<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WRL SERIES FUND, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/X/ Fee paid previously with preliminary materials.
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
201 HIGHLAND AVENUE
LARGO, FLORIDA 33770
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 29, 1996
TO THE SHAREHOLDERS:
A special meeting of the shareholders of the Emerging Growth Portfolio
("Portfolio") of the WRL Series Fund, Inc. (the "Fund"), will be held on
Tuesday, October 29, 1996, at 10:00 a.m., at 201 Highland Avenue, Largo, Florida
33770, or any adjournment thereof, for the following purposes:
(1) To approve a new Sub-Advisory Agreement between Western Reserve Life
Assurance Co. of Ohio ("Western Reserve") and Van Kampen American Capital
Asset Management, Inc. (the "Sub-Adviser") with respect to the Emerging Growth
Portfolio of the Fund, the material terms of which are substantially identical
as those of the existing Sub-Advisory Agreement between Western Reserve and
the Sub-Adviser; and
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
You are entitled to vote at the meeting and any adjournments thereof if you
owned Portfolio shares at the close of business on September 9, 1996. If you
attend the meeting, you may vote your shares in person. If you do not expect to
attend the meeting, please complete, date, sign and return the enclosed proxy in
the enclosed postage paid envelope.
By Order of the Board of Directors
Thomas E. Pierpan, Assistant Secretary
September 19, 1996
<PAGE> 3
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
201 HIGHLAND AVENUE
LARGO, FLORIDA 33770
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
OCTOBER 29, 1996
This is a proxy statement for the Emerging Growth Portfolio ("Portfolio") of
the WRL Series Fund, Inc. (the "Fund"), a series mutual fund consisting of
several series or separate investment portfolios. This proxy statement is being
furnished in connection with the solicitation of proxies by the Board of
Directors of the Fund, on behalf of the Portfolio, to be used at the Fund's
special meeting of shareholders of the Portfolio ("Meeting"). The Meeting will
be held on Tuesday, October 29, 1996, at 10:00 a.m. Eastern Time, at 201
Highland Avenue, Largo, Florida 33770, for the purposes set forth in the notice
of the Meeting.
The primary purpose of the Meeting is to permit the Portfolio's shareholders
to consider a Proposed Sub-Advisory Agreement (defined below) to take effect
following the consummation of the transactions contemplated by an Agreement and
Plan of Merger, dated as of June 21, 1996 (the "Merger Agreement"), among Morgan
Stanley Group Inc. ("Morgan Stanley"), MSAM Holdings II, Inc., MSAM Acquisition
Inc. and VK/AC Holding, Inc. ("VKAC Holding"), the indirect parent corporation
of the Sub-Adviser (the "Acquisition"). Pursuant to the Merger Agreement, the
Sub-Adviser will become an indirect subsidiary of Morgan Stanley. The
shareholder vote on the Proposed Sub-Advisory Agreement is required under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a result of
Morgan Stanley's contemplated acquisition of the Sub-Adviser. The Portfolio's
Proposed Sub-Advisory Agreement is substantially identical to the Portfolio's
Current Sub-Advisory Agreement (defined below), except for the dates of
execution, effectiveness and termination.
Western Reserve, and AUSA Life Insurance Company ("AUSA Life"), an affiliate
of Western Reserve, are both wholly-owned subsidiaries of First AUSA Life
Insurance Company ("First AUSA"). Western Reserve or AUSA Life, as the case may
be, will vote in accordance with the directions as indicated on your enclosed
voting instruction form provided it is received properly executed. If you
properly execute your voting instruction form and give no voting instruction,
your shares will be voted FOR all the proposals set forth herein. Abstentions
will be counted as present for purposes of determining a quorum, but will not be
counted as voting with respect to those proposals from which Policyowners
(defined below) abstain. Voting instructions may be revoked at any time prior to
their exercise by
<PAGE> 4
execution of a subsequent voting instruction form, by written notice to the
Secretary of the Fund or by voting in person at the Meeting.
A majority of the shares of stock outstanding on September 9, 1996,
represented in person or by proxy, of the Fund must be present for the
transaction of business at the Meeting. In the event that a quorum is present at
the Meeting but sufficient votes to approve the proposal are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. A shareholder vote may be taken on the proposal in this
proxy statement prior to any such adjournment if sufficient votes have been
received and it is otherwise appropriate.
Each full share outstanding is entitled to one vote and each fractional share
outstanding is entitled to a proportionate share of one vote. As of the Record
Date, September 9, 1996, the Fund had outstanding 21,514,918.697 shares of the
Portfolio (representing a cash value of $399,220,210.62), all of which are owned
of record by the WRL Series Life Account or the WRL Series Annuity Account of
Western Reserve, by Western Reserve directly, or by Pooled Account No. 27 of
AUSA Life (together, the "Accounts"). Western Reserve or AUSA Life,
respectively, will vote shares held in those Accounts at the Meeting in
accordance with the instructions received from the holders of individual
variable life insurance policies, individual variable annuity contracts and
group annuities (collectively, "Policies" owned by the "Policyowners") whose
benefits thereunder are funded through those Accounts.
POLICYOWNERS' RIGHT TO INSTRUCT WESTERN RESERVE
The Fund has agreed to solicit voting instructions from the Policyowners, upon
which instructions Western Reserve or AUSA Life, respectively, will vote the
shares of the Portfolio at the Meeting on October 29, 1996, and any adjournment
thereof. The Fund will mail to each Policyowner of record as of September 9,
1996 a copy of this proxy statement. The number of Fund shares in the Portfolio
for which a Policyowner may give instructions is determined as follows: the
number of Portfolio shares (and corresponding votes) allotted to each Policy
will be calculated by dividing the amount of the Policy's cash value (the
contract value, in the case of a variable annuity or group annuity contract),
attributable to the Portfolio by $100. Fractional shares will be counted. Based
upon the cash value attributable to the Portfolio as of September 9, 1996,
Policyowners are entitled to an aggregate of 3,992,202.1062 votes with respect
to the Portfolio.
All shares for which Western Reserve and AUSA Life receive properly executed
instructions which are not subsequently revoked prior to the Meeting, will be
voted at the Meeting in accordance with such instructions. Western Reserve and
AUSA Life will vote the shares of the Portfolio for which no timely instructions
are
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received, and any shares owned exclusively by Western Reserve, in proportion to
the voting instructions which are received with respect to all Policies
participating in the Fund. Abstentions will be applied on a pro rata basis to
reduce the votes eligible to be cast.
To the knowledge of the Fund, no person has the right to instruct Western
Reserve or AUSA Life with respect to 5% or more of the shares of the Portfolio.
However, the proportionate voting policy will result in certain Policyowners'
instructions affecting the vote of 5% or more of total outstanding shares. These
particular Policyowners and the percentage of votes which their instruction may
affect will depend upon which Policyowners provide instructions and which
Policyowners do not.
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PROPOSAL NO. 1: TO APPROVE THE PROPOSED SUB-ADVISORY
AGREEMENT BETWEEN WESTERN RESERVE AND THE SUB-ADVISER
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Prior to and at a meeting on September 9, 1996, the Board of Directors of the
Fund, including a majority of the directors who are not interested persons of
the Fund as defined in Section 2(a)(19) of the 1940 Act ("independent
directors"), reviewed and, at the Board meeting, unanimously approved the terms
of the Proposed Sub-Advisory Agreement and authorized its submission to the
Policyowners of the Portfolio for their approval. The Proposed Sub-Advisory
Agreement appears as Exhibit A to this proxy statement.
BACKGROUND
Van Kampen American Capital Asset Management, Inc. is the sub-adviser for the
Portfolio. The Sub-Adviser has acted as sub-adviser for the Portfolio since
commencement of its investment operations.
The Sub-Adviser currently is a wholly-owned subsidiary of Van Kampen American
Capital, Inc. ("VKAC"), which is a wholly-owned subsidiary of VKAC Holding,
which in turn is controlled, through the ownership of a substantial majority of
its common stock, by The Clayton & Dubilier Private Equity Fund IV Limited
Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is managed
by Clayton, Dubilier & Rice, Inc., a New York based private investment firm. The
General Partner of C&D L.P. is Clayton & Dubilier Associates IV Limited
Partnership ("C&D Associates L.P."). The general partners of C&D Associates L.P.
are Joseph L. Rice, III, B. Charles Ames, William A. Barbe, Alberto Cribiore,
Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and Andrall E. Pearson,
each of whom is a principal of Clayton, Dubilier & Rice, Inc. In addition,
certain officers, directors and employees of VKAC own, in the aggregate,
approximately 6% of the common stock of VKAC Holding and have the
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<PAGE> 6
right to acquire, upon the exercise of options (whether or not vested),
approximately an additional 12% of the common stock of VKAC Holding. Currently,
and after giving effect to the exercise of such options, no officer or trustee
of the Van Kampen American Capital Funds owns or would own 5% of more of the
common stock of VKAC Holding. The addresses of VKAC Holding, VKAC and the Sub-
Adviser are One Parkview Plaza, Oakbrook Terrace, Illinois 60181 and 2800 Post
Oak Blvd., Houston, Texas 77056.
Prior to December, 1994, the Sub-Adviser provided investment advisory services
under the name "American Capital Asset Management, Inc."
INFORMATION CONCERNING MORGAN STANLEY
Morgan Stanley and various of its directly or indirectly owned subsidiaries,
including Morgan Stanley & Co. Incorporated ("Morgan Stanley & Co."), a
registered broker-dealer and investment adviser, and Morgan Stanley
International, are engaged in a wide range of financial services. Their
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; asset
management; trading of futures, options, foreign exchange, commodities and swaps
(involving foreign exchange, commodities, indices and interest rates); real
estate advice, financing and investing; and global custody, securities clearance
services and securities lending. Morgan Stanley Asset Management Inc. ("MSAM")
also is a wholly-owned subsidiary of Morgan Stanley. As of June 30, 1996, MSAM,
together with its affiliated investment advisory companies, had approximately
$103.5 billion of assets under management and fiduciary advice.
THE ACQUISITION
Pursuant to the Merger Agreement, MSAM Acquisition Inc. will be merged with
and into VKAC Holding and VKAC Holding will be the surviving corporation (the
"Acquisition"). Following the Acquisition, VKAC Holding and the Sub-Adviser will
be indirect subsidiaries of Morgan Stanley.
The Sub-Adviser anticipates that the consummation of the Acquisition will
occur by the end of November 1996, provided that a number of conditions set
forth in the Merger Agreement are met or waived. The conditions require, among
other things, that as of the closing the shareholders of certain investment
companies (including the Portfolio) and investors in certain accounts advised by
the Sub-Adviser or its affiliates, which investment companies and accounts have
aggregate assets in excess of a specified minimum amount, have approved new
investment advisory agreements or consented to the assignment of existing
investment advisory agreements. At the closing, MSAM Acquisition Inc. will pay
approximately $740 million (based on VKAC's long-term debt outstanding as of
July 31, 1996) in cash to the
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stockholders of VKAC Holding (excluding certain management stockholders), and to
persons owning options to purchase stock of VKAC Holding, subject to certain
purchase price adjustments set forth in the Merger Agreement. As of July 31,
1996, VKAC had long-term debt outstanding of approximately $410 million. To the
extent that pre-tax income of VKAC prior to the closing of the Acquisition
permits the repayment of its long-term debt, the purchase price for the equity
interests in VKAC Holding will be increased by the amount of long-term debt
repaid. The purchase price also is subject to certain adjustments based, among
other things, on assets under management of VKAC and its subsidiaries at the
time of closing. The Sub-Adviser also contemplates that, as part of the
Acquisition, certain officers and directors of VKAC Holding and its affiliates
will contribute to MSAM Holdings II, Inc. their existing shares of common stock
of VKAC Holding in exchange for approximately $25 million of shares of preferred
stock of MSAM Holdings II, Inc. which, in turn, will be exchangeable into common
stock, par value $1.00 per share, of Morgan Stanley at specified times over a
four year period. Such shares of preferred stock will represent, in the
aggregate, 5% of the combined voting power in MSAM Holdings II, Inc., the
remainder of which will be indirectly owned by Morgan Stanley.
VKAC Holding will engage in certain preparatory transactions prior to the
Acquisition, including the distribution to stockholders of VKAC Holding of (i)
all of VKAC Holding's investment in McCarthy, Crisanti & Maffei, Inc., a
wholly-owned subsidiary engaged in the business of distributing research and
financial information, (ii) all of VKAC Holding's investment in Hansberger
Global Investors, Inc. a company in which VKAC Holding made a minority
investment in May 1996, and (iii) certain related cash amounts.
There is no financing condition to the closing of the Acquisition. VKAC has
been advised by Morgan Stanley that as of August 30, 1996, no determination has
been made whether any additional indebtedness will be incurred by Morgan Stanley
and its affiliates or VKAC and its affiliates in connection with the
Acquisition. In addition, the disposition of VKAC's outstanding long-term
indebtedness (including its bank loans and senior notes) in connection with the
Acquisition has not yet been determined.
The operating revenue of VKAC and its subsidiaries for the fiscal year ended
December 31, 1995, less expenses for the same period, was more than adequate to
service VKAC's outstanding debt. VKAC prepaid $80 million of its long-term debt
in 1995, and has continued to make debt prepayments during 1996. VKAC Holding
and VKAC believe, based on the earnings experience of VKAC and its subsidiaries,
that after the Acquisition the operating revenue of VKAC and its subsidiaries
should be more than sufficient to service their debt and that VKAC and its
subsidiaries should be able to conduct their respective operations as now
conducted and as proposed to be conducted.
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<PAGE> 8
The Merger Agreement does not contemplate any changes, other than changes in
the ordinary course of business, in the management or operation of the
Sub-Adviser relating to the Portfolio, the personnel managing the Portfolio or
other services or business activities of the Portfolio. The Acquisition is not
expected to result in material changes in the business, corporate structure or
composition of the senior management or personnel of the Sub-Adviser, or in the
manner in which the Sub-Adviser renders services to the Portfolio. Morgan
Stanley has agreed in the Merger Agreement that, for a period of two years from
the date of the Acquisition, it will cause the Sub-Adviser to provide
compensation and employee benefits which are substantially comparable in the
aggregate to those presently provided. The Sub-Adviser does not anticipate that
the Acquisition or any ancillary transactions will cause a reduction in the
quality of services now provided to the Portfolio, or have any adverse effect on
the Sub-Adviser's ability to fulfill their respective obligations under the
Proposed Sub-Advisory Agreement or to operate its business in a manner
consistent with past business practices.
Certain officers of the Sub-Adviser previously entered into employment
agreements with VKAC Holding, which expire from between 1997 and 2000. Certain
officers of the Sub-Adviser also previously entered into retention agreements
with VKAC Holding, which will remain in place for two years following the
consummation of the Acquisition. The Merger Agreement contemplates that Morgan
Stanley will, and will cause VKAC Holding to, honor such employment and
retention agreements. The employment agreements and retention agreements are
intended to assure that the services of the officers are available to the
Sub-Adviser (and thus to the Portfolio) for a remaining term of two to four
years. As described above, certain officers and employees of VKAC and the
Sub-Adviser are expected to contribute their existing shares of common stock of
VKAC Holding to MSAM Holdings II, Inc. in exchange for approximately $25 million
of preferred stock in MSAM Holdings II, Inc. which, in turn, will be
exchangeable into common stock, par value $1.00 per share, of Morgan Stanley at
specified times over a four year period. Such shares of preferred stock will
represent, in the aggregate, 5% of the combined voting power in MSAM Holdings
II, Inc.
THE CURRENT ADVISORY AGREEMENTS
Consummation of the Acquisition may constitute an assignment of the Current
Sub-Advisory Agreement. As required by the 1940 Act, the Current Sub-Advisory
Agreement provides for its automatic termination in the event of an assignment.
See "Current Sub-Advisory Agreement" below.
In anticipation of the Acquisition and in order for the Sub-Adviser to
continue to serve as investment sub-adviser to the Portfolio after consummation
of the Acquisition, the Proposed Sub-Advisory Agreement must be approved (i) by
a majority of the Directors of the Fund who are not parties to the Proposed
Sub-Advisory
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Agreement or interested persons of any such party ("Disinterested Directors")
and (ii) by the holders of a majority of the outstanding voting securities
(within the meaning of the 1940 Act) of the Portfolio of the Fund. See "Proposed
Sub-Advisory Agreement" below.
CURRENT INVESTMENT ADVISORY AGREEMENT. Western Reserve, a life insurance
company located at 201 Highland Avenue, Largo, Florida 33770, serves as the
Portfolio's Investment Adviser. The Investment Adviser is a wholly-owned
subsidiary of First AUSA Life Insurance Company ("First AUSA"), a stock life
insurance company which is wholly-owned by AEGON USA, Inc. ("AEGON"). AEGON is a
financial services holding company whose primary emphasis is on life and health
insurance and annuity and investment products. AEGON is a wholly-owned indirect
subsidiary of AEGON nv, a Netherlands corporation, which is a publicly-traded
international insurance group.
Subject to the supervision and direction of the Fund's Board of Directors, the
Investment Adviser is responsible for managing the Portfolio in accordance with
the Portfolio's stated investment objective and policies. As compensation for
its services to the Portfolio, the Investment Adviser receives monthly
compensation at the annual rate of 0.80% of the average daily net assets of the
Portfolio.
The Investment Adviser is responsible for providing investment advisory
services and pays all compensation of and furnishes office space for officers
and employees of the Investment Adviser connected with investment management of
the Fund, as well as the fees of all Directors of the Fund who are affiliated
persons of Western Reserve or any of its subsidiaries. The Portfolio pays all
other expenses incurred in its operation, including general administrative
expenses. Accounting services are provided for the Portfolio by the Investment
Adviser. Pursuant to an expense limitation voluntarily adopted by Western
Reserve, Western Reserve has undertaken, until at least April 30, 1997, to pay
expenses on behalf of the Portfolio to the extent normal operating expense
(including investment advisory fees but excluding interest, taxes, brokerage
fees, commissions and extraordinary charges) exceed 1.00% of the Portfolio's
average daily net assets.
The Acquisition will have no effect on the Current Investment Advisory
Agreement between Western Reserve, which is not affiliated with any of the
parties to the Acquisition, and the Fund. Western Reserve will continue to serve
as Investment Adviser to the Portfolio pursuant to the Current Investment
Advisory Agreement.
CURRENT SUB-ADVISORY AGREEMENT. Pursuant to the Current Sub-Advisory Agreement
for the Portfolio, which is dated December 20, 1994, the Fund's Investment
Adviser, Western Reserve, contracts with the Sub-Adviser for sub-advisory
services. The Current Sub-Advisory Agreement for the Portfolio was initially
approved by the Fund's Directors on September 19, 1994 and was most recently
approved by the Fund's Directors at a meeting held for such purpose by the
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Board of Directors, including a majority of the independent directors of the
Fund, on March 18, 1996. The Sub-Advisory Agreement was last submitted to
shareholders for approval in December, 1994, at which time, it was contemplated
that the then parent company of the Sub-Adviser, American Capital Management &
Research, Inc. would be acquired by The Van Kampen Merritt Companies, Inc. A new
sub-advisory agreement to reflect this previous change of control in the sub-
adviser was approved by shareholders at a shareholder meeting called for that
purpose on December 12, 1994.
Pursuant to the Current Sub-Advisory Agreement, the Sub-Adviser provides
investment advisory assistance and portfolio management advice to the Investment
Adviser for the Portfolio. Subject to review and supervision by the Investment
Adviser and the Board of Directors of the Fund, the Sub-Adviser is responsible
for the actual management of the Portfolio and for making decisions to buy, sell
or hold any particular security, and the Sub-Adviser places orders to buy or
sell securities on behalf of the Portfolio. The Sub-Adviser bears all of its
expenses in connection with the performance of its services, such as
compensating and furnishing office space for its officers and employees
connected with investment and economic research, trading and investment
management of the Portfolio. The Sub-Adviser is also responsible for selecting
the broker-dealers who execute the portfolio transactions for the Portfolio.
For its services, the Sub-Adviser receives monthly compensation from the
Investment Adviser in the amount of 50% of the investment management fees
received by the Investment Adviser with respect to the Portfolio, less 50% of
the amount of any excess expenses paid by the Investment Adviser on behalf of
the Portfolio pursuant to the expense limitation described above.
Under its terms, the Current Sub-Advisory Agreement for the Portfolio will
continue in effect until April 22, 1997, and from year to year thereafter so
long as such continuance is specifically approved at least annually by the vote
of a majority of the Disinterested directors of the Fund, cast in person at a
meeting called for the purpose of voting on the approval of the terms of such
renewal, and by either the directors of the Fund or the affirmative vote of a
majority of the outstanding voting securities of the Portfolio (as that phrase
is defined in the 1940 Act). The Current Sub-Advisory Agreement may be
terminated with respect to the Portfolio at any time, without penalty, by the
Sub-Adviser, the Directors of the Fund or by shareholders of the Portfolio
acting by vote of at least a majority of its outstanding voting securities (as
that phrase is defined in the 1940 Act), on 60 days' written notice to the
Sub-Adviser or by the Sub-Adviser if it gives 60 days written notice to Western
Reserve and the Fund. In addition, the Current Sub-Advisory Agreement terminates
automatically upon its assignment, and upon termination of the Current
Investment Advisory Agreement. The Current Sub-Advisory Agreement may be amended
with respect to the Portfolio only with the approval by the affirmative vote
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of a majority of the outstanding voting securities of the Portfolio (as that
phrase is defined in the 1940 Act) and the approval by the vote of a majority of
the Disinterested Directors of the Fund, cast in person at a meeting called for
the purpose of voting on the approval of such amendment.
The Sub-Adviser's principal executive officers and directors, together with
their principal occupations, are listed below. The address of each of the
following persons is noted below.
DIRECTORS AND OFFICERS OF THE SUB-ADVISER. The following table sets forth
certain information concerning the principal executive officers and directors of
the Sub-Adviser. The address of each of the following persons is noted below.
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------------------- ----------------------------------------------
<S> <C>
Don G. Powell............... President, Chief Executive Officer and a
2800 Post Oak Blvd. Director of VKAC Holding and VKAC and
Houston, TX 77056 Chairman, Chief Executive Officer and a
Director of Van Kampen American Capital
Distributors, Inc. ("Distributors"), the
Sub-Adviser, Van Kampen American Capital
Management, Inc., Van Kampen American Capital
Investment Advisory Corp. (the "VK Adviser"),
and Van Kampen American Capital Advisors, Inc.
Chairman, President and a Director of Van
Kampen American Capital Exchange Corporation,
American Capital Contractual Services, Inc.,
Van Kampen Merritt Equity Holdings Corp., and
American Capital Shareholders Corporation.
Chairman and a Director of ACCESS Investor
Services, Inc. ("ACCESS"), Van Kampen Merritt
Equity Advisors Corp., McCarthy, Crisanti &
Maffei, Inc., and Van Kampen American Capital
Trust Company, Chairman, President and a
Director of Van Kampen American Capital
Services, Inc. Director or Trustee of other
open-end investment companies and closed-end
investment companies advised by the
Sub-Adviser. Prior to July 1996, Chairman and
Director of VSM Inc. and VCJ Inc. Prior to
July 1996, President, Chief Executive Officer
and a Trustee/Director of certain open-end
investment companies and closed-end investment
companies advised by the Sub-Adviser and the
VK Adviser.
</TABLE>
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<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------------------- ----------------------------------------------
<S> <C>
Dennis J. McDonnell......... President, Chief Operating Officer and a
One Parkview Plaza Director of the Sub-Adviser, the VK Adviser,
Oakbrook Terrace, IL 60181 Van Kampen American Capital Advisors, Inc. and
Van Kampen American Capital Management, Inc.
Executive Vice President and a Director of
VKAC Holding and VKAC. President and Director
of Van Kampen Merritt Equity Advisors Corp.
Director of Van Kampen Merritt Equity Holdings
Corp. and McCarthy, Crisanti & Maffei, S.A.
Chief Executive Officer and Director of
McCarthy, Crisanti & Maffei, Inc. Chairman and
a Director of MCM Asia Pacific Company,
Limited. President and a Trustee/Director of
open-end investment companies and closed-end
investment companies advised by the
Sub-Adviser and the VK Adviser. Executive Vice
President of certain open-end investment
companies and closed-end investment companies
advised by the Sub-Adviser. Prior to July
1996, President, Chief Operating Officer and a
Director of VSM Inc. and VCJ Inc. Prior to
December 1991, Senior Vice President of Van
Kampen Merritt Inc.
Ronald A. Nyberg............ Executive Vice President, General Counsel and
One Parkview Plaza Secretary of VKAC Holding and VKAC. Executive
Oakbrook Terrace, IL 60181 Vice President, General Counsel and a Director
of Distributors, the Sub-Adviser and the VK
Adviser, Van Kampen American Capital
Management, Inc., Van Kampen Merritt Equity
Advisors Corp., and Van Kampen Merritt Equity
Holdings Corp. Executive Vice President,
General Counsel and Assistant Secretary of Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services, Inc.,
Van Kampen American Capital Exchange
Corporation, ACCESS, Van Kampen American
Capital Services, Inc. and American Capital
Shareholders Corporation. Executive Vice
President, General Counsel, Assistant
Secretary and Director of Van Kampen American
Capital Trust Company. General Counsel of
McCarthy, Crisanti & Maffei, Inc. Vice
President and Secretary of open-end investment
companies and closed-end companies advised by
the VK Adviser. Vice President of open-end
investment companies and closed-end investment
companies advised by the Sub-Adviser. Director
of ICI Mutual Insurance Co., a provider of
insurance to members of the Investment Company
Institute. Prior to July 1996, Executive Vice
President and General Counsel of VSM Inc., and
Executive Vice President, General Counsel and
Director of VCI.
</TABLE>
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<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------------------- ----------------------------------------------
<S> <C>
William R. Rybak............ Executive Vice President and Chief Financial
One Parkview Plaza Officer of VKAC Holding and VKAC since
Oakbrook Terrace, IL 60181 February 1993, and Treasurer of VKAC Holding
through December 1993. Executive Vice
President, Chief Financial Officer and a
Director of Distributors, the Sub-Adviser,
the VK Adviser and Van Kampen American Capital
Management, Inc. Executive Vice President,
Chief Financial Officer, Treasurer and
Director of Van Kampen Merritt Equity Advisors
Corp. Executive Vice President and Chief
Financial Officer of the Van Kampen American
Capital Advisors, Inc., Van Kampen American
Capital Exchange Corporation, Van Kampen
American Capital Trust Company, ACCESS and
American Capital Contractual Services, Inc.
Executive Vice President, Chief Financial
Officer and Treasurer of American Capital
Shareholders Corporation, Van Kampen American
Capital Services, Inc. and Van Kampen Merritt
Equity Holdings Corp. Chief Financial Officer
and Treasurer of McCarthy, Crisanti & Maffei,
Inc. Chairman of the Board of Hinsdale
Financial Corp., a savings and loan holding
company. Prior to July 1996, Executive Vice
President, Chief Financial Officer and a
Director of VCJ Inc., and Executive Vice
President and Chief Financial Officer of VSM
Inc.
Peter W. Hegel.............. Executive Vice President of the Sub-Adviser,
One Parkview Plaza the VK Adviser and Van Kampen American Capital
Oakbrook Terrace, IL 60181 Advisors, Inc. Director of McCarthy, Crisanti
& Maffei, Inc. and Van Kampen American Capital
Management, Inc. Vice President of open-end
investment companies and certain closed-end
investment companies advised by the
Sub-Adviser and the VK Adviser. Prior to July
1996, Director of VSM Inc.
Robert C. Peck, Jr.......... Executive Vice President of the VK Adviser.
2800 Post Oak Blvd. Executive Vice President and Director of the
Houston, TX 77056 Sub-Adviser. Vice President of certain
open-end investment companies and certain
closed-end investment companies advised by the
Sub-Adviser and the VK Adviser.
Alan T. Sachtleben.......... Executive Vice President of the VK Adviser.
2800 Post Oak Blvd. Executive Vice President and Director of the
Houston, Texas 77056 Sub-Adviser. Vice President of certain
open-end investment companies and closed-end
investment companies advised by the
Sub-Adviser and the VK Adviser.
</TABLE>
Exhibit B indicates the size of each investment company having an investment
objective similar to that of the Portfolio advised or sub-advised by the
Sub-Adviser and the advisory fee rate.
11
<PAGE> 14
No Director of the Fund has owned any securities of or has had any other
material interest in the Sub-Adviser or its respective affiliates since the
beginning of the Fund's most recent fiscal year. In addition, except as
described herein, no officer or director of the Fund has or had any material
interest in any material transaction since the beginning of the Fund's last
fiscal year to which the Sub-Adviser or any parent or subsidiary of the
Sub-Adviser was or is to be a party. Except as described herein, neither the
Sub-Adviser, nor any of its directors or officers, any director or officer of
the Fund, nor any parent company of the Sub-Adviser, purchased or sold, nor
became a party to any contract for the purchase or sale of, any securities (in
an amount exceeding 1% of the outstanding securities of a class) of the
Sub-Adviser, or its parents, subsequent to the beginning of the Fund's last
fiscal year.
During the last fiscal year Western Reserve paid the Sub-Adviser $919,287 for
the Sub-Adviser's services under the Current Sub-Advisory Agreement.
PROPOSED SUB-ADVISORY AGREEMENT AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The Proposed Sub-Advisory Agreement is substantially identical to the Current
Sub-Advisory Agreement except that (i) the effective date of the Proposed Sub-
Advisory Agreement will be the later to occur of (a) obtaining shareholder
approval or (b) the closing of the Acquisition; and (ii) the initial term of the
Proposed Sub-Advisory Agreement has been reduced from two years to seventeen
months. THE PROPOSED SUB-ADVISORY AGREEMENT DOES NOT CONTEMPLATE ANY CHANGES IN
THE NATURE OF SERVICES PROVIDED BY THE SUB-ADVISER, OR THE COMPENSATION TO BE
PAID BY WESTERN RESERVE TO THE SUB-ADVISER FOR ITS SERVICES. WESTERN RESERVE
WILL CONTINUE TO SERVE AS INVESTMENT ADVISER TO THE PORTFOLIO PURSUANT TO THE
CURRENT INVESTMENT ADVISORY AGREEMENT UNTIL SUCH TIME AS THAT AGREEMENT IS
AMENDED OR TERMINATED IN ACCORDANCE WITH ITS TERMS. The description of the
Proposed Sub-Advisory Agreement set forth herein is qualified by reference to
Exhibit A, which consists of the Proposed Sub-Advisory Agreement.
EVALUATION BY THE BOARD. Prior to and at a meeting of the Board of Directors
of the Fund on September 9, 1996, the Directors of the Fund, including the
Disinterested Directors, reviewed information regarding the Acquisition and the
Proposed Sub-Advisory Agreement. The Board also discussed the Acquisition, its
possible effects on the Portfolio, the Fund, and related matters.
In evaluating the Proposed Sub-Advisory Agreement, the Board took into account
that the Portfolio's Current Sub-Advisory Agreement, including the terms
relating to the services to be provided thereunder by the Sub-Adviser and the
fees and expenses payable by the Portfolio, is substantially identical to the
Current Sub-Advisory Agreement, except for the dates of execution, effectiveness
and termination. The Directors also considered possible benefits to the
Sub-Adviser and Morgan Stanley that may result from the Acquisition, including
the continued use
12
<PAGE> 15
by the Sub-Adviser, to the extent permitted by law, of Morgan Stanley & Co. and
its affiliates for brokerage services and the possible retention of MSAM as a
sub-adviser to certain Van Kampen American Capital investment companies (not
including the Portfolio).
The Board also considered the terms of the Merger Agreement and the possible
effects of the Acquisition upon VKAC's and the Sub-Adviser's organization and
upon the ability of the Sub-Adviser to provide advisory services to the
Portfolio. The Board considered the skills and capabilities of the Sub-Adviser
and the representations of Morgan Stanley that no material change was planned in
the current management or facilities of the Sub-Adviser. In this regard,
representatives of Morgan Stanley were available during the Board meeting by
telephone to discuss the resources available to VKAC and the Sub-Adviser, after
giving effect to the Acquisition, to secure for the Portfolio quality investment
research, investment advice and other client services. The Board considered the
financial resources of Morgan Stanley and Morgan Stanley's representation to the
Board that it will provide sufficient capital to support the operations of the
Sub-Adviser. The Board considered the reputation, expertise and resources of
Morgan Stanley and its affiliates in domestic and international financial
markets. The Board considered the continued employment of members of senior
management of the Sub-Adviser and VKAC pursuant to employment and retention
agreements and the incentives provided to such members and other key employees
of the Sub-Adviser and VKAC, to be important to help to assure continuity of the
personnel primarily responsible for maintaining the quality of investment
advisory and other services for the Portfolio.
The Board also considered the effect on the Portfolio of the Sub-Adviser
becoming an affiliated person of Morgan Stanley. Following the Acquisition, the
1940 Act will prohibit or impose certain conditions on the ability of the
Portfolio to engage in certain transactions with Morgan Stanley and its
affiliates. For example, absent exemptive relief, the Portfolio will be
prohibited from purchasing securities from Morgan Stanley & Co., a wholly-owned
broker-dealer subsidiary of Morgan Stanley, in transactions in which Morgan
Stanley & Co. acts as a principal, and the Portfolio will have to satisfy
certain conditions in order to engage in securities transactions in which Morgan
Stanley & Co. acts as a broker or to purchase securities in an underwritten
offering in which Morgan Stanley & Co. is acting as an underwriter. In this
connection, management of the Sub-Adviser represented to the Board that they do
not believe these prohibitions or conditions will have a material effect on the
management or performance of the Portfolio.
The Board was advised that Section 15(f) of the 1940 Act is applicable to the
Acquisition. Section 15(f) of the 1940 Act permits, in the context of a change
in control of an investment adviser to a registered investment company, the
receipt by such investment adviser, or any of its affiliated persons, of an
amount or benefit in
13
<PAGE> 16
connection with such sale, as long as two conditions are satisfied. First, an
"unfair burden" must not be imposed on the investment company for which the
investment adviser acts in such capacity as a result of the sale of such
interest, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" as defined in the 1940 Act,
includes any arrangement during the two-year period after the transaction
whereby the investment adviser (or predecessor or successor adviser) or any
"interested person", as defined in the 1940 Act, of any such adviser, receives
or is entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory and other services), or from any person in connection with
the purchase or sale of securities or other property to, from or on behalf of
the investment company (other than ordinary fees for bona fide principal
underwriting services).
Management of the Portfolio is aware of no circumstances arising from the
Acquisition, preparatory transactions to the Acquisition or any potential
financing that might result in the imposition of an "unfair burden" on the
Portfolio. Moreover, Morgan Stanley has agreed in the Merger Agreement that,
upon consummation of the Acquisition, it will take no action which would have
the effect, directly or indirectly, of violating any of the provisions of
Section 15(f) of the 1940 Act in respect of the Acquisition. In this regard the
Merger Agreement provides that Morgan Stanley will use its reasonable best
efforts to assure that (i) no "unfair" burden" will be imposed on the Portfolio
as a result of the transactions contemplated by the Merger Agreement and (ii)
except as provided in the Merger Agreement, that the investment advisory fees
paid by the Portfolio will not be increased for a period of two years from the
closing of the Acquisition and that, during such period, advisory fee waivers
shall not be permitted to expire except in accordance with their terms. The
Sub-Adviser may permit a voluntary fee waiver unilaterally adopted by it to
expire at any time and no assurance can be given that voluntary waivers will not
be permitted to expire during the two year period. During the two year period
following the Acquisition, the Sub-Adviser does not intend to change its
policies with respect to the circumstances under which voluntary fee waivers may
be permitted to expire. Following the Acquisition, to the extent permitted by
applicable law, the Sub-Adviser anticipates that the Portfolio will continue to
use Morgan Stanley & Co. and its affiliates for brokerage services.
The second condition of Section 15(f), as applicable to the Portfolio, is that
during the three-year period immediately following a transaction to which
Section 15(f) is applicable, at least 75% of the subject investment company's
board of directors must not be "interested persons" (as defined in the 1940 Act)
of the Sub-Adviser or predecessor sub-adviser. The current composition of the
Board would be in compliance with such condition subsequent to the Acquisition.
14
<PAGE> 17
After consideration of the above factors, and such other factors and
information that the Directors deemed relevant, the Directors, including the
Disinterested Directors, unanimously approved the Proposed Sub-Advisory
Agreement and voted to recommend its approval to the shareholders of the
Portfolio.
In the event that shareholders of the Portfolio do not approve the Proposed
Sub-Advisory Agreement with respect to the Portfolio and the Acquisition is
consummated, the Board would seek to obtain for the Portfolio interim investment
advisory services at the lesser of cost or the current fee rate either from the
Sub-Adviser or from another advisory organization. Thereafter, the Board would
either negotiate a new sub-advisory agreement with an advisory organization
selected by the Board or make appropriate arrangements, in either event subject
to approval of the shareholders of the Portfolio. In the event the Acquisition
is not consummated, the Sub-Adviser would continue to serve as sub-advisor of
the Portfolio pursuant to the terms of the Current Sub-Advisory Agreement.
If approved by the shareholders of the Portfolio, the Proposed Sub-Advisory
Agreement with respect to the Portfolio will become effective the later to occur
of (a) obtaining shareholder approval or (b) the closing of the Acquisition. If
approved, the Proposed Sub-Advisory Agreement will continue in effect for an
initial period of seventeen months and for successive one year periods provided
such continuance is approved at least annually in the same manner as described
above with respect to the Current Sub-Advisory Agreement.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 1
- ------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------
VKAC Holding will bear the expense of preparing, printing and mailing the
enclosed form of proxy, the accompanying Notice and this Proxy Statement.
In order to obtain the necessary quorum at the Meeting, additional
solicitation may be made by mail, telephone or personal interview by
representatives of the Fund and regular employees of Western Reserve or its
affiliate(s), or by First Data Investors Services Group, a solicitation firm
located in Boston, Massachusetts that has been engaged to assist in proxy
solicitations at an estimated cost of approximately $150,500.
- ------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- ------------------------------------------------------------------------------
As a general matter, the Fund does not hold annual meetings of shareholders.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a
15
<PAGE> 18
subsequent shareholders' meeting should send their written proposals to the
Secretary of the Fund, 201 Highland Avenue, Largo, Florida 33770.
- ------------------------------------------------------------------------------
ANNUAL REPORT
- ------------------------------------------------------------------------------
A copy of the Fund's Annual Report may be obtained without charge upon request
by writing to the Fund at the address above first written or by calling the Fund
at (800) 851-9777.
- ------------------------------------------------------------------------------
OTHER BUSINESS
- ------------------------------------------------------------------------------
Management knows of no business to be presented to the Meeting other than the
matters set forth in this proxy statement, but should any other matter requiring
vote of shareholders arise, the proxies will vote thereon according to their
best judgment in the interests of the Fund.
By Order of the Board of Directors,
Thomas E. Pierpan, Assistant Secretary
Largo, Florida
September 19, 1996
16
<PAGE> 19
EXHIBIT A
- ------------------------------------------------------------------------------
SUB-ADVISORY AGREEMENT FOR THE EMERGING GROWTH
PORTFOLIO OF THE WRL SERIES FUND, INC.
- ------------------------------------------------------------------------------
This Agreement is entered into as of October , 1996 or if later, the date
upon which the Sub-Advisory Agreement dated December 20, 1994 for the Emerging
Growth Portfolio of the Fund terminates, between Western Reserve Life Assurance
Co. of Ohio, an Ohio corporation (referred to herein as "WRL"), and Van Kampen
American Capital Asset Management, Inc., a Delaware corporation (referred to
herein as "VKAC"), to provide certain investment advisory services with respect
to a certain series of shares of common stock of the WRL Series Fund, Inc.,
allocated to the Emerging Growth Portfolio (the "Portfolio").
WHEREAS, WRL has entered into an Investment Advisory Agreement (referred to
herein as the "Advisory Agreement"), dated November 19, 1992, with WRL Series
Fund, Inc. (the "Fund"), a Maryland corporation, under which WRL has agreed,
among other things, to act as investment adviser to the Portfolio; and
WHEREAS, the Advisory Agreement provides that WRL may engage VKAC to furnish
investment information and advice to assist WRL in carrying out its
responsibilities under the Advisory Agreement as investment adviser to the
Portfolio; and
WHEREAS, it is the purpose of this Agreement to express the mutual agreements
of the parties hereto with respect to the services to be provided by VKAC to WRL
with respect to the Portfolio and the terms and conditions under which such
services will be rendered.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
1. Services of VKAC. VKAC shall act as investment counsel to WRL with respect
to the Portfolio. In this capacity, VKAC shall have the following
responsibilities:
(a) to furnish continuous investment information, advice and
recommendations to WRL as to the acquisition, holding or disposition of any
or all of the securities or other assets which the Portfolio may own or
contemplate acquiring from time to time;
(b) to cause its officers to attend meetings of WRL or the Fund and
furnish oral or written reports, as WRL may reasonably require, in order to
keep WRL and its officers and the Directors of the Fund and appropriate
officers of the Fund fully informed as to the condition of the investment
securities of the Portfolio, the investment recommendations of VKAC, and the
investment considerations which have given rise to those recommendations;
A-1
<PAGE> 20
(c) to furnish such statistical and analytical information and reports
as may reasonably be required by WRL from time to time;
(d) to supervise and place orders for the purchase, sale, exchange and
conversions of securities as directed by the appropriate officers of the
Fund or of WRL; and
(e) to monitor and comply with the investment restrictions set forth in
(i) the Investment Company Act of 1940, as amended (the "1940 Act"); (ii)
Subchapter M Section 851(a) of the Internal Revenue Code ("Code"); and (iii)
Section 817(d) of the Code, and, to furnish such compliance reports as
requested from time to time by WRL.
2. Obligations of WRL. WRL shall have the following obligations under this
Agreement:
(a) to keep VKAC continuously and fully informed as to the composition
of the Portfolio's investment securities and the nature of the Portfolio's
assets and liabilities;
(b) to keep VKAC continually and fully advised of the Portfolio's
investment objectives, and any modifications and changes thereto, as well as
any specific investment restrictions or limitations by sending VKAC copies
of each registration statement;
(c) to furnish VKAC with a certified copy of any financial statement or
report prepared for the Fund with respect to the Portfolio by certified or
independent public accountants, and with copies of any financial statements
or reports made by the Fund to shareholders or to any governmental body or
securities exchange and to inform VKAC of the results of any audits or
examinations by regulatory authorities pertaining to the Portfolio, if these
results affect the services provided by VKAC pursuant to this agreement;
(d) to furnish VKAC with any further materials or information which VKAC
may reasonably request to enable it to perform its functions under this
Agreement; and
(e) to compensate VKAC for its services under this Agreement by the
payment of fees equal to (i) 50% of the fees received by WRL for services
rendered under the Investment Advisory Agreement by WRL to the Portfolio
during the term of this Agreement, less (ii) 50% of the amount paid by WRL
on behalf of the Portfolio pursuant to any expense limitation or the amount
of any other reimbursement made by WRL to the Portfolio. In the event that
this Agreement shall be effective for only part of a period to which any
such fee received by WRL is attributable, then an appropriate pro-ration of
the fee that would have been payable hereunder if this Agreement had
remained in effect until the end of such period shall be made, based on the
number of calendar
A-2
<PAGE> 21
days in such period and the number of calendar days during the period in
which this Agreement was in effect. The fees payable to VKAC hereunder shall
be payable upon receipt by WRL from the Portfolio of advisory fees payable
to WRL.
3. Treatment of Investment Advice. WRL shall treat the investment information,
advice and recommendations of VKAC as being advisory only, and shall determine
the extent to which such advice and recommendations relating to the Portfolio
shall be passed on to the Fund or incorporated in investment advice by WRL
relating to the Portfolio. WRL may direct VKAC to furnish its investment
information, advice and recommendations directly to officers or Directors of the
Fund.
4. Best Efforts. It is understood and agreed that in furnishing the investment
advice and other services as herein provided, VKAC shall use its best
professional judgment to recommend actions which will provide favorable results
for the Portfolio. VKAC shall not be liable to the Portfolio or to any
shareholder of the Portfolio to any greater degree than WRL.
5. Compliance With Laws. VKAC represents that it is, and will continue to be
throughout the term of this Agreement, an investment adviser registered under
all applicable federal and state laws. In all matters relating to the
performance of this Agreement, VKAC will act in conformity with the Fund's
Articles of Incorporation, Bylaws, and current registration statement applicable
to the Portfolio and with the instructions and direction of WRL and the Fund's
Directors, and will conform to and comply with the 1940 Act and all other
applicable federal or state laws and regulations.
6. Termination. This Agreement shall terminate automatically upon the
termination of the Advisory Agreement. This Agreement may be terminated at any
time, without penalty, by WRL or by the Fund by giving 60 days' written notice
of such termination to VKAC at its principal place of business, provided that
such termination is approved by the Board of Directors of the Fund or by vote of
a majority of the outstanding voting securities (as that phrase is defined in
Section 2(a)(42) of the 1940 Act) of the Portfolio. This Agreement may be
terminated at any time by VKAC by giving 60 days' written notice of such
termination to the Fund and WRL at their respective principal places of
business.
7. Assignment. This Agreement shall terminate automatically in the event of
any assignment (as that term is defined in Section 2(a)(4) of the 1940 Act) of
this Agreement.
8. Term. This Agreement shall continue in effect, unless sooner terminated in
accordance with its terms, for an initial term ending April 22, 1998 and shall
continue in effect from year to year thereafter provided continuance is
specifically approved at least annually by the vote of a majority of the
Directors of the Fund who are not parties hereto or interested persons (as the
term is defined in
A-3
<PAGE> 22
Section 2(a)(19) of the 1940 Act) of any such party, cast in person at a meeting
called for the purpose of voting on the approval of the terms of such renewal,
and by either the Directors of the Fund or the affirmative vote of a majority of
the outstanding voting securities of the Portfolio (as that phrase is defined in
Section 2(a)(42) of the 1940 Act).
9. Amendments. This Agreement may be amended only with the approval by the
affirmative vote of a majority of the outstanding voting securities of the
Portfolio (as that phrase is defined in Section 2(a)(42) of the 1940 Act) and
the approval by the vote of a majority of the Directors of the Fund who are not
parties hereto or interested persons (as that term is defined in Section
2(a)(19) of the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on the approval of such amendment, unless otherwise
permitted in accordance with the 1940 Act.
10. Prior Agreements. This Agreement supersedes all prior agreements between
the parties relating to the subject matter hereof, and all such prior agreements
are deemed terminated upon the effectiveness of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
<TABLE>
<S> <C>
ATTEST: VAN KAMPEN AMERICAN
CAPITAL ASSET
MANAGEMENT, INC.
_____________________________ By:_____________________________
Secretary Title: Vice President
ATTEST: WESTERN RESERVE LIFE
ASSURANCE CO. OF OHIO
_____________________________ By:_____________________________
Assistant Secretary Title: Chairman of the Board,
Chief Executive Officer
and President
</TABLE>
A-4
<PAGE> 23
EXHIBIT B
The following table indicates the size of each investment company having an
investment objective similar to that of the Portfolio advised or sub-advised by
the Sub-Adviser and the advisory fee rate.
<TABLE>
<CAPTION>
ANNUAL
MANAGEMENT
NET FEE AS
ASSETS PERCENT OF
ON AVERAGE
AUGUST 12, NET
NAME 1996 ASSETS
- ---------------------------------------- -------- ----------
(IN MILLIONS)
<S> <C> <C>
Van Kampen American Capital Emerging
Growth Fund........................... $2,261.0 (1)
Common Sense Trust
Common Sense Emerging Growth Fund..... 72.5 (2)
WNL Series Trust
Van Kampen American Capital Emerging
Growth Portfolio...................... 1.1 (3)
Van Kampen American Capital Life
Investment Trust
Emerging Growth Portfolio............. 5.3 (4)
</TABLE>
- ---------------
(1) 0.575% on the first $350 million; 0.525% on the next $350 million; 0.475% on
the next $350 million; and 0.425% on the excess over $1.05 billion.
(2) 0.65% on the first $1 billion; 0.60% on the next $1 billion; 0.55% on the
next $1 billion; 0.50% on the next $1 billion; and 0.45% on the excess over
$4 billion.
(3) 0.50% on the Fund's average net assets.
(4) 0.70% of the Fund's average daily net assets.
B-1
<PAGE> 24
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR A SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
OCTOBER 29, 1996
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the Portfolio of the WRL Series Fund, Inc.
("Fund") as to which I am entitled to give instructions, as shown above, at a
Special Meeting of the Shareholders of the Fund ("the Meeting") to be held at
10:00 a.m. on October 29, 1996, Eastern Time and any adjournments thereof at
201 Highland Avenue, Largo, Florida 33770 as follows:
(1) To approve the Proposed Sub-Advisory Agreement between the
Sub-Adviser and Western Reserve;
Emerging Growth Portfolio ___ For ___ Against ___ Abstain
(2) In the discretion of Western Reserve transact such other
business as may properly come before the Meeting or any adjournment
thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS.
PLEASE SIGN AND DATE THIS FORM
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated September 19, 1996. THIS INSTRUCTION WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THIS INSTRUCTION WILL BE VOTED "FOR" EACH PROPOSAL.
This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
---------------------------------------- -------------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly
as name or names appear on this Voting Instruction Form. If the individual
signing the form is a fiduciary (e.g., attorney, executor, trustee, guardian,
etc.) the individual's signature must be followed by his full title.
<PAGE> 25
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR A SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
OCTOBER 29, 1996
Account No.: Pooled Account No. 27 Cash Value Proxy Votes
- ---------------------------------- ---------- -----------
$
I hereby instruct AUSA Life Insurance Company ("AUSA Life") to vote the
shares of the Portfolio of the WRL Series Fund, Inc. ("Fund") as to which I am
entitled to give instructions, as shown above, at a Special Meeting of the
Shareholders of the Fund ("the Meeting") to be held at 10:00 a.m. on October
29, 1996, Eastern Time and any adjournments thereof at 201 Highland Avenue,
Largo, Florida 33770 as follows:
(1) To approve the Proposed Sub-Advisory Agreement between the
Sub-Adviser and Western Reserve Life Assurance Co. of Ohio;
Emerging Growth Portfolio ___ For ___ Against ___ Abstain
(2) In the discretion of AUSA Life transact such other business
as may properly come before the Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS.
PLEASE SIGN AND DATE THIS FORM
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated September 19, 1996. THIS INSTRUCTION WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THIS INSTRUCTION WILL BE VOTED "FOR" EACH PROPOSAL.
This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
---------------------------------------- -------------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly
as name or names appear on this Voting Instruction Form. If the individual
signing the form is a fiduciary (e.g., attorney, executor, trustee, guardian,
etc.) the individual's signature must be followed by his full title.
<PAGE> 26
INDEX TO EXHIBITS
EX-20 Letter to Shareholder
<PAGE> 1
EXHIBIT 20
September 19, 1996
Dear Policyowner or Contract Owner:
As an Owner of a variable life insurance policy or variable annuity contract
(either of which is referred to as a "Policy") issued by Western Reserve Life
Assurance Co. of Ohio ("Western Reserve"), you have the right to instruct
Western Reserve how to vote certain shares of the Emerging Growth Portfolio
(the "Portfolio") of WRL Series Fund, Inc. (the "Fund") at the October 29,
1996 special meeting of shareholders of the Fund (the "Meeting"). To assist
you in giving those instructions, we have enclosed the following:
(1) A Notice of the Special Meeting;
(2) A Voting Instruction Form; and
(3) A Proxy Statement to Shareholders.
Please read the enclosed Notice of the Special Meeting and the Proxy Statement
for details regarding the purpose of the Meeting.
The primary purposes of the Meeting are to vote on approval of a new
Sub-Advisory Agreement between Western Reserve and Van Kampen American Capital
Asset Management, Inc. on behalf of the Portfolio of the Fund.
Western Reserve is the sole shareholder of the Portfolio. Although you are not
directly a shareholder of the Portfolio, some or all of your Policy's cash
value or contract value is invested, as provided by your Policy, in the
Portfolio. Accordingly, you have the right under your Policy to instruct
Western Reserve how to vote the Portfolio shares which are attributable to your
Policy. The enclosed Voting Instruction Form shows the number of Proxy Votes
in the Portfolio attributable to your Policy for which you are entitled to give
voting instructions.
To be given effect at the Meeting, a properly executed Voting Instruction Form
must be received by us at 201 Highland Avenue, Largo, Florida 33770 no later
than October 27, 1996.
IF WE SO RECEIVE YOUR FORM AND A CHOICE AS TO ANY PROPOSAL IS NOT SPECIFIED
IN IT, WE WILL VOTE SUCH SHARES "FOR" SUCH PROPOSAL.
We will vote the shares of the Portfolio for which timely voting instructions
are not received in the same proportion as those shares attributable to the
Portfolio for which timely instructions are received. We will also vote the
Portfolio's shares in our best judgment on any other matters which come before
the Meeting.
The number of Portfolio shares for which an Owner may give instructions is
determined as follows. For each Policy the number of votes in the Portfolio
will be determined by dividing the amount of the Policy's cash value or
contract value attributable to the Portfolio as of the record date by $100.
Fractional shares will be counted.
Please complete the Voting Instruction Form and promptly return it in the
enclosed postage paid envelope. Your instructions are very important, and we
would appreciate your return of the Form as soon as possible.
Thank you for your prompt cooperation.
Very truly yours,
/s/ John R. Kenney
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Chairman, Chief Executive Officer and President
Western Reserve Life Assurance Co. of Ohio
P.S. IF YOU OWN MORE THAN ONE POLICY, YOU WILL RECEIVE A SEPARATE MAILING
FOR EACH POLICY. IT IS IMPORTANT YOU RETURN A SIGNED VOTING
INSTRUCTION FORM FOR EACH POLICY.
