EXHIBIT 99.2
WRL SERIES FUND, INC.
INVESTMENT ADVISORY AGREEMENT FOR THE
VALUE EQUITY PORTFOLIO OF THE WRL SERIES FUND, INC.
This Agreement, entered into as of April 30, 1996, is between WRL Series
Fund, Inc., a Maryland corporation (referred to herein as the "Fund"), and
Western Reserve Life Assurance Co. of Ohio, an Ohio corporation (referred to
herein as "WRL"), to provide certain investment advisory services with respect
to a certain series of shares of common stock of the Fund, allocated to the
Value Equity Portfolio (the "Portfolio").
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended, (the "1940 Act") and consists of
more than one series of shares, including the Portfolio. In managing its
Portfolio, as well as in the conduct of certain of its affairs, the Fund wishes
to have the benefit of the investment advisory services of WRL and its
assistance in performing certain management, administrative and promotional
functions. WRL desires to furnish such services for the Portfolio and to perform
the functions assigned to it under this Agreement for the considerations
provided. Accordingly, the parties have agreed as follows:
1. INVESTMENT ADVISORY SERVICES. In its capacity as investment
adviser to the Portfolio, WRL shall have the following responsibilities:
(a) to furnish continuous advice and recommendations to the Fund
as to the acquisition, holding or disposition of any or all of the securities or
other assets which the Portfolio may own or contemplate acquiring from time to
time;
(b) to cause its officers to attend meetings and furnish oral or
written reports, as the Fund may reasonably require, in order to keep the Board
of Directors and appropriate officers of the Fund fully informed as to the
conditions of the investment portfolio of the Portfolio, the investment
recommendations of WRL, and the investment considerations which have given rise
to those recommendations; and
(c) to supervise the purchase and sale of securities
of the Portfolio as directed by the appropriate officers of the Fund.
It is understood and agreed that WRL may, and intends to, enter into a
Sub-Advisory Agreement with a duly registered investment adviser (the
"Sub-Adviser"), under which the Sub-Adviser will furnish investment information
and advice to assist WRL in carrying out its responsibilities under this Section
1. The compensation to be paid to the Sub-Adviser for such services and the
other terms and conditions under which the services shall be rendered by the
Sub-Adviser shall be set forth in the Sub-Advisory Agreement; provided, however,
that such Agreement shall be approved by the Board of Directors and by the
holders of the outstanding voting securities of the Portfolio in accordance with
the requirements of Section 15 of the 1940 Act), and shall otherwise be subject
to, and contain such provisions as shall be required by, the 1940 Act.
2. MANAGEMENT AND ADMINISTRATIVE SERVICES. WRL shall furnish or make
available to the Portfolio the services of executive and management personnel to
supervise the performance of all administrative, recordkeeping, shareholder
relations, regulatory reporting and compliance, and all other functions of the
Portfolio (other than the investment advisory services provided for in Section
1), including supervising and coordinating the services of the Portfolio's
custodian and transfer agent. WRL shall also assist the Portfolio in maintaining
communications and relations with shareholders of the Portfolio, answer
shareholder inquiries or supervise such activity by the Portfolio's transfer
agent, and assist in the preparation of reports to shareholders of the
Portfolio.
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3. WRL EXPENSES. In addition to the expenses which WRL may incur in the
performance of its services pursuant to Sections 1 and 2 above, WRL shall incur
and pay the following expenses relating to the Portfolio's organization and
operations:
(a) All costs and expenses, including legal and accounting fees,
incurred in connection with the formation and organization of the Portfolio,
including the preparation (and filing, when necessary) of the Portfolio
contracts, plans and documents; conducting meetings of organizers, directors and
shareholders, and all other matters relating to the formation and organization
of the Portfolio and the preparation for offering its shares. The organization
of the Portfolio for all of the foregoing purposes will be considered completed
upon effectiveness of the post-effective amendment to the Fund's registration
statement to register the Portfolio under the Securities Act of 1933;
(b) All costs and expenses, including legal and accounting fees,
filing fees and printing costs, in connection with the preparation and filing of
the post-effective amendment to the Fund's registration statement to register
the Portfolio under the Securities Act of 1933 and the 1940 Act (including all
amendments thereto prior to the effectiveness of the registration statement
under the Securities Act of 1933);
(c) All costs and expenses, including legal fees and filing fees,
in connection with registering or qualifying the Portfolio's shares for sale
under the securities laws, if applicable, of such states as the Fund shall
designate prior to the effectiveness of approval of such registration or
qualifications in each such state;
(d) Reasonable compensation, fees and related expenses of the
officers and Directors of the Fund, except for such Directors who are not
interested persons (as that term is defined in Section 2(a)(19) of the 0000 Xxx)
of WRL; and
(e) Rental of offices for the Portfolio.
4. OBLIGATIONS OF THE FUND. The Fund shall have the following
obligations under this Agreement:
(a) to keep WRL continuously and fully informed as to the
composition of the Portfolio's investment securities and the nature of all of
its assets and liabilities from time to time;
(b) to furnish WRL with a certified copy of any financial
statement or report prepared for the Portfolio by certified or independent
public accountants, and with copies of any financial statements or reports made
to its shareholders or to any governmental body or securities exchange;
(c) to furnish WRL with any further materials or information
which WRL may reasonably request to enable it to perform its functions under
this Agreement; and
(d) to compensate WRL for its services in accordance with
the provisions of Section 5 hereof.
5. COMPENSATION. For its services under this Agreement, WRL is entitled
to receive from the Portfolio a monthly fee, payable on the last day of each
month during which or part of which this Agreement is in effect, of 1/12 of
0.80% of the average daily net assets of the Portfolio for such month. For the
month during which this Agreement becomes effective and the month during which
it terminates, however, there shall be an appropriate pro-ration of the fee
payable for such month based on the number of calendar days of such month during
which this Agreement is effective.
6. EXPENSES PAID BY THE PORTFOLIO. Subject to the provisions of Section
7, below, and except as provided in this paragraph, nothing in this Agreement
shall be construed to impose upon WRL the obligation to incur, pay, or reimburse
the Portfolio for any expenses not specifically assumed by WRL under Sections 1,
2 and 3 above. The Portfolio shall pay all of its other expenses including, but
not limited to, investment adviser fees; any compensation, fees, or
reimbursements which the Fund pays to its Directors who are not interested
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persons (as that phrase is defined in Section 2(a)(19) of the 0000 Xxx) of WRL;
compensation of the Portfolio's custodian, registrar and dividend disbursing
agent; current legal, accounting and printing expenses; administrative,
clerical, recordkeeping and bookkeeping expenses; pricing costs including the
daily calculation of net asset value; auditing; certain insurance premiums;
investor services including allocable telephone and personnel expenses;
brokerage commissions and all other expenses in connection with execution of
portfolio transactions interest; all federal, state and local taxes (including
stamp, excise, income and franchise taxes) and the preparation and filing of all
returns and reports in connection therewith; costs of certificates and the
expenses of delivering such certificates to the purchasers thereof; expenses of
local representation in Maryland; expenses of shareholders' meetings and of
preparing, printing and distributing proxy statement; expenses of preparation
and distribution of notices and reports to shareholders; expenses of preparing
and filing reports with federal and state regulatory authorities; all costs and
expenses, including fees and disbursements of counsel and auditors, filing and
renewal fees and printing costs in connection with the preparation and filing of
any required amendments, supplements or renewals of registration statement,
qualifications or prospectuses under the Securities Act of 1933 and the
securities laws of any states or territories subsequent to the effectiveness of
the initial registration statement under the Securities Act of 1933; all costs
involved in preparing and printing prospectuses of the Portfolio; extraordinary
expenses; and all other expenses properly payable by the Fund or the Portfolio.
Nothing in this Section 6 shall prohibit the Fund from entering into other
agreements or adopting plans which provide for the allocation of expenses of the
Fund or the Portfolio to other entities, or the assumption of other expenses by
the Fund or the Portfolio.
7. LIMITATION ON EXPENSES OF THE PORTFOLIO. If the laws, regulations or
policies of any state in which shares of the Portfolio are qualified for sale
limit the operation and management expenses (collectively referred to as "Normal
Operating Expenses" and as described below), WRL will pay on behalf of the
Portfolio the amount by which such expenses exceed the lowest of such state
limitations (the "Expense Limitation"). Normal Operating Expenses include, but
are not limited to, the fees of the Portfolio's investment adviser, the
compensation of its custodian, registrar, auditors and legal counsel, printing
expenses, expenses incurred in complying with all laws applicable to the sale of
shares of the Portfolio and any compensation, fees, or reimbursement which the
Portfolio pays to Directors of the Fund who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 0000 Xxx) of WRL, but excluding all
interest and all federal, state and local taxes (such as stamp, excise, income,
franchise and similar taxes). If Normal Operating Expenses exceed in any year
the Expense Limitation of the Fund, WRL shall pay for those excess expenses on
behalf of the Portfolio in the year in which they are incurred. Expenses of the
Portfolio shall be calculated and accrued monthly. If at the end of any month
the accrued expenses of the Portfolio exceed a pro rata portion of the
above-described Expense Limitation, based upon the average daily net asset value
of the Portfolio from the beginning of the fiscal year through the end of the
month for which calculation is made, the amount of such excess shall be paid by
WRL on behalf of the Portfolio and such excess amounts shall continue to be paid
until the end of a month when such accrued expenses are less than the pro rata
portion of such Expense Limitation. Any necessary final adjusting payments,
whether from WRL to the Portfolio or from the Portfolio to WRL, shall be made as
soon as reasonably practicable after the end of the fiscal year.
8. TREATMENT OF INVESTMENT ADVICE. With respect to the Portfolio, the
Fund shall treat the investment advice and recommendations of WRL as being
advisory only, and shall retain full control over its own investment policies.
However, the Directors of the Fund may delegate to the appropriate officers of
the Fund, or to a committee of Directors, the power to authorize purchases,
sales or other actions affecting the Portfolio in the interim between meetings
of the Directors, provided such action is consistent with the established
investment policy of the Directors and is reported to the Directors at their
next meeting.
9. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by the Portfolio upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Portfolio and shall
be paid by the Portfolio. WRL is authorized and directed to place the
Portfolio's securities transactions, or to delegate to the Sub-Adviser the
authority and direction to place the Portfolio's securities transactions, only
with brokers and dealers who render satisfactory service in the execution of
orders at the most favorable prices and at reasonable commission rates;
provided, however, that WRL or the Sub-Adviser,
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may pay a broker or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if WRL or the Sub-Adviser determines
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer
viewed in terms of either that particular transaction or the overall
responsibilities of WRL or the Sub-Adviser. WRL and the Sub-Adviser are also
authorized to consider sales of the individual and group life insurance policies
issued by WRL by a broker-dealer as a factor in selecting broker-dealers to
execute the Portfolio's securities transactions, provided that in placing
portfolio business with such broker-dealers, WRL and the Sub-Adviser shall seek
the best execution of each transaction and all such brokerage placement shall be
consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. Notwithstanding the foregoing, the Fund shall retain
the right to direct the placement of all securities transactions of the
Portfolio, and the Directors may establish policies or guidelines to be followed
by WRL and the Sub-Adviser in placing securities transactions for the Portfolio
pursuant to the foregoing provisions. WRL shall report on the placement of
portfolio transactions each quarter to the Directors of the Fund.
10. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Directors of the Fund or by the shareholders of the Portfolio
acting by vote of at least a majority of its outstanding voting securities (as
that phrase is defined in Section 2(a)(42) of the 0000 Xxx) provided in either
case that 60 days' written notice of termination be given to WRL at its
principal place of business. This Agreement may be terminated by WRL at any time
by giving 60 days' written notice of termination to the Fund, addressed to its
principal place of business.
11. ASSIGNMENT. This Agreement shall terminate automatically
in the event of any assignment (as the term is defined in Section 2(a)(4) of the
0000 Xxx) of this Agreement.
12. TERM. This Agreement shall continue in effect, unless sooner
terminated in accordance with its terms, for an initial term ending April 22,
1998, and shall continue in effect from year to year thereafter provided such
continuance is specifically approved at least annually by the vote of a majority
of the Directors of the Fund who are not parties hereto or interested persons
(as that term is defined in Section 2(a)(19) of the 0000 Xxx) of any such party,
cast in person at a meeting called for the purpose of voting on the approval of
the terms of such renewal, and by either the Directors of the Fund or the
affirmative vote of a majority of the outstanding voting securities of the
Portfolio (as that phrase is defined in Section 2(a)(42) of the 1940 Act).
13. AMENDMENTS. This Agreement may be amended only with the approval of
the affirmative vote of a majority of the outstanding voting securities of the
Portfolio (as that phrase is defined in Section 2(a)(42) of the 0000 Xxx) and
the approval by the vote of a majority of Directors of the Fund who are not
parties hereto or interested persons (as that phrase is defined in Section
2(a)(19) of the 1940 Act of 1940) of any such party, cast in person at a meeting
called for the purpose of voting on the approval of such amendment, unless
otherwise permitted in accordance with the 1940 Act.
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14. PRIOR AGREEMENTS. This Agreement constitutes the entire
agreement between the parties hereto and supersedes in its entirety any and all
previous agreements between the parties relative to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WRL SERIES FUND, INC.
ATTEST:
By:_______________________________
_____________________ Chairman of the Board and President
Assistant Secretary
WESTERN RESERVE LIFE
ASSURANCE CO. OF OHIO
ATTEST:
By:_______________________________
_____________________ Executive Vice President
Assistant Secretary
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