EXHIBIT (D)(5)
INVESTMENT SUB-ADVISORY AGREEMENT
GROWTH FUND
EFFECTIVE AS OF MARCH 1, 2002
This Agreement is made and entered into as of this first day of March,
2002, among WM Advisors, Inc. ("WM Advisors"), a corporation organized under the
laws of the state of Xxxxxxxxxx, XX Variable Trust, a business trust formed
under the laws of the Commonwealth of Massachusetts (the "Trust"), on behalf of
its Growth Fund series (the "Fund"), and Columbia Management Company, (the
"Sub-Advisor"), a corporation organized under the laws of the state of Oregon.
Whereas, the Trust is engaged in business as an open-end, management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act");
Whereas, the Trust offers a number of investment portfolios, each with
its own investment objective and strategies, and of which one investment
portfolio is the Fund;
Whereas, WM Advisors is engaged in the business of rendering investment
advisory and management services, is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is the
investment advisor of the Fund;
Whereas, the Sub-Advisor is engaged in the business of rendering
investment advisory and management services and is registered as an investment
adviser under the Advisers Act; and
Whereas, WM Advisors desires to retain the Sub-Advisor to furnish
investment advisory and management services to the Fund and the Sub-Advisor is
willing to furnish such services;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, it is hereby agreed by and between the parties hereto as follows:
1. Investment Description; Appointment
WM Advisors desires to employ such portion of the capital of the Fund as
may from time to time be determined by WM Advisors 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 or
supplements to the Fund's Prospectus and Statement of Additional Information and
the Trust's Master Trust Agreement to the Sub-Advisor during the continuance of
this Agreement before or at the time such amendments or supplements become
effective. WM Advisors agrees to furnish the Sub-Advisor with minutes of
meetings of the Board of Trustees of the Trust to the extent they may affect the
duties of the Sub-Advisor, a certified copy of any
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financial statements or reports prepared for the Fund by certified or
independent public accountants, and with copies of any financial statements or
reports made by the Fund to its shareholders or to any governmental body or
securities exchange, and any further materials or information which the
Sub-Advisor may reasonably request to enable it to perform its functions under
this Agreement. WM Advisors desires to employ and hereby appoints the
Sub-Advisor to act as investment sub-adviser 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, with respect
to the portion of the Fund allocated to the Sub-Advisor by WM Advisors, (a)
maintain compliance procedures for the Fund that the Sub-Advisor believes are
adequate to ensure its compliance with the applicable provisions of the Trust's
Master Trust Agreement, the 1940 Act, and the Advisers Act, as the same may from
time to time be amended; (b) make investment decisions 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 in accordance with the 1940 Act and the Advisers Act and the rules
adopted thereunder and will furnish to the Trust's Board of Trustees such
quarterly, annual and special reports as the Board may reasonably 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 knowingly 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. Subject to the
supervision of WM Advisors and in accordance with the investment objectives and
policies as stated in the Fund's Prospectus and Statement of Additional
Information, the Sub-Advisor is authorized, in its discretion and without prior
consultation with WM Advisors, to buy, sell, lend and otherwise trade in any
stocks, bonds, and other securities and investment instruments on behalf of the
Fund, without regard to the length of time the securities have been held and the
resulting rate of portfolio turnover or any tax considerations, and so long as
consistent with the foregoing, the majority or the whole of the Fund may be
invested in such proportions of stocks, bonds, other securities or investment
instruments, or cash as the Sub-Advisor shall determine. 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 Fund may hold or contemplate purchasing.
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3. Brokerage
Subject to (i) the over-riding objective of obtaining the best possible
execution of orders; and (ii) review and approval of the Board of Trustees of
the Trust, which may be conducted as often as quarterly, the Sub-Advisor shall
place all orders for the purchase and sale of securities for the Fund with
brokers or dealers selected by the Sub-Advisor, which may include brokers or
dealers affiliated with the Sub-Advisor. All transactions with any affiliated
person of the Trust, or where any such affiliated person acts as broker or agent
in connection with any such transaction, shall be accomplished in compliance
with the 1940 Act, the Advisers Act, the Securities Exchange Act of 1934, as
amended, the rules adopted thereunder and the procedures adopted thereunder by
the Trust. Purchase or sell orders for the Fund may be aggregated with
contemporaneous purchase or sell orders of other clients of the Sub-Advisor;
provided that (i) no advisory account will be favored by the Sub-Advisor over
any other account; (ii) each client of the Sub-Advisor who participates in such
an aggregated order will participate at the average share price, with all
transaction costs shared on a pro rata basis; (iii) only advisory clients'
transactions will be aggregated for such an aggregated order; and (iv) the
accounts of clients whose orders are aggregated will be segregated on the
Sub-Advisor's books and records so as to identify the particular client who has
the beneficial interest therein. The Sub-Advisor shall use its best efforts to
obtain execution of Fund transactions at prices which are advantageous to the
Fund and at commission rates that are reasonable in relation to the benefits
received. However, the Sub-Advisor may select brokers or dealers on the basis
that they provide brokerage, research, or other services or products to the Fund
and/or other accounts serviced by the Sub-Advisor. The Sub-Advisor may pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission or dealer spread another broker or dealer
would have charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research products and/or services provided by such
broker or dealer. This determination, with respect to brokerage and research
services or products, may be viewed in terms of either that particular
transaction or the overall responsibilities which the Sub-Advisor and its
affiliates have with respect to the Fund and to accounts over which they
exercise investment discretion, and not all such services or products may be
used by the Sub-Advisor in managing the Fund; provided that with respect to such
transaction and such determination the affiliates of the Sub-Advisor shall have
the same responsibilities to the Fund as the Sub-Advisor has under this
Agreement.
4. Information Provided to the Trust
The Sub-Advisor will keep the Trust and WM Advisors informed of
developments materially affecting the Fund of which the Sub-Advisor becomes
aware 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. Except as may otherwise be
provided by federal securities laws, 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
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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 (the conduct excepted in this
sentence shall be referred to as "Disqualifying Conduct").
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Trust, on behalf of the Fund, 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. 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 under management by the Sub-Advisor 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 of its expenses in performing its services
under this Agreement, which expenses shall not include brokerage fees or
commissions in connection with the effectuation of securities transactions. The
Sub-Advisor shall not be required to bear any expenses of the Trust, the Fund or
WM Advisors. 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; all fees, including 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 Fund pays a distribution fee pursuant to the terms of a
Distribution Plan adopted under Rule 12b-1 of the 1940 Act. Any reimbursement of
advisory fees required by any expense limitation provision shall be the sole
responsibility of WM Advisors.
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 xxxx
Xxxx 4 of 9
be allocated in accordance with procedures reasonably 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. WM Advisors
recognizes and agrees that the Sub-Advisor may provide advice to other clients
which may differ from or be identical to advice given with respect to the Fund.
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 0000 Xxx)
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 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable, without penalty, on 30 days'
written notice, by WM Advisors, the Board of Trustees 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 automatically in the event of its assignment (as
defined in the 1940 Act). The Sub-Advisor agrees to notify the Trust of any
circumstances that, to its best knowledge and belief, 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
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.
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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
The parties agree and acknowledge that the Sub-Advisor is the sole owner
of the name and xxxx "Columbia Management Company" and that all use of any
designation comprised in whole or part of Columbia Management Company (a
"Sub-Advisor Xxxx") under this Agreement shall inure to the benefit of the
Sub-Advisor. The use by the Trust on its own behalf or on behalf of the Fund of
any Sub-Advisor Xxxx in any advertisement or sales literature or other materials
promoting the Fund shall be with the consent of the Sub-Advisor. The Trust and
WM Advisors shall not, without the consent of the Sub-Advisor, make
representations regarding the Sub-Advisor intended to be disseminated to the
investing public in any disclosure document, advertisement or sales literature
or other materials promoting the Fund. Such consent shall not be required for
any documents or other materials intended for broker-dealer use only, for use by
the Trust's trustees and for internal use by the Trust and WM Advisors. Consent
by the Sub-Advisor to such use of any Sub-Advisor Xxxx and any such
representation 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 3 business days after the request is made by the Trust, the Fund or WM
Advisors for such use of any Sub-Advisor Xxxx or any such representation. Upon
termination of this Agreement for any reason, the Trust and WM Advisors shall
cease all use of any Sub-Advisor Xxxx(s) as soon as reasonably practicable.
The Sub-Advisor agrees and acknowledges that the Trust is the sole owner
of the name and xxxx "WM Variable Trust" and WM Advisors is the sole owner of
the name and xxxx "WM Advisors, Inc." and that any and all use of any
designation comprised in whole or in part of "WM Variable Trust" or "WM
Advisors, Inc." (each a "WM Xxxx") under this Agreement shall inure to the
benefit of the Trust or WM Advisors, respectively. The use by the Sub-Advisor on
its own behalf of any WM Xxxx in any advertisement or sales literature or other
materials promoting the Sub-Advisor shall be with the consent of the Trust or WM
Advisors, respectively. The Sub-Advisor shall not, without the consent of the
Trust or WM Advisors, as applicable, make representations regarding the Trust,
the Fund or WM Advisors in any disclosure document, advertisement or sales
literature or other materials promoting the Sub-Advisor. Consent by the Trust
and WM Advisors to such use of any WM Xxxx and any such representations shall
not be unreasonably withheld and shall be deemed to be given if no written
objection is received by the Sub-Advisor within 5 business days after the
request by the Sub-Advisor is made for such use of any WM Xxxx or any such
representations. Upon termination of this Agreement for any reason, the Sub-
Advisor shall cease any and all use of any WM Xxxx as soon as reasonably
practicable.
14. Declaration of Trust and Limitation of Liability
A copy of the Master Trust Agreement of the Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts, and notice is hereby
given that this Agreement is executed by an officer of the Trust on behalf of
the Trustees of the Trust, as trustees and not
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individually, on further behalf of the Fund, and that the obligations of this
Agreement with respect to the Fund shall be binding upon the assets and
properties of the Fund only and shall not be binding upon the assets and
properties of any other series of the Trust or upon any of the Trustees,
officers, employees, agents or shareholders of the Fund or the Trust
individually.
15. Entire Agreement; Amendment of Management Agreement
This Agreement constitutes the entire agreement among the parties
hereto, except that WM Advisors and the Trust are also parties to an Investment
Management Agreement relating to the Fund dated March 20, 1998, as amended as of
January 1, 1999 (the "Management Agreement").
The Trust and WM Advisors hereby amend the Management Agreement, for so
long as this Agreement shall remain in effect, to provide that: (a) The Trust,
on behalf of the Fund, shall pay to WM Advisors a monthly fee equal to the
excess, if any, of (i) the fee set forth in Section 5 of the Management
Agreement (the "Management Fee") over (ii) the fee paid by the Fund under this
Agreement or any other sub-advisory agreement with respect to the Fund; (b) WM
Advisors shall not be entitled to any other fees under the Management Agreement;
(c) The Trust acknowledges and agrees that, for so long as Sub-Adviser meets the
standard of care set forth in this Agreement, WM Advisors shall have no
obligation to (i) furnish a continuous investment program for the Fund, (ii)
determine from time to time what securities will be purchased, retained or sold
by the Fund, and what portion of the Fund's assets will be held as cash, or
(iii) place orders for the purchase and sale of portfolio securities for the
Fund with brokers or dealers selected by WM Advisors; (d) Notwithstanding this
Agreement, WM Advisors remains authorized to determine what securities or other
property shall be purchased or sold by or for the Fund; (e) In exchange for the
fee paid by the Fund under the Management Agreement and in recognition of its
obligation to select and monitor the Sub-Advisor, and not for the services
provided by the Sub-Advisor pursuant to the Sub-Advisory Agreement, WM Advisors
shall indemnify and hold the Trust harmless from and against any and all claims,
costs, expenses (including attorneys' fees), losses, damages, charges, payments
and liabilities of any sort or kind which may be asserted against the Trust or
for which the Trust may be held liable arising out of or attributable to any
actual or alleged failure of Sub-Advisor to meet the standard of care set forth
in this Agreement.
16. Governing Law
This Agreement shall be governed in accordance with the laws of The
Commonwealth of Massachusetts.
17. Miscellaneous
(a) Unless WM Advisors or the Trust gives the Sub-Advisor written
instructions to the contrary, the Sub-Advisor shall vote all proxies solicited
by or with respect to the issuers of securities in which assets of the Fund may
be invested. The Sub-Advisor shall use its best good faith judgment to vote such
proxies in a manner which best serves the interests of the Fund's shareholders.
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(b) WM Advisors shall provide the Sub-Advisor with a copy of the Fund's
agreement (the "Custody Agreement") with the Custodian (the "Custodian")
designated to hold the assets of the Fund and any modification thereto in
advance. The Fund's assets shall be maintained in the custody of the Custodian
identified in, and in accordance with the terms and conditions of, the Custody
Agreement. The Sub-Advisor shall have no liability for the acts or omissions of
the Custodian. Any assets added to the portion of the Fund to be managed by the
Sub-Advisor shall be delivered directly to the Custodian.
(c) The Sub-Advisor may perform its services through any employee,
officer or agent of the Sub-Advisor, and the Trust and the Fund shall not be
entitled to the advice, recommendation, or judgment of any specific person.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
WM ADVISORS, INC. WM VARIABLE TRUST, on behalf of its
Growth Fund series
By By
----------------------------------- --------------------------------------
Name: Name:
Title: Title:
COLUMBIA MANAGEMENT COMPANY
By Dated:
----------------------------------- ------------------
Name:
Title:
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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 portion of the Fund
managed by the Sub-Advisor;
"Other Assets" shall mean the net assets of the portion of the Growth
Fund series of WM Trust II managed by the Sub-Advisor.
"Combined Assets" shall mean the sum of Fund Assets and Other Assets;
and
"Average Daily Net Fund Assets," "Average Daily Net Other Assets" and
"Average Daily Net Combined Assets" shall mean the average of the
value of the Fund Assets, Other Assets or Combined Assets, as the case
may be, on each business day.
2. The Sub-Advisor fee shall be paid in arrears (within 10 days of
receipt by WM Advisors of an invoice from the Sub-Advisor) based upon the
Average Daily Net Combined Assets during the preceding month. The fee payable
for the month shall be calculated by applying the annual rate, as set forth in
the fee schedule below, to the Average Daily Net Combined Assets, and dividing
by twelve. The portion of the monthly fee to be paid by the Fund shall be
prorated based upon the Average Daily Net Fund Assets as compared to the Average
Daily Net Combined Assets. For a month in which this Agreement becomes effective
or terminates, the portion of the Sub-Advisor fee due hereunder shall be
prorated on the basis of the number of days that the Agreement is in effect
during the month.
3. The following fee schedule shall be used to calculate the fee to be
paid to the Sub-Advisor under this Agreement:
First Next Next Next Over
$25 $25 $50 $400 $500
Million Million Million Million Million
------- ------- ------- ------- -------
0.60% 0.40% 0.30% 0.25% 0.15%
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