A MESSAGE TO VARIABLE LIFE POLICYOWNERS
The Stock Markets witnessed significant
increases during the first half of 1995, with
the S&P 500 achieving a total return of 20.1%
for the first six months compared to a total
return of 1.2% for the entire 1994 year. At
the same time long term interest rates have
trended down since the beginning of the year.
At December 31, 1994, the 30 year treasury
bond yielded 7.87%, compared to a yield of
6.62% at June 30, 1995. As interest rates
decreased, there has been an increase in the
value of fixed income holdings like those in
the Bond Portfolio and bond fund in the Asset
Allocation Portfolio.
Short term rates rose during the first
part of the year but recently have trended
somewhat downward as the Federal Reserve
adopted a more accommodating policy by just
reducing short term rates by .25%.
The U.S. Gross Domestic Product for the
first quarter of 1995 increased 2.7% and for
the second quarter the increase was 0.5%.
Inflation remains low with the Consumer Price
Index running at 3.2% this year after last
year's 2.7%.
(Picture)
DAVID H. ROE, PRESIDENT
THE STOCK ACCOUNT. At June 30, 1995, the assets were allocated 96% to
60 different stock positions with the remainder in a high quality money
market fund. Our emphasis within the stock portfolio continues to be in
issues which we believe will perform well in the current environment and
tend to hold their values during market weakness.
THE MONEY MARKET ACCOUNT. On June 30, 1995, this portfolio held 24
different issues of the highest quality commercial paper with maturities
ranging from 2 to 32 days.
THE INVESTMENT GRADE BOND ACCOUNT. Bonds represented 89% of investable
funds on June 30, with the remainder in a high quality money market fund.
The portfolio was comprised of 26 bond issues, with maturities ranging from
3 years to 12 years.
THE ASSET ALLOCATION ACCOUNT. At June 30, assets were allocated 46% to
common stocks, 50% to bonds with the remainder in a high quality money
market fund. There were 60 different common stock issues in the portfolio
and 54 different bond positions.
THE OUTLOOK. For the balance of 1995, we expect somewhat moderating
economic growth and continued low inflation with interest rates remaining
in the range established so far this year. At the time of this report,
macroeconomics indicators are showing mixed signs. While expansion is
slowing, business profits are stronger than expected and the dollar's
relatively low value provides companies selling goods and services outside
the U.S. with a competitive environment.
RESPECTFULLY,
DAVID H. ROE
David H. Roe
President
United Services Life Insurance Company
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<TABLE>
United Services Variable Life Separate Account I
Statement of Assets and Liabilities
June 30, 1995
(Unaudited)
Sub-accounts
Common Money Asset
Stock Market Bond Allocation
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets:
Investments:
USLICO Series Fund-Common Stock Portfolio
(704,956 shares; cost $7,691,551) $ 8,425,890
USLICO Series Fund-Money Market Portfolio
(834,090 shares; cost $834,090) $ 834,090
USLICO Series Fund-Bond Portfolio
(156,819 shares; cost $1,576,708) $ 1,594,045
USLICO Series Fund-Asset Allocation Portfolio
(652,916 shares; cost $6,946,311) $ 7,426,559
Policy loans 599,555 30,314 43,462 603,329
----------- ----------- ----------- -----------
Total assets 9,025,445 864,404 1,637,507 8,029,888
----------- ----------- ----------- -----------
Liabilities:
Net accrued for policy related transactions 284,460 25,098 124,227 340,890
Amounts payable to United Services 500,000 500,000 1,000,000 1,000,000
----------- ----------- ----------- -----------
Total liabilities 784,460 525,098 1,124,227 1,340,890
----------- ----------- ----------- -----------
Net assets - for variable life
insurance policies $ 8,240,985 $ 339,306 $ 513,280 $ 6,688,998
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
United Services Variable Life Separate Account I
Statement of Operations and Changes in Net Assets
For the Six Months Ended June 30, 1995
(Unaudited)
Sub-accounts
Common Money Asset
Stock Market Bond Allocation
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 123,893 $ 22,467 $ 50,171 $ 175,835
Expenses:
Mortality and expense risk charges 19,027 2,009 3,654 17,229
----------- ----------- ----------- -----------
Net investment income 104,866 20,458 46,517 158,606
Net unrealized gains on investments 1,077,416 - 110,033 759,707
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 1,182,282 20,458 156,550 918,313
From policy related transactions:
Transfers in for net premiums 1,183,719 53,557 63,158 791,710
Transfers between sub-accounts 33,027 10,405 (4,384) (39,048)
Transfers for withdrawal/surrender (370,917) (13,216) (20,150) (206,157)
Transfer of investment and operating
results to United Services (337,943) (21,666) (125,448) (357,972)
--------- ------ ------- ---------
Net increase in net assets 1,690,168 49,538 69,726 1,106,846
Net assets, beginning of period 6,550,817 289,768 443,554 5,582,152
----------- ----------- ----------- -----------
Net assets, end of period $ 8,240,985 $ 339,306 $ 513,280 $ 6,688,998
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
United Services Variable Life Separate Account I
Statement of Operations and Changes in Net Assets
For the Six Months Ended June 30, 1994
(Unaudited)
Sub-accounts
Common Money Asset
Stock Market Bond Allocation
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 73,475 $ 10,897 $ 43,198 $ 133,030
Expenses:
Mortality and expense risk charges 11,909 1,913 3,419 13,547
----------- ----------- ----------- -----------
Net investment income 61,566 8,984 39,779 119,483
Net unrealized losses on investments (132,495) - (87,624) (285,220)
----------- ----------- ----------- -----------
Net increase(decrease) in net assets
resulting from operations (70,929) 8,984 (47,845) (165,737)
From policy related transactions:
Transfers in for net premiums 1,128,166 37,594 79,164 851,580
Transfers between sub-accounts 11,767 (850) (423) (10,494)
Transfers for withdrawal/surrender (277,574) (19,546) (14,476) (148,767)
Transfer of investment and operating
results from(to) United Services (242,711) (14,445) 21,975 (182,370)
----------- ----------- ----------- -----------
Net increase in net assets 548,719 11,737 38,395 344,212
Net assets, beginning of period 4,753,797 245,691 353,802 4,717,335
----------- ----------- ----------- -----------
Net assets, end of period $ 5,302,516 $ 257,428 $ 392,197 $ 5,061,547
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
United Services Variable Life Separate Account I
Statement of Operations and Changes in Net Assets
For The Six Months Ended June 30, 1993
(Unaudited)
Sub-accounts
Common Money Asset
Stock Market Bond Allocation
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Income:
Reinvested dividends $ 20,407 $ 9,046 $ 14,561 $ 41,735
Expenses:
Mortality and expense risk charge 9,600 1,868 3,295 12,019
----------- ----------- ----------- -----------
Net investment income 10,807 7,178 11,266 29,716
Net unrealized gains on investments 164,708 - 78,232 280,205
Net realized gains on investments - - 2,916 3,487
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations 175,515 7,178 92,414 313,408
From policy related transactions:
Transfers in for net premiums 943,658 46,193 49,865 823,004
Transfers between sub-accounts (4,287) (4,250) 757 7,780
Transfers for withdrawal/surrender (138,902) (20,752) (29,054) (204,391)
Transfer of investment and operating
results to United Services (249,999) (18,758) (99,178) (311,636)
----------- ----------- ----------- -----------
Net increase in net assets 725,985 9,611 14,804 628,165
Net assets, beginning of period 3,078,677 236,697 257,347 3,518,686
----------- ----------- ----------- -----------
Net assets, end of period $ 3,804,662 $ 246,308 $ 272,151 $ 4,146,851
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
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UNITED SERVICES VARIABLE LIFE SEPARATE ACCOUNT I - NOTES TO FINANCIAL
STATEMENTS - JUNE 30, 1995
(1) ORGANIZATION - United Services Variable Life Separate Account I
("Separate Account I") was established by United Services Life Insurance
Company ("United Services") in 1986 under the insurance laws of the
Commonwealth of Virginia. Separate Account I operates as a unit investment
trust under the Investment Company Act of 1940 and is used to fund certain
benefits for variable life insurance policies issued by United Services.
The assets of Separate Account I and its sub-accounts are the property of
United Services. The portion of Separate Account I assets applicable to
the variable life policies will not be charged with liabilities arising out
of any other business United Services may conduct. The net assets
maintained in the sub-accounts provide the basis for the periodic
determination of the amount of increased or decreased benefits under the
policies. The net assets may not be less than the amount required under
the state insurance law to provide for death benefits (without regard to
the minimum death benefit guarantee) and other policy benefits. Additional
assets are held in United Services' general account to cover the
contingency that the guaranteed minimum death benefit might exceed the
death benefit which would have been payable in the absence of such
guarantee. On January 17, 1995, United Services became an indirect wholly-
owned subsidiary of ReliaStar Financial Corp. ("ReliaStar"), previously The
NWNL Companies, Inc., an insurance holding company based in Minneapolis,
Minnesota.
USLICO Series Fund ("Series Fund") is an open-end diversified management
investment company whose shares are sold only to United Services and other
affiliates separate accounts.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Valuation of Investments - Investments in shares of Series Fund are
valued at the reported net asset value of the respective portfolios. The
aggregate cost of the investments acquired and the aggregate proceeds of
investments sold, for the six months ended June 30, 1995, were:
Cost of Shares Proceeds from
Sub-account Acquired Shares Sold
Common Stock $305,908 $ -
Money Market 37,714 -
Bond 94,317 -
Asset Allocation 199,104 -
(b) Security Transactions - Purchases and sales are recorded on the
trade date.
(c) Federal Income Taxes - United Services is taxed as a life insurance
company under the Internal Revenue Code of 1986, as amended (the "Code").
Since the sub-accounts are not separate entities from United Services, and
their operations form a part of United Services, they will not be taxed
separately as a "regulated investment company" under Sub-chapter M of the
Code. Under existing Federal income tax law, investment income of the sub-
accounts, to the extent that it is applied to increase reserves under a
contract, is not taxed and may be compounded for reinvestment without
additional tax to United Services.
(d) Charges Deducted from Premiums - Transfers to the sub-accounts of
Separate Account I for net premiums represent gross premiums payable for
a policy year, less deductions for sales loads, administrative expenses,
premium taxes, risk charges and additional premiums, if any, for optional
insurance benefits.
(e) Amounts Payable to United Services - The amounts payable to United
Services in each sub-account arises from the amount allocated from United
States to facilitate commencement of operations.
(f) Dividends - Dividends received on the shares held by the sub-
accounts of Separate Account I are reinvested to purchase additional shares
of the applicable portfolio of the Series Fund.
(g) Transfer of Investment and Operating Results to United Services -
The sub-accounts transfer their investment and operating results in excess
of amounts required to meet policyholder reserve and liability amounts to
United Services.
(3) ADMINISTRATION AND RELATED PARTY TRANSACTIONS - A daily charge is made
by United Services against each sub-account's net assets for mortality and
expense risks at an effective annual rate of .50%. The mortality risk
assumed is that insureds may live for a shorter period of time than
estimated and, therefore, a greater amount of death benefits than expected
will be payable in relation to the amount of premiums received. The
expense risk assumed is that expenses incurred in issuing and administering
the policies will be greater than estimated. Other costs of administering
Separate Account I are absorbed by United Services.
USLICO Securities Corporation ("USLICO Securities") acts as principal
underwriter (as defined in the Investment Company Act of 1940) of Separate
Account I's policies. In conjunction with the merger noted above, USLICO
Securities became a wholly-owned subsidiary of Washington Square
Securities, Inc. which is wholly-owned by ReliaStar. On April 1, 1995,
Bankers Centennial Management Corp. ("BCMC") was replaced as investment
advisor to the Series Fund by Washington Square Capital, Inc., an indirect
wholly-owned ReliaStar subsidiary. Newbold's Asset Management, Inc.
continues to serve as investment advisor to the Series Fund in the same
capacity as before the merger.
Certain officers and directors of ReliaStar and United Services are also
officers and directors of USLICO Securities, the Series Fund and Washington
Square Capital, Inc.
