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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 TRUST II
(Name of Registrant as Specified In Its Charter)
WM TRUST II
(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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WM GROUP OF FUNDS
INTERNATIONAL GROWTH FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JUNE 23, 1999
To the Shareholders of the International Growth Fund:
Notice is hereby given that a Special Meeting of Shareholders of the
International Growth Fund (the "Fund"), a series of WM Trust II, will be held on
June 23, 1999 at 10:00 a.m., Pacific time, at the main office of the Fund at
1201 Third Avenue, 22nd Floor, 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. and Capital
Guardian Trust Company.
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 April 26, 1999 are
entitled to notice of, and to vote at, the Meeting.
By order of the Board of Trustees,
John T. West, Secretary
MAY 10, 1999
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YOUR VOTE IS IMPORTANT
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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.
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WM GROUP OF FUNDS
INTERNATIONAL GROWTH 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 II
(the "Trust") for use at the Special Meeting of Shareholders of the
INTERNATIONAL GROWTH FUND (the "Fund"), a series of the Trust, to be held at
10:00 a.m., Pacific time, on June 23, 1999 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 May 10, 1999.
A COPY OF THE ANNUAL REPORT OF THE TRUST FOR THE FISCAL YEAR ENDED
OCTOBER 31, 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
April 26, 1999, 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-- ____________; Class
B-- ____________; Class I--__________; and Class S--____________.
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 a majority 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.
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
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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.
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, Inc. (the "Advisor") and its affiliates. The Trust may decide to
retain D.F. King to aid in solicitation of proxies for a fee not to exceed
$10,000. 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 Fund.
II. APPROVAL OF SUB-ADVISORY AGREEMENT WITH CAPITAL GUARDIAN TRUST COMPANY.
THE PROPOSAL
As described more fully below, the Advisor has proposed that Capital
Guardian Trust Company ("Capital Guardian") serve as sub-advisor to the Fund
pursuant to a Sub-Advisory Agreement (the "Proposed Agreement") with respect to
the Fund. In order for Capital Guardian 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 in principle (to be effective upon
shareholder approval and subject to formal approval of the Proposed Agreement by
the Trustees at an in-person meeting called for that purpose to be held on June
8, 1999) 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 April 21, 1999. 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 Capital Guardian, the Trustees considered the
extensive experience of Capital Guardian in managing international investments,
its performance record, its distribution and administrative support
capabilities, and its fees. 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.
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 Capital
Guardian is set forth below under "Other Information."
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DESCRIPTION OF PROPOSED AGREEMENT
In order to assist it in carrying out its responsibilities as manager
of the Fund, the Advisor has proposed to retain Capital Guardian under the
Proposed Agreement to render sub-advisory services to the Fund under the
supervision of the Advisor and the Trustees of the Trust.
The Advisor would pay the fees of Capital Guardian under the Proposed
Agreement. Under the Proposed Agreement, Capital Guardian would receive a fee
that would have been equal to approximately [0.43%] of the Fund's average net
assets during the year ended October 31, 1998. Under the Proposed Agreement and
a substantially identical agreement with respect to the International Growth
Fund series of WM Variable Trust, the Advisor would pay Capital Guardian fees at
an annual rate based upon the combined average net assets ("Combined Assets") of
the Fund and the International Growth Fund series of WM Variable Trust according
to the following schedule: ___% of the first $___ million of Combined Assets,
___% of the next $___ million of Combined Assets, and ___% of Combined Assets in
excess of $___ million. The portion of these fees attributable to the Proposed
Agreement would be based on the ratio of the Fund's average daily net assets to
the Combined Assets.
The Proposed Agreement provides that, subject to the supervision of the
Trustees and the Advisor, Capital Guardian would, in conformity with the Trust's
Master Trust Agreement, the 1940 Act, the Investment Advisers Act of 1940 (to
the extent applicable) 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 Capital
Guardian; 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 Capital Guardian 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 Capital Guardian 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, Capital Guardian would
supervise the Fund's investments and conduct a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of the Funds' assets. In
addition, Capital Guardian would furnish the Fund or the Advisor with whatever
statistical information the Fund or the Advisor may reasonably request with
respect to the investments 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 July 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
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Proposed Agreement terminates automatically in the event of its assignment or
upon any termination of the advisory agreement between the Trust and the
Advisor. The Proposed Agreement may be terminated without penalty on 30 days'
written notice, by the Advisor, by the Board of Trustees of the Trust or by a
vote of a majority of the Funds' shares, or upon 90 days' written notice by
Capital Guardian.
The Proposed Agreement provides that Capital Guardian shall not be
subject to any liability for any error of judgement or mistake of law or for any
loss suffered by the Fund 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.
TRUSTEES' RECOMMENDATION
THE TRUSTEES OF THE TRUST RECOMMEND THAT SHAREHOLDERS OF THE FUND VOTE
FOR APPROVAL OF 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
INFORMATION ABOUT THE TRUST
The Trust is an open-end management investment company organized in
1989 as a business trust under the laws of Massachusetts. The Trust is a series
investment company with nine investment portfolios. The Fund is one of those
portfolios and is diversified. The address of the Trust is 1201 Third Avenue,
22nd Floor, Seattle, Washington 98101.
INFORMATION ABOUT THE ADVISOR
WM Advisors, Inc., the Advisor to the Fund, 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
agreement with the Trust dated March 20, 1998, as amended as of January 1, 1999
(the "Advisory Agreement"), and approved by the Fund's shareholders on December
23, 1997. The Advisory Agreement was submitted for shareholder approval at such
time in connection with the reorganization of the Trust.
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The Advisor's responsibilities under the Advisory Agreement include
managing the Fund's investment operations and portfolio composition, including
the purchase, retention and disposition of securities therefor, in accordance
with the Fund's investment objectives, policies and restrictions as stated in
the Prospectus and Statement of Additional Information. 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. 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 (a) by the vote of a majority of the Trustees, including a
majority of independent and disinterested 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 be amended only in accordance with the 1940 Act.
The Advisory Agreement may be terminated at any time without the
payment of any penalty, by either the Trust (by vote of the Board of Trustees,
or by a vote of a majority of the outstanding voting securities of the Fund) or
the Advisor upon 60 days' written notice to the other.
The Advisory Agreement provides that the Advisor shall not be
liable for any error of judgement or mistake of law or for any loss suffered by
the Trust in connection with matters to which the Advisory Agreement relates,
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
incurred by it in connection with its activities 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 1.10% on the first $50 million of net assets, plus 1.00% on the
next $75 million of net assets, plus 0.80% on net assets in excess of $125
million.
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FEES PAID
For the fiscal year ended October 31, 1998 (four months due to a change
in the fiscal year), the Fund paid advisory fees to the Advisor, transfer agency
fees to the Transfer Agent, and distribution fees to the Distributor as follows:
advisory fees: $497,321; transfer agency fees: $46,783; distribution fees:
$69,684.
INFORMATION ABOUT CAPITAL GUARDIAN
Capital Guardian, located at [address], is a wholly-owned subsidiary of
Capital Group International, Inc., located at [address], which in turn is owned
by The Capital Group Companies, Inc. ("CGC"), located at [address]. CGC is also
the parent company of several other subsidiaries, all of which directly or
indirectly provide investment management services. A broad group of
approximately 250 key investment and administrative people have an equity
participation in CGC, with 100% of the company owned by active associates and
recent retirees. CGC maintains investment management relationships with several
other organizations around the world. [Together with its affiliates, Capital
Guardian had aggregate assets under management or supervision, of more than
$___________ as of __________ ___, 1999]. [Name the principal executive officer
and each director.]
If the Proposed Agreement is approved by shareholders (assuming
approval of the Proposed Agreement by the Board of Trustees at an in-person
meeting called for that purpose to be held on June 8, 1999), a team of portfolio
managers will have responsibility for the day-to-day management of the Fund's
portfolio, effective on or about July 1, 1999. The lead portfolio manager would
be [name], [title], who has been employed by Capital Guardian since [date of
employment]. The other members of the management team would be: [list other
managers, titles, dates of employment]. [Capital Guardian has informed the
Advisor that it has no financial condition that is reasonably likely to impair
its financial ability to fulfill its commitment to the Fund under the Proposed
Agreement.]
OTHER FUNDS ADVISED OR SUB-ADVISED BY CAPITAL GUARDIAN
Capital Guardian also serves as the investment advisor to the following
mutual funds [note that they serve as funding vehicles for variable annuities],
each of which has an investment objective similar to that of the Fund: [list
mutual funds]. Capital Guardian receives fees at the annual rates of ___%, ___%,
and ___% of the average daily net assets of [list funds], respectively. As of
_______ __, 1999, the approximate net assets of each of the funds were
$________, $________, and $________, respectively. [Indicate whether investment
adviser has waived, reduced, or otherwise agreed to reduce its compensation
under any applicable contract]
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CURRENT SUB-ADVISORY AGREEMENT
Warburg Pincus Asset Management, Inc. ("Warburg") currently acts as
sub-advisor to the Fund pursuant to an agreement (the "Current Sub-Advisory
Agreement") with the Advisor dated March 20, 1998, which was approved by the
Fund's shareholders on December 23, 1997. The Current Sub-Advisory Agreement was
submitted for shareholder approval at such time in connection with the
reorganization of the Trust. The Board of Trustees of the Trust approved such
agreement at a meeting held on October 27-28, 1999. Under the Current
Sub-Advisory Agreement, Warburg is compensated for its services by the Advisor
at an annual rate of 0.50% of the Fund's average daily net assets. The aggregate
fee paid to Warburg was $753,964 during the fiscal year ended June 30, 1998 and
$247,641 during the fiscal period between June 30, 1998 and October 31, 1998. If
the Proposed Agreement is approved, it is expected that the Current Sub-
Advisory Agreement will be terminated and the Proposed Agreement will be
effective on or about July 1, 1999.
COMPARISON OF PROPOSED AGREEMENT AND CURRENT SUB-ADVISORY AGREEMENT
The material terms of the Current Sub-Advisory Agreement and the
Proposed Agreement are substantially the same, except for the sub-advisory fee
rates. Had the Proposed Agreement been in effect during the last fiscal year,
the aggregate sub-advisory fee would have been $______________ during the fiscal
year ended June 30, 1998 and $____________ during the fiscal period between June
30, 1998 and October 31, 1998. The differences in the fees that were actually
paid under the Current Sub-Advisory Agreement and the fees that would have been
paid under the Proposed Agreement are _____% of the fees paid to Warburg during
such fiscal year and _____% of the fees paid to Warburg during such period.
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 will be made by the Advisor or Capital Guardian, 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 will be
made independently from those of the other accounts managed by the Advisor or
Capital Guardian, 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 Capital Guardian 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 Capital Guardian 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 Capital Guardian seeks the best overall terms
available. In assessing the best overall terms available for any transaction,
the Advisor and Capital Guardian will consider the factors that the Advisor or
Capital Guardian 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, in selecting brokers or dealers to
execute a particular transaction and in evaluating the best overall terms
available, to consider the value of any brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as amended) provided by a broker or dealer. The Advisor may pay a broker or
dealer who provides such services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting the transaction if the Advisor
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer.
Under the Proposed Agreement, Capital Guardian would, in placing orders with
brokers and dealers, 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, Capital Guardian
would, in its discretion, be permitted to purchase and sell securities to and
from brokers and dealers who provide the Trust with research advice and other
services. The fees under the Advisory Agreements 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.
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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 Capital Guardian, 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 June 30, 1998 and the fiscal period ended
October 31, 1998, the Fund [did not pay any brokerage commissions to any broker
then affiliated with the Advisor or Capital Guardian].
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OWNERSHIP OF SHARES AND VOTING INFORMATION
[As of April 26, 1999, the "Record Date", to the knowledge of the
Trust, 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 shares of the Fund:
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES OWNED
------------ -------------
<S> <C> <C>
[ ] [ ] [ ]
</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 the Advisor, is the President and a Trustee of the Trust, Monte D. Calvin,
Director of the Advisor, is the Senior Vice President and Chief Financial
Officer of the Trust, and Sandra A. Cavanaugh, Director of the Advisor, is
Senior Vice President of the Trust.
No persons act as both officers or Trustees of the Trust and officers
or directors of Capital Guardian.
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, 22nd Floor, Seattle, Washington 98101.
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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.
May 10, 1999
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APPENDIX A
INVESTMENT SUB-ADVISORY AGREEMENT
INTERNATIONAL GROWTH FUND
EFFECTIVE AS OF JULY 1, 1999
Capital Guardian Trust Company
One Market Street
Stuart Tower
18th Floor
San Francisco, CA 94105
Ladies and Gentlemen:
WM Advisors, Inc. ("WM Advisors"), a corporation organized under the
laws of the state of Washington, hereby agrees with Capital Guardian Trust
Company, (the "Sub-Advisor"), a trust company organized under the laws of the
state of _____________, as follows:
1. Investment Description; Appointment
WM Advisors desires to employ the capital of the International Growth
Fund (the "Fund"), a series of WM Trust II (the "Trust"), by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in the Trust's Master Trust Agreement, as amended, and in the
Prospectus and Statement of Additional Information relating to the Fund as in
effect and which may be amended from time to time, and in such manner and to
such extent as may from time to time be approved by the Board of Trustees of the
Trust. Copies of the Funds' Prospectus and Statement of Additional Information
and the Trust's Master Trust Agreement, as amended, have been or will be
submitted to the Sub-Advisor. WM Advisors agrees to provide copies of all
amendments to the Fund's Prospectus and Statement of Additional Information and
the Trust's Master Trust Agreement to the Sub-Advisor on an on-going basis. WM
Advisors desires to employ and hereby appoints the Sub-Advisor to act as
investment sub-advisor to the Fund. The Sub-Advisor accepts the appointment and
agrees to furnish the services described herein for the compensation set forth
below.
2. Services as Investment Sub-Advisor
Subject to the supervision of the Board of Trustees of the Trust and of
WM Advisors, the Fund's investment adviser, the Sub-Advisor will (a) act in
conformity with the Trust's Master Trust Agreement, the Investment Company Act
of 1940 (the "1940 Act"), the Investment Advisers Act of 1940 (to the extent
applicable to the Sub-Advisor) and the Internal Revenue Code of 1986, as the
same may from time to time be amended; (b) make investment
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<PAGE> 14
decisions for the Fund in accordance with the Fund's investment objectives and
policies as stated in the Fund's Prospectus and Statement of Additional
Information as in effect and, after notice to the Sub-Advisor, and which may be
amended from time to time; (c) place purchase and sale orders on behalf of the
Fund to effectuate the investment decisions made; (d) maintain books and
records with respect to the securities transactions of the Fund and will
furnish to the Trust's Board of Trustees such periodic, regular and special
reports 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 Fund's investments and conduct a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of the Fund's assets. In
addition, the Sub-Advisor will furnish the Fund or WM Advisors with whatever
statistical information the Fund or WM Advisors may reasonably request with
respect to the investments that the Funds may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Fund and selecting brokers or
dealers, the Sub-Advisor will use its best efforts to seek the best overall
terms available and shall execute or direct the execution of all such
transactions in a manner permitted by law and in a manner that is in the best
interest of the Fund and their shareholders. In assessing the best overall
terms available for any Fund transactions, the Sub-Advisor will consider all
factors it deems relevant including, but not limited to, breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis. Pursuant to
its investment determinations for the Fund, in placing orders with brokers and
dealers, the Sub-Advisor will attempt to obtain the best net price and the most
favorable execution of its orders. Consistent with this obligation, when the
execution and price offered by two or more brokers or dealers are comparable,
the Sub-Advisor may, in its discretion, purchase and sell portfolio securities
to and from brokers and dealers who provide the Trust with research advice and
other services.
4. Information Provided to the Trust
The Sub-Advisor will keep the Trust and WM Advisors informed of
developments materially affecting the Fund, and will on its own initiative,
furnish the Trust and WM Advisors on at least a quarterly basis with whatever
information the Sub-Advisor believes is appropriate for this purpose.
5. Standard of Care
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<PAGE> 15
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 Fund 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 Fund or the Trust for services provided
hereunder and agrees to look solely to WM Advisors for payment of fees due. Upon
any termination of this Agreement before the end of a 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 Fund's net assets shall be computed at the
times and in the manner specified in the Fund's Prospectus or Statement of
Additional Information relating to the Fund 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 Fund 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.
8. Services to Other Companies or Accounts
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<PAGE> 16
WM Advisors understands that the Sub-Advisor now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts and as investment adviser to one or more other investment
companies or series of investment companies, and WM Advisors has no objection to
the Sub-Advisor so acting, provided that whenever the Fund and one or more
other accounts or investment companies advised by the Sub-Advisor have available
funds for investment, investments suitable and appropriate for each will be
allocated in accordance with procedures believed to be equitable to each entity.
Similarly, opportunities to sell securities will be allocated in an equitable
manner. WM Advisors recognizes that in some cases this procedure may limit the
size of the position that may be acquired or disposed of for the Fund. In
addition, WM Advisors understands that the persons employed by the Sub-Advisor
to assist in the performance of the Sub-Advisor's duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Sub-Advisor or any affiliate of the
Sub-Advisor to engage in and devote time and attention to other business or to
render services or whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date first written
above, shall continue for a period of two years thereafter, and shall continue
in effect for a period of more than two years thereafter only so long as such
continuance is specifically approved at least annually by (a) the Board of
Trustees of the Trust or (b) a vote of a "majority" (as defined in the 1940 Act)
of the Fund's outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote case 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 for 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 Master Trust
Agreement, dated February 22, 1989, 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.
11. Indemnification
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<PAGE> 17
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. Use of Names
a. It is understood that the name "Capital Guardian Trust
Company" or any derivative thereof or logo associated with
that name is the valuable property of the Sub-Advisor and its
affiliates and that the Trust and/or the Fund have the right
to use such name (or derivative or logo) in offering materials
of the Trust and/or Fund only with the prior written approval
of the Sub-Advisor and for so long as the Sub-Advisor is an
investment sub-advisor to the Trust and/or the Fund; provided
that the Trust and the Fund may use such name (or derivative
or logo) without such prior written approval in offering
materials of the Trust to the extent that (i) such materials
simply list the Sub-Advisor as the Sub-Advisor to the Fund as
part of a listing of the investment sub-advisers to the series
or portfolios of the Trust with a brief description of the
Sub-Advisor's experience and duties hereunder; (ii) such
materials include such name (or derivative or logo) and any
related information that has been previously approved by the
Sub-Advisor or that is required to be disclosed by applicable
law or regulation, such as information disclosed in the
Trust's registration statement; or (iii) such materials are
intended for broker-dealer use only, for use by the Trust's
Trustees, or for internal use by the Trust and WM Advisors.
Such prior written approval of the Sub-Advisor shall not be
unreasonably withheld and shall be deemed to be given if no
written objection is received by the Trust, the Fund or WM
Advisors within three business days after the request is made
by the Trust, the Fund or WM Advisors for such use. Upon
termination of this Agreement, the Trust and the Fund shall
forthwith cease to use such name (or derivative or logo) as
soon as reasonably practicable.
b. It is understood that the names "WM Trust II," and "WM
Advisors, Inc." or any derivatives thereof or logos associated
with such names is the valuable property of the Trust and/or
WM Advisors and their affiliates and that the Sub-Advisor or
its affiliates have the right to use such names (or
derivatives or logos) in marketing materials of the
Sub-Advisor or its affiliates only with the prior written
approval of WM Advisors or the Trust, as applicable, and for
so long as the Sub-Advisor is an investment sub-advisor to the
Trust and/or the Fund; provided that the Sub-Advisor or its
affiliates may use such names (or
A-5
<PAGE> 18
derivatives or logos) without such prior written approval in
marketing materials of the Sub-Advisor or its affiliates to
the extent that (i) such materials simply list the Trust or
the Fund as part of a listing of the investment companies
advised by the Sub-Advisor or its affiliates with a brief
description of the Trust or the Fund; (ii) such materials
include such names (or derivatives or logos) and any related
information that has been previously approved by the Trust or
WM Advisors, as applicable, or that is required to be
disclosed by applicable law or regulation; or (iii) such
materials are intended for broker-dealer use only or for
internal use by the Sub-Advisor. Such prior written approval
of WM Advisors or the Trust, as applicable, shall not be
unreasonably withheld and shall be deemed to be given if no
written objection is received by the Sub-Advisor within three
business days after the request is made by the Sub-Advisor for
such use. Upon termination of this Agreement, the Sub-Advisor
and its affiliates shall forthwith cease to use such names (or
derivatives or logos) as soon as reasonably practicable.
14. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
15. 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:
Capital Guardian Trust Company
By Dated:
------------------------- ---------------------------
Name:
Title:
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<PAGE> 19
ANNEX A
1. For purposes of calculating the fee to be paid to the Sub-Advisor
under this Agreement:
"Fund Assets" shall mean the net assets of the Fund;
"Other Assets" shall mean the portion of the net assets of the
International Growth Fund series of WM Variable Trust managed by the
Sub-Advisor; and
"Combined Assets" shall mean the sum of Fund Assets and Other Assets.
2. The Sub-Advisor shall be paid a monthly fee, absent fee waivers,
according to the following annual rate schedule based upon the average daily
Combined Assets:
First Next Next Next Next Over
$ $ $ $ $ $
---- ---- ---- ---- ---- ----
Million Million Million Million Million Million
------- ------- ------- ------- ------- -------
0. % 0. % 0. % 0. % 0. % 0. %
---- ---- ---- ---- ---- ----
The portion of this monthly fee that is payable under this Agreement shall be a
pro rata portion of this monthly fee based upon the ratio of average daily Fund
Assets to average daily Combined Assets. The remainder of this monthly fee
shall be payable under a separate agreement between WM Advisors and the
Sub-Advisor with respect to the International Growth Fund series of WM Variable
Trust.
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<PAGE> 20
WM GROUP OF FUNDS
INTERNATIONAL GROWTH FUND
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS-July 23, 1999
The undersigned hereby appoints William G. Papesh, Monte D. Calvin,
Sandra A. Cavanaugh, 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
INTERNATIONAL GROWTH FUND, a series of WM Trust II, on July 23, 1999 at 10:00
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 Capital Guardian Trust 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
- --------------------------------------------------------------------------------
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) [XXX-XXXX].
- --------------------------------------------------------------------------------
A-8
