SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14 (c) 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:
[X] Preliminary Information Statement [ ] Confidential, for Use of
Commission Only
[ ] Definitive Information Statement [as permitted by Rule
14a-6(e)(2)]
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WRL SERIES FUND, INC.
(Name of Registrant as Specified in Its Charter)
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Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] $125 per Exchange Act Rules 0-11(c) (1) (ii), 14 c-(1) (ii), 14c-5(g). [ ]
Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
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[X] 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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INFORMATION STATEMENT DATED MAY 1, 2000
WRL SERIES FUND, INC.
WRL GE INTERNATIONAL EQUITY
570 Carillon Parkway
St. Petersburg, Florida 33716
(Toll Free) 1-800-855-9777
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
This is an information statement for the WRL GE International Equity portfolio
(the "Portfolio") (formerly named WRL GE/Scottish Equitable International
Equity) of WRL Series Fund, Inc. (the "Fund"), a series mutual fund consisting
of several separate investment funds. This information statement is being
furnished in connection with the Order received by the Fund from the Securities
and Exchange Commission ("SEC") on August 5, 1998 granting an Exemption from
Section 15(a) of the Investment Company Act of 1940 ("1940 Act").
The primary purpose of this information statement is to notify shareholders of
the Portfolio of a new Sub-Advisory Agreement between WRL Investment Management,
Inc. ("WRL Management") and GE Asset Management Incorporated (formerly GE
Investment Management Incorporated) with respect to the Portfolio (the "New
Sub-Advisory Agreement"), which took effect, May 1, 2000.
INTRODUCTION
Currently, WRL Management acts as investment adviser to the Portfolio pursuant
to an investment advisory agreement dated January 1, 1997 (the "Advisory
Agreement"). Under the Advisory Agreement, WRL Management is responsible for
providing investment management and supervision services to the Portfolio. With
respect to the Portfolio, WRL Management entered into a Sub-Advisory Agreement
with GE Asset Management Incorporated ("GEAM") dated January 1, 1997 (the
"Original GEAM Sub-Advisory Agreement"), and a Sub-Advisory Agreement with
Scottish Equitable Investment Management Limited ("SEIM") dated January 1, 1997
(the "Original SEIM Sub-Advisory Agreement") (the Original GEAM Sub-Advisory
Agreement and the Original SEIM Sub-Advisory Agreement are referred to
collectively as the "Original Sub-Advisory Agreements"). Under the Original
Sub-Advisory Agreements the assets of the Portfolio were divided between GEAM
and SEIM, and each entity managed that portion of the assets of the Portfolio
that was allocated to it.
SEIM, located in Edinburgh, Scotland, is a wholly-owned subsidiary of Scottish
Equitable plc, the successor of Scottish Equitable Life Assurance Society. SEIM
is also an indirect wholly-owned subsidiary of AEGON N.V. and, thus, is an
affiliate of WRL Management and the Fund.
SEIM notified the Fund that it was terminating operations in the United States.
This resulted
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in termination of the Original SEIM Sub-Advisory Agreement effective May 1,
2000. Effective that date, SEIM ceased providing investment management services
to the Portfolio and ceased earning any compensation from the Portfolio.
Consequently, beginning May 1, 2000, GEAM agreed to serve as the sole
sub-adviser for the Portfolio, with no change in the Portfolio's overall
investment management fee schedule. WRL Management will continue to serve as
investment adviser to the Portfolio under the Advisory Agreement.
Section 15(a) of the Investment Company Act of 1940, as amended (the "1940 Act")
generally provides that no person may serve as an investment adviser to a
registered investment company, such as the Portfolio, except pursuant to a
written contract that, among other requirements, has been approved by the vote
of a majority of the investment company's outstanding voting securities. Any
material change to an existing advisory contract creates a new advisory
agreement that must be approved in accordance with Section 15(a) of the 1940
Act.
The termination of the Original SEIM Sub-Advisory Agreement and the resulting
reallocation of the investment management responsibilities for certain assets of
the Portfolio from SEIM to GEAM is deemed to result in a material change to the
Original GEAM Sub-Advisory Agreement under the 1940 Act. As a result, the New
Sub-Advisory Agreement is deemed to be a new advisory agreement under the 1940
Act.
On August 5, 1998, an Exemptive Order (Release IC-23379) was granted by the SEC
to the WRL Series Fund, Inc. which allows the Fund to change a non-affiliated
sub-adviser without the solicitation of shareholders of the relative portfolio
provided that such shareholders are provided with an Information Statement
detailing the change within 90 days of such change.
This Information Statement is being provided to you by the Fund on behalf of the
Portfolio.
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THE ADVISORY AGREEMENT
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The Fund, on behalf of the Portfolio, entered into the Advisory Agreement with
WRL Management. Pursuant to the Advisory Agreement, WRL Management serves as the
investment adviser to the Portfolio. Pursuant to the terms of the Advisory
Agreement, WRL Management entered into the Original Sub-Advisory Agreements with
SEIM and GEAM to provide day to day investment management services with regard
to certain assets of the Portfolio. Under the Original Sub-Advisory Agreements,
each day, the cash that flowed into the Portfolio for investment was divided
equally by SEIM and GEAM, and they managed their respective portions of the
portfolio separately from then on.
SEIM advised WRL Management that it would cease business operations in the
United States sometime during the first half of the year 2000. As a result, SEIM
notified the Fund and WRL Management that it would terminate the Original SEIM
Sub-Advisory Agreement
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effective May 1, 2000. Under the New Sub-Advisory Agreement, GEAM became the
sole investment sub-adviser with respect to all of the assets of the Portfolio,
including those assets of the Portfolio formerly managed by SEIM.
The change of sub-advisers for the Portfolio did not cause the Advisory
Agreement to change.
WRL INVESTMENT MANAGEMENT, INC.
WRL Management, a Delaware corporation, located at 570 Carillon Parkway, St.
Petersburg, Florida 33716 is a wholly-owned direct subsidiary of AUSA Holding
Company ("AUSA"). AUSA is a holding company which is wholly-owned by AEGON USA,
Inc. ("AEGON USA"), a financial services holding company. The primary emphasis
of the subsidiary companies of AUSA is generally the sale and servicing of life
and health insurance, and annuity and investment products. AEGON USA is a
wholly-owned indirect subsidiary of AEGON N.V., a Netherlands corporation and
publicly traded international insurance group.
WRL Management does not currently act as an investment adviser with respect to
any registered investment company other than the Fund.
WRL Management's directors and principal officers, together with their principal
occupations, are listed below. The address of each is 570 Carillon Parkway, St.
Petersburg, Florida 33716.
<TABLE>
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NAME AND POSITION WITH WRL MANAGEMENT PRINCIPAL OCCUPATION
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<S> <C>
John R. Kenney Director, Chairman and Co-CEO of Great Companies, Inc.;
Director, Chairman and President Director and Chairman of IDEX Mutual Funds; Chairman of
the Board of WRL Series Fund, Inc.; Director of ISI
Insurance Agency, Inc.; Chairman and Chief Executive
Officer of Western Reserve Life Assurance Co. of Ohio;
Senior Vice President of AEGON USA, Inc.
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Jerome C. Vahl Director and President, Western Reserve Life Assurance
Director Co. of Ohio; Director of Idex Investor Services, Inc.;
Vice President, AEGON USA, Cedar Rapids, Iowa.
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Alan M. Yaeger Executive Vice President, WRL Series Fund, Inc.; Chief
Director Financial Officer and Actuary, WRL Life Assurance Co.
of Ohio.
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Kim D. Day Vice President, Fund Operations and Principal
Vice President and Treasurer Accounting Officer, WRL Series Fund, Inc.; Vice
President and Treasurer, WRL Investment Services, Inc.
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Allan J. Hamilton Treasurer, Controller and Principal Financial Officer,
Vice President and Controller WRL Series Fund, Inc.
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</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Thomas E. Pierpan, Esq. Vice President and Assistant Secretary of IDEX Mutual
Assistant Vice President, Compliance Officer and Assistant Funds; Vice President and Assistant Secretary of WRL
Secretary Series Fund, Inc.; Senior Vice President, General
Counsel and Assistant Secretary of Western Reserve Life
Assurance Co. of Ohio.
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</TABLE>
All officers as set forth above, except Messrs. Vahl serve as an officer or
trustee of the Fund. No officer or trustee of the Fund (who is not a director of
WRL Investment Management) owns securities or has any other material direct or
indirect interest in WRL Management or is a person controlling, controlled by or
under common control with WRL Management.
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THE NEW SUB-ADVISORY AGREEMENT BETWEEN
WRL INVESTMENT MANAGEMENT AND GEAM
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WRL Management, on behalf of the Portfolio, entered into the Original
Sub-Advisory Agreements with GEAM and SEIM pursuant to which SEIM and GEAM each
provided investment management services with respect to the portion of the
assets of the Portfolio. The New Sub-Advisory Agreement between WRL Management
and GEAM with respect to the Portfolio took effect May 1, 2000. Under the New
Sub-Advisory Agreement, GEAM became the investment sub-adviser with respect to
100% of the assets of the Portfolio. Other than expanding the role of GEAM with
regard to providing investment management services to the Portfolio, and
providing that GEAM's fee will be calculated based on 100 percent of the assets
of the Portfolio, the terms and conditions of the New Sub-Advisory Agreement are
substantially identical to the terms and conditions of the Original GEAM
Sub-Advisory Agreement. The New Sub-Advisory Agreement appears as Exhibit A to
this Information Statement.
GE ASSET MANAGEMENT INCORPORATED
GEAM, located at 3003 Summer Street, Stamford, CT 06904, serves as sub-adviser
of the Portfolio. GEAM is a wholly-owned subsidiary of General Electric Company
("GE") and is a registered investment adviser. GEAM's principal officers,
directors and portfolio managers hold similar positions with General Electric
Investment Corporation ("GEIC"), a wholly-owned subsidiary of GE and a
registered investment adviser. As of December 31, 1999, GEAM oversaw $115.8
billion and managed individual and institutional assets of $91.7 billion, of
which more than $18.2 billion was invested in mutual funds.
GE's investment advisers provide investment management and related services to
other mutual fund portfolios and individual, corporate, charitable and
retirement accounts. For each registered investment company portfolio advised or
sub-advised by GEAM or GEIC with an investment objective similar to that of the
WRL GE International Equity portfolio, the following table identifies and sets
forth the size of each such portfolio as of December 31, 1999, along with the
management fee expressed as a percentage of average net assets for that
portfolio. GEAM or GEIC receives the fees in exchange for providing investment
services, which are comprised of investment advisory services or administrative
services, or both.
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<TABLE>
<CAPTION>
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NAME OF ITS PORTFOLIO/FUND WITH NET ASSETS AS OF ANNUAL MANAGEMENT FEE RATE
SIMILAR INVESTMENT OBJECTIVE DECEMBER 31, 1999
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<S> <C> <C>
GE International Equity Fund $ 0.80%
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GE Institutional International Equity $ First $25 million 0.75%
Fund Next $50 million 0.65%
Over $75 million 0.55%
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GE Investments International Equity $ First $100 million 1.00%
Fund Next $100 million 0.95%
Over $200 million 0.90%
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Elfun International Equity Fund* $ 0.10%
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IDEX GE International Equity Fund $ 50% of the investment management
(formerly IDEX GE/Scottish Equitable fees received by the investment
International Equity) adviser (GEAM acts as sub-adviser);
investment adviser compensation
0.80% of the first $500 million
of the fund's averaged daily
assets and 0.70% of assets over
$500 million.
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</TABLE>
* The Elfun International Equity Fund is an "employees' securities company"
within the meaning of the 1940 Act and thus is offered exclusively to certain
employees of GE and its subsidiaries and other persons satisfying eligibility
requirements. As such, it receives investment management services at a
significantly reduced rate.
DIRECTORS AND OFFICERS OF GEAM. The following table sets forth certain
information concerning the principal executive officers and directors of GEAM.
The address of each of the following persons is 3003 Summer Street, Stamford,
Connecticut 06904.
NAME PRINCIPAL OCCUPATION/POSITION WITH
GEAM
John H. Myers Chairman of the Board and President
Eugene K. Bolton Executive Vice President and Director
Michael J. Cosgrove Executive Vice President and Director
Ralph R. Layman Executive Vice President and Director
Alan M. Lewis Executive Vice President, General Counsel
Secretary and Director
Robert A. MacDougall Executive Vice President and Director
Geoffrey R. Norman Executive Vice President and Director
Donald W. Torey Executive Vice President and Director
John J. Walker Executive Vice President and Director
No officer or director of the Fund is an officer, employee, director or
shareholder of GEAM.
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No officer or director of the Fund owns securities or has any other material
direct or indirect interest in GEAM or is a person controlling, controlled by or
under common control with GEAM.
ORIGINAL SUB-ADVISORY AGREEMENTS
GEAM and SEIM served as co-sub-advisers of the Portfolio from January 1, 1997 to
May 1, 2000. Pursuant to the Original Sub-Advisory Agreements, WRL Management
contracted with GEAM and SEIM for investment sub-advisory services for the
Portfolio.
Under the terms of the Original Sub-Advisory Agreements, GEAM and SEIM provided
investment advisory assistance and portfolio management advice to WRL
Management. Subject to the review and supervision of WRL Management and the
Board, GEAM and SEIM were responsible for the actual management of the Portfolio
and for making decisions to buy, sell or hold any particular security, and GEAM
and SEIM each placed orders to buy or sell securities on behalf of the portion
of the Portfolio's assets that each managed. GEAM and SEIM each bore all of
their expenses in connection with the performance of its services, such as
compensating and furnishing office space for its officers and employees
connected with investment and economic research, trading and investment
management of the Portfolio.
The Original Sub-Advisory Agreements also stipulated that each sub-adviser may
place orders with broker-dealers for the purchase or sale of the portfolio
securities and it had to attempt to obtain quality execution at favorable
security prices, but it could, in its discretion, agree to pay a broker-dealer
that furnishes brokerage or research services a higher commission than that
which might have been charged by another broker-dealer for effecting the same
transactions, if the sub-adviser determined in good faith that such commission
is reasonable in relation to the brokerage or research services provided.
For their services, GEAM and SEIM, together, received monthly compensation from
WRL Management in the amount of 50% of the investment management fees received
by WRL Management with respect to the Portfolio. The compensation paid to GEAM
and SEIM individually was based on the portion of Portfolio assets that each
entity managed.
During the most recent fiscal year of the Portfolio, GEAM and SEIM received the
following amount of sub-advisory fees for their services under the Original
Sub-Advisory Agreements:
GEAM: $
SEIM: $
Although the sub-advisory fee under the New Sub-Advisory Agreement will remain
the same, if GEAM had served as sole sub-adviser during the Portfolio's fiscal
year ended December 31, 1999, WRL Management would have paid GEAM an aggregate
investment sub-advisory fee of $ , (which is the amount received by both
sub-advisers for that period) for its investment sub-advisory services. Thus, if
GEAM had been the sole sub-adviser during that year, GEAM would have received
100% of the aggregate investment sub-advisory fee, instead of ____% of such fee
which GEAM received as co-sub-adviser.
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The Original Sub-Advisory Agreements for the Portfolio were last approved by the
Board on March 29, 1999, and was most recently submitted to shareholders for
approval on January 1, 1997 the date of their initial approval. Under the terms
of the Original Sub-Advisory Agreements, each continued in effect from year to
year so long as such continuance was specifically approved 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 Board or the affirmative vote of a majority of the
outstanding voting securities of the Portfolio (as that phrase is defined in the
1940 Act). Each Original Sub-Advisory Agreement could be terminated with respect
to the Portfolio at any time, without penalty, by either GEAM or SEIM as
applicable, the Board or by shareholders of the Portfolio acting by vote of at
least a majority of its outstanding voting securities on 60 days' written notice
to the sub-adviser or by the sub-adviser on 60 days' written notice to WRL
Management and the Fund. In addition, each Original Sub-Advisory Agreement
terminated automatically upon its assignment. Each Original Sub-Advisory
Agreement could be amended with respect to the Portfolio only with the approval
of 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. On March 1, 2000, SEIM notified the
Chairman of the Fund that it was terminating the sub-advisory relationship
effective May 1, 2000.
GEAM INVESTMENT STRATEGY
As sole sub-adviser of the Portfolio, GEAM will invest primarily in equity
securities of companies in developed or developing countries other than the
United States. GEAM focuses on companies that it expects will grow faster than
relevant markets and whose security price does not fully reflect their potential
growth. Under normal circumstances, the Portfolio's assets are invested in no
fewer than three different countries.
GEAM considers the following factors in determining where an issuer is located:
country of organization, primary securities trading market, location of assets,
or country where the issuer derives at least half of its revenue and profits.
Stock selection is key to performance of the Portfolio.
GEAM seeks to identify securities of growth companies with characteristics such
as:
o low prices relative to their long-term cash earnings potential
o potential for significant improvement in the company's business
o financial strength
o sufficient liquidity
GEAM may also invest in debt securities and other securities and investment
strategies in pursuit of the Portfolio's investment objective.
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NEW SUB-ADVISORY AGREEMENT AND APPROVAL OF THE
BOARD OF DIRECTORS
The following description of the New Sub-Advisory Agreement is qualified by
reference to Exhibit A, which consists of the New Sub-Advisory Agreement.
THE NEW SUB-ADVISORY AGREEMENT IS SUBSTANTIALLY IDENTICAL TO THE ORIGINAL GEAM
SUB-ADVISORY AGREEMENT EXCEPT THAT: (I) THE EFFECTIVE DATE IS MAY 1, 2000; (II)
THE INITIAL TERM ENDS TWO YEARS FROM THE EFFECTIVE DATE; (III) GEAM SERVES AS
THE SOLE SUB-ADVISER FOR THE FUND; (IV) THE AMOUNT OF ADVISORY FEES RECEIVED BY
GEAM, BUT NOT THE RATE AT WHICH THOSE FEES ARE PAID BY WRL MANAGEMENT, WILL
INCREASE; AND (V) THE AGREEMENT REFLECTS NON-MATERIAL STYLISTIC AND CLARIFYING
CHANGES. THE NEW SUB-ADVISORY AGREEMENT DOES NOT REFLECT ANY CHANGES IN THE
NATURE OF SERVICES PROVIDED BY GEAM OR COMPENSATION PAID TO GEAM, EXCEPT THAT IT
SERVES AS THE SOLE SUB-ADVISER OF THE PORTFOLIO AND GEAM'S FEES ARE CALCULATED
BASED UPON ALL OF THE PORTFOLIO'S ASSETS. GEAM WILL CONTINUE TO SERVE AS THE
INVESTMENT SUB-ADVISER TO THE PORTFOLIO PURSUANT TO THE TERMS OF THE NEW
SUB-ADVISORY AGREEMENT UNTIL SUCH TIME AS THE AGREEMENT IS AMENDED OR TERMINATED
IN ACCORDANCE WITH ITS TERMS.
PER THE TERMS OF THE NEW SUB-ADVISORY AGREEMENT, GEAM WILL RECEIVE 50% OF THE
MANAGEMENT FEES RECEIVED BY THE INVESTMENT ADVISER.
EVALUATION BY THE BOARD
Prior to and at a meeting of the Board on March 20, 2000, the Board, including
the Disinterested Directors, reviewed information regarding the New Sub-Advisory
Agreement.
In evaluating the New Sub-Advisory Agreement, the Board took into account that
the Original GEAM Sub-Advisory Agreement, including the terms relating to the
services to be provided thereunder by GEAM and the expenses payable by the
Portfolio, is substantially identical to the New Sub-Advisory Agreement, except
for the dates of execution, effectiveness and termination, and that GEAM will
serve as the sole sub-adviser for the Portfolio. Although the advisory fee
schedule under the New Sub-Advisory Agreement is the same as it is under the
Original Sub-Advisory Agreement, the actual amount of sub-advisory fees received
by GEAM will increase as a result of it being the sole sub-adviser to the
Portfolio. The Board also considered the reputation, expertise and resources of
GEAM and its affiliates in both domestic and international financial markets.
Furthermore, the Board considered the desirability of retaining, subject to
ordinary turnover, the same personnel primarily responsible for providing
current investment advisory and other services for the portion of the assets
that GEAM managed for the Portfolio.
After consideration of the factors discussed above and such other factors and
information that the Board deemed relevant, the Board, including the
Disinterested Directors, unanimously approved the New Sub-Advisory Agreement.
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SHAREHOLDER PROPOSALS
As a general matter, the Portfolio 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 WRL Series Fund, Inc., 570 Carillon Parkway, St.
Petersburg, Florida 33716.
ANNUAL REPORT
WRL will furnish, without charge, a copy of its most recent annual report to
shareholders upon request. Any such request should be directed to WRL by calling
(800) 855-9777 or by writing WRL at P.O. Box 5068, Clearwater, FL 33758-5068.
ADDITIONAL INFORMATION
The Fund's investment adviser, WRL Investment Management, Inc., its transfer
agent, WRL Investment Services, Inc., and its principal underwriter/distributor,
AFSG Securities Corporation, are located at 570 Carillon Parkway, St.
Petersburg, Florida 33716.
By Order of the Board of Trustees,
John K. Carter, Esq., Secretary
WRL Series Fund, Inc.
St. Petersburg, Florida
Exhibit A - New Sub-Advisory Agreement
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EXHIBIT A
SUB-ADVISORY AGREEMENT
BETWEEN
WRL INVESTMENT MANAGEMENT, INC.
AND
GE ASSET MANAGEMENT INCORPORATED
SUB-ADVISORY AGREEMENT, made as of the 1st day of May, 2000, between
WRL Investment Management, Inc. ("Investment Adviser"), a corporation organized
and existing under the laws of the State of Florida and GE Asset Management
Incorporated ("Sub-Adviser"), a corporation organized and existing under the
laws of the State of Delaware.
WHEREAS, the Investment Adviser has entered into an Investment Advisory
Agreement dated as of the 1st day of January, 1997 ("Advisory Agreement") with
the WRL Series Fund, Inc. ("Fund"), a Maryland corporation which is engaged in
business as an open-end management 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 WRL GE
International Equity portfolio ("Portfolio"), a separate series of the Fund;
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act");
and
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to the Investment
Adviser with respect to the Portfolio and the Sub-Adviser is willing to furnish
such services.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein set forth, the parties hereto agree as follows:
1. APPOINTMENT.
Investment Adviser hereby appoints the Sub-Adviser as an investment
sub-adviser with respect to the Portfolio for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. DUTIES OF THE SUB-ADVISER.
A. INVESTMENT SUB-ADVISORY SERVICES. Subject to the
supervision of the
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Fund's Board of Directors ("Board") and the Investment Adviser, the Sub-Adviser
shall act as an investment sub-adviser and shall supervise and direct the
investments of the Portfolio in accordance with the Portfolio's investment
objective, policies, and restrictions as provided in the Fund's Prospectus and
Statement of Additional Information, as currently in effect and as amended or
supplemented from time to time (hereinafter referred to as the "Prospectus"),
and such other limitations as directed by the appropriate officers of the
Investment Adviser or the Fund by notice in writing to the Sub-Adviser. The
Sub-Adviser shall obtain and evaluate such information relating to the economy,
industries, businesses, securities markets, and securities as it may deem
necessary or useful in the discharge of its obligations hereunder and shall
formulate and implement a continuing program for the management of the assets
and resources of the Portfolio allocated to it in a manner consistent with the
Portfolio's investment objective, policies, and restrictions. In furtherance of
this duty, the Sub-Adviser, on behalf of the Portfolio, is authorized, in its
discretion and without prior consultation with the Portfolio or the Investment
Adviser, to:
(1) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds and other securities or assets; and
(2) place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or
through such brokers, dealers, underwriters or issuers as the
Sub-Adviser may select.
B. ADDITIONAL DUTIES OF SUB-ADVISER. In addition to the
above, Sub-Adviser
shall:
(1) furnish continuous investment information, advice and
recommendations to the Fund as to the acquisition, holding or
disposition of any or all of the securities or other assets which
the Portfolio may own or contemplate acquiring from time to time;
(2) cause its officers to attend quarterly (or such less frequent)
meetings of the Fund in person, via telephone or teleconference
capabilities and furnish oral or written reports, as the Fund may
reasonably require, in order to keep the Fund and its officers and
Board fully informed as to the condition of the investment
securities of the Portfolio, the investment recommendations of the
Sub-Adviser, and the investment considerations which have given
rise to those recommendations; and
(3) furnish such statistical and analytical information and
reports as may reasonably be required by the Fund from time to
time.
C. FURTHER DUTIES OF SUB-ADVISER. In all matters relating to
the performance of this Agreement, the Sub-Adviser shall act in conformity with
the Fund's Articles of Incorporation and By-Laws, as each may be amended or
supplemented, and currently effective Registration Statement (as defined below)
and with the written instructions and
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directions of the Board and the Investment Adviser, either as reflected in the
Registration Statement (as defined below) or otherwise provided in writing to
the Sub-Adviser by 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, either as reflected in
the Registration Statement (as defined below), or otherwise provided in writing
to the Sub-Adviser by the Investment Adviser.
3. COMPENSATION.
For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, the Sub-Adviser shall receive a monthly investment
management fee equal to (i) 50% of the fees received by the Investment Adviser
for services rendered under the Advisory Agreement by the Investment Adviser
with respect to the amount of the Portfolio's assets managed by the Sub-Adviser
during such period. The management fee shall be payable by the Investment
Adviser monthly to the Sub-Adviser upon receipt by the Investment Adviser from
the Portfolio of advisory fees payable to the Investment Adviser. If this
Agreement becomes effective or terminates before the end of any month, the
investment management fee for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be pro-rated according to the pro-ration which such
period bears to the full month in which such effectiveness or termination
occurs.
4. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have
responsibility for all services to be provided to the Portfolio pursuant to the
Advisory Agreement and shall oversee and review the Sub-Adviser's performance of
its duties under this Agreement.
B. The Investment Adviser has furnished the Sub-Adviser with
copies of each of the following documents and will furnish to the Sub-Adviser at
its principal office all future amendments and 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;
(4) The Fund's Registration Statement under the 1940 Act and the
Securities
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Act of 1933, as amended ("1933 Act"), on Form N-1A, as filed with
the Securities and Exchange Commission ("SEC") relating to the
Portfolio and its shares and all amendments thereto ("Registration
Statement");
(5) The Notification of Registration of the Fund under the 1940
Act on Form N-8A as filed with the SEC and any amendments thereto;
(6) The Fund's Prospectus and Statement of Additional Information
(as defined above); and
(7) A certified copy of any publicly available financial statement
or report prepared for the Fund by certified or independent public
accountants, and copies of any financial statements or reports
made by the Portfolio to its shareholders or to any governmental
body or securities exchange.
The Investment Adviser shall furnish the Sub-Adviser with any further
documents, materials or information that the Sub-Adviser may reasonably request
to enable it to perform its duties pursuant to this Agreement.
C. During the term of this Agreement, the Investment Adviser
shall furnish to the Sub-Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of the Portfolio or the public, which
refer to the Sub-Adviser or investment companies or other advisory accounts
advised or sponsored by the Sub-Adviser 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.
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B. On occasions when the Sub-Adviser deems the purchase or
sale of a security to be in the best interest of the Fund as well as other
clients of the Sub-Adviser, the Sub-Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-Adviser in the
manner the Sub-Adviser considers to be the most equitable and consistent with
its fiduciary obligations to the Fund and to its other clients.
C. In addition to the foregoing, the Sub-Adviser agrees that
orders with broker-dealers for the purchase or sale of portfolio securities by
the Portfolio shall be placed in accordance with the standards set forth in the
Advisory Agreement, and the Investment Adviser acknowledges in this Agreement
the specific authority given to both the Investment Adviser and the Sub-Adviser
under the Advisory Agreement with respect to the placement of brokerage.
6. OWNERSHIP OF RECORDS.
The Sub-Adviser shall maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees: (i) that all records that it maintains for the Fund
are the property of the Fund, (ii) to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records that it maintains for the Fund and
that are required to be maintained by Rule 31a-1 under the 1940 Act and (iii)
agrees to surrender promptly to the Fund any records that it maintains for the
Fund upon request by the Fund; provided, however, the Sub-Adviser may retain
copies of such records.
7. REPORTS.
The Sub-Adviser shall furnish to the Board or the Investment Adviser,
or both, as appropriate, such information, reports, evaluations, analyses and
opinions as the Sub-Adviser and the Board or the Investment Adviser, as
appropriate, may mutually agree upon from time to time.
8. SERVICES TO OTHERS CLIENTS.
Nothing contained in this Agreement shall limit or restrict (i) the
freedom of the Sub-Adviser, or any affiliated person thereof, to render
investment advisory, management and corporate administrative services to any
other investment companies, to act as investment manager or investment counselor
to any 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
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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 seek to continue to meet for so long as this Agreement remains
in effect, any other 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 promptly 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. REPRESENTATIONS AND WARRANTIES OF INVESTMENT ADVISER.
The Investment Adviser represents, warrants and agrees as follows:
A. The Investment 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 from
performing the services contemplated by the Advisory Agreement; (iii) has met,
and will seek to continue to meet for so long as this Agreement remains in
effect, any other 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 the Advisory Agreement;
(iv) has the authority to enter into and perform the services contemplated by
the Advisory Agreement and has the authority to enter into this Agreement; and
(v) will promptly notify the Sub-Adviser of the occurrence of any event that
would disqualify the Investment Adviser from serving as an investment adviser of
an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
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<PAGE>
B. The Investment Adviser agrees that it will notify the
Sub-Adviser, to the extent possible, within a reasonable period of time prior to
any termination of this Agreement pursuant to Section 14 which arises from a
termination of the Advisory Agreement (including any termination by assignment
resulting from a foreseeable change in control of the Investment Adviser that is
a matter of public information).
11. LIMITATION OF LIABILITY.
The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Portfolio, the Fund or its
shareholders or by the Investment Adviser in connection with the matters to
which this Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
12. INDEMNIFICATION.
A. The Investment Adviser agrees to indemnify the Sub-Adviser,
its officers and directors, and any person who controls the Sub-Adviser within
the meaning of Section 15 of the 1933 Act for any loss or expense (including
attorney's fees) arising out of any claim, demand, action or suit in the event
that the Sub-Adviser has been found to be without fault and the Investment
Adviser or any other investment sub-adviser to the Portfolio, or any person who
controls the Investment Adviser or such other investment sub-adviser within the
meaning of Section 15 of the 1933 Act has been found at fault (i) by the final
judgment of a court of competent jurisdiction or (ii) in any order of settlement
of any claim, demand, action or suit that has been approved by the Board of
Directors of the Investment Adviser, such other investment sub-adviser or such
other controlling person.
B. The Sub-Adviser agrees to indemnify the Investment Adviser,
its officers and directors, and any person who controls the Investment Adviser
within the meaning of Section 15 of the 1933 Act for any loss or expense
(including attorney's fees) arising out of any claim, demand, action or suit in
the event that the Investment Adviser has been found to be without fault and the
Sub-Adviser or any person who controls the Sub-Adviser within the meaning of
Section 15 of the 1933 Act has been found at fault (i) by the final judgment of
a court of competent jurisdiction or (ii) in any order of settlement of any
claim, demand, action or suit that has been approved by the Board of Directors
of the Sub-Adviser or such other controlling person.
13. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those Directors of the Fund who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Portfolio's outstanding voting securities.
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Unless sooner terminated as provided herein, this Agreement shall continue in
effect until April 30, 2001 from its effective date. Thereafter, this Agreement
shall continue in effect from year to year, with respect to the Portfolio,
subject to the termination provisions and all other terms and conditions hereof,
so long as such continuation shall be specifically approved at least annually
(a) by either the Board, or by vote of a majority of the outstanding voting
securities of the Portfolio; and (b) in either event, by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Directors of the Fund who are not parties to this Agreement or
interested persons of any such party. The Sub-Adviser shall furnish to the Fund,
promptly upon its request such information as may reasonably be necessary to
evaluate the terms of this Agreement or any extension, renewal, or amendment
hereof.
14. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on at least 60
days' prior written notice to the Sub-Adviser. This Agreement 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.
15. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of a majority of the Portfolio's outstanding voting securities, unless
otherwise permitted in accordance with the 1940 Act.
16. 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
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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 or
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.
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:
Title: President
Attest: GE ASSET MANAGEMENT INCORPORATED
By
-----------------------------
- ------------------------------------ Name:
Assistant Secretary Title:
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