DECEMBER 31, 1999
ANNUAL REPORT
to Variable Life Policyowners
DYNAMIC VARIABLE LIFE
Dynamic Variable Life
ReliaStar Life Insurance
Company of New York
Variable Separate Account
USLICO Series Fund
THIS REPORT IS FOR THE
INFORMATION OF POLICYOWNERS
AND NOT AN OFFERING OF THE SALE
OF THE VARIABLE LIFE POLICY, WHICH CAN
ONLY BE MADE BY A CURRENT PROSPECTUS.
[LOGO] RELIASTAR
RELIASTAR LIFE INSURANCE
COMPANY OF NEW YORK
4601 Fairfax Drive, PO Box 3700
Arlington, VA 22203
047659a (2/00)
<PAGE>
A MESSAGE TO VARIABLE LIFE POLICYOWNERS
We are now in the sixth year of significant increases in the U.S. Stock Markets,
as measured by the Dow Jones Industrial Average and the Standard & Poor's 500
Index. Propelled by a fourth quarter increase of 11.2%, the Dow's increase for
the twelve months ended December 31, 1999, was 25.2%. The S&P increased 14.5% in
the fourth quarter and 19.5% for the last twelve months. Both the Dow Jones
Industrial Average and the S&P 500 are unmanaged indices and the percentage
changes exclude dividends.
The yield on the 30-year Treasury Bond has increased, so that at the end of
December, it was approximately 6.5%. Short-term rates, as measured by the
3-month Treasury Bill, are yielding 5.3%, which is also above a quarter ago.
The U.S. Gross Domestic Product for the third quarter of 1999 has increased 5.7%
while inflation remains low with the Consumer Price Index increasing by 2.7%
year-over-year on December 31, 1999.
The Variable Life Insurance Policies, which are the subject of this report, are
distributed by Washington Square Securities, Inc. ("WSSI"), 20 Washington Avenue
South, Minneapolis, Minnesota 55401, (612) 372-5507. WSSI, a registered
broker-dealer, is an affiliated company of ReliaStar Life Insurance Company of
New York, the issuer of your insurance policy.
THE STOCK ACCOUNT. On December 31, 1999, the invested assets were allocated
99.85% to 124 different stock positions with the remainder in a high quality
money market fund. Our emphasis within the stock portfolio continues to be in
issues which we believe will perform well in the current environment and tend to
hold their values during market weakness.
THE MONEY MARKET ACCOUNT. On December 31, 1999, this portfolio held 21 different
issues of the highest quality commercial paper with maturities ranging from 1
day to 8 weeks.
THE INVESTMENT GRADE BOND ACCOUNT. Bonds represented 97.36% of the investable
funds on December 31, 1999 with the remainder in a high quality money market
fund. The portfolio was comprised of 25 bond issues, with scheduled maturities
ranging from 4 months to 49 years.
THE ASSET ALLOCATION ACCOUNT. On December 31, 1999, invested assets were
allocated 62.03% to common stocks and 36.88% to bonds, with the remainder in a
high quality money market fund. There were 126 different common stock issues in
the portfolio and 28 different bond positions.
THE OUTLOOK. For the remainder of 2000, we expect economic growth to slow to
2.0% to 3.0% given the Federal Reserve's desire to raise short rates. Inflation
and intermediate interest rates should grind slightly higher. At the time of
this report, macroeconomic indicators are showing signs of strong growth and low
unemployment. While the business expansion has been underway for almost 9 years,
it is likely to be sustained throughout 2000. Nevertheless, profits are expected
to grow at a slightly slower rate than in the past few years.
ReliaStar Life Insurance Company of New York is a wholly owned subsidiary of
ReliaStar Financial Corp.
Respectfully,
/s/ James R. Gelder
James R. Gelder
President and Chief Executive Officer
ReliaStar Life Insurance Company of New York
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Sub-accounts
------------
COMMON MONEY ASSET TOTAL
STOCK MARKET BOND ALLOCATION SUB-ACCOUNTS
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in USLICO Series
Fund Portfolios $15,118,018 $ 5,159,653 $ 1,198,698 $ 6,774,361 $28,250,730
Policy loans 1,395,600 739,057 9,909 736,619 2,881,185
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS 16,513,618 5,898,710 1,208,607 7,510,980 31,131,915
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Net accrued for policy related
transactions due to (from) ReliaStar Life of New York 303,438 77,269 5,442 131,836 517,985
Amounts payable to ReliaStar Life of New York 375,000 125,000 1,000,000 1,000,000 2,500,000
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES 678,438 202,269 1,005,442 1,131,836 3,017,985
----------- ----------- ----------- ----------- -----------
NET ASSETS - FOR VARIABLE LIFE
INSURANCE POLICIES $15,835,180 $ 5,696,441 $ 203,165 $ 6,379,144 $28,113,930
=========== =========== =========== =========== ===========
Investments basis data:
Shares Owned 953,217 5,159,653 132,893 537,648
Cost $11,763,648 $ 5,159,653 $ 1,331,200 $ 6,083,282
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Sub-accounts
------------
COMMON MONEY ASSET TOTAL
STOCK MARKET BOND ALLOCATION SUB-ACCOUNTS
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Reinvested dividends $ 1,461,698 $ 220,000 $ 59,442 $ 532,521 $ 2,273,661
Expenses:
Mortality and expense risk charges 64,050 25,665 6,001 30,521 126,237
----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME 1,397,648 194,335 53,441 502,000 2,147,424
----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net unrealized gains (losses) on investments 1,835,100 -- (93,356) 332,421 2,074,165
Net realized gains (losses) on investments 124,420 -- -- 6,387 130,807
----------- ----------- ----------- ----------- -----------
NET GAIN (LOSS) ON INVESTMENTS 1,959,520 -- (93,356) 338,808 2,204,972
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) RESULTING FROM OPERATIONS 3,357,168 194,335 (39,915) 840,808 4,352,396
----------- ----------- ----------- ----------- -----------
POLICY RELATED TRANSACTIONS:
Net premiums 536,132 411,965 22,909 569,146 1,540,152
Transfers between sub-accounts 40,476 (30,924) (9,743) 191 --
Withdrawals and surrenders (1,515,573) (397,951) (12,143) (373,921) (2,299,588)
TRANSFER OF INVESTMENT AND OPERATING
RESULTS FROM (TO) RELIASTAR LIFE OF NEW YORK 13,264 (133,917) 22,125 (258,838) (357,366)
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS 2,431,467 43,508 (16,767) 777,386 3,235,594
NET ASSETS, BEGINNING OF YEAR 13,403,713 5,652,933 219,932 5,601,758 24,878,336
----------- ----------- ----------- ----------- -----------
NET ASSETS, END OF YEAR $15,835,180 $ 5,696,441 $ 203,165 $ 6,379,144 $28,113,930
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Sub-accounts
------------
COMMON MONEY ASSET TOTAL
STOCK MARKET BOND ALLOCATION SUB-ACCOUNTS
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Reinvested dividends $ 630,884 $ 239,866 $ 81,834 $ 354,491 $ 1,307,075
Expenses:
Mortality and expense risk charges 62,942 24,839 5,971 29,563 123,315
----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME 567,942 215,027 75,863 324,928 1,183,760
----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net unrealized gains (losses) on investments 123,370 -- (27,376) 4,950 100,944
Net realized gains (losses) on investments 3,009 -- (240) 808 3,577
----------- ----------- ----------- ----------- -----------
NET GAIN (LOSS) ON INVESTMENTS 126,379 -- (27,616) 5,758 104,521
----------- ----------- ----------- ----------- -----------
NET INCREASE RESULTING FROM OPERATIONS 694,321 215,027 48,247 330,686 1,288,281
----------- ----------- ----------- ----------- -----------
POLICY RELATED TRANSACTIONS:
Net premiums 651,372 471,978 22,681 674,767 1,820,798
Transfers between sub-accounts (12,936) (31,437) 44,506 (133) --
Withdrawals and surrenders (1,294,727) (251,809) (42,444) (384,431) (1,973,411)
TRANSFER OF INVESTMENT AND OPERATING
RESULTS FROM (TO) RELIASTAR LIFE OF NEW YORK 92,974 (202,334) (46,334) (273,884) (429,578)
----------- ----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS 131,004 201,425 26,656 347,005 706,090
NET ASSETS, BEGINNING OF YEAR 13,272,709 5,451,508 193,276 5,254,753 24,172,246
----------- ----------- ----------- ----------- -----------
NET ASSETS, END OF YEAR $13,403,713 $ 5,652,933 $ 219,932 $ 5,601,758 $24,878,336
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Sub-accounts
------------
COMMON MONEY ASSET TOTAL
STOCK MARKET BOND ALLOCATION SUB-ACCOUNTS
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Reinvested dividends $ 2,580,642 $ 240,105 $ 88,176 $ 835,462 $ 3,744,385
Expenses:
Mortality and expense risk charges 61,528 24,586 6,023 28,422 120,559
----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME 2,519,114 215,519 82,153 807,040 3,623,826
----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net unrealized losses on investments (378,013) -- (6,453) (78,357) (462,823)
Net realized gains (losses) on investments 147,232 -- (1,109) 28,538 174,661
----------- ----------- ----------- ----------- -----------
NET GAIN (LOSS) ON INVESTMENTS (230,781) -- (7,562) (49,819) (288,162)
----------- ----------- ----------- ----------- -----------
NET INCREASE RESULTING FROM OPERATIONS 2,288,333 215,519 74,591 757,221 3,335,664
----------- ----------- ----------- ----------- -----------
POLICY RELATED TRANSACTIONS:
Net premiums 698,365 500,497 23,758 731,659 1,954,279
Transfers between sub-accounts 7,355 (9,057) 2,198 (496) --
Withdrawals and surrenders (911,793) (322,535) (11,166) (374,126) (1,619,620)
TRANSFER OF INVESTMENT AND OPERATING
RESULTS TO RELIASTAR LIFE OF NEW YORK (488,269) (207,625) (71,165) (389,564) (1,156,623)
----------- ----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS 1,593,991 176,799 18,216 724,694 2,513,700
NET ASSETS, BEGINNING OF YEAR 11,678,718 5,274,709 175,060 4,530,059 21,658,546
----------- ----------- ----------- ----------- -----------
NET ASSETS, END OF YEAR $13,272,709 $ 5,451,508 $ 193,276 $ 5,254,753 $24,172,246
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK VARIABLE LIFE SEPARATE ACCOUNT I -
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1999
(1) ORGANIZATION - ReliaStar Life Insurance Company of New York Variable Life
Separate Account I ("Separate Account I") was established by ReliaStar Life
Insurance Company of New York ("ReliaStar Life of New York"), previously
ReliaStar Bankers Security Life Insurance Society, in 1986 under New York
insurance laws. Separate Account I operates as a unit investment trust under the
Investment Company Act of 1940 and is used to fund certain benefits for variable
life insurance policies issued by ReliaStar Life of New York. The assets of
Separate Account I and its sub-accounts are the property of ReliaStar Life of
New York. The portion of Separate Account I assets applicable to the variable
life policies will not be charged with liabilities arising out of any other
business ReliaStar Life of New York may conduct. The net assets maintained in
the sub-accounts provide the basis for the periodic determination of the amount
of increased or decreased benefits under the policies. The net assets may not be
less than the amount required under the state insurance law to provide for death
benefits (without regard to the minimum death benefit guarantee) and other
policy benefits. Additional assets are held in ReliaStar Life of New York's
general account to cover the contingency that the guaranteed minimum death
benefit might exceed the death benefit which would have been payable in the
absence of such guarantee.
In January 1995, ReliaStar Life of New York became an indirect wholly-owned
subsidiary of ReliaStar Financial Corp. ("ReliaStar"), a financial services
company based in Minneapolis, Minnesota. Prior to that time ReliaStar Life of
New York was an indirect wholly-owned subsidiary of USLICO Corporation. USLICO
Series Fund ("Series Fund") is an open-end diversified management investment
company whose shares are sold only to ReliaStar Life of New York and other
affiliates' separate accounts.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) VALUATION OF INVESTMENTS - Investments in shares of the Series Fund are
valued at the reported net asset value of the respective portfolios. The
aggregate cost of the investments acquired and the aggregate proceeds of
investments sold, for the year ended December 31, 1999, were:
Cost of Shares Proceeds from
Sub-account Acquired Shares Sold
----------- -------------- ------------
Common Stock $1,461,698 $ 915,721
Money Market 220,481 134,197
Bond 82,993 --
Asset Allocation 532,521 149,822
-------------- ------------
Total $2,297,693 $1,199,740
(b) SECURITY TRANSACTIONS - Purchases and sales are recorded on the trade
date date based on the net asset value as of the close of the preceding business
day.
(c) FEDERAL INCOME TAXES - ReliaStar Life of New York is taxed as a life
insurance company under the Internal Revenue Code of 1986, as amended (the
"Code"). Since the sub-accounts are not separate entities from ReliaStar Life of
New York, and their operations form a part of ReliaStar Life of New York, they
will not be taxed separately as a "regulated investment company" under
Sub-chapter M of the Code. Under existing Federal income tax law, investment
income of the sub-accounts, to the extent that it is applied to increase
reserves under a contract, is not taxed and may be compounded for reinvestment
without additional tax to ReliaStar Life of New York.
(d) CHARGES DEDUCTED FROM PREMIUMS - Transfers to the sub-accounts of Separate
Account I for net premiums represent gross premiums payable for a policy year,
less deductions for sales loads, administrative expenses, premium taxes, risk
charges and additional premiums, if any, for optional insurance benefits.
(e) AMOUNTS PAYABLE TO RELIASTAR LIFE OF NEW YORK - The amounts payable to
ReliaStar Life of New York in each sub-account arises from the amount allocated
from ReliaStar Life of New York to facilitate commencement of operations.
(f) DIVIDENDS - Dividends received on the shares held by the sub-accounts of
Separate Account I are reinvested to purchase additional shares of the
applicable portfolio of the Series Fund.
(g) TRANSFER OF INVESTMENT AND OPERATING RESULTS FROM (TO) RELIASTAR LIFE OF
NEW YORK - The sub-accounts transfer their investment and operating results in
excess of amounts required to meet policyholder reserve and liability amounts to
ReliaStar Life of New York. When investment and operating results are
insufficient to meet reserve requirements, ReliaStar Life of New York transfers
to the sub-accounts amounts sufficient to fund the deficiency. Also included in
this transfer are cost of insurance charges totaling $746,269, $767,677 and
$796,500 for all sub-accounts for the years ended December 31, 1999, 1998 and
1997 respectively.
(3) ADMINISTRATION AND RELATED PARTY TRANSACTIONS - A daily charge is made by
ReliaStar Life of New York against each sub-account's investments for mortality
and expense risks at an effective annual rate of .50%. The mortality risk
assumed by ReliaStar Life of New York is that insureds may live for a shorter
period of time than estimated and, therefore, a greater amount of death benefits
than expected will be payable in relation to the amount of premiums received.
The expense risk assumed by ReliaStar Life of New York is that expenses incurred
in issuing and administering the policies will be greater than estimated. Other
costs of administering Separate Account I are absorbed by ReliaStar Life of New
York.
Washington Square Securities, Inc., a direct wholly-owned ReliaStar subsidiary,
acts as principal underwriter (as defined in the Investment Company Act of 1940)
of Separate Account I's policies. ReliaStar Investment Research, Inc.,
previously known as Washington Square Advisers, Inc., also a direct wholly-owned
ReliaStar subsidiary, serves as investment adviser to the Series Fund with
respect to short-term and fixed maturity securities. Pilgrim Baxter Value
Investors, Inc. serves as investment sub-adviser to the Series Fund with respect
to equity securities.
Certain officers and directors of ReliaStar and ReliaStar Life of New York are
also officers and directors of Washington Square Securities, Inc., the Series
Fund and ReliaStar Investment Research, Inc.
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To ReliaStar Life Insurance Company of New York:
We have audited the accompanying statement of assets and liabilities of
ReliaStar Life Insurance Company of New York Variable Life Separate Account I
(consisting of the common stock, money market, bond, and asset allocation
portfolios) as of December 31, 1999, and the related statements of operations
and changes in net assets for the years ended December 31, 1999, 1998 and 1997.
These financial statements are the responsibility of the management of ReliaStar
Life Insurance Company of New York. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
portfolios constituting the ReliaStar Life Insurance Company of New York
Variable Life Separate Account I as of December 31, 1999, and the results of its
operations and changes in its net assets for the years ended December 31, 1999,
1998 and 1997, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, Minnesota
February 11, 2000
7
<PAGE>
USLICO SERIES FUND
INVESTMENT STRATEGIES AND PERFORMANCE OF THE STOCK PORTFOLIO
Pilgrim Advisors, Inc. (formerly Northstar Investment Management
Corporation), (the "Sub-Adviser") is responsible for the investment and
reinvestment of the Stock Portfolio's assets. They are "growth oriented" in
their investment philosophy, which means they proceed from the premise that
returns can be maximized through buying companies that are able to grow their
earnings more rapidly than the market. This philosophy is maintained while
trying to minimize the risk in the portfolio. The methodology combines a "bottom
up" fundamental process with a "top down," theme-based approach to finding
suitable growth prospects at reasonable valuations.
In another strong year for the broad equity market, Pilgrim Advisors, Inc.
outperformed its benchmark and achieved excellent performance overall. The fund
underwent a significant transformation in the last three months of the year, as
the portfolio adopted the strategy of the new fund manager. An increased
weighting in technology shares helped significantly, as positions were added in
stocks that will benefit from longer-term economic trends such as wireless
communications and the semiconductors that are powering the dramatic changes in
technology. As they looked beyond the Y2K issue, the fund managers added to
positions in software companies that provide solutions to help companies
transact business on the Internet. Another key sector for the Fund was
biotechnology. Positions in interest rate sensitive stocks such as financials
and utilities were pared from the portfolio, as the managers believe that the
Federal Reserve will continue to raise interest rates to slow the economy down,
thus putting pressure on the financial sector. However, the Fund remains
positioned in the fastest growing sectors of the economy and in sectors with
less interest rate sensitivity, which should continue to generate returns that
exceed the broader market. The Total Return for 1999, after all expenses at the
Portfolio level was 30.08%.
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN*
Between the Stock Portfolio and the S & P 500 Index
[GRAPH]
AVERAGE ANNUAL TOTAL RETURN
1 Year 30.08%
5 Years 23.19%
10 Years 14.59%
STOCK PORTFOLIO S & P 500 INDEX
THOUSANDS OF DOLLARS
DEC 87 10.4 10.5
DEC 88 11.5 12.3
DEC 89 14.3 15.9
DEC 90 13.3 15.6
DEC 91 15.7 20.4
DEC 92 16.6 22.0
DEC 93 18.3 24.2
DEC 94 18.8 24.5
DEC 95 24.8 33.7
DEC 96 30.5 41.5
DEC 97 38.1 55.3
DEC 98 40.4 71.1
DEC 99 52.6 86.0
* $10,000 INVESTED ON 12/31/86 IN FUND OR INDEX INCLUDING REINVESTMENT OF
DIVIDENDS FISCAL YEARS ENDED 12/31
Returns include the reinvestment of all distributions at Net Asset Value and the
change in share price for the stated period, but exclude insurance and
administration charges assessed by the insurance company's separate accounts.
The average annual total return for one, five and ten years which reflects all
common fees and charges for both the underlying fund and separate account levels
are 28.34%, 21.01% and 12.74%, respectively. Such figures do not include the
charges the insurance company makes for the cost of insurance, which if
included, would significantly reduce the return. Please refer to the
hypothetical illustrations in the prospectus of the separate account which
indicate how the cost of insurance can impact performance or you may request a
personalized illustration of historical performance which reflects the cost for
insurance protection. Past performance is not predictive of future performance.
Investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
8
<PAGE>
USLICO SERIES FUND
INVESTMENT STRATEGIES AND PERFORMANCE OF THE BOND PORTFOLIO
The responsibility for investment and reinvestment in the Bond Portfolio
lies with ReliaStar Investment Research, Inc. (formerly Washington Square
Advisers, Inc.), which is affiliated with ReliaStar Life Insurance Company of
New York and ReliaStar Life Insurance Company. Investments are primarily in
investment-grade intermediate to long-term bonds. During 1999, the Bond
Portfolio was primarily invested in corporate bonds rated "BBB" or better by
Moody's or Standard & Poor's. The Portfolio also holds adjustable rate mortgages
and U.S. Government strips. The average maturity of the bonds was less than ten
years. The composition of the Portfolio holdings tended to have heavier emphasis
on corporate bonds than that of its broad market index, which is the Lehman
Brothers Aggregate Bond Index. The Total Return for 1999, after all expenses at
the Portfolio level was -2.87%.
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN*
Between the Bond Portfolio and the Lehman Bros. Aggregate Bond Index
[GRAPH]
AVERAGE ANNUAL TOTAL RETURN
1 Year -2.87%
5 Years 5.86%
10 Years 6.22%
BOND PORTFOLIO LEHMAN BROS AGGREGATE BOND INDEX**
THOUSANDS OF DOLLARS
DEC 87 10.1 10.1
DEC 88 11.1 10.9
DEC 89 12.5 12.4
DEC 90 13.0 13.5
DEC 91 14.9 15.6
DEC 92 16.0 16.8
DEC 93 17.7 18.7
DEC 94 17.1 18.0
DEC 95 20.1 21.5
DEC 96 20.7 22.1
DEC 97 22.2 24.3
DEC 98 23.1 26.4
DEC 99 22.4 26.2
* $10,000 INVESTED ON 6/25/87 IN FUND OR 7/1/87 IN INDEX INCLUDING
REINVESTMENT OF INCOME FISCAL YEARS ENDED 12/31.
** THE GRAPH ABOVE USED THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
AS A COMPARISON INDEX FROM JUNE 1987 THROUGH DECEMBER 1997. THE LEHMAN
BROTHERS AGGREGATE BOND INDEX IS THE COMPARISON INDEX SINCE JANUARY
1998.
Returns include the reinvestment of all distributions at Net Asset Value and the
change in share price for the stated period, but exclude insurance and
administration charges assessed by the insurance company's separate accounts.
The average annual total return for one, five and ten years which reflects all
common fees and charges for both the underlying fund and separate account levels
are -3.25%, 5.24% and 5.71%, respectively. Such figures do not include the
charges the insurance company makes for the cost of insurance, which if
included, would significantly reduce the return. Please refer to the
hypothetical illustrations in the prospectus of the separate account which
indicate how the cost of insurance can impact performance or you may request a
personalized illustration of historical performance which reflects the cost for
insurance protection. Past performance is not predictive of future performance.
Investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
9
<PAGE>
USLICO SERIES FUND
INVESTMENT STRATEGIES AND PERFORMANCE OF THE ASSET ALLOCATION PORTFOLIO
This Portfolio consists of stocks, intermediate to long term bonds of
primarily investment grade and money market instruments. The stocks are chosen
by Pilgrim Advisors, Inc. (formerly Northstar Investment Management
Corporation), which is also responsible for choosing the stocks in the Stock
Portfolio. Pilgrim Advisors, Inc. is a "growth oriented" investment manager and
uses the same strategies to pick stocks for this Portfolio as is described under
"Investment Strategies and Performance of the Stock Portfolio." The Adviser for
the bonds and money market portions is ReliaStar Investment Research, Inc.
(formerly Washington Square Advisers, Inc.). During 1999, the bonds in the
Portfolio were primarily corporate bonds rated "BBB" or better by Moody's or
Standard and Poor's. The average maturity of the bonds was less than ten years.
Bond holdings were slightly shorter in duration with heavier emphasis on
corporate bonds than that of the Lehman Brothers Aggregate Bond Index. The Total
Return for 1999, after all expenses at the Portfolio level, was 15.10%.
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN*
Between the Asset Allocation Portfolio, Lehman Bros. Aggregate Bond Index
and S & P Index
[GRAPH]
AVERAGE ANNUAL TOTAL RETURN
1 Year 15.10%
5 Years 14.96%
10 Years 10.73%
ASSET LEHMAN BROS
ALLOCATION AGGREGATE S & P 500
PORTFOLIO BOND INDEX** INDEX
THOUSANDS OF DOLLARS
12/87 9.5 10.1 10.3
12/88 10.5 10.9 12.0
12/89 12.2 12.4 15.5
12/90 12.3 13.5 15.3
12/91 14.1 15.6 19.9
12/92 15.2 16.8 21.4
12/93 16.8 18.7 23.6
12/94 16.6 18.0 23.9
12/95 20.8 21.5 32.9
12/96 23.4 22.1 40.4
12/97 27.3 24.3 53.9
12/98 28.8 26.4 69.3
12/99 33.1 26.2 83.9
* $10,000 INVESTED ON 6/25/87 IN FUND OR 7/1/87 IN INDEX INCLUDING
REINVESTMENT OF INCOME FISCAL YEARS ENDED 12/31.
** THE GRAPH ABOVE USED THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
AS A COMPARISON INDEX FROM JUNE 1987 THROUGH DECEMBER 1997. THE LEHMAN
BROTHERS AGGREGATE BOND INDEX IS THE COMPARISON INDEX SINCE JANUARY 1998.
Returns include the reinvestment of all distributions at Net Asset Value and the
change in share price for the stated period, but exclude insurance and
administration charges assessed by the insurance company's separate accounts.
The average annual total return for one, five and ten years which reflects all
common fees and charges for both the underlying fund and separate account levels
are 14.19%, 13.84% and 9.72%, respectively. Such figures do not include the
charges the insurance company makes for the cost of insurance, which if
included, would significantly reduce the return. Please refer to the
hypothetical illustrations in the prospectus of the separate account which
indicate how the cost of insurance can impact performance or you may request a
personalized illustration of historical performance which reflects the cost for
insurance protection. Past performance is not predictive of future performance.
Investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
10
<PAGE>
USLICO SERIES FUND
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMMON MONEY ASSET TOTAL
STOCK MARKET BOND ALLOCATION PORTFOLIOS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO COMBINED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 80,696 $ 453 $ 29,483 $ 106,415 $ 217,047
Common stock, at fair value (cost
$26,081,338 and $9,171,522, respectively) 34,441,416 -- -- 11,277,391 45,718,807
Bonds, at fair value (cost
$2,937,151 and $7,384,429, respectively) -- -- 2,692,174 6,703,706 9,395,880
Commercial paper, at amortized
cost which approximates fair value -- 6,055,118 -- -- 6,055,118
Dividends receivable 11,235 -- -- 3,654 14,889
Interest receivable 1,316 11 33,856 81,807 116,990
Securities not settled, net 29,355 -- -- 14,747 44,102
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS 34,564,018 6,055,582 2,755,513 18,187,720 61,562,833
------------ ------------ ------------ ------------ ------------
LIABILITIES
Accrued expenses 71,119 (2,135) (9,623) 7,988 67,349
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES 71,119 (2,135) (9,623) 7,988 67,349
------------ ------------ ------------ ------------ ------------
NET ASSETS $ 34,492,899 $ 6,057,717 $ 2,765,136 $ 18,179,732 $ 61,495,484
============ ============ ============ ============ ============
NET ASSET VALUE PER SHARE $ 16.06 $ 1.00 $ 9.00 $ 12.68
============ ============ ============ ============
SHARES OUTSTANDING 2,147,436 6,057,717 307,215 1,433,205
============ ============ ============ ============
NET ASSETS CONSIST OF:
Capital stock ($.001 par value) $ 2,147 $ 6,058 $ 307 $ 1,433
Additional paid-in capital 26,180,793 6,051,659 3,021,541 16,005,604
Accumulated undistributed
net investment income (loss) (13,874) -- 681 1,449
Accumulated undistributed net
realized gains (losses) from
investment transactions (36,245) -- (12,416) 8,405
Net unrealized appreciation (depreciation)
of investments 8,360,078 -- (244,977) 2,162,841
------------ ------------ ------------ ------------
Net assets $ 34,492,899 $ 6,057,717 $ 2,765,136 $ 18,179,732
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
USLICO SERIES FUND-COMMON STOCK PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
COMMON STOCK
FAIR
SHARES VALUE
------ ----------
COMPUTERS & ELECTRONICS - 21.80%
Adaptec, Inc. 3,400 $ 169,575
Agilent Technologies, Inc. 6,700 517,994
Analog Devices, Inc. 2,500 232,500
Apple Computer 2,200 226,188
Applied Materials, Inc. 2,300 291,381
Atmel Corp. 10,800 319,275
Gateway, Inc. 1,900 136,919
KLA Tencor Corp. 2,800 311,850
Lam Resh Corp. 4,100 457,406
Lattice Semiconductor Corp. 8,400 395,850
Lexmark International Group, Inc. 3,600 325,800
Micron Technology, Inc. 3,500 272,125
Microsoft Corp. 2,700 315,225
Motorola, Inc. 2,200 323,950
Novellus Systems, Inc. 4,100 502,378
Oracle Corp. 7,300 818,056
PMC Sierra, Inc. 2,100 336,656
Portal Software, Inc. 1,300 133,737
SDL, Inc. 1,700 370,600
Sanmina Corp. 1,800 179,775
Siebel Systems, Inc. 2,200 184,800
Sun Microsystems, Inc. 2,100 162,619
Tibco Software, Inc. 1,000 153,000
Xilinx, Inc. 8,400 381,938
----------
7,519,597
----------
DRUGS & HEALTH CARE - 8.49%
Becton Dickinson & Co. 4,900 131,075
Biogen, Inc. 900 76,050
Genentech, Inc. 2,300 309,350
Idec Pharmaceuticals Corp. 1,550 152,288
Immunex Corp. 4,300 470,850
Medimmune, Inc. 2,400 398,100
Medtronic, Inc. 2,200 80,163
Merck & Company, Inc. 5,900 395,669
Sepracor, Inc 2,800 277,725
Stryker Corp. 3,900 271,537
United Healthcare Corp. 2,700 143,437
Warner Lambert Co. 2,700 221,231
----------
2,927,475
----------
INDUSTRIAL - 4.16%
Akamai Technologies, Inc. 200 $ 65,525
General Electric Co. 2,800 433,300
JDS Uniphase Corp. 2,200 354,887
Kimberly Clark Corp. 6,000 391,500
United Pan Europe 1,500 191,250
----------
1,436,462
----------
TELECOMMUNICATIONS - 9.18%
AT&T Corp. 6,700 340,025
Allegiance Telecon, Inc. 3,200 295,200
Bell Atlantic Corp. 64 3,940
BellSouth Corp. 6,000 280,875
MCI WorldCom, Inc. 7,200 382,050
Nextel Communications, Inc. 3,800 391,875
Qwest Communications Internaltional, Inc. 12,100 520,300
SBC Communications, Inc. 95 4,631
Tritel, Inc. 5,200 164,775
Voicestream Wireless Corp. 3,100 441,169
Western Wireless Corp. 5,100 340,425
----------
3,165,265
----------
BUSINESS SEVICES & ENGINEERING - 17.70%
America Online, Inc. 3,800 286,663
Appnet, Inc. 6,300 275,625
Bea Sys, Inc. 3,500 244,781
Chemdex Corp. 1,600 177,600
Computer Sciences Corp. 3,600 340,650
Cybersource Corp. 3,600 186,300
Doubleclick, Inc. 800 202,450
Dow Jones & Co., Inc. 2,300 156,400
Electronic Data Sys Corp. 4,800 321,300
Exodus Communications, Inc. 4,000 355,250
Gemstar Internalional Group, LTD 7,200 513,000
Inktomi Corp. 1,600 142,000
Office Depot, Inc. 12,800 140,000
Qlogic Corp. 1,700 271,787
Real Networks, Inc. 450 54,141
Sapient Corp. 5,800 817,437
TMP Worldwide, Inc. 1,200 170,400
United Parcel Services, Inc. 4,000 276,000
Verisign, Inc. 3,200 611,000
Yahoo, Inc. 1,300 562,494
----------
6,105,278
----------
(continued)
See accompanying notes to financial statements.
12
<PAGE>
USLICO SERIES FUND-COMMON STOCK PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
FINANCE - 8.72%
American International Group, Inc. 2,200 $ 237,875
Bank New York, Inc. 6,900 276,000
Capital One Financial Corp. 3,200 154,200
Chase Manhattan Corp. 1,800 139,838
Citigroup, Inc. 6,000 333,375
Federal National Mortgage, Assn 2,400 149,850
Lehman Brothers Holdings, Inc. 3,100 262,531
Marsh & McLennan Companies, Inc. 3,500 334,906
Merrill Lynch & Company, Inc. 3,800 317,300
Morgan Stanley Dean Witter 1,300 185,575
Paine Webber Group, Inc. 3,400 131,962
PMI Group, Inc. 5,200 253,825
XL Capital, LTD 1,600 83,000
Zions Bancorp 2,500 147,969
-----------
3,008,206
-----------
ENERGY - 1.67%
Conoco, Inc. 10,700 264,825
Exxon Mobil Corp. 3,848 310,005
-----------
574,830
-----------
FOOD, HOUSE & PERSONAL PRODUCTS - 2.09%
Avon Products, Inc. 6,300 207,900
Coca Cola Co. 2,600 151,450
Procter & Gamble Co. 1,900 208,169
Tribune Company 2,800 154,175
-----------
721,694
-----------
RETAIL TRADE - 5.80%
Abercrombie and Fitch Co. 6,200 165,462
Bed Bath & Beyond, Inc. 5,900 205,025
Costco Wholesale Corp. 3,600 328,500
GAP, Inc. 5,800 266,800
Lowes Company, Inc. 7,800 466,050
Nike, Inc. 3,000 148,687
Pacific Sunwear of Califoria 7,300 232,688
WalMart Stores, Inc. 2,700 186,638
-----------
1,999,850
-----------
COMMUNICATIONS - 17.03%
Applied Micro Circuits Corp. 3,200 $ 407,200
Brocade Comunications Sys Inccom 1,800 318,600
Charter communications, Inc. 5,700 124,688
Cisco Systems, Inc. 5,600 599,900
Clear Channel Communications 3,400 303,450
Ditech Communications Corp. 2,400 224,400
Emmis Communications Corp. 3,800 473,634
Ericsson LM Telephone Co. 3,000 197,063
Finistar Corp. 1,500 134,813
Foundry Networks, Inc. 1,500 452,531
Infinity Broadcasting Corp. 8,800 318,450
Infonet Services Corp. 1,600 42,000
Intermedia Communications, Inc. 6,600 256,162
Nortel Networks Corp. 4,400 444,400
Qualcomm, Inc. 4,000 704,500
Redback Networks, Inc. 2,000 355,000
Sycamore Networks, Inc. 900 277,200
Williams Communications Group 8,300 240,181
-----------
5,874,172
-----------
ENTERTAINMENT - 1.24%
Cendant Corp. 10,000 265,625
Walt Disney Co. 5,500 160,875
-----------
426,500
-----------
TRANSPORTATION - 1.98%
AMR Corp. Del 3,300 221,100
Continental Airlines, Inc. 3,400 150,875
Delta Airlines, Inc. 2,800 139,475
UAL Corp. 2,200 170,637
-----------
682,087
-----------
TOTAL COMMON STOCK 99.85% 34,441,416
OTHER ASSETS AND
LIABILITIES, NET .15% 51,483
-----------
NET ASSETS 100.00% $34,492,899
===========
See accompanying notes to financial statements.
13
<PAGE>
USLICO SERIES FUND-MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMMERCIAL PAPER PRINCIPAL AMORTIZED
INTEREST COST
-------- ----
<S> <C> <C>
State Street Repo, 3.0%, Due January 03, 2000 $ 132,000 $ 132,000
Ford Motor Co., 6.31%, Due January 06, 2000 300,000 299,737
Household Financial Corp., 5.77%, Due January 11, 2000 300,000 299,519
Chevron USA, Inc., 5.94%, Due January 18, 2000 300,000 299,158
Northern IL Gas Co., 5.80%, January 18, 2000 300,000 299,178
Merrill Lynch & Co., 5.98%, Due January 19, 2000 300,000 299,103
Eastman Kodak Co., 6.35%, Due January 20, 2000 300,000 298,995
Paccar Financial Corp., 5.95%, Due January 20, 2000 250,000 249,215
DuPont EI DeNemours & Co., 5.86%, Due January 24, 2000 300,000 298,877
Procter & Gamble Co., 5.85%, Due January 26, 2000 300,000 298,781
Baltimore Gas & Electric Co., 6.25%, Due January 27, 2000 300,000 298,646
Bellsouth Telecomm, Inc., 5.84%, Due January 27, 2000 300,000 298,735
Campbell Soup Co., 5.80%, Due January 27, 2000 300,000 298,743
American Express Credit Corp., 5.78%, Due January 31, 2000 300,000 298,555
Walt Disney Co., 5.87%, Due February 01, 2000 300,000 298,484
Coca Cola Co., 5.78%, Due February 04, 2000 300,000 298,362
Florida Power Corp., 6.32%, Due February 09, 2000 300,000 297,946
Pacific Gas and Electric Co., 5.95%, Due February 10, 2000 300,000 298,017
American General Financial Corp., 5.88%, Due February 11, 2000 300,000 297,991
American Tel & Teleg Co., 5.86%, Due February 16, 2000 300,000 297,754
Diageo Capital, Plc., 5.95, Due February 24, 2000 300,000 297,322
---------- ---------
TOTAL COMMERCIAL PAPER 99.96 % $6,082,000 6,055,118
========== =========
OTHER ASSETS AND
LIABILITIES, NET .04 % 2,599
---------
NET ASSETS 100.00 % 6,057,717
=========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
USLICO SERIES FUND-BOND PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PAR FAIR
BONDS VALUE VALUE
-------------- -----------------
<S> <C> <C>
GOVERNMENT - 29.12%
FHLMC, 6.80%, Due December 01, 2026 # $ 63,543 $ 64,932
FNMA, 7.50%, Due July 01, 2027 # 9,802 9,996
FNMA, 6.93%, Due July 01, 2027 # 21,737 22,255
GNMA Pool 181826, 9.00%, Due March 15, 2021 # 17,883 18,783
US Trust Security Strips, Due February 15, 2021 1,390,000 334,128
US Trust Security Strips, Due February 15, 2005 495,000 355,059
---------------- -----------------
1,997,965 805,153
---------------- -----------------
DRUGS & HEALTH CARE - 8.83%
American Health PPTYS, Inc., 7.05%, Due January 15, 2002 100,000 94,390
Columbia/HCA Healthcare Corp., 6.41%, Due June 15, 2000 150,000 149,756
---------------- -----------------
250,000 244,146
---------------- -----------------
FINANCE - 56.86%
Abbey National PLC, 7.35%, Due October 29, 2049 # 100,000 95,171
Advanta Mortgage Loan Trust, 6.06%, Due March 25, 2028 50,000 50,649
Amresco Residential Securities Corp., 6.30%, Due January 25, 2028 100,000 100,500
BHP Finance USA, 6.42%, Due March 01, 2026 # 100,000 96,691
Franchise Financial Corp. America, 8.25%, Due October 30, 2003 100,000 97,135
Health Care Reit, Inc.,7.57%, Due April 15, 2000 100,000 99,534
Labranche & Co., 9.50%, Due August 15, 2004 145,000 141,771
Macsaver Financial Services, Inc., 7.40%, Due February 15, 2002 150,000 93,750
Noranda Forest, Inc., 6.88%, Due November 15, 2005 100,000 93,847
Protection One Alarm Monitor, Inc., 7.38%, Due August 15, 2005 150,000 119,250
Regency Centers, LP., 7.13%, Due July 15, 2005 100,000 92,681
Salomon Brothers Mortgage Securities VII, 6.30%, Due June 25, 2028 145,000 144,909
Salomon Brothers Mortgage Securities VII, 6.00%, Due October 25, 2028 75,000 75,000
TriNet Corporate Realty Trust, 6.75%, Due March 01, 2003 100,000 92,508
United Companies Financial Corp., 9.35%, Due November 01, 2049 100,000 35,250
Waste Management, Inc., 6.00%, Due May 15, 2001 150,000 143,729
---------------- -----------------
1,765,000 1,572,375
---------------- -----------------
INDUSTRIAL - 2.55%
Bantec, Inc., 7.5%, Due June 01, 2008 100,000 70,500
---------------- -----------------
100,000 70,500
---------------- -----------------
TOTAL BONDS 97.36% $ 4,112,965 2,692,174
================
OTHER ASSETS AND
LIABILITIES, NET 2.64% 72,962
-----------------
NET ASSETS 100.00% $ 2,765,136
=================
</TABLE>
# - Callable at the option of the issuer.
See accompanying notes to financial statements.
15
<PAGE>
USLICO SERIES FUND-ASSET ALLOCATION PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
COMMON STOCK
FAIR
SHARES VALUE
---------- ----------
COMPUTERS & ELECTRONICS - 13.46%
Adaptec, Inc. 1,100 $ 54,863
Agilent technologies, Inc. 2,200 170,088
Analog Devices, Inc. 800 74,400
Apple Computer 700 71,969
Applied Materials, Inc. 800 101,350
Atmel Corp. 3,600 106,425
Gateway, Inc. 600 43,237
KLA Tencor Corp. 900 100,237
Lam Resh Corp. 1,300 145,031
Lattice Semiconductor Corp. 2,700 127,237
Lexmark International Group, Inc. 1,100 99,550
Micron Technology, Inc. 1,100 85,525
Microsoft Corp. 900 105,075
Motorola, Inc. 700 103,075
Novellus Systems, Inc. 1,300 159,291
Oracle Corp. 2,400 268,950
PMC Sierra, Inc. 700 112,219
Portal Software, Inc. 400 41,150
SDL, Inc. 600 130,800
Sanmina Corp. 600 59,925
Siebel Systems, Inc. 700 58,800
Sun Microsystems, Inc. 700 54,206
Tibco Software, Inc. 300 45,900
Xilinx, Inc. 2,800 127,312
----------
2,446,615
----------
DRUGS & HEALTH CARE - 5.22%
Becton Dickinson & Co. 1,600 42,800
Biogen, Inc. 300 25,350
Genentech, Inc. 750 100,875
Idec Pharmaceuticals Corp. 450 44,213
Immunex Corp. 1,400 153,300
Johnson & Johnson 50 4,656
Medimmune, Inc. 800 132,700
Medtronic, Inc. 700 25,506
Merck & Company, Inc. 1,900 127,419
Sepracor, Inc 900 89,269
Stryker Corp. 1,250 87,031
United Healthcare Corp. 800 42,500
Warner Lambert Co. 900 73,744
----------
949,363
----------
INDUSTRIAL - 2.37%
General Electric Co. 700 $ 108,325
JDS Uniphase Corp. 800 129,050
Kimberly Clark Corp. 2,000 130,500
United Pan Europe 500 63,750
----------
431,625
----------
TELECOMMUNICATIONS - 5.63%
AT&T Corp. 2,100 106,575
Allegiance Telecon, Inc. 1,000 92,250
Bell Atlantic Corp. 42 2,585
BellSouth Corp. 2,000 93,625
GTE Corp. 50 3,528
MCI WorldCom, Inc. 2,250 119,391
Nextel Communications, Inc. 1,200 123,750
Qwest Communications Internaltional, Inc. 4,000 172,000
SBC Communications, Inc. 10 487
Tritel, Inc. 1,700 53,869
Voicestream Wireless Corp. 1,000 142,312
Western Wireless Corp. 1,700 113,475
----------
1,023,847
----------
ENTERTAINMENT - .77%
Cendant Corp. 3,300 87,656
Walt Disney Co. 1,800 52,650
----------
140,306
----------
RETAIL TRADE - 3.63%
Abercrombie and Fitch Co. 2,000 53,375
Bed Bath & Beyond, Inc. 1,900 66,025
Costco Wholesale Corp. 1,200 109,500
GAP, Inc. 1,900 87,400
Lowes Company, Inc. 2,600 155,350
Nike, Inc. 1,000 49,563
Pacific Sunwear of Califoria 2,400 76,500
WalMart Stores, Inc. 900 62,212
----------
659,925
----------
BUSINESS SEVICES & ENGINEERING - 10.98%
America Online, Inc. 1,200 90,525
Appnet, Inc. 2,100 91,875
Bea Sys, Inc. 1,100 76,931
Chemdex Corp. 500 55,500
Computer Sciences Corp. 1,200 113,550
Cybersource Corp. 1,200 62,100
Doubleclick, Inc. 200 50,613
Dow Jones & Co., Inc. 700 47,600
Electronic Data Sys Corp. 1,600 107,100
Exodus Communications, Inc. 1,400 124,338
Gemstar Internalional Group, LTD 2,400 171,000
Inktomi Corp. 600 53,250
Office Depot, Inc. 4,200 45,937
Qlogic Corp. 600 95,925
Real Networks, Inc. 150 18,047
Sapient Corp. 2,000 281,875
TMP Worldwide, Inc. 400 56,800
United Parcel Services, Inc. 1,300 89,700
Verisign, Inc. 1,000 190,937
Yahoo, Inc. 400 173,075
----------
1,996,678
----------
See accompanying notes to financial statements. (continued)
16
<PAGE>
USLICO SERIES FUND-ASSET ALLOCATION PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
COMMON STOCK, CONTINUED
FAIR
SHARES VALUE
----------- -----------
FINANCE - 5.83%
American General Corp. 600 $ 45,525
American International Group, Inc. 800 86,500
Bank New York, Inc. 2,200 88,000
Capital One Financial Corp. 1,100 53,006
Chase Manhattan Corp. 600 46,613
Citigroup, Inc. 3,200 177,800
Federal National Mortgage Assn 800 49,950
Lehman Brothers Holdings, Inc. 1,000 84,688
Marsh & McLennan Companies, Inc. 1,100 105,256
Merrill Lynch & Company, Inc. 1,200 100,200
Morgan Stanley Dean Witter 500 71,375
Paine Webber Group, Inc. 1,100 42,694
PMI Group, Inc. 1,700 82,981
XL Capital, LTD 500 25,937
-----------
1,060,525
-----------
ENERGY - .98%
Conoco, Inc. 3,500 86,625
Exxon Mobil Corp. 1,128 90,875
-----------
177,500
-----------
FOOD, HOUSE & PERSONAL PRODUCTS - 1.25%
Avon Products, Inc. 2,000 66,000
Coca Cola Co. 800 46,600
Procter & Gamble Co. 600 65,738
Tribune Company 900 49,556
-----------
227,894
-----------
TRANSPORTATION - 1.22%
AMR Corp. Del 1,100 73,700
Continental Airlines, Inc. 1,100 48,813
Delta Airlines, Inc. 900 44,831
UAL Corp. 700 54,294
-----------
221,638
-----------
COMMUNICATIONS - 10.68%
Applied Micro Circuits Corp. 1,000 $ 127,250
Brocade Comunications Sys Inccom 600 106,200
Charter communications, Inc. 1,900 41,563
Cisco Systems, Inc. 1,800 192,825
Clear Channel Communications 1,100 98,175
Ditech Communications Corp. 800 74,800
Emmis Communications Corp. 1,200 149,569
Ericsson LM Telephone Co. 1,000 65,688
Finistar Corp. 500 44,937
Foundry Networks, Inc. 500 150,844
Infinity Broadcasting Corp. 2,900 104,944
Infonet Services Corp. 600 15,750
Intermedia Communications, Inc. 2,200 85,387
Lucent Technologies, Inc. 600 44,887
Nortel Networks Corp. 1,400 141,400
Qualcomm, Inc. 1,200 211,350
Redback Networks, Inc. 650 115,375
Sycamore Networks, Inc. 300 92,400
Williams Communications Group 2,700 78,131
-----------
1,941,475
-----------
TOTAL COMMON STOCK 62.03% 11,277,391
-----------
See accompanying notes to financial statements. (continued)
17
<PAGE>
USLICO SERIES FUND-ASSET ALLOCATION PORTFOLIO
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
BONDS PAR FAIR
GOVERNMENT - 11.15% VALUE VALUE
-------------------- ------------------
<S> <C> <C>
FHLMC, 9.00%, Due October 01, 2019 # 7,085 $ 7,400
FHLMC, 6.80%, Due December 01, 2026 # 166,190 169,823
FNMA, 6.97%, Due July 01, 2027 # 49,010 49,982
FNMA, 6.00%, Due July 01, 2027 # 57,821 59,199
GNMA, 10.00%, Due February 15, 2016 # 8,517 9,275
US Trust Security Strips, Due February 15, 2005 1,180,000 846,402
US Trust Security Strips, Due February 15, 2021 3,680,000 884,598
------------------
2,026,679
------------------
DRUGS & HEALTH CARE - 3.07%
American Health PPTYS, Inc., 7.05%, Due January 15, 2002 200,000 188,780
Columbia/HCA Healthcare Corp., 6.41%, Due June 15, 2000 370,000 369,397
------------------
558,177
------------------
FINANCE - 20.76%
Abbey National PLC, 7.35%, Due October 29, 2049 # 100,000 95,171
Advanta Mortgage Loan Trust, 6.06%, Due March 25, 2028 100,000 101,299
Amresco Residential Securities Corp., 6.30%, Due January 25, 2028 200,000 201,000
BHP Finance USA, 6.42%, Due March 01, 2026 # 100,000 96,691
Franchise Financial Corp. America, 8.25%, Due October 30, 2003 200,000 194,270
Health Care Reit, Inc., 7.57%, Due April 15, 2000 360,000 358,322
Labranche & Companies, Inc., 9.50%, Due August 15, 2004 355,000 347,094
Macsaver Financial Services, Inc., 7.40%, Due February 15, 2002 350,000 218,750
Nomura Depositor Trust, 6.18%, Due January 15, 2003 # 100,000 100,125
Noranda Forest, Inc., 6.88%, Due November 15, 2005 100,000 93,847
Protection One Alarm Monitor, Inc., 7.38%, Due August 15, 2005 350,000 278,250
Regency Centers, LP., 7.13%, Due July 15, 2005 300,000 278,043
Salomon Brothers Mortgage Securities VII, 6.30%, Due June 25, 2028 365,000 364,772
Salomon Brothers Mortgage Securities VII, 5.38%, Due October 25, 2028 365,000 365,000
TriNet Corporate Realty Trust, 6.75%, Due March 01, 2003 350,000 323,778
United Companies Financial Corp., 9.35%, Due November 01, 2049 200,000 70,500
Waste Management, Inc., 6.00%, Due May 15, 2001 300,000 287,457
------------------
3,774,369
------------------
INDUSTRIAL - 1.89%
Bantec, Inc., 7.5%, Due June 1, 2008 350,000 246,750
Canadian Pacific, 6.875%, Due April 15, 2003 100,000 97,731
------------------
344,481
------------------
TOTAL BONDS 36.88% 10,363,623 6,703,706
============== ==================
TOTAL INVESTMENTS 98.91% 17,981,097
OTHER ASSETS AND
LIABILITIES, NET 1.09% 198,635
------------------
NET ASSETS 100.00% $ 18,179,732
==================
</TABLE>
# - Callable at the option of the issuer.
See accompanying notes to financial statements.
18
<PAGE>
USLICO SERIES FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common Money Asset
Stock Market Bond Allocation
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment income:
Income:
Dividends $ 473,709 $ -- $ -- $ 155,974
Interest 25,547 312,502 162,274 419,026
------------ ------------ ------------ ------------
Total income 499,256 312,502 162,274 575,000
------------ ------------ ------------ ------------
Expenses:
Accounting fee 31,062 6,581 3,055 17,978
Custodian fee 65,311 13,759 6,387 37,590
Management fee 113,595 20,478 14,973 65,452
Other administrative 89,553 18,872 8,764 51,560
------------ ------------ ------------ ------------
Subtotal 299,521 59,690 33,179 172,580
------------ ------------ ------------ ------------
Less management fees reimbursed by
affiliates (see note 2) 41,844 5,359 7,953 24,146
------------ ------------ ------------ ------------
Total expenses 257,677 54,331 25,226 148,434
------------ ------------ ------------ ------------
Net investment income 241,579 258,171 137,048 426,566
------------ ------------ ------------ ------------
Realized and unrealized gains (losses) on investments:
Net proceeds from sales 102,049,944 -- 1,253,280 36,881,023
Cost of securities sold (99,221,526) -- (1,265,523) (35,925,153)
------------ ------------ ------------ ------------
Net realized gains on investments 2,828,418 -- (12,243) 955,870
Net unrealized gains (losses) on investments 5,038,448 -- (208,974) 1,068,903
------------ ------------ ------------ ------------
Net gains (losses) on investments 7,866,866 -- (221,217) 2,024,773
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 8,108,445 $ 258,171 $ (84,169) $ 2,451,339
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
USLICO SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common Money Asset
Stock Market Bond Allocation
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income $ (261,263) $ (258,171) $ (138,387) $ (432,101)
Net realized gains on investments (3,026,352) -- -- (992,240)
CAPITAL SHARE TRANSACTIONS 1,898,052 93,990 155,810 817,365
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 6,718,882 93,990 (66,746) 1,844,363
NET ASSETS, BEGINNING OF YEAR 27,774,017 5,963,727 2,831,882 16,335,368
------------ ------------ ------------ ------------
NET ASSETS, END OF YEAR $ 34,492,899 $ 6,057,717 $ 2,765,136 $ 18,179,732
============ ============ ============ ============
</TABLE>
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C>
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income $ (410,935) $ (282,362) $ (156,186) $ (515,110)
Net realized gains on investments (967,581) -- (35,769) (445,245)
CAPITAL SHARE TRANSACTIONS 350,378 179,415 100,234 536,913
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 482,372 179,415 29,508 435,274
NET ASSETS, BEGINNING OF YEAR 27,291,645 5,784,312 2,802,374 15,900,094
------------ ------------ ------------ ------------
NET ASSETS, END OF YEAR $ 27,774,017 $ 5,963,727 $ 2,831,882 $ 16,335,368
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
USLICO SERIES FUND - NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1999
(1) ORGANIZATION - USLICO Series Fund (the Fund) is an open-end, diversified
management investment company registered under the Investment Company Act of
1940 and consisting of four separate series (Portfolios), each of which has its
own investment objectives and policies. The Fund was organized as a business
trust under the laws of Massachusetts on January 19, 1988. Shares of the
Portfolios are sold only to separate accounts of ReliaStar Life Insurance
Company (ReliaStar Life), previously ReliaStar United Services Life Insurance
Company and ReliaStar Life Insurance Company of New York (ReliaStar Life of New
York), previously ReliaStar Bankers Security Life Insurance Society, to serve as
the investment medium for variable life insurance policies issued by these
companies. The separate accounts invest in shares of one or more of the
Portfolios, in accordance with allocation instructions received from
policyowners. Each Portfolio share outstanding represents a beneficial interest
in the respective Portfolio and carries a par value of $.001. The Fund has an
unlimited number of shares authorized.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) VALUATION OF INVESTMENTS
1. Common Stock, Bond and Asset Allocation Portfolios - Equity securities
for which market quotations are readily available are stated at that fair value.
Fair value is determined on the basis of last reported sales price, or, if no
sales are reported, the latest available bid price obtained from a quotation
reporting system or from established market makers. Money market instruments are
valued at fair value, except that instruments maturing in sixty days or less are
valued using amortized cost which approximates fair value. Debt securities
(other than obligations having a maturity of sixty days or less at their date of
acquisition) are valued on the basis of market quotations obtained from brokers
and dealers or pricing services, which take into account appropriate factors
such as institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics, and
other market data. Debt obligations having a maturity of sixty days or less are
generally valued at amortized cost, which approximates fair value.
2. Money Market Portfolio - Investment securities held by the Money
Market Portfolio are all carried at amortized cost.
(b) INCOME RECOGNITION - Dividend income is recorded on the ex-dividend date.
Interest income is accrued daily. Realized gains and losses on the sale of
securities are computed on the basis of the identified cost of the related
securities sold and are recognized at the date of trade.
(c) OTHER ADMINISTRATIVE FEES - Other administrative fees are charged to the
Portfolios at an annual percentage rate of .65%. Fund expenses directly
attributable to a Portfolio are charged to that Portfolio. All other expenses
are allocated proportionately among all Portfolios in relation to respective net
assets.
(d) FEDERAL INCOME TAXES - Each Portfolio intends to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. Accordingly,
a Portfolio will not be subject to Federal income taxes if it makes
distributions of net investment income and net realized gains in compliance with
Subchapter M and meets certain other requirements. (Normally, however, such
distributions are automatically reinvested in additional portfolio shares.) As
the Fund is believed to be in compliance with these requirements, no federal
income tax provision has been provided.
(e) MANAGEMENT FEES - The Fund's investment advisers are compensated with a
quarterly management fee based on an annual percentage of the average daily net
assets of each Portfolio. During 1999, 1998 and 1997 the adviser was paid a fee
at an annual rate of .25% of the net asset value of the Portfolios. The maximum
management fee which may be charged is an annual percentage rate of .50% on the
first $100 million of average daily net assets and .45% of average daily net
assets in excess thereof. ReliaStar Life and ReliaStar Life of New York will
reimburse the Portfolios to the extent that management fees exceed .25%. For the
year ended December 31, 1999 ReliaStar Life has reimbursed the Common Stock
Portfolio $41,844, the Money Market Portfolio $5,359, the Bond Portfolio $7,953
and the Asset Allocation Portfolio $24,146.
(f) CONTRIBUTIONS AND WITHDRAWALS - Net funds contributed into or withdrawn
from the Fund are made on the basis of the net asset value per share prevailing
at the close of business on the preceding business day.
(3) AFFILIATIONS AND RELATED PARTY TRANSACTIONS - ReliaStar Life is a
wholly-owned subsidiary of ReliaStar Financial Corp. ("ReliaStar"), a financial
services company based in Minneapolis, Minnesota. ReliaStar Life of New York, is
a wholly-owned subsidiary of ReliaStar Life. ReliaStar Investment Research, Inc.
(formerly Washington Square Advisers, Inc.), a direct wholly-owned ReliaStar
subsidiary, serves as investment adviser to the Fund. The Fund's distributor,
Washington Square Securities, Inc., is also a wholly-owned subsidiary of
ReliaStar Financial Corp. Pilgrim Holdings, Corp., is a subsidiary of ReliaStar
Financial, Corp. Pilgrim Advisors, Inc. is a wholly-owned subsidiary of Pilgrim
Holdings, Corp. Pilgrim Advisors, Inc. serves as investment sub-adviser for the
Common Stock Portfolio and the common stock portion of the Asset Allocation
Portfolio. The Fund purchases securities through Pilgrim Advisors, Inc. in the
normal course of business. Effective October 1, 1999, the sub-adviser changed
from Pilgrim Baxter Value Investors, Inc. to Northstar Investment Management
Corporation. Effective November 1, 1999 Northstar Investment Management
Corporation changed its name to Pilgrim Advisors, Inc.
Officers of the Fund are also officers of ReliaStar, Washington Square
Securities, Inc., ReliaStar Life and ReliaStar Life of New York and receive
compensation therefrom. They do not receive additional compensation for services
rendered to the Fund. Trustees of the Board received a fee of $1,000 for each
meeting attended during 1999 and 1998. $500 was paid for each meeting attended
during 1997. For the year ended December 31, 1999, 1998, and 1997, total fees
paid to the Trustees aggregated $12,000, $16,000, and $8,000, respectively, for
all Portfolios combined.
21
<PAGE>
(4) INVESTMENTS - As of December 31, 1999, net unrealized appreciation
(depreciation) for each portfolio was as follows:
Net
Unrealized
Appreciation
Portfolio Appreciation Depreciation (Depreciation)
--------- ------------ ------------ --------------
Common Stock $8,674,455 $ (314,377) $8,360,078
Money Market N/A N/A N/A
Bond 4,336 (249,313) (244,977)
Asset Allocation 2,823,447 (660,606) 2,162,841
(5) CAPITAL SHARE TRANSACTIONS - Transactions in capital shares for the year
ended December 31, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
----------------- ------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
COMMON STOCK PORTFOLIO:
Shares issued in reinvestment of dividends 211,379 101,216 $ 3,287,614 $ 1,378,516
Shares purchased/(redeemed) .............. (100,951) (85,893) (1,389,562) (1,028,138)
----------- ----------- ----------- -----------
Net increase (decrease) ................. 110,428 15,323 $ 1,898,052 $ 350,378
=========== =========== =========== ===========
MONEY MARKET PORTFOLIO:
Shares issued in reinvestment of dividends 258,171 282,362 $ 258,171 $ 282,362
Shares purchased/(redeemed) .............. (164,180) (102,947) (164,181) (102,947)
----------- ----------- ----------- -----------
Net increase (decrease) ............... 93,991 179,415 $ 93,990 $ 179,415
=========== =========== =========== ===========
BOND PORTFOLIO:
Shares issued in reinvestment of dividends 14,944 19,421 $ 138,387 $ 191,954
Shares purchased/(redeemed) .............. 1,715 (9,163) 17,423 (91,720)
----------- ----------- ----------- -----------
Net increase (decrease) ................. 16,659 10,258 $ 155,810 $ 100,234
=========== =========== =========== ===========
ASSET ALLOCATION PORTFOLIO:
Shares issued in reinvestment of dividends 115,187 79,912 $ 1,424,341 $ 960,355
Shares purchased/(redeemed) .............. (52,069) (37,539) (606,976) (423,442)
----------- ----------- ----------- -----------
Net increase (decrease) ................. 63,118 42,373 $ 817,365 $ 536,913
=========== =========== =========== ===========
</TABLE>
22
<PAGE>
USLICO SERIES FUND
CONDENSED FINANCIAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMMON MONEY ASSET
STOCK MARKET BOND ALLOCATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 13.64 $ 1.00 $ 9.74 $ 11.92
Income from investment operations:
Net investment income 0.12 0.04 0.46 0.31
Net realized and unrealized
gains (losses) on securities 3.93 -- (0.73) 1.48
-------------- -------------- -------------- --------------
Total from investment operations 4.05 0.04 (0.27) 1.79
Distributions:
Distribution of income (0.13) (0.04) (0.46) (0.31)
Distribution of capital gains (1.50) -- -- (0.72)
-------------- -------------- -------------- --------------
Net asset value, end of year $ 16.06 $ 1.00 $ 9.01 $ 12.68
============== ============== ============== ==============
Total return 30.08% 5.00% -2.87% 15.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $ 34,492,899 $ 6,057,717 $ 2,765,136 $ 18,179,732
Expenses to average net assets 0.90% 0.90% 0.90% 0.90%
Net investment income to average net assets 0.84% 4.27% 4.88% 2.58%
Portfolio turnover rate 305.87% N/A 45.74% 227.49%
Weighted average number of shares outstanding
for year ended December 31, 1999 2,018,443 6,047,979 298,279 1,371,808
</TABLE>
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 13.50 $ 1.00 $ 10.00 $ 11.98
Income from investment operations:
Net investment income 0.20 0.05 0.55 0.39
Net realized and unrealized
gains on securities 0.62 -- (0.13) 0.27
-------------- -------------- -------------- --------------
Total from investment operations 0.82 0.05 0.42 0.66
Distributions:
Distribution of income (0.20) (0.05) (0.55) (0.39)
Distribution of capital gains (0.48) -- (0.13) (0.33)
-------------- -------------- -------------- --------------
Net asset value, end of year $ 13.64 $ 1.00 $ 9.74 $ 11.92
============== ============== ============== ==============
Total return 6.00% 5.00% 4.30% 5.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $ 27,774,017 $ 5,963,727 $ 2,831,882 $ 16,335,368
Expenses to average net assets 0.75% 0.75% 0.75% 0.75%
Net investment income to average net assets 1.49% 4.79% 5.50% 3.19%
Portfolio turnover rate 172.22% N/A 90.97% 135.68%
Weighted average number of shares outstanding
for year ended December 31, 1998 2,008,104 5,895,120 283,193 1,332,191
</TABLE>
23
<PAGE>
USLICO SERIES FUND
CONDENSED FINANCIAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
COMMON MONEY ASSET
STOCK MARKET BOND ALLOCATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 13.25 $ 1.00 $ 10.02 $ 11.85
Income from investment operations:
Net investment income 0.27 0.05 0.59 0.46
Net realized and unrealized
gains (losses) on securities 3.05 -- 0.12 1.51
-------------- -------------- -------------- --------------
Total from investment operations 3.32 0.05 0.71 1.97
Distributions:
Distribution of income (0.27) (0.05) (0.59) (0.46)
Distribution of capital gains (2.80) -- (0.14) (1.38)
-------------- -------------- -------------- --------------
Net asset value, end of year $ 13.50 $ 1.00 $ 10.00 $ 11.98
============== ============== ============== ==============
Total return 25.06% 5.00% 7.09% 16.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $ 27,291,645 $ 5,784,312 $ 2,802,374 $ 15,900,094
Expenses to average net assets 0.73% 0.75% 0.75% 0.74%
Net investment income to average net assets 1.87% 4.88% 5.88% 3.68%
Portfolio turnover rate 88.55% N/A 117.24% 104.30%
Weighted average number of shares outstanding
for year ended December 31, 1997 1,760,754 5,852,073 280,426 1,228,385
</TABLE>
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 12.62 $ 1.00 $ 10.38 $ 11.82
Income from investment operations:
Net investment income 0.34 0.05 0.64 0.53
Net realized and unrealized
gains (losses) on securities 2.55 -- (0.36) 0.94
-------------- -------------- -------------- --------------
Total from investment operations 2.89 0.05 0.28 1.47
Distributions:
Distribution of income (0.33) (0.05) (0.64) (0.53)
Distribution of capital gains (1.93) -- -- (0.91)
-------------- -------------- -------------- --------------
Net asset value, end of year $ 13.25 $ 1.00 $ 10.02 $ 11.85
============== ============== ============== ==============
Total return 22.90% 5.00% 2.70% 12.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $ 23,558,091 $ 5,979,861 $ 2,783,385 $ 14,614,568
Expenses to average net assets 0.75% 0.75% 0.75% 0.75%
Net investment income to average net assets 2.50% 4.77% 6.45% 4.39%
Portfolio turnover rate 79.17% N/A 47.37% 61.98%
Weighted average number of shares outstanding
for year ended December 31, 1996 1,575,455 5,897,797 284,090 1,148,567
</TABLE>
24
<PAGE>
USLICO SERIES FUND
CONDENSED FINANCIAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMMON MONEY ASSET
STOCK MARKET BOND ALLOCATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (PER SHARE)
Net asset value, beginning of year $ 10.37 $ 1.00 $ 9.41 $ 10.18
Income from investment operations:
Net investment income 0.36 0.05 0.66 0.55
Net realized and unrealized
gains on securities 2.95 -- 1.04 2.01
-------------- -------------- -------------- --------------
Total from investment operations 3.31 0.05 1.70 2.56
Distributions:
Distribution of income (0.37) (0.05) (0.66) (0.55)
Distribution of capital gains (0.69) -- (0.07) (0.37)
-------------- -------------- -------------- --------------
Net asset value, end of year $ 12.62 $ 1.00 $ 10.38 $ 11.82
============== ============== ============== ==============
Total return 31.92% 5.00% 18.07% 25.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $ 19,968,336 $ 5,819,470 $ 3,068,825 $ 13,675,779
Expenses to average net assets 0.63% 0.63% 0.63% 0.63%
Net investment income to average net assets 3.07% 5.37% 6.49% 4.81%
Portfolio turnover rate 62.51% N/A 32.67% 44.97%
Weighted average number of shares outstanding
for year ended December 31, 1995 1,450,668 5,763,272 276,475 1,068,503
</TABLE>
25
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
USLICO Series Fund:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of USLICO Series Fund (consisting of the common
stock, money market, bond, and asset allocation portfolios), and the related
statements of operations as of and for the year ended December 31, 1999 and
changes in net assets and the condensed financial information for the years
ended December 31, 1999 and 1998. These financial statements and condensed
financial information are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
condensed financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and the condensed financial information. Our procedures
included confirmation of securities owned as of December 31, 1999, by
correspondence with custodians and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the condensed financial information
referred to above present fairly, in all material respects, the net assets,
investments and results of their operations for each of the respective
portfolios constituting the USLICO Series Fund as of and for the year ended
December 31, 1999, and changes in their net assets and the condensed financial
information for the years ended December 31, 1999 and 1998, in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, Minnesota
February 11, 2000
26
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
<PAGE>
[LOGO] RELIASTAR PRESORTED
RELIASTAR LIFE INSURANCE STANDARD RATE
COMPANY OF NEW YORK PAID
4601 Fairfax Drive, PO Box 3700 PERMIT NO. 3395
Arlington, VA 22203 MINNEAPOLIS, MN
