<PAGE> 1
A N N U A L R E P O R T
D E C E M B E R 3 1 , 1 9 9 5
------------------------------------------------------------
WRL SERIES
FUND, INC.
GROWTH PORTFOLIO
------------------------------------------------------------
February 1996
ACC00004-A (2/96)
<PAGE> 2
- --------------------------------------------------------------------------------
T A B L E O F C O N T E N T S
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Chairman's letter..................................... 1
Report of Independent Accountants................. 2
Financial Statements:
Schedule of Investments...................... 3
Management's Discussion and Analysis......... 5
Statement of Assets and Liabilities
and Statement of Operations............... 6
Statement of Changes in Net Assets........... 7
Financial Highlights......................... 8
Notes to Financial Statements..................... 9
</TABLE>
<PAGE> 3
FELLOW CONTRACT OWNERS:
(PHOTO)
JOHN R. KENNEY
Chairman of the Board
It's been a wonderful year. Pure and
simple.
We've been witness this year to a
great financial spectacle. Throughout
all of 1995, the markets have
seemingly moved in just one
direction: up. Stocks thundered
higher, propelled by dropping
interest rates and the ability of
belt-tightened companies to keep
profits growing, even as economic
growth cooled a bit. The Dow Jones
Industrial Average, nearing its 100th
year, surged 33%, the fourth best
annual gain in the post-World War II
era. Bonds have been no slouch
either. With the economy gently
slowing, and inflation barely, if at
all, stirring, bond prices recovered
brilliantly from last year's
miserable performance, registering
their third best annual total return
in 50 years. It has indeed been a
banner year.
While it's been fun to watch this
magnificent bull market in action,
it's been particularly satisfying to
have taken part. 1995 is a pointed
reminder that the greatest risk in
investing may very well lie in not
being invested at all and missing out
on the long-term rewards that
patience and professional money
management can bring. I'm proud of
the extraordinary results the Growth
Portfolio managers posted this period
and this year. Please take a few
minutes and review the personal
comments from these outstanding
professionals on just how they've
been investing for the last year. I
invite you to evaluate this report
and review the data, including major
equity positions and industry
weightings. All of this information
is intended to provide an insight
into what has been some of the
industry's finest performances.
After such sensational advances, it's
almost a natural instinct for
investors to get a little spooked, to
fear the markets have "run out of
gas" if you will. Can another
stunning year lie ahead? Can the
economy roll along strongly enough to
boost profits while not pushing rates
higher? Will the presidential
election cycle keep investors on edge
much of the year? Who knows.
Forecasts are like reading
yesterday's newspaper, and as often
as not, the common wisdom is way off,
as it was in 1995.
To be sure, the positives of lower
interest rates, expanding profits,
and potentially big inflows of
foreign capital are all favorable.
Still, for ourselves, we aren't
making any short-term predictions on
what the markets will do in 1996.
We're really not worried. We're in it
for the long term -- we're investors.
Experience has shown us that
investing for the long term and not
worrying too much about the interim
peaks and troughs is the smarter bet.
History has also documented the
benefits of sticking with a
disciplined long-term program of
investing.
If it's true that success solicits
success, than we're justified in our
optimistic outlook for next year and
for years after that. The Growth
Portfolio is managed not only with
long-term results in mind but
long-term relationships as well. Our
highest priority remains the safety
of the funds you've entrusted to us.
We respect your personal task of
financial planning and appreciate the
opportunity to help.
Sincerely yours,
/s/ John R. Kenney
---------------------
John R. Kenney
Chairman of the Board
1
<PAGE> 4
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of the WRL Series Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Growth Portfolio (one of the
portfolios constituting the WRL Series Fund, Inc., hereafter referred to as the
"Portfolio") at December 31, 1995, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for the five years in the period
then ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolio's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Kansas City, Missouri
January 31, 1996
- --------------------------------------------------------------------------------
2
<PAGE> 5
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ --------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (0.50%)
U.S. Treasury Notes
5.50%, due 09/30/97.......... $ 6,000,000 $ 6,030,000
--------------
Total U.S. Government Obligations
(cost: $ 6,033,363)............ 6,030,000
--------------
CORPORATE DEBT SECURITIES (1.24%)
RETAIL & DEPARTMENT STORES (1.24%)
Ralphs Grocery Company
11.00%, due 06/15/05......... 15,000,000 14,850,000
--------------
Total Corporate Debt Securities
(cost: $ 14,906,203)........... 14,850,000
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ --------------
<S> <C> <C>
PREFERRED STOCKS (4.06%)
COMPUTER TECHNOLOGY (4.06%)
SAP AG - Vorzug................ 319,965 48,516,809
--------------
Total Preferred Stocks
(cost: $ 24,311,900)........... 48,516,809
--------------
COMMON STOCKS (72.74%)
APPAREL & TEXTILES (0.51%)
Fila Holding S.p.A. - Sponsored
ADR.......................... 134,100 6,101,550
BANKING (5.95%)
Chemical Banking Corporation... 267,400 15,709,750
Citicorp....................... 415,730 27,957,843
First Interstate Bancorp....... 200,950 27,429,675
BEVERAGES (2.70%)
Coca-Cola Company.............. 435,375 32,326,594
BIO-TECHNOLOGY (1.24%)
Chiron Corporation*............ 134,050 14,812,525
COMPUTER TECHNOLOGY (22.14%)
Broderbund Software, Inc.*..... 172,025 10,450,519
Cisco Systems, Inc.*........... 415,100 30,976,838
First Data Corporation......... 691,800 46,264,125
HBO & Company.................. 246,450 18,884,231
Informix Corporation*.......... 522,625 15,678,750
Intuit, Inc.*.................. 180,800 14,102,400
Microsoft Corporation*......... 298,200 26,167,050
Netscape Communications
Corporation*................. 108,125 15,029,375
PeopleSoft, Inc.*.............. 299,450 12,876,350
PsiNet, Inc.*.................. 160,525 3,672,009
Shiva Corporation*............. 86,200 6,271,050
Sun Microsystems, Inc.*........ 1,408,300 64,253,688
CONTAINERS (0.05%)
Liqui-Box Corporation.......... 18,325 542,878
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ --------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONICS (4.37%)
Altera Corporation*............ 206,175 $ 10,257,206
General Electric Company....... 78,425 5,646,600
LSI Logic Corporation*......... 200,950 6,581,113
Stratacom, Inc.*............... 404,525 29,732,588
ENTERTAINMENT (1.45%)
Walt Disney Company............ 294,725 17,388,775
FINANCE (5.50%)
Charles Schwab Corporation..... 115,500 2,324,438
Federal Home Loan Mortgage
Corporation.................. 179,125 14,956,938
Federal National Mortgage
Association.................. 167,080 20,738,805
Merrill Lynch & Company,
Inc. ........................ 542,876 27,686,676
MEDICAL (5.94%)
Medtronic, Inc................. 219,000 12,236,625
Oxford Health Plans, Inc.*..... 333,450 24,633,619
PacifiCare Health Systems,
Inc. -
Class B*..................... 204,475 17,789,325
United Healthcare
Corporation.................. 249,725 16,356,988
PHARMACEUTICALS (8.20%)
Amgen, Inc.*................... 380,950 22,618,906
Astra AB - Class A Free........ 194,584 7,783,947
Eli Lilly & Company............ 145,200 8,167,500
Johnson & Johnson.............. 80,150 6,862,843
Pfizer, Inc. .................. 492,750 31,043,250
SmithKline Beecham - Class A... 35,300 389,128
SmithKline Beecham PLC - ADR... 380,850 21,137,175
RADIO & TELEVISION (0.67%)
Infinity Broadcasting
Corporation - Class A*....... 215,785 8,037,991
RETAIL & DEPARTMENT STORES (0.39%)
Starbucks Corporation*......... 221,900 4,659,900
SHOES & LEATHER GOODS (1.17%)
Nike, Inc. - Class B........... 200,900 13,987,662
TELECOMMUNICATIONS (12.46%)
Ascend Communications, Inc.*... 493,450 40,031,131
Glenayre Technologies, Inc.*... 340,925 21,222,581
L.M. Ericsson Telephone
Company - Sponsored ADR...... 1,017,050 19,832,475
Picturetel Corporation*........ 613,850 26,472,281
Premisys Communications,
Inc.*........................ 267,050 14,954,800
Tellabs, Inc.*................. 43,125 1,595,625
U.S. Robotics Corporation*..... 280,825 24,642,393
--------------
Total Common Stocks
(cost: $ 609,219,207).......... 869,276,484
--------------
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
3
<PAGE> 6
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ---------------
<S> <C> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS (5.85%)
Federal National Mortgage
Association
5.59%, due 01/10/96......... $ 50,000,000 $ 49,914,597
Federal National Mortgage
Association
5.47%, due 01/17/96......... 20,000,000 19,945,300
---------------
Total Short-Term U.S. Government
Obligations
(cost: $ 69,859,897).......... 69,859,897
---------------
COMMERCIAL PAPER (15.65%)
Household Finance Corp.
5.77%, due 01/04/96......... 40,000,000 39,967,944
General Electric Capital
Corporation
5.90%, due 01/03/96......... 40,000,000 39,973,778
Prudential Funding Corp.
5.63%, due 01/04/96......... 30,000,000 29,976,542
Texaco, Inc.
5.92%, due 01/04/96......... 30,000,000 29,975,333
Ford Motor Co.
5.75%, due 01/02/96......... 47,200,000 47,177,384
---------------
Total Commercial Paper
(cost: $ 187,070,981)......... 187,070,981
---------------
Total Investment Securities
(cost: $ 911,401,551)....... $ 1,195,604,171
---------------
---------------
SUMMARY
Investments at value.......... 100.04 % $ 1,195,604,171
Liabilities in Excess
of Other Assets............. (0.04)% (429,778)
-------- ---------------
Net Assets.................... 100.00 % $ 1,195,174,393
-------- ---------------
-------- ---------------
INVESTMENTS BY COUNTRY
Size of investment is indicated as a percentage of total
portfolio net assets.
<CAPTION>
MARKET VALUE PERCENTAGE
--------------- ----------
<S> <C> <C>
Germany........................ $ 48,516,809 4.06%
Sweden......................... 7,783,947 .65%
United Kingdom................. 389,128 .03%
United States.................. 1,138,484,509 95.26%
------------- ------
$ 1,195,174,393 100.00%
------------- ------
------------- ------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* No income dividends were paid during the preceding twelve months.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
4
<PAGE> 7
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION
YEAR ENDED DECEMBER 31, 1995
INVESTMENTS BY INDUSTRY
AT DECEMBER 31, 1995
Amount of investments in each category is indicated as a percentage of total
Portfolio net assets
[GRAPH]
U.S. Government Obligations 0.50%
Corporate Debt Securities 1.24%
Preferred Stocks 4.06%
Banking 5.95%
Beverages 2.70%
Computer Technology 22.14%
Electronics 4.37%
Finance 5.50%
Medical 5.94%
Pharmaceuticals 8.20%
Telecommunications 12.46%
Short-Term U.S. Government Obligations 5.85%
Commercial Paper 15.65%
Other 5.44%
The financial markets have just closed out one of the most exciting years on
record. Stocks posted remarkable gains in 1995 against a backdrop of moderate
economic growth, benign inflation, and falling interest rates. And, as if this
were not enough good news, corporate profits grew at double-digit rates for the
fourth year in a row, up a total of 127%. According to Standard & Poor's, this
is the first such sustained expansion since 1934-37.
Although the market produced substantial returns in 1995 -- the Dow Jones
Industrial Average gained 33.4% -- momentum fell off in technology and
telecommunication stocks during the fourth quarter. These sectors were important
contributors to the Growth Portfolio's performance during the previous nine
months. But late in the third quarter, we became concerned that, despite their
excellent earnings, the high valuations many of these companies were carrying
might leave them vulnerable. With that, we selectively trimmed the Portfolio's
technology and telecommunication holdings. That we did allowed us to avoid some
of the subsequent damage these groups suffered. At the same time, strong
performances from our pharmaceutical, health care, and financial stocks helped
sustain returns through the end of the year. Altogether, the Growth Portfolio
gained a total of 47.12% for the year ending December 31, 1995. This compares
favorably to the Dow Industrials which rose 33.4% for the same period, and the
Standard & Poor's Index of 500 Common Stocks which gained 37.58%.
Among the technology and telecommunication stocks we sold or trimmed at a profit
were Hewlett-Packard Company, Microsoft Corporation, LSI Logic Corporation, U.S.
Robotics Corp., Intel Corporation, and Texas Instruments, Inc. Cellular
manufacturer Nokia AB was liquidated as well. Some of these assets were put to
work in stocks like Altera, Ascend Communications, Inc. and Cisco Systems, Inc.
These companies gave the Growth Portfolio additional exposure to the
accelerating growth of the Internet.
Pharmaceutical and healthcare stocks performed well overall, and several
positions were either added or increased during the period. SmithKline Beecham,
a large multinational drug company, gave us solid returns last quarter, and Eli
Lilly & Company and Amgen, Inc. were both added. In addition, Pfizer, Inc. and
Oxford Health, a healthcare provider in the New York area, gave the Portfolio
some strong gains.
Financial stocks continue to look attractive in the current market. Citicorp,
Chemical Banking Corporation, and Merrill Lynch & Company, Inc. each have unique
industry characteristics and all are repurchasing significant amounts of their
own stocks. They are also benefiting from a positively-sloped yield curve, which
we believe will continue into the first of the new year.
We are expecting more volatile markets in 1996. Moderate growth and a benign
interest rate environment should support stock prices, but paradoxically,
earnings may be off, especially when compared to the really exceptional numbers
of 1995. So while the broad indexes should make progress, we may experience
greater internal volatility in individual stocks and industries. As a result,
our strategy will be to accumulate positions gradually and let them go more
aggressively. The Portfolio will also have additional balance among the groups
that have performed well for us this year, specifically technology,
telecommunications, pharmaceutical, healthcare, and financial services. We
believe this strategy will be effective in providing competitive returns in
1996.
<TABLE>
<S> <C> <C> <C>
(LOGO)
(1) THE JANUS SYMBOL IS A
REGISTERED
SERVICE MARK OF JANUS CAPITAL
CORPORATION /s/ Scott W. Schoelzel /s/ Thomas F. Marsico
---------------------- ----------------------
Scott W. Schoelzel Thomas F. Marscio
Growth Portfolio Managers
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE> 8
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 654,470,673)...................... $ 938,673,293
Short-term securities, at amortized cost.... 256,930,878
Cash........................................ 33,818
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 31,050
Interest.................................. 150,799
Dividends................................. 295,175
Foreign receivable........................ 56,356
Foreign currency contracts................ 555,276
Other..................................... 0
-----------------
Total assets............................ 1,196,726,645
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 624,219
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 752,262
Dividends to shareholders................. 0
Other fees................................ 175,771
Foreign payable........................... 0
Foreign currency contracts................ 0
-----------------
Total liabilities....................... 1,552,252
-----------------
Total net assets...................... $ 1,195,174,393
===================
NET ASSETS:
Capital stock
($ .01 par value 125,000,000
authorized)............................... $ 377,494
Additional paid-in capital.................. 904,642,630
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 575,360
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. 4,820,848
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 284,202,620
Foreign currency transactions............. 555,441
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 1,195,174,393
===================
Shares outstanding at December 31, 1995..... 37,749,399
===================
Net asset value per share................... $ 31.66
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest.................................... $ 11,008,338
Dividends (net of foreign tax of
$ 104,644)................................ 6,312,452
-------------
Total investment income............... 17,320,790
-------------
EXPENSES:
Investment advisory fees.................... 7,847,750
Printing and shareholder reports............ 205,936
Custodian fees.............................. 189,984
Legal fees.................................. 10,429
Auditing and accounting fees................ 36,196
Directors fees.............................. 10,513
Other fees.................................. 181,060
-------------
Total expenses........................ 8,481,868
Less:
Advisory fee waiver and expense
reimbursement........................... 0
Fees paid indirectly...................... 13,276
-------------
Net expenses.......................... 8,468,592
-------------
Net investment income (loss)................ 8,852,198
-------------
Net realized gain (loss) on:
Investment securities................... 157,659,617
Foreign currency transactions........... (2,827,328)
-------------
Total net realized gain (loss)........ 154,832,289
-------------
Change in unrealized appreciation
(depreciation) on:
Investment securities................... 210,175,819
Foreign currency transactions........... 555,441
-------------
Total change in unrealized
appreciation (depreciation)......... 210,731,260
-------------
Net gain (loss) on investments.......... 365,563,549
-------------
Net increase (decrease) in net assets
resulting from operations................. $ 374,415,747
=============
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
6
<PAGE> 9
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss)........................................................... $ 8,852,198 $ 7,567,047
Net realized gain (loss) on investments and foreign currency transactions.............. 154,832,289 (42,264,053)
Change in unrealized appreciation (depreciation) on investments and foreign currency
transactions......................................................................... 210,731,260 (40,706,686)
------------- -------------
Net increase (decrease) in net assets resulting from operations...................... 374,415,747 (75,403,692)
------------- -------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income.................................................................. (8,276,838) (7,567,047)
In excess of net investment income..................................................... 0 (5,606)
Net realized gains..................................................................... (106,305,203) 0
In excess of net realized gains........................................................ 0 (1,236,523)
------------- -------------
Total distributions.................................................................. (114,582,041) (8,809,176)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares...................................................... 111,725,690 116,495,908
Dividends and distributions reinvested................................................. 114,582,041 8,809,176
Cost of shares repurchased............................................................. (105,350,493) (161,518,580)
------------- -------------
Increase (decrease) in net assets from capital shares transactions................... 120,957,238 (36,213,496)
------------- -------------
Net increase (decrease) in net assets................................................ 380,790,944 (120,426,364)
NET ASSETS:
Beginning of period.................................................................... 814,383,449 934,809,813
------------- -------------
End of period.......................................................................... $ 1,195,174,393 $ 814,383,449
============= =============
Undistributed net investment income.................................................. $ 575,360 $ 0
============= =============
SHARE ACTIVITY:
Shares outstanding - beginning of period............................................... 34,205,930 35,614,033
------------- -------------
Shares issued.......................................................................... 3,712,711 4,627,689
Shares issued - reinvestment of dividends and distributions............................ 3,625,404 371,607
Shares redeemed........................................................................ (3,794,646) (6,407,399)
------------- -------------
Increase (decrease) in shares outstanding.............................................. 3,543,469 (1,408,103)
------------- -------------
Shares outstanding - end of period..................................................... 37,749,399 34,205,930
============= =============
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
7
<PAGE> 10
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND,
INC. GROWTH PORTFOLIO AND THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS
[GRAPH]
FINANCIAL HIGHLIGHTS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
---------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $ 23.81 $ 26.25 $ 25.83 $ 26.26 $ 17.48 $ 17.85 $ 12.97
Income from operations:
Net investment income (loss)............ .26 .22 .28 .36 .27 .30 .19
Net realized and unrealized
gain (loss) on investments............ 10.97 (2.41) .79 .52 10.75 (.33) 6.29
---------- --------- --------- --------- --------- --------- --------
Total income (loss) from operations... 11.23 (2.19) 1.07 .88 11.02 (.03) 6.48
Distributions:
Dividends from net investment income.... (.24) (.22) (.28) (.36) (.27) (.30) (.19)
Distributions from net realized gains on
investments........................... (3.14) .00 (.37) (.95) (1.97) (.04) (1.41)
Distributions in excess of net realized
gains on investments.................. .00 (.03) .00 .00 .00 .00 .00
---------- --------- --------- --------- --------- --------- --------
Total distributions................... (3.38) (.25) (.65) (1.31) (2.24) (.34) (1.60)
---------- --------- --------- --------- --------- --------- --------
Net asset value, end of period............. $ 31.66 $ 23.81 $ 26.25 $ 25.83 $ 26.26 $ 17.48 $ 17.85
============ =========== =========== =========== =========== =========== ==========
Total return............................... 47.12% (8.31)% 3.97% 2.35% 59.79% (.22)% 47.04%
Ratios and supplemental data:
Net assets at end of period
(in thousands).......................... $1,195,174 $ 814,383 $ 934,810 $ 711,422 $ 393,511 $ 129,057 $ 74,680
Ratio of expenses to average net assets... .86% .84% .87% .86% .90% 1.00% 1.00%
Ratio of net investment income (loss)
to average net assets................... .90% .88% 1.07% 1.44% 1.21% 2.06% 1.18%
Portfolio turnover rate................... 130.48% 107.33% 77.91% 77.70% 7.27% 157.01% 123.80%
<CAPTION>
1988 1987 1986+
-------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of period....... $ 11.14 $ 10.14 $ 10.00
Income from operations:
Net investment income (loss)............ .31 .21 .00
Net realized and unrealized
gain (loss) on investments............ 1.83 1.00 .14
-------- -------- -------
Total income (loss) from operations... 2.14 1.21 .14
Distributions:
Dividends from net investment income.... (.31) (.21) .00
Distributions from net realized gains on
investments........................... .00 .00 .00
Distributions in excess of net realized
gains on investments.................. .00 .00 .00
-------- -------- -------
Total distributions................... (.31) (.21) .00
-------- -------- -------
Net asset value, end of period............. $ 12.97 $ 11.14 $ 10.14
========== ========== =========
Total return............................... 18.62% 10.90% 5.84%
Ratios and supplemental data:
Net assets at end of period
(in thousands).......................... $ 28,497 $ 15,815 $ 716
Ratio of expenses to average net assets... 1.00% 1.00% .19%
Ratio of net investment income (loss)
to average net assets................... 2.50% 1.84% .03%
Portfolio turnover rate................... 76.27% 222.13% 8.55%
</TABLE>
* The above table illustrates the change for a share outstanding computed using
average shares outstanding throughout each period. See Note 6.
+ The inception of this portfolio was October 2, 1986. The total return is not
annualized.
The notes to the financial statements are an integral part of this report.
This material must be preceded or accompanied by the Fund's current prospectus.
- --------------------------------------------------------------------------------
8
<PAGE> 11
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 1995
NOTE 1 - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
The WRL Series Fund, Inc. (the "Fund") is a diversified, open-end,
investment management company registered under the Investment Company Act of
1940, as amended. The Fund was incorporated on August 21, 1985 as a Maryland
Corporation and on October 2, 1986, the Growth Portfolio commenced operations.
From inception of the Fund until June 30, 1992, shares were sold exclusively to
the WRL Series Life Account (the "Life Account") and the WRL Series Annuity
Account (the "Annuity Account"), collectively called the Separate Accounts of
Western Reserve Life Assurance Co. of Ohio ("WRL"), to fund benefits under
variable universal life insurance policies and variable annuity contracts issued
by WRL. Under an amendment dated September 19, 1994 to the Participation
Agreement dated July 1, 1992, the Fund's Board of Directors authorized sales of
its shares of the Growth Portfolio to the separate accounts of life insurance
companies which are affiliates of WRL.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
A. VALUATION OF INVESTMENTS
Securities held by the Growth Portfolio are valued at market value, except
for short-term debt securities. Short-term debt securities maturing in 60
days or less are valued on the amortized cost basis, which approximates
market value. Stocks are valued at the latest sale price on the last
business day of the fiscal period as reported by the principal securities
exchange on which the issue is traded or, if no sale is reported for a
stock, the latest bid price is used. Bonds are valued using prices quoted by
a major dealer in bonds which offers a pricing service. Certain pricing
methodologies, such as matrix pricing of bonds, may involve the use of
estimates and actual sales prices may differ. Securities for which
quotations may not be readily available are valued as determined in good
faith in accordance with procedures established by and under the general
supervision of the Fund's Board of Directors.
The value of foreign securities are translated into U.S. dollars using spot
foreign exchange rates.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Security gains and
losses are calculated on the first-in first-out basis for both tax and
financial reporting purposes. Dividend income is recorded on the ex-dividend
date, and interest income, including amortization of bond premium and
accretion of discount, is accrued daily. Dividend income on foreign
securities is recorded net of foreign tax withholdings.
The accounting records of the Fund are maintained in U.S. dollars. For
transactions denominated in a currency other than the U.S. dollar, purchases
and sales of securities, income received, and expenses paid are translated
into U.S. dollars at the foreign exchange spot rate on the date the
transaction is recorded. Currency gain and loss is also calculated on
payables and receivables that are denominated in foreign currencies. The
payables and receivables are generally related to security transactions and
income.
The unrealized gain or loss on forward foreign currency contracts is due to
the difference between the foreign exchange contract rate and the foreign
exchange forward rate applicable to that contract at the end of the period.
This gain or loss becomes realized when the contract is closed or settled.
Futures contracts and options are valued based upon daily settlement prices
with the fluctuations in value recorded as unrealized gains and losses.
These gains and losses become realized when the position is closed. The
risks associated with the use of options and futures contracts involve the
possibilities of an illiquid market and an imperfect correlation between the
value of the instrument and the underlying security.
C. FEDERAL INCOME TAXES
It is the Fund's policy to distribute substantially all of its taxable
income and capital gains to its shareholders and otherwise qualify as a
regulated investment company under the Internal Revenue Code. Pursuant to
Code Section 4982(f), regulated investment companies serving as funding
vehicles for life insurance company separate accounts are not subject to
excise tax distribution requirements. Accordingly, no provision for Federal
income taxes has been made.
Income distributions and capital gain distributions are determined in
accordance with income tax regu-
- --------------------------------------------------------------------------------
9
<PAGE> 12
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 1 (CONTINUED)
lations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for such items
as wash sales, foreign currency transactions, net operating losses and
capital loss carryforwards.
In the Growth Portfolio, a reclassification was made for $188,988 from
undistributed realized gains and losses to additional paid-in capital. Net
investment income, net realized gains, and net assets were not effected by
this change.
D. DIVIDENDS AND DISTRIBUTIONS
Dividends of the Growth Portfolio are declared and reinvested
semi-annually, while capital gain distributions are declared and reinvested
annually. Dividends and distributions of the Fund are generally paid to and
reinvested by the Separate Accounts on the next business day after
declaration.
E. ORGANIZATION COSTS
All costs incurred in connection with the formation of the Fund and its
portfolios were paid by WRL.
NOTE 2 - INVESTMENT ADVISORY AND
TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY
The Fund has entered into an annually renewable investment advisory
agreement for the Growth Portfolio with WRL as investment adviser. The Fund
pays to WRL, and charges to the portfolio, advisory fees each month at .80%
of the average daily net assets.
WRL currently voluntarily waives its advisory fees to the extent the Growth
Portfolio's normal operating expenses exceeds 1.00% of the average daily
net assets of the portfolio.
WRL has entered into a sub-advisory agreement with Janus Capital
Corporation ("JCC"). Pursuant to the agreement, fifty percent of the
advisory fee paid to WRL is due JCC each month. The sub-advisory fee is an
expense of WRL.
The Growth Portfolio is charged for expenses that specifically relate to
its operations. All other operating expenses of the Fund that are not
attributable to a specific portfolio are allocated based upon the
proportionate number of policy and contract owners of the underlying
sub-accounts. WRL directly incurs and pays these operating expenses
relating to the Fund, which subsequently reimburses WRL.
B. AFFILIATES
WRL is an indirect wholly-owned subsidiary of AEGON USA, Inc., which is an
indirect wholly-owned subsidiary of AEGON nv, a Netherlands corporation.
NOTE 3 - SECURITY TRANSACTIONS
Securities transactions are summarized as follows:
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
--------------
<S> <C>
For the year ended December 31, 1995:
Purchases of securities:
Long-term excluding U.S.
Government..................... $1,055,695,142
U.S. Government securities........ 1,694,937,824
Proceeds from maturities and sales
of securities:
Long-term excluding U.S.
Government..................... 1,127,131,393
U.S. Government securities........ 1,686,795,548
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE> 13
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 4 - FEDERAL INCOME TAX MATTERS
The income, expenses, gains and losses on securities transactions
attributed to the Growth Portfolio for accounting purposes, are also attributed
to the Growth Portfolio for Federal income tax purposes. Gains and losses on
forward currency contracts are treated as ordinary income for Federal income tax
purposes.
Net capital gains noted below are the excess of the long-term capital gains
over short-term capital losses. The net capital loss carryforwards are available
to offset future capital gains through the periods listed below. The Growth
Portfolio will elect to treat the net capital losses incurred in the two month
period ended December 31, 1995, (Post-October Losses Deferred) as having been
incurred in the following fiscal year. The cost of investments for Federal
income tax purposes and the composition of unrealized appreciation and
depreciation on investment securities for Federal income tax purposes are as
follows at December 31, 1995:
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
------------
<S> <C>
Net Capital Gains............................................................................ $113,958,394
Post-October Losses Deferred................................................................. 233,731
Prior Year Net Capital Loss Carryforward Utilized............................................ 43,473,423
Net Capital Loss Carryforward................................................................ 0
Available through:......................................................................... n/a
Federal Tax Cost Basis....................................................................... 911,406,571
Unrealized Appreciation...................................................................... 289,513,601
Unrealized Depreciation...................................................................... 5,316,001
Net Unrealized Appreciation.................................................................. 284,197,600
</TABLE>
NOTE 5 - COMMITMENTS
The Fund is authorized to enter into foreign exchange contracts for the
purpose of hedging against foreign exchange risk arising from the Fund's
investment in securities denominated in foreign currencies. All foreign exchange
contracts are marked-to-market daily at the applicable foreign exchange rates
and the resulting unrealized gains or losses recorded in the Fund's financial
statements. These gains and losses are realized when the contract is
extinguished either by entering into a closing transaction or by delivery of the
currency. The risks that may arise from these contracts are the potential
inability of the counterparties to meet the terms of their contracts, and from
unanticipated movements in the currency's value relative to the U.S. dollar.
The Growth Portfolio entered into forward foreign currency contracts, which
obligate the Fund to deliver currencies at specified future dates. The open
contracts at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
12/31/95 NET UNREALIZED
VALUE IN APPRECIATION
CURRENCY BOUGHT (SOLD) SETTLEMENT DATE U.S. DOLLARS (DEPRECIATION)
- --------------------------------------- ------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Growth Portfolio
German Deutschemark.................. (19,713,000) 2/22/96 $ 13,814,167 284,674
German Deutschemark.................. (22,000,000) 4/11/96 15,453,731 98,369
German Deutschemark.................. (8,500,000) 4/25/96 5,974,938 172,233
------------ --------------
Total Growth Portfolio....... $ 35,242,836 $555,276
============ ==============
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE> 14
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 6 - FINANCIAL HIGHLIGHTS
The Financial Highlights for the Growth Portfolio contain a chart (the
"comparison chart") setting forth Average Annual Total Return ("total return")
and a comparison of the change in value of a $10,000 investment in the Growth
Portfolio to a broad based market index. In the comparison chart and the total
return set forth in "Financial Highlights", the total return and the change in
value of the Growth Portfolio reflect the advisory fee and all other Growth
Portfolio expenses and include reinvestment of dividends and capital gains; they
do not reflect the charges against the corresponding sub-account or the charges
and deductions under the applicable Annuity Contracts. Where the Growth
Portfolio's period from inception is less than one year, the total return shown
is not annualized. The index referred to in the comparison chart is unmanaged
and is used as a general measure of market performance; it assumes reinvestment
of dividends and capital gains and the index does not include any management or
investment expenses.
The ratio of expenses to average net assets in the financial highlights is
net of advisory fee waiver (see Note 2). Without the advisory fee waived by WRL
the ratio for each period presented would be as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------------------------------------------------
PORTFOLIO 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------------------------------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth....................................... * * * * * * 1.13% 1.49% 1.90% 6.76%
</TABLE>
* No waiver - portfolio did not exceed expense limitations.
- --------------------------------------------------------------------------------
12
<PAGE> 15
- --------------------------------------------------------------------------------
W R L S E R I E S F U N D , I N C .
- --------------------------------------------------------------------------------
---------------------------------------------
OFFICE OF THE WRL SERIES FUND
201 Highland Avenue
Largo, FL 34640
1-800-851-9777
---------------------------------------------
DISTRIBUTOR:
InterSecurities, Inc.
201 Highland Avenue
Largo, FL 34640
---------------------------------------------
FUND CUSTODIAN:
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
---------------------------------------------
INVESTMENT ADVISER:
Western Reserve Life Assurance Co. of Ohio
201 Highland Avenue
Largo, FL 34640
---------------------------------------------
SUB-ADVISER:
Janus Capital Corporation
Suite 300
100 Fillmore Street
Denver, CO 80206
---------------------------------------------
INDEPENDENT ACCOUNTANTS:
Price Waterhouse LLP
1055 Broadway
Kansas City, MO 64105
<PAGE> 16
THIS MATERIAL IS FOR CONTRACT HOLDER'S
REPORTING PURPOSES ONLY AND SHALL NOT
BE USED IN CONNECTION WITH A SOLICITATION,
OFFER OR ANY PROPOSED SALE OR PURCHASE
OF SECURITIES UNLESS PRECEDED OR
ACCOMPANIED BY A PROSPECTUS.
February 1996
ACC00004-A (2/96)
<PAGE> 17
Appendix to Electronic Format Page 1 of 1
WRL Series Fund. Inc., Growth Portfolio
Page 1 (photo) Shown is John R. Kenney, Chairman of the Board
Page 5 (graph) Pie chart depicting industry investments as a percentage
of total portfolio net assets.
<TABLE>
<S> <C>
U.S. Government Obligations 0.50%
Corporate Debt Securities 1.24%
Preferred stocks 4.06%
Banking 5.95%
Beverages 2.70%
Computer Technology 22.14%
Electronics 4.37%
Finance 5.50%
Medical 5.94%
Pharmaceuticals 8.20%
Telecommunications 12.46%
Short-term U.S. Government Obligations 5.85%
Commercial Paper 15.65%
Other 5.44%
</TABLE>
Page 8 (graph) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception
versus the Standard & Poor's Index of 500 Common Stocks
(S&P) over the same time frame.
<TABLE>
<S> <C> <C>
Portfolio S&P Index
Inception 10/2/86 $10,000 $10,000
Period Ended 12/31/86 $10,144 $10,560
FYE 12/31/87 $11,249 $11,110
FYE 12/31/88 $13,344 $12,940
FYE 12/31/89 $19,621 $17,040
FYE 12/31/90 $19,578 $16,511
FYE 12/31/91 $31,284 $21,542
FYE 12/31/92 $32,021 $23,183
FYE 12/31/93 $33,293 $25,519
FYE 12/31/94 $30,527 $25,856
FYE 12/31/95 $44,912 $35,481
</TABLE>
