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
<Table>
<Caption>
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%
</Table>
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
<Table>
<Caption>
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%
</Table>
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
<Table>
<Caption>
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%
</Table>
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)
<Table>
<Caption>
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
</Table>
See accompanying notes to financial statements.
17
USLICO STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED)
<Table>
<Caption>
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
-----------
</Table>
<Table>
<Caption>
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
-----------
</Table>
See accompanying notes to financial statements.
18
USLICO STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
<Table>
<Caption>
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
</Table>
<Table>
<Caption>
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
-----------
<Caption>
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
-----------
</Table>
<Table>
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
===== ===========
</Table>
<Table>
@ 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:
</Table>
<Table>
Gross Unrealized Appreciation $ 1,544,000
Gross Unrealized Depreciation (64,351)
-----------
Net Unrealized Appreciation $ 1,479,649
===========
</Table>
See accompanying notes to financial statements.
19
USLICO MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED)
<Table>
<Caption>
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
</Table>
<Table>
<Caption>
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
----------
</Table>
See accompanying notes to financial statements.
20
USLICO MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
<Table>
<Caption>
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
----------
</Table>
<Table>
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
===== ==========
</Table>
@@ Foreign Issuer
<Table>
<Caption>
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%
=====
</Table>
See accompanying notes to financial statements.
21
USLICO BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED)
<Table>
<Caption>
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
----------
</Table>
<Table>
<Caption>
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
----------
</Table>
See accompanying notes to financial statements.
22
USLICO BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
<Table>
<Caption>
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
----------
</Table>
<Table>
<Caption>
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
----------
<Caption>
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
----------
</Table>
See accompanying notes to financial statements.
23
USLICO BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
<Table>
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
----------
</Table>
<Table>
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
===== ==========
</Table>
<Table>
@@ 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:
</Table>
<Table>
Gross Unrealized Appreciation $ 122,282
Gross Unrealized Depreciation (3,378)
----------
Net Unrealized Appreciation $ 118,904
==========
</Table>
See accompanying notes to financial statements.
24
USLICO ASSET ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED)
<Table>
<Caption>
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
-----------
</Table>
<Table>
<Caption>
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
-----------
</Table>
See accompanying notes to financial statements.
25
USLICO ASSET ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
<Table>
<Caption>
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
-----------
</Table>
<Table>
<Caption>
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
-----------
<Caption>
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
-----------
</Table>
See accompanying notes to financial statements.
26
USLICO ASSET ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
<Table>
<Caption>
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
-----------
</Table>
<Table>
<Caption>
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
</Table>
See accompanying notes to financial statements.
27
USLICO ASSET ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
<Table>
<Caption>
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
-----------
</Table>
<Table>
<Caption>
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
-----------
</Table>
See accompanying notes to financial statements.
28
USLICO ASSET ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 2003 (UNAUDITED) (CONTINUED)
<Table>
<Caption>
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
-----------
</Table>
<Table>
<Caption>
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
-----------
</Table>
<Table>
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
===== ===========
</Table>
<Table>
@ 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:
</Table>
<Table>
Gross Unrealized Appreciation $ 964,906
Gross Unrealized Depreciation (55,221)
-----------
Net Unrealized Appreciation $ 909,685
===========
</Table>
See accompanying notes to financial statements.
29
USLICO SERIES FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
<Table>
<Caption>
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
</Table>
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)
<Table>
<Caption>
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
=========== ========== ========== ===========
</Table>
FOR THE YEAR ENDED DECEMBER 31, 2002
<Table>
<Caption>
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 $ -- $ -- $ -- $ --
=========== ========== ========== ===========
</Table>
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:
<Table>
Stock Portfolio $102,570
Money Market Portfolio 45,414
Bond Portfolio 61,606
Asset Allocation Portfolio 121,706
</Table>
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:
<Table>
<Caption>
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
</Table>
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:
<Table>
<Caption>
PURCHASES SALES
--------- -----
Stock Portfolio $14,801,451 $15,494,411
Bond Portfolio 902,837 178,982
Asset Allocation Portfolio 1,180,681 369,617
</Table>
33
USLICO SERIES FUND -- NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2003 (UNAUDITED)
(CONTINUED)
U.S. Government Securities not included above were as follows:
<Table>
<Caption>
PURCHASES SALES
--------- -----
Bond Portfolio $ 719,199 $1,237,016
Asset Allocation Portfolio 1,786,497 2,390,441
</Table>
(5) SUMMARY OF CAPITAL SHARES TRANSACTIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
<Table>
<Caption>
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
======== ======== ======== ========
</Table>
FOR THE YEAR ENDED DECEMBER 31, 2002
<Table>
<Caption>
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
======== ======== ======== ========
</Table>
(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:
<Table>
<Caption>
ORDINARY INCOME
---------------
Money Market $11,064
Bond 31,841
Asset Allocation 63,986
</Table>
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:
<Table>
<Caption>
AMOUNT EXPIRATION DATES
------ ----------------
Stock $17,966,202 2009-2011
Bond 175,924 2009-2010
Asset Allocation 6,425,914 2009-2011
</Table>
(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)
<Table>
<Caption>
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%
</Table>
<Table>
(1) Total return is calculated assuming reinvestments of all
dividends and capital gain distributions.
(2) Annualized.
* Amount is less than $0.01 per share.
</Table>
FOR THE YEAR ENDED DECEMBER 31, 2002
<Table>
<Caption>
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%
</Table>
(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
<Table>
<Caption>
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%
</Table>
(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
<Table>
<Caption>
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%
</Table>
(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
<Table>
<Caption>
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%
</Table>
(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
<Table>
<Caption>
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%
</Table>
(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.
<Table>
<Caption>
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).
<Caption>
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.
</Table>
39
TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
<Table>
<Caption>
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
<Caption>
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
</Table>
40
TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
<Table>
<Caption>
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).
<Caption>
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
</Table>
41
TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
<Table>
<Caption>
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).
<Caption>
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.
</Table>
42
TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
<Table>
<Caption>
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).
<Caption>
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).
</Table>
(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)
<Table>
<Caption>
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).
</Table>
44
TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
<Table>
<Caption>
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).
</Table>
45
TRUSTEE AND OFFICER INFORMATION (UNAUDITED)
<Table>
<Caption>
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.
</Table>
(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
-----------------------------------------------------