SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WRL SERIES FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Persons(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14-a6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X} Fee paid previously with preliminary materials.
[ ] 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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(3) Filing Party:
(4) Date Filed:
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WRL SERIES FUND, INC.
MONEY MARKET PORTFOLIO
201 Highland Avenue
Largo, Florida 34640
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 21, 1996
TO THE SHAREHOLDERS:
A special meeting of the shareholders of the Money Market Portfolio
("Portfolio") of the WRL Series Fund, Inc. (the "Fund"), will be held on
Wednesday, February 21, 1996, at 10:00 a.m., at 201 Highland Avenue, Largo,
Florida 34640, or any adjournment thereof, for the following purposes:
(1) To approve a new Sub-Advisory Agreement between Western Reserve Life
Assurance Co. of Ohio ("Western Reserve") and J.P. Morgan Investment Management
Inc. ("J.P. Morgan Investment") with respect to the Portfolio;
(2) To amend the Portfolio's fundamental investment restriction regarding
investment of the Portfolio's assets in any particular industry;
(3) To amend and combine the Portfolio's fundamental investment restriction
regarding commodities, and options and other derivative instruments and the
Portfolio's fundamental investment restriction regarding investments of the
Portfolio's assets in real estate or interest in real estate; and
(4) To transact such other business as may properly come before the meeting
or any adjournment thereof.
You are entitled to vote at the meeting and any adjournments thereof if you
owned Portfolio shares at the close of business on December 22, 1995. If you
attend the meeting, you may vote your shares in person. If you do not expect to
attend the meeting, please complete, date, sign and return the enclosed proxy in
the enclosed postage paid envelope.
By Order of the Board of Directors,
Thomas E. Pierpan
Vice President and Assistant Secretary
January 5, 1996
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WRL SERIES FUND, INC.
MONEY MARKET PORTFOLIO
201 Highland Avenue
Largo, Florida 34640
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
FEBRUARY 21, 1996
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This document is a proxy statement for the Money Market Portfolio
("Portfolio") of the WRL Series Fund, Inc. (the "Fund"), a series mutual fund
consisting of several series or separate investment portfolios. This proxy
statement is furnished in connection with the solicitation of proxies by the
Board of Directors of the Fund, on behalf of the Portfolio, to be used at the
Fund's Special Meeting of Shareholders of the Portfolio ("Meeting"). The Meeting
will be held on Wednesday, February 21, 1996, at 10:00 a.m. Eastern Time, at 201
Highland Avenue, Largo, Florida 34640, for the purposes set forth in the Notice
of the Meeting.
The proxies named in the shareholder proxy card will vote in accordance
with the directions as indicated thereon by Western Reserve if your voting
instruction form is received properly executed. If you properly execute your
voting instruction form and give no voting instruction, your shares will be
voted FOR all the proposals set forth herein. Abstentions will be counted as
present for purposes of determining a quorum, but will not be counted as voting
with respect to those proposals from which Policyowners 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.
A majority of the shares of stock outstanding on December 22, 1995,
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 proposals 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, will be
paid by the Portfolio. The principal solicitation of proxies will be by the
mailing of this proxy statement on or about January 5, 1996, but proxies may
also be solicited by telephone and/or in person by representatives of the Fund
and regular employees of Western Reserve or its affiliate(s). 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, December 22, 1995, the Fund had outstanding 81,334,612 shares of
the Money Market Portfolio (representing a cash value of $81,334,612), all of
which are owned of record by the WRL Series Life Account or the WRL Series
Annuity Account of Western Reserve, by Western Reserve directly, or by Pooled
Account No. 27 of AUSA Life Insurance Company, Inc., ("AUSA"), an affiliate of
Western Reserve. These Accounts and Western Reserve shall vote the shares at the
Meeting in accordance with the instructions received from the holders of
individual life insurance policies and individual and group variable annuity
contracts (collectively, "Policies" owned by the "Policyowners") whose benefits
thereunder are funded through those Accounts. (Holders of qualified group
variable contracts may seek voting instructions from individual qualified plan
participants if required under the terms of the qualified plan pursuant to which
such group variable contract is held.)
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POLICYOWNERS' RIGHT TO INSTRUCT WESTERN RESERVE
The Fund has agreed to solicit instructions from the Policyowners, upon
which instructions Western Reserve and AUSA will vote the shares of the
Portfolio at the Meeting on February 21, 1996, and any adjournment thereof. The
Fund will mail to each Policyowner of record as of December 22, 1995, a copy of
this proxy statement. The number of Fund shares in the Portfolio for which a
Policyowner may give instructions is determined as follows: for each Policy the
number of votes in the Portfolio will be determined by dividing the amount of
the Policy's cash value (the contract value, in the case of a variable annuity
contract), attributable to the Portfolio by $100. Fractional shares will be
counted. Based upon the cash value attributable to the Portfolio as of December
22, 1995, Policyowners are entitled to an aggregate of 813,346 votes with
respect to the Portfolio.
All shares for which Western Reserve and AUSA receive properly executed
instructions, which are not subsequently revoked prior to the Meeting, will be
voted at the Meeting in accordance with such instructions. Western Reserve and
AUSA will vote the shares of the Portfolio as to which no timely instructions
are received, and any shares owned exclusively by Western Reserve, in proportion
to the voting instructions which are received with respect to all Policies
participating in the Fund. Voting instructions to abstain on the item to be
voted upon will be applied on a pro rata basis to reduce the votes eligible to
be cast.
To the knowledge of the Fund, no person has the right to instruct Western
Reserve or AUSA with respect to 5% or more of the shares of the Portfolio.
However, the proportionate voting policy will result in certain Policyowners'
instructions affecting the vote of 5% or more of total outstanding shares. These
particular Policyowners and the percentage of votes which their instruction may
affect will depend upon which Policyowners provide instructions and which
Policyowners do not.
PROPOSAL 1
APPROVAL OF NEW SUB-ADVISORY AGREEMENT WITH J.P. MORGAN INVESTMENT
MANAGEMENT INC. FOR THE MONEY MARKET PORTFOLIO
The Policyowners of the Portfolio will be asked at the Meeting to approve a
new Sub-Advisory Agreement (for purposes of this Proposal, "New Sub-Advisory
Agreement") between Western Reserve and J.P. Morgan Investment with respect to
the Portfolio. The New Sub-Advisory Agreement was approved by the Board of
Directors, including a majority of the Directors who are not parties to the
Current Investment Advisory Agreement, New Sub-Advisory Agreement or the Present
Sub-Advisory Agreement or interested persons of such parties ("independent
directors"), at a meeting held on December 4, 1995. Western Reserve, as
Investment Adviser to the Portfolio, had recommended to the Board of Directors
that the Fund retain J.P. Morgan Investment to serve as the new Sub-Adviser for
the Portfolio. The New Sub-Advisory Agreement is attached as Exhibit A.
Janus Capital Corporation ("Janus Capital"), located at 100 Fillmore
Street, Denver, Colorado 80206, currently serves as Sub-Adviser for the
Portfolio and has done so since the commencement of the Portfolio's operations
in October, 1986, pursuant to a Sub-Advisory Agreement (for purposes of this
Proposal, "Present Sub-Advisory Agreement") between Western Reserve and Janus
Capital with respect to the Portfolio. It is currently anticipated that, in
light of the Board's recommendation, Janus Capital will resign its position as
Sub-Adviser of the Portfolio, effective not later than April 30, 1996.
The New Sub-Advisory Agreement as approved by the Board of Directors is now
being submitted for approval by the Policyowners of the Portfolio. If it is
approved by a Majority Vote of the outstanding units of the Portfolio, it will
continue in effect for an initial term ending April 22, 1998, and will continue
from year to year thereafter, subject to approval annually by the Board of
Directors or by a Majority Vote of the outstanding shares of the Portfolio, and
also, in either event, approval by a majority of the independent directors who
are not parties to the New Sub-Advisory Agreement or interested persons of any
such party at a meeting called for the purpose of voting on such approval.
"Majority Vote" for purposes of this proxy statement, and under the Investment
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Company Act of 1940, as amended (the "1940 Act"), means the lesser of (i) 67% of
the shares represented at a meeting at which more than 50% of the outstanding
shares of the Portfolio are represented or (ii) more than 50% of the outstanding
shares of the Portfolio. If the Policyowners of the Portfolio should fail to
approve the New Sub-Advisory Agreement, the Board of Directors shall consider
appropriate action with respect to such non-approval of the New Sub-Advisory
Agreement, including, but not limited to, retention of Janus Capital as
Sub-Adviser to the Portfolio.
CURRENT INVESTMENT ADVISORY AGREEMENT
Western Reserve, a life insurance company located at 201 Highland Avenue,
Largo, Florida 34640, serves as the Portfolio's Investment Adviser. The
Investment Adviser is a wholly-owned subsidiary of First AUSA Life Insurance
Company, 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.
Pursuant to the existing Investment Advisory Agreement between Western
Reserve and the Fund, dated February 26, 1991 ("Current Investment Advisory
Agreement"), and subject to the supervision and direction of the Fund's Board of
Directors, the Investment Adviser is responsible for managing the Portfolio in
accordance with the Portfolio's stated investment objective and policies and
performing additional management and administrative services. As compensation
for its services to the Portfolio, the Investment Adviser presently receives
monthly compensation at the annual rate of 0.50% of the average daily net assets
of the Portfolio. At its meeting on December 4, 1995, the Board of Directors
approved a resolution which, contingent upon the approval of this Proposal at
the Meeting, will, effective May 1, 1996, reduce the annual compensation paid to
the Investment Adviser pursuant to the Current Investment Advisory Agreement
from 0.50% to 0.40%.
The Investment Adviser is responsible for providing investment advisory
services and, in addition to expenses that Western Reserve may incur in
performing its services under the Current Investment Advisory Agreement, pays
the compensation, fees, and related expenses of all Directors of the Fund who
are affiliated persons of Western Reserve or any of its subsidiaries. The
Portfolio pays all other expenses incurred in its operation, including general
administrative expenses. Accounting services are provided for the Portfolio by
the Investment Adviser. Pursuant to an expense limitation voluntarily adopted by
Western Reserve, Western Reserve has undertaken, until at least April 30, 1996,
to pay expenses on behalf of the Portfolio to the extent normal operating
expenses (including investment advisory fees, but excluding interest, taxes,
brokerage fees, commissions and extraordinary charges) exceed 0.70% of the
Portfolio's average daily net assets.
Other than the reduction in annual compensation to the Investment Adviser
noted above, approval of the New Sub-Advisory Agreement by Policyowners will
have no effect on the Current Investment Advisory Agreement between Western
Reserve, which is not affiliated with Janus Capital or J.P. Morgan Investment,
and the Fund. Western Reserve will continue to serve as Investment Adviser to
the Portfolio pursuant to the Current Investment Advisory Agreement between the
Fund and Western Reserve.
PRESENT SUB-ADVISORY AGREEMENT
Pursuant to the Present Sub-Advisory Agreement for the Portfolio, which is
dated February 26, 1991, the Fund's Investment Adviser, Western Reserve,
contracts with Janus Capital for sub-advisory services. The Present Sub-Advisory
Agreement for the Portfolio was initially approved by the Fund's Directors at a
special meeting held for such purpose on December 30, 1990, and was most
recently approved at a meeting held for such purpose by the Board of Directors,
including a majority of the independent directors, on March 6, 1995. The Present
Sub-Advisory Agreement for the Portfolio was approved by Policyowners at a
special shareholders meeting held for such purpose on January 22, 1991.
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Pursuant to the Present Sub-Advisory Agreement, Janus Capital provides
investment advisory assistance and portfolio management advice to the Investment
Adviser for the Portfolio. Subject to review and supervision by the Investment
Adviser and the Board of Directors of the Fund, Janus Capital is responsible for
the actual management of the Portfolio and for making decisions to buy, sell or
hold any particular security, and places orders to buy or sell securities on
behalf of the Portfolio. Janus Capital bears 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.
Thomas H. Bailey is the President of Janus Capital. Kansas City Southern
Industries, Inc., located at 114 West 11th Street, Kansas City, Missouri 64105,
owns 83% of Janus Capital.
For its services as Sub-Adviser, Janus Capital is paid compensation from
the Investment Adviser at the annual rate of 0.25% of the Portfolio's average
daily net assets. For the fiscal year ended December 31, 1994, Janus Capital
received sub-advisory fees in the amount of $175,899. For the fiscal year ended
December 31, 1995, Janus Capital received approximately $212,000 in sub-advisory
fees.
Janus Capital is also responsible for selecting the broker-dealers who
execute the portfolio transactions for the Portfolio. Janus Capital may
occasionally place portfolio business with the affiliated brokers of the
Investment Adviser or Janus Capital. In placing portfolio business with all
dealers, Janus Capital seeks best execution of each transaction and all
brokerage placement must be consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. Janus Capital is authorized to
pay higher commissions to brokerage firms that provide it with investment and
research information than to firms which do not provide such services, if Janus
Capital determines that such commissions are reasonable in relation to the
overall services provided and Janus Capital receives best execution. The
information received may be used by Janus Capital in managing the assets of
other advisory and sub-advisory accounts, as well as in the management of the
assets of the Portfolio.
Under its terms, the Present Sub-Advisory Agreement for the Portfolio will
continue in effect until April 22, 1996, 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 independent directors of the Fund, cast in person at a
meeting called for the purpose of voting on the approval of the terms of such
renewal, and by either the Directors of the Fund or the affirmative vote of a
majority of the outstanding voting securities of the Portfolio (as that phrase
is defined in the 1940 Act). The Present Sub-Advisory Agreement may be
terminated with respect to the Portfolio at any time, without penalty, by the
Directors of the Fund or by shareholders of the Portfolio acting by vote of a
least a majority of its outstanding voting securities (as that phrase is defined
in the 1940 Act), on 60 days' written notice to Janus Capital, or by Western
Reserve if it gives 60 days' written notice to Janus Capital. The Present
Sub-Advisory Agreement may be amended with respect to the Portfolio only with
the approval by the affirmative vote of a majority of the outstanding voting
securities of the Portfolio (as that phrase is defined in the 1940 Act) and the
approval by the vote of a majority of the independent directors of the Fund,
cast in person at a meeting called for the purpose of voting on the approval of
such amendment.
NEW SUB-ADVISORY AGREEMENT
If the New Sub-Advisory Agreement with J.P. Morgan Investment, located at
522 Fifth Avenue, New York, New York 10036, is approved by the vote of a
majority of the Portfolio's outstanding shares, J.P. Morgan Investment will
become the new Sub-Adviser of the Portfolio, effective May 1, 1996. As of that
date, Janus Capital will no longer serve as Sub-Adviser of the Portfolio (but
will continue to serve as Sub-Adviser to the Growth Portfolio, Bond Portfolio
and Global Portfolio of the Fund).
The New Sub-Advisory Agreement requires J.P. Morgan Investment to provide,
subject to the supervision of Western Reserve, a continuous investment program
for the Portfolio, including investment research and management with respect to
all securities and investments and cash equivalents in the Portfolio, in
accordance
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with the Portfolio's investment objective, policies, and restrictions. J.P.
Morgan Investment will determine from time to time what securities and other
investments will be purchased, retained, or sold by the Portfolio and will place
orders pursuant to its investment determinations.
The New Sub-Advisory Agreement contains many terms and conditions which are
essentially the same as the terms and conditions of the Present Sub-Advisory
Agreement, with the exception of the following differences:
(1) The New Sub-Advisory Agreement states that the Sub-Adviser makes the
investment decisions as to which securities will be purchased and sold for
the Portfolio. The Present Sub-Advisory Agreement states that the
Sub-Adviser supervises the purchase and sale of securities as directed by
officers of the Fund and of the Investment Adviser;
(2) The New Sub-Advisory Agreement explicitly requires the Investment
Adviser to provide the Sub-Adviser with a set of "Guidelines" setting forth
the limitations on the types of securities in which the Portfolio is
permitted to invest, and investment activities in which the Portfolio is
permitted to engage. Additionally, the New Sub-Advisory Agreement requires
the Investment Adviser to provide the Sub-Adviser with a daily report with
respect to the Fund's compliance with certain tests required by the
Internal Revenue Code of 1986, as amended. The Present Sub-Advisory
Agreement does not explicitly require such guidelines or reports from the
Investment Adviser to the Sub-Adviser;
(3) The New Sub-Advisory Agreement explicitly states the terms and
conditions under which the Sub-Adviser will seek "best execution" of
securities transactions on behalf of the Portfolio according to the
requirements of Section 28(e) of the Securities Exchange Act of 1934. The
Present Sub-Advisory Agreement does not explicitly state such terms and
conditions; however, the Portfolio has to date followed the guidelines for
'best execution" according to Section 28(e);
(4) The New Sub-Advisory Agreement states that the Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered
by the Fund in connection with the matters to which the New Sub-Advisory
Agreement relates except a loss resulting from willful misfeasance, bad
faith or gross negligence on the Sub-Adviser's part in the performance of
its duties. The Present Sub-Advisory Agreement does not include a
corresponding provision;
(5) Under the New Sub-Advisory Agreement, compensation payable by the
Investment Adviser to the Sub-Adviser will be at the annual rate of 0.15%
of the Portfolio's average daily net assets. Under the Present Sub-Advisory
Agreement, the Sub-Adviser is paid compensation by the Investment Adviser
at the annual rate of 0.25% of the Portfolio's average daily net assets. It
should be noted that the annual rate of compensation from the Fund to the
Investment Adviser, from which the Investment Adviser pays compensation to
the Sub-Adviser, will be correspondingly reduced from 0.50% to 0.40% of the
Portfolio's average daily net assets;
(6) The New Sub-Advisory Agreement states in detail the types of expenses
to be borne by the Portfolio Fund and not by the Sub-Adviser. The Present
Sub-Advisory Agreement does not include a corresponding provision;
(7) The New Sub-Advisory Agreement states that the Sub-Adviser currently
acts, and will continue to act, as investment adviser to fiduciary and
other managed accounts and investment companies and will allocate
investments suitable to each in accordance with a methodology suitable and
appropriate to each entity. The Present Sub-Advisory Agreement does not
include a corresponding provision; and
(8) The New Sub-Advisory Agreement provides indemnification by the
Investment Adviser to the Sub-Adviser against any and all losses, claims,
damages or liabilities to which the Sub-Adviser may become subject in the
course of the Sub-Adviser's performance of its duties to the Portfolio.
The Present Sub-
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Advisory Agreement does not include a corresponding provision. It should be
noted that this indemnification is provided to the Investment Sub-Adviser
by the Investment Adviser, and not by the Fund.
The New Sub-Advisory Agreement will terminate automatically in the event of
its assignment. In addition, it may be terminated by Western Reserve upon 60
days' written notice to J.P. Morgan Investment and the Fund; by J.P. Morgan
Investment upon 60 days' written notice to Western Reserve and the Fund; or by
the Fund, upon the vote of a majority of the Fund's Board of Directors or a
majority of the outstanding voting securities of the Portfolio, upon 60 days'
written notice to J.P. Morgan Investment.
Under the New Sub-Advisory Agreement, Western Reserve will pay J.P. Morgan
Investment a fee, payable monthly, based on the aggregate average daily net
assets of the Portfolio, at the annual rate of 0.15% of the aggregate average
daily net assets of the Portfolio. Western Reserve will pay J.P. Morgan
Investment this fee out of the advisory fee that it receives from the Portfolio.
INFORMATION ABOUT J.P. MORGAN INVESTMENT
J.P. Morgan Investment is an investment manager for corporate, public, and
union employee benefit funds, foundations, endowments, insurance companies,
government agencies and the accounts of other institutional investors. A
wholly-owned subsidiary of J.P. Morgan & Co. Incorporated ("Morgan"), J.P.
Morgan Investment was incorporated in the state of Delaware on February 7, 1984
and commenced operations on July 2, 1984. It was formed from the Institutional
Investment Group of Morgan Guaranty Trust Company of New York, also a subsidiary
of Morgan. The principal business address of J.P. Morgan Investment is 522 Fifth
Avenue, New York, New York, 10036.
Morgan acquired its first tax-exempt client in 1913 and its first pension
account in 1940. J.P. Morgan Investment's assets under management have grown to
over $133 billion. With offices in London and Singapore, J.P. Morgan Investment
draws from a worldwide resources base to provide comprehensive investment
management services to an international group of clients. Investment management
activities in Japan, Australia, and Germany are carried out by affiliates: J.P.
Morgan Trust Bank Limited in Tokyo, J.P. Morgan Investment Management Australia
Limited in Melbourne, and J.P. Morgan Investment GmbH in Frankfurt.
Keith M. Schappert is the President and Chief Executive Officer of J.P.
Morgan Investment. See Appendix A to this proxy statement for a complete list of
the directors and principal executive officers of J.P. Morgan Investment and a
table setting forth the registered investment companies having similar
investment objectives to the Portfolio for which J.P. Morgan Investment serves
as sub-adviser, including the fees payable to J.P. Morgan Investment.
THE DIRECTORS' RECOMMENDATION
In determining whether it was appropriate to approve the New Sub-Advisory
Agreement and to recommend approval to Policyowners, the Board of Directors,
including the Directors who are not interested persons of Western Reserve or
J.P. Morgan Investment, considered various matters and materials provided by
J.P. Morgan Investment. Information considered by the Directors included, among
other things, the following: (1) that the compensation to be received by J.P.
Morgan Investment will be less than the compensation paid to the current
Sub-Adviser, and that the compensation paid by the Portfolio to the Adviser will
be reduced accordingly by an equal amount; (2) that the nature and quality of
the services required to be performed by the Sub-Adviser to the Portfolio
requires an entity more experienced in the management of money market
portfolios, such as J.P. Morgan Investment, than is the Current Sub-Adviser (see
Appendix A); (3) the results achieved by J.P. Morgan Investment in other areas
of investment management, including the management of portfolios comparable to
the Portfolio; and (4) the personnel and research capabilities of J.P. Morgan
Investment and J.P. Morgan Investment's methodology in managing portfolios
comparable to the Portfolio.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1
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PROPOSAL 2
AMENDMENT OF THE MONEY MARKET PORTFOLIO'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING INVESTMENT OF THE PORTFOLIO'S ASSETS IN ANY
PARTICULAR INDUSTRY
CURRENT FUNDAMENTAL RESTRICTION:
The Money Market Portfolio's current fundamental investment restriction
regarding investment of the Portfolio's assets in any particular industry
provides that the Portfolio may not:
Invest more than 25% of the value of the Portfolio's assets in
any particular industry (other than Government securities).
NEW FUNDAMENTAL RESTRICTION:
If Proposal 2 is approved by a Majority Vote of the outstanding units
of the Portfolio, the foregoing fundamental investment restriction for the
Portfolio would be amended, and the Portfolio would implement a new fundamental
investment restriction regarding investment of the Portfolio's assets in any
particular industry, providing that the Portfolio may not:
Invest more than 25% of the value of the Portfolio's assets in
any particular industry (other than Government securities OR
OBLIGATIONS OF U.S. BRANCHES OF U.S. BANKS).
The proposed change to this fundamental investment restriction does not
alter the Portfolio's overall policy regarding industry concentration, which
imposes a 25% limit on the Portfolio's investment of its assets in any
particular industry. The proposed change also does not alter the ability of the
Portfolio to invest MORE than 25% of its assets in Government securities.
However, the proposed change to this fundamental investment restriction would
also give the Portfolio the flexibility to invest more than 25% of its assets in
obligations of U.S. branches of U.S. banks. The new Sub-Adviser to the Portfolio
believes that such flexibility, which would permit the Sub-Adviser to invest the
Portfolio's assets in a broader range of obligations of U.S. branches of U.S.
banks, may enable the Sub-Adviser to take advantage of attractive investment
opportunities for the Portfolio that would not be permitted under the current
concentration policy if the Portfolio's investments in U.S. branches of U.S.
banks had already reached 25% of assets.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2
PROPOSAL 3
AMENDMENT AND COMBINATION OF THE MONEY MARKET PORTFOLIO'S FUNDAMENTAL
INVESTMENT RESTRICTION REGARDING COMMODITIES, AND OPTIONS AND OTHER DERIVATIVE
INSTRUMENTS, AND MERGER WITH THE MONEY MARKET PORTFOLIO'S FUNDAMENTAL
INVESTMENT RESTRICTION REGARDING INVESTMENTS OF THE PORTFOLIO'S ASSETS
IN REAL ESTATE OR INTERESTS IN REAL ESTATE
CURRENT FUNDAMENTAL RESTRICTIONS:
The Money Market Portfolio's current fundamental investment restriction
regarding commodities, and options and other derivative instruments, provides
that the Portfolio will not:
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Purchase or sell physical commodities other than foreign
currencies unless acquired as a result of ownership of
securities (but this restriction shall not prevent the
Portfolio from purchasing or selling options, futures
contracts, caps, floors and other derivative instruments,
engaging in swap transactions or investing in securities or
other instruments backed by physical commodities).
The Money Market Portfolio's current fundamental investment restriction
regarding investment of the Portfolio's assets in real estate or interests in
real estate provides that the Portfolio may not:
Invest directly in real estate or interests in real estate,
including limited partnership interests; however, the
Portfolio may own debt or equity securities issued by
companies engaged in those businesses.
NEW FUNDAMENTAL RESTRICTION:
If Proposal 3 is approved by a Majority Vote of the outstanding units
of the Portfolio, the foregoing fundamental investment restrictions for the
Portfolio would be amended and combined, and the Portfolio would implement a new
fundamental investment restriction regarding commodities, and derivative
instruments, as well as real estate or interests therein. This new fundamental
investment restriction would provide that the Portfolio may not:
Purchase or sell puts, calls, straddles, spreads, or any
combination thereof, real estate (including real estate
limited partnerships), commodities, or commodity contracts or
interests in oil, gas or mineral exploration or development
programs or leases. However, the Portfolio may purchase debt
securities or commercial paper issued by companies which
invest in real estate or interests therein, including real
estate investment trusts.
The purpose of the proposed adoption of a new investment restriction in
place of the current restrictions on investments in commodities and real estate
is to limit the Portfolio's investments to those appropriate for a money market
fund. The current restrictions applicable to the Portfolio prevent the Portfolio
from purchasing or selling physical commodities, but permit the purchase and
sale of certain types of derivative instruments, as well as the purchase of
equity securities issued by companies engaged in buying and selling real estate.
The proposed new Sub-Adviser believes that the new investment restriction is
more appropriate for a money market fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 3
* * * * * * * * * * * * * *
A copy of the Annual Report or Semi-Annual Report for the Fund may be
obtained without charge upon request by writing to the Fund at 201 Highland
Avenue, Largo, FL 34640 or by calling 1-800-851-9777, Ext. 6538 if you are a
variable annuity contract owner or Ext. 6510 if you are a variable life
policyholder.
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
34640.
8
<PAGE>
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
Vice President and Assistant Secretary
Largo, Florida
January 5, 1996
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<PAGE>
APPENDIX A
The directors and principal executive officers of J.P. Morgan Investment
Management Inc. ("J.P. Morgan Investment") and their principal occupations are
as shown below. Unless otherwise indicated, the business address of each such
person is 522 Fifth Avenue, New York, New York 10036.
<TABLE>
<CAPTION>
POSITION WITH J.P. MORGAN INVESTMENT
NAME AND ADDRESS AND PRINCIPAL OCCUPATION
- ---------------- ------------------------------------
<S> <C>
Kenneth W. Anderson Director and Managing Director, J.P. Morgan
J.P. Morgan Investment Management Inc. Investment; Managing Director, Morgan Guaranty
28 King Street Trust Company of New York
London SW1Y 6XA
United Kingdom
Robert A. Anselmi Director, Managing Director, General Counsel and
Secretary, J.P. Morgan Investment; Managing
Director and Assistant Secretary, Morgan Guaranty
Trust Company of New York
David L. Brigham Director and Managing Director, J.P.
Morgan Investment; Managing Director,
Morgan Guaranty Trust Company of New York
Jean L. P. Brunel Director, J.P. Morgan Investment; Managing
Director, Morgan Guaranty Trust Company
of New York
William L. Cobb, Jr. Director, Vice Chairman and Managing Director,
J.P. Morgan Investment; Managing Director,
Morgan Guaranty Trust Company of New York
Michael R. Granito Director and Managing Director, J. P. Morgan
Investment; Managing Director, Morgan Guaranty
Trust Company of New York
Thomas M. Luddy Director and Managing Director, J.P. Morgan
Investment; Managing Director, Morgan Guaranty
Trust Company of New York
Michael E. Patterson Director, J.P. Morgan Investment; Chief
J.P. Morgan & Co. Incorporated Administrative Officer, J.P. Morgan & Co.
60 Wall Street Incorporated; Morgan Guaranty
New York, NY 10260-0060 Trust Company of New York
C. Nicholas Potter Chairman of the Board and Director,
J.P. Morgan Investment; Managing Director,
Morgan Guaranty Trust Company of New York
Keith M. Schappert President, Director and Managing Director, J.P.
Morgan Investment; Managing Director, Morgan
Guaranty Trust Company of New York
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
APPENDIX A (continued)
POSITION WITH J.P. MORGAN INVESTMENT
NAME AND ADDRESS AND PRINCIPAL OCCUPATION
- ---------------- ------------------------------------
<S> <C>
M. Steven Soltis Director, Managing Director and Chief
Administrative and Financial Officer,
J.P. Morgan Investment; Managing Director,
Morgan Guaranty Trust Company of New York
John R. Thomas Director, J.P. Morgan Investment; President,
J.P. Morgan Trust Bank Ltd. Director and Managing Director, J.P. Morgan Trust
Akasaka Park Building Bank Ltd.
2-20, Akasaka 5-chome
Minato-ku, Tokyo, Japan
</TABLE>
11
<PAGE>
J.P. Morgan Investment receives fees for investment sub-advisory services
provided to the following registered investment companies having a similar
investment objective to the Portfolio:
<TABLE>
<CAPTION>
APPROXIMATE NET
ASSETS AS OF RATE OF ANNUAL
INVESTMENT COMPANY 11/30/95 COMPENSATION
- ------------------ --------------- --------------
($ millions)
<S> <C> <C>
Sierra Trust Funds
- Global Money Fund $ 39,775,933 .15% of average daily net assets
The Sierra Variable Trust
- Global Money Fund 19,719,986 .15% of average daily net assets
The Preferred Group of Mutual Funds
- Preferred Money Market Fund 409,207,471 .15% of average daily net assets
American Skandia Trust
- AST Money Market Portfolio 350,479,770 .15% on first $1 billion of average
daily net assets
.10% on balance
</TABLE>
12
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
MONEY MARKET PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
FEBRUARY 21, 1996
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the Money Market 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 February 21, 1996, Eastern Time and any adjournments
thereof at 201 Highland Avenue, Largo, Florida 34640 as follows:
(1) To approve the Proposed Sub-Advisory Agreement between J. P. Morgan
Investment Management Inc. and Western Reserve:
[ ] For [ ] Against [ ] Abstain
(2) To approve the change to the fundamental investment restriction regarding
investment of the Portfolio's assets in any particular industry:
[ ] For [ ] Against [ ] Abstain
FOLD HERE
(3) To amend and combine the Portfolio's fundamental investment restriction
regarding commodities, and options and other derivative instruments and
the Portfolio's fundamental investment restriction regarding investments
of the Portfolio's assets in real estate or interests in real estate:
[ ] For [ ] Against [ ] Abstain
(4) In the discretion of Western Reserve transact such other business as may
properly come before the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND
RECOMMENDS A VOTE FOR ALL PROPOSALS.
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY.
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
January 5, 1996. THIS INSTRUCTION WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THIS INSTRUCTION WILL BE VOTED "FOR" EACH PROPOSAL.
This instruction may be revoked at any time prior to the Meeting by notifying
the Secretary of the Fund in writing.
__________________________________________ _________________
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.
Moisten and Seal
INVESTMENT SUB-ADVISORY AGREEMENT
J.P. Morgan Investment Management Inc.
522 Fifth Avenue
New York, New York 10036
Dear Sirs:
Western Reserve Life Assurance Co. of Ohio (the "Adviser")
hereby agrees with J.P. Morgan Investment Management Inc., a Delaware
corporation (the "Sub-Advisor") as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT. The Adviser entered
into an Investment Advisory Agreement (referred to herein as the
"Advisory Agreement"), dated February 26, 1991, with WRL Series Fund,
Inc., a Maryland corporation (the "Fund"), under which the Adviser
agreed, among other things, to act as investment adviser to the Fund.
The Adviser desires to employ the capital of the Money Market Portfolio
("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 Portfolio 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 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 the
Statement and amendments to the Charter Document. The Advisory
Agreement provides that the Adviser may engage a Sub-Adviser to perform
the services contemplated hereunder. The 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 Adviser and the Board of Directors of
the Fund, the Sub-
1
<PAGE>
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 the
Guidelines (as such term is defined below); (b) make investment
decisions for the Portfolio; (c) place purchase and sale orders for
portfolio 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 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 Adviser may reasonably require, in order to keep the 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 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 Adviser agrees to cause to be delivered
to a person designated in writing for such purpose by the Sub-Adviser
each day, by _________ p.m., New York time, a written report dated the
date of its delivery (the "Report") with respect to the Porftolio'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
Adviser agrees that the Sub-Adviser may rely on the Guidelines and the
Report without independent verification of their accuracy.
2
<PAGE>
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 price of 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 paragraphs 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 the 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. In consideration of the services rendered
pursuant to this Agreement, the 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 .15% of the Portfolio's average daily net assets. The
fee for the period from the [date the initial public sale of the Fund's
shares commences] 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 any 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 purpose 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
3
<PAGE>
be incurred in the operation of the Portfolio will be borne by the Fund
or the Adviser, as appropriate, except to the extent specifically
assumed by the Sub-Adviser. The expenses to be borne by the Fund or the
Adviser, as appropriate, include, without limitation, the following:
organizational costs, taxes, interest, brokerage fees and commissions,
Director's fees, Securities and Exchange Commission fees and state Blue
Sky qualification 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 any extraordinary
expenses.
7. SERVICES TO OTHER COMPANIES OR ACCOUNTS. The 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 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 Adviser recognizes that, in some cases, this
procedure may limit the size of the position that may be acquired or
sold for the Portfolio. In addition, the 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 of 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 Investment Company Act of 1940, as amended (the
"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 Adviser's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the
Act the records relating to its activities hereunder required to be
maintained by Rule 31a-1 under the Act and to preserve the records
relating to its activities hereunder required by Rule 204-2 under the
Investment Advisers Act of 1940, as amended, for the period specified
in said Rule.
4
<PAGE>
9. TERM OF AGREEMENT. This Agreement shall become effective as
of April 30, 1996 and shall continue until April 22, 1998 and
thereafter shall continue annually, provided such continuance is
specifically approved at least annually by (i) the Fund's Board or (ii)
a vote of "majority" (as defined in the Act) of the Portfolio's
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Fund's Board who are
not "interested persons" (as defined in the Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose
of voting on such approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the 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 Adviser. This Agreement also will
terminate automatically in the event of its assignment (as defined in
the Act).
10. INDEMNIFICATION. The 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 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
5
<PAGE>
(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 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 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
Adviser may otherwise have, but does not supersede the standard of care
owed by the Sub-Adviser to the Adviser as described in Section 4 above.
11. DISCLOSURE. The Adviser represents and warrants that
neither the Fund nor the 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 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 of 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
6
<PAGE>
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 conflict of
laws.
If the foregoing accurately sets forth our agreement, kindly
indicate your acceptance hereof by signing and returning the enclosed
copy hereof.
Very truly yours,
By: _______________________________
Name:______________________________
Title:_____________________________
WESTERN RESERVE LIFE ASSURANCE
CO. OF OHIO
Accepted:
By:_______________________________________
Name:_____________________________________
Title:____________________________________
J.P. MORGAN INVESTMENT MANAGEMENT INC.
7
