Dear Investor:
With the major stock indexes up 25% to 30% or more, and long term bond indexes
up 10% to 15%, 1997 was another truly exceptional year for investors in U. S.
securities. And, as you will see in the following pages of this report, the
Ultra Series Funds participated nicely in these very favorable markets.
It was also an exceptional year for U. S. investors exposed to emerging market
stocks, which lost 35% on average in the non-Japan Pacific Basin markets, or
even to Asian bonds, which returned negative 3% on average in 1997.
All this has been very unsettling for U. S. investors, making it increasingly
difficult to not "fold their hand, but to stay in the game." What might the U.
S. investing game provide in 1998?
The only certainty is more volatility. But, we should also see continued
resilience. And we just might see the economy play a wild card that could change
the game significantly.
Although most of Wall Street and the financial media are focusing on the
increasing uncertainty of worldwide economic growth rates and U. S. corporate
earnings levels, the financial markets may be more impacted in 1998 by another
factor -- a change to a new stage of the inflation cycle. After 17 years of
slowing inflation in this country, it was approaching zero. Most forecasters had
been expecting a bounce back to modestly higher inflation rates due to our
continuing economic strength amid increasingly strained resources, fueled by an
expanding money supply.
The Asian problems changed that expectation. The bursting of the Asian economic
bubble suddenly dashed both the hopes of continued strong U. S. economic growth
and the fears of rekindling U. S. inflation. Although we concur that the Asian
problems should have a moderating effect on the level of U. S. economic
activity, we think the impact will be modest. The more significant impact could
well be on our inflation rates.
The economic troubles in Asia hasten the "exporting of deflation" to the United
States. As prices on Asian manufactured goods plummet, pricing and currency
pressures spread world wide. This could well lead to a dip into overall
deflation -- actual declines in overall price levels -- in the United States.
This deflationary situation could actually aid key segments of the amazingly
resilient U. S. economy, leading to expanding domestic and European sales and
sustained profit margins due to lower manufacturing costs. The relative fortunes
of U. S. companies would show increasing divergence, however, as some benefit
from lower costs and others suffer from shrinking pricing power and higher
costs.
U.S. bonds and most stocks would do quite well in this "mixed overall growth
with modest deflation" environment. And, investors worldwide would recognize
even more than in the past that the U. S. offers the strongest investments
available. This buying interest, on top of that of our own baby boomers and
Gen-Xers, could add another few percentage points to 1998's returns on U. S.
securities. The result: A never-seen-before fourth consecutive year of double
digit returns.
There are other possibilities, of course. Situations in which we stay in
disinflation, or soon return to modest inflation, have occurred much more often
in our nation's history. And, the possibility of a broadening recession still
lingers, which would hurt most stocks and low-quality bonds.
At times like this, it is especially important that investors employ all the
techniques available to assure good long term results. Be sure your expectations
are rational as to volatility and long term returns. Be sure your target asset
allocation reflects your current situation, and be sure to maintain that target
allocation by at least annually reallocating investments from recently
outperforming areas to lagging categories. And finally, be sure to "spread your
bets" by using diversified investments like the Ultra Series Funds. Narrowly
focused mutual funds and large concentrations of specific securities can be
harmful to a portfolio in any market. They can be particularly hazardous at
potential turning points like we are seeing in 1998.
We greatly appreciate the opportunity to work along side you and your financial
management professional in pursuing the fulfillment of your long term financial
goals.
Sincerely,
/s/ Lawrence R. Halverson
Lawrence R. Halverson, CFA
Senior Vice President
<PAGE>
CAPITAL APPRECIATION STOCK FUND OF ULTRA SERIES FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
At this place, the shareholder report shows a graphic representation of how the
Capital Appreciation Stock Fund compared to Several indexes. Ten thousand
invested on the inception date of January 3, 1994, would have the following
value as of December 31, 1997.
Capital Appreciation Stock Fund1 .................$22,027
S&P 500 Stock Index ...............................22,840
Lipper Average2 ...................................18,561
Consumer Price Index ..............................11,071
The scale on this chart is different from the scale on the other charts in this
report because the fund's inception date is January 3, 1994.
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1997
- --------------------------------------------------------------------------------
- ----------------------------------- ------------ ------------ ------------------
One Five Since Inception
Year Years of Fund
- ----------------------------------- ------------ ------------ ------------------
- ----------------------------------- ------------ ------------ ------------------
Capital Appreciation Stock Fund3 31.57% N/A 21.83%
S&P 500 Stock Index 33.35% N/A 21.79%
Lipper Average2 21.45% N/A 22.89%
Consumer Price Index 1.90% N/A 3.45%
- ----------------------------------- ------------ ------------ ------------------
TEN LARGEST HOLDINGS (% of Portfolio)
Owens Illinois, Inc.............. 3.8% Wang Laboratories, Inc....... 2.6%
U.S. West Media Group............ 3.5% Safeway, Inc................. 2.5%
EMC Corp......................... 3.1% Mutual Risk Management Ltd... 2.4%
Airtouch Communications, Inc..... 3.1% Interim Services, Inc........ 2.3%
Travelers Group, Inc............. 3.1% Cox Communications, Inc...... 2.2%
At this place, the shareholder report contains a pie chart showing a portfolio
mix of 3.2% in foreign investments, 4.6% in short-term investments, and 92.2%
in common stocks.
1 Capital Appreciation Stock Fund returns on the graph are from inception,
January 3, 1994.
2 Lipper Performance Summary Average for Capital Appreciation Stock Funds
represents the average annual total return of all the underlying Capital
Appreciation Stock Funds in Lipper Analytical Services Variable Insurance
Products Performance Analysis Service.
3 Fund returns are calculated after mutual fund level expenses have been
subtracted, as described in the prospectus. Market indexes are not actual
investment alternatives; the returns shown reflect just the income from and
changes in value of the securities in the index and do not reflect any
deduction for the transaction costs, bid/asked spreads, management fees or
operating expenses that would be incurred in an actual indexed or managed
fund.
Figures for more than one year reflect a steady compounded rate. Actual returns
fluctuated year by year. Because principal value and investment return
fluctuate, there may be a gain or loss on withdrawal. Past performance is not
predictive of future results. This material must be preceded or accompanied by a
current prospectus. Current prospectuses are mailed to existing policyholders.
<PAGE>
Management's Discussion of 1997 Performance
Capital Appreciation Stock Fund
Investment Objective: Seeks a high level of long-term growth of capital by
investing in common stocks, including those of smaller companies and companies
undergoing significant change.
Management's Discussion: The U.S. stock market turned in its third consecutive
year of 20%+ gains, led by large capitalization stocks. The Capital Appreciation
Stock Fund's investment approach of staying invested in reasonably valued
companies across the small, middle and large capitalization segments of the
equity market caused the Fund's return to significantly outperform the average
of funds with the same investment objective. It also significantly outperformed
the small capitalization indexes and performed generally in line with middle
capitalization indexes, but slightly lagged the pure "big cap" market indexes
such as the S&P 500:
USF Capital Appreciation Stock Fund 31.6%
Lipper Average of Capital Appreciation Funds 21.5%
Russell 2000 Index (Small capitalization stocks) 22.2%
Standard & Poor's Mid Cap 400 Index (Middle capitalization stocks) 32.2%
Russell 1000 Index (Large capitalization stocks) 32.4%
Standard & Poor's 500 Index (Large capitalization stocks) 33.4%
Results in 1997 benefited from strong performance in the cable TV stocks, with
exceptional returns generated by Cox Communications and U.S. West Media Group.
Investor interest in the cable group increased dramatically as the companies saw
early success launching new products such as high-speed cable modems and digital
set-top boxes. The Fund also benefited from a strong showing in the
communications services sector. Portfolio holdings in this area gained over 60%
during the year, led by a 66% gain in Telefonos de Mexico ADRs and a 64% return
from Airtouch Communications. Many stocks within this sector appeared
attractively valued during 1997, and we have maintained an overweighted position
in our portfolios. In fact, both Airtouch Communications and Telefonos de Mexico
ADRs have been among the Fund's ten largest holdings. After the strong
performance of this group in 1997, we have been taking profits and are reducing
our exposure to this sector. Other strong performers in our Capital Appreciation
Fund include Owens-Illinois, a manufacturer of packaging products, and Safeway
Stores, a supermarket operator.
Two negative influences on performance during 1997 were our underweighted
position in the financial sector and the underperformance of our capital goods
stocks. Financial stocks were among the best performing groups in the market
last year, gaining over 60%. Our underweighting in this area modestly tempered
our portfolio performance. Our capital goods stocks significantly underperformed
that sector of the index. Much of the negative impact was due to our position in
Waste Management, a restructuring story which suffered a setback as it continued
to struggle with earnings and management transition issues. An additional factor
which had a negative impact on Fund results was our slightly larger than normal
cash position. While we do not try to "time the market" by actively raising cash
during periods of strong market performance, cash levels occasionally build to
levels beyond what is generally needed for liquidity reasons. This reflects the
increased difficulty in finding stocks that meet our valuation and quality
criteria when overall valuation levels are at the high-end of historical ranges.
While this cash build is temporary, it does have the effect of dampening overall
portfolio returns during strong markets like we had during 1997.
We believe that the health care and consumer staples sectors offer many
attractive investment opportunities in today's market. We are overweighted in
these sectors in the Capital Appreciation Fund relative to the S&P 500.
Conversely, we are underweighted in the consumer cyclical and utilities sectors
as we believe that most of the stocks within those sectors are fairly valued, if
not over-valued. Such differences from the S&P do not represent broad judgments
about the relative outlooks for the various sectors, but merely reflect the
types of stocks that we are finding most attractive. We let our "stock picking"
dictate the exposures of the portfolios, but only within reasonable limits to
ensure that our portfolios remain well diversified across all sectors. After the
recent strong performance of the larger capitalization tiers of the market, we
are also finding that many mid- and small-capitalization stocks appear
relatively more attractive. As a result, we have been increasing our exposure to
lower market capitalization tiers.
Overall, 1997 proved to be another stellar year for the U.S. stock market. After
three consecutive years of over-20% returns, it seems unrealistic to expect this
pace to continue. However, we are still able to find attractively valued
investment opportunities in domestic stocks, and we believe that long-term
investors will benefit from investing in common stocks, particularly those of
the type we include in the Capital Appreciation Stock Fund.
Annette E. Hellmer, CFA Daniel E. Julie, CFA, CPA Lawrence R. Halverson, CFA
Investment Officer Investment Officer Senior Vice President
CIMCO Inc. CIMCO Inc. CIMCO Inc.
<PAGE>
GROWTH AND INCOME STOCK FUND OF ULTRA SERIES FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
At this place, the shareholder report shows a graphic representation of how the
Growth and Income Stock Fund compared to several indexes. Ten thousand dollars
invested on the inception date of January 3, 1985, would have the following
value as of December 31, 1997.
Growth and Income Stock Fund ....................$46,887
S&P 500 Stock Index ...............................52,448
Lipper Average1 ...................................44,154
Consumer Price Index ..............................13,989
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1997
- --------------------------------------------------------------------------------
- --------------------------------- ----------- ------------ ------------
One Year Five Years Ten Years
- --------------------------------- ----------- ------------ ------------
- --------------------------------- ----------- ------------ ------------
Growth and Income Stock Fund2 31.42% 19.51% 16.71%
S&P 500 Stock Index 33.35% 20.23% 18.04%
Lipper Average1 27.20% 17.35% 16.01%
Consumer Price Index 1.90% 2.60% 3.41%
- --------------------------------- ----------- ------------ ------------
TEN LARGEST HOLDINGS (% of Portfolio)
Int'l Business Machines Corp. ... 2.9% EMC Corp. ....................... 2.6%
Allstate Corporation............. 2.8% The Dow Chemical Company ........ 2.6%
Bristol-Myers Squibb Co.......... 2.7% American Home Products Corp. .... 2.5%
Nabisco-Holdings ................ 2.7% Wal-Mart Stores, Inc............. 2.4%
U.S. West Media Group............ 2.7% Aetna Life & Casualty Co. ....... 2.3%
At this place, the shareholder report contains a pie chart showing a portfolio
mix of 2.8% in foreign stocks, 4.9% in short-term investments, and 92.3 in
common stocks.
1 The Lipper Performance Summary Average for Growth and Income Stock Funds
represents the average annual total return of all the underlying Growth and
Income Stock Funds in Lipper Analytical Services Variable Insurance
Products Performance Analysis Service.
2 Fund returns are calculated after mutual fund level expenses have been
subtracted, as described in the prospectus. Market indexes are not actual
investment alternatives; the returns shown reflect just the income from and
changes in value of the securities in the index and do not reflect any
deduction for the transaction costs, bid/asked spreads, management fees or
operating expenses that would be incurred in an actual indexed or managed
fund.
Figures for more than one year reflect a steady compounded rate. Actual returns
fluctuated year by year. Because principal value and investment return
fluctuate, there may be a gain or loss on withdrawal. Past performance is not
predictive of future results. This material must be preceded or accompanied by a
current prospectus. Current prospectuses are mailed to existing policyholders.
<PAGE>
Management's Discussion of 1997 Performance
Growth and Income Stock Fund
Investment Objective: Seeks long term growth of capital, with income as a
secondary consideration, by investing primarily in common stocks of companies
with financial and market strengths and long term records of performance.
Management's Discussion: The U.S. stock market's unprecedented bull market
continued through 1997. But, it isn't the strong returns that most investors
will remember, it will be the now infamous phrases: Irrational Exuberance, Asian
Contagion, and Deflation. The market struggled through the volatility created by
these concerns, however, with the advance led primarily by large- and
mid-capitalization stocks. The Growth and Income Stock Fund's investment
philosophy keeps the fund invested in reasonably valued stocks of mostly larger
companies across all major economic sectors. The fund targets companies that
have strong competitive positions, attractive relative valuations, and catalysts
to drive positive fundamental changes. This approach allowed the fund to
significantly outperform the average of similar funds in 1997, and to
approximate the returns of representative market indexes:
USF Growth and Income Stock Fund 31.4%
Lipper Average of Growth and Income Funds 27.2%
Russell 2000 Index (Small capitalization stocks) 22.2%
Standard & Poor's 400 Index (Middle capitalization stocks) 32.2%
Russell 1000 Index (Large capitalization stocks) 32.4%
Standard & Poor's 500 Index (Large capitalization stocks) 33.4%
The Fund's performance relative to market indexes benefited from a modest
overweighted position and strong performance in the technology sector. The
Fund's technology holdings returned 44.6% during 1997 as compared to a return of
25.2% for the S&P 500's technology sector. A significant contributor to this
performance was EMC Corp. As the leader in enterprise storage systems, it was
able to capitalize on the increasing need for storage in networked systems.
Other technology performance contributors were Computer Associates, a leading
software solutions company, and Texas Instruments, a leader in the production of
digital signal processors.
The Fund also benefited from a solid performance from the finance sector which
returned 60.6% during 1997 as compared to the S&P's finance sector return of
48.9%. This relative performance was offset slightly by an underweighted
position in the sector during the period. A key contributor here was Allstate
Corp, which delivered strong earnings growth due to reduced catastrophe
exposures and improved loss ratios in the auto business. The bull market was the
driving force behind the strong results posted by Morgan Dean Witter and
Salomon, Inc. Other strong contributors to the Fund's performance included the
cable stocks. The investment market had shunned this group as satellite TV was
coming on stream, but the underlying values of the companies were rediscovered
during 1997, allowing US West Media Group and Cox Communications stocks to
provide returns in excess of 55%. Also, the wireless communications industry
continued its tremendous growth in 1997. Airtouch Communications was a key
holding of the Fund and returned 64% for the period.
The weakest performing sectors for the Fund in 1997 were capital goods and
healthcare. A key capital goods holding for the Fund was Waste Management Inc.,
a restructuring story which suffered a setback as it continued to struggle with
earnings and management transition issues. The slightly overweighted healthcare
sector underperformed because several of the drug stocks that drove the market's
performance were not viable candidates for the fund due to their already
inflated valuations. The healthcare sector was also harmed by medical costs
increasing faster than revenues, thereby pressuring margins in the HMO sector.
The Growth and Income Fund enters 1998 with overweighted positions relative to
the S&P 500 in the consumer staples, healthcare and technology sectors. The
consumer cyclical, finance and capital goods sectors carry underweighted
positions with the remaining sectors at approximately market weights. Such
differences from the S&P do not represent overall judgments about the relative
outlooks for the various sectors, but merely reflect the types of stocks that we
are finding most attractive. We let our "stock picking" dictate the exposures of
the portfolios, but only within reasonable limits to ensure that our portfolios
remain well diversified across all sectors.
The strong performance of the financial markets over the past several years
should not be extrapolated indefinitely into the future. But, we caution
investors against trying to time a market setback. Although the world markets
have been extremely volatile, the broad global economic fundamentals are still
quite conducive to moderate economic expansion. Long term investors should not
let volatility or next year's batch of infamous phrases disrupt their long term
asset accumulation programs, but should maintain their diversified portfolios of
reasonably priced, quality securities like those we seek to provide in the
Growth and Income Stock Fund.
Annette E. Hellmer, CFA Daniel E. Julie, CFA, CPA Lawrence R. Halverson, CFA
Investment Officer Investment Officer Senior Vice President
CIMCO Inc. CIMCO Inc. CIMCO Inc.
<PAGE>
BALANCED FUND OF ULTRA SERIES FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
At this place, the shareholder report shows a graphic representation of how the
Balanced Fund compared to several indexes. Ten thousand invested on the
inception date of January 3, 1985 would have the following value as of December
31, 1997.
Balanced Fund ....................................$29,934
Synthetic Index1 ..................................32,039
Lipper Average2 ...................................31,345
Consumer Price Index ..............................13,989
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1997
- --------------------------------------------------------------------------------
- --------------------------------- ----------- ------------ ------------
One Year Five Years Ten Years
- --------------------------------- ----------- ------------ ------------
- --------------------------------- ----------- ------------ ------------
Balanced Fund3 16.87% 11.73% 11.58%
Synthetic Index 18.57% 12.41% 12.35%
Lipper Average2 18.75% 12.60% 12.10%
Consumer Price Index 1.90% 2.60% 3.41%
- --------------------------------- ----------- ------------ ------------
At this place, the shareholder report contains a pie chart showing a portfolio
mix of 0.2% Non-U.S. corporate bonds, 3.8% Non-U.S. government & agency bonds,
6.9% short-term investments, 17.1% U.S. corporate bonds, 24.2 % U.S. goverment &
agency bonds, and 47.8% common stocks.
1 The Synthetic Index represents the average annual total returns of a
portfolio which was annually readjusted to 45% Standard and Poor's 500, 40%
Lehman Intermediate Government/Corporate Index, and 15% 90-Day Treasury
Bills.
2 The Lipper Performance Summary Average for Balanced Funds represents the
average annual total return of all the underlying Balanced Funds in Lipper
Analytical Services Variable Insurance Products Performance Analysis
Service.
3 Fund returns are calculated after mutual fund level expenses have been
subtracted, as described in the prospectus. Market indexes are not actual
investment alternatives; the returns shown reflect just the income from and
changes in value of the securities in the index and do not reflect any
deduction for the transaction costs, bid/asked spreads, management fees or
operating expenses that would be incurred in an actual indexed or managed
fund.
Figures for more than one year reflect a steady compounded rate. Actual returns
fluctuated year by year. Because principal value and investment return
fluctuate, there may be a gain or loss on withdrawal. Past performance is not
predictive of future results. This material must be preceded or accompanied by a
current prospectus. Current prospectuses are mailed to existing policyholders.
<PAGE>
Management's Discussion of 1997 Performance
Balanced Fund
Investment Objective: Seeks a high total return through the combination of
income and capital growth by investing in common stocks of the type owned in the
Growth and Income and Capital Appreciation Stock Funds, bonds of the type owned
in the Bond Fund and money market instruments of the type owned in the Money
Market Fund.
Management's Discussion: The U. S. stock market provided another year of
exceptional returns in 1997, while erratic but generally declining interest rate
levels allowed bond returns to also modestly exceed their long-term averages.
The Balanced Fund's conservative portfolio management approach of staying
invested in a diversified portfolio of reasonably valued stocks, bonds and money
market instruments allowed it to advance nicely in 1997, but at a slightly lower
rate than representative market indexes and the average of similar funds:
USF Balanced Fund 16.9%
Synthetic Index* 18.6%
Lipper Average of Balanced Funds 18.8%
* 45% Standard & Poor's 500, 40% Lehman Intermediate
Government/Corporate Index and 15% 90-day U. S. Treasury bills.
The key operating factors causing a difference between the Balanced Fund's
return and that of the synthetic index were Fund expenses, which averaged
approximately .68% of Fund assets in 1997, and transaction costs. Market indexes
are not actual investment funds and do not bear either expenses or transaction
costs.
In addition, although the markets represented in the synthetic index (described
in the footnote above) better represent the types of securities owned in the
Balanced Fund than any other single stock and bond indexes, the Balanced Fund
generally invests in some stocks of smaller capitalization companies than those
represented in the Standard & Poor's 500, and it invests a smaller proportion of
its assets in U. S. Treasury bonds than represented in the Lehman Intermediate
Government/Corporate Index. These differences typically provide higher returns
to the Fund, but that was not the case in 1997's "large cap" stock market and
"flight to quality" bond market environment. Management's discussions of
performance of the Bond, Growth and Income Stock and Capital Appreciation Stock
Funds provide descriptions of the various portfolio management activities which
were employed in these funds as well as in the Balanced Fund, explaining the
major sources of positive and negative variances in Fund performance relative to
the indexes.
The difference between the Balanced Fund's 1997 performance and that of the
average balanced fund in the Lipper universe was primarily attributable to the
long-standing difference in the mix of stocks, bonds and money market
investments. The average balanced fund has a greater proportion of its assets
invested in stocks and less in bonds and money markets than does the Ultra
Series Balanced Fund. This reflects the more aggressive management style of the
average fund, or the more conservative structure of the Ultra Series Balanced
Fund. This difference has resulted in somewhat lower total returns in recent
years for the Balanced Fund, but it has also very favorably impacted the
Balanced Fund's stability of returns, a common measure of investment risk.
According to Morningstar, the Balanced Fund's historic risk level is only 47% of
that of the average balanced fund, putting it among the most conservative 10% of
such funds. This substantial reduction in risk makes the Balanced Fund an
attractive investment for many conservative investors. More risk tolerant
Balanced Fund investors may want to direct a portion of their investments to one
or more of the Ultra Series stock funds. This blend may well provide greater
stability as well as higher returns for the overall portfolio than might be
obtained from the average balanced fund.
With the exceptional stock market returns and slightly above average bond market
returns, 1997 was another year of well above average overall investment market
performance. One should not expect returns of this magnitude to persist
indefinitely. Nor, however, should investors abandon long-term asset
accumulation programs in expectation of a marker setback. We see no reason to
expect a negative change in the long-term performance of stocks and bonds and,
therefore, see more risk to the long-term investor in "sitting on the sidelines"
than in "remaining in the game" by accumulating a diversified portfolio of
quality, reasonably priced securities like those we seek to provide in the
Balanced Fund.
Annette E. Hellmer, CFA Joe Gogola, CFA Lawrence R. Halverson, CFA
Investment Officer Senior Investment Officer Senior Vice President
CIMCO Inc. CIMCO Inc. CIMCO Inc.
<PAGE>
BOND FUND OF ULTRA SERIES FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
At this place, the shareholder report shows a graphic representation of how the
Bond Fund compared to several indexes. Ten thousand invested on the inception
date of January 3, 1985, would have the following value as of December 31, 1997.
Bond Fund .......................................$21,497
Lehman Brothers Intermediate
Government/Corporate Bond Index...............22,275
Lipper Average1 ...................................19,124
Consumer Price Index ..............................13,989
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1997
- --------------------------------------------------------------------------------
- ----------------------------------- ------------ ------------ ------------------
One Five Ten
Year Years Years
- ----------------------------------- ------------ ------------ ----------------
- ----------------------------------- ------------ ------------ ----------------
Bond Fund2 7.45% 6.30% 7.95%
Lehman Brothers Intermediate
Govt./Corporate Bond Index 7.87% 6.66% 8.34%
Lipper Average1 6.32% 5.27% 6.70%
Consumer Price Index 1.90% 2.60% 3.41%
- ----------------------------------- ------------ ------------ ----------------
At this place, the shareholder report contains a pie chart showing a portfolio
mix of 3.3% Non-U.S. corporate bonds, 6.0% Non-U.S. government & agency
bonds, 7.7% short-term investments, 26.5% U.S. government & agency bonds, and
56.5% U.S. corporate bonds.
1 The Lipper Performance Summary average for Short/Intermediate Investment
Grade Funds represents the average annual total return of all the
underlying Short/Intermediate Investment Grade Funds in Lipper Analytical
Services Variable Insurance Products Performance Analysis Service.
2 Fund returns are calculated after mutual fund level expenses have been
subtracted, as described in the prospectus. Market indexes are not actual
investment alternatives; the returns shown reflect just the income from and
changes in value of the securities in the index and do not reflect any
deduction for the transaction costs, bid/asked spreads, management fees or
operating expenses that would be incurred in an actual indexed or managed
fund.
Figures for more than one year reflect a steady compounded rate. Actual returns
fluctuated year by year. Because principal value and investment return
fluctuate, there may be a gain or loss on withdrawal. Past performance is not
predictive of future results. This material must be preceded or accompanied by a
current prospectus. Current prospectuses are mailed to existing policyholders.
<PAGE>
Management's Discussion of 1997 Performance
Bond Fund
Investment Objective: Seeks a high level of current income, consistent with the
prudent limitation of investment risk, through investment in a diversified
portfolio of fixed income securities with maturities of up to 30 years. The fund
emphasizes intermediate-term securities.
Management's Discussion: The bond market reflected an erratic rise and fall in
interest rates through most of the first three quarters of 1997, which allowed
bonds to earn their underlying coupon income with virtually no net change in
bond prices. By mid-September, however, the Asian economic crisis began to rock
financial markets across the globe. Then, on October 27, it caused the Dow Jones
Industrials stock index to plummet 554 points, the largest single-day point loss
in history. Other equity markets around the world experienced similar or worse
shocks.
During this chaotic period, the U. S. government bond sector outperformed all
others as investors worldwide sought the safety of the most stable government
and strongest economy and currency in the world. U. S. corporate bonds, which
provide a yield advantage over the higher quality Treasuries, only partially
benefited from this global "flight to quality." They did not experience the
degree of price gains that Treasuries did, offsetting their yield advantage and
causing them to underperform Treasuries. The Bond Fund's conservative investment
approach of broad portfolio diversity emphasizing good quality
intermediate-term, corporate issues held the Fund's performance below that of
similar funds which make greater use of lower quality, higher yielding bonds,
but generally in line with Lehman Brothers Intermediate Government/Corporate
Index.
USF Bond Fund 7.5%
Lipper Average of Short/Intermediate-Term Investment Grade Funds 6.3%
Lehman Brothers Intermediate Government/Corporate Index 7.9%
Lehman Brothers Aggregate Index 9.7%
Lehman Brothers Government/Corporate Index 9.8%
The difference between the Bond Fund's return and that of the intermediate index
reflects Fund expenses, which averaged approximately .58% annually of Fund
assets, and transaction costs. Market indexes are not actual investment funds
and do not incur expenses or transaction costs.
To enhance the fund's interest income yield relative to the indexes, it
generally carries a significantly smaller component of government securities,
and recently added modest allocations to interest only strips, international
dollar-denominated bonds, less marketable corporate and asset-backed securities
and below investment grade issues. The late-1997 flight to quality resulted in
corporate and international bonds underperforming. The accompanying drop in
market interest rate levels caused interest only holdings to decline in price,
as expected from such a hedge position, offsetting their significantly higher
current yield. The Fund's return lagged the longer term Lehman Brothers
Aggregate and Government/Corporate Indexes due to the Fund's shorter duration
and significantly smaller exposure to U. S. government securities.
Although recent bond market returns appear modest relative to the exceptionally
high U. S. stock market returns, both the stock and the bond markets actually
outperformed their long-term averages in 1997. We encourage investors to
maintain realistic expectations for long term investment returns, and to be
prepared for continued volatility and occasional severe market setbacks. But,
any such setbacks should be viewed as normal occurrences, not something that
must be avoided for a long-term investment program to succeed. A greater risk to
the investor's future performance is "sitting on the sidelines" or following an
undiversified investment program, rather than continuing to accumulate a
diversified portfolio of quality and value-priced securities including those of
the type held in Bond Fund.
As 1998 unfolds, we will continue to seek to provide in the Bond Fund the price
stability with good returns that investors have realized in the past. The Fund
will maintain its "A" average quality rating and its intermediate-term portfolio
duration, but as noted above, we are utilizing some new investment categories to
increase the portfolio yield. This effort employs CIMCO's internally developed,
computer-based portfolio optimization model, which allows us to efficiently
evaluate various bond allocations over multiple projected interest rate paths
using historically based covariances and expected rates of return for each of
several categories of bonds. We expect this new tool to be a valuable supplement
to the experience- and knowledge-based judgement we have used over the years and
will continue to use to manage this conservative bond portfolio for long term
investors.
Joseph L. Gogola, CFA Lawrence R. Halverson, CFA
Senior Investment Officer Senior Vice President
CIMCO Inc. CIMCO Inc.
<PAGE>
TREASURY 2000 FUND OF ULTRA SERIES FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
At this place, the shareholder report shows a graphic representation of how the
Treasury 2000 Fund compared to several indexes. Ten thousand dollars invested on
the inception date of July 28, 1988, would have the following value as of
December 31, 1997.
Treasury 2000 Fund1 ..............................$25,514
Lipper Average2 ...................................26,381
Lehman Brothers Intermediate Treasury Bond Index...21,758
Consumer Price Index ..............................13,989
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1997
- --------------------------------------------------------------------------------
- ----------------------------------- ------------ ------------ ------------------
One Five Since Inception
Year Years of Fund
- ----------------------------------- ------------ ------------ ----------------
- ----------------------------------- ------------ ------------ ----------------
Treasury 2000 Fund3 6.86% 7.19% 10.36%
Lehman Brothers Intermediate
Treasury Bond Index 7.69% 6.38% 8.10%
Lipper Average2 9.58% 8.64% 10.86%
Consumer Price Index 1.90% 2.60% 3.63%
- ----------------------------------- ------------ ------------ ----------------
1 Treasury 2000 Fund returns on the graph are from inception, July 28, 1988.
2 The Lipper Performance Summary Average for Target Maturity Funds represents
the average annual total return of all the underlying Target Maturity Funds
in Lipper Analytical Services Variable Insurance Products Performance
Analysis Service. The Lipper Performance Summary Average for Target
Maturity Funds covers the period from January 1, 1988 to December 31, 1997.
This is not exactly the same time frame as the Treasury 2000 Fund which
began on July 29, 1988.
3 Fund returns are calculated after mutual fund level expenses have been
subtracted, as described in the prospectus. Market indexes are not actual
investment alternatives; the returns shown reflect just the income from and
changes in value of the securities in the index and do not reflect any
deduction for the transaction costs, bid/asked spreads, management fees or
operating expenses that would be incurred in an actual indexed or managed
fund.
Figures for more than one year reflect a steady compounded rate. Actual returns
fluctuated year by year. Because principal value and investment return
fluctuate, there may be a gain or loss on withdrawal. Past performance is not
predictive of future results. This material must be preceded or accompanied by a
current prospectus. Current prospectuses are mailed to existing policyholders.
<PAGE>
Management's Discussion of 1997 Performance
Treasury 2000 Fund
Investment Objective: Seeks safety of capital and a relatively predictable
payout upon Portfolio Maturity, primarily by investing in Stripped Treasury
Securities.
Management's Discussion: The bond market reflected an erratic rise and fall in
interest rates through most of the first three quarters of 1997. By
mid-September, however, the Asian economic crisis began to rock financial
markets across the globe, leading to a broad "flight to quality" by investors
worldwide. This drove up the prices of the highest quality, most liquid
securities available, leading to significant out-performance by U. S. government
securities relative to most other categories of U. S. and foreign bonds. The
Treasury 2000 Fund's portfolio approach of remaining invested exclusively in
U.S. Treasury Strips or similar coupon securities with a maturity date of
November 15, 2000 produced a very attractive return for such short-term, high
quality investments:
USF Treasury 2000 Fund 6.9%
Lipper Average of Target Maturity Funds 8.7%
Lehman Intermediate Treasury Bond Index 7.7%
The Fund's shorter duration (2.80 versus 3.05 for the Index) during a period of
falling interest rates reduced the Fund's return relative to that of the index.
Similarly, the average target maturity fund in the Lipper universe had a longer
duration, producing a somewhat higher return for this peer group average.
Also influencing the Fund return relative to the market index was Fund expenses,
which amounted to .45% annually of Fund assets. Market indexes are not actual
investment funds and do not bear either expenses or transaction costs.
Between now and the November 15, 2000, maturity and distribution date, the
Fund's returns will reflect changes in market interest rate levels, but will be
primarily impacted by the appreciation of the Fund's investment securities to
their face value at maturity.
The performance of financial assets like those in the Fund was slightly in
excess of their long-term averages. We see no reason why the future performance
of the broad bond market will not be in line with the long-term average return.
Therefore, investors should be careful not expect too much of their investments
in the future, nor to put their portfolios' future performance at risk by
"sitting on the sidelines" or by following an undiversified investment program.
We strongly encourage all long term investors to continue to accumulate
diversified portfolios of quality and value-priced securities including where
appropriate those of the type in the Treasury 2000 Fund.
Joseph L. Gogola, CFA Lawrence R. Halverson, CFA
Senior Investment Officer Senior Vice President
CIMCO Inc. CIMCO Inc.
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statement of Assets and Liabilities
December 31, 1997
Capital Growth and Money Treasury
Appreciation Income Balanced Bond Market 2000
Assets: Stock Fund Stock Fund Fund Fund Fund Fund
---------- ---------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Investments in securities, at value,
(note 2)-see accompanying schedule
(cost $404,240,049) $458,255,162 $ -- $ -- $ -- $ -- $ --
(cost $461,510,749) -- 584,882,177 -- -- -- --
(cost $269,135,520) -- -- 310,239,939 -- -- --
(cost $185,177,448) -- -- -- 185,599,118 -- --
(cost $41,192,527) -- -- -- -- 41,192,527 --
(cost $1,502,323) -- -- -- -- -- 1,701,374
Receivable for securities sold 304,594 7,556,707 812,914 -- -- --
Accrued interest receivable 240 328 2,152,172 3,302,397 8 --
Accrued dividends receivable 393,843 1,152,046 237,397 -- -- --
----------- ----------- ----------- ---------- ---------- ----------
Total assets 458,953,839 593,591,258 313,442,422 188,901,515 41,192,535 1,701,374
----------- ----------- ----------- ---------- ---------- ----------
Liabilities:
Payable for securities purchased 2,526,385 3,154,136 3,450,718 -- -- --
Dividends payable -- -- -- -- 5,562 --
Accrued expenses 233,219 301,689 187,992 61,947 16,821 697
----------- ----------- ----------- ----------- ---------- ----------
Total liabilities 2,759,604 3,455,825 3,638,710 61,947 22,383 697
----------- ----------- ----------- ----------- ---------- ----------
Net assets applicable to outstanding
capital stock $456,194,235 $590,135,433 $309,803,712 $188,839,568 $41,170,152 $1,700,677
=========== =========== =========== =========== ========== ==========
Represented by:
Capital stock, par value $.01 $242,004 $216,928 $181,994 $179,093 $411,702 $1,841
Additional paid-in capital 401,977,352 466,547,077 268,464,496 188,176,466 40,758,450 1,499,785
Undistributed net investment income -- -- 49,986 62,339 -- --
Undistributed net realized gain (loss)
on investments (40,234) -- 2,817 -- -- --
Unrealized appreciation (depreciation)
on investments 54,015,113 123,371,428 41,104,419 421,670 -- 199,051
----------- ----------- ----------- ----------- ---------- ----------
Total net assets - representing net assets
applicable to outstanding capital stock $456,194,235 $590,135,433 $309,803,712 $188,839,568 $41,170,152 $1,700,677
=========== =========== =========== =========== ========== ==========
Number of Class Z Shares issued and
outstanding (note 5) 24,200,359 21,692,803 18,199,350 17,909,312 41,170,152 184,138
=========== =========== =========== =========== ========== ==========
Net asset value per share of outstanding
capital stock (note 2) $18.85 $27.20 $17.02 $10.54 $1.00 $9.24
=========== =========== =========== =========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND OF ULTRA SERIES FUND
Investments in Securities
December 31, 1997
CAPITAL APPRECIATION STOCK % Net Quality Annualized Maturity Par
FUND INVESTMENTS: Assets Rating* Yield Date Amount Value
------ ------- ----- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Short-Term Investments:
Commercial Paper/Savings: 5.1%
Anheuser Busch Companies A-1/P-1 5.85% Jan 08, 1998 $3,000,000 $2,996,646
Coca-Cola Company A-1+/P-1 5.83% Jan 13, 1998 3,000,000 2,994,280
Consolidated Natural Gas A-1+/P-1 6.30% Jan 07, 1998 2,000,000 1,997,933
Ford Motor Credit Corporation A-1/P-1 5.73% Jan 05, 1998 2,000,000 1,998,758
Ford Motor Credit Corporation A-1/P-1 6.06% Jan 06, 1998 3,500,000 3,497,098
General Electric Capital Corporation A-1+/P-1 5.98% Jan 15, 1998 2,000,000 1,995,434
Merrily Lynch Capital Markets A-1+/P-1 5.97% Jan 20, 1998 3,000,000 2,990,737
Merrily Lynch Capital Markets A-1+/P-1 5.97% Jan 12, 1998 1,000,000 998,106
Merrily Lynch Capital Markets A-1+/P-1 5.68% Jan 02, 1998 2,000,000 1,999,667
State Street Bank & Trust 5.25% 1,644,775 1,644,775
----------
TOTAL SHORT-TERM INVESTMENTS,
AT COST $23,113,434
----------
% Net
Long-Term Investments: Assets Shares Value
Common Stocks: 95.4%
Foreign Issues: 3.2%
Glaxo Wellcome PLC - ADR 101,800 $4,873,675
Telefonos deMexico SP ADR - Cl L 174,000 9,754,875
---------
Foreign Issues total 14,628,550
Building Materials: 1.9%
Raychem Corporation 195,500 8,418,719
Forest Products/Paper: 2.3%
Georgia-Pacific Corporation 72,100 4,380,075
Georgia-Pacific (Timber Grp)*** 55,500 1,259,156
Willamette Industries Inc. 155,900 5,018,031
---------
Forest Products/Paper total 10,657,262
Insurance: 6.9%
Aetna Inc. 137,400 9,695,288
Allstate Corporation 85,882 7,804,526
Travelers Group, Inc. 258,999 13,953,571
---------
Insurance total 31,453,385
Banks: 2.3%
Banc One Corporation 101,200 5,496,425
Bankers Trust New York Corporation 45,200 5,082,175
---------
Banks total 10,578,600
Investment Banking/Brokerage: 7.1%
A. G. Edwards, Inc. 214,300 8,518,425
Everest Reinsurance Holdings, Inc. 179,650 7,410,563
Morgan Stanley, Dean Witter, Discover and Co. 91,200 5,392,200
Mutual Risk Management Ltd. 366,464 10,971,016
---------
Investment Banking/Brokerage total 32,292,204
Drugs/Health Care: 6.8%
ALZA Corporaton 153,900 4,895,944
Biogen, Inc.*** 72,200 2,626,275
Bristol-Myers Squibb Company 54,800 5,185,450
Centocor, Inc.*** 114,400 3,803,800
Crescendo Pharmaceuticals Corporation*** 6,260 72,381
MedPartners, Inc.*** 175,659 3,930,370
Pharmacia & Upjohn, Inc. 152,000 5,567,000
United Healthcare Corporation 99,400 4,938,938
---------
Drugs/Health Care total 31,020,158
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
CAPITAL APPRECIATION STOCK % Net
FUND INVESTMENTS, CONTINUED: Assets Shares Value
<S> <C> <C> <C>
Hospital Management/Supplies: 0.8%
Columbia/HCA Healthcare Corporation 123,700 $3,664,613
---------
Retail - Discount: 1.7%
The TJX Companies, Inc. 134,100 4,609,688
Wal-Mart Stores, Inc. 78,700 3,103,731
---------
Retail-Discount total 7,713,419
Retail - Department: 2.0%
Dayton Hudson Corporation 136,900 9,240,750
---------
Retail - Drug: 1.9%
Rite Aid Corporation 145,800 8,556,638
---------
Retail-Grocery: 2.6%
Safeway Inc.*** 183,800 11,625,350
---------
Media: 3.2%
Cognizant Corporation 121,300 5,405,431
PRIMEDIA Inc.*** 720,600 9,097,575
---------
Media total 14,503,006
Foods - Products & Service: 5.2%
General Mills, Inc. 56,050 4,014,581
Nabisco Holdings Corporation - Class A 194,100 9,401,719
Sara Lee Corporation 74,400 4,189,650
Tyson Foods, Inc. - Class A 303,800 6,227,900
---------
Foods - Products & Service total 23,833,850
Apparel/Textile: 1.1%
Nine West Group, Inc.*** 188,400 4,886,625
---------
Office Equipment/Computers: 10.0%
3Com Corporation*** 154,900 5,411,819
EMC Corporation*** 519,300 14,248,294
Gateway 2000, Inc.*** 159,700 5,210,213
International Business Machines Corporation 59,350 6,205,784
Seagate Technology, Inc.*** 151,700 2,920,225
Wang Laboratories, Inc.*** 526,250 11,643,281
---------
Office Equipment/Computers total 45,639,616
Electronics-Semiconductors: 1.9%
Dallas Semiconductor Corporation 142,700 5,815,025
Micron Technology, Inc.*** 104,450 2,715,700
---------
Electronics-Semiconductors total 8,530,725
Electronics: 1.2%
Texas Instruments Incorporated 124,800 5,616,000
---------
Pollution Control: 1.1%
Waste Management, Inc. 174,600 4,801,500
---------
Oil/Oil Service: 6.2%
Occidental Petroleum Corporation 296,550 8,692,622
Unocal Corporation 172,050 6,677,691
USX-Marathon Group 277,200 9,355,500
The Williams Companies, Inc. 123,400 3,501,475
---------
Oil/Oil Service total 28,227,288
Containers: 3.8%
Owens-Illinois, Inc.*** 455,600 17,284,325
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
CAPITAL APPRECIATION STOCK % Net
FUND INVESTMENTS, CONTINUED: Assets Shares Value
<S> <C> <C> <C>
Chemicals: 3.5%
The Dow Chemical Company 48,000 $4,872,000
Kerr-Mcgee Corporation 77,300 4,894,056
Praxair Inc 134,500 6,052,500
---------
Chemicals total 15,818,556
Transportation: 2.6%
Delta Air Lines, Inc. 31,350 3,730,650
Federal Express Corporation*** 75,800 4,628,538
Midwest Express Holdings, Inc.*** 92,450 3,588,215
---------
Transportation total 11,947,403
Telecommunications: 8.8%
AirTouch Communications, Inc.*** 343,550 14,278,796
Cox Communications, Inc.*** 246,800 9,887,425
U.S. WEST Media Group*** 546,500 15,780,188
---------
Telecommunications total 39,946,409
Utilities-Telephone: 2.2%
Ameritech Corporation 61,400 4,942,700
Bell Atlantic Corporation 54,650 4,973,150
---------
Utilities-Telephone total 9,915,850
Utilities-Electric: 0.7%
PG& E Corporation 108,450 3,300,947
---------
Diversified Companies: 2.3%
Rockwell International Corporation 90,725 4,740,381
Sonat, Inc. 126,200 5,773,650
---------
Diversified Companies total 10,514,031
Miscellaneous: 2.3%
Interim Services, Inc.*** 406,800 10,525,950
---------
TOTAL COMMON STOCKS
(COST: $381,126,615) $435,141,728
-----------
TOTAL INVESTMENTS, CAPITAL APPRECIATION
STOCK FUND (COST:$404,240,049)** $458,255,162
===========
See accompanying notes to investments in securities.
<FN>
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
**At December 31, 1997, the cost of securities for federal income tax purposes
was $404,280,283. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation.................................... $62,867,872
Gross unrealized depreciation................................... (8,892,995)
----------
Net unrealized appreciation...................................... $53,974,878
==========
Tax cost and appreciation differ from the financial statement by $40,234 due to
timing of dividend distributions.
***This Security is not income producing.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1
GROWTH AND INCOME STOCK FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
GROWTH AND INCOME STOCK % Net Quality Annualized Maturity Par
FUND INVESTMENTS: Assets Rating* Yield Date Amount Value
------ ------- ----- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Short-Term Investments:
Commercial Paper/Savings: 4.7%
Anheuser Busch Companies A-1/P-1 5.85% Jan 08, 1998 $3,000,000 $2,996,646
Associate Corp NA A-1+/P-1 5.68% Jan 06, 1998 1,500,000 1,498,848
Associate Corp NA A-1+/P-1 5.83% Jan 05, 1998 3,500,000 3,497,779
BellSouth Telecomm Inc A-1+/P-1 5.28% Jan 13, 1998 2,000,000 1,996,250
BellSouth Telecomm Inc A-1+/P-1 6.04% Jan 05, 1998 2,244,000 2,242,516
Ford Motor Credit Company A-1/P-1 5.83% Feb 02, 1998 2,500,000 2,487,378
Ford Motor Credit Company A-1/P-1 5.94% Jan 06, 1998 2,756,000 2,753,761
General Electric Capital Corp A-1+/P-1 5.73% Jan 12, 1998 1,000,000 998,292
General Electric Capital Corp A-1+/P-1 5.74% Jan 14, 1998 1,000,000 997,978
General Electric Capital Corp A-1+/P-1 5.86% Jan 14, 1998 2,000,000 1,995,869
Merrill Lynch & Co Inc A-1+/P-1 5.79% Feb 02, 1998 1,000,000 994,996
Merrill Lynch & Co Inc A-1+/P-1 5.86% Jan 16, 1998 3,000,000 2,992,850
State Street Bank & Trust 5.25% 2,250,069 2,250,070
----------
TOTAL COMMERCIAL PAPER/
SAVINGS, AT COST $27,703,233
----------
Quasi-Government/Government Sponsored: 0.2%
Federal Home Loan Discount Notes AAA 5.76% Feb 19, 1998 $1,055,000 $1,046,930
---------
% Net
Long-Term Investments: Assets Shares Value
Common Stocks: 94.2%
Foreign Issues: 2.8%
Glaxo Wellcome PLC - ADR 201,350 $9,639,631
Philips Electronics N.V. 113,700 6,878,850
---------
Foreign Issues total 16,518,481
Forest Products/Paper: 2.7%
Georgia-Pacific Corporation 94,300 5,728,725
Georgia-Pacific (Timber Grp)*** 78,100 1,771,894
Kimberly-Clark Corporation 173,900 8,575,444
---------
Forest Products/Paper total 16,076,063
Insurance: 8.3%
Aetna Inc. 192,700 13,597,393
Allstate Corporation 183,684 16,692,283
Everest Reinsurance Holdings, Inc. 142,350 5,871,937
Travelers Group, Inc. 242,724 13,076,755
---------
Insurance total 49,238,368
Banks: 3.7%
Banc One Corporation 233,100 12,660,244
Bankers Trust New York Corporation 81,100 9,118,681
---------
Banks total 21,778,925
Investment Banking/Brokerage: 2.4%
A. G. Edwards, Inc. 153,050 6,083,738
Morgan Stanley, Dean Witter, Discover
and Co. 133,000 7,863,625
---------
Investment Banking/Brokerage total 13,947,363
Drugs/Health Care: 7.8%
American Home Products Corporation 192,100 14,695,650
Bristol-Myers Squibb Company 170,400 16,124,100
Pharmacia and Upjohn, Inc. 139,200 5,098,200
Tenet Healthcare Corporation 300,300 9,947,438
---------
Drugs/Health Care total 45,865,388
Retail - Department: 1.6%
Sears, Roebuck & Co. 205,300 9,289,825
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
GROWTH AND INCOME STOCK % Net
FUND INVESTMENTS, CONTINUED: Assets Shares Value
<S> <C> <C> <C>
Retail - Discount: 2.4%
Wal-Mart Stores, Inc. 354,200 $13,968,763
---------
Retail - Drug: 1.2%
CVS Corporation 112,653 7,216,833
---------
Retail - Grocery: 0.6%
American Stores Company 158,000 3,248,875
---------
Media: 1.3%
Cox Communications, Inc.*** 192,300 7,704,019
---------
Foods - Products & Service: 7.6%
General Mills, Inc. 141,200 10,113,450
Nabisco Holdings Corporation-Class A 325,800 15,780,937
Sara Lee Corporation 200,700 11,301,918
Tyson Foods, Inc. - Class A 382,725 7,845,863
---------
Foods - Products & Service total 45,042,168
Auto-Related: 1.7%
Echlin Inc. 147,300 5,330,419
General Motors Corporation 81,150 4,919,719
---------
Auto-Related total 10,250,138
Office Equipment/Computers: 8.9%
Computer Associates International, Inc. 252,000 13,324,500
EMC Corporation*** 554,100 15,203,118
Hewlett-Packard Company 110,400 6,900,000
International Business Machines Corporation 165,400 17,294,638
---------
Office Equipment/Computers total 52,722,256
Electronics: 2.9%
Motorola, Inc. 122,300 6,978,744
Texas Instruments Incorporated 219,400 9,873,000
---------
Electronics total 16,851,744
Aerospace/Defense: 1.4%
United Technologies Corporation 114,500 8,337,031
---------
Pollution Control: 1.1%
Waste Management, Inc. 240,550 6,615,125
---------
Oil/Oil Service: 8.9%
Amoco Corporation 61,800 5,260,725
Exxon Corporation 141,200 8,639,675
Occidental Petroleum Corporation 221,750 6,500,047
Texaco, Inc. 103,600 5,633,250
Unocal Corporation 198,750 7,713,984
USX-Marathon Group 281,650 9,505,688
The Williams Companies, Inc. 325,800 9,244,575
---------
Oil/Oil Service total 52,497,944
Containers: 3.5%
Crown Cork & Seal Company, Inc. 180,000 9,022,500
Owens-Illinois, Inc.*** 309,500 11,741,656
---------
Containers total 20,764,156
Chemicals: 4.4%
Dexter Corporation 246,700 10,654,356
The Dow Chemical Company 148,750 15,098,125
---------
Chemicals total 25,752,481
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
GROWTH AND INCOME STOCK % Net
FUND INVESTMENTS, CONTINUED: Assets Shares Value
<S> <C> <C> <C>
Transportation: 1.0%
Delta Air Lines, Inc. 48,950 $5,825,050
---------
Railroad Equipment: 1.8%
Burlington Northern Santa Fe
Corporation 56,400 5,241,675
Norfolk Southern Corporation 182,200 5,614,038
---------
Railroad Equipment total 10,855,713
Telecommunications: 6.8%
AirTouch Communications, Inc.*** 207,100 8,607,594
Harris Corporation 159,800 7,330,825
Sprint Corporation 145,500 8,529,937
U.S. WEST Media Group 545,200 15,742,650
---------
Telecommunications total 40,211,006
Utilities-Telephone: 4.1%
Ameritech Corporation 112,950 9,092,475
Bell Atlantic Corporation 85,850 7,812,350
GTE Corporation 142,450 7,443,013
---------
Utilities-Telephone total 24,347,838
Utilities-Electric: 2.5%
Duke Energy Company 75,100 4,158,663
Northern States Power Company 61,000 3,553,250
PG&E Corporation 232,300 7,070,631
---------
Utilities-Electric total 14,782,544
Diversified Companies: 2.8%
Rockwell International Corporation 177,880 9,294,230
General Signal Corporation 169,000 7,129,688
---------
Diversified Companies total 16,423,918
TOTAL COMMON STOCKS
(COST: $432,760,587) $556,132,014
-----------
TOTAL INVESTMENTS, GROWTH AND
INCOME STOCK FUND
(COST: $461,510,749)** $584,882,177
===========
See accompanying notes to investments in securities.
<FN>
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
**At December 31, 1997, the cost of securities for federal income tax purposes
was $461,510,749. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation................................$131,689,818
Gross unrealized depreciation............ ....................(8,318,391)
-----------
Net unrealized appreciation..................................$123,371,427
===========
***This Security is not income producing.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
% Net Quality Annualized Maturity Par
BALANCED FUND INVESTMENTS: Assets Rating* Yield Date Amount Value
------ ------- ----- ---- ------ -----
Short-Term Investments:
<S> <C> <C> <C> <C> <C> <C>
Commercial Paper/Savings: 7.2%
Associate Corp of North America A-1+/P-1 5.82% Jan 27, 1998 $1,500,000 $1,493,847
CIT Group Holdings A-1/P-1 5.71% Feb 03, 1998 2,000,000 1,989,825
Ford Motor Credit Corporation A-1/P-1 5.99% Jan 05, 1998 4,000,000 3,994,184
General Electric Capital Corporation A-1+/P-1 5.81% Jan 22, 1998 5,000,000 4,987,228
Interstate Power A-1/P-1 6.01% Jan 29, 1998 2,000,000 1,990,822
Merrill Lynch & Co., Inc A-1+/P-1 5.82% Feb 27, 1998 4,000,000 3,985,653
Walt Disney Company A-1/P-1 5.70% Jan 02, 1998 2,000,000 1,999,690
State Street Bank & Trust 5.25% 1,710,242 1,710,243
----------
TOTAL COMMERCIAL PAPER/
SAVINGS, AT COST $22,151,492
----------
% Net Quality Coupon Maturity Par
U.S. Government & Agency Bonds: Assets Rating* Rate Date Amount Value
------ ------- ---- ---- ------ -----
Government Guaranteed: 7.1%
Government National Mortgage Assn.-97-8 PK**** AAA 7.500 Apr 16, 2026 $5,170,266 $1,625,263
U.S. Treasury Notes AAA 8.500 Feb 15, 2000 500,000 527,969
U.S. Treasury Notes AAA 7.500 Nov 15, 2001 1,000,000 1,060,938
U.S. Treasury Notes AAA 7.875 Apr 15, 1998 1,000,000 1,007,188
U.S. Treasury Notes AAA 5.500 Apr 15, 2000 500,000 498,282
U.S. Treasury Notes AAA 7.125 Sep 30, 1999 900,000 921,657
U.S. Treasury Notes AAA 5.875 Feb 15, 2004 950,000 958,907
U.S. Treasury Notes AAA 5.750 Aug 15, 2003 800,000 801,000
U.S. Treasury Notes AAA 6.500 May 15, 2005 1,100,000 1,147,094
U.S. Treasury Notes AAA 6.500 Aug 15, 2005 700,000 730,626
U.S. Treasury Notes AAA 5.875 Nov 15, 2005 7,350,000 7,391,351
U.S. Treasury Notes AAA 6.250 Feb 15, 2007 5,000,000 5,162,505
----------
TOTAL GOVERNMENT GUARANTEED
(COST: $21,704,168) $21,832,780
----------
Quasi-Government/Government Sponsored: 17.1%
Federal Home Loan Bank-CPI Floating Rate AAA 5.421 Feb 20, 2007 $5,000,000 $4,778,950
Federal Home Loan Mortgage Corp. 1455 HA AAA 7.900 Jun 15, 2021 3,344,000 3,641,338
Federal Home Loan Mortgage Corp. 1378 H AAA 10.000 Jan 15, 2021 2,250,000 2,561,834
Federal Home Loan Mortgage Corp.-GNMA 4-B AAA 6.500 Nov 25, 2002 4,500,000 4,526,046
Federal Home Loan Mortgage Corp. AAA 6.440 Jan 28, 2000 250,000 253,059
Federal Home Loan Mortgage Corp.-1992 PH**** AAA 7.000 Sep 15, 2027 2,000,000 818,550
Federal Home Loan Mortgage Corp.-1978 AD AAA 7.000 Apr 15, 2025 2,045,655 2,042,049
FNMA Pass Through Cert. AAA 8.000 Feb 01, 2002 68,685 70,371
Federal National Mortgage Assn.-89-82 G AAA 8.400 Nov 25, 2019 1,600,000 1,690,117
Federal National Mortgage Assn.-Strip 282-2**** AAA 7.000 Sep 01, 2025 7,513,262 2,239,118
Federal National Mortgage Assn.-97-59 J**** AAA 8.000 July 18, 2027 8,000,000 2,806,840
Federal National Mortgage Assn.-97-29 PL**** AAA 7.500 Aug 18, 2026 8,000,000 3,249,384
Federal National Mortgage Assn.-93-62 D AAA 7.000 Jun 25, 2021 4,000,000 4,027,788
Federal National Mortgage Assn.-96-M6 G AAA 7.750 Sep 17, 2023 4,000,000 4,222,520
Federal National Mortgage Assn.-91-137 H AAA 7.000 Oct 25, 2021 4,000,000 4,052,332
Federal National Mortgage Assn.-G93-8 PG AAA 6.500 July 25, 2018 2,000,000 2,000,620
Federal National Mortgage Assn.-97-48 C AAA 6.500 July 18, 2027 3,572,274 3,545,665
Federal National Mortgage Assn.-97-57 PT**** AAA 8.000 Mar 18, 2024 8,000,000 2,256,976
Federal Home Loan Mortgage Corp.-Strip 183 IO**** AAA 7.000 Apr 01, 2027 7,805,793 2,357,857
Federal National Mortgage Assn.-Strip 272-2**** AAA 7.500 July 01, 2026 7,278,272 1,865,021
----------
TOTAL QUASI-GOVERNMENT/GOVERNMENT
SPONSORED (COST: $53,322,686) $53,006,435
----------
Non-U.S. Government Bonds:
Sovereign Issues: 3.8%
Argentina Global Bond BA-3/BB 8.375 Dec 20, 2003 $4,250,000 $4,048,125
Brazil - Global B-1/BB- 8.875 Nov 05, 2001 2,500,000 2,475,000
Columbia, Republic BAA-3/BBB- 7.250 Feb 23, 2004 3,000,000 2,845,956
Ministry of Finance - Russia Ba-2/BB- 10.000 Jun 26, 2007 2,500,000 2,322,500
----------
TOTAL SOVEREIGN ISSUES (COST: $12,238,117) $11,691,581
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BALANCED FUND INVESTMENTS, % Net Quality Coupon Maturity Par
CONTINUED: Assets Rating* Rate Date Amount Value
------ ------- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
U.S Corporate Bonds: 17.3%
Building Materials: 0.1%
Stanley Works A-2/A 7.375 Dec 15, 2002 $250,000 $263,287
--------
Drug/Health Care: 0.7%
Abbott Laboratories, Inc. AA-1/AAA 6.800 May 15, 2005 500,000 522,142
American Home Products, Corp. A-2/A 7.700 Feb 15, 2000 1,050,000 1,083,818
Bergen Brunswig BAA-1/A- 7.250 Jun 01, 2005 500,000 522,049
Bergen Brunswig BAA-1/A- 7.375 Jan 15, 2003 113,000 117,995
---------
Drug/Health Care total 2,246,004
Electronics: 0.4%
Motorola Inc AA-3/AA 6.500 Sep 01, 2025 50,000 52,134
Raytheon Co. BAA-1/BBB 6.500 Jul 15, 2005 530,000 533,380
Texas Instruments, Inc. A-3/A 9.000 Mar 15, 2001 500,000 541,729
---------
Electronics total 1,127,243
Forest Products/Paper: 1.3%
Champion International Corp. BAA-1/BBB 9.875 Jun 01, 2000 250,000 270,506
Champion International Corp. BAA-1/BBB 7.100 Sep 01, 2005 1,570,000 1,628,640
International Paper A-3/A- 7.875 Aug 01, 2006 500,000 545,132
Kimberly Clark Corp. AA-2/AA 9.000 Aug 01, 2000 750,000 803,219
Weyerhaeuser Company A-2/A 8.375 Feb 15, 2007 800,000 911,958
---------
Forest Products/Paper total 4,159,455
Hospital Management/Supplies: 0.3%
Baxter International, Inc. A-3/A 7.625 Nov 15, 2002 250,000 263,861
Columbia/HCA Healthcare Corporation BAA-2/BBB 6.910 Jun 15, 2005 700,000 684,779
---------
Hospital Management/Supplies total 948,640
Insurance/Casualty: 0.5%
Equitable Life Assoc A-2/A 6.950 Dec 01, 2005 1,050,000 1,070,702
Lincoln National Corp. A-2/A 7.250 May 15, 2005 500,000 519,633
---------
Insurance/Casualty total 1,590,335
Investment Banking/Brokerage: 2.0%
Donaldson, Lufkin Jenrette, Inc. A-3/A- 6.875 Nov 01, 2005 300,000 304,588
Donaldson, Lufkin Jenrette, Inc. A-3/A- 5.625 Feb 15, 2016 520,000 513,985
Merrill Lynch & Co., Inc. AA-3/AA- 6.250 Jan 15, 2006 650,000 639,939
Merrill Lynch & Co., Inc. AA-3/AA- 7.000 Mar 15, 2006 1,000,000 1,030,348
Paine Webber Group BAA-1/BBB+ 6.750 Feb 01, 2006 1,000,000 1,004,972
Salomon Inc. A-2/A 7.125 Aug 01, 1999 1,000,000 1,015,580
Salomon Inc. A-2/A 7.200 Feb 01, 2004 1,500,000 1,553,409
---------
Investment Banking/Brokerage total 6,062,821
Finance Co. - Consumer Loan: 0.5%
American General Finance A-2/A+ 7.125 Dec 01, 1999 500,000 509,439
Household Finance Co. A-2/A 7.125 Sep 01,2005 500,000 517,997
Norwest Financial Inc. AA-3/AA- 7.875 Feb 15, 2002 500,000 530,507
---------
Finance Co. - Consumer Loan total 1,557,943
Mortgage Related Securities: 0.5%
Prudential Home Funding AAA 6.050 Apr 25, 2024 1,500,000 1,398,930
---------
Media: 0.3%
Cox Communications BAA-2/A- 6.875 Jun 15, 2005 500,000 512,917
McGraw-Hill, Inc. A-1 9.430 Sep 01, 2000 250,000 269,239
---------
Media total 782,156
Publishing-News: 0.2%
Knight Ridder, Inc. A-3/A 8.500 Sep 01, 2001 500,000 518,935
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BALANCED FUND INVESTMENTS, % Net Quality Coupon Maturity Par
CONTINUED: Assets Rating* Rate Date Amount Value
------ ------- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Retail-Department: 0.2%
Dayton Hudson Corp. BAA-1/BBB+ 9.750 Nov 01, 1998 $500,000 $514,127
---------
Beverage/Confect/Tobacco: 0.1%
Pepsico Inc. A-1/A 6.125 Jan 15, 1998 250,000 250,648
---------
Auto-Related: 1.3%
Borg-Warner Automotive BAA-2/BBB+ 7.000 Nov 01, 2006 1,150,000 1,187,162
Ford Motor Company A-1/A 7.500 Nov 15, 1999 500,000 512,553
Ford Motor Company A-1/A 7.250 Oct 01, 2008 2,000,000 2,127,636
General Motors Corporation A-3/A- 7.000 Jun 15, 2003 300,000 310,726
---------
Auto-Related total 4,138,077
Hotel & Motel: 0.4%
Marriott International, Inc. BAA-1/BBB+ 7.125 Jun 01, 2007 1,050,000 1,095,304
---------
Electric Household Appliances: 0.1%
Maytag Corporation BAA-1/BBB+ 9.750 May 15, 2002 250,000 282,138
---------
Finance-Diversified: 1.7%
Associate Corp of N America AA-3/AA- 5.250 Sep 01, 1998 40,000 39,822
Dow Capital B.V. A-1/A 7.125 Jan 15, 2003 250,000 259,379
Ford Motor Credit A-1/A 6.125 Jan 09, 2006 1,000,000 978,051
General Motors Acceptance Corp A-3/A- 6.450 Apr 15, 1999 2,900,000 2,912,882
U.S. West Capital Funding BAA-1/BBB+ 6.750 Oct 01, 2005 1,000,000 1,008,534
---------
Finance-Diversified total 5,198,668
Engineering/Construction Services: 0.3%
Foster Wheeler Corp. BAA-2/BBB 6.750 Nov 15, 2005 1,020,000 1,025,204
---------
Machinery/Tools: 0.4%
Giddings & Lewis BA-1 7.500 Oct 01, 2005 500,000 521,974
Ingersoll Rand Company A-3/A- 6.480 Jun 01. 2025 700,000 719,376
---------
Machinery/Tools total 1,241,350
Office Equipment/Computers: 0.1%
Xerox Corporation A-2/A 7.150 Aug 01, 2004 300,000 314,215
---------
Oil/Oil Service: 0.5%
Enron Corp. BAA-2/BBB+ 7.625 Sep 10, 2004 500,000 530,464
Mobil Corporation AA-2/AA 8.375 Feb 12, 2001 500,000 532,500
Union Oil California BAA-1/BBB+ 7.200 May 15, 2005 500,000 522,040
---------
Oil/Oil Service total 1,585,004
Chemicals: 0.4%
PPG Industries, Inc. A-1/A 6.875 Aug 01, 2005 500,000 521,446
Union Carbide Corporation BAA-2/BBB 6.790 Jun 01, 2025 700,000 725,847
---------
Chemicals total 1,247,293
Specialty Chemicals: 0.2%
Praxair, Inc. A-3/BBB+ 6.850 Jun 15, 2005 500,000 515,597
---------
Transportation: 2.4%
American Airlines A-3/BBB 8.040 Sep 16, 2011 1,000,000 1,077,780
Burlington Northern Inc. BAA-2/BBB 7.400 May 15, 1999 500,000 508,761
Delta Air Lines BAA-1/BBB 8.540 Jan 02, 2007 1,478,492 1,592,826
Federal Express A-3/BBB+ 7.850 Jan 30, 2015 983,319 1,071,346
Federal Express A-3/BBB+ 7.890 Sep 23, 2008 500,000 533,535
Golden State Petroleum Transport Corp. AA-2 8.040 Feb 01, 2019 2,000,000 2,143,428
United Airlines Baa-1/BBB 9.020 Apr 19, 2012 462,541 534,813
---------
Transportation total 7,462,489
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BALANCED FUND INVESTMENTS, % Net Quality Coupon Maturity Par
CONTINUED: Assets Rating* Rate Date Amount Value
------ ------- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Aerospace/Defense: 0.6%
Lockheed Martin A-3/BBB+ 6.850 May 15, 2001 $1,250,000 $1,270,875
Rockwell International Corp. A-1/AA+ 7.625 Feb 17, 1998 500,000 500,961
---------
Aerospace/Defense total 1,771,836
Utilities-Telephone: 0.6%
Alltel Corporation A-2/A+ 7.250 Apr 01, 2004 500,000 523,121
BellSouth Telecommunications, Inc. AAA/AAA 6.500 Jun 15, 2005 350,000 357,087
GTE-California AA-3/AA- 6.250 Jan 15, 1998 250,000 250,026
GTE Corporation BAA-1/A 9.100 Jun 01, 2003 500,000 562,578
Northwestern Bell Telephone Co. AA-3/A 9.500 May 01, 2000 250,000 268,769
---------
Utilities-Telephone total 1,961,581
Utilities-Electric: 1.0%
Consolidated Edison of New York, Inc. A-1/A+ 6.250 Apr 01, 1998 300,000 300,222
Midwest Power Systems A-2/AA- 7.125 Feb 01, 2003 250,000 260,116
Pacific Gas & Electric Co. A-1/AA- 6.250 Aug 01, 2003 300,000 300,604
Pacificorp A-2/A 6.750 Apr 01, 2005 500,000 510,954
System Energy Resources BAA-3/BBB- 7.625 Apr 01, 1999 1,100,000 1,119,790
Wisconsin Public Service, Inc. AA-2/AA+ 7.300 Oct 01, 2002 500,000 525,360
---------
Utilities-Electric total 3,017,046
Utilities-Natural Gas Pipeline: 0.1%
Burlington Resources Inc. A-3/A- 9.625 Jun 15, 2000 250,000 269,712
Southern Cal Gas Co A-1/AA- 5.250 Mar 01, 1998 20,000 19,981
---------
Utilities-Natural Gas Pipeline total 289,693
Diversified Companies: 0.1%
Whitman Corporation BAA-2/BBB+ 7.500 Feb 01, 2003 300,000 315,538
---------
TOTAL U.S. CORPORATE BONDS,
AT COST: ($50,975,878) $52,881,547
----------
NON - U.S. CORPORATE BONDS: 0.2%
Shell Canada, Ltd. AA-2/AA 8.875 Jan 14, 2001 $500,000 $539,125
TOTAL NON - U.S. CORPORATE BONDS,
AT COST: ($505,991) $539,125
---------
% Net
Assets Shares Value
Common Stocks: 47.8%
Foreign Issues: 1.7%
Glaxo Wellcome PLC - ADR 38,150 $1,826,431
Philips Electronics N.V. 18,500 1,119,250
Telefonos deMexico SP ADR Cl L 39,000 2,186,438
---------
Foreign Issues total 5,132,119
Building Materials: 0.9%
Raychem Corporation 62,600 2,695,713
---------
Forest Products/Paper: 1.1%
Georgia-Pacific Corporation 26,400 1,603,800
Georgia-Pacific (Timber Grp)*** 19,800 449,213
Willamette Industries, Inc. 44,500 1,432,344
---------
Forest Products/Paper total 3,485,357
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BALANCED FUND INVESTMENTS, % Net
CONTINUED: Assets Shares Value
<S> <C> <C> <C>
Insurance: 3.9%
Aetna Inc. 43,400 $3,062,413
Allstate Corporation 41,557 3,776,492
Everest Reinsurance Holdings, Inc. 38,500 1,588,125
Travelers Group, Inc. 68,986 3,716,621
---------
Insurance total 12,143,651
Banks: 1.4%
Banc One Corporation 42,300 2,297,419
Bankers Trust New York Corporation 17,800 2,001,388
---------
Banks total 4,298,807
Investment Banking/Brokerage: 1.3%
A. G. Edwards, Inc. 54,600 2,170,350
Morgan Stanley, Dean Witter, Discover
and Co. 29,400 1,738,275
---------
Investment Banking/Brokerage total 3,908,625
Drugs/Health Care: 4.0%
American Home Products Corporation 45,700 3,496,050
Bristol-Myers Squibb Company 40,200 3,803,925
Centocor, Inc.*** 30,200 1,004,150
MedPartners, Inc.*** 39,188 876,832
Pharmacia & Upjohn, Inc. 42,700 1,563,888
United Healthcare Corp. 32,300 1,604,906
---------
Drugs/Health Care total 12,349,751
Hospital Management/Supplies: 0.6%
Columbia/HCA Healthcare Corporation 58,450 1,731,581
---------
Retail-Deptarment: 1.3%
Dayton Hudson Corporation 30,400 2,052,000
Sears, Roebuck & Co. 45,700 2,067,925
---------
Retail-Deptarment total 4,119,925
Retail - Discount: 0.8%
Wal-Mart Stores, Inc. 66,200 2,610,763
---------
Retail - Drug: 0.8%
CVS Corporation 37,126 2,378,384
---------
Retail - Grocery: 0.7%
Safeway Inc.*** 36,300 2,295,975
---------
Media: 2.0%
Cognizant Corporation 31,300 1,394,806
Cox Communications, Inc.*** 66,700 2,672,169
PRIMEDIA Inc.*** 171,500 2,165,188
---------
Media total 6,232,163
Foods-Food Products: 3.4%
General Mills, Inc. 31,400 2,249,025
Nabisco Holdings Corp. - Class A 88,200 4,272,188
Sara Lee Corp. 34,800 1,959,675
Tyson Foods, Inc. - Class A 104,625 2,144,813
---------
Foods-Food Products total 10,625,701
Auto-Related: 0.4%
General Motors Corporation 21,600 1,309,500
---------
Apparel/Textile: 0.4%
Nine West Group, Inc.*** 42,900 1,112,719
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BALANCED FUND INVESTMENTS, % Net
CONTINUED: Assets Shares Value
<S> <C> <C> <C>
Office Equipment/Computers: 4.8%
EMC Corporation*** 127,800 $3,506,513
Gateway 2000, Inc.*** 47,200 1,539,900
International Business Machines
Corporation 41,600 4,349,800
Seagate Technology, Inc.*** 24,200 465,850
3Com Corporation*** 67,600 2,361,775
Wang Laboratories, Inc.*** 112,500 2,489,063
---------
Office Equipment/Computers total 14,712,901
Electronics: 1.9%
Hewlett-Packard Company 25,000 1,562,500
Micron Technology Inc.*** 37,450 973,700
Motorola, Inc. 27,600 1,574,925
Texas Instruments Incorporated 40,000 1,800,000
---------
Electronics total 5,911,125
Pollution Control: 0.5%
Waste Management, Inc. 60,000 1,650,000
---------
Oil/Oil Service: 4.0%
Amoco Corporation 16,450 1,400,306
Exxon Corporation 32,000 1,958,000
Occidental Petroleum Corporation 56,600 1,659,088
Unocal Corporation 86,200 3,345,638
USX-Marathon Group 72,400 2,443,500
Williams Companies 51,200 1,452,800
---------
Oil/Oil Service total 12,259,332
Containers: 1.3%
Owens-Illinois, Inc.*** 108,500 4,116,219
---------
Chemicals: 1.6%
The Dow Chemical Company 20,900 2,121,350
Kerr-Mcgee Corporation 19,200 1,215,600
Praxair Inc 37,000 1,665,000
---------
Chemicals total 5,001,950
Transportation: 1.0%
Delta Air Lines, Inc. 10,500 1,249,500
Federal Express Corp*** 30,700 1,874,619
---------
Transportation total 3,124,119
Railroad Equipment: 0.5%
Norfolk Southern Corporation 44,900 1,383,481
---------
Telecommunications: 1.5%
U.S. WEST Media Group*** 159,100 4,594,013
---------
Utilities-Telephone: 3.5%
AirTouch Communications, Inc.*** 95,850 3,983,766
Ameritech Corporation 26,500 2,133,250
Bell Atlantic Corporation 25,000 2,275,000
GTE Corporation 44,100 2,304,225
---------
Utilities-Telephone total 10,696,241
Utilities-Electric: 1.0%
Northern States Power Company 29,100 1,695,075
PG&E Company 48,050 1,462,522
---------
Utilities-Electric total 3,157,597
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BALANCED FUND INVESTMENTS, % Net
CONTINUED: Assets Shares Value
<S> <C> <C> <C>
Diversified Companies: 1.1%
Rockwell International Corporation 32,500 $1,698,125
United Technologies 21,800 1,587,313
---------
Diversified Companies total 3,285,438
Miscellaneous: 0.6%
Interim Services, Inc*** 70,100 1,813,839
---------
TOTAL COMMON STOCKS,
AT COST: ($108,237,189) $148,136,979
-----------
TOTAL INVESTMENTS, BALANCED FUND
AT COST: ($269,135,520)** $310,239,939
===========
See accompanying notes to investments in securities.
<FN>
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
**At December 31, 1997, the cost of securities for federal income tax
purposes was $269,135,520. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation.....................................$45,550,324
Gross unrealized depreciation......................................(4,445,906)
---------
Net unrealized appreciation.......................................$41,104,418
==========
***This security is not income producing.
****This security provides a claim on the interest component of the underlying
mortgages, but not on their principal component. That is, the security's cash
flows depend on the amount of principal outstanding at the payment date. If
prepayments on the underlying mortgages are higher than expected, the yield on
the security may be adversely affected.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
% Net Quality Annualized Maturity Par
BOND FUND INVESTMENTS: Assets Rating* Yield Date Amount Value
------ ------- ----- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Short-Term Investments:
Government Guaranteed - U.S.: 4.2%
U.S. Treasury Bill AAA 5.45% Feb 12, 1998 $8,000,000 $7,950,230
Commercial Paper/Savings: 1.8%
Ford Motor Credit Company A-1/P-1 6.11% Jan 02, 1998 $1,000,000 $999,832
General Electric Capital Corp A-1+/P-1 6.54% Jan 02, 1998 300,000 299,946
Merrill Lynch & Co Inc A-1+/P-1 6.09% Jan 02, 1998 2,000,000 1,999,667
State Street Bank & Trust 5.25% 14,035 14,035
---------
Total Commercial Paper/Savings 3,313,480
---------
TOTAL SHORT-TERM INVESTMENTS,
AT COST $11,263,710
----------
% Net Quality Coupon Maturity Par
Assets Rating* Rate Date Amount Value
U.S. Government & Agency Bonds: 26.5%
Government Guaranteed: 12.1%
Government National Mortgage Assn
- 97-8 PK*** AAA 7.500 Apr 16, 2026 $2,000,000 $628,696
Government National Mortgage
Association AAA 8.000 Aug 15, 2006 70,203 73,742
Private Export Funding AAA 5.650 Mar 15, 2003 275,000 273,448
U.S. Treasury Note AAA 5.750 Aug 15, 2003 5,300,000 5,306,630
U.S. Treasury Note AAA 5.875 Nov 15, 2005 4,150,000 4,173,348
U.S. Treasury Note AAA 7.875 Nov 15, 1999 2,000,000 2,077,502
U.S. Treasury Note AAA 8.000 Aug 15, 1999 1,000,000 1,035,938
U.S. Treasury AAA 7.500 May 15, 2002 1,000,000 1,068,126
U.S. Treasury AAA 6.250 Feb 15, 2007 3,000,000 3,097,503
U.S. Treasury AAA 6.125 Aug 15, 2007 5,000,000 5,140,630
---------
Government Guaranteed total
(COST: $22,857,527) $22,875,563
----------
Quasi-Government/Government Sponsored: 14.4%
Federal Home Loan Bank AAA 5.490 Feb 01, 2001 $200,000 $197,831
Federal Home Loan Bank AAA 7.020 Jul 06, 1999 100,000 101,781
Federal Home Loan Bank AAA 7.020 Jul 06, 1999 100,000 104,383
Federal Home Loan Bank
-CPI Floating Rate AAA 5.421 Feb 20, 2007 2,000,000 1,911,580
FHLMC Pass Through Cert. AAA 8.500 Apr 01, 2001 6,329 6,479
FHLMC Pass Through Cert. AAA 8.500 May 01, 2001 15,807 16,182
FHLMC Pass Through Cert. AAA 8.000 May 01, 2007 31,668 32,819
Federal Home Loan Mortgage Corp. AAA 6.440 Jan 28, 2000 150,000 151,836
Federal Home Loan Mortgage Corp.
1455 HA AAA 7.900 Jun 15, 2021 836,000 910,335
Federal Home Loan Mortgage Corp.
1378 H AAA 10.000 Jan 15, 2021 750,000 853,945
Federal Home Loan Mortgage Corp.
-GNMA 4 B AAA 6.500 Nov 25, 2002 1,174,000 1,180,795
Federal Home Loan Mortgage Corp.
-1506 I AAA 6.750 May 15, 2008 2,000,000 2,033,588
Federal Home Loan Mortgage Corp.
- 1539 PM AAA 6.500 Jun 15, 2008 2,000,000 2,004,120
Federal Home Loan Mortgage Corp.
- 1510 F AAA 6.900 Mar 15, 2013 2,000,000 2,057,536
Federal Home Loan Mortgage Corp.
- 1948 IA*** AAA 7.500 Mar 15, 2027 561,391 209,399
Federal Home Loan Mortgage Corp.
- 1992 PH*** AAA 7.000 Sep 15, 2027 4,000,000 1,637,100
Federal Home Loan Mortgage Corp.
- 1978 AD AAA 7.000 Apr 15, 2025 1,000,000 998,237
Federal Home Loan Mortgage Corp.
- Strip 183 IO*** AAA 7.000 Mar 15, 2027 6,830,069 2,063,125
Federal Home Loan Mortgage Corp.
- Strip 282 2*** AAA 7.000 Sep 01, 2025 1,878,315 559,779
Federal National Mortgage Association
89-82 G AAA 8.400 Nov 25, 2019 400,000 422,529
Federal National Mortgage Association
96-M6 G AAA 7.750 Sep 17, 2023 1,000,000 1,055,630
Federal National Mortgage Association
93-62 D AAA 7.000 Jun 25, 2021 1,000,000 1,006,947
Federal National Mortgage Association
91-137 H AAA 7.000 Oct 25, 2021 1,000,000 1,013,083
Federal National Mortgage Association
G93-8 PG AAA 6.500 July 25, 2018 1,000,000 1,000,310
Federal National Mortgage Association
- 97-48 C AAA 6.500 July 18, 2027 921,877 915,010
Federal National Mortgage Association AAA 5.450 Oct 10, 2003 10,000 9,738
Federal National Mortgage Association AAA 6.850 Apr 05, 2004 45,000 46,952
Federal National Mortgage Association
- 97-59 J*** AAA 8.000 July 18, 2027 4,000,000 1,403,420
Federal National Mortgage Association
- 97-29 PL*** AAA 7.500 Aug 18, 2026 4,000,000 1,624,692
Federal National Mortgage Association
- 97-57 PT*** AAA 8.000 Mar 18, 2024 4,000,000 1,128,488
Federal National Mortgage Association
- Strip 272 2*** AAA 7.500 Jul 01, 2026 1,819,568 466,255
---------
Quasi-Government/Government Sponsored total
(COST: ($27,336,863) $27,123,904
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BOND FUND INVESTMENTS, % Net Quality Coupon Maturity Par
CONTINUED: Assets Rating* Rate Date Amount Value
------ ------- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Non - U.S. Government Bonds: 6.1%
Canadian Provincials: 4.2%
Hydro Quebec A-1 8.400 Jan 15, 2022 $1,000,000 $1,181,620
New Brunswick, Prov A-1 6.750 Aug 15, 2013 2,000,000 2,075,880
Nova Scotia Prov of A-3 9.735 Jul 15, 2002 1,000,000 1,125,920
Ontario, Province of AA-3 7.750 Jun 04, 2002 1,000,000 1,064,450
Quebec Province of A-2 9.125 Mar 01, 2000 250,000 265,208
Saskatchewan Province of A-3 7.125 Mar 15, 2008 2,000,000 2,134,260
---------
Canadian Provincials total 7,847,338
Sovereign Issues: 1.9%
Argentina Global Bond BA-3/BB 8.375 Dec 20, 2003 750,000 714,375
Brazil - Global B-1/BB- 8.875 Nov 05, 2001 500,000 495,000
Columbia, Republic BAA-3/BBB- 7.250 Feb 23, 2004 2,000,000 1,897,304
Ministry of Finance - Russia BA-2/BB- 10.000 Jun 26, 2007 500,000 464,500
---------
Sovereign Issues total 3,571,179
TOTAL NON - U.S. GOVERNMENT BONDS
(COST: $11,496,772) $11,418,517
----------
U.S. Corporate Bonds: 56.5%
Forest Products/Paper: 5.6%
Boise Cascade Corp. BAA-3/BBB- 9.450 Nov 01, 2009 $500,000 $609,403
Boise Cascade Corp. BAA-3/BBB- 9.875 Feb 15, 2001 500,000 517,909
Champion International Corp. BAA-1/BBB 9.875 Jun 01, 2000 100,000 108,202
Champion International Corp. BAA-1/BBB 7.100 Sep 01, 2005 3,750,000 3,890,063
Champion International Corp. BAA-1/BBB 6.400 Feb 15, 2026 2,000,000 2,021,222
Chesapeake Corp. BAA-3/BBB 7.200 Mar 15, 2005 1,000,000 1,033,652
International Paper A-3/A- 7.875 Aug 01, 2006 1,000,000 1,090,264
Kimberly-Clark Corp. AA-2/AA 9.000 Aug 01, 2000 600,000 642,575
Scott Paper-Defeased NR 10.000 Mar 01, 2002 500,000 570,887
---------
Forest Products/Paper total 10,484,176
Investment Banking/Brokerage: 9.5%
Bear Stearns A-2/A 6.750 Apr 15, 2003 1,000,000 1,012,050
Dean Witter Discover A-1/A+ 6.750 Oct 15, 2013 2,500,000 2,499,783
Dean Witter Discover A-1/A+ 6.300 Jan 15, 2006 1,000,000 983,941
Donaldson, Lufkin, Jenrette, Inc. A-3/A- 6.875 Nov 01, 2005 700,000 710,706
Donaldson, Lufkin, Jenrette, Inc. A-3/A- 5.625 Feb 15, 2016 2,480,000 2,451,311
Lehman Brothers Holdings BAA-1/A 7.125 Sep 15, 2003 1,000,000 1,027,365
Lehman Brothers Holdings BAA-1/A 6.306 Sep 10, 2001 1,000,000 998,551
Merrill Lynch & Co., Inc. AA-3/AA- 6.250 Jan 15, 2006 350,000 344,583
Paine Webber Group BAA-1/BBB+ 6.750 Feb 01, 2006 700,000 703,480
Paine Webber Inc. BAA-1/BBB+ 7.875 Feb 15, 2003 1,000,000 1,058,878
Salomon Inc. A-2/A 7.125 Aug 01, 1999 500,000 507,790
Salomon Inc. A-2/A 7.200 Feb 01, 2004 3,500,000 3,624,621
Salomon Inc. A-2/A 7.500 Feb 01, 2003 2,000,000 2,098,524
---------
Investment Banking/Brokerage total 18,021,583
Finance Co. - Consumer Loans: 1.0%
Household Finance Co. A-2/A 7.125 Sep 01, 2005 1,735,000 1,797,450
---------
Finance/Insurance: 0.4%
Equitable Life Assurance A-2/A 6.950 Dec 01, 2005 792,000 807,615
---------
Finance - Diversified: 2.5%
Ameritech Capital AA-3/AA+ 7.500 Apr 01, 2005 2,000,000 2,147,254
Dow Capital A-1/A 7.125 Jan 15, 2003 900,000 933,765
General Motors Acceptance Corporation A-3 6.450 Apr 15, 1999 1,045,000 1,049,642
U.S. West Capital Funding BAA-1/BBB+ 6.750 Oct 01, 2005 500,000 504,267
---------
Finance - Diversified total 4,634,928
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BOND FUND INVESTMENTS, % Net Quality Coupon Maturity Par
CONTINUED: Assets Rating* Rate Date Amount Value
------ ------- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Mortgage Related Securities: 0.2%
Prudential Home Funding AAA 6.050 Apr 25, 2024 $500,000 $466,310
---------
Drugs/Health Care: 0.3%
American Home Products A-2/A 7.700 Feb 15, 2000 530,000 547,070
---------
Hospital Management/Supplies 0.2%
Columbia/HCA Healthcare Corporation BAA-2/BBB 6.910 Jun 15, 2005 300,000 293,477
---------
Media: 0.1%
McGraw-Hill, Inc. A-1 9.430 Sep 1, 2000 100,000 107,695
---------
Publishing-News: 0.3%
Knight Ridder A-3/A 8.500 Sep 01, 2001 530,000 550,071
---------
Beverage/Confect/Tobacco: 0.3%
J Seagram & Sons A-2/A 9.650 Aug 15, 2018 500,000 657,175
---------
Retail-Department: 0.3%
Dayton Hudson Corp. BAA-1/BBB+ 9.750 Nov 01, 1998 250,000 257,063
Dayton Hudson Corp. BAA-1/BBB+ 7.250 Sep 01, 2004 310,000 323,014
---------
Retail-Department total 580,077
Auto-Related: 2.7%
Ford Motor Co. A-1/A 7.500 Nov 15, 1999 1,500,000 1,537,658
Ford Motor Co. A-1/A 7.250 Oct 01, 2008 1,000,000 1,063,818
Ford Motor Co. A-1/A 8.875 Apr 01, 2006 500,000 577,576
General Motors Corp. A-3/A- 7.000 Jun 15, 2003 745,000 771,635
Hertz Corp A-3/BBB+ 9.000 Nov 01, 2009 1,000,000 1,226,303
---------
Auto-Related total 5,176,990
Hotel & Motel: 0.3%
Marriott International, Inc. BAA-1/BBB+ 7.125 Jun 01, 2007 500,000 521,573
---------
Electronics: 2.0%
Motorola Inc. AA-3/AA 6.500 Sep 01, 2025 1,975,000 2,059,275
Xerox Corporation A-2/A 7.150 Aug 01, 2004 1,700,000 1,780,553
---------
Electronics total 3,839,828
Aerospace/Defense: 0.9%
Lockheed Martin A-3/BBB+ 6.850 May 15, 2001 750,000 762,525
Lockheed Corp A-3/BBB+ 9.375 Oct 15, 1999 500,000 527,410
Raytheon Co. BAA-1/BBB 6.500 Jul 15, 2005 500,000 503,189
---------
Aerospace/Defense total 1,793,124
Electric Household Appliance: 0.4%
Maytag Corporation BAA-1/BBB+ 9.750 May 15, 2002 600,000 677,132
---------
Engineering/Construction Services: 0.9%
Foster Wheeler Corp. BAA-2/BBB 6.750 Nov 15, 2005 1,710,000 1,718,723
---------
Machine Tools: 1.5%
Giddings & Lewis BA-1 7.500 Oct 01, 2005 2,500,000 2,609,870
Ingersoll Rand Company A-3/A- 6.480 Jun 01, 2025 300,000 308,304
---------
Machine Tools total 2,918,174
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BOND FUND INVESTMENTS, % Net Quality Coupon Maturity Par
CONTINUED: Assets Rating* Rate Date Amount Value
------ ------- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Oil/Oil Service: 4.7%
Baroid Corp AA-3/A 8.000 Apr 15, 2003 $58,000 $62,645
Coastal Corp BAA-3/BBB- 10.250 Oct 15, 2004 1,000,000 1,201,620
Enron Corp. BAA-2/BBB+ 7.625 Sep 10, 2004 1,500,000 1,591,392
Enron Corp. BAA-2/BBB+ 6.875 Oct 15, 2007 1,500,000 1,526,691
Lyondell Petrochem BAA-3/BBB- 10.000 Jun 01, 1999 500,000 524,766
Occidental Peto Bond BAA-2/BBB 9.250 Aug 01, 2019 1,000,000 1,276,388
Union Oil Co. of California BAA-1/BBB+ 7.200 May 15, 2005 1,400,000 1,461,712
Union Oil Co. of California BAA-1/BBB+ 9.125 Feb 15, 2006 1,000,000 1,169,650
---------
Oil/Oil Service total 8,814,864
Containers: 0.5%
Bemis Co., Inc. A-2/A 6.700 Jul 01, 2005 1,010,000 1,028,088
---------
Chemicals: 1.8%
Union Carbide Corporation BAA-2/BBB 6.790 Jun 01, 2025 3,300,000 3,421,849
---------
Transportation: 7.1%
American Airlines A-3/BBB 8.040 Sep 16, 2011 2,000,000 2,155,560
Burlington Northern, Inc. BAA-2/BBB 7.400 May 15, 1999 200,000 203,504
CSX Corp BAA-2/BBB 9.000 Aug 15, 2006 1,800,000 2,086,528
Delta Air Lines BAA-1/BBB 8.540 Jan 02, 2007 292,674 315,307
Federal Express A-3/BBB+ 7.850 Jan 30, 2015 3,441,617 3,749,711
Golden State Petroleum Transport Ba1/BBB- 8.040 Feb 01, 2019 4,000,000 4,286,856
Southwest Airlines A-1/A 8.700 Jul 01, 2011 19,455 22,374
United Airlines Baa-1/BBB 9.020 Apr 19, 2012 462,541 534,813
---------
Transportation total 13,354,653
Railroad Equipment: 0.2%
Union Pacific RR Aa-3/A 6.540 Jul 01, 2015 434,739 438,674
---------
Utilities-Telephone: 4.7%
BellSouth Telecommunications, Inc. AAA/AAA 6.500 Jun 15, 2005 150,000 153,037
BellSouth Telecommunications, Inc. AAA/AAA 6.250 May 15, 2003 1,500,000 1,513,880
Carolina T&T AA-3/A+ 5.750 Aug 15, 2000 1,000,000 992,849
GTE Corporation BAA-1/A 9.100 Jun 01, 2003 1,000,000 1,125,155
GTE Corporation BAA-1/A 9.375 Dec 01, 2000 500,000 541,604
GTE North, Inc. A-1/AA- 6.000 Jan 15, 2004 4,000,000 3,956,208
Northwestern Bell Telephone Co. AA-3/A 9.500 May 01, 2000 600,000 645,044
Pacific NW Bell Telephone AA-3/A 4.375 Sep 01, 2002 35,000 32,503
---------
Utilities-Telephone total 8,960,280
Utilities-Electric: 5.4%
Cincinnati Gas & Electric A-3/A- 5.800 Feb 15, 1999 1,000,000 997,403
Commonwealth Edison BAA-2/BBB 7.000 Jul 01, 2005 1,000,000 1,024,427
Consolidated Edison of New York A-1/A+ 6.250 Apr 01, 1998 200,000 200,148
Florida Power A-1 6.720 Jul 01, 2005 2,000,000 2,033,606
Midwest Power Systems A-2/AA- 7.125 Feb 01, 2003 150,000 156,069
Niagara Mohawk Power BA-3/BB+ 9.250 Oct 01, 2001 500,000 538,008
Pacificorp A-2/A 6.750 Apr 01, 2005 250,000 255,477
System Energy Resourses BAA-3/BBB- 7.625 Apr 01, 1999 762,000 775,709
Wisconsin Power & Light AA-2/AA 7.600 Jul 01, 2005 2,000,000 2,145,968
Wisconsin Public Service, Inc. AA-2/AA+ 7.300 Oct 01, 2002 2,000,000 2,101,438
---------
Utilities-Electric total 10,228,253
Utilities-Natural Gas Pipeline: 2.6%
Burlington Resources, Inc. A-3/A- 9.625 Jun 15, 2000 100,000 107,885
Consolidated Natural Gas A-1/AA- 5.875 Oct 01, 1998 50,000 50,014
El Paso Natural Gas Baa-2/BBB 9.450 Sep 01, 1999 500,000 525,357
Michigan Consolidated Gas A-2/A 8.000 May 01, 2002 2,000,000 2,133,026
Michigan Consolidated Gas A-2/A 5.750 May 01, 2001 1,000,000 989,266
Southwestern Energy BAA-2/BBB+ 6.700 Dec 01, 2005 1,000,000 1,016,697
---------
Utilities-Natural Gas Pipeline total 4,822,245
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
BOND FUND INVESTMENTS, % Net Quality Coupon Maturity Par
CONTINUED: Assets Rating* Rate Date Amount Value
------ ------- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Diversified Companies: 0.1%
Whitman Corporation BAA-2/BBB+ 7.500 Feb 01, 2003 100,000 105,178
---------
TOTAL U.S. CORPORATE BONDS
(COST: $106,058,517) $106,767,256
-----------
Non - U.S. Corporate Bonds: 3.3%
BHP Finance, Inc. A-2/A 6.420 Mar 01, 2026 $2,000,000 $1,998,054
Falconbridge Ltd. BAA-2/BBB+ 7.350 Nov 01, 2006 2,000,000 2,104,272
Hanson Overseas A-3/A- 6.750 Sep 15, 2005 2,000,000 2,047,842
---------
TOTAL NON - U.S. CORPORATE BONDS
(COST: $6,164,058) $6,150,168
---------
TOTAL INVESTMENTS, BOND SERIES
(COST: $185,177,448)** $185,599,118
===========
See accompanying notes to investments in securities.
<FN>
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
**At December 31, 1997, the cost of securities for federal income tax purposes
was $185,177,448. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation.................................$1,093,246
Gross unrealized depreciation...................................(671,576)
--------
Net unrealized depreciation.................................... $421,670
========
***This security provides a claim on the interest component of the underlying
mortgages, but not on their principal component. That is, the security's cash
flows depend on the amount of principal outstanding at the payment date. If
prepayments on the underlying mortgages are higher than expected, the yield on
the security may be adversely affected.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
% Net Quality Annualized Maturity Par
MONEY MARKET FUND INVESTMENTS: Assets Rating* Yield Date Amount Value
------ ------- ----- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Short-Term Investments:
Commercial Paper/Savings: 68.0%
Anheuser Busch Companies A-1/P-1 5.76% Jan 22, 1998 $2,100,000 $2,093,092
Associates Corp NA A-1+/P-1 5.88% Jan 29, 1998 2,000,000 1,991,071
Bell South Telecom Inc. A-1+/P-1 5.28% Jan 13, 1998 2,000,000 1,996,250
Caterpillar Inc A-1/P-1 5.78% Feb 17, 1998 2,000,000 1,991,148
CIT Group Holdings A-1/P-1 5.71% Feb 03, 1998 2,000,000 1,989,825
Coca-Cola Co. A-1+/P-1 5.65% Feb 02 ,1998 2,100,000 2,089,733
Consolidated Natural Gas A-1+/P-1 6.30% Jan 07, 1998 369,000 368,619
Ford Motor Credit Company A-1/P-1 5.82% Feb 10, 1998 2,000,000 1,987,415
General Electric Capital Corporation A-1+/P-1 5.75% Jan 06, 1998 2,100,000 2,098,362
General Mills A-1/P-1 5.74% Jan 02, 1998 1,350,000 1,349,789
Interstate Power Co. A-1/P-1 5.90% Jan 26, 1998 1,000,000 995,993
Interstate Power Co. A-1/P-1 5.88% Jan 27, 1998 1,000,000 995,847
John Deere Capital Credit A-1/P-1 5.78% Jan 23, 1998 2,000,000 1,993,107
Madison Gas & Electric A-1+/P-1 5.88% Jan 12, 1998 1,000,000 998,237
Merrill Lynch & Co Inc A-1+/P-1 5.72% Jan 08, 1998 900,000 900,000
Morgan Stanley, Dean Witter, Discover
and Co. A-1/P-1 5.76% Jan 22, 1998 1,200,000 1,196,080
Northern Illinois Gas Co A-1+/P-1 5.85% Jan 23, 1998 1,800,000 1,793,675
Walt Disney Company A-1/P-1 5.63% Jan 02, 1998 1,100,000 1,099,832
State Street Bank & Trust 5.25% 56,342 56,342
----------
TOTAL COMMERCIAL PAPER/
SAVINGS, AT COST $27,984,417
----------
Quasi-Government/Government Sponsored: 21.5%
Federal Home Loan Discount Notes 5.78% Jan 02, 1998 $1,500,000 $1,498,115
Federal Home Loan Discount Notes 5.65% Jan 12, 1998 2,805,000 2,800,165
FNMA Discount Notes 5.86% Jan 20, 1998 2,321,000 2,316,600
FNMA Discount Notes 5.62% Jan 16, 1998 1,055,000 1,052,613
Federal Farm Credit Discount Notes 5.62% Jan 21, 1998 1,200,000 1,196,340
----------
TOTAL QUASI-GOVERNMENT/GOVERNMENT
SPONSORED, AT COST $8,863,833
----------
Government Guaranteed: 10.6%
U. S. Treasury Bill 4.97% Feb 05, 1998 $4,450,000 $4,344,277
----------
TOTAL INVESTMENTS, MONEY MARKET
FUND, AT COST $41,192,527
==========
See accompanying notes to investments in securities.
<FN>
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TREASURY 2000 FUND OF ULTRA SERIES FUND
Investments in Securities (Continued)
December 31, 1997
% of Interest Maturity Principal
TREASURY 2000 FUND INVESTMENTS: Net Assets Rate Date Amount Value
---------- ---- ---- ------ -----
<S> <C> <C> <C> <C> <C>
Government Guaranteed - U.S.:
U.S. Treasury Strip (Cost $1,502,323)* 100.0% 9.69% Nov 15, 2000 $2,000,000 $1,701,374
=========
</TABLE>
See accompanying notes to investments in securities.
Notes to investments in securities:
Interest rates on and stripped Treasury Securities represent annualized yield to
maturity at date of purchase. Values of investment securities are determined as
described in Note 2 of the financial statements.
[FN]
*At December 31, 1997, the cost of securities for federal income tax purposes
was $1,502,323. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation..................................... $199,050
Gross unrealized depreciation................................ --
--------
Net unrealized appreciation....................................... $199,050
========
</FN>
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statement of Operations
Year Ended December 31, 1997
Capital Growth and Money Treasury
Appreciation Income Stock Balanced Bond Market 2000
Stock Fund Fund Fund Fund Fund Fund
Investment income (note 2):
<S> <C> <C> <C> <C> <C> <C>
Interest income $451,972 $881,021 $9,624,772 $3,320,834 $1,621,455 $114,238
Dividend income 1,854,993 6,473,882 1,727,637 -- -- --
---------- ---------- ---------- --------- --------- --------
Total income 2,306,965 7,354,903 11,352,409 3,320,834 1,621,455 114,238
---------- ---------- ---------- --------- --------- --------
Expenses (note 4):
Advisory fees 1,194,672 2,108,616 1,627,496 248,008 134,513 --
Advisory/Administrative fees -- -- -- -- -- 7,325
Accounting and custodian fees 18,100 37,708 30,955 6,462 5,387 --
Trustees' fees 2,203 5,276 4,030 641 493 23
Registration fees 19,125 45,350 36,131 5,394 4,550 --
Legal fees 4,858 11,521 9,179 1,370 1,156 --
Audit fees 5,711 13,634 10,888 1,654 1,351 39
Printing and mailing fees 8,245 19,550 15,576 2,325 1,962 --
Other expenses 3,760 8,916 7,104 1,061 895 --
---------- ---------- ---------- --------- --------- --------
Expenses before reimbursement 1,256,674 2,250,571 1,741,359 266,915 150,307 7,387
Reimbursable expenses from
CUNA Mutual Life Insurance Company (8,943) (16,291) (12,966) (4,363) (4,095) --
---------- ---------- ---------- --------- --------- --------
Total net expenses 1,247,731 2,234,280 1,728,393 262,552 146,212 7,387
---------- ---------- ---------- --------- --------- --------
Net investment income 1,059,234 5,120,623 9,624,016 3,058,282 1,475,243 106,851
---------- ---------- ---------- --------- --------- --------
</TABLE>
Realized and unrealized gain (loss) on investments (notes 2 and 3):
<TABLE>
<CAPTION>
Realized gain (loss) on security transactions:
<S> <C> <C> <C> <C> <C> <C>
Proceeds from sale of securities
and principal pay downs 29,124,058 76,016,996 56,037,257 15,142,309 4,961,839 --
Cost of securities sold (23,606,820) (66,517,987) (52,244,642) (15,119,915) (4,961,839) --
---------- ---------- ---------- --------- --------- --------
Net realized gain (loss) on
security transactions 5,517,238 9,499,009 3,792,615 22,394 -- --
Net change in unrealized
appreciation or depreciation
on investments 40,907,564 84,642,706 25,504,114 326,623 -- 1,846
---------- ---------- ---------- --------- --------- --------
Net gain (loss) on investments 46,424,802 94,141,715 29,296,729 349,017 -- 1,846
---------- ---------- ---------- --------- --------- --------
Net increase in net assets
resulting from operations $47,484,036 $99,262,338 $38,920,745 $3,407,299 $1,475,243 $108,697
========== ========== ========== ========= ========= ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
CAPITAL APPRECIATION GROWTH AND INCOME
STOCK FUND STOCK FUND BALANCED FUND
Operations: 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income $1,059,234 $646,279 $5,120,623 $2,863,311 $9,624,016 $5,922,093
Net realized gain (loss) on security
transaction 5,517,238 3,152,749 9,499,009 5,656,957 3,792,615 4,268,803
Net change in unrealized appreciation
or depreciation on investments 40,907,564 9,688,795 84,642,706 26,520,015 25,504,114 6,612,755
----------- ---------- ----------- ----------- ----------- -----------
Change in net assets from
operations 47,484,036 13,487,823 99,262,338 35,040,283 38,920,745 16,803,651
----------- ---------- ----------- ----------- ----------- -----------
Distributions to shareholders:
From net investment income (1,065,876) (639,086) (5,180,495) (2,804,744) (9,668,911) (5,850,662)
From realized gains on investments (5,541,711) (3,084,815) (9,518,672) (5,675,210) (3,841,952) (4,393,033)
Return of capital (43,461) -- (118,470) -- -- --
----------- ---------- ----------- ----------- ----------- -----------
Change in net assets from
distributions (6,651,048) (3,723,901) (14,817,637) (8,479,954) (13,510,863) (10,243,695)
----------- ---------- ----------- ----------- ----------- -----------
Class Z Share transactions (note 5):
Proceeds from sale of shares 311,778,406 48,543,686 260,073,329 99,870,808 80,187,804 70,374,669
Net asset value of shares issued in
reinvestment of distributions 6,651,048 3,723,901 14,817,637 8,479,954 13,510,863 10,243,695
----------- ---------- ----------- ----------- ----------- -----------
318,429,454 52,267,587 274,890,966 108,350,762 93,698,667 80,618,364
Cost of shares repurchased (1,742,040) (1,475,008) (2,041,007) (4,208,480) (4,029,711) (3,422,404)
----------- ---------- ----------- ----------- ----------- -----------
Change in net assets derived from
capital share transactions 316,687,414 50,792,579 272,849,959 104,142,282 89,668,956 77,195,960
----------- ---------- ----------- ----------- ----------- -----------
Increase in net assets 357,520,402 60,556,501 357,294,660 130,702,611 115,078,838 83,755,916
Net assets:
Beginning of year 98,673,833 38,117,332 232,840,773 102,138,162 194,724,874 110,968,958
----------- ---------- ----------- ----------- ----------- -----------
End of year $456,194,235 $98,673,833 $590,135,433 $232,840,773 $309,803,712 $194,724,874
=========== ========== =========== =========== =========== ===========
Undistributed net investment
income included in net assets -- $14,253 -- $69,558 $49,986 $94,881
=========== ========== =========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statement of Changes in Net Assets (Continued)
Years Ended December 31, 1997 and 1996
BOND FUND MONEY MARKET FUND TREASURY 2000 FUND
Operations: 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income $3,058,282 $1,251,976 $1,475,243 $836,930 $106,851 $107,928
Net realized gain (loss) on security
transactions 22,394 49,716 -- -- -- --
Net change in unrealized appreciation
or depreciation on investments 326,623 (477,126) -- -- 1,846 (75,534)
---------- ---------- ---------- ---------- ---------- ----------
Change in net assets from
operations 3,407,299 824,566 1,475,243 836,930 108,697 32,394
----------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income (3,013,977) (1,238,292) (1,475,243) (836,930) -- --
From realized gains on investments (22,394) (49,716) -- -- -- --
Return of capital -- -- -- -- -- --
----------- ---------- ---------- ---------- ---------- ----------
Change in net assets from
distributions (3,036,371) (1,288,008) (1,475,243) (836,930) -- --
----------- ---------- ---------- ---------- ---------- ----------
Class Z Share transactions (note 5):
Proceeds from sale of shares 160,361,652 13,819,369 57,328,276 32,934,173 7,239 7,020
Net asset value of shares issued in
reinvestment of distributions 3,036,371 1,288,008 1,473,088 835,642 -- --
----------- ---------- ---------- ---------- ---------- ----------
163,398,023 15,107,377 58,801,364 33,769,815 7,239 7,020
Cost of shares repurchased (1,501,306) (1,796,780) (38,642,199) (24,132,957) -- --
----------- ---------- ---------- ---------- ---------- ----------
Change in net assets derived from
capital share transactions 161,896,717 13,310,597 20,159,165 9,636,858 7,239 7,020
----------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets 162,267,645 12,847,155 20,159,165 9,636,858 115,936 39,414
Net assets:
Beginning of year 26,571,923 13,724,768 21,010,987 11,374,129 1,584,741 1,545,327
----------- ---------- ---------- ---------- ---------- ----------
End of year $188,839,568 $26,571,923 $41,170,152 $21,010,987 $1,700,677 $1,584,741
=========== ========== ========== ========== ========== ==========
Undistributed net investment
income included in net assets $62,339 $18,034 -- -- -- --
=========== ========== ========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND OF ULTRA SERIES FUND
Financial Highlights
Year Ended December 31
------------------------- CAPITAL APPRECIATION STOCK FUND -------------------------
(For a share outstanding throughout the period): 1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.60 $12.51 $9.97 $10.00
------ ------ ------ ------
Income from Investment Operations
Net Investment Income 0.07 0.13 0.14 0.16
Net Realized and Unrealized Gain (Loss)
on Investments 4.52 2.55 2.91 0.37
------ ------ ------ ------
Total from Investment Operations 4.59 2.68 3.05 0.53
-------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.07) (0.13) (0.14) (0.15)
Distributions from Realized Capital Gains (0.27) (0.46) (0.37) (0.41)
------ ------ ------ ------
Total Distributions (0.34) (0.59) (0.51) (0.56)
-------------------------------------------------------------
Net Asset Value, End of Period $18.85 $14.60 $12.51 $9.97
====================================================================================================================================
Total Return* 31.57% 21.44% 30.75% 5.44%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $456,194 $98,674 $38,117 $9,449
Ratio of Expenses to Average Net Assets** 0.82% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 0.70% 0.96% 1.37% 1.55%
Portfolio Turnover Rate 17.06% 49.77% 61.32% 65.81%
Average Commission Rate $0.06 $0.06 $0.06
====================================================================================================================================
<FN>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate account
level because charges made at the separate account level have not been
subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA Mutual
Life Insurance Company. If the Expense Reimbursement Agreement had not been
in effect and if the full expenses allowable under the Investment Advisory
Agreement between the Ultra Series Fund and the Investment Adviser had been
charged, the resulting ratio of expenses to average net assets would have
been 0.83%, 0.66%, 0.75%, and 0.85%, for 1997, 1996, 1995, and 1994,
respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND OF ULTRA SERIES FUND
Financial Highlights
Year Ended December 31
------------------------- GROWTH AND INCOME STOCK FUND ---------------------------
(For a share outstanding throughout the period): 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.32 $18.20 $15.06 $15.51 $15.49
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income 0.31 0.34 0.37 0.32 0.29
Net Realized and Unrealized Gain (Loss)
on Investments 6.36 3.93 4.37 (0.04) 1.87
----- ----- ----- ----- -----
Total from Investment Operations 6.67 4.27 4.74 0.28 2.16
-----------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.32) (0.34) (0.37) (0.32) (0.29)
Distributions from Realized Capital Gains (0.47) (0.81) (1.23) (0.40) (1.85)
----- ----- ----- ----- -----
Total Distributions (0.79) (1.15) (1.60) (0.73) (2.14)
-----------------------------------------------------------------------------------
Net Asset Value, End of Period $27.20 $21.32 $18.20 $15.06 $15.51
====================================================================================================================================
Total Return* 31.42% 22.02% 31.75% 1.42% 13.77%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $590,135 $232,841 $102,138 $48,913 $32,468
Ratio of Expenses to Average Net Assets** 0.61% 0.65% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 1.39% 1.78% 2.28% 2.19% 1.84%
Portfolio Turnover Rate 20.39% 40.55% 57.80% 45.36% 56.79%
Average Commission Rate $0.06 $0.06 $0.06
====================================================================================================================================
<FN>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate account
level because charges made at the separate account level have not been
subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA Mutual
Life Insurance Company. If the Expense Reimbursement Agreement had not been
in effect and if the full expenses allowable under the Investment Advisory
Agreement between the Ultra Series Fund and the Investment Adviser had been
charged, the resulting ratio of expenses to average net assets would have
been 0.61%, 0.65%, 0.69%, 0.70%, and 0.73%, for 1997, 1996, 1995, 1994, and
1993, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND OF ULTRA SERIES FUND
Financial Highlights
Year Ended December 31
-------------------------------- BALANCED FUND ------------------------------
(For a share outstanding throughout the period): 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.29 $14.63 $12.90 $13.70 $13.54
------ ------ ------ ------ -----
Income from Investment Operations
Net Investment Income 0.62 0.58 0.55 0.52 0.50
Net Realized and Unrealized Gain (Loss)
on Investments 1.93 0.98 2.29 (0.56) 0.95
----- ----- ----- ----- ----
Total from Investment Operations 2.55 1.56 2.84 (0.04) 1.45
------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.63) (0.58) (0.55) (0.51) (0.50)
Distributions from Realized Capital Gains (0.19) (0.32) (0.56) (0.25) (0.79)
----- ----- ----- ----- -----
Total Distributions (0.82) (0.90) (1.11) (0.76) (1.29)
-------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.02 $15.29 $14.63 $12.90 $13.70
====================================================================================================================================
Total Return* 16.87% 10.79% 22.27% -0.46% 10.47%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $309,804 $194,725 $110,969 $67,468 $54,363
Ratio of Expenses to Average Net Assets** 0.68% 0.65% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 3.81% 3.91% 4.03% 4.00% 3.62%
Portfolio Turnover Rate 21.15% 33.48% 36.68% 28.53% 28.71%
Average Commission Rate $0.06 $0.06 $0.06
====================================================================================================================================
<FN>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate account
level because charges made at the separate account level have not been
subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA Mutual
Life Insurance Company. If the Expense Reimbursement Agreement had not been
in effect and if the full expenses allowable under the Investment Advisory
Agreement between the Ultra Series Fund and the Investment Adviser had been
charged, the resulting ratio of expenses to average net assets would have
been 0.69%, 0.65%, 0.68%, 0.70%, and 0.74%, for 1997, 1996, 1995, 1994, and
1993, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND OF ULTRA SERIES FUND
Financial Highlights
Year Ended December 31
------------------------------ BOND FUND ------------------------------------
(For a share outstanding throughout the period): 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.33 $10.63 $9.67 $10.58 $10.32
------ ------ ------ ------ -----
Income from Investment Operations
Net Investment Income 0.29 0.65 0.60 0.59 0.64
Net Realized and Unrealized Gain (Loss)
on Investments 0.45 (0.28) 0.96 (0.90) 0.28
----- ----- ----- ----- ----
Total from Investment Operations 0.74 0.37 1.56 (0.31) 0.92
-----------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.51) (0.64) (0.59) (0.59) (0.65)
Distributions from Realized Capital Gains (0.02) (0.03) (0.01) (0.01) (0.01)
----- ----- ----- ----- -----
Total Distributions (0.53) (0.67) (0.60) (0.60) (0.66)
------------------------------------------------------------------------------
Net Asset Value, End of Period $10.54 $10.33 $10.63 $9.67 $10.58
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return* 7.45% 2.86% 16.37% -3.06% 8.87%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $188,840 $26,572 $13,725 $7,867 $6,297
Ratio of Expenses to Average Net Assets** 0.56% 0.65% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 6.50% 6.25% 6.08% 6.03% 5.99%
Portfolio Turnover Rate 30.71% 25.67% 14.74% 11.97% 12.23%
====================================================================================================================================
<FN>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate account
level because charges made at the separate account level have not been
subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA Mutual
Life Insurance Company. If the Expense Reimbursement Agreement had not been
in effect and if the full expenses allowable under the Investment Advisory
Agreement between the Ultra Series Fund and the Investment Adviser had been
charged, the resulting ratio of expenses to average net assets would have
been 0.57%, 0.67%, 0.68%, 0.70%, and 0.75%, for 1997, 1996, 1995, 1994, and
1993, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND OF ULTRA SERIES FUND
Financial Highlights
Year Ended December 31
------------------------------ MONEY MARKET FUND ----------------------------
(For a share outstanding throughout the period): 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----
Income from Investment Operations
Net Investment Income 0.05 0.05 0.05 0.03 0.03
Net Realized and Unrealized Gain (Loss)
on Investments 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----
Total from Investment Operations 0.05 0.05 0.05 0.03 0.03
-----------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.05) (0.05) (0.05) (0.03) (0.03)
Distributions from Realized Capital Gains (0.00) (0.00) (0.00) 0.00 0.00
----- ----- ----- ----- -----
Total Distributions (0.05) (0.05) (0.05) (0.03) (0.03)
------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
====================================================================================================================================
Total Return* 4.75% 5.17% 5.21% 3.34% 2.86%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $41,170 $21,011 $11,374 $7,799 $4,749
Ratio of Expenses to Average Net Assets** 0.50% 0.65% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 5.05% 4.74% 5.17% 3.66% 2.43%
Portfolio Turnover Rate -- -- -- -- --
====================================================================================================================================
<FN>
For the Money Market Fund, the "seven-day average" yield for the seven days
ended December 31, 1997, was 4.96% and the "effective" yield for that period was
5.09%.
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate account
level because charges made at the separate account level have not been
subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA Mutual
Life Insurance Company. If the Expense Reimbursement Agreement had not been
in effect and if the full expenses allowable under the Investment Advisory
Agreement between the Ultra Series Fund and the Investment Adviser had been
charged, the resulting ratio of expenses to average net assets would have
been 0.51%, 0.67%, 0.73%, 0.78%, and 0.77% for 1997, 1996, 1995, 1994, and
1993, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TREASURY 2000 FUND OF ULTRA SERIES FUND
Financial Highlights
Year Ended December 31
------------------------------- TREASURY 2000 FUND ---------------------------
(For a share outstanding throughout the period) 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $8.64 $8.47 $7.00 $7.53 $6.53
----- ----- ----- ----- ----
Income from Investment Operations
Net Investment Income 0.58 0.58 0.58 0.53 0.48
Net Realized and Unrealized Gain (Loss)
on Investments 0.02 (0.41) 0.89 (1.06) 0.52
----- ----- ----- ----- ----
Total from Investment Operations 0.60 0.17 1.47 (0.53) 1.00
-----------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income 0.00 0.00 0.00 0.00 0.00
Distributions from Realized Capital Gains 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----
Total Distributions 0.00 0.00 0.00 0.00 0.00
-----------------------------------------------------------------------------
Net Asset Value, End of Period $9.24 $8.64 $8.47 $7.00 $7.53
====================================================================================================================================
Total Return* 6.85% 2.10% 20.99% -7.12% 15.43%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $1,701 $1,585 $1,545 $1,272 $1,363
Ratio of Expenses to Average Net Assets 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of Net Investment Income to Average
Net Assets 6.56% 7.03% 7.40% 7.50% 6.69%
Portfolio Turnover Rate -- -- -- -- --
====================================================================================================================================
<FN>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate account
level because charges made at the separate account level have not been
subtracted.
</FN>
</TABLE>
<PAGE>
ULTRA SERIES FUND
Notes to Financial Statements
(1) Description of the Fund
The Ultra Series Fund (the "Fund"), a Massachusetts Business Trust, is
registered under the Investment Company Act of 1940 (the "1940 Act"), as
amended, as a diversified, open-end management investment company. The Fund
is a series fund with six investment portfolios (the "funds"), each with
different investment objectives and policies and each having available two
separate classes of common stock with a par value of $.01 per share. Fund
shares are sold and redeemed at a price equal to the shares' net asset
value (note 2(b)). The assets of each fund are held separate from the
assets of the other funds.
Effective May 1, 1997, the shares of each fund were divided into Class Z
and Class C Shares. Class Z Shares are offered to all insurance company
separate accounts issued by, and all qualified retirement plans sponsored
by, CUNA Mutual Life Insurance Company or its affiliates ("CUNA Mutual
Life"). Class C Shares are offered to separate accounts of insurance
companies other than CUNA Mutual Life, and to qualified retirement plans of
companies not affiliated with the Fund or CUNA Mutual Life. Both classes of
shares are identical in all respects except that: Class C Shares may be
subject to a distribution fee (note 4); each class will have exclusive
voting rights with respect to matters that affect just that class; and each
class will bear a different name or designation. All income earned and
expenses incurred by the Fund are borne on a pro-rata basis by each
outstanding share of each class based on the daily net asset value of
shares of that class. As of December 31, 1997, no Class C Shares have been
issued.
(2) Significant Accounting Policies
(a) Valuation of Investment Securities
Value of securities, including call options, which are traded on
exchanges are valued at the last sales price on the principal exchange
as of the close of the New York Stock Exchange or 3:00 p.m. Central
Standard Time, whichever is earlier, on the day the securities are
being valued. Securities not traded on a stock exchange on a given day
or traded over-the-counter are valued using a procedure determined in
good faith to represent a fair value and which is authorized by the
Board of Trustees. Pursuant to Rule 2A-7 of the 1940 Act, all money
market instruments in the Money Market Fund are valued on an amortized
cost basis. Money Market Instruments in the other funds are valued on
an amortized cost basis if there are less than 60 days to maturity.
(b) Share Valuation and Dividends to Shareholders
The net asset value of the shares of each fund is determined on a daily
basis based on the valuation of the net assets of the funds divided by
the number of shares of the fund outstanding. Expenses, including the
investment advisory, advisory/administrative, and distribution fees
(note 4), are accrued daily and reduce the net asset value per share.
Dividends on the Money Market Fund will be declared and reinvested
daily in additional full and fractional shares of the Money Market
Fund. Dividends of ordinary income from the Capital Appreciation Stock
Fund, Growth and Income Stock Fund, Bond Fund, and Balanced Fund will
be declared and reinvested quarterly in additional full and fractional
shares of the respective funds. All net realized capital gains of these
funds, if any, will be declared and reinvested at least annually. The
Treasury 2000 Fund will utilize an annual consent dividend procedure
which provides the fund with the deduction for dividends constructively
paid to shareholders.
(c) Federal Income and Excise Taxes
The Fund intends to distribute all of its taxable income and to comply
with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for income or
excise taxes is required. Net investment income and net realized gains
(losses) for the funds may differ for financial statement and tax
purposes. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains
(losses) were recorded by the funds. In addition, the Capital
Appreciation Stock Fund, the Growth and Income Stock Fund, and the
Balanced Fund paid consent dividends, whereby $91,306, $131,287 and
$16,980, respectively, of its realized gains were treated as being
distributed to their shareholders and reinvested in that fund.
<PAGE>
(d) Security Transactions and Investment Income
Security transactions are recorded on the trade date basis. Realized
gains and losses from security transactions are reported on the
identified cost basis. Interest, including amortization of premium and
discount, is accrued daily and dividend income is recorded on the
ex-dividend date.
(e) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increase
and decrease in net assets from operations during the period. Actual
results could differ from those estimates.
(3) Purchase and Sales of Investment Securities
The cost of securities purchased and the proceeds from securities sold
(including maturities, excluding short-term securities for all funds except
Money Market) for each fund during the year ended December 31, 1997, were
as follows:
<TABLE>
<CAPTION>
Capital Growth and Money Treasury
Appreciation Income Stock Balanced Bond Market 2000
Stock Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Total costs of securities purchased $323,217,798 $315,654,405 $138,509,972 $163,798,811 $208,359,230 $ --
=========== =========== =========== =========== =========== ========
Total proceeds received on security
sales and principal paydowns $29,124,058 $76,016,996 $56,037,257 $15,142,309 $189,689,839 $ --
========== =========== =========== ========== =========== ========
</TABLE>
(4) Transactions with Affiliates
Fees and Expenses
The Fund has entered into an investment advisory agreement with CIMCO Inc.
(the "Investment Adviser"), an affiliated company. For the four-month
period ended April 30, 1997, the Investment Adviser received monthly
advisory or advisory/ administrative fees, based on average daily net
assets, at an annual rate of .5 percent of the Capital Appreciation Stock,
Growth and Income Stock, Balanced, Bond and Money Market Funds and .45
percent of the Treasury 2000 Fund. On May 1, 1997, a new advisory agreement
with the Investment Advisor changed this fee structure and provides for a
different fee for each portfolio within the Fund. The fees, paid monthly,
are calculated as a percentage of the average daily net assets for each
portfolio at the following annual rates:
Capital Appreciation Stock 0.80%
Balanced 0.70%
Growth and Income Stock 0.60%
Bond 0.55%
Money Market 0.45%
Treasury 2000 0.45%
Under the new unitary fee structure, the Investment Adviser is responsible
for providing or obtaining services and paying certain expenses including
custodian fees, transfer agent fees, pricing costs, and accounting and
legal fees as indicated in the investment advisory agreement.
In addition to the unitary investment advisor fee, each fund also pays
certain expenses including trustees fees, brokerage commissions, interest
expense, audit fees, and other extraordinary expenses.
For the four-month period ended April 30, 1997, the Investment Adviser was
required to reimburse the funds for the amount, if any, by which the
aggregate expenses of any fund (including the Investment Adviser's fee, but
excluding brokerage commissions, interest, taxes, and extraordinary
expenses) in any calendar year exceed 2.0 percent of the average daily net
assets of the funds. In addition, for the four-month period ended April 30,
1997, CUNA Mutual Life has voluntarily agreed to reimburse the Capital
Appreciation Stock, Growth and Income Stock, Balance, Bond and Money Market
Funds for ordinary business expenses in excess of .65 percent (of which .5
percent is the advisory fee and .15 percent is general and administrative
expenses) of the average daily net assets of these funds. Also, for the
four-month period ended April 30, 1997, the Investment Advisor has agreed
to assume responsibility for providing all administrative services and
paying all ordinary business expenses of the Treasury 2000 Fund which
exceed .45 percent (all of which is the advisory/administrative fee) of
average daily net assets. Currently, CUNA Mutual Life and CUNA Mutual
Insurance Society, affiliated companies, are providing administrative
services on behalf of the Investment Advisor.
<PAGE>
During the year ended December 31, 1997, CUNA Mutual Life voluntarily
reimbursed expenses for each of the funds in the following amounts:
Capital Appreciation Stock Fund.......... $ 8,943
Bond Fund ................................ $ 4,363
Growth and Income Stock Fund.............. $16,291
Money Market Fund ........................ $ 4,095
Balanced Fund............................. $12,966
All capital shares outstanding at December 31, 1997, are owned by separate
investment accounts of CUNA Mutual Life.
Certain officers and directors of the Fund are also officers of CUNA Mutual
Life or CIMCO Inc. During the twelve-month period ended December 31, 1997,
the Fund made no direct payments to its officers and paid trustees' fees of
approximately $12,675 to its unaffiliated trustees.
Distribution Plan
All shares are distributed through CUNA Brokerage Service, Inc.("CBS"), and
affiliated company, or other registered broker-dealers authorized by CBS.
Class C Shares may also be subject to an asset-based distribution fee
pursuant to Rule 12b-1 under the 1940 Act, equal to not more than 0.25%, on
an annual basis, of the average value of the daily net assets of each
series of the Fund attributable to Class C Shares on an annual basis.
(5) Share Activity
Transactions in Class Z Shares of each fund for the years ended December
31, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>
Capital Growth and Money Treasury
Appreciation Income Stock Balanced Bond Market 2000
Stock Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding at December 31, 1995 3,046,550 5,611,047 7,585,243 1,291,279 11,374,129 182,546
Shares sold, including reinvestment
of dividends 3,818,030 5,524,047 5,380,713 1,453,110 33,769,815 805
Shares repurchased (105,316) (215,447) (228,534) (171,319) (24,132,957) --
--------- --------- --------- --------- ---------- -------
Shares outstanding at December 31, 1996 6,759,264 10,919,647 12,737,422 2,573,070 21,010,987 183,351
Shares sold, including reinvestment
of dividends 17,535,010 10,850,472 5,705,061 15,479,381 58,801,364 787
Shares repurchased (93,915) (77,316) (243,133) (143,139) (38,642,199) --
---------- ---------- --------- --------- ---------- -------
Shares outstanding at December 31, 1997 24,200,359 21,692,803 18,199,350 17,909,312 41,170,152 184,138
---------- ---------- ---------- ---------- ---------- -------
</TABLE>
<PAGE>
ULTRA SERIES FUND
INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
Ultra Series Fund:
We have audited the statements of assets and liabilities, including the
schedules of investments in securities, of the Capital Appreciation Stock Fund,
Growth and Income Stock Fund, Balanced Fund, Bond Fund, Money Market Fund, and
Treasury 2000 Fund of the Ultra Series Fund as of December 31, 1997, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended,
and financial highlights for each of the years in the five-year (four years for
Capital Appreciation Stock Fund) period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Investment securities held in custody were confirmed
to us by the custodian. As to securities purchased or sold but not received or
delivered, we requested confirmation from brokers, and where replies were not
received, we carried out other appropriate audit procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Capital Appreciation Stock Fund, Growth and Income Stock Fund, Balanced Fund,
Bond Fund, Money Market Fund, and Treasury 2000 Fund of the Ultra Series Fund as
of December 31, 1997, the results of their operations for the year then ended,
the changes in their net assets for each of the years in the two-year-period
then ended, and the financial highlights for each of the years in the five-year
(four years for Capital Appreciation Stock Fund) period then ended in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
February 6, 1998
<PAGE>
ULTRA SERIES FUND
Officers and Trustees
OFFICERS
Michael S. Daubs, President
Lawrence R. Halverson, Vice President/Secretary
Donald E. Heltner, Vice President
Michael G. Joneson, Chief Accounting Officer, Treasurer and Assistant Secretary
Robert M. Buckingham, Chief Financial Officer/Assistant Secretary
BOARD OF TRUSTEES
Gwendolyn M. Boeke
Alfred L. Disrud
Kevin T. Lentz
Keith S. Noah
Thomas C. Watt
