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: [ ]
[X] Preliminary Proxy Statement [ ] Confidential, for Use of
Commission Only (as permitted
by Rule 14a-6(e) (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WRL SERIES FUND, INC.
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(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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WRL SERIES FUND, INC.
201 Highland Avenue
Largo, Florida 33770
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
December 16, 1996
TO THE SHAREHOLDERS:
A special meeting of the shareholders of the Portfolios (each a
"Portfolio"; collectively the "Portfolios") of the WRL Series Fund, Inc. (the
"Fund"), will be held on Monday, December 16, 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 investment advisory agreement for the Fund (the "Proposed
Advisory Agreement") between the Fund, on behalf of each Portfolio, and WRL
Investment Management, Inc. ("WRL Management");
(2) To approve a new investment sub-advisory agreement for each Portfolio (a
"Proposed Sub-Advisory Agreement," and collectively, the "Proposed Sub-Advisory
Agreements") between WRL Management, on behalf of such Portfolio, and the
Portfolio's current sub-adviser(s);
(3) To approve a distribution plan (the "Distribution Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, pursuant to
which the Portfolios may reimburse InterSecurities, Inc. ("ISI"), which will act
as Distributor of the Fund's shares, for distribution-related expenses incurred
by ISI in the performance of its duties as Distributor pursuant to a
distribution agreement between ISI and the Fund (the "Distribution Agreement");
(4) To re-elect the directors of the Fund;
(5) To ratify the selection of Price Waterhouse LLP as independent auditors for
the Fund's current fiscal year; and
(6) To transact such other business as may properly come before the meeting or
any adjournments thereof.
Please indicate your voting instructions on the enclosed voting
instruction form with respect to each Portfolio in which you were a beneficial
owner as of the record date; sign such voting instruction form; and return it in
the envelope provided, which is addressed for your convenience and needs no
postage if mailed in the United States.
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In order to avoid the additional expense of further solicitation, we
ask that you mail your voting instruction form promptly.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR VOTING INSTRUCTION FORM PROMPTLY NO
MATTER HOW MANY SHARES YOU BENEFICIALLY OWN. You are entitled to vote at the
meeting and any adjournments thereof if you beneficially owned Portfolio shares
at the close of business on October 7, 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 voting instruction form in the
postage paid envelope provided.
By Order of the Board of Directors
Thomas E. Pierpan, ASSISTANT SECRETARY
October 24, 1996
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WRL SERIES FUND, INC.
201 Highland Avenue
Largo, Florida 33770
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
DECEMBER 16, 1996
This is a proxy statement relating to the investment portfolios of WRL
Series Fund, Inc. (the "Fund"), as listed on Schedule A of this Proxy Statement
(each, a "Portfolio," and collectively, the "Portfolios"). The Fund is a series
mutual fund consisting of a number of series or Portfolios. This proxy statement
is furnished in connection with the solicitation of proxies by the Board of
Directors of the Fund, on behalf of the Portfolios, to be used at the Fund's
special meeting of shareholders of the Portfolios (the "Meeting"). The Meeting
will be held on Monday, December 16, 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 purposes of the Meeting are: (1) to permit the shareholders
of each Portfolio to consider a Proposed Advisory Agreement (described below)
between the Fund, on behalf of each Portfolio, and WRL Investment Management,
Inc. ("WRL Management"), to take effect on January 1, 1997; (2) to permit the
shareholders of each Portfolio to consider a Proposed Sub-Advisory Agreement
(each as described below) between WRL Management and each of the current
sub-adviser(s) of such Portfolio, to take effect on January 1, 1997; (3) to
permit the shareholders of each Portfolio to consider a distribution plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"1940 Act"), to take effect on January 1, 1997, which provides that each
Portfolio may reimburse InterSecurities, Inc. ("ISI") for certain
distribution-related expenses, but in no event are the reimbursements to be paid
under the distribution plan to exceed AN ANNUAL RATE of 0.15% of each such
Portfolio's average daily net assets. Shareholders will also be asked to
re-elect the Fund's directors and to ratify the selection of Price Waterhouse
LLP as independent auditors for the Fund's current fiscal year.
A majority of the shares of stock outstanding on October 7, 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 proposals 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.
The costs of the Meeting, including the solicitation of proxies and
voting instructions, will be paid by the Portfolios. The principal solicitation
of proxies and voting instructions will be by the mailing of this proxy
statement on or about October 24, 1996, but proxies and voting instructions may
also be solicited by telephone and/or in person by representatives of the Fund
and regular employees of Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") or its affiliates. Such representatives and employees will not receive
additional compensation for solicitation activities.
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, October 7, 1996, the Fund had outstanding __________ shares of the
Portfolios (representing a cash value of $______ ), all of which shares are
owned of record by the WRL Series Life Account or the WRL Series Annuity Account
of Western Reserve, by Western Reserve directly, by the PFL Endeavor Variable
Annuity Account of PFL Life Insurance Company, Inc. ("PFL Life"), or by Pooled
Account No. 27 of AUSA Life Insurance
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Company, Inc. ("AUSA Life") (together, the "Accounts"). The outstanding shares
owned by the Accounts in each respective Portfolio are reflected on attached
Schedule A.
POLICYOWNERS' RIGHT TO INSTRUCT WESTERN RESERVE
Western Reserve, PFL Life or AUSA Life, respectively, will vote shares
held in the Accounts at the Meeting in accordance with the instructions received
from the holders of individual life insurance policies, individual variable
annuity contracts and group annuities (collectively, the "Policies" owned by the
"Policyowners") whose benefits thereunder are funded through those Accounts.
(The holder of a qualified group variable contract may seek voting instructions
from individual qualified plan participants if required under the terms of the
qualified plan pursuant to which the group contract is held.)
The Fund has agreed to solicit voting instructions from the
Policyowners, upon which instructions Western Reserve, PFL Life or AUSA Life,
respectively, will vote the shares of the Portfolios at the Meeting on December
16, 1996, and any adjournment thereof. The Fund will mail to each Policyowner of
record as of October 7, 1996 a copy of this proxy statement. The number of Fund
shares in a Portfolio or Portfolios for which a Policyowner may give
instructions is determined as follows: the number of shares of a given Portfolio
(and corresponding votes) allotted to a Policy will be calculated by dividing
the amount of the Policy's cash value (or 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 Portfolios as of October 7, 1996, Policyowners are entitled to an
aggregate of votes with respect to each of the Portfolios as reflected on
attached Schedule A.
All shares for which Western Reserve, PFL Life 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, PFL Life and AUSA Life will vote the shares of each Portfolio
for which no timely instructions are received, and any shares beneficially owned
exclusively by Western Reserve, in proportion to the voting instructions which
are received with respect to all Policies participating in such Portfolio.
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, PFL Life or AUSA Life with respect to 5% or more of the shares
of any 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. Western Reserve, or PFL Life or AUSA
Life, affiliates of Western Reserve, as applicable, 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 in proportion to
the voting instructions which are received with respect to all Policies
participating in such Portfolio. 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 execution of
a subsequent voting instruction form, by written notice to the Secretary of the
Fund, or by voting in person at the Meeting.
The following table summarizes each proposal to be presented at the
Meeting and the Portfolios solicited with respect to each proposal:
PROPOSAL AFFECTED PORTFOLIOS
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1. Approval of Proposed Advisory Each Portfolio*
Agreement
2. Approval of Proposed Sub-Advisory Each Portfolio*
Agreements
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3. Approval of Distribution Plan Each Portfolio*
4. Re-election of Directors of the Fund All Portfolios**
5. Ratification of Independent Auditors All Portfolios**
*SHAREHOLDERS OF A PORTFOLIO WILL VOTE SEPARATELY FROM OTHER SHAREHOLDERS OF THE
FUND ON THE PROPOSED ADVISORY AGREEMENT AS IT APPLIES TO SUCH PORTFOLIO; ON THE
PROPOSED SUB-ADVISORY AGREEMENT(S) APPLICABLE TO SUCH PORTFOLIO; AND ON THE
DISTRIBUTION PLAN AS IT APPLIES TO SUCH PORTFOLIO.
**SHAREHOLDERS OF ALL THE PORTFOLIOS OF THE FUND WILL VOTE TOGETHER AS A SINGLE
CLASS ON THIS PROPOSAL.
For each Portfolio of the Fund, the Board of Directors recommends that
you cast your vote:
\Bullet\ FOR approval of the Proposed Advisory Agreement as it relates to
such Portfolio.
\Bullet\ FOR approval of the Proposed Sub-Advisory Agreement relating to
such Portfolio.
\Bullet\ FOR the approval of the Distribution Plan as it relates to such
Portfolio.
\Bullet\ FOR the re-election of the Directors of the Fund.
\Bullet\ FOR the ratification of the selection of Price Waterhouse LLP as
independent auditors for the current fiscal year of the Fund.
Each of these proposals are described in more detail below, and in the
attached Schedules and Exhibits. The Schedules and Exhibits are important parts
of this Proxy Statement; please consult them carefully as you review this Proxy
Statement and evaluate the proposals.
INTRODUCTION
Currently, Western Reserve acts as investment adviser to each of the
Portfolios pursuant to investment advisory agreements (each a "Current Advisory
Agreement"), each dated as reflected on attached Schedule B. Under each Current
Advisory Agreement, Western Reserve is responsible for providing investment
management and supervision and administrative services to the relevant
Portfolio. With respect to each Portfolio of the Fund, Western Reserve has in
turn entered into one or more sub-advisory agreement(s) (each, a "Current
Sub-Advisory Agreement"), each dated as reflected on attached Schedule C, with
sub-adviser(s). Under each Current Sub-Advisory Agreement, each Portfolio's
sub-adviser(s), as set forth on attached Schedule C, is generally responsible
for providing investment management services to the relevant Portfolio(s).
Pursuant to an internal restructuring plan (the "Restructuring"),
Western Reserve has formed two new wholly-owned subsidiaries, WRL Investment
Management, Inc., and WRL Investment Services, Inc. ("WRL Services"). WRL
Management and WRL Services together will assume the business of Western Reserve
as it relates to the management, supervision, and administration of registered
investment companies, including, but not limited to, the Fund. WRL Management
will be the successor to Western Reserve's business as an investment adviser and
manager and supervisor of registered investment companies. WRL Services will
assume Western Reserve's role as the provider of administrative services to
registered investment companies. Thus, it is contemplated that upon
implementation of the Restructuring, (i) WRL Management will replace Western
Reserve as the investment adviser to each Portfolio of the Fund; and (ii) WRL
Services will replace Western Reserve as the provider of administrative services
to each Portfolio of the Fund.
As a result of the Restructuring, it is anticipated that a new advisory
agreement between the Fund, on behalf of each Portfolio, and WRL Management (the
"Proposed Advisory Agreement"), will be effective upon the consummation of the
Restructuring. With respect to a Portfolio, the Proposed Advisory
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Agreement must be approved by a vote of the majority of the outstanding voting
securities of such Portfolio, as defined in the 1940 Act (see below). The terms
of the Proposed Advisory Agreement that govern investment management and
supervision services are substantially the same as the terms that govern
investment management and supervision services in each of the Current Advisory
Agreements, except for the dates of execution and termination of the agreements,
and the identity of the investment adviser (currently, Western Reserve; in the
Proposed Advisory Agreement, WRL Management). The provisions addressing
administrative services that are reflected in the Current Advisory Agreements
are NOT contained in the Proposed Advisory Agreement. Following the
Restructuring, administrative services will be provided to the Fund not by the
Fund's investment adviser pursuant to an investment advisory agreement, but
instead by WRL Services pursuant to an Administrative Services and Transfer
Agency Agreement (see below).
In accordance with and pursuant to the Current Advisory Agreements,
Western Reserve has, on behalf of each Portfolio of the Fund, entered into a
Current Sub-Advisory Agreement with one or more sub-adviser(s) for such
Portfolio. The Current Sub-Advisory Agreements and current sub-adviser(s) for
each Portfolio are listed on Schedule C. The change in the Fund's investment
adviser from Western Reserve to its newly-formed subsidiary, WRL Management,
will result in the assignment and automatic termination of the Current
Sub-Advisory Agreements. Accordingly, with respect to each Portfolio, as a
result of the Restructuring, it is anticipated that a new sub-advisory agreement
(each, a Proposed Sub-Advisory Agreement) between WRL Management, on the one
hand, and the current sub-adviser(s) to such Portfolio, on the other hand, will
be effective upon consummation of the Restructuring. In addition, the Proposed
Sub-Advisory Agreements reflect certain additions or changes deemed appropriate
by WRL Management and/or the sub-adviser to the Portfolio. With respect to a
Portfolio, a Proposed Sub-Advisory Agreement must be approved by a vote of the
majority of outstanding voting securities of such Portfolio as defined in the
1940 Act (see below).
The Fund also wishes to enter into an arrangement with ISI, an
affiliate of Western Reserve, PFL Life, AUSA Life, WRL Management and WRL
Services, pursuant to which ISI will perform distribution-related services for
the Fund pursuant to a distribution plan (the "Distribution Plan") and related
distribution agreement (the "Distribution Agreement"). The Distribution Plan
provides that ISI will be reimbursed thereunder for distribution-related
expenses incurred in accordance with the Distribution Plan and the Distribution
Agreement, but in no event will the reimbursement fees paid under the
Distribution Plan exceed AN ANNUAL RATE of 0.15% of each Portfolio's average
daily net assets. With respect to a Portfolio, the Distribution Plan must be
approved by a vote of the majority of outstanding voting securities of such
Portfolio, as defined in the 1940 Act (see below). As discussed below, the Board
of Directors of the Fund believes that the Fund and the Policyowners (defined
below) will benefit from enhanced sales of Portfolio shares and an increased
level of net assets resulting from ISI's performance of distribution-related
services for the Portfolios of the Fund.
With respect to a Portfolio, the Proposed Advisory Agreement, a
Proposed Sub-Advisory Agreement, and the Distribution Plan must be approved by a
"vote of the majority of the outstanding voting securities" of such Portfolio,
as defined in the 1940 Act. The "vote of a majority of the outstanding voting
securities" means the lesser of the vote of (i) 67% or more of the shares of the
Portfolios entitled to vote thereon present at the Meeting if the holders of
more than 50% of such outstanding shares are present in person or represented by
proxy; or (ii) more than 50% of such outstanding shares of the Portfolio
entitled to vote thereon.
PROPOSALS 1, 2 AND 3, WHICH EACH RELATE TO THE RESTRUCTURING, MUST BE
APPROVED BY ALL PORTFOLIOS IN ORDER FOR ANY OF THESE PROPOSALS TO BE
IMPLEMENTED. IN OTHER WORDS, SHAREHOLDERS OF EACH PORTFOLIO MUST APPROVE (I) THE
PROPOSED ADVISORY AGREEMENT, AS IT APPLIES TO SUCH PORTFOLIO; (II) EACH PROPOSED
SUB-ADVISORY AGREEMENT RELATING TO SUCH PORTFOLIO; AND (III) THE DISTRIBUTION
PLAN, AS IT APPLIES TO SUCH PORTFOLIO, IN ORDER FOR THE RESTRUCTURING TO BE
CONSUMMATED AND EACH OF THESE PROPOSALS TO BE IMPLEMENTED.
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PROPOSAL 1: TO APPROVE THE PROPOSED ADVISORY
AGREEMENT BETWEEN THE FUND AND WRL MANAGEMENT
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The Board of Directors of the Fund (the "Board" or "Directors") met on
October 3, 1996, at which meeting the Directors, including the Disinterested
Directors (Directors who are not party to, or interested persons of any party
to, or otherwise have any direct or indirect financial interest in, the Current
or Proposed Advisory Agreements; the Current or Proposed Sub-Advisory
Agreements; or the Distribution Plan), concluded that the Restructuring, and the
execution of the Proposed Advisory Agreement between the Fund, on behalf of each
of the Portfolios, and WRL Management, would be in the best interest of each
Portfolio and its shareholders. The Board unanimously approved the Proposed
Advisory Agreement, and recommended that it be submitted for approval by the
shareholders of the respective Portfolios at the Meeting.
THE CURRENT INVESTMENT ADVISER AND CURRENT ADVISORY AGREEMENTS
Western Reserve, a life insurance company located at 201 Highland
Avenue, Largo, Florida 33770, currently serves as the investment adviser to each
Portfolio of the Fund. Western Reserve does not act as investment adviser or
sub-adviser to any other investment companies. Western Reserve 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.
Western Reserve has acted as investment adviser and manager for each
Portfolio since the commencement of such Portfolio's operations. The Current
Advisory Agreements for the Fund, on behalf of the various Portfolios, were last
approved by a majority of the Directors, including a majority of the
Disinterested Directors, voting in person at a meeting called for that purpose
on the dates set forth on attached Schedule B, whereby the Board voted to
continue the Current Advisory Agreements for a period of one year. The Current
Advisory Agreements were initially approved by the Board on the dates set forth
on attached Schedule B, and were last approved by shareholders of each Portfolio
on the dates set forth on attached Schedule B. The Form of the Current Advisory
Agreement for each Portfolio is attached hereto as Exhibit A; this Form of
Current Advisory Agreement accurately reflects the material provisions of each
of the Current Advisory Agreements.
Pursuant to the Current Advisory Agreements, Western Reserve is
responsible for providing to each of the Portfolios investment research and
portfolio management, including the selection of securities for each Portfolio
to purchase, hold, or sell, and the selection of brokers through whom that
Portfolio's portfolio transactions are executed. Western Reserve also furnishes
or makes available to the Portfolios the services of executive and management
personnel to supervise the performance of all administrative, record keeping,
regulatory reporting and compliance services, including the supervision of the
custodian of the Fund. Western Reserve may incur and will pay certain additional
expenses, including legal and accounting fees, in connection with the formation
and maintenance of the Portfolios, including the preparation and filing, when
appropriate, of all documents. Western Reserve also furnishes offices, necessary
facilities and equipment, and permits its officers and employees to serve
without compensation as Directors and officers of the Fund if duly elected to
such positions. Accounting services are also provided by Western Reserve to the
Fund.
Each Portfolio pays all other expenses incurred in its operation
including, but not limited to, general administrative expenses, interest
charges, fees and expenses of independent auditors, taxes and government fees,
costs of share certificates and any other expenses (including clerical expenses)
of issuance, sale or repurchase of its shares, expenses in connection with its
dividend reinvestment plan, membership fees in trade associations, expenses of
annual and special meetings of the directors and shareholders, fees and
disbursements of transfer agents, expenses of disbursing dividends and
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distributions, fees, expenses and out-of-pocket costs of the directors who are
not affiliated with Western Reserve, insurance premiums, indemnification and
other expenses not expressly provided for in each Current Advisory Agreement,
and any extraordinary expenses of nonrecurring nature.
Each Current Advisory Agreement also provides that Western Reserve
shall not be liable to the Fund with respect to any error of judgment or law, or
for any loss suffered by, the particular Portfolio in connection with the
matters to which the Current Advisory Agreement relates except a loss resulting
from willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations or duties under the Current Advisory Agreement.
Western Reserve's activities are subject to the review and supervision
of the Board, to which Western Reserve renders periodic reports with respect to
each Portfolio's investment activities.
Under its terms, each Current Advisory Agreement will continue in
effect until the date shown on attached Schedule B, 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
relevant Portfolio. Each Current Advisory Agreement may be terminated by either
party, at any time, without penalty, upon 60 days' written notice, and will
automatically terminate in the event of its assignment. A Current Advisory
Agreement may be amended with respect to a Portfolio only with the approval by
the affirmative vote of a majority of the outstanding voting securities of the
Portfolio 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.
As compensation for its services to the Portfolios under the Current
Advisory Agreements, Western Reserve receives monthly compensation at the annual
rates reflected on attached Schedule B. Schedule B also lists the aggregate
amount of advisory fees remitted by each Portfolio to Western Reserve for the
fiscal year ended December 31, 1995. The net assets of each of the Portfolios as
of September 30, 1996 are also shown on such schedule. 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 each
Portfolio, except for Meridian/INVESCO Foreign Sector Portfolio,
Meridian/INVESCO Global Sector Portfolio, and Meridian/INVESCO US Sector
Portfolio, to the extent normal operating expenses (including investment
advisory fees but excluding interest, taxes, brokerage fees, commissions and
extraordinary charges) exceed 1.00% of each Portfolio's average daily net assets
(1.50% for the C.A.S.E. Growth & Income Portfolio and the C.A.S.E. Quality
Growth Portfolio, and 0.70% for the Bond Portfolio and Money Market Portfolio).
During the Fund's last fiscal year, the following Portfolios paid
brokerage commissions to affiliated broker-dealers in the amounts shown, which
constituted the percentage of the Portfolio's total brokerage commissions for
the fiscal year shown:
AFFILIATED BROKERAGE COMMISSIONS (YEAR ENDED DECEMBER 31, 1995)
PORTFOLIO AMOUNT PAID % OF TOTAL COMMISSIONS PAID
--------- ----------- ---------------------------
Aggressive Growth $240,067* 100%
Balanced $1,040** 1.15%
- -------------
* Commissions paid to Alger, Inc., affiliate of Fred Alger Management, Inc.,
Sub-Adviser to the Aggressive Growth Portfolio.
** Commissions paid to AEGON
USA Securities, Inc., affiliate of AEGON USA Investment Management, Inc.,
Sub-Adviser to the Balanced Portfolio.
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No Director of the Fund has beneficially owned any securities of or has
had any other material interest in Western Reserve or its respective affiliates
during the past five years. 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 Western
Reserve or any affiliate of Western Reserve was or is to be a party. Except as
described herein, neither Western Reserve, nor any of its directors and
officers, any Director or officer of the Fund, nor any parent company of Western
Reserve, 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 Western Reserve, or its affiliates, subsequent to the
beginning of the Fund's last fiscal year.
THE RESTRUCTURING
Western Reserve has determined to internally reorganize its investment
management and supervision and investment company administration functions, in
an effort to streamline these operations, and provide an overall higher quality
of service. The Restructuring will result in the "relocation" of Western
Reserve's investment management and supervision functions to a new wholly-owned
subsidiary of Western Reserve, WRL Management; the Restructuring will also
result in the "relocation" of Western Reserve's fund administration functions to
a second new wholly-owned subsidiary of Western Reserve, WRL Services. It is
anticipated that, in the future, WRL Management and/or WRL Services will seek to
provide investment management and/or supervision or administrative and transfer
agency services, respectively, to investment companies other than the Fund,
which may include investment companies unaffiliated with Western Reserve, WRL
Management, or WRL Services. The directors and principal executive officer of
WRL Management, together with their principal occupations, are listed on
attached Schedule B.
Upon consummation of the Restructuring, WRL Management will provide
investment management and supervision services to each Portfolio of the Fund
pursuant to the Proposed Advisory Agreement; and WRL Services will provide
administrative and transfer agency services to each Portfolio of the Fund
pursuant to an Administrative Services and Transfer Agency Agreement
("Administrative Agreement"). Subject to review by the Board of Directors, WRL
Management will be responsible for providing investment management and
supervision services to each Portfolio in accordance with such Portfolio's
investment objective and policies. It is important to note that the newly-formed
WRL Management will possess the same level of expertise in investment management
and supervision that is associated with Western Reserve, but will also benefit
from a focus concentrated solely on the provision of advisory services. It is
anticipated that the "relocation" of investment management and supervision
resources from Western Reserve to WRL Management, and the accompanying
contemplated change in investment adviser to the Fund, will have no negative
impact on the Portfolios or on Policyowners. Personnel of Western Reserve that
perform investment management and supervision services for the Portfolios
pursuant to the Current Advisory Agreement will continue to do so under the
Proposed Advisory Agreement. No change in the level, quality, or quantity of
such services to be performed is contemplated.
The investment advisory fees to be paid by each of the Portfolios under
the Proposed Advisory Agreement are the same as those paid by each of the
Portfolios under the Current Advisory Agreement. Because, however, under the
terms of the Proposed Advisory Agreement, neither Western Reserve nor WRL
Management will perform administrative and transfer agency services for the
Fund, the Proposed Advisory Agreement, if approved, will result in an indirect
increase in advisory fees. It is anticipated that, upon consummation of the
Restructuring, administrative and transfer agency services will be performed for
the Fund by WRL Services pursuant to the Administrative Agreement, to be
effective on January 1, 1997; under the Administrative Agreement, each Portfolio
of the Fund will reimburse WRL Services for the cost of such services on a
monthly basis. Under the terms of the Current Advisory Agreement, Western
Reserve (the current adviser) performs CERTAIN administrative services for the
Fund AT WESTERN RESERVE'S EXPENSE. Following the Restructuring, WRL Services
will perform ALL administrative and transfer agency services for the Fund AT THE
FUND'S EXPENSE. Western Reserve, WRL Management, and WRL Services each believe
that the Restructuring will, over time, result in an improved quality of both
7
<PAGE>
investment management and supervision and administrative and transfer agency
services being provided to the Fund (see below).
Consummation of the Restructuring will result in an "assignment" (as
defined in the 1940 Act) of each Current Advisory Agreement between the Fund, on
behalf of a Portfolio or Portfolios, and Western Reserve. As required by the
1940 Act, each Current Advisory Agreement provides for its automatic termination
in the event of an assignment.
In anticipation of the Restructuring, and in order for WRL Management
to serve as investment adviser to each Portfolio after consummation of the
Restructuring without interruption of advisory services, the Proposed Advisory
Agreement between the Fund, on behalf of each of the Portfolios, and WRL
Management must be approved (i) by a majority of Disinterested Directors and
(ii) by the holders of a majority of the outstanding voting securities of each
Portfolio.
THE PROPOSED ADVISORY AGREEMENT
The Board approved the Proposed Advisory Agreement between the Fund, on
behalf of each of the Portfolios, and WRL Management, which is attached hereto
as Exhibit B, at a special meeting of the Board held on October 3, 1996. The
Proposed Advisory Agreement as it relates to a Portfolio will take effect for
such Portfolio upon the later to occur of (i) the consummation of the
Restructuring, or (ii) the approval of the Proposed Advisory Agreement by vote
of a majority of outstanding voting securities of such Portfolio.
The form of the Proposed Advisory Agreement is the same in all material
respects as each of the Current Advisory Agreements, except for (i) the dates of
execution and termination; (ii) the name of the investment adviser; and (iii)
provisions relating to administrative and transfer agency services. In
particular, provisions relating to administrative and transfer agency services,
which are reflected in the Current Advisory Agreements, are NOT contained in the
Proposed Advisory Agreement, but are addressed in the Administrative Agreement,
which is attached hereto as Exhibit C. (The description of the Current Advisory
Agreements and the Proposed Advisory Agreement set forth herein is qualified by
reference to Exhibits A, B, and C.)
The investment advisory fee as a percentage of net assets payable by
each Portfolio to the Portfolio's investment adviser would remain the same under
each Proposed Advisory Agreement as under the Current Advisory Agreements.
(Thus, if the investment advisory fee under each Proposed Advisory Agreement had
been in effect for each Portfolio's most recently completed fiscal year,
advisory fees paid to the respective Adviser by each Portfolio would have been
identical to those paid under the Current Advisory Agreements.) However, WRL
Management will not provide any administrative services under the Proposed
Advisory Agreement. Thus, the Proposed Advisory Agreement results in an indirect
increase in the advisory fee paid by each Portfolio of the Fund. In addition,
after the Restructuring, each Portfolio will pay for all administrative and
transfer agency services provided by WRL Services pursuant to the Administrative
Agreement.
In evaluating the Proposed Advisory Agreement, the Board took into
account that, except for the dates of execution and termination, the name of the
investment adviser, and the removal of administrative services, there are no
material differences between the terms and conditions of each Portfolio's
Current Advisory Agreement and its Proposed Advisory Agreement, including the
terms relating to the advisory services to be provided thereunder by the Adviser
and the fees and expenses payable by the Portfolios.
The Board also considered the terms of the Restructuring and the
ability of the new, wholly-owned advisory entity to provide investment
management and supervision services to the Portfolios. (WRL Management does not
presently act as investment adviser or sub-adviser to any other investment
companies.) The Board considered the skills and capabilities of WRL Management
and the representations of Western Reserve that no material change in the
current management or facilities provided to shareholders would result from a
reorganization of advisory functions into Western Reserve's
8
<PAGE>
new wholly-owned subsidiary. In this regard, representatives of Western Reserve
met with the Board at the Meeting, at which time such representatives described
the resources available to WRL Management, after consummation of the
Restructuring, to secure for each Portfolio quality investment research,
investment advice and sub-adviser supervision. The Board also considered the
fact that members of senior management of Western Reserve would perform services
for WRL Management. The Board views certain employment incentives provided to
such members of senior management, and the retention of other key employees of
Western Reserve as key personnel of WRL Management, to be important factors
helping to assure continuity of the personnel primarily responsible for
maintaining the quality of investment and supervision services for the
Portfolios. Accordingly, each Portfolio would receive the same investment
management and supervision services, provided in the same manner, as it receives
under a Current Advisory Agreement. With respect to the fact that compensation
to be paid under the Proposed Advisory Agreement with respect to each Portfolio
will be the same as under the Current Advisory Agreements, notwithstanding the
fact that WRL Management will not provide any administrative services to the
Fund, the Directors considered (i) the recent growth in the number of Portfolios
of the Fund, and the corresponding increase in investment supervision
responsibilities of the Fund's adviser (I.E., monitoring an increased number of
sub-advisers); and (ii) the corresponding increase in cost to the adviser of
performing such supervision.
The Board also considered pro forma expense information for the Fund
(post-Restructuring) provided by Western Reserve, as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT 12B-1 SERVICE AND OTHER EXPENSES TOTAL PORTFOLIO
PORTFOLIO FEES DISTRIBUTION FEES (AFTER REIMBURSEMENT) ANNUAL EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
FOR YEAR AFTER FOR YEAR AFTER FOR YEAR AFTER FOR YEAR AFTER
ENDED RESTRUCTURING ENDED RESTRUCTURING ENDED RESTRUCTURING ENDED RESTRUCTURING
12/31/95 (PRO FORMA) 12/31/95 (PRO FORMA) 12/31/95 (PRO FORMA) 12/31/95 (PRO FORMA)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AGGRESSIVE 0.80% 0.80% -0- .03% - .15% 0.12% .15% - .27% .92% .95% - 1.07%
GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
0.80% 0.80% -0- .03% - .15% 0.11% .14% - .26% .91% .94% - 1.06%
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH 0.80% 0.80% -0- .03% - .15% 0.06% .09% - .21% .86% .89% - 1.01%
- -----------------------------------------------------------------------------------------------------------------------------------
GLOBAL 0.80% 0.80% -0- .03% - .15% 0.19% .22% - .34% .99% 1.02% - 1.14%
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED 0.80% 0.80% -0- .03% - .15% 0.17% .20% - .32% .97% 1.00% - 1.12%
- -----------------------------------------------------------------------------------------------------------------------------------
BOND 0.50% 0.50% -0- .03% - .15% 0.11% .14% - .26% .61% .64% - .76%
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TO- 0.60% 0.60% -0- .03% - .15% 0.18% .21% - .33% .78% .81% - .93%
INTERMEDIATE
GOVERNMENT
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY-INCOME 0.80% 0.80% -0- .03% - .15% 0.07% .10% - .32% .87% .90% - 1.02%
- -----------------------------------------------------------------------------------------------------------------------------------
9
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITY 0.75% 0.75% -0- .03% -.15% 0.25% .28% - .40% 1.00% 1.03% - 1.15%
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET 0.40% 0.40% -0- .03% -.15% 0.06% .09% - .25% .56% .49% - .61%
- -----------------------------------------------------------------------------------------------------------------------------------
TACTICAL ASSET 0.80% 0.80% -0- .03% -.15% 0.13% .16% - .28% .93% .96% - 1.08%
ALLOCATION
- -----------------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY 0.80% 0.80% -0- .03% -.15% 0.20% .23% - .35% 1.00% 1.03% - 1.15%
- -----------------------------------------------------------------------------------------------------------------------------------
C.A.S.E. GROWTH 0.80% 0.80% -0- .03% -.15% 0.20% .23% - .35% 1.00% 1.03% - 1.15%
- -----------------------------------------------------------------------------------------------------------------------------------
C.A.S.E. 0.80% 0.80% -0- .03% -.15% 0.70% .73% - .85% 1.50% 1.53% - 1.65%
QUALITY GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
C.A.S.E. GROWTH 0.80% 0.80% -0- .03% -.15% 0.70% .73% - .85% 1.50% 1.53% - 1.65%
& INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
MERIDIAN/
INVESCO 1.10% 1.10% -0- .03% -.15% 0.20% .23% - .35% 1.30% 1.33% - 1.45%
GLOBAL SECTOR
- -----------------------------------------------------------------------------------------------------------------------------------
MERIDIAN/
INVESCO 1.10% 1.10% -0- .03% -.15% 0.20% .23% - .35% 1.30% 1.33% - 1.45%
US SECTOR
- -----------------------------------------------------------------------------------------------------------------------------------
MERIDIAN/
INVESCO 1.10% 1.10% -0- .03% -.15% 0.20% .23% - .35% 1.30% 1.33% - 1.45%
FOREIGN SECTOR
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Based upon its review, the Board concluded that the Proposed Advisory
Agreement is in the best interest of the Portfolios and their shareholders.
Accordingly, 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 Advisory Agreement
and voted to recommend its approval to the shareholders of the Portfolios.
In the event that shareholders of a Portfolio do not approve the
Proposed Advisory Agreement with respect to such Portfolio, the Restructuring
would not be consummated, and Western Reserve would continue to serve as
investment adviser for all of the Portfolios pursuant to the terms of the
Current Advisory Agreements.
SHAREHOLDER APPROVAL
To become effective with respect to a Portfolio, the Proposed Advisory
Agreement must be approved by a majority of the outstanding voting securities of
such Portfolio. The Proposed Advisory Agreement was unanimously approved by the
Board after consideration of all factors wich they
10
<PAGE>
determined to be relevant to their deliberations, including those discussed
above. The Board also unanimously determined to submit the Proposed Advisory
Agreement for consideration by the shareholders of each Portfolio of the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE BY SHAREHOLDERS OF EACH
PORTFOLIO "FOR APPROVAL" OF THE PROPOSED ADVISORY AGREEMENT.
- -------------------------------------------------------------------------------
PROPOSAL 2: APPROVAL OF PROPOSED SUB-ADVISORY AGREEMENT(S) FOR
EACH PORTFOLIO
- -------------------------------------------------------------------------------
Consummation of the Restructuring described above will constitute an
"assignment" (as defined in the 1940 Act) of each of the Current Sub-Advisory
Agreements, listed on attached Schedule C. As required by the 1940 Act, each
Current Sub-Advisory Agreement provides for its automatic termination in the
event of an assignment.
In anticipation of the Restructuring and in order for each current
sub-adviser to continue to serve as sub-adviser to a Portfolio of the Fund upon
consummation of the Restructuring, a new sub-advisory agreement (a Proposed
Sub-Advisory Agreement) between WRL Management and each current sub-adviser(s)
to such Portfolio must be approved (i) by the Directors of the Fund, including a
majority of the Disinterested Directors; and (ii) by the holders of a majority
of the outstanding voting securities of such Portfolio. The current
sub-adviser(s) for each Portfolio of the Fund, which will each continue to serve
as sub-adviser(s) pursuant to a Proposed Sub-Advisory Agreement, are reflected
on attached Schedule C. The Board approved the Proposed Sub-Advisory Agreements
between WRL Management and each sub-adviser at a special meeting of the Board
held on October 3, 1996. A Proposed Sub-Advisory Agreement for a Portfolio will
take effect upon the later to occur of (i) the consummation of the
Restructuring, or (ii) the approval of the Proposed Sub-Advisory Agreement by
vote of a majority of outstanding voting securities of such Portfolio.
CURRENT SUB-ADVISORY AGREEMENTS
Pursuant to each Current Sub-Advisory Agreement, each of which is dated
as reflected on attached Schedule C, the Fund's current investment adviser,
Western Reserve, contracts with the relevant sub-adviser for sub-advisory
services. The Current Sub-Advisory Agreement for each Portfolio was initially
approved by the Fund's Directors on the date that is reflected on attached
Schedule C, and was most recently approved by the Fund's Directors at a meeting
held for such purpose by the Board of Directors, including a majority of the
Disinterested Directors of the Fund, on the date that is reflected on attached
Schedule C. Each Current Sub-Advisory Agreement was last approved by
shareholders of the relevant Portfolio on the date that is reflected on attached
Schedule C.
Pursuant to each Current Sub-Advisory Agreement, the relevant
sub-adviser provides investment advisory assistance and portfolio management
advice to Western Reserve for the relevant Portfolio. Subject to review and
supervision by Western Reserve and the Board, the sub-adviser is responsible for
actual management of the Portfolio and for making decisions to buy, sell or hold
particular securities, and a sub-adviser places orders to buy or sell securities
on behalf of the relevant Portfolio. A 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, each sub-adviser receives monthly compensation from
Western Reserve as reflected on attached Schedule C. During the fiscal year
ended December 31, 1995, Western Reserve paid each sub-adviser the fees
reflected on attached Schedule C for each sub-adviser's services under the
relevant Current Sub-Advisory Agreement.
11
<PAGE>
Under its terms, each Current Sub-Advisory Agreement will continue in
effect until the date reflected on attached Schedule C, 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. Each Current Sub-Advisory Agreement may be terminated with respect to
a 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, 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, each Current Sub-Advisory Agreement
for a Portfolio terminates automatically upon its assignment, and upon
termination of the Current Advisory Agreement for such Portfolio. Each Current
Sub-Advisory Agreement may be amended with respect to a Portfolio only with the
approval by the affirmative vote of a majority of the outstanding voting
securities of the Portfolio 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 current sub-advisers' principal executive officer and directors,
together with their principal occupations, are listed on attached Schedule C.
Schedule C also includes information regarding the size of each investment
company (or series thereof) that is managed by the sub-adviser and which has an
investment objective similar to that of the Portfolio sub-advised by each
sub-adviser, if any, and the advisory fee rate paid by such investment company.
No Director of the Fund has beneficially owned any securities of or has
had any other material interest in a sub-adviser or its respective affiliates
during the past five years. 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 a
sub-adviser or any parent or subsidiary of such sub-adviser was or is to be a
party. Except as described herein, none of the sub-advisers, nor any of their
directors and officers, any Director or officer of the Fund, nor any parent
company of a 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 parent, subsequent
to the beginning of the Fund's last fiscal year.
PROPOSED SUB-ADVISORY AGREEMENTS AND RECOMMENDATION OF THE BOARD OF DIRECTORS
Each Proposed Sub-Advisory Agreement is substantially similar to the
Current Sub-Advisory Agreement, except for (i) the name of the investment
adviser specified (previously, Western Reserve; in the Proposed Sub-Advisory
Agreements, WRL Management); (ii) the dates of execution and termination; and
(iii) certain additional changes, as described in more detail below. The
effective date of each Proposed Sub-Advisory Agreement will be the later of (i)
the consummation of the Restructuring; or (ii) the approval of the Proposed
Sub-Advisory Agreement by vote of a majority of the outstanding voting
securities of the Portfolio. The Proposed Sub-Advisory Agreements do not
contemplate any changes in the nature of services provided by the sub-adviser,
or any changes in the compensation to be paid by the investment adviser of the
Portfolios to the sub-adviser pursuant to each Proposed Sub-Advisory Agreement,
until such time as that Proposed Sub-Advisory Agreement is amended or terminated
in accordance with its terms. The description of the Proposed Sub-Advisory
Agreements set forth herein is qualified by reference to Exhibit D. Exhibit D
consists of the Form of the Proposed Sub-Advisory Agreement, as well as
annotations describing certain variations from the Form of Proposed Sub-Advisory
Agreement that will be reflected in some, but not all, of the Proposed
Sub-Advisory Agreements.
In addition to the change in the name of the investment adviser and in
the dates of execution and termination, the form of each Proposed Sub-Advisory
Agreement differs from the Current Sub-Advisory Agreement in the following ways:
\Bullet\ The Proposed Sub-Advisory Agreement expands the description of
investment sub-advisory services to be provided to require the
sub-adviser, in the performance of its duties and responsibilities, to:
(1) comply with the investment objectives, policies, and restrictions
of the Portfolio; and (2) consider
12
<PAGE>
information relating to the economy, industries, businesses, securities
markets, and securities as necessary. In addition, the Proposed
Sub-Advisory Agreement requires the sub-adviser to formulate and
implement a continuing program for the management of the assets and
resources of the Portfolio. (See Section 2.A of the Proposed
Sub-Advisory Agreement.)
\Bullet\ Under the Proposed Sub-Advisory Agreement, the sub-adviser has the
explicit authority (which it has implicitly under the Current
Sub-Advisory Agreement) to trade in securities, by itself or through
brokers, dealers, underwriters, or issuers, in its own discretion and
without prior consultation with the Investment Adviser or the
Portfolio. The Current Sub-Advisory Agreement does not explicitly grant
such broad discretionary powers. (See Section 2.A(1) and (2) of the
Proposed Sub-Advisory Agreement.)
\Bullet\ Under the Proposed Sub-Advisory Agreement, the sub-adviser provides
information, advice, and reports directly to the Fund, instead of to
the Investment Adviser as required by the Current Sub-Advisory
Agreement. (See Section 2.B of the Proposed Sub-Advisory Agreement.)
Accordingly, the Proposed Sub-Advisory Agreement does not include the
provision of the Current Sub-Advisory Agreement which states that the
Investment Adviser determines the extent to which to pass on advisory
information to the Fund unless the Investment Adviser directs the
sub-adviser to provide such information to the Fund directly.
\Bullet\ The Proposed Sub-Advisory Agreement requires additional duties and
responsibilities of the Investment Adviser, which include furnishing
the sub-adviser with corporate documents of the Fund, registration
statements of the Fund, prospectuses of the Portfolio, all amendments
thereto, and materials intended for distribution to shareholders of the
Portfolio or the public. (See Sections 4.B(1)-(6) and 4.C of the
Proposed Sub-Advisory Agreement.) The Proposed Sub-Advisory Agreement
no longer expressly requires the Investment Adviser to keep the
sub-adviser informed of the composition of the Portfolio's investment
securities and assets and liabilities.
\Bullet\ The Proposed Sub-Advisory Agreement adds a section not present in the
Current Sub-Advisory Agreement that governs the use of broker-dealers
by the sub-adviser for the purchase and sale of securities for the
Portfolio. (See Section 5.A., B., and C. of the Proposed Sub-Advisory
Agreement.)
\Bullet\ The Proposed Sub-Advisory Agreement, unlike the Current Sub-Advisory
Agreement, allows the Agreement to be terminated by the Investment
Adviser if the sub-adviser becomes unable to discharge its duties and
obligations. (See Section 12 of the Proposed Sub-Advisory Agreement.)
\Bullet\ The Proposed Sub-Advisory Agreement extends the representations of the
sub-adviser and adds certain provisions that do not have a counterpart
in the Current Sub-Advisory Agreement, to address such topics as
ownership of records, reports, services to other clients, governing
law, captions, interpretations, and definitions.
Prior to and at a meeting of the Board of Directors of the Fund on
October 3, 1996, the Directors of the Fund, including the Disinterested
Directors, reviewed information regarding the Restructuring and the Proposed
Sub-Advisory Agreements.
In evaluating each Proposed Sub-Advisory Agreement, the Board took into
account that each Portfolio's Proposed Sub-Advisory Agreement, including the
terms relating to the services to be provided thereunder by the sub-adviser and
the fees payable by WRL Management to the sub-adviser(s) of each Portfolio, is
substantially similar to the Current Sub-Advisory Agreement, except for the
differences noted above, and the dates of execution, termination, and the change
in identity of investment adviser from Western Reserve to WRL Management.
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
Agreements and voted to recommend their approval to the shareholders of the
relevant Portfolios.
13
<PAGE>
In the event that shareholders of a Portfolio do not approve a Proposed
Sub-Advisory Agreement with respect to such Portfolio, the Restructuring will
not be consummated and each sub-adviser will continue to serve as sub-adviser of
the appropriate Portfolio pursuant to the terms of a Current Sub-Advisory
Agreement.
If approved by the shareholders of a Portfolio, a Proposed Sub-Advisory
Agreement with respect to such Portfolio will become effective on the later to
occur of (a) the consummation of the Restructuring; or (b) approval of the
Proposed Sub-Advisory Agreement by a majority of the outstanding voting
securities of such Portfolio. If approved, the Proposed Sub-Advisory Agreements
will continue in effect for an initial period of two years and for successive
one year periods thereafter, provided such continuance is approved at least
annually in the same manner as described above with respect to the Current
Sub-Advisory Agreement.
SHAREHOLDER APPROVAL
To become effective, a Proposed Sub-Advisory Agreement must be approved
by a majority of the outstanding voting securities of the Portfolio to which it
relates. Each Proposed Sub-Advisory Agreement was unanimously approved by the
Directors, including the Disinterested Directors, after consideration of all
factors which they determined to be relevant to their deliberations, including
those discussed above. The Board also unanimously determined to submit each of
the Proposed Sub-Advisory Agreements for consideration by the shareholders of
each Portfolio of the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE "FOR APPROVAL" OF EACH OF
THE PROPOSED SUB-ADVISORY AGREEMENTS.
- -------------------------------------------------------------------------------
PROPOSAL 3: APPROVAL OF A DISTRIBUTION PLAN FOR EACH PORTFOLIO
- -------------------------------------------------------------------------------
On October 3, 1996 the Directors, including the Disinterested
Directors, approved the Distribution Plan pursuant to Rule 12b-1 and related
Distribution Agreement (attached as Exhibits E and F, respectively). If the
Distribution Plan is approved by shareholders of all Portfolios as described
below, the Distribution Plan and the Distribution Agreement will be effective
with respect to all Portfolios as of January 1, 1997. Under the Distribution
Plan, ISI, whose principal office is located at 201 Highland Avenue, Largo,
Florida 33770, will perform distribution-related services for the Fund pursuant
to the Distribution Plan and related Distribution Agreement.
Under the Distribution Plan, the Fund, on behalf of the Portfolios, may
reimburse ISI after each calendar month for certain Fund distribution expenses
incurred or paid by ISI, provided that such remittances in the aggregate do not
exceed AN ANNUAL RATE of 0.15%, on an annual basis, of the average daily net
asset value of shares of each Portfolio. Distribution expenses for which ISI may
be reimbursed include, but are not limited to, expenses of printing and
distributing the Fund's prospectus and statement of additional information to
potential investors; developing and preparing Fund advertisements, sales
literature and other promotional materials; holding seminars and sales meetings
designed to promote the distribution of Fund shares; the development of
consumer-oriented sales materials describing and/or relating to the Fund; and
expenses attributable to "distribution-related services" provided to the Fund.
"Distribution-related services" include, but are not limited to: salaries and
benefits; office expenses; equipment expenses (I.E., computers, software, office
equipment, etc.); training costs; travel costs; printing costs; supply expenses;
computer programming time; and data center expenses, each as they relate to the
promotion of the sale of Fund shares.
ISI will be required to submit to the Directors annual distribution
expense budgets FOR APPROVAL and quarterly reports of distribution expenses,
with respect to each Portfolio. ISI will allocate to each Portfolio distribution
expenses specifically attributable to the distribution of shares of such
Portfolio; distribution expenses not specifically attributable to the
distribution of shares of a particular Portfolio will
14
<PAGE>
be allocated among the Portfolios, based upon the ratio of the net asset value
of each Portfolio to the net asset value of all Portfolios, or such other
factors as ISI deems fair and are approved by the Directors.
FACTORS CONSIDERED BY THE DIRECTORS
In determining whether to approve the Distribution Plan and the
Distribution Agreement, the Directors considered the possible advantages
afforded Policyowners from adopting the Distribution Plan and Distribution
Agreement. The Directors were informed by representatives of ISI that
reimbursements of distribution-related expenses by the Fund under the
Distribution Plan would provide incentives to ISI to establish and maintain an
enhanced distribution system whereby new investors will be attracted to the
Portfolios. The Directors believe that improvements in distribution services
should result in increased sales of shares in the Portfolios. In turn, increased
sales are expected to lead to an increase in the Portfolios' net asset levels,
which would enable the Portfolios to achieve economies of scale and lower their
per-share operating expenses. In addition, higher net asset levels could enhance
the investment management of the Portfolios, for net inflows of cash from new
sales may enable the Fund's investment adviser and sub-advisers to take
advantage of attractive investment opportunities. Finally, reduced redemptions
could eliminate the potential need to liquidate attractive securities positions
in order to raise the capital necessary to meet redemption requests. In
addition, it is anticipated that in the future, and subject to the Fund's
obtaining any necessary regulatory approvals, ISI may undertake efforts to make
Portfolios of the Fund available as investment options under variable annuity
contracts, variable life insurance policies, and/or qualified retirement plans
issued or sponsored by insurance companies or plan sponsors affiliated or
unaffiliated with Western Reserve. The Board took into account that these
marketing efforts could lead to further increases in Fund assets, and attendant
economies of scale and reductions in overall operating expenses, as described
above.
The Directors also considered that Policyowners would indirectly pay
increased expenses under the Distribution Plan, namely, Fund
distribution-related expenses in amounts not to exceed 0.15% of each Portfolio's
average daily net assets on an annual basis. However, the Directors determined
that it was reasonably likely that this increase in Portfolio expenses under the
Distribution Plan would in the long term be offset by a reduction in expenses
resulting from economies of scale achieved at higher asset levels. The Board
also recognized that because advisory fees would increase if Portfolio assets
under management increase, the Fund's investment adviser and sub-advisers would
receive increased compensation if the assets of the Portfolios increase as a
result of increased sales of shares. The Directors also considered other
alternative plans for increasing sales of Fund shares. After discussion of the
possible benefits and costs associated with the Distribution Plan, the Directors
determined to vote in favor of its adoption.
Among the requirements of Rule 12b-1 applicable to the Distribution
Plan and the Distribution Agreement are the following: (i) the Distribution Plan
must be approved by a vote of at least a majority of the outstanding voting
securities of each Portfolio; (ii) the Distribution Plan and the Distribution
Agreement must be approved by a vote of the Directors of the Fund, and of a
majority of the Disinterested Directors, cast in person at a meeting called for
the purpose of voting on such Distribution Plan and such Distribution Agreement;
(iii) each of the Distribution Plan and the Distribution Agreement must provide,
in substance (a) that it shall continue in effect for a period of more than one
year only so long as such continuance is specifically approved at least annually
in the manner described in (ii) above, (b) that any person authorized to direct
the disposition of monies paid or payable by the Fund under the Distribution
Plan or the Distribution Agreement shall provide to the Fund's Directors for
review, at least quarterly, a written report of the amounts so expended and the
purpose for which such expenditures were made, (c) that the Distribution Plan
may be terminated at any time by vote of a majority of the Disinterested
Directors and (d) that the Distribution Agreement may be terminated without
penalty at any time by vote of a majority of Disinterested Directors or by vote
of a majority of the outstanding voting securities of such Portfolio on not more
than 60 days' written notice and, in any event, the Distribution Agreement will
terminate in the event of its assignment; (iv) the Distribution Plan may not be
amended to increase materially the amount to be spent for distribution without
shareholder approval and all material Distribution Plan amendments must be
approved by the Disinterested Directors' vote; (v) the selection and nomination
of the Fund's Disinterested Directors must be committed to such Disinterested
Directors;
15
<PAGE>
and (vi) in implementing or continuing the Distribution Plan, the Fund's
Directors who vote to approve such implementation or continuation must conclude
that there is a reasonable likelihood that the Distribution Plan will benefit
each Portfolio and its shareholders.
Based upon information supplied by Western Reserve and ISI, and based
upon Western Reserve's opinion that the Distribution Plan will benefit the
Portfolios by providing an incentive for ISI to promote the Portfolios to
prospective investors, the Directors, including the Disinterested Directors,
approved the Distribution Plan and the Distribution Agreement. While the
Directors have concluded, in the exercise of reasonable business judgment and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Distribution Plan will benefit Portfolios and their shareholders, and in turn,
Policyowners, there can be no assurance that the anticipated benefits will be
realized.
SHAREHOLDER APPROVAL
As discussed above, approval of this proposal with respect to a
Portfolio requires the affirmative vote of a majority of the outstanding voting
securities of such Portfolio.
In the event that the Distribution Plan is not so approved by any one
of the Portfolios, the Distribution Plan will not be implemented with respect to
the Fund. In such case, the Directors will consider what course of action should
be taken. While the Directors have made no determination with respect to this
contingency, one possibility might be a resolicitation of the non-approving
Portfolios' shareholders for approval of the Distribution Plan in the form
presented to this Meeting.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE BY SHAREHOLDERS OF EACH
PORTFOLIO "FOR APPROVAL" OF THE DISTRIBUTION PLAN.
- -------------------------------------------------------------------------------
PROPOSAL 4: RE-ELECTION OF THE FUND'S DIRECTORS
- -------------------------------------------------------------------------------
The Fund is not required to hold annual meetings of shareholders for
the election of Directors. Shareholders are asked to consider the re-election of
the Fund's five Directors at the Meeting pursuant to the Fund's Bylaws, which
permit the election of Directors at any meeting required to be held.
At a meeting held on October 3, 1996, the Board of Directors
unanimously nominated for re-election Peter R. Brown, Charles C. Harris, Russell
A. Kimball, Jr., John R. Kenney, and G. John Hurley, the incumbent Directors.
The chart below indicates the initial year of election of each incumbent
Director.
The Directors are to be re-elected at the Meeting to serve until
reaching their respective designated retirement ages or until their successors
are duly elected and qualified. Following the Meeting, the Fund does not
contemplate holding regular meetings of shareholders to elect Directors or
otherwise. Each of the nominees named below has agreed to continue to serve as a
Director if re-elected. However, should any nominee become unable or unwilling
to accept nomination or re-election, the proxies will be voted for one or more
substitute nominees designated by the Board or Directors.
The following sets forth the names, ages, principal occupations and
other information respecting the nominees:
<TABLE>
<CAPTION>
- ----------------------------------------------------------- ------------------------------------------
NAME, AGE AND INITIAL ELECTION YEAR PRINCIPAL OCCUPATIONS OR EMPLOYMENT
IN THE PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------
<S> <C>
Peter R. Brown Chairman of the Board, Peter Brown Construction
1475 South Belcher Road Company, Largo, Florida (1963 - Present); Trustee of
Largo, Florida 33771 IDEX Fund, IDEX II Series Fund and IDEX Fund 3; Rear
Age: 68 Admiral (Ret.) U.S. Navy Reserve, Civil Engineer Corps.
Initial Election Year: 1986
- ------------------------------------------------------------------------------------------------------
16
<PAGE>
- ------------------------------------------------------------------------------------------------------
NAME, AGE AND INITIAL ELECTION YEAR PRINCIPAL OCCUPATIONS OR EMPLOYMENT
IN THE PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------
Charles C. Harris
35 Winston Drive, Retired (1988 - Present); Senior Vice-President,
Clearwater, Florida 34616 Treasurer, Western Reserve Life Assurance Co. of Ohio
Age: 66 (1966 - 1988); Vice President, Treasurer (1968 -
Initial Election Year: 1986 1988), Director (1968 - 1987), Pioneer Western
Corporation; Vice President of WRL Series Fund, Inc.
(1986 - December, 1990).
- ------------------------------------------------------------------------------------------------------
Russell A. Kimball, Jr. General Manager, Sheraton Sand Key Resort, Clearwater,
1160 Gulf Boulevard Florida (1975 - present).
Clearwater Beach, Florida 34630
Age: 52
Initial Election Year: 1986
- ------------------------------------------------------------------------------------------------------
John R. Kenney,** Chairman of the Board Chairman of the Board of Directors (1987 - present),
of Directors and President Chief Executive Officer (1982 - present), President
Western Reserve Life Assurance Co. of Ohio (1978 - 1987 and December, 1992 -present), Director
P.O. Box 5068 (1978 - present), Western Reserve Life Assurance Co.
Clearwater, FL 34618-5068 of Ohio; Chairman of the Board of Directors
Age: 58 (September, 1996 - present), WRL Investment Management,;
Initial Election Year: 1986 Inc. Chairman of the Board of Directors (September, 1996
- present), WRL Investment Services, Inc.; Chairman of
the Board of Directors and Chief Executive Officer
(1988 - February, 1991), President(1988 - 1989), Director
(1976 - February, 1991), Executive Vice President
(1972 -1988), Pioneer Western Corporation (financial
services), Largo, Florida; President and Director
(1985 - September, 1990) and Director (December,
1990 - present), Idex Management,Inc. (investment
adviser), Largo, Florida; Trustee (1987 - present),
Chairman (December, 1989 -September,1990 and November,
1990 - present) and President and Chief Executive Officer
(November , 1986 - September, 1990), IDEX Fund, IDEX II
Series Fund and IDEX Fund 3 (investment companies) all of
Largo, Florida.
- ------------------------------------------------------------------------------------------------------
17
<PAGE>
- ------------------------------------------------------------------------------------------------------
NAME, AGE AND INITIAL ELECTION YEAR PRINCIPAL OCCUPATIONS OR EMPLOYMENT IN THE
PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------
G. John Hurley,** Director and Executive Executive Vice President (June, 1993 - present), Chief
Vice President Operating Officer (March, 1994 - present) Western
Western Reserve Life Assurance Co. of Ohio Reserve Life Assurance Co. of Ohio; Director
P.O. Box 5068 (September, 1996 - present), WRL Investment Management,
Clearwater, Florida 34618-5068 Inc.; Director (September, 1996 - present, WRL
Age: 48 Investment Services, Inc., WRL Investment Services,
Initial Election Year: 1994 Inc.; President and Chief Executive Officer
(September, 1990 - present), Trustee (June, 1990
present) and Executive Vice President (June, 1988
September, 1990) of IDEX Fund, IDEX II Series Fund
and IDEX Fund 3; President, Chief Executive Officer
and Director of InterSecurities, Inc. (May, 1988
present); Assistant Vice President of AEGON USA
Managed Portfolios, Inc. (September, 1991 -
August, 1992); Vice President of Pioneer Western
Corporation(May 1988 - February, 1991).
- ------------------------------------------------------------------------------------------------------
</TABLE>
** SUCH DIRECTOR IS AN "INTERESTED PERSON" OF THE FUND AS DEFINED IN
THE 1940 ACT AND AN AFFILIATED PERSON OF WESTERN RESERVE AND ISI AND DID NOT
RECEIVE COMPENSATION DIRECTLY FROM THE FUND. SUCH DIRECTOR WILL ALSO BE AN
AFFILIATED PERSON OF WRL MANAGEMENT. NO DIRECTOR OF THE FUND IS AFFILIATED WITH
ANY OF THE SUB-ADVISERS WITH THE EXCEPTION OF THE ABOVE-NAMED INTERESTED
DIRECTORS, WHO ARE EACH AFFILIATED WITH AEGON USA INVESTMENT MANAGEMENT, INC.
During the year ended December 31, 1995, the Board of Directors of the
Fund met five times. Each of the incumbent Directors attended more than 75% of
the aggregate number of such Board meetings. During the year ended December 31,
1995, the Board's only standing committee, the Audit Committee, which consists
of Messrs. Brown, Harris and Kimball, met two times. Each of the incumbent
Directors serving on the Audit Committee attended more than 75% of the aggregate
number of Audit Committee meetings.
The functions performed by the Audit Committee include the
recommendation of the independent public accountants for the Fund to be selected
by the Board, the review of the scope and results of audit services, the review
of the adequacy of internal accounting and financial controls, the review of
material changes in accounting principles and practices and other matters when
requested from time to time by the Board of Directors.
The Fund pays an annual fee of $6,000 to each of its Disinterested
Directors: Peter R. Brown, Charles C. Harris, and Russell A. Kimball, Jr. Each
Disinterested Director also receives $500, plus expenses, per each regular and
each special Board Meeting attended. The Compensation Table, below, provides
compensation amounts paid to the Disinterested Directors of the Fund for the
fiscal year ended December 31, 1995. Compensation from the "Fund Complex"
reflects compensation received by a Director of the Fund from the Fund together
with IDEX Fund, IDEX II Series Fund and IDEX Fund 3.
18
<PAGE>
COMPENSATION TABLE
----------------------------------------------------------
TOTAL COMPENSATION
AGGREGATE FROM FUND AND FUND
NAME OF COMPENSATION COMPLEX PAID TO
PERSON, POSITION FROM FUND DIRECTORS
---------------- ------------ ------------------
----------------------------------------------------------
Peter R. Brown, $9,500 $32,500
Director
----------------------------------------------------------
Charles C. Harris, $9,500 $32,500
Director
----------------------------------------------------------
Russell A. $8,500 $8,500
Kimball, Jr.,
Director
----------------------------------------------------------
Beginning on January 1, 1996, a non-qualified deferred compensation
plan became available to the Disinterested Directors. Under the compensation
plan, compensation may be deferred that would otherwise be payable by the Fund,
and by certain other entities, including IDEX Fund, IDEX II Series Fund and IDEX
Fund 3, for which the Disinterested Directors serve as directors or trustees.
Compensation may be deferred on a current basis for services rendered as a
director/trustee.
SHAREHOLDER APPROVAL
The selection of each nominee requires an affirmative vote of a
majority of outstanding voting securities entitled to vote present at the
Meeting in person or by proxy. Shareholders of all Portfolios will vote together
as a single class on the election of nominees for the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE "FOR APPROVAL" OF THE
RE-ELECTION OF THE FUND'S DIRECTORS.
- -------------------------------------------------------------------------------
PROPOSAL 5: RATIFICATION OF INDEPENDENT AUDITORS
- -------------------------------------------------------------------------------
The Board, including a majority of the Disinterested Directors of the
Fund, has selected the firm of Price Waterhouse LLP ("Price Waterhouse"),
independent public accountants, to examine the financial statements of each
Portfolio for the current fiscal year. Based on information in the possession of
the Fund, and information furnished by Price Waterhouse, Price Waterhouse has no
direct or indirect financial interest in the Fund. The appointment of Price
Waterhouse is subject to ratification or rejection by the shareholders of the
Fund.
Representatives of Price Waterhouse LLP will be available to respond to
questions from shareholders and will have the opportunity to make a statement if
they so desire.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE "FOR APPROVAL" OF
THE RATIFICATION OF THE FUND'S INDEPENDENT PUBLIC ACCOUNTANTS.
- -------------------------------------------------------------------------------
OFFICERS
- -------------------------------------------------------------------------------
The following table sets forth certain information concerning the
executive officers of the Fund, other than information concerning Messrs. Kenney
and Hurley, which is set forth above. As shown more
19
<PAGE>
fully below, the executive officers of the Fund are also officers of Western
Reserve. The officers of the Fund serve for one year or until their respective
successors are chosen and qualified. The Fund pays no salaries or compensation
to any of its officers, all of whom are employees of Western Reserve. Unless
otherwise indicated, the address for each officer is Western Reserve Life
Assurance Co. of Ohio, P.O. Box 5068, Clearwater, Florida 34618-5068.
- ----------------------------------------------------------- -------------------
NAME OF OFFICER PRINCIPAL OCCUPATIONS OR EMPLOYMENT IN THE
PAST 5 YEARS
- -------------------------------------------------------------------------------
Alan M. Yaeger, Executive Vice President (June, 1993 - Present),
Executive Vice President Chief Financial Officer (December, 1995 -
Age: 50 present), Senior Vice President (1981 - June,
1993) and Actuary (1972 present), Western
Reserve Life Assurance Co. of Ohio; Director
(September, 1996 - present), WRL Investment
Management, Inc.; Director (September, 1996 -
present), WRL Investment Services, Inc.
- -------------------------------------------------------------------------------
Rebecca A. Ferrell, Secretary, Assistant Vice President and Counsel (June,
Vice President and Counsel 1995 - present), Attorney (August, 1993 -
Age: 35 June, 1995), Western Reserve Life Assurance Co.
of Ohio; Secretary and Assistant Vice President
(March, 1994 - September, 1995), Secretary,
Vice President and Counsel (September, 1995
- present) of IDEX Fund; IDEX II Series Fund and
IDEX Fund 3; Attorney(September, 1992 - August,
1993) Hearne, Graziano, Nader & Buhr, P.A.;
Legal Writing Instructor (August, 1991 -
June, 1992), Florida State University College of
Law; Teaching Assistant, English (August, 1990 -
July, 1991), University of South Florida.
- --------------------------------------------------------------------------------
Richard B. Franz, II, Senior Vice President (1987 - present), Chief
Treasurer Financial Officer (1987 - December, 1995) and
Age: 46 Treasurer (1988 - present), Western Reserve Life
Assurance Co. of Ohio; Senior Vice President and
Treasurer (1988 - February, 1991), Pioneer
Western Corporation (financial services), Largo,
Florida; Treasurer (1988 - September, 1990 and
November, 1990 present), IDEX Fund, IDEX II
Series Fund and IDEX Fund 3 investment
companies), all of Largo, Florida.
- -------------------------------------------------------------------------------
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 subsequent shareholders' meeting should send their written
proposals to the Secretary of the Fund, 201 Highland Avenue, Largo, Florida
33770.
20
<PAGE>
- -------------------------------------------------------------------------------
ANNUAL REPORT
- -------------------------------------------------------------------------------
A copy of the Fund's Annual Report and most recent Semi-Annual Report
may be obtained without charge upon request by writing to the Fund at the
address above first written, or by calling 1-800-851-9777.
- -------------------------------------------------------------------------------
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
October 24, 1996
Schedule A - Shares of the Portfolios
Schedule B - Information re: Current Advisory Agreements
Schedule C - Information re: Current Sub-Advisory Agreements
Exhibit A - Form of Current Advisory Agreements
Exhibit B - Proposed Advisory Agreement
Exhibit C - Administrative Services and Transfer Agency Agreement
Exhibit D - Form of Proposed Sub-Advisory Agreements
Exhibit E - Proposed Distribution Plan
Exhibit F - Distribution Agreement
21
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
WRL SERIES FUND, INC.
- -------------------------------------------------------------------------------------------------------- -------------
OUTSTANDING SHARES OWNED BY THE AGGREGATE VOTES PER PORTFOLIO BASED ON
PORTFOLIO ACCOUNTS AND WESTERN RESERVE CASH VALUE OF THE PORTFOLIOS
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Aggressive Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Balanced Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Bond Portfolio
- ----------------------------------------------------------------------------------------------------------------------
C.A.S.E. Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------
C.A.S.E. Growth & Income Portfolio
- ----------------------------------------------------------------------------------------------------------------------
C.A.S.E. Quality Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Emerging Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Equity-Income Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Global Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Growth Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Meridian/INVESCO Foreign Sector Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Meridian/INVESCO Global Sector Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Meridian/INVESCO US Sector Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Money Market Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Short-to-Intermediate Government Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Tactical Asset Allocation Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Utility Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Value Equity Portfolio
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE B
WRL SERIES FUND, INC.
- ----------------------------------------------------------------------------------------------------------------- ----------------
DATE MOST
---------
DATE MOST RECENTLY DATE OF
--------- -------- -------
DATE OF INITIAL RECENTLY APPROVED BY TERMINATION
--------------- -------- ----------- -----------
DATE OF APPROVAL BY APPROVED BY PORTFOLIO'S UNLESS RE-
------- ----------- ----------- ----------- ----------
PORTFOLIO AGREEMENT FUND'S BOARD FUND'S BOARD SHAREHOLDERS APPROVED
--------- --------- ------------ ------------ ------------ --------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggressive Growth December 7, 1993 December 6, 1993 March 18, 1996 December 7, 1993 April 22, 1997
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio December 7, 1993 December 6, 1993 March 18, 1996 December 7, 1993 April 22, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Bond Portfolio February 26, 1991 July 14, 1986 March 18, 1996 July 15, 1986 April 22, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
C.A.S.E. Growth February 6, 1995 February 6, 1995 N/A February 7, 1995 April 22, 1997
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
C.A.S.E. Growth & February 6, 1995 February 6, 1995 N/A February 7, 1995 April 22, 1997
Income Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
C.A.S.E. Quality February 6, 1995 February 6, 1995 N/A February 7, 1995 April 22, 1997
Growth Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Emerging Growth November 19, 1992 November 12, 1992 March 18, 1996 November 13, 1992 April 22, 1997
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Equity-Income November 19, 1992 November 12, 1992 March 18, 1996 November 13, 1992 April 22, 1997
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Global Portfolio July 13, 1992 March 18, 1992 March 18, 1996 March 19, 1992 April 22, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio February 26, 1991 July 14, 1986 March 18, 1996 July 15, 1986 April 22, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Meridian/ April 30, 1996 December 4, 1995 N/A December 5, 1995 April 22, 1998
INVESCO Foreign
Sector Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
AGGREGATE
---------
ADVISORY
--------
FEE FOR NET ASSETS
------- ----------
YEAR ENDED AS OF
---------- -----
ADVISORY DECEMBER SEPTEMBER
-------- -------- ---------
PORTFOLIO FEE* 31, 1995 30, 1996
--------- ---- -------- --------
- ------------------------------------------------------------------------
Aggressive Growth 0.80% $849,097 $ 209,402,318
Portfolio
- ------------------------------------------------------------------------
Balanced Portfolio 0.80% $195,339 $ 42,049,894
- -------------------------------------------------------------------------
Bond Portfolio 0.50% $409,862 $ 95,145,715
- ------------------------------------------------------------------------
C.A.S.E. Growth 0.80% $5,519** $ 17,400,407
Portfolio
- ------------------------------------------------------------------------
C.A.S.E. Growth & 0.80% $3,453** $ 2,011,561
Income Portfolio
- ------------------------------------------------------------------------
C.A.S.E. Quality 0.80% $3,871** $ 1,738,532
Growth Portfolio
- ------------------------------------------------------------------------
Emerging Growth 0.80% $1,838,573 $ 439,589,157
Portfolio
- ------------------------------------------------------------------------
Equity-Income 0.80% $1,746,022 $ 326,972,438
Portfolio
- ------------------------------------------------------------------------
Global Portfolio 0.80% $2,075,054 $ 505,274,086
- ------------------------------------------------------------------------
Growth Portfolio 0.80% $7,847,750 $1,490,401,247
- ------------------------------------------------------------------------
Meridian/ 1.10% N/A $ 1,112,142
INVESCO Foreign
Sector Portfolio
- ------------------------------------------------------------------------
* Monthly compensation at the annual rate of the average daily net assets of
the Fund.
** For the period May 1, 1995 (commencement of operations) to December 31, 1995.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
DATE MOST RECENTLY DATE OF
DATE OF INITIAL RECENTLY APPROVED BY TERMINATION
--------------- -------- ----------- -----------
DATE OF APPROVAL BY APPROVED BY PORTFOLIO'S UNLESS RE-
------- ----------- ----------- ----------- ----------
PORTFOLIO AGREEMENT FUND'S BOARD FUND'S BOARD SHAREHOLDERS APPROVED
--------- --------- ------------ ------------ ------------ --------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Meridian/ April 30, 1996 December 4, 1995 N/A December 5, 1995 April 22, 1998
INVESCO Global
Sector Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Meridian/ April 30, 1996 December 4, 1995 N/A December 5, 1995 April 22, 1998
INVESCO US
Sector Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Money Market April 30, 1996 December 4, 1995 N/A February 21, 1996 April 22, 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Short-to-Inter- July 13, 1992 March 18, 1992 March 18, 1996 March 19, 1992 April 22, 1997
mediate Government
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Tactical Asset August 18, 1994 August 18, 1994 March 18, 1996 August 19, 1994 April 22, 1997
Allocation Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Utility Portfolio December 7, 1993 December 6, 1993 March 18, 1996 December 7, 1993 April 22, 1997
- ----------------------------------------------------------------------------------------------------------------- -----------------
Value Equity April 30, 1996 December 4, 1995 N/A December 5, 1995 April 22, 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
AGGREGATE
---------
ADVISORY
--------
FEE FOR NET ASSETS
------- ----------
YEAR ENDED AS OF
---------- ---------
ADVISORY DECEMBER SEPTEMBER
PORTFOLIO -------- -------- ---------
--------- FEE* 31, 1995 30, 1996
- ----------------------------------------------------------------------
Meridian/ 1.10% N/A $4,647,066
INVESCO Global
Sector Portfolio
- ----------------------------------------------------------------------
Meridian/ 1.10% N/A $806,973
INVESCO US
Sector Portfolio
- ----------------------------------------------------------------------
Money Market- 0.40% $422,357 $110,156,910
Portfolio (0.50%
prior to
May 1, 1996)
- ----------------------------------------------------------------------
Short-to-Inter- 0.60% $126,134 $25,239,730
mediate Govern- ment
Portfolio
- ----------------------------------------------------------------------
Tactical Asset 0.80% $433,844 $157,192,639
Allocation Portfolio
- ----------------------------------------------------------------------
Utility Portfolio 0.75% $128,859 $32,125,155
- ------------------------------------------------------- --------------
Value Equity 0.80% N/A $28,597,532
Portfolio
- ----------------------------------------------------------------------
* Monthly compensation at the annual rate of the average daily net assets of
the Fund.
** For the period May 1, 1995 (commencement of operations) to December 31, 1995.
2
<PAGE>
WRL INVESTMENT MANAGEMENT, INC.
201 Highland Avenue
Largo, FL 33770
The following table indicates the principal executive officer and
directors of the Investment Adviser, together with their principal occupations.
- -------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
- ------------------------------- ---------------------
- -------------------------------------------------------------------------------
John R. Kenney,
Chairman of the Board of Directors Chairman of the Board of
Directors (1987 - present) , Chief
Executive Officer (1982 - present),
President (1978 - 1987 and December, 1992
- present), Director (1978 - present),
Western Reserve Life Assurance Co. of
Ohio; Chairman of the Board of Directors
(September, 1996 - present), WRL
Investment Services, Inc.; Chairman of
the Board of Directors and Chief
Executive Officer (1988 - February,
1991), President (1988 - 1989), Director
(1976 - February, 1991), Executive Vice
President (1972 - 1988), Pioneer Western
Corporation (financial services), Largo,
Florida; President and Director (1985 -
September, 1990) and Director (December,
1990 - present), Idex Management, Inc.
(investment adviser), Largo, Florida;
Trustee (1987 - present), Chairman
(December, 1989 - September, 1990 and
November, 1990 - present) and President
and Chief Executive Officer (November,
1986 - September, 1990), IDEX Fund, IDEX
II Series Fund and IDEX Fund 3
(investment companies) all of Largo,
Florida.
- -------------------------------------------------------------------------------
Alan M. Yaeger, Director Executive Vice President (June, 1993 -
present), Chief Financial Officer
(December, 1995 - present), Senior Vice
President (1981 - June, 1993) and
Actuary (1972 present), Western Reserve
Life Assurance Co. of Ohio; Director
(September, 1996 present), WRL
Investment Services, Inc.
- -------------------------------------------------------------------------------
G. John Hurley, Director Executive Vice President (June, 1993 -
present), Chief Operating Officer
(March, 1994 - present), Western Reserve
Life Assurance Co. of Ohio; Director
(September, 1996 - present), WRL
Investment Services, Inc.; President and
Chief Executive Officer (September, 1990
- present), Trustee (June, 1990 -
present), and Executive Vice President
(June, 1988 - September, 1990), IDEX
Fund, IDEX II Series Fund and IDEX Fund
3; President, Chief Executive Officer
and Director of InterSecurities, Inc.
(May, 1988 - present); Assistant Vice
President (September, 1991 - August,
1992), AEGON USA Managed Portfolios,
Inc.; Vice President (May, 1988 -
February, 1991), Pioneer Western
Corporation.
- -------------------------------------------------------------------------------
3
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES FUND, INC.
SCHEDULE C
- ----------------------------------------------------------------------------------------------------------------------------------
DATE MOST
---------
DATE MOST RECENTLY
--------- --------
DATE OF INITIAL RECENTLY APPROVED BY
--------------- --------- -----------
APPROVAL BY APPROVED BY PORTFOLIO'S
----------- ----------- -----------
PORTFOLIO SUB-ADVISER DATE OF AGREEMENT FUND'S BOARD FUND'S BOARD SHAREHOLDERS
--------- ----------- ----------------- ------------ ------------ ------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggressive Fred Alger December 7, 1993 December 6, 1993 March 18, 1996 December 7, 1993
Growth Portfolio Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio AEGON USA December 7, 1993 December 6, 1993 March 18, 1996 December 7, 1993
Investment
Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Bond Portfolio Janus Capital February 26, 1991 July 14, 1986 March 18, 1996 July 15, 1986
Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
C.A.S.E. Growth C.A.S.E. February 6, 1995 February 6, 1995 N/A February 7, 1995
Portfolio Management, Inc.
- ------------------------------------------------------------------------------------------- --------------------------------------
C.A.S.E. Growth & C.A.S.E. February 6, 1995 February 6, 1995 N/A February 7, 1995
Income Portfolio Management, Inc.
- ------------------------------------------------------------------------------------------- --------------------------------------
C.A.S.E. Quality C.A.S.E. February 6, 1995 February 6, 1995 N/A February 7, 1995
Growth Portfolio Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Emerging Growth Van Kampen December 20, 1994 December 20, 1994 March 18, 1996 December 12, 1994
Portfolio American Capital
Asset
Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------------------
SUB-
ADVISORY
--------
DATE OF FEE FOR
------- -------
TERMINATION YEAR ENDED
----------- SUB- ----------
UNLESS RE- ADVISORY DECEMBER
---------- -------- ----------
PORTFOLIO APPROVED FEE RATE* 31, 1995
--------- -------- --------- --------
- ---------------------------------------------------------------------
Aggressive April 22, 1997 0.40% $424,549
Growth Portfolio
- ---------------------------------------------------------------------
Balanced Portfolio April 22, 1997 0.40%** $94,669
- ---------------------------------------------------------------------
Bond Portfolio April 22, 1997 0.25% $204,931
- ---------------------------------------------------------------------
C.A.S.E. Growth April 22, 1997 0.40% $2,759***
Portfolio
- ---------------------------------------------------------------------
C.A.S.E. Growth & April 22, 1997 0.40% $1,726***
Income Portfolio
- ---------------------------------------------------------------------
C.A.S.E. Quality April 22, 1997 0.40% $1,895***
Growth Portfolio
- ---------------------------------------------------------------------
Emerging Growth April 22, 1997 0.40%** $919,287
Portfolio
- ---------------------------------------------------------------------
* Monthly compensation at the annual rate of the average daily net assets
of the Fund.
** Less 50% of any excess expenses paid by the Investment Adviser as a
result of that Portfolio's expense limitation.
*** For the period May 1, 1995, (commencement of operations) to December 31,
1995.
1
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
DATE MOST
---------
DATE MOST RECENTLY
--------- --------
DATE OF INITIAL RECENTLY APPROVED BY
--------------- -------- -----------
APPROVAL BY APPROVED BY PORTFOLIO'S
----------- ----------- -----------
PORTFOLIO SUB-ADVISER DATE OF AGREEMENT FUND'S BOARD FUND'S BOARD SHAREHOLDERS
--------- ----------- ----------------- ------------ ------------ ------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity-Income Luther King November 19, 1992 November 12, 1992 March 18, 1992 November 20, 1992
Portfolio Capital
Management
Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
Global Portfolio Janus Capital July 13, 1992 March 18, 1992 March 18, 1996 July 14, 1992
Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio January Capital February 26, 1991 July 14, 1986 March 18, 1996 February 27, 1991
Corporation
- ----------------------------------------------------------------------------------------------------------------------------------
Meridian April 30, 1996 December 4, 1995 N/A May 1, 1996
Meridian/ Investment
INVESCO Management
Foreign Sector Corporation
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
INVESCO Global April 30, 1996 December 4, 1995 N/A May 1, 1996
Asset
Management
Limited
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------------------
SUB-
ADVISORY
--------
DATE OF FEE FOR
------- -------
TERMINATION SUB- YEAR ENDED
----------- ---- ----------
UNLESS RE- ADVISORY DECEMBER
---------- -------- --------
PORTFOLIO APPROVED FEE RATE* 31, 1995
--------- -------- --------- --------
- ---------------------------------------------------------------------
Equity-Income April 22, 1997 0.40% $873,011
Portfolio
- ---------------------------------------------------------------------
Global Portfolio April 22, 1997 0.40% $1,037,527
- ---------------------------------------------------------------------
Growth Portfolio April 22, 1997 0.40% $3,923,875
- ---------------------------------------------------------------------
April 22, 1998 0.30% of N/A
Meridian/ first $100
INVESCO million,
Foreign Sector 0.35% over
Portfolio $100 million
- ---------------------------------------------------------------------
April 22, 1998 0.40% of N/A
first $100
million,
0.35% over
$100 million
- ---------------------------------------------------------------------
* Monthly compensation at the annual rate of the average daily net assets of
the Fund.
** Less 50% of any excess expenses paid by the Investment Adviser as a result
of that Portfolio's expense limitation.
*** For the period May 1, 1995 (commencement of oper tions) to December 31,
1995.
2
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
DATE MOST
---------
DATE MOST RECENTLY
--------- --------
DATE OF INITIAL RECENTLY APPROVED BY
--------------- -------- -----------
APPROVAL BY APPROVED BY PORTFOLIO'S
----------- ----------- -----------
PORTFOLIO SUB-ADVISER DATE OF AGREEMENT FUND'S BOARD FUND'S BOARD SHAREHOLDERS
--------- ----------- ----------------- ------------ ------------ ------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Meridian April 30, 1996 December 4, 1995 N/A May 1, 1996
Investment
Meridian/ Management
INVESCO Global Corporation
Sector Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
INVESCO April 30, 1996 December 4, 1995 N/A May 1, 1996
Global Asset
Management
Limited
- ----------------------------------------------------------------------------------------------------------------------------------
Meridian April 30, 1996 December 4, 1995 N/A May 1, 1996
Investment
Meridian/ Management
INVESCO US Corporation
Sector Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
INVESCO April 30, 1996 December 4, 1995 N/A May 1, 1996
Global Asset
Management
Limited
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------------------------------------------------
SUB-
----
ADVISORY
--------
DATE OF FEE FOR
------- -------
TERMINATION SUB- YEAR ENDED
----------- ---- ----------
UNLESS RE- ADVISORY DECEMBER
---------- -------- --------
PORTFOLIO APPROVED FEE RATE* 31, 1995
--------- -------- --------- --------
- -----------------------------------------------------------------------
April 22,1998 0.30% of N/A
first $100
Meridian/ million,
INVESCO Global 0.35% over
Sector Portfolio $100 million
- -----------------------------------------------------------------------
April 22, 1997 0.40% of N/A
first $100
million,
0.35% over
$100 million
- -----------------------------------------------------------------------
April 22, 1998 0.30% of N/A
first $100
Meridian/ million,
INVESCO US 0.35% over
Sector Portfolio $100 million
- -----------------------------------------------------------------------
April 22, 1998 0.40% of N/A
first $100
million,
0.35% over
$100 million
- -----------------------------------------------------------------------
* Monthly compensation at the annual rate of the average daily net assets of
the Fund.
** Less 50% of any excess expenses paid by the Investment Adviser as a result
of that Portfolio's expense limitation.
*** For the period May 1, 1995
(commencement of operations) to December 31, 1995.
3
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
DATE MOST
---------
DATE MOST RECENTLY
--------- --------
DATE OF INITIAL RECENTLY APPROVED BY
--------------- -------- -----------
APPROVAL BY APPROVED BY PORTFOLIO'S
----------- ----------- -----------
PORTFOLIO SUB-ADVISER DATE OF AGREEMENT FUND'S BOARD FUND'S BOARD SHAREHOLDERS
--------- ----------- ----------------- ------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market J.P. Morgan April 30, 1996 December 4, 1995 N/A February 21, 1996
Portfolio Investment
Management Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Short-to- AEGON USA July 13, 1992 March 18, 1992 March 18, 1996 July 14, 1992
Intermediate Investment
Government Management, Inc.
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Tactical Asset Dean Investment August 18, 1994 August 18, 1994 March 18, 1996 August 19, 1994
Allocation Associates
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Utility Portfolio Federated December 7, 1993 December 6, 1993 March 18, 1996 December 8, 1993
Investment
Counseling
- ----------------------------------------------------------------------------------------------------------------------------------
Value Equity NWQ Investment April 30, 1996 December 4, 1995 N/A May 1, 1996
Portfolio Management
Company, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------
SUB-
----
ADVISORY
--------
DATE OF FEE FOR
------- -------
TERMINATION SUB- YEAR ENDED
----------- ---- ----------
UNLESS RE- ADVISORY DECEMBER
---------- -------- --------
PORTFOLIO APPROVED FEE RATE* 31, 1995
--------- -------- --------- --------
- -------------------------------------------------------------------------
Money Market April 22,1998 0.15% $211,178
Portfolio (0.25% (for previous
prior to Sub-Adviser)
May 1, 1996)
- -------------------------------------------------------------------------
Short-to- April 22,1997 0.30%** $63,067
Intermediate
Government
Portfolio
- -------------------------------------------------------------------------
Tactical Asset April 22, 1997 0.40%** $216,922
Allocation
Portfolio
- -------------------------------------------------------------------------
Utility Portfolio April 22, 1997 0.50% of $85,906
first $30
million,
0.35% of
next $20
million,
0.25% over
$50 million
- ------------------------------------------ ------------------------------
Value Equity April 22, 1998 0.40%** N/A
Portfolio
- -------------------------------------------------------------------------
* Monthly compensation at the annual rate of the average daily net assets of
the Fund.
** Less 50% of any excess expenses paid by the Investment Adviser as a result
of that Portfolio's expense limitation.
*** For the period May 1, 1995
(commencement of operations) to December 31, 1995.
4
<PAGE>
<TABLE>
<CAPTION>
FRED ALGER MANAGEMENT, INC.
30 MONTGOMERY STREET
JERSEY CITY, NJ 07302
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- ---------------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
- ------------------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Fred M. Alger III, Chairman of the Board Chairman of the Board of Alger Associates, Inc., Fred Alger
Management, Inc., Alger, Inc., Alger Properties, Inc., Alger
Shareholder Services, Inc., Alger Life Insurance Agency, Inc.,
Spectra Fund, and Castle Convertible Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
David D. Alger, Director President and Director of Alger Associates, Inc., Fred Alger Management,
Inc., Alger, Inc., Alger Properties, Inc., Alger Shareholder Services,
Inc., Alger Life Insurance Agency, Inc., Spectra Fund, and Castle
Convertible Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
The following table indicates the size of each investment company
having an investment objective similar to that of the Aggressive Growth
Portfolio advised or sub-advised by the Sub-Adviser and the advisory fee rate.
- ------------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS AS OF SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- ----------------------------------- ----------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Alger Fund
Capital Appreciation Portfolio $148,869,000 0.85% of average daily net assets
- -----------------------------------------------------------------------------------------------------------------------
The Alger American Fund
Leveraged AllCap Portfolio $29,725,000 0.85% of average daily net assets
- ------------------------------------------------------------------------------------------------------------------------
The Alger Retirement Fund
Capital Appreciation Retirement Portfolio $6,557,000 0.85% of average daily net assets
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
5
<PAGE>
FRED ALGER MANAGEMENT, INC.
Names and Addresses of all Parents of Fred Alger Management, Inc.:
Fred Alger & Company, Incorporated Alger Associates, Inc.
30 Montgomery Street 75 Maiden Lane
Jersey City, NJ 07302 New York City, NY 10038
If anyone owns 10% or more of the outstanding voting securities of Fred Alger
Management, Inc.: state the name and address of such person.
Fred Alger Management, Inc. is 100% owned by Fred Alger & Company, Incorporated.
Fred Alger & Company, Incorporated is 100% owned by Alger Associates, Inc.
6
<PAGE>
LUTHER KING CAPITAL MANAGEMENT CORPORATION
301 COMMERCE STREET
FORT WORTH, TX 76102
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- -------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------- ---------------------
- -------------------------------------------------------------------------------
J. Luther King, Jr. President
- -------------------------------------------------------------------------------
The following table indicates the size of each investment company
having an investment objective similar to that of the Equity-Income Portfolio
advised or sub-advised by the Sub-Adviser and the advisory fee rate.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- -------------------------------- ---------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
IDEX II Series Fund $14,355,395 1.00% on the first $750 million; 0.90% on the next
250 million; and 0.85% over $1 billion
Equity-Income
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
Names and Addresses of all Parents of Luther King Capital Management
Corporation.
If anyone owns 10% or more of the outstanding voting securities of Luther King
Capital Management Corporation, state the name and address of such person.
Southwest JLK Corporation owns 100% of Luther King Capital Management
Corporation. J. Luther King, Jr. owns more than 10% of Southwest JLK
Corporation.
Southwest JLK Corporation J. Luther King, Jr.
301 Commerce Street Luther King Capital Management Corporation
Suite 1600 301 Commerce Street
Fort Worth, Texas 76102 Suite 1600
Fort Worth, Texas 76102
7
<PAGE>
<TABLE>
<CAPTION>
INVESCO GLOBAL ASSET MANAGEMENT LIMITED
ROSEBANK, 12 BERMUDIANA ROAD
HAMILTON, BERMUDA HM11
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- -----------------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------- ---------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Everard T. Richards, Deputy Chairman & Director Deputy Chairman and Director of INVESCO Global Asset Management Limited
("IGAM"), Chief Executive Officer of Bermuda Asset Management Ltd.
- -----------------------------------------------------------------------------------------------------------------------------------
John D. Rogers, Director Director of IGAM; President of INVESCO Asset Management
(Japan) Limited in Tokyo, Japan
- -----------------------------------------------------------------------------------------------------------------------------------
Wendell M. Starke, Chairman and Director Chairman & Director of IGAM; Chairman and Director of INVESCO Capital
Management, Inc. in Atlanta, GA; Chairman and Director of INVESCO, Inc. in
Atlanta, GA; and Director of INVESCO plc in London England
- -----------------------------------------------------------------------------------------------------------------------------------
David Hartley, Treasurer and Director Secretary/Treasurer of INVESCO Group Services, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Michael A. Wood, Secretary and Director Trust Officer, Bank of Bermuda
- -----------------------------------------------------------------------------------------------------------------------------------
Stephen A. Dana, Director Global Partner
- -----------------------------------------------------------------------------------------------------------------------------------
Ricardo Ricciardi, Director Director of INVESCO Asset Management Limited in
London
- -----------------------------------------------------------------------------------------------------------------------------------
John D. Campbell, Director Senior Partner, Appleby, Spurling and Kempe
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
INVESCO GLOBAL ASSET MANAGEMENT LIMITED
The following table indicates the size of each investment company
having an investment objective similar to that of the Meridian/INVESCO Global
Sector, Meridian/INVESCO US Sector and Meridian/INVESCO Foreign Sector
Portfolios advised or sub-advised by the Sub-Adviser and the advisory fee rate.
- -----------------------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- -------------------------------- ---------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Meridian/INVESCO Global Sector Fund $4,367,601 0.40% of the first $100 million of assets and 0.35%
of ssets in excess of $100 million
- -----------------------------------------------------------------------------------------------------------------------------------
Meridian/INVESCO US Sector Fund $808,578 0.40% of the first $100 million of assets and 0.35%
of assets in excess of $100 million
- -----------------------------------------------------------------------------------------------------------------------------------
Meridian/INVESCO Foreign Sector Fund $1,099,900 0.40% of the first $100 million of assets and 0.35%
of assets in excess of $100 million
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
Names and Addresses of all Parents of INVESCO Global Asset Management Limited.
If anyone owns 10% or more of the outstanding voting securities of INVESCO
Global Asset Management Limited, state the name and address of such person.
INVESCO Global Asset Management Limited is an indirect wholly-owned subsidiary
of INVESCO PLC (100% ownership), 11 Devonshire Square, London EC2M 4YR England
9
<PAGE>
<TABLE>
<CAPTION>
DEAN INVESTMENT ASSOCIATES
2480 KETTERING TOWER
DAYTON, OH 45423
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- -------------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------- ---------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Chauncey H. Dean, Chairman and Chief Executive Officer Chairman and Chief Executive Officer of Dean Investment Associates
("Dean").
- -------------------------------------------------------------------------------------------------------------------------------
John C. Riazzi, Director Vice President and Director of Consulting Services of Dean.
- -------------------------------------------------------------------------------------------------------------------------------
Robert D. Dean, Director Vice President and Director of Research of Dean.
- -------------------------------------------------------------------------------------------------------------------------------
Frank H. Scott, CPA Sr. Vice President and Director of Compliance
- -------------------------------------------------------------------------------------------------------------------------------
Darrell N. Fulton, Ph.D., CPA Vice President and Director of Information Systems
- -------------------------------------------------------------------------------------------------------------------------------
Stephen M. Miller, CPA Vice President and Director of Administration and Finance
- -------------------------------------------------------------------------------------------------------------------------------
Edward J. Blake, CPA Asst. Vice President, Director of Client Services
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table indicates the size of each investment company
having an investment objective similar to that of the Tactical Asset Allocation
Portfolio advised or sub-advised by the Sub-Adviser and the advisory fee rate.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- -------------------------------- ---------------------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
American United Life $1,986,576 0.0375%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
10
<PAGE>
DEAN INVESTMENT ASSOCIATES
Names and Addresses of all Parents of Dean Investment Associates:
C.H. Dean and Associates
2480 Kettering Tower
Dayton, Ohio 45423-2480
If anyone owns 10% or more of the outstanding voting securities of Dean
Investment Associates, state the name and address of such person:
Chauncey H. Dean Zada G. Dean Dennis D. Dean
2480 Kettering Tower 2480 Kettering Tower 2480 Kettering Tower
Dayton, Ohio 45423 Dayton, Ohio 45423 Dayton, Ohio 45423
11
<PAGE>
<TABLE>
<CAPTION>
FEDERATED INVESTMENT COUNSELING
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------- ---------------------
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
John F. Donahue, Trustee Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research Corp.;
President, Passport Research, Ltd.
- ------------------------------------------------------------------------------------------------------------------------
J. Christopher Donahue, Trustee President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp. and Federated Global Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated Shareholder Services Company
and Federated Shareholder Services; Director, Federated Services
Company.
- ------------------------------------------------------------------------------------------------------------------------
Mark L. Mallon, President and Trustee Executive Vice President, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., Federated Global Research
Corp. and Passport Research, Ltd.
- ------------------------------------------------------------------------------------------------------------------------
John W. McGonigle, Trustee Executive Vice President, Secretary and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management and Federated
Research; Director, Federated Research Corp., and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company and
Federated Shareholder Services; Director, Federated Services Company;
and Director, Federated Securities Corp.
- ------------------------------------------------------------------------------------------------------------------------
Mark D. Olson, Trustee Trustee, Federated Investors, Federated Advisers, Federated Research,
Federated Management, Federated Shareholder Services and Federated
Shareholder Services Company; Partner, Wilson, Halbrook & Bayard.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
FEDERATED INVESTMENT COUNSELING
The following table indicates the size of each investment company
having an investment objective similar to that of the Utility Portfolio advised
or sub-advised by the Sub-Adviser and the advisory fee rate.
- --------------------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- -------------------------------- ---------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SunAmerica Series Trust $4.3 million 0.55% on first $20 million; 0.35% on next $30
Utility Portfolio million; 0.25% on next $100 million; 0.20% on
next $350 million; and 0.15% in excess of $500
million
- ----------------------------------------------- --------------------------------------------------------------------------------
American Skandia Advisor's Choice Design & 0.50% on first $25 million; 0.35% on next $25
Select, Axiom & Galaxy III Variable Annuities $112.4 million million; and 0.25% in excess of $50 million
Utility Portfolio
- ----------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
Names and Addresses of all Parents of Federated Investment Counseling.
If anyone owns 10% or more of the outstanding voting securities of Federated
Investment Counseling, state the name and address of such person.
Federated Investment Counseling is a wholly-owned subsidiary of Federated
Investors.
Federated Investors
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
13
<PAGE>
<TABLE>
<CAPTION>
MERIDIAN INVESTMENT MANAGEMENT CORPORATION
12835 EAST ARAPAHOE ROAD
TOWER II - 7TH FLOOR
ENGLEWOOD, CO 80112
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- ---------------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Michael J. Hart, President & Director President and Director of Meridian Management & Research Corporation,
the Sub-Adviser and Meridian Clearing Corporation.
- ---------------------------------------------------------------------------------------------------------------------
Dr. Craig T. Callahan, Director Secretary, Treasurer & Director of Sub-Adviser, Chief Investment
Adviser of Meridian Management & Research Corp. and Vice President
of Meridian Clearing Corp.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table indicates the size of each investment company
having an investment objective similar to that of the Meridian/INVESCO Global
Sector, Meridian/INVESCO U.S. Sector and Meridian/INVESCO Foreign Sector
Portfolios advised or sub-advised by the Sub-Adviser and the advisory fee rate.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- -------------------------------- ---------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Security Benefit Corporation $38,000,000 0.20%
- ----------------------------------------------------------------------------------------------- ----------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
Names and Addresses of all Parents of Meridian Investment Management
Corporation.
If anyone owns 10% or more of the outstanding voting securities of Meridian
Investment Management Corporation, state the name and address of such person.
Meridian Management & Research Corporation - 100% ownership of Meridian
Investment Management Corporation
Michael J. Hart, 64 Glenmoor Drive, Cherry Hills Village, Colorado 80110 - 50%
ownership of Meridian Management & Research Corporation
Craig T. Callahan, 52 Glenmoor Way, Cherry Hills Village, Colorado 80110 - 50%
ownership of Meridian Management & Research Corporation
14
<PAGE>
<TABLE>
<CAPTION>
J.P. MORGAN INVESTMENT MANAGEMENT, INC.
522 FIFTH AVENUE
NEW YORK, NY 10036
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------- ---------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Keith M. Schappert, President, CEO and Director President and CEO of J.P. Morgan Investment.
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth W. Anderson, Director Director and Managing Director of J.P. Morgan Investment.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert Anselmi, Director Director, Managing Director, General Counsel and Secretary of J.P.
Morgan Investment.
- ------------------------------------------------------------------------------------------------------------------------------------
Jean L.P. Brunel, Director Managing Director of Morgan Guaranty Trust Co. of New York.
- ------------------------------------------------------------------------------------------------------------------------------------
William L. Cobb, Jr., Vice Chairman and Director Managing Director of J.P. Morgan Investment and Managing Director,
Morgan Guaranty Trust Co. of New York.
- ------------------------------------------------------------------------------------------------------------------------------------
Michael R. Granito, Director Director and Managing Director of J.P. Morgan Investment.
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas M. Luddy, Director Director and Managing Director of J.P. Morgan Investment.
- ------------------------------------------------------------------------------------------------------------------------------------
Michael E. Patterson, Director Chief Administrative Officer of J.P. Morgan & Co. Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
C. Nicholas Potter, Chairman and Director Managing Director of Morgan Guaranty Trust Company of New York
- ------------------------------------------------------------------------------------------------------------------------------------
Steven Soltis, Director Managing Director, Chief Administrative and Financial Officer
of J.P. Morgan Investment.
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Thomas, Director President, Director and Managing Director of J.P. Morgan Trust Bank
Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
J.P. MORGAN INVESTMENT MANAGEMENT, INC.
The following table indicates the size of each investment company
having an investment objective similar to that of the Money Market Portfolio
advised or sub-advised by the Sub-Adviser and the advisory fee rate.
- -----------------------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- -------------------------------- ---------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sierra Trust Funds $156,576,557 0.15% of average daily net assets
Global Money Fund
- -----------------------------------------------------------------------------------------------------------------------------------
The Sierra Variable Trust $20,960,861 0.15% of average daily net assets
Global Money Fund
- -----------------------------------------------------------------------------------------------------------------------------------
The Preferred Group of Mutual Funds $87,620,453 0.15% of average daily net assets
Preferred Money Market Fund
- -----------------------------------------------------------------------------------------------------------------------------------
American Skandia Trust $495,479,161 0.15% on first $1 billion of average daily net assets,
AST Money Market Portfolio 0.10% on balance
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
Names and Addresses of all Parents of J.P. Morgan Investment Management, Inc.
If anyone owns 10% or more of the outstanding voting securities of J.P. Morgan
Investment Management, Inc., state the name and address of such person.
J. P. Morgan Investment Management Inc. is a wholly-owned subsidiary of J. P.
Morgan & Co. Incorporated, located at 60 Wall Street, New York, New York
10260-0060.
16
<PAGE>
<TABLE>
<CAPTION>
AEGON USA INVESTMENT MANAGEMENT, INC.
4333 EDGEWATER ROAD
CEDAR RAPIDS, IA 52499
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- -----------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------- ---------------------
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Patrick E. Falconio, President and Director President & Director; Executive Vice President and Chief
Financial Officer of AEGON USA, Inc.
- -----------------------------------------------------------------------------------------------------------------
Brenda K. Clancy, Director Vice President, and Controller of AEGON USA, Inc.
- -----------------------------------------------------------------------------------------------------------------
Craig D. Vermie, Director Vice President, Secretary and General Counsel of AEGON USA,
Inc.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Names and Addresses of all Parents of AEGON USA Investment Management, Inc.:
AEGON USA Investment Management, Inc., located at 4333 Edgewood Road, N.E.,
Cedar Rapids, Iowa 52499, is a wholly-owned subsidiary of AUSA Holding Company,
1111 North Charles Street, Baltimore, Maryland 21201, which, in turn, is a
wholly-owned subsidiary of AEGON USA, Inc., 4333 Edgewater Road, N.E., Cedar
Rapids, Iowa 52499, which is a wholly-owned subsidiary of AEGON U.S. Holding
Corporation, 1111 North Charles Street, Baltimore, Maryland 21201, which is
wholly-owned by Voting Trust, located in Short Hills, New Jersey, which is
controlled by AEGON International B.V., which is wholly-owned by AEGON, n.v.,
both located in the Netherlands.
17
<PAGE>
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN ASSET MANAGEMENT, INC.
2800 POST OAK BLVD.
HOUSTON, TX 77253
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- -----------------------------------------------------------------------------------------------------------------------------------
DIRECTOR AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------ ---------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Don G. Powell, Chairman, CEO and Director Chairman, CEO and Director of Van Kampen American Capital Asset Management, Inc.
("Van Kampen") and CEO and Director of Van Kampen American Capital, Inc.
(`VKAC").
- -----------------------------------------------------------------------------------------------------------------------------------
Dennis J. McDonnell, Director President, COO and Director of Van Kampen and Van Kampen American Capital
Investment Advisory Corp. ("VK Advisor") and Executive Vice President of VKAC.
- -----------------------------------------------------------------------------------------------------------------------------------
Ronald A. Nyberg, Director Executive Vice President and General Counsel of VKAC.
- -----------------------------------------------------------------------------------------------------------------------------------
William R. Rybak, Director Executive Vice President and Chief Financial Officer of VKAC.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Robert C. Peck, Jr., Director Executive Vice President of Van Kampen.
- -----------------------------------------------------------------------------------------------------------------------------------
Alan T. Sachtleben, Director Executive Vice President of Van Kampen.
- -----------------------------------------------------------------------------------------------------------------------------------
Peter W. Hegel, Director Executive Vice President of VK Advisor.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
VAN KAMPEN AMERICAN ASSET MANAGEMENT, INC.
The following table indicates the size of each investment company
having an investment objective similar to that of the Emerging Growth Portfolios
advised or sub-advised by the Sub-Adviser and the advisory fee rate.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- -------------------------------- ---------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Van Kampen American Capital 0.575% on the first $350 million;
Emerging Growth Fund $2,554,444,400 0.525% on the next $350 million;
0.475% on the next $350 million; and
0.425% on the excess over $1.05 billion
- -----------------------------------------------------------------------------------------------------------------------------------
Common Sense Trust 0.65% on the first $1 billion;
Common Sense Emerging Growth Fund $85,708,280 0.60% on the next $1 billion;
0.55% on the next $1 billion; and
0.45% on the excess over $4 billion
- -----------------------------------------------------------------------------------------------------------------------------------
WNL Series Trust, Van Kampen American Capital $1,828,410 0.50% on the Fund's average net assets
Emerging Growth Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Van Kampen American Capital Life Investment Trust $5,146,216 0.70% of the Fund's average daily net assets
Emerging Growth Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
Names and Addresses of all Parents of Van Kampen American Capital Asset
Management, Inc.
If anyone owns 10% or more of the outstanding voting securities of Van Kampen
American Capital Asset Management, Inc., state the name and address of such
person.
Van Kampen American Capital Asset Management, Inc. is a wholly-owned subsidiary
of Van Kampen American Capital, Inc., a Delaware corporation ("VKAC"). VKAC, in
turn, is wholly-owned by VK/AC Holding, Inc., a Delaware corporation
("Holding"). The corporate headquarters of both Holding and VKAC are located at
One Parkview Plaza, Oakbrook Terrace, Illinois 60181 and 2800 Post Oak
Boulevard, Houston, Texas 77056/
19
<PAGE>
<TABLE>
<CAPTION>
JANUS CAPITAL CORPORATION
100 FILLMORE STREET
DENVER, CO 80206
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- -----------------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
------------------------------- ---------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Thomas H. Bailey, Chairman, President, CEO and Director President of Janus Capital Corporation, Janus Investment Fund
and Janus Aspen Series.
- -----------------------------------------------------------------------------------------------------------------------------------
James P. Craig Vice President, CIO and Director Vice President and Chief Investment Officer of Janus Capital
Corp.; Executive Vice President of Janus Investment Fund and
Janus Aspen Series.
- -----------------------------------------------------------------------------------------------------------------------------------
Michael N. Stolper, Director President of Stolper & Co.; President of Seaport Venture, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Michael E. Herman, Director Chairman of the Finance Committee of Ewing Marion Kauffman
Foundation; President of Kansas City Royals Baseball Team
- -----------------------------------------------------------------------------------------------------------------------------------
Thomas A. McDonnell, Director President, CEO and Director of DST Systems, Inc.; Executive
Vice President and Director of Kansas Southern Inc.
- ----------------------------------------------------------------------------------------- -----------------------------------------
Landon H. Rowland, Director President and CEO of Kansas City Southern Industries, Inc.
- ----------------------------------------------------------------------------------------- -----------------------------------------
</TABLE>
<TABLE>
<CAPTION>
The following table indicates the size of each investment company
having an investment objective similar to that of the Bond Portfolio advised or
sub-advised by the Sub-Adviser and the advisory fee rate.
- -------------------------------------------------------------------------------------- -----------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
-------------------------- -------------------------------- ---------------------------------
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Investment Fund $579,600,000 0.65% of first $300 million 1
Janus Flexible Income Fund 0.55% on assets over $300 million
- --------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series $22,200,000 0.65% of first $300 million 1
Flexible Income Portfolio .55% of assets over $300 million
- --------------------------------------------------------------------------------------------------------------------------
IDEX II Series Fund $18,383,000 50% of fees received by Adviser less 50% of
IDEX II Flexible Income Portfolio fee waiveror reimbursement 2
- --------------------------------------------------------------------------------------------------------------------------
<FN>
* Monthly compensation at the annual rate of the average daily net assets of
the respective Portfolio.
1 Subject to total expense limit of 1.00%.
2 Adviser's fee is 0.90% of first $100 million, 0.80% of next $150 million,
and 0.70% on assets
over $250 million.
</FN>
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
JANUS CAPITAL CORPORATION
The following table indicates the size of each investment company
having an investment objective similar to that of the Growth Portfolio advised
or sub-advised by the Sub-Adviser and the advisory fee rate.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Investment Fund $429,400,000 1.00% of first $30 million
Janus Olympus Fund 0.75% of next $270 million
0.70% of next $200 million
0.65% on assets over $500 million
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Investment Fund $3,787,200,000 1.00% of first $30 million
Janus Twenty Fund 0.75% of next $270 million
0.70% of next $200 million
0.65% on assets over $500 million
- -----------------------------------------------------------------------------------------------------------------------------------
American Skandia Trust $747,215,000 0.60% of first $100 million
Jancap Growth Portfolio 0.55% of next 900 million
0.50% on assets over $1 billion
- -----------------------------------------------------------------------------------------------------------------------------------
Traveler's Fund U $188,908,000 0.55%
Capital Appreciation Fund
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX Fund $399,447,000 0.50% of fees received by Adviser less 50% of fee waiver
or reimbursement 2
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX II Series Fund $579,423,000 0.50% of fees received by Adviser less 50% of fee waiver
IDEX Growth Portfolio or reimbursement 2
- -----------------------------------------------------------------------------------------------------------------------------------
IDEX Fund 3 $182,741,000 0.50% of fees received by Adviser less 50% of fee waiver
or reimbursement 3
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Monthly compensation at the annual rate of the average daily net assets of
the respective Portfolio.
1 Janus Capital has voluntarily agreed to waive a portion of its fee equal to
0.10% of the Portfolio's average daily net assets over $500 million but not
in excess of $1 billion, and 0.05% of the portion of the Portfolio's average
daily net assets over $1 billion.
2 Adviser's fee is 1.00% of first $750 million, 0.90% of next $250 million,
and 0.85% on assets over $1 billion.
3 Adviser's fee is 1.00%.
</FN>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
JANUS CAPITAL CORPORATION
The following table indicates the size of each investment company
having an investment objective similar to that of the Global Portfolio advised
or sub-advised by the Sub-Adviser and the advisory fee rate.
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Investment Fund $4,053,700,000 1.00% of first $30 million
Janus Worldwide Fund 0.75% of next $270 million
0.70% of next $200 million
0.65% on assets over $500 million
- -------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series $393,000,000 1.00% of first $30 million
Worldwide Growth Portfolio 0.75% of next $270 million
0.70% of next $200 million
0.65% on assets over $500 million
- -------------------------------------------------------------------------------------------------------------------------
JNL Series Trust $37,795,000 0.55% of first $100 million
JNL Global Equities Series 0.50% of next $400 million
0.45% on assets over $500 million
- -------------------------------------------------------------------------------------------------------------------------
New England Funds Trust I $105,648,000 2 0.65% of first $50 million
New England Star Worldwide Fund 0.60% of next $50 million
0.55% on ssets over $100 million
- -------------------------------------------------------------------------------------------------------------------------
IDEX II Series Fund $143,686,000 0.50% of fees received by Adviser less 50% of fee waiver
IDEX II Global Portfolio or reimbursement 3
- -------------------------------------------------------------------------------------------------------------------------
<FN>
* Monthly compensation at the annual rate of the average daily net assets of
the respective Portfolio.
1 Janus Capital has agreed to reduce the Portfolio's advisory fee to the
extent that such fee exceeds the effective rate of Janus Investment Fund -
Janus Worldwide Fund. The effective rate is the advisory fee calculated by
Janus Worldwide Fund as of the last day of each calendar quarter (expressed
as an annual rate). The effective rate of Janus Worldwide Fund was 0.67% for
the quarter ended March 31, 1996.
2 Portion of assets managed by Janus Capital is $22,506,722.
3 Adviser's fee is 1.00% of first $750 million, 0.90% of next $250 million,
and 0.85% on assets over $1 billion.
</FN>
</TABLE>
22
<PAGE>
JANUS CAPITAL CORPORATION
Names and Addresses of all Parents of Janus Capital Corporation:
Kansas City Southern Industries, Inc.
114 West 11th Street
Kansas City, MO 64105
If anyone owns 10% or more of the outstanding voting securities of Janus Capital
Corporation, state the name and address of such person:
Kansas City Southern Industries, Inc. owns approximately 83% of the outstanding
voting stock of Janus Capital Corporation.
Thomas H. Bailey, 100 Fillmore Street, Denver, CO 80206, owns approximately 12%
of the outstanding voting stock of Janus Capital Corporation.
23
<PAGE>
<TABLE>
<CAPTION>
NWQ INVESTMENT MANAGEMENT COMPANY, INC.
655 SOUTH HOPE STREET
11TH FLOOR
LOS ANGELES, CA 90017
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
- ------------------------------- ---------------------
- -------------------------------------------------------------------------------------------------------------------------
David A. Polak, Director, President and Chief Investment Officer Director, President and CIO of
NWQ Investment Management Company, Inc. ("NWQ").
- -------------------------------------------------------------------------------------------------------------------------
Edward C. Friedel, Jr., Director Director and Managing Director of NWQ.
- -------------------------------------------------------------------------------------------------------------------------
James H. Galbreath, Director Director and Managing Director of NWQ.
- -------------------------------------------------------------------------------------------------------------------------
The following table indicates the size of each investment company
having an investment objective similar to that of the Value Equity Portfolio
advised or sub-advised by the Sub-Adviser and the advisory fee rate.
- ----------------------------------------------------------------------------------------------------------------------------
NAME OF INVESTMENT COMPANY NET ASSETS ON SEPTEMBER 20, 1996 ADVISORY OR SUB-ADVISORY FEE RATE*
- -------------------------- -------------------------------- ---------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
UAM Funds, Inc. $3,175,828 0.70% Investment Advisory Fee
NWQ Value Equity Portfolio NOTE: Until 2/28/97, the Adviser has voluntarily agreed
to waive all or part of its advisory fee, and to
reimburse the portfolio for administrative and other
expenses if necessary, in order to keep total annual
operating expenses of the portfolio from exceeding 1.00%
for the Value Equity Portfolio's Institutional Class
Shares and 1.40% for the Value Equity Portfolio's
Service Class* shares.
(*Approved but not funded currently.)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Monthly compensation at the annual rate of the average daily net assets of the
respective Portfolio.
24
<PAGE>
NWQ INVESTMENT MANAGEMENT COMPANY, INC.
Names and Addresses of all Parents of NWQ Investment Management Company, Inc.
United Asset Management Holdings, Inc.
One International Place
Boston, MA 02110
If anyone owns 10% or more of the outstanding voting securities of NWQ
Investment Management Company, Inc., state the name and address of such person.
United Asset Management Holdings, Inc. is 100% shareholder of NWQ Investment
Management Company, Inc.
NOTE: United Asset Management Corp. (a public reporting company under Section 12
& 15(d) of the Securities Exchange Act of 1934) is 100% shareholder of United
Asset Management Holdings, Inc. (Same address)
25
<PAGE>
<TABLE>
<CAPTION>
C.A.S.E. MANAGEMENT, INC.
2255 GLADES ROAD
SUITE 221-A
BOCA RATON, FL 33431
The following table indicates the principal executive officer and
directors of the Sub-Adviser, together with their principal occupations.
- ----------------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICER PRINCIPAL OCCUPATIONS
- ------------------------------- ---------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
William E. Lange, Chairman and CEO President of C.A.S.E. Inc., President, CEO and Founder of C.A.S.E. Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
James M. LaBonte, COO and CFO Operations Officer of C.A.S.E., Inc. and C.A.S.E. Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Bruce Jordan, CCO Portfolio Manager and Compliance Officer for C.A.S.E. Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Robert G. Errigo, Vice President Financial Consultant and Investment Committee Member for C.A.S.E. Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Names and Addresses of all Parents of C.A.S.E. Management, Inc.
If anyone owns 10% or more of the outstanding voting securities of C.A.S.E.
Management, Inc., state the name and address of such person.
C.A.S.E., Inc. owns 100% of C.A.S.E. Management, Inc.
William E. Lange owns 71% of C.A.S.E., Inc., 2255 Glades Road, Suite 221-A, Boca
Raton, Florida 33431
Fred Cowburn owns 12.6% of C.A.S.E., Inc., 127 Maple Street, New Providence, New
Jersey 07760
26
<PAGE>
EXHIBIT A
WRL SERIES FUND, INC.
FORM OF CURRENT
INVESTMENT ADVISORY AGREEMENT
FOR THE ________________ PORTFOLIO
OF THE WRL SERIES FUND, INC.
This Agreement, entered into as of __________, 19__, is between WRL
Series Fund, Inc., a Maryland corporation (referred to herein as the "Fund"),
and Western Reserve Life Assurance Co. of Ohio, an Ohio corporation (referred to
herein as "WRL"), to provide certain investment advisory services with respect
to a certain series of shares of common stock of the Fund, allocated to the
_________ Portfolio (the "Portfolio").
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended, (the "1940 Act") and consists of
more than one series of shares, including the Portfolio. In managing its
Portfolio, as well as in the conduct of certain of its affairs, the Fund wishes
to have the benefit of the investment advisory services of WRL and its
assistance in performing certain management, administrative and promotional
functions. WRL desires to furnish such services for the Portfolio and to perform
the functions assigned to it under this Agreement for the considerations
provided. Accordingly, the parties have agreed as follows:
1. INVESTMENT ADVISORY SERVICES. In its capacity as investment adviser
to the Portfolio, WRL shall have the following responsibilities:
(a) to furnish continuous advice and recommendations to the Fund
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 and furnish oral or
written reports, as the Fund may reasonably require, in order to keep the Board
of Directors and appropriate officers of the Fund fully informed as to the
conditions of the investment portfolio of the Portfolio, the investment
recommendations of WRL, and the investment considerations which have given rise
to those recommendations; and
(c) to supervise the purchase and sale of securities of the
Portfolio as directed by the appropriate officers of the Fund.
It is understood and agreed that WRL may, and intends to, enter into a
Sub-Advisory Agreement with a duly registered investment adviser (the
"Sub-Adviser"), under which the Sub-Adviser will furnish investment information
and advice to assist WRL in carrying out its responsibilities under this Section
1. The compensation to be paid to the Sub-Adviser for such services and the
other terms and conditions under which the services shall be rendered by the
Sub-Adviser shall be set forth in the Sub-Advisory Agreement; provided, however,
that such Agreement shall be approved by the Board of Directors and by the
holders of the outstanding voting securities of the Portfolio in accordance with
the requirements of Section 15 of the 1940 Act), and shall otherwise be subject
to, and contain such provisions as shall be required by, the 1940 Act.
2. MANAGEMENT AND ADMINISTRATIVE SERVICES. WRL shall furnish or make
available to the Portfolio the services of executive and management personnel to
supervise the performance of all administrative, recordkeeping, shareholder
relations, regulatory reporting and compliance, and all other functions of the
Portfolio (other than the investment advisory services provided for in Section
1), including supervising and coordinating the services of the Portfolio's
custodian and transfer agent. WRL shall also assist the Portfolio in maintaining
communications and relations with shareholders of the Portfolio, answer
shareholder inquiries or
Page 1 of 6
<PAGE>
supervise such activity by the Portfolio's transfer agent, and assist in the
preparation of reports to shareholders of the Portfolio.
3. WRL EXPENSES. In addition to the expenses which WRL may incur in the
performance of its services pursuant to Sections 1 and 2 above, WRL shall incur
and pay the following expenses relating to the Portfolio's organization and
operations:
(a) All costs and expenses, including legal and accounting fees,
incurred in connection with the formation and organization of the Portfolio,
including the preparation (and filing, when necessary) of the Portfolio
contracts, plans and documents; conducting meetings of organizers, directors and
shareholders, and all other matters relating to the formation and organization
of the Portfolio and the preparation for offering its shares. The organization
of the Portfolio for all of the foregoing purposes will be considered completed
upon effectiveness of the post-effective amendment to the Fund's registration
statement to register the Portfolio under the Securities Act of 1933.
(b) All costs and expenses, including legal and accounting fees,
filing fees and printing costs, in connection with the preparation and filing of
the post-effective amendment to the Fund's registration statement to register
the Portfolio under the Securities Act of 1933 and the 1940 Act (including all
amendments thereto prior to the effectiveness of the registration statement
under the Securities Act of 1933);
(c) All costs and expenses, including legal fees and filing fees,
in connection with registering or qualifying the Portfolio's shares for sale
under the securities laws, if applicable, of such states as the Fund shall
designate prior to the effectiveness of approval of such registration or
qualifications in each such state;
(d) Reasonable compensation, fees and related expenses of the
officers and Directors of the Fund, except for such Directors who are not
interested persons (as that term is defined in Section 2(a)(19) of the 1940 Act)
of WRL; and
(e) Rental of offices for the Portfolio.
4. OBLIGATIONS OF THE FUND. The Fund shall have the following
obligations under this Agreement:
(a) to keep WRL continuously and fully informed as to the
composition of the Portfolio's investment securities and the nature of all of
its assets and liabilities from time to time;
(b) to furnish WRL with a certified copy of any financial
statement or report prepared for the Portfolio by certified or independent
public accountants, and with copies of any financial statements or reports made
to its shareholders or to any governmental body or securities exchange;
(c) to furnish WRL with any further materials or information which
WRL may reasonably request to enable it to perform its functions under this
Agreement; and (d) to compensate WRL for its services in accordance with the
provisions of Section 5 hereof.
5. COMPENSATION. For its services under this Agreement, WRL is entitled
to receive from the Portfolio a monthly fee, payable on the last day of each
month during which or part of which this Agreement is in effect, of 1/12 of
____% (see Schedule A attached for a list of each Portfolio's advisory fee rate)
of the average daily net assets of the Portfolio for such month. For the month
during which this Agreement becomes effective and the month during which it
terminates, however, there shall be an appropriate pro-ration of the fee payable
for such month based on the number of calendar days of such month during which
this Agreement is effective.
Page 2 of 6
<PAGE>
6. EXPENSES PAID BY THE PORTFOLIO. Subject to the provisions of Section
7, below, and except as provided in this paragraph, nothing in this Agreement
shall be construed to impose upon WRL the obligation to incur, pay, or reimburse
the Portfolio for any expenses not specifically assumed by WRL under Sections 1,
2 and 3 above. The Portfolio shall pay all of its other expenses including, but
not limited to, investment adviser fees; any compensation, fees, or
reimbursements which the Fund pays to its Directors who are not interested
persons (as that phrase is defined in Section 2(a)(19) of the 1940 Act) of WRL;
compensation of the Portfolio's custodian, registrar and dividend disbursing
agent; current legal, accounting and printing expenses; administrative,
clerical, recordkeeping and bookkeeping expenses; pricing costs including the
daily calculation of net asset value; auditing; certain insurance premiums;
investor services including allocable telephone and personnel expenses;
brokerage commissions and all other expenses in connection with execution of
portfolio transactions interest; all federal, state and local taxes (including
stamp, excise, income and franchise taxes) and the preparation and filing of all
returns and reports in connection therewith; costs of certificates and the
expenses of delivering such certificates to the purchasers thereof; expenses of
local representation in Maryland; expenses of shareholders' meetings and of
preparing, printing and distributing proxy statement; expenses of preparation
and distribution of notices and reports to shareholders; expenses of preparing
and filing reports with federal and state regulatory authorities; all costs and
expenses, including fees and disbursements of counsel and auditors, filing and
renewal fees and printing costs in connection with the preparation and filing of
any required amendments, supplements or renewals of registration statement,
qualifications or prospectuses under the Securities Act of 1933 and the
securities laws of any states or territories subsequent to the effectiveness of
the initial registration statement under the Securities Act of 1933; all costs
involved in preparing and printing prospectuses of the Portfolio; extraordinary
expenses; and all other expenses properly payable by the Fund or the Portfolio.
Nothing in this Section 6 shall prohibit the Fund from entering into other
agreements or adopting plans which provide for the allocation of expenses of the
Fund or the Portfolio to other entities, or the assumption of other expenses by
the Fund or the Portfolio.
7. LIMITATION ON EXPENSES OF THE PORTFOLIO. If the laws, regulations or
policies of any state in which shares of the Portfolio are qualified for sale
limit the operation and management expenses (collectively referred to as "Normal
Operating Expenses" and as described below), WRL will pay on behalf of the
Portfolio the amount by which such expenses exceed the lowest of such state
limitations (the "Expense Limitation"). Normal Operating Expenses include, but
are not limited to, the fees of the Portfolio's investment adviser, the
compensation of its custodian, registrar, auditors and legal counsel, printing
expenses, expenses incurred in complying with all laws applicable to the sale of
shares of the Portfolio and any compensation, fees, or reimbursement which the
Portfolio pays to Directors of the Fund who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of WRL, but excluding all
interest and all federal, state and local taxes (such as stamp, excise, income,
franchise and similar taxes). [If Normal Operating Expenses exceed in any year
the Expense Limitation of the Fund, WRL shall pay for those excess expenses on
behalf of the Portfolio in the year in which they are incurred. Expenses of the
Portfolio shall be calculated and accrued monthly. If at the end of any month
the accrued expenses of the Portfolio exceed a pro rata portion of the
above-described Expense Limitation, based upon the average daily net asset value
of the Portfolio from the beginning of the fiscal year through the end of the
month for which calculation is made, the amount of such excess shall be paid by
WRL on behalf of the Portfolio and such excess amounts shall continue to be paid
until the end of a month when such accrued expenses are less than the pro rata
portion of such Expense Limitation. Any necessary final adjusting payments,
whether from WRL to the Portfolio or from the Portfolio to WRL, shall be made as
soon as reasonably practicable after the end of the fiscal year.]
THE INVESTMENT ADVISORY AGREEMENT BETWEEN WESTERN RESERVE LIFE AND
JANUS CAPITAL CORPORATION PROVIDES THE FOLLOWING LANGUAGE UNDER SECTION
7. LIMITATION ON EXPENSES OF FUND, WHICH IS DIFFERENT THAN THE LANGUAGE
ABOVE BEGINNING WITH THE BRACKETED INFORMATION:
"... IF AT THE END OF ANY MONTH THE ACCRUED EXPENSES OF ANY
PORTFOLIO OF THE FUND EXCEED A PRO RATA PORTION OF THE
ABOVE-DESCRIBED EXPENSE LIMITATION, BASED UPON THE AVERAGE DAILY
NET ASSET VALUE FROM THE BEGINNING OF THE FISCAL YEAR THROUGH THE
END OF THE MONTH FOR WHICH CALCULATION IS MADE, THE AMOUNT OF SUCH
EXCESS SHALL BE WITHHELD FROM THE ADVISORY FEE WHICH IS PAID TO
WRL PURSUANT TO PARAGRAPH 5 HEREOF AT THE END OF SUCH MONTH, AND
SUCH AMOUNT SHALL NOT BE PAID UNTIL THE END
Page 3 of 6
<PAGE>
OF A MONTH WHEN SUCH ACCRUED EXPENSES ARE LESS THAN THE PRO RATA
PORTION OF SUCH EXPENSE LIMITATION. IF AT THE END OF ANY MONTH THE
ACCRUED EXPENSES EXCEED THE PRO RATA PORTION OF THE EXPENSE
LIMITATION BY MORE THAN THE AMOUNT OF THE ADVISORY FEE FOR SUCH
MONTH, WRL SHALL PROMPTLY PAY SUCH EXCESS TO THE FUND. IF, AFTER
ANY PORTION OR ALL OF THE ADVISORY FEE PAYABLE AT THE END OF ANY
MONTH HAS BEEN WITHHELD FROM PAYMENT, THE ACCRUED EXPENSE OF THE
FUND AT THE END OF A MONTH ARE LESS THAN THE PRO RATA PORTION OF
THE EXPENSE LIMITATION, THE FUND SHALL PAY TO WRL THE AMOUNTS
PREVIOUSLY WITHHELD, UP TO THE PRO RATA PORTION OF THE EXPENSE
LIMITATION. ANY NECESSARY FINAL ADJUSTING PAYMENTS., WHETHER FROM
WRL TO THE FUND OR FROM THE FUND TO WRL, SHALL BE MADE AS SOON AS
REASONABLY PRACTICABLE AFTER THE END OF THE FISCAL YEAR."
8. TREATMENT OF INVESTMENT ADVICE. With respect to the Portfolio, the
Fund shall treat the investment advice and recommendations of WRL as being
advisory only, and shall retain full control over its own investment policies.
However, the Directors of the Fund may delegate to the appropriate officers of
the Fund, or to a committee of Directors, the power to authorize purchases,
sales or other actions affecting the Portfolio in the interim between meetings
of the Directors, provided such action is consistent with the established
investment policy of the Directors and is reported to the Directors at their
next meeting.
9. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by the Portfolio upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Portfolio and shall
be paid by the Portfolio. WRL is authorized and directed to place the
Portfolio's securities transactions, or to delegate to the Sub-Adviser the
authority and direction to place the Portfolio's securities transactions, only
with brokers and dealers who render satisfactory service in the execution of
orders at the most favorable prices and at reasonable commission rates;
provided, however, that WRL or the Sub-Adviser, may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if WRL or the Sub-Adviser determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer viewed in terms of
either that particular transaction or the overall responsibilities of WRL or the
Sub-Adviser. WRL and the Sub-Adviser are also authorized to consider sales by a
broker-dealer, of life insurance and annuity policies issued by WRL, as a factor
in selecting broker-dealers to execute the Portfolio's securities transactions,
provided that in placing portfolio business with such broker-dealers, WRL and
the Sub-Adviser shall seek the best execution of each transaction and all such
brokerage placement shall be consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. Notwithstanding the foregoing,
the Fund shall retain the right to direct the placement of all securities
transactions of the Portfolio, and the Directors may establish policies or
guidelines to be followed by WRL and the Sub-Adviser in placing securities
transactions for the Portfolio pursuant to the foregoing provisions. WRL shall
report on the placement of portfolio transactions each quarter to the Directors
of the Fund.
10. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Directors of the Fund or by the shareholders of the Portfolio
acting by vote of at least a majority of its outstanding voting securities (as
that phrase is defined in Section 2(a)(42) of the 1940 Act) provided in either
case that 60 days' written notice of termination be given to WRL at its
principal place of business. This Agreement may be terminated by WRL at any time
by giving 60 days' written notice of termination to the Fund, addressed to its
principal place of business.
11. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as the term is defined in Section 2(a)(4) of the 1940
Act) of this Agreement.
12. TERM. This Agreement shall continue in effect, unless sooner
terminated in accordance with its terms, for an initial term ending
_____________, 19__, and shall continue in effect from year to year thereafter,
provided such 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 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 the
Page 4 of 6
<PAGE>
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).
13. AMENDMENTS. This Agreement may be amended only with the approval of
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 Directors of the Fund who are not
parties hereto or interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act of 1940) 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.
14. PRIOR AGREEMENTS. This Agreement constitutes the entire agreement
between the parties hereto and supersedes in its entirety any and all previous
agreements between the parties relative to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WRL SERIES FUND, INC.
ATTEST:
By: /s/ JOHN R. KENNEY
---------------------------
/s/ WILLIAM H. GEIGER Chairman of the Board
- -------------------------------
Secretary
WESTERN RESERVE LIFE ASSURANCE
CO. OF OHIO
ATTEST:
By: /s/ G. JOHN HURLEY
---------------------------
/s/ WILLIAM H. GEIGER Executive Vice President
- -------------------------------
Secretary
Page 5 of 6
<PAGE>
Schedule A
PERCENTAGE OF MONTHLY
PORTFOLIO AVERAGE DAILY NET ASSETS
- --------- ------------------------
Growth 0.80%
Bond 0.50%
Global 0.80%
Money Market 0.40%
Short-to-Intermediate Government 0.60%
Emerging Growth 0.80%
Equity-Income 0.80%
Balanced 0.80%
Aggressive Growth 0.80%
Utility 0.75%
Tactical Asset Allocation 0.80%
Value Equity 0.80%
C.A.S.E. Growth 0.80%
C.A.S.E. Growth & Income 0.80%
C.A.S.E. Quality Growth 0.80%
Meridian/INVESCO Global Sector 1.10%
Meridian/INVESCO US Sector 1.10%
Meridian/INVESCO Foreign Sector 1.10%
International Equity 1.00%
U.S. Equity 0.80%
Page 6 of 6
<PAGE>
EXHIBIT B
WRL SERIES FUND, INC.
FORM OF PROPOSED
INVESTMENT ADVISORY AGREEMENT
This Agreement, entered into as of January 1, 1997, is between WRL
Series Fund, Inc., a Maryland corporation (referred to herein as the "Fund"),
and WRL Investment Management, Inc., a Florida corporation (referred to herein
as "WRL Management"), to provide certain investment advisory services with
respect to the series of shares of common stock of the Fund.
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended, (the "1940 Act") and consists of
more than one series of shares (the "Portfolios"). In managing its Portfolios,
the Fund wishes to have the benefit of the investment advisory services of WRL
Management and its assistance in performing certain management functions. WRL
Management desires to furnish such services to the Fund and to perform the
functions assigned to it under this Agreement for the considerations provided.
Accordingly, the parties have agreed as follows:
1. INVESTMENT ADVISORY SERVICES. In its capacity as investment adviser
to the Fund, WRL Management shall have the following responsibilities:
(a) to furnish continuous advice and recommendations to the Fund
as to the acquisition, holding or disposition of any or all of the
securities or other assets which the Portfolios may own or
contemplate acquiring from time to time;
(b) to cause its officers to attend meetings and furnish oral or
written reports, as the Fund may reasonably require, in order to
keep the Board of Directors and appropriate officers of the Fund
fully informed as to the conditions of each investment portfolio
of the Portfolios, the investment recommendations of WRL
Management, and the investment considerations which have given
rise to those recommendations;
(c) to supervise the purchase and sale of securities of the
Portfolios as directed by the appropriate officers of the Fund;
and
(d) to maintain all books and records required to be maintained by
the Investment Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on
behalf of the Fund. In compliance with the requirements of Rule
31a-3 under the 1940 Act, WRL Management hereby agrees: (i) that
all records that it maintains for the Fund are the property of the
Fund, (ii) to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any records that it maintains for the Fund and
that are required to be maintained by Rule 31a-1 under the 1940
Act and (iii) agrees to surrender promptly to the Fund any records
that it maintains for the Fund upon request by the Fund; provided,
however, WRL Management may retain copies of such records.
WRL Management shall pay all expenses incurred in connection with the
performance of its responsibilities under this Agreement. It is understood and
agreed that WRL Management may, and intends to, enter into Sub-Advisory
Agreements with duly registered investment advisers (the "Sub-Advisers") for
each Portfolio, under which each Sub-Adviser will, under the supervision of WRL
Management, furnish investment information and advice with respect to one or
more Portfolios to assist WRL Management in carrying out its responsibilities
under this Section 1. The compensation to be paid to each Sub-Adviser for such
services and the other terms and conditions under which the services shall be
rendered by the Sub-Adviser shall be set forth in the Sub-Advisory Agreement
between WRL
Page 1 of 5
<PAGE>
Management and each Sub-Adviser; provided, however, that such Agreement shall
be approved by the Board of Directors and by the holders of the outstanding
voting securities of each Portfolio in accordance with the requirements of
Section 15 of the 1940 Act, and shall otherwise be subject to, and contain such
provisions as shall be required by the 1940 Act.
2. OBLIGATIONS OF THE FUND. The Fund shall have the following
obligations under this Agreement:
(a) to keep WRL Management continuously and fully informed as to
the composition of each Portfolio's investment securities and the
nature of all of its assets and liabilities from time to time;
(b) to furnish WRL Management with a certified copy of any
financial statement or report prepared for each Portfolio by
certified or independent public accountants, and with copies of
any financial statements or reports made to its shareholders or to
any governmental body or securities exchange;
(c) to furnish WRL Management with any further materials or
information which WRL Management may reasonably request to enable
it to perform its functions under this Agreement; and
(d) to compensate WRL Management for its services in accordance
with the provisions of Section 3 hereof.
3. COMPENSATION. For its services under this Agreement, WRL Management
is entitled to receive from each Portfolio a monthly fee, payable on the last
day of each month during which or part of which this Agreement is in effect, as
set forth on Schedule A attached to this Agreement, as it may be amended from
time to time in accordance with Section 11 below. For the month during which
this Agreement becomes effective and the month during which it terminates,
however, there shall be an appropriate pro-ration of the fee payable for such
month based on the number of calendar days of such month during which this
Agreement is effective.
4. EXPENSES PAID BY EACH PORTFOLIO. Nothing in this Agreement shall be
construed to impose upon WRL Management the obligation to incur, pay, or
reimburse a Portfolio for any expenses. A Portfolio shall pay all of its
expenses including, but not limited to:
(a) all costs and expenses, including legal and accounting fees,
incurred in connection with the formation and organization of a
Portfolio, including the preparation (and filing, when necessary)
of the Portfolio's contracts, plans and documents; conducting
meetings of organizers, directors and shareholders, and all other
matters relating to the formation and organization of a Portfolio
and the preparation for offering its shares. The organization of a
Portfolio for all of the foregoing purposes will be considered
completed upon effectiveness of the post-effective amendment to
the Fund's registration statement to register the Portfolio under
the Securities Act of 1933.
(b) all costs and expenses, including legal and accounting fees,
filing fees and printing costs, in connection with the preparation
and filing of the post-effective amendment to the Fund's
registration statement to register the Portfolio under the
Securities Act of 1933 and the 1940 Act (including all amendments
thereto prior to the effectiveness of the registration statement
under the Securities Act of 1933);
(c) investment advisory fees;
Page 2 of 5
<PAGE>
(d) any compensation, fees, or reimbursements which the Fund pays
to its Directors who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of the Fund or WRL
Management;
(e) compensation of the Fund's custodian, administrator, registar
and dividend disbursing agent;
(f) legal, accounting and printing expenses;
(g) other administrative, clerical, recordkeeping and bookkeeping
expenses;
(h) pricing costs, including the daily calculation of net asset
value;
(i) auditing;
(j) insurance premiums, including Fidelity Bond Coverage, Error &
Ommissions Coverage and Directors and Officers Coverage, in
accordance with the provisions of the 1940 Act and the rules
thereunder;
(k) services for shareholders, including allocable telephone and
personnel expenses;
(l) brokerage commissions and all other expenses in connection
with execution of portfolio transactions, including interest:
(m) all federal, state and local taxes (including stamp, excise,
income and franchise taxes) and the preparation and filing of all
returns and reports inconnection therewith;
(n) costs of certificates and the expenses of delivering such
certificates to the purchasers of shares relating thereto;
(o) expenses of local representation in Maryland;
(p) fees and/or expenses payable pursuant to any plan of
distribution adopted with respect to the Fund in accordance with
Section 12(b) of the 1940 Act and Rule 12b-1 thereunder;
(q) expenses of shareholders' meetings and of preparing, printing
and distributing notices, proxy statements and reports to
shareholders;
(r) expenses of preparing and filing reports with federal and
state regulatory authorities;
(s) all costs and expenses, including fees and disbursements, of
counsel and auditors, filing and renewal fees and printing costs
in connection with the filing of any required amendments,
supplements or renewals of registration statement, qualifications
or prospectuses under the Securities Act of 1933 and the
securities laws of any states or territories subsequent to the
effectiveness of the initial registration statement under the
Securities Act of 1933;
(t) all costs involved in preparing and printing prospectuses of
the Fund;
(u) extraordinary expenses; and
(v) all other expenses properly payable by the Fund or the
Portfolios.
Page 3 of 5
<PAGE>
5. TREATMENT OF INVESTMENT ADVICE. With respect to the Portfolios, the
Fund shall treat the investment advice and recommendations of WRL Management as
being advisory only, and shall retain full control over its own investment
policies. However, the Directors of the Fund may delegate to the appropriate
officers of the Fund, or to a committee of Directors, the power to authorize
purchases, sales or other actions affecting the Portfolios in the interim
between meetings of the Directors, provided such action is consistent with the
established investment policy of the Directors and is reported to the Directors
at their next meeting.
6. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by each Portfolio upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Portfolio and shall
be paid by the Portfolio. WRL Management is authorized and directed to place
each Portfolio's securities transactions, or to delegate to the Sub-Adviser of
that Portfolio the authority and direction to place the Portfolio's securities
transactions, only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable price and at reasonable commission
rates (best price and execution); provided, however, that WRL Management or the
Sub-Adviser, may pay a broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if WRL Management or
the Sub-Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of WRL Management or the
Sub-Adviser. WRL Management and the Sub-Adviser are also authorized to consider
sales of individual and group life insurance policies and/or variable annuity
contract issued by Western Reserve Life Assurance Co. of Ohio by a broker-dealer
as a factor in selecting broker-dealers to execute the Portfolio's securities
transactions, provided that in placing portfolio business with such
broker-dealers, WRL Management and the Sub-Adviser shall seek the best execution
of each transaction and all such brokerage placement shall be consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. Notwithstanding the foregoing, the Fund shall retain the right to direct
the placement of all securities transactions of the Portfolios, and the
Directors may establish policies or guidelines to be followed by WRL Management
and the Sub-Advisers in placing securities transactions for each Portfolio
pursuant to the foregoing provisions. WRL Management shall report on the
placement of portfolio transactions each quarter to the Directors of the Fund.
7. LIMITATION ON EXPENSES OF THE PORTFOLIOS. If the insurance or
securities laws, regulations or policies of any state in which shares of the
Portfolios are qualified for sale limit the operation and management expenses
(collectively referred to as "Normal Operating Expenses" and as described
below), WRL Management will pay on behalf of the Portfolios the amount by which
such expenses exceed the lowest of such state limitations (the "Expense
Limitation"). Normal Operating Expenses include, but are not limited to, the
fees of the Portfolios' investment adviser, the compensation of its custodian,
registrar, auditors and legal counsel, printing expenses, expenses incurred in
complying with all laws applicable to the sale of shares of the Portfolios and
any compensation, fees, or reimbursement which the Portfolios pay to Directors
of the Fund who are not interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act) of WRL Management, but excluding all interest and all
federal, state and local taxes (such as stamp, excise, income, franchise and
similar taxes). If Normal Operating Expenses exceed in any year the Expense
Limitation of the Fund, WRL Management shall pay for those excess expenses on
behalf of the Portfolios in the year in which they are incurred. Expenses of the
Portfolios shall be calculated and accrued monthly. If at the end of any month
the accrued expenses of the Portfolios exceed a pro rata portion of the
above-described Expense Limitation, based upon the average daily net asset value
of the Portfolios from the beginning of the fiscal year through the end of the
month for which calculation is made, the amount of such excess shall be paid by
WRL Management on behalf of the Portfolios and such excess amounts shall
continue to be paid until the end of a month when such accrued expenses are less
than the pro rata portion of such Expense Limitation. Any necessary final
adjusting payments, whether from WRL Management to the Portfolios or from the
Portfolios to WRL Management, shall be made as soon as reasonably practicable
after the end of the fiscal year.
Page 4 of 5
<PAGE>
8. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Directors of the Fund or by the shareholders of each Portfolio
acting by vote of at least a majority of its outstanding voting securities (as
that phrase is defined in Section 2(a)(42) of the 1940 Act) provided in either
case that 60 days' written notice of termination be given to WRL Management at
its principal place of business. This Agreement may be terminated by WRL
Management at any time by giving 60 days' written notice of termination to the
Fund, addressed to its principal place of business.
9. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as the term is defined in Section 2(a)(4) of the 1940
Act) of this Agreement.
10. TERM. This Agreement shall continue in effect, unless sooner
terminated in accordance with its terms, for an initial term ending January 1,
1999 and shall continue in effect from year to year thereafter provided such
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 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
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 each
Portfolio (as that phrase is defined in Section 2(a)(42) of the 1940 Act).
11. AMENDMENTS. This Agreement may be amended only with the approval of
the affirmative vote of a majority of the outstanding voting securities of each
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 Directors of the Fund who are not
parties hereto or interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act of 1940) 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.
12. PRIOR AGREEMENTS. This Agreement constitutes the entire agreement
between the parties hereto and supersedes in its entirety any and all previous
agreements between the parties relative to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: WRL SERIES FUND, INC.
________________________ By:__________________________________
Assistant Vice President Chairman of the Board and President
and Assistant Secretary
ATTEST: WRL INVESTMENT MANAGEMENT, INC.
________________________ By:__________________________________
Assistant Vice President President and Treasurer
and Assistant Secretary
Page 5 of 5
<PAGE>
Schedule A
PERCENTAGE OF MONTHLY
PORTFOLIO AVERAGE DAILY NET ASSETS
- --------- ------------------------
Growth 0.80%
Bond 0.50%
Global 0.80%
Money Market 0.40%
Short-to-Intermediate Government 0.60%
Emerging Growth 0.80%
Equity-Income 0.80%
Balanced 0.80%
Aggressive Growth 0.80%
Utility 0.75%
Tactical Asset Allocation 0.80%
Value Equity 0.80%
C.A.S.E. Growth 0.80%
C.A.S.E. Growth & Income 0.80%
C.A.S.E. Quality Growth 0.80%
Meridian/INVESCO Global Sector 1.10%
Meridian/INVESCO US Sector 1.10%
Meridian/INVESCO Foreign Sector 1.10%
International Equity 1.00%
U.S. Equity 0.80%
<PAGE>
EXHIBIT C
WRL SERIES FUND, INC.
ADMINISTRATIVE SERVICES AND TRANSFER AGENCY AGREEMENT
This Agreement is entered into as of January 1, 1997 by WRL Series
Fund, Inc. (the "Fund"), a Maryland corporation, and WRL Investment Services,
Inc. ("WRL Services"), a Florida corporation.
WHEREAS, the Fund is a diversified, open-end management investment
company consisting of separate series or investment portfolios (the "Portfolios"
or "Portfolio"); and
WHEREAS, WRL Services is an administrative services company located at
201 Highland Avenue, Largo, Florida, 33770, which is or will be registered as a
transfer agent under Section 17A(c)(1) of the Securities Act of 1934, as
amended, and is a wholly-owned subsidiary of WRL Investment Management, Inc., a
registered investment adviser; and
WHEREAS, the Fund seeks to engage WRL Services to furnish the Fund with
administrative services to assist the Fund in carrying out certain of its
functions and operations.
WHEREAS, WRL Services desires to provide administrative services to the
Fund, in accordance with the terms of this Agreement.
WHEREAS, it is the purpose of this Agreement to express the mutual
agreement of the parties hereto with respect to the services to be provided by
WRL Services to the Fund 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. ADMINISTRATIVE SERVICES PROVIDED. WRL Services shall provide
supervisory, administrative, and transfer agency services to each
Portfolio of the Fund. Subject to the overall supervision of the
Board of Directors of the Fund, WRL Services shall furnish to each
Portfolio:
\Bullet\ The services of personnel to supervise and perform all
administrative, clerical, recordkeeping and bookkeeping
services for the Fund, including acting as registrar for the
Fund and recording the ownership of Fund shares and changes
in or transfers of such ownership;
\Bullet\ To the extent agreed upon by the parties hereto from time to
time, monitor and verify Investors Bank & Trust Company's
daily calculation of net asset values;
\Bullet\ Preparation and filing of all returns and reports in
connection with federal, state and local taxes;
\Bullet\ Shareholder relations functions, including preparation of
notices to shareholders;
\Bullet\ Regulatory reporting and compliance, including preparation
of any required amendments, supplements or renewals of
registration statements, qualifications or prospectuses
under the Securities Act of 1933 and the securities laws of
any states or territories subsequent to the effectiveness of
the initial registration statement under the Securities Act
of 1933;
1
<PAGE>
\Bullet\ All other matters relating to the operation of the
Portfolios, other than investment management and
distribution functions;
\Bullet\ Supervise and coordinate the Fund's custodian and its
dividend disbursing agent and monitor their services to each
Portfolio;
\Bullet\ Assist each Portfolio in preparing reports to shareholders;
and
\Bullet\ Provide office space, telephones and other office equipment
as necessary in order for WRL Services to perform
administrative services to the Fund as described herein.
2. OBLIGATIONS OF EACH PORTFOLIO OF THE FUND. Each Portfolio shall have
the following obligations under this Agreement:
(a) to provide WRL Services with access to all information,
documents and records of and about each Portfolio that are
necessary for WRL Services to carry out the performance of
its duties under this Agreement;
(b) to furnish WRL Services with a certified copy of any
financial statement or report prepared for any Portfolio by
certified or independent public accountants, and with copies
of any financial statements or reports made by such
Portfolio to its shareholders or to any governmental body or
securities exchange; and
(c) to reimburse WRL Services for the services performed by
WRL Services pursuant to Section 1 of this Agreement during
its term, on a costs incurred basis. WRL Services shall be
responsible for providing all personnel, materials, and
other resources necessary in order for WRL Services to
perform its obligations under Section 1 of this Agreement.
The Fund will in turn reimburse WRL Services for the expense
of such personnel, materials, and other resources by paying
to WRL Services an amount equal to the cost of such
personnel, materials and other resources, as incurred by WRL
Services in a calendar month, within fifteen calendar days
following the end of such calendar month. In the event that
this Agreement shall be effective for only part of a
calendar month, the amount to be paid by the Fund to WRL
Services with respect to such calendar month will be based
on costs incurred during the term of effectiveness. Expenses
reimbursed by the Fund pursuant to this Section 2(c) shall
be paid by each Portfolio in relative proportion to the
accumulation value or cash value of the variable contracts
held by owners of variable life insurance and variable
annuities allocated to the investment options funded by such
Portfolio.
3. INVESTMENT COMPANY ACT COMPLIANCE. In performing services hereunder,
WRL Services shall at all times comply with applicable provisions of
the Investment Company Act of 1940, as amended (the "1940 Act") and any
other federal or state securities laws. In addition, and without
limiting the foregoing, this Agreement is subject to the 1940 Act and
rules thereunder; to the extent that any provision of this Agreement
would require a party to take any action prohibited by the 1940 Act and
rules thereunder, or would preclude a party from taking any action
required by the 1940 Act and rules thereunder, then it is the intention
of the parties hereto that such provision shall be enforced only to the
extent permitted under the 1940 Act and rules thereunder; and that all
other provisions of this Agreement shall remain valid and enforceable
as if the provision at issue had never been a part hereof.
2
<PAGE>
4. RECORDS. WRL Services recognizes and agrees that, pursuant to Rule
31a-3 under the 1940 Act, records required to be maintained by the Fund
pursuant to Rule 31a-1 and/or Rule 31a-2 under the 1940 Act that are
maintained by WRL Services, for and on behalf of the Fund, are the
property of the Fund; shall be maintained, updated, preserved, and made
available in accordance with the 1940 Act and rules thereunder; and
will be surrendered promptly to the Fund upon request.
5. TERM AND TERMINATION.
(a) This Agreement shall continue in effect until terminated
pursuant to provisions hereof.
(b) This Agreement may be terminated at any time, without penalty,
by the Fund by giving 60 days' written notice of such termination
to WRL Services at its principal place of business; or may be
terminated at any time by WRL Services by giving 60 days' written
notice of such termination to the Fund at its principal place of
business.
6. AMENDMENTS. This Agreement may be amended only by written instrument
signed by the parties hereto.
7. 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.
Attest: WRL SERIES FUND, INC.
_____________________________ By: _____________________________________
Priscilla I. Hechler John R. Kenney, Chairman of the Board
Assistant Vice President and President
and Assistant Secretary
Attest: WRL INVESTMENT SERVICES, INC.
_____________________________ By: _____________________________________
Thomas E. Pierpan Kenneth P. Beil, President and
Secretary, Vice President and Treasurer
General Counsel
3
<PAGE>
EXHIBIT D-1
FORM OF SUB-ADVISORY AGREEMENT
FOR THE FOLLOWING PORTFOLIOS:
1. Aggressive Growth Portfolio
2. Balanced Portfolio
3. Bond Portfolio
4. C.A.S.E. Growth Portfolio
5. C.A.S.E. Growth & Income Portfolio
6. C.A.S.E. Quality Growth Portfolio
7. Emerging Growth Portfolio
8. Equity-Income Portfolio
9. Global Portfolio
10. Growth Portfolio
11. Meridian/INVESCO Foreign Sector Portfolio
12. Meridian/INVESCO Global Sector Portfolio
13. Meridian/INVESCO US Sector Portfolio
14. Short-to-Intermediate Government Portfolio
15. Tactical Asset Allocation Portfolio
16. Utility Portfolio
17. Value Equity Portfolio
The Sub-Advisory Agreement for Money Market Portfolio is separately attached as
Exhibit D-2.
1
<PAGE>
FORM OF SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT, made as of the ____ day of _______, 1997,
between WRL Investment Management, Inc. ("Investment Adviser"), a corporation
organized and existing under the laws of the State of Florida and
_______________________________ ("Sub-Adviser"), a corporation organized and
existing under the laws of the State of _______.
THE SUB-ADVISORY AGREEMENTS WITH MERIDIAN INVESTMENT MANAGEMENT
CORPORATION AND INVESCO GLOBAL ASSET MANAGEMENT LIMITED REPLACE THE
TERM "SUB-ADVISER" WITH THE TERM "CO-SUB-ADVISER" THROUGHOUT THE
AGREEMENTS.
THE SUB-ADVISORY AGREEMENT WITH FEDERATED INVESTMENT COUNSELING
REPLACES THE TERM "CORPORATION" WITH "BUSINESS TRUST," TO REFLECT
FEDERATED INVESTMENT COUNSELING'S FORM OF ORGANIZATION.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of the 1st day of January, 1997 ("Advisory Agreement") with
the WRL Series Fund, Inc. ("Fund"), a Maryland corporation which is engaged in
business as an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of the ____________
Portfolio ("Portfolio"), a separate series of the Fund;
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act");
and
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to the Investment
Adviser with respect to the Portfolio and the Sub-Adviser is willing to furnish
such services.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein set forth, the parties hereto agree as follows:
2
<PAGE>
1. APPOINTMENT.
Investment Adviser hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the Portfolio for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. DUTIES OF THE SUB-ADVISER.
A. INVESTMENT SUB-ADVISORY SERVICES. Subject to the supervision of
the Fund's Board of Directors ("Board") and the Investment Adviser, the
Sub-Adviser shall act as the investment sub-adviser and shall supervise and
direct the investments of the Portfolio in accordance with the Portfolio's
investment objective, policies, and restrictions as provided in the Fund's
Prospectus and Statement of Additional Information, as currently in effect and
as amended or supplemented from time to time (hereinafter referred to as the
"Prospectus"), and such other limitations as directed by the appropriate
officers of the Investment Adviser or the Fund by notice in writing to the
Sub-Adviser. The Sub-Adviser shall obtain and evaluate such information relating
to the economy, industries, businesses, securities markets, and securities as it
may deem necessary or useful in the discharge of its obligations hereunder and
shall formulate and implement a continuing program for the management of the
assets and resources of the Portfolio in a manner consistent with the
Portfolio's investment objective, policies, and restrictions. In furtherance of
this duty, the Sub-Adviser, on behalf of the Portfolio, is authorized, in its
discretion and without prior consultation with the Portfolio or the Investment
Adviser, to:
THE SUB-ADVISORY AGREEMENT WITH FEDERATED INVESTMENT COUNSELING
ADDS "AND PROCEDURES ADOPTED BY THE BOARD" AFTER "LIMITATIONS" IN
LINE 7 OF SECTION 2A. AFTER THE SENTENCE ENDING "IN WRITING TO THE
SUB-ADVISER" IN LINE 8 OF SECTION 2A, IT ADDS THE FOLLOWING
SENTENCE: "THE PARTIES HERETO AGREE THAT THE SUB-ADVISER IS NOT A
PRICING AGENT OF THE FUND, AND THAT ALL PRICES WILL BE FINALLY
DETERMINED BY THE ENTITY ACTING AS PRICING AGENT TO THE FUND."
THE SUB-ADVISORY AGREEMENT WITH JANUS CAPITAL CORPORATION REPLACES
THE WORD "PORTFOLIO" WITH THE WORD "BOARD" IN LINE 14 OF SECTION
2A.
(1) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds and other securities or assets; and
(2) place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or through
such brokers, dealers, underwriters or issuers as the Sub-Adviser may
select.
THE SUB-ADVISORY AGREEMENT WITH MERIDIAN INVESTMENT MANAGEMENT
CORPORATION REPLACES SECTION 2A(1) AND (2) WITH THE FOLLOWING:
(1) FURNISH CONTINUOUS INVESTMENT INFORMATION, ADVICE AND
RECOMMENDATIONS TO THE FUND AS TO THE ASSET ALLOCATION, INDUSTRY
AND COUNTRY SELECTIONS FOR ANY OR ALL OF THE SECURITIES OR OF THE
SECURITIES OR OTHER ASSETS WHICH THE PORTFOLIOS MAY OWN OR
CONTEMPLATE ACQUIRING FROM TIME TO TIME;
(2) CAUSE ITS OFFICERS TO ATTEND MEETINGS OF THE FUND AND FURNISH
ORAL OR WRITTEN REPORTS, AS THE FUND MAY REASONABLY REQUIRE, IN
ORDER TO KEEP THE
3
<PAGE>
FUND AND ITS OFFICERS AND BOARD FULLY INFORMED AS TO THE CONDITION
OF THE INVESTMENT SECURITIES OF THE PORTFOLIOS, THE INVESTMENT
RECOMMENDATIONS OF THE CO-SUB-ADVISER, AND THE INVESTMENT
CONSIDERATIONS WHICH HAVE GIVEN RISE TO THOSE RECOMMENDATIONS;
(3) FURNISH SUCH QUANTITATIVE INVESTMENT RESEARCH, STATISTICAL
AND ANALYTICAL INFORMATION AND REPORTS AS MAY REASONABLY BE
REQUIRED BY THE FUND FROM TIME TO TIME; AND
(4) TO MAKE DECISIONS WITH REGARD TO ASSET ALLOCATION,
INDUSTRY AND COUNTRY SELECTIONS FOR EACH PORTFOLIO.
B. ADDITIONAL DUTIES OF SUB-ADVISER. In addition to the above,
Sub-Adviser shall:
(1) furnish continuous investment information, advice and
recommendations to the Fund 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;
THE SUB-ADVISORY AGREEMENT WITH INVESCO GLOBAL ASSET MANAGEMENT
LIMITED ADDS THE FOLLOWING TO THE END OF SECTION 2B(1):
PROVIDED, HOWEVER, THAT NOT WITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT TO THE CONTRARY, THE CO-SUB-ADVISER SHALL HAVE NO
RESPONSIBILITY WITH RESPECT TO THE ALLOCATION OF EACH PORTFOLIO'S
ASSETS AMONG INDUSTRIAL SECTORS OR COUNTRIES, IT BEING UNDERSTOOD
THAT MERIDIAN INVESTMENT MANAGEMENT CORPORATION WILL PROVIDE SUCH
ALLOCATION SERVICES TO THE INVESTMENT ADVISER.
(2) cause its officers to attend meetings of the Fund and furnish oral
or written reports, as the Fund may reasonably require, in order to
keep the Fund and its officers and Board fully informed as to the
condition of the investment securities of the Portfolio, the investment
recommendations of the Sub-Adviser, and the investment considerations
which have given rise to those recommendations; and
THE SUB-ADVISORY AGREEMENT WITH JANUS CAPITAL CORPORATION REPLACES
"THE FUND AND ITS OFFICERS AND BOARD" IN LINE 2 OF SECTION 2B(2)
WITH "THE FUND'S OFFICERS, BOARD AND SHAREHOLDERS."
(3) furnish such statistical and analytical information and reports as
may reasonably be required by the Fund from time to time.
THE SUB-ADVISORY AGREEMENT WITH JANUS CAPITAL CORPORATION INSERTS
", ITS OFFICERS AND THE BOARD" BEFORE "FROM TIME TO TIME" IN LINE
2 OF SECTION 2B(3) AND ADDS ", OTHER THAN PROPRIETARY INFORMATION
AND PROVIDED SUB-ADVISER SHALL NOT BE RESPONSIBLE FOR PORTFOLIO
ACCOUNTING" TO THE END OF SECTION 2B(3).
THE SUB-ADVISORY AGREEMENT WITH MERIDIAN INVESTMENT MANAGEMENT
CORPORATION DELETES SECTION 2B.
THE SUB-ADVISORY AGREEMENT WITH INVESCO GLOBAL ASSET MANAGEMENT
LIMITED ADDS THE FOLLOWING TO SECTION 2B:
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<PAGE>
(4) IN CONNECTION WITH THE RENDERING OF THE SERVICES REQUIRED TO
BE PROVIDED BY THE CO-SUB-ADVISER UNDER THIS AGREEMENT, THE
CO-SUB-ADVISER MAY, TO THE EXTENT IT DEEMS APPROPRIATE AND SUBJECT
TO THE PRIOR CONSENT OF THE INVESTMENT ADVISER, ENTER INTO SERVICE
AGREEMENTS WITH ONE OR MORE COMPANIES AFFILIATED WITH THE
CO-SUB-ADVISER ("INVESCO AFFILIATES"), PURSUANT TO WHICH SUCH
INVESCO AFFILIATE(S) PROVIDES INVESTMENT MANAGEMENT INFORMATION
AND SERVICES/SUPPORT TO THE CO-SUB-ADVISER WITH RESPECT TO ONE OR
MORE OF THE PORTFOLIOS; PROVIDED, HOWEVER, THAT THE CO-SUB-ADVISER
SHALL SUPERVISE AND REMAIN FULLY RESPONSIBLE FOR ALL SUCH SERVICES
IN ACCORDANCE WITH AND TO THE EXTENT PROVIDED BY THIS AGREEMENT;
AND FURTHER PROVIDED THAT EACH SUCH SERVICE AGREEMENT SHALL BE
SUBJECT TO THE REQUIREMENTS OF THE 1940 ACT AND REGULATIONS
THEREUNDER.
THE SUB-ADVISORY AGREEMENT WITH JANUS CAPITAL CORPORATION ADDS THE
FOLLOWING LANGUAGE TO SECTION 2B :
(4) SUB-ADVISER SHALL BE RESPONSIBLE FOR THE PREPARATION AND
FILING OF SCHEDULE 13G AND FORM 13F ON BEHALF OF THE PORTFOLIOS.
SUB-ADVISER SHALL NOT BE RESPONSIBLE FOR THE PREPARATION OR FILING
OF ANY REPORTS REQUIRED OF THE PORTFOLIOS BY ANY GOVERNMENTAL OR
REGULATORY AGENCY, EXCEPT AS EXPRESSLY AGREED TO IN WRITING.
SUB-ADVISER SHALL VOTE PROXIES RECEIVED IN CONNECTION WITH
SECURITIES HELD BY THE PORTFOLIOS.
(5) SUB-ADVISER SHALL HAVE NO RESPONSIBILITY TO MONITOR CERTAIN
LIMITATIONS OR RESTRICTIONS, INCLUDING WITHOUT LIMITATION, THE 1/2
OF 1% LIMITATION ON PERSONAL TRADING (EXCEPT FOR EMPLOYEES OF
SUB-ADVISER), THE "SHORT-SHORT" TEST, AND THE 90%-SOURCE TEST FOR
WHICH THE SUB-ADVISER DETERMINES IT HAS NOT BEEN PROVIDED
SUFFICIENT INFORMATION IN ACCORDANCE WITH SECTION 4 OF THIS
AGREEMENT OR OTHERWISE. ALL SUCH MONITORING SHALL BE THE
RESPONSIBILITY OF INVESTMENT ADVISER.
C. FURTHER DUTIES OF SUB-ADVISER. In all matters relating to the
performance of this Agreement, the Sub-Adviser shall act in conformity with the
Fund's Articles of Incorporation and By-Laws, as each may be amended or
supplemented, and currently effective Registration Statement (as defined below)
and with the written instructions and directions of the Board and the Investment
Adviser, and shall comply with the requirements of the 1940 Act, the Advisers
Act, the rules thereunder, and all other applicable federal and state laws and
regulations.
THE SUB-ADVISORY AGREEMENTS WITH AEGON USA INVESTMENT MANAGEMENT,
INC. AND JANUS CAPITAL CORPORATION ADD THE FOLLOWING TO THE END OF
SECTION 2C:
SUB-ADVISER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, THAT ANY LEVEL OF PERFORMANCE OR INVESTMENT RESULTS WILL
BE ACHIEVED BY ANY PORTFOLIO, OR THAT ANY PORTFOLIO WILL PERFORM
COMPARABLY WITH ANY STANDARD OR INDEX, INCLUDING OTHER CLIENTS OF
SUB-ADVISER, WHETHER PUBLIC OR PRIVATE.
THE SUB-ADVISORY AGREEMENT WITH FEDERATED INVESTMENT COUNSELING
ADDS THE FOLLOWING TO THE END OF SECTION 2C:
EXCEPT AS MAY OTHERWISE BE REQUIRED BY THE 1940 ACT OR THE RULES
THEREUNDER OR OTHER APPLICABLE LAW, THE FUND AND WRL
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<PAGE>
MANAGEMENT AGREE THAT THE SUB-ADVISER, ANY AFFILIATED PERSON OF
THE SUB-ADVISER, AND EACH PERSON, IF ANY, WHO, WITHIN THE MEANING
OF SECTION 15 OF THE SECURITIES ACT OF 1933 CONTROLS THE
SUB-ADVISER, SHALL NOT BE LIABLE FOR, OR SUBJECT TO ANY DAMAGES,
EXPENSES, LOSSES IN CONNECTION WITH ANY ACT OR OMISSION CONNECTED
WITH OR ARISING OUT OF ANY SERVICES RENDERED UNDER THIS AGREEMENT,
EXCEPT BY REASON OF WILLFUL MISFEASANCE, BAD FAITH, OR GROSS
NEGLIGENCE IN THE PERFORMANCE OF THE SUB-ADVISER'S DUTIES, OR BY
REASON OF RECKLESS DISREGARD OF THE SUB-ADVISER'S OBLIGATIONS AND
DUTIES UNDER THIS AGREEMENT.
3. COMPENSATION.
For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, the Sub-Adviser shall receive a monthly investment
management fee equal to ___% of the fees received by the Investment Adviser for
services rendered under the Advisory Agreement by the Investment Adviser to the
Portfolio. The management fee shall be payable by the Investment Adviser monthly
to the Sub-Adviser upon receipt by the Investment Adviser from the Portfolio of
advisory fees payable to the Investment Adviser. If this Agreement becomes
effective or terminates before the end of any month, the investment management
fee for the period from the effective date to the end of such month or from the
beginning of such month to the date of termination, as the case may be, shall be
pro-rated according to the pro-ration which such period bears to the full month
in which such effectiveness or termination occurs.
COMPENSATION VARIES AMONG SUB-ADVISERS AND PORTFOLIOS. CONSULT
SCHEDULE C FOR SPECIFIC INFORMATION ON SUB-ADVISER COMPENSATION
FOR EACH PORTFOLIO.
4. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement.
B. The Investment Adviser has furnished the Sub-Adviser with
copies of each of the following documents and will furnish to the Sub-Adviser at
its principal office all future amendments and supplements to such documents, if
any, as soon as practicable after such documents become available:
THE SUB-ADVISORY AGREEMENTS WITH AEGON USA INVESTMENT MANAGEMENT,
INC. AND JANUS CAPITAL CORPORATION ADD "AND, WHEN POSSIBLE, BEFORE
SUCH AMENDMENTS OR SUPPLEMENTS BECOME EFFECTIVE" TO THE END OF
SECTION 4B.
(1) The Articles of Incorporation of the Fund, as filed with the
State of Maryland, as in effect on the date hereof and as amended from time to
time ("Articles");
(2) The By-Laws of the Fund as in effect on the date hereof and as
amended from time to time ("By-Laws");
(3) Certified resolutions of the Board of the Fund authorizing the
appointment of the Investment Adviser and the Sub-Adviser and approving the form
of the Advisory Agreement and this Agreement;
THE SUB-ADVISORY AGREEMENTS WITH AEGON USA INVESTMENT MANAGEMENT,
INC. AND JANUS CAPITAL CORPORATION ADD "AND ANY
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<PAGE>
OTHER RESOLUTIONS OF THE BOARD APPLICABLE TO THE SUB-ADVISER'S
DUTIES UNDER THIS AGREEMENT" TO THE END OF SECTION 4B(3).
(4) The Fund's Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A, as filed with the
Securities and Exchange Commission ("SEC") relating to the Portfolio
and its shares and all amendments thereto ("Registration Statement");
(5) The Notification of Registration of the Fund under the 1940
Act on Form N-8A as filed with the SEC and any amendments thereto;
(6) The Fund's Prospectus (as defined above); and
THE SUB-ADVISORY AGREEMENT WITH JANUS CAPITAL CORPORATION ADDS
"AND STATEMENT OF ADDITIONAL INFORMATION" TO SECTION 4B(6).
(7) A certified copy of any publicly available financial statement
or report prepared for the Fund by certified or independent public
accountants, and copies of any financial statements or reports made by
the Portfolio to its shareholders or to any governmental body or
securities exchange.
THE SUB-ADVISORY AGREEMENT WITH FEDERATED INVESTMENT COUNSELING
ADDS THE FOLLOWING TO SECTION 4B:
(8) A COPY OF THE ADVISORY AGREEMENT CURRENTLY IN EFFECT, AND ALL
AMENDMENTS; AND
(9) FUND PROCEDURES ADOPTED BY THE BOARD.
The Investment Adviser shall furnish the Sub-Adviser with any further
documents, materials or information that the Sub-Adviser may reasonably request
to enable it to perform its duties pursuant to this Agreement.
THE SUB-ADVISORY AGREEMENT WITH JANUS CAPITAL CORPORATION INSERTS
THE FOLLOWING NEW SUBSECTION AFTER SUBSECTION B OF SECTION 4:
UNDER THE DIRECTION OF SUB-ADVISER, INVESTMENT ADVISER SHALL
BE RESPONSIBLE FOR SETTING UP AND MAINTAINING BROKERAGE ACCOUNTS
AND OTHER ACCOUNTS SUB-ADVISER DEEMS ADVISABLE TO ALLOW FOR THE
PURCHASE OR SALE OF VARIOUS FORMS OF SECURITIES PURSUANT TO THIS
AGREEMENT, OR SHALL TAKE SUCH ACTIONS AS SUB-ADVISER DEEMS
NECESSARY OR ADVISABLE TO ENABLE SUB-ADVISER TO ESTABLISH SUCH
ACCOUNTS ON BEHALF OF THE FUND.
C. During the term of this Agreement, the Investment Adviser shall
furnish to the Sub-Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of the Portfolio or the public, which
refer to the Sub-Adviser or investment companies or other advisory accounts
advised or sponsored by the Sub-Adviser or investment companies or other
advisory accounts advised or sponsored by the Sub-Adviser in any way, prior to
the use thereof, and the Investment Adviser shall not use any such materials if
the Sub-Adviser reasonably objects in writing fifteen business days (or such
other time as may be mutually agreed) after receipt thereof.
7
<PAGE>
THE SUB-ADVISORY AGREEMENT WITH JANUS CAPITAL CORPORATION ADDS "BY
THE INVESTMENT ADVISER" AFTER "MATERIAL PREPARED" IN LINE 3 OF
SECTION 4C.
5. BROKERAGE.
A. The Sub-Adviser agrees that, in placing orders with
broker-dealers for the purchase or sale of portfolio securities, it shall
attempt to obtain quality execution at favorable security prices (best price and
execution); provided that, on behalf of the Fund, the Sub-Adviser may, in its
discretion, agree to pay a broker-dealer that furnishes brokerage or research
services as such services are defined under Section 28(e) of the Securities
Exchange Act of 1934, as amended ("1934 Act"), a higher commission than that
which might have been charged by another broker-dealer for effecting the same
transactions, if the Sub-Adviser determines in good faith that such commission
is reasonable in relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Sub-Adviser with respect to the accounts as to
which it exercises investment discretion (as such term is defined under Section
3(a)(35) of the 1934 Act). In no instance will portfolio securities be purchased
from or sold to the Sub-Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rule and regulations
thereunder.
THE SUB-ADVISORY AGREEMENT WITH FRED ALGER MANAGEMENT, INC. ADDS
THE FOLLOWING SENTENCE BEFORE THE LAST SENTENCE OF SECTION 5A:
"THE SUB-ADVISER MAY DIRECT ORDERS FOR PURCHASE OR SALE OF
SECURITIES TO FRED ALGER & COMPANY, INCORPORATED, A MEMBER OF THE
NEW YORK STOCK EXCHANGE, INC.
THE SUB-ADVISORY AGREEMENT WITH FEDERATED INVESTMENT COUNSELING
ADDS "OR ITS AFFILIATED PERSON" AFTER "THE OVERALL
RESPONSIBILITIES OF THE SUB-ADVISER" IN LINE 10 OF SECTION 5A.
B. On occasions when the Sub-Adviser deems the purchase or sale of
a security to be in the best interest of the Fund as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be purchased or sold to attempt to obtain a more favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner the Sub-Adviser
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to its other clients.
THE SUB-ADVISORY AGREEMENT WITH FEDERATED INVESTMENT COUNSELING
ADDS "OR ITS AFFILIATED PERSON" AFTER "CLIENTS OF THE SUB-ADVISER"
IN LINE 2 OF SECTION 5B.
C. In addition to the foregoing, the Sub-Adviser agrees that
orders with broker-dealers for the purchase or sale of portfolio securities by
the Portfolio shall be placed in accordance with the standards set forth in the
Advisory Agreement.
6. OWNERSHIP OF RECORDS.
The Sub-Adviser shall maintain all books and records required to
be maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees: (i) that all records that it maintains for the Fund
are the property of the Fund, (ii) to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records that it maintains for the Fund and
that are required to be maintained by Rule 31a-1 under the 1940 Act and (iii)
8
<PAGE>
agrees to surrender promptly to the Fund any records that it maintains for the
Fund upon request by the Fund; provided, however, the Sub-Adviser may retain
copies of such records.
THE SUB-ADVISORY AGREEMENT WITH NWQ INVESTMENT MANAGEMENT COMPANY,
INC. REPLACES "RULE 31A-1" IN LINE 6 OF SECTION 6 WITH "RULE
31A-1(F)."
7. REPORTS.
The Sub-Adviser shall furnish to the Board or the Investment Adviser,
or both, as appropriate, such information, reports, evaluations, analyses and
opinions as the Sub-Adviser and the Board or the Investment Adviser, as
appropriate, may mutually agree upon from time to time.
8. SERVICES TO OTHERS CLIENTS.
Nothing contained in this Agreement shall limit or restrict (i) the
freedom of the Sub-Adviser, or any affiliated person thereof, to render
investment management and corporate administrative services to other investment
companies, to act as investment manager or investment counselor to other
persons, firms, or corporations, or to engage in any other business activities,
or (ii) the right of any director, officer, or employee of the Sub-Adviser, who
may also be a director, officer, or employee of the Fund, to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature.
9. REPRESENTATIONS OF SUB-ADVISER.
The Sub-Adviser represents, warrants, and agrees as follows:
A. The Sub-Adviser: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will continue to meet for so long as this Agreement remains in
effect, any applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify the Investment Adviser of the
occurrence of any event that would disqualify the Sub-Adviser from serving as an
investment adviser of an investment company pursuant to Section 9 (a) of the
1940 Act or otherwise.
B. The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and, if it has not
already done so, will provide the Investment Adviser and the Fund with a copy of
such code of ethics, together with evidence of its adoption.
C. The Sub-Adviser has provided the Investment Adviser and the
Fund with a copy of its Form ADV as most recently filed with the SEC and will,
promptly after filing any amendment to its Form ADV with the SEC, furnish a copy
of such amendment to the Investment Adviser.
THE SUB-ADVISORY AGREEMENTS WITH AEGON USA INVESTMENT MANAGEMENT,
INC. AND JANUS CAPITAL CORPORATION ADD TWO ADDITIONAL SECTIONS
AFTER SECTION 9 AS FOLLOWS:
10. CONFIDENTIALITY AND PROPRIETARY RIGHTS.
9
<PAGE>
SUB-ADVISER WILL NOT, DIRECTLY OR INDIRECTLY, AND WILL NOT PERMIT
ITS AFFILIATES EMPLOYEES, OFFICERS, DIRECTORS, AGENTS, CONTRACTORS, OR
THE PORTFOLIOS TO USE, DISCLOSE OR FURNISH TO ANY PERSON OR ENTITY,
RECORDS OR INFORMATION CONCERNING THE BUSINESS OF SUB-ADVISER, EXCEPT
AS NECESSARY FOR THE PERFORMANCE OF ITS DUTIES UNDER THIS AGREEMENT OR
THE ADVISORY AGREEMENT, OR AS REQUIRED BY LAW UPON PRIOR WRITTEN NOTICE
TO SUB-ADVISER. SUB-ADVISER IS THE SOLE OWNER OF THE NAME AND MARK
["AEGON USA INVESTMENT MANAGEMENT, INC."/"JANUS," AS APPLICABLE].
SUB-ADVISER SHALL NOT, AND SHALL NOT PERMIT THE PORTFOLIOS TO, WITHOUT
PRIOR WRITTEN CONSENT OF SUB-ADVISER, USE THE NAME OR MARK ["AEGON USA
INVESTMENT MANAGEMENT, INC."/"JANUS," AS APPLICABLE] OR MAKE
REPRESENTATIONS REGARDING SUB-ADVISER OR ITS AFFILIATES. UPON
TERMINATION OF THIS AGREEMENT FOR ANY REASON, INVESTMENT ADVISER SHALL
IMMEDIATELY CEASE, AND SHALL CAUSE THE PORTFOLIOS TO IMMEDIATELY CEASE,
ALL USE OF THE [AEGON USA INVESTMENT MANAGEMENT, INC./JANUS, AS
APPLICABLE] NAME OR ANY [AEGON USA INVESTMENT MANAGEMENT, INC./JANUS,
AS APPLICABLE] MARK.
11. LIABILITY.
EXCEPT AS MAY OTHERWISE BE PROVIDED BY THE 1940 ACT, OR OTHER
FEDERAL SECURITIES LAWS, NEITHER SUB-ADVISER NOR ANY OF ITS AFFILIATES,
OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, OR AGENTS SHALL BE LIABLE
FOR ANY LOSS, LIABILITY, COST, DAMAGE, OR EXPENSE (INCLUDING REASONABLE
ATTORNEYS' FEES AND COSTS) (COLLECTIVELY, REFERRED TO IN THIS AGREEMENT
AS "LOSSES"), EXCEPT FOR LOSSES RESULTING FROM SUB-ADVISER'S GROSS
NEGLIGENCE, BAD FAITH, OR WILLFUL MISCONDUCT OR RECKLESS DISREGARD OF
ITS OBLIGATIONS AND DUTIES UNDER THIS AGREEMENT. INVESTMENT ADVISER
SHALL HOLD HARMLESS AND INDEMNIFY SUB-ADVISER, ITS AFFILIATES,
DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS FOR ANY LOSS NOT
RESULTING FROM SUB-ADVISER'S GROSS NEGLIGENCE, BAD FAITH, OR WILLFUL
MISCONDUCT OR RECKLESS DISREGARD OF ITS OBLIGATIONS AND DUTIES UNDER
THIS AGREEMENT. THE OBLIGATIONS CONTAINED IN THIS SECTION 11 SHALL
SURVIVE TERMINATION OF THIS AGREEMENT.
10. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those Directors of the Fund who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Portfolio's outstanding voting securities. Unless
sooner terminated as provided herein, this Agreement shall continue in effect
for two years from its effective date. Thereafter, this Agreement shall continue
in effect from year to year, with respect to the Portfolio, subject to the
termination provisions and all other terms and conditions hereof, so long as
such continuation shall be specifically approved at least annually (a) by either
the Board, or by vote of a majority of the outstanding voting securities of the
Portfolio; and (b) in either event, by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party. The Sub-Adviser shall furnish to the Fund, promptly
upon its request such information as may reasonably be necessary to evaluate the
terms of this Agreement or any extension, renewal, or amendment hereof.
10
<PAGE>
11. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on at least 60
days' prior written notice to the Sub-Adviser. This Agreement may also be
terminated by the Investment Adviser: (i) on at least 60 days' prior written
notice to the Sub-Adviser, without the payment of any penalty; or (ii) if the
Sub-Adviser becomes unable to discharge its duties and obligations under this
Agreement. The Sub-Adviser may terminate this Agreement at any time, or preclude
its renewal without the payment of any penalty, on at least 60 days' prior
notice to the Investment Adviser. This Agreement shall terminate automatically
in the event of its assignment or upon termination of the Advisory Agreement.
12. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of a majority of the Portfolio's outstanding voting securities and a vote
of a majority of those Directors of the Fund who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such amendment, unless otherwise permitted
in accordance with the 1940 Act.
THE SUB-ADVISORY AGREEMENT WITH INVESCO GLOBAL ASSET MANAGEMENT
LIMITED ADDS THE FOLLOWING SECTION:
13. LIABILITY OF THE CO-SUB-ADVISER.
THE CO-SUB-ADVISER SHALL HAVE NO LIABILITY UNDER THIS AGREEMENT TO
WRL INVESTMENT, THE FUND, THE PORTFOLIOS OR TO THE FUND'S
SHAREHOLDERS OR CREDITORS FOR ANY ERROR OF JUDGMENT, MISTAKE OF
LAW, OR FOR ANY LOSS ARISING OUT OF ANY INVESTMENT, NOR FOR ANY
OTHER ACT OR OMISSION IN THE PERFORMANCE OF ITS DUTIES UNDER THIS
AGREEMENT NOT INVOLVING WILLFUL MISFEASANCE, BAD FAITH, GROSS
NEGLIGENCE OR RECKLESS DISREGARD OF ITS OBLIGATIONS AND DUTIES
HEREUNDER. WRL INVESTMENT SHALL HAVE NO LIABILITY UNDER THIS
AGREEMENT TO THE CO-SUB-ADVISER FOR ANY ERROR OF JUDGMENT, MISTAKE
OF LAW, OR FOR ANY LOSS ARISING OUT OF ANY INVESTMENT, NOR FOR ANY
OTHER ACT OF OMISSION IN THE PERFORMANCE OF ITS DUTIES UNDER THIS
AGREEMENT OR THE ADVISORY AGREEMENT NOT INVOLVING WILLFUL
MISFEASANCE, BAD FAITH, GROSS NEGLIGENCE OR RECKLESS DISREGARD OF
ITS OBLIGATIONS AND DUTIES HEREUNDER.
13. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Maryland without giving effect to the conflicts of
laws principles thereof, and the 1940 Act. To the extent that the applicable
laws of the State of Maryland conflict with the applicable provisions of the
1940 Act, the latter shall control.
B. CAPTIONS. The captions contained in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
C. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding of the parties hereto and shall supersede any prior
agreements between the parties
11
<PAGE>
relating to the subject matter hereof, and all such prior agreements shall be
deemed terminated upon the effectiveness of this Agreement.
D. INTERPRETATION. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of its responsibility for
and control of the conduct of the affairs of the Fund.
E. DEFINITIONS. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations, or orders of the SEC validly issued pursuant to the 1940
Act. As used in this Agreement, the terms "majority of the outstanding voting
securities," "affiliated person," "interested person," "assignment," "broker,"
"investment adviser," "net assets," "sale," "sell," and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the SEC by any rule, regulation, or order. Where the effect
of a requirement of the federal securities laws reflected in any provision of
this Agreement is made less restrictive by a rule, regulation, or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation, or order, unless the
Investment Adviser and the Sub-Adviser agree to the contrary.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their duly authorized signatories as of the date and year
first above written.
Attest: WRL INVESTMENT MANAGEMENT, INC.
By: ____________________ By: ________________________________
Priscilla I. Hechler Name: Kenneth P. Beil
Assistant Secretary Title: President and Treasurer
Attest: [Sub-Adviser's Name]
By: ____________________ By: ________________________________
Name:
Title:
12
<PAGE>
EXHIBIT D-2
SUB-ADVISORY AGREEMENT
FOR
MONEY MARKET PORTFOLIO
<PAGE>
SUB-ADVISORY AGREEMENT
BETWEEN
WRL INVESTMENT MANAGEMENT, INC.
AND
J. P. MORGAN INVESTMENT MANAGEMENT INC.
SUB-ADVISORY AGREEMENT, made as of the 1st day of January, 1997,
between WRL Investment Management, Inc. ("Investment Adviser"), a corporation
organized and existing under the laws of the State of Florida and J. P. Morgan
Investment Management Inc. ("Sub-Adviser"), a corporation organized and existing
under the laws of the State of Delaware.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of the 1st day of January, 1997 ("Advisory Agreement") with
the WRL Series Fund, Inc. ("Fund"), a Maryland corporation which is engaged in
business as an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of the Money Market
Portfolio ("Portfolio"), a separate series of the Fund;
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act");
and
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to the Investment
Adviser with respect to the Portfolio and the Sub-Adviser is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual promises
herein set forth, the parties hereto agree as follows:
1. INVESTMENT DESCRIPTION: APPOINTMENT.
The Investment Adviser desires to employ the capital of the Portfolio
by investing and reinvesting in investments of the kind and in accordance with
the limitations specified in the Fund's Articles of Incorporation, as amended to
date (the "Charter Document"), and in the prospectus (the "Prospectus") and the
statement of additional information (the "Statement") for the Fund filed with
the Securities and Exchange Commission as part of the Fund's Registration
Statement on Form N-1A, as amended or supplemented from time to time, and in
such manner and to such extent as from time to time may be approved by the
Fund's Board of Directors. Copies of the Prospectus, the Statement and the
Charter Document, each as currently in effect, have been delivered to the
Sub-Adviser. The Investment Adviser agrees, on an ongoing basis, to provide to
the Sub-Adviser as promptly as practicable, copies of all amendments and
supplements to the Prospectus and Statement and amendments to the Charter
Document. The Advisory Agreement provides that the Investment Adviser may engage
a Sub-Adviser to perform the services contemplated hereunder. The Investment
Adviser desires to engage and hereby appoints the Sub-Adviser to act as
investment sub-adviser to the Portfolio. The Sub-Adviser accepts the appointment
and agrees to furnish the services described herein for the compensation set
forth below.
2. SERVICES AS INVESTMENT SUB-ADVISER, GUIDELINES AND ADVICE.
Subject to the supervision of the Investment Adviser and the Board of
Directors of the Fund, the Sub-Adviser will (a) manage the Portfolio's assets in
accordance with the Portfolio's investment objective(s) and policies stated in
the Prospectus, the Statement and the Charter Document, but subject to
Guidelines (as such term is defined below); (b) make investment decisions for
the Portfolio; (c) place purchase and sale orders for portfolio
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<PAGE>
transactions for the Portfolio; and (d) employ professional portfolio managers
and securities analysts to provide research services to the Portfolio; (e)
furnish statistical and analytical information and reports as may reasonably be
required by the Investment Adviser from time to time, and, in providing these
services, conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the Portfolio's assets; (f) cause its
officers to attend meetings of the Fund's Board of Directors and furnish oral or
written reports, as the Investment Adviser may reasonably require, in order to
keep the Investment Adviser 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 the
Sub-Adviser, and the investment considerations which have given rise to those
recommendations.
The Investment Adviser agrees on an on-going basis to provide or cause
to be provided to the Sub-Adviser guidelines, to be revised as provided below
(the "Guidelines"), setting forth limitations, by dollar amount or percentage of
net assets, on the types of securities in which the Portfolio is permitted to
invest or investment activities in which the Portfolio is permitted to engage.
Among other matters, the Guidelines shall set forth clearly the limitations
imposed upon the Portfolio as a result of relevant diversification requirements
under state and federal law pertaining to insurance products, including, without
limitation, the provisions of Section 817(h) of the Internal Revenue Code of
1986, as amended (the "Code"). The Guidelines shall remain in effect until 12:00
p.m. on the third business day following actual receipt by the Sub-Adviser of a
written notice, denominated clearly as such, setting forth revised Guidelines.
The Investment Adviser agrees to cause to be delivered to a person designated in
writing for such purpose by the Sub-Adviser each day, by 1:00 p.m., New York
time, a written report dated the date of its delivery (the "Report") with
respect to the Portfolio's compliance for its current fiscal year with the
short-three test set forth in Section 851(b)(3) of the Code (the "short-three
test"). The Report shall include in chart form the Portfolio's gross income
(within the meaning of Section 851 of the Code) from the beginning of the
current fiscal year to the date of the Report and its cumulative income and
gains described in Section 851(b)(3) of the Code for such period. If the Report
is not timely delivered, the Sub-Adviser shall be permitted to rely on the most
recent Report delivered to it. The Investment Adviser agrees that the
Sub-Adviser may rely on the Guidelines and the Report without independent
verification of their accuracy.
3. BROKERAGE.
In selecting brokers or dealers to execute transactions on behalf of
the Fund, the Sub-Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Sub-Adviser
will consider factors it deems relevant, including, without limitation, the
breadth of the market in the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. In selecting
brokers or dealers to execute a particular transaction, and in evaluating the
best overall terms available, the Sub-Adviser is authorized to consider the
brokerage and research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided to the Portfolio and/or
other accounts over which the Sub-Adviser or its affiliates exercise investment
discretion.
4. STANDARD OF CARE.
The Sub-Adviser shall exercise its best judgment in rendering the
services described in paragraph 2 and 3 above. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with matters to which this Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement (each such act or omission shall be
referred to as "Disqualifying Conduct"). The Sub-Adviser shall not be deemed to
have engaged in Disqualifying Conduct if it complies with the Guidelines and
acts in reliance on the Report, and the Sub-Adviser's failure to act in
accordance therewith shall not constitute evidence that it engaged in
Disqualifying Conduct.
5. COMPENSATION.
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In consideration of the services rendered pursuant to this Agreement,
the Investment Adviser will pay the Sub-Adviser on the first business day of
each month a fee for the previous month at the annual rate of 0.15% of the
Portfolio's average daily net assets. The fee for the period from the date of
its initial public sale of the Portfolio's shares to the end of the month during
which such sale shall have been commenced shall be prorated according to the
proportion that such period bears to the full monthly period. Upon termination
of this Agreement before the end of a month, the fee for such part of that month
shall be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purposes of determining fees payable to the Sub-Adviser, the
value of the Portfolio's net assets shall be computed at the times and in the
manner specified in the Prospectus and/or the Statement.
6. EXPENSES.
The Sub-Adviser will bear all of its expenses in connection with the
performance of its services under this Agreement. All other expenses to be
incurred in the operation of the Portfolio will be borne by the Fund or the
Investment Adviser, as appropriate, except to the extent specifically assumed by
the Sub-Adviser. The expenses to be borne by the Fund or the Investment Adviser,
as appropriate, include, without limitation, the following: organizational
costs, taxes, interest, brokerage fees and commissions, Directors' fees,
Securities and Exchange Commission filing fees, if any, advisory fees, charges
of custodians, transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal expenses, costs
of independent pricing services, costs of maintaining existence, costs
attributable to investor services (including, without limitation, telephone and
personnel expenses), costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing stockholders, costs of stockholders' reports and meetings, and
extraordinary expenses.
7. SERVICES TO OTHER COMPANIES OR ACCOUNTS.
The Investment Adviser understands that the Sub-Adviser now acts, will
continue to act and may act in the future as investment adviser to fiduciary and
other managed accounts and as investment adviser to other investment companies,
and the Investment Adviser has no objection to the Sub-Adviser so acting,
provided that, whenever the Portfolio and one or more other accounts or
investment companies advised by the Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a methodology believed to be equitable to each entity. The
Sub-Adviser agrees to allocate similarly opportunities to sell securities. The
Investment Adviser recognizes that, in some cases, this procedure may limit the
size of the position that may be acquired or sold for the Portfolio. The
Investment Adviser understands that the persons employed by the Sub-Adviser to
assist in the performance of the Sub-Adviser's duties hereunder will not devote
their full time to such service and nothing contained herein shall be deemed to
limit or restrict the right of the Sub-Adviser or any affiliate of the
Sub-Adviser to engage in and devote time and attention to other business or to
render services of whatever kind or nature.
8. BOOKS AND RECORDS.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the
Portfolio are the property of the Fund and further agrees to surrender promptly
to the Fund copies of any of such records upon the Fund's or the Investment
Adviser's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records relating to its
activities hereunder required to be maintained by Rule 31a-1 under the 1940 Act
and to preserve the records relating to its activities hereunder required by
Rule 204-2 under the Advisers Act, for the period specified in said Rule.
9. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those Directors of the Fund who are
not parties to this Agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in
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<PAGE>
person at a meeting called for the purposes of voting on such approval, and (ii)
by vote of a majority of the Portfolio's outstanding voting securities. Unless
sooner terminated as provided herein, this Agreement shall continue in effect
for two years from its effective date. Thereafter, this Agreement shall continue
in effect from year to year, provided such continuance is specifically approved
at least annually by (i) the Fund's Board or (ii) a vote of a "majority" (as
defined in the 1940 Act) of the Portfolio's outstanding voting securities,
provided that in either event the continuance is approved by a majority of the
Fund's Board who are not interested persons of any party to this Agreement by
vote cast in person at a meeting called for the purpose of voting such approval.
This Agreement is terminable, without penalty, on 60 days' written notice, by
the Investment Adviser, by the Fund's Board, by vote of holders of a majority of
the Portfolio's shares or by the Sub-Adviser, and will terminate five business
days after the Sub-Adviser receives written notice of the termination of the
advisory agreement between the Fund and the Investment Adviser. This Agreement
also will terminate automatically in the event of its assignment (as defined in
the 1940 Act).
10. INDEMNIFICATION.
The Investment Adviser agrees to indemnify and hold harmless the
Sub-Adviser and each person who controls or is associated with the Sub-Adviser
within the meaning of such terms under the federal securities laws and any
officer, trustee, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection
therewith) under any statute or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities:
(1) arise out of or are based upon (i) any untrue statement
or alleged untrue statement of any material fact contained
in the variable annuity contracts and variable life
insurance policies (both contracts and policies,
collectively referred to as "Contracts") for which the
Portfolio serves as an underlying investment option, (ii)
any untrue statement or alleged untrue statement of any
material fact contained in the Prospectuses or Statements
for the Contracts, (iii) any sales literature for the
Contracts, (or any amendment or supplement to any of the
foregoing), or (iv) the statement or omission to state or
the alleged statement or alleged omission to state in the
Prospectuses or Statements for the Contracts a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made; provided, that this
provision shall not apply if such statement or omission or
such alleged statement or alleged omission was made in
reliance upon and in conformity with information furnished
to the Investment Adviser by the Sub-Adviser for use in the
Contracts, or the Prospectuses or the Statements for the
Contracts, or sales literature (or any amendment or
supplement), or otherwise for use in connection with the
sales of the Contracts or Portfolio shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Sub-Adviser (other
than statements or representations contained in the
Contracts, the Prospectuses or Statements, or sales
literature for the Contracts not supplied by the Sub-Adviser
or persons under its control) or wrongful conduct of the
Investment Adviser or persons under its control with respect
to the sales or distribution of the Contracts or Portfolio
shares; or
(3) arise out of or are based upon (i) any untrue statement
or alleged untrue statement of any material fact contained
in the Prospectus or Statement for the Portfolio (or any
amendment thereof or supplement thereto), (ii) any sales
literature for the Portfolio or (iii) the omission or
alleged omission to state in the Prospectus or Statement for
the Portfolio a material fact required to be stated therein
or necessary to make the statements therein not misleading
in light of the circumstances in which they were made;
provided, that this provision shall not apply if such
statement or omission or such alleged statement or alleged
omission was made in reliance upon and in conformity with
information furnished to the
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<PAGE>
Investment Adviser by the Sub-Adviser for use with the
Prospectus, Statement or sales literature for the Portfolio
and the Contracts; or
(4) arise out of any third-party claims or proceedings
relating to the performance by or obligations of the
Sub-Adviser in the performance of its duties hereunder,
except to the extent any such claims arise out of any
material breach by the Sub-Adviser of this Agreement.
This indemnification will be in addition to any liability which the Investment
Adviser may otherwise have, but does not supersede the standard of care owed by
the Sub-Adviser to the Investment Adviser as described in Section 4 above.
11. DISCLOSURE.
The Investment Adviser represents and warrants that neither the Fund
nor the Investment Adviser shall, without the prior written consent of the
Sub-Adviser, make representations regarding or reference to the Sub-Adviser or
any affiliates in any disclosure document, advertisement, sales literature or
other promotional materials.
12. MISCELLANEOUS.
All notices provided for by this Agreement shall be in writing and
shall be deemed given when received, against appropriate receipt, by Diane
Minardi at 522 Fifth Avenue, New York NY 10036 in the case of the Sub-Adviser,
General Counsel at P.O. Box 5068, Clearwater, FL 34618 in the case of the
Investment Adviser, or such other person as a party shall designate by notice to
the other parties. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. This Agreement constitutes the entire agreement among the
parties hereto and supersedes any prior agreement among the parties relating to
the subject matter hereof. The paragraph headings of this Agreement are for
convenience of reference and do not constitute a part hereof. This Agreement
shall be governed in accordance with the internal laws of the State of New York,
without giving effect to principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
Attest: WRL INVESTMENT MANAGEMENT, INC.
By:
--------------------------------------
- ------------------------------- Name: Kenneth P. Beil
Assistant Secretary Title: President and Treasurer
Attest: J. P. MORGAN INVESTMENT MANAGEMENT INC.
By
- ------------------------------- -------------------------------------
Name: Diane Minardi
Title: Vice President
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<PAGE>
EXHIBIT E
WRL SERIES FUND, INC.
PROPOSED
PLAN OF DISTRIBUTION PURSUANT TO
RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
WHEREAS, WRL Series Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act") as an open-end
management investment company; and
WHEREAS, the Fund currently offers its shares of the Portfolios of the
Fund (the `Portfolios") for sale to separate accounts established by insurance
companies to fund the benefits under certain individual variable life insurance
policies and individual and group variable annuity contracts (collectively, the
"Separate Accounts"), and may distribute its shares to other offerees in the
future. The Separate Accounts may or may not be registered with the Securities
and Exchange Commission; and
WHEREAS, the Fund desires to adopt a Plan of Distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act applicable to the shares of the
Portfolios during the continuous offering of such shares; and
WHEREAS, the Fund's board of directors (the "Board") has, pursuant to
and in accordance with Rule 12b-1, exercised reasonable business judgment and
observed its fiduciary duties under state law and under Section 36(a) and (b) of
the 1940 Act in determining that there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders;
NOW THEREFORE, the Fund hereby adopts this Plan in accordance with Rule
12b-1 under the 1940 Act with respect to the shares of the Portfolios.
1. For the period commencing with the date on which this Plan shall
first become effective and ending on December 31 of that year and for each
twelve month period (or portion thereof) thereafter in which this Plan shall
continue in effect, the Fund on behalf of the Portfolios, as listed on Schedule
A of this Agreement, is authorized to pay to various service providers, as
direct payment for expenses incurred in connection with the distribution of a
Portfolio's shares, amounts equal to actual expenses associated with
distributing such Portfolio's shares, up to a maximum rate of 0.15% on an
annualized basis of the average daily net assets. Such fee shall be measured and
accrued daily and paid monthly.
2. Expenses permitted to be paid pursuant to this Plan shall include,
but not necessarily be limited to, the following:
(a) the cost for printing and mailing of Fund prospectuses and
statements of additional information, and any supplements thereto
to potential investors;
(b) the costs relating to the development and preparation of Fund
advertisements, sales literature, and brokers' and other
promotional materials describing and/or relating to the Fund;
(c) expenses incurred in connection with the presentation of seminars
and sales meetings describing the Fund attended by sales personnel
and potential investors;
(d) the development of consumer-oriented sales materials describing
and/or relating to the Fund; and
(e) expenses attributable to "distribution-related services" provided
to the Fund. "Distribution-related services" includes, but are not
limited to: salaries and benefits; office expenses; equipment
expenses (I.E., computers, software, office equipment, etc.);
training costs; travel
1
<PAGE>
costs; printing costs; supply expenses; computer programming time;
and data center expenses, each as they relate to the promotion of
the sale of Fund shares.
3. This Plan shall not take effect with respect to shares of a Portfolio
until it has been approved by a vote of at least a majority of the outstanding
voting securities (as defined in the 1940 Act) of such Portfolio.
4. This Plan, together with any related agreements, shall not take
effect until they have been approved, by a vote of the majority of the Fund's
Board, including a majority of those members of the Board who are not
"interested persons" of the Fund (as defined in the 1940 Act), and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreements related to the Plan (the "Independent Directors"), cast in person at
a meeting called for the purpose of voting on this Plan and such agreements.
5. This Plan shall continue in effect for as long as such continuance is
specifically approved at least annually by the Board and Independent Directors
in the manner provided in paragraph 4.
6. Any person authorized to direct the disposition of monies paid or
payable by the Fund pursuant to this Plan or any related agreement shall provide
to the Fund's Board, and the Board shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such expenditures
were made, and shall furnish the Board with such other information as the Board
may reasonably request in connection with such payments in order to enable the
Board to make an informed determination as to whether the Plan should be
continued.
7. This Plan may be terminated at any time with respect to a Portfolio
by vote of a majority of the Independent Directors, or by vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of such
Portfolio.
8. Any agreement related to the Plan, including its implementation,
shall be in writing and shall provide:
(a) that such agreement, with respect to a Portfolio, may be
terminated at any time, without payment of any penalty, by vote of
a majority of the Independent Directors or by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act)
of such Portfolio, on not more than 60 days' written notice to the
other party/parties to such agreement; and
(b) that such agreement shall terminate automatically in the event
of its assignment.
9. This Plan may not be amended to increase materially the amount of
distribution expenses permitted to be paid by a Portfolio pursuant to paragraphs
1 and 2 without the approval of the shareholders of such Portfolio, and any
material amendment to the Plan must be approved by the Board and Independent
Directors in the manner provided in paragraph 4.
10. As long as the Plan is in effect, the selection and nomination of
those members of the Board who are not interested persons (as defined in the
1940 Act) of the Fund shall be committed to the discretion of such disinterested
directors then in office.
11. The Fund will preserve copies of this Plan, and any related
agreements and reports, for a period of not less than six years from the date of
those documents, the first two years in an easily accessible place.
12. Any provision of this Plan that is invalid, illegal, or unenforceable
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity, illegality, or unenforceability, without affecting in any
way the remaining provisions of this Plan in such jurisdiction, or without
rendering that or any other provisions of this Plan invalid, illegal, or
unenforceable in any other jurisdiction.
2
<PAGE>
IN WITNESS WHEREOF, the Fund has executed this Plan on the day and year
set forth below in Largo, Florida.
Dated as of: January 1, 1997
ATTEST: WRL SERIES FUND, INC.
____________________ By: ____________________
Priscilla I. Hechler John R. Kenney
Assistant Vice President Chairman of the Board and
and Assistant Secretary President
3
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Schedule A
PARTICIPATING PORTFOLIOS AS OF JANUARY 1, 1997
Growth
Bond
Global
Money Market
Short-to-Intermediate Government
Emerging Growth
Equity-Income
Balanced
Aggressive Growth
Utility
Tactical Asset Allocation
Value Equity
C.A.S.E. Growth
C.A.S.E. Growth & Income
C.A.S.E. Quality Growth
Meridian/INVESCO Global Sector
Meridian/INVESCO US Sector
Meridian/INVESCO Foreign Sector
International Equity
U.S. Equity Portfolio
<PAGE>
EXHIBIT F
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of January, 1997, between WRL Series Fund,
Inc., a Maryland corporation (the "Fund"), and InterSecurities, Inc., a Delaware
corporation (the "Distributor"), each with offices at 201 Highland Avenue,
Largo, Florida 33770.
WHEREAS, the Fund is a registered open-end management investment
company, which currently offers shares of its common stock in twenty series,
each as set forth on Schedule A hereto (the "Current Portfolios"), and the Fund
may offer shares of one or more additional Portfolios in the future;
WHEREAS, the Fund was originally organized to act as the funding
vehicle for certain individual variable life insurance policies and individual
and group variable annuity contracts offered by Western Reserve Life Assurance
Co. of Ohio ("Western Reserve") or life insurance companies affiliated with
Western Reserve through separate accounts of such life insurance companies; and
WHEREAS, in the future, the Fund may also offer its shares to life
insurance companies unaffiliated with Western Reserve (together with Western
Reserve and its affiliated life insurance companies, the "Life Companies") as a
funding vehicle for variable life insurance policies and variable annuity
contracts (together with the variable life insurance policies and variable
annuity contracts offered by Western Reserve and its affiliated life insurance
companies, the "Policies"), and/or to qualified pension and retirement plans
(the "Qualified Plans"); and
WHEREAS, from time to time, the Fund may enter into sales agreements
with Life Companies that have or will establish one or more separate accounts to
offer Policies, pursuant to which one or more Portfolios of the Fund serves as
the underlying funding vehicle for such Policies; and, under certain
circumstances, may enter into sales agreements with the Qualified Plans; and
WHEREAS, it is contemplated that, in addition to entering into sales
agreements with Life Companies and/or Qualified Plans, the Distributor shall
engage in certain promotional and sales efforts on behalf of the Fund, as
described in the Distribution Plan pursuant to Rule 12b-1 adopted by the Fund
concurrent with the effective date of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. (a) The Fund proposes to issue and sell shares of common stock of
the Fund (the "Shares") to separate accounts of Life Companies and to the
Qualified Plans as may be permitted by applicable law and subject to the Fund's
obtaining any necessary regulatory approvals. The Fund hereby appoints the
Distributor as agent to sell the Shares and the Distributor hereby accepts such
appointment. The Shares will be distributed under such terms as are set by the
Fund and will be sold to the separate accounts and the Qualified Plans permitted
to buy the Shares as specified by the Fund's Board of Directors.
(b) In the event that the Fund from time to time designates one or
more Portfolios in addition to the Current Portfolios ("Additional Portfolios"),
it shall notify the Distributor. If the Distributor is willing to perform
services hereunder to the Additional Portfolios, it shall so notify the Fund.
Thereafter, the Fund and the Distributor shall mutually agree to amend Schedule
A to this Agreement in writing to add the Additional Portfolios and the
Additional Portfolios shall be subject to this Agreement, subject to the
approval of the Board of Directors as set forth in Section 7.(a) below.
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<PAGE>
2. (a) The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value thereof as described in the
Fund's prospectus, and (ii) the Fund shall receive 100% of such net asset value.
(b) The Shares will be sold in accordance with any sales agreements
between the Fund and Life Companies and, where applicable, the Fund and
Qualified Plans. The Current Portfolios and all Additional Portfolios subject to
this Agreement are referred to collectively as "Portfolios."
3. (a) All sales literature and advertisements used by the Distributor
in connection with sales of Shares shall be subject to approval by the Fund. The
Fund authorizes the Distributor, in connection with the sales or arranging for
the sale of Shares, to provide only such information and to make only such
statements or representations as are contained in the Fund's then-current
Prospectus or in sales literature or advertisements approved by the Fund or in
such financial and other statements which are furnished to the Distributor
pursuant to the next paragraph. The Fund shall not be responsible in any way for
any information provided or statements or representations made by the
Distributor or its representatives or agents other than the information,
statements and representations described in the preceding sentence. The
Distributor shall review all materials submitted to it by Life Companies and
Qualified Plans that describe the Fund, the Shares or the Fund's investment
adviser. The Distributor shall not be responsible for any information provided
or statements or representations made by Life Companies or Qualified Plans,
representatives or agents of Life Companies or Qualified Plans, or any other
persons or entities other than the Distributor's representatives or agents.
(b) The Fund shall keep the Distributor fully informed with regard
to its affairs, shall furnish the Distributor with a certified copy of all
financial statements and a signed copy of each report prepared by its
independent certified public accountants, and shall cooperate fully in the
efforts of the Distributor to sell the Shares and in the performance by the
Distributor of all its duties under this Agreement.
4. (a) The Fund will pay or cause to be paid:
(i) registration fees for registering its shares under the
Securities Act of 1933 (the "1933 Act");
(ii) the expenses, including counsel fees, of preparing
registration statements and such other documents as the Fund
believes are necessary for registering the Shares with the
Securities and Exchange Commission (the "SEC") and such states
as are deemed necessary or appropriate;
(iii) expenses incident to preparing amendments to
registration statements of the Fund under the 1933 Act and the
Investment Company Act of 1940, as amended (the "1940 Act");
(iv) expenses for preparing and setting in type all
prospectuses and the expense of supplying them to the then
existing shareholders or beneficial owners of Shares
(including owners of Policies whose contracts use one or more
Portfolios as their funding vehicle);
(v) expenses incident to the issuance of its Shares such as
the cost of stock certificates, if any, taxes and fees of the
transfer agent for establishing shareholder record accounts
and confirmations; and
-2-
<PAGE>
(vi) expenses for administrative and transfer agency services,
pursuant to and in accordance with the Administrative Services
and Transfer Agency Agreement between the Fund and WRL
Investment Services, Inc. dated January 1, 1997, as it may be
amended from time to time in accordance with its terms.
(b) The Distributor shall pay all of its own costs and expenses
connected with the offer and sale of Shares ("Distribution Expenses"), except
that certain Distribution Expenses may be reimbursed to the Distributor as
provided in Section 5 hereof.
5. (a) Pursuant to a Distribution Plan (the "Plan") adopted by the
Board of Directors of the Fund in accordance with Section 12(b) of the 1940 Act,
Rule 12b-1 and the other rules and regulations promulgated thereunder, as the
same may be, from time to time, issued or amended, the Fund, on behalf of a
Portfolio that has approved the Plan pursuant to Section 3 thereof, may
reimburse the Distributor, as direct payment for expenses incurred in connection
with the distribution of a Portfolio's shares, amounts equal to actual expenses
associated with distributing such Portfolio's shares, up to a maximum rate of
0.15%, on an annualized basis of a Portfolio's average daily net assets.
Reimbursements shall be measured and accrued daily, and remitted to the
Distributor monthly. Such reimbursement may be made only for the period
commencing on the date hereof and ending December 31, 1997, and for each twelve
month period (or portion thereof) thereafter, in which the Plan is in effect for
that Portfolio.
(b) Distribution Expenses reimbursable hereunder shall include,
but not necessarily be limited to, the following:
(i) the cost for printing and mailing of Fund prospectuses and
statements of additional information, and any supplements
thereto, to potential investors;
(ii) the costs relating to the development and preparation of
Fund advertisements and sales literature and brokers' and
other promotional materials describing and/or relating to the
Fund;
(iii) expenses incurred in connection with the presentation of
seminars and sales meetings describing the Fund attended by
sales personnel and potential investors;
(iv) the development of consumer-oriented sales materials
describing and/or relating to the Fund; and
(v) expenses attributable to "distribution-related" services
provided to the Fund. "Distribution-related services" include,
but are not limited to: salaries and benefits; office
expenses; equipment expenses (I.E., computers, software,
office equipment, etc.); training costs; travel costs;
printing costs; supply expenses; computer programming time;
and data center expenses, each as they relate to the promotion
of the sale of Fund shares.
(c) The Distributor shall submit annual reimbursable Distribution
Expense budgets to the Board of Directors of the Fund. As soon as practicable
after the end of each calendar quarter, the Distributor shall submit to the
Board of Directors reports requesting ratification of reimbursement of
Distribution Expenses as to each Portfolio for that quarter. The Distributor
will allocate to each Portfolio reimbursable Distribution Expenses not
specifically attributable to the distribution of shares of a particular
Portfolio, based upon the ratio of the net asset value of each Portfolio at the
end of each calendar month to the net asset value of all Portfolios on that same
date. The Board of Directors will consider each request at its next regular
meeting after such request is submitted, and the Distributor shall only retain
reimbursements by the Fund on behalf of a Portfolio for those reimbursable
Distribution Expenses that are approved by the Board of Directors, including a
majority of the "Disinterested Directors" (as that term is defined in Section 7
hereof).
-3-
<PAGE>
6. (a) The Fund shall maintain a currently effective Registration
Statement on Form N-1A and shall file with the SEC such reports and other
documents as may be required under the 1933 Act and the 1940 Act or by the rule
and regulations of the SEC thereunder.
(b) The Fund represents and warrants that its Registration
Statement, post-effective amendments, Prospectus and Statement of Additional
Information (excluding statements based upon written information furnished by
the Distributor expressly for inclusion therein) shall not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that all statements or information furnished to the Distributor, pursuant to
Section 3(b) hereof, shall be true and correct in all material respects.
7. (a) This Agreement shall take effect on the date hereof after it has
been approved by a vote of the majority of Directors of the Fund and those
Directors of the Fund who are not "interested persons" of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or this
Agreement (the "Disinterested Directors"), cast in person at a meeting called
for the purpose of voting on this Agreement. This Agreement shall remain in full
force and effect until December 31, 1997, and may be continued for twelve month
periods (or portions thereof) thereafter; provided that such continuance shall
be specifically approved annually by the Board of Directors of the Fund or by a
majority of the outstanding voting securities of each Portfolio of the Fund as
it applies to that Portfolio, and in either case, also by a majority of the
Disinterested Directors. This Agreement may be amended, with respect to any
Portfolio, with the approval of the Board of Directors or of a majority of the
outstanding voting securities of each Portfolio of the Fund as it applies to
that Portfolio, provided, that in either case, such amendment shall also be
approved by a majority of the Disinterested Directors.
(b) This Agreement, with respect to any Portfolio, may be
terminated, at any time without payment of any penalty, by vote of a majority of
the Disinterested Directors or by vote of a majority of the outstanding voting
securities of that Portfolio, or may be terminated by the Distributor, in either
case on not more than 60 days' written notice delivered personally or mailed by
registered mail, postage prepaid, to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) The terms "interested persons," "assignment" and "vote of a
majority of the outstanding voting securities" as used herein shall have the
meanings given to them in the 1940 Act.
8. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties ("disabling conduct") hereunder
on the part of the Distributor (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity affiliated with
the Distributor or retained by it to perform or assist in the performance of its
obligations under this Agreement) the Distributor shall not be subject to
liability to the Fund or to any shareholder of the Fund for any act or omission
in the course of, or connected with, rendering services hereunder, of law or for
any loss suffered by any of them in connection with the matters to which this
Agreement relates.
9. This Agreement is made by the Fund, on behalf of each Portfolio,
pursuant to authority granted by the Board of Directors, and the obligations
created hereby are not binding on any of the Directors or shareholders of the
Fund individually, but bind only the property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed by their duly authorized officers and under their respective
seals on the day and year first above written.
-4-
<PAGE>
WRL SERIES FUND, INC
Attest:
_________________________ By ___________________________
Secretary John R. Kenney
Chairman of the Board and President
Attest: INTERSECURITIES, INC.
__________________________ By ____________________________
Secretary G. John Hurley
President
-5-
<PAGE>
SCHEDULE A
As of January 1, 1997, the Distributor shall act as distributor for shares of
the following Portfolios of WRL Series Fund, Inc.:
GROWTH PORTFOLIO
BOND PORTFOLIO
GLOBAL PORTFOLIO
MONEY MARKET PORTFOLIO
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
BALANCED PORTFOLIO
EMERGING GROWTH PORTFOLIO
EQUITY-INCOME PORTFOLIO
AGGRESSIVE GROWTH PORTFOLIO
UTILITY PORTFOLIO
TACTICAL ASSET ALLOCATION PORTFOLIO
C.A.S.E. GROWTH PORTFOLIO
C.A.S.E. GROWTH & INCOME PORTFOLIO
C.A.S.E. QUALITY GROWTH PORTFOLIO
VALUE EQUITY PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
MERIDIAN/INVESCO GLOBAL SECTOR PORTFOLIO
MERIDIAN/INVESCO US SECTOR PORTFOLIO
MERIDIAN/INVESCO FOREIGN SECTOR PORTFOLIO
U.S. EQUITY PORTFOLIO
<PAGE>
THE BOARD OF DIRECTORS OF THE FUND
RECOMMENDS A VOTE FOR ALL PROPOSALS
(1)To approve the Proposed Advisory Agreement on behalf of the Portfolio;
/circle/ For /circle/ Against /circle/ Abstain
(2) To approve the Proposed Sub-Advisory Agreement on behalf of the Portfolio;
/circle/ For /circle/ Against /circle/ Abstain
(3) To approve the Distribution Plan on behalf of the Portfolio;
/circle/ For /circle/ Against /circle/ Abstain
(4) To re-elect Peter R. Brown, Charles C. Harris, Russell A. Kimball, Jr.,
John R. Kenney, and G. John Hurley as directors of the Fund;
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
- ------------------------------------------------------
/circle/ For /circle/ Against /circle/ Abstain
AUTHORITY TO VOTE FOR ANY NOMINEE FOR DIRECTOR MAY BE WITHHELD BY LINING
THROUGH OR OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE IN THE QUESTION
ABOVE.
(5) To ratify the selection of Price Waterhouse LLP as independent auditors for
the Fund's current fiscal year; and
/circle/ For /circle/ Against /circle/ Abstain
(6) To transact such other business as may properly come before the meeting or
any adjournments thereof.
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
October 22, 1996.
THIS INSTRUCTION WILL BE VOTED AS SPECIFIED.
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.
PLEASE MARK INSIDE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES
/above arrow/ FOLD AND DETACH HERE /ABOVE ARROW/
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
DECEMBER 16, 1996
I hereby instruct PFL Life Insurance Company, Inc. ("PFL Life") to vote the
shares of the Growth 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 December
16, 1996, Eastern Time and any adjournments thereof at 201 Highland Avenue,
Largo, Florida 33770.
<PAGE>
THE BOARD OF DIRECTORS OF THE FUND
RECOMMENDS A VOTE FOR ALL PROPOSALS
(1)To approve the Proposed Advisory Agreement on behalf of the Portfolio;
/circle/ For /circle/ Against /circle/ Abstain
(2) To approve the Proposed Sub-Advisory Agreement on behalf of the Portfolio;
/circle/ For /circle/ Against /circle/ Abstain
(3) To approve the Distribution Plan on behalf of the Portfolio;
/circle/ For /circle/ Against /circle/ Abstain
(4) To re-elect Peter R. Brown, Charles C. Harris, Russell A. Kimball, Jr.,
John R. Kenney, and G. John Hurley as directors of the Fund;
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
--------------------------------------------------
/circle/ For /circle/ Against /circle/ Abstain
AUTHORITY TO VOTE FOR ANY NOMINEE FOR DIRECTOR MAY BE WITHHELD BY LINING
THROUGH OR OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE IN THE QUESTION
ABOVE.
(5) To ratify the selection of Price Waterhouse LLP as independent auditors for
the Fund's current fiscal year; and
/circle/ For /circle/ Against /circle/ Abstain
(6) To transact such other business as may properly come before the meeting or
any adjournments thereof.
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
October 22, 1996.
THIS INSTRUCTION WILL BE VOTED AS SPECIFIED.
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.
PLEASE MARK INSIDE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES
/above arrow/ FOLD AND DETACH HERE /ABOVE ARROW/
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
DECEMBER 16, 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 December 16, 1996, Eastern Time and any adjournments thereof at
201 Highland Avenue, Largo, Florida 33770.
