<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [x] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
NAME OF COMPANY
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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May 1999
WM STRATEGIC ASSET
MANAGEMENT PORTFOLIOS
Important News
for Strategic Asset Management Portfolio Shareholders
This is a brief overview of important matters to be voted upon. You should
carefully read the text of the enclosed Proxy Statement. Thank you for mailing
your proxy card promptly.
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Q. Why am I receiving this proxy statement?
A. You are being asked to approve the new organizational structure of the
SAM Portfolios, which would change from a Massachusetts business trust to a
Massachusetts limited liability company. Changing the organizational
structure of the WM Strategic Asset Management (SAM) Portfolios is expected
to increase their size by allowing us to offer participants in a WM
Financial Securities asset allocation service (WMFS clients) the
opportunity to exchange into the SAM Portfolios on a tax free basis.
Q. How will this affect my account?
A. Generally, the reorganization will not affect your account/investment
option. After the reorganization, you will be a shareholder of a new
Portfolio that will continue to seek the same investment objective,
following the same investment policies as your Portfolio. You will continue
to receive the same shareholder services. Over time, this change may also
result in lower operating costs and expenses to shareholders, as a result
of increased assets under management. Of course, there can be no assurance
that the expected investments by WMFS clients, if any, will result in
savings for current Portfolio shareholders.
Q. Why do I need to vote?
A. Your vote is needed to ensure that the proposal outlined in the proxy
statement can be acted upon. Your immediate response on the enclosed proxy
card(s) or by telephone will help prevent the need for any further
solicitations for a shareholder vote. We encourage all shareholders to
participate in the governance of the Trust.
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Q. How does the Board of Trustees suggest that I vote?
A. After careful consideration, the Board of Trustees unanimously
recommends that you vote "FOR" each item proposed on the enclosed proxy.
Q. How do I vote my shares?
A. You may vote by mail, phone, fax or in person at the Special Meeting. To
vote by mail, simply sign and send us the enclosed authorization card(s) in
the envelope provided In the alternative, you may vote by phone or fax
through D.F. King, our proxy solicitor. To vote by fax, sign the proxy card
and fax (both sides) to (212) 269-2796. The proxy solicitor can accept your
vote over the phone anytime between 5:00 a.m. and 7:00 p.m. Pacific Time
(8:00 a.m. and 10:00 p.m. Eastern Time), Monday through Friday--simply call
(800) XXX-XXXX. Finally, you can vote in person at the Special Meeting on
June [23,] 1999.
Q. Who is paying the cost of the shareholder meeting and this proxy
solicitation?
A. WM Advisors and its affiliates -- not your Existing Portfolio -- are
paying all the costs.
Q. If the changes are approved by the shareholders, when will they go
into effect?
A. If the shareholders approve the proposed changes at the special
meeting on June [23,] 1999, they should become effective on or about
[JULY __, 1999].
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WM GROUP OF FUNDS
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
STRATEGIC GROWTH PORTFOLIO
CONSERVATIVE GROWTH PORTFOLIO
BALANCED PORTFOLIO
FLEXIBLE INCOME PORTFOLIO
INCOME PORTFOLIO
1201 Third Avenue, 22nd Floor
Seattle, Washington 98101
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held JUNE [23], 1999
A Special Meeting of Shareholders (the "Meeting") of WM Strategic
Asset Management Portfolios (the "Trust") will be held at 1201 Third
Avenue, 22nd Floor, Seattle, Washington on JUNE [23], 1999 at 11:00 a.m.
(Pacific time), to consider and take action on the following proposal (the
"Proposal"):
A. Reorganization as a Massachusetts Limited Liability Company. To
approve the reorganization of each of the Portfolios (the "Existing
Portfolios") listed above (a "Reorganization"), currently a series of a
Massachusetts business trust (the "Trust") as a series (a "New Portfolio")
of a Massachusetts limited liability company (the "Company") pursuant to an
Agreement and Plan of Reorganization providing for, and the authorization
of certain related actions involving, the transfer of all of the assets of
the Existing Portfolio to the corresponding New Portfolio, in exchange for
shares of the corresponding New Portfolio and the assumption by the
corresponding New Portfolio of all of the liabilities of the Existing
Portfolio, and the distribution of such shares of the New Portfolio to the
shareholders of the Existing Portfolio in complete liquidation of the
Existing Portfolio; and the taking of any other actions by the Existing
Portfolio or its affiliate to the extent necessary to complete the
transactions contemplated in connection with the Existing Portfolio's
Reorganization. (TO BE VOTED UPON BY THE SHAREHOLDERS OF EACH EXISTING
PORTFOLIO, VOTING SEPARATELY BY PORTFOLIO BUT WITHOUT REGARD TO CLASS.)
B. Other Business. To transact such other business as may properly
come before the Meeting or any adjournment thereof.
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The Board of Trustees has fixed the close of business on April 26,
1999 as the record date for determination of shareholders of the Trust
entitled to notice of, and to vote at, the Meeting.
By Order of the Board of Trustees
John T. West
Secretary
[MAY 10], 1999
YOUR VOTE IS IMPORTANT! WE URGE YOU TO PROMPTLY SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE PREPAID POSTAGE
ENVELOPE WHICH IS ALSO ENCLOSED FOR YOUR CONVENIENCE OR YOU MAY
CALL 1-800-XXX-XXXX OR FAX YOUR PROXY TO (212) 269-2796. THIS WILL
HELP AVOID THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION.
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WM GROUP OF FUNDS
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
STRATEGIC GROWTH PORTFOLIO
CONSERVATIVE GROWTH PORTFOLIO
BALANCED PORTFOLIO
FLEXIBLE INCOME PORTFOLIO
INCOME PORTFOLIO
1201 Third Avenue, 22nd Floor
Seattle, Washington 98101
SPECIAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Trustees of WM Strategic Asset
Management Portfolios, a Massachusetts business trust (the "Trust") for use
at the Special Meeting of Shareholders (the "Meeting") to be held at 1201
Third Avenue, 22nd Floor, Seattle, Washington 98101 on JUNE [23], 1999 at
11:00 a.m. (Pacific time), or any adjournment thereof. Accompanying this
Proxy Statement is a Notice of the Meeting (the "Notice") and a proxy for
the Meeting solicited by the Board of Trustees. It is expected that this
Proxy Statement, the Notice and the proxy will be mailed to shareholders on
or about [MAY 10], 1999. Except as specifically provided herein, the term
"Existing Portfolios" shall refer to the Portfolios listed above, each of
which is currently organized as a series of the Trust.
THE TRUST WILL FURNISH TO SHAREHOLDERS, UPON REQUEST AND WITHOUT
CHARGE, A COPY OF ITS ANNUAL REPORT FOR THE FISCAL YEAR ENDED OCTOBER 31,
1998. THE ANNUAL REPORT OF THE TRUST MAY BE OBTAINED BY CONTACTING THE
TRUST AT THE ADDRESS LISTED ON THE COVER PAGE OF THIS PROXY STATEMENT OR BY
CALLING TOLL-FREE (800) 222-5852.
The Meeting has been called for the purpose of having the
shareholders of the Trust consider and take action upon the proposal set
forth in the Notice (the "Proposal"). Shareholders of each Existing
Portfolio are entitled to vote on the Proposal as it affects that
Portfolio, voting separately by Portfolio. Shareholders of both Classes of
each Existing Portfolio will vote together. Each share of an Existing
Portfolio outstanding on the Record Date, as defined below, will be
entitled to one vote, with fractional shares voting proportionately.
The close of business on April 26, 1999, has been established as
the record date (the "Record Date") for determining shareholders entitled
to notice of, and to vote at, the Meeting. As of the Record Date, the
following number of shares of each Existing Portfolio were outstanding:
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Number of
Shares
Outstanding
Existing Portfolio
Strategic Growth Portfolio [FIRST DATA TO SUPPLY]
Conservative Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Income Portfolio
As of the Record Date, the Trust believes that the Trustees and
officers of the Trust, as a group, owned less than one percent of the
shares of each Existing Portfolio and of the Trust as a whole. To the best
knowledge of the Trust, no person owned of record or beneficially 5% or
more of the outstanding shares of any Existing Portfolio as of the Record
Date, except as follows:
<TABLE>
<CAPTION>
Shares Percent of
Name of Beneficially Outstanding Shares of
Record Owner Portfolio Owned Existing Portfolio
[FIRST DATA TO SUPPLY]
<S> <C> <C> <C>
</TABLE>
The holders of 30% of the shares of each Existing Portfolio
outstanding on the Record Date, present in person or represented by proxy,
will constitute a quorum for the Meeting with respect to the Existing
Portfolio. A majority of all shares outstanding of each Existing Portfolio
is required to approve the Proposal with respect to such Existing
Portfolio. If Shareholders of some of the Existing Portfolios approve the
Proposal and others do not, the Board of Trustees will consider what
further actions may be appropriate with respect to the Proposal.
Timely, properly executed proxies will be voted as you instruct.
IF NO SPECIFICATION IS MADE, SHARES WILL BE VOTED FOR THE APPROVAL OF THE
PROPOSAL. At any time before it has been voted, the enclosed proxy may be
revoked by the signer by a written revocation received by
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the Secretary of the Trust, by properly executing a later-dated proxy or by
attending the Meeting, requesting the return of any previously delivered
proxy and voting in person.
Votes cast by proxy or in person at the Meeting will be counted by
persons appointed by the Trust as tellers for the Meeting. The tellers will
count the total number of votes cast "for" approval of a Proposal for
purposes of determining whether sufficient affirmative votes have been
cast. The tellers will count shares represented by proxies that reflect
abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or
nominee does not have the discretionary voting power on a particular
matter) as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum. Abstentions and broker
non-votes have the effect of negative votes against the Proposal.
The Proposal described in this Proxy Statement has been approved
by the Board of Trustees of the Trust. The Board of Trustees does not
intend to bring any other matters before the Meeting and does not know of
any other matters which will be brought before the Meeting by others. In
the event any other matters not mentioned in the Proxy Statement properly
come before the Meeting, the enclosed proxy authorizes the persons named in
the proxy to vote on such other matters in their discretion.
Solicitation of proxies by personal interview, mail and telephone
may be made by officers and Trustees of the Trust and employees of WM
Advisors, Inc. (the "Manager"), WM Funds Distributor, Inc. (the
"Distributor") and their affiliates. The Trust has retained D.F. King to
aid in solicitation of proxies for a fee not to exceed $50,000. The costs
of retaining D.F. King and other expenses incurred in connection with the
solicitation of proxies, and the costs of holding the Meeting, will be
borne by the Manager and/or its affiliates, not by the Existing Portfolios.
If sufficient votes in favor of the Proposal are not received by
the time currently scheduled for the Meeting, the persons named as proxies
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any adjournment will require the affirmative vote
of a plurality of the votes cast on the question in person or by proxy at
the session of the Meeting to be adjourned. If the Meeting is adjourned
with respect to one or more Existing Portfolios, one or more of the other
Existing Portfolios may still proceed to vote on the Proposal. The persons
named as proxies will vote in favor of such adjournment those proxies which
they are entitled to vote in favor of the Proposal. They will vote against
any such adjournment those proxies required to be voted against the
Proposal. The costs of any additional solicitation and of any adjourned
session will be borne by the Manager and/or its affiliates. See Proposal 1
-- "Reorganization as a Massachusetts Limited Liability Company."
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In order that your shares may be represented at the Meeting,
please sign, date and complete the enclosed proxy and return it in the
prepaid postage envelope enclosed for your convenience.
In the alternative, you may vote by phone or fax through D.F.
King, our proxy solicitor. To vote by fax, sign the proxy card and fax
(both sides) to (212) 269-2796 or simply call (800) xxx-xxxx.
SHAREHOLDER PROPOSALS AT FUTURE MEETINGS
The Trust does not, and the Company will not, hold annual or other
regular meetings of shareholders. Shareholder proposals to be presented at
any future meeting of shareholders of the Company must be received by the
Company at a reasonable time before the Company's mailing of solicitation
of proxies for that meeting in order for such proposals to be considered
for inclusion in the proxy materials relating to that meeting.
PROPOSAL 1:
REORGANIZATION AS A MASSACHUSETTS LIMITED LIABILITY COMPANY
At the Meeting, it is proposed that the shareholders of each
Existing Portfolio approve the reorganization (a "Reorganization") of the
Existing Portfolio, currently a series of a Massachusetts business trust,
as a series of a Massachusetts limited liability company (a "New
Portfolio"). Each Reorganization would be effected pursuant to an Agreement
and Plan of Reorganization (a "Plan") which provides for the transfer of
all of the assets of the Existing Portfolio to the New Portfolio in
exchange for shares of the New Portfolio and the assumption by the New
Portfolio of all of the liabilities of the Existing Portfolio, followed by
the liquidation of the Existing Portfolio (the "SAMP Reorganization"). This
Proposal also would authorize the taking of any other actions by the
Existing Portfolio and its affiliates to the extent necessary to complete
the Existing Portfolio's Reorganization. A vote in favor of this Proposal
will constitute a vote in favor of both the Reorganization of the relevant
Existing Portfolio and any other actions necessary to complete the
Reorganization.
The name of the Company is "WM Strategic Asset Management
Portfolios, LLC." The Company has been newly organized for the purpose of
effecting the Reorganization. Like the Trust, the Company will have
separate series representing different Portfolios. The Trust is, and the
Company will be, registered as an open-end diversified management
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"). The Trust's shares are, and the Company's shares will be,
registered under the Securities Act of 1933, as amended. Like the Trust,
each series (each, a "New Portfolio") of the Company will have shares
representing beneficial interests in the assets and liabilities belonging
to that series, and each series will be further divided into separate
classes (Class A and Class B) that have the same attributes as
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the corresponding classes of the Existing Portfolio. Each New Portfolio
will have the same investment objectives, policies and restrictions, and
the same name (Strategic Growth Portfolio, Conservative Growth Portfolio,
Balanced Portfolio, Flexible Income Portfolio or Income Portfolio) as the
corresponding Existing Portfolio. In each Reorganization, the shareholders
of a Existing Portfolio will receive shares of the corresponding New
Portfolio which are of the same class (Class A or Class B) as the shares of
the Existing Portfolio they currently hold.
BACKGROUND AND REASONS FOR THE REORGANIZATION
The Board of Trustees of the Trust, including all Trustees who are
not "interested persons" of the Trust, the Manager or the Distributor
within the meaning of the 1940 Act, has unanimously approved the
Reorganizations of the Existing Portfolios and recommended shareholder
approval of this Proposal. The Board of Trustees determined that the
Reorganization of each Existing Portfolio would be in the best interests of
that Existing Portfolio and that the interests of each Existing Portfolio's
shareholders would not be diluted as a result of the Reorganization. The
Board of Trustees also considered the tax consequences of the
Reorganizations.
The Massachusetts Limited Liability Company Act provides statutory
limited liability for shareholders. While the possibility of shareholder
liability of a shareholder of a Massachusetts business trust is considered
remote, reorganization as a Massachusetts limited liability company is
expected to offer New Portfolio shareholders substantially greater
protection from potential personal liability.
The Reorganizations of the Existing Portfolios will also permit
the assets of the Existing Portfolios to be combined on a tax-free basis
with the assets of certain investors who currently receive asset allocation
services from WM Financial Services ("WMFS") a WM affiliate. Those
investors currently have their assets invested in shares of certain WM
Funds, just as each of the Existing Portfolios is invested in the same WM
Funds (the "Underlying WM Funds"). The expected addition of approximately
_______ by those WMFS clients to the New Portfolios will provide a greater
opportunity for lowering aggregate operating expenses (as a percentage of
average net assets) for the Portfolios than would otherwise be the case. Of
course, there can be no assurance that the expected addition by those
investors will result in savings for Existing Portfolio shareholders.
The tax-free treatment of the Reorganizations means that all
assets contributed to each New Portfolio, both by the Existing Portfolios
and by WMFS advisory clients, will be carried on the New Portfolio's books
at the tax basis in effect immediately prior to the Reorganizations. This
means that, when shares of the Underlying WM Funds originally belonging to
WMFS advisory clients are sold by a New Portfolio, any gain on sale will
result in a capital gain which, when subsequently distributed to
shareholders of the New Portfolio, will be taxable to all shareholders of
the New Portfolio at the time of distribution, not only to the former
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WMFS advisory clients who originally owned the securities. Similarly, when
securities originally belonging to the Existing Portfolios are sold by a
New Portfolio, any gain on sale will generally be taxable to all
shareholders of that New Portfolio at the time of distribution of such
gain, not only to the shareholders of the Existing Portfolio which held the
securities at the time of the Reorganization. For a further discussion of
tax consequences, please see Federal Income Tax Consequences on page 14
hereof.
AGREEMENT AND PLAN OF REORGANIZATION
Each Plan provides that the relevant New Portfolio will acquire
all of the assets of the corresponding Existing Portfolio in exchange for
the assumption by the New Portfolio of all of the liabilities of the
Existing Portfolio and for the issuance of the shares of the New Portfolio
("Reorganization Shares"), all as of the Exchange Date (defined in each
Plan to be [JULY __, 1999] or such other date as may be agreed upon by the
New Portfolio and the Existing Portfolio). The following discussion of the
Plans is qualified in its entirety by the full text of the Plan for each
Existing Portfolio, the form of which is attached as Appendix A to this
Proxy Statement.
Each Existing Portfolio will transfer all of its assets to the
corresponding New Portfolio, and, in exchange, the New Portfolio will
assume all of the liabilities of the Existing Portfolio and deliver to the
Existing Portfolio (i) a number of full and fractional Class A
Reorganization Shares having an aggregate net asset value equal to the
value of the assets of the Existing Portfolio attributable to its Class A
shares, less the value of the liabilities of the Existing Portfolio assumed
by the New Portfolio attributable to the Class A shares of the Existing
Portfolio and (ii) a number of full and fractional Class B Reorganization
Shares having an aggregate net asset value equal to the value of assets of
the Existing Portfolio attributable to its Class B shares, less the value
of the liabilities of the Existing Portfolio assumed by the New Portfolio
attributable to the Class B shares of the Existing Portfolio. For more
information, see "Federal Income Tax Consequences" below.
Immediately following the Exchange Date, each Existing Portfolio
will distribute pro rata to its shareholders of record as of the close of
business on the Exchange Date the full and fractional Reorganization Shares
received by the Existing Portfolio, with Class A Reorganization Shares
being distributed to holders of Class A shares of the Existing Portfolio
and Class B Reorganization Shares being distributed to holders of the Class
B shares of the Existing Portfolio. As a result of the proposed
transaction, each holder of Class A and Class B shares of the Existing
Portfolio will receive a number of Class A and Class B Reorganization
Shares equal in aggregate value at the Exchange Date to the value of the
Class A and Class B shares, respectively, of the Existing Portfolio held by
the shareholder. This distribution will be accomplished by the
establishment of accounts on the records of the corresponding New Portfolio
in the names of the Existing Portfolio shareholders, each account
representing the respective number of full and fractional Class A and Class
B
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Reorganization Shares due such shareholder. Because the shares of the New
Portfolio will not be represented by certificates, certificates for
Reorganization Shares will not be issued.
The consummation of each Reorganization is subject to the
conditions set forth in the relevant Plan, any of which may be waived. Each
Plan may be terminated and the Reorganization abandoned at any time, before
or after approval by the shareholders of the Existing Portfolio, prior to
the Exchange Date, by mutual consent of the relevant Existing Portfolio and
New Portfolio or, if any condition set forth in the Plan has not been
fulfilled and has not been waived by the party entitled to its benefits, by
such party.
All legal and accounting fees and expenses, printing and other
fees and expenses incurred in connection with the consummation of the
transactions contemplated by the Plan will be borne by the Manager and/or
its affiliates.
Notwithstanding any of the foregoing, expenses will in any event
be paid by the party directly incurring such expenses if and to the extent
that the payment by any other party of such expenses would result in the
disqualification of the first party as a "regulated investment company"
within the meaning of Section 851 of the Internal Revenue Code of 1986, as
amended (the "Code").
REORGANIZATION SHARES
Full and fractional Reorganization Shares will be issued to each
Existing Portfolio's shareholders in accordance with the procedures under
the Plan as described above. The Reorganization Shares are Class A and
Class B shares of the New Portfolio, which will have characteristics
identical to those of the corresponding class of Existing Portfolio shares
with respect to contingent deferred sales charges ("CDSCs") and conversion.
For purposes of determining the CDSC payable on redemption of Class B
Reorganization Shares, as well as the conversion date of Class B
Reorganization Shares, (i) the Class B Reorganization Shares will be
treated as having been acquired as of the dates that, and for the prices at
which, the shareholders originally acquired their Class B shares of the
Existing Portfolio, (ii) any CDSC will be applied using the schedule in
effect for the Existing Portfolio at the time the shares of the Existing
Portfolio were originally purchased, and (iii) Class B Reorganization
Shares will convert automatically into Class A shares of the New Portfolio
after the same conversion period as was in effect at the time the shares of
the Existing Portfolio were originally purchased. Class A Reorganization
Shares will be subject to service and distribution fees, payable under the
New Portfolio's Class A Distribution Plan, which is substantially identical
to the Existing Portfolio's existing Class A Distribution Plan. Class B
Reorganization Shares will be subject to service and distribution fees
payable under the New Portfolio's Class B Distribution Plan, which is
substantially identical to the Existing Portfolio's existing Class B
Distribution Plan.
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OTHER MATTERS
The investment objectives, policies and restrictions of each New
Portfolio will be the same as those for the corresponding Existing
Portfolio; they will not change as a result of the Reorganizations. The
Manager and an officer of the Trust, as the sole members of the Company
(the "Initial Members") prior to the Existing Portfolios' Reorganization,
will vote for the current Trustees of the Trust as Trustees of the Company
(the "Trustees"). The Trust's officers will become officers of the Company
with comparable responsibilities. The Initial Members will approve an
Investment Management Agreement between the Company and the Manager
substantially identical to the Investment Management Agreement currently in
effect and a Distribution Plan for each Class of Shares substantially
identical to those currently in effect for the Existing Portfolio. The
Distributor will serve as the distributor of the shares of the Company
under the same terms as it does for the Trust.
STRUCTURE OF THE COMPANY AND THE NEW PORTFOLIOS
The Company has been established pursuant to a Limited Liability
Company Agreement (the "Company Agreement") under the laws of The
Commonwealth of Massachusetts. Immediately prior to the Reorganization, the
Company will have nominal assets and no liabilities and the sole members of
the Company will be the Initial Members. After the Reorganization, the same
Trustees who currently serve as Trustees on the Trust will be the Trustees
of the Company.
Each of the Reorganization Shares will be fully paid and
nonassessable by the Company when issued, will be transferable without
restriction, and will have no preemptive or conversion rights, except that
Class B Reorganization Shares convert automatically into Class A shares as
described above. The Company Agreement permits the Company to issue an
unlimited number of shares and, without shareholder approval, to divide its
shares into two or more series of shares representing separate investment
Existing Portfolios and to further divide any such series into two or more
classes of shares having such preferences and special or relative rights
and privileges as the Trustees may determine. Each New Portfolio's shares
will initially be divided into two classes, Class A and Class B which
correspond to the classes of shares of the relevant Existing Portfolio.
COMPARISON OF GOVERNING DOCUMENTS OF EXISTING PORTFOLIOS AND NEW PORTFOLIOS
As a Massachusetts limited liability company, the Company will be
subject to the provisions of its Company Agreement and Bylaws (the "Company
Bylaws"). The provisions of the Company Agreement and the Company Bylaws
differ in certain respects from those of the Trust's Agreement and
Declaration of Trust (the "Declaration of Trust") and Bylaws ("Trust
Bylaws"). The following is a summary of certain of those differences. For
additional information regarding all of the differences, shareholders
should refer directly to such
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documents, copies of which may be obtained without charge by contacting the
Trust at its address listed on the cover of this Proxy Statement or by
calling toll-free (800) 222-5852.
SHAREHOLDER LIABILITY. Under Massachusetts law, shareholders of a
Massachusetts business trust could, under certain circumstances, be held
personally liable for the obligations of the trust, although this
possibility is considered remote. The Massachusetts Limited Liability
Company Act provides, by statute, that shareholders shall not be from
liable for liabilities of the Company by virtue of their being
shareholders.
VOTING RIGHTS, MEETINGS AND PROCEDURES. The shareholders of each
New Portfolio generally have the same rights to vote and to call
shareholder meetings as shareholders of each Existing Portfolio. The voting
rights of shareholders of the Company are set forth in the Company
Agreement. These voting rights are generally the same as those for
shareholders of the Trust except with regard to derivative litigation and
amendment of the respective Agreements. (Please see discussion below of
voting rights with respect to amendments and derivative litigation). The
Trust Bylaws provide that a quorum is 30% of the aggregate number of Shares
entitled to vote, while the Company Agreement provides that 10% of the
Shares entitled to vote shall constitute a quorum. Neither a New Portfolio
nor an Existing Portfolio is required to hold annual shareholder meetings
for matters such as the election of Trustees, although the requirements of
the 1940 Act may effectively require that a New Portfolio or an Existing
Portfolio call special shareholder meetings under certain conditions.
DIFFERENCES IN REDEMPTION RIGHTS OF SHAREHOLDERS. Redemption of
shares by shareholders under the Company Agreement is only subject to the
requirements of the 1940 Act, whereas the Trust Agreement requires at least
weekly redemptions to be permitted even if not required by the 1940 Act.
Because the 1940 Act requires daily redemptions to be permitted, there will
be no practical difference unless the 1940 Act requirements are changed.
MANDATORY REDEMPTION RIGHTS BY THE TRUST/COMPANY. The Declaration
of Trust provides that the Trust may redeem shares at any time, if the
Trustees determine in their sole discretion that failure to so redeem may
have materially adverse consequences to the holders of the shares of the
Trust or any class or series of shares thereof. The Company Agreement
provides that the Company shall have the right at any time to redeem shares
of any shareholder....to the extent such shareholder owns shares equal to
or in excess of a percentage determined from time to time by the Trustees
of (a) the outstanding shares of the Company or (b) the shares of any
Series. Both the Declaration of Trust and the Company Agreement provide
that the Portfolio may redeem shares of an account which falls below a
minimum value set by the Trustees.
DIFFERENCES IN RECORDS PROVISIONS. The Declaration of Trust
provides that the Declaration of Trust and any amendments thereto shall be
filed with the Secretary of the Commonwealth of Massachusetts, and a copy
thereof shall be kept at the office of the Trust where it may be inspected
by any Shareholder. The Company Agreement provides that "[a]ny documents
which a Shareholder may have a right to obtain pursuant to the
[Massachusetts Limited Liability
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<PAGE> 15
Company] Act or otherwise shall be furnished at the sole expense of such
Shareholder at the Company's principal office only after the Shareholder
gives 30 days' prior written notice of its intent to obtain such records,
and further subject to such rules and procedures as the Trustees may
establish, which may include rules and procedures established after the
date of such request." However, the Company Agreement will be filed with
the Securities and Exchange Commission.
DIFFERENCES IN PROVISIONS REGARDING COMBINING SERIES/CLASSES. Both
the Declaration of Trust and the Company Agreement provide that the
Trustees may combine two or more classes or series of the Trust's shares
into a single one. The Company Agreement further provides that the Trustees
may from time to time divide or combine the shares of shareholders of any
particular series or class into a greater or lesser number of shares
without thereby changing the proportionate beneficial interest of the
shareholders of that series or class in the assets belonging to that series
or class or in any way affecting the rights of shareholders of any other
series or class. The Declaration of Trust has no corresponding provision
allowing division of a series or Class or changing the number of Shares.
DIFFERENCES IN PROVISIONS REGARDING SALE OF ASSETS AND MERGERS.
The Declaration of Trust provides that a two-thirds vote of Shareholders is
required for the Trust to merge or consolidate with any other corporation,
association, trust or other organization or for the Trust to sell, lease or
exchange all or substantially all of the Trust property, including its
goodwill. However, if such merger, consolidation, sale, lease or exchange
is recommended by the Trustees, the vote or written consent of the holders
of the majority of the Shares outstanding and entitled to vote is
sufficient authorization. The Company Agreement does not provide any
requirement for shareholder approval for sales of substantially all of the
assets of the Company. The Company Agreement provides that the Trustees may
cause the Company to be merged into or consolidated with another entity or
its shares exchanged under or pursuant to any state or federal statute, if
any, or otherwise to the extent permitted by law upon majority vote of
Shareholder votes properly cast upon the question.
INTERESTED TRANSACTIONS PROVISIONS. The Declaration of Trust
provides that certain transactions of the Trust with Principal Shareholders
(as defined therein) shall require a two-thirds vote of the Shares
outstanding in order to be valid. Transactions subject to the two-thirds
vote requirement under the Declaration of Trust include the merger or
consolidation of the Trust with or into any Principal Shareholders; the
issuance of any securities of the Trust to any Principal Shareholder for
cash; the sale, lease or exchange of all or any substantial part of the
assets of the Trust to any principal Shareholder; and the sale, lease or
exchange to the Trust in exchange for securities of the Trust of any assets
of any principal Shareholder.
However, the two-thirds vote requirement under the Declaration of
Trust is not applicable if the Trustees approve a memorandum of
understanding with the Principal Shareholder with regard to the
transactions or if the transaction is with a corporation, a majority of the
outstanding Shares normally entitled to vote in elections of trustees of
which is owned of record or beneficially by the Trust. The Company
Agreement has no comparable provision.
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<PAGE> 16
DERIVATIVE LITIGATION PROVISIONS. Section 11.1(vi) of the Trust
Bylaws provide that the Shareholders shall have voting power "to the same
extent as the stockholders of the Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the
Trust or the Shareholders." The Company Agreement provides that no
Shareholder shall have the right to bring or maintain any court action,
proceeding or claim on behalf of the Company or any series without first
making demand on the Trustees to bring or maintain such action, proceeding
or claim. Demand is excused only when the plaintiff makes a specific
showing that irreparable injury to the Company or Series would otherwise
result. In their sole discretion, the Trustees may submit the matter to a
vote of Shareholders of the Company or Series, as appropriate. Any decision
by the Trustees to bring, maintain or settle (or not to bring, maintain or
settle) such court action, proceeding or claim, or to submit the matter to
a vote of Shareholders shall be made by the Trustees in their business
judgment and shall be binding upon the Shareholders. However, if this
provision is found not to be enforceable, any decision by any shareholder
to bring such a court action, proceeding or claim shall require a majority
affirmative vote of the Shares outstanding of the Company or Series, as
applicable.
DIFFERENCES IN AMENDMENT PROVISIONS. The Declaration of Trust
provides that most amendments may be made by a majority of the Trustees
when authorized by a majority of the shares outstanding and entitled to
vote, while the Company Agreement provides that amendments need only the
approval of a majority of Shareholder votes properly cast upon the
question. In both cases, amendments affecting only certain classes require
only the approval of the affected classes, and amendments to change the
name of the Trust/Company or for the purpose of "supplying any omission,
curing any ambiguity or curing, correcting or supplementing any defective
or inconsistent provision" of the Agreement do not require Shareholder
authorization. In the case of the Trust, amendments dealing with par value
of shares do not require shareholder vote; par value does not apply to
limited liability companies.
ABILITY TO EFFECT STATUTORY MERGERS. Under Massachusetts law
pertaining to business trusts, Massachusetts business trusts may merge with
or into one or more domestic limited liability companies but not with or
into a corporation. Massachusetts limited liability companies, however, may
merge with or into one or more domestic or foreign limited liability
companies, domestic or foreign professional corporations, one or more
domestic business trusts or associations, a domestic or foreign general or
limited partnership. Thus, if in future the Portfolios should desire to
effect another merger, organization as a limited liability company will
afford the Portfolios greater flexibility.
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<PAGE> 17
FEDERAL INCOME TAX CONSEQUENCES
As a condition to each Existing Portfolio's obligation to
consummate the Reorganization, the Existing Portfolio will receive an
opinion from Ropes & Gray, counsel to the Trust, to the effect that, on the
basis of the existing provisions of the Code, current administrative rules
and court decisions, for federal income tax purposes: (i) no gain or loss
will be recognized by the Existing Portfolio as a result of the
Reorganization; (ii) no gain or loss will be recognized by shareholders of
the Existing Portfolio on the distribution of Reorganization Shares to them
in exchange for their shares of the Existing Portfolio; (iii) the tax basis
of the Reorganization Shares that the Existing Portfolio's shareholders
receive in place of their Existing Portfolio shares will be the same as the
basis in the Existing Portfolio shares; (iv) a shareholder's holding period
for the Reorganization Shares received pursuant to the Plan will be
determined by including the holding period for the Existing Portfolio
shares exchanged for the Reorganization Shares, provided that the
shareholder held the Existing Portfolio shares as a capital asset; (v) no
gain or loss will be recognized by the New Portfolio as a result of the
reorganization; (vi) the New Portfolio's tax basis in the assets that the
New Portfolio receives from the Existing Portfolio will be the same as the
Existing Portfolio's basis in such assets; and (vii) the New Portfolio's
holding period in such assets will include the Existing Portfolio's holding
period in such assets. Each opinion will be based on certain factual
certifications made by officers of the Trust and the Existing Portfolios
and will also be based on customary assumptions.
Prior to the Exchange Date, each Existing Portfolio will declare a
distribution to shareholders which, together with all previous
distributions, will have the effect of distributing to shareholders all of
its investment company taxable income (computed without regard to the
deduction for dividends paid) and net realized capital gains, if any,
through the Exchange Date.
The tax-free treatment of the Reorganizations means that all
assets contributed to the New Portfolios, both by the Existing Portfolios
and by WMFS advisory clients, will be carried on the New Portfolio's books
at the tax basis in effect immediately prior to the Reorganizations. This
means that, when shares of the Underlying WM Funds originally belonging to
WMFS advisory clients are sold by a New Portfolio, any gain on sale will
result in a capital gain which, when subsequently distributed to
shareholders of the New Portfolio, will be taxable to all shareholders of
the New Portfolio at the time of distribution, not only to the former WMFS
advisory clients who originally owned the securities. Similarly, when
securities originally belonging to the Existing Portfolios are sold by a
New Portfolio, any gain on sale will generally be taxable to all
shareholders of that New Portfolio at the time of distribution of such
gain, not only to the shareholders of the Existing Portfolio which held the
securities at the time of the Reorganization.
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<PAGE> 18
The percentages of unrealized appreciation for each Existing
Portfolio and for the total assets which are eligible to be contributed by
WMFS advisory clients to each New Portfolio, and the respective amounts of
total assets, as of March 31, 1999, are estimated to be as follows:
<TABLE>
<CAPTION>
UNREALIZED CAPITAL APPRECIATION
TOTAL NET ASSETS (DEPRECIATION)
ON MARCH 31, 1999 AS A PERCENTAGE OF TOTAL NET ASSETS
(in thousands) ON MARCH 31, 1999
----------------- -----------------
<S> <C> <C>
EXISTING PORTFOLIO
Strategic Growth Portfolio 14.8%
Amount eligible to be contributed by WMFS Clients $110,780 [PENDING]
Conservative Growth Portfolio 14.4%
Amount eligible to be contributed by WMFS Clients $318,794
Balanced Portfolio 10.0%
Amount eligible to be contributed by WMFS Clients $255,583
Flexible Income Portfolio 2.7%
Amount eligible to be contributed by WMFS Clients $ 33,543
Income Portfolio 0.2%
Amount eligible to be contributed by WMFS Clients $ 18,814
</TABLE>
None of the SAM Portfolios had capital loss carryforwards exceeding
0.20% of its net assets as of October 31, 1998. However, this number, as
well as the numbers set forth in the table above, is subject to change up
until the closing of the Reorganizations.
TAKING OF OTHER ACTIONS
It is also proposed, as part of this Proposal, that the shareholders
of each Existing Portfolio approve the taking of any other actions by the
Existing Portfolio or its affiliates to the extent necessary to complete
the Existing Portfolio's Reorganization. Such actions will include any
necessary procedures to effect the Reorganization, including but not
limited to the ratification of the current Trustees of the Trust as
Trustees of the Company, the approval of an investment management agreement
for the Company that is substantially identical to the investment
management agreement currently in effect for the Trust, the approval of
Class A and Class B distribution plans for each New Portfolio which are
substantially identical to those currently in effect for the Existing
Portfolios, the temporary waiver of any fundamental investment restrictions
which would otherwise prevent the Reorganization and the approval of any
other necessary agreements.
INFORMATION ABOUT THE MANAGER
The Manager is registered under the Investment Advisers Act of 1940,
as amended (the "Advisers Act") and has been in the investment management
business since 1944. The Manager is a subsidiary of Washington Mutual, Inc.
The principal address of Washington Mutual, Inc. is 1201 Third Avenue,
Seattle, Washington 98101.
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<PAGE> 19
PRINCIPAL UNDERWRITER
The Principal Underwriter of both the Existing Portfolios and New
Portfolios is WM Funds Distributor, Inc., located at 1201 Third Avenue,
Suite 2210, Seattle, Washington 98101.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT THE
SHAREHOLDERS OF EACH PORTFOLIO VOTE FOR APPROVAL OF THIS PROPOSAL.
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<PAGE> 20
WM GROUP OF FUNDS
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS-June [23], 1999
The undersigned hereby appoints William G. Papesh, Monte D. Calvin and John
T. West, and each of them separately, proxies with power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Special Meeting of Shareholders of the STRATEGIC GROWTH PORTFOLIO, a
series of WM Strategic Asset Management Portfolios, on June [23], 1999 at 11:00
a.m. Pacific time, and any adjournment thereof, all of the shares of the
Portfolio which the undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE PROPOSAL.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting. The Trustees recommend a vote FOR
Proposal 1.
For Against Abstain
/ / / / / /
A. To approve the Reorganization of the Portfolio
as a series of WM Strategic Asset Management
Portfolios, LLC, a Massachusetts limited
liability company.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign.
When signing as executor, administrator,
attorney, trustee or guardian or as custodian for
a minor, please give full title as such. If a
corporation, please sign in full corporate name
and indicate the signer's office. If a partner,
sign in the partnership name.
---------------------------------------
Signature
---------------------------------------
Signature (if held jointly)
---------------------------------------
Date
IN THE ALTERNATIVE, YOU MAY VOTE BY PHONE OR FAX THROUGH D.F. KING, OUR PROXY
SOLICITOR. TO VOTE BY FAX, SIGN THE PROXY CARD AND FAX (BOTH SIDES) TO (212)
269-2796 OR SIMPLY CALL (800) XXX-XXXX.
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PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
IF YOU HAVE ANY QUESTIONS, YOU MAY CALL (800) 222-5852.
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