Dear Shareholder,
Whether you are a seasoned investment veteran or a new recruit, you probably
feel like 1998 was the investing equivalent of military boot camp. We agree, and
you have our congratulations. You have survived what may prove to be one of the
most difficult investment periods you will ever experience!
* After an erratic January, U.S. stocks surged in February through May,
trailed off through much of June, then staged a dramatic climb to their mid-July
peaks some 15% or more above their beginning levels. They then plummeted,
especially in the month of August, more than erasing year-to-date gains. They
struggled to hold their values through September, then recovered strongly
beginning in early-October and through most of the rest of the year. By the end
of December, in spite of these extreme gyrations, the average U.S. stock had
provided a return in the mid-teens, exceeding the market's long-term average for
the fourth consecutive year.
* U.S. bonds traced a much less volatile and very favorable path through the
first several months of the year, until mid-August. Suddenly, U.S. Treasury
securities accelerated their price advance while corporate, mortgage-backed and
municipal bonds moved in the opposite direction. By year end, Treasuries had
backed off of their highs while other bonds generally maintained their prices,
providing returns for most bonds at least somewhat in excess of their long-term
norms.
* International securities struggled to at best match their U.S.
counterparts. Debt of companies and governments in "young" economies around the
world weakened early in the year, worsened mid-year and, with Russia's default
in mid-August, plummeted in price along with these countries' stock markets.
Most showed only modest recovery to year end. At the other extreme, the
investment markets in Western Europe moved more in line with the U.S. markets.
As a result, investors experienced widely varied results among the various
international markets.
This extremely divergent behavior of investment markets reflected the vastly
different economic scenarios unfolding in the various regions. Since mid-1997,
developing Asia was moving from economic boom fueled by huge capital inflows
(which led to vast excesses of production capacity) to severe recession
aggravated by rampant capital outflows as banks and other investors from around
the globe sought safer investments. Russia, an oil export-dependent nation
struggling to convert from a government-controlled to a free economy, was
knocked to its knees by the recessionary and deflationary wave from Asia. And,
further ripples from Asia were (and still are) eroding the foundations of other
financially weak and commodity-dependent countries.
The economies of Western Europe and the United States, in contrast, were
broad-based, conservatively financed and thriving before the Asia/Russia
problems developed, and were only marginally impacted as these problems played
out in 1998. As summarized above, however, their investment markets were still
buffeted, not due to severe changes in their current economic fortunes, but by
changes in investors' expectations, amplified by changes in their attitudes.
Throughout this period, U.S. investors have been struggling to discern the
staying power of our healthy economy in the face of the economic erosion taking
place elsewhere in the world. Their expectations through most of 1997 had been
that we would survive the troubles virtually unscathed. As more facts became
available, expectations were dampened, then revived, then were doused again. By
August, with the distant problems still lingering and Russia's default actually
impacting some U.S. financial institutions, investors were simply unable to back
down their near-term expectations one more time while maintaining their
basically positive longer-term outlook. Their expectations turned down sharply
along with their attitudes. And, they became sellers of nearly everything except
U.S. Treasury securities.
Then, of course, with encouragement from the Federal Reserve's unanticipated
interest rate cut, attitudes perked up again in early October, sending both the
stock and bond markets back to new highs for the year. With more Fed
encouragement and generally favorable economic news between then and year end,
both markets established new highs in October/November, and we closed the year
only marginally off of those highs.
It is important to note that, through all the international turmoil, the U.S.
economy has been impacted only marginally. Increasing negative influences seem
reasonable to expect, however, but perhaps only in the form of modestly slower
near term growth and dampened overall corporate profits. Some industries and
companies, of course, will suffer more than others. Looking ahead to the first
couple of years of the new millennium, the prospects for an actual economic
downturn -- a recession -- are certainly higher than generally perceived at the
beginning of last year, but are still widely considered to be less than 50/50.
And, the nation's ability to grow longer-term, as it provides the products and
services desired by its own citizens and people throughout the world, remains
unquestioned.
As such, we believe strongly that long-term investors should not let the market
turbulence and questionable near term economic prospects deter them from
continuing with their investment programs. Even if a recession were probable,
ultimate investment success is not dependent upon "taking cover" during every
economic storm. Just as the patient investor "survived" this year's chaotic
markets with quite attractive returns, longer-term investment success can be
achieved by riding out the storms. In fact, exiting a long-term program when bad
weather is forecast then re-entering it when the clouds have cleared will
usually diminish long-term returns. Inevitably, investors are too late getting
out and too late to come back in.
The following pages present summaries of the portfolio management principles and
strategies that were employed in each of the Ultra Series Funds during 1998, as
well as the current portfolio attributes that will impact the Funds' performance
going forward. We encourage you to read these summaries to learn more about the
nature of each fund and how it may react in various economic environments. The
better you understand your investments, the easier it will be for you to "live
with" them over time, and the more likely you will be to reach the financial
goals you are pursuing with these investments.
And that is our ultimate goal -- YOUR financial success. We thank you for the
opportunity to serve you in this pursuit.
Sincerely,
/s/L.R. Halverson
Lawrence R. Halverson, CFA
Vice President
Ultra Series Fund
<PAGE>
CAPITAL APPRECIATION STOCK 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 indices. Ten thousand
invested on the inception date of January 3, 1994, would have the following
value as of December 31, 1998.
Capital Appreciation Stock Fund1 .................$26,631
S&P 500 Stock Index ...............................29,377
Lipper Average2 ...................................22,663
Consumer Price Index ..............................11,248
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, 1998
- --------------------------------------------------------------------------------
One Three Five Since Inception
Year Years Years of Fund
- --------------------------------- -------- --------- --------- -----------------
Capital Appreciation Stock Fund3 20.90% 24.54% N/A 21.64%
S&P 500 Stock Index 28.60% 28.23% N/A 24.05%
Lipper Average2 22.10% 20.55% N/A 17.78%
Consumer Price Index 1.60% 2.27% N/A 2.38%
- --------------------------------- -------- --------- --------- -----------------
At this place, the shareholder report contains a pie chart showing a portfolio
mix of 5.7% in foreign investments, 2.0% in short-term investments, and 92.3%
in common stocks.
TEN LARGEST EQUITY HOLDINGS (% of Portfolio)
EMC Corporation.............. 4.2% Cox Communications........ 2.5%
Dayton Hudson Corporation.... 4.0% Owens-Illinois, Inc....... 2.4%
Airtouch Communications, Inc. 3.9% Mutual Risk Management Ltd 2.4%
Safeway, Inc................. 3.4% Citigroup Inc............. 2.3%
MediaOne Group Inc........... 3.4% Wang Laboratories, Inc.... 2.3%
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, but do not include any separate account fees, charges or
expenses imposed by the variable annuity and life insurance contracts that
use the Capital Appreciation Stock Fund, 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 1998 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 continued its unprecedented
performance record with large capitalization indexes turning in a fourth
consecutive year of 20%+ gains. However, market leadership was extremely narrow,
more so than at any other time in history, with large cap growth stocks and
internet-related issues dominating investment performance. In this difficult
environment, the Capital Appreciation Stock Fund outperformed the small and
middle capitalization segments of the equity market, though it lagged the large
cap-dominated indexes such as the S&P 500. In addition, the Fund once again
outperformed its average peer as represented by the Lipper Index of Capital
Appreciation Mutual Funds:
USF Capital Appreciation Stock Fund 20.9%
Russell 2000 Index (Small capitalization stocks) -2.6%
Standard & Poor's Mid Cap 400 Index (Middle capitalization stocks) 19.1%
Russell Mid Cap Index (Middle capitalization stocks) 10.1%
Standard & Poor's 500 Index (Large capitalization stocks) 28.6%
Lipper Index of Capital Appreciation Funds 20.0%
Fund results in 1998 benefited from exceptionally strong performance in the
consumer staples sector. Not only was this the Fund's most over-weighted sector
relative to the S&P Midcap Index, our holdings in this sector appreciated over
39% during the year, compared to an 8.3% gain in the S&P Midcap's consumer
staples sector. Safeway Inc., a supermarket operator, led the sector's
out-performance with a gain of 93% for the year. In addition, our cable holdings
continued to perform well with Cox Communications and MediaOne Group gaining 72%
and 63%, respectively. The Fund also benefited from strong performance in the
consumer cyclical and healthcare sectors. Stocks such as Dayton Hudson, TJX
Companies, ALZA and Pharmacia & Upjohn were among the out-performers in those
groups.
Fund results were negatively impacted by holdings in the finance sector. Poor
performance of stocks such as Bankers Trust, Allstate and Citigroup caused our
sector performance to lag that of the S&P Midcap finance sector. The capital
goods sector also underperformed which had a negative impact on results.
The strongest performing sector in the market during 1998 was the technology
sector, with the S&P Midcap technology sector gaining over 79% during the year.
Your Fund's technology holdings appreciated an impressive 82.9%. This return was
driven by a gain of over 200% for EMC Corp, the Fund's largest holding. Micron
Technology and Texas Instruments were also exceptionally strong performers,
gaining 95% and 91%, respectively. While our technology stocks turned in
impressive performance, Fund results were negatively impacted by its slightly
under-weighted position throughout the year in this strong performing sector.
At this time, we continue to find many attractive stocks in the consumer staples
and healthcare sectors and remain over-weighted in those areas. Sector weights
are a function of our "bottom-up" analysis and reflect the relative
attractiveness of individual stocks, not macro-economic assessments of the broad
sectors. We have been taking profits in some of our cable holdings and as a
result have been slightly reducing our exposure to the consumer staples sector,
though we remain over-weighted. We expect to slightly increase our exposure to
the technology sector, resulting in a weighting that is more in line with the
S&P Midcap Index. Our most under-weighted sector remains the utilities sector,
due to what we believe are lackluster prospects for the companies in that area.
The Capital Appreciation Stock Fund utilizes a "flex-cap" approach, investing in
companies across the small, middle and large capitalization segments of the
equity market. After the recent out-performance of larger-cap issues, we are
finding more attractive opportunities in the middle capitalization tiers. We
have begun to transition the Capital Appreciation Stock Fund away from many of
its larger-cap issues into stocks which we believe offer greater upside
potential. We expect that this will allow the Fund to continue to perform well
for long-term investors. Even if the performance momentum of large-cap stocks
continues awhile longer, the returns provided by the Capital Appreciation Stock
Fund should be attractive, and the Fund should be positioned to outperform in
the case of a significant market setback.
CIMCO Inc. Common Stock Management Team
<PAGE>
GROWTH AND INCOME STOCK 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 indices. Ten thousand dollars
invested on January 1, 1988 would have the following value as of December 31,
1998.
Growth and Income Stock Fund ....................$47,409
S&P 500 Stock Index ...............................57,828
Lipper Average1 ...................................43,819
Consumer Price Index ..............................13,614
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1998
- --------------------------------------------------------------------------------
One Three Five Ten
Year Years Years Years
- --------------------------------- ---------- ----------- ----------- -----------
Growth and Income Stock Fund2 17.92% 23.66% 20.37% 16.84%
S&P 500 Stock Index 28.60% 28.23% 24.05% 19.18%
Lipper Average1 16.53% 21.03% 18.26% 15.92%
Consumer Price Index 1.60% 2.27% 2.38% 3.13%
- --------------------------------- ---------- ----------- ----------- -----------
At this place, the shareholder report contains a pie chart showing a portfolio
mix of 3.2% in foreign stocks, 2.8% in short-term investments, and 94.0% in
common stocks.
TEN LARGEST EQUITY HOLDINGS (% of Portfolio)
Int'l Business Machines Corp... 3.1% Bristol-Myers Squibb Co......... 2.7%
MediaOne Group Inc............. 3.1% Banc One Corporation............ 2.5%
American Home Products Corp.... 3.0% Wal-Mart Stores, Inc............ 2.5%
Kimberly-Clark Corporation..... 3.0% BankAmerica Corporation......... 2.4%
EMC Corporation................ 2.9% Texas Instruments Incorporated.. 2.3%
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, but do not include any separate account fees, charges or
expenses imposed by the variable annuity and life insurance contracts that
use the Growth and Income Stock Fund, 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 1998 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 market of 1998 can be described in one word: "WOW"!
Unfortunately not all investors can say it with the same degree of
gratification. After watching stocks provide strong gains by summer, they "took
them all back" by early October, and then rebounded sharply from their October
lows to close with an unprecedented fourth consecutive year of 20%+ returns.
However, these returns mask the realities of the broader investment environment.
The market narrowness discussed in past reports not only continued, but
increased. As illustrated below, the different segments of the market produced
dramatically different results, not only between the large and small
capitalization stocks, but also within the large capitalization segment. The 50
largest of the S&P 500 companies returned 37.5% on a capitalization-weighted
basis while the bottom 450 returned 16.7%. On an equal-weighted basis, the top
50 returned 38.9% while the bottom 450 returned 10.2%. The Growth and Income
Stock Fund returned 17.9% during the year, significantly outperforming the
average peer fund as represented by the Lipper Mutual Fund Index of Growth and
Income Funds.
USF Growth and Income Stock Fund 17.9%
Russell 2000 Index (Small capitalization stocks) -2.6%
Standard & Poor's 400 Index (Middle capitalization stocks) 19.1%
Russell 1000 Index (Large capitalization stocks) 27.1%
Standard & Poor's 500 Index (Large capitalization stocks) 28.6%
Lipper Mutual Fund Index of Growth and Income Funds 13.6%
Market performance during the period was driven by out-performance in the
healthcare, technology and communications services sectors. In the Growth and
Income Stock Fund, the communications services and consumer cyclical sectors
outperformed both the overall index and their respective industry groups. The
healthcare and technology sectors did well relative to the overall index, but
trailed their respective groups in the index. The basic materials, energy and
finance sectors had a negative impact on fund performance. Noteworthy
contributors to the Fund's good returns during the period included EMC,
Wal-Mart, Texas Instruments, IBM, Airtouch Communications, CVS and MediaOne
Group.
The Fund enters the new year with a modestly over-weighted position in the
energy sector and under-weighted positions in the capital goods and
communications services sectors. Sector weights are a function of our
"bottom-up" analysis and reflect the relative attractiveness of individual
stocks, not macro-economic assessments of the broad sectors.
The strength of the bull market in the face of the Asian and now Brazilian
crises has surprised most investors. While there are solid fundamentals that are
favorable for the long-term investor, it is important to recognize what is
driving these returns. As stated above, the returns have been concentrated in a
small number of industry-leading stocks that carry high P/E ratios (high prices
of the stocks relative to their earnings per share). This "narrowness" of market
returns is further widening the valuation gap between these stocks and the rest
of the market.
Several reasons can be offered to explain the significant out-performance of the
large capitalization stocks. Since the indexes are capitalization weighted, the
growth in index funds results in increased demand for the large cap stocks. Also
the strong returns in the U.S. economy have attracted significant foreign
capital to our largest, most liquid companies. In addition, many mutual funds
have grown so large during this bull market that they need the liquidity of the
large stocks. The rate cuts initiated by the Federal Reserve last September
provided not only investor liquidity but also confidence that the economic
growth would continue.
With this key segment of the market at these high valuation levels, the
likelihood of increased market volatility or a short-term correction is high.
However, the solid foundation of strong economic fundamentals remains intact,
and should continue to offer support to long-term investors who maintain their
investment accumulation discipline and do not try to time the market. It is
important to remember that occasional corrections are a normal phase of bull
markets, and while unnerving in the short term, have a relatively small impact
on long-term investment results.
CIMCO Inc. Common Stock Portfolio Management Team
<PAGE>
BALANCED 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 indices. Ten thousand invested on January 1,
1988 would have the following value as of December 31, 1998.
Balanced Fund ....................................$32,715
S&P 500 Stock Index................................57,828
Synthetic Index1 ..................................33,771
Lipper Average2 ...................................30,617
Lehman Brothers Intermediate Government/
Corporate Bond Index.............................22,636
90 Day Treasury Bill...............................16,966
Consumer Price Index ..............................13,614
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1998
- --------------------------------------------------------------------------------
One Three Five Ten
Year Years Years Years
- --------------------------------- ---------- ----------- ----------- -----------
Balanced Fund3 13.40% 13.66% 12.31% 11.84%
S&P 500 Stock Index 28.60% 28.23% 24.05% 19.18%
Synthetic Index1 17.26% 16.09% 14.17% 12.94%
Lipper Average2 14.85% 15.45% 13.40% 12.58%
Lehman Brothers Intermediate
Govt./Corporate Bond Index 8.42% 6.77% 6.60% 8.51%
90 Day Treasury Bill 4.98% 5.15% 5.09% 5.43%
Consumer Price Index 1.60% 2.27% 2.38% 3.13%
- --------------------------------- ---------- ----------- ----------- -----------
At this place, the shareholder report contains a pie chart showing a portfolio
mix of 1.7% Non-U.S. corporate bonds, 0.6% Non-U.S. government & agency bonds,
1.5% short-term investments, 25.9% U.S. corporate bonds, 12.8% U.S. goverment &
agency bonds, 1.8 foreign common stocks, and 55.7% 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, but do not include any separate account fees, charges or
expenses imposed by the variable annuity and life insurance contracts that
use the Balanced Fund, 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 1998 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 continued its unprecedented
performance record with large capitalization indexes turning in a fourth
consecutive year of 20%+ gains. However, market leadership was extremely narrow,
more so than at any other time in history. Large-cap growth stocks and
internet-related issues dominated investment performance while other stocks
provided returns at more modest levels, but still generally above the historical
average for all but the smallest capitalization tiers of U.S. stocks.
At the same time, the U.S. bond market was experiencing similar extremes of
performance. U.S. Treasury securities were providing the strongest returns while
most other areas of the bond market struggled to reach returns at or even
somewhat below their long-term average return levels.
In this difficult environment, the Balanced Fund performed generally in line
with equal-weighted representative markets, but lagged the
capitalization-weighted indexes that emphasize the returns of the largest
capitalization stocks. Due to the Fund's smaller and more conservative exposure
to stocks relative to the average balanced fund, it modestly under-performed its
average peer as represented by the Lipper Index of Balanced Mutual Funds:
USF Balanced Fund 13.4%
Synthetic Index* (With capitalization-weighted S&P 500) 17.3%
Synthetic Index* (With equal-weighted S&P 500) 10.5%
Lipper Index of Balanced Funds 15.1%
* 45% Standard & Poor's 500, 40% Lehman Intermediate Government/Corporate
Index and 15% 90-day U.S. Treasury Bills.
Management's discussions of the Bond, Growth and Income Stock and Capital
Appreciation Stock Funds elsewhere in this report provide descriptions of the
various portfolio management activities which were employed for 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.
Diversified investing always makes good sense. It becomes even more important in
periods of extreme market volatility because it cushions the impact on investors
of swings in any one market segment or category of investments. This makes it
far easier for most investors, professionals and amateurs alike, to "keep their
heads" during periods of great turmoil and maintain their long-term investment
focus. Along with the near-term concerns commonly cited about today's stock
market valuation levels and the world economic situation, there are many very
favorable near-term aspects to our economy and markets, and many more
longer-term positives. We expect continued market shocks as the world economy
works through these near-term concerns, but we also expect the generally upward
advance in stock prices and the favorable bond performance to survive these
shocks and provide attractive returns for diligent, disciplined long-term
investors. The diversified approach pursued by the Ultra Series Balanced Fund
should continue to provide a solid core for many such long-term investors'
portfolios.
CIMCO Inc. Balanced Portfolio Management Team
<PAGE>
BOND 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 indices. Ten thousand invested on January 1, 1988,
would have the following value as of December 31, 1998.
Bond Fund .......................................$21,125
Lehman Brothers Intermediate
Government/Corporate Bond Index...............22,636
Lipper Average1 ...................................19,267
Consumer Price Index ..............................13,614
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1998
- --------------------------------------------------------------------------------
One Three Five Ten
Year Years Years Years
- --------------------------------- ---------- ----------- ----------- -----------
Bond Fund2 6.18% 5.48% 5.77% 7.77%
Lehman Brothers Intermediate
Govt./Corporate Bond Index 8.42% 6.77% 6.60% 8.51%
Lipper Average1 6.11% 5.48% 5.48% 6.78%
Consumer Price Index 1.60% 2.27% 2.38% 3.13%
- --------------------------------- ---------- ----------- ----------- -----------
At this place, the shareholder report contains a pie chart showing a portfolio
mix of 3.1% Non-U.S. corporate bonds, 1.2% Non-U.S. government & agency bonds,
3.4% short-term investments, 32.3% U.S. government & agency bonds, and 60.0%
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, but do not include any separate account fees, charges or
expenses imposed by the variable annuity and life insurance contracts that
use the Bond Fund, 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 1998 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. The fund emphasizes short to
intermediate-term, investment grade bonds.
Management's Discussion: Bond market returns in 1998 reflected heightened
volatility in the world financial markets. Recall that interest rates traded in
a narrow range in the first half of the year. However, Treasury yields fell and
bond prices rose dramatically over the summer months reflecting a flight to
quality as economic uncertainty in the Asian markets and the collapse in Russia
sparked a worldwide contagion that unnerved investors.
Interestingly, while U.S. Treasury bonds did well, most other sectors in the
fixed income markets experienced little if any price appreciation. Indeed,
emerging market debt and even high yield corporate bonds actually posted
significant price declines in 1998. The fact is that, for a time last year, some
financial markets literally "seized up" with little trading taking place as
liquidity practically evaporated. Perhaps the assurances by the Federal Reserve
via three timely interest rate cuts during the fall averted a real calamity.
Despite the global turmoil, the U.S. economy enjoyed another year of strong
growth in 1998 with real GDP growing at approximately 4%. Low unemployment,
steady interest rates, and a resilient stock market contributed to strong
consumer spending. Yet, inflation remained low owing to weak commodity prices,
global competition, and improving productivity. The Federal government budget is
in surplus and is expected to be so as far as the eye can see! Life just doesn't
get any better than this!
As we look to 1999, we see a "soft landing" as the most likely scenario with
growth moderating to 2-3%. A mounting trade deficit saps economic growth and the
rest of the world is experiencing a slowdown. We believe a return to normalcy in
the stock market and a resumption of consumer savings may also contribute to a
less ebullient economic landscape. For bonds, we expect a year of "clipping your
coupon" with little price appreciation. We do believe, however, that there is
excellent value in the non-Treasury sectors of the market.
The table below depicts 1998 performance of the Fund, a few sectors of the fixed
income markets and the average Short/Intermediate Investment Grade Bond Mutual
Fund as reported by Lipper Analytical Services.
USF Bond Fund 6.2%
Lehman Intermediate Govt/Corp Bond Index 8.4%
Lehman Long Treasury Bond Index 14.2%
Lehman High Yield Corporate Bond Index 1.8%
Lipper Short/Intermediate Funds 6.1%
The Fund's 6.2% total return compares favorably to the 6.1% return posted by the
average mutual fund with a similar objective. The Fund's return lagged that of
the Lehman Intermediate Government/Corporate index for a number of reasons.
The Fund incurs transaction costs and management fees (approximately 0.55%
annually), while market indices are not actually investment funds and incur no
expenses or transactions costs. More importantly, the benchmark had a
concentration of almost 2/3 Treasury and Agency securities, which were the best
performing sectors of the bond market last year. We have maintained a less than
1/3 weight here preferring higher yielding alternatives. While that strategy
under-performed the benchmark this year, we are convinced that over longer
periods of time, a concentration in "spread product" (corporate and
mortgage-backed securities) will provide superior results.
The Fund's 77 holdings are well diversified across the major sectors of the
fixed income markets, with 50% of assets in corporate securities, 29% in
mortgage-backed bonds, 14% in Treasuries and Agencies, and 7% in other
securities. The portfolio of bonds currently has an average quality rating of
AA-, a five-year effective maturity and provides a 6.0% yield before expenses.
Going forward we may reduce our corporate holdings in favor of mortgage-backed
securities. We like the high quality, generous yield spreads, and
diversification benefits of that asset class.
We continue to believe that the Fund serves as an important "anchor in the wind"
when viewed in the context of a diversified portfolio of financial assets. We
expect that our conservative investment approach will provide competitive
returns and moderate price volatility in the year ahead. We thank you for the
opportunity to manage your money and promise our very best.
CIMCO Inc. Bond Portfolio Management Team
<PAGE>
TREASURY 2000 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 indices. Ten thousand dollars invested on
January 1, 1988 would have the following value as of December 31, 1998.
Treasury 2000 Fund1 ..............................$25,818
Lipper Average2 ...................................26,982
Lehman Brothers Intermediate Treasury Bond Index...22,241
Consumer Price Index ..............................13,614
- --------------------------------------------------------------------------------
Average Annual Total Return Through December 31, 1998
- --------------------------------------------------------------------------------
One Three Five Ten
Year Years Years Years
- --------------------------------- ---------- ----------- ----------- -----------
Treasury 2000 Fund3 7.52% 5.47% 5.68% 9.95%
Lipper Average2 10.43% 7.01% 7.80% 10.44%
Lehman Brothers Intermediate
Treasury Bond Index 8.62% 6.22% 6.13% 8.32%
Consumer Price Index 1.60% 2.27% 2.38% 3.13%
- --------------------------------- ---------- ----------- ----------- -----------
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.
3 Fund returns are calculated after mutual fund level expenses have been
subtracted, but do not include any separate account fees, charges or
expenses imposed by the variable annuity and life insurance contracts that
use the Treasury 2000 Fund, 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 1998 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 year 1998 provided exceptional returns for
investors in the "top tiers" of U.S. stocks and bonds. The nation's largest,
fast-growing companies' stocks led the U.S. stock market through most of the
year, and U.S. Treasury securities led the bond market, providing higher total
returns than most other major investment categories. The Treasury 2000 Fund's
investment approach of staying invested exclusively in U.S. Treasury Strips or
similar zero coupon securities with a maturity date of November 15, 2000,
allowed the Fund to advance generally in line with the short maturity, high
quality end of the bond market and with similar mutual funds:
USF Treasury 2000 Fund 7.5%
Lehman Intermediate Treasury Bond Index 8.6%
Lipper Intermediate U.S. Government Mutual Funds Index 8.2%
The difference between the Fund's return and that of the Lehman index was
attributable to the nearer-term maturity date of the Fund's investments relative
to the approximately three year average duration of the bonds in the index, and
to the approximately .46% return reduction caused by the expenses of operating
the Fund. Market indexes are not actual investment alternatives and bear no
operating expenses.
The Lipper Intermediate U.S. Government Index Fund's return differed from that
of the Ultra Series Treasury 2000 Fund due to the Fund's shorter term to
maturity, and because the Lipper Index represents funds that invest not only in
U.S. Treasury securities, but also securities issued by U.S. government
agencies, many of which are not backed by the full faith and credit of the U.S.
Treasury, but all of which are still of very high quality.
Between now and the November 15, 2000 maturity date, the Fund's returns will
modestly reflect changes in market interest rates, but will be impacted
primarily by the appreciation of the Fund's investment securities to their face
value at maturity. A fund share purchased on December 31, 1998, and held to the
November 15, 2000 maturity date of the Fund would provide a yield to maturity of
5.22%.
Because this Fund is now very close to its scheduled maturity date, many of the
Fund's original investors have probably realized most of the benefits originally
sought with this investment. In most cases, another of the Ultra Series Funds
may serve the investors' ongoing investment needs as well as or better than the
Treasury 2000 Fund. For instance, investors seeking price stability and money
market-type returns would be well served with the Money Market Fund. Investors
seeking somewhat higher returns and able to bear some variability in the market
values of their investment might be better served with the Bond Fund. Therefore,
we anticipate closing the Treasury 2000 Fund to new investors sometime during
1999, and may liquidate the Fund pursuant to the terms described in the
prospectus on or soon after November 15, 1999. If that action is pursued, all
Treasury 2000 investors will be notified well in advance, and for any investors
who do not instruct us how to invest the proceeds of their Treasury 2000 Fund,
we will automatically transfer their Treasury 2000 balances to the Ultra Series
Money Market Fund. We encourage you to discuss these alternatives with your
representative or call the CUNA Mutual Life Insurance Company offices at
1-800-798-5500.
CIMCO Inc. Bond Portfolio Management Team
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Assets and Liabilities
December 31, 1998
Capital Growth and Money Treasury
Appreciation Income Stock Balanced Bond Market 2000
Assets: Stock Fund Fund Fund Fund Fund Fund
Investments in securities, at value,
(note 2) - see accompanying schedule
<S> <C> <C> <C> <C> <C> <C>
(cost $487,393,428) $627,766,335 $ -- $ -- $ -- $ -- $ --
(cost $635,624,559) -- 832,751,106 -- -- -- --
(cost $368,051,167) -- -- 447,739,098 -- -- --
(cost $224,862,908) -- -- -- 225,198,714 -- --
(cost $56,438,569) -- -- -- -- 56,438,569 --
(cost $1,616,561) -- -- -- -- -- 1,837,294
Receivable for investment securities 11,418,257 27,938,953 -- -- -- --
sold
Accrued interest receivable 75,548 67,218 2,168,930 3,189,911 6,147 --
Accrued dividends receivable 498,350 1,373,705 349,170 -- -- --
----------- ----------- ----------- ----------- ---------- ---------
Total assets 639,758,490 862,130,982 450,257,198 228,388,625 56,444,716 1,837,294
----------- ----------- ----------- ----------- ---------- ---------
Liabilities:
Payable for investment securities
purchased 8,975,851 28,538,208 -- -- -- --
Dividends payable -- -- -- -- 7,291 --
Accrued management fees 403,344 410,123 259,950 105,350 20,236 --
Accrued other expenses 6,229 9,029 4,906 2,125 701 1,390
----------- ----------- ----------- ----------- ---------- ---------
Total liabilities 9,385,424 28,957,360 264,856 107,475 28,228 1,390
----------- ----------- ----------- ----------- ---------- ---------
Net assets applicable to outstanding
capital stock $630,373,066 $833,173,622 $449,992,342 $228,281,150 $56,416,488 $1,835,904
=========== =========== =========== =========== ========== =========
Represented by:
Capital stock, par value $.01 $284,121 $272,644 $240,187 $215,987 $564,165 $1,849
Additional paid-in capital 489,343,817 632,012,293 372,513,172 227,655,831 55,852,323 1,613,322
Undistributed net investment income -- -- 27,494 70,041 -- --
Accumulated net realized gain (loss)
on investments 372,221 3,762,138 (2,476,442) 3,485 -- --
Unrealized appreciation (depreciation)
on investments 140,372,907 197,126,547 79,687,931 335,806 -- 220,733
----------- ----------- ----------- ----------- ---------- ----------
Total net assets - representing net assets
applicable to outstanding capital stock $630,373,066 $833,173,622 $449,992,342 $228,281,150 $56,416,488 $1,835,904
=========== =========== =========== =========== ========== ==========
Number of Class Z Shares issued and
outstanding (note 5) 28,412,098 27,264,375 24,018,663 21,598,720 56,416,488 184,870
=========== =========== =========== =========== ========== ==========
Net asset value per share of outstanding
capital stock (note 2) $22.19 $30.56 $18.74 $10.57 $1.00 $9.93
=========== =========== =========== =========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Investments in Securities
December 31, 1998
CAPITAL APPRECIATION STOCK % Net Quality Annualized
FUND INVESTMENTS: Assets Rating* Yield Shares Value
<S> <C> <C> <C> <C> <C>
Short-Term Investments:
Investment Company: 1.6%
State Street Prime Money Market 5.190 9,902,375 $9,902,375
---------
TOTAL SHORT-TERM INVESTMENTS,
AT COST $9,902,375
---------
% Net
Long-Term Investments: Assets Shares Value
Common Stocks: 98.0%
Foreign Issues: 5.7%
Elan Corp PLC - ADR*** 118,100 $8,215,331
Glaxo Wellcome PLC - ADR 49,300 3,426,350
Mutual Risk Management Ltd. 386,464 15,120,404
Telefonos de Mexico SP ADR - Cl L 191,000 9,299,313
----------
TOTAL FOREIGN ISSUES
(COST: $23,888,051) $36,061,398
----------
Domestic Issues:
Building Materials: 2.6%
Raychem Corporation 240,500 $7,771,156
The Sherwin-Williams Company*** 294,800 8,659,750
---------
16,430,906
---------
Hardware and Tools: 0.9%
Illinois Tool Works Inc. 98,300 5,701,400
---------
Machinery/Equipment: 1.6%
Pall Corporation 388,600 9,836,438
---------
Forest Products/Paper: 1.3%
Willamette Industries, Inc. 244,700 8,197,450
---------
Insurance: 2.7%
The Allstate Corporation 137,664 5,317,272
Everest Reinsurance Holdings, Inc. 298,000 11,603,374
---------
16,920,646
---------
Banks: 5.1%
Bank One Corporation 187,320 9,565,028
Bankers Trust Corporation 93,700 8,005,494
Citigroup Inc. 297,599 14,731,150
---------
32,301,672
---------
Investment Banking/Brokerage: 2.0%
A. G. Edwards, Inc. 249,300 9,286,425
Morgan Stanley Dean Witter and Co. 44,400 3,152,400
---------
12,438,825
---------
Drugs/Health Care: 8.0%
Aetna Inc. 162,400 12,768,700
ALZA Corporation*** 188,300 9,838,675
Bristol-Myers Squibb Company 60,300 8,068,894
Centocor, Inc.*** 229,000 10,333,625
Crescendo Pharmaceuticals Corporation*** 6,260 85,292
Pharmacia & Upjohn, Inc. 167,500 9,484,688
---------
50,579,874
---------
Hospital Management/Supplies: 1.4%
Columbia/HCA Healthcare Corporation 356,500 8,823,375
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Investments in Securities (Continued)
December 31, 1998
CAPITAL APPRECIATION STOCK % Net
FUND INVESTMENTS, CONTINUED: Assets Shares Value
<S> <C> <C> <C> <C> <C>
Retail - Discount: 2.6%
Consolidated Stores Corporation*** 181,300 $3,659,994
The TJX Companies, Inc. 428,400 12,423,600
---------
16,083,594
---------
Retail - Department: 5.8%
Dayton Hudson Corporation 464,400 25,193,700
Tiffany & Co. 222,700 11,552,562
---------
36,746,262
---------
Retail - Drug: 2.2%
Rite Aid Corporation 291,600 14,452,425
---------
Retail-Grocery: 3.4%
Safeway Inc.*** 352,500 21,480,468
---------
Media: 7.6%
Cox Communications, Inc.*** 224,000 15,484,000
MediaOne Group, Inc.*** 451,500 21,220,500
Sprint PCS Group*** 63,500 1,468,438
PRIMEDIA Inc.*** 820,600 9,642,050
---------
47,814,988
---------
Foods - Products & Service: 4.6%
Nabisco Holdings Corp. - Class A 247,700 10,279,550
Sara Lee Corporation 253,200 7,137,075
Tyson Foods, Inc. - Class A 542,700 11,532,375
---------
28,949,000
---------
Office Equipment/Computers: 12.5%
3Com Corporation*** 220,900 9,899,081
EMC Corporation*** 310,500 26,392,500
Gateway 2000, Inc.*** 216,400 11,076,975
IMS Health Incorporated 121,300 9,150,568
Seagate Technology, Inc.*** 245,400 7,423,350
Wang Laboratories, Inc.*** 526,250 14,603,438
---------
78,545,912
---------
Electronics-Semiconductors: 4.6%
Dallas Semiconductor Corporation 202,200 8,239,650
Micron Technology, Inc.*** 176,150 8,906,584
Texas Instruments Incorporated 144,300 12,346,669
---------
29,492,903
---------
Oil/Oil Service: 4.5%
Kerr-McGee Corporation 148,700 5,687,775
Unocal Corporation 212,350 6,197,965
USX-Marathon Group 347,500 10,468,438
Weatherford International, Inc.*** 293,300 5,682,688
---------
28,036,866
---------
Containers: 2.4%
Owens-Illinois, Inc.*** 500,400 15,324,750
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Investments in Securities (Continued)
December 31, 1998
CAPITAL APPRECIATION STOCK % Net
FUND INVESTMENTS, CONTINUED: Assets Shares Value
<S> <C> <C> <C> <C> <C>
Chemicals: 4.3%
The Dexter Corporation 240,000 $7,545,000
The Dow Chemical Company 64,300 5,847,281
Praxair, Inc. 185,000 6,521,250
Rohm and Haas Company 242,700 7,311,338
---------
27,224,869
---------
Transportation: 3.1%
Delta Air Lines, Inc. 80,300 4,175,600
FDX Corporation*** 122,600 10,911,400
Midwest Express Holdings, Inc.*** 169,875 4,469,836
---------
19,556,836
---------
Telecommunications: 3.9%
AirTouch Communications, Inc.*** 343,550 24,778,544
---------
Utilities-Electric: 0.8%
CalEnergy Company, Inc*** 54,100 1,876,594
PG& E Corporation 96,050 3,025,575
---------
4,902,169
---------
Utilities-Natural Gas: 2.1%
Sonat Inc. 162,000 4,384,125
The Williams Companies, Inc. 280,900 8,760,569
---------
13,144,694
---------
Diversified Companies: 0.4%
Rockwell International Corporation 48,125 2,337,070
Tyco International Ltd. 174 13,126
---------
2,350,196
---------
Miscellaneous: 1.9%
Interim Services Inc.*** 500,000 11,687,500
---------
TOTAL DOMESTIC COMMON STOCKS,
(COST: $453,603,002) $581,802,562
-----------
TOTAL COMMON STOCKS,
(COST: $477,491,053) $617,863,960
-----------
TOTAL INVESTMENTS, CAPITAL APPRECIATION
STOCK FUND (COST: $487,393,428) $627,766,335
===========
</TABLE>
Notes to investments in securities:
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings, if applicable, (unaudited). See
the current Prospectus and Statement of Additional Information for a complete
description of these ratings.
**At December 31, 1998, the cost of securities for federal income tax purposes
was $487,433,663. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation.................................... $170,021,999
Gross unrealized depreciation................................... (29,689,327)
-----------
Net unrealized appreciation...................................... $140,332,672
===========
***This security is non-income producing.
ADR American Depositary Receipt
PLC Public Limited Company
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Investments in Securities
December 31, 1998
GROWTH AND INCOME STOCK % Net Quality Annualized
FUND INVESTMENTS: Assets Rating* Yield Shares Value
<S> <C> <C> <C> <C> <C>
Short-Term Investments:
Investment Company: 2.7%
State Street Prime Money Market 5.190 22,576,307 $22,576,307
----------
TOTAL SHORT-TERM INVESTMENTS,
AT COST $22,576,307
----------
% Net
Long-Term Investments: Assets Shares Value
Common Stocks: 97.2%
Foreign Issues: 3.2%
Glaxo Wellcome PLC - ADR 201,350 $13,993,825
Philips Electronics N.V. - ADR 191,900 12,989,231
----------
TOTAL FOREIGN ISSUES,
(COST: $18,510,658) $26,983,056
----------
Domestic Issues:
Forest Products/Paper: 4.0%
Georgia-Pacific Group 152,200 $8,913,212
Kimberly-Clark Corporation 459,400 25,037,300
----------
33,950,512
----------
Insurance: 1.8%
The Allstate Corporation 383,468 14,811,452
----------
Banks: 9.5%
BankAmerica Corporation 331,371 19,923,681
Bank One Corporation 408,540 20,861,074
Bankers Trust Corporation 143,200 12,234,650
Citigroup Inc. 267,324 13,232,538
Household International, Inc. 168,400 6,672,850
Wachovia Corporation 70,700 6,181,831
----------
79,106,624
----------
Investment Banking/Brokerage: 1.8%
A. G. Edwards, Inc. 97,350 3,626,288
Morgan Stanley Dean Witter and Co. 166,400 11,814,400
----------
15,440,688
----------
Drugs/Health Care: 10.8%
Aetna Inc. 211,000 16,589,875
American Home Products Corporation 448,300 25,244,894
Bristol-Myers Squibb Company 170,400 22,801,650
Johnson & Johnson 128,600 10,786,325
Tenet Healthcare Corporation*** 568,200 14,915,250
----------
90,337,994
----------
Retail - Department: 1.7%
Sears, Roebuck & Co. 335,100 14,241,750
----------
Retail - Discount: 2.5%
Wal-Mart Stores, Inc. 253,700 20,660,694
----------
Retail - Drug: 1.7%
CVS Corporation 259,506 14,272,830
----------
Media: 3.1%
MediaOne Group, Inc.*** 541,800 25,464,600
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Investments in Securities (Continued)
December 31, 1998
GROWTH AND INCOME STOCK % Net
FUND INVESTMENTS, CONTINUED: Assets Shares Value
<S> <C> <C> <C> <C> <C>
Foods - Products & Service: 6.3%
ConAgra, Inc. 169,000 $ 5,323,500
General Mills, Inc. 199,100 15,480,025
Nabisco Holdings Corp. - Class A 367,700 15,259,550
Sara Lee Corporation 356,000 10,034,750
Tyson Foods, Inc. - Class A 303,725 6,454,156
----------
52,551,981
----------
Beverage/Confections/Tobacco: 1.4%
PepsiCo, Inc. 285,800 11,699,938
----------
Auto-Related: 2.1%
Dana Corporation 229,685 9,388,374
General Motors Corporation 113,850 8,147,390
----------
17,535,764
----------
Office Equipment/Computers: 10.2%
Computer Associates International, Inc. 424,700 18,102,838
EMC Corporation*** 287,800 24,463,000
Hewlett-Packard Company 239,300 16,347,181
International Business Machines Corporation 139,500 25,772,625
----------
84,685,644
----------
Electronics: 5.6%
Harris Corporation 347,400 12,723,525
Motorola, Inc. 248,200 15,155,712
Texas Instruments Incorporated 222,700 19,054,768
----------
46,934,005
----------
Aerospace/Defense: 1.3%
United Technologies Corporation 100,300 10,907,625
----------
Pollution Control: 1.4%
Waste Management, Inc. 241,253 11,248,421
----------
Oil/Oil Service: 7.2%
Amoco Corporation 185,200 11,181,450
Exxon Corporation 141,200 10,325,250
Schlumberger Limited 254,900 11,757,263
Texaco Inc. 158,500 8,380,688
Unocal Corporation 271,450 7,922,946
USX-Marathon Group 355,850 10,719,981
----------
60,287,578
----------
Paper Products: 1.1%
Minnesota Mining and Manufacturing, Inc, 131,400 9,345,825
----------
Containers: 2.2%
Crown Cork & Seal Company, Inc. 364,400 11,228,075
Owens-Illinois, Inc.*** 221,300 6,777,313
----------
18,005,388
----------
Chemicals: 2.6%
The Dexter Corporation 22,600 710,487
The Dow Chemical Company 155,550 14,145,328
PPG Industries, Inc. 119,100 6,937,575
----------
21,793,390
----------
Transportation: 0.9%
Delta Air Lines, Inc. 138,900 7,222,800
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Investments in Securities (Continued)
December 31, 1998
GROWTH AND INCOME STOCK % Net
FUND INVESTMENTS, CONTINUED: Assets Shares Value
<S> <C> <C> <C> <C> <C>
Railroad Equipment: 1.8%
Burlington Northern Santa Fe Corporation 220,200 $ 7,431,750
Norfolk Southern Corporation 227,700 7,215,244
----------
14,646,994
----------
Telecommunications: 4.5%
AirTouch Communications, Inc.*** 192,900 13,912,913
Sprint Corporation 157,600 13,258,100
Tele-Communications, Inc.*** 186,500 10,315,781
----------
37,486,794
----------
Utilities-Telephone: 3.0%
Ameritech Corporation 211,900 13,429,163
GTE Corporation 179,950 11,696,750
----------
25,125,913
----------
Utilities-Electric: 2.5%
Duke Energy Corporation 113,900 7,296,719
Northern States Power Company 229,700 6,374,175
PG&E Corporation 232,300 7,317,450
----------
20,988,344
----------
Utilities-Natural Gas: 1.6%
The Williams Companies, Inc. 415,600 12,961,525
----------
Diversified Companies: 1.4%
Rockwell International Corporation 236,275 11,474,105
Tyco International Ltd. 34 2,565
----------
11,476,670
----------
TOTAL DOMESTIC ISSUES,
(COST: $594,537,594) $783,191,743
-----------
TOTAL COMMON STOCKS,
(COST: $613,048,252) $810,174,799
-----------
TOTAL INVESTMENTS, GROWTH AND INCOME
FUND, (COST: $635,624,559)** $832,751,106
===========
</TABLE>
Notes to investments in securities:
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings, if applicable, (unaudited). See
the current Prospectus and Statement of Additional Information for a complete
description of these ratings.
**At December 31, 1998, the cost of securities for federal income tax purposes
was $635,624,559. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation.................................... $228,624,275
Gross unrealized depreciation........................ ........... (31,497,728)
-----------
Net unrealized appreciation...................................... $197,126,547
===========
***This security is non-income producing.
ADR American Depositary Receipt
PLC Public Limited Company
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Investments in Securities
December 31, 1998
% Net Quality Rating Annualized Maturity
BALANCED FUND INVESTMENTS: Assets (Unaudited)* Yield Date Shares Value
Short-Term Investments:
<S> <C> <C> <C> <C> <C> <C>
Investment Company: 1.4%
State Street Prime Money Market 5.190 6,150,058 $6,150,058
----------
TOTAL SHORT-TERM INVESTMENTS,
AT COST $6,150,058
----------
% Net Quality Rating Coupon Maturity Par
U.S. Government & Agency Bonds: Assets (Unaudited)* Rate Date Amount Value
Government Notes: 6.8%
U.S. Treasury Notes AAA 5.875 Nov 30, 2001 $10,000,000 $10,334,380
U.S. Treasury Notes AAA 7.875 Nov 15, 2004 8,000,000 9,270,000
U.S. Treasury Notes AAA 4.625 Nov 30, 2000 11,000,000 11,010,318
----------
TOTAL GOVERNMENT
(COST: $30,597,908) $30,614,698
----------
Government Agencies: 6.0%
Federal Home Loan Bank Note - CPI
Floating Rate AAA 4.800 Feb 20, 2007 $5,000,000 $4,700,150
Federal Home Loan Mortgage
CMO-FHR.-1978 AD AAA 7.000 Apr 15, 2025 2,045,655 2,089,651
Federal Home Loan Bank Bond AAA 5.190 Oct 20, 2003 5,000,000 4,999,620
Federal National Mortgage Assn.-96-M6 G AAA 7.750 Sep 17, 2023 4,000,000 4,207,500
Federal National Mortgage Assn.
- I.O. Strip 272-2**** AAA 7.500 July 01, 2026 6,042,126 862,924
FNMA MBS - Pool 252104 AAA 6.500 Nov 01, 2018 4,951,467 5,008,706
FNMA MBS - Pool 252268 AAA 5.500 Dec 01, 2008 5,000,000 4,976,650
----------
TOTAL GOVERNMENT AGENCIES
(COST: $27,937,836) $26,845,201
----------
Sovereign Issues: 0.6%
Columbia, Republic BAA-3/BBB- 7.250 Feb 23, 2004 $3,000,000 $2,570,277
----------
TOTAL SOVEREIGN ISSUES
(COST: $2,962,323) $2,570,277
----------
U.S. Corporate Bonds: 25.9%
Drug/Health Care: 0.1%
Bergen Brunswig BAA-1/A- 7.250 Jun 01, 2005 $500,000 $541,417
----------
Electronics: 0.1%
Texas Instruments, Inc. A-3/A 9.000 Mar 15, 2001 500,000 539,024
----------
Electrical/Household Appliance: 1.2%
Westinghouse Electric BAA-3/BBB- 6.875 Sep 01, 2003 5,400,000 5,566,428
----------
Telecommunications: 1.3%
Cable & Wireless BAA-1/A- 6.750 Dec 01, 2008 3,000,000 3,043,524
Sprint Spectrum, Step Coupon (A) BAA-3/A- 12.500 Aug 15, 2006 3,000,000 2,715,000
----------
5,758,524
----------
Forest Products/Paper: 2.2%
Champion International Corp. BAA-1/BBB 6.400 Feb 15, 2026 5,000,000 5,022,200
International Paper A-3/BBB+ 7.500 May 15, 2004 2,800,000 2,968,478
Kimberly Clark Corp. AA-2/AA 9.000 Aug 01, 2000 750,000 795,485
Weyerhaeuser Company A-2/A 8.375 Feb 15, 2007 800,000 921,030
----------
9,707,193
----------
Hospital Supplies: 0.7%
Columbia/HCA Healthcare Corporation BA-2-2/BBB 6.125 Dec 15, 2000 1,000,000 979,889
Columbia/HCA Healthcare Corporation BA-2-2/BBB 8.020 Aug 05, 2002 2,000,000 2,038,014
----------
3,017,903
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Investments in Securities (Continued)
December 31, 1998
BALANCED FUND INVESTMENTS, % Net Quality Rating Coupon Maturity Par
CONTINUED: Assets (Unaudited)* Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
Insurance/Casualty: 1.8%
Aetna Services, Inc. A-3/A 6.970 Aug 15, 2036 $4,800,000 $5,098,190
Equitable Life Assoc. 144A, (B) A-2/A 6.950 Dec 01, 2005 3,000,000 3,177,501
----------
8,275,691
----------
Investment Banking/Brokerage: 1.1%
Goldman Sachs LP 144A, MTN (B) A+ 6.250 Feb 01, 2003 4,800,000 4,840,781
----------
Finance Co. 3.6%
Chrysler Financial A-3 5.690 Nov 15, 2001 5,000,000 5,044,300
Ford Motor Company A-1/A 7.500 Nov 15, 1999 500,000 509,242
Hertz Corporation A-3/BBB+ 7.000 Apr 15, 2001 5,000,000 5,143,890
Norwest Financial Inc. AA-3/A+ 7.875 Feb 15, 2002 500,000 533,696
PHH Corp Mortgage A-2 7.020 Nov 09, 2001 5,000,000 5,056,115
----------
16,287,243
----------
Aerospace/Defense: 2.3%
Lockheed Martin Corp. A-3/BBB+ 6.500 Apr 15, 2003 5,000,000 5,192,510
Raytheon Co. 144A, (B) BAA-1/BBB 6.000 Dec 15,2010 5,000,000 5,006,340
----------
10,198,850
----------
Asset-backed: 5.7%
Citibank Credit Card Master Trust I,
Series 1998-6, Class A, ABS AAA/AAA 5.850 Apr 10, 2003 4,800,000 4,850,712
Deutsche Mortgage and Asset Receiving
Corp., 1998, Class C, CMO A-2 6.861 Mar 15, 2008 5,000,000 5,052,975
First Union Corp A-2/A- 8.125 Jun 24, 2002 5,000,000 5,391,495
GMAC Commerical Mortgage BAA-1/BBB 7.730 Oct 15, 2028 5,204,500 5,397,301
Residential Funding Mortgage
Securities II, 1998-HI2, (C) AAA/AAA 6.290 July 25, 2013 4,800,000 4,830,984
----------
25,523,467
----------
Publishing-News: 0.1%
Knight Ridder, Inc. A-3/A 8.500 Sep 01, 2001 375,000 392,295
----------
Office Equipment/Computers: 1.1%
Computer Associates BAA-1/A- 6.375 Apr 15, 2005 5,000,000 4,985,590
----------
Engineering/Construction Services: 0.2%
Foster Wheeler Corp. BAA-3/BBB 6.750 Nov 15, 2005 1,020,000 952,738
----------
Machinery/Tools: 0.5%
Cummins Engine BAA-1/BBB+ 6.750 Feb 15, 2027 1,500,000 1,511,010
Giddings & Lewis BA1 7.500 Oct 01, 2005 500,000 544,842
----------
2,055,852
----------
Oil/Oil Service: 0.2%
Enron Corp. BAA-2/BBB+ 7.625 Sep 10, 2004 500,000 536,073
Mobil Corporation AA-2/AA 8.375 Feb 12, 2001 500,000 532,378
----------
1,068,451
----------
Chemicals: 1.0%
Monsanto Co. 144A, (B) A-2/A 5.375 Dec 01, 2001 4,000,000 3,986,808
Union Carbide Corporation BAA-2/BBB 6.790 Jun 01, 2025 700,000 713,366
----------
4,700,174
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Investments in Securities (Continued)
December 31, 1998
BALANCED FUND INVESTMENTS, % Net Quality Rating Coupon Maturity Par
CONTINUED: Assets (Unaudited)* Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
Transportation: 1.6%
American Airlines A-2/BBB 8.040 Sep 16, 2011 $1,000,000 $1,074,925
Burlington Northern Inc. BAA-2/BBB+ 7.400 May 15, 1999 500,000 503,697
Delta Air Lines BAA-1/BBB 8.540 Jan 02, 2007 1,408,928 1,549,371
Federal Express A-3/BBB+ 7.850 Jan 30, 2015 960,681 1,030,479
Federal Express A-3/BBB+ 7.890 Sep 23, 2008 474,965 508,201
Golden State Petroleum Transport
Corp. 144A, (B) AA-2 8.040 Feb 01, 2019 2,000,000 1,938,654
United Airlines BAA-1/BBB 9.020 Apr 19, 2012 451,888 515,064
----------
7,120,391
----------
Utilities-Electric: 0.1%
Midwest Power Systems A-2/AA- 7.125 Feb 01, 2003 250,000 265,562
Pacific Gas & Electric Co. A-1/AA- 6.250 Aug 01, 2003 300,000 312,241
----------
577,803
----------
Utilities-Natural Gas Pipeline: 0.6%
Transcontinental Gas A-2/BBB 6.125 Jan 15, 2005 2,800,000 2,826,754
----------
Metals/Copper: 0.3%
MAGMA Copper Co. A-2 8.700 May 15, 2005 1,400,000 1,510,694
----------
Diversified Companies: 0.1%
Whitman Corporation BAA-2/BBB+ 7.500 Feb 01, 2003 300,000 319,455
----------
TOTAL U.S. CORPORATE BONDS,
(COST: $115,646,177) $116,766,718
-----------
Non-U.S. Corporate Bonds: 1.7%
Shell Canada, Ltd. AA-2/AA 8.875 Jan 14, 2001 $ 500,000 $ 538,535
Petro Geoservices 144A, (B) BBB 6.250 Nov 19 2003 7,000,000 6,976,109
----------
TOTAL NON-U.S. CORPORATE BONDS,
(COST: $7,473,945) $7,514,644
----------
% Net
Assets Shares Value
Common Stocks: 57.5%
Foreign Issues: 1.8%
Glaxo Wellcome PLC - ADR 46,150 $3,207,425
Philips Electronics N.V. - ADR 42,200 2,856,413
Telefonos de Mexico SP ADR - Cl L 39,000 1,898,812
----------
TOTAL FOREIGN ISSUES,
(COST: $5,513,281) 7,962,650
----------
Domestic Issues:
Building Materials: 0.5%
Raychem Corporation 72,300 $2,336,194
----------
Machinery/Equipment: 0.7%
Pall Corporation 115,000 2,910,938
----------
Forest Products/Paper: 1.9%
Kimberly-Clark Corporation 107,500 5,858,750
Willamette Industries, Inc. 80,300 2,690,050
----------
8,548,800
----------
Insurance: 1.4%
The Allstate Corporation 95,614 3,693,090
Everest Reinsurance Holdings, Inc. 60,600 2,359,613
----------
6,052,703
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Investments in Securities (Continued)
December 31, 1998
BALANCED FUND INVESTMENTS, % Net
CONTINUED: Assets Shares Value
<S> <C> <C> <C> <C> <C> <C>
Banks: 4.0%
Bank One Corporation 92,290 $ 4,712,558
BankAmerica Corporation 99,798 6,000,355
Bankers Trust Corporation 38,200 3,263,712
Citigroup Inc. 78,086 3,865,257
----------
17,841,882
----------
Investment Banking/Brokerage: 1.3%
A. G. Edwards, Inc. $65,900 $2,454,775
Morgan Stanley Dean Witter and Co. 49,100 3,486,100
----------
5,940,875
----------
Drugs/Health Care: 5.6%
Aetna Inc. 64,300 5,055,588
American Home Products Corporation 130,200 7,331,888
Bristol-Myers Squibb Company 45,000 6,021,562
Centocor, Inc.*** 60,800 2,743,600
Pharmacia & Upjohn, Inc. 71,800 4,065,675
----------
25,218,313
----------
Hospital Management/Supplies: 0.7%
Columbia/HCA Healthcare Corporation 119,950 2,968,762
----------
Retail-Department: 3.2%
Dayton Hudson Corporation 120,800 6,553,400
Sears, Roebuck & Co. 71,200 3,026,000
Tiffany & Co. 90,300 4,684,313
----------
14,263,713
----------
Retail - Discount: 0.9%
Wal-Mart Stores, Inc. 48,800 3,974,150
----------
Retail - Drug: 0.9%
CVS Corporation 74,252 4,083,860
----------
Retail - Grocery: 1.0%
Safeway Inc.*** 72,600 4,424,063
----------
Media: 3.3%
Cox Communications, Inc.*** 66,700 4,610,638
MediaOne Group, Inc.*** 159,100 7,477,700
PRIMEDIA Inc.*** 215,200 2,528,600
----------
14,616,938
----------
Foods - Products & Services: 3.0%
General Mills, Inc. 38,400 2,985,600
Nabisco Holdings Corp. - Class A 115,700 4,801,550
Sara Lee Corporation 100,800 2,841,300
Tyson Foods, Inc. - Class A 141,125 2,998,906
----------
13,627,356
----------
Auto-Related: 0.4%
General Motors Corporation 27,300 1,953,656
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Investments in Securities (Continued)
December 31, 1998
BALANCED FUND INVESTMENTS, % Net
CONTINUED: Assets Shares Value
<S> <C> <C> <C> <C> <C> <C>
Office Equipment/Computers: 8.5%
3Com Corporation*** 96,000 $ 4,302,000
EMC Corporation*** 127,800 10,863,000
Gateway 2000, Inc.*** 65,100 3,332,306
Hewlett-Packard Company 52,500 3,586,406
IMS Health Incorporated 34,600 2,610,138
International Business Machines
Corporation 36,800 6,798,800
Seagate Technology, Inc.*** 103,300 3,124,825
Wang Laboratories, Inc. *** 122,700 3,404,925
----------
38,022,400
----------
Electronics: 2.5%
Micron Technology, Inc.*** 73,550 3,718,872
Motorola, Inc. 56,700 3,462,244
Texas Instruments Incorporated 48,300 4,132,668
----------
11,313,784
----------
Pollution Control: 0.6%
Waste Management, Inc. 54,127 2,523,671
----------
Oil/Oil Service: 3.6%
Amoco Corporation 45,300 2,734,988
Exxon Corporation 37,200 2,720,250
Kerr-McGee Corporation 55,100 2,107,575
Schlumberger Limited 68,600 3,164,175
Unocal Corporation 86,200 2,515,962
USX-Marathon Group 95,200 2,867,900
----------
16,110,850
----------
Containers: 1.2%
Crown Cork & Seal Company, Inc. 54,500 1,679,281
Owens-Illinois, Inc.*** 125,800 3,852,625
----------
5,531,906
----------
Chemicals: 1.8%
The Dow Chemical Company 36,200 3,291,938
Praxair, Inc. 59,900 2,111,475
Rohm and Haas Company 86,900 2,617,862
----------
8,021,275
----------
Transportation: 1.3%
Delta Air Lines, Inc. 44,400 2,308,800
FDX Corporation*** 39,700 3,533,300
----------
5,842,100
----------
Railroad Equipment: 0.5%
Norfolk Southern Corporation 66,800 2,116,725
----------
Aerospace/Defense: 0.7%
United Technologies Corporation 29,000 3,153,750
----------
Telecommunications: 1.5%
AirTouch Communications, Inc.*** 95,850 6,913,181
----------
Utilities-Telephone: 2.1%
Ameritech Corporation 53,000 3,358,875
Bell Atlantic Corporation 50,000 2,650,000
GTE Corporation 50,900 3,308,500
----------
9,317,375
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Investments in Securities (Continued)
December 31, 1998
BALANCED FUND INVESTMENTS, % Net
CONTINUED: Assets Shares Value
<S> <C> <C> <C> <C> <C> <C>
Utilities-Electric: 0.8%
Northern States Power Company 58,200 $1,615,050
PG&E Corporation 64,350 2,027,025
----------
3,642,075
----------
Utilities-Natural Gas: 0.8%
The Williams Companies, Inc. 113,500 3,539,781
----------
Diversified Companies: 0.6%
Rockwell International Corporation 59,000 2,865,188
----------
Miscellaneous: 0.4%
Interim Services Inc.*** $70,100 $1,638,588
----------
TOTAL DOMESTIC COMMON STOCKS,
(COST: $171,769,639) $249,314,852
-----------
TOTAL COMMON STOCKS,
(COST: $177,282,920) $257,277,502
-----------
TOTAL INVESTMENTS, BALANCED FUND
(COST: $368,051,167) $447,739,098
===========
</TABLE>
Notes to investments in securities:
Values of investment securities are determined as described in Note 2 of the
financial statements.
*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, 1998, the cost of securities for federal income tax
purposes was $368,051,167. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation..................................... $90,121,578
Gross unrealized depreciation.....................................(10,433,647)
----------
Net unrealized appreciation....................................... $79,687,931
==========
***This security is non-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.
(A) Represents a security that remains zero coupon until a predetermined date,
at which the stated coupon rate becomes the effective rate.
(B) Restricted security sold within the terms of a private placement memorandum
exempt from registration under section 144A of the Securities Act of 1933,
as amended, and maybe sold only to dealers in that program or other
"qualified institutional investors." On December 31, 1998, the total market
value of these investments was $25,926,193 or 5.8% of total net assets.
(C) Represents a security whose interest rate increases at predetermined dates.
The rate disclosed is the rate currently in effect.
ABS Asset Backed Security
ADR American Depositary Receipt
CMO Collateralized Mortgage Obligation
CPI Consumer Price Index
IO Interest Only
MTN Medium Term Note
PLC Pubic Limited Company
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Investments in Securities
December 31, 1998
% Net Quality Rating Annualized Maturity
BOND FUND INVESTMENTS: Assets (Unaudited)* Yield Date Shares Value
Short-Term Investments:
<S> <C> <C> <C> <C> <C> <C>
Investment Company: 2.0%
State Street Prime Money Market 5.190 4,553,516 $4,553,516
---------
TOTAL SHORT-TERM INVESTMENTS,
AT COST $4,553,516
---------
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
U.S. Government & Agency Bonds: 32.4%
Government Notes: 13.8%
U.S. Treasury Note AAA 7.625 Feb 15, 2007 $ 5,000,000 $ 5,414,065
U.S. Treasury Note AAA 6.625 Jul 31, 2001 10,000,000 10,478,130
U.S. Treasury Note AAA 5.750 Apr 30, 2003 15,500,000 15,514,539
----------
TOTAL GOVERNMENT NOTES,
(COST: $ 31,431,650) $31,406,734
----------
Government Agencies: 18.6%
Federal Home Loan Bank Note
- CPI Floating Rate AAA 4.800 Feb 20, 2007 $2,000,000 $1,880,060
Federal Home Loan Bank Note AAA 5.125 Sep 15, 2003 5,000,000 4,994,175
Federal Home Loan Mortgage Corp.
CMO - 1978 AD AAA 7.000 Apr 15, 2025 1,000,000 1,021,507
FHLMC (Gold) - Pool D92482 AAA 7.000 Aug 01, 2018 2,086,236 2,132,551
FHLMC (Gold) - Pool D92564 AAA 7.000 Oct 01, 2018 2,894,570 2,958,829
FHLMC (Gold) - Pool E00574 AAA 6.500 Oct 01, 2013 4,681,724 4,759,300
Federal National Mortgage Association
96-M6 G AAA 7.750 Sep 17, 2023 1,000,000 1,051,875
Federal National Mortgage Association
- I.O. Strip 272-2*** AAA 7.500 Jul 01, 2026 6,042,126 862,924
FNMA MBS - Pool 252104 AAA 6.500 Nov 01, 2018 4,649,047 4,702,790
FNMA MBS - Pool 252099 AAA 7.000 Nov 01, 2013 9,728,649 9,952,700
FNMA MBS - Pool 252268 AAA 5.500 Dec 01, 2008 5,000,000 4,976,650
Federal National Mortgage Association,MTN AAA 5.900 Jul 09, 2003 3,000,000 3,054,532
----------
TOTAL GOVERNMENT AGENCIES
(COST: $42,843,571) $42,347,893
----------
Non-U.S. Government Bonds: 1.3%
Canadian Provincials: 0.5%
Nova Scotia, Province of A-3/A- 9.735 Jul 15, 2002 $1,000,000 $1,128,110
---------
Sovereign Issues: 0.8%
Columbia, Republic BAA-3/BBB- 7.250 Feb 23, 2004 2,000,000 1,713,518
---------
TOTAL NON - U.S. GOVERNMENT BONDS,
(COST: $3,022,711) $2,841,628
---------
U.S. Corporate Bonds: 60.0%
Forest Products/Paper: 3.4%
Boise Cascade Corp. BAA-3/BB+ 9.450 Nov 01, 2009 $ 500,000 $ 566,285
Boise Cascade Corp. BAA-3/BB+ 9.875 Feb 15, 2001 500,000 501,512
Champion International Corp. BAA-1/BBB 6.400 Feb 15, 2026 5,000,000 5,022,200
Chesapeake Corp. BAA-3/BBB 7.200 Mar 15, 2005 1,000,000 1,062,224
Kimberly-Clark Corp. AA-2/AA 9.000 Aug 01, 2000 600,000 636,388
----------
7,788,609
----------
Investment Banking/Brokerage: 4.8%
Goldman Sachs LP 144A, MTN (B) A+ 6.250 Feb 01, 2003 4,800,000 4,840,780
Paine Webber BAA-1 6.585 Jul 23, 2001 1,000,000 1,007,157
Salomon Inc. AA-3/A 7.200 Feb 01, 2004 4,800,000 5,048,002
----------
10,895,939
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Investments in Securities (Continued)
December 31, 1998
BOND FUND INVESTMENTS, % Net Quality Rating Coupon Maturity Par
CONTINUED: Assets (Unaudited)* Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
Finance Co. : 8.2%
Capital One Master Trust 1998-1 A AAA/AAA 6.310 Jun 15, 2011 $5,000,000 $5,232,390
Chrysler Financial A-3 5.690 Nov 15, 2001 5,000,000 5,044,300
Ford Motor Company A-1/A 7.500 Nov 15, 1999 1,500,000 1,527,724
Liberty Financial A-3/A 6.750 Nov 15, 2008 1,700,000 1,752,284
PHH Corp Mortgage A-2 7.020 Nov 09, 2001 5,000,000 5,056,115
----------
18,612,813
----------
Insurance: 5.3%
Aetna Services, Inc. A-3/A 6.970 Aug 15, 2036 4,800,000 5,098,190
Equitable Life Assurance 144A, (B) A-2/A 6.950 Dec 01, 2005 1,842,000 1,950,986
Prudential Insurance 144A, (B) A-2/A+ 6.375 Jul 23, 2006 5,000,000 5,156,300
----------
12,205,476
----------
Asset-Backed Securities: 10.5%
Carramerica Realty Corp. BAA-3/BBB 6.625 Oct 01, 2000 2,000,000 1,984,332
Citibank Credit Card Master Trust I,
1998-6, ABS AAA/AAA 5.850 Apr 10, 2003 4,800,000 4,850,712
Deutsche Mortgage and Asset Receiving
Corp., 1998, Class C, CMO A-2 6.861 June 15, 2031 5,000,000 5,052,975
GMAC Commerical Mortgage BAA-1/BBB 7.730 Oct 15, 2028 5,204,500 5,397,301
KIMCO Realty Corp., MTN A-3/A- 6.960 Jul 16, 2007 2,000,000 1,929,880
Residential Funding Mortgage
Securities II, 1998 HI2 (C) AAA/AAA 6.290 July 25, 2013 4,800,000 4,830,984
----------
24,046,184
----------
Hospital Management/Supplies 2.1%
Columbia/HCA Healthcare Corporation BA-2/BBB 6.125 Dec 15, 2000 1,800,000 1,763,800
Columbia/HCA Healthcare Corporation BA-2/BBB 8.020 Aug 05, 2002 3,000,000 3,057,021
----------
4,820,821
----------
Publishing-News: 0.2%
Knight Ridder A-3/A 8.500 Sep 01, 2001 397,000 415,310
----------
Packaged Food Products: 1.8%
Nabisco, Inc. BAA-2/BBB 6.700 June 15, 2002 4,000,000 4,053,984
----------
Aerospace/Defense: 4.7%
Lockheed Martin Corp. A-3/BBB+ 6.500 Apr 15, 2003 5,050,000 5,244,435
Lockheed Martin Corp. A-3/BBB+ 9.375 Oct 15, 1999 500,000 514,472
Raytheon Co. 144A, (B) BAA-1/BBB 6.000 Dec 15, 2010 5,000,000 5,006,340
----------
10,765,247
----------
Engineering/Construction Services: 1.2%
Foster Wheeler Corp. BAA-3/BBB 6.750 Nov 15, 2005 3,000,000 2,802,171
----------
Machinery/Tools: 3.4%
Cummins Engine BAA-1/BBB+ 6.750 Feb 15, 2027 5,000,000 5,036,700
Giddings & Lewis BA1 7.500 Oct 01, 2005 2,500,000 2,724,210
----------
7,760,910
----------
Oil/Oil Service: 1.3%
Enron Corp. BAA-2/BBB+ 7.625 Sep 10, 2004 1,500,000 1,608,219
Equistar Chemicals BAA-3/BBB- 10.000 Jun 01, 1999 1,250,000 1,263,675
----------
2,871,894
----------
Chemicals: 2.3%
Monsanto Co. 144A, (B) A-2/A 5.750 Dec 01, 2005 2,000,000 1,998,226
Union Carbide Corporation BAA-2/BBB 6.790 Jun 01, 2025 3,300,000 3,363,010
----------
5,361,236
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Investments in Securities (Continued)
December 31, 1998
BOND FUND INVESTMENTS, % Net Quality Rating Coupon Maturity Par
CONTINUED: Assets (Unaudited)* Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
Transportation: 5.6%
American Airlines A-2/BBB 8.040 Sep 16, 2011 $2,000,000 $2,149,850
Burlington Northern, Inc. BAA-2/BBB+ 7.400 May 15, 1999 200,000 201,479
CSX Corp BAA-2/BBB 9.000 Aug 15, 2006 1,800,000 2,122,929
Delta Air Lines BAA-1/BBB 8.540 Jan 02, 2007 278,816 306,609
Federal Express A-3/BBB+ 7.850 Jan 30, 2015 3,362,383 3,606,678
Golden State Petroleum Transport 144A,(B) BA-2 8.040 Feb 01, 2019 4,000,000 3,877,308
Southwest Airlines A-1/A 8.700 Jul 01, 2011 18,827 21,666
United Airlines BAA-1/BBB 9.020 Apr 19, 2012 451,888 515,064
----------
12,801,583
----------
Railroad Equipment: 0.2%
Union Pacific RR A-1/A- 6.540 Jul 01, 2015 418,593 424,698
----------
Utilities-Telephone: 0.7%
Carolina T&T A-2/A+ 5.750 Aug 15, 2000 1,000,000 1,006,328
GTE Corporation BAA-1/A 9.375 Dec 01, 2000 500,000 538,142
----------
1,544,470
----------
Utilities-Electric: 0.7%
Cincinnati Gas & Electric Co. A-3/A- 5.800 Feb 15, 1999 1,000,000 1,000,433
Midwest Power Systems A-2/AA- 7.125 Feb 01, 2003 150,000 159,337
Niagara Mohawk Power BA-1/BBB 9.250 Oct 01, 2001 500,000 542,675
----------
1,702,445
----------
Telecommunications: 0.9%
Cable & Wireless BAA-1/A- 6.750 Dec 01, 2008 2,000,000 2,029,016
----------
Utilities-Natural Gas Pipeline: 2.0%
El Paso Natural Gas BAA-2/BBB 9.450 Sep 01, 1999 500,000 511,822
Michigan Consolidated Gas A-2/A- 5.750 May 01, 2001 1,000,000 1,006,420
Southwestern Energy BAA-2/BBB+ 6.700 Dec 01, 2005 1,000,000 1,008,167
Transcontinental Gas A-2/BBB 6.125 Jan 15, 2005 2,000,000 2,019,110
----------
4,545,519
----------
Metals/Copper: 0.7%
MAGMA Copper Co. A-2 8.700 May 15, 2005 1,400,000 1,510,694
----------
Diversified Companies: 0.0%
Whitman Corporation BAA-2/BBB+ 7.500 Feb 01, 2003 100,000 106,485
----------
TOTAL U.S. CORPORATE BONDS,
(COST: $136,025,588) $137,065,504
-----------
Non-U.S. Corporate Bonds: 3.1%
BHP Finance, Inc. A-3/A 6.420 Mar 01, 2026 $2,000,000 $2,000,504
Petro GeoServices 144A, (B) BBB 6.250 Nov 19, 2003 5,000,000 4,982,935
-----------
TOTAL NON-U.S. CORPORATE BONDS,
(COST: $6,985,872) $6,983,439
-----------
TOTAL INVESTMENTS, BOND FUND
(COST: $224,862,908) $225,198,714
===========
</TABLE>
<PAGE>
BOND FUND
Investments in Securities (Continued)
December 31, 1998
BOND FUND INVESTMENTS, CONTINUED:
Notes to investments in securities:
Values of investment securities are determined as described in Note 2 of the
financial statements.
*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, 1998, the cost of securities for federal income tax purposes
was $224,862,908. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation..................................... $1,826,875
Gross unrealized depreciation.................................... (1,491,069)
---------
Net unrealized depreciation....................................... $335,806
=========
***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.
(B) Restricted security sold within the terms of a private placement memorandum
exempt from registration under section 144A of the Securities Act of 1933,
as amended, and maybe sold only to dealers in that program or other
"qualified institutional investors." On December 31, 1998, the total market
value of these investments was $27,812,875 or 12.2% of total net assets.
(C) Represents a security whose interest rate increases at predetermined dates.
The rate disclosed is the rate currently in effect.
ABS Asset Backed Security
CMO Collateralized Mortgage Obligation
CPI Consumer Price Index
IO Interest Only
MTN Medium Term Note
PLC Public Limited Company
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
Investments in Securities
December 31, 1998
% Net Quality Rating Annualized Maturity Par
MONEY MARKET FUND INVESTMENTS: Assets (Unaudited)* Yield Date Amount Value
Short-Term Investments:
<S> <C> <C> <C> <C> <C> <C>
Commercial Paper: 73.2%
American General Finance Corp. A-1/P-1 5.290 Jan 19, 1999 $2,000,000 $1,994,860
Associates Corp NA A-1+/P-1 5.280 Mar 01, 1999 2,500,000 2,478,981
Bell South Telecom Inc. A-1+/P-1 5.260 Jan 20, 1999 1,140,000 1,136,901
Bell South Telecom Inc. A-1+/P-1 5.490 Jan 20, 1999 635,000 633,190
Caterpillar Financial Services A-1/P-1 5.510 Jan 04, 1999 2,000,000 1,999,108
Coca-Cola Co. A-1+/P-1 5.090 Mar 23, 1999 2,100,000 2,076,611
Consolidated Natural Gas A-1+/P-1 5.250 Jan 25, 1999 1,000,000 996,580
Deere & Company A-1/P-1 5.170 Jan 26, 1999 2,000,000 1,993,014
Ford Motor Credit Company A-1/P-1 5.290 Feb 02, 1999 2,400,000 2,389,013
General Electric Capital Corporation A-1+/P-1 5.700 Jan 07, 1999 1,000,000 999,087
General Electric Capital Corporation A-1+/P-1 5.440 Jan 07, 1999 1,300,000 1,298,856
General Mills Inc A-1/P-1 5.360 Jan 04, 1999 479,000 478,790
General Motors Acceptance Corporation A-1/P-1 5.460 Jan 21, 1999 500,000 498,520
General Motors Acceptance Corporation A-1/P-1 4.880 Jun 28, 1999 2,200,000 2,148,875
Goldman Sachs Group A-1+/P-1 5.420 Feb 23, 1999 2,300,000 2,282,291
Household Finance A-1/P-1 5.170 Jan 05, 1999 1,000,000 999,440
Household Finance A-1/P-1 5.290 Jan 05, 1999 1,000,000 999,426
Lucent Technologies A-1/P-1 5.120 Jan 28, 1999 1,000,000 996,250
Lucent Technologies A-1/P-1 5.200 Feb 26, 1999 1,600,000 1,587,356
McGraw-Hill Companies A-1/P-1 5.160 Mar 24, 1999 2,400,000 2,372,557
Merrill Lynch & Co Inc A-1+/P-1 5.300 Jan 26, 1999 1,500,000 1,494,635
Merrill Lynch & Co Inc A-1+/P-1 5.150 Mar 24, 1999 1,000,000 988,611
Morgan Stanley, Dean Witter, Discover
and Co. A-1/P-1 5.300 Feb 12, 1999 2,000,000 1,987,983
Motorola Credit Corp A-1+/P-1 5.280 Jan 28, 1999 2,500,000 2,490,344
Norwest Financial A-1/P-1 5.580 Jan 12, 1999 2,000,000 1,996,712
Walt Disney Company A-1/P-1 5.050 Feb 08, 1999 2,000,000 1,989,635
----------
TOTAL COMMERCIAL PAPER,
AT COST $41,307,626
----------
Quasi-Government/Government Sponsored: 19.6%
Federal Home Loan Bank Discount Notes 4.720 Mar 17, 1999 $2,000,000 $1,980,958
Federal Home Loan Bank Discount Notes 5.000 Apr 30, 1999 2,500,000 2,459,920
Federal Home Loan Mortgage Discount Notes 4.720 Mar 12, 1999 1,500,000 1,486,671
Federal Home Loan Mortgage Discount Notes 5.130 Feb 18, 1999 1,000,000 993,320
Federal Home Loan Mortgage Discount Notes 5.150 Feb 26, 1999 1,702,000 1,688,709
Federal Farm Credit Discount Notes 5.620 Feb 25, 1999 475,000 471,132
Federal Farm Credit Discount Notes 4.900 Jun 01, 1999 1,000,000 980,160
Federal National Mortgage Association 5.080 Mar 10, 1999 1,000,000 990,650
----------
TOTAL QUASI-GOVERNMENT/GOVERNMENT
SPONSORED, AT COST $11,051,520
----------
Government Guaranteed: 5.3%
U.S. Treasury Bill 5.240 Feb 04, 1999 $3,000,000 $2,985,763
----------
Shares Value
Investment Company: 1.9%
State Street Prime Money Market 5.190 1,093,659 $1,093,660
----------
TOTAL INVESTMENTS, MONEY MARKET
FUND AT COST $56,438,569
==========
</TABLE>
Notes to investments in securities:
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
<PAGE>
<TABLE>
<CAPTION>
TREASURY 2000 FUND
Investments in Securities
December 31, 1998
% Net Interest Maturity Principal
TREASURY 2000 FUND INVESTMENTS: Assets Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
Government Guaranteed - U.S.:
U.S. Treasury Strip (Cost $1,616,561)* 100.1% 6.900 Nov 15, 2000 $2,000,000 $1,837,294
=========
</TABLE>
Notes to investments in securities:
Values of investment securities are determined as described in Note 2 of the
financial statements.
Interest rate on stripped Treasury Security represents annualized yield to
maturity at date of purchase.
*At December 31, 1998, the cost of securities for federal income tax purposes
was $1,616,561. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation....................................... $220,733
Gross unrealized depreciation.............. ....................... --
--------
Net unrealized appreciation......................................... $220,733
========
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Operations
Year Ended December 31, 1998
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>
Investment income (note 2):
Interest income $1,137,243 $1,458,228 $12,156,177 $13,419,620 $2,454,777 $114,238
Dividend income 4,810,528 11,188,272 2,572,782 -- -- --
----------- ----------- ----------- ----------- --------- --------
Total income 5,947,771 12,646,500 14,728,959 13,419,620 2,454,777 114,238
----------- ----------- ----------- ----------- --------- --------
Expenses (note 4):
Management fees 4,287,520 4,275,173 2,631,828 1,135,607 202,445 7,946
Trustees' fees 3,782 6,787 3,619 1,322 478 --
Audit fees 5,994 10,179 5,382 2,112 693 --
----------- ----------- ----------- ----------- --------- --------
Total net expenses 4,297,296 4,292,139 2,640,829 1,139,041 203,616 7,946
----------- ----------- ----------- ----------- --------- --------
Net investment incomes 1,650,475 8,354,361 12,088,130 12,280,579 2,251,161 106,292
Realized and unrealized gain (loss)
on investments (notes 2 and 3):
Realized gain (loss) on investments:
Proceeds from sale of investments and
principal pay downs (notes 2 and 3): 106,002,318 127,994,232 292,869,418 303,044,744 6,411,577 --
Cost of investments sold (90,926,633) (93,703,097) (295,345,860) (302,885,556) (6,411,577) --
----------- ----------- ----------- ----------- --------- --------
Net realized gain (loss) on investments 15,075,685 34,291,135 (2,476,442) 159,188 -- --
----------- ----------- ----------- ----------- --------- --------
Net change in unrealized appreciation
or depreciation on investments 86,357,794 73,755,119 38,583,512 (85,864) -- 21,682
----------- ----------- ----------- ----------- --------- --------
Net gain (loss) on investments 101,433,479 108,046,254 36,107,070 73,324 -- 21,682
----------- ----------- ----------- ----------- --------- --------
Net increase in net assets
resulting from operations $103,083,954 $116,400,615 $48,195,200 $12,353,903 $2,251,161 $127,974
=========== =========== =========== =========== ========= ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Changes in Net Assets
Years Ended December 31, 1998 and 1997
CAPITAL APPRECIATION GROWTH AND INCOME
STOCK FUND STOCK FUND BALANCED FUND
Operations: 1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Net investment income $1,650,475 $1,059,234 $8,354,361 $5,120,623 $12,088,130 $9,624,016
Net realized gain (loss) on
investments 15,075,685 5,517,238 34,291,135 9,499,009 (2,476,442) 3,792,615
Net change in unrealized
appreciation or depreciation
on investments 86,357,794 40,907,564 73,755,119 84,642,706 38,583,512 25,504,114
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
operations 103,083,954 47,484,036 116,400,615 99,262,338 48,195,200 38,920,745
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders:
From net investment income (1,663,199) (1,065,876) (8,355,956) (5,180,495) (12,093,642) (9,668,911)
From realized gains on
investments (14,650,506) (5,541,711) (30,527,402) (9,518,672) (19,797) (3,841,952)
Return of capital -- (43,461) -- (118,470) -- --
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
distributions (16,313,705) (6,651,048) (38,883,358) (14,817,637) (12,113,439) (13,510,863)
----------- ----------- ----------- ----------- ----------- -----------
Class Z Share transactions
(note 5):
Proceeds from sale of shares 74,042,102 311,778,406 138,687,461 260,073,329 98,736,778 80,187,804
Net asset value of shares
issued in reinvestment of
distributions 16,313,705 6,651,048 38,883,358 14,817,637 12,113,439 13,510,863
----------- ----------- ----------- ----------- ----------- -----------
90,355,807 318,429,454 177,570,819 274,890,966 110,850,217 93,698,667
Cost of shares repurchased (2,947,225) (1,742,040) (12,049,887) (2,041,007) (6,743,348) (4,029,711)
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets derived
from capital share
transactions 87,408,582 316,687,414 165,520,932 272,849,959 104,106,869 89,668,956
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets 174,178,831 357,520,402 243,038,189 357,294,660 140,188,630 115,078,838
Net assets:
Beginning of year 456,194,235 98,673,833 590,135,433 232,840,773 309,803,712 194,724,874
----------- ----------- ----------- ----------- ----------- -----------
End of year $630,373,066 $456,194,235 $833,173,622 $590,135,433 $449,992,342 $309,803,712
=========== =========== =========== =========== =========== ===========
Undistributed net investment
income included in net assets -- -- -- -- $27,494 $ 49,986
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Changes in Net Assets (Continued)
Years Ended December 31, 1998 and 1997
BOND FUND MONEY MARKET FUND TREASURY 2000 FUND
Operations: 1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Net investment income $12,280,579 $3,058,282 $2,251,161 $1,475,243 $106,292 $106,851
Net realized gain (loss) on
investments 159,188 22,394 -- -- -- --
Net change in unrealized
appreciation or depreciation
on investments (85,864) 326,623 -- -- 21,682 1,846
----------- ----------- ---------- ---------- ---------- ----------
Change in net assets from
operations 12,353,903 3,407,299 2,251,161 1,475,243 127,974 108,697
----------- ----------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income (12,272,877) (3,013,977) (2,251,161) (1,475,243) -- --
From realized gains on
investments (155,703) (22,394) -- -- -- --
Return of capital -- -- -- -- -- --
----------- ----------- ---------- ---------- ---------- ----------
Change in net assets from
distributions (12,428,580) (3,036,371) (2,251,161) (1,475,243) -- --
----------- ----------- ---------- ---------- ---------- ----------
Class Z Share transactions
(note 5):
Proceeds from sale of shares 30,878,732 160,361,652 45,266,763 57,328,276 7,253 7,239
Net asset value of shares
issued in reinvestment of
distributions 12,428,580 3,036,371 2,249,737 1,473,088 -- --
----------- ----------- ---------- ---------- ---------- ----------
43,307,312 163,398,023 47,516,500 58,801,364 7,253 7,239
Cost of shares repurchased (3,791,053) (1,501,306) (32,270,164) (38,642,199) -- --
----------- ----------- ---------- ---------- ---------- ----------
Change in net assets derived
from capital share
transactions 39,516,259 161,896,717 15,246,336 20,159,165 7,253 7,239
----------- ----------- ---------- ---------- ---------- ----------
Increase (decrease) in net
assets 39,441,582 162,267,645 15,246,336 20,159,165 135,227 115,936
Net assets:
Beginning of year 188,839,568 26,571,923 41,170,152 21,010,987 1,700,677 1,584,741
----------- ----------- ---------- ---------- ---------- ----------
End of year $228,281,150 $188,839,568 $56,416,488 $41,170,152 $1,835,904 $1,700,677
=========== =========== ========== ========== ========== ==========
Undistributed net investment
income included in net assets $70,041 $62,339 -- -- -- --
=========== =========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Financial Highlights
Year Ended December 31
------------------------ CAPITAL APPRECIATION STOCK FUND -----------------------
(For a share outstanding throughout the period): 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $18.85 $14.60 $12.51 $9.97 $10.00
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income 0.06 0.07 0.13 0.14 0.16
Net Realized and Unrealized Gain (Loss)
on Investments 3.87 4.52 2.55 2.91 0.37
------ ------ ------ ------ ------
Total from Investment Operations 3.93 4.59 2.68 3.05 0.53
--------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.06) (0.07) (0.13) (0.14) (0.15)
Distributions from Realized Capital Gains (0.53) (0.27) (0.46) (0.37) (0.41)
------ ------ ------ ------ ------
Total Distributions (0.59) (0.34) (0.59) (0.51) (0.56)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $22.19 $18.85 $14.60 $12.51 $9.97
===============================================================================================================================
Total Return* 20.90% 31.57% 21.44% 30.75% 5.44%
===============================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $630,373 $456,194 $98,674 $38,117 $9,449
Ratio of Expenses to Average Net Assets** 0.80% 0.82% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 0.31% 0.70% 0.96% 1.37% 1.55%
Portfolio Turnover Rate 18.67% 17.06% 49.77% 61.32% 65.81%
===============================================================================================================================
</TABLE>
*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.
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Financial Highlights
Year Ended December 31
-------------------------- GROWTH AND INCOME STOCK FUND ------------------------
(For a share outstanding throughout the period): 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $27.20 $21.32 $18.20 $15.06 $15.51
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income 0.34 0.31 0.34 0.37 0.32
Net Realized and Unrealized Gain (Loss)
on Investments 4.52 6.36 3.93 4.37 (0.04)
------ ------ ------ ------ ------
Total from Investment Operations 4.86 6.67 4.27 4.74 0.28
--------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.34) (0.32) (0.34) (0.37) (0.33)
Distributions from Realized Capital Gains (1.16) (0.47) (0.81) (1.23) (0.40)
------ ------ ------ ------ ------
Total Distributions (1.50) (0.79) (1.15) (1.60) (0.73)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $30.56 $27.20 $21.32 $18.20 $15.06
===============================================================================================================================
Total Return* 17.92% 31.42% 22.02% 31.75% 1.42%
===============================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $833,174 $590,135 $232,841 $102,138 $48,913
Ratio of Expenses to Average Net Assets** 0.60% 0.61% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 1.17% 1.39% 1.78% 2.28% 2.19%
Portfolio Turnover Rate 17.69% 20.39% 40.55% 57.80% 45.36%
===============================================================================================================================
</TABLE>
*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%, and 0.70% for 1997, 1996, 1995, and 1994,
respectively.
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Financial Highlights
Year Ended December 31
------------------------------ BALANCED FUND -----------------------------------
(For a share outstanding throughout the period): 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.02 $15.29 $14.63 $12.90 $13.70
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income 0.57 0.62 0.58 0.55 0.52
Net Realized and Unrealized Gain (Loss)
on Investments 1.72 1.93 0.98 2.29 (0.56)
------ ------ ------ ------ ------
Total from Investment Operations 2.29 2.55 1.56 2.84 (0.04)
--------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.57) (0.63) (0.58) (0.55) (0.51)
Distributions from Realized Capital Gains -- (0.19) (0.32) (0.56) (0.25)
------ ------ ------ ------ ------
Total Distributions (0.57) (0.82) (0.90) (1.11) (0.76)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $18.74 $17.02 $15.29 $14.63 $12.90
===============================================================================================================================
Total Return* 13.40% 16.87% 10.79% 22.27% (0.46)%
===============================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $449,992 $309,804 $194,725 $110,969 $67,468
Ratio of Expenses to Average Net Assets** 0.70% 0.68% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 3.20% 3.81% 3.91% 4.03% 4.00%
Portfolio Turnover Rate 78.71% 21.15% 33.48% 36.68% 28.53%
===============================================================================================================================
</TABLE>
*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%, and 0.70% for 1997, 1996, 1995, and 1994,
respectively.
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Financial Highlights
Year Ended December 31
------------------------------ BOND FUND ---------------------------------------
(For a share outstanding throughout the period): 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.54 $10.33 $10.63 $9.67 $10.58
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income 0.63 0.54 0.65 0.60 0.59
Net Realized and Unrealized Gain (Loss)
on Investments 0.02 0.20 (0.28) 0.96 (0.90)
------ ------ ------ ------ ------
Total from Investment Operations 0.65 0.74 0.37 1.56 (0.31)
--------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.62) (0.51) (0.64) (0.59) (0.59)
Distributions from Realized Capital Gains -- (0.02) (0.03) (0.01) (0.01)
------ ------ ------ ------ ------
Total Distributions (0.62) (0.53) (0.67) (0.60) (0.60)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $10.57 $10.54 $10.33 $10.63 $9.67
===============================================================================================================================
Total Return* 6.18% 7.45% 2.86% 16.37% (3.06)%
===============================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $228,281 $188,840 $26,572 $13,725 $7,867
Ratio of Expenses to Average Net Assets** 0.55% 0.56% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 5.94% 6.50% 6.25% 6.08% 6.03%
Portfolio Turnover Rate 142.98% 30.71% 25.67% 14.74% 11.97%
===============================================================================================================================
</TABLE>
*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%, and 0.70% for 1997, 1996, 1995, and 1994,
respectively.
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
Financial Highlights
Year Ended December 31
------------------------------ MONEY MARKET FUND -------------------------------
(For a share outstanding throughout the period): 1998 1997 1996 1995 1994
<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 0.05 0.03
--------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.05) (0.05) (0.05) (0.05) (0.03)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
===============================================================================================================================
Total Return* 4.61% 4.75% 5.17% 5.21% 3.34%
===============================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $56,416 $41,170 $21,011 $11,374 $7,799
Ratio of Expenses to Average Net Assets** 0.45% 0.50% 0.65% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 4.99% 5.05% 4.74% 5.17% 3.66%
===============================================================================================================================
</TABLE>
For the Money Market Fund, the "seven-day average" yield for the seven days
ended December 31, 1998, was 4.65% and the "effective" yield for that period was
4.76%.
*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%, and 0.78% for 1997, 1996, 1995, and 1994,
respectively.
<PAGE>
<TABLE>
<CAPTION>
TREASURY 2000 FUND
Financial Highlights
Year Ended December 31
------------------------------ TREASURY 2000 FUND ------------------------------
(For a share outstanding throughout the period) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.24 $8.64 $8.47 $7.00 $7.53
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income 0.58 0.58 0.58 0.58 0.53
Net Realized and Unrealized Gain (Loss)
on Investments 0.11 0.02 (0.41) 0.89 (1.06)
------ ------ ------ ------ ------
Total from Investment Operations 0.69 0.60 0.17 1.47 (0.53)
--------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income -- -- -- -- --
Distributions from Realized Capital Gains -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions -- -- -- -- --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $9.93 $9.24 $8.64 $8.47 $7.00
===============================================================================================================================
Total Return* 7.52% 6.85% 2.10% 20.99% (7.12)%
===============================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $1,836 $1,701 $1,585 $1,545 $1,272
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 6.01% 6.56% 7.03% 7.40% 7.50%
===============================================================================================================================
</TABLE>
*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.
<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. 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, 1998, no Class C Shares have been
issued.
(2) Significant Accounting Policies
(a) Valuation of Investment Securities
Portfolio securities for which market quotations are readily available
are valued at current market value. If market quotations or valuations
are not available, or if such quotations or valuations are believed to
be inaccurate, unreliable or not reflective of market value, portfolio
securities are valued according to procedures adopted by the funds'
board of trustees in good faith at fair value.
Pricing services value domestic and foreign equity securities (and
occasionally fixed-income securities) traded on a securities exchange
or Nasdaq at the last reported sale price, up to the time of valuation.
If there are no reported sales of a security on the valuation date, it
is valued at the mean between the published bid and asked prices
reported by the exchange or Nasdaq. If there are no sales and no
published bid and asked quotations for a security on the valuation date
or the security is not traded on an exchange or Nasdaq, the pricing
service may obtain market quotations directly from broker-dealers.
Fixed-income securities are valued at prices obtained from a pricing
service, when such prices are available. In circumstances where prices
are not available from the fund's pricing service, securities may be
valued using market quotations obtained from one or more dealers or a
quotation system. Short-term securities with maturities of 60 days or
less are valued at amortized cost, which approximates market value.
(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 Taxes
Each 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.
<PAGE>
For federal income tax purposes, at December 31, 1998, the Balanced
Fund had a capital loss carryover of $2,476,442 that will expire in the
year 2006 if not offset by subsequent capital gains. It is unlikely
that the Board of Trustees will authorize a distribution of any net
realized capital gains until the available capital loss carryover has
been offset or expires.
The statements of assets and liabilities, as a result of certain
book-tax differences, reflect the following reclassification
adjustments:
<TABLE>
<CAPTION>
Capital Growth and Treasury
Appreciation Income Stock Balanced 2000
Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Increase (Decrease) in undistributed net investment income $12,724 $1,595 ($16,980) ($106,292)
Increase (Decrease) in accumulated net realized
gain (loss) on investments ($12,724) ($1,595) $16,980 --
Increase additional paid-in capital -- -- -- $106,292
</TABLE>
(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, 1998, 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 $181,315,505 $276,619,830 $413,924,975 $342,207,737 $398,291,967 $ --
========== =========== =========== ========== =========== ========
Total proceeds received on security
sales and principal paydowns $100,026,853 $125,952,187 $296,571,119 $296,047,051 $385,466,018 $ --
========== =========== =========== ========== =========== ========
</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. The fees under the
agreement, 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%
Growth and Income Stock 0.60%
Balanced 0.70%
Bond 0.55%
Money Market 0.45%
Treasury 2000 0.45%
Under this unified 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 unified investment advisory fee, each fund also pays
certain expenses including trustees fees, brokerage commissions, interest
expense, audit fees, and other extraordinary expenses.
<PAGE>
All capital shares outstanding at December 31, 1998, 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, 1998,
the Fund made no direct payments to its officers and paid trustees' fees of
approximately $15,988 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, 1998 and 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> <C>
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
Shares sold, including reinvestment
of dividends 4,353,976 5,984,581 6,194,436 4,043,397 47,516,500 732
Shares repurchased (142,237) (413,009) (375,123) (353,989) (32,270,164) --
--------- --------- --------- --------- ---------- -------
Shares outstanding at December 31, 1998 28,412,098 27,264,375 24,018,663 21,598,720 56,416,488 184,870
--------- --------- --------- --------- ---------- -------
</TABLE>
<PAGE>
ULTRA SERIES FUND
Independent Auditors' Report
The Board of Trustees and Shareholders
Ultra Series Fund:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of Capital Appreciation Stock Fund,
Growth and Income Stock Fund, Balanced Fund, Bond Fund, Money Market Fund and
Treasury 2000 Fund (funds within Ultra Series Fund) as of December 31, 1998, 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 the financial highlights for each of the years in the five-year period then
ended. These financial statements and the financial highlights are the
responsibility of the funds' management. Our responsibility is to express an
opinion on these financial statements and the 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 the financial
highlights 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 are confirmed to us by the
custodian. As to securities purchased and sold but not received or delivered, we
request confirmations from brokers and, where replies are not received, we carry
out other appropriate auditing 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
Capital Appreciation Stock Fund, Growth and Income Stock Fund, Balanced Fund,
Bond Fund, Money Market Fund and Treasury 2000 Fund as of December 31, 1998, and
the results of their operations, the changes in their net assets and the
financial highlights for the periods stated in the first paragraph above, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 5, 1999
<PAGE>
ULTRA SERIES FUND
Officers and Trustees
OFFICERS
Michael S. Daubs, President
Lawrence R. Halverson, Vice President/Secretary
Michael G. Joneson, Chief Accounting Officer, Treasurer and Assistant Secretary
Robert M. Buckingham, Chief Financial Officer/Assistant Secretary
BOARD OF TRUSTEES
Gwendolyn M. Boeke
Michael S. Daubs
Alfred L. Disrud
Lawrence R. Halverson
Keith S. Noah
Thomas C. Watt
