<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.
---------------------------------------------
February 1996
ACC00001-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
WRL SERIES FUND, INC.
Financial Statements:
Money Market Portfolio....................... 3
Bond Portfolio............................... 8
Growth Portfolio............................. 13
Short-to-Intermediate Government Portfolio... 19
Global Portfolio............................. 25
Equity-Income Portfolio...................... 32
Emerging Growth Portfolio.................... 39
Aggressive Growth Portfolio.................. 47
Balanced Portfolio........................... 53
Utility Portfolio............................ 59
Tactical Asset Allocation Portfolio.......... 65
Notes to Financial Statements..................... 72
</TABLE>
<PAGE> 3
FELLOW CONTRACT AND POLICY 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 WRL Series
Fund portfolio managers posted this period and this year. Please take a few
minutes and review the personal comments from these outstanding professionals
regarding their respective Portfolios and just how they've been investing for
the last year. I invite you to evaluate these reports 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 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, then we're justified in our
optimistic outlook for next year and for years after that. The Portfolios of the
WRL Series Fund are 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.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of the WRL Series Fund, Inc.
In our opinion, the accompanying statements of assets and liabilities,
including the schedules 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 Money Market, Bond, Growth,
Short-To-Intermediate Government, Global, Equity-Income, Emerging Growth,
Aggressive Growth, Balanced, Utility, and Tactical Asset Allocation Portfolios
(eleven of the portfolios constituting the WRL Series Fund, Inc., hereafter
referred to as the "Portfolios") at December 31, 1995, the results of each of
their operations, the changes in each of their net assets and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolios' 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.
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
CORPORATE OBLIGATIONS (99.93%)
AUTOMOTIVE (5.83%)
Ford Motor Co.
5.75%, due 01/02/96............. $ 1,200,000 $ 1,199,425
General Motors Acceptance Corp.
5.71%, due 01/08/96............. 3,500,000 3,495,004
BANKING (4.33%)
Dresdner U.S. Finance, Inc.
5.78%, due 01/17/96............. 3,500,000 3,489,885
BEVERAGES (9.90%)
Coca-Cola Enterprises
5.70%, due 01/05/96............. 4,000,000 3,996,200
PepsiCo, Inc.
5.58%, due 02/09/96............. 4,000,000 3,974,580
COMPUTER TECHNOLOGY (4.32%)
CSC Enterprises
5.75%, due 01/31/96............. 3,500,000 3,482,111
ELECTRONICS (4.32%)
General Electric Capital
Corporation
5.67%, due 02/02/96............. 3,500,000 3,481,258
FINANCE (30.91%)
American Express Co.
5.50%, due 02/23/96............. 4,000,000 3,966,389
AVCO Financial
5.65%, due 01/30/96............. 3,500,000 3,482,972
Cargill Financial Services Corp.
5.71%, due 01/09/96............. 3,000,000 2,995,242
Countrywide Credit Industries,
Inc.
5.67%, due 02/02/96............. 4,000,000 3,978,580
Dean Witter Discover & Company
5.70%, due 01/26/96............. 3,000,000 2,987,175
Household International, Inc.
5.82%, due 01/10/96............. 3,500,000 3,493,776
Merrill Lynch & Co., Inc.
5.75%, due 01/12/96............. 4,000,000 3,991,694
HOUSEHOLD PRODUCTS (4.30%)
Proctor & Gamble Company
5.57%, due 03/07/96............. 3,500,000 3,463,176
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
CORPORATE OBLIGATIONS (CONTINUED)
INSURANCE (8.66%)
Prudential Funding Corp.
5.80%, due 01/17/96............. $ 3,500,000 $ 3,489,850
USAA Capital Corporation
5.69%, due 01/19/96............. 3,500,000 3,488,936
MACHINERY (4.95%)
John Deere Capital Corporation
5.73%, due 01/18/96............. 4,000,000 3,987,903
OIL & GAS (8.80%)
Chevron Oil Finance Co.
5.55%, due 01/16/96............. 3,600,000 3,590,565
Texaco, Inc.
5.68%, due 01/11/96............. 3,500,000 3,493,373
TELECOMMUNICATIONS (13.61%)
A T & T Capital Corporation
5.68%, due 01/22/96............. 3,500,000 3,487,299
A T & T Capital Corporation
5.60%, due 01/22/96............. 500,000 498,211
Bell Atlantic Corp.
5.80%, due 01/19/96............. 3,500,000 3,488,722
US West Communications Group
5.75%, due 01/26/96............. 3,500,000 3,484,906
------------
Total Corporate Obligations
(cost: $ 80,487,232)............ 80,487,232
------------
Total Investment Securities
(cost: $ 80,487,232)............ $ 80,487,232
=============
SUMMARY
Investments at value.............. 99.93% $ 80,487,232
Other Assets in
Excess of Liabilities........... 0.07% 56,440
------- ------------
Net Assets........................ 100.00% $ 80,543,672
------- ------------
------- ------------
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
3
<PAGE> 6
WRL SERIES FUND, INC.
MONEY MARKET 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]
Automotive 5.83%
Banking 4.33%
Beverages 9.90%
Computer Technology 4.32%
Electronics 4.32%
Finance 30.91%
Household Products 4.30%
Insurance 8.66%
Machinery 4.95%
Oil & Gas 8.80%
Telecommunications 13.61%
Other 0.07%
Slower economic growth and low inflation allowed interest rates to fall in 1995,
and the bond market rallied. The year ended with the 30-year U.S. Treasury bond
yielding 5.96%, down from 7.87% on January 2, 1995, and the one-year U.S.
Treasury Bill at 5.13%, down from 7.16%. Yields on the Money Market Portfolio
followed a similar path. At this period's end, December 31, 1995, net yield for
the Portfolio was 5.4%.
The crosscurrents of economic activity and inflation expectations kept the
markets guessing as to which way, and by how much, the Federal Reserve Board
(Fed) would cause interest rates to move. The suspense ended on December 19,
1995, when the Fed lowered its key rates by a quarter of a percentage point. Now
the questions are whether and when rates will go down again.
Other current thinking is that the economy is showing enough signs of weakness
to justify another Fed action to lower interest rates. We would like to buy
one-year securities now, thinking that if we wait, we will have to invest at
lower rates. There have been some barriers to executing that strategy, however.
Companies have been reluctant to issue one-year debt, thinking they will soon be
able to do so at a lower rate. Also, overnight rates are currently higher than
one-year rates (an inverted yield curve). So we must be very selective when
buying long-term securities to avoid giving up too much yield. Another barrier
is a need for near-total liquidity in the Portfolio, since investors are free to
withdraw or exchange at any time.
Our strategy is to search for the best values in very short-term securities to
receive the benefits of the higher rates in that segment and maintain the Money
Market Portfolio's liquidity. This approach has given the Portfolio a weighted
average maturity of 26 days as of December 29, 1995. If we find opportunities to
do so, we will be lengthening the Portfolio's duration somewhat during the
coming months.
<TABLE>
<S> <C>
(LOGO)
(1)THE JANUS SYMBOL IS A /s/ Sharon Pichler
REGISTERED ------------------------------
SERVICE MARK OF JANUS CAPITAL Sharon Pichler
CORPORATION Money Market Portfolio Manager
</TABLE>
An investment in the Money Market Portfolio is neither insured nor guaranteed by
the U.S. Government and there can be no assurance that the Portfolio will be
able to maintain a stable net asset value of $1.00 per share.
- --------------------------------------------------------------------------------
4
<PAGE> 7
WRL SERIES FUND, INC.
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 0)................................ $ 0
Short-term securities, at amortized cost.... 80,487,232
Cash........................................ 100,602
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 0
Interest.................................. 0
Dividends................................. 0
Other..................................... 0
-----------------
Total assets............................ 80,587,834
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 0
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 31,438
Dividends to shareholders................. 11,666
Other fees................................ 1,058
-----------------
Total liabilities....................... 44,162
-----------------
Total net assets...................... $ 80,543,672
===================
NET ASSETS:
Capital stock
($ .01 par value 150,000,000
authorized)............................... $ 805,437
Additional paid-in capital.................. 79,738,235
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 0
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. 0
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 0
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 80,543,672
===================
Shares outstanding at December 31, 1995..... 80,543,672
===================
Net asset value per share................... $ 1.00
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest................................... $ 4,942,733
Dividends.................................. 0
----------------
Total investment income.............. 4,942,733
----------------
EXPENSES:
Investment advisory fees................... 422,357
Printing and shareholder reports........... 9,436
Custodian fees............................. 28,591
Legal fees................................. 491
Auditing and accounting fees............... 7,242
Directors fees............................. 528
Other fees................................. 0
----------------
Total expenses......................... 468,645
Less:
Advisory fee waiver and expense
reimbursement.......................... 0
Fees paid indirectly..................... 2,450
----------------
Net expenses......................... 466,195
----------------
Net investment income (loss)............... 4,476,538
----------------
Net realized gain (loss) on:
Investment securities.................. 0
----------------
Change in unrealized appreciation
(depreciation) on:
Investment securities.................. 0
----------------
Net gain (loss) on investments......... 0
----------------
Net increase (decrease) in net assets
resulting from operations................ $ 4,476,538
===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
5
<PAGE> 8
WRL SERIES FUND, INC.
MONEY MARKET 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)............................................................ $ 4,476,538 $ 2,545,149
Net realized gain (loss) on investments................................................. 0 0
Change in unrealized appreciation (depreciation) on investments......................... 0 0
----------------- -----------------
Net increase (decrease) in net assets resulting from operations....................... 4,476,538 2,545,149
----------------- -----------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income................................................................... (4,476,538) (2,545,149)
Net realized gains...................................................................... 0 0
----------------- -----------------
Total distributions................................................................... (4,476,538) (2,545,149)
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares....................................................... 114,390,840 114,696,321
Dividends and distributions reinvested.................................................. 4,476,538 2,545,149
Cost of shares repurchased.............................................................. (131,404,321) (69,943,338)
----------------- -----------------
Increase (decrease) in net assets from capital shares transactions.................... (12,536,943) 47,298,132
----------------- -----------------
Net increase (decrease) in net assets................................................. (12,536,943) 47,298,132
NET ASSETS:
Beginning of period..................................................................... 93,080,615 45,782,483
----------------- -----------------
End of period........................................................................... $ 80,543,672 $ 93,080,615
=================== ===================
Undistributed net investment income................................................... $ 0 $ 0
=================== ===================
SHARE ACTIVITY:
Shares outstanding - beginning of period................................................ 93,080,615 45,782,483
----------------- -----------------
Shares issued........................................................................... 114,390,840 114,696,321
Shares issued - reinvestment of dividends and distributions............................. 4,476,538 2,545,149
Shares redeemed......................................................................... (131,404,321) (69,943,338)
----------------- -----------------
Increase (decrease) in shares outstanding............................................... (12,536,943) 47,298,132
----------------- -----------------
Shares outstanding - end of period...................................................... 80,543,672 93,080,615
=================== ===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
6
<PAGE> 9
WRL SERIES FUND, INC.
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
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.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from operations:
Net investment income (loss)............... .05 .04 .02 .03 .05 .07 .07
Net realized and unrealized
gain (loss) on investments............... .00 .00 .00 .00 .00 .00 .00
-------- -------- -------- -------- -------- -------- -------
Total income (loss) from operations...... .05 .04 .02 .03 .05 .07 .07
-------- -------- -------- -------- -------- -------- -------
Distributions:
Dividends from net investment income....... (.05) (.04) (.02) (.03) (.05) (.07) (.07)
Distributions from net realized gains
on investments........................... .00 .00 .00 .00 .00 .00 .00
-------- -------- -------- -------- -------- -------- -------
Total distributions...................... .(05) (.04) (.02) (.03) (.05) (.07) (.07)
-------- -------- -------- -------- -------- -------- -------
Net asset value, end of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ========== =========
Total return.................................. 5.40% 3.44% 2.45% 3.03% 5.25% 7.09% 8.09%
Ratios and supplemental data:
Net assets at end of period
(in thousands).............................. $ 80,544 $ 93,081 $ 45,782 $ 45,600 $ 33,695 $ 24,931 $ 6,233
Ratio of expenses to average net assets...... .56% .60% .66% .70% .70% .66% .70%
Ratio of net investment income (loss)
to average net assets...................... 5.30% 3.59% 2.41% 2.99% 5.07% 7.09% 7.82%
Portfolio turnover rate...................... n/a n/a n/a n/a n/a n/a n/a
<CAPTION>
1988 1987 1986+
------- ----- -----
<S> <C<C> <C> <C>
Net asset value, beginning of period................ $ 1.00 $1.00 $1.00
Income from operations:
Net investment income (loss)..................... .05 .04 .01
Net realized and unrealized
gain (loss) on investments..................... .00 .00 .00
------- ----- -----
Total income (loss) from operations............ .05 .04 .01
------- ----- -----
Distributions:
Dividends from net investment income............. (.05) (.04) (.01 )
Distributions from net realized gains
on investments................................. .00 .00 .00
------- ----- -----
Total distributions............................ (.05) (.04) (.01 )
------- ----- -----
Net asset value, end of period...................... $ 1.00 $1.00 $1.00
========= ======= ========
Total return........................................ 5.77% 4.56% 1.14%
Ratios and supplemental data:
Net assets at end of period
(in thousands).................................... $ 5,114 $ 582 $101
Ratio of expenses to average net assets............ .70% .89% .12%
Ratio of net investment income (loss)
to average net assets............................ 6.26% 4.83% 1.14%
Portfolio turnover rate............................ n/a n/a n/a
</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.
- --------------------------------------------------------------------------------
7
<PAGE> 10
WRL SERIES FUND, INC.
BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (42.80%)
U.S. Treasury Bonds
6.88%, due 08/15/25............. $ 1,800,000 $ 2,029,266
U.S. Treasury Notes
7.88%, due 11/15/04............. 23,000,000 26,618,820
U.S. Treasury Bonds
7.75%, due 11/30/99............. 1,500,000 1,625,430
U.S. Treasury Notes
6.50%, due 05/15/05............. 8,000,000 8,513,520
U.S. Treasury Bonds
6.50%, due 08/15/05............. 2,000,000 2,131,020
U.S. Treasury Notes
5.88%, due 11/15/05............. 570,000 582,665
------------
Total U.S. Government Obligations
(cost: $ 37,297,831)............ 41,500,721
------------
CORPORATE DEBT SECURITIES (42.70%)
AEROSPACE (3.25%)
Raytheon Company
6.50%, due 07/15/05............. 1,000,000 1,028,750
Raytheon Company
7.38%, due 07/15/25............. 2,000,000 2,122,500
AUTOMOTIVE (2.20%)
General Motors Corporation
7.40%, due 09/01/25............. 2,000,000 2,135,000
BANKING (11.85%)
BankAmerica Corporation
7.20%, due 04/15/06............. 2,000,000 2,127,500
Chemical Banking Corporation
6.50%, due 01/15/09............. 2,000,000 2,010,000
NationsBank Corporation
6.88%, due 02/15/05............. 2,000,000 2,067,500
NBD Bancorp, Inc.
7.13%, due 05/15/07............. 3,000,000 3,198,750
Swiss Bank Corp.
7.00%, due 10/15/15............. 2,000,000 2,082,500
BEVERAGES (2.62%)
Coca-Cola Enterprises, Inc.
6.75%, due 09/15/23............. 2,500,000 2,540,625
CHEMICALS (3.45%)
Witco Corporation
7.75%, due 04/01/23............. 3,000,000 3,348,750
FINANCE (6.64%)
Commercial Credit Corp.
6.50%, due 06/01/05............. 1,000,000 1,017,500
Ford Motor Credit Company
6.75%, due 08/15/08............. 3,500,000 3,613,750
Texaco Capital, Inc.
7.50%, due 03/01/43............. 750,000 820,313
Transamerica Financial Corporation
6.50%, due 03/15/11............. 1,000,000 982,500
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
CORPORATE DEBT SECURITIES (CONTINUED)
FOODS & FOOD SERVICE (3.25%)
Hershey Foods
6.70%, due 10/01/05............. $ 3,000,000 $ 3,150,000
HOLDING COMPANIES (2.13%)
Hanson Overseas BV
6.75%, due 09/15/05............. 2,000,000 2,070,000
INSURANCE (2.32%)
Aegon nv *
8.00%, due 08/15/06............. 2,000,000 2,252,500
PHARMACEUTICALS (3.32%)
Eli Lilly & Company
7.13%, due 06/01/25............. 3,000,000 3,217,500
RESTAURANTS (1.67%)
McDonald's Corporation
7.38%, due 07/15/33............. 1,500,000 1,621,875
------------
Total Corporate Debt Securities
(cost: $ 38,645,399)............ 41,407,813
------------
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS (5.12%)
Federal Home Loan Bank
5.40%, due 02/21/96............. 5,000,000 4,960,250
------------
Total Short-Term U.S. Government Obligations
(cost: $ 4,960,250)............. 4,960,250
------------
COMMERCIAL PAPER (8.14%)
General Electric Capital
Corporation
5.90%, due 01/03/96............. 4,000,000 3,997,377
Household Finance Corp.
5.70%, due 01/02/96............. 3,900,000 3,898,148
------------
Total Commercial Paper
(cost: $ 7,895,525)............. 7,895,525
------------
Total Investment Securities
(cost: $ 88,799,005).......... $ 95,764,309
=============
SUMMARY
Investments at value.............. 98.76% $ 95,764,309
Other Assets in
Excess of Liabilities........... 1.24% 1,207,576
------- ------------
Net Assets........................ 100.00% $ 96,971,885
------- ------------
------- ------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* See footnote 2B to financial statements.
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
8
<PAGE> 11
WRL SERIES FUND, INC.
BOND 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]
<TABLE>
<S> <C>
U.S. Government Obligations 42.80%
Aerospace 3.25%
Automotive 2.20%
Banking 11.85%
Beverages 2.62%
Chemicals 3.45%
Finance 6.64%
Foods & Food Service 3.25%
Insurance 2.32%
Pharmaceuticals 3.32%
Short-Term U.S. Government Obligation 5.12%
Commercial Paper 8.14%
Other 5.04%
</TABLE>
1995 proved to be a strong year for the bond market as a sharp decline in
interest rates produced an unusual and exciting surge in prices. Unfortunately,
the dramatic gains we have just seen do not happen very often. The year will
very likely prove to be an anomaly to the upside, just as 1994 has proven to be
an anomaly on the downside. This does not mean I'm pessimistic about the bond
market in 1996. Far from it. As long as economic growth is moderate and
inflation remains at acceptable levels, bonds should generate good returns. But
it will be difficult in 1996 to match the results achieved last year.
During the year, the yield on the benchmark 10-year U.S. Treasury bond dropped
from 7.82% at year-end 1994 to 6.18% as of September 30, and then to 5.58% at
the end of 1995. The 30-year U.S. Treasury yield followed a similar pattern for
the same periods, declining from 7.87% to 6.50% to 5.96%. For the year ended
December 31, 1995, the Lehman Brothers Government/Corporate Bond Index gained
19.2%. For the same period, the Bond Portfolio returned 22.99%.
I pursued a conservative strategy early in the year, when short-term rates were
still rising, the economy was growing vigorously, and higher inflation seemed a
significant threat. At the beginning of the year, the Portfolio was positioned
defensively, with 26.5% in cash, 22.3% in corporate bonds, and 51.2% in
Government bonds.
During the year the economy has gradually weakened. In spite of the 4.2% growth
in Gross Domestic Product (GDP) in the third quarter, the fourth quarter will
probably come in closer to 2%. Retail sales have been slow, especially during
the Christmas season, and the manufacturing sector has softened. The bond market
has correctly anticipated a weaker economy, and once again has been ahead of the
Federal Reserve Board, which lowered short-term interest rates twice during the
year. The last easing happened to occur on December 19, the same week interest
rates were lowered in both the German and UK markets, which caused global bond
markets to finish on an upstroke. As we ended 1995, the Portfolio was positioned
very differently: cash had been reduced to 14.5%, corporate bonds were increased
to 42.7%, and Government Bonds were trimmed to 42.8%.
Also, the U.S. bond market has been anticipating a positive outcome of the
budget battle in Washington, and any meaningful progress toward balancing the
budget has been viewed favorably. The shutdown in government services during the
fourth quarter, while frustrating in many areas, no doubt served to boost bond
prices.
As we look towards 1996, the economy will probably continue to slow early in the
year as weak Christmas sales and the layoff of Federal workers have a
flow-through effect. A responsible budget agreement will very likely prove
important to the market's performance, so I will monitor developments on that
front very closely.
<TABLE>
<S> <C>
(LOGO)
(1)THE JANUS SYMBOL IS A /s/ Ronald V. Speaker
REGISTERED ----------------------
SERVICE MARK OF JANUS CAPITAL Ronald V. Speaker
CORPORATION Bond Portfolio Manager
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE> 12
WRL SERIES FUND, INC.
BOND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 75,943,230)....................... $ 82,908,534
Short-term securities, at amortized cost.... 12,855,775
Cash........................................ 84,887
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 0
Interest.................................. 1,180,693
Dividends................................. 0
Other..................................... 0
-----------------
Total assets............................ 97,029,889
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 0
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 38,148
Dividends to shareholders................. 0
Other fees................................ 19,856
-----------------
Total liabilities....................... 58,004
-----------------
Total net assets...................... $ 96,971,885
===================
NET ASSETS:
Capital stock
($ .01 par value 25,000,000 authorized)... $ 85,474
Additional paid-in capital.................. 97,435,126
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 17,596
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. (7,531,615)
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 6,965,304
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 96,971,885
===================
Shares outstanding at December 31, 1995..... 8,547,388
===================
Net asset value per share................... $ 11.35
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest.................................... $ 5,809,135
Dividends................................... 0
------------
Total investment income............... 5,809,135
------------
EXPENSES:
Investment advisory fees.................... 409,862
Printing and shareholder reports............ 24,781
Custodian fees.............................. 29,089
Legal fees.................................. 1,249
Auditing and accounting fees................ 9,224
Directors fees.............................. 1,255
Other fees.................................. 27,503
------------
Total expenses........................ 502,963
Less:
Advisory fee waiver and expense
reimbursement........................... 0
Fees paid indirectly...................... 7,648
------------
Net expenses.......................... 495,315
------------
Net investment income (loss)................ 5,313,820
------------
Net realized gain (loss) on:
Investment securities................... 2,182,123
Change in unrealized appreciation
(depreciation) on:
Investment securities................... 9,317,232
------------
Net gain (loss) on investments.......... 11,499,355
------------
Net increase (decrease) in net assets
resulting from operations................. $ 16,813,175
============
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
10
<PAGE> 13
WRL SERIES FUND, INC.
BOND 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)........................................................... $ 5,313,820 $ 4,863,317
Net realized gain (loss) on investments................................................ 2,182,123 (9,689,964)
Change in unrealized appreciation (depreciation) on investments........................ 9,317,232 (1,576,688)
------------ ------------
Net increase (decrease) in net assets resulting from operations...................... 16,813,175 (6,403,335)
------------ ------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income.................................................................. (5,296,224) (4,881,503)
In excess of net investment income..................................................... 0 (23,774)
Net realized gains..................................................................... 0 0
------------ ------------
Total distributions.................................................................. (5,296,224) (4,905,277)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares...................................................... 26,382,392 15,154,642
Dividends and distributions reinvested................................................. 5,296,224 4,905,277
Cost of shares repurchased............................................................. (17,287,599) (28,401,923)
------------ ------------
Increase (decrease) in net assets from capital shares transactions................... 14,391,017 (8,342,004)
------------ ------------
Net increase (decrease) in net assets................................................ 25,907,968 (19,650,616)
NET ASSETS:
Beginning of period.................................................................... 71,063,917 90,714,533
------------ ------------
End of period.......................................................................... $ 96,971,885 $ 71,063,917
============ ============
Undistributed net investment income.................................................. $ 17,596 $ 0
============ ============
SHARE ACTIVITY:
Shares outstanding - beginning of period............................................... 7,252,963 8,070,229
------------ ------------
Shares issued.......................................................................... 2,425,769 1,405,712
Shares issued - reinvestment of dividends and distributions............................ 477,566 490,352
Shares redeemed........................................................................ (1,608,910) (2,713,330)
------------ ------------
Increase (decrease) in shares outstanding.............................................. 1,294,425 (817,266)
------------ ------------
Shares outstanding - end of period..................................................... 8,547,388 7,252,963
============ ============
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
11
<PAGE> 14
WRL SERIES FUND, INC.
BOND PORTFOLIO
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND,
INC. BOND PORTFOLIO AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
[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................ $ 9.80 $ 11.24 $ 11.18 $ 11.18 $ 9.91 $ 10.07 $ 9.29
Income from operations:
Net investment income (loss)..................... .69 .63 .72 .75 .86 .79 .75
Net realized and unrealized
gain (loss) on investments..................... 1.55 (1.44) .95 .32 1.30 (.16) .78
-------- -------- -------- -------- -------- -------- -------
Total income (loss) from operations............ 2.24 (.81) 1.67 1.07 2.16 .63 1.53
-------- -------- -------- -------- -------- -------- -------
Distributions:
Dividends from net investment income............. (.69) (.63) (.72) (.75) (.86) (.79) (.75)
Distributions from net realized gains on
investments.................................... .00 .00 (.89) (.32) (.03) .00 .00
-------- -------- -------- -------- -------- -------- -------
Total distributions............................ (.69) (.63) (1.61) (1.07) (.89) (.79) (.75)
-------- -------- -------- -------- -------- -------- -------
Net asset value, end of period...................... $ 11.35 $ 9.80 $ 11.24 $ 11.18 $ 11.18 $ 9.91 $ 10.07
========== ========== ========== ========== ========== ========== =========
Total return........................................ 22.99% (6.94)% 13.38% 6.79% 18.85% 6.21% 14.65%
Ratios and supplemental data:
Net assets at end of period
(in thousands)................................... $ 96,972 $ 71,064 $ 90,715 $ 56,820 $ 22,291 $ 10,143 $ 7,025
Ratio of expenses to average net assets............ .61% .59% .64% .70% .70% .69% .70%
Ratio of net investment income (loss)
to average net assets............................ 6.45% 5.94% 5.94% 6.49% 8.02% 8.82% 8.60%
Portfolio turnover rate............................ 120.54% 131.73% 149.02% 80.73% 33.47% 18.09% 23.26%
<CAPTION>
1988 1987 1986+
------- ------- -------
<S> <C<C> <C> <C>
Net asset value, beginning of period................ $ 9.22 $ 10.28 $ 10.00
Income from operations:
Net investment income (loss)..................... .90 .25 .13
Net realized and unrealized
gain (loss) on investments..................... .07 (.89) .15
------- ------- -------
Total income (loss) from operations............ .97 (.64) .28
------- ------- -------
Distributions:
Dividends from net investment income............. (.90) (.38) .00
Distributions from net realized gains on
investments.................................... .00 (.04) .00
------- ------- -------
Total distributions............................ (.90) (.42) .00
------- ------- -------
Net asset value, end of period...................... $ 9.29 $ 9.22 $ 10.28
========= ========= =========
Total return........................................ 7.73% (5.66)% 11.49%
Ratios and supplemental data:
Net assets at end of period
(in thousands)................................... $ 3,372 $ 1,400 $ 127
Ratio of expenses to average net assets............ .70% .86% .12%
Ratio of net investment income (loss)
to average net assets............................ 8.96% 7.17% 1.51%
Portfolio turnover rate............................ 21.54% 134.76% 123.68%
</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.
- --------------------------------------------------------------------------------
12
<PAGE> 15
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.
- --------------------------------------------------------------------------------
13
<PAGE> 16
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.
- --------------------------------------------------------------------------------
14
<PAGE> 17
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]
<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>
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 /s/ Scott W. Schoelzel /s/ Thomas F. Marisco
SERVICE MARK OF JANUS CAPITAL ---------------------- ---------------------
CORPORATION Scott W. Schoelzel Thomas F. Marsico
Growth Portfolio Managers
</TABLE>
- --------------------------------------------------------------------------------
15
<PAGE> 18
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.
- --------------------------------------------------------------------------------
16
<PAGE> 19
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.
- --------------------------------------------------------------------------------
17
<PAGE> 20
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> <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.
- --------------------------------------------------------------------------------
18
<PAGE> 21
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (37.44%)
Federal Agricultural Mortgage
Corporation
7.03%, due 05/26/98.............. $ 300,000 $ 310,365
Government Trust Certificate -
Israel Class 1-C
U.S. Government Guaranteed
9.25%, due 11/15/01.............. 430,000 475,687
Government Trust Certificate -
Israel Class 1-B
U.S. Government Guaranteed
5.25%, due 03/15/98.............. 500,000 496,250
U.S. Treasury Bonds
8.88%, due 02/15/19.............. 500,000 674,245
U.S. Treasury Notes
7.50%, due 5/15/02............... 1,000,000 1,108,910
U.S. Treasury Notes
6.38%, due 01/15/00.............. 1,000,000 1,036,830
U.S. Treasury Notes
6.25%, due 02/15/03.............. 1,000,000 1,043,570
U.S. Treasury Notes
5.13%, due 4/30/98............... 1,500,000 1,496,775
U.S. Treasury Bonds
7.75%, due 11/30/99.............. 1,300,000 1,408,706
U.S Treasury Notes
7.25%, due 02/15/98.............. 750,000 780,105
------------
Total U.S. Government Obligations
(cost: $ 8,502,707)................ 8,831,443
------------
MORTGAGE-BACKED SECURITIES (11.26%)
Federal Home Loan Mortgage
Corporation
REMIC Trust
Series 1141 Class E
8.50%, due 01/15/19.............. 439,409 440,582
Federal National Mortgage
Association
REMIC Trust
Series 1989-40 Class B
9.50%, due 04/25/18.............. 244,634 246,689
Federal National Mortgage
Association
7.72%, due 12/16/96.............. 500,000 510,730
Federal National Mortgage
Association Strip
Series 66 - Class 1
7.50%, due 01/01/20.............. 324,842 332,063
Federal National Mortgage
Association Strip
Series 66 - Class 1
8.15%, due 12/01/99.............. 499,525 532,931
Prudential-Bache CMO Trust
Series 9 - Class E
9.88%, due 08/01/17.............. 574,805 591,796
------------
Total Mortgage-Backed Securities
(cost: $ 2,642,031)................ 2,654,791
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
ASSET-BACKED SECURITIES (9.67%)
American Express Master Trust
Series 1994-2 Class A
7.60%, due 08/15/02.............. $ 1,000,000 $ 1,079,320
Choice Credit Card Master Trust
Series 1992-2 - Class B
7.20%, due 04/15/99.............. 100,000 103,798
Ford Credit Auto Loan Master Trust
Series 1992-1 Class A
6.88%, due 01/15/99.............. 100,000 102,351
Standard Credit Card Master Trust
Series 1993-2 Class A
5.95%, due 10/07/04.............. 1,000,000 994,880
------------
Total Asset-Backed Securities
(cost: $ 2,081,417)................ 2,280,349
------------
SUPRANATIONAL AGENCY OBLIGATIONS (8.07%)
African Development Bank
9.30%, due 07/01/00.............. 500,000 565,625
African Development Bank
7.75%, due 12/15/01.............. 500,000 541,875
International Bank For
Reconstruction & Development
7.90%, due 04/01/98.............. 250,000 261,875
International Bank For
Reconstruction & Development
8.02%, due 04/01/99.............. 500,000 535,000
------------
Total Supranational Agency Obligations
(cost: $ 1,853,279)................ 1,904,375
------------
CORPORATE DEBT SECURITIES (15.92%)
BANKING (4.24%)
Security Pacific Corporation**
5.63%, due 08/15/96.............. 1,000,000 999,366
ENERGY (2.23%)
Shell Canada Ltd.
7.38%, due 06/01/99.............. 500,000 526,250
FINANCE (3.04%)
General Electric Capital
Corporation
8.30%, due 09/20/09.............. 600,000 716,250
INSURANCE (3.24%)
Progressive Corporation
6.60%, due 01/15/04.............. 750,000 765,000
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
19
<PAGE> 22
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
CORPORATE DEBT SECURITIES (CONTINUED)
REAL ESTATE (3.17%)
Kimco Realty Corporation
6.38%, due 02/10/99.............. $ 750,000 $ 748,110
------------
Total Corporate Debt Securities
(cost: $ 3,687,134)................ 3,754,976
------------
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS (12.67%)
Federal Home Loan Mortgage Corp.
5.57%, due 02/08/96.............. 750,000 745,358
Federal National Mortgage
Association
5.65%, due 01/12/96.............. 1,000,000 997,960
Federal National Mortgage
Association
5.67%, due 01/19/96.............. 750,000 747,638
Federal National Mortgage
Association
5.46%, due 01/26/96.............. 500,000 497,952
------------
Total Short-Term U.S. Government Obligations
(cost: $ 2,988,908).............. 2,988,908
------------
SHORT-TERM OBLIGATION (3.76%)
Prudential-Bache Securities*
5.39%, Repurchase Agreement dated
12/29/95 to be repurchased at
$ 887,049
on 01/02/96...................... 886,518 886,518
------------
Total Short-Term Obligation
(cost: $ 886,518).................. 886,518
------------
Total Investment Securities
(cost: $ 22,641,994)............. $ 23,301,360
------------
------------
SUMMARY
Investments at value............... 98.79% $ 23,301,360
Other Assets in
Excess of Liabilities............ 1.21% 286,373
------- ------------
Net Assets......................... 100.00% $ 23,587,733
------- ------------
------- ------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* Collateralized by $ 4,175,265 Federal National Mortgage Association 9.00%
due 09/01/22; market value and accrued interest aggregated $ 902,250 for
this collateral at December 31, 1995.
** Floating rate note
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
20
<PAGE> 23
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT 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 37.44%
Mortgage-Backed Securities 11.26%
Asset-Backed Securities 9.67%
Supranational Agency Obligations 8.07%
Banking 4.24%
Finance 3.04%
Insurance 3.24%
Real Estate 3.17%
Short-Term U.S. Government Obligation 12.67%
Short-Term Obligation 3.67%
Other 3.44%
Following its outstanding performance in the first half of the year, the U.S.
bond market retreated somewhat before interest rate declines resumed midway
through the third quarter. Yield on two- and three-year Treasury notes declined
by 64 basis points in the last half of the year, closing the year at 5.15% and
5.21%, respectively, and bringing the full-year change to about 255 basis
points. The benchmark 30-year Treasury bond fell 67 basis points in the last six
months and 192 basis points during the year to yield 5.95% at 1995 year end.
The falling interest rates in 1995 were prompted by slower economic growth and
decelerating inflation. The market's perception changed in the first half of the
year from an anticipation of further Federal Reserve Board (Fed) tightening to
speculation that it would be inclined to ease monetary policy. Ultimately, in
the second half of 1995, the Fed did take such action. For the year, the Fed's
moves consisted of a 50-basis point increase in the target rate in February,
followed by 25-basis point decreases in the target rate in both July and
December, which left the rate unchanged versus last year-end at 5.50%.
The Short-to-Intermediate Government Portfolio achieved a respectable
performance level with a total return of 13.54% for the year ended December 31,
1995, compared to a return of 14.57% for the benchmark Merrill Lynch 1-10 Year
Government Index ("Index"). Particularly pleasing was the fact that the
Portfolio approximately matched the performance of the Index in the volatile
third quarter (the absolute returns were low but still positive). That period of
interest rate fluctuations resulted from uncertainty about the strength of the
economy and the concomitant inflation pressures, as well as uncertainty related
to the timing of an additional Fed ease.
The bull market for interest rates in 1995 provided an environment for excellent
performance in bonds. The Portfolio and Index total returns for the year were
13.54% and 14.57%, respectively, both of which reflect the very strong bond
market performance in 1995. This performance relative to the Index was
attributable to two principal factors relating to the structure of the portfolio
that primarily impacted performance the first six months of the year. First, the
portfolio's duration was kept slightly shorter than the Index for a portion of
the period, which reduced the benefit from principal increases in the declining
rate environment. Second, the portfolio's "barbell" maturity structure relative
to the Index, with an under-weighting in the two- to three-year area of the
yield curve, limited the benefit from the greater decline of intermediate-term
yields compared to short- and long-term yields.
The Short-to-Intermediate Government Portfolio's investment objective calls for
as high a level of current income as is consistent with preservation of capital.
This conservative orientation limits the number of options available to enhance
the performance of the Portfolio. Still, we achieved an acceptable level of
performance compared to our Index, especially during the second half of the
year, as a result of having a longer relative duration for most of the period.
The Portfolio's performance throughout the year was enhanced by incremental
yields from allocations to spread product (such as high-quality corporate,
supranational, asset-backed, and mortgage-backed securities).
Given our current neutral outlook on the market looking forward into 1996, the
Portfolio is positioned to benefit primarily from interest income, rather than
price appreciation. The average maturity of the portfolio (slightly more than
four years) rests around the mid-point of its 1-7 year permissible range and the
portfolio's duration was approximately 97% of the Index at the end of the year.
Although the portfolio maturity structure is approximately matched with the
Index, a slight bias toward a barbell remains, due partially to the our cash
requirements. The Portfolio's position provides the flexibility to adjust
quickly to changes from our present interest rate outlook.
<TABLE>
<S> <C>
[AEGON LOGO] /s/ Clifford A. Sheets
------------------------
Clifford A. Sheets
Short-to-Intermediate Government
Portfolio Manager
</TABLE>
- --------------------------------------------------------------------------------
21
<PAGE> 24
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 18,766,568)....................... $ 19,425,934
Short-term securities, at amortized cost.... 3,875,426
Cash........................................ 0
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 0
Interest.................................. 299,527
Dividends................................. 0
Other..................................... 0
-----------------
Total assets............................ 23,600,887
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 0
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 11,096
Dividends to shareholders................. 0
Other fees................................ 2,058
-----------------
Total liabilities....................... 13,154
-----------------
Total net assets...................... $ 23,587,733
===================
NET ASSETS:
Capital stock
($ .01 par value 100,000,000
authorized)............................... $ 22,645
Additional paid-in capital.................. 23,331,147
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 4,159
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. (429,584)
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 659,366
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 23,587,733
===================
Shares outstanding at December 31, 1995..... 2,264,543
===================
Net asset value per share................... $ 10.42
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest.................................... $ 1,401,790
Dividends................................... 0
-----------------
Total investment income............... 1,401,790
-----------------
EXPENSES:
Investment advisory fees.................... 126,134
Printing and shareholder reports............ 4,737
Custodian fees.............................. 15,749
Legal fees.................................. 238
Auditing and accounting fees................ 7,211
Directors fees.............................. 242
Other fees.................................. 10,616
-----------------
Total expenses........................ 164,927
Less:
Advisory fee waiver and expense
reimbursement........................... 0
Fees paid indirectly...................... 496
-----------------
Net expenses.......................... 164,431
-----------------
Net investment income (loss)................ 1,237,359
-----------------
Net realized gain (loss) on:
Investment securities................... (188,473)
Change in unrealized appreciation
(depreciation) on:
Investment securities................... 1,624,946
-----------------
Net gain (loss) on investments.......... 1,436,473
-----------------
Net increase (decrease) in net assets
resulting from operations................. $ 2,673,832
===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
22
<PAGE> 25
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT 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)........................................................... $ 1,237,359 $ 1,110,326
Net realized gain (loss) on investments................................................ (188,473) (326,157)
Change in unrealized appreciation (depreciation) on investments........................ 1,624,946 (910,740)
----------------- -----------------
Net increase (decrease) in net assets resulting from operations...................... 2,673,832 (126,571)
----------------- -----------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income.................................................................. (1,233,200) (1,113,951)
Net realized gains..................................................................... 0 0
----------------- -----------------
Total distributions.................................................................. (1,233,200) (1,113,951)
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares...................................................... 13,644,823 14,250,185
Dividends and distributions reinvested................................................. 1,233,200 1,113,951
Cost of shares repurchased............................................................. (13,087,126) (18,631,210)
----------------- -----------------
Increase (decrease) in net assets from capital shares transactions................... 1,790,897 (3,267,074)
----------------- -----------------
Net increase (decrease) in net assets................................................ 3,231,529 (4,507,596)
NET ASSETS:
Beginning of period.................................................................... 20,356,204 24,863,800
----------------- -----------------
End of period.......................................................................... $ 23,587,733 $ 20,356,204
=================== ===================
Undistributed net investment income.................................................. $ 4,159 $ 0
=================== ===================
SHARE ACTIVITY:
Shares outstanding - beginning of period............................................... 2,093,571 2,414,767
----------------- -----------------
Shares issued.......................................................................... 1,338,408 1,405,317
Shares issued - reinvestment of dividends and distributions............................ 119,758 113,598
Shares redeemed........................................................................ (1,287,194) (1,840,111)
----------------- -----------------
Increase (decrease) in shares outstanding.............................................. 170,972 (321,196)
----------------- -----------------
Shares outstanding - end of period..................................................... 2,264,543 2,093,571
=================== ===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
23
<PAGE> 26
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
Comparison of change in value of $10,000 investment in the WRL Series Fund,
Inc. Short-to-Intermediate Government Portfolio and the Merrill Lynch 1-10 Year
Government
Bond Index
[GRAPH]
FINANCIAL HIGHLIGHTS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------
1995 1994 1993 1992+
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 9.72 $ 10.30 $ 10.02 $ 10.00
Income from operations:
Net investment income (loss)............ .60 .50 .36 .02
Net realized and unrealized
gain (loss) on investments............ .70 (.58) .29 .02
-------- -------- -------- -------
Total income (loss) from operations... 1.30 (.08) .65 .04
-------- -------- -------- -------
Distributions:
Dividends from net investment income.... (.60) (.50) (.35) (.02)
Distributions from net realized gains
on investments........................ .00 .00 (.02) .00
-------- -------- -------- -------
Total distributions................... (.60) (.50) (.37) (.02)
-------- -------- -------- -------
Net asset value, end of period.............. $ 10.42 $ 9.72 $ 10.30 $ 10.02
========= ========= ========= ========
Total return................................ 13.54% (.43)% 4.58% .45%
Ratios and supplemental data:
Net assets at end of period
(in thousands).......................... $ 23,588 $ 20,356 $ 24,864 $ 2,509
Ratio of expenses to average net assets... .78% .81% 1.00% 1.00%
Ratio of net investment income (loss) to
average net assets...................... 5.84% 4.95% 3.44% 3.24%
Portfolio turnover rate................... 51.82% 93.70% 28.64% .00%
</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 December 3, 1992. 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.
- --------------------------------------------------------------------------------
24
<PAGE> 27
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
---------- -------------
<S> <C> <C>
PREFERRED STOCKS (4.94%)
BANKING (**)
Banco Bradesco SA.................. 515,000 $ 4,481
BEVERAGES (0.23%)
Cia. Cervejaria Brahma............. 1,631,000 671,157
COMPUTER TECHNOLOGY (3.09%)
SAP AG -- Vorzug................... 58,951 8,938,835
ELECTRONICS (0.39%)
Centrais Electricas Brasileiras
SA -- Series B................... 4,124,000 1,115,542
MEDICAL (0.94%)
Fresenius AG....................... 28,680 2,725,511
RETAIL & DEPARTMENT STORES (0.29%)
Fielmann AG........................ 13,852 716,266
Lojas Americanas SA*............... 5,710,000 133,614
TELECOMMUNICATIONS (**)
Telecomunicacoes Brasileiras SA.... 14,487 697
-------------
Total Preferred Stocks
(cost: $ 10,359,395)............... 14,306,103
-------------
COMMON STOCKS (89.19%)
AEROSPACE (0.98%)
Mitsubishi Heavy Industries Ltd.... 357,000 2,849,215
APPAREL & TEXTILES (0.70%)
Fila Holding S.p.A. -- Sponsored
ADR.............................. 44,275 2,014,514
AUTOMOTIVE (3.45%)
Bajaj Auto Limited*+............... 46,150 1,182,594
Honda Motor Co., Ltd............... 177,000 3,656,033
Volkswagen AG...................... 14,512 4,863,360
Yamaha Motor Co., Ltd.............. 31,000 276,571
BANKING (8.67%)
Bangkok Bank Company Ltd........... 48,492 589,299
Chase Manhattan Corporation........ 83,175 5,042,485
Citicorp........................... 81,275 5,465,744
Dai-Ichi Kangyo Bank............... 73,000 1,437,064
First Interstate Bancorp........... 13,100 1,788,150
Grupo Financiero Inbursa, SA de
CV -- Class B*................... 1,220,025 3,562,718
HSBC Holdings PLC.................. 149,600 2,263,735
Mitsui Trust & Banking............. 122,000 1,336,889
PT Bank Dagang Nasional
Indonesia+....................... 360,500 295,945
Sakura Bank Ltd.................... 124,000 1,575,252
Sanwa Bank Ltd..................... 65,000 1,323,701
Sparbanken Sverige AB*............. 33,693 429,777
BEVERAGES (0.04%)
Erciyas Biracilik Ve Malt
Sanayii -- ADR*+................. 13,425 125,655
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
---------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
BUILDING (0.30%)
PT Semen Cibinong.................. 348,500 $ 869,724
CHEMICALS (4.04%)
Ciba-Geigy AG...................... 4,306 3,799,853
Cytec Industries, Inc.*............ 5,125 319,672
Sgl Carbon AG*+.................... 50,242 3,896,906
Takeda Chemical Industries Ltd..... 94,000 1,549,651
The Carbide/Graphite Group, Inc.*.. 63,525 913,172
Waters Corporation*................ 66,200 1,208,150
COMMERCIAL SERVICES (5.39%)
Assa Abloy AB -- Class B Free*..... 368,446 3,448,360
Grand Optical Photoservice......... 16,580 1,621,698
Medaphis Corporation*.............. 24,625 911,125
Securitas AB -- Class B Free....... 139,932 6,653,873
Sysdeco Group AS*.................. 64,791 1,775,012
Triple P nv*....................... 122,000 1,220,000
COMPUTER TECHNOLOGY (9.90%)
Cisco Systems, Inc.*............... 7,725 576,478
First Data Corporation............. 2,875 192,266
Frontec AB -- Class B *............ 2,081 60,000
General Motors Corporation -- Class
E................................ 52,650 2,737,800
Getronics nv....................... 128,647 6,019,794
Group Axime*....................... 31,683 2,444,135
JBA Holdings PLC................... 239,120 1,451,618
NTT Data Communications Systems
Company.......................... 2,700 9,085,532
Sun Microsystems, Inc.*............ 70,350 3,209,720
Technology Solutions Company*...... 63,225 1,232,888
WM-Data AB -- Class B.............. 36,475 1,651,823
CONSUMER GOODS (3.26%)
Amway Japan Ltd.................... 36,000 1,522,110
Wolters Kluwer nv.................. 83,639 7,921,389
CONTAINERS (1.51%)
Crown Cork & Seal Company, Inc.*... 104,975 4,382,707
ELECTRIC UTILITIES (0.61%)
Consolidated Electric Power Asia
Ltd. -- ADR +.................... 20,400 370,692
Consolidated Electric Power Asia
Ltd.............................. 766,750 1,393,280
ELECTRONICS (3.27%)
Canon, Inc......................... 206,000 3,735,648
Omron Corporation.................. 123,000 2,922,325
Rohm Company....................... 22,000 1,226,726
Sony Corporation................... 13,800 828,375
Sony Corporation -- ADR............ 5,475 336,028
Victor Company of Japan Ltd.*...... 34,000 431,924
ENGINEERING & CONSTRUCTION (0.05%)
New World Infrastructure*+......... 75,600 144,708
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
25
<PAGE> 28
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
---------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ENTERTAINMENT (0.36%)
TABcorp Holdings Limited........... 51,814 $ 146,508
Thorn EMI PLC...................... 37,447 881,693
FINANCE (1.28%)
Lloyds TSB Group PLC............... 285,377 1,521,970
Nordbanken AB*..................... 51,791 895,172
Sumitomo Trust & Banking........... 91,000 1,288,402
FOODS & FOOD SERVICE (3.15%)
Cultor Oy 2-Free................... 55,069 2,284,864
Cultor Oy Series 1................. 38,247 1,586,903
Huhtamaki Group -- Class I Free.... 37,423 905,750
Ito-Yokado Co...................... 24,000 1,480,217
Nutricia Vereenigde Bedrijven nv... 35,314 2,859,845
FOREST PRODUCTS & PAPER (0.12%)
Rotneros Bruks..................... 338,254 357,427
FURNITURE (0.55%)
Industrie Natuzzi S.p.A. -- ADR.... 35,025 1,589,260
HOLDING COMPANIES (7.06%)
Barco Industries nv................ 14,733 1,700,732
Citic Pacific Ltd.*................ 1,000,500 3,422,560
First Pacific Company Ltd.*........ 48,000 53,389
Grupo Carso SA de CV*.............. 261,050 1,392,519
Kinnevik AB -- Class B Free........ 438,723 13,742,174
Malbak Limited 144A -- GDR+........ 17,200 119,134
HOME FURNISHINGS (0.28%)
AMRE, Inc.*........................ 54,700 799,988
HOTEL & MOTEL (2.26%)
HFS, Inc.*......................... 79,900 6,531,826
JEWELRY & WATCHES (0.76%)
Bulgari S.p.A.*+................... 258,800 2,211,639
MANUFACTURING (0.57%)
Getinge Industrier AB -- Class B... 5,619 256,585
Orkla AS -- Class A................ 27,999 1,394,452
MEDICAL (0.75%)
Gelman Sciences, Inc.*............. 10,050 253,763
HEALTHSOUTH Corporation*........... 28,200 821,325
Scandinavian Mobility International
AS*+............................. 9,766 234,412
Takare PLC......................... 306,329 856,092
METALS (**)
SSAB Svenskt Stal AB -- Class A.... 940 9,649
OFFICE EQUIPMENT (0.72%)
Oce-Van Der Grinten nv............. 34,070 2,074,640
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
---------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
OIL & GAS (1.29%)
Petroleum Geo-Services -- ADR*..... 27,700 $ 692,500
YPF Sociedad Anonima SA --
Sponsored ADR.................... 140,975 3,048,585
PHARMACEUTICALS (12.30%)
Astra AB -- Class A Free........... 76,815 3,072,833
Eisai Company Ltd.................. 55,000 965,377
Gehe AG............................ 8,208 4,186,878
Gehe AG -- New*.................... 2,239 1,111,599
Pfizer, Inc........................ 16,600 1,045,800
Roche Holding AG................... 1,380 10,948,096
R. P. Scherer Corporation*......... 60,125 2,953,641
Sandoz AG*......................... 5,627 5,166,155
Sankyo Co. Ltd..................... 59,000 1,327,386
SmithKline Beecham -- Class A...... 167,500 1,846,420
SmithKline Beecham PLC -- ADR...... 29,825 1,655,288
Yamanouchi Pharmaceutical.......... 61,000 1,313,227
PUBLISHING (0.22%)
News Corporation Ltd............... 135,635 634,825
RADIO & TELEVISION (1.01%)
Bell Cablemedia PLC -- ADR*........ 4,675 74,800
Central European Media Enterprises
Ltd.*............................ 95,125 1,950,063
Grupo Televisa SA -- Sponsored
GDR.............................. 18,625 419,063
Heritage Media Corporation -- Class
A*............................... 13,150 336,969
Telewest PLC -- ADR*............... 5,500 132,688
REAL ESTATE (0.97%)
Mitsubishi Estate Co., Ltd......... 121,000 1,513,673
Mitsui Fudosan Co., Ltd............ 104,000 1,280,838
RETAIL & DEPARTMENT STORES (2.44%)
Credit Saison Co., Ltd............. 119,800 2,857,914
Daimaru, Inc....................... 48,000 372,379
General Nutrition Companies*....... 54,600 1,255,800
Hankyu Department Store............ 40,000 585,724
Isetan Co.......................... 85,000 1,401,280
PT Matahari Putra Prima............ 329,250 580,224
SHOES & LEATHER GOODS (0.72%)
Adidas AG*......................... 27,034 1,433,779
Gymboree Corp.*.................... 31,875 657,422
TELECOMMUNICATIONS (6.04%)
DDI Corporation.................... 388 3,010,085
Korea Mobile Telecom 144A --
GDR*+............................ 51,771 2,057,898
Millicom International Cellular
SA*.............................. 32,825 1,001,163
Nippon Telegraph & Telephone
Corporation...................... *** 1,781
Nokia AB -- K Shares............... 38,460 1,524,818
Nokia #144 -- A Shares +........... 10,000 387,248
Nynex CableComms Group*............ 11,000 191,125
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
26
<PAGE> 29
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
---------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
Paging Network, Inc.*.............. 139,400 $ 3,397,876
Telecom Argentina Stet -- France
Telecom SA -- ADR................ 1,125 53,578
Telecom Italia S.p.A............... 224,751 395,618
Telecomunicacoes Brasileiras SA --
Sponsored ADR.................... 70,479 3,393,719
Telefonica de Argentina SA -- ADR.. 73,875 2,013,095
Videotron Holdings PLC -- ADR*..... 5,500 70,125
TOBACCO PRODUCTS (2.38%)
PT Hanjaya Mandala Sampoerna*...... 661,500 6,893,040
TRANSPORTATION (1.79%)
Swissair AG*....................... 7,093 5,180,074
-------------
Total Common Stocks
(cost: $ 217,008,025).............. 258,209,222
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<S> <C> <C>
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS (3.43%)
Federal Home Loan Bank
5.40%, due 02/21/96......... $10,000,000 $ 9,920,500
-------------
Total Short-Term U.S. Government
Obligations
(cost: $ 9,920,500)........... 9,920,500
-------------
COMMERCIAL PAPER (3.76%)
General Electric Capital
Corporation
5.75%, due 01/03/96......... 5,000,000 4,996,806
Ford Motor Co.
5.75%, due 01/02/96......... 5,900,000 5,897,172
-------------
Total Commercial Paper
(cost: $ 10,893,978).......... 10,893,978
-------------
Total Investment Securities
(cost: $ 248,181,898)....... $ 293,329,803
==============
SUMMARY
Investments at value.......... 101.32 % $ 293,329,803
Liabilities in Excess
of Other Assets............. (1.32)% (3,824,156)
-------- -------------
Net Assets.................... 100.00 % $ 289,505,647
-------- -------------
-------- -------------
INVESTMENTS BY COUNTRY
Size of investment is indicated as a percentage of total
portfolio net assets.
<CAPTION>
MARKET VALUE PERCENTAGE
------------- ----------
<S> <C> <C>
Australia........................ $ 781,332 0.27%
Belgium.......................... 1,700,732 0.59%
Brazil........................... 1,925,504 0.67%
Denmark.......................... 234,412 0.08%
Finland.......................... 6,689,582 2.31%
France........................... 4,065,835 1.40%
Germany.......................... 27,873,130 9.63%
Hong Kong........................ 7,277,670 2.51%
Indonesia........................ 8,638,931 2.98%
Italy............................ 2,607,256 0.90%
Japan............................ 51,155,300 17.67%
Mexico........................... 4,955,236 1.71%
Netherlands...................... 18,875,664 6.52%
Norway........................... 3,169,464 1.09%
Sweden........................... 30,577,670 10.57%
Switzerland...................... 25,094,177 8.67%
Thailand......................... 589,299 0.20%
United Kingdom................... 6,557,803 2.27%
United States.................... 86,736,650 29.96%
------------- ----------
Total.......................... $ 289,505,647 100.00%
------------- ----------
------------- ----------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* No income dividends were paid during the preceding twelve months.
** Industry percentage is less than .01%.
*** Less than one share held.
+ Securities are registered pursuant to rule 144A and may be deemed to be
restricted for resale.
ADR American Depository Receipt
GDR Global Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
27
<PAGE> 30
WRL SERIES FUND, INC.
GLOBAL 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]
Preferred Stocks 4.94%
Automotive 3.45%
Banking 8.67%
Chemicals 4.04%
Commercial Services 5.39%
Computer Technology 9.90%
Consumer Goods 3.26%
Electronics 3.27%
Foods & Food Service 3.15%
Holding Companies 7.06%
Hotel & Motel 2.26%
Pharmaceuticals 12.30%
Retail & Department Stores 2.44%
Telecommunications 6.04%
Tobacco Products 2.38%
Short-Term U.S. Government Obligations 3.43%
Commercial Paper 3.76%
Other 14.26%
Several European markets posted records last year, but few kept pace with the
U.S. rally, at least when measured in U.S. dollars. In the Pacific Rim, the
Japanese recession continued into year end, though signs of strength emerged in
the second half of the year. Domestically, in the history of U.S. financial
markets it's hard to find a better environment than existed in 1995. Low
interest rates, low inflation, and excellent corporate earnings fueled a broad
market advance, and both equities and fixed-income securities produced some of
the best results of the last fifty years. Despite the sharp pullback in
technology and telecommunications sectors -- market leaders for much of the
year -- the advance continued through the fourth quarter. Returns did not,
however, maintain the blistering pace set in the previous nine months.
In this environment, the Global Portfolio gained 23.06% for the year ended
December 31, 1995. By comparison, the Morgan Stanley Capital International World
Index rose 21.28%. Both returns are with dividends reinvested.
Even though key European interest rates fell in 1995, on the whole, rates
remained stubbornly higher. As a result, returns in the larger markets like
Germany, France and the UK were kept in check. Nevertheless, the potential of
our European growth stocks, especially in the pharmaceuticals, medical, and
printing areas, remain compelling. Both Roche Holding AG and SmithKline Beecham
enjoy strong balance sheets, excellent earnings growth, and profitable product
lines, and sell at lower price/earnings multiples than similar growth stories in
the U.S. Wolters Kluwer nv is also building market franchise through
acquisitions of professional printing and publishing companies worldwide. In
Germany, Fresenius AG (medical products), Fielmann AG (retailing), Gehe AG
(pharmaceuticals), and SAP AG (software) contributed to portfolio returns.
Swedish stocks that appreciated included Assa Abloy AB (locks and security
devices) and Sparbanken Sverige AB (banking), which had substantial gains.
Elsewhere, DDI Corporation, an independent Japanese long-distance provider and
cellular operator, should profit from consumer enthusiasm for cellular
communications in Japan, where the cellular market is still in the early stages.
On the domestic front, the Global Portfolio had a number of standouts during the
quarter. HFS, Inc. is the franchisor of many popular hotel and motel chains,
including Howard Johnson's, Ramada, and Super 8. The company recently acquired
real estate broker Century 21, and is applying the same profitable cross-selling
strategy it uses in its hotel business to the residential real estate market.
One of the new acquisitions, AMRE, Inc., provides an example of the HFS
strategy. AMRE contracts with Sears to do home remodeling and now has entered
into an agreement with HFS for referrals from Century 21's customer base.
Another outstanding performer during the quarter was Sun Microsystems, Inc.,
which appreciated earlier in the year, only to give back some of its gains in
the fourth quarter. Sun remains a significant holding, however, because it has
an excellent product line including commercial workstations and networks used in
conjunction with the Internet. Sun also has a new computer language called JAVA
that, though still in the testing phase, is already getting a lot of attention
from software developers.
In the U.S., while I expect increased volatility in the equity markets in 1996,
moderate economic growth and low interest rates should create a favorable
environment for stocks. Market volatility can also have the positive effect of
creating buying opportunities and increasing demand for high-quality stocks that
have more predictable earnings streams. Additionally, as foreign markets and
economies continue to deregulate and open to global investment, new and exciting
opportunities should increase. Most mature economies are experiencing moderate
growth, low inflation, and stable interest rates, which provide a positive
environment for equities, and many developing economies are working to attain a
similar climate. Over time, these efforts should continue to create exciting
markets.
<TABLE>
<S> <C>
(LOGO) /s/ Helen Young Hayes
(1)THE JANUS SYMBOL IS A ------------------------
REGISTERED SERVICE MARK OF JANUS Helen Young Hayes
CAPITAL CORPORATION Global Portfolio Manager
</TABLE>
- --------------------------------------------------------------------------------
28
<PAGE> 31
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 227,367,420)...................... $ 272,515,325
Short-term securities, at amortized cost.... 20,814,478
Cash........................................ 38,780
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 4,054,102
Interest.................................. 0
Dividends................................. 12,654
Foreign receivable........................ 58,674
Foreign currency contracts................ 3,298,068
Other..................................... 87
-----------------
Total assets............................ 300,792,168
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 8,387,330
Accounts payable and accrued liabilities:
Due to foreign sub-custodian.............. 740,629
Investment advisory fees.................. 178,818
Dividends to shareholders................. 0
Other fees................................ 103,840
Foreign payable........................... 0
Foreign currency contracts................ 1,875,904
-----------------
Total liabilities....................... 11,286,521
-----------------
Total net assets...................... $ 289,505,647
===================
NET ASSETS:
Capital stock
($ .01 par value 100,000,000
authorized)............................... $ 186,589
Additional paid-in capital.................. 242,913,688
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... (803,810)
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. 610,600
Net unrealized appreciation (depreciation)
on:
Investment securities................... 45,147,905
Foreign currency transactions........... 1,450,675
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 289,505,647
===================
Shares outstanding at December 31, 1995..... 18,658,875
===================
Net asset value per share................... $ 15.52
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest.................................... $ 1,479,551
Dividends (net of foreign tax of
$ 410,348)................................ 3,020,313
-----------------
Total investment income............... 4,499,864
-----------------
EXPENSES:
Investment advisory fees.................... 2,075,054
Printing and shareholder reports............ 88,269
Custodian fees.............................. 286,847
Legal fees.................................. 4,414
Auditing and accounting fees................ 19,864
Directors fees.............................. 4,495
Other fees.................................. 88,562
-----------------
Total expenses........................ 2,567,505
Less:
Advisory fee waiver and expense
reimbursement........................... 0
Fees paid indirectly...................... 8,905
-----------------
Net expenses.......................... 2,558,600
-----------------
Net investment income (loss)................ 1,941,264
-----------------
Net realized gain (loss) on:
Investment securities................... 12,447,015
Foreign currency transactions........... (4,190,026)
-----------------
Total net realized gain (loss)........ 8,256,989
-----------------
Change in unrealized appreciation
(depreciation) on:
Investment securities................... 41,005,180
Foreign currency transactions........... 2,676,925
-----------------
Total change in unrealized
appreciation (depreciation)......... 43,682,105
-----------------
Net gain (loss) on investments.......... 51,939,094
-----------------
Net increase (decrease) in net assets
resulting from operations................. $ 53,880,358
===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
29
<PAGE> 32
WRL SERIES FUND, INC.
GLOBAL 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)............................................................ $ 1,941,264 $ 1,463,813
Net realized gain (loss) on investments and foreign currency transactions............... 8,256,989 8,122,174
Change in unrealized appreciation (depreciation) on investments and foreign
currency transactions................................................................. 43,682,105 (10,790,715)
----------------- -----------------
Net increase (decrease) in net assets resulting from operations....................... 53,880,358 (1,204,728)
----------------- -----------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income................................................................... 0 (1,463,813)
In excess of net investment income...................................................... 0 (133,574)
Net realized gains...................................................................... (11,272,429) (8,229,252)
In excess of net realized gains......................................................... 0 (430,412)
----------------- -----------------
Total distributions................................................................... (11,272,429) (10,257,051)
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares....................................................... 33,603,270 171,489,373
Dividends and distributions reinvested.................................................. 11,272,429 10,257,051
Cost of shares repurchased.............................................................. (59,756,345) (7,600,214)
----------------- -----------------
Increase (decrease) in net assets from capital shares transactions.................... (14,880,646) 174,146,210
----------------- -----------------
Net increase (decrease) in net assets................................................. 27,727,283 162,684,431
NET ASSETS:
Beginning of period..................................................................... 261,778,364 99,093,933
----------------- -----------------
End of period........................................................................... $ 289,505,647 $ 261,778,364
=================== ===================
Undistributed net investment income................................................... $ (803,810) $ 0
=================== ===================
SHARE ACTIVITY:
Shares outstanding - beginning of period................................................ 19,954,849 7,275,408
----------------- -----------------
Shares issued........................................................................... 2,319,062 12,454,611
Shares issued - reinvestment of dividends and distributions............................. 726,386 781,173
Shares redeemed......................................................................... (4,341,422) (556,343)
----------------- -----------------
Increase (decrease) in shares outstanding............................................... (1,295,974) 12,679,441
----------------- -----------------
Shares outstanding - end of period...................................................... 18,658,875 19,954,849
=================== ===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
30
<PAGE> 33
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
[COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND,
INC. GLOBAL PORTFOLIO AND THE MORGAN STANELY CAPITAL INTERNATIONAL WORLD INDEX]
[GRAPH]
FINANCIAL HIGHLIGHTS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------
1995 1994 1993 1992+
--------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 13.12 $ 13.62 $ 10.16 $ 10.00
Income from operations:
Net investment income (loss)....................... .10 .10 .04 (.02)
Net realized and unrealized
gain (loss) on investments....................... 2.91 .10 3.72 .18
--------- --------- -------- -------
Total income (loss) from operations.............. 3.01 .20 3.76 .16
--------- --------- -------- -------
Distributions:
Dividends from net investment income............... .00 (.10) (.04) .00
Dividends in excess of net investment income....... .00 (.01) .00 .00
Distributions from net realized gains
on investments................................... (.61) (.56) (.26) .00
Distributions in excess of net realized gains
on investments................................... .00 (.03) .00 .00
--------- --------- -------- -------
Total distributions.............................. (.61) (.70) (.30) .00
--------- --------- -------- -------
Net asset value, end of period......................... $ 15.52 $ 13.12 $ 13.62 $ 10.16
========== ========== ========= ========
Total return........................................... 23.06% .25% 35.05% 1.62%
Ratios and supplemental data:
Net assets at end of period
(in thousands)..................................... $ 289,506 $ 261,778 $ 99,094 $ 508
Ratio of expenses to average net assets.............. .99% 1.01% 1.09% 2.48%
Ratio of net investment income (loss)
to average net assets.............................. .75% .73% .30% (2.23)%
Portfolio turnover rate.............................. 130.60% 192.06% 79.93% .00%
</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 December 3, 1992. 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.
Foreign securities involve special risks described in the prospectus that should
be considered carefully before investing.
- --------------------------------------------------------------------------------
31
<PAGE> 34
WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (6.20%)
U.S. Treasury Notes
7.50%, due 01/31/96............. $ 2,500,000 $ 2,504,725
U.S. Treasury Notes
6.13%, due 05/31/97............. 4,300,000 4,353,234
U.S. Treasury Notes
6.00%, due 11/30/97............. 4,500,000 4,564,395
U.S. Treasury Notes
5.88%, due 05/31/96............. 4,500,000 4,511,565
-------------
Total U.S. Government Obligations
(cost: $ 15,861,466).............. 15,933,919
-------------
CORPORATE DEBT SECURITIES (12.29%)
BANKING (1.27%)
First Union Corporation
7.25%, due 02/15/03............. 2,600,000 2,746,250
Norwest Financial, Inc.
6.20%, due 09/15/99............. 505,000 512,575
BEVERAGES (0.16%)
PepsiCo, Inc.
7.88%, due 08/15/96............. 409,000 415,135
CHEMICALS (0.57%)
M.A. Hanna Company
9.38%, due 09/15/03............. 1,250,000 1,462,500
ELECTRIC UTILITIES (0.52%)
Potomac Electric Power Company
5.00%, due 09/01/02............. 1,400,000 1,330,000
ELECTRONICS (0.90%)
Avnet, Inc.
6.88%, due 03/15/04............. 2,199,000 2,314,448
FOODS & FOOD SERVICE (0.40%)
Dole Food Company
6.75%, due 07/15/00............. 1,000,000 1,016,250
INSURANCE (1.03%)
Torchmark Corporation
8.63%, due 03/01/17............. 2,500,000 2,637,500
MEDICAL (0.24%)
Meditrust Corporation
6.88%, due 11/15/98............. 600,000 609,000
OIL & GAS (2.87%)
Dresser Industries, Inc.
6.25%, due 06/01/00............. 1,100,000 1,116,500
Oneok, Inc.
9.75%, due 12/01/20............. 1,000,000 1,218,750
Transcontinental Gas Power &
Light Company
9.13%, due 02/01/17............. 4,800,000 5,046,000
RAILROADS (1.18%)
Union Pacific Corporation
6.25%, due 03/15/99............. 3,000,000 3,030,000
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
<S> <C> <C>
CORPORATE DEBT SECURITIES (CONTINUED)
RETAIL & DEPARTMENT STORES (2.29%)
May Department Stores Company
10.75%, due 06/15/18............ $ 75,000 $ 80,250
May Department Stores Company
9.13%, due 12/01/16............. 5,500,000 5,802,500
TELECOMMUNICATIONS (0.44%)
GTE Corporation
10.75%, due 09/15/17............ 1,000,000 1,123,750
TOBACCO PRODUCTS (0.42%)
RJR Nabisco, Inc.
8.30%, due 04/15/99............. 1,000,000 1,068,750
-------------
Total Corporate Debt Securities
(cost: $ 31,135,399).............. 31,530,158
-------------
CONVERTIBLE BONDS (2.11%)
COMPUTER TECHNOLOGY (1.10%)
Danka Business Systems PLC+
6.75%, due 04/01/02............. 2,000,000 2,830,000
INSURANCE (1.01%)
American Travellers Corporation
6.50%, due 10/01/05............. 1,900,000 2,600,625
-------------
Total Convertible Bonds
(cost: $ 3,900,000)............... 5,430,625
-------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS (7.98%)
FINANCE (1.02%)
Time Warner Financing............. 83,500 $ 2,609,375
FOREST PRODUCTS & PAPER (2.27%)
International Paper Company....... 49,000 2,192,750
James River Corporation of
Virginia -- Series P............ 78,800 3,654,350
OIL & GAS (1.20%)
Valero Energy Corporation......... 60,000 3,090,000
TOBACCO PRODUCTS (1.74%)
RJR Nabisco Holdings Corp. -
Series C........................ 700,000 4,462,500
TRANSPORTATION (1.75%)
Laidlaw One, Inc.................. 174,000 4,502,250
-------------
Total Convertible Preferred Stocks
(cost: $ 19,611,053).............. 20,511,225
-------------
COMMON STOCKS (66.83%)
AEROSPACE (1.30%)
Raytheon Company.................. 70,800 3,345,300
APPAREL & TEXTILES (0.91%)
Intimate Brands, Inc.............. 156,000 2,340,000
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
32
<PAGE> 35
WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
BANKING (1.47%)
Mellon Bank Corporation........... 70,000 $ 3,762,500
BEVERAGES (1.72%)
Adolph Coors Company - Class B.... 200,000 4,425,000
BUILDING (1.39%)
Sherwin-Williams Company.......... 87,700 3,573,775
CHEMICALS (7.80%)
E. I. Dupont De Nemours &
Company......................... 46,000 3,214,250
Lawter International, Inc. ....... 337,500 3,923,438
Loctite Corporation............... 74,500 3,538,750
M.A. Hanna Company................ 101,650 2,846,200
Nalco Chemical Company............ 130,100 3,919,263
Olin Corporation.................. 35,000 2,598,750
COMMERCIAL SERVICES (1.18%)
Olsten Corporation................ 76,700 3,029,650
COMPUTER TECHNOLOGY (1.97%)
Danka Business Systems
PLC - ADR....................... 41,900 1,550,300
Hewlett-Packard Company........... 42,000 3,517,500
CONSUMER GOODS (0.79%)
Colgate-Palmolive Company......... 28,700 2,016,175
ELECTRONICS (6.72%)
AMP, Inc. ........................ 77,000 2,954,875
Duracell International, Inc. ..... 70,000 3,622,500
Emerson Electric Company.......... 32,000 2,616,000
General Electric Company.......... 60,000 4,320,000
National Service Industries....... 114,800 3,716,650
ENTERTAINMENT (1.36%)
Walt Disney Company............... 59,400 3,504,600
ENVIRONMENTAL SERVICES (1.79%)
WMX Technologies, Inc. ........... 154,100 4,603,738
FINANCE (2.25%)
Federal National Mortgage
Association..................... 20,000 2,482,500
H&R Block, Inc. .................. 81,100 3,284,550
FOODS & FOOD SERVICE (5.07%)
H.J. Heinz Company................ 157,500 5,217,188
Kellogg Company................... 60,000 4,635,000
Philip Morris Companies, Inc. .... 35,000 3,167,500
HOLDING COMPANIES (1.51%)
Hanson PLC - ADR.................. 255,000 3,888,750
LEISURE (1.23%)
Callaway Golf Company............. 140,000 3,167,500
MACHINERY (1.05%)
Acme-Cleveland Corporation........ 143,600 2,692,500
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING (3.62%)
Stewart & Stevenson Services,
Inc............................. 105,000 $ 2,651,250
Thomas & Betts Corporation........ 33,600 2,478,000
Tyco International Ltd. .......... 117,000 4,168,125
MEDICAL (3.07%)
Columbia/HCA Healthcare
Corporation..................... 69,400 3,522,050
C.R. Bard, Inc. .................. 135,000 4,353,750
MINING (0.98%)
Freeport McMoRan, Inc............. 68,000 2,516,000
OIL & GAS (6.53%)
Amoco Corporation................. 60,700 4,362,812
Atlantic Richfield Company........ 34,000 3,765,500
Exxon Corporation................. 57,400 4,599,175
Mobil Corporation................. 35,900 4,020,800
PHARMACEUTICALS (3.28%)
Pharmacia & Upjohn, Inc........... 122,525 4,747,843
Schering-Plough Corp.............. 67,000 3,668,250
PHOTOGRAPHY (1.64%)
Eastman Kodak Company............. 62,900 4,214,300
PUBLISHING (1.81%)
A.H. Belo Corp. - Class A......... 133,800 4,649,550
REAL ESTATE (1.99%)
Crescent Real Estate Equities,
Inc. ........................... 70,600 2,409,225
Storage USA, Inc.................. 82,500 2,691,562
RETAIL & DEPARTMENT STORES (1.89%)
Home Depot, Inc. ................. 51,612 2,470,924
J.C. Penney Company, Inc. ........ 50,000 2,381,250
TELECOMMUNICATIONS (2.51%)
Airtouch Communications, Inc.*.... 105,400 2,977,550
Alltel Corporation................ 117,900 3,478,050
-------------
Total Common Stock
(cost: $ 142,291,835)............. 171,600,668
-------------
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
SHORT-TERM OBLIGATION (5.38%)
Salomon Brothers**
5.38%, Repurchase Agreement
dated 12/29/95 to be
repurchased at $ 13,826,791
on 01/02/96..................... $ 13,818,539 $ 13,818,539
-------------
Total Short-Term Obligation
(cost: $ 13,818,539).......................... 13,818,539
-------------
Total Investment Securities
(cost: $ 226,618,292)......................... $ 258,825,134
==============
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
33
<PAGE> 36
WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
SUMMARY
Investments at value............ 100.79 % $ 258,825,134
Liabilities in Excess
of Other Assets............... (0.79)% (2,019,464)
-------- -------------
Net Assets...................... 100.00 % $ 256,805,670
-------- -------------
-------- -------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* No income dividends were paid during the preceding twelve months.
** Collateralized by $ 13,179,854 Treasury Bill zero coupon due 06/13/96 and
$ 1,284,560 Treasury Bill zero coupon due 06/06/96; market value and
accrued interest aggregated $ 12,875,399 and $ 1,256,043 respectively for
this collateral at December 31, 1995.
+ Securities are registered pursuant to rule 144A and may be deemed to be
restricted for resale.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
34
<PAGE> 37
WRL SERIES FUND, INC.
EQUITY-INCOME 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]
<TABLE>
<S> <C>
U.S. Government Obligations 6.20%
Corporate Debt Securities 12.29%
Convertible Bonds 2.11%
Convertible Preferred Stocks 7.98%
Chemicals 7.80%
Electronics 6.72%
Finance 2.25%
Foods & Food Service 5.07%
Manufacturing 3.62%
Medical 3.07%
Oil & Gas 6.53%
Pharmaceuticals 3.28%
Telecommunications 2.51%
Short-Term Obligation 5.38%
Other 25.19%
</TABLE>
The Equity-Income Portfolio, with its objective of growth and income generation,
invests in common stocks, convertible securities, intermediate-term government
and corporate bonds, and cash. For the year ended December 31, 1995, the
Equity-Income Portfolio gained 24.66%. By comparison, the Standard & Poor's
Index of 500 Common Stocks index rose 37.58% and the Lehman Brothers
Government/Corporate Intermediate Bond Index advanced 15.3% for the
corresponding period. At year end, the asset mix for the Portfolio was 66.8%
stocks, 10.1% convertible securities, 12.3% corporate bonds, 6.2% U.S. Treasury
bonds, and 4.6% cash equivalents.
The strong returns from financial assets continued through the third and fourth
calendar quarter, leaving 1995 with the best total return from the S&P 500 since
1958. The sectors leading the market shifted dramatically in the fourth quarter.
As signs of a slowing economy persisted, investors moved towards companies with
the ability to generate consistent growth in a more difficult economic
environment. This shift favored the healthcare, consumer non-durable, financial,
and energy sectors. Technology, retail, consumer cyclicals, and basic industry
sectors fared poorly as the level and sustainability of their earnings growth
became more uncertain. These trends benefitted the Portfolio as we had begun to
emphasize the more consistent sectors early in the third quarter. New holdings
or rising weightings in these sectors included H.J. Heinz Company, Columbia/HCA
Healthcare Corporation, Pharmacial, Upjohn, Inc. and Federal National Mortgage
Association.
The second half also witnessed a rotation back into larger capitalization
stocks. After outpacing the S&P 500 in the third quarter, the Russell 2000 Index
lagged substantially in the fourth quarter, with a 2.2% gain versus the S&P
500's 6.0% advance. This shift resulted in the smaller-company indexes like the
Russell 2000 and even the technology-laden NASDAQ Composite lagging the S&P 500
for the year. During the period, we held several larger growth companies like
General Electric Company, Kellogg Company, and Philip Morris Companies, Inc., as
well as several undergoing restructuring such as Eastman Kodak Company, Colgate-
Palmolive Company, H&R Block, Inc., and Hanson PLC.
Our discipline emphasizes sustainable unit growth over cost cutting that can
temporarily buoy earnings growth. We believe the medium-sized growth companies
with above-average growth prospects and lower valuations are more attractive
than many larger companies. We also believe the record level of merger and
acquisition activity and readily available credit will continue to result in
business combinations at above-market prices for the strong franchise companies
we identify.
With our objective of generating a current yield above that of the S&P 500, less
than 1% of the holdings in the Portfolio pay no dividends. We are underweighted
in technology because of the lack of dividends and because heading into the
second half of 1995, our assessment was this sector was expensive in relation to
historical valuations. This sector has indeed corrected severely in the fourth
quarter, and our small sector holding allowed us to avoid the large price
declines suffered by even the leading companies in that area.
With investor expectations at elevated levels, the uncertainty created by the
presidential race, the budget, the level of corporate profit growth, and the
unknown extent of the economic slowdown, we forecast an increase in the stock
market's volatility in 1996. The Equity-Income Portfolio remains focused on
stocks of companies with strong balance sheets, established market shares within
their industries, and high and sustainable profitability levels. Investing in
fundamentally sound companies and avoiding overvalued sectors of the market will
play a larger role in the returns available to investors during 1996.
<TABLE>
<S> <C> <C> <C>
[LKCM LOGO] /s/ Luther King /s/ Scot C. Hollmann /s/ Patrick Clegg
--------------- -------------------- -----------------
Luther King Scot C. Hollmann Patrick Clegg
Equity-Income Portfolio Managers
</TABLE>
- --------------------------------------------------------------------------------
35
<PAGE> 38
WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 212,799,753)...................... $ 245,006,595
Short-term securities, at amortized cost.... 13,818,539
Cash........................................ 0
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 0
Interest.................................. 851,347
Dividends................................. 410,032
Foreign receivable........................ 3,680
Other..................................... 0
-----------------
Total assets............................ 260,090,193
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 3,070,975
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 160,589
Dividends to shareholders................. 0
Other fees................................ 52,959
-----------------
Total liabilities....................... 3,284,523
-----------------
Total net assets...................... $ 256,805,670
===================
NET ASSETS:
Capital stock
($ .01 par value 100,000,000
authorized)............................... $ 199,625
Additional paid-in capital.................. 223,831,232
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 17,969
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. 550,002
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 32,206,842
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 256,805,670
===================
Shares outstanding at December 31, 1995..... 19,962,450
===================
Net asset value per share................... $ 12.86
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest.................................... $ 3,523,806
Dividends (net of foreign tax of
$ 19,256)................................. 5,094,751
-----------------
Total investment income............... 8,618,557
-----------------
EXPENSES:
Investment advisory fees.................... 1,746,022
Printing and shareholder reports............ 67,478
Custodian fees.............................. 33,309
Legal fees.................................. 3,354
Auditing and accounting fees................ 14,535
Directors fees.............................. 3,426
Other fees.................................. 33,298
-----------------
Total expenses........................ 1,901,422
Less:
Advisory fee waiver and expense
reimbursement........................... 0
Fees paid indirectly...................... 11
-----------------
Net expenses.......................... 1,901,411
-----------------
Net investment income (loss)................ 6,717,146
-----------------
Net realized gain (loss) on:
Investment securities................... 9,894,197
Change in unrealized appreciation
(depreciation) on:
Investment securities................... 31,505,904
-----------------
Net gain (loss) on investments.......... 41,400,101
-----------------
Net increase (decrease) in net assets
resulting from operations................. $ 48,117,247
===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
36
<PAGE> 39
WRL SERIES FUND, INC.
EQUITY-INCOME 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).......................................................... $ 6,717,146 $ 4,099,175
Net realized gain (loss) on investments............................................... 9,894,197 (2,641,183)
Change in unrealized appreciation (depreciation) on investments....................... 31,505,904 (1,894,090)
----------------- -------------------
Net increase (decrease) in net assets resulting from operations..................... 48,117,247 (436,098)
----------------- -------------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income................................................................. (6,700,560) (4,097,792)
Net realized gains.................................................................... (6,702,504) 0
----------------- -------------------
Total distributions................................................................. (13,403,064) (4,097,792)
----------------- -------------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares..................................................... 49,617,709 102,858,390
Dividends and distributions reinvested................................................ 13,403,064 4,097,792
Cost of shares repurchased............................................................ (24,796,488) (9,115,514)
----------------- -------------------
Increase (decrease) in net assets from capital shares transactions.................. 38,224,285 97,840,668
----------------- -------------------
Net increase (decrease) in net assets............................................... 72,938,468 93,306,778
NET ASSETS:
Beginning of period................................................................... 183,867,202 90,560,424
----------------- -------------------
End of period......................................................................... $ 256,805,670 $ 183,867,202
=================== ====================
Undistributed net investment income................................................. $ 17,969 $ 1,383
=================== ====================
SHARE ACTIVITY:
Shares outstanding - beginning of period.............................................. 16,863,575 8,060,755
----------------- -------------------
Shares issued......................................................................... 4,064,325 9,254,687
Shares issued - reinvestment of dividends and distributions........................... 1,059,083 379,699
Shares redeemed....................................................................... (2,024,533) (831,566)
----------------- -------------------
Increase (decrease) in shares outstanding............................................. 3,098,875 8,802,820
----------------- -------------------
Shares outstanding - end of period.................................................... 19,962,450 16,863,575
=================== ====================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
37
<PAGE> 40
WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Comparison of change in value of $10,000 investment in the WRL Series Fund,
Inc. Equity-Income Portfolio, the Standard & Poor's index of 500 Common Stock
and Lehman Brothers Government/Corporate Intermediate Bond Index
[GRAPH]
FINANCIAL HIGHLIGHTS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------
1995 1994 1993+
--------- --------- --------
<S> <C> <C> <C>
Net asset value, beginning of period........................... $ 10.90 $ 11.23 $ 10.00
Income from operations:
Net investment income (loss)............................... .37 .31 .19
Net realized and unrealized
gain (loss) on investments............................... 2.33 (.33) 1.33
--------- --------- --------
Total income (loss) from operations...................... 2.70 (.02) 1.52
--------- --------- --------
Distributions:
Dividends from net investment income....................... (.37) (.31) (.19)
Distributions from net realized gains
on investments........................................... (.37) .00 (.10)
--------- --------- --------
Total distributions...................................... (.74) (.31) (.29)
--------- --------- --------
Net asset value, end of period................................. $ 12.86 $ 10.90 $ 11.23
========== ========== =========
Total return................................................... 24.66% (.53)% 13.49%
Ratios and supplemental data:
Net assets at end of period
(in thousands)............................................. $ 256,806 $ 183,867 $ 90,560
Ratio of expenses to average net assets...................... .87% .89% 1.00%
Ratio of net investment income (loss)
to average net assets...................................... 3.07% 2.78% 1.70%
Portfolio turnover rate...................................... 52.59% 53.50% 27.41%
</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 March 1, 1993. 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.
- --------------------------------------------------------------------------------
38
<PAGE> 41
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS (96.53%)
APPAREL & TEXTILES (2.33%)
Fila Holding S.p.A. - Sponsored
ADR............................. 20,000 $ 910,000
Gadzooks, Inc.*................... 10,000 252,500
Liz Claiborne, Inc................ 27,000 749,250
Nautica Enterprises, Inc.*........ 20,000 875,000
Quiksilver, Inc.*................. 19,100 652,981
St. John Knits, Inc. ............. 22,000 1,168,750
Tommy Hilfiger Corporation*....... 50,000 2,118,750
BANKING (4.62%)
Bank of Boston Corporation........ 65,000 3,006,250
Baybanks, Inc. ................... 25,000 2,456,250
City National Corporation......... 40,000 560,000
Coast Savings Financial, Inc.*.... 27,400 948,725
Cullen/Frost Bankers, Inc. ....... 20,000 1,000,000
First American Corporation........ 20,000 947,500
First Bank System, Inc. .......... 15,000 744,375
MBNA Corporation.................. 15,000 553,125
Mercantile Bancorporation......... 25,000 1,150,000
North Fork Bancorporation, Inc.... 20,000 505,000
Peoples Heritage Financial
Group, Inc...................... 25,000 568,750
Star Banc Corporation............. 15,000 892,500
BEVERAGES (0.19%)
Coca-Cola Enterprises, Inc. ...... 20,000 535,000
BIO-TECHNOLOGY (0.18%)
Quintiles Transnational
Corporation*.................... 12,500 512,500
BUILDING (1.09%)
Beazer Homes USA, Inc.*........... 20,000 412,500
Centex Corporation................ 25,000 868,750
Granite Construction, Inc......... 26,600 837,900
Toll Brothers, Inc.*.............. 45,000 1,035,000
CHEMICALS (2.25%)
Agrium, Inc....................... 20,000 900,000
Albemarle Corporation............. 30,000 581,250
B.F. Goodrich Company............. 20,000 1,362,500
FMC Corporation*.................. 5,000 338,125
Hercules, Inc. ................... 15,000 845,625
IMC Global, Inc. ................. 60,000 2,452,500
COMMERCIAL SERVICES (3.72%)
Accustaff, Inc.*.................. 15,000 660,000
Alternative Resources
Corporation*.................... 20,000 605,000
Cambridge Technology Partners,
Inc.*........................... 15,000 862,500
Corestaff, Inc.*.................. 4,000 146,000
Corrections Corporation
of America*..................... 60,000 2,227,500
Equifax, Inc...................... 70,000 1,496,250
HA-LO Industries, Inc.*........... 10,000 307,500
Health Mgmt Systems, Inc.*........ 20,000 780,000
Interpublic Group of
Companies, Inc. ................ 20,000 867,500
Measurex Corp. ................... 25,000 706,250
Medaphis Corporation*............. 21,800 806,600
National Media Corporation*....... 15,000 315,000
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
COMMERCIAL SERVICES (CONTINUED)
Oxford Resources Corp - Class
A*.............................. 35,000 $ 787,500
Sitel Corp.*...................... 5,000 153,125
COMPUTER TECHNOLOGY (15.40%)
3Com Corporation*................. 35,000 1,631,875
America Online, Inc.* ............ 35,000 1,312,500
Aspen Technology, Inc.*........... 15,000 506,250
Bay Networks, Inc.*............... 60,000 2,467,500
Cabletron Systems, Inc.*.......... 15,000 1,215,000
Cadence Design Systems, Inc.*..... 67,500 2,835,000
Ceridian Corporation*............. 10,000 412,500
Ciber, Inc.*...................... 8,000 187,000
CKS Group, Inc.*.................. 5,000 195,000
Clarify, Inc.*.................... 5,000 150,000
Cycare Systems, Inc.*............. 15,500 397,188
Dell Computer Corporation*........ 50,000 1,731,250
Discreet Logic, Inc.*............. 9,600 240,000
Global Village Communication*..... 25,000 484,375
HBO & Company..................... 60,000 4,597,500
HPR, Inc.*........................ 5,000 150,625
IDX Systems Corporation*.......... 5,000 173,750
Informix Corporation*............. 50,000 1,500,000
Inso Corporation*................. 10,800 459,000
Kronos, Inc.*..................... 15,400 731,500
McAfee Associates, Inc.*.......... 50,000 2,193,750
Medic Computer Systems, Inc.*..... 35,000 2,117,500
Meta-Software, Inc.*.............. 2,000 33,500
MetaTools, Inc.*.................. 5,000 130,000
Micros Systems, Inc.*............. 19,500 960,375
Mylex Corporation*................ 40,000 765,000
National Data Corporation......... 30,000 742,500
Netscape Communications
Corporation*.................... 5,000 695,000
Network Appliance, Inc.*.......... 3,600 144,450
Network General Corporation*...... 20,000 667,500
Oracle Systems Corporation*....... 15,000 635,625
Pairgain Technologies, Inc.*...... 22,500 1,231,875
Parametric Technology Company*.... 25,000 1,662,500
PeopleSoft, Inc.*................. 30,000 1,290,000
Pixar, Inc.*...................... 1,400 40,425
Premenos Technology
Corporation*.................... 3,000 79,125
PRI Automation, Inc.*............. 20,000 702,500
Project Software & Development,
Inc.*........................... 20,000 697,500
Pure Software, Inc.*.............. 6,000 193,500
Quarterdeck Corporation*.......... 30,000 825,000
RadiSys Corporation*.............. 10,000 117,500
Reynolds & Reynolds Company -
Class A......................... 30,000 1,166,250
ROSS Technology, Inc.*............ 6,000 58,500
Scopus Technology, Inc.*.......... 2,500 63,125
Security Dynamics Technologies,
Inc.*........................... 12,500 681,250
Structural Dynamics Research
Corporation*.................... 20,000 587,500
Sun Microsystems, Inc.*........... 55,000 2,509,375
Sungard Data Systems, Inc.*....... 40,000 1,140,000
Sync Research, Inc.*.............. 2,500 113,125
UUNET Technologies, Inc.*......... 10,000 630,000
Visio Corporation*................ 5,000 141,250
Zoran Corporation*................ 3,000 62,250
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
39
<PAGE> 42
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
COSMETICS (0.09%)
Thermolase Corporation*........... 10,000 $ 258,750
ELECTRONICS (9.25%)
Allen Group, Inc.................. 30,000 671,250
Altera Corporation*............... 25,000 1,243,750
Analog Devices, Inc.*............. 25,000 884,375
Atmel Corporation*................ 25,000 559,375
BMC Industries, Inc. ............. 20,000 465,000
C-Cube Microsystems, Inc.*........ 45,000 2,812,500
Cyberoptics Corporation*.......... 35,000 1,391,250
Harman International
Industries, Inc. ............... 25,000 1,003,125
Input/Output, Inc.*............... 40,000 2,310,000
International Rectifier
Corporation*.................... 50,000 1,250,000
Jabil Circuit, Inc.*.............. 30,000 337,500
Kemet Corporation*................ 40,000 955,000
Kent Electronics Corp.*........... 20,000 1,167,500
KLA Instruments Corporation*...... 20,000 521,250
Linear Technology Corporation..... 50,000 1,962,500
Macromedia, Inc.*................. 30,000 1,567,500
Oak Technology, Inc.*............. 22,500 950,625
Raychem Corporation............... 17,500 995,312
Robotic Vision Systems, Inc.*..... 30,000 723,750
SCI Systems, Inc.*................ 50,000 1,550,000
Sundstrand Corporation............ 20,000 1,407,500
ThermoSpectra Corporation*........ 5,000 78,125
UCAR International, Inc.*......... 15,000 506,250
Ultratech Stepper, Inc.*.......... 20,000 515,000
Watkins-Johnson Company........... 20,000 875,000
ENTERTAINMENT (0.98%)
Mirage Resorts, Inc.*............. 50,000 1,725,000
Regal Cinemas, Inc.*.............. 37,500 1,115,625
ENVIRONMENTAL SERVICES (1.14%)
Sanifill, Inc.*................... 30,000 1,001,250
United Waste Systems, Inc.*....... 30,000 1,117,500
U.S. Filter Corporation*.......... 25,000 665,625
U.S.A. Waste Services, Inc.*...... 26,000 490,750
FINANCE (4.40%)
Aames Financial Corp.............. 20,000 557,500
Bank of New York
Company, Inc. .................. 50,000 2,437,500
Finova Group, Inc. ............... 20,000 965,000
First Investors Financial Services
Group*.......................... 5,000 40,625
Green Tree Financial
Corporation..................... 70,000 1,846,250
Mercury Finance Company........... 35,000 463,750
Student Loan Marketing
Association..................... 22,500 1,482,188
Sunamerica, Inc. ................. 40,000 1,900,000
TCF Financial Corporation......... 50,000 1,656,250
The Money Store, Inc. ............ 18,750 292,969
United Companies Financial
Corporation..................... 40,000 1,055,000
FOODS & FOOD SERVICE (0.23%)
Richfood Holdings, Inc. .......... 25,000 668,750
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
HOTEL & MOTEL (0.85%)
HFS, Inc.*........................ 20,000 $ 1,635,000
La Quinta Inns, Inc. ............. 30,000 821,250
HOUSEHOLD PRODUCTS (0.49%)
First Brands Corporation.......... 25,000 1,190,625
USA Detergents, Inc.*............. 10,000 235,000
HOUSING (0.28%)
Clayton Homes, Inc. .............. 37,500 801,562
INSTRUMENTS (1.08%)
Millipore Corporation............. 35,000 1,439,375
Tektronix, Inc. .................. 15,000 736,875
Thermedics, Inc.*................. 25,000 693,750
Zygo Corporation*................. 10,000 251,250
INSURANCE (3.64%)
American Bankers Insurance Group.. 35,000 1,365,000
American Travellers
Corporation*.................... 15,000 421,875
CMAC Investment Corporation....... 15,000 660,000
Compdent Corporation*............. 6,800 282,200
Exel Limited...................... 20,000 1,220,000
First Commonwealth, Inc.*......... 2,000 52,000
Fremont General Corporation....... 20,000 735,000
Mercury General Corporation....... 20,000 955,000
Old Republic International
Corporation..................... 30,000 1,065,000
Penncorp Financial Group, Inc. ... 38,200 1,122,125
Reliastar Financial Corp.......... 20,000 887,500
TIG Holdings, Inc................. 20,000 570,000
United Dental Care, Inc.*......... 15,000 618,750
Vesta Insurance Group, Inc. ...... 10,000 545,000
MACHINERY (1.77%)
Black & Decker Corporation........ 22,100 779,025
Cognex Corporation*............... 40,000 1,390,000
Dover Corporation................. 20,000 737,500
Duriron Company, Inc. ............ 25,000 584,375
Greenfield Industries, Inc. ...... 30,000 937,500
Snap-On, Inc. .................... 15,000 678,750
MANUFACTURING (0.44%)
Danaher Corporation............... 40,000 1,270,000
MEDICAL (10.78%)
Boston Scientific Corporation*.... 50,000 2,450,000
Circon Corporation*............... 36,600 741,150
Coherent, Inc.*................... 10,000 405,000
Enterprise Systems, Inc.*......... 2,400 73,200
Guidant Corporation............... 55,000 2,323,750
Gulf South Medical Supply,
Inc.*........................... 20,000 605,000
Health Management Associates,
Inc.*........................... 53,750 1,404,218
HEALTHSOUTH Corporation*.......... 45,000 1,310,625
Invacare Corporation.............. 40,000 1,010,000
Maxicare Health Plans, Inc.*...... 25,000 671,875
MediSense, Inc.*.................. 20,000 632,500
MedPartners/Mullikin, Inc.*....... 25,000 825,000
Medtronic, Inc. .................. 40,000 2,235,000
Mentor Corporation................ 40,000 920,000
MiniMed, Inc.*.................... 26,600 332,500
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
40
<PAGE> 43
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MEDICAL (CONTINUED)
National Surgery Centers, Inc.*... 5,000 $ 115,000
Nellcor Puritan Bennett, Inc.*.... 20,000 1,160,000
OccuSystems, Inc.*................ 25,000 500,000
Omnicare, Inc. ................... 50,000 2,237,500
PhyCor, Inc.*..................... 70,000 3,539,375
Physician Reliance Network,
Inc.*........................... 25,000 993,750
Physician Sales & Service,
Inc.*........................... 40,000 1,140,000
Renal Treatment Centers, Inc.*.... 20,000 880,000
Research Medical, Inc.*........... 37,000 999,000
Respironics, Inc. ................ 20,000 420,000
Spine-Tech, Inc.*................. 15,000 348,750
Sybron Corporation*............... 30,000 712,500
Total Renal Care Holdings,
Inc.*........................... 4,500 132,750
United Healthcare Corporation..... 20,000 1,310,000
Universal Health Services, Inc. --
Class B*........................ 15,000 665,625
METALS (0.48%)
Mueller Industries, Inc.*......... 20,000 585,000
Precision Castparts Corporation... 20,000 795,000
MINING (0.80)%
Minerals Technologies, Inc........ 15,000 547,500
Potash Corporation of
Saskatchewan, Inc............... 25,000 1,771,875
OFFICE EQUIPMENT (1.00%)
Alco Standard Corporation......... 50,000 2,281,250
Nu-Kote Holding, Inc. -- Class
A*.............................. 35,000 595,000
OIL & GAS (4.81%)
BJ Services Company -- Warrants*.. 14,000 106,750
BJ Services Company*.............. 39,378 1,141,962
Cairn Energy USA, Inc.*........... 10,000 140,000
Camco International, Inc.......... 25,000 700,000
Chesapeake Energy Corporation*.... 37,500 1,246,875
Diamond Offshore Drilling,
Inc.*........................... 25,000 843,750
DLB Oil & Gas, Inc.*.............. 25,000 240,625
Global Marine, Inc.*.............. 75,000 656,250
Kerr-McGee Corporation............ 25,000 1,587,500
Newfield Exploration Company*..... 25,000 675,000
Phoenix Resource
Companies, Inc.................. 20,000 345,000
Pogo Producing Company............ 40,000 1,130,000
Pride Petroleum Services, Inc.*... 60,000 637,500
Smith International, Inc.*........ 50,000 1,175,000
Sonat Offshore Drilling Company,
Inc............................. 45,000 2,013,750
Tidewater, Inc.................... 30,000 945,000
Varco International, Inc.*........ 25,000 300,000
PACKAGING (0.34%)
Sealed Air Corporation*........... 16,000 450,000
Sonoco Products Co................ 20,000 525,000
PHARMACEUTICALS (1.40%)
Cardinal Health, Inc.............. 12,500 684,375
Dura Pharmaceuticals, Inc.*....... 40,000 1,390,000
Watson Pharmaceutical, Inc.*...... 40,000 1,960,000
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
PUBLISHING (1.53%)
Desktop Data, Inc.*............... 5,000 $ 122,500
Gartner Group, Inc. -- Class A*... 35,000 1,675,625
Meredith Corporation.............. 40,000 1,675,000
Scientific Games Holdings
Corporation*.................... 25,000 943,750
RADIO & TELEVISION (1.53%)
Clear Channel
Communications, Inc.*........... 40,000 1,765,000
Evergreen Media
Corporation -- Class A*......... 30,000 960,000
Infinity Broadcasting
Corporation -- Class A*......... 45,000 1,676,250
RAILROADS (0.61%)
Conrail, Inc...................... 25,000 1,750,000
RESTAURANTS (1.44%)
Applebee's International, Inc..... 35,000 796,250
Boston Chicken, Inc.*............. 35,000 1,124,375
Lone Star Steakhouse & Saloon,
Inc.*........................... 35,000 1,343,125
Outback Steakhouse, Inc.*......... 25,000 896,875
RETAIL & DEPARTMENT STORES (6.59%)
Baby Superstore, Inc.*............ 10,000 570,000
Bed Bath & Beyond, Inc.*.......... 15,000 582,187
Boise Cascade Office Products
Corporation*.................... 15,000 641,250
Casey's General Stores, Inc....... 40,000 875,000
CompUSA, Inc.*.................... 25,000 778,125
Consolidated Stores Corporation*.. 55,000 1,196,250
Corporate Express, Inc.*.......... 50,000 1,506,250
Eastbay, Inc.*.................... 4,000 79,000
Eckerd Corporation*............... 20,000 892,500
Fastenal Company.................. 30,000 1,267,500
Garden Ridge Corp.*............... 10,000 387,500
General Nutrition Companies*...... 50,000 1,150,000
Henry Schein, Inc.*............... 5,700 168,150
Just For Feet, Inc.*.............. 30,000 1,072,500
Kroger Company*................... 40,000 1,500,000
Micro Warehouse, Inc.*............ 20,000 865,000
Petco Animal Supplies, Inc.*...... 15,000 438,750
Safeway, Inc.*.................... 20,000 1,030,000
Staples, Inc.*.................... 55,000 1,340,625
Starbucks Corporation*............ 40,000 840,000
Sunglass Hut International,
Inc.*........................... 30,000 712,500
Vons Companies, Inc.*............. 20,000 565,000
Zale Corporation*................. 35,000 564,375
SHOES & LEATHER GOODS (0.49%)
Wolverine World Wide, Inc......... 45,000 1,417,500
TELECOMMUNICATIONS (7.84%)
Ascend Communications, Inc.*...... 70,000 5,678,750
Aspect Telecommunication
Corporation*.................... 27,500 921,250
AT&T Capital Corporation.......... 20,000 765,000
Cascade Communications Corp.*..... 15,000 1,278,750
Cellular Communications, Inc. -
Class A*........................ 10,000 497,500
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
41
<PAGE> 44
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
Cincinnati Bell, Inc.............. 40,000 $ 1,390,000
DSP Communications, Inc.*......... 25,000 1,090,625
ECI Telecommunications Limited.... 20,000 456,250
Frontier Corporation.............. 50,000 1,500,000
Glenayre Technologies, Inc.*...... 20,000 1,245,000
LCI International, Inc.*.......... 60,000 1,230,000
MIDCOM Communications, Inc.*...... 15,000 273,750
Palmer Wireless, Inc.*............ 15,000 330,000
Picturetel Corporation*........... 25,000 1,078,125
U.S. Robotics Corporation*........ 45,000 3,948,750
VTEL Corporation*................. 50,000 925,000
TRANSPORTATION (2.47%)
Airborne Freight Corporation...... 25,000 665,625
Comair Holdings Inc............... 37,500 1,007,812
Consolidated Delivery & Logistics,
Inc.*........................... 33,900 372,900
Continental Airlines, Inc. -
Class A*........................ 10,000 425,000
Continental Airlines, Inc. -
Class B *....................... 30,000 1,305,000
Fritz Companies, Inc.*............ 20,000 830,000
Midwest Express Holdings, Inc.*... 15,000 416,250
Northwest Airlines Corp. -
Class A*........................ 41,000 2,091,000
-------------
Total Common Stocks
(cost: $ 210,126,820)............. 278,497,729
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
<S> <C> <C>
SHORT-TERM U.S. GOVERNMENT
OBLIGATION (6.22%)
Federal Home Loan Mortgage
Corp.
5.75%, due 01/02/96.......... $ 17,955,000 $ 17,946,397
-------------
Total Short-Term U.S. Government
Obligations
(cost: $ 17,946,397)......... 17,946,397
-------------
Total Investment Securities
(cost: $ 228,073,217)........ $ 296,444,126
-------------
-------------
SUMMARY
Investments at value........... 102.75 % $ 296,444,126
Liabilities in Excess
of Other Assets.............. (2.75)% (7,924,891)
-------- -------------
Net Assets..................... 100.00 % $ 288,519,235
-------- -------------
-------- -------------
</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.
- --------------------------------------------------------------------------------
42
<PAGE> 45
WRL SERIES FUND, INC.
EMERGING 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]
Apparel & Textiles 2.33%
Banking 4.62%
Commercial Services 3.72%
Computer Technology 15.40%
Electronics 9.25%
Finance 4.40%
Insurance 3.64%
Medical 10.78%
Oil & Gas 4.81%
Retail & Department Stores 6.59%
Telecommunications 7.84%
Transportation 2.47%
Short-Term U.S. Government Obligations 6.22%
Other 17.93%
The Emerging Growth Portfolio gained 46.79% during the year ended December 31,
1995, rising with a market that continued to rally in response to good earnings
and falling interest rates. The Portfolio beat all the major comparable indexes
including the NASDAQ Composite, the S&P Midcap Index, and the Russell 2000,
which gained 40.9%, 30.9%, and 28.4%, respectively, for the same period.
Technology and finance led in the fourth quarter as the market appears to be
rotating more among sectors, meaning it now might be more of a "stock pickers'
market" rather than a sector betting market. Investors seem to be looking for
companies that can maintain solid growth even as the economy slows. The Emerging
Growth Portfolio, with its emphasis on small-company growth stocks, is ideally
positioned with investments in those types of companies.
The investment style we employ is a bottom-up approach which focuses on stock
selection rather than "market timing" or "sector rotation". Risk is controlled
by maintaining a broadly diversified portfolio, not by making big bets on any
one sector or stock. Usually the Portfolio remains fully invested. The objective
is to outperform the market by picking the best stocks in each sector. This
investment style is designed to deliver consistent results.
Stocks are selected based on a company's potential to deliver upside earnings
surprises. To find such companies, we look for rising earnings estimates and
improving valuations. Investments are made in the highest growth companies in
each sector that meet the screening criteria. In general, these will be smaller
companies with revenues less than $1 billion.
Our biggest gainers during the period were: C-Cube Microsystems, Inc. (specialty
semiconductors), Ascend Communications, Inc. (telecommunications equipment),
Macromedia, Inc. (software), HFS, Inc. (hotel/motel), and Phycor, Inc.
(physician practice management).
We remain optimistic about the prospect for smaller capitalization growth
stocks. Small stocks are still selling at reasonable valuation levels when
compared to larger stocks, and would benefit strongly from any cut in the
capital gains tax.
<TABLE>
<S> <C> <C>
/s/ Gary Lewis
---------------------------------
Gary Lewis
[VAN KAMPEN AMERICAN CAPITAL LOGO] Emerging Growth Portfolio Manager
</TABLE>
- --------------------------------------------------------------------------------
43
<PAGE> 46
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 210,126,820).................... $ 278,497,729
Short-term securities, at amortized cost.... 17,946,397
Cash........................................ 13,705
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 901,092
Interest.................................. 0
Dividends................................. 107,585
Other..................................... 0
-----------------
Total assets............................ 297,466,508
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 8,680,577
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 177,974
Dividends to shareholders................. 0
Other fees................................ 88,722
-----------------
Total liabilities....................... 8,947,273
-----------------
Total net assets...................... $ 288,519,235
===================
NET ASSETS:
Capital stock
($ .01 par value 100,000,000
authorized)............................... $ 177,582
Additional paid-in capital.................. 219,203,866
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 16,877
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. 750,001
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 68,370,909
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 288,519,235
===================
Shares outstanding at December 31, 1995..... 17,758,249
===================
Net asset value per share................... $ 16.25
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest..................................... $ 925,956
Dividends (net of foreign tax of $ 6,884).... 1,230,543
-----------------
Total investment income................ 2,156,499
-----------------
EXPENSES:
Investment advisory fees..................... 1,838,573
Printing and shareholder reports............. 97,365
Custodian fees............................... 71,508
Legal fees................................... 4,963
Auditing and accounting fees................. 17,062
Directors fees............................... 4,959
Other fees................................... 64,126
-----------------
Total expenses......................... 2,098,556
Less:
Advisory fee waiver and expense
reimbursement............................ 0
Fees paid indirectly....................... 6,375
-----------------
Net expenses........................... 2,092,181
-----------------
Net investment income (loss)................. 64,318
-----------------
Net realized gain (loss) on:
Investment securities.................... 35,450,575
Change in unrealized appreciation
(depreciation) on:
Investment securities.................... 52,134,219
-----------------
Net gain (loss) on investments........... 87,584,794
-----------------
Net increase (decrease) in net assets
resulting from operations................ $ 87,649,112
===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
44
<PAGE> 47
WRL SERIES FUND, INC.
EMERGING 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)............................................................ $ 64,318 $ 93,436
Net realized gain (loss) on investments................................................. 35,450,575 (21,381,696)
Change in unrealized appreciation (depreciation) on investments......................... 52,134,219 9,437,298
----------------- -----------------
Net increase (decrease) in net assets resulting from operations....................... 87,649,112 (11,850,962)
----------------- -----------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income................................................................... (49,487) (91,390)
Net realized gains...................................................................... (11,919,087) 0
----------------- -----------------
Total distributions................................................................... (11,968,574) (91,390)
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares....................................................... 49,653,525 110,299,870
Dividends and distributions reinvested.................................................. 11,968,574 91,390
Cost of shares repurchased.............................................................. (31,433,111) (18,271,675)
----------------- -----------------
Increase (decrease) in net assets from capital shares transactions.................... 30,188,988 92,119,585
----------------- -----------------
Net increase (decrease) in net assets................................................. 105,869,526 80,177,233
NET ASSETS:
Beginning of period..................................................................... 182,649,709 102,472,476
----------------- -----------------
End of period........................................................................... $ 288,519,235 $ 182,649,709
=================== ===================
Undistributed net investment income................................................... $ 16,877 $ 2,046
=================== ===================
SHARE ACTIVITY:
Shares outstanding - beginning of period................................................ 15,817,298 8,217,028
----------------- -----------------
Shares issued........................................................................... 3,437,728 9,166,228
Shares issued - reinvestment of dividends and distributions............................. 739,247 7,914
Shares redeemed......................................................................... (2,236,024) (1,573,872)
----------------- -----------------
Increase (decrease) in shares outstanding............................................... 1,940,951 7,600,270
----------------- -----------------
Shares outstanding - end of period...................................................... 17,758,249 15,817,298
=================== ===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
45
<PAGE> 48
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND,
INC. EMERGING 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+
--------- --------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period........................................ $ 11.55 $ 12.47 $ 10.00
Income from operations:
Net investment income (loss)............................................ .01 .01 (.04)
Net realized and unrealized
gain (loss) on investments............................................ 5.42 (.92) 2.51
--------- --------- ---------
Total income (loss) from operations................................... 5.43 (.91) 2.47
--------- --------- ---------
Distributions:
Dividends from net investment income.................................... .00 (.01) .00
Distributions from net realized gains
on investments........................................................ (.73) .00 .00
--------- --------- ---------
Total distributions................................................... (.73) (.01) .00
--------- --------- ---------
Net asset value, end of period.............................................. $ 16.25 $ 11.55 $ 12.47
========== ========== ==========
Total return................................................................ 46.79% (7.36)% 24.71%
Ratios and supplemental data:
Net assets at end of period
(in thousands).......................................................... $ 288,519 $ 182,650 $ 102,472
Ratio of expenses to average net assets................................... .91% .92% 1.00%
Ratio of net investment income (loss)
to average net assets................................................... .03% .06% (.30)%
Portfolio turnover rate................................................... 124.13% 72.62% 12.79%
</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 March 1, 1993. 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.
- --------------------------------------------------------------------------------
46
<PAGE> 49
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- -------------
<S> <C> <C>
COMMON STOCKS (97.09%)
AEROSPACE (2.01%)
Lockheed Martin Corporation...... 14,509 $ 1,146,211
McDonnell Douglas Corporation.... 22,200 2,042,400
APPAREL & TEXTILES (1.22%)
Tommy Hilfiger Corporation*...... 45,800 1,940,775
COMMERCIAL SERVICES (2.19%)
CUC International, Inc.*......... 900 30,713
Service Corporation
International.................. 78,200 3,440,800
COMPUTER TECHNOLOGY (23.32%)
3Com Corporation*................. 34,700 1,617,887
Adaptec, Inc.*.................... 35,000 1,435,000
ADFlex Solutions, Inc.*........... 24,000 642,000
Bay Networks, Inc.*............... 82,350 3,386,644
Broderbund Software, Inc.*........ 25,000 1,518,750
Cisco Systems, Inc.*.............. 40,200 2,999,925
Compaq Computer Corporation*...... 32,000 1,536,000
Dell Computer Corporation*........ 35,800 1,239,575
Digital Equipment Corporation*.... 80,600 5,168,475
Electronics For Imaging, Inc.*.... 69,600 3,045,000
First Data Corporation............ 69,707 4,661,645
Informix Corporation *............ 80,000 2,400,000
Pinnacle Systems, Inc.*........... 5,000 123,750
PRI Automation, Inc.*............. 26,500 930,813
Seagate Technology, Inc.*......... 70,000 3,325,000
Silicon Graphics, Inc.*........... 43,100 1,185,250
Softkey International, Inc.*...... 76,200 1,762,125
ELECTRONICS (12.38%)
Altera Corporation*............... 66,400 3,303,400
Intel Corporation................. 49,000 2,780,750
Linear Technology Corporation..... 67,800 2,661,150
Maxim Intergrated Products,
Inc.*........................... 136,000 5,236,000
Microchip Technology, Inc.*....... 106,000 3,869,000
Triquint Semiconductor, Inc.*..... 9,000 121,500
Xilinx, Inc.*..................... 54,500 1,662,250
ENVIRONMENTAL SERVICES (1.73%)
United Waste Systems, Inc.*....... 17,000 633,250
U.S.A. Waste Services, Inc.*...... 111,900 2,112,113
FINANCE (1.90%)
Advanta Corporation -- Class B.... 20,000 727,500
Lehman Brothers Holdings, Inc..... 30,500 648,124
The Money Store, Inc.............. 105,000 1,640,625
HOTEL & MOTEL (0.43%)
La Quinta Inns, Inc............... 25,000 684,374
HOUSING (1.08%)
Clayton Homes, Inc................ 80,000 1,710,000
INSTRUMENTS (0.76%)
Tencor Instruments*............... 35,200 858,000
Thermo Electron Corporation*...... 6,450 335,400
INSURANCE (2.96%)
American International Group,
Inc............................. 24,900 2,303,250
Travelers Group, Inc.............. 38,100 2,395,537
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING (2.04%)
Asm Lithography Holding nv*....... 77,000 $ 2,560,250
Oakley, Inc.*..................... 20,000 680,000
MEDICAL (14.06%)
Columbia/HCA Healthcare
Corporation..................... 60,000 3,045,000
Health Management
Associates, Inc.*............... 12,750 333,094
Healthsource, Inc.*............... 118,600 4,269,600
IDEXX Laboratories, Inc.*......... 40,000 1,880,000
Liposome Company, Inc.*........... 45,500 910,000
MedPartners/Mullikin, Inc.*....... 55,000 1,815,000
Medtronic, Inc.................... 18,000 1,005,750
Omnicare, Inc..................... 20,800 930,800
Oxford Health Plans, Inc.*........ 51,000 3,767,625
Summit Technology, Inc.*.......... 112,500 3,796,875
United Healthcare Corporation..... 8,000 524,000
OFFICE EQUIPMENT (1.06%)
Alco Standard Corporation......... 37,000 1,688,125
PHARMACEUTICALS (8.66%)
Biochem Pharma, Inc.*............. 85,100 3,414,637
Cardinal Health, Inc.............. 75,600 4,139,100
Eli Lilly & Company............... 48,000 2,700,000
Merck & Company, Inc.*............ 31,500 2,071,125
SmithKline Beecham PLC -- ADR..... 25,000 1,387,500
RADIO & TELEVISION (1.09%)
Viacom, Inc. -- Class B*.......... 36,500 1,729,188
RESTAURANTS (4.81%)
Boston Chicken, Inc.*............. 60,000 1,927,500
Landry's Seafood Restaurants,
Inc.*........................... 21,400 365,138
Lone Star Steakhouse & Saloon,
Inc.*........................... 121,100 4,647,213
Outback Steakhouse, Inc.*......... 19,000 681,625
RETAIL & DEPARTMENT STORES (7.24%)
Cintas Corporation................ 29,000 1,290,500
GAP, Inc.......................... 47,200 1,982,400
OfficeMax, Inc.*.................. 199,750 4,469,406
Viking Office Products, Inc.*..... 25,000 1,162,500
VISX, Inc.*....................... 26,500 1,033,500
Williams-Sonoma, Inc.*............ 83,000 1,535,500
TELECOMMUNICATIONS (8.15%)
ADC Telecommunications, Inc.*..... 58,000 2,117,000
DSC Communications Corporation*... 51,400 1,895,375
Glenayre Technologies, Inc.*...... 56,250 3,501,562
Network Equipment Technologies,
Inc.*........................... 16,400 448,950
Tellabs, Inc.*.................... 58,000 2,146,000
U.S. Robotics Corporation......... 32,000 2,808,000
-------------
Total Common Stocks
(cost: $ 132,020,826)............. 153,920,799
-------------
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
47
<PAGE> 50
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<S> <C> <C>
SHORT-TERM OBLIGATION (4.03%)
Prudential-Bache Securities**
5.39%, Repurchase Agreement
dated 12/29/95 to be repurchased
at $ 6,394,173 on 01/02/96...... $ 6,390,346 $ 6,390,346
-------------
Total Short-Term Obligation
(cost: $ 6,390,346)............... 6,390,346
-------------
Total Investment Securities
(cost: $ 138,411,172)........... $ 160,311,145
-------------
-------------
SUMMARY
Investments at value.............. 101.12 % $ 160,311,145
Liabilities in Excess
of Other Assets................. (1.12)% (1,777,091)
-------- -------------
Net Assets........................ 100.00 % $ 158,534,054
-------- -------------
-------- -------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* No income dividends were paid during the preceding twelve months.
** Collateralized by $ 4,490,163 Federal Home Loan Mortgage Corporation 7.46%
due 10/01/24; $ 653,761 Federal Home Loan Mortgage Corporation 6.08% due
09/01/25; $ 2,463,832 Federal Home Loan Mortgage Corporation 6.19% due
07/01/24; market value and accrued interest aggregated $ 3,871,201,
$ 654,401 and $ 1,992,559 respectively for the collateral at December 31,
1995.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
48
<PAGE> 51
WRL SERIES FUND, INC.
AGGRESSIVE 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]
Commercial Services 2.19%
Computer Technology 23.32%
Electronics 12.38%
Insurance 2.96%
Manufacturing 2.04%
Medical 14.06%
Pharmaceuticals 8.66%
Restaurants 4.81%
Retail & Department Stores 7.24%
Telecommunications 8.15%
Short-Term Obligation 4.03%
Other 10.16%
For the six month period ended December 31, 1995 the Aggressive Growth Portfolio
returned 4.51% versus a gain of 14.45% for the Standard & Poor's Index of 500
Common Stocks. The Portfolio's relative underperformance to the S&P over this
time period was due primarily to a weak fourth quarter in which the Portfolio
was negatively impacted by a substantial commitment to technology-related
stocks, Despite a weak quarter, the Aggressive Growth Portfolio had a very
impressive 38.02% return for the full year, outperforming all major indexes,
including the S&P 500 which returned 37.58%.
As we entered the second half of 1995, we were faced with an economy which had
been decelerating for two quarters. In response, the Federal Reserve Board
lowered rates by 1/4 point in July. At the same time, mostly due to this
slowdown in the economy and lack of inflation, the bond market was rallying
sharply. The stock market in general rose quickly, with the widely-followed Dow
Jones Industrial Average breaking one record after another. Technology stocks
continued to respond strongly to extremely favorable second quarter earnings in
all sectors, especially semiconductors and related semiconductor equipment. The
third quarter ended with Gross Domestic Product (GDP) up a surprising 4.2%. This
better-than-expected number for GDP was caused in part by a build-up in
inventories, suggesting that the fourth quarter numbers would be lower than the
third quarter.
As the fourth quarter progressed, it became clear that the economy was
decelerating sharply, especially at the consumer level. This began to have
negative implications for certain technology stocks -- especially
commodity-based semiconductors (DRAM's and SRAM's). We had a substantial
commitment -- almost 50% of the portfolio -- to technology-related stocks
entering the fourth quarter. Significant sell-offs began to occur and we began
to liquidate select technology holdings. By December, we had reduced the
portfolio's technology-related exposure to approximately 35%, retaining stocks
which we felt still had good fundamentals.
The period from late November through December was exceedingly volatile and our
remaining technology holdings seemingly dropped and recovered on alternating
weeks. Nearing Christmas, investors became more concerned about the outlook for
consumer spending and the economy in general. This was exacerbated by Fed
inaction in November as well as the continuation of difficult budget talks. The
shutdown of the Government due to lack of a budget agreement also resulted in
the absence of important economic statistics, impacting the psychology of both
the stock and bond markets. Many Wall Street analysts began to recommend the
sale of specific technology stocks which brought the entire sector under
pressure.
In general, growth stocks fell dramatically as investors took profits and
rotated into defensive stocks, sending the averages higher but depressing growth
stocks. We had predicted that the Fed would lower rates in December, and this
proved to be an accurate forecast. This action eliminated some negativity in the
market and we regained some of our lost momentum.
Technology stocks have continued to be subject to periods of excessive profit
taking. We believe that this phenomenon has been greatly overdone and that many
of our holdings are exceedingly undervalued at present levels. Recently we did a
study that shows that if our top thirteen technology holdings were to get to
their high 1995 price/earnings multiples based on 1996 earnings, the average
appreciation would be in excess of 70%. We are extremely reluctant, therefore,
to sell companies that are doing well at this price. We believe that this
strategy will, in the end, prevail.
Looking out to 1996, we forecast that: the economy will grow, but at a slow
rate; the Fed will be anxious to supply credit in small increments; inflation,
after a brief commodity-based scare, will be low; corporate profits will rise
but not as strong as 1995; and the stock market will have a good year, possibly
reaching 6000 at some time during the year. Altogether, we are convinced that
1996 will be another excellent year for the Aggressive Growth Portfolio.
<TABLE>
<C> <S>
/s/ David D. Alger
------------------------------------------
David D. Alger
[FRED ALGER MANAGEMENT, INC. LOGO] Aggressive Growth Portfolio Manager
</TABLE>
- --------------------------------------------------------------------------------
49
<PAGE> 52
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 132,020,826)...................... $ 153,920,799
Short-term securities, at amortized cost.... 6,390,346
Cash........................................ 0
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 484,906
Interest.................................. 957
Dividends................................. 33,795
Other..................................... 0
-------------
Total assets............................ 160,830,803
-------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 2,142,802
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 98,172
Dividends to shareholders................. 0
Other fees................................ 55,775
-------------
Total liabilities....................... 2,296,749
-------------
Total net assets...................... $ 158,534,054
=============
NET ASSETS:
Capital stock
($ .01 par value 75,000,000 authorized)... $ 119,645
Additional paid-in capital.................. 136,947,761
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 0
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. (433,325)
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 21,899,973
-------------
Net assets applicable to outstanding
shares of capital......................... $ 158,534,054
=============
Shares outstanding at December 31, 1995..... 11,964,511
=============
Net asset value per share................... $ 13.25
=============
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest.................................... $ 283,756
Dividends (net of foreign tax of $ 3,581)... 343,597
-----------------
Total investment income............... 627,353
-----------------
EXPENSES:
Investment advisory fees.................... 849,097
Interest expense............................ 161,975
Printing and shareholder reports............ 44,843
Custodian fees.............................. 30,752
Legal fees.................................. 2,331
Auditing and accounting fees................ 8,325
Directors fees.............................. 2,251
Other fees.................................. 43,042
-----------------
Total expenses........................ 1,142,616
Less:
Advisory fee waiver and expense
reimbursement........................... 0
Fees paid indirectly...................... 95
-----------------
Net expenses.......................... 1,142,521
-----------------
Net investment income (loss)................ (515,168)
-----------------
Net realized gain (loss) on:
Investment securities................... 4,512,355
Change in unrealized appreciation
(depreciation) on:
Investment securities................... 20,073,057
-----------------
Net gain (loss) on investments.......... 24,585,412
-----------------
Net increase (decrease) in net assets
resulting from operations................. $ 24,070,244
===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
50
<PAGE> 53
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994*
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......................................................... $ (515,168) $ 31,739
Net realized gain (loss) on investments............................................... 4,512,355 (244,421)
Change in unrealized appreciation (depreciation) on investments....................... 20,073,057 1,826,916
----------------- ------------------
Net increase (decrease) in net assets resulting from operations..................... 24,070,244 1,614,234
----------------- ------------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income................................................................. 0 (31,238)
In excess of net investment income.................................................... (501) 0
Net realized gains.................................................................... (4,186,091) 0
----------------- ------------------
Total distributions................................................................. (4,186,592) (31,238)
----------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares..................................................... 133,357,432 39,557,658
Dividends and distributions reinvested................................................ 4,186,592 31,238
Cost of shares repurchased............................................................ (37,719,938) (2,345,576)
----------------- ------------------
Increase (decrease) in net assets from capital shares transactions.................. 99,824,086 37,243,320
----------------- ------------------
Net increase (decrease) in net assets............................................... 119,707,738 38,826,316
NET ASSETS:
Beginning of period................................................................... 38,826,316 0
----------------- ------------------
End of period......................................................................... $ 158,534,054 $ 38,826,316
=================== ====================
Undistributed net investment income................................................. $ 0 $ 501
=================== ====================
SHARE ACTIVITY:
Shares outstanding - beginning of period.............................................. 3,937,879 0
----------------- ------------------
Shares issued......................................................................... 10,492,134 4,179,652
Shares issued - reinvestment of dividends and distributions........................... 315,955 3,290
Shares redeemed....................................................................... (2,781,457) (245,063)
----------------- ------------------
Increase (decrease) in shares outstanding............................................. 8,026,632 3,937,879
----------------- ------------------
Shares outstanding - end of period.................................................... 11,964,511 3,937,879
=================== ====================
</TABLE>
* The inception of this portfolio was March 1, 1994.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
51
<PAGE> 54
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND,
INC. AGGRESSIVE GROWTH PORTFOLIO, THE VALUE LINE (ARITHMETIC) INDEX
AND THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS
[GRAPH]
FINANCIAL HIGHLIGHTS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1995 1994+
--------- ------------
<S> <C> <C>
Net asset value, beginning of period..................... $ 9.86 $ 10.00
Income from operations:
Net investment income (loss)......................... (.06) .02
Net realized and unrealized
gain (loss) on investments......................... 3.96 (.14)
--------- ------------
Total income (loss) from operations................ 3.90 (.12)
--------- ------------
Distributions:
Dividends from net investment income................. .00 (.02)
Distributions from net realized gains
on investments..................................... (.51) .00
--------- ------------
Total distributions................................ (.51) (.02)
--------- ------------
Net asset value, end of period........................... $ 13.25 $ 9.86
========== ==============
Total return............................................. 38.02% (1.26)%
Ratios and supplemental data:
Net assets at end of period
(in thousands)....................................... $ 158,534 $ 38,826
Ratio of expenses to average net assets................ 1.07% 1.00%
Ratio of net investment income (loss)
to average net assets................................ (.48)% .20%
Portfolio turnover rate................................ 108.04% 89.73%
</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 March 1, 1994. 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.
- --------------------------------------------------------------------------------
52
<PAGE> 55
WRL SERIES FUND, INC.
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (31.83%)
U.S. Treasury Bonds
7.25%, due 05/15/16............ $ 800,000 $ 913,016
U.S. Treasury Bonds
7.50%, due 11/15/16............ 800,000 937,976
U.S. Treasury Bonds
7.25%, due 08/15/22............ 800,000 924,440
U.S. Treasury Bonds
6.25%, due 08/15/23............ 1,500,000 1,543,020
U.S. Treasury Notes
7.00%, due 04/15/99............ 700,000 735,595
U.S. Treasury Notes
6.38%, due 08/15/02............ 700,000 734,678
U.S. Treasury Notes
6.00%, due 10/15/99............ 800,000 818,896
U.S. Treasury Notes
7.25%, due 08/15/04............ 800,000 889,864
U.S. Treasury Notes
7.13%, due 09/30/99............ 700,000 742,056
U.S. Treasury Notes
6.50%, due 05/15/05............ 800,000 851,352
U.S. Treasury Notes
7.25%, due 11/15/96............ 800,000 813,344
------------
Total U.S. Government Obligations
(cost: $ 9,286,679).............. 9,904,237
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS (64.08%)
AUTOMOTIVE (2.33%)
Chrysler Corporation............. 13,100 $ 725,413
BANKING (9.04%)
Dime Bancorp, Inc.* ............. 64,000 744,000
H.F. Ahmanson & Company.......... 25,000 662,500
Pacific Crest Capital, Inc.*..... 90,000 652,500
Washington Mutual, Inc........... 26,000 750,750
BUILDING (2.42%)
Masco Corporation................ 24,000 753,000
COMPUTER TECHNOLOGY (2.42%)
Hewlett-Packard Company.......... 9,000 753,750
ELECTRONICS (2.55%)
General Electric Company......... 11,000 792,000
ENERGY (2.45%)
Enron Corporation................ 20,000 762,500
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
FINANCE (2.31%)
Student Loan Marketing
Association.................... 10,900 $ 718,038
HOUSING (2.58%)
Merry Land & Investment Company,
Inc............................ 34,000 803,250
INSURANCE (7.61%)
Equitable of Iowa Companies...... 25,000 803,125
USF&G Corporation................ 44,010 742,668
Western National Corporation..... 51,000 822,375
MEDICAL (7.16%)
Foundation Health Corporation*... 17,000 731,000
Humana, Inc.*.................... 25,000 684,375
US Healthcare, Inc............... 17,500 813,750
OIL & GAS (5.25%)
Dresser Industries, Inc.......... 32,000 780,000
Sonat, Inc....................... 24,000 855,000
PUBLISHING (2.50%)
Dun & Bradstreet Corporation..... 12,000 777,000
REAL ESTATE (13.17%)
Equity Residential Properties
Trust.......................... 24,000 735,000
Health and Retirement Property
Trust.......................... 42,000 682,500
Liberty Property Trust........... 35,000 726,250
Shurgard Storage Centers, Inc. -
Class A........................ 24,000 648,000
Storage Trust Realty............. 37,000 841,750
Storage USA, Inc................. 14,200 463,275
TELECOMMUNICATIONS (2.29%)
AT&T Corporation................. 11,000 712,250
------------
Total Common Stocks
(cost: $ 17,372,463)............. 19,936,019
------------
OTHER INVESTMENT SECURITIES (1.55%)
FINANCE (1.55%)
Templeton Russia Fund, Inc.*..... 35,000 481,250
------------
Total Other Investment Securities
(cost: $ 508,910)................ 481,250
------------
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
53
<PAGE> 56
WRL SERIES FUND, INC.
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
SHORT-TERM OBLIGATION (1.87%)
Prudential-Bache Securities**
5.39%, Repurchase Agreement
dated 12/29/95 to be
repurchased at $ 583,592 on
01/02/96....................... $ 583,242 $ 583,242
------------
Total Short-Term Obligation
(cost: $ 583,242)................ 583,242
------------
Total Investment Securities
(cost: $ 27,751,294)........... $ 30,904,748
------------
------------
SUMMARY
Investments at value............. 99.33% $ 30,904,748
Other Assets in
Excess of Liabilities.......... 0.67% 209,697
------- ------------
Net Assets....................... 100.00% $ 31,114,445
------- ------------
------- ------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* No income dividends were paid during the preceding twelve months.
** Collateralized by $ 2,746,917 Federal National Mortgage Association 9.00%
due 09/01/22; market value and accrued interest aggregated $ 594,908 for
this collateral at December 31, 1995.
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
54
<PAGE> 57
WRL SERIES FUND, INC.
BALANCED 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 31.83%
Automotive 2.33%
Banking 9.04%
Building 2.42%
Computer Technology 2.42%
Electronics 2.55%
Energy 2.45%
Finance 2.31%
Housing 2.58%
Insurance 7.61%
Medical 7.16%
Oil & Gas 5.25%
Publishing 2.50%
Real Estate 13.17%
Telecommunications 2.29%
Short-Term Obligation 1.87%
Other 2.22%
The strength in both the equity and the bond market for the last period exceeded
most expectations. If anything, our strategy remained unduly cautious. Still,
for the year ended December 31, 1995, the Balanced Portfolio returned 19.80%. By
comparison, the Standard & Poor's Index of 500 Common Stocks gained 37.58% and
the Lehman Brothers Government/Corporate Intermediate Index was up 15.33% for
the same period. As investors we remained disciplined in terms of adhering to
our purchase criteria emphasizing a value orientation. This process, by its
nature, tends to exclude stocks trading at multiples much higher than the
general market.
Looking out to 1996, we're seeing a downshifting in corporate earnings
expectations from what was a nearly 20% growth rate in 1995. The consensus
expectations for next year's earnings indicates a 7% uptick compared with the
1995 base period. With our nation's economic growth starting to slow, one has to
question a 7% projection; I think a lower rate is more realistic. If the real
economy does deliver more modest results, one has to approach the 1996 stock
market with a higher degree of caution than in 1995.
The real economy, as opposed to the financial markets, has indeed shown definite
signs of slowing its rate of growth. Although few analysts are willing to
predict recession, we would note that industrial raw material prices peaked as
long ago as last July and have been in a fairly steady, although volatile,
decline since then. And retail sales during the Christmas season were a
disappointment in almost all retail categories. Moreover, the relentless
downtick in employment in American manufacturing has continued unabated now for
almost a year.
This pattern of slowing growth seems to be the case for most of our overseas
trading partners as well. With that, assumptions about how U.S. exports would
continue to provide a growth component to our own Gross Domestic Product are now
suspect, even with a relatively weak U.S. dollar. Meanwhile, as the budget
impasse continues in Washington, expectations of a possible capital gains tax
reduction (on balance a strong stimulus to future economic growth) grow dim with
a resulting loss of positive investor sentiment.
Still, we remain perhaps more bullish than one might expect on the financial
markets for the coming year. The underlying positive factor in the markets is
the potential for downward drifting interest rates. To that end, the maturities
of the fixed-income portion of the Balanced Portfolio remain longer than
historic norms -- duration is approximately 7.5 years and average maturity is
around 13.5 years. If the Federal Reserve chooses to continue the process of
reducing short rates, which we think is their most probable course, we will
likely see price/earnings ratios supported by lower interest rates, even while
earnings may come in at levels lower than current expectations. This is
admittedly a rather delicate balancing act, with the positive impact of interest
rates running into reduced earnings expectations as we move through 1996.
The Balanced Portfolio remains defensively positioned. It is deliberately
interest-rate sensitive, not only with regard to bond holdings, but equities as
well. We are positioned in select early-cycle beneficiaries, like the autos,
which have proven historically to be interest-rate sensitive. Holdings in
insurance companies, savings and loans, and the real estate investment trusts
should also benefit from a declining interest rate environment. All the while,
we'll be paying very close attention to earnings reports as we move into the new
year.
[AEGON LOGO] /s/ Michael Van Meter
------------------------------------
Michael Van Meter
Balanced Portfolio Manager
- --------------------------------------------------------------------------------
55
<PAGE> 58
WRL SERIES FUND, INC.
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 27,168,052)....................... $ 30,321,506
Short-term securities, at amortized cost.... 583,242
Cash........................................ 0
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 2,163,458
Interest.................................. 155,662
Dividends................................. 82,615
Foreign receivable........................ 1,184
Other..................................... 0
-----------------
Total assets............................ 33,307,667
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 2,166,978
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 19,227
Dividends to shareholders................. 0
Other fees................................ 7,017
-----------------
Total liabilities....................... 2,193,222
-----------------
Total net assets...................... $ 31,114,445
===================
NET ASSETS:
Capital stock
($ .01 par value 75,000,000 authorized)... $ 29,258
Additional paid-in capital.................. 28,656,393
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 1,887
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. (726,547)
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 3,153,454
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 31,114,445
===================
Shares outstanding at December 31, 1995..... 2,925,799
===================
Net asset value per share................... $ 10.63
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest.................................... $ 684,725
Dividends (net of foreign tax of $ 2,269)... 628,973
-----------------
Total investment income............... 1,313,698
-----------------
EXPENSES:
Investment advisory fees.................... 195,339
Printing and shareholder reports............ 10,317
Custodian fees.............................. 17,359
Legal fees.................................. 506
Auditing and accounting fees................ 7,211
Directors fees.............................. 521
Other fees.................................. 6,623
-----------------
Total expenses........................ 237,876
Less:
Advisory fee waiver and expense
reimbursement........................... 0
Fees paid indirectly...................... 48
-----------------
Net expenses.......................... 237,828
-----------------
Net investment income (loss)................ 1,075,870
-----------------
Net realized gain (loss) on:
Investment securities................... (304,159)
Foreign currency transactions........... (310)
-----------------
Total net realized gain (loss)........ (304,469)
-----------------
Change in unrealized appreciation
(depreciation) on:
Investment securities................... 3,757,433
Foreign currency transactions........... 385
-----------------
Total change in unrealized
appreciation (depreciation)......... 3,757,818
-----------------
Net gain (loss) on investments.......... 3,453,349
-----------------
Net increase (decrease) in net assets
resulting from operations............... $ 4,529,219
===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
56
<PAGE> 59
WRL SERIES FUND, INC.
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994*
<S> <C> <C>
OPERATIONS:
Net investment income (loss)......................................................... $ 1,075,870 $ 357,478
Net realized gain (loss) on investments and foreign currency transactions............ (304,469) (422,221)
Change in unrealized appreciation (depreciation) on investments and translation of
foreign currency transactions...................................................... 3,757,818 (604,364)
----------------- ------------------
Net increase (decrease) in net assets resulting from operations.................... 4,529,219 (669,107)
----------------- ------------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income................................................................ (1,074,367) (356,951)
Net realized gains................................................................... 0 0
----------------- ------------------
Total distributions................................................................ (1,074,367) (356,951)
----------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares.................................................... 12,933,665 21,414,453
Dividends and distributions reinvested............................................... 1,074,367 356,951
Cost of shares repurchased........................................................... (5,770,415) (1,323,370)
----------------- ------------------
Increase (decrease) in net assets from capital shares transactions................. 8,237,617 20,448,034
----------------- ------------------
Net increase (decrease) in net assets.............................................. 11,692,469 19,421,976
NET ASSETS:
Beginning of period.................................................................. 19,421,976 0
----------------- ------------------
End of period........................................................................ $ 31,114,445 $ 19,421,976
=================== ====================
Undistributed net investment income................................................ $ 1,887 $ 527
=================== ====================
SHARE ACTIVITY:
Shares outstanding - beginning of period............................................. 2,102,921 0
----------------- ------------------
Shares issued........................................................................ 1,309,039 2,203,355
Shares issued - reinvestment of dividends and distributions.......................... 105,008 38,513
Shares redeemed...................................................................... (591,169) (138,947)
----------------- ------------------
Increase (decrease) in shares outstanding............................................ 822,878 2,102,921
----------------- ------------------
Shares outstanding - end of period................................................... 2,925,799 2,102,921
=================== ====================
</TABLE>
* The inception of this portfolio was March 1, 1994.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
57
<PAGE> 60
WRL SERIES FUND, INC.
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
[COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND,
INC. BALANCED PORTFOLIO, THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS AND
LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX]
[GRAPH]
FINANCIAL HIGHLIGHTS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1995 1994+
-------- ------------
<S> <C> <C>
Net asset value, beginning of period.................. $ 9.24 $ 10.00
Income from operations:
Net investment income (loss)...................... .44 .34
Net realized and unrealized
gain (loss) on investments...................... 1.38 (.76)
-------- ------------
Total income (loss) from operations............. 1.82 (.42)
-------- ------------
Distributions:
Dividends from net investment income.............. (.43) (.34)
Distributions from net realized gains
on investments.................................. .00 .00
-------- ------------
Total distributions............................. (.43) (.34)
-------- ------------
Net asset value, end of period........................ $ 10.63 $ 9.24
========= =============
Total return.......................................... 19.80% (5.73)%
Ratios and supplemental data:
Net assets at end of period
(in thousands).................................... $ 31,114 $ 19,422
Ratio of expenses to average net assets............. .97% 1.00%
Ratio of net investment income (loss)
to average net assets............................. 4.38% 4.27%
Portfolio turnover rate............................. 98.55% 57.73%
</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 March 1, 1994. 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.
- --------------------------------------------------------------------------------
58
<PAGE> 61
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
CORPORATE DEBT SECURITIES (0.81%)
FINANCE (0.81%)
Equitable Companies, Inc.
6.13%, due 12/15/24.............. $ 175,000 $ 199,718
------------
Total Corporate Debt Securities
(cost: $ 180,260).................. 199,718
------------
CONVERTIBLE BONDS (1.52%)
COMPUTER TECHNOLOGY (0.43%)
3Com Corporation 144A+
10.25%, due 11/01/01............. 70,000 107,275
ELECTRONICS (0.76%)
Analog Devices, Inc.
3.50%, due 12/01/00.............. 70,000 75,600
National Semiconductor Corporation
144A+
6.50%, due 10/01/02.............. 60,000 55,950
VLSI Technology, Inc.
8.25%, due 10/01/05.............. 60,000 55,500
RETAIL & DEPARTMENT STORES (0.33%)
Federated Department Stores, Inc.
5.00%, due 10/01/03.............. 80,000 80,100
------------
Total Convertible Bonds
(cost: $ 379,054)................ 374,425
------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- ------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS (15.19%)
BANKING (0.22%)
First USA, Inc..................... 1,400 $ 55,300
BUILDING (0.55%)
Kaufman & Broad Homes Corporation -
Series B......................... 9,000 133,875
COMPUTER TECHNOLOGY (0.98%)
General Motors Corporation -
Series C......................... 3,300 241,725
FINANCE (3.45%)
Merrill Lynch & Company, Inc....... 6,200 321,625
Sunamerica, Inc. -
Series E......................... 3,000 196,500
Sunamerica, Inc. -
Series D......................... 6,900 330,338
FOREST PRODUCTS & PAPER (1.37%)
International Paper Company+....... 2,400 107,400
James River Corporation of Virginia -
Series P......................... 9,800 229,075
METALS (1.52%)
Reynolds Metals Company............ 7,400 374,625
OIL & GAS (0.93%)
Williams Companies, Inc............ 3,100 227,850
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- ------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
TELEPHONE UTILITIES (2.21%)
Compania Inversiones
Telecommunications - 144A+....... 9,700 $ 544,412
TOBACCO PRODUCTS (3.96%)
RJR Nabisco Holdings Corp. -
Series C......................... 153,000 975,375
------------
Total Convertible Preferred Stocks
(cost: $ 3,564,779).............. 3,738,100
------------
COMMON STOCKS (77.91%)
BANKING (0.30%)
PNC Bank Corporation............... 2,300 74,175
ELECTRIC UTILITIES (38.52%)
Baltimore Gas and Electric
Company.......................... 10,200 290,700
CINergy Corporation................ 9,400 287,875
CMS Energy Corporation............. 20,600 615,425
DPL, Inc. ......................... 24,300 601,425
DQE, Inc. ......................... 19,750 607,312
Duke Power Company................. 16,600 786,425
Florida Progress Corporation....... 9,800 346,675
FPL Group, Inc. ................... 20,900 969,237
General Public Utilities
Corporation...................... 10,900 370,600
Illinova Corporation............... 17,900 537,000
National Power PLC - ADR*.......... 15,430 142,728
NIPSCO Industries, Inc. ........... 13,400 512,550
Ohio Edison Company................ 6,600 155,100
PacifiCorp......................... 16,800 357,000
Peco Energy Company................ 11,700 352,462
Pinnacle West Capital
Corporation...................... 21,400 615,250
Southern Company................... 19,200 472,800
Texas Utilities Company............ 13,500 555,187
Unicom Corporation................. 4,300 140,825
Utilicorp United, Inc. ............ 14,100 414,187
Western Resources, Inc. ........... 10,500 350,437
ENERGY (2.55%)
Enron Corporation.................. 12,200 465,125
Enron Global Power & Pipelines
L.L.C. .......................... 6,500 161,688
FOODS & FOOD SERVICE (1.03%)
Philip Morris Companies, Inc. ..... 2,800 253,400
MEDICAL (1.84%)
Meditrust Corporation.............. 13,000 453,375
OIL & GAS (5.01%)
Exxon Corporation.................. 4,200 336,525
Panhandle Eastern Corporation...... 5,100 142,163
Sonat, Inc. ....................... 12,400 441,750
Williams Companies, Inc. .......... 7,100 311,513
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
59
<PAGE> 62
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (20.21%)
A T & T Corporation................ 16,300 $ 1,055,425
Ameritech Corporation.............. 12,100 713,900
Bellsouth Corporation.............. 20,500 891,750
Cable & Wireless PLC - Sponsored
ADR.............................. 2,200 46,475
Compania de Telecomunicaciones de
Chile SA - ADR................... 2,100 174,038
MCI Communications Corporation..... 35,500 927,437
Nokia Corp. - Series A - ADR....... 5,900 229,363
SBC Communications, Inc. .......... 13,800 793,500
Telecomunicacoes Brasileiras SA -
ADR.............................. 3,000 142,125
TELEPHONE UTILITIES (4.37%)
GTE Corporation.................... 19,000 836,000
Telefonica de Espana SA - ADR...... 5,700 238,688
UTILITIES (4.08%)
MCN Corporation.................... 18,600 432,450
Pacific Enterprises................ 16,000 452,000
Westcoast Energy, Inc.............. 8,100 118,463
------------
Total Common Stocks
(cost: $ 16,815,850)............... 19,172,528
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
SHORT-TERM OBLIGATION (4.86%)
HSBC Securities, Inc.**
5.50%, Repurchase Agreement dated
12/29/95 to be repurchased at
$ 1,195,730 on 01/02/96.......... $ 1,195,000 $ 1,195,000
------------
Total Short-Term Obligation
(cost: $ 1,195,000)................ 1,195,000
------------
Total Investment Securities
(cost: $ 22,134,943)............. $ 24,679,771
------------
------------
SUMMARY
Investments at value............... 100.29 % $ 24,679,771
Liabilities in Excess
of Other Assets.................. (0.29)% (72,282)
-------- ------------
Net Assets......................... 100.00 % $ 24,607,489
-------- ------------
-------- ------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* No income dividends were paid during the preceding twelve months.
** Collateralized by $ 1,225,000 U.S. Treasury Notes 5.13% due 04/30/98;
market value and accrued interest aggregated $ 1,222,320 for this
collateral at December 31, 1995.
+ Securities are registered pursuant to rule 144A and may be deemed to be
restricted for resale.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
60
<PAGE> 63
WRL SERIES FUND, INC.
UTILITY 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]
<TABLE>
<S> <C>
Corporate Debt Securities 0.81%
Convertible Bonds 1.52%
Convertible Preferred Stocks 15.19%
Electric Utilities 38.52%
Energy 2.55%
Oil & Gas 5.01%
Telecommunications 20.21%
Telephone Utilities 4.37%
Utilities 4.08%
Short-Term Obligations 4.86%
Other 2.88%
</TABLE>
1995 was the year in which utilities rose from the ashes of 1994 like the
Phoenix. In the previous year, utilities had been hurt by rapidly rising
interest rates and fears of restructuring. The predominantly
electric-utility-weighted Dow Jones Utility Average lost 15.81% on a total
return basis in 1994, while the telephone-heavy Standard & Poor's Utility Index
fell 8.31%. But in 1995, rapidly falling interest rates, subsiding restructuring
fears, and strong earnings growth led to a handsome 31.61% gain in the Dow Jones
Utility Average and a stunning gain of 42.11% in the S&P Utility Index for the
full year.
By comparison, the Utility Portfolio posted a very respectable total return of
25.25%. This relative underperformance was due in part to the Portfolio's
conservative structure, which holds certain convertible securities to help
cushion the interest-rate sensitivity of utility stocks. It is this strategy
that has allowed the Portfolio to perform well versus its peer group during weak
utility markets, and over long periods of time with below-average risk rankings.
Another significant reason for the Portfolio's underperformance in 1995 was its
relative underweighting in the Baby Bells, which as a group advanced over 50%
for the year. While we believe that the coming of long distance, cellular, and
cable competition will lead to lower profit margins for the Baby Bells, it
appears that true competition may now be years away. In the meantime, the
telephone companies are enjoying strong subscriber growth while cost-cutting
efforts are enhancing earnings. As a result, we have of late increased our
portfolio weighting in the U.S. telecom sector from 9% to over 20%.
We did participate in several positive stock performances in 1995. These
included: William Cos., which rose 75% on a total return basis; GTE, which rose
45%; DQE Inc., which rose 53%; Pinnacle West, which rose 45%; PNC Financial,
which rose 52%; and AT&T Corp., which rose 29%.
We currently have 38% of the portfolio in domestic electric utilities. Because
of this group's relative underperformance in 1995, we believe it is poised to
perform well in 1996. Additionally, the reform movement to bring down
competitive barriers is proceeding much more slowly than expected, while
companies continue to cut costs. The natural gas stocks which comprise 10% of
our portfolio are reacting to an excellent start to the winter. We also believe
the weakness in international markets over the last two years had led to some
attractive valuations there. Consequently, we have initiated positions in
Compania de Telecomunicaciones de Chile-SA and Telecommunicacoes Brasileiras-SA.
The international utility markets offer superior growth and some of the best
relative valuations in years.
Our focus in 1996 will be to seek companies with competitive management that
have accelerating earnings and above-average dividend growth potential. The key
variable determining utility stocks' 1996 performance will continue to be
earnings and interest rates. The yield on long-term treasuries fell by 192 basis
points in 1995, giving utilities their initial thrust. It's difficult to foresee
a similar decline in 1996, but with an accommodative Federal Reserve, an
election, and a slowing economy, it is equally as difficult to expect much
upside risk to interest rates. Earnings growth was a pleasant surprise in 1995
as companies benefited from increased efficiencies in the face of a slower than
expected industry restructuring, particularly for telephone and electric
utilities. We expect this positive trend to continue.
Overall, we are optimistic as we enter 1996. Each of the utility sectors is
enjoying relatively positive fundamentals and the defensive nature of this asset
class will provide a strong measure of protection when we ultimately have a
general bear market. While we do not expect a repeat of 1995 for utility stocks,
we do believe that most investors will be pleased with 1996's performance.
[CAPTION]
<TABLE>
<S> <C> <C>
[LOGO] /s/ Christopher H. Wiles
<S> <C> ------------------------
Christopher H. Wiles
Utility Portfolio Manager
- --------------------------------------------------------------------------------
</TABLE>
61
<PAGE> 64
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 20,939,943)........................ $ 23,484,771
Short-term securities, at amortized cost..... 1,195,000
Cash......................................... 2,615
Receivables:
Fund shares sold........................... 0
Securities sold............................ 19,883
Interest................................... 6,976
Dividends.................................. 72,764
Foreign receivable......................... 125
Other...................................... 0
-----------------
Total assets............................. 24,782,134
-----------------
LIABILITIES:
Fund shares purchased........................ 0
Securities purchased......................... 156,531
Accounts payable and accrued liabilities:
Custody fees............................... 0
Investment advisory fees................... 13,585
Dividends to shareholders.................. 0
Other fees................................. 4,529
Foreign payable............................ 0
-----------------
Total liabilities........................ 174,645
-----------------
Total net assets....................... $ 24,607,489
===================
NET ASSETS:
Capital stock
($ .01 par value 75,000,000 authorized).... $ 22,122
Additional paid-in capital................... 22,044,707
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)............................ 249
Accumulated undistributed net realized
gain (loss) on:
Investment transactions.................. (4,417)
Net unrealized appreciation (depreciation)
on:
Investment securities...................... 2,544,828
-----------------
Net assets applicable to outstanding
shares of capital.......................... $ 24,607,489
===================
Shares outstanding at December 31, 1995...... 2,212,175
===================
Net asset value per share.................... $ 11.12
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
INVESTMENT INCOME: DECEMBER 31, 1995
<S> <C>
Interest.................................... $ 118,159
Dividends (net of foreign tax of $ 3,957)... 842,556
-----------------
Total investment income............... 960,715
-----------------
EXPENSES:
Investment advisory fees.................... 128,859
Printing and shareholder reports............ 8,135
Custodian fees.............................. 34,769
Legal fees.................................. 384
Auditing and accounting fees................ 6,944
Directors fees.............................. 411
Other fees.................................. 7,164
-----------------
Total expenses........................ 186,666
Less:
Advisory fee waiver and expense
reimbursement........................... 14,417
Fees paid indirectly...................... 437
-----------------
Net expenses................................ 171,812
-----------------
Net investment income (loss)................ 788,903
-----------------
Net realized gain (loss) on:
Investment securities................... 275,952
Foreign currency transactions........... 6,300
-----------------
Total net realized gain (loss)........ 282,252
-----------------
Change in unrealized appreciation
(depreciation) on:
Investment securities................... 2,876,027
Foreign currency transactions........... 27
-----------------
Total change in unrealized
appreciation (depreciation)......... 2,876,054
-----------------
Net gain (loss) on investments.......... 3,158,306
-----------------
Net increase (decrease) in net assets
resulting from operations................. $ 3,947,209
===================
</TABLE>
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
62
<PAGE> 65
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994*
<S> <C> <C>
OPERATIONS:
Net investment income (loss)........................................................ $ 788,903 $ 238,336
Net realized gain (loss) on investments and foreign currency transactions........... 282,252 (95,580)
Change in unrealized appreciation (depreciation) on investments and translation of
foreign currency transactions..................................................... 2,876,054 (331,226)
------------------ ------------------
Net increase (decrease) in net assets resulting from operations................... 3,947,209 (188,470)
------------------ ------------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income............................................................... (788,904) (238,086)
Net realized gains.................................................................. (191,089) 0
------------------ ------------------
Total distributions............................................................... (979,993) (238,086)
------------------ ------------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares................................................... 18,320,350 12,803,011
Dividends and distributions reinvested.............................................. 979,993 238,086
Cost of shares repurchased.......................................................... (8,142,104) (2,132,507)
------------------ ------------------
Increase (decrease) in net assets from capital shares transactions................ 11,158,239 10,908,590
------------------ ------------------
Net increase (decrease) in net assets............................................. 14,125,455 10,482,034
NET ASSETS:
Beginning of period................................................................. 10,482,034 0
------------------ ------------------
End of period....................................................................... $ 24,607,489 $ 10,482,034
==================== ====================
Undistributed net investment income............................................... $ 249 $ 250
==================== ====================
SHARE ACTIVITY:
Shares outstanding - beginning of period............................................ 1,127,702 0
------------------ ------------------
Shares issued....................................................................... 1,789,282 1,324,342
Shares issued - reinvestment of dividends and distributions......................... 91,339 25,588
Shares redeemed..................................................................... (796,148) (222,228)
------------------ ------------------
Increase (decrease) in shares outstanding........................................... 1,084,473 1,127,702
------------------ ------------------
Shares outstanding - end of period.................................................. 2,212,175 1,127,702
==================== ====================
</TABLE>
* The inception of this portfolio was March 1, 1994.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
63
<PAGE> 66
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
[COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND,
INC. UTILITY PORTFOLIO, THE DOW JONES UTILITIES AVERAGE INDEX AND THE STANDARD &
POOR'S INDEX OF 500 COMMON STOCKS]
[GRAPH]
FINANCIAL HIGHLIGHTS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1995 1994+
-------- --------
<S> <C> <C>
Net asset value, beginning of period........................ $ 9.30 $ 10.00
Income from operations:
Net investment income (loss)............................ .46 .43
Net realized and unrealized
gain (loss) on investments............................ 1.93 (.70)
-------- --------
Total income (loss) from operations................... 2.39 (.27)
-------- --------
Distributions:
Dividends from net investment income.................... (.46) (.43)
Distributions from net realized gains
on investments........................................ (.11) .00
-------- --------
Total distributions................................... (.57) (.43)
-------- --------
Net asset value, end of period.............................. $ 11.12 $ 9.30
========= =========
Total return................................................ 25.25% (4.58)%
Ratios and supplemental data:
Net assets at end of period
(in thousands).......................................... $ 24,607 $ 10,482
Ratio of expenses to average net assets................... 1.00% 1.00%
Ratio of net investment income (loss)
to average net assets................................... 4.56% 5.36%
Portfolio turnover rate................................... 78.34% 36.13%
</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 March 1, 1994. The total return is not
annualized.
The notes to the financial statements are in integral part of this report.
This material must be preceded or accompanied by the Fund's current prospectus.
- --------------------------------------------------------------------------------
64
<PAGE> 67
WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (31.72%)
U.S. Treasury Notes
7.13%, due 10/15/98.............. $ 3,000,000 $ 3,144,450
U.S. Treasury Notes
7.50%, due 11/15/01.............. 2,000,000 2,204,240
U.S. Treasury Notes
6.25%, due 01/31/97.............. 1,500,000 1,516,560
U.S. Treasury Notes
7.00%, due 04/15/99.............. 2,000,000 2,101,700
U.S. Treasury Notes
7.50%, due 05/15/02.............. 2,000,000 2,217,820
U.S. Treasury Notes
6.75%, due 05/31/97.............. 2,000,000 2,041,040
U.S. Treasury Notes
5.50%, due 07/31/97.............. 2,000,000 2,010,080
U.S. Treasury Notes
6.38%, due 08/15/02.............. 2,000,000 2,099,080
U.S. Treasury Notes
6.25%, due 02/15/03.............. 2,000,000 2,087,140
U.S. Treasury Notes
5.38%, due 05/31/98.............. 2,000,000 2,006,380
U.S. Treasury Notes
6.50%, due 04/30/99.............. 2,000,000 2,073,360
U.S. Treasury Notes
7.50%, due 10/31/99.............. 2,000,000 2,146,940
U.S. Treasury Notes
7.38%, due 11/15/97.............. 2,000,000 2,074,920
U.S. Treasury Notes
6.88%, due 03/31/00.............. 3,000,000 3,170,670
U.S. Treasury Notes
7.25% due 11/15/96............... 2,000,000 2,033,360
U.S. Treasury Notes
6.25%, due 05/31/00.............. 3,000,000 3,101,610
U.S. Treasury Notes
7.75% due 02/15/01............... 2,000,000 2,208,240
------------
Total U.S. Government Obligations
(cost: $ 37,356,910)............... 38,237,590
------------
U.S. GOVERNMENT AGENCY (0.90%)
Private Export Funding Corp.
7.30%, due 01/31/02.............. 1,000,000 1,080,000
------------
Total U.S. Government Agency
(cost: $ 1,054,490)................ 1,080,000
------------
MORTGAGE-BACKED SECURITIES (1.70%)
Federal Home Loan Bank
7.48%, due 06/28/01.............. 1,000,000 1,033,140
Federal Home Loan Mortgage
Corporation
6.57%, due 09/18/00.............. 1,000,000 1,019,250
------------
Total Mortgage-Backed Securities
(cost: $ 2,019,258)................ 2,052,390
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
<S> <C> <C>
CORPORATE DEBT SECURITIES (12.12%)
BANKING (0.96%)
Mellon Financial
9.25%, due 08/15/01.............. $ 1,000,000 $ 1,158,750
BEVERAGES (0.87%)
PepsiCo, Inc.
7.75%, due 10/01/98.............. 1,000,000 1,050,000
FINANCE (5.96%)
American Express Company
6.50%, due 08/01/00.............. 1,000,000 1,026,250
Federal Home Loan Bank
6.19%, due 11/20/01.............. 1,000,000 1,013,900
Federal National Mortgage
Association
6.18%, due 07/22/98.............. 1,000,000 1,003,020
Federal National Mortgage
Association
6.81%, due 05/15/00.............. 1,000,000 1,023,520
Ford Motor Credit Company
8.38%, due 01/15/00.............. 1,000,000 1,083,750
General Motors Acceptance
Corporation
6.63%, due 10/15/05.............. 1,000,000 1,023,750
Paine Webber Group
6.25%, due 06/15/98.............. 1,000,000 1,005,000
MACHINERY (0.87%)
Ingersoll-Rand Co.
6.97%, due 08/11/04.............. 1,000,000 1,053,750
MANUFACTURING (0.85%)
Masco Corporation
6.63%, due 09/15/99.............. 1,000,000 1,022,500
RETAIL & DEPARTMENT STORES (0.86%)
Wal-Mart Stores, Inc.
6.75%, due 05/15/02.............. 1,000,000 1,042,500
TELECOMMUNICATIONS (1.75%)
BellSouth Telecommunications
7.00%, due 02/01/05.............. 1,000,000 1,067,500
MCI Communications Corporation
7.13%, due 01/20/00.............. 1,000,000 1,046,250
------------
Total Corporate Debt Securities
(cost: $ 14,284,307)............... 14,620,440
------------
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
65
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WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- -------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS (0.42%)
TOBACCO PRODUCTS (0.42%)
RJR Nabisco Holdings Corp. -
Series C........................ 80,000 $ 510,000
-------------
Total Convertible Preferred Stocks
(cost: $ 493,563)................. 510,000
-------------
COMMON STOCKS (47.58%)
APPAREL & TEXTILES (2.37%)
Liz Claiborne, Inc. .............. 30,000 832,500
Shaw Industries, Inc. ............ 30,000 442,500
VF Corporation.................... 30,000 1,582,500
AUTOMOTIVE (4.07%)
Chrysler Corporation.............. 37,000 2,048,875
Ford Motor Company................ 40,000 1,160,000
PACCAR, Inc....................... 24,000 1,011,000
TBC Corporation*.................. 80,000 690,000
BUILDING (1.28%)
Fleetwood Enterprises, Inc. ...... 60,000 1,545,000
CHEMICALS (3.70%)
Dow Chemical Company.............. 20,000 1,407,500
Eastman Chemical Company.......... 30,000 1,878,750
Praxair, Inc. .................... 35,000 1,176,875
COMPUTER TECHNOLOGY (2.20%)
EMC Corporation*.................. 80,000 1,230,000
Seagate Technology, Inc.*......... 30,000 1,425,000
ELECTRONICS (2.23%)
American Power Conversion
Corporation*.................... 50,000 475,000
Intel Corporation................. 10,000 567,500
Teleflex, Inc. ................... 40,000 1,640,000
FINANCE (3.43%)
Federal Home Loan Mortgage
Corporation..................... 20,000 1,670,000
Federal National Mortgage
Association..................... 13,000 1,613,625
Lehman Brothers Holdings, Inc. ... 40,000 850,000
FOOD & FOOD SERVICE (1.65%)
Darden Restaurants, Inc. ......... 30,000 356,250
Philip Morris Companies, Inc. .... 18,000 1,629,000
FOREST PRODUCTS & PAPER (3.90%)
International Paper Company....... 60,000 2,272,500
Louisiana-Pacific Corporation..... 100,000 2,425,000
FURNITURE (0.19%)
O'Sullivan Industries
Holdings, Inc.* ................ 35,000 231,875
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
----------- -------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
INSURANCE (6.05%)
AFLAC, Inc. ...................... 41,000 1,778,375
AMBAC, Inc. ...................... 40,000 1,875,000
Integon Corporation............... 21,000 433,125
John Alden Financial
Corporation..................... 75,000 1,565,625
The PMI Group, Inc. .............. 36,000 1,629,000
MACHINERY (0.32%)
Lindsay Manufacturing Company* ... 10,000 385,000
MEDICAL (3.75%)
Humana, Inc.* .................... 80,000 2,190,000
US Healthcare, Inc. .............. 50,000 2,325,000
METALS (1.23%)
Birmingham Steel Corporation...... 100,000 1,487,500
OIL & GAS (1.78%)
Ashland, Inc. .................... 40,000 1,405,000
Valero Energy Corporation......... 30,000 735,000
RETAIL & DEPARTMENT STORES (4.26%)
Fingerhut Companies, Inc. ........ 40,000 555,000
May Department Stores Company..... 40,000 1,690,000
TJX Companies, Inc. .............. 80,000 1,510,000
Toys "R" Us, Inc.* ............... 40,000 870,000
Value City Department Stores*..... 75,000 506,250
TELECOMMUNICATIONS (2.31%)
Sprint Corporation................ 30,000 1,196,250
Telefonos de Mexico SA -
Class L - ADR................... 50,000 1,593,750
TOBACCO PRODUCTS (1.66%)
UST, Inc. ........................ 60,000 2,002,500
TRANSPORTATION (0.72%)
Arnold Industries, Inc. .......... 50,000 868,750
UTILITIES (0.48%)
Southwestern Energy Company....... 45,000 573,750
-------------
Total Common Stocks
(cost: $ 52,391,153).............. 57,336,125
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<S> <C> <C>
COMMERCIAL PAPER (4.19%)
Allomon Funding Corporation
5.85%, due 01/04/96............. $ 1,000,000 $ 999,188
Anchor Funding Corporation
6.10%, due 01/08/96............. 500,000 499,237
Distribution Funding Corporation
5.93%, due 01/02/96............. 800,000 799,605
Dynamic Funding Corporation
6.10%, due 01/02/96............. 250,000 249,873
Enterprise Funding Corporation
5.78%, due 01/11/96............. 1,000,000 998,073
</TABLE>
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
66
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WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Fingerhut Companies, Inc.
5.85%, due 01/02/96............. $ 500,000 $ 499,756
Triple A One Funding Corporation
5.85%, due 01/05/96............. 1,000,000 999,025
-------------
Total Commercial Paper
(cost: $ 5,044,757)............... 5,044,757
-------------
SHORT-TERM OBLIGATION (0.60%)
Prudential-Bache Securities**
5.39% Repurchase Agreement
dated 12/29/95 to be repurchased
at 723,736
on 01/02/96..................... 723,303 723,303
-------------
Total Short-Term Obligation
(cost: $ 723,303)................. 723,303
-------------
Total Investment Securities
(cost: $ 113,367,741)........... $119,604,605
-------------
-------------
SUMMARY
Investments at value.............. 99.23% $ 119,604,605
Other Assets in
Excess of Liabilities........... 0.77% 926,362
------- -------------
Net Assets........................ 100.00% $ 120,530,967
------- -------------
------- -------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
* No income dividends were paid during the preceding twelve months.
** Collateralized by $ 3,406,565 of Federal National Mortgage Association
9.00% due 09/01/22; market value and accrued interest aggregated $ 737,770
for this collateral at December 31, 1995.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
67
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WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION
PERIOD 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]
<TABLE>
<S> <C>
U.S. Government Obligations 31.72%
Corporate Debt Securities 12.12%
Apparel & Textiles 2.37%
Automotive 4.07%
Chemicals 3.70%
Computer Technology 2.20%
Electronics 2.23%
Finance 3.43%
Forest Products & Paper 3.90%
Insurance 6.05%
Medical 3.75%
Retail & Department Stores 4.26%
Telecommunications 2.31%
Commercial Paper 4.19%
Other 13.70%
</TABLE>
The investment objective of the Tactical Asset Allocation Portfolio is
preservation of capital and competitive investment returns. Its strategy seeks
to enhance value during strong market periods and to preserve capital during
weak or volatile market periods.
The U.S. stock market was strong during 1995 with the Standard & Poor's Index of
500 Common Stocks providing a 37.58% total return. Fixed-income markets also
showed strong performance during this period as the Lehman Brothers
Government/Corporate Intermediate Bond Index gained 15.3% on a total return
basis. For the year ended December 31, 1995, the Tactical Asset Allocation
Portfolio provided a total return of 20.09%. While on an absolute basis, these
returns were satisfactory, our conservative posture during 1995 kept our
allocation in stocks below 50%, thus hurting the Portfolio's performance
relative to the S&P 500.
Stocks and bonds rose sharply in 1995 as corporate earnings exceeded most
expectations and the Federal Reserve appeared to have achieved a "soft landing"
in the economy. The improvement in the inflation outlook, mostly due to the
slowdown in the economy, provided fuel for the sharp decline in interest rates.
Robust flows into mutual funds and corporate share repurchase programs provided
important support to stock prices.
Throughout the period we maintained a well-diversified portfolio of stocks that
provided solid returns. Our value philosophy guides us toward stocks and
industries that are currently out-of-favor and where expectations are very low.
We have purchased stocks of companies with attractive valuations and strong
balance sheets. At all times we seek to emphasize quality in our value stock
selection process.
Our asset allocation discipline guides us to a relatively low equity exposure
when risks appear high, and a relatively high equity exposure when risks appear
low. Over a complete market cycle, we intend to have an average allocation to
equities slightly greater than 60%. Our fixed-income strategy seeks to enhance
income through purchases of U.S. Treasuries and corporate bonds, and mostly
plays a defensive role.
As 1995 came to a close, we were maintaining our conservative outlook toward the
U.S. stock market with about a 48% allocation in equities, 46% in U.S.
Treasuries and corporate bonds, and 6% in cash investments. While our outlook on
stocks is positive for the long-term, our forecasting models suggest a more
difficult equity market environment in the short-to-intermediate term. With the
Federal Reserve apparently on a path of easing monetary policy, monetary factors
appear mixed to positive. At the same time, technical factors have been steadily
deteriorating. Valuations in the market remain a concern, just as they have for
much of 1995; dividend yield on the S&P 500 is the lowest in history, while
price-to-book value is near record-high territory. Sentiment has also
deteriorated with very high levels of initial and secondary stock offerings. In
sum, while interest rate and monetary factors suggest the market is not
necessarily overvalued, sentiment, technical, and valuation factors suggest that
risks have developed to the point where, historically, stocks have entered a
cyclical correction.
Our discipline is to maintain a fairly diversified portfolio of stocks with no
large industry or individual stock bets, particularly when we view the risks in
the stock market to be relatively high. Presently, our largest single equity
position is about 2%, and the largest industry position is about 6%.
Over the last several years, the stock market has not experienced a broad-based
decline, but has gone through rotational corrections, where entire industry
groups have declined sharply within a generally upward trending stock market.
This environment has provided excellent opportunities to selectively purchase
quality companies at attractive prices. We think we are well-positioned to take
advantage of this rotational behavior and plan to increase equity exposure when
attractive investment opportunities are presented as the broader market enters a
consolidation/correction phase.
<TABLE>
<S> <C> <C>
/s/ Arvind Sachdeva
-------------------
[DEAN INVESTMENT ASSOCIATES LOGO] Arvind Sachdeva
Tactical Asset Allocation Portfolio Manager
</TABLE>
- --------------------------------------------------------------------------------
68
<PAGE> 71
WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS: DECEMBER 31, 1995
<S> <C>
Investments in securities, at market value
(cost $ 107,599,681)...................... $ 113,836,545
Short-term securities, at amortized cost.... 5,768,060
Cash........................................ 0
Receivables:
Fund shares sold.......................... 0
Securities sold........................... 0
Interest.................................. 858,334
Dividends................................. 155,850
Other..................................... 0
-----------------
Total assets............................ 120,618,789
-----------------
LIABILITIES:
Fund shares purchased....................... 0
Securities purchased........................ 0
Accounts payable and accrued liabilities:
Custody fees.............................. 0
Investment advisory fees.................. 74,616
Dividends to shareholders................. 0
Other fees................................ 13,206
-----------------
Total liabilities....................... 87,822
-----------------
Total net assets...................... $ 120,530,967
===================
NET ASSETS:
Capital stock
($ .01 par value 75,000,000 authorized)... $ 104,880
Additional paid-in capital.................. 113,928,784
Accumulated undistributed income:
Accumulated undistributed net investment
income (loss)........................... 10,439
Accumulated undistributed net realized
gain (loss) on:
Investment transactions................. 250,000
Net unrealized appreciation (depreciation)
on:
Investment securities..................... 6,236,864
-----------------
Net assets applicable to outstanding
shares of capital......................... $ 120,530,967
===================
Shares outstanding at December 31, 1995..... 10,487,976
===================
Net asset value per share................... $ 11.49
===================
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD ENDED
INVESTMENT INCOME: DECEMBER 31, 1995*
<S> <C>
Interest.................................. $ 1,888,887
Dividends (Net of foreign tax of $ 19).... 674,868
------------------
Total investment income............. 2,563,755
------------------
EXPENSES:
Investment advisory fees.................. 433,844
Printing and shareholder reports.......... 8,254
Custodian fees............................ 44,519
Legal fees................................ 367
Auditing and accounting fees.............. 6,500
Directors fees............................ 396
Other fees................................ 13,467
------------------
Total expenses........................ 507,347
Less:
Advisory fee waiver and expense
reimbursement......................... 0
Fees paid indirectly.................... 286
------------------
Net expenses........................ 507,061
------------------
Net investment income (loss).............. 2,056,694
------------------
Net realized gain (loss) on:
Investment securities................. 2,438,162
Change in unrealized appreciation
(depreciation) on:
Investment securities................. 6,236,864
------------------
Net gain (loss) on investments........ 8,675,026
------------------
Net increase (decrease) in net assets
resulting from operations............... $ 10,731,720
====================
</TABLE>
* The inception of this portfolio was January 3, 1995.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
69
<PAGE> 72
WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1995*
<S> <C>
OPERATIONS:
Net investment income (loss)............................................................................... $ 2,056,694
Net realized gain (loss) on investments.................................................................... 2,438,162
Change in unrealized appreciation (depreciation) on investments............................................ 6,236,864
------------------
Net increase (decrease) in net assets resulting from operations.......................................... 10,731,720
------------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income...................................................................................... (2,046,255)
Net realized gains......................................................................................... (2,188,162)
------------------
Total distributions...................................................................................... (4,234,417)
------------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares.......................................................................... 125,126,149
Dividends and distributions reinvested..................................................................... 4,234,417
Cost of shares repurchased................................................................................. (15,326,902)
------------------
Increase (decrease) in net assets from capital shares transactions....................................... 114,033,664
------------------
Net increase (decrease) in net assets.................................................................... 120,530,967
NET ASSETS:
Beginning of period........................................................................................ 0
------------------
End of period.............................................................................................. $ 120,530,967
====================
Undistributed net investment income...................................................................... $ 10,439
====================
SHARE ACTIVITY:
Shares outstanding - beginning of period................................................................... 0
------------------
Shares issued.............................................................................................. 11,463,783
Shares issued - reinvestment of dividends and distributions................................................ 370,908
Shares redeemed............................................................................................ (1,346,715)
------------------
Increase (decrease) in shares outstanding.................................................................. 10,487,976
------------------
Shares outstanding - end of period......................................................................... 10,487,976
====================
</TABLE>
* The inception of this portfolio was January 3, 1995.
The notes to the financial statements are an integral part of this report.
- --------------------------------------------------------------------------------
70
<PAGE> 73
WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
[COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND,
INC. TACTICAL ASSET ALLOCATION PORTFOLIO, THE STANDARD & POOR'S INDEX OF 500
COMMON STOCKS AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND
INDEX]
[GRAPH]
FINANCIAL HIGHLIGHTS*
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
DECEMBER 31
-----------
1995+
-----------
<S> <C> <C>
Net asset value, beginning of period............... $ 10.00
Income from operations:
Net investment income (loss)................... .41
Net realized and unrealized
gain (loss) on investments................... 1.93
-----------
Total income (loss) from operations.......... 2.34
-----------
Distributions:
Dividends from net investment income........... (.41)
Distributions from net realized gains
on investments............................... (.44)
-----------
Total distributions.......................... (.85)
-----------
Net asset value, end of period..................... $ 11.49
=============
Total return....................................... 20.09%
Ratios and supplemental data:
Net assets at end of period
(in thousands).................................. $ 120,531
Ratio of expenses to average net assets.......... .93%
Ratio of net investment income (loss)
to average net assets.......................... 3.76%
Portfolio turnover rate.......................... 38.68%
</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 January 3, 1995. 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.
- --------------------------------------------------------------------------------
71
<PAGE> 74
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 commenced operations with three portfolios on October 2, 1986:
Money Market, Bond, and Growth (each with different investment objectives). 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
all the Portfolios to the separate accounts of life insurers affiliated with
WRL.
Since our initial three portfolio offerings, additional portfolios have
been added.
<TABLE>
<CAPTION>
PORTFOLIO INCEPTION
- --------------------------------- -----------------
<S> <C>
Short-to-Intermediate Government December 3, 1992
Global December 3, 1992
Equity-Income March 1, 1993
Emerging Growth March 1, 1993
Aggressive Growth March 1, 1994
Balanced March 1, 1994
Utility March 1, 1994
Tactical Asset Allocation January 3, 1995
</TABLE>
On January 3, 1995, WRL supplied seed capital in the amount of $500,000 for
the Tactical Asset Allocation Portfolio. On April 20, 1995, WRL redeemed the
seed capital in the Tactical Asset Allocation Portfolio for $524,042.
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
The Board of Directors has determined that the most appropriate method for
valuing the securities of the Money Market Portfolio is the amortized cost
method. Under this method, the net asset value of Money Market Portfolio
shares is expected to remain at a constant $1.00 per share.
Securities held by the remaining portfolios 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.
- --------------------------------------------------------------------------------
72
<PAGE> 75
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 1 (CONTINUED)
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 regulations 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.
Reclassifications between undistributed net investment income (UNII) and
undistributed realized capital gains (URCG) were made to appropriately
conform financial accounting and tax treatment of dividend distributions.
Net investment income, net realized gains and net assets were not effected
by this change. The Portfolios and the amounts of the reclassifications are
as follows:
<TABLE>
<CAPTION>
PORTFOLIO UNII URCG
---------------------- ----------- -----------
<S> <C> <C>
Global $(2,745,074) $ 2,745,074
Aggressive Growth 515,168 (515,168)
Balanced (143) 143
</TABLE>
In addition, reclassifications were made in the Growth and Global Portfolios
for $188,988 and $1,444,952, respectively, from undistributed realized gains
and losses to additional paid-in capital.
D. DIVIDENDS AND DISTRIBUTIONS
Dividends of the Fund's Money Market Portfolio are declared daily and
reinvested monthly. Dividends of the remaining portfolios 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 annually renewable investment advisory agreements
for each portfolio with WRL as investment adviser. The Fund pays to WRL, and
charges to each respective portfolio, advisory fees each month at the
following annual rate expressed as a percentage of the average daily net
assets of the respective portfolio:
<TABLE>
<CAPTION>
PORTFOLIO PERCENT OF ASSETS
----------------------------- -----------------
<S> <C>
Money Market .50%
Bond .50%
Growth .80%
Short-to-Intermediate
Government .60%
Global .80%
Equity-Income .80%
Emerging Growth .80%
Aggressive Growth .80%
Balanced .80%
Utility .75%
Tactical Asset Allocation .80%
</TABLE>
- --------------------------------------------------------------------------------
73
<PAGE> 76
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 2 (CONTINUED)
WRL currently voluntarily waives its advisory fees to the extent a
portfolio's normal operating expenses exceeds the percentage of net assets
of the portfolio as listed below:
<TABLE>
<CAPTION>
PORTFOLIO PERCENT OF ASSETS
----------------------------- -----------------
<S> <C>
Money Market .70%
Bond .70%
Growth 1.00%
Short-to-Intermediate
Government 1.00%
Global 1.00%
Equity-Income 1.00%
Emerging Growth 1.00%
Aggressive Growth 1.00%
Balanced 1.00%
Utility 1.00%
Tactical Asset Allocation 1.00%
</TABLE>
WRL has entered into a sub-advisory agreement with various management
companies. Pursuant to each agreement, fifty percent of the advisory fee
paid to WRL is due the respective management company, for the following
Portfolios:
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT MANAGER
-------------------------------------------------
<S> <C>
Money Market Janus Capital Corporation
("JCC")
Bond JCC
Growth JCC
Global JCC
Equity-Income Luther King Capital
Management Corp.
Aggressive Growth Fred Alger Management, Inc.
</TABLE>
Pursuant to other agreements, fifty percent of the advisory fee paid to WRL
less fifty percent of any expense reimbursement is due the respective
management company:
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT MANAGER
------------------------------------------------
<S> <C>
Short-to-Intermediate AEGON USA Investment
Government Management, Inc.
("AEGON Mgmt.")
Balanced AEGON Mgmt.
Emerging Growth Van Kampen American
Capital Asset
Management, Inc.
Tactical Asset Dean Investment
Allocation Associates
</TABLE>
Pursuant to the Utility Portfolio agreement, 0.50% of the first $30 million
of average daily net assets, 0.35% of the next $20 million of average daily
net assets and 0.25% of average daily net assets in excess of $50 million,
is payable to Federated Investment Counseling.
The Portfolios are charged for expenses that specifically relate to their
individual 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. All normal operating
expenses that exceed the established expense limit set forth above will be
borne by WRL.
B. AFFILIATES
WRL and AEGON Mgmt. are indirect wholly-owned subsidiaries of AEGON USA,
Inc., which is an indirect wholly-owned subsidiary of AEGON nv, a
Netherlands corporation.
During the year ended December 31, 1995, the Aggressive Growth Portfolio
borrowed against a line of credit agreement with Bank Labouchere nv
Amsterdam, an affiliate of AEGON nv, resulting in the payment of interest
expense in the amount of $161,975 in the accompanying statement of
operations.
- --------------------------------------------------------------------------------
74
<PAGE> 77
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 3 - SECURITY TRANSACTIONS
Securities transactions are summarized as follows:
<TABLE>
<CAPTION>
SHORT-TO-
INTERMEDIATE
MONEY MARKET BOND GROWTH GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
For the year ended December 31, 1995:
Purchases of securities:
Long-term excluding U.S. Government....... $ 0 $ 75,683,716 $1,055,695,142 $ 2,692,520
U.S. Government securities................ 549,916,827 164,384,279 1,694,937,824 30,390,892
Proceeds from maturities and sales of
securities:
Long-term excluding U.S. Government....... 0 46,796,607 1,127,131,393 841,936
U.S. Government securities................ 590,589,720 162,292,701 1,686,795,548 29,843,931
</TABLE>
<TABLE>
<CAPTION>
EQUITY- EMERGING AGGRESSIVE
GLOBAL INCOME GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
For the year ended December 31, 1995:
Purchases of securities:
Long-term excluding U.S. Government....... $367,269,819 $124,020,948 $ 290,988,995 $205,223,005
U.S. Government securities................ 212,838,215 13,370,477 1,085,133,937 0
Proceeds from maturities and sales of
securities:
Long-term excluding U.S. Government....... 298,077,220 104,149,062 268,170,818 114,163,880
U.S. Government securities................ 321,200,747 2,447,135 1,071,039,261 0
</TABLE>
<TABLE>
<CAPTION>
TACTICAL
ASSET
BALANCED UTILITY ALLOCATION
PORTFOLIO PORTFOLIO PORTFOLIO*
------------ ----------- -----------
<S> <C> <C> <C>
For the year ended December 31, 1995:
Purchases of securities:
Long-term excluding U.S. Government........... $22,163,317 $23,505,083 $72,500,362
U.S. Government securities.................... 7,812,756 0 66,925,418
Proceeds from maturities and sales of securities:
Long-term excluding U.S. Government........... 19,236,337 12,844,412 14,052,023
U.S. Government securities.................... 2,931,139 0 19,474,955
</TABLE>
* The inception of this portfolio was January 3, 1995.
- --------------------------------------------------------------------------------
75
<PAGE> 78
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 each Portfolio for accounting purposes, are also attributed to
that 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 Fund 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>
PRIOR YEAR NET
POST-OCTOBER CAPITAL LOSS NET CAPITAL LOSS
NET CAPITAL LOSSES CARRYFORWARD NET CAPITAL LOSS CARRYFORWARD
PORTFOLIO GAINS DEFERRED UTILIZED CARRYFORWARD AVAILABLE THROUGH:
- ----------------------- ------------ ------------ ---------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Money Market........... $ n/a $ n/a $ n/a $ n/a n/a
Bond................... 0 0 2,128,588 (7,509,065) December 31, 2002
Growth................. 113,958,394 233,731 43,473,423 0 n/a
Short-to-Intermediate $171,939 through
Government........... 0 9,904 0 (419,679) December 31, 2002
$247,740 through
December 31, 2003
Global................. 11,759,084 5,086 0 0 n/a
Equity-Income.......... 7,252,507 0 2,641,691 0 n/a
Emerging Growth........ 12,672,178 0 22,781,487 0 n/a
Aggressive Growth...... 8,312,504 4,016,717 236,359 0 n/a
Balanced............... 0 472,914 179,481 (241,575) December 31, 2002
Utility................ 199,418 0 75,763 0 n/a
Tactical Asset
Allocation........... 2,438,162 0 0 0 n/a
</TABLE>
<TABLE>
<CAPTION>
NET UNREALIZED
FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO COST BASIS APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------------------- ------------ ------------- ------------ -----------------
<S> <C> <C> <C> <C>
Money Market............. $ 80,487,232 $ n/a $ n/a $ n/a
Bond..................... 88,821,523 6,942,786 0 6,942,786
Growth................... 911,406,571 289,513,601 5,316,001 284,197,600
Short-to-Intermediate
Government............. 22,641,994 677,321 17,955 659,366
Global................... 248,384,731 49,395,227 4,450,155 44,945,072
Equity-Income............ 226,618,292 34,473,888 2,267,046 32,206,842
Emerging Growth.......... 228,076,306 71,947,386 3,579,566 68,367,820
Aggressive Growth........ 138,439,024 26,297,668 4,425,547 21,872,121
Balanced................. 27,763,353 3,210,247 68,852 3,141,395
Utility.................. 22,154,048 2,678,751 153,028 2,525,723
Tactical Asset
Allocation............. 113,367,741 7,252,401 1,015,537 6,236,864
</TABLE>
- --------------------------------------------------------------------------------
76
<PAGE> 79
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 and Global Portfolios 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) 02/22/96 $ 13,814,167 $ 284,674
German Deutschemark................. (22,000,000) 04/11/96 15,453,731 98,369
German Deutschemark................. (8,500,000) 04/25/96 5,974,938 172,233
------------ --------------
Total Growth Portfolio...... $ 35,242,836 $ 555,276
============= ==============
Global Portfolio
British Pound....................... (34,540) 01/02/96 $ 53,622 $ (455)
British Pound....................... (413,196) 01/04/96 641,435 2,449
British Pound....................... (292,229) 01/05/96 453,638 (1,706)
British Pound....................... 300,000 01/25/96 465,475 (6,605)
British Pound....................... (3,808,000) 01/25/96 5,908,428 114,686
British Pound....................... 500,000 01/25/96 775,791 7,192
British Pound....................... 608,000 01/25/96 943,362 7,042
British Pound....................... 820,000 01/25/96 1,272,298 (23,712)
British Pound....................... (68,711) 01/08/96 106,626 0
Finnish Markka...................... (245,630) 01/03/96 56,633 (222)
Finnish Markka...................... (272,068) 01/04/96 62,731 (563)
Finnish Markka...................... (16,900,000) 01/25/96 3,900,633 29,599
Finnish Markka...................... (12,264,000) 05/09/96 2,840,756 60,249
Finnish Markka...................... 3,000,000 05/09/96 694,901 3,362
French Franc........................ 73,163 01/31/96 14,982 90
French Franc........................ 184,805 01/31/96 37,844 78
French Franc........................ 4,000,000 03/14/96 819,599 5,930
French Franc........................ (12,200,000) 03/14/96 2,499,778 (61,875)
French Franc........................ (9,225,000) 03/14/96 1,890,201 (62,383)
French Franc........................ 73,163 01/31/96 14,941 0
German Deutschemark................. (5,404,000) 01/25/96 3,781,872 106,457
German Deutschemark................. 7,000,000 01/25/96 4,898,798 (122,362)
German Deutschemark................. (22,968,000) 01/25/96 16,073,657 473,894
Hong Kong Dollar.................... (477,548) 01/02/96 61,761 4
Japanese Yen........................ 17,319,134 01/04/96 168,104 (683)
Japanese Yen........................ 6,302,479 01/04/96 61,173 (248)
Japanese Yen........................ 13,630,128 01/04/96 132,297 (537)
Japanese Yen........................ 12,757,715 01/04/96 123,829 (503)
Japanese Yen........................ 905,382 01/04/96 8,788 (36)
</TABLE>
- --------------------------------------------------------------------------------
77
<PAGE> 80
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 5 - COMMITMENTS (CONTINUED)
<TABLE>
<CAPTION>
12/31/95 NET UNREALIZED
VALUE IN APPRECIATION
CURRENCY BOUGHT (SOLD) SETTLEMENT DATE U.S. DOLLARS (DEPRECIATION)
- -------------------------------------- -------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Global Portfolio (continued)
Japanese Yen........................ 4,817,474 01/04/96 $ 46,760 $ (190)
Japanese Yen........................ 1,808,836 01/05/96 17,560 (65)
Japanese Yen........................ 6,313,667 01/05/96 61,291 (225)
Japanese Yen........................ 13,707,055 01/05/96 133,064 (489)
Japanese Yen........................ 25,576,558 01/05/96 248,290 (912)
Japanese Yen........................ (171,003,000) 01/25/96 1,665,078 48,551
Japanese Yen........................ (108,145,000) 01/25/96 1,053,022 239,342
Japanese Yen........................ (99,037,000) 02/08/96 966,234 183,754
Japanese Yen........................ (1,000,000,000) 02/08/96 9,756,297 716,003
Japanese Yen........................ (185,963,000) 02/08/96 1,814,310 337,044
Japanese Yen........................ (300,000,000) 02/08/96 2,926,890 333,449
Japanese Yen........................ (445,000,000) 02/22/96 4,349,930 83,445
Japanese Yen........................ (1,300,000,000) 03/14/96 12,745,348 255,172
Japanese Yen........................ (350,000,000) 03/14/96 3,431,440 132,896
Japanese Yen........................ (300,000,000) 03/14/96 2,941,234 60,567
Japanese Yen........................ 4,577,920 01/08/96 44,360 0
Japanese Yen........................ 5,473,088 01/08/96 53,034 0
Japanese Yen........................ 4,012,155 01/08/96 38,877 0
Swedish Krona....................... (99,000,000) 01/25/96 14,909,078 (1,541,537)
Swedish Krona....................... (47,140,000) 02/08/96 7,092,092 (50,596)
Swiss Franc......................... (5,854,000) 05/09/96 5,160,012 96,813
------------ --------------
Total Global Portfolio...... $118,218,154 $ 1,422,164
============= ==============
</TABLE>
- --------------------------------------------------------------------------------
78
<PAGE> 81
WRL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 6 - FINANCIAL HIGHLIGHTS
The Financial Highlights for each Portfolio (except the Money Market
Portfolio) contains 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 that Portfolio to one or more broad based market
indices. In the comparison chart and the total return set forth in "Financial
Highlights", the total return and the change in value of the portfolio reflect
the advisory fee and all other portfolio expenses and include reinvestment of
dividends and capital gains; they do not reflect the charges against the
corresponding sub-accounts or the charges and deductions under the applicable
Policies or Annuity Contracts. Where a Portfolio's period from inception is less
than one year, the total return shown is not annualized. The indices referred to
in the comparison charts are unmanaged and are used as a general measure of
market performance; with the exception of the Value Line (Arithmetic) Index,
they assume reinvestment of dividends and capital gains and all indices do 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>
Money Market.......................... * * * * * * 0.84% 1.16% 1.63% 6.33%
Bond.................................. * * * * 0.82% * 0.82% 1.07% 2.12% 6.37%
Growth................................ * * * * * * 1.13% 1.49% 1.90% 6.76%
Short-to-Intermediate
Government.......................... * * 1.02% 1.41% ** ** ** ** ** **
Global................................ * * * * ** ** ** ** ** **
Equity-Income......................... * * 1.12% ** ** ** ** ** ** **
Emerging Growth....................... * * 1.16% ** ** ** ** ** ** **
Aggressive Growth..................... * 1.18% ** ** ** ** ** ** ** **
Balanced.............................. * 1.34% ** ** ** ** ** ** ** **
Utility............................... 1.08% 1.90% ** ** ** ** ** ** ** **
Tactical Asset Allocation............. * ** ** ** ** ** ** ** ** **
</TABLE>
* No waiver - portfolio did not exceed expense limitations.
** Portfolio not in existence during this period.
- --------------------------------------------------------------------------------
79
<PAGE> 82
This page is intentionally left blank.
<PAGE> 83
- --------------------------------------------------------------------------------
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
Ext. 6538
---------------------------------------------
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-ADVISERS:
<TABLE>
<S> <C>
Janus Capital Corporation AEGON USA
Suite 300 Investment Management, Inc.
100 Fillmore Street 4333 Edgewood Road, N.E.
Denver, CO 80206 Cedar Rapids, IA 52449
Luther King Capital Van Kampen American Capital
Management Corporation Asset Management, Inc.
301 Commerce Street 2800 Post Oak Blvd.
Fort Worth, TX 76102 Houston, TX 77253
Federated Investment Counseling Fred Alger Management, Inc.
Federated Investors Tower 75 Maiden Lane
Pittsburgh, PA 15222-3779 New York, NY 10038
</TABLE>
Dean Investment Associates
2480 Kettering Tower
Dayton, OH 45423-2480
---------------------------------------------
INDEPENDENT ACCOUNTANTS:
Price Waterhouse LLP
1055 Broadway
Kansas City, MO 64105
<PAGE> 84
THIS MATERIAL IS FOR CONTRACT HOLDER
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
ACC00001-A (2/96)
<PAGE> 85
Appendix to Electronic Format Page 1 of 7
WRL Series Fund, Inc.
Page 1 (photo) Shown is John R. Kenney, Chairman of the
Board
Page 4 (photo) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
Automotive 5.83%
Banking 4.33%
Beverages 9.90%
Computer Technology 4.32%
Electronics 4.32%
Finance 30.91%
Household Products 4.30%
Insurance 8.66%
Machinery 4.95%
Oil & Gas 8.80%
Telecommunications 13.61%
Other 0.07%
</TABLE>
Page 9 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
U.S. Government Obligations 42.80%
Aerospace 3.25%
Automotive 2.20%
Banking 11.85%
Beverages 2.62%
Chemicals 3.45%
Finance 6.64%
Foods & Food Service 3.25%
Insurance 2.32%
Pharmaceuticals 3.32%
Short-Term U.S. Government Obligations 5.12%
Commercial Paper 8.14%
Other 5.04%
</TABLE>
Page 12 (graph) Mountain graph depicting the change in value
of a $10,000 investment in the portfolio
since inception versus the Lehman Brothers
Government/Corporate Bond Index (LB) over the
same time frame.
<TABLE>
<CAPTION>
Portfolio LB Index
<S> <C> <C>
Inception 10/2/86 $10,000 $10,000
Period Ended 12/31/86 $10,412 $10,310
FYE 12/31/87 $9,823 $10,540
FYE 12/31/88 $10,583 $11,340
FYE 12/31/89 $12,133 $12,960
FYE 12/31/90 $12,887 $14,030
FYE 12/31/91 $15,317 $16,290
FYE 12/31/92 $16,358 $17,530
FYE 12/31/93 $18,547 $19,460
FYE 12/31/94 $17,260 $18,780
FYE 12/31/95 $21,228 $22,390
</TABLE>
<PAGE> 86
Appendix to Electronic Format (continued) Page 2 of 7
WRL Series Fund, Inc.
Page 15 (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 18 (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>
<CAPTION>
Portfolio S&P Index
<S> <C> <C>
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>
Page 21 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
U.S. Government Obligations 37.44%
Mortgage-Backed Securities 11.26%
Asset-Backed Securities 9.67%
Supranational Agency Obligations 8.07%
Banking 4.24%
Finance 3.04%
Insurance 3.24%
Real Estate 3.17%
Short-Term U.S. Government Obligation 12.67%
Short-Term Obligation 3.76%
Other 3.44%
</TABLE>
<PAGE> 87
Appendix to Electronic Format (continued) Page 3 of 7
WRL Series Fund, Inc.
Page 24 (graph) Mountain graph depicting the change in value
of a $10,000 investment in the portfolio
since inception versus the Merrill Lynch 1-10
Year Government Bond Index (ML) over the same
time frame.
<TABLE>
<CAPTION>
Portfolio ML Index
<S> <C> <C>
Inception 12/3/92 $10,000 $10,000
Period Ended 12/31/92 $10,045 $10,132
FYE 12/31/93 $10,505 $10,960
FYE 12/31/94 $10,460 $10,772
FYE 12/31/95 $11,877 $12,341
</TABLE>
Page 28 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
Preferred Stocks 4.94%
Automotive 3.45%
Banking 8.67%
Chemicals 4.04%
Commercial Services 5.39%
Computer Technology 9.90%
Consumer Goods 3.26%
Electronics 3.27%
Foods & Food Service 3.15%
Holding Companies 7.06%
Hotel & Motel 2.26%
Pharmaceuticals 12.30%
Retail & Department Stores 2.44%
Telecommunications 6.04%
Tobacco Products 2.38%
Short-Term U.S. Government Obligations 3.43%
Commercial Paper 3.76%
Other 14.26%
</TABLE>
Page 31 (graph) Mountain graph depicting the change in value
of a $10,000 investment in the portfolio
since inception versus the Morgan Stanley
Capital International World Index (MS) over
the same time frame.
<TABLE>
<CAPTION>
Portfolio MS Index
<S> <C> <C>
Inception 12/3/92 $10,000 $10,000
Period Ended 12/31/92 $10,162 $10,008
FYE 12/31/93 $13,724 $12,415
FYE 12/31/94 $13,759 $13,110
FYE 12/31/95 $16,932 $15,900
</TABLE>
<PAGE> 88
Appendix to Electronic Format (continued) Page 4 of 7
WRL Series Fund, Inc.
Page 35 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
U.S. Government Obligations 6.20%
Corporate Debt Securities 12.29%
Convertible Bonds 2.11%
Convertible Preferred Stock 7.98%
Chemicals 7.80%
Electronics 6.72%
Finance 2.25%
Foods & Food Service 5.07%
Manufacturing 3.62%
Medical 3.07%
Oil & Gas 6.53%
Pharmaceuticals 3.28%
Telecommunications 2.51%
Short-Term Obligation 5.38%
Other 25.19%
</TABLE>
Page 38 (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) and Lehman
Brothers Government/Corporate Intermediate
Bond Index (LB) over the same time frame.
<TABLE>
<CAPTION>
Portfolio S&P Index LB Index
<S> <C> <C> <C>
Inception 3/1/93 $10,000 $10,000 $10,000
Period Ended 12/31/93 $11,349 $10,770 $10,490
FYE 12/31/94 $11,288 $10,912 $10,300
FYE 12/31/95 $14,072 $14,996 $11,879
</TABLE>
Page 43 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
Apparel & Textiles 2.33%
Banking 4.62%
Commercial Services 3.72%
Computer Technology 15.40%
Electronics 9.25%
Finance 4.40%
Insurance 3.64%
Medical 10.78%
Oil & Gas 4.81%
Retail & Department Stores 6.59%
Telecommunications 7.84%
Transportation 2.47%
Short-Term U.S. Government Obligations 6.22%
Other 17.93%
</TABLE>
<PAGE> 89
Appendix to Electronic Format (continued) Page 5 of 7
WRL Series Fund, Inc.
Page 46 (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>
<CAPTION>
Portfolio S&P Index
<S> <C> <C>
Inception 3/1/93 $10,000 $10,000
Period Ended 12/31/93 $12,471 $10,770
FYE 12/31/94 $11,553 $10,912
FYE 12/31/95 $16,960 $14,996
</TABLE>
Page 49 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
Commercial Services 2.19%
Computer Technology 23.32%
Electronics 12.38%
Insurance 2.96%
Manufacturing 2.04%
Medical 14.06%
Pharmaceuticals 8.66%
Restaurants 4.81%
Retail & Department Stores 7.24%
Telecommunications 8.15%
Short-Term Obligation 4.03%
Other 10.16%
</TABLE>
Page 52 (graph) Mountain graph depicting the change in value
of a $10,000 investment in the portfolio
since inception versus the Value Line
(Arithmetic) Index (VL) and the Standard &
Poor's Index of 500 Common Stocks (S&P) over
the same time frame.
<TABLE>
<CAPTION>
Portfolio VL Index S&P Index
<S> <C> <C> <C>
Inception $10,000 $10,000 $10,000
Period Ended 12/31/94 $9,874 $9,685 $10,072
FYE 12/31/95 $13,628 $12,197 $13,854
</TABLE>
Page 55 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
U.S. Government Obligations 31.83%
Automotive 2.33%
Banking 9.04%
Building 2.42%
Computer Technology 2.42%
Electronics 2.55%
Energy 2.45%
Finance 2.31%
Housing 2.58%
Insurance 7.61%
Medical 7.16%
Oil & Gas 5.25%
Publishing 2.50%
Real Estate 13.17%
Telecommunications 2.29%
Short-Term Obligations 1.87%
Other 2.22%
</TABLE>
<PAGE> 90
Appendix to Electronic Format (continued) Page 6 of 7
WRL Series Fund, Inc.
Page 58 (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) and the
Lehman Brothers Government/Corporate
Intermediate Bond Index (LB) over the same
time frame.
<TABLE>
<CAPTION>
Portfolio S&P Index LB Index
<S> <C> <C> <C>
Inception 3/1/94 $10,000 $10,000 $10,000
Period Ended 12/31/94 $9,427 $10,072 $9,840
FYE 12/31/95 $11,293 $13,854 $11,348
</TABLE>
Page 61 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
Corporate Debt Securities 0.81%
Convertible Bonds 1.52%
Convertible Preferred Stocks 15.19%
Electric Utilities 38.52%
Energy 2.55%
Oil & Gas 5.01%
Telecommunications 20.21%
Telephone Utilities 4.37%
Utilities 4.08%
Short-Term Obligation 4.86%
Other 2.88%
</TABLE>
Page 64 (graph) Mountain graph depicting the change in value
of a $10,000 investment in the portfolio
since inception versus the Dow Jones
Utilities Average Index (Dow Util) and the
Standard & Poor's Index of 500 Common Stocks
(S&P) over the same time frame.
<TABLE>
<CAPTION>
Dow Util
Portfolio Index S&P Index
<S> <C> <C> <C>
Inception 3/1/94 $10,000 $10,000 $10,000
Period Ended 12/31/94 $9,542 $8,625 $10,072
FYE 12/31/95 $11,952 $12,063 $13,854
</TABLE>
Page 68 (graph) Pie chart depicting industry investments as a
percentage of total portfolio net assets.
<TABLE>
<S> <C>
U.S. Government Obligations 31.72%
Corporate Debt Securities 12.12%
Apparel & Textiles 2.37%
Automotive 4.07%
Chemicals 3.70%
Computer Technology 2.20%
Electronics 2.23%
Finance 3.43%
Forest Products & Paper 3.90%
Insurance 6.05%
Medical 3.75%
Retail & Department Stores 4.26%
Telecommunications 2.31%
Commercial Paper 4.19%
Other 13.70%
</TABLE>
<PAGE> 91
Appendix to Electronic Format (continued) Page 7 of 7
WRL Series Fund, Inc.
Page 71 (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) and the
Lehman Brothers Government/Corporate
Intermediate Bond Index (LB) over the same
time frame.
<TABLE>
<CAPTION>
Portfolio S&P Index LB Index
<S> <C> <C> <C>
Inception 1/3/95 $10,000 $10,000 $10,000
Period Ended 12/31/95 $12,009 $13,758 $11,533
</TABLE>
