USLICO SERIES FUND
INVESTMENT STRATEGIES AND PERFORMANCE OF THE STOCK PORTFOLIO
Newbold's Asset Management, Inc. (the "Sub-Adviser") is responsible
for the investments and reinvestments of the Stock Portfolio's assets.
They are "value oriented" in their investment philosophy, which means
they proceed from the premise that investment value and return can best
be realized through buying companies with a low price relative to
current earnings. This "bottom up" approach seeks to identify
companies whose earnings growth suggests an increasing stream of future
dividend income, and whose shares' pricing represents a level below
realizable value.
In 1995, Newbold's participated in the exuberant stock market that
recorded the strongest annual returns since 1958 and the 3rd largest in
the post WW II era. Newbold's value style produced underweighted
positions in two strong "growth" sectors - Healthcare (ultimately the
leading performance sector) - and Technology, and those underweights
generated a performance lag. However, Newbold's large overweight in
Utilities in the second half of the year resulted in a recapture of
nearly all of that lag. The large positions in Commercial Aircraft
producers also generated strong returns. Going into 1996, the portfolio
has de-emphasized economically sensitive issues, in favor of more stable
earnings producers found in the Utility, Food & Beverage, and Health
Care industries.
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN*
BETWEEN THE STOCK PORTFOLIO AND THE S&P 500 INDEX
Year Stock S&P 500
Portfolio Index
(in thousands of dollars)
12/85 10.0 10.0
12/86 11.2 11.5
12/87 11.6 11.7
12/88 12.9 13.1
12/89 16.0 16.7
12/90 14.9 15.6
12/91 17.5 19.7
12/92 18.5 20.6
12/93 20.5 22.1
12/94 21.1 21.7
12/95 27.8 29.2
*-$10,000 INVESTED ON 12/31/85 IN FUND OR INDEX INCLUDING REINVESTMENT
OF DIVIDENDS
FISCAL YEARS ENDED 12/31
Returns include the reinvestment of all distributions at Net Asset Value
and the change in share price for the stated period, but exclude
insurance and administration charges assessed by the Insurance Company
separate accounts.
Past performance is not predictive of future performance. Investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
USLICO SERIES FUND
INVESTMENT STRATEGIES AND PERFORMANCE OF THE BOND PORTFOLIO
The responsibility for investments and reinvestments in the Bond
Portfolio is with Washington Square Capital (the "Adviser"), which is
affiliated with Bankers Security Life Insurance Society and United
Services Life Insurance Company. Investments are primarily in
investment-grade intermediate to long-term corporate bonds. Bonds
represented 97% of investable funds at year-end with the remainder of
the portfolio in a high quality money market fund.
During 1995, the Bond Portfolio was primarily invested in corporate
bonds rated "A" or better by Moody's or Standard & Poor's. The
Portfolio holds no Collateralized Mortgage Obligations.
The average maturity of the bonds was less than ten years. The
composition of the Portfolio holdings tended to be somewhat shorter in
duration and with heavier emphasis on corporate bonds than that of its
most representative industry index, which is the Lehman Brothers
Government/Corporate Bond Index. The Total Return for 1995, after all
expenses at the Portfolio level was 18.07%.
COMPARISON OF 102 MONTH CUMULATIVE TOTAL RETURN*
BETWEEN THE BOND PORTFOLIO AND THE LEHMAN BROS GOV'T CORP INDEX
Year Stock Lehman Bros
Portfolio Gov't Corp Index
(in thousands of dollars)
6/25/87 10.0 10.0
12/87 10.1 10.1
12/88 11.1 10.9
12/89 12.5 12.4
12/90 13.0 13.5
12/91 14.9 15.6
12/92 16.0 16.8
12/93 17.7 18.7
12/94 17.1 18.0
12/95 20.1 21.5
*-$10,000 INVESTED ON 6/25/87 IN FUND OR 7/1/87 IN INDEX INCLUDING
REINVESTMENT OF INCOME
FISCAL YEARS ENDED 12/31
Returns include the reinvestment of all distributions at Net Asset Value
and the change in share price for the stated period, but exclude
insurance and administration charges assessed by the Insurance Company
separate accounts.
Past performance is not predictive of future performance. Investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
USLICO SERIES FUND
INVESTMENT STRATEGIES AND PERFORMANCE OF THE ASSET ALLOCATION PORTFOLIO
This Portfolio consists of stocks, intermediate to long term bonds
of primarily investment grade and money market instruments. The stocks
are chosen by Newbold's, which is also responsible for choosing the
stocks in the Stock Portfolio. It is a "value oriented" investment
manager and uses the same strategies to pick stocks for this Portfolio
as is described under "Investment Strategies and Performance of the
Stock Portfolio." The Adviser for the bonds and money market portions
is Washington Square Capital. During 1995, the bonds in the Portfolio
were primarily corporate bonds rated "A" or better by Moody's or
Standard and Poor's. The Portfolio holds no Collateralized Mortgage
Obligations. The average maturity of the bonds was less than ten years.
Bond holdings tended to be somewhat shorter in duration and with
heavier emphasis on corporate bonds than that of Lehman Brothers
Government/Corporate Bond Index. The Total Return for 1995, after all
expenses at the Portfolio level, was 25.15%.
COMPARISON OF 102 MONTH CUMULATIVE TOTAL RETURN*
BETWEEN THE ASSET ALLOCATION PORTFOLIO, LEHMAN BROS
GOV'T CORP INDEX AND S&P 500 INDEX
Year Stock Lehman Bros S&P 500
Portfolio Gov't Corp Index INDEX
(in thousands of dollars)
6/25/87 10.0 10.0 10.0
12/87 9.5 10.1 10.1
12/88 10.5 10.9 11.4
12/89 12.2 12.4 14.4
12/90 12.3 13.5 13.5
12/91 14.1 15.6 17.1
12/92 15.2 16.8 17.8
12/93 16.8 18.7 19.1
12/94 16.6 18.0 18.8
12/95 20.8 21.5 25.2
*-$10,000 INVESTED ON 6/25/87 IN FUND OR 7/1/87 IN INDEX INCLUDING
REINVESTMENT OF INCOME
FISCAL YEARS ENDED 12/31
Returns include the reinvestment of all distributions at Net Asset Value
and the change in share price for the stated period, but exclude
insurance and administration charges assessed by the Insurance Company
separate accounts. Past performance is not predictive of future
performance. Investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
<PAGE>
<TABLE>
USLICO Series Fund
Statement of Assets and Liabilities
December 31, 1995
Common Money Asset Total
Stock Market Bond Allocation Portfolios
Portfolio Portfolio Portfolio Portfolio Combined
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 600,370 $ 2,654 $ 85,500 $ 276,593 $ 965,117
Common stock, at fair value (cost
$16,457,309 and $5,662,193, respectively) 19,413,676 - - 6,679,936 26,093,612
Bonds, at fair value (cost
$2,803,296 and $6,288,482, respectively) - - 2,961,368 6,593,786 9,555,154
Commercial paper, at amortized
cost which approximates fair value - 5,875,117 - - 5,875,117
Dividends receivable 46,199 - - 15,929 62,128
Interest receivable 1,987 15 50,362 112,589 164,953
Securities not settled, net 26,299 - - 59,082 85,381
------------ ------------ ------------ ------------ ------------
Total assets 20,088,531 5,877,786 3,097,230 13,737,915 42,801,462
------------ ------------ ------------ ------------ ------------
Liabilities
Accrued expenses 120,195 58,316 28,405 62,136 269,052
------------ ------------ ------------ ------------ ------------
Net assets $ 19,968,336 $ 5,819,470 $ 3,068,825 $ 13,675,779 $ 42,532,410
============ ============ ============ ============ ============
Net asset value per share $ 12.62 $ 1.00 $ 10.38 $ 11.82
============ ============ ============ ============
Shares outstanding 1,582,137 5,819,470 295,615 1,156,980
============ ============ ============ ============
Net assets consist of:
Capital stock ($.001 par value) $ 1,582 $ 5,819 $ 296 $ 1,157
Additional paid-in capital 17,011,431 5,813,651 2,909,963 12,348,396
Accumulated undistributed
net investment income (3,311) - 494 (73)
Accumulated undistributed net
realized gains from
investment transactions 2,267 - - 3,252
Net unrealized appreciation
of investments 2,956,367 - 158,072 1,323,047
------------ ------------ ------------ ------------
Net assets $ 19,968,336 $ 5,819,470 $ 3,068,825 $ 13,675,779
============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
USLICO Series Fund-Common Stock Portfolio
Statement of Investments
December 31, 1995
Common Stock
Fair Fair
Shares Value Shares Value
--------- ----------- --------- -----------
<S> <C> <C> <S> <C> <C>
Aerospace & Defense - 3.69% Food,House & Personal Products - 8.02%
- -------------------------- --------------------------------------
Boeing Co. 4,100 318,775 Anheuser-Busch Co., Inc. 3,200 $ 212,800
United Technologies Corp. 4,400 418,000 Archer-Daniels-Midland Co. 13,170 237,060
----------- Conagra 1,900 78,137
736,775 Dial Corp. 7,700 227,150
----------- RJR Nabisco Holdings 13,320 406,260
Computers - .82% RJR Nabisco PFD 14,500 90,625
- --------------- - Unilever N.V. 2,500 350,312
Apple Computer, Inc. 5,100 163,200 -----------
----------- 1,602,344
163,200 -----------
----------- Industrial - 10.55%
Diversified - 2.98% -------------------
- ------------------- Aluminum Co. of America 6,700 338,350
Corning, Inc. 10,900 333,812 Browning-Ferris Industries, In 8,300 236,550
General Electric 3,400 241,825 Genuine Parts Co. 5,800 235,625
ITT Industries, Inc. 800 19,000 Hanson PLC ADR 21,400 326,350
----------- International Paper Co. 5,200 195,650
594,637 Masco Corp. 12,000 373,500
----------- Mead Corp. 3,400 173,825
Drugs & Health Care - 7.97% Pitney Bowes, Inc. 4,900 226,625
- --------------------------- -----------
Baxter International, Inc. 5,200 217,100 2,106,475
Bristol-Myers Squibb Co. 6,100 522,313 -----------
US Healthcare, Inc. 6,200 282,875 Publishing - 3.64%
Warner Lambert Co. 5,900 569,350 ------------------
----------- Dun & Bradstreet 7,300 471,763
1,591,638 New York Times Co. 8,700 254,475
----------- -----------
726,238
Energy & Chemicals - 22.34% -----------
- --------------------------- Retail Trade - 3.75%
Amoco Corp. 3,500 252,438 --------------------
Atlantic Richfield Co. 4,000 446,500 American Stores Co. 12,200 320,250
Chevron Corp. 11,600 610,450 Dayton-Hudson Corp. 1,200 90,000
Dow Chemical Co. 1,600 110,800 Limited 18,700 301,538
Exxon Corp. 5,200 430,950 Reebok International Ltd. 1,300 36,562
Mobil Corp. 2,100 238,350 -----------
Panhandle Eastern Corp. 12,900 361,200 748,350
Rhone Poulenc ADR 8,300 177,412 -----------
Royal Dutch Petro-NY shares 900 126,675 Utilities/Communications - 24.17%
Schlumberger Ltd. 4,850 340,713 --------------------------------
TransCanada Pipelines Ltd. 25,200 349,650 AT & T Corp. 10,500 678,562
USX-Marathon Group 12,600 244,125 Baltimore Gas & Electric 6,500 184,437
W. R. Grace & Co. 5,500 328,625 Entergy Corp. 16,500 476,438
WMX Technologies, Inc. 15,300 443,700 FPL Group 7,600 351,500
----------- General Public Utilities Corp. 10,600 356,425
4,461,588 GTE Corp. 12,500 550,000
----------- Houston Industries, Inc. 8,000 195,000
Entertainment - .21% MCI Communications 4,300 112,875
- -------------------- NYNEX Corp. 13,000 677,625
ITT Corp. 800 42,000 Pacific Enterprises 1,500 42,375
----------- PacifiCorp 5,800 124,700
42,000 Peco Energy Co. 3,500 105,000
----------- SCEcorp 9,800 171,500
Finance - 9.08% Sprint Corp. 13,800 558,900
- --------------- Southern Co. 5,600 137,200
Aetna Life & Casualty Co. 2,900 203,725 Unicom Corp. 3,200 104,800
Bankers Trust N.Y. Co. 1,800 120,825 -----------
Chubb Corp. 3,350 327,463 4,827,337
Fleet Financial Group, Inc. 8,800 366,300 -----------
ITT Hartford Group, Inc. 800 38,500
NationsBank Corp. 2,250 156,656
Providian Corp. 5,300 212,000
St. Paul Companies 7,000 387,625
-----------
1,813,094
-----------
Total Common Stock 97.22% 19,413,676
Other Assets and
Liabilities, Net 2.78% 554,660
-----------
Net Assets 100.00% $19,968,336
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
USLICO Series Fund-Money Market Portfolio
Statement of Investments
December 31, 1995
Principal Amortized
Commercial Paper 100.96% Amount Cost
------------ ------------
<S> <C> <C>
General Electric Capital Corp., 5.70%, Due January 1, 1996 $ 245,000 $ 245,000
Kansas City Power, 5.68%, Due January 2, 1996 200,000 199,874
Consolidated Gas Co., 5.75%, Due January 4, 1996 275,000 274,736
AT & T Capital, 5.70%, Due January 5, 1996 215,000 214,762
Consolidated Natural Gas Co., 5.72%, Due January 5, 1996 215,000 214,761
Temple Inland Inc., 5.75%, Due January 9, 1996 260,000 259,543
Household Finance, 5.75%, Due January 10, 1996 100,000 99,808
Baltimore Gas & Electric Co., 5.70%, Due January 11, 1996 250,000 249,485
Idaho Power Co., 5.65%, Due January 11, 1996 260,000 259,470
SAFECO Corp., 5.70%, Due January 11, 1996 250,000 249,483
Household Finance, 5.73%, Due January 12, 1996 138,000 137,692
Merrill Lynch & Co., 5.80%, Due January 12, 1996 250,000 249,436
Campbell Soup Co., 5.75%, Due January 16, 1996 260,000 259,253
Nordstrom Credit Inc., 5.80%, Due January 16, 1996 208,000 207,397
E.I .DuPont de Nemours, 5.70%, Due January 17, 1996 265,000 264,203
Beneficial Corp., 5.75%, Due January 18, 1996 250,000 249,201
American Express Credit Corp., 5.70%, Due January 19, 1996 260,000 259,136
American General Finance Corp., 5.74%, Due January 19, 1996 260,000 259,130
Chevron Oil Finance Corp., 5.70%, Due January 19, 1996 250,000 249,169
Florida Power Corp., 5.80%, Due January 19, 1996 260,000 259,120
Northern States Power, 5.70%, Due January 22, 1996 200,000 199,240
Stanley Morgan Group, 5.73%, Due January 24, 1996 260,000 258,924
Pitney Bowes Credit, 5.72%, Due January 24, 1996 260,000 258,930
Smithkline Beecham, 5.65%, Due January 30, 1996 250,000 248,745
Ameritech Corp., 5.68%, Due February 2, 1996 250,000 248,619
------------ ------------
Total Commercial Paper 100.96% $ 5,891,000 5,875,117
============
Other Assets and
Liabilities, Net (0.96)% (55,647)
------------
Net Assets 100.00% $ 5,819,470
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
USLICO Series Fund-Bond Portfolio
Statement of Investments
December 31, 1995
Par Fair
Bonds Value Value
----------- ------------
<S> <C> <C>
Government - 36.17%
GNMA Pool 181826, 9.00%, Due March, 2021 # $ 40,144 $ 42,540
US Treasury Note, 8.00%, Due May, 2001 550,000 614,969
US Treasury Note, 7.50%, Due February, 2005 400,000 452,500
------------ ------------
990,144 1,110,009
------------ ------------
Finance - 17.07%
J.P. Morgan Co., 7.625%, Due September, 2004 100,000 109,406
NationsBank Corp., 5.375%, Due April, 2000 100,000 98,156
Sears Credit Acct Tr 1991B, 8.60%, Due May, 1998 100,000 106,052
Texaco Capital, Inc., 8.50%, Due February, 2003 100,000 112,305
U.S. Leasing International, 5.95%, Due October, 2003 100,000 97,850
------------ ------------
500,000 523,769
------------ ------------
Industrial - 22.32%
Alcan Aluminum Co., 5.875%, Due April, 2000 100,000 99,844
English China Clay, 7.375%, Due October, 2002 100,000 106,820
Hoechst Celanese, 6.125%, Due February, 2004 100,000 99,719
Midwest Power System, 7.00%, Due February, 2005 100,000 105,614
Motorola, Inc., 7.60%, Due January, 2007 100,000 110,813
Norfolk Southern Corp., 7.875%, Due February, 2004 50,000 55,769
Xerox Corp., 7.15%, Due August, 2004 100,000 106,500
------------ ------------
650,000 685,079
------------ ------------
Retail Trade - 7.41%
May Department Stores, 9.875%, Due June, 2000 100,000 115,396
Wal-Mart Stores, 8.625%, Due April, 2001 100,000 112,031
------------ ------------
200,000 227,427
------------ ------------
Utilities - 13.53%
General Telephone ILL, 7.50%, Due February, 2002 # 100,000 101,882
GTE Northwest, 7.375%, Due May, 2001 100,000 106,156
Southern California Edison, 7.375%, Due Decembr, 2003 100,000 102,281
Washington Gas & Light, 7.53%, Due July, 2002 100,000 104,765
------------ ------------
400,000 415,084
------------ ------------
Total Bonds 96.50% $ 2,740,144 2,961,368
============
Other Assets and
Liabilities, Net 3.50% 107,457
------------
Net Assets 100.00% $ 3,068,825
============
# - Callable at the option of the issuer.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
USLICO Series Fund-Asset Allocation Portfolio
Statement of Investments
December 31, 1995
Common Stock
Fair Fair
Shares Value Shares Value
--------- ----------- --------- -----------
S> <C> <C> <S> <C> <C>
Aerospace & Defense - 1.84% Food, House & Personal Products -3.83%
- -------------------------- --------------------------------------
Boeing Co. 1,400 $ 108,850 Anheuser-Busch Co., Inc. 1,100 $ 73,150
United Technologies Corp. 1,500 142,500 Archer-Daniels-Midland Co. 4,500 81,000
----------- Dial Corp. 2,600 76,700
251,350 RJR Nabisco Holdings 4,660 142,130
----------- RJR Nabisco PFD 5,100 31,875
Computers - 0.26% Unilever N.V. 850 119,106
- ------------------ -----------
Apple Computer, Inc. 1,100 35,200 523,961
----------- -----------
35,200 Industrial - 5.30%
----------- ------------------
Diversified - 1.50% Aluminum Co. of America 2,300 116,150
- ------------------ Browning-Ferris Industries, In 2,800 79,800
Corning, Inc. 3,700 113,312 Genuine Parts Co.. 2,000 81,250
General Electric 1,200 85,350 Hanson PLC ADR 7,400 112,850
ITT Industies, Inc. 300 7,125 International Paper Co. 1,800 67,725
----------- Masco Corp. 4,100 127,613
205,787 Mead Corp. 1,200 61,350
----------- Pitney Bowes, Inc. 1,700 78,625
Drugs & Health Care - 3.98% -----------
- --------------------------- 725,363
Baxter International, Inc. 1,800 75,150 -----------
Bristol-Myers Squibb Co. 2,100 179,812 Publishing - 1.82%
US Healthcare, Inc. 2,100 95,813 ------------------
Warner Lambert Co. 2,000 193,000 Dun & Bradstreet 2,500 161,562
----------- New York Times Co. 3,000 87,750
543,775 -----------
----------- 249,312
Energy & Chemicals - 11.25% -----------
- --------------------------- Retail Trade - 2.09%
Amoco Corp. 1,200 86,550 ---------------------
Atlantic Richfield Co. 1,400 156,275 American Stores Co. 4,200 110,250
Chevron Corp. 3,950 207,869 Dayton-Hudson Corp. 400 30,000
Dow Chemical Co. 600 41,550 Limited 6,400 103,200
Exxon Corp. 1,800 149,175 Reebok International Ltd. 1,500 42,187
Mobil Corp. 700 79,450 -----------
Panhandle Eastern Corp. 4,500 126,000 285,637
Rhone Poulenc ADR 2,900 61,988 -----------
Royal Dutch Petro-NY shares 300 42,225 Utilities/Communications - 12.33%
Schlumberger Ltd. 1,650 115,913 ---------------------------------
TransCanada Pipelines Ltd. 8,700 120,712 AT & T Corp. 3,600 232,650
USX-Marathon Group 4,300 83,312 Baltimore Gas & Electric 2,300 65,263
W.R. Grace & Co. 1,950 116,512 Entergy Corp. 5,600 161,700
WMX Technologies, Inc. 5,200 150,800 FPL Group 2,600 120,250
----------- General Public Utilities Corp. 3,600 121,050
1,538,331 GTE Corp. 4,300 189,200
----------- Houston Industries, Inc. 2,800 68,250
Entertainment - 0.11% MCI Communications 1,500 39,375
- -------------------------------------- NYNEX Corp. 4,500 234,563
ITT Corp. 300 15,750 Pacific Enterprises 1,500 42,375
----------- PacifiCorp 2,000 43,000
15,750 Peco Energy Co. 1,200 36,000
----------- SCEcorp 3,400 59,500
Finance - 4.53% Sprint Corp. 4,700 190,350
- ---------------------------- Southern Co. 1,900 46,550
Aetna Life & Casualty Co. 1,000 70,250 Unicom Corp. 1,100 36,025
Bankers Trust N.Y. Co. 600 40,275 -----------
Chubb Corp. 1,150 112,413 1,686,101
Fleet Financial Group, Inc. 3,000 124,875 -----------
ITT Hartford Group, Inc. 300 14,437
NationsBank Corp. 750 52,219
Providian Corp. 1,800 72,000
St. Paul Companies 2,400 132,900
-----------
619,369
-----------
Total Common Stock 48.84% 6,679,936
-----------
</TABLE>
<PAGE>
<TABLE>
USLICO Series Fund-Asset Allocation Portfolio
Statement of Investments
December 31, 1995
Bonds Par Fair
Value Value
------------ ------------
<S> <C> <C>
Government - 15.98%
FHLMC, 9.00%, Due October, 2019 # $ 38,438 $ 40,204
GNMA, 10.00%, Due February, 2016 # 9,230 10,159
US Treasury Note, 8.00%, Due May, 2001 1,100,000 1,229,938
US Treasury Note, 7.50%, Due February, 2005 800,000 905,000
------------ ------------
1,947,668 2,185,301
------------ ------------
Finance - 10.03%
Citicorp, 7.125%, Due June, 2003 100,000 105,062
Discover Card Trust 1991-D, 8.00%, Due October,1998 100,000 106,346
Ford Motor Credit, 8.00%, Due June, 2002 150,000 164,766
General Electric Capital, 7.875%, Due December, 2006 100,000 113,219
Grand Met Investment Corp., 6.50%, Due September, 1999 50,000 51,022
J.P. Morgan Co., 7.625%, Due September, 2004 100,000 109,406
Morgan Stanley, 6.375%, Due December, 2003 150,000 149,721
Norwest Financial, 6.125%, Due August, 2003 150,000 149,578
Sears Credit Acct Tr 1991B, 8.60%, Due May, 1998 100,000 106,052
Standard Credit Corp., 9.375%, Due July, 1997 100,000 105,609
Texaco Capital, Inc., 8.03%, Due October, 2002 100,000 110,350
U.S. Leasing International, 6.70%, Due April, 2003 100,000 100,877
------------ ------------
1,300,000 1,372,008
------------ ------------
Industrial - 10.83%
Associates Corp. of North America, 8.625%, Due June, 1997 100,000 104,031
Canadian Pacific, 6.875%, Due April, 2003 100,000 103,155
Communications Satellite, 8.125%, Due April, 2004 100,000 112,193
English China Clay, 7.375%, Due October, 2002 200,000 213,640
Equitable Resources, 8.19%, Due November, 2001 100,000 109,192
Hoechst Celanese, 6.125%, Due February, 2004 100,000 99,719
Lowe's Cos., 7.25%, Due August, 2002 100,000 103,151
Motorola, Inc., 7.60%, Due January, 2007 100,000 110,813
Norfolk Southern Corp., 7.875%, Due February, 2004 100,000 111,538
PepsiCo Inc., 7.75%, Due October, 1998 100,000 104,906
Sara Lee, 6.10%, Due May, 2003 100,000 99,161
Warner Lambert, 6.625%, Due September, 2002 100,000 102,844
Xerox Corp., 7.15%, Due August, 2004 100,000 106,500
------------ ------------
1,400,000 1,480,843
------------ ------------
(continued)
</TABLE>
<PAGE>
<TABLE>
USLICO Series Fund-Asset Allocation Portfolio
Statement of Investments
December 31, 1995
Bonds, continued Par Fair
Value Value
------------ ------------
<S> <C> <C>
Retail Trade - 3.13%
J.C. Penney, 6.125%, Due November, 2003 $ 100,000 $ 99,500
May Department Stores, 9.875%, Due June, 2000 100,000 115,396
Sears, 6.54%, Due July, 2003 100,000 101,209
Wal-Mart Stores, 8.625%, Due April, 2001 100,000 112,031
------------ ------------
400,000 428,136
------------ ------------
Utilities - 8.25%
Alabama Power, 6.85%, Due August, 2002 100,000 102,180
Allegheny Generating, 5.625%, Due September, 2003 100,000 96,764
AT&T Corp., 7.125%, Due January, 2002 100,000 105,969
General Telephone SE, 7.625%, Due July, 2002 100,000 101,907
Illinois Bell Telephone, 7.625%, Due April, 2006 # 100,000 101,875
Kansas City Power & Light, 7.40%, Due February, 2008 100,000 107,548
New England Telephone, 7.375%, Due October, 2007 # 100,000 102,002
Ohio Bell Telephone, 6.75%, Due July, 2008 # 100,000 100,985
Pacific Bell, 7.00%, Due July, 2004 100,000 105,750
Southern California Edison, 7.375%, Due December, 2003 100,000 102,281
South Carolina Electric & Gas, 6.00%, Due June, 2000 100,000 100,237
------------ ------------
1,100,000 1,127,498
------------ ------------
Total 48.22% $ 6,147,668 6,593,786
============ ------------
Total Investments 97.06% 13,273,722
Other Assets and
Liabilities, Net 2.94% 402,057
------------
Net Assets 100.00% $ 13,675,779
============
# - Callable at the option of the issuer.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
USLICO Series Fund
Statement of Operations and Changes in Net Assets
For the Year Ended December 31, 1995
Common Money Asset
Stock Market Bond Allocation
Portfolio Portfolio Portfolio Portfolio
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Investment income:
Income:
Dividends $ 586,560 $ - $ - $ 204,665
Interest 56,673 345,679 198,713 453,027
------------ ----------- ----------- ------------
Total income 643,233 345,679 198,713 657,692
------------ ----------- ----------- ------------
Expenses:
Management fee 23,450 7,184 3,692 16,081
Other administrative 87,083 28,778 13,812 59,914
------------ ----------- ----------- ------------
Total expenses 110,533 35,962 17,504 75,995
------------ ----------- ----------- ------------
Net investment income 532,700 309,717 181,209 581,697
------------ ----------- ----------- ------------
Realized and unrealized gains
on investments:
Net proceeds from sales 10,275,292 - 870,439 5,208,193
Cost of securities sold (9,268,825) - (849,932) (4,811,709)
------------ ----------- ----------- ------------
Net realized gains on investments 1,006,467 - 20,507 396,484
Net unrealized gains on investments 3,154,718 - 256,864 1,694,675
------------ ----------- ----------- ------------
Net gains on investments 4,161,185 - 277,371 2,091,159
------------ ----------- ----------- ------------
Net increase in net assets
resulting from operations 4,693,885 309,717 458,580 2,672,856
Distributions to shareholders from:
Net investment income (535,933) (309,717) (181,195) (582,747)
Net realized gains on investment (1,004,200) - (20,507) (393,232)
Capital share transactions 2,127,095 67,044 327,227 1,430,618
------------ ----------- ----------- ------------
Net increase in net assets 5,280,847 67,044 584,105 3,127,495
Net assets, beginning of year 14,687,489 5,752,426 2,484,720 10,548,284
------------ ----------- ----------- ------------
Net assets, end of year $ 19,968,336 $ 5,819,470 $ 3,068,825 $ 13,675,779
============ =========== =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
USLICO Series Fund
Statement of Operations and Changes in Net Assets
For the Year Ended December 31, 1994
Common Money Asset
Stock Market Bond Allocation
Portfolio Portfolio Portfolio Portfolio
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Investment income:
Income:
Dividends $ 478,008 $ - $ - $ 150,913
Interest 54,906 237,029 187,951 415,280
------------ ----------- ----------- ------------
Total income 532,914 237,029 187,951 566,193
------------ ----------- ----------- ------------
Expenses:
Management fee 33,276 13,776 6,302 24,168
Other administrative 66,551 27,552 12,604 48,336
------------ ----------- ----------- ------------
Total expenses 99,827 41,328 18,906 72,504
------------ ----------- ----------- ------------
Net investment income 433,087 195,701 169,045 493,689
------------ ----------- ----------- ------------
Realized and unrealized gains
and (losses) on investments:
Net proceeds from sales 7,249,138 - 269,657 2,609,575
Cost of securities sold (6,116,626) - (263,607) (2,269,413)
------------ ----------- ----------- ------------
Net realized gains on investments 1,132,512 - 6,050 340,162
Net unrealized losses on investments (1,364,494) - (275,367) (1,011,574)
------------ ----------- ----------- ------------
Net losses on investments (231,982) - (269,317) (671,412)
------------ ----------- ----------- ------------
Net increase (decrease) in net assets
resulting from operations 201,105 195,701 (100,272) (177,723)
Distributions to shareholders from:
Net investment income (433,165) (195,701) (169,483) (494,576)
Net realized gains on investments (966,330) - (6,050) (340,826)
Capital share transactions 3,436,426 380,549 128,752 2,434,362
------------ ----------- ----------- ------------
Net increase (decrease) in net assets 2,238,036 380,549 (147,053) 1,421,237
Net assets, beginning of year 12,449,453 5,371,877 2,631,773 9,127,047
------------ ----------- ----------- ------------
Net assets, end of year $ 14,687,489 $ 5,752,426 $ 2,484,720 $ 10,548,284
============ =========== =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
USLICO SERIES FUND - NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1995
(1) ORGANIZATION - USLICO Series Fund (the Fund) is an open-end,
diversified management investment company registered under the
Investment Company Act of 1940 and consisting of four separate series
(Portfolios), each of which has its own investment objectives and
policies. The Fund was organized as a business trust under the laws of
Massachusetts on January 19, 1988. Shares of the Portfolios are sold
only to separate accounts of United Services Life Insurance Company
(United Services) and Bankers Security Life Insurance Society (Bankers
Security) to serve as the investment medium for variable life insurance
policies issued by these companies. The separate accounts invest in
shares of one or more of the Portfolios, in accordance with allocation
instructions received from policyowners. Each Portfolio share
outstanding represents a beneficial interest in the respective Portfolio
and carries a par value of $.001. The Fund has an unlimited number of
shares authorized.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Valuation of Investments
1. Common Stock, Bond and Asset Allocation Portfolios - Equity
securities for which market quotations are readily available are stated
at that fair value. Fair value is determined on the basis of last
reported sales price, or, if no sales are reported, the latest available
bid price obtained from a quotation reporting system or from established
market makers. Money market instruments are valued at fair value,
except that instruments maturing in sixty days or less are valued using
amortized cost which approximates fair value. Debt securities (other
than obligations having a maturity of sixty days or less at their date
of acquisition) are valued on the basis of market quotations obtained
from brokers and dealers or pricing services, which take into account
appropriate factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics, and other market data. Debt obligations having
a maturity of sixty days or less are generally valued at amortized cost,
which approximates fair value.
2. Money Market Portfolio - Investment securities held by the
Money Market Portfolio are all carried at amortized cost.
(b) Income Recognition - Dividend income is recorded on the ex-
dividend date. Interest income is accrued daily. Realized gains and
losses on the sale of securities are computed on the basis of the
identified cost of the related securities sold and are recognized at the
date of trade.
(c) Other Administrative Fees - Other administrative fees are charged
to the Portfolios at an annual percentage rate of .5%. Fund expenses
directly attributable to a Portfolio are charged to that Portfolio. All
other expenses are allocated proportionately among all Portfolios in
relation to respective net assets.
(d) Federal Income Taxes - Each Portfolio intends to qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code. Accordingly, a Portfolio will not be subject to Federal income
taxes if it makes distributions of net investment income and net
realized gains in compliance with subchapter M and meets certain other
requirements. (Normally, however, such distributions are automatically
reinvested in additional portfolio shares.) As the Fund is believed to
be in compliance with these requirements, no federal income tax
provision has been provided.
(e) Management Fees - The Fund's investment advisors are compensated
with a quarterly management fee based on an annual percentage of the
average daily net assets of each Portfolio. In 1994 and from July 1,
1995 to December 31, 1995, the advisor was paid an annual fee of .25% of
the net asset value of the Portfolios. During the period from January
1, 1995, to June 30, 1995, no investment advisory fee was charged
pending approval of new advisory agreements which was received on June
30, 1995 (see below). The maximum management fee which may be charged
is an annual percentage rate of .50% on the first $100 million of
average daily net assets and .45% of average daily net assets in excess
thereof.
(f) Contributions and Withdrawals - Net funds contributed into or
withdrawn from the Fund are made on the basis of the net asset value per
share prevailing at the close of business on the preceding business day.
(3) AFFILIATIONS AND RELATED PARTY TRANSACTIONS - On January 17, 1995,
United Services and Bankers Security became wholly-owned subsidiaries of
ReliaStar Financial Corp. ("ReliaStar"), previously The NWNL Companies,
Inc., an insurance holding company based in Minneapolis, Minnesota. In
conjunction with this merger, on April 1, 1995, Bankers Centennial
Management Corp. was replaced as investment advisor to the Fund by
Washington Square Capital, Inc., an indirect wholly-owned ReliaStar
subsidiary. The Fund's distributor, USLICO Securities Corp., became a
wholly-owned subsidiary of Washington Square Securities, Inc. which is
wholly-owned by ReliaStar. Newbold's Asset Management, Inc. continues
to act as investment advisor for the Common Stock Portfolio and the
common stock portion of the Asset Allocation Portfolio. The Fund
purchased securities through Newbold's Asset Management, Inc. in the
normal course of business.
Officers of the Fund are also officers of ReliaStar, Washington Square
Securities, Inc., Washington Square Capital, Inc., United Services and
Bankers Security and receive compensation therefrom. They do not
receive additional compensation for services rendered to the Fund.
Trustees of the Board receive a fee of $500 for each meeting attended.
For the six month periods ended June 30, 1995 and 1994, total fees paid
to the Trustees aggregated $3,000 in both periods for all Portfolios
combined.
<PAGE>
(4) INVESTMENTS - As of December 31, 1995, net unrealized appreciation
for each portfolio was as follows:
Net
Unrealized
Portfolio Appreciation Depreciation Appreciation
Common Stock $3,105,171 $ (148,804) $2,956,367
Money Market N/A N/A N/A
Bond 158,974 (902) 158,072
Asset Allocation 1,376,094 (53,047) 1,323,047
(5) CAPITAL SHARE TRANSACTIONS - Transactions in capital stock were as
follows:
SHARES AMOUNT
1995 1994 1995 1994
COMMON STOCK PORTFOLIO:
Shares sold................ 47,165 181,788 $ 586,962 $ 2,036,931
Shares issued in 118,938 125,478 1,540,133 1,399,495
reinvestment of dividends 166,103 307,266 2,127,095 3,436,426
Shares redeemed............ - - - -
Net increase............... 166,103 307,266 $2,127,095 $ 3,436,426
MONEY MARKET PORTFOLIO:
Shares sold............... . 36,248 184,848 $ 36,248 $ 184,848
Shares issued in 309,717 195,701 309,717 195,701
reinvestment of dividends 345,965 380,549 345,965 380,549
Shares redeemed............ (278,921) - (278,921) -
Net increase(decrease) (67,044) 380,549 $ 67,044 $ 380,549
BOND PORTFOLIO:
Shares sold................ 12,189 8,229 $ 125,525 $ 79,701
Shares issued in 19,469 17,714 201,702 175,533
reinvestment of dividends 31,658 25,943 327,227 255,234
Shares redeemed............ - (12,977) - (126,482)
Net increase............... 31,658 12,966 $ 327,227 $ 128,752
ASSET ALLOCATION PORTFOLIO:
Shares sold................ 42,559 148,183 $ 496,970 $ 1,598,960
Shares issued in 82,056 77,594 975,979 835,402
reinvestment of dividends 124,615 225,777 1,472,949 2,434,362
Shares redeemed............ (3,664) - (42,331) -
Net increase............... 120,951 225,777 $1,430,618 $ 2,434,362
<PAGE>
<TABLE>
USLICO SERIES FUND
CONDENSED FINANCIAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
COMMON MONEY ASSET
STOCK MARKET BOND ALLOCATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 10.37 $ 1.00 $ 9.41 $ 10.18
Income from investment operations:
Net investment income 0.36 0.05 0.66 0.55
Net realized and unrealized
gains on securities 2.95 - 1.04 2.01
----------- ----------- ----------- -----------
Total from investment operations 3.31 0.05 1.70 2.56
Distributions:
Distribution of income (0.37) (0.05) (0.66) (0.55)
Distribution of capital gains (0.69) - (0.07) (0.37)
----------- ----------- ----------- -----------
Net asset value, end of year $ 12.62 $ 1.00 $ 10.38 $ 11.82
=========== =========== =========== ===========
Total return 31.92% 5.00% 18.07% 25.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year $19,968,336 $ 5,819,470 $ 3,068,825 $13,675,779
Expenses to average net assets 0.63% 0.63% 0.63% 0.63%
Net investment income to average net assets 3.07% 5.37% 6.49% 4.81%
Portfolio turnover rate 62.51% N/A 32.67% 44.97%
Weighted average number of shares outstanding
for year ended December 31, 1995 1,450,668 5,763,272 276,475 1,068,503
FOR THE YEAR ENDED DECEMBER 31, 1994
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 11.23 $ 1.00 $ 10.49 $ 11.26
Income from investment operations:
Net investment income 0.36 0.04 0.67 0.55
Net realized and unrealized
losses on securities (0.05) - (1.06) (0.70)
----------- ----------- ----------- -----------
Total from investment operations 0.31 0.04 (0.39) (0.15)
Distributions:
Distribution of income (0.36) (0.04) (0.67) (0.55)
Distribution of capital gains (0.81) - (0.02) (0.38)
----------- ----------- ----------- -----------
Net asset value, end of year $ 10.37 $ 1.00 $ 9.41 $ 10.18
=========== =========== =========== ===========
Total return 2.76% 4.00% (3.72)% (1.33)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year $14,687,489 $ 5,752,426 $ 2,484,720 $10,548,284
Expenses to average net assets 0.75% 0.75% 0.75% 0.75%
Net investment income to average net assets 3.23% 3.54% 6.67% 5.09%
Portfolio turnover rate 59.41% N/A 10.94% 28.53%
Weighted average number of shares outstanding
for year ended December 31, 1994 1,195,719 5,527,212 254,126 892,257
</TABLE>
<PAGE>
<TABLE>
USLICO SERIES FUND
CONDENSED FINANCIAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1993
COMMON MONEY ASSET
STOCK MARKET BOND ALLOCATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 10.45 $ 1.00 $ 10.21 $ 10.71
Income from investment operations:
Net investment income 0.32 0.02 0.70 0.58
Net realized and unrealized
gains on securities 0.78 - 0.37 0.58
----------- ----------- ----------- -----------
Total from investment operations 1.10 0.02 1.07 1.16
Distributions:
Distribution of income (0.32) (0.02) (0.70) (0.58)
Distribution of capital gains - - (0.09) (0.03)
----------- ----------- ----------- -----------
Net asset value, end of year $ 11.23 $ 1.00 $ 10.49 $ 11.26
=========== =========== =========== ===========
Total return 10.53% 2.00% 10.48% 10.83%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year $12,449,453 $ 5,371,877 $ 2,631,773 $ 9,127,047
Expenses to average net assets 0.75% 0.75% 0.75% 0.75%
Net investment income to average net assets 2.93% 2.42% 6.62% 5.09%
Portfolio turnover rate 51.27% N/A 19.04% 27.80%
Weighted average number of shares outstanding
for year ended December 31, 1993 1,079,215 5,386,166 243,616 772,390
FOR THE YEAR ENDED DECEMBER 31, 1992
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 10.55 $ 1.00 $ 10.21 $ 10.71
Income from investment operations:
Net investment income 0.38 0.03 0.73 0.61
Net realized and unrealized
gains on securities 0.22 - 0.06 0.19
----------- ----------- ----------- -----------
Total from investment operations 0.60 0.03 0.79 0.80
Distributions:
Distribution of income (0.70) (0.03) (0.79) (0.78)
Distribution of capital gains - - - (0.02)
----------- ----------- ----------- -----------
Net asset value, end of year $ 10.45 $ 1.00 $ 10.21 $ 10.71
=========== =========== =========== ===========
Total return 5.69% 3.00% 7.74% 7.47%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year $11,102,452 $ 5,464,509 $ 2,507,559 $ 8,054,067
Expenses to average net assets 0.75% 0.75% 0.75% 0.75%
Net investment income to average net assets 3.53% 2.98% 7.16% 5.61%
Portfolio turnover rate 36.00% N/A 41.30% 26.79%
Weighted average number of shares outstanding
for year ended December 31, 1992 994,102 5,433,008 238,112 665,240
</TABLE>
<PAGE>
<TABLE>
USLICO SERIES FUND
CONDENSED FINANCIAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1991
COMMON MONEY ASSET
STOCK MARKET BOND ALLOCATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 9.97 $ 1.00 $ 9.65 $ 10.08
Income from investment operations:
Net investment income 0.38 0.05 0.79 0.61
Net realized and unrealized
gains on securities 1.37 - 0.58 0.87
----------- ----------- ----------- -----------
Total from investment operations 1.75 0.05 1.37 1.48
Distributions:
Distribution of income (0.29) (0.05) (0.79) (0.58)
Distribution of capital gains (0.88) - (0.02) (0.27)
----------- ----------- ----------- -----------
Net asset value, end of year $ 10.55 $ 1.00 $ 10.21 $ 10.71
=========== =========== =========== ===========
Total return 17.55% 5.00% 14.20% 14.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year $10,128,224 $ 5,329,151 $ 2,512,214 $ 6,540,186
Expenses to average net assets 0.78% 0.75% 0.81% 0.77%
Net investment income to average net assets 3.61% 5.30% 7.86% 5.78%
Portfolio turnover rate 98.05% N/A 12.17% 39.91%
Weighted average number of shares outstanding
for year ended December 31, 1991 847,572 5,144,416 236,131 507,445
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
USLICO Series Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of USLICO Series Fund
(consisting of the common stock, money market, bond and asset allocation
portfolios) as of December 31, 1995, and the related statements of
operations and changes in net assets and the condensed financial
information for the year then ended. These financial statements and
condensed financial information are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and the condensed financial information based on
our audits. The statements of operations and changes in net assets for
the year ended December 31, 1994 and the condensed financial information
for the years ended December 31, 1994, 1993, 1992 and 1991 were audited
by other auditors whose report, dated February 2, 1995 expressed an
unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and condensed financial information are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements and the condensed
financial information. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
custodians and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the condensed financial
information referred to above present fairly, in all material respects,
the net assets and investments of each of the respective portfolios
constituting the USLICO Series Fund as of December 31, 1995, and the
results of their operations and changes in their net assets and the
condensed financial information for the year then ended, in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, MN
January 26, 1996
