Exhibit 5(d)
INVESTMENT SUB-ADVISORY AGREEMENT
March 20, 1998
Warburg Pincus Asset Management, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
WM Advisors, Inc. ("WM Advisors"), a corporation organized under the laws
of the state of Washington, hereby agrees with Warburg Pincus Asset Management,
Inc. (the "Sub-Advisor"), a corporation organized under the laws of the State of
Delaware as follows:
1. Investment Description; Appointment
WM Trust II (the "Company"), an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts desires to employ the
capital of the Company's International Growth Fund (the "Fund") by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in its Master Trust Agreement, as amended, and in its 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 Company. Copies of
the Fund's Prospectus and Statement of Additional Information and the Company'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 Company'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-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
(a) Subject to the supervision of the Board of Trustees of the
Company and of WM Advisors, the Fund's investment adviser, the Sub-
Advisor will (i) act in conformity with the Company's Master Trust
Agreement, the Investment Company Act of 1940 (the "1940 Act"), the
Investment Advisers Act of 1940 and the Internal Revenue Code of 1986,
as the same may from time to time be amended (ii) make investment
decisions for the Fund in accordance with the Fund's investment
objective(s) 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; (iii) place
purchase and sale orders on behalf of the Fund to effectuate the
investment decisions made; (iv) maintain books and records with respect
to the securities transactions of the Fund and will furnish to the
Company's Board of Trustees such periodic, regular and special reports
as the Board may request; (v) treat confidentially and as proprietary
information of the Company, all records and other information relative
to the Company and prior, present or potential shareholders (other than
information publicly available, otherwise legally in the hands of the
Sub-Advisor or pertaining to mutual clients); and (vi) will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification
to and approval in writing by the Company or WM Advisors, which approval
shall not be unreasonably withheld and, notwithstanding the foregoing,
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 Company or WM Advisors. In providing those
services, the Sub-Advisor will supervise the Fund's investments and
conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets. In addition,
the Sub-Advisor will furnish the Fund or WM Advisors with whatever
statistical information the Fund or WM Advisors may reasonably request
with respect to the instruments that the Fund may hold or contemplate
purchasing.
(b) WM Advisors agrees, on an ongoing basis, to notify the Sub-
Advisor expressly in writing of each change in the fundamental and
nonfundamental investment policies of the Fund.
(c) WM Advisors agrees to provide the Sub-Advisor with such
assistance as may be reasonably requested by the Sub-Advisor in
connection with its activities pertaining to the Fund under this
Agreement, including, without limitation, information concerning the
Fund, its funds available, or to become available, for investment and
generally as to the conditions of the Fund's affairs.
(d) In fulfilling its obligations hereunder, the Sub-Advisor shall
be entitled to rely on and act in accordance with, and WM Advisors
agrees to hold the Sub-Advisor harmless for any act or omission taken in
good faith in reliance on, information and instructions, which may be
standing instructions, provided to the Sub-Advisor by WM Advisors, the
Company's administrator, or other agent of WM Advisors designated by WM
Advisors. Such information and instructions shall be conveyed to the
Sub-Advisor in a timely manner so as to permit the Sub-Advisor to take
such action as may be required in an orderly fashion. WM Advisors agrees
to provide or cause to be provided to the Sub-Advisor on an ongoing
basis, such
2
information as is reasonably requested by the Sub-Advisor for
performance by the Sub-Advisor of its obligations under this Agreement,
and the Sub-Advisor shall not be in breach of any term of this Agreement
or be deemed to have acted negligently if WM Advisors fails to provide
or cause to be provided such information and the Sub-Advisor relies on
the information most recently furnished to the Sub-Advisor. WM Advisors
will promptly provide the Sub-Advisor with any procedures applicable to
the Sub-Advisor adopted from time to time by the Board of Trustees of
the Company and agrees to promptly provide the Sub-Advisor copies of all
amendments thereto.
3. Brokerage
(a) 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 its shareholders. In assessing the best
overall terms available for any Fund transaction, 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 Company with research advice and other services.
(b) In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best price and execution available, the
Sub-Advisor is authorized to consider the brokerage and research services
(within the meaning of Section 28(e) of the 0000 Xxx) provided to the Sub-
Advisor or any affiliated person of the Sub-Advisor. Subject to the
requirements of Section 17(e) of the 1940 Act, the Sub-Advisor is
specifically authorized to select an affiliated person of the Sub-Advisor
to execute brokerage, but in no event principal, transactions for the Fund.
On occasions when the Sub-Advisor deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Sub-
Advisor, to the extent permitted by applicable laws and regulations, may,
but shall be under no obligation to, aggregate the securities to be
purchased or sold in order to obtain the most favorable execution and/or
lower brokerage commissions, if any, and efficient execution. In such
event, allocation of securities so sold or purchased, as well as the
expenses incurred in the transaction, will be made by the Sub-Advisor in
the manner the Sub-Advisor considers to be the most equitable and
consistent with its fiduciary
3
obligation over time to the Fund and to such other clients. Furthermore, WM
Advisors recognizes that the Sub-Advisor may give advice, and take action,
with respect to its other clients that may differ from the advice given, or
the time or nature of action taken, with respect to the Fund.
4. Information Provided to the Company
The Sub-Advisor will keep the Company and WM Advisors informed of
developments materially affecting the Fund, and will on its own initiative,
furnish the Company 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 its services
under this agreement. Except as may otherwise be provided by federal or state
securities laws and in Section 11 hereof, 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 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.
6. Compensation
In consideration of the services rendered pursuant to this Agreement, WM
Advisors will pay the Sub-Advisor on the first business day of each month a fee
for the previous month at the annual rate of 0.50% of the Fund's average daily
net assets. The Sub-Advisor shall have no right to obtain compensation directly
from the Fund or the Company for services provided hereunder and agrees to look
solely to WM Advisors for payment of fees due. Upon any termination of this
Agreement before the end of a month, the fee for such month shall be prorated
according to the proportion that the period prior to such termination bears to
the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purposes of determining fees payable to the Sub-
Advisor, the value of the net assets of the Fund shall be computed at the times
and in the manner specified in the Prospectus or Statement of Additional
Information relating to the Fund as from time to time in effect.
Notwithstanding the foregoing, in the event that any reduction in the fees
paid to WM Advisors under the Advisory Agreement shall be required as a result
of any statutory or regulatory limitation on investment company expenses, there
shall be a proportionate reduction in the fee payable to the Sub-Advisor
hereunder; provided that the Sub-Advisor will never be required to pay more than
the amount of fees it receives.
4
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 Company 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
Company who are not officers, directors or employees of the Sub-Advisor, WM
Advisors, the Fund's sub-administrator 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 the
Company's sub-administrator and transaction charges of custodians; insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Company'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 Company; 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.
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 one has no objection to Sub-
Advisor so acting, providing that companies whenever the Fund and one or more
other accounts or investment companies advised by the Sub-Advisor have available
funds for investment, investments suitable and appropriate for each will be
allocated in accordance with procedures believed to be equitable over time to
each entity. Similarly, opportunities to sell securities will be allocated in
an equitable manner over time. 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
and shall continue for a one-year term and shall continue thereafter so long as
such continuance is specifically approved at least annually by (i) the Board of
Trustees of the Company or (ii)
5
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 60 days' written notice, by WM
Advisors, the Board of Trustees of the Company or by vote of holders of a
majority of the Fund's shares, or upon 90 days' written notice, by the Sub-
Advisor and, will terminate automatically upon any termination of the advisory
agreement between the Company 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 WM Advisors of any circumstances
that might result in this Agreement being deemed to be assigned.
10. Representations of the Company and the Sub-Advisor
WM Advisors represents that (a) a copy of the Company'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. Indemnifications
(a) WM Advisors shall indemnify the Sub-Advisor and its controlling
persons, officers, directors, employees, agents, legal representatives and
persons controlled by it (collectively, "Sub-Advisor Related Persons") to
the fullest extent permitted by law against any and all loss, damage,
judgements, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees (collectively "Losses"), incurred by the Sub-
Advisor or Sub-Advisor Related Persons arising from or in connection with
this Agreement or the performance by the Sub-Advisor or Sub-Advisor Related
Persons of its or their duties hereunder, including, without limitation,
such Losses arising under any applicable law or that may be based upon any
untrue statement of a material fact contained in the Company's registration
statement, or any amendment thereof or any supplement thereto, or the
omission to state therein a material fact known or which should have been
known and was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was
made in reliance upon written information furnished to WM Advisors by the
Sub-Advisor or a Sub-Advisor Related Person; except to the extent any such
Losses result from willful misfeasance, bad faith, gross negligence or
reckless disregard on the part of the Sub-Advisor or a Sub-Advisor Related
Person in the performance of any of its duties under, or in connection
with, this Agreement.
6
(b) The Sub-Advisor shall indemnify WM Advisors and its controlling
persons, officers, directors, employees, agents, legal representatives and
persons controlled by it (collectively, "WM Advisors Related Persons") to
the fullest extent permitted by law against any and all Losses incurred by
WM Advisors or WM Advisors Related Persons arising from or in connection
with this Agreement or the performance by WM Advisors or WM Advisors
Related Persons of its or their duties hereunder so long as such Losses
arise out of the Sub-Advisor's failure to perform its responsibilities to
WM Advisors, the Fund or the Company hereunder, including, without
limitation, such Losses arising under any applicable law or that may be
based upon any untrue statement of a material fact contained in the
Company's registration statement, or any amendment thereof or any
supplement thereto, or the omission to state therein a material fact known
or which should have been known and was required to be stated therein or
necessary to make the statements therein not misleading, to the extent that
such statement or omission was based on information provided by the Sub-
Advisor or a Sub-Advisor Related Person unless such statement or omission
was made in reliance upon written information furnished to the Sub-Advisor
or Sub-Advisor Related Person by WM Advisors or a WM Advisors Related
Person; and except to the extent any such Losses result from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part
of WM Advisors or a WM Advisors Related Person in the performance of any of
its duties under, or in connection with, this Agreement.
(c) The indemnifications provided in this Section 11 shall survive
the termination of this Agreement.
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 "Warburg Pincus Asset
Management, Inc." or any derivative thereof or logo associated with that
name is the valuable property of the Sub-Advisor and its affiliates and
that the Company and/or the Fund have the right to use such name (or
derivative or logo) in offering materials of the Company 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-adviser to the Company and/or the Fund;
provided that the Company and the Fund may use such name (or derivative or
logo)
7
without such prior written approval in offering materials of the Company 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 Company with a brief description of the
Sub-Advisor's experience and duties hereunder; (ii) such materials include
such name (or derivative or logo) and any related information that has been
previously approved by the Sub-Advisor or that is required to be disclosed
by applicable law or regulation, such as information disclosed in the
Company's registration statement; or (iii) such materials are intended for
broker-dealer use only, for use by the Company's Trustees, or for internal
use by the Company and WM Advisors. Such prior written approval of the Sub-
Advisor shall not be unreasonably withheld and shall be deemed to be given
if no written objection is received by the Company, the Fund or WM Advisors
within three business days after the request is made by the Company, the
Fund or WM Advisors for such use. Upon termination of this Agreement, the
Company and the Fund shall forthwith cease to use such name (or derivative
or logo) as soon as reasonably practicable.
(b) It is understood that the names "WM Trust II," and "WM
Advisors, Inc." or any derivatives thereof or logos associated with such
names is the valuable property of the Company and/or WM Advisors and their
affiliates and that the Sub-Advisor or its affiliates have the right to use
such names (or derivatives or logos) in marketing materials of the Sub-
Advisor or its affiliates only with the prior written approval of WM
Advisors or the Company, as applicable, and for so long as the Sub-Advisor
is an investment sub-adviser to the Company 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 Company 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 Company or the Fund; (ii) such materials include such
names (or derivatives or logos) and any related information that has been
previously approved by the Company or WM Advisors, as applicable, or that
is required to be disclosed by applicable law or regulation, such as
information disclosed in the Form ADV or Form BD of the Sub-Advisor or its
affiliates; or (iii) such materials are intended for broker-dealer use only
or for internal use by the Sub-Advisor. Such prior written approval of WM
Advisors or the Company, as applicable, shall not be unreasonably withheld
and shall be deemed to be given if no written objection is received by the
Sub-Advisor within three business days after the request is made by the
Sub-Advisor for such use. Upon termination of this Agreement, the Sub-
Advisor and its affiliates shall forthwith cease to use such names (or
derivatives or logos) as soon as reasonably practicable.
8
14. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
15. Governing Law
This Agreement shall be governed in accordance with the laws of The
Commonwealth of Massachusetts.
If the foregoing accurately sets forth our agreement, kindly indicate your
acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
WM ADVISORS, INC.
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Accepted as of the date
first written above:
WARBURG PINCUS ASSET MANAGEMENT, INC.
By /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
9
