SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
USLICO Series Fund
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
( ) 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:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
USLICO SERIES FUND
4601 NORTH FAIRFAX DRIVE, ARLINGTON VIRGINIA 22203
August 26, 1999
Dear Shareholder:
A Special Meeting of the Shareholders of the USLICO Series Fund will be
held at 2:00 p.m. Eastern Time on September 23, 1999, at the offices of the
Fund. Formal notice of the Meeting appears on the next page, followed by the
proxy statement. We hope that you can attend the meeting in person; however, we
urge you in any event to vote your shares by completing and returning the
enclosed proxy card in the envelope provided at your earliest convenience.
At the Meeting, you will be asked to consider election of the Board of
Trustees; approving a new subadvisory agreement between ReliaStar Investment
Research, Inc. and Northstar Investment Management Corporation for the Fund's
Stock and Asset Allocation Portfolios; and ratification of selection of KPMG LLP
as the Fund's independent accountants for the fiscal year 2000.
Please exercise your right to vote by completing, dating and signing the
enclosed proxy card. A self-addressed, postage-paid envelope has been enclosed
for your convenience. It is important that you vote and that your vote be
received no later than September 16, 1999.
We appreciate your participation and prompt response in this matter, and
thank you for your continued support.
By Order of the Board of Trustees,
/s/ Robert B. Saginaw
---------------------
Robert B. Saginaw
Secretary
<PAGE>
USLICO SERIES FUND
4601 NORTH FAIRFAX DRIVE, ARLINGTON, VIRGINIA 22203
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be Held on September 23, 1999
To the Shareholders of USLICO Series Fund:
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of USLICO Series Fund (the "Fund"), a Massachusetts business trust,
will be held at the offices of the Fund, 4601 North Fairfax Drive, Fourth Floor
Conference Room, Arlington, Virginia on September 23, 1999, at 2:00 p.m. Eastern
Time, or at such adjourned time as may be necessary for the holders of a
majority of the shares of the Fund to vote for the following purposes:
(1) To elect the Board of Trustees;
(2) To approve a new subadvisory agreement between ReliaStar
Investment Research, Inc. and Northstar Investment Management Corporation
for the Fund's Stock and Asset Allocation Portfolios;
(3) To ratify the selection of KPMG LLP as independent accountants of
the Fund for the fiscal year ending December 31, 2000; and
(4) To transact such other business as may properly come before the
Special Meeting.
The Trustees of the Fund have fixed the close of business on July 16, 1999
as the record date for determining shareholders entitled to notice of and to
vote at the Meeting or any adjournment thereof.
By Order of the Board of Trustees,
/s/ Robert B. Saginaw
---------------------
Robert B. Saginaw
Secretary
Arlington, Virginia
August 26, 1999
Shareholders are urged to vote promptly on the above matters. Shareholders
who do not expect to attend the meeting in person are requested to complete,
date and sign the enclosed form of proxy and return it promptly in the envelope
provided for that purpose. Instructions for the proper execution of proxies are
set forth on the inside cover. Shareholders who hold shares in more than one
account will receive a proxy package for each account. You must return separate
proxy cards for each separate account.
<PAGE>
USLICO SERIES FUND
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 23, 1999
-----------------
This proxy statement is being furnished in connection with the
solicitation of proxies by USLICO Series Fund (the "Fund") for the Special
Meeting of Shareholders to be held on September 23, 1999, or any adjournment
thereof. The Fund is an open-end management investment company comprised of four
portfolios that are offered to insurance company separate accounts ("Variable
Accounts") which serve as investment vehicles for variable life products
(collectively "Variable Contracts") issued by ReliaStar Life Insurance Company
and ReliaStar Life Insurance Company of New York (collectively the "Affiliated
Insurance Companies"). At the Special Meeting, Shareholders of the Fund will be
asked to approve the election of Trustees; a new subadvisory agreement with
respect to the Fund's Stock and Asset Allocation Portfolios (the "Subadvisory
Agreement"), a copy of which is attached hereto as Exhibit A, between ReliaStar
Investment Research, Inc. ("ReliaStar Investment" or the "Adviser") (formerly
"Washington Square Advisers, Inc.") and Northstar Investment Management
Corporation ("Northstar" or the "Sub-Adviser"); and ratification of the
selection of KPMG LLP as independent accountants of the Fund for the fiscal year
ending December 31, 2000. It is anticipated that the first mailing to
shareholders of proxies and proxy statements will be on or about August 26,
1999. In accordance with current law, the Affiliated Insurance Companies will
request voting instructions from the owners of the Variable Contracts ("Variable
Contract Owners") and will vote shares or other voting interests in the separate
account in proportion to the voting instructions received. Each Affiliated
Insurance Company is required to vote shares of the Portfolio held by its
Variable Accounts in accordance with instructions received from Variable
Contract Owners. Each Affiliated Insurance Company is also required to vote
shares of the Portfolio held in each of their respective Variable Accounts for
which no voting instructions have been received in the same proportion as it
votes shares held by that Variable Account for which it has received
instructions. Shares held by an Affiliated Insurance Company in its general
account, if any, must be voted in the same proportion as the votes cast with
respect to shares held in all of such Company's Variable Accounts in the
aggregate. Variable Contract Owners permitted to give instructions to the
Portfolio and the number of shares for which such instructions may be given for
purposes of voting at the Meeting, and adjournment thereof, will be determined
as of the record date. In connection with the solicitation of such instructions
from Variable Contract Owners, it is expected that the Affiliated Insurance
Companies will furnish a copy of this Proxy Statement to Variable Contract
Owners.
July 16, 1999 has been chosen as the record date to determine shareholders
entitled to notice of, and to vote at, the Meeting. Shareholders are entitled to
one vote for each $100 of cash value in his or her Variable Contract (less any
amount of an outstanding loan and accrued interest thereon), which may be cast
by proxy or by personally appearing at the Meeting. At the close of business on
July 16, 1999 ("Record Date") there were the following shares of the Stock,
Asset Allocation, Money Market, and Bond Portfolios, respectively, outstanding:
280,450, 144,799, 54,229, and 8,094. The Trustees and officers of the Fund as a
group beneficially owned less than 1% of the outstanding shares of the Fund.
ReliaStar Financial Corporation, the ultimate parent company of ReliaStar
Investment and Northstar, directly or through its Affiliated Insurance
<PAGE>
Companies owns of record 100% of the outstanding shares of the Fund. No other
person was known by management of the Fund to own beneficially or of record 5%
or more of the outstanding shares of the Fund on that date.
The enclosed form of proxy, if properly executed and returned, will be
voted in accordance with the instructions specified thereon. If no choice is
specified, the proxy will be voted FOR the proposals, and, in the discretion of
the proxies named on the proxy card, on any other matter properly brought before
the Meeting. Please note that a proxy marked "abstain" is equivalent to a vote
against proposals two and three.
The enclosed proxy is revocable by you at any time prior to the exercise
thereof by submitting a written notice of revocation or a subsequently executed
proxy. Signing and mailing the proxy will not affect your right to give a later
proxy or to attend the Meeting and vote your shares in person.
In the event that a quorum is not obtained, or if a quorum is present at
the Meeting but sufficient votes to approve the proposals are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote those proxies which
they are entitled to vote FOR the proposals in favor of such an adjournment and
will vote those proxies required to be voted AGAINST the proposals against any
such adjournment. A shareholder vote may be taken on the proposals in this proxy
statement prior to any such adjournment if sufficient votes have been received
for approval.
The costs of soliciting proxies in the accompanying form for the Special
Meeting, including the costs of preparing, printing and mailing the accompanying
Notice of Special Meeting, the Secretary's letter and this proxy statement and
the costs of the Special Meeting will be borne by the Fund. Proxy material will
also be distributed through brokers, custodians and nominees to beneficial
owners, and the Fund will reimburse such parties for reasonable charges and
expenses. In addition to the use of the mails, proxies may be solicited by
telephone or telegraph by officers and Trustees of the Fund, or their agents, on
behalf of the Trustees of the Fund, expenses of which shall be charged to the
Fund. The Fund has not retained a proxy solicitor.
It is anticipated that the first mailing to shareholders of proxies and
proxy statements will be on or about August 26, 1999. The Fund's annual report,
containing financial statements for the year ended December 31, 1998, is
available at no charge upon written request to Ms. Stephanie L. Beckner,
USLICO Series Fund, 300 First Stamford Place, Stamford, Connecticut 06902 or by
calling 1-800-595-7827.
2
<PAGE>
PROPOSAL ONE: ELECTION OF TRUSTEES
Pursuant to the provisions of the Declaration of Trust, the Trustees have
determined that the number of Trustees will be fixed at nine. The nine nominees
are listed below. Messrs. Doherty, Goode, Gosule, Lipson, May, Putnam, Smith,
Turner and Wallace were nominated to the Board of Trustees by the Trust's
current Board at a Special Meeting held on August 16, 1999. If elected by
shareholders, the nine nominees shall constitute the entire Board, each to hold
office until his successor is elected or he resigns or is otherwise removed. The
current Trustees have tendered their resignations, effective upon the election
of the nominees as Trustees of the Fund. If for any reason the Special Meeting
is not held, the current Trustees will continue to serve as such. If any of the
nominees should withdraw or otherwise become unavailable for election due to
events not now known or anticipated, the proxy confers discretionary power on
the persons named therein to vote for such other nominee or nominees as the
Nominating Committee may recommend.
Trustees must be elected by a plurality of the shares present at the
Meeting in person or by proxy and entitled to vote thereon. Unless you give
contrary instructions in the form of proxy, your proxy will be voted FOR the
election of the nine nominees, and your shares will be voted FOR such other
nominee or nominees as the Nominating Committee may recommend.
<TABLE>
<CAPTION>
Present Position With the Fund; Business
Nominee, Age Experience during the Past Five Years; Other Directorships.
- --------------- -----------------------------------------------------------
<S> <C>
Paul S. Doherty, Age: 65 No present position with the Fund. President, Doherty, Wallace, Pillsbury and Murphy,
P.C., Attorneys. Director, Tambrands, Inc. Trustee of the Northstar affiliated investment
companies (since October 1993).
Robert B. Goode, Jr., Age: 69 No present position with the Fund. Currently retired. From 1990 to 1991, Chairman of The
First Reinsurance Company of Hartford. From 1987 to 1989, President and Director of
American Skandia Life Assurance Company. Trustee of the Northstar affiliated investment
companies (since October 1993).
Alan L. Gosule, Age: 58 No present position with the Fund. Partner, Rogers & Wells, Attorneys. Director, F.L.
Putnam Investment Management Co., Inc. Trustee of the Northstar affiliated investment
companies (since June 1995).
*Mark L. Lipson, Age: 50 No present position with the Fund. Director, Chairman and Chief Executive Officer of
Northstar and Northstar Holding, Inc. Director of Northstar Administrators Corporation
and Northstar Funding, Inc. and Director, Chairman and Chief Executive Officer of
Northstar Distributors, Inc. Trustee and President of the Northstar affiliated investment
companies (since October 1993).
Walter H. May, Age: 62 No present position with the Fund. Retired. Former Senior Executive for Piper Jaffray,
Inc. Trustee of the Northstar affiliated investment companies (since April 1996).
</TABLE>
- ------------
* Deemed to be an "interested person" of the Fund, as defined by the 1940 Act.
3
<PAGE>
<TABLE>
<CAPTION>
Present Position With the Fund; Business
Nominee, Age Experience during the Past Five Years; Other Directorships.
- --------------- -----------------------------------------------------------
<S> <C>
David W.C. Putnam, Age: 59 No present position with the Fund. President, Clerk and Director of F.L. Putnam
Securities Company, Inc., F.L. Putnam Investment Management Company, Inc., Interstate
Power Company, Inc., Trust Realty Corp. and Bow Ridge Mining Co.; Director of Anchor
Investment Management Corporation; President and Trustee of Anchor Capital Accumulation
Trust, Anchor International Bond Trust, Anchor Gold and Currency Trust, Anchor Resources
and Commodities Trust and Anchor Strategic Assets Trust. Trustee of the Northstar
affiliated investment companies (since June 1995).
John R. Smith, Age: 76 No present position with the Fund. From 1970-1991, Financial Vice President of Boston
College; President of New England Fiduciary Company (financial planning) since 1991;
Chairman of Massachusetts Educational Financing Authority since 1987; Vice Chairman of
Massachusetts Health and Education Authority. Trustee of the Northstar affiliated
investment companies (since June 1995).
*John G. Turner, Age: 59 No present position with the Fund. Since May 1993, Chairman and CEO of ReliaStar
Financial Corporation and ReliaStar Life Insurance Co. and Chairman of other ReliaStar
Affiliated Insurance Companies since 1995. Since October 1993, Director of Northstar and
affiliates. Prior to May 1993, President and CEO of ReliaStar and Northwestern National.
Chairman and Trustee of the Northstar affiliated investment companies (since October
1995).
David W. Wallace, Age: 75 No present position with the Fund. Chairman of Putnam Trust Company, Lone Star
Industries and FECO Engineered Systems, Inc. He is also President and Trustee of the
Robert R. Young Foundation and Governor of the New York Hospital. Director of UMC
Electronics and Zurn Industries, Inc. Former Chairman and Chief Executive Officer, Todd
Shipyards and Bangor Punta Corporation, and former Chairman and Chief Executive Officer
of National Securities & Research Corporation. Trustee of the Northstar affiliated
investment companies (since October 1993).
</TABLE>
- ------------
* Deemed to be an "interested person" of the Fund, as defined by the 1940 Act.
The Board of Trustees met four times during the fiscal year ended December
31, 1998. The Board also acts as an Audit Committee that reviews and evaluates
the audit function, including recommending to the Board the independent
accountants to be selected for the Fund (see Proposal Three). The Audit
Committee met once during the Fund's fiscal year ended December 31, 1998. The
Board also acts as a Nominating Committee that is responsible for the selection
and nomination of disinterested trustees. It is not expected that the Nominating
Committee will consider nominees recommended by shareholders. The Nominating
Committee did not meet during the fiscal year ended December 31, 1998. Each
Committee consists of Trustees who are not "interested persons" of the Fund as
defined in the 1940 Act ("Independent Trustees") (currently Jeri A. Eckhart,
Wayne O. Jefferson, Jr., Richard C. Kaufman) and David H. Roe, a Trustee who is
an interested person. Except for Mr. Roe, Officers and Trustees of the Fund who
are "interested persons" of the Fund receive no salary or fees from the Fund.
Each Trustee receives an annual retainer of $4,000.
4
<PAGE>
The following table provides certain information relating to the
compensation of the Fund's Trustees for the fiscal year ended December 31, 1998.
Compensation Table
Period Ended December 31, 1998
<TABLE>
<CAPTION>
Pension Benefits Estimated Annual Total Compensation
Compensation Accrued as Part of Benefits Upon From Fund and
From Fund Fund Expenses Retirement Complex (a)
--------------- -------------------- ------------------- -----------------------
<S> <C> <C> <C> <C>
Jeri A. Eckhart $4,000 0 0 $4,000
Wayne O. Jefferson, Jr. 4,000 0 0 4,000
Richard C. Kaufman 4,000 0 0 4,000
David H. Roe 4,000 0 0 4,000
</TABLE>
- ---------------
(a) Compensation paid by the four series of the Fund.
Vote Required for Approval
Election of the Trustees requires the approval by an affirmative vote of a
plurality of the shares of the Fund present, in person or by proxy.
THE CURRENT TRUSTEES HAVE NOMINATED THE INDIVIDUALS NOTED ON PAGES THREE AND
FOUR FOR ELECTION AS TRUSTEES.
PROPOSAL TWO: APPROVAL OF NEW SUBADVISORY
AGREEMENT FOR THE STOCK AND ASSET ALLOCATION PORTFOLIOS
Introduction
On August 16, 1999, a majority of the Trustees of the Fund, who are not
parties to such agreement or interested persons (as defined in the 1940 Act) of
any such party (the "Independent Trustees"), and a majority of the entire Board
of Trustees met in person and approved, subject to the required shareholder
approval described herein, the Subadvisory Agreement between ReliaStar
Investment and Northstar for the Stock and Asset Allocation Portfolios, and
recommended approval of the Subadvisory Agreement by shareholders of the
Portfolios. The form of the Subadvisory Agreement is attached to this proxy
statement as Exhibit A.
The Subadvisory Agreement, if approved by vote of the holders of a
majority of the outstanding shares of each of the Portfolios (as defined in the
1940 Act), will become effective on or about October 1, 1999, and will continue
in effect for an initial term of two years. Thereafter, the Subadvisory
Agreement will continue in effect from year to year, subject to approval
annually by the Trustees of the Fund, on behalf of the Portfolios, or vote of
the holders of a majority of the outstanding shares of each of the Portfolios
(as defined in the 1940 Act), and also, in either event, to approval by a
majority of the Independent Trustees. For this purpose, the vote of the holders
of a majority of the outstanding shares of a Portfolio means the lesser of
either (i) the vote of 67% or more of the shares of the Portfolio present at the
Meeting if the holders of more than 50% of the outstanding Portfolio shares are
present or represented by proxy or (ii) the vote of the holders of more than 50%
of the outstanding shares of the Portfolio ("1940 Act Majority"). In the event
that shareholders of either Portfolio do not approve the Subadvisory Agreement
for
5
<PAGE>
that Portfolio, ReliaStar Investment would continue to serve as Adviser to the
Portfolio without the services of the Sub-Adviser, and the Trustees of the Fund,
on behalf of the Portfolio, may consider other possible courses of action with
regard to the management of that Portfolio.
THE TRUSTEES OF THE FUND BELIEVE THAT THE SUBADVISORY AGREEMENT BETWEEN
RELIASTAR INVESTMENT AND NORTHSTAR IS IN THE BEST INTEREST OF EACH PORTFOLIO AND
ITS SHAREHOLDERS AND, ACCORDINGLY, HAVE APPROVED THE SUBADVISORY AGREEMENT AND
RECOMMEND THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
Background and Reasons for the Proposed Arrangement
The Fund commenced operations on April 29, 1988, and pursuant to an
investment advisory agreement with the Fund dated April 1, 1995 (the
"Agreement"), ReliaStar Investment Research, Inc. began managing the Fund's four
portfolios. Pursuant to the Agreement, ReliaStar Investment may recommend
retaining, and with the approval of the Fund, retain one or more sub-advisers to
perform all or part of the advisory function. Pilgrim Baxter Value Investors,
Inc. has been serving as sub-adviser to the Stock and Asset Allocations
Portfolios since April 1, 1995. The Trustees, however, had expressed
disappointment to ReliaStar Investment concerning the investment performance of
the Stock Portfolio and the equity portion of the Asset Allocation Portfolio.
Thereafter at a Special Meeting of the Trustees, ReliaStar Investment
recommended that the Trustees consider appointing Northstar Investment
Management Corporation as sub-adviser for the Stock Portfolio and that portion
of the Asset Allocation Portfolio's assets that are allocated by the Adviser to
the management of the sub-adviser, which is substantially the equity securities.
This recommendation was based upon a number of considerations, including the
additional technical expertise that a qualified sub-adviser could utilize in
managing the Portfolios, with the goal of achieving enhanced investment
performance. ReliaStar Investment noted that it had deemed Northstar to be
qualified to provide advisory services to the Portfolios. This determination was
based on Northstar's investment experience and technical expertise, the
Adviser's performance goals for the Portfolios, the efficiencies achieved
because Northstar provides investment advisory services to other mutual funds
dedicated to insurance company separate accounts, the cost of Northstar's
services and possible other alternatives. ReliaStar Investment believed that the
application of Northstar's investment philosophy in pursuing the Portfolios'
objectives, the resources of the firm, and Northstar's reputation and
performance record in managing equity portfolios would benefit the Portfolios
and their shareholders. A sub-adviser, if a new one were selected and approved,
would be subject to the supervision of the Adviser and of the Trustees of the
Fund, on behalf of the Portfolio(s).
After review of relevant information relating to Northstar and the terms
of the proposed subadvisory arrangement, the Trustees concluded that entering
into the Subadvisory Agreement would be in the best interests of each Portfolio
and its shareholders. In considering the Subadvisory Agreement, the Trustees
evaluated, as set forth more fully below, materials furnished by ReliaStar
Investment and Northstar, Northstar's experience in providing various investment
services to individuals and institutions, the depth of its operations, as well
as the firm's reputation, integrity, and financial resources. Among other
things, the Trustees also considered the demonstrated skills and capabilities of
ReliaStar Investment's current management, personnel, its resources and
facilities, and the fact that ReliaStar Investment
6
<PAGE>
would be responsible for overseeing and monitoring the Sub-Adviser management of
the Portfolios. The Trustees also concluded that the advisory services to the
Portfolios could be enhanced by the investment and research methods and
resources offered by Northstar. After reviewing and considering the information
and data presented, the Trustees concluded that approval of the Subadvisory
Agreement could reasonably be expected to enhance each Portfolio's performance
by making available to it additional investment and technical resources at no
additional cost to the Portfolios or their shareholders.
Evaluation by the Trustees
The terms of the new Subadvisory Agreement were reviewed by the Trustees,
including the Independent Trustees, at a Special Meeting held on August 16,
1999. In considering whether to approve the Subadvisory Agreement and to submit
it to shareholders for their approval, the Trustees considered a number of
factors. Initially, the Trustees reviewed the Adviser's reasons for proposing
the subadvisory arrangement, including, in particular, the investment
performance of the Portfolios. It was noted that retaining the services of the
Sub-Adviser may enhance the Portfolios' performance and assist in maintaining
investors in the Portfolios. Based upon information presented by ReliaStar
Investment, the Trustees concluded that utilizing the resources of a qualified
investment advisory firm that specializes in the equity investments of the
Portfolios was, under all the circumstances in the best interest of the
Portfolios. In this context, it was noted that all fees associated with
retaining a sub-adviser would be borne solely by ReliaStar Investment, so that
the Portfolios would incur no additional advisory expense as a result of the
arrangement. The Trustees considered the services and qualifications of the
Sub-Adviser. Specifically, the Trustees considered (1) the Northstar
organization, including its corporate structure, financial resources, and the
credentials of the firm's investment, research and technical personnel; (2) the
range of services to be provided by the Sub-Adviser, its research and technical
capabilities, and skills and capabilities of its staff to provide investment and
related services; and (3) the nature and scope of its advisory services and the
nature of the clients served by the firm. The Trustees also considered the level
of the fee to be paid to the Sub-Adviser and the respective responsibilities of
the Sub-Adviser and the Adviser to the Portfolios under the subadvisory
arrangement. Finally, the Trustees considered performance data supplied by the
Sub-Adviser.
Terms of the Subadvisory Agreement
The terms of the new Subadvisory Agreement will be the same in all
material respects as that of the current subadvisory agreement. The Subadvisory
Agreement delegates to the Sub-Adviser responsibility for the management of all
of the Stock Portfolio's assets and the assets of the Asset Allocation Portfolio
allocated by the Adviser to the management of the Sub-Adviser, which is
substantially the equity portion, with full discretion, consistent with the
Portfolios' investment objectives. Accordingly, Northstar will be responsible
for selecting investments for purchase, and determining the timing for the
purchase and sale by the Portfolios of their investments. ReliaStar Investment,
as Adviser, will be responsible for overseeing the advisory services of the
Sub-Adviser and monitoring the operations of the Portfolios and their respective
compliance functions. The Adviser and the Sub-Adviser will be subject to the
overall supervision of the Fund's Trustees.
The Subadvisory Agreement provides that ReliaStar Investment, at its own
expense, will pay the Sub-Adviser an annual fee. Accordingly, the Subadvisory
Agreement will not increase the fees paid by the Portfolios for investment
advisory services. The Sub-Adviser will be paid an
7
<PAGE>
annual fee equal to 0.45 of 1% of the average daily net assets of the Stock
Portfolio and an annual fee equal to 0.45 of 1% of the average daily net assets
of the Asset Allocation Portfolio that are allocated to the Sub-Adviser for
management. This fee is calculated and accrued daily and paid to the Sub-Adviser
monthly. The maximum annual advisory fee which may be charged to each Portfolio,
as set forth in the Investment Advisory Agreement with ReliaStar Investment is
0.50% of the first $100 million of each Portfolio's net assets and 0.45% of each
Portfolio's net assets in excess of $100 million. However, all of the Variable
Contracts contain a provision limiting investment advisory services to no more
than an annual rate of 0.25%, which has been the rate consistently charged. The
Affiliated Insurance Companies reimburse for charges which are in excess of the
annual rate of 0.25% and will continue to do so.
The Subadvisory Agreement provides that the Sub-Adviser shall exercise its
best judgment in rendering its services thereunder. The Sub-Adviser shall not be
liable to the Portfolios or their shareholders for its acts or omissions in
rendering the services to be provided under the Subadvisory Agreement except for
damages arising from or resulting by reason of the Sub-Adviser's willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of the Sub-Adviser's reckless disregard of its obligations and duties
under the Subadvisory Agreement.
Northstar Investment Management Corporation
Northstar Investment Management Corporation is registered as an investment
adviser under the Investment Advisers Act of 1940. Northstar's principal address
is 300 First Stamford Place, Stamford, Connecticut 06902. The firm was formed in
1993 and is an indirect wholly-owned subsidiary of ReliaStar Financial
Corporation (the corporate parent of ReliaStar Investment and the Affiliated
Insurance Companies). The Sub-Adviser is a Delaware corporation. The Sub-Adviser
currently manages approximately $4.5 billion of assets for mutual funds,
variable annuity portfolios, institutions, and collateralized bond obligations,
of which the Sub-Adviser manages approximately $32 million in assets that are
invested in the Northstar Galaxy Trust Emerging Growth Portfolio, a series of
the Northstar Galaxy Trust which is similar in its investment objective to that
of the Stock Portfolio. The Sub-Adviser receives an annual fee equal to 0.75 of
1% of the average daily net assets of the Northstar Galaxy Trust Emerging Growth
Portfolio.
Mary Lisanti will serve as the portfolio manager of the Stock Portfolio
and the assets of the Asset Allocation Portfolio that are allocated to the
Sub-Adviser for management, and as such, will be the person primarily
responsible for the day-to-day investment management of the Stock Portfolio and
the assets of the Asset Allocation Portfolio that are allocated to the
Sub-Adviser for management. Ms. Lisanti serves as a Portfolio Manager and the
Chief Investment Officer -- Equities at Northstar. Ms. Lisanti has over 20 years
of investment management experience. Before joining Northstar, Ms. Lisanti was a
Portfolio Manager at Strong Capital Management where she managed the Strong
Small Cap Fund and co-managed the Strong Mid Cap Fund. From 1993 to 1996, Ms.
Lisanti was a Managing Director and Head of Small and Mid-Capitalization Equity
Strategies at Bankers Trust Corp. where she managed the BT Small Cap Fund and
the BT Capital Appreciation Fund. Prior to Bankers Trust, Ms. Lisanti was a
Portfolio Manager with the Evergreen Funds. She began her career as an Analyst
specializing in emerging growth stocks with Donaldson, Lufkin & Jenrette and
Shearson Lehman Hutton, and was ranked the number one Institutional Investor
Emerging Growth Stock Analyst in 1989. She is a Chartered Financial Analyst, and
a member of the New York Society of Security Analysts and the Financial Analyst
Federation.
8
<PAGE>
The Sub-Adviser's directors and principal executive officers are listed
below. Unless otherwise noted, the business address of each person is at the
principal address of the Sub-Adviser.
<TABLE>
<CAPTION>
<S> <C>
Name Position at Northstar
- ----- ---------------------
Mark L. Lipson Director, Chairman and Chief Executive Officer
Jeffrey Aurigemma Vice President and Senior Portfolio Manager
Stephanie L. Beckner Vice President, Secretary and Counsel
Mary Lisanti Executive Vice President and Chief Investment Officer -- Equities
Agnes Mullady Senior Vice President, Treasurer and Chief Financial Officer
</TABLE>
If the new Subadvisory Agreement is approved by shareholders of each
Portfolio, it is expected that it will be executed and become effective on or
about October 1, 1999 and the subadivisory agreement with Pilgrim Baxter Value
Investors, Inc. will be terminated. The Subadvisory Agreement may be terminated
without payment of any penalty by either of the Portfolios or the Adviser upon
the vote of a majority of the Trustees or by vote of the majority of the
Portfolio's outstanding voting securities, upon sixty (60) days' written notice
to the Sub-Adviser, or by the Sub-Adviser without cause, at any time without
penalty, upon sixty (60) days' written notice to the Portfolio or Adviser.
Otherwise, the Subadvisory Agreement will remain in effect for two years and
thereafter will continue in effect from year to year, provided that such
continuation is approved annually by the Trustees of the Fund, on behalf of the
Portfolio or by vote of a majority of the outstanding voting securities of the
Portfolio, and by the vote, cast in person at a meeting duly called and held, of
a majority of the Trustees of the Fund who are not parties to the Subadvisory
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party. The Subadvisory Agreement will automatically terminate in the event of
its assignment (as defined in the 1940 Act) or the assignment or termination of
the Agreement.
On July 22, 1999, ReliaStar Financial Corporation ("ReliaStar"), the
corporate parent of ReliaStar Investment and Northstar, entered into an
agreement with Pilgrim Capital Corp. ("Pilgrim"), under which Pilgrim will merge
into a subsidiary of ReliaStar. Pilgrim is the corporate parent of Pilgrim
Investments, Inc., which is the investment manager of the Pilgrim Funds.
Completion of the acquisition is contingent upon, among other things, approval
by the directors/trustees and the shareholders of the Pilgrim Funds and certain
regulatory approvals. the closing of the acquisition is scheduled for the fourth
quarter of 1999. The acquisition will not result in a change in control or
management of ReliaStar Investment or Northstar, and approval by the Trustees
and/or shareholders of the Fund is not required. However, it is expected that,
following completion of the acquisition, ReliaStar will consider various
alternatives for changes in the corporate structure of the merged entities with
a view towards leveraging management resources within the organization and
maximizing efficiency. Accordingly, it is possible that the investment
management business of Northstar may be combined with that of Pilgrim
Investments, Inc. It is not anticipated that any such combination would result
in any changes in the personnel primarily responsible for management of the
Fund.
Vote Required For Approval
Adoption of the Subadvisory Agreement set forth herein requires the
approval by a 1940 Act Majority of Stock Portfolio and the Asset Allocation
Portfolio's outstanding voting securities.
9
<PAGE>
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS OF THE PORTFOLIOS VOTE TO APPROVE
THE SUBADVISORY AGREEMENT.
PROPOSAL THREE: TO RATIFY THE SELECTION OF KPMG LLP AS
INDEPENDENT ACCOUNTANTS OF THE FUND
The financial statements for the Fund for the fiscal years ended December
31, 1998 and 1999 have or will be audited by Deloitte & Touche LLP, independent
accountants. At its meeting on August 16, 1999 the Board of Trustees selected
KPMG LLP as independent accountants for the Fund for the fiscal year ending
December 31, 2000. As required by the 1940 Act, the Trustees' selection is
subject to the right of the Fund, by vote of a majority of its outstanding
voting securities at any meeting called for the purpose of voting on such
action, to terminate such employment without penalty. The change of independent
accountants was motivated by the proposed appointment of Northstar as
sub-adviser to the Portfolios, as discussed above in connection with Proposal
Two. The Trustees concluded that the Portfolios would benefit from the
qualifications of and services provided by KPMG LLP.
The ratification of the selection of independent accountants is to be
voted upon at the Meeting and it is intended that the persons named in the
accompanying proxy will vote FOR KPMG LLP unless contrary instructions are
given. KPMG LLP has advised the Fund that it has no direct or material indirect
ownership interest in the Fund. Representatives of Deloitte & Touche LLP and
KPMG LLP are not expected to be present at the Meeting, but have been given the
opportunity to make a statement if they so desire, and will be available should
any matter arise requiring their presence to answer any questions.
Vote Required For Approval
Ratification of the selection of KPMG LLP as independent accountants for
the Fund requires an affirmative vote of at least a majority of the shares of
the Fund present, in person or by proxy.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE TO APPROVE THE RATIFICATION.
Additional Information about the Adviser
ReliaStar Investment currently serves as the investment adviser to the
Fund pursuant to the Agreement. The Adviser's principal offices are located at
20 Washington Avenue South, Minneapolis, Minnesota 55401. ReliaStar Investment
was organized in November of 1981 as a Minnesota corporation. ReliaStar
Investment, and its affiliated companies, ReliaStar Life Insurance Company
("ReliaStar Life"), the Fund's administrator, and Washington Square Securities
Inc., the Fund's distributor, are each wholly-owned by ReliaStar as is ReliaStar
Life Insurance Company of New York ("RLNY"). The Fund supports the Variable
Contracts issued by ReliaStar Life and RLNY. ReliaStar is a New York Stock
Exchange listed company, with over $20 billion in assets, and approximately $2.1
billion in shareholders' equity as of December 31, 1998. ReliaStar, through its
subsidiaries, specializes in the life and health insurance businesses, issuing
and distributing individual life insurance, annuities and mutual funds, group
life and health insurance and life and health reinsurance, and provides related
investment management services.
10
<PAGE>
ReliaStar Investment registered with the Securities and Exchange
Commission under the Investment Advisers Act of 1940 in December of 1981, and
began advising mutual funds in April of 1995. Through July of 1999, ReliaStar
Investment advised the four portfolios of the Fund and approximately $14.6
billion for ReliaStar Financial Corporation and its subsidiaries.
ReliaStar Life Insurance Company, an affiliate of the Adviser, serves as
administrator for the Fund pursuant to an Administrative Services Agreement
entered into between the Administrator and the Fund dated January 1, 1999. The
Administrator's principal offices are located at 20 Washington Avenue South,
Minneapolis, Minnesota 55401. The administrator provides the overall business
management and administrative services necessary to the proper conduct of the
Fund's business, except for services provided by other providers to the Fund
pursuant to separate service contracts, for which the Administrator acts as
liaison.
Washington Square Securities, Inc., also an affiliate of the Adviser,
serves as Distributor of the Fund's shares pursuant to a Distribution Agreement
entered into between the Distributor and the Fund dated February 1, 1997. The
Distributor's principal offices are located at 20 Washington Avenue South,
Minneapolis, Minneapolis 55401. The Distributor conducts a continuous offering
pursuant to a "best efforts" arrangement, requiring it to take and pay for only
such securities as may be sold to the public through investment dealers.
Terms of the ReliaStar Investment Advisory Agreement with the Fund
Pursuant to the Agreement, the Adviser, at its expense, offers the
Portfolios advice and assistance with respect to the selection, acquisition,
holding and disposal of securities, maintains all books and records required
under the 1940 Act to the extent not maintained by the Fund's custodian and will
render to the Trustees such periodic and special reports as the Trustees may
reasonably request. ReliaStar Investment or the Affiliated Insurance Companies
pay the salary and expenses of all personnel of the Fund and ReliaStar
Investment required to perform the services under the Agreement and all expenses
incurred by ReliaStar Investment and the Fund in connection with the performance
of ReliaStar Investment's responsibilities under the Agreement. The Portfolios
bear all other expenses incurred in the operation of the Portfolios, including
interest charges, taxes, fees and commissions of every kind, expenses of issue,
sale, repurchase or redemption of shares, expenses of registering or qualifying
shares for sale, all charges of custodians (including sums as custodian and for
keeping books, performing portfolio valuations and rendering other services to
the Portfolios), transfer agents, permits, registrars, auditors and legal
counsel, expenses of preparing, printing and distributing to shareholders
prospectuses, reports and notices to shareholders, and all costs incident to the
Portfolios' organization and existence.
The Agreement provides that the Adviser is not liable for any act or
omission in the course of or in connection with rendering services thereunder in
the absence of willful misfeasance, bad faith, or gross negligence in fulfilling
its obligations or duties. The Agreement permits the Adviser to render services
to others and to engage in other activities.
The Agreement provides for its automatic termination in the event of its
assignment (as defined in the 1940 Act) or may be terminated at any time without
payment of any penalty upon no more than 60 nor less than 30 days' written
notice by ReliaStar Investment, by the Trustees of the Fund, on behalf of the
Portfolio(s), or by the affirmative vote of the holders of a majority of the
outstanding voting securities of the Portfolios (as defined in the 1940 Act).
11
<PAGE>
Fees Paid to ReliaStar Investment by the Portfolios
For 1998, ReliaStar Investment received the following investment advisory
fees: $64,509 from the Stock Portfolio, $38,430 from the Asset Allocation
Portfolio, $14,571 from the Money Market Portfolio, and $7,027 from the Bond
Portfolio. ReliaStar Life Insurance Company received $93,210 for its services
under the Administrative Services Agreement during the same period.
ReliaStar Investment's directors and principal executive officers, and
their principal occupations, including any position with the Fund, are shown
below. Unless otherwise indicated, the business address of each director and
officer is 20 Washington Avenue South, Minneapolis, Minnesota 55401.
<TABLE>
<CAPTION>
<S> <C> <C>
Position with
Name Principal Occupation the Fund
- ------ ---------------------- --------------
Gregory M. Anderson Senior Vice President and Portfolio Manager None
Susan M. Bergen Secretary None
Stephen L. Buchert Director of Compliance None
Richard R. Crowl Senior Vice President and General Counsel None
Gary L. Jacobson Senior Vice President -- Special Investments None
Mark S. Jordahl President, Chief Executive Officer and Director None
Michael L. Sheplee Senior Vice President -- Administration and None
Treasurer
Winifred Smith Senior Vice President -- Real Estate None
John G. Turner Director None
</TABLE>
MISCELLANEOUS
Shareholder Proposals
Proposals of shareholders must be received by the Fund a reasonable time
prior to mailing of the proxy materials for a meeting of shareholders. The
submission by a shareholder of a proposal for inclusion in the proxy statement
does not guarantee that it will be included. Shareholder proposals are subject
to certain regulations under the federal securities laws.
Other Business
The Trustees know of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is their
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named as proxies in the enclosed form of proxy.
Other Information
ReliaStar Investment Research Inc. serves as the Fund's investment
adviser. ReliaStar Life Insurance Company is its administrator, and Washington
Square Securities, Inc. is its principal underwriter. All are located at 20
Washington Avenue South, Minneapolis, Minnesota 55401.
12
<PAGE>
EXHIBIT A
USLICO SERIES FUND STOCK PORTFOLIO AND
USLICO SERIES FUND ASSET ALLOCATION PORTFOLIO
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of October, 1999 by and between ReliaStar
Investment Research, Inc., a Minnesota Corporation (hereinafter the "Adviser"),
investment adviser for the USLICO Series Fund Stock Portfolio and the USLICO
Series Fund Asset Allocation Portfolio (collectively, the "Portfolios"), each
being a series of the USLICO Series Fund (the "Trust") and Northstar Investment
Management Corporation, a Delaware corporation (hereinafter the "Sub-Adviser").
WHEREAS, the Adviser has been retained by the Trust, an open-end
diversified management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), to provide investment advisory
services to the Portfolios pursuant to an Investment Advisory Agreement dated
April 1, 1995 (the "Investment Advisory Agreement"); and
WHEREAS, the Trustees of the Trust, including a majority of the Trustees
who are not "interested persons," as defined in the 1940 Act, and the
Portfolios' shareholders have approved the appointment of the Sub-Adviser to
perform certain investment advisory services for the Portfolios pursuant to this
Subadvisory Agreement with the Adviser and the Sub-Adviser is willing to perform
such services for the Portfolios;
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Sub-Adviser as
follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to perform
advisory services to the Portfolios for the periods and on the terms set forth
in this Subadvisory Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth, for the compensation herein
provided.
2. Duties of Sub-Adviser. The Adviser hereby authorizes Sub-Adviser to
manage the investment and reinvestment of cash and investments comprising the
assets of the USLICO Series Fund Stock Portfolio and those assets of the USLICO
Series Fund Asset Allocation Portfolio which are designated by the Adviser for
management by the Sub-Adviser (collectively, the "Assets"), with power on behalf
of and in the name of the Portfolios at Sub-Adviser's discretion; subject at all
times to the supervision of the Adviser and the Trustees of the Trust:
(a) to direct the purchase, subscription or other acquisition, and
the sale, redemption, and exchange of the Assets, subject to the duty to
render to the Trustees of the Trust and the Adviser such written reports
regarding the Assets as often as the Trustees of the Trust or the Adviser
shall reasonably require;
(b) to make all decisions relating to the manner, method and timing
of investment transactions relating to the Assets, to select brokers,
dealers and other intermediaries by or through whom such transactions will
be effected, and to engage such consultants, analysts and experts in
connection therewith as may be considered necessary or appropriate;
A-1
<PAGE>
(c) to direct banks, brokers or custodians to disburse funds or
assets solely in order to execute investment transactions for the Assets,
provided that the Sub-Adviser shall have no other authority to direct the
transfer of the Assets to itself or other persons and shall have no other
authority over the disbursement (as opposed to investment decisions) of
funds or assets nor any custody of any of the Assets; and
(d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; provided that any specific
or general directions which the Trustees of the Trust, or the Adviser may
give to the Sub-Adviser with regard to any of the foregoing powers shall,
unless the contrary is expressly stated therein, override the general
authority given by this provision to the extent that the Trustees of the
Trust may, at any time and from time to time, direct, either generally or
to a limited extent and either alone or in concert with the Adviser or the
Sub-Adviser (provided that such directions would not cause the Sub-Adviser
to violate any fiduciary duties or any laws with regard to the
Sub-Adviser's duties and responsibilities), all or any of the same as they
shall think fit and, in particular, the Adviser shall have the right to
request the Sub-Adviser to place trades through brokers and other agents
of the Adviser's choice, subject to the Sub-Adviser's judgment that such
brokers or agents will execute such trades on the best overall terms
available, taking into consideration factors the Sub-Adviser deems
relevant including, without limitation, the price of the security,
research or other services which render that broker's services the most
appropriate for the Sub-Adviser's needs, the financial condition and
dealing and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and
on a continuing basis; and provided further that nothing herein shall be
construed as giving the Sub-Adviser power to manage the aforesaid cash and
investments in such a manner as would cause either of the Portfolios to be
considered a "dealer" in stocks, securities or commodities for U.S.
federal income tax purposes.
The Adviser shall monitor and review the performance of the Sub-Adviser
under this Agreement, including but not limited to the Sub-Adviser's performance
of the duties delineated in subparagraphs (a)-(d) of this provision.
The Sub-Adviser further agrees that, in performing its duties hereunder,
it will
(a) (i) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and
all other applicable federal and state laws and regulations, the current
Prospectus and Statement of Additional Information for the Portfolios
supplied to the Sub-Adviser by the Adviser, and with any applicable
procedures adopted by the Trustees in writing supplied to the Sub-Adviser
by the Adviser; (ii) manage the Portfolios in accordance with the
investment requirements for regulated investment companies under
Subchapter M of the Code and regulations issued thereunder; (iii) direct
the placement of orders pursuant to its investment determinations for the
Assets directly with the issuer, or with any broker or dealer, in
accordance with applicable policies expressed in the Portfolios'
Prospectus and/or Statement of Additional Information and in accordance
with applicable legal requirements.
(b) furnish to the Portfolios whatever non-proprietary reports the
Portfolios may reasonably request with respect to the Assets or
contemplated strategies. In addition, the Sub-Adviser will keep the
Portfolios and the Trustees informed of developments materially
A-2
<PAGE>
affecting the Assets and shall, on the Sub-Adviser's own initiative,
furnish to the Portfolios from time to time whatever information the
Sub-Adviser believes appropriate for this purpose;
(c) make available to the Portfolios' administrator, Northstar
Administrators Corporation (the "Administrator"), the Adviser, and the
Portfolios, promptly upon their request, such copies of its investment
records and ledgers with respect to the Portfolios as may be required to
assist the Adviser, the Administrator and the Portfolios in their
compliance with applicable laws and regulations. The Sub-Adviser will
furnish the Trustees with such periodic and special reports regarding the
Portfolios as they may reasonably request;
(d) immediately notify the Adviser and the Portfolios in the event
that the Sub-Adviser or any of its affiliates: (i) becomes aware that it
is subject to a statutory disqualification that prevents the Sub-Adviser
from serving as an investment adviser pursuant to this Subadvisory
Agreement; or (ii) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and
Exchange Commission ("SEC") or other regulatory authority. The Sub-Adviser
further agrees to notify the Portfolios and the Adviser immediately of any
material fact known to the Sub-Adviser respecting or relating to the
Sub-Adviser that is not contained in the Trust's Registration Statement,
or any amendment or supplement thereto, but that is required to be
disclosed therein, and of any statement contained therein that becomes
untrue in any material respect. The Portfolios, Adviser, Administrator,
and their Affiliates shall likewise immediately notify the Sub-Adviser if
any of them becomes aware of any regulatory action of the type described
in this subparagraph 2(d).
3. Allocation of Charges and Expenses. The Sub-Adviser shall pay all
expenses associated with the management of its business operations in performing
its responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its directors, officers and employees,
and other internal operating costs; provided, however, that the Sub-Adviser
shall be entitled to reimbursement on a monthly basis by the Adviser of all
reasonable out-of-pocket expenses properly incurred by it in connection with
serving as Sub-Adviser to the Assets. For the avoidance of doubt, each Portfolio
shall bear its own overhead and other internal operating costs (whether incurred
directly or by the Adviser or the Sub-Adviser) including, without limitation:
(a) the costs incurred by the Portfolio in the preparation and
printing of the Prospectus or any offering literature (including any form
of advertisement or other solicitation materials calculated to lead to
investors subscribing for shares);
(b) all fees and expenses on behalf of the Portfolio to the Transfer
Agent and the Custodian;
(c) the reasonable fees and expenses of accountants, auditors,
lawyers and other professional advisors to the Portfolio;
(d) any interest, fee or charge payable on or on account of any
borrowing by the Portfolio;
(e) fiscal and governmental charges and duties relating to the
purchase, sale, issue or redemption of shares and increases in authorized
share capital of the Portfolio;
A-3
<PAGE>
(f) the fees of any stock exchange or over-the-counter market on
which shares of the Portfolio may from time to time be listed, quoted or
dealt in and the expenses of obtaining any such listing, quotation or
permission to deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect of
or in connection with the acquisition, holding or disposal of any of the
assets of the Portfolio or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares of the
Portfolio in newspapers and other publications;
(j) all expenses incurred in the convening of meetings of
shareholders or in the preparation of agreements or other documents
relating to the Portfolio or in relation to the safe custody of the
documents of title of any investments;
(k) all Trustees communication costs; and
(l) all premiums and costs for Portfolio insurance and blanket
fidelity bonds.
4. Compensation. As compensation for the services provided by the
Sub-Adviser under this Agreement, the Adviser will pay the Sub-Adviser at the
end of each calendar month an advisory fee computed daily at an annual rate
equal to 0.45 of 1% of the average daily net asset value of the Assets. The
"average daily net asset value" of the Assets shall mean the value placed on the
Assets as of 4:00 p.m. (New York time) on each day on which the net asset value
of the Portfolios is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Portfolios lawfully determine the value of their
net assets as of some other time on each business day, as of such other time.
The value of the Assets shall always be determined pursuant to the applicable
provisions of the Trust's Declaration of Trust and the Registration Statement.
If, pursuant to such provisions, the determination of net asset value is
suspended for any particular business day, then for the purposes of this Section
4, the value of the Assets as last determined shall be deemed to be the value of
the Assets as of the close of regular trading on the New York Stock Exchange, or
as of such other time as the value of the Assets may lawfully be determined, on
that day. If the determination of the net asset value of the shares of the
Portfolio has been so suspended for a period including any month end when the
Sub-Adviser's compensation is payable pursuant to this Section, the
Sub-Adviser's compensation payable at the end of such month shall be computed on
the basis of the value of the Assets as last determined (whether during or prior
to such month). If the Portfolios determine the value of the Assets more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
Section 4.
5. Books and Records. The Sub-Adviser agrees to maintain such books and
records with respect to its services to the Portfolios as are required by
Section 31 under the 1940 Act, and rules adopted thereunder, and by other
applicable legal provisions, and to preserve such records for the periods and in
the manner required by applicable laws or regulations. The Sub-Adviser also
agrees that records it maintains and preserves pursuant to Rules 31a-2 under the
1940 Act (excluding trade secrets or intellectual property rights) in connection
with its services hereunder are the property of the Portfolios and will be
surrendered promptly to the Portfolios upon its request and the Sub-Adviser
further agrees that it will furnish to regulatory authorities having
A-4
<PAGE>
the requisite authority any information or reports in connection with its
services hereunder which may be requested in order to determine whether the
operations of the Portfolios are being conducted in accordance with applicable
laws and regulations.
6. Standard of Care and Limitation of Liability. The Sub-Adviser shall
exercise its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Sub-Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Portfolios or the
holders of the Portfolios' shares or by the Adviser in connection with the
matters to which this Subadvisory Agreement relates, provided that nothing in
this Subadvisory Agreement shall be deemed to protect or purport to protect the
Sub-Adviser against liability to the Portfolios or to holders of the Portfolios'
shares or to the Adviser to which the Sub-Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Adviser's reckless disregard
of its obligations and duties under this Subadvisory Agreement. As used in this
Section 6, the term "Sub-Adviser" shall include any officers, directors,
employees or other affiliates of the Sub-Adviser performing services for the
Portfolios.
7. Services Not Exclusive. The Advisor understands that the Sub-Adviser
now acts, will continue to act and may act in the future as investment advisor
to fiduciary and other managed accounts and as investment advisor to other
investment companies, and, except as may be separately agreed to from time to
time between the Adviser and the Sub-Adviser, the Trust has no objection to the
Sub-Adviser so acting, provided that whenever the Portfolios and one or more
other accounts or investment companies advised by the Sub-Adviser have available
funds for investment, investments suitable and appropriate for each will be
allocated in accordance with a methodology believed to be equitable to each
entity. The Sub-Adviser agrees to allocate similar opportunities to sell
securities. The Adviser recognizes that, in some cases, this procedure may limit
the size of the position that may be acquired or sold for the Portfolios. In
addition, the Adviser understands that the persons employed by the Sub-Adviser
to assist in the performance of the Shareholder's duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Sub-Adviser or any affiliate of the
Sub-Adviser to engage in and devote time and attention to other business or to
render services of whatever kind or nature.
8. Duration and Termination. This Subadvisory Agreement shall become
effective as of the date of its execution and shall continue in effect for a
period of two years from the date of execution. Thereafter, this Subadvisory
Agreement shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Trust's
Trustees or (ii) a vote of a "majority" (as defined in the 1940 Act) of each
Portfolio's outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Trust's Trustees who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Subadvisory Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Subadvisory Agreement may be terminated: (a) at any time without penalty by
either Portfolio or the Adviser upon the vote of a majority of the Trustees or
by vote of a majority of the Portfolio's outstanding voting securities, upon
sixty (60) days written notice to the Sub-Adviser, or (b) by the Sub-Adviser
without cause at any time without penalty, upon sixty (60) days written notice
to the Trust or the Adviser. This Subadvisory Agreement will terminate
automatically five business days after
A-5
<PAGE>
the Sub-Adviser receives written notice of the termination of the Investment
Advisory Agreement. This Subadvisory Agreement will also terminate automatically
in the event of its assignment (as defined in the 1940 Act).
9. Amendments. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by both parties, and no material amendment of this Subadvisory Agreement
shall be effective until approved by an affirmative vote of (i) a majority of
the outstanding voting securities of each Portfolio, and (ii) a majority of the
Trustees of the Trust, including a majority of Trustees who are not interested
persons of any party to this Subadvisory Agreement, cast in person at a meeting
called for the purpose of voting on such approval, if such approval is required
by applicable law.
10. Indemnification. (a) The Adviser hereby agrees to indemnify the
Sub-Adviser and its affiliates from and against all liabilities, losses,
expenses, reasonable attorneys' fees and costs (other than attorneys' fees and
costs in relation to the preparation of this Agreement; each party bearing
responsibility for its own such costs and fees) or damages (other than
liabilities, losses, expenses, attorneys' fees and costs or damages arising from
the Sub-Adviser failing to meet the standard of care required in Section 6 of
this Subadvisory Agreement in the performance by the Sub-Adviser of, or its
failure to perform, the services required hereunder), arising from the Adviser's
(its affiliates and their respective agents and employees) failure to perform
its duties or assume its obligations hereunder, or from its wrongful actions or
omissions, including, but not limited to, any claims for non-payment of advisory
fees; claims asserted or threatened by any shareholder of the Portfolios,
governmental or regulatory agency, or any other person; claims arising from any
wrongful act by the Portfolios or any of the Trust's trustees, officers,
employees, or representatives, or by the Adviser, its officers, employees or
representatives, or from any actions by the Portfolios' distributors or any
representative of the Portfolios; any action or claim against the Sub-Adviser
based on any alleged untrue statement or misstatement of material fact in any
registration statement, prospectus, shareholder report or other information or
materials covering shares filed or made public by the Portfolios or any
amendment thereof or supplement thereto, or the failure or alleged failure to
state therein a material fact required to be stated in order that the statements
therein are not misleading, provided that such claim is not based upon
information provided to the Adviser by the Sub-Adviser or approved by the
Sub-Adviser in the manner provided in paragraph 12(b) of this Agreement, or
which facts or information the Sub-Adviser failed to provide or disclose. With
respect to any claim for which the Sub-Adviser shall be entitled to indemnity
hereunder, the Adviser shall assume the reasonable expenses and costs (including
any reasonable attorneys' fees and costs) of the Sub-Adviser of investigating
and/or defending any claim asserted or threatened by any party, subject always
to the Adviser first receiving a written undertaking from the Sub-Adviser to
repay any amounts paid on its behalf in the event and to the extent of any
subsequent determination that the Sub-Adviser was not entitled to
indemnification hereunder in respect of such claim.
(b) The Sub-Adviser hereby agrees to indemnify the Adviser, its affiliates
and the Portfolios from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs (other than attorneys' fees and costs in
relation to the preparation of this Agreement; each party bearing responsibility
for its own such costs and fees) or damages (other than liabilities, losses,
expenses, attorneys fees and costs or damages arising from the Adviser's failure
to perform its responsibilities hereunder or claims arising from its acts or
failure to act in performing this
A-6
<PAGE>
Agreement) arising from Sub-Adviser's (its affiliates and their respective
agents and employees) willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of the Sub-Adviser's reckless disregard
of its obligations and duties under this Subadvisory Agreement, or arising from
failure to act in any action or claim against the Adviser based on any alleged
untrue statement or misstatement of a material fact made or provided by or with
the consent of Sub-Adviser contained in any registration statement, prospectus,
shareholder report or other information or materials relating to the Portfolios
and shares issued by the Portfolios, or the failure or alleged failure to state
a material fact therein required to be stated in order that the statements
therein are not misleading, which fact should have been made or provided by the
Sub-Adviser to the Adviser. With respect to any claim for which the Adviser is
entitled to indemnity hereunder, the Sub-Adviser shall assume the reasonable
expenses and costs (including any reasonable attorneys' fees and costs) of the
Adviser of investigating and/or defending any claim asserted or threatened by
any party, subject always to the Sub-Adviser first receiving a written
undertaking from the Adviser to repay any amounts paid on its behalf in the
event and to the extent of any subsequent determination that the Adviser was not
entitled to indemnification hereunder in respect of such claim.
(c) In the event that the Sub-Adviser or Adviser is or becomes a party to
any action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the other
party thereof. After becoming notified of the same, the party from whom
indemnification is sought shall be entitled to participate in any such action or
proceeding and shall assume any payment for the full defense thereof with
counsel reasonably satisfactory to the party seeking indemnification. After
properly assuming the defense thereof, the party from whom indemnification is
sought shall not be liable hereunder to the other party for any legal or other
expenses subsequently incurred by such party in connection with the defense
thereof, other than damages, if any, by way of judgment, settlement, or
otherwise pursuant to this provision. The party from whom indemnification is
sought shall not be liable hereunder for any settlement of any action or claim
effected without its written consent, which consent shall not be unreasonably
withheld.
11. Independent Contractor. Sub-Adviser shall for all purposes of this
Agreement be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or represent
the Portfolios in any way or otherwise be deemed to be an agent of the
Portfolios. Likewise, the Portfolios, the Adviser and their respective
affiliates, agents and employees shall not be deemed agents of the Sub-Adviser
and shall have not authority to bind Sub-Adviser.
12. Use of Name. (a) The Portfolios may, subject to sub-clause (b) below,
use the name, "Northstar Investment Management Corporation" or "Northstar" for
promotional purposes only for so long as this Agreement (or any extension,
renewal or amendment thereof) continues in force, unless the Sub-Adviser shall
specifically consent in writing to such continued use thereafter. Any permitted
use by the Portfolios during the term hereof of the name of the Sub-Adviser or
Northstar shall in no way prevent the Sub-Adviser or any of it shareholders or
any of their successors, from using or permitting the use of such name (whether
singly or in any combination with any other words) for, by or in connection with
an entity or enterprise other than the Portfolios. The name and right to the
name Northstar Investment Management Corporation or any derivation of the name
Northstar shall at all times be owned and be the sole and exclusive property of
Northstar and its affiliated entities. Northstar Investment
A-7
<PAGE>
Management Corporation, by entering into this Agreement, is allowing the
Portfolios to use the name Northstar Investment Management Corporation and/or
Northstar solely by or on behalf of the Portfolios. At the conclusion of this
Agreement or in the event of any termination of this Agreement or if the
Sub-Adviser's services are terminated for any reason, each of the authorized
parties and their respective employees, representatives, affiliates, and
associates agree that they shall immediately cease using the name Northstar
Investment Management Corporation and/or Northstar of said name for any purpose
whatsoever.
(b) The Adviser and its affiliates shall not publish or distribute, and
shall cause the Portfolios not to publish or distribute to Portfolio
shareholders, prospective investors, sales agents or members of the public any
disclosure document, offering literature (including any form of advertisement or
other solicitation materials calculated to lead investors to subscribe for and
purchase shares of the Portfolios) or other document referring by name to the
Sub-Adviser or any of its affiliates, unless the Sub-Adviser shall have
consented in writing to such references in the form and context in which they
appear; provided however, that where the Portfolios timely seek to obtain
approval of disclosure contained in any documents required to be filed by the
Portfolios, and such approval is not forthcoming on or before the date on which
such documents are required by law to be filed, the Sub-Adviser shall be deemed
to have consented to such disclosure.
13. Miscellaneous.
(a) This Subadvisory Agreement shall be governed by the laws of the State
of Massachusetts, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder. In the event of any litigation in which the Adviser and the
Sub-Adviser are adverse parties and there are no other parties to such
litigation, such action shall be brought in the United States District Court for
the State of Massachusetts, located in Boston, Massachusetts.
(b) The captions of this Subadvisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.
14. Notices. Any notice, instruction or other instrument required or
permitted to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or sent
by prepaid registered mail, express mail or by facsimile to the parties at such
offices or such other address as may be notified by either party from time to
time. Such notice, instruction or other instrument shall be deemed to have been
served, in the case of a registered letter at the expiration of seventy-two (72)
hours after posting; in the case of express mail, within twenty-four (24) hours
after dispatch; and in the case of facsimile, immediately on dispatch, and if
delivered outside normal business hours it shall be deemed to have been received
at the next time after delivery or transmission when normal business hours
commence. Evidence that the notice, instruction or other instrument was properly
addressed, stamped and put into the post shall be conclusive evidence of
posting.
A-8
<PAGE>
15. Non-Solicitation. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Portfolios),
and each of their employees and affiliates agree not to knowingly solicit to
invest, or accept or retain as investors, in the Portfolios any persons or
entities who are clients of or investors in any portfolio or investment vehicle
managed by any entity owned or affiliated with Northstar Investment Management
Corporation.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of October 1, 1999.
Northstar Investment Management Corporation
By:_________________________________________
MARK L. LIPSON
Chairman and CEO
ReliaStar Investment Research, Inc.
By:_________________________________________
MARK S. JORDAHL
President and CEO
A-9
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
RELIASTAR LIFE INSURANCE COMPANY
USLICO SERIES FUND _____ PORTFOLIO SPECIAL MEETING OF SHAREHOLDERS -
SEPTEMBER 23, 1999
VOTING INSTRUCTIONS PROXY SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned, revoking previous instructions, hereby appoints David H.
Roc and Robert B. Saginaw, and each of them, with full power of substitution and
relocation, as proxies, to vote all shares of the above-referenced Portfolio
(the "Portfolio"), a series of the USLICO Series Fund (the "Fund"), a
Massachusetts business trust, which are held in the account of the undersigned
in the Variable Account at the Special Meeting of persons having a voting
interest in the Porfolio, to be held on September 23, 1999 at 2:00 p.m. Eastern
Time, at the offices of the Fund, 4601 North Fairfax Drive, Arlington, Virginia,
and at any and all adjouirments thereof. Messrs. Roc and Saginaw are hereby
instructed to vote on each proposal described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
PLEASE VOTE, SIGN, DATE AND
PROMPTLY MAIL THIS VOTING
INSTRUCTION IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS NECESSARY
IF MAILED IN THE UNITED STATES.
Date: ______________________ 1999
This voting instruction shall
be signed exactly as your
name(s) appear hereon. If
attorney, executor, guardian or
in some other capacity or as
an officer of a corporation,
please state capacity or title as
such.
------------------------------------------------------------
Signature(s)
USLICO
PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE AND MAIL THIS VOTING INSTRUCTION
FORM IN THE ENCLOSED ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES.
This Voting Instructions Form, when properly executed, will be voted in
accordance with the instructions marked below by the undersigned. In the absence
of contrary instructions, this Instruction Form will be voted FOR the proposal.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW.
1. Proposal to elect the Board of FOR WITHHELD
Trustees (all Portfolios). [ ] [ ]
Paul S. Doherty Walter H. May David W. Wallace
Robert B. Goode David D.C. Putnam
Alan L. Gosule John R. Smith
Mark L. Lipson John G. Turner
SHAREHOLDERS MAY WITHHOLD THEIR VOTE FOR ANY NOMINEE(S) BY WRITING THAT
NOMINEE'(S) NAME(S) IN THE SPACE PROVIDED BELOW.
- -----------------------------------------------
2. Proposal to approve a new FOR AGAINST ABSTAIN
sub-advisory agreement for the USLICO [ ] [ ] [ ]
Series Fund Stock and Asset Allocation
Portfolios (only the Stock and Asset
Allocation Portfolios).
3. Proposal to ratify the selection of
KPMG LLP as independent accountants for
the Fund (all Portfolios) and, in their [ ] [ ] [ ]
discretion, upon such other business as
may come before the meeting of any
adjournments thereof.
USLICO
