SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the appropriate box: [ ] Preliminary Proxy Statement [ } Confidential,
for Use of
Commission Only (as permitted
by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WRL
SERIES FUND, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 (1)
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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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WRL SERIES FUND, INC.
570 Carillon Parkway
St. Petersburg, Florida 33716
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 15, 1998
TO THE SHAREHOLDERS:
A special meeting of the shareholders of the Portfolios (each a
"Portfolio"; collectively the "Portfolios") of the WRL Series Fund, Inc. (the
"Fund"), will be held on Tuesday, December 15, 1998 at 10:00 a.m., at 570
Carillon Parkway, St. Petersburg, Florida 33716, or any adjournment thereof, for
the following purposes:
(1) To approve a proposal to permit WRL Investment Management, Inc. ("WRL
Management" or "Investment Adviser"), after obtaining the approval of
the Board of Directors of the Fund (the "Board" or "Directors"), to
enter into and materially amend Sub-Advisory Agreements with
investment sub-advisers for each Portfolio of the Fund, without
obtaining shareholder approval;
(2) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Please indicate your voting instructions on the enclosed voting instruction
form(s) with respect to each Portfolio in which you were a beneficial owner as
of the record date; sign the 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 instruction 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 October 9, 1998. 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
Thomas E. Pierpan
Secretary
October 23, 1998
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WRL SERIES FUND, INC.
570 Carillon Parkway
St. Petersburg, Florida 33716
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
DECEMBER 15, 1998
This is a proxy statement relating to the investment portfolios of the
WRL Series Fund, Inc. (the "Fund"), as listed on Schedule A of this Proxy
Statement (each, a "Portfolio," and collectively, the "Portfolios'). The Fund is
a series mutual fund consisting of a number of series or Portfolios. This proxy
statement is furnished in connection with the solicitation of proxies by the
Board of Directors of the Fund (the "Board" or "Directors"), on behalf of the
Portfolios, to be used at the Fund's special meeting of shareholders of the Fund
(the "Meeting"). The Meeting will be held on Tuesday, December 15, 1998, at
10:00 a.m. Eastern Time, at 570 Carillon Parkway, St. Petersburg, Florida 33716,
for the purposes set forth in the Notice of the Meeting.
The primary purpose of the Meeting is to seek shareholder approval of a
proposal to provide WRL Management, as the Investment Adviser to each Portfolio,
and subject to the approval of the Board, to enter into and materially amend
certain Sub-Advisory Agreements with investment sub-advisers to each existing
Portfolio, as well as any Portfolio that may be added to the Fund, without
obtaining Shareholder approval (the "Sub-Adviser Approval Policy").
A majority of the shares of stock outstanding on October 9, 1998
("Record Date") of each Portfolio of the Fund, represented in person or by
proxy, must be presented for the transaction of business at the Meeting. In the
event that a quorum is present at the Meeting but sufficient votes to approve
proposals are not yet received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. A shareholder vote may be
taken on the proposal in this Proxy Statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
The costs of the Meeting, including the solicitation of proxies and
voting instructions, will be paid by the Portfolios. The principal solicitation
of proxies and voting instructions will be by the mailing of this Proxy
Statement on or about October 23, 1998, 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 Life Assurance Co. of Ohio ("Western
Reserve") or its affiliates. Such representatives and employees will not receive
additional compensation for any solicitation activities.
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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 the Fund had outstanding 491,002,877.143 shares of the Portfolios
(representing a cash value of $5,515,712,400.08), all of which shares are owned
of record by the WRL Series Life Account and the WRL Series Annuity Account of
Western Reserve, by Western Reserve directly; or by the PFL Endeavor Variable
Annuity Account, the PFL Endeavor Platinum Variable Annuity Account, the PFL
Retirement Builder Variable Annuity Account, and the PFL Life Variable Annuity
Account A, all of PFL Life Insurance Company ("PFL Life"); or by the AUSA Series
Life Account, the AUSA Series Annuity Account, the AUSA Endeavor Variable
Annuity Account, or Pooled Account No. 27, all of AUSA Life Insurance Company,
Inc. ("AUSA Life") (together, the "Accounts"). Western Reserve, PFL Life and
AUSA Life are affiliates. The outstanding shares owned by the Accounts in each
respective Portfolio are reflected on attached Schedule A.
Shareholder Approval
To become effective with respect to a Portfolio, the proposed
Sub-Adviser Approval Policy must be approved by a "vote of the majority of the
outstanding voting securities" of each Portfolio of the Fund, as defined in the
Investment Company Act of 1940, as amended ("1940 Act"). The "vote of a majority
of the outstanding voting securities" means the lesser of the vote of (i) 67% or
more of the shares of the Portfolios entitled to vote thereon present at the
Meeting if the holders of more than 50% of such outstanding shares are present
in person or represented by proxy; or (ii) more than 50% of such outstanding
shares of the Portfolio entitled to vote thereon. The Proposed Sub-Adviser
Approval Policy was unanimously approved by the Fund's Board after consideration
of all factors which they determined to be relevant to their deliberations,
including those discussed above. The Board also unanimously determined to submit
the Proposed Sub-Adviser Approval Policy for consideration by the shareholders
of each Portfolio of the Fund.
POLICYOWNERS' RIGHT TO INSTRUCT SHAREHOLDERS
Western Reserve, PFL Life and AUSA Life, respectively, the shareholders
of the Portfolios, will vote shares held in the Accounts at the Meeting in
accordance with the instructions received from the holders of individual life
insurance policies, individual variable annuity contracts and group annuities
(collectively, the "Policies" owned by the "Policyowners") whose benefits
thereunder are funded through those Accounts. (The holder of a qualified group
variable contract may seek voting instructions from individual qualified plan
participants if required under the terms of the qualified plan pursuant to which
the group contract is held.)
The Fund has agreed to solicit voting instructions from the
Policyowners, upon which instructions Western Reserve, PFL Life or AUSA Life,
respectively, will vote the shares of the Portfolios at the Meeting on December
15, 1998, and any adjournment thereof. The Fund will mail to each Policyowner of
record as of the Record Date a copy of this Proxy Statement. The number of Fund
shares in a Portfolio or Portfolios for which a Policyowner may give
instructions is determined as follows: the number of shares of a given Portfolio
(and corresponding votes) allotted to a Policy will be calculated by dividing
the amount of the Policy's cash value (or the contract value, in the case of a
variable annuity or group annuity contract) attributable to the Portfolio by
$100. Fractional shares will be counted. Based upon the cash value attributable
to the Portfolios as of the Record Date, Policyowners are entitled to an
aggregate of votes with respect to each Portfolio as reflected on attached
Schedule A.
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All shares for which Western Reserve, PFL Life and AUSA Life receive
properly executed instructions, which are not subsequently revoked prior to the
Meeting, will be voted at the Meeting in accordance with such instructions.
Western Reserve, PFL Life and AUSA Life will vote the shares of each Portfolio
for which no timely instructions are received, and any shares beneficially owned
exclusively by Western Reserve, in proportion to the voting instructions which
are received with respect to all Policies participating in such Portfolio.
Abstentions will be applied on a pro rata basis to reduce the votes eligible to
be cast.
To the knowledge of the Fund, no person has the right to instruct
Western Reserve, PFL Life or AUSA Life with respect to 5% or more of the shares
of any Portfolio. However, the proportionate voting policy will result in
certain Policyowners' instructions affecting the vote of 5% or more of total
outstanding shares. These particular Policyowners and the percentage of votes
which their instruction may affect will depend upon which Policyowners provide
instructions and which Policyowners do not. Western Reserve, PFL Life or AUSA
Life, as applicable, will vote in accordance with the directions as indicated on
your enclosed voting instruction form(s) provided it is received properly
executed. If you properly execute your voting instruction form(s) and give no
voting instruction, your shares will be voted in proportion to the voting
instructions which are received with respect to all Policies participating in
such Portfolio(s). 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 Policyowners (defined below) who abstain. Voting instructions may
be revoked at any time prior to their exercise by execution of a subsequent
voting instruction form, by written notice to the Secretary of the Fund, or by
voting in person at the Meeting.
The following table summarizes the proposal to be presented at the
Meeting and the Portfolios solicited with respect to that proposal:
Proposal Affected Portfolios
1. Approval of the Sub-Adviser Approval Policy All Portfolios*
*Shareholders of each Portfolio of the Fund will vote together as a single class
on the Sub-Adviser Approval Policy.
For each Portfolio of the Fund, the Board of Directors recommends that you cast
your vote:
FOR approval of the Sub-Adviser Approval Policy
The proposal is described in more detail below.
THE PROPOSAL
PROPOSAL 1: TO APPROVE A POLICY TO PERMIT THE BOARD OF DIRECTORS AND WRL
MANAGEMENT TO ENTER INTO AND MATERIALLY AMEND SUB-ADVISORY AGREEMENTS WITHOUT
OBTAINING FURTHER SHAREHOLDER APPROVAL AND TO APPROVE A TECHNICAL AMENDMENT TO
EACH PORTFOLIO'S INVESTMENT SUB-ADVISORY AGREEMENT.
At a special Board of Directors Meeting held on September 14, 1998, the
Directors, including a majority of the directors who are not parties to the
Sub-Advisory Agreements or interested persons (within the meaning of Section
2(a)(19) of the 1949 Act) of any such party (the "Disinterested Directors"),
approved and recommended that shareholders of each Portfolio approve a policy to
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permit the Investment Adviser, on behalf of each Portfolio and subject to
approval of the Board, to appoint sub-advisers, to enter into sub-advisory
agreements, and to materially amend existing sub-advisory agreements (the
"Sub-Adviser Approval Policy") without further shareholder approval for the
existing Portfolios of the Fund, and for future Portfolios, subject to certain
conditions. Special restrictions apply to the Sub-Advisers that are affiliates
of the Investment Adviser ("Affiliated Sub-Adviser"). Implementation of the
Sub-Adviser Approval Policy approved by the Board is subject to the terms and
conditions of an Exemptive Order from the SEC as described below.
The Fund
The Fund is a Maryland corporation organized as a diversified, open-end
management investment company under the 1940 Act. Shares of the Fund are
registered under the Securities Act of 1933 (the "1933 Act"), and the Fund
itself is registered under the 1940 Act on Form N-1A with the SEC. Shares of the
Fund are currently sold only to Western Reserve, PFL Life and AUSA Life and
separate accounts of each to fund benefits under certain individual flexible
premium variable life insurance policies and certain individual and group
variable annuity contracts. WRL Investment Services, Inc., located at 570
Carillon Parkway, St. Petersburg, Florida 33716, an affiliate of the Investment
Adviser, serves as transfer agent and administrator for the Fund.
InterSecurities, Inc., whose principal office is located at 570 Carillon
Parkway, St. Petersburg, Florida 33716, an affiliate of the Investment Adviser,
serves as principal underwriter for the Fund.
The Investment Adviser
WRL Management, located at 570 Carillon Parkway, St. Petersburg,
Florida 33716, currently serves as the investment adviser to each Portfolio of
the Fund. The Investment Adviser does not currently act as investment adviser or
sub-adviser to any other investment company. The Investment Adviser is a direct,
wholly-owned subsidiary of Western Reserve, located at 570 Carillon Parkway, St.
Petersburg, Florida 33716, which is a wholly-owned subsidiary of First AUSA Life
Insurance Company ("First AUSA"), located at 4333 Edgewood Road, N.E., Cedar
Rapids, Iowa 52499, a stock life insurance company, which is wholly-owned by
AEGON USA, Inc. ("AEGON USA"). AEGON USA, located at 4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499, is a financial services holding company whose primary
emphasis is on life and health insurance and annuity and investment products.
AEGON USA is a wholly-owned indirect subsidiary of AEGON nv, a Netherlands
corporation, which is a publicly-traded international insurance group.
The Investment Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"). The Investment
Adviser has served as the investment adviser to each Portfolio of the Fund since
January 1, 1997. (Prior to that date, Western Reserve served as the investment
adviser to each Portfolio in existence prior to that date.) Pursuant to the
Investment Advisory Agreement between the Fund and the Investment Adviser, dated
January 1, 1997, and subject to the supervision of the Board, the Investment
Adviser is responsible for furnishing continuous advice and recommendations to
the Fund as to the acquisition, holding, or disposition of any or all the
securities or other assets that the Portfolios may own or contemplate acquiring
from time to time. The Investment Adviser's officers attend meetings of the
Board and are responsible for furnishing oral or written reports to keep the
Board and officers of the Fund fully informed as to the condition of the
investments of each Portfolio, the investment recommendations of the Investment
Adviser, and the investment considerations that have given rise to those
recommendations. The Investment Adviser supervises the purchase and sale of the
investments of the Portfolios and maintains all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to transactions on behalf of the Fund.
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The Investment Advisory Agreement contemplates that the Investment
Adviser, in connection with the performance of its responsibilities under the
Agreement, will enter into sub-advisory agreements with sub-advisers to provide
each Portfolio with investment management services. The Investment Adviser
selects a sub-adviser based on a qualitative and quantitative evaluation of the
proposed sub-adviser. The Investment Adviser monitors the performance of each
sub-adviser and evaluates how well the sub-adviser has performed in managing the
assets of its respective Portfolio(s) in light of each such Portfolio's stated
investment objective and policies. The Investment Adviser also monitors each
sub-adviser's long-term performance and the level of risk assumed in achieving
that level of performance. Particular criteria for the selection and retention
of a sub-adviser include the sub-adviser's discipline and thoroughness in
pursuit of a Portfolio's stated investment objective and the sub-adviser's
long-term performance. Short-term performance by itself is not a significant
factor in selecting or terminating a sub-adviser.
The Investment Adviser also may, from time to time, recommend that the
services of a sub-adviser be terminated. The criteria for termination includes
the departure of a sub-adviser's key investment advisory personnel, a change in
control of management of the sub-adviser, a departure from a Portfolio's stated
investment objective or policies, or other developments relating to the
sub-adviser that are deemed not to be in the best interest of shareholders by
the Investment Adviser.
The Sub-Advisers
With respect to each of the seventeen Portfolios of the Fund, the
Investment Adviser has entered into an investment sub-advisory agreement (each a
"Sub-Advisory Agreement" and, together, the "Sub-Advisory Agreements") with one
or more investment sub-advisers for each Portfolio (each, a "Sub-Adviser"). The
Fund currently has fourteen different Sub-Advisers. Each Portfolio currently has
one Sub-Adviser, except for one Portfolio which has two Co-Sub-Advisers. Each
Sub-Adviser provides investment advisory assistance and portfolio management
advice to the Investment Adviser for the Portfolio(s) with respect to which the
Sub-Adviser is engaged. Subject to review and supervision by the Investment
Adviser and the Board, each Sub-Adviser is responsible for the actual investment
management of its Portfolio(s) and for making decisions to buy, sell, or hold
any particular security. Each Sub-Adviser also places orders to buy or sell
securities on behalf of that Portfolio. Each Sub-Adviser bears all of its
expenses in connection with the performance of its services, such as
compensating and furnishing office space for its officers and employees
connected with investment and economic research, trading, and investment
management of its Portfolio(s). Each Sub-Adviser is a registered investment
adviser under the Advisers Act. Each Sub-Adviser receives monthly compensation
from the Investment Adviser based on a specified percentage of the average daily
net assets of each Portfolio managed by that Sub-Adviser.
Each Sub-Adviser has been recommended by the Investment Adviser, and
selected and approved by the Board, including a majority of Directors who are
not parties to the Sub-Advisory Agreement or interested persons (within the
meaning of Section 2(a)(19) of the 1940 Act) of any such party ("Disinterested
Directors"), as well as by the shareholders of the relevant Portfolio. With the
exception of the Sub-Advisory Agreements for the Global Sector Portfolio, Bond
Portfolio, Third Avenue Value Portfolio and the Real Estate Securities
Portfolio, each of the current Sub-Advisory Agreements was approved at a meeting
of shareholders held on December 16, 1996. The Sub-Advisory Agreement for the
Global Sector Portfolio was approved by shareholders on June 16, 1997, and the
Sub-Advisory Agreement for the Bond Portfolio was approved by shareholders on
December 15, 1997. The Sub-Advisory Agreement for the Third Avenue Value
Portfolio was approved by the initial sole shareholder on January 2, 1998 and
the Sub-Advisory Agreement for the Real Estate Securities Portfolio was approved
by the initial sole shareholder on May 1, 1998.
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As required by the 1940 Act, each Sub-Advisory Agreement: describes the
compensation that is to be paid to each Sub-Adviser by the Investment Adviser;
continues in effect for up to two years and from year to year thereafter, only
so long as such continuance is specifically approved at least annually by the
Board or by a vote of the majority of the outstanding voting securities of the
appropriate Portfolio in the manner required by the 1940 Act, and Rules
thereunder; may be terminated at any time, without the payment of any penalty,
by the Fund's Board or by shareholders on sixty (60) days' written notice to the
Sub-Adviser, on (60) days' written notice from the Investment Adviser to the
Sub-Adviser provided certain conditions are met, or on sixty (60) days' written
notice from the Sub-Adviser to the Investment Adviser; will terminate
automatically in the event of its assignment; and requires approval of
amendments thereto as specified by the 1940 Act.
The Section 15 Exemptive Order
On May 13, 1997 (as amended and restated on April 2, 1998 and July 14,
1998), the Fund and the Investment Adviser filed an application with the SEC
requesting an order of exemption pursuant to Section 6(c) of the 1940 Act (the
"Exemptive Order") for relief from the provisions of Section 15(a) of the 1940
Act and Rule 18f-2 thereunder the 1940 Act. The provisions of the 1940 Act
require that shareholders approve investment advisory agreements, including
sub-advisory agreements, and to approve any material amendment to such an
investment advisory agreement. The Exemptive Order was granted by the SEC on
August 5, 1998. If shareholders approve the Sub-Adviser Approval Policy as
described in the Exemptive Order, the Investment Adviser will be authorized,
subject to approval by the Board, to evaluate, select and retain new
sub-advisers for the Portfolios, or materially amend an existing sub-advisory
agreement without obtaining further approval of the affected Portfolio's
shareholders, whenever the Investment Adviser and the Board believe such actions
are in the best interests of the Fund and its shareholders.
Current Sub-Adviser Approval Process. Currently, for each Portfolio,
the Investment Adviser enters into a separate sub-advisory agreement with the
respective Sub-Adviser selected by the Investment Adviser and approved by the
Board. Under the terms of these Sub-Advisory Agreements, the Sub-Advisers have
authority to provide the respective Portfolio(s) with advice concerning the
investment management of the Portfolio's assets. The Sub-Advisers determine what
securities shall be purchased or sold, and what portion of the Portfolio's
assets shall remain uninvested. For these sub-advisory services to the
Portfolios, WRL Management pays each Sub-Adviser a monthly fee at an annual rate
based on the average daily net assets of the Portfolio, as specified in the
specific Sub-Advisory Agreement. Each Sub-Adviser bears its own expenses of
providing sub-advisory services to the respective Portfolio. Each Portfolio's
sub-advisory arrangements are subject to annual approval by the Board, including
the Disinterested Directors. Any material amendments to an existing Sub-Advisory
Agreement currently require approval by the Board and a Portfolio's
shareholders.
Each Sub-Adviser of a Portfolio is an "investment adviser" to that
Portfolio, as that term is defined in Section 2(a)(20) of the 1940 Act. Section
15(a) of the 1940 Act and Rule 18f-2 thereunder provide, in effect, that it is
unlawful for any person to act as an investment adviser to a Portfolio except
pursuant to a written contract that has been submitted to and approved by the
vote of a majority of the voting securities of that Portfolio. Therefore, when a
Sub-Adviser is initially retained, shareholders of each affected Portfolio
generally are required to approve the Sub-Advisory Agreement with the proposed
Sub-Adviser. Similarly, if an existing Sub-Advisory Agreement were amended in
any material respect, such amendment would generally be deemed to result in a
new contract for which shareholder approval would be required. Moreover, under
Section 15(a), a Sub-Advisory Agreement terminates automatically upon its
"assignment," which in most instances would occur upon a change of control of
the Sub-Adviser.
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Proposed Sub-Adviser Approval Policy. Approval of the Sub-Adviser
Approval Policy will not affect any of the requirements under the federal
securities laws that govern the Portfolios, the Investment Adviser, the
Sub-Advisers or the Sub-Advisory Agreements other than the requirement to call
meetings of an affected Portfolio's shareholders and obtain approval for certain
changes affecting Sub-Advisers. The Board, including the Disinterested
Directors, will continue to evaluate and approve all new sub-advisory agreements
between the Investment Adviser and a Sub-Adviser as well as all changes to
existing Sub-Advisory Agreements. The Fund and Investment Adviser will be
subject to several conditions imposed by the SEC to ensure that the interests of
each Portfolio's shareholders are adequately protected whenever the Investment
Adviser acts under the Sub-Adviser Approval Policy. Furthermore, within 90 days
of a change to a Portfolio's sub-advisory arrangements, the Fund will provide
the affected Portfolio's shareholders with an information statement that
contains substantially the same information about the sub-adviser, the
sub-advisory agreement and the sub-advisory fee that would be required to be
sent to shareholders in a proxy statement.
SHAREHOLDER APPROVAL OF THIS PROPOSAL WILL NOT RESULT IN AN INCREASE OR
DECREASE IN THE TOTAL AMOUNT OF INVESTMENT ADVISORY FEES PAID BY THE PORTFOLIOS
TO THE INVESTMENT ADVISER. Shareholders should recognize that in engaging new
sub-advisers and entering into sub-advisory agreements, the Adviser will
negotiate fees with these sub-advisers and, because these fees are paid by the
Adviser and not directly by each Portfolio, any fee reduction negotiated by the
Adviser may inure to the Adviser's benefit and any increase will inure to its
detriment. The fees paid to the Adviser by the Portfolios and the fees paid
sub-advisers by the Adviser are considered by the Board in approving the
advisory and sub-advisory arrangements, and any change in fees paid by a
Portfolio to the Adviser would require shareholder approval. In any event, if
the shareholders approve this Policy, the Investment Adviser, pursuant to each
Portfolio's Investment Advisory Agreement, will continue to provide the same
level of management and administrative services to the Portfolios as it has
always provided.
In addition to shareholder approval, the relief granted by the SEC and
set forth in the Exemptive Order is subject to the following conditions:
(1) The Investment Adviser will not enter into a Sub-Advisory Agreement
with any affiliated Sub-Adviser without the Sub-Advisory Agreement,
including the compensation to be paid thereunder, being approved by
the shareholders with assets allocated to any sub-account of a
registered separate account for which the applicable Portfolio serves
as a funding medium.
(2) At all times, a majority of the Board will be persons each of whom is
a Disinterested Director and the nomination of new or additional
Disinterested Directors will be within the discretion of the
then-existing Disinterested Directors.
(3) When a Sub-Adviser change is proposed for a Portfolio with an
Affiliated Sub-Adviser, the Board, including a majority of the
Disinterested Directors, will make a separate finding, reflected in
the minutes of the meetings of the Board, that the change is in the
best interests of the affected Portfolio and the shareholders with
assets allocated to any sub-account of a registered separate account
for which the Portfolio serves as a funding medium, and does not
involve a conflict of interest from which the Investment Adviser or
the Affiliated Sub-Adviser derives an inappropriate advantage.
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(4) The Investment Adviser will provide general management and
administrative services to the Fund and the Portfolios, including
overall supervisory responsibility for the general management and
investment of the Fund's securities portfolios, and subject to review
and approval by the Board, will: (a) set each Portfolio's overall
investment strategies; (b) select Sub-Advisers; (c) monitor and
evaluate the performance of Sub-Advisers; (d) allocate and, when
appropriate, reallocate a Portfolio's assets among its Sub-Advisers in
those cases where a Portfolio has more than one Sub-Adviser; and (e)
implement procedures reasonably designed to ensure that the
Sub-Advisers comply with the Portfolios' investment objective,
policies, and restrictions.
(5) Within ninety (90) days of the hiring of any new Sub-Adviser, the
Investment Adviser will furnish shareholders with assets allocated to
any sub-account of a registered separate account for which the
applicable Portfolio serves as a funding medium with all information
about the new Sub-Adviser that would be included in a proxy statement.
The information will include any change in the disclosure caused by
the addition of a new sub-adviser. The Investment Adviser will meet
this condition by providing the shareholders with an information
statement that meets certain requirements of the Securities Exchange
Act of 1934, as amended, and the rules thereunder.
(6) The Fund will disclose in its prospectus the existence, substance, and
effect of the Proposed Sub-Adviser Approval Policy. The Fund's
prospectus will prominently disclose that the Investment Adviser has
ultimate responsibility for the investment performance of the
Portfolios due to its responsibility to oversee Sub-Advisers and
recommend their hiring, termination, and replacement.
(7) No Director or officer of the Fund or the Investment Adviser will own
directly or indirectly (other than through a pooled investment vehicle
that is not controlled by a Director or officer of the Fund) any
interest in a Sub-Adviser, except for: (a) ownership of interests in
the Investment Adviser or any entity that controls, is controlled by,
or is under common control with the Investment Adviser; or (b)
ownership of less than one percent (1%) of the outstanding securities
of any class of equity or debt securities of a publicly traded company
that is either a Sub-Adviser or an entity that controls, is controlled
by, or is under common control with a Sub-Adviser.
As of the date of this Proxy Statement, neither the Fund nor the
Investment Adviser is aware of any reason why a Portfolio's current Sub-Adviser
will not continue to serve in its capacity and under the terms of the existing
Sub-Advisory Agreement (except with regard to the Global Sector Portfolio as
described below).
In addition, in connection with the implementation of the proposed
Sub-Adviser Approval Policy, the Board and the Investment Adviser may amend,
from time to time, certain provisions of each current Sub-Advisory Agreement to
reflect the terms and conditions of the Exemptive Order and the Sub-Adviser
Approval Policy.
Meridian Investment Management Corporation - Additional Information
Meridian Investment Management Corporation ("Meridian") serves as the
Sub-Adviser to the Global Sector Portfolio. Meridian is a wholly-owned
subsidiary of Meridian Management & Research, Inc. ("MM&R"). Michael J. Hart and
Dr. Craig Callahan each own 50% of MM&R. Meridian has informed the Investment
Adviser that MM&R has entered into an agreement to acquire Mr. Hart's
8
<PAGE>
interest in MM&R (the "Acquisition"). The Acquisition could be deemed to
result in a "change of control" of MM&R under the 1940 Act. Because MM&R is the
parent company of Meridian, a change in control of MM&R may be deemed to result
in an "assignment," as defined in the 1940 Act, of the existing Sub-Advisory
Agreement between WRL Management and Meridian with respect to the Global Sector
Portfolio (the "Meridian Agreement"). As required by the 1940 Act, the Meridian
Agreement provides for its automatic termination in the event of its assignment.
Meridian has indicated that it intends to seek "no-action" relief from
the SEC in connection with the Acquisition. More particularly, Meridian intends
to seek the concurrence of the staff of the SEC with the opinion of Meridian's
legal counsel that the Acquisition will not result in an actual change in
control of Meridian or the assignment of the investment advisory and
sub-advisory agreements to which Meridian is a party, including the Sub-Advisory
Agreement for the Global Sector Portfolio.
If Meridian is unsuccessful in obtaining the relief it has requested
from the SEC, under the current sub-advisory agreement approval process,
shareholders of the Global Sector Portfolio would be asked to approve a new
investment sub-advisory agreement between Meridian and the Investment Adviser
with respect to the Global Sector Portfolio. If shareholders approve the
proposal regarding the Sub-Adviser Approval Policy, the Board and the Investment
Adviser will consider whether to approve any such agreement without seeking
further shareholder approval.
Reasons for Obtaining the Section 15 Exemptive Order
The Board believes that providing the Investment Adviser with maximum
flexibility to perform those duties that shareholders expect the Investment
Adviser to perform - selecting, supervising and evaluating sub-advisers without
incurring the unnecessary delay or expense of obtaining shareholder approval is
in the best interests of each Portfolio's shareholders because it will allow
each Portfolio to operate more efficiently. Currently, in order for the
Investment Adviser to appoint a Sub-Adviser or materially amend a Sub-Advisory
Agreement, the Fund must call and hold a shareholders meeting of each affected
Portfolio, create and distribute proxy materials, and solicit proxy votes from
the Portfolio's shareholders. This process is timely and costly, and the costs
are usually borne entirely by the respective Portfolio. Without the delay
inherent in holding a shareholders meeting, each Portfolio would be able to act
more quickly and with less expense to appoint a Sub-Adviser when the Directors
and Investment Adviser feel that the appointment would benefit the Portfolio.
Also, the Fund's Board believes that it is appropriate to allow the
selection, supervision and evaluation of a sub-adviser to be done by the
Investment Adviser (subject to review and approval by the Fund's Board) in light
of the management structure of the Fund, as well as the Investment Adviser's
significant experience and expertise in selecting sub-advisers and the
shareholders' expectation that the Investment Adviser will utilize that
expertise to select the most competent sub-advisers. In the opinion of the
Directors, the Investment Adviser has demonstrated that it has the requisite
expertise to evaluate, select and supervise sub-advisers. The Board believes
that many investors choose to invest in a Portfolio of the Fund because of the
Investment Adviser's experience and expertise in evaluating and choosing
sub-advisers who can add the most value to a shareholder's investment in the
Fund.
Finally, the Board will provide sufficient oversight of the sub-adviser
selection process to ensure that shareholders' interests are protected whenever
the Investment Adviser selects a new sub-adviser or materially amends existing
Sub-Advisory Agreements. The Board, including a majority of the Disinterested
Directors, will continue to evaluate and approve all new sub-advisory agreements
as well as any amendments to existing Sub-Advisory Agreements. In their review,
the Board will analyze all factors that they consider to be relevant to the
determination, including the nature, quality and
9
<PAGE>
scope of services provided by the Sub-Advisers. The Directors will compare
the investment performance of the assets managed by the Sub-Adviser with other
accounts with similar investment objectives managed by other advisers and will
review the Sub-Adviser's compliance with federal securities laws and
regulations. The Board believes that their comprehensive review will ensure that
the Investment Adviser continues to act in the best interests of each Portfolio
and its shareholders. Each Sub-Advisory Agreement will continue to be subject to
all provisions of the 1940 Act, except for the specific provisions of the 1940
Act for which relief was granted by the SEC.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE "FOR APPROVAL" OF THE
PROPOSED SUB-ADVISER APPROVAL POLICY
- --------------------------------------------------------------------------------
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, 570 Carillon Parkway, St. Petersburg,
Florida 33716.
- --------------------------------------------------------------------------------
Annual Report
- --------------------------------------------------------------------------------
A copy of the Fund's Annual Report and most recent Semi-Annual Report
may be obtained without charge upon written request to the Secretary of the Fund
at the address above first written, or by calling the WRL Sales Support Team at
1-800-851-9777, ext. 1-6567 or the WRL Customer Services at ext. 1-6510.
- --------------------------------------------------------------------------------
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 the vote of shareholders arise, the proxies will vote thereon
according to their best judgment in the interests of the Fund.
By Order of the Board of Directors
Thomas E. Pierpan, Secretary
St. Petersburg, Florida
October 23, 1998
Schedule A - Outstanding Shares of each Portfolio
10
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES FUND, INC.
Schedule A
<S> <C> <C> <C>
- -------------------------------- --------------------------------- -----------------------------------------------------
Outstanding Shares Owned by the Accounts and Aggregate Votes Per Portfolio Based on Cash Value
Portfolio Western Reserve of the Portfolios
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- ------------------------------------
Aggressive Growth 23,271,025.089 3,790,714.1840
- -------------------------------- ---------------------------------- ------------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Balanced 7,113,966.858 803,034.0672
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Bond 14,817,220.345 1,774,296.3864
- -------------------------------- ---------------------------------- ------------------------------------------
- -------------------------------- ---------------------------------- ------------------------------------------
C.A.S.E. Growth 4,768,024.976 482,850.2219
- -------------------------------- ---------------------------------- ------------------------------------------
- -------------------------------- -------------------------------- -----------------------------------------
Emerging Growth 29,634,038.002 5,508,862.3602
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Growth & Income 6,625,088.467 797,929.9913
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
International Equity 2,598,296.956 248,822.1559
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Global 42,636,439.781 7,663,350.7057
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- ----------------------------------------
Global Sector 1,057,591.595 104,649.8094
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Growth 50,139,034.720 21,101,700.6901
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Money Market 227,728,650.020 2,277,286.5002
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Real Estate Securities 205,138.158 16,101.0440
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Strategic Total Return 35,127,099.207 5,063,963.7023
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Tactical Asset Allocation 25,007,933.954 3,223,331.4163
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Third Avenue Value 1,880,572.996 142,021.5841
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
U.S. Equity 5,699,002.398 683,979.6174
- -------------------------------- ---------------------------------- -----------------------------------------
- -------------------------------- ---------------------------------- -----------------------------------------
Value Equity 12,693,753.621 1,474,229.5644
- -------------------------------- ---------------------------------- -----------------------------------------
</TABLE>
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
[(name) PORTFOLIO]
Voting Instructions Solicited on Behalf of the Board of Directors for a
Special Meeting of Shareholders of the WRL Series Fund, Inc.
December 15, 1998
Account Name
and Number Cash Value Proxy Votes
I hereby instruct Western Reserve Life Assurance Co. of Ohio ("Western
Reserve") to vote the shares of the [(name) Portfolio] of the WRL Series Fund,
Inc. ("Fund") as to which I am entitled to give instructions, as shown above, at
a Special Meeting of the Shareholders of the Fund ("the Meeting") to be held at
10:00 a.m. on December 15, 1998, Eastern Time and any adjournments thereof at
570 Carillon Parkway, St. Petersburg, Florida 33716 as follows:
(1) To approve a proposal to permit WRL Investment Management, Inc., after
obtaining the approval of the Board of Directors of the Fund, to enter
into and materially amend Sub-Advisory Agreements with investment
sub-advisers for each Portfolio of the Fund, without obtaining
shareholder approval;
___ For ___ Against ___ Abstain
(2) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN
THE POSTAGE PAID ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated October 23, 1998. This instruction will be voted as specified. If no
specification is made, this instruction will be voted "FOR" each proposal.
This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
----------------------------------- -------------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly as
name or names appear on this Voting Instruction Form. If the individual signing
the form is a fiduciary (e.g., attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his full title.
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
[(name) Portfolio]
Voting Instructions Solicited on Behalf of the Board of Directors for a
Special Meeting of Shareholders of the WRL Series Fund, Inc.
December 15, 1998
Account No.: Pooled Account No. 27 Cash Value Proxy Votes
I hereby instruct AUSA Life Insurance Company, Inc. ("AUSA Life") to
vote the shares of the[[name] Portfolio]of the WRL Series Fund, Inc. ("Fund") as
to which I am entitled to give instructions, as shown above, at a Special
Meeting of the Shareholders of the Fund (the "Meeting") to be held at 10:00 a.m.
on December 15, 1998, Eastern Time and any adjournments thereof at 570 Carillon
Parkway, St. Petersburg, Florida 33716 as follows:
(3) To approve a proposal to permit WRL Investment Management, Inc., after
obtaining the approval of the Board of Directors of the Fund, to enter
into and materially amend Sub-Advisory Agreements with investment
sub-advisers for each Portfolio of the Fund, without obtaining
shareholder approval;
___ For __ Against ___ Abstain
(2) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated October 23, 1998. This instruction will be voted as specified. This
instruction may be revoked at any time prior to the Meeting by executing a
subsequent voting instruction form, by notifying the Secretary of the Fund in
writing or by voting in person at the Meeting.
-------------------------------- ---------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly
as name or names appear on this Voting Instruction Form. If the individual
signing the form is a fiduciary (e.g., attorney, executor, trustee,
guardian, etc.) the individual's signature must be followed by his full
title.
<PAGE>
VOTING INSTRUCTION FORM
WRL SERIES FUND, INC.
[[name] PORTFOLIO]
Voting Instructions Solicited on Behalf of the Board of
Directors for a Special Meeting of Shareholders of
the WRL Series Fund, Inc.
December 15, 1998
Account Name
and Number Cash Value Proxy Votes
I hereby instruct PFL Life Insurance Company ("PFL Life") to vote the
shares of the[(name) Portfolio] of the WRL Series Fund, Inc.("Fund")as
to which I am entitled to give instructions,as shown above, at a Special Meeting
of the Shareholders of the Fund ("the Meeting") to be held at 10:00 a.m. on
December 15, 1998, Eastern Time and any adjournments thereof at 570 Carillon
Parkway, St. Petersburg, Florida 33716 as follows:
(1) To approve a proposal to permit WRL Investment Management, Inc., after
obtaining the approval of the Board of Directors of the Fund, to enter
into and materially amend Sub-Advisory Agreements with investment
sub-advisers for each Portfolio of the Fund, without obtaining
shareholder approval;
___ For ___ Against ___ Abstain
(2) To transact such other business as may properly come before the `
Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE FOR ALL PROPOSALS
PLEASE SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN
THE POSTAGE PAID ENVELOPE
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy Statement
dated October 23, 1998. This instruction will be voted as specified. If no
specification is made, this instruction will be voted "FOR" each proposal.
This instruction may be revoked at any time prior to the Meeting by
executing a subsequent voting instruction form, by notifying the Secretary of
the Fund in writing or by voting in person at the Meeting.
----------------------------------- -------------------
Policyowner or Contract Holder Signature Date
PLEASE SIGN, DATE AND RETURN THIS FORM PROMPTLY. Signature should be exactly as
name or names appear on this Voting Instruction Form. If the individual signing
the form is a fiduciary (e.g., attorney, executor, trustee, guardian, etc.) the
individual's signature must be followed by his full title.
<PAGE>
