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ANNUAL REPORT
DECEMBER 31, 1996
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WRL SERIES
FUND, INC.
February 1997
ACC00001 (2/97)
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T A B L E O F C O N T E N T S
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PAGE
Chairman's Letter ................................................. 1
Report of Independent Accountants ................................. 2
WRL SERIES FUND, INC ..............................................
Portfolio Manager's Commentary:
Money Market Portfolio .......................................... 3
Bond Portfolio .................................................. 4
Growth Portfolio ................................................ 5
Short-to-Intermediate Government Portfolio ...................... 6
Global Portfolio ................................................ 7
Equity-Income Portfolio ......................................... 8
Emerging Growth Portfolio ....................................... 9
Aggressive Growth Portfolio ..................................... 10
Balanced Portfolio .............................................. 11
Utility Portfolio ............................................... 12
Tactical Asset Allocation Portfolio ............................. 13
C.A.S.E. Growth Portfolio ....................................... 14
Meridian/INVESCO Global Sector Portfolio ........................ 15
Value Equity Portfolio .......................................... 16
Schedule of Investments:
Money Market Portfolio .......................................... 17
Bond Portfolio .................................................. 18
Growth Portfolio ................................................ 19
Short-to-Intermediate Government Portfolio ...................... 22
Global Portfolio ................................................ 24
Equity-Income Portfolio ......................................... 29
Emerging Growth Portfolio ....................................... 32
Aggressive Growth Portfolio ..................................... 37
Balanced Portfolio .............................................. 40
Utility Portfolio ............................................... 42
Tactical Asset Allocation Portfolio ............................. 45
C.A.S.E. Growth Portfolio ....................................... 48
Meridian/INVESCO Global Sector Portfolio ........................ 50
Value Equity Portfolio .......................................... 53
Statements of Assets and Liabilities ............................. 56
Statements of Operations ......................................... 58
Statements of Changes in Net Assets .............................. 60
Financial Highlights ............................................. 64
Notes to Financial Statements .................................... 67
THE PORTFOLIOS OF THE WRL SERIES FUND, INC. ARE MADE AVAILABLE THROUGH VARIABLE
LIFE INSURANCE, VARIABLE ANNUITY, AND GROUP ANNUITY PRODUCTS ISSUED BY WESTERN
RESERVE LIFE ASSURANCE CO. OF OHIO AND ITS AFFILIATES. THE AVAILABILITY OF
CERTAIN PORTFOLIOS MAY VARY FROM PRODUCT TO PRODUCT.
<PAGE>
[Graphic]
John R. Kenney
CHAIRMAN OF THE BOARD
FELLOW CONTRACT AND POLICY OWNERS:
ALL'S WELL THAT ENDS WELL.
YES, DESPITE A SCARY SUMMER SELL-OFF AND MORE THAN A LITTLE NERVOUSNESS IN
DECEMBER, INVESTORS STILL BID A FOND FAREWELL TO 1996, AND TO ANOTHER
OUTSTANDING YEAR FOR THE MARKETS. OFFICIALLY, THE DOW JONES INDUSTRIAL AVERAGE
GAINED 28.89% ON THE YEAR, THE S&P INDEX OF 500 COMMON STOCKS 22.96%, AND THE
NASDAQ COMPOSITE 23.2%--REMARKABLE NUMBERS IN THEIR OWN RIGHT, BUT STUNNING WHEN
CONSIDERED WITH 1995'S EXTRAORDINARY RETURNS.
NOT TOO SURPRISINGLY, EVEN AS THE MAJOR AVERAGES SEEMED TO PUSH ALMOST DAILY
INTO UNCHARTED TERRITORY, THE DEBATES RAGED AS TO HOW LONG THE GOOD TIMES WOULD
LAST. HOW LONG BEFORE STOCKS WOULD FINALLY "CORRECT." HOW LONG BEFORE THIS GREAT
"BUBBLE" WOULD BURST. HOW LONG INVESTORS WOULD HANG AROUND AFTER THE FIRST SIGN
OF TROUBLE.
SO IT GOES. IT IS, QUITE SIMPLY, THE NATURE OF THE BUSINESS FOR WELL-INTENTIONED
FOLKS TO OFFER UP THEIR PROGNOSIS OF A BULL MARKET DURING A BULL MARKET. BUT THE
FACT REMAINS, IT'S UTTERLY IMPOSSIBLE TO KNOW WHEN THE TOPS AND BOTTOMS WILL
OCCUR. AND ANYONE WHO PRETENDS TO KNOW HAS DISPLACED FAITH IN THE FUTURE WITH
SPECULATION ABOUT THE FUTURE.
THAT'S NOT TO SAY WE DON'T NEED TO PAY ATTENTION; WE DO. INDEED, PERHAPS IT'S A
KEEN PERSPECTIVE, NOT INTELLECTUAL BRILLIANCE, THAT'S THE KEY TO INVESTMENT
SUCCESS. AND IN THE END, FOR MOST INVESTORS THE IMPORTANT THING MAY BE NOT SO
MUCH THEIR ABSOLUTE RETURNS, BUT THE STABILITY AND SUITABILITY OF THEIR
PORTFOLIOS ALONG THE WAY.
THE WRL SERIES FUND, INC. HAS BEEN DESIGNED FOR YOU TO CONSTRUCT YOUR OWN
"HEALTHY" PORTFOLIO. EACH PORTFOLIO IS MANAGED BY ONE OF THE INDUSTRY'S PREMIER
INVESTMENT ADVISORY GROUPS, AND EACH PORTFOLIO MANAGER IS A SPECIALIST IN A
PARTICULAR INVESTMENT DISCIPLINE. PLEASE TAKE A FEW MINUTES AND REVIEW THE
PERSONAL COMMENTS FROM THESE OUTSTANDING PROFESSIONALS REGARDING THEIR
RESPECTIVE PORTFOLIOS AND HOW THEY'VE BEEN INVESTING THIS LAST YEAR AND WHY. I
INVITE YOU TO EVALUATE THESE REPORTS AND REVIEW THE DATA, INCLUDING MAJOR
POSITIONS AND WEIGHTINGS. ALL OF THIS INFORMATION IS INTENDED TO HELP PROVIDE
YOU WITH AN INSIGHT INTO THE PORTFOLIO'S PERFORMANCE FOR THE PERIOD.
AND IN OUR ONGOING EFFORT TO PROVIDE YOU WITH THE FOREMOST OPPORTUNITY FOR
SUCCESS IN A FULL ARRAY OF CHOICES, I'M PLEASED TO ANNOUNCE THE INTRODUCTION OF
TWO NEW PORTFOLIOS--THE INTERNATIONAL EQUITY PORTFOLIO, CO-MANAGED BY GE
INVESTMENT MANAGEMENT INCORPORATED AND SCOTTISH EQUITABLE INVESTMENT MANAGEMENT
LIMITED, AND THE U.S. EQUITY PORTFOLIO, MANAGED BY GE INVESTMENT MANAGEMENT
INCORPORATED. THE OFFERING OF BOTH BEGAN ON JANUARY 2, 1997; MAKE SURE TO ASK
YOUR REPRESENTATIVE ABOUT THESE NEW PORTFOLIOS WITH RESPECT TO YOUR FINANCIAL
PLAN.
AS WE HEAD INTO 1997, THE ECONOMIC AND POLITICAL SETTINGS ARE CLOSE TO IDEAL FOR
THE MARKETS. BUT, FOR WHAT IT'S WORTH, I WOULDN'T EXPECT TO SEE THE SAME KIND OF
HISTORIC PERFORMANCE WE'VE WITNESSED OVER THE LAST TWO YEARS. WHAT I DO EXPECT
IS THAT WE'LL STAY TRUE TO OUR GOALS. SCOTT SCHOELZEL, OUR OUTSTANDING GROWTH
PORTFOLIO MANAGER, MAY HAVE SAID IT BEST IN HIS LETTER--"WE INTEND TO STAY THE
COURSE WHATEVER THE MARKET DOES AND FOCUS SQUARELY ON LONG-TERM RESULTS."
AS ALWAYS, OUR HIGHEST PRIORITY REMAINS THE SAFETY OF THE FUNDS YOU HAVE
ENTRUSTED WITH US. OUR COMMITMENT IS TO PROVIDE YOU WITH SUPERIOR PRODUCTS AND
EXCEPTIONAL SERVICE FOR THE LONG TERM. WE RESPECT YOUR PERSONAL TASK OF
FINANCIAL PLANNING AND APPRECIATE THE OPPORTUNITY TO HELP. SINCERELY YOURS,
/s/ JOHN R. KENNEY
------------------
JOHN R. KENNEY
CHAIRMAN OF THE BOARD
1
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WRL SERIES FUND, INC.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of the WRL Series Fund, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Money Market, Bond, Growth,
Short-to-Intermediate Government, Global, Equity-Income, Emerging Growth,
Aggressive Growth, Balanced, Utility, Tactical Asset Allocation, C.A.S.E.
Growth, Meridian/ INVESCO Global Sector and Value Equity Portfolios (fourteen of
the portfolios constituting the WRL Series Fund, Inc., hereafter referred to as
the "Portfolios") at December 31, 1996, the results of each of their operations,
the changes in each of their net assets and the financial highlights for each of
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Portfolios'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1996 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Kansas City, Missouri
January 31, 1997
2
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WRL SERIES FUND, INC.
MONEY MARKET PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
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[GRAPH 1]
DURING THE FIRST TWO QUARTERS OF 1996, YIELDS ROSE WITH THE RELEASE OF ECONOMIC
DATA SHOWING CONTINUED GROWTH, LEADING INVESTORS TO EXPECT FEDERAL RESERVE
TIGHTENING. BUT WITH MIXED ECONOMIC DATA IN THE THIRD QUARTER SHOWING STRONG
EMPLOYMENT GROWTH COMBINED WITH BENIGN CONSUMER AND PRODUCER INFLATION FIGURES,
SHORTER-TERM YIELDS FELL AND YIELDS ON MATURITIES ONE YEAR AND LONGER REMAINED
UNCHANGED. DURING THE FOURTH QUARTER, TREASURY YIELDS DECLINED ON INSTRUMENTS
ONE YEAR AND LONGER WHILE SHORTER-TERM YIELDS ROSE.
J.P. MORGAN INVESTMENT MANAGEMENT INC. ASSUMED MANAGEMENT OF THE PORTFOLIO ON
MAY 1, 1996. THE PORTFOLIO'S YEAR-END NET RETURN OF 5.03% OUTPERFORMED THE
LIPPER MONEY MARKET AVERAGE'S RETURN OF 4.81%. THE PORTFOLIO MAINTAINED ITS
AVERAGE LIFE AROUND THE 50-DAY LEVEL AND ACHIEVED YIELD PICK-UP BY TAKING
ADVANTAGE OF HIGHER YIELDS OFFERED BY FLOATING RATE NOTES, COMMERCIAL PAPER, AND
AGENCY SECTORS AT THE EXPENSE OF SHORT-TERM TREASURIES. IN ADDITION, THE
PORTFOLIO ENHANCED RETURNS BY MAKING TACTICAL ALLOCATIONS IN THE JAPANESE BANK
PAPER MARKET.
WE BELIEVE THAT THE FEDERAL RESERVE WILL CONTINUE TO REMAIN INACTIVE IN THE
NEAR FUTURE. WE WILL CONTINUE TO SEARCH FOR ATTRACTIVELY PRICED FLOATING RATE
NOTES AND COMMERCIAL PAPER WHILE REDUCING SHORT-TERM TREASURIES, ANTICIPATING
THAT THE HIGHER YIELDING SECTORS WILL CONTINUE TO LOOK ATTRACTIVE ON A
RELATIVE YIELD BASIS. WE PLAN TO MAINTAIN THE PORTFOLIO'S AVERAGE LIFE RANGE
BETWEEN 50 AND 60 DAYS.
[LOGO] /s/ ROBERT R. JOHNSON
---------------------
ROBERT R. JOHNSON
MONEY MARKET PORTFOLIO MANAGER
Past performance does not guarantee future results.
An investment in the Money Market Portfolio is neither insured nor guaranteed
by the U.S. Government and there can be no assurance that the Portfolio will be
able to maintain a stable net asset value of $1.00 per share.
3
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WRL SERIES FUND, INC.
BOND PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL
SERIES FUND, INC. BOND PORTFOLIO
AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
[GRAPH 2]
BONDS CLOSED OUT A DIFFICULT YEAR WITH VERY RESPECTABLE GAINS IN THE FOURTH
QUARTER. WITH A 3.04% GAIN OVER THE LAST THREE MONTHS, THE LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX WAS ABLE TO FINISH 1996 IN POSITIVE TERRITORY,
UP 2.90%. THE BOND PORTFOLIO, WITH A COMPARABLE 3.00% GAIN FOR THE QUARTER,
CLOSED THE YEAR ENDED DECEMBER 31, 1996 WITH A RETURN OF .14%.
THE MODERATE ECONOMIC GROWTH OF THE THIRD QUARTER CONTINUED INTO THE FINAL THREE
MONTHS OF THE YEAR. THE STRONG EMPLOYMENT NUMBERS THAT UNSETTLED THE MARKET BACK
IN FEBRUARY, EVENTUALLY PUSHING LONG RATES ABOVE 7%, WEAKENED A BIT IN THE
FOURTH QUARTER, WHILE INFLATION REMAINED MILD. AS A RESULT, THE YIELD ON THE
BENCHMARK 30-YEAR TREASURY BOND DROPPED FROM 6.89% TO 6.64% BY QUARTER END. IN
GENERAL, ECONOMIC GROWTH WAS MODERATE OVERSEAS AS WELL, WHERE MANY ECONOMIES,
ESPECIALLY THOSE IN EUROPE, EITHER GREW SLOWLY OR AT HEALTHY, BUT SUSTAINABLE,
RATES. IN JAPAN, THE ECONOMY REMAINED SLUGGISH, AND THE STOCK MARKET FELL BACK
BELOW 20,000. FORTUNATELY, FEDERAL RESERVE BOARD CHAIRMAN ALAN GREENSPAN'S
REMARK THAT "IRRATIONAL EXUBERANCE" WAS INFLATING THE PRICES OF U.S. FINANCIAL
ASSETS SEEMED TO BE AIMED MORE AT EQUITIES THAN AT THE FIXED-INCOME MARKETS. AT
YEAR-END, THE FEDERAL RESERVE WAS STILL ON THE SIDELINES.
OVER THE COURSE OF 1996, THE PORTFOLIO STRATEGY REMAINED CONSERVATIVE, WITH
HOLDINGS BALANCED BETWEEN CASH, U.S. TREASURIES, AND INVESTMENT-GRADE CORPORATE
BONDS. CASH LEVELS DECREASED DURING THE FOURTH QUARTER, AS FUNDS WERE PUT TO
WORK IN INVESTMENT-GRADE CORPORATE BONDS. IN THE CORPORATE SECTOR, SELECTIVITY
AND DIVERSIFICATION ONCE AGAIN GAVE US AN ADVANTAGE OVER THE LEHMAN INDEX. THE
PORTFOLIO'S TREASURY AND INVESTMENT-GRADE BONDS REMAINED PRIMARILY IN 10-YEAR
MATURITIES, WHERE YIELDS WERE COMPETITIVE AND PRICES SOMEWHAT LESS VOLATILE THAN
THE LONG END OF THE MARKET. BOTH OF THESE SECTORS BENEFITTED FROM THE DECLINE IN
INTEREST RATES. WE CONTINUE TO HOLD SEVERAL HIGH-QUALITY BANK ISSUES, INCLUDING
CHASE MANHATTAN CORPORATION, CITICORP, AND BANKAMERICA CORPORATION.
WE ARE LOOKING FORWARD TO THE COMING YEAR. EVEN IF THE STOCK MARKET SHOULD
WEAKEN, IT COULD BE POSITIVE FOR INTEREST RATES, AS CONSUMER CONFIDENCE,
RETAIL SALES, AND THE HOUSING MARKET COULD COOL DOWN. WE INTEND TO LOOK HARD,
BOTH DOMESTICALLY AND ABROAD, FOR GOOD OPPORTUNITIES IN THE FIXED-INCOME
MARKETS. EACH YEAR OUR FIXED-INCOME TEAM EITHER MEETS WITH, OR GOES OUT IN
THE FIELD TO VISIT, A WIDE VARIETY OF COMPANIES. THAT EFFORT HAS PAID OFF IN
THE PAST, AND WE HOPE IT WILL CONTINUE TO PRODUCE GOOD RETURNS IN 1997.
[LOGO] /s/ RONALD V. SPEAKER
----------------------
RONALD V. SPEAKER
BOND PORTFOLIO MANAGER
This material must be preceded or accompanied by the Fund's current prospectus.
4
<PAGE>
WRL SERIES, FUND, INC.
GROWTH PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
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GROWTH PORTFOLIOCOMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
WRL SERIES FUND, INC. GROWTH PORTFOLIO
AND THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS
[GRAPH 3]
DOMESTIC EQUITY MARKETS CLOSED OUT ANOTHER STRONG YEAR, LOGGING IMPRESSIVE
RESULTS FOR 1996. ALTHOUGH STOCK INDEXES MOVED HIGHER IN THE FOURTH QUARTER,
THEIR PERFORMANCE WAS SOMEWHAT DECEPTIVE BECAUSE RETURNS WERE DRIVEN BY AN
UNUSUALLY SMALL NUMBER OF STOCKS. THE STANDARD & POOR'S INDEX OF 500 COMMON
STOCKS GAINED 8.34% FOR THE QUARTER, VERSUS 0.63% FOR THE GROWTH PORTFOLIO. FOR
THE FULL YEAR ENDED DECEMBER 31, 1996, THE PORTFOLIO GAINED 17.96%,
UNDERPERFORMING THE INDEX, WHICH GAINED 22.96%.
THERE ARE ALWAYS INDIVIDUAL DISAPPOINTMENTS DURING ANY PERFORMANCE PERIOD, BUT
FOURTH QUARTER PERFORMANCE WAS DETERMINED BY THE MARKET'S UNUSUALLY NARROW
FOCUS. ALMOST ACROSS THE BOARD, THE FOURTH QUARTER RALLY WAS A FLIGHT TO
LIQUIDITY--NVESTORS PUT MONEY ALMOST EXCLUSIVELY INTO COMPANIES WITH LARGER
MARKET CAPITALIZATIONS AND HIGHER TRADING VOLUMES. NOT ONLY DID LARGE STOCKS
CONTINUE TO OUTPERFORM SMALLER STOCKS, BUT THE LARGEST STOCKS IN EACH
CAPITALIZATION CATEGORY, SMALL-, MID-, AND LARGE-CAP, PERFORMED SIGNIFICANTLY
BETTER THAN THEIR SMALLER SIBLINGS. MUCH OF THIS "BIG IS BEAUTIFUL" RALLY
OCCURRED DURING THE SECOND HALF OF THE YEAR, AFTER THE JULY DECLINE, WHEN LARGE
STOCKS REBOUNDED QUICKLY AND SMALLER STOCKS, WHICH HAD BEEN SEVERELY BATTERED IN
THE SUMMER SELL-OFF, RECOVERED ONLY MODERATELY.
WHY THE RUSH TO LIQUIDITY? THERE IS PROBABLY NO SINGLE ANSWER, BUT BIG STOCKS
OFTEN DRAW A PREMIUM WHEN INVESTORS ARE NERVOUS ABOUT EARNINGS AND/OR MARKET
VALUATIONS. EARNINGS SLOWED IN 1996, AND APPEAR TO BE SLOWING FURTHER IN 1997
(AT LEAST COMPARED TO THE RECORD GAINS OF 1992-1995). MEANWHILE, STOCK PRICES
HAVE SURGED, SUPPORTED BY EXCELLENT ECONOMIC CONDITIONS: MODERATE GROWTH, MILD
INFLATION, AND LOW INTEREST RATES. DURING THE LAST QUARTER, THE COMBINATION OF
SLOWER EARNINGS GROWTH AND DRAMATIC MARKET ADVANCES PUT THE SQUEEZE ON
VALUATIONS AND SENT INVESTORS SCURRYING FOR A SAFE HAVEN. UNFORTUNATELY, "SAFE"
STOCKS WERE BID UP TO WHAT I THINK ARE "UNSAFE" LEVELS. ON THE PLUS SIDE,
HOWEVER, MANY STOCKS THAT THE RALLY IGNORED FELL TO ATTRACTIVE VALUATIONS, SO
SMALL STOCKS NOW HAVE SIGNIFICANTLY MORE POTENTIAL FOR APPRECIATION, AND
SIGNIFICANTLY LESS POTENTIAL FOR DEPRECIATION, THAN THE HIGH-FLYING BEHEMOTHS.
WE HAVE NO IDEA WHEN THE WINDS WILL SHIFT. BUT WE DO KNOW THE MARKET WILL
EVENTUALLY ABANDON ITS FIXATION ON SIZE, SOONER THAN LATER PROBABLY, AND ONCE
AGAIN START REWARDING COMPANIES FOR EXCEPTIONAL INDIVIDUAL FUNDAMENTALS. ON AN
HISTORICAL BASIS, THE FOURTH QUARTER WAS AN ANOMALY.
DESPITE THE WEAKER PERFORMANCE OF THE FOURTH QUARTER, WE REMAIN VERY
ENTHUSIASTIC ABOUT HEALTH CARE, FINANCIAL SERVICES, TELECOMMUNICATIONS,
TECHNOLOGY, AND SELECTED RETAILERS. WE BELIEVE THESE SECTORS ARE POISED TO
BENEFIT FROM FUNDAMENTAL CHANGES IN ECONOMIC AND DEMOGRAPHIC TRENDS, BOTH AT
HOME AND ABROAD. WITHIN THESE SECTORS, WE WILL CONTINUE TO FOCUS ON INDIVIDUAL
COMPANIES THAT HAVE EXCEPTIONAL FUNDAMENTALS. EVEN THOUGH THE SHORT-TERM RISK
MAY BE HIGHER WITH SOME OF THESE COMPANIES THAN WITH MORE MATURE BUSINESSES, THE
LONG-TERM POTENTIAL IS PROPORTIONALLY HIGHER.
AS WE ENTER 1997, WE DO NOT INTEND TO CHANGE OUR STRIPES. WE INTEND TO STAY THE
COURSE WHATEVER THE MARKET DOES AND FOCUS SQUARELY ON LONG-TERM RESULTS. BUT WE
DO INTEND TO EXECUTE OUR STRATEGY OPPORTUNISTICALLY, BECAUSE WE EXPECT STOCK
PRICES TO BE VOLATILE THIS YEAR. ONE REASON IS THE INCREDIBLE SPEED AT WHICH
INFORMATION IS NOW DISSEMINATED AND, AS A RESULT, HOW RAPIDLY THE MARKETS REACT.
THERE IS ALSO ENORMOUS PRESSURE ON INVESTMENT MANAGERS NOT TO GET CAUGHT IN A
DOWNTURN. MANY MANAGERS ARE APPARENTLY TRYING TO KEEP ONE FOOT OUT THE DOOR,
WHICH, THOUGH IT MAY BE GOOD NEWS TO CONTRARIANS, CAN FUEL VOLATILITY. THE FACT
THAT WE ARE IN NEW TERRITORY ON THE INDEXES ALSO MAKES SOME INVESTORS NERVOUS.
FOR BETTER OR WORSE, A 1,000-POINT MOVE IS NOT WHAT IT USED TO BE. SO WE WILL BE
MORE SELECTIVE AND, WHENEVER POSSIBLE, USE VOLATILITY TO OBTAIN BETTER PRICES ON
BOTH THE BUY AND SELL SIDE.
[LOGO] /s/ SCOTT W. SCHOELZEL
-------------------
SCOTT W. SCHOELZEL
GROWTH PORTFOLIO MANAGER
This material must be preceded or accompanied by the Fund's current prospectus.
5
<PAGE>
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
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COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO AND THE MERRILL LYNCH 1-10 YEAR
GOVERNMENT BOND INDEX
[GRAPH 4]
IT WAS A TALE OF TWO MARKETS FOR DOMESTIC INTEREST RATES DURING 1996 WITH BOND
YIELDS GENERALLY RISING IN THE FIRST HALF OF THE YEAR AND THEN FALLING FOR MOST
OF THE LAST SIX MONTHS. INTEREST RATES PEAKED AROUND MID-YEAR BUT STILL ENDED
THE YEAR AT LEVELS HIGHER THAN AT THE END OF 1995. THE YIELDS ON TREASURIES
MATURING IN TWO THROUGH 30 YEARS INCREASED BY ABOUT 100 BASIS POINTS IN THE
FIRST SIX MONTHS OF THE YEAR AND DECREASED BY APPROXIMATELY 25 BASIS POINTS IN
THE SECOND HALF. THE TWO-YEAR AND FIVE-YEAR TREASURY NOTES CLOSED THE YEAR AT
5.87% AND 6.21%, RESPECTIVELY, WHILE THE BENCHMARK 30-YEAR TREASURY BOND YIELDED
6.64% AT 1996 YEAR END.
THE INTEREST RATE FLUCTUATIONS DURING 1996 WERE TRIGGERED AS THE MARKET
ATTEMPTED TO ASSESS THE STRENGTH OF THE ECONOMY, DETERMINE THE EXTENT OF
INFLATION CONCERNS (INCLUDING WAGE PRESSURES), AND PREDICT POTENTIAL FEDERAL
RESERVE BOARD (FED) ACTION. SHARP PRICE DECLINES IN THE SPRING AND EARLY SUMMER
WERE FOLLOWED BY A TRADING RANGE ENVIRONMENT THAT LASTED UNTIL THE FALL RALLY.
THE RALLY FIZZLED IN DECEMBER, HOWEVER, ENABLING BOND PRICES TO ONLY PARTIALLY
RECOVER THEIR PRINCIPAL LOSSES FOR THE YEAR. AFTER A 25-BASIS-POINT EASING IN
LATE JANUARY, THE FED'S ONLY MOVE IN 1996, EXPECTATIONS OF A TIGHTENING MOVE
DURING THE SUMMER MONTHS EVENTUALLY GAVE WAY TO A NEUTRAL OUTLOOK AS A SLOWDOWN
IN THE ECONOMY BECAME APPARENT.
THE SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO'S INVESTMENT OBJECTIVE CALLS FOR
AS HIGH A LEVEL OF CURRENT INCOME AS IS CONSISTENT WITH THE PRESERVATION OF
CAPITAL WHILE MAINTAINING A MAJORITY OF HOLDINGS IN U.S. GOVERNMENT SECURITIES.
THIS CONSERVATIVE ORIENTATION LIMITS THE NUMBER OF OPTIONS AVAILABLE TO ENHANCE
PERFORMANCE. IN ADDITION, THE VOLATILE INTEREST RATE ENVIRONMENT IN 1996
PRODUCED A DIFFICULT MARKET IN GENERAL FOR BOND PORTFOLIOS, ESPECIALLY COMPARED
WITH THE EQUITY MARKET ADVANCE (AS WELL AS LAST YEAR'S VERY STRONG BOND MARKET
RETURNS). STILL, THE PORTFOLIO ACHIEVED A RESPECTABLE LEVEL OF PERFORMANCE WITH
A TOTAL RETURN OF 3.48% FOR THE YEAR ENDED DECEMBER 31, 1996, COMPARED TO A
RETURN OF 3.93% FOR THE BENCHMARK MERRILL LYNCH 1-10 YEAR GOVERNMENT INDEX
("INDEX"). THE PORTFOLIO'S PERFORMANCE ALSO COMPARED FAVORABLY TO THE BOND
MARKET IN GENERAL, WHERE INDEXES SUCH AS THE LEHMAN BROTHERS
GOVERNMENT/CORPORATE INDEX RETURNED 2.90% FOR THE YEAR.
TRANSACTION ACTIVITY DURING THE YEAR MAINTAINED THE PORTFOLIO'S DURATION IN A
RANGE GENERALLY BETWEEN 80% AND 105% OF THE INDEX. PARTICULARLY PLEASING WAS THE
FACT THAT PERFORMANCE WAS ENHANCED BY KEEPING THE DURATION SLIGHTLY SHORTER THAN
THE INDEX DURING THE RISING RATE ENVIRONMENT IN THE FIRST HALF OF THE YEAR. WE
REMAINED SLIGHTLY DEFENSIVELY POSITIONED IN THE LATTER PART OF THE YEAR, WHICH
CAUSED PERFORMANCE TO LAG IN THE SEPTEMBER THROUGH NOVEMBER RALLY. THE
PORTFOLIO'S PERFORMANCE WAS ENHANCED THROUGHOUT THE YEAR BY INCREMENTAL YIELDS
FROM ALLOCATIONS TO SPREAD PRODUCTS SUCH AS HIGH-QUALITY CORPORATE,
SUPRANATIONAL, ASSET-BACKED, AND MORTGAGE-BACKED SECURITIES.
LOOKING TOWARD NEXT YEAR, WE EXPECT BONDS TO REMAIN IN A BROAD TRADING RANGE.
GIVEN THIS MODESTLY BEARISH OUTLOOK, THE PORTFOLIO IS POSITIONED TO BENEFIT
PRIMARILY FROM INTEREST INCOME RATHER THAN PRICE CHANGES. AT THE END OF THE
YEAR, THE PORTFOLIO'S AVERAGE MATURITY OF SLIGHTLY MORE THAN FOUR YEARS RESTED
AROUND THE MID-POINT OF ITS PERMISSIBLE RANGE, WHILE DURATION WAS APPROXIMATELY
96% OF THE INDEX. THE MATURITY STRUCTURE IS ALSO BIASED SOMEWHAT TOWARD A
BARBELL (DUE PARTIALLY TO LIQUIDITY NEEDS), WHICH POSITIONS THE PORTFOLIO TO
BENEFIT FROM A FLATTENING YIELD CURVE ENVIRONMENT. FINALLY, THE PORTFOLIO HAS
SUFFICIENT FLEXIBILITY TO ADJUST QUICKLY TO CHANGES FROM OUR PRESENT INTEREST
RATE OUTLOOK FOR 1997.
[LOGO] /s/ CLIFFORD A. SHEETS /s/ JARRELL D. FREY
---------------------- -------------------
CLIFFORD A. SHEETS JARRELL D. FREY
SHORT-TO-INTERMEDIATE GOVERNMENT
CO-PORTFOLIO MANAGERS
This material must be preceded or accompanied by the Fund's current prospectus.
6
<PAGE>
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
GLOBAL PORTFOLIO AND THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX
[GRAPH 5]
THE U.S. MARKETS CLOSED OUT ANOTHER POSITIVE YEAR WITH A STRONG FOURTH QUARTER
RALLY LED BY LARGER, MORE WELL-ESTABLISHED COMPANIES. AFTER JULY'S GENERAL
MARKET SELL-OFF, THERE WAS A VISIBLE FLIGHT TO HIGHER QUALITY ISSUES WITH MORE
PREDICTABLE EARNINGS STREAMS, DRIVING THE S&P 500 INDEX TO AN IMPRESSIVE GAIN.
IN NOVEMBER, U.S. EQUITIES DREW SUPPORT FROM A STRONGER BOND MARKET, WHERE YIELD
ON THE 30-YEAR U.S. TREASURY BOND FELL TO A NINE-MONTH LOW.
INTERNATIONAL MARKETS EXPERIENCED MIXED RESULTS FOR THE YEAR. ALTHOUGH MOST
FOREIGN MARKETS FAILED TO KEEP PACE WITH THE U.S., MANY POSTED HEALTHY GAINS AND
SOME SET A NUMBER OF INDIVIDUAL RECORDS DURING THE FOURTH QUARTER. ASIDE FROM
ALAN GREENSPAN RATTLING INTERNATIONAL AND DOMESTIC MARKETS EARLY IN DECEMBER,
MANY GLOBAL MARKETS ENJOYED A POSITIVE EQUITY ENVIRONMENT. EUROPE WAS
PARTICULARLY SOUND AS STOCKS ENJOYED LOW INFLATION, FALLING INTEREST RATES,
IMPROVING BOND MARKETS, AND A STRONG DOLLAR. A STRONG DOLLAR BENEFITS EXPORTERS,
MAKING THEIR PRODUCTS MORE COMPETITIVE. WITHIN THIS ENVIRONMENT, THE GLOBAL
PORTFOLIO GAINED 27.74% FOR THE YEAR ENDED DECEMBER 31, 1996. FOR THE SAME
PERIOD, THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX GAINED 14.03% AND
THE MORGAN STANLEY EAFE INDEX GAINED 11.63%.
OUR APPROACH TO PORTFOLIO MANAGEMENT REMAINS BASICALLY UNCHANGED, WE RELY ON
INTENSIVE, FUNDAMENTAL RESEARCH. BY UNDERSTANDING THE UNDERLYING POTENTIAL OF
OUR COMPANIES, WE FEEL THAT WE CAN ADD GREATER VALUE TO SECURITY SELECTION AND
CAN MORE COMPLETELY AND ACCURATELY PREDICT EACH COMPANY'S GROWTH POTENTIAL.
MACROECONOMIC ISSUES ARE A SECONDARY CONSIDERATION IN THE SECURITY SELECTION
PROCESS, ALTHOUGH THEY ARE NOT IGNORED. AS SUCH, COUNTRY AND INDUSTRY
ALLOCATIONS ARE A RESULT OF THE SECURITY SELECTION PROCESS AND ARE NOT DRIVEN BY
A PREDETERMINED PERCENTAGE. THIS HAS BEEN THE CRUX OF OUR INVESTMENT PHILOSOPHY
AND THE KEY TO THE GLOBAL PORTFOLIO'S RETURNS.
THE PORTFOLIO HAD A NUMBER OF STRONG PERFORMERS DURING THE PERIOD. LONG-TIME
HOLDINGS LIKE ASSA-ABLOY AB, WM-DATA AB, AND RENTOKIL GROUP PLC ALL POSTED
IMPRESSIVE GAINS. ASSA-ABLOY IS THE LARGEST LOCK PRODUCER IN EUROPE WITH AN
INTERNATIONAL CUSTOMER BASE. THE COMPANY JUST ANNOUNCED SOLID EARNINGS FOR THE
FIRST NINE MONTHS OF THE YEAR WITH GOOD POTENTIAL SALES GROWTH IN THE MONTHS
AHEAD; REVENUES APPEAR STRONG AS THE COMPANY CONTINUES TO GAIN ADDITIONAL MARKET
SHARE. WM-DATA FITS IN WITH OUR BELIEF IN COMPUTER OUTSOURCING, AND THE STOCK
HAS PERFORMED REMARKABLY WELL. A DOMINANT PLAYER IN THE NORDIC REGION, THE
COMPANY IS WELL-POSITIONED WITH ITS FULL RANGE OF COMPREHENSIVE SOLUTIONS IN THE
INFORMATION TECHNOLOGY FIELD. RENTOKIL IS A UNITED KINGDOM BASED COMPANY WHICH
HAS AN EXCELLENT MANAGEMENT TEAM. THE COMPANY OPERATES HIGH-MARGIN, RECURRING
BUSINESSES, RANGING FROM PLANT AND PEST CONTROL TO HOSPITAL WASTE MANAGEMENT AND
DISPOSAL.
THE PORTFOLIO ALSO ACHIEVED GOOD RETURNS FROM MORE RECENT ADDITIONS, INCLUDING
FRESENIUS MEDICAL CARE AG AND BARCLAYS PLC. FRESENIUS IS A WORLDWIDE LEADER IN
THE DIALYSIS EQUIPMENT BUSINESS, AND VIA ITS RECENT MERGER WITH GRACE'S NMC
DIVISION, NOW CONTROLS 25% OF THE U.S. DIALYSIS MARKET. FRESENIUS IS WELL
POSITIONED TO GAIN ADDITIONAL MARKET SHARE IN THE GLOBAL DIALYSIS BUSINESS. IN
THE UNITED KINGDOM, BARCLAYS PLC HAS UNDERGONE MAJOR RESTRUCTURINGS WHICH HAVE
DRAMATICALLY LOWERED ITS COST STRUCTURE. BARCLAYS HAS DEVELOPED A BETTER
CLIENTELE MIX AND BZW, ITS ASSET MANAGEMENT DIVISION, CONTINUES TO GROW.
POSITIONS IN TWO HOLDINGS, EDS (ELECTRONIC DATA SYSTEMS CORPORATION) AND SAP
AG-VORZUG WERE TRIMMED OR LIQUIDATED DURING THE FOURTH QUARTER. MISSED EARNINGS
ESTIMATES SURPRISED ANALYSTS, AND EDS SOLD-OFF. WE TRIMMED THE POSITION ON
GENERAL CONCERN ABOUT FUTURE EARNINGS. SAP ALSO DISAPPOINTED ANALYSTS WITH
LOWER-THAN-EXPECTED SALES GROWTH EVEN THOUGH THE COMPANY POSTED A 33% INCREASE
DURING THE PERIOD.
LOOKING AHEAD, FOREIGN MARKETS ARE BECOMING INCREASINGLY DIVERSE. THIS TREND IS
LIKELY TO BECOME EVEN MORE PRONOUNCED AS COUNTRIES DEVELOP STRONGER, MORE
COMPLEX ECONOMIES. FOREIGN MARKETS ARE ALSO LESS EFFICIENT, AND THEREFORE MORE
CONGENIAL TO INDIVIDUAL STOCK SELECTION. SECURITY SELECTION IS THE KEY TO
LONG-TERM PERFORMANCE AND REMAINS OUR FOCUS. BY UTILIZING OUR DEDICATED RESEARCH
STAFF TO UNCOVER COMPANIES WITH STRONG EARNINGS GROWTH POTENTIAL AROUND THE
WORLD, THE PORTFOLIO SHOULD CONTINUE TO BENEFIT FROM GLOBAL INVESTING.
[LOGO] /s/ HELEN YOUNG HAYES
------------------------
HELEN YOUNG HAYES
GLOBAL PORTFOLIO MANAGER
This material must be preceded or accompanied by the Fund's current prospectus.
Foreign securities involve special risks described in the prospectus that
should be considered carefully before investing.
7
<PAGE>
WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO, THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS AND
LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX
[GRAPH 6]
THE EQUITY-INCOME PORTFOLIO IS MANAGED USING A STRATEGIC TOTAL RETURN APPROACH
WHICH EMPHASIZES CAPITAL APPRECIATION, INCOME GENERATION, AND PROTECTION AGAINST
EXCESSIVE VOLATILITY. IN ORDER TO PROVIDE AN ATTRACTIVE RISK/REWARD PROFILE, THE
PORTFOLIO INVESTS IN A BLEND OF COMMON STOCKS, CONVERTIBLE SECURITIES,
GOVERNMENT AND CORPORATE BONDS, AND CASH. FOR THE YEAR ENDED DECEMBER 31, 1996,
THE EQUITY-INCOME PORTFOLIO ACHIEVED A 15.00% TOTAL RETURN. AS WAS THE CASE IN
1995, COMMON STOCK INVESTMENTS GENERATED THE MAJORITY OF THE PORTFOLIO'S
ADVANCE, WHILE THE FIXED-INCOME SECTOR PROVIDED SIGNIFICANT INCOME AND CUSHIONED
THE VOLATILITY. THIS RELATIONSHIP BETWEEN STOCKS AND BONDS WAS REFLECTED IN
FINANCIAL MARKET INDEXES, WHERE THE STANDARD & POOR'S 500 INDEX OF 500 COMMON
STOCKS GAINED 22.96% WHILE THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE
BOND INDEX RETURNED 4.05% FOR THE YEAR.
DURING 1996, THE STOCK MARKET WAS DRIVEN HIGHER BY SOLID CORPORATE PROFIT
GROWTH, MILD INFLATION, RECORD CASH FLOW INTO MUTUAL FUNDS, AND SIGNIFICANT
CORPORATE SHARE REPURCHASE PROGRAMS. ANOTHER IMPORTANT ASPECT OF LAST YEAR'S
CAPITAL MARKET ENVIRONMENT WAS STRONG MERGER AND ACQUISITION ACTIVITY. THE
LONG-TERM STRATEGY OF MANY CORPORATIONS IS TO EFFICIENTLY EXPAND THEIR
PRODUCT/SERVICE OFFERINGS IN AN EFFORT TO GENERATE INCREMENTAL REVENUES AND
EARNINGS. IN SEVERAL INDUSTRIES, COMPANIES ARE FULFILLING THIS STRATEGIC
INITIATIVE BY ACQUIRING BUSINESSES WITH COMPLEMENTARY PRODUCT LINES OR
DISTRIBUTION CAPABILITIES. IN MANY CASES, THE ACQUISITION CRITERIA FOR CORPORATE
ACQUIRERS IS CONSISTENT WITH THE CHARACTERISTICS WE LOOK FOR IN COMPANIES
- --FINANCIAL STRENGTH, SUPERIOR MARKET POSITIONS, SUSTAINABLE PROFITABILITY
LEVELS, AND A FAVORABLE GROWTH OUTLOOK. THE ACQUISITIONS OF DURACELL BY GILLETTE
AND OF LOCTITE BY THE GERMAN CONGLOMERATE HENKEL ARE TWO EXAMPLES OF HOW
PORTFOLIO RETURNS WERE ENHANCED BY OWNERSHIP OF STRATEGIC ACQUISITION
CANDIDATES.
STRONG STOCK SELECTION WITHIN SEVERAL SECTORS INCLUDING HEALTH CARE, FINANCE,
CONSUMER PRODUCTS, AND ENERGY DROVE THE PORTFOLIO'S ADVANCE IN 1996. WE EXPECT
ESTABLISHED, QUALITY COMPANIES TO CONTINUE TO BE STRONG PERFORMERS AS LONG AS
INVESTORS REMAIN CAUTIOUS ABOUT THE SUSTAINABILITY OF THE ECONOMIC ADVANCE.
INTEREST RATES ARE UNLIKELY TO SHIFT MEANINGFULLY OVER THE NEAR-TERM AS LIMITED
INFLATIONARY PRESSURES ARE VISIBLE AT THIS TIME. BASED ON OUR OUTLOOK, WE WILL
CONTINUE TO EMPHASIZE THE SHARES OF HIGH-QUALITY COMPANIES THAT ARE EXPECTED TO
GENERATE STEADY EARNINGS, CASH FLOW, AND DIVIDEND GROWTH REGARDLESS OF ECONOMIC
CONDITIONS. THE CURRENT ENVIRONMENT APPEARS TO BE WELL SUITED TO THE
EQUITY-INCOME PORTFOLIO'S PHILOSOPHY AND STRATEGY.
[LOGO] /s/ LUTHER KING /s/ SCOT C. HOLLMANN
--------------- --------------------
LUTHER KING SCOT C. HOLLMANN
EQUITY-INCOME CO-PORTFOLIO MANAGERS
This material must be preceded or accompanied by the Fund's current prospectus.
8
<PAGE>
WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO AND THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS
[GRAPH 7]
ON THE STRENGTH OF A TERRIFIC FIRST NINE MONTHS, AND DESPITE A VERY WEAK FOURTH
QUARTER, THE EMERGING GROWTH PORTFOLIO GAINED 18.88% FOR THE YEAR ENDED DECEMBER
31, 1996. THIS PERFORMANCE COMPARES FAVORABLY TO THE RUSSELL 2000, WHICH GAINED
16.55% DURING THE YEAR, BUT LAGS THE NASDAQ COMPOSITE AND THE S & P MIDCAP INDEX
WHICH ROSE 23.2% AND 19.22%, RESPECTIVELY.
THE PORTFOLIO, WITH ITS EMPHASIS ON SMALL-AND MID-CAPITALIZATION GROWTH STOCKS,
WAS IDEALLY POSITIONED FOR THE FIRST THREE QUARTERS WHEN THE MARKET FOCUSED
PRIMARILY ON GROWTH COMPANIES AS THE ECONOMY SLOWED. THE MARKET DID AN ABOUT
FACE IN THE FOURTH QUARTER, HOWEVER, CONCENTRATING INSTEAD ON COMPANIES WITH
TURNAROUND POTENTIAL BUT LITTLE CURRENT GROWTH, AND ON LARGER COMPANIES THAT
TRADE MORE ACTIVELY. AT THE SAME TIME, STOCKS THAT DID SO WELL THE FIRST NINE
MONTHS WERE LEFT TO CONSOLIDATE THEIR GAINS. WHILE THE BEST PERFORMING GROUP WAS
ENERGY, AND HEALTH CARE WAS THE WORST, THE BEST AND WORST PERFORMING STOCKS CAME
FROM MANY DIFFERENT SECTORS. IN OTHER WORDS, IT BECAME A STOCK PICKER'S MARKET
RATHER THAN A SECTOR BETTING MARKET.
THE INVESTMENT STYLE EMPLOYED IN THE EMERGING GROWTH PORTFOLIO IS A BOTTOM UP
APPROACH WHICH FOCUSES ON STOCK SELECTION RATHER THAN "MARKET TIMING" OR "SECTOR
ROTATION". RISK IS CONTROLLED BY MAINTAINING A BROADLY DIVERSIFIED PORTFOLIO,
AND NOT MAKING BIG BETS ON ANY ONE SECTOR OR STOCK. USUALLY THE PORTFOLIO
REMAINS FULLY INVESTED. THE OBJECTIVE IS TO OUTPERFORM THE MARKET BY PICKING THE
BEST STOCKS IN EACH SECTOR. THIS INVESTMENT STYLE IS DESIGNED TO DELIVER
CONSISTENT RESULTS.
STOCKS ARE SELECTED BASED ON A COMPANY'S POTENTIAL TO DELIVER UPSIDE EARNINGS
SURPRISES. TO FIND SUCH COMPANIES, WE LOOK FOR RISING EARNINGS ESTIMATES AND
IMPROVING VALUATIONS. INVESTMENTS ARE MADE IN THE HIGHEST GROWTH COMPANIES IN
EACH SECTOR THAT MEET OUR BUY CRITERIA. IN GENERAL, THESE WILL BE SMALLER
COMPANIES WITH REVENUES LESS THAN $2 BILLION.
OUR BIGGEST GAINERS HELD DURING THE ENTIRE YEAR WERE: CLARIFY, INC. (SOFTWARE),
DURA PHARMACEUTICALS, INC. (EMERGING PHARMACEUTICALS), USA DETERGENTS, INC.
(PACKAGED GOODS), MINI MED, INC. (MEDICAL SPECIALTIES), AND CHESAPEAKE ENERGY
CORPORATION (OIL AND GAS EXPLORATION).
WHILE WE CONTINUE TO REMAIN OPTIMISTIC ABOUT THE LONG-TERM PROSPECTS FOR SMALLER
CAPITALIZATION GROWTH STOCKS, WE CANNOT IGNORE THE RECENT POOR RELATIVE
PERFORMANCE OF THIS SECTOR OF THE MARKET. BUT WITH THEIR RELATIVE VALUATION
LEVELS NOW VERY ATTRACTIVE COMPARED TO LARGER STOCKS, AND GIVEN THE POTENTIAL
BENEFIT FROM ANY CUT IN THE CAPITAL GAINS TAX RATE, SMALL GROWTH STOCKS COULD
WELL PLAY CATCH-UP WITH THE REST OF THE MARKET.
[LOGO] /s/ GARY M. LEWIS
-----------------
GARY M. LEWIS
EMERGING GROWTH PORTFOLIO MANAGER
This material must be preceded or accompanied by the Fund's current prospectus.
9
<PAGE>
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO, THE VALUE LINE (ARITHMETIC) INDEX AND THE STANDARD
& POOR'S INDEX OF 500 COMMON STOCKS
[GRAPH 8]
1996 PROVED TO BE AN INTERESTING AND TURBULENT TIME IN THE MARKET. IN JANUARY,
THE AGGRESSIVE GROWTH PORTFOLIO WAS COMING OFF AN EXTRAORDINARY YEAR, HAVING
SIGNIFICANTLY OUTPERFORMED ALL RELEVANT MAJOR MARKET INDEXES. DURING THE PAST
TWELVE MONTHS, HOWEVER, IT HAS BEEN MUCH MORE DIFFICULT TO OUTPERFORM THE
MARKET. ALTHOUGH THE PORTFOLIO POSTED A POSITIVE RETURN OF 10.45% FOR THE YEAR
ENDED DECEMBER 31, 1996, IT LAGGED ITS BENCHMARK INDEX, THE STANDARD & POOR'S
INDEX OF 500 COMMON STOCKS, WHICH RETURNED 22.96% FOR THE PERIOD. THE GOOD NEWS
IS THAT WE FEEL THAT THE FACTORS WHICH HAVE CONTRIBUTED TO OUR RECENT
PERFORMANCE ARE NOW BEHIND US, SETTING THE STAGE FOR A STRONG REBOUND NEXT YEAR.
IN A SENSE, THIS PAST YEAR HAS ALMOST BEEN A CYCLE. WE BEGAN WITH THE ASSUMPTION
THAT THE ECONOMY WAS EXCEEDINGLY WEAK, WENT THROUGH A PERIOD FROM MID-MARCH TO
LATE OCTOBER DURING WHICH THE POPULAR VIEW WAS THAT THE ECONOMY WAS TOO STRONG,
AND THEN MOVED BACK IN THE DIRECTION TO CLOSE THE YEAR WHERE WE BEGAN.
THE ECONOMIC UNCERTAINTY WHICH EXISTED THROUGHOUT MOST OF THE YEAR RESULTED IN
DEFENSIVE POSITIONING OF INVESTORS. AS A RESULT, THERE WAS A FLIGHT TO LARGER,
MORE PREDICTABLE, BLUE-CHIP TYPE STOCKS. THE S&P 500, THEREFORE, ENJOYED A VERY
STRONG YEAR, DRIVEN BY THE LARGER, STABLE COMPANIES IN THE INDEX. AT THE SAME
TIME, THE AGGRESSIVE GROWTH PORTFOLIO, WITH ITS "ALL-CAP" (SMALL-, MEDIUM-, AND
LARGE-CAPITALIZATION) PORTFOLIO MANAGEMENT STRATEGY, WAS RELATIVELY
UNDERWEIGHTED IN THESE STRONG PERFORMING STOCKS. ADDITIONALLY, AS SMALL-AND
MID-CAP STOCKS SIGNIFICANTLY LAGGED THE LARGER AVERAGES, THE PORTFOLIO'S
EXPOSURE TO THESE TYPES OF STOCKS CAUSED IT TO UNDERPERFORM THE S&P 500, WHICH
HAS RELATIVELY LITTLE EXPOSURE IN THESE AREAS.
WE FEEL SEVERAL "FEAR FACTORS" WHICH CONTRIBUTED TO THIS DEFENSIVE STRATEGY OF
INVESTING HAVE FINALLY BEEN PUT TO REST. ONE OF THESE FACTORS WAS THE FEAR THE
FEDERAL RESERVE WOULD DEEM IT NECESSARY TO RAISE INTEREST RATES. SCANT QUARTERLY
INCREASES IN THE GDP, A DECLINE IN WEEKLY HOURS WORKED, AND, MOST IMPORTANTLY,
LOW LEVELS OF INFLATION, ALL SUGGEST THE FEDERAL RESERVE WILL NOT FIND THE NEED
TO TIGHTEN RATES. ANOTHER CONCERN WAS THAT THE DEMOCRATS WOULD REGAIN CONTROL OF
THE POLITICAL AGENDA. THE REPUBLICANS, HOWEVER, MAINTAINED CONTROL OF THE HOUSE
OF REPRESENTATIVES AND INCREASED THEIR CONTROL OF THE SENATE BY TWO SEATS. THESE
RESULTS ESSENTIALLY FORCE A MODERATE AGENDA ON PRESIDENT CLINTON AND PROBABLY
DOOM FOR A LONG TIME TO COME ANY RETURN TO LIBERAL ISSUES.
WE CONTINUE TO MAINTAIN THAT ECONOMIC GROWTH IS NOT OVERLY ROBUST. FACTORS WHICH
SUPPORT OUR BELIEF INCLUDE A RECENT DROP IN THE PRICE OF GOLD, THE RISING
DOLLAR, AND SLOWING CORPORATE PROFITS. WE CONTEND THAT THE STOCK MARKET
CONTINUES TO BE UNDERVALUED RELATIVE TO THE BOND MARKET. FURTHERMORE, WE FEEL
THAT GROWTH STOCKS ARE UNDERVALUED RELATIVE TO THE REST OF THE STOCK MARKET,
HAVING RECOVERED MORE SLOWLY AND LESS IMPRESSIVELY THAN BLUE-CHIP STOCKS FROM
THE SELLOFF IN JULY. AS A RESULT, MANY OF THESE GROWTH STOCKS CURRENTLY HELD IN
THE PORTFOLIO HAVE LOW VALUATIONS RELATIVE TO THEIR EARNINGS GROWTH RATES.
IN CONCLUSION, THE ECONOMY AND THE STOCK MARKET ARE VERY FAVORABLE AT PRESENT.
THERE IS NOTHING TO DISSUADE US FROM A POSITIVE FORECAST FOR BOTH THE MARKET AND
THE AGGRESSIVE GROWTH PORTFOLIO IN 1997.
[LOGO] /s/ DAVID D. ALGER
----------------------------
DAVID D. ALGER PRESIDENT,
FRED ALGER MANAGEMENT, INC.
This material must be preceded or accompanied by the Fund's current prospectus.
10
<PAGE>
WRL SERIES FUND, INC.
BALANCED PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
BALANCED PORTFOLIO, THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS AND LEHMAN
BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX
[GRAPH 9]
THE BALANCED PORTFOLIO FINISHED THE YEAR ON A STRONG NOTE, GAINING 6.08% IN THE
FOURTH QUARTER. FOR THE YEAR ENDED DECEMBER 31, 1996, THE PORTFOLIO PROVIDED A
10.72% TOTAL RATE OF RETURN. BY COMPARISON, THE STANDARD & POOR'S INDEX OF 500
COMMON STOCKS GAINED 22.96% AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE
INTERMEDIATE BOND INDEX WAS UP 4.05% FOR THE SAME PERIOD. AT YEAR END, THE ASSET
ALLOCATION AMONG EQUITIES, FIXED INCOME, AND INTEREST-BEARING CASH RESERVES WAS
63%, 34%, AND 3% RESPECTIVELY.
WITHIN THE FIXED-INCOME COMPONENT, DURATION STOOD AT 6.49 YEARS. THE ONLY
HOLDINGS WITHIN THIS ASSET CLASS ARE U.S. TREASURIES MATURING BETWEEN APRIL OF
1999 AND FEBRUARY OF 2023. THIS SECTOR OF THE PORTFOLIO, WHICH CURRENTLY YIELDS
6.7%, PROVIDED FLAT RETURNS DURING THE YEAR DUE TO A WEAK BOND MARKET FROM
MID-FEBRUARY THROUGH EARLY SEPTEMBER. A RALLY THEN COMMENCED, LASTING UNTIL
EARLY DECEMBER. AT THAT TIME, YIELD ON THE 30-YEAR TREASURY BOND MOVED FROM
6.35% TO 6.64% BY THE MARKET CLOSE ON DECEMBER 31. WE ANTICIPATE BETTER TOTAL
RETURNS FROM THE BOND SECTOR OF THE PORTFOLIO DURING THE COMING YEAR.
THE PERFORMANCE WITHIN THE EQUITY SECTOR OF THE PORTFOLIO PROVIDED THE POSITIVE
FORCE BEHIND OUR RETURNS FOR THE YEAR. EMPLOYING A VALUE-ORIENTED STRATEGY, WE
HAVE THE EQUITY PORTION DISTRIBUTED AMONG A NUMBER OF INDUSTRIES AND
SUB-SECTORS. THE PORTFOLIO'S DIVERSIFIED HOLDINGS ATTEMPT TO INTERNALLY BALANCE
STOCK EXPOSURE TO SECTORS THAT WILL BENEFIT IF THE BROADER MARKET CONTINUES TO
ADVANCE, WHILE PROVIDING DEFENSIVE CHARACTERISTICS IF AND WHEN THE EQUITY MARKET
SHOULD WEAKEN. THE DEFENSIVE POSTURE IS PROVIDED BY DELIBERATELY INCLUDING
EQUITY GROUPS LIKE FINANCIALS, UTILITIES, AND REITS, THAT ARE INTEREST-RATE
SENSITIVE. THESE TYPES OF EQUITIES COULD DELIVER POSITIVE RELATIVE PERFORMANCE
IF THE ECONOMY SHOULD CONTINUE ITS MODEST GROWTH OR EVEN SLOW IN 1997. WE
ANTICIPATE THAT INTEREST RATES WILL MOVE SOMEWHAT LOWER OVER THE COURSE OF THE
YEAR, PROVIDING AN UPPER-PRICE BIAS TO THE ABOVE MENTIONED GROUPS.
AS PART OF THE ONGOING EFFORT TO PROVIDE A CAUTIOUS BALANCED APPROACH TO STOCK
AND BOND INVESTING, THE CURRENT YIELD ON THE PORTFOLIO WAS 4.2% AS OF THE END OF
DECEMBER. THIS RELATIVELY HIGH LEVEL OF CASH FLOW FROM INTEREST AND DIVIDENDS
NOT ONLY PROVIDES REINVESTABLE CASH FOR FURTHER PURCHASE, BUT ALSO SERVES AS A
DEFENSIVE TOOL TO LIMIT DOWN SIDE VOLATILITY.
AS 1997 UNFOLDS, WE EXPECT TO SEE THE CONTINUATION OF HIGH INFLOWS OF INVESTABLE
DOLLARS INTO EQUITY MUTUAL FUNDS. THIS POWERFUL FORCE WILL BE AUGMENTED BY A
FAVORABLE FEDERAL RESERVE THAT, WE BELIEVE, WILL EITHER HOLD SHORT-TERM INTEREST
RATES STEADY OR MODESTLY REDUCE THEM DEPENDING ON THE PACE OF THE ECONOMY AND
THE INFLATION OUTLOOK.
WE WOULD, HOWEVER, HIGHLIGHT TWO IMPORTANT RISK ELEMENTS THAT COULD AFFECT BOTH
THE EQUITY AND BOND MARKETS AT THIS TIME. FIRST, A SLOW GROWING ECONOMY WITHIN
WHICH CORPORATE MANAGERS COULD FIND IT EVEN MORE CHALLENGING TO MAINTAIN THE
GROWTH RATE OF THEIR EARNINGS PER SHARE. SECOND, IF THE ECONOMY DOES SLOW ENOUGH
DURING THE NEXT TWO QUARTERS, DECLINING INTEREST RATES MAY NOT PROVIDE ENOUGH
FORCE TO EXPAND PRICE/EARNINGS RATIOS TO OFFSET STAGNANT OR FALLING EARNINGS.
ALTHOUGH WE ARE OPTIMISTIC REGARDING PROSPECTIVE 1997 RESULTS IN GENERAL, WE
BELIEVE OUR BALANCED, VALUE-ORIENTED APPROACH MAY PROVE TO BE MORE REWARDING.
INDEED, A SOMEWHAT DEFENSIVE STYLE MAY BE MORE APPROPRIATE THAN IT HAS BEEN FOR
THE LAST TWO YEARS.
[LOGO] /s/ MICHAEL VAN METER
---------------------
MICHAEL VAN METER
BALANCED PORTFOLIO MANAGER
This material must be preceded or accompanied by the Fund's current prospectus.
11
<PAGE>
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
UTILITY PORTFOLIO, THE DOW JONES UTILITIES AVERAGE INDEX AND THE STANDARD &
POOR'S INDEX OF 500 COMMON STOCKS
[GRAPH 10]
1996 WAS AN EXCITING YEAR FOR THE UTILITY INDUSTRY, COMPLETE WITH MERGERS AND
ACQUISITIONS, SPIN-OFFS, AND LANDMARK LEGISLATION. OUR OBSERVATION IS THAT
EFFORTS TO BRING COMPETITION TO THE UTILITY INDUSTRY ARE PROGRESSING VERY
SLOWLY, ALLOWING THE COMPANIES TIME TO IMPROVE THEIR BALANCE SHEETS AND COST
STRUCTURES, TO WORK WITH THEIR COMMISSIONS AND LEGISLATURES, AND INCREASINGLY TO
FIND SYNERGISTIC MERGER PARTNERS. CLEARLY, MANY UTILITY MANAGEMENTS ARE
POSITIONING THEIR COMPANIES TO THRIVE IN THE MORE COMPETITIVE ENVIRONMENT OF THE
FUTURE.
FOR THE YEAR ENDED DECEMBER 31, 1996, THE UTILITY PORTFOLIO POSTED A TOTAL
RETURN OF 11.64%, FAR SURPASSING THE 3.08% RETURN FOR THE S&P UTILITY INDEX. IT
SHOULD BE NOTED THAT STANDARD & POOR'S REMOVED TELEPHONE UTILITIES FROM ITS
UTILITY INDEX AND PLACED THEM IN A SEPARATE S&P COMMUNICATIONS INDEX ON JULY 10,
1996. IN THE FUTURE, WE PLAN TO COMPARE THE PORTFOLIO'S PERFORMANCE WITH BOTH
THE S&P UTILITY INDEX, REPRESENTING ELECTRIC AND NATURAL GAS SECTORS, AND THE
S&P COMMUNICATIONS INDEX.
THE PORTFOLIO'S PERFORMANCE WAS BOLSTERED BY AN 11% ALLOCATION TO NATURAL GAS, A
SECTOR WHICH ENJOYED A NEARLY 33% TOTAL RETURN IN 1996. THIS PERFORMANCE DWARFED
THAT OF THE S&P ELECTRICS, DOWN 0.33% FOR THE YEAR AND THE S&P TELEPHONES, WHICH
WERE UP ONLY 1.01%. WHILE NATURAL GAS STOCKS BENEFITED FROM STRONG GAS PRICES
AND MERGER SPECULATION, THE INTEREST-SENSITIVE ELECTRICS WERE HELD BACK BY A
POORLY PERFORMING BOND MARKET. TELEPHONES SUFFERED FROM A COMBINATION OF RISING
INTEREST RATES, ENTERING THE YEAR IN AN OVERBOUGHT POSITION AND INVESTOR
CONCERNS REGARDING TELECOM DEREGULATION.
AN 8% ALLOCATION TO INTERNATIONAL UTILITIES ALSO CONTRIBUTED NICELY TO THE
PORTFOLIO'S RETURN, AS INTERNATIONAL UTILITIES SIGNIFICANTLY OUTPERFORMED
DOMESTIC UTILITIES IN 1996. FINALLY, THE PORTFOLIO HOLDS 23% IN NON-UTILITY
COMMON STOCKS AND CONVERTIBLE SECURITIES WHICH DIVERSIFY AWAY SOME OF THE
INTEREST RATE RISK INHERENT IN UTILITIES AND WHICH HAVE CONTRIBUTED
SIGNIFICANTLY TO THE DEFENSIVE CHARACTERISTICS OF THE PORTFOLIO.
WE EXPECT TO SEE MORE ELECTRIC UTILITY COMPANY MERGERS IN 1997 AND A
CONTINUATION OF THE CONVERGENCE THEME. THE FEDERAL ENERGY REGULATORY COMMISSION
HAS RECENTLY ISSUED GUIDELINES WHICH SHOULD QUICKEN THE PACE OF COMPLETING
PROPOSED ELECTRIC UTILITY MERGERS. THIS IS WELCOME NEWS. THE PREMIUMS BEING PAID
AND THE SYNERGISTIC SAVINGS RESULTING FROM THESE COMBINATIONS SHOULD BENEFIT THE
STOCKS. ADDITIONALLY, WE SHOULD SEE FURTHER COMPETITIVE RULINGS FROM STATE
UTILITY COMMISSIONS AND LEGISLATURES, REDUCING UNCERTAINTY IN THE GROUP. ON THE
TELEPHONE FRONT, RECENT DEREGULATION GUIDELINES PROPOSED BY THE FEDERAL
COMMUNICATIONS COMMISSION EXHIBIT A SLOW AND LESS HARSH APPROACH TO THE PROCESS,
RESULTING IN POSITIVE PERFORMANCES BY THESE STOCKS. LASTLY, UTILITIES RETAIN
THEIR DEFENSIVE INVESTMENT QUALITIES AS THE GENERAL STOCK MARKET BECOMES
INCREASINGLY VOLATILE.
WITHIN THIS ENVIRONMENT, WE WILL CONTINUE TO BUILD THE PORTFOLIO AROUND
HIGH-QUALITY DOMESTIC UTILITIES WITH SUPERIOR DIVIDENDS, DEFENSIVE NON-UTILITY
HOLDINGS, AND DIVERSIFIED INTERNATIONAL UTILITY HOLDINGS. WE WILL STRIVE TO
MAINTAIN THE DEFENSIVE QUALITIES OF THE UTILITY PORTFOLIO WHILE OFFERING A
COMPETITIVE RETURN.
[LOGO] /s/ LINDA A. DUESSEL /s/ CHRISTOPHER H. WILES
-------------------- ------------------------
LINDA A. DUESSEL CHRISTOPHER H. WILES
UTILITY CO-PORTFOLIO MANAGERS
This material must be preceded or accompanied by the Fund's current prospectus.
12
<PAGE>
WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO, THE STANDARD & POOR'S INDEX OF 500 COMMON
STOCKS AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX
[GRAPH 11]
1996 WAS A TERRIFIC YEAR FOR THE STOCK MARKET AND FOR THE TACTICAL ASSET
ALLOCATION PORTFOLIO.
WHILE THERE IS AN OLD ADAGE THAT SAYS "THE THIRD TIME IS THE CHARM," IN TERMS OF
THE STOCK MARKET, IT'S HARD TO IMAGINE 1997 BEING ANY MORE CHARMING THAN THE
PAST TWO YEARS. IN FACT 1995 AND 1996 PROVIDED EQUITY INVESTORS WITH THE
STRONGEST TWO-YEAR PERIOD IN NEARLY 40 YEARS. FOR THE FULL YEAR, THE STANDARD &
POOR'S INDEX OF 500 COMMON STOCKS RETURNED 22.96%, WHILE BONDS, AS MEASURED BY
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX, GAINED 4.05%.
THE TACTICAL ASSET ALLOCATION PORTFOLIO ADVANCED A SOLID 14.42% FOR THE YEAR
ENDED DECEMBER 31, 1996. THE RESULTS ARE VERY MUCH IN KEEPING WITH OUR STATED
OBJECTIVE OF COMPETITIVE INVESTMENT RETURNS, WHILE PROVIDING DOWNSIDE RISK
PROTECTION AND PRESERVATION OF CAPITAL.
AS OF THE END OF 1996, AND FOR THE GREATER PART OF THE YEAR, THE PORTFOLIO
MAINTAINED EQUITY EXPOSURE AT AROUND 55% OF TOTAL NET ASSETS. THE FIXED-INCOME
PORTION OF THE PORTFOLIO, REPRESENTED BY A CONSERVATIVE "COVER THE DOWNSIDE"
PROFILE, WAS SPLIT BETWEEN SHORT-TERM (LESS THAN 3-1/2 YEAR AVERAGE MATURITY)
U.S. GOVERNMENT, AGENCY, AND HIGH-QUALITY CORPORATE FIXED-INCOME SECURITIES (24%
OF THE PORTFOLIO), AND A LADDERING OF 30 TO 90 DAY COMMERCIAL PAPER (21% OF THE
PORTFOLIO).
THE FACT THAT 45% OF THE PORTFOLIO'S ASSETS HAVE BEEN POSITIONED TO PROVIDE
STABILITY AND CONSISTENCY, AS STATED IN THE PROSPECTUS, MAY BRING INTO QUESTION
OUR ABILITY TO CHALK UP COMPETITIVE RESULTS. WHAT HAS ALLOWED US TO SHOW
INVESTMENT RETURNS COMPARABLE TO OTHER PORTFOLIOS INVESTED MORE AGGRESSIVELY IN
STOCKS HAS BEEN OUR SUPERIOR INDUSTRY AND SECURITY SELECTION.
WHILE WE MAINTAINED OUR DISCIPLINE OF NOT EXCEEDING 10% IN ANY ONE INDUSTRY, SO
NO ONE "INDUSTRY BET" CAN DISTORT PERFORMANCE, THE PORTFOLIO HAD EXPOSURE TO
NUMEROUS INDUSTRIES THAT OUTPERFORMED THE S&P 500. WE ESTIMATE THAT OUR
AGGREGATE EQUITY HOLDINGS OUTPERFORMED THE S&P 500 BY APPROXIMATELY 5%.
AS WE LOOK TO 1997, WE DO NOT BELIEVE INVESTORS CAN CONTINUE TO ENJOY THE
"RISING TIDE" FOR ALL EQUITY HOLDINGS. THE CURRENT VALUATIONS FOR THE OVERALL
STOCK MARKET LOOK RELATIVELY POOR TO US --THE DIVIDEND YIELD ON THE S&P 500 IS
THE LOWEST IN HISTORY AND THE PRICE-TO-BOOK VALUE RATIO IS AT AN ALL TIME HIGH.
LIKEWISE, TECHNICAL DIVERGENCE IN THE MARKET AS PORTRAYED BY THE NARROWING OF
LEADERSHIP AMONG INDIVIDUAL STOCKHOLDINGS PROVIDES SOME EVIDENCE OF A VULNERABLE
MARKETPLACE. THIS, HOWEVER, DOES NOT HAVE TO SPELL DISASTER. INDEED, 1996
DISPLAYED A NUMBER OF THESE SAME CHARACTERISTICS, YET WITH THE HELP OF STRONG
CORPORATE EARNINGS, A RELATIVELY LOW INTEREST RATE ENVIRONMENT, AND BENIGN
INFLATION, THE MARKET SUSTAINED ITS ADVANCE.
FURTHER CONTINUATION OF THESE FAVORABLE MACRO TRENDS COULD ALLOW 1997 TO SHRUG
OFF A NUMBER OF THE NEGATIVES, JUST AS 1996 DID. BUT AS PRUDENT INVESTORS, WE
WILL NOT IGNORE THE CAUTION SIGNALS PRESENT AND WE WILL KEEP ONE EYE ON THE EXIT
DOOR (AS IS REFLECTED BY OUR ASSET ALLOCATION). AT THE SAME TIME, IN AN EFFORT
TO BUILD ON OUR SUCCESSES OF 1996, OUR EQUITY RESEARCH TEAM WILL WORK
AGGRESSIVELY TO UNCOVER VALUE-ADDED OPPORTUNITIES. ONE RECENT EXAMPLE LIES IN
OUR DECISION LATE IN THE FOURTH QUARTER TO INITIATE NEW HOLDINGS IN THE
MULTIMEDIA/CABLE INDUSTRY, CLEARLY AN OUT-OF-FAVOR, LOW VALUATION SITUATION.
WE ASSURE YOU THAT AS 1997 DEVELOPS, CONSISTENCY AND COMPETITIVENESS WILL REMAIN
AT THE HEART OF OUR DECISION MAKING.
[LOGO] /s/ ARVIND SACHDEVA /s/ JOHN C. RIAZZI
------------------- ------------------
ARVIND SACHDEVA JOHN C. RIAZZI
TACTICAL ASSET ALLOCATION CO-PORTFOLIO MANAGERS
This material must be preceded or accompanied by the Fund's current prospectus.
13
<PAGE>
WRL SERIES FUND, INC.
C.A.S.E. GROWTH PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the year ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
C.A.S.E. GROWTH PORTFOLIO AND THE WILSHIRE 5000 INDEX
[GRAPH 12]
THE C.A.S.E. GROWTH PORTFOLIO WAS FUNDED MAY 1, 1995, WITH THE INVESTMENT
OBJECTIVE OF CAPITAL GROWTH THROUGH INVESTMENTS IN COMMON STOCKS OF SMALL TO
MEDIUM-SIZED COMPANIES. THE C.A.S.E. GROWTH PORTFOLIO FOR THIS PAST YEAR ENDED
DECEMBER 31, 1996, RETURNED 17.50%. THE STANDARD & POOR'S INDEX OF 500 COMMON
STOCKS GAINED 22.96% FOR THE SAME PERIOD.
GENERALLY, OUR STRATEGY IS TO INVEST IN STOCKS OF COMPANIES WITH
WELL-ABOVE-AVERAGE MANAGEMENT, SOLID BALANCE SHEETS, BELOW MARKET PRICE TO
EARNINGS RATIOS (ON BOTH A LEADING AND LAGGING BASIS), ABOVE MARKET INSIDER AND
INSTITUTIONAL BUYING, AND EARNINGS ESTIMATES THAT ARE BEING REVISED UPWARDS.
WHILE GENERALLY EMPLOYING A BUY-AND-HOLD POSTURE UNTIL FUNDAMENTALS DICTATE A
CHANGE, THE PORTFOLIO MAY USE SHORT-TERM STRATEGIES TO TAKE ADVANTAGE OF
CHANGING MARKET CONDITIONS.
THE PAST YEAR PROVED TO BE VERY DIFFICULT FOR FUNDS THAT CONCENTRATE THEIR
HOLDINGS ON MID-AND SMALL-CAPITALIZED ISSUES. MOST INVESTORS COMPARED THE
PERFORMANCE OF THESE FUNDS TO THE NASDAQ COMPOSITE THAT RECORDED A TREMENDOUS
YEAR--UP 23.2%--BUT WAS DOMINATED BY A FEW NAMES. FOR EXAMPLE, IT IS ESTIMATED
THAT IF INTEL AND MICROSOFT (TWO VERY LARGE CAPITALIZED COMPANIES) WERE NOT
INCLUDED, THE NASDAQ COMPOSITE GAINED ONLY ABOUT HALF OF ITS 22.7%. WHILE THE
C.A.S.E. GROWTH PORTFOLIO MAY HAVE LAGGED THE NASDAQ COMPOSITE LAST YEAR, ITS
PERFORMANCE WAS VERY STRONG COMPARED TO LIPPER'S EQUITY INDEX OF ALL SMALL
COMPANY GROWTH FUNDS' GAIN OF 14.5%, AND THE RUSSELL 2000'S GAIN OF 16.55%.
OUR PHILOSOPHY OF INVESTING IN COMPANIES WITH ABOVE-AVERAGE EARNINGS'
CHARACTERISTICS AND BELOW-MARKET RISK PARAMETERS BALANCED BY PROPER
DIVERSIFICATION IS PRODUCING ABOVE AVERAGE GAINS FOR OUR PARTICIPANTS. WE ARE
CONFIDENT IN OUR APPROACH AND WITH UNDERLYING MARKET FUNDAMENTALS--A GROWING
ECONOMY, CONTROLLED INFLATION, FLAT INTEREST RATES, AND HEALTHY CORPORATE
PROFITS--STILL IN PLACE, WE CAN LOOK FORWARD TO ANOTHER GOOD YEAR.
THE STOCK MARKET CONTINUES TO BE DOMINATED BY EARNINGS AS IT REACHES NEW HIGHS.
IN FACT, OF THE TWO DOZEN FUNDAMENTAL METHODOLOGIES USED PROFESSIONALLY TO
EVALUATE INVESTMENTS, THE FIVE LEADING FACTORS GOVERNING PRICE MOVEMENT ARE ALL
EARNINGS RELATED--CHANGE IN ANALYSTS' PROJECTIONS, QUARTERLY EARNINGS GROWTH
RATE, EARNINGS SURPRISE FACTORS, THE CURRENT YEAR'S EARNINGS PROJECTION, AND
HISTORICAL 5-YEAR GROWTH RATES. IN "EARNINGS" TERMS, THE MARKET APPEARS
REASONABLY PRICED AT 19 TIMES TRAILING 12 MONTHS EARNINGS. IN THE PAST, MARKET
TOPS HAVE OCCURRED AT LEVELS SLIGHTLY ABOVE THE CURRENT MULTIPLE OF 19.
STOCKS WHICH EXHIBIT FUNDAMENTALS OF EXCEPTIONAL STRENGTH WILL ORDINARILY DO
BETTER THAN THE MARKET IN GOOD AS WELL AS BAD TIMES. THE BROAD REACH AND
ECONOMIC SCOPE OF OUR STUDY DISCIPLINES LEND THEMSELVES TO INVESTING IN
SELECTIVE ECONOMIC PERIODS, WHEN VOLATILITY AND UNCERTAINTY ARE PRESENT.
THEREFORE, OUR APPROACH SEEMS WELL SUITED TO THE PERIOD AHEAD.
[LOGO] /s/ WILLIAM E. LANGE
--------------------
WILLIAM E. LANGE
C.A.S.E. GROWTH PORTFOLIO MANAGER
This material must be preceded or accompanied by the Fund's current prospectus.
14
<PAGE>
WRL SERIES FUND, INC.
MERIDIAN/INVESCO GLOBAL SECTOR PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the period ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON FINANCIAL TIMES WORLD INDEX AND THE LEHMAN HUTTON AGGREGATE BOND
INDEX
[GRAPH 13]
THE MERIDIAN/INVESCO GLOBAL SECTOR PORTFOLIO, WITH ITS INVESTMENT OBJECTIVE
OF CAPITAL GROWTH, FOLLOWS AN ASSET ALLOCATION AND SECTOR ROTATION STRATEGY
WHICH SHIFTS BETWEEN A WIDE RANGE OF ASSET CLASSES, AND WITHIN THEM, SECTORS.
THE PORTFOLIO INCREASED 6.08% FROM ITS INCEPTION MAY 1, 1996 THROUGH DECEMBER
31, 1996. THE PORTFOLIO'S BENCHMARK, WHICH CONSISTS OF A 60% WEIGHTING IN THE
FINANCIAL TIMES WORLD INDEX AND A 40% WEIGHTING IN THE LEHMAN HUTTON
AGGREGATE BOND INDEX, WAS UP 6.08% FOR THE SAME PERIOD. INDIVIDUALLY, THE
FINANCIAL TIMES WORLD INDEX INCREASED 4.73%, WHILE THE LEHMAN HUTTON
AGGREGATE BOND INDEX WAS UP 8.11%.
THE U.S. EQUITY MARKET POSTED A SECOND STRAIGHT YEAR OF RECORD GAINS. THE
YEAR, HOWEVER, WAS MARKED BY INCREASED VOLATILITY AND DIVERGENT SECTOR
PERFORMANCE. THE MARKET CONTINUED TO FAVOR LARGE CAPITALIZATION STOCKS, AS
REPRESENTED BY THE DOW JONES INDUSTRIAL AVERAGE AND THE STANDARD AND POOR'S
INDEX OF 500 COMMON STOCKS. THIS WAS MAINLY DUE TO A ROBUST ECONOMIC
BACKGROUND AND A LOW INFLATION ENVIRONMENT. SMALL STOCKS, MEANWHILE,
CONSIDERABLY LAGGED THE BROADER MARKET AVERAGES. AS ECONOMIC GROWTH SLOWS IN
THE UPCOMING YEAR, EARNINGS GROWTH WILL BECOME A MORE HIGHLY PRIZED
COMMODITY. THIS SHOULD INCREASE THE OPPORTUNITIES AVAILABLE FOR A SECTOR
ROTATION STRATEGIST WITH AN EMPHASIS ON STOCK SELECTION.
DURING THE FOURTH QUARTER, WE INCREASED OUR EXPOSURE TO THE CONSUMER STAPLES
SECTOR, INCLUDING POSITIONS IN THE HEALTH CARE DELIVERY AND FOOD INDUSTRIES.
THESE WERE UNDER CONSIDERABLE PRESSURE DURING MOST OF 1996 AND VALUATIONS NOW
APPEAR TO BE EXCEPTIONAL. THESE INDUSTRIES SHOULD BENEFIT FROM ENCOURAGING
DEMOGRAPHICS, IMPROVING FUNDAMENTALS, AND FASTER GROWTH IN THE UPCOMING YEAR.
OUR QUANTITATIVE RESEARCH INDICATES THAT WHILE THE U.S. EQUITY MARKET, AS A
WHOLE, IS FAIRLY VALUED, THERE ARE NUMEROUS OPPORTUNITIES IN MARKETS OUTSIDE
OUR BORDERS. INTERNATIONAL EQUITY MARKETS IN OUR OPINION REPRESENT THE BEST
GLOBAL OPPORTUNITY. WHILE SEVERAL INTERNATIONAL MARKETS LOOK ATTRACTIVE, OUR
ANALYSIS INDICATES THAT EUROPEAN EQUITIES ARE THE MOST UNDER-PRICED RELATIVE
TO THEIR FAIR VALUE. THE PORTFOLIO HAS EQUITY EXPOSURE IN GERMANY, DENMARK,
AND ITALY. WHILE THESE MARKETS HAVE ASSISTED IN THE PORTFOLIO'S PERFORMANCE
OVER THE PAST YEAR, THEY STILL REPRESENT EXCELLENT OPPORTUNITIES.
THE U.S. DOLLAR REMAINS A CONCERN WITH REGARD TO JAPANESE EQUITIES. THE DOLLAR
CURRENTLY TRADES AT NEARLY 115 YEN, WHICH REPRESENTS A THREE-YEAR HIGH. FEARS
AND CONCERNS HAVE PUT PRESSURE ON THE JAPANESE EQUITY MARKETS OVER THE PAST
YEAR. AND THOUGH THE PORTFOLIO REMAINS UNDER-WEIGHTED IN JAPAN, OUR ANALYSIS
SHOWS THAT JAPANESE EQUITIES ARE TRADING BELOW OUR VALUATIONS. AS SUCH, WE WILL
CONTINUE TO MONITOR THIS MARKET AND TAKE ADVANTAGE OF ANY MISPRICINGS.
OUR FIXED-INCOME STRATEGY INCLUDES HIGH QUALITY ISSUES, AND IS MAINLY USED AS A
DEFENSIVE POSITION. CURRENTLY, OUR EMPHASIS IS ON HIGH-QUALITY BONDS WITH A
RELATIVELY SHORT OVERALL MATURITY. WE HAVE SUPPLEMENTED THIS EXPOSURE WITH A
SIZABLE POSITION IN THE REAL ESTATE MARKET. REAL ESTATE, REPRESENTED BY REAL
ESTATE INVESTMENT TRUSTS (REITS) HAS PERFORMED WELL THIS YEAR. IT WAS, IN FACT,
THE SECOND BEST PERFORMING ASSET CLASS IN 1996. WE CONTINUE TO FEEL THIS IS A
GOOD INVESTMENT THAT WILL ADD TO THE PORTFOLIO'S STABILITY.
FOR THE PAST TWO YEARS THE U.S. EQUITY MARKET HAS BEEN THE BEST PERFORMING ASSET
CLASS. WE REMAIN CAUTIOUS ON OUR OUTLOOK FOR THE MARKET, HOWEVER, AS DOMESTIC
STOCKS ARE TRADING NEAR THEIR FAIR VALUE. ASSET ALLOCATION, WE THINK, WILL BE
THE MOST CRUCIAL ASPECT AFFECTING THE MERIDIAN/INVESCO GLOBAL SECTOR PORTFOLIO'S
RETURNS IN THE UPCOMING YEAR. OUR STRATEGY IN 1997 WILL BE TO ENHANCE VALUE BY
INCREASING DIVERSIFICATION GLOBALLY AND INVESTING IN ASSET CLASSES THAT REMAIN
BARGAIN-PRICED.
/s/ Bryan M. Ritz
--------------
[LOGO] BRYAN M. RITZ
(1) A registered service MERIDIAN/INVESCO GLOBAL SECTOR
mark of INVESCO PLC PORTFOLIO MANAGER
This material must be preceded or accompanied by the Fund's current prospectus.
Foreign securities involve special risks described in the prospectus that
should be considered carefully before investing.
15
<PAGE>
WRL SERIES FUND, INC.
VALUE EQUITY PORTFOLIO
PORTFOLIO MANAGERS' COMMENTARY
For the period ended December 31, 1996
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE WRL SERIES FUND, INC.
VALUE EQUITY PORTFOLIO AND THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS
[GRAPH 14]
THE VALUE EQUITY PORTFOLIO COMMENCED OPERATIONS ON MAY 1, 1996. THE PORTFOLIO'S
INVESTMENT OBJECTIVE IS TO ACHIEVE MAXIMUM, CONSISTENT TOTAL RETURN WITH MINIMUM
RISK TO PRINCIPAL BY INVESTING PRIMARILY IN COMMON STOCKS WITH ABOVE-AVERAGE
STATISTICAL VALUE WHICH, IN THE SUB-ADVISER'S OPINION, ARE IN FUNDAMENTALLY
ATTRACTIVE INDUSTRIES AND ARE UNDERVALUED AT THE TIME OF PURCHASE. THE PORTFOLIO
PERFORMED WELL FROM ITS INCEPTION THROUGH DECEMBER 31, 1996 RETURNING 13.19%
VERSUS THE STANDARD & POOR'S INDEX OF 500 COMMON STOCKS WHICH GAINED 15.00%
DURING THE SAME PERIOD. AIDING PERFORMANCE HAS BEEN A SOMEWHAT ABOVE-NORMAL CASH
POSITION WHICH CUSHIONED THE PORTFOLIO DURING THE STOCK MARKET SELL-OFFS IN JULY
AND DECEMBER.
THE CORNERSTONE OF OUR INVESTMENT PROCESS IS A DISCIPLINED APPROACH TO VALUE
RECOGNITION WITHIN INDUSTRIES REPRESENTING LONG-TERM MARKET LEADERSHIP. WE
BELIEVE THAT INVESTMENT OPPORTUNITY IS CREATED BY CHANGES IN THE ECONOMIC,
MONETARY, POLITICAL, AND SOCIAL ENVIRONMENT. WE SEEK TO RECOGNIZE CHANGES EARLY
IN ASSET CATEGORIES, MARKET SECTORS, INDUSTRIES AND COMPANIES--BEFORE THESE
CHANGES ARE REFLECTED IN SECURITIES' PRICES. STOCK SELECTION EMPHASIZES
MEDIUM-TO LARGE-CAPITALIZATION COMPANIES REPRESENTING ABOVE-AVERAGE STATISTICAL
VALUE. INVESTMENTS ARE CONCENTRATED IN THOSE FUNDAMENTALLY ATTRACTIVE INDUSTRIES
IDENTIFIED AS THE BENEFICIARIES OF LONG-TERM INVESTMENT TRENDS. OUR VALUE EQUITY
DISCIPLINE SERVES AS A COMPLEMENTARY, RISK-AVERSE STYLE TO OTHER MORE AGGRESSIVE
GROWTH MANAGERS.
FEDERAL RESERVE CHAIRMAN GREENSPAN'S RECENT REMARKS ABOUT FINANCIAL MARKET
"IRRATIONAL EXUBERANCE" CAUSED A WORLDWIDE CORRECTION IN STOCK PRICES. WHILE
THERE MAY WELL HAVE BEEN SIGNS OF EXUBERANCE AND EXCESSIVE SPECULATION FROM TIME
TO TIME, WE WOULD NOT CHARACTERIZE THIS BULL MARKET AS IRRATIONAL. IT IS CORRECT
THAT INDIVIDUAL CONTRIBUTIONS TO EQUITY MUTUAL FUNDS HAVE BEEN A SIGNIFICANT
FACTOR IN THE STOCK MARKET'S CLIMB, BUT THERE ARE OTHER FACTORS AS WELL. LOW
INFLATION HAS BEEN A MAJOR POSITIVE FORCE. LOW INFLATION KEEPS PRICES AND WAGES
UNDER CONTROL AND MODERATES THE DEMAND FOR CREDIT, ALLOWING NOMINAL INTEREST
RATES TO REMAIN LOW AND PRICE/EARNINGS (P/E) MULTIPLES TO EXPAND. ANOTHER FACTOR
HAS BEEN A NEAR REVOLUTION IN THE FOCUS OF CORPORATE MANAGEMENTS TO THE CONCEPT
OF BUILDING SHAREHOLDER VALUE. THIS HAS MEANT FEWER ILL-ADVISED CAPACITY
EXPANSION PROJECTS AND FAR MORE STOCK BUY-BACKS AND CASH MERGERS. FINALLY, THE
STOCK MARKET HAS BEEN HELPED BY THE MOST IMPORTANT LONG-TERM INFLUENCE OF ALL
- --RISING CORPORATE PROFITS.
WHILE INVESTORS REACT (AND OFTEN OVERREACT) TO EACH NEW ECONOMIC STATISTIC,
RECENT ECONOMIC EVIDENCE STRONGLY SUGGESTS THAT THE BUSINESS CYCLE IS MUCH MORE
MUTED TODAY THAN IT WAS TEN OR TWENTY YEARS AGO. IT FOLLOWS THAT MANY
INDUSTRIAL/CAPITAL GOODS COMPANIES THAT ARE COMMONLY REFERRED TO AS CYCLICAL MAY
IN FACT BE LESS SUBJECT TO DOWNSIDE EARNINGS RISK THAN THE MARKET GENERALLY
ASSUMES. WE FIND THIS TO BE THE CASE IN NUMEROUS COMPANIES, MANY OF THEM SELLING
AT 8-11 TIMES EARNINGS IN A MARKET GENERALLY SELLING FOR 18-20 TIMES EARNINGS.
TO THE DEGREE THAT THESE RELATIVELY LOW P/E MULTIPLES SUGGEST MINIMUM
EXPECTATIONS FOR EARNINGS GROWTH, WE FIND THESE SECTORS TO REPRESENT A LOWER
RISK, HIGHER POTENTIAL RETURN SITUATION. WITH THE OVERALL MARKET BEING SOMEWHAT
EXPENSIVE, WE BELIEVE THIS LOWER RISK APPROACH IS THE PRUDENT COURSE TO FOLLOW.
[LOGO] /s/ EDWARD C. FRIEDEL
---------------------
EDWARD C. FRIEDEL
VALUE EQUITY PORTFOLIO MANAGER
This material must be preceded or accompanied by the Fund's current prospectus.
16
<PAGE>
WRL SERIES FUND, INC.
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS (15.14%)
Federal Home Loan Bank
Discount Note
6.50%, due 01/02/97 ....................... $11,995,000 $ 11,992,834
Federal National Mortgage
Association (a)
5.42%, due 06/11/97 ........................ 4,000,000 3,998,633
U.S. Treasury Notes
5.38%, due 11/30/97 ........................ 2,500,000 2,496,396
------------
Total Short-Term U.S. ........................
Government Obligations
(cost: $18,487,863) ........................................ 18,487,863
------------
COMMERCIAL PAPER (40.25%)
AUTOMOTIVE (4.09%)
Ford Motor Credit Company
7.00%, due 01/02/97 ........................ 5,000,000 4,999,028
BEVERAGES (4.09%)
Coca-Cola Company
5.92%, due 01/09/97 ......................... 5,000,000 4,993,422
COMMERCIAL BANKS (15.30%)
ABN-Amro Bank N.V ............................
5.34%, due 06/19/97 ......................... 3,000,000 2,924,795
Barclays US Funding Corp. ....................
5.72%, due 01/03/97 ......................... 5,800,000 5,798,157
Commerzbank US Finance Inc. ..................
5.33%, due 01/30/97 ...................... 5,000,000 4,978,532
Korea Development Bank
5.30%, due 02/10/97 ......................... 5,000,000 4,970,556
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (4.50%)
General Electric Capital Corporation
5.39%, due 01/06/97 ...................... 5,500,000 5,495,883
INDUSTRIAL MACHINERY & EQUIPMENT (4.09%)
Asea Brown Boveri Ltd. .......................
7.10%, due 01/03/97 ........................ 5,000,000 4,998,028
INSURANCE (4.09%)
AIG Funding Inc. .............................
5.95%, due 01/02/97 ......................... 5,000,000 4,999,173
OIL & GAS EXTRACTION (4.09%)
Koch Industries Inc. .........................
7.10%, due 01/02/97 ......................... 5,000,000 4,999,013
------------
Total Commercial Paper
(cost: $49,156,587) .......................................... 49,156,587
------------
SHORT-TERM OBLIGATIONS (4.50%)
FINANCE (2.05%)
Asset Backed Securities Corporation
5.38%, due 10/15/97 ......................... $2,500,000 $ 2,500,000
INDUSTRIAL MACHINERY & EQUIPMENT (2.45%)
John Deere Capital Corporation
5.85%, due 07/03/97 ......................... 3,000,000 2,998,947
------------
Total Short-Term Obligations
(cost: $5,498,947) ........................................... 5,498,947
------------
BANK OBLIGATIONS (39.57%)
Banque National de Paris
5.39%, due 03/03/97 ......................... 5,000,000 4,999,837
Deutsche Bank AG
5.69%, due 10/28/97 ......................... 2,000,000 1,999,042
First Union Corporation
5.36%, due 02/18/97 ......................... 4,915,000 4,915,000
Industrial Bank of Japan
5.47%, due 02/10/97 ......................... 5,000,000 4,999,173
Landesbank Hessen-Thuringen
6.01%, due 07/18/97 ......................... 5,000,000 5,011,020
National Westminster Bank PLC
5.39%, due 02/14/97 ...................... 5,400,000 5,399,991
NationsBank Corporation
5.66%, due 04/30/97 ......................... 4,000,000 3,994,575
PNC Bank Corporation (a)
5.50%, due 12/11/97 ......................... 3,000,000 2,997,780
Sanwa Bank Ltd.-New York
5.68%, due 01/13/97 ......................... 5,000,000 5,000,044
Societe Generale-New York
5.80%, due 05/02/97 ......................... 4,000,000 4,000,000
Sumitomo Bank Ltd.
5.61%, due 01/31/97 ......................... 5,000,000 5,000,083
------------
Total Bank Obligations
(cost: $48,316,545) .......................................... 48,316,545
------------
Total Investment Securities
(cost: $121,459,942) ......................................... $121,459,942
============
SUMMARY
Investments at value ......................... 99.46% $121,459,942
Other Assets in
Excess of Liabilities ...................... 0.54% 654,371
---------- ------------
Net Assets ................................... 100.00% $122,114,313
========== ============
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Floating rate note. Rate listed is as of December 31, 1996.
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
17
<PAGE>
WRL SERIES FUND, INC.
BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
U.S. GOVERNMENT OBLIGATIONS (41.42%)
U.S. Treasury Bonds
6.50%, due 11/15/26 ........................... $ 4,000,000 $ 3,924,760
U.S. Treasury Notes
7.75%, due 11/30/99 ........................... 1,500,000 1,567,005
U.S. Treasury Notes
6.38%, due 03/31/01 ........................... 3,000,000 3,020,430
U.S. Treasury Notes (a)
6.50%, due 10/15/06 ........................... 31,000,000 31,155,000
------------
Total U.S. Government Obligations
(cost: $39,834,487) ........................................... 39,667,195
------------
CORPORATE DEBT SECURITIES (42.95%)
CHEMICALS & ALLIED PRODUCTS (1.04%)
Witco Corporation
7.75%, due 04/01/23 ........................... 1,000,000 993,750
COMMERCIAL BANKS (15.64%)
BankAmerica Corporation
7.20%, due 04/15/06 ........................... 2,000,000 2,022,500
Chase Manhattan Corporation
6.75%, due 08/15/08 ........................... 2,000,000 1,937,500
Citicorp
7.25%, due 10/15/11 ........................... 3,000,000 3,000,000
NationsBank Corporation
7.50%, due 09/15/06 ........................... 3,000,000 3,082,500
NBD Bancorp, Inc.
7.13%, due 05/15/07 ........................... 3,000,000 2,996,250
Swiss Bank Corporation
7.00%, due 10/15/15 ........................... 2,000,000 1,935,000
FINANCE (9.21%)
Commercial Credit Company
7.38%, due 04/15/05 ........................... 1,000,000 1,025,000
Ford Motor Credit Company
6.75%, due 08/15/08 ........................... 4,000,000 3,885,000
Sears Roebuck Acceptance
Corporation
6.70%, due 11/15/06 ........................... 4,000,000 3,905,000
FOOD & KINDRED PRODUCTS (5.11%)
CPC International, Inc. - Class C
6.15%, due 01/15/06 ........................... 2,000,000 1,907,500
Hershey Foods Corporation
6.70%, due 10/01/05 ........................... 3,000,000 2,988,750
HEALTH SERVICES (3.19%)
Columbia/HCA Healthcare
Corporation 7.25%, due 05/20/08 ............... 3,000,000 3,056,250
CORPORATE DEBT SECURITIES (CONTINUED)
INSURANCE (1.02%)
The PMI Group, Inc.
6.75%, due 11/15/06 ........................... $ 1,000,000 $ 980,000
MOTION PICTURES (3.11%)
Walt Disney Company
6.75%, due 03/30/06 ........................... 3,000,000 2,977,500
PRINTING & PUBLISHING (2.08%)
Tribune Company
6.88%, due 11/01/06 ........................... 2,000,000 1,987,500
RESTAURANTS (1.53%)
McDonald's Corporation
7.38%, due 07/15/33 ........................... 1,500,000 1,468,125
RUBBER & MISC. PLASTIC PRODUCTS (1.02%)
Rubbermaid, Inc.
6.60%, due 11/15/06 ........................ 1,000,000 980,000
------------
Total Corporate Debt Securities
(cost: $41,250,587) ........................................... 41,128,125
------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS (8.32%)
Federal Home Loan Mortgage
Corporation
5.25%, due 01/23/97 ......................... 3,000,000 2,990,375
Federal Home Loan Mortgage
Corporation
5.24%, due 02/06/97 ......................... 5,000,000 4,973,800
------------
Total Short-Term U.S. Government Obligations
(cost: $7,964,175) ............................................ 7,964,175
------------
COMMERCIAL PAPER (6.15%)
Coca-Cola Enterprises, Inc.
5.50%, due 01/24/97 ........................... 2,000,000 1,992,972
Household Finance Corporation
6.50%, due 01/02/97 ........................... 3,900,000 3,899,296
------------
Total Commercial Paper
(cost: $5,892,268) ............................................ 5,892,268
------------
Total Investment Securities
(cost: $94,941,517) ........................................... $94,651,763
============
SUMMARY
Investments at value ............................ 98.84% $ 94,651,763
Other Assets in
Excess of Liabilities ......................... 1.16% 1,106,947
----------- ------------
Net Assets ...................................... 100.00% $ 95,758,710
=========== ============
NOTES TO SCHEDULE OF INVESTMENTS:
(a) At December 31, 1996 security is on loan. See footnote 1C to financial
statements.
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
18
<PAGE>
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
U.S. GOVERNMENT OBLIGATION (0.39%)
U.S. Treasury Notes
5.50%, due 09/30/97 ........................... $ 6,000,000 $ 5,999,760
-----------
Total U.S. Government Obligation
(cost: $6,014,205) ............................................ 5,999,760
-----------
CORPORATE DEBT SECURITIES (0.84%)
HOTELS & OTHER LODGING PLACES (0.84%)
Trump Atlantic City Funding (b)
11.25%, due 05/01/06 .......................... 13,000,000 12,837,500
-----------
Total Corporate Debt Securities
(cost: $13,000,000) ........................................... 12,837,500
-----------
CONVERTIBLE BONDS (0.04%)
ELECTRONIC COMPONENTS & ACCESSORIES (0.04%)
Lernout & Hauspie Speech
Products N.V. 144A (c)
8.00%, 11/15/01 ............................... 570,000 573,563
-----------
Total Convertible Bonds
(cost: $ 570,000) ............................................. 573,563
-----------
NUMBER OF MARKET
SHARES VALUE
---------- -----------
PREFERRED STOCKS (D)
COMPUTER & DATA PROCESSING SERVICES (D)
SAP AG -Vorzug .................................. 400 $ 55,924
-----------
Total Preferred Stocks
(cost: $57,162) ................................................ 55,924
-----------
COMMON STOCKS (84.25%)
AEROSPACE (1.24%)
Boeing Company .................................. 177,500 18,881,563
AIR TRANSPORTATION (0.23%)
UAL Corporation (a) ............................. 56,550 3,534,375
APPAREL PRODUCTS (2.14%)
Gucci Group nv -NY registered
shares (a) .................................... 512,825 32,756,697
APPAREL, PIECE GOODS, & NOTIONS (4.38%
Nike, Inc. -Class B ......................... 1,120,275 66,936,431
BEVERAGES (3.00%)
Coca-Cola Company ............................... 870,750 45,823,219
BUSINESS SERVICES (0.23%)
Equifax, Inc. ................................... 113,100 3,463,688
COMMERCIAL BANKS (8.17%)
Chase Manhattan Corporation ..................... 424,125 37,853,156
Citicorp ........................................ 398,955 41,092,365
Wells Fargo & Company ........................... 170,008 45,859,658
COMMUNICATIONS EQUIPMENT (4.99%)
Ascend Communications, Inc. (a) ................. 738,925 45,905,716
Cascade Communications Corp. (a)(b) ............. 341,450 18,822,431
DSP Communications, Inc. (a) .................... 3,400 65,875
Lucent Technologies, Inc. ....................... 229,350 10,607,438
Omnipoint Corporation (a) ....................... 9,625 185,281
Tellabs, Inc. (a) ............................... 1,725 64,903
ViaSat, Inc. (a) ................................ 56,475 508,275
COMPUTER & DATA PROCESSING SERVICES (17.92%)
3Com Corporation (a) ............................ 113,375 8,318,891
3DLabs Inc., Ltd. (a) ........................... 31,150 716,450
Applix, Inc. (a) ................................ 21,450 469,219
Aurum Software, Inc. (a) ........................ 1,400 32,375
Baan Company N.V. (a)(b) ........................ 3,400 118,150
Cabletron Systems, Inc. (a) ..................... 3,400 113,050
Cadence Design Systems, Inc. (a) ................ 12,450 494,888
Cambridge Technology Partners, Inc. (a) ......... 100 3,356
Check Point Software Technologies Ltd. (a) ..... 2,250 48,938
Claremont Technology Group,Inc. (a) ............. 575 15,094
Cybermedia, Inc. (a) ............................ 7,350 115,763
Documentum, Inc. (a)(b) ......................... 1,125 37,969
DSP Group Inc. (a) .............................. 3,950 33,575
Edify Corporation (a) ........................... 11,875 190,000
First Data Corporation .......................... 1,383,600 50,501,400
FORE Systems, Inc. (a) .......................... 1,700 55,888
HBO & Company ................................... 873,725 51,877,422
HNC Software, Inc. (a)(b) ....................... 92,900 2,914,738
IKOS Systems, Inc. (a) .......................... 12,375 247,500
Informix Corporation (a) ........................ 5,650 115,119
International Network Services (a) .............. 9,975 301,120
Intuit, Inc. (a) ................................ 212,925 6,707,138
JBA Holdings Plc ................................ 2,814 25,771
Manguistics Group, Inc. (a) ..................... 2,250 89,438
Microsoft Corporation (a) ....................... 742,400 61,340,800
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
19
<PAGE>
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
---------- -----------
COMMON STOCKS (CONTINUED)
COMPUTER & DATA PROCESSING SERVICES (CONTINUED)
Netscape Communications
Corporation (a)(b) ............................... 322,025 $18,315,172
Oracle Corporation (a) ............................. 11,325 472,819
Parametric Technology
Company (a) ...................................... 9,625 494,484
PeopleSoft (a)(b) .................................. 690,900 33,120,019
Planning Sciences International
Plc -ADR (a) ..................................... 33,925 407,100
Premisys Communications,
Inc. (a)(b) ...................................... 327,475 11,052,281
Rational Software
Corporation (a)(b) ............................... 1,700 67,256
Rogue Wave Software (a) ............................ 5,650 88,988
Sapient Corporation (a) ............................ 12,475 525,509
Sun Microsystems, Inc. (a) ......................... 552,500 14,192,344
Transaction Systems Architects,
Inc. Class A (a) ................................. 1,125 37,406
Trusted Information Systems,
Inc. (a) ......................................... 16,800 180,600
TTI Team Telecom International Ltd. ................
(a) .............................................. 76,300 476,875
VeriFone, Inc. (a) ................................. 1,175 34,663
Veritas Software Corporation (a) ................... 2,275 113,181
Visio Corporation (a) .............................. 1,400 69,300
Voxware, Inc. (a) .................................. 254,000 1,905,000
XLConnect Solutions Inc. (a)(b) .................... 7,200 207,000
Xylan Corporation (a)(b) ........................... 255,325 7,212,931
COMPUTER & OFFICE EQUIPMENT (13.10%)
Cisco Systems, Inc. (a) ............................ 1,201,100 76,419,988
Citrix Systems, Inc. (a) ........................... 5,125 200,195
Clarify, Inc. (a) .................................. 254,450 12,213,600
International Business Machines
Corporation ...................................... 511,250 77,198,750
Sandisk Corporation (a) ............................ 1,700 16,575
U.S. Robotics Corporation (a) ...................... 473,050 34,059,600
ELECTRICAL GOODS (D)
Harmonic Lightwaves, Inc. (a) ...................... 3,375 51,891
ELECTRONIC COMPONENTS & ACCESSORIES (1.32%)
Analog Devices, Inc. (a) ........................... 9,025 305,722
Etec Systems, Inc. (a) ............................. 46,300 1,770,975
Flextronics International, Ltd. (a) ................ 3,975 110,306
Texas Instruments, Inc. ............................ 283,000 18,041,250
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (2.83%)
Gemstar International Group
Limited (a)(b) ................................... 6,775 118,563
General Electric Company ........................... 436,575 43,166,353
FINANCE (2.07%)
Federal Home Loan Mortgage
Corporation ..................................... 129,500 14,261,188
Federal National Mortgage
Association ..................................... 464,920 17,318,270
FOOD STORES (0.47%)
Starbucks Corporation (a)(b) ...................... 252,300 7,222,088
HEALTH SERVICES (3.41%)
Oxford Health Plans, Inc.(a) ...................... 716,250 41,945,391
United Healthcare Corporation ..................... 226,525 10,193,625
HOTELS & OTHER LODGING PLACES (1.34%)
HFS, Inc. (a) ..................................... 254,100 15,182,475
Mirage Resorts, Inc. (a) .......................... 242,950 5,253,794
INSURANCE (1.55%)
PacifiCare Health Systems, Inc. -
Class B (a)(b) ................................... 276,975 23,612,119
MANAGEMENT SERVICES (0.01%)
Whittman-Hart, Inc. (a) ........................... 4,550 116,594
MEDICAL INSTRUMENTS & SUPPLIES (0.89%)
Boston Scientific Corporation (a) ................. 26,750 1,605,000
Medtronic, Inc. ................................... 175,375 11,925,500
MOTION PICTURES (0.03%)
Brilliant Digital Entertainment (a) ............... 113,200 431,575
OIL & GAS EXTRACTION (0.11%)
Marine Drilling Company, Inc. (a) ................. 84,850 1,670,484
PERSONAL CREDIT INSTITUTIONS (0.42%)
American Express Company .......................... 113,075 6,388,738
PHARMACEUTICALS (8.65%)
Amgen, Inc. (a) ................................... 138,925 7,554,047
Astra AB -Class A Free ............................ 194,584 9,621,423
Biogen, Inc. (a) .................................. 164,050 6,356,937
Bristol-Myers Squibb Company ...................... 37,400 4,067,250
Eli Lilly & Company ............................... 361,125 26,362,124
Pfizer, Inc. ...................................... 590,075 48,902,465
Smithkline Beecham Plc ............................ 66,388 919,940
SmithKline Beecham Plc -
ADR (b) ......................................... 417,325 28,378,100
RESTAURANTS (1.05%)
PepsiCo, Inc. ..................................... 550,325 16,097,005
See notes to schedule of investments
The notes to the financial statements are an integral part of this report.
20
<PAGE>
WRL SERIES FUND, INC.
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- --------------
COMMON STOCKS (CONTINUED)
RUBBER & MISC. PLASTIC PRODUCTS (0.45%)
Fila Holding S.p.A. - Sponsored
ADR (b) ................................... 118,025 $ 6,860,202
SECURITY & COMMODITY BROKERS (2.69%)
Merrill Lynch & Company, Inc. ............... 503,826 41,061,818
TELECOMMUNICATIONS (1.55%)
MFS Communications Company, Inc. ............
(a)(b) .................................... 416,025 22,569,355
TELECOMMUNICATIONS (CONTINUED)
Telefonica del Peru S.A. - ADR ............... 56,475 1,065,965
TRANSPORTATION & PUBLIC UTILITIES (0.01%)
Sabre Group Holding Inc. (a) ............ 2,925 81,533
--------------
Total Common Stocks
(cost: $886,191,313) ...................................... 1,286,916,824
--------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------- --------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS (11.07%)
Federal Home Loan Mortgage
Corp Discount Note
5.42%, due 01/22/97 ....................... $ 25,000,000 $ 24,920,958
Federal Home Loan Mortgage
Corp Discount Note
5.28%, due 03/21/97 ....................... 50,000,000 49,420,667
Federal Home Loan Mortgage
Corp Discount Note
5.18%, due 02/14/97 ....................... 45,000,000 44,715,100
Federal National Mortgage
Association Discount Note
5.25%, due 01/03/97 ....................... 50,000,000 49,985,417
--------------
Total Short-Term U.S. Government Obligations
(cost: $169,042,142) ......................................... 169,042,142
--------------
COMMERCIAL PAPER (4.06%)
Coca-Cola Company
5.50%, due 01/24/97 ....................... 10,000,000 9,964,861
Household Finance Corp. .....................
6.50%, due 01/02/97 ....................... 52,000,000 51,990,611
--------------
Total Commercial Paper
(cost: $61,955,472) .......................................... 61,955,472
--------------
Total Investment Securities
(cost: $1,136,830,294) ....................................... $1,537,381,185
==============
SUMMARY
Investments at value ..................... 100.65% $1,537,381,185
Liabilities in Excess
of Other Assets ........................ (0.65%) (9,971,713)
------ --------------
Net Assets ............................... 100.00% $1,527,409,472
====== ==============
INVESTMENTS BY COUNTRY
SIZE OF INVESTMENT IS INDICATED AS A PERCENTAGE OF TOTAL PORTFOLIO NET
ASSETS.
MARKET
VALUE PERCENTAGE
-------------- -------------
United Kingdom ................. $ 945,711 0.06%
Germany ........................ 55,924 (d)
Sweden ......................... 9,621,423 0.63%
United States .................. 1,516,786,414 99.31%
-------------- ------
$1,527,409,472 100.00%
============== ======
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) At December 31, 1996 security is on loan. See footnote 1C to financial
statements.
(c) Securities are registered pursuant to rule 144A and may be deemed to be
restricted for resale.
(d) Percentage is less than .01%.
ADR American Depository Receipt.
See notes to schedule of investments
The notes to the financial statements are an integral part of this report.
21
<PAGE>
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
U.S. GOVERNMENT OBLIGATIONS (23.51%)
U.S. Treasury Bonds
7.50%, due 11/15/16 .............................. $ 750,000 $ 812,205
U.S. Treasury Bonds
6.50%, due 08/15/05 .............................. 1,000,000 1,005,810
U.S. Treasury Notes
7.50%, due 05/15/02 .............................. 1,000,000 1,057,390
U.S. Treasury Notes
6.38%, due 08/15/02 .............................. 1,000,000 1,006,990
U.S. Treasury Notes
7.25%, due 02/15/98 .............................. 750,000 762,113
U.S. Treasury Notes
5.13%, due 04/30/98 .............................. 1,500,000 1,488,405
----------
Total U.S. Government Obligations
(cost: $6,071,710) .............................................. 6,132,913
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (4.70%)
Federal Agricultural
Mortgage Corporation
7.03%, due 05/26/98 ........................... 300,000 304,665
Government Trust Certificate -
Israel Class 1-B
U.S. Government Guaranteed
5.25%, due 03/15/98 ........................... 500,000 494,375
Government Trust
Certificate-Israel Class 1-C
U.S. Government Guaranteed
9.25%, due 11/15/01 ........................... 399,839 425,829
----------
Total U.S. Government Agency Obligations
(cost: $1,246,499) ........................................... 1,224,869
----------
MORTGAGE-BACKED SECURITIES (18.22%)
Federal Home Loan Mortgage
Corporation Gold Pool
6.50%, due 05/01/11 ............................. 1,052,224 1,033,473
Federal Home Loan Mortgage
Corporation Series 1115 Class I
7.50%, due 10/15/05 ............................. 1,032,157 1,039,475
Federal National Mortgage
Association
7.00%, due 01/25/06 ............................. 528,594 526,992
Federal National Mortgage
Association
6.00%, due 10/25/10 ............................. 12,420 12,393
Federal National Mortgage
Association Strip
Series 66 - Class 1
7.50%, due 01/01/20 ............................. 250,715 253,135
Federal National Mortgage
Association Series 1992-58
Class C
6.00%, due 08/25/13 ............................. 823,703 820,202
Government National Mortgage
Association
7.00%, due 06/15/23 ............................. 856,882 837,868
Prudential-Bache CMO Trust
Series 9 -Class E
9.88%, due 08/01/17 ............................. 229,632 232,776
----------
Total Mortgage-Backed Securities
(cost: $4,804,765) .............................................. 4,756,314
----------
ASSET-BACKED SECURITIES (11.76%)
American Express Master Trust
Series 1994-2 Class A
7.60%, due 08/15/02 ............................. 1,000,000 1,042,050
Atlantic Auto Grantor Trust (a)
Series 1996-A Class A
6.70%, due 09/15/02 ............................. 854,077 858,214
Choice Credit Card Master Trust
Series 1992-2 - Class B
7.20%, due 04/15/99 ............................. 100,000 101,534
Ford Credit Auto Loan Master Trust
Series 1992-1 Class A
6.88%, due 01/15/99 ............................. 100,000 100,035
Standard Credit Card Master Trust
Series 1993-2 Class A
5.95%, due 10/07/04 ............................. 1,000,000 967,720
----------
Total Asset-Backed Securities
(cost: $2,949,766) .............................................. 3,069,553
----------
SUPRANATIONAL AGENCY OBLIGATIONS (7.03%)
African Development Bank
9.30%, due 07/01/00 ............................... 500,000 540,000
African Development Bank
7.75%, due 12/15/01 ............................ 500,000 520,000
International Bank For
Reconstruction & Development
7.90%, due 04/01/98 ........................... 250,000 255,625
International Bank For
Reconstruction & Development
8.02%, due 04/01/99 ............................ 500,000 520,000
----------
Total Supranational Agency Obligations
(cost: $1,826,426) ............................................... 1,835,625
----------
See notes to schedule of investments
The notes to the financial statements are an integral part of this report.
22
<PAGE>
WRL SERIES FUND, INC.
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
CORPORATE DEBT SECURITIES (17.97%)
FINANCE (4.74%)
General Electric Capital Corporation
8.30%, due 09/20/09 ............................ $ 600,000 $ 672,750
Lehman Brothers Holdings, Inc. ...................
8.80%, due 03/01/15 ............................ 500,000 563,750
HOLDING & OTHER INVESTMENT OFFICES (2.87%)
Kimco Realty Corporation
6.00%, due 02/10/99 ............................ 750,000 750,000
INSURANCE (2.82%)
Progressive Corporation
6.60%, due 01/15/04 ............................ 750,000 736,875
OIL & GAS EXTRACTION (1.96%)
Shell Canada Limited
7.38%, due 06/01/99 ............................ 500,000 512,500
PAPER & ALLIED PRODUCTS (2.96%)
Scott Paper Company
9.75%, due 10/01/97 ............................ 750,000 771,082
SECURITY & COMMODITY BROKERS (2.62%)
Goldman Sachs Group L P 144A (a)
6.20%, due 02/15/01 ............................ 700,000 683,375
-----------
Total Corporate Debt Securities
(cost: $4,695,371) ............................... ............. 4,690,332
-----------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS (13.38%)
Federal Farm Credit Bank
5.58%, due 01/06/97 ............................. 500,000 499,613
Federal National Mortgage
Association
5.52%, due 01/24/97 ............................. 1,000,000 996,473
Federal Home Loan Mortgage
Corporation Discount Notes
5.33%, due 01/17/97 ............................. 1,000,000 997,631
Federal National Mortgage
Association Discount Notes
5.30%, due 01/07/97 ............................. 1,000,000 999,117
-----------
Total Short-Term U.S. Government Obligations
(cost: $ 3,492,834) ............................................ 3,492,834
-----------
SHORT-TERM OBLIGATION (2.24%)
Prudential-Bache Securities (b)
5.72% Repurchase Agreement
dated 12/31/96 to be repurchased
at $585,758 on 01/02/97 ......................... 585,571 585,571
-----------
Total Short-Term Obligation
(cost: $585,571) .................................. 585,571
-----------
Total Investment Securities
(cost: $25,672,942) ............................... $25,788,011
===========
SUMMARY
Investments at value .............................. 98.81% $25,788,011
Other Assets in
Excess of Liabilities ........................... 1.19% 310,200
---------- -----------
Net Assets ........................................ 100.00% $26,098,211
========== ===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Securities are registered pursuant to rule 144A and may be deemed to be
restricted for resale.
(b) Collateralized by $638,412 Federal National Mortgage Association
6.08% due 12/01/35; market value and accrued interest aggregated $
597,283 for this collateral at December 31, 1996.
See notes to schedule of investments
The notes to the financial statements are an integral part of this report.
23
<PAGE>
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
---------- -----------
PREFERRED STOCKS (1.64%)
BEER, WINE, & DISTILLED BEVERAGES (0.23%)
Cia. Cervejaria Brahma ........................... 2,297,000 $ 1,255,540
COMMERCIAL BANKS (D)
Banco Bradesco S.A ............................... 790,561 5,692
ELECTRIC SERVICES (0.24%)
Cia Energetica de Minas Gerais ................... 37,617,000 1,278,978
MEDICAL INSTRUMENTS & SUPPLIES (1.17%)
Fresenius AG ..................................... 25,659 5,305,997
Fresenius Medical Care
AG (a) ......................................... 11,611 935,872
TELECOMMUNICATIONS (D)
Telecomunicacoes Brasileiras SA .................. 14,487 1,113
-----------
Total Preferred Stocks
(cost: $4,927,297) ............................................. 8,783,192
-----------
COMMON STOCKS (94.82%)
AEROSPACE (0.42%)
Boeing Company ................................... 20,500 2,180,688
AGRICULTURE (1.44%)
Kesko OY ......................................... 110,947 1,564,603
Parmalat Finanziaria S.p.A ....................... 3,973,923 6,081,465
AIR TRANSPORTATION (0.41%)
Swissair AG (a) .................................. 2,622 2,124,673
AMUSEMENT & RECREATION SERVICES (1.27%)
Aristocrat Leisure Limited
144A (c) ....................................... 1,455,169 3,782,930
London Clubs International plc ................... 581,615 3,026,650
APPAREL PRODUCTS (1.01%)
Gucci Group nv -NY
registered share ............................... 84,150 5,375,081
APPAREL, PIECE GOODS, & NOTIONS (0.24%)
Nike, Inc. - Class B ............................. 21,775 1,301,056
AUTOMOTIVE (2.79%)
Bajaj Auto Limited -Sponsored
GDR 144A (c) ................................... 36,920 1,218,360
Honda Motor Company, Ltd. ........................ 117,000 3,343,434
Isuzu Motors Ltd. ................................ 320,000 1,422,775
LucasVarity plc - ADR (a) ........................ 4,725 179,550
LucasVarity plc (a) .............................. 1,284,208 4,891,234
Mahindra & Mahindra Limited -
Sponsored GDR (a) (b) .......................... 35,132 412,801
Tata Engineering & Locomotive
Company Limited - GDR (b) ...................... 79,750 847,344
Tata Engineering & Locomotive
Company Limited - GDR
144A (c) ....................................... 92,919 987,264
Tata Engineering & Locomotive
Company Limited - GDR
144A (b) (c) ................................... 116,350 1,236,219
Yamaha Motor Co., Ltd. ........................... 45,000 404,040
BEER, WINE, & DISTILLED BEVERAGES (0.24%)
Cia, Cervejaria Brahma -
Rights ......................................... 183,667 9,298
Quilmes Industrial SA -
ADR (a) ........................................ 136,725 1,247,616
BEVERAGES (0.16%)
South African Breweries Limited
144A -ADR (a) (c) .............................. 34,305 857,625
BUSINESS CREDIT INSTITUTIONS (0.32%)
Credit Communal Holding/ Dexia
144A (a) (c) ................................... 18,310 1,671,316
BUSINESS SERVICES (3.54%)
Investment AB Bure ............................... 158,204 1,880,203
Prosegur, CIA de Seguridad SA .................... 38,595 356,618
Securitas AB -Class B Free ....................... 501,747 14,613,276
Select Appointments Holdings
Public Limited
Company -ADR (a) (b) ........................... 88,500 1,017,750
SEMA Group plc ................................... 58,754 1,096,269
CHEMICALS & ALLIED PRODUCTS (3.75%)
Amway Japan Limited (b) .......................... 32,400 1,040,559
BASF AG .......................................... 229,480 8,846,127
Hoechst AG (b) ................................... 167,037 7,896,729
SGL Carbon AG 144A (c) ........................... 18,160 2,290,961
COMMERCIAL BANKS (5.68%)
Banco Frances del Rio de la
Plata S.A. ADR (b) ............................. 87,371 2,402,703
Bangkok Bank Public Company
Limited ........................................ 92,400 893,729
See notes to schedule of investments
The notes to the financial statements are an integral part of this report.
24
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WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
----------- -----------
COMMON STOCKS (CONTINUED)
COMMERCIAL BANKS (CONTINUED)
Barclays Plc ....................................... 299,991 $ 5,145,516
Citicorp ........................................... 43,850 4,516,550
Credit Suisse Group ................................ 80,143 8,245,165
Deutsche Pfandbrief -&
Hypothekenbank AG ................................ 7,915 357,560
Kookmin Bank GDR (a) ............................... 4,403 82,226
Nordbanken AB ...................................... 77,265 2,341,020
Skandinaviska Enskilda Banken -
Class A .......................................... 204,927 2,104,745
Sparbanken Sverige AB -
Class A .......................................... 88,149 1,513,232
Wells Fargo & Company .............................. 10,258 2,767,096
COMMUNICATIONS EQUIPMENT (0.98%)
Lucent Technologies, Inc. .......................... 110,875 5,127,969
Tandberg ASA (a) ................................... 3,754 115,884
COMPUTER & DATA PROCESSING SERVICE (9.47%)
CAP Gemini Sogeti SA (a) ........................... 71,848 3,477,366
Dassault Systemes S.A. ADR
(a) (b) .......................................... 27,750 1,283,438
Electronic Data Systems
Corporation ...................................... 6,375 275,719
Enator AB (a) (b) .................................. 85,501 2,189,117
Enator AB (a) ...................................... 17,100 437,818
First Data Corporation ............................. 5,750 209,875
Frontec AB - Class B (a) ........................... 121,947 2,111,327
Getronics NV ....................................... 360,489 9,801,121
Group Axime (a) (b) ................................ 50,457 5,839,931
JBA Holdings Plc ................................... 239,120 2,189,892
Misys plc .......................................... 421,801 8,021,853
NTT Data Communications
Systems Company .................................. 2,470 7,228,956
Parametric Technology
Company (a) ...................................... 98,875 5,079,703
Sligos SA (b) ...................................... 16,126 2,115,293
Sungard Data Systems, Inc. (a) ..................... 9,425 372,288
COMPUTER & OFFICE EQUIPMENT (2.05%)
Cisco Systems, Inc. (a) ............................ 37,750 2,401,844
International Business Machines
Corporation ...................................... 37,525 5,666,275
Oce-Van Der Grinten N.V ............................ 26,659 2,899,263
CONSTRUCTION (0.34%)
Hi Cement Corporation
144A (a) (c) ..................................... 5,549,000 1,838,397
DEPARTMENT STORES (1.20%)
Credit Saison Co., Limited (b) ..................... 211,400 $ 4,726,979
Isetan Co. ......................................... 131,000 1,696,452
ELECTRIC SERVICES (0.08%)
Mosenegro -RDC ADR
144A (c) ......................................... 13,800 420,900
ELECTRONIC COMPONENTS & ACCESSORIES (1.11%)
Electrocomponents plc .............................. 750,428 5,960,464
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (4.06%)
Philips Electronics N.V ............................ 136,536 5,540,591
Philips Electronics N.V. - NY
shares ADR ....................................... 214,478 8,579,120
Raychem Corporation ................................ 32,975 2,642,122
Sony Corporation ................................... 30,500 1,998,575
Sony Corporation - ADR ............................. 5,475 359,297
UCAR International, Inc. (a) ....................... 68,575 2,580,134
ENGINEERING & MANAGEMENT SERVICES (0.36%)
Metra Oy - Class B ................................. 30,500 1,696,617
New World Infrastructure 144A (a) (b) (c) .......... 75,600 220,915
ENVIRONMENTAL SERVICES (4.90%)
Rentokil Group PLC ................................. 3,470,322 26,197,593
FINANCE (0.39%)
Lloyds TSB Group plc ............................... 285,377 2,103,028
FOOD STORES (1.49%)
Asda Group plc ..................................... 2,595,742 5,465,371
Disco S.A. - sponsored ADR (a) ..................... 50,550 1,428,038
Santa Isabel S.A. ADR .............................. 48,700 1,101,838
FOOD & KINDRED PRODUCTS (2.25%)
Nutricia Vereenigde Bedrijven N.V .................. 62,640 9,532,174
Raision Tehtaat Oy ................................. 39,924 2,489,774
FURNITURE & HOME FURNISHINGS (0.18%)
Industrie Natuzzi Spa - Sponsored ADR ............... 42,550 978,650
HEALTH SERVICES (0.42%)
Vivra, Inc. (a) .................................... 80,975 2,236,934
See notes to schedule of investments
The notes to the financial statements are an integral part of this report.
25
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WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- -----------
COMMON STOCKS (CONTINUED)
HOLDING & OTHER INVESTMENT OFFICES (3.30%)
First Pacific Company Ltd. ........................ 33,000 $ 42,882
Grupo Carso SA de CV (a) .......................... 201,083 1,047,301
Incentive AB - Class B ............................ 15,577 1,131,335
Kinnevik AB - Class B Free ........................ 254,182 7,011,403
Lagardere Groupe (b) .............................. 305,957 8,404,374
HOTELS & OTHER LODGING PLACES (0.45%)
HFS, Inc. (a) ..................................... 32,075 1,916,481
Indian Hotels Company Limited -
Sponsored GDR
144A (a) (c) .................................... 19,961 505,213
INDUSTRIAL MACHINERY & EQUIPMENT (0.88%)
Hunter Douglas N.V ................................ 7,975 538,601
New Holland N.V. (a) (b) .......................... 153,075 3,195,441
Pfeiffer Vacuum Technology AG -
ADR (a) .......................................... 11,600 208,800
Sandvik AB -Class A ............................... 28,983 786,715
INSTRUMENTS & RELATED PRODUCTS (0.38%)
Grand Optical Photoservice ........................ 12,453 2,020,249
INSURANCE (0.32%)
Schweizerische Rueckversicherungs -
Gesellschaft (b) ................................ 1,613 1,724,637
MACHINERY, EQUIPMENT & SUPPLIES (0.32%)
Kawasaki Heavy Industries
Ltd. (a) ........................................ 414,000 1,712,044
MANUFACTURING INDUSTRIES (3.55%)
Sulzer AG ......................................... 5,469 3,163,140
Amer Group, Ltd. (b) .............................. 86,882 1,793,483
Assa Abloy AB -
Class B Free ..................................... 508,058 9,243,517
Barco Industries nv ............................... 17,886 3,090,405
London International
Group plc ....................................... 604,523 1,707,457
MEDICAL INSTRUMENTS & SUPPLIES (2.26%)
Fresenius Medical Care AG -
ADR (a) ......................................... 338,400 9,517,500
Nobel Biocare AB 144A (a)(c) ...................... 144,444 2,543,215
MINING (0.46%)
Atlas Copco AB -Class A ........................... 66,479 1,619,179
De Beers Centenary AG ............................. 28,913 828,559
OIL & GAS EXTRACTION (1.33%)
Gazprom - ADR 144A (a)(b)(c) ...................... 85,850 1,523,838
Lukoil Holding Sponsored ADR ...................... 12,025 540,226
Tatneft ADR 144A (a)(c) ........................... 29,775 1,429,200
YPF Sociedad Anonima SA -
Sponsored ADR ................................... 143,950 3,634,738
PAPER & ALLIED PRODUCTS (1.35%)
Alco Standard Corporation ......................... 139,900 7,222,338
PERSONAL CREDIT INSTITUTIONS (0.28%)
Associates First Capital
Corporation (a) ................................. 34,425 1,519,003
PERSONAL SERVICES (2.78%)
Hays plc .......................................... 1,434,647 13,801,758
Ranstad Holdings N. V ............................. 15,087 1,091,512
PHARMACEUTICALS (9.20%)
Eisai Company Ltd. ................................ 261,500 5,147,371
Gehe AG ........................................... 60,918 3,901,953
Glaxo Wellcome Plc ................................ 173,888 2,821,831
Grupo Casa Autrey S.A. de C.V. -
Sponsored ADR ................................... 153,475 2,992,763
Novartis AG (a) ................................... 11,042 12,641,177
Pfizer, Inc. ...................................... 12,625 1,046,297
Roche Holding AG .................................. 1,492 11,626,771
SmithKline Beecham Plc ............................ 315,122 4,366,652
SmithKline Beecham Plc -ADR ....................... 32,675 2,221,900
Takeda Chemical Industries Ltd. ................... 117,000 2,454,545
PRINTING & PUBLISHING (2.09%)
Dorling Kindersley Holdings
plc ............................................. 20,932 147,984
EMAP plc .......................................... 50,741 639,712
Pearson plc ....................................... 88,609 1,136,848
Wolters Kluwer NV ................................. 69,559 9,254,371
RADIO & TELEVISION BROADCASTING (1.48%)
CanWest Global Communications
Corporation (a) (b) ............................. 114,150 1,170,038
Central European Media
Enterprises Ltd. (a) ............................ 91,165 2,894,489
Grupo Televisa S.A. -
Sponsored GDR (a)(b) ............................ 138,125 3,539,453
See notes to schedule of investments
The notes to the financial statements are an integral part of this report.
26
<PAGE>
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
---------- ------------
COMMON STOCKS (CONTINUED)
RADIO & TELEVISION BROADCASTING (CONTINUED)
Heritage Media Corporation -
Class A (a) ...................................... 26,300 $ 295,875
RAILROADS (0.02%)
Tranz Rail Holdings Ltd. -
Sponsored ADR (a) ................................ 4,700 83,131
REAL ESTATE (0.52%)
Diligentia AB (a) .................................. 20,492 323,218
Mitsubishi Estate Co., Ltd. ........................ 158,000 1,623,241
Mitsui Fudosan Co., Ltd. ........................... 82,000 821,203
RESEARCH & TESTING SERVICES (1.05%)
WM-Data AB - Class B (b) ........................... 65,014 5,628,092
RETAIL TRADE (0.18%)
Eurobike (a) ....................................... 32,200 984,133
RUBBER & MISC. PLASTIC PRODUCTS (1.16%)
Adidas AG .......................................... 71,642 6,196,115
SECURITY & COMMODITY BROKERS (0.64%)
Grupo Financiero Inbursa, SA
de CV -Class B ................................... 1,005,141 3,434,667
TELECOMMUNICATIONS (7.46%)
Airtouch Communications, Inc. ......................
(a) .............................................. 22,900 578,225
Korea Mobile
Telecommunications - ADR
144A (a) (b) (c) ................................. 170,942 2,200,877
MFS Communications Company,
Inc. (a) (b) ..................................... 89,950 4,902,275
Millicom International Cellular
S.A. (a) ......................................... 32,825 1,054,503
Nippon Telegraph & Telephone
Corporation ...................................... 650 4,928,716
Oy Nokia AB - Class A .............................. 18,781 1,089,617
Oy Nokia AB - Class A -ADR ......................... 75,300 4,329,750
Paging Network, Inc. (a) ........................... 10,950 166,988
Portugal Telecom S.A - .............................
Sponsored ADR .................................... 64,700 1,827,775
Telecom Argentina Stet - France
Telecom S.A. - ADR ............................... 1,450 58,544
Telecom Italia Mobile SpA .......................... 746,411 1,893,107
Telecom Italia S.p.A ............................... 672,843 1,748,682
TELECOMMUNICATIONS (CONTINUED)
Telecomunicacoes Brasileiras SA -
Sponsored ADR .................................... 67,775 5,184,788
Telefonaktiebolaget LM Ericsson .................... 45,231 1,400,298
Telefonaktiebolaget LM Ericsson
ADR .............................................. 135,400 4,087,387
Telefonica de Argentina S.A. -
Sponsored ADR (b) ................................ 67,300 1,741,387
Telefonica del Peru S.A. - ADR ..................... 143,525 2,709,033
TEXTILE MILL PRODUCTS (1.02%)
Wolford AG (b) ..................................... 45,286 5,481,856
TOBACCO PRODUCTS (0.74%)
PT Hanjaya Mandala Sampoerna ....................... 742,000 3,959,847
WHOLESALE TRADE DURABLE GOODS (1.05%)
Danka Business Systems plc -
Sponsored ADR (b) ................................ 158,850 5,619,318
------------
Total Common Stocks
(cost: $421,832,066) ........................................... 507,084,298
------------
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
COMMERCIAL PAPER (1.70%)
Household Finance Corp. ........................
6.50%, due 01/02/97 ........................... $9,100,000 $ 9,098,357
------------
Total Commercial Paper
(cost: $9,098,357) ............................. 9,098,357
------------
Total Investment Securities
(cost: $435,857,720) ........................... $524,965,847
============
SUMMARY
Investments at value ........................... 98.16% $524,965,847
Other Assets in
Excess of Liabilities ........................ 1.84% 9,853,888
---------- ------------
Net Assets ..................................... 100.00% $534,819,735
========== ============
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
27
<PAGE>
WRL SERIES FUND, INC.
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
INVESTMENTS BY COUNTRY
SIZE OF INVESTMENT IS INDICATED AS A PERCENTAGE OF TOTAL PORTFOLIO NET
ASSETS.
MARKET
VALUE PERCENTAGE
------------ ----------
Africa .................... $ 828,559 0.15%
Australia ................. 3,782,930 0.71%
Austria ................... 5,481,857 1.02%
Belgium ................... 4,761,721 0.89%
Brazil .................... 2,550,621 0.48%
Finland ................... 8,634,094 1.61%
France .................... 21,857,213 4.09%
Germany ................... 36,715,447 6.87%
Hong Kong ................. 263,798 0.05%
Indonesia ................. 3,959,848 0.74%
Italy ..................... 9,723,254 1.82%
Japan ..................... 38,548,892 7.21%
Mexico .................... 4,481,967 0.84%
Netherlands ............... 38,657,634 7.23%
Norway .................... 115,884 0.02%
Philippines ............... 1,838,397 0.34%
Spain ..................... 356,618 0.07%
Sweden .................... 56,877,710 10.63%
Switzerland ............... 39,525,564 7.39%
Thailand .................. 893,729 0.17%
United Kingdom ............ 88,720,111 16.59%
United States ............. 166,243,887 31.08%
------------ -------
$534,819,735 100.00%
============ =======
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) As of December 31, 1996, security is on loan. See footnote 1C to
financial statements.
(c) Securities are registered pursuant to rule 144A and may be
deemed to be restricted for resale.
(d) Percentage is less than .01%.
ADR American Depository Receipt
GDR Global Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
28
<PAGE>
WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
U.S. GOVERNMENT OBLIGATIONS (4.51%)
U.S. Treasury Notes
6.50%, due 05/31/01 ............................. $5,500,000 $ 5,561,160
U.S. Treasury Notes
7.50%, due 11/15/01 ............................. 4,000,000 4,211,040
U.S. Treasury Notes
7.50%, due 02/15/05 ............................. 4,500,000 4,809,240
U.S. Treasury Notes
6.00%, due 11/30/97 ............................. 3,000,000 3,006,870
-----------
Total U.S. Government Obligations
(cost: $17,472,985) ............................................ 17,588,310
-----------
CORPORATE DEBT SECURITIES (15.48%)
BUSINESS SERVICES (1.18%)
Olsten Corporation
7.00%, due 03/15/06 ............................. 4,625,000 4,607,656
CHEMICALS & ALLIED PRODUCTS (0.74%)
Dexter Corporation
9.25%, due 12/15/16 ............................. 1,425,000 1,494,242
M.A. Hanna Company
9.38%, due 09/15/03 ............................. 1,250,000 1,412,500
COMMERCIAL BANKS (0.68%)
First Union Corporation
7.25%, due 02/15/03 ............................. 2,600,000 2,665,000
COMMUNICATIONS EQUIPMENT (1.98%)
GTE Corporation
10.75%, due 09/15/17 ............................ 1,000,000 1,076,250
Lucent Technologies Inc. .........................
6.90%, due 07/15/01 ............................. 6,575,000 6,640,750
ELECTRIC SERVICES (3.48%)
Interstate Power Company
8.63%, due 09/15/21 ............................. 3,825,000 4,087,969
Kentucky Utilities Company
8.55%, due 05/15/27 ............................. 4,000,000 4,225,000
West Penn Power Company
8.88%, due 02/01/21 ............................. 5,000,000 5,268,750
ELECTRICAL GOODS (0.57%)
Avnet, Inc. ......................................
6.88%, due 03/15/04 ............................. 2,199,000 2,209,995
GAS PRODUCTION & DISTRIBUTION (1.57%)
Oneok, Inc. ......................................
9.75%, due 12/01/20 ............................. 1,000,000 1,117,500
Transcontinental Gas Power &
Light Company
9.13%, due 02/01/17 .............................. $4,800,000 5,010,000
LIFE INSURANCE (0.90%)
Torchmark Corporation
8.63%, due 03/01/17 ............................ 3,350,000 3,504,937
RAILROADS (0.77%)
Union Pacific Corporation
6.25%, due 03/15/99 ............................ 3,000,000 2,992,500
SECURITY & COMMODITY BROKERS (0.67%)
J.P. Morgan & Company
7.63%, due 09/15/04 ............................ 2,510,000 2,629,225
TELECOMMUNICATIONS (1.44%)
Alltel Corporation
7.25%, due 04/01/04 ............................ 5,465,000 5,608,456
TOBACCO PRODUCTS (1.50%)
RJR Nabisco Holdings Corporation
8.30%, due 04/15/99 ............................ 5,650,000 5,868,938
-----------
Total Corporate Debt Securities
(cost $60,355,056) ............................................. 60,419,668
-----------
CONVERTIBLE BONDS (5.77%)
ELECTRIC SERVICES (1.01%)
Potomac Electric Power Company
5.00%, due 09/01/02 ............................ 4,250,000 3,931,250
INDUSTRIAL MACHINERY & EQUIPMENT (0.81%)
Robbins & Myers, Inc. ............................
6.50%, due 09/01/03 ............................. 2,800,000 3,167,500
LUMBER & OTHER BUILDING MATERIALS (1.50%)
Home Depot, Inc. .................................
3.25%, due 10/01/01 ............................. 6,000,000 5,880,000
OIL & GAS EXTRACTION (1.25%)
Nabors Industries, Inc. ..........................
5.00%, due 05/15/06 ............................. 3,950,000 4,878,250
WHOLESALE TRADE DURABLE GOODS (1.20%)
Danka Business Systems PLC 144A (c)
6.75%, due 04/01/02 ............................ 3,400,000 4,666,500
-----------
Total Convertible Bonds
(cost $20,828,516) ............................................. 22,523,500
-----------
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
29
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WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
---------- -----------
CONVERTIBLE PREFERRED STOCKS (5.15%)
COMPUTER & DATA PROCESSING SERVICE (1.95%)
Microsoft Corporation .............................. 95,000 $ 7,611,875
ELECTRIC SERVICES (1.75%)
Calenergy, Inc. -
Capital Trust 144A (c) ........................... 110,300 6,811,025
PRIMARY METAL INDUSTRIES (1.45%)
Titanium Metals
Corporation 144A (c) ............................. 103,500 5,666,625
-----------
Total Convertible Preferred Stocks
(cost: $18,762,947) ............................................ 20,089,525
-----------
COMMON STOCKS (67.89%)
BUSINESS SERVICES (1.29%)
Manpower, Inc. ..................................... 155,000 5,037,500
CHEMICALS & ALLIED PRODUCTS (10.29%)
Colgate-Palmolive Company .......................... 60,700 5,599,575
Estee Lauder Companies - Class A ................... 65,000 3,306,875
E.I. Dupont De Nemours &
Company .......................................... 46,000 4,341,250
Lawter International, Inc. ......................... 337,500 4,260,938
Morton International, Inc. (b) ..................... 151,500 6,173,625
M.A. Hanna Company ................................. 152,475 3,335,391
Nalco Chemical Company ............................. 100,100 3,616,113
Olin Corporation ................................... 110,000 4,138,750
Procter & Gamble
Company (b) ...................................... 50,000 5,375,000
COMMERCIAL BANKS (1.46%)
Mellon Bank Corporation ............................ 80,000 5,680,000
COMPUTER & DATA PROCESSING SERVICE (0.67%)
Electronic Data Systems
Corporation ...................................... 60,000 2,595,000
Information Resources, Inc. (a) .................... 873 12,222
COMPUTER & OFFICE EQUIPMENT (1.73%)
Hewlett-Packard Company ............................ 134,000 6,733,500
ELECTRICAL GOODS (0.99%)
Westinghouse Electric Corporation (b) .............. 195,000 3,875,625
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (5.34%)
Duracell International, Inc. ....................... 70,000 4,891,250
Emerson Electric Company .......................... 61,200 5,921,100
General Electric Company .......................... 58,000 5,734,750
National Service Industries, Inc. ................. 114,800 4,290,650
ENVIRONMENTAL SERVICES (1.33%)
WMX Technologies, Inc. ............................ 159,100 5,190,637
FABRICATED METAL PRODUCTS (0.92%)
Masco Corporation ................................. 100,000 3,600,000
FINANCE (1.42%)
Federal National Mortgage Association ............. 149,000 5,550,250
FOOD & KINDRED PRODUCTS (2.30%)
H.J. Heinz Company ................................ 100,000 3,575,000
Nabisco Holdings Corporation -
Class A ......................................... 139,300 5,415,287
HEALTH SERVICES (1.09%)
Columbia/HCA Healthcare
Corporation ..................................... 104,100 4,242,075
HOLDING & OTHER INVESTMENT OFFICES (4.81%)
Crescent Real Estate
Equities, Inc. .................................. 127,000 6,699,250
Starwood Lodging Trust ............................ 162,600 8,963,325
Storage USA, Inc. ................................. 82,500 3,104,063
INDUSTRIAL MACHINERY & EQUIPMENT (1.85%)
Baker Hughes, Inc. ................................ 120,000 4,140,000
Stewart & Stevenson
Services, Inc. .................................. 105,000 3,058,125
INSTRUMENTS & RELATED PRODUCTS (2.25%)
Eastman Kodak Company ............................. 47,900 3,843,975
Raytheon Company .................................. 102,800 4,947,250
INSURANCE (1.19%)
American International Group, Inc. ................ 43,000 4,654,750
INSURANCE AGENTS, BROKERS & SERVICES (0.80%)
Marsh & McLennan Companies, Inc. .................. 30,000 3,120,000
LIFE INSURANCE (1.81%)
American General Corporation ...................... 106,900 4,369,537
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
30
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WRL SERIES FUND, INC.
EQUITY-INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
---------- ------------
COMMON STOCKS (CONTINUED)
LIFE INSURANCE (CONTINUED)
UNUM Corporation ................................. 37,400 $ 2,702,150
MANUFACTURING INDUSTRIES (1.29%)
Tyco International Ltd. .......................... 95,000 5,023,125
MEDICAL INSTRUMENTS & SUPPLIES (1.28%)
Baxter International, Inc. ....................... 122,200 5,010,200
MOTION PICTURES (0.81%)
Walt Disney Company .............................. 45,400 3,160,975
OIL & GAS EXTRACTION (2.39%)
Atlantic Richfield Company ....................... 34,000 4,505,000
Union Pacific Resources Group,
Inc ............................................ 165,000 4,826,250
PAINT, GLASS, WALLPAPER STORES (0.97%)
Sherwin-Williams Company ......................... 67,700 3,791,200
PETROLEUM REFINING (4.13%)
Amoco Corporation ................................ 75,700 6,093,850
Exxon Corporation ................................ 57,400 5,625,200
Mobil Corporation ................................ 35,900 4,388,775
PHARMACEUTICALS (2.57%)
Merck & Company, Inc. ............................ 72,000 5,706,000
Schering-Plough Corporation ...................... 67,000 4,338,250
PRINTING & PUBLISHING (0.70%)
A.H. Belo Corporation -
Class A (b) .................................... 78,800 2,748,150
REAL ESTATE (0.89%)
Boykin Lodging Company ........................... 144,000 3,456,000
RESTAURANTS (0.86%)
PepsiCo, Inc. .................................... 115,000 3,363,750
RUBBER & MISC. PLASTIC PRODUCTS (1.89%)
Tupperware Corporation ........................... 137,100 7,351,987
SAVINGS INSTITUTIONS (1.51%)
First Colorado Bancorp, Inc. ..................... 346,000 5,882,000
STONE, CLAY & GLASS PRODUCTS (2.02%)
Corning Incorporated ............................. 170,000 7,862,500
TELECOMMUNICATIONS (0.95%)
Alltel Corporation ................................ 117,900 3,699,113
TOBACCO PRODUCTS (1.29%)
UST, Inc. ......................................... 155,000 5,018,125
WHOLESALE TRADE DURABLE GOODS (2.80%)
Fisher Scientific International ................... 105,000 4,948,125
Johnson & Johnson ................................. 120,000 5,970,000
-----------
Total Common Stocks
(cost: $214,498,020) .......................................... 264,863,363
-----------
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
SHORT-TERM OBLIGATION (1.42%)
Salomon Brothers, Inc. (d)
5.90%, Repurchase Agreement
dated 12/31/96 to be
repurchased at $5,535,393 on
01/02/97 ................................. $5,533,579 $ 5,533,579
------------
Total Short-Term Obligation
(cost: $5,533,579) ........................................ 5,533,579
------------
Total Investment Securities
(cost: $337,451,103) ...................................... $391,017,945
============
SUMMARY
Investments at value ....................... 100.22% $391,017,945
Liabilities in Excess
of Other Assets .......................... (0.22%) (877,023)
---------- ------------
Net Assets ................................. 100.00% $390,140,922
========== ============
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) As of December 31, 1996 security is on loan. See footnote 1C to
financial statements.
(c) Securities are registered pursuant to rule 144A and may be
deemed to be restricted for resale.
(d) Collateralized by $1,634,710 U.S. Treasury Notes 10.63% due 08/15/15 and
$1,634,710 U.S. Treasury Notes 12.00% due 08/15/13 and $668,400 U.S.
Treasury Notes 9.13% due 05/15/18; market value and accrued interest
aggregated $2,382,334, $2,417,245, and 850,536 respectively for this
collateral at December 31, 1996.
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
31
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WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ----------
PREFERRED STOCKS (C)
TELECOMMUNICATIONS (C)
Airtouch Communications, Inc. ...................... 1 $ 45
Airtouch Communications, Inc. -
Series B (b) ..................................... 1 27
----------
Total Preferred Stocks
(cost: $78) .................................................... 72
----------
COMMON STOCKS (95.44%)
AEROSPACE (0.14%)
Gulfstream Aerospace
Corporation (a) .................................. 25,000 606,250
AIR TRANSPORTATION (0.49%)
Comair Holdings, Inc. (a) .......................... 30,000 720,000
Continental Airlines, Inc. -
Class A (a) ...................................... 20,000 557,500
Continental Airlines, Inc. -
Class B (a) (b) .................................. 30,000 847,500
AMUSEMENT & RECREATION SERVICES (0.11%)
Penske Motorsports, Inc. (a)(b) .................... 17,500 441,875
APPAREL PRODUCTS (1.86%)
Gucci Group nv -NY registered
share (a) ........................................ 27,500 1,756,563
Liz Claiborne, Inc. ................................ 35,000 1,351,875
Nautica Enterprises, Inc. (a) ...................... 80,000 2,020,000
Tommy Hilfiger Corporation (a) ..................... 60,000 2,880,000
APPAREL & ACCESSORY STORES (1.48%)
Gadzooks, Inc. (a) ................................. 30,000 547,500
Loehmann's Holdings, Inc. (a) ...................... 10,000 230,000
Ross Stores, Inc. (b) .............................. 55,000 2,750,000
Saks Holdings (a)(b) ............................... 35,500 958,500
St. John Knits, Inc. ............................... 44,000 1,914,000
APPAREL, PIECE GOODS & NOTIONS (1.38%)
Nike, Inc. - Class B ............................... 100,000 5,975,000
BEVERAGES (0.39%)
Coca-Cola Enterprises, Inc. ........................ 35,000 1,697,500
BUILDING MATERIALS & GARDEN SUPPLIES (0.11%)
Prime Service, Inc. (a) ............................ 15,000 412,500
BUSINESS CREDIT INSTITUTIONS (0.75%)
Finova Group, Inc. ................................. 50,000 3,212,500
BUSINESS SERVICES (2.87%)
AccuStaff, Inc. (a)(b) ............................. 57,750 1,219,969
APAC Teleservices, Inc. (a)(b) ..................... 55,000 2,110,625
Billing Information Concepts (a) ................... 35,000 1,006,250
Concord EFS, Inc. (a) .............................. 35,000 988,750
Corestaff, Inc. (a) ................................ 37,500 888,280
CRA Managed Care, Inc. (a) ......................... 12,500 562,500
Interpublic Group of
Companies, Inc. .................................. 30,000 1,425,000
Omnicom Group, Inc. ................................ 35,000 1,601,250
Robert Half International,
Inc. (a)(b) ...................................... 30,000 1,031,250
Sitel Corporation (a) .............................. 80,000 1,130,000
Vincam Group, Inc. (a)(b) .......................... 10,000 438,750
CHEMICALS & ALLIED PRODUCTS (1.36%)
B.F. Goodrich Company .............................. 45,000 1,822,500
Cytec Industries, Inc. (a) ......................... 17,500 710,938
Praxair, Inc. ...................................... 45,000 2,075,625
USA Detergents, Inc. (a)(b) ........................ 30,000 1,248,750
COMMERCIAL BANKS (1.78%)
Bank of Boston Corporation ......................... 40,000 2,570,000
Cullen/Frost Bankers, Inc. ......................... 25,000 831,250
First Bank System, Inc. ............................ 20,000 1,365,000
North Fork Bancorporation, Inc. .................... 20,000 712,500
Peoples Heritage Financial
Group, Inc. ...................................... 30,000 840,000
Star Banc Corporation .............................. 15,000 1,378,125
COMMUNICATIONS EQUIPMENT (7.48%)
ADC Telecommunications, Inc. (a) ................... 95,000 2,956,875
Andrew Corporation (a) ............................. 35,000 1,857,188
Ascend Communications, Inc. (a) .................... 110,000 6,833,750
Aspect Telecommunication
Corporation (a)(b) ............................... 50,000 3,175,000
Cascade Communications Corp. (a)(b) ................ 70,000 3,858,750
DSP Communications, Inc. (a) ....................... 32,000 620,000
Lucent Technologies, Inc. .......................... 30,000 1,387,500
Pairgain Technologies, Inc. (a)(b) ................. 230,000 7,000,625
Tellabs, Inc. (a) .................................. 110,000 4,138,750
Ultrak, Inc. (a) ................................... 15,000 457,500
COMPUTER & DATA PROCESSING SERVICES (17.43%)
3Com Corporation (a) ............................... 50,000 3,668,750
Acxiom Corporation (a) ............................. 80,000 1,920,000
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
32
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EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ----------
COMMON STOCKS (CONTINUED)
COMPUTER & DATA PROCESSING SERVICES (CONTINUED)
Altera Corporation (a) ............................. 17,500 $1,272,030
spen Technologies, Inc. (a) ....................... 27,000 2,166,750
Avant! Corp. (a) ................................... 4,383 139,160
BMC Software, Inc. (a) ............................. 110,000 4,551,250
Cadence Design Systems, Inc. (a) ................... 85,000 3,378,750
Cambridge Technology
Partners, Inc. (a) ............................... 50,000 1,678,125
Centennial Technologies,
Inc. (a)(b) ...................................... 12,500 650,000
Ciber, Inc. (a)(b) ................................. 30,000 900,000
Cognos, Inc. (a) ................................... 30,000 843,750
Compuware Corporation (a) .......................... 55,000 2,756,875
Factset Research Systems, Inc. (a) ................. 7,500 157,500
Gartner Group, Inc. - Class A (a) .................. 47,500 1,849,530
HBO & Company (b) .................................. 45,000 2,671,875
Legato Systems, Inc. (a) ........................... 40,000 1,305,000
McAfee Associates, Inc. (a) ........................ 172,500 7,590,000
Memco Software Ltd. (a) ............................ 7,500 132,188
Microsoft Corporation (a) .......................... 60,000 4,957,500
National Data Corporation .......................... 40,000 1,740,000
National Techteam, Inc. (a) ........................ 20,000 400,000
Network General Corporation (a) .................... 25,000 756,250
Oracle Corporation (a) ............................. 45,000 1,878,750
Parametric Technology Company
(a)(b) ........................................... 70,000 3,596,250
PeopleSoft, Inc. (a)(b) ............................ 155,000 7,430,313
Rational Software
Corporation (a)(b) ............................... 20,000 791,250
Remedy Corporation (a) ............................. 10,000 537,500
Reynolds & Reynolds Company -
Class A .......................................... 60,000 1,560,000
Saville Systems Ireland PLC -
ADR (a) .......................................... 22,000 893,750
Security Dynamics Technologies,
Inc. (a) ......................................... 60,000 1,890,000
Sun Microsystems, Inc. (a) ......................... 70,000 1,798,125
Sungard Data Systems, Inc. (a) ..................... 55,000 2,172,500
Technology Solutions
Company (a) ...................................... 30,000 1,245,000
Vantive Corporation (a) ............................ 30,000 937,500
Viasoft, Inc. (a) .................................. 65,000 3,071,250
Visio Corporation (a) .............................. 5,000 247,500
Wind River Systems (a) ............................. 35,000 1,658,125
COMPUTER & OFFICE EQUIPMENT (6.12%)
Caribiner International, Inc. (a) .................. 6,300 316,575
CBT Group plc -
sponsored ADR (a) ................................ 4,600 249,550
CDW Computer Centers,
Inc. (a)(b) ...................................... 30,000 1,779,375
Cisco Systems, Inc. (a)(b) ......................... 87,500 5,567,188
Citrix Systems, Inc. (a) ........................... 40,000 1,562,500
Clarify, Inc. (a) .................................. 35,000 1,680,000
Compaq Computer
Corporation (a) .................................. 35,000 2,598,750
Comverse Technology, Inc. (a) ...................... 35,000 1,323,436
Dell Computer Corporation (a) ...................... 130,000 6,906,250
Encad, Inc. (a) .................................... 25,000 1,031,250
Engineering Animation, Inc.(a) ..................... 8,000 194,000
Gateway 2000, Inc. (a) ............................. 20,000 1,071,250
International Game
Technology ....................................... 50,000 912,500
Vanstar Corporatio (a) ............................. 50,000 1,225,000
CONSTRUCTION (0.10%)
Apogee Enterprises, Inc. (a) ....................... 10,000 397,500
DEPARTMENT STORES (0.49%)
TJX Companies, Inc. ................................ 45,000 2,131,875
EDUCATIONAL SERVICES (0.29%)
Apollo Group, Inc. - Class A (a)(b) ................ 37,500 1,253,906
ELECTRIC SERVICES (0.27%)
AES Corporation (a) ................................ 25,000 1,162,500
ELECTRICAL GOODS (0.06%)
Hughes Supply, Inc. ................................ 5,000 215,625
ELECTRONIC COMPONENTS & ACCESSORIES (3.11%)
American Power Conversion
Corporation (a) .................................. 25,000 681,250
BMC Industries, Inc. ............................... 30,000 945,000
Intel Corporation .................................. 60,000 7,856,250
Sanmina Corporation (a) ............................ 25,000 1,412,500
Videoserver, Inc. (a) .............................. 10,000 425,000
Vitesse Semiconductor
Corporation (a) .................................. 46,000 2,093,000
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (1.31%)
Applied Magnetics Corporation (a) .................. 20,000 597,500
Dynatech Corporation (a) ........................... 55,000 2,433,750
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
33
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WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUTED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
---------- ----------
COMMON STOCKS (CONTINUED)
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (CONTINUED)
Raychem Corporation ................................ 32,500 $2,604,063
ENVIRONMENTAL SERVICES (1.41%)
United Waste Systems, Inc. (a) ..................... 80,000 2,750,000
U.S.A. Waste Services, Inc. (a) .................... 105,000 3,346,875
FABRICATED METAL PRODUCTS (0.43%)
Danaher Corporation ................................ 40,000 1,865,000
FINANCE (2.29%)
Aames Financial Corporation (b) .................... 40,000 1,435,000
ContiFinancial Corporation (a) ..................... 19,200 693,600
Delta Financial Corporation (a) .................... 10,000 180,000
Green Tree Financial
Corporation ...................................... 55,000 2,124,375
IMC Mortgage Company (a) ........................... 5,000 167,500
Imperial Credit Industries,Inc (a) ................. 60,000 1,260,000
Student Loan Marketing Association ................. 30,000 2,793,750
The Money Store, Inc. (b) .......................... 45,000 1,243,125
FOOD STORES (1.98%)
Kroger Company (a) ................................. 35,000 1,627,500
Safeway, Inc. (a)(b) ............................... 77,500 3,313,125
Vons Companies, Inc. (a) ........................... 60,000 3,592,500
FOOD & KINDRED PRODUCTS (0.51%)
Interstate Bakeries Corporation .................... 45,000 2,210,625
FURNITURE & FIXTURES (0.15%)
Herman Miller, Inc. (a) ............................ 11,800 668,175
FURNITURE & HOME FURNISHINGS STORES (0.64%)
Bed Bath & Beyond, Inc. (a)(b) ..................... 75,000 1,818,750
Ethan Allen Interiors, Inc. (a) .................... 25,000 962,500
GAS PRODUCTION & DISTRIBUTION (0.71%)
Cooper Cameron Corporation (a) ..................... 40,000 3,060,000
HEALTH SERVICES (2.21%)
Health Management Associates,
Inc. (a) ......................................... 80,625 1,814,063
HEALTHSOUTH Corporation (a) ........................ 90,000 3,476,250
Oxford Health Plans, Inc. (a) ...................... 20,000 1,171,250
Renal Treatment Centers, Inc. (a) .................. 50,000 1,275,000
Total Renal Care Holdings, Inc. (a) ................ 25,500 924,375
Universal Health Services, Inc. -
Class B (a) ...................................... 30,000 858,750
HOTELS & OTHER LODGING PLACES (2.19%)
Doubletree Corporation (a)(b) ...................... 55,000 2,475,000
HFS, Inc. (a) ...................................... 82,500 4,929,375
MGM Grand, Inc. (a) ................................ 15,000 523,125
Prime Hospitality Corp. (a) ........................ 30,000 483,750
Promus Hotel Corporation (a) ....................... 35,000 1,036,875
INDUSTRIAL MACHINERY & EQUIPMENT (1.64%)
Baker Hughes, Inc. ................................. 20,000 690,000
Camco International, Inc. .......................... 25,000 1,153,125
Smith International, Inc. (a) ...................... 60,000 2,692,500
U.S. Filter Corporation (b) ........................ 80,000 2,540,000
INSTRUMENTS & RELATED PRODUCTS (0.66%)
SCI Systems, Inc. (a) .............................. 37,000 1,651,125
Uniphase Corporation (a) ........................... 22,500 1,181,250
INSURANCE (1.33%)
American Bankers Insurance
Group, Inc. ...................................... 20,000 1,022,500
CMAC Investment Corporation ........................ 60,000 2,205,000
ITT Hartford Group, Inc. ........................... 15,000 1,012,500
Old Republic International
Corporation ...................................... 30,000 802,500
TIG Holdings, Inc. ................................. 20,000 677,500
INSURANCE AGENTS, BROKERS & SERVICES (0.37%)
Penncorp Financial Group, Inc. (b) ................. 44,100 1,587,600
IRON & STEEL FOUNDRIES (0.35%)
Precision Castparts Corporation .................... 30,000 1,488,750
LEATHER & LEATHER PRODUCTS (0.45%)
Wolverine World Wide, Inc. ......................... 67,500 1,957,500
LIFE INSURANCE (2.38%)
Conseco Inc. ....................................... 95,016 6,057,270
Sunamerica, Inc. ................................... 95,000 4,215,625
LUMBER & OTHER BUILDING MATERIALS (0.26%)
Eagle Hardware & Garden, Inc. (a) .................. 55,000 1,141,250
MANAGEMENT SERVICES (1.12%)
Corrections Corporation of America
(a)(b) ........................................... 75,000 2,296,875
Paychex, Inc. ...................................... 45,000 2,314,688
Whittman-Hart, Inc. (a) ............................ 8,800 225,500
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
34
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WRL SERIES FUND, INC.
EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ----------
COMMON STOCKS (CONTINUED)
MANUFACTURING INDUSTRIES (0.54%)
Blyth Industries. Inc. (a)(b) ...................... 15,000 $ 684,375
Tiffany & Company .................................. 45,000 1,648,125
MEDICAL INSTRUMENTS & SUPPLIES (0.62%)
ESC Medical Systems
Limited (a) ...................................... 15,000 382,500
Mentor Corporation ................................. 45,000 1,327,500
MiniMed, Inc. (a)(b) ............................... 30,000 967,500
MISC. GENERAL MERCHANDISE STORES (0.47%)
Consolidated Stores
Corporation (a) .................................. 62,500 2,015,625
MOTION PICTURES (0.42%)
Regal Cinemas, Inc. (a)(b) ......................... 59,500 1,829,625
OIL & GAS EXTRACTION (8.10%)
Benton Oil & Gas Company (a) ....................... 30,000 678,750
BJ Services Company -
Warrants (a) ..................................... 14,000 376,250
BJ Services Company (a) ............................ 19,378 988,278
Chesapeake Energy
Corporation (a)(b) ............................... 70,000 3,893,750
Cliffs Drilling Company (a) ........................ 20,000 1,265,000
Comstock Resources, Inc.. (a) ...................... 60,000 780,000
Diamond Offshore Drilling, Inc. (a) ................ 35,000 1,995,000
ENSCO International, Inc. (a) ...................... 35,000 1,697,500
Falcon Drilling Company, Inc. (a) ................. 55,000 2,158,750
Flores & Rucks, Inc. (a) ........................... 32,500 1,730,625
Forcenergy, Inc. (a)(b) ............................ 50,000 1,812,500
Global Marine, Inc. (a)(b) ......................... 90,000 1,856,250
Marine Drilling Company, Inc. (a) .................. 55,000 1,082,813
Noble Drilling Corporation (a) ..................... 45,000 894,375
Nuevo Energy Company (a)(b) ........................ 15,000 780,000
Pogo Producing Company ............................. 57,500 2,716,875
Reading & Bates Corporation (a) .................... 75,000 1,987,500
Rowan Companies, Inc. (a) .......................... 110,000 2,488,750
Rutherford-Moran Oil
Corporation (a) .................................. 10,000 280,000
Titan Exploration, Inc. (a) ........................ 25,000 300,000
Transocean Offshore, Inc. .......................... 50,000 3,131,250
United Meridian Corporation (a) .................... 40,000 2,070,000
PAPER & ALLIED PRODUCTS (0.20%)
Sealed Air Corporation (a) ......................... 21,000 874,125
PAPER & PAPER PRODUCTS (0.16%)
U.S. Office Products Company (a)(b) ................ 20,000 682,500
PERSONAL CREDIT INSTITUTIONS (0.79%)
Household International, Inc. ...................... 32,500 2,998,125
RAC Financial Group, Inc. (a)(b) ................... 20,000 422,500
PETROLEUM & PETROLEUM PRODUCTS (0.20%)
Barrett Resources
Corporation (a) .................................. 20,000 852,500
PHARMACEUTICALS (2.45%)
Dura Pharmaceuticals, Inc. (a) ..................... 105,000 5,013,750
Henry Schein, Inc. (a) ............................. 17,000 584,375
Jones Medical Industries, Inc. ..................... 42,500 1,556,563
Medicis Pharmaceutical Corporation
Class A (a) ...................................... 35,000 1,540,000
Nu Skin Asia Pacific Inc. -
Class A (a) ...................................... 5,000 154,375
Parexel International
Corporation (a) .................................. 15,000 774,375
Rexall Sundown, Inc. (a) ........................... 35,000 951,563
PRIMARY METAL INDUSTRIES (0.41%)
Mueller Industries, Inc. (a) ....................... 20,000 770,000
Titanium Metals Corporation (a) .................... 30,000 986,250
PRINTING & PUBLISHING (0.81%)
Consolidated Graphics, Inc. (a) .................... 20,000 1,120,000
Meredith Corporation ............................... 45,000 2,373,750
RADIO & TELEVISION BROADCASTING (0.61%)
Evergreen Media Corporation -
Class A (a) ...................................... 57,500 1,437,500
Infinity Broadcasting Corporation
Class A (a) ...................................... 27,500 924,688
Univision Communications, Inc. (a) ................. 7,400 273,800
RADIO, TELEVISION, & COMPUTER STORES (0.32%)
Inacom Corporation (a) ............................. 35,000 1,400,000
REAL ESTATE (0.25%)
Amresco, Inc. (a) .................................. 40,000 1,070,000
RESEARCH & TESTING SERVICES (0.51%)
Curative Technologies, Inc. (a) .................... 20,000 553,750
Quintiles Transnational
Corporation (a)(b) ............................... 25,000 1,656,250
RESTAURANTS (0.61%)
Boston Chicken, Inc. (a)(b) ........................ 26,000 932,750
CKE Restaurants, Inc. .............................. 15,000 540,000
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
35
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EMERGING GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
RESTAURANTS (CONTINUED)
Landry's Seafood Restaurants,
Inc. (a) ...................................... 20,000 $ 427,500
Rainforest Cafe, Inc. (a)(b) .................... 31,900 749,650
RETAIL NURSERIES & GARDEN STORES (0.10%)
Central Garden and Pet
Company (a) ................................... 20,000 421,250
RETAIL TRADE (1.25%)
Borders Group, Inc. (a) ......................... 28,500 1,022,438
CompUSA, Inc. (a)(b) ............................ 90,000 1,856,250
Price/Costco, Inc. (a) .......................... 40,000 1,005,000
Staples, Inc. (a)(b) ............................ 52,500 948,280
The Sports Authority, Inc. (a) .................. 25,000 543,750
SAVINGS INSTITUTIONS (1.66%)
Astoria Financial Corporation ................... 15,000 553,125
Greenpoint Financial Corporation ................ 25,000 1,184,375
TCF Financial Corporation ....................... 45,000 1,957,500
Washington Mutual, Inc. ......................... 80,000 3,465,000
SHOE STORES (0.52%)
Just For Feet, Inc. (a)(b) ...................... 45,000 1,181,250
The Finish Line, Inc. (a) ....................... 50,000 1,056,250
TELECOMMUNICATIONS (1.36%)
ACC Corporation (a) ............................. 32,500 983,125
Boston Technology, Inc. (a) ..................... 15,000 431,250
Cincinnati Bell, Inc. ........................... 55,000 3,389,375
Mastec, Inc. (a)(b) ............................. 20,000 1,060,000
VARIETY STORES (0.22%)
Dollar General Corporation ...................... 30,000 960,000
WATER TRANSPORTATION (0.59%)
Tidewater, Inc. ................................. 40,000 1,810,000
Trico Marine Services, Inc. (a) ................. 15,000 720,000
WHOLESALE TRADE DURABLE GOODS (1.82%)
Danka Business Systems PLC -
sponsored ADR (b) ............................. 25,000 884,375
HA-LO Industries, Inc. (a) ...................... 37,500 1,031,250
Ingram Micro, Inc. (a) .......................... 35,000 805,000
Omnicare, Inc. .................................. 120,000 3,855,000
Shaw Group, Inc. (a)(b) ......................... 15,000 350,625
Richfood Holdings, Inc. ......................... 37,500 909,375
------------
Total Common Stocks
(cost: $305,602,423) .......................................... 411,759,971
------------
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
SHORT-TERM U.S. GOVERNMENT OBLIGATION (3.88%)
Student Loan Marketing
Association
6.50%, due 01/02/97 ........................... $16,765,000 $ 16,761,973
------------
Total Short-Term U.S. Government Obligation
(cost: $16,761,973) ........................................... 16,761,973
------------
Total Investment Securities
(cost: $322,364,474) .......................................... $428,522,016
============
SUMMARY
Investments at value ............................ 99.32% $428,522,016
Other Assets in
Excess of Liabilities ......................... 0.68% 2,932,311
----------- ------------
Net Assets ...................................... 100.00% $431,454,327
=========== ============
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) As of December 31, 1996 security is on loan. See footnote 1C to
financial statements.
(c) Percentage is less than .01%.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
36
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WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ----------
COMMON STOCKS (97.06%)
AEROSPACE (3.89%)
Boeing Company ..................................... 48,000 $5,106,000
Gulfstream Aerospace
Corporation (a) .................................. 43,000 1,042,750
Sundstrand Corporation ............................. 57,000 2,422,500
APPAREL PRODUCTS (2.10%)
Gucci Group nv - NY registered
share ............................................ 46,100 2,944,638
Tommy Hilfiger Corporation (a) ..................... 35,000 1,680,000
APPAREL, PIECE GOODS & NOTIONS (1.95%)
Nike, Inc. - Class B ............................... 72,000 4,302,000
BUSINESS SERVICES (1.57%)
CUC International, Inc. (a) ........................ 94,000 2,232,500
Equifax, Inc. ...................................... 40,400 1,237,250
CHEMICALS & ALLIED PRODUCTS (1.77%)
Monsanto Company ................................... 100,700 3,914,713
COMMERCIAL BANKS (5.14%)
Chase Manhattan Corporation ........................ 52,000 4,641,000
Citicorp ........................................... 54,200 5,582,600
MBNA Corporation ................................... 27,000 1,120,500
COMMUNICATIONS EQUIPMENT (5.53%)
Ascend Communications, Inc. (a) .................... 35,400 2,199,225
Cable Design Technologies (a) ...................... 20,000 622,500
Cascade Communications
Corporation (a) .................................. 19,600 1,080,450
Glenayre Technologies, Inc. (a) .................... 74,475 1,605,866
Lucent Technologies, Inc. .......................... 18,400 851,000
PairGain Technologies, Inc. (a) .................... 26,800 815,725
PictureTel Corporation (a) ......................... 66,500 1,729,000
QUALCOMM, Inc. (a) ................................. 30,000 1,196,250
Tellabs, Inc. (a) .................................. 56,000 2,107,000
COMPUTER & DATA PROCESSING SERVICES (16.22%)
3Com Corporation (a) ............................... 63,700 4,673,988
Adaptec, Inc. (a) .................................. 139,400 5,576,000
Altera Corporation (a) ............................. 62,100 4,513,894
Computer Associates
International, Inc. .............................. 17,200 855,700
Compuware Corporation (a) .......................... 38,800 1,944,850
First Data Corporation ............................. 175,412 6,402,538
Informix Corporation (a) ........................... 126,100 2,569,288
Medic Computer Systems,
Inc. (a) (b) ..................................... 28,200 1,136,813
Microsoft Corporation (a) .......................... 52,600 4,346,074
Parametric Technology
Company (a) ...................................... 22,900 1,176,488
Sun Microsystems, Inc. (a) ......................... 99,200 2,548,200
COMPUTER & OFFICE EQUIPMENT (6.35%)
Cisco Systems, Inc. (a) ............................ 110,400 7,024,200
Electronics For Imaging, Inc. (a) .................. 25,600 2,105,600
Hewlett-Packard Company ............................ 41,500 2,085,374
International Game Technology ...................... 153,000 2,792,250
DEPARTMENT STORES (0.64%)
TJX Companies, Inc. ................................ 30,000 1,421,250
DRUG STORES & PROPRIETARY STORES (0.59%)
Rite Aid Corporation (b) ........................... 33,000 1,311,750
ELECTRONIC COMPONENTS & ACCESSORIES (5.58%)
Intel Corporation .................................. 57,800 7,568,187
Linear Technology Corporation ...................... 30,100 1,320,638
Maxim Integrated Products,
Inc. (a) ......................................... 24,400 1,055,300
Xilinx, Inc. (a) ................................... 64,000 2,356,000
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (1.48%)
General Electric Company ........................... 33,000 3,262,875
ENGINEERING & MANAGEMENT SERVICES (1.06%)
Halliburton Company ................................ 38,900 2,343,725
ENVIRONMENTAL SERVICES (2.15%)
United Waste Systems, Inc. (a) ..................... 34,000 1,168,750
U.S.A. Waste Services, Inc. (a) .................... 111,900 3,566,813
FINANCE (1.83%)
Green Tree Financial
Corporation ...................................... 29,600 1,143,300
The Money Store, Inc. (b) .......................... 105,000 2,900,625
FOOD STORES (0.50%)
Safeway, Inc. (a) (b) .............................. 25,900 1,107,225
HEALTH SERVICES (3.25%)
Columbia/HCA Healthcare
Corporation ...................................... 88,500 3,606,375
IDEXX Laboratories, Inc. (a) ....................... 40,000 1,440,000
PhyCor, Inc. (a) (b) ............................... 75,000 2,128,125
HOTELS & OTHER LODGING PLACES (0.39%)
Mirage Resorts, Inc. (a) ........................... 40,000 865,000
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
37
<PAGE>
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
INDUSTRIAL MACHINERY & EQUIPMENT (1.97%)
Case Corporation ................................. 32,000 $1,744,000
Smith International, Inc. (a) .................... 33,100 1,485,363
United Technologies Corporation .................. 17,000 1,122,000
INSURANCE (2.50%)
American International Group,
Inc ............................................ 50,900 5,509,925
LEATHER & LEATHER PRODUCTS (0.95%)
Nine West Group, Inc. (a) ........................ 45,000 2,086,875
LUMBER & OTHER BUILDING MATERIALS (2.62%)
Home Depot, Inc. ................................. 115,500 5,789,438
MEDICAL INSTRUMENTS & SUPPLIES (2.80%)
Boston Scientific Corporation (a) ................ 24,500 1,470,000
Hologic, Inc. (a) ................................ 34,000 841,500
Medtronic, Inc. .................................. 32,000 2,176,000
Target Therapeutics, Inc. (a) .................... 40,000 1,680,000
OIL & GAS EXTRACTION (1.81%)
Schlumberger, Ltd. ............................... 40,000 3,995,000
PERSONAL SERVICES (4.41%)
Cintas Corporation ............................... 29,000 1,703,750
Service Corporation International ................ 177,400 4,967,200
Loewen Group, Inc. ............................... 78,300 3,063,488
PHARMACEUTICALS (7.47%)
Amgen, Inc. (a) .................................. 27,700 1,506,186
Biochem Pharma, Inc. (a) ......................... 19,500 979,875
Bristol-Myers Squibb Company ..................... 10,000 1,087,500
Eli Lilly & Company .............................. 53,600 3,912,800
Merck & Company, Inc. ............................ 41,500 3,288,875
Pfizer, Inc. ..................................... 25,400 2,105,025
Warner-Lambert Company ........................... 47,500 3,562,500
PRIMARY METAL INDUSTRIES (0.89%)
Titanium Metals Corporation (a) .................. 60,000 1,972,500
RESTAURANTS (2.60%)
Boston Chicken, Inc. (a)(b) ...................... 89,400 3,207,225
Lone Star Steakhouse & Saloon (a)(b) ............. 75,100 2,008,925
Outback Steakhouse, Inc. (a) ..................... 19,500 521,625
RETAIL TRADE (1.07%)
OfficeMax, Inc. (a) .............................. 221,725 2,355,828
SECURITY & COMMODITY BROKERS (1.01%)
Charles Schwab Corporation (b) ................... 69,400 2,220,800
TELECOMMUNICATIONS (2.94%)
LCI International, Inc. (a) ...................... 48,900 1,051,350
Oy Nokia Ab ADR .................................. 25,400 1,463,675
Telecomunicacoes Brasileiras SA -
Sponsored ADR .................................. 21,500 1,644,750
WorldCom, Inc. (a) ............................... 89,500 2,332,593
VARIETY STORES (0.72%)
Dollar General Corporation ....................... 49,300 1,577,600
WATER TRANSPORTATION (0.49%)
Tidewater, Inc. .................................. 23,700 1,072,425
WHOLESALE TRADE DURABLE GOODS (0.82%)
Ingram Micro, Inc. (a) ........................... 79,000 1,817,000
------------
Total Common Stocks
(cost: $180,943,958) .......................................... 214,074,258
------------
PRINCIPAL MARKET
AMOUNT VALUE
---------- -------------
SHORT-TERM OBLIGATION (3.30%)
Investors Bank & Trust Company (c)
5.91% Repurchase
Agreement
dated 12/31/96 to be
repurchased at $7,274,373
on 01/02/97 .................................. $7,271,985 $ 7,271,985
------------
Total Short-Term Obligation
(cost: $7,271,985) ............................. 7,271,985
------------
Total Investment Securities
(cost: $188,215,943) ........................ $221,346,243
============
SUMMARY
Investments at value ........................... 100.36% $221,346,243
Liabilities in Excess
of Other Assets .............................. (0.36%) (793,866)
---------- ------------
Net Assets ..................................... 100.00% $220,552,377
========== ============
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
38
<PAGE>
WRL SERIES FUND, INC.
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) As of December 31, 1996 security is on loan. See footnote 1C to
financial statements.
(c) Collateralized by $ 895,000 Federal Home Loan Mortgage Corporation 9.51%
due 11/01/23; $ 7,150,000 Federal Home Loan Mortgage Corporation 9.51%
due 05/15/23; market value and accrued interest aggregated $404,386 and
$7,231,526 respectively for the collateral at December 31, 1996.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
39
<PAGE>
WRL SERIES FUND, INC.
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
U.S. GOVERNMENT OBLIGATIONS (33.41%)
U.S. Treasury Bonds
7.25%, due 05/15/16 ............................ $1,500,000 $ 1,584,315
U.S. Treasury Bonds
7.50%, due 11/15/16 ............................ 1,500,000 1,624,410
U.S. Treasury Bonds
7.13%, due 02/15/23 ............................ 2,000,000 2,087,500
U.S. Treasury Notes(b)
6.38%, due 08/15/02 ............................ 2,000,000 2,013,980
U.S. Treasury Notes
7.25%, due 08/15/04 ............................ 1,500,000 1,578,510
U.S. Treasury Notes
6.50%, due 05/15/05 ............................ 2,000,000 2,012,600
U.S. Treasury Notes(b)
6.50%, due 10/15/06 ............................ 1,000,000 1,005,000
U.S. Treasury Notes(b)
7.00%, due 04/15/99 ............................ 1,500,000 1,533,330
U.S. Treasury Notes
7.13%, due 09/30/99 ............................ 1,500,000 1,541,145
U.S. Treasury Notes
6.00%, due 10/15/99 ............................ 1,500,000 1,500,960
-----------
Total U.S. Government Obligations
(cost: $16,398,703) ............................................ 16,481,750
-----------
NUMBER OF MARKET
SHARES VALUE
---------- -----------
CONVERTIBLE PREFERRED STOCKS (3.94%)
AGRICULTURE (1.31%)
Dole Food Company ................................ 18,000 $ 645,750
HOLDING & OTHER INVESTMENT OFFICES (1.17%)
Walden Residential
Properties, Inc. ............................... 20,000 577,500
LIFE INSURANCE (1.46%)
SunAmerica, Inc. (a) ............................. 17,000 718,250
-----------
Total Convertible Preferred Stocks
(cost: $1,895,010) ............................................. 1,941,500
-----------
PREFERRED STOCKS (1.38%)
FINANCE (1.38%)
Crimi Mae, Inc. .................................. 23,500 681,500
-----------
Total Preferred Stocks
(cost: $602,375) ............................................... 681,500
-----------
COMMON STOCKS (57.02%)
AUTOMOTIVE (1.34%)
Chrysler Corporation ............................. 20,000 660,000
AUTOMOTIVE DEALERS & SERVICE STATIONS (1.98%)
Ugly Duckling Corporation (a) ................... 50,000 975,000
CHEMICALS & ALLIED PRODUCTS (2.01%)
IMC Global, Inc. ................................ 20,000 782,500
Styling Technology Corporation (a) .............. 20,000 207,500
COMMERCIAL BANKS (1.50%)
Norwest Corporation ............................. 17,000 739,500
COMMUNICATIONS EQUIPMENT (1.27%)
Lucent Technologies, Inc. ....................... 13,500 624,375
COMPUTER & DATA PROCESSING SERVICES (0.53%)
Digex, Inc. (a) ................................. 25,000 259,375
COMPUTER & OFFICE EQUIPMENT (1.32%)
Hewlett-Packard Company ......................... 13,000 653,250
DEPARTMENT STORES (1.30%)
Wal-Mart Stores, Inc. ........................... 28,000 640,500
ELECTRIC SERVICES (3.45%)
Duke Power Company(b) ........................... 12,000 555,000
NIPSCO Industries, Inc. ......................... 15,000 594,375
Teco Energy, Inc. ............................... 23,000 554,875
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (1.30%)
General Electric Company ........................ 6,500 642,688
FABRICATED METAL PRODUCTS (1.46%)
Masco Corporation ............................... 20,000 720,000
FINANCE (3.62%)
Federal National Mortgage
Association ................................... 17,000 633,250
Mego Financial Corp. (a) ........................ 50,000 437,500
Student Loan Marketing
Association ................................... 7,700 717,063
FOOD & KINDRED PRODUCTS (1.43%)
Archer-Daniels-Midland
Company ....................................... 32,000 704,000
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
40
<PAGE>
WRL SERIES FUND, INC.
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
---------- -----------
COMMON STOCKS (CONTINUED)
GAS PRODUCTION & DISTRIBUTION (1.46%)
Sonat, Inc. ...................................... 14,000 $ 721,000
HEALTH SERVICES (4.31%)
Columbia/HCA Healthcare
Corporation .................................... 16,950 690,713
Foundation Health
Corporation (a) ................................ 24,000 762,000
United Healthcare Corporation .................... 15,000 675,000
HOLDING & OTHER INVESTMENT OFFICES (8.64%)
Equity Residential Properties
Trust .......................................... 17,000 701,250
Health and Retirement Property
Trust .......................................... 31,000 600,625
Liberty Property Trust ........................... 24,000 618,000
Merry Land & Investment Company,
Inc ............................................ 23,000 494,500
Prime Retail, Inc. ............................... 53,000 662,500
Shurgard Storage Centers, Inc. -
Class A ........................................ 19,000 562,875
Storage USA, Inc. ................................ 16,500 620,813
INSURANCE (1.41%)
Allstate Corporation ............................. 12,000 694,500
LIFE INSURANCE (2.58%)
Equitable of Iowa Companies ...................... 14,000 642,250
Western National Corporation ..................... 33,000 635,250
MINING (1.91%)
Potash Corporation of
Saskatchewan, Inc. (b) ......................... 11,000 935,000
OIL & GAS EXTRACTION (2.69%)
Dresser Industries, Inc. ......................... 21,100 654,100
Enron Corporation ................................ 15,600 672,750
PAPER & ALLIED PRODUCTS (1.35%)
Kimberly-Clark Corporation ....................... 7,000 666,750
SAVINGS INSTITUTIONS (5.86%)
BankUnited Financial Corporation -
Class A (a) .................................... 35,000 350,000
ITLA Capital Corporation (a) ..................... 46,000 690,000
Pacific Crest Capital, Inc. (a) .................. 55,000 632,500
Poughkeepsie Savings Bank, FSB ................... 100,000 525,000
Washington Mutual, Inc. ........................... 16,000 693,000
STONE, CLAY & GLASS PRODUCTS (1.43%)
Gentex Corporation (a) ............................ 35,000 704,375
TELECOMMUNICATIONS (1.50%)
GTE Corporation ................................... 16,300 741,649
TEXTILE MILL PRODUCTS (1.37%)
Fruit of the Loom, Inc. (a) ....................... 18,000 681,749
-----------
Total Common Stocks
(cost: $23,450,984) ............................................. 28,128,900
-----------
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
SHORT-TERM OBLIGATION (3.64%)
Prudential-Bache Securities, Inc. (c)
5.72% Repurchase
Agreement dated
12/31/96 to be
repurchased at
$1,796,590 on 01/02/97 ....................... $ 1,796,020 $ 1,796,020
-----------
Total Short-Term Obligation
(cost: $1,796,020) ............................. 1,796,020
-----------
Total Investment Securities
(cost: $44,143,092) ............................ $49,029,670
===========
SUMMARY
Investments at value ........................... 99.39% $49,029,670
Other Assets in Excess of
Liabilities .................................. 0.61% 301,009
----------- -----------
Net Assets ..................................... 100.00% $49,330,679
=========== ===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) As of December 31, 1996 security is on loan. See footnote 1C to financial
statements.
(c) Collateralized by $1,958,087 Federal National Mortgage Association 6.08%
due 12/01/35; market value and accrued interest aggregated $1,831,940 for
this collateral at December 31, 1996.
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
41
<PAGE>
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
--------- ----------
CONVERTIBLE BONDS (8.54%)
APPAREL & ACCESSORY STORES (0.32%)
Saks Holdings, Inc.
5.50%, due 09/15/06 ............................ $140,000 $ 126,875
COMPUTER & OFFICE EQUIPMENT (0.88%)
Solectron Corporation - Series 144A (c)
6.00%, due 03/01/06 ............................. 310,000 334,025
ELECTRIC, GAS & SANITARY SERVICES (0.39%)
Korea Electric Power
Corporation (b)
5.00%, due 08/01/01 ............................. 140,000 145,425
ENGINEERING & MANAGEMENT SERVICES (0.93%)
New World Infrastructure -
Series 144A (c)
5.00%, due 07/15/01 ............................. 300,000 355,781
FINANCE (1.00%)
Salomon, Inc. DECS
6.25%, due 02/01/01 ............................. 6,300 379,575
HEALTH SERVICES (0.44%)
Tenet Healthcare Corporation
6.00%, due 12/01/05 ............................. 160,000 169,000
LIFE INSURANCE (0.67%)
SunAmerica, Inc.
6.50%, due 10/31/99 ............................. 6,000 253,500
PHARMACEUTICALS (0.76%)
Alza Corporation
5.00%, due 05/01/06 ............................. 300,000 289,125
SECURITY & COMMODITY BROKERS (3.15%)
Merrill Lynch STRYPES
convertible to Cox
Communications, Inc.
6.00%, due 06/01/99 ............................. 7,900 175,775
Merrill Lynch STRYPES
convertible to IMC Global, Inc.
6.25%, due 01/02/01 ............................. 4,500 180,563
Merrill Lynch STRYPES
convertible to SunAmerica, Inc.
7.25%, due 06/15/99 ............................. 2,900 192,850
Merrill Lynch STRYPES
convertible to MGIC
Investment Corporation
6.50%, due 08/15/98 ............................. 9,700 652,325
----------
Total Convertible Bonds
(cost: $2,988,605) ............................................. 3,254,819
----------
NUMBER OF MARKET
SHARES VALUE
---------- ----------
CONVERTIBLE PREFERRED STOCKS (10.20%)
COMPUTER & DATA PROCESSING SERVICE (1.66%)
Microsoft Corporation -
Series A ......................................... 7,900 $ 632,987
ENVIRONMENTAL SERVICES (0.86%)
Browning-Ferris Industries, Inc. .................. 11,500 327,750
FINANCE (0.47%)
Salomon, Inc. - Series FSA ........................ 5,800 177,625
GAS PRODUCTION & DISTRIBUTION (1.64%)
Williams Companies, Inc. .......................... 7,100 627,463
INSURANCE (0.96%)
Aetna Inc. ........................................ 4,600 365,124
METAL MINING (0.92%)
Coeur D'Alene Mines Corporation ................... 20,100 351,750
PAPER & ALLIED PRODUCTS (0.94%)
Alco Standard Corporation -
Series BB (b) ................................... 1,700 162,350
International Paper Company ....................... 4,300 196,725
PAPER & PAPER PRODUCTS (0.47%)
Amcor Ltd. (a) .................................... 3,500 178,500
PETROLEUM REFINING (0.97%)
Tosco Financing Trust-Series
144A (a) (c) .................................... 7,200 369,900
PRINTING & PUBLISHING (0.45%)
Hollinger International, Inc. ..................... 15,000 172,500
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
42
<PAGE>
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- -----------
CONVERTIBLE PREFERRED STOCKS (CONTINUED)
TELECOMMUNICATIONS (0.86%)
AirTouch Communications, Inc. -
Series B (b) ................................... 12,000 $ 327,000
-----------
Total Convertible Preferred Stocks
(cost: $3,748,491) ............................... 3,889,674
-----------
COMMON STOCKS (79.00%)
AUTOMOTIVE (1.00%)
Ford Motor Company ............................... 11,900 379,313
COMMERCIAL BANKS (0.95%)
Mellon Bank Corporation .......................... 5,100 362,100
ELECTRIC SERVICES (42.74%)
CINergy Corporation .............................. 14,500 483,938
CMS Energy Corporation ........................... 38,300 1,287,837
DPL, Inc. ........................................ 44,300 1,085,350
DQE, Inc. ........................................ 30,750 891,750
Duke Power Company (b) ........................... 31,400 1,452,250
FPL Group, Inc. .................................. 34,200 1,573,200
GPU, Inc. ........................................ 17,400 585,075
Iberdrola S.A .................................... 17,700 250,774
Illinova Corporation ............................. 32,700 899,250
National Power plc - Sponsored ADR ............... 25,930 878,379
NIPSCO Industries, Inc. .......................... 24,400 966,850
PacifiCorp ....................................... 29,100 596,550
Peco Energy Company .............................. 28,700 724,675
Pinnacle West Capital Corporation ................ 39,100 1,241,425
Portland General Corporation ..................... 20,300 852,600
Southern Company ................................. 41,100 929,887
Teco Energy, Inc. (b) ............................ 34,600 834,725
Texas Utilities Company .......................... 18,500 753,875
ELECTRIC, GAS & SANITARY SERVICES (1.03%)
American Water Works Company, Inc. ............... 8,000 165,000
Korea Electric Power Corporation -
Sponsored ADR .................................. 11,100 227,550
GAS PRODUCTION & DISTRIBUTION (6.80%)
MCN Corporation .................................. 31,100 898,013
New Jersey Resources Corporation ................. 2,100 61,425
Pacific Enterprises .............................. 26,600 807,975
PanEnergy Corporation ............................ 7,800 351,000
Williams Companies, Inc. ......................... 12,600 472,500
HOLDING & OTHER INVESTMENT OFFICES (3.04%)
Meditrust Corporation ............................ 29,000 1,160,000
LIFE INSURANCE (D)
SunAmerica, Inc. ................................. 2 89
PETROLEUM REFINING (0.46%)
Exxon Corporation ................................ 1,800 176,400
TELECOMMUNICATIONS (21.06%)
Ameritech Corporation ............................ 17,700 1,073,062
AT&T Corporation ................................. 7,400 321,900
BellSouth Corporation ............................ 29,500 1,191,062
Frontier Corporation ............................. 7,900 178,738
GTE Corporation .................................. 26,300 1,196,650
MCI Communications Corporation ................... 37,800 1,235,587
Pacific Telesis Group ............................ 22,600 830,550
SBC Communications, Inc. ......................... 4,000 207,000
Sprint Corporation ............................... 18,600 741,675
Stet Societa' Finanziaria
Telefonica S.p.A ............................... 142,000 479,765
Telecomunicacoes Brasileiras S.A .................
- Sponsored ADR ................................. 5,400 413,100
Telefonica del Peru S.A. - ADR ................... 8,400 158,550
TOBACCO PRODUCTS (1.92%)
Philip Morris Companies, Inc. .................... 6,500 732,063
-----------
Total Common Stocks
(cost: $27,035,045) ........................................... 30,109,457
-----------
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
SHORT-TERM OBLIGATION (5.06%)
HSBC Securities, Inc. (e)
5.50%, Repurchase
Agreement dated 12/31/96
to be repurchased at
$1,927,589 on 01/02/97 ........................ $ 1,927,000 $ 1,927,000
Total Short-Term Obligation
(cost: $1,927,000) .............................. 1,927,000
-----------
Total Investment Securities
(cost: $35,699,141) ............................. $39,180,950
===========
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
43
<PAGE>
WRL SERIES FUND, INC.
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
SUMMARY
Investments at value ............... $102.80% $ 39,180,950
Liabilities in Excess
of Other Assets .................. (2.80%) (1,065,619)
------- ------------
Net Assets ......................... 100.00% $ 38,115,331
======= ============
INVESTMENTS BY COUNTRY
SIZE OF INVESTMENT IS INDICATED AS A PERCENTAGE OF TOTAL PORTFOLIO NET
ASSETS.
MARKET VALUE PERCENTAGE
------------ ----------
Italy ......................... $ 479,765 1.26%
Spain ......................... 250,774 0.66%
United States ................. 37,384,792 98.08%
----------- ------
$38,115,331 100.00%
=========== ======
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) As of December 31, 1996 security is on loan. See footnote 1C to
financial statements
(c) Securities are registered pursuant to rule 144A and may be deemed to be
restricted for resale.
(d) Percentage is less than .01%.
(e) Collateralized by $1,985,000 U.S. Treasury Notes 4.75% due 09/30/98;
market value and accrued interest aggregated $1,976,162 for this
collateral at December 31, 1996.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
44
<PAGE>
WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTIMENTS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
U.S. GOVERNMENT OBLIGATIONS (9.31%)
U.S. Treasury Notes
6.88%, due 03/31/00 ......................... $ 5,000,000 $ 5,111,900
U.S. Treasury Notes
6.38%, due 08/15/02 ......................... 5,000,000 5,034,950
U.S. Treasury Notes
5.38%, due 05/31/98 ......................... 4,000,000 3,978,560
U.S. Treasury Notes
5.88%, due 08/15/98 ......................... 2,000,000 2,001,500
U.S. Treasury Notes
7.13%, due 10/15/98 ......................... 3,000,000 3,064,590
-----------
Total U.S. Government Obligations
(cost: $19,240,192) .......................................... 19,191,500
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (8.72%)
Federal Farm Credit Banks
6.00%, due 06/24/99 ......................... 5,000,000 4,963,650
Federal Home Loan Mortgage
Corporation
7.44%, due 09/20/06 ......................... 5,000,000 5,068,750
Federal Home Loan Bank
7.10%, due 02/28/11 ......................... 1,000,000 960,710
Federal National Mortgage
Association
6.81%, due 05/15/00 ......................... 1,000,000 1,001,070
Federal National Mortgage
Association
6.18%, due 01/03/97 ......................... 1,000,000 1,000,000
Federal National Mortgage
Association (c)
5.40%, due 05/25/99 ......................... 2,250,000 2,246,233
Federal National Mortgage
Association (c)
5.40%, due 05/25/99 ......................... 2,750,000 2,743,869
-----------
Total U.S. Government Agency Obligations
(cost: $18,105,240) .......................................... 17,984,282
-----------
CORPORATE DEBT SECURITIES (2.92%)
FABRICATED METAL PRODUCTS (0.49%)
Masco Corporation
6.63%, due 09/15/99 ........................ 1,000,000 1,003,750
FINANCE (2.43%)
Ford Motor Credit Company -
Series MTN
5.81%, due 11/09/98 ......................... 5,000,000 5,006,410
-----------
Total Corporate Debt Securities
(cost: $6,016,963) ........................................... 6,010,160
-----------
NUMBER OF MARKET
SHARES VALUE
------------- ----------
PREFERRED STOCKS (0.49%)
TELECOMMUNICATIONS (0.49%)
MCI Capital I - Series A ........................ 40,000 $1,000,000
----------
Total Preferred Stocks
(cost: $1,000,000) .............................. 1,000,000
----------
COMMON STOCKS (53.67%)
AUTOMOTIVE (3.40%)
Chrysler Corporation ............................ 135,000 4,455,000
Ford Motor Company .............................. 80,000 2,550,000
CHEMICALS & ALLIED PRODUCTS (0.98%)
Georgia Gulf Corporation ........................ 75,000 2,015,625
COMMUNICATIONS EQUIPMENT (2.11%)
Cox Communications, Inc. (a) (b) ................ 50,000 1,156,250
Philips Electronics N.V. - NY
shares -ADR ................................... 80,000 3,200,000
COMPUTER & DATA PROCESSING SERVICE (1.61%)
Digi International, Inc. (a) .................... 100,000 950,000
Novell, Inc. (a) ................................ 250,000 2,367,175
COMPUTER & OFFICE EQUIPMENT (1.53%)
Seagate Technology, Inc. (a) .................... 80,000 3,160,000
DEPARTMENT STORES (2.51%)
May Department Stores Company ................... 60,000 2,805,000
TJX Companies, Inc. ............................. 50,000 2,368,750
ELECTRONIC COMPONENTS & ACCESSORIES (1.20%)
MEMC Electronic Materials,
Inc. (a) ...................................... 110,000 2,475,000
FINANCE (3.66%)
Countrywide Credit Industries,
Inc ........................................... 108,400 3,102,950
Federal Home Loan Bank -
Series JJ11 ................................... 20,000 2,202,500
Federal National Mortgage
Association ................................... 60,000 2,235,000
HOLDING & OTHER INVESTMENT OFFICES (1.71%)
Trizec Hahn Corporation ......................... 160,000 3,520,000
INDUSTRIAL MACHINERY & EQUIPMENT (1.57%)
Applied Materials, Inc. (a) ..................... 90,000 3,234,375
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
45
<PAGE>
WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
INSURANCE (5.89%)
AFLAC, Inc. .................................... 60,000 $ 2,565,000
AMBAC, Inc. .................................... 30,000 1,991,250
Frontier Insurance Group,
Inc. (b) ..................................... 30,000 1,147,500
MGIC Investment Corporation .................... 30,000 2,280,000
The PMI Group, Inc. ............................ 75,000 4,153,125
MINING (1.44%)
Potash Corporation of
Saskatchewan, Inc. (b) ....................... 35,000 2,975,000
PERSONAL CREDIT INSTITUTIONS (0.64%)
Associates First Capital
Corporation .................................. 30,000 1,323,750
PETROLEUM REFINING (1.11%)
Valero Energy Corporation ...................... 80,000 2,290,000
PHARMACEUTICALS (1.55%)
McKesson Corporation ........................... 30,000 1,680,000
R. P. Scherer Corporation (a) .................. 30,000 1,507,500
PRIMARY METAL INDUSTRIES (3.24%)
Alumax, Inc. (a) ............................... 80,000 2,670,000
Aluminum Company of America .................... 30,000 1,912,500
Birmingham Steel Corporation ................... 110,000 2,090,000
RADIO & TELEVISION BROADCASTING (0.51%)
Viacom, Inc. - Class B (a) ..................... 30,000 1,046,250
RESIDENTIAL BUILDING CONSTRUCTION (1.64%)
Clayton Homes, Inc. ............................ 250,000 3,375,000
RESTAURANTS (1.23%)
Cracker Barrel Old Country Store,
Inc .......................................... 100,000 2,537,500
RETAIL TRADE (3.42%)
Fingerhut Companies, Inc. ...................... 160,000 1,960,000
Toys "R" Us, Inc. (a) .......................... 170,000 5,100,000
RUBBER & MISC. PLASTIC PRODUCTS (2.28%)
Dow Chemical Company (b) ....................... 60,000 4,702,500
SECURITY & COMMODITY BROKERS (1.22%)
Lehman Brothers Holdings, Inc. ................. 80,000 2,510,000
SHOE STORES (1.36%)
Payless Shoesource, Inc. (a) ................... 75,000 2,812,500
TELECOMMUNICATIONS (2.43%)
A T & T Corporation ............................ 60,000 2,610,000
Sprint Corporation ............................. 60,000 2,392,500
TEXTILE MILL PRODUCTS (0.83%)
Wellman, Inc. .................................. 100,000 1,712,500
TOBACCO PRODUCTS (3.33%)
Philip Morris Companies, Inc. .................. 35,000 3,941,875
UST, Inc. (b) .................................. 90,000 2,913,750
WHOLESALE TRADE DURABLE GOODS (1.30%)
Arrow Electronics, Inc. (a) .................... 50,000 2,675,000
-----------
Total Common Stocks
(cost: $94,256,415) ............................ 110,672,625
------------
Principal Market
Amount Value
------------ ------------
SHORT-TERM U.S. GOVERNMENT OBLIGATION (2.43%)
Student Loan Marketing
Association (c)
5.64%, due 02/14/97 ........................ $ 5,000,000 $ 5,001,565
------------
Total Short-Term U.S. Government Obligation
(cost: $5,006,795) ............................. 5,001,565
------------
COMMERCIAL PAPER (22.09%)
PHH Corporation
5.45%, due 01/06/97 .......................... 5,000,000 4,996,215
ASI Funding Corporation
5.52%, due 01/10/97 .......................... 2,700,000 2,696,274
Enterprise Funding Corporation
5.47%, due 01/07/97 .......................... 4,499,000 4,494,898
Enterprise Funding Corporation
5.47%, due 01/07/97 .......................... 1,900,000 1,898,268
Enterprise Funding Corporation
5.77%, due 01/09/97 .......................... 4,300,000 4,294,486
Gotham Funding Corporation 5.54%,
due 01/10/97 ................................. 1,378,000 1,376,091
Gotham Funding Corporation 5.75%,
due 01/27/97 ................................. 5,000,000 4,979,236
Holland Ltd. Securitization
5.72%, due 01/24/97 .......................... 2,000,000 1,992,691
Industrial Funding Corporation
5.70%, due 01/15/97 .......................... 5,700,000 5,687,365
Investment Research & Information
Services Limited 5.60%, due
01/10/97 ..................................... 1,000,000 998,600
Merrill Lynch & Co., Inc.
5.80%, due 01/03/97 .......................... 250,000 249,919
See notes to schedule of investments.
The notes to the financial statement are an integral part of this report.
46
<PAGE>
WRL SERIES FUND, INC.
TACTICAL ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTIMENTS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
------------- ------------
COMMERCIAL PAPER (CONTINUED)
Triple A One Funding Corporation
5.80%, due 01/02/97 .................... $ 3,100,000 $ 3,099,500
Triple A One Funding Corporation
6.27%, due 01/02/97 .................... 550,000 549,904
Triple A One Funding Corporation
5.47%, due 01/03/97 .................... 3,207,000 3,206,026
Triple A One Funding Corporation
5.47%, due 01/03/97 .................... 2,150,000 2,149,347
Triple A One Funding Corporation
5.52%, due 01/09/97 .................... 730,000 729,105
Twin Towers, Inc. ........................
5.75%, due 01/08/97 .................... 750,000 749,162
Fingerhut Companies, Inc. ................
5.45%, due 01/03/97 .................... 1,400,000 1,399,577
------------
Total Commercial Paper
(cost $45,546,664) ....................... 45,546,664
------------
Total Investment Securities
(cost: $189,172,269) .................. $205,406,796
============
SUMMARY
Investments at value ..................... 99.63% $205,406,796
Other Assets in
Excess of Liabilities .................. 0.37% 764,929
------------ ------------
Net Assets ............................... 100.00% $206,171,725
============ ============
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) As of December 31, 1996, security is on loan. See footnote 1C to
financial statements.
(c) Floating rate note. Rate listed is as of December 31, 1996.
See notes to schedule of investments.
The notes to the financial statement are an integral part of this report.
47
<PAGE>
WRL SERIES FUND, INC.
C.A.S.E. GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ----------
COMMON STOCKS (80.37%)
AEROSPACE (1.56%)
AAR Corporation ........................................ 13,700 $414,425
AGRICULTURE (1.47%)
Chiquita Brands International, Inc. .................... 30,600 390,150
APPAREL PRODUCTS (1.77%)
Pillowtex .............................................. 16,600 298,800
U.S. Industries, Inc. (a) .............................. 5,000 171,875
APPAREL & ACCESSORY STORES (1.00%)
Gymboree Corp. (a) ..................................... 11,600 265,350
BUSINESS SERVICES (1.73%)
Equifax, Inc. .......................................... 15,000 459,375
CHEMICALS & ALLIED PRODUCTS (1.81%)
Ethyl Corporation ...................................... 50,000 481,250
COMMERCIAL BANKS (4.92%)
City National Corporation .............................. 20,500 443,313
Magna Group, Inc. ...................................... 13,100 386,450
Provident Bankshares Corporation ....................... 1,586 61,834
Summit Bancorp ......................................... 9,500 415,625
COMMUNICATION (1.19%)
360 Communications Company (a) ......................... 13,700 316,813
COMMUNICATIONS EQUIPMENT (3.84%)
C-Cube Microsystems, Inc. (a) .......................... 11,000 406,313
DSC Communications Corporation (a) ..................... 13,000 232,375
Picturetel Corporation (a) ............................. 14,700 382,200
COMPUTER & DATA PROCESSING SERVICE (7.44%)
Banyan Systems, Inc. (a) ............................... 33,100 148,950
BMC Software, Inc. (a) ................................. 6,000 248,250
Control Data Systems, Inc. (a) ......................... 20,700 455,400
Oracle Corporation (a) ................................. 11,400 475,950
S3 Incorporated (a) .................................... 25,600 416,000
Sun Microsystems, Inc. (a) ............................. 9,000 231,187
COMPUTER & OFFICE EQUIPMENT (2.96%)
Cisco Systems, Inc. (a) ................................ 4,500 286,313
Xircom, Inc. (a) ....................................... 23,000 500,250
ELECTRIC SERVICES (1.48%)
Calenergy, Inc. (a) .................................... 11,700 393,413
ELECTRONIC COMPONENTS & ACCESSORIES (2.92%)
Atmel Corporation (a) .................................. 11,300 374,313
LSI Logic Corporation (a) .............................. 15,000 401,250
FOOD & KINDRED PRODUCTS (3.23%)
Dean Foods Company ..................................... 15,000 483,750
Interstate Bakeries Corporation ........................ 7,600 373,350
FURNITURE & FIXTURES (1.74%)
HON Industries, Inc. ................................... 14,000 462,000
GAS PRODUCTION & DISTRIBUTION (1.24%)
National Fuel Gas Company .............................. 8,000 330,000
HEALTH SERVICES (2.54%)
Chronimed, Inc. (a) .................................... 21,200 288,850
NovaCare, Inc. (a) ..................................... 35,000 385,000
HOTELS & OTHER LODGING PLACES (1.29%)
Prime Hospitality Corp. (a) ............................ 21,300 343,462
INDUSTRIAL MACHINERY & EQUIPMENT (4.21%)
Global Industrial Technologies, Inc. (a) ............... 22,800 504,450
SPS Technologies, Inc. (a) ............................. 5,800 372,650
U.S. Filter Corporation (a) ............................ 7,550 239,712
INSTRUMENTS & RELATED PRODUCTS (2.80%)
GenRad, Inc. (a) ....................................... 12,000 279,000
Perkin-Elmer Corporation ............................... 7,900 465,112
LIFE INSURANCE (2.01%)
SunAmerica, Inc. ....................................... 12,000 532,500
MACHINERY, EQUIPMENT & SUPPLIES (1.65%)
Kaman Corporation - Class A ............................ 33,600 436,800
OIL & GAS EXTRACTION (6.70%)
Noble Drilling Corporation (a) ......................... 16,900 335,888
Oryx Energy Company (a) ................................ 5,000 123,750
Rowan Companies, Inc. (a) .............................. 24,000 543,000
Santa Fe Energy Resources, Inc. (a) .................... 29,900 414,862
Southwestern Energy Company ............................ 23,900 361,487
PAPER & ALLIED PRODUCTS (1.68%)
Mosinee Paper Corporation .............................. 12,600 447,300
PAPER & PAPER PRODUCTS (1.51%)
Caraustar Industries, Inc. ............................. 12,100 402,325
See notes to schedule of investments.
The notes to the financial statement are an integral part of this report.
48
<PAGE>
WRL SERIES FUND, INC.
C.A.S.E. GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVETIMETS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
---------- -----------
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS (1.90%)
Biogen, Inc. (a) ................................. 13,000 $ 503,750
PRIMARY METAL INDUSTRIES (2.29%)
Oregon Steel Mills, Inc. ......................... 19,800 331,650
Steel Technologies, Inc. ......................... 20,900 276,925
RADIO & TELEVISION BROADCASTING (0.89%)
HSN Inc. (a) ..................................... 9,900 235,125
RADIO, TELEVISION, & COMPUTER STORES (0.29%)
Bell Microproducts, Inc. (a) ..................... 8,800 78,100
RETAIL TRADE (1.65%)
Price/Costco, Inc. (a) ........................... 17,400 437,175
SECURITY & COMMODITY BROKERS (1.51%)
Paine Webber Group, Inc. ......................... 14,300 402,188
TELECOMMUNICATIONS (2.16%)
WorldCom, Inc. (a) ............................... 22,000 573,375
TEXTILE MILL PRODUCTS (1.33%)
Mohawk Industries, Inc. (a) ...................... 16,000 352,000
WATER TRANSPORTATION (1.87%)
Tidewater, Inc. .................................. 11,000 497,750
WHOLESALE TRADE DURABLE GOODS (0.43%)
Wyle Electronics ................................. 2,900 114,550
WHOLESALE TRADE NONDURABLE GOODS (1.36%)
Richfood (CONTINUED)HOLDINGS, INC ................ 14,900 361,325
-----------
Total Common Stocks
(cost: $19,785,427) ............................................ 21,346,585
-----------
Total Investment Securities
(cost: $19,785,427) ............................................ $21,346,585
===========
SUMMARY
Investments at value ............................. 80.37% $21,346,585
Other Assets in
Excess of Liabilities .......................... 19.63% 5,212,947
----------- -----------
Net Assets ....................................... 100.00% $26,559,532
=========== ===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
See notes to schedule of investments.
The notes to the financial statement are an integral part of this report.
49
<PAGE>
WRL SERIES FUND, INC.
MERIDIAN/INVESCO GLOBAL SECTOR PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTIMENTS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
---------- ----------
U.S GOVERNMENT OBLIGATIONS (21.33%)
U.S. Treasury Notes
6.63%, due 06/30/01 ............................. $735,000 $ 746,628
U.S. Treasury Notes
7.25%, due 08/15/04 ............................. 290,000 305,178
U.S. Treasury Notes
5.88%, due 02/15/04 ............................. 450,000 438,084
----------
Total U.S Government Obligations
(cost: $1,481,001) .............................................. 1,489,890
----------
ASSET-BACKED SECURITIES (0.94%)
General Motors Acceptance Corporation
6.75%, due 03/15/03 ............................. 66,000 65,753
----------
Total Asset-Backed Securities
(cost: $64,614) ................................................ 65,753
----------
CORPORATE DEBT SECURITIES (5.98%)
COMMERCIAL BANKS (3.81%)
Hitachi Credit Corp.
6.63%, due 11/19/01 ............................. 200,000 200,750
NationsBank Corporation
7.00%, due 05/15/03 ............................. 65,000 65,569
FINANCE (2.17%)
Commercial Credit Company
6.13%, due 12/01/05 ............................. 160,000 151,200
----------
Total Corporate Debt Securities
(cost: $414,328) ............................................... 417,519
----------
NUMBER OF MARKET
SHARES VALUE
---------- ----------
PREFERRED STOCKS (1.05%)
COMPUTER & DATA PROCESSING (1.05%)
SAP AG -Vorzug .................................... 525 $ 73,400
----------
Total Preferred Stock
(cost: $79,779) .............................................. 73,400
----------
COMMON STOCKS (61.39%)
AEROSPACE (0.45%)
Mitsubishi Heavy Industries, Ltd. ................. 4,000 31,771
AGRICULTURE (1.04%)
Dole Food Company ................................. 2,150 72,831
APPAREL & ACCESSORY STORES (0.77%)
Gucci Group ....................................... 800 53,797
AUTOMOTIVE (1.46%)
Bayerische Motoren Werke AG ....................... 105 73,264
Honda Motor Company, Ltd. ......................... 1,000 28,576
BEER, WINE, & DISTILLED BEVERAGES (0.59%)
Asahi Breweries ................................... 4,000 41,440
CHEMICALS & ALLIED PRODUCTS (2.70%)
Bayer AG .......................................... 1,980 80,858
Hoechst AG ........................................ 1,460 69,022
Mitsubishi Chemical Corp. (a) ..................... 12,000 38,850
COMMERCIAL BANKS (0.80%)
Sanwa Bank Ltd. ................................... 2,000 27,281
Sumitomo Trust & Bank ............................. 2,000 28,835
COMMUNICATION (1.45%)
US West, Inc. (a) ................................. 5,460 101,010
COMMUNICATIONS EQUIPMENT (1.30%)
Lucent Technologies, Inc. ......................... 1,380 63,825
Tadiran Telecommunications Ltd. ................... 1,200 26,850
COMPUTER & DATA PROCESSING SERVICES (0.19%)
Bay Networks, Inc. (a) ............................ 630 13,151
COMPUTER & OFFICE EQUIPMENT (0.87%)
Cisco Systems, Inc. (a) ........................... 540 34,358
Sterling Commerce, Inc. (a) ....................... 750 26,438
CONSTRUCTION (0.55%)
Daiwa House Industry Co., Ltd. (a) ................ 3,000 38,591
DEPARTMENT STORES (0.52%)
Takashimaya Co. ................................... 3,000 36,001
ELECTRICAL GOODS (0.53%)
Motorola, Inc. .................................... 600 36,825
ELECTRONIC COMPONENTS & ACCESSORIES (3.31%)
Atmel Corporation (a) ............................. 790 26,169
Fujitsu Ltd. ...................................... 5,000 46,620
Intel Corporation ................................. 840 109,988
Lattice Semiconductor Corporation (a) ............. 1,060 48,760
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (1.92%)
Hirose Electric Co. ............................... 900 52,137
Sharp Corporation ................................. 3,000 42,735
Sony Corporation .................................. 600 39,316
See notes to schedule of investments.
The notes to the financial statement are an integral part of this report.
50
<PAGE>
WRL SERIES FUND, INC.
MERIDIAN/INVESCO GLOBAL SECTOR PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTOMETS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- -----------
COMMON STOCKS (CONTINUED)
FABRICATED METAL PRODUCTS (1.16%)
Mitsubishi Materials Corp. ....................... 11,000 $ 44,444
NSK Ltd. ......................................... 6,000 36,364
FINANCE (1.07%)
Nikko Securities Company Ltd. (a) ................ 5,000 37,296
Orix Corp. ....................................... 900 37,451
FOOD & KINDRED PRODUCTS (1.59%)
H.J. Heinz Company ............................... 1,475 52,731
Ralston-Ralston Purina Group ..................... 800 58,700
HEALTH SERVICES (5.61%)
Columbia/HCA Healthcare Corporation .............. 2,300 93,725
Falck A/S ........................................ 450 134,499
Oxford Health Plans, Inc. (a) .................... 2,800 163,975
HOLDING & OTHER INVESTMENT OFFICES (10.41%)
Bay Apartment Communities, Inc. .................. 4,580 164,880
Beacon Properties Corporation .................... 4,300 157,488
Gables Residential Trust ......................... 5,090 147,610
Public Storage, Inc. ............................. 4,020 124,620
Starwood Lodging Trust ........................... 2,415 133,127
INSTRUMENTS & RELATED PRODUCTS (0.41%)
KLA Instruments Corporation (a) .................. 810 28,755
INSURANCE (0.46%)
Dai-Tokyo Fire & Marine
Insurance Co. .................................. 6,000 31,857
MACHINERY, EQUIPMENT & SUPPLIES (0.64%)
Daikin Industries Ltd. ........................... 5,000 44,462
MANUFACTURING INDUSTRIES (1.63%)
Bulgari SpA ...................................... 4,600 93,456
Sega Enterprises ................................. 600 20,202
MEDICAL INSTRUMENTS & SUPPLIES (1.60%)
Coloplast A/S - Class B .......................... 980 111,505
METAL CANS & SHIPPING CONTAINERS (1.99%)
Crown Cork & Seal Company, Inc. .................. 2,555 138,928
OIL & GAS EXTRACTION (1.40%)
Ente Nazionale Idrocarburi SpA ................... 19,000 97,795
PHARMACEUTICALS (1.73%)
Novo Nordisk A/S ................................. 640 120,642
PRIMARY METAL INDUSTRIES (0.49%)
Kawasaki Steel ................................... 12,000 34,499
PRINTING & PUBLISHING (1.47%)
A.H. Belo Corporation - Class A .................. 2,950 102,881
RADIO & TELEVISION BROADCAST (1.17%)
Emmis Broadcasting Corporation (a) ............... 2,500 81,875
REAL ESTATE (0.43%)
Mitsui Fudosan ................................... 3,000 30,044
RESTAURANTS (3.36%)
Cracker Barrel Old Country
Store, Inc. ...................................... 2,540 64,453
Lone Star Steakhouse & Saloon (a) ................ 2,350 62,863
McDonald's Corporation ........................... 2,370 107,243
RUBBER & MISC. PLASTIC PRODUCTS (0.94%)
Adidas AG ........................................ 760 65,730
STONE, CLAY & GLASS PRODUCTS (1.22%)
Owens-Illinois, Inc. (a) ......................... 3,750 85,313
TELECOMMUNICATIONS (2.20%)
Newbridge Networks Corporation (a) ............... 600 16,950
Nippon Telegraph & Telephone Corp. ............... 4 30,320
Telecom Italia Mobile SpA ........................ 42,000 106,524
TEXTILE MILL PRODUCTS (0.27%)
Toray Industries, Inc. ........................... 3,000 18,519
TRUCKING & WAREHOUSING (0.59%)
Nippon Express Co. ............................... 6,000 41,129
WHOLESALE TRADE DURABLE GOODS (1.10%)
Canon Sales Co. .................................. 2,000 44,548
Itochu Corp. ..................................... 6,000 32,219
----------
Total Common Stocks
(cost: $4,024,742) ............................................ 4,288,921
----------
Total Investment Securities
(cost: $6,064,464) ............................................ $6,335,483
==========
SEE NOTES TO SCHEDULE OF INVESTMENTS.
THE NOTES TO THE FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS REPORT.
51
<PAGE>
WRL SERIES FUND, INC.
MERIFIAN/INVESCO GLOBAL SECTOR PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
SUMMARY
Investments at value .................. 90.69% $6,335,483
Other Assets in
Excess of
Liabilities ......................... 9.31% 650,592
------ ----------
Net Assets ............................ 100.00% $6,986,075
====== ==========
INVESTMENTS BY COUNTRY
Size of investment is indicated as a percentage of total portfolio net
assets.
MARKET
VALUE PERCENTAGE
---------- ----------
Denmark ............................ $ 366,647 5.25%
Germany ............................ 362,275 5.19%
Netherlands ........................ 53,797 0.77%
Italy .............................. 297,775 4.26%
Japan .............................. 935,509 13.39%
United States ...................... 4,970,072 71.14%
---------- ------
$6,986,075 100.00%
========== ======
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
52
<PAGE>
WRL SERIES FUND, INC.
VALUE EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ----------
PREFERRED STOCKS (B)
MEDICAL INSTRUMENTS & SUPPLIES (B)
Fresenius National Medical
Care (a) ......................................... 4,500 $ 585
----------
Total Preferred Stocks
(cost: $624) ................................................... 585
----------
COMMON STOCKS (86.28%)
AEROSPACE (4.63%)
Boeing Company ..................................... 12,100 1,287,137
Sundstrand Corporation ............................. 23,550 1,000,875
AUTOMOTIVE (3.84%)
Echlin, Inc. ....................................... 18,700 591,387
General Motors Corporation ......................... 23,500 1,310,125
BUSINESS SERVICES (0.69%)
ADT Ltd. (a) ....................................... 15,000 343,125
CHEMICALS & ALLIED PRODUCTS (6.67%)
Air Products & Chemicals, Inc. ..................... 11,000 760,375
E.I. Dupont De Nemours & Company ................... 4,200 396,375
IMC Global, Inc. ................................... 32,200 1,259,825
W. R. Grace & Company .............................. 17,000 879,750
COMMERCIAL BANKS (7.26%)
Bank of New York Company, Inc. ..................... 22,000 742,500
Chase Manhattan Corporation ........................ 8,000 714,000
National City Corporation .......................... 24,100 1,081,488
Norwest Corporation ................................ 24,200 1,052,700
COMPUTER & OFFICE EQUIPMENT (0.86%)
Minnesota Mining & Manufacturing
Company .......................................... 5,150 426,806
CONSTRUCTION (1.91%)
Foster Wheeler Corporation ......................... 11,800 438,075
J. Ray Mcdermott, S.A. (a) ......................... 22,900 503,800
DEPARTMENT STORES (0.90%)
Federated Department Stores,
Inc.(a) .......................................... 13,000 443,625
ELECTRICAL GOODS (1.25%)
Cooper Industries, Inc. ............................ 14,700 619,237
ELECTRONIC COMPONENTS & ACCESSORIES (2.59%)
AMP, Inc. .......................................... 7,050 270,544
Texas Instruments, Inc. ............................ 15,800 1,007,250
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (6.79%)
Black & Decker Corporation ......................... 25,300 $ 762,163
Emerson Electric Company ........................... 11,300 1,093,275
General Electric Company ........................... 6,400 632,800
Maytag Corporation ................................. 15,000 296,250
Thomas & Betts Corporation ......................... 12,800 568,000
ENGINEERING & MANAGEMENT SERVICES (1.77%)
Halliburton Company ................................ 14,500 873,625
FORESTRY (0.54%)
Weyerhaeuser Company ............................... 5,600 265,300
HEALTH SERVICES (1.89%)
Columbia/HCA Healthcare
Corporation ...................................... 22,900 933,175
INDUSTRIAL MACHINERY & EQUIPMENT (14.63%)
BW/IP Holding, Inc. ................................ 10,000 165,000
Case Corporation ................................... 16,000 872,000
Caterpillar, Inc. .................................. 20,000 1,505,000
Deere & Company .................................... 37,350 1,517,344
Harnischfeger Industries, Inc. ..................... 7,000 336,875
Ingersoll-Rand Company ............................. 22,000 979,000
Kennametal, Inc. ................................... 12,300 478,163
United Technologies Corporation .................... 11,200 739,200
York International Corporation ..................... 11,300 631,388
INSTRUMENTS & RELATED PRODUCTS (2.86%)
General Signal Corporation ......................... 3,300 141,075
Honeywell, Inc. .................................... 4,900 322,175
Xerox Corp. ........................................ 18,000 947,250
INSURANCE (8.76%)
Allstate Corporation ............................... 15,400 891,275
American International Group, Inc. ................. 7,900 855,175
General Re Corporation ............................. 5,000 788,750
Loews Corporation .................................. 19,000 1,790,751
MACHINERY, EQUIPMENT & SUPPLIES (1.02%)
W.W. Grainger, Inc. ................................ 6,300 505,575
MOTOR VEHICLES, PARTS & SUPPLIES (1.33%)
Exide Corporation .................................. 28,500 655,500
OIL & GAS EXTRACTION (3.64%)
Dresser Industries, Inc. ........................... 21,200 657,200
ENSCO International, Inc. (a) ...................... 8,600 417,100
Noble Drilling Corporation (a) ..................... 17,600 349,800
Reading & Bates Corporation (a) .................... 14,100 373,650
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
53
<PAGE>
WRL SERIES FUND, INC.
VALUE EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
PAPER & ALLIED PRODUCTS (0.90%)
Champion International Corporation .............. 10,300 $ 445,475
PETROLEUM REFINING (0.03%)
Coastal Corporation ............................. 300 14,662
PRIMARY METAL INDUSTRIES (2.93%)
Alumax, Inc. (a) ................................ 21,600 720,900
Reynolds Metals Company ......................... 7,900 445,362
USX - US Steel Group, Inc. ...................... 9,000 282,375
RAILROADS (0.91%)
Burlington Northern Santa Fe .................... 5,200 449,150
RUBBER & MISC. PLASTIC PRODUCTS (1.00%)
Dow Chemical Company ............................ 6,300 493,762
SECURITY & COMMODITY BROKERS (0.85%)
Bear Stearns Companies, Inc. .................... 15,000 418,125
TELECOMMUNICATIONS (1.22%)
GTE Corporation ................................. 13,200 600,600
TRANSPORTATION EQUIPMENT (0.67%)
Trinity Industries, Inc. ........................ 8,800 330,000
WATER TRANSPORTATION (1.46%)
Tidewater, Inc. ................................. 15,900 719,475
WHOLESALE TRADE NONDURABLE GOODS (2.48%)
Unilever NV ADR (a) ............................. 7,000 1,226,750
-----------
Total Common Stocks
(cost: $39,294,156) ........................................... 42,619,469
-----------
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
SHORT-TERM OBLIGATION (14.12%)
Investors Bank & Trust Company (c)
5.91%, Repurchase Agreement
dated 12/31/96 to be
repurchased at $6,976,529 on
01/02/97 ....................................... $6,974,239 $ 6,974,239
-----------
Total Short-Term Obligation
(cost: $6,974,239) ............................... 6,974,239
-----------
Total Investment Securities
(cost: $46,269,019) .............................. $49,594,293
===========
SUMMARY
Investments at value ............................. 100.40% $49,594,293
Liabilities in Excess
of Other Assets ................................ (0.40%) (199,986)
---------- -----------
Net Assets ....................................... 100.00% $49,394,307
========== ===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) No income dividends were paid during the preceding twelve months.
(b) Percentage is less than .01%.
(c) Collateralized by $6,940,993 Federal Home Loan Mortgage Corporation
5.91% due 08/01/23; $96,275 Federal Home Loan Mortgage Corporation 5.91%
due 06/01/22; market value and accrued interest aggregated $7,224,434
and $98,557 respectively for this collateral at December 31, 1996.
ADR American Depository Receipt
See notes to schedule of investments.
The notes to the financial statements are an integral part of this report.
54
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
55
<PAGE>
WRL SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
At December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET BOND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
ASSETS:
Investments in securities, at cost ......... $ 0 $ 81,085,074 $ 905,832,680
============== ============== ==============
Investments in securities, at market value . $ 0 $ 80,795,320 $1,306,383,571
Short-term securities, at amortized cost ... 121,459,942 13,856,443 230,997,614
Cash ....................................... 2,438 0 2,535,332
Cash collateral for securities on loan ..... 0 23,117,500 102,124,125
Receivables:
Securities sold ........................... 0 0 11,321,964
Interest .................................. 730,425 1,205,290 344,729
Dividends ................................. 0 0 760,150
Foreign receivable ........................ 0 0 19,664
Foreign currency contracts ................ 0 0 763,541
Other ..................................... 0 23,243 503,663
-------------- -------------- --------------
Total assets ............................. 122,192,805 118,997,796 1,655,754,353
-------------- -------------- --------------
LIABILITIES:
Securities purchased ....................... 0 0 24,012,047
Accounts payable and accrued liabilities:
Investment advisory fees .................. 41,961 42,066 1,077,971
Due to custodian .......................... 0 26,343 0
Dividends to shareholders ................. 18,724 0 0
Deposits for securities on loan ........... 0 23,117,500 102,124,125
Foreign currency contracts ................ 0 0 297,741
Other fees ................................ 17,807 53,177 832,997
-------------- -------------- --------------
Total liabilities ........................ 78,492 23,239,086 128,344,881
-------------- -------------- --------------
Total net assets ........................ $ 122,114,313 $ 95,758,710 $1,527,409,472
============== ============== ==============
NET ASSETS:
Capital stock shares authorized ............ 225,000,000 25,000,000 125,000,000
============== ============== ==============
Capital stock ($.01 par value) ............. $ 1,221,143 $ 89,434 $ 436,387
Additional paid-in-capital ................. 120,893,170 101,731,646 1,112,611,748
Accumulated undistributed net investment
income (loss) ............................ 0 162,218 2,199,248
Accumulated undistributed net realized
gain (loss) on:
Investment and foreign currency
transactions .......................... 0 (5,934,834) 11,145,324
Net unrealized appreciation
(depreciation) on:
Investment securities ..................... 0 (289,754) 400,550,891
Foreign currency transactions ............. 0 0 465,874
-------------- -------------- --------------
Net assets applicable to outstanding
shares of capital ......................... $ 122,114,313 $ 95,758,710 $1,527,409,472
============== ============== ==============
Shares outstanding at
December 31, 1996 ......................... 122,114,313 8,943,366 43,638,675
============== ============== ==============
Net asset value per share .................. $ 1.00 $ 10.71 $ 35.00
============== ============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SHORT-TO-
INTERMEDIATE
GOVERNMENT GLOBAL EQUITY-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
ASSETS:
Investments in securities, at cost ......... $ 21,594,537 $ 426,759,363 $ 331,917,524
============== ============== ==============
Investments in securities, at market value . $ 21,709,606 $ 515,867,490 $ 385,484,366
Short-term securities, at amortized cost ... 4,078,405 9,098,357 5,533,579
Cash ....................................... 123 1,682,150 95
Cash collateral for securities on loan ..... 0 60,654,609 8,139,900
Receivables:
Securities sold ........................... 0 8,297,377 0
Interest .................................. 331,959 8,845 1,881,020
Dividends ................................. 0 340,649 515,245
Foreign receivable ........................ 0 200,125 0
Foreign currency contracts ................ 0 3,725,226 0
Other ..................................... 0 267,385 40,100
-------------- -------------- --------------
Total assets ............................. 26,120,093 600,142,213 401,594,305
-------------- -------------- --------------
LIABILITIES:
Securities purchased ....................... 0 3,117,510 2,902,970
Accounts payable and accrued liabilities:
Investment advisory fees .................. 13,517 365,934 268,533
Due to custodian .......................... 0 0 0
Dividends to shareholders ................. 0 0 0
Deposits for securities on loan ........... 0 60,654,609 8,139,900
Foreign currency contracts ................ 0 789,246 0
Other fees ................................ 8,365 395,179 141,980
-------------- -------------- --------------
Total liabilities ........................ 21,882 65,322,478 11,453,383
-------------- -------------- --------------
Total net assets ........................ $ 26,098,211 $ 534,819,735 $ 390,140,922
============== ============== ==============
NET ASSETS:
Capital stock shares authorized ............ 100,000,000 100,000,000 100,000,000
============== ============== ==============
Capital stock ($.01 par value) ............. $ 25,475 $ 295,233 $ 279,226
Additional paid-in-capital ................. 26,251,989 434,774,009 335,004,739
Accumulated undistributed net investment
income (loss) ............................. 64,368 2,119,219 290,116
Accumulated undistributed net realized
gain (loss) on:
Investment and foreign currency
transactions ........................... (358,690) 5,571,285 999,999
Net unrealized appreciation
(depreciation) on:
Investment securities ..................... 115,069 89,108,127 53,566,842
Foreign currency transactions ............. 0 2,951,862 0
-------------- -------------- --------------
Net assets applicable to outstanding
shares of capital ........................ $ 26,098,211 $ 534,819,735 $ 390,140,922
============== ============== ==============
Shares outstanding at
December 31, 1996 ........................ 2,547,452 29,523,310 27,922,619
============== ============== ==============
Net asset value per share .................. $ 10.24 $ 18.12 $ 13.97
============== ============== ==============
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
EMERGING AGGRESSIVE
GROWTH GROWTH BALANCED UTILITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at cost ......... $ 305,602,501 $ 180,943,958 $ 42,347,072 $ 33,772,141
============== ============== ============== ==============
Investments in securities, at market value . $ 411,760,043 $ 214,074,258 $ 47,233,650 $ 37,253,950
Short-term securities, at amortized cost ... 16,761,973 7,271,985 1,796,020 1,927,000
Cash ....................................... 11,069 470 0 942
Cash collateral for securities on loan ..... 70,814,178 11,775,500 5,719,800 3,106,172
Receivables:
Securities sold ........................... 3,245,813 1,701,096 0 240,318
Interest .................................. 10,327 2,911 272,809 24,361
Dividends ................................. 98,264 82,411 76,951 107,470
Foreign receivable ........................ 1,778 0 1,184 777
Foreign currency contracts ................ 0 0 0 0
Other ..................................... 406,059 0 29,600 4,299
-------------- -------------- -------------- --------------
Total assets ............................. 503,109,504 234,908,631 55,130,014 42,665,289
-------------- -------------- -------------- --------------
LIABILITIES:
Securities purchased ....................... 63,941 2,325,535 0 1,306,251
Accounts payable and accrued liabilities:
Investment advisory fees .................. 299,822 155,152 33,921 23,912
Due to custodian .......................... 0 0 0 91,208
Dividends to shareholders ................. 0 0 0 0
Deposits for securities on loan ........... 70,814,178 11,775,500 5,719,800 3,106,172
Foreign currency contracts ................ 0 0 0 0
Other fees ................................ 477,236 100,067 45,614 22,415
-------------- -------------- -------------- --------------
Total liabilities ........................ 71,655,177 14,356,254 5,799,335 4,549,958
-------------- -------------- -------------- --------------
Total net assets ........................ $ 431,454,327 $ 220,552,377 $ 49,330,679 $ 38,115,331
============== ============== ============== ==============
NET ASSETS:
Capital stock shares authorized ............ 100,000,000 75,000,000 75,000,000 75,000,000
============== ============== ============== ==============
Capital stock ($.01 par value) ............. $ 233,709 $ 155,559 $ 43,293 $ 32,403
Additional paid-in-capital ................. 322,391,739 185,877,781 44,078,688 33,919,024
Accumulated undistributed net investment
income (loss).............................. 0 0 122,121 152,775
Accumulated undistributed net realized
gain (loss) on:
Investment and foreign currency
transactions ........................... 2,671,337 1,388,737 199,999 529,200
Net unrealized appreciation
(depreciation) on:
Investment securities ..................... 106,157,542 33,130,300 4,886,578 3,481,809
Foreign currency transactions ............. 0 0 0 120
-------------- -------------- -------------- --------------
Net assets applicable to outstanding
shares of capital ........................ $ 431,454,327 $ 220,552,377 $ 49,330,679 $ 38,115,331
============== ============== ============== ==============
Shares outstanding at
December 31, 1996 ........................ 23,370,941 15,555,943 4,329,270 3,240,316
============== ============== ============== ==============
Net asset value per share .................. $ 18.46 $ 14.18 $ 11.39 $ 11.76
============== ============== ============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MERIDIAN/
TACTICAL ASSET C.A.S.E. INVESCO
ALLOCATION GROWTH GLOBAL SECTOR VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at cost ......... $ 138,624,040 $ 19,785,427 $ 6,064,464 $ 39,294,780
============== ============== ============== ==============
Investments in securities, at market value . $ 154,858,567 $ 21,346,585 $ 6,335,483 $ 42,620,054
Short-term securities, at amortized cost ... 50,548,229 0 0 6,974,239
Cash ....................................... 733,923 5,196,843 612,319 0
Cash collateral for securities on loan ..... 14,064,950 0 0 0
Receivables:
Securities sold ........................... 0 0 24,975 0
Interest .................................. 618,964 19,058 23,258 1,144
Dividends ................................. 209,450 18,738 7,026 53,689
Foreign receivable ........................ 0 0 203 0
Foreign currency contracts ................ 0 0 0 0
Other ..................................... 27,839 0 0 0
-------------- -------------- -------------- --------------
Total assets ............................. 221,061,922 26,581,224 7,003,264 49,649,126
-------------- -------------- -------------- --------------
LIABILITIES:
Securities purchased ....................... 587,375 0 0 213,990
Accounts payable and accrued liabilities:
Investment advisory fees .................. 140,205 17,354 6,276 32,663
Due to custodian .......................... 0 0 0 0
Dividends to shareholders ................. 0 0 0 0
Deposits for securities on loan ........... 14,064,950 0 0 0
Foreign currency contracts ................ 0 0 0 0
Other fees ................................ 97,667 4,338 10,913 8,166
-------------- -------------- -------------- --------------
Total liabilities ........................ 14,890,197 21,692 17,189 254,819
-------------- -------------- -------------- --------------
Total net assets ........................ $ 206,171,725 $ 26,559,532 $ 6,986,075 $ 49,394,307
============== ============== ============== ==============
NET ASSETS:
Capital stock shares authorized ............ 75,000,000 75,000,000 75,000,000 75,000,000
============== ============== ============== ==============
Capital stock ($.01 par value) ............. $ 163,489 $ 19,796 $ 6,622 $ 43,842
Additional paid-in-capital ................. 188,040,054 24,766,368 6,679,338 45,988,280
Accumulated undistributed net investment
income (loss) ............................. 234,039 12,212 13,476 31,911
Accumulated undistributed net realized
gain (loss) on:
Investment and foreign currency
transactions ........................... 1,499,616 199,998 15,624 5,000
Net unrealized appreciation
(depreciation) on:
Investment securities ..................... 16,234,527 1,561,158 271,019 3,325,274
Foreign currency transactions ............. 0 0 (4) 0
-------------- -------------- -------------- --------------
Net assets applicable to outstanding
shares of capital ........................ $ 206,171,725 $ 26,559,532 $ 6,986,075 $ 49,394,307
============== ============== ============== ==============
Shares outstanding at
December 31, 1996 ........................ 16,348,935 1,979,552 662,187 4,384,171
============== ============== ============== ==============
Net asset value per share .................. $ 12.61 $ 13.42 $ 10.55 $ 11.27
============== ============== ============== ==============
</TABLE>
The notes to the financial statements are an integral part of this report.
57
<PAGE>
WRL SERIES FUND, INC.
STATEMENTS OF OPERATIONS
For the year or period ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET BOND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ................................... $ 5,602,086 $ 6,235,110 $ 17,595,471
Dividends .................................. 0 0 8,366,877
Foreign tax withheld ....................... 0 0 (165,732)
-------------- -------------- --------------
Total investment income ................... 5,602,086 6,235,110 25,796,616
-------------- -------------- --------------
EXPENSES:
Investment advisory fees ................... 436,658 474,926 11,137,321
Printing and shareholder reports ........... 48,588 74,130 622,351
Custody fees ............................... 30,784 27,879 234,779
Legal fees ................................. 1,141 3,202 23,148
Auditing and accounting fees ............... 5,000 5,000 15,499
Directors fees ............................. 330 1,216 8,449
Registration fees .......................... 801 968 6,280
Other fees ................................. 6,237 16,762 126,220
-------------- -------------- --------------
Total expenses ............................ 529,539 604,083 12,174,047
Less:
Advisory fee waiver and expense
reimbursement ......................... 0 0 0
Fees paid indirectly ...................... 1,364 1,889 3,751
-------------- -------------- --------------
Net expenses ............................. 528,175 602,194 12,170,296
-------------- -------------- --------------
Net investment income (loss) ............... 5,073,911 5,632,916 13,626,320
-------------- -------------- --------------
Net realized gain (loss) on:
Investment securities .................... 0 1,596,781 88,069,084
Foreign currency transactions ............ 0 0 2,784,807
-------------- -------------- --------------
Total net realized gain (loss) ........... 0 1,596,781 90,853,891
-------------- -------------- --------------
Change in unrealized appreciation
(depreciation) on:
Investment securities .................... 0 (7,255,058) 116,348,271
Foreign currency transactions ............ 0 0 (89,567)
-------------- -------------- --------------
Total change in unrealized
appreciation (depreciation) ............ 0 (7,255,058) 116,258,704
-------------- -------------- --------------
Net gain (loss) on investments ............ 0 (5,658,277) 207,112,595
-------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations .............. $ 5,073,911 $ (25,361) $ 220,738,915
============== ============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SHORT-TO-
INTERMEDIATE
GOVERNMENT GLOBAL EQUITY-INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ................................... $ 1,531,735 $ 1,289,219 $ 5,284,242
Dividends .................................. 0 5,570,540 5,865,075
Foreign tax withheld ....................... 0 (632,045) (943)
-------------- -------------- --------------
Total investment income ................... 1,531,735 6,227,714 11,148,374
-------------- -------------- --------------
EXPENSES:
Investment advisory fees ................... 148,680 3,468,535 2,462,304
Printing and shareholder reports ........... 14,735 280,166 209,747
Custody fees ............................... 16,029 418,796 52,227
Legal fees ................................. 494 11,508 7,959
Auditing and accounting fees ............... 5,000 10,500 7,500
Directors fees ............................. 182 4,221 2,930
Registration fees .......................... 155 3,471 2,206
Other fees ................................. 2,578 66,611 42,971
-------------- -------------- --------------
Total expenses ............................ 187,853 4,263,808 2,787,844
Less:
Advisory fee waiver and expense
reimbursement ......................... 0 0 0
Fees paid indirectly ...................... 42 3,479 1,280
-------------- -------------- --------------
Net expenses ............................. 187,811 4,260,329 2,786,564
-------------- -------------- --------------
Net investment income (loss) ............... 1,343,924 1,967,385 8,361,810
-------------- -------------- --------------
Net realized gain (loss) on:
Investment securities .................... 69,307 44,869,375 13,598,753
Foreign currency transactions ............ 0 6,635,859 0
-------------- -------------- --------------
Total net realized gain (loss) ........... 69,307 51,505,234 13,598,753
-------------- -------------- --------------
Change in unrealized appreciation
(depreciation) on:
Investment securities ..................... (544,297) 43,960,222 21,360,000
Foreign currency transactions ............. 0 1,501,187 0
-------------- -------------- --------------
Total change in unrealized
appreciation (depreciation) ............. (544,297) 45,461,409 21,360,000
-------------- -------------- --------------
Net gain (loss) on investments ............. (474,990) 96,966,643 34,958,753
-------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ............... $ 868,934 $ 98,934,028 $ 43,320,563
============== ============== ==============
</TABLE>
58
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
EMERGING AGGRESSIVE
GROWTH GROWTH BALANCED UTILITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
INVESTMENT INCOME:.
Interest ................................... $ 1,425,761 $ 747,987 $ 951,593 $ 118,860
Dividends .................................. 1,187,421 941,567 668,766 1,342,421
Foreign tax withheld ....................... (3,159) (7,395) 0 (1,173)
-------------- -------------- -------------- --------------
Total investment income ................... 2,610,023 1,682,159 1,620,359 1,460,108
-------------- -------------- -------------- --------------
EXPENSES:
Investment advisory fees ................... 2,985,089 1,529,679 315,419 231,441
Printing and shareholder reports ........... 317,798 229,994 37,421 36,988
Custody fees ............................... 95,955 38,142 13,916 27,465
Legal fees ................................. 13,185 9,588 1,490 1,380
Auditing and accounting fees ............... 7,500 5,000 5,000 5,000
Directors fees ............................. 4,832 3,498 547 508
Registration fees .......................... 3,367 2,520 567 385
Other fees ................................. 75,324 54,832 8,219 7,921
-------------- -------------- -------------- --------------
Total expenses ............................ 3,503,050 1,873,253 382,579 311,088
Less:
Advisory fee waiver and expense
reimbursement ......................... 0 0 0 0
Fees paid indirectly ...................... 1,407 72 23 778
-------------- -------------- -------------- --------------
Net expenses ............................. 3,501,643 1,873,181 382,556 310,310
-------------- -------------- -------------- --------------
Net investment income (loss) ............... (891,620) (191,022) 1,237,803 1,149,798
-------------- -------------- -------------- --------------
Net realized gain (loss) on:
Investment securities .................... 20,856,924 8,279,659 1,348,035 1,515,535
Foreign currency transactions ............ (305) 0 0 (790)
-------------- -------------- -------------- --------------
Total net realized gain (loss) ........... 20,856,619 8,279,659 1,348,035 1,514,745
-------------- -------------- -------------- --------------
Change in unrealized appreciation
(depreciation) on:
Investment securities ..................... 37,786,633 11,230,327 1,733,124 936,981
Foreign currency transactions ............. 0 0 0 120
-------------- -------------- -------------- --------------
Total change in unrealized
appreciation (depreciation) ............. 37,786,633 11,230,327 1,733,124 937,101
-------------- -------------- -------------- --------------
Net gain (loss) on investments ............. 58,643,252 19,509,986 3,081,159 2,451,846
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ............... $ 57,751,632 $ 19,318,964 $ 4,318,962 $ 3,601,644
============== ============== ============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MERIDIAN/
TACTICAL ASSET C.A.S.E. INVESCO
ALLOCATION GROWTH GLOBAL SECTOR VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO(A) PORTFOLIO(A)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ................................... $ 4,412,535 $ 116,472 $ 57,042 $ 123,823
Dividends .................................. 1,577,419 91,321 24,188 208,574
Foreign tax withheld ....................... 0 (371) (543) 0
-------------- -------------- -------------- --------------
Total investment income ................... 5,989,954 207,422 80,687 332,397
-------------- -------------- -------------- --------------
EXPENSES:
Investment advisory fees ................... 1,308,435 83,931 26,485 111,557
Printing and shareholder reports ........... 74,126 52,569 1,711 11,110
Custody fees ............................... 50,406 35,088 26,048 23,131
Legal fees ................................. 2,557 328 51 300
Auditing and accounting fees ............... 5,300 3,000 3,000 3,000
Directors fees ............................. 927 123 19 122
Registration fees .......................... 888 102 14 50
Other fees ................................. 15,885 3,496 565 3,944
-------------- -------------- -------------- --------------
Total expenses ............................ 1,458,524 178,637 57,893 153,214
Less:
Advisory fee waiver and expense
reimbursement ......................... 0 73,269 0 13,672
Fees paid indirectly ...................... 305 454 0 97
-------------- -------------- -------------- --------------
Net expenses ............................. 1,458,219 104,914 57,893 139,445
-------------- -------------- -------------- --------------
Net investment income (loss) ............... 4,531,735 102,508 22,794 192,952
-------------- -------------- -------------- --------------
Net realized gain (loss) on:
Investment securities .................... 5,222,727 629,925 39,864 73,039
Foreign currency transactions ............ 0 0 2,540 0
-------------- -------------- -------------- --------------
Total net realized gain (loss) ........... 5,222,727 629,925 42,404 73,039
-------------- -------------- -------------- --------------
Change in unrealized appreciation
(depreciation) on:
Investment securities .................... 9,997,663 1,514,389 271,019 3,325,274
Foreign currency transactions ............ 0 0 (4) 0
-------------- -------------- -------------- --------------
Total change in unrealized
appreciation (depreciation) ............. 9,997,663 1,514,389 271,015 3,325,274
-------------- -------------- -------------- --------------
Net gain (loss) on investments ............. 15,220,390 2,144,314 313,419 3,398,313
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ............... $ 19,752,125 $ 2,246,822 $ 336,213 $ 3,591,265
============== ============== ============== ==============
<FN>
(a) The inception of this portfolio was May 1, 1996.
- ----------
</FN>
</TABLE>
The notes to the financial statements are an integral part of this report.
59
<PAGE>
WRL SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the year or period ended
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET BOND
PORTFOLIO PORTFOLIO
DECEMBER 31 DECEMBER 31
-------------------------------- -------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ............... $ 5,073,911 $ 4,476,538 $ 5,632,916 $ 5,313,820
Net realized gain (loss) on investments
and foreign currency transactions ........ 0 0 1,596,781 2,182,123
Change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions ............ 0 0 (7,255,058) 9,317,232
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ................ 5,073,911 4,476,538 (25,361) 16,813,175
-------------- -------------- -------------- --------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income ...................... (5,073,911) (4,476,538) (5,488,294) (5,296,224)
In excess of net investment income ......... 0 0 0 0
Net realized gains ......................... 0 0 0 0
In excess of net realized gains ............ 0 0 0 0
-------------- -------------- -------------- --------------
Total distributions ....................... (5,073,911) (4,476,538) (5,488,294) (5,296,224)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares .......... 177,545,050 114,390,840 24,809,395 26,382,392
Dividends and distributions reinvested ..... 5,073,911 4,476,538 5,488,294 5,296,224
Cost of shares repurchased ................. (141,048,320) (131,404,321) (25,997,209) (17,287,599)
-------------- -------------- -------------- --------------
Increase (decrease) in net assets from
capital share transactions .............. 41,570,641 (12,536,943) 4,300,480 14,391,017
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets ...... 41,570,641 (12,536,943) (1,213,175) 25,907,968
NET ASSETS:
Beginning of period ........................ 80,543,672 93,080,615 96,971,885 71,063,917
-------------- -------------- -------------- --------------
End of period .............................. $ 122,114,313 $ 80,543,672 $ 95,758,710 $ 96,971,885
============== ============== ============== ==============
Undistributed net investment income ....... $ 0 $ 0 $ 162,218 $ 17,596
============== ============== ============== ==============
SHARE ACTIVITY:
Shares outstanding-beginning of period ..... 80,543,672 93,080,615 8,547,388 7,252,963
-------------- -------------- -------------- --------------
Shares issued .............................. 177,545,050 114,390,840 2,281,700 2,425,769
Shares issued-reinvestment of dividends
and distributions ........................ 5,073,911 4,476,538 514,858 477,566
Shares redeemed ............................ (141,048,320) (131,404,321) (2,400,580) (1,608,910)
-------------- -------------- -------------- --------------
Increase (decrease) in shares
outstanding .............................. 41,570,641 (12,536,943) 395,978 1,294,425
-------------- -------------- -------------- --------------
Shares outstanding-end of period ........... 122,114,313 80,543,672 8,943,366 8,547,388
============== ============== ============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
DECEMBER 31
----------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ............... $ 13,626,320 $ 8,852,198
Net realized gain (loss) on investments
and foreign currency transactions ........ 90,853,891 154,832,289
Change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions ............ 116,258,704 210,731,260
--------------- ---------------
Net increase (decrease) in net assets
resulting from operations ................ 220,738,915 374,415,747
--------------- ---------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income ...................... (14,201,680) (8,276,838)
In excess of net investment income ......... (585,559) 0
Net realized gains ......................... (81,744,608) (106,305,203)
In excess of net realized gains ............ 0 0
--------------- ---------------
Total distributions ....................... (96,531,847) (114,582,041)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares .......... 219,914,964 111,725,690
Dividends and distributions reinvested ..... 96,531,847 114,582,041
Cost of shares repurchased ................. (108,418,800) (105,350,493)
--------------- ---------------
Increase (decrease) in net assets from
capital share transactions .............. 208,028,011 120,957,238
--------------- ---------------
Net increase (decrease) in net assets ...... 332,235,079 380,790,944
NET ASSETS:
Beginning of period ........................ 1,195,174,393 814,383,449
--------------- ---------------
End of period .............................. $ 1,527,409,472 $ 1,195,174,393
=============== ===============
Undistributed net investment income ....... $ 2,199,248 $ 575,360
=============== ===============
SHARE ACTIVITY:
Shares outstanding-beginning of period ..... 37,749,399 34,205,930
--------------- ---------------
Shares issued .............................. 6,261,333 3,712,711
Shares issued-reinvestment of dividends
and distributions ........................ 2,730,723 3,625,404
Shares redeemed ............................ (3,102,780) (3,794,646)
--------------- ---------------
Increase (decrease) in shares
outstanding .............................. 5,889,276 3,543,469
--------------- ---------------
Shares outstanding - end of period ......... 43,638,675 37,749,399
=============== ===============
</TABLE>
The notes to the financial statements are an integral part of this report.
60
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SHORT-TO-INTERMEDIATE
GOVERNMENT GLOBAL
PORTFOLIO PORTFOLIO
DECEMBER 31 DECEMBER 31
-------------------------------- --------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ............... $ 1,343,924 $ 1,237,359 $ 1,967,385 $ 1,941,264
Net realized gain (loss) on investments
and foreign currency transactions ......... 69,307 (188,473) 51,505,234 8,256,989
Change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions ............ (544,297) 1,624,946 45,461,409 43,682,105
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ................ 868,934 2,673,832 98,934,028 53,880,358
-------------- -------------- -------------- --------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income ...................... (1,282,128) (1,233,200) (1,163,575) 0
In excess of net investment income ......... 0 0 (4,516,640) 0
Net realized gains ......................... 0 0 (39,908,690) (11,272,429)
In excess of net realized gains ............ 0 0 0 0
-------------- -------------- -------------- --------------
Total distributions ....................... (1,282,128) (1,233,200) (45,588,905) (11,272,429)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares .......... 12,991,955 13,644,823 186,542,360 33,603,270
Dividends and distributions reinvested ..... 1,282,128 1,233,200 45,588,905 11,272,429
Cost of shares repurchased ................. (11,350,411) (13,087,126) (40,162,300) (59,756,345)
-------------- -------------- -------------- --------------
Increase (decrease) in net assets from
capital share transactions .............. 2,923,672 1,790,897 191,968,965 (14,880,646)
Net increase (decrease) in net assets ...... 2,510,478 3,231,529 245,314,088 27,727,283
-------------- -------------- -------------- --------------
NET ASSETS:
Beginning of period ........................ 23,587,733 20,356,204 289,505,647 261,778,364
-------------- -------------- -------------- --------------
End of period .............................. $ 26,098,211 $ 23,587,733 $ 534,819,735 $ 289,505,647
============== ============== ============== ==============
Undistributed net investment income ....... $ 64,368 $ 4,159 $ 2,119,219 $ (803,810)
============== ============== ============== ==============
SHARE ACTIVITY:
Shares outstanding-beginning of period ..... 2,264,543 2,093,571 18,658,875 19,954,849
-------------- -------------- -------------- --------------
Shares issued .............................. 1,250,339 1,338,408 10,474,987 2,319,062
Shares issued-reinvestment of dividends
and distributions ........................ 125,061 119,758 2,526,793 726,386
Shares redeemed ............................ (1,092,491) (1,287,194) (2,137,345) (4,341,422)
-------------- -------------- -------------- --------------
Increase (decrease) in shares
outstanding .............................. 282,909 170,972 10,864,435 (1,295,974)
-------------- -------------- -------------- --------------
Shares outstanding - end of period ......... 2,547,452 2,264,543 29,523,310 18,658,875
============== ============== ============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
EQUITY-INCOME EMERGING GROWTH
PORTFOLIO PORTFOLIO
DECEMBER 31 DECEMBER 31
-------------------------------- -----------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................ $ (8,361,810) $ (6,717,146) $ (891,620) $ (641,318)
Net realized gain (loss) on investments
and foreign currency transactions ......... 13,598,753 9,894,197 20,856,619 35,450,575
Change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions ............. 21,360,000 31,505,904 37,786,904 37,786,633
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations ................ 43,320,563 48,117,247 57,751,632 87,649,112
-------------- -------------- -------------- --------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income ...................... (8,089,663) (6,700,560) 0 (49,487)
In excess of net investment income.......... 0 0 (16,877) 0
Net realized gains .......................... (13,148,756) (6,702,504) (18,935,588) (11,919,087)
In excess of net realized gains ........... 0 0 0 0
-------------- -------------- -------------- --------------
Total distributions ..................... (21,238,419) (13,403,064) (18,952,465) (11,968,574)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares ......... 111,098,802 49,617,709 133,226,763 49,653,525
Dividends and distributions reinvested .... 21,238,419 13,403,064 18,952,465 11,968,574
Cost of shares repurchased ................ (21,084,113) (24,796,488) (48,043,303) (31,433,111)
-------------- -------------- -------------- --------------
Increase (decrease) in net assets from
capital share transactions ................ 111,253,108 38,224,285 104,135,925 30,188,988
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets ....... 133,335,252 72,938,468 142,935,092 105,869,526
NET ASSETS:
Beginning of period ....................... 256,805,670 183,867,202 288,519,235 182,649,709
-------------- -------------- -------------- --------------
End of period ............................. $ 390,140,922 $ 256,805,670 $ 431,454,327 $ 288,519,235
============== ============== ============== ==============
Undistributed net investment income ...... $ 290,116 $ 17,969 $ 0 $ 16,877
============== ============== ============== ==============
SHARE ACTIVITY:
Shares outstanding-beginning of period .... 19,962,450 16,863,575 17,758,249 15,817,298
-------------- -------------- -------------- --------------
Shares issued ............................. 7,994,839 4,064,325 7,201,118 3,437,728
Shares issued-reinvestment of dividends
and distributions ....................... (1,513,827) 1,059,083 1,027,524 739,247
Shares redeemed ........................... (1,548,497) (2,024,533) (2,615,950) (2,236,024)
-------------- -------------- -------------- --------------
Increase (decrease) in shares
outstanding ............................. 7,960,169 3,098,875 5,612,692 1,940,951
-------------- -------------- -------------- --------------
Shares outstanding - end of period ........ 27,922,619 19,962,450 23,370,941 17,758,249
============== ============== ============== ==============
</TABLE>
The notes to the financial statements are an integral part of this report.
61
<PAGE>
WRL SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the year or period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH BALANCED
PORTFOLIO PORTFOLIO
DECEMBER 31 DECEMBER 31
-------------------------------- --------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................... $ (191,022) $ (515,168) $ 1,237,803 $ 1,075,870
Net realized gain (loss) on investments and
foreign currency transactions ................ 8,279,659 4,512,355 1,348,035 (304,469)
Change in unrealized appreciation (depreciation)
on investments and foreign currency
transactions ................................. 11,230,327 20,073,057 1,733,124 3,757,818
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations .............................. 19,318,964 24,070,244 4,318,962 4,529,219
-------------- -------------- -------------- --------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income .......................... 0 0 (1,117,569) (1,074,367)
In excess of net investment income ............. (2,670,490) (501) 0 0
Net realized gains ............................. (3,787,108) (4,186,091) (421,489) 0
In excess of net realized gains ................ 0 0 0 0
-------------- -------------- -------------- --------------
Total distributions ........................... (6,457,598) (4,186,592) (1,539,058) (1,074,367)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares .............. 99,773,436 133,357,432 19,661,402 12,933,665
Dividends and distributions reinvested ......... 6,457,598 4,186,592 1,539,058 1,074,367
Cost of shares repurchased ..................... (57,074,077) (37,719,938) (5,764,130) (5,770,415)
-------------- -------------- -------------- --------------
Increase (decrease) in net assets from capital
share transactions .......................... 49,156,957 99,824,086 15,436,330 8,237,617
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets .......... 62,018,323 119,707,738 18,216,234 11,692,469
NET ASSETS:
Beginning of period ............................ 158,534,054 38,826,316 31,114,445 19,421,976
-------------- -------------- -------------- --------------
End of period .................................. $ 220,552,377 $ 158,534,054 $ 49,330,679 $ 31,114,445
============== ============== ============== ==============
Undistributed net investment income ........... $ 0 $ 0 $ 122,121 $ 1,887
============== ============== ============== ==============
SHARE ACTIVITY:
Shares outstanding-beginning of period ......... 11,964,511 3,937,879 2,925,799 2,102,921
-------------- -------------- -------------- --------------
Shares issued .................................. 7,309,426 10,492,134 1,800,033 1,309,039
Shares issued-reinvestment of dividends
and distributions ............................ 470,994 315,955 135,690 105,008
Shares redeemed ................................ (4,188,988) (2,781,457) (532,252) (591,169)
-------------- -------------- -------------- --------------
Increase (decrease) in shares
outstanding .................................. 3,591,432 8,026,632 1,403,471 822,878
-------------- -------------- -------------- --------------
Shares outstanding - end of period ............. 15,555,943 11,964,511 4,329,270 2,925,799
============== ============== ============== ==============
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
UTILITY
PORTFOLIO
DECEMBER 31
--------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ................... $ 1,149,798 $ 788,903
Net realized gain (loss) on investments and
foreign currency transactions ................ 1,514,745 282,252
Change in unrealized appreciation (depreciation)
on investments and foreign currency
transactions ................................. 937,101 2,876,054
-------------- --------------
Net increase (decrease) in net assets resulting
from operations .............................. 3,601,644 3,947,209
-------------- --------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income .......................... (996,482) (788,904)
In excess of net investment income ............. 0 0
Net realized gains ............................. (981,918) (191,089)
In excess of net realized gains ................ 0 0
-------------- --------------
Total distributions ........................... (1,978,400) (979,993)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares .............. 18,780,850 18,320,350
Dividends and distributions reinvested ......... 1,978,400 979,993
Cost of shares repurchased ..................... (8,874,652) (8,142,104)
-------------- --------------
Increase (decrease) in net assets from capital
share transactions .......................... 11,884,598 11,158,239
-------------- --------------
Net increase (decrease) in net assets .......... 13,507,842 14,125,455
NET ASSETS:
Beginning of period ............................ 24,607,489 10,482,034
-------------- --------------
End of period .................................. $ 38,115,331 $ 24,607,489
============== ==============
Undistributed net investment income ........... $ 152,775 $ 249
============== ==============
SHARE ACTIVITY:
Shares outstanding-beginning of period ......... 2,212,175 1,127,702
-------------- --------------
Shares issued .................................. 1,645,679 1,789,282
Shares issued-reinvestment of dividends
and distributions ............................ 168,076 91,339
Shares redeemed ................................ (785,614) (796,148)
-------------- --------------
Increase (decrease) in shares
outstanding .................................. 1,028,141 1,084,473
-------------- --------------
Shares outstanding - end of period ............. 3,240,316 2,212,175
============== ==============
</TABLE>
62
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
TACTICAL ASSET ALLOCATION C.A.S.E. GROWTH
PORTFOLIO PORTFOLIO
DECEMBER 31 DECEMBER 31
-------------------------------- --------------------------------
1996 1995(a) 1996 1995(b)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................... $ 4,531,735 $ 2,056,694 $ 102,508 $ 11,328
Net realized gain (loss) on investments and
foreign currency transactions ................ 5,222,727 2,438,162 629,925 81,032
Change in unrealized appreciation (depreciation)
on investments and foreign currency
transactions ................................. 9,997,663 6,236,864 1,514,389 46,769
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations .............................. 19,752,125 10,731,720 2,246,822 139,129
-------------- -------------- -------------- --------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income .......................... (4,542,174) (2,046,255) (95,636) (10,990)
In excess of net investment income ............. (15,961) 0 0 0
Net realized gains ............................. (3,723,111) (2,188,162) (429,926) (76,031)
In excess of net realized gains ................ 0 0 0 0
-------------- -------------- -------------- --------------
Total distributions ........................... (8,281,246) (4,234,417) (525,562) (87,021)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares .............. 137,334,527 125,126,149 23,037,532 2,442,347
Dividends and distributions reinvested ......... 8,281,246 4,234,417 525,562 87,021
Cost of shares repurchased ..................... (71,445,894) (15,326,902) (1,303,064) (3,234)
-------------- -------------- -------------- --------------
Increase (decrease) in net assets from capital
share transactions .......................... 74,169,879 114,033,664 22,260,030 2,526,134
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets .......... 85,640,758 120,530,967 23,981,290 2,578,242
NET ASSETS:
Beginning of period ............................ 120,530,967 0 2,578,242 0
-------------- -------------- -------------- --------------
End of period .................................. $ 206,171,725 $ 120,530,967 $ 26,559,532 $ 2,578,242
============== ============== ============== ==============
Undistributed net investment income ........... $ 234,039 $ 10,439 $ 12,212 $ 338
============== ============== ============== ==============
SHARE ACTIVITY:
Shares outstanding-beginning of period ......... 10,487,976 0 221,168 0
-------------- -------------- -------------- --------------
Shares issued .................................. 11,297,595 11,463,783 1,821,039 213,996
Shares issued-reinvestment of dividends
and distributions ............................ 660,359 370,908 39,166 7,465
Shares redeemed ................................ (6,096,995) (1,346,715) (101,821) (293)
-------------- -------------- -------------- --------------
Increase (decrease) in shares
outstanding .................................. 5,860,959 10,487,976 1,758,384 221,168
-------------- -------------- -------------- --------------
Shares outstanding - end of period ............. 16,348,935 10,487,976 1,979,552 221,168
============== ============== ============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MEIDIAN/INVESCO
GLOBAL SECTOR VALUE EQUITY
PORTFOLIO PORTFOLIO
DECEMBER 31 DECEMBER 31
--------------------------------
1996(c) 1996(c)
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ................... $ 22,794 $ 192,952
Net realized gain (loss) on investments and
foreign currency transactions ................ 42,404 73,039
Change in unrealized appreciation (depreciation)
on investments and foreign currency
transactions ................................. 271,015 3,325,274
-------------- --------------
Net increase (decrease) in net assets resulting
from operations .............................. 336,213 3,591,265
-------------- --------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income .......................... (11,859) (161,041)
In excess of net investment income ............. 0 0
Net realized gains ............................. (24,239) (68,039)
In excess of net realized gains ................ 0 0
-------------- --------------
Total distributions ........................... (36,098) (229,080)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares .............. 7,998,720 48,034,709
Dividends and distributions reinvested ......... 36,098 229,080
Cost of shares repurchased ..................... (1,348,858) (2,231,667)
-------------- --------------
Increase (decrease) in net assets from capital
share transactions .......................... 6,685,960 46,032,122
-------------- --------------
Net increase (decrease) in net assets .......... 6,986,075 49,394,307
NET ASSETS:
Beginning of period ............................ 0 0
-------------- --------------
End of period .................................. $ 6,986,075 $ 49,394,307
============== ==============
Undistributed net investment income ........... $ 13,476 $ 31,911
============== ==============
SHARE ACTIVITY:
Shares outstanding-beginning of period ......... 0 0
-------------- --------------
Shares issued .................................. 788,163 4,575,121
Shares issued-reinvestment of dividends
and distributions ............................ 3,424 20,132
Shares redeemed ................................ (129,400) (211,082)
-------------- --------------
Increase (decrease) in shares
outstanding .................................. 662,187 4,384,171
-------------- --------------
Shares outstanding - end of period ............. 662,187 4,384,171
============== ==============
<FN>
(a) The inception of this portfolio was January 3, 1995.
(b) The inception of this portfolio was May 1, 1995.
(c) The inception of this portfolio was May 1, 1996.
- ----------
</FN>
</TABLE>
The notes to the financial statements are an integral part of this report.
63
<PAGE>
WRL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS*
For the period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
DECEMBER 31
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from operations:
Net investment income (loss) .............. 0.05 0.05 0.04 0.02 0.03
Net realized and unrealized gain (loss)
on investments .......................... 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total income (loss) from operations ...... 0.05 0.05 0.04 0.02 0.03
----------- ----------- ----------- ----------- -----------
Distributions:
Dividends from net investment income ...... (0.05) (0.05) (0.04) (0.02) (0.03)
Dividends in excess of net investment
income .................................. 0.00 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... 0.00 0.00 0.00 0.00 0.00
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... (0.05) (0.05) (0.04) (0.02) (0.03)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ===========
Total return (a) ............................ 5.03% 5.40% 3.44% 2.45% 3.03%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... $ 122,114 $ 80,544 $ 93,081 $ 45,782 $ 45,600
Ratio of expenses to average net
assets (b) .............................. 0.52% 0.56% 0.60% 0.66% 0.70%
Ratio of net investment income (loss)
to average net assets (b) ............... 5.03% 5.30% 3.59% 2.41% 2.99%
Ratio of commissions paid to number of
shares .................................. N/A N/A N/A N/A N/A
Portfolio turnover rate (a) ............... N/A N/A N/A N/A N/A
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
BOND PORTFOLIO
DECEMBER 31
------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 11.35 $ 9.80 $ 11.24 $ 11.18 $ 11.18
Income from operations:
Net investment income (loss) .............. 0.64 0.69 0.63 0.72 0.75
Net realized and unrealized gain (loss)
on investments .......................... (0.64) 1.55 (1.44) 0.95 0.32
---------- ---------- ---------- ---------- ----------
Total income (loss) from operations ...... 0.00 2.24 (0.81) 1.67 1.07
---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net investment income ...... (0.64) (0.69) (0.63) (0.72) (0.75)
Dividends in excess of net investment
income .................................. 0.00 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... 0.00 0.00 0.00 (0.89) (0.32)
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ----------
Total distributions ...................... (0.64) (0.69) (0.63) (1.61) (1.07)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period .............. $ 10.71 $ 11.35 $ 9.80 $ 11.24 $ 11.18
========== ========== ========== ========== ==========
Total return (a) ............................ 0.14% 22.99% (6.94%) 13.38% 6.79%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... $ 95,759 $ 96,972 $ 71,064 $ 90,715 $ 56,820
Ratio of expenses to average net
assets (b) .............................. 0.64% 0.61% 0.59% 0.64% 0.70%
Ratio of net investment income (loss)
to average net assets (b) ............... 5.96% 6.45% 5.94% 5.94% 6.49%
Ratio of commissions paid to number of
shares .................................. N/A N/A N/A N/A N/A
Portfolio turnover rate (a) ............... 187.72% 120.54% 131.73% 149.02% 80.73%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
DECEMBER 31
-------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 31.66 $ 23.81 $ 26.25 $ 25.83 $ 26.26
Income from operations:
Net investment income (loss) .............. 0.34 0.26 0.22 0.28 0.36
Net realized and unrealized gain
(loss) on investments ................... 5.35 10.97 (2.41) 0.79 0.52
---------- ---------- ---------- ---------- ----------
Total income (loss) from operations ...... 5.69 11.23 (2.19) 1.07 0.88
---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net investment income ...... (0.35) (0.24) (0.22) (0.28) (0.36)
Dividends in excess of net investment
income .................................. (0.01) 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... (1.99) (3.14) 0.00 (0.37) (0.95)
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 (0.03) 0.00 0.00
---------- ---------- ---------- ---------- ----------
Total distributions ...................... (2.35) (3.38) (0.25) (0.65) (1.31)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period .............. $ 35.00 $ 31.66 $ 23.81 $ 26.25 $ 25.83
========== ========== ========== ========== ==========
Total return (a) ............................ 17.96% 47.12% (8.31%) 3.97% 2.35%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... $1,527,409 $1,195,174 $ 814,383 $ 934,810 $ 711,422
Ratio of expenses to average net
assets (b) .............................. 0.88% 0.86% 0.84% 0.87% 0.86%
Ratio of net investment income (loss)
to average net assets (b) ............... 0.98% 0.90% 0.88% 1.07% 1.44%
Ratio of commissions paid to number of
shares .................................. 4.93% N/A N/A N/A N/A
Portfolio turnover rate (a) ............... 45.21% 130.48% 107.33% 77.91% 77.70%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
SHORT-TO-INTERMEDIATE GOVERNMENT PORTFOLIO
DECEMBER 31
------------------------------------------------------------------
1996 1995 1994 1993 1992(c)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 10.42 $ 9.72 $ 10.30 $ 10.02 $ 10.00
Income from operations:
Net investment income (loss) .............. 0.56 0.60 0.50 0.36 0.02
Net realized and unrealized gain
(loss) on investments ................... (0.21) 0.70 (0.58) 0.29 0.02
---------- ---------- ---------- ---------- ----------
Total income (loss) from operations ...... 0.35 1.30 (0.08) 0.65 0.04
---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net investment income ...... (0.53) (0.60) (0.50) (0.35) (0.02)
Dividends in excess of net investment
income .................................. 0.00 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... 0.00 0.00 0.00 (0.02) 0.00
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ----------
Total distributions ...................... (0.53) (0.60) (0.50) (0.37) (0.02)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period .............. 10.24 $ 10.42 $ 9.72 $ 10.30 $ 10.02
========== ========== ========== ========== ==========
Total return (a) ............................ 3.48% 13.54% (0.43%) 4.58% 0.45%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... $ 26,098 $ 23,588 $ 20,356 $ 24,864 $ 2,509
Ratio of expenses to average net
assets (b) .............................. 0.76% 0.78% 0.81% 1.00% 1.00%
Ratio of net investment income (loss)
to average net assets (b) ............... 5.43% 5.84% 4.95% 3.44% 3.24%
Ratio of commissions paid to number of
shares .................................. N/A N/A N/A N/A N/A
Portfolio turnover rate (a) ............... 58.15% 51.82% 93.70% 28.64% 0.00%
<FN>
* The above table illustrates the change for a share outstanding computed
using average shares outstanding throughout each period. See Notes to
Financial Highlights on page 66 and Note 6.
- ----------
</FN>
</TABLE>
The notes to the financial statements are an integral part of this report.
64
<PAGE>
<TABLE>
<CAPTION>
GLOBAL PORFOLIO
DECEMBER 31
------------------------------------------------------------------
1996 1995 1994 1993 1992(c)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 15.52 $ 13.12 $ 13.62 $ 10.16 $ 10.00
Income from operations:
Net investment income (loss ............... 0.08 0.10 0.10 0.04 (0.02)
Net realized and unrealized gain
(loss) on investments ................... 4.20 2.91 0.10 3.72 0.18
---------- ---------- ---------- ---------- ----------
Total income (loss) from operations ...... 4.28 3.01 0.20 3.76 0.16
---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net investment income ...... (0.04) 0.00 (0.10) (0.04) 0.00
Dividends in excess of net investment
income .................................. (0.17) 0.00 (0.01) 0.00 0.00
Distributions from net realized gains
on investments .......................... (1.47) (0.61) (0.56) (0.26) 0.00
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 (0.03) 0.00 0.00
---------- ---------- ---------- ---------- ----------
Total distributions ...................... (1.68) (0.61) (0.70) (0.30) 0.00
---------- ---------- ---------- ---------- ----------
Net asset value, end of period .............. $ 18.12 $ 15.52 $ 13.12 $ 13.62 $ 10.16
========== ========== ========== ========== ==========
Total return (a) ............................ 27.74% 23.06% 0.25% 35.05% 1.62%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... $ 534,820 $ 289,506 $ 261,778 $ 99,094 $ 508
Ratio of expenses to average net
assets (b) .............................. 0.99% 0.99% 1.01% 1.09% 2.48%
Ratio of net investment income (loss)
to average net assets (b) ............... 0.46% 0.75% 0.73% 0.30% (2.23%)
Ratio of commissions paid to number of
shares .................................. 1.54% N/A N/A N/A N/A
Portfolio turnover rate (a) ............... 88.31% 130.60% 192.06% 79.93% 0.00%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
EQUITY-INCOME PORTFOLIO
DECEMBER 31
-------------------------------------------------
1996 1995 1994 1993(d)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 12.86 $ 10.90 $ 11.23 $ 10.00
Income from operations:
Net investment income (loss) .............. 0.37 0.37 0.31 0.19
Net realized and unrealized gain
(loss) on investments ................... 1.56 2.33 (0.33) 1.33
---------- ---------- ---------- ----------
Total income (loss) from operations ...... 1.93 2.70 (0.02) 1.52
---------- ---------- ---------- ----------
Distributions:
Dividends from net investment income ...... (0.32) (0.37) (0.31) (0.19)
Dividends in excess of net investment
income .................................. 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... (0.50) (0.37) 0.00 (0.10)
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 0.00 0.00
---------- ---------- ---------- ----------
Total distributions ...................... (0.82) (0.74) (0.31) (0.29)
---------- ---------- ---------- ----------
Net asset value, end of period .............. $ 13.97 $ 12.86 $ 10.90 $ 11.23
========== ========== ========== ==========
Total return (a) ............................ 15.00% 24.66% (0.53%) 13.49%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... $ 390,141 $ 256,806 $ 183,867 $ 90,560
Ratio of expenses to average net
assets (b) .............................. 0.91% 0.87% 0.89% 1.00%
Ratio of net investment income (loss)
to average net assets (b) ............... 2.72% 3.07% 2.78% 1.70%
Ratio of commissions paid to number of
shares .................................. 5.82% N/A N/A N/A
Portfolio turnover rate (a) ............... 49.32% 52.59% 53.50% 27.41%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
EMERGING GROWTH PORTFOLIO
DECEMBER 31
--------------------------------------------------
1996 1995 1994 1993(D)
----------- ----------- ----------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period ........ $ 16.25 $ 11.55 $ 12.47 $ 10.00
Income from operations:
Net investment income (loss) .............. (0.04) 0.01 0.01 (0.04)
Net realized and unrealized gain
(loss) on investments ................... 3.10 5.42 (0.92) 2.51
----------- ----------- ----------- -----------
Total income (loss) from operations ...... 3.06 5.43 (0.91) 2.47
----------- ----------- ----------- -----------
Distributions:
Dividends from net investment income ...... 0.00 0.00 (0.01) 0.00
Dividends in excess of net investment
income .................................. 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... (0.85) (0.73) 0.00 0.00
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 0.00 0.00
----------- ----------- ----------- -----------
Total distributions ...................... (0.85) (0.73) (0.01) 0.00
----------- ----------- ----------- -----------
Net asset value, end of period .............. $ 18.46 $ 16.25 $ 11.55 $ 12.47
=========== =========== =========== ===========
Total return (a) ............................ 18.88% 46.79% (7.36%) 24.71%
Ratios and supplemental data:
Net assets at end of period $431,454 $288,519 $182,650 $102,472
(in thousands) ..........................
Ratio of expenses to average net
assets (b) .............................. 0.94% 0.91% 0.92% 1.00%
Ratio of net investment income (loss) (0.24%) 0.03% 0.06% (0.30%)
to average net assets (b) ...............
Ratio of commissions paid to number of 5.65% N/A N/A N/A
shares .................................. 80.02% 124.13% 72.62% 12.79%
Portfolio turnover rate (a) ...............
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO BALANCED PORTFOLIO
DECEMBER 31 DECEMBER 31
------------------------------------ --------------------------------------
1996 1995 1994(e) 1996 1995 1994(e)
---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 13.25 $ 9.86 $ 10.00 $ 10.63 $ 9.24 $ 10.00
Income from operations:
Net investment income (loss) .............. (0.01) (0.06) 0.02 0.34 0.44 0.34
Net realized and unrealized gain
(loss) on investments ................... 1.38 3.96 (0.14) 0.80 1.38 (0.76)
---------- ---------- -------- ---------- ---------- ----------
Total income (loss) from operations ...... 1.37 3.90 (0.12) 1.14 1.82 (0.42)
---------- ---------- -------- ---------- ---------- ----------
Distributions:
Dividends from net investment income ...... 0.00 0.00 (0.02) (0.28) (0.43) (0.34)
Dividends in excess of net investment
income .................................. (0.19) 0.00 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... (0.25) (0.51) 0.00 (0.10) 0.00 0.00
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- -------- ---------- ---------- ----------
Total distributions ...................... (0.44) (0.51) (0.02) (0.38) (0.43) (0.34)
---------- ---------- -------- ---------- ---------- ----------
Net asset value, end of period .............. 14.18 $ 13.25 $ 9.86 $ 11.39 $ 10.63 $ 9.24
========== ========== ======== ========== ========== ==========
Total return (a) ............................ 10.45% 38.02% (1.26%) 10.72% 19.80% (5.73%)
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... 220,552 $ 158,534 $ 38,826 $ 49,331 $ 31,114 $ 19,422
Ratio of expenses to average net
assets (b) .............................. 0.98% 1.07% 1.00% 0.97% 0.97% 1.00%
Ratio of net investment income (loss)
to average net assets (b) ............... (0.10%) (0.48%) (0.20%) 3.14% 4.38% 4.27%
Ratio of commissions paid to number of
shares .................................. 7.08% N/A N/A 0.24% N/A N/A
Portfolio turnover rate (a) ............... 101.28% 108.04% 89.73% 76.90% 98.55% 57.73%
<FN>
* The above table illustrates the change for a share outstanding computed
using average shares outstanding throughout each period. See Notes to
Financial Highlights on page 66 and Note 6.
- ----------
</FN>
</TABLE>
65
<PAGE>
WRL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS*
For the period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TACTICAL
ASSET
UTILITY ALLOCATION
PORTFOLIO PORTFOLIO
DECEMBER 31 DECEMBER 31
-------------------------------------- ------------------------
1996 1995 1994(e) 1996 1995(f)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 11.12 $ 9.30 $ 10.00 $ 11.49 $ 10.00
Income from operations:
Net investment income (loss) .............. 0.42 0.46 0.43 0.33 0.41
Net realized and unrealized gain
(loss) on investments ................... 0.87 1.93 (0.70) 1.33 1.93
---------- ---------- ---------- ---------- ----------
Total income (loss) from operations ...... 1.29 2.39 (0.27) 1.66 2.34
---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net investment income ...... (0.33) (0.46) (0.43) (0.30) (0.41)
Dividends in excess of net investment
income .................................. 0.00 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... (0.32) (0.11) 0.00 (0.24) (0.44)
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ----------
Total distributions ...................... (0.65) (0.57) (0.43) (0.54) (0.85)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period .............. $ 11.76 $ 11.12 $ 9.30 $ 12.61 $ 11.49
========== ========== ========== ========== ==========
Total return (a) ............................ 11.64% 25.25% (4.58%) 14.42% 20.09%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... $ 38,115 $ 24,607 $ 10,482 $ 206,172 $ 120,531
Ratio of expenses to average net
assets (b) .............................. 1.00% 1.00% 1.00% 0.90% 0.93%
Ratio of net investment income (loss)
to average net assets (b) ............... 3.73% 4.56% 5.36% 2.78% 3.76%
Ratio of commissions paid to number of
shares .................................. 4.33% N/A N/A 0.50% N/A
Portfolio turnover rate (a) ............... 68.53% 78.34% 36.13% 98.97% 38.68%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MERIDAN/
C.A.S.E. INVESCO
GROWTH GLOBAL SECTOR VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
DECEMBER 31 DECEMBER 31 DECEMBER 31
------------------------ ------------- ------------
1996 1995(g) 1996(h) 1996(h)
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 11.66 $ 10.00 $ 10.00 $ 10.00
Income from operations:
Net investment income (loss) .............. 0.12 0.12 0.06 0.10
Net realized and unrealized gain
(loss) on investments ................... 1.92 2.49 0.55 1.23
---------- ---------- ---------- ----------
Total income (loss) from operations ...... 2.04 2.61 0.61 1.33
---------- ---------- ---------- ----------
Distributions:
Dividends from net investment income ...... (0.05) (0.12) (0.02) (0.04)
Dividends in excess of net investment
income .................................. 0.00 0.00 0.00 0.00
Distributions from net realized gains
on investments .......................... (0.23) (0.83) (0.04) (0.02)
Distributions in excess of net realized
gains on investments .................... 0.00 0.00 0.00 0.00
---------- ---------- ---------- ----------
Total distributions ...................... (0.28) (0.95) (0.06) (0.06)
---------- ---------- ---------- ----------
Net asset value, end of period .............. $ 13.42 $ 11.66 $ 10.55 $ 11.27
========== ========== ========== ==========
Total return (a) ............................ 17.50% 20.65% 6.08% 13.19%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .......................... $ 26,560 $ 2,578 $ 6,986 $ 49,394
Ratio of expenses to average net
assets (b) .............................. 1.00% 1.00% 2.37% 1.00%
Ratio of net investment income (loss)
to average net assets (b) ............... 0.94% 1.02% 0.62% 0.89%
Ratio of commissions paid to number of
shares .................................. 6.04% N/A 3.13% 6.96%
Portfolio turnover rate (a) ............... 160.27% 121.62% 27.58% 7.93%
<FN>
* The above table illustrates the change for a share outstanding computed
using average shares outstanding throughout each period. See Notes to
Financial Highlights below and Note 6.
NOTES TO FINANCIAL HIGHLIGHTS
(a) For periods of less than one year the total return and portfolio turnover
rate are not annualized.
(b) For periods of less than one year the ratio of expenses to average net
assets and the ratio of net investment income (loss) to average net assets
are annualized.
(c) The inception of this portfolio was December 3, 1992.
(d) The inception of this portfolio was March 1, 1993.
(e) The inception of this portfolio was March 1, 1994.
(f) The inception of this portfolio was January 3, 1995.
(g) The inception of this portfolio was May 1, 1995.
(h) The inception of this portfolio was May 1, 1996.
- ----------
</FN>
</TABLE>
The notes to the financial statements are an integral part of this report.
66
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 1996
NOTE 1--ORGANIZATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
The WRL Series Fund, Inc. ("Fund") is a diversified, open-end, investment
management company registered under the Investment Company Act of 1940, as
amended. The Fund was incorporated on August 21, 1985 as a Maryland
corporation and commenced operations with three Portfolios on October 2,
1986: Money Market, Bond, and Growth (each with different investment
objectives). From inception of the Fund until June 30, 1992, shares were sold
exclusively to the WRL Series Life Account (the "Life Account") and the WRL
Series Annuity Account (the "Annuity Account"), collectively called the
Separate Accounts of Western Reserve Life Assurance Co. of Ohio ("WRL"), to
fund benefits under variable universal life insurance policies and variable
annuity contracts issued by WRL.
Since our initial three Portfolio offerings, additional Portfolios have
been added.
PORTFOLIO INCEPTION
- --------- ---------
Short-to-Intermediate Government December 3, 1992
Global December 3, 1992
Equity-Income March 1, 1993
Emerging Growth March 1, 1993
Aggressive Growth March 1, 1994
Balanced March 1, 1994
Utility March 1, 1994
Tactical Asset Allocation January 3, 1995
C.A.S.E. Growth May 1, 1995
Meridian/INVESCO Global Sector May 1, 1996
Value Equity May 1, 1996
On May 1, 1996, WRL supplied seed capital as follows:
PORTFOLIO CONTRIBUTION
- --------- ------------
Meridian/INVESCO Global Sector $ 1,000,000
Value Equity $ 500,000
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
A. VALUATION OF INVESTMENT
The Board of Directors has determined that the most appropriate method for
valuing the securities of the Money Market Portfolio is the amortized cost
basis. Under this method, the net asset value of the Money Market
Portfolio shares is expected to remain at a constant $1.00 per share,
although there can be no assurance that this will be achieved.
Securities held by the remaining Portfolios are valued at market value,
except for short-term debt securities. Short-term debt securities maturing
in 60 days or less are valued on the amortized cost basis, which
approximates market value. Stocks are valued at the latest sale price on
the last business day of the fiscal period and reported by the principal
securities exchange on which the issue is traded or, if no sale is
reported for a stock, the latest bid price is used. Bonds are valued using
prices quoted by a major dealer in bonds which offers a pricing service.
Certain pricing methodologies, such as matrix pricing of bonds, may
differ. Securities for which quotations may not be readily available are
valued as determined in good faith in accordance with procedures
established by and under the general supervision of the Fund's Board of
Directors.
The value of foreign securities are translated into U.S. dollars using
foreign exchange spot rates.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Security gains and
losses are calculated on the first-in, first-out basis for both tax and
financial reporting purposes. Dividend income is recorded on the
ex-dividend date, and interest income, including amortization of bond
premium and accretion of discount, is accrued daily. Dividend income on
foreign securities is recorded net of foreign tax expense.
The accounting records of the Fund are maintained in U.S. dollars. For
transactions denominated in a currency other than the U. S. dollar,
purchases and sales of securities, income received, and expenses paid are
translated into U.S. dollars at the foreign exchange spot rate on the date
the transaction is recorded. Currency gain and loss is also calculated
67
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 1 (CONTINUED)
on payables and receivables that are denominated in foreign currencies.
The payables and receivables are generally related to security
transactions and income.
The unrealized gain or loss on forward foreign currency contracts is due
to the difference between the foreign exchange contract rate and the
foreign exchange forward rate applicable to that contract at the end of
the period. This gain or loss becomes realized when the contract is closed
or settled.
Futures contracts and options are valued based upon daily settlement
prices with the fluctuations in value recorded as unrealized gains and
losses. These gains and losses become realized when the position is
closed. The risks associated with the use of options and futures contracts
involve the possibilities of an illiquid market and an imperfect
correlation between the value of the instrument and the underlying
security.
C. SECURITIES LENDING
At December 31, 1996, securities with an aggregate market value of
$288,344,273 had been loaned under agreements whereby the Fund received
cash collateral in the amount of $299,516,734. The Fund derives income
from its securities lending activities. During the year ended December 31,
1996, the following amounts of income, net of related expenses, resulted
from securities lending activities:
PORTFOLIO MARKET VALUE INCOME
--------- ------------ ------
Bond $ 22,430,178 $ 19,016
Growth 98,439,509 582,588
Short-to-Intermediate
Government -- 1,006
Global 57,629,450 178,201
Equity-Income 7,771,550 11,698
Emerging Growth 68,291,990 182,828
Aggressive Growth 11,575,037 37,128
Balanced 5,567,288 3,673
Utility 3,003,848 4,016
Tactical Asset Allocation 13,635,423 6,280
D. FEDERAL INCOME TAXES
It is the Fund's policy to distribute substantially all of its taxable
income and capital gains to its shareholders and otherwise qualify as a
regulated investment company under the Internal Revenue Code. Pursuant to
Code Section 4982(f), regulated investment companies serving as funding
vehicles for life insurance company separate accounts are not subject to
excise tax distribution requirements. Accordingly, no provision for
Federal income taxes has been made.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for such items as wash sales, foreign currency
transactions, net operating losses and capital loss carryforwards.
Reclassifications between undistributed net invest-ment income (UNII) and
undistributed net realized capital gains (UNCG) were made to appropriately
conform financial accounting and tax treatment of dividend distributions.
Net investment income, net realized gains and net assets were not affected
by these reclassifications. The Portfolios and the amounts of the
reclassifications are as follows:
PORTFOLIO UNII UNCG
--------- ---- ----
Growth $ 2,784,807 $(2,784,807)
Short-to-Intermediate Government (1,587) 1,587
Global 6,635,859 (6,635,859)
Emerging Growth (305) 305
Aggressive Growth 2,670,489 (2,670,489)
Utility (790) 790
Tactical Asset Allocation 250,000 (250,000)
C.A.S.E. Growth 5,002 (5,002)
Meridian/INVESCO Global Sector 2,541 (2,541)
In addition, reclassifications were made in the Emerging Growth and
Aggressive Growth Portfolios for $891,925 and $191,022, respectively,
between undistributed net investment income and additional paid-in
capital.
E. DIVIDENDS AND DISTRIBUTIONS
Dividends of the Money Market Portfolio are declared daily and reinvested
monthly. Dividends of the remaining Portfolios are typically declared and
reinvested semi-annually, while capital gain distributions are typically
declared and reinvested
68
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 1 (CONTINUED)
annually. Dividends and distributions of the Fund are generally paid to
and reinvested by the Separate Accounts on the next business day after
declaration.
F. ORGANIZATION COSTS
All costs incurred in connection with the formation of the Fund and its
Portfolios were paid by WRL.
G. EXPENSE OFFSET ARRANGEMENT
Fees paid indirectly, in the accompanying Statement of Operations,
represent reductions in custody expenses in lieu of interest income earned
on incidental uninvested cash balances. Such fees have been added to
custody fees to reflect total Fund expenses.
NOTE 2--INVESTMENT ADVISORY AND
TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY
The Fund has entered into annually renewable investment advisory
agreements for each Portfolio with WRL as investment adviser. The Fund
pays to WRL, and charges to each respective Portfolio, advisory fees each
month at the following annual rate expressed as a percentage of the
average daily net assets of the respective Portfolio:
PERCENT OF
PORTFOLIO ASSETS
--------- ------
Money Market .40%
Bond .50%
Growth .80%
Short-to-Intermediate Government .60%
Global .80%
Equity-Income .80%
Emerging Growth .80%
Aggressive Growth .80%
Balanced .80%
Utility .75%
Tactical Asset Allocation .80%
C.A.S.E. Growth .80%
Meridian/INVESCO Global Sector 1.10%
Value Equity .80%
WRL has entered into a sub-advisory agreement with various management
companies. Pursuant to each agreement, fifty percent of the advisory fee
paid to WRL is due the respective management company for the following
Portfolios:
PORTFOLIO INVESTMENT MANAGER
--------- ------------------
Money Market J.P. Morgan Investment
Management Inc.
Bond Janus Capital Corporation
("JCC")
Growth JCC
Global JCC
Equity-Income Luther King Capital
Management Corp.
Aggressive Fred Alger Management, Inc.
Growth
C.A.S.E. Growth C.A.S.E. Management, Inc.
Effective May 1, 1996, the investment manager for the Money Market
Portfolio changed from Janus Capital Corporation to J.P. Morgan Investment
Management Inc. As a result of this change the annual advisory fee rate
was reduced from .50% to .40%.
Pursuant to other sub-advisory agreements, fifty percent of the advisory
fee paid to WRL less fifty percent of any expense reimbursement is due the
respective management company for the following portfolios:
PORTFOLIO INVESTMENT MANAGER
--------- ------------------
Short-to-Intermediate AEGON USA Investment
Government Management, Inc.
("AEGON Mgmt.")
Emerging Growth Van Kampen American
Capital Asset
Management, Inc.
Balanced AEGON Mgmt.
Tactical Asset Dean Investment
Allocation Associates
Value Equity NWQ Investment
Management, Inc.
Pursuant to the Utility Portfolio agreement, 0.50% of the first $30
million of average daily net assets, 0.35% of the next $20 million of
average daily net assets and 0.25% of average daily net assets in excess
of $50 million, is payable to Federated Investment Counseling.
Pursuant to the Meridian/INVESCO Global Sector Portfolio agreement,
Meridian Investment Manage-ment Corporation receives monthly compensation
from the investment adviser, as a percentage of the
69
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 2 (CONTINUED)
Portfolio's average daily net assets, at an annual rate of 0.30% of the
first $100 million of net assets and 0.35% of net assets in excess of $100
million. For its services, INVESCO Global Asset Management Limited
receives monthly compensation from the investment adviser, as a percentage
of the Portfolio's average daily net assets, at an annual rate of 0.40% of
the first $100 million of average daily net assets and 0.35% of net assets
in excess of $100 million.
WRL currently voluntarily waives its advisory fees to the extent a
Portfolio's normal operating expenses exceeds the percentage of average
daily net assets on an annualized basis of the Portfolio as listed below:
PERCENT OF
PORTFOLIO NET ASSETS
--------- ----------
Money Market .70%
Bond .70%
Growth 1.00%
Short-to-Intermediate Government 1.00%
Global 1.00%
Equity-Income 1.00%
Emerging Growth 1.00%
Aggressive Growth 1.00%
Balanced 1.00%
Utility 1.00%
Tactical Asset Allocation 1.00%
C.A.S.E. Growth 1.00%
Value Equity 1.00%
The Portfolios are charged for expenses that specifically relate to their
individual operations. All other operating expenses of the Fund that are
not attributable to a specific portfolio are allocated based upon the
proportionate number of policy and contract owners of the underlying
sub-accounts. WRL directly incurs and pays these operating expenses
relating to the Fund, which subsequently reimburses WRL. All normal
operating expenses that exceed the established expense limit set forth
above will be borne by WRL.
At a Special Meeting of Fund shareholders on December 16, 1996, a change
in investment adviser from WRL to WRL Investment Management, Inc. (WRL
Management) was approved, effective January 1, 1997. At the same meeting,
shareholders also approved new investment advisory agreements ("New
Advisory Agreements") between WRL Management and the Fund, on behalf of
each Portfolio. The terms of the New Advisory Agreements are substantially
the same as the terms of the current advisory agreements between WRL and
each Portfolio. At the same Special Meeting, Fund shareholders also
approved, effective January 1, 1997, new investment sub-advisory
agreements ("New Sub-Advisory Agreements) between the Fund, on behalf of
each Portfolio, and each respective sub-adviser for each Portfolio. The
terms of the New Sub-Advisory Agreements are substantially the same as the
terms of the current sub-advisory agreements. WRL Management is a direct,
wholly-owned subsidiary of WRL.
B. AFFILIATES
WRL and AEGON Mgmt. are indirect wholly-owned subsidiaries of AEGON USA,
Inc., which is an indirect wholly-owned subsidiary of AEGON nv, a
Netherlands corporation.
The Sub-Advisors may occasionally place portfolio business with affiliated
brokers of the Investment Advisor or a Sub-Advisor. Brokerage commissions
were paid to affiliated brokers of the Investment Advisor or the
Sub-Advisor during the year ended December 31, 1996, as follows:
PORTFOLIO COMMISSIONS
--------- -----------
Utility $ 60
Aggressive Growth $ 329,194
C. PLAN OF DISTRIBUTION
Effective January 1, 1997, the Fund has adopted a Plan of Distribution
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended ("Distribution Plan") and pursuant to the Plan, has entered into a
Distribution Agreement with InterSecurities, Inc. ("ISI").
Under the Distribution Plan, the Fund, on behalf of the Portfolios, is
authorized to pay to various service providers, as direct payment for
expenses incurred in connection with the distribution of a Portfolio's
shares, amounts equal to actual expenses associated with distributing such
Portfolio's shares, up to a maximum rate of 0.15% on an annualized basis
of the average daily net assets.
70
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 2 (CONTINUED)
ISI has determined that it will not seek payment by the Fund of
distribution expenses with respect to
any Portfolio during the fiscal year ending December 31, 1997. Prior to
ISI seeking reimbursement, Policy and Contract Owners will be notified in
advance.
D. DEFERRED COMPENSATION PLAN
Each eligible Director of the WRL Series Fund, Inc. who is not an officer
or affiliated person as defined under the Investment Company Act of 1940,
as amended, may elect to participate in the Deferred Compensation Plan for
Directors of the WRL Series Fund, Inc. (the "Plan"). Under the Plan, such
Directors may elect to defer payment of a percentage of their total fees
earned as a Director of the Fund. These deferred amounts may be invested
in any Portfolio of the IDEX Series Fund. Invested plan amounts are
included in other assets. The total liability for deferred compensation to
Directors under the Plan at December 31, 1996, is included in other
liabilities in the accompanying Statement of Assets and Liabilities.
71
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 3--SECURITIES TRANSACTIONS
Securities transactions are summarized as follows:
<TABLE>
<CAPTION>
SHORT-TO-
MONEY INTERMEDIATE
MARKET BOND GROWTH GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
For the year ended December 31, 1996:
Purchase of securities:
Long-term excluding U.S. Government ............ $ 2,997,906 $ 44,537,785 $ 667,260,041 $ 3,023,124
U.S. Government securities ..................... 1,085,659,284 223,639,382 1,426,399,933 54,616,920
Proceeds from maturities and sales of securities:
Long-term excluding U.S. Government ............ 0 40,365,979 503,958,753 1,628,226
U.S. Government securities ..................... 1,067,875,318 221,553,101 1,334,539,303 39,763,434
</TABLE>
<TABLE>
<CAPTION>
EQUITY- EMERGING AGGRESSIVE
GLOBAL INCOME GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
For the year ended December 31, 1996:
Purchase of securities: $517,669,490 $229,621,379 $ 355,320,165 $220,403,683
Long-term excluding U.S. Government ............ 71,702,152 22,706,985 5,821,863,005 0
U.S. Government securities .....................
Proceeds from maturities and sales of securities:
Long-term excluding U.S. Government ............ 362,361,319 125,605,749 280,701,399 179,760,209
U.S. Government securities ..................... 81,958,836 21,039,297 6,081,167,000 0
</TABLE>
<TABLE>
<CAPTION>
TACTICAL
ASSET C.A.S.E
BALANCED UTILITY ALLOCATION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
For the year ended December 31, 1996:
Purchase of securities:
Long-term excluding U.S. Government ............ $ 24,958,127 $31,754,087 $ 110,153,767 $ 30,146,788
U.S. Government securities ..................... 17,840,688 0 53,047,246 0
Proceeds from maturities and sales of securities:
Long-term excluding U.S. Government ............ 18,562,835 20,421,870 68,830,238 13,395,262
U.S. Government securities ..................... 10,396,307 0 68,341,148 0
</TABLE>
<TABLE>
<CAPTION>
MERIDIAN/
INVESCO VALUE
GLOBAL SECTOR EQUITY
PORTFOLIO (A) PORTFOLIO(A)
------------- ------------
<S> <C> <C>
For the period ended December 31, 1996:
Purchase of securities:
Long-term excluding U.S. Government ............ $ 4,941,216 $ 40,678,054
U.S. Government securities ..................... 1,987,236 0
Proceeds from maturities and sales of securities:
Long-term excluding U.S. Government ............ 609,711 1,456,312
U.S. Government securities ..................... 295,054 0
</TABLE>
(a) The inception of this portfolio was May 1, 1996.
72
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 4--FEDERAL INCOME TAX MATTERS
The income, expenses, gains and losses on security transactions attributed
to each Portfolio for accounting purposes are also attributed to that
Portfolio for Federal income tax purposes. Gains and losses on forward
currency contracts, if applicable, are treated as ordinary income for Federal
income tax purposes pursuant to Section 988 of the Internal Revenue Code.
Each Portfolio has and will continue to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, and
accordingly, has made or intends to make sufficient distributions of net
investment income and net realized gains, if any, to relieve it from all
Federal and state income taxes and Federal excise taxes.
The net capital loss carryforwards noted below as of December 31, 1996, if
applicable, are available to offset future realized capital gains through the
periods listed. Each portfolio will elect to treat the net capital losses
incurred in the two month period ended December 31, 1996, (Post-October
Losses Deferred), if applicable, as having been incurred in the following
fiscal year.
<TABLE>
<CAPTION>
PRIOR YEAR
POST-OCTOBER NET CAPITAL LOSS
NET CAPITAL LOSSES CARRYFORWARD
PORTFOLIO GAINS DEFERRED UTILIZED
- --------- ----- -------- --------
<S> <C> <C> <C>
Money Market ........................... $ 0 $ 0 $ 0
Bond ................................... 0 0 1,587,858
Growth ................................. 88,064,810 0 0
Short-to-Intermediate Government ...... 0 4,297 65,287
Global ................................. 44,910,837 50,169 0
Equity-Income .......................... 13,598,753 0 0
Emerging Growth ........................ 21,005,379 0 0
Aggressive Growth ...................... 4,564,665 0 0
Balanced ............................... 852,130 221,935 241,574
Utility ................................ 1,509,572 0 0
Tactical Asset Allocation ............. 5,359,275 0 0
C.A.S.E. Growth ........................ 629,925 0 0
Meridian/INVESCO Global Sector ........ 40,098 0 0
Value Equity ........................... 86,461 13,422 0
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996 NET CAPITAL LOSS
NET CAPITAL LOSS CARRYFORWARD
CARRYFORWARD AVAILABLE THROUGH:
------------ ------------------
<S> <C> <C>
Money Market ............................ $ 0 N/A
Bond .................................... (5,921,207) December 31, 2002
Growth .................................. 0 N/A
Short-to-Intermediate Government ........ (354,392) $106,652 through December 31, 2002
$247,740 through December 31, 2003
Global .................................. 0 N/A
Equity-Income ........................... 0 N/A
Emerging Growth ......................... 0 N/A
Aggressive Growth ....................... 0 N/A
Balanced ................................ 0 N/A
Utility ................................. 0 N/A
Tactical Asset Allocation ............... 0 N/A
C.A.S.E. Growth ......................... 0 N/A
Meridian/INVESCO Global Sector .......... 0 N/A
Value Equity ............................ 0 N/A
</TABLE>
73
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 4 (CONTINUED)
The aggregate cost of investments and composition of unrealized
appreciation and depreciation for Federal income tax purposes as of December
31, 1996, are as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO COST BASIS APPRECIATION DEPRECIATION (DEPRECIATION)
- --------- ---------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Money Market ............................ $ 121,459,942 $ 0 $ 0 $ 0
Bond .................................... 94,955,112 494,152 797,501 (303,349)
Growth .................................. 1,136,831,039 425,137,980 24,587,834 400,550,146
Short-to-Intermediate Government ....... 25,672,942 239,120 124,051 115,069
Global .................................. 436,102,015 99,673,576 10,809,744 88,863,832
Equity-Income ........................... 337,451,103 55,994,201 2,427,359 53,566,842
Emerging Growth ......................... 322,516,018 111,790,327 5,784,329 106,005,998
Aggressive Growth ....................... 188,545,519 40,113,922 7,313,198 32,800,724
Balanced ................................ 44,151,798 5,388,695 510,823 4,877,872
Utility ................................. 35,712,323 3,800,453 331,826 3,468,627
Tactical Asset Allocation .............. 189,308,817 18,286,091 2,188,112 16,097,979
C.A.S.E. Growth ......................... 19,785,427 2,101,782 540,624 1,561,158
Meridian/INVESCO Global Sector ......... 6,064,698 510,905 240,120 270,785
Value Equity ............................ 46,269,019 3,806,929 481,655 3,325,274
</TABLE>
NOTE 5--COMMITMENTS
The Fund is authorized to enter into foreign exchange contracts for the
purpose of hedging against foreign exchange risk arising from the Fund's
investment in securities denominated in foreign currencies. All foreign
exchange contracts are marked-to-market daily at the applicable foreign
exchange rates and the resulting unrealized gains or losses recorded in the
Fund's financial statements. These gains and losses are realized when the
contract is extinguished either by entering into a closing transaction or by
delivery of the currency. The risks that may arise from these contracts are
the potential inability of the counterparties to meet the terms of their
contracts, and from unanticipated movements in the currency's value relative
to the U.S. dollar.
The Growth and Global Portfolios entered into forward foreign currency
contracts, which obligate the Fund to deliver currencies at specified future
dates. The open contracts at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 NET
VALUE IN UNREALIZED
SETTLEMENT U.S. DOLLARS APPRECIATION
CURRENCY BOUGHT (SOLD) DATE BOUGHT (SOLD) (DEPRECIATION)
- -------- ------------- ---- ------------- --------------
<S> <C> <C> <C> <C>
GROWTH PORTFOLIO
German Deutschemark (8,500,000) 01/27/97 $ (5,537,520) $238,899
German Deutschemark (19,713,000) 01/17/97 (12,833,764) 524,642
German Deutschemark 8,500,000 01/27/97 5,537,520 (87,968)
German Deutschemark 4,713,000 01/17/97 3,068,307 (45,873)
German Deutschemark 3,000,000 01/17/97 1,953,091 (34,322)
German Deutschemark 4,000,000 01/17/97 2,604,122 (45,569)
German Deutschemark 5,500,000 01/17/97 3,580,668 (57,380)
German Deutschemark 2,500,000 01/17/97 1,627,576 (26,629)
------------ --------
Total Growth Portfolio $ 0 $465,800
============ ========
</TABLE>
74
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 5 (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 NET
VALUE IN UNREALIZED
SETTLEMENT U.S. DOLLARS APPRECIATION
CURRENCY BOUGHT (SOLD) DATE BOUGHT (SOLD) (DEPRECIATION)
- -------- ------------- ---- ------------- --------------
<S> <C> <C> <C> <C>
GLOBAL PORTFOLIO
Belgian Franc (13,679,512) 01/08/97 $ (431,571) $ (2,316)
Belgian Franc (6,367,677) 01/08/97 (200,892) (1,322)
Belgian Franc (2,323,649) 01/08/97 (73,308) (717)
Belgian Franc (15,996,769) 01/08/97 (504,677) (5,465)
Belgian Franc (37,580,535) 01/08/97 (1,185,618) (10,124)
Swiss Franc (10,000,000) 01/16/97 (7,495,090) 580,562
Swiss Franc (5,854,000) 05/12/97 (4,440,823) 267,538
Swiss Franc (18,000,000) 03/04/97 (13,554,880) 58,382
Swiss Franc (3,037,064) 01/03/97 (2,273,132) (24,164)
German Deutschemark (14,000,000) 01/17/97 (9,114,427) 229,496
German Deutschemark (17,372,000) 01/24/97 (11,315,081) 543,101
German Deutschemark (1,000,000) 03/04/97 (652,947) (11,288)
Finnish Markka (13,400,000) 01/27/97 (2,917,420) 66,326
Finnish Markka (320,616) 01/02/97 (69,677) (627)
French Franc (7,425,000) 03/11/97 (1,438,210) (17,973)
British Pound (1,580,000) 01/27/97 (2,703,122) (251,673)
British Pound (2,200,000) 01/17/97 (3,764,626) (358,366)
British Pound 1,580,000 01/27/97 2,703,122 109,094
British Pound 2,200,000 01/17/97 3,764,626 151,742
British Pound (23,276) 01/02/97 (39,842) (878)
British Pound (36,818) 01/02/97 (63,022) (1,389)
British Pound (77,683) 01/03/97 (132,970) (3,006)
British Pound (187,889) 01/07/97 (321,581) (3,894)
Japanese Yen (445,000,000) 01/17/97 (3,851,447) 338,760
Japanese Yen (800,000,000) 01/16/97 (6,922,930) 416,081
Japanese Yen (200,000,000) 03/11/97 (1,743,755) 43,204
Japanese Yen (649,000,000) 03/11/97 (5,658,486) 136,675
Japanese Yen (350,000,000) 06/17/97 (3,095,227) 59,916
Japanese Yen (45,463,159) 01/06/97 (392,845) 3,245
Japanese Yen (11,352,331) 01/06/97 (98,095) 810
Japanese Yen (30,254,962) 01/07/97 (261,470) (120)
Japanese Yen (14,442,701) 01/07/97 (124,817) (57)
Japanese Yen (5,014,612) 01/08/97 (43,344) (71)
Swedish Krona (1,344,906) 01/02/97 (197,348) (1,797)
Swedish Krona (593,037) 01/02/97 (87,021) (792)
Swedish Krona (99,000,000) 01/27/97 (14,543,382) 553,373
Swedish Krona (30,000,000) 01/27/97 (4,407,085) 166,921
Swedish Krona (544,491) 01/03/97 (79,901) (749)
Swedish Krona (646,925) 01/07/97 (94,950) (1,004)
South Africa Rand (4,090,000) 11/03/97 (874,679) (91,454)
------------ ----------
Total Global Portfolio $(98,701,950) $2,935,980
============ ==========
</TABLE>
75
<PAGE>
WRL SERIES FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 6--FINANCIAL HIGHLIGHTS
The total return set forth in "Financial Highlights" reflects the advisory
fee and all other portfolio expenses and includes reinvestment of dividends
and capital gains; it does not reflect the charges against the corresponding
sub-accounts or the charges and deductions under the applicable Policies or
Annuity Contracts. Where a Portfolio's period from inception is less than one
year, the total return shown is not annualized.
The ratio of expenses to average net assets in the Financial Highlights is
net of the advisory fee waiver (see Note 2). Without the advisory fee waived
by WRL the ratio for each period presented would be as follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------
PORTFOLIO 1996 1995 1994 1993 1992
- --------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Money Market ........................................ * * * * *
Bond ................................................ * * * * *
Growth .............................................. * * * * *
Short-to-Intermediate Government ................... * * * 1.02% 1.41%
Global .............................................. * * * * *
Equity-Income ....................................... * * * 1.12% **
Emerging Growth ..................................... * * * 1.16% **
Aggressive Growth ................................... * * 1.18% ** **
Balanced ............................................ * * 1.34% ** **
Utility ............................................. * 1.08% 1.90% ** **
Tactical Asset Allocation .......................... * * * ** **
C.A.S.E. Growth ..................................... 1.64% 4.15% ** ** **
Meridian/INVESCO Global Sector ..................... N/A ** ** ** **
Value Equity ........................................ 1.03% ** ** ** **
</TABLE>
* No waiver--portfolio did not exceed expense limitations.
** Portfolio was not in existence during this period.
76
<PAGE>
WRL SERIES FUND, INC.
- --------------------------------------------------------------------------------
SUPPLEMENTARY INFORMATION
Section 270.30d-1 under the Investment Company Act of 1940, as amended,
titled "Reports to Stockholders of Management Companies," requires regulated
investment companies to report on all subject matter put to a vote of the
shareholders and provide final results. In adherence to this amendment, WRL
solicited a vote by the policyholders for a new investment sub-advisory
agreement for the Emerging Growth Portfolio between WRL and Van Kampen
American Capital Asset Management, Inc. At a special
shareholders/policyholders meeting on October 29, 1996, the resolution was
adopted, 94% For, 1% Against, and 5% Abstain.
In adherence to this amendment, WRL solicited a vote by the policyholders
for:
1. A new investment advisory agreement between the fund, on behalf of each
portfolio, and WRL Investment Management, Inc., effective January 1, 1997;
2. A new investment sub-advisory agreement for each Portfolio between WRL
Management, Inc., on behalf of such Portfolio, and the Portfolio's current
sub-adviser(s), effective January 1, 1997;
3. A distribution plan pursuant to rule 12b-1 under the Investment
Company Act of 1940, as amended, pursuant to which the Portfolios may
reimburse InterSecurities, Inc., ("ISI") which will act as Distributor of the
Fund's shares for distribution related expenses incurred by ISI in the
performance of its duties as Distributor pursuant to a distribution agreement
between ISI and the Fund.
At a special shareholders/policyholders meeting on December 16, 1996 the
results of the resolution were as follows:
PROPOSAL 1
--------------------------
PORTFOLIOS FOR AGAINST ABSTAIN
- ---------- --- ------- -------
Money Market 88% 7% 5%
Bond 90% 5% 5%
Growth 89% 6% 5%
Short-to-Intermediate Government 88% 6% 6%
Global 89% 7% 4%
Equity-Income 89% 8% 3%
Emerging Growth 91% 5% 4%
Aggressive Growth 90% 6% 4%
Balanced 91% 6% 3%
Utility 91% 5% 4%
Tactical Asset Allocation 91% 6% 3%
C.A.S.E. Growth 95% 1% 4%
C.A.S.E. Growth & Income 98% 2% 0%
C.A.S.E. Quality Growth 88% 6% 6%
Meridian/INVESCO Global Sector 93% 6% 1%
Meridian/INVESCO US Sector 100% 0% 0%
Meridian/INVESCO Foreign Sector 100% 0% 0%
Value Equity 90% 8% 2%
77
<PAGE>
WRL SERIES FUND, INC.
- --------------------------------------------------------------------------------
SUPPLEMENTARY INFORMATION (CONTINUED)
PROPOSAL 2
--------------------------
PORTFOLIOS FOR AGAINST ABSTAIN
- ---------- --- ------- -------
Money Market 88% 6% 6%
Bond 90% 5% 5%
Growth 89% 6% 5%
Short-to-Intermediate Government 88% 6% 6%
Global 89% 7% 4%
Equity-Income 89% 7% 4%
Emerging Growth 91% 5% 4%
Aggressive Growth 90% 6% 4%
Balanced 91% 5% 4%
Utility 91% 5% 4%
Tactical Asset Allocation 91% 6% 3%
C.A.S.E. Growth 95% 1% 4%
C.A.S.E. Growth & Income 98% 2% 0%
C.A.S.E. Quality Growth 88% 12% 0%
Meridian/INVESCO Global Sector (a) 94% 5% 1%
Meridian/INVESCO Global Sector (b) 93% 6% 1%
Meridian/INVESCO US Sector (a) 74% 0% 26%
Meridian/INVESCO US Sector (b) 100% 0% 0%
Meridian/INVESCO Foreign Sector (a) 100% 0% 0%
Meridian/INVESCO Foreign Sector (b) 100% 0% 0%
Value Equity 90% 8% 2%
(a) Sub-advisory agreement between the investment advisor and INVESCO Global
Asset Management Limited.
(b) Sub-advisory agreement between the investment advisor and Meridian
Investment Management Corporation.
PROPOSAL 3
--------------------------
PORTFOLIOS FOR AGAINST ABSTAIN
- ---------- --- ------- -------
Money Market 84% 9% 7%
Bond 89% 6% 5%
Growth 87% 8% 5%
Short-to-Intermediate Government 89% 7% 4%
Global 85% 11% 4%
Equity-Income 84% 12% 4%
Emerging Growth 88% 8% 4%
Aggressive Growth 88% 8% 4%
Balanced 87% 9% 4%
Utility 87% 9% 4%
Tactical Asset Allocation 86% 11% 3%
C.A.S.E. Growth 85% 11% 4%
C.A.S.E. Growth & Income 98% 2% 0%
C.A.S.E. Quality Growth 88% 12% 0%
Meridian/INVESCO Global Sector 88% 11% 1%
Meridian/INVESCO US Sector 100% 0% 0%
Meridian/INVESCO Foreign Sector 100% 0% 0%
Value Equity 75% 22% 3%
78
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This Page Intentionally Left Blank.
79
<PAGE>
This Page Intentionally Left Blank.
80
<PAGE>
- -----------------------------------------------------------------------------
W R L S E R I E S F U N D , I N C .
- -----------------------------------------------------------------------------
OFFICE OF THE WRL SERIES FUND
201 Highland Avenue
Largo, FL 33770-2597
1-800-851-9777
-----------------------------------
DISTRIBUTOR:
InterSecurities, Inc.
201 Highland Avenue
Largo, FL 33770-2597
-----------------------------------
FUND CUSTODIAN:
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
-----------------------------------
INVESTMENT ADVISER:
WRL Investment Management, Inc.
201 Highland Avenue
Largo, FL 33770-2957
-----------------------------------
SUB-ADVISERS:
Janus Capital Corporation AEGON USA
100 Fillmore Street Investment Management, Inc.
Denver, CO 80206 4333 Edgewood Road, N.E.
Cedar Rapids, IA 52449
Luther King Capital
Management Corporation Van Kampen American Capital
301 Commerce Street Asset Management, Inc.
Fort Worth, TX 76102 One Parkview Plaza
Oakbrook Terrace, IL 60181
Federated Investment Counseling
Federated Investors Tower Fred Alger Management, Inc.
Pittsburgh, PA 15222-3779 75 Maiden Lane
New York, NY 10038
NWQ Investment
Management Company, Inc. J.P. Morgan Investment
655 South Hope Street Management Inc.
11th Floor 522 Fifth Avenue
Los Angeles, CA 90017 New York, NY 10036
Meridian Investment Management INVESCO Global Asset
Corporation Management Limited
12835 East Arapahoe Road Rosebank, 12 Bermudiana Road
Tower II, 7th Floor Hamilton, Bermuda HM11
Englewood, CO 80112
Dean Investment Associates
C.A.S.E. Management, Inc. 2480 Kettering Tower
2255 Glades Rd. Dayton, OH 45423-2480
Suite 221-A
Boca Raton, FL 33431
-----------------------------------
INDEPENDENT ACCOUNTANTS:
Price Waterhouse LLP
1055 Broadway
Kansas City, MO 64105
<PAGE>
THIS MATERIAL IS FOR CONTRACT AND POLICY
HOLDERS' REPORTING PURPOSES ONLY AND SHALL
NOT BE USED IN CONNECTION WITH SA SOLICITATION,
OFFER OR ANY PROPOSED SALE OR PURCHASE
OF SECURITIES. THIS MATERIAL MUST BE
PRECEDED OR ACCOMPANIES BY A PROSPECTUS.
[WRL LOGO]
-----------------------------------------------------
Investment Adviser
WRL Investment Management, Inc.
Distributor: InterSecurities, Inc.
201 Highland Avenue /bullet/ Largo, Florida 33770-2597
February 1997
ACC00001 (2/97)
<PAGE>
Appendix to Electronic Format Page 1 of 4
WRL Series Fund. Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Page 1 (photo) Shown is John R. Kenney, Chairman of the Board
Page 3 (graph 1) Pie chart depicting portfolio composition as a
percentage of total portfolio net assets.
Short-term U.S. Government Obligation 15.14%
Commercial Paper 40.25%
Short-Term Obligations 4.50%
Bank Obligations 39.57%
Other 0.54%
Bar chart depicting maturity composition of the portfolio at December 31, 1996
Market Value
30 days $58,254,115
30-60 days $25,284,803
60-90 days $4,999,837
90-180 days $14,918,003
180-270 days $8,009,966
270 days to 1 year $9,993,218
more than 1 year $0
Page 4 (graph 2) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Lehman Brothers Government/Corporate Bond Index (LB) over the
same time frame.
Portfolio LB Index
Inception 10/2/86 $10,000 $10,000
Period Ended 12/31/86 $10,412 $10,310
FYE 12/31/87 $9,823 $10,540
FYE 12/31/88 $10,583 $11,340
FYE 12/31/89 $12,133 $12,960
FYE 12/31/90 $12,887 $14,030
FYE 12/31/91 $15,317 $16,290
FYE 12/31/92 $16,358 $17,530
FYE 12/31/93 $18,547 $19,460
FYE 12/31/94 $17,260 $18,780
FYE 12/31/95 $21,228 $22,390
FYE 12/31/96 $21,258 $23,040
</TABLE>
<PAGE>
Appendix to Electronic Format (continued) Page 2 of 4
WRL Series Fund. Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Page 5 (graph 3) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Standard & Poor's Index of 500 Common Stocks (S&P) over the
same time frame.
Portfolio S&P Index
Inception 10/2/86 $10,000 $10,000
Period Ended 12/31/86 $10,144 $10,560
FYE 12/31/87 $11,249 $11,110
FYE 12/31/88 $13,344 $12,940
FYE 12/31/89 $19,621 $17,040
FYE 12/31/90 $19,578 $16,511
FYE 12/31/91 $31,284 $21,542
FYE 12/31/92 $32,021 $23,183
FYE 12/31/93 $33,293 $25,519
FYE 12/31/94 $30,527 $25,856
FYE 12/31/95 $44,912 $35,572
FYE 12/31/96 $52,979 $43,740
Page 6 (graph 4) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Merrill Lynch 1-10 Year Government Bond Index (ML) over the
same time frame.
Portfolio ML Index
Inception 12/3/92 $10,000 $10,000
Period Ended 12/31/92 $10,045 $10,132
FYE 12/31/93 $10,505 $10,960
FYE 12/31/94 $10,460 $10,774
FYE 12/31/95 $11,877 $12,341
FYE 12/31/96 $12,290 $12,826
Page 7 (graph 5) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Morgan Stanley Capital International World Index (MS) over the
same time frame.
Portfolio MS Index
Inception 12/3/92 $10,000 $10,000
Period Ended 12/31/92 $10,162 $10,008
FYE 12/31/93 $13,724 $12,415
FYE 12/31/94 $13,759 $13,110
FYE 12/31/95 $16,932 $15,900
FYE 12/31/96 $21,628 $18,130
</TABLE>
<PAGE>
Appendix to Electronic Format (continued) Page 3 of 4
WRL Series Fund. Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Page 8 (graph 6) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Standard & Poor's Index of 500 Common Stocks (S&P) and Lehman
Brothers Government/Corporate Intermediate Bond
Index (LB) over the same time frame.
Portfolio S&P Index LB Index
Inception 3/1/93 $10,000 $10,000 $10,000
Period Ended 12/31/93 $11,349 $10,770 $10,490
FYE 12/31/94 $11,288 $10,912 $10,805
FYE 12/31/95 $14,072 $14,996 $12,461
FYE 12/31/96 $16,182 $18,439 $12,966
Page 9 (graph 7) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Standard & Poor's Index of 500 Common Stocks (S&P) over the
same time frame.
Portfolio S&P Index
Inception 3/1/93 $10,000 $10,000
FYE 12/31/93 $12,471 $10,770
FYE 12/31/94 $11,553 $10,912
FYE 12/31/95 $16,960 $14,996
FYE 12/31/96 $20,162 $18,439
Page 10 (graph 8) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Value Line (Arithmetic) Index (VL) and the Standard's and
Poor's Index of 500 Common Stocks (S&P) over the same time
frame.
Portfolio VL Index S&P Index
Inception 3/1/94 $10,000 $10,000 $10,000
Period Ended 12/31/94 $9,874 $9,685 $10,072
FYE 12/31/95 $13,628 $12,197 $13,857
FYE 12/31/96 $15,052 $14,609 $17,039
Page 11 (graph 9) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Standard's and Poor's Index of 500 Common Stocks (S&P) and the
Lehman Brothers Government/Corporate Intermediate Bond
Index (LB) over the same time frame.
Portfolio S&P Index LB Index
Inception 3/1/94 $10,000 $10,000 $10,000
Period Ended 12/31/94 $9,427 $10,072 $9,840
FYE 12/31/95 $11,293 $13,857 $11,348
FYE 12/31/96 $12,504 $17,039 $11,808
Page 12 (graph 10) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Dow Jones Utilities Average Index (Dow Util) and the
Standard's & Poor's Index of 500 Common Stocks (S&P) over the
same time frame.
Dow Util
Portfolio Index S&P Index
Inception 3/1/94 $10,000 $10,000 $10,000
Period Ended 12/31/94 $9,542 $9,166 $10,072
FYE 12/31/95 $11,952 $12,063 $13,857
FYE 12/31/96 $13,343 $13,065 $17,039
</TABLE>
<PAGE>
Appendix to Electronic Format (continued) Page 4 of 4
WRL Series Fund. Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Page 13 (graph 11) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Standard's and Poor's Index of 500 Common Stocks( S&P) and the
Lehman Brothers Government/Corporate Intermediate Bond
Index (LB) over the same time frame.
Portfolio S&P Index LB Index
Inception 1/3/95 $10,000 $10,000 $10,000
Period Ended 12/31/95 $12,009 $13,758 $11,533
FYE 12/31/96 $13,741 $16,917 $12,000
Page 14 (graph 12) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Wilshire 5000 Index (Wilshire) over the same time frame.
Portfolio Wilshire Index
Inception 5/1/95 $10,000 $10,000
Period Ended 12/31/95 $12,065 $12,028
FYE 12/31/96 $14,176 $14,294
Page 15 (graph 13) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Financial Times World Index (FT) and the Lehman Hutton Bond
Index (LH) over the same time frame.
Portfolio FT Index LH Index
Inception 5/1/96 $10,000 $10,000 $10,000
Period Ended 12/31/96 $10,608 $10,473 $10,811
Page 16 (graph 14) Mountain graph depicting the change in value of a
$10,000 investment in the portfolio since inception versus the
Standard & Poor's Index of 500 Common Stocks (S&P) over the
same time frame.
Portfolio S&P Index
Inception 5/1/96 $10,000 $10,000
Period Ended 12/31/96 $11,319 $11,500
</TABLE>
