<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] 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 Variable Trust
(Name of Registrant as Specified In Its Charter)
(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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<PAGE> 2
WM Variable Trust May 18, 1999
1300 21st Street, 2nd Floor
Sacramento, CA 95814
Dear Contract Owner:
The enclosed proxy statement solicits your vote as a Contract Owner of the WM
Advantage or the WM Strategic Asset Manager variable annuities for the purpose
of approving a new investment sub-advisory agreement with Capital Guardian Trust
Company (Capital Guardian) for the WM Variable Trust International Growth Fund
Division. This proxy statement is designed to give you detailed information
about the proposal. We encourage you to follow the Board of Trustees'
recommendation by voting "FOR" the proposal.
A Special Meeting of Contract Owners has been scheduled for June 23, 1999. While
you, of course, are welcome to join us at the meeting, most Contract Owners cast
their votes by completing and signing the proxy card that accompanies this proxy
statement. YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT AS SOON AS POSSIBLE. For your convenience, we
have enclosed a postage-paid reply envelope.
The WM Variable Trust employs a "two-tiered" investment management structure. We
select only experienced portfolio managers with proven track records to handle
the day-to-day investment management decisions for our funds. Overall investment
practices, guidelines, and performance are then monitored and reviewed by a team
of investment professionals at WM Advisors, Inc.
In an ongoing effort to provide Contract Owners with the highest quality
investment management possible, we have chosen Capital Guardian to assume
sub-advisory responsibilities for the WM International Growth Fund Division. An
institutional investment management firm founded in 1968, Capital Guardian
currently manages more than $80 billion in assets, with $40 billion in
international equity portfolios alone. Based on our extensive research and
analysis, we believe Capital Guardian's experience and proven track record in
managing international equity portfolios will benefit the Fund.
We feel confident that Capital Guardian will be a valuable addition to the WM
Funds family. We appreciate your participation as a Contract Owner, and look
forward to serving your investment needs in the years to come. If you have any
questions about this proposal, please do not hesitate to call (800) 222-5852.
Sincerely,
William G. Papesh
President
This material must be preceded or accompanied by a current WM Advantage or WM
Strategic Asset Manager prospectus.
<PAGE> 3
AMERICAN GENERAL LIFE INSURANCE COMPANY
HOUSTON, TEXAS 77251-1401
------------------------
NOTICE TO CONTRACTOWNERS OF SPECIAL MEETING
OF SHAREHOLDERS OF THE WM VARIABLE TRUST
TO BE HELD ON JUNE 23, 1999
Dear Contractowners:
The Variable Account Value of your WM Advantage variable annuity contract
or your WM Strategic Asset Manager variable annuity contract has been allocated
at your discretion to investment divisions of Separate Account D of American
General Life Insurance Company ("American General Life"). These divisions invest
in corresponding funds or portfolios of WM Variable Trust, a mutual fund (the
"Trust").
As Contractowner of record at the close of business on April 26, 1999 (the
"Record Date"), you are hereby offered the opportunity to instruct American
General Life as to how it should vote on proposals to be considered at a Special
Meeting of Shareholders of the Trust, relating to the International Growth Fund
(the "Fund"). American General Life's Separate Account D, is, and was on the
Record Date, the sole shareholder of the Fund.
The Special Meeting will be held at the main office of the Fund at 1201
Third Avenue, 22nd Floor, Seattle, Washington 98101, on June 23, 1999 at 10 a.m.
Pacific Time, to consider the approval of a new investment sub-advisory
agreement relating to the International Growth Fund by and between WM Advisors,
Inc. and Capital Guardian Trust Company.
Attached to this Notice is the Notice of Special Meeting of Shareholders
and the Proxy Statement of the Trust. You are urged to read both of these
statements prior to completing your Voting Instruction Card.
American General Life with WM Advisors, Inc., the Fund's investment
adviser, and the Trust's principal underwriter, WM Funds Distributor, Inc., are
committed to quality products and services and to earning your trust and
confidence. Please acknowledge this commitment by completing your voting
instructions and returning it to American General Life.
Rosalia S. Nolan
Vice President
IMPORTANT
IT IS IMPORTANT THAT YOUR CONTRACT BE REPRESENTED. PLEASE MARK YOUR PREFERENCE
ON THE VOTING INSTRUCTIONS, SIGN AND DATE IT, AND MAIL IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
YOUR PROMPT RESPONSE WILL HELP ENSURE THAT YOUR INTERESTS ARE REPRESENTED.
<PAGE> 4
WM VARIABLE TRUST
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 Variable Trust, 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 14, 1999
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> 5
WM VARIABLE TRUST
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 Variable Trust
(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, 22nd Floor,
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 14, 1999.
A COPY OF THE ANNUAL REPORT OF THE TRUST FOR THE FISCAL YEAR ENDED DECEMBER
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 aggregate number of
shares of beneficial interest of the Fund for all classes issued and outstanding
as of the Record Date was 4,681,925.591.
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 30% 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 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 expenses incurred in
connection with the solicitation of proxies, and the costs of holding the
Meeting, will be borne by the Fund.
1
<PAGE> 6
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 (subject to shareholder approval and
formal ratification 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" (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 also recommended approval of the Proposed Agreement by
shareholders. In determining to recommend the engagement of Capital Guardian,
the Trustees particularly focused on Capital Guardian's historical performance
relative to that of the Fund. The Trustees also considered the extensive
experience of Capital Guardian in managing international investments, its
investment philosophy and value orientation, which the Advisor believes are
well-suited to the Fund, its name recognition and organizational stability, its
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."
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.
Under the Proposed Agreement, the Advisor would pay the fees of Capital
Guardian in accordance with the fee schedule set forth in Annex A of the
Proposed Agreement. The schedule provides certain discounts based upon (1)
assets of the Fund and certain affiliates of the Advisor managed by Capital
Guardian or its affiliates and (2) the revenues received by Capital Guardian
pursuant to those arrangements. Had the Proposed Agreement been in effect for
the fiscal year ended December 31, 1998, the Advisor estimates that Capital
Guardian would have received a fee that would have been equal to approximately
0.44% of the Fund's average daily net assets. This fee estimate assumes, for
purposes of calculating applicable fee discounts, that aggregate assets managed
by Capital Guardian or its affiliates for the Fund and certain affiliates of the
Advisor were $551,302,298 and is based on (i) the average daily net assets of
the Fund and the International Growth Fund series of WM Trust II, another fund
managed by the Advisor and to be sub-advised by Capital Guardian, for the year
ended December 31, 1998, plus (ii) the assets, as of May 1, 1999, of another
affiliate of the Advisor managed by Capital Guardian.
2
<PAGE> 7
The Proposed Agreement provides that, subject to the supervision of the
Trustees and the Advisor, Capital Guardian would act (to the extent related to
the scope of its duties reasonably contemplated under the Proposed Agreement) 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 under the Proposed
Agreement, 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 of a majority of the Trustees or (ii) by the vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of the Fund,
provided that in either event the continuance is also approved by a majority of
the Independent Trustees, by vote cast in person at a meeting called for the
purpose of voting on such approval. The 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 60 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 60 days' written notice by Capital Guardian.
The Proposed Agreement provides that Capital Guardian shall not be subject
to any liability for any error of judgment 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.
3
<PAGE> 8
III. ADDITIONAL INFORMATION
INFORMATION ABOUT THE TRUST
The Trust is an open-end management investment company organized in 1993 as
a business trust under the laws of Massachusetts. The Trust is a series
investment company with fifteen 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 both the Advisor and Washington
Mutual, Inc. is 1201 Third Avenue, Seattle, Washington 98101.
The Principal Executive Officer and Directors of the Advisor and their
principal occupations are listed below. The address for each is 1201 Third
Avenue, Seattle, WA 98101.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ---- --------------------
<S> <C>
Monte D. Calvin First Vice President of WM Shareholder Services, Inc. (the
"Transfer Agent"), the Advisor and WM Funds Distributor,
Inc. (the "Distributor")
Sandra A. Cavanaugh First Vice President of the Advisor, Transfer Agent and
Distributor
Craig S. Davis Executive Vice President of Washington Mutual, Inc.
Sharon L. Howells First Vice President and Corporate Secretary of the Advisor,
Distributor and Transfer Agent
Kenneth Lepore President of the Transfer Agent
William G. Papesh President of the Advisor, Distributor and WM Group of Funds
</TABLE>
ADVISORY AGREEMENT
The Advisor currently acts as the Fund's Advisor pursuant to an agreement
with the Trust dated January 30, 1998 (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 original
appointment of the Advisor.
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,
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
4
<PAGE> 9
Fund, provided such continuance is approved at least annually (a) by the vote of
a majority of the Trustees or (b) by the vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund, provided that in
either event the continuance is also approved by a majority of the Independent
Trustees, by vote cast in person at a meeting called for the purpose of voting
on such approval. 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 judgment 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 0.95% on the first $50 million of net assets, plus 0.85% on the next $75
million of net assets, plus 0.75% on net assets in excess of $125 million.
FEES PAID
For the fiscal year ended December 31, 1998, the Fund paid advisory fees to
the Advisor, and transfer agency fees and administrative fees to the Transfer
Agent as follows: advisory fees: $537,004; transfer agency fees: $478;
administrative fees: $103,148. The Fund paid no distribution fees to the
Distributor during such fiscal year.
INFORMATION ABOUT CAPITAL GUARDIAN
Capital Guardian has provided the Advisor with the following information
about its organization. Capital Guardian is a wholly-owned subsidiary of Capital
Group International, Inc. ("CGI"), which in turn is owned by The Capital Group
Companies, Inc. ("CGC"), all of which are located at 333 South Hope Street, Los
Angeles, CA 90071. 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. Capital
Guardian had aggregate assets under management of approximately $85.9 billion as
of March 31, 1999. 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.
5
<PAGE> 10
The Principal Executive Officer and Directors of Capital Guardian and their
principal occupations and addresses are listed below:
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION ADDRESS
- ---- -------------------- -------
<S> <C> <C>
Robert Ronus President of Capital Guardian, 333 South Hope Street, 55th Floor
Portfolio Manager Los Angeles, CA 90071-1447
Andrew F. Barth Research Analyst 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
Michael D. Beckman Sr. Vice President and Treasurer 135 South State College Boulevard
of Capital Guardian Brea, CA 92821-5804
Larry P. Clemmensen President of CGC 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
Roberta A. Conroy Attorney 11100 Santa Monica Boulevard, 15th Floor
Los Angeles, CA 90025-3384
David I. Fisher Portfolio Manager 11100 Santa Monica Boulevard, 15th Floor
Los Angeles, CA 90025-3384
William H. Hurt Portfolio Manager 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
Nancy J. Kyle Portfolio Manager 630 Fifth Avenue, 36th Floor
New York, NY 10111-0121
Karin L. Larson Research Analyst 11100 Santa Monica Boulevard, 15th Floor
Los Angeles, CA 90025-3384
D. James Martin Research Analyst 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
John R. McIllwraith Portfolio Manager One Market, Steuart Tower, Suite 1800
San Francisco, CA 94105-1409
James R. Mulally Portfolio Manager 11100 Santa Monica Boulevard, 15th Floor
Los Angeles, CA 90025-3384
Jason M. Pilalas Research Analyst 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
Theodore R. Samuels Portfolio Manager 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
John H. Seiter Portfolio Manager 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
Eugene P. Stein Portfolio Manager 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
Shaw B. Wagener Portfolio Manager 333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
</TABLE>
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
6
<PAGE> 11
or about July 1, 1999. The members of the management team would be: David I.
Fisher, Chairman of the Board of CGI and Capital Guardian (29 years with Capital
Guardian); Hartmut Giesecke, Chairman of the Board of Capital Guardian's
Japanese investment management subsidiary, Capital International K.K., Managing
Director Asia-Pacific of CGI, Senior Vice President and Director of Capital
International Research, Inc. and Capital International, Inc. (26 years with
Capital Guardian); Richard N. Havas, Senior Vice President and a portfolio
manager with research responsibilities for Capital Guardian and Capital
International Limited (13 years with Capital Guardian); Nancy J. Kyle, Senior
Vice President, Director and a member of the Executive Committee of Capital
Guardian, President and a Director of Capital Guardian (Canada), Inc., and a
Vice President of Emerging Markets Growth Fund (8 years with Capital Guardian);
John McIlwraith, Senior Vice President-International and a Director of Capital
Guardian, a Director and a Senior Vice President of Capital International
Limited, and an international equity portfolio manager (15 years with Capital
Guardian); Robert Ronus, President and a Director of Capital Guardian, Chairman
of the Board of Capital International Research, Inc., Chairman of the Board and
a Director of Capital Guardian (Canada), Inc., a Director of CGC and CGI, and a
Senior Vice President of Capital International S.A. and Capital International
Limited (26 years with Capital Guardian); Lionel M. Sauvage, a Senior Vice
President and portfolio manager for Capital Guardian and a Vice President and a
Director of Capital International Research, Inc. (12 years with Capital
Guardian); Nilly Sikorsky, President and Managing Director of Capital
International S.A., Chairman of Capital International Perspective S.A., Managing
Director-Europe and a Director of CGI, CGC, Capital International Limited and
Capital International K.K. (36 years with Capital Guardian); Rudolf M.
Staehelin, a Senior Vice President and Director of Capital International
Research, Inc. and Capital International S.A. (17 years with Capital Guardian).
OTHER FUNDS SUB-ADVISED BY CAPITAL GUARDIAN
Capital Guardian has provided the Advisor with the following information
relating to certain other funds it sub-advises. As of March 31, 1999, Capital
Guardian acts as a sub-advisor to the registered investment companies listed
below which have a similar investment mandate to that of the Fund. The size of
each fund and the fee schedule applicable to each is set forth below. Capital
Guardian has not waived, reduced or otherwise agreed to reduce compensation
under the schedules below except as may be noted.
<TABLE>
<CAPTION>
FEES AS A PERCENTAGE OF ASSETS
----------------------------------------------------------
BETWEEN BETWEEN
ASSETS AS OF FIRST $25,000,000 & $50,000,000 & OVER
FUND 3/31/99 $25,000,000 $50,000,000 $250,000,000 $250,000,000
- ---- ------------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Diversified Investment Advisors-
International Equity Fund....... $368,302,946 75% 60% .425% .375%
Fremont International Growth
Fund............................ $ 37,128,589 75% 60% .425% .375%
Vantage Point International
Fund............................ $136,451,336 75% 60% .425% .375%
Republic International Equity
Fund............................ $239,234,642 70% 55% .425% .375%
SEI Institutional Investments
Trust*.......................... $162,200,000 75% 60% .425% .375%
SEI Institutional International
Trust*.......................... $355,300,000 75% 60% .425% .375%
American General International
Value Fund-AG2.................. $ 6,200,000 75% 60% .425% .375%
American General International
Value Fund-AG3.................. $ 6,800,000 75% 60% .425% .375%
</TABLE>
- ---------------
* Based upon a funding commitment to reach a designated asset level within a set
time, Capital Guardian has charged under the above schedule from the onset as
if the designated asset level had been reached.
7
<PAGE> 12
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 January 30, 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 original
appointment of the Advisor. The Board of Trustees of the Trust approved such
agreement at a meeting held on October 27-28, 1997. 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 $286,524 during the fiscal year ended December 31, 1998.
The Advisor has notified Warburg that the Current Sub-Advisory Agreement will
terminate on June 30, 1999 in order to accommodate the engagement of Capital
Guardian under the Proposed Agreement, which if approved 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 Advisor
estimates that the aggregate sub-advisory fee would have been approximately
$252,547 during the fiscal year ended December 31, 1998. This fee estimate
assumes, for purposes of calculating applicable fee discounts, that aggregate
assets managed by Capital Guardian or its affiliates for certain affiliates of
the Advisor are $551,302,298 and is based on (i) the average daily net assets of
the Fund and the International Growth Fund series of WM Trust II, another fund
managed by the Advisor and to be sub-advised by Capital Guardian, for the year
ended December 31, 1998, plus (ii) the assets, as of May 1, 1999, of another
affiliate of the Advisor managed by Capital Guardian. The difference in the fee
that was actually paid under the Current Sub-Advisory Agreement and the fee that
would have been paid under the Proposed Agreement is approximately 11.9% of the
fee paid to Warburg during the fiscal year ended December 31, 1998. All fees to
be paid to Capital Guardian under the Proposed Agreement will be borne by the
Advisor. Fees paid by the Fund to the Advisor would not be affected by the
Proposed Agreement.
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.
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<PAGE> 13
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 each 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.
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 December 31, 1998, the Fund did not pay any
brokerage commissions to any broker then affiliated with the Trust, the Advisor,
Warburg or Capital Guardian.
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.
9
<PAGE> 14
American General Life Insurance Company, P.O. Box 1401, Houston, Texas
77251-1401, is the sole record holder of shares of the Fund. To the knowledge of
the Trust, as of the Record Date, no other person is the beneficial holder of 5%
or more of the shares of the Fund.
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 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, ADMINISTRATOR AND PRINCIPAL UNDERWRITER.
The Fund's Transfer Agent and Administrator 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.
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 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 14, 1999
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<PAGE> 15
APPENDIX A
INVESTMENT SUB-ADVISORY AGREEMENT
INTERNATIONAL GROWTH FUND
EFFECTIVE AS OF JULY 1, 1999
Capital Guardian Trust Company
333 South Hope Street
Los Angeles, CA 90071
Ladies and Gentlemen:
WM Advisors, Inc. ("WM Advisors"), a corporation organized under the laws
of the state of Washington, hereby agrees with Capital Guardian Trust Company,
(the "Sub-Advisor"), a trust company organized under the laws of the state of
California, as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
WM Advisors desires to employ the capital of the International Growth Fund
(the "Fund"), a series of WM Variable Trust (the "Trust"), by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in the Trust's Master Trust Agreement, as amended, and in the
Prospectus and Statement of Additional Information relating to the Fund as in
effect and which may be amended from time to time, and in such manner and to
such extent as may from time to time be approved by the Board of Trustees of the
Trust. Copies of the Fund's Prospectus and Statement of Additional Information
and the Trust's Master Trust Agreement, as amended, have been or will be
submitted to the Sub-Advisor. WM Advisors agrees to provide copies of all
amendments to the Fund's Prospectus and Statement of Additional Information and
the Trust's Master Trust Agreement to the Sub-Advisor on an on-going basis. WM
Advisors desires to employ and hereby appoints the Sub-Advisor to act as
investment sub-advisor to the Fund. The Sub-Advisor accepts the appointment and
agrees to furnish the services described herein for the compensation set forth
below.
2. SERVICES 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, to the extent
related to the scope of its duties reasonably contemplated under this Agreement,
(a) act in conformity with the Trust's Master Trust Agreement, the Investment
Company Act of 1940 (the "1940 Act"), the Investment Advisers Act of 1940 (to
the extent applicable to the Sub-Advisor) and the Internal Revenue Code of 1986,
as the same may from time to time be amended; (b) make investment decisions for
the Fund in accordance with the Fund's investment objectives and policies as
stated in the Fund's Prospectus and Statement of Additional Information as in
effect and, after notice to the Sub-Advisor, and which may be amended from time
to time; (c) place purchase and sale orders on behalf of the Fund to effectuate
the investment decisions made; (d) maintain appropriate records with respect to
the securities transactions of the Fund and will furnish to the Trust's Board of
Trustees such periodic, regular and special reports (including presentations by
the Sub-Advisor's personnel primarily responsible for the day-to-day management
of the Fund's portfolio) as the Board may reasonably request; (e) provide WM
Advisors and its affiliates with such support with respect to the Fund as they
may reasonably request; and (f) treat confidentially and as proprietary
information of the Trust, all records and other information relative to the
Trust and prior, present or potential shareholders; and will not use such
records and
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<PAGE> 16
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 market, economic,
and transactional information that the Trust or WM Advisors may reasonably
request relating to the investments that the Fund may hold or contemplate
purchasing.
3. BROKERAGE
In executing transactions for the Fund and selecting brokers or dealers,
the Sub-Advisor will use its best efforts to seek the best overall terms
available and shall execute or direct the execution of all such transactions in
a manner permitted by law and in a manner that is in the best interest of the
Fund and their shareholders. In assessing the best overall terms available for
any Fund transactions, the Sub-Advisor will consider all factors it deems
relevant including, but not limited to, breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer and the reasonableness of any commission for the specific
transaction and on a continuing basis. Pursuant to its investment determinations
for the Fund, in placing orders with brokers and dealers, the Sub-Advisor will
attempt to obtain the best net price and the most favorable execution of its
orders. Consistent with this obligation, when the execution and price offered by
two or more brokers or dealers are comparable, the Sub-Advisor may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Trust with research advice and other services.
4. INFORMATION PROVIDED TO THE TRUST
The Sub-Advisor will keep the Trust and WM Advisors informed of
developments materially affecting the Fund, and will on its own initiative,
furnish the Trust and WM Advisors on at least a quarterly basis with whatever
information the Sub-Advisor believes is appropriate for this purpose.
5. STANDARD OF CARE
The Sub-Advisor shall exercise its best judgment in rendering the services
described in paragraphs 2 and 3 above. The Sub-Advisor shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund or
WM Advisors in connection with the matters to which this Agreement relates,
except (a) a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36(b)(3) of the
1940 Act), or (b) a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement (each such
breach, act or omission described in (a) or (b) shall be referred to as
"Disqualifying Conduct").
6. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, WM
Advisors will pay the Sub-Advisor on the first business day of each quarter a
fee for the previous quarter according to the schedule of fees detailed in Annex
A attached to this Agreement. The Sub-Advisor shall have no right to obtain
compensation directly from the Fund or the Trust for services provided hereunder
and agrees to look solely to WM Advisors for payment of fees due. Upon any
termination of this Agreement before the end of a quarter, the fee for such
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<PAGE> 17
part of that quarter shall be prorated according to the proportion that such
period bears to the full quarterly period and shall be payable upon the date of
termination of this Agreement.
7. EXPENSES
The Sub-Advisor will bear all expenses in connection with the performance
of its services under this Agreement, which expenses shall not include brokerage
fees or commissions in connection with the effectuation of securities
transactions. The Trust will bear certain other expenses to be incurred in its
operation, including but not limited to: organizational expenses, taxes,
interest, brokerage fees and commissions, if any; fees of trustees of the Trust
who are not officers, directors or employees of the Sub-Advisor, WM Advisors, or
any of their affiliates; Securities and Exchange Commission fees and state Blue
Sky qualification fees; out-of-pocket expenses of custodians, transfer and
dividend disbursing agents and transaction charges of custodians; insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Trust's existence; costs attributable to investor services, including without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of the shareholders of the Fund and of the officers or Board of
Trustees of the Trust; and any other operating expenses of the Fund. In
addition, the Fund may pay a distribution fee pursuant to the terms of a
Distribution Plan adopted under Rule 12b-1 of the 1940 Act.
8. SERVICES TO OTHER COMPANIES OR ACCOUNTS
WM Advisors understands that the Sub-Advisor now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and as investment adviser to one or more other investment companies or
series of investment companies, and WM Advisors has no objection to the Sub-
Advisor so acting, provided that whenever the Fund and one or more other
accounts or investment companies advised by the Sub-Advisor have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with procedures mutually believed to be equitable to each entity.
Similarly, opportunities to sell securities will be allocated in an equitable
manner. WM Advisors recognizes that in some cases this procedure may limit the
size of the position that may be acquired or disposed of for the Fund. In
addition, WM Advisors understands that the persons employed by the Sub-Advisor
to assist in the performance of the Sub-Advisor's duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Sub-Advisor or any affiliate of the
Sub-Advisor to engage in and devote time and attention to other business or to
render services of whatever kind or nature.
9. TERM OF AGREEMENT
This Agreement shall become effective as of the date first written above,
shall continue for a period of two years thereafter, and shall continue in
effect for a period of more than two years thereafter only so long as such
continuance is specifically approved at least annually by (a) the Board of
Trustees of the Trust or (b) a vote of a "majority" (as defined in the 1940 Act)
of the Fund's outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by WM Advisors, the Board of Trustees for the Trust or by vote
of holders of a majority of the Fund's shares, or upon 60 days' written notice
by the Sub-Advisor and will terminate automatically upon any termination of the
advisory agreement between the Trust and WM Advisors. In addition, this
Agreement will also terminate
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automatically in the event of its assignment (as defined in said Act). The
Sub-Advisor agrees to notify the Trust of any circumstances that might result in
this Agreement being deemed to be assigned.
10. REPRESENTATIONS OF WM ADVISORS AND THE SUB-ADVISOR
WM Advisors represents that (a) a copy of the Trust's Master Trust
Agreement, dated January 29, 1993, together with all amendments thereto, is on
file in the office of the Secretary of the Commonwealth of Massachusetts, (b)
the appointment of the Sub-Advisor has been duly authorized, (c) it has acted
and will continue to act in conformity with the 1940 Act and other applicable
laws, and (d) it is authorized to perform the services herein.
The Sub-Advisor represents that it is authorized to perform the services
described herein.
11. INDEMNIFICATION
WM Advisors shall indemnify and hold harmless the Sub-Advisor and its
affiliates and their respective officers, directors and employees from and
against any and all claims, losses, liabilities or damages (including reasonable
attorneys' fees and other related expenses), howsoever arising from or in
connection with this Agreement or the performance by the Sub-Advisor 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,"
the names of the Sub-Advisor's affiliates within The Capital Group
Companies, Inc. (including, but not limited to the American Funds Group of
mutual funds), and any derivative thereof or logo associated with such
names are the valuable property of the Sub-Advisor and its affiliates and
that the Trust and/or the Fund have the right to use such name (or
derivative or logo) in offering materials of the Trust and/or Fund only
with the prior written approval of the Sub-Advisor and for so long as the
Sub-Advisor is an investment sub-advisor to the Trust and/or the Fund;
provided that the Trust and the Fund may use such name (or derivative or
logo) without such prior written approval in offering materials of the
Trust to the extent that (i) such materials simply list the Sub-Advisor as
the Sub-Advisor to the Fund as part of a listing of the investment
sub-advisers to the series or portfolios of the Trust with a pre-approved
standard description of the Sub-Advisor's experience and duties hereunder;
(ii) such materials include such name (or derivative or logo) and any
related information that has been previously approved by the Sub-Advisor or
that is required to be disclosed by applicable law or regulation, such as
information disclosed in the Trust's registration statement; or (iii) such
materials are intended for internal use by the Trust and WM Advisors. In
using information about the Sub-Advisor where pre-approval is not required,
it shall be WM Advisors' responsibility to seek updates to such materials
as it deems necessary. Such prior written approval of the Sub-Advisor shall
not be unreasonably withheld or delayed. Upon termination of this
Agreement, the Trust and the Fund shall forthwith cease to use such name
(or derivative or logo) as soon as reasonably practicable.
b. It is understood that the names "WM Variable Trust," and "WM
Advisors, Inc." or any derivatives thereof or logos associated with such
names are the valuable property of the Trust and/or WM
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Advisors and their affiliates and that the Sub-Advisor or its affiliates
have the right to use such names (or derivatives or logos) in marketing
materials of the Sub-Advisor or its affiliates only with the prior written
approval of WM Advisors or the Trust, as applicable, and for so long as the
Sub-Advisor is an investment sub-advisor to the Trust and/or the Fund;
provided that the Sub-Advisor or its affiliates may use such names (or
derivatives or logos) without such prior written approval in marketing
materials of the Sub-Advisor or its affiliates to the extent that (i) such
materials simply list the Trust or the Fund as part of a listing of the
investment companies advised by the Sub-Advisor or its affiliates with a
brief description of the Trust or the Fund; (ii) such materials include
such names (or derivatives or logos) and any related information that has
been previously approved by the Trust or WM Advisors, as applicable, or
that is required to be disclosed by applicable law or regulation; or (iii)
such materials are intended for internal use by the Sub-Advisor. Such prior
written approval of WM Advisors or the Trust, as applicable, shall not be
unreasonably withheld or delayed. Upon termination of this Agreement, the
Sub-Advisor and its affiliates shall forthwith cease to use such names (or
derivatives or logos) as soon as reasonably practicable.
14. PROXY VOTING
Except as specifically instructed by the Trustees of the Trust or WM
Advisors, the Sub-Advisor shall exercise or procure the exercise of any voting
rights attaching to investments of the Fund on behalf of the Fund.
15. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto.
16. GOVERNING LAW
This Agreement shall be governed in accordance with the laws of The
Commonwealth of Massachusetts.
If the foregoing accurately sets forth our agreement, kindly indicate your
acceptance hereof by signing and returning the enclosed copy hereof.
<TABLE>
<S> <C>
Very truly yours,
WM Advisors, Inc.
Dated: ------------------------------------------------- By -------------------------------------------------
Name:
Title:
Accepted:
Capital Guardian Trust Company
By ---------------------------------------------------- Dated: ----------------------------------------------
Name:
Title:
</TABLE>
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<PAGE> 20
ANNEX A
1. STANDARD FEE
The minimum annual fee payable under this Agreement shall be $200,000.
The fees payable under this Agreement shall be determined by reference to
the following schedule based upon the average daily net assets of the Fund (as
determined by the Trust's accounting agent pursuant to the Fund's pricing
procedures) subject to reduction as described below:
<TABLE>
<S> <C>
On the first $25 million.................................... .75 of 1%
$25 million to $50 million.................................. .60 of 1%
$50 million to $250 million................................. .425 of 1%
Over $250 million*.......................................... .375 of 1%
</TABLE>
- ---------------
* This breakpoint will be applied to the extent the aggregate non-U.S./global,
regional, single country (excluding U.S.) equity, and fixed-income (emerging
markets) assets of (i) the Fund, (ii) any other investment company advised by
WM Advisors or any of its affiliates, (iii) any pension or employee benefit
plan sponsored by WM Advisors or any of its affiliates or (iv) WM Advisors or
its affiliates that are managed by Sub-Advisor or its affiliates exceed $250
million.
2. ASSET FEE AGGREGATION POLICIES
For fee purposes, asset aggregation will apply to all accounts of (i) the
Fund, (ii) any other investment company advised by WM Advisors or any of its
affiliates, (iii) any pension or employee benefit plan sponsored by WM Advisors
or any of its affiliates or (iv) WM Advisors or its affiliates that are managed
by Sub-Advisor or its affiliates, except for emerging market equity investments
and investments in other funds with internally charged fees ("Eligible
Accounts"). In order to achieve the benefit of asset aggregation, the combined
actual fees must exceed the combined total of the minimum fee applicable to each
Eligible Account.
For Eligible Accounts with the same investment objectives and guidelines,
all assets for these Eligible Accounts will be aggregated for fee calculation
purposes.
For Eligible Accounts with different investment objectives and guidelines:
- Each Eligible Account will be charged on the first $10 million at the
initial breakpoint rate for the appropriate mandate. Any incremental
assets over $10 million will be aggregated and charged at the incremental
rate for the appropriate mandate.
- Assets invested in commingled funds will be aggregated and charged at the
incremental rate for the appropriate mandate.
- The first additional account within a new country will be charged on the
first $15 million at the initial breakpoint rate for the appropriate
mandate. Any incremental assets over $15 million will be aggregated and
charged at the incremental rate for the appropriate mandate.
For asset aggregation purposes, Eligible Accounts will be aggregated in the
following order: balanced, equity-developed markets, convertible,
fixed-income -- high yield, fixed-income -- emerging markets, and
fixed-income -- developed markets.
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<PAGE> 21
The benefit from asset aggregation, if any, will be calculated by comparing
total aggregated fees to total unaggregated fees for all Eligible Accounts. The
resulting percentage discount will be applied to each Eligible Account's
unaggregated fees.
If all Eligible Accounts are not denominated in the same currency, the
local currency assets of each Eligible Account and the related fees calculated
on an unaggregated basis will be converted to U.S. dollars using the applicable
foreign exchange rate. The total of such fees will be compared to the Eligible
Accounts' total aggregated fees. The resulting percentage discount will then be
applied to each Eligible Account's unaggregated fee as determined in U.S.
dollars.
3. FEE DISCOUNTS AND ELIMINATION OF FEE BREAKPOINTS
The following fee discount will be applied based upon the total aggregated
fees paid by all accounts of (i) the Fund, (ii) any other investment company
advised by WM Advisors or any of its affiliates, (iii) any pension or employee
benefit plan sponsored by WM Advisors or any of its affiliates or (iv) WM
Advisors or its affiliates that are managed by Sub-Advisor or its affiliates:
<TABLE>
<S> <C>
Aggregated fees between $1.25 million to $4 million......... 5% discount
Aggregated fees between $4 million to $8 million............ 7.5% discount
Aggregated fees between $8 million to $12 million........... 10% discount
Aggregated fees over $12 million............................ 12.5% discount
</TABLE>
For this purpose, aggregated fees will include all fees from separate
accounts, commingled funds, and funds with internally charged fees managed by
Sub-Advisor and its affiliates (except for investments in American Funds' mutual
funds). The resulting fee discount percentage will be applied to each account's
fees (excluding fees related to investments in funds with internally charged
fees).
If total aggregated fees (before discounts) exceed $3 million, fee
breakpoints will be eliminated and each account will be charged at the lowest
marginal fee rate applicable to the account's fee schedule.
To determine the applicable fee discount level and breakpoint elimination
threshold, the total aggregated fees for the quarter will be annualized. For
this purpose, all local currency fees will be converted to a designated base
currency.
Fees related to investments in funds with internally charged fees will be
estimated by multiplying the quarter end value of the account (adjusted on a
prorated basis for any contributions or withdrawals during the quarter) by the
fund's effective fee. For this purpose, the effective fee will be based on the
value of the fund's quarter end assets and the fund's current fee schedule.
Applicable discount levels and the elimination of fee breakpoints will be
effective beginning with the first quarter a discount threshold is exceeded and
will remain in effect unless the total fees fall below the discount threshold
due to a significant withdrawal of assets. A decline in market values alone will
not cause the reinstatement of a lower discount level or fee breakpoints.
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WM VARIABLE TRUST
INTERNATIONAL GROWTH FUND
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - JUNE 23, 1999
American General Life Insurance Company 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 Variable Trust, on
June 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 in the manner indicated below.
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.
1. To approve the Sub-Advisory Agreement with respect to the International
Growth Fund between WM Advisors, Inc. and Capital Guardian Trust Company.
Number of Shares
----------------
For: ________________
Against: ________________
Abstain: ________________
American General Life Insurance Company
Houston, Texas 77251-1591
By: ________________________
Title: ________________________
Date: ________________________
PLEASE VOTE, SIGN AND DATE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 23
AMERICAN GENERAL LIFE
P.O. BOX 1401
HOUSTON, TX 77251
WM VARIABLE TRUST
INTERNATIONAL GROWTH FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
June 23, 1999
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF
OF THE TRUSTEES OF THE WM VARIABLE TRUST.
This proxy is for your use in voting on the proposal listed below
relating to WM Variable Trust (the "Trust"). The undersigned hereby instructs
American General Life Insurance Company Separate Account D ("Separate Account
D") to vote shares of the International Growth Fund (the "Fund"), attributable
to his/her variable annuity contract for which the undersigned is entitled to
give instructions at the Special Meeting of Shareholders of the Fund to be held
at 10:00 a.m. Pacific Time on June 23, 1999, and at any adjournment thereof,
upon the proposals below and as set forth in the Notice of Special Meeting. The
undersigned acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Trust's Proxy Statement accompanying this Voting
Instruction Card and revokes any instructions previously given.
With respect to those shares for which instructions have not been
received by Separate Account D before the meeting, Separate Account D will vote
those shares in the affirmative, in the negative or in the abstention, in the
same proportion as those shares for which instructions have been received.
This ballot, when properly executed, will be voted in the manner
directed herein by the undersigned. If no direction is made, this ballot will be
voted in favor of the proposals.
By signing and dating below you instruct Separate Account D to vote
shares of the Funds/Portfolios attributable to your variable annuity contract at
the Special Meeting of Shareholders of the Trust or at any and all adjournments
of the Special Meeting. It shall vote as recommended by the trustees, except as
you have otherwise indicated on the card below and in its discretion upon such
other matters as may properly come before the Special Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSAL.
PLEASE VOTE, SIGN AND DATE BELOW AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
IF YOU HAVE ANY QUESTIONS, YOU MAY CALL (800) 277-0914
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
AMWMVA Keep this portion for your records
- -------------------------------------------------------------------------------
Detach and return this portion only
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
WM VARIABLE TRUST
In its discretion, Separate Account D is authorized to vote upon such other
business as may properly come before the Meeting. The Trustees recommend a vote
FOR Proposal 1.
Vote On Proposals
1. To approve the Sub-Advisory Agreement with respect to the
Fund between WM Advisors, Inc. and Capital Guardian Trust Company.
For Against Abstain
[ ] [ ] [ ]
PLEASE SIGN BELOW 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 (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
