SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
USLICO SERIES FUND
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the 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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
USLICO SERIES FUND
20 Washington Avenue South, Route 1212
Minneapolis, Minnesota 55401
(800) 333-6965
July __, 2000
Dear Shareholder:
ReliaStar Financial Corp., the indirect parent company of ReliaStar
Investment Research, Inc. (the investment adviser to the Stock, Money Market,
Bond and Asset Allocation Portfolios (the "Portfolios") of the USLICO Series
Fund (the "Fund"))and Pilgrim Investments, Inc. (the sub-adviser to the Stock
Portfolio and the Asset Allocation Portfolio of the Fund) is being acquired by
the financial services firm ING Groep N.V. Headquartered in Amsterdam, ING is a
global financial institution active in the fields of insurance, banking, and
asset management.
At the shareholder meeting on August 18, 2000, you will be asked to
approve a new advisory contract and, as applicable, sub-advisory contract to
take effect after the acquisition. If approved, ReliaStar Investment Research,
Inc. and Pilgrim Investments, Inc. will continue to advise the Portfolios
following the transaction. Except for the dates, these new contracts are the
same as those currently in effect. Approval of the new advisory and sub-advisory
contracts is sought so that management of the Fund can continue uninterrupted
after the transaction, because the current agreements may terminate
automatically as a result of the transaction. At the shareholder meeting, you
also will be asked to elect new Trustees for the Fund.
After careful consideration, the Board of Trustees of the Fund
unanimously approved each of the proposals and recommends that shareholders vote
"FOR" each proposal.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. TO
AVOID THE ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS,
PLEASE TAKE A FEW MINUTES TO READ THE PROXY STATEMENT AND CAST YOUR VOTE. IT IS
IMPORTANT THAT YOUR VOTE BE RECEIVED BY NO LATER THAN AUGUST 17, 2000.
We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
ROBERT W. STALLINGS
Chief Executive Officer and President
<PAGE>
USLICO SERIES FUND
20 Washington Avenue South, Route 1212
Minneapolis, Minnesota 55401
(800) 333-6965
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 18, 2000
To the Shareholders:
A Special Meeting (the "Meeting") of Shareholders of the Stock, Money
Market, Bond, and Asset Allocation Portfolios of USLICO Series Fund (the "Fund")
will be held on August 18, 2000 at 10:00 a.m. local time, at 40 North Central
Avenue, Suite 1200, Phoenix, Arizona 85004 for the following purposes:
1. To elect eleven Trustees to serve until their successors are elected and
qualified;
2. To approve a new Investment Management Agreement between the Fund and
ReliaStar Investment Research, Inc. ("RIRI") to reflect the acquisition of
RIRI by ING Groep N.V. ("ING"), with no change in the advisory fees payable
to RIRI;
3. For Shareholders of the Stock Portfolio and Asset Allocation Portfolio, to
approve a new Sub-Advisory Agreement between RIRI and Pilgrim Investments,
Inc. ("Pilgrim Investments") to reflect the acquisition of RIRI and Pilgrim
Investments by ING, with no change in the sub-advisory fee payable to
Pilgrim Investments; and
4. To transact such other business as may properly come before the Meeting of
Shareholders or any adjournments thereof.
Shareholders of record at the close of business on June 19, 2000 are
entitled to notice of, and to vote at, the Meeting. Your attention is called to
the accompanying Proxy Statement. Regardless of whether you plan to attend the
Meeting. PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so
that a quorum will be present and a maximum number of shares may be voted. If
you are present at the Meeting, you may change your vote, if desired, at that
time.
By Order of the Board of Trustees,
JAMES M. HENNESSY
Executive Vice President and Secretary
Dated: July __, 2000
<PAGE>
USLICO SERIES FUND
20 Washington Avenue South, Route 1212
Minneapolis, Minnesota 55401
(800) 333-6965
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 18, 2000
A Special Meeting (the "Meeting") of Shareholders of the Stock, Money
Market, Bond, and Asset Allocation Portfolios (the "Portfolios") of USLICO
Series Fund (the "Fund") will be held on August 18, 2000 at 10:00 a.m., local
time, at 40 North Central Avenue, Suite 1200, Phoenix, Arizona 85004 for the
following purposes:
1. To elect eleven Trustees to serve until their successors are elected and
qualified;
2. To approve a new Investment Management Agreement between the Fund and
ReliaStar Investment Research, Inc. ("RIRI"") to reflect the acquisition of
RIRI by ING Groep N.V. ("ING"), with no change in the advisory fees payable
to RIRI;
3. For Shareholders of the Stock Portfolio and Asset Allocation Portfolio, to
approve a new Sub-Advisory Agreement between RIRI and Pilgrim Investments,
Inc. ("Pilgrim Investments") to reflect the acquisition of RIRI and Pilgrim
Investments by ING, with no change in the sub-advisory fee payable to
Pilgrim Investments; and
4. To transact such other business as may properly come before the Meeting of
Shareholders or any adjournments thereof.
The date of the first mailing of this Proxy Statement is expected to be
on or about July ___, 2000. The Board of Trustees is soliciting votes from
Shareholders of each Portfolio only with respect to the particular proposals
that affect that Portfolio. The following table identifies the Portfolios
entitled to vote on each Proposal.
Portfolio Proposal 1 Proposal 2 Proposal 3 Proposal 4
--------- ---------- ---------- ---------- ----------
Stock Portfolio X X X X
Money Market Portfolio X X X
Bond Portfolio X X X
Asset Allocation Portfolio X X X X
<PAGE>
GENERAL OVERVIEW
On April 30, 2000, ReliaStar Financial Corp. ("ReliaStar") entered into
an agreement (the "Transaction") to be acquired by ING Groep N.V. ("ING"). ING
is a global financial institution active in the fields of insurance, banking and
asset management. Headquartered in Amsterdam, it conducts business in more than
60 countries, and has almost 90,000 employees. ING seeks to provide a full range
of integrated financial services to private, corporate, and institutional
clients through a variety of distribution channels. As of December 31, 1999, ING
had total assets of approximately $471.8 billion and assets under management of
approximately $330.3 billion. ING includes, among its numerous direct and
indirect subsidiaries, Baring Asset Management, Inc. in Boston, Mass., ING
Investment Management Advisors B.V. in the Hague, the Netherlands, Furman Selz
Capital Management LLC in New York, N.Y., ING Investment Management LLC in
Atlanta, Georgia, Baring International Investment Limited in London, England and
Baring Asset Management (Asia) Limited in Hong Kong. Completion of the
Transaction is contingent upon, among other things, approval by the Trustees of
USLICO Series Fund, and certain USLICO Series Fund shareholder and regulatory
approvals. The closing of the Transaction is expected to occur during the third
quarter of 2000.
In the Transaction, ING will issue to stockholders of ReliaStar $54.00
in cash for each share of ReliaStar common stock held by them, subject to
possible adjustments. On June 19, 2000, the total number of shares of ReliaStar
outstanding was ___.
RIRI and Pilgrim Investments are expected to remain intact after the
Transaction. RIRI and Pilgrim Investments do not currently anticipate that there
will be any changes in the investment personnel primarily responsible for the
management of the Fund, or any series thereof, as a result of the Transaction.
ING's principal executive offices are located at Strawinskylaan 2631, 1077 zz
Amsterdam, P.O. Box 810, 1000 AV Amsterdam, the Netherlands.
PROPOSAL NO. 1
ELECTION OF TRUSTEES
The Board of Trustees of the Fund has nominated eleven individuals (the
"Nominees") for election to the Board of Trustees of the Fund. Shareholders are
being asked to elect the Nominees to serve as Trustees, each to serve until his
or her successor is duly elected and qualified. Pertinent information about each
Nominee is set forth below. Each Nominee has consented to serve as a Trustee if
elected. All of the Nominees currently serve as Trustees of the Fund. Mark L.
Lipson, a current Trustee of the Fund, is not standing for election as a Trustee
of the Fund.
The Nominees are being nominated to provide uniformity across the
Boards of Directors/Trustees of all of the funds managed by Pilgrim Investments
and the Board of Trustees of the Fund. In evaluating the Nominees, the Trustees
took into account their background and experience, including their familiarity
with the issues relating to this type of fund and investments as well as their
careers in business, finance, marketing and other areas. The Trustees also
considered the experience of each of the Nominees as trustees or directors of
certain of the Funds in the Pilgrim group of funds.
2
<PAGE>
INFORMATION REGARDING NOMINEES
Below are the names, ages, business experience during the past five
years and other directorships of the Nominees. An asterisk (*) has been placed
next to the name of each Nominee who would constitute an "interested person," as
defined in the Investment Company Act of 1940 (the "1940 Act"), by virtue of
that person's affiliation with the Fund, RIRI, Pilgrim Investments, or any of
its affiliates. The address of each Nominee is 40 North Central Avenue, Suite
1200, Phoenix, Arizona 85004.
<TABLE>
<CAPTION>
Position(s) to
be Held With
Name and Age the Fund** Principal Occupation During Past 5 Years
------------ ---------- ----------------------------------------
<S> <C> <C>
Al Burton (Age 72) Trustee President of Al Burton Productions for more than the last five
years. Mr. Burton is also a Director, Trustee or Advisory Board
Member of each of the funds managed by Pilgrim.
Paul S. Doherty Trustee President, of Doherty, Wallace, Pillsbury and Murphy, P.C.,
(Age 66) Attorneys. Formerly a Director of Tambrands, Inc. (1993-1998).
Mr. Doherty is also a Director or Trustee of each of the funds
managed by Pilgrim.
Robert B. Goode Trustee Retired. Mr. Goode was formerly Chairman, American Direct Business
(Age 69) Insurance Agency, Inc. (1996 - 2000). Mr. Goode is also a Director
or Trustee of each of the funds managed by Pilgrim.
Alan L. Gosule Trustee Partner and Chairman of the Tax Department of Clifford Chance, Rogers
(Age 59) & Wells (since 1991). Mr. Gosule is a Director of F.L. Putnam
Investment Management Co., Inc., Simpson Housing Limited Partnership,
Home Properties of New York, Inc., CORE Cap, Inc. and Colonnade
Partners. Mr. Gosule is also a Director or Trustee of each of the
funds managed by Pilgrim.
Walter H. May Trustee Retired. Mr. May was formerly Managing Director and Director of
(Age 63) Marketing for Piper Jaffray, Inc. Mr. May is also a director or
Trustee of each of the funds managed by Pilgrim.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Position(s) to
be Held With
Name and Age the Fund** Principal Occupation During Past 5 Years
------------ ---------- ----------------------------------------
<S> <C> <C>
Jock Patton (Age 54) Trustee Private Investor. Director of Hypercom Corporation (since January
1999), and JDA Software Group, Inc. (since January 1999). Mr. Patton
is also a Director of Buick of Scottsdale, Inc., National Airlines,
Inc., BG Associates, Inc., BK Entertainment, Inc., Arizona
Rotorcraft, Inc. and Director and Chief Executive Officer of Rainbow
Multimedia Group, Inc. Mr. Patton was formerly Director of Stuart
Entertainment, Inc., Director of Artisoft, Inc. (August 1994-July
1998); and a President and Co-owner of StockVal, Inc. (April 1993 -
June 1997). Mr. Patton is also a Director, Trustee, or a member of
the Advisory Board of each of the funds managed by Pilgrim.
David W.C. Putnam President, Clerk and Director of F.L. Putnam Securities Company, Inc.
(Age 60) and its affiliates (since 1978). Mr. Putnam is Director of Anchor
Investment Management Corporation and President and Director/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. Mr. Putnam was
formerly Director of Trust Realty Corp. and Bow Ridge Mining Co. Mr.
Putnam is also a Director or Trustee of each of the funds managed by
Trustee Pilgrim.
John R. Smith Trustee President of New England Fiduciary Company (since 1991). Mr. Smith is
(Age 76) Chairman of Massachusetts Educational Financing Authority (since 1987),
Vice Chairman of Massachusetts Health and Education Authority (since
1979) and Vice-Chairman of MHI, Inc. (Massachusetts Non-Profit Energy
Purchasers Consortium) (since 1996). Mr. Smith is also a Director
or Trustee of each of the funds managed by Pilgrim.
*Robert W. Stallings Trustee Chairman, Chief Executive Officer and President of Pilgrim Group,
(Age 51) Inc. ("Pilgrim Group") (since December 1994); Chairman, Pilgrim
Investments, Inc. (since December 1994); Chairman, Pilgrim
Securities, Inc. ("Pilgrim Securities") (since December 1994);
President and Chief Executive Officer of Pilgrim Funding, Inc. (since
November 1999); and President and Chief Executive Officer of Pilgrim
Capital Corporation and its predecessors (since August 1991). Mr.
Stallings is also a Director, Trustee, or a member of the Advisory
Board of each of the Pilgrim Funds.
*John G. Turner Trustee/ Chairman and Chief Executive Officer of ReliaStar Financial Corp. and
(Age 60) Chairman ReliaStar Life Insurance Co. (since 1993); Chairman of ReliaStar Life
Insurance Company of New York (since 1995); Chairman of Northern Life
Insurance Company (since 1992). Mr. Turner was formerly, Director
of Northstar Investment Management Corporation and affiliates (1993
to 1999) and President of ReliaStar Financial Corp. and ReliaStar
Life Insurance Co. (1989-1991). Mr. Turner is also Chairman of each
of the funds managed by Pilgrim.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Position(s) to
be Held With
Name and Age the Fund** Principal Occupation During Past 5 Years
------------ ---------- ----------------------------------------
<S> <C> <C>
David Wallace Trustee Chairman of FECO Engineered Systems, Inc. Mr. Wallace is President
(Age 76) and Trustee of the Robert R. Young Foundation; Governor of the New
York Hospital, Trustee of Greenwit Hospital and Director of UMC
Electronics and Zurn Industries, Inc. Mr. Wallace was formerly
Chairman of Lone Star Industries and Putnam Trust Company, Chairman
and Chief Executive Officer of Todd Shipyards, Bangor Punta
Corporation, and National Securities & Research Corporation. Mr.
Wallace is also a Director or Trustee of each of the funds managed by
Pilgrim.
</TABLE>
* An "interested person" as defined in section 2(a)(19) of the 1940 Act.
During the most recent fiscal year, the Board of Trustees met [_____]
times. Each Trustee attended more than [75%] of such meetings during which
period the Trustee served as a Trustee.
COMMITTEES
The Board of Trustees of the Fund has an Audit Committee whose function
is to meet with the independent auditors for the Fund to review the scope of the
Fund's audit, the Fund's financial statements and interim accounting controls,
and to meet with management concerning these matters, among other things. The
Committee for the Fund currently consists of Paul Doherty, Robert Goode, John
Smith, and David Wallace. Prior to November 16, 1999, the Committee consisted of
the entire Board of Trustees of the Fund. The Audit Committee met [___] during
the Fund's fiscal year ended December 31, 1999. Each member of the Audit
Committee attended ____% of such meetings.
The Board of Trustees of the Fund has a Valuation Committee whose
function is to review the determination of the value of securities held by the
Portfolios for which market quotations are not available. The Committee
currently consists of Jock Patton, Al Burton, Alan L. Gosule, Walter H. May and
David W.C. Putnam. The Valuation Committee was created on November 16, 1999 and
did not meet during the fiscal year ended December 31, 1999.
The Board of Trustees of the Fund has an Executive Committee to act for
the full Board if necessary in the event that Board action is needed between
regularly scheduled Board meetings. The Executive Committee for the Fund
consists of Robert W. Stallings, John G. Turner, Walter H. May and Jock Patton.
The Executive Committee was created on January 27, 2000, and therefore did not
meet during the fiscal year ended December 31, 1999.
The Board also has 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,
1999.] The Committee consists of Al Burton, Paul Doherty, Robert Goode, and
Walter May. Prior to November 16, 1999, the Nominating Committee consisted of
Jeri A. Eckhart, Wayne O. Jefferson, Jr., Richard C. Kaufman and David H. Roe.
5
<PAGE>
The Fund does not have a Compensation Committee.
REMUNERATION OF TRUSTEES AND OFFICERS
The Fund currently pays each Trustee who is not an "interested person"
of the adviser a pro rata share, as described below, of (i) an annual retainer
of $20,000; (ii) $5,000 per quarterly Board meeting; (iii) $500 per committee
meeting; (iv) $500 per special or telephonic meeting; and (v) out-of-pocket
expenses. The pro rata share paid by the Fund is based on the Fund's average net
assets as a percentage of the average net assets of all the funds managed by
Pilgrim Investments for which the Trustees serve in common as Directors or
Trustees or as Advisory Board Members, if applicable. Certain of the Pilgrim
Funds had different compensation schedules in place for the Trustees during
portions of 1999.
The following table sets forth the compensation paid to each of the
Trustees of the Fund for the fiscal year ended December 31, 1999, as applicable.
Trustees who are interested persons of the Fund do not receive any compensation
from the Fund. In the column headed "Total Compensation From Fund Complex Paid
to Trustees," the number in parentheses indicates the total number of investment
company boards of directors in the Pilgrim Fund complex on which the Trustee
served during that year.
6
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE 1999 COMPENSATION TOTAL COMPENSATION FROM
COMPENSATION PENSION OR RETIREMENT ESTIMATED ANNUAL FUND COMPLEX PAID TO
NAME OF PERSON AND FROM USLICO BENEFITS ACCRUED AS BENEFITS UPON TRUSTEES AND NUMBER OF
POSITION SERIES FUND PART OF FUND EXPENSE RETIREMENT BOARDS(1)
-------- ------------ -------------------- ---------- ---------
<S> <C> <C> <C> <C>
Mary A. Baldwin $ 625 N/A N/A $19,241
Trustee (2) (8 Boards)
Al Burton $ 625 N/A N/A $20,717
Trustee (2) (13 Boards)
Paul S. Doherty $ 625 N/A N/A $12,445
Trustee (3) (15 Boards)
Jeri A. Eckhart $3,000 N/A N/A $ 3,000
Trustee (4) (1 Board)
Robert B. Goode, Jr. $ 625 N/A N/A $12,062
Trustee (3) (15 Boards)
Alan S. Gosule $ 625 N/A N/A $______
Trustee (3) (15 Boards)
Wayne O. Jefferson, Jr $3,000 N/A N/A $ 3,000
Trustee (4) (1 Board)
Richard C. Kaufman $3,000 N/A N/A $ 3,000
Trustee (4) (1 Board)
Mark L. Lipson $ 0 N/A N/A $ 0
Trustee (3)(5) (15 Boards)
Walter H. May $ 625 N/A N/A $12,446
Trustee (3) (15 Boards)
Jock Patton $ 385 N/A N/A $20,415
Trustee (2) (15 Boards)
David W.C. Putnam $ 625 N/A N/A $11,202
Trustee (3) (15 Boards)
David H. Roe $3,000 N/A N/A $ 3,000
Trustee (4) (15 Boards)
John R. Smith $3,000 N/A N/A $12,445
Trustee (3) (15 Boards)
Robert W. Stallings $ 0 N/A N/A $ 0
Trustee (2)(5) (15 Boards)
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE 1999 COMPENSATION TOTAL COMPENSATION FROM
COMPENSATION PENSION OR RETIREMENT ESTIMATED ANNUAL FUND COMPLEX PAID TO
NAME OF PERSON AND FROM USLICO BENEFITS ACCRUED AS BENEFITS UPON TRUSTEES AND NUMBER OF
POSITION SERIES FUND PART OF FUND EXPENSE RETIREMENT BOARDS(1)
-------- ------------ -------------------- ---------- ---------
<S> <C> <C> <C> <C>
John G. Turner $ 0 N/A N/A $ 0
Trustee (3)(5) (15 Boards)
David W. Wallace $11,586
Trustee (3) $ 625 N/A N/A (15 Boards)
</TABLE>
----------
(1) Information provided for the fiscal year ended December 31, 1999. The fund
complex includes other investment companies in the Pilgrim group of funds.
(2) Elected a Trustee on November 16, 1999.
(3) Elected a Director/Trustee of other funds advised Pilgrim Investments on
October 26, 1999.
(4) Resigned as Trustee effective October 1, 1999.
(5) "Interested person," as defined in the 1940 Act, of the Fund.
(6) Resigned as a Trustee on June 15, 2000.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of the Fund present
at the meeting, in person or by proxy, is required to approve the election of
each Nominee for the Fund.
THE BOARD OF TRUSTEES OF THE FUND, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO.
1.
PROPOSAL NO. 2
APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT
Shareholders of the Fund are being asked to approve a new Investment
Management Agreement (the "New Agreement") between the Fund and RIRI. APPROVAL
OF THE NEW AGREEMENT IS SOUGHT SO THAT THE MANAGEMENT OF EACH PORTFOLIO CAN
CONTINUE UNINTERRUPTED AFTER THE TRANSACTION, BECAUSE THE CURRENT INVESTMENT
MANAGEMENT AGREEMENT (THE "CURRENT AGREEMENT") MAY TERMINATE AUTOMATICALLY AS A
RESULT OF THE TRANSACTION, WHICH IS DESCRIBED IN "GENERAL OVERVIEW" ABOVE.
The Transaction between ReliaStar and ING is scheduled to close in
September 2000. As a result of this transaction, ReliaStar will become a
wholly-owned subsidiary of ING America Insurance Holdings, Inc., a subsidiary of
ING. RIRI and Pilgrim Investments will remain wholly-owned subsidiaries of
ReliaStar. The change in ownership of RIRI resulting from this transaction may
be deemed under the 1940 Act to be an assignment of the Current Agreement. The
Current Agreement provides for its automatic termination upon an assignment.
Accordingly, the New Agreement between RIRI and the Fund is proposed for
8
<PAGE>
approval by shareholders of the Portfolios. A Form of the New Agreement is
attached as Appendix A to this proxy statement.
RIRI and representatives of ING have advised the Fund that currently no
change is expected in the investment advisory and other personnel in connection
with the Transaction and that it is currently anticipated the same persons
responsible for management of the Portfolios under the Current Agreement will
continue to be responsible under the New Agreement. RIRI does not anticipate
that the Transaction will cause any reduction in the quality of services now
provided to the Fund or have any adverse effect on RIRI's ability to fulfill its
obligations to the Fund.
The terms of the New Agreements are the same in all respects as the
terms of the Current Agreement, except for the dates. The Current Agreement was
last reapproved by the Fund's Board of Trustees, including a majority of the
Trustees who were not parties to the Current Agreement or interested persons of
such parties, at a Meeting of the Board of Trustees held on April 27, 2000. The
shareholders of the Portfolios last approved the Current Agreement on September
23, 1999.
At the June 13, 2000 meeting of the Board of Trustees, the New
Agreement was approved unanimously by the Board of Trustees, including all of
the Trustees who are not interested parties to the New Agreement or interested
persons of such parties. The New Agreement as approved by the Board of Trustees
is submitted for approval by the shareholders of the Portfolios.
If the New Agreement is approved by shareholders, it will take effect
immediately after the closing of the Transaction. The New Agreement will remain
in effect for two years from the date it takes effect, and, unless earlier
terminated, will continue from year to year thereafter, provided that each such
continuance is approved annually with respect to the Fund (i) by the Fund's
Board of Trustees or by the vote of a majority of the outstanding voting
securities of the Portfolios, and, in either case, (ii) by a majority of the
Fund's Trustees who are not parties to the New Agreement or "interested persons"
of any such party (other than as Trustees of the Fund).
If the shareholders of the Fund should fail to approve the New
Agreement pertaining to the Fund, the Transaction may not be consummated. If the
Transaction is not consummated, RIRI will continue to serve as adviser for the
Fund under the Current Agreement.
THE TERMS OF THE NEW AGREEMENT
The terms of the New Agreement will be the same in all respects as that
of the Current Agreement, except for the dates. The New Agreement requires RIRI
to provide, subject to the supervision of the Board of Trustees, investment
advice and investment services to the Portfolios and to furnish advice and
recommendations with respect to investment of the Portfolios' assets and the
purchase or sale of portfolio securities. RIRI also provides investment research
and analysis.
9
<PAGE>
There will be no increase in advisory fees for any of the Portfolios.
The Current Agreement provides that each Portfolio pays RIRI for its services
under the Agreement a fee at an annual rate not to exceed 0.50% of the first
$100 million of the average daily net assets of the Portfolio, and 0.45% of the
average daily net assets of the Portfolio in excess of $100 million. The Fund
has been advised that certain of the variable life insurance policies for which
the Portfolios serve as investment vehicles provide under their terms that
investment advisory fees applicable to the policies cannot exceed on an annual
basis 0.25% of average daily net assets. Each Portfolio's investment advisory
fees in excess of 0.25% of the Portfolio's average daily net assets are paid by
ReliaStar Life Insurance Company ("RL") and ReliaStar Life Insurance Company of
New York ("RLNY"). For the fiscal year ended December 31, 1999, the Portfolios
paid RIRI the following management fees: Stock Portfolio - $_______; Money
Market Portfolio - $_________; Bond Portfolio - $_______; and Asset Allocation
Portfolio - $________.
Like the Current Agreement, the New Agreement provides that RIRI is not
subject to liability to the Fund or its shareholders for any act or omission in
the course of, or connected with, rendering services under the Agreement, except
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties under the New Agreement.
Like the Current Agreement, the New Agreement may be terminated with
respect to a Portfolio at any time, without the payment of any penalty, by a
vote of a majority of the outstanding voting securities of the Portfolio or by a
vote of a majority of the Fund's Board of Trustees on 60 days' written notice to
RIRI or by RIRI on 60 days' written notice to the Fund. The New Agreement will
terminate automatically in the event of its "assignment" (as defined in the 1940
Act).
INFORMATION ABOUT RIRI
RIRI is registered as an investment adviser with the Securities and
Exchange Commission. As of June ___, 2000, RIRI managed over $________ in
assets. RIRI is a wholly-owned subsidiary of ReliaStar. Though its subsidiaries,
ReliaStar offers individuals and institutes life insurance and annuities,
employee benefits products and services, life and health reinsurance retirement
plans, mutual funds, bank products, and personal finance education. RIRI's
address is 100 Washington Avenue South, Minneapolis, MN 55401.
See Appendix C to this proxy statement for a list of the directors and
principal executive officers of RIRI and a list of other investment companies
with similar investment objectives for which RIRI acts as investment adviser.
From time to time, RIRI receives brokerage and research services from
brokers that execute securities transactions for the Fund. The commission paid
by the Fund to a broker that provides such services to RIRI may be greater than
the commission would be if the Fund used a broker that does not provide the same
level of brokerage and research services. [Additionally, RIRI may use such
services for clients other than the specific Portfolio from which the related
commissions are derived.]
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EVALUATION BY THE BOARD OF TRUSTEES
In determining whether or not it was appropriate to approve the New
Agreement and to recommend approval to shareholders, the Board of Trustees,
including the Trustees who are not interested persons of RIRI, considered
various materials and representations provided by RIRI and met with a
representative of ING. The Independent Trustees were advised by independent
legal counsel with respect to these matters.
Information considered by the Trustees included, among other things,
the following: (1) RIRI's representation that it is expected to remain intact
after the Transaction, and that the same persons currently responsible for
management of the Portfolios are expected to continue to manage the Portfolios
after the Transaction closes; (2) that the senior management personnel
responsible for the management of RIRI are expected to continue to be
responsible for the management of RIRI; (3) that the compensation to be received
by RIRI under the New Agreement is the same as the compensation paid under the
Current Agreement; (4) ING America Insurance Holdings, Inc.'s representation
that it will use reasonable best efforts to assure that an "unfair burden" (as
defined in the 1940 Act) is not imposed on the Portfolios as a result of the
Transaction; (5) the commonality of the terms and provisions of the New
Agreement and the Current Agreement; and (6) ING's financial strength and
commitment to the advisory business.
Further, the Board of Trustees reviewed its determinations reached at
the meeting of the Board of Trustees of the Fund on April 27, 2000 respecting
the Current Agreement and, with respect to the Current Agreement, (1) the nature
and quality of the services rendered by RIRI under the Agreement; (2) the
fairness of the compensation payable to RIRI under the Agreement; (3) the
results achieved by RIRI for the Portfolios; and (4) the personnel, operations
and financial condition, and investment management capabilities, methodologies,
and performance of RIRI. The Board also considered the administrative,
compliance and accounting services provided by RIRI and its affiliates to the
Portfolios and the fact that RIRI is reimbursed for its costs (up to a cap of
0.05% of each Portfolio's average daily net assets) in providing those services.
Based upon its review, the Board determined that, by approving the New
Agreement, the Portfolios can best be assured that services from RIRI will be
provided without interruption. The Board also determined that the New Agreement
is in the best interests of each Portfolio and its shareholders. Accordingly,
after consideration of the above factors, and such other factors and information
it considered relevant, the Board of Trustees unanimously approved the New
Agreement and voted to recommend its approval by the each Portfolio's
shareholders.
The effectiveness of this Proposal No. 2 is conditioned on the
consummation of the Transaction. Accordingly, in the event that the Transaction
is not consummated, RIRI will continue to manage the Fund pursuant to the
Current Agreement.
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VOTE REQUIRED
Shareholders of each Portfolio must separately approve the New
Agreement with respect to that Portfolio. Approval of this Proposal No. 2 by a
Portfolio requires an affirmative vote of the lesser of (i) 67% or more of the
shares of the Portfolio present at the Meeting if more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy, or (ii)
more than 50% of the outstanding shares of the Portfolio.
THE BOARD OF TRUSTEES OF THE FUND, INCLUDING A MAJORITY OF THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 2.
PROPOSAL NO. 3
APPROVAL OF SUB-ADVISORY AGREEMENT
(STOCK PORTFOLIO AND ASSET ALLOCATION PORTFOLIO ONLY)
Pilgrim Investments serves as Sub-Adviser to the Stock Portfolio and
the equity portion of the Asset Allocation Portfolio. Shareholders of the Stock
and Asset Allocation (each a "Sub-Advised Portfolio") are being asked to approve
a new Sub-Advisory Agreement with Pilgrim Investments, for that Portfolio.
SHAREHOLDER APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT (THE "NEW SUB-ADVISORY
AGREEMENT") IS BEING SOUGHT SO THAT THE MANAGEMENT OF EACH SUB-ADVISED PORTFOLIO
CAN CONTINUE UNINTERRUPTED AFTER THE TRANSACTION, BECAUSE THE TRANSACTION MAY
TERMINATE AUTOMATICALLY THE CURRENT SUB-ADVISORY AGREEMENT (THE "CURRENT
SUB-ADVISORY AGREEMENT") FOR THE SUB-ADVISED PORTFOLIOS. The New Sub-Advisory
Agreement is included as Appendix B.
The New Sub-Advisory Agreement must be voted upon separately by each
Sub-Advised Portfolio. If the New Sub-Advisory Agreement is approved by
shareholders of a Sub-Advised Portfolio, it will take effect immediately after
the closing of the Transaction. It will remain in effect for two years from the
date it takes effect, and, unless earlier terminated, will continue in effect
from year to year thereafter, provided that each such continuance is approved at
least annually (i) by the Fund's Board of Trustees or by the vote of a majority
of the outstanding voting securities of the particular Sub-Advised Portfolio,
and, in either case, (ii) by a majority of the Fund's Trustees who are not
parties to the New Sub-Advisory Agreement or "interested persons" of any such
party (other than as Trustees of the Fund).
At the June 13, 2000 meeting of the Board of Trustees, the New
Sub-Advisory Agreement was approved unanimously by the Board of Trustees,
including all of the Trustees who are not interested parties to the New
Sub-Advisory Agreement or interested persons of such parties.
If the shareholders of a Sub-Advised Portfolio should fail to approve
the New Sub-Advisory Agreement that pertains to that Portfolio, the Sub-Adviser
may continue to serve in that capacity with respect to the other Portfolio whose
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shareholders approved the New Sub-Advisory Agreement. In such an event, the
Board of Trustees shall meet to consider appropriate action.
TERMS OF THE NEW SUB-ADVISORY AGREEMENT
The New Sub-Advisory Agreement, like the Current Sub-Advisory Agreement
requires Pilgrim Investments to provide, subject to the supervision of RIRI and
the Board of Trustees, a continuous investment program for the Stock Portfolio
and the equity portion of the Asset Allocation Portfolio and to determine the
composition of the assets of the Sub-Advised Portfolios, including directing the
purchase, retention and sale of investments of the Portfolios, in accordance
with the Portfolios' investment objectives, policies, and restrictions.
The New Sub-Advisory Agreement, like the Current Sub-Advisory
Agreement, requires the Sub-Adviser to provide, subject to supervision by the
Board of Trustees and RIRI, a continuous investment program for the Stock
Portfolio and the equity portion of the Asset Allocation Portfolio, and to
determine the composition of the assets of the Sub-Advised Portfolios, including
determination of the purchase, retention, or sale of the securities, cash and
other investments for the Sub-Advised Portfolios, in accordance with the
Sub-Advised Portfolios' investment objectives, policies and restrictions.
The fees payable to Pilgrim Investments, which are paid by RIRI and not
by the Sub-Advised Portfolios, will remain the same under the New Sub-Advisory
Agreement. The New Sub-Advisory Agreement provides that RIRI, at its own
expense, will pay Pilgrim Investments an annual fee equal to 0.45% of the
average daily net assets of the Stock Portfolio and the equity portion of the
Asset Allocation Portfolio.
Like the Current Sub-Advisory Agreement, the New Sub-Advisory Agreement
provides that Pilgrim Investments is not subject to liability for any error of
judgment, mistaken of law, or loss suffered by the Portfolios or their
shareholders in rendering the services under the New Sub-Advisory Agreement
except by reason of Pilgrim Investment's willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of Pilgrim Investment's
reckless disregard of its obligations and duties under the New Sub-Advisory
Agreement.
The termination provisions of the New Sub-Advisory Agreement are the
same as those of the Current Sub-Advisory Agreement. The New Sub-Advisory
Agreement may be terminated on 60 days' notice to Pilgrim Investments by either
the Portfolio or RIRI upon the vote of a majority of the Trustees or by vote of
a majority of a Portfolio's outstanding voting securities or by Pilgrim
Investments on (60) days' notice to the Fund or RIRI. The New Sub-Advisory
Agreement will terminate automatically five business days after Pilgrim
Investments receives notice of the termination of the Investment Management
Agreement. The New Sub-Advisory Agreement will also terminate automatically in
the event of its "assignment" (as defined in the 1940 Act).
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INFORMATION ABOUT PILGRIM INVESTMENTS
Organized in December 1994, Pilgrim Investments is registered as an
investment adviser with the Securities and Exchange Commission. As of May 31,
2000, Pilgrim Investments managed over $15.9 billion in assets. Pilgrim
Investments is an indirect wholly-owned subsidiary of ReliaStar. Through its
subsidiaries, ReliaStar offers individuals and institutions life insurance and
annuities, employee benefits products and services, life and health reinsurance,
retirement plans, mutual funds, bank products, and personal finance education.
Prior to April 30, 2000, Pilgrim Advisors, Inc. ("Pilgrim Advisors")
served as investment adviser to the Sub-Advised Portfolios. On April 30, 2000,
Pilgrim Advisors, also an indirect wholly-owned subsidiary of ReliaStar, merged
with Pilgrim Investments, and Pilgrim Investments is the surviving corporation
from that merger. Pilgrim Investments' principal address is 40 North Central
Avenue, Suite 1200, Phoenix, Arizona 85004.
RECOMMENDATION OF TRUSTEES
In determining whether or not it was appropriate to approve the New
Sub-Advisory Agreement for the Stock and Asset Allocation Portfolios of the Fund
and to recommend approval to shareholders, the Board of Trustees, including the
Trustees who are not interested persons of Pilgrim Investments, considered
various materials and representations provided by Pilgrim Investments and met
with a representative of ING. The Independent Trustees were advised by
independent legal counsel with respect to these matters.
Information considered by the Trustees included, among other things,
the following: (1) Pilgrim Investments' representation that it is expected to
remain intact after the Transaction, and that the same persons currently
responsible for management of the Portfolios are expected to continue to manage
the Portfolios after the Transaction closes; (2) that the senior management
personnel responsible for the management of Pilgrim Investments are expected to
continue to be responsible for the management of Pilgrim Investments; (3) that
the compensation to be received by Pilgrim Investments under the New
Sub-Advisory Agreement is the same as the compensation paid under the Current
Sub-Advisory Agreement; (4) ING America Insurance Holdings, Inc.'s
representation that it will use reasonable best efforts to assure that an
"unfair burden" (as defined in the 1940 Act) is not imposed on the Portfolios as
a result of the Transaction; (5) the commonality of the terms and provisions of
the New Sub-Advisory Agreement and the Current Sub-Advisory Agreement; and (6)
ING's financial strength and commitment to the advisory business.
Further, the Board of Trustees reviewed its determinations reached at
the meeting of the Board of Trustees held on April 27, 2000 respecting the
Current Sub-Advisory Agreement and, with respect to the Current Sub-Advisory
Agreement, (1) the nature and quality of the services rendered by Pilgrim
Investments under the Agreement; (2) the fairness of the compensation payable to
Pilgrim Investments under the Agreement; (3) the results achieved by Pilgrim
Investments for the Stock Portfolio and the equity portion of the Asset
Allocation Portfolio; and (4) the personnel, operations and financial condition,
14
<PAGE>
and investment management capabilities, methodologies, and performance of
Pilgrim Investments.
Based upon its review, the Board has determined that, by approving the
New Sub-Advisory Agreement, the Stock and Asset Allocation Portfolios can best
be assured that services from Pilgrim Investments will be provided without
interruption. The Board believes that retaining Pilgrim Investments is in the
best interests of the Stock and Asset Allocation Portfolios and their
shareholders. Accordingly, after consideration of the above factors, and such
other factors and information it considered relevant, the Board of Trustees
unanimously approved the New Sub-Advisory Agreement and voted to recommend its
approval by the shareholders of the Stock and Asset Allocation Portfolios of the
Fund.
The effectiveness of this Proposal No. 3 is conditioned on the
consummation of the Transaction. Accordingly, in the event that the Transaction
is not consummated, Pilgrim Investments will continue to manage the Stock
Portfolio and the equity portion of the Asset Allocation Portfolio pursuant to
the Current Sub-Advisory Agreement.
VOTE REQUIRED
Shareholders of the Stock Portfolio and the Asset Allocation Portfolio
must separately approve the New Sub-Advisory Agreement with respect to that
Portfolio. Approval of this Proposal No. 3 by a Portfolio requires an
affirmative vote of the lesser of (i) 67% or more of the shares of the Portfolio
present at the meeting if more than 50% of the outstanding shares of the
Portfolio are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Portfolio.
THE BOARD OF TRUSTEES, INCLUDING A MAJORITY OF THE INDEPENDENT
TRUSTEES, RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 3.
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
Management of the Fund does not know of any matters to be presented at
the Meeting other than those described in this Proxy Statement. If other
business should properly come before the Meeting, the proxy holders will vote
thereon in accordance with their best judgment.
SECTION 15(f) OF THE INVESTMENT COMPANY ACT
ING America Insurance Holdings, Inc. and ReliaStar, the indirect parent
company of RIRI and Pilgrim Investments, have agreed to use their reasonable
best efforts to assure compliance with the conditions of Section 15(f) of the
1940 Act, as amended. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser or any affiliated persons thereof to receive any amount or
benefit in connection with a transaction that results in a change in control of
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<PAGE>
or identity of the investment adviser to an investment company as long as two
conditions are met. First, no "unfair burden" may be imposed on the investment
company as a result of the transaction relating to the change of control, or any
express or implied terms, conditions or understandings applicable thereto. As
defined in the 1940 Act, the term "unfair burden" includes any arrangement
during the two-year period after the change in control whereby the investment
adviser (or predecessor or successor adviser), or any interested person of any
such adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its security holders (other than fees
for bona fide investment advisory or other services), or from any person in
connection with the purchase or sale of securities or other property to, from,
or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter of the investment company). Second, during
the three year period immediately following the change of control, at least 75%
of an investment company's board of directors/trustees must not be "interested
persons" of the investment adviser or the predecessor investment adviser within
the meaning of the 1940 Act, as amended.
VOTING RIGHTS
Shares of the Portfolios were sold only to separate accounts of
insurance companies ("Separate Accounts") and were used to fund variable life
insurance policies ("Variable Contracts"). The Variable Contract were offered by
ReliaStar Life Insurance Company and ReliaStar Life Insurance Company of New
York (the "Affiliated Insurance Companies").
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
Separate 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 Separate Accounts for
which no voting instructions have been received in the same proportion as it
votes shares held by that Separate 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 Separate 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 any 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.
June 19, 2000 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
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close of business on June 19, 2000 ("Record Date") there were the following
shares of the Stock, Asset Allocation, Money Market, and Bond Portfolios,
respectively, outstanding: _______, _________, _________, and ________.
To the knowledge of the Fund, the Trustees and officers of the Fund as
a group beneficially owned less than 1% of the outstanding shares of the Fund as
of ______, 2000. ReliaStar, the ultimate parent company of RIRI and Pilgrim
Investments, directly or through its Affiliated Insurance 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. 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.
SOLICITATION OF PROXIES
Solicitation of proxies is being made primarily by the mailing of this
Notice and Proxy Statement with its enclosures on or about _________,2000.
A Variable Contract Owner may revoke the accompanying proxy at any time
prior to its use by filing with the Fund a written revocation or duly executed
proxy bearing a later date. In addition, any Variable Contract Owner who attends
the Meeting in person may vote by ballot at the Meeting, thereby canceling any
proxy previously given. The persons named in the accompanying proxy will vote as
directed by the proxy, but in the absence of voting directions in any proxy that
is signed and returned, they intend to vote "FOR" each of the proposals and may
vote in their discretion with respect to other matters not now known to the
Board of the Fund that may be presented at the Meeting.
EXPENSES
Pilgrim Investments or an affiliate, or ING, will pay the expenses of
the Fund in connection with this Notice and Proxy Statement and the Meeting,
including the printing, mailing, solicitation and vote tabulation expenses,
legal fees, and out of pocket expenses. The Fund will not bear the expenses of
the Proxy Statement.
ADVISER, SUB-ADVISER, AND PRINCIPAL UNDERWRITER
RIRI is located at 100 Washington Avenue, South, Minneapolis, Minnesota
55401, and serves as the investment adviser to the Fund. Pilgrim Investments is
located at 40 North Central Avenue, Suite 1200, Phoenix, Arizona 85004, and
serves as sub-adviser to the Stock Portfolio and the equity portion of the Asset
Allocation Portfolio.
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Shares of the Fund are continuously distributed through Washington
Square Securities, Inc., a wholly-owned subsidiary of ReliaStar, which is the
100% owner of RL and RLNY. The Fund entered into a distribution agreement, with
Washington Square Securities, Inc. on February 1, 1997 which was last renewed on
April 27, 2000. Washington Square Securities, Inc., a registered broker-dealer
under the Securities Act of 1934, as amended, and member of the National
Association of Securities Dealers, Inc., receives no remuneration from the Fund
for distributing shares of the Portfolios. Its address is 111 Washington Ave.
S., Minneapolis, MN 55401. A list of Directors and Principal Executive Officers
of Pilgrim Investments is found in Appendix E.
EXECUTIVE OFFICERS OF THE FUND
Officers of the Fund are elected by the Board and hold office until
they resign, are removed or are otherwise disqualified to serve. The principal
executive officers of the Fund, together with such person's position with the
Fund and principal occupation for the last five years, are listed on Appendix D
attached hereto.
SHAREHOLDER PROPOSALS
The Fund is not required to hold annual meetings of shareholders and
currently does not intend to hold such a meeting unless shareholder action is
required in accordance with the 1940 Act. A shareholder proposal to be
considered for inclusion in the proxy statement at any subsequent meeting of
shareholders must be submitted at a reasonable time before the proxy statement
for that meeting is mailed. Whether a proposal is submitted in the proxy
statement will be determined in accordance with applicable federal and state
laws.
REPORTS TO SHAREHOLDERS
The Fund will furnish, without charge, a copy of the Annual Report and
the most recent Semi-Annual Report on request. Requests for such reports should
be directed to Pilgrim Investments at 40 North Central Avenue, Suite 1200,
Phoenix, Arizona 85004 or at (800) 992-1080.
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
JAMES M. HENNESSY, Secretary
June 28, 2000
40 North Central Avenue
Suite 1200
Phoenix, Arizona 85004
(800) 992-0180
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APPENDICES
Appendix A Form of Investment Management Agreement between ReliaStar
Investment Research, Inc. and the USLICO Series Fund.
Appendix B Form of USLICO Series Fund Stock Portfolio and USLICO Series Fund
Asset Allocation Portfolio Sub-Advisory Agreement.
Appendix C Directors and Principal Executive Officers of ReliaStar Investment
Research, Inc.
Appendix D Principal Executive Officers of the USLICO Series Fund
Appendix E Directors and Principal Executive Officers of Pilgrim Investments,
Inc.
<PAGE>
APPENDIX A
FORM OF INVESTMENT MANAGEMENT AGREEMENT FOR USLICO SERIES FUND
INVESTMENT MANAGEMENT AGREEMENT
Agreement dated _________________, 2000 between USLICO Series Fund (the
"Fund") and ReliaStar Investment Research, Inc. (the "Adviser").
WITNESSETH:
WHEREAS, the Fund is an open-end, diversified investment company
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
the securities of which are registered under the Securities Act of 1933, as
amended (the "1933 Act"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 as amended (the "Advisers Act"); and
WHEREAS, the Fund is authorized to issue shares of beneficial interest
("Shares") in separate classes or portfolios, with each such portfolio
representing interests in a separate portfolio of securities and other assets;
and
WHEREAS, the Fund has initially established four portfolios, designated
the Money Market Portfolio, the Stock Portfolio, the Bond Portfolio, and the
Asset Allocation Portfolio, such portfolios together with all other portfolios
subsequently established by the Fund with respect to which the Fund desires to
retain the Adviser to render investment advisory services hereunder and with
respect to which the Adviser is willing so to do being herein collectively
referred to as the "Portfolios".
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties as follows:
1. The Fund hereby appoints the Adviser to act as investment adviser to
the Fund with respect to the Portfolios for the period and on the terms set
forth in this Agreement. The Adviser accepts such appointment and agrees to
tender the services herein set forth, for the compensation herein provided.
In the event the Fund establishes one or more additional portfolios
with respect to which it desires to retain the Adviser to render management and
investment advisory services hereunder, it shall notify the Adviser in writing.
If the Adviser is willing to render such services it shall notify the Fund in
writing, whereupon such class shall become a Portfolio hereunder.
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2. The Fund has delivered properly certified or authenticated copies of
each of the following documents to the Adviser and will deliver to it all future
amendments and supplements thereto, if any:
(a) a certified resolution of the Board of Trustees of the Fund
authorizing the appointment of the Adviser and approving the form of this
Agreement;
(b) the Registration Statements as filed by the Fund under the
1940 Act and the 1933 Act with the Securities and Exchange Commission (the
"Registration Statement"), including the Fund's Prospectus and Statement of
Additional Information, and any amendments or supplements thereto;
(c) exhibits, powers of attorneys, certificates and any and all
other documents relating to or filed in connection with the Registration
Statement described above.
3. The Adviser agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained
by the Adviser with respect to the Fund by the 1940 Act. The adviser further
agrees that all records which it maintains for the Fund are the property of the
Fund and it will promptly surrender any of such records upon request.
4. (a) The Adviser shall provide to the Fund investment guidance and
policy direction in connection with the management of the Portfolio of the Fund,
including oral and written research, analysis, advice, and statistical and
economic data and information.
Consistent with the investment objectives, policies and restrictions
applicable to the Fund and its Portfolios, the Adviser will determine the
securities and other assets to be purchased or sold by each Portfolio of the
Fund and will determine what portion of each Portfolio shall be invested is
securities or other assets, and what portion, if any, should be held uninvested.
The Fund will have the benefit of the investment analysis and research,
the review of current economic conditions and trends and the consideration of
long-range investment policy generally available to investment advisory clients
of the Adviser. It is understood that the Adviser will not use any inside
information pertinent to investment decisions undertaken in connection with this
Agreement that may be in its possession or in the possession of any of its
affiliates, nor will the Adviser seek to obtain any such information.
(a) The Adviser also shall provide to the officers of the Fund
administrative assistance in connection with the operation of the Fund and the
Portfolios, which shall include (i) compliance with all reasonable requests of
the Fund for information, including information required in connection with the
Fund's filings with the Securities and Exchange Commission and state securities
commissions, and (ii) such other services as the Fund's officers shall from time
to time determine to be necessary or useful to the administration of the Fund
and the Portfolios.
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(b) As manager of the assets of the Portfolios, the Adviser shall
make investments for the account of the Portfolios in accordance with the
Adviser's best judgment and within the investment objectives, policies and
restrictions set forth in the Prospectus, the 1940 Act and the provisions of the
Internal Revenue Code relating to regulated investment companies, subject to
policy decisions adopted by the Fund's Board of Trustees. In connection
therewith, the Adviser shall place orders for the purchase and sale of
securities and other assets either directly with the issue or with any
broker-dealer. The Adviser is authorized to select brokers and dealers and to
open and maintain brokerage accounts and trading accounts for the purchase and
sale of securities and options with broker-dealers for and on behalf of the
Portfolios in accordance with procedures, if any, established by the Adviser and
approved by the Fund's Board of Trustees.
(c) The Adviser shall furnish to the Fund's Board of Trustees
periodic reports on the investment performance of the Fund and its Portfolios
and on the performance of its obligations under this Agreement and shall supply
such additional reports and information as the Fund's officers or Board of
Trustees shall reasonably request.
(d) On occasions when the Adviser deems the purchase or sale of a
security to be in the best invest of a Portfolio as well as other of its
clients, the Adviser, to the extent permitted by applicable law, may aggregate
the securities to be sold or purchased in order to obtain the best execution or
lower brokerage commissions, if any. The Adviser may also on occasion purchase
or sell a particular security for one or more clients in different amounts. On
either occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to such other customers.
(e) The Adviser may cause a Portfolio to pay a broker which
provides brokerage and research services to the Adviser a commission for
effecting a securities transaction in excess of the amount another broker might
have charged. Such higher commissions may not be paid unless the Adviser
determines in good faith that the amount paid is reasonable in relation to the
services received in terms of the particular transaction or the Advisers overall
responsibilities to the Fund and any other of the Adviser's clients.
(f) In connection with the purchase and sale of securities of each
Portfolio, the Adviser will arrange for the transmission to the Fund's Custodian
or other agent on a daily basis, such confirmations, trade tickets and other
documents and shall provide information reasonably requested by the Fund's
Custodian or other agent for helping such agent perform its administrative
responsibilities to the Fund including responsibility to identify securities to
be purchased or sold by the Fund, to determine the value of the Funds portfolio
securities and other assets and to determine the Fund's net asset value per
share. With respect to portfolio securities to be purchased or sold through the
Depository Trust Company, the Adviser will arrange for the automatic
transmission of the confirmation of such trades to the Fund's custodian.
5. The Adviser shall give the Fund the benefit of the Adviser's best
judgment and efforts in rendering services under this Agreement. As an
inducement to the Adviser's undertaking to render these services, the Fund
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agrees that the Adviser shall not be liable under this Agreement for any mistake
in judgment or in any other event whatsoever, provided that nothing in this
Agreement shall be deemed to protect or purport to protect -------- the Adviser
against any liability to the Fund or its shareholders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance or the Adviser's duties under this Agreement or by
reason of the Adviser's reckless disregard of as obligation and duties
hereunder.
6. (a) The Adviser shall, at its expense, (i) employ or associate with
itself such persons as it believes appropriate to assist it in performing its
obligations under this Agreement and (ii) provide all services. equipment and
facilities necessary to perform its obligations under this Agreement.
(b) Subject to the approval of the Fund's Board of Trustees and,
to the extent required by law, the Shareholders of Portfolios, the Adviser may
contract with such other parties as it deems appropriate to obtain investment
research, information, investment advisory and management services and other
assistance, but any fees, compensation or expenses to be paid to any such party
shall be paid by the Adviser, and no obligation shall be incurred on the Fund's
behalf in any respect.
(c) The Fund shall be responsible for all of its expenses and
liabilities, including compensation of its trustees who are not affiliated with
the Adviser; taxes and governmental fees; interest charges; fees and expenses of
the Fund's independent accountants and legal counsel; trade association
membership dues; fees and expenses of any custodian (including maintenance of
books and accounts and calculation of the net asset value of the Fund's Shares),
transfer agent, registrar and dividend disbursing agent of the Fund; expenses of
issuing, selling, redeeming, registering and qualifying the Shares for sale;
expenses of preparing and printing share certificates, prospectuses and reports
to shareholders; notices, proxy statements, reports to regulatory agencies and
any postage and mailing expenses associated with such distributions; the cost of
office supplies, including stationery; travel expenses of all officers, trustees
and employees; insurance premiums; brokerage and other expenses of executing
portfolio transactions; expenses of shareholders' meetings; organizational
expenses; and extraordinary expenses.
7. In consideration of the services to be rendered by the Adviser under
this Agreement, each Portfolio of the Fund shall pay the Adviser fee, calculated
each day based on the Portfolio's daily net assets (as determined on each
business day at the time set forth in the Prospectus for determining net asset
value per share) at a maximum annual rate of 0.50% of the first $100 million of
the Portfolio's net assets and 0.45% of the Portfolio's net assets in excess of
$100 million.
8. (a) This Agreement shall become effective with respect to the
Portfolios on _____________, 2000 (and, with respect to any additional
portfolio, the date specified in a supplement to the Agreement) and shall
continue in effect with respect to a Portfolio for a period of more than two
years from that date (or, with respect to additional Portfolio, the date
specified in a supplement to this Agreement) only so long as the continuance is
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specifically approved at least annually (i) by the Vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Portfolios or
by the Fund's Board of Trustees and (ii) by the vote, cast in person at a
meeting called for the purpose, of a majority of the Fund's Trustees who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party.
(b) This Agreement may be terminated with respect to a Portfolio
(or any additional Portfolio) at any time, without the payment of any penalty,
by a vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Portfolios or by a vote of a majority of the Fund's entire
Board of Trustees on 60 days' written notice to the Adviser or by the Adviser on
60 days' written notice to the Fund. This Agreement will terminate automatically
in the event of its assignment (as defined in the 1940 Act).
9. Except to the extent necessary to perform the Adviser's obligations
under this Agreement, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, of any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
10. The investment management services of the Adviser to the Fund under
this Agreement are not to be deemed exclusive as to the Adviser and the Adviser
will be free to render similar services to others.
11. This Agreement shall be construed in accordance with the laws of
the State of Minnesota, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act.
12. The Adviser agrees that it will keep confidential and not disclose
or use any records of or information in its possession relating to the Fund
obtained pursuant to this Agreement in any manner whatsoever except as expressly
authorized in this Agreement, and will keep confidential any information
obtained pursuant to the investment, advisory relationship, and disclose such
information only if the Fund has authorized such disclosure, or if such
disclosure is expressly required by federal or state regulatory authorities.
13. Notices of any kind, to be given to the Adviser by the Fund shall
be in writing and shall be duly given if mailed or delivered to the Adviser at
_______________, or at such other address or to such individual as shall be
specified by the Adviser to the Fund. Notices of any kind to be given to the
Fund by the Adviser shall be in writing and shall be given if mailed or
delivered to __________________, or at such other address or to such individual
as shall be specified by the Fund to the Adviser.
14. The Declaration of Trust establishing the Fund, filed on January
19, 1988, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the Office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "USLICO Series Fund" refers to the
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Trustees under the Declaration collectively as trustees and not as individuals
or personally, and that no shareholder, trustee, officer, employee or agent of
the Fund shall be subject to claims against or obligations of the Fund to any
extent whatsoever, but that the Fund estate only shall be liable.
15. The Fund acknowledges receipt of Part II of the Advisees Form ADV
which is on file with the Securities and Exchange Commission.
If the foregoing correctly sets forth the agreement between the Fund
and the Adviser, please so indicate by signing and returning to the Fund the
enclosed copy hereof.
USLICO SERIES FUND
By:
------------------------------------
Name:
Title:
Accepted:
RELIASTAR INVESTMENT RESEARCH, INC.
By:
----------------------------------
Name:
Title:
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APPENDIX B
FORM OF SUB-ADVISORY AGREEMENT BETWEEN RIRI AND PILGRIM INVESTMENTS, INC.
USLICO SERIES FUND STOCK PORTFOLIO AND
USLICO SERIES FUND ASSET ALLOCATION PORTFOLIO
SUB-ADVISORY AGREEMENT
AGREEMENT made this ___ day of September, 2000 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 Pilgrim Investments,
Inc., 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 Management Agreement dated
September ___, 2000 (the "Investment Management 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 covenants
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 an 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
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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;
(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 further 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 US. federal income tax purposes.
3. 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.
4. The Sub-Adviser farther 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
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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 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, ReliaStar
Life Insurance Company (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 them to, 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).
5. ALLOCATION OF CHARGES AND EXPENSES. The Sub-Adviser shall pay
expenses associated with the management of its business operations in performing
its responses 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);
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(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;
(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.
6. 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 asset value" of the Assets shall mean the value placed on the
Assets as of 4:00 p.m. (New York time) an 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
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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.
7. 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 91a-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 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.
8. 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.
9. 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 Shareholders 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.
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10. 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 the Sub-Adviser receives written notice
of the termination of the Investment Management Agreement. This Sub-Advisory
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
11. AMENDMENTS. No provision of this Sub-Advisory 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.
12. INDEMNIFICATION BY THE FUND. (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
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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 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 provisions. 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 comment shall not be unreasonably
withheld.
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13. 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.
14. USE OF NAME. (a) The Portfolios may, subject to sub-clause (b)
below, use the name, "Pilgrim Investments, Inc." or "Pilgrim" 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 Pilgrim
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
Pilgrim Investments, Inc. or any derivation of the name Pilgrim shall at all
times be owned and be the sole and exclusive property of Pilgrim and its
affiliated entities. Pilgrim Investments, Inc., by entering into this Agreement,
is allowing the Portfolios to use the name Pilgrim Investments, Inc. and/or
Pilgrim solely by or on behalf of the Portfolios. At the conclusion of the
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 Pilgrim
Investments, Inc. and/or Pilgrim 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 and 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.
15. MISCELLANEOUS.
(a) The 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-8
<PAGE>
(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.
16. 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.
17. 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 Pilgrim
Investments, Inc.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument to
be executed by their officers designated below as of September ___, 2000.
Pilgrim Investments, Inc.
By:
------------------------------------
ReliaStar Investment Research, Inc.
By:
------------------------------------
B-9
<PAGE>
APPENDIX C
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF RIRI
Set forth below is the name and principal occupation of the principal
executive officer and each director of ReliaStar Investment Research, Inc. The
business address of each such person is ______________.
[TO BE PROVIDED]
C-1
<PAGE>
APPENDIX D
The following persons currently are principal executive officers of USLICO
Series Fund (unless otherwise noted, the mailing address of the officers is 40
North Central Avenue, Suite 1200, Phoenix, Arizona 85004):
Robert W. Stallings, CHIEF EXECUTIVE OFFICER AND PRESIDENT. (Age 51)
Chairman, Chief Executive Officer and President of Pilgrim Group, Inc.
("Pilgrim Group") (since December 1994); Chairman, Pilgrim Investments,
Inc. (since December 1994); Chairman, Pilgrim Securities, Inc. ("Pilgrim
Securities") (since December 1994); President and Chief Executive Officer
of Pilgrim Funding, Inc. (since November 1999); and President and Chief
Executive Officer of Pilgrim Capital Corporation and its predecessors
(since August 1991). Mr. Stallings is also a Director, Trustee, or a member
of the Advisory Board of each of the Pilgrim Funds.
James R. Reis, EXECUTIVE VICE PRESIDENT AND ASSISTANT SECRETARY. (Age 42)
Director, Vice Chairman (since December 1994), Executive Vice President
(since April 1995), and Director of Structured Finance (since April 1998),
Pilgrim Group and Pilgrim Investments; Director (since December 1994) and
Vice Chairman (since November 1995) of Pilgrim Securities; Executive Vice
President, Assistant Secretary and Chief Credit Officer of Pilgrim Prime
Rate Trust; Executive Vice President and Assistant Secretary of each of the
other Pilgrim Funds. Presently serves or has served as an officer or
director of other affiliates of Pilgrim Capital Corporation.
James M. Hennessy, EXECUTIVE VICE PRESIDENT AND SECRETARY. (Age 51)
Executive Vice President and Secretary, Pilgrim Capital Corporation and its
predecessors (since April 1998). Executive Vice President and Secretary
(since April 1998), Pilgrim Group, Pilgrim Securities and Pilgrim
Investments; Executive Vice President and Secretary of each of the Pilgrim
Funds. Formerly Senior Vice President, Pilgrim Capital Corporation and its
affiliates (April 1995 - April 1998).
Michael J. Roland, SENIOR VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER.
(Age 42) Senior Vice President and Chief Financial Officer, Pilgrim Group,
Pilgrim Investments and Pilgrim Securities (since June 1998); Senior Vice
President and Principal Financial Officer of each of the Pilgrim Funds. He
served in same capacity from January, 1995 - April, 1997. Formerly, Chief
Financial Officer of Endeavor Group (April 1997 to June 1998).
Robert S. Naka, SENIOR VICE PRESIDENT AND ASSISTANT SECRETARY. (Age 37)
Senior Vice President, Pilgrim Investments (since November 1999) and
Pilgrim Group, Inc. (since August 1999). Senior Vice President and
Assistant Secretary of each of the Pilgrim Funds. Formerly Vice President,
Pilgrim Investments (April 1997 - October 1999), Pilgrim Group, Inc.
Formerly Assistant Vice President, Pilgrim Group, Inc. (August 1995 -
February 1997).
David P. Wilken, TREASURER. (Age 36) Second Vice President of ReliaStar
Life Insurance Company (since 1995); Assistant Vice President of RLNY; and
Affiliated with ReliaStar Life since 1997.
D-1
<PAGE>
APPENDIX E
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF PILGRIM INVESTMENTS, INC.
Set forth below is the name and principal occupation of the principal
executive officer and each director of Pilgrim Investments, Inc. The business
address of each such person is 40 North Central Avenue, Suite 1200, Phoenix,
Arizona 85004.
POSITION WITH PILGRIM
<TABLE>
<CAPTION>
NAME AND AGE INVESTMENTS PRINCIPAL OCCUPATION DURING THE LAST FIVE YEARS
------------ ----------- -----------------------------------------------
<S> <C> <C>
Robert W. Stallings(51) Chairman of the Board Chairman, Chief Executive Officer and
of Directors President of Pilgrim Group, Inc. ("Pilgrim
Group") (since December 1994); Chairman,
Pilgrim Investments, Inc. ("Pilgrim
Investments") (since December 1994);
Chairman, Pilgrim Securities, Inc. ("Pilgrim
Securities") (since December 1994); President
and Chief Executive Officer of Pilgrim
Funding, Inc. (since November 1999); and
President and Chief Executive Officer of
Pilgrim Capital Corporation and its
predecessors since August 1991. Mr. Stallings
is also a Director, Trustee, or a member of
the Advisory Board of each of the Pilgrim
Funds.
James R. Reis (42) Finance Director, Vice Chairman (since December
1994); Executive Vice President (since April
1995) a Director of Structured Finance (since
April 1998), Pilgrim Group, Inc. and Pilgrim
Investments; Director Director, Vice
____________ (since December 1994) Vice
Chairman (since November 1995) of Pilgrim
Chairman, Executive Securities; Executive
Vice President, Assistant Secretary and Chief
Vice President and Credit Officer of Pilgrim
Prime Rate Trust; Executive Vice President
Director of Senior and Assistant Secretary of
each of the other Pilgrim Funds. Lending and
Structured Presently serves or has served as
an officer or director of other affiliates of
Pilgrim Capital Corporation.
Stanley D. Vyner President and Chief President and Chief Executive Officer (since
(49) Executive Officer August 1996), Pilgrim Investments; Executive
Vice President of most of the Pilgrim Funds
(since July 1996). Formerly Chief Executive
Officer (November 1993 - December 1995) HSBC
Asset Management Americas, Inc.
</TABLE>
E-1
<PAGE>
USLICO SERIES FUND
The undersigned hereby instructs Robert W. Stallings or James M. Hennessy
(Proxies) to vote the shares held by him at the Special Meeting of Shareholders
of the USLICO Series Fund to be held at 10:00 a.m., local time, on August 18,
2000 at 40 North Central Avenue, Suite 1200, Phoenix, Arizona 85004 and at any
adjournment thereof, in the manner directed below with respect to the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, and in the Proxies' discretion, upon such other matters as may
properly come before the meeting or any adjournment thereof.
Please vote, sign and date this voting instruction and return it in the enclosed
envelope.
These voting instructions will be voted as specified. IF NO SPECIFICATION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL PROPOSALS.
TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY URGE YOU TO
REVIEW, COMPLETE AND RETURN YOUR BALLOT AS SOON AS POSSIBLE. YOUR VOTE IS
IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
Please indicate your vote by an "x" in the appropriate box below.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS.
<TABLE>
<CAPTION>
For Against For all
All All Except Abstain
<S> <C> <C> <C> <C>
1. To elect eleven Trustees to serve until their
successors are elected and qualified. [ ] [ ] [ ] [ ]
</TABLE>
Nominees: Al Burton Walter H. May, Jr. John R. Smith
Paul S. Doherty Jock Patton Robert W. Stallings
Robert B. Goode, Jr. David W. C. Putnam John G. Turner
Alan L. Gosule David W. Wallace
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR
ALL EXCEPT" BOX AND STRIKE THROUGH THAT NOMINEE'S NAME.
2. To approve a new Investment Management For Against Abstain
Agreement between the Fund and ReliaStar [ ] [ ] [ ]
Investment Research, Inc. ("RIRI").
3. Approve a new Sub-Advisory Agreement with For Against Abstain
respect to the Fund's Stock and Asset [ ] [ ] [ ]
Allocation Portfolios between RIRI and
Pilgrim Investments, Inc.
4. To transact such other business as may For Against Abstain
properly come before the Meeting of [ ] [ ] [ ]
Shareholders or any adjournments thereof
<PAGE>
This proxy must be signed exactly as your name(s) appears hereon. If as an
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add titles as such. Joint owners must each sign.
------------------------------- ------------------
Signature Date
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Signature (if held jointly) Date
