USLICO SERIES FUND/VA/, 497, 2000-05-11

USLICO SERIES FUND/VA/
497, 2000-05-11

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USLICO SERIES FUND

PROSPECTUS

MAY 1, 2000

The four Portfolios of the USLICO Series Fund are as follows:

The Stock Portfolio

The Money Market Portfolio

The Bond Portfolio

The Asset Allocation Portfolio

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is May 1, 2000
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TABLE OF CONTENTS

Page
----
Types of Investors for Whom the Fund is Intended............................ 2
The Stock Portfolio -- Risk/Return Summary.................................. 3
The Money Market Portfolio -- Risk/Return Summary........................... 4
The Bond Portfolio -- Risk/Return Summary................................... 5
The Asset Allocation Portfolio -- Risk/Return Summary....................... 6
Performance Information for Last 10 Years................................... 7
Investment Objectives, Principal Investment Strategies,
and Related Risks of the Stock Portfolio.................................. 12
Investment Objectives, Principal Investment Strategies,
and Related Risks of the Money Market Portfolio........................... 13
Investment Objectives, Principal Investment Strategies,
and Related Risks of the Bond Portfolio................................... 14
Investment Objectives, Principal Investment Strategies,
and Related Risks of the Asset Allocation Portfolio....................... 15
General Portfolio Policies.................................................. 17
Risk Factors and Special Considerations..................................... 18
Management of the Portfolios................................................ 19
Other Expenses.............................................................. 21
Total Expenses.............................................................. 21
Pricing of Portfolio Shares................................................. 22
Distribution and Taxes...................................................... 22
Financial Highlights........................................................ 22

To obtain more information please refer to the back cover.

TYPES OF INVESTORS FOR WHOM THE FUND IS INTENDED

Shares of the USLICO SERIES FUND (the "Fund") are sold only to insurance
companies and are used to fund variable life insurance policies ("Policies").
The Policies were offered by ReliaStar United Services Life Insurance Company
(now merged into ReliaStar Life Insurance Company) and ReliaStar Life Insurance
Company of New York (the "insurance companies") and sold with a prospectus
describing the Policies and with a prospectus of the Fund. The insurance
companies are affiliated with the Investment Adviser and Sub-Adviser of the
Fund. The Fund has four different Portfolios, each with different investment
objectives and strategies. The Portfolios are the (1) Stock Portfolio; (2) Money
Market Portfolio; (3) Bond Portfolio; and (4) Asset Allocation Portfolio.
Because Policy owners may instruct the insurance companies which Portfolio(s)
they want to use to fund their Policies, this prospectus gives you important
information about the Portfolios which you should know about before investing.
Please read this prospectus and keep it for future reference.

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THE STOCK PORTFOLIO

RISK/RETURN SUMMARY

INVESTMENT GOAL:

The Stock Portfolio seeks intermediate and long-term growth of capital. Its
secondary objective is to receive a reasonable level of income.

INVESTMENT FOCUS:

U.S. Common Stocks with medium to large market capitalizations.

PRINCIPAL INVESTMENT STRATEGIES:

* Identifying companies with above-average growth potential.

* Investing primarily in common stocks.

* Investing at least 70% of total assets in securities of companies with
large market capitalizations (those with market capitalizations similar to
companies in the S&P 500 Index).

* Potentially investing in companies with smaller or medium market
capitalizations.

* Investing primarily in domestic issuers.

* Investing primarily in "value" stocks.

* Using fundamental analysis of each issuer's financial condition and
industry position and market and economic conditions to select investments.

PRINCIPAL INVESTMENT RISKS:

* STOCK MARKET VOLATILITY. Stock markets are volatile and can decline
significantly in response to adverse issuer, political, regulatory, market
or economic developments. Different parts of the market can react
differently to these developments.

* ISSUER-SPECIFIC CHANGES. The value of an individual security or particular
type of security can be more volatile than the market as a whole and can
perform differently than the value of the market as a whole. The value of
securities of smaller issuers can be more volatile than that of larger
issuers.

* FOREIGN EXPOSURE. Entities located in foreign countries can be affected by
adverse political, regulatory, market or economic developments in those
countries.

* CHANGES IN VALUES. When you sell your shares of the Portfolio, they could
be worth more or less than what you paid for them. Loss of money is a risk.
Values are not guaranteed.

* NOT GUARANTEED BY FDIC. An investment in the Portfolio is not a deposit of
the bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

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THE MONEY MARKET PORTFOLIO

RISK/RETURN SUMMARY

INVESTMENT GOAL:

Seeks as high a level of current income consistent with preservation of capital
and liquidity.

INVESTMENT FOCUS:

Short-term U.S. Governmental Securities and Money Market instruments.

PRINCIPAL INVESTMENT STRATEGIES:

Purchasing U.S. Governmental Securities and U.S. dollar denominated high quality
money market instruments rated A-1 by Standard & Poor's Ratings Group ("S&P") or
P-1 by Moody's Investor Services, Inc. ("Moody's"), and repurchase agreements.

PRINCIPAL INVESTMENT RISKS:

* INSOLVENCY RISK. Defaults in paying principal and/or interest by an issuer.

* INTEREST RATE CHANGES. Interest rate increases can cause the price of a
U.S. Government or a money market security to decrease.

* FINANCIAL SERVICES EXPOSURE. Changes in government regulation or economic
downturns can have a significant negative effect on issuers in the
financial services sector.

* ISSUER-SPECIFIC CHANGES. A decline in the credit quality of an issuer or
the provider of credit support or a maturity-shortening structure for a
security can cause the price of a money market security to decrease.

* NOT GUARANTEED BY FDIC. An investment in the Portfolio is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Portfolio seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the Portfolio.

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THE BOND PORTFOLIO

RISK/RETURN SUMMARY

INVESTMENT GOAL:

High level of income consistent with prudent risk and the preservation of
capital.

INVESTMENT FOCUS:

Investment grade bonds - rated in top four rating categories of either S&P or
Moody's.

PRINCIPAL INVESTMENT STRATEGIES:

* Investing in U.S. dollar-denominated investment-grade bonds.

* Managing the Portfolio to have similar overall interest rate risk to the
Lehman Brothers Aggregate Bond Index.

* Allocating assets across different market sectors and maturities.

* Analyzing a security's structural features, current pricing and trading
opportunities, and the credit quality of its issuer to select investments.

PRINCIPAL INVESTMENT RISKS:

* INSOLVENCY RISK. Default in payment of principal and/or interest by an
issuer.

* CREDIT RISK. A decline in the credit quality of an issuer can cause the
price of a bond to decrease.

* INTEREST RATE CHANGES. Interest rate increases can cause the price of a
debt security to decrease.

* FOREIGN EXPOSURE. Entities located in foreign countries can be affected by
adverse political, regulatory, market or economic developments in those
countries.

* PREPAYMENT. The ability of an issuer of a debt security to repay principal
prior to a security's maturity can cause greater price volatility if
interest rates change and less income if called in a lower interest rate
environment.

* CHANGES IN VALUES. Values are not guaranteed. When you sell your shares of
the Portfolio, they could be worth more or less than what you paid for
them.

* NOT GUARANTEED BY FDIC. An investment in the Portfolio is not a deposit of
the bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

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THE ASSET ALLOCATION PORTFOLIO

RISK/RETURN SUMMARY

INVESTMENT GOAL:

Seeks to obtain high total return with reduced risk over the long term by
allocating its assets among stocks, bonds, and short-term instruments.

INVESTMENT FOCUS:

U.S. Common Stocks, investment grade bonds and money market instruments.

PRINCIPAL INVESTMENT STRATEGIES:

* Allocating the Portfolio's assets among stocks, bonds, and short-term money
market instruments.

* Adjusting allocation among asset classes.

* Investing primarily in domestic issuers.

* Analyzing an issuer using fundamental and/or quantitative factors and
evaluating each security's current price relative to estimated long-term
value to select investments.

* Entering into repurchase agreements maturing in seven days or less.

PRINCIPAL INVESTMENT RISKS:

* INTEREST RATE CHANGES. Interest rate increases can cause the price of a
debt security to decrease.

* INSOLVENCY RISK. Default in payment of principal and/or interest by an
issuer.

* CREDIT RISK. A decline in the credit quality of an issuer can cause the
price of its bond to decrease.

* FOREIGN EXPOSURE. Foreign markets can be more volatile than the U.S. market
due to increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S. market.

* CHANGED IN VALUES. Values are not guaranteed, you may lose money. When you
sell your shares of the Portfolio, they could be worth more or less than
what you paid for them.

* NOT GUARANTEED BY FDIC. An investment in the Portfolio is not a deposit of
the bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

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PERFORMANCE INFORMATION FOR LAST 10 YEARS

The bar charts and the performance information listed on the following pages
illustrate the risks and volatility of investing in the Portfolios. The charts
shows the changes in each Portfolio's performance from year to year for the past
10 calendar years. The additional information shows the highest and lowest
returns for a quarter during those 10 years and compares its average annual
returns for 1, 5 and 10 years to an index. How each Portfolio has performed in
the past is not necessarily an indication of how it will perform in the future.

The bar charts reflect the management fees and expenses of the Fund but the
performance figures generally do not reflect charges assessed by the insurance
company separate accounts. If such charges had been reflected, the returns would
be less than those shown below. Performance assumes reinvestment of income and
capital gain distributions.

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PERFORMANCE OF THE STOCK PORTFOLIO (1)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
-6.60 17.55 5.69 10.53 2.76 31.92 22.90 25.06 6.00 30.08

BEST AND WORST QUARTER DURING LAST 10 YEARS

Best Quarter Worst Quarter
------------ -------------
30.04% -18.60%

Three months ending Three months ending
December 31, 1999 September 30, 1998

COMPARING RETURNS WITH THE S&P 500 INDEX

This table compares the Stock Portfolio's average annual total returns for 1, 5
and 10 years ending December 31, 1999 to those of the S&P 500 Index.

1 Year 5 Years 10 Years
------ ------- --------
Stock Portfolio 30.08 23.19 14.59
S&P 500 Index 21.04 28.54 18.19

INFORMATION ON THE S&P 500 INDEX

The S&P 500 Index contains 500 widely held common stocks. The index includes
industrial, technology, utility, financial and transportation stocks.
Calculations of its performance assumes reinvestment of dividends. You cannot
invest directly in the index. It does not have an investment adviser and does
not pay any commissions or expenses. If it had expenses, its performance would
be lower. In order to outperform the index over any specific time frame, a fund
must return to investors an amount greater than that provided by the index plus
total operating expenses.

- ----------
(1) Prior to October 1, 1999, the Stock Portfolio was managed by a different
sub-adviser.

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PERFORMANCE OF THE MONEY MARKET PORTFOLIO

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
7.00 5.00 3.00 2.00 4.00 5.00 5.00 5.00 5.00 5.00

BEST AND WORST QUARTER DURING LAST 10 YEARS

Best Quarter Worst Quarter
------------ -------------
1.80% 0.49%

Three months ending Three months ending
December 31, 1990 March 31, 1993

THE PORTFOLIO'S AVERAGE ANNUAL RETURNS

This table provides information on the Portfolio's average annual total returns
for 1, 5 and 10 years ending December 31, 1999:

1 Year 5 Years 10 Years
------ ------- --------
Money Market Portfolio 5.00% 5.00% 4.60%

THE PORTFOLIO'S SEVEN DAY YIELD

The Portfolio's 7-day yield, as of the end of December 31, 1999, was 5.14%.

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PERFORMANCE OF THE BOND PORTFOLIO

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
4.20 14.20 7.74 10.48 -3.72 18.07 2.70 7.09 4.30 -2.87

BEST AND WORST QUARTER DURING LAST 10 YEARS

Best Quarter Worst Quarter
------------ -------------
6.58% -1.96%

Three months ending Three months ending
June 30, 1995 March 31, 1996

COMPARING RETURNS WITH THE LEHMAN BROTHERS AGGREGATE BOND INDEX

This table compares the Portfolio's average annual total returns for 1, 5 and 10
years ending December 31, 1999 to those of the Lehman Brothers Aggregate Bond
Index.

1 Year 5 Years 10 Years
------ ------- --------
Bond Portfolio -2.87 5.86 6.22
Lehman Brothers Aggregate Bond Index -0.82 7.73 7.70

INFORMATION ON THE LEHMAN BROTHERS AGGREGATE BOND INDEX

The Lehman Brothers Aggregate Bond Index is a broad, unmanaged index of
securities of fixed income instruments. You cannot invest directly in an index.
It does not have an investment adviser and does not pay any commissions or
expenses. If it had expenses, its performance would be lower. In order to
outperform the index over any specific time frame, a fund must return to
investors an amount greater than that provided by the index plus total operating
expenses.

10
<PAGE>
PERFORMANCE ON THE ASSET ALLOCATION PORTFOLIO (1)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
0.83 14.68 7.47 10.83 -1.33 25.15 12.44 16.62 5.51 15.10

BEST AND WORST QUARTER DURING LAST 10 YEARS

Best Quarter Worst Quarter
------------ -------------
16.00% -8.51%

Three months ending Three months ending
December 31, 1999 September 30, 1998

COMPARING RETURNS WITH THE S&P 500 AND LEHMAN INDICES

This table compares the Portfolio's average annual total returns for 1, 5 and 10
years ending December 31, 1999 to those of the S&P 500 and Lehman Indices.

1 Year 5 Years 10 Years
------ ------- --------
Asset Allocation Portfolio 15.10 14.96 10.73
S&P 500 Index 21.04 28.54 18.19
Lehman Brothers Aggregate Bond Index -0.82 7.73 7.70

INFORMATION ON THE S&P 500 AND LEHMAN INDICES

The Standard and Poor's ("S&P") 500 Index contains 500 widely held common
stocks. The index includes industrial, technology, utility, financial and
transportation stocks. Calculations of its performance assumes reinvestment of
dividends. The Lehman Brothers Aggregate Bond Index ("Lehman Bond Index") is a
broad, unmanaged index of securities of fixed income instruments.

You cannot invest directly in either the S&P or the Lehman Bond Index. Neither
has an investment adviser and neither pays any commissions or expenses. If an
index had expenses, its performance would be lower. In order to outperform an
index over any specific time frame, a fund must return to investors an amount
greater than that provided by the index plus total operating expenses.

- ----------
(1) Prior to October 1, 1999, the equity portion of the Asset Allocation
Portfolio was managed by a different sub-adviser.

11
<PAGE>
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND
RELATED RISKS OF THE STOCK PORTFOLIO

The information below is intended to provide detailed information on the
Stock Portfolio's investment objectives, strategies used in seeking to achieve
those objectives and the risks of investing in this Portfolio.

INVESTMENT OBJECTIVES

The Stock Portfolio's primary objective is to achieve intermediate and
long-term growth of capital. Its secondary objective is to receive a reasonable
level of income.

PRINCIPAL INVESTMENT STRATEGIES

The Stock Portfolio invests primarily in U.S. common stocks listed on
national securities exchanges, and believed to offer above average growth
potential. Under normal circumstances at least 70% of its assets will be
invested in such common stocks and other equity securities. No more than 25% of
the Portfolio's assets are invested in a single industry and no more than 5% may
be invested in any single company. The investment managers of the Stock
Portfolio are "value oriented" in their investment philosophy, which means they
proceed from the premise that investment value and return can best be realized
through buying companies with a low price relative to current earnings. This
"bottom up" approach seeks to identify companies whose earnings growth suggests
an increasing stream of future dividend income and whose share price is believed
to be undervalued. Consistent with this investment philosophy, the Portfolio
typically consists of large cap stocks with relatively low valuations and high
current dividend yields.

The Portfolio's investments are rotated among various market sectors based
on the investment manager's research and view of the economy. The Portfolio may
buy and sell securities frequently, resulting in portfolio turnover and higher
transaction costs.

From time to time the Portfolio will, on its common stock portfolio, write
covered call options that are traded on a U. S. securities exchange or board of
trade. It will do so when the Portfolio Manager believes the price of the stock
will remain relatively stable, thus allowing the Fund to enjoy the premium
income and enhance its return. (See "Options" under "Risk Factors and Special
Considerations" in this prospectus.)

This Portfolio will retain a flexible approach to the investment of funds
and the Portfolio's composition may vary with the economic outlook. The
Portfolio may invest in U.S. Governmental securities, commercial paper, and
other money market instruments, including repurchase agreements maturing in
seven days or less with Federal Reserve System banks or with dealers in U.S.
Government Securities. When, in the judgment of the Adviser, current cash needs
or market or economic conditions warrant a temporary defensive position, the
Portfolio may invest to a greater degree in such short-term U.S. Government
securities, commercial paper, and other money market instruments. Taking
temporary defensive positions may reduce the chances of the Portfolio achieving
its investment objectives.

THE RISKS OF INVESTING

Since the Stock Portfolio invests primarily in U.S. common stocks, its
returns may, and probably will vary. Your cash values and maybe the death
benefit of your Policy will vary with the investment performance of the
Portfolio(s) you select. Poor performance could result in the cash values in
your insurance Policy declining. Loss of money is a risk of investing in the
Stock Portfolio. The Portfolio is intended as a long-term investment vehicle for
variable life insurance policies and is not designed to provide policy owners
with a means of speculating on short-term stock market movements. There is no
assurance the investment objectives will be achieved. While the Portfolio may

12
<PAGE>
compare its performance returns, for benchmark purposes, to the performance
returns of broad based indices such as the S&P 500, the Portfolio is not managed
to replicate the securities contained in those indices, and may achieve returns
less than those indices.

In entering into a Repurchase Agreement, the Portfolio bears the risk of
loss in the event the other party to the transaction defaults on its
obligations. In such a case the Portfolio would be delayed, or prevented from,
exercising its rights to dispose of the underlying securities, including the
risk of possible decline in the value of the underlying securities during the
period in which the Portfolio seeks to assert its rights to them, the risk of
incurring expenses associated with asserting those rights and the risk of losing
all or part of the income from the agreement.

Participation in the options market involves investment risks and
transaction costs, which the Portfolio would not be subject to if it didn't use
this strategy. If its predictions of price movement are inaccurate, the
Portfolio might be in a worse position than if the strategy were not used.
Neither the Fund, the investments of the Stock Portfolio, the Policies' cash
values, nor its death benefit are guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.

INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND
RELATED RISKS OF THE MONEY MARKET PORTFOLIO

The information below is intended to provide detailed information on the
Money Market Portfolio's investment objectives, strategies used in seeking to
achieve those objectives and the risks of investing in this Portfolio.

INVESTMENT OBJECTIVE

The Money Market Portfolio's primary objective is to seek maximum current
income consistent with the preservation of capital and the maintenance of
liquidity by investing in "money market" instruments meeting specified quality
standards.

PRINCIPAL INVESTMENT STRATEGIES

The Money Market Portfolio may invest only in high-quality instruments with
a maturity or remaining maturity of 12 months or less from the date of purchase,
and may include the following: U.S. Government securities; commercial paper
maturing in nine months or less from the date of purchase if rated A-1 by S&P or
Prime-1 by Moody's, or debt obligations rated at least AA by S&P or at least Aa
by Moody's, repurchase agreements maturing in seven days or less with Federal
Reserve System banks or with dealers in U.S. Government securities; and
negotiable certificates of deposit, bankers' acceptances, fixed-time deposits,
and other obligations of federally chartered domestic banks, savings banks, or
savings and loan associations having total assets of $1 billion or more.

The Portfolio will not invest in any fixed-time deposit maturing in more
than 7 days if, as a result, more than 10% of the value of its total assets
would be invested in such fixed-time deposits and other illiquid securities. The
Portfolio may also invest in fixed-time or other deposits with a state-chartered
bank that acts as custodian to the Fund, provided that any such bank has total
assets of $2 billion or more. The Portfolio may also purchase obligations that
mature in 12 months or less from the date of purchase if the obligation is
accompanied by a guarantee of principal and interest provided that the guarantee
is that of a bank or corporation whose certificates of deposit or commercial
paper may otherwise be purchased by the Portfolio. The Portfolio is required to
maintain an average weighted maturity of not more than 90 days and invest
exclusively in securities that mature within 397 days. All investments by the
Portfolio are limited to United States dollar-denominated investments. The

13
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Portfolio may not invest more than 25% of its total assets in securities of any
one particular industry nor invest more than 5% of its assets in any one issuer,
except that these restrictions do not apply to investments in U.S. Government
securities and the 25% limit does not apply to the Money Market Portfolio for
securities or obligations issued by U.S. banks.

THE RISKS OF INVESTING

Since the Money Market Portfolio invests primarily in Money Market
instruments, one risk is a default by an issuer and its loss to the Portfolio of
principal and/or interest payments. An additional risk is the Portfolio not
maintaining a value of $1.00 per share. When interest rates decline, the
performance return for this Portfolio will decline. In that environment your net
performance return may be relatively small. There is no assurance the investment
objectives will be achieved.

Neither the Fund nor the investments of the Money Market Portfolio are
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.

INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND
RELATED RISKS OF THE BOND PORTFOLIO

The information below is intended to provide detailed information on the
Bond Portfolio's investment objectives, strategies used in seeking to achieve
those objectives and the risks of investing in this Portfolio.

INVESTMENT OBJECTIVES

The Bond Portfolio's primary objective is to provide a high level of income
consistent with prudent investment risk by investing primarily in
investment-grade intermediate to long-term corporate bonds and other debt
securities. As a secondary objective, the Portfolio seeks capital appreciation
when consistent with its principal objective.

PRINCIPAL INVESTMENT STRATEGIES

To achieve its objective, the Portfolio invests primarily in securities
rated in the top four rating categories of either S&P (AAA, AA, A, and BBB) or
Moody's (Aaa, Aa, A, and Baa) or, if not rated, of equivalent quality in the
judgment of the Adviser. The Portfolio may also invest in U.S. Government
securities, commercial paper, certificates of deposit, and other money market
instruments including repurchase agreements maturing in seven days or less with
Federal Reserve System banks or with dealers in U.S. Government. The Portfolio
will not invest in common stocks, rights, or other equity securities.

Generally turnover rates have been relatively low but on occasion, the
Portfolio has bought and sold securities frequently resulting in portfolio
turnover and higher transaction costs.

The weighted average maturity of the securities in the Portfolio will vary
from time to time depending upon the judgment of the Adviser as to prevailing
conditions in the economy and the securities markets and the prospects for

14
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interest rate changes among different categories of fixed-income securities.
Under normal circumstances, more than 80% of the Portfolio's assets will be
invested in fixed-income securities, including convertible and non-convertible
debt securities.

THE RISKS OF INVESTING

Since shares of the Portfolio normally represent an investment primarily in
debt securities with market prices that may vary, the value of the Portfolio's
shares will vary as the aggregate value of the Portfolio's investments increases
or decreases. Although the Portfolio will invest only in investment-grade debt
securities, the market price of the Portfolio's securities will likely be
affected by changes in interest rates since the market value of debt obligations
may be expected to rise and fall inversely with interest rates generally. As
interest rates rise, the market value of fixed-income securities will likely
fall, adversely affecting the value of the Portfolio. Debt obligations with
longer maturities that typically provide the best yield will subject the
Portfolio to relatively greater price fluctuations than shorter-term
obligations. The Portfolio is intended as a long-term investment vehicle for
variable life insurance policies. However, there is no assurance the investment
objectives will be achieved. While the Portfolio may compare its performance
returns, for benchmark purposes, to the performance returns of broad based
indices such as the Lehman Brothers Aggregate Bond Index, the Portfolio is not
managed to replicate the securities contained in those indices, and may achieve
returns less than those indices.

Neither the Fund nor the investments of the Portfolio are guaranteed by the
Federal Deposit Insurance Corporation or any other governmental agency.

INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND
RELATED RISKS OF THE ASSET ALLOCATION PORTFOLIO

The information below is intended to provide detailed information on the
Portfolio's investment objectives, strategies used in seeking to achieve those
objectives and the risks of investing in this Portfolio.

INVESTMENT OBJECTIVE

The Portfolio's primary objective is to achieve high total return,
consistent with prudent investment risk by investing in common stocks and other
equity securities, investment grade intermediate to long-term debt obligations
and high quality money market instruments.

PRINCIPAL INVESTMENT STRATEGIES

The Portfolio allocates its assets into three broad categories: (1) U.S.
common stocks and other equity securities believed to offer above average growth
potential; (2) intermediate to long-term investment grade bonds; and (3) high
quality money market instruments. Under normal circumstances at least 30% of its
assets will be invested in common stocks and other equity securities, at least
20% in investment grade bonds and the remainder in money market instruments.
With certain exceptions for money market investments, no more than 25% of the
assets of the Portfolio are invested in a single industry and no more than 5%
may be invested in any single company. The Portfolio Managers of the stock
portion of the Portfolio are "value oriented" in their investment philosophy,

15
<PAGE>
which means they proceed from the premise that investment value and return can
best be realized through buying companies with a low price relative to current
earnings. This "bottom up" approach seeks to identify companies whose earnings
growth suggests an increasing stream of future dividend income and whose share
price is believed to be undervalued. Consistent with this investment philosophy,
the stock portion of the Portfolio typically consists of large cap stocks with
low valuations and relatively high current dividend yields.

The equity investments are rotated among various market sectors based on
its portfolio manager's research and view of the economy. The Portfolio may buy
and sell equity securities frequently, resulting in portfolio turnover and
higher transaction costs.

From time to time the equity portion of the Portfolio will, on its common
stock portfolio, write covered call options that are traded on a U. S.
securities exchange or board of trade. It will do so when the portfolio manager
believes the price of the stock will remain relatively stable, thus allowing the
Fund to enjoy the premium income and enhance its return. (See "Options" under
"Risk Factors and Special Considerations" in this prospectus.)

The bond portion of the Portfolio invests primarily in securities rated in
the top four rating categories of either S&P (AAA, AA, A, and BBB) or Moody's
(Aaa, Aa, A, and Baa) or, if not rated, of equivalent quality in the judgment of
the Adviser. This Portfolio will retain a flexible approach to the investment of
funds and the portfolio composition may vary with the economic outlook. The
Portfolio may invest U.S. Governmental securities, commercial paper, and other
money market instruments, including repurchase agreements maturing in seven days
or less. When, in the judgment of the Adviser, current cash needs or market or
economic conditions warrant a temporary defensive position, the Portfolio may
invest to a greater degree in short-term U.S. Government securities, commercial
paper, and other money market instruments. Taking temporary defensive positions
may reduce the chances of the Portfolio achieving its investment objectives.

The Money Market portion of the Portfolio may invest only in high-quality
instruments with a maturity or remaining maturity of 12 months or less from the
date of purchase, and may include the following: U.S. Government securities;
commercial paper maturing in nine months or less from the date of purchase if
rated A-1 by S&P or Prime-1 by Moody's, or debt obligations rated at least AA by
S&P or at least Aa by Moody's. The Portfolio may also invest in repurchase
agreements maturing in seven days or less with Federal Reserve System banks or
with dealers in U.S. Government securities; and negotiable certificates of
deposit, bankers' acceptances, fixed-time deposits, and other obligations of
federally chartered domestic banks, savings banks, or savings and loan
associations having total assets of $1 billion or more.

THE RISKS OF INVESTING

Since the Portfolio invests in U.S. common stocks, investment grade bonds
and Money Market instruments, its returns may, and probably will vary. Your cash
values and maybe the death benefit of your Policy will vary with the investment
performance of the Portfolio(s) you select. Poor investment performance may
result in the cash values in your insurance Policy declining. Loss of money is a
risk of investing in the Portfolio. There is no assurance the Portfolio's
investment objectives will be achieved. While the Portfolio may compare its
performance returns, for benchmark purposes, to the performance returns of broad
based indices such as the S&P 500 Index and the Lehman Brothers Aggregate Bond
Index ("Lehman Index"), the Portfolio is not managed to replicate the securities
contained in those indices, and may achieve returns less than those indices.

16
<PAGE>
exercising its rights to dispose of the underlying securities, including the
risk of possible decline in the value of the underlying securities during the
period in which the Portfolio seeks to assert its rights to them, the risk of
incurring expenses associated with asserting those rights and the risk of losing
all or part of the income from the agreement.

Participation in the options market involves investment risks and
transaction costs which the Portfolio would not be subject to if it did not use
this strategy. If its predictions of price movement are inaccurate, the
Portfolio might be in a worse position than if the strategy were not used.

Neither the Fund, the investments of the Portfolio, the Policies cash
values, nor the death benefit are guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.

GENERAL PORTFOLIO POLICIES

DIVERSIFICATION

Each Portfolio operates as a "diversified" fund. In addition, each
Portfolio intends to conduct its operations so that it will comply with
diversification requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and qualify as a "regulated investment company."
In order to qualify as a regulated investment company, each Portfolio must limit
its investments so that at the close of each quarter of the taxable year, with
respect to at least 50% of its total assets, not more than 5% of its total
assets will be invested in the securities of a single issuer. The Code requires
that not more than 25% in value of each Portfolio's total assets may be invested
in the securities of a single issuer at the close of each quarter of the taxable
year. These restrictions do not apply to investments in U.S. government
securities. The 25% limit does not apply to the Money Market Portfolio or the
Bond Portfolio for securities or obligations issued by U.S. Banks.

17
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS

The following risk factors are applicable to all Portfolios:

GENERALLY

The value of a Portfolio's investments, and as a result the net asset value
of the Portfolio shares, will fluctuate in response to changes in the market and
economic conditions as well as the financial condition and prospects of issuers
in which the Portfolio invests. Because of the risks associated with the Fund's
investments, the Fund is intended as a long term investment vehicle for Variable
Life Insurance Policies and is not designed to provide policyholders with a
means of speculating on short-term stock or bond market movements. While the
Fund may compare its total returns for benchmarking purposes to the total
returns of broad based securities indices (such as the S&P 500), the Fund is not
managed to replicate the securities contained in such indices and therefore may
achieve returns which are less than such indices.

INVESTMENTS IN FOREIGN SECURITIES. There are certain risks in owning
foreign securities, including those resulting from: fluctuations in currency
exchange rates; devaluation of currencies; political or economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions; reduced availability of public information
concerning issuers; accounting, auditing and financial reporting standards or
other regulatory practices and requirements that are not uniform when compared
to those applicable to domestic companies; settlement and clearance procedures
in some countries that may not be reliable and can result in delays in
settlement; higher transaction and custody expenses than for domestic
securities; and limitations on foreign ownership of equity securities. Also,
securities of many foreign companies may be less liquid and the prices more
volatile than those of domestic companies. With certain foreign countries, there
is the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Portfolios,
including the withholding of dividends.

CORPORATE DEBT SECURITIES. Corporate debt securities are subject to the
risk of the issuer's inability to meet principal and interest payments on the
obligation and may also be subject to price volatility due to such factors as
interest rate sensitivity, market perception of the credit-worthiness of the
issuer and general market liquidity. When interest rates decline, the value of a
Portfolio's debt securities can be expected to rise, and when interest rates
rise, the value of those securities can be expected to decline. Debt securities
with longer maturities tend to be more sensitive to interest rate movements than
those with shorter maturities.

One measure of risk for fixed income securities is duration. Duration is
one of the tools used by a Portfolio Manager in selection of fixed income
securities. Historically, the maturity of a bond was used as a proxy for the
sensitivity of a bond's price to changes in interest rates, otherwise known as a
bond's "interest rate risk" or "volatility." According to this measure, the
longer the maturity of a bond, the more its price will change for a given change
in market interest rates. However, this method ignores the amount and timing of
all cash flows from the bond prior to final maturity. Duration is a measure of
average life of a bond on a present value basis, which was developed to
incorporate a bond's yield, coupons, final maturity and call features into one
measure. For point of reference, the duration of a noncallable 7% coupon bond
with a remaining maturity of 5 years is approximately 4.5 years, and the
duration of a noncallable 7% coupon bond with a remaining maturity of 10 years
is approximately 8 years. Material changes in interest rates may impact the
duration calculation.

U.S. GOVERNMENT SECURITIES. Some U.S. Government agency securities may be
subject to varying degrees of credit risk, particularly those not backed by the
full faith and credit of the United States Government. All U.S. Government
securities may be subject to price declines in the securities due to changing
interest rates.

18
<PAGE>
CONVERTIBLE SECURITIES. The price of a convertible security will normally
fluctuate in some proportion to changes in the price of the underlying equity
security, and as such is subject to risks relating to the activities of the
issuer and general market and economic conditions. The income component of
convertible securities causes fluctuations based upon changes in interest rates
and the credit quality of the issuer. Convertible securities are often lower
rated securities. A Portfolio may be required to redeem or convert a convertible
security before the holder would otherwise choose.

REPURCHASE AGREEMENTS. In entering into a repurchase agreement, the
Portfolio bears a risk of loss in the event that the other party to the
transaction defaults on its obligations and the Portfolio is delayed, or
prevented from, exercising its rights to dispose of the underlying securities,
including the risk of possible decline in the value of the underlying securities
during the period in which the Portfolio seeks to assert its rights to them, the
risk of incurring expenses associated with asserting those rights and the risk
of losing all or part of the income from the agreement.

TEMPORARY DEFENSIVE STRATEGIES. When the Adviser or Sub-Adviser to a
Portfolio, as the case may be, anticipates unusual market or other conditions,
the Portfolio may temporarily depart from its principal investment strategies as
a defensive measure. To the extent that a Portfolio invests defensively, it
likely will not achieve capital appreciation.

The following risk factor is applicable to the Stock and Asset Allocation
Portfolios:

OPTIONS. Participation in the options market involves investment risks and
transaction costs to which the Portfolio would not be subject, absent the use of
this strategy. If predictions of movements in the direction of the securities
and interest rate markets are inaccurate, the adverse consequences to the
Portfolio may leave it in a worse position than if such strategy was not used.
Risks inherent in the use of options include: (a) dependency on the ability of
the Portfolio Manager, as the case may be, to predict correctly movements in the
direction of interest rates and securities prices; (b) imperfect correlation
between the price of options and movements in the prices of the securities; (c)
the fact that the skills needed to use these strategies are unique to this
investment technique; and (d) the possible need to defer closing out certain
positions.

MANAGEMENT OF THE PORTFOLIOS

INVESTMENT ADVISERS

Since April 1, 1995, ReliaStar Investment Research, Inc. ("RIRI")
(formerly, Washington Square Advisers, Inc.), 100 Washington Avenue,
Minneapolis, MN 55401, an affiliate of the insurance companies issuing the
Policies, has served as the investment adviser to the Fund's four Portfolios and
is responsible for the day-to-day management of the Money Market and Bond
Portfolios, and the non-equity portion of the Asset Allocation Portfolio and
other business affairs.

RIRI and its predecessors have been managing investment assets for their
affiliated insurance companies since 1983 and currently manages $14.7 billion of
fixed income assets for their affiliates.

It furnishes continuous advice and recommendations concerning the
Portfolios' non-equity investments. It also furnishes certain administrative,
compliance, legal and accounting services for the Fund, and it or its affiliated
companies may be reimbursed by the Fund for its costs (up to a cap of 0.65% of
Portfolio's average daily net assets) in providing those services. In addition,
employees of companies affiliated with RIRI serve as officers of the Fund, and
these companies provide office space for the Fund and pay the salaries, fees and
expenses of certain Fund officers.

19
<PAGE>
Under the Investment Advisory Agreement, the Adviser is compensated for its
services at a quarterly fee based on an annual percentage of the average daily
net assets of each Portfolio. For each Portfolio, the Fund pays the Adviser a
fee at a maximum annual rate based on the following schedule:

* 0.50% of the first $100 million of the average daily net assets of the
Portfolio

* 0.45% of the average daily net assets of the Portfolio in excess of
$100 million

The table below shows the aggregate annual advisory fee paid by each Portfolio
for the most recent fiscal year as a percentage of that Portfolio's average
daily net assets. *

Portfolio Advisory Fee
--------- ------------
Stock Portfolio 0.25%
Money Market Portfolio 0.25%
Bond Portfolio 0.25%
Asset Allocation Portfolio 0.25%

Effective October 1, 1999, the Fund, RIRI and Pilgrim Investments, Inc.
("Pilgrim Investments") (formerly Northstar Investment Management Corporation)
entered into a Sub-Advisory Agreement under which Pilgrim Investments, 40 North
Central Ave., Suite 1200, Phoenix, AZ 85004 provides advisory services to the
Stock Portfolio and the equity portion of the Asset Allocation Portfolio of the
Fund, and is responsible for the day-to-day management of those assets.

Pilgrim Investments is an indirect wholly-owned subsidiary of ReliaStar
Financial Corp. ("ReliaStar") (NYSE: RLR). 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
sub-adviser to the stock portfolio and the equity portion of the Asset
Allocation Portfolio. On April 30, 2000, Pilgrim Advisors, an indirect
wholly-owned subsidiary of ReliaStar, merged with Pilgrim Investments. Pilgrim
Advisors and Pilgrim Investments were sister companies and shared certain
resources and investment personnel.

Pilgrim Investments is a registered investment adviser that currently
manages over $16.6 billion in assets.

As compensation for the services provided by the Sub-Adviser under the
Sub-Advisory Agreement, the Advisor pays the Sub-Adviser at the end of each
calendar month an advisory fee computed daily at an annual rate equal to 0.45 of
1.00% of the average daily net asset value of the Portfolio assets managed by
the Sub-Adviser.

- ----------
* The Policies contain a contractual provision limiting the annual amount
Policyholders can be charged for management fees to 0.25%. Any management
fees above that amount are paid by the insurance companies. If this limit,
which is contractual, was not available, the management fees paid by the
Portfolios would have been: Stock, 0.45%; Money Market, 0.25%; Bond, 0.25%;
and Asset Allocation, 0.36%.

20
<PAGE>
PORTFOLIO MANAGERS

Mary Lisanti has been responsible for the day-to-day management of the
Stock Portfolio and the equity portion of the Asset Allocation Portfolio since
October 1, 1999. Ms. Lisanti joined Pilgrim Investments in May 1998. She has
over 20 years of experience in small- and mid-cap investments. Before joining
Pilgrim Investments, Ms. Lisanti was a Portfolio Manager at Strong Capital
Management where she managed the Strong Small Cap Fund and co-managed the Strong
Mid Cap Fund. From 1993 to 1996, Ms. Lisanti was a Managing Director and Head of
Small- and Mid-Capitalization Equity Strategies at Bankers Trust Corp. where she
managed the BT Small Cap Fund and the BT Capital Appreciation Fund. Prior to
Bankers Trust, Ms. Lisanti was a Portfolio Manager with the Evergreen Funds. She
began her career as an Analyst specializing in emerging growth stocks with
Donaldson, Lufkin & Jenrette and Shearson Lehman Hutton, and was ranked the
number one Institutional Investor Emerging Growth Stock Analyst in 1989. She is
a Chartered Financial Analyst, and a Member of the New York Society of Security
Analysts and the Financial Analyst Federation.

The Money Market and Bond Portfolios, and that portion of the Asset
Allocation Portfolio which invests in bonds and money market assets, is managed
by James L. Mahnke. He has been the Portfolio Manager for these assets since
August, 1997. He is a Senior Vice President and Portfolio Manager of the
Adviser, RIRI, where he has served in its investment department since October,
1995. Previously he was employed by Alliance Capital Management, L.P. from 1987
to 1995; first as an Analyst and then as a Vice President and Portfolio Manager.
He has a Masters Degree in Agricultural Economics from Purdue University.

OTHER EXPENSES

The Fund bears all costs of its operations. Such costs include fees to the
Adviser, shareholder servicing costs, trustees' fees and expenses, legal,
accounting services, auditing fees, custodian fees, printing and supplies,
registration fees, and others. Fund expenses directly attributable to a
Portfolio are charged to that Portfolio; other expenses are allocated
proportionately among all the Portfolios in relation to the net assets of each
Portfolio. In 1999, 1998 and 1997, the Fund paid $271,170, $206,668 and $240,886
respectively, for these services.

TOTAL EXPENSES

In 1999, the management fee (computed on an annualized basis as a
percentage of the net asset value of each Portfolio) and the total operating
expenses as a percentage of average net assets of each Portfolio were as
follows:

Total Expenses
Portfolio Management Fee* (Including Management Fees)
--------- --------------- ---------------------------
Common Stock Portfolio 0.25% 0.90%
Money Market Portfolio 0.25% 0.90%
Bond Portfolio 0.25% 0.90%
Asset Allocation Portfolio 0.25% 0.90%

21
<PAGE>
PRICING OF PORTFOLIO SHARES

The price of Portfolio shares is based on the Portfolio's net asset value
("NAV"). All purchases, redemptions and exchanges will be processed at the NAV
next calculated after a request is received and accepted by the Portfolio. The
Portfolio's NAV is calculated at the close of the regular trading session of the
NYSE (normally 4:00 p.m. New York time) each day that the NYSE is open. The NAV
of Portfolio shares is not determined on days the NYSE is closed (generally, New
Year's Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas). In order to receive a
day's price, the order must be received by the close of the regular trading
session of the NYSE. Securities are valued at market value or, if a market
quotation is not readily available, at their fair value determined in good faith
under procedures established by and under the supervision of the Trustees.
Short-term instruments maturing within 60 days are valued at amortized cost,
which approximates market value.

DISTRIBUTIONS AND TAXES

To avoid taxation, the Internal Revenue Code requires the Fund to
distribute net income and any net capital gains realized on its investments
annually. The Fund's income from dividends and interest and any net realized
short-term capital gains are paid to shareholders as ordinary income dividends.
Net realized long-term gains are paid to shareholders as capital gains
distributions.

As a contract owner invested in a Portfolio, you are entitled to a share of
the income and capital gains that the Portfolio distributes. The amount you
receive is based on the number of shares you own.

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand each
Portfolio's financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned [or lost] on a
direct investment in the Portfolio (assuming reinvestment of all dividends and
distributions) but does not include charges and expenses attributable to any
insurance product.

The information for the years ended December 31, 1999, 1998, 1997, 1996 and
1995 has been audited by independent auditors whose report, along with the
Fund's financial statements, are included in the Fund's annual report, and is
available on request at no charge, by calling 1-800-333-6965.

22
<PAGE>
USLICO SERIES FUND
STOCK PORTFOLIO

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (PER SHARE) 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 13.64 $ 13.50 $ 13.25 $ 12.62 $ 10.37
Income from investment operations:
Net investment income 0.12 0.20 0.27 0.34 0.36
Net Gains or Losses on Securities
(both realized and unrealized) 3.93 0.62 3.05 2.55 2.95
----------- ----------- ----------- ----------- -----------
Total from investment operations 4.05 0.82 3.32 2.89 3.31
Less Distributions:
Dividends from net investment income (0.13) (0.20) (0.27) (0.33) (0.37)
Distribution from capital gains (1.50) (0.48) (2.80) (1.93) (0.69)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 16.06 $ 13.64 $ 13.50 $ 13.25 $ 12.62
=========== =========== =========== =========== ===========
Total return 30.08% 6.00% 25.06% 22.90% 31.92%

RATIO/SUPPLEMENT DATA
Net assets, end of year $34,492,899 $27,774,017 $27,291,645 $23,558,091 $19,968,336
Ratio of expenses to average net assets 0.90% 0.75% 0.73% 0.75% 0.63%
Ratio of net investment income to average
net assets 0.84% 1.49% 1.87% 2.50% 3.07%
Portfolio turnover rate 305.87% 172.22% 88.55% 79.17% 62.51%
</TABLE>

23
<PAGE>
USLICO SERIES FUND
MONEY MARKET PORTFOLIO

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (PER SHARE) 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.04 0.05 0.05 0.05 0.05
Net Gains or Losses on Securities
(both realized and unrealized) -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.04 0.05 0.05 0.05 0.05
Less Distributions:
Dividends from net investment income (0.04) (0.05) (0.05) (0.05) (0.05)
Distribution from capital gains -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return (1) 5.00% 5.00% 5.00% 5.00% 5.00%

RATIO/SUPPLEMENT DATA
Net assets, end of year $6,057,717 $5,963,727 $5,784,312 $5,979,861 $5,819,470
Ratio of expenses to average net assets 0.90% 0.75% 0.75% 0.75% 0.63%
Ratio of net investment income to average net
assets 4.27% 4.79% 4.88% 4.77% 5.37%
Portfolio turnover rate N/A N/A N/A N/A N/A
</TABLE>

24
<PAGE>
USLICO SERIES FUND
BOND PORTFOLIO

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (PER SHARE) 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 9.74 $ 10.00 $ 10.02 $ 10.38 $ 9.41
Income from investment operations:
Net investment income 0.46 0.55 0.59 0.64 0.66
Net Gains or Losses on Securities
(both realized and unrealized) (0.73) (0.13) 0.12 (0.36) 1.04
---------- ---------- ---------- ---------- ----------
Total from investment operations (0.27) 0.42 0.71 0.28 1.70
Less Distributions:
Dividends from net investment income (0.46) (0.55) (0.59) (0.64) (0.66)
Distribution from capital gains -- (0.13) (0.14) -- (0.07)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 9.01 $ 9.74 $ 10.00 $ 10.02 $ 10.38
========== ========== ========== ========== ==========
Total return (2.87)% 4.30% 7.09% 2.70% 18.07%

RATIO/SUPPLEMENT DATA
Net assets, end of year $2,765,136 $2,831,882 $2,802,374 $2,783,385 $3,068,825
Ratio of expenses to average net assets 0.90% 0.75% 0.75% 0.75% 0.63%
Ratio of net investment income to average
net assets 4.88% 5.50% 5.88% 6.45% 6.49%
Portfolio turnover rate 45.74% 90.97% 117.24% 47.37% 32.67%
</TABLE>

25
<PAGE>
USLICO SERIES FUND
ASSET ALLOCATION PORTFOLIO

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (PER SHARE) 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 11.92 $ 11.98 $ 11.85 $ 11.82 $ 10.18
Income from investment operations:
Net investment income 0.31 0.39 0.46 0.53 0.55
Net Gains or Losses on Securities
(both realized and unrealized) 1.48 0.27 1.51 0.94 2.01
----------- ----------- ----------- ----------- -----------
Total from investment operations 1.79 0.66 1.97 1.47 2.56
Less Distributions:
Dividends from net investment income (0.31) (0.39) (0.46) (0.53) (0.55)
Distribution from capital gains (0.72) (0.33) (1.38) (0.91) (0.37)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 12.68 $ 11.92 $ 11.98 $ 11.85 $ 11.82
=========== =========== =========== =========== ===========
Total return 15.10% 5.51% 16.62% 12.44% 25.15%

RATIO/SUPPLEMENT DATA
Net assets, end of year $18,179,732 $16,335,368 $15,900,094 $14,614,568 $13,675,779
Ratio of expenses to average net assets 0.90% 0.75% 0.74% 0.75% 0.63%
Ratio of net investment income to average
net assets 2.58% 3.19% 3.68% 4.39% 4.81%
Portfolio turnover rate 227.49% 135.68% 104.30% 61.98% 44.97%
</TABLE>

26
<PAGE>
FOR MORE INFORMATION

If you would like more information about the USLICO Series Fund and its four
Portfolios, the following documents are available free upon request:

ANNUAL AND SEMI-ANNUAL REPORT TO POLICY OWNERS

Additional information about the Fund's investments, including a list of its
Portfolios' holdings, is available in the Fund's annual and semiannual reports
to policy owners, which are incorporated herein by reference. In the Fund's
annual report, you will find, except for the Money Market Portfolio, a
discussion of the market conditions and investment strategies that significantly
affected each portfolio's performance during its most recent fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI provides more detailed information about the Fund and is incorporated
herein by reference.

To receive a free copy of the latest annual or semiannual report or the SAI, or
to request additional information or make inquiries about the Fund, please
contact us as follows:

USLICO Series Fund c/o ReliaStar Service Center, PO Box 5050, Minot, ND
58702-5050

1-877-884-5050

This information may also be reviewed or obtained from the SEC. In order to
review the information in person, you will need to visit the SEC's Public
Reference Room in Washington, D.C. or call 202-942-8090. Otherwise, you may
obtain the information for a fee by contacting the SEC at:

Securities and Exchange Commission Public Reference Section Washington, D.C.
20549-0102

or at the e-mail address: [email protected]

Or obtain the information at no cost by visiting the SEC's Internet website at
http://www.sec.gov.

When contacting the SEC, you will want to refer to the Fund's SEC file number.
The file number is as follows:

File number 811-05451

27
<PAGE>
USLICO SERIES FUND
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000

USLICO Series Fund (the "Fund") is an open-end, diversified management
investment company consisting of four separate investment Portfolios: the Stock
Portfolio, the Money Market Portfolio, the Bond Portfolio, and the Asset
Allocation Portfolio.

The Statement of Additional Information is intended to supplement the
information provided to investors in the Prospectus dated May 1, 2000, of the
USLICO Series Fund, and has been filed with the Securities and Exchange
Commission as part of the Fund's Registration Statement. This Statement of
Additional Information is not itself a prospectus and should be read carefully
in conjunction with the Fund's Prospectus and retained for future reference. The
contents of this Statement of Additional Information are incorporated by
reference in the Prospectus in their entirety. A copy of the Prospectus may be
obtained free of charge from the Fund at the address and telephone number listed
below.

USLICO Series Fund
c/o ReliaStar Life Service Center
PO Box 5050
Minot, N.D. 58702-5050
(877) 884-5050

1
<PAGE>
TABLE OF CONTENTS

PAGE
----
TABLE OF CONTENTS.......................................................... 2
INTRODUCTION............................................................... 3
GENERAL INFORMATION........................................................ 3
INVESTMENT RESTRICTIONS.................................................... 3
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES........................ 5
Mortgage-Related Securities............................................... 5
Bank Obligations.......................................................... 5
Corporate Debt Securities................................................. 6
Commercial Paper.......................................................... 6
Repurchase Agreements..................................................... 6
Options................................................................... 6
Risks Associated with Call Options on Securities.......................... 7
Temporary Defensive Policy................................................ 7
MANAGEMENT OF THE FUND..................................................... 8
Trustees.................................................................. 8
Compensation of Trustees.................................................. 9
Officers.................................................................. 11
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES........................ 12
THE INVESTMENT ADVISER AND SUB-ADVISER..................................... 12
DISTRIBUTION OF FUND SHARES................................................ 14
Suspension of Redemptions................................................. 14
CUSTODIAN.................................................................. 14
ADMINISTRATIVE SERVICES AGREEMENT.......................................... 14
LEGAL COUNSEL.............................................................. 15
INDEPENDENT AUDITORS....................................................... 15
PORTFOLIO TRANSACTIONS AND BROKERAGE....................................... 15
Brokerage and Research Services........................................... 15
Portfolio Turnover........................................................ 16
NET ASSET VALUE............................................................ 16
CALCULATION OF PERFORMANCE DATA............................................ 17
THE MONEY MARKET PORTFOLIO YIELD........................................... 17
THE STOCK PORTFOLIO, THE BOND PORTFOLIO, AND THE ASSET
ALLOCATION PORTFOLIO - AVERAGE ANNUAL TOTAL RETURN......................... 18
THE STOCK PORTFOLIO, THE BOND PORTFOLIO, THE ASSET
ALLOCATION PORTFOLIO - CUMULATIVE TOTAL RETURN............................. 19
PERFORMANCE COMPARISONS.................................................... 19
TAXATION................................................................... 19
Distributions............................................................. 20
ADDITIONAL INFORMATION..................................................... 20
Shareholder Meetings...................................................... 20
Liability................................................................. 20
Experts................................................................... 20
FINANCIAL STATEMENTS....................................................... 21
APPENDIX A................................................................. A-1
APPENDIX B................................................................. B-1

2
<PAGE>
INTRODUCTION

This Statement of Additional Information is designed to elaborate upon the
discussion of certain securities and investment strategies which are described
in the Prospectus. The more detailed information contained herein is intended
solely for investors who have read the Prospectus and are interested in a more
detailed explanation of certain aspects of the Fund's securities and investment
strategies.

No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information or the Prospectus dated May 1, 2000, and, if given or made, such
information or representations may not be relied upon as having been authorized
by the Fund. This Statement of Additional Information does not constitute an
offer to sell securities in any state or jurisdiction in which such offering may
not lawfully be made. The delivery of this Statement of Additional Information
at any time shall not imply that there has been no change in the affairs of the
Fund since the date hereof.

GENERAL INFORMATION

The Fund is an open-end diversified management investment company
registered under the Investment Company Act of 1940 and consists of four
separate series (Portfolios), each of which has its own investment objectives
and policies. The Fund was organized as a business trust under the laws of
Massachusetts on January 19, 1988. On January 17, 1995, ReliaStar United
Services Life Insurance Company (hereinafter "RUSL" and formerly known as
"United Services Life Insurance Company") and ReliaStar Life Insurance Company
of New York (herein after "RLNY" and formerly known as "ReliaStar Bankers
Security Life Insurance Company" and "Bankers Security Life Insurance Society")
became wholly-owned subsidiaries of ReliaStar Financial Corp. ("ReliaStar"),
previously the NWNL Companies, Inc., an insurance holding company based in
Minneapolis, Minnesota. On December 31, 1998, RUSL was merged into ReliaStar
Life Insurance Company ("RL").

Shares of the Portfolios are sold only to separate accounts of RL and RLNY
to serve as the investment medium for variable life insurance policies issued by
these companies. Each Portfolio share outstanding represents a beneficial
interest in the respective Portfolio and carries a par value of $.001. The Fund
has an unlimited number of shares authorized. All shares are non-assessable and
fully transfer when issued and paid for in accordance thereof. The Fund sends
its contract holders annual audited financial statements and six-month unaudited
financial statements.

INVESTMENT RESTRICTIONS

Each Portfolio's investment objective, together with the investment
restrictions set forth below, are fundamental policies of each Portfolio and may
not be changed with respect to any Portfolio without the approval of a majority
of the outstanding voting shares of that Portfolio. The vote of a majority of
the outstanding voting securities of a Portfolio means the vote at an annual or
special meeting of (i) 67% or more of the voting securities present at such
meeting, if the holders of more than 50% of the outstanding securities of such
portfolio are present or represented by proxy; or (ii) more than 50% of the
outstanding voting securities of such Portfolio, whichever is less.

Unless otherwise stated, each of the following policies applies to each of
the Portfolios. An existing Portfolio may not:

1. Purchase securities on margin or make short sales;

2. Invest more than 25% of its total assets in securities of any one
particular industry nor invest more than 5% of its assets in any one
issuer, except that these restrictions do not apply to investments in
U.S. Government securities and the 25% limit does not apply to the
Money Market or Bond Portfolios for securities or obligations issued
by U.S. banks;

3. Invest in more than 10% of any issuer's outstanding voting securities;

3
<PAGE>
4. Invest in securities of other investment companies;

5. Participate in the underwriting of securities;

6. Borrow, pledge, or hypothecate its assets, except that a Portfolio may
borrow from banks for temporary purposes, but any such borrowing is
limited to an amount equal to 25% of a Portfolio's net assets and a
Portfolio will not purchase additional securities while borrowing
funds in excess of 5% of that Portfolio's net assets;

7. Invest for the purpose of exercising control over any company;

8. Invest in commodities or commodity contracts;

9. Purchase warrants, or write, purchase, or sell puts, calls, straddles,
spreads, or combinations thereof, except the Stock and Asset
Allocation Portfolios may write covered call options as described in
their sections;

10. Make investments in real estate or mortgages except that a Portfolio
may purchase readily marketable securities of companies holding real
estate or interest therein, or in oil, gas, or development programs;

11. Purchase securities having legal or contractual restrictions on
resale;

12. Make any loans of securities or cash, except that a Portfolio may,
consistent with its investment objective and policies, (i) invest in
debt obligations including bonds, debentures, or other debt
securities, bank and other depository institution obligations, and
commercial paper, even though the purchase of such obligations may be
deemed the making of loans, and (ii) enter into repurchase agreements;

13. Issue senior securities; and

14. Invest more than 10% of its total assets in repurchase agreements
maturing in more than seven days or in portfolio securities that are
not readily marketable.

ADDITIONAL INVESTMENT RESTRICTIONS APPLICABLE
TO THE MONEY MARKET AND BOND PORTFOLIOS

The Fund has adopted the following investment restrictions applicable only to
the Money Market and Bond Portfolios under which such Portfolios may not do the
following:

1. Invest in common stocks or other equity securities; and

2. Invest in securities of companies which, together with predecessor
companies, have a record of less than five years continuous
operations.

If a percentage restriction is adhered to at the time of an investment for any
Portfolio, a later increase or decrease in percentage resulting from a change in
the value of portfolio securities or the amount of the Portfolio's net assets
will not be considered a violation of any of the foregoing restrictions.

4
<PAGE>
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES

MORTGAGE-RELATED SECURITIES

The Bond and Asset Allocation Portfolios may invest in GNMA certificates
and FNMA and FHLMC mortgage-backed obligations. Mortgage-related securities are
interests in pools of mortgage loans made to residential homebuyers, including
mortgage loans made by savings and loan institutions, mortgage bankers,
commercial banks and others. Pools of mortgage loans are assembled as securities
for sale to investors by various governmental and government-related
organizations.

GNMA Certificates: GNMA certificates are mortgage-backed securities
representing part ownership of a pool of mortgage loans for which timely payment
of interest and principal is guaranteed by the full faith and credit of the U.S.
Government. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the U.S. Government, the timely payment of
principal and interest on securities issued by institutions approved by GNMA
(such as savings and loan institutions, commercial banks and mortgage bankers)
and backed by pools of FHA-insured or VA-guaranteed mortgages. GNMA certificates
differ from typical bonds because principal is repaid monthly over the term of
the loan rather than returned in a lump sum at maturity. Because both interest
and principal payments (including prepayments) on the underlying mortgage loans
are passed through to the holder of the certificate, GNMA certificates are
called "pass-through" securities.

FNMA and FHLMC Mortgage-Backed Obligations: Government-related guarantors
(i.e., not backed by the full faith and credit of the U.S. Government) include
the Federal National Mortgage Association ("FNMA") and the Federal Home Loan
Mortgage Association ("FHLMC"). FNMA, a federally-chartered and privately-owned
corporation, issues pass-through securities representing interest in a pool of
conventional mortgage loans. FNMA guarantees the timely payment of principal and
interest but this guarantee is not backed by the full faith and credit of the
U.S. Government. FNMA is a government-sponsored corporation owned entirely by
private stockholders. It is subject to general regulation by the Secretary of
Housing and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any government agency) residential mortgages from a list of
approved seller/servicers which include state and federally-chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers.

BANK OBLIGATIONS

Bank obligations in which all Portfolios may invest include certificates of
deposit, bankers' acceptances and fixed time deposits.

Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Fixed time deposits are bank obligations payable at a stated maturity date and
bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand
by the investor, but may be subject to early withdrawal penalties which are
dependent upon the market conditions and the remaining maturity of obligations.
There are no contractual restrictions on the right to transfer a beneficial
interest in a fixed time deposit to a third party, although there is no market
for such deposits.

A Portfolio will not invest in any security issued by a commercial bank
unless the bank is federally-chartered and has total assets of at least U.S. $1
billion, or the equivalent in other currencies. All Portfolios may invest in
obligations of savings banks. A Portfolio will not invest in any security issued
by a savings bank unless such institution is federally-chartered and has total
assets of at least $1 billion.

5
<PAGE>
CORPORATE DEBT SECURITIES

All Portfolios may invest in corporate debt securities or obligations. The
investment return of corporate debt securities reflects interest earnings and
changes in the market value of the security. The market value of a corporate
debt obligation may also be expected to rise and fall inversely with interest
rates generally. There also exists the risk that the issuers of the securities
may not be able to meet their obligations on interest or principal payments at
the time called for by an instrument.

COMMERCIAL PAPER

All of the Portfolios may invest in commercial paper (including variable
amount master demand notes) issued by U.S. corporations (1) that have the rating
designated for the applicable Portfolio as described in the Prospectus, or (2)
if not rated, are determined to be of an investment quality comparable to rated
commercial paper in which a Portfolio may invest.

REPURCHASE AGREEMENTS

All Portfolios may invest in repurchase agreements. If a Portfolio acquires
securities from a bank or broker-dealer, it may simultaneously enter into a
repurchase agreement with the seller wherein the seller agrees at the time of
sale to repurchase the security at a mutually agreed upon time and price. The
term of such an agreement is generally quite short, possibly overnight or for a
few days, although it may extend over a number of month (up to one year) from
the date of delivery. The resale price is in excess of the purchase price by an
amount which reflect an agreed upon market rate of return, effective for the
period of time the Portfolio is invested in the security. This results in a
fixed rate of return protected from market fluctuations during the period of the
agreement. This rate is not tied to the coupon rate on the security subject to
the repurchase agreement.

Under the Investment Company Act of 1940 (the "1940 Act"), repurchase
agreements are considered to be loans by the purchaser collateralized by the
underlying securities. The adviser or subadviser, as the case may be, to a
Portfolio will monitor the value of the underlying securities at the time a
repurchase agreement is entered into and at all times during the term of the
agreement to ensure that its value always equals or exceeds the agreed upon
repurchase price to be paid to the Portfolio. The adviser to a portfolio, in
accordance with procedures established by the Board of Trustees, will also
evaluate the creditworthiness and financial responsibility of the banks and
broker-dealers with which the Portfolio enters into repurchase agreements.

A Portfolio may not enter into a repurchase agreement having more than
seven days remaining to maturity if, as a result, such agreements together with
any other securities which are not readily marketable, would exceed ten percent
(10%) of the net assets of the Portfolio. If the seller should become bankrupt
or default on its obligations to repurchase the securities, a Portfolio may
experience delay or difficulties in exercising its rights to the securities held
as collateral and might incur a loss if the value of the securities should
decline. A Portfolio also might incur disposition costs in connection with
liquidation of the securities.

OPTIONS

In pursuing their investment objectives, the Stock and Asset Allocation
Portfolios may engage in the writing of call options on debt securities.

Writing Options on Securities: The Portfolios may write (sell) call options
on debt or other securities in standardized contracts traded on national
securities exchanges or boards of trade.

A call option on a security is a contract that gives the holder of the
call, in return for a premium, the right to buy the underlying security from the
writer of the option at a specified exercise price at any time during the term
of the option. The writer of a call option on a security has the obligation upon
exercise of the option to deliver the underlying security upon payment of the
exercise price.

6
<PAGE>
A Portfolio may write call options only if they are "covered" or "secured".
In the case of a call option on a security, the option is "covered" if the
Portfolio owns the security underlying the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or, if
additional cash consideration is required, cash or cash equivalents in such
amount are placed in a segregated account by its custodian) upon conversion or
exchange of other securities held by the Portfolio.

If an option written by a Portfolio expires unexercised, the Portfolio
realizes a capital gain equal to the premium received at the time the option was
written. If an option purchased by a Portfolio expires unexercised, the
Portfolio realized a capital loss equal to the premium paid.

A Portfolio may purchase a call only in a "closing purchase transaction" to
terminate its obligation on a call that it has written. Prior to the earlier of
exercise or expiration of the call, an option may be closed out by an offsetting
purchase of a call option of the same series (type, exchange, underlying
security, exercise price and expiration). There can be no assurance, however,
that a closing purchase transaction can be effected when the Portfolio desires.

A Portfolio will realize a capital gain from a closing purchase transaction
if the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Portfolio will realize a capital loss. The
principal factors affecting the market value of a call option include supply and
demand, interest rates, the current market price of the underlying security in
relation to the exercise price of the option, the volatility of the underlying
security, and the time remaining until the expiration date.

The premium received for an option written by a Portfolio is recorded as a
deferred credit. The value of the option is marked-to-market daily and is valued
at the closing price on the exchange or board of trade on which it is traded,
or, if no closing price is available, at the mean between the last bid and asked
prices.

RISKS ASSOCIATED WITH CALL OPTIONS ON SECURITIES

There are several risks associated with writing call options on securities.
For example, there are significant differences between the securities and option
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. A decision as to
whether, when, and how to use a call option involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.

There can be no assurance that a liquid market will exist when a Portfolio
seeks to close out an option position. If a Portfolio were unable to close out a
covered call option it had written on a security, it would not be able to sell
the underlying security unless the option expired without exercise. As a writer
of a covered call option, a Portfolio foregoes, during the option's life, the
opportunity to profit from increases in the market value of the security
covering the call option above the sum of the premium and the exercise price of
the call.

If trading were suspended in an option written by a Portfolio, the Portfolio
would not be able to close out the option. If restrictions on exercise were
imposed, the Portfolio might be unable to exercise an option it has purchased.

TEMPORARY DEFENSIVE POLICY

Each Portfolio will retain a flexible approach to the investment of funds
and the Portfolio's composition may vary with the economic outlook. The
Portfolio may invest in U.S. Governmental securities, commercial paper, and
other money market instruments, including repurchase agreements maturing in
seven days or less. When, in the judgment of the Investment Adviser, current
cash needs or market or economic conditions warrant a temporary defensive
position, the Portfolio may invest to a greater degree in such short-term U.S.
Government securities, commercial paper, and other money market instruments.
Taking temporary defensive positions may reduce the chances of the Portfolio
achieving its investment objectives.

7
<PAGE>
MANAGEMENT OF THE FUND

The business and affairs of the Fund are managed under the direction of its
Board of Trustees according to applicable laws of the Commonwealth of
Massachusetts and the Fund's Declaration and Agreement of Trust.

TRUSTEES

The Trustees of the Fund are listed below. An asterisk (*) has been placed
next to the name of each Trustee who is an "interested person," as that term is
defined in the 1940 Act, by virtue of that person's affiliation with the Fund's
Investment Adviser, ReliaStar Investment Research, Inc. ("RIRI"), a Sub-Adviser,
Pilgrim Investments, Inc. ("Pilgrim Investments"). Unless otherwise noted, the
mailing address of the Trustees is 40 North Central Avenue, Suite 1200, Phoenix,
Arizona 85004. The Board of Trustees governs the Fund and is responsible for
protecting the interests of shareholders. The Trustees are experienced
executives who oversee the Fund's activities, review contractual arrangements
with companies that provide services to the Fund, and review the Fund's
performance.

The Trustees are as follows:

MARY A. BALDWIN, PH.D. (Age 60) Trustee. Realtor, Coldwell Banker Success Realty
(formerly, The Prudential Arizona Realty) for more than the last five years. Ms.
Baldwin is also Vice President, United States Olympic Committee (November 1996 -
Present), and formerly Treasurer, United States Olympic Committee (November 1992
- - November 1996). Ms. Baldwin is also a Director, Trustee, or a member of the
Advisory Board of each of the Funds managed by the Sub-Adviser.

AL BURTON. (Age 72) Trustee. President of Al Burton Productions for more than
the last five years; formerly Vice President, First Run Syndication, Castle Rock
Entertainment (July 1992 - November 1994). Mr. Burton is also a Director,
Trustee, or a member of the Advisory Board of each of the Funds managed by the
Sub-Adviser.

PAUL S. DOHERTY. (Age 66) Trustee. President, of Doherty, Wallace, Pillsbury and
Murphy, P.C., Attorneys. Mr. Doherty was formerly a Director of Tambrands, Inc.
(1993 - 1998). Mr. Doherty is also a Director or Trustee of each of the Funds
managed by the Sub-Adviser.

ROBERT B. GOODE. (Age 69) Trustee. Currently retired. Mr. Goode was formerly
Chairman of American Direct Business Insurance Agency, Inc. (1996 - 2000),
Chairman of The First Reinsurance Company of Hartford (1990-1991) and President
and Director of American Skandis Life Assurance Company (1987-1989). Mr. Goode
is also a Director or Trustee of each of the Funds managed by the Sub-Adviser.

ALAN L. GOSULE. (Age 59) Trustee. Partner, Rogers & 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 the Sub-Adviser.

*MARK LIPSON. (Age 51) Trustee. Chairman and Director of Pilgrim Advisors, Inc.,
and Director of Pilgrim Funding, Inc. Mr. Lipson was formerly Chairman of
Pilgrim Capital Corporation and Northstar Distributors, Inc.; Director of
Northstar Administrators Corporation; President of Pilgrim Funding, Inc.;
Director, President and Chief Executive Officer of National Securities &
Research Corporation; and Director/Trustee and President of the National
Affiliated Investment Companies and certain of National's subsidiaries (prior to
August 1993). Mr. Lipson is also a Director or Trustee of each of the Funds
managed by the Sub-Adviser.

WALTER H. MAY. (Age 63) Trustee. Retired. Mr. May was formerly Managing Director
and Director of Marketing for Piper Jaffray, Inc. Mr. May is also a Director or
Trustee of each of the Funds managed by the Sub-Adviser.

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

8
<PAGE>
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); President and Co-owner of StockVal,
Inc. (April 1993 - June 1997) and a Partner and Director of the law firm of
Streich, Lang, P.A. (1972 - 1993). Mr. Patton is also a Director, Trustee, or a
member of the Advisory Board of each of the Funds managed by the Sub-Adviser.

DAVID W.C. PUTNAM. (Age 60) Trustee. President and Director of F.L. Putnam
Securities Company, Inc. and affiliates. Mr. Putnam is Director of Anchor
Investment Trusts, the Principled Equity Market Trust, and Progressive Capital
Accumulation 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 the Sub-Adviser.

JOHN R. SMITH. (Age 76) Trustee. President of New England Fiduciary Company
(since 1991). Mr. Smith is Chairman of Massachusetts Educational Financing
Authority (since 1987), Vice Chairman of Massachusetts Health and Education
Authority (since 1979), Vice-Chairman of MHI, Inc. (Massachusetts non-profit
Energy Purchasers Consortium) (since 1996), and formerly Financial Vice
President of Boston College (1970-1991). Mr. Smith is also a Director or Trustee
of each of the Funds managed by the Sub-Adviser.

*ROBERT W. STALLINGS. (Age 51) Trustee. Chief Executive Officer and President.
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 Chairman, President and Chief Executive Officer of
Pilgrim Holdings Corporation (Pilgrim Capital Corporation merged into this
subsidiary October 29, 1999) (since August 1991). Mr. Stallings is also a
Director, Trustee, or a member of the Advisory Board of each of the Funds
managed by the Sub-Adviser.

*JOHN G. TURNER. (Age 60) Trustee. Chairman and Chief Executive Officer of Relia
Star Financial Corp. and Relia Star Life Insurance Co. (since 1993); Chairman of
ReliaStar United Services Life Insurance Company and ReliaStar Life Insurance
Company of New York (since 1995); Chairman of Northern Life Insurance Company
(since 1992); Director of Northstar Investment Management Corporation and
affiliates (since October 1993); Chairman and Director/Trustee of the Northstar
affiliated investment companies (since October 1993). Mr. Turner was formerly
President of ReliaStar Financial Corp. and ReliaStar Life Insurance Co.
(1989-1991) and President and Chief Operating Officer of ReliaStar Life
Insurance Company (1986-1991). Mr. Turner is also Chairman of each of the Funds
managed by the Sub-Adviser.

DAVID W. WALLACE. (Age 76) Trustee. Chairman of FECO Engineered Systems, Inc.
Mr. Wallace is President and Director/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, Putnam Trust Company, Chairman 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 the Sub-Adviser.

COMPENSATION OF TRUSTEES

The regular meetings of the Board are held quarterly. All Officers and
Interested Trustees of the Fund are compensated by RIRI or Pilgrim Investments.
Trustees who are not "interested persons" are paid by the Fund. The Fund also
reimburses the Trustees for expenses incurred by them in connection with such
meetings. The Trustees who are not "interested persons" received $2,500 per year
payable on a quarterly basis. Such fees are allocated evenly among the
Portfolios.

9
<PAGE>
COMPENSATION TABLE*

<TABLE>
<CAPTION>
1999 Total
Compensation Compensation From
Pension or Registrant and
Retirement Fund Complex Paid
Aggregate Benefits Accrued Estimated Annual to Trustees and
Name and Compensation as Part of Fund Benefits Upon Number of
Position From Registrant Expense (1) 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 $ 10,769
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, $ 625 N/A N/A $ 20,415
Trustee (2) (13 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) (1 Board)

John R. Smith, $ 625 N/A N/A $ 12,445
Trustee (3) (15 Boards)

Robert W. Stallings, $ 0 N/A N/A $ 0
Trustee (2) (5) (13 Boards)

John G. Turner, $ 0 N/A N/A $ 0
Trustee (3) (5) (15 Boards)

David W. Wallace, $ 625 N/A N/A $ 11,586
Trustee (3) (15 Boards)
</TABLE>
10
<PAGE>
- ----------
(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 by Pilgrim Investments on
October 26, 1999.
(4) Resigned as Trustee effective October 1, 1999.
(5) "Interested person" as defined in the Investment Company Act of 1940, of
the Fund. Officers and Trustees who are "interested persons" do not receive
any compensation from the Fund.

OFFICERS

Unless otherwise noted, the mailing address of the officers is 40 North
Central Avenue, Suite 1200, Phoenix, Arizona 85004. The following individuals
serve as officers for the Fund:

ROBERT W. STALLINGS, CHIEF EXECUTIVE OFFICER AND PRESIDENT. Mr. Stallings'
background is described above.

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, Inc. 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. Chief Financial Officer (since December 1993), Vice Chairman and
Assistant Secretary (since April 1993) and former President (May 1991 - December
1993), Pilgrim Capital (formerly Express America Holdings Corporation).
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 50) Executive
Vice President and Secretary (since April 1998), Pilgrim Capital (formerly
Express America Holdings Corporation), Pilgrim Group, Pilgrim Securities and
Pilgrim Investments; Executive Vice President and Secretary of each of the other
Pilgrim Funds. Formerly Senior Vice President, Pilgrim Capital (April 1995 -
April 1998); Senior Vice President, Express America Mortgage Corporation (June
1992 - August 1994) and President, Beverly Hills Securities Corp. (January 1990
- - June 1992).

MICHAEL J. ROLAND, SENIOR VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER. (Age
41) 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 other Pilgrim Funds. He served in
same capacity from January, 1995 - April, 1997. Formerly, Chief Financial
Officer of Endeaver Group (April, 1997 to June, 1998).

ROBERT S. NAKA, SENIOR VICE PRESIDENT AND ASSISTANT SECRETARY. (Age 36) 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 other Pilgrim Funds. Formerly Vice President, Pilgrim Investments (April
1997 - October 1999), Pilgrim Group, Inc. (February 1997 - August 1999).
Formerly Assistant Vice President, Pilgrim Group, Inc. (August 1995 - February
1997). Formerly Operations Manager, Pilgrim Group, Inc. (April 1992 - April
1995).

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.

11
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

On January 17, 1995, ReliaStar Financial Corp. ("ReliaStar") acquired
USLICO. USLICO was a holding company with two primary subsidiaries: United
Services Life Insurance Company (now merged into ReliaStar Life Insurance
Company or "RL"), of Arlington, Virginia, and Bankers Security Life Insurance
Society (now known as ReliaStar Life Insurance Company of New York or "RLNY"),
of Woodbury, New York.

USLICO Series Fund (the "Fund"), consisting of four distinct Portfolios, is
an investment vehicle for certain separate accounts of RL and RLNY. At the
present time, shares of the Fund are sold exclusively to RL and RLNY. The shares
serve as the investment medium for variable life insurance policies issued by
these companies.

Beneficial owners of more than 25% of the Fund's outstanding securities as
of April 3, 2000 were: ReliaStar United Services Variable Life Separate Account
I and ReliaStar Life Insurance Company of New York Variable Life Separate
Account I. For this purpose "control" means: (i) the beneficial ownership,
either directly or through one or more controlled companies, of more than 25% of
the voting securities of a company; (ii) the acknowledgment or assertion by
either the controlled or controlling party of the existence of control; or (iii)
an adjudication under the terms and conditions of the 1940 Act, which has become
final, that control exists.

As of April 3, 2000, no person owned of record or was known by the Fund to
own beneficially 5% or more of any Portfolio's outstanding equity securities
except that ReliaStar United Services Variable Life Separate Account I, a
separate account of RL, 4601 N. Fairfax Drive, Arlington, VA 22201, owned 55.61%
of the Stock Portfolio, 14.81% of the Money Market Portfolio, 56.74% of the Bond
Portfolio and 62.49% of the Asset Allocation Portfolio; and ReliaStar Life
Insurance Company of New York Variable Life Separate Account I, a separate
account of RLNY, 1000 Woodbury Road, Woodbury, NY 11797, owned 44.39% of the
Stock Portfolio, 85.19% of the Money Market Portfolio, 43.26% of the Bond
Portfolio and 37.51% of the Asset Allocation Portfolio.

On April 27, 2000, no Officer or Trustee of the Portfolios, owned
beneficially or of record or had an interest in shares of any Portfolio.

THE INVESTMENT ADVISER AND SUB-ADVISER

Since April 1, 1995, ReliaStar Investment Research, Inc. (formerly,
Washington Square Advisers, Inc.) has served as investment adviser to the Fund
pursuant to an Investment Advisory Agreement between it and the Fund. RIRI is a
wholly owned subsidiary of ReliaStar Financial Corp. From April 1988 through
April 1995, the adviser for the Fund was Bankers Centennial Management Corp.
RIRI is responsible for administering affairs of and supervising the investment
program for the Fund. RIRI also furnishes to the Board of Trustees, which has
overall responsibility for the business and affairs of the Fund, with periodic
reports on the investment performance of each Portfolio. RIRI's address is 100
Washington Ave. So., Minneapolis, MN 55401.

RIRI provides the Fund with all necessary office facilities and personnel
for servicing the Fund's investments, and compensates all personnel of RIRI
performing services relating to research, statistical and investment activities.

In addition, RIRI or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services necessary
for the operation of the Fund. These services include providing facilities for
maintaining the Fund's organization: supervising relations with custodians,
transfer and pricing agents, accountants, legal counsel, underwriters, and other
persons dealing with the fund; preparing all general shareholder communications
and conducting shareholder relations; maintaining the Fund's records and the
registration of the Fund's shares under federal securities laws and making
necessary filings under state securities laws; developing management and
shareholder services for the fund; and furnishing reports, evaluations, and
analyses on a variety of subjects to the Trustees.

Prior to April 30, 2000, Pilgrim Advisors, Inc. ("Pilgrim Advisors") served
as investment sub-adviser to the Stock Portfolio and the equity portion of the
Asset Allocation Portfolio of the Funds. On April 30, 2000, Pilgrim Advisors, an

12
<PAGE>
indirect wholly-owned subsidiary of ReliaStar, merged with Pilgrim Investments.
Pilgrim Advisors and Pilgrim Investments were sister companies and shared
certain resources and investment personnel.

Pilgrim Investments serves as sub-adviser pursuant to a Sub-Advisory
Agreement dated October 1, 1999. The address of Pilgrim Investments is 40 North
Central Avenue, Suite 1200, Phoenix, AZ 85004. Pilgrim Investments has managed
assets since 1994. Prior to October 1, 1999 the Stock Portfolio and the equity
portion of the Asset Allocation Portfolio were managed by another subadviser.

Subject to overall supervision of the Fund's Board of Trustees, RIRI
exercises overall responsibility for the investment and reinvestment of the
Fund's assets for which its has primary investment responsibility and
continuously monitors and supervises all aspects of Pilgrim Investments'
performance of its investment duties. In so doing, RIRI manages the day-to-day
investment operations of the Fund and the composition of the investment
portfolios of the Bond and Money Market Portfolios and the assets of the Asset
Allocation Portfolio not allocated to the management of Pilgrim Investments,
including the purchase, retention and disposition of the investments, securities
and cash contained therein.

Subject to overall responsibility of the Fund's Board of Trustees and RIRI,
Pilgrim Investments will exercise overall responsibility for the investment and
reinvestment of the Stock Portfolio and the portion of the assets of the Asset
Allocation Portfolio allocated by RIRI to Pilgrim Investments. In so doing,
Pilgrim Investments will manage the day-to-day operations of the investment
portfolio of the Stock Portfolio and the portion of the Asset Allocation
Portfolio for which it has primary advisory responsibility, which includes all
equity investments.

Under the terms of the Advisory Agreement, RIRI is obligated to manage the
Fund's Portfolios in accordance with applicable laws and regulations.

The Advisory Agreement ("Agreement") was reapproved last by the Board of
Trustees, including a majority of the Trustees who are not parties to the
Agreement, or interested persons of such parties, at a meeting held on April 27,
2000, to be effective April 30, 2000. The Agreement will continue in effect
indefinitely, provided such continuance is approved annually by (i) the holders
of a majority of the outstanding voting securities of the Fund or by the Board,
and (ii) a majority of the Trustees who are not parties to such Advisory
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party. The Board previously approved the Agreement on March 1, 1999. The
Agreement may be terminated without penalty on 60 days written notice by either
party to the Agreement and will terminate automatically if assigned.

The Board of Trustees approved the SubAdvisory Agreement between RIRI and
Pilgrim Investments, at its August 16, 1999 Board Meeting, subject to
shareholder approval. At the Shareholder Meeting on September 23, 1999, the
Agreement was approved by a "majority" of the outstanding shares (as defined in
the 1940 Act). The Agreement will continue in effect indefinitely, provided such
continuance is approved annually by (i) the holders of a majority of the
outstanding voting securities of the Fund or by the Board, and (ii) a majority
of the Trustees who are not parties to such SubAdvisory Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. The Agreement may be
terminated without penalty on 60 days written notice by either party to the
Agreement and will terminate automatically if assigned.

The Fund pays RIRI for its services under the Agreement a fee based on an
annual percentage of the average daily net assets of each Portfolio. For each
Portfolio, the Fund pays RIRI a fee at an annual rate not to exceed .50% of the
first $100 million of the average daily net assets of the Portfolio, and .45% of
the average daily net assets of the Portfolio in excess of $100 million. The
Fund does not pay Pilgrim Investments. For the years 1999, 1998 and 1997, the
Fund paid RIRI the following management fees: Stock Portfolio, $113,595, $98,513
and $64,509, respectively; Money Market Portfolio, $20,478, $19,255 and $14,571,
respectively; Bond Portfolio, $14,973, $12,107 and $7,027, respectively; Asset
Allocation Portfolio, $65,452, $57,991 and $38,430, respectively. By contractual
provision within the Policies, the management fees that can be charged against
the Policyholders for all investment advisory services are limited to .25% on an
annual basis. All management fees above that amount are paid for by the
Insurance Companies.

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<PAGE>
RIRI pays Pilgrim Investments at the rate of 0.45 of 1.00% of the average
daily net assets of the assets which Pilgrim Investments manages. For the period
from October 1, 1999 through December 31, 1999, RIRI paid Pilgrim Investments
$46,078. For the period of January 1, 1999 through September 29, 1999 and for
the fiscal years ending December 31, 1998 and 1997, RIRI paid the previous
subadviser $128,260, $168,524 and $160,174.

DISTRIBUTION OF FUND SHARES

Shares of the Fund are continuously distributed through Washington Square
Securities, Inc., a wholly-owned subsidiary of ReliaStar Financial Corp., which
is the 100% owner of ReliaStar Life Insurance Company ("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 Portfolio.
Its address is 111 Washington Ave. S., Minneapolis, MN 55401.

ReliaStar Financial Marketing Corporation, formerly known as USLICO
Securities Corp., a direct wholly-owned subsidiary of ReliaStar Financial Corp.
served as the Fund's Distributor from 1988 until February 1, 1997, pursuant to a
distribution contract. It received no compensation from the Fund.

SUSPENSION OF REDEMPTIONS

The Fund may suspend the right of redemption of shares of any Portfolio for
any period: (i) during which the New York Stock Exchange is closed other than
customary weekend and holiday closings or during which trading on the New York
Stock Exchange is restricted; (ii) when the Securities and Exchange Commission
determines that a state of emergency exists which may make payment or transfer
not reasonable practicable; (iii) as the Securities and Exchange Commission may
by order permit for the protection of the security holder of the Fund; or (iv)
at any other time when the Fund may, under applicable laws and regulations,
suspend payment on the redemption of its shares.

CUSTODIAN

On October 1, 1997, State Street Bank and Trust Company ("State Street"), a
Massachusetts banking institution, became Custodian for all the Fund's
portfolios and their cash. State Street's address is One Heritage Drive, North
Quincy, Massachusetts, 02171. Previously Crestar Bank, a Virginia banking
institution, served as custodian for the Fund's portfolios securities and cash.
In its capacity as Custodian, State Street maintains certain financial and
accounting books and records pursuant to a separate agreement with the Fund.

ADMINISTRATIVE SERVICES AGREEMENT

RL, successor by merger, on December 31, 1998, to ReliaStar United Services
Life Insurance Company ("RUSL") acts as the Fund's dividend disbursing and
transfer agent and provides administrative, legal and accounting services
pursuant to an Administrative Services Agreement (the "Administrative
Agreement") by and between the Fund, RUSL, and RIRI.

As compensation, RL is reimbursed for its costs associated with providing
services under the Administrative Agreement to the Fund. Such reimbursements
will be fair and reasonable and include all costs incurred by RL up to a cap of
0.65% of each Portfolio's average daily net assets.

The Administrative Services Agreement is renewable from year to year if the
Fund's Trustees, (including a majority of the Fund's disinterested Trustees)
approve the continuance of the Agreement. RL or the Fund may terminate the
Administrative Services Agreement on 90 days written notice to the other party.
Amendments to the Agreement may be effected if approved by the Trustees of the
Fund (including a majority of the disinterested trustees) and the Agreement is
not assignable by the Fund without the written consent of RL, or by RL without
the written authorization of the Fund's Board of Trustees.

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<PAGE>
During the fiscal years ending December 31, 1999, 1998 and 1997, RL and its
predecessor received $124,280, $93,210 and $66,032 for its services under the
Administrative Services Agreement.

LEGAL COUNSEL

Dechert Price & Rhoads serves as legal counsel to the Fund and the
Portfolios

INDEPENDENT AUDITORS

The Board of Trustees of the Trust has selected the firm of KPMG LLP, to
serve as independent auditors for the Fund for the current fiscal year and to
audit the annual financial statements of the Fund, prepare the Fund's federal
and state tax returns, and consult with the Fund on matters of accounting and
federal and state income taxation.

PORTFOLIO TRANSACTIONS AND BROKERAGE

BROKERAGE AND RESEARCH SERVICES

There is generally no stated commission in the case of fixed-income
securities, which are traded in the over-the-counter markets, but the price paid
by the Fund usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer. Transactions on
national stock exchanges and other agency transactions involve the payment of
the Fund of negotiated brokerage commissions. Such commissions vary among
different brokers. Also, a particular broker may charge different commissions
according to such factors as the difficulty and size of the transaction.

RIRI or Pilgrim Investments places all orders for the purchase and sale of
portfolio securities and options for a Portfolio through a substantial number of
broker-dealers. In executing transactions, RIRI or Pilgrim Investments will
attempt to obtain the best execution for a Portfolio taking into account such
factors as price (including the applicable brokerage commission or dollar
spread), size of order, the nature of the market for the security, the timing of
the transaction, the reputation, experience and financial stability of the
broker-dealer involved, the quality of the service, the difficulty of execution
and operational facilities of the firms involved, and the firm's risk in
positioning a block of securities. In effecting purchases and sales of portfolio
securities in transactions on national stock exchanges for the account of the
Fund RIRI or Pilgrim Investments may pay higher commission rates than the lowest
available when RIRI or Pilgrim Investments believes it is reasonable to do so in
light of the value of the brokerage and research services provided by the
broker-dealer effecting the transaction, as described below. In the case of
securities traded on the over-the-counter markets, there is generally no stated
commission, but the price includes an undisclosed commission or mark-up.

Some securities considered for investment by the Fund's Portfolios may also
be appropriate for other clients served by RIRI or Pilgrim Investments. If a
purchase or sale of securities consistent with the investment policies of a
Portfolio and one or more of these clients served by RIRI or Pilgrim Investments
is considered at or about the same time, transactions in such securities will be
allocated among the Portfolios and clients in a manner deemed fair and
reasonable by RIRI or Pilgrim Investments. Although there is no specified
formula for allocating such transactions, the various allocation methods used by
RIRI or Pilgrim Investments, and the results of such allocations, are subject to
periodic review by the Fund's Adviser and Board of Trustees.

It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research services from broker-dealers which execute portfolio
transactions for the clients of such advisers. Consistent with this practice,
the adviser for a Portfolio may receive research services from many
broker-dealers with which that adviser places the Portfolio transactions. These
services, which in some cases may also be purchased for cash, include such
matters as general economic and security market reviews, industry and company
reviews, evaluations of securities and recommendations as to the purchase and
sale of securities. Some of these services may be of value to the Adviser or
Sub-Adviser in advising its various clients (including the Fund), although not

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<PAGE>
all of these services are necessarily useful and of value in managing a
Portfolio. The management fee paid by the Portfolio is not reduced because the
Adviser or Sub-Adviser and its affiliates receive such services.

As permitted by Section 28(e) of the Securities Exchange Act of 1934, RIRI
or Pilgrim Investments may cause a Portfolio to pay a broker-dealer which
provides "brokerage and research services" (as defined in that Act) to RIRI or
Pilgrim Investments, an amount of disclosed commission for effecting a
securities transaction for the Portfolio in excess of the commission which
another broker-dealer would have charged for effecting that transaction.

The Fund paid aggregate brokerage commissions of $400,212, $157,552 and
$300,108 for the three years ended December 31, 1997, 1998, and 1999.

PORTFOLIO TURNOVER

For reporting purposes, the portfolio turnover rate of each Portfolio is
calculated by dividing the value of the lesser of purchases or sales of
portfolio securities for the fiscal year by the monthly average of the value of
portfolio securities owned by the Portfolio during the fiscal year. In
determining such portfolio turnover, long-term U.S. Government securities are
included. Short-term U.S. Government securities and all other securities whose
maturities at the time of acquisition were one year or less are excluded. A 100%
portfolio turnover rate would occur, for example, if all of the Portfolio's
securities (other than short-term securities) were replaced once during the
fiscal year. The portfolio turnover rate for each Portfolio will vary from year
to year, depending on market conditions. Because each Portfolio has a different
investment objective, each will have a different expected rate of portfolio
turnover. However, the portfolio turnover rate will not be a limiting factor
when management deems it appropriate to buy or sell securities for a particular
Portfolio.

The writing of call options by the Stock and Asset Allocation Portfolios
may result in higher turnover than otherwise would be the case and, therefore,
greater commission expenses.

It is anticipated that the annual portfolio turnover, as defined above,
will not exceed the following limits of the Portfolios under normal market
conditions: Money Market Portfolio -- 0%; Stock Portfolio -- 125%; Bond
Portfolio -- 100%; and Asset Allocation Portfolio -- 150%. Increased portfolio
turnover may result in greater brokerage commission. In 1999, the Portfolio
turnover rate was: Stock Portfolio -- 305.87%; Bond Portfolio -- 45.74%; and
Asset Allocation Portfolio -- 227.49%.

Market conditions and changes in interest rates may result in turnover at a
greater or lesser than anticipated.

NET ASSET VALUE

As indicated under "Net Asset Value" in the Prospectus, the Fund's net
asset value per share for the purpose of pricing purchase and redemption orders
is determined after 4:00 p.m. Eastern Standard Time, on each day the New York
Stock Exchange is open for trading. Net asset value will not be determined on
the following days: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

Pursuant to an exemptive rule of the Securities and Exchange Commission,
the Money Market Portfolio's securities are valued by the amortized cost method.
This method of valuation involves valuing a security at its cost at the time of
purchase and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the security. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Portfolio would receive if
it sold the security. During periods of declining interest rates, the quoted
yield on shares of the Portfolio may tend to be higher than that of a fund or
Portfolio with identical investments which uses a method of valuation based on
market prices an estimates of market prices for all its portfolio securities.
Thus, if the use of amortized cost by the Portfolio resulted in lower aggregate
portfolio value on a particular day, a prospective investor in the Portfolio

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<PAGE>
would be able to obtain a somewhat higher yield of he purchased shares on that
day than he would be able to receive from a fund or Portfolio using solely
market values. Existing investors in the Portfolio would receive less investment
income. The converse is true in a period of rising interest rates.

The Rule permitting the Portfolio to use the amortized cost method of
valuation requires that, under the direction of the Board of Trustees, certain
procedures be adopted to monitor and stabilize the price per share of the
Portfolio. Calculations are made to compare the value of its investments valued
at amortized cost with market values. Market valuations are obtained by using
actual quotations provided by issuers or market makers, estimates of market
value, or values obtained from yield data relating to classes of money market
instruments or U.S. Government securities published by reputable sources at the
mean between the bid and asked prices for the instruments. In the event that a
deviation of 1/2 of 1% or more exists between the Fund's $1.00 per share net
asset value and the net asset value calculated by reference to market
quotations, or if there is any other deviation which the Board of Trustees
believes would result in a material dilution of shareholders or purchasers, the
Board of Trustees will promptly consider what action, if any, should be
initiated.

Under the exemptive Rule of the Securities and Exchange Commission allowing
the Fund to use the amortized cost method of valuation of portfolio securities,
the Fund must maintain a dollar-weighted average portfolio maturity of 90 days
or less. In addition, with certain limited exceptions, the Fund cannot invest
more than 5% of its assets in the securities of a single issuer (other than
government securities). Investments in Second Tier securities in the aggregate
must be limited to 5% of the Fund's total assets, and investment in a single
Second Tier Security cannot exceed the greater of 1% of total assets or $1
million.

The Fund can only invest in instruments having remaining maturities of 397
days or less and can only invest in securities determined by RIRI to be of high
quality with minimal credit risks.

CALCULATION OF PERFORMANCE DATA

The Fund is the successor to the Separate Account I (a Stock Account),
Separate Account II (a Money Market Account), Separate Account III (a Bond
Account) and Separate Account IV (an Asset Allocation Account) of ReliaStar
United Services Life Insurance Company and Separate Account I (a Stock Account),
Separate Account II (a Money Market Account), Separate Account III (a Bond
Account) and Separate Account IV (an Asset Allocation Account) of ReliaStar Life
Insurance Company of New York (collectively, the "RUSL and RLNY Separate
Accounts"). On April 30, 1988, the investment-related assets and liabilities of
the RUSL and RLNY Separate Accounts were transferred to the Stock, Money Market,
Bond and Asset Allocation Portfolios of the Fund. Performance calculations are
based upon the RLNY Separate Accounts.

THE MONEY MARKET PORTFOLIO YIELD

To calculate a seven-day yield for the Money Market Portfolio, the Fund
uses a hypothetical, pre-existing account having a balance of $100 at the
beginning of the seven-day period. The net change in the value of the Portfolio
during the seven-day period (excluding any realized gains or losses from the
sale of securities and unrealized appreciation and depreciation) is divided by
the value of the Account at the beginning of the period and then multiplied by
365/7 to obtain the annual yield to the nearest hundredth of one percent. Since
the net change in the seven-day value is used, the values reflect the charges
made against the Portfolio.

The seven-day yield does not necessarily represent the future yield of the
Money Market Portfolio. Yields fluctuate on a daily basis and reflect quality,
length of maturities, rates of return and market conditions for money market
investments suitable for this Portfolio.

A hypothetical example of how we calculate the seven-day yield for the
period ending December 31, 1999, assuming the values used are as follows:

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<PAGE>
(1) Value on Dec. 24, 1999.......................................... $ 100.00
(2) Value on Dec. 31, 1999 (exclusive of capital charges)........... 100.08
(3) Net change:(2) - (1)............................................ .08
(4) Net change divided by Value on Dec. 24, 1999:
(3) divided by (1).................................................. .0008
(5) Seven-day yield annualized (multiplied by 365/7)................ 4.17%

THE BOND PORTFOLIO, THE COMMON STOCK PORTFOLIO,
THE ASSET ALLOCATION PORTFOLIO - SEC 30 DAY YIELD

Yield is computed by dividing the net investment income per share deemed
earned during the computation period by the maximum offering price per share on
the last day of the period according to the following formula:

a-b
------------------
SEC YIELD = 2[( cd + 1)(6)-1]

Where: a = dividends and interest earned during the period;

b = expenses accrued for the period (net of reimbursements);

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends: and,

d = the maximum offering price per share on the last day of the
period.

The SEC 30 day yield for the period ending December 31, 1999 for the Bond
Portfolio was 4.51%; the Common Stock Portfolio, -0.45%; and the Asset
Allocation Portfolio 3.87%

THE STOCK PORTFOLIO, THE BOND PORTFOLIO, AND THE ASSET
ALLOCATION PORTFOLIO - AVERAGE ANNUAL TOTAL RETURN

Average Annual Total Return is computed by finding the average annual
compounded rates of return over 1, 5, and 10 years that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:

n
P(1+T) = ERV

Where: P = a hypothetical initial payment of $1,000;

T = average annual total return;

n = number of years; and,

ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such
period.

This calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the Prospectus, and includes all recurring fees, such as investment advisory
and management fees, charged as expenses to all shareholder accounts.

The average annual return for the Stock Portfolio for the one-year,
five-year and ten-year periods ended December 31, 1999 are 30.08%, 23.19% and
14.59% respectively. The average annual return for the Bond Portfolio for the
one-year, five-year and ten-year periods ended December 31, 1999 are -2.87%,
5.86% and 6.22% respectively. The average annual return for the Asset Allocation
Portfolio for the one-year, five-year and ten-year periods ended December 31,
1999 are 15.10%, 14.96% and 10.73% respectively.

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<PAGE>
THE STOCK PORTFOLIO, THE BOND PORTFOLIO, THE ASSET
ALLOCATION PORTFOLIO - CUMULATIVE TOTAL RETURN

Cumulative Total Return is computed by finding the cumulative compounded
rate of return over the period indicated in the advertisement that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:

CTR = ERV - P
------- * 100
P

Where: CTR = Cumulative total return;

ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such
period; and,

P = initial payment of $1,000.

The cumulative total return for the fiscal year ending December 31, 1999,
for each Portfolio was 30.08%, Stock Portfolio; -2.87%, Bond Portfolio; and,
15.10%, Asset Allocation Portfolio.

PERFORMANCE COMPARISONS

Comparative performance information may be used from time to time in
advertising each Portfolio's shares, including data from Lipper Analytical
Services, Inc., Morningstar, Inc. and other entities or organizations which
track the performance of investment companies. Each Portfolio's performance also
may be compared to the performance of its respective Comparison Index, if any,
as described in the Prospectus, and, additionally, to the performance of
unmanaged indices. Unmanaged indices may assume the reinvestment of dividends
but generally do not reflect deductions for administrative and management cost
and expenses.

Quotations of yield or total return for the Fund will not take into account
charges or deductions against the Separate Account to which the Fund shares are
sold or charges and deductions against the policies issued by RL and RLNY.
Performance information for a Portfolio reflects only the performance of a
hypothetical investment in the Portfolio during the particular time period on
which the calculation is based. Performance information should be considered in
light of the Portfolios' investment objectives and policies, characteristics and
quality of the Portfolios, and the market conditions during the given time
period, and should not be considered as a representation of what may be achieved
in the future.

TAXATION

Each Portfolio intends to qualify annually and elects to be treated as a
regulated investment company under the Internal Revenue Code of 1986 (the
"Code").

To qualify as a regulated investment company, each Portfolio must, among
other things: (i) derive in each taxable year at least ninety percent (90%) of
its gross income from dividends, interest, payments with respect to securities
loan, and gains from the sale or other disposition of stock, securities or
foreign currencies or other income derived with respect to its business of
investing in such stock, securities or currencies; (ii)* diversify its holdings
so that, at the end of each quarter of the taxable year,(a) at least fifty
percent (50%) of the market value of the Portfolios' assets are represented by
cash, U.S. Government securities, the securities of other regulated investment
companies and other securities, with such other securities of any one issuer
limited for the purposes of this calculation to an amount not greater than five

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<PAGE>
percent (5%) of the value of the Portfolio's total assets and 10 percent (10%)
of the outstanding voting securities of such issuer, and (b) not more than
twenty-five percent (25%) of the value of its total assets is invested in the
securities of [more than one] issuer (other than U.S. Government securities or
the securities of other resulted investment companies); and (iii) distribute at
least ninety percent (90%) of its net investment income (which includes
dividends, interest, and net short-term capital gains in excess of and net
long-term capital losses) each taxable year.

As a regulated investment company, a Portfolio will not be subject to U.S.
federal income tax on its net investment income and net capital gains (any net
long-term capital gains in excess of the sum of net short-term capital losses
and capital loss carryovers from prior years), if any, that it distributes to
shareholders. Each Portfolio intends to distribute to its shareholders, at least
annually, substantially all of its net investment income and any net capital
gains. In addition, amounts not distributed by a Portfolio on a timely basis in
accordance with a calendar year distribution requirement are subject to a
nondeductible four percent (4%) excise tax. To avoid the tax, a Portfolio must
distribute during each calendar year, (i) at least ninety-eight percent (98%) of
its ordinary income (not taking into account any capital gains or losses) for
the calendar year, (ii) at least ninety-eight percent (98%) of its capital gains
in excess of its capital losses for the twelve-month period ending October 31 of
the calendar year, and (iii) all ordinary income and capital gains for previous
years that were not distributed during such years. To avoid application of the
excise tax, each Portfolio intends to make these distributions in accordance
with the calendar year distribution requirement. A distribution will be treated
as paid during the calendar year if it is declared by a Portfolio before
December 31 of the year and paid by the Portfolio by January 31 of the following
year. Such distribution will be taxable to shareholders (the Separate Account)
in the year the distributions are declared, rather than the year in which the
distributions are received.

DISTRIBUTIONS

Distributions of any new investment income by a Portfolio are taxable to
the shareholder as ordinary income. Net capital gains will be treated, to the
extent distributed, as long-term capital gains in the hands of the shareholder.

ADDITIONAL INFORMATION

SHAREHOLDER MEETINGS

The Declaration of Trust does not require that the Fund hold annual or
regular meetings of shareholders. Meetings of the Shareholders may be called by
the Trustees and held at such times the Trustees may from time to time
determine, for the purpose of the elections of Trustees or such other purposes
as may be specified by the Trustees.

LIABILITY

Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Fund, or Portfolio thereof,
organized as a Massachusetts business trust. The Declaration of Trust further
provides for indemnification out of the assets and property of the Fund, or
Portfolio thereof, for all loss and expense of any shareholder held personally
liable for the obligations of the Fund or Portfolio. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund or Portfolio would be unable to meet
its obligations.

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EXPERTS

The financial statements incorporated in this prospectus by reference from
the Registrant's Annual Report to shareholders for the year ended December 31,
1999 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

FINANCIAL STATEMENTS

The audited Financial Statements for the Fund for the fiscal year ended
December 31, 1999 are incorporated herein by reference to the Registrant's 1999
Annual Report to Shareholders filed with the U.S. Securities and Exchange
Commission. No other portion of the Annual Report is so incorporated. Copies of
the Fund's Annual Report may be obtained without charge by contacting Pilgrim
Funds at 40 North Central Avenue, Suite 1200, Phoenix, Arizona 85004, (800)
992-0180.

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APPENDIX A

CORPORATE BOND AND COMMERCIAL PAPER RATINGS

(a) Corporate Bonds: Bonds are rated Aa by Moody's Investors Service, Inc.
are judged by Moody's to be of high quality by all standards. Together with
bonds rated Aaa (Moody's highest rating) they comprise what are generally known
as high-grade bonds. Aa bonds are rated lower than Aaa bonds because margins of
protection may not be as large as those of Aaa bonds, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than those
applicable to Aaa securities. Bonds which are rated A by Moody's possess may
favorable investment attributes and are to be considered as upper medium-grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest as susceptibility to
impairment sometime in the future.

Moody's Baa rated bonds are Considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.

Bonds rated AA by Standard & Poor's Corporation are judged by Standard &
Poor's to be high-grade obligations and in the majority of instances differ only
in small degree from issues rated AAA (Standard & Poor's highest rating). Bonds
rated AAA are considered by Standard & Poor's to be the highest grade
obligations and possess the ultimate degree of protection as to principal and
interest. With AA bonds, as with AAA bonds, prices move with the long-term money
market. Bonds rated A by Standard & Poor's have a strong capacity to pay
principal and interest, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions.

Standard & Poor's BBB rated bonds, or medium-grade category bonds, are
borderline between definitely sound obligations and those where the speculative
elements begin to predominate. These bonds have adequate asset coverage and
normally are protected by satisfactory earnings. Their susceptibility to
changing conditions, particularly depressions, necessitates constant watching.
These bonds generally are more responsive to business and trade conditions than
to interest rates. This group is the lowest which qualifies for commercial bank
investment.

(b) Commercial Paper: The ratings Prime-1 and Prime-2 are the two highest
commercial paper rating assigned by Moody's. Among the factors considered by
Moody's in assigning ratings are the following: (1) evaluation of the management
of the issuer; (2) economic evaluation of the issuer's industry or industries
and an appraisal of speculative-type risks which may be inherent in certain
areas; (3) evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years; (7) financial strength of a
parent company and the relationships which exist with the issuer; and (8)
recognition by management of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such obligations.
Issuers within this Prime category may be given ratings 1, 2 or 3, depending on
the relative strengths of these factors.

Commercial paper rated A-1 or A-2 by Standard & Poor's has the following
characteristics: (1) liquidity ratios are adequate to meet cash requirements;
(2) long-term senior debt rating should be A or better, although in some cases
BBB credits may be allowed if other factors outweigh the BBB; (3) the issuer
should have access to at least two additional channels of borrowing; (4) basic
earnings and cash flow should have an upward trend with allowance made for
unusual circumstances; and (5) typically the issuer's industry should be well
established and the issuer should have a strong position within its industry and
the reliability and quality of management should be unquestioned. Issuers rated
A are further referred to by use of numbers 1, 2 and 3 to denote relative
strength within this highest classification.

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APPENDIX B

GLOSSARY OF INVESTMENT TERMS

U.S. GOVERNMENT SECURITIES - are obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities. Securities by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes, and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury (such as GNMA certificates). In these
securities, the payment of principal and interest is unconditionally guaranteed
by the U.S. Government, and thus they are of the highest possible credit
quality. Such securities are subject to variations in market value due to
fluctuations in interest rates, but, if held to maturity, will be paid in full.
Securities issued by U.S. Government instrumentalities and certain federal
agencies are neither direct obligations of nor guaranteed by the Treasury.
However, they involve federal sponsorship in one way or another: some are
supported by the discretionary authority of the Treasury to purchase certain
obligations of the issuer; others are supported only by the credit of the
issuing government agency or instrumentality. These agencies and
instrumentalities include, but are not limited to, Federal Land Banks, Farmers
Home Administration, Central Bank for Cooperatives, Federal Intermediate Credit
Banks, and Federal Home Loan Banks. All of the Portfolios may invest in U.S.
Government securities.

MORTGAGE-RELATED SECURITIES - The Bond and Asset Allocation Portfolios may
invest in GNMA certificates and FNMA and FHLMC mortgage-backed obligations.

GNMA CERTIFICATES: GNMA certificates are mortgage-backed securities representing
part ownership of a pool of mortgage loans on which timely payment of interest
and principal is guaranteed by the full faith and credit of the U.S. Government.
GNMA certificates differ from typical bonds because principal is repaid monthly
over the term of the loan rather than returned in a lump sum at maturity.
Although the mortgage loans in the pool will have maturities of up to 30 years,
the actual average life of the GNMA certificates typically will be substantially
less because the mortgages will be subject to normal principal amortization and
may be prepaid prior to maturity. Reinvestment of prepayments may occur at
higher or lower rates than the original yield on the certificates.

FNMA AND FHLMC MORTGAGE-BACKED OBLIGATIONS: The Federal National Mortgage
Association ("FNMA"), a federally chartered and privately-owned corporation,
issues pass-through securities representing interests in a pool of conventional
mortgage loans. FNMA guarantees the timely payment of principal and interest but
this guarantee is not backed by the full faith and credit of the U.S.
Government. The Federal Home Loan Mortgage Corporation ("FHLMC"), a corporate
instrumentality of the United States, issues participation certificates which
represent an interest I a pool of conventional mortgage loans. FHLMC guarantees
the timely payment of interest and the ultimate collection of principal and
maintains reserves to protect holders against losses due to default, but the
certificates are not backed by the full faith and credit of the U.S. Government.
As is the case with GNMA certificates, the actual maturity of and realized yield
on particular FNMA and FHLMC pass-through securities will vary based on the
prepayment experience of the underlying pool of mortgages.

RISKS OF MORTGAGE-RELATED SECURITIES: In the case of mortgage pass-through
securities such as GNMA certificates or FNMA and FHLMC mortgage-backed
obligations, early repayment of principal arising from prepayments of principal
on the underlying mortgage loans due to the sale of the underlying property, the
refinancing of the loan, or foreclosure may expose a Portfolio to a lower rate
of return upon reinvestment of principal. Prepayment rates vary widely and may
be affected by changes in market interest rates. In periods of falling interest
rates, the rate of prepayment tends to increase, thereby shortening the actual
average life of the mortgage-related security. Conversely, when interest rates
are rising, the rate of prepayment tends to decrease, thereby lengthening the
actual average life of the mortgage-related security. Accordingly, it is not
possible to accurately predict the average life of a particular pool.
Reinvestment of prepayments may occur at higher or lower rates than the original
yield on the certificates. Therefore, the actual maturity and realized yield on
pass-through or modified pass-through mortgage-related securities will vary
based upon the prepayment experience on the underlying pool of mortgages.

REPURCHASE AGREEMENTS - are agreements by which the Portfolio purchases a
security and obtains a simultaneous commitment from the seller (a member bank of
the Federal Reserve System or a recognized securities dealer) to repurchase the

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security at an agreed upon price and date. The resale price is in excess of the
purchase price and reflects an agreed upon market rate unrelated to the coupon
rate on the purchased security. Such transactions afford an opportunity for a
Portfolio to maintain liquidity and earn income over periods of time as short as
overnight.

The underlying securities on repurchase agreements are ordinarily U.S.
Government securities but may be other securities in which the Portfolio might
otherwise invest. A Portfolio will enter into repurchase agreements only if they
are fully collateralized. The market value of the collateral, including accrued
interest, will equal or exceed the repurchase price, and the collateral will be
in the actual or constructive possession of the Portfolio.

A Portfolio will enter only into repurchase agreements that mature in seven days
or less. A repurchase agreement subjects a Portfolio to the risk of the ability
of the seller to pay the repurchase price on the delivery date; however, the
underlying security constitutes the collateral for the seller's obligation. In
addition, the Adviser will enter into repurchase agreements with parties that it
considers creditworthy. In the event the seller does default, the Portfolio may
incur (i) a loss if the value of the collateral declines and (ii) disposition
costs in connection with liquidating the collateral. In the event bankruptcy
proceedings are commenced with respect to the seller, realization upon the
collateral by the Portfolio may be delayed or limited and a loss may be incurred
if the collateral securing the repurchase agreement declines in value during the
bankruptcy proceedings.

CERTIFICATES OF DEPOSIT - are certificates issued against funds deposited in a
bank, are for definite period of time, earn a specified rate of return, and are
normally negotiable.

BANKERS' ACCEPTANCES - are short-term credit instruments issued by corporations
to finance the import-export transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity. These instruments
reflect the obligation of both the bank and drawer to pay the face amount of the
instrument at maturity.

COMMERCIAL PAPER - All Portfolios may invest in commercial paper. Commercial
paper represents short-term unsecured promissory notes issued by bank holding
companies, corporations, and finance companies. The commercial paper purchased
by a Portfolio will consist of direct obligations of domestic issuers which, at
the time of investment, (i) meet the rating standard for particular Portfolios
as specified in the section on Investment Objectives and Policies, or (ii) if
not rated, are determined to be of an investment quality comparable to rated
commercial paper in which a Portfolio may invest.

CORPORATE DEBT SECURITIES - All Portfolios may invest in corporate debt
securities of domestic issuers. The debt securities in which a Portfolio may
invest are limited to corporate debt securities (corporate bonds, debentures,
notes, and other similar corporate debt instruments) which meet the minimum
ratings criteria or other standards set forth for that particular Portfolio, or,
if not so rated, are, in the Adviser's opinion, comparable in quality to
corporate debt securities in which a Portfolio may invest.

The investment return on corporate debt securities reflects interest earnings
and changes in the market value of the security. The market value of corporate
debt obligations may be expected to rise and fall inversely with the interest
rates generally. There also exists the risk that the issuers of the securities
may not be able to meet their obligations on interest or principal payments at
the time called for by an instrument.

OPTIONS - CALLS - The Stock Portfolio and the Asset Allocation Portfolio may
write (i.e., sell) call options ("calls") if (i) after any sale, not more than
25% of that Portfolio's total assets are subject to calls; (ii) the calls are
traded on a domestic securities exchange or board of trade; and (iii) the calls
are "covered." The option is "covered" if the Portfolio owns the security
underlying the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or, if additional cash
consideration is required, cash or cash equivalents in such amount are placed in
a segregated account by its custodian) upon conversion or exchange of other
securities held by the Portfolio. When the Portfolio writes a call, it receives
a premium and agrees to sell the callable securities to a purchaser at a fixed
exercise price (which may differ from the market price of the underlying
security) regardless of market price changes during the call period. The
Portfolio may purchase a call only in a "closing purchase transaction" to

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terminate its obligation on a call which it has written. For as long as the
Portfolio remains obligated as a writer of a call, it forgoes the opportunity to
profit from increases in the market price of the underlying security above the
call price. The principal objective in writing covered calls is to attempt to
attain, through the receipt of premiums from expired calls and net profits, if
any, from closing purchase transactions, a greater current return than might be
realized by holding the securities without writing calls.

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