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.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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May 12, 1997
Dear Contract Owner:
As an Owner of a variable annuity contract (a "Contract") issued by Western
Reserve Life Assurance Co. of Ohio ("Western Reserve"), you have the right to
instruct Western Reserve how to vote certain shares of the Global Sector
Portfolio, the US Sector Portfolio or the Foreign Sector Portfolio (each a
"Portfolio" or collectively, the "Portfolios") of the WRL Series Fund, Inc. (the
"Fund") attributable to your Contract at the June 16, 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
Contract; 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.
The primary purposes of the Meeting are (1) to approve a new Proposed Advisory
Agreement between the Fund, on behalf of each Portfolio, and WRL Investment
Management, Inc. ("WRL Management") and (2) to approve a new Sub-Advisory
Agreement between WRL Management and Meridian Investment Management Corporation
(the "Sub-Adviser") on behalf of each Portfolio.
The Proposed Advisory Agreement is substantially identical to the current
Advisory Agreement, except for (1) a reduction in the investment advisory fee,
as a percentage of net assets of each Portfolio, payable to WRL Management by
the Fund from the assets of such Portfolio, and (2) the date of execution, and
effectiveness and termination. The Proposed Sub-Advisory Agreement is
substantially similar to the current Sub-Advisory Agreement in effect with
respect to each Portfolio, except (1) certain material changes in the nature,
reflecting a significant expansion in the scope, of services provided by the
Sub-Adviser, (2) a change in the method of computing the investment sub-advisory
fee payable to the Sub-Adviser by WRL Management, resulting in an increase in
the Sub-Adviser's compensation as a percentage of net assets of each Portfolio,
and (3) the dates of execution, effectiveness and termination.
Western Reserve is the sole shareholder of each Portfolio. Although you are not
directly a shareholder of any Portfolio, some or all of your Contract's cash
value is invested, as provided by your Contract, in one or more of the
Portfolios. Accordingly, you have the right under your Contract to instruct
Western Reserve how to vote each 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
a Portfolio will be determined by dividing the amount of the Contract's cash
value attributable to a Portfolio as of the record date (April 30, 1997) by
$100. Fractional shares will be counted. The enclosed Voting Instruction Form(s)
shows the number of Proxy Votes in each Portfolio attributable to your Contract
for which you are entitled to give voting instructions.
To be given effect at the Meeting, properly executed Voting Instruction Forms
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 JUNE 12, 1997.
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.
Please complete a Voting Instruction Form for each Portfolio and promptly return
it in the enclosed postage paid envelope. Your instructions are very important,
and we would appreciate your return of the Form(s) as soon as possible.
Thank you for your prompt cooperation.
Very truly yours,
John R. Kenney
Chairman, Chief Executive Officer and President
Western Reserve Life Assurance Co. of Ohio
P.S. IF YOU OWN MORE THAN ONE CONTRACT, YOU WILL RECEIVE A SEPARATE MAILING FOR
EACH CONTRACT. IT IS IMPORTANT YOU RETURN A SIGNED VOTING INSTRUCTION FORM
FOR EACH PORTFOLIO OF EACH CONTRACT.
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WRL SERIES FUND, INC.
GLOBAL SECTOR PORTFOLIO
US SECTOR PORTFOLIO
FOREIGN SECTOR PORTFOLIO
201 HIGHLAND AVENUE
LARGO, FLORIDA 33770
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NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
JUNE 16, 1997
-------------------
TO THE SHAREHOLDERS:
A special meeting of the shareholders of the Global Sector Portfolio,
US Sector Portfolio and Foreign Section Portfolio (each a "Portfolio";
collectively, the "Portfolios") of the WRL Series Fund, Inc. (the "Fund), will
be held on June 16, 1997 at 10:30 a.m. Eastern Time, at 201 Highland Avenue,
Largo, Florida 33770, or any adjournment thereof, for the following purposes:
(1) To approve a new investment advisory agreement for each Portfolio (the
"Proposed Advisory Agreement") between the Fund, on behalf of such
Portfolio, and WRL Investment Management, Inc. ("WRL Management");
(2) To approve a new investment sub-advisory agreement for each Portfolio
(the "Proposed Sub-Advisory Agreement") between WRL Management, with
respect to such Portfolio, and Meridian Investment Management
Corporation ("Meridian");
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Please indicate your voting instructions on the enclosed voting
instruction form WITH RESPECT TO EACH Portfolio in which you were a beneficial
owner as of the record date; sign such voting instruction form; and return it in
the envelope provided, which is addressed for your convenience and needs no
postage if mailed in the United States.
In order to avoid the additional expense to the Fund of further
solicitation, we ask that you mail your voting form promptly.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR VOTING INSTRUCTION FORM
PROMPTLY NO MATTER HOW MANY SHARES YOU BENEFICIALLY OWN. You are entitled to
vote at the meeting and any adjournments thereof if you beneficially owned
Portfolio shares at the close of business on April 30, 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 for each Portfolio in the postage-paid envelope provided.
By Order of the Board of Directors
/s/ THOMAS E. PIERPAN
---------------------
Thomas E. Pierpan
VICE PRESIDENT & ASSISTANT SECRETARY
May 12, 1997
<PAGE>
WRL SERIES FUND, INC.
GLOBAL SECTOR PORTFOLIO
US SECTOR PORTFOLIO
FOREIGN SECTOR PORTFOLIO
201 HIGHLAND AVENUE
LARGO, FLORIDA 33770
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JUNE 16, 1997
This is a Proxy Statement for the Global Sector Portfolio, US Sector
Portfolio and Foreign Sector Portfolio (each a "Portfolio"; collectively, the
"Portfolios") of the WRL Series Fund, Inc., a Maryland corporation (the "Fund"),
a series mutual fund consisting of several series or separate investment
portfolios. This Proxy Statement is being 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 June 16, 1997, at 10:30
a.m. Eastern Time, at 201 Highland Avenue, Largo, Florida 33770, for the
purposes set forth in the Notice of the Meeting.
The primary purposes of the Meeting are: (1) to permit the shareholders
of each Portfolio to consider a Proposed Advisory Agreement (described below)
between the Fund, on behalf of each Portfolio, and WRL Management, to take
effect on June 16, 1997, or as soon thereafter as practicable; and (2) to permit
the shareholders of each Portfolio to consider a Proposed Sub-Advisory Agreement
(described below) between WRL Management and Meridian, to take effect on June
16, 1997, or as soon thereafter as practicable.
A majority of the shares of stock outstanding on April 30, 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, April 30, 1997, the Fund had outstanding 917,524.360 shares of the
Global Sector Portfolio, 231,201.817 shares of the US Sector Portfolio and
152,692.395 shares of the Foreign Sector Portfolio (with an aggregate net asset
value of $10.500, $10.617 and $9.983, respectively), all of which shares are
owned of record by the WRL Series Annuity Account (the "Account") of Western
Reserve Life Assurance Co. of Ohio ("Western Reserve") or by Western Reserve
directly. Western Reserve, the sole shareholder of the Portfolios, will vote
shares held in the Account at the Meeting in accordance with the instructions
received from the holders of individual variable annuity contracts ("Contracts"
owned by the "Contractowners") whose benefits thereunder are funded through the
Account.
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 May 12, 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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CONTRACTOWNERS' RIGHT TO INSTRUCT WESTERN RESERVE
The Fund has agreed to solicit voting instructions from the
Contractowners, upon which instructions Western Reserve will vote the shares of
the Portfolios at the Meeting on June 16, 1997, and any adjournment thereof. The
Fund will mail to each Contractowner of record as of April 30, 1997, a copy of
this Proxy Statement. The number of Fund shares in a Portfolio for which a
Contractowner may give instructions is determined as follows: the number of
Portfolio shares (and corresponding votes) allotted to each Contract will be
calculated by dividing the amount of the Contract's value attributable to the
Portfolio by $100. Fractional shares will be counted. Based upon the contract
value attributable to each Portfolio as of April 30, 1997, Contractowners are
entitled to the following aggregate of votes with respect to each of the
Portfolios:
OUTSTANDING SHARES AGGREGATE VOTES BASED ON CONTRACT
PORTFOLIO OWNED BY THE ACCOUNT VALUE OF THE PORTFOLIO
- --------- -------------------- ---------------------------------
Global Sector 917,524.360 96,339.222
US Sector 231,201.817 24,547.512
Foreign Sector 152,692.395 15,242.813
All shares for which Western Reserve receives 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 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 Contracts
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 with respect to 5% or more of the shares of any Portfolio.
However, the proportionate voting policy may result in certain Contractowners'
instructions affecting the vote of 5% or more of total outstanding shares of a
Portfolio. These particular Contractowners and the percentage of votes which
their instruction may affect will depend upon which Contractowners provide
instructions and which Contractowners do not. Because no director or executive
officer of the Fund holds a Contract whose benefits thereunder are funded by the
Portfolios, none has the right to instruct Western Reserve as to any shares of
any Portfolio.
Western Reserve will vote in accordance with the direction as indicated
in your enclosed voting instruction form(s) provided it is received properly
executed prior to the Meeting. If you properly execute your voting instruction
form(s) and give no voting instruction, your shares will be voted in proportion
to the voting instructions which are received with respect to all Contracts
participating in each applicable Portfolio. Abstentions will be counted as
present for purposes of determining a quorum, but will not be counted as voting
with respect to those proposals from which Contractowners 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.
Shareholders of each Portfolio will vote separately from shareholders
of the other Portfolios on the Proposed Advisory Agreement as it applies to such
Portfolio, and the Proposed Sub-Advisory Agreement as it relates to such
Portfolio. For each Portfolio, the Board of Directors recommends that you cast
your vote:
FOR approval of the Proposed Advisory Agreement as it applies to such
Portfolio.
FOR approval of the Proposed Sub-Advisory Agreement as it relates to
such Portfolio.
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Each of these proposals is described in more detail below, and in the
attached Exhibits. The Exhibits are an important part 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 Advisory Agreement and
Proposed Sub-Advisory Agreement must be approved by a "vote of a majority of the
outstanding voting securities" of such Portfolio, as defined in Section 2(a)(42)
of the Investment Company Act of 1940, as amended (the "1940 Act"). The "vote of
a majority of the outstanding voting securities" means the vote of the lesser
of: (i) 67% or more of the shares of the Portfolio 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 EACH PORTFOLIO MUST APPROVE BOTH (I) THE PROPOSED
ADVISORY AGREEMENT, AS IT APPLIES TO SUCH PORTFOLIO, AND (II) THE PROPOSED
SUB-ADVISORY AGREEMENT, AS IT RELATES TO SUCH PORTFOLIO, IN ORDER FOR EACH OF
THESE PROPOSALS TO BE IMPLEMENTED WITH RESPECT TO THAT PORTFOLIO.
INTRODUCTION
Currently, WRL Management acts as investment adviser of each Portfolio
pursuant to an investment advisory agreement dated January 1, 1997 (the "Current
Advisory Agreement"). Under the Current Advisory Agreement, WRL Management is
responsible for providing investment management and supervision services to each
Portfolio. With respect to each Portfolio, WRL Management had in turn entered
into an investment sub-advisory agreement with Meridian dated January 1, 1997
(the "Current Sub-Advisory Agreement"), and an investment sub-advisory agreement
with INVESCO Global Asset Management Limited ("INVESCO Management") dated
January 1, 1997 (the "INVESCO Sub-Advisory Agreement"). Under the Current
Sub-Advisory Agreement, Meridian is formally responsible for making asset
allocation, industry and country selections for each Portfolio. Under the
INVESCO Sub-Advisory Agreement, INVESCO Management was formally responsible for
actually selecting individual securities and other assets for each Portfolio
within the constraints of Meridian's asset allocation, industry and country
selections.
The consummation of a merger involving INVESCO PLC (an English holding
company of which INVESCO Management was an indirect wholly-owned subsidiary) and
AIM Management Group Inc. on February 28, 1997, resulted in an assignment of the
INVESCO Sub-Advisory Agreement; accordingly, on such date the INVESCO
Sub-Advisory Agreement terminated automatically, as required by Section 15(a)(4)
of the 1940 Act. Thereafter, INVESCO Management has provided no services and has
earned no compensation from WRL Management or the Fund. Instead, beginning
February 28, 1997, Meridian has -- voluntarily and for no additional
compensation beyond that set forth in the Current Sub-Advisory Agreement,
pending shareholder consideration and approval of the Proposed Sub-Advisory
Agreement (see Proposal No. 2 below) -- assumed responsibility for actually
selecting individual securities and other assets in addition to making asset
allocation, industry and country selections for each Portfolio. In turn, also
beginning February 28, 1997, WRL Management has -- pending shareholder
consideration and approval of the Proposed Advisory Agreement (see Proposal No.
1 below) -- waived an amount of the monthly compensation to which it is entitled
under the Current Advisory Agreement that is equal to the amount WRL Management
would otherwise have been obligated to pay to INVESCO Management, had the
INVESCO Sub-Advisory Agreement not terminated.
------------------------------------------------------
PROPOSAL NO. 1:
TO APPROVE THE PROPOSED ADVISORY AGREEMENT
BETWEEN THE FUND AND WRL MANAGEMENT
------------------------------------------------------
Prior to and at a meeting on April 10, 1997, the Board of Directors of
the Fund, including a majority of directors who are not parties to the Proposed
Advisory Agreement or interested persons (within the meaning of Section 2(a)(19)
of the 1940 Act) of any such party ("disinterested directors") reviewed and, at
that Board meeting, unanimously approved, the terms of the Proposed Advisory
Agreement on the basis that its execution
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would be in the best interest of each Portfolio and its shareholders and
authorized its submission to the shareholders of each Portfolio for their
approval. The Proposed Advisory Agreement, as it applies to each Portfolio, will
take effect for such Portfolio on June 16, 1997, or as soon thereafter as
practicable, following its approval by vote of a majority of the outstanding
voting securities of such Portfolio.
WRL INVESTMENT MANAGEMENT, INC.
WRL Management, a Florida corporation, located at 201 Highland Avenue,
Largo, Florida 33770, currently serves as the investment adviser of the Fund.
WRL Management is a direct wholly-owned subsidiary of Western Reserve, 201
Highland Avenue, Largo, Florida 33770, a stock life insurance company which is
wholly-owned by First AUSA Life Insurance Company ("First AUSA"), 4333 Edgewood
Rd., NE, Cedar Rapids, Iowa 52499, a stock life insurance company which is
wholly-owned by AEGON USA, Inc. ("AEGON"), 4333 Edgewood Rd., NE, Cedar Rapids,
Iowa 52499. AEGON is a financial services holding company whose primary emphasis
is on life and health insurance and annuity and investment products. AEGON is a
wholly-owned indirect subsidiary of AEGON nv, 50 Mariahoeveplein, 2591 TV The
Hague, The Netherlands, a Netherlands corporation, which is a publicly-traded
international insurance group.
WRL Management does not currently act as investment adviser with
respect to any registered investment company other than the Fund.
WRL Management's directors and principal executive officer, together
with their principal occupations, are listed below. The address of each is c/o
WRL Investment Management, Inc., 201 Highland Avenue, Largo, Florida 33770.
NAME, POSITION WITH
WRL MANAGEMENT PRINCIPAL OCCUPATION
------------------- --------------------
John R. Kenney, Chairman of the Board of Directors, Chief Executive
Chairman of the Board of Officer and President, Western Reserve Life
Directors Assurance Co. of Ohio; Chairman of the Board of
Directors, WRL Investment Services, Inc.; Director,
Idex Management, Inc. (investment adviser);
Chairman of the Board of Directors and President,
WRL Series Fund, Inc.; Trustee and Chairman, IDEX
Series Fund (investment company); Chairman and
Director, InterSecurities, Inc.; Chairman, AEGON
Asset Management Services, Inc.
Alan M. Yaeger, Executive Vice President, Actuary and Chief
Director Financial Officer, Western Reserve Life Assurance
Co. of Ohio; Director, WRL Investment Services,
Inc.; Executive Vice President, WRL Series Fund,
Inc.
G. John Hurley, Executive Vice President, Western Reserve Life
Director Assurance Co. of Ohio; Director, WRL Investment
Services, Inc.; Executive Vice President and
Director, WRL Series Fund, Inc.; President, Chief
Executive Officer and Trustee, IDEX Series Fund;
President, Chief Executive Officer and Director,
InterSecurities, Inc.; Director, President and
Chief Executive Officer, AEGON Asset Management
Services, Inc.
Kenneth P. Beil, Vice President and Assistant Treasurer, Western
President and Treasurer Reserve Life Assurance Co. of Ohio; Vice President
Fund Operations and Principal Accounting Officer,
WRL Series Fund, Inc.; President, WRL Investment
Services, Inc.
Except as set forth in the table above with respect to Messrs. Kenney,
Yaeger, Hurley and Beil, no officer or director of the Fund is also an officer,
employee, director or shareholder of WRL Management, other
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than Thomas E. Pierpan, Vice President and Assistant Secretary of the Fund, and
who is also Vice President, Secretary and General Counsel of WRL Management (and
Vice President, Associate General Counsel and Assistant Secretary of Western
Reserve), and Priscilla I. Hechler, Assistant Vice President and Assistant
Secretary of the Fund, and who is also Assistant Vice President and Assistant
Secretary of WRL Management (and Assistant Vice President and Assistant
Secretary of Western Reserve). No officer or director of the Fund (who is not a
director of WRL Management) owns securities or has any other material direct or
indirect interest in WRL Management or a person controlling, controlled by or
under common control with WRL Management.
THE CURRENT ADVISORY AGREEMENT
WRL Management has served as the investment adviser of the Fund, with
respect to the Portfolios, under the Current Advisory Agreement since January 1,
1997. Subject to the supervision and direction of the Fund's Board of Directors,
WRL Management is generally responsible for managing the Portfolios in
accordance with each Portfolio's stated investment objective and policies. As
compensation for its services to the Portfolios, WRL Management currently is
entitled to receive monthly compensation from the Fund at an annual rate of
1.10% of the average daily net assets of each Portfolio.
Pursuant to the Current Advisory Agreement, WRL Management 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 Portfolios 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 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; to supervise the purchase and sale of
securities of the Portfolios as directed by the appropriate officers of the
Fund; and to maintain all books and records required to be maintained by WRL
Management pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to transactions on behalf of the Fund. WRL Management
pays all expenses incurred in connection with the performance of its
responsibilities. Each Portfolio pays all other expenses incurred in its
operation, including general administrative expenses, accounting fees, legal
fees and investment advisory fees.
Under its terms, the Current Advisory Agreement, as it applies to each
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 such
Portfolio. The Current Advisory Agreement may be terminated with respect to a
Portfolio at any time by the Board of Directors of the Fund, or by vote of a
majority of the outstanding voting securities of the Portfolio, in each case
without penalty on 60 days' written notice to WRL Management, or by WRL
Management on 60 days' written notice to the Fund, and 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 Board
of Directors of the Fund, 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 was submitted to a vote of
shareholders of the Fund at that time to permit an internal restructuring of
Western Reserve, the Fund's investment adviser prior to January 1, 1997. On that
date, which was the effective date of the Current Advisory Agreement, WRL
Management, as a newly-formed direct wholly-owned subsidiary of Western Reserve,
succeeded to Western Reserve's business as an investment manager and supervisor
of
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registered investment companies (but not to Western Reserve's business as a
provider of certain administrative services to registered investment companies).
During the Fund's fiscal year ended December 31, 1996, the Fund paid
Western Reserve (under a prior investment advisory agreement) an aggregate
investment advisory fee of $26,485, $6,446 and $8,289 for investment management
and supervision services and for certain administrative services, on behalf of
the Global Sector Portfolio, US Sector Portfolio and Foreign Sector Portfolio,
respectively. 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
THE PROPOSED ADVISORY AGREEMENT
The Proposed Advisory Agreement is substantially identical to the
Current Advisory Agreement, except for: (i) a reduction in the investment
advisory fee, as a percentage of net assets of each Portfolio, payable to WRL
Management by the Fund from the assets of such Portfolio; and (ii) the date of
execution, and effectiveness and termination. In essence, the Proposed Advisory
Agreement constitutes merely an amendment to -- specifically, a reduction in the
investment advisory fee specified in -- the Current Advisory Agreement. The
description herein of the terms of the Proposed Advisory Agreement is qualified
by reference to the full text of the Form of Proposed Advisory Agreement itself,
which appears as Exhibit A to this Proxy Statement and is marked to highlight
the changes from the Current Advisory Agreement.
The Proposed Advisory Agreement makes permanent WRL Management's
current waiver, which began February 28, 1997, of an amount of the monthly
compensation to which it is entitled under the Current Advisory Agreement that
it would otherwise have been obligated to pay to INVESCO Management, which
ceased to provide investment sub-advisory services to the Fund with respect to
the Portfolios as of that date. At the current asset size of each Portfolio, the
amount of this ongoing waiver and the corresponding proposed reduction in the
investment advisory fee under the Proposed Advisory Agreement is at an annual
rate of 0.30% of the average daily net assets of each Portfolio. Therefore, the
resulting monthly compensation to be received by WRL Management under the
Proposed Advisory Agreement is at an annual rate of 0.80% of the average daily
net assets of each Portfolio (1.10%, the current advisory fee, LESS 0.30%). If
the investment advisory fee under the Proposed Advisory Agreement had been in
effect during the Fund's fiscal year ended December 31, 1996, the Fund would
have paid Western Reserve an aggregate investment advisory fee of $19,262,
$4,688 and $6,028 for investment management and supervision services, on behalf
of the Global Sector Portfolio, US Sector Portfolio and Foreign Sector
Portfolio, respectively. Thus, had the proposed fee been in effect during that
year, the aggregate investment advisory fee for each Portfolio would have been
73% of the aggregate investment advisory fee actually paid by the Fund to
Western Reserve.
In evaluating the Proposed Advisory Agreement, the Board considered
that, except for the reduction in the investment advisory fee and the dates of
execution, and effectiveness and termination, the terms of the Proposed Advisory
Agreement are the same, in all material respects, as the terms of the Current
Advisory Agreement. The Board also considered the nature, quality and extent of
services provided under the Current Advisory Agreement and the skills and
capabilities of WRL Management regarding its continued ability to provide such
services. Accordingly, the Board expects each Portfolio to receive the same
investment management and supervision services under the Proposed Advisory
Agreement as it receives under the Current Advisory Agreement, albeit with a
lower investment advisory fee.
Based upon the Directors' review and evaluation of the information
presented, and in consideration of all factors deemed relevant to their
deliberations, the Board of Directors determined that the Proposed Advisory
Agreement is fair, reasonable, and in the best interest of each Portfolio and
its shareholders. Accordingly the Board, including the disinterested directors,
unanimously approved the terms of the Proposed Advisory Agreement and determined
to submit the Proposed Advisory Agreement for consideration by the shareholders
of each Portfolio. If the Proposed Advisory Agreement is not approved by the
shareholders of a Portfolio, the Board will consider what steps to take in the
best interest of that Portfolio and its shareholders.
6
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
PROPOSED ADVISORY AGREEMENT WITH RESPECT TO EACH PORTFOLIO
----------------------------------------------------------
PROPOSAL NO. 2:
TO APPROVE THE PROPOSED SUB-ADVISORY AGREEMENT
BETWEEN WRL MANAGEMENT AND MERIDIAN
----------------------------------------------------------
Prior to and at a meeting on April 10, 1997, the Board of Directors of
the Fund, including a majority of directors who are not parties to the Proposed
Sub-Advisory Agreement or interested persons (within the meaning of Section
2(a)(19) of the 1940 Act) of any such party ("disinterested directors") reviewed
and, at that Board meeting, unanimously approved, the terms of the Proposed
Sub-Advisory Agreement on the basis that its execution would be in the best
interest of each Portfolio and its shareholders and authorized its submission to
the shareholders of each Portfolio for their approval. The Proposed Sub-Advisory
Agreement, as it relates to each Portfolio, will take effect for such Portfolio
on June 16, 1997, or as soon thereafter as practicable, following its approval
by vote of a majority of the outstanding voting securities of such Portfolio.
MERIDIAN INVESTMENT MANAGEMENT CORPORATION
Meridian, located at 12835 East Arapahoe Road, Tower II, Penthouse,
Englewood, Colorado 80112, currently serves as the investment sub-adviser of the
Portfolios. Meridian is a wholly-owned subsidiary of Meridian Management &
Research Corporation ("MM&R"). Michael J. Hart and Dr. Craig T. Callahan each
own 50% of MM&R.
Meridian provides investment management and related services to other
mutual fund portfolios and individual, corporate, charitable and retirement
accounts. For any other registered investment company portfolio advised or
sub-advised by Meridian and having an investment objective similar to that of
the Global Sector Portfolio, US Sector Portfolio, or Foreign Sector Portfolio,
the following table identifies and sets forth the size of such portfolio as of
March 31, 1997, and the rate of Meridian's investment advisory or sub-advisory
compensation:
<TABLE>
<CAPTION>
INVESTMENT REGISTERED NAME OF ITS PORTFOLIO ANNUAL
OJECTIVE INVESTMENT WITH SIMILAR NET ASSETS SUB-ADVISORY
SIMILAR TO COMPANY INVESTMENT OBJECTIVE AS OF 3/31/97 FEE RATE*
- ---------- --------- -------------------- ------------- -----------
<S> <C> <C> <C> <C>
Global Sector Security Security Asset Allocation $6 million 0.40%
Equity Fund Fund
Global Sector SBL Fund Specialized Asset $43 million 0.40%
Allocation Series
</TABLE>
- ---------------------
* Annual percentage of the average daily net assets of the portfolio.
Meridian did not waive, reduce, or otherwise agree to reduce its
compensation under any sub-advisory arrangements.
Meridian's directors and principal executive officers, together with
their principal occupations, are listed below. The address of each is c/o
Meridian Investment Management Corporation, 12835 East Arapahoe Road, Tower II,
Penthouse, Englewood, Colorado 80112.
7
<PAGE>
<TABLE>
<CAPTION>
NAME, POSITION
WITH MERIDIAN PRINCIPAL OCCUPATION
- ------------- --------------------
<S> <C>
Dr. Craig T. Callahan, Director, Secretary, Treasurer and Chief Investment Officer, Meridian Management &
Director, Secretary, Research Corporation; Vice President, Meridian Clearing Corp.; Trustee, ICON Funds.
Treasurer, Chairman of the
Investment Committee and
Chief Investment Officer
Michael J. Hart, Director and President, Meridian Management & Research Corporation; Director and
Director and President President, Meridian Clearing Corp.; Trustee and President, ICON Funds.
</TABLE>
No officer or director of the Fund is an officer, employee, director or
shareholder of Meridian. No officer or director of the Fund (who is not a
director of Meridian) owns securities or has any other material direct or
indirect interest in Meridian or a person controlling, controlled by or under
common control with Meridian.
THE CURRENT SUB-ADVISORY AGREEMENT
Meridian has served as an investment sub-adviser of the Portfolios
under the Current Sub-Advisory Agreement since January 1, 1997. Subject to the
supervision of the Fund's Board of Directors and WRL Management, Meridian is
generally responsible for supervising and directing the investments of the
Portfolios in accordance with each Portfolio's stated investment objective,
policies and restrictions and such other limitations as directed by the
appropriate officers of WRL Management or the Fund. SINCE FEBRUARY 28, 1997,
MERIDIAN HAS -- VOLUNTARILY AND FOR NO ADDITIONAL COMPENSATION BEYOND THAT SET
FORTH IN THE CURRENT SUB-ADVISORY AGREEMENT -- ASSUMED RESPONSIBILITY FOR
ACTUALLY SELECTING INDIVIDUAL SECURITIES AND OTHER ASSETS FOR THE PORTFOLIOS --
A RESPONSIBILITY PREVIOUSLY ASSUMED BY INVESCO MANAGEMENT UNDER THE NOW
TERMINATED INVESCO SUB-ADVISORY AGREEMENT. As compensation for its services to
the Portfolios, Meridian receives monthly compensation from WRL Management
equal, as a percentage of each Portfolio's average daily net assets, to an
annual rate of 0.30% of the first $100 million of assets and 0.35% of assets in
excess of $100 million.
Pursuant to the Current Sub-Advisory Agreement, Meridian expressly has
the responsibility: to furnish continuous investment information, advice and
recommendations to the Fund as to the asset allocation, industry and country
selections for any or all of the securities or other assets which the Portfolios
may own or contemplate acquiring from time to time; to 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 Portfolios, the
investment recommendations of Meridian, and the investment considerations which
have given rise to those recommendations; to furnish such quantitative
investment research, statistical and analytical information and reports as may
reasonably be required by the Fund from time to time; and to make decisions with
regard to asset allocation, industry and country selections for each Portfolio.
Meridian is also obligated to maintain all books and records required to be
maintained by Meridian pursuant to the 1940 Act and the rules and regulations
promulgated thereunder with respect to transactions on behalf of the Fund.
Meridian bears all of its expenses in connection with the performance of its
services.
Under its terms, the Current Sub-Advisory Agreement, as it relates to
each 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 such
Portfolio. The Current Sub-Advisory Agreement may be terminated with respect to
a Portfolio at any time by the Board of
8
<PAGE>
Directors of the Fund, or by vote of a majority of the outstanding voting
securities of the Portfolio, in each case without penalty on 60 days' written
notice to Meridian, by WRL Management on 60 days' written notice to Meridian
(without penalty) or if Meridian becomes unable to discharge its duties and
obligations under the Current Sub-Advisory Agreement, or by Meridian without
penalty on 60 days' written notice to WRL Management, and will automatically
terminate in the event of its assignment or upon termination of the Current
Advisory Agreement. The Current Sub-Advisory Agreement may be amended with
respect to a Portfolio only with the approval by the affirmative vote of a
majority of the outstanding voting securities of the Portfolio and the approval
by the vote of a majority of the disinterested directors of the Fund, cast in
person at a meeting called for the purpose of voting on the approval of such
amendment.
The terms of the Current Sub-Advisory Agreement were approved by the
Board of Directors of the Fund, 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 Sub-Advisory Agreement was
submitted to a vote of shareholders of the Fund at that time to permit the
internal restructuring of Western Reserve on January 1, 1997, which included a
change of the Fund's investment adviser from Western Reserve to WRL Management
and the automatic termination of a prior investment sub-advisory contract
between Western Reserve and Meridian.
During the Fund's fiscal year ended December 31, 1996, Western Reserve
paid Meridian (under the prior investment sub-advisory agreement) an aggregate
investment sub-advisory fee of $7,223, $1,758 and $2,261 for investment advisory
assistance and portfolio management advice, on behalf of the Global Sector
Portfolio, US Sector Portfolio and Foreign Sector Portfolio, respectively.
During that year, the Fund paid no fees to Meridian, its affiliates or any
affiliate of such affiliates, for services provided to the Fund other than under
the prior investment sub-advisory agreement.
THE PROPOSED SUB-ADVISORY AGREEMENT
The Proposed Sub-Advisory Agreement is substantially similar to the
Current Sub-Advisory Agreement, except for: (i) certain material changes in the
nature, reflecting a significant expansion in the scope, of services provided by
Meridian (discussed below); (ii) a change in the method of computing the
investment sub-advisory fee payable to Meridian by WRL Management, resulting in
an increase in Meridian's compensation as a percentage of net assets of each
Portfolio (discussed below); and (iii) the dates of execution, effectiveness and
termination. In essence, the Proposed Sub-Advisory Agreement constitutes an
amendment to the Current Sub-Advisory Agreement whereby Meridian formalizes and
is compensated for its expanded role as the SOLE investment sub-adviser of the
Portfolios, following the termination of the INVESCO Sub-Advisory Agreement. The
description herein of the terms of the Proposed Sub-Advisory Agreement is
qualified by reference to the full text of the Form of Proposed Sub-Advisory
Agreement itself, which appears as Exhibit B to this Proxy Statement and is
marked to highlight the changes from the Current Sub-Advisory Agreement.
In addition to the change in the dates of execution, effectiveness and
termination, the Proposed Sub-Advisory Agreement differs from the Current
Sub-Advisory Agreement as follows:
(i) EXPANDED SCOPE OF SERVICES
(a) ADDITIONAL RESPONSIBILITIES. The Proposed Sub-Advisory
Agreement requires Meridian to furnish continuous investment
information, advice and recommendations 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. The Current Sub-Advisory
Agreement limits Meridian's role to furnishing such
information, advice and recommendations, and making decisions,
with regard to asset allocation, industry and country
selections for each Portfolio.
9
<PAGE>
(b) ADDITIONAL AUTHORITY. Under the Proposed Sub-Advisory
Agreement, Meridian is explicitly authorized, in its
discretion and without prior consultation with the Portfolios
or the Investment Adviser, to:
(1) buy, sell, exchange, convert, lend, and otherwise trade
in 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 Meridian may select.
The Current Sub-Advisory Agreement does not explicitly grant such broad
discretionary powers.
(ii) INCREASED INVESTMENT SUB-ADVISORY FEE
Under the Proposed Sub-Advisory Agreement, Meridian will receive
monthly compensation equal to 50% of the fees (I.E., solely the
investment advisory fee) received by WRL Management with respect to the
Portfolios. Because the monthly compensation to be received by WRL
Management under the Proposed Advisory Agreement is at an annual rate
of 0.80% of the average daily net assets of each Portfolio, the
resulting monthly compensation to be received by Meridian under the
Proposed Sub-Advisory Agreement for its expanded scope of services is
at an annual rate of 0.40% of the average daily net assets of each
Portfolio. If the investment sub-advisory fee under the Proposed
Sub-Advisory Agreement (and the investment advisory fee under the
Proposed Advisory Agreement) had been in effect during the Fund's
fiscal year ended December 31, 1996, WRL Management would have paid
Meridian an aggregate investment sub-advisory fee of $9,631, $2,344 and
$3,014 for expanded investment sub-advisory services, with respect to
the Global Sector Portfolio, US Sector Portfolio and Foreign Sector
Portfolio, respectively. Thus, had the proposed fee been in effect
during that year, the aggregate investment sub-advisory fee for each
Portfolio would have been 133% of the aggregate investment sub-advisory
fee actually paid by Western Reserve to Meridian.
In evaluating the Proposed Sub-Advisory Agreement, the Board considered
the nature, quality and extent of services provided under the Current
Sub-Advisory Agreement and took note of the nature, quality and extent of the
additional services -- provided voluntarily by Meridian, following the
termination of the INVESCO Sub-Advisory Agreement on February 28, 1997 -- with
respect to actually selecting individual securities and other assets for each
Portfolio. The Board analyzed the reputation, experience, personnel, resources,
financial condition, and performance of Meridian, as reflected in the other
mutual fund portfolios and individual, corporate, charitable and retirement
accounts to which it provides investment management services. The Board also
considered the statements made by representatives of Meridian regarding its
skills and capabilities to provide the expanded scope of services in the
performance of its duties under the Proposed Sub-Advisory Agreement.
Meridian began operations in 1991 and, using value-based proprietary
sector (I.E., asset category, industry and country) rotation techniques, has
over $650 million under management (as of March 1, 1997). Meridian weights and
rotates assets among 115 industries and over 30 individual countries, focusing
its investment decisions on the most underpriced bargains. Meridian has
performed stock selection services for portfolios since 1993 and currently
manages 13 stock portfolios, which have total assets of approximately $25
million. For U.S. investing, stocks are selected based on their ability to track
with the industry to which such stock is related, as well as on potential for
superior growth within the respective industry. Outside the U.S., Meridian
believes that the most significant determinant of portfolio performance is not
industry selection, but country selection. In managing accounts for which it has
responsibility for individual securities selection, Meridian employs virtually
the same strategy that it uses as a sector rotation manager. Overall, Meridian
is committed to continual proprietary research and adheres to a philosophy of
quantitative, disciplined investing.
10
<PAGE>
Based upon the Directors' review and evaluation of the information
presented, and in consideration of all factors deemed relevant to their
deliberations, the Board of Directors determined that the Proposed Sub-Advisory
Agreement is fair, reasonable, and in the best interest of each Portfolio and
its shareholders. Accordingly the Board, including the disinterested directors,
unanimously approved the terms of the Proposed Sub-Advisory Agreement and
determined to submit the Proposed Sub-Advisory Agreement for consideration by
the shareholders of each Portfolio. If the Proposed Sub-Advisory Agreement is
not approved by the shareholders of a Portfolio, the Board will consider what
steps to take in the best interest of that Portfolio and its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED SUB-ADVISORY
AGREEMENT WITH RESPECT TO EACH PORTFOLIO
* * *
CERTAIN OTHER SERVICE PROVIDERS
The principal underwriter of the Fund is InterSecurities, Inc., a
Delaware corporation, whose principal office is located at 201 Highland Avenue,
Largo, Florida 33770. The administrator of the Fund is WRL Investment Services,
Inc., a Florida corporation, whose principal office is also located at 201
Highland Avenue, Largo, Florida 33770.
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 may be obtained without charge upon
request by writing to the Fund at the address above first written, or by calling
1-800-851-9777.
OTHER BUSINESS
Management knows of no business to be presented to the Meeting other
than the matters set forth in this Proxy Statement, but should any other matter
requiring vote of shareholders arise, the proxies will vote thereon according to
their judgment in the best interest of the Portfolio.
By Order of the Board of Directors
/s/ THOMAS E. PIERPAN
------------------------------------
Thomas E. Pierpan
VICE PRESIDENT & ASSISTANT SECRETARY
Largo, Florida
May 12, 1997
11
<PAGE>
EXHIBIT A
WRL SERIES FUND, INC.
PROPOSED 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 Management and each Sub-Adviser; provided, however, that
Page 1 of 5
<PAGE>
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;
(e) compensation of the Fund's custodian, administrator, registar
and dividend disbursing agent;
Page 2 of 5
<PAGE>
(f) legal, accounting and printing expenses;
(g) other administrative, clerical, recordkeeping and bookkeeping
expenses;
(h) pricing costs, including the daily calculation of net asset
value;
(i) auditing;
(j) insurance premiums, including Fidelity Bond Coverage, Error &
Ommissions Coverage and Directors and Officers Coverage, in
accordance with the provisions of the 1940 Act and the rules
thereunder;
(k) services for shareholders, including allocable telephone and
personnel expenses;
(l) brokerage commissions and all other expenses in connection with
execution of portfolio transactions, including interest:
(m) all federal, state and local taxes (including stamp, excise,
income and franchise taxes) and the preparation and filing of all
returns and reports inconnection therewith;
(n) costs of certificates and the expenses of delivering such
certificates to the purchasers of shares relating thereto;
(o) expenses of local representation in Maryland;
(p) fees and/or expenses payable pursuant to any plan of
distribution adopted with respect to the Fund in accordance with
Section 12(b) of the 1940 Act and Rule 12b-1 thereunder;
(q) expenses of shareholders' meetings and of preparing, printing
and distributing notices, proxy statements and reports to
shareholders;
(r) expenses of preparing and filing reports with federal and state
regulatory authorities;
(s) all costs and expenses, including fees and disbursements, of
counsel and auditors, filing and renewal fees and printing costs in
connection with the filing of any required amendments, supplements
or renewals of registration statement, qualifications or
prospectuses under the Securities Act of 1933 and the securities
laws of any states or territories subsequent to the effectiveness of
the initial registration statement under the Securities Act of 1933;
(t) all costs involved in preparing and printing prospectuses of the
Fund;
(u) extraordinary expenses; and
(v) all other expenses properly payable by the Fund or the
Portfolios.
5. TREATMENT OF INVESTMENT ADVICE. With respect to the Portfolios, the
Fund shall treat the investment advice and recommendations of WRL Management as
being advisory only, and shall retain full control over its own investment
policies. However, the Directors of the Fund may delegate to the appropriate
officers of the Fund, or to a committee of Directors, the power to authorize
purchases, sales or other actions affecting the Portfolios in the interim
between meetings of the Directors, provided such action is consistent with the
established investment policy of the Directors and is reported to the Directors
at their next meeting.
6. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by each Portfolio upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the
Page 3 of 5
<PAGE>
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.
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
Page 4 of 5
<PAGE>
provided such continuance is specifically approved at least annually by the vote
of a majority of the Directors of the Fund who are not parties hereto or
interested persons (as that term is defined in Section 2(a)(19) of the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on the approval of the terms of such renewal, and by either the Directors of the
Fund or the affirmative vote of a majority of the outstanding voting securities
of each Portfolio (as that phrase is defined in Section 2(a)(42) of the 1940
Act).
11. AMENDMENTS. This Agreement may be amended only with the approval of
the affirmative vote of a majority of the outstanding voting securities of each
Portfolio (as that phrase is defined in Section 2(a)(42) of the 1940 Act) and
the approval by the vote of a majority of Directors of the Fund who are not
parties hereto or interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act of 1940) of any such party, cast in person at a meeting
called for the purpose of voting on the approval of such amendment, unless
otherwise permitted in accordance with the 1940 Act.
12. PRIOR AGREEMENTS. This Agreement constitutes the entire agreement
between the parties hereto and supersedes in its entirety any and all previous
agreements between the parties relative to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: WRL SERIES FUND, INC.
By:
- ----------------------- ----------------------------------
Assistant Vice President Chairman of the Board and President
and Assistant Secretary
ATTEST: WRL INVESTMENT MANAGEMENT, INC.
By:
- ----------------------- -----------------------
Assistant Vice President President and Treasurer
and Assistant Secretary
Page 5 of 5
<PAGE>
SCHEDULE A
SCHEDULE EFFECTIVE JUNE 16, 1997
PERCENTAGE OF MONTHLY EFFECTIVE
PORTFOLIO AVERAGE DAILY NET ASSETS DATE/TERMINATION DATE
--------- ------------------------ ---------------------
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 0.60% January 1, 1997/
Government 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
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF MONTHLY EFFECTIVE
PORTFOLIO AVERAGE DAILY NET ASSETS DATE/TERMINATION DATE
--------- ------------------------ ---------------------
<S> <C> <C>
June 16, 1997/
Global Sector 0.80% January 1, 1999
June 16, 1997/
Foreign Sector 0.80% January 1, 1999
June 16, 1997/
US Sector 0.80% January 1, 1999
January 1, 1997/
International Equity 1.00% January 1, 1999
January 1, 1997/
U.S. Equity 0.80% January 1, 1999
</TABLE>
<PAGE>
EXHIBIT B
PROPOSED
SUB-ADVISORY AGREEMENT
BETWEEN
WRL INVESTMENT MANAGEMENT, INC.
AND
MERIDIAN INVESTMENT MANAGEMENT CORPORATION
SUB-ADVISORY AGREEMENT, made as of the ____ day of June, 1997, between
WRL Investment Management, Inc. ("Investment Adviser"), a corporation organized
and existing under the laws of the State of Florida and Meridian Investment
Management 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, as amended June 16, 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 Global Sector,
US Sector and Foreign Sector 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 Portfolios or the Investment
Adviser, to:
(1) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds and other securities or assets; and
<PAGE>
(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 and its officers and Board 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 quantitative investment research, statistical and
analytical information and reports as may reasonably be required by
the Fund from time to time; and
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.
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
each Portfolio. 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 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:
(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;
2
<PAGE>
(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 Portfolios' 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 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. 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 Portfolios or the public, which
refer to 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
3
<PAGE>
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.
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. 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 each Portfolio's outstanding voting securities. Unless
sooner terminated as provided herein, this Agreement shall continue in effect
until January 1, 1999. Thereafter, this Agreement shall continue in effect from
year to year, with respect to the Portfolios, 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; 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,
4
<PAGE>
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.
11. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of each Portfolio on at least 60
days' prior written notice to the Sub-Adviser. This Agreement may also be
terminated by the Investment Adviser: (i) on at least 60 days' prior written
notice to the Sub-Adviser, without the payment of any penalty; or (ii) if the
Sub-Adviser becomes unable to discharge its duties and obligations under this
Agreement. The Sub-Adviser may terminate this Agreement at any time, or preclude
its renewal without the payment of any penalty, on at least 60 days' prior
notice to the Investment Adviser. This Agreement shall terminate automatically
in the event of its assignment or upon termination of the Advisory Agreement.
12. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of a majority of each Portfolio's outstanding voting securities, unless
otherwise permitted in accordance with the 1940 Act.
13. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Maryland without giving effect to the conflicts of
laws principles thereof, and the 1940 Act. To the extent that the applicable
laws of the State of Maryland conflict with the applicable provisions of the
1940 Act, the latter shall control.
B. CAPTIONS. The captions contained in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
C. ENTIRE AGREEMENT. This Agreement represents the entire agreement
and understanding of the parties hereto and shall supersede any prior agreements
between the parties 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.
5
<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: MERIDIAN INVESTMENT MANAGEMENT
CORPORATION
By
- ------------------------------ ------------------------------
Name:
Title:
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
GLOBAL SECTOR PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR A SPECIAL MEETING OF SHAREHOLDERS OF
THE WRL SERIES FUND, INC.
JUNE 16, 1997
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the Global Sector 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 10:30 a.m. Eastern Time on June 16, 1997, at 201 Highland Avenue,
Largo, Florida 33770, and any adjournment thereof, as follows:
(1) To approve the Proposed Advisory Agreement between the Fund, on behalf
of the Global Sector Portfolio, and WRL Investment Management, Inc.
("WRL Management");
For [ ] Against [ ] Abstain [ ]
(2) To approve the Proposed Sub-Advisory Agreement between WRL Management,
with respect to the Global Sector Portfolio, and Meridian Investment
Management Corporation;
For [ ] Against [ ] Abstain [ ]
(3) In the discretion of Western Reserve, 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 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 May 12, 1997. This instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS INSTRUCTION WILL BE VOTED IN PROPORTION TO THE
VOTING INSTRUCTIONS SPECIFIED WITH RESPECT TO ALL CONTRACTS PARTICIPATING IN THE
GLOBAL SECTOR PORTFOLIO.
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.
---------------------------------- -----------------------
Contractowner 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.
US SECTOR PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR A SPECIAL MEETING OF SHAREHOLDERS OF
THE WRL SERIES FUND, INC.
JUNE 16, 1997
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the US Sector 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
10:30 a.m. Eastern Time on June 16, 1997, at 201 Highland Avenue, Largo, Florida
33770, and any adjournment thereof, as follows:
(1) To approve the Proposed Advisory Agreement between the Fund, on behalf
of the US Sector Portfolio, and WRL Investment Management, Inc. ("WRL
Management");
For [ ] Against [ ] Abstain [ ]
(2) To approve the Proposed Sub-Advisory Agreement between WRL Management,
with respect to the US Sector Portfolio, and Meridian Investment
Management Corporation;
For [ ] Against [ ] Abstain [ ]
(3) In the discretion of Western Reserve, 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 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 May 12, 1997. This instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS INSTRUCTION WILL BE VOTED IN PROPORTION TO THE
VOTING INSTRUCTIONS SPECIFIED WITH RESPECT TO ALL CONTRACTS PARTICIPATING IN THE
US SECTOR PORTFOLIO.
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.
---------------------------------- -----------------------
Contractowner 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.
FOREIGN SECTOR PORTFOLIO
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR A SPECIAL MEETING OF SHAREHOLDERS OF
THE WRL SERIES FUND, INC.
JUNE 16, 1997
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the Foreign Sector 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 10:30 a.m. Eastern Time on June 16, 1997, at 201 Highland Avenue,
Largo, Florida 33770, and any adjournment thereof, as follows:
(1) To approve the Proposed Advisory Agreement between the Fund, on behalf
of the Foreign Sector Portfolio, and WRL Investment Management, Inc.
("WRL Management");
For [ ] Against [ ] Abstain [ ]
(2) To approve the Proposed Sub-Advisory Agreement between WRL Management,
with respect to the Foreign Sector Portfolio, and Meridian Investment
Management Corporation;
For [ ] Against [ ] Abstain [ ]
(3) In the discretion of Western Reserve, 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 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 May 12, 1997. This instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS INSTRUCTION WILL BE VOTED IN PROPORTION TO THE
VOTING INSTRUCTIONS SPECIFIED WITH RESPECT TO ALL CONTRACTS PARTICIPATING IN THE
FOREIGN SECTOR PORTFOLIO.
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.
---------------------------------- -----------------------
Contractowner 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.
