-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QUmrToVmVJAW0N7BwnX3s7EkyvEfphrY3k7avpIG0vQub+LYO6/KkH9+56mVajgo 598rgT77JiH3TybYBkJkjQ== 0000940400-07-000299.txt : 20070817 0000940400-07-000299.hdr.sgml : 20070817 20070817103240 ACCESSION NUMBER: 0000940400-07-000299 CONFORMED SUBMISSION TYPE: NSAR-A/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070430 FILED AS OF DATE: 20070817 DATE AS OF CHANGE: 20070817 EFFECTIVENESS DATE: 20070817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS CENTRAL INDEX KEY: 0001011114 IRS NUMBER: 954584965 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: NSAR-A/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-07577 FILM NUMBER: 071064083 BUSINESS ADDRESS: STREET 1: WM GROUP OF FUNDS STREET 2: 1201 THIRD AVENUE, 22ND FLOOR CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 206-461-2413 MAIL ADDRESS: STREET 1: WM GROUP OF FUNDS STREET 2: 1201 THIRD AVENUE, 22ND FLOOR CITY: SEATTLE STATE: WA ZIP: 98101 FORMER COMPANY: FORMER CONFORMED NAME: SIERRA ASSET MANAGEMENT PORTFOLIOS DATE OF NAME CHANGE: 19960726 FORMER COMPANY: FORMER CONFORMED NAME: SIERRA ASSET MANAGEMENT TRUST DATE OF NAME CHANGE: 19960322 0001011114 S000000913 CONSERVATIVE BALANCED PORTFOLIO C000002621 CLASS A SAIPX C000002622 CLASS B SBIPX C000002623 CLASS C SCIPX C000018570 CLASS R-1 C000018571 CLASS R-2 0001011114 S000000914 STRATEGIC GROWTH PORTFOLIO C000002624 CLASS A SACAX C000002625 CLASS B SBCAX C000002626 CLASS C SWHCX C000018572 CLASS R-1 C000018573 CLASS R-2 0001011114 S000000915 FLEXIBLE INCOME PORTFOLIO C000002627 CLASS A SAUPX C000002628 CLASS B SBUPX C000002629 CLASS C SCUPX C000018574 CLASS R-1 C000018575 CLASS R-2 0001011114 S000000916 BALANCED PORTFOLIO C000002630 CLASS A SABPX C000002631 CLASS B SBBPX C000002632 CLASS C SCBPX C000018576 CLASS R-1 C000018577 CLASS R-2 0001011114 S000000917 CONSERVATIVE GROWTH PORTFOLIO C000002633 CLASS A SAGPX C000002634 CLASS B SBGPX C000002635 CLASS C SCGPX C000018578 CLASS R-1 C000018579 CLASS R-2 NSAR-A/A 1 wmsam.fil PAGE 1 000 A000000 04/30/2007 000 C000000 0001011114 000 D000000 N 000 E000000 NF 000 F000000 Y 000 G000000 Y 000 H000000 N 000 I000000 6.1 000 J000000 A 001 A000000 WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS, LLC 001 B000000 811-07577 001 C000000 2069135847 002 A000000 1201 3RD AVENUE, SUITE 0822 002 B000000 Seattle 002 C000000 WA 002 D010000 98101 003 000000 N 004 000000 Y 005 000000 N 006 000000 N 007 A000000 Y 007 B000000 5 007 C010100 1 007 C020100 Strategic Growth Portfolio 007 C030100 Y 007 C010200 2 007 C020200 Conservative Growth Portfolio 007 C030200 Y 007 C010300 3 007 C020300 Balanced Portfolio 007 C030300 Y 007 C010400 4 007 C020400 Flexible Income Portfolio 007 C030400 Y 007 C010500 5 007 C020500 Conservative Balanced Portfolio 007 C030500 Y 008 A00AA01 WM ADVISORS, INC. 008 B00AA01 A 008 C00AA01 801-4855 008 D01AA01 SEATTLE 008 D02AA01 WA 008 D03AA01 98101 011 A00AA01 WM FUNDS DISTRIBUTOR, INC. 011 B00AA01 8-50200 011 C01AA01 SEATTLE 011 C02AA01 WA 011 C03AA01 98101 012 A00AA01 WM SHAREHOLDER SERVICES, INC. 012 B00AA01 84-9999 012 C01AA01 SEATTLE PAGE 2 012 C02AA01 WA 012 C03AA01 98101 013 A00AA01 DELOITTE & TOUCHE LLP 013 B01AA01 BOSTON 013 B02AA01 MA 013 B03AA01 02116 014 A00AA01 WM FINANCIAL SERVICES, INC. 014 B00AA01 8-3641 014 A00AA02 WM FUNDS DISTRIBUTOR, INC. 014 B00AA02 8-50200 015 A00AA01 MELLON BANK 015 B00AA01 C 015 C01AA01 EVERETT 015 C02AA01 MA 015 C03AA01 02149 015 E01AA01 X 018 00AA00 Y 019 A00AA00 Y 019 B00AA00 40 019 C00AA00 WMGRPFUNDS 020 A000001 N/A 020 C000001 0 021 000000 0 022 A000001 MORGAN STANLEY 022 B000001 13-2838811 022 C000001 1298905 022 D000001 0 022 A000002 CREDIT SUISSE FIRST BOSTON CORP. 022 B000002 13-2853402 022 C000002 214309 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N 050 000200 N 050 000300 N 050 000400 N 050 000500 N 051 000100 N 051 000200 N 051 000300 N 051 000400 N 051 000500 N 052 000100 N 052 000200 N 052 000300 N 052 000400 N 052 000500 N 053 A000100 N 053 A000200 N 053 A000300 N 053 A000400 N 053 A000500 N 054 A00AA00 Y 054 B00AA00 Y 054 C00AA00 Y 054 D00AA00 N 054 E00AA00 N 054 F00AA00 N 054 G00AA00 Y 054 H00AA00 Y 054 I00AA00 N 054 J00AA00 Y 054 K00AA00 N 054 L00AA00 Y 054 M00AA00 Y 054 N00AA00 N 054 O00AA00 Y 055 A00AA00 N 055 B00AA00 N 056 00AA00 Y 057 00AA00 N 058 A00AA00 N 059 00AA00 Y 060 A00AA00 Y 060 B00AA00 N 061 00AA00 100 062 A000100 N 062 B000100 0.0 062 C000100 0.0 062 D000100 0.0 062 E000100 0.0 PAGE 10 062 F000100 0.0 062 G000100 0.0 062 H000100 0.0 062 I000100 0.0 062 J000100 0.0 062 K000100 0.0 062 L000100 0.0 062 M000100 0.0 062 N000100 0.0 062 O000100 0.0 062 P000100 0.0 062 Q000100 0.0 062 R000100 0.0 062 A000200 N 062 B000200 0.0 062 C000200 0.0 062 D000200 0.0 062 E000200 0.0 062 F000200 0.0 062 G000200 0.0 062 H000200 0.0 062 I000200 0.0 062 J000200 0.0 062 K000200 0.0 062 L000200 0.0 062 M000200 0.0 062 N000200 0.0 062 O000200 0.0 062 P000200 0.0 062 Q000200 0.0 062 R000200 0.0 062 A000300 N 062 B000300 0.0 062 C000300 0.0 062 D000300 0.0 062 E000300 0.0 062 F000300 0.0 062 G000300 0.0 062 H000300 0.0 062 I000300 0.0 062 J000300 0.0 062 K000300 0.0 062 L000300 0.0 062 M000300 0.0 062 N000300 0.0 062 O000300 0.0 062 P000300 0.0 062 Q000300 0.0 062 R000300 0.0 062 A000400 N 062 B000400 0.0 PAGE 11 062 C000400 0.0 062 D000400 0.0 062 E000400 0.0 062 F000400 0.0 062 G000400 0.0 062 H000400 0.0 062 I000400 0.0 062 J000400 0.0 062 K000400 0.0 062 L000400 0.0 062 M000400 0.0 062 N000400 0.0 062 O000400 0.0 062 P000400 0.0 062 Q000400 0.0 062 R000400 0.0 062 A000500 N 062 B000500 0.0 062 C000500 0.0 062 D000500 0.0 062 E000500 0.0 062 F000500 0.0 062 G000500 0.0 062 H000500 0.0 062 I000500 0.0 062 J000500 0.0 062 K000500 0.0 062 L000500 0.0 062 M000500 0.0 062 N000500 0.0 062 O000500 0.0 062 P000500 0.0 062 Q000500 0.0 062 R000500 0.0 063 A00AA00 0 063 B00AA00 0.0 066 A000100 Y 066 B000100 N 066 C000100 Y 066 D000100 N 066 E000100 N 066 F000100 N 066 G000100 N 066 A000200 Y 066 B000200 N 066 C000200 Y 066 D000200 N 066 E000200 N 066 F000200 N 066 G000200 N 066 A000300 Y PAGE 12 066 B000300 N 066 C000300 N 066 D000300 N 066 E000300 N 066 F000300 N 066 G000300 Y 066 A000400 Y 066 B000400 N 066 C000400 N 066 D000400 N 066 E000400 N 066 F000400 Y 066 G000400 N 066 A000500 Y 066 B000500 N 066 C000500 N 066 D000500 N 066 E000500 N 066 F000500 N 066 G000500 Y 067 000100 N 067 000200 N 067 000300 Y 067 000400 N 067 000500 Y 068 A000100 N 068 B000100 N 068 A000200 N 068 B000200 N 068 A000300 N 068 B000300 N 068 A000400 N 068 B000400 N 068 A000500 N 068 B000500 N 069 000100 N 069 000200 N 069 000300 N 069 000400 N 069 000500 N 070 A010100 Y 070 A020100 Y 070 B010100 N 070 B020100 N 070 C010100 N 070 C020100 N 070 D010100 N 070 D020100 N 070 E010100 Y 070 E020100 N 070 F010100 Y PAGE 13 070 F020100 N 070 G010100 Y 070 G020100 N 070 H010100 Y 070 H020100 N 070 I010100 N 070 I020100 N 070 J010100 Y 070 J020100 N 070 K010100 Y 070 K020100 Y 070 L010100 N 070 L020100 N 070 M010100 N 070 M020100 N 070 N010100 Y 070 N020100 N 070 O010100 Y 070 O020100 N 070 P010100 N 070 P020100 N 070 Q010100 N 070 Q020100 N 070 R010100 N 070 R020100 N 070 A010200 Y 070 A020200 Y 070 B010200 N 070 B020200 N 070 C010200 N 070 C020200 N 070 D010200 N 070 D020200 N 070 E010200 Y 070 E020200 N 070 F010200 Y 070 F020200 N 070 G010200 Y 070 G020200 N 070 H010200 Y 070 H020200 N 070 I010200 N 070 I020200 N 070 J010200 Y 070 J020200 N 070 K010200 Y 070 K020200 Y 070 L010200 N 070 L020200 N 070 M010200 N 070 M020200 N PAGE 14 070 N010200 Y 070 N020200 N 070 O010200 Y 070 O020200 N 070 P010200 N 070 P020200 N 070 Q010200 N 070 Q020200 N 070 R010200 N 070 R020200 N 070 A010300 Y 070 A020300 Y 070 B010300 N 070 B020300 N 070 C010300 N 070 C020300 N 070 D010300 N 070 D020300 N 070 E010300 Y 070 E020300 N 070 F010300 Y 070 F020300 N 070 G010300 Y 070 G020300 N 070 H010300 Y 070 H020300 N 070 I010300 N 070 I020300 N 070 J010300 Y 070 J020300 N 070 K010300 Y 070 K020300 Y 070 L010300 N 070 L020300 N 070 M010300 N 070 M020300 N 070 N010300 Y 070 N020300 N 070 O010300 Y 070 O020300 N 070 P010300 N 070 P020300 N 070 Q010300 N 070 Q020300 N 070 R010300 N 070 R020300 N 070 A010400 Y 070 A020400 Y 070 B010400 N 070 B020400 N 070 C010400 N PAGE 15 070 C020400 N 070 D010400 N 070 D020400 N 070 E010400 Y 070 E020400 N 070 F010400 Y 070 F020400 N 070 G010400 Y 070 G020400 N 070 H010400 Y 070 H020400 N 070 I010400 N 070 I020400 N 070 J010400 Y 070 J020400 N 070 K010400 Y 070 K020400 Y 070 L010400 N 070 L020400 N 070 M010400 N 070 M020400 N 070 N010400 Y 070 N020400 N 070 O010400 Y 070 O020400 N 070 P010400 N 070 P020400 N 070 Q010400 N 070 Q020400 N 070 R010400 N 070 R020400 N 070 A010500 Y 070 A020500 Y 070 B010500 N 070 B020500 N 070 C010500 N 070 C020500 N 070 D010500 N 070 D020500 N 070 E010500 Y 070 E020500 N 070 F010500 Y 070 F020500 N 070 G010500 Y 070 G020500 N 070 H010500 Y 070 H020500 N 070 I010500 N 070 I020500 N 070 J010500 Y 070 J020500 N PAGE 16 070 K010500 Y 070 K020500 Y 070 L010500 N 070 L020500 N 070 M010500 N 070 M020500 N 070 N010500 Y 070 N020500 N 070 O010500 Y 070 O020500 N 070 P010500 N 070 P020500 N 070 Q010500 N 070 Q020500 N 070 R010500 N 070 R020500 N 071 A000100 175760 071 B000100 34725 071 C000100 2384064 071 D000100 1 071 A000200 265171 071 B000200 66660 071 C000200 3881983 071 D000200 2 071 A000300 268967 071 B000300 105560 071 C000300 4698257 071 D000300 2 071 A000400 19679 071 B000400 43380 071 C000400 851252 071 D000400 3 071 A000500 26435 071 B000500 17610 071 C000500 646787 071 D000500 3 072 A000100 3 072 B000100 39 072 C000100 22595 072 D000100 0 072 E000100 0 072 F000100 1547 072 G000100 0 072 H000100 0 072 I000100 503 072 J000100 2 072 K000100 0 072 L000100 155 072 M000100 3 072 N000100 22 072 O000100 0 PAGE 17 072 P000100 0 072 Q000100 0 072 R000100 6 072 S000100 1 072 T000100 3244 072 U000100 0 072 V000100 0 072 W000100 77 072 X000100 5560 072 Y000100 0 072 Z000100 17074 072AA000100 154172 072BB000100 0 072CC010100 424530 072CC020100 0 072DD010100 12863 072DD020100 6622 072EE000100 0 072 A000200 3 072 B000200 35 072 C000200 37262 072 D000200 0 072 E000200 0 072 F000200 2519 072 G000200 0 072 H000200 0 072 I000200 600 072 J000200 1 072 K000200 0 072 L000200 218 072 M000200 4 072 N000200 22 072 O000200 0 072 P000200 0 072 Q000200 0 072 R000200 6 072 S000200 1 072 T000200 5189 072 U000200 0 072 V000200 0 072 W000200 101 072 X000200 8661 072 Y000200 0 072 Z000200 28636 072AA000200 230235 072BB000200 0 072CC010200 691794 072CC020200 0 072DD010200 22880 072DD020200 11203 072EE000200 0 PAGE 18 072 A000300 3 072 B000300 226 072 C000300 47410 072 D000300 0 072 E000300 0 072 F000300 3072 072 G000300 0 072 H000300 0 072 I000300 651 072 J000300 1 072 K000300 0 072 L000300 216 072 M000300 5 072 N000300 22 072 O000300 0 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072 O000500 0 072 P000500 0 072 Q000500 0 072 R000500 6 072 S000500 1 072 T000500 863 072 U000500 0 072 V000500 0 072 W000500 16 072 X000500 1449 072 Y000500 0 072 Z000500 5348 072AA000500 20853 072BB000500 0 072CC010500 63214 072CC020500 0 072DD010500 3180 072DD020500 2812 072EE000500 4480 073 A010100 0.2180 073 A020100 0.1840 073 B000100 0.0000 PAGE 20 073 C000100 0.0000 073 A010200 0.2090 073 A020200 0.1800 073 B000200 0.0000 073 C000200 0.0000 073 A010300 0.1390 073 A020300 0.2210 073 B000300 0.0768 073 C000300 0.0000 073 A010400 0.1270 073 A020400 0.2070 073 B000400 0.0375 073 C000400 0.0000 073 A010500 0.1150 073 A020500 0.1870 073 B000500 0.0778 073 C000500 0.0000 074 A000100 0 074 B000100 0 074 C000100 0 074 D000100 0 074 E000100 0 074 F000100 0 074 G000100 0 074 H000100 0 074 I000100 0 074 J000100 0 074 K000100 0 074 L000100 0 074 M000100 0 074 N000100 0 074 O000100 0 074 P000100 0 074 Q000100 0 074 R010100 0 074 R020100 0 074 R030100 0 074 R040100 0 074 S000100 0 074 T000100 0 074 U010100 0 074 U020100 0 074 V010100 0.00 074 V020100 0.00 074 W000100 0.0000 074 X000100 0 074 Y000100 0 074 A000200 0 074 B000200 0 074 C000200 0 074 D000200 0 PAGE 21 074 E000200 0 074 F000200 0 074 G000200 0 074 H000200 0 074 I000200 0 074 J000200 0 074 K000200 0 074 L000200 0 074 M000200 0 074 N000200 0 074 O000200 0 074 P000200 0 074 Q000200 0 074 R010200 0 074 R020200 0 074 R030200 0 074 R040200 0 074 S000200 0 074 T000200 0 074 U010200 0 074 U020200 0 074 V010200 0.00 074 V020200 0.00 074 W000200 0.0000 074 X000200 0 074 Y000200 0 074 A000300 0 074 B000300 0 074 C000300 0 074 D000300 0 074 E000300 0 074 F000300 0 074 G000300 0 074 H000300 0 074 I000300 0 074 J000300 0 074 K000300 0 074 L000300 0 074 M000300 0 074 N000300 0 074 O000300 0 074 P000300 0 074 Q000300 0 074 R010300 0 074 R020300 0 074 R030300 0 074 R040300 0 074 S000300 0 074 T000300 0 074 U010300 0 074 U020300 0 PAGE 22 074 V010300 0.00 074 V020300 0.00 074 W000300 0.0000 074 X000300 0 074 Y000300 0 074 A000400 0 074 B000400 0 074 C000400 0 074 D000400 0 074 E000400 0 074 F000400 0 074 G000400 0 074 H000400 0 074 I000400 0 074 J000400 0 074 K000400 0 074 L000400 0 074 M000400 0 074 N000400 0 074 O000400 0 074 P000400 0 074 Q000400 0 074 R010400 0 074 R020400 0 074 R030400 0 074 R040400 0 074 S000400 0 074 T000400 0 074 U010400 0 074 U020400 0 074 V010400 0.00 074 V020400 0.00 074 W000400 0.0000 074 X000400 0 074 Y000400 0 074 A000500 0 074 B000500 0 074 C000500 0 074 D000500 0 074 E000500 0 074 F000500 0 074 G000500 0 074 H000500 0 074 I000500 0 074 J000500 0 074 K000500 0 074 L000500 0 074 M000500 0 074 N000500 0 074 O000500 0 074 P000500 0 PAGE 23 074 Q000500 0 074 R010500 0 074 R020500 0 074 R030500 0 074 R040500 0 074 S000500 0 074 T000500 0 074 U010500 0 074 U020500 0 074 V010500 0.00 074 V020500 0.00 074 W000500 0.0000 074 X000500 0 074 Y000500 0 075 A000100 0 075 B000100 2380487 075 A000200 0 075 B000200 3877995 075 A000300 0 075 B000300 4728497 075 A000400 0 075 B000400 856218 075 A000500 0 075 B000500 649041 076 000100 0.00 076 000200 0.00 076 000300 0.00 076 000400 0.00 076 000500 0.00 077 A000000 Y 077 C000000 Y 077 H000000 N 077 M000000 Y 078 000000 N 080 C00AA00 0 081 B00AA00 0 082 B00AA00 0 083 B00AA00 0 084 B00AA00 0 086 A010000 0 086 A020000 0 086 B010000 0 086 B020000 0 086 C010000 0 086 C020000 0 086 D010000 0 086 D020000 0 086 E010000 0 086 E020000 0 086 F010000 0 086 F020000 0 PAGE 24 SIGNATURE SUZANNE WHALEN TITLE FUND ADMINISTRATION SPECIALIST EX-99.77C VOTES 2 wmsam77c.txt Shareholder votes - Meeting 12/15/2006 WM Group of Funds - WM SAM Funds REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED WM CONSERVATIVE BALANCED PORTFOLIO To approve the Agreement and Plan of Reorganization. Vote - Non-Routine Quorum - 10% O/S Passing - 50% Voted REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 14,666,784.758 27,589.200.806 47.074 94.053 Against: 581,918.384 0.993 1.984 Abstain: 1,162,450.325 1.983 3.963 BNV: .000 0.000 0.000 Total Voted: 5,860,822.578 29,333,569.515 50.050 100.00 Needed for Quorum -23,472,746.937 votes 50.050 Needed to Pass -12,922,416.049 affirmative votes 94.053 Outstanding Shares 58,608,225.784 Approval of Proposed Advisory Agreement with WMA. Vote - Non-Routine Quorum - 50% O/S Passing - 67% Voted 50% O/S REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 19,653,491.575 27,697,343.028 47.258 94.422 Against: 519,069.676 0.886 1.770 Abstain: 1,117,156.811 1.906 3.808 BNV: .000 0.000 0.000 Total Voted: 29,304,112.892 29,333,569.515 50.050 100.00 Needed for Quorum -29,456.623 votes 50.050 Needed to Pass -8,043,851.453 affirmative votes 47.258 94.422 Outstanding Shares 58,608,225.784 WM BALANCED PORTFOLIO To approve the Agreement and Plan of Reorganization. Vote - Non-Routine Quorum - 10% O/S Passing - 50% Voted REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 82,163,303.786 151,781.346.502 46.795 92.366 Against: 4,105,472.018 1.266 2.498 Abstain: 8,439,789.053 2.602 3.136 BNV: .000 0.000 0.000 Total Voted: 32,435,186.644 164,326,607.507 50.663 100.00 Needed for Quorum -131,891,420.929 votes 50.663 Needed to Pass -69,618,042.716 affirmative votes 92.366 Outstanding Shares 324,351,866.445 Approval of Proposed Advisory Agreement with WMA. Vote - Non-Routine Quorum - 50% O/S Passing - 67% Voted 50% O/S REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 110,098,827.074 152,408,343.006 46.989 92.747 Against: 3,811,163.821 1.175 2.319 Abstain: 8,107,100.746 2.499 4.934 BNV: .000 0.000 0.000 Total Voted: 162,175,933.223 164,326,607.507 50.663 100.00 Needed for Quorum -2,150,674.351 votes 50.663 Needed to Pass -42,309,515.932 affirmative votes 46.989 92.747 Outstanding Shares 324,531,866.445 WM FLEXIBLE INCOME PORTFOLIO To approve the Agreement and Plan of Reorganization. Vote - Non-Routine Quorum - 10% O/S Passing - 50% Voted REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 19,295,543.028 35,326.328.566 46.482 91.540 Against: 700,630.757 0.922 1.816 Abstain: 2,564,126.733 3.374 6.644 BNV: .000 0.000 0.000 Total Voted: 7,599,948.660 38,591,086.056 50.778 100.00 Needed for Quorum -30,991,137.396 votes 50.778 Needed to Pass -16,030,785.538 affirmative votes 91.540 Outstanding Shares 75,999,486.597 Approval of Proposed Advisory Agreement with WMA. Vote - Non-Routine Quorum - 50% O/S Passing - 67% Voted 50% O/S REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 25,856,027.658 35,271,060.743 46.410 91.397 Against: 719,197.469 0.946 1.864 Abstain: 2,600,827.844 3.422 6.739 BNV: .000 0.000 0.000 Total Voted: 37,999,743.299 38,591,086.056 50.778 100.00 Needed for Quorum -591,342.758 votes 50.778 Needed to Pass -9,415,033.085 affirmative votes 46.410 91.397 Outstanding Shares 75,999,486.597 WM CONSERVATIVE GROWTH PORTFOLIO To approve the Agreement and Plan of Reorganization. Vote - Non-Routine Quorum - 10% O/S Passing - 50% Voted REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 60,123,122.089 111,532.850.279 46.778 92.754 Against: 2,983,727.159 1.251 2.481 Abstain: 5,729,666.740 2.403 4.765 BNV: .000 0.000 0.000 Total Voted: 23,842,856.787 120,246,244.178 50.433 100.00 Needed for Quorum -96,403,387.391 votes 50.433 Needed to Pass -51,409,728.190 affirmative votes 92.754 Outstanding Shares 238,428,567.872 Approval of Proposed Advisory Agreement with WMA. Vote - Non-Routine Quorum - 50% O/S Passing - 67% Voted 50% O/S REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 80,564,983.599 111,610,524.197 46.811 92.818 Against: 2,880,702.207 1.208 2.396 Abstain: 5,735,017.774 2.414 4.786 BNV: .000 0.000 0.000 Total Voted: 119,214,283.936 120,246,244.178 50.433 100.00 Needed for Quorum -1,031,960.242 votes 50.433 Needed to Pass -31,045,540.598 affirmative votes 46.811 92.818 Outstanding Shares 238,428,567.872 WM STRATEGIC GROWTH PORTFOLIO To approve the Agreement and Plan of Reorganization. Vote - Non-Routine Quorum - 10% O/S Passing - 50% Voted REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 33,490,514.965 62,551.800.730 46.964 93.387 Against: 1,623,962.915 1.219 2.425 Abstain: 2,805,266.285 2.106 4.188 BNV: .000 0.000 0.000 Total Voted: 13,319,182.428 66,981,029.930 50.289 100.00 Needed for Quorum -53,661,847.502 votes 50.289 Needed to Pass -29,061,285.765 affirmative votes 93.387 Outstanding Shares 133,191,824.277 Approval of Proposed Advisory Agreement with WMA. Vote - Non-Routine Quorum - 50% O/S Passing - 67% Voted 50% O/S REQUIRED CURRENT VOTING LEVEL VOTING LEVEL % OF O/S % OF VOTED For: 44,877,290.053 62,654,410.560 47.041 93.541 Against: 1,553,866.122 1.167 2.230 Abstain: 2,772,753.248 2.082 4.140 BNV: .000 0.000 0.000 Total Voted: 66,595,912.138 66,981,029.930 50.289 100.00 Needed for Quorum -385,117.792 votes 50.289 Needed to Pass -17,777,120.507 affirmative votes 47.041 93.541 Outstanding Shares 133,191,824.277 EX-99.77M MERGERS 3 wmsam77m.txt AGREEMENT AND PLAN OF REORGANIZATION (WM SAM) THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is as of made the 1st day of December, 2006, by and among Principal Investors Fund, Inc. ("PIF"), a Maryland corporation, on behalf of its separate series listed below (the "Acquiring Funds") and WM Strategic Asset Management Portfolios, LLC ("WM SAM"), a Massachusetts limited liability company, on behalf of its separate series listed below (the "Acquired Funds"), and for purposes of Section 7 of this Agreement only, by Principal Management Corporation ("PMC"), an Iowa corporation, and New American Capital, Inc. ("NAC"), a Delaware corporation. Acquired Funds Corresponding PIF Acquiring Funds Balanced Portfolio -- SAM Balanced Portfolio* Conservative Balanced Portfolio -- SAM Conservative Balanced Portfolio* Conservative Growth Portfolio -- SAM Conservative Growth Portfolio* Flexible Income Portfolio -- SAM Flexible Income Portfolio* Strategic Growth Portfolio -- SAM Strategic Growth Portfolio* This Agreement shall be deemed to be a separate agreement between WM SAM, on behalf of each Acquired Fund, and PIF, on behalf of the corresponding Acquiring Fund. As used herein, unless the context otherwise requires, each Acquired Fund and its corresponding Acquiring Fund are, respectively, the "Acquired Fund" and the "Acquiring Fund." Certain Acquiring Funds are new series of PIF that are being organized in connection with the transactions contemplated by this Agreement. These Acquiring Funds are indicated above by an asterisk. They will not commence operations until the Closing. The provisions of this Agreement that apply to such an Acquiring Fund are to be read with that understanding. The remaining Acquiring Funds are referred to herein as the "Existing Acquiring Funds." This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder. The reorganization with respect to each Acquired Fund and its corresponding Acquiring Fund will consist of: (i) the transfer of all of the assets of the Acquired Fund to the Acquiring Fund and the assumption by the Acquiring Fund of the Stated Liabilities of the Acquired Fund (as defined in Section 1.3) in exchange solely for Class A, Class B, and Class C shares of capital stock of the Acquiring Fund (the "Acquiring Fund Shares"); (ii) the distribution of the Acquiring Fund Shares to the shareholders of the Acquired Fund according to their respective interests; and (iii) the termination, dissolution and complete liquidation of the Acquired Fund as soon as practicable thereafter, all upon the terms and conditions hereinafter set forth (the "Reorganization"). WHEREAS, each of the Acquired Fund and the corresponding Acquiring Fund is a separate series of an open-end, management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and the Acquired Fund owns securities and other investments which generally are assets of the character in which the Acquiring Fund is permitted to invest; WHEREAS, the Board of Directors of PIF has determined that the Reorganization is in the best interests of the Acquiring Fund; and WHEREAS, the Board of Trustees of WM SAM has determined that the Reorganization is in the best interests of the Acquired Fund; NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties agree as follows: 1. TRANSFER OF ACQUIRED FUND ASSETS IN EXCHANGE FOR ACQUIRING FUND SHARES AND ASSUMPTION OF STATED LIABILITIES AND LIQUIDATION OF ACQUIRED FUND 1.1. The Exchange. Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein: (a) The Acquired Fund will transfer and deliver to the Acquiring Fund, and the Acquiring Fund will acquire, all the assets of the Acquired Fund as set forth in Section 1.2; (b) The Acquiring fund will assume the Stated Liabilities of the Acquired Fund as set forth in Section 1.3; and (c) the Acquiring Fund will issue and deliver to the Acquired Fund, the number of full and fractional shares of each corresponding class of Acquiring Fund Shares determined by dividing the aggregate value of the Acquired Fund's assets, net of certain stated liabilities of the Acquired Fund, attributable to each class of Acquired Fund Shares (as set forth below), computed in the manner and as of the time and date set forth in Section 2.1, by the net asset value of one Acquiring Fund Share of the corresponding class (as set forth below), computed in the manner and as of the time and date set forth in Section 2.2. Such transactions shall take place at the closing provided for in Section 3.1 (the "Closing"). The classes of shares of the Acquiring Fund correspond to the classes of shares of the Acquired Fund (the "Acquired Fund Shares") as follows: Class A shares of the Acquiring Fund correspond to Class A shares of the Acquired Fund; Class B shares of the Acquiring Fund correspond to Class B shares of the Acquired Fund; and Class C shares of the Acquiring Fund correspond to Class C shares of the Acquired Fund. 1.2. Assets to Be Acquired. The assets of the Acquired Fund to be acquired by the Acquiring Fund shall consist of all property owned by the Acquired Fund, including, without limitation, all cash, securities, commodities, interests in futures and other financial instruments, claims, (whether absolute or contingent, known or unknown), receivables (including dividends, interest, principal, subscriptions and other receivables), goodwill and other intangible property, all books and records belonging to the Acquired Fund, any deferred or prepaid expenses shown as an asset on the books of the Acquired Fund on the closing date provided for in Section 3.1 (the "Closing Date"), and all interests, rights, privileges and powers, other than cash in an amount necessary to pay dividends and distributions as provided in Section 6.2 (c) and other than the Acquired Fund's rights under this Agreement (collectively, "Assets"). The Acquired Fund will, at least 7 days prior to the Closing Date, furnish the Acquiring Fund with (a) a list of the Acquired Fund's portfolio securities and other investments and (b) a list of the Acquired Fund's "historic business assets," which are defined for this purpose as (i) those assets that were acquired by the Acquired Fund prior to the date of the approval of the Reorganization by the Board of Trustees of WM SAM, and (ii) those assets that were acquired subsequent to such Board approval but in accordance with the Acquired Fund's investment objectives and not with a view to, or in anticipation or as part of, the Reorganization. The Acquiring Fund will, at least 3 days prior to the Closing Date, furnish the Acquired Fund with a list of the securities and other instruments, if any, on the Acquired Fund's list referred to above that do not conform to the Acquiring Fund's investment objectives, policies and restrictions. If requested by the Acquiring Fund, the Acquired Fund will dispose of securities and other instruments on the Acquiring Fund's list before the Closing Date. In addition, if it is determined that the portfolios of the Acquired Fund and the Acquiring Fund, when aggregated, would contain investments exceeding certain percentage limitations imposed upon the Acquiring Fund with respect to such investments, the Acquired Fund, if requested by the Acquiring Fund, will dispose of a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the Closing Date. After the Acquired Fund furnishes the Acquiring Fund with the list described above, the Acquired Fund will not, without the prior approval of the Acquiring Fund, acquire any additional securities other than securities which the Acquiring Fund is permitted to purchase, pursuant to its investment objectives, policies and restrictions or otherwise (taking into consideration its own portfolio composition as of such date). Notwithstanding the foregoing, (a) nothing herein will require the Acquired Fund to dispose of any portfolio securities or other investments, if, in the reasonable judgment of the Acquired Fund's trustees or investment adviser, such disposition would adversely affect the tax-free nature of the Reorganization for federal income tax purposes or would otherwise not be in the best interests of the Acquired Fund and (b) nothing will permit the Acquired Fund to dispose of any portfolio securities or other investments if, in the reasonable judgment of the Acquiring Fund's directors or investment adviser, such disposition would adversely affect the tax-free nature of the Reorganization for federal income tax purposes or would otherwise not be in the best interests of the Acquired Fund. 1.3. Liabilities to Be Assumed. The Acquired Fund will endeavor to identify and discharge, to the extent practicable, all of its liabilities and obligations, including all liabilities relating to operations, prior to the Closing Date. The Acquiring Fund shall assume only those accrued and unpaid liabilities of the Acquired Fund set forth in the Acquired Fund's statement of assets and liabilities as of the Closing Date delivered by the Acquired Fund to the Acquiring Fund pursuant to Section 3.2 (the "Stated Liabilities"). The Acquiring Fund shall assume only the Stated Liabilities and shall not assume any other debts, liabilities or obligations of the Acquired Fund. Notwithstanding the foregoing, the Acquiring Fund agrees that all rights to indemnification and all limitations of liability existing in favor of the Acquired Fund's current and former Trustees and officers, acting in their capacities as such, under the Acquired Fund's Limited Liability Company Agreement ("LLC Agreement") and Bylaws as in effect as of the date of this Agreement shall survive the Reorganization as obligations of the Acquiring Fund and shall continue in full force and effect, without any amendment thereto, and shall constitute rights which may be asserted against the Acquired Fund, its successors or assigns. 1.4. Liquidation and Distribution. Immediately after the transfer of Assets provided for in Section 1.1, the Acquired Fund will distribute in complete liquidation of the Acquired Fund to the shareholders of record of each class of Acquired Fund Shares, determined as of the close of regular trading on the New York Stock Exchange ("NYSE") on the Closing Date (the "Acquired Fund Shareholders"), on a pro rata basis, all the Acquiring Fund Shares of the corresponding class received by the Acquired Fund pursuant to Section 1.1. Such distribution and liquidation will be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund Shareholders, and representing the respective pro rata number of each class of Acquiring Fund Shares due Acquired Fund Shareholders holding the corresponding class of Acquired Fund Shares. All issued and outstanding shares of the Acquired Fund will simultaneously be redeemed and cancelled on the books of the Acquired Fund and will be null and void. The Acquiring Fund shall not issue certificates representing Acquiring Fund Shares in connection with such exchange. 1.5. Ownership of Shares. Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund's transfer agent. 1.6 Surrender of Certificates. With respect to Acquiring Fund Shares distributable pursuant to Section 1.4 to an Acquired Fund Shareholder holding a certificate or certificates for Acquired Fund Shares, if any, on the Closing Date, the Acquiring Fund will not permit such shareholder to receive Acquiring Fund Share certificates therefor, exchange such Acquiring Fund Shares for shares of other investment companies, effect an account transfer of such Acquiring Fund Shares, or pledge or redeem such Acquiring Fund Shares until the Acquiring Fund has been notified by the Acquired Fund or its agent that such Acquired Fund Shareholder has surrendered all his or her outstanding certificates for Acquired Fund Shares or, in the event of lost certificates, posted adequate bond. 1.7. Transfer Taxes. Any transfer taxes payable upon the issuance of Acquiring Fund Shares in a name other than the registered holder of the Acquired Fund Shares on the books of the Acquired Fund as of that time shall, as a condition of such transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred. 1.8. Reporting Responsibility. Any reporting responsibility of or with respect to an Acquired Fund, including, but not limited to, the responsibility for filing of regulatory reports, tax returns, or other documents with the Securities and Exchange Commission (the "SEC"), any state securities commission, and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Acquired Fund. 1.9 Termination and Dissolution. As soon as practicable after the Closing Date, WM SAM shall make all filings and take all other necessary steps to effect the complete dissolution of the Acquired Fund, and after the dissolution of all the Acquired Funds, to effect its complete dissolution and to terminate its registration under the 1940 Act. 1.10 Books and Records. Immediately after the Closing Date, the share transfer books relating to the Acquired Fund shall be closed, and no transfer of shares shall thereafter be made on such books. All books and records of WM SAM relating to the Acquired Fund, including without limitation all books and records required to be maintained under the 1940 Act and the rules and regulations thereunder, shall be available to PIF from and after the Closing Date and shall be turned over to PIF as soon as practicable after the Closing Date. After delivery of such books and records to PIF, PIF shall be responsible for the maintenance of such books and records in accordance with the 1940 Act and the rules and regulations thereunder. 1.11 Action by PIF and WM SAM. PIF shall take on behalf of the Acquiring Fund all actions expressed herein as being the obligations of the Acquiring Fund. WM SAM shall take on behalf of the Acquired Fund all actions expressed herein as being the obligations of the Acquired Fund. 2. VALUATION 2.1. Valuation of Assets. The value of the Assets to be transferred to the Acquiring Fund shall be computed as of the close of regular trading on the NYSE, and after the declaration of any dividends pursuant to Section 6.2 (c), on the Closing Date, using the valuation procedures set forth in the Articles of Incorporation and Bylaws of the Acquiring Fund and the then current prospectus or prospectuses or statement or statements of additional information of the Acquiring Fund (collectively, as amended or supplemented from time to time, the "Acquiring Fund Prospectus"), and shall be certified by the Acquired Fund. 2.2. Valuation of Shares. The net asset value of a share of each class of Acquiring Fund Shares shall be the net asset value per share computed with respect to that class as of the close of regular trading on the NYSE on the Closing Date, using the valuation procedures set forth in the Articles of Incorporation and the Bylaws of the Acquiring Fund and the Acquiring Fund Prospectus. 3. CLOSING AND CLOSING DATE 3.1. Closing Date. The Closing shall be held on January 12, 2007 (the "Closing Date"), at the offices of Principal Management Corporation, 680 8th Street, Des Moines, Iowa 50392, or at such other time and place as PIF and WM SAM may agree. Unless otherwise provided, all acts taking place at the Closing shall be deemed to take place simultaneously as of the close of regular trading on the NYSE on the Closing Date (the "Effective Time"). 3.2 Statement of Assets and Stated Liabilities. WM SAM will prepare and deliver to the Acquiring Fund on the second business day prior to the Closing Date a statement of the Assets and Stated Liabilities of the Acquired Fund as of such date for review and agreement by the parties to determine that the Assets and Stated Liabilities of the Acquired Fund are being correctly determined in accordance with the terms of this Agreement. WM SAM will deliver at the Closing (i) an updated statement of Assets and Stated Liabilities of the Acquired Fund and (ii) a list of the Acquired Fund's portfolio assets showing the tax costs of each of its assets by lot and the holding periods of such assets, each of (i) and (ii) as of the Closing Date, and certified by the principal accounting officer of WM SAM. 3.3. Custodian's Certificate. The Acquired Fund shall instruct its custodian to deliver, at the Closing, a certificate of an authorized officer stating that (i) the Assets have been delivered in proper form to the custodian for the Acquiring Fund on the Closing Date, and (ii) all necessary taxes in connection with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. The Acquired Fund's portfolio securities represented by a certificate or other written instrument shall be presented by the custodian for the Acquired Fund to the custodian for the Acquiring Fund for examination no later than five business days preceding the Closing Date, and shall be transferred and delivered by the Acquired Fund as of the Closing Date for the account of the Acquiring Fund duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof free and clear of all liens, encumbrances and claims whatsoever. The Acquired Fund's portfolio securities and instruments deposited with a securities depository, as defined in Rule 17f-4 under the 1940 Act, or other permitted counterparties or a futures commission merchant, as defined in Rule 17f-6 under the 1940 Act, shall be delivered as of the Closing Date by book entry, in accordance with the customary practices of such depositories and future commission merchants and the custodian for the Acquiring Fund. The cash to be transferred by the Acquired Fund shall be delivered in the manner specified by the Acquiring Fund. 3.4. Transfer Agent's Certificate. The Acquired Fund shall instruct its transfer agent to deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Acquired Fund Shareholders as of the Closing Date and the number and percentage ownership (to four decimal places) of outstanding shares of each class of the Acquired Fund owned by each such shareholder immediately prior to the Closing. The Acquiring Fund shall issue and deliver, or instruct its transfer agent to issue and deliver, a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date to the Acquired Fund, or provide evidence reasonably satisfactory to the Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired Fund's account on the books of the Acquiring Fund. 3.5 Failure to Deliver Assets. If the Acquired Fund is unable to make delivery pursuant to Section 3.2 to the custodian for the Acquiring Fund of any of the Assets of the Acquired Fund for the reason that any of such Assets have not yet been delivered to it by the Acquired Fund's broker, dealer or other counterparty, then, in lieu of such delivery, the Acquired Fund shall deliver, with respect to those Assets, executed copies of an agreement of assignment and due bills executed on behalf of the broker, dealer or other counterparty, or such other documentation in lieu thereof as may be acceptable to the Acquiring Fund, together with such other documents as may be required by the Acquiring Fund or its custodian. 3.6 Delivery of Additional Items. At the Closing each party shall deliver to the other such bills of sale, instruments of assumptions of liabilities, checks, assignments, share certificates, receipts and other documents, as such other party or its counsel may reasonably request in connection with the transfer of assets, assumption of liabilities and liquidation contemplated by Section 1. 3.7. Effect of Suspension in Trading. In the event that on the Closing Date (a) the NYSE or another primary trading market for portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed to trading or trading thereupon shall be restricted, or (b) trading or the reporting of trading on the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquired Fund or the Acquiring Fund is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored or such other date to which PIF and WM SAM may agree. 4. REPRESENTATIONS AND WARRANTIES 4.1 The Acquired Fund. WM SAM on behalf of the Acquired Fund represents and warrants to PIF and the Acquiring Fund as follows: (a) Organization, Existence, etc. WM SAM is a limited liability company that is duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has power to own all of its properties and assets and to carry on its business as presently conducted. WM SAM is duly authorized to transact business in Massachusetts and is qualified to do business in all jurisdictions in which it is required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Acquired Fund. The Acquired Fund is a legally designated, validly existing series of shares of WM SAM representing interests in a separate portfolio thereof under the laws of Massachusetts. Each of WM SAM and the Acquired Fund has all necessary federal, state and local authorizations to own all of its properties and assets and to carry on its business as now conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Acquired Fund. (b) Registration as Investment Company. WM SAM is duly registered under the 1940 Act as an open-end investment company of the management type; such registration has not been revoked or rescinded and is in full force and effect. Each of WM SAM and the Acquired Fund is in compliance in all material respects with the 1940 Act and the rules and regulations thereunder. (c) Form N-14. The Registration Statement on N-14 and the Combined Prospectus/Proxy Statement contained therein relating to the transactions contemplated by this Agreement as amended or supplemented from time to time (the "Registration Statement"), as of the effective date of the Registration Statement and at all times subsequent thereto up to and including the Closing Date, conforms and will conform, as it relates to WM SAM and the Acquired Fund, in all material respects to the requirements of federal and state securities laws and the rules and regulations thereunder and does not and will not include, as it relates to WM SAM and the Acquired Fund, any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Any written information furnished by WM SAM with respect to WM SAM or the Acquired Fund for use in the Registration Statement or any other materials provided in connection with the Reorganization, as of the effective date of the Registration and at all times subsequent thereto up to and including the Closing Date, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading. (d) Current Offering Documents. The prospectus, statement of additional information and shareholder reports of WM SAM relating to the Acquired Fund, each to the extent incorporated by reference in the Registration Statement, comply in all material respects with the requirements of the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act, are and will be accurate in all material respects and do not and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (e) No Violation. Each of WM SAM and the Acquired Fund is not in violation of Massachusetts law or in any material respect of any provision of WM SAM's LLC Agreement or Bylaws or of any agreement, indenture, note, mortgage, instrument, contract, lease or other undertaking to which WM SAM or the Acquired Fund is a party or by which it is bound, and the execution, delivery and performance of this Agreement will not result in any such violation or in the acceleration of any obligation, or the imposition or any penalty, under any material agreement, indenture, instrument, contract, lease or other undertaking to which WM SAM or the Acquired Fund is a party or by which it is bound. (f) Contracts. Each of WM SAM and the Acquired Fund has no material contracts, agreements or other commitments (other than this Agreement) that will not be terminated without liability to it before the Closing Date, other than liabilities, if any, to be discharged prior to the Closing Date or reflected as Stated Liabilities in the Statement of Assets and Stated Liabilities as provided in Section 3.2 and other than contracts that may be terminated without liability to it following the Closing Date. (g) Litigation. To the knowledge of WM SAM and the Acquired Fund, except as has been disclosed in writing to PIF, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or threatened as to the Acquired Fund, any of its properties or assets, or any person whom WM SAM or the Acquired Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, there are no facts which form the basis for the institution of any such litigation, proceeding or investigation, and each of WM SAM and the Acquired Fund is not a party to or subject to the provisions of any order, decree or judgment of any court of governmental body, which materially and adversely affects its business or its ability to consummate the transactions contemplated hereby. (h) Financial Statements. The audited financial statements of the Acquired Fund for the fiscal year ended October 31, 2005, have been prepared in accordance with accounting principles generally accepted in the United States of America consistently applied and have been audited by Deloitte & Touche LLP . True and complete copies of such statements have been furnished to PIF. Such statements fairly reflect the financial condition and the results of operations of the Acquired Fund as of such date and the results of operations and changes in net assets for the periods indicated, and there are no liabilities of or the Acquired Fund whether actual or contingent and whether or not determined or determinable as of such date that are required to be disclosed but are not disclosed in such statements. The unaudited financial statements of the Acquired Fund for the six months ended April 30, 2006 have been prepared in accordance with accounting principles generally accepted in the United States of America consistently applied by WM SAM. True and complete copies of such statements have been furnished to PIF. Such statements fairly reflect the financial condition and the results of operations of the Acquired Fund as of such date and the results of operations and changes in net assets for the periods indicated, and there are no liabilities of the Acquired Fund whether actual or contingent and whether or not determined or determinable as of such date that are required to be disclosed but are not disclosed in such statements. There are no liabilities of any Acquired Fund, whether actual or contingent and whether or not determined or determinable, other than liabilities disclosed or provided for in the financial statements of the Acquired Fund referred to above, liabilities incurred in the ordinary course of business subsequent to October 31, 2005, liabilities previously disclosed to and accepted by PIF and liabilities which in the aggregate have not been and will not be materially adverse to the financial condition, results of operations, business or assets of the Acquired Fund. (i) No Material Adverse Change. Since October 31, 2005, there has been no material adverse change in the financial condition, assets, liabilities or business of the Acquired Fund (other than changes occurring in the ordinary course of business) or any incurrence by the Acquired Fund of indebtedness, except as disclosed to PIF. For the purposes of this Section, distributions of net investment income and net realized capital gains, changes in portfolio securities, changes in the market value of portfolio securities or net redemptions shall be deemed to be in the ordinary course of business. (j) Taxes. Each of WM SAM and the Acquired Fund has duly filed all federal, state, local and foreign tax returns which are required to have been filed, and all taxes of WM SAM and the Acquired Fund which are due and payable have been paid except for amounts that alone or in the aggregate would not reasonably be expected to have a material adverse effect. As of the Closing Date, all federal and other tax returns and reports of WM SAM and the Acquired Fund required by law to have been filed by such date (giving effect to extensions) shall have been filed, and all federal and other taxes shown to be due on such returns and reports or on any assessment received shall have been paid, or provisions shall have been made for the payment thereof. All of the Acquired Fund's tax liabilities will have been adequately provided for on its books. To the best of the knowledge of WM SAM and the Acquired Fund, each of them will not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and it will not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid. (k) Regulated Investment Company. Each of WM SAM and the Acquired Fund has met the requirements of subchapter M of the Code for treatment as a "regulated investment company" within the meaning of Section 851 of the Code in respect of each taxable year since it commenced operations and will continue to meet such requirements at all times through the Closing Date. Each of WM SAM and the Acquired Fund has not at any time since its inception been liable for nor is now liable for any material income or excise tax pursuant to Section 852 or 4982 of the Code. The Acquired Fund is in compliance in all material respects with applicable regulations of the Internal Revenue Service pertaining to the reporting of dividends and other distributions on and redemptions of its capital stock and to withholding in respect of dividends and other distributions to shareholders and is not liable for any material penalties which could be imposed thereunder. (l) Capitalization. The authorized capital of WM SAM consists of an unlimited number of shares of beneficial interest, of such number of different series as the Board of Trustees may authorize from time to time. All issued and outstanding shares of beneficial interest of the Acquired Fund are, and on the Closing Date will be, duly authorized and validly issued and outstanding, fully paid and non-assessable (except as described in the prospectus of WM SAM) by WM SAM and will have been issued in compliance with all applicable registration or qualification requirements of federal and state securities laws. No options, warrants or other rights to subscribe for or purchase, or securities convertible into, any shares of beneficial interest of the Acquired Fund are outstanding and none will be outstanding on the Closing Date. The shares of beneficial interest are not subject to preemptive or dissenter's rights. At the Effective Time, all issued and outstanding shares of beneficial interest in the Acquired Fund will be held in book-entry form by shareholders of record of the Acquired Fund as set forth on the books and records of WM SAM in the amounts set forth therein, and as set forth in any list of shareholders of record provided to PIF or the corresponding Acquiring Fund for purposes of the Reorganization. (m) Investment Operations. The Acquired Fund's investment operations from inception to the date of this Agreement have been in compliance in all material respects with the investment policies and investment restrictions set forth in its prospectus or prospectuses and statement or statements of additional information as in effect from time to time, except as previously disclosed in writing to PIF. (n) Authority Relative to this Agreement. WM SAM, on behalf of the Acquired Fund, has the power to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by Board of Trustees of WM SAM, and, subject to approval by the required majority of the shareholders of the Acquired Fund, this Agreement constitutes the valid and binding obligation of WM SAM and the Acquired Fund, enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and other equitable principles. (o) No Distribution. The Acquiring Fund Shares to be issued to the Acquired Fund pursuant to Section 1.1(c) will not be acquired for the purpose of making any distribution thereof other than to the shareholders of the Acquired Fund as provided in Section 1.4. (p) Information. The information provided by the Acquired Fund for use in the Registration Statement referred to in Section 4.1(c) or in no-action letters, applications for orders or other documents that may be necessary in connection with the transactions contemplated by this Agreement shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations as applicable thereto. (q) Regulatory Approvals. No consent, approval, authorization or order of any court or governmental authority is required for the consummation by WM SAM on behalf of the Acquired Fund of the transactions contemplated by this Agreement, except such as may be required under the 1933 Act, the Securities Exchange Act of 1934 (the "1934 Act"), the 1940 Act and state securities or "Blue Sky" laws (which terms as used herein shall include the laws of the District of Columbia and of Puerto Rico). (r) The Assets. At the Closing Date, WM SAM, on behalf of the Acquired Fund, will have good and marketable title to the Assets of the Acquired Fund to be transferred to the corresponding Acquiring Fund pursuant to Section 1.1(a) and will have full right, power and authority to sell, assign, transfer and deliver such Assets hereunder. At the Closing Date, subject only to the delivery of the Assets and the Stated Liabilities and payment therefor as contemplated by this Agreement, the Acquiring Fund will acquire good and marketable title to the Assets of the Acquired Fund, subject to no encumbrances, liens or security interests whatsoever and without any restrictions on their transfer, except as previously disclosed to and accepted by the Acquiring Fund. (s) Diversification. At the Closing Date, the Acquired Fund will have sold such of its assets, if any, as are necessary to assure that, after giving effect to the acquisition of the Assets of the Acquired Fund pursuant to this Agreement, the Acquiring Fund, if it is a "diversified company" within the meaning of Section 5(b)(1) of the 1940 Act, will remain such a "diversified company" and in any event will remain in compliance with such other mandatory investment restrictions as are set forth in the Acquiring Fund Prospectus, as amended through the Closing Date. (t) Restricted Securities. No registration of any of the Assets of the Acquired Fund would be required if they were, as of the time of such transfer, the subject of a public distribution by either of the Acquiring Fund or the Acquired Fund, except as previously disclosed by the Acquired Fund to the Acquiring Fund. 4.2 Acquiring Fund. PIF on behalf of the Acquiring Fund represents and warrants to WM SAM and the Acquired Fund as follows: (a) Organization, Existence, etc. PIF is a corporation that is duly organized, validly existing and in good standing under the laws of the State of Maryland and has power to own all of its properties and assets and to carry on its business as presently conducted. PIF is duly authorized to transact business in Maryland and is qualified to do business in all jurisdictions in which it is required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Acquiring Fund. The Acquiring Fund is a legally designated, validly existing series of shares of PIF representing interests in a separate portfolio thereof under the laws of Maryland. Each of PIF and the Acquiring Fund has all necessary federal, state and local authorizations to own all of its properties and assets and to carry on its business as now, or in the case of a New Acquiring Fund, as then, being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Acquiring Fund. (b) Registration as Investment Company. PIF is duly registered under the 1940 Act as an open-end investment company of the management type; such registration has not been revoked or rescinded and is in full force and effect. Each of PIF and the Acquiring Fund is in compliance in all material respects with the 1940 Act and the rules and regulations thereunder. (c) Form N-14. The Registration Statement as of its effective date and at all times subsequent thereto up to and including the Closing Date, conforms and will conform, as it relates to PIF and the Acquiring Fund, in all material respects to the requirements of federal and state securities laws and the rules and regulations thereunder and does not and will not include, as it relates to PIF and the Acquiring Fund, any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representations and warranties in this Section 4.2(c) apply to statements or omissions made in reliance upon and in conformity with written information concerning WM SAM and the Acquired Fund furnished to the Acquiring Fund by WM SAM or the Acquired Fund. From the effective date of the Registration Statement through the time of the meeting of the Acquired Fund Shareholders and on the Closing Date, any written information furnished by PIF with respect to PIF and the Acquiring Fund for use in the Registration Statement or any other materials provided in connection with the Reorganization, as of the effective date of the Registration and at all times subsequent thereto up to and including the Closing Date, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which such statements were made, not misleading. (d) Current Offering Documents. The Acquiring Fund Prospectus and shareholder reports of PIF relating to the Acquiring Fund, each to the extent incorporated by reference in the Registration Statement, comply in all material respects with the requirements of the 1933 Act and the 1940 Act, are and will be accurate in all material respects and do not and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (e) Acquiring Fund Assets. At the Closing Date, PIF, on behalf of the Acquiring Fund, will have good and marketable title to the assets attributable to the Acquiring Fund. (f) No Violation. Each of PIF and the Acquiring Fund is not in violation of Maryland law or in any material respect of any provision of PIF's Articles of Incorporation or Bylaws or of any agreement, indenture, note, mortgage, instrument, contract, lease or other undertaking to which PIF or the Acquiring Fund is a party or by which it is bound, and the execution, delivery and performance of this Agreement will not result in any such violation or in the acceleration of any obligation, or the imposition or any penalty, under any material agreement, indenture, instrument, contract, lease or other undertaking to which PIF or the Acquiring Fund is a party or by which it is bound. (g) Litigation. To the knowledge of PIF and the Acquiring Fund, except as has been disclosed in writing to WM SAM, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or threatened as to the Acquiring Fund, any of its properties or assets, or any person whom PIF or the Acquiring Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, there are no facts which form the basis for the institution of any such litigation, proceeding or investigation, and each of PIF and the Acquiring Fund is not a party to or subject to the provisions of any order, decree or judgment of any court of governmental body, which materially and adversely affects its business or its ability to consummate the transactions contemplated hereby. (h) Financial Statements. The audited financial statements of the Acquiring Fund for the fiscal year ended October 31, 2005, have been prepared in accordance with accounting principles generally accepted in the United States of America consistently applied and have been audited by Ernst & Young LLP. True and complete copies of such statements have been furnished to WM SAM. Such statements fairly reflect the financial condition and the results of operations of the Acquiring Fund as of such date and the results of operations and changes in net assets for the periods indicated, and there are no liabilities of the Acquiring Fund whether actual or contingent and whether or not determined or determinable as of such date that are required to be disclosed but are not disclosed in such statements. The unaudited financial statements of Acquiring Fund for the six months ended April 30, 2006 have been prepared in accordance with accounting principles generally accepted in the United States of America consistently applied by PIF. True and complete copies of such statements have been furnished to WM SAM. Such statements fairly reflect the financial condition and the results of operations of the Acquiring Fund as of such date and the results of operations and changes in net assets for the periods indicated, and there are no liabilities of the Acquiring Fund whether actual or contingent and whether or not determined or determinable as of such date that are required to be disclosed but are not disclosed in such statements. There are no liabilities of any Acquiring Fund, whether actual or contingent and whether or not determined or determinable, other than liabilities disclosed or provided for in the financial statements of the Acquiring Fund referred to above, liabilities incurred in the ordinary course of business subsequent to October 31, 2005, liabilities previously disclosed to and accepted by WM SAM and liabilities which in the aggregate have not been and will not be materially adverse to the financial condition, results of operations, business or assets of the Acquiring Fund. (i) No Material Adverse Change. Since October 31, 2005, there has been no material adverse change in the financial condition, assets, liabilities or business of the Acquiring Fund (other than changes occurring in the ordinary course of business) or any incurrence by the Acquiring Fund of indebtedness, except as disclosed to WM SAM. For the purposes of this Section, distributions of net investment income and net realized capital gains, changes in portfolio securities, changes in the market value of portfolio securities or net redemptions shall be deemed to be in the ordinary course of business. (j) Taxes. Each of PIF and the Acquiring Fund has duly filed all federal, state, local and foreign tax returns which are required to have been filed, and all taxes of PIF and the Acquiring Fund which are due and payable have been paid except for amounts that alone or in the aggregate would not reasonably be expected to have a material adverse effect. As of the Closing Date, all federal and other tax returns and reports of PIF and the Acquiring Fund required by law to have been filed by such date (giving effect to extensions) shall have been filed, and all federal and other taxes shown to be due on such returns and reports or on any assessment received shall have been paid, or provisions shall have been made for the payment thereof. All of the Acquiring Fund's tax liabilities will have been adequately provided for on its books. To the best of the knowledge of PIF and the Acquiring Fund, each of them will not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and it will not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid. (k) Regulated Investment Company. Each of PIF and the Acquiring Fund has met the requirements of subchapter M of the Code for treatment as a "regulated investment company" within the meaning of Section 851 of the Code in respect of each taxable year since it commenced operations and will continue to meet such requirements at all times through the Closing Date. Each of PIF and the Acquiring Fund has not at any time since its inception been liable for nor is now liable for any material income or excise tax pursuant to Section 852 or 4982 of the Code. The Acquiring Fund is in compliance in all material respects with applicable regulations of the Internal Revenue Service pertaining to the reporting of dividends and other distributions on and redemptions of its capital stock and to withholding in respect of dividends and other distributions to shareholders and is not liable for any material penalties which could be imposed thereunder. (l) Capitalization. The authorized capital of PIF consists of 40,230,000,000 shares of capital stock of such number of different series as the Board of Directors may authorize from time to time. All issued and outstanding shares of the Acquiring Fund are, and on the Closing Date will be, duly authorized and validly issued and outstanding, fully paid and non-assessable (except as described in the prospectus of PIF) by PIF and will have been issued in compliance with all applicable registration or qualification requirements of federal and state securities laws. No options, warrants or other rights to subscribe for or purchase, or securities convertible into, any shares of the Acquiring Fund are outstanding and none will be outstanding on the Closing Date. The shares are not subject to preemptive or dissenter's rights. (m) Investment Operations. The Acquiring Fund's investment operations from inception to the date of this Agreement have been in compliance in all material respects with the investment policies and investment restrictions set forth in its prospectus or prospectuses and statement or statements of additional information as in effect from time to time, except as previously disclosed in writing to WM SAM. (n) Authority Relative to this Agreement. PIF, on behalf of the Acquiring Fund, has the power to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by Board of Directors of PIF, and this Agreement constitutes the valid and binding obligation of PIF and the Acquiring Fund, enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and other equitable principles. (o) Information. The information provided by the Acquiring Fund for use in the Registration Statement referred to in Section 4.1(c) or in no-action letters, applications for orders or other documents that may be necessary in connection with the transactions contemplated by this Agreement shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations as applicable thereto. (p) Regulatory Approvals. No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Acquiring Fund of the transactions contemplated by this Agreement, except such as may be required under the 1933 Act, the 1934 Act, the 1940 Act and state securities or "Blue Sky" laws (which terms as used herein shall include the laws of the District of Columbia and of Puerto Rico). 5. COVENANTS 5.1 The Acquired Fund. WM SAM on behalf of the Acquired Fund covenants and agrees as follows: (a) Operations in the Ordinary Course. Except as otherwise contemplated by this Agreement, WM SAM with respect to the Acquired Fund shall conduct its business in the ordinary course between the date of this Agreement and the Closing Date, it being understood that such ordinary course of business will include the regular and customary periodic dividends and distributions. (b) Meeting of the Acquired Fund's Shareholders. WM SAM will call and hold a meeting of the shareholders of the Acquired Funds to consider and act upon this Agreement and the transactions contemplated herein and take all other reasonable action necessary to obtain the required shareholder approval of the transactions contemplated hereby. The meeting shall be scheduled for December 15, 2006 or such other date to which WM SAM and PIF may agree. (c) Registration Statement. In connection with the preparation of the Registration Statement, WM SAM will cooperate with PIF and will furnish to PIF the information relating to the Acquired Funds required to be included in the Registration Statement. (d) Cooperation in Effecting Reorganization. The Acquired Fund agrees to take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to cause the conditions to the obligations of PIF and the corresponding Acquiring Fund to consummate the transactions contemplated hereby to be met or fulfilled and otherwise to consummate and make effective such transactions. (e) Statement of Earnings and Profits. As promptly as practicable, but in any case within 30 days after the Closing Date, the Acquired Fund shall furnish to the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for federal income tax purposes, and of any capital loss carryovers and other items that the corresponding Acquiring Fund will succeed to and take into account as a result of Sections 381 through 384 of the Code. Such statement will be certified by the principal accounting officer of WM SAM. 5.2 The Acquiring Fund. PIF on behalf of the Acquiring Fund covenants and agrees as follows: (a) Operations in the Ordinary Course. Except as otherwise contemplated by this Agreement, PIF with respect to the Acquiring Fund shall conduct its business in the ordinary course between the date of this Agreement and the Closing Date, it being understood that such ordinary course of business will include the regular and customary periodic dividends and distributions. (b) Registration Statement. PIF will prepare and file the Registration Statement and include therein the Prospectus/Proxy Statement to be used in connection with the shareholders meeting referred to in Section 5.1(b). (c) Cooperation in Effecting Reorganization. The Acquiring Fund agrees to take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to cause the conditions to the obligations of WM SAM and the Acquired Fund to consummate the transactions contemplated hereby to be met or fulfilled and otherwise to consummate and make effective such transactions. (d) Continued Operations. PIF will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state securities or "Blue Sky" laws as it may deem appropriate in order to continue the operations of the Acquiring Fund after the Closing Date. 6. CONDITIONS PRECEDENT 6.1 The Acquired Fund. The obligations of WM SAM on behalf of the Acquired Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by PIF and the Acquiring Fund of all the obligations to be performed by them hereunder on or before the Closing Date and, in addition thereto, to the following further conditions: (a) Officers Certificate. PIF on behalf of the Acquiring Fund shall have delivered to WM SAM on behalf of the Acquired Fund a certificate executed in its name by its President or Vice President and its Chief Financial Officer, in form and substance satisfactory to WM SAM and dated as of the Closing Date, to the effect that the representations and warranties of PIF on behalf of the Acquiring Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and that PIF and the Acquiring Fund have complied with all the covenants and agreements and satisfied all of the conditions on their parts to be performed or satisfied under this Agreement at or prior to the Closing Date. (b) Opinion of Counsel. WM SAM on behalf of the Acquired Fund shall have received a favorable opinion of Dykema Gossett PLLC, counsel to the Acquiring Fund for the transactions contemplated hereby, dated the Closing Date and in a form satisfactory to WM SAM, to the following effect: (i) PIF is a corporation organized and validly existing under the laws of the State of Maryland and has power to own all of its properties and assets and to carry on its business as presently conducted and described in the registration statement on Form N-1A of PIF, and the Acquiring Fund is a separate series of PIF constituted in accordance with the applicable provisions of the 1940 Act and the Articles of Incorporation and Bylaws of PIF; (ii) This Agreement has been authorized, executed and delivered by the Acquiring Fund and, assuming the Registration Statement referred to in Section 5.2(b) and the Prospectus/Proxy Statement included therein comply with applicable federal securities laws and assuming the authorization, execution and delivery of this Agreement by WM SAM and the Acquired Fund, is the valid and binding obligation of PIF and the Acquiring Fund enforceable against PIF and the Acquiring Fund in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and other equitable principles; (iii) The Acquiring Fund has the power to assume the liabilities to be assumed by it hereunder and upon consummation of the transactions contemplated hereby the Acquiring Fund will have assumed such liabilities; (iv) The Acquiring Fund Shares to be issued for transfer to the Acquired Fund Shareholders as provided by this Agreement are authorized and upon such transfer and delivery will be validly issued and outstanding and fully paid and non- assessable Class A, Class B, and Class C shares of capital stock in the Acquiring Fund, and no shareholder of the Acquiring Fund has any preemptive right of subscription or purchase in respect thereof; (v) The execution and delivery of this Agreement did not, and the performance by PIF and the Acquiring Fund of their obligations hereunder will not, violate the PIF Articles of Incorporation or Bylaws, or any provision of any material agreement known to such counsel to which PIF or the Acquiring Fund is a party or by which it is bound or, to the knowledge of such counsel, result in the acceleration of any obligation or the imposition of any penalty under any material agreement or any judgment or decree to which PIF or the Acquiring Fund is a party or by which it is bound; (vi) To the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental authority is required for the consummation by PIF and the Acquiring Fund of the transactions contemplated by this Agreement except such as may be required under state securities or "Blue Sky" laws or such as have been obtained; (vii) Such counsel does not know of any legal or governmental proceedings relating to PIF or the Acquiring Fund existing on or before the date of mailing of the Prospectus/Proxy Statement included in the Registration Statement referred to in Section 5.2(b) or the Closing Date required to be described in the Registration Statement which are not described as required; (viii) PIF is registered with the SEC as an investment company under the 1940 Act; and (ix) To the knowledge of such counsel, except as has been disclosed in writing to WM SAM, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or threatened as to PIF or the Acquiring Fund or any of their properties or assets or any person whom PIF or the Acquiring Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, and each of PIF and the Acquiring Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body, which materially and adversely affects its business or its ability to consummate the transactions contemplated hereby. 6.2 The Acquiring Fund. The obligations of PIF on behalf of the Acquiring Fund to complete the transactions provided for herein shall be subject, at its election, to the performance by WM SAM and the Acquired Fund of all the obligations to be performed by them hereunder on or before the Closing Date and, in addition thereto, to the following further conditions: (a) Officers Certificate. WM SAM on behalf of the Acquired Fund shall have delivered to PIF on behalf of the Acquiring Fund a certificate executed in its name by its President or Vice President and its Treasurer or Assistant Treasurer, in form and substance satisfactory to PIF and dated as of the Closing Date, to the effect that the representations and warranties of WM SAM on behalf of the Acquired Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and that WM SAM and the Acquired Fund have complied with all the covenants and agreements and satisfied all of the conditions on their parts to be performed or satisfied under this Agreement at or prior to the Closing Date. (b) Opinion of Counsel. PIF on behalf of the Acquiring Fund shall have received a favorable opinion of Ropes & Gray LLP, counsel to the Acquired Fund for the transactions contemplated hereby, dated the Closing Date and in a form satisfactory to the Acquiring Fund, to the following effect: (i) WM SAM is a limited liability company organized and validly existing under the laws of the Commonwealth of Massachusetts and has power to own all of its properties and assets and to carry on its business as presently conducted and described in the registration statement on Form N-1A of WM SAM, and the Acquired Fund is a separate series of WM SAM constituted in accordance with the applicable provisions of the 1940 Act and the LLC Agreement and Bylaws of WM SAM; (ii) This Agreement has been authorized, executed and delivered on behalf of WM SAM and the Acquired Fund and, assuming the Registration Statement referred to in Section 5.2(b) and the Prospectus/Proxy Statement included therein comply with applicable federal securities laws and assuming the authorization, execution and delivery of this Agreement by PIF and the Acquiring Fund, is the valid and binding obligation of WM SAM and the Acquired Fund enforceable against WM SAM and the Acquired Fund in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and other equitable principles; (iii) The Acquired Fund has the power to sell, assign, transfer and deliver the Assets to be transferred by it hereunder, and, upon consummation of the transactions contemplated hereby, the Acquired Fund will have transferred such Assets to the Acquiring Fund; (iv) The execution and delivery of this Agreement did not, and the performance by WM SAM and the Acquired Fund of their obligations hereunder will not, violate the WM SAM LLC Agreement or Bylaws, or any provision of any material agreement known to such counsel to which WM SAM or the Acquired Fund is a party or by which it is bound or, to the knowledge of such counsel, result in the acceleration of any obligation or the imposition of any penalty under any material agreement or any judgment or decree to which WM SAM or the Acquired Fund is a party or by which it is bound; (v) To the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental authority is required for the consummation by WM SAM and the Acquired Fund of the transactions contemplated by this Agreement, except such as have been obtained; (vi) Such counsel does not know of any legal or governmental proceedings relating to WM SAM or the Acquired Fund existing on or before the date of mailing of the Prospectus/ Proxy Statement included in the Registration Statement referred to in Section 5.2(b) or the Closing Date required to be described in the Registration Statement which are not described as required; (vii) WM SAM is registered with the SEC as an investment company under the 1940 Act; and (viii) To the knowledge of such counsel, except as has been disclosed in writing to PIF, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or threatened as to WM SAM or the Acquired Fund or any of their properties or assets or any person whom WM SAM or the Acquired Fund may be obligated to indemnify in connection with such litigation, proceeding or investigation, and each of WM SAM and the Acquired Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body, which materially and adversely affects its business or its ability to consummate the transactions contemplated hereby. (c) Distributions. Prior to the Closing Date, WM SAM on behalf of the Acquired Fund (if it is a corresponding Fund to an Existing Acquiring Fund) shall have declared a dividend or dividends, with a record and ex-dividend date prior to the Effective Time, which, together with all previous dividends, shall have the effect of distributing all of the Acquired Fund's investment company taxable income for all its taxable periods ending on or prior to the Closing Date (computed without regard to any deduction for dividends paid), plus the excess of its interest income, if any, excludable from gross income under Section 103(a) of the Code over its deductions disallowed under Sections 265 and 171(a)(2) of the Code for all taxable periods ending on or before the Closing Date and all of its net capital gains realized in all its taxable periods ending on or prior to the Closing Date (after reduction for any capital loss carry forward). (d) Tax Certificate. The Acquired Fund shall have furnished to the Acquiring Fund a certificate, signed by the President (or any Vice President) and the Treasurer of WM SAM, as to the adjusted tax basis in the hands of the Acquired Fund of the securities delivered to the Acquiring Fund pursuant to this Agreement. (e) Custodian Certificate. The custodian of the Acquired Fund shall have delivered to the Acquiring Fund a certificate identifying all of the assets of the Acquired Fund held by such custodian as of the Closing Date. 6.3 Further Conditions Precedent. The respective obligations of WM SAM on behalf of the Acquired Fund and PIF on behalf of the Acquiring Fund hereunder are subject to the further conditions that on or before the Closing Date: (a) Shareholder Approval. This Agreement and the transactions contemplated herein shall have received all necessary shareholder approvals at the meeting of shareholders of the Acquired Fund referred to in Section 5.1(b). (b) Closing under Stock Purchase Agreement. The closing under the Stock Purchase Agreement dated as of July 25, 2006 among Washington Mutual, Inc., New American Capital, Inc., Principal Financial Group, Inc. and Principal Management Corporation shall have occurred. (c) Proceedings. On the Closing Date no action, suit or other proceeding shall be pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated hereby. (d) Consents. All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities (including those of the SEC and of state "Blue Sky" and securities authorities) deemed necessary by WM SAM and PIF to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Acquired Fund. (e) Registration Statement. The Registration Statement shall have become effective under the 1933 Act and no stop order suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act. (f) Tax Opinion. WM SAM on behalf of the Acquired Fund and PIF on behalf of the Acquiring Fund shall have received a favorable opinion of Dykema Gossett PLLC dated on the Closing Date (which opinion will be subject to certain qualifications) satisfactory to both parties substantially to the effect that, on the basis of the existing provisions of the Code, Treasury regulations promulgated thereunder, current administrative rules, and court decisions, generally for federal income tax purposes: (i) The acquisition by the Acquiring Fund of the Assets of the Acquired Fund in exchange for the Acquiring Fund's assumption of the Stated Liabilities of the Acquired Fund and issuance of the Acquiring Fund Shares, followed by the distribution by the Acquired Fund of such Acquiring Fund Shares to the shareholders of the Acquired Fund in exchange for their shares of the Acquired Fund, all as provided in Section 1 hereof, will constitute a reorganization within the meaning of Section 368(a) of the Code, and the Acquired Fund and the Acquiring Fund will each be "a party to a reorganization" within the meaning of Section 368(b) of the Code; (ii) No gain or loss will be recognized by the Acquired Fund (i) upon the transfer of its assets to the Acquiring Fund in exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the Stated Liabilities of the Acquired Fund or (ii) upon the distribution of the Acquiring Fund Shares by the Acquired Fund to its shareholders in liquidation, as contemplated in Section 1 hereof; (iii) No gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Acquired Fund in exchange for the assumption of the Stated Liabilities of the Acquired Fund and issuance of the Acquiring Fund Shares as contemplated in Section 1 hereof; (iv) The tax basis of the Assets of the Acquired Fund acquired by the Acquiring Fund will be the same as the tax basis of such Assets in the hands of the Acquired Fund immediately prior to the transfer; (v) The holding periods of the Assets of the Acquired Fund in the hands of the Acquiring Fund will include the periods during which such Assets were held by the Acquired Fund; (vi) No gain or loss will be recognized by the Acquired Fund Shareholders upon the exchange of all of their Acquired Fund Shares for the Acquiring Fund Shares; (vii) The aggregate tax basis of the Acquiring Fund Shares to be received by each shareholder of the Acquired Fund will be the same as the aggregate tax basis of the Acquired Fund Shares exchanged therefor; (viii) An Acquired Fund shareholder's holding period for the Acquiring Fund Shares to be received will include the period during which the Acquired Fund Shares exchanged therefor were held, provided that the shareholder held the Acquired Fund Shares as a capital asset on the date of the exchange; and (ix) The Acquiring Fund will succeed to and take into account the items of the Acquired Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the regulations thereunder. The opinion will be qualified to reflect that the Code requires that certain contracts or securities (including, in particular, futures contracts, certain foreign currency contracts, "non-equity" options and investments in "passive foreign investment companies") be marked-to-market (treated as sold for their fair market value) at the end of a taxable year (or upon their termination or transfer). The opinion will be based on certain factual certifications made by officers of WM SAM and PIF and will also be based on customary assumptions. The opinion is not a guarantee that the tax consequences of the Reorganization will be as described above. The opinion will note and distinguish certain published precedent. There is no assurance that the Internal Revenue Service or a court would agree with the opinion. 7. FEES AND EXPENSES Except as set forth in Section 1.7, whether or not the transactions contemplated hereby are consummated, all fees and expenses in connection with this Agreement, and the transactions contemplated hereby, incurred (a) by WM SAM, the Acquired Fund and NAC shall be paid by NAC and (b) by PIF, the Acquiring Fund and PMC shall be paid by PMC; provided, however, that each of NAC and PMC shall pay 50% of the document preparation (including reasonable attorneys' fees), printing, mailing and other costs and expenses associated with the board approvals and proxy solicitations contemplated by this Agreement, including amounts reimbursed to the Acquired Funds and the Acquiring Funds. Notwithstanding the foregoing, expenses will in any event be paid by the party directly incurring such expenses if and to the extent that the payment by another person of such expenses would result in the disqualification of such party as a "regulated investment company" within the meaning of Section 851 of the Code. 8. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES 8.1 Entire Agreement. The Acquired Fund and the Acquiring Fund, agree that neither party has made any representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement between the parties. 8.2 Survival. The representations, warranties and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall not survive the consummation of the transactions contemplated hereunder except Sections 1.1, 1.4, 1.6 through 1.11, 4.1(c) and (d), 4.2 (c) and (d), 7, 8, 11 and 12. 9. TERMINATION 9.1 This Agreement may be terminated by the mutual agreement of the Acquired Fund and the Acquiring Fund. In addition, either the Acquired Fund or the Acquiring Fund may at its option terminate this Agreement at or prior to the Closing Date because: (a) Of a material breach by the other of any representation, warranty, covenant or agreement contained herein to be performed by the other party at or prior to the Closing Date; (b) A condition herein expressed to be precedent to the obligations of the terminating party has not been met and it reasonably appears that it will not or cannot be met; or (c) Any governmental authority of competent jurisdiction shall have issued any judgment, injunction, order, ruling or decree or taken any other action restraining, enjoining or otherwise prohibiting this Agreement or the consummation of any of the transactions contemplated herein and such judgment, injunction, order, ruling, decree or other action becomes final and non-appealable; provided that the party seeking to terminate this Agreement pursuant to this Section 9.1(c) shall have used its reasonable best efforts to have such judgment, injunction, order, ruling, decree or other action lifted, vacated or denied. 9.2 If the transactions contemplated by this Agreement have not been substantially completed by June 30, 2007, this Agreement shall automatically terminate on that date unless a later date is agreed to by both the Acquired Fund and the Acquiring Fund. 9.3 If for any reason the transactions contemplated by this Agreement are not consummated, no party shall be liable to any other party for any damages resulting therefrom, including without limitation consequential damages, in the absence of willful default. In the event of willful default, all remedies at law or in equity of the party adversely effected shall survive. 10. AMENDMENTS This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the authorized officers of WM SAM on behalf of the Acquired Fund and PIF on behalf of the Acquiring Fund; provided, however, that following the shareholders' meeting called by the Acquired Fund pursuant to Section 5.2(b) no such amendment may have the effect of changing the provisions for determining the number of Acquiring Fund Shares to be issued to shareholders of the Acquired Fund under this Agreement to the detriment of such shareholders without their further approval. 11. NOTICES All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed given if delivered personally, transmitted by facsimile (and telephonically confirmed), mailed by registered or certified mail with postage prepaid and return receipt requested, or sent by commercial overnight courier, courier fees prepaid (if available; otherwise, by the next best class of service available), to the parties at the following address: (a) if to PIF or the Acquiring Fund, to it at: Principal Financial Group, Inc. 711 High Street Des Moines, IA 50392 Attn: Michael D. Roughton, Esq. Telecopy: (515) 248-3011 Confirmation: (515) 248-3842 with a copy to: Dykema Gossett PLLC 1300 I Street, N.W. Suite 300-West Washington, D.C. 20005 Attn: John W. Blouch, Esq. Telecopy: (202) 906-8669 Confirmation: (202) 906-8600 (b) if to WM SAM or the Acquired Fund, to it at: WM SAM 1201 3rd Avenue 22nd Floor Seattle, WA, 98101 Attn: William G. Papesh Telecopy: (206) 233-0666 Confirmation: (206) 913-5825 with a copy to: Ropes & Gray LLP One International Place Boston, MA 02110 Attn: Brian D. McCabe, Esq. Telecopy: (617) 951-7050 Confirmation: (617) 951-7801 or to such other person or address as any party shall specify by notice in writing to the other parties in accordance with this Section. All such notices or other communications shall be deemed to have been received on the date of the personal delivery or on the third business day after the mailing or dispatch thereof; provided that notice of change of address shall be effective only upon receipt. 12. GENERAL 12.1 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 12.2 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. 12.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without giving affect to any choice or conflicts of law rule or provision that would result in the application of the laws of any other jurisdiction. 12.4 Assignment. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other parties. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement. 12.5 Waivers. At any time prior to the Effective Time of the Reorganization, each of WM SAM, on behalf of the Acquired Fund, and PIF, on behalf of the Acquiring Fund, may by written instrument signed by it (i) waive any inaccuracies in the representations and warranties made to it and such Fund contained herein and (ii) waive compliance with any of the covenants or conditions made for its benefit and the benefit of such Fund contained herein, except that conditions set forth in Sections 6.3(c) and (d) may not be waived and except that any such waiver that would have a material adverse effect on the interests or rights of any Acquired Fund (or its shareholders) or any Acquiring Fund (or its shareholders) shall be made only with the consent of the Board of WM SAM or PIF, respectively. 12.6 Reliance. All covenants and agreements made under this Agreement shall be deemed to have been material and relied upon by WM SAM on behalf of the Acquired Fund and PIF on behalf of the Acquiring Fund notwithstanding any investigation made by such party or on its behalf. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its President or Vice President as of the date first written above. WM STRATEGIC ASSET MANAGEMENT PRINCIPAL INVESTORS FUND, INC. PORTFOLIOS, LLC on behalf of each of the on behalf of each of the following following Acquiring Funds: Acquired Funds: Balanced Portfolio SAM Balanced Portfolio Conservative Balanced Portfolio SAM Conservative Balanced Portfolio Conservative Growth Portfolio SAM Conservative Growth Portfolio Flexible Income Portfolio SAM Flexible Income Portfolio Strategic Growth Portfolio SAM Strategic Growth Portfolio By: By: ___________________________ ________________________ William G. Papesh Ralph C. Eucher President and Chief Executive President and Chief Officer Executive Officer NEW AMERICAN CAPITAL, INC. PRINCIPAL MANAGEMENT CORPORATION By: By: ______________________________ ________________________ Todd Baker Ralph C. Eucher Executive Vice President President [Page Break] DISCLOSURE SCHEDULE January 12, 2007 The following Disclosure Schedule is provided by WM Strategic Asset Management Portfolios, LLC (the "Trust") pursuant to that certain Agreement and Plan of Reorganization dated as of December 1, 2006 by and among Principal Investors Fund Inc. ("PIF"), WM Strategic Asset Management Portfolios, LLC, Principal Management Corporation and New American Capital, Inc. (the "Merger Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement. This Disclosure Schedule qualifies the representations and warranties made by the Trust in the Merger Agreement. Inclusion of information in this Disclosure Schedule is not intended to be, and shall not be construed as, an admission of liability, or any fact pertaining to such liability, with respect to any matter whatsoever. Any summary or description of any law, regulation, contract, plan or other document contained in this Disclosure Schedule is for convenience only and reference should be made to such law, regulation, contract, plan or other document for a full explanation thereof. Disclosures contained in any documents referenced in this Disclosure Schedule shall be deemed to have been made in writing by the Trust to PIF for purposes of the Merger Agreement. If an item is disclosed in any part of this Disclosure Schedule and the existence of such item or its contents are relevant to any other Schedule, then such item will be deemed to be disclosed in such other Schedule to the extent such item or its contents would be reasonably understood to apply to the information called for by such other Schedule. Section 4.1(g) Litigation 1. By letter dated February 26, 2004, the SEC requested documents and information regarding WM Shareholder Services, Inc. in connection with its services as transfer agent. WM Shareholder Services responded to the request and additional requests for information based on the initial inquiry. The SEC has not provided any notice of any failure by WM Shareholder Services to comply with any applicable laws or regulation. 2. On June 10, 2005, WM Strategic Asset Management Portfolios, LLC (the "SAM Funds") and WM Advisors, Inc. (the "Adviser") received a letter written in response to an examination by the SEC, in which the staff expressed concerns relating to the SAM Fund's advisory contract with the Adviser. A copy of this letter has been provided to PIF. On July 8, 2005, the Trustees of the SAM Funds who are not interested persons of the SAM Funds sent a response letter to the SEC, a copy of which has also been provided to PIF. No further response has been received by the SAM Funds from the SEC. -----END PRIVACY-ENHANCED MESSAGE-----