SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [23]
and/or
Registration Statement Under the Investment Company Act of 1940 [X]
Amendment No. [27]
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Ultra Series Fund
2000 Heritage Way
Waverly, Iowa 50677
(319) 352-4090, ext. 2157
(Registrant's Exact Name, Address and Telephone Number)
Barbara L. Secor, Esq.
CUNA Mutual Life Insurance Company
2000 Heritage Way
Waverly, Iowa 50677
(Name and Address of Agent for Service)
Copy to:
Stephen E. Roth, Esq.
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D. C. 20004-2404
Approximate Date of Proposed Public Offering: [ ]
--------------------------------------------
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ X ] on May 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date)pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
ULTRA SERIES FUND
PROSPECTUS MAY 1, 1999
Money Market Fund
Treasury 2000 Fund
Bond Fund
Balanced Fund
Growth and Income Stock Fund
Capital Appreciation Stock Fund
Mid-Cap Stock Fund
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the shares in these funds, nor does the Commission
guarantee the accuracy or adequacy of the prospectus. Any statement to the
contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
THE FUND
Expenses............................................................1
Money Market Fund...................................................3
Treasury 2000 Fund..................................................5
Bond Fund...........................................................7
Balanced Fund.......................................................9
Growth and Income Stock Fund.......................................11
Capital Appreciation Stock Fund....................................13
Mid-Cap Stock Fund.................................................15
Risk vs. Return....................................................17
RISKS ASSOCIATED WITH CERTAIN HIGHER RISK SECURITIES
Foreign Securities.................................................18
Euro Conversion....................................................18
Small Capitalization Stocks........................................19
THE SHARES
Offer..............................................................19
Purchase and Redemption............................................20
Distribution.......................................................20
Dividends..........................................................21
Pricing of Fund Shares.............................................21
Taxes..............................................................22
MORE ABOUT ULTRA SERIES FUND
Portfolio Management...............................................22
Inquiries..........................................................23
Year 2000..........................................................23
Financial Highlights...............................................23
Additional information about each fund's investments is available in the
Statement of Additional Information (SAI), and the annual and semiannual reports
to shareholders. In particular, the annual reports will discuss the relevant
market conditions and investment strategies used by the portfolio manager(s)
that materially affected performance during the prior fiscal year. You may get a
copy of the most recent of these reports at no cost by calling 1-800-798-5500.
Please note that an investment in any of these funds is not a deposit in a
credit union or other financial institution and is neither insured nor endorsed
in any way by any credit union, other financial institution, or government
agency. Such an investment involves certain risks, including loss of principal,
and is not guaranteed to result in positive investment gains. These funds may
not achieve their objectives.
<PAGE>
EXPENSES
This table describes the expenses that you may pay if you buy and hold shares of
the fund.
Annual fund operating expenses are paid out of fund assets and are reflected in
the share price.
Management fees are amounts paid to the investment adviser for managing the
funds' investments and administering fund operations.
Distribution or "12b-1" fees are fees each fund pays its distributor for
distribution-related expenses.
Other expenses are trustees' fees, auditors' fees, interest on borrowings, any
taxes and extraordinary expenses.
Shareholder Fees Class C Class Z
None None
Annual Fund Operating Expenses
Management Fees Class C Class Z
Money Market Fund .45% .45%
Treasury 2000 Fund .45% .45%
Bond Fund .55% .55%
Balanced Fund .70% .70%
Growth and Income Stock Fund .60% .60%
Capital Appreciation Stock Fund .80% .80%
Mid-Cap Stock Fund 1.00% 1.00%
Distribution (12b-1) Fees .25% None
Other Expenses
Money Market Fund .01% .01%
Treasury 2000 Fund None None
Bond Fund .01% .01%
Balanced Fund .01% .01%
Growth and Income Stock Fund .01% .01%
Capital Appreciation Stock Fund .01% .01%
Mid-Cap Stock Fund .01% .01%
Total Annual Fund Operating Expenses
Money Market Fund .71% .46%
Treasury 2000 Fund .70% .45%
Bond Fund .81% .56%
Balanced Fund .96% .71%
Growth and Income Stock Fund .86% .61%
Capital Appreciation Stock Fund 1.06% .81%
*Mid-Cap Stock Fund 1.26% 1.01%
*Because the Mid-Cap Stock Fund is new, these amounts are only estimates.
<PAGE>
EXAMPLES
The examples shown below are intended to help you compare the cost of investing
in each fund with the cost of investing in other mutual funds. The examples are
based on a $10,000 initial investment in each fund over the various time periods
indicated. The examples assume: (1) 5% annual return and (2) redemption at the
end of each period.
Class Z:
Fund 1 year 3 years 5 years 10 years
Money Market $ 47 $ 148 $ 258 $ 579
Treasury 2000 46 144 252 567
Bond 57 179 313 701
Balanced 73 227 395 883
Growth and Income Stock 62 195 340 762
Capital Appreciation Stock 83 259 450 1,002
Mid-Cap Stock 103 322 558 1,236
Class C:
Fund 1 year 3 years 5 years 10 years
Money Market $ 73 $ 227 $ 395 $ 883
Treasury 2000 72 224 390 871
Bond 83 259 450 1,002
Balanced 98 306 531 1,178
Growth and Income Stock 88 274 477 1,061
Capital Appreciation Stock 108 337 585 1,294
Mid-Cap Stock 128 400 692 1,523
You should not consider the examples above as a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
<PAGE>
MONEY MARKET FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Money Market Fund seeks high current income from money market instruments
consistent with the preservation of capital and liquidity. The fund intends to
maintain a stable value of $1.00 per share.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
1. require stability of principal;
2. are seeking a mutual fund for the cash portion of an asset allocation
program;
3. need to "park" your money temporarily; or
4. consider yourself a saver rather than an investor.
You may want to invest fewer of your assets in this fund if you:
1. want federal deposit insurance;
2. are seeking an investment that is likely to outpace inflation;
3. are investing for retirement or other goals that are many years in the
future; or
4. are investing for growth or maximum current income.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
As with any money market fund, the yield paid by the fund will vary with changes
in interest rates. Generally, if interest rates rise, the market value of income
bearing securities will decline. There is a possibility that the fund's share
value could fall below $1.00, which could reduce the value of your account. An
investment in the Money Market Fund is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Money Market Fund attempts to maintain a stable price of $1.00 per share,
there is no assurance that it will be able to do so and it is possible to lose
money by investing in the fund.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Money Market Fund invests exclusively in U.S. dollar-denominated money
market securities maturing (or resetting their interest rates to market levels)
in thirteen months or less from the date of purchase. It includes securities
issued by U.S. and foreign financial institutions, corporate issuers, the U.S.
Government and its agencies and instrumentalities, municipalities, foreign
governments, and multi-national organizations such as the World Bank. At least
95% of the fund's assets must be rated in the highest short-term category (or
its unrated equivalent), and 100% of the fund's assets must be invested in
securities rated in the two highest rating categories. A more detailed
description of the types of permissible issuers and rating categories is
contained in the SAI. The fund maintains a dollar-weighted average portfolio
maturity of 90 days or less. The fund may also invest in U.S. dollar-denominated
foreign money market securities, although no more than 25% of the fund's assets
may be invested in these securities unless they are backed by a U.S. parent
financial institution.
<PAGE>
MONEY MARKET FUND PERFORMANCE
How has the Money Market Fund performed?
The following chart provides an indication of the risks of investing in the
Money Market Fund by showing the changes in the portfolio performance of the
Class Z shares from year to year over a 10-year period. The chart assumes the
reinvestment of all dividends and distributions. The figures shown do not
reflect charges deducted in connection with variable contracts.
Total Return
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
Class Z shares of the Money Market Fund. Total returns are as follows:
1989 8.39% 1994 3.34%
1990 7.53% 1995 5.21%
1991 5.36% 1996 4.72%
1992 3.05% 1997 5.01%
1993 2.86% 1998 5.00%
Best Calendar Quarter: 2Q89 2.31%
Worst Calendar Quarter: 2Q93 .60%
Please remember that past performance is no guarantee of the results the Money
Market Fund may achieve in the future. Future returns may be higher or lower
than the returns the fund achieved in the past.
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How does the performance of the Money Market Fund compare to general money
market returns?
The following table compares the performance of Class Z Shares with the
performance of the 90-day U.S. Treasury Bill, which is one measure of the
performance of the relevant market. Returns shown for the Money Market Fund are
after the deduction of fund management and operating expenses. The Treasury Bill
returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares 5.00% 4.65% 5.03%
90-day U.S. Treasury Bill 5.05% 5.10% 5.44%
<PAGE>
TREASURY 2000 FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Treasury 2000 Fund seeks to provide safety of capital and a relatively
predictable payout upon portfolio maturity.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
1. desire an assured future value of a portion of your investments at a
specified future date; or
2. prefer the very high credit quality of U. S. Treasury securities.
You may want to invest fewer of your assets in this fund if you:
1. want Federal deposit insurance;
2. are willing to assume some variability of future balance in pursuit of
higher long term returns; or
3. want an investment based on growth or maximum current income.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
Because of their substantial discount from face value, prices of Stripped
Treasury Securities are particularly sensitive to changes in interest rates. The
longer the term to maturity, the more susceptible these securities will be to a
given change in interest rates (interest rate risk).
Variable rates of inflation and economic growth, together with the fiscal and
monetary policies adopted to attempt to deal with these and other economic
problems, contribute to wide fluctuations in interest rates (and thus in the
value of fixed-rate debt obligations like these). Although more volatile,
Stripped Treasury Securities avoid reinvestment risk of interest payments at
inopportune times in the market. Avoiding this risk is an important factor in
being able to achieve a relatively predictable payout upon portfolio maturity.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Treasury 2000 Fund invests primarily in Stripped Treasury Securities.
Stripped Treasury Securities include U.S. Treasury debt obligations originally
issued as bearer bonds which have been stripped of their unmatured interest
coupons. Stripped Treasury Securities do not receive any periodic payments of
interest and are not subject to early redemption. The Stripped Treasury
Securities held by this fund mature on November 15, 2000.
Unlike most coupon-bearing bonds, Stripped Treasury Securities are sold at a
substantial discount from face value because the buyer receives only the right
to receive one future fixed payment and does not receive any rights to periodic
interest payments. While Stripped Treasury Securities insulate shareholders from
being unable to invest interest payments received at a rate as high as the yield
to maturity on the stripped security, they also prevent investing the interest
at a higher rate should interest rates rise.
In addition to Stripped Treasury Securities, this fund may invest in
coupon-bearing Treasury Notes with maturities identical to those of the Stripped
Treasury Securities held in the portfolio. The Treasury Notes may be purchased
to the extent necessary to maintain sufficient cash flow to pay the investment
adviser's fees.
On or within 12 months prior to November 15, 2000, the securities held by the
Fund will be liquidated. Once the Fund has liquidated its portfolio, additional
Stripped Treasury Securities with a portfolio maturity date selected at that
time may be purchased and the Fund may continue, with liquidation and subsequent
refunding occurring from time to time. If, at the time of the portfolio
liquidation date for this Fund, it appears not to be in the best interest of the
Fund to purchase additional Stripped Treasury Securities, the fund will
distribute its assets and cease operations.
<PAGE>
TREASURY 2000 FUND PERFORMANCE
How has the Treasury 2000 Fund performed?
The following chart provides an indication of the risks of investing in the
Treasury 2000 Fund by showing the changes in the portfolio performance of the
Class Z shares from year to year over a 10-year period. The chart assumes the
reinvestment of all dividends and distributions. The figures shown do not
reflect charges deducted in connection with variable contracts.
Total Return
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
Class Z shares of the Treasury 2000 Fund. Total returns are as follows:
1989 21.79% 1994 -7.12%
1990 7.12% 1995 20.99%
1991 20.37% 1996 2.10%
1992 8.01% 1997 6.85%
1993 15.43% 1998 7.52%
Best Calendar Quarter: 2Q89 15.51%
Worst Calendar Quarter: 1Q94 -5.03%
Please remember that past performance is no guarantee of the results the
Treasury 2000 Fund may achieve in the future. Future returns may be higher or
lower than the returns the fund achieved in the past.
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How does the performance of the Treasury 2000 Fund compare to the short-term
U.S. Treasury Note market?
The following table compares the performance of the Class Z Shares with the
performance of the Lehman Brothers Intermediate Treasury Bond Index, which is
one measure of the performance of the relevant market. Returns shown for the
Treasury 2000 Fund are after the deduction of fund management and operating
expenses. The Lehman Index returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares 7.52% 5.68% 9.95%
Lehman Index 8.62% 6.13% 8.32%
<PAGE>
BOND FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Bond Fund seeks to generate a high level of current income, consistent with
the prudent limitation of investment risk, primarily through investment in a
diversified portfolio of income bearing debt securities.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
1. seek an investment based on a regular stream of income;
2. seek higher potential returns than money market funds and are willing
to accept moderate risk of volatility;
3. want to diversify your investments;
4. seek a mutual fund for the income portion of an asset allocation
program; or
5. are retired or nearing retirement.
You may want to invest fewer of your assets in this fund if you:
1. invest for maximum return over a long time horizon; or
2. need absolute stability of your principal.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
As with most income funds, the Bond Fund is subject to interest rate risk, the
risk that the value of your investment will fluctuate with changes in interest
rates. Typically, a rise in interest rates causes a decline in the market value
of income bearing securities. Other factors may affect the market price and
yield of the fund's securities, including investor demand and domestic and
worldwide economic conditions. Loss of money is a risk of investing in this
fund.
In addition, the fund is subject to credit risk, the risk that issuers of debt
securities may be unable to meet their interest or principal payment obligations
when due. The ability of the fund to realize interest under repurchase
agreements and pursuant to loans of the fund's securities is dependent on the
ability of the seller or borrower, as the case may be, to perform its obligation
to the fund. There is also prepayment/extension risk, which is the chance that a
rise or fall in interest rates will reduce/extend the life of a mortgage-backed
security by increasing/decreasing mortgage prepayments, reducing the return in
either case.
To the extent that the fund invests in non-investment grade securities, the fund
is also subject to above-average credit, market and other risks. Issuers of
non-investment grade securities (i.e., "junk" bonds) are typically in weak
financial health and their ability to pay interest and principal is uncertain.
Compared to issuers of investment-grade bonds, they are more likely to encounter
financial difficulties and to be materially affected by these difficulties when
they do encounter them.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
To keep current income relatively stable and to limit share price volatility,
the Bond Fund emphasizes investment grade securities and maintains an
intermediate (typically 3-6 year) average portfolio duration. Under normal
circumstances, the fund invests at least 80% of its assets in:
1. Corporate debt securities: securities issued by domestic and foreign
corporations;
2. U.S. government debt securities: securities issued or guaranteed by
the U.S. government or its agencies or
instrumentalities; and
3. Foreign government debt securities: securities issued or guaranteed by
a foreign government or its agencies or instrumentalities, payable in
U.S. dollars.
To the extent permitted by law and available in the market, the fund may also
invest in asset-backed and mortgage-backed securities, including those
representing mortgage, commercial or consumer loans originated by credit unions.
<PAGE>
BOND FUND PERFORMANCE
How has the Bond Fund performed?
The following chart provides an indication of the risks of investing in the Bond
Fund by showing the changes in the portfolio performance of the Class Z shares
from year to year over a 10-year period. The chart assumes the reinvestment of
all dividends and distributions. The figures shown do not reflect charges
deducted in connection with variable contracts.
Total Return
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
Class Z shares of the Bond Fund. Total returns are as follows:
1989 11.74% 1994 -3.06%
1990 7.41% 1995 16.37%
1991 14.70% 1996 2.86%
1992 6.47% 1997 7.45%
1993 8.87% 1998 6.18%
Best Calendar Quarter: 2Q89 5.94%
Worst Calendar Quarter: 1Q94 -2.50%
Please remember that past performance is no guarantee of the results the Bond
Fund may achieve in the future. Future returns may be higher or lower than the
returns the fund achieved in the past.
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How does the performance of the Bond Fund compare to the bond market?
The following table compares the performance of the Class Z Shares with the
performance of the Lehman Brothers Intermediate Government/Corporate Bond Index
which is one measure of the performance of the relevant market. Returns shown
for the Bond Fund are after the deduction of fund management and operating
expenses. The Lehman Index returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares 6.18% 5.77% 7.77%
Lehman Index 8.42% 6.59% 8.51%
<PAGE>
BALANCED FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Balanced Fund seeks a high total return through the combination of income
and capital appreciation.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
1. are looking for a more conservative option to a growth-oriented fund;
2. want a well-diversified and relatively stable investment allocation;
3. need a core investment;
4. seek a reasonable total return over the long term irrespective of its
form (i.e., capital gains or ordinary income); or
5. are retired or nearing retirement.
You may want to invest fewer of your assets in this fund if you:
1. are investing for maximum return over a long time horizon;
2. want your return to be either ordinary income or capital gains, but
not both; or
3. require a high degree of stability of your principal.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
The risks of this fund are similar to the risks described for the Bond, Money
Market, Growth and Income Stock and Capital Appreciation Stock Funds because it
invests in the same types of securities. As with any fund that invests in stocks
and bonds, the fund is subject to market and interest rate risks, the risks that
the value of your investment will fluctuate in response to stock and bond market
movements and changes in interest rates.
Generally, if interest rates rise, the market value of income bearing securities
(including bonds) will decline. There is also the risk that the issuer will not
pay its debts. If payments on an income bearing security are not paid when due,
it may cause the net asset value of the fund to go down.
Because different stocks and bonds move in and out of favor depending on market
conditions, investor sentiment and a myriad of other issues, the fund may
sometimes outperform funds with a different investment objective and sometimes
underperform them. Loss of money is a risk of investing in this fund.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Balanced Fund invests in a broadly diversified array of securities including
common stocks, bonds and money market instruments. The fund employs regular
rebalancing to maintain a relatively static asset allocation. Stock, bond and
cash components will vary, however, reflecting the relative availability of
attractively priced stocks and bonds. Generally, however, common stocks will
constitute 60% to 40% of the fund's assets, bonds will constitute 40% to 60% of
the fund's assets and money market instruments may constitute up to 20% of the
fund's assets. The Balanced Fund will invest primarily in the same types of
equity securities in which the Capital Appreciation Stock and Growth and Income
Stock Funds invest, the same types of bonds in which the Bond Fund invests, and
the same types of money market instruments in which the Money Market Fund
invests.
The fund may invest up to 25% of its assets in foreign securities.
The fund typically sells a stock when the fundamental expectations for buying it
no longer apply, the price exceeds its perceived value or other stocks appear
more attractively priced relative to their values.
<PAGE>
BALANCED FUND PERFORMANCE
How has the Balanced Fund performed?
The following chart provides an indication of the risks of investing in the
Balanced Fund by showing the changes in the portfolio performance of the Class Z
shares from year to year over a 10-year period. The chart assumes the
reinvestment of all dividends and distributions. The figures shown do not
reflect charges deducted in connection with variable contracts.
Total Return
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
Class Z shares of the Balanced Fund. Total returns are as follows:
1989 18.03% 1994 -.46%
1990 3.75% 1995 22.27%
1991 18.53% 1996 10.79%
1992 6.85% 1997 16.87%
1993 10.47% 1998 13.40%
Best Calendar Quarter: 4Q98 11.43%
Worst Calendar Quarter: 3Q90 -5.69%
Please remember that past performance is no guarantee of the results the
Balanced Fund may achieve in the future. Future returns may be higher or lower
than the returns the fund achieved in the past.
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How does the performance of the Balanced Fund compare to the balanced market?
The following table compares the performance of the Class Z Shares with the
performance of the Blended Index* and each of the components of the Blended
Index, which is one measure of the performance of the relevant market. Returns
shown for the Balanced Fund are after the deduction of fund management and
operating expenses. The Blended Index returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares 13.40% 12.31% 11.84%
Blended Index* 17.26% 14.17% 12.94%
S&P 500 Stock Index 28.60% 24.05% 19.18%
Lehman Index 8.42% 6.59% 8.51%
90-day U.S. Treasury Bills 4.98% 5.09% 5.43%
*The blended index is a composition of the S&P 500 (Capitalization-weighted)
Stock Index (45%), the Lehman Brothers Intermediate Government/Corporate Bond
Index (40%), and 90-day U.S. Treasury Bills (15%).
<PAGE>
GROWTH AND INCOME STOCK FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Growth and Income Stock Fund seeks long-term capital growth, with income as
a secondary consideration.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
1. are looking for a stock fund that has both growth and income
components;
2. are looking for a more conservative option to a growth-oriented fund;
3. need a core investment;
4. seek above-average long-term total return through a combination of
capital gains and ordinary income; or
5. are retired or nearing retirement.
You may want to invest fewer of your assets in this fund if you:
1. are investing for maximum return over a long time horizon;
2. desire your return to be either ordinary income or capital gains, but
not both; or
3. require a high degree of stability of your principal.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
Any fund that invests in stocks and seeks income is subject to market and
interest rate risks, meaning the value of your investment will fluctuate when
the stock market and interest rates move. Loss of money is a risk of investing
in this fund.
In addition, a "value" approach to investing includes the risks that: 1. the
securities markets will not recognize the value of a security for an
unexpectedly long period of time; and 2. a stock that is believed to be
undervalued actually is appropriately priced or over-priced due to unanticipated
problems associated with the issuer or industry.
The fund may carry additional risks relating to foreign securities. The
principal risks of foreign securities are described later in this prospectus and
in the SAI.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Growth and Income Fund will focus on stocks of larger companies with
financial and market strengths and a long-term record of financial performance.
Under normal market conditions, the fund will maintain at least 80% of its
assets in these stocks. Primarily through ownership of a diversified portfolio
of common stocks and securities convertible into common stocks, the fund will
seek a rate of return in excess of returns typically available from less
variable investment alternatives. The fund generally follows what is known as a
"value" approach, which generally means that the managers seek to invest in
stocks at prices below their estimated value based on fundamental analysis of
the issuing company and its prospects. By investing in value stocks, the fund
attempts to limit the downside risk over time but may also produce smaller gains
than other stock funds if their values are not realized by the market.
The fund will typically invest in securities representing every sector of the
S&P 500 in about (+/-50%) the same weightings as such sector has in the S&P 500.
For example, if technology companies represent 10% of the S&P 500, the fund will
typically have between 5% and 15% of its assets invested in securities issued by
technology companies.
The fund may also invest in warrants, preferred stocks and debt securities
(including non-investment grade debt securities). The fund may invest up to 25%
of its assets in foreign securities.
The fund typically sells a stock when the fundamental expectations for buying it
no longer apply, the price exceeds its value or other stocks appear more
attractively priced relative to their values.
<PAGE>
GROWTH AND INCOME STOCK FUND PERFORMANCE
How has the Growth and Income Stock Fund performed?
The following chart provides an indication of the risks of investing in the
Growth and Income Stock Fund by showing the changes in the portfolio performance
of the Class Z shares from year to year over a 10-year period. The chart assumes
the reinvestment of all dividends and distributions. The figures shown do not
reflect charges deducted in connection with variable contracts.
Total Return
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
Class Z shares of the Growth and Income Stock Fund. Total returns are as
follows:
1989 24.37% 1994 1.42%
1990 -1.98% 1995 31.75%
1991 25.66% 1996 22.02%
1992 7.66% 1997 31.42%
1993 13.77% 1998 17.92%
Best Calendar Quarter: 4Q98 17.81%
Worst Calendar Quarter: 3Q90 -13.69%
Please remember that past performance is no guarantee of the results the Growth
and Income Stock Fund may achieve in the future. Future returns may be higher or
lower than the returns the fund achieved in the past.
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How does the performance of the Growth and Income Stock Fund compare to the
growth and income market?
The following table compares the performance of the Class Z Shares with the
performance of the Russell 1000 Index and the S&P 500, which are measures of the
performance of the relevant market. Returns shown for the Growth and Income
Stock Fund are after the deduction of fund management and operating expenses.
The Russell 1000 Index and S&P 500 Index returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares 17.92% 20.37% 16.84%
S&P 500 Stock Index 28.60% 24.05% 19.18%
(Capitalization-weighted)
S&P 500 Stock Index 12.76% 18.77% 16.78%
(Equal-weighted)
Russell 1000 Index 27.02% 23.27% 19.03%
<PAGE>
CAPITAL APPRECIATION STOCK FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Capital Appreciation Stock Fund seeks long-term capital appreciation.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
1. have a longer investment time horizon;
2. are willing to accept higher on-going short-term risk for the
potential of higher long-term returns;
3. want to diversify your investments;
4. are seeking a fund for the growth portion of an asset allocation
program; or
5. are investing for retirement or other goals that are many years in the
future.
You may want to invest fewer of your assets in this fund if you:
1. are investing with a shorter investment time horizon in mind;
2. are seeking an investment based on income rather than capital gains;
or
3. are uncomfortable with an investment whose value may vary
substantially.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
As with any fund that invests in equity securities, this fund is subject to
market risk, the risk that the value of a security may move up and down due to
factors not directly related to the issuer. Loss of money is a significant risk
of investing in this fund. Due to its focus on stocks that may appreciate in
value and lack of emphasis on those that provide current income, this fund will
typically experience greater volatility over time than the Growth and Income
Stock Fund.
In addition, a "value" approach to investing includes the risks that: 1. the
securities markets will not recognize the value of a security for an
unexpectedly long period of time; and 2. a stock that is believed to be
undervalued actually is appropriately priced or over-priced due to unanticipated
problems associated with the issuer or industry.
To the extent that the fund invests in higher-risk securities, it takes on
additional risks that could adversely affect its performance. For example, to
the extent that the fund invests in foreign securities, it will be subject to
the risks related to such securities, including the risks of adverse changes in
the rate of currency exchange and associated unstable political situations. A
further discussion of the principal risks associated with foreign securities is
contained in the foreign securities section and SAI. To the extent that the fund
invests in higher-risk securities, it takes on additional risks that could
adversely affect its performance. For example, to the extent that the fund
invests in foreign securities, it will be subject to the risks related to such
securities, including the risks of changes in the rate of currency exchange and
varying political situations. The principal risks of foreign securities and
small company stocks are described later in this prospectus and in the SAI.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Capital Appreciation Stock Fund invests primarily in common stocks of
companies of various sizes, and will, under normal market conditions, maintain
at least 80% of its assets in such securities. The fund seeks stocks that have
low market prices relative to their values based on analysis by the fund's
investment adviser of the issuing companies and their prospects. This is
referred to as a "value" approach which is further described on the Growth and
Income Stock Fund page. Relative to the Growth and Income Stock Fund, the
Capital Appreciation Stock Fund will include some smaller, less developed
companies and some companies undergoing more significant changes in their
operations or experiencing significant changes in their markets. The fund will
diversify its holdings among various industries and among companies within those
industries, but will often be less diversified than the Growth and Income Stock
Fund. The combination of these factors introduces greater investment risk than
the Growth and Income Stock Fund, but can also provide higher long-term returns
than are typically available from less risky investments.
The fund will typically invest in securities representing every sector of the
S&P 400 in about (+/-100%) the same weightings as such sector has in the S&P
400. For example, if technology companies represent 10% of the S&P 400, the fund
will typically have between 0% and 20% of its assets invested in securities
issued by technology companies.
The fund may also invest in warrants, preferred stocks and convertible debt
securities, and may invest up to 25% of its assets in foreign securities.
The fund typically sells a stock when the fundamental expectations for buying it
no longer apply, the price exceeds its value, or other stocks appear more
attractively priced relative to their values.
<PAGE>
CAPITAL APPRECIATION STOCK FUND PERFORMANCE
How has the Capital Appreciation Stock Fund performed?
The following chart provides an indication of the risks of investing in the
Capital Appreciation Stock Fund by showing the changes in the portfolio
performance of the Class Z shares from year to year since inception. The chart
assumes the reinvestment of all dividends and distributions. The figures shown
do not reflect charges deducted in connection with variable contracts.
Total Return
GRAPHIC: Bar chart that shows total returns for Class Z shares of the Capital
Appreciation Stock Fund since inception. Total returns are as follows:
1994 5.44%
1995 30.75%
1996 21.44%
1997 31.57%
1998 20.90%
Best Calendar Quarter: 4Q98 20.84%
Worst Calendar Quarter: 3Q98 -12.04%
Please remember that past performance is no guarantee of the results the Capital
Appreciation Stock Fund may achieve in the future. Future returns may be higher
or lower than the returns the fund achieved in the past.
- --------------------------------------------------------------------------------
How does the performance of the Capital Appreciation Stock Fund compare to the
capital appreciation market?
The following table compares the performance of the Class Z Shares with the
performance of the Russell 3000 Index and S&P 400 Stock Index, which are
measures of the performance of the relevant market. Returns shown for the
Capital Appreciation Stock Fund are after the deduction of fund management and
operating expenses. The Russell 3000 Index and S&P 400 Stock Index returns bear
no such expenses.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares 20.90% 21.64% N/A
Russell 3000 Index 24.14% 22.26% 18.48%
S&P 400 Stock Index 19.10% 18.84% 19.26%
<PAGE>
MID-CAP STOCK FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Mid-Cap Stock Fund seeks long-term capital appreciation by investing in
midsize and small companies.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
1. have a longer investment time horizon;
2. are willing to accept higher on-going short-term risk for the
potential of higher long-term returns;
3. want to diversify your investments;
4. are seeking a fund for the growth portion of an asset allocation
program;
5. are seeking exposure to smaller companies as part of an asset
allocation program; or
6. are investing for retirement or other goals that are many years in the
future.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
As with any fund that invests in equity securities, this fund is subject to
market risk, the risk that the value of your investment will fluctuate in
response to stock market movements. Loss of money is a significant risk of
investing in this fund.
Due to its focus on smaller companies' stocks that may appreciate in value and
lack of emphasis on those that provide current income, this fund will typically
experience greater volatility over time than the Growth and Income Stock Fund.
Securities issued by smaller companies may be less liquid than securities issued
by larger, more established companies. In addition, a "value" approach to
investing includes the risks that: 1. the securities markets will not recognize
the value of a security for an unexpectedly long period of time; and 2. a stock
that is believed to be undervalued actually is appropriately priced or
over-priced due to unanticipated problems associated with the issuer or
industry.
To the extent that the fund invests in higher-risk securities, it takes on
additional risks that could adversely affect its performance. For example, to
the extent that the fund invests in foreign securities, it will be subject to
the risks related to such securities, including the risks of changes in the rate
of currency exchange and varying political situations. The principal risks of
foreign securities and small company stocks are described later in this
prospectus and in the SAI.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Mid-Cap Stock Fund invests primarily in common stocks of midsize and smaller
companies (market capitalization of less than $10 billion at the time of
purchase), and will under normal market conditions, maintain at least 80% of its
assets in such securities. However, the fund will not automatically sell a stock
just because the company's market capitalization has grown beyond the $10
billion upper limit and such position may be increased through additional
purchases.
<PAGE>
MID-CAP STOCK FUND (Continued)
INVESTOR PROFILE(Continued)
Who should consider investing in this fund?
You may want to invest fewer of your assets in this fund if you:
1. are investing with a shorter investment time horizon in mind;
2. are seeking an investment based on income rather than capital gain; or
3. are uncomfortable with an investment whose value may vary
substantially.
PRINCIPAL INVESTMENT STRATEGIES (Continued)
How does this fund pursue its objective?
The fund seeks stocks in this midsize to smaller range that have a low market
price relative to their value as estimated based on fundamental analysis of the
issuing company and its prospects. This is sometimes referred to as a "value"
approach. Relative to both the Growth and Income Stock and Capital Appreciation
Stock Funds, the Mid-Cap Stock Fund will include more smaller, less developed
issuers. These midsize and smaller companies often have difficulty competing
with larger companies, but the successful ones tend to grow faster than larger
companies. They often use profits to expand rather than to pay dividends.
The fund will diversify its holdings among various industries and among
companies within those industries but will often be less diversified than the
Growth and Income Stock Fund. The combination of these factors introduces
greater investment risk than the Growth and Income Stock Fund, but can also
provide higher long-term returns than are typically available from less risky
investments.
The fund will typically invest in securities representing every sector of the
S&P 400 Midcap Index in about (+/-100%) the same weightings as such sector has
in the S&P 400 Midcap Index. For example, if technology companies represent 10%
of the S&P 400 Midcap Index, the fund will typically have between 0% and 20% of
its assets invested in securities issued by technology companies.
The fund may also invest in warrants, preferred stocks and convertible debt
securities, and may invest up to 25% of its assets in foreign securities.
The fund typically sells a stock when the fundamental expectations for buying it
no longer apply, the price exceeds its value or other stocks appear more
attractively priced relative to their values.
Note: The Mid-Cap Stock Fund is a new fund that does not have historical
investment performance. When it does, its performance will be shown along with
the performance of the S&P 400 Midcap Index and the Russell Midcap Index, which
are measures of the performance of the relevant market. The following table
shows the historical performance of these indexes.
Average Annual Total Returns
(As of December 31, 1998)
One Year Three Year
S&P 400 Midcap Index 19.10% 23.37%
Russell Midcap Index 10.10% 19.12%
<PAGE>
RISK VS. RETURN
The risk/return curve below demonstrates that, in general for diversified
portfolios of securities of the various types, as short-term risk increases the
potential for long-term gain also increases. "Short-term risk" refers to the
likely volatility of a fund's total return and its potential for gain or loss
over a relatively short time period. "Long-term potential gain" means the
expected average annual total return over a relatively long time period, such as
20 years.
GRAPHIC: This graphic shows where each of the funds in the Ultra Series Fund,
in addition to other types of investments, fall on a curve that depicts the risk
taken for the gain potential. The x-axis is labelled "Long Term Potential for
Gains"; the y-axis is labelled "Short Term Risk (Volatility of Returns)."
This curve is not intended to indicate future volatility or performance. It is
merely intended to demonstrate the relationship between the on-going short-term
risk and the long-term potential for gain of each portfolio of the Ultra Series
Fund relative to other funds and types of investments.
Although each fund expects to pursue its investment objective using its
principal investment strategies regardless of market conditions, each fund may
invest up to 100% of its assets in money market securities as a defensive tactic
in abnormal market conditions.
The preceding fund pages provide descriptions of the general investment
strategies and what we believe to be the principal risks of each of the funds.
The fund pages do not contain an exhaustive description of all the risks and
investment strategies of the funds. Please read each of the fund pages to gain a
basic understanding of the funds. For a more detailed description, including
non-principal risks, investment strategies, and investment restrictions, please
consult the Statement of Additional Information. Also, if there are terms or
concepts you do not fully understand, please consult the SAI, other reference
material or your registered representative before investing.
<PAGE>
RISKS ASSOCIATED WITH CERTAIN HIGHER RISK SECURITIES
FOREIGN SECURITIES
As indicated in the earlier pages, several of the funds may invest in foreign
equity and debt securities. Foreign securities are securities that are issued by
companies organized or whose principal operations are outside the U.S., are
issued by a foreign government, are principally traded outside of the U.S., or
are quoted or denominated in a foreign currency. Equity securities include
common stocks, securities convertible into common stocks, preferred stocks, and
other securities representing equity interests such as American depository
receipts ("ADRs"), European depository receipts ("EDRs") and global depository
receipts ("GDRs"). The fund may also invest in debt securities, foreign money
market instruments, and other income bearing securities as well as forward
foreign currency exchange contracts and other derivative securities and
contracts.
Investing in foreign securities involves certain special considerations and
additional risks which are not typically associated with investing in securities
of domestic issuers or U.S. dollar denominated securities. For example, foreign
securities are typically subject to:
1. Fluctuations in currency exchange rates.
2. Higher trading and custody charges compared to securities of U.S.
companies.
3. Different accounting and reporting practices than U.S. companies. As a
result, it is often more difficult to evaluate financial information
from foreign issuers. Also, the laws of some foreign countries limit
the information that is made available to investors.
4. Less stringent securities regulations than those of the U.S.
5. Potential political instability.
6. Potential economic instability. The economies of individual foreign
countries may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross domestic product, rate of inflation,
and industry diversification. Such differences may cause the economies
of these countries to be less stable than the U.S. economy and may
make them more sensitive to economic fluctuations.
Some of the investments will be stocks or bonds of relatively large issuers
located or operating in developed countries. Such securities are those generally
representative of the companies comprising the Morgan Stanley Capital
International, Europe, Australia, and Far East ("EAFE") Stock Index.
EURO CONVERSION
On January 1, 1999, the European Monetary Union ("EMU") implemented a new
currency unit, the Euro. In effect, the Euro will become the official currency
of the EMU and will replace the individual currencies previously used by many
European countries. About 46% of the stock exchange capitalization of the entire
European market moved to Euros, and participating governments will issue their
bonds in Euros. The Euro transition may adversely affect financial markets
world-wide and may result in changes in the relative strength of other major
currencies, including the U.S. dollar. It is not possible to accurately predict
what affect, if any, the conversion to the Euro by the EMU will have on the
operations of the funds or the securities markets in general. However, if a fund
invests in securities denominated by the Euro, the fund will be exposed to risks
relating to the Euro conversion. For more details, please refer to the SAI.
<PAGE>
SMALL CAPITALIZATION STOCKS
Certain funds may also invest in small capitalization stocks and stocks or bonds
principally traded in emerging securities markets or of issuers located in or
having substantial business operations in emerging economies. The downside of
investing in smaller companies is that such investments entail a higher level of
risk compared to larger, more established companies. Small capitalization
companies often do not have the financial strength needed to do well in
difficult economic times. Also, they often sell limited numbers of products,
which can make it harder for them to compete with larger companies. As a result,
their securities prices may fluctuate more over the short-term, but they have
more potential to grow. The emerging economies in which the fund invests are
located primarily in the Asia-Pacific region, Eastern Europe, Central and South
America, and Africa. The small size, inexperience and limited trading volume of
the securities markets in certain of these countries may also make investments
in such countries more volatile and less liquid than investments in securities
traded in markets in Japan and Western European countries.
THE SHARES
OFFER
Currently, each series of shares is divided into two classes. Class C and Class
Z are identical except that Class C shares bear a distribution fee pursuant to a
distribution plan (the "Distribution Plan"), described below, adopted in
accordance with Rule 12b-1 under the Act.
Both Classes are sold in a continuous offering. The Ultra Series Fund generally
offers Class Z shares to separate accounts of CUNA Mutual Group and to qualified
pension and retirement plans of CUNA Mutual Group. The Ultra Series Fund offers
Class C shares to separate accounts of insurance companies and to qualified
pension and retirement plans that are not affiliated with CUNA Mutual Group. The
fund does not offer its shares directly to the general public.
Investments in the Ultra Series Fund by separate accounts of insurance companies
are made through either variable annuity or variable life insurance contracts,
together commonly known as variable contracts. Each separate account contains a
subaccount that corresponds to a portfolio in the Ultra Series Fund.
Ultra Series Fund Separate Account
Money Market Fund Money Market Subaccount
Treasury 2000 Fund Treasury 2000 Subaccount
Bond Fund Bond Subaccount
Balanced Fund Balanced Subaccount
Growth and Income Stock Fund Growth and Income Stock Subaccount
Capital Appreciation Stock Fund Capital Appreciation Stock Subaccount
Mid-Cap Stock Fund Mid-Cap Stock Subaccount
PURCHASE AND REDEMPTION
On each day that a Fund's net asset value is calculated, the Ultra Series Fund
processes any orders to purchase or redeem shares. Purchase and redemption
orders are processed at each fund's net asset value calculated on the day the
order is received, although orders may be executed the next morning. Shares are
purchased and redeemed at net asset value without the deduction of sales or
redemption charges.
For a more detailed description of the procedures for allocating interest in a
separate account to a portfolio of the Ultra Series Fund, owners of individual
variable contracts should refer to the separate prospectus for their contracts;
and participants in qualified pension or retirement plans should refer to their
plan documents.
Treasury 2000 Fund Only: The Ultra Series Fund anticipates demand for shares in
the Treasury 2000 Fund to decrease as the portfolio maturity date approaches.
Also, it may not be possible to purchase additional Stripped Treasury Securities
with a maturity date the same as the Stripped Treasury Securities in the fund.
Accordingly, the Ultra Series Fund may stop selling shares in the fund if the
Trustees decide further sale of shares in the fund is not in its best interest.
At some time during the 12 months before maturity of the portfolio, the
securities will be liquidated and the proceeds (after deductions for accrued but
unpaid fees, taxes, governmental and other charges) will be automatically
invested at the Net Asset Value in the Money Market Fund, unless an owner of a
variable contract directs otherwise. No charge will be made for reinvestment of
these proceeds. At least 45 days before the portfolio maturity date, the Ultra
Series Fund will mail to each owner of a variable contract with an interest in
the fund a Notice of Impending Maturity. The notice will state that, unless the
Ultra Series Fund receives a written request to invest the proceeds in another
fund at least five days prior to portfolio maturity, on the date the portfolio
matures, each owner's proceeds will be automatically invested in the Money
Market Fund.
<PAGE>
DISTRIBUTION
The Ultra Series Fund has adopted a Distribution Plan pursuant to Rule 12b-1 of
the Act under which the Ultra Series Fund bears certain expenses relating to the
distribution of Class C shares. The Distribution Plan provides that the Ultra
Series Fund will pay CUNA Brokerage Services, Inc. a distribution fee of 0.25%
of the average daily net assets of Class C shares of each fund annually. The
distribution fee is calculated and accrued daily and paid quarterly or at other
times as agreed upon by the Ultra Series Fund and CUNA Brokerage Services, Inc.
The distribution fee is paid out of each fund's assets supporting Class C
shares. This means that the net asset value of Class C shares is reduced by the
daily accrual of the fee. The net asset value of Class Z shares is not affected
by the distribution fee. Over time, these fees will increase the cost of your
investment in Class C shares and may cost you more than paying other types of
sales charges.
DIVIDENDS
Dividends of the various funds in the Ultra Series Fund (except those from the
Treasury 2000 Fund) are distributed to separate accounts for variable contracts
and qualified pension or retirement plans and automatically reinvested in Ultra
Series Fund shares.
Dividends from the Money Market Fund are declared daily and reinvested monthly
in full and fractional shares of the Money Market Fund.
Dividends of ordinary income from the Bond, Balanced, Growth and Income Stock,
Capital Appreciation Stock and Mid-Cap Stock Funds will be declared and
reinvested quarterly in full and fractional shares.
Dividends of capital gains from these funds will be declared and reinvested at
least annually in full and fractional shares. In no event will capital gain
dividends be declared and paid more frequently than allowed under SEC rules.
Annually, the Treasury 2000 Fund will declare a "consent" dividend for income
tax purposes.
The funds' distributions may be subject to federal income tax. An exchange of
fund shares may also be treated as a sale of fund shares and any gain on the
transaction may be subject to federal income tax.
PRICING OF FUND SHARES
The funds' shares are sold and redeemed at the shares' net asset value without
sales or redemption charges. Net asset value is computed by adding the total
current values of each fund's assets, subtracting all liabilities and dividing
by the number of outstanding shares. On each day that net asset value is
calculated, the calculation occurs at the earlier of 3:00 p.m. Central Standard
Time or the close of the New York Stock Exchange.
Net asset values are calculated on any day the New York Stock Exchange is open
for business.
Federal securities regulations will be followed in case of an emergency that
interferes with valuation of shares.
The funds' shares will be purchased and redeemed at their net asset value.
Generally, the assets of each fund are valued using market quotations and
independent pricing services. If these are not available, the value of the
assets of the funds will be based on their "fair value" as determined in
accordance with procedures adopted by the Board of Trustees. The assets of the
Money Market Fund and other short-term investments having maturities of 60 days
or less will be valued at amortized cost. More information about the calculation
of net asset value is in the SAI.
<PAGE>
TAXES
For federal income tax purposes, each Fund will be treated as a separate entity.
Each Fund intends to qualify each year as a "regulated investment company" under
the Internal Revenue Code, as amended (the "Code"). By so qualifying, a Fund is
not subject to federal income tax to the extent that its net investment income
and net realized capital gains are distributed to the separate accounts of
insurance companies or to qualified plans. Further, each Fund intends to meet
certain diversification requirements applicable to mutual funds underlying
variable life insurance and variable annuity contracts.
The Shareholders of the Funds are qualified pension and profit sharing plans and
the separate accounts of life insurance companies. Under current law, plan
participants and owners of variable life insurance and annuity contracts which
have invested in a Fund are not subject to federal income tax on Fund
distributions or on gains realized upon the sale or redemption of Fund shares
until they are withdrawn from the plan or contracts.
For information concerning the federal tax consequences to the purchasers of the
variable annuity or variable life insurance contracts, see the prospectus for
such contract. For more information about the tax status of the Funds, see
"Taxes" in the SAI.
MORE ABOUT ULTRA SERIES FUND
PORTFOLIO MANAGEMENT
The investment adviser for the Ultra Series Fund is:
CIMCO Inc.
5910 Mineral Point Road
Madison, WI 53701-0391
CIMCO was established on July 6, 1982. It provides investment management of the
investment portfolios of CUNA Mutual Group, its "permanent affiliate" CUNA
Mutual Life Insurance Company, their subsidiaries and affiliates, and MEMBERS
Mutual Funds. CIMCO has over $7 billion of assets under management.
CIMCO employs a team approach in the management of investments of all the funds.
The Money Market, Treasury 2000, Bond, Balanced, Growth and Income Stock,
Capital Appreciation Stock and Mid-Cap Stock Funds are each managed by teams of
portfolio managers employed by CIMCO.
CIMCO manages the assets of the Mid-Cap Stock Fund using a "manager of managers"
approach under which CIMCO may manage some or all of the fund's assets and may
allocate some or all of the fund's assets among one or more "specialist"
subadvisers. CIMCO monitors the performance of each subadviser to the extent
that it deems appropriate to achieve a fund's investment objective, reallocates
fund assets among its own portfolio management team and individual subadvisers,
or recommends to the Ultra Series Fund board that a fund employ or terminate
particular subadvisers.
As of the date of this prospectus, Heartland Advisors, Inc. is the only
subadviser managing some of the assets of the Mid-Cap Stock Fund. Heartland
Advisors, Inc. also serves as investment adviser to each of the funds in the
Heartland family of funds. Net assets under management of the Heartland
organization were over $3 billion as of December 31, 1998.
In addition to providing portfolio management services, CIMCO also provides or
arranges for the provision of substantially all other services required by the
funds. Such services include all administrative, accounting, and legal services,
as well as the services of custodians, transfer agents, and dividend disbursing
agents.
As payment for its services as the investment adviser, CIMCO receives a
management fee based upon the assets of each fund. The management fee paid to
CIMCO is computed and accrued daily and paid monthly, as indicated in the
Expenses section.
<PAGE>
INQUIRIES
If you have any questions regarding the Ultra Series Fund, please contact:
CUNA Brokerage Services, Inc.
2000 Heritage Way
Waverly, IA 50677
(800) 798-5500
(319) 352-4090
YEAR 2000
The Ultra Series Fund, like all funds, could be adversely affected by computer
systems that do not properly process date-related information on and after
January 1, 2000. This is often referred to as "Year 2000" or "Y2K". While Year
2000 problems could have a negative effect on funds, CIMCO and its affiliated
entities are working to avoid such problems. They are also obtaining assurances
from service providers that they are taking similar steps. If the systems of
CIMCO or those of their service providers are not available or malfunction
because of Year 2000 problems, then the funds could experience substantial
delays in performing certain functions (for example, processing purchase and
sale transactions). As a result of CIMCO's efforts, it is not anticipated that
its systems will have any negative affects on your Ultra Series Fund
investments.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund, assuming reinvestment of all dividends and distributions. This
information has been audited by KPMG Peat Marwick LLP, whose report, along with
the Fund's financial statements, are included in the SAI or annual report, which
are available upon request.
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND: CLASS Z
Financial Highlights
Years Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1994 1995 1996 1997 1998
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net Investment Income 0.03 0.05 0.05 0.05 0.05
Net Realized and Unrealized Gain (Loss)
on Investments - - - - -
Total from Investment Operations 0.03 0.05 0.05 0.05 0.05
Distributions
Distributions from Net Investment Income (0.03) (0.05) (0.05) (0.05) (0.05)
Distributions from Realized Capital Gains - - - - -
Total Distributions (0.03) (0.05) (0.05) (0.05) (0.05)
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
Total Return* 3.34% 5.21% 4.72% 5.01% 5.00%
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $7,799 $11,374 $21,011 $41,170 $56,416
Ratio of Expenses to Average Net Assets** 0.65% 0.65% 0.65% 0.50% 0.45%
Ratio of Net Investment Income to Average Net Assets** 3.66% 5.17% 4.74% 5.05% 4.99%
</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 0.78%, 0.73%, 0.67%, and 0.51% for 1994, 1995, 1996, and
1997, respectively.
<PAGE>
<TABLE>
<CAPTION>
TREASURY 2000 FUND: CLASS Z
Financial Highlights
Years Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1994 1995 1996 1997 1998
Net Asset Value, Beginning of Period $7.53 $7.00 $8.47 $8.64 $9.24
Income from Investment Operations
Net Investment Income 0.53 0.58 0.58 0.58 0.58
Net Realized and Unrealized Gain (Loss)
on Investments (1.06) 0.89 (0.41) 0.02 0.11
Total from Investment Operations (0.53) 1.47 0.17 0.60 0.69
Distributions
Distributions from Net Investment Income - - - - -
Distributions from Realized Capital Gains - - - - -
Total Distributions - - - - -
Net Asset Value, End of Period $7.00 $8.47 $8.64 $9.24 $9.93
Total Return* -7.12% 20.99% 2.10% 6.85% 7.52%
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $1,272 $1,545 $1,585 $1,701 $1,836
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 7.50% 7.40% 7.03% 6.56% 6.01%
</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>
<TABLE>
<CAPTION>
BOND FUND: CLASS Z
Financial Highlights
Years Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1994 1995 1996 1997 1998
Net Asset Value, Beginning of Period $10.58 $9.67 $10.63 $10.33 $10.54
Income from Investment Operations
Net Investment Income 0.59 0.60 0.65 0.54 0.63
Net Realized and Unrealized Gain (Loss)
on Investments (0.90) 0.96 (0.28) 0.20 0.02
Total from Investment Operations (0.31) 1.56 0.37 0.74 0.65
Distributions
Distributions from Net Investment Income (0.59) (0.59) (0.64) (0.51) (0.62)
Distributions from Realized Capital Gains (0.01) (0.01) (0.03) (0.02) -
Total Distributions (0.60) (0.60) (0.67) (0.53) (0.62)
Net Asset Value, End of Period $9.67 $10.63 $10.33 $10.54 $10.57
Total Return* -3.06% 16.37% 2.86% 7.45% 6.18%
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $7,867 $13,725 $26,572 $188,840 $228,281
Ratio of Expenses to Average Net Assets** 0.65% 0.65% 0.65% 0.56% 0.55%
Ratio of Net Investment Income to Average Net Assets 6.03% 6.08% 6.25% 6.50% 5.94%
Portfolio Turnover Rate 11.97% 14.74% 25.67% 30.71% 142.98%
</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 0.70%, 0.68%, 0.67%, and 0.57% for 1994, 1995, 1996, and
1997, respectively.
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND: CLASS Z
Financial Highlights
Years Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1994 1995 1996 1997 1998
Net Asset Value, Beginning of Period $13.70 $12.90 $14.63 $15.29 $17.02
Income from Investment Operations
Net Investment Income 0.52 0.55 0.58 0.62 0.57
Net Realized and Unrealized Gain (Loss)
on Investments (0.56) 2.29 0.98 1.93 1.72
Total from Investment Operations (0.04) 2.84 1.56 2.55 2.29
Distributions
Distributions from Net Investment Income (0.51) (0.55) (0.58) (0.63) (0.57)
Distributions from Realized Capital Gains (0.25) (0.56) (0.32) (0.19) -
Total Distributions (0.76) (1.11) (0.90) (0.82) (0.57)
Net Asset Value, End of Period $12.90 $14.63 $15.29 $17.02 $18.74
Total Return* -0.46% 22.27% 10.79% 16.87% 13.40%
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $67,468 $110,969 $194,725 $309,804 $449,992
Ratio of Expenses to Average Net Assets** 0.65% 0.65% 0.65% 0.68% 0.70%
Ratio of Net Investment Income to Average
Net Assets 4.00% 4.03% 3.91% 3.81% 3.20%
Portfolio Turnover Rate 28.53% 36.68% 33.48% 21.15% 78.71%
</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 0.70%, 0.68%, 0.65%, and 0.69% for 1994, 1995, 1996, and
1997, respectively.
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND: CLASS Z
Financial Highlights
Years Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1994 1995 1996 1997 1998
Net Asset Value, Beginning of Period $15.51 $15.06 $18.20 $21.32 $27.20
Income from Investment Operations
Net Investment Income 0.32 0.37 0.34 0.31 0.34
Net Realized and Unrealized Gain (Loss)
on Investments (0.04) 4.37 3.93 6.36 4.52
Total from Investment Operations 0.28 4.74 4.27 6.67 4.86
Distributions
Distributions from Net Investment Income (0.33) (0.37) (0.34) (0.32) (0.34)
Distributions from Realized Capital Gains (0.40) (1.23) (0.81) (0.47) (1.16)
Total Distributions (0.73) (1.60) (1.15) (0.79) (1.50)
Net Asset Value, End of Period $15.06 $18.20 $21.32 $27.20 $30.56
Total Return* 1.42% 31.75% 22.02% 31.42% 17.92%
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $48,913 $102,138 $232,841 $590,135 $833,174
Ratio of Expenses to Average Net Assets** 0.65% 0.65% 0.65% 0.61% 0.60%
Ratio of Net Investment Income to Average Net Assets 2.19% 2.28% 1.78% 1.39% 1.17%
Portfolio Turnover Rate 45.36% 57.80% 40.55% 20.39% 17.69%
</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 0.70%, 0.69%, 0.65%, and 0.61% for 1994, 1995, 1996, and
1997, respectively.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND: CLASS Z
Financial Highlights
Years Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1994* 1995 1996 1997 1998
Net Asset Value, Beginning of Period $10.00 $9.97 $12.51 $14.60 $18.85
Income from Investment Operations
Net Investment Income 0.16 0.14 0.13 0.07 0.06
Net Realized and Unrealized Gain (Loss)
on Investments 0.37 2.91 2.55 4.52 3.87
Total from Investment Operations 0.53 3.05 2.68 4.59 3.93
Distributions
Distributions from Net Investment Income (0.15) (0.14) (0.13) (0.07) (0.06)
Distributions from Realized Capital Gains (0.41) (0.37) (0.46) (0.27) (0.53)
Total Distributions (0.56) (0.51) (0.59) (0.34) (0.59)
Net Asset Value, End of Period $9.97 $12.51 $14.60 $18.85 $22.19
Total Return** 5.44% 30.75% 21.44% 31.57% 20.90%
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $9,449 $38,117 $98,674 $456,194 $630,373
Ratio of Expenses to Average Net Assets*** 0.65% 0.65% 0.65% 0.82% 0.80%
Ratio of Net Investment Income to Average Net Assets 1.55% 1.37% 0.96% 0.70% 0.31%
Portfolio Turnover Rate 65.81% 61.32% 49.77% 17.06% 18.67%
</TABLE>
* The Fund began operations January 3, 1994.
** 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 0.85%, 0.75%, 0.66%, and 0.83% for 1994, 1995, 1996, and
1997, respectively.
<PAGE>
The following documents contain more information about the funds and are
available free upon request:
Statement of Additional Information (SAI). The SAI contains additional
information about all aspects of the funds. A current SAI has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
Annual and Semiannual Reports. The funds' annual and semiannual reports provide
additional information about the funds' investments. The annual report contains
a discussion of the market conditions and investment strategies that
significantly affected each fund's performance during the last fiscal year.
Requesting Documents. You may request copies of these documents, ask questions
about your account, or request further information about the funds either by
contacting your broker or by contacting the funds at:
Ultra Series Fund
CUNA Mutual Life Insurance Company
2000 Heritage Way
Waverly, IA 50677
(800) 798-5500
Public Information. You can review and copy information about the funds,
including the SAI, at the Securities and Exchange Commission's Public Reference
Room in Washington D.C. You may obtain information on the operation of the
public reference room by calling the Commission at 1-800-SEC-0330. Reports and
other information about the funds also are available on the Commission's
Internet site at http://www.sec.gov. You may obtain copies of this information,
upon payment of a duplicating fee, by writing the Public Reference Section of
the Securities and Exchange Commission, Washington, D.C. 20549-6009.
The Funds are available to the public only through the purchase of:
(1) Class Z shares of the Ultra Series Fund by certain individual variable
life insurance contracts or variable annuity contracts;
(2) Class Z shares of the Ultra Series Fund by certain group variable
annuity contracts for qualified pension and retirement plans; or
(3) Class C shares of the Ultra Series Fund directly by qualified pension
and retirement plans.
When used in connection with individual variable annuity contracts or variable
life insurance contracts, this Prospectus must be accompanied by prospectuses
for those contracts. When distributed to qualified pension and retirement plans
or to participants of such plans, this Prospectus may be accompanied by
disclosure materials relating to such plans which should be read in conjunction
with this Prospectus.
Investment Company File No. 811-4815
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ULTRA SERIES FUND
2000 Heritage Way
Waverly, Iowa 50677
(319) 352-4090
This is not a prospectus. This statement of additional information should be
read in conjunction with the Ultra Series Fund prospectus which is incorporated
by reference.
The prospectus contains information that an investor should know before
investing. For a copy of the most recent prospectus, call or write CUNA
Brokerage Services, Inc., 2000 Heritage Way, Waverly, Iowa 50677, (319)
352-4090, (800) 798-5500.
MAY 1, 1999
<PAGE>
TABLE OF CONTENTS PAGE
General Information...........................................................1
Investment Practices..........................................................1
Lending Portfolio Securities.............................................1
Restricted Securities....................................................2
Foreign Securities.......................................................2
Put and Call Options.....................................................3
Financial Futures and Related Options....................................4
Stock Index Futures and Related Options..................................5
Bond Fund Practices......................................................6
Lower-Rated Corporate Debt Securities....................................7
Foreign Government Securities............................................8
Convertible Securities...................................................8
Repurchase Agreements....................................................9
Reverse Repurchase Agreements............................................9
U.S. Government Securities..............................................10
Mortgage-Backed and Asset-Backed Securities.............................10
Forward Commitment and When-Issued Securities...........................11
Investment Limitations.......................................................12
Portfolio Turnover...........................................................14
Management of the Fund.......................................................14
Officers and Trustees...................................................14
Trustees Compensation...................................................16
Substantial Shareholders................................................16
Beneficial Owners.......................................................16
The Investment Adviser.......................................................17
Management Agreements with Subadvisers.......................................18
Expenses of the Fund.........................................................19
Distribution Plan and Agreement..............................................19
Transfer Agent...............................................................20
Custodian....................................................................21
Independent Auditors.........................................................21
Brokerage....................................................................21
How Securities Are Offered...................................................22
Shares Of Beneficial Interest...........................................22
Limitation of Trustee and Officer Liability.............................23
Limitation of Interseries Liability.....................................23
Net Asset Value of Shares....................................................24
Money Market Fund.......................................................24
Treasury 2000, Bond, Balanced, Growth and Income Stock,
Capital Appreciation Stock and Mid-Cap Stock Funds....................25
Dividends, Distributions and Taxes...........................................26
Options and Futures Transactions........................................28
Straddles...............................................................29
Distributor.............................................................30
Calculation of Yields and Total Returns......................................30
Money Market Fund Yields................................................31
Other Fund Yields.......................................................32
Average Annual Total Returns............................................33
Other Total Returns.....................................................34
Financial Statements.........................................................34
<PAGE>
GENERAL INFORMATION
The Ultra Series Fund is an investment company consisting of seven separate
investment portfolios or funds (each, a "Fund") each of which has a different
investment objective. Each Fund is a diversified, open-end management investment
company, commonly known as a mutual fund. The seven Funds are Money Market,
Treasury 2000, Bond, Balanced, Growth and Income Stock, Capital Appreciation
Stock, and Mid-Cap Stock. The Ultra Series Fund was organized under the laws of
the Commonwealth of Massachusetts on September 16, 1983, and is a Massachusetts
Business Trust. Under Massachusetts's law, shareholders of a business trust may,
under certain circumstances, be held personally liable as partners for the
obligations of the Ultra Series Fund. The Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Ultra
Series Fund and requires that notice of such disclaimer be given in each
instrument entered into or executed by the Ultra Series Fund. The Declaration of
Trust provides for indemnification out of the Ultra Series Fund property for any
shareholder held personally liable for the obligations of the Ultra Series Fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Ultra Series Fund
itself would be unable to meet its obligations.
INVESTMENT PRACTICES
The Ultra Series Fund is a diversified open-end management investment company
consisting of seven investment portfolios or funds, each with its own investment
objective and policies. The Ultra Series Fund Prospectus describes the
investment objective and policies of each of the seven Funds. The following
information is provided for those investors wishing to have more comprehensive
information than that contained in the Prospectus. Within the past year, no Fund
has employed any of the following practices: lending of portfolio securities,
investing in restricted securities, investing in options, financial futures,
stock index futures and related options. Except for the Mid-Cap Stock Fund (as
described below), no Fund has a current intention of employing these practices
in the foreseeable future.
If the Ultra Series Fund enters into futures contracts or call options thereon,
reverse repurchase agreements, firm commitment agreements or standby commitment
agreements, the Ultra Series Fund will obtain approval from the Board of
Trustees to establish a segregated account with the custodian of the Ultra
Series Fund. The segregated account will hold liquid assets such as cash, U.S.
government assets and high-grade debt obligations. The cash value of the
segregated account will be not less than the market value of the futures
contracts and call options thereon, reverse repurchase agreements, firm
commitment agreements and standby commitment agreements.
Lending Portfolio Securities
All Funds, except the Money Market Fund, may lend portfolio securities. Such
loans will be made only in accordance with guidelines established by the
Trustees and on the request of broker-dealers or institutional investors deemed
qualified, and only when the borrower agrees to maintain cash or securities as
collateral with the Fund equal at all times to at least 100% of the value of the
securities. The Fund will continue to receive interest or dividends on the
securities loaned and will, at the same time, earn an agreed-upon amount of
interest on the collateral which will be invested in readily marketable
short-term obligations of high quality. The Fund will retain the right to call
the loaned securities and intends to call loaned voting securities if important
shareholder meetings are imminent. Such security loans will not be made if, as a
result, the aggregate of such loans exceeds 30% of the value of the Fund's
assets. The Fund may terminate such loans at any time. While there may be delays
in recovery of loaned securities or even a loss of rights in collateral supplied
should the borrower fail financially, loans will be made only to firms deemed by
the Investment Adviser to be in good standing and will not be made unless, in
the judgment of the Investment Adviser, the consideration to be earned from such
loans would justify the risk.
Restricted Securities
Each Fund, except the Money Market, Treasury 2000, and Mid-Cap Stock Funds, may
invest up to 10% of its net assets in restricted securities. The Mid-Cap Stock
Fund may invest up to 15% of its net assets in restricted securities. Securities
regulations limit the resale of restricted securities which have been acquired
through private placement transactions, directly from the issuer or from
security holders, generally at higher yields or on terms more favorable to
investors than comparable publicly traded securities. Privately placed
securities are often not readily marketable and ordinarily can be sold only in
privately negotiated transactions to a limited number of purchasers or in public
offerings made pursuant to an effective registration statement under the
Securities Act of 1933. Private or public sales of such securities by the Fund
may involve significant delays and expense. Private sales require negotiations
with one or more purchasers and generally produce less favorable prices than the
sale of comparable unrestricted securities. Public sales generally involve the
time and expense of preparing and processing a registration statement under the
Securities Act of 1933 and may involve the payment of underwriting commissions;
accordingly, the proceeds may be less than the proceeds from the sale of
securities of the same class which are freely marketable. Restricted securities
in each Fund will be valued at fair value as determined in good faith by or at
the direction of the Trustees for purposes of determining the Fund's Net Asset
Value. Such securities, when possible, will be valued on a comparative basis to
securities with similar characteristics for which market prices are available.
Foreign Securities
All Funds, except the Treasury 2000 Fund, may invest in foreign securities.
Investment in foreign issuers involves investment risks that are different, in
some respects, from an investment in U.S. domestic issuers. Such risks may
include foreign political and economic developments. Publicly available
information concerning issuers located outside the United States may not be
comparable in scope or depth of analysis to that generally available for
publicly held U.S. issuers. Accounting and auditing practices and financial
reporting requirements may vary significantly from country to country and
generally are not comparable to those applicable to publicly held U.S.
corporations. In the event of default, debt obligations of foreign issuers may
be difficult to enforce. The Investment Adviser will make every effort to
analyze potential investments in foreign issuers on the same basis as the rating
services analyze domestic issuers, but because public information is not always
comparable to that available on domestic issuers, this may not be possible.
Therefore, while the Investment Adviser will make every effort to select
investments in foreign securities on the same basis relative to quality and risk
as its investments in domestic securities, this may not always be possible.
Except for the Mid-Cap Stock Fund, no Fund will invest more than 10% of its
total assets in foreign securities. ADRs are not considered foreign securities
for this purpose. However, the Growth and Income Stock, and Capital Appreciation
Stock Funds may invest up to 25% of assets, and the Balanced Fund may invest up
to 15% of assets in American Depository Receipts and foreign securities. The
Mid-Cap Stock Fund may invest up to 25% of its total assets in foreign
securities and has no limitations on ADRs.
Put and Call Options
All Funds, except the Money Market Fund, may engage in the purchase, sale and
covered writing of put and call options that are traded on U.S. exchanges and
boards of trade. A call option is a contract (generally having a duration of
nine months or less) pursuant to which the purchaser of the call option in
return for a premium paid, has the right to buy the security or instrument
underlying the option at a specified exercise price at any time during the term
of the option. The writer of the call option, who receives the premium, has the
obligation, upon exercise of the option, to deliver the underlying security or
instrument against payment of the exercise price during the option period. A put
option is a similar contract which gives the purchaser of the put option, in
return for a premium, the right to sell the underlying security or instrument at
a specified price during the term of the option. The writer of the put, who
receives the premium, has the obligation to buy the underlying security or
instrument, upon exercise, at the exercise price during the option period.
The writing of a call option is "covered" if the Fund owns the underlying
security or instrument covered by the call or has an absolute and immediate
right to acquire that security or instrument without additional cash
consideration (or for additional cash consideration held in a segregated account
by its custodian) upon conversion or exchange of other securities or instruments
held in its portfolio. The writing of a call option is also covered if the Fund
holds a call on an equivalent amount of the same security or instrument as the
call written where the exercise price of the call held is equal to or less than
the exercise price of the call written or greater than the exercise price of the
call written if the difference is maintained by the Fund in cash, U.S. Treasury
bills or other high grade short-term obligations in a segregated account with
its custodian. The writing of a put option is "covered" if the Fund maintains
cash, U.S. Treasury bills or other high grade short-term obligations with a
value equal to the exercise price in a segregated account with its custodian, or
else holds a put on an equivalent amount of the same security or instrument as
the put written where the exercise price of the put held is equal to or greater
than the exercise price of the put written. The premium paid by the purchaser of
an option will reflect, among other things, the relationship of the exercise
price to the market price and volatility of the underlying security or
instrument, the remaining term of the option, supply and demand, and interest
rates.
If the writer of an option wishes to terminate his obligation, he may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same kind as the option previously written. The effect of the purchase is that
the clearing corporation will cancel the writer's position. However, a writer
may not effect a closing purchase transaction after it has been notified of the
exercise of an option. Likewise, an investor who is the holder of an option may
liquidate his position by effecting a "closing sale transaction." This is
accomplished by selling an option of the same kind as the option previously
purchased. There is no guarantee that either a closing purchase or a closing
sale transaction can be effected.
Effecting a closing transaction in the case of a written call option will permit
the Fund to write another call option on the underlying security or instrument
with either a different exercise price or expiration date or both, or in the
case of a written put option will permit the Fund to write another put option to
the extent that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction will permit the
cash or proceeds from the concurrent sale of any securities or instruments
subject to the option to be used for other Fund investments. If the Fund desires
to sell a particular security or instrument from its portfolio on which it has
written a call option, it will effect a closing transaction prior to or
concurrent with the sale of the security or instrument.
The Fund may write put and call options only if they are covered, and the
options must remain covered so long as a Fund is obligated as a writer.
An option position may be closed out only on an exchange or board of trade which
provides a secondary market for an option of the same kind. Although the Fund
will generally purchase or write only those options for which there appears to
be an active secondary market, there is no assurance that a liquid secondary
market on an exchange or board of trade will exist for any particular option, or
at any particular time, and for some options no secondary market on an exchange
or board of trade may exist. In such event it might not be possible to effect
closing transactions in particular options, with the result that the Fund would
have to exercise its options in order to realize any profit and would incur
brokerage commissions upon the exercise of call options and upon the subsequent
disposition of underlying securities or instruments acquired through the
exercise of call options or upon the purchase of underlying securities or
instruments for the exercise of put options. If the Fund, as a covered call
option writer, is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security or instrument until
the option expires or it delivers the underlying security or instrument upon
exercise.
The use of put and call options is restricted to no more than twenty percent
(20%) of the net assets in the Fund using such option.
Financial Futures and Related Options
The Balanced, Bond, and Treasury 2000 Funds may engage in transactions in
financial futures contracts or related options, but only as a hedge against
changes in the values of securities held in the Fund's portfolio resulting from
market conditions or which it intends to purchase and where the transactions are
economically appropriate to the reduction of risks inherent in the ongoing
management of the Fund. A Fund may not purchase or sell financial futures or
purchase related options if, immediately thereafter, more than one-third of its
net assets would be hedged. In addition, a Fund may not purchase or sell
financial futures or purchase related options if, immediately thereafter, the
sum of the amount of margin deposits on the Fund's existing futures positions
and premiums paid for related options would exceed five percent (5%) of the
market value of the Fund's total assets.
Unlike when a Fund purchases or sells a security, no price is paid or received
by the Fund upon the purchase or sale of a futures contract. Initially, the Fund
will be required to deposit with the custodian under the name of the futures
commission merchant an amount of cash or U.S. Treasury bills, known as initial
margin. The nature of initial margin in futures transactions is different from
that of margin in securities transactions in that a futures contract margin does
not involve the borrowing of funds by a customer to finance the transaction.
Rather, the initial margin is in the nature of a performance bond or a good
faith deposit on a contract which is returned to the Fund upon termination of
the Fund's contract assuming all contractual obligations have been satisfied.
Subsequent payments, called "variation margin," to or from the custodian will be
made on a daily basis as the price of the underlying securities or instruments
fluctuates making the long and short positions in the futures contract more or
less valuable, a process known as "mark to the market." At any time prior to
expiration of the futures contract, the Fund may elect to close the position by
taking an opposite position which will operate to terminate the Fund's position
in the futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and the Fund
realizes a loss or a gain.
There are several risks in connection with the use of financial futures as a
hedging device. One risk arises because of the imperfect correlation between
movements in the price of the futures contracts and movements in the price of
the securities or instruments which are the subject of the hedge. The price of
the futures contract may move more than or less than the price of the securities
or instruments being hedged. If the price of the futures contract moves less
than the price of the securities or instruments which are the subject of the
hedge, the hedge will not be fully effective but, if the price of the securities
or instruments being hedged has moved in an unfavorable direction, the Fund
would be in a better position than if it had not hedged at all. If the price of
the securities being hedged has moved in a favorable direction, this advantage
will be partially offset by the futures. If the price of the futures contract
moves more than the price of the securities or instruments being hedged, the
Fund will experience either a loss or a gain on the futures contract which will
not be completely offset by movements in the price of the securities or
instruments. To compensate for the imperfect correlation of movements in the
price of securities or instruments being hedged and movements in the price of
the futures contracts, the Fund may buy or sell financial futures contracts in a
greater dollar amount than the dollar amount of securities being hedged if the
historical volatility of the prices of such securities has been greater than the
historical volatility of the futures. Conversely, the Fund may buy or sell fewer
financial futures contracts if the historical volatility of the price of the
securities being hedged is less than the historical volatility of the futures.
The financial impact of any use of financial futures is subject to movements in
interest rates. For example, if the Fund is hedged against the possibility of a
rise in interest rates, adversely affecting the value of bonds held in its
portfolio, and bond prices increase instead, the Fund will lose part or all of
the benefit of the increased value of its bonds which it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of securities may be, but
will not necessarily be, at increased prices which reflect the rising market.
The Fund may have to sell securities at a time when it may be disadvantageous to
do so.
Stock Index Futures and Related Options
The Balanced, Growth and Income Stock, Capital Appreciation Stock, and Mid-Cap
Stock Funds may engage in transactions in stock index futures contracts or
related options, but only as a hedge against changes resulting from market
conditions in the values of securities held in the Fund's portfolio or which the
Fund intends to purchase and where the transactions are economically appropriate
to the reduction of risks inherent in the ongoing management of the Fund. A Fund
may not purchase or sell stock index futures or purchase related options if,
immediately thereafter, more than one-third of its net assets would be hedged.
In addition, a Fund may not purchase or sell stock index futures or purchase
related options if, immediately thereafter, the sum of the amount of margin
deposits on the Fund's existing futures positions and premiums paid for related
options would exceed twenty percent (20%) of net assets.
Unlike when a Fund purchases or sells a security, no price is paid or received
by the Fund upon the purchase or sale of a futures contract. Initially, the Fund
will be required to deposit with the custodian under the name of the futures
commission merchant an amount of cash or U.S. Treasury bills known as initial
margin. The nature of initial margin in futures transactions is different from
that of margin in security transactions in that futures contract margin does not
involve the borrowing of funds by a customer to finance the transactions.
Rather, the initial margin is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Fund upon termination of the
futures contract assuming all contractual obligations have been satisfied.
Subsequent payments, called "variation margin," to or from the custodian, will
be made on a daily basis as the price of the underlying stock index fluctuates
making the long and short positions in the futures contract more or less
valuable, a process known as "mark to the market." At any time prior to
expiration of the futures contract, the Fund may elect to close the position by
taking an opposite position which will operate to terminate the Fund's position
in the futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and the Fund
realizes a loss or a gain.
There are several risks in connection with the use of stock index futures as a
hedging device. One risk arises because of the imperfect correlation between
movements in the price of the stock index futures contract and movements in the
price of the securities which are the subject of the hedge. The price of the
stock index futures may move more than or less than the price of the securities
being hedged. If the price of the stock index futures contract moves less than
the price of the securities which are the subject of the hedge, the hedge will
not be fully effective but, if the price of the securities being hedged has
moved in an unfavorable direction, the Fund would be in a better position than
if it had not hedged at all. If the price of the securities being hedged has
moved in a favorable direction, this advantage will be partially offset by the
futures contract. If the price of the futures contract moves more than the price
of the stock, the Fund will experience either a loss or a gain on the futures
contract which will not be completely offset by movements in the price of the
securities which are the subject of the hedge. To compensate for the imperfect
correlation of movements in the price of securities being hedged and movements
in the price of the stock index futures, the Fund may buy or sell stock index
futures contracts in a greater dollar amount than the dollar amount of
securities being hedged if the historical volatility of the prices of such
securities has been greater than the historical volatility of the index.
Conversely, the Fund may buy or sell fewer stock index futures contracts if the
historical volatility of the price of the securities being hedged is less than
the historical volatility of the stock index.
The financial impact of any use of stock index futures is subject to movements
in the direction of the market. For example, if the Fund has hedged against the
possibility of a decline in the market adversely affecting stocks held in its
portfolio and stock prices increase instead, the Fund will lose part or all of
the benefit of the increased value of its stocks which it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of securities may be, but
will not necessarily be, at increased prices which reflect the rising market.
The Fund may have to sell securities at a time when it may be disadvantageous to
do so.
Compared to the use of stock index futures, the purchase of options on stock
index futures involves less potential risk because the maximum amount at risk is
the premium paid for the options (plus transaction costs). However, there may be
circumstances when the use of an option on a stock index future would result in
a loss when the use of a stock index future would not, such as when there is no
movement in the level of the index.
Bond Fund Practices
The Bond Fund will emphasize investment grade, primarily intermediate-term
securities. If an investment grade security is downgraded by the rating agencies
or otherwise falls below the investment quality standards stated in the
Prospectus, management will retain that instrument only if management believes
it is in the best interest of the Fund. The Fund may invest more than twenty
percent (20%) of total assets in corporate debt securities which are not in the
four highest ratings by Standard and Poor's Corporation or Moody's Investors
Service, Inc. The Fund may also invest in debt options, interest rate futures
contracts, and options on interest rate futures contracts.
The Fund may utilize interest rate futures and options to manage the risk of
fluctuating interest rates. These instruments will be used to control risk or
obtain additional income and not with a view toward speculation. The Fund will
invest only in futures and options which are traded on U.S. exchanges or boards
of trade.
In the fixed income securities market, purchases of some issues are occasionally
made under firm (forward) commitment agreements. Purchases of securities under
such agreements can involve risk of loss due to changes in the market rate of
interest between the commitment date and the settlement date. As a matter of
operating policy, the Fund will not commit itself to forward commitment
agreements in an amount in excess of 25% of net assets and will not engage in
such agreements for leveraging purposes. For purposes of this limitation,
forward commitment agreements are defined as those agreements involving more
than five business days between the commitment date and the settlement date.
Lower-Rated Corporate Debt Securities
As described in the prospectus, each fund, other than the Money Market Fund, may
make certain investments including corporate debt obligations that are unrated
or rated in the lower rating categories (i.e., ratings of BB or lower by
Standard & Poor's or Ba or lower by Moody's). Bonds rated BB or Ba or below by
Standard & Poor's or Moody's (or comparable unrated securities) are commonly
referred to as "lower-rated" securities or as "junk bonds" and are considered
speculative and may be questionable as to principal and interest payments. In
some cases, such bonds may be highly speculative, have poor prospects for
reaching investment standing and be in default. As a result, investment in such
bonds will entail greater speculative risks than those associated with
investment in investment-grade bonds (i.e., bonds rated AAA, AA, A or BBB by
Standard & Poor's or Aaa, Aa, A or Baa by Moody's).
An economic downturn could severely affect the ability of highly leveraged
issuers of junk bonds to service their debt obligations or to repay their
obligations upon maturity. Factors having an adverse impact on the market value
of lower rated securities will have an adverse effect on a fund's net asset
value to the extent it invests in such securities. In addition, a fund may incur
additional expenses to the extent it is required to seek recovery upon a default
in payment of principal or interest on its portfolio holdings.
The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on a
fund's ability to dispose of a particular security when necessary to meet its
liquidity needs. Under adverse market or economic conditions, the secondary
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a result,
the Investment Adviser could find it more difficult to sell these securities or
may be able to sell the securities only at prices lower than if such securities
were widely traded. Prices realized upon the sale of such lower rated or unrated
securities, under these circumstances, may be less than the prices used in
calculating a fund's net asset value.
Since investors generally perceive that there are greater risks associated with
lower-rated debt securities, the yields and prices of such securities may tend
to fluctuate more than those for higher rated securities do. In the lower
quality segments of the fixed-income securities market, changes in perceptions
of issuers' creditworthiness tend to occur more frequently and in a more
pronounced manner than do changes in higher quality segments of the fixed-income
securities market resulting in greater yield and price volatility.
Another factor which causes fluctuations in the prices of fixed-income
securities is the supply and demand for similarly rated securities. In addition,
the prices of fixed-income securities fluctuate in response to the general level
of interest rates. Fluctuations in the prices of portfolio securities subsequent
to their acquisition will not affect cash income from such securities but will
be reflected in a fund's net asset value.
Lower-rated (and comparable non-rated) securities tend to offer higher yields
than higher-rated securities with the same maturities because the historical
financial condition of the issuers of such securities may not have been as
strong as that of other issuers, increasing the risks of loss of income and
principal versus higher-rated securities. In addition to the risk of default,
there are the related costs of recovery on defaulted issues. The Investment
Adviser will attempt to reduce these risks through diversification of these
funds' portfolios and by analysis of each issuer and its ability to make timely
payments of income and principal, as well as broad economic trends in corporate
developments.
Foreign Government Securities
All of the funds other than the Treasury 2000 Fund may invest in debt
obligations of foreign governments and governmental agencies, including those of
emerging countries. Investment in sovereign debt obligations involves special
risks not present in debt obligations of corporate issuers. The issuer of the
debt or the governmental authorities that control the repayment of the debt may
be unable or unwilling to repay principal or interest when due in accordance
with the terms of such debt, and the funds may have limited recourse in the
event of a default. Periods of economic uncertainty may result in the volatility
of market prices of sovereign debt and in turn the fund's net asset value, to a
greater extent than the volatility inherent in debt obligations of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign currency reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the sovereign debtor's policy
toward principal international lenders and the political constraints to which a
sovereign debtor may be subject.
Convertible Securities
The Balanced, Growth and Income Stock, Capital Appreciation Stock, and Mid-Cap
Stock Funds may each invest in convertible securities. Convertible securities
may include corporate notes or preferred stock but are ordinarily a long-term
debt obligation of the issuer convertible at a stated conversion rate into
common stock of the issuer. As with all debt and income-bearing securities, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, to increase as interest rates decline. Convertible
securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality. However, when the market price of
the common stock underlying a convertible security exceeds the conversion price,
the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield basis,
and thus may not decline in price to the same extent as the underlying common
stock. Convertible securities rank senior to common stocks in an issuer's
capital structure and are consequently of higher quality and entail less risk
than the issuer's common stock. In evaluating a convertible security, the fund's
Investment Adviser gives primary emphasis to the attractiveness of the
underlying common stock. The convertible debt securities in which the funds may
invest are subject to the same rating criteria as that fund's investments in
non-convertible debt securities. Convertible debt securities, the market yields
of which are substantially below prevailing yields on non-convertible debt
securities of comparable quality and maturity, are treated as equity securities
for the purposes of a fund's investment policies or restrictions.
Repurchase Agreements
Each fund may enter into repurchase agreements. In a repurchase agreement, a
security is purchased for a relatively short period (usually not more than 7
days) subject to the obligation to sell it back to the issuer at a fixed time
and price plus accrued interest. The funds will enter into repurchase agreements
only with member banks of the Federal Reserve System, U.S. Central Credit Union,
and with "primary dealers" in U.S. Government securities. The Investment Adviser
will continuously monitor the creditworthiness of the parties with whom the
funds enter into repurchase agreements.
The Trust has established a procedure providing that the securities serving as
collateral for each repurchase agreement must be delivered to the Trust's
custodian either physically or in book-entry form and that the collateral must
be marked to market daily to ensure that each repurchase agreement is fully
collateralized at all times. In the event of bankruptcy or other default by a
seller of a repurchase agreement, a fund could experience delays in liquidating
the underlying securities during the period in which the fund seeks to enforce
its rights thereto, possible subnormal levels of income, declines in value of
the underlying securities or lack of access to income during this period and the
expense of enforcing its rights.
Reverse Repurchase Agreements
Each fund may also enter into reverse repurchase agreements which involve the
sale of U.S. Government securities held in its portfolio to a bank with an
agreement that the fund will buy back the securities at a fixed future date at a
fixed price plus an agreed amount of "interest" which may be reflected in the
repurchase price. Reverse repurchase agreements are considered to be borrowings
by the fund entering into them. Reverse repurchase agreements involve the risk
that the market value of securities purchased by the fund with proceeds of the
transaction may decline below the repurchase price of the securities sold by the
fund which it is obligated to repurchase. A fund that has entered into a reverse
repurchase agreement will also continue to be subject to the risk of a decline
in the market value of the securities sold under the agreements because it will
reacquire those securities upon effecting their repurchase. To minimize various
risks associated with reverse repurchase agreements, each fund will establish
and maintain with the Trust's custodian a separate account consisting of liquid
securities, of any type or maturity, in an amount at least equal to the
repurchase prices of the securities (plus any accrued interest thereon) under
such agreements. No fund will enter into reverse repurchase agreements and other
borrowings (except from banks as a temporary measure for extraordinary emergency
purposes) in amounts in excess of 30% of the fund's total assets (including the
amount borrowed) taken at market value. No fund will use leverage to attempt to
increase income. No fund will purchase securities while outstanding borrowings
exceed 5% of the fund's total assets. Each fund will enter into reverse
repurchase agreements only with federally insured banks or credit unions which
are approved in advance as being creditworthy by the Trustees. Under procedures
established by the Trustees, the Investment Adviser will monitor the
creditworthiness of the institutions involved.
U.S. Government Securities
All of the funds may purchase U.S. Government Securities. U.S. Government
Securities are obligations issued or guaranteed by the U.S. Government, its
agencies, authorities or instrumentalities.
Certain U.S. Government securities, including U.S. Treasury bills, notes and
bonds, and Government National Mortgage Association certificates ("Ginnie
Maes"), are supported by the full faith and credit of the U.S. Certain other
U.S. Government securities, issued or guaranteed by Federal agencies or
government sponsored enterprises, are not supported by the full faith and credit
of the U.S. Government, but may be supported by the right of the issuer to
borrow from the U.S. Treasury. These securities include obligations of the
Federal Home Loan Mortgage Corporation ("Freddie Macs"), and obligations
supported by the credit of the instrumentality, such as Federal National
Mortgage Association Bonds ("Fannie Maes"). No assurance can be given that the
U.S. Government will provide financial support to such Federal agencies,
authorities, instrumentalities and government sponsored enterprises in the
future. U.S. Government Securities may also include zero coupon bonds.
Ginnie Maes, Freddie Macs and Fannie Maes are mortgage-backed securities which
provide monthly payments which are, in effect, a "pass-through" of the monthly
interest and principal payments (including any prepayments) made by individual
borrowers on the pooled mortgage loans. Collateralized mortgage obligations
("CMOs") in which the fund may invest are securities issued by a corporation or
a U.S. Government instrumentality that are collateralized by a portfolio of
mortgages or mortgage-backed securities. Mortgage-backed securities may be less
effective than traditional debt obligations of similar maturity at maintaining
yields during periods of declining interest rates. (See "Mortgage-Backed and
Asset-Backed Securities.")
Each fund may invest in separately traded principal and interest components of
securities guaranteed or issued by the U.S. Treasury if such components are
traded independently under the Separate Trading of Registered Interest and
Principal of Securities program ("STRIPS").
All of the funds may acquire securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies, authorities or instrumentalities
in the form of custody receipts. Such receipts evidence ownership of future
interest payments, principal payments or both on certain notes or bonds issued
by the U.S. Government, its agencies, authorities or instrumentalities. For
certain securities law purposes, custody receipts are not considered obligations
of the U.S. Government.
Mortgage-Backed and Asset-Backed Securities
The Money Market, Bond, and Balanced Funds may invest in mortgage-backed
securities, which represent direct or indirect participation in, or are
collateralized by and payable from, fixed rate or variable rate mortgage loans
secured by real property. These funds may also invest in fixed or variable rate
asset-backed securities, which represent participation in, or are secured by and
payable from, assets such as motor vehicle installment sales, installment loan
contracts, leases of various types of real and personal property, receivables
from revolving credit (i.e., credit card) agreements and other categories of
receivables. Such assets are securitized though the use of trusts and special
purpose corporations. Payments or distributions of principal and interest may be
guaranteed up to certain amounts and for a certain time period by a letter of
credit or a pool insurance policy issued by a credit union or other financial
institution unaffiliated with the Trust, or other credit enhancements may be
present.
Mortgage-backed and asset-backed securities are often subject to more rapid
repayment than their stated maturity date would indicate as a result of the
pass-through of prepayments of principal on the underlying loans. A fund's
ability to maintain positions in such securities will be affected by reductions
in the principal amount of such securities resulting from prepayments, and its
ability to reinvest the returns of principal at comparable yields is subject to
generally prevailing interest rates at that time. To the extent that a fund
invests in mortgage-backed and asset-backed securities, the values of its
portfolio securities will vary with changes in market interest rates generally
and the differentials in yields among various kinds of U.S. Government
securities and other mortgage-backed and asset-backed securities.
Asset-backed securities present certain additional risks that are not presented
by mortgage backed securities because asset-backed securities generally do not
have the benefit of a security interest in collateral that is comparable to
mortgage assets. Credit card receivables are generally unsecured and the debtors
on such receivables are entitled to the protection of a number of state and
federal consumer credit laws, many of which give such debtors the right to
set-off certain amounts owed on the credit cards, thereby reducing the balance
due. Automobile receivables generally are secured, but by automobiles rather
than residential real property. Most issuers of automobile receivables permit
the loan servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would secure an interest superior to that of the holders of the
asset-backed securities. In addition, because of the large number of vehicles
involved in a typical issuance and technical requirements under state laws, the
trustee for the holders of the automobile receivables may not have a proper
security interest in the underlying automobiles. Therefore, there is the
possibility that, in some cases, recoveries on repossessed collateral may not be
available to support payments on these securities.
Forward Commitment and When-Issued Securities
Each fund may purchase securities on a when-issued or forward commitment basis.
"When-issued" refers to securities whose terms are specified and for which a
market exists, but which have not been issued. Each fund will engage in
when-issued transactions with respect to securities purchased for its portfolio
in order to obtain what is considered to be an advantageous price and yield at
the time of the transaction. For when-issued transactions, no payment is made
until delivery is due, often a month or more after the purchase. In a forward
commitment transaction, a fund contracts to purchase securities for a fixed
price at a future date beyond customary settlement time.
When a fund engages in forward commitment and when-issued transactions, it
relies on the seller to consummate the transaction. The failure of the issuer or
seller to consummate the transaction may result in the fund's losing the
opportunity to obtain a price and yield considered to be advantageous. The
purchase of securities on a when-issued or forward commitment basis also
involves a risk of loss if the value of the security to be purchased declines
prior to the settlement date.
On the date a fund enters into an agreement to purchase securities on a
when-issued or forward commitment basis, the fund will segregate in a separate
account cash or liquid securities, of any type or maturity, equal in value to
the fund's commitment. These assets will be valued daily at market, and
additional cash or securities will be segregated in a separate account to the
extent that the total value of the assets in the account declines below the
amount of the when-issued commitments. Alternatively, a fund may enter into
offsetting contracts for the forward sale of other securities that it owns.
INVESTMENT LIMITATIONS
The Ultra Series Fund has adopted the following restrictions and policies
relating to the investment of assets and the activities of each Fund. The
policies in this INVESTMENT LIMITATION section are fundamental and may not be
changed for a Fund without the approval of the holders of a majority of the
outstanding votes of that Fund (which for this purpose and under the Investment
Company Act of 1940 (the "Act") means the lesser of (i) sixty-seven percent
(67%) of the outstanding votes attributable to shares represented at a meeting
at which more than fifty percent (50%) of the outstanding votes attributable to
shares are represented or (ii) more than fifty percent (50%) of the outstanding
votes attributable to shares). Except as noted below, none of the Funds within
the Ultra Series Fund may:
1. Borrow money in excess of one-third of the value of its total assets
taken at market value (including the amount borrowed) and then only
from banks as a temporary measure for extraordinary or emergency
purposes. This borrowing provision is not for investment leverage, but
solely to facilitate management of a Fund by enabling the Fund to meet
redemption requests where the liquidation of an investment is deemed
to be inconvenient or disadvantageous. Except for the Mid-Cap Stock
Fund, a Fund will not make additional investments while it has
borrowings outstanding.
2. Underwrite securities of other issuers, except that a Fund may acquire
portfolio securities under circumstances where, if the securities are
later publicly offered or sold by the Fund, it may be deemed to be an
underwriter for purposes of the Securities Act of 1933.
3. Invest over twenty-five percent (25%) of assets taken at its market
value in any one industry. Securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or instruments secured
by these money market instruments, such as repurchase agreements,
shall not be considered investments in any one industry for purposes
of these rules. Telephone, gas, and electric utility industries shall
be considered separate industries.
4. Purchase or sell commodities, commodity contracts (except financial
futures contracts), foreign exchange or real estate, including
interests in real estate investment trusts whose securities are not
readily marketable or invest in oil, gas or other mineral development
or exploration programs. (This does not prohibit investment in the
securities of corporations which own interests in commodities, foreign
exchange, real estate or oil, gas or other mineral development or
exploration programs.) The Mid-Cap Stock Fund may invest in securities
related to oil, gas, or other mineral development or exploration
programs.
5. Invest more than five percent (5%) of the value of the assets of a
Fund in securities of any one issuer, except in the case of the
securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities.
6. Invest in securities of a company for the purpose of exercising
control or management. The Mid-Cap Stock Fund may engage in such
activities.
7. Invest in securities issued by any other registered investment
companies in excess of five percent (5%) of total assets, nor in
excess of three percent (3%) of the assets of the acquired investment
company. Not more than ten percent (10%) of total assets taken at
market value will be invested in such securities.
8. Purchase or sell real estate, except a Fund may purchase securities
which are issued by companies which invest in real estate or interests
therein.
9. Issue senior securities as defined in the Act, except insofar as a
Fund may be deemed to have issued a senior security by reason of (a)
entering into any repurchase agreement; (b) borrowing money in
accordance with restrictions described above; (c) lending portfolio
securities; (d) purchasing securities on a when-issued or delayed
delivery basis; or (e) accommodating short sales. If the asset
coverage falls below three hundred percent (300%), when taking into
account items (a) through (e), a Fund may be required to liquidate
investments to be in compliance with the Act.
10. Lend portfolio securities in excess of thirty percent (30%) of the
value of its total assets. Any loans of portfolio securities will be
made according to guidelines established by the Trustees, including
maintenance of collateral of the borrower at least equal at all times
to the current market value of the securities loaned.
11. Invest in illiquid assets (which include repurchase agreements that do
not mature within seven (7) days, non-negotiable time deposits
maturing in over seven (7) days, restricted securities, and other
securities for which there is no ready market) in an amount in excess
of ten percent (10%) of the value of its total assets. The Mid-Cap
Stock Fund may invest up to fifteen percent (15%) of the value of its
net assets in illiquid assets.
12. Make loans (the acquisition of bonds, debentures, notes and other
securities as permitted by the investment objectives of a Fund shall
not be deemed to be the making of loans) except that a Fund may
purchase securities subject to repurchase agreements under policies
established by the Trustees.
13. Invest in foreign securities (ADRs are not considered foreign
securities) in excess of ten percent (10%) of the value of its total
assets. The Mid-Cap Stock Fund may invest up to twenty-five percent
(25%) of the value of its total assets in foreign securities.
Except for the limitations on borrowing from banks, if the above percentage
restrictions are adhered to at the time of investment, a later increase or
decrease in such percentage resulting from a change in values of securities or
amount of net assets will not be considered a violation of any of the foregoing
restrictions.
The Money Market Fund may not write put or call options, purchase common stock
or other equity securities or purchase securities on margin or sell short. The
Treasury 2000, Bond, Balanced, Growth and Income Stock, Capital Appreciation
Stock, and Mid-Cap Stock Funds may not purchase securities on margin or sell
short. However, each Fund may obtain such short-term credits as may be necessary
for the clearance of transactions and may make margin payments in connection
with transactions in futures and related options as permitted by its investment
policies.
PORTFOLIO TURNOVER
While the Money Market Fund is not subject to specific restrictions on portfolio
turnover, it generally does not seek profits by short-term trading. However, it
may dispose of a portfolio security prior to its maturity where disposition
seems advisable because of a revised credit evaluation of the issuer or other
considerations. Because money market instruments have short maturities, the Fund
expects to have a high portfolio turnover, but since brokerage commissions are
not customarily charged on money market instruments, a high turnover should not
adversely affect Net Asset Value or net investment income.
The Treasury 2000, Bond, Balanced, Growth and Income Stock, Capital Appreciation
Stock, and Mid-Cap Stock Funds will trade whenever, in management's view,
changes are appropriate to achieve the stated investment objectives. Management
does not anticipate that unusual portfolio turnover will be required and intends
to keep such turnover to moderate levels consistent with the objectives of each
Fund. Although management makes no assurances, it is expected that the annual
portfolio turnover rate will be generally less than 100%. This would mean that
normally less than 100% of the securities held by the Fund would be replaced in
any one year (excluding turnover of securities having a maturity of one year or
less).
MANAGEMENT OF THE FUND
Ultra Series Fund is governed by a Board of Trustees. The Trustees have the
duties and responsibilities set forth under the applicable laws of the State of
Massachusetts, including but not limited to the management and supervision of
the funds.
The board, from time to time, may include individuals who may be deemed to be
affiliated persons of CIMCO, the funds' adviser. At all times, however, the
majority of board members will not be affiliated with CIMCO or the funds.
The funds do not hold annual shareholder meetings, but may hold special meetings
for such purposes as electing or removing board members, changing fundamental
policies, approving certain management contracts, approving or amending a 12b-1
plan, or as otherwise required by the 1940 Act.
Officers and Trustees
<TABLE>
Name and Address Fund Position(s) Principal Occupation(s)
For the Past 5 Years
<S> <C> <C>
Michael S. Daubs* President, CIMCO Inc.
5910 Mineral Point Road 1983 - Present President, 1982 - Present
Madison, WI 53705 Trustee,
Age - 55 CUNA Mutual Life Insurance Company
Chief Investment Officer, 1973 - Present
CUNA Mutual Insurance Society
Chief Investment Officer, 1990 - Present
Lawrence R. Halverson* Vice President, CIMCO Inc.
5910 Mineral Point Road 1987 - Present Senior Vice President, 1996 - Present
Madison, WI 53705 Secretary, Vice President, 1987 - 1996
Age - 53 1992 - Present CUNA Brokerage Services, Inc.
Trustee, President, 1996 - 1998
1997 - Present
Robert M. Buckingham* Assistant Secretary CUNA Mutual Life Insurance Company
2000 Heritage Way 1993-Present Vice President and Valuation Actuary
Waverly, IA 50677 1991-Present
Age - 44
Michael G. Joneson* Treasurer, CUNA Mutual Life Insurance Company
2000 Heritage Way and Assistant Vice President - Controller, Treasurer
Waverly, IA 50677 Secretary 1986-Present
Age - 52 1992-Present
Gwendolyn M. Boeke Trustee Evangelical Lutheran Church in America
2000 Heritage Way 1988 - Present Area Representative - Iowa
Waverly, IA 50677 1990 - Present
Age - 64
Alfred L. Disrud Trustee Planned Giving Services
2000 Heritage Way 1987 - Present Owner
Waverly, IA 50677 1986 - Present
Age - 78
Keith S. Noah Trustee Noah & Smith (Attorneys)
2000 Heritage Way 1984 - Present Partner
Waverly, IA 50677 1948 - Present
Age - 78
Thomas C. Watt Trustee MidAmerican Energy Company
2000 Heritage Way 1986 - Present Manager - Business Initiatives
Waverly, IA 50677 1997 - Present
Age - 62
MidAmerican Energy Company
District Manager
1995 - 1997
Midwest Power Systems, Inc.
Division Manager
1992 - 1995
</TABLE>
*An interested person within the meaning of the Act.
Trustee Compensation
Aggregate Compensation Total Compensation from
Name, Position from Fund(1) Fund and Fund Complex(1)(2)
Michael S. Daubs(3) None None
Lawrence R. Halverson(3) None None
Gwendolyn M. Boeke $4,000 $8,000
Alfred L. Disrud $4,000 $8,000
Keith S. Noah $4,000 $8,000
Thomas C. Watt $4,000 $8,000
(1)Amounts for the fiscal year ending December 31, 1998.
(2)"Fund Complex" includes the Ultra Series Fund and MEMBERS Mutual Funds.
(3)Non-compensated interested trustee.
Trustees and officers of the Ultra Series Fund do not receive any benefits from
the Ultra Series Fund upon retirement nor does the Ultra Series Fund accrue any
expense for pension or retirement benefits. All Trustees and officers of the
Ultra Series Fund also serve as trustees or officers of the MEMBERS Mutual
Funds, an open-end management investment company that is managed by the
Investment Adviser.
Substantial Shareholders
CUNA Mutual Life Insurance Company (the "Company") established the Ultra Series
Fund as an investment vehicle underlying the separate accounts of the Company
which issue variable contracts. The shareholders of the Ultra Series Fund are as
follows:
Voting rights are described in the Ultra Series Fund Prospectus in the GENERAL
INFORMATION, Shareholder Rights section.
Beneficial Owners
As of March 31, 1999, the directors and officers as a group own less than one
percent (1%). In addition to its own beneficial interest in each Fund, the
Company holds legal title on behalf of the beneficiaries of employee benefit
plans held within the Company separate accounts not registered pursuant to an
exemption from the registration provisions of the securities acts. As of March
31, 1999, the following persons had a beneficial interest exceeding five percent
(5%):
Beneficial Owner
Percentage of
Fund Beneficial Owner Holdings Net Assets
Treasury 2000 CUNA Mutual Life $1,843,523.23 28.84%
Insurance Company
2000 Heritage Way
Waverly, IA 50677
THE INVESTMENT ADVISER
The Management Agreement ("Agreement") requires that the Investment Adviser
provide continuous professional investment management of the investments of the
Ultra Series Fund, including establishing an investment program complying with
the investment objectives, policies and restrictions of each Series. In
addition, the Adviser has agreed to provide, or arrange to have provided, all
services to each Series of the Ultra Series Fund, including but not limited to
legal and accounting services, mailing and printing services, custody and
transfer agent services, etc. The Investment Adviser is CIMCO Inc. The Company,
and CUNA Mutual Investment Corporation each own a one-half interest in the
Investment Adviser. CUNA Mutual Insurance Society is the sole owner of CUNA
Mutual Investment Corporation. CUNA Mutual Investment Corporation is the sole
owner of CUNA Brokerage Services, Inc., the principal underwriter. The
Investment Adviser and the Ultra Series Fund have servicing agreements with the
Company and with CUNA Mutual Insurance Society. The Company and CUNA Mutual
Insurance Society entered into a permanent affiliation July 1, 1990. At the
current time, all of the directors of the Company are also directors of CUNA
Mutual Insurance Society and many of the senior executive officers of the
Company hold similar positions with CUNA Mutual Insurance Society.
The Investment Adviser, pursuant to a Management Agreement effective May 1,
1997, provides investment advice for each Fund and provides or arranges for the
provision of substantially all other services required by the Ultra Series Fund
through services agreements with affiliated and unaffiliated service providers.
Such services include all administrative, accounting and legal services as well
as the services of custodians, transfer agents and dividend disbursing agents.
There are, however, certain expenses that The Ultra Series Fund pays for itself
under the Management Agreement. These are: fees of the independent Trustees,
fees of the independent auditors, interest on borrowings by a Fund, any taxes
that a Fund must pay, and any extraordinary expenses incurred by a Fund or Funds
not in the ordinary course of business. As full compensation for its services,
the Ultra Series Fund pays the Investment Adviser a unitary fee computed at an
annualized percentage rate of the average value of the daily net assets of each
series as set forth in the table below:
Management Fee Table
Series Management Fee
Money Market 0.45 %
Treasury 2000 0.45 %
Bond 0.55 %
Balanced 0.70 %
Growth & Income Stock 0.60 %
Capital Appreciation Stock 0.80 %
Mid-Cap Stock 1.00 %
The total fee paid to the Investment Adviser during the years ended December 31
was as follows:
1996 $2,094,152
1997 $5,320,543
1998 $12,547,473
The Investment Adviser makes the investment decisions and is responsible for the
investment and reinvestment of assets; performs research, statistical analysis,
and continuous supervision of the Fund's investment portfolio; furnishes office
space for the Ultra Series Fund; provides the Ultra Series Fund with such
accounting data concerning the investment activities of the Ultra Series Fund as
is required to be prepared and files all periodic financial reports and returns
required to be filed with the Securities and Exchange Commission ("SEC") and any
other regulatory agency; continuously monitors compliance by the Ultra Series
Fund in its investment activities with the requirements of the Act and the rules
promulgated pursuant thereto; and renders to the Ultra Series Fund such periodic
and special reports as may be reasonably requested with respect to matters
relating to the duties of the Investment Adviser.
The Adviser contracts with the Company to perform some of these services on
behalf of the Ultra Series Fund in return for a portion of the investment
advisory fee. The Adviser paid $447,362, $1,268,229, and $2,800,753 for those
services in 1996, 1997, and 1998, respectively.
The Adviser contracts with CUNA Mutual Insurance Society to perform cash
management and investment accounting services on behalf of the Ultra Series Fund
in return for a portion of the investment advisory fee. The Adviser paid
$19,711, $16,404, and $0 for those services in 1996, 1997, and 1998,
respectively.
The Management Agreement provides that the Investment Adviser shall not be
liable to the Ultra Series Fund or any shareholder for anything done or omitted
by it, or for any losses that may be sustained in the purchase, holding or sale
of any security, except for an act or omission involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties imposed upon it
by the Management Agreement.
MANAGEMENT AGREEMENTS WITH SUBADVISERS
As described in the prospectus, CIMCO manages the assets of the Mid-Cap Stock
Fund using a "manager of managers" approach under which CIMCO may allocate some
of the fund's assets among one or more "specialist" subadvisers (each, a
"Subadviser").
Even though Subadvisers have day-to-day responsibility over the management of a
portion of the Mid-Cap Stock Fund, CIMCO retains the ultimate responsibility for
the performance of these funds and will oversee the Subadvisers and recommend
their hiring, termination, and replacement.
CIMCO may, at some future time, employ a subadvisory or "manager of managers"
approach to other new or existing funds in addition to the Mid-Cap Stock Fund.
As of the date of the prospectus, Heartland Advisors, Inc. is the only
subadviser managing some of the assets of the Mid-Cap Stock Fund. The prospectus
contains a description of Heartland and its fee for managing the assets of the
Mid-Cap Stock Fund.
The directors and principal officers of the Investment Adviser are as follows:
Janice C. Doyle Assistant Secretary
Michael S. Daubs Director and President
Lawrence R. Halverson Senior Vice President and Secretary
Joyce A. Harris Director and Chair
James C. Hickman Director
Michael B. Kitchen Director
Daniel J. Larson Vice President
Thomas J. Merfeld Vice President
George A. Nelson Director and Vice Chair
Jeffrey B. Pantages Senior Vice President
Scott R. Powell Vice President
CUNA Brokerage Services, Inc., 5910 Mineral Point Road, Madison, WI 53705-4456
is the Trust's principal underwriter.
EXPENSES OF THE FUND
The Money Market, Bond, Balanced, Growth and Income Stock, Capital Appreciation
Stock, and Mid-Cap Stock Funds are currently obligated to pay to the Investment
Adviser the Management Fee set forth in the Management Fee Table above. As part
of its services, the Investment Adviser has agreed to provide or arrange to have
provided, administrative services to each Fund. Currently, the Company provides
the Funds with administrative, fund accounting, transfer agency and shareholder
services. The Adviser pays the Company .15% of the average value of the daily
net assets for these services.
Prior to May 1, 1997, expenses which exceeded .65% of the average value of daily
net assets of such Fund were being absorbed by the Company pursuant to an
Expense Reimbursement Agreement between the Company and the Ultra Series Fund.
For the year ended December 31, 1995, the Company absorbed $96,817 of ordinary
business expense. For the year ended December 31, 1996, no expenses were
absorbed by the Company. For the year ended December 31, 1997, $48,308 was
absorbed by the Company.
DISTRIBUTION PLAN AND AGREEMENT
The Ultra Series fund has adopted a Distribution Plan pursuant to Rule 12b-1 of
the Act under which the Ultra Series Fund bears certain expenses relating to the
distribution of Class C shares. The Distribution Plan provides for the Ultra
Series Fund to pay CUNA Brokerage Services, Inc. a distribution fee equal, on an
annual basis, to 0.25% of the average daily net assets of each Fund attributable
to Class C shares. The distribution fee is calculated and accrued daily and paid
quarterly or at such other intervals as the Ultra Series Fund and CUNA Brokerage
Services, Inc. agree. The distribution fee is paid solely out of each Fund's
assets supporting Class C shares. This means that the net asset value of Class C
shares reflects the daily accrual of the fee but that the net asset value of
Class Z shares is not affected by the distribution fee and no distribution fee
is supported by assets of any Fund representing Class Z shares.
Under the Distribution Plan, CUNA Brokerage Services, Inc. receives the entire
amount of the distribution fee and may spend any amount of the fee that it
considers appropriate to finance any activity that is primarily intended to
result in the sale of Class C shares or to service Class C shareholders. CUNA
Brokerage Services, Inc. does not have to spend all of the distribution fee and
can spend more than the amount of the fee to finance activities intended to
result in the sale of Class C shares or to service Class C shareholders. If CUNA
Brokerage Services, Inc. spends less than the entire amount of the fee in any
period, it may keep the amounts not spent. If CUNA Brokerage Services, Inc.
spends more than the amount of the fee in any period, the Ultra Series Fund will
not reimburse CUNA Brokerage Services, Inc. for the difference.
Activities primarily intended to result in the sale of Class C shares or service
Class C shareholders include, among other: (a) compensation to employees of CUNA
Brokerage Services, Inc.; (b) compensation to and expenses, including overhead
and telephone expenses, of CUNA Brokerage Services, Inc., other selected
broker-dealers, and insurance companies who engage in or support activities
primarily intended to result in the sale of Class C shares; (c) the costs of
printing and distributing prospectuses, statements of additional information and
annual and interim reports of the Ultra Series Fund for prospective Class C
shareholders; (d) the costs of preparing, printing and distributing sales
literature and advertising materials attributable to Class C shares; (e)
expenses relating to the formulation and implementation of marketing strategies
and promotional activities relating to Class C shares such as direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; and (f) the costs of obtaining such information, analyses and
reports with respect to marketing and promotional activities and investor
accounts as the Ultra Series Fund may, from time to time, deem advisable. CUNA
Brokerage Services, Inc. did not incur any expenses in 1998 relating to the sale
of Class C shares.
The Distribution Plan was initially approved on October 29, 1996, by the Board
of Trustees of the Ultra Series Fund, including all disinterested Trustees. The
Plan became effective May 1, 1997, and continues in effect from year to year
only so long as such continuance is approved at least annually by the Trustees,
including a majority of the Trustees who are not interested, as defined by the
Act, and who have no direct or indirect financial interest in the operation of
the Plan or agreements related to it.
Any amendment which would materially increase the amount which the Ultra Series
Fund may expend under the Plan requires approval by holders of a majority of the
outstanding shares of the Ultra Series Fund. Any agreement related to the Plan
may be terminated at any time, upon sixty (60) days written notice to the other
party, by a vote of a majority of the disinterested Trustees, or by vote of a
majority of the Trust's outstanding voting securities. In the event of an
assignment, the Plan terminates automatically. As long as the Plan is in effect,
the selection and nomination of the disinterested Trustees of the Ultra Series
Fund are committed to the discretion of the disinterested Trustees.
TRANSFER AGENT
CUNA Mutual Life Insurance Company, 2000 Heritage Way, Waverly, IA 50677, is the
transfer agent and dividend disbursing agent for the Fund. As transfer agent,
CUNA Mutual maintains the shareholder records and reports. CIMCO pays CUNA
Mutual Life Insurance Company .15% of the average daily net assets for its
transfer agency services and other services described in the Fund Expenses
section above.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110, is
the current custodian for the securities and cash of the Ultra Series Fund. The
custodian holds for the Ultra Series Fund all securities and cash owned by the
Ultra Series Fund, and receives for the Ultra Series Fund all payments of
income, payments of principal or capital distributions with respect to
securities owned by the Ultra Series Fund. Also, the custodian receives payment
for the shares issued by the Ultra Series Fund. The custodian releases and
delivers securities and cash upon proper instructions from the Ultra Series
Fund. Pursuant to and in furtherance of a Custody Agreement with the custodian,
the Ultra Series Fund uses automated instructions and a cash data entry system
to transfer monies to and from the Ultra Series Fund's account at the custodian.
INDEPENDENT AUDITORS
The financial statements have been included herein and elsewhere in the
Registration Statement in reliance upon the reports of KPMG Peat Marwick, LLP,
4200 Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402, independent
auditors, and upon the authority of said firm as experts in accounting and
auditing.
BROKERAGE
It is the policy of the Ultra Series Fund, in effecting transactions in
portfolio securities, to seek best execution of orders at the most favorable
prices. The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations, including without limitation, the overall direct net economic
result (involving both price paid or received and any commissions and other
costs paid), the efficiency with which the transaction is effected, the ability
to effect the transaction at all where a large block is involved, the
availability of the broker to stand ready to execute potentially difficult
transactions in the future and the financial strength and stability of the
broker. Such considerations are judgmental and are weighed by management in
determining the overall reasonableness of brokerage commissions paid.
Subject to the foregoing, a factor in the selection of brokers is the receipt of
research services, analyses and reports concerning issuers, industries,
securities, economic factors and trends and other statistical and factual
information. Any such research and other statistical and factual information
provided by brokers to the Ultra Series Fund, or the Investment Adviser or
Sub-Adviser ("Advisers" for purposes of this section), is considered to be in
addition to and not in lieu of services required to be performed by the Advisers
under its contract with the Ultra Series Fund. Research obtained on behalf of
the Ultra Series Fund may be used by the Advisers in connection with other
clients of the Advisers. Conversely, research received from placement of
brokerage for other accounts may be used by the Advisers in managing investments
of the Ultra Series Fund. Therefore, the correlation of the cost of research to
individual clients of the Advisers, including the Ultra Series Fund, is
indeterminable and cannot practically be allocated among the Ultra Series Fund
and the Advisers' other clients. Consistent with the above, the Ultra Series
Fund may effect principal transactions with a broker-dealer that furnishes
brokerage and/or research services, or designate any such broker-dealer to
receive selling commissions, discounts or other allowances, or otherwise deal
with any broker-dealer, in connection with the acquisition of securities in
underwritings. Accordingly, the net prices or commission rates charged by any
such broker-dealer may be greater than the amount another firm might charge if
the management of the Ultra Series Fund determines in good faith that the amount
of such net prices and commissions is reasonable in relation to the value of the
services and research information provided by such broker-dealer to the Ultra
Series Fund. For the year ended December 31, 1996, Capital Appreciation Stock
Fund paid $171,251, Growth and Income Stock Fund paid $336,331 and Balanced Fund
paid $150,550 in brokerage fees. There were no brokerage fees paid by Bond,
Money Market, or Treasury 2000 Funds in 1996. For the year ended December 31,
1997, Capital Appreciation Stock Fund paid $186,338, Growth and Income Stock
Fund paid $352,096 and Balanced Fund paid $92,415 in brokerage fees. There were
no brokerage fees paid by Bond, Money Market, or Treasury 2000 Funds in 1997.
For the year ended December 31, 1998, Capital Appreciation Stock Fund paid
$358,785, Growth and Income Stock Fund paid $372,675, and Balanced Fund paid
$117,875 in brokerage fees. There were no brokerage fees paid by Bond, Money
Market, or Treasury 2000 Funds in 1998.
The Ultra Series Fund expects that purchases and sales of money market
instruments usually will be principal transactions. Money market instruments are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. There usually will be no brokerage commissions paid
for such purchases. Purchases from underwriters will include the underwriting
commission or concession and purchases from dealers serving as market makers
will include the spread between the bid and asked price. Where transactions are
made in the over-the-counter market, the Ultra Series Fund will deal with the
primary market makers unless equal or more favorable prices are otherwise
obtainable.
Where advantageous, the Ultra Series Fund may participate with other clients of
the Advisers in "bunching of trades" wherein one purchase or sale transaction
representing several different client accounts is placed with a broker. The
Advisers have established various policies and procedures that assure equitable
treatment of all accounts.
The policy with respect to brokerage is and will be reviewed by the Trustees
from time to time. Because of the possibility of further regulatory developments
affecting the securities exchanges and brokerage practices generally, the
foregoing practices may be changed, modified or eliminated.
HOW SECURITIES ARE OFFERED
Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest of the Trust without par
value. Under the Declaration of Trust, the Trustees have the authority to create
and classify shares of beneficial interest in separate series, without further
action by shareholders. As of the date of this SAI, the Trustees have authorized
shares of the seven funds described in the prospectus. Additional series and/or
classes may be added in the future. The Declaration of Trust also authorizes the
Trustees to classify and reclassify the shares of the Trust, or new series of
the Trust, into one or more classes. As of the date of this SAI, the Trustees
have authorized the issuance of two classes of shares of the fund, designated as
Class C and Class Z. Additional classes of shares may be offered in the future.
The shares of each class of each fund represent an equal proportionate interest
in the aggregate net assets attributable to that class of that fund. The
different classes of a fund may bear different expenses relating to the cost of
holding shareholder meetings necessitated by the exclusive voting rights of any
class of shares.
Dividends paid by each fund, if any, with respect to each class of shares will
be calculated in the same manner, at the same time and on the same day and will
be in the same amount, except for differences resulting from the fact that: (i)
the distribution and service fees relating to Class C or Class Z shares will be
borne exclusively by that class; (ii) each of Class C shares and Class Z shares
will bear any other class expenses properly allocable to such class of shares,
subject to the requirements imposed by the Internal Revenue Service on funds
having a multiple-class structure. Similarly, the NAV per share may vary
depending on whether Class C shares or Class Z shares are purchased.
In the event of liquidation, shareholders of each class of each fund are
entitled to share pro rata in the net assets of the class of the fund available
for distribution to these shareholders. Shares entitle their holders to one vote
per dollar value of shares, are freely transferable and have no preemptive,
subscription or conversion rights. When issued, shares are fully paid and
non-assessable, except as set forth below.
Share certificates will not be issued.
Limitation of Trustee and Officer Liability
The Declaration further provides that the Trust shall indemnify each of its
Trustees and officers against liabilities and expenses reasonably incurred by
them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Trust.
The Declaration does not authorize the Trust to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.
Limitation of Interseries Liability
All persons dealing with a fund must look solely to the property of that
particular fund for the enforcement of any claims against that fund, as neither
the Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of a fund or the Trust. No fund is liable for
the obligations of any other fund. Since the funds use a combined prospectus,
however, it is possible that one fund might become liable for a misstatement or
omission in the prospectus regarding another fund with which its disclosure is
combined. The Trustees have considered this factor in approving the use of the
combined prospectus.
Pursuant to current interpretations of the Act, the Company will solicit voting
instructions from owners of variable annuity or variable life insurance
contracts issued by it with respect to any matters that are presented to a vote
of shareholders. Insurance companies not affiliated with the CUNA Mutual Group
will generally follow similar procedures. On any matter submitted to a vote of
shareholders, all shares of the Ultra Series Fund then issued and outstanding
and entitled to vote shall be voted in the aggregate and not by series or Class,
except for matters concerning only a series or Class. Certain matters approved
by a vote of the shareholders of the Ultra Series Fund may not be binding on a
series or Class whose shareholders have not approved such matter. This is the
case if the matter affects interests of that series or Class which are not
identical with the interests of all other series and Classes such as a change in
investment policy, approval of the Investment Adviser or a material change in
the distribution Plan and failure by the holders of a majority of the
outstanding voting securities of the series or Class to approve the matter. The
holder of each share of each series or Class of stock of the Ultra Series Fund
shall be entitled to one vote for each full dollar of net asset value and a
fractional vote for each fractional dollar of net asset value attributed to the
shareholder.
The Ultra Series Fund is not required to hold annual meetings of shareholders
and does not plan to do so. The Trustees may call special meetings of
shareholders for action by shareholder vote as may be required by the Act or the
Declaration of Trust. The Trustees have the power to alter the number and the
terms of office of the Trustees, and may lengthen their own terms or make their
terms of unlimited duration and appoint their successors, provided always at
least a majority of the Trustees have been elected by the shareholders of the
Ultra Series Fund. The Declaration of Trust provides that shareholders can
remove Trustees by a vote of two-thirds of the outstanding shares and the
Declaration of Trust sets out procedures to be followed.
Because shares of the Ultra Series Fund are sold to the CUNA Mutual Group
separate accounts, qualified retirement plans sponsored by CUNA Mutual Group,
unaffiliated insurance company separate accounts and qualified retirement plans,
it is possible that material conflicts could arise among and between the
interests of: (1) variable annuity contract owners (or participants under group
variable annuity contracts) and variable life insurance contract owners, or (2)
owners of variable annuity and variable life insurance contracts of affiliated
and unaffiliated insurance companies and (3) participants in affiliated and
unaffiliated qualified retirement plans. Such material conflicts could include,
for example, differences in federal tax treatment of variable annuity contracts
versus variable life insurance contracts. The Ultra Series Fund does not
currently foresee any disadvantage to one category of investors vis-a-vis
another arising from the fact that the Ultra Series Fund's shares support
different types of variable insurance contracts. However, the Ultra Series
Fund's Board of Trustees will continuously monitor events to identify any
potential material conflicts that may arise between the interests of different
categories or classes of investors and to determine what action, if any, should
be taken to resolve such conflicts. Such action may include redeeming shares of
the Ultra Series Fund held by one or more of the separate accounts or qualified
retirement plans involved in any material irreconcilable conflict.
NET ASSET VALUE OF SHARES
Net Asset Value per share is calculated each Valuation Day. Net Asset Value is
determined by dividing each Fund's total net assets by the number of shares
outstanding at the time of calculation. Total net assets are determined by
adding the total current value of portfolio securities, cash, receivables, and
other assets and subtracting liabilities. Shares will be sold and redeemed at
the Net Asset Value next determined after receipt of the purchase order or
request for redemption.
The Net Asset Value of a share issued by the Bond, Balanced, Growth and Income
Stock, Capital Appreciation Stock, and Mid-Cap Stock Funds was initially set at
$10.00 per share. The Net Asset Value of a share issued by the Money Market Fund
was initially set at $1.00 per share. (See Money Market Fund below.) The Net
Asset Value of a share of the Treasury 2000 Fund was initially set at $3.62 per
share.
Money Market Fund
The Trustees have determined that the best method currently available for
determining the Net Asset Value is the amortized cost method. The Trustees will
utilize this method pursuant to Rule 2a-7 of the Act. The use of this valuation
method will be continuously reviewed and the Trustees will make such changes as
may be necessary to assure that assets are valued fairly as determined by the
Trustees in good faith. Rule 2a-7 obligates the Trustees, as part of their
responsibility within the overall duty of care owed to the shareholders, to
establish procedures reasonably designed, taking into account current market
conditions and the investment objectives, to stabilize the Net Asset Value per
share as computed for the purpose of distribution and redemption at $1.00 per
share. The Trustees' procedures include periodically monitoring, as they deem
appropriate and at such intervals as are reasonable in light of current market
conditions, the relationship between the amortized cost value per share and the
Net Asset Value per share based upon available market quotations. The Trustees
will consider what steps should be taken, if any, in the event of a difference
of more than 1/2 of one percent (1%) between the two. The Trustees will take
such steps as they consider appropriate, (e.g., redemption in kind or shortening
the average portfolio maturity) to minimize any material dilution or other
unfair results which might arise from differences between the two. The Rule
requires that the Fund limit its investments to instruments which the Trustees
determine will present minimal credit risks and which are of high quality as
determined by a major rating agency, or, in the case of any instrument that is
not so rated, of comparable quality as determined by the Trustees. It also calls
for the Fund to maintain a dollar weighted average portfolio maturity (not more
than 90 days) appropriate to its objective of maintaining a stable Net Asset
Value of $1.00 per share and precludes the purchase of any instrument with a
remaining maturity of more than 397 days. Should the disposition of a portfolio
security result in a dollar weighted average portfolio maturity of more than 90
days, the Fund will invest its available cash in such manner as to reduce such
maturity to 90 days or less as soon as reasonably practicable.
It is the normal practice of the Fund to hold portfolio securities to maturity.
Therefore, unless a sale or other disposition of a security is mandated by
redemption requirements or other extraordinary circumstances, the Fund will
realize the par value of the security. Under the amortized cost method of
valuation traditionally employed by institutions for valuation of money market
instruments, neither the amount of daily income nor the Net Asset Value is
affected by any unrealized appreciation or depreciation. In periods of declining
interest rates, the indicated daily yield on shares the Fund has computed by
dividing the annualized daily income by the Net Asset Value will tend to be
higher than if the valuation were based upon market prices and estimates. In
periods of rising interest rates, the indicated daily yield on shares the Fund
has computed by dividing the annualized daily income by the Net Asset Value will
tend to be lower than if the valuation were based upon market prices and
estimates.
Treasury 2000, Bond, Balanced, Growth and Income Stock, Capital Appreciation
Stock, and Mid-Cap Stock Funds
Common stocks that are traded on an established exchange or over-the-counter are
valued on the basis of market price as of the end of the Valuation Period,
provided that a market quotation is readily available. Otherwise, they are
valued at fair value as determined in good faith by or at the direction of the
Trustees.
Stripped Treasury Securities, long-term straight debt obligations, and
non-convertible preferred stocks are valued using readily available market
quotations, if available. When exchange quotations are used, the latest quoted
sale price is used. If an over-the-counter quotation is used, the last bid price
will normally be used. If readily available market quotations are not available,
these securities are valued at market value as determined in good faith by or at
the direction of the Trustees. Readily available market quotations will not be
deemed available if an exchange quotation exists for a debt security, preferred
stock, or security convertible into common stock, but it does not reflect the
true value of the Fund's holdings because sales have occurred infrequently, the
market for the security is thin, or the size of the reported trade is considered
not comparable to the Fund's institutional size holdings. When readily available
market quotations are not available, the Fund will use an independent pricing
service which provides valuations for normal institutional size trading units of
such securities. Such a service may utilize a matrix system which takes into
account appropriate factors such as institutional size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data in determining valuations. These
valuations are reviewed by the Investment Adviser. If the Investment Adviser
believes that evaluation still does not represent a fair value, it will present
for approval of the Trustees such other valuation as the Investment Adviser
considers to represent a fair value. The specific pricing service or services to
be used will be presented for approval of the Trustees.
Short-term instruments having maturities of sixty (60) days or less will be
valued at amortized cost. Short-term instruments having maturities of more than
sixty (60) days will be valued at market values or values based on current
interest rates.
Options, stock index futures, interest rate futures, and related options which
are traded on U.S. exchanges or boards of trade are valued at the closing price
as of the close of the New York Stock Exchange.
The Investment Adviser, at the direction of the Trustees, values the following
at prices it deems in good faith to be fair:
1. Securities (including restricted securities) for which complete
quotations are not readily available, and
2. Listed securities if, in the opinion of the Investment Adviser, the
last sale price does not reflect the current market value or if no
sale occurred, and
3. Other assets.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends that each of the Funds will qualify each year as a regulated
investment company under Subchapter M of Chapter 1 of the Code. If, as intended,
each Fund continues to qualify as a regulated investment company and distributes
substantially all of its net investment income and net capital gains to its
shareholders, then, under the provisions of Subchapter M, there should be little
or no income or gains taxable to it. In addition, each Fund intends to comply
with other distribution rules specified in Code so that it will not incur a 4%
nondeductible federal excise tax that otherwise would apply.
Each Fund of the Trust must meet several requirements to maintain its status as
a regulated investment company. These requirements include the following: (1) at
least 90% of the Fund's gross income must be derived from dividends, interest,
payments with respect to securities loaned, and gains from the sale or
disposition of securities; and (2) at the close of each quarter of the Fund's
taxable year, (a) at least 50% of the value of the Fund's total assets must
consist of cash, U.S. Government securities and other securities (no more than
5% of the value of the Fund may consist of such other securities of any one
issuer, and the Fund must not hold more than 10% of the outstanding voting stock
of any issuer), and (b) the Fund must not invest more than 25% of the value of
its total assets in the securities of any one issuer (other than U.S. Government
securities).
Each of the Funds also intends to comply with section 817(h) of the Code and the
regulations issued thereunder, which impose certain investment diversification
requirements on separate accounts of life insurance companies that are used to
support variable annuity contracts ("VA contracts") and variable life insurance
policies ("VLI policies"). In general, these requirements are that no more than
55% of the value of the assets of a Fund may be represented by any one
investment; no more than 70% by any two investments; no more than 80% by any
three investments; and no more than 90% by any four investments. For these
purposes, all securities of the same issuer are treated as a single investment
and each United States government agency or instrumentality is treated as a
separate issuer. These diversification requirements are in addition to the
requirements of subchapter M and of the Investment Company Act, and may affect
the securities in which a Fund may invest. In order to comply with the current
or future requirements of section 817(h) (or related provisions of the Code),
the Trust may be required, for example, to alter the investment objectives of
one or more of the Funds. (To the extent required by law, approval of owners of
VA contracts or VLI policies or of the Commission will be obtained before
changing investment objectives.)
If a Fund fails to qualify as a regulated investment company, it will be subject
to federal, and possibly state, corporate taxes on its taxable income and gains
(without any deduction for its distributions to its shareholders) and
distributions to its shareholders will constitute ordinary income to the extent
of such Fund's available earnings and profits. Owners of VA contracts and VLI
policies indirectly invested in such a Fund might be taxed currently on the
investment earnings under their contracts or policies and thereby lose the
benefit of tax deferral. In addition, if a Fund fails to comply with the
diversification requirements of section 817(h) of the Code and the regulations
thereunder, owners of VA contracts and VLI policies indirectly invested in the
Fund would be taxed on the investment earnings under their contracts or policies
and thereby lose the benefit of tax deferral. Accordingly, compliance with the
above rules is carefully monitored by the investment adviser and the Trust
intends that each Fund comply with these rules as they exist or as they may be
modified from time to time. Compliance with the tax requirements described above
may result in a reduction in the return under a Fund, since, to comply with the
above rules, the investments utilized (and the time at which such investments
are entered into and closed out) may be different from what the investment
adviser might otherwise believe desirable.
The foregoing discussion of federal income tax consequences is a general and
abbreviated summary based on tax laws and regulations in effect on the date of
this SAI. Tax law is subject to change by legislative, administrative or
judicial action. Each prospective investor should consult his or her own tax
adviser as to the tax consequences of investments in the Funds. For information
concerning the federal income tax consequences to the owners of VA contracts and
VLI policies, see the prospectuses for such contracts or policies. [For
information concerning the federal income tax consequences to plan participants,
see the summary plan description.]
It is the intention of the Ultra Series Fund to distribute substantially all of
the net investment income, if any, of each Fund thereby avoiding the imposition
of any Fund-level income or excise tax as follows:
(i) Dividends on the Money Market Fund will be declared daily and
reinvested monthly in additional full and fractional shares of the
Money Market Fund.
(ii) Dividends of ordinary income from the Bond, Balanced, Growth and
Income Stock, and Capital Appreciation Stock, and Mid-Cap Stock Funds
will be declared and reinvested quarterly in additional full and
fractional shares of the respective Fund.
(iii)All net realized short-term and long-term capital gains of the Ultra
Series Fund, if any, will be declared and distributed at least
annually, but in any event, no more frequently than allowed under SEC
rules, to the shareholders of each Fund to which such gains are
attributable.
(iv) Dividends on the Treasury 2000 Fund cannot be paid to its shareholders
(the Separate Accounts) during the taxable year since no cash will be
available for distribution until the securities are sold or mature.
The Fund is treated as if it paid a dividend of a certain amount
without actually paying the dividend if the shareholder consents to
the treatment ("consent dividend"). The Separate Accounts will file a
consent on Form 972 each year to include in gross income, as a taxable
dividend for that year, an amount computed to be sufficient to enable
the Fund to meet the distribution requirements necessary for the Fund
to be treated as a conduit and taxed as a regulated investment
company.
Because there will be no periodic payment of interest on the Stripped
Treasury Securities held by the Treasury 2000 Fund, shareholders
(i.e., the separate accounts or qualified plans) will be requested
periodically to sign consents to have a certain portion of the accrued
amount of discount treated as dividends. Currently the separate
accounts are the only shareholders of the Treasury 2000 Fund; it is
anticipated that any taxable income will be offset by a corresponding
deduction for an increase in reserves.
Options and Futures Transactions
The tax consequences of options transactions entered into by a Fund will vary
depending on the nature of the underlying security, whether the option is
written or purchased and finally, whether the "straddle" rules, discussed
separately below, apply to the transaction. When a Fund writes a call or a put
option on an equity or convertible debt security, the treatment for federal
income tax purposes of the premium that it receives will, subject to the
straddle rules, depend on whether the option is exercised. If the option expires
unexercised, or if the Fund enters into a closing purchase transaction, the Fund
will realize a gain (or loss if the cost of the closing purchase transaction
exceeds the amount of the premium) without regard to any unrealized gain or loss
on the underlying security. Any such gain or loss will be short-term capital
gain or loss, except that any loss on a "qualified" covered call stock option
that is not treated as part of a straddle may be treated as long-term capital
loss. If a call option written by a Fund is exercised, the Fund will recognize a
capital gain or loss from the sale of the underlying security, and will treat
the premium as additional sales proceeds. Whether the gain or loss will be
long-term or short-term will depend on the holding period of the underlying
security. If a put option written by a Fund is exercised, the amount of the
premium will reduce the tax basis of the security that the Fund then purchases.
If a put or call option that a Fund has purchased on an equity or convertible
debt security expires unexercised, the Fund will realize a capital loss equal to
the cost of the option. If the Fund enters into a closing sale transaction with
respect to the option, it will realize a capital gain or loss (depending on
whether the proceeds from the closing transaction are greater or less than the
cost of the option). The gain or loss will be short-term or long-term depending
on the Fund's holding period in the option. If the Fund exercises such a put
option, it will realize a short-term gain or loss (long-term if the Fund holds
the underlying security for more than one year before it purchases the put) from
the sale of the underlying security measured by the sales proceeds decreased by
the premium paid. If the Fund exercises such a call option, the premium paid for
the option will be added to the tax basis of the security purchased.
One or more Funds may invest in Section 1256 contracts. Section 1256 contracts
generally include options on nonconvertible debt securities (including
securities of U.S. Government agencies or instrumentalities), options on stock
indexes, futures contracts, options on futures contracts and certain foreign
currency contracts. Options on foreign currency, futures contracts on foreign
currency, and options on foreign currency futures will qualify as Section 1256
contracts if the options or futures are traded on or subject to the rules of a
qualified board or exchange. In general, gain or loss on Section 1256 contracts
will be treated as 60% long-term and 40% short-term capital gain or loss
("60/40"), regardless of the period of time particular positions are actually
held by a Fund. In addition, any Section 1256 contracts held at the end of each
taxable year (and on October 31 of each year for purposes of determining the
amount of capital gain net income that a Fund must distribute to avoid liability
for the 4% excise tax) are "marked to market" with the result that unrealized
gains or losses are treated as though they were realized and the resulting gain
or loss is treated as 60/40 gain or loss.
Straddles
Hedging transactions undertaken by a Fund may result in "straddles" for federal
income tax purposes. Straddles are defined to include "offsetting positions" in
actively-traded personal property. Under current law, it is not clear under what
circumstances one investment made by a Fund, such as an option or futures
contract, would be treated as "offsetting" another investment also held by the
Fund, such as the underlying security (or vice versa) and, therefore, whether
the Fund would be treated as having entered into a straddle. In general,
investment positions may be "offsetting" if there is a substantial diminution in
the risk of loss from holding one position by reason of holding one or more
other positions (although certain "qualified" covered call stock options written
by a Fund may be treated as not creating a straddle).
To the extent that the straddle rules apply to positions established by a Fund,
losses realized by the Fund may be either deferred or recharacterized as
long-term losses, and long-term gains realized by the Fund may be converted to
short-term gains.
Each Fund may make one or more of the elections available under the Code which
are applicable to straddles. If a Fund makes any of the elections, the amount,
character, and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections operate to
accelerate the recognition of gains or losses from the affected straddle
positions.
Because application of the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-term capital gain, may be increased or decreased substantially as compared
to a Fund that did not engage in such hedging transactions.
Distributor
As described in the Prospectus, the Ultra Series Fund does not deal directly
with the public. Shares of the Ultra Series Fund are currently issued and
redeemed through the distributor, pursuant to a Distribution Agreement between
the Ultra Series Fund and the distributor. The principal place of business of
CUNA Brokerage Services, Inc. is 5910 Mineral Point Road, Madison, Wisconsin
53705. The distributor is owned by CUNA Mutual Investment Corporation which in
turn is owned by CUNA Mutual Insurance Society. The Company and CUNA Mutual
Insurance Society entered into an agreement of permanent affiliation on July 1,
1990. Shares of the Ultra Series Fund are purchased and redeemed at Net Asset
Value. The Distribution Agreement provides that the distributor will use its
best efforts to render services to the Ultra Series Fund, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations, it will not be liable to the Ultra Series Fund or any shareholder
for any error of judgment or mistake of law or any act or omission or for any
losses sustained by the Ultra Series Fund or its shareholders. CUNA Brokerage
has not received underwriting commissions from the Ultra Series Fund for any of
the last three fiscal years.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, the Ultra Series Fund may disclose yields, total returns, and
other performance data. Such performance data will be computed, or accompanied
by performance data computed, in accordance with the standards defined by the
SEC. The Ultra Series Fund will not disclose performance of the Ultra Series
Fund in separate account sales literature or advertising without also showing
performance at the separate account level.
The Ultra Series Fund may distribute sales literature showing total return
performance. Total return calculations are based on historical results and are
not intended to indicate future performance. Total return will vary over time
depending on market conditions, assets owned and operating expenses. Information
about the performance of the Ultra Series Fund is contained in the annual report
to shareholders which may be obtained without charge from the address shown on
the first page of this SAI.
Total return figures distributed by the Ultra Series Fund will show the change
in value of an investment in the Ultra Series Fund from the beginning of the
measuring period to the end of the measuring period. All dividends and capital
gains are assumed to be immediately reinvested. Average annual total return is
calculated by determining the growth or decline in value of a $1,000
hypothetical investment over a stated period and then calculating the annually
compounded percentage rate that would have produced the same ending value if the
rate of growth or decline in value had been constant during the entire period.
The actual rate of growth or decline varies over time, rather than being
constant, so actual year-to-year performance will be different from "average"
annual return. The Ultra Series Fund will show average annual total returns for
1, 3, 5, and 10 year periods (or, if shorter, the period since inception) and
may show actual and average total returns for other periods. The Ultra Series
Fund may also show cumulative return, computed by dividing the value at the end
of the period by the value at the beginning of the period. Cumulative total
return may be shown either as a percentage change or as a dollar value.
Performance data may be shown in the form of graphs, charts, tables and
numerical examples.
The Ultra Series Fund may also distribute sales literature showing yield figures
for its Money Market and Bond Funds. Yield figures are based on historical
earnings and are not intended to indicate future performance. The yield of the
fund refers to the income generated by an investment in the fund over the stated
period. This income is then annualized, that is, the amount of income generated
by the investment during that period is assumed to be generated over a 365-day
period and is shown as a percentage of the investment. The effective yield is
calculated similarly but, when annualized, the income earned is assumed to be
reinvested or "compounded." The effective yield will be slightly higher than the
yield because of the effect of assumed reinvestment.
The Ultra Series Fund may distribute sales literature comparing its total
returns to standard industry measures, for example, the Dow Jones Industrial
Average, one or more of the Standard & Poor's or Frank Russell Company stock
indexes, one or more of the Lehman Brothers bond indexes, the consumer price
index, and data published by Lipper Analytical Services, Morningstar, Inc., and
Ibbotson Associates. The Dow Jones Industrial Average (DJIA) is a market
value-weighted, unmanaged index of 30 large industrial stocks traded on the New
York Stock Exchange. The Standard and Poor's and Frank Russell Company stock
indexes are unmanaged, market value weighted indexes of various industrial,
transportation, utility and financial companies, grouped by size of market
capitalization, valuation characteristics (i.e. growth or value) or other
attributes. The Lehman Brothers bond indexes represent unmanaged groups of fixed
income securities of various issuers and terms to maturity which are
representative of bond market performance. The consumer price index is a
statistical measure of changes in the prices of goods and services over time
published by the U.S. Bureau of Labor Statistics. Lipper Analytical Services and
Morningstar, Inc. are independent services that monitor performance of mutual
funds and insurance company separate accounts. Lipper Performance Summary
Averages represent the average annual total return of all the funds (within a
specified investment category) that are covered by the Lipper Analytical
Services Variable Insurance Products Performance Analysis Service.
The volatility of each fund may be compared to the volatility of the relevant
market as a whole. "Beta" is a measure of the sensitivity of a particular asset
or a particular fund relative to the marketplace in which it is traded. The beta
of the market is 1.0 which serves as a benchmark to assess other assets
including the six funds within the Ultra Series Fund. Beta is a measure of the
degree to which the return on the asset or the fund moved relative to how the
return of the relevant market moved. A number that is both positive and less
than 1.0 means that the asset or fund moved in the same direction as the market
but to a smaller degree. In other words, a beta of less than 1.0 indicates less
volatility (less investment risk) than the market.
Standard deviation measures the volatility of actual periodic returns around a
statistically fitted (average) trendline of the actual returns. For example, a
portfolio that grew over a five-year period at an average annual total return of
10% with a standard deviation of 15% would be much more volatile (would involve
more investment risk) than a portfolio that grew at an average annual total
return of 8% with a standard deviation of 5%. The latter portfolio might meet
the investment needs of a risk averse investor better than the former portfolio.
Money Market Fund Yields
From time to time, sales literature may quote the current annualized yield of
the Money Market Fund for a seven-day period in a manner which does not take
into consideration any realized or unrealized gains or losses on portfolio
securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the period in the value of a
hypothetical account having a balance of 1 share at the beginning of the period,
dividing such net change in account value by the value of the hypothetical
account at the beginning of the period to determine the base period return, and
annualizing this quotient on a 365-day basis. The net change in value reflects
net income from the Fund attributable to the hypothetical account.
Current yield is calculated according to the following formula:
Current Yield = [(NCS - ES)/UV) X (365/7)] x 100
Where:
NCS= the net change in the value of the Money Market Fund (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation) for the seven-day period attributable
to a hypothetical account having a balance of 1 share.
ES= per share expenses attributable to the hypothetical account for the
seven-day period.
UV= the share value at the close of business on the day prior to the first
day of the seven-day period.
Effective yield = [(1 + ((NCS-ES)/UV)) 365/7 - 1] x 100
Where:
NCS= the net change in the value of the Money Market Fund (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation) for the seven-day period attributable
to a hypothetical account having a balance of 1 share.
ES = per share expenses attributable to the hypothetical account for the
seven-day period.
UV = the share value at the close of business on the day prior to the
first day of the seven-day period.
The current and effective yields on amounts held in the Money Market Fund
normally fluctuate on a daily basis. Therefore, the disclosed yield for any
given past period is not an indication or representation of future yields or
rates of return. The Money Market Fund's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity, the types
and quality of portfolio securities held and operating expenses. Yields on
amounts held in the Money Market Fund may also be presented for periods other
than a seven-day period.
Other Fund Yields
From time to time, sales literature may quote the current annualized yield of
one or more of the Funds (except the Money Market Fund) for 30-day or one-month
periods. The annualized yield of a Fund refers to income generated by the Fund
during a 30-day or one-month period and is assumed to be generated each period
over a 12-month period.
The yield is computed by: 1) dividing the net investment income of the Fund for
the period; by 2) the maximum offering price per share on the last day of the
period times the daily average number of shares outstanding for the period; by
3) compounding that yield for a six-month period; and by 4) multiplying that
result by 2. The 30-day or one-month yield is calculated according to the
following formula:
Yield = [2 X (((NI - ES)/(U X UV)) + 1)6 - 1)] x 100
Where:
NI = net income of the Fund for the 30-day or one-month period
attributable to the Fund's shares.
ES = expenses of the Fund for the 30-day or one-month period.
U = the average number of shares outstanding.
UV = the share value at the close of the last day in the 30-day or
one-month period.
The yield normally fluctuates over time. Therefore, the disclosed yield for any
given past period is not an indication or representation of future yields or
rates of return. A Fund's actual yield is affected by the types and quality of
portfolio securities held and operating expenses.
Average Annual Total Returns
From time to time, sales literature may also quote average annual total returns
for one or more of the Funds for various periods of time.
When a Fund has been in operation for 1, 3, 5, and 10 years, respectively, the
average annual total return for these periods will be provided. Average annual
total returns for other periods of time may, from time to time, also be
disclosed.
Standard average annual total returns represent the average annual compounded
rates of return that would equate an initial investment of $1,000 to the
redemption value of that investment as of the last day of each of the periods.
The ending date for each period for which total return quotations are provided
will be for the most recent month or calendar quarter-end practicable,
considering the type of the communication and the media through which it is
communicated.
The total return is calculated according to the following formula:
TR = [((ERV/P)1/N) - 1] x 100
Where:
TR = the average annual total return net of any Fund recurring charges.
ERV = the ending redeemable value of the hypothetical account at the end
of the period.
P= a hypothetical initial payment of $1,000.
N = the number of years in the period.
Other Total Returns
From time to time, sales literature may also disclose cumulative total returns
in conjunction with the standard formats described above. The cumulative total
returns will be calculated using the following formula:
CTR = [(ERV/P) - 1] x 100
Where:
CTR= The cumulative total return net of any Fund recurring charges for the
period.
ERV = The ending redeemable value of the hypothetical investment at the
end of the period.
P= A hypothetical single payment of $1,000.
FINANCIAL STATEMENTS
Data from the most recent annual report begins on the next page.
<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* 5.00% 5.01% 4.72% 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
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits:
(a) Amended and Restated Declaration of Trust. Incorporated herein
by reference to post-effective amendment number 19 to this
Form N-1A registration statement (File No. 2-87775) filed with
the Commission on February 28, 1997.
(b) Amended and Restated Bylaws. Incorporated herein by reference
to post-effective amendment number 19 to this Form N-1A
registration statement (File No. 2-87775) filed with the
Commission on February 28, 1997.
(c) Not Applicable.
(d) 1. Management Agreement effective May 1, 1997.
Incorporated herein by reference to post-effective
amendment number 19 to this Form N-1A registration
statement (File No. 2-87775) filed with the
Commission on February 28, 1997.
2. Amendment No. 1 to Management Agreement effective May
1, 1999.
3. Investment Sub-Advisory Agreement Between CIMCO Inc.
and Heartland Advisors, Inc. effective May 1, 1999.
4. Servicing Agreement between CIMCO Inc. and CUNA
Mutual Insurance Society effective May 1, 1997.
Incorporated herein by reference to post-effective
amendment number 22 to this Form N-1A registration
statement (File No. 2-87775) filed with the
Commission on February 12, 1999.
5. Servicing Agreement between CUNA Mutual Life
Insurance Company and CIMCO Inc. effective May 1,
1997. Incorporated herein by reference to
post-effective amendment number 22 to this Form N-1A
registration statement (File No. 2-87775) filed with
the Commission on February 12, 1999.
(e) Distribution Agreement between Ultra Series Fund and CUNA
Brokerage Services, Inc. effective December 29, 1993.
Incorporated herein by reference to post-effective amendment
number 19 to this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 28, 1997.
(f) N/A
<PAGE>
(g) 1. Mutual Fund Custody Agreement between Ultra Series
Fund and State Street Bank and Trust Company
effective April 30, 1997. Incorporated herein by
reference to post-effective amendment number 22 to
this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12,
1999.
2. Amendment No. 1 to Mutual Fund Custody Agreement
effective May 1, 1999.
(h) 1. Participation Agreement between Ultra Series Fund and
CUNA Mutual Life Insurance Company Pension Plan for
Home Office Employees. Incorporated herein by
reference to post-effective amendment number 22 to
this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12,
1999.
2. Participation Agreement between Ultra Series Fund and
CUNA Mutual Life Insurance Company Pension Plan for
Agents. Incorporated herein by reference to
post-effective amendment number 22 to this Form N-1A
registration statement (File No. 2-87775) filed with
the Commission on February 12, 1999.
3. Participation Agreement between Ultra Series Fund and
CUNA Mutual Life Insurance Company 401(k)/Thrift Plan
for Home Office Employees. Incorporated herein by
reference to post-effective amendment number 22 to
this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12,
1999.
4. Participation Agreement between Ultra Series Fund and
CUNA Mutual Life Insurance Company 401(k)/Thrift Plan
for Agents. Incorporated herein by reference to
post-effective amendment number 22 to this Form N-1A
registration statement (File No. 2-87775) filed with
the Commission on February 12, 1999.
5. Participation Agreement between Ultra Series Fund and
CUNA Mutual Pension Plan. Incorporated herein by
reference to post-effective amendment number 22 to
this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12,
1999.
6. Participation Agreement between Ultra Series Fund and
CUNA Mutual Savings Plan. Incorporated herein by
reference to post-effective amendment number 22 to
this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12,
1999.
7. Participation Agreement between Ultra Series Fund and
CUNA Mutual Thrift Plan. Incorporated herein by
reference to post-effective amendment number 22 to
this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12,
1999.
<PAGE>
(i) Opinion of Counsel. Incorporated herein by reference to
post-effective amendment number 19 to this Form N-1A
registration statement (File No. 2-87775) filed with the
Commission on February 28, 1997.
(j) Consent of KPMG Peat Marwick LLP.
(k) Not Applicable.
(l) Not Applicable.
(m) 1. Plan of Distribution dated May 1, 1997. Incorporated
herein by reference to post-effective amendment
number 19 to this Form N-1A registration statement
(File No. 2-87775) filed with the Commission on
February 28, 1997.
2. Supplement No. 1 to Distrubution Plan effective May
1, 1999.
(n) Financial Data Schedules.
(o) Multi-Class Plans. Incorporated herein by reference to
post-effective amendment number 19 to this Form N-1A
registration statement (File No. 2-87775) filed with the
Commission on February 28, 1997.
Other Exhibits
Powers of Attorney
<PAGE>
Item 24. Persons Controlled by or Under Common Control with the Fund
Class Z shares of the Ultra Series Fund are currently sold to separate accounts
of CUNA Mutual Life Insurance Company, CUNA Mutual Insurance Society, or their
affiliates, and to their qualified retirement plans.
Class C shares of the Ultra Series Fund are offered to separate accounts of
insurance companies other than CUNA Mutual Life Insurance Company, CUNA Mutual
Insurance Society, or their affiliates, and to qualified retirement plans of
companies not affiliated with the Fund, CUNA Mutual Life Insurance Company, CUNA
Mutual Insurance Society, or their affiliates. Currently, there are no Class C
shares outstanding.
CUNA Mutual Life Insurance Company is a mutual life insurance company and
therefore is controlled by its contractowners. Various companies and other
entities are controlled by CUNA Mutual Life Insurance Company and various
companies may be considered to be under common control with CUNA Mutual Life
Insurance Company. Such other companies and entities, together with the identity
of their controlling persons (where applicable), are set forth in the following
organization charts. In addition, by virtue of an Agreement of Permanent
Affiliation with CUNA Mutual Insurance Society ("CUNA Mutual"), the Ultra Series
Fund could be considered to be an affiliated person or an affiliated person of
an affiliated person of CUNA Mutual. Likewise, CUNA Mutual and its affiliates,
together with the identity of their controlling persons (where applicable), are
set forth on the following organization charts.
See organization charts on the following pages.
<PAGE>
CUNA Mutual Insurance Society
ORGANIZATIONAL CHART AS OF DECEMBER 31, 1998
CUNA Mutual Insurance Society
Business: Life, Health & Disability Insurance
May 20, 1935*
State of domicile: Wisconsin
CUNA Mutual Insurance Society, either directly or indirectly is the controlling
company of the following wholly-owned subsidiaries:
1. CUNA Mutual Investment Corporation
Business: Holding Company
September 15, 1972*
State of domicile: Wisconsin
CUNA Mutual Investment Corporation is the owner of the following subsidiaries:
a. CUMIS Insurance Society, Inc.
Business: Corporate Property/Casualty Insurance
May 23, 1960*
State of domicile: Wisconsin
CUMIS Insurance Society, Inc. is the 100% owner of the
following subsidiary:
(1) Credit Union Mutual Insurance Society New
Zealand Ltd.
Business: Fidelity Bond Coverage
November l, 1990*
State of domicile: Wisconsin
b. CUNA Brokerage Services, Inc.
Business: Brokerage
July 19, 1985*
State of domicile: Wisconsin
c. CUNA Mutual General Agency of Texas, Inc.
Business: Managing General Agent
August 14, 1991*
State of domicile: Texas
d. MEMBERS Life Insurance Company
Business: Credit Disability/Life/Health
February 27, 1976*
State of domicile: Wisconsin
Formerly CUMIS Life & CUDIS
e. International Commons, Inc.
Business: Special Events
January 13, 1981*
State of domicile: Wisconsin
f. CUNA Mortgage Corporation
Business: Mortgage Servicing
November 20, 1978*
State of domicile: Wisconsin
(1) CU Mortgage Corporation Inc.
Business: Mortgage Servicing
May 28, 1987*
State of domicile: California
g. Investors Equity Insurance Company, Inc.
Business: Private Mortgage Insurance
April 14, 1994*
State of Domicile: California
h. CUNA Mutual Insurance Agency, Inc.
Business: Leasing/Brokerage
March 1, 1974*
State of domicile: Wisconsin
Formerly CMCI Corporation
i. Stewart Associates Incorporated
Business: Credit Insurance
March 6, 1998
State of domicile: Wisconsin
CUNA Mutual Insurance Agency, Inc. is the 100% owner of the following
subsidiaries:
(1) CM Field Services, Inc.
Business: Serves Agency Field Staff
January 26,1994*
State of domicile: Wisconsin
(2) CUNA Mutual Insurance Agency of Alabama, Inc.
Business: Property & Casualty Agency
May 27, 1993*
State of domicile: Alabama
<PAGE>
(3) CUNA Mutual Insurance Agency of New Mexico, Inc.
Business: Brokerage of Corporate & Personal Lines
June 10, 1993*
State of domicile: New Mexico
(4) CUNA Mutual Insurance Agency of Hawaii, Inc.
Business: Property & Casualty Agency
June 10, 1993*
State of domicile: Hawaii
(5) CUNA Mutual Casualty Insurance Agency of Mississippi, Inc.
Business: Property & Casualty Agency
June 24, 1993 *
State of domicile: Mississippi
(6) CUNA Mutual Insurance Agency of Kentucky, Inc.
Business: Brokerage of Corporate & Personal Lines
October 5, 1994*
State of domicile: Kentucky
(7) CUNA Mutual Insurance Agency of Massachusetts, Inc.
Business: Brokerage of Corporate & Personal Lines
January 27, 1995*
State of domicile: Massachusetts
2. C.U.I.B.S. Pty. Ltd.
Business: Brokerage
February 18,1981*
Country of domicile: Australia
3. CUNA Caribbean Insurance Society Limited
Business: Life and Health
July 4, 1985*
Country of domicile: Trinidad and Tobago
* Dates shown are dates of acquisition, control or organization.
CUNA Mutual Insurance Society, either directly or through a wholly-owned
subsidiary, has a partial ownership interest in the following:
1. C. U. Family Insurance Services, Inc./Colorado
50% ownership by CUNA Mutual Insurance Agency, Inc.
50% ownership by Colleague Services Corporation
September 1, 1981
2. C. U. Insurance Services, Inc./Oregon
50% ownership by CUNA Mutual Insurance Agency, Inc.
50% ownership by Oregon Credit Union League
December 27, 1989
3. CUFIS of New York, Inc.
50% ownership by CUNA Mutual Insurance Agency, Inc. 50% ownership by
CUC Services, Inc.
March 28, 1991
4. The CUMIS Group Limited
63.449% ownership by CUNA Mutual Insurance Society (as of 12-31 -96)
5. CIMCO Inc. (CIMCO)
50% ownership by CUNA Mutual Investment Corporation 50% ownership by
CUNA Mutual Life Insurance Company January 1, 1992
6. GWARANT, Ltd.
50% ownership by CUNA Mutual Insurance Society 50% ownership by
Foundation for Polish Credit Unions February 18, 1994
7. CUNA Mutual Insurance Agency of Ohio, Inc.
1% of value owned by Michael Corcoran (CUNA Mutual Employee) subject to
a voting trust agreement, Michael B. Kitchen as Voting Trustee.
99% of value-owned by CUNA Mutual Insurance Agency, Inc. Due to Ohio
regulations, CUNA Mutual Insurance Agency, Inc. holds no voting stock
in this corporation.
June 14, 1993
8. SECURITY Management Company, Ltd. (Hungary)
90% ownership by CUNA Mutual Insurance Society
10% ownership by: Federation of Savings Cooperatives
Savings Cooperative of Szoreg
Savings Cooperative of Szekkutas
(collectively called Hungarian Associates)
September 5, 1992
9. CMG Mortgage Insurance Company
50% ownership by CUNA Mutual Investment Corporation 50% ownership by
PMI Mortgage Insurance Co.
April 14, 1994
<PAGE>
10. Cooperators Life Assurance Society Limited (Jamaica)
CUNA Mutual Insurance Society owns 122,500 shares
Jamaica Co-op Credit Union League owns 127,500 shares
(NOTE: Awaiting authority to write business) May 10, 1990
11. CU Interchange Group, Inc.
Owned by CUNA Mutual Investment Corporation, CUNA Service Group and
various state league organizations
December 15, 1993 - CUNA Mutual Investment Corporation purchased
100 shares stock
12. CUNA Service Group, Inc.
April 22, 1974 - CUNA Mutual Insurance Society purchased 200.71 shares
13. Credit Union Service Corporation
Owned by CUNA Mutual Investment Corporation, Credit Union National
Association, Inc. and 18 state league organizations March 29, 1996 -
CUNA Mutual Investment Corporation purchased 1,300,000 shares of stock
Partnerships
1. LeaSo Partners, a California partnership
CUNA Mutual Insurance Society - 50% Partner
California Credit Union League - 50% Partner
December 29, 1981
2. CM CUSO Limited Partnership, a Washington Partnership
CUMIS Insurance Society, Inc. - General Partner
Credit Unions in Washington - Limited Partners
June 14, 1993
Limited Liability Companies
1. "Sofia LTD." (Ukraine)
99.96% CUNA Mutual Insurance Society
.04% CUMIS Insurance Society, Inc.
March 6, 1996
2. 'FORTRESS' (Ukraine)
80% "Sofia LTD."
19% The Ukrainian National Association of Savings and Credit Unions
1% Service Center by UNASCU
September 25, 1996
<PAGE>
Affiliated (Nonstock)
1. MEMBERS Prime Club, Inc.
August 8, 1978
2. CUNA Mutual Group Foundation, Inc.
July 5, 1967
3. CUNA Mutual Life Insurance Company
July 1, 1990
<PAGE>
CUNA Mutual Life Insurance Company
ORGANIZATIONAL CHART AS OF DECEMBER 31, 1998
CUNA Mutual Life Insurance Company
An Iowa mutual life insurance company
Fiscal Year End: December 31
CUNA Mutual Life Insurance Company is the controlling company for the following
subsidiaries:
1. Red Fox Motor Hotel Corporation
An Iowa Business Act Corporation.
100% ownership by CUNA Mutual Life Insurance Company
2. CIMCO Inc.
An Iowa Business Act Corporation
50% ownership by CUNA Mutual Life Insurance Company
50% ownership by CUNA Mutual Investment Corporation
CIMCO Inc. is the investment adviser of:
Ultra Series Fund
MEMBERS Mutual Funds
3. Plan America Program, Inc.
A Maine Business Act Corporation
100% ownership by CUNA Mutual Life Insurance Company
4. CMIA Wisconsin Inc.
A Wisconsin Business Act Corporation
100% ownership by CUNA Mutual Life Insurance Company
<PAGE>
Item 25. Indemnification
Each officer, Trustee or agent of the Ultra Series Fund shall be indemnified by
the Ultra Series Fund to the full extent permitted under the General Laws of the
State of Massachusetts and the Investment Company Act of 1940, as amended,
except that such indemnity shall not protect any such person against any
liability to the Ultra Series Fund or any shareholder thereof to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office ("disabling conduct"). Indemnification shall be made when (1) a final
decision on the merits is made by a court or other body before whom the
proceeding was brought, that the person to be indemnified was not liable by
reason of disabling conduct or, (2) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the person to
be indemnified was not liable by reason of disabling conduct, by (a) the vote of
a majority of the quorum of Trustees who are not "interested persons" of the
Ultra Series Fund as defined in Section 2(a)(19) of the Investment Company Act
of 1940, or (b) an independent legal counsel in a written opinion. The Ultra
Series Fund may, by vote of a majority of a quorum of Trustees who are not
interested persons, advance attorneys' fees or other expenses incurred by
officers, Trustees, Investment Advisers or principal underwriters, in defending
a proceeding upon the undertaking by or on behalf of the person to be
indemnified to repay the advance unless it is ultimately determined that he is
entitled to indemnification. Such advance shall be subject to at least one of
the following: (1) the person to be indemnified shall provide a security for his
undertaking, (2) the Ultra Series Fund shall be insured against losses arising
by reason of any lawful advances, or (3) a majority of a quorum of the
disinterested non-party Trustees of the Ultra Series Fund, or an independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts, that there is reason to believe that the person to be
indemnified ultimately will be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
<PAGE>
Item 26. Business and Other Connections of Investment Adviser
The Investment Adviser for the Ultra Series Fund is CIMCO Inc. See Part A
MANAGEMENT OF THE ULTRA SERIES FUND, The Investment Adviser for a more complete
description.
The officers and directors of the Investment Adviser are as follows:
NAME/ADDRESS POSITION HELD
Michael S. Daubs CIMCO Inc.
5910 Mineral Point Rd. President
Madison, WI 53705 1982-Present
Director
1995-Present
CUNA Mutual Insurance Society
Chief Officer - Investment
1990-Present
CUNA Mutual Life Insurance Company
Chief Officer - Investment
1989-Present
Janice C. Doyle CIMCO Inc.
5910 Mineral Point Rd. Assistant Secretary
Madison, WI 53705 1995-Present
Lawrence R. Halverson CIMCO Inc.
5910 Mineral Point Rd. Senior Vice President and Secretary
Madison, WI 53705 1996-Present
Vice President and Secretary
1992-1996
CUNA Brokerage Services, Inc.
President
1996-1998
Joyce A. Harris CIMCO Inc.
PO Box 7130 Director and Chair
Madison, WI 53707 1992 - Present
Telco Community Credit Union
President, Chief Executive Officer
1978- Present
James C. Hickman CIMCO Inc.
975 University Avenue Director
Madison, WI 53706 1992 - Present
University of Wisconsin
Professor
1972 - Present
Michael B. Kitchen CIMCO Inc.
5910 Mineral Point Rd. Director
Madison, WI 53705 1995 - Present
CUNA Mutual Insurance Society
President and Chief Executive Officer
1995- Present
CUNA Mutual Life Insurance Company
President and Chief Executive Officer
1995 - Present
Daniel J. Larson CIMCO Inc.
5910 Mineral Point Rd. Vice President
Madison, WI 53705 1995 - Present
Thomas J. Merfeld CIMCO Inc.
5910 Mineral Point Rd. Vice President
Madison, WI 53705 1994 - Present
George A. Nelson CIMCO Inc.
PO Box 44965 Director and Vice Chair
Madison, WI 53744 1992 - Present
Evening Telegram Co. - WISC-TV
Vice President
1982 - Present
Jeffrey B. Pantages CIMCO Inc.
5910 Mineral Point Rd. Senior Vice President
Madison, WI 53705 1998-Present
Scott R. Powell CIMCO Inc.
5910 Mineral Point Rd. Vice President
Madison, WI 53705 1998 - Present
<PAGE>
Item 27. Distributor
a. CUNA Brokerage Services, Inc., a registered broker-dealer, is the principal
Distributor of the shares of the Ultra Series Fund. CUNA Brokerage Services,
Inc. does not act as principal underwriter, depositor or investment adviser for
any investment company other than the Registrant, MEMBERS Mutual Funds, CUNA
Mutual Life Variable Account, and CUNA Mutual Life Variable Annuity Account.
b. The officers and directors of CUNA Brokerage Services, Inc. are as follows:
Name and Principal Position with Positions and Offices
Business Address Distributor with Registrant
Wayne A. Benson* Director & President Chief Officer - Sales
Donna C. Blankenheim* Assistant Secretary Vice President
Assistant Secretary
Timothy L. Carlson** Assistant Treasurer None
Jan C. Doyle* Assistant Secretary Assistant Secretary
John C. Fritsche Assistant Vice President None
4455 LBJ Freeway
Suite 1108
Dallas, TX 75244
Lawrence R. Halverson* Director None
John W. Henry* Director & Vice President Vice President
Michael G. Joneson* Director, Treasurer Vice President
& Secretary
Brian C. Lasko** Managing Principal None
Campbell D. McHugh* Compliance Officer None
Barbara L. Secor** Assistant Secretary Assistant Vice President
Assistant Secretary
Jason E. Smith* Assistant Secretary Assistant Secretary
Sandra K. Steffeney Vice President None
33320 9th Avenue South
Suite 250
Federal Way, WA 98063-3919
Joanne M. Toay* Assistant Compliance Officer None
Michael A. Ullsperger* Assistant Treasurer Assistant Treasurer
Scott Vignovich** Vice President None
John M. Waggoner* Chief Officer - Legal Chief Officer - Legal
John W. Wiley* Associate Compliance Officer None
*The principal business address of these persons is: 5910 Mineral Point Road,
Madison, Wisconsin 53705.
**The principal business address of these persons is: 2000 Heritage Way,
Waverly, Iowa 50677
c. There have been no commissions or other compensation paid by Registrant to
unaffiliated principal underwriters.
<PAGE>
Item 28. Location of Accounts and Records
The accounts, books and other documents required to be maintained by Registrant
pursuant to Section 31(a) of the Investment Company Act of 1940 and the rules
promulgated thereunder are maintained by:
a. CUNA Mutual Life Insurance Company
2000 Heritage Way
Waverly, Iowa 50677
b. CIMCO Inc.
5910 Mineral Point Road
Madison, Wisconsin 53705
c CUNA Mutual Insurance Society
5910 Mineral Point Road
Madison, Wisconsin 53705
d. State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
<PAGE>
Item 29. Management Services
Not applicable.
<PAGE>
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund certifies that it meets all of the requirements
for effectiveness of this registration statement under rule 485(b) under the
Securities Act of 1933 and has duly caused this registration statement to be
signed on its behalf by the undersigned, duly authorized, in the City of
Madison, State of Wisconsin, on the 14th day of April, 1999.
Ultra Series Fund
By: /s/ Michael S. Daubs
Michael S. Daubs
President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURE AND TITLE DATE
/s/ Gwendolyn M. Boeke* February 8, 1999
- -------------------------------- -----------------
Gwendolyn M. Boeke
Trustee
/s/ Robert M. Buckingham April 14, 1999
- -------------------------------- -----------------
Robert M. Buckingham
Assistant Secretary
/s/ Michael S. Daubs April 14, 1999
- -------------------------------- -----------------
Michael S. Daubs
President and Trustee
/s/ Alfred L. Disrud* February 8, 1999
- -------------------------------- -----------------
Alfred L. Disrud
Trustee
/s/ Lawrence R. Halverson April 14, 1999
- -------------------------------- -----------------
Lawrence R. Halverson
Vice President, Secretary and Trustee
/s/ Michael G. Joneson April 14, 1999
- -------------------------------- -----------------
Michael G. Joneson
Treasurer and Assistant Secretary
/s/ Keith S. Noah* February 8, 1999
- -------------------------------- -----------------
Keith S. Noah
Trustee
/s/ Thomas C. Watt* February 8, 1999
- -------------------------------- -----------------
Thomas C. Watt
Trustee
*Pursuant to Powers of Attorney.
<PAGE>
INDEX TO EXHIBITS TO
FORM N-1A FOR
ULTRA SERIES FUND
Item 23.
(d) 2. Amendment No. 1 to Management Agreement effective May
1, 1999.
3. Investment Sub-Advisory Agreement Between CIMCO Inc.
and Heartland Advisors, Inc. effective May 1, 1999.
(g) 2. Amendment No. 1 to Mutual Fund Custody Agreement
effective May 1, 1999.
(j) Consent of KPMG Peat Marwick LLP
(m) 2. Supplement No. 1 to Distrubution Plan effective May
1, 1999.
(n) Financial Data Schedules
Powers of Attorney
<PAGE>
Exhibit 23(d)2
AMENDMENT NO. 1
ULTRA SERIES FUND MANAGEMENT AGREEMENT
Effective May 1, 1999, pursuant to adoption by the Board of Trustees on
March 9, 1999, the following amendments are made to the Ultra Series Fund
Management Agreement dated February 5, 1997.
1. Paragraph No. 1 of the Recitals section of the Management
Agreement is amended to read as follows:
"1. The fund is a series-type, open-end management investment
company registered under the Investment Company Act of 1940, as amended
(the 1940 Act) that currently consists of seven investment portfolios
(each, a Series) designated as capital appreciation stock, mid-cap
stock, growth and income stock, balanced, bond, money market, and
treasury 2000, each such Series having its own investment objective;"
2. Article 3 entitled Compensation of Manager is amended to add
the following annual rate to the current list of rates:
"Mid-Cap Stock 1.00%"
Ultra Series Fund
By: /s/ L. R. Halverson
Name: Lawrence R. Halverson
Title: Senior Vice President
ATTEST:
/s/ Diane M. Fisher
CIMCO Inc.
By: /s/ Michael S. Daubs
Michael S. Daubs
President
ATTEST:
/s/ Kevin S. Thompson
<PAGE>
Exhibit 23(d)3
Mid-Cap Stock Portfolio
of the
ULTRA SERIES FUND
INVESTMENT SUB-ADVISORY AGREEMENT
Between
CIMCO Inc.
and
Heartland Advisors, Inc.
(April 13, 1999)
THIS AGREEMENT ("Agreement") is made this 13th day of April, 1999, by and
between CIMCO Inc., an Iowa corporation (the "Adviser"), and Heartland Advisors,
Inc. (the "Sub-Adviser"), a Wisconsin corporation.
1. Representations.
(a) Ultra Series Fund (the "Trust") is a Delaware business trust
organized with one or more series of shares and is registered as an
open-end management investment company under the Investment Company Act
of 1940, as amended (the "ICA").
(b) The Adviser and the Sub-Adviser each is an investment adviser
registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act").
(c) The Board of Trustees of the Trust (the "Trustees") have engaged
the Investment Adviser to act as investment adviser for the Mid-Cap
Stock Fund (the "Portfolio"), one series of the Trust, under the terms
of a management agreement, dated February 7, 1997, with the Trust (the
"Management Agreement").
(d) The Adviser, acting pursuant to the Management Agreement, wishes to
engage the Sub-Adviser, and the Trustees have approved the engagement
of the Sub-Adviser, to provide investment advice and other investment
services set forth below.
2. Investment Services. The Adviser hereby engages the services of Sub-Adviser
in connection with Adviser's management of the Portfolio. Pursuant to this
Agreement and subject to the oversight and supervision of the Adviser and the
Trustees, the Sub-Adviser shall manage the investment and reinvestment of that
portion of the Portfolio as Adviser shall determine from time to time
(hereinafter referred to as the "Sub-Portfolio").
Adviser intends to use a manager-of-managers approach to manage the Portfolio.
The number of sub-advisers, the named sub-advisers, and the percentage of assets
of the Portfolio managed by each sub-adviser shall be determined by the Trustees
and the Adviser from time to time; provided, however, the Sub-Adviser shall be
given not less than thirty (30) days advance written notice of all changes
affecting this Agreement or the Sub-Adviser's role hereunder.
The Sub-Adviser shall formulate and implement a continuous investment program
for the Sub-Portfolio conforming to the investment objective, investment
policies and restrictions of the Sub-Portfolio as set forth in the Prospectus
and Statement of Additional Information of the Fund as in effect from time to
time (together, the "Registration Statement"), the Agreement and Declaration of
Trust and By-laws of the Fund, any investment guidelines or other instructions
received by the Sub-Adviser in writing from the Adviser from time to time and
all applicable securities laws and related regulations. Any amendments to the
foregoing documents (excluding securities laws and regulations) will not be
deemed effective with respect to the Sub-Adviser until the Sub-Adviser's receipt
thereof.
The Adviser acknowledges and agrees that the Sub-Adviser is hereby authorized,
to freely exercise on behalf of the Trust, its rights as a shareholder of the
various companies in which the Sub-Portfolio may invest including, but not
limited to its right to, (a) communicate its views on matters of policy to
management, the board of directors and other shareholders of a portfolio company
and (b) take such other steps, either individually or as part of a group, to (i)
influence a portfolio company's decision-making process, (ii) seek changes in a
company's management or board of directors, (iii) effect the sale of all or some
of a portfolio company's assets and (iv) vote to participate in or oppose a
takeover effort by or of a portfolio company whenever the Sub-Adviser believes
such activities may affect the value of the Trust's investment ("control
actions"). The Adviser understands that such control actions could result in
additional expense to the Trust, including expenses associated with operational
or regulatory requirements and the ongoing cost of potential litigation as a
plaintiff. However, no expense shall be incurred without the written consent of
the Adviser. The Adviser further understands that such control actions also
could restrict the Trust's ability to freely trade in the securities of a
portfolio company with respect to which it is deemed to be investing for
control, which might adversely affect the Trust's liquidity as well as the
valuation of those securities. Greater public disclosure could be required
regarding the Trust's investment and trading strategies in regulatory filings
relating to such securities.
The appropriate officers and employees of the Sub-Adviser will be available to
consult with the Adviser, the Trust and the trustees at reasonable times and
upon reasonable notice concerning the business of the Sub-Portfolio, including
valuations of securities which are not registered for public sale, not traded on
any securities market or otherwise may be deemed illiquid for purposes of the
ICA; provided it is understood that the Sub-Adviser is not responsible for daily
pricing of the Sub-Portfolio's assets except for recommending to the Adviser
upon request proposed valuations for portfolio securities when market quotations
are not readily available.
Sub-Adviser shall not be responsible for the provision of administrative,
bookkeeping or accounting services to the Portfolio or Sub-Portfolio, except as
specifically provided herein, as required by the ICA or the Advisers Act or as
may be necessary for the Sub-Adviser to supply to the Adviser, the Portfolio or
the Portfolio's shareholders the information required to be provided by the
Sub-Adviser hereunder. To the extent the Sub-Adviser agrees to perform any such
services, they shall be performed based upon the books and records the
Sub-Adviser maintains with respect to the Sub-Portfolio. Any records maintained
hereunder shall be the property of the Fund and surrendered promptly upon
request.
2. Compliance Monitoring and Reporting The parties acknowledge and agree that
the Sub-Adviser shall not be the compliance agent or administrator for the Trust
or for the Adviser. However, the Sub-Adviser shall supervise and monitor the
activities of its representatives, personnel and agents in connection with the
investment program of the Sub-Portfolio. In furnishing the services under this
Agreement, the Sub-Adviser shall manage the Sub-Portfolio in accordance with the
requirements of: (i) the ICA and the regulations promulgated thereunder; (ii)
Subchapters L and M (including, respectively, Section 817(h) and Sections
851(b)(1), (2), (3), and (4) of the Internal Revenue Code and the regulations
promulgated thereunder; (iii) other applicable provisions of state or federal
law; (iv) the Agreement and Declaration of Trust and By-Laws of the Trust; (v)
policies and determinations of the Trust and the Adviser provided to the
Sub-Adviser in writing; (vi) the fundamental and non-fundamental investment
policies and restrictions as may be amended from time to time by the Portfolio's
shareholders or Trustees and communicated to the Sub-Adviser in writing; (vii)
the Registration Statement; and (viii) investment guidelines or other
instructions provided to the Sub-Adviser in writing from the Adviser.
Notwithstanding the foregoing, the Sub-Adviser shall have no responsibility to
monitor compliance with limitations or restrictions for which information from
the Adviser or its authorized agents is required to enable the Sub-Adviser to
monitor compliance with such limitations or restrictions unless such information
is accurately, completely and timely provided to the Sub-Adviser in writing.
The Sub-Adviser shall be responsible for the preparation and filing of any
reports required to be filed under Sections 13 and 16 of the Securities and
Exchange Act of 1934, as amended (the "1934 Act") with respect to securities
held in the Sub-Portfolio. The Sub-Adviser shall not be responsible for the
preparation or filing of any other reports required of the Portfolio or
Sub-Portfolio by any governmental or regulatory agency, except as expressly
agreed to in writing.
The Adviser and Sub-Adviser shall cooperate with each other in providing
information, reports and other materials to regulatory and administrative bodies
having proper jurisdiction over the Adviser, the Sub-Adviser, the Portfolio or
the Sub-Portfolio; provided, however, that this agreement to cooperate does not
apply to the provision of information, reports and other materials which either
of them reasonably believes a regulatory or administrative body does not have
the authority to request or is the respective party's privileged or confidential
information.
3. Execution of Portfolio Transactions. Subject to the supervision and control
of the Adviser, which in turn is subject to the supervision and control of the
Trustees, the Sub-Adviser in its discretion shall determine which issuers and
securities or other investments shall be purchased, held, sold or exchanged by
the Sub-Portfolio or otherwise represented in the Sub-Portfolio's investment
portfolio from time to time and, subject to the provisions of this section 3 of
the Agreement, shall place orders with and give instructions to brokers, dealers
and others for all such transactions and cause such transactions to be executed.
Custody of the Sub-Portfolio shall be maintained by a custodian bank (the
"Custodian") designated by the Trust, and the Adviser shall authorize the
Custodian to honor orders and instructions by employees of the Sub-Adviser
designated by the Sub-Adviser to settle transactions in respect of the
Sub-Portfolio. No assets may be withdrawn from the Sub-Portfolio other than for
settlement of transactions on behalf of the Sub-Portfolio, except upon the
written authorization of appropriate officers of the Trust who shall have been
certified as such by proper authorities of the Trust prior to the withdrawal.
In connection with the investment and reinvestment of the assets of the
Sub-Portfolio, the Sub-Adviser is responsible for the selection of
broker-dealers to execute purchase, sale, exchange and other transactions for
the Sub-Portfolio in conformity with the policy regarding brokerage as set forth
in the Registration Statement, or as the Trustees may determine form time to
time, as well as the negotiation of brokerage commission rates with such
executing broker-dealers. Generally, the Sub-Adviser's primary consideration in
placing Sub-Portfolio investment transactions with broker-dealers for execution
will be to obtain, and maintain the availability of, best execution at the best
available price.
Consistent with this policy, the Sub-Adviser, in selecting broker-dealers and
negotiating brokerage commission rates, will take all relevant factors into
consideration, including, but not limited to: the best price available; the
reliability, integrity and financial condition of the broker-dealer; the size
and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the
Sub-Portfolio on a continuing basis. Subject to such polices and procedures as
the Trustees may determine and communicate in writing to the Sub-Adviser, the
Sub-Adviser shall have discretion to effect investment transactions for the
Sub-Portfolio through broker-dealers (including, to the extent permissible under
applicable law, broker-dealers affiliated with the Sub-Adviser) qualified to
obtain best execution of such transactions who provide brokerage and /or
research services, as such services are defined in section 28(e) of the 1934
Act, and to cause the Sub-Portfolio to pay any such broker-dealers an amount of
commission for effecting a portfolio investment transaction, if the Sub-Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage or research services provided by such
broker-dealer, viewed in terms of either that particular investment or the
Sub-Adviser's overall responsibilities with respect to the Sub-Portfolio and
other accounts as to which the Sub-Adviser exercises investment discretion as
such term is defined in section 3(a)(35) of the Securities and Exchange Act of
1934 (the "1934 Act") (the "Separate Accounts"). The Sub-Adviser shall not be
required to use a broker-dealer which provides research services to the Adviser
or other sub-advisers or to use a particular broker-dealer which the Adviser has
recommended.
On occasions when the Sub-Adviser deems the purchase or sale of a security to be
in the best interest of the Sub-Portfolio as well as other Separate Accounts,
the Sub-Adviser, in good faith and conformity with its responsibilities under
applicable laws, rules and regulations may, but shall not be required to,
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and achieve more efficient
execution. In the event of such an allocation, the allocation of securities and
the related transaction expenses shall be made by the Sub-Adviser among the
Sub-Portfolio, the Portfolio and other clients of the Sub-Adviser in such manner
as the Sub-Adviser reasonably believes is fair and equitable and consistent with
its fiduciary obligations.
4. Proxy Voting; Class Actions. Unless the Adviser gives the Sub-Adviser written
instructions to the contrary, the Sub-Adviser shall use its good faith judgment
in a manner which it reasonably believes best serves the interests of the
Portfolio's shareholders to vote or abstain from voting all proxies solicited by
or with respect to the issuers of securities in which assets of the
Sub-Portfolio may be invested. Sub-Adviser's sole responsibility with respect to
matters of Class Actions received by the Trust relating to securities held in
the Sub-Portfolio shall be to consult with the Adviser and/or the Trustees
regarding the merits thereof.
5. Reports by the Sub-Adviser. The Sub-Adviser shall report to the Adviser with
such frequency and in such form as may be mutually agreed from time to time
information concerning transactions and performance of the Sub-Portfolio,
including information required in the Registration Statement or information
necessary for the Adviser to review the Sub-Portfolio or discuss the management
of it. The Sub-Adviser shall permit the books and records maintained with
respect to the Sub-Portfolio to be inspected and audited by the Trust, the
Adviser or their respective agents at all reasonable times during normal
business hours upon reasonable notice. The Sub-Adviser shall immediately notify
both the Adviser and the Trust of any legal process served upon it in connection
with its activities hereunder, including any legal process served upon it on
behalf of the Adviser, the Portfolio or the Trust. The Sub-Adviser shall
promptly notify the Adviser of any changes in any information regarding the
Sub-Adviser or the investment program for the Sub-Portfolio as described in the
Registration Statement.
6. Compensation of the Sub-Adviser. For the services rendered hereunder, Adviser
shall pay Sub-Adviser at the end of each month, a fee at the annual rate of 0.60
of the average daily net assets of the Sub-Portfolio.
Sub-Adviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of the Sub-Portfolio shall be determined by the method and on the dates set
forth in the Trust's Registration Statement, as amended from time to time, and
in accordance with such valuation procedures as adopted by the Fund. In the
event of termination of this Agreement, all compensation due through the date of
termination shall be calculated on a pro-rated basis through the date of
termination and paid within thirty business days of the termination date.
The Adviser and the Sub-Adviser shall not be considered as partners or
participants in a joint venture. The Sub-Adviser is an independent contractor
and, unless otherwise expressly provided herein or otherwise authorized, shall
have no authority to act or represent the Adviser, the Trust or the Portfolio or
to otherwise act as agent for any of them.
The Sub-Adviser shall provide the office space, furnishings, equipment and
personnel and shall pay such other of its expenses required to perform the
services to be provided under this Agreement, but shall not be obligated to pay
any expenses of the Adviser, the Portfolio or the Fund. Except as otherwise
specifically provided herein, the Adviser, the Portfolio and the Fund shall not
be obligated to pay any expenses of the Sub-Adviser.
7. Delivery of Documents to the Sub-Adviser. On or before the effective date of
this Agreement, the Adviser shall furnish the Sub-Adviser with true, correct and
complete copies of each of the following documents each of which is hereby
acknowledged as received by the Sub-Adviser by its signature below:
(a) The Agreement and Declaration of Trust of the Fund, as in
effect on the date hereof;
(b) The By-Laws of the Fund, as in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Sub-Adviser as portfolio manager of the Sub-Portfolio and approving the
form of this Agreement;
(d) The resolutions of the Trustees selecting the Adviser as investment
manager to the Portfolio and approving the form of the Management
Agreement;
(e) The Management Agreement;
(f) The Code of Ethics of the Fund and of the Adviser, as in
effect on the date hereof;
(g) The Registration Statement of the Fund; and
(h) A list of affiliates of the Fund, the Adviser, other sub-advisers
to the Fund and their respective officers, directors, trustees, and
shareholders to the extent such affiliations will affect or limit
investment management of the Sub-Portfolio.
The Adviser shall furnish the Sub-Adviser from time to time with copies of all
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (f) and (h) above shall be provided promptly
and in no event later than 30 days from the date such materials become available
to the Adviser. Such amendments or supplements as to item (g) above shall be
provided not later than the end of the business day next following the date such
amendments or supplements become known to the Adviser. Any amendments or
supplements to the foregoing shall not be deemed effective with respect to the
Sub-Adviser until the Sub-Adviser's receipt thereof. The Adviser shall provide
such additional information as the Sub-Adviser may reasonably request in
connection with the performance of its duties hereunder.
8. Delivery of Documents to the Adviser. On or before the effective date of this
Agreement, the Sub-Adviser shall furnish the Adviser with true, correct and
complete copies of each of the following documents each of which is hereby
acknowledged as received by the Adviser by its signature below:
(a) At least 48 hours prior to execution of this Agreement, the
Sub-Adviser's Form ADV as filed with the Securities and Exchange
commission as of the date hereof;
(b) Separate lists of persons who the Sub-Adviser wishes to have
authorized to give written and/or oral instructions to Custodians of
Trust assets for the Sub-Portfolio;
(c) The Code of Ethics of the Sub-Adviser, as in effect on the date
hereof; and
(d) Any other portfolio management policies or procedures affecting
management of the Sub-Portfolio the Adviser reasonably requests.
The Sub-Adviser shall furnish the Adviser from time to time with copies of all
amendments of or supplements to the foregoing, if any. Such amendments or
supplements shall be provided promptly and in no event later than 30 days from
the date such materials become available to the Sub-Adviser. Any amendments or
supplements to the foregoing will not be deemed effective with respect to the
Adviser until the Adviser's receipt thereof. The Sub-Adviser shall provide
additional information as the Adviser may reasonably request in connection with
the Sub-Adviser's performance of its duties under this Agreement.
9. Confidential Treatment. The parties hereto understand that any information or
recommendation supplied by the Sub-Adviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Adviser, the Trust or such persons the Adviser may designate in connection
with the Sub-Portfolio. The parties also understand that any information
supplied to the Sub-Adviser by the Adviser or the Trust in connection with the
performance of its obligations hereunder, is to be regarded as confidential and
for use only by the Sub-Adviser in connection with its obligation to provide
investment advice and other services to the Sub-Portfolio. This paragraph shall
not apply to information, reports or other materials that are either public
information or required to be disclosed by federal or state regulatory
authorities.
10. Use of Name. The Adviser shall not use, and shall not permit the Trust to
use, the Sub-Adviser's name (or that of any of its affiliates) or any derivative
thereof, or logo, servicemark or trademark owned by the Sub-Adviser in any Trust
sales literature or other public communication without prior approval by the
Sub-Adviser.
11. Representations of the Parties. Each party hereto hereby further represents
and warrants to the other that: (i) it is registered as an investment adviser
under the Advisers Act; and (ii) it will promptly notify the other if it ceases
to be so registered, if its registration is suspended for any reason, or if it
is notified by any regulatory organization or court of competent jurisdiction
that it should show cause why its registration should not be suspended or
terminated; and (iii) it is duly authorized to enter into this Agreement and to
perform its obligations hereunder.
The Sub-Adviser further represents that it has adopted a written Code of Ethics
in compliance with Rule 17j-1(b) of the ICA. The Sub-Adviser shall be subject to
such Code of Ethics and shall not be subject to any other Code of Ethics,
including the Adviser's Code of Ethics, unless specifically adopted by the
Sub-Adviser. The Adviser further represents and warrants to the Sub-Adviser that
(i) the appointment of the Sub-Adviser by the Adviser has been duly authorized
and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the ICA, the Fund's governing documents and other applicable
law.
12. Liability. The federal laws impose responsibilities under certain
circumstances on persons who act in good faith, and therefore, nothing herein
shall in any way constitute a waiver or limitation of any rights which the
Trust, the Portfolio or the Adviser may have under applicable law.
13. Other Activities of the Sub-Adviser. The Adviser agrees that the Sub-Adviser
and any of its shareholders or employees, and persons affiliated with the
Sub-Adviser or with any such shareholder or employee, may render investment
management, advisory or brokerage services to other investors and institutions,
and that such investors and institutions may own, purchase or sell securities or
other interests in property that are in the same as, similar to, or different
from those which are selected for purchase, holding or sale for the
Sub-Portfolio. The Adviser further acknowledges that the Sub-Adviser and any of
its shareholders or employees, and persons affiliated with the sub-Adviser shall
be in all respects free to take action with respect to investments in securities
or other interests in property that are the same as, similar to, or different
from those selected for purchase, holding or sale for the Sub-Portfolio. Subject
to applicable securities laws and regulations, nothing in this Agreement shall
impose upon the Sub-Adviser any obligation (i) to purchase or sell, or recommend
for purchase or sale, for the Sub-Portfolio any security which the Sub-Adviser,
its shareholders, employees or persons affiliated with the Sub-Adviser may
purchase or sell for their own respective accounts or for the account of any
other client of the Sub-Adviser, advisory or otherwise, or (ii) to abstain from
the purchase or sale of any security of issuers named on the list provided by
the Adviser pursuant to subparagraph 7(h) hereof for the Sub-Adviser's other
clients, advisory or otherwise.
14. Continuance and Termination. This Agreement shall become effective only
after it is approved by the Trustees and shall remain in full force and effect
for two years from the effective date hereof, and is renewable annually
thereafter by specific approval of the Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio. Any such renewal shall be
approved by the vote of a majority of the Trustees who are not interested
persons under the ICA, cast in person (or as otherwise permitted under the ICA)
at a meeting called for the purpose of voting on such renewal. This Agreement
may be terminated without penalty at any time by the Adviser or the Sub-Adviser
upon 60 days written notice, and will automatically terminate in the event of
(i) its "assignment" by either party to this Agreement, as such term is defined
in the ICA, subject to such exemptions as may be granted by the Securities and
Exchange Commission by rule, regulation or order, or (ii) upon termination of
the Management Agreement, provided the Sub-Adviser has received prior written
notice thereof.
15. Notification. Unless otherwise expressly agreed in writing, any notice,
instruction or other communication required or contemplated by this Agreement
shall be in writing . All such communications shall be addressed to the
recipient at the address set forth below, provided that either party may, by
notice, designate a different recipient and/or address for such party.
Adviser: CIMCO Inc.
5910 Mineral Point Road
Madison, WI 53701-0391
Attention: Lawrence R. Halverson, Senior Vice President
Sub-Adviser: Heartland Advisors, Inc.
790 N. Milwaukee St.
Milwaukee, WI 53202
Attention: Jilaine Hummel Bauer
Senior Vice President and General Counsel
16. Limitation of Liability and Indemnification. Neither the Sub-Adviser nor any
of its officers, directors, employees, shareholders, nor any other person
performing executive, administrative, trading or other functions for the
Sub-Portfolio (at the direction or request of the Sub-Adviser) or the
Sub-Adviser in connection with the discharge of its obligations undertaken or
reasonably assumed with respect to this Agreement, shall be liable for any error
of judgment or mistake of law or for any loss suffered by the Adviser, the Fund
or the Portfolio or its shareholders in connection with the matters to which
this Agreement relates, except for loss resulting from willful misfeasance, bad
faith, or gross negligence or from the reckless disregard of such duties by the
Sub-Adviser. In no case shall the Sub-Adviser be liable for any loss incurred by
reason of any act or omission of the Trust, the Adviser, or their respective
agents including the Trust's custodian or any broker-dealer.
The Sub-Adviser shall indemnify and hold harmless the Adviser, its directors,
officers, and employees, any affiliated person of the Adviser and each
controlling person of the Adviser if any, against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses), to which the Adviser or any such other indemnified person may become
subject arising out of the Sub-Adviser's responsibilities as investment manager
of the Sub-Portfolio to the extent of and as a result of the willful misconduct,
bad faith, or gross negligence by the Sub-Adviser, any of the Sub-Adviser's
employees or representatives or any affiliate of, or any person, acting on
behalf of the Sub-Adviser; provided, however, that in no case is the
Sub-Adviser's indemnity in favor of the Adviser or any other such indemnified
person deemed to protect such person against any liability to which any such
person would otherwise be subject by reason of willful misconduct, bad faith or
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
The Adviser agrees to indemnify and hold harmless the Sub-Adviser, its
directors, officers, employees and shareholders, any affiliated person of the
Sub-Adviser and each controlling person of the Sub-Adviser, if any, against any
and all losses, claims, damages, liabilities or litigation (including reasonable
legal and other expenses), to which the Sub-Adviser or any such other
indemnified person may become subject arising out of the Adviser's
responsibilities as investment manager of the Portfolio (i) to the extent of and
as a result of the willful misconduct, bad faith or gross negligence by the
Adviser, any of the Adviser's employees or representatives or any affiliate of,
or any person, other than the Sub-Adviser, acting on behalf of the Adviser, or
(ii) as a result of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including any amendment
thereof or any supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, if such a statement or omission was made other
than in reliance upon and in conformity with written information furnished by
the Sub-Adviser, or any affiliated person of the Sub-Adviser or other than upon
verbal information confirmed by the Sub-Adviser in writing; provided, however,
that in no case is the Adviser's indemnity in favor of the Sub-Adviser or any
other such indemnified person of the Sub-Adviser deemed to protect such person
against any liability to which any such person would otherwise be subject by
reason of willful misconduct, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement.
It is agreed that the obligations of the indemnifying party under this section
shall extend to expenses and costs (including reasonable attorneys fees)
incurred by the indemnified party as a result of any litigation brought by the
indemnifying party alleging the indemnified party's- failure to perform its
obligations and duties in the manner required under this Agreement unless
judgment is rendered for the indemnifying party. It is further agreed that the
indemnity of the indemnifying party under this section shall not apply unless
the indemnified party shall have notified the indemnifying party in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of a claim hereunder shall have been served upon the
indemnified party.
17. Conflict of Laws. The provisions of this Agreement shall be subject to all
applicable statutes, laws, rules and regulations, including, without limitation,
the applicable provisions of the ICA and rules and regulations promulgated
thereunder. To the extent that any provision contained herein conflicts with any
such applicable provision of law or regulation, the latter shall control. The
terms and provisions of this Agreement shall be interpreted and defined in a
manner consistent with the provisions and definitions of the ICA. If any
provision of this Agreement shall be held or made invalid by a court decision,
statue, rule or otherwise, the remainder of this Agreement shall continue in
full force and effect and shall not be affected by such invalidity.
18. Amendments, Waivers, etc. Provisions of this Agreement may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought. This Agreement may be amended at any time by written mutual consent
of the parties, subject to the requirements of the ICA and rules and regulations
promulgated and orders granted thereunder.
19. Governing State Law. This Agreement is made under, and shall be governed by
and construed in accordance with, the laws of the State of Wisconsin.
20. Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement is held to be illegal or made invalid by
court decision, statute, rule or otherwise, such illegality or invalidity will
not affect the validity or enforceability of the remainder of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized officers as of the date first above written.
Attest: CIMCO Inc.
/s/ Kevin S. Thompson By: /s/ Michael S. Daubs
Kevin S. Thompson Michael S. Daubs, President
Attest: Heartland Advisors, Inc.
/s/ Lois Schmatzhagen By: /s/ William J. Nasgovitz
Lois Schmatzhagen, Secretary William J. Nasgovitz, President
<PAGE>
Exhibit 23(g)2
AMENDMENT NO. 1 TO
MUTUAL FUND CUSTODY AGREEMENT
THIS AGREEMENT is made as of ___________, 1999 by and between the ULTRA
SERIES FUND, a Massachusetts Business Trust (the "Fund"), and STATE STREET BANK
AND TRUST COMPANY, a Massachusetts State chartered bank trust company ("State
Street").
1. The parties entered into a Mutual Fund Custody Agreement dated April 30,
1997.
2. The Parties agree to amend Attachment B of the Custody Agreement to read as
follows:
ATTACHMENT B
Portfolios of the Ultra Series Fund
Capital Appreciation Stock Series
Mid-Cap Stock Fund
Money Market Series
Growth and Income Stock Series
Bond Series
Balanced Series
Treasury 2000 Series
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated below as of the day and year first above written.
ULTRA SERIES FUND
Attest: By: ----------------------------
Michael S. Daubs
- ---------------------- President
STATE STREET BANK AND TRUST COMPANY
Attest: By:
----------------------------------
Name:
Title:
- ----------------------
<PAGE>
Exhibit 23(j)
Consent of KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
4200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Independent Auditors' Consent
The Board of Trustees
Ultra Series Fund:
We consent to the use of our report dated February 5, 1999 included herein and
to the references to our Firm under the headings "FINANCIAL HIGHLIGHTS" in Part
A and "INDEPENDENT AUDITORS" in Part B of the Registration Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 20, 1999
<PAGE>
Exhibit 23(m)2
ULTRA SERIES FUND
Supplement No. 1 to
Distribution Plan
A. Ultra Series Fund (the Fund) is a diversified, open-end management
investment company registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended (the 1940 Act).
B. Paragraph B of the Distribution Plan (the Plan) states that the Plan shall
also apply to the Shares of any other series of the Fund as shall be designated
from time to time by the board of trustees of the Fund (the Board) in any
supplement to the Plan.
C. At its March 9, 1999 meeting, the Board of Trustees approved supplementing
the Plan to include the Mid-Cap Stock Fund as part of the Plan.
D. The Distribution Plan is hereby supplemented to include the Mid-Cap Stock
Fund.
IN WITNESS WHEREOF, Ultra Series Fund has adopted this Supplement to
the Distribution Plan as of May 1, 1999.
ULTRA SERIES FUND
By: /s/ Michael S. Daubs
Michael S. Daubs
President
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Money Market Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 56,438,569
<INVESTMENTS-AT-VALUE> 56,438,569
<RECEIVABLES> 6,147
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,444,716
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,228
<TOTAL-LIABILITIES> 28,228
<SENIOR-EQUITY> 564,165
<PAID-IN-CAPITAL-COMMON> 55,852,323
<SHARES-COMMON-STOCK> 56,416,488
<SHARES-COMMON-PRIOR> 41,170,152
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 56,416,488
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,454,777
<OTHER-INCOME> 0
<EXPENSES-NET> 203,616
<NET-INVESTMENT-INCOME> 2,251,161
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,251,161
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,251,161
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45,265,339
<NUMBER-OF-SHARES-REDEEMED> 32,270,164
<SHARES-REINVESTED> 2,251,161
<NET-CHANGE-IN-ASSETS> 15,246,336
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 202,445
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 203,616
<AVERAGE-NET-ASSETS> 45,086,491
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Treasury 2000 Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 1,616,561
<INVESTMENTS-AT-VALUE> 1,837,294
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,837,294
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,390
<TOTAL-LIABILITIES> 1,390
<SENIOR-EQUITY> 1,849
<PAID-IN-CAPITAL-COMMON> 1,613,322
<SHARES-COMMON-STOCK> 184,870
<SHARES-COMMON-PRIOR> 184,138
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 220,733
<NET-ASSETS> 1,835,904
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 114,238
<OTHER-INCOME> 0
<EXPENSES-NET> 7,946
<NET-INVESTMENT-INCOME> 106,292
<REALIZED-GAINS-CURRENT> 21,682
<APPREC-INCREASE-CURRENT> 21,682
<NET-CHANGE-FROM-OPS> 127,974
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 732
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 732
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,946
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,946
<AVERAGE-NET-ASSETS> 1,767,182
<PER-SHARE-NAV-BEGIN> 9.24
<PER-SHARE-NII> .58
<PER-SHARE-GAIN-APPREC> .11
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> .45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> Bond Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 224,862,908
<INVESTMENTS-AT-VALUE> 225,198,714
<RECEIVABLES> 3,189,911
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 228,388,625
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 107,475
<TOTAL-LIABILITIES> 107,475
<SENIOR-EQUITY> 215,987
<PAID-IN-CAPITAL-COMMON> 227,659,315
<SHARES-COMMON-STOCK> 21,598,720
<SHARES-COMMON-PRIOR> 17,909,312
<ACCUMULATED-NII-CURRENT> 70,041
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,484
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 335,807
<NET-ASSETS> 228,281,150
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,419,620
<OTHER-INCOME> 0
<EXPENSES-NET> 1,139,041
<NET-INVESTMENT-INCOME> 12,280,579
<REALIZED-GAINS-CURRENT> 159,188
<APPREC-INCREASE-CURRENT> (85,864)
<NET-CHANGE-FROM-OPS> 12,353,903
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,272,877
<DISTRIBUTIONS-OF-GAINS> 155,703
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,693,316
<NUMBER-OF-SHARES-REDEEMED> 353,989
<SHARES-REINVESTED> 1,350,081
<NET-CHANGE-IN-ASSETS> 3,689,408
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,135,607
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,139,041
<AVERAGE-NET-ASSETS> 206,615,353
<PER-SHARE-NAV-BEGIN> 10.54
<PER-SHARE-NII> .63
<PER-SHARE-GAIN-APPREC> .02
<PER-SHARE-DIVIDEND> .62
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.57
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> Balanced Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 368,051,167
<INVESTMENTS-AT-VALUE> 447,739,098
<RECEIVABLES> 2,518,100
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 450,257,198
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 264,856
<TOTAL-LIABILITIES> 264,856
<SENIOR-EQUITY> 240,187
<PAID-IN-CAPITAL-COMMON> 372,496,192
<SHARES-COMMON-STOCK> 24,018,663
<SHARES-COMMON-PRIOR> 18,199,350
<ACCUMULATED-NII-CURRENT> 44,474
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,476,442
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 79,687,931
<NET-ASSETS> 449,992,342
<DIVIDEND-INCOME> 2,572,782
<INTEREST-INCOME> 12,156,177
<OTHER-INCOME> 0
<EXPENSES-NET> 2,640,829
<NET-INVESTMENT-INCOME> 12,088,130
<REALIZED-GAINS-CURRENT> (2,476,442)
<APPREC-INCREASE-CURRENT> 38,583,512
<NET-CHANGE-FROM-OPS> 48,195,200
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,093,642
<DISTRIBUTIONS-OF-GAINS> 19,797
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,470,261
<NUMBER-OF-SHARES-REDEEMED> 375,123
<SHARES-REINVESTED> 724,175
<NET-CHANGE-IN-ASSETS> 5,819,313
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,631,828
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,640,829
<AVERAGE-NET-ASSETS> 377,376,179
<PER-SHARE-NAV-BEGIN> 17.02
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> 1.72
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .57
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.74
<EXPENSE-RATIO> .70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> Growth & Income Stock Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 635,624,560
<INVESTMENTS-AT-VALUE> 832,751,106
<RECEIVABLES> 29,379,876
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 862,130,982
<PAYABLE-FOR-SECURITIES> 28,538,208
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 419,152
<TOTAL-LIABILITIES> 419,152
<SENIOR-EQUITY> 272,644
<PAID-IN-CAPITAL-COMMON> 631,999,476
<SHARES-COMMON-STOCK> 27,264,375
<SHARES-COMMON-PRIOR> 13,899,526
<ACCUMULATED-NII-CURRENT> 8,091
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,766,865
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 197,126,546
<NET-ASSETS> 833,173,622
<DIVIDEND-INCOME> 11,188,272
<INTEREST-INCOME> 1,458,228
<OTHER-INCOME> 0
<EXPENSES-NET> 4,292,139
<NET-INVESTMENT-INCOME> 8,354,361
<REALIZED-GAINS-CURRENT> (34,291,135)
<APPREC-INCREASE-CURRENT> 73,755,119
<NET-CHANGE-FROM-OPS> 116,400,615
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,355,956
<DISTRIBUTIONS-OF-GAINS> 30,527,402
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,302,812
<NUMBER-OF-SHARES-REDEEMED> 413,009
<SHARES-REINVESTED> 1,681,769
<NET-CHANGE-IN-ASSETS> 5,571,572
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,275,173
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,292,139
<AVERAGE-NET-ASSETS> 713,078,748
<PER-SHARE-NAV-BEGIN> 27.20
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> 4.52
<PER-SHARE-DIVIDEND> .34
<PER-SHARE-DISTRIBUTIONS> 1.16
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.56
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> Capital Appreciation Stock Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 487,393,429
<INVESTMENTS-AT-VALUE> 627,766,335
<RECEIVABLES> 11,992,155
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 639,758,490
<PAYABLE-FOR-SECURITIES> 8,975,851
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 409,573
<TOTAL-LIABILITIES> 9,385,424
<SENIOR-EQUITY> 284,121
<PAID-IN-CAPITAL-COMMON> 489,295,973
<SHARES-COMMON-STOCK> 28,412,098
<SHARES-COMMON-PRIOR> 24,200,359
<ACCUMULATED-NII-CURRENT> (5,114)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 425,180
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 140,372,906
<NET-ASSETS> 630,373,066
<DIVIDEND-INCOME> 4,810,528
<INTEREST-INCOME> 1,137,243
<OTHER-INCOME> 0
<EXPENSES-NET> 4,297,296
<NET-INVESTMENT-INCOME> 1,650,475
<REALIZED-GAINS-CURRENT> 15,075,685
<APPREC-INCREASE-CURRENT> 86,357,794
<NET-CHANGE-FROM-OPS> 103,083,954
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,663,199
<DISTRIBUTIONS-OF-GAINS> 14,650,506
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,413,901
<NUMBER-OF-SHARES-REDEEMED> 142,237
<SHARES-REINVESTED> 940,075
<NET-CHANGE-IN-ASSETS> 4,211,739
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,287,520
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,297,296
<AVERAGE-NET-ASSETS> 536,289,877
<PER-SHARE-NAV-BEGIN> 18.85
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 3.87
<PER-SHARE-DIVIDEND> .06
<PER-SHARE-DISTRIBUTIONS> .53
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.19
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 8th day of February, 1999.
/s/ Gwendolyn M. Boeke
Gwendolyn M. Boeke
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 8th day of February, 1999.
/s/ Michael S. Daubs
Michael S. Daubs
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 8th day of February, 1999.
/s/ Alfred L. Disrud
Alfred L. Disrud
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 8th day of February, 1999.
/s/ Lawrence R. Halverson
Lawrence R. Halverson
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 8th day of February, 1999.
/s/ Keith S. Noah
Keith S. Noah
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 8th day of February, 1999.
/s/ T.C. Watt
T.C. Watt
Trustee for Ultra Series Fund
