-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TG4vLaAZpapcy6F7rtsZaQFdawljdfGQXsu7OuMLB9KOdE8DD4cYPn12ERcUUXNH QQ1orj6+yuc+FD5BiznVLw== 0000950153-03-001719.txt : 20030829 0000950153-03-001719.hdr.sgml : 20030829 20030828200541 ACCESSION NUMBER: 0000950153-03-001719 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030829 EFFECTIVENESS DATE: 20030829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: USLICO SERIES FUND/VA/ CENTRAL INDEX KEY: 0000827885 IRS NUMBER: 541499398 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05451 FILM NUMBER: 03872256 BUSINESS ADDRESS: STREET 1: 4601 N FAIRFAX DR STREET 2: P O BOX 3700 CITY: ARLINGTON STATE: VA ZIP: 22203 BUSINESS PHONE: 703-875-3400 MAIL ADDRESS: STREET 1: 4601 N FAIRFAX DRIVE CITY: ARLINGTON STATE: VA ZIP: 22203 FORMER COMPANY: FORMER CONFORMED NAME: USLICO SERIES FUND DATE OF NAME CHANGE: 19880321 N-CSRS 1 p68192dnvcsrs.txt N-CSRS OMB APPROVAL OMB Number: 3235-0570 Expires: Nov. 30, 2005 Estimated average burden hours per response: 5.0 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-05451 --------- USLICO Series Fund ------------------ (Exact name of registrant as specified in charter) 7337 E. Doubletree Ranch Rd., Scottsdale, AZ 85258 -------------------------------------------------- (Address of principal executive offices) (Zip code) CT Corporation System, 101 Federal Street, Boston, MA 02110 ----------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-800-992-0180 -------------- Date of fiscal year end: December 31 ----------- Date of reporting period: January 1, 2003 to June 30, 2003 -------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1): Dear Policyholders, We are now in the third consecutive year of one of the longest economic downturns in our country's history. These have been difficult times for investors because they have had to weather not only the lackluster performance of the last three years but also the economic setbacks, corporate scandals and troubling international events that have helped trigger and prolong the downturn. It is true: this generation of investors has been tested perhaps more than any other previous generation and -- by and large -- they have proven to be a robust group. Perhaps I am premature in my enthusiasm, but I believe that the gradual market upturn we have witnessed in recent months suggests that things may be improving. ING Funds has experienced unprecedented performance in recent months and, overall, international and domestic markets give reason for cautious optimism. The latest market upswings -- no matter how gradual -- underscore ReliaStar Life Insurance Company's long-held philosophy that it is important for investors to remain focused on their long-term goals and maintain reasonable expectations. In an effort to further improve our fund performance, we have recently made several key changes in the management of our Portfolios. Specifically, we selected three individuals with impressive financial expertise and disciplined investing styles to oversee the Portfolios. To learn more about these new managers and their investment philosophies, please consult the May 2003 Portfolios prospectus. Such changes demonstrate our commitment to providing quality service and innovative products to help meet the needs of our policyholders as well as our enthusiasm and optimism about the future. On behalf of ReliaStar, I thank you for your continued support and confidence and look forward to serving you in the future. Sincerely, /s/ James R. Gelder James R. Gelder Senior Vice President, US Life Group ReliaStar Life Insurance Company Variable products issued by ReliaStar Life Insurance Company are distributed by ING America Equities, Inc. 1290 Broadway, Denver, CO 80203. Both are members of ING. cn370298112004 Dear Policyholders, We are now in the third consecutive year of one of the longest economic downturns in our country's history. These have been difficult times for investors because they have had to weather not only the lackluster performance of the last three years but also the economic setbacks, corporate scandals and troubling international events that have helped trigger and prolong the downturn. It is true: this generation of investors has been tested perhaps more than any other previous generation and -- by and large -- they have proven to be a robust group. Perhaps I am premature in my enthusiasm, but I believe that the gradual market upturn we have witnessed in recent months suggests that things may be improving. ING Funds has experienced unprecedented performance in recent months and, overall, international and domestic markets give reason for cautious optimism. The latest market upswings -- no matter how gradual -- underscore ReliaStar Life Insurance Company of New York's long-held philosophy that it is important for investors to remain focused on their long-term goals and maintain reasonable expectations. In an effort to further improve our fund performance, we have recently made several key changes in the management of our Portfolios. Specifically, we selected three individuals with impressive financial expertise and disciplined investing styles to oversee the Portfolios. To learn more about these new managers and their investment philosophies, please consult the May 2003 Portfolios prospectus. Such changes demonstrate our commitment to providing quality service and innovative products to help meet the needs of our policyholders as well as our enthusiasm and optimism about the future. On behalf of ReliaStar, I thank you for your continued support and confidence and look forward to serving you in the future. Sincerely, /s/ James R. Gelder James R. Gelder President and Chief Executive Officer ReliaStar Life Insurance Company of New York Variable products issued by ReliaStar Life Insurance Company of New York are distributed by ING America Equities, Inc. 1290 Broadway, Denver, CO 80203. Both are members of ING. cn370308112004 (This page intentionally left blank.) 7 USLICO SERIES FUND PORTFOLIO MANAGER'S REPORT FOR THE STOCK PORTFOLIO PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by James A. Vail, CFA, ING Investments, LLC. GOAL: The USLICO Series Fund -- Stock Portfolio (the "Portfolio") seeks intermediate and long-term growth of capital. Its secondary investment objective is to receive a reasonable level of income. MARKET OVERVIEW: The first half of 2003 marked a return to positive territory for the Standard and Poor's 500 Index ("S&P 500 Index"), with the index increasing 11.77% for the six months ended June 30, 2003. The positive first half performance was led by a blistering 15.37% increase in the second quarter. The Portfolio outperformed the S&P 500 Index in the first half, registering a 15.13% increase. Investors showed their fondness for equities once again, as the Iraqi War came to an end. Resolution of this conflict allowed investors to re-focus on the markets and less on the uncertain geo-political events abroad. The Federal Reserve and Washington both did their parts to create a favorable environment for equities versus fixed income with a low interest rate environment and a tax rate reduction on dividends. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio, excluding any charges, returned 15.13% compared to the S&P 500 Index, which returned 11.77% for the same period. PORTFOLIO SPECIFICS: The Portfolio outperformed the Index in the first half of the year due to our exposure to Information Technology, Health Care, and Consumer Discretionary sectors as investors shifted to higher growth Information Technology names that had been previously depressed. The Health Care sector was re-energized by movement in both the House and the Senate on Washington's prescription drug benefit, with pharmaceutical and generic pharmaceutical manufacturers leading the way. MARKET OUTLOOK: Seldom in the history of the markets have such forces combined to set the stage for higher corporate profits and, in turn, higher equity prices. The Federal Reserve has provided the lowest interest rates in 40 years; fiscal policy is stimulative; the weak U.S. dollar is resuscitating our export industries, and the relaxed tax environment with an emphasis on dividends are all providing an attractive environment for equities. Forecasts for gross domestic product growth in the second half are edging higher and corporate sentiment appears to be improving. The consumer has held up well, and unemployment claims may have peaked increasing the likelihood for stable levels of consumer confidence. While doubts remain over current stock valuations, we are encouraged regarding the positioning and outlook for our Portfolio. See accompanying index descriptions on page 16. 8 USLICO SERIES FUND PORTFOLIO MANAGER'S REPORT FOR THE STOCK PORTFOLIO
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ---------------------------------------------------------------- 1 YEAR 5 YEAR 10 YEAR ------ ------ ------- USLICO Series Fund -- Stock Portfolio -5.92% -13.37% 1.40% S&P 500 Index 0.25% -1.61% 10.04%
Based on a $10,000 initial investment, the table above illustrates the total return of USLICO Series Fund -- Stock Portfolio against the S&P 500 Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your life insurance policy. Total returns would have been lower if such expenses or charges were included. TOTAL RETURNS REFLECT THE FACT THAT THE INVESTMENT MANAGER HAS WAIVED CERTAIN FEES AND OPERATING EXPENSES OTHERWISE PAYABLE BY THE PORTFOLIO, SUBJECT TO POSSIBLE LATER REIMBURSEMENT DURING A THREE-YEAR PERIOD. TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THERE BEEN NO WAIVER TO THE PORTFOLIO. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. Portfolio holdings are subject to change daily. PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany investments in equities. The value of securities of smaller issuers can be more volatile than that of larger issuers. Derivatives are subject to the risk of changes in the market price of a security, credit risk with respect to the counterparty to the derivative instrument, and the risk of loss due to changes in interest rates. Certain derivatives may also have a leveraging effect, which may increase the volatility of the portfolio. See accompanying index descriptions on page 16. 9 USLICO SERIES FUND PORTFOLIO MANAGER'S REPORT FOR THE MONEY MARKET PORTFOLIO PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by Jennifer J. Thompson, CFA, ING Investments, LLC. GOAL: The USLICO Series Fund -- Money Market Portfolio (the "Portfolio") seeks maximum current income consistent with preservation of capital and liquidity. The Portfolio may achieve this objective by investing in short-term U.S. Government Securities and U.S. dollar denominated high quality money market instruments. Money market securities are considered high quality if rated A-1 or better by Standard & Poor's Ratings Group or P-1 by Moody's Investor Services, Inc. These securities are determined to present minimal credit risk. The Portfolio may also invest in repurchase agreements. MARKET OVERVIEW: The first half of 2003 was eventful and volatile. During the first quarter, the markets and the world watched as United Nations weapons inspectors combed Iraq for weapons of mass destruction. President Bush set forth Iraq's continued violations of United Nations resolutions and prepared America and the world for war with or without U.N. Security Council support. Ultimately, in March, a U.S./U.K.-led coalition declared war on Iraq and, in April, the coalition was successful in ousting Saddam Hussein and liberating Iraqi citizens from the brutal dictator. In early May, President Bush declared an end to major combat in Iraq. The war and the build up to war virtually paralyzed the economy in the first quarter. The "political uncertainty" manifested itself in declining employment and low consumer confidence and spending, reduced business spending, higher energy prices and related stresses on the airline and transportation industries. Even the Federal Reserve Board's ("Fed") Federal Open Market Committee ("FOMC") admitted its inability to characterize the risks to the economy at its March 18th FOMC meeting. The second quarter war-related euphoria, however, was short-lived on Wall Street as market participants quickly changed their focus to the U.S. economy. During the quarter, Federal Reserve Chairman Greenspan and other Fed officials began discussing the low level of price inflation in the U.S. Fed officials emphasized that a substantial fall in inflation would be an unwelcome development. Chairman Greenspan stated in testimony to Congress in May that though the risks of deflation are minor, the consequences are severe enough to merit consideration of possible measures to address it. In total, the market first interpreted these comments to mean that the Fed Funds' target rate of 1.25% would be kept low for an extended period of time. However, as the quarter progressed and the risks of deflation became the focus, market participants began pricing in a Fed ease of 25 basis points and, at times, a strong probability of a 50 basis point ease. Ultimately, the Fed lowered rates by 25 basis points at its June 25th FOMC meeting leaving the Fed Funds target at 1.00% -- the lowest level since 1958. The LIBOR curve was flat and, at times, inverted throughout the first half. One-month LIBOR began the period at 1.38% and ended it at 1.12%. Twelve-month LIBOR went from approximately 1.45% to 1.19% by the period end. The steepness of the curve remained the same at 7 bps with some significant volatility during the period associated with the underpinnings of war, a lackluster economy and discussions of declining price inflation by Fed officials. PORTFOLIO SPECIFICS: In the generally flat interest rate environment, value was added by significantly increasing purchases of floating rate notes which reset at rates higher than that of commercial paper, certificates of deposit and bank notes. Using such strategy, the average maturity of the Portfolio was shorter than competitors throughout the period and was 46 days at the end of June versus 57 days for the benchmark. MARKET OUTLOOK: In early July, market participants are beginning to wonder whether the economic paralysis in the first half of the year was really war-related. Some economic indicators, at times, seem to signal recovery. However, employment levels remain subdued and business excess capacity remains high. For now, the LIBOR yield curve remains very flat and market participants have no conviction about the direction of interest rates going forward. With this backdrop, we will keep most purchases very short -- in the one-month to three-month area -- until the direction of the economy becomes detectable. PRINCIPAL RISK FACTOR(S): Investments in the Portfolio are 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. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER'S ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. This report contains statements that may be "forward looking" statements. Actual results may differ materially from those projected in the "forward looking" statements. Portfolio holdings are subject to change daily. See accompanying index descriptions on page 16. 10 USLICO SERIES FUND PORTFOLIO MANAGER'S REPORT FOR THE BOND PORTFOLIO PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by James Kauffmann, ING Investments, LLC GOAL: The USLICO Series Fund -- Bond Portfolio (the "Portfolio") seeks a high level of income consistent with prudent risk and the preservation of capital. As a secondary objective, the Portfolio seeks capital appreciation when consistent with its principal objective. MARKET REVIEW: Despite the uncertainties surrounding the war in Iraq, all credit sensitive sectors rallied significantly in the first half of 2003; yields on the Treasury curve dropped as well. By the second quarter, strong buying from Asian central banks and mortgage hedgers propelled the 10-year Treasury from 3.80% to a low 3.10% only to see it retreat to 3.45% by quarter-end. China was reported to have been buying up to $600 million a day of short U.S. government paper, and their foreign reserves ballooned to $340 billion during the quarter. As summer approached, incipient signs of domestic economic stability, improving financial conditions, a firmer dollar, and positive equity markets resulted in rising rates for investment grade bonds. Nevertheless, the Lehman Brothers Aggregate Bond Index is up 3.93% year-to-date. The Federal Reserve Board ("Fed") sent an unequivocal message to the markets with the release of its May policy statement: "The probability of an unwelcome substantial fall in inflation, though minor, exceeds that of a pickup in inflation from its already low level." Subsequent comments from Fed officials reiterated their concern about the tepid recovery and "corrosive deflation." The Fed concerns, coupled with mediocre economic numbers and no signs of core inflation, fueled a strong rally in bonds in May. However, the governors presented a more sanguine economic outlook by the June Federal Open Markets Committee meeting. While the Fed did drop overnight rates to 1.00%, the bond market backed off as many participants had hoped for a larger ease of 50 basis points. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio, excluding any charges, returned 3.90% compared to the Lehman Brothers Aggregate Bond Index, which returned 3.93% for the same period. PORTFOLIO SPECIFICS: The Portfolio's short duration at the end of the reporting period hurt performance. Duration measures a portfolio's sensitivity to interest rate changes and is expressed in years. So by being short duration, our portfolio rose in value by less than the benchmark as interest rates fell. This drag on performance was offset by our overweighting in credit sectors, which boosted relative returns as all credit sectors have posted positive excess returns year-to-date. Credit sectors are those with higher credit risks than Treasuries. They do well during periods when investors lower the extra return they demand for the risk involved. The utilities sector was the biggest winner, with 5.82% of excess returns; industrials returned 3.73%; and financials were up 3.40%. Commercial mortgages returned 1.59%, and asset-backed securities, which tend to be shorter in duration, posted 1.26% of excess returns. Positive contributors to performance also included an underweight in mortgages, which are facing a perilous environment: 95% of the outstanding paper is refinance-able. With the average dollar price over $104, the prospect of receiving a large portion of your mortgage portfolio back at $100 is not a happy one. The sector produced 0.46% of excess return. An overall yield advantage to the benchmark contributed positively to overall results. MARKET OUTLOOK: Weak aggregate demand has followed the capital expenditure binge years of the late 1990s, and this phenomenon is global in nature. Many economists contend that gross domestic product must come in above 3.5% for an extended period in order for deflationary concerns to abate. We believe that the stimulative effects of negative real rates, a weaker dollar, and tax cuts will eventually boost the domestic economy out of its lethargy. The Fed is intent on fomenting the "animal spirits" of capital markets, and the American homeowner is once again reaping the rewards of cheap mortgage rates some of which will likely find its way into consumer spending. The big question for bond investors is how long rates will stay relatively low and when and how fast the economy will gain traction. A yield of 3.45% on the 10-year Treasury looks very low when compared to the interest rates witnessed in the 1980s and 1990s, but so-called low yields are not unusual in the context of rates from the end of WW II until the oil embargoes of the 1970s. Clearly, the late June retreat in bond prices was the result of unsustainable, near-term supply and demand technicals, and now market pundits will be looking for data confirming their forward looking, bullish economic outlook. In response to these historically low interest rates we are slightly short in duration, and we continue our underweight in mortgages. See accompanying index description on page 16. 11 USLICO SERIES FUND PORTFOLIO MANAGER'S REPORT FOR THE BOND PORTFOLIO
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ---------------------------------------------------------------- 1 YEAR 5 YEAR 10 YEAR ------ ------ ------- USLICO Series Fund -- Bond Portfolio 9.45% 4.41% 5.71% Lehman Brothers Aggregate Bond Index 10.40% 7.55% 7.21%
Based on a $10,000 initial investment, the table above illustrates the total return of USLICO Series Fund -- Bond Portfolio against the Lehman Brothers Aggregate Bond Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your life insurance policy. Total returns would have been lower if such expenses or charges were included. TOTAL RETURNS REFLECT THE FACT THAT THE INVESTMENT MANAGER HAS WAIVED CERTAIN FEES AND OPERATING EXPENSES OTHERWISE PAYABLE BY THE PORTFOLIO, SUBJECT TO POSSIBLE LATER REIMBURSEMENT DURING A THREE-YEAR PERIOD. TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THERE BEEN NO WAIVER TO THE PORTFOLIO. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. Portfolio holdings are subject to change daily. PRINCIPAL RISK FACTOR(S): Credit, interest rate and other risks that accompany debt instruments. See accompanying index descriptions on page 16. 12 USLICO SERIES FUND PORTFOLIO MANAGERS' REPORT FOR THE ASSET ALLOCATION PORTFOLIO PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by James A. Vail, CFA manages the Equity Portfolio, a team of investment professionals led by James B. Kauffmann manages the Bond Portfolio and a team of investment professionals led by Jennifer J. Thompson, CFA manages the Money Market Portfolio. They are all with ING Investments, LLC. GOAL: The USLICO Series Fund -- Asset Allocation Portfolio (the "Portfolio") seeks to obtain high total return with reduced risk over the long term by allocating its assets among stocks, bonds and short-term instruments. MARKET OVERVIEW: STOCKS: The first half of 2003 marked a return to positive territory for the Standard and Poor's 500 Index ("S&P 500 Index"), with the index increasing 11.77% for the six months ended June 30, 2003. The positive first half performance was led by a blistering 15.37% increase in the second quarter. The Portfolio outperformed the S&P 500 Index in the first half, registering a 14.17% increase. Investors showed their fondness for equities once again, as the Iraqi War came to an end. Resolution of this conflict allowed investors to re-focus on the markets, and less on the uncertain geo-political events abroad. The Federal Reserve and Washington both did their parts to create a favorable environment for equities versus fixed income with a low interest rate environment and a tax rate reduction on dividends. BONDS: Strong buying from Asian central banks and mortgage hedgers propelled the ten-year Treasury from 3.80% to a low 3.10% only to see it retreat to 3.45% by quarter-end. China was reported to have been buying up to $600 million a day of short U.S. government paper, and their foreign reserves ballooned to $340 billion during the quarter. As summer approached, incipient signs of domestic economic stability, improving financial conditions, a firmer dollar, and positive equity markets resulted in rising rates for investment-grade bonds. Nevertheless, the Lehman Brothers Aggregate Bond Index printed another positive quarter of 2.50%, which brings the year-to-date return to 3.93%. The Federal Reserve Board ("Fed") sent an unequivocal message to the markets with the release of its May policy statement: "The probability of an unwelcome substantial fall in inflation, though minor, exceeds that of a pickup in inflation from its already low level." Subsequent comments from Fed officials reiterated their concern about the tepid recovery and "corrosive deflation." The Fed concerns, coupled with mediocre economic numbers and no signs of core inflation, fueled a strong rally in bonds in May. However, the governors presented a more sanguine economic outlook by the June Federal Open Markets Committee meeting. While the Fed did drop overnight rates to 1.00%, the bond market backed off as many participants had hoped for a larger ease of 50 basis points. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio, excluding any charges, returned 8.14% compared to the S&P 500 Index which returned 11.77% and the Lehman Brothers Aggregate Bond Index, with returned 3.93% for the same period. PORTFOLIO SPECIFICS: STOCKS: The Portfolio outperformed the index in the first half of the year due to our exposure to Information Technology, Health Care, and the Consumer Discretionary sectors as investors shifted to higher growth Information Technology names that had been previously depressed. The Health Care sector was re-energized by movement in both the House and the Senate on Washington's prescription drug benefit, with pharmaceutical and generic pharmaceutical manufacturers leading the way. BONDS: The Portfolio's short duration at the end of the reporting period hurt performance. Duration measures a portfolio's sensitivity to interest rate changes and is expressed in years. So by being short duration, our portfolio rose in value by less than the benchmark as interest rates fell. This drag on performance was offset by our overweighting in credit sectors, which boosted relative returns as all credit sectors have posted positive excess returns year-to-date. Credit sectors are those with higher credit risks than Treasuries. They do well during periods when investors lower the extra return they demand for the risk involved. The utilities sector was the biggest winner, with 5.82% of excess returns; industrials returned 3.73%; and financials were up 3.40%. Commercial mortgages returned 1.59%, and asset-backed securities, which tend to be shorter in duration, posted 1.26% of excess returns. Positive contributors to performance also included an underweight in mortgages, which are facing a perilous environment: 95% of the outstanding paper is refinance-able. With the average dollar price over $104, the prospect of receiving a large portion of your mortgage portfolio back at $100 is not a happy one. The sector produced 0.46% of excess return. An overall yield advantage to the benchmark contributed positively to overall results. See accompanying index descriptions on page 16. 13 OUTLOOK: STOCKS: Seldom in the history of the markets have such forces combined to set the stage for higher corporate profits and in turn higher equity prices. The Fed has provided the lowest interest rates in 40 years; fiscal policy is stimulative; the weak U.S. dollar is resuscitating our export industries, and the relaxed tax environment with the emphasis on dividends are all providing an attractive environment for equities. Forecasts for gross domestic product growth ("GDP") in the second half are edging higher and corporate sentiment appears to be improving. The consumer has held up well and unemployment claims may have peaked increasing the likelihood for stable levels of consumer confidence. While doubts remain over current stock valuations, we are encouraged regarding the positioning and outlook for our portfolio. BONDS: Weak aggregate demand has followed the capital expenditure binge years of the late 1990s, and this phenomenon is global in nature. Many economists contend that GDP must come in above 3.5% for an extended period in order for deflationary concerns to abate. We believe that the stimulative effects of negative real rates, a weaker dollar, and tax cuts will eventually boost the domestic economy out of its lethargy. The Fed is intent on fomenting the "animal spirits" of capital markets, and the American homeowner is once again reaping the rewards of cheap mortgage rates, some of which will find its way into consumer spending. The big questions for bond investors are how long rates will stay relatively low and when and how fast the economy will gain traction. A yield of 3.45% on the 10-year treasury looks very low compared to interest rates in the 1980s and 1990s, but so-called low yields are not unusual in the context of rates from the end of WW II until the oil embargoes of the 1970s. Clearly, the late June retreat in bond prices was most likely the result of unsustainable, near-term supply and demand technicals, and now market pundits will be looking for data confirming their forward-looking, bullish economic outlook. In response to these historically low interest rates, we are slightly short in duration, and we continue our underweight in mortgages. USLICO SERIES FUND PORTFOLIO MANAGER'S REPORT FOR THE ASSET ALLOCATION PORTFOLIO
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ---------------------------------------------------------------- 1 YEAR 5 YEAR 10 YEAR ------ ------ ------- USLICO Series Fund -- Asset Allocation Portfolio 4.72% -3.97% 4.19% S&P 500 Index 0.25% -1.61% 10.04% Lehman Brothers Aggregate Bond Index 10.40% 7.55% 7.21%
Based on a $10,000 initial investment, the table illustrates the total return of USLICO Series Fund -- Asset Allocation Portfolio against both the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your life insurance policy. Total returns would have been lower if such expenses or charges were included. TOTAL RETURNS REFLECT THE FACT THAT THE INVESTMENT MANAGER HAS WAIVED CERTAIN FEES AND OPERATING EXPENSES OTHERWISE PAYABLE BY THE PORTFOLIO, SUBJECT TO POSSIBLE LATER REIMBURSEMENT DURING A THREE-YEAR PERIOD. TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THERE BEEN NO WAIVER TO THE PORTFOLIO. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. Portfolio holdings are subject to change daily. See accompanying index descriptions on page 16. 14 PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany investments in equities. Credit, interest rate and other risks that accompany debt instruments. The value of securities of smaller issuers can be more volatile than that of larger issuers. Derivatives are subject to the risk of changes in the market price of a security, credit risk with respect to the counterparty to the derivative instrument, and the risk of loss due to changes in interest rates. Certain derivatives may also have a leveraging effect, which may increase the volatility of the portfolio. See accompanying index descriptions on page 16. 15 INDEX DESCRIPTIONS - -------------------------------------------------------------------------------- The STANDARD AND POOR'S 500 INDEX is an unmanaged index that measures the performance of approximately 500 large-capitalization U.S. companies whose securities are traded on major U.S. stock markets. The LEHMAN BROTHERS AGGREGATE BOND INDEX is an unmanaged index and is composed of securities from Lehman Brothers Government/Corporate Bond Index, Mortgaged-Backed Securities Index and the Asset-Backed Securities Index. All indices are unmanaged. An investor cannot invest directly in an index. 16 USLICO SERIES FUND STATEMENTS OF ASSETS AND LIABILITIES AS OF JUNE 30, 2003 (UNAUDITED)
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- ASSETS: Cash $ 411 $ 547 $ 46,102 $ 82,238 Investments in securities at value* 10,753,636 -- 2,749,219 11,547,981 Short-term investments at amortized cost 1,096,000 6,455,314 542,000 1,164,000 Dividends and interest receivable 4,246 19,903 23,856 48,193 Receivable for investment securities sold -- -- 51,725 167,032 Prepaid expenses 31 2 1 -- Reimbursement due from manager 1,398 357 744 1,585 ------------ ---------- ---------- ----------- Total assets 11,855,722 6,476,123 3,413,647 13,011,029 ------------ ---------- ---------- ----------- LIABILITIES: Payable for investment securities purchased 117,433 -- 186,331 396,293 Payable to affiliates 9,397 5,635 2,776 10,646 Payable for trustee fees 11,271 1,153 2,338 6,248 Other accrued expenses and liabilities 55,826 8,443 14,937 36,064 ------------ ---------- ---------- ----------- Total liabilities 193,927 15,231 206,382 449,251 ------------ ---------- ---------- ----------- NET ASSETS $ 11,661,795 $6,460,892 $3,207,265 $12,561,778 ============ ========== ========== =========== NET ASSET VALUE PER SHARE $ 5.71 $ 1.00 $ 10.03 $ 8.22 SHARES OUTSTANDING (UNLIMITED AUTHORIZED) 2,043,337 6,461,050 319,762 1,527,374 NET ASSETS WERE COMPRISED OF: Paid-in capital ($0.001 par value) $ 28,149,789 $6,461,050 $3,238,202 $17,989,707 Undistributed net investment income (accumulated net investment loss) (21,242) -- 20,130 46,705 Accumulated net realized loss on investments and foreign currencies (17,946,401) (158) (169,971) (6,384,319) Net unrealized appreciation of investments 1,479,649 -- 118,904 909,685 ------------ ---------- ---------- ----------- NET ASSETS $ 11,661,795 $6,460,892 $3,207,265 $12,561,778 ============ ========== ========== =========== * Cost of investments in securities $ 9,273,987 $ -- $2,630,315 $10,638,296
See accompanying notes to financial statements. 17 USLICO STOCK PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED)
SHARES VALUE ------ ----- COMMON STOCK: 92.2% AEROSPACE/DEFENSE: 1.5% 2,315 @ Alliant Techsystems, Inc. $ 120,172 600 Northrop Grumman Corp. 51,774 ----------- 171,946 ----------- APPAREL: 1.7% 3,900 @ Coach, Inc. 193,986 ----------- 193,986 ----------- BANKS: 3.5% 1,800 Bank of America Corp. 142,254 4,300 Investors Financial Services Corp. 124,743 2,700 Wells Fargo & Co. 136,080 ----------- 403,077 ----------- BEVERAGES: 0.7% 1,500 Anheuser-Busch Cos., Inc. 76,575 ----------- 76,575 ----------- COMMERCIAL SERVICES: 0.7% 1,700 @ University of Phoenix Online 86,190 ----------- 86,190 ----------- COMPUTERS: 4.4% 17,810 @ EMC Corp.-Mass 186,471 7,600 Hewlett-Packard Co. 161,880 2,000 International Business Machines Corp. 165,000 ----------- 513,351 ----------- COSMETICS/PERSONAL CARE: 0.7% 900 Procter & Gamble Co. 80,262 ----------- 80,262 ----------- DIVERSIFIED FINANCIAL SERVICES: 6.1% 8,100 Citigroup, Inc. 346,680 4,700 JP Morgan Chase & Co. 160,646 5,100 SLM Corp. 199,767 ----------- 707,093 ----------- ELECTRONICS: 1.3% 12,000 Symbol Technologies, Inc. 156,120 ----------- 156,120 ----------- ENTERTAINMENT: 1.1% 9,955 @ Metro-Goldwyn-Mayer, Inc. 123,641 ----------- 123,641 -----------
SHARES VALUE ------ ----- HEALTHCARE-PRODUCTS: 3.6% 3,100 @ Boston Scientific Corp. $ 189,410 2,300 Johnson & Johnson 118,910 2,600 @ Zimmer Holdings, Inc. 117,130 ----------- 425,450 ----------- HEALTHCARE-SERVICES: 1.7% 2,000 Aetna, Inc. 120,400 1,600 @ Mid Atlantic Medical Services 83,680 ----------- 204,080 ----------- INSURANCE: 2.7% 4,000 American Intl. Group 220,720 3,300 @@ Platinum Underwriters Holdings Ltd. 89,562 ----------- 310,282 ----------- INTERNET: 6.4% 4,700 @ Amazon.Com, Inc. 171,503 2,200 @ eBay, Inc. 229,196 10,400 @ Yahoo!, Inc. 340,704 ----------- 741,403 ----------- LEISURE TIME: 1.0% 2,900 Harley-Davidson, Inc. 115,594 ----------- 115,594 ----------- MEDIA: 2.7% 8,800 @ Cablevision Systems Corp. 182,688 4,700 @ Comcast Corp. 135,501 ----------- 318,189 ----------- MISCELLANEOUS MANUFACTURING: 4.6% 600 3M Co. 77,388 5,600 General Electric Co. 160,608 2,900 Pall Corp. 65,250 12,000 @@ Tyco Intl. Ltd. 227,760 ----------- 531,006 ----------- OIL & GAS: 6.3% 7,100 @,@@ Nabors Industries Ltd. 280,805 6,500 @ Patterson-UTI Energy, Inc. 210,600 3,300 @,@@ Precision Drilling Corp. 124,608 6,200 XTO Energy, Inc. 124,682 ----------- 740,695 -----------
See accompanying notes to financial statements. 18 USLICO STOCK PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
SHARES VALUE ------ ----- OIL & GAS SERVICES: 1.3% 4,300 @ Smith Intl., Inc. $ 157,982 ----------- 157,982 ----------- PHARMACEUTICALS: 15.4% 4,000 @ AdvancePCS 152,920 1,600 @ Barr Laboratories, Inc. 104,800 5,365 @,@@ Biovail Corp. 252,477 10,300 @ Celgene Corp. 313,120 1,200 Eli Lilly & Co. 82,764 400 @ Forest Laboratories, Inc. 21,900 4,400 @ Medimmune, Inc. 160,028 2,435 Merck & Co., Inc. 147,439 8,300 Pfizer, Inc. 283,445 2,300 @ Pharmaceutical Resources, Inc. 111,918 3,800 @ Sepracor, Inc. 68,514 2,200 Wyeth 100,210 ----------- 1,799,535 ----------- RETAIL: 9.3% 8,000 @ Abercrombie & Fitch Co. 227,280 5,800 @ Chico's FAS, Inc. 122,090 700 @ Costco Wholesale Corp. 25,620 5,790 @ Dollar Tree Stores, Inc. 183,717 6,800 Gap, Inc. 127,568 4,200 Home Depot, Inc. 139,104 4,800 Wal-Mart Stores, Inc. 257,616 ----------- 1,082,995 ----------- SEMICONDUCTORS: 2.6% 11,800 @ Altera Corp. 193,520 5,300 Intel Corp. 110,155 ----------- 303,675 ----------- SOFTWARE: 4.6% 8,100 Microsoft Corp. 207,441 11,500 @ Veritas Software Corp. 329,705 ----------- 537,146 ----------- TELECOMMUNICATIONS: 8.3% 6,010 AT&T Corp. 115,692 4,550 @ Cisco Systems, Inc. 75,485 11,155 @ Comverse Technology, Inc. 167,660 15,250 @ Corning, Inc. 112,697
SHARES VALUE ------ ----- TELECOMMUNICATIONS: (CONTINUED) 5,000 @ Nextel Communications, Inc. $ 90,400 2,500 SBC Communications, Inc. 63,875 11,600 Scientific-Atlanta, Inc. 276,544 1,800 Verizon Communications, Inc. 71,010 ----------- 973,363 ----------- Total Common Stock (Cost $9,273,987) 10,753,636 ----------- PRINCIPAL AMOUNT ------ V SHORT-TERM INVESTMENT: 9.4% $1,096,000 State Street Repurchase Agreement dated 06/30/03, 0.950%, due 07/01/03, $1,096,029 to be received upon repurchase (Collateralized by $735,000 U.S. Treasury Bond, 8.500%, Market Value $1,119,597, due 02/15/20) 1,096,000 ----------- Total Short-Term Investment (Cost $1,096,000) 1,096,000 -----------
TOTAL INVESTMENTS IN SECURITIES (COST $10,369,987)* 101.6% $11,849,636 OTHER ASSETS AND LIABILITIES-NET (1.6) (187,841) ----- ----------- NET ASSETS 100.0% $11,661,795 ===== ===========
@ Non-income producing security @@ Foreign Issuer * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 1,544,000 Gross Unrealized Depreciation (64,351) ----------- Net Unrealized Appreciation $ 1,479,649 ===========
See accompanying notes to financial statements. 19 USLICO MONEY MARKET PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED)
PRINCIPAL AMOUNT VALUE ------ ----- ASSET-BACKED COMMERCIAL PAPER: 1.5% $100,000 Ciesco LP, 1.100%, due 08/14/03 $ 99,866 ---------- Total Asset-Backed Commercial Paper (Cost $99,866) 99,866 ---------- CERTIFICATE OF DEPOSIT: 1.5% 100,000 Washington Mutual, 1.290%, due 10/17/03 100,000 ---------- Total Certificate of Deposit (Cost $100,000) 100,000 ---------- COMMERCIAL PAPER: 26.3% 200,000 Barclays U.S. Fund, 1.000%, due 08/01/03 199,828 200,000 General Electric Capital Corp., 1.080%, due 07/23/03 199,868 100,000 Goldman Sachs Group LP, 1.200%, due 08/29/03 99,803 100,000 HBOS Treasury Services PLC, 1.240%, due 07/28/03 99,907 100,000 HBOS Treasury Services PLC, 1.250%, due 08/04/03 99,882 100,000 HBOS Treasury Services PLC, 1.260%, due 07/16/03 99,947 100,000 Household Finance Corp., 1.240%, due 07/03/03 99,993 100,000 Household Finance Corp., 1.250%, due 07/02/03 99,997 200,000 @@ Lloyds Bank PLC, 1.270%, due 07/29/03 199,802 100,000 @@ Svenska Handelsbanken, Inc., 1.250%, due 07/02/03 99,997 200,000 UBS Finance, Inc., 1.030%, due 07/11/03 199,943 100,000 Washington Mutual, 1.213%, due 09/17/03 100,025 100,000 Washington Mutual, 1.251%, due 11/13/03 100,000 ---------- Total Commercial Paper (Cost $1,698,992) 1,698,992 ---------- CORPORATE NOTES: 53.9% 100,000 American Honda Finance Corp., 1.160%, due 09/16/03 100,004 100,000 Associates Corp. Of North America, 5.750%, due 11/01/03 101,477
PRINCIPAL AMOUNT VALUE ------ ----- $100,000 Bank Of America Corp., 1.550%, due 05/03/04 $ 100,247 40,000 Bank Of America Corp., 5.750%, due 03/01/04 41,175 150,000 Bank One Corp., 5.625%, due 02/17/04 154,053 150,000 Bank One NA Illinois, 1.310%, due 02/23/04 150,136 100,000 Bankboston Corp., 1.430%, due 07/14/03 100,005 300,000 @@ Canadian Imperial, 1.045%, due 12/15/03 300,007 100,000 Chase Manhattan Bank, 1.074%, due 06/30/04 100,000 200,000 Citigroup Global Markets Holdings, Inc., 1.224%, due 02/20/04 200,215 100,000 General Electric Capital Corp., 1.399%, due 10/22/03 100,042 100,000 Goldman Sachs Group, Inc., 1.540%, due 08/18/03 100,034 100,000 Household Finance Corp., 4.520%, due 09/15/03 100,693 100,000 JP Morgan Chase & Co., 1.415%, due 02/05/04 100,108 100,000 Merrill Lynch & Co., Inc., 1.133%, due 11/19/03 100,033 100,000 Merrill Lynch & Co., Inc., 1.480%, due 08/15/03 100,040 100,000 Merrill Lynch & Co., Inc., 6.800%, due 11/03/03 101,861 280,000 Morgan Stanley, 1.540%, due 08/07/03 280,112 150,000 Nationsbank Corp., 1.354%, due 07/07/03 150,003 300,000 Royal Bank Canada, 1.030%, due 03/15/04 299,957 200,000 US Bancorp, 1.410%, due 09/15/03 200,118 200,000 Wachovia Bank, 1.410%, due 06/08/04 200,501 300,000 Wells Fargo Bank NA, 0.984%, due 300,000 ---------- Total Corporate Notes (Cost $3,480,821) 3,480,821 ----------
See accompanying notes to financial statements. 20 USLICO MONEY MARKET PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT VALUE ------ ----- v U.S. GOVERNMENT AGENCY OBLIGATIONS: 12.5% $200,000 Federal Home Loan Bank System, 5.375%, due 01/05/04 $ 204,320 100,000 Federal Home Loan Mortgage Corporation, 3.250%, due 01/15/04 101,059 400,000 Federal National Mortgage Association Discount Note, 0.000%, due 399,895 100,000 Federal National Mortgage Association, 5.125%, due 02/13/04 102,361 ---------- Total U.S. Government Agency Obligations (Cost $807,635) 807,635 ---------- REPURCHASE AGREEMENT: 4.2% 268,000 State Street Repurchase Agreement dated 06/30/03, 1.100%, due 07/01/03, $268,008 to be received upon repurchase (Collateralized by $275,000 Federal Home Loan Bank, 1.350% Market Value $275,773 due 05/03/04) 268,000 ---------- Total Repurchase Agreement (Cost $268,000) 268,000 ----------
TOTAL INVESTMENTS IN SECURITIES (COST $6,455,314)* 99.9% $6,455,314 OTHER ASSETS AND LIABILITIES-NET 0.1 5,578 ----- ---------- NET ASSETS 100.0% $6,460,892 ===== ==========
@@ Foreign Issuer
PERCENTAGE INDUSTRY OF NET ASSETS - -------- ------------- Asset-Backed Commercial Paper 1.5% Bank Holding Companies 7.6% Federal & Federally-Sponsored Credit Agencies 12.5% Foreign Bank, Branches and Agencies 24.8% National Commercial Banks 17.1% Personal Credit Institutions 12.4% Savings and Loans 4.6% Security Brokers, Dealers & Flotation Companies 15.2% Repurchase Agreement 4.2% Other Assets and Liabilities, Net 0.1% ----- NET ASSETS 100.0% =====
See accompanying notes to financial statements. 21 USLICO BOND PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED)
PRINCIPAL AMOUNT VALUE ------ ----- CORPORATE BONDS: 34.8% AUTO MANUFACTURERS: 1.0% $ 25,000 Ford Motor Co., 6.625%, due 10/01/28 $ 20,952 10,000 General Motors Corp., 8.375%, due 07/15/33 9,918 ---------- 30,870 ---------- BANKS: 0.4% 10,000 Mellon Capital I, 7.720%, due 12/01/26 11,771 ---------- 11,771 ---------- BUILDING MATERIALS: 3.4% 100,000 @@ Nexfor, Inc., 6.875%, due 11/15/05 108,433 ---------- 108,433 ---------- COMMERCIAL SERVICES: 0.0% 100,000 #,X United Cos. Financial Corp., 9.350%, due 11/02/99 -- ---------- -- ---------- DIVERSIFIED FINANCIAL SERVICES: 6.9% 50,000 Boeing Capital Corp., 7.100%, due 09/27/05 55,139 100,000 # Goldman Sachs Group LP, 6.625%, due 12/01/04 107,246 50,000 Household Finance Corp., 5.750%, due 01/30/07 55,129 5,000 # Wachovia Capital Trust V, 7.965%, due 06/01/27 5,842 ---------- 223,356 ---------- ELECTRIC: 7.3% 50,000 @@ Empresa Nacional de Electricidad SA, 8.500%, due 04/01/09 53,500 100,000 Exelon Corp., 6.750%, due 05/01/11 115,646 6,000 # PG&E Corp., 6.875%, due 07/15/08 6,000 50,000 Progress Energy, Inc., 6.750%, due 03/01/06 55,546 5,000 # Reliant Resources, Inc., 9.250%, due 07/15/10 5,063 ---------- 235,755 ----------
PRINCIPAL AMOUNT VALUE ------ ----- MEDIA: 2.9% $ 35,000 AMFM, Inc., 8.000%, due 11/01/08 $ 41,037 50,000 AOL Time Warner, Inc., 5.625%, due 05/01/05 53,091 ---------- 94,128 ---------- MISCELLANEOUS MANUFACTURING: 0.7% 20,000 General Electric Co., 5.000%, due 02/01/13 21,116 ---------- 21,116 ---------- OIL & GAS: 1.7% 50,000 Pemex Project Funding Master Trust, 7.375%, due 12/15/14 55,125 ---------- 55,125 ---------- PACKAGING & CONTAINERS: 0.2% 5,000 # Sealed Air Corp., 5.625%, due 07/15/13 5,027 ---------- 5,027 ---------- PIPELINES: 3.2% 10,000 CenterPoint Energy Resources Corp., 8.125%, due 07/15/05 10,831 80,000 Kinder Morgan, Inc., 6.500%, due 09/01/12 91,674 ---------- 102,505 ---------- SOVEREIGN: 0.5% 15,000 @@ Mexico Government Intl. Bond, 6.625%, due 03/03/15 16,088 ---------- 16,088 ---------- TELECOMMUNICATIONS: 6.6% 50,000 AT&T Wireless Services, Inc., 8.125%, due 05/01/12 60,371 50,000 @@ France Telecom, 10.000%, due 03/01/31 69,188 50,000 Sprint Capital Corp., 8.375%, due 03/15/12 59,838 20,000 TCI Communications Finance, 9.650%, due 03/31/27 23,900 ---------- 213,297 ---------- Total Corporate Bonds (Cost $1,051,538) 1,117,471 ----------
See accompanying notes to financial statements. 22 USLICO BOND PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT VALUE ------ ----- COLLATERALIZED MORTGAGE OBLIGATIONS AND ASSET BACKED SECURITIES: 3.1% AIRLINES: 0.3% $ 10,000 American Airlines, Inc., 7.024%, due 10/15/09 $ 9,530 ---------- 9,530 ---------- COMMERCIAL: 1.4% 30,000 XX CS First Boston Mortgage Securities Corp., 3.382%, due 05/15/38 29,584 15,000 XX Wachovia Bank Commercial Mortgage Trust, 0.000%, due 06/15/35 15,075 ---------- 44,659 ---------- CREDIT CARD: 0.7% 6,000 Bank One Issuance Trust, 4.540%, due 09/15/10 6,245 6,000 Capital One Master Trust, 4.900%, due 03/15/10 6,502 8,000 MBNA Credit Card Master Note Trust, 4.950%, due 06/15/09 8,720 ---------- 21,467 ---------- HOME EQUITY: 0.5% 16,275 Amresco Residential Securities Mortgage Loan Trust, 1.685%, due 01/25/28 16,291 ---------- 16,291 ---------- OTHER ASSET BACKED SECURITY: 0.2% 7,000 XX Residential Asset Mortgage Products, Inc., 2.140%, due 06/25/33 6,943 ---------- 6,943 ---------- Total Collateralized Mortgage Obligations and Asset Backed Securities (Cost $99,594) 98,890 ---------- U.S. GOVERNMENT AGENCY OBLIGATIONS: 38.2% FEDERAL HOME LOAN BANK: 16.5% 500,000 4.500%, due 11/15/12 527,643 ---------- 527,643 ----------
PRINCIPAL AMOUNT VALUE ------ ----- FEDERAL HOME LOAN MORTGAGE CORPORATION: 0.6% $ 19,609 4.458%, due 12/01/26 $ 20,261 ---------- 20,261 ---------- FEDERAL NATIONAL MORTGAGE ASSOCIATION: 21.1% 1,503 4.700%, due 07/01/27 1,559 14,738 4.805%, due 07/01/27 15,234 38,893 6.000%, due 10/01/32 40,399 78,932 6.000%, due 10/01/32 81,987 60,230 6.500%, due 08/01/32 62,790 37,427 6.500%, due 10/01/32 39,019 96,316 6.500%, due 12/01/31 100,411 84,548 7.000%, due 09/01/32 88,984 36,045 7.000%, due 11/01/32 37,937 127,649 7.500%, due 07/01/21 136,452 66,404 7.500%, due 11/01/29 70,556 ---------- 675,328 ---------- Total U.S. Government Agency Obligations (Cost $1,173,786) 1,223,232 ---------- U.S. TREASURY OBLIGATIONS: 9.3% U.S. TREASURY BOND: 0.3% 10,000 5.375%, due 02/15/31 11,213 ---------- 11,213 ---------- U.S. TREASURY NOTES: 9.0% 100,000 2.250%, due 07/31/04 101,277 73,000 2.625%, due 05/15/08 73,536 10,000 3.625%, due 05/15/13 10,050 100,000 4.000%, due 11/15/12 103,750 288,613 ---------- Total U.S. Treasury Obligations (Cost $295,597) 299,826 ---------- SHARES ------ PREFERRED STOCK: 0.3% AUTO MANUFACTURERS: 0.3% 392 General Motors Corp. 9,800 ---------- Total Preferred Stock (Cost $9,800) 9,800 ---------- Total Long-Term Investments (Cost $2,630,315) 2,749,219 ----------
See accompanying notes to financial statements. 23 USLICO BOND PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED) CXPRINCIPALAMOUNT VALUE - --------- ---------- V SHORT-TERM INVESTMENT: 16.9% REPURCHASE AGREEMENT: 16.9% $ 542,000 State Street Repurchase Agreement dated 06/30/03, 0.950%, due 07/01/03, $542,014 to be received upon repurchase (Collateralized by $545,000 U.S. Treasury Note, 3.000%, Market Value $557,944 due 02/29/04) $ 542,000 ---------- Total Short-Term Investment (Cost $542,000) 542,000 ----------
TOTAL INVESTMENTS IN SECURITIES (COST $3,172,315)* 102.6% $3,291,219 OTHER ASSETS AND LIABILITIES-NET (2.6) (83,954) ----- ---------- NET ASSETS 100.0% $3,207,265 ===== ==========
@@ Foreign Issuer # Securities purchased pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. X Fair value determined by ING Valuation Committee appointed by the Portfolio's Board of Trustees. The security is in default with respect to principal and interest. XX Value of securities obtained from one or more dealers making markets in the securities which have been adjusted based on the Portfolio's valuation procedures. * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 122,282 Gross Unrealized Depreciation (3,378) ---------- Net Unrealized Appreciation $ 118,904 ==========
See accompanying notes to financial statements. 24 USLICO ASSET ALLOCATION PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED)
SHARES VALUE ------ ----- COMMON STOCK: 50.3% AEROSPACE/DEFENSE: 0.8% 1,325 @ Alliant Techsystems, Inc. $ 68,781 400 Northrop Grumman Corp. 34,516 ----------- 103,297 ----------- AIRLINES: 0.4% 3,300 Southwest Airlines Co. 56,760 ----------- 56,760 ----------- APPAREL: 0.7% 1,700 @ Coach, Inc. 84,558 ----------- 84,558 ----------- BANKS: 1.9% 1,100 Bank of America Corp. 86,933 2,500 Investors Financial Services Corp. 72,525 1,700 Wells Fargo & Co. 85,680 ----------- 245,138 ----------- BEVERAGES: 0.4% 1,000 Anheuser-Busch Cos., Inc. 51,050 ----------- 51,050 ----------- COMMERCIAL SERVICES: 0.3% 700 @ University of Phoenix Online 35,490 ----------- 35,490 ----------- COMPUTERS: 2.5% 6,800 @ EMC Corp.-Mass. 71,196 5,900 Hewlett-Packard Co. 125,670 1,400 International Business Machines Corp. 115,500 ----------- 312,366 ----------- COSMETICS/PERSONAL CARE: 0.4% 600 Procter & Gamble Co. 53,508 ----------- 53,508 ----------- DIVERSIFIED FINANCIAL SERVICES: 4.3% 1,500 American Express Co. 62,715 5,300 Citigroup, Inc. 226,840 700 Fannie Mae 47,208 700 Goldman Sachs Group, Inc. 58,625 1,900 JP Morgan Chase & Co. 64,942 2,100 SLM Corp. 82,257 ----------- 542,587 -----------
SHARES VALUE ------ ----- ELECTRONICS: 0.5% 4,700 Symbol Technologies, Inc. $ 61,147 ----------- 61,147 ----------- ENTERTAINMENT: 0.6% 5,685 @ Metro-Goldwyn-Mayer, Inc. 70,608 ----------- 70,608 ----------- HEALTHCARE-PRODUCTS: 2.0% 1,200 @ Boston Scientific Corp. 73,320 1,500 Johnson & Johnson 77,550 1,100 Medtronic, Inc. 52,767 1,000 @ Zimmer Holdings, Inc. 45,050 ----------- 248,687 ----------- HEALTHCARE-SERVICES: 0.7% 800 Aetna, Inc. 48,160 700 @ Mid Atlantic Medical Services 36,610 ----------- 84,770 ----------- INSURANCE: 3.0% 2,600 American Intl. Group 143,468 1,700 Lincoln National Corp. 60,571 1,100 Marsh & McLennan Cos., Inc. 56,177 2,100 @@ Platinum Underwriters Holdings Ltd. 56,994 3,600 Travelers Property Casualty Corp. 57,240 ----------- 374,450 ----------- INTERNET: 2.3% 1,900 @ Amazon.Com, Inc. 69,331 800 @ eBay, Inc. 83,344 4,300 @ Yahoo!, Inc. 140,868 ----------- 293,543 ----------- LEISURE TIME: 0.5% 1,700 Harley-Davidson, Inc. 67,762 ----------- 67,762 ----------- MEDIA: 2.0% 3,500 @ Cablevision Systems Corp. 72,660 4,100 @ Comcast Corp. 118,203 2,900 Walt Disney Co. 57,275 ----------- 248,138 -----------
See accompanying notes to financial statements. 25 USLICO ASSET ALLOCATION PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
SHARES VALUE ------ ----- MISCELLANEOUS MANUFACTURING: 3.1% 400 3M Co. $ 51,592 4,100 General Electric Co. 117,588 2,100 Honeywell Intl., Inc. 56,385 1,200 Pall Corp. 27,000 7,300 @@ Tyco Intl. Ltd. 138,554 ----------- 391,119 ----------- OIL & GAS: 3.1% 1,400 Exxon Mobil Corp. 50,274 4,000 @,@@ Nabors Industries Ltd. 158,200 2,600 @ Patterson-UTI Energy, Inc. 84,240 1,200 @,@@ Precision Drilling Corp. 45,312 2,466 XTO Energy, Inc. 49,591 ----------- 387,617 ----------- OIL & GAS SERVICES: 0.5% 1,800 @ Smith Intl., Inc. 66,132 ----------- 66,132 ----------- PHARMACEUTICALS: 7.4% 1,700 @ AdvancePCS 64,991 700 @ Barr Laboratories, Inc. 45,850 3,065 @,@@ Biovail Corp. 144,239 4,300 @ Celgene Corp. 130,720 800 Eli Lilly & Co. 55,176 200 @ Forest Laboratories, Inc. 10,950 1,700 @ Medimmune, Inc. 61,829 1,390 Merck & Co., Inc. 84,164 5,400 Pfizer, Inc. 184,410 1,000 @ Pharmaceutical Resources, Inc. 48,660 1,500 @ Sepracor, Inc. 27,045 1,500 Wyeth 68,325 ----------- 926,359 ----------- RETAIL: 5.5% 3,300 @ Abercrombie & Fitch Co. 93,753 2,300 @ Chico's FAS, Inc. 48,415 1,400 @ Costco Wholesale Corp. 51,240 3,305 @ Dollar Tree Stores, Inc. 104,868 4,400 Gap, Inc. 82,544 2,400 Home Depot, Inc. 79,488 1,900 Sears Roebuck and Co. 63,916 3,200 Wal-Mart Stores, Inc. 171,744 ----------- 695,968 ----------- SEMICONDUCTORS: 1.0% 3,900 @ Altera Corp. 63,960 3,100 Intel Corp. 64,430 ----------- 128,390 -----------
SHARES VALUE ------ ----- SOFTWARE: 2.1% 5,100 Microsoft Corp. $ 130,611 4,800 @ Veritas Software Corp. 137,616 ----------- 268,227 ----------- TELECOMMUNICATIONS: 3.6% 3,435 AT&T Corp. 66,124 2,600 @ Cisco Systems, Inc. 43,134 4,255 @ Comverse Technology, Inc. 63,953 5,210 @ Corning, Inc. 38,502 1,900 @ Nextel Communications, Inc. 34,352 1,700 SBC Communications, Inc. 43,435 4,800 Scientific-Atlanta, Inc. 114,432 1,100 Verizon Communications, Inc. 43,395 ----------- 447,327 ----------- TRANSPORTATION: 0.7% 1,400 CSX Corp. 42,126 800 Union Pacific Corp. 46,416 ----------- 88,542 ----------- Total Common Stock (Cost $5,648,152) 6,333,540 ----------- PREFERRED STOCK: 0.1% AUTO MANUFACTURERS: 0.1% 722 General Motors Corp. 17,978 ----------- Total Preferred Stock (Cost $18,050) 17,978 ----------- PRINCIPAL AMOUNT VALUE ------ ----- CORPORATE BONDS: 14.7% AUTO MANUFACTURERS: 0.5% $ 55,000 Ford Motor Co., 6.625%, due 10/01/28 45,892 15,000 General Motors Corp., 8.375%, due 07/15/33 14,765 ----------- 60,657 -----------
See accompanying notes to financial statements. 26 USLICO ASSET ALLOCATION PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT VALUE ------ ----- BANKS: 1.1% $ 20,000 Mellon Capital I, 7.720%, due 12/01/26 $ 23,625 100,000 Wachovia Corp., 4.950%, due 11/01/06 108,966 ----------- 132,591 ----------- BUILDING MATERIALS: 0.9% 100,000 @@ Nexfor, Inc., 6.875%, due 11/15/05 108,560 ----------- 108,560 ----------- COMMERCIAL SERVICES: 0.0% 200,000 #,X United Cos. Financial Corp., 9.350%, due 11/02/99 -- ----------- -- ----------- DIVERSIFIED FINANCIAL SERVICES: 2.2% 50,000 Boeing Capital Corp., 7.100%, due 09/27/05 55,179 150,000 # Goldman Sachs Group LP, 6.625%, due 12/01/04 160,893 50,000 Household Finance Corp., 5.750%, due 01/30/07 55,227 5,000 # Wachovia Capital Trust V, 7.965%, due 06/01/27 5,842 ----------- 277,141 ----------- ELECTRIC: 2.8% 100,000 @@ Empresa Nacional de Electricidad SA, 8.500%, due 04/01/09 107,172 150,000 Exelon Corp., 6.750%, due 05/01/11 173,872 12,000 # PG&E Corp., 6.875%, due 07/15/08 12,000 50,000 Progress Energy, Inc., 6.750%, due 03/01/06 55,609 5,000 # Reliant Resources, Inc., 9.250%, due 07/15/10 5,050 ----------- 353,703 ----------- FOOD: 2.0% 100,000 ConAgra Foods, Inc., 9.750%, due 03/01/21 141,244 100,000 Safeway, Inc., 7.250%, due 09/15/04 106,289 ----------- 247,533 -----------
PRINCIPAL AMOUNT VALUE ------ ----- MEDIA: 1.0% $ 65,000 AMFM, Inc., 8.000%, due 11/01/08 $ 75,887 50,000 AOL Time Warner, Inc., 5.625%, due 05/01/05 53,109 ----------- 128,996 ----------- MISCELLANEOUS MANUFACTURING: 0.3% 40,000 General Electric Co., 5.000%, due 02/01/13 42,331 ----------- 42,331 ----------- OIL & GAS: 0.4% 50,000 Pemex Project Funding Master Trust, 7.375%, due 12/15/14 54,875 ----------- 54,875 ----------- PACKAGING & CONTAINERS: 0.1% 10,000 # Sealed Air Corp., 5.625%, due 07/15/13 10,107 ----------- 10,107 ----------- PIPELINES: 1.3% 20,000 CenterPoint Energy Resources Corp., 8.125%, due 07/15/05 21,674 120,000 Kinder Morgan, Inc., 6.500%, due 09/01/12 137,798 ----------- 159,472 ----------- SOVEREIGN: 0.2% 25,000 @@ Mexico Government Intl. Bond, 6.625%, due 03/03/15 26,625 ----------- 26,625 ----------- TELECOMMUNICATIONS: 1.9% 50,000 AT&T Wireless Services, Inc., 8.125%, due 05/01/12 60,361 50,000 @@ France Telecom, 10.000%, due 03/01/31 69,432 50,000 Sprint Capital Corp., 8.375%, due 03/15/12 59,981
See accompanying notes to financial statements. 27 USLICO ASSET ALLOCATION PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT VALUE ------ ----- TELECOMMUNICATIONS: (CONTINUED) $ 40,000 TCI Communications Finance, 9.650%, due 03/31/27 $ 47,800 ----------- 237,574 ----------- Total Corporate Bonds (Cost $1,727,832) 1,840,165 ----------- COLLATERALIZED MORTGAGE OBLIGATIONS AND ASSET BACKED SECURITIES: 1.5% AIRLINES: 0.1% 10,000 American Airlines, Inc., 7.024%, due 10/15/09 9,553 ----------- 9,553 ----------- COMMERCIAL: 0.7% 60,000 XX CS First Boston Mortgage Securities Corp., 3.382%, due 05/15/38 59,168 25,000 XX Wachovia Bank Commercial Mortgage Trust, 0.000%, due 06/15/35 25,123 ----------- 84,291 ----------- CREDIT CARD: 0.3% 12,000 Bank One Issuance Trust, 4.540%, due 09/15/10 12,489 11,000 Capital One Master Trust, 4.900%, due 03/15/10 11,920 12,000 MBNA Credit Card Master Note Trust, 4.950%, due 06/15/09 13,097 ----------- 37,506 ----------- HOME EQUITY: 0.3% 32,550 Amresco Residential Securities Mortgage Loan Trust, 1.685%, due 01/25/28 32,581 ----------- 32,581 -----------
PRINCIPAL AMOUNT VALUE ------ ----- OTHER ASSET BACKED SECURITY: 0.1% $ 15,000 XX Residential Asset Mortgage Products, Inc., 2.140%, due 06/25/33 $ 14,902 ----------- 14,902 ----------- Total Collateralized Mortgage Obligations and Asset Backed Securities (Cost $180,142) 178,833 ----------- U.S. GOVERNMENT AGENCY OBLIGATIONS: 19.8% FEDERAL HOME LOAN BANK: 4.2% 500,000 4.500%, due 11/15/12 528,259 ----------- 528,259 ----------- FEDERAL HOME LOAN MORTGAGE CORPORATION: 3.5% 51,286 4.458%, due 12/01/26 53,037 368,500 6.500%, due 12/01/31 383,582 2,693 9.000%, due 10/01/19 3,002 ----------- 439,621 ----------- FEDERAL NATIONAL MORTGAGE ASSOCIATION: 12.1% 7,514 4.700%, due 07/01/27 7,799 39,202 4.805%, due 07/01/27 40,556 377,780 6.000%, due 01/01/32 392,859 238,579 6.000%, due 02/01/32 248,110 118,398 6.000%, due 10/01/32 123,124 90,345 6.500%, due 08/01/32 94,243 192,631 6.500%, due 12/01/31 200,941 126,821 7.000%, due 09/01/32 133,594 191,474 7.500%, due 07/01/21 204,794 66,404 7.500%, due 11/01/29 70,604 ----------- 1,516,624 ----------- Total U.S. Government Agency Obligations (Cost $2,374,297) 2,484,504 -----------
See accompanying notes to financial statements. 28 USLICO ASSET ALLOCATION PORTFOLIO PORTFOLIO OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT VALUE ------ ----- v U.S. TREASURY OBLIGATIONS: 5.5% U.S. TREASURY BOND: 1.0% $ 110,000 5.375%, due 02/15/31 $ 123,900 ----------- 123,900 ----------- U.S. TREASURY NOTES: 4.5% 200,000 2.250%, due 07/31/04 202,649 348,000 2.625%, due 05/15/08 351,290 15,000 3.625%, due 05/15/13 15,122 ----------- 569,061 ----------- Total U.S. Treasury Obligations (Cost $689,823) 692,961 ----------- Total Long-Term Investments (Cost $10,638,296) 11,547,981 -----------
PRINCIPAL AMOUNT VALUE ------ ----- SHORT-TERM INVESTMENTS: 9.3% REPURCHASE AGREEMENT: 9.3% $1,164,000 State Street Repurchase Agreement dated 06/30/03, 0.950%, due 07/01/03, $1,164,031 to be received upon repurchase (Collateralized by $1,180,000 U.S. Treasury Note, 1.500%, Market Value $1,190,662 due 02/28/25) $ 1,164,000 ----------- Total Short-Term Investments (Cost $1,164,000) 1,164,000 -----------
TOTAL INVESTMENTS IN SECURITIES (COST $11,802,296)* 101.2% $12,711,981 OTHER ASSETS AND LIABILITIES-NET (1.2) (150,203) ----- ----------- NET ASSETS 100.0% $12,561,778 ===== ===========
@ Non-income producing security @@ Foreign Issuer # Securities purchased pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. X Fair value determined by ING Valuation Committee appointed by the Portfolio's Board of Trustees. The security is in default with respect to principal and interest. XX Value of securities obtained from one or more dealers making markets in the securities which have been adjusted based on the Portfolio's valuation procedures. * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 964,906 Gross Unrealized Depreciation (55,221) ----------- Net Unrealized Appreciation $ 909,685 ===========
See accompanying notes to financial statements. 29 USLICO SERIES FUND STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- INVESTMENT INCOME: Dividends, net of foreign taxes* $ 22,824 $ -- $ -- $ 23,534 Interest 3,190 39,927 66,000 140,387 ---------- ------- -------- -------- Total investment income 26,014 39,927 66,000 163,921 ---------- ------- -------- -------- EXPENSES: Investment management fees 12,942 8,003 3,887 14,738 Custody and accounting expense 15,021 2,715 5,265 18,055 Administrative service fees 5,177 3,201 1,555 5,895 Professional fees 17,724 13,769 7,075 16,715 Shareholder reporting expense 5,208 2,015 920 4,579 Miscellaneous expense 680 241 108 435 Trustee fees 4,887 1,086 1,448 3,801 ---------- ------- -------- -------- Subtotal 61,639 31,030 20,258 64,218 Less expenses waived and/or reimbursed by affiliates 14,383 2,167 6,229 10,988 ---------- ------- -------- -------- Net expenses 47,256 28,863 14,029 53,230 ---------- ------- -------- -------- Net investment income (loss) (21,242) 11,064 51,971 110,691 ---------- ------- -------- -------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments and foreign currencies 187,319 (158) 5,954 134,907 Net change in unrealized appreciation on investments 1,355,554 -- 63,328 713,098 ---------- ------- -------- -------- Net realized and unrealized gain (loss) on investments and foreign currencies 1,542,873 (158) 69,282 848,005 ---------- ------- -------- -------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,521,631 $10,906 $121,253 $958,696 ========== ======= ======== ======== * Foreign taxes $ 196 $ -- $ -- $ 76
See accompanying notes to financial statements. 30 USLICO SERIES FUND STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- FROM OPERATIONS: Net investment income (loss) $ (21,242) $ 11,064 $ 51,971 $ 110,691 Net realized gain (loss) on investments 187,319 (158) 5,954 134,907 Net change in unrealized appreciation of investments 1,355,554 -- 63,328 713,098 ----------- ---------- ---------- ----------- Net increase in net assets resulting from operations 1,521,631 10,906 121,253 958,696 ----------- ---------- ---------- ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- (11,064) (31,841) (63,986) FROM CAPITAL SHARES TRANSACTIONS: Dividends reinvested -- 11,064 31,841 63,986 ----------- ---------- ---------- ----------- Net increase in net assets resulting from capital share transactions -- 11,064 31,841 63,986 ----------- ---------- ---------- ----------- Net increase in net assets 1,521,631 10,906 121,253 958,696 ----------- ---------- ---------- ----------- NET ASSETS, BEGINNING OF PERIOD 10,140,164 6,449,986 3,086,012 11,603,082 ----------- ---------- ---------- ----------- NET ASSETS, END OF PERIOD $11,661,795 $6,460,892 $3,207,265 $12,561,778 =========== ========== ========== =========== UNDISTRIBUTED NET INVESTMENT INCOME (ACCUMULATED NET INVESTMENT LOSS) AT END OF PERIOD $ (21,242) $ -- $ 20,130 $ 46,705 =========== ========== ========== ===========
FOR THE YEAR ENDED DECEMBER 31, 2002
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- FROM OPERATIONS: Net investment income (loss) $ (71,750) $ 62,181 $ 114,885 $ 281,382 Net realized gain (loss) on investments (3,172,082) -- 63,043 (1,015,881) Net change in unrealized appreciation (depreciation) of investments (1,575,904) -- 53,152 (378,729) ----------- ---------- ---------- ----------- Net increase (decrease) in net assets resulting from operations (4,819,736) 62,181 231,080 (1,113,228) ----------- ---------- ---------- ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- (62,181) (123,927) (377,091) FROM CAPITAL SHARES TRANSACTIONS: Net proceeds from sales of shares 47,886 35,800 9,255 54,100 Dividends reinvested -- 62,181 123,927 377,091 Cost of shares redeemed (60,481) (47,727) -- (89,948) ----------- ---------- ---------- ----------- Net increase (decrease) in net assets resulting from capital share transactions (12,595) 50,254 133,182 341,243 ----------- ---------- ---------- ----------- Net increase (decrease) in net assets (4,832,331) 50,254 240,335 (1,149,076) ----------- ---------- ---------- ----------- NET ASSETS, BEGINNING OF YEAR 14,972,495 6,399,732 2,845,677 12,752,158 ----------- ---------- ---------- ----------- NET ASSETS, END OF YEAR $10,140,164 $6,449,986 $3,086,012 $11,603,082 =========== ========== ========== =========== UNDISTRIBUTED NET INVESTMENT INCOME AT END OF YEAR $ -- $ -- $ -- $ -- =========== ========== ========== ===========
See accompanying notes to financial statements. 31 USLICO SERIES FUND -- NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2003 (UNAUDITED) (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 (Stock Portfolio, Money Market Portfolio, Bond Portfolio and Asset Allocation Portfolio), 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) and ReliaStar Life Insurance Company of New York (Reliastar Life of New York, a wholly owned subsidiary of ReliaStar Life) 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. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Security Valuation -- For each Portfolio except the Money Market Portfolio, equity securities are valued daily at the closing sale prices reported on recognized securities exchanges or lacking any sales, at the last available bid price. Prices of long-term debt securities are valued on the basis of last reported sales price, or if no sales are reported, the value is determined based upon the mean of representative quoted bid and asked prices for such securities, or, if prices are not available, at prices provided by market makers, or at prices for securities of comparable maturity, quality and type. Short-term debt instruments with remaining maturities of less than 60 days at the date of acquisition are valued at amortized cost, unless the Trustees determine that amortized cost does not reflect the fair value of such obligations. Securities and assets for which market quotations are not readily available (which may include certain restricted securities which are subject to limitations as to their sale) are valued at their fair values as determined in good faith by or under the supervision of the Portfolios' Board of Trustees ("Board"), in accordance with methods that are specifically authorized by the Board. Securities traded on exchanges, including foreign exchanges, which close earlier than the time that a Portfolio calculates its net asset value may also be valued at their fair values as determined in good faith by or under the supervision of a Portfolio's Board, in accordance with methods that are specifically authorized by the Board. If a significant event which is likely to impact the value of one or more foreign securities held by a Portfolio occurs after the time at which the foreign market for such security (ies) closes but before the time that the Portfolio's net asset value is calculated on any business day, such event may be taken into account in determining the fair value of such security (ies) at the time the Portfolio calculates its net asset value. For these purposes, significant events after the close of trading on a foreign market may include, among others, securities trading in the U.S. and other markets, corporate announcements, natural and other disasters, and political and other events. Among other elements of analysis, the Board has authorized the use of one or more research services to assist with the determination of the fair value of foreign securities in light of significant events. Research services use statistical analyses and quantitative models to help determine fair value as of the time a Portfolio calculates its net asset value. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment, and the fair value assigned to a security may not represent the actual value that a Portfolio could obtain if it were to sell the security at the time of the close of the NYSE. The Money Market Portfolio, as permitted by Rule 2a-7 under the Act, carries all investments at amortized cost, which approximates market value. (b) Security Transactions and Investment Income -- Security transactions are recorded on the trade date. Realized gains or losses on sales of investments are calculated on the identified cost basis. Interest income is recorded on the accrual basis except when collection is not expected and dividend income is recorded on the ex-dividend date. Discounts are accreted and premiums amortized to par at maturity based on the scientific method. (c) 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. Therefore, no federal income tax provision is required. To the extent any future capital gains are offset by these loss carryforwards, such gains may not be distributed to shareholders. (d) Purchases and Sales -- Purchases and sales of Fund shares are made on the basis of the net asset value per share prevailing at the close of business on the preceding business day. (e) Repurchase Agreements -- The Portfolios' custodian takes possession of collateral pledged for investments in repurchase agreements. The underlying collateral is valued daily on a mark-to-market basis to assure that the value, including accrued interest, is at least equal to the repurchase price. In the event of default of the obligation to repurchase, the Portfolios have the right to liquidate the collateral and apply proceeds in satisfaction of the obligation. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Portfolios may be delayed or limited. 32 USLICO SERIES FUND -- NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2003 (UNAUDITED) (CONTINUED) (f) Use of Estimates -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. (g) Distribution to Shareholders -- Dividends from net investment income are declared and paid quarterly by the Stock Portfolio, Bond Portfolio and Asset Allocation Portfolio, and declared and paid daily by the Money Market Portfolio. Distributions of net realized capital gains, if any, are declared annually; however, to the extent that a net realized capital gain can be reduced by a capital loss carryover, such gain will not be distributed. The Portfolios may periodically make reclassifications among certain of their capital accounts as a result of the timing of certain income and capital gains distributions determined annually in accordance with Federal tax regulations which may differ from accounting principles generally accepted in the United States of America. (3) AFFILIATIONS AND RELATED PARTY TRANSACTIONS -- Each of the Portfolios has entered into an Investment Advisory Agreement with ING Investments, LLC (the "Adviser"), a wholly-owned subsidiary of ING Groep N.V. The advisory agreement provides that management fees be charged to each of the Portfolios at an annual percentage rate of 0.50% on the first $100 million of average daily net assets and 0.45% of average daily net assets in excess thereof. The Adviser has contractually agreed to waive management fees charged to each of the Portfolios to the extent they exceed 0.25% of the average daily net assets of each Portfolio. The Adviser has also agreed to voluntarily limit the annual expenses of each Portfolio, other than management fees, to 0.65% of the average net assets of each Portfolio. As of June 30, 2003, the cumulative amount of reimbursed fees that are subject to possible recoupment by the Adviser are as follows: Stock Portfolio $102,570 Money Market Portfolio 45,414 Bond Portfolio 61,606 Asset Allocation Portfolio 121,706
ING Funds Services, LLC (the "Administrator"), serves as administrator to each Portfolio. The Portfolios pay the Administrator a fee calculated at an annual rate of 0.10% of each Portfolio's average daily net assets. ING Funds Distributor, LLC, a wholly-owned subsidiary of ING Groep N.V., serves as Distributor of the Fund. The former distributor for the Fund was Washington Square Securities, Inc. No fees are charged to the Portfolios for distribution services. At June 30, 2003, the Portfolios had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities:
ACCRUED ADVISORY FEE ACCRUED ADMINISTRATIVE FEE TOTAL -------------------- -------------------------- ----- Stock Portfolio $6,712 $2,685 $ 9,397 Money Market Portfolio 4,025 1,610 5,635 Bond Portfolio 1,982 794 2,776 Asset Allocation Portfolio 7,605 3,041 10,646
Each Portfolio has adopted a Retirement Policy covering all independent trustees of the Portfolio who will have served as an independent trustee for at least five years at the time of retirement. Benefits under this plan are based on an annual rate as defined in the plan agreement, as amended May 24, 2002. (4) PURCHASES AND SALES OF INVESTMENT SECURITIES -- The aggregate cost of purchases and proceeds from sales of investments (excluding U.S. Government and short-term investments) for the six months ended June 30, 2003 were as follows:
PURCHASES SALES --------- ----- Stock Portfolio $14,801,451 $15,494,411 Bond Portfolio 902,837 178,982 Asset Allocation Portfolio 1,180,681 369,617
33 USLICO SERIES FUND -- NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2003 (UNAUDITED) (CONTINUED) U.S. Government Securities not included above were as follows:
PURCHASES SALES --------- ----- Bond Portfolio $ 719,199 $1,237,016 Asset Allocation Portfolio 1,786,497 2,390,441
(5) SUMMARY OF CAPITAL SHARES TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- DOLLARS Shares issued as reinvestments of dividends $ -- $ 11,064 $ 31,841 $ 63,986 -------- -------- -------- -------- Net increase $ -- $ 11,064 $ 31,841 $ 63,986 ======== ======== ======== ======== SHARES Shares issued as reinvestment of dividends -- 11,064 3,256 8,419 -------- -------- -------- -------- Net increase in shares outstanding -- 11,064 3,256 8,419 ======== ======== ======== ========
FOR THE YEAR ENDED DECEMBER 31, 2002
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- DOLLARS Shares sold $ 47,886 $ 35,800 $ 9,255 $ 54,100 Shares issued as reinvestments of dividends -- 62,181 123,927 377,091 Shares redeemed (60,481) (47,727) -- (89,948) -------- -------- -------- -------- Net increase (decrease) $(12,595) $ 50,254 $133,182 $341,243 ======== ======== ======== ======== SHARES Shares sold 7,278 35,800 983 6,502 Shares issued as reinvestment of dividends -- 62,181 13,037 47,446 Shares redeemed (9,192) (47,727) -- (10,811) -------- -------- -------- -------- Net increase (decrease) in shares outstanding (1,914) 50,254 14,020 43,137 ======== ======== ======== ========
(6) FEDERAL INCOME TAXES Dividends paid by the Portfolios from net investment income and distributions of net realized short-term capital gains are for federal income tax purposes, taxable as ordinary income to shareholders. The tax composition of dividends and distributions to shareholders for six months ended June 30, 2003 were as follow:
ORDINARY INCOME --------------- Money Market $11,064 Bond 31,841 Asset Allocation 63,986
The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These book/tax differences are either considered temporary or permanent in nature. Key differences are the treatment of short-term capital gains, foreign currency transactions, organization costs and other differences. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. To the extent 34 USLICO SERIES FUND -- NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2003 (UNAUDITED) (CONTINUED) distributions exceed net investment income and/or net realized capital gains for tax purposes, they are reported as distributions of paid-in capital. For income tax purposes, capital (currency) losses incurred after October 31 within the Portfolio's fiscal year are deemed to arise on the first business day of the following fiscal year. Capital loss carryforwards, which may be used to offset future, realized capital gains for federal income tax purposes were as follows at December 31, 2002:
AMOUNT EXPIRATION DATES ------ ---------------- Stock $17,966,202 2009-2011 Bond 175,924 2009-2010 Asset Allocation 6,425,914 2009-2011
(7) SUBSEQUENT EVENTS -- At a special meeting held on July 22, 2003, Shareholders approved a Sub-Advisory Agreement between ING Investments, LLC and ING Aeltus Investment Management, Inc., with no change in the Adviser, the portfolio manager(s), or the overall management fee paid by each Portfolio. Effective August 1, 2003 the Fund will be sub-advised by ING Aeltus Investment Management, Inc. Both ING Aeltus Investment Management, Inc. and ING Investments, LLC are indirect wholly-owned subsidiaries of ING Groep N.V. 35 USLICO SERIES FUND FINANCIAL HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 4.96 $ 1.00 $ 9.75 $ 7.64 Income (loss) from investment operations: Net investment income (loss) (0.01) 0.00* 0.16 0.07 Net realized and unrealized gain (loss) on investments (0.76) -- 0.22 0.55 ------- ------ ------ ------- Total from investment operations (0.75) 0.00* 0.38 0.62 Distributions Distribution of net investment income -- (0.00)* (0.10) (0.04) ------- ------ ------ ------- Net asset value, end of period $ 5.71 $ 1.00 $10.03 $ 8.22 ======= ====== ====== ======= TOTAL RETURN(1) 15.13% 0.17% 3.90% 8.14% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's) $11,662 $6,461 $3,207 $12,562 Ratio of expenses to average net assets after expense reimbursement(2) 0.90% 0.90% 0.90% 0.90% Ratio of expenses to average net assets prior to expense reimbursement(2) 1.18% 0.97% 1.30% 1.09% Ratio of net investment income (loss) to average net assets(2) (0.41)% 0.35% 3.34% 1.88% Portfolio turnover rate 152% N/A 51% 83%
(1) Total return is calculated assuming reinvestments of all dividends and capital gain distributions. (2) Annualized. * Amount is less than $0.01 per share.
FOR THE YEAR ENDED DECEMBER 31, 2002
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 7.32 $ 1.00 $ 9.41 $ 8.64 Income (loss) from investment operations: Net investment income (loss) (0.04) 0.01 0.39 0.19 Net realized and unrealized gain (loss) on investments (2.32) -- 0.35 (0.94) ------- ------ ------ ------- Total from investment operations (2.36) 0.01 0.74 (0.75) Distributions Distribution of net investment income -- (0.01) (0.40) (0.25) ------- ------ ------ ------- Net asset value, end of year $ 4.96 $ 1.00 $ 9.75 $ 7.64 ======= ====== ====== ======= TOTAL RETURN(1) (32.24)% 0.88% 8.07% (8.72)% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) $10,140 $6,450 $3,086 $11,603 Ratio of expenses to average net assets after expense reimbursement 0.90% 0.78% 0.89% 0.90% Ratio of expenses to average net assets prior to expense reimbursement 1.47% 1.03% 1.37% 1.34% Ratio of net investment income (loss) to average net assets (0.59)% 0.97% 4.20% 2.42% Portfolio turnover rate 418% N/A 159% 258%
(1) Total return is calculated assuming reinvestments of all dividends and capital gain distributions. See accompanying notes to financial statements. 36 USLICO SERIES FUND FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2001
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO(2) PORTFOLIO(2) PORTFOLIO(2) PORTFOLIO(2) ------------ ------------ ------------ ------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 12.42 $ 1.00 $ 9.21 $ 11.04 Income (loss) from investment operations: Net investment income (loss) (0.05) 0.03 0.48 0.22 Net realized and unrealized gain (loss) on investments (5.05) -- 0.11 (2.43) ------- ------ ------ ------- Total from investment operations (5.10) 0.03 0.59 (2.21) Distributions Distribution of net investment income -- (0.03) (0.39) (0.19) ------- ------ ------ ------- Net asset value, end of year $ 7.32 $ 1.00 $ 9.41 $ 8.64 ======= ====== ====== ======= TOTAL RETURN(1) (41.06)% 3.14% 6.47% (20.09)% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) $14,972 $6,400 $2,846 $12,752 Ratio of expenses to average net assets after expense reimbursement 0.90% 0.90% 0.90% 0.90% Ratio of expenses to average net assets prior to expense reimbursement 1.42% 1.63% 2.15% 1.76% Ratio of net investment income (loss) to average net assets (0.61)% 3.13% 5.02%(3) 2.37%(3) Portfolio turnover rate 510% N/A 215% 354%
(1) Total return is calculated assuming reinvestments of all dividends and capital gain distributions at net asset value. (2) Effective May 11, 2001, ING Investments, LLC ceased serving as sub-adviser to all of the Portfolios and began serving as adviser to all of the Portfolios. (3) Had the Bond Portfolio and the Asset Allocation Portfolio not amortized premiums and accreted discounts the ratio of net investment income to average net assets would have been 4.56% and 2.09%, respectively. FOR THE YEAR ENDED DECEMBER 31, 2000
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO(2) PORTFOLIO(2) PORTFOLIO(2) --------- ------------ ------------ ------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 16.06 $ 1.00 $ 9.01 $ 12.68 Income (loss) from investment operations: Net investment income (loss) (0.02) 0.05 0.40 0.18 Net realized and unrealized gain (loss) on investments (3.18) -- 0.20 (1.41) ------- ------ ------ ------- Total from investment operations (3.20) 0.05 0.60 (1.23) Distributions Distribution of net investment income -- (0.05) (0.40) (0.18) Distribution of realized capital gains (0.44) -- -- (0.23) ------- ------ ------ ------- Net asset value, end of year $ 12.42 $ 1.00 $ 9.21 $ 11.04 ======= ====== ====== ======= TOTAL RETURN(1) (19.94)% 5.59% 6.74% (9.80)% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) $26,513 $6,331 $2,881 $15,591 Ratio of expenses to average net assets after expense reimbursement 0.62% 0.90% 0.90% 0.90% Ratio of expenses to average net assets prior to expense reimbursement 0.87% 1.34% 1.83% 1.18% Ratio of net investment income (loss) to average net assets (0.11)% 5.45% 4.30% 1.44% Portfolio turnover rate 365.49% N/A 49.27% 242.78%
(1) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. (2) Effective December 1, 2000, ING Pilgrim Investments, LLC became sub-adviser to the Money Market and Bond Portfolios as well as the bond portion of the Asset Allocation Portfolio. See accompanying notes to financial statements. 37 USLICO SERIES FUND FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 1999
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 13.64 $ 1.00 $ 9.74 $ 11.92 Income (loss) from investments operations: Net investment income 0.12 0.04 0.46 0.31 Net realized and unrealized gain (loss) on investments 3.93 -- (0.73) 1.48 ------- ------ ------ ------- Total from investment operations 4.05 0.04 (0.27) 1.79 Distributions: Distribution of net investment income (0.13) (0.04) (0.46) (0.31) Distribution of realized capital gains (1.50) -- -- (0.72) ------- ------ ------ ------- Net asset value, end of year $ 16.06 $ 1.00 $ 9.01 $ 12.68 ======= ====== ====== ======= TOTAL RETURN(1) 30.08% 5.00% (2.87)% 15.10% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) $34,493 $6,058 $2,765 $18,180 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%
(1) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. FOR THE YEAR ENDED DECEMBER 31, 1998
MONEY ASSET STOCK MARKET BOND ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE: 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 (loss) on investments 0.62 -- (0.13) 0.27 ------- ------ ------ ------- Total from investment operations 0.82 0.05 0.42 0.66 Distributions Distribution of net investment income (0.20) (0.05) (0.55) (0.39) Distribution of realized capital gains (0.48) -- (0.13) (0.33) ------- ------ ------ ------- Net asset value, end of year $ 13.64 $ 1.00 $ 9.74 $ 11.92 ======= ====== ====== ======= TOTAL RETURN(1) 6.00% 5.00% 4.30% 5.51% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) $27,774 $5,964 $2,832 $16,335 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%
(1) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. See accompanying notes to financial statements. 38 TRUSTEE AND OFFICER INFORMATION (UNAUDITED) The business and affairs of the Trusts are managed under the direction of the Trust's Board of Trustees. A Trustee who is not an interested person of the Trusts, as defined in the 1940 Act, is an independent trustee ("Independent Trustee"). The Trustees and Officers of the Trust are listed below. The Statement of Additional Information includes additional information about trustees of the Registrant and is available, without charge, upon request at 1-800-992-0180.
TERM OF OFFICE AND PRINCIPAL POSITION(S) LENGTH OF OCCUPATION(S) NAME, ADDRESS HELD TIME DURING THE AND AGE WITH TRUST SERVED(1) PAST FIVE YEARS ------- ---------- --------- --------------- Independent Trustees: Paul S. Doherty(2) Trustee September Mr. Doherty is President and Partner, 7337 E. Doubletree Ranch Rd. 1999 - Present Doherty, Wallace, Pillsbury and Murphy, Scottsdale, AZ 85258 P.C., Attorneys (1996 - Present); Born: 1934 Director, Tambrands, Inc. (1993 - 1998); and Trustee of each of the funds managed by Northstar Investment Management Corporation (1993 - 1999). J. Michael Earley(3) Trustee February President and Chief Executive Officer, 7337 E. Doubletree Ranch Rd. 2002 - Present Bankers Trust Company, N.A. Scottsdale, AZ 85258 (1992 - Present). Born: 1945 R. Barbara Gitenstein(2) Trustee February President, College of New Jersey 7337 E. Doubletree Ranch Rd. 2002 - Present (1999 - Present). Formerly, Executive Scottsdale, AZ 85258 Vice President and Provost, Drake Born: 1948 University (1992 - 1998). Walter H. May(2) Trustee September Retired. Formerly, Managing Director and 7337 E. Doubletree Ranch Rd. 1999 - Present Director of Marketing, Piper Jaffray, Scottsdale, AZ 85258 Inc.; Trustee of each of the funds Born: 1936 managed by Northstar Investment Management Corporation (1996 - 1999). Jock Patton(2) Trustee November Private Investor (June 1997 - Present). 7337 E. Doubletree Ranch Rd. 1999 - Present Formerly Director and Chief Executive Scottsdale, AZ 85258 Officer, Rainbow Multimedia Group, Inc. Born: 1945 (January 1999 - December 2001); Director of Stuart Entertainment, Inc.; Director of Artisoft, Inc. (1994 - 1998). NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER OVERSEEN DIRECTORSHIPS NAME, ADDRESS BY HELD BY AND AGE TRUSTEE TRUSTEE ------- ------- ------- Independent Trustees: Paul S. Doherty(2) 111 -- 7337 E. Doubletree Ranch Rd. Scottsdale, AZ 85258 Born: 1934 J. Michael Earley(3) 111 -- 7337 E. Doubletree Ranch Rd. Scottsdale, AZ 85258 Born: 1945 R. Barbara Gitenstein(2) 111 -- 7337 E. Doubletree Ranch Rd. Scottsdale, AZ 85258 Born: 1948 Walter H. May(2) 111 Best Prep charity 1991 - 7337 E. Doubletree Ranch Rd. Present. Scottsdale, AZ 85258 Born: 1936 Jock Patton(2) 111 Director, Hypercom, Inc. 7337 E. Doubletree Ranch Rd. (January 1999 - Present); JDA Scottsdale, AZ 85258 Software Group, Inc. (January Born: 1945 1999 - Present); and BG Associates, Inc.
39 TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
TERM OF OFFICE AND PRINCIPAL POSITION(S) LENGTH OF OCCUPATION(S) NAME, ADDRESS HELD TIME DURING THE AND AGE WITH TRUST SERVED(1) PAST FIVE YEARS ------- ---------- --------- --------------- Independent Trustees: David W.C. Putnam(3) Trustee September President and Director, F.L. Putnam 7337 E. Doubletree Ranch Rd. 1999 - Present Securities Company, Inc. and its Scottsdale, AZ 85258 affiliates; President, Secretary and Born: 1939 Trustee, The Principled Equity Market Fund. Formerly, Trustee, Trust Realty Trust (December Corp.; Anchor Investment Trust; Bow 2000 - Present); Ridge Mining Company and each of the F.L. Putnam funds managed by Northstar Investment Foundation Management Corporation (1994 - 1999). Blaine E. Rieke(3) Trustee February General Partner, Huntington Partners 7337 E. Doubletree Ranch Rd. 2001 - Present (January 1997 - Present). Chairman of Scottsdale, AZ 85258 the Board and Trustee of each of the Born: 1933 funds managed by ING Investment Management Co. LLC (November 1998 - February 2001). Roger B. Vincent(3) Trustee February President, Springwell Corporation 7337 E. Doubletree Ranch Rd. 2002 - Present (1989 - Present). Formerly, Director Scottsdale, AZ 85258 Tatham Offshore, Inc. (1996 - 2000). Born: 1945 NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER OVERSEEN DIRECTORSHIPS NAME, ADDRESS BY HELD BY AND AGE TRUSTEE TRUSTEE ------- ------- ------- Independent Trustees: David W.C. Putnam(3) 111 Anchor International Bond 7337 E. Doubletree Ranch Rd. (December 2000 - Present); Scottsdale, AZ 85258 Progressive Capital Born: 1939 Accumulation Trust (August 1998 - Present); Principled Equity Market Fund (November 1996 - Present), Mercy Endowment Foundation (1995 - Present); Director, F.L. Putnam Investment Management Company (December 2001 - Present); Asian American Bank and Trust Company (June 1992 - Present); and Notre Dame Health Care Center (1991 - Present) F.L. Putnam Securities Company, Inc. (June 1978 - Present); and an Honorary Trustee, Mercy Hospital (1973 - Present). Blaine E. Rieke(3) 111 Morgan Chase Trust Co. 7337 E. Doubletree Ranch Rd. (January 1998 - Present). Scottsdale, AZ 85258 Born: 1933 Roger B. Vincent(3) 111 AmeriGas Propane, Inc. 7337 E. Doubletree Ranch Rd. (1998 - Present). Scottsdale, AZ 85258 Born: 1945
40 TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
TERM OF OFFICE AND PRINCIPAL POSITION(S) LENGTH OF OCCUPATION(S) NAME, ADDRESS HELD TIME DURING THE AND AGE WITH TRUST SERVED(1) PAST FIVE YEARS ------- ---------- --------- --------------- Independent Trustees: Richard A. Wedemeyer(2) Trustee February Retired. Mr. Wedemeyer was formerly Vice 7337 E. Doubletree Ranch Rd. 2001 - Present President -- Finance and Administration, Scottsdale, AZ 85258 Channel Corporation (June 1996 - April Born: 1936 2002). Formerly Vice President, Operations and Administration, Jim Henson Productions. (1979 - 1997); Trustee, First Choice Funds (1997 - 2001); and of each of the funds managed by ING Investment Management Co. LLC (1998 - 2001). NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER OVERSEEN DIRECTORSHIPS NAME, ADDRESS BY HELD BY AND AGE TRUSTEE TRUSTEE ------- ------- ------- Independent Trustees: Richard A. Wedemeyer(2) 111 Touchstone Consulting Group 7337 E. Doubletree Ranch Rd. (1997 - Present). Scottsdale, AZ 85258 Born: 1936
41 TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
TERM OF OFFICE AND PRINCIPAL POSITION(S) LENGTH OF OCCUPATION(S) NAME, ADDRESS HELD TIME DURING THE AND AGE WITH TRUST SERVED(1) PAST FIVE YEARS ------- ---------- --------- --------------- Trustees who are "Interested Persons": Thomas J. McInerney(4) Trustee February Chief Executive Officer, ING U.S. 7337 E. Doubletree Ranch Rd. 2001 - Present Financial Services (September 2001 - Scottsdale, AZ 85258 Present); General Manager and Chief Born: 1956 Executive Officer, ING U.S. Worksite Financial Services (December 2000 - Present); Member ING Americas Executive Committee (2001 - Present); President, Chief Executive Officer and Director of Northern Life Insurance Company (March 2001 - October 2002), ING Aeltus Holding Company, Inc. (2000 - Present), ING Retail Holding Company (1998 - Present), ING Life Insurance and Annuity Company (September 1997 - November 2002) and ING Retirement Holdings, Inc. (1997 - Present). Formerly, General Manager and Chief Executive Officer, ING Worksite Division (December 2000 - October 2001), President ING-SCI, Inc. (August 1997 - December 2000); President, Aetna Financial Services (August 1997 - December 2000). NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER OVERSEEN DIRECTORSHIPS NAME, ADDRESS BY HELD BY AND AGE TRUSTEE TRUSTEE ------- ------- ------- Trustees who are "Interested Persons": Thomas J. McInerney(4) 165 Trustee, GCG Trust (February 7337 E. Doubletree Ranch Rd. 2002 - Present); Equitable Scottsdale, AZ 85258 Life Insurance Co., Golden Born: 1956 American Life Insurance Co., Life Insurance Company of Georgia, Midwestern United Life Insurance Co., ReliaStar Life Insurance Co., Security Life of Denver, Security Connecticut Life Insurance Co., Southland Life Insurance Co., USG Annuity and Life Company, and United Life and Annuity Insurance Co. Inc (March 2001 - Present); Director, Ameribest Life Insurance Co., (March 2001 to January 2003); Director, First Columbine Life Insurance Co. (March 2001 to December 2002); Member of the Board, National Commission on Retirement Policy, Governor's Council on Economic Competitiveness and Technology of Connecticut, Connecticut Business and Industry Association, Bushnell; Connecticut Forum; Metro Hartford Chamber of Commerce; and is Chairman, Concerned Citizens for Effective Government.
42 TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
TERM OF OFFICE AND PRINCIPAL POSITION(S) LENGTH OF OCCUPATION(S) NAME, ADDRESS HELD TIME DURING THE AND AGE WITH TRUST SERVED(1) PAST FIVE YEARS ------- ---------- --------- --------------- Trustees who are "Interested Persons": John G. Turner(5) Trustee February Chairman, Hillcrest Capital Partners 7337 E. Doubletree Ranch Rd. 2001 - Present (May 2002 - Present); President, Turner Scottsdale, AZ 85258 Investment Company (January Born: 1939 2002 - Present). Mr. Turner was formerly Vice Chairman of ING Americas (2000 - 2002); Chairman and Chief Executive Officer of ReliaStar Financial Corp. and ReliaStar Life Insurance Company (1993 - 2000); Chairman of ReliaStar United Services Life Insurance Company (1995 - 1998); Chairman of ReliaStar Life Insurance Company of New York (1995 - 2001); Chairman of Northern Life Insurance Company (1992 - 2001); Chairman and Trustee of the Northstar affiliated investment companies (1993 - 2001) and Director, Northstar Investment Management Corporation and its affiliates (1993 - 1999). NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER OVERSEEN DIRECTORSHIPS NAME, ADDRESS BY HELD BY AND AGE TRUSTEE TRUSTEE ------- ------- ------- Trustees who are "Interested Persons": John G. Turner(5) 111 Director, Hormel Foods 7337 E. Doubletree Ranch Rd. Corporation (March 2000 - Scottsdale, AZ 85258 Present); Shopko Stores, Inc. Born: 1939 (August 1999 - Present); and M.A. Mortenson Company (March 2002 - Present).
(1) Trustees serve until their successors are duly elected and qualified, subject to the Board's retirement policy. (2) Valuation Committee member. (3) Audit Committee member. (4) Mr. McInerney is an "interested person," as defined by the 1940 Act, because of his affiliation with ING U.S. Worksite Financial Services, an affiliate of ING Investments, LLC. (5) Mr. Turner is an "interested person," as defined by the 1940 Act, because of his affiliation with ING Americas, an affiliate of ING Investments, LLC. 43 TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
PRINCIPAL TERM OF OFFICE OCCUPATION(S) NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS ------- ------------------- -------------- --------------- Officers: James M. Hennessy President and Chief February 2001 - President and Chief Executive Officer of 7337 E. Doubletree Ranch Rd. Executive Officer Present ING Capital Corporation, LLC, ING Funds Scottsdale, AZ 85258 Services, LLC, ING Advisors, Inc., ING Born: 1949 Chief Operating Officer June 2000 - Investments, LLC, Lexington Funds Present Distributor, Inc., Express America T.C. Inc. and EAMC Liquidation Corp. (since Senior Executive Vice June 2000 - December 2001); Executive Vice President President and Secretary February 2001 and Chief Operating Officer of ING Funds Distributor, LLC (since June 2000). Formerly, Executive Vice President and Chief Operating Officer of ING Quantitative Management, Inc. (October 2001 to September 2002); Senior Executive Vice President (June 2000 to December 2000) and Secretary (April 1995 to December 2000) of ING Capital Corporation, LLC, ING Funds Services, LLC, ING Investments, LLC, ING Advisors, Inc., Express America T.C. Inc., and EAMC Liquidation Corp.; and Executive Vice President, ING Capital Corporation, LLC and its affiliates (May 1998 to June 2000) and Senior Vice President, ING Capital Corporation, LLC and its affiliates (April 1995 to April 1998). Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief 7337 E. Doubletree Ranch Rd. President and Assistant Present Financial Officer and Treasurer of ING Scottsdale, AZ 85258 Secretary Funds Services, LLC, ING Funds Born: 1958 Distributor, LLC, ING Advisors, Inc., Principal Financial January 2000 - ING Investments, LLC (December 2001 to Officer Present present), Lexington Funds Distributor, Inc., Express America T.C. Inc. and EAMC Liquidation Corp. (since December 2001). Senior Vice President January 2000 - Formerly, Executive Vice President, February 2002 Chief Financial Officer and Treasurer of ING Quantitative Management, Inc. (December 2001 to October 2002); Senior Vice President, ING Funds Services, LLC, ING Investments, LLC, and ING Funds Distributor, LLC (June 1998 to December 2001) and Chief Financial Officer of Endeavor Group (April 1997 to June 1998).
44 TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
PRINCIPAL TERM OF OFFICE OCCUPATION(S) NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS ------- ------------------- -------------- --------------- Officers: Stanley D. Vyner Executive Vice April 2000 - Executive Vice President of ING 7337 E. Doubletree Ranch Rd. President Present Advisors, Inc. and ING Investments, LLC Scottsdale, Arizona 85258 (July 2000 to present) and Chief Born: 1950 Investment Officer of the International Portfolios, ING Investments, LLC (July 1996 to present). Formerly, President and Chief Executive Officer of ING Investments, LLC (August 1996 to August 2000). Robert S. Naka Senior Vice President January 2000 - Senior Vice President and Assistant 7337 E. Doubletree Ranch Rd. and Assistant Secretary Present Secretary of ING Funds Services, LLC, Scottsdale, AZ 85258 ING Funds Distributor, LLC, ING Born: 1963 Advisors, Inc., ING Investments, LLC (October 2001 to present) and Lexington Funds Distributor, Inc. (since December 2001). Formerly, Senior Vice President and Assistant Secretary for ING Quantitative Management, Inc. (October 2001 to October 2002); Vice President, ING Investments, LLC (April 1997 to October 1999), ING Funds Services, LLC (February 1997 to August 1999) and Assistant Vice President, ING Funds Services, LLC (August 1995 to February 1997). Kimberly A. Anderson Vice President and February 2001 - Vice President and Assistant Secretary 7337 E. Doubletree Ranch Rd. Secretary Present of ING Funds Services, LLC, ING Funds Scottsdale, AZ 85258 Distributor, LLC, ING Advisors, Inc., Born: 1964 Assistant Vice January 2000 - ING Investments, LLC (since October President and Assistant February 2001 2001) and Lexington Funds Distributor, Secretary Inc. (since December 2001). Formerly, Vice President for ING Quantitative Management, Inc. (October 2001 to October 2002); Assistant Vice President of ING Funds Services, LLC (November 1999 to January 2001) and has held various other positions with ING Funds Services, LLC for more than the last five years. Robyn L. Ichilov Vice President and April 2000 - Vice President of ING Funds Services, 7337 E. Doubletree Ranch Rd. Treasurer Present LLC (since October 2001) and ING Scottsdale, AZ 85258 Investments, LLC (since August 1997); Born: 1967 Accounting Manager, ING Investments, LLC (since November 1995).
45 TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
PRINCIPAL TERM OF OFFICE OCCUPATION(S) NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS ------- ------------------- -------------- --------------- Officers: Lauren D. Bensinger Vice President February 2003 - Vice President and Chief Compliance 7337 E. Doubletree Ranch Rd. Present Officer, ING Funds Distributor, LLC. Scottsdale, Arizona 85258 (July 1995 - Present); Vice President Born: 1954 (February 1996 - Present) and Chief Compliance Officer (October 2001 - Present) ING Investments, LLC; Vice President and Chief Compliance Officer, ING Advisors, Inc. (July 2000 - Present), Vice President and Chief Compliance Officer, ING Quantitative Management, Inc. (July 2000 - September 2002), and Vice President, ING Fund Services, LLC (July 1995 - Present). Maria M. Anderson Assistant Vice August 2001 - Assistant Vice President of ING Funds 7337 E. Doubletree Ranch Rd. President Present Services, LLC (since October 2001). Scottsdale, AZ 85258 Formerly, Manager of Fund Accounting and Born: 1958 Fund Compliance, ING Investments, LLC (September 1999 to November 2001); Section Manager of Fund Accounting, Stein Roe Mutual Funds (July 1998 to August 1999); and Financial Reporting Analyst, Stein Roe Mutual Funds (August 1997 to July 1998). Todd Modic Assistant Vice August 2001 - Vice-President of Financial Reporting- 7337 E. Doubletree Ranch Rd. President Present Fund Accounting of ING Funds Services, Scottsdale, AZ 85258 LLC (September 2002 to present). Born: 1967 Director of Financial Reporting of ING Investments, LLC (since March 2001). Formerly, Director of Financial Reporting, Axient Communications, Inc. (May 2000 to January 2001) and Director of Finance, Rural/Metro Corporation (March 1995 to May 2000). Susan P. Kinens Assistant Vice February 2003 - Assistant Vice President and Assistant 7337 E. Doubletree Ranch Rd. President and Assistant Present Secretary, ING Funds Services, LLC Scottsdale, AZ 85258 Secretary (December 2002 - Present); and has held Born: 1976 various other positions with ING Funds Services, LLC for the last five years.
(1) The officers hold office until the next annual meeting of the Trustees and until their successors are duly elected and qualified. 46 ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEMS 4-8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Based on our evaluation conducted within 90 days of the filing date, hereof, the design and operation of the registrant's disclosure controls and procedures are effective to ensure that material information relating to the registrant is made known to the certifying officers by others within the appropriate entities, particularly during the period in which Forms N-CSR are being prepared, and the registrant's disclosure controls and procedures allow timely preparation and review of the information for the registrant's Form N-CSR and the officer certifications of such Form N-CSR. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. (a) Not applicable. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto as EX-99.CERT. The officer certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as EX-99.906CERT SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): USLICO Series Fund By /s/ James M. Hennessy -------------------------------------------------------- James M. Hennessy President and Chief Executive Officer Date: August 28, 2003 ----------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James M. Hennessy -------------------------------------------------------- James M. Hennessy President and Chief Executive Officer Date: August 28, 2003 ----------------------------------------------------- By /s/ Michael J. Roland -------------------------------------------------------- Michael J. Roland Executive Vice President and Chief Financial Officer Date: August 28, 2003 ----------------------------------------------------- EX-99.CERT 3 p68192dexv99wcert.txt EX-99.CERT EX-99.CERT CERTIFICATION I, James M. Hennessy, certify that: 1. I have reviewed this report on Form N-CSR of USLICO Series Fund.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ James M. Hennessy Date: August 28, 2003 - ------------------------------------- ------------------- James M. Hennessy President and Chief Executive Officer EX-99.CERT CERTIFICATION I, Michael J. Roland, certify that: 1. I have reviewed this report on Form N-CSR of USLICO Series Fund: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Michael J. Roland Date: August 28, 2003 - ------------------------------------- ------------------- Michael J. Roland Executive Vice President and Chief Financial Officer EX-99.906CERT 4 p68192dexv99w906cert.txt EX-99.906CERT EX-99.906CERT CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: USLICO Series Fund Date of Form N-CSR: Period Ended 6/30/03, to be filed 8/28/03 The undersigned, the principal executive officer of the above named registrant (the "Fund"), hereby certifies that, with respect to the Form N-CSR referred to above, to the best of his knowledge and belief, after reasonable inquiry: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906 has been provided to USLICO Series Fund and will be retained by USLICO Series Fund and furnished to the Securities and Exchange Commission or its staff upon request. IN WITNESS WHEREOF, the undersigned has executed this Certification below, as of this 28 day of August, 2003. /s/ James M. Hennessy --------------------- James M. Hennessy EX-99.906CERT CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: USLICO Series Fund Date of Form N-CSR: Period Ended 6/30/03, to be filed 8/28/03 The undersigned, the principal financial officer of the above named registrant (the "Fund"), hereby certifies that, with respect to the Form N-CSR referred to above, to the best of his knowledge and belief, after reasonable inquiry: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906 has been provided to USLICO Series Fund and will be retained by USLICO Series Fund and furnished to the Securities and Exchange Commission or its staff upon request. IN WITNESS WHEREOF, the undersigned has executed this Certification below, as of this 28 day of August, 2003. /s/ Michael J. Roland --------------------- Michael J. Roland -----END PRIVACY-ENHANCED MESSAGE-----