<PAGE>
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1998
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2 )
---
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
<TABLE>
<S> <C>
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only
[X] 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>
WM GROUP OF FUNDS
TAX-EXEMPT BOND FUND
1201 THIRD AVENUE
SUITE 1400
SEATTLE, WASHINGTON 98101
November 11, 1998
Dear Shareholder:
On September 22, 1998, the Trustees approved the appointment of a new sub-
advisor, Van Kampen Management, Inc. for the Tax-Exempt Bond Fund (the
"Fund"). We believe the appointment of Van Kampen as sub-advisor, if approved
by the shareholders, will greatly benefit the Fund. Van Kampen has extensive
experience managing similar funds and already sub-advises the following other
WM Funds: California Municipal Fund, California Insured Intermediate Municipal
Fund and Florida Insured Municipal Fund.
A special meeting of shareholders will be held on December 18, 1998 at 2:00
p.m. (Pacific time) at the Fund's main office at 1201 Third Avenue, 15th
Floor, Seattle, Washington. This meeting is being held to approve Van Kampen's
appointment. Van Kampen's fees, as well as the costs of this solicitation and
meeting, will be paid for by the Advisor, WM Advisors, Inc., and NOT by the
Fund. There will not be any change in the fees borne by your Fund as a result
of the proposed change.
The accompanying proxy materials discuss the proposed Sub-Advisory agreement
in greater detail. Please read the information, and, if you cannot attend the
meeting, please cast your vote on the enclosed proxy card, date the card, and
return it in the postage prepaid envelope as soon as possible. PLEASE SIGN AND
RETURN YOUR PROXY CARD. YOUR VOTE IS IMPORTANT. If insufficient proxy cards
are returned, additional solicitation efforts will be required to encourage
shareholders to return their proxy cards.
If you have any questions, please telephone toll-free (800) 222-5852.
We look forward to the opportunities that Van Kampen's engagement will offer
to all shareholders and we appreciate your continued support.
Sincerely,
William G. Papesh
President
<PAGE>
WM GROUP OF FUNDS
TAX-EXEMPT BOND FUND
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 18, 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 18, 1998 at 2:00 p.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 11, 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>
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 WM 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 2:00 p.m., Pacific
time, on December 18, 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 11, 1998.
A COPY OF THE ANNUAL REPORT OF THE TRUST FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997 AND THE SEMI-ANNUAL REPORT FOR THE PERIOD ENDED APRIL 30, 1998 (DUE
TO THE CHANGE IN THE FUND'S YEAR-END) 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--
36,985,547.105; 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
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.
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
2
<PAGE>
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 facsimile
may be made by officers and Trustees of the Trust and employees of WM Advisors
and its affiliates. The Trust has retained First Data, Inc. to aid in the
tabulation of proxies. In addition, the Trust may decide to retain First Data,
Inc. to aid in solicitation of proxies for a fee not to exceed $2,500. 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.
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 a majority of 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.
A majority of the Trustees, including a majority of 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. If the shareholders do not approve the Proposed Agreement,
the Trustees will consider what further actions to take. Such actions could
include considering another potential sub-advisor for the Fund.
3
<PAGE>
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
average daily net assets of the Fund, calculated 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 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.
4
<PAGE>
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 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.
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 1201 Third Avenue,
Seattle, Washington 98101.
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
WM Advisors currently acts as the Fund's Advisor pursuant to an agreement
with the Trust dated March 20, 1998 (the "Advisory Agreement") and approved by
the
5
<PAGE>
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.
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.
6
<PAGE>
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 0.50% of the first $250 million of average daily net assets,
plus 0.40% on net assets in excess of $250 million.
Fees Paid
For the fiscal year ended December 31, 1997, of Composite Tax-Exempt Bond
Fund, Inc. the predecessor to the 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.
Other Fund Sub-Advised By Van Kampen
Van Kampen also serves as sub-advisor to a mutual fund, Mentor National
Municipal Fund, which has an investment objective similar to that of the Fund.
Van Kampen receives a fee at the annual rate of 0.25% of Mentor National
Municipal Fund's average daily net assets. As of September 30, 1998, the
approximate net assets of Mentor National Municipal Fund were $110.8 million.
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
7
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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,
8
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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.
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:
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES OWNED
------------ -------------
<S> <C> <C>
CLASS A
None
CLASS B
None
CLASS I
WM Shareholder Services.............................. 148.018 100%
1201 Third Avenue
Seattle, Washington 98101
CLASS S
WM Shareholder Services.............................. 179.830 100%
1201 Third Avenue
Seattle, Washington 98101
</TABLE>
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 President and a 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.
9
<PAGE>
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. The Principal
Underwriter is WM Funds Distributor, Inc. The principal business address of
each 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.
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 11, 1998
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 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 Company 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
A-1
<PAGE>
books and records with respect to the securities 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.
A-2
<PAGE>
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 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 month according to the schedule of fees detailed in Annex
A attached to this Agreement. The Sub-Advisor shall have no right to obtain
compensation directly from the 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
A-3
<PAGE>
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.
8. Services to Other Companies or Accounts
WM Advisors understands that the Sub-Advisor now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and as investment adviser to one or more other investment companies
or series of investment companies, and WM Advisors has no objection to the
Sub-Advisor so acting, provided that whenever the 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 assist in the performance of the Sub-Advisor's duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of the Sub-Advisor or any
affiliate of the Sub-Advisor to engage in and devote time and attention to
other business or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date first written above,
shall continue for a period of two years thereafter, and shall continue in
effect for a period of more than two years thereafter only so long as such
continuance is specifically approved at least annually by (a) the Board of
Trustees of the Trust or (b) a vote of a "majority" (as defined in the 1940
Act) of the 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 and will terminate automatically upon any
termination of the advisory agreement between the Trust and WM Advisors. In
addition, this Agreement will also terminate automatically in the event of its
assignment (as defined in said Act). The Sub-Advisor agrees to notify the
Trust of any circumstances that might result in this Agreement being deemed to
be assigned.
10. Representations of WM Advisors and the Sub-Advisor
WM Advisors represents that (a) a copy of the Trust's 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-
A-4
<PAGE>
Advisor has been duly authorized, (c) it has acted and will continue to act in
conformity with the 1940 Act and other applicable laws, and (d) it is
authorized to perform the services herein.
The Sub-Advisor represents that it is authorized to perform the services
described herein.
11. Indemnification
WM Advisors shall indemnify and hold harmless the Sub-Advisor 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:
A-5
<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:
<TABLE>
<S> <C>
Tax-Exempt Bond Fund................ 0.10%
</TABLE>
A-6
<PAGE>
Please fold and detach card at perforation before mailing.
WM GROUP OF FUNDS
TAX-EXEMPT BOND FUND
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS--DECEMBER 18, 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 18, 1998 at 2:00 P.M. Pacific time, and any adjournment
thereof, all of the shares of the Tax-Exempt Bond 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.
Date ________________
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(s)
<PAGE>
Please fold and detach card at perforation before mailing.
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.
Please vote by filling in the appropriate box below.
1.To approve the Sub-Advisory Agreement with respect to the Fund between WM
Advisors, Inc. and Van Kampen Management, Inc.
FOR [_] AGAINST [_] ABSTAIN [_]
PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
