SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X}
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
Commission Only (as permitted
by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c)or Rule 14a-12
WRL SERIES FUND, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
WRL SERIES FUND, INC.
201 Highland Avenue
Largo, Florida 33770
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
December 15, 1997
TO THE SHAREHOLDERS:
A special meeting of the shareholders of the Portfolios (each a
"Portfolio"; collectively the "Portfolios") of the WRL Series Fund, Inc. (the
"Fund"), will be held on Monday, December 15, 1997 at 10:00 a.m., at 201
Highland Avenue, Largo, Florida 33770, or any adjournment thereof, for the
following purposes:
GROWTH & INCOME PORTFOLIO:
(1) To approve a change to a policy of non-industry concentration with respect
to the Growth & Income Portfolio of the Fund;
BOND PORTFOLIO:
(2) To approve a new investment sub-advisory agreement between WRL Investment
Management, Inc. and AEGON USA Investment Management, Inc. with respect to the
Bond Portfolio of the Fund;
(3) To transact such other business as may properly come before the meeting or
any adjournment thereof with respect to the Growth & Income Portfolio and Bond
Portfolio of the Fund.
Please indicate your voting instructions on the enclosed voting
instruction form(s) WITH RESPECT TO EACH PORTFOLIO in which you were a
beneficial owner as of the record date; sign such voting instruction form(s);
and return it in the envelope provided, which is addressed for your convenience
and needs no postage if mailed in the United States.
In order to avoid the additional expense to the Fund of further
solicitation, we ask that you mail your voting instruction form promptly.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR VOTING INSTRUCTION FORM(S)
PROMPTLY NO MATTER HOW MANY SHARES YOU BENEFICIALLY OWN. You are entitled to
vote at the meeting and any adjournment thereof if you beneficially owned
Portfolio shares at the close of business on October 10, 1997. If you attend the
meeting, you may vote your shares in person. If you do not expect to attend the
meeting, please complete, date, sign and return the enclosed voting instruction
form(s) for each Portfolio in the postage paid envelope provided.
By Order of the Board of Directors
Thomas E. Pierpan,
ASSISTANT SECRETARY
November 3, 1997
<PAGE>
WRL SERIES FUND, INC.
GROWTH & INCOME PORTFOLIO
BOND PORTFOLIO
201 HIGHLAND AVENUE
LARGO, FLORIDA 33770
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
DECEMBER 15, 1997
This is a Proxy Statement for the Growth & Income Portfolio and the
Bond Portfolio (each, a "Portfolio," and collectively, the "Portfolios") of the
WRL Series Fund, Inc. (the "Fund"). The Fund, a Maryland corporation, is a
series mutual fund consisting of a number of series or separate investment
portfolios. This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of the Fund, on behalf of each
Portfolio, to be used at the Fund's special meeting of shareholders of the
Portfolios (the "Meeting"). The Meeting will be held on Monday, December 15,
1997, at 10:00 a.m. Eastern Time, at 201 Highland Avenue, Largo, Florida 33770,
for the purposes set forth in the Notice of the Meeting.
The primary purposes of the Meeting are: (1) to permit the shareholders
of the Growth & Income Portfolio to consider a change (specifically the removal
of) the current concentration policy to a policy of non-industry concentration,
to take effect January 1, 1998; and (2) to permit the shareholders of the Bond
Portfolio to consider a Proposed Sub-Advisory Agreement (described below)
between WRL Investment Management, Inc. (the "Investment Adviser") and AEGON USA
Investment Management, Inc. ("AIMI"), to take effect on January 1, 1998.
A majority of the shares of stock outstanding on October 10, 1997,
represented in person or by proxy, of each Portfolio must be present for that
Portfolio to transact business at the Meeting. In the event that, with respect
to a Portfolio, a quorum is present at the Meeting but sufficient votes to
approve proposals are not received, the persons named as proxies may propose one
or more adjournments of the Meeting with respect to that Portfolio to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the Portfolio's shares represented at the
Meeting in person or by proxy. A shareholder vote of a Portfolio may be taken on
any proposal in this Proxy Statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
Each full share outstanding is entitled to one vote and each fractional
share outstanding is entitled to a proportionate share of one vote. As of the
Record Date, October 10, 1997, the Fund had outstanding 3,684,265.636 shares of
the Growth & Income Portfolio and 8,546,505.030 shares of the Bond Portfolio
(with an aggregate net asset value of $49,035,466.09 and $95,700,466.38,
respectively), all of which shares are owned of record by the WRL Series Life
Account or the WRL Series Annuity Account of Western Reserve Life Assurance Co.
Of Ohio ("Western Reserve"), by Western Reserve directly, or by Pooled Account
No. 27 of AUSA Life Insurance Company, Inc. ("AUSA Life") (together, the
"Accounts"). Western Reserve and AUSA Life are affiliates.
The costs of the Meeting, including the solicitation of proxies and
voting instructions, will be paid by the Portfolios. The principal solicitation
of proxies and voting instructions will be by the mailing of this Proxy
Statement on or about November 3, 1997, but proxies and voting instructions may
also be solicited by telephone and/or in person by representatives of the Fund
and regular employees of Western Reserve or its affiliates. Such representatives
and employees will not receive additional compensation for solicitation
activities.
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POLICYOWNERS' RIGHT TO INSTRUCT SHAREHOLDERS
Western Reserve or AUSA Life, respectively, the shareholders of the
Portfolios, will vote shares held in the Accounts at the Meeting in accordance
with the instructions received from the holders of individual life insurance
policies, individual variable annuity contracts and group annuities
(collectively, the "Policies" owned by the "Policyowners") whose benefits
thereunder are funded through those Accounts. (The holder of a qualified group
variable contract may seek voting instructions from individual qualified plan
participants if required under the terms of the qualified plan pursuant to which
the group contract is held.)
The Fund has agreed to solicit voting instructions from the
Policyowners, upon which instructions Western Reserve or AUSA Life,
respectively, will vote the shares of the Portfolios at the Meeting on December
15, 1997, and any adjournment thereof. The Fund will mail to each Policyowner of
record as of October 10, 1997 a copy of this Proxy Statement. The number of Fund
shares in a Portfolio or Portfolios for which a Policyowner may give
instructions is determined as follows: the number of shares of a given Portfolio
(and corresponding votes) allotted to a Policy will be calculated by dividing
the amount of the Policy's cash value (or the contract value, in the case of an
individual variable annuity or group variable annuity contract) attributable to
the Portfolio by $100. Fractional shares will be counted. Based upon the cash
value attributable to the Portfolios as of October 10, 1997, Policyowners are
entitled to an aggregate of votes with respect to each of the Portfolios:
<TABLE>
<CAPTION>
AGGREGATE VOTES BASED ON CASH OR
OUTSTANDING SHARES OWNED BY THE CONTRACT VALUE OF THE
PORTFOLIO ACCOUNT PORTFOLIO
<S> <C> <C> <C> <C> <C>
Growth & Income 3,684,265.636 490,354.6609
Bond 8,546,505.030 957,004.6638
</TABLE>
As of October 15, 1997, the officers and Directors of the Fund, as a group,
beneficially owned less than 1% of the outstanding shares of each of the Bond
Portfolio and the Growth & Income Portfolio.
All shares for which Western Reserve and AUSA Life receive properly
executed instructions, which are not subsequently revoked prior to the Meeting,
will be voted at the Meeting in accordance with such instructions. Western
Reserve and AUSA Life will vote the shares of each Portfolio for which no timely
instructions are received, and any shares beneficially owned exclusively by
Western Reserve, in proportion to the voting instructions which are received
with respect to all Policies participating in such Portfolio. Abstentions will
be applied on a PRO RATA basis to reduce the votes eligible to be cast.
To the knowledge of the Fund, no person has the right to instruct
Western Reserve or AUSA Life with respect to 5% or more of the shares of any
Portfolio. However, the proportionate voting policy (described above) may result
in certain Policyowners' instructions affecting the vote of 5% or more of total
outstanding shares of a Portfolio. These particular Policyowners and the
percentage of votes which their instruction may affect will depend upon which
Policyowners provide instructions and which Policyowners do not.
Western Reserve or AUSA Life, as applicable, will vote in accordance
with the directions as indicated on your enclosed voting instruction form(s). A
voting instruction form for each Portfolio attributable to your Policy must be
received by EVACO Financial Printers (tabulating company) at 100 Carillon
Parkway, Suite 170, St. Petersburg, Florida 33716-9984 no later than December
12, 1997. If you do not return your voting instruction forms(s), your shares
will be voted in proportion to the voting instructions which are received with
respect to all Policies participating in each applicable Portfolio. Abstentions
will be counted as present for purposes of determining a quorum, but will not be
counted as
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voting with respect to those proposals from which Policyowners abstain.
Voting instructions may be revoked at any time prior to their exercise by
execution of a subsequent voting instruction form, by written notice to the
Secretary of the Fund, or by voting in person at the Meeting.
The following table summarizes each proposal to be presented at the
Meeting and the Portfolios solicited with respect to each proposal:
- ----------------------- --------------------------------------------------------
PROPOSAL AFFECTED PORTFOLIOS
- ------------------------------ ---------------------------
- ------------------------------ ---------------------------
1. Approval of change to a policy of non-industry Growth & Income Portfolio
investment concentration
- --------------------------------------------------- ----------------------------
- --------------------------------------------------- ----------------------------
2. Approval of a new Sub-Advisory Agreement Bond Portfolio
- --------------------------------------------------- ----------------------------
For each Portfolio of the Fund, the Board of Directors recommends that
you cast your vote:
/bullet/ FOR approval of the proposed change to a policy of
non-industry concentration with respect to the Growth &Income
Portfolio.
/bullet/ FOR the approval of a new Sub-Advisory Agreement with respect
to the Bond Portfolio.
Each of these proposals are described in more detail below, and in the
attached Schedule and Exhibits. The Schedule and Exhibits are important parts of
this Proxy Statement; please consult them carefully as you review this Proxy
Statement and evaluate the proposals.
With respect to a Portfolio, the proposed change of concentration for
the Growth & Income Portfolio and the new Sub-Advisory Agreement for the Bond
Portfolio must be approved by a "vote of the majority of the outstanding voting
securities" of such Portfolio, as defined in the Investment Company Act of 1940,
as amended ("1940 Act"). The "vote of a majority of the outstanding voting
securities" means the lesser of the vote of (i) 67% or more of the shares of the
Portfolios entitled to vote thereon present at the Meeting if the holders of
more than 50% of such outstanding shares are present in person or represented by
proxy; or (ii) more than 50% of such outstanding shares of the Portfolio
entitled to vote thereon.
SHAREHOLDERS OF THE GROWTH & INCOME PORTFOLIO ONLY WILL VOTE ON THE
POLICY CONCENTRATION FOR THAT PORTFOLIO; AND SHAREHOLDERS OF THE BOND PORTFOLIO
ONLY WILL VOTE ON THE NEW SUB-ADVISORY AGREEMENT FOR THAT PORTFOLIO. IN OTHER
WORDS, SHAREHOLDERS WILL ONLY VOTE ON THE PROPOSALS FOR EACH PORTFOLIO IN WHICH
THEY OWN SHARES.
INTRODUCTION
THE FUND
The Fund is a Maryland corporation organized as a diversified, open-end
management investment company under the 1940 Act. Shares of the Fund are
registered under the Securities Act of 1933 (the "1933 Act"), and the Fund
itself is registered under the 1940 Act on Form N-1A with the Securities and
Exchange Commission ("SEC"). Shares of the Fund are currently sold only to
separate accounts of Western Reserve, PFL Life Insurance Company, and AUSA Life
to fund benefits under certain individual flexible premium variable life
insurance policies and certain individual and group variable annuity contracts.
WRL Investment Services, Inc., located at 201 Highland Avenue, Largo, FL 33770,
an affiliate of the Investment Adviser, serves as transfer agent and
administrator for the Fund.
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InterSecurities, Inc., whose principal office is located at 201 Highland Avenue,
Largo, FL 33770, an affiliate of the Investment Adviser, serves as principal
underwriter for the Fund.
THE INVESTMENT ADVISER
The Investment Adviser, located at 201 Highland Avenue, Largo, Florida
33770, currently serves as the investment adviser to each Portfolio of the Fund.
The Investment Adviser does not currently act as investment adviser or
sub-adviser to any other investment companies. The Investment Adviser is a
direct, wholly-owned subsidiary of Western Reserve, located at 201 Highland
Avenue, Largo, Florida 33770, which is a wholly-owned subsidiary of First AUSA
Life Insurance Company ("First AUSA"), located at 4333 Edgewood Road, N.E.,
Cedar Rapids, Iowa 52499, a stock life insurance company, which is wholly-owned
by AEGON USA, Inc. ("AEGON USA"). AEGON USA, located at 4333 Edgewood Road,
N.E., Cedar Rapids, Iowa 52499, is a financial services holding company whose
primary emphasis is on life and health insurance and annuity and investment
products. AEGON USA is a wholly-owned indirect subsidiary of AEGON nv, a
Netherlands corporation, which is a publicly-traded international insurance
group.
The Investment Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act"). The Investment Adviser has
served as the investment adviser to each Portfolio of the Fund since January 1,
1997. (Prior to that date, Western Reserve served as the investment adviser to
each Portfolio.) Pursuant to the Investment Advisory Agreement between the Fund
and the Investment Adviser, dated January 1, 1997, and subject to the
supervision of the Fund's Board of Directors (the "Fund's Board"), the
Investment Adviser is responsible for furnishing continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets that the Portfolios may own or
contemplate acquiring from time to time. The Investment Adviser's officers
attend meetings and are responsible for furnishing oral or written reports to
keep the Fund's Board and officers of the Fund fully informed as to the
condition of the investments of each Portfolio, the investment recommendations
of the Investment Adviser, and the investment considerations that have given
rise to those recommendations. The Investment Adviser supervises the purchase
and sale of the investments of the Portfolios and maintains all books and
records required to be maintained pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund.
The Investment Advisory Agreement contemplates that the Investment
Adviser, in connection with the performance of its responsibilities under the
Agreement, will enter into sub-advisory agreements with sub-advisers to provide
each Portfolio with investment management services. The Investment Adviser
selects a sub-adviser based on a qualitative and quantitative evaluation of the
sub-adviser. The Investment Adviser monitors the performance of each sub-adviser
and evaluates how well the sub-adviser has managed the assets of its respective
Portfolio(s) in light of each Portfolio's stated investment objective and
policies. The Investment Adviser also monitors the sub-adviser's long-term
performance and the level of risk assumed in achieving that performance.
Particular criteria for selection and retention of a sub-adviser include the
sub-adviser's discipline and thoroughness in pursuit of a Portfolio's stated
investment objective and the sub-adviser's long-term performance. Short-term
performance by itself is not a significant factor in selecting or terminating a
sub-adviser.
The Investment Adviser also may, from time to time, recommend the
services of a sub-adviser be terminated. The criteria for termination include
the departure of a sub-adviser's key investment advisory personnel, a change in
control of the sub-adviser, a departure from a Portfolio's stated investment
objective or policies, or other developments relating to the sub-adviser deemed
by the Investment Adviser not to be in the best interests of shareholders.
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<PAGE>
THE SUB-ADVISERS
With respect to each of the twenty-one Portfolios of the Fund, the
Investment Adviser has entered into contracts ("Sub-Advisory Agreements") with
at least one investment sub-adviser (each, a "Sub-Adviser"). Each Sub-Adviser
provides investment advisory assistance and portfolio management advice to the
Investment Adviser for the Portfolio(s) with respect to which the Sub-Adviser is
engaged. Subject to review and supervision by the Investment Adviser and the
Fund's Board, each Sub-Adviser is responsible for the actual investment
management of its Portfolio(s) and for making decisions to buy, sell, or hold
any particular security. Each Sub-Adviser also places orders to buy or sell
securities on behalf of that Portfolio. Each Sub-Adviser bears all of its
expenses in connection with the performance of its services, such as
compensating and furnishing office space for its officers and employees
connected with investment and economic research, trading, and investment
management of its Portfolio(s). Each Sub-Adviser is a registered investment
adviser under the Advisers Act. Each Sub-Adviser receives monthly compensation
from the Investment Adviser at an annual rate of a specified percentage of the
average daily net assets of each Portfolio managed by that Sub-Adviser.
Each Sub-Adviser has been recommended by the Investment Adviser, and
selected and approved by the Fund's Board, including a Majority of directors who
are not parties to the Sub-Advisory Agreement or interested persons (within the
meaning of Section 2(a)(19) of the 1940 Act) of any such party ("Disinterested
Directors"), as well as by the shareholders of the relevant Portfolio. All of
the current Sub-Advisory Agreements were approved at a meeting of shareholders
held on December 16, 1996, except the Sub-Advisory Agreement for the Global
Sector, US Sector and Foreign Sector Portfolios, which was approved by
shareholders on June 16, 1997.
Each Sub-Advisory Agreement: describes all compensation payable by the
Investment Adviser thereunder; initially continues in effect for up to two years
and from year to year thereafter, only so long as such continuance is
specifically approved at least annually by the Fund's Board or by a vote of the
majority of the outstanding voting securities of the Portfolio at the times and
in the manner required by the 1940 Act, and Rules thereunder; may be terminated
at any time, without the payment of any penalty, by the Fund's Board or by
shareholders on sixty (60) days' written notice to the Sub-Adviser, on sixty
(60) days' written notice from the Investment Adviser to the Sub-Adviser
provided certain conditions are met, or on sixty (60) days' written notice from
the Sub-Adviser to the Investment Adviser; will terminate automatically in the
event of its assignment; and requires approval of amendments thereto in the
manner required by the 1940 Act.
SUMMARY OF THE PROPOSALS
(1) Federated Investment Counseling, located at Federated Investors
Tower, Pittsburgh, PA 15222-3779, is the Growth & Income Portfolio's
Sub-Adviser. Upon a request from Federated Investment Counseling, the Investment
Adviser has recommended to the Fund's Board a change to a policy of non-industry
concentration for the Growth & Income Portfolio. Specifically, the Sub-Adviser
has requested a change in policy from concentration in utilities to a policy of
non-industry concentration. The Fund's Board has agreed that the proposed change
in concentration policy is in the best interest of the Portfolio.
(2) The Investment Adviser seeks to enter into a new Sub-Advisory
Agreement with AIMI with respect to the Bond Portfolio. This new Sub-Advisory
Agreement would REPLACE the current Sub-Advisory Agreement with respect to the
Bond Portfolio between the Investment Adviser and Janus Capital Corporation
("Janus Capital").
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PROPOSAL 1: TO APPROVE A CHANGE IN INVESTMENT CONCENTRATION POLICY WITH
RESPECT TO THE GROWTH & INCOME PORTFOLIO
The Fund's Board, including the Disinterested Directors, reviewed and,
at a Board meeting held on September 15, 1997, unanimously approved, a
recommendation by the Growth & Income Portfolio's Sub-Adviser concerning the
policy of concentration for the Portfolio, specifically, that the Portfolio's
current policy of concentration in the utility industry be changed to a policy
of non-industry concentration.
Prior to May 1, 1997, the Growth & Income Portfolio was named the
Utility Portfolio. The Portfolio's Sub-Adviser recommended to the Fund's Board
on March 3, 1997, that the Portfolio change its investment focus from the
utility industry to a diversified portfolio of equity and debt securities with
an emphasis on sector investing.
It is the opinion of the Sub-Adviser that concentration in the utility
industry has served the shareholders well since inception of the Portfolio in
1994. However, as the utility industry continues to be deregulated and many
changes are underway to adapt to the deregulation, it is the Sub-Adviser's
belief that concentration in the utility industry is now potentially
unattractive for investors and may result in greater risk.
The portfolio managers of the Portfolio will remain the same. They will
continue to manage the Portfolio's assets with the shareholders' best interests
in mind. The Sub-Adviser merely seeks to change the policy of concentration for
the Portfolio so that no more than 25% of its assets will be invested in one
particular industry, as described below.
In connection with the change in investment concentration policy, the
Portfolio would adopt a new fundamental investment restriction regarding
non-concentration as follows:
The Portfolio may not, as a matter of fundamental policy, invest more
than 25% of the Portfolio's assets in the securities of issuers
primarily engaged in the same industry. Utilities will be divided
according to their services, for example, gas, gas transmission,
electric and telephone, and each will be considered a separate industry
for purposes of this restriction. In addition, there shall be no
limitation on the purchase of obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, or of
certificates of deposit and bankers' acceptances.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE "FOR APPROVAL" OF THE
PROPOSED CHANGE IN INVESTMENT CONCENTRATION POLICY WITH RESPECT TO THE
GROWTH & INCOME PORTFOLIO
PROPOSAL 2: TO APPROVE A PROPOSED SUB-ADVISORY AGREEMENT WITH RESPECT
TO THE BOND PORTFOLIO OF THE FUND
The Fund's Board, including the Disinterested Directors, reviewed and,
at a Board meeting held on June 23, 1997, unanimously approved, a new
Sub-Advisory Agreement (for purposes of this proposal, "Proposed Sub-Advisory
Agreement") between the Investment Adviser and AIMI with respect to the Bond
Portfolio. The Investment Adviser had recommended to the Fund's Board that the
Fund retain AIMI to serve as the new Sub-Adviser for the Bond Portfolio. The
Proposed Sub-Advisory Agreement is attached as Exhibit 3.
Janus Capital, located at 100 Fillmore Street, Denver, Colorado 80206,
currently serves as Sub-Adviser for the Bond Portfolio and has done so since the
commencement of the Portfolio's operations in
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October, 1986, pursuant to a Sub-Advisory Agreement (for purposes of this
Proposal, the "Current Sub-Advisory Agreement") between the Investment Adviser
and Janus Capital with respect to the Portfolio. Thomas H. Bailey is the
President of Janus Capital. Kansas City Southern Industries, Inc., located at
114 West 11th Street, Kansas City, Missouri 64105, owns 83% of Janus Capital. It
is currently anticipated that, in light of the Fund's Board's recommendation,
Janus Capital will resign its position as Sub-Adviser to the Portfolio,
effective not later than the close of business on December 31, 1997. The
Investment Adviser is not affiliated with Janus Capital.
AIMI, located at 4333 Edgewood Road, NE, Cedar Rapids, Iowa 52499, is a
wholly-owned subsidiary of AEGON USA and thus is an affiliate of the Investment
Adviser. AEGON USA is a financial services holding company whose primary
emphasis is on life and health insurance and annuity and investment products.
AEGON USA is a wholly-owned indirect subsidiary of AEGON nv, a Netherlands
corporation which is a publicly traded international insurance group. AIMI
manages the general account investment portfolios of the life insurance
subsidiaries of AEGON USA.
The Investment Adviser will continue to serve as investment adviser to
the Portfolio pursuant to the Current Advisory Agreement.
The Proposed Sub-Advisory Agreement, as approved by the Fund's Board,
is now submitted for approval by the Policyowners of the Portfolio. If it is
approved by a majority vote of the outstanding units of the Portfolio, it will
continue in effect for an initial term ending January 1, 2000, and will continue
from year to year thereafter, subject to approval annually by the Fund's Board
or by a majority vote of the outstanding shares of the Portfolio, and also, in
either event, approval by a majority of the independent directors who are not
parties to the Proposed Sub-Advisory Agreement or interested persons of any such
party at a meeting called for the purpose of voting on such approval. "Majority
Vote" for purposes of this Proxy Statement, and under the 1940 Act, means the
lesser of (i) 67% of the shares represented at a meeting at which more than 50%
of the outstanding shares of the Portfolio are represented or (ii) more than 50%
of the outstanding shares of the Portfolio. If the Policyowners of the Portfolio
should fail to approve the Proposed Sub-Advisory Agreement, the Fund's Board
shall consider appropriate action with respect to such non-approval of the
Proposed Sub-Advisory Agreement, including, but not limited to, retention of
Janus Capital as Sub-Adviser to the Portfolio.
CURRENT ADVISORY AGREEMENT
The Investment Adviser has served as the investment adviser of the
Fund, with respect to the Bond Portfolio, under the Current Advisory Agreement
(see Exhibit 1) since January 1, 1997. Subject to the supervision and direction
of the Fund's Board, the Investment Adviser is generally responsible for
managing the Bond Portfolio in accordance with the Bond Portfolio's stated
investment objective and policies. As compensation for its services to the Bond
Portfolio, the Investment Adviser currently is entitled to receive monthly
compensation from the Fund at an annual rate of 0.50% of the average daily net
assets of the Bond Portfolio.
Pursuant to the Current Advisory Agreement, the Investment Adviser
expressly has the responsibility: to furnish continuous advice and
recommendations to the Fund as to the acquisition, holding or disposition of any
or all of the securities or other assets which the Portfolio may own or
contemplate acquiring from time to time; to cause its officers to attend
meetings and furnish oral or written reports, as the Fund may reasonably
require, in order to keep the Fund's Board and appropriate officers of the Fund
fully informed as to the conditions of the investment portfolio of the
Portfolio, the investment recommendations of the Investment Adviser, and the
investment considerations which have given rise to those recommendations; to
supervise the purchase and sale of securities of the Portfolio as directed by
the appropriate officers of the Fund; and to maintain all books and records
required to be maintained by the Investment Adviser pursuant to the 1940 Act and
the rules and regulations promulgated thereunder with respect to transactions on
behalf of the Fund. The Investment Adviser pays all expenses incurred in
connection with the performance of its responsibilities. The Portfolio pays all
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other expenses incurred in its operation, including general administrative
expenses, accounting fees, legal fees and investment advisory fees. As
compensation for its services to the Portfolio, the Investment Adviser presently
receives monthly compensation at the annual rate of 0.50% of the average daily
net assets of the Portfolio. At its meeting on June 23, 1997, the Fund's Board
approved a resolution which, contingent upon the approval of this Proposal at
the Meeting, will, effective January 1, 1998, reduce the annual compensation
paid to the Investment Adviser pursuant to the Current Advisory Agreement from
an annual rate of 0.50% to 0.45% of average daily net assets of the Portfolio.
During the Fund's fiscal year ended December 31, 1996, the Fund paid
Western Reserve (the Investment Adviser prior to January 1, 1997) (under a prior
investment advisory agreement) an aggregate investment advisory fee of $474,926
for investment management and supervision services and for certain
administrative services on behalf of the Bond Portfolio. During that year, the
Fund paid no fees to Western Reserve, its affiliates or any affiliate of such
affiliates, for services provided to the Fund other than under the prior
investment advisory agreement. If the proposed Investment Advisory fee at the
annual rate of 0.45% of the average daily net assets of the Bond Portfolio had
been in effect during the Fund's fiscal year ended December 31, 1996, the Fund
would have paid Western Reserve an aggregate advisory fee of $427,433, which is
90% of the aggregate investment advisory fee actually paid by the Fund to
Western Reserve for that year.
Under its terms, the Current Advisory Agreement, as it applies to the
Bond Portfolio, will continue in effect until January 1, 1999, and from year to
year thereafter, so long as such continuance is specifically approved at least
annually by the vote of a majority of the Disinterested Directors of the Fund,
cast in person at a meeting called for the purpose of voting on the approval of
the terms of such renewal, and by either the Directors of the Fund or the
affirmative vote of a majority of the outstanding voting securities of the
Portfolio. The Current Advisory Agreement may be terminated with respect to a
Portfolio at any time by the Fund's Board, or by vote of a majority of the
outstanding voting securities of the Portfolio, in each case, without penalty on
sixty (60) days' written notice to the Investment Adviser, or by the Investment
Adviser on sixty (60) days' written notice to the Fund. It will automatically
terminate in the event of its assignment. The Current Advisory Agreement may be
amended with respect to a Portfolio only with the approval by the affirmative
vote of a majority of the outstanding voting securities of the Portfolio and the
approval by the vote of a majority of the Disinterested Directors of the Fund,
cast in person at a meeting called for the purpose of voting on the approval of
such amendment.
The terms of the Current Advisory Agreement were approved by the Fund's
Board, including by vote of a majority of its Disinterested Directors cast in
person, at a meeting called for such purpose and held on October 3, 1996, and
approved by the vote of a majority of the outstanding voting securities of each
Portfolio at a special meeting of shareholders on December 16, 1996. The Current
Advisory Agreement contains a Schedule listing advisory fees for the Portfolios
of the Fund which will be amended to reflect this reduction of advisory fee for
the Bond Portfolio.
Other than the reduction in annual compensation to the Investment
Adviser noted above, approval of the Proposed Sub-Advisory Agreement by
Policyowners will have no effect on the Current Advisory Agreement between the
Investment Adviser, which is not affiliated with Janus Capital, and the Fund
with respect to the Bond Portfolio.
CURRENT SUB-ADVISORY AGREEMENT
Pursuant to the Current Sub-Advisory Agreement for the Bond Portfolio
(see Exhibit 2), which is dated January 1, 1997, the Investment Adviser
contracts with Janus Capital for sub-advisory services. The Current Sub-Advisory
Agreement for the Portfolio was initially approved by the Fund's Board,
including by vote of a majority of its Disinterested Directors cast in person,
at a special meeting called for such purpose on October 3, 1996, and was
approved by the vote of a majority of the outstanding voting securities of the
Portfolio at a special meeting of the shareholders on December 16, 1996.
8
<PAGE>
Pursuant to the Current Sub-Advisory Agreement, Janus Capital provides
investment advisory assistance and portfolio management advice to the Investment
Adviser for the Bond Portfolio. Subject to review and supervision by the
Investment Adviser and the Fund's Board, Janus Capital is responsible for the
actual management of the Bond Portfolio and for making decisions to buy, sell or
hold any particular security, and places orders to buy or sell securities on
behalf of the Bond Portfolio. Janus Capital bears expenses in connection with
the performance of its services, such as compensating and furnishing office
space for its officers and employees connected with investment and economic
research, trading and investment management of the Bond Portfolio.
Janus Capital is also responsible for selecting the broker-dealers who
execute the portfolio transactions for the Portfolio. Janus Capital may
occasionally place portfolio business with the affiliated brokers of the
Investment Adviser or Janus Capital. In placing portfolio business with all
dealers, Janus Capital seeks best execution of each transaction and all
brokerage placement must be consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. Janus Capital is authorized to
pay higher commissions to brokerage firms that provide it with investment and
research information than to firms which do not provide such services, if Janus
Capital determines that such commissions are reasonable in relation to the
overall services provided and Janus Capital receives best execution. The
information received may be used by Janus Capital in managing the assets of
other advisory and sub-advisory accounts, as well as in the management of the
assets of the Portfolio.
For its services as Sub-Adviser, Janus Capital is paid compensation
from the Investment Adviser at the annual rate of 0.25% of the Portfolio's
average daily net assets. For the fiscal year ended December 31, 1996, Janus
Capital received sub-advisory fees in the amount of $237,463.
Under its terms, the Current Sub-Advisory Agreement for the Portfolio
will continue in effect until January 1, 1999, and from year to year thereafter,
so long as such continuance is specifically approved at least annually by the
vote of a majority of the Disinterested Directors of the Fund, cast in person at
a meeting called for the purpose of voting on the approval of the terms of such
renewal, and by either the Fund's Board or the affirmative vote of a majority of
the outstanding voting securities of the Portfolio (as that phrase is defined in
the 1940 Act). The Current Sub-Advisory Agreement may be terminated with respect
to the Portfolio at any time, without penalty, by (i) the Fund's Board or by a
majority of the shareholders of the Portfolio acting by vote of at least a
majority of its outstanding voting securities (as that phrase is defined in the
1940 Act), on sixty (60) days' written notice to Janus Capital, (ii) by the
Investment Adviser if it gives sixty (60) days' written notice to Janus Capital
or (iii) by Janus Capital if it gives sixty (60) days' written notice to the
Investment Adviser. The Current Sub-Advisory Agreement may be amended with
respect to the Portfolio only with the approval by an affirmative vote of a
majority of the outstanding voting securities of the Portfolio (as that phrase
is defined in the 1940 Act) and the approval by a vote of a majority of the
Disinterested Directors of the Fund, cast in person at a meeting called for the
purpose of voting on the approval of such amendment.
PROPOSED SUB-ADVISORY AGREEMENT
If the Proposed Sub-Advisory Agreement with AIMI (see Exhibit 3), is
approved by the vote of a majority of the Portfolio's outstanding shares, AIMI
will become the Sub-Adviser of the Portfolio, effective immediately upon
termination of the Current Sub-Advisory Agreement with Janus Capital (proposed
to be the close of business on December 31, 1997). As of the date of termination
of the Current Sub-Advisory Agreement, Janus Capital would no longer serve as
Sub-Adviser of the Bond Portfolio (but will continue to serve as Sub-Adviser to
the Fund's Growth Portfolio and Global Portfolio).
The Proposed Sub-Advisory Agreement requires AIMI to provide, subject
to the supervision of the Investment Adviser, a continuous investment program
for the Portfolio, including investment research and management with respect to
all securities and investments and cash equivalents in the Portfolio, in
accordance with the Portfolio's investment objective, policies, and
restrictions. AIMI will determine from
9
<PAGE>
time to time what securities and other investments will be purchased, retained,
or sold by the Portfolio and will place orders pursuant to its investment
determinations.
The Proposed Sub-Advisory Agreement contains essentially the same terms
and conditions as the Current Sub-Advisory Agreement, with the following
exceptions:
(1) The Proposed Sub-Advisory Agreement reflects the change of
Sub-Adviser from Janus Capital to AIMI.
(2) The initial term of the Proposed Sub-Advisory Agreement will be two
years ending January 1, 2000.
(3) Under the Proposed Sub-Advisory Agreement, compensation payable by
the Investment Adviser to the Sub-Adviser will be a monthly investment
management fee equal to (i) an annual rate of 0.20% of the monthly average daily
net assets of the Portfolio, less (ii) 50% of the amount paid by the Investment
Adviser on behalf of the Portfolio pursuant to any expense limitation or the
amount of any other reimbursement made by the Investment Adviser to the
Portfolio. Under the Current Sub-Advisory Agreement, the Sub-Adviser is paid
compensation by the Investment Adviser at an annual rate of 0.25% of the
Portfolio's average daily net assets. If the proposed Sub-Advisory Agreement is
approved, the annual rate of compensation from the Bond Portfolio to the
Investment Adviser, from which the Investment Adviser pays compensation to the
Bond Portfolio's Sub-Adviser, will be correspondingly reduced from 0.50% to
0.45% of the Portfolio's average daily net assets.
The Proposed Sub-Advisory Agreement will terminate automatically in the
event of its assignment. In addition, it may be terminated by the Investment
Adviser upon sixty (60) days' written notice to AIMI and the Fund; by AIMI upon
sixty (60) days' written notice to the Investment Adviser and the Fund; or by
the Fund, upon the vote of a majority of the Fund's Board or a majority of the
outstanding voting securities of the Portfolio, upon sixty (60) days' written
notice to AIMI.
If the investment sub-advisory fee under the Proposed Sub-Advisory
Agreement (and the proposed investment advisory fee under the Advisory Agreement
with respect to the Bond Portfolio) had been in effect during the Fund's fiscal
year ended December 31, 1996, the Investment Adviser (prior to January 1, 1997,
Western Reserve) would have paid AIMI an aggregate investment sub-advisory fee
in the following amount:
<TABLE>
<CAPTION>
PROPOSED SUB-ADVISORY HYPOTHETICAL AMOUNT % OF AGGREGATE
FEE PAID IN 1996 (BASED ON SUB-ADVISORY FEE
PORTFOLIO PROPOSED FEE) ACTUALLY PAID
<S> <C> <C> <C>
Bond 0.20% of average daily $189,970.40 80%
net assets
</TABLE>
INFORMATION ABOUT AIMI
AIMI's directors and principal executive officers, together with their
principal occupations, are listed below. The business address of each of these
persons is 4333 Edgewood Road, NE, Cedar Rapids, Iowa 52499:
NAME, POSITION WITH AIMI PRINCIPAL OCCUPATION
Patrick E. Falconio President and Director of AIMI and Executive
President and Director Vice President and Chief Investment Officer
of AEGON USA.
10
<PAGE>
Brenda K. Clancy Senior Vice President and Treasurer of AEGON
Director USA; Director, Treasurer and Vice President
of First AUSA, Life Investors Insurance
Company of America and Monumental Life
Insurance Company.
Craig D. Vermie Secretary, Vice President and General Counsel
Director of AEGON USA, Bankers United Life Assurance
Company, Life Investors Insurance Company of
America, PFL Life Insurance Company; Director,
Vice President, General Counsel and Assistant
Secretary of Monumental Life Insurance Company.
Donald E. Flynn Executive Vice President of AIMI.
Executive Vice President
James D. Ross Executive Vice President of AIMI.
Executive Vice President
Clifford A. Sheets Executive Vice President of AIMI.
Executive Vice President
Ralph M. O'Brien Senior Vice President of AIMI.
Senior Vice President
Michael Van Meter Senior Vice President of AIMI.
Senior Vice President
Steven P. Opp Senior Vice President of AIMI.
Senior Vice President
David R. Halfpap Senior Vice President of AIMI.
Senior Vice President
Gregory W. Theobald Secretary and Vice President of AIMI.
Secretary and Vice President
Jon D. Kettering Vice President and Treasurer of AIMI.
Vice President and Treasurer
THE DIRECTORS RECOMMENDATION
In determining whether to approve the Proposed Sub-Advisory Agreement
and to recommend its approval to Policyowners, the Fund's Board, including
Disinterested Directors, considered a number of relevant factors, based on
historical information about the Bond Portfolio and certain materials provided
by AIMI. Factors and information considered by the Directors included, among
other things, the following:
(1) The compensation to be received by AIMI under the Proposed
Sub-Advisory Agreement. Such compensation will be less than the compensation
paid to the Portfolio's current Sub-Adviser, and the compensation paid by the
Portfolio to the Investment Adviser will be correspondingly reduced. It is
anticipated that lower advisory fees will result in a lower expense ratio for
the Portfolio and, accordingly, will benefit shareholders in both the short and
the long term.
11
<PAGE>
(2) The historical performance of the Bond Portfolio under portfolio
management by Janus Capital, as compared to the Lehman Government/Corporate
Index. For example, for the period ending March 31, 1997, AIMI's fixed income
assets under management achieved 8.00% average annual total return1 over the
past five years; the Bond Portfolio's average annual total return has been 6.90%
for the same period; and the Lehman Government/Corporate Index has experienced
7.32% average total return for the same period. (In considering information
relating to this performance comparison, the Board took into account differing
fee and expense levels of the Bond Portfolio and AIMI's fixed income assets
under management, as well as other factors relevant to the comparability of
performance information.)
(3) The nature and quality of the services that AIMI can provide to the
Portfolio. For example, AIMI's fixed income assets under management totaled $25
billion at March 31, 1997; Janus Capital's fixed income assets under management
totaled $ 1.2 billion at June 1, 1997. AIMI and its predecessors have been
managing fixed income assets since 1959; Janus Capital has been managing fixed
income assets since 1986. The Board determined that the Bond Portfolio should be
managed by an entity more experienced in the management of fixed income assets,
such as AIMI, than is the current Sub-Adviser. (AIMI's fixed income assets under
management include the Short-to-Intermediate Government Portfolio of the Fund,
as set forth on Schedule A.)
(4) The depth and experience of the Securities Investment Team employed
by AIMI and their organizational resources, including nonproprietary national,
international and economic forecasts; in-house credit and sector analyses; and
technical resources. Fixed income investment personnel of AIMI, who have
combined experience in fixed income portfolio management of 150 years, as
compared to 11 years for Janus Capital fixed income investment personnel,
utilize all of these resources in developing AIMI's Core Fixed Income Strategy.
The Board also considered that AIMI is, for the most part, dedicated solely to
fixed income asset management; this specialization was viewed by the Board as
signaling a greater potential commitment of resources on the part of AIMI to
fixed income investing in the future than would necessarily be the case with
Janus Capital.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE PROPOSED SUB-ADVISORY
AGREEMENT WITH RESPECT TO THE BOND PORTFOLIO
SHAREHOLDER PROPOSALS
As a general matter, the Fund does not hold annual meetings of
shareholders. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholders' meeting should send their written
proposals to the Secretary of the Fund, 201 Highland Avenue, Largo, Florida
33770.
ANNUAL REPORT
A copy of the Fund's Annual Report and most recent Semi-Annual Report
may be obtained without charge upon request by writing to the Fund at the
address above first written, or by calling 1-800-851-9777.
- --------
1 These are gross of management fee results for AIMI's fixed income assets
under management. They are presented before investment advisory fees, but
net of transaction charges. If the AIMI fixed income assets had been
subject to a 0.45% advisory fee, this five year average annual total return
would have been 7.51%.
12
<PAGE>
OTHER BUSINESS
Management knows of no business to be presented to the Meeting other
than the matters set forth in this Proxy Statement, but should any other matter
requiring vote of shareholders arise, the proxies will vote thereon according to
their best judgment in the interests of the Fund.
By Order of the Board of Directors
Thomas E. Pierpan, ASSISTANT SECRETARY
Largo, Florida
November 3, 1997
Schedule A - Information regarding certain funds managed by AIMI
Exhibit 1 - Current Advisory Agreement
Exhibit 2 - Current Sub-Advisory Agreement - Bond Portfolio
Exhibit 3 - Form of Proposed Sub-Advisory Agreement - Bond Portfolio
13
<PAGE>
SCHEDULE A
The following table indicates the size of each investment company
having an investment objective similar to that of the Bond Portfolio that is
advised or sub-advised by AIMI and the applicable advisory fee rate.
<TABLE>
<CAPTION>
Annual
Management
Net Assets as Fee as
of August 31, 1997 Percent of
FUND NAME (IN MILLIONS) AVERAGE NET ASSETS
<S> <C> <C>
WRL Series Fund
Short-to-Intermediate Government
Portfolio $25.7 0.30%
</TABLE>
14
<PAGE>
EXHIBIT 1
WRL SERIES FUND, INC.
INVESTMENT ADVISORY AGREEMENT
This Agreement, entered into between WRL Series Fund, Inc., a Maryland
corporation (referred to herein as the "Fund"), and WRL Investment Management,
Inc., a Florida corporation (referred to herein as "WRL Management"), to provide
certain investment advisory services with respect to the series of shares of
common stock of the Fund.
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended, (the "1940 Act") and consists of
more than one series of shares (the "Portfolios"). In managing its Portfolios,
the Fund wishes to have the benefit of the investment advisory services of WRL
Management and its assistance in performing certain management functions. WRL
Management desires to furnish such services to the Fund and to perform the
functions assigned to it under this Agreement for the considerations provided.
Schedule A lists the effective date and termination date of this Agreement for
each Portfolio of the Fund. Accordingly, the parties have agreed as follows:
1. INVESTMENT ADVISORY SERVICES. In its capacity as investment
adviser to the Fund, WRL Management shall have the following responsibilities:
(a) to furnish continuous advice and recommendations to the Fund as to
the acquisition, holding or disposition of any or all of the securities
or other assets which the Portfolios may own or contemplate acquiring
from time to time;
(b) to cause its officers to attend meetings and furnish oral or
written reports, as the Fund may reasonably require, in order to keep
the Board of Directors and appropriate officers of the Fund fully
informed as to the conditions of each investment portfolio of the
Portfolios, the investment recommendations of WRL Management, and the
investment considerations which have given rise to those
recommendations;
(c) to supervise the purchase and sale of securities of the Portfolios
as directed by the appropriate officers of the Fund; and
(d) to maintain all books and records required to be maintained by the
Investment Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on
behalf of the Fund. In compliance with the requirements of Rule 31a-3
under the 1940 Act, WRL Management hereby agrees: (i) that all records
that it maintains for the Fund are the property of the Fund, (ii) to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any records that it maintains for the Fund and that are required to be
maintained by Rule 31a-1 under the 1940 Act and (iii) agrees to
surrender promptly to the Fund any records that it maintains for the
Fund upon request by the Fund; provided, however, WRL Management may
retain copies of such records.
WRL Management shall pay all expenses incurred in connection with the
performance of its responsibilities under this Agreement. It is understood and
agreed that WRL Management may, and intends to, enter into Sub-Advisory
Agreements with duly registered investment advisers (the "Sub-Advisers") for
each Portfolio, under which each Sub-Adviser will, under the supervision of WRL
Management, furnish investment information and advice with respect to one or
more Portfolios to assist WRL Management in carrying out its responsibilities
under this Section 1. The compensation to be paid to each Sub-Adviser for such
services and the other terms and conditions under which the services shall be
rendered by the Sub-Adviser shall be set forth in the Sub-Advisory Agreement
between WRL
1
<PAGE>
Management and each Sub-Adviser; provided, however, that such Agreement shall be
approved by the Board of Directors and by the holders of the outstanding voting
securities of each Portfolio in accordance with the requirements of Section 15
of the 1940 Act, and shall otherwise be subject to, and contain such provisions
as shall be required by the 1940 Act.
2. OBLIGATIONS OF THE FUND. The Fund shall have the following
obligations under this Agreement:
(a) to keep WRL Management continuously and fully informed as to the
composition of each Portfolio's investment securities and the nature of
all of its assets and liabilities from time to time;
(b) to furnish WRL Management with a certified copy of any financial
statement or report prepared for each Portfolio by certified or
independent public accountants, and with copies of any financial
statements or reports made to its shareholders or to any governmental
body or securities exchange;
(c) to furnish WRL Management with any further materials or information
which WRL Management may reasonably request to enable it to perform its
functions under this Agreement; and
(d) to compensate WRL Management for its services in accordance with
the provisions of Section 3 hereof.
3. COMPENSATION. For its services under this Agreement, WRL
Management is entitled to receive from each Portfolio a monthly fee, payable on
the last day of each month during which or part of which this Agreement is in
effect, as set forth on Schedule A attached to this Agreement, as it may be
amended from time to time in accordance with Section 11 below. For the month
during which this Agreement becomes effective and the month during which it
terminates, however, there shall be an appropriate pro-ration of the fee payable
for such month based on the number of calendar days of such month during which
this Agreement is effective.
4. EXPENSES PAID BY EACH PORTFOLIO. Nothing in this Agreement shall
be construed to impose upon WRL Management the obligation to incur, pay, or
reimburse a Portfolio for any expenses. A Portfolio shall pay all of its
expenses including, but not limited to:
(a) all costs and expenses, including legal and accounting fees,
incurred in connection with the formation and organization of a
Portfolio, including the preparation (and filing, when necessary) of
the Portfolio's contracts, plans and documents; conducting meetings of
organizers, directors and shareholders, and all other matters relating
to the formation and organization of a Portfolio and the preparation
for offering its shares. The organization of a Portfolio for all of the
foregoing purposes will be considered completed upon effectiveness of
the post-effective amendment to the Fund's registration statement to
register the Portfolio under the Securities Act of 1933.
(b) all costs and expenses, including legal and accounting fees, filing
fees and printing costs, in connection with the preparation and filing
of the post-effective amendment to the Fund's registration statement to
register the Portfolio under the Securities Act of 1933 and the 1940
Act (including all amendments thereto prior to the effectiveness of the
registration statement under the Securities Act of 1933);
(c) investment advisory fees;
(d) any compensation, fees, or reimbursements which the Fund pays to
its Directors who are not interested persons (as that phrase is defined
in Section 2(a)(19) of the 1940 Act) of the Fund or WRL Management;
2
<PAGE>
(e) compensation of the Fund's custodian, administrator, registar and
dividend disbursing agent;
(f) legal, accounting and printing expenses;
(g) other administrative, clerical, recordkeeping and bookkeeping
expenses;
(h) pricing costs, including the daily calculation of net asset value;
(I) auditing;
(j) insurance premiums, including Fidelity Bond Coverage, Error &
Omissions Coverage and Directors and Officers Coverage, in accordance
with the provisions of the 1940 Act and the rules thereunder;
(k) services for shareholders, including allocable telephone and
personnel expenses;
(l) brokerage commissions and all other expenses in connection with
execution of portfolio transactions, including interest;
(m) all federal, state and local taxes (including stamp, excise, income
and franchise taxes) and the preparation and filing of all returns and
reports in connection therewith;
(n) costs of certificates and the expenses of delivering such
certificates to the purchasers of shares relating thereto;
(o) expenses of local representation in Maryland;
(p) fees and/or expenses payable pursuant to any plan of distribution
adopted with respect to the Fund in accordance with Section 12(b) of
the 1940 Act and Rule 12b-1 thereunder;
(q) expenses of shareholders' meetings and of preparing, printing and
distributing notices, proxy statements and reports to shareholders;
(r) expenses of preparing and filing reports with federal and state
regulatory authorities;
(s) all costs and expenses, including fees and disbursements, of
counsel and auditors, filing and renewal fees and printing costs in
connection with the filing of any required amendments, supplements or
renewals of registration statement, qualifications or prospectuses
under the Securities Act of 1933 and the securities laws of any states
or territories subsequent to the effectiveness of the initial
registration statement under the Securities Act of 1933;
(t) all costs involved in preparing and printing prospectuses of the
Fund;
(u) extraordinary expenses; and
(v) all other expenses properly payable by the Fund or the Portfolios.
5. TREATMENT OF INVESTMENT ADVICE. With respect to the Portfolios,
the Fund shall treat the investment advice and recommendations of WRL Management
as being advisory only, and shall retain full control over its own investment
policies. However, the Directors of the Fund may delegate to the appropriate
officers of the Fund, or to a committee of Directors, the power to authorize
purchases, sales or other actions affecting the Portfolios in the interim
between meetings of the Directors, provided such action is consistent with the
established investment policy of the Directors and is reported to the Directors
at their next meeting.
3
<PAGE>
6. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by each Portfolio upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Portfolio and shall
be paid by the Portfolio. WRL Management is authorized and directed to place
each Portfolio's securities transactions, or to delegate to the Sub-Adviser of
that Portfolio the authority and direction to place the Portfolio's securities
transactions, only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable price and at reasonable commission
rates (best price and execution); provided, however, that WRL Management or the
Sub-Adviser, may pay a broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if WRL Management or
the Sub-Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of WRL Management or the
Sub-Adviser. WRL Management and the Sub-Adviser are also authorized to consider
sales of individual and group life insurance policies and/or variable annuity
contract issued by Western Reserve Life Assurance Co. of Ohio by a broker-dealer
as a factor in selecting broker-dealers to execute the Portfolio's securities
transactions, provided that in placing portfolio business with such
broker-dealers, WRL Management and the Sub-Adviser shall seek the best execution
of each transaction and all such brokerage placement shall be consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. Notwithstanding the foregoing, the Fund shall retain the right to direct
the placement of all securities transactions of the Portfolios, and the
Directors may establish policies or guidelines to be followed by WRL Management
and the Sub-Advisers in placing securities transactions for each Portfolio
pursuant to the foregoing provisions. WRL Management shall report on the
placement of portfolio transactions each quarter to the Directors of the Fund.
7. LIMITATION ON EXPENSES OF THE PORTFOLIOS. If the insurance or
securities laws, regulations or policies of any state in which shares of the
Portfolios are qualified for sale limit the operation and management expenses
(collectively referred to as "Normal Operating Expenses" and as described
below), WRL Management will pay on behalf of the Portfolios the amount by which
such expenses exceed the lowest of such state limitations (the "Expense
Limitation"). Normal Operating Expenses include, but are not limited to, the
fees of the Portfolios' investment adviser, the compensation of its custodian,
registrar, auditors and legal counsel, printing expenses, expenses incurred in
complying with all laws applicable to the sale of shares of the Portfolios and
any compensation, fees, or reimbursement which the Portfolios pay to Directors
of the Fund who are not interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act) of WRL Management, but excluding all interest and all
federal, state and local taxes (such as stamp, excise, income, franchise and
similar taxes). If Normal Operating Expenses exceed in any year the Expense
Limitation of the Fund, WRL Management shall pay for those excess expenses on
behalf of the Portfolios in the year in which they are incurred. Expenses of the
Portfolios shall be calculated and accrued monthly. If at the end of any month
the accrued expenses of the Portfolios exceed a pro rata portion of the
above-described Expense Limitation, based upon the average daily net asset value
of the Portfolios from the beginning of the fiscal year through the end of the
month for which calculation is made, the amount of such excess shall be paid by
WRL Management on behalf of the Portfolios and such excess amounts shall
continue to be paid until the end of a month when such accrued expenses are less
than the pro rata portion of such Expense Limitation. Any necessary final
adjusting payments, whether from WRL Management to the Portfolios or from the
Portfolios to WRL Management, shall be made as soon as reasonably practicable
after the end of the fiscal year.
8. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Directors of the Fund or by the shareholders of each Portfolio
acting by vote of at least a majority of its outstanding voting securities (as
that phrase is defined in Section 2(a)(42) of the 1940 Act) provided in either
case that 60 days' written notice of termination be given to WRL Management at
its principal place of business. This Agreement may be terminated by WRL
Management at any time by giving 60 days' written notice of termination to the
Fund, addressed to its principal place of business.
4
<PAGE>
9. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as the term is defined in Section 2(a)(4) of the 1940
Act) of this Agreement.
10. TERM. This Agreement shall continue in effect, unless sooner
terminated in accordance with its terms, as provided for each Portfolio on
Schedule A, and shall continue in effect from year to year thereafter provided
such continuance is specifically approved at least annually by the vote of a
majority of the Directors of the Fund who are not parties hereto or interested
persons (as that term is defined in Section 2(a)(19) of the 1940 Act) of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Directors of the Fund
or the affirmative vote of a majority of the outstanding voting securities of
each Portfolio (as that phrase is defined in Section 2(a)(42) of the 1940 Act).
11. AMENDMENTS. This Agreement may be amended only with the approval of
the affirmative vote of a majority of the outstanding voting securities of each
Portfolio (as that phrase is defined in Section 2(a)(42) of the 1940 Act) and
the approval by the vote of a majority of Directors of the Fund who are not
parties hereto or interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act of 1940) of any such party, cast in person at a meeting
called for the purpose of voting on the approval of such amendment, unless
otherwise permitted in accordance with the 1940 Act.
12. PRIOR AGREEMENTS. This Agreement constitutes the entire agreement
between the parties hereto and supersedes in its entirety any and all previous
agreements between the parties relative to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: WRL SERIES FUND, INC.
/S/ PRISCILLA I. HECHLER By:/S/ JOHN R. KENNEY
Assistant Vice President Chairman of the Board and President
and Assistant Secretary
ATTEST: WRL INVESTMENT MANAGEMENT, INC.
/S/ PRISCILLA I. HECHLER By:/S/ KENNETH P. BEIL
Assistant Vice President President
and Assistant Secretary
697advis.doc
5
<PAGE>
<TABLE>
<CAPTION>
Schedule A
SCHEDULE EFFECTIVE JUNE 16, 1997
PERCENTAGE OF MONTHLY AVERAGE DAILY EFFECTIVE DATE/TERMINATION DATE
PORTFOLIO NET ASSETS
<S> <C> <C>
January 1, 1997/
Growth 0.80% January 1, 1999
January 1, 1997/
Bond 0.50% January 1, 1999
January 1, 1997/
Global 0.80% January 1, 1999
January 1, 1997/
Money Market 0.40% January 1, 1999
Short-to-Intermediate Government 0.60% January 1, 1997/
January 1, 1999
January 1, 1997/
Emerging Growth 0.80% January 1, 1999
January 1, 1997/
Strategic Total Return 0.80% January 1, 1999
January 1, 1997/
Balanced 0.80% January 1, 1999
January 1, 1997/
Aggressive Growth 0.80% January 1, 1999
January 1, 1997/
Growth & Income 0.75% January 1, 1999
January 1, 1997/
Tactical Asset Allocation 0.80% January 1, 1999
January 1, 1997/
Value Equity 0.80% January 1, 1999
January 1, 1997/
C.A.S.E. Growth 0.80% January 1, 1999
January 1, 1997/
C.A.S.E. Quality Growth 0.80% January 1, 1999
January 1, 1997/
C.A.S.E. Growth & Income 0.80% January 1, 1999
1
<PAGE>
PERCENTAGE OF MONTHLY AVERAGE DAILY EFFECTIVE DATE/TERMINATION DATE
PORTFOLIO NET ASSETS
June 16, 1997/
Global Sector 0.80% January 1, 1999
June 16, 1997/
Foreign Sector 0.80% January 1, 1999
June 16, 1997/
US Sector 0.80% January 1, 1999
January 1, 1997/
International Equity 1.00% January 1, 1999
January 1, 1997/
U.S. Equity 0.80% January 1, 1999
</TABLE>
2
<PAGE>
EXHIBIT 2
SUB-ADVISORY AGREEMENT
BETWEEN
WRL INVESTMENT MANAGEMENT, INC.
AND
JANUS CAPITAL CORPORATION
SUB-ADVISORY AGREEMENT, made as of the 1st day of January, 1997,
between WRL Investment Management, Inc. ("Investment Adviser"), a corporation
organized and existing under the laws of Florida and Janus Capital Corporation
("Sub-Adviser"), a corporation organized and existing under the laws of the
State of Colorado.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of the 1st day of January, 1997 ("Advisory Agreement") with
the WRL Series Fund, Inc. ("Fund"), a Maryland corporation which is engaged in
business as an open-end investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of the Growth, Bond,
Global and Janus Balanced Portfolios ("Portfolios"), each a separate series of
the Fund;
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act");
and
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to the Investment
Adviser with respect to the Portfolios and the Sub-Adviser is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual promises
herein set forth, the parties hereto agree as follows:
1. APPOINTMENT.
Investment Adviser hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the Portfolios for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. DUTIES OF THE SUB-ADVISER.
A. INVESTMENT SUB-ADVISORY SERVICES. Subject to the supervision of
the Fund's Board of Directors ("Board") and the Investment Adviser, the
Sub-Adviser shall act as the investment sub-adviser and shall supervise and
direct the investments of the Portfolios in accordance with each Portfolio's
investment objective, policies, and restrictions as provided in the Fund's
Prospectus and Statement of Additional Information, as currently in effect and
as amended or supplemented from time to time (hereinafter referred to as the
"Prospectus"), and such other limitations as directed by the appropriate
officers of the Investment Adviser or the Fund by notice in writing to the
Sub-Adviser. The Sub-Adviser shall obtain and evaluate such information relating
to the economy, industries, businesses, securities markets, and securities as it
may deem necessary or useful in the discharge of its obligations hereunder and
shall formulate and implement a continuing program for the management of the
assets and resources of the Portfolios in a manner consistent with each
Portfolio's investment objective, policies, and restrictions. In furtherance of
this duty, the Sub-Adviser, on behalf of the Portfolios, is authorized, in its
discretion and without prior consultation with the Board or the Investment
Adviser, to:
1
<PAGE>
(1) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds and other securities or assets; and
(2) place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or
through such brokers, dealers, underwriters or issuers as the
Sub-Adviser may select.
B. ADDITIONAL DUTIES OF SUB-ADVISER. In addition to the above,
Sub-Adviser shall:
(1) furnish continuous investment information, advice and
recommendations to the Fund as to the acquisition, holding or
disposition of any or all of the securities or other assets which
the Portfolios may own or contemplate acquiring from time to time;
(2) cause its officers to attend meetings of the Fund and furnish
oral or written reports, as the Fund may reasonably require, in
order to keep the Fund's officers, Board and shareholders fully
informed as to the condition of the investment securities of the
Portfolios, the investment recommendations of the Sub-Adviser, and
the investment considerations which have given rise to those
recommendations; and
(3) furnish such statistical and analytical information and
reports as may reasonably be required by the Fund, its officers
and the Board from time to time, other than proprietary
information and provided Sub-Adviser shall not be responsible for
Portfolio accounting.
(4) Sub-Adviser shall be responsible for the preparation and
filing of Schedule 13G and Form 13F on behalf of the Portfolios.
Sub-Adviser shall not be responsible for the preparation or filing
of any reports required of the Portfolios by any governmental or
regulatory agency, except as expressly agreed to in writing.
Sub-Adviser shall vote proxies received in connection with
securities held by the Portfolios.
(5) Sub-Adviser shall have no responsibility to monitor certain
limitations or restrictions, including without limitation, the 1/2
of 1% limitation on personal trading (except for employees of
Sub-Adviser), the "short-short" test, and the 90%-source test for
which the Sub-Adviser determines it has not been provided
sufficient information in accordance with Section 4 of this
Agreement or otherwise. All such monitoring shall be the
responsibility of Investment Adviser.
C. FURTHER DUTIES OF SUB-ADVISER. In all matters relating to the
performance of this Agreement, the Sub-Adviser shall act in conformity with the
Fund's Articles of Incorporation and By-Laws, as each may be amended or
supplemented, and the Fund's currently effective Registration Statement (as
defined below) and with the written instructions and directions of the Board and
the Investment Adviser, and shall comply with the requirements of the 1940 Act,
the Advisers Act, the rules thereunder, and all other applicable federal and
state laws and regulations. Sub-Adviser makes no representation or warranty,
express or implied, that any level of performance or investment results will be
achieved by any Portfolio or that any Portfolio will perform comparably with any
standard or index, including other clients of Sub-Adviser, whether public or
private.
3. COMPENSATION.
For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, the Sub-Adviser shall receive a monthly investment
management fee equal to 50% of the fees received by the Investment Adviser for
services rendered under the Advisory Agreement by the Investment Adviser to the
Portfolios. The management fee shall be payable by the Investment Adviser
monthly to the Sub-Adviser upon receipt by the Investment Adviser from the
Portfolios of advisory fees payable to the Investment Adviser. If this Agreement
becomes effective or terminates before the end of any month, the investment
management fee for the period from the effective date to the end of such
2
<PAGE>
month or from the beginning of such month to the date of termination, as the
case may be, shall be pro-rated according to the pro-ration which such period
bears to the full month in which such effectiveness or termination occurs.
4. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have responsibility
for all services to be provided to the Portfolios pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement.
B. The Investment Adviser has furnished the Sub-Adviser with
copies of each of the following documents and will furnish to the Sub-Adviser at
its principal office all future amendments and supplements to such documents, if
any, as soon as practicable after such documents become available and, when
possible, before such amendments or supplements become effective:
(1) The Articles of Incorporation of the Fund, as filed with the
State of Maryland, as in effect on the date hereof and as amended
from time to time ("Articles"):
(2) The By-Laws of the Fund as in effect on the date hereof and as
amended from time to time ("By-Laws");
(3) Certified resolutions of the Board of the Fund authorizing the
appointment of the Investment Adviser and the Sub-Adviser and
approving the form of the Advisory Agreement and this Agreement
and any other resolutions of the Board applicable to the
Sub-Adviser's duties under this Agreement;
(4) The Fund's Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A, as filed with
the Securities and Exchange Commission ("SEC") relating to the
Portfolios and its shares and all amendments thereto
("Registration Statement");
(5) The Notification of Registration of the Fund under the 1940
Act on Form N-8A as filed with the SEC and any amendments thereto:
(6) The Fund's Prospectus (as defined above) and Statement of
Additional Information; and
(7) A certified copy of any publicly available financial statement
or report prepared for the Fund by certified or independent public
accountants, and copies of any financial statements or reports
made by the Portfolios to its shareholders or to any governmental
body or securities exchange.
The Investment Adviser shall furnish the Sub-Adviser with any further
documents, materials or information that the Sub-Adviser may reasonably request
to enable it to perform its duties pursuant to this Agreement.
C. Under the direction of Sub-Adviser, Investment Adviser shall be
responsible for setting up and maintaining brokerage accounts and other accounts
Sub-Adviser deems advisable to allow for the purchase or sale of various forms
of securities pursuant to this Agreement, or shall take such actions as
Sub-Adviser deems necessary or advisable to enable Sub-Adviser to establish such
accounts on behalf of the Fund.
D. During the term of this Agreement, the Investment Adviser shall
furnish to the Sub-Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared by the Investment Adviser, or on its behalf, for distribution to
shareholders of the Portfolios or the public, which refer to the Sub-Adviser or
investment companies or other advisory accounts
3
<PAGE>
advised or sponsored by the Sub-Adviser or investment companies or other
advisory accounts advised or sponsored by the Sub-Adviser in any way, prior to
the use thereof, and the Investment Adviser shall not use any such materials if
the Sub-Adviser reasonably objects in writing fifteen business days (or such
other time as may be mutually agreed) after receipt thereof.
5. BROKERAGE.
A. The Sub-Adviser agrees that, in placing orders with
broker-dealers for the purchase or sale of portfolio securities, it shall
attempt to obtain quality execution at favorable security prices (best price and
execution); provided that, on behalf of the Fund, the Sub-Adviser may, in its
discretion, agree to pay a broker-dealer that furnishes brokerage or research
services as such services are defined under Section 28(e) of the Securities
Exchange Act of 1934, as amended ("1934 Act"), a higher commission than that
which might have been charged by another broker-dealer for effecting the same
transactions, if the Sub-Adviser determines in good faith that such commission
is reasonable in relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Sub-Adviser with respect to the accounts as to
which it exercises investment discretion (as such term is defined under Section
3(a)(35) of the 1934 Act). In no instance will portfolio securities be purchased
from or sold to the Sub-Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules and regulations
thereunder.
B. On occasions when the Sub-Adviser deems the purchase or sale of
a security to be in the best interest of the Fund as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be purchased or sold to attempt to obtain a more favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner the Sub-Adviser
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to its other clients.
C. In addition to the foregoing, the Sub-Adviser agrees that
orders with broker-dealers for the purchase or sale of portfolio securities by
the Portfolios shall be placed in accordance with the standards set forth in the
Advisory Agreement.
6. OWNERSHIP OF RECORDS.
The Sub-Adviser shall maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees: (i) that all records that it maintains for the Fund
are the property of the Fund, (ii) to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records that it maintains for the Fund and
that are required to be maintained by Rule 31a-1 under the 1940 Act and (iii)
agrees to surrender promptly to the Fund any records that it maintains for the
Fund upon request by the Fund; provided, however, the Sub-Adviser may retain
copies of such records.
7. REPORTS.
The Sub-Adviser shall furnish to the Board or the Investment Adviser,
or both, as appropriate, such information, reports, evaluations, analyses and
opinions as the Sub-Adviser and the Board or the Investment Adviser, as
appropriate, may mutually agree upon from time to time.
8. SERVICES TO OTHERS CLIENTS.
Nothing contained in this Agreement shall limit or restrict (i) the
freedom of the Sub-Adviser, or any affiliated person thereof, to render
investment management and corporate administrative services to other investment
companies, to act as investment manager or investment counselor to other
persons, firms, or corporations, or to engage in any other business activities,
or (ii) the right of any director, officer, or employee of the Sub-Adviser, who
may also be a director, officer, or employee of the Fund, to engage
4
<PAGE>
in any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature.
9. REPRESENTATIONS OF SUB-ADVISER.
The Sub-Adviser represents, warrants, and agrees as follows:
A. The Sub-Adviser: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will continue to meet for so long as this Agreement remains in
effect, any applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify the Investment Adviser of the
occurrence of any event that would disqualify the Sub-Adviser from serving as an
investment adviser of an investment company pursuant to Section 9 (a) of the
1940 Act or otherwise.
B. The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and, if it has not
already done so, will provide the Investment Adviser and the Fund with a copy of
such code of ethics, together with evidence of its adoption.
C. The Sub-Adviser has provided the Investment Adviser and the
Fund with a copy of its Form ADV as most recently filed with the SEC and will,
promptly after filing any amendment to its Form ADV with the SEC, furnish a copy
of such amendment to the Investment Adviser.
10. CONFIDENTIALITY AND PROPRIETARY RIGHTS.
Sub-Adviser will not, directly or indirectly, and will not permit its
affiliates employees, officers, directors, agents, contractors, or the
Portfolios to use, disclose, or furnish to any person or entity, records or
information concerning the business of Sub-Adviser, except as necessary for the
performance of its duties under this Agreement or the Advisory Agreement, or as
required by law upon prior written notice to Sub-Adviser. Sub-Adviser is the
sole owner of the name and mark "Janus." Sub-Adviser shall not, and shall not
permit the Portfolios to, without prior written consent of Sub-Adviser, use the
name or mark "Janus" or make representations regarding Sub-Adviser or its
affiliates. Upon termination of this Agreement for any reason, Investment
Adviser shall immediately cease, and shall cause the Portfolios to immediately
cease, all use of the Janus name or any Janus mark.
11. LIABILITY.
Except as may otherwise be provided by the 1940 Act, or other federal
securities laws, neither Sub-Adviser nor any of its affiliates, officers,
directors, shareholders, employees, or agents shall be liable for any loss,
liability, cost, damage, or expense (including reasonable attorneys' fees and
costs) (collectively, referred to in this Agreement as "Losses"), except for
Losses resulting from Sub-Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. Investment Adviser shall hold harmless and indemnify Sub-Adviser, its
affiliates, directors, officers, shareholders, employees or agents for any Loss
not resulting from Sub-Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The obligations contained in this Section 11 shall survive
termination of this Agreement.
12. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those Directors of the Fund who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority
5
<PAGE>
of each Portfolio's outstanding voting securities. Unless sooner terminated as
provided herein, this Agreement shall continue in effect for two years from its
effective date. Thereafter, this Agreement shall continue in effect from year to
year, with respect to each Portfolio, subject to the termination provisions and
all other terms and conditions hereof, so long as such continuation shall be
specifically approved at least annually (a) by either the Board, or by vote of a
majority of the outstanding voting securities of each Portfolio; or (b) in
either event, by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Directors of the Fund who are not
parties to this Agreement or interested persons of any such party. The
Sub-Adviser shall furnish to the Fund, promptly upon its request such
information as may reasonably be necessary to evaluate the terms of this
Agreement or any extension, renewal, or amendment hereof.
13. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Portfolios on at least 60
days' prior written notice to the Sub-Adviser. This Agreement may also be
terminated by the Investment Adviser: (i) on at least 60 days' prior written
notice to the Sub-Adviser, without the payment of any penalty; or (ii) if the
Sub-Adviser becomes unable to discharge its duties and obligations under this
Agreement. The Sub-Adviser may terminate this Agreement at any time, or preclude
its renewal without the payment of any penalty, on at least 60 days' prior
notice to the Investment Adviser. This Agreement shall terminate automatically
in the event of its assignment or upon termination of the Advisory Agreement.
14. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of a majority of the Portfolio's outstanding voting securities, unless
otherwise permitted in accordance with the 1940 Act.
15. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Maryland without giving effect to the conflicts of
laws principles thereof, and the 1940 Act. To the extent that the applicable
laws of the State of Maryland conflict with the applicable provisions of the
1940 Act, the latter shall control.
B. CAPTIONS. The captions contained in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
C. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding of the parties hereto and shall supersede any prior
agreements between the parties relating to the subject matter hereof, and all
such prior agreements shall be deemed terminated upon the effectiveness of this
Agreement.
D. INTERPRETATION. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of its responsibility for
and control of the conduct of the affairs of the Fund.
E. DEFINITIONS. Any question of interpretation of any term of
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations, or
6
<PAGE>
orders of the SEC validly issued pursuant to the 1940 Act. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "net assets," "sale," "sell," and "security" shall have the same
meaning as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation, or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by a rule, regulation, or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation, or order, unless the Investment
Adviser and the Sub-Adviser agree to the contrary.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
Attest: WRL INVESTMENT MANAGEMENT, INC.
/S/ PRISCILLA I. HECHLER By: /S/ KENNETH P. BEIL
Assistant Secretary Name: Kenneth P. Beil
Title: President and Treasurer
Attest: JANUS CAPITAL CORPORATION
/S/ VERNA MORRIS By: /S/ STEPHEN L. STIENEKER
Name: Stephen L. Stieneker
Title: Vice President of Compliance
Janus.doc
7
<PAGE>
EXHIBIT 3
PROPOSED SUB-ADVISORY AGREEMENT
BETWEEN
WRL INVESTMENT MANAGEMENT, INC.
AND
AEGON USA INVESTMENT MANAGEMENT, INC.
SUB-ADVISORY AGREEMENT, made as of the 1st day of January, 1998,
between WRL Investment Management, Inc. ("Investment Adviser"), a corporation
organized and existing under the laws of the State of Florida and AEGON USA
Investment Management, Inc. ("Sub-Adviser"), a corporation organized and
existing under the laws of the State of Iowa.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of the 1st day of January, 1997 ("Advisory Agreement") with
the WRL Series Fund, Inc. ("Fund"), a Maryland corporation which is engaged in
business as an open-end investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of the Bond Portfolio
("Portfolio"), a separate series of the Fund;
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act");
and
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to the Investment
Adviser with respect to the Portfolio and the Sub-Adviser is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual promises
herein set forth, the parties hereto agree as follows:
1. APPOINTMENT.
Investment Adviser hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the Portfolio for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. DUTIES OF THE SUB-ADVISER.
A. INVESTMENT SUB-ADVISORY SERVICES. Subject to the supervision of
the Fund's Board of Directors ("Board") and the Investment Adviser, the
Sub-Adviser shall act as the investment sub-adviser and shall supervise and
direct the investments of the Portfolio in accordance with the Portfolio's
investment objective, policies, and restrictions as provided in the Fund's
Prospectus and Statement of Additional Information, as currently in effect and
as amended or supplemented from time to time (hereinafter referred to as the
"Prospectus"), and such other limitations as directed by the appropriate
officers of the Investment Adviser or the Fund by notice in writing to the
Sub-Adviser. The Sub-Adviser shall obtain and evaluate such information relating
to the economy, industries, businesses, securities markets, and securities as it
may deem necessary or useful in the discharge of its obligations hereunder and
shall formulate and implement a continuing program for the management of the
assets and resources of the Portfolio in a manner consistent with the
Portfolio's investment objective, policies, and restrictions. In furtherance of
this duty, the Sub-Adviser, on behalf of the Portfolio, is authorized, in its
discretion and without prior consultation with the Portfolio or the Investment
Adviser, to:
1
<PAGE>
(1) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds and other securities or assets; and
(2) place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or
through such brokers, dealers, underwriters or issuers as the
Sub-Adviser may select.
B. ADDITIONAL DUTIES OF SUB-ADVISER. In addition to the above,
Sub-Adviser shall:
(1) furnish continuous investment information, advice and
recommendations to the Fund as to the acquisition, holding or
disposition of any or all of the securities or other assets which
the Portfolio may own or contemplate acquiring from time to time;
(2) cause its officers to attend meetings of the Fund and furnish
oral or written reports, as the Fund may reasonably require, in
order to keep the Fund and its officers and Board fully informed
as to the condition of the investment securities of the Portfolio,
the investment recommendations of the Sub-Adviser, and the
investment considerations which have given rise to those
recommendations; and
(3) furnish such statistical and analytical information and
reports as may reasonably be required by the Fund from time to
time.
C. FURTHER DUTIES OF SUB-ADVISER. In all matters relating to the
performance of this Agreement, the Sub-Adviser shall act in conformity with the
Fund's Articles of Incorporation and By-Laws, as each may be amended or
supplemented, and currently effective Registration Statement (as defined below)
and with the written instructions and directions of the Board and the Investment
Adviser, and shall comply with the requirements of the 1940 Act, the Advisers
Act, the rules thereunder, and all other applicable federal and state laws and
regulations. Sub-Adviser makes no representation or warranty, express or
implied, that any level of performance or investment results will be achieved by
any Portfolio, or that any Portfolio will perform comparably with any standard
or index, including other clients of Sub-Adviser, whether public or private.
3. COMPENSATION.
For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, the Sub-Adviser shall receive a monthly investment
management fee equal to (i) 0.20% of monthly average daily net assets of the
Portfolio, less (ii) 50% of the amount paid by the Investment Adviser on behalf
of the Portfolio pursuant to any expense limitation or the amount of any other
reimbursement made by the Investment Adviser to the Portfolio. The management
fee shall be payable by the Investment Adviser monthly to the Sub-Adviser upon
receipt by the Investment Adviser from the Portfolio of advisory fees payable to
the Investment Adviser. If this Agreement becomes effective or terminates before
the end of any month, the investment management fee for the period from the
effective date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be pro-rated according to the
pro-ration which such period bears to the full month in which such effectiveness
or termination occurs.
4. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement.
B. The Investment Adviser has furnished the Sub-Adviser with
copies of each of the following documents and will furnish to the Sub-Adviser at
its principal office all future amendments and
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<PAGE>
supplements to such documents, if any, as soon as practicable after such
documents become available and, when possible, before such amendments or
supplements become effective:
(1) The Articles of Incorporation of the Fund, as filed with the
State of Maryland, as in effect on the date hereof and as amended
from time to time ("Articles"):
(2) The By-Laws of the Fund as in effect on the date hereof and as
amended from time to time ("By-Laws");
(3) Certified resolutions of the Board of the Fund authorizing the
appointment of the Investment Adviser and the Sub-Adviser and
approving the form of the Advisory Agreement and this Agreement
and any other resolutions of the Board applicable to the
Sub-Adviser's duties under this Agreement;
(4) The Fund's Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A, as filed with
the Securities and Exchange Commission ("SEC") relating to the
Portfolio and its shares and all amendments thereto ("Registration
Statement");
(5) The Notification of Registration of the Fund under the 1940
Act on Form N-8A as filed with the SEC and any amendments thereto:
(6) The Fund's Prospectus (as defined above); and
(7) A certified copy of any publicly available financial statement
or report prepared for the Fund by certified or independent public
accountants, and copies of any financial statements or reports
made by the Portfolio to its shareholders or to any governmental
body or securities exchange.
The Investment Adviser shall furnish the Sub-Adviser with any further
documents, materials or information that the Sub-Adviser may reasonably request
to enable it to perform its duties pursuant to this Agreement.
C. During the term of this Agreement, the Investment Adviser shall
furnish to the Sub-Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of the Portfolio or the public, which
refer to the Sub-Adviser or investment companies or other advisory accounts
advised or sponsored by the Sub-Adviser or investment companies or other
advisory accounts advised or sponsored by the Sub-Adviser in any way, prior to
the use thereof, and the Investment Adviser shall not use any such materials if
the Sub-Adviser reasonably objects in writing fifteen business days (or such
other time as may be mutually agreed) after receipt thereof.
5. BROKERAGE.
A. The Sub-Adviser agrees that, in placing orders with
broker-dealers for the purchase or sale of portfolio securities, it shall
attempt to obtain quality execution at favorable security prices (best price and
execution); provided that, on behalf of the Fund, the Sub-Adviser may, in its
discretion, agree to pay a broker-dealer that furnishes brokerage or research
services as such services are defined under Section 28(e) of the Securities
Exchange Act of 1934, as amended ("1934 Act"), a higher commission than that
which might have been charged by another broker-dealer for effecting the same
transactions, if the Sub-Adviser determines in good faith that such commission
is reasonable in relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Sub-Adviser with respect to the accounts as to
which it exercises investment discretion (as such term is defined under Section
3(a)(35) of the 1934 Act). In no instance will portfolio securities be purchased
from or sold to the Sub-Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules and regulations
thereunder.
3
<PAGE>
B. On occasions when the Sub-Adviser deems the purchase or sale of
a security to be in the best interest of the Fund as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be purchased or sold to attempt to obtain a more favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner the Sub-Adviser
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to its other clients.
C. In addition to the foregoing, the Sub-Adviser agrees that
orders with broker-dealers for the purchase or sale of portfolio securities by
the Portfolio shall be placed in accordance with the standards set forth in the
Advisory Agreement.
6. OWNERSHIP OF RECORDS.
The Sub-Adviser shall maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees: (i) that all records that it maintains for the Fund
are the property of the Fund, (ii) to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records that it maintains for the Fund and
that are required to be maintained by Rule 31a-1 under the 1940 Act and (iii)
agrees to surrender promptly to the Fund any records that it maintains for the
Fund upon request by the Fund; provided, however, the Sub-Adviser may retain
copies of such records.
7. REPORTS.
The Sub-Adviser shall furnish to the Board or the Investment Adviser,
or both, as appropriate, such information, reports, evaluations, analyses and
opinions as the Sub-Adviser and the Board or the Investment Adviser, as
appropriate, may mutually agree upon from time to time.
8. SERVICES TO OTHERS CLIENTS.
Nothing contained in this Agreement shall limit or restrict (i) the
freedom of the Sub-Adviser, or any affiliated person thereof, to render
investment management and corporate administrative services to other investment
companies, to act as investment manager or investment counselor to other
persons, firms, or corporations, or to engage in any other business activities,
or (ii) the right of any director, officer, or employee of the Sub-Adviser, who
may also be a director, officer, or employee of the Fund, to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature.
9. REPRESENTATIONS OF SUB-ADVISER.
The Sub-Adviser represents, warrants, and agrees as follows:
A. The Sub-Adviser: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will continue to meet for so long as this Agreement remains in
effect, any applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify the Investment Adviser of the
occurrence of any event that would disqualify the Sub-Adviser from serving as an
investment adviser of an investment company pursuant to Section 9 (a) of the
1940 Act or otherwise.
4
<PAGE>
B. The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and, if it has not
already done so, will provide the Investment Adviser and the Fund with a copy of
such code of ethics, together with evidence of its adoption.
C. The Sub-Adviser has provided the Investment Adviser and the
Fund with a copy of its Form ADV as most recently filed with the SEC and will,
promptly after filing any amendment to its Form ADV with the SEC, furnish a copy
of such amendment to the Investment Adviser.
10. CONFIDENTIALITY AND PROPRIETARY RIGHTS.
Sub-Adviser will not, directly or indirectly, and will not permit its
affiliates employees, officers, directors, agents, contractors, or the Portfolio
to use, disclose or furnish to any person or entity, records or information
concerning the business of Sub-Adviser, except as necessary for the performance
of its duties under this Agreement or the Advisory Agreement, or as required by
law upon prior written notice to Sub-Adviser. Sub-Adviser is the sole owner of
the name and mark "AEGON USA Investment Management, Inc." Sub-Adviser shall not,
and shall not permit the Portfolio to, without prior written consent of
Sub-Adviser, use the name or mark "AEGON USA Investment Management, Inc." or
make representations regarding Sub-Adviser or its affiliates. Upon termination
of this Agreement for any reason, Investment Adviser shall immediately cease,
and shall cause the Portfolio to immediately cease, all use of the AEGON USA
Investment Management, Inc. name or any AEGON USA Investment Management, Inc.
mark.
11. LIABILITY.
Except as may otherwise be provided by the 1940 Act, or other federal
securities laws, neither Sub-Adviser nor any of its affiliates, officers,
directors, shareholders, employees, or agents shall be liable for any loss,
liability, cost, damage, or expense (including reasonable attorneys' fees and
costs) (collectively, referred to in this Agreement as "Losses"), except for
Losses resulting from Sub-Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. Investment Adviser shall hold harmless and indemnify Sub-Adviser, its
affiliates, directors, officers, shareholders, employees or agents for any Loss
not resulting from Sub-Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The obligations contained in this Section 11 shall survive
termination of this Agreement.
12. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those Directors of the Fund who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Portfolio's outstanding voting securities. Unless
sooner terminated as provided herein, this Agreement shall continue in effect
for two years from its effective date. Thereafter, this Agreement shall continue
in effect from year to year, with respect to the Portfolio, subject to the
termination provisions and all other terms and conditions hereof, so long as
such continuation shall be specifically approved at least annually (a) by either
the Board, or by vote of a majority of the outstanding voting securities of the
Portfolio; and (b) in either event, by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party. The Sub-Adviser shall furnish to the Fund, promptly
upon its request such information as may reasonably be necessary to evaluate the
terms of this Agreement or any extension, renewal, or amendment hereof.
13. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on at least 60
days' prior written notice to the Sub-Adviser. This Agreement
5
<PAGE>
may also be terminated by the Investment Adviser: (i) on at least 60 days' prior
written notice to the Sub-Adviser, without the payment of any penalty; or (ii)
if the Sub-Adviser becomes unable to discharge its duties and obligations under
this Agreement. The Sub-Adviser may terminate this Agreement at any time, or
preclude its renewal without the payment of any penalty, on at least 60 days'
prior notice to the Investment Adviser. This Agreement shall terminate
automatically in the event of its assignment or upon termination of the Advisory
Agreement.
14. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of a majority of the Portfolio's outstanding voting securities, unless
otherwise permitted in accordance with the 1940 Act.
15. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Maryland without giving effect to the conflicts of
laws principles thereof, and the 1940 Act. To the extent that the applicable
laws of the State of Maryland conflict with the applicable provisions of the
1940 Act, the latter shall control.
B. CAPTIONS. The captions contained in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
C. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding of the parties hereto and shall supersede any prior
agreements between the parties relating to the subject matter hereof, and all
such prior agreements shall be deemed terminated upon the effectiveness of this
Agreement.
D. INTERPRETATION. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of its responsibility for
and control of the conduct of the affairs of the Fund.
E. DEFINITIONS. Any question of interpretation of any term of
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations, or orders of the SEC validly issued pursuant to the 1940
Act. As used in this Agreement, the terms "majority of the outstanding voting
securities," "affiliated person," "interested person," "assignment," "broker,"
"investment adviser," "net assets," "sale," "sell," and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the SEC by any rule, regulation, or order. Where the effect
of a requirement of the federal securities laws reflected in any provision of
this Agreement is made less restrictive by a rule, regulation, or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation, or order, unless the
Investment Adviser and the Sub-Adviser agree to the contrary.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
Attest: WRL INVESTMENT MANAGEMENT, INC.
By:
Assistant Secretary Name: Kenneth P. Beil
Title: President and Treasurer
Attest: AEGON USA INVESTMENT MANAGEMENT, INC.
By:
Name:
Title:
bond.doc
7
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
GROWTH & INCOME PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR A SPECIAL MEETING OF SHAREHOLDERS OF
THE WRL SERIES FUND, INC.
DECEMBER 15, 1997
Account Name
AND NUMBER CASH VALUE PROXY VOTES
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the Growth & Income Portfolio of the WRL Series
Fund, Inc. ("Fund") as to which I am entitled to give instructions, as shown
above, at a Special Meeting of the Shareholders of the Fund ("the Meeting") to
be held at 10:00 a.m. on December 15, 1997, Eastern Time and any adjournments
thereof at 201 Highland Avenue, Largo, Florida 33770 as follows:
(1) To approve a change to a policy of non-industry concentration
with respect to the Growth & Income Portfolio
___ For ___ Against ___ Abstain
(2) To transact such other business as may properly come before
the Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN
THE POSTAGE PAID ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated November 3, 1997. THIS INSTRUCTION WILL BE VOTED AS SPECIFIED.
IF NO SPECIFICATION IS MADE, THIS INSTRUCTION WILL BE VOTED "FOR" EACH PROPOSAL.
This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
----------------------------------- -------------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly as
name or names appear on this Voting Instruction Form. If the individual signing
the form is a fiduciary (E.G., attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his full title.
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
BOND PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR A SPECIAL MEETING OF SHAREHOLDERS OF
THE WRL SERIES FUND, INC.
DECEMBER 15, 1997
Account Name
AND NUMBER CASH VALUE PROXY VOTES
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the Bond Portfolio of the WRL Series Fund, Inc.
("Fund") as to which I am entitled to give instructions, as shown above, at a
Special Meeting of the Shareholders of the Fund ("the Meeting") to be held at
10:00 a.m. on December 15, 1997, Eastern Time and any adjournments thereof at
201 Highland Avenue, Largo, Florida 33770 as follows:
(1) To approve a Proposed Sub-Advisory Agreement between AEGON USA
Investment Management, Inc.and WRL Investment Management, Inc.
___ For ___ Against ___ Abstain
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE
POSTAGE PAID ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated November 3, 1997. THIS INSTRUCTION WILL BE VOTED AS SPECIFIED.
IF NO SPECIFICATION IS MADE, THIS INSTRUCTION WILL BE VOTED "FOR" EACH PROPOSAL.
This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
----------------------------------- -------------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly as
name or names appear on this Voting Instruction Form. If the individual signing
the form is a fiduciary (E.G., attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his full title.
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
BOND PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR A SPECIAL MEETING OF SHAREHOLDERS OF THE
WRL SERIES FUND, INC.
DECEMBER 15, 1997
ACCOUNT NO.: POOLED ACCOUNT NO. 27 CASH VALUE PROXY VOTES
- ---------------------------------- ---------- -----------
I hereby instruct AUSA Life Insurance Company, Inc. ("AUSA Life") to
vote the shares of the Portfolio of the WRL Series Fund, Inc. ("Fund") as to
which I am entitled to give instructions, as shown above, at a Special Meeting
of the Shareholders of the Fund (the "Meeting") to be held at 10:00 a.m. on
December 15, 1997, Eastern Time and any adjournments thereof at 201 Highland
Avenue, Largo, Florida 33770 as follows:
(1) To approve a Proposed Sub-Advisory Agreement between AEGON USA
Investment Management, Inc.and WRL Investment Management,Inc.;
___ For __ Against ___ Abstain
(2) To transact such other business as may properly come before
the Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated November 3, 1997. THIS INSTRUCTION WILL BE VOTED AS SPECIFIED. This
instruction may be revoked at any time prior to the Meeting by executing a
subsequent voting instruction form, by notifying the Secretary of the Fund in
writing or by voting in person at the Meeting.
-------------------------------- ---------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly as
name or names appear on this Voting Instruction Form. If the individual signing
the form is a fiduciary (E.G., attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his full title.
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
GROWTH & INCOME PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR A SPECIAL MEETING OF SHAREHOLDERS OF THE
WRL SERIES FUND, INC.
DECEMBER 15, 1997
ACCOUNT NO.: POOLED ACCOUNT NO. 27 CASH VALUE PROXY VOTES
- ---------------------------------- ---------- -----------
I hereby instruct AUSA Life Insurance Company, Inc. ("AUSA Life") to
vote the shares of the Portfolio of the WRL Series Fund, Inc. ("Fund") as to
which I am entitled to give instructions, as shown above, at a Special Meeting
of the Shareholders of the Fund (the "Meeting") to be held at 10:00 a.m. on
December 15, 1997, Eastern Time and any adjournments thereof at 201 Highland
Avenue, Largo, Florida 33770 as follows:
(1) To approve a change to a policy of non-industry concentration
with respect to the Growth & Income Portfolio
___ For __ Against ___ Abstain
(2) To transact such other business as may properly come before
the Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated November 3, 1997. THIS INSTRUCTION WILL BE VOTED AS SPECIFIED. This
instruction may be revoked at any time prior to the Meeting by executing a
subsequent voting instruction form, by notifying the Secretary of the Fund in
writing or by voting in person at the Meeting.
--------------------------------- --------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly as
name or names appear on this Voting Instruction Form. If the individual signing
the form is a fiduciary (E.G., attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his full title.
<PAGE>
Apppendix
November 3, 1997
Dear Policy or Contract Owner:
As an Owner of a variable life insurance policy or variable annuity contract
(either of which is referred to as a "Policy"), you have the right to vote
certain shares of the Growth & Income and/or Bond Portfolio (the "Portfolios")
of the WRL Series Fund, Inc. (the "Fund") attributable to your Policy at the
December 15, 1997 special meeting of shareholders of the Fund (the "Meeting").
To assist you in giving those instructions, we have enclosed the following:
(1) A Notice of the Special Meeting;
(2) A Voting Instruction Form for each Portfolio applicable to your
Policy; and
(3) A Proxy Statement to Shareholders.
Please read the enclosed Notice of the Special Meeting and the Proxy Statement
for details regarding the purposes of the Meeting.
Shareholders of the Bond Portfolio are being asked to approve a Proposed
Sub-Advisory Agreement for the Bond Portfolio between WRL Investment Management,
Inc. (the "Investment Adviser") and AEGON USA Investment Management, Inc.
("AEGON USA"). We are requesting a change of Sub-Adviser from Janus Capital
Corporation to AEGON USA. If the Proposed Sub-Advisory Agreement is approved,
the investment advisory fees for the Bond Portfolio will be reduced from 0.50%
to 0.45% of average daily net assets.
Shareholders of the Growth & Income Portfolio are being asked to approve a
change of concentration policy to a policy of non-industry concentration. The
Portfolio's Sub-Adviser, Federated Investment Counseling, believes that the
Portfolio's current policy of concentration in the utility industry is now
potentially unattractive for investors and may result in greater risk.
A Voting Instruction Form for each Portfolio attributable to your Policy must be
received by EVACO Financial Printers (tabulating company) at 100 Carillon
Parkway, Suite 170, St. Petersburg, Florida 33716-9984 no later than December
12, 1997. This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
If you own more than one Policy, you will receive a separate mailing for each
Policy. It is important you promptly return a signed Voting Instruction Form for
each Portfolio of each Policy in the enclosed postage-paid envelope.
We will vote the shares of each Portfolio for which timely voting instructions
are not received in the same proportion as those shares attributable to each
Portfolio for which timely instructions are received. We will also vote each
Portfolio's shares in our best judgment on any other matters which come before
the Meeting.
Thank you for your prompt cooperation.
Very truly yours,
/s/ John R. Kenney
John R. Kenney
Chairman of the Board, Chief Executive
Officer and President
Western Reserve Life Assurance Co. of Ohio
<PAGE>
Appendix
November 3, 1997
Dear Contract Owner:
As an Owner of a variable annuity contract (the "Contract") issued by AUSA Life
Insurance Company, Inc. ("AUSA Life"), you have the right to instruct AUSA Life
how to vote certain shares of the Growth & Income and/or the Bond Portfolio of
the WRL Series Fund, Inc. (the "Fund") attributable to your Contract at the
December 15, 1997 special meeting of shareholders of the Fund (the "Meeting").
To assist you in giving those instructions, we have enclosed the following:
(1) A Notice of the Special Meeting; (2) A Voting Instruction Form; and
(3) A Proxy Statement to Shareholders.
Please read the enclosed Notice of the Special Meeting and the Proxy Statement
for details regarding the purposes of the Meeting.
Shareholders of the Bond Portfolio are being asked to approve a Proposed
Sub-Advisory Agreement for the Bond Portfolio between WRL Investment Management,
Inc. (the "Investment Adviser") and AEGON USA Investment Management, Inc.
("AEGON USA"). We are requesting a change of Sub-Adviser from Janus Capital
Corporation to AEGON USA. If the Proposed Sub-Advisory Agreement is approved,
the investment advisory fees for the Bond Portfolio will be reduced from 0.50%
to 0.45% of average daily net assets.
Shareholders of the Growth & Income Portfolio are being asked to approve a
change of concentration policy to a policy of non-industry concentration. The
Portfolio's Sub-Adviser, Federated Investment Counseling, believes that the
Portfolio's current policy of concentration in the utility industry is now
potentially unattractive for investors and may result in greater risk.
Although you are not directly a shareholder of the Growth & Income or Bond
Portfolio, some or all of your contract value is invested, as provided by your
Contract, in the Growth & Income or Bond Portfolio. Accordingly, you have the
right under your Contract to instruct AUSA Life how to vote the Growth & Income
Portfolio's or Bond Portfolio's shares which are attributable to your Contract.
The number of Portfolio shares for which an Owner may give instructions is
determined as follows. For each Contract the number of votes in the Portfolio
will be determined by dividing the amount of the Contract's contract value
attributable to the Portfolio as of the record date (October 10, 1997) by $100.
Fractional shares will be counted. The enclosed Voting Instruction Form(s) shows
the number of Proxy Votes in the Growth & Income or Bond Portfolio attributable
to your Contract for which you are entitled to give voting instructions.
A Voting Instruction Form for EACH PORTFOLIO ATTRIBUTABLE TO YOUR CONTRACT must
be received by EVACO Financial Printers (tabulating company) at 100 Carillon
Parkway, Suite 170, St. Petersburg, Florida 33716-9984 NO LATER THAN DECEMBER
12, 1997. This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
IF YOU OWN MORE THAN ONE CONTRACT, YOU WILL RECEIVE A SEPARATE MAILING FOR EACH
CONTRACT. IT IS IMPORTANT YOU PROMPTLY RETURN A SIGNED VOTING INSTRUCTION FORM
FOR EACH PORTFOLIO OF EACH CONTRACT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
We will vote the shares of each Portfolio for which timely voting instructions
are not received in the same proportion as those shares for which timely
instructions are received. We will also vote each Portfolio's shares in our best
judgment on any other matters which come before the Meeting.
Thank you for your prompt cooperation.
Very truly yours,
/s/ William L. Busler
William L. Busler
Vice President
AUSA Life Insurance Company, Inc.
