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))
[ ] 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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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
WRL SERIES FUND, INC.
201 Highland Avenue
Largo, Florida 33770
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
December 9, 1997
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 9, 1997 at 10:00 a.m., at 201 Highland
Avenue, Largo, Florida 33770, or any adjournment thereof, for the following
purposes:
Growth & Income Portfolio:
(1) To approve a change to a policy of non-industry concentration with respect
to the Growth & Income Portfolio of the Fund;
Bond Portfolio:
(2) To approve a new investment sub-advisory agreement between WRL Investment
Management, Inc. and AEGON USA Investment Management, Inc. with respect to the
Bond Portfolio of the Fund;
(3) To transact such other business as may properly come before the meeting or
any adjournment thereof with respect to the Growth & Income Portfolio and Bond
Portfolio of the Fund.
Please indicate your voting instructions on the enclosed voting
instruction form(s) WITH RESPECT TO EACH PORTFOLIO in which you were a
beneficial owner as of the record date; sign such voting instruction form(s);
and return it in the envelope provided, which is addressed for your convenience
and needs no postage if mailed in the United States.
In order to avoid the additional expense to the Fund of further
solicitation, we ask that you mail your voting instruction form promptly.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR VOTING INSTRUCTION FORM(S)
PROMPTLY NO MATTER HOW MANY SHARES YOU BENEFICIALLY OWN. You are entitled to
vote at the meeting and any adjournment thereof if you beneficially owned
Portfolio shares at the close of business on October 10, 1997. 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(s) for each Portfolio in the postage paid envelope provided.
By Order of the Board of Directors
Thomas E. Pierpan, Assistant Secretary
October 27, 1997
<PAGE>
WRL SERIES FUND, INC.
GROWTH & INCOME PORTFOLIO
BOND PORTFOLIO
201 Highland Avenue
Largo, Florida 33770
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
DECEMBER 9, 1997
This is a Proxy Statement for the Growth & Income Portfolio and the
Bond Portfolio (each, a "Portfolio," and collectively, the "Portfolios") of the
WRL Series Fund, Inc.(the "Fund"). The Fund, a Maryland corporation, is a series
mutual fund consisting of a number of 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 each Portfolio, to be used
at the Fund's special meeting of shareholders of the Portfolios (the "Meeting").
The Meeting will be held on Tuesday, December 9, 1997, 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 the Growth & Income Portfolio to consider a change (specifically the removal
of) the current concentration policy to a policy of non-industry concentration,
to take effect January 1, 1998; and (2) to permit the shareholders of the Bond
Portfolio to consider a Proposed Sub-Advisory Agreement (described below)
between WRL Investment Management, Inc. (the "Investment Adviser") and AEGON USA
Investment Management, Inc. ("AIMI"), to take effect on January 1, 1998.
A majority of the shares of stock outstanding on October 10, 1997,
represented in person or by proxy, of each Portfolio must be present for that
Portfolio to transact business at the Meeting. In the event that, with respect
to a Portfolio, 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 with respect to that Portfolio to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the Portfolio's shares represented at the
Meeting in person or by proxy. A shareholder vote of a Portfolio may be taken on
any proposal in this Proxy Statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
Each full share outstanding is entitled to one vote and each fractional
share outstanding is entitled to a proportionate share of one vote. As of the
Record Date, October 10, 1997, the Fund had outstanding ________ shares of the
Growth & Income Portfolio and ________ shares of the Bond Portfolio (with an
aggregate net asset value of $________ and $________, respectively), all of
which shares are owned of record by the WRL Series Life Account or the WRL
Series Annuity Account of Western Reserve Life Assurance Co. Of Ohio ("Western
Reserve"), by Western Reserve directly, or by Pooled Account No. 27 of AUSA Life
Insurance Company, Inc. ("AUSA Life") (together, the "Accounts"). Western
Reserve and AUSA Life are affiliates.
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 27, 1997, 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 or its affiliates. Such representatives
and employees will not receive additional compensation for solicitation
activities.
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POLICYOWNERS' RIGHT TO INSTRUCT SHAREHOLDERS
Western Reserve or AUSA Life, respectively, the shareholders of the
Portfolios, 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 or AUSA Life,
respectively, will vote the shares of the Portfolios at the Meeting on December
9, 1997, and any adjournment thereof. The Fund will mail to each Policyowner of
record as of October 10, 1997 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 an
individual variable annuity or group variable 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 10, 1997, Policyowners are
entitled to an aggregate of votes with respect to each of the Portfolios:
<TABLE>
<CAPTION>
AGGREGATE VOTES BASED
OUTSTANDING SHARES ON POLICY VALUE OF THE
PORTFOLIO OWNED BY THE ACCOUNT PORTFOLIO
--------- -------------------- ---------
<S> <C> <C>
Growth & Income
Bond
</TABLE>
All shares for which Western Reserve and AUSA Life receive properly
executed instructions, which are not subsequently revoked prior to the Meeting,
will be voted at the Meeting in accordance with such instructions. Western
Reserve and AUSA Life will vote the shares of 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 or AUSA Life with respect to 5% or more of the shares of any
Portfolio. However, the proportionate voting policy (described above) may result
in certain Policyowners' instructions affecting the vote of 5% or more of total
outstanding shares of a Portfolio. 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 AUSA Life, as applicable, will vote in accordance
with the directions as indicated on your enclosed voting instruction form(s)
provided it is received properly executed prior to the Meeting. If you properly
execute your voting instruction form(s) 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 each applicable 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 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.
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The following table summarizes each proposal to be presented at the
Meeting and the Portfolios solicited with respect to each proposal:
<TABLE>
<CAPTION>
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PROPOSAL AFFECTED PORTFOLIOS
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<S> <C>
1. Approval of change to a policy of non-industry Growth & Income Portfolio
investment concentration
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2. Approval of a new Sub-Advisory Agreement Bond Portfolio
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</TABLE>
For each Portfolio of the Fund, the Board of Directors recommends that
you cast your vote:
\bullet\FOR approval of the proposed change to a policy of non-industry
concentration with respect to the Growth & Income Portfolio.
\bullet\FOR the approval of a new Sub-Advisory Agreement with respect
to the Bond Portfolio.
Each of these proposals are described in more detail below, and in the
attached Schedule and Exhibits. The Schedule and Exhibits are important parts of
this Proxy Statement; please consult them carefully as you review this Proxy
Statement and evaluate the proposals.
With respect to a Portfolio, the proposed change of concentration for
the Growth & Income Portfolio and the new Sub-Advisory Agreement for the Bond
Portfolio must be approved by a "vote of the majority of the outstanding voting
securities" of such Portfolio, as defined in the Investment Company Act of 1940,
as amended ("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.
Shareholders of the Growth & Income Portfolio only will vote on the
policy concentration for that Portfolio; and shareholders of the Bond Portfolio
only will vote on the new Sub-Advisory Agreement for that Portfolio. In other
words, shareholders will only vote on the proposals for each Portfolio in which
they own shares.
INTRODUCTION
THE FUND
The Fund is a Maryland corporation organized as a diversified,
open-end management investment company under the 1940 Act. Shares of the Fund
are registered under the Securities Act of 1933 (the "1933 Act"), and the Fund
itself is registered under the 1940 Act on Form N-1A with the Securities and
Exchange Commission ("SEC"). Shares of the Fund are currently sold only to
separate accounts of Western Reserve, PFL Life Insurance Company, and AUSA Life
to fund benefits under certain individual flexible premium variable life
insurance policies and certain individual and group variable annuity contracts.
WRL Investment Services, Inc., located at 201 Highland Avenue, Largo, FL 33770,
an affiliate of the Investment Adviser, serves as transfer agent and
administrator for the Fund. InterSecurities, Inc., whose principal office is
located at 201 Highland Avenue, Largo, FL 33770, an affiliate of the Investment
Adviser, serves as principal underwriter for the Fund.
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The Investment Adviser
The Investment Adviser, located at 201 Highland Avenue, Largo, Florida
33770, currently serves as the Investment adviser to each Portfolio of the Fund.
The Investment Adviser does not act as investment adviser or sub- adviser to any
other investment companies. The Investment Adviser is a direct, wholly-owned
subsidiary of Western Reserve, located at 201 Highland Avenue, Largo, Florida
33770, which is a wholly-owned subsidiary of First AUSA Life Insurance Company
("First AUSA"), located at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499, a
stock life insurance company, which is wholly-owned by AEGON USA, Inc.("AEGON
USA"). AEGON USA, located at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499,
is a financial services holding company whose primary emphasis is on life and
health insurance and annuity and investment products. AEGON USA is a
wholly-owned indirect subsidiary of AEGON nv, a Netherlands corporation, which
is a publicly-traded international insurance group.
The Investment Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act"). The Investment Adviser has
served as the investment adviser to each Portfolio of the Fund since January 1,
1997. (Prior to that date, Western Reserve served as the investment adviser to
each Portfolio.) Pursuant to the Investment Advisory Agreement between the Fund
and the Investment Adviser, dated January 1, 1997, and subject to the
supervision of the Fund's Board of Directors (the "Fund's Board"), the
Investment Adviser is responsible for furnishing continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets that the Portfolios may own or
contemplate acquiring from time to time. The Investment Adviser's officers
attend meetings and are responsible for furnishing oral or written reports to
keep the Fund's Board and officers of the Fund fully informed as to the
condition of the investments of each Portfolio, the investment recommendations
of the Investment Adviser, and the investment considerations that have given
rise to those recommendations. The Investment Adviser supervises the purchase
and sale of the investments of the Portfolios and maintains all books and
records required to be maintained pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund.
The Investment Advisory Agreement contemplates that the Investment
Adviser, in connection with the performance of its responsibilities under the
Agreement, will enter into sub-advisory agreements with sub-advisers to provide
each Portfolio with investment management services. The Investment Adviser
selects a sub-adviser based on a qualitative and quantitative evaluation of the
sub-adviser. The Investment Adviser monitors the performance of each sub-adviser
and evaluates how well the sub-adviser has managed the assets of its respective
Portfolio(s) in light of each Portfolio's stated investment objective and
policies. The Investment Adviser also monitors the sub-adviser's long-term
performance and the level of risk assumed in achieving that performance.
Particular criteria for selection and retention of a sub-adviser include the
sub-adviser's discipline and thoroughness in pursuit of a Portfolio's stated
investment objective and the sub-adviser's long-term performance. Short-term
performance by itself is not a significant factor in selecting or terminating a
sub-adviser.
The Investment Adviser also may, from time to time, recommend the
services of a sub-adviser be terminated. The criteria for termination include
the departure of a sub-adviser's key investment advisory personnel, a change in
control of the sub-adviser, a departure from a Portfolio's stated investment
objective or policies, or other developments relating to the sub-adviser deemed
by the Investment Adviser not to be in the best interests of shareholders.
The Sub-Advisers
With respect to each of the twenty-one Portfolios of the Fund, the
Investment Adviser has entered into contracts ("Sub-Advisory Agreements") with
at least one investment sub-adviser (each, a "Sub-Adviser"), as set forth on
attached Schedule B. Each Sub-Adviser provides investment advisory assistance
and portfolio management advice to the Investment Adviser for the Portfolio(s)
with respect to
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which the Sub-Adviser is engaged. Subject to review an supervision by the
Investment Adviser and the Fund's Board, each Sub-Adviser is responsible for the
actual investment management of its Portfolio(s) and for making decisions to
buy, sell, or hold any particular security. Each Sub-Adviser also places orders
to buy or sell securities on behalf of that Portfolio. Each 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 its Portfolio(s). Each Sub-Adviser is a registered investment
adviser under the Advisers Act. Each Sub-Adviser receives monthly compensation
from the Investment Adviser at an annual rate of a specified percentage of the
average daily net assets of each Portfolio managed by that Sub-Adviser.
Each Sub-Adviser has been recommended by the Investment Adviser, and
selected and approved by the Fund's Board, including a Majority of directors who
are not parties to the Sub-Advisory Agreement or interested persons (within the
meaning of Section 2(a)(19) of the 1940 Act) any such party ("Disinterested
Directors"), as well as by the shareholders of the relevant Portfolio. All of
the current Sub-Advisory Agreements were approved at a meeting of shareholders
held on December 16, 1996, except the Sub-Advisory Agreement for the Global
Sector, US Sector and Foreign Sector Portfolios, which was approved by
shareholders on June 16, 1997.
As required by the 1940 Act, each Sub-Advisory Agreement: describes all
compensation payable by the Investment Adviser thereunder; initially continues
in effect for up to two years and from year to year thereafter, only so long as
such continuance is specifically approved at least annually by the Fund's Board
at the times and in the manner required by the 1940 Act, and Rules thereunder;
may be terminated at any time, without the payment of any penalty, by the Fund's
Board or by shareholders on sixty (60) days' written notice to the Sub-Adviser,
on sixty (60) days' written notice from the Investment Adviser to the
Sub-Adviser provided certain conditions are met, or on sixty (60) days' written
notice from the Sub-Adviser to the Investment Adviser; will terminate
automatically in the event of its assignment; and requires approval of
amendments thereto in the manner required by the 1940 Act.
SUMMARY OF THE PROPOSALS
(1) Federated Investment Counseling, located at Federated Investors
Tower, Pittsburgh, PA 15222-3779, is the Growth & Income Portfolio's
Sub-Adviser. Upon a request from Federated Investment Counseling, the Investment
Adviser has recommended to the Fund's Board a change to a policy of non-industry
concentration for the Growth & Income Portfolio. Specifically, the Sub-Adviser
has requested a change in policy from concentration in utilities to a policy of
non-industry concentration. The Fund's Board has agreed that the proposed change
in concentration policy is in the best interest of the Portfolio.
(2) The Investment Adviser seeks to enter into a new Sub-Advisory
Agreement with AIMI with respect to the Bond Portfolio. This new Sub-Advisory
Agreement would replace the current Sub-Advisory Agreement with respect to the
Bond Portfolio between the Investment Adviser and Janus Capital Corporation
("Janus Capital").
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PROPOSAL 1: TO APPROVE A CHANGE IN INVESTMENT CONCENTRATION POLICY
WITH RESPECT TO THE GROWTH & INCOME PORTFOLIO
- --------------------------------------------------------------------------------
The Fund's Board, including the Disinterested Directors, reviewed and,
at a Board meeting held on September 15, 1997, unanimously approved, a
recommendation by the Growth & Income Portfolio's Sub-Adviser concerning the
policy of concentration for the Portfolio, specifically, that the Portfolio's
current policy of concentration in the utility industry be changed to a policy
of non-industry concentration.
Prior to May 1, 1997, the Growth & Income Portfolio was named the
Utility Portfolio. The Portfolio's Sub-Adviser recommended to the Fund's Board
on March 3, 1997, that the Portfolio change its
5
<PAGE>
investment focus from the utility industry to a diversified portfolio of equity
and debt securities with an emphasis on sector investing.
It is the opinion of the Sub-Adviser that concentration in the utility
industry has served the shareholders well since inception of the Portfolio in
1994. However, as the utility industry continues to be deregulated and many
changes are underway to adapt to the deregulation, it is the Sub- Adviser's
belief that concentration in the utility industry is now potentially
unattractive for investors and may result in greater risk.
The portfolio managers of the Portfolio will remain the same. They will
continue to manage the Portfolio's assets with the shareholders' best interests
in mind. The Sub-Adviser merely seeks to change the policy of concentration for
the Portfolio so that no more than 25% of its assets will be invested in one
particular industry, as described below.
In connection with the change in investment concentration policy, the
Portfolio would adopt a new fundamental investment restriction regarding non-
concentration as follows:
The Portfolio may not, as a matter of fundamental policy, invest more
than 25% of the Portfolio's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided
according to their services, for example, gas, gas transmission,
electric and telephone, and each will be considered a separate industry
for purposes of this restriction. In addition, there shall be no
limitation on the purchase of obligations issued or guaranteed by the
U.S.Government or its agencies or instrumentalities, or of certificates
of deposit and bankers' acceptances.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE "FOR APPROVAL" OF THE
PROPOSED CHANGE IN INVESTMENT CONCENTRATION POLICY WITH RESPECT TO THE
GROWTH & INCOME PORTFOLIO
- --------------------------------------------------------------------------------
PROPOSAL 2: TO APPROVE A PROPOSED SUB-ADVISORY AGREEMENT WITH
RESPECT TO THE BOND PORTFOLIO OF THE FUND
- --------------------------------------------------------------------------------
The Fund's Board, including the Disinterested Directors, reviewed and,
at a Board meeting held on June 23, 1997, unanimously approved, a new Sub-
Advisory Agreement (for purposes of this proposal, "Proposed Sub-Advisory
Agreement") between the Investment Adviser and AIMI with respect to the Bond
Portfolio. The Investment Adviser recommended to the Fund's Board that the Fund
retain AIMI to serve as the new Sub-Adviser for the Bond Portfolio. The Proposed
Sub-Advisory Agreement is attached as Exhibit 3.
Janus Capital, located at 100 Fillmore Street, Denver, Colorado
80206, currently serves as Sub-Adviser for the Bond 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, the "Current
Sub-Advisory Agreement") between the Investment Adviser and Janus Capital with
respect to 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. It is currently anticipated
that, in light of the Fund's Board's recommendation, Janus Capital will resign
its position as Sub-Adviser to the Portfolio, effective not later than the close
of business on December 31, 1997. The Investment Adviser is not affiliated with
Janus Capital.
AIMI, located at 4333 Edgewood Road, NE, Cedar Rapids, Iowa 52499, is a
wholly-owned subsidiary of AEGON USA and thus is an affiliate of the Investment
Adviser. AEGON USA is a financial services holding company whose primary
emphasis is on life and health insurance and annuity and investment products.
AEGON USA is a wholly-owned indirect subsidiary of AEGON nv, a Netherlands
6
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corporation which is a publicly traded international insurance group. AIMI
manages the general account investment portfolios of the life insurance
subsidiaries of AEGON USA.
The Investment Adviser will continue to serve as investment adviser to
the Portfolio pursuant to the Current Advisory Agreement.
The Proposed Sub-Advisory Agreement, as approved by the Fund's Board,
is now 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 January 1, 2000, and will continue
from year to year thereafter, subject to approval annually by the Fund's Board
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 Proposed 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 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 Proposed Sub-Advisory Agreement, the Fund's Board
shall consider appropriate action with respect to such non-approval of the
Proposed Sub-Advisory Agreement, including, but not limited to, retention of
Janus Capital as Sub-Adviser to the Portfolio.
Current Advisory Agreement
The Investment Adviser has served as the investment adviser of the
Fund, with respect to the Bond Portfolio, under the Current Advisory Agreement
(see Exhibit 1) since January 1, 1997. Subject to the supervision and direction
of the Fund's Board, the Investment Adviser is generally responsible for
managing the Bond Portfolio in accordance with the Bond Portfolio's stated
investment objective and policies. As compensation for its services to the Bond
Portfolio, the Investment Adviser currently is entitled to receive monthly
compensation from the Fund at an annual rate of 0.50% of the average daily net
assets of the Bond Portfolio.
Pursuant to the Current Advisory Agreement, the Investment Adviser
expressly has the responsibility: 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; to cause its officers to attend
meetings and furnish oral or written reports, as the Fund may reasonably
require, in order to keep the Fund's Board and appropriate officers of the Fund
fully informed as to the conditions of the investment portfolio of the
Portfolio, the investment recommendations of the Investment Adviser, and the
investment considerations which have given rise to those recommendations; to
supervise the purchase and sale of securities of the Portfolio as directed by
the appropriate officers of the Fund; and 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. The Investment Adviser pays all expenses incurred in
connection with the performance of its responsibilities. The Portfolio pays all
other expenses incurred in its operation, including general administrative
expenses, accounting fees, legal fees and investment advisory fees. 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 June 23, 1997, the Fund's Board
approved a resolution which, contingent upon the approval of this Proposal at
the Meeting, will, effective January 1, 1998, reduce the annual compensation
paid to the Investment Adviser pursuant to the Current Advisory Agreement from
an annual rate of 0.50% to 0.45% of average daily net assets of the Portfolio.
During the Fund's fiscal year ended December 31, 1996, the Fund paid
Western Reserve (the Investment Adviser prior to January 1, 1997) (under a prior
investment advisory agreement) an aggregate investment advisory fee of $474,926
for investment management and supervision services and for certain
administrative services on behalf of the Bond Portfolio. During that year, the
Fund paid no fees to
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<PAGE>
Western Reserve, its affiliates or any affiliate of such affiliates, for
services provided to the Fund other than under the prior investment advisory
agreement. If the proposed Investment Advisory fee at the annual rate of 0.45%
of the average daily net assets of the Bond Portfolio had been in effect during
the Fund's fiscal year ended December 31, 1996, the Fund would have paid Western
Reserve an aggregate advisory fee of $427,433, which is 90% of the aggregate
investment advisory fee actually paid by the Fund to Western Reserve for that
year.
Under its terms, the Current Advisory Agreement, as it applies to the
Bond Portfolio, will continue in effect until January 1, 1999, 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. The Current Advisory Agreement may be terminated with respect to a
Portfolio at any time by the Fund's Board, or by vote of a majority of the
outstanding voting securities of the Portfolio, in each case, without penalty on
sixty (60) days' written notice to the Investment Adviser, or by the Investment
Adviser on sixty (60) days' written notice to the Fund. It will automatically
terminate in the event of its assignment. The 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.
The terms of the Current Advisory Agreement were approved by the Fund's
Board, including by vote of a majority of its Disinterested Directors cast in
person, at a meeting called for such purpose and held on October 3, 1996, and
approved by the vote of a majority of the outstanding voting securities of each
Portfolio at a special meeting of shareholders on December 16, 1996. The Current
Advisory Agreement contains a Schedule listing advisory fees for the Portfolios
of the Fund which will be amended to reflect this reduction of advisory fee for
the Bond Portfolio.
Other than the reduction in annual compensation to the Investment
Adviser noted above, approval of the Proposed Sub-Advisory Agreement by
Policyowners will have no effect on the Current Advisory Agreement between the
Investment Adviser, which is not affiliated with Janus Capital, and the Fund
with respect to the Bond Portfolio.
Current Sub-Advisory Agreement
Pursuant to the Current Sub-Advisory Agreement for the Bond Portfolio
(see Exhibit 2), which is dated January 1, 1997, the Investment Adviser
contracts with Janus Capital for sub-advisory services. The Current Sub-Advisory
Agreement for the Portfolio was initially approved by the Fund's Board,
including by vote of a majority of its Disinterested Directors cast in person,
at a special meeting called for such purpose on October 3, 1996, and was
approved by the vote of a majority of the outstanding voting securities of the
Portfolio at a special meeting of the shareholders on December 16, 1996.
Pursuant to the Current Sub-Advisory Agreement, Janus Capital provides
investment advisory assistance and portfolio management advice to the Investment
Adviser for the Bond Portfolio. Subject to review and supervision by the
Investment Adviser and the Fund's Board, Janus Capital is responsible for the
actual management of the Bond 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 Bond 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 Bond Portfolio.
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
8
<PAGE>
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.
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, 1996, Janus Capital
received sub-advisory fees in the amount of $237,463.
Under its terms, the Current Sub-Advisory Agreement for the Portfolio
will continue in effect until January 1, 1999, 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 Fund's Board or the affirmative vote of a majority of
the outstanding voting securities of the Portfolio (as that phrase is defined in
the 1940 Act). The Current Sub-Advisory Agreement may be terminated with respect
to the Portfolio at any time, without penalty, by (i) the Fund's Board or by a
majority of the shareholders of the Portfolio acting by vote of at least a
majority of its outstanding voting securities (as that phrase is defined in the
1940 Act), on sixty (60) days' written notice to Janus Capital, (ii) by the
Investment Adviser if it gives sixty (60) days' written notice to Janus Capital
or (iii) by Janus Capital if it gives sixty (60) days' written notice to the
Investment Adviser. The Current Sub-Advisory Agreement may be amended with
respect to the Portfolio only with the approval by an 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 a 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.
Proposed Sub-Advisory Agreement
If the Proposed Sub-Advisory Agreement with AIMI (see Exhibit 3), is
approved by the vote of a majority of the Portfolio's outstanding shares, AIMI
will become the Sub-Adviser of the Portfolio, effective immediately upon
termination of the Current Sub-Advisory Agreement with Janus Capital (proposed
to be the close of business on December 31, 1997). As of the date of termination
of the Current Sub-Advisory Agreement, Janus Capital would no longer serve as
Sub-Adviser of the Bond Portfolio (but will continue to serve as Sub- Adviser to
the Fund's Growth Portfolio and Global Portfolio).
The Proposed Sub-Advisory Agreement requires AIMI to provide, subject
to the supervision of the Investment Adviser, 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 with the Portfolio's investment objective, policies, and
restrictions. AIMI 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 Proposed Sub-Advisory Agreement contains essentially the same terms
and conditions as the Current Sub-Advisory Agreement, with the following
exceptions:
(1) The Proposed Sub-Advisory Agreement reflects the change of Sub-
Adviser from Janus Capital to AIMI.
(2) The initial term of the Proposed Sub-Advisory Agreement will be two
years ending January 1, 2000.
(3) Under the Proposed Sub-Advisory Agreement, compensation payable by
the Investment Adviser to the Sub-Adviser will be a monthly investment
management fee equal to (i) an annual rate
9
<PAGE>
of 0.20% of the monthly average daily net assets of the Portfolio,
less (ii) 50% of the amount paid by the Investment Adviser on behalf
of the Portfolio pursuant to any expense limitation or the amount of
any other reimbursement made by the Investment Adviser to the
Portfolio. Under the Current Sub-Advisory Agreement, the Sub-Adviser
is paid compensation by the Investment Adviser at an annual rate of
0.25% of the Portfolio's average daily net assets. If the proposed
Sub-Advisory Agreement is approved, the annual rate of compensation
from the Bond Portfolio to the Investment Adviser, from which the
Investment Adviser pays compensation to the Bond Portfolio's Sub-
Adviser, will be correspondingly reduced from 0.50% to 0.45% of the
Portfolio's average daily net assets.
The Proposed Sub-Advisory Agreement will terminate automatically in the
event of its assignment. In addition, it may be terminated by the Investment
Adviser upon sixty (60) days' written notice to AIMI and the Fund; by AIMI upon
sixty (60) days' written notice to the Investment Adviser and the Fund; or by
the Fund, upon the vote of a majority of the Fund's Board or a majority of the
outstanding voting securities of the Portfolio, upon sixty (60) days' written
notice to AIMI.
If the investment sub-advisory fee under the Proposed Sub-Advisory
Agreement (and the investment advisory fee under the Proposed Advisory
Agreement) had been in effect during the Fund's fiscal year ended December 31,
1996, the Investment Adviser (prior to January 1, 1997, Western Reserve) would
have paid AIMI an aggregate investment sub-advisory fee in the following amount:
<TABLE>
<CAPTION>
PROPOSED SUB-ADVISORY HYPOTHETICAL AMOUNT % OF AGGREGATE
FEE PAID IN 1996 (BASED ON SUB-ADVISORY FEE
PORTFOLIO PROPOSED FEE) ACTUALLY PAID
<S> <C> <C> <C>
Bond 0.20% of average daily $189,970.40 80%
net assets
</TABLE>
INFORMATION ABOUNTAIMI
AIMI's directors and principal executive officers, together with their
principal occupations, are listed below:
NAME, POSITION WITH AIMI PRINCIPAL OCCUPATION
Patrick E. Falconio President and Director of AIMI and Executive
President and Director Vice President and Chief Investment Officer of
AEGON USA.
Brenda K. Clancy Senior Vice President and Treasurer of AEGON
Director USA; Director, Treasurer and Vice President of
First AUSA, Life Investors Insurance Company of
America and Monumental Life Insurance Company.
Craig D. Vermie Secretary, Vice President and General Counsel
Director of AEGON USA, Bankers United Life Assurance
Company, Life Investors Insurance Company of
America, PFL Life Insurance Company; Director,
Vice President, General Counsel and Assistant
Secretary of Monumental Life Insurance Company.
Donald E. Flynn Executive Vice President of AIMI.
Executive Vice President
10
<PAGE>
James D. Ross Executive Vice President of AIMI.
Executive Vice President
Clifford A. Sheets Executive Vice President of AIMI.
Executive Vice President
Ralph M. O'Brien Senior Vice President of AIMI.
Senior Vice President
Michael Van Meter Senior Vice President of AIMI.
Senior Vice President
Steven P. Opp Senior Vice President of AIMI.
Senior Vice President
David R. Halfpap Senior Vice President of AIMI.
Senior Vice President
Gregory W. Theobald Secretary and Vice President of AIMI.
Secretary and Vice President
Jon D. Kettering Vice President and Treasurer of AIMI.
Vice President and Treasurer
The Directors Recommendation
In determining whether it was appropriate to approve the Proposed
Sub-Advisory Agreement and to recommend its approval to Policyowners, the Fund's
Board, including the Disinterested Directors, considered various matters and
materials provided by AIMI. Information considered by the Directors included,
among other things, the following: (1) that the compensation to be received by
AIMI will be less than the compensation paid to the current Sub-Adviser, and
that the compensation paid by the Portfolio to the Investment Adviser will be
correspondingly reduced; (2) that the nature and quality of the services
required to be performed by the new Sub-Adviser to the Portfolio requires an
entity more experienced in the management of a bond portfolio, such as AIMI,
than is the current Sub-Adviser (see Schedule C); (3) the results achieved by
AIMI in other areas of investment management, including the management of
portfolios comparable to the Bond Portfolio; (4) the performance of the Bond
Portfolio managed by Janus Capital and a similar fund currently managed by AIMI
against the Lehman Gov't/Corp Index; and (5) the personnel and research
capabilities of AIMI and AIMI's methodology in managing portfolios comparable to
the Bond Portfolio.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE PROPOSED SUB-ADVISORY
AGREEMENT WITH RESPECT TO THE BOND PORTFOLIO
- --------------------------------------------------------------------------------
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.
11
<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 27, 1997
Schedule A - Information regarding certain funds managed by AIMI
Exhibit 1 - Current Advisory Agreement
Exhibit 2 - Current Sub-Advisory Agreement - Bond Portfolio
Exhibit 3 - Form of Proposed Sub-Advisory Agreement - Bond Portfolio
12
<PAGE>
SCHEDULE A
The following table indicates the size of each investment company
having an investment objective similar to that of the Bond Portfolio that is
advised or sub-advised by AIMI and the applicable advisory fee rate.
<TABLE>
<CAPTION>
Annual
Management
Fee as
Net Assets as Percent of
of August 31, 1997 Average Net
Fund Name (In Millions) Assets
<S> <C> <C>
WRL Series Fund $25.7 0.30%
Portfolio
AEGON Pension Fund $39.5 0.25%
</TABLE>
13
<PAGE>
EXHIBIT 1
WRL SERIES FUND, INC.
INVESTMENT ADVISORY AGREEMENT
This Agreement, entered into 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.
Schedule A lists the effective date and termination date of this Agreement for
each Portfolio of the Fund. 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
1
<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 there to prior to the effectiveness of the
registration statement under the Securities Act of 1933);
(c) investment advisory fees;
2
<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 in connection 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.
3
<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.
4
<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, as provided for each Portfolio on
Schedule A, 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.
/s/Priscilla I. Hechler By:/s/John R. Kenney
Assistant Vice President Chairman of the Board and President
and Assistant Secretary
ATTEST: WRL INVESTMENT MANAGEMENT, INC.
/s/ Priscilla I. Hechler By:/s/ Kenneth P. Beil
Assistant Vice President President
and Assistant Secretary
5
<PAGE>
<TABLE>
<CAPTION>
Schedule A
SCHEDULE EFFECTIVE JUNE 16, 1997
PERCENTAGE OF MONTHLY EFFECTIVE
PORTFOLIO AVERAGE DAILY NET DATE/TERMINATION DATE
ASSETS
<S> <C> <C>
January 1, 1997/
Growth 0.80% January 1, 1999
January 1, 1997/
Bond 0.50% January 1, 1999
January 1, 1997/
Global 0.80% January 1, 1999
January 1, 1997/
Money Market 0.40% January 1, 1999
Short-to-Intermediate Government 0.60% January 1, 1997/
January 1, 1999
January 1, 1997/
Emerging Growth 0.80% January 1, 1999
January 1, 1997/
Stragegic Total Return 0.80% January 1, 1999
January 1, 1997/
Balanced 0.80% January 1, 1999
January 1, 1997/
Aggressive Growth 0.80% January 1, 1999
January 1, 1997/
Growth & Income 0.75% January 1, 1999
January 1, 1997/
Tactical Asset Allocation 0.80% January 1, 1999
January 1, 1997/
Value Equity 0.80% January 1, 1999
January 1, 1997/
C.A.S.E. Growth 0.80% January 1, 1999
January 1, 1997/
C.A.S.E. Quality Growth 0.80% January 1, 1999
January 1, 1997/
C.A.S.E. Growth & Income 0.80% January 1, 1999
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF MONTHLY EFFECTIVE
PORTFOLIO AVERAGE DAILY NET DATE/TERMINATION DATE
ASSETS
<S> <C> <C>
June 16, 1997/
Global Sector 0.80% January 1, 1999
June 16, 1997/
Foreign Sector 0.80% January 1, 1999
June 16, 1997/
US Sector 0.80% January 1, 1999
January 1, 1997/
International Equity 1.00% January 1, 1999
January 1, 1997/
U.S. Equity 0.80% January 1, 1999
</TABLE>
2
<PAGE>
EXHIBIT 2
SUB-ADVISORY AGREEMENT
BETWEEN
WRL INVESTMENT MANAGEMENT, INC.
AND
JANUS CAPITAL CORPORATION
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 Florida and Janus Capital Corporation
("Sub-Adviser"), a corporation organized and existing under the laws of the
State of Colorado.
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 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 Growth, Bond,
Global and Janus Balanced Portfolios ("Portfolios"), each 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 Portfolios 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. Appointment.
Investment Adviser hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the Portfolios 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 Portfolios in accordance with each
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 Portfolios in a manner consistent with each
Portfolio's investment objective, policies, and restrictions. In furtherance of
this duty, the Sub-Adviser, on behalf of the Portfolios, is authorized, in its
discretion and without prior consultation with the Board or the Investment
Adviser, to:
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(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.
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 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 Fund's officers, Board and shareholders fully
informed as to the condition of the investment securities of the
Portfolios, the investment recommendations of the Sub-Adviser,
and the investment considerations which have given rise to those
recommendations; and
(3) furnish such statistical and analytical information and reports
as may reasonably be required by the Fund, its officers and the
Board from time to time, other than proprietary information and
provided Sub-Adviser shall not be responsible for Portfolio
accounting.
(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 the Fund's 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. 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.
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 50% of the fees received by the Investment Adviser for
services rendered under the Advisory Agreement by the Investment Adviser to the
Portfolios. The management fee shall be payable by the Investment Adviser
monthly to the Sub-Adviser upon receipt by the Investment Adviser from the
Portfolios 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
2
<PAGE>
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.
4. Duties of the Investment Adviser.
A. The Investment Adviser shall continue to have
responsibility for all services to be provided to the Portfolios 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 and, when
possible, before such amendments or supplements become effective:
(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 and any other resolutions of the Board applicable to
the Sub-Adviser's duties under this Agreement;
(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 Portfolios 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 Statement of
Additional Information; and
(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 Portfolios to its
shareholders or to any governmental body or securities
exchange.
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.
C. 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.
D. 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 by the Investment Adviser, or on its behalf, for distribution to
shareholders of the Portfolios or the public, which refer to the Sub-Adviser or
investment companies or other advisory
3
<PAGE>
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.
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 rules and regulations
thereunder.
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.
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 Portfolios 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)
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.
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,
4
<PAGE>
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.
10. Confidentiality and Proprietary Rights.
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 "Janus." Sub-Adviser shall not, and shall not
permit the Portfolios to, without prior written consent of Sub-Adviser, use the
name or mark "Janus" 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 Janus name or any Janus 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.
12. 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
5
<PAGE>
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 each 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 each 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 each Portfolio; or (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.
13. 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 Portfolios 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.
14. 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, unless
otherwise permitted in accordance with the 1940 Act.
15. 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 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 of
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by
6
<PAGE>
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.
/s/ Priscilla I. Hechler By: /s/ Kenneth P. Beil
Assistant Secretary Name: Kenneth P. Beil
Title: President and Treasurer
Attest: JANUS CAPITAL CORPORATION
/s/ Verna Morris By /s/ Stephen L. Stieneker
Name: Stephen L. Stieneker
Title: Vice President of Compliance
7
<PAGE>
EXHIBIT 3
PROPOSED SUB-ADVISORY AGREEMENT
BETWEEN
WRL INVESTMENT MANAGEMENT, INC.
AND
AEGON USA INVESTMENT MANAGEMENT, INC.
SUB-ADVISORY AGREEMENT, made as of the 1st day of January, 1998,
between WRL Investment Management, Inc. ("Investment Adviser"), a corporation
organized and existing under the laws of the State of Florida and AEGON USA
Investment Management, Inc. ("Sub-Adviser"), a corporation organized and
existing under the laws of the State of Iowa.
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 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 Bond 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. 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:
1
<PAGE>
(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.
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;
(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
(3) furnish such statistical and analytical information and
reports as may reasonably be required by the Fund from time to time.
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. 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.
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 (i) 0.20% of monthly average daily net assets of the
Portfolio, less (ii) 50% of the amount paid by the Investment Adviser on behalf
of the Portfolio pursuant to any expense limitation or the amount of any other
reimbursement made 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.
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
2
<PAGE>
amendments and supplements to such documents, if any, as soon as practicable
after such documents become available and, when possible, before such amendments
or supplements become effective:
(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 and any other resolutions of the Board applicable to
the Sub-Adviser's duties under this Agreement;
(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
(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 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.
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.
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 rules and regulations
thereunder.
3
<PAGE>
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.
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)
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.
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.
4
<PAGE>
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.
10. Confidentiality and Proprietary Rights.
Sub-Adviser will not, directly or indirectly, and will not permit its
affiliates employees, officers, directors, agents, contractors, or the Portfolio
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." Sub-Adviser shall not,
and shall not permit the Portfolio to, without prior written consent of
Sub-Adviser, use the name or mark "AEGON USA Investment Management, Inc." 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 Portfolio to immediately cease, all use of the AEGON USA
Investment Management, Inc. name or any AEGON USA Investment Management, Inc.
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.
12. 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.
13. 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
5
<PAGE>
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.
14. 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, unless
otherwise permitted in accordance with the 1940 Act.
15. 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 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 of
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.
6
<PAGE>
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: __________________________________
Assistant Secretary Name: Kenneth P. Beil
Title: President and Treasurer
Attest: AEGON USA INVESTMENT MANAGEMENT, INC.
By
Name:
Title:
7
bond.doc
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
GROWTH & INCOME PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
DECEMBER 9, 1997
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the Growth & Income 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 9, 1997, Eastern Time and any adjournments
thereof at 201 Highland Avenue, Largo, Florida 33770 as follows:
(1) To approve a change to a policy of non-industry concentration with
respect to the Growth & Income Portfolio
___ For ___ Against ___ Abstain
(2) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN
THE POSTAGE PAID ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated October 27, 1997. This instruction will be voted as specified. If no
specification is made, this instruction will be voted "FOR" each proposal.
This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
----------------------------------- ---------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly as
name or names appear on this Voting Instruction Form. If the individual signing
the form is a fiduciary (e.g., attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his full title.
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
BOND PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
DECEMBER 9, 1997
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the Bond 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 9, 1997, Eastern Time and any adjournments thereof at 201
Highland Avenue, Largo, Florida 33770 as follows:
(1) To approve a Proposed Sub-Advisory Agreement between AEGON USA
Investment Management, Inc. and WRL Investment Management, Inc.
___ For ___ Against ___ Abstain
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE
POSTAGE PAID ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated October 27, 1997. This instruction will be voted as specified. If no
specification is made, this instruction will be voted "FOR" each proposal.
This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
----------------------------------- -------------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly as
name or names appear on this Voting Instruction Form. If the individual signing
the form is a fiduciary (e.g., attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his full title.
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
BOND PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
DECEMBER 9, 1997
ACCOUNT NO.: POOLED ACCOUNT NO. 27 CASH VALUE PROXY VOTES
- ---------------------------------- ---------- -----------
I hereby instruct AUSA Life Insurance Company, Inc. ("AUSA Life") to
vote the shares of the Portfolio of the WRL Series Fund, Inc. ("Fund") as to
which I am entitled to give instructions, as shown above, at a Special Meeting
of the Shareholders of the Fund (the "Meeting") to be held at 10:00 a.m. on
December 9, 1997, Eastern Time and any adjournments thereof at 201 Highland
Avenue, Largo, Florida 33770 as follows:
(1) To approve a Proposed Sub-Advisory Agreement between AEGON USA
Investment Management, Inc. and WRL Investment Management, Inc. ;
___ For __ Against ___ Abstain
(2) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated October 27, 1997. 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.
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
GROWTH & INCOME PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE WRL SERIES FUND, INC.
DECEMBER 9, 1997
ACCOUNT NO.: POOLED ACCOUNT NO. 27 CASH VALUE PROXY VOTES
- ---------------------------------- ---------- ----------
I hereby instruct AUSA Life Insurance Company, Inc. ("AUSA Life") to
vote the shares of the Portfolio of the WRL Series Fund, Inc. ("Fund") as to
which I am entitled to give instructions, as shown above, at a Special Meeting
of the Shareholders of the Fund (the "Meeting") to be held at 10:00 a.m. on
December 9, 1997, Eastern Time and any adjournments thereof at 201 Highland
Avenue, Largo, Florida 33770 as follows:
(1) To approve a change to a policy of non-industry concentration with
respect to the Growth & Income Portfolio
___ For __ Against ___ Abstain
(2) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated October 24, 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.
<PAGE>
APPENDIX
WRL LETTERHEAD
October 27, 1997
Dear Policy or Contract Owner:
As an Owner of a variable life insurance policy or variable annuity contract
(either of which is referred to as a "Policy"), you have the right to vote
certain shares of the Growth & Income and/or Bond Portfolio (the "Portfolios")
of the WRL Series Fund, Inc. (the "Fund") attributable to your Policy at the
December 9, 1997 special meeting of shareholders of the Fund (the "Meeting"). To
assist you in giving those instructions, we have enclosed the following:
(1) A Notice of the Special Meeting;
(2) A Voting Instruction Form for each Portfolio applicable to
your Policy; and
(3) A Proxy Statement to Shareholders.
Please read the enclosed Notice of the Special Meeting and the Proxy Statement
for details regarding the purposes of the Meeting.
Shareholders of the Bond Portfolio are being asked to approve a Proposed
Sub-Advisory Agreement for the Bond Portfolio between WRL Investment Management,
Inc. (the "Investment Adviser") and AEGON USA Investment Management, Inc.
("AEGON USA"). We are requesting a change of Sub-Adviser from Janus Capital
Corporation to AEGON USA. If the Proposed Sub-Advisory Agreement is approved,
the investment advisory fees for the Bond Portfolio will be reduced from 0.50%
to 0.45% of average daily net assets.
Shareholders of the Growth & Income Portfolio are being asked to approve a
change of concentration policy to a policy of non-industry concentration. The
Portfolio's Sub-Adviser, Federated Investment Counseling, believes that the
Portfolio's current policy of concentration in the utility industry is now
potentially unattractive for investors and may result in greater risk.
A Voting Instruction Form FOR EACH PORTFOLIO ATTRIBUTABLE TO YOUR POLICY Must be
received by EVACO Financial Printers (tabulating company) at 100 Carillon
Parkway, Suite 170, St. Petersburg, Florida 33716-9984 no later than December 5,
1997. 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.
IF YOU OWN MORE THAN ONE POLICY, YOU WILL RECEIVE A SEPARATE MAILING FOR EACH
POLICY. IT IS IMPORTANT YOU PROMPTLY RETURN A SIGNED VOTING INSTRUCTION FORM FOR
EACH PORTFOLIO OF EACH POLICY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
We will vote the shares of each Portfolio for which timely voting instructions
are not received in the same proportion as those shares attributable to each
Portfolio for which timely instructions are received. We will also vote each
Portfolio's shares in our best judgment on any other matters which come before
the Meeting.
Thank you for your prompt cooperation.
Very truly yours,
/s/ John R. Kenney
John R. Kenney
Chairman of the Board, Chief Executive
Officer and President
Western Reserve Life Assurance Co. of Ohio
<PAGE>
AUSA LETTERHEAD
October 27, 1997
Dear Contract Owner:
As an Owner of a variable annuity contract (the "Contract") issued by AUSA Life
Insurance Company, Inc. ("AUSA Life"), you have the right to instruct AUSA Life
how to vote certain shares of the Growth & Income and/or the Bond Portfolio of
the WRL Series Fund, Inc. (the "Fund") attributable to your Contract at the
December 9, 1997 special meeting of shareholders of the Fund (the "Meeting"). To
assist you in giving those instructions, we have enclosed the following:
(1) A Notice of the Special Meeting; (2) A Voting Instruction Form; and
(3) A Proxy Statement to Shareholders.
Please read the enclosed Notice of the Special Meeting and the Proxy Statement
for details regarding the purposes of the Meeting.
Shareholders of the Bond Portfolio are being asked to approve a Proposed
Sub-Advisory Agreement for the Bond Portfolio between WRL Investment Management,
Inc. (the "Investment Adviser") and AEGON USA Investment Management, Inc.
("AEGON USA"). We are requesting a change of Sub-Adviser from Janus Capital
Corporation to AEGON USA. If the Proposed Sub-Advisory Agreement is approved,
the investment advisory fees for the Bond Portfolio will be reduced from 0.50%
to 0.45% of average daily net assets.
Shareholders of the Growth & Income Portfolio are being asked to approve a
change of concentration policy to a policy of non-industry concentration. The
Portfolio's Sub-Adviser, Federated Investment Counseling, believes that the
Portfolio's current policy of concentration in the utility industry is now
potentially unattractive for investors and may result in greater risk.
Although you are not directly a shareholder of the Growth & Income or Bond
Portfolio, some or all of your contract value is invested, as provided by your
Contract, in the Growth & Income or Bond Portfolio. Accordingly, you have the
right under your Contract to instruct AUSA Life how to vote the Growth & Income
Portfolio's or Bond Portfolio's shares which are attributable to your Contract.
The number of Portfolio shares for which an Owner may give instructions is
determined as follows. For each Contract the number of votes in the Portfolio
will be determined by dividing the amount of the Contract's contract value
attributable to the Portfolio as of the record date (October 10, 1997) by $100.
Fractional shares will be counted. The enclosed Voting Instruction Form(s) shows
the number of Proxy Votes in the Growth & Income or Bond Portfolio attributable
to your Contract for which you are entitled to give voting instructions.
A Voting Instruction Form for EACH PORTFOLIO ATTRIBUTABLE TO YOUR CONTRACT Must
be received by EVACO Financial Printers (tabulating company) at 100 Carillon
Parkway, Suite 170, St. Petersburg, Florida 33716-9984 no later than December 5,
1997. 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.
IF YOU OWN MORE THAN ONE CONTRACT, YOU WILL RECEIVE A SEPARATE MAILING FOR EACH
CONTRACT. IT IS IMPORTANT YOU PROMPTLY RETURN A SIGNED VOTING INSTRUCTION FORM
FOR EACH Portfolio of each Contract in the enclosed postage-paid envelope.
We will vote the shares of each Portfolio for which timely voting instructions
are not received in the same proportion as those shares for which timely
instructions are received. We will also vote each Portfolio's shares in our best
judgment on any other matters which come before the Meeting.
Thank you for your prompt cooperation.
Very truly yours,
/s/ William L. Busler
William L. Busler
Vice President
AUSA Life Insurance Company, Inc.
