<PAGE>
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER __, 1998
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1 )
---
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
<TABLE>
<S> <C>
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only
[_] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[_] Definitive Additional Materials [_] Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
</TABLE>
WM Trust I
----------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on a table below per Exchange Act Rules 14a-6(i)(1) 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 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:
- --------------------------------------------------------------------------------
<PAGE>
THE WM GROUP OF FUNDS
TAX-EXEMPT BOND FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
DECEMBER 15, 1998
To the Shareholders of the Tax-Exempt Bond Fund:
Notice is hereby given that a Special Meeting of Shareholders of the Tax-
Exempt Bond Fund (the "Fund"), a series of WM Trust I, will be held on December
15, 1998 at 11:00 a.m., Pacific time, at the main office of the Fund at 1201
Third Avenue, Seattle, Washington 98101, for the following purposes:
1. To approve or disapprove a new Sub-Advisory Agreement relating to
the Fund by and between WM Advisors, Inc. ("WM Advisors") and Van Kampen
Management Inc. ("Van Kampen").
2. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on October 21, 1998 are
entitled to notice of, and to vote at, the Meeting.
By order of the Board of Trustees,
John T. West, Secretary
NOVEMBER __, 1998
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
- --------------------------------------------------------------------------------
PLEASE RESPOND -- YOUR VOTE IS IMPORTANT, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING. PLEASE COMPLETE, SIGN DATE AND MAIL
THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE SO
THAT YOU WILL BE REPRESENTED AT THE MEETING.
<PAGE>
THE WM GROUP OF FUNDS
TAX-EXEMPT BOND FUND
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Trustees (the "Trustees") of Trust I (the
"Trust") for use at the Special Meeting of Shareholders of the Tax-Exempt Bond
Fund (the "Fund"), a series of the Trust, to be held at 11:00 a.m., Pacific
time, on December 15, 1998 at 1201 Third Avenue, Seattle, Washington and at any
adjournment or adjournments thereof (the "Meeting"). This Proxy Statement and
its enclosures are being mailed to shareholders beginning on or about November
__, 1998. A copy of the Annual Report of the Trust for the fiscal year December
31, 1997 and the Semi-Annual Report for the period ended June 30, 1998 may be
obtained without charge by writing to WM Funds Distributor Inc., 1201 Third
Avenue, Seattle, Washington 98101 or by calling (800) 222-5852.
I. GENERAL
All shareholders of record of the Fund as of the close of business on
October 21, 1998, the record date for determining shareholders entitled to vote
at the Meeting (the "Record Date"), are entitled to one vote for each share of
beneficial interest of the Fund held as of that date, and each fractional share
shall be entitled to a proportional fractional vote. The number of shares of
beneficial interest of each class of the Fund of each class issued and
outstanding as of the Record Date was as follows: Class A--36,995,338.088; Class
B--2,115,231.175; Class I--148.018 and Class S--179.830.
Timely, properly executed proxies will be voted as you instruct. IF NO
SPECIFICATION IS MADE, SHARES WILL BE VOTED FOR THE APPROVAL OF THE PROPOSED
SUB-ADVISORY AGREEMENT. At any time before it has been voted, the enclosed
proxy may be revoked by the signer by a written revocation received by the Clerk
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.
The holders of 10% of the shares of the Fund outstanding as of the Record
Date, present in person or represented by proxy, constitute a quorum for the
transaction of business by the shareholders of the Fund at the Meeting,
although it is necessary for at least a majority of the shares of the Fund to
be represented at the Meeting in order for the Proposed Agreement to be
approved. 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 Proposal 1 for purposes
of determining whether sufficient affirmative votes have been cast. The tellers
will count all 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 discretionary
voting power on a particular matter) as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. Abstentions and
broker non-votes will have the effect of a negative vote on Proposal 1,
depending on the number of shares present at the meeting.
Solicitation of proxies by personal interview, mail, telephone and
telegraph may be made by officers and Trustees of the Trust and employees of WM
Advisors. The Trust has retained [FIRST DATA, INC.] to aid in the solicitation
of proxies. The costs of retaining First Data, Inc. and other expenses incurred
in connection with the solicitation of proxies, and the costs of holding the
Meeting, will be borne by WM Advisors and not by the Fund.
2
<PAGE>
II. APPROVAL OF SUB-ADVISORY AGREEMENT WITH VAN KAMPEN.
THE PROPOSAL
As described more fully below, WM Advisors has proposed that Van Kampen
serve as Sub-Advisor to the Fund pursuant to a Sub-Advisory Agreement (the
"Proposed Agreement") with respect to the Fund. In order for Van Kampen to
serve as Sub-Advisor to the Fund, the Investment Company Act of 1940, as amended
(the "1940 Act"), requires approval of the Proposed Agreement by both the
Trust's Board of Trustees and the Fund's shareholders.
The Proposed Agreement was approved (to be effective upon shareholder
approval) by all the Trustees, including those Trustees who are not "interested
persons" or affiliates (as defined in the 1940 Act) of any party to the Proposed
Agreement (the "Independent Trustees"), on September 22, 1998. The Trustees,
including the Independent Trustees, have recommended approval of the Proposed
Agreement by shareholders. In determining to recommend the engagement of Van
Kampen, the Trustees considered the extensive experience of Van Kampen in
managing funds of this type and its performance record.
A description of the Proposed Agreement, the services to be provided
thereunder, and the procedures for termination and renewal thereof is set forth
below under "Description of Proposed Agreement." Such description is qualified
in its entirety by reference to the form of the Proposed Agreement set forth in
Appendix A to this Proxy Statement. Additional information about Van Kampen is
set forth below under "Other Information."
DESCRIPTION OF PROPOSED AGREEMENT
In order to assist it in carrying out its responsibilities as manager of
the Fund, WM Advisors has proposed to retain Van Kampen under the Proposed
Agreement to render Sub-Advisory services to the Fund under the supervision of
WM Advisors and the Trustees of the Trust.
WM Advisors would pay the fees of Van Kampen under the Proposed Agreement.
Under the Proposed Agreement, Van Kampen would receive a fee based on the assets
of the Fund, calculated based on the average quarterly net asset value,
determined as of the last business day of each month in the calendar quarter, of
the Fund at the annual rate of 0.10%.
The Proposed Agreement provides that, subject to the supervision of the
Trustees and WM Advisors, Van Kampen would, in conformity with the Trust's
Declaration of Trust, the Investment Company Act of 1940 (the "1940 Act"), the
Investment Advisers Act of 1940 and the Internal Revenue Code of 1986, 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 as amended from time to time with notice
to Van Kampen; place purchase and sale orders on behalf of the Fund to
effectuate the investment decisions made; maintain books and records with
respect to the securities transactions of the
3
<PAGE>
Fund and furnish to the Trust's Board of Trustees such periodic, regular and
special reports as the Board may request; and treat confidentially and as
proprietary information of the Trust, all records and other information relative
to the Trust and prior, present or potential shareholders. The Proposed
Agreement further provides that Van Kampen shall 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 approval shall not be unreasonably withheld and such records
may not be withheld where Van Kampen 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, Van Kampen will supervise the Fund's investments
and conduct a continual program of investment, evaluation and, if appropriate,
sale and reinvestment of the Funds' assets. In addition, Van Kampen will furnish
the Fund or WM Advisors with whatever statistical information the Fund or WM
Advisors may reasonably request with respect to the instruments that the Fund
may hold or contemplate purchasing.
The Proposed Agreement provides that it will continue in effect for an
initial term of two years from its date of execution (which is expected to be on
or about January 1, 1999) and thereafter so long as it is approved at least
annually in accordance with the 1940 Act. The 1940 Act requires that, after the
initial two-year term, the Proposed Agreement be approved at least annually by
(i) the vote, cast in person at a meeting called for the purpose, of a majority
of the Independent Trustees and (ii) the majority vote of the full Board of
Trustees or the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund. The Proposed Agreement terminates
automatically in the event of its assignment, and may be terminated without
penalty by the Trust at any time, on thirty days' written notice to WM Advisors
and Van Kampen, by WM Advisors upon thirty days' written notice, and by Van
Kampen upon ninety days' written notice.
The Proposed Agreement provides that Van Kampen shall not be subject to any
liability to the Trust, the Fund or WM Advisors, or to any shareholder, officer,
director or Trustee thereof, for any act or omission in the course of, or
connected with, rendering services thereunder, in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties by Van Kampen.
TRUSTEES' RECOMMENDATION
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE
FUND VOTE TO APPROVE THE PROPOSED AGREEMENT.
Approval requires the vote of the lesser of (1) 67% of the shares of the
Fund represented at the Meeting, if more than 50% of the shares of the Fund are
represented at the Meeting, or (2) more than 50% of the outstanding shares of
the Fund.
4
<PAGE>
III. ADDITIONAL INFORMATION
The Trust is an open-end management investment company organized in 1997 as
a business trust under the laws of Massachusetts. The Trust is a series
investment company with eight investment portfolios. The Fund is one of those
portfolios and is diversified. The address of the Trust is 601 West Main Avenue,
Spokane, Washington 99201.
INFORMATION ABOUT THE ADVISOR
The Advisor 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 Advisor is a subsidiary of Washington Mutual, Inc. The
principal address of Washington Mutual, Inc. is 1201 Third Avenue, Seattle,
Washington 98101.
ADVISORY AGREEMENT
The Advisor currently acts as the Fund's Advisor pursuant to an Advisory
Agreement between the Advisor and the Trust dated March 20, 1998 (the "Advisory
Agreement") and approved by the Fund's shareholders on February 20, 1998. The
Advisory Agreement was submitted for shareholder approval at such time in
connection with the reorganization of the Fund's predecessor, a Washington
corporation, as a series of the Trust.
The Advisor's responsibilities under the Advisory Agreement include
formulating the Fund's investment policies (subject to the terms of the
Prospectus), analyzing economic trends, directing and evaluating the investment
services provided by any Sub-Advisors and monitoring the Fund's investment
performance and reporting to the Board of Trustees, as well as providing certain
administrative services to the Fund. In connection with its service as
investment advisor to the Fund, the Advisor may engage one or more Sub-Advisors
to provide investment advisory services to the Fund and may change or eliminate
any such Sub-Advisor if it deems such action to be in the best interests of the
Fund and its shareholders. Where the Advisor has not delegated such duties to a
Sub-Advisor, it is responsible for managing the investment and reinvestment of
the Fund's assets.
The Advisory Agreement provides that it will, unless sooner terminated in
accordance with the Advisory Agreement, continue in effect with respect to the
Fund for a period of two years from its effective date and thereafter on an
annual basis with respect to the Fund, provided such continuance is approved at
least annually by the vote of a majority of the Independent Trustees and either
(a) by the vote of a majority of the Trustees, or (b) by the vote of a majority
of the outstanding voting securities of the Fund. The Advisory Agreement
provides that it terminates automatically in the event of its assignment (as
defined by the 1940 Act) by the Advisor. The Advisory Agreement provides that it
may not be materially amended without a majority vote of the outstanding voting
securities of the Fund.
5
<PAGE>
The Advisory Agreement may be terminated at any time without the payment of
any penalty, by the Trust by vote of a majority of the Trustees, including a
majority of the Independent Trustees, or by a vote of a majority of the
outstanding voting securities of the Fund, upon 60 days' written notice to the
Advisor or by the Advisor at any time, without the payment of any penalty, upon
60 days' written notice to the Trust.
The Advisory Agreement provides that the Advisor shall not be subject to
any liability arising out of any services rendered by it under the Advisory
Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties under the Advisory Agreement.
The Advisory Agreement provides that the Advisor shall pay the expenses
associated with maintaining its staff and personnel and shall, at its own
expense, provide all services, equipment, office space and facilities necessary
to perform its obligations under the Advisory Agreement.
Under the Advisory Agreement, a monthly advisory fee based on the average
daily net assets of the Fund is payable by the Fund to the Advisor at an annual
rate of .55%.
FEES PAID
For the fiscal year ended December 31, 1997, of Composite Tax-Exempt Bond
Fund, Inc. the predecessor to the Fund, the predecessor fund paid advisory fees
to the Advisor, transfer agency fees to WM Shareholder Services, Inc. (the
"Transfer Agent"), and distribution fees to the Distributor as follows: $987,356
in advisory fees, $473,989 in distribution fees, and $84,547 in transfer agency
fees.
INFORMATION ABOUT VAN KAMPEN
Van Kampen, One Parkview Plaza, Oakbrook, Illinois 60181, also acts as sub-
advisor to the California Municipal, California Insured Intermediate Municipal
and Florida Insured Municipal Funds of WM Trust II. Van Kampen is an indirect
wholly owned subsidiary of Morgan Stanley Dean Witter & Co., a publicly held
global financial services company. Van Kampen provides investment advice to a
wide variety of individual, institutional and investment company clients and,
together with its affiliates, had aggregate assets under management or
supervision, as of September 30, 1998, of more than $68 billion.
If the Sub-Advisory Agreement is approved by shareholders, David C.
Johnson, Senior Vice President of Van Kampen, will have primary responsibility
for the day-to-day management of the Tax-Exempt Bond Fund's portfolio effective
on or about January 1, 1999. Mr. Johnson has been employed by Van Kampen since
1989.
6
<PAGE>
Other Funds Advised or Sub-Advised by Van Kampen
The following table sets forth certain information concerning other mutual
funds that have investment objectives similar to those of the Fund, for which
Van Kampen serves as investment advisor or sub-advisor:
<TABLE>
<CAPTION>
APPROXIMATE
ANNUAL INVESTMENT NET ASSETS
[SUB]-ADVISORY (IN MILLIONS)
FEE RATE (AS A PERCENTAGE OF AS OF
NAME OF FUND AVERAGE DAILY NET ASSETS) SEPTEMBER 30, 1998
- ------------------------------ ---------------------------- ------------------
<S> <C> <C>
MENTOR NATIONAL MUNICIPAL FUND 0.25% $110.8
</TABLE>
*With respect to these funds Van Kampen serves as a sub-advisor and,
accordingly, the sponsoring investment advisor pays Van Kampen a sub-advisory
fee at the rates shown under "Investment [Sub-]Advisory Fee Rate."
PORTFOLIO TRANSACTIONS AND BROKERAGE
BROKERAGE AND RESEARCH SERVICES
Most of the purchases and sales of securities for the 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 the Fund are made by the Advisor or Van Kampen, which also is
responsible for placing these transactions, subject to the overall review of the
Trust's Board of Trustees. Although investment decisions for the Fund are made
independently from those of the other accounts managed by the Advisor or Van
Kampen, investments of the type the Fund may make may also be made by those
other accounts. When the Fund and one or more other accounts managed by the
Advisor or Van Kampen are prepared to invest in, or desire to dispose of, the
same security, available investments or opportunities for sales will be
allocated in a manner believed by the Advisor or Van Kampen to be equitable to
each. In some cases, this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that coordination and the ability
to participate in volume transactions will be to the benefit of the Fund.
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.
In selecting brokers or dealers to execute portfolio transactions on behalf
of the Fund, the Advisor or Van Kampen seeks the best overall terms available.
In assessing the best overall terms available for any transaction, the Advisor
or Van Kampen will consider the factors that the Advisor or Van Kampen 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, the Advisory Agreement
authorizes the Advisor, and the Sub-advisory Agreement will authorize Van
Kampen, 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 the Advisor, Van Kampen or their affiliates exercise
investment discretion. The fees under the advisory agreements between the Trust,
the Advisor and Van Kampen are not reduced by reason of their receiving such
brokerage and research services. The Trust's Board of Trustees will periodically
review the commissions paid by the Fund to determine if the commissions paid
over representative periods of time were reasonable in relation to the benefits
received by the Fund.
Consistent with applicable provisions of the 1940 Act, the rules and
exemptions adopted by the Commission thereunder, and relevant interpretive and
"no-action" positions taken by the Commission's staff, the Trust's Board of
Trustees has adopted procedures pursuant to Rule 17e-1 under the 1940 Act to
ensure that all portfolio transactions with affiliates will be fair and
reasonable. Under the procedures adopted, portfolio transactions for the Fund
may be executed through any affiliated broker (other than affiliated persons of
the Trust solely because the broker is an affiliated person of a sub-advisor of
another Fund) if, subject to other conditions in the Rule 17e-1 procedures, in
the judgment of the Advisor or Van Kampen, the use of an affiliated broker is
likely to result in price and execution at least as favorable as those of other
qualified broker-dealers, and if, in the transaction an affiliated broker
charges the Fund a rate consistent with those charged for comparable
transactions in comparable accounts of the broker's most favored unaffiliated
clients. Over-the-counter purchases and sales are transacted directly with
principal market makers except in those cases in which better prices and
executions may be obtained elsewhere.
7
<PAGE>
BROKERAGE TRANSACTIONS WITH AFFILIATES
During the fiscal year ended December 31, 1997, the Fund did not pay any
brokerage commissions to any broker then affiliated with the Advisor or Van
Kampen.
OWNERSHIP OF SHARES AND VOTING INFORMATION
As of October 21, 1998, the Trust believes that the Trustees and officers
of the Trust, as a group, owned less than one percent of each class of shares of
the Fund and of the Trust as a whole. As of the Record Date, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the Fund:
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES OWNED
----- ------------
CLASS A
- -------
None
CLASS B
- -------
None
CLASS I
- -------
WM Shareholder Services 148.018 100.00
601 W. Main Avenue, Suite 300
Spokane, WA 99201
CLASS S
- -------
WM Funds Administration 90.848 50.518
601 W. Main Avenue, Suite 300
Spokane, WA 99201
WM Shareholder Services 88.982 49.481
601 W. Main Avenue
Spokane, WA 99201
8
<PAGE>
CERTAIN TRUSTEES AND OFFICERS OF THE TRUST
The following persons are both officers or Trustees of the Trust and
officers or directors of the Advisor: William G. Papesh, Director and President
of WM Advisors, is the Vice President and Trustee of the Trust, Monte D. Calvin,
Director of WM Advisors, is the Senior Vice President and Chief Financial
Officer of the Trust and Sandy Cavanaugh, Director of WM Advisors, is Senior
Vice President of the Trust.
No persons act as both officers or Trustees of the Trust and officers and
directors of Van Kampen.
TRANSFER AGENT AND PRINCIPAL UNDERWRITER.
The Transfer Agent is WM Shareholder Services, Inc., located at 601 W. Main
Avenue, Spokane, Washington 99201. The Principal Underwriter is WM Funds
Distributor, Inc. The principal business address of the Principal Underwriter
is 1201 Third Avenue, Seattle, Washington 98101.
OTHER MATTERS
In the event that a quorum is not present for purposes of acting on
Proposal 1, or if sufficient votes in favor of Proposal 1 are not received by
the time of the Meeting, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a plurality of the shares
present in person or represented by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of any Proposal that has
not then been adopted. They will vote against any such adjournment those
proxies required to be voted against each Proposal that has not then been
adopted and will not vote any proxies that direct them to abstain from voting on
such Proposals.
9
<PAGE>
Although the Meeting is called to transact any other business that may
properly come before it, the only business that management intends to present or
knows that others will present is Proposal 1, mentioned in the Notice of Special
Meeting. However, you are being asked on the enclosed proxy to authorize the
persons named therein to vote in accordance with their judgment with respect to
any additional matters which properly come before the Meeting, and on all
matters incidental to the conduct of the Meeting.
SHAREHOLDER PROPOSALS AT FUTURE MEETINGS
The Trust does not hold annual or other regular meetings of shareholders.
Shareholder proposals to be presented at any future meeting of shareholders of
the Trust must be received by the Trust at a reasonable time before the Trust's
solicitation of proxies for that meeting in order for such proposals to be
considered for inclusion in the proxy materials relating to that meeting.
November __, 1998
[INTENTIONALLY LEFT BLANK]
10
<PAGE>
APPENDIX A
----------
INVESTMENT SUB-ADVISORY AGREEMENT
Effective as of January 1, 1999
Van Kampen Management Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Ladies and Gentlemen:
WM Advisors, Inc. ("WM Advisors"), a corporation organized under the laws
of the state of Washington, hereby agrees with Van Kampen Management Inc. (the
"Sub-Advisor"), a corporation organized under the laws of the state of Delaware,
as follows:
1. Investment Description; Appointment
WM Advisors desires to employ the capital of the investment funds of WM
Trust I (the "Trust") listed on Annex A hereto (individually, each a "Fund" and
collectively, the "Funds") by investing and reinvesting in investments of the
kind and in accordance with the limitations specified in the Trust's Declaration
of Trust, as amended, and in the Prospectus and Statement of Additional
Information relating to the Funds 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 Funds' Prospectus
and Statement of Additional Information and the Trust's Declaration of Trust, as
amended, have been or will be submitted to the Sub-Advisor. WM Advisors agrees
to provide copies of all amendments to the Funds' Prospectus and Statement of
Additional Information and the Trust's Declaration of Trust to the Sub-Advisor
on an on-going basis. WM Advisors desires to employ and hereby appoints the
Sub-Advisor to act as an investment sub-advisor to the Funds. The Sub-Advisor
accepts the appointment and agrees to furnish the services described herein for
the compensation set forth below.
2. Services as Investment Sub-Advisor
Subject to the supervision of the Board of Trustees of the Trust and of WM
Advisors, the Funds' investment adviser, the Sub-Advisor will (a) act in
conformity with the Trust's Declaration of Trust, the Investment Trust Act of
1940 (the "1940 Act"), the Investment Advisers Act of 1940 and the Internal
Revenue Code of 1986, as the same may from time to time be amended; (b) make
investment decisions for the Funds in accordance with the Funds' investment
objectives and policies as stated in the Funds' 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 funds to effectuate the investment decisions made; (d) maintain
books and records with respect to the securities
<PAGE>
transactions of the Funds and will furnish to the Trust's Board of Trustees such
periodic, regular and special reports as the Board may request; and (e) 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 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 Funds' investments and conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of the Funds' assets. In addition, the Sub-Advisor will furnish the
Funds or WM Advisors with whatever statistical information the Funds or WM
Advisors may reasonably request with respect to the instruments that the Funds
may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Funds 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
Funds 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 Funds, 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 Funds, 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 of judgment or mistake of law or for any loss suffered by the Funds in
connection with the matters to which this
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<PAGE>
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 month a fee
for the previous among the fees detailed in Annex A attached to this Agreement.
The Sub-Advisor shall have no right to obtain compensation directly from the
Funds 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 month, the fee for such part of that month shall be prorated
according to the proportion that such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to the Sub-Advisor, the value of the Funds'
net assets shall be computed at the times and in the manner specified in the
Funds' Prospectus or Statement of Additional Information relating to the Funds
as from time to time in effect.
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 Funds and of the officers or Board of
Trustees of the Trust; and any extraordinary expenses. In addition, the Funds
pay a distribution fee pursuant to the terms of a Distribution Plan adopted
under Rule 12b-1 of the 1940 Act.
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<PAGE>
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 companies, and WM Advisors has no objection to the Sub-Advisor
so acting, provided that whenever the Funds 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 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 Funds. In addition, WM
Advisors understands that the persons employed by the Sub-Advisor to asset 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 Funds' 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 30 days'
written notice, by WM Advisors, the Board of Trustees of the Trust or by vote of
holders of a majority of the Funds' shares or upon 90 days' written notice, by
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 Declaration of Trust,
dated September 19, 1997, together with all amendments thereto, is on file in
the office of the Secretary of the Commonwealth of Massachusetts, (b) the
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.
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<PAGE>
11. Indemnification
WM Advisors shall indemnify and hold harmless the Sub-Advisor 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 of 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. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto.
14. 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:_____________________________ By__________________________________
Name:
Title:
Accepted:
VAN KAMPEN
MANAGEMENT INC.
By_________________________________ Dated:______________________________
Name:
Title:
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<PAGE>
ANNEX A
For the services provided and expenses assumed pursuant to the Agreement,
the Sub-Advisor will be paid a monthly fee, absent fee waivers, based upon each
Fund's average daily net assets, at an annual rate as follows:
Tax-Exempt Bond Fund........ 0.10%
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<PAGE>
GROUP OF FUNDS
TAX-EXEMPT BOND FUND
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS--December 15, 1998
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 TAX EXEMPT BOND FUND, a series of WM
Trust I, on December 15, 1998 at 11:00 A.M. Pacific time, and any adjournment
thereof, all of the shares of the Fund 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
[_] [_] [_]
1. To approve the Sub-Advisory Agreement with
respect to the Fund between WM Advisors, Inc.
and Van Kampen Management, Inc.
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
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TO VOTE BY TELEPHONE, CALL TOLL-FREE 1-800-[___-____] [NEED FIRST DATA PHONE]
BETWEEN 5 A.M. AND 6 P.M. (PST).
TO VOTE BY MAIL, PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
TO VOTE BY FAX, PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE
AND FAX THE PROXY CARD TO 1-___-___-____ [NEED FIRST DATA FAX]
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