements incorporated by reference into this SAI
and the financial highlights included in Part A of this registration statement
and incorporated by reference into this SAI have been so included and
incorporated in reliance upon the reports of the independent accountants, given
on their authority as experts in auditing and accounting.

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<PAGE> 102

DESCRIPTION OF S&P, MOODY'S, DUFF AND FITCH IBCA RATINGS

DESCRIPTION OF S&P CORPORATE BOND RATINGS
AAA -- Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA -- Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.
A -- Debt rated "A" has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB -- Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
BB, B, CCC, CC OR C -- Debt rated "BB", "B", "CCC", "CC" or "C" is regarded as
having predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and C
the highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
BB -- Debt rated "BB" has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could lead
to inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B -- Debt rate "B" has greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions would likely impair capacity or willingness to
pay interest and repay principal. The "B" rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied "BB" or "BB-"
rating.
CCC -- Debt rated "CCC" has a current identifiable vulnerability to default, and
is dependent on favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category also is
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.
CC -- The rating "CC" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC" rating.
C -- The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

D -- Debt is rated D when the issue is in payment default, or the obligor has
filed for bankruptcy. The D rating is used when interest or principal payments
are not made on the date due, even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such grace
period.

PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

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<PAGE> 103

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
A -- Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C -- Bonds which are rated C are the lowest class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the security ranks in the lower end of its generic rating
category.
DESCRIPTION OF DUFF & PHELPS CORPORATE BOND RATINGS
AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA -- High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
A -- Protection factors are average but adequate. However, risk factors are more
variable and greater in periods of economic stress.

45
<PAGE> 104

BBB -- Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic cycles.

BB -- Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or down
frequently within this category.

B -- Below investment grade and possessing risk that obligations will not be met
when due. Financial protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into a higher or
lower rating grade.

CCC -- Well below investment grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
DD -- Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP -- Preferred stock with dividend arrearages.
DESCRIPTION OF FITCH IBCA CORPORATE BOND RATINGS
AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.

AA -- Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.

A -- Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and to repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and to repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
BB -- Bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic changes.
However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.
B -- Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC -- Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC -- Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

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<PAGE> 105

C -- Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D -- Bonds are in default on interest and/or principal payments.
Such bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the DDD, DD, or D categories.
DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS
A-1 -- This highest category indicates that the degree of safety regarding
timely payment is strong. Debt determined to possess extremely strong safety
characteristics is denoted with a plus sign (+) designation.
A-2 -- Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3 -- Debt carrying this designation has an adequate capacity for timely
payment. It is, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B -- Debt rated "B" is regarded as having only speculative capacity for timely
payment.
C -- This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D -- This rating indicates that the obligation is in payment default.
DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS
PRIME-1 -- Issuers rated Prime-1 (or supporting institutions) have superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
-- Leading market positions in well established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2 -- Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3 -- Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
NOT PRIME -- Issuers rate Not Prime do not fall within any of the Prime rating
categories.

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<PAGE> 106

DESCRIPTION OF DUFF & PHELPS COMMERCIAL PAPER RATINGS
HIGH GRADE
D-1+ -- Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
D-1 -- Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
D-1- -- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
GOOD GRADE
D-2 -- Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
SATISFACTORY GRADE
D-3 -- Satisfactory liquidity and other protection factors qualify issue as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.
NON-INVESTMENT GRADE
D-4 -- Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service. Operating factors and market access
may be subject to a high degree of variation.
DEFAULT
D-5 -- Issuer failed to meet scheduled principal and/or interest payments.
DESCRIPTION OF FITCH IBCA COMMERCIAL PAPER RATINGS
F1 -- Highest Credit Quality. Indicates the strongest capacity for timely
payment of financial commitments; may have an added "+" to denote any
exceptionally strong credit feature.
F2 -- Good Credit Quality. A satisfactory capacity for timely payment, but the
margin of safety is not as great as in the case of the higher ratings.
F3 -- Fair Credit Quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.
B -- Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.
C -- High Default Risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favourable business
and economic environment.
D -- Default. Denotes actual or imminent payment default.

48
<PAGE> 107
WM VARIABLE TRUST
FORM N-1A

PART C
OTHER INFORMATION

Item 23. Exhibits

(a) Agreement and Declaration of Trust,

(1) Agreement and Declaration of Trust, dated January 29,
1993 -- incorporated by reference to Post-Effective
Amendment ("PEA") No. 7 to the Registrant's
Registration Statement, filed with the SEC on
February 28, 1997.

(2) Amendment No. 1 to the Trust's Agreement and
Declaration of Trust dated April 27, 1993 --
incorporated by reference to PEA No. 7 to the
Registrant's Registration Statement, filed on
February 28, 1997.

(3) Amendment No. 2 to the Trust's Agreement and
Declaration of Trust dated September 22, 1993--
incorporated by reference to PEA No. 7 to the
Registrant's Registration Statement filed on February
28, 1997.

(b) Bylaws of the Trust -- incorporated by reference to PEA No. 7
filed on February 28, 1997.

(d) Investment Advisory Contracts

(1) Management Agreement, dated as of January 30, 1998,
between the Trust and WM Advisors, Inc. (formerly
known as Composite Research & Management Co.) --
incorporated by reference to PEA No. 13, filed on
February 27, 1998

(2) Sub-Adviser Agreement, dated as of January 30, 1998
between WM Advisors, Inc. and Janus Capital
Corporation ("Janus") with respect to the Growth Fund
-- incorporated by reference to PEA No. 13, filed on
February 27, 1998.

(3) Amendment to Sub-Adviser Agreement dated December 7,
1999 between WM Advisors, Inc. and Janus Capital
Corporation ("Janus") with respect to the Growth Fund
incorporated by reference to PEA No. 18, filed on
February 15, 2000.

(4) Sub-Adviser Agreement, dated as of June 23, 1999
between WM Advisers, Inc. and Capital Guardian Trust
Company with respect to the International Growth Fund
--.

<PAGE> 108
(e) Underwriting Contracts.

(1) Distribution Agreement, dated January 30, 1998
between the Trust and WM Funds Distributor, Inc.
(formerly known as Composite Funds Distributor, Inc.)
-- incorporated by reference to PEA No. 13 to the
Registrant's Registration Statement filed on February
27, 1998.

(2) Participation Agreement among the Trust, WM Funds
Distributor, Inc., American General Life Insurance
Company ("American General") and American General
Securities Incorporated ("American General
Securities"), dated as of July 12, 1999.

(f) Bonus or Profit Sharing Plans Not Applicable.

(g) Custody Agreement, dated as of March 20, 1998, between the
Trust and Boston Safe Deposit & Trust Company -- incorporated
by reference to PEA No. 7 to the Registrant's Registration
Statement filed on February 28, 1997.

(h) Other Material Contracts

(1) Transfer Agent Contract, dated as of September 14,
1999.

(2) Administration Agreement dated January 30, 1998 --
incorporated by reference to PEA No. 13 to the
Registrant's Registration Statement filed on February
27, 1998.
(i) Legal Opinion -- incorporated by reference to PEA No. 15 to
the Registrant's Registration Statement filed on April 1,
1998.

(j) Other Opinions

(1) Consent of Deloitte & Touche LLP

(k) Omitted Financial Statements -- Not Applicable.

(l) Initial Capital Agreements -- Not Applicable.

(m) 12b-1 Plan -- Not Applicable.

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(n) Financial Data Schedules - Not Applicable.
(o) Rule 18f-3 Plan -- Not Applicable.

(p) Code of Ethics

1. WM Group of Funds, WM Advisors, WM Funds Distributor, Inc.
Code of Ethics, dated as of December 7, 1999.

2. Janus Capital Corporation Code of Ethics, dated as of
March 1, 2000.

3. Capital Guardian Trust Company Code of Ethics, dated as of
January 1, 2000.

Item 24. Persons Controlled by or Under Common Control with Registrant.

The Trust is a business trust organized under the laws of the
Commonwealth of Massachusetts. Prior to March 20, 1998, the Trust was known as
the Sierra Variable Trust. Separate Account D of American General Life Insurance
Company is the sole shareholder of, and may be deemed to control, the Trust.
American General Life Insurance Company is a subsidiary of American General
Corporation.

The list of American General Corporation's active subsidiaries is
hereby incorporated by reference to Item 26 of the Form N-4 registration
statement of American General Life Insurance Company and its Separate Account D,
File Nos. 33-57730 and 811-2441.

The Registrant is operated under the supervision of WM Advisors. WM
Advisors is affiliated with Shareholder Services, which serves as transfer agent
for the Registrant. An affiliate of WM Advisors, WM Funds Distributor, Inc. ("WM
Funds Distributor") serves as the principal underwriter and distributor for the
Registrant. WM Advisors, Shareholder Services and WM Funds Distributor serve in
their same capacities for the four other registered investment companies.

WM Advisors, Shareholder Services and WM Funds Distributor are all
wholly-owned subsidiaries of Washington Mutual, Inc. and are all incorporated
under the laws of the State of Washington.

Item 25. Indemnification.

Article VIII of the Registrant's Agreement and Declaration of Trust
provides in relevant part:

The Trust shall indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as
a shareholder, creditor or otherwise) (hereinafter referred to as a
"Covered Person") against all liabilities and expenses, including but
not limited to amounts paid in satisfaction of judgments, in compromise
or as fines and penalties, and counsel fees reasonably incurred by any
Covered Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered

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Person may be or may have been involved as a party or otherwise or with
which such Covered Person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a Covered
Person except with respect to any matter as to which such Covered
Person shall have been finally adjudicated in any such action, suit or
other proceeding to be liable to the Trust to its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office. Expenses, including counsel fees so incurred by any
such Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), shall be paid from
time to time by the Trust in advance of the final disposition of any
such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Covered Person to repay amounts so paid to the Trust if
it is ultimately determined that indemnification of such expenses is
not authorized under this Article; provided, however, that either (a)
such Covered Person shall have provided appropriate security for such
undertaking, (b) the Trust shall be insured against losses arising from
any such advance payments or (c) either a majority of the disinterested
Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter), or
independent legal counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as opposed to a full
trial type inquiry) that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Article.

As to any matter disposed of (whether by a compromise payment, pursuant
to a consent decree or otherwise) without an adjudication by a court,
or by any other body before which the proceeding is brought, that such
Covered Person is liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office,
indemnification shall be provided if (a) approved, after notice that it
involves such indemnification, by at least a majority of the
disinterested Trustees acting on the matter (provided that a majority
of the disinterested Trustees then in office act on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that such Covered Person is not
liable to the Trust or its Shareholders by reasons of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office, or (b) there has
been obtained an opinion in writing of independent legal counsel, based
upon a review of readily available facts (as opposed to a full trial
type inquiry) to the effect that such indemnification would not protect
such Person against any liability to the Trust to which he or she would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office. Any approval pursuant to this Section shall not prevent
the recovery from any Covered Person of any amount paid to such Covered
Person in accordance with this Section as indemnification if such
Covered Person is subsequently adjudicated by a court of competent
jurisdiction to have been liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office.

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<PAGE> 111

Item 26. Business and Other Connections of Investment Advisor.

(a) WM Advisors, Inc.
Directors/Officers Past Two Fiscal Years
- ------------------ ---------------------

Monte D. Calvin WM Shareholder Services, Inc.
First Vice President, Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

First Vice President, WM Advisors, Inc.
Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

First Vice President, WM Funds Distributor, Inc.
Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Sandra A. Cavanaugh WM Advisors, Inc.
First Vice President, Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

First Vice President, Director WM Shareholder Services, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

First Vice President, Director WM Funds Distributor, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

Craig S. Davis WM Funds Distributor, Inc.
Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Director WM Shareholder Services, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

Director WM Advisors, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

Executive Vice President Washington Mutual, Inc.
1201 Third Ave., Seattle, WA 98101

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<PAGE> 112
Chairman January 1996 - July 1997
ASB Financial Services, Irvine, CA

Sharon L. Howells WM Advisors, Inc.
First Vice President, 1201 Third Ave., 22nd Floor, Seattle, WA 98101
Corporate Secretary
Director

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<PAGE> 113
First Vice President, WM Funds Distributor, Inc.
Corporate Secretary, 1201 Third Avenue, 22nd Floor, Seattle, WA 98101
Director

First Vice President WM Shareholder Services, Inc.
Corporate Secretary, 1201 Third Avenue, 22nd Floor, Seattle, WA 98101
Director

Joel King March 1998 - present
Vice President WM Advisors, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101
Vice President January 1996 - February 1998
Bennington Capital Management
1420 Fifth Ave., Seattle, WA 98101

Suzanne M. Krahling March 1999 - present
First Vice President, WM Advisors, Inc.
Treasurer 1201 Third Avenue, 22nd Floor, Seattle, WA 98101

First Vice President, WM Shareholder Services, Inc.
Treasurer 1201 Third Avenue, 22nd Floor, Seattle, WA 98101

First Vice President, WM Funds Distributor, Inc.
Treasurer 1201 Third Avenue, 22nd Floor, Seattle, WA 98101

First Vice President, WM Financial Services,
Secretary, Treasurer 1201 Third Avenue, Suite 780, Seattle, WA 98101

Joel Calvo September 1999 - present
Chairman WM Advisors, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

President and Chairman WM Shareholder Services, Inc.
1201 Third Avenue, 22nd Floor, Seattle, WA 98101

Director WM Financial Services,
1201 Third Avenue, Suite 780, Seattle, WA 98101

William G. Papesh WM Advisors, Inc.
President, Director 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Director Will Shareholder Services, Inc.
1201 Third Ave., Seattle, WA 98101

Director WM Insurance Services
1201 Third Ave., Seattle, WA 98101

President, Director WM Group of Funds
1201 Third Avenue, 22nd Floor, Seattle, WA 98101

President, Director July 1997 - present
WM Funds Distributor, Inc.
1201 Third Avenue, 22nd Floor, Seattle, WA 98101

Brian L. Placzek WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Gary J. Pokrzywinski WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Audrey S. Quaye WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Brian Applegate November 1998 - present
Assistant Vice President WM Avisors
1201 Third Ave., 22nd Floor, Seattle, WA 98101

July 1997 - November 1998
Freeman Wellwood, Seattle, WA

Jamelah Leddy May 1999 - present
Assistant Vice President WM Advisors
1201 Third Ave., 22nd Floor, Seattle, WA 98101

July 1997 - May 1999
Piper Jaffray, Seattle, WA

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<PAGE> 114
Michael D. Meighan WM Advisors, Inc.
Assistant Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

David W. Simpson WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Craig V. Sosey WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Stephen Q. Spencer WM Advisors, Inc.
Vice President 1201 Third Ave., 22nd Floor, Seattle, WA 98101

Linda C. Walk December 1997 - present
Vice President WM Advisors, Inc.
1201 Third Ave., 22nd Floor, Seattle, WA 98101

November 1996 - November 1997
Laid Norton Trust Company
Norton Building, Suite 1600, Seattle, WA 98104

January 1996 - July 1996
Ernst & Young LLP
2001 Market Street, 41st Floor, Philadelphia,
PA 19103

Randall L. Yoakum February 1999 - present
First Vice President, WM Advisors, Inc.
Chairman of Investment 1201 Third Ave., 22nd Floor, Seattle, WA 98101
Committee

April 1997 - February 1999
D.A. Davidson & Co., Great Falls, MT

-8-
<PAGE> 115

(b) Capital Guardian Trust Co.

Directors/Officers Past Two Years
- -------------------- --------------
<S> <C>

Timothy D. Amour Director, Capital Guardian Trust Company,
Capital Research and Management Company and
Capital Management Services, Inc.; Chairman
and Chief Executive Officer, Capital
Research Company

Donnalisa Barnum Senior Vice President, Capital Guardian Trust
Company; Vice President, Capital
International Limited

Andrew F. Barth Director, Capital Guardian Trust Company;
Executive Vice President and Research
Manager, Capital Guardian Research Company

Michael D. Beckman Senior Vice President, Treasurer and
Director, Capital Guardian Trust Company;
Director, Capital Guardian Trust Company of
Nevada; Treasurer, Capital Guardian Research
Company

Michael A. Burik Senior Counsel, The Capital Group Companies,
Inc.

Elizabeth A. Burns Senior Vice President, Capital Guardian Trust
Company

Larry P. Clemmensen Director, Capital Guardian Trust Company and
American Funds Distributors, Inc.; Chairman
of the Board, American Funds Service Company;
Director and President, The Capital Group
Companies, Inc.; Senior Vice President and
Director, Capital Research and Management
Company; President and Director, Capital
Management Services, Inc.; Treasurer, Capital
Strategy Research, Inc.; Senior Vice
President, Capital Income Builder, Inc. and
Capital World Growth & Income Fund, Inc.

Kevin G. Clifford Director and President, American Funds
Distributors, Inc.; Director, Capital
Guardian Trust Company

Roberta A. Conroy Senior Vice President, Director and Counsel,
Capital Guardian Trust Company; Senior Vice
President and Secretary, Capital
International, Inc. and Emerging Markets
Growth Fund, Inc.; Assistant General Counsel,
The Capital Group Companies, Inc.; Secretary,
Capital Management Services, Inc.

John B. Emerson Senior Vice President, Capital Guardian Trust
Company; Deputy Assistant to the President
for Intergovernmental Affairs, Deputy
Director of Presidential Personnel, The White
House

Michael E. Erickson Senior Vice President, Capital Guardian Trust
Company; Senior Vice President, Capital
International, Limited

David I. Fisher Chairman and Director, The Capital Group
Companies, Inc. and Capital Guardian Trust
Company; Vice Chairman and Director, Capital
International, Inc., Capital International
K.K., Capital International Limited and
Emerging Markets Growth Fund, Inc.; President
and Director, Capital Group International,
Inc. and Capital International Limited
(Bermuda); Presidente du Conseil, Capital
International S.A., Director, Capital Group
Research, Inc., Capital Research
International, EuroPacific Growth Fund and
New Perspective Fund

Richard N. Havas Senior Vice President, Capital Guardian Trust
Company, Capital International Limited,
Capital Research International and Capital
Guardian Canada, Inc.

Frederick M. Hughes, Jr. Senior Vice President, Capital Guardian Trust
Company

William H. Hurt Senior Vice President and Director, Capital
Guardian Trust Company; Chairman, Capital
Guardian Trust Company of Nevada and Capital
Strategy Research, Inc.

Peter C. Kelly Senior Vice President, Capital Guardian
Trust Company; Chairman and Director,
Capital Guardian Trust Company of Nevada and
Capital Strategy Research, Inc.; formerly,
Director, The Capital Group Companies, Inc.

Robert G. Kirby Chairman Emeritus, Capital Guardian Trust
Company; Senior Partner, The Capital Group
Partners L.P.

Nancy J. Kyle Senior Vice President and Director, Capital
Guardian Trust Company; President, Capital
Guardian Canada, Inc. and Vice President,
Emerging Markets Growth Fund, Inc.

Karin L. Larson Director, Capital Guardian Trust Company and
The Capital Group Companies, Inc.; President,
Director and Director of Research, Capital
Guardian Research Company; Chairperson,
President and Director, Capital Group
Research, Inc.; President, Director and
Director of International Research, Capital
Research International

James R. Mulally Senior Vice President and Director, Capital
Guardian Trust Company; Senior Vice
President, Capital International Limited;
Director, Capital Guardian Research Company;
Vice President, Capital Research Company

Shelby Notkin Senior Vice President, Capital Guardian Trust
Company; Director, Capital Guardian Trust
Company of Nevada

Mary M. O'Hern Senior Vice President, Capital Guardian Trust
Company and Capital International Limited;
Vice President, Capital International, Inc.

Jeffrey C. Paster Senior Vice President, Capital Guardian Trust
Company

Robert V. Pennington Senior Vice President, Capital Guardian Trust
Company; President, Capital Guardian Trust
Company of Nevada

Jason M. Pilalas Director, Capital Guardian Trust Company;
Senior Vice President and Director, Capital
Guardian Research Company

Robert Ronus President and Director, Capital Guardian
Trust Company; Chairman and Director, Capital
Guardian Canada, Inc., Capital Guardian
Research Company and Capital Research
International; Director, The Capital Group
Companies, Inc., Capital Group International,
Inc. and Capital International Fund S.A.;
Directeur, Capital International S.A.; Senior
Vice President, Capital International Limited

James F. Rothenberg Director, American Funds Distributors, Inc.,
American Funds Service Company, The Capital
Group Companies, Inc., Capital Group
Research, Inc., Capital Guardian Trust
Company and Capital Management Services,
Inc.; Director and President Capital
Research and Management, Inc.; formerly,
Director of Capital Guardian Trust Company,
a Nevada Corporation, and Capital Research
Company

Theodore R. Samuels Senior Vice President and Director, Capital
Guardian Trust Company; Director, Capital
Guardian Research Company

Lionel A. Sauvage Senior Vice President, Capital Guardian Trust
Company; Director, Capital Guardian Research
Company; Vice President, Capital
International Research, Inc.

John H. Seiter Executive Vice President of Client Relations
& Marketing and Director, Capital Guardian
Trust Company; Senior Vice President, Capital
Group International, Inc.; Vice President,
The Capital Group Companies, Inc.

Karen Skinner-Twoney Vice President, Capital Guardian Trust
Company; Director, Vice President and
Treasurer, Capital Guardian Trust Company of
Nevada

Eugene P. Stein Executive Vice President and Director,
Capital Guardian Trust Company; Director,
Capital Guardian Research Company

Philip A. Swan Senior Vice President, Capital Guardian Trust
Company

Shaw B. Wagener Director, Capital Guardian Trust Company,
Capital International Asia Pacific Management
Company, S.A., Capital International
Management Company, Capital International
Emerging Countries Fund and Capital
International Latin American Fund; President
and Director, Capital International, Inc.;
Senior Vice President, Capital Group
International, Inc. and Emerging Markets
Growth Fund, Inc.

Eugene M. Waldron Senior Vice President, Capital Guardian Trust
Company; Vice President, Loomis, Sayles &
Company

Joanne Weckbacher Senior Vice President, Capital Guardian
Trust Company
</TABLE>

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<PAGE> 116

<TABLE>
<CAPTION>
Directors Past Two Fiscal Years
- --------- ---------------------
<S> <C>
Thomas H. Bailey March 1996 - present
Director Axis Capital
41-46 Piccadilly, London, U.K.

President, Chairman of Trustees May 1993 - present
Janus Aspen Series
100 Fillmore Street, Denver, CO

Director Idex Management, Incorporated
201 Highland Avenue, Largo, Fl

President, Director, Chairman of June 1978 - present
Board, CEO Janus Capital Corporation
100 Fillmore Street, Denver, CO

President, Chairman of Trustees February 1970 - present
Janus Investment Fund
100 Fillmore Street, Denver, CO
</TABLE>

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<PAGE> 117
<TABLE>
<S> <C>
James P. Craig, III December 1997 - present
Vice Chairman Janus Capital Corporation
100 Fillmore Street, Denver, CO

Chief Investment Officer June 1995 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

Director April 1995 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

Executive Vice President May 1993 - present
Janus Aspen Series
100 Fillmore Street, Denver, CO

Vice President October 1984 - December 1997
Janus Capital Corporation
100 Fillmore Street, Denver, CO

Executive Vice President June 1984 - present
Janus Investment Fund
100 Fillmore Street, Denver, CO

Trustee June 1995 - present
Janus Aspen Series
100 Fillmore Street, Denver, CO

Trustee June 1995 - present
Janus Investment Fund
100 Fillmore Street, Denver, CO

Portfolio Manager May 1983 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO
</TABLE>

-11-
<PAGE> 118
<TABLE>
<S> <C>
Thomas A. Early
Director November 1998 - present
Janus World Funds PLC
100 Fillmore Street, Denver, CO

Vice President, General Counsel September 1998 - present
Janus Service Corporation
3773 Cherry Creek Drive North, Denver, CO

Vice President, General Counsel February 1998 - present
Janus Aspen Series
100 Fillmore Street, Denver, CO

Vice President, General Counsel, February 1998 - present
Secretary Janus Capital Corporation
100 Fillmore Street, Denver, CO

Vice President, General Counsel February 1998 - present
Janus Capital International Ltd.
76 Shoe Lane, 15th Floor, London, U.K.

Vice President, General Counsel February 1998 - present
Janus Distributors, Incorporated
100 Fillmore Street, Denver, CO

Vice President, General Counsel February 1998 - present
Janus Investment Fund
100 Fillmore Street, Denver, CO

Executive Vice President, General January 1997 - January 1998
Counsel Prudential Investments Fund
100 Mulberty Street, Newark, NJ
</TABLE>

-12-
<PAGE> 119
<TABLE>
<S> <C>
Steven R. Goodbarn
Director November 1998 - present
Janus World Funds, PLC
100 Fillmore Street, Denver, CO

Vice President, CFO December 1995 - present
Janus Aspen Series
100 Fillmore Street, Denver, CO

Vice President, CFO December 1995 - present
Janus Investment Fund
100 Fillmore Street, Denver, CO

Vice President of Finance June 1995 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

Vice President of Finance June 1995 - present
Janus Capital International Ltd.
76 Shoe Lane, 15th Floor, London, U.K.

Director, Vice President of Finance June 1995 - Present
Janus Distributors, Incorporated,
100 Fillmore Street, Denver, CO

Director, Vice President of Finance June 1995 - present
Janus Service Corporation
3773 Cherry Creek Drive North, Denver, CO

Director May 1995 - June 1998
Idex Management, Incorporated
201 Highland Avenue, Largo, FL

Treasurer, CFO, Director September 1994 - present
Janus Capital International Ltd.
76 Shoe Lane, 15th floor, London, U.K.

Treasurer, CFO May 1992- present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

Treasurer, CFO April 1992 - present
Janus Distributors, Incorporated
100 Fillmore Street, Denver, CO
</TABLE>

-13-
<PAGE> 120
<TABLE>
<S> <C>
Treasurer, CFO April 1992 - present
Janus Service Corporation
3773 Cherry Creek Drive North, Denver, CO
Michael E. Herman
President August 1993 - present
Kansas City Royals Baseball Team
Kansas City, MO

Chairman of Finance Committee May 1990 - present
Ewing Marion Kauffman Foundation
9300 Ward Parkway, Kansas City, MO

Director June 1984 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

Marjorie G. Hurd November 1996 - present
Chief Operations Officer Janus Capital Corporation
100 Fillmore Street, Denver, CO

Vice President July 1995 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

President July 1995 - present
Janus Service Corporation
3773 Cherry Creek Drive North, Denver, CO

Thomas A. McDonnell
President November 1993 - present
DST Technologies, Incorporated
1055 Broadway, Kansas City, MO

Director October 1990 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

President April 1987 - present
DST Systems, Incorporated
333 West 11th Street, Kansas City, MO

Chief Executive Officer October 1984 - present
DST Systems, Incorporated
333 West 11th Street, Kansas City, MO
</TABLE>

-14-
<PAGE> 121
<TABLE>
<S> <C>
Landon H. Rowland
Director January 1996 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

Chairman, President, Chief Executive April 1980 - present
Officer Kansas City Southern Industries, Incorporated
114 West 11th Street, Kansas City, MO

Stephen Lamar Stieneker
Assistant Vice President and March 1999 - present
Secretary Janus Investment Fund
100 Fillmore Street, Denver, CO

Assistant Vice President and March 1999 - present
Secretary Janus Aspen Series
100 Fillmore Street, Denver, CO

Assistant General Counsel, Chief January 1996 - present
Compliance Officer, V.P. Janus Capital Corporation
Compliance 100 Fillmore Street, Denver, CO

Michael N. Stolper
Director February 1994 - present
Pasadena Capital
101 Munson Street, Greenfield, MA

Director December 1985 - present
BDI Investment Corporation
990 Solano Beach, Solano Beach, CA

Director June 1984 - present
Janus Capital Corporation
100 Fillmore Street, Denver, CO

Director April 1984 - present
Meridian Funds
60 East Sir Francis Drake Boulevard, Lakespur, CA

President August 1975 - present
Stolper & Company
600 West Broadway, San Diego, CA
</TABLE>

-15-
<PAGE> 122
<TABLE>
<S> <C>
Mark B. Whiston
Director November 1998 - present
Janus World Funds PLC
100 Fillmore Street, Denver, CO

Director June 1995 - present
Janus Capital International Ltd.
76 Shoe Lane, 15th Floor, London, U.K.
U.K.
President September 1994 - present
Janus Capital International Ltd.
76 Shoe Lane, 15th Floor, London, U.K.

Vice President, Chief Marketing March 1997 - present
Officer Janus Capital Corporation
100 Fillmore Street, Denver, CO
</TABLE>

-16-
<PAGE> 123

Item 27. Principal Underwriters.

(a) The principal underwriter for the Registrant is WM Funds
Distributor, Inc. WM Funds Distributor, Inc. also serves as
principal underwriter for WM Trust I, WM Trust II and
WM Strategic Asset Management Portfolios.

-17-
<PAGE> 124
(b) The Directors and Officers of WM Funds Distributor, Inc.,
their positions with WM Funds Distributor, Inc. and the WM
Group of Funds are set forth in the table below. The principal
business address of WM Funds Distributor, Inc. and each of its
directors and officers is 1201 Third Avenue, 22nd Floor,
Seattle, Washington 98101.

<TABLE>
<CAPTION>
Name and Position And Positions And
Principal Business Offices With Offices With
Address Underwriter Registrant
------- ----------- ----------
<S> <C> <C>
William G. Papesh President President
Sandra A. Cavanaugh First Vice President First Vice President

Monte D. Calvin First Vice President, Chief Financial Officer,
Treasurer First Vice President

Sharon L. Howells First Vice President, First Vice President
Corporate Secretary
</TABLE>

Item 28. Location of Accounts and Records.

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules thereunder
will be maintained at the offices of the Registrant, at 1201 Third Avenue, 22nd
Floor, Seattle, WA 98101, the offices of the Registrant's sub-administrator,
PFPC, 101 Federal St., Boston, MA 02110 the offices of the Registrant's
custodian, Boston Safe Deposit and Trust Company, One Boston Place, Boston, MA
02108 and the offices of the Registrant's sub-advisors, Janus Capital
Corporation, 100 Fillmore Street, Suite 300, Denver, Colorado 80206 and Capital
Guardian Trust Company, 333 South Hope Street, Los Angeles, CA 90071.

Item 29. Management Services.

The Registrant is not a party to any management related contract, other
than as set forth in the Prospectus.

Item 30. Undertakings.

-18-
<PAGE> 125
(a) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.

-19-
<PAGE> 126
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Seattle in the State of Washington on the 28th
day of April, 2000.

WM VARIABLE TRUST

WILLIAM G. PAPESH*
----------------------------
William G. Papesh, President

Pursuant to the requirement of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
WILLIAM G. PAPESH* President and Trustee May 1, 2000
- ----------------------------------
William G. Papesh

MONTE D. CALVIN Chief Financial Officer May 1, 2000
- ----------------------------------
Monte D. Calvin

DAVID E. ANDERSON* Trustee May 1, 2000
- ----------------------------------
David E. Anderson

WAYNE L. ATTWOOD, M.D.* Trustee May 1, 2000
- ----------------------------------
Wayne L. Attwood, M.D.

ARTHUR H. BERNSTEIN* Trustee May 1, 2000
- ----------------------------------
Arthur H. Bernstein

KRISTIANNE BLAKE* Trustee May 1, 2000
- ----------------------------------
Kristianne Blake

EDMOND R. DAVIS* Trustee May 1, 2000
- ----------------------------------
Edmond R. Davis
</TABLE>

-20-
<PAGE> 127

Signature Title Date
--------- ----- ----
JOHN W. ENGLISH* Trustee May 1, 2000
- ----------------------------------
John W. English

ANNE V. FARRELL* Trustee May 1, 2000
- ----------------------------------
Anne V. Farrell

CARROL R. MCGINNIS** Trustee May 1, 2000
- ----------------------------------
Carrol R. McGinnis

MICHAEL K. MURPHY* Trustee May 1, 2000
- ----------------------------------
Michael K. Murphy

ALFRED E. OSBORNE, JR.* Trustee May 1, 2000
- ----------------------------------
Alfred E. Osborne, Jr.

DANIEL PAVELICH* Trustee May 1, 2000
- ----------------------------------
Daniel Pavelich

JAY ROCKEY* Trustee May 1, 2000
- ----------------------------------
Jay Rockey

MORTON O. SCHAPIRO** Trustee May 1, 2000
- ----------------------------------
Morton O. Schapiro

RICHARD C. YANCEY* Trustee May 1, 2000
- ------------------------------------
Richard C. Yancey

* By WILLIAM G. PAPESH Pursuant to Powers of Attorney previously filed.

-21-

<PAGE> 1
INVESTMENT SUB-ADVISORY AGREEMENT

WM VARIABLE TRUST

INTERNATIONAL GROWTH FUND

EFFECTIVE AS OF JUNE 23, 1999

Capital Guardian Trust Company
333 South Hope Street
Los Angeles, CA 90071

Ladies and Gentlemen:

WM Advisors, Inc. ("WM Advisors"), a corporation organized under the laws
of the state of Washington, hereby agrees with Capital Guardian Trust Company,
(the "Sub-Advisor"), a trust company organized under the laws of the state of
California, as follows:

1. INVESTMENT DESCRIPTION; APPOINTMENT

WM Advisors desires to employ the capital of the International Growth Fund
(the "Fund"), a series of WM Variable Trust (the "Trust"), by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in the Trust's Master Trust Agreement, as amended, and in the
Prospectus and Statement of Additional Information relating to the Fund as in
effect and which may be amended from time to time, and in such manner and to
such extent as may from time to time be approved by the Board of Trustees of the
Trust. Copies of the Fund's Prospectus and Statement of Additional Information
and the Trust's Master Trust Agreement, as amended, have been or will be
submitted to the Sub-Advisor. WM Advisors agrees to provide copies of all
amendments to the Fund's Prospectus and Statement of Additional Information and
the Trust's Master Trust Agreement to the Sub-Advisor on an on-going basis. WM
Advisors desires to employ and hereby appoints the Sub-Advisor to act as
investment sub-advisor to the Fund. The Sub-Advisor accepts the appointment and
agrees to furnish the services described herein for the compensation set forth
below.

2. SERVICES AND INVESTMENT SUB-ADVISOR

Subject to the supervision of the Board of Trustees of the Trust and of WM
Advisors, the Fund's investment adviser, the Sub-Advisor will, to the extent
related to the scope of its duties reasonably contemplated under this
Agreement, (a) act in conformity with the Trust's Master Trust Agreement, the
Investment Company Act of 1940 (the "1940 Act"), the Investment Advisers Act
of 1940 (to the extent applicable to the Sub-Advisor) and the Internal Revenue
Code of 1986, as the same may from time to time be amended; (b) make investment
decisions for the Fund in accordance with the Fund's investment objectives and
policies as stated in the Fund's Prospectus and Statement of Additional
Information as in effect and, after notice to the Sub-Advisor, and which may
be amended from time to time; (c) place purchase and sale orders on behalf of
the Fund to effectuate the investment decisions made; (d) maintain appropriate
records with respect to the securities transactions of the Fund and will
furnish to the Trust's Board of Trustees such periodic, regular and special
reports (including presentations by the Sub-Advisor's personnel primarily
responsible for the day-to-day management of the Fund's portfolio) as the
Board may reasonably request; (e) provide WM Advisors and its affiliates with
such support with respect to the Fund as they may reasonably request; and (f)
treat confidentially and as proprietary information of the Trust, all records
and other information relative to the Trust and prior, present or potential
shareholders; and will not use such records and information for any purpose
other than performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Trust, which
<PAGE> 2
approval shall not be unreasonably withheld and such records may not be withheld
where the Sub-Advisor may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust. In providing those
services, the Sub-Advisor will supervise the Fund's investments and conduct a
continuous program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. In addition, the Sub-Advisor will furnish the
Fund or WM Advisors with whatever market, economic, and transactional
information that the Trust or WM Advisors may reasonably request relating to the
investments that the Fund may hold or contemplate purchasing.

3. BROKERAGE

In executing transactions for the Fund and selecting brokers or dealers,
the Sub-Advisor will use its best efforts to seek the best overall terms
available and shall execute or direct the execution of all such transactions in
a manner permitted by law and in a manner that is in the best interest of the
Fund and their shareholders. In assessing the best overall terms available for
any Fund transactions, the Sub-Advisor will consider all factors it deems
relevant including, but not limited to, breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer and the reasonableness of any commission for the specific
transaction and on a continuing basis. Pursuant to its investment determinations
for the Fund, in placing orders with brokers and dealers, the Sub-Advisor will
attempt to obtain the best net price and the most favorable execution of its
orders. Consistent with this obligation, when the execution and price offered by
two or more brokers or dealers are comparable, the Sub-Advisor may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Trust with research advice and other services.

4. INFORMATION PROVIDED TO THE TRUST

The Sub-Advisor will keep the Trust and WM Advisors informed of
developments materially affecting the Fund, and will on its own initiative,
furnish the Trust and WM Advisors on at least a quarterly basis with whatever
information the Sub-Advisor believes is appropriate for this purpose.

5. STANDARD OF CARE

The Sub-Advisor shall exercise its best judgment in rendering the services
described in paragraphs 2 and 3 above. The Sub-Advisor shall not be liable for
any error or judgment or mistake of law or for any loss suffered by the Fund or
WM Advisors in connection with the matters to which this Agreement relates,
except (a) a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36(b)(3) of the
1940 Act), or (b) a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement (each such
breach, act or omission described in (a) or (b) shall be referred to as
"Disqualifying Conduct").

6. COMPENSATION

In consideration of the services rendered pursuant to this Agreement, WM
Advisors will pay the Sub-Advisor on the first business day of each quarter a
fee for the previous quarter according to the schedule of fees detailed in Annex
A attached to this Agreement. The Sub-Advisor shall have no right to obtain
compensation directly from the Fund or the Trust for services provided hereunder
and agrees to look solely to WM Advisors for payment of fees due. Upon any
termination of this Agreement before the end of a quarter, the fee for such part
of that quarter shall be prorated according to the proportion that such period
bears to the full quarterly period and shall be payable upon the date of
termination of this Agreement.

-2-

<PAGE> 3
7. EXPENSES

The Sub-Advisor will bear all expenses in connection with the performance
of its services under this Agreement, which expenses shall not include brokerage
fees or commissions in connection with the effectuation of securities
transactions. The Trust will bear certain other expenses to be incurred in its
operation, including but not limited to: organizational expenses, taxes,
interest, brokerage fees and commissions, if any; fees of trustees of the Trust
who are not officers, directors or employees of the Sub-Advisor, WM Advisors, or
any of their affiliates; Securities and Exchange Commission fees and state Blue
Sky qualification fees; out-of-pocket expenses of custodians, transfer and
dividend disbursing agents and transaction charges of custodians; insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Trust's existence; costs attributable to investor services, including without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of the shareholders of the Fund and of the officers or Board of
Trustees of the Trust; and any other operating expenses of the Fund. In
addition, the Fund may pay a distribution fee pursuant to the terms of a
Distribution Plan adopted under Rule 12b-1 of the 1940 Act.

8. SERVICES TO OTHER COMPANIES OR ACCOUNTS

WM Advisors understands that the Sub-Advisor now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and as investment adviser to one or more other investment companies or
series of investment companies, and WM Advisors has no objection to the
Sub-Advisor so acting, provided that whenever the Fund and one or more other
accounts or investment companies advised by the Sub-Advisor have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with procedures mutually believed to be equitable to each entity.
Similarly, opportunities to sell securities will be allocated in an equitable
manner. WM Advisors recognizes that in some cases this procedure may limit the
size of the position that may be acquired or disposed of for the Fund. In
addition, WM Advisors understands that the persons employed by the Sub-Advisor
to assist in the performance of the Sub-Advisor's duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Sub-Advisor or any affiliate of the
Sub-Advisor to engage in and devote time and attention to other business or to
render services of whatever kind or nature.

9. TERM OF AGREEMENT

This Agreement shall become effective as of the date first written above,
shall continue for a period of two years thereafter, and shall continue in
effect for a period of more than two years thereafter only so long as such
continuance is specifically approved at least annually by (a) the Board of
Trustees of the Trust or (b) a vote of a "majority" (as defined in the 1940 Act)
of the Fund's outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by WM Advisors, the Board of Trustees for the Trust or by vote
of holders of a majority of the Fund's shares, or upon 60 days' written notice
by the Sub-Advisor and will terminate automatically upon any termination of the
advisory agreement between the Trust and WM Advisors. In addition, this
Agreement will also terminate automatically in the event of its assignment (as
defined in said Act). The Sub-Advisor agrees to notify the Trust of any
circumstances that might result in this Agreement being deemed to be assigned.

10. REPRESENTATIONS OF WM ADVISORS AND THE SUB-ADVISOR

WM Advisors represents that (a) a copy of the Trust's Master Trust
Agreement, dated January 29, 1993, together with all amendments thereto, is on
file in the office of the Secretary of the Commonwealth of Massachusetts, (b)
the

-3-

<PAGE> 4
appointment of the Sub-Advisor has been duly authorized, (c) it has acted and
will continue to act in conformity with the 1940 Act and other applicable laws,
and (d) it is authorized to perform the services herein.

The Sub-Advisor represents that it is authorized to perform the services
described herein.

11. INDEMNIFICATION

WM Advisors shall indemnify and hold harmless the Sub-Advisor and its
affiliates and their respective officers, directors and employees from and
against any and all claims, losses, liabilities or damages (including reasonable
attorneys' fees and other related expenses), howsoever arising from or in
connection with this Agreement or the performance by the Sub-Advisor or its
duties hereunder; provided, however, that nothing contained herein shall
require that the Sub-Advisor be indemnified for Disqualifying Conduct.

12. AMENDMENT OF THIS AGREEMENT

No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.

13. USE OF NAMES

a. It is understood that the name "Capital Guardian Trust Company," the
names of the Sub-Advisor's affiliates within The Capital Group Companies, Inc.
(including, but not limited to the American Funds Group of mutual funds), and
any derivative thereof or logo associated with such names are the valuable
property of the Sub-Advisor and its affiliates and that the Trust and/or the
Fund have the right to use such name (or derivative or logo) in offering
materials of the Trust and/or Fund only with the prior written approval of the
Sub-Advisor and for so long as the Sub-Advisor is an investment sub-advisor to
the Trust and/or the Fund; provided that the Trust and the Fund may use such
name (or derivative or logo) without such prior written approval in offering
materials of the Trust to the extent that (i) such materials simply list the
Sub-Advisor as the Sub-Advisor to the Fund as part of a listing of the
investment sub-advisers to the series or portfolios of the Trust with a
pre-approved standard description of the Sub-Advisor's experience and duties
hereunder; (ii) such materials include such name (or derivative or logo) and any
related information that has been previously approved by the Sub-Advisor or that
is required to be disclosed by applicable law or regulation, such as information
disclosed in the Trust's registration statement; or (iii) such materials are
intended for internal use by the Trust and WM Advisors. In using information
about the Sub-Advisor where pre-approval is not required, it shall be WM
Advisors' responsibility to seek updates to such materials as it deems
necessary. Such prior written approval of the Sub-Advisor shall not be
unreasonably withheld or delayed. Upon termination of this Agreement, the Trust
and the Fund shall forthwith cease to use such name (or derivative or logo) as
soon as reasonably practicable.

b. It is understood that the names "WM Variable Trust," and "WM Advisors,
Inc." or any derivatives thereof or logos associated with such names are the
valuable property of the Trust and/or WM Advisors and their affiliates and that
the Sub-Advisor or its affiliates have the right to use such names (or
derivatives or logos) in marketing materials of the Sub-Advisor or its
affiliates only with the prior written approval of WM Advisors or the Trust, as
applicable, and for so long as the Sub-Advisor is an investment sub-advisor to
the Trust and/or the Fund; provided that the Sub-Advisor or its affiliates may
use such names (or derivatives or logos) without such prior written approval in
marketing materials of the Sub-Advisor or its affiliates to the extent that (i)
such materials simply list the Trust or the Fund as part of a listing of the
investment companies advised by the Sub-Advisor or its affiliates with a brief
description of the Trust or the Fund; (ii) such materials include such names (or
derivatives or logos) and any related information that has been previously
approved by the Trust or WM Advisors, as applicable, or that is required to be
disclosed by applicable law or regulation; or (iii) such materials are intended
for internal use by the Sub-Advisor. Such prior written approval of WM Advisors
or the Trust, as applicable, shall not be unreasonably withheld or

-4-
<PAGE> 5
delayed. Upon termination of this Agreement, the Sub-Advisor and its
affiliates shall forthwith cease to use such names (or derivatives or logos) as
soon as reasonably practicable.

14. PROXY VOTING

Except as specifically instructed by the Trustees of the Trust or WM
Advisors, the Sub-Advisor shall exercise or procure the exercise of any voting
rights attaching to investments of the Fund on behalf of the Fund.

15. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the parties
hereto.

16. GOVERNING LAW

This Agreement shall be governed in accordance with the laws of The
Commonwealth of Massachusetts.

If the foregoing accurately sets forth our agreement, kindly indicate your
acceptance hereof by signing and returning the enclosed copy hereof.

Very truly yours,

WM Advisors, Inc.

Dated: 6/24/99 By /s/ WILLIAM C. PAPESH
-------------------------- ---------------------------------
Name: William C. Papesh
Title: President

Accepted:

Capital Guardian Trust Company

By /s/ MICHAEL BURIK Dated: June 23, 1999
------------------------------ --------------------------------
Name: Michael Burik
Title: Vice President

-5-
<PAGE> 6
ANNEX A

1. STANDARD FEE

The minimum annual fee payable under this Agreement shall be $200,000.

The fee payable under this Agreement shall be determined by reference to
the following schedule based upon the average daily net assets of the Fund (as
determined by the Trust's accounting agent pursuant to the Fund's pricing
procedures) subject to reduction as described below:

<TABLE>
<S> <C>
On the first $25 million .................................. .75 of 1%
$25 million to $50 million.................................. .60 of 1%
$50 million to $250 million................................. .425 of 1%
Over $250 million*.......................................... .375 of 1%
</TABLE>

- ---------------
* This breakpoint will be applied to the extent the aggregate
non-U.S./global, regional, single country (excluding U.S.) equity, and
fixed-income (emerging markets) assets of (i) the Fund, (ii) any other
investment company advised by WM Advisors or any of its affiliates, (iii)
any person or employee plan sponsored by WM Advisors or any of its
affiliates or (iv) WM Advisors or its affiliates that are managed by
Sub-Advisors or its affiliates exceed $250 million.

2. Asset Fee Aggregation Policies

For fee purposes, asset aggregation will apply to all accounts of (i) the
Fund, (ii) any other investment company advised by WM Advisors or any of its
affiliates, (iii) any pension or employee benefit plan sponsored by WM Advisors
or any of its affiliates or (iv) WM Advisors or its affiliates that are managed
by Sub-Advisors or its affiliates, except for emerging market equity
investments and investments in other funds with internally charged fees
("Eligible Accounts)". In order to achieve the benefit of asset aggregation, the
combined total of the minimum fee applicable to each Eligible Account.

For Eligible Accounts with the same investment objectives and guidelines,
all assets for these Eligible Accounts will be aggregated for fee calculation
purposes.

For Eligible Accounts with different investment objectives and guidelines:

o Each Eligible Account will be charged on the first $10 million at the
initial breakpoint rate for the appropriate mandate. Any incremental
assets over $10 million will be aggregated and charged at the
incremental rate for the appropriate mandate.

o Assets invested in commingled funds will be aggregated and charged at
the incremental rate for the appropriate mandate.

o The first additional account within a new country will be charged on
the first $15 million at the initial breakpoint rate for the
appropriate mandate. Any incremental assets over $15 million will be
aggregated and charged at the incremental rate for the appropriate
mandate.

A-1
<PAGE> 7
For asset aggregation purposes, Eligible Accounts will be aggregated in
the following order: balanced, equity-developed markets, convertible,
fixed-income -- high yield, fixed-income -- emerging markets, and
fixed-income -- developed markets.

The benefit from asset aggregation, if any, will be calculated by
comparing total aggregated fees to total unaggregated fees for all Eligible
Accounts. The resulting percentage discount will be applied to each Eligible
Account's unaggregated fees.

If all Eligible Accounts are not denominated in the same currency, the
local currency assets of each Eligible Account and the related fees calculated
on an unaggregated basis will be converted to U.S. dollars using the applicable
foreign exchange rate. The total of such fees will be compared to the Eligible
Accounts' total aggregated fees. The resulting percentage discount will then be
applied to each Eligible Account's unaggregated fee as determined in U.S.
dollars.

3. FEE DISCOUNTS AND ELIMINATION OF FREE BREAKPOINTS

The following fee discount will be applied based upon the total aggregated
fees paid by all accounts of (i) the Fund, (ii) any other investment company
advised by WM Advisors or any of its affiliates, (iii) any pension or employee
benefit plan sponsored by WM Advisors or any of its affiliates or (iv) WM
Advisors or its affiliates that are managed by Sub-Advisor or its affiliates:

Aggregated fees between $1.25 million to $4 million.... 5% discount
Aggregated fees between $4 million to $8 million....... 7.5% discount
Aggregated fees between $8 million to $12 million...... 10% discount
Aggregated fees over $12 million....................... 12.5% discount

For this purpose, aggregated fees will include all fees from separate
accounts, commingled funds, and funds with internally charged fees managed by
Sub-Advisor and its affiliates (except for investments in American Funds'
mutual funds). The resulting fee discount percentage will be applied to each
account's fees (excluding fees related to investments in funds with internally
charged fees).

If total aggregated fees (before discounts) exceed $3 million, fee
breakpoints will be eliminated and each account will be charged at the lowest
marginal fee rate applicable to the account's fee schedule.

To determine the applicable fee discount level and breakpoint elimination
threshold, the total aggregated fees for the quarter will be annualized. For
this purpose, all local currency fees will be converted to a designated base
currency.

Fees related to investments in funds with internally charged fees will be
estimated by multiplying the quarter end value of the account (adjusted on a
prorated basis for any contributions or withdrawals during the quarter) by the
fund's effective fee. For this purpose, the effective fee will be based on the
value of the fund's quarter end assets and the fund's current fee schedule.

Applicable discount levels and the elimination of fee breakpoints will be
effective beginning with the first quarter a discount threshold is exceeded and
will remain in effect unless the total fees fall below the discount threshold
due to a significant withdrawal of assets. A decline in market values alone
will not cause the reinstatement of a lower discount level or fee breakpoints.

A-2

<PAGE> 1
EXHIBIT 99.(E)(2)

PARTICIPATION AGREEMENT

AMONG

AMERICAN GENERAL LIFE INSURANCE COMPANY,
AMERICAN GENERAL SECURITIES INCORPORATED,
WM VARIABLE TRUST

AND

WM FUNDS DISTRIBUTOR, INC.

DATED AS OF

July 12, 1999

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
Section 1. Introduction.................................................................... 2
1.1 Availability of Separate Account Divisions................................... 2
1.2 Broker-Dealer Registration................................................... 3

Section 2. Processing Transactions......................................................... 3
2.1 Timely Pricing and Orders.................................................... 3
2.2 Timely Payments.............................................................. 4
2.3 Redemption in Kind........................................................... 4
2.4 Applicable Price............................................................. 4

Section 3. Costs and Expenses.............................................................. 5
3.1 General...................................................................... 5
3.2 Registration................................................................. 5
3.3 Other (Non-Sales-Related).................................................... 5
3.4 Sales-Related................................................................ 6
3.5 Parties to Cooperate......................................................... 7

Section 4. Legal Compliance................................................................ 7
4.1 Tax Laws..................................................................... 7
4.2 Insurance and Certain Other Laws............................................. 9
4.3 Securities Laws.............................................................. 11
4.4 Notice of Certain Proceedings and Other Circumstances........................ 12
4.5 AGL to Provide Documents..................................................... 13
4.6 Trust to Provide Documents................................................... 13

Section 5. Mixed and Shared Funding........................................................ 13
5.1 General...................................................................... 13
5.2 Disinterested Trustees....................................................... 14
5.3 Monitoring for Material Irreconcilable Conflicts............................. 14
5.4 Conflict Remedies............................................................ 15
5.5 Notice to AGL................................................................ 17
5.6 Information Requested by Board of Trustees................................... 18
5.7 Compliance with SEC Rules.................................................... 18
5.8 Requirements for Other Insurance Companies................................... 19

Section 6. Termination..................................................................... 19
6.1 Events of Termination........................................................ 19
6.2 Funds to Remain Available.................................................... 21
6.3 Survival of Warranties and Indemnifications.................................. 21
6.4 Continuance of Agreement for Certain Purposes................................ 22
</TABLE>

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<PAGE> 3

<TABLE>
<S> <C>
Section 7. Parties to Cooperate Respecting Termination..................................... 22

Section 8. Assignment...................................................................... 22

Section 9. Notices......................................................................... 23

Section 10. Voting Procedures.............................................................. 23

Section 11. Foreign Tax Credits............................................................ 24

Section 12. Indemnification................................................................ 24
12.1 Indemnification of Trust and Distributor by AGL.............................. 24
12.2 Indemnification of AGL and AGSI by Distributor............................... 28
12.3 Effect of Notice............................................................. 31

Section 13. Applicable Law................................................................. 31

Section 14. Execution in Counterparts...................................................... 32

Section 15. Severability................................................................... 33

Section 16. Rights Cumulative.............................................................. 33

Section 17. Restrictions on Sales of Trust Shares.......................................... 33

Section 18. Scope of Liability............................................................. 34

Section 19. Headings....................................................................... 34
</TABLE>

-ii-

<PAGE> 4

PARTICIPATION AGREEMENT

THIS AGREEMENT, made and entered into as of the 12th day of July, 1999
("Agreement"), by and among American General Life Insurance Company, a Texas
life insurance company ("AGL") (on behalf of itself and its "Separate Account,"
defined below), American General Securities Incorporated, a Texas corporation
("AGSI"), the principal underwriter with respect to the Contracts referred to
below, WM Variable Trust, a Massachusetts business trust (the "Trust"), and WM
Funds Distributor, Inc., a Washington corporation (the "Distributor"), the
Trust's principal underwriter (collectively, the "Parties"),

WITNESSETH THAT:

WHEREAS the Distributor and the Trust desire that shares of the
investment funds of the Trust set forth in Exhibit A to the Agreement (the
"Funds"; reference herein to the "Trust" includes reference to each Fund to the
extent the context requires) be made available by the Distributor to serve as
underlying investment media for those combination fixed and variable annuity
contracts of AGL that are the subject of AGL's Form N-4 registration statements
filed with the Securities and Exchange Commission (the "SEC"), File Nos.
33-57730 and 333-25549 (the "Contracts").

<PAGE> 5

NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Trust and the Distributor will make shares in the Funds
available to AGL for this purpose at net asset value and with no sales charges,
all subject to the following provisions:

Section 1. Introduction

1.1 Availability of Separate Account Divisions.

AGL represents that American General Life Insurance Company Separate
Account D (the "Separate Account") is and will continue to be available to serve
as an investment vehicle for its Contracts. The Contracts provide for the
allocation of net amounts received by AGL to separate series (the "Divisions";
reference herein to the "Separate Account" includes reference to each Division
to the extent the context requires) of the Separate Account for investment in
the shares of corresponding Funds of the Trust that are made available through
the Separate Account to act as underlying investment media. The Trust may from
time to time add additional Funds, which will become subject to this Agreement,
if they are made available as investment media for the Contracts. The investment
funds of the Trust which are subject to this Agreement are set forth in Exhibit
A to the Agreement. Exhibit A shall be amended from time to time as necessary to
identify all investment funds offered under this Agreement. AGL will not
unreasonably deny any request by the Distributor to create new Divisions
corresponding to such new Funds.

-2-

<PAGE> 6

1.2 Broker-Dealer Registration.

The Distributor and AGSI each represents and warrants that it is
registered as a broker dealer with the SEC under the Securities Exchange Act of
1934, as amended, and is a member in good standing of the National Association
of Securities Dealers, Inc. (the "NASD").

Section 2. Processing Transactions

2.1 Timely Pricing and Orders.

The Trust or its designated agent will provide closing net asset value,
dividend and capital gain information for each Fund to AGL at the close of
trading on each day (a "Business Day") on which (a) the New York Stock Exchange
is open for regular trading, (b) the Trust calculates its net asset value and
(c) AGL is open for business. The Trust or its designated agent will use its
best efforts to provide this information by 5:00 p.m., Houston time. AGL will
use these data to calculate unit values, which in turn will be used to process
transactions that receive that same Business Day's Separate Account unit value.
The Separate Account processing will be done the same evening, and corresponding
orders with respect to Trust shares will be placed the morning of the following
Business Day. AGL will use its best efforts to place such orders with the Trust
by 9:00 a.m., Houston time.

-3-
<PAGE> 7

2.2 Timely Payments.

AGL will transmit orders for purchases and redemptions of Trust shares
to the Distributor, and will wire payment for net purchases to a custodial
account designated by the Trust on the same day as the order for Trust shares is
placed, to the extent practicable. Payment for net redemptions will be wired by
the Trust to an account designated by AGL on the same day as the order is
placed, to the extent practicable, and in any event be made within six calendar
days after the date the order is placed in order to enable AGL to pay redemption
proceeds within the time specified in Section 22(e) of the Investment Company
Act of 1940, as amended (the "1940 Act").

2.3 Redemption in Kind.

The Trust reserves the right to pay any portion of a redemption in kind
of portfolio securities, if the Trust's board of trustees (the "Board of
Trustees") determines that it would be detrimental to the best interests of
shareholders to make a redemption wholly in cash.

2.4 Applicable Price.

The Parties agree that orders resulting from purchase payments,
surrenders, partial withdrawals, routine withdrawals of charges, or other
transactions under Contracts will be executed at the net asset values as
determined as of the close of regular trading on the New York Stock Exchange on
the Business Day that AGL processes such transactions, which will be the
Business Day prior to the Distributor's receipt of such orders. All other
purchases and redemptions will be effected at the net asset values next computed
after receipt by the Trust of the order therefor, and such orders will be
irrevocable. AGL hereby elects to reinvest all dividends

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<PAGE> 8

and capital gains distributions in additional shares of the corresponding Fund
at the record-date net asset values until AGL otherwise notifies the Trust in
writing, it being agreed by the Parties that the record date and the payment
date with respect to any dividend or distribution will be the same Business Day.

Section 3. Costs and Expenses

3.1 General.

Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.

3.2 Registration.

The Trust will pay the cost of its registering as a management
investment company under the 1940 Act and registering its shares under the
Securities Act of 1933, as amended (the "1933 Act"), and keeping such
registrations current and effective. AGL will pay the cost of registering the
Separate Account as a unit investment trust under the 1940 Act and registering
units of interest under the Contracts under the 1933 Act and keeping such
registrations current and effective.

3.3 Other (Non-Sales-Related).

As among the Parties, the Trust will bear the costs of preparing, filing
with the SEC and setting for printing the Trust's prospectus, statement of
additional information and any supplements thereto (collectively, the "Trust
Prospectus"), periodic reports to shareholders, Trust

-5-
<PAGE> 9

proxy material and other shareholder communications. AGL will bear the costs of
preparing, filing with the SEC and setting for printing, the Separate Account's
prospectus, statement of additional information and any supplements thereto
(collectively, the "Separate Account Prospectus"), periodic reports to owners,
annuitants or participants under the Contracts (collectively, "Participants"),
voting instruction solicitation material, and other Participant communications.
As among the Parties, the Trust and AGL each will bear the costs of printing and
delivering to existing Participants the documents as to which it bears the cost
of preparation as set forth above in this Section 3.3, it being understood that
reasonable cost allocations will be made in cases where any such Trust and AGL
documents are printed or mailed on a combined or coordinated basis.

3.4 Sales-Related.

Except as may otherwise be agreed to by the Parties relating to an
initial period of time after the Contracts are first offered for sale, the
Distributor or, where required by applicable federal or state law, its designee,
will bear the cost of preparing, printing and distributing all Trust and
Separate Account sales literature and advertising and filing it with the SEC and
NASD, printing and delivering to offerees Trust and Separate Account
Prospectuses, Trust and Separate Account periodic reports and Trust and AGL
sales literature, and placing any advertisements. AGL will bear the cost of
filing any Trust or AGL sales materials with, and obtaining approval from, any
state insurance regulatory authorities, to the extent required.

-6-
<PAGE> 10

3.5 Parties to Cooperate.

The Trust, AGL, AGSI and the Distributor each agrees to cooperate with
the others, as applicable, in arranging to print, mail and/or deliver combined
or coordinated prospectuses or other materials of the Trust and Separate
Account.

Section 4. Legal Compliance

4.1 Tax Laws.

(a) The Trust represents that it will make every effort to qualify and
to maintain qualification of each Fund as a regulated investment company ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Trust or the Distributor will notify AGL immediately upon
having a reasonable basis for believing that a Fund has ceased to so qualify or
that it might not so qualify in the future.

(b) AGL represents that it believes, in good faith, that the Contracts
will be treated as annuity contracts under applicable provisions of the Code and
that it will make every effort to maintain such treatment; AGL will notify the
Trust and the Distributor immediately upon having a reasonable basis for
believing that any of the Contracts have ceased to be so treated or that they
might not be so treated in the future.

(c) The Trust represents that it will make every effort to comply and to
maintain each Fund's compliance with the diversification requirements set forth
in Section 817(h) of the Code

-7-
<PAGE> 11

and Section 1.817-5(b) of the regulations under the Code, and the Trust or the
Distributor will notify AGL immediately upon having a reasonable basis for
believing that a Fund has ceased to so comply or that a Fund might not so comply
in the future.

(d) AGL represents that it believes, in good faith, that the Separate
Account is a "segregated asset account" and that interests in the Separate
Account are offered exclusively through the purchase of or transfer into a
"variable contract," within the meaning of such terms under Section 817(h) of
the Code and the regulations thereunder. AGL will make every effort to continue
to meet such definitional requirements, and it will notify the Trust and the
Distributor immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the future.

(e) The Trust represents that, under the terms of its investment
advisory agreements with WM Advisors, Inc. (the "Adviser"), the Adviser is and
will be responsible for managing the Trust in compliance with the Trust's
investment objectives, policies and restrictions as set forth in the Trust
Prospectus. The Trust represents that these objectives, policies and
restrictions do and will include operating as a RIC in compliance with
Subchapter M of the Code and Section 817(h) of the Code and regulations
thereunder. The Trust has adopted and will maintain procedures for ensuring that
the Trust is managed in compliance with Subchapter M and Section 817(h) and
regulations thereunder. On request, the Trust shall also provide AGL with such
materials, cooperation and assistance as may be reasonably necessary for AGL or
any person designated by AGL to review from time to time the procedures and
practices of the Adviser, each

-8-
<PAGE> 12

sub-adviser or other provider of services to the Trust for ensuring that the
Trust is managed in compliance with Subchapter M and Section 817(h) and
regulations thereunder.

(f) Whenever any matter (a "Matter") comes to the attention of the Trust
that causes it to believe that any of its Funds was not a RIC in compliance with
Subchapter M of the Code and/or was not in compliance with Section 817(h) of the
Code and the regulations thereunder as of the last day of a calendar quarter,
the Trust shall furnish a report of such Matter immediately to AGL. The Trust
will then take such action as is necessary or appropriate to cure any
noncompliance during a grace period of 30 calendar days after the end of the
calendar quarter covered by the report. If the Trust does not so cure the
noncompliance regarding each affected Fund's status as a RIC, the Trust will
pursue those efforts necessary to enable each affected Fund to qualify once
again for treatment as a RIC in compliance with Subchapter M, including
cooperation in good faith with AGL. If the Trust does not so cure the
noncompliance regarding a Fund's status under Section 817(h), the Trust will
cooperate in good faith with AGL's efforts to obtain a ruling and closing
agreement, as provided in Revenue Procedure 92-95 issued by the Internal Revenue
Service (or any applicable ruling or procedure subsequently issued by the
Internal Revenue Service), that the affected Fund satisfies Section 817(h) for
the period or periods covered by the Actionable Report.

4.2 Insurance and Certain Other Laws.

(a) The Trust will use its best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by AGL.

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<PAGE> 13

(b) AGL represents and warrants that (i) it is an insurance company duly
organized, validly existing and in good standing under the laws of the State of
Texas and has full corporate power, authority and legal right to execute,
deliver and perform its duties and comply with its obligations under this
Agreement, (ii) it has legally and validly established and maintains the
Separate Account as a segregated asset account under Article 3.75 of the Texas
Insurance Code, and (iii) the Contracts comply in all material respects with all
other applicable federal and state laws and regulations.

(c) AGL and AGSI represent and warrant that AGSI is a business
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas and has full corporate power, authority and legal
right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.

(d) The Distributor represents and warrants that it is a business
corporation duly organized, validly existing, and in good standing under the
laws of the State of Washington and has full corporate power, authority and
legal right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.

(e) The Distributor and the Trust represent and warrant that the Trust
is a business trust duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts and has full power, authority, and
legal right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.

-10-
<PAGE> 14

4.3 Securities Laws.

(a) AGL represents and warrants that (i) it has registered the Separate
Account as a unit investment trust in accordance with the provisions of the 1940
Act to serve as a segregated investment account for its variable annuity
contracts, including the Contracts, (ii) the Separate Account does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, (iii) the Separate Account's 1933 Act registration statement
relating to the Contracts, together with any amendments thereto, will at all
times comply in all material respects with the requirements of the 1933 Act and
the rules thereunder, and (iv) the Separate Account Prospectus will at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder.

(b) The Trust and the Distributor represent and warrant that (i) Trust
shares sold pursuant to this Agreement will be registered under the 1933 Act to
the extent required by the 1933 Act and duly authorized for issuance and sold in
compliance with Massachusetts law, (ii) the Trust is and will remain registered
under the 1940 Act to the extent required by the 1940 Act, and (iii) the Trust
will amend the registration statement for its shares under the 1933 Act and
itself under the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.

(c) The Trust represents and warrants that (i) the Trust does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, including the exemptive order issued by the Commission as
Release No. IC-22047, which the Trust further

-11-
<PAGE> 15

represents and warrants is applicable to the Trust, (ii) its 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (iii) the Trust Prospectus will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder.

(d) The Trust will register and qualify its shares for sale in
accordance with the laws of any state or other jurisdiction only if and to the
extent reasonably deemed advisable by the Trust, AGL or any other life insurance
company utilizing the Trust.

4.4 Notice of Certain Proceedings and Other Circumstances.

The Distributor or the Trust shall immediately notify AGL of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to the Trust's registration statement
under the 1933 Act or the Trust Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Trust Prospectus, (iii) the
initiation of any proceedings for that purpose or for any other purpose relating
to the registration or offering of the Trust's shares, or (iv) any other action
or circumstances that may prevent the lawful offer or sale of Trust shares in
any state or jurisdiction, including, without limitation, any circumstances in
which (x) the Trust's shares are not registered and, in all material respects,
issued and sold in accordance with applicable state and federal law or (y) such
law precludes the use of such shares as an underlying investment medium of the
Contracts issued or to be issued by AGL. The Distributor and the Trust will make
every reasonable effort to prevent the issuance of any stop

-12-
<PAGE> 16

order, cease and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.

4.5 AGL to Provide Documents.

AGL will provide to the Trust one complete copy of all SEC registration
statements, Separate Account Prospectuses, reports, any preliminary and final
voting instruction solicitation material, applications for exemptions, requests
for no-action letters, and all amendments to any of the above, that relate to
the Separate Account or the Contracts, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.

4.6 Trust to Provide Documents.

The Trust will provide to AGL one complete copy of all SEC registration
statements, Trust Prospectuses, reports, any preliminary and final proxy
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Trust or its shares,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.

Section 5. Mixed and Shared Funding

5.1 General.

The Trust may apply for an order exempting it from certain provisions of
the 1940 Act and rules thereunder so that, subject to compliance with Section 17
of this Agreement, the Trust may

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<PAGE> 17

be available for investment by certain other entities, including, without
limitation, separate accounts funding variable life insurance policies, separate
accounts of insurance companies unaffiliated with AGL and trustees of qualified
pension and retirement plans ("Mixed and Shared Funding"). The Parties recognize
that the SEC has imposed terms and conditions for such orders that are
substantially identical to many of the provisions of this Section 5. If the
Trust implements Mixed and Shared Funding, pursuant to such an exemptive order
or otherwise, Sections 5.2 through 5.8 below shall apply, but not otherwise.

5.2 Disinterested Trustees.

The Trust agrees that the Board of Trustees shall at all times consist
of trustees a majority of whom (the "Disinterested Trustees") are not interested
persons of the Adviser or the Distributor within the meaning of Section 2(a)(19)
of the 1940 Act.

5.3 Monitoring for Material Irreconcilable Conflicts.

The Trust agrees that the Board of Trustees will monitor for the
existence of any material irreconcilable conflict between the interests of the
Participants of all separate accounts of life insurance companies utilizing the
Trust, including the Separate Account. AGL agrees to inform the Board of
Trustees of the Trust of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder,
but the Parties recognize that such a conflict may arise for a variety of
reasons, including, without limitation:

(a) an action by any state insurance or other regulatory authority;

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<PAGE> 18

(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action
by insurance, tax or securities regulatory authorities;

(d) the manner in which the investments of any Fund are being managed;

(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract participants or by
participants of different life insurance companies utilizing the
Trust; or

(f) a decision by a life insurance company utilizing the Trust to
disregard the voting instructions of participants.

Consistent with the SEC's requirements in connection with exemptive
proceedings of the type referred to in Section 5.1 hereof, AGL will assist the
Board of Trustees in carrying out its responsibilities by providing the Board of
Trustees with all information reasonably necessary for the Board of Trustees to
consider any issue raised, including information as to a decision by AGL to
disregard voting instructions of Participants.

5.4 Conflict Remedies.

(a) It is agreed that if it is determined by a majority of the members
of the Board of Trustees or a majority of the Disinterested Trustees that a
material irreconcilable conflict exists, AGL and the other life insurance
companies utilizing the Trust will, at their own expense and to the extent
reasonably practicable (as determined by a majority of the Disinterested
Trustees), take

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<PAGE> 19

whatever steps are necessary to remedy or eliminate the material irreconcilable
conflict, which steps may include, but are not limited to:

(i) withdrawing the assets allocable to some or all of the
separate accounts from the Trust or any Fund and reinvesting such
assets in a different investment medium, including another Fund
of the Trust, or submitting the question whether such segregation
should be implemented to a vote of all affected participants and,
as appropriate, segregating the assets of any particular group
(e.g., annuity contract owners or participants, life insurance
contract owners or all contract owners and participants of one or
more life insurance companies utilizing the Trust) that votes in
favor of such segregation, or offering to the affected contract
owners or participants the option of making such a change; and

(ii) establishing a new registered investment company of the type
defined as a "Management Company" in Section 4(3) of the 1940 Act
or a new separate account that is operated as a Management
Company.

(b) If the material irreconcilable conflict arises because of AGL's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, AGL may be
required, at the Trust's election, to withdraw the Separate Account's investment
in the Trust. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six months after the
Trust gives notice to AGL that this provision is being implemented, and until
such withdrawal the Distributor and Trust shall continue to accept and implement
orders by AGL for the purchase and redemption of shares of the Trust.

-16-
<PAGE> 20

(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to AGL conflicts with the
majority of other state regulators, then AGL will withdraw the Separate
Account's investment in the Trust within six months after the Trust's Board of
Trustees informs AGL that it has determined that such decision has created a
material irreconcilable conflict, and until such withdrawal the Distributor and
Trust shall continue to accept and implement orders by AGL for the purchase and
redemption of shares of the Trust.

(d) AGL agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.

(e) For purposes hereof, a majority of the Disinterested Trustees will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will the Trust or the Distributor
be required to establish a new funding medium for any of the Contracts. AGL will
not be required by the terms hereof to establish a new funding medium for any of
the Contracts if an offer to do so has been declined by vote of a majority of
Participants materially adversely affected by the material irreconcilable
conflict.

5.5 Notice to AGL.

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<PAGE> 21

The Trust will promptly make known in writing to AGL the Board of
Trustees' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.

5.6 Information Requested by Board of Trustees.

AGL and the Trust will at least annually submit to the Board of Trustees
of the Trust such reports, materials or data as the Board of Trustees may
reasonably request so that the Board of Trustees may fully carry out the
obligations imposed upon them by the provisions hereof, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Trustees. All reports received by the Board of Trustees of
potential or existing conflicts, and all Board of Trustees actions with regard
to determining the existence of a conflict, notifying life insurance companies
utilizing the Trust of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Trustees or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.

5.7 Compliance with SEC Rules.

If, at any time during which the Trust is serving an investment medium
for variable life insurance policies, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to mixed and shared funding, the Parties agree that they will comply
with the terms and conditions thereof and that the terms of this Section 5

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<PAGE> 1
EXHIBIT 99.(H)(I)

TRANSFER AGENT CONTRACT

TRANSFER AGENT CONTRACT (this "Agreement"), dated September 14, 1999, by
and between WM Trust I, WM Trust II and WM Variable Trust (each a "Trust" and a
"Company"), each a Massachusetts business trust, and WM Strategic Asset
Management Portfolios, LLC (the "LLC" and a "Company"), a Massachusetts limited
liability company, and WM Shareholder Services, Inc. (the "Transfer Agent"), a
Washington corporation.

W I T N E S S E T H

WHEREAS, each Company is an investment management company registered under
the Investment Company Act of 1940 (the "1940" Act);

WHEREAS, each Company is authorized to issue shares in separate series
with each series representing a separate portfolio of securities and other
assets (each a "Fund"); and

WHEREAS, each Fund listed on the signature page attached to this Agreement
desires the Transfer Agent to perform the services set forth in Schedule A
attached hereto and incorporated herein by reference, and the Transfer Agent is
willing to perform such services;

NOW THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties hereto agree as follows:

1. The Transfer Agent shall perform for each Fund the services set forth
in Schedule A for a monthly fee as set forth in Schedule B attached hereto and
incorporated herein by reference.

2. Each Fund agrees to reimburse the Transfer Agent for postage, the
procurement and/or printing of statements, envelopes, checks, reports, tax
forms, proxies, or other forms of printed material required in the performance
of its services to the Fund under this Agreement.

3. Each Fund agrees to reimburse the Transfer Agent for all freight and
other delivery charges and insurance or bonding charges incurred by the
Transfer Agent in delivering materials to and from the Fund and its
shareholders ("Shareholders").

4. Each Fund agrees to reimburse the Transfer Agent for all direct
telephone expenses incurred by the Fund in calling Shareholders regarding their
fund transactions, accounts, and for any other Fund business.

<PAGE> 2
5. Each Fund agrees that all computer programs and procedures developed
to perform services required under this Agreement are the property of the
Transfer Agent and the Transfer Agent agrees that all records and other data,
except computer programs and procedures, are the property of the Fund. The
Transfer Agent agrees that it will furnish all records and other data as may be
requested to a Fund immediately upon termination of this Agreement for any
reason whatsoever.

6. The Transfer Agent agrees to treat all records and other information
relative to a Fund with utmost confidence and further agrees that all records
maintained by the Transfer Agent for the Fund shall be open to inspection and
audit at reasonable times by the officers, agents or auditors employed by the
Fund and that such records shall be preserved and retained by the Transfer
Agent so long as this agreement shall remain in effect.

7. The Transfer Agent shall not be liable for any damage, loss of data,
delay or any other loss caused by any such power failure or machine breakdown,
except that the Transfer Agent shall be liable for actual out-of-pocket costs
caused by any such power failure or machine breakdown, and the Transfer Agent
shall recover the data in process that is assumed lost during any power failure
or machine breakdown.

8. The Transfer Agent will maintain in force through the duration of
this Agreement a fidelity bond in a face amount not less than $1,000,000
written by a reputable insurance company, covering theft, embezzlement,
forgery and other acts of malfeasance by the Transfer Agent, its employees, or
agents in connection with services performed for a Fund.

9. This agreement may be terminated without the payment of any penalty
by any party upon one hundred eighty (180) days written notice thereof given by
a Fund to the Transfer Agent and upon one hundred eighty (180) days written
notice thereof given by the Transfer Agent to a Fund.

10. Any notice shall be officially given when sent by registered or
certified mail by a party to the appropriate address listed in the Funds'
current registration statement, provided that each party may notify each other
by regular mail of any changed address to which such notices shall be sent.

11. This Agreement constitutes the entire Agreement between the parties
and shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Massachusetts and shall inure to the benefit of the parties
hereto and their respective successors.

12. (a) A copy of the Declaration of Trust of each Trust is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby given
that this

-2-
<PAGE> 3
Agreement is executed by an officer of each Trust on behalf of each Fund, and
that the obligations of this Agreement shall be binding upon the assets and
properties of the Fund only and shall not be binding upon the assets and
properties of any other series of any Trust or upon any of the trustees,
officers, employees, agents or shareholders of the Fund or the Trust
individually.

(b) A copy of the LLC Certificate of Formation of the LLC is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this Agreement is executed by an officer of the LLC on behalf of its
trustees, as trustees and not individually, on further behalf of each Fund, and
that the obligations of this Agreement as they relate to each Fund shall be
binding upon the assets and properties of that Fund only and shall not be
binding upon the assets and properties of any other Fund or series of the LLC
or upon any of the trustees, officers, employees, agents or shareholders of a
Fund or the LLC individually.

-3-

<PAGE> 4
IN WITNESS WHEREOF, the parties hereto cause this Agreement to be
executed by their officers designated below as of the date first above-written.

WM TRUST I, on behalf of its series:
Money Market Fund
Tax-Exempt Money Market Fund
U.S. Government Securities Fund
Income Fund
High Yield Fund
Tax-Exempt Bond Fund
Bond & Stock Fund
Growth & Income Fund
Northwest Fund

WM TRUST II, on behalf of its series:
California Money Fund
Short Term High Quality Bond Fund
Target Maturity 2002 Fund
California Insured Intermediate
Municipal Fund
Florida Insured Municipal Fund
Growth Fund
Emerging Growth Fund
International Growth Fund
California Municipal Fund

WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS, LLC,
on behalf of its series:
Strategic Growth Portfolio
Conservative Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Income Portfolio

WM VARIABLE TRUST,
on behalf of its series:
Money Market Fund
Short Term High Quality Bond Fund
U.S. Government Securities Fund
Income Fund
Bond & Stock Fund
Growth & Income Fund
Northwest Fund
Growth Fund
Emerging Growth Fund
International Growth Fund
Strategic Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Income Portfolio

Each By:

/s/ WILLIAM G. PAPESH
- -----------------------------
William G. Papesh
President

WM SHAREHOLDER SERVICES, INC.

/s/ MONTE D. CALVIN
- -----------------------------
Monte D. Calvin
First Vice President

-4-

<PAGE> 5
SCHEDULE A
SERVICE PROVIDED

I. Shareholder Services

A. Maintain all Shareholder records on electronic data processing
equipment, including:

1. Share balances

2. Account transaction history

3. Names and addresses

4. Distribution records

5. Transfer records

6. Over-all control records

B. New Accounts

1. Deposit all monies received into a Fund custody account
maintained by the Fund's custodian.

2. Set up account according to Shareholders' instructions

3. Issue and mail shareholder confirmations

C. Additional Purchases

1. Deposit monies received into a Fund custody account maintained by
the Fund's custodian.

2. Issue Shareholder confirmations

D. Redemptions

Liquidate shares upon Shareholder request

1. Make payments of redemption proceeds in accordance with the
Fund's then current prospectus.

A-1

<PAGE> 6
2. Issue and mail Shareholder confirmation

E. Transfer shares as requested, including obtaining necessary papers and
documents to satisfy transfer requirements. On irregular transfers
requiring special legal opinions, such special legal fees, if any, are
to be paid for by the Fund.

F. Process changes, corrections of addresses and registrations

G. Maintain service with Shareholders as follows:

1. Activity required to receive, process and reply to Shareholders'
correspondence regarding account matters

2. Refer correspondence regarding investment matters to the Fund with
sufficient account data to answer

3. Contact Shareholders directly to settle problems and answer
questions

H. Compute distributions, dividends and capital gains

1. Make payment or reinvest in additional shares as directed by
shareholders according to provisions of the Fund's then current
prospectus

2. Advise each Shareholder of the amount of dividends received and
tax status annually

I. Produce transcripts of shareholder account history as required

J. Maintain the controls associated with the computer programs and manual
systems to arrive at the Fund's total shares outstanding

K. Receive mail and perform other administrative functions relating to
transfer agent work

II. Other Services

A. Mailing services to shareholders

B. Services in connection with any stock splits

A-2
<PAGE> 7
C. Develop special reports for Fund officers regarding statistical and
accounting data pertaining to the Fund. Fund shall pay for
out-of-pocket expenses charged by vendors to develop such reports or
portions thereof.

D. Voice response unit

E. NSCC support

A-3
<PAGE> 8
SCHEDULE B
MONTHLY SHAREHOLDER SERVICING FEES
September __, 1999

Fee Per Account Per Month*

Money Market Open Closed
- ------------ ---- ------
Money Market Fund $1.65 $0.21
Tax-Exempt Money Market Fund
California Money Fund

- -------------------------------------------------------------------------------
All Other Funds $1.35 $0.21
- ---------------
- -------------------------------------------------------------------------------
Fees Include:

- - Shareholder and Broker Servicing
- - Transaction Processing, Correspondence, and Research
- - Settlement and Reconciliation
- - Corporate Actions
- - Tax Reporting and Compliance
- - NSCC Support
- - Management Company and Broker/Dealer Support
- - Asset Allocation Processing for all distribution channels

Additional charges will be made for out-of-pocket expenses according to
Schedule C.

*No fee is paid by WM Variable Trust.

B-1
<PAGE> 9

SCHEDULE C

OUT-OF-POCKET EXPENSES

The Funds shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:

- - NSCC charges

- - Banking fees

- - Voice response unit

- - Microfiche/Microfilm/Image production

- - Magnetic media tapes and freight

- - Printing costs, including certificates, envelopes, checks and stationery

- - Postage (bulk, pre-sort, ZIP+4, bar-coding, first class) direct pass
through to the Funds

- - Due diligence mailings

- - Telephone and telecommunication costs, including all lease, maintenance
and line costs

- - Ad hoc reports

- - Shareholder transcripts

- - Proxy solicitations, mailings and tabulations

- - Daily & Distribution advice mailings

- - Shipping, Certified and Overnight mail and insurance

- - Year-end form production and mailings

- - Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines

- - Duplicating services

- - Courier services

- - Incoming and outgoing wire charges

- - Federal Reserve charges for check clearance

- - Overtime, as approved by the Funds

- - Temporary staff, as approved by the Funds

- - Travel and entertainment, as approved by the Funds

- - Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors

- - Third party audit reviews

- - Ad hoc programming time

- - Insurance

- - Such other miscellaneous expenses reasonably incurred by the Transfer
Agent in performing its duties and responsibilities under this Agreement

C-1

<PAGE> 1

INDEPENDENT AUDITORS' CONSENT

WM Variable Trust:

We consent to the incorporation by reference in this Post-Effective Amendment
No. 19 to Registration Statement No. 033-57732 of the WM Variable Trust (the
"Trust") on Form N-1A of our report dated February 4, 2000 appearing in the
Trust's 1999 Annual Report and to the references to us under the heading
"Financial Highlights" in the Prospectus and under the headings "Counsel and
Independent Accountants" and "Financial Statements" in the Statement of
Additional Information, both of which are parts of such Registration Statement.

Deloitte & Touche LLP
San Francisco, California
April 28, 2000

<PAGE> 1
EXHIBIT 99.(P)(1)

CODE OF ETHICS

OF THE

WM GROUP OF FUNDS,

WM ADVISORS, INC.,

WM FUNDS DISTRIBUTOR, INC.

AND

SELECTED EMPLOYEES OF WM SHAREHOLDER SERVICES, INC.

This Code of Ethics ("Code"), has been adopted by the companies referred
to herein on December 7, 1999. This Code shall apply to all Access Persons of
the Investment Company, to all Access Persons of the Adviser in accordance with
Rule 204-2 of the Investment Advisers Act of 1940 for IMS Accounts, to all
Access Persons of the Distributor, and to the Fund Accounting Department and
Fund Administration Department of the Transfer Agent.

1. STATEMENT OF GENERAL PRINCIPLES.

This Code is intended as a statement of general fiduciary principles
that govern the personal investment activities of all Access Persons. In
addition to the specific standards and guidelines set forth below, Access
Persons must govern themselves in accordance with the following general
principles:

(a) The Code is based on the principle that the officers, trustees,
directors and employees of the companies subject to this Code
owe a fiduciary duty to, among others, the shareholders of the
Investment Company, to conduct their personal securities
transactions in a manner which does not interfere with Fund
portfolio transactions or otherwise take unfair advantage of
their relationship to the Funds. Persons covered by this Code
must adhere to this general principle as well as comply with the
Code's specific provisions; and

(b) Access Persons should not take inappropriate advantage of their
position. Troublesome questions can arise whenever Access
Persons receive unusual investment opportunities, perquisites,
or gifts of more than de minimis value from persons doing or
seeking business with the Adviser, Investment Company or IMS
Account. As a general principle, it is imperative that those who
work for or on behalf of an Investment Company or IMS Account
avoid any such situation that might compromise, or call into
question, their exercise of fully independent judgment.

2. DEFINITIONS.

(a) "Access Person" means any director, trustee, officer, employee,
general partner, or Advisory Person of the Investment Company,
or Adviser; in addition, "Access Person" includes any director,
officer, or employee of the Distributor whose function causes
such person to be an "Access Person" as so defined by Rule
17j-1.

(b) "Adviser" means WM Advisors, Inc.

(c) "Advisory Person" means (1) any employee of the Investment
Company or Adviser, or of any company in a control relationship
to the Investment Company or Adviser, who, in connection with
his regular functions or duties, makes, participates in, or
obtains information, regarding the purchase or sale of a
Security by the Investment Company or Adviser, or whose
functions relate to the making of any recommendations with
respect to such purchases or sales; and (2) employees of the
Transfer Agent engaged in fund accounting or fund administration
for the Investment Company; and (3) any natural person in a
control relationship to the Investment Company or Adviser who
obtains information concerning recommendations made to the
Investment Company or Adviser with regard to the purchase or
sale of a Security.

(d) "IMS Accounts" means accounts that are separately managed by the
Adviser.

<PAGE> 2
(e) "Beneficial Ownership" shall be interpreted in the same manner
as it would be in determining whether a person is subject to the
provisions of Section 16a-1(a)(2) of the Securities Exchange Act
of 1934 and the rules and regulations thereunder, except that
the determination of direct or indirect beneficial ownership
shall apply to all securities which an Access Person has or
acquires.

(f) "Control" shall have the same meaning as that set forth in
section 2(a)(9) of the Investment Company Act.

(g) "Disinterested Trustee" means a trustee of the Investment
Company who is not an "interested person" of the Investment
Company or Adviser within the meaning of Section 2(a)(19) of the
Investment Company Act.

(h) "Distributor" means WM Funds Distributor, Inc.

(i) "Initial Public Offering" means an offering of securities
registered under the Securities Act of 1933 [15 U.S.C. 77a], the
issuer of which, immediately before the registration, was not
subject to the reporting requirements of sections 13 or 15(d) of
the Securities Exchange Act of 1934 [15 U.S.C. 78m or 78o(d)].

(j) "Investment Company" means:

WM Trust I: U.S. Government Securities Fund, Income Fund, Growth
& Income Fund, Money Market Fund, Tax-Exempt Money Market Fund,
Tax-Exempt Bond Fund,
Northwest Fund, Bond & Stock Fund;
WM Trust II: Short Term High Quality Bond, Growth Fund, Emerging
Growth Fund, International Growth Fund, California Municipal
Fund, California Insured Intermediate, Municipal Fund,
California Money Fund, Florida Insured Municipal
Fund, Target Maturity 2002 Fund;
WM Strategic Asset Management Portfolios: Strategic Growth
Portfolio, Conservative Growth Portfolio, Balanced Portfolio,
Flexible Income Portfolio, Income Portfolio WM Variable Trust:
Money Market Fund, Short Term High Quality Bond, U.S. Government
Securities Fund, Income Fund, Growth & Income Fund, Growth Fund,
Emerging Growth Fund, International Growth Fund, Bond & Stock
Fund, Northwest Fund, Strategic Growth Portfolio, Conservative
Growth Portfolio, Balanced Portfolio, Flexible Income Portfolio,
Income Portfolio.

(k) "Investment Personnel" means: (i) Any employee of the Fund or
investment adviser (or of any company in a control relationship
to the Fund or investment adviser) who, in connection with his
or her regular functions or duties, makes or participates in
making recommendations regarding the purchase or sale of
securities by the Fund; (ii) Any natural person who controls the
Fund or investment adviser and who obtains information
concerning recommendations made to the Fund regarding the
purchase or sale of securities by the Fund.

(l) "Purchase or sale of a security" includes, inter alia, the
writing of an option to purchase or sell a security, including
any security that is convertible into or exchangeable for any
security that is held or to be acquired by a fund.

(m) "Security" shall have the meaning set forth in Section 2(a)(36)
of the Investment Company Act, except that it shall not include
shares of registered open-end investment companies, securities
issued by the Government of the United States, short-term debt
securities which are "government securities" within the meaning
of Section 2(a)(16) of the Investment Company Act, repurchase
agreements and other high quality short term debt instruments
(any instrument with a maturity at issuance of less than 366
days and that is rated in one of the two highest rating
categories by a nationally recognized rating organization),
bankers' acceptances, bank certificates of deposit, commercial
paper, and such other money market instruments as designated by
the board of trustees of the Investment Company or board of
directors of the Adviser.

(n) "Transfer Agent" means WM Shareholder Services, Inc.

2
<PAGE> 3

(o) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such
a recommendation.

3. EXEMPTED TRANSACTIONS. The prohibitions of Section 4 of this Code shall
not apply to:

(a) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control.

(b) Purchases or sales of securities which are not eligible for
purchase or sale by the Investment Company or Adviser.

(d) Purchases which are part of an automatic dividend reinvestment
plan.

(e) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.

4. PROHIBITED PURCHASES OR SALES/BLACKOUT PERIOD.

(a) Access Persons. An Access Person shall not purchase or sell,
directly or indirectly, any Security in which he or she has, or
by reason of such transaction acquires, any direct or indirect
Beneficial Ownership and which he or she knows or should have
known at the time of such purchase or sale:

(1) is being considered for purchase or sale by the
Investment Company or Adviser;
(2) is being purchased or sold by the Investment Company or
Adviser;

(b) Investment Personnel. Investment Personnel, in addition to the
prohibition of 4(a) above, shall not purchase or sell, directly
or indirectly, any Security in which he or she has, or by reason
of such transaction acquires, any direct or indirect Beneficial
Ownership and which he or she knows or should have known at the
time of such purchase or sale will be purchased or sold by the
Investment Company or Adviser within a period of seven (7)
calendar days before and seven (7) calendar days after the
purchase or sale of the Security by the Investment Company or
Adviser (the "Blackout Period"), and any profits realized on
these trades shall inure to and be recoverable by the Investment
Company or Adviser. Investment Personnel shall not purchase or
sell, directly or indirectly, any Security in which he or she
has, or by reason of such transaction acquires, any direct or
indirect Beneficial Ownership:

(1) that is issued pursuant to an "initial public offering";
or
(2) that is issued pursuant to a "limited offering" (an
offering that is exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) or
Section 4(6) or pursuant to Rule 504, Rule 505, or Rule
506 under the Securities Act of 1933), unless the
purchase or sale is pre-approved as provided in Section
5.

5. PRE-CLEARANCE OF PARTICIPATION IN PRIVATE OFFERINGS. Investment
Personnel shall obtain approval from the Compliance Officer of the
Adviser prior to the acquisition of Securities issued pursuant to a
"private offering" (as that term is generally recognized as an exemption
from registration under Section 4(2) of the Securities Act of 1933)
("Private Offering Security") in which they, their families (including
those of immediate family sharing the same household as the Access
Person) or trusts of which they are trustees or in which they have a
beneficial interest are parties. The Compliance Officer shall promptly
notify the person of approval or denial for the transaction.
Notification of approval or denial for the transaction may be given
verbally; however, it shall be confirmed in writing within 72 hours of
verbal notification. Such notification must be kept strictly
confidential, and the Compliance

3
<PAGE> 4
Officer shall maintain records of the approval and the rationale
supporting the acquisition of such securities for at least five years
after the end of the fiscal year in which the approval is granted. In
reviewing the request, the Compliance Officer shall consult with the
Presidents of the Investment Company and Adviser, and shall take into
account, among other factors, whether the investment opportunity should
be reserved for an Investment Company or IMS Account, and whether the
opportunity is being offered to such person as a result of his or her
position with the Adviser. Investment Personnel who are Beneficial
Owners of any Private Offering Security shall be required to disclose
such ownership to the Compliance Officer prior to making any
recommendation regarding the purchase or sale of the Private Offering
Security by an Investment Company or IMS Account or participating in the
determination of which recommendations shall be made to the Investment
Company or IMS Account. Under such circumstances, the Adviser's decision
to purchase the Private Offering Securities shall be subject to an
independent review by Investment Personnel with no personal interest in
the Private Offering Securities.

6. BAN ON SHORT-TERM TRADING PROFITS.

(a) For the purpose of preventing the unfair use of information
which may have been obtained by Investment Personnel, any profit
realized by such Investment Personnel from any purchase and
sale, or any sale and purchase, of any Security in which he or
she has, or by reason of such transaction acquires, any direct
or indirect Beneficial Ownership (other than an exempted
security), within any period of less than sixty (60) days,
unless such Security was acquired in good faith in connection
with a debt previously contracted, shall inure to and be
recoverable by the Investment Company or Adviser, irrespective
of any intention on the part of such Investment Personnel in
entering into such transaction of holding the Security purchased
or of not repurchasing the Security sold for a period exceeding
sixty (60) days. This Section shall not apply unless such
Investment Personnel was the Beneficial Owner of the Security or
of an interest in a Security both at the time of the purchase
and sale, or the sale and purchase.

7. REPORTING.

(a) Every Access Person shall report to the Compliance Officer (as
that person is designated from time to time by the Adviser) the
information described in Sections 7(c), 7(d), 7(e) and 7(f) of
this Code with respect to transactions in any Security in which
such Access Person has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership in the
Security; provided, however, that an Access Person shall not be
required to make a report with respect to transactions effected
for any account over which such person does not have any direct
or indirect influence.

(b) A Disinterested Trustee of the Investment Company need only make
a quarterly report in a Security if such trustee or director, at
the time of that transaction, knew, or in the ordinary course of
fulfilling his official duties as a trustee of the Investment
Company or a director of the Adviser should have known, that
during the 15-day period immediately preceding the date of the
transaction by the director, such Security was purchased or sold
by the Investment Company or Adviser or was being considered by
the Investment Company or Adviser for purchase or sale by the
Investment Company or Adviser.

(c) Within ten (10) days of becoming an Access Person (except
persons who would be included in this subsection solely because
of their capacity as a trustee of the Investment Company), such
person shall disclose to the Compliance Officer all Security
holdings Beneficially Owned by the Access Person. Annually, in
conjunction with the first-quarter report specified in Section
7(e) of this Code, all Access Persons shall disclose to the
Compliance Officer all Security holdings Beneficially Owned by
them. Such annual or initial report shall contain the date of
the report, name, number of shares and principal amount of all
securities owned by the access person and all securities
accounts the access person maintains with a broker, dealer or
bank (or any account in which the Access Person may have a
beneficial interest).

4
<PAGE> 5

(d) All Access Persons (except persons who would be included in this
subsection solely because of their capacity as a trustee of the
Investment Company) shall immediately provide to or cause to be
provided to the Compliance Officer:

(1) duplicate copies of all documents issued by the broker,
dealer or bank with or through whom the transaction was
effected that confirm the transaction; and
(2) duplicate copies of all periodic statements issued by
any broker, dealer or bank that describe any Security
Beneficially Owned by the Access Person.

(e) Not later than ten (10) days after the end of each calendar
quarter, all Access Persons (except persons who would be
included in this subsection solely because of their capacity as
a trustee of the Investment Company) must certify in a written
report that the securities transactions contained in the
duplicate statements provided to the Compliance Officer pursuant
to Section 7(d) include all the securities transactions (as
defined in Section 2(m) of this Code) entered into by said
Access Person during the quarter covered by the report. Access
Persons are not required to list all transactions on the
quarterly report unless the information required to be included
in the quarterly report (as described in Section 7(f) of this
Code) has not been described adequately in the duplicate
statements provided to the Compliance Officer. If said Access
Person has no accounts containing securities (as defined in
section 2(m) of this Code), this fact also must be certified in
written report on a quarterly basis. If the Access Person
establishes a new securities account during the quarterly
period, the quarterly report must also disclose the name of the
broker, dealer or bank with whom the account is established and
the date the account is established.

(f) A quarterly report shall be made by all Access Persons (except
those included in Section 7(e) above and Disinterested Trustees
as set forth in Section 7(b) above) not later than ten (10) days
after the end of the calendar quarter in which the transaction
to which the report relates was effected, and shall contain the
following information:

(1) the date of the transaction, the title and the number of
shares, and the principal amount of each Security
involved;
(2) the nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
(3) the price at which the transaction was effected;
(4) the name of the broker, dealer or bank with or through
whom the transaction was effected; and
(5) the date of the report.

(g) Any such report may contain a statement that the report shall
not be construed as an admission by the person making such
report that he has any direct or indirect Beneficial Ownership
in the Security to which the report relates.

(h) All such reports, account statements, and all related
information described in this section (7) of the Code shall be
reviewed by the Designated Compliance Officer.

8. PRE-CLEARANCE OF TRADES. Every Access Person (except persons who would
be included in this Section 8 solely because of their capacity as a
trustee of the Investment Company) shall obtain clearance from the
Compliance Officer prior to effecting any securities transaction in
which they, their families (including those of immediate family sharing
the same household as the Access Person) or trusts of which they are
trustees or in which they have a beneficial interest are parties. The
Compliance Officer shall promptly notify the Access Person of clearance
or denial of clearance for the transaction which decision shall be
effective only on the day it is issued. Notification of approval or
denial may be given verbally; however, it shall be confirmed in writing
within 24 hours of verbal notification. Such notification must be kept
strictly confidential. The Compliance Officer shall record both the date
of the securities transaction and the date pre-clearance was granted.
The President of

5
<PAGE> 6
the Adviser shall assume the above reporting and pre-clearance
activities and act as compliance officer for transactions of the
Designated Compliance Officer.

9. PROHIBITED ACTIVITIES OF INVESTMENT PERSONNEL.

(a) Gifts. Investment Personnel are prohibited from receiving,
either directly or indirectly, anything of value in excess of a
de minimis amount from any person or an employee of another
entity where such payment or gratuity is in relation to the
business of the employer of the offeror of the payment or
gratuity.

(b) Service as a Director. Investment Personnel are prohibited from
serving on the boards of directors of publicly traded companies,
absent a prior authorization from the Compliance Officer based
upon a determination that the board service would not be
inconsistent with the interests of the Investment Company.

10. SANCTIONS. Upon discovering a violation of this Code, the board of
trustees of the Investment Company, or the board of directors of the
Adviser, Transfer Agent, or Distributor may impose such sanctions as it
deems appropriate, including inter alia, a letter of censure or
suspension or termination of the employment of the violator. All
material violations of this Code and any sanctions imposed with respect
thereto shall be reported periodically to the board of trustees of the
Investment Company or board of directors of the Adviser with respect to
whose securities the violation occurred.

11. CERTIFICATION OF COMPLIANCE WITH CODE. All Access Persons shall certify
annually that they:

(a) have read and understood the Code and are subject thereto,
(b) have complied with the requirements of the Code, and
(c) disclosed or reported all personal securities transactions
required to be disclosed or reported pursuant to the
requirements of the Code.

12. REPORT AND CERTIFICATION OF ADEQUACY to the Board of Trustees and Board
of Directors. On an annual basis, the Compliance Officer shall prepare a
written report to the management and the board of trustees of the
Investment Company and board of directors of the Adviser, Transfer Agent
and Distributor setting forth the following:

(a) stating that the Code of Ethics procedures have been designed to
prevent access persons from violating the Code;
(b) a summary of existing procedures concerning personal investing
and any changes in procedures made during the past year;
(c) identifying any violations that required significant remedial
action during the past year; and
(d) identifying any recommended changes in existing restrictions or
procedures based upon the Investment Company's or Adviser's
experience under the Code, evolving industry practices, or
developments in applicable laws or regulations.

13. BOARD APPROVAL. Following the report and certification by the Compliance
Officer, the board of trustees of the Investment Company (including a
majority of independent trustees) must approve this Code of Ethics on an
annual basis. Any material change to this Code must be approved within
six months.

<PAGE> 1
EXHIBIT 99.(P)(2)

[JANUS LOGO]

JANUS ETHICS RULES

"ACT IN THE BEST INTEREST OF OUR INVESTORS EARN THEIR
CONFIDENCE WITH EVERY ACTION"
- --------------------------------------------------------------------------------

CODE OF ETHICS
INSIDER TRADING POLICY
GIFT POLICY
OUTSIDE EMPLOYMENT POLICY
- --------------------------------------------------------------------------------

LAST REVISED MARCH 1, 2000
- --------------------------------------------------------------------------------

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
DEFINITIONS..................................................................................1

INTRODUCTION.................................................................................4
CAUTION REGARDING PERSONAL TRADING ACTIVITIES........................................4
COMMUNICATIONS WITH OUTSIDE TRUSTEES/DIRECTORS.......................................4

CODE OF ETHICS...............................................................................5
OVERVIEW.............................................................................5
GENERAL PROHIBITIONS.................................................................5
TRADING RESTRICTIONS.................................................................6
EXCLUDED TRANSACTIONS.........................................................6
DISCLOSURE OF CONFLICTS.......................................................7
PRECLEARANCE..................................................................7
TRADING BAN ON PORTFOLIO MANAGERS AND ASSISTANT PORTFOLIO MANAGERS............8
BAN ON IPOs AND HOT ISSUES....................................................8
60 DAY RULE...................................................................8
BLACKOUT PERIOD...............................................................8
FIFTEEN DAY RULE..............................................................8
SEVEN DAY RULE................................................................9
SHORT SALES...................................................................9
HEDGE FUNDS, INVESTMENT CLUBS, AND OTHER INVESTMENTS..........................9
PRECLEARANCE PROCEDURES..............................................................9
GENERAL PRECLEARANCE..........................................................9
PRECLEARANCE REQUIREMENTS FOR INVESTMENT PERSONNEL...........................10
PRECLEARANCE OF COMPANY STOCK................................................10
PRECLEARANCE OF TENDER OFFERS AND STOCK PURCHASE PLANS.......................11
FOUR DAY EFFECTIVE PERIOD....................................................11
REPORTING REQUIREMENTS..............................................................11
ACCOUNT STATEMENTS...........................................................11
HOLDINGS REPORTS.............................................................12
PERSONAL SECURITIES TRANSACTION REPORTS......................................12
NON-INFLUENCE AND NON-CONTROL ACCOUNTS.......................................12
OTHER REQUIRED FORMS................................................................13
ACKNOWLEDGMENT OF RECEIPT FORM...............................................13
ANNUAL CERTIFICATION FORM....................................................13
OUTSIDE DIRECTOR/TRUSTEE REPRESENTATION FORM.................................13

INSIDER TRADING POLICY......................................................................14
BACKGROUND INFORMATION..............................................................14
WHO IS AN INSIDER?...........................................................15
WHEN IS INFORMATION NONPUBLIC?...............................................15
WHAT IS MATERIAL INFORMATION?................................................15
WHEN IS INFORMATION MISAPPROPRIATED?.........................................15
PENALTIES FOR INSIDER TRADING................................................16
WHO IS A CONTROLLING PERSON?.................................................16
PROCEDURES TO IMPLEMENT POLICY......................................................16
</TABLE>

<PAGE> 3

<TABLE>
<S> <C>
IDENTIFYING MATERIAL INSIDE INFORMATION......................................16
REPORTING INSIDE INFORMATION.................................................17
WATCH AND RESTRICTED LISTS...................................................17
PROTECTING INFORMATION.......................................................18
RESPONSIBILITY TO MONITOR TRANSACTIONS.......................................19
RECORD RETENTION.............................................................19
TENDER OFFERS................................................................19

GIFT POLICY.................................................................................20
GIFT GIVING.........................................................................20
GIFT RECEIVING......................................................................20
CUSTOMARY BUSINESS AMENITIES........................................................20

OUTSIDE EMPLOYMENT POLICY...................................................................21

PENALTY GUIDELINES..........................................................................22
OVERVIEW............................................................................22
PENALTY GUIDELINES ...............................................................22

SUPERVISORY AND COMPLIANCE PROCEDURES.......................................................23
SUPERVISORY PROCEDURES..............................................................23
PREVENTION OF VIOLATIONS.....................................................23
DETECTION OF VIOLATIONS......................................................23
COMPLIANCE PROCEDURES...............................................................24
REPORTS OF POTENTIAL DEVIATIONS OR VIOLATIONS................................24
ANNUAL REPORTS...............................................................24
RECORDS......................................................................24
INSPECTION...................................................................25
CONFIDENTIALITY..............................................................25
FILING OF REPORTS............................................................25
THE ETHICS COMMITTEE................................................................25
MEMBERSHIP OF THE COMMITTEE..................................................25
COMMITTEE MEETINGS...........................................................25
SPECIAL DISCRETION...........................................................26

GENERAL INFORMATION ABOUT THE ETHICS RULES..................................................27
DESIGNEES....................................................................27
ENFORCEMENT..................................................................27
INTERNAL USE.................................................................27

FORMS.......................................................................................28
</TABLE>

<PAGE> 4

JANUS ETHICS RULES

"ACT IN THE BEST INTEREST OF OUR INVESTORS - EARN THEIR
CONFIDENCE WITH EVERY ACTION"

- --------------------------------------------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------

The following definitions are used throughout this document. You are responsible
for reading and being familiar with each definition.

1. "Access Person" shall mean:

1) Any trustee, director, officer or Advisory Person of the Janus
Funds or JCC;

2) Any director or officer of JDI who in the ordinary course of his
or her business makes, participates in or obtains information
regarding the purchase or sale of securities for the Janus Funds
or for the advisory clients or whose functions or duties as part
of the ordinary course of his or her business relate to the
making of any recommendation to the Janus Funds or advisory
clients regarding the purchase or sale of securities; and

3) Any other persons designated by the Ethics Committee as having
access to current trading information.

2. "Advisory Person" shall mean:

1) Any employee of the Janus Funds or JCC (or of any company in a
control relationship to the Janus Funds or JCC) who in
connection with his or her regular functions or duties, makes,
participates in or obtains information regarding the purchase or
sale of a security by the Funds or for the account of advisory
clients, or whose functions relate to the making of any
recommendations with respect to such purchases and sales; and

2) Any natural person in a control relationship to the Funds or JCC
who obtains information concerning recommendations made to the
Funds or for the account of Clients with regard to the purchase
or sale of a security.

3. "Beneficial Ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) under the Securities Exchange Act of
1934 in determining whether a person is subject to the provisions of
Section 16 except that the determination of direct or indirect
Beneficial Ownership shall apply to all Covered Securities which an
Access Person has or acquires. For example, in addition to a person's
own accounts the term "Beneficial Ownership" encompasses securities held
in the name of a spouse or equivalent domestic partnership, minor
children, a relative sharing your home, or certain trusts under which
you or a related party is a beneficiary, or held under other
arrangements indicating a sharing of financial interest.

4. "Company Stock" is any stock or option issued by Janus, Stilwell
Financial, Inc. ("Stilwell") or Kansas City Southern Industries, Inc.
("KCSI").

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<PAGE> 5

5. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act.

6. "Covered Persons" are all Directors, Trustees, officers, and full-time,
part-time or temporary employees of Janus, and persons working at Janus
on a contract basis.

7. "Covered Securities" generally include all securities (including Company
Stock), whether publicly or privately traded, and any option, future,
forward contract or other obligation involving a security or index
thereof, including an instrument whose value is derived or based on any
of the above (a "derivative"). The term Covered Security includes any
separate security, which is convertible into or exchangeable for, or
which confers a right to purchase such security. The following
investments are not Covered Securities:

- shares of registered open-end investment companies (e.g., mutual
funds);

- direct obligations of the U.S. government (e.g., Treasury
securities), or any derivative thereof;

- securities representing a limited partnership interest in a real
estate limited partnership;

- high-quality money market instruments, such as certificates of
deposit, bankers acceptances, repurchase agreements, commercial
paper, and U.S. government agency obligations;

- insurance contracts, including life insurance or annuity
contracts;

- direct investments in real estate, business franchises or
similar ventures; and

- physical commodities (including foreign currencies), or any
derivatives thereof.

8. "Designated Compliance Representatives" are David Kowalski and Ernie
Overholt or their designee(s).

9. "Designated Legal Representatives" are Bonnie Howe and Heidi Walter or
their designee(s).

10. "Designated Trading Operations Representatives" are Lesa Finney, John
Porro, and Mark Farrell.

11. "Directors" are directors of JCC.

12. "Executive Committee" is comprised of Thomas Bailey, Jim Craig, Thomas
Early, Steve Goodbarn, Margie Hurd, and Mark Whiston.

13. "Executive Investment Committee" is comprised of Jim Craig, Jim Goff,
Helen Hayes, Warren Lammert, and Scott Schoelzel.

14. "Ethics Committee" is comprised of Thomas Early, Steve Goodbarn, David
Kowalski and Ernie Overholt.

15. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of sections 13 or 15(d) of the Securities Exchange Act of 1934.

16. "Inside Trustees and Directors" are Trustees and Directors who are also
employed by Janus.

17. "Investment Personnel" shall mean (i) a person who makes decisions
regarding the purchase or sale of securities by or on behalf of the
Janus Funds or advisory clients and any person such as an analyst or

2
<PAGE> 6

trader who directly assists in the process, and (ii) any natural person
who controls the Janus Funds or JCC and who obtains information
concerning recommendations made to the Funds regarding the purchase or
sale of Covered Securities by the Funds.

18. "Janus" is Janus Investment Fund, Janus Aspen Series, Janus Capital
Corporation, Janus Service Corporation, Janus Distributors, Inc., Janus
Capital International Ltd., Janus International (UK) Ltd., Janus Capital
Trust Manager Ltd., Janus Universal Funds, and Janus World Funds Plc.

19. "Janus Funds" are Janus Investment Fund, Janus Aspen Series, Janus
Universal Funds, and Janus World Funds Plc.

20. "JCC" is Janus Capital Corporation, Janus Capital International Ltd.,
Janus International (UK) Ltd. and Janus Capital Trust Manager Ltd.

21. "JDI" is Janus Distributors, Inc.

22. "JDI's Operations Manager" is Dana Stephens and/or her designee(s).

23. "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to section 4(2) or section
4(6) or pursuant to rule 504, rule 505 or rule 506 thereunder.

24. "NASD" is the National Association of Securities Dealers, Inc.

25. "Non-Access Person" is any person that is not an Access Person.

26. "Outside Directors" are Directors who are not employed by Janus.

27. "Outside Trustees" are Trustees who are not "interested persons" of the
Janus Funds within the meaning of Section 2(a)(9) of the 1940 Act.

28. "Registered Persons" are persons registered with the NASD by JDI.

29. "Security Held or to be Acquired" means any Covered Security which,
within the most recent 15 days (i) is or has been held by the Janus
Funds; or (ii) is being or has been considered by the Janus Funds or JCC
for purchase.

30. "SEC" is Securities and Exchange Commission.

31. "Trustees" are trustees of Janus Investment Fund and Janus Aspen Series.

These definitions may be updated from time to time to reflect changes in
personnel.

- --------------------------------------------------------------------------------
INTRODUCTION
- --------------------------------------------------------------------------------

3
<PAGE> 7

These Ethics Rules ("Rules") apply to all Covered Persons. The Rules
apply to transactions for your personal accounts and any other accounts you
Beneficially Own. You may be deemed the beneficial owner of any account in which
you have a direct or indirect financial interest. Such accounts include, among
others, accounts held in the name of your spouse or equivalent domestic
partnership, your minor children, a relative sharing your home, or certain
trusts under which you or such persons are a beneficiary.

The Rules are intended to ensure that you (i) at all times place first
the interests of the Janus Funds, investment companies for which Janus serves as
subadviser, and other advisory clients ("Clients"); (ii) conduct all personal
trading consistent with the Rules and in such a manner as to avoid any actual or
potential conflict of interest or any abuse of your position of trust and
responsibility; and (iii) not use any material nonpublic information in
securities trading. The Rules also establish policies regarding other matters,
such as outside employment and the giving or receiving of gifts.

You are required to read and retain these Rules and to sign and return
the attached Acknowledgment of Receipt Form to Compliance upon commencement of
employment or other services. On an annual basis thereafter, you will be
required to complete an Annual Certification Form. The Annual Certification Form
confirms that (i) you have received, read and asked any questions necessary to
understand the Rules; (ii) you agree to conduct yourself in accordance with the
Rules; and (iii) you have complied with the Rules during such time as you have
been associated with Janus. Depending on your status, you may be required to
submit additional reports and/or obtain clearances as discussed more fully
below.

Unless otherwise defined, all capitalized terms shall have the same
meaning as set forth in the Definitions section.

CAUTION REGARDING PERSONAL TRADING ACTIVITIES

Certain personal trading activities may be risky not only because of the
nature of the transactions, but also because action necessary to close out a
position may become prohibited for some Covered Persons while the position
remains open. For example, you may not be able to close out short sales and
transactions in derivatives. Furthermore, if JCC becomes aware of material
nonpublic information, or if a Client is active in a given security, some
Covered Persons may find themselves "frozen" in a position. JCC will not bear
any losses in personal accounts resulting from the application of these Rules.

COMMUNICATIONS WITH OUTSIDE TRUSTEES/DIRECTORS

As a regular business practice, JCC attempts to keep Directors and
Trustees informed with respect to its investment activities through reports and
other information provided to them in connection with board meetings and other
events. In addition, Janus personnel are encouraged to respond to inquiries from
Directors and Trustees, particularly as they relate to general strategy
considerations or economic or market conditions affecting Janus. However, it is
JCC's policy not to communicate specific trading information and/or advice on
specific issues to Outside Directors and Outside Trustees (i.e., no information
should be given on securities for which current activity is being considered for
Clients). Any pattern of repeated requests by such Directors or Trustees should
be reported to the Chief Compliance Officer or the Compliance Manager.

- --------------------------------------------------------------------------------
CODE OF ETHICS
- --------------------------------------------------------------------------------

OVERVIEW

4
<PAGE> 8

In general, it is unlawful for persons affiliated with investment
companies, their principal underwriters or their investment advisers to engage
in personal transactions in securities held or to be acquired by a registered
investment company, if such personal transactions are made in contravention of
rules which the SEC has adopted to prevent fraudulent, deceptive and
manipulative practices. Such rules require each registered investment company,
investment adviser and principal underwriter to adopt its own written code of
ethics containing provisions reasonably necessary to prevent its employees from
engaging in such conduct, and to maintain records, use reasonable diligence, and
institute such procedures as are reasonably necessary to prevent violations of
such code. This Code of Ethics ("Code") and information reported hereunder will
enable Janus to fulfill these requirements.

GENERAL PROHIBITIONS

The following activities are prohibited for applicable Covered Persons
(remember, if you work at Janus full-time, part-time, temporarily or on a
contract basis, or you are a Trustee or Director, you are a Covered Person).
Persons who violate any prohibition may be required to disgorge any profits
realized in connection with such violation to a charitable organization selected
by the Ethics Committee and may be subject to other sanctions imposed by the
Ethics Committee, as outlined in the Penalty Guidelines.

1. Covered Persons may not cause a Client to take action, or to
fail to take action, for personal benefit, rather than to
benefit such Client. For example, a Covered Person would violate
this Code by causing a Client to purchase a security owned by
the Covered Person for the purpose of supporting or increasing
the price of that security or by causing a Client to refrain
from selling a security in an attempt to protect a personal
investment, such as an option on that security.

2. Covered Persons may not use knowledge of portfolio transactions
made or contemplated for Clients to profit, or cause others to
profit, by the market effect of such transactions.

3. Covered Persons may not disclose current portfolio transactions
made or contemplated for Clients as well as any other nonpublic
information to anyone outside of Janus.

4. Covered Persons may not engage in fraudulent conduct in
connection with the purchase or sale of a Security Held or to be
Acquired by a Client, including without limitation:

1) Employing any device, scheme or artifice to defraud any
Client;

2) Making to any Client any untrue statement of material
fact or omitting to state to any Client a material fact
necessary in order to make the statements made, in light
of the circumstances under which they are made, not
misleading;

3) Engaging in any act, practice or course of business
which operates or would operate as a fraud or deceit
upon any Client;

4) Engaging in any manipulative practice with respect to
any Client; or

5) Investing in derivatives to evade the restrictions of
this Code. Accordingly, individuals may not use
derivatives to take positions in securities that would
be otherwise prohibited by the Code if the positions
were taken directly.

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<PAGE> 9

5. Investment Personnel may not serve on the board of directors of
a publicly traded company without prior written authorization
from the Ethics Committee. No such service shall be approved
without a finding by the Ethics Committee that the board service
would not be inconsistent with the interests of Clients. If
board service is authorized by the Ethics Committee, the
Investment Personnel serving as director normally should be
isolated from those making investment decisions with respect to
the company involved through "Chinese Walls" or other
procedures.

TRADING RESTRICTIONS

The trading restrictions of the Code apply to all direct or indirect
acquisitions or dispositions of Covered Securities, whether by purchase, sale,
tender offers, stock purchase plan, gift, inheritance, or otherwise. Unless
otherwise noted, the following trading restrictions are applicable to any
transaction in a Covered Security Beneficially Owned by a Covered Person.
Outside Directors and Outside Trustees are exempt from certain trading
restrictions because of their limited access to current information regarding
Client investments.

Any disgorgement of profits required under any of the following
provisions shall be donated to a charitable organization selected by the Ethics
Committee, as outlined in the Penalty Guidelines. However, if disgorgement is
required as a result of trades by a portfolio manager that conflicted with that
manager's own Clients, disgorgement proceeds shall be paid directly to such
Clients. If disgorgement is required under more than one provision, the Ethics
Committee shall determine in its sole discretion the provision that shall
control.(1)

EXCLUDED TRANSACTIONS

Some or all of the trading restrictions listed below do not apply to the
following transactions; however, these transactions must still be reported to
Compliance (see Reporting Requirements):

- Tender offer transactions are exempt from all trading restrictions
except preclearance.

- ----------

(1) Unless otherwise noted, restrictions on personal transactions apply
to transactions involving Covered Securities, including any derivative thereof.
When determining the amount of disgorgement required with respect to a
derivative, consideration will be given to price differences in both the
derivative and the underlying securities, with the lesser amount being used for
purposes of computing disgorgement. For example, in determining whether
reimbursement is required when the applicable personal trade is in a derivative
and the Client transaction is in the underlying security, the amount shall be
calculated using the lesser of (a) the difference between the price paid or
received for the derivative and the closing bid or ask price (as appropriate)
for the derivative on the date of the Client transaction, or (b) the difference
between the last sale price, or the last bid or ask price (as appropriate) of
the underlying security on the date of the derivative transaction, and the price
received or paid by the Client for the underlying security. Neither preclearance
nor disgorgement shall be required if such person?s transaction is to close,
sell or exercise a derivative within five days of its expiration.

6
<PAGE> 10

- The acquisition of securities through stock purchase plans are
exempt from all trading restrictions except preclearance, the
trading ban on portfolio managers and assistant portfolio managers,
and the seven day rule. (Note: the sales of securities acquired
through a stock purchase plan are subject to all of the trading
restrictions of the Code).

- The acquisition of securities through stock dividends, automatic
dividend reinvestment plans, stock splits, reverse stock splits,
mergers, consolidations, spin-offs, or other similar corporate
reorganizations or distributions generally applicable to all holders
of the same class of such securities are exempt from all trading
restrictions. The acquisition of securities through the exercise of
rights issued by an issuer pro rata to all holders of a class of
securities, to the extent the rights were acquired in the issue are
exempt from all trading restrictions.

- Non-discretionary transactions in Company Stock (e.g., the
acquisition of securities through Stilwell or KCSI's Employee Stock
Purchase Plan ("ESPP") or the receipt of options in Company Stock as
part of a compensation or benefit plan) are exempt from all trading
restrictions. Discretionary transactions in Company Stock issued by
JCC are exempt from all trading restrictions. Discretionary
transactions in Company Stock issued by Stilwell or KCSI (e.g.,
exercising options or selling ESPP Stock) are exempt from all
trading restrictions except preclearance (See procedures for
Preclearance of Company Stock).

- The acquisition of securities by gift or inheritance is exempt from
all trading restrictions. (Note: the sales of securities acquired by
gift or inheritance are subject to all trading restrictions of the
Code).

- Transactions in options on and securities based on the following
indexes are exempt from all trading restrictions: S&P 500 Index, S&P
MidCap 400 Index, S&P 100 Index, FTSE 100 Index or Nikkei 225 Index.

DISCLOSURE OF CONFLICTS

If an Investment Person is planning to invest or make a recommendation
to invest in a security for a Client, and such person has a material interest in
the security, such person must first disclose such interest to his or her
manager or the Chief Investment Officer. The manager or Chief Investment Office
shall conduct an independent review of the recommendation to purchase the
security for Clients. The manager or Chief Investment Officer may review the
recommendation only if he or she has no material interest in the security. A
material interest is Beneficial Ownership of any security (including
derivatives, options, warrants or rights), offices, directorships, significant
contracts, or interests or relationships that are likely to affect such person's
judgment.

PRECLEARANCE

Access Persons (except Outside Directors and Outside Trustees) must
obtain preclearance prior to engaging in any personal transaction in Covered
Securities. (See Preclearance Procedures below).

TRADING BAN ON PORTFOLIO MANAGERS AND ASSISTANT PORTFOLIO MANAGERS

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<PAGE> 11

Portfolio managers and their assistants are prohibited from trading
personally in Covered Securities. However, the following types of transactions
are exempt from this policy, but are subject to all applicable provisions of the
Rules, including preclearance:

- Purchases or sales of Company Stock;

- The sale of any security that is not held by any Client; and

- The sale of any security in order to raise capital to fund a
significant life event. For example, purchasing a home or
automobile, or paying medical or education expenses.

BAN ON IPOs AND HOT ISSUES

Covered Persons (except Outside Directors and Outside Trustees) may not
purchase securities in an initial public offering or in a secondary offering
that constitutes a "hot issue" as defined in NASD rules. Such securities may be
purchased or received, however, where the individual has an existing right to
purchase the security based on his or her status as an investor, policyholder or
depositor of the issuer. In addition, securities issued in reorganizations are
also outside the scope of this prohibition if the transaction involves no
investment decision on the part of the Covered Person except in connection with
a shareholder vote.

60 DAY RULE

Access Persons (except Outside Directors and Outside Trustees) shall
disgorge any profits realized in the purchase and sale, or sale and purchase, of
the same or equivalent Covered Securities within sixty (60) calendar days if a
Client held or traded the security during the sixty (60) calendar day period.

BLACKOUT PERIOD

No Access Person may engage in a transaction in a Covered Security when
such person knows or should have known at the time there to be pending, on
behalf of any Client, a "buy" or "sell" order in that same security. The
existence of pending orders will be checked by Compliance as part of the
Preclearance process. Preclearance may be given when any pending Client order is
completely executed or withdrawn.

FIFTEEN DAY RULE

Any Access Person (except Outside Directors and Outside Trustees) who
buys or sells a Covered Security within fifteen calendar days before such
security is bought or sold on behalf of any Client must disgorge any price
advantage realized. The price advantage shall be the favorable spread, if any,
between the price paid or received by such person and the least favorable price
paid or received by a Client during such period.(2) The Ethics Committee has the
authority by unanimous action to exempt any person from the fifteen-day rule if
such person is selling a security to raise capital to fund a significant life
event. For example, purchasing a home or automobile, or paying medical or
education expenses. In order for the Ethics Committee to consider such
exemption, the life event must occur within thirty (30) calendar days of the
security transaction, and the person must provide written confirmation of the
event.

- ----------

(2) Personal purchases are matched only against subsequent Client
purchases and personal sales are matched only against subsequent Client sales
for purposes of this restriction.

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SEVEN DAY RULE

Any portfolio manager or assistant portfolio manager who buys or sells a
Covered Security within seven calendar days before or after he or she trades in
that security on behalf of a Client shall disgorge any profits realized on such
transaction.

SHORT SALES

Any Access Person who sells short a Covered Security that such person
knows or should have known is held long by any Client shall disgorge any profit
realized on such transaction. This prohibition shall not apply, however, to
securities indices or derivatives thereof (such as futures contracts on the S&P
500 index). Client ownership of Covered Securities will be checked as part of
the Preclearance process.

HEDGE FUNDS, INVESTMENT CLUBS, AND OTHER INVESTMENTS

No Access Person (except Outside Directors and Outside Trustees) may
participate in hedge funds, partnerships, investment clubs, or similar
investment vehicles, unless such person does not have any direct or indirect
influence or control over the trading. Covered Persons wishing to rely upon this
provision must submit a Certification of Non-Influence and Non-Control Form to
the Compliance Manager for approval. (See Non-Influence and Non-Control Accounts
section below.)

PRECLEARANCE PROCEDURES

Access Persons must obtain preclearance for all applicable transactions
in Covered Securities in which such person has a Beneficial Interest. A
Preclearance Form must be completed and forwarded to Compliance. Compliance
shall promptly notify the person of approval or denial of the transaction.
Notification of approval or denial of the transaction may be given verbally;
however, it shall be confirmed in writing within seventy-two (72) hours of
verbal notification. When preclearance has been approved, the person then has
four business days from and including the day of first notification to execute
the trade.

GENERAL PRECLEARANCE

General preclearance shall be obtained from an authorized person from
each of the following three groups:

- A DESIGNATED LEGAL OR COMPLIANCE REPRESENTATIVE, who will present the
personal investment to the attendees of the weekly investment meeting,
whereupon an opportunity will be given to orally object. An attendee of
the weekly investment meeting shall object to such clearance if such
person knows of a conflict with a pending Client transaction or a
transaction known by such attendee to be under consideration for a
Client. Objections to such clearance should also take into account,
among other factors, whether the investment opportunity should be
reserved for a Client. If no objections are raised, the Designated
Legal or Compliance Representative shall so indicate by signing the
Preclearance Form. Such approval shall not be required for sales of
securities not held by any Clients.

In place of this authorization, Investment Personnel are required to
obtain approvals from all Executive Investment Committee members as
noted in the section below entitled Preclearance Requirements for
Investment Personnel.

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<PAGE> 13

- A DESIGNATED TRADING OPERATIONS REPRESENTATIVE, who may provide
clearance if such Representative knows at the time of the request of no
pending "buy" or "sell" order in the security on behalf of a Client and
no such trades are known by such person to be under consideration.

- The COMPLIANCE MANAGER, OR A DESIGNATED LEGAL OR COMPLIANCE
REPRESENTATIVE IF THE COMPLIANCE MANAGER IS NOT AVAILABLE, who may
provide clearance if no legal prohibitions are known by such person to
exist with respect to the proposed trade. Approvals for such clearance
should take into account, among other factors, the existence of any
Watch List or Restricted List and, to the extent reasonably
practicable, recent trading activity and holdings of Clients.

No authorized person may preclear a transaction in which such person has
a Beneficial Interest.

PRECLEARANCE REQUIREMENTS FOR INVESTMENT PERSONNEL

Trades by Investment Personnel may not be precleared by presentation at
the weekly investment meeting. Instead, Investment Personnel must obtain the
following management approvals. However, such approvals shall not be required
for sales of securities not held by any Clients:

- TRADES IN EQUITY SECURITIES require prior written approval from
all members of the Executive Investment Committee, Investment
Person's manager and either Ron Speaker or Sandy Rufenacht;

- TRADES IN DEBT SECURITIES require prior written approval from
all senior fixed income portfolio managers, either Jim Craig or
two other Executive Investment Committee members, and Investment
Person's manager.

A portfolio manager may not preclear his or her own transaction.

PRECLEARANCE OF COMPANY STOCK

Officers of Janus and certain persons designated by Compliance who wish
to make discretionary transactions in Stilwell or KCSI securities, or
derivatives thereon, must preclear such transactions. A Company Stock
Preclearance Form must be completed and forwarded to Compliance. Compliance
shall promptly notify the person of approval or denial for the transaction.
Notification of approval or denial for the transaction may be given verbally;
however, it shall be confirmed in writing within seventy-two (72) hours of
verbal notification. When preclearance has been approved, the person then has
four business days from and including the day of first notification to execute
the trade.

If such persons are subject to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, trading will generally be allowed only in the
ten (10) business day period beginning seventy-two (72) hours after Stilwell or
KCSI files its quarterly results with the SEC (e.g., 10Q or 10K filing, not
earnings release). To preclear the trade, the Compliance Manager or such other
Representative shall discuss the transaction with Janus's General Counsel or
Chief Financial Officer.

PRECLEARANCE OF TENDER OFFERS AND STOCK PURCHASE PLANS

Access Persons (other than Outside Directors and Outside Trustees) who
wish to participate in a tender offer or stock purchase plan must preclear such
trades only with the Compliance Manager prior to submitting

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notice to participate in such tender offer or notice of participation in such
stock purchase plan to the applicable company. To preclear the trade, the
Compliance Manager shall consider all material factors relevant to a potential
conflict of interest between the Access Person and Clients. In addition, any
increase of $100 or more to a pre-existing stock purchase plan must be
precleared.

FOUR DAY EFFECTIVE PERIOD

Clearances to trade will be in effect for only four trading/business
days from and including the date of the last Authorized Person's signature
(which may not be provided more than one day after the first Authorized Person's
signature). For tender offers, stock purchase plans, exercise of Company Stock
and similar transactions, the date the request is submitted to the company
processing the transaction will be considered the trade date for purposes of
this requirement. Open orders, including stop loss orders, will generally not be
allowed unless such order is expected to be completed within the four day
effective period. It is necessary to re-preclear transactions not executed
within the four day effective period.

REPORTING REQUIREMENTS

ACCOUNT STATEMENTS

ACCESS PERSONS (other than Outside Trustees) and REGISTERED PERSONS must
notify Compliance of each brokerage account in which they have a Beneficial
Interest and must arrange for their brokers or financial institutions to provide
to Compliance, on a timely basis, duplicate account statements and confirmations
showing all transactions in brokerage or commodities accounts in which they have
a Beneficial Interest. A Personal Brokerage Account Disclosure Form should be
completed for this purpose.

PLEASE NOTE THAT, EVEN IF SUCH PERSON DOES NOT TRADE COVERED SECURITIES
IN A PARTICULAR BROKERAGE OR COMMODITIES ACCOUNT (E.G., TRADING MUTUAL FUNDS IN
A SCHWAB ACCOUNT), THE REPORTING OF DUPLICATE ACCOUNT STATEMENTS AND
CONFIRMATIONS IS STILL REQUIRED. HOWEVER, IF SUCH PERSON ONLY USES A PARTICULAR
BROKERAGE ACCOUNT FOR CHECKING ACCOUNT PURPOSES, AND NOT INVESTMENT PURPOSES, HE
OR SHE MAY IN LIEU OF REPORTING DUPLICATE ACCOUNT STATEMENTS, REPORT DUPLICATE
TRADE CONFIRMATIONS AND MAKE A QUARTERLY REPRESENTATION TO COMPLIANCE INDICATING
THAT NO INVESTMENT TRANSACTIONS OCCURRED IN THE ACCOUNT DURING THE CALENDAR
QUARTER. Reporting of accounts that do not allow any trading in Covered
Securities (e.g., a mutual fund account held directly with the fund sponsor) is
not required.

Covered Persons must notify Compliance of each reportable account at the
time it is opened, and annually thereafter, including the name of the firm and
the name under which the account is carried. A Personal Brokerage Account
Disclosure Form should be completed for this purpose.

Certain transactions might not be reported through a brokerage account,
such as private placements, inheritances or gifts. In these instances, Access
Persons must report these transactions within ten (10) calendar days using a
Personal Securities Transaction Report as noted below.

- --------------------------------------------------------------------------------
Registered Persons are reminded that they must also inform any brokerage firm
with which they open an account, at the time the account is opened, that they
are registered with JDI.
- --------------------------------------------------------------------------------

NON-ACCESS PERSONS who engage in an aggregate of $25,000 or more of
transactions in Covered Securities within a calendar year must provide
Compliance with an Annual Transaction Report listing all such transactions in
all accounts in which such person has a Beneficial Interest. Compliance will
request this information annually and will spot check all or a portion of such
transactions or accounts.

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HOLDINGS REPORTS

ACCESS PERSONS (other than Outside Trustees) must, within ten (10)
calendar days after becoming an Access Person, provide Compliance with a
Holdings Report which lists all Covered Securities beneficially held and any
brokerage accounts through which such securities are maintained. In addition,
such persons must provide a brief description of any positions held (e.g.,
director, officer, other) with for-profit entities other than Janus. The report
must contain information current as of no more than thirty (30) calendar days
from the time the report is submitted.

PERSONAL SECURITIES TRANSACTION REPORTS

ACCESS PERSONS (other than Outside Trustees) must provide a Personal
Securities Transaction Report within ten (10) calendar days after any month end
showing all transactions in Covered Securities for which confirmations are known
by such person to not have been timely provided to Janus, and all such
transactions that are not effected in brokerage or commodities accounts,
including without limitation non-brokered private placements, and transactions
in securities that are in certificate form, which may include gifts,
inheritances, and other transactions in Covered Securities.

OUTSIDE TRUSTEES need only report a transaction in a Covered Security if
such person, at the time of that transaction, knew or, in the ordinary course of
fulfilling his or her official duties as a Trustee should have known, that,
during the fifteen-day period immediately preceding the date of his or her
personal transaction, such security was purchased or sold by, or was being
considered for purchase or sale on behalf of, any Janus Fund for which such
person acts as Trustee.

SUCH PERSONS MUST PROMPTLY COMPLY WITH ANY REQUEST OF THE COMPLIANCE MANAGER TO
PROVIDE TRANSACTION REPORTS REGARDLESS OF WHETHER THEIR BROKER HAS BEEN
INSTRUCTED TO PROVIDE DUPLICATE CONFIRMATIONS. SUCH REPORTS MAY BE REQUESTED,
FOR EXAMPLE, TO CHECK THAT ALL APPLICABLE CONFIRMATIONS ARE BEING RECEIVED OR TO
SUPPLEMENT THE REQUESTED CONFIRMATIONS WHERE A BROKER IS DIFFICULT TO WORK WITH
OR OTHERWISE FAILS TO PROVIDE DUPLICATE CONFIRMATIONS ON A TIMELY BASIS.

NON-INFLUENCE AND NON-CONTROL ACCOUNTS

The Rules shall not apply to any account, partnership, or similar
investment vehicle over which a Covered Person has no direct or indirect
influence or control. Covered Persons wishing to rely upon this provision are
required to receive approval from the Ethics Committee. In order to request such
approval, a Certification of Non-Influence and Non-Control Form must be
submitted to the Compliance Manager.

Any account beneficially owned by a Covered Person that is managed by
JCC in a discretionary capacity is not covered by these Rules so long as such
person has no direct or indirect influence or control over the account. The
employment relationship between the account-holder and the individual managing
the account, in the absence of other facts indicating control, will not be
deemed to give such account-holder influence or control over the account.

OTHER REQUIRED FORMS

In addition to the Preclearance Form, Preclearance Form for Company
Stock, Personal Brokerage Account Disclosure Form, Holdings Report, Report of
Personal Securities Transactions, Annual Transaction

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Report, and Certification of Non-Influence and Non-Control Form discussed above,
the following forms (available through Lotus Notes) must be completed if
applicable to you:

ACKNOWLEDGMENT OF RECEIPT FORM

Each Covered Person must provide Compliance with an Acknowledgment of
Receipt Form within ten (10) calendar days of commencement of employment or
other services certifying that he or she has received a current copy of the
Rules and acknowledges, as a condition of employment, that he or she will comply
with the Rules in their entirety.

ANNUAL CERTIFICATION FORM

Each Covered Person must provide Compliance annually within thirty (30)
calendar days from date of request with an Annual Certification Form certifying
that he or she:

1) Has received, read and understands the Rules;

2) Has complied with the requirements of the Rules; and

3) Has disclosed or reported all open brokerage and commodities
accounts, personal holdings and personal securities transactions
required to be disclosed or reported pursuant to the
requirements of the Rules.

OUTSIDE DIRECTOR/TRUSTEE REPRESENTATION FORM

All Outside Directors and Outside Trustees must, upon commencement of
services and annually thereafter, provide Compliance with an Outside
Director/Trustee Representation Form. The Form declares that such persons agree
to refrain from trading in any securities when they are in possession of any
information regarding trading recommendations made or proposed to be made to any
Client by Janus or its officers or employees.

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INSIDER TRADING POLICY
- --------------------------------------------------------------------------------

BACKGROUND INFORMATION

The term "insider trading" is not defined in the federal securities
statutes, but generally is used to refer to the use of material nonpublic
information to trade in securities (whether or not one is an "insider") or to
communications of material nonpublic information to others.

While the law concerning insider trading can be complex and unclear, you
should assume that the law prohibits:

- Trading by an insider, while in possession of material nonpublic
information,

- Trading by a non-insider, while in possession of material
nonpublic information, where the information was disclosed to
the non-insider (either directly or through one or more
intermediaries) in violation of an insider's duty to keep it
confidential,

- Communicating material nonpublic information to others in breach
of a duty not to disclose such information, and

- Misappropriating confidential information for securities trading
purposes, in breach of a duty owed to the source of the
information to keep the information confidential.

Trading based on material nonpublic information about an issuer does not
violate this policy unless the trader (i) is an "insider" with respect to an
issuer; (ii) receives the information from an insider or from someone that the
trader knows received the information from an insider, either directly or
indirectly, or (iii) misappropriates the nonpublic information or obtains or
misuses it in breach of a duty of trust and confidence owed to the source of the
information. Accordingly, trading based on material nonpublic information about
an issuer can be, but is not necessarily, a violation of this Policy. Trading
while in possession of material nonpublic information relating to a tender offer
is prohibited under this Policy regardless of how such information was obtained.

Application of the law of insider trading to particular transactions can
be difficult, particularly if it involves a determination about trading based on
material nonpublic information. You legitimately may be uncertain about the
application of this Policy in particular circumstances. If you have any
questions regarding the application of the Policy or you have any reason to
believe that a violation of the Policy has occurred or is about to occur, you
should contact the Chief Compliance Officer or the Compliance Manager.

The following discussion is intended to help you understand the
principal concepts involved in insider trading.

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WHO IS AN INSIDER?

The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, one or more of the Janus entities may become a
temporary insider of a company it advises or for which it performs other
services. To be considered an insider, the company must expect the outsider to
keep the disclosed nonpublic information confidential and/or the relationship
must at least imply such a duty.

WHEN IS INFORMATION NONPUBLIC?

Information remains nonpublic until it has been made public. Information
becomes public when it has been effectively communicated to the marketplace,
such as by a public filing with the SEC or other governmental agency, inclusion
in the Dow Jones "tape" or publication in The Wall Street Journal or another
publication of general circulation. Moreover, sufficient time must have passed
so that the information has been disseminated widely.

WHAT IS MATERIAL INFORMATION?

Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally means information for
which there is a substantial likelihood that a reasonable investor would
consider it important in making his or her investment decisions, or information
that is reasonably certain to have a substantial effect on the price of a
company's securities. Information that should be considered material includes,
but is not limited to: dividend changes, earnings estimates, changes in
previously released earnings estimates, significant merger or acquisition
proposals or agreements, major litigation, liquidation problems, and
extraordinary management developments.

Material information may also relate to the market for a company's
securities. Information about a significant order to purchase or sell securities
may, in some contexts, be deemed material. Similarly, prepublication information
regarding reports in the financial press also may be deemed material. For
example, the Supreme Court upheld the criminal convictions of insider trading
defendants who capitalized on prepublication information about The Wall Street
Journal's "Heard on the Street" column.

WHEN IS INFORMATION MISAPPROPRIATED?

The misappropriation theory prohibits trading on the basis of non-public
information by a corporate "outsider" in breach of a duty owed not to a trading
party, but to the source of confidential information. Misappropriation of
information occurs when a person obtains the non-public information through
deception or in breach of a duty of trust and loyalty to the source of the
information.

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PENALTIES FOR INSIDER TRADING

Penalties for trading on or communicating material nonpublic information
are severe, both for individuals involved in such unlawful conduct and their
employers or other controlling persons. A person can be subject to some or all
of the penalties below even if he or she does not personally benefit from the
violation. Penalties include:

- Civil injunctions

- Treble damages

- Disgorgement of profits

- Jail sentences for up to 10 years

- Fines up to $1,000,000 (or $2,500,000 for corporations and other
entities)

- Civil penalties for the person who committed the violation of up
to three times the profit gained or loss avoided, whether or not
the person actually benefited, and

- Civil penalties for the employer or other controlling person of
up to the greater of $1,000,000 or three times the amount of the
profit gained or loss avoided.

In addition, any violation of the law may result in serious sanctions by
Janus, including termination of employment.

WHO IS A CONTROLLING PERSON?

Included as controlling persons are Janus and its Directors, Trustees
and officers. If you are a Director, Trustee or officer, you have a duty to act
to prevent insider trading. Failure to fulfill such a duty may result in
penalties as described above.

PROCEDURES TO IMPLEMENT POLICY

The following procedures have been established to aid the Directors,
Trustees, officers and employees of Janus in avoiding insider trading, and to
aid Janus in preventing, detecting and imposing sanctions against insider
trading.

IDENTIFYING MATERIAL INSIDE INFORMATION

Before trading for yourself or others, including the Janus Funds or
other Clients, in the securities of a company about which you may have potential
inside information, ask yourself the following questions:

- To whom has this information been provided? Has the information
been effectively communicated to the marketplace?

- Has this information been obtained from either the issuer or
from another source in breach of a duty to that source to keep
the information confidential?

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<PAGE> 20

- Is the information material? Is this information that an
investor would consider important in making his or her
investment decisions? Is this information that would affect the
market price of the securities if generally disclosed?

Special caution should be taken with respect to potential inside
information regarding JCC. Although JCC's shares are not publicly traded, JCC's
parent, KCSI, is a publicly traded company. KCSI owns 82% of the stock of JCC.
As a result, potential inside information regarding JCC may affect trading in
KCSI stock and should be reported pursuant to the procedures set forth below.
The following is a non-exclusive list of situations that Investment Personnel
should report immediately pursuant to the procedures below: (i) participation in
private placements; (ii) the receipt of any information from an issuer pursuant
to a confidentiality agreement; (iii) participation on or receipt of information
from a bankruptcy committee of an issuer; and (iv) receipt of information
regarding earnings or sales figures in advance of the public release of those
numbers.

REPORTING INSIDE INFORMATION

If, after consideration of the above, you believe that the information
is material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you should take the following steps:

- Do not purchase or sell the securities on behalf of yourself or
others, including Clients.

- Do not communicate the information inside or outside of Janus,
other than to the Chief Compliance Officer or the Compliance
Manager.

- Immediately advise the Chief Compliance Officer or Compliance
Manager of the nature and source of such information. The Chief
Compliance Officer or Compliance Manager will review the
information with the Ethics Committee.

- Depending upon the determination made by the Ethics Committee,
or by the Chief Compliance Officer until the Committee can be
convened, you may be instructed to continue the prohibition
against trading and communication and the Compliance Manager
will place the security on a Restricted List or Watch List, as
described below. Alternatively, if it is determined that the
information obtained is not material nonpublic information, you
may be allowed to trade and communicate the information.

WATCH AND RESTRICTED LISTS

Whenever the Ethics Committee or the Chief Compliance Officer determines
that a Director, Trustee, officer or employee of Janus is in possession of
material nonpublic information with respect to a company (regardless of whether
it is currently owned by any Client) such company will either be placed on a
Watch List or on a Restricted List.

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WATCH LIST

If the security is placed on a Watch List, the flow of the information
to other Janus personnel will be restricted in order to allow such persons to
continue their ordinary investment activities. This procedure is commonly
referred to as a "Chinese Wall."

RESTRICTED LIST

If the Ethics Committee or the Chief Compliance Officer determines that
material nonpublic information is in the possession of a Director, Trustee,
officer, or employee of Janus and cannot be adequately isolated through the use
of a Chinese Wall, the company will be placed on the Restricted List. While a
company is on the Restricted List, no Investment Person shall initiate or
recommend any transaction in any Client account, and no Access Person shall be
precleared to transact in any account in which he or she has a beneficial
interest, with respect to the securities of such company. The Ethics Committee
or the Chief Compliance Officer will also have the discretion of placing a
company on the Restricted List even though no "break in the Chinese Wall" has or
is expected to occur with respect to the material nonpublic information about
the company. Such action may be taken by such persons for the purpose of
avoiding any appearance of the misuse of material nonpublic information.

The Ethics Committee or the Chief Compliance Officer will be responsible
for determining whether to remove a particular company from the Watch List or
Restricted List. The only persons who will have access to the Watch List or
Restricted List are members of the Ethics Committee, Designated Legal or
Compliance Representatives and such persons who are affected by the information.
The Watch List and Restricted List are highly confidential and should, under no
circumstances, be discussed with or disseminated to anyone other than the
persons noted above.

PROTECTING INFORMATION

Directors, Trustees, officers and employees of Janus shall not disclose
any nonpublic information (whether or not it is material) relating to Janus or
its securities transactions to any person outside Janus (unless such disclosure
has been authorized by the Chief Compliance Officer). Material nonpublic
information may not be communicated to anyone, including any Director, Trustee,
officer or employee of Janus, except as provided in this Policy. Access to such
information must be restricted. For example, access to files containing material
nonpublic information and computer files containing such information should be
restricted, and conversations containing such information, if appropriate at
all, should be conducted in private.

To insure the integrity of the Chinese Wall and to avoid unintended
disclosures, it is important that all employees take the following steps with
respect to confidential or nonpublic information:

- Do not discuss confidential information in public places such as
elevators, hallways or social gatherings.

- To the extent practical, limit access to the areas of the firm
where confidential information could be observed or overheard to
employees with a business need for being in the area.

- Avoid use of speakerphones in areas where unauthorized persons
may overhear conversations.

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- Avoid use of wireless and cellular phones, or other means of
communication, which may be intercepted.

- Where appropriate, maintain the confidentiality of Client
identities by using code names or numbers for confidential
projects.

- Exercise care to avoid placing documents containing confidential
information in areas where they may be read by unauthorized
persons and to store such documents in secure locations when
they are not in use.

- Destroy copies of confidential documents no longer needed for a
project unless required to be saved pursuant to applicable
record keeping policies or requirements.

RESPONSIBILITY TO MONITOR TRANSACTIONS

Compliance will monitor transactions of Clients and employees for which
reports are received to detect the existence of any unusual trading activities
with respect to companies on the Watch and Restricted Lists. Compliance will
immediately report any unusual trading activity directly to the Compliance
Manager, and in his or her absence, the Chief Compliance Officer, who will be
responsible for determining what, if any, action should be taken.

RECORD RETENTION

Compliance shall maintain copies of the Watch List and Restricted List
for a minimum of six years.

TENDER OFFERS

Tender offers represent a particular concern in the law of insider
trading for two reasons. First, tender offer activity often produces
extraordinary fluctuations in the price of the target company's securities.
Trading during this time period is more likely to attract regulatory attention
(and produces a disproportionate percentage of insider trading cases). Second,
the SEC has adopted a rule which expressly forbids trading and "tipping" while
in possession of material nonpublic information regarding a tender offer
received from the tender offeror, the target company or anyone acting on behalf
of either. Janus employees and others subject to this Policy should exercise
particular caution any time they become aware of nonpublic information relating
to a tender offer.

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GIFT POLICY
- --------------------------------------------------------------------------------

Gifts may be given (or accepted) only if they are in accordance with
normally accepted business practices and do not raise any question of
impropriety. A question of impropriety may be raised if a gift influences or
gives the appearance of influencing the recipient. The following outlines
Janus's policy on giving and receiving gifts to help us maintain those standards
and is applicable to all Inside Directors and Inside Trustees, officers and
employees of Janus.

GIFT GIVING

Neither you nor members of your immediate family may give any gift,
series of gifts, or other thing of value, including cash, loans, personal
services, or special discounts ("Gifts") in excess of $100 per year to any
Client or any one person or entity that does or seeks to do business with or on
behalf of Janus or any Client (collectively referred to herein as "Business
Relationships").

GIFT RECEIVING

Neither you nor members of your immediate family may receive any Gift of
material value from any single Business Relationship. A Gift will be considered
material in value if it influences or gives the appearance of influencing the
recipient.

In the event the aggregate fair market value of all Gifts received by
you from any single Business Relationship is estimated to exceed $250 in any
12-month period, you must immediately notify your manager. Managers that receive
such notification must report this information to the Compliance Manager if it
appears that such Gifts may have improperly influenced the receiver. If the Gift
is made in connection with the sale or distribution of registered investment
company or variable contract securities, the aggregate fair market value of all
such Gifts received by you from any single Business Relationship may never
exceed $100 in any 12-month period.

Occasionally, Janus employees are invited to attend or participate in
conferences, tour a company's facilities, or meet with representatives of a
company. Such invitations may involve traveling and may require overnight
lodging. Generally, Janus must pay for all travel and lodging expenses provided
in connection with such activities. However, if appropriate, and with prior
approval from your manager, you may accept travel related amenities if the costs
are considered insubstantial and are not readily ascertainable.

The solicitation of a Gift is prohibited (i.e., you may not request a
Gift, such as tickets to a sporting event, be given to you).

CUSTOMARY BUSINESS AMENITIES

Customary business amenities are not considered Gifts so long as such
amenities are business related (e.g., if you are accepting tickets to a sporting
event, the offerer must go with you), reasonable in cost, appropriate as to time
and place, and neither so frequent nor so costly as to raise any question of
impropriety. Customary business amenities which you and, if appropriate, your
guests, may accept (or give) include an occasional meal, a ticket to a sporting
event or the theater, greens fees, an invitation to a reception or cocktail
party, or comparable entertainment.

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OUTSIDE EMPLOYMENT POLICY
- --------------------------------------------------------------------------------

No Inside Director, Inside Trustee, officer or employee of Janus shall
accept employment or compensation as a result of any business activity (other
than a passive investment), outside the scope of his relationship with Janus
unless such person has provided prompt written notice of such employment or
compensation to the Chief Compliance Officer (or, for Registered Persons, to
JDI's Operations Manager), and, in the case of securities-related employment or
compensation, has received the prior written approval of the Ethics Committee.
Registered Persons are reminded to update and submit their Outside Business
Activity Disclosure forms as appropriate pursuant to JDI's Written Supervisory
Procedures and applicable NASD rules.

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PENALTY GUIDELINES
- --------------------------------------------------------------------------------

OVERVIEW

Covered Persons who violate any of the requirements, restrictions, or
prohibitions of the Rules may be subject to sanctions imposed by the Ethics
Committee. The following guidelines shall be used by the Compliance Manager for
recommending remedial actions for Covered Persons who violate prohibitions or
disregard requirements of the Rules. Deviations from the Fifteen-Day Rule are
not considered to be violations under the Rules and, therefore, are not subject
to the penalty guidelines.

Upon learning of a potential deviation from, or violation of the Rules,
the Compliance Manager will provide a written recommendation of remedial action
to the Ethics Committee. The Ethics Committee has full discretion to approve
such recommendation or impose other sanctions it deems appropriate. The Ethics
Committee will take into consideration, among other things, whether the
violation was a technical violation of the Rules or inadvertent oversight (i.e.,
ill-gotten profits versus general oversight). The guidelines are designed to
promote consistency and uniformity in the imposition of sanctions and
disciplinary matters.

PENALTY GUIDELINES

Outlined below are the guidelines for the sanctions that may be imposed
on Covered Persons who fail to comply with the Rules:

- 1st violation- Compliance will send a memorandum of reprimand to
the person, copying his or her supervisor. The memorandum will
generally reinforce the person's responsibilities under the
Rules, educate the person on the severity of personal trading
violations and inform the person of the possible penalties for
future violations of the Rules;

- 2nd violation- Janus's Chief Investment Officer, James Craig,
will meet with the person to discuss the violations in detail
and will reinforce the importance of complying with the Rules;

- 3rd violation- Janus's Chairman of the Board, Thomas Bailey,
will meet with the person to discuss the violations in detail
and will reinforce the importance of complying with the Rules;

- 4th violation- The Executive Committee will impose such
sanctions as it deems appropriate, including without limitation,
a letter of censure, fines, withholding of bonus payments, or
suspension or termination of employment or personal trading
privileges.

In addition to the above disciplinary sanctions, such persons may be
required to disgorge any profits realized in connection with such violation. All
disgorgement proceeds collected will be donated to a charitable organization
selected by the Ethics Committee. The Ethics Committee may determine to impose
any of the sanctions set forth in item 4 above, including termination,
immediately and without notice if it determines that the severity of any
violation or violations warrants such action. All sanctions imposed will be
documented in such person's personal trading file maintained by Janus, and will
be reported to the Executive Committee.

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SUPERVISORY AND COMPLIANCE PROCEDURES
- --------------------------------------------------------------------------------

The Chief Compliance Officer and Compliance Manager are responsible for
implementing supervisory and compliance review procedures. Supervisory
procedures can be divided into two classifications: prevention of violations and
detection of violations. Compliance review procedures include preparation of
special and annual reports, record maintenance and review, and confidentiality
preservation.

SUPERVISORY PROCEDURES

PREVENTION OF VIOLATIONS

To prevent violations of the Rules, the Compliance Manager should, in
addition to enforcing the procedures outlined in the Rules:

1. Review and update the Rules as necessary, at least once
annually, including but not limited to a review of the Code by
the Chief Compliance Officer, the Ethics Committee and/or
counsel;

2. Answer questions regarding the Rules, or refer the same to the
Chief Compliance Officer;

3. Request from all persons upon commencement of services, and
annually thereafter, any applicable forms and reports as
required by the Rules;

4. Identify all Access Persons and notify them of their
responsibilities and reporting requirements;

5. Write letters to the securities firms requesting duplicate
confirmations and account statements where necessary; and

6. With such assistance from the Human Resources Department as may
be appropriate, maintain a continuing education program
consisting of the following:

1) Orienting Covered Persons who are new to Janus to the
Rules, and

2) Further educating Covered Persons by distributing memos
or other materials that may be issued by outside
organizations such as the Investment Company Institute
discussing the issue of insider trading and other issues
raised by the Rules.

DETECTION OF VIOLATIONS

To detect violations of these Rules, the Compliance Manager should, in
addition to enforcing the procedures outlined in the Rules:

- Implement procedures to review holding and transaction reports,
confirmations, forms and statements relative to applicable
restrictions, as provided under the Code; and

- Implement procedures to review the Restricted and Watch Lists
relative to applicable personal and Client trading activity, as
provided under the Policy.

Spot checks of certain information are permitted as noted under the
Code.

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COMPLIANCE PROCEDURES

REPORTS OF POTENTIAL DEVIATIONS OR VIOLATIONS

Upon learning of a potential deviation from, or violation of the Rules,
the Compliance Manager shall report such violation to the Chief Compliance
Officer, together with all documents relating to the matter. The Chief
Compliance Officer shall either present the information at the next regular
meeting of the Ethics Committee, or conduct a special meeting. The Ethics
Committee shall thereafter take such action as it deems appropriate (see Penalty
Guidelines).

ANNUAL REPORTS

The Compliance Manager shall prepare a written report to the Ethics
Committee and the Trustees at least annually. The written report to the Trustees
shall include any certification required by Rule 17j-1. This report shall set
forth the following information, and shall be confidential:

- Copies of the Rules, as revised, including a summary of any
changes made since the last report;

- Identification of any material issues arising under the Rules
including material violations requiring significant remedial
action since the last report;

- Identification of any material conflicts that arose since the
last report; and

- Recommendations, if any, regarding changes in existing
restrictions or procedures based upon Janus's experience under
these Rules, evolving industry practices, or developments in
applicable laws or regulations.

The Trustees must initially approve these Rules within the time frame
required by Rule 17-1. Any material changes to these Rules must be approved
within six months.

RECORDS

Compliance shall maintain the following records on behalf of each Janus
entity:

- A copy of this Code and any amendment thereof which is or at any
time within the past five years has been in effect.

- A record of any violation of this Code, or any amendment
thereof, and of any action taken as a result of such violation.

- Files for personal securities transaction confirmations and
account statements, all reports and other forms submitted by
Covered Persons pursuant to these Rules and any other pertinent
information.

- A list of all persons who are, or have been, required to make
reports pursuant to these Rules.

- A list of persons who are, or within the last five years have
been responsible for, reviewing transaction and holdings
reports.

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- A copy of each report made to the Trustees pursuant to this
Code.

INSPECTION

The records and reports maintained by Compliance pursuant to the Rules
shall at all times be available for inspection, without prior notice, by any
member of the Ethics Committee.

CONFIDENTIALITY

All procedures, reports and records monitored, prepared or maintained
pursuant to these Rules shall be considered confidential and proprietary to
Janus and shall be maintained and protected accordingly. Except as otherwise
required by law or this Policy, such matters shall not be disclosed to anyone
other than to members of the Ethics Committee, as requested.

FILING OF REPORTS

To the extent that any report, form acknowledgment or other document is
required to be in writing and signed, such documents may be submitted in by
e-mail or other electronic form approved by Compliance. Any report filed with
the Chief Compliance Officer or Compliance Manager of JCC shall be deemed filed
with the Janus Funds.

THE ETHICS COMMITTEE

The purpose of this Section is to describe the Ethics Committee. The
Ethics Committee is created to provide an effective mechanism for monitoring
compliance with the standards and procedures contained in the Rules and to take
appropriate action at such times as violations or potential violations are
discovered.

MEMBERSHIP OF THE COMMITTEE

The Committee consists of Thomas A. Early, Vice President and General
Counsel; Steven R. Goodbarn, Vice President of Finance, Treasurer and Chief
Financial Officer; David Kowalski, Vice President and Chief Compliance Officer;
and Ernie C. Overholt, Compliance Manager. The Compliance Manager currently
serves as the Chairman of the Committee. The composition of the Committee may be
changed from time to time.

COMMITTEE MEETINGS

The Committee shall generally meet every four months or as often as
necessary to review operation of the compliance program and to consider
technical deviations from operational procedures, inadvertent oversights, or any
other potential violation of the Rules. Deviations alternatively may be
addressed by including them in the employee's personnel records maintained by
Janus. Committee meetings are primarily intended for consideration of the
general operation of the compliance program and substantive or serious
departures from standards and procedures in the Rules.

Such other persons may attend a Committee meeting, at the discretion of
the Committee, as the Committee shall deem appropriate. Any individual whose
conduct has given rise to the meeting also may be called upon, but shall not
have the right, to appear before the Committee.

It is not required that minutes of Committee meetings be maintained; in
lieu of minutes the Committee may issue a report describing any action taken.
The report shall be included in the confidential file maintained

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by the Compliance Manager with respect to the particular employee or employees
whose conduct has been the subject of the meeting.

SPECIAL DISCRETION

The Committee shall have the authority by unanimous action to exempt any
person or class of persons or transaction or class of transactions from all or a
portion of the Rules, provided that:

- The Committee determines, on advice of counsel, that the
particular application of all or a portion of the Rules is not
legally required;

- The Committee determines that the likelihood of any abuse of the
Rules by such exempted person(s) or as a result of such exempted
transaction is remote;

- The terms or conditions upon which any such exemption is granted
is evidenced in writing; and

- The exempted person(s) agrees to execute and deliver to the
Compliance Manager, at least annually, a signed Acknowledgment
Form, which Acknowledgment shall, by operation of this
provision, include such exemptions and the terms and conditions
upon which it was granted.

The Committee shall also have the authority by unanimous action to
impose such additional requirements or restrictions as it, in its sole
discretion, determines appropriate or necessary, as outlined in the Penalty
Guidelines.

Any exemption, and any additional requirement or restriction, may be
withdrawn by the Committee at any time (such withdrawal action is not required
to be unanimous).

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- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE ETHICS RULES
- --------------------------------------------------------------------------------

DESIGNEES

The Compliance Manager and the Chief Compliance Officer may appoint
designees to carry out their functions pursuant to these Rules.

ENFORCEMENT

In addition to the penalties described in the Penalty Guidelines and
elsewhere in the Rules, upon discovering a violation of the Rules, the Janus
entity with which you are associated may impose such sanctions as it deems
appropriate, including without limitation, a letter of censure or suspension or
termination of employment or personal trading privileges of the violator. All
material violations of the Rules and any sanctions imposed with respect thereto
shall be reported periodically to the Directors and Trustees and the directors
of any other Janus entity which has been directly affected by the violation.

INTERNAL USE

The Rules are intended solely for internal use by Janus and do not
constitute an admission, by or on behalf of such companies, their controlling
persons or persons they control, as to any fact, circumstance or legal
conclusion. The Rules are not intended to evidence, describe or define any
relationship of control between or among any persons. Further, the Rules are not
intended to form the basis for describing or defining any conduct by a person
that should result in such person being liable to any other person, except
insofar as the conduct of such person in violation of the Rules may constitute
sufficient cause for Janus to terminate or otherwise adversely affect such
person's relationship with Janus.

<PAGE> 1

EXHIBIT C

CODE OF CONDUCT

All of us within the Capital organization are responsible for maintaining the
very highest ethical standards when conducting business. In keeping with these
standards, we must never allow our own interests to be placed ahead of our
shareholders' and clients' interests.

Over the years we have earned a reputation for the highest integrity. Regardless
of lesser standards that may be followed through business or community custom,
we must observe exemplary standards of honesty and integrity.

REPORTING VIOLATIONS

If you know of any violation of our Code of Conduct, you have a
responsibility to report it. Deviations from controls or procedures that
safeguard the company, including the assets of shareholders and clients,
should also be reported.

You can report confidentially to:

- Your manager or department head

- CGC Audit Committee:

Wally Stern -- CHAIRMAN
Donnalisa Barnum
David Beevers
Jim Brown
Larry P. Clemmensen
Roberta Conroy
Bill Hurt -- (emeritus)
Sonny Kamm
Mike Kerr
Victor Kohn
John McLaughlin
Don O'Neil
Tom Rowland
John Smet
Antonio Vegezzi
Shaw Wagener
Kelly Webb

- Mike Downer or any other lawyer in the CGC Legal Group

- Don Wolfe of Deloitte & Touche LLP (CGC's auditors).

CGC GIFTS POLICY -- CONFLICTS OF INTEREST

A conflict of interest occurs when the private interests of associates
interfere or could potentially interfere with their responsibilities at work.
Associates must not place themselves or the company in a position of actual
or potential conflict. Associates may not accept gifts worth more than $100,
excessive business entertainment, loans, or anything else involving personal
gain from those who conduct business with the company. In addition, a
business

<PAGE> 2

entertainment event exceeding $200 in value should not be accepted unless the
associate receives permission from the Gifts Policy Committee.

REPORTING -- Although the limitations on accepting gifts applies to all
associates as described above, some associates will be asked to fill out
quarterly reports. If you receive a reporting form, you must report any gift
exceeding $50 (although it is recommended that you report all gifts received)
and business entertainment in which an event exceeds $75.

GIFTS POLICY COMMITTEE

The Gifts Policy Committee oversees administration of and compliance with the
Policy.

INSIDER TRADING

Antifraud provisions of the federal securities laws generally prohibit
persons while in possession of material nonpublic information from trading on
or communicating the information to others. Sanctions for violations can
include civil injunctions, permanent bars from the securities industry, civil
penalties up to three times the profits made or losses avoided, criminal
fines and jail sentences.

While investment research analysts are most likely to come in contact with
material nonpublic information, the rules (and sanctions) in this area apply
to all CGC associates and extend to activities both within and outside each
associate's duties.

PERSONAL INVESTING POLICY

As an associate of the Capital Group companies, you may have access to
confidential information. This places you in a position of special trust.

You are associated with a group of companies that is responsible for the
management of many billions of dollars belonging to mutual fund shareholders
and other clients. The law, ethics and our own policy place a heavy burden on
all of us to ensure that the highest standards of honesty and integrity are
maintained at all times.

There are several rules that must be followed to avoid possible conflicts of
interest in personal securities transactions.

ALL ASSOCIATES

Information regarding proposed or partially completed plans by CGC companies
to buy or sell specific securities must not be divulged to outsiders.

Favors or preferential treatment from stockbrokers may not be accepted.

Associates may not subscribe to any initial public offering or any other
securities offering that is subject to allocation (so-called "hot issues").
Generally, this prohibition applies to spouses of

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associates and any family member residing in the same household. However, an
associate may request that the Personal Investing Policy Committee consider
granting an exception. PLEASE NOTE THAT ANY INVESTMENTS IN PRIVATE PLACEMENTS
THAT ARE NOT PROHIBITED AS DESCRIBED ABOVE MUST BE PRE-CLEARED.

COVERED PERSONS

Associates who have access to investment information in connection with their
regular duties are generally considered "covered persons." If you receive a
quarterly personal securities transactions report form, you are a covered
person. A DETAILED DESCRIPTION OF THE PERSONAL INVESTING POLICY CAN BE FOUND
AT THE CGC WEB HOME PAGE. You should take the time to review this policy as
ongoing interpretations of the policy will be explained therein.

Covered persons must conduct their personal securities transactions in such a
way that they do not conflict with the interests of the funds and client
accounts. This policy also includes securities transactions of family members
living in the covered person's household and any trust or custodianship for
which the associate is trustee or custodian. A conflict may occur if you, a
family member in the same household, a trust or custodianship for which you
are trustee or custodian have a transaction in a security when the funds or
client accounts are considering or concluding a transaction in the same
security.

Additional rules apply to "investment personnel" including portfolio
counselors/managers, research analysts, traders, and investment
administration personnel (see below).

PRE-CLEARANCE OF SECURITIES TRANSACTIONS

Before buying or selling securities, covered persons should find out if the
purchase or sale of a particular security would involve a conflict of
interest. This involves checking with the CGC Legal Group based in LAO by
calling (phone number). (You will generally receive a response within one
business day.) Unless a shorter period is specified, clearance is good for
two trading days (including the day you check). If you have not executed your
transaction within this period, you must again pre-clear your transaction.

Covered persons must PROMPTLY submit quarterly reports of certain
transactions. Transactions of securities (including fixed-income securities)
or options (see below) must be pre-cleared as described above and reported
except for: gifts or bequests of securities (although receipt of securities
as a gift must be reported and pre-clearance and reporting are required if
these securities are later sold); open-end investment companies (mutual
funds); shares of CGC stock; money market instruments with maturities of one
year or less; direct obligations of the U.S. Government, bankers'
acceptances, CDs or other commercial paper; commodities; and options or
futures on broad-based indices. Covered persons must also report transactions
made by family members in their household and by those for which they are a
trustee or custodian. Reporting forms will be supplied at the appropriate
times AND MUST BE SUBMITTED BY THE DATE INDICATED ON THE FORM.

In addition, the following transactions must be reported but need not have
been pre-cleared: transactions in debt instruments rated "A" or above by at
least one national rating service; sales pursuant to tender offers; and
dividend reinvestment plan purchases (provided the purchase pursuant to such
plan is made with dividend proceeds only).

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PERSONAL INVESTING SHOULD BE VIEWED AS A PRIVILEGE, NOT A RIGHT. AS SUCH,
LIMITATIONS MAY BE PLACED ON THE NUMBER OF PRE-CLEARANCES AND/OR TRANSACTIONS
AS DEEMED APPROPRIATE BY THE PERSONAL INVESTING COMMITTEE.

BROKERAGE ACCOUNTS

Covered persons should inform their stockbrokers that they are employed by an
investment adviser, trust company or affiliate of either. The broker is
subject to certain rules designed to prevent favoritism toward such accounts.
Associates may not accept negotiated commission rates which they believe may
be more favorable than the broker grants to accounts with similar
characteristics. In addition, covered persons must direct their brokers to
send duplicate confirmations and copies of all periodic statements on a
timely basis to The Legal Group of The Capital Group Companies, Inc.,(special
post office box address). ALL DOCUMENTS RECEIVED IN THIS POST OFFICE BOX ARE
KEPT STRICTLY CONFIDENTIAL.

[If extraneous information is included on an associate's statements (e.g.,
checking account information or other information that is not subject to the
policy), the associate might want to establish a separate account solely for
transactions subject to the policy.]

ANNUAL DISCLOSURE OF PERSONAL SECURITIES HOLDINGS

Covered persons will be required to disclose all personal securities holdings
upon commencement of employment (or upon becoming a covered person) and
thereafter on an annual basis. Reporting forms will be supplied for this
purpose.

ANNUAL RE-CERTIFICATION

All access persons will be required to certify annually that they have read
and understood the Personal Investing Policy and recognize that they are
subject thereto.

ADDITIONAL RULES FOR INVESTMENT PERSONNEL

DISCLOSURE OF OWNERSHIP OF RECOMMENDED SECURITIES -- Ownership of securities
that are held professionally as well as personally will be reviewed on a
periodic basis by the Legal Group and may also be reviewed by the applicable
Management Committee and/or Investment Committee or Subcommittee. In
addition, to the extent that disclosure has not already been made by the
Legal Group to the applicable Management Committee and/or Investment
Committee or Subcommittee, any associate who is in a position to recommend
the purchase or sale of securities by the fund or client accounts that s/he
personally owns should first disclose such ownership either in writing (in a
company write-up) or orally (when discussing the company at investment
meetings) prior to making a recommendation.(1)

BLACKOUT PERIOD -- Portfolio counselors/managers and research analysts may
not buy or sell a security within at least seven calendar days before and
after a fund or client account that his or her company manages transacts in
that security. Profits resulting from transactions occurring

- ----------

(1) Note that this disclosure requirement is consistent with both AIMR standards
as well as the ICI Advisory Group Guidelines.

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within this time period are subject to special review and may be subject to
disgorgement.

BAN ON SHORT-TERM TRADING PROFITS -- Investment personnel are prohibited from
profiting from the purchase and sale or sale and purchase of the same (or
equivalent) securities within 60 days. THIS RESTRICTION APPLIES TO THE
PURCHASE OF AN OPTION AND THE EXERCISE OF THE OPTION WITHIN 60 DAYS.

SERVICE AS A DIRECTOR -- Investment personnel must obtain prior authorization
of the investment committee of the appropriate management company before
serving on the board of directors of publicly traded companies. This can be
arranged by calling the LAO Legal Group.

PERSONAL INVESTING POLICY COMMITTEE

Any questions or hardships that result from these policies or requests for
exceptions should be referred to CGC's Personal Investing Policy Committee by
calling the LAO Legal Group.