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. [22]
and/or
Registration Statement Under the Investment Company Act of 1940 [X]
Amendment No. [26]
-----------------------------------
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)
[ ] on (date) 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)
[ X ] on (May 1, 1999)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>
[Front Cover]
ULTRA SERIES FUND
PROSPECTUS MAY 1, 1999
Money Market Fund
Treasury 2000 Fund
Bond Fund
Balanced Fund
Growth and Income Stock Fund
Mid-Cap Stock Fund
Capital Appreciation 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
Money Market Fund
Treasury 2000 Fund
Bond Fund
Balanced Fund
Growth and Income Stock Fund
Mid-Cap Stock Fund
Capital Appreciation Stock Fund
Risks vs. Return
Risks Associated with Certain Higher Risk Securities
Expenses
THE SHARES
Offer
Purchase and Redemption
Distribution
Dividends
Pricing of Fund Shares
Taxes
MORE ABOUT ULTRA SERIES FUND
Portfolio Management
Inquiries
Year 2000
Financial Highlights
Additional information about each fund's investments is available in 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 any 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>
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. However, because the investments in this fund
are so short term, there is only a remote 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 illustration of the performance of the Class Z
shares of the fund. The chart assumes the reinvestment of all dividends and
distributions.
Total Return
[GRAPHIC: Bar chart that will show total returns for the past ten calendar years
for Class Z shares of the Money Market Fund.]
Best Calendar Quarter: 2Q89 2.3068%
Worst Calendar Quarter: 2Q93 .5994%
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.
How does the performance of the Money Market Fund compare to general money
market returns?
The following table compares the performance of each class of shares of the
Money Market Fund 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 return bears no such expenses.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares
Class C Shares
90-day U.S. Treasury Bill
<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. 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 the proceeds 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 illustration of the performance of the Class Z
shares of the fund. The chart assumes the reinvestment of all dividends and
distributions.
Total Return
[GRAPHIC: Bar chart that will show total returns for the past ten calendar years
for Class Z shares of the Treasury 2000 Fund.]
Best Calendar Quarter: 2Q89 15.5069%
Worst Calendar Quarter: 1Q94 (5.0295)%
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. 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 each class of shares of the
Treasury 2000 Fund with the performance of the Lehman Brothers Intermediate
Treasury Bond Index, which is one measure of the performance of the relevant
market.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares
Class C Shares
Lehman Index
<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;
3. Foreign government debt securities: securities issued or guaranteed by
a foreign government or its agencies or instrumentalities, payable in
U.S. dollars; and
4. Other issuer debt securities: securities issued or guaranteed by
corporations, financial institutions, and others.
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 illustration of the performance of the Class Z
shares of the fund. The chart assumes the reinvestment of all dividends and
distributions.
Total Return
[GRAPHIC: Bar chart that will show total returns for the past ten calendar years
for Class Z shares of the Bond Fund.]
Best Calendar Quarter 2Q89 5.9412%
Worst Calendar Quarter: 1Q94 (2.4980)%
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.
How does the performance of the Bond Fund compare to the bond market?
The following table compares the performance of each class of shares of the Bond
Fund with the performance of the Lehman Brothers Intermediate
Government/Corporate Bond Index which is one measure of the performance of the
relevant market.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares
Class C Shares
Lehman Index
<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. Loss of money is a risk of investing in
this fund.
To the extent that it invests in certain securities, the fund may be affected by
additional risks relating to:
1. non-investment grade securities;
2. foreign securities; and
3. mortgage-backed securities.
These risks also include the chance that the issuer will not pay its debts.
Foreign securities have additional risks relating to the rate of currency
exchange and varying political situations. These risks are more fully explained
later in this prospectus and in the SAI.
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 type 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 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 illustration of the performance of the Class Z
shares of the fund. The chart assumes the reinvestment of all dividends and
distributions.
Total Return
[GRAPHIC: Bar chart that will show total returns for the past ten calendar years
for Class Z shares of the Balanced Fund.]
Best Calendar Quarter: 4Q98 11.4267%
Worst Calendar Quarter: 3Q90 (5.6866)%
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.
How does the performance of the Balanced Fund compare to the balanced market?
The following table compares the performance of each class of shares of the
Balanced Fund 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.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares
Class C Shares
Blended Index*
S&P 500 Stock Index
Lehman Index
90-day U.S. Treasury Bills
*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 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 illustration of the performance of the Class Z
shares of the fund. The chart assumes the reinvestment of all dividends and
distributions.
Total Return
[GRAPHIC: Bar chart that will show total returns for the past ten calendar years
for Class Z shares of the Growth and Income Stock Fund.]
Best Calendar Quarter: 4Q98 17.8124%
Worst Calendar Quarter: 3Q90 (13.6880)%
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. 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 each class of shares of the
Growth and Income Stock Fund with the performance of the Russell 1000 Index
and the S&P 500, which are measures of the performance of the relevant market.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares
Class C Shares
S&P 500 Stock Index
(Capitalization-weighted)
S&P 500 Stock Index
(Equal-weighted)
Russell 1000 Index
<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 longer investment time horizons;
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.
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 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 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.
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 Five Year Ten Year
S&P 400 Midcap Index
Russell Midcap Index
<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 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.
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 500 in about (+/-100%) 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 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 illustration of the performance of the Class Z
shares of the fund. The chart assumes the reinvestment of all dividends and
distributions.
Total Return
[GRAPHIC: Bar chart that will show total returns for the past ten calendar years
for Class Z shares of the Capital Appreciation Stock Fund.]
Best Calendar Quarter: 4Q98 20.8424%
Worst Calendar Quarter: 3Q98 (12.0395)%
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 each class of shares of the
Capital Appreciation Stock Fund with the performance of the S&P 1500 Stock
Index, Russell 3000 Index, and S&P 400 Stock Index, which are measures of the
performance of the relevant market.
Average Annual Total Returns
(As of December 31, 1998)
One Year Five Year Ten Year
Class Z Shares
Class C Shares
Russell 3000 Index
S&P 400 Stock Index
<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 each of the funds in the Ultra Series Fund, as well
as other types of investments. 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 a concise description of the 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
better 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 national products, 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 Money 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 may move 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.
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.
<PAGE>
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%
Mid-Cap Stock Fund 1.00% 1.00%
Capital Appreciation Stock Fund .80% .80%
Distribution (12b-1) Fees .25% .00%
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%
Mid-Cap Stock Fund .01% .01%
Capital Appreciation 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%
*Mid-Cap Stock Fund 1.26% 1.01%
Capital Appreciation Stock Fund 1.06% .81%
*Because the Mid-Cap Stock Fund is new, these amounts are only estimates.
This table describes the expenses that you may pay if you buy and hold shares of
the fund.
Shareholder fees are paid from your account.
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.
<PAGE>
EXAMPLE
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 $ $ $ $
Treasury 2000
Bond
Balanced
Growth and Income Stock
Mid-Cap Stock N/A N/A N/A N/A
Capital Appreciation Stock
Class C:
Fund 1 year 3 years 5 years 10 years
Money Market $ $ $ $
Treasury 2000
Bond
Balanced
Growth and Income Stock
Mid-Cap Stock N/A N/A N/A N/A
Capital Appreciation Stock
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>
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
Mid-Cap Stock Fund Mid-Cap Stock Subaccount
Capital Appreciation Stock Fund Capital Appreciation 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.
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.
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 attached prospectus for such
contract. [For information concerning the federal tax consequences to plan
participants, see the summary plan description accompanying this prospectus.]
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 advice to 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 $6 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 about ____ 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. During the fiscal year ended
December 31, 1998, CIMCO received a total of $12,547,472.73 in management fees
from the funds. The management fee paid to CIMCO is computed and accrued daily
and paid monthly, as indicated in the Expenses section.
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
you will experience negative affects on your Ultra Series Fund investments from
the Year 2000 transition.
<PAGE>
The financial highlights table is intended to help you understand the funds'
financial performance. Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate than an
investor would have earned on an investment in the fund. (Assuming reinvestment
of all dividends and distributions). The information has been audited by KPMG,
whose report, along with the funds' financial statements are included in the
annual report which is available upon request.
<TABLE>
<CAPTION>
MONEY MARKET FUND
Financial Highlights
Years Ended December 31
------------------------------------ MONEY MARKET FUND ------------------------------------
(For a share outstanding throughout
the period): 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period
Income from Investment Operations $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $
Net Investment Income .08 .08 .05 .03 .03 .03 .05 .05 .05
Net Realized and Unrealized Gain
(Loss)on Investments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total from Investment Operations .08 .08 .05 .03 .03 .03 .05 .05 .05
Distributions
Distributions from Net Investment
Income (.08) (.08) (.05) (.03) (.03) (.03) (.05) (.05) (.05)
Distributions from Realized
Capital Gains (0.00) (0.00) (0.00) 0.00 0.00 0.00 0.00 0.00 0.00
Total Distributions (.05) (.05) (.05) (.03) (.03) (.03) (.05) (.08) (.08)
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return* 8.39% 7.53% 5.36% 3.05% 2.86% 3.34% 5.21% 5.17% 4.75%
Ratio/Supplemental Data
Net Assets, End of Period
(000s Omitted) $4,420 $4,794 $5,082 $5,097 $4,749 $7,799 $11,374 $21,011 $41,170 $
Ratio of Expenses to Average
Net Assets** .65% .65% .65% .65% .65% .65% .65% .65% .50%
Ratio of Net Investment Income to
Average Net Assets 8.39% 7.53% 5.36% 3.05% 2.43% 3.66% 5.17% 4.74% 5.05%
Portfolio Turnover Rate -- -- -- -- -- -- -- -- --
For the Money Market Fund, the "seven-day average" yield for the seven days ended December 31, 1997, was 4.96% and the "effective"
yield for that period was 5.09%.
*These returns are after all charges at the mutual fund level have been subtracted. These returns are higher than the returns at
the separate account level because charges made at the separate account level have not been subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance Company and its affiliates absorbed certain expenses
under the terms of an Expense Reimbursement Agreement between the Ultra Series Fund and CUNA Mutual Life Insurance Company. If
the Expense Reimbursement Agreement had not been in effect and if the full expenses allowable under the Investment Advisory
Agreement between the Ultra Series Fund and the Investment Adviser had been charged, the resulting ratio of expenses to average
net assets would have been .77%, .78%, .73%, .67%, and .51% for 1993, 1994, 1995, 1996, and 1997, respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TREASURY 2000 FUND
Financial Highlights
Years Ended December 31
--------------------------------- TREASURY 2000 FUND ---------------------------------
(For a share outstanding throughout
the period) 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period
Income from Investment Operations $3.85 $4.69 $5.02 $6.04 $6.53 $7.53 $7.00 $8.47 $8.64
Net Investment Income .34 .38 .41 .45 .48 .53 .58 .58 .58
Net Realized and Unrealized Gain
(Loss) on Investments .50 (.05) .61 .04 .52 (1.06) .89 (.41) .02
Total from Investment Operations .84 .33 1.02 .49 1.00 (.53) 1.47 .17 .60
Distributions
Distributions from Net Investment
Income -- -- -- -- -- -- -- -- --
Distributions from Realized
Capital Gains -- -- -- -- -- -- -- -- --
Total Distributions -- -- -- -- -- -- -- -- --
Net Asset Value, End of Period $4.69 $5.02 $6.04 $6.53 $7.53 $7.00 $8.47 $8.64 $9.24
Total Return* 21.79% 7.12% 20.37% 8.01% 15.43% (7.12%) 20.99% 2.10% 6.85%
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted $834 $987 $1,084 $1,176 $1,363 $1,272 $1,545 $1,585 $1,701
Ratio of Expenses to Average Net Assets .45% .45% .45% .45% .45% .45% .45% .45% .45%
Ratio of Net Investment Income to
Average Net Assets 8.02% 8.25% 7.76% 7.26% 6.69% 7.50% 7.40% 7.03% 6.56%
Portfolio Turnover Rate
*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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Financial Highlights
Years Ended December 31
--------------------------------------- BOND FUND -----------------------------------------
(For a share outstanding throughout
the period): 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.70 $9.93 $9.75 $10.37 $10.32 $10.58 $9.67 $10.63 $10.33
Income from Investment Operations
Net Investment Income .87 .89 .77 .69 .64 .59 .60 .65 .29
Net Realized and Unrealized Gain
(Loss)on Investments .23 (.18) .62 (.03) .28 (.90) .96 (.28) .45
Total from Investment Operations 1.11 .71 1.39 .66 .92 (.31) 1.56 .37 .74
Distributions
Distributions from Net Investment
Income (.88) (.89) (.77) (.70) (.65) (.59) (.59) (.64) (.51)
Distributions from Realized
Capital Gains -- -- -- (.01) (.01) (.01) (.01) (.03) (.02)
Total Distributions (.88) (.89) (.77) (.71) (.66) (.60) (.60) (.67) (.53)
Net Asset Value, End of Period $9.93 $9.75 $10.37 $10.32 $10.58 $9.67 $10.63 $10.33 $10.54
Total Return* 11.74% 7.41% 14.70% 6.47% 8.87% (3.06%) 16.37% 2.86% 7.45%
Ratio/Supplemental Data
Net Assets, End of Period
(000s Omitted) $3,315 $3,399 $3,975 $5,244 $6,297 $7,867 $13,725 $26,572 $188,840
Ratio of Expenses to Average
Net Assets** .65% .65% .65% .65% .65% .65% .65% .65% .56%
Ratio of Net Investment Income to
Average Net Assets 8.63% 8.87% 7.74% 6.83% .99% 6.03% 6.08% 6.25% 6.50%
Portfolio Turnover Rate 24.47% 46.09% 8.74% 13.58% 12.23% 11.97% 14.74% 25.67% 30.71%
*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 .75%, .70%, .68%, .67%, and .57%, for 1993, 1994, 1995, 1996, and 1997, respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Financial Highlights
Years Ended December 31
-------------------------------------- BALANCED FUND ---------------------------------------
(For a share outstanding throughout
the period): 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.47 $12.59 $12.11 $13.44 $13.54 $13.70 $12.90 $14.63 $15.29
Income from Investment Operations
Net Investment Income .61 .74 .62 .55 .50 .52 .55 .58 .62
Net Realized and Unrealized Gain
(Loss)on Investments 1.42 (.29) 1.56 .40 .95 (.56) 2.29 .98 1.93
Total from Investment Operations 2.03 .46 2.18 .95 1.45 (.04) 2.84 1.56 2.55
Distributions
Distributions from Net Investment
Income (.71) (.74) (.63) (.55) (.50) (.51) (.55) (.58) (.63)
Distributions from Realized
Capital Gains (.20) (.20) (.22) (.30) (.79) (.25) (.56) (.32) (.19)
Total Distributions (.91) (.94) (.85) (.85) (1.29) (.76) (1.11) (.90) (.82)
Net Asset Value, End of Period $12.59 $12.11 $13.44 $13.54 $13.70 $12.90 $14.63 $15.29 $17.02
Total Return* 18.03% 3.75% 18.53% 6.85% 10.47% (.46) 22.27% 10.79% 16.87%
Ratio/Supplemental Data
Net Assets, End of Period
(000s Omitted) $15,416 $19,964 $29,539 $41,604 $54,363 $67,468 $110,969 $194,725 $309,804
Ratio of Expenses to Average Net
Assets** ....................... .65% .65% .65% .65% .65% .65% .65% .65% .68%
Ratio of Net Investment Income to
Average Net Assets ........... 5.97% 6.23% 4.98% 4.10% 3.62% 4.00% 4.03% 3.91% 3.81%
Portfolio Turnover Rate .......... 30.64% 27.07% 13.26% 19.23% 28.71% 28.53% 36.68% 33.48% 21.15%
Average Commission Rate .......... $.06 $.06 $.06
*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 .69%, .65%, .68%, .70%, and .74%, for 1997, 1996, 1995, 1994, and 1993, respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Financial Highlights
Years Ended December 31
------------------------------- GROWTH AND INCOME STOCK FUND -------------------------------
(For a share outstanding throughout
the period): 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of $12.15 $14.13 $12.75 $15.21 $15.49 $15.51 $15.06 $18.20 $21.32
Period
Income from Investment Operations
Net Investment Income .33 .44 .33 .32 .29 .32 .37 .34 .31
Net Realized and Unrealized Gain
(Loss) on Investments 2.61 (.73) 2.95 .90 1.87 (.04) 4.37 3.93 6.36
Total from Investment Operations 2.94 (.29) 3.28 1.22 2.16 .28 4.74 4.27 6.67
Distributions
Distributions from Net Investment
Income (.38) (.44) (.34) (.32) (.29) (.32) (.37) (.34) (.32)
Distributions from Realized
Capital Gains (.58) (.66) (.49) (.62) (1.85) (.40) (1.23) (.81) (.47)
Total Distributions (.96) (1.10) (.83) (.94) (2.14) (.72) (1.60) (1.15) (.79)
Net Asset Value, End of Period $14.13 $12.74 $15.20 $15.49 $15.51 $15.07 $18.20 $21.32 $27.20
Total Return* 24.37% (1.98%) 25.66% 7.66% 13.77% 1.42% 31.75% 22.02% 31.42%
Ratio/Supplemental Data
Net Assets, End of Period
(000s Omitted) $7,932 $9,258 $17,101 $24,382 $32,468 $48,913 $102,138 $232,841 $590,135
Ratio of Expenses to Average
Net Assets** .65% .65% .65% .65% .65% .65% .65% .65% .61%
Ratio of Net Investment Income to
Average Net Assets 2.83% 3.33% 2.58% 2.11% 1.84% 2.19% 2.28% 1.78% 1.39%
Portfolio Turnover Rate 35.55% 32.02% 27.90% 29.67% 56.79% 45.36% 57.80% 40.55% 20.39%
Average Commission Rate $0.06 $0.06 $0.06
*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 .73%, .70%, .69%, .65%, and .61%, for 1993, 1994, 1995, 1996, and 1997, respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Financial Highlights
Years Ended December 31
------------------------- CAPITAL APPRECIATION STOCK FUND ---------------------------
(For a share outstanding throughout the period): 1994* 1995 1996 1997 1998
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.00 $9.97 $12.51 $14.60
Income from Investment Operations
Net Investment Income .16 .14 .13 0.07
Net Realized and Unrealized Gain (Loss)
on Investments .37 2.91 2.55 4.52
Total from Investment Operations .53 3.05 2.68 4.59
Distributions
Distributions from Net Investment Income (.15) (.14) (.13) (.07)
Distributions from Realized Capital Gains (.41) (.37) (.46) (.27)
Total Distributions (.56) (.51) (.59) (.34)
Net Asset Value, End of Period $9.97 $12.51 $14.60 $18.85
Total Return** 5.44% 30.75% 21.44% 31.57%
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $9,449 $38,117 $98,674 $456,194
Ratio of Expenses to Average Net Assets*** .65% .65% .65% .82%
Ratio of Net Investment Income to Average
Net Assets 1.55% 1.37% 96% 70%
Portfolio Turnover Rate 65.81% 61.32% 49.77% 17.06%
Average Commission Rate $0.06 $0.06 $0.06
*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 .83%, .66%, .75%, and .85%, for 1997, 1996, 1995, and 1994, respectively.
</TABLE>
<PAGE>
[Back Cover]
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 prospectus for the Ultra Series Fund which is
incorporated by reference.
The prospectus contains information that an investor should know before
investing. For a copy of the prospectus, dated May 1, 1999, 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.......................................................
Investment Practices......................................................
Lending Portfolio Securities.....................................
Restricted Securities............................................
Foreign Securities...............................................
Put And Call Options.............................................
Financial Futures And Related Options............................
Stock Index Futures And Related Options..........................
Bond Fund Practices..............................................
Lower-Rated Debt Securities......................................
Foreign Government Securities....................................
Convertible Securities...........................................
Repurchase Agreements............................................
Reverse Repurchase Agreements....................................
U.S. Government Securities.......................................
Mortgage-Backed And Asset-Backed Securities......................
Forward Commitment And When-Issued Securities....................
Investment Limitations....................................................
Temporary Defensive Positions.............................................
Portfolio Turnover........................................................
Management Of The Fund....................................................
Officers And Trustees............................................
Trustees Compensation............................................
Substantial Shareholders.........................................
Beneficial Owners................................................
The Investment Adviser....................................................
Management Agreements with Subadvisers....................................
Expenses Of The Fund......................................................
Distribution Plan And Agreement...........................................
Transfer Agent............................................................
Custodian.................................................................
Independent Auditors......................................................
Brokerage.................................................................
How Securities Are Offered................................................
Shares Of Beneficial Interest....................................
Limitation Of Trustee And Officer Liability......................
Limitation Of Interseries Liability..............................
Net Asset Value Of Shares.................................................
Money Market Fund................................................
Treasury 2000, Bond, Balanced, Growth And Income Stock,
Mid-Cap Stock, And Capital Appreciation Stock Funds.............
Dividends, Distributions And Taxes........................................
Options And Futures Transactions.................................
Straddles........................................................
Distributor......................................................
Calculation Of Yields And Total Returns...................................
Money Market Fund Yields.........................................
Other Fund Yields................................................
Average Annual Total Returns.....................................
Other Total Returns..............................................
Financial Statements......................................................
<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, Mid-Cap Stock, and
Capital Appreciation 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 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. 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 and Treasury 2000 Funds, may invest up to 10%
of their total 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. 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, Mid-Cap Stock, and Capital Appreciation Stock Fund s 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.
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 writer's position will be canceled by the clearing corporation. 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, Mid-Cap Stock, and Capital Appreciation
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. 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, Mid-Cap Stock, and Capital Appreciation
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). 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. Monies used to pay interest on
borrowed funds will not be available for investment. 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.)
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.
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.
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.
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, Mid-Cap Stock, and
Capital Appreciation 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.
TEMPORARY DEFENSIVE POSITIONS
Although each fund expects to pursue its investment objective utilizing its
principal investment strategies regardless of market conditions, each fund may
invest up to 100% in money market securities as a defensive tactic in abnormal
market conditions.
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, Mid-Cap Stock, and
Capital Appreciation 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.
<TABLE>
Officers and Trustees
Name and Address Position(s) Held with Fund Principal Occupation(s) For
the Past 5 Years
<S> <C> <C>
Michael S. Daubs* President, 1983 - Present CIMCO Inc.
5910 Mineral Point Road Trustee, 1997 - Present President, 1982 - Present
Madison, WI 53705
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, 1987 - Present CIMCO Inc.
5910 Mineral Point Road Secretary, 1992 - Present Senior Vice President, 1996 - Present
Madison, WI 53705 Trustee, 1997 - Present Vice President, 1987 - 1996
Age - 53 Secretary, 1992 - Present
CUNA Brokerage Services, Inc.
President, 1996 - 1998
Robert M. Buckingham* Chief Financial Officer and CUNA Mutual Life Insurance Company
2000 Heritage Way Assistant Secretary Vice President and Valuation Actuary
Waverly, IA 50677 1993-Present 1991-Present
Age - 44
Michael G. Joneson* Chief Accounting Officer, CUNA Mutual Life Insurance Company
2000 Heritage Way Treasurer, 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 Waverly, Iowa 50677
Waverly, IA 50677 Owner
Age - 78 1986 - Present....
Keith S. Noah Trustee Noah & Smith (Attorneys)
2000 Heritage Way 1984 - Present Charles City, Iowa 50616
Waverly, IA 50677 Partner
Age - 78 1948 - Present
Thomas C. Watt Trustee MidAmerican Energy Company
2000 Heritage Way 1986 - Present Waterloo, Iowa 50704
Waverly, IA 50677 Manager - Business Initiatives
Age - 62 1997 - Present
MidAmerican Energy Company
Waterloo, Iowa 50704
District Manager
1995 - 1997
Midwest Power Systems, Inc.
Waterloo, Iowa 50704
Division Manager
1992 - 1995
*An interested person within the meaning of the Act.
</TABLE>
Trustee Compensation
Aggregate Compensation Total Compensation from
Name of Person, 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 February 1, 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 April
1, 1998, the following persons had a beneficial interest exceeding five percent
(5%):
Percentage of
Fund Beneficial Owner Holdings Net Assets
Treasury 2000 CUNA Mutual Life Insurance Company
2000 Heritage Way $546,036.73 31.64%
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, 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 %
Mid-Cap Stock 1.00 %
Capital Appreciation Stock 0.80 %
Under the Investment Advisory Agreement effective prior to May 1, 1997, the
total fee paid to the Investment Adviser during the year ended December 31,
1996, was $2,094,152. The total fee paid to the Investment Adviser during the
year ended December 31, 1997, was $5,320,543. The total fee paid to the
investment adviser for the year ended December 31, 1998 was $12,547,472.73.
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.
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.
Effective January 1, 1992, the Adviser contracted 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. In 1995, the Adviser paid $217,034 for
those services. In 1996, the Adviser paid $447,362 for those services. In 1997,
the Adviser paid $223,220 for those services. In 1998, the Adviser paid
$___________ for those services. Effective July 17, 1993, the Adviser contracted
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. In 1995, the Adviser paid $9,487 for those
services. In 1996, the Adviser paid $19,711 for those services. In 1997, the
Adviser paid $16,404 for those services. In 1998, the Adviser paid $___________
for those services.
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.
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, Mid-Cap Stock, and
Capital Appreciation 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 is providing some of these services on behalf of the Investment Adviser.
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, $_______ 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.
The table below shows the dollar amount spent in 1998 by CUNA Brokerage
Services, Inc. for each of the following items:
1) Advertising $__________________
2) Printing and mailing of prospectuses to other
current shareholders __________________
3) Compensation to underwriters __________________
4) Compensation to broker-dealers __________________
5) Compensation to sales personnel __________________
6) Interest carrying or other financing charges, and __________________
7) Other __________________
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. It is compensated by
CIMCO based on a percentage of assets in the fund.
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 is
considered to be in addition to and not in lieu of services required to be
performed by the Investment Adviser under its contract with the Ultra Series
Fund. Research obtained on behalf of the Ultra Series Fund may be used by the
Investment Adviser in connection with other clients of the Investment Adviser.
Conversely, research received from placement of brokerage for other accounts may
be used by the Investment Adviser in managing investments of the Ultra Series
Fund. Therefore, the correlation of the cost of research to individual clients
of the Adviser, including the Ultra Series Fund, is indeterminable and cannot
practically be allocated among the Ultra Series Fund and the Investment
Adviser's 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 $92,415 in brokerage fees. There were
no brokerage fees paid by Bond, Money Market, or Treasury 2000 Funds in 1997.
For the year ended December 31, 1998, Capital Appreciation Stock Fund paid [$ ],
Growth and Income Stock Fund paid [$ ], and Balanced Fund paid [$ ] 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 Investment Adviser in "bunching of trades" wherein one purchase or sale
transaction representing several different client accounts is placed with a
broker. The Investment Adviser has 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, and Capital Appreciation 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, Mid-Cap Stock, and
Capital Appreciation Stock
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, Mid-Cap Stock, and Capital Appreciation 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. The total amount
of underwriting commissions received by CUNA Brokerage from the Ultra Series
Fund for each of the last three fiscal years are 1996 [$ ], 1997 [$ ], and 1998
[$ ].
<TABLE>
Net Underwriting Compensation on
Name of Principal Discounts and Commissions Redemptions and Brokerage Commissions
Underwriter Repurchases Other Compensation
<S> <C> <C> <C> <C>
</TABLE>
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.
Such average annual total return information for the Funds is as follows:
For the For the For the
1-year 5-year 10-year
period period period
ended ended ended
Fund 12/31/98 12/31/98 12/31/98
Capital Appreciation
Growth and Income
Balanced
Bond
Treasury 2000
* Capital Appreciation Fund returns are from inception, January 3, 1994.
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.
[This information will be provided later.]
<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. Servicing Agreement between CIMCO Inc. and CUNA Mutual Insurance
Society effective May 1, 1997.
3. Servicing Agreement between CUNA Mutual Life Insurance Company
and CIMCO Inc. effective May 1, 1997.
(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
(g) Mutual Fund Custody Agreement between Ultra Series Fund and State
Street Bank and Trust Company effective April 30, 1997.
(h) 1. Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company Pension Plan for Home Office Employees.
2. Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company Pension Plan for Agents.
3. Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company 401(k)/Thrift Plan for Home Office
Employees.
4. Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company 401(k)/Thrift Plan for Agents.
5. Participation Agreement between Ultra Series Fund and CUNA Mutual
Pension Plan.
6. Participation Agreement between Ultra Series Fund and CUNA Mutual
Savings Plan.
7. Participation Agreement between Ultra Series Fund and CUNA Mutual
Thrift Plan.
(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) 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.
(n) Financial Data Schedules [to be included in b filing]
(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
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
(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
* 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. Cooperative Savings and Credit Unions Insurance Society "Benefit" SA
(Poland) 75.93% ownership by CUNA Mutual Insurance Society 11.49%
ownership by CUMIS Insurance Society, Inc. 12.58% ownership by
Foundation for Polish Credit Unions September 1, 1992
7. GWARANT, Ltd.
50% ownership by CUNA Mutual Insurance Society 50% ownership by
Foundation for Polish Credit Unions February 18, 1994
8. 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
9. 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
10. CMG Mortgage Insurance Company
50% ownership by CUNA Mutual Investment Corporation 50% ownership by
PMI Mortgage Insurance Co.
April 14, 1994
11. 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
12. CUNA Caribbean Insurance Society Limited (Trinidad and Tobago, W.I.)
47.96% ownership by CUNA Mutual Insurance Society
July 4, 1985
13. 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
14. CUNA Service Group, Inc.
April 22, 1974 - CUNA Mutual Insurance Society purchased 200.71 shares
15. "Benevita LKS" (Russia)
49% CUNA Mutual Insurance Society
51 % League of Credit Unions
December 7, 1995
16. 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
Limited Liability Companies
1. CUNA Mortgage Assistance, L.L.C. 50% interest by CUNA Mortgage
Corporation 50% interest by CUNA Service Group, Inc.
November 7, 1995
2. "Sofia LTD." (Ukraine) 99.96% CUNA Mutual Insurance Society .04% CUMIS
Insurance Society, Inc.
March 6, 1996
3. 'FORTRESS' (Ukraine)
80% "Sofia LTD."
19% The Ukrainian National Association of Savings and Credit Unions
1% Service Center by UNASCU
September 25, 1996
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
Affiliated (Nonstock)
1. NARCUP, Inc.
August 8, 1978
2. CUNA Mutual Group Foundation, Inc.
July 5, 1967
3. CUNA Mutual Life Insurance Company
July 1, 1990
CUNA Mutual Life Insurance Company
ORGANIZATIONAL CHART AS OF OCTOBER 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:
The 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.
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 & Secretary Vice President
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** Assistant Vice President
John M. Waggoner* Chief Officer - Legal
John W. Wiley* Associate Compliance Officer
*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 has duly caused this registration statement to be
signed on its behalf by the undersigned, duly authorized, in the City of Madison
and State of Wisconsin, on the ____ day of _________________, 1999.
Ultra Series FUND
By:
Michael S. Daubs
Trustee and President
<PAGE>
Pursuant to the Securities Act of 1933, this Amendment to the Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURES AND TITLE DATE
Michael S. Daubs, Trustee and President
Lawrence R. Halverson, Trustee, Vice President
and Secretary
Michael G. Joneson, Treasurer and Assistant Secretary
Robert M. Buckingham, Assistant Secretary
Gwendolyn M. Boeke*
Gwendolyn M. Boeke, Trustee
Alfred L. Disrud*
Alfred L. Disrud, Trustee
Keith S. Noah*
Keith S. Noah, Trustee
Thomas C. Watt*
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. Servicing Agreement between CIMCO Inc. and CUNA Mutual Insurance
Society effective May 1, 1997.
3. Servicing Agreement between CUNA Mutual Life Insurance Company
and CIMCO Inc. effective May 1, 1997.
(g) Mutual Fund Custody Agreement between Ultra Series Fund and State
Street Bank and Trust Company effective April 30, 1997.
(h) 1. Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company Pension Plan for Home Office Employees
2. Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company Pension Plan for Agents
3. Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company 401(k)/Thrift Plan for Home Office
Employees
4. Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company 401(k)/Thrift Plan for Agents
5. Participation Agreement between Ultra Series Fund and CUNA Mutual
Pension Plan
6. Participation Agreement between Ultra Series Fund and CUNA Mutual
Savings Plan
7. Participation Agreement between Ultra Series Fund and CUNA Mutual
Thrift Plan
(j) Consent of KPMG Peat Marwick LLP
(n) Financial Data Schedules [to be included in b filing]
Powers of Attorney
<PAGE>
Exhibit 23(d)2
SERVICING AGREEMENT BETWEEN
CIMCO INC.
AND
CUNA MUTUAL INSURANCE SOCIETY
THIS AGREEMENT is made effective May 1, 1997 by and between CIMCO Inc. (CIMCO),
a registered investment adviser domiciled in the state of Iowa with its
principal office located in Madison, Wisconsin, and CUNA Mutual Insurance
Society (CUNA Mutual), a mutual insurance company domiciled in the state of
Wisconsin with its principal office located in Madison, Wisconsin.
WHEREAS, CIMCO is an independent registered investment adviser, engaged
primarily in the business of providing investment advice and investment
management services on a fee for service basis and CIMCO alone has control over
its investment advisory business; and
WHEREAS, CUNA Mutual and CUNA Mutual Life Insurance Company (CUNA Mutual Life),
a mutual life insurance company domiciled in the state of Iowa with its
principal office located in Waverly, Iowa, have entered into an agreement of
permanent affiliation to increase efficiencies and to share certain resources
and facilities between CUNA Mutual Life and CUNA Mutual while each company
remains a separate corporate entity and continues to be separately owned by its
policyowner group, and CUNA Mutual Investment Corporation, a wholly owned
subsidiary of CUNA Mutual, and CUNA Mutual Life each own fifty percent (50%) of
CIMCO, and
WHEREAS, CIMCO currently acts as investment adviser to CUNA Mutual, CUNA Mutual
Life, and a registered investment company sponsored by CUNA Mutual Life, namely
Ultra Series Fund; and
WHEREAS, CIMCO wishes to purchase from CUNA Mutual various services required by
CIMCO in the ordinary course of administering its business,
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
1. CIMCO shall purchase from CUNA Mutual certain cash management and
investment administration services necessary to fulfill CIMCO's
obligation under the Investment Advisory Agreements between CIMCO and
Ultra Series Fund approved by the shareholders on December 5, 1991, and
subsequently approved by the Trust's Board of Trustees.
2. CUNA Mutual shall conduct cash management and investment administration
services in accord with the requirements of securities laws and
regulations. Further, CUNA Mutual shall interact with the custodian for
the Ultra Series Fund only as expressly permitted by (1) the Custody
Agreement between Ultra Series Fund and its custodian, (2) the Cash Data
Entry Funds Transfer System Service Agreement between Ultra Series Fund
and its custodian, and (3) resolutions of the Board of Trustees.
3. CUNA Mutual shall maintain cash management and investment administration
records as required by Section 31 under the Investment Company Act. Such
records shall be the property of Ultra Series Fund and CUNA Mutual shall
surrender them promptly upon request.
4. The services CIMCO purchases from CUNA Mutual hereunder are exclusive of
the services CUNA Mutual performs under a Servicing Agreement between
CUNA Mutual and CIMCO effective January 1, 1992.
5. CIMCO shall pay CUNA Mutual the fees calculated in accordance with the
attached Exhibit A which may be amended from time to time by written
endorsement executed by both parties.
6. This agreement shall be nonassignable and shall remain in effect until
terminated and may be terminated by any party as of the first day of any
month by giving the other party at least 30 days prior written notice.
IN WITNESS WHEREOF, this agreement is executed by CUNA Mutual and CIMCO by their
respective duly authorized officers.
CUNA MUTUAL INSURANCE SOCIETY
By: /s/ Michael B. Kitchen
President and Chief Executive Officer
CIMCO INC.
By: /s/ Michael S. Daubs
President
<PAGE>
Exhibit A - Schedule of Fees to Servicing Agreement Between
CUNA Mutual Insurance Society and CIMCO Inc.
1. Fees for cash management and investment administration services.
As full compensation for cash management services, CIMCO will pay a monthly fee
based on the net assets at the close of business on the last business day of the
preceding month multiplied by a specified factor. For the Treasury 2000 Series,
the factor is .000000833, which is approximately equal to an annualized rate of
.001% of net assets. For the Bond Series, the factor is .000001667, which is
approximately equal to an annualized rate of .002% of net assets. For the Money
Market Series, the fact is .000002500, which is approximately equal to an
annualized rate of .003%. For the Balanced Series, Growth and Income Stock
Series, and Capital Appreciation Series, the factor is .000004167, which is
approximately equal to an annualized rate of .005% of net assets.
CUNA MUTUAL INSURANCE SOCIETY
By: /s/ Michael B. Kitchen
President and Chief Executive Officer
CIMCO INC.
By: /s/ Michael S. Daubs
President
<PAGE>
Exhibit 23(d)3
SERVICING AGREEMENT BETWEEN
CUNA MUTUAL LIFE INSURANCE COMPANY
AND
CIMCO INC.
THIS AGREEMENT is made by and between CUNA Mutual Life Insurance Company (CUNA
Mutual Life ), a mutual life insurance company domiciled in the state of Iowa
with its principal office located in Waverly, Iowa, and CIMCO Inc. (CIMCO), a
duly licensed registered investment adviser domiciled in the state of Iowa with
its principal office located in Madison, Wisconsin.
WHEREAS, CIMCO is an independent registered investment adviser, engaged
primarily in the business of providing investment advice and investment
management services on a fee for service basis, and currently acts as investment
adviser to the Ultra Series Fund and other clients, and
WHEREAS, CIMCO alone will have control over its investment advisory business,
and
WHEREAS, CIMCO wishes to purchase from CUNA Mutual Life various services
required by CIMCO in the ordinary course of administering its business,
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
1. CIMCO shall purchase from CUNA Mutual Life certain accounting,
administrative, clerical, legal, tax and other services necessary to
fulfill CIMCO's obligation under the Investment Advisory Agreement
between CIMCO and the Ultra Series Fund.
2. As full compensation for the above-described services, CIMCO will pay to
CUNA Mutual Life a monthly fee equal to 1/12th of .15% of the entire net
assets of Ultra Series Fund determined as of the close of business on
the last business day of the preceding month.
3. This agreement shall be nonassignable and shall remain in effect until
terminated and may be terminated by any party as of the first day of any
month by giving the other party at least 30 days prior written notice.
4. This agreement shall be applied, interpreted, construed and enforced in
accordance with the laws of the state of Iowa.
IN WITNESS WHEREOF, this agreement is executed by CUNA Mutual Life and CIMCO by
their respective duly authorized officers to become effective on the 1st day of
May, 1997.
CUNA MUTUAL LIFE INSURANCE COMPANY
By: /s/ Michael B. Kitchen
President and Chief Executive Officer
CIMCO INC.
By: /s/ Michael S. Daubs
President
<PAGE>
Exhibit 23(g)
MUTUAL FUND CUSTODY AGREEMENT
Ultra Series Fund
STATE STREET BANK AND TRUST COMPANY
<PAGE>
MUTUAL FUND CUSTODY AGREEMENT
Ultra Series Fund
Table of Contents
Section/Article Page
1. Appointment...............................................................1
2. Delivery of Documents.....................................................1
3. Definitions...............................................................2
4. Delivery and Registration of the Property.................................3
5. Voting Rights.............................................................3
6. Receipt and Disbursement of Money.........................................4
7. Receipt of Securities.....................................................4
8. Use of Securities Depository or the Book-Entry System.....................5
9. Instructions Consistent With The Declaration, etc.........................6
10. Transactions..............................................................7
11. Transactions Requiring Instructions.......................................8
12. Purchase of Securities....................................................9
13. Sales of Securities......................................................10
14. DUTIES OF CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE OF THE
UNITED STATES............................................................10
15. Authorized Shares........................................................13
16. Records..................................................................13
17. Cooperation with Accountants.............................................13
18. Confidentiality..........................................................14
19. Equipment Failures.......................................................14
20. Right to Receive Advice..................................................14
21. Compliance with Governmental Rules and Regulations.......................15
22. Compensation.............................................................15
23. Indemnification..........................................................15
24. Responsibility of State Street...........................................16
25. Collection...............................................................16
26. Duration and Termination.................................................17
27. Notices..................................................................17
28. Insurance................................................................17
29. Further Actions..........................................................18
30. Amendments...............................................................18
31. Miscellaneous............................................................18
32. ADDITIONAL FUNDS.........................................................18
33. REPRODUCTION OF DOCUMENTS................................................18
31. SHAREHOLDER COMMUNICATIONS ELECTION......................................18
Attachment A -- Fees
Attachment B -- Investment Portfolios of the Fund
<PAGE>
MUTUAL FUND CUSTODY AGREEMENT
THIS AGREEMENT is made as of April 30, 1997, 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").
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer two classes of shares in six
series, the Capital Appreciation Stock Series, the Money Market Series, the
Growth and Income Series, the Bond Series, the Balanced Series and the Treasury
2000 Series (such series together with all other series subsequently established
by the Fund and made subject to this Contract in accordance with Article 32,
being herein referred to as the "Portfolio(s)");
WHEREAS, the Fund desires to retain State Street to serve as the custodian
of the assets of the Portfolios of the Fund and State Street is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints State Street to act as custodian
of the portfolio securities, cash and other property of each Portfolio of the
Fund on the terms set forth in this Agreement. State Street accepts such
appointment and agrees to furnish the services herein set forth in return for
the compensation as provided in Article 21 of this Agreement.
2. Delivery of Documents. The Fund will promptly furnish to State Street
such copies, properly certified or authenticated, of contracts, documents and
other related information that State Street may request or requires to properly
discharge its duties. Such documents may include but are not limited to the
following:
(a) Resolutions of the Fund's Trustees authorizing the appointment of State
Street as Custodian of the portfolio securities, cash and other property of the
Fund and approving this Agreement;
(b) Incumbency and signature certificates identifying and containing the
signatures of the Fund's officers and/or the persons authorized to sign Written
Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Declaration of Trust filed with the Office of the Secretary
of the Commonwealth of Massachusetts and all amendments thereto (such
Declaration of Trust, as currently in effect and as they shall from time to time
be amended, are herein called the "Declaration");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
currently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(e) Resolutions of the Fund's Trustees and/or the Fund's stockholders
approving the Management Agreement between the Fund and the Fund's investment
adviser (the "Management Agreement");
(f) The Management Agreement;
(g) The Fund's current Registration Statement on Form N-1A under the 1940
Act and the Securities Act of 1933, as amended ("the 1933 Act") as filed with
the Securities and Exchange Commission (the "SEC"); and
(h) The Fund's most recent prospectus including all amendments and
supplements thereto (the "Prospectus").
The Fund will furnish State Street from time to time with copies of all
amendments of or supplements to the foregoing, if any. The Fund will also
furnish State Street with a copy of the opinion of counsel for the Fund with
respect to the validity of the shares of common stock, par value $.01 per share
(the "Shares"), of the Fund and the status of such Shares under the 1933 Act as
registered with the SEC, and under any other applicable federal law or
regulation.
3. Definitions
(a) "Authorized Person". As used in this Agreement, the term "Authorized
Person" means the Fund's President, Vice-President, Treasurer and any other
person, whether or not any such person is an officer or employee of the Fund,
duly authorized by the Trustees of the Fund to give Written Instructions on
behalf of the Fund.
(b) "Book-Entry System". As used in this Agreement, the term "Book-Entry
System" means the Federal Reserve/Treasury book-entry system for United States
and federal agency securities, its successor or successors and its nominee or
nominees.
(c) "Property". The term "Property", as used in this Agreement, means:
(i) any and all securities, cash, and other property of the Fund which
the Fund may from time to time deposit, or cause to be deposited, with
State Street or which State Street may from time to time hold for the Fund;
(ii) all income in respect of any such securities or other property;
(iii) all proceeds of the sales of any of such securities or other
property;
and
(iv) all proceeds of the sale of securities issued by the Fund, which
are received by State Street from time to time from or on behalf of the
Fund.
(d) "Securities Depository". As used in this Agreement, the term
"Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC, or its successor or successors and its nominee
or nominees; and shall also mean any other registered clearing agency, its
successor or successors, specifically identified in a certified copy of a
resolution of the Fund's Trustees approving deposits by State Street therein.
(e) "Written Instructions". Means instructions
(i) delivered by mail, tested telegram, cable, telex, facsimile
sending device, and received by State Street, signed by one Authorized
Person if the transaction is valued at less than $1,000,000 and by two
Authorized Persons if the transaction is valued at equal to or greater than
$1,000,000 or by persons reasonably believed by State Street to be
Authorized Persons; or
(ii) transmitted electronically through the State Street `s electronic
trade delivery system.
4. Delivery and Registration of the Property. The Fund will deliver or
cause to be delivered to State Street all Property owned by it, including cash
received for the issuance of its Shares, at any time during the period of this
Agreement, except for securities and monies to be delivered to any subcustodian
appointed pursuant to Article 7 hereof. State Street will not be responsible for
such securities and such monies until actually received by State Street or by
any subcustodian. All securities delivered to State Street or to any such
subcustodian (other than in bearer form) shall be registered in the name of the
Fund or in the name of a nominee of the Fund or in the name of State Street or
any nominee of State Street (with or without indication of fiduciary status) or
in the name of any subcustodian or any nominee of such subcustodian appointed
pursuant to Article 7 hereof or shall be properly endorsed and in form for
transfer satisfactory to State Street. If, however, the Fund directs State
Street to maintain securities in "street name", State Street shall utilize its
best efforts only to timely collect income due the Fund on such securities and
to notify the Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or exchange
offers.
5. Voting Rights. With respect to all securities, however registered, it is
understood that the voting and other rights and powers shall be exercised by the
Fund. State Street's only duty shall be to mail to the Fund any documents
received, including proxy statements and offering circulars, with any proxies
for securities registered in a nominee name executed by such nominee. Where
warrants, options, tenders or other securities have fixed expiration dates, the
Fund understands that in order for State Street to act, State Street must
receive the Fund's instructions at its offices in North Quincy, Massachusetts,
addressed as State Street may from time to time request, by no later than noon
(Massachusetts time) at least one business day prior to the last scheduled date
to act with respect thereto (or such earlier date or time as permits the Fund a
reasonable period of time in which to respond after State Street notifies the
Fund of such date or time). Absent State Street's timely receipt of such
instructions, such instruments will expire without liability to State Street.
6. Receipt and Disbursement of Money.
(a) State Street shall open and maintain a demand deposit account for each
Portfolio of the Fund (the "Bank Account") subject only to draft or order by
State Street acting pursuant to the terms of this Agreement, and shall hold in
such Bank Account, subject to the provisions hereof, all cash received by it
from or for such Portfolio of the Fund. State Street shall make payments of cash
to, or for the account of, such Portfolio of the Fund from such cash only (i)
for the purchase of securities for the Fund as provided in Article 12 hereof;
(ii) upon receipt of Written Instructions, for the payment of dividends or other
distributions of shares, or for the payment of interest, taxes, administration,
distribution or advisory fees or expenses which are to be borne by the Portfolio
under the terms of this Agreement, any Management Agreement, or any
administration agreement of the Fund; (iii) upon receipt of Written Instructions
for payments in connection with the conversion, exchange or surrender of
securities owned or subscribed to by the Portfolio and held by or to be
delivered to State Street; (iv) to a subcustodian pursuant to Article 7 hereof;
or (v) upon receipt of Written Instructions for other corporate purposes.
(b) State Street is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian for the
Fund.
7. Receipt of Securities.
(a) Except as provided by Article 8 hereof, State Street shall hold all
securities and non-cash Property received by it for each Portfolio of the Fund.
All such securities and non-cash Property are to be held or disposed of by State
Street for each Portfolio of the Fund pursuant to the terms of this Agreement.
In the absence of Written Instructions accompanied by a certified resolution
authorizing the specific transaction by the Fund's Trustees, State Street shall
have no power or authority to withdraw, deliver, assign, hypothecate, pledge or
otherwise dispose of any such securities and non-cash Property, except in
accordance with the express terms provided for in this Agreement.
Upon receipt of Written Instructions, State Street shall on behalf of the
applicable Portfolio(s) from time to time employ one or more sub-custodians,
located in the United States but only in accordance with an applicable vote by
the Board of Trustees of the Fund on behalf of the applicable Portfolio(s), and
provided that State Street shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian employed at the direction of the Fund than any such sub-custodian
has to State Street. The Custodian may employ as sub-custodian for the Fund's
foreign securities on behalf of the applicable Portfolio(s) the foreign banking
institutions and foreign securities depositories designated in Schedule A hereto
but only in accordance with the provisions of Article 14.
State Street may itself at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as amended, to act as its
agent to carry out such of the provisions of this Agreement as State Street may
from time to time direct; provided, however, that the appointment of any agent
shall not relieve State Street of its responsibilities or liabilities hereunder.
(b) Promptly after the close of business on each day, State Street shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of each Portfolio of the Fund during said day. Where securities are
transferred to for the account of a Portfolio of the Fund to an account
maintained by State Street at a Securities Depository or the Book Entry System
pursuant to Article 8 hereof, State Street shall also by book-entry or otherwise
identify as belonging to such Portfolio of the Fund the quantity of securities
that belongs to such Portfolio of the Fund that are part of a fungible bulk of
securities registered in the name of State Street (or its nominee) or shown in
State Street's account on the books of a Securities Depository or the Book-Entry
System. At least monthly and at such other times as may be reasonable requested
by the Fund, State Street shall furnish the Fund with a detailed statement of
the Property held for each Portfolio of the Fund under this Agreement.
8. Use of Securities Depository or the Book-Entry System. The Fund shall
deliver to State Street a certified resolution of the Trustees of the Fund
approving, authorizing and instructing State Street on a continuous and ongoing
basis until instructed to the contrary by Written Instructions actually received
by State Street (i) to deposit in a Securities Depository or the Book-Entry
System all securities of each Portfolio of the Fund eligible for deposit therein
and (ii) to utilize a Securities Depository or the Book-Entry System to the
extent possible in connection with the performance of its duties hereunder,
including without limitation, settlements of purchases and sales of securities
by a Portfolio of the Fund, and deliveries and returns of securities collateral
in connection with borrowings. Without limiting the generality of such use, it
is agreed that the following provisions shall apply thereto:
(a) Securities and any cash of a Portfolio of the Fund deposited in a
Securities Depository or the Book-Entry System will at all times be segregated
from any assets and cash controlled by State Street in other than a fiduciary or
custodian capacity but may be commingled with other assets held in such
capacities. State Street will effect payment for securities and receive and
deliver securities in accordance with accepted industry practices in the place
where the transaction is settled, unless the Fund has given State Street Written
Instructions to the contrary.
(b) All Books and records maintained by State Street which relate to any
Portfolio of the Fund's participation in a Securities Depository or the
Book-Entry System will at all times during State Street's regular business hours
be open to the inspection of the Fund's duly authorized employees or agents, and
the Fund will be furnished with all information in respect of the services
rendered to it as it may require.
(c) Anything to the contrary in this Contract notwithstanding, State Street
shall be liable to the Fund for the benefit of a Portfolio for any loss or
damage to the Portfolio resulting from use of a Securities Depository or the
Book-Entry System by reason of any negligence, misfeasance or misconduct of
State Street or any of its agents or of any of its or their employees or from
failure of State Street or any such agent to enforce effectively such rights as
it may have against the Securities Depository or the Book-Entry System; at the
election of the Fund, it shall be entitled to be subrogated to the rights of
State Street with respect to any claim against a. Securities Depository or the
Book-Entry System or any other person which State Street may have as a
consequence of any such loss or damage if and to the extent that the Portfolio
has not been made whole for any such loss or damage.
9. Instructions Consistent With The Declaration, etc. Unless otherwise
provided in this Agreement, State Street shall act only upon Written
Instructions. State Street may assume that any Written Instructions received
hereunder are not in any way inconsistent with any provision of the Articles or
By-Laws of the Fund or any vote or resolution of the Fund's Trustees, or any
committee thereof. State Street shall be entitled to rely upon any Written
Instructions actually received by State Street pursuant to this Agreement. The
Fund agrees that State Street shall incur no liability in acting upon Written
Instructions given to State Street. In accord with instructions from the Fund,
as required by accepted industry practice or as State Street may elect in
effecting the execution of Fund instructions, advances of cash or other Property
made by State Street on behalf of a Portfolio of the Fund, arising from the
purchase, sale, redemption, transfer or other disposition of Property of the
Fund, or in connection with the disbursement of funds to any party, or in
payment of fees, expenses, claims or liabilities owed to State Street by the
Fund, or to any other party which has secured judgment in a court of law against
the Fund which creates an overdraft in the accounts or over-delivery of Property
shall be deemed a loan by State Street to the Fund, payable on demand, bearing
interest at such rate customarily charged by State Street for similar loans and
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay State Street promptly,
State Street shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
The Fund agrees that test arrangements, authentication methods or other
security devices to be used with respect to instructions which the Fund may give
by telephone, telex, TWX facsimile transmission, bank wire or through an
electronic instruction system, shall be processed in accordance with terms and
conditions for the use of such arrangements, methods or devices as State Street
may put into effect and modify from time to time. The Fund shall safeguard any
test keys, identification codes or other security devices which State Street
makes available to the Fund and agrees that the Fund shall be responsible for
any loss, liability or damage incurred by State Street or by the Fund as a
result of State Street's acting in accordance with instructions from any
unauthorized person using the proper security device unless such loss, liability
or damage was incurred as a result of State Street's negligence or willful
misconduct. State Street may electronically record, but shall not be obligated
to so record, any instructions given by telephone and any other telephone
discussions with respect to the Account. In the event that the Fund uses State
Street's electronic trade delivery system, the Fund agrees that State Street is
not responsible for the consequences of the failure of the system to perform for
any reason beyond the reasonable control of State Street, or the failure of any
communications carrier, utility, or communications network. In the event the
system is inoperable, the Fund agrees that it will accept the communication of
transaction instructions by telephone, facsimile transmission on equipment
compatible to State Street's facsimile receiving equipment or by letter, at no
additional charge to the Fund.
10. Transactions Not Requiring Instructions. State Street is authorized to
take the following action without Written Instructions:
(a) Collection of Income and Other Payments. State Street shall:
(i) subject to Article 4, collect and receive for the account of each
Portfolio of the Fund, all income and other payments and distributions,
including (without limitation) stock dividends, rights, warrants and
similar items, included or to be included in the Property of such Portfolio
of the Fund, and promptly advise the Fund of such receipt and shall credit
such income, as collected, to such Portfolio of the Fund. From time to
time, State Street may elect, but shall not be so obligated, to credit the
Account with interest, dividends or principal payments on payable or
contractual settlement date, in anticipation of receiving same from a
payer, central depository, broker or other agent employed by the Fund or
State Street. Any such crediting and posting shall be at the Fund's sole
risk, and State Street shall be authorized to reverse any such advance
posting in the event State Street does not receive good funds from any such
payer, central depository, broker or agent of the Fund.
(ii) endorse and deposit for collection in the name of the Fund,
checks, drafts, or other orders for the payment of money on the same day as
received;
(iii) receive and hold for the account of each Portfolio of the Fund
all securities received by the Fund as a result of a stock dividend, share
split-up or reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or similar securities issued with
respect to any portfolio securities of such Portfolio of the Fund held by
State Street hereunder;
(iv) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed or retired, or otherwise
become payable on the date such securities become payable;
(v) take any action which may be necessary and proper in connection
with the collection and receipt of such income and other payments and the
endorsement for collection of checks, drafts and other negotiable
instruments;
(vi) with respect to domestic securities, to exchange securities in
temporary form for securities in definitive form, to effect an exchange of
the shares where the par value of stock is changed, and to surrender
securities at maturity or when advised of earlier call for redemption,
against payment therefor in accordance with accepted industry practice. The
Fund understands that State Street subscribes to one or more nationally
recognized services that provide information with respect to calls for
redemption of bonds or other corporate actions. State Street shall not be
liable for failure to redeem any called bond or to take other action if
notice of such call or action was not provided by any service to which it
subscribes provided that State Street shall have acted in good faith
without negligence and in accordance with "Street Practice" (as is
customary in industry). State Street shall have no duty to notify the Fund
of any rights, duties, limitations, conditions or other information set
forth in any security (including mandatory or optional put, call and
similar provisions), but State Street shall forward to the Fund any notices
or other documents subsequently received in regard to any such security.
When fractional shares of stock of a declaring corporation are received as
a stock distribution, unless specifically instructed to the contrary in
writing, State Street is authorized to sell the fraction received and
credit the applicable Portfolio's account. Unless specifically instructed
to the contrary in writing, State Street is authorized to exchange
securities in bearer form for securities in registered form. If any
Property registered in the name of a nominee of State Street is called for
partial redemption by the issuer of such Property, State Street is
authorized to allot the called portion to the respective beneficial holders
of the Property in such manner deemed to be fair and equitable by State
Street in its sole discretion.
(b) Miscellaneous Transactions. State Street is authorized to deliver or
cause to be delivered Property against payment or other consideration or written
receipt therefor in the following cases:
(i) for examination by a broker selling for the account of a Portfolio of
the Fund in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary securities for
definitive securities;
(iii) for transfer of securities into the name of the Fund or State Street
or a nominee of either, or for exchange of securities for a different
number of bonds, certificates, or other evidence, representing the
same aggregate face amount or number of units bearing the same
interest rate, maturity date and call provisions, if any; provided
that, in any such case, the new securities are to be delivered to
State Street.
11. Transactions Requiring Instructions. Upon receipt of Written
Instructions and not otherwise, State Street, directly or through the use of a
Securities Depository or the Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated in such
Written Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised,
(b) Deliver any securities held for a Portfolio of the Fund against receipt
of other securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any securities held for a Portfolio of the Fund to any
protective committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, against receipt of such certificates of
deposit, interim receipts or other instruments or documents as may be issued to
it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of a Portfolio of the
Fund and take such other steps as shall be stated in said instructions to be for
the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of such Portfolio of
the Fund;
(e) Release securities belonging to a Portfolio of the Fund to any bank or
trust company for the purpose of pledge or hypothecation to secure any loan
incurred by such Portfolio of the Fund; provided, however, that securities shall
be released only upon payment to State Street of the monies borrowed, except
that in cases where additional collateral is required to secure a borrowing
already made, subject to proper prior authorization, further securities may be
released for that purpose; and pay such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon surrender of the note or
notes evidencing the loan;
(f) Deliver any securities held for a Portfolio of the Fund upon the
exercise of a covered call option written by the Fund on such securities on
behalf of such Portfolio; and
(g) Deliver securities held for a Portfolio of the Fund pursuant to
separate security lending agreements concerning the lending of the Portfolio's
securities into which the Fund may enter, from time to time on behalf of such
Portfolio.
(h) Without specific authorization of the Fund, State Street shall not
accept due bills in place of Property or securities or accept partial delivery
or settlement. State Street is authorized to deliver Property of a Portfolio of
the Fund, against a receipt therefor, for examination in accordance with "street
delivery" custom and to accept, in lieu of Property, documents, including trust
and collateral receipts and letters of undertaking, as long as such documents
contain the agreement of the issuer thereof to hold such Property subject to
State Street's sole order.
12. Purchase of Securities. Promptly after each purchase of securities by
the Fund's investment adviser (or any sub-adviser), the Fund shall deliver to
State Street (as Custodian) Written Instructions specifying with respect to each
such purchase: (a) the name of the issuer and the title of the securities, (b)
the number of shares of the principal amount purchased and accrued interest, if
any, (c) the dates of purchase and settlement, (d) the purchase price per unit,
(e) the total amount payable upon such purchase, (f) the name of the person from
whom or the broker through whom the purchase was made and (g) the Portfolio of
the Fund for which the purchase was made. State Street shall upon receipt of
securities purchased by or for a Portfolio of the Fund pay out of the moneys
held for the account of such Portfolio the total amount payable to the person
from whom or the broker through whom the purchase was made, provided that the
same conforms to the total amount payable as set forth in such Written
Instructions.
13. Sales of Securities. Promptly after each sale of securities by the
Fund's investment adviser, the Fund shall deliver to State Street (as Custodian)
Written Instructions, specifying with respect to each such sale: (a) the name of
the issuer and the title of the security, (b) the number of shares or principal
amount sold, and accrued interest' if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the Fund upon such sale, (f) the
name of the broker through whom or the person to whom the sale was made and (g)
the Portfolio of the Fund for which the sale was made. State Street shall
deliver the securities upon receipt of the total amount payable to the Fund upon
such sale, provided that the same conforms to the total amount payable as set
forth in such Written Instructions. Subject to the foregoing, State Street may
accept payment in such form as shall be satisfactory to it, and may deliver
securities and arrange for payment in accordance with the customs prevailing
among dealers in securities.
14. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
(a) Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the foreign
banking institutions and foreign securities depositories designated on Schedule
A hereto ("foreign sub-custodians"). Upon receipt of Written Instructions,
together with a certified resolution of the Fund's Board of Trustees, the
Custodian and the Fund may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Written Instructions, the
Fund may instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's assets.
(b) Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a) "foreign
securities", as defined in paragraph (c)(1) of Rule 17f-5 under the Investment
Company Act of 1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to effect the
Portfolio's foreign securities transactions. The Custodian shall identify on its
books as belonging to the Fund, the foreign securities of the Fund held by each
foreign sub-custodian.
(c) Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or in a
book-entry system for the central handling of securities located outside the
United States (each a "Foreign Securities System") only through arrangements
implemented by the foreign banking institutions serving as sub-custodians
pursuant to the terms hereof. Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Article 14 (e)
hereof.
(d) Holding Securities. The Custodian may hold securities and other
non-cash property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
(e) Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each Portfolio
will not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or administration; (b)
beneficial ownership for the assets of each Portfolio will be freely
transferable without the payment of money or value other than for custody or
administration; (c) adequate records will be maintained identifying the assets
as belonging to each applicable Portfolio; (d) officers of or auditors employed
by, or other representatives of the Custodian, including to the extent permitted
under applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e) assets
of the Portfolios held by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
(f) Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a foreign sub-custodian insofar as such
books and records relate to the performance of such foreign banking institution
under its agreement with the Custodian.
(g) Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the securities and
other assets of the Portfolio(s) held by foreign sub-custodians, including but
not limited to an identification of entities having possession of the
Portfolio(s) securities and other assets and advices or notifications of any
transfers of securities to or from each custodial account maintained by a
foreign banking institution for the Custodian on behalf of each applicable
Portfolio indicating, as to securities acquired for a Portfolio, the identity of
the entity having physical possession of such securities.
(h) Transactions in Foreign Custody Account. (i) Except as otherwise
provided in subparagraph (ii) of this Article 14 (h), the provisions of Articles
12 and 13 of this Contract shall apply, mutatis mutandis to the foreign
securities of the Fund held outside the United States by foreign sub-custodians.
(ii) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the account of
each applicable Portfolio may be effected in accordance with the customary
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such securities from such
purchaser or dealer.
(iii) Securities maintained in the custody of a foreign sub-custodian may
be maintained in the name of such entity's nominee to the same extent as set
forth in Article 4 of this Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such securities.
(i) Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the performance of
its duties and to indemnify, and hold harmless, the Custodian and the Fund from
and against any loss, damage, cost, expense, liability or claim arising out of
or in connection with the institution's performance of such obligations. At the
election of the Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking institution as a
consequence of any such loss, damage, cost, expense, liability or claim if and
to the extent that the Fund has not been made whole for any such loss, damage,
cost, expense, liability or claim.
(j) Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth with
respect to sub-custodians generally in this Contract and, regardless of whether
assets are maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by Article
14(l) hereof, the Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where the
sub-custodian has otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this Article 14 (j), in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except such loss
as may result from (a) political risk (including, but not limited to, exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses (excluding
a bankruptcy or insolvency of State Street London Ltd. not caused by political
risk) due to Acts of God, nuclear incident or other losses under circumstances
where the Custodian and State Street London Ltd. have exercised reasonable care.
(k) Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be similar in
kind and scope to that furnished to the Fund in connection with the initial
approval of this Contract. In addition, the Custodian will promptly inform the
Fund in the event that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the subject
of an exemptive order from the Securities and Exchange Commission is notified by
such foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted U.S.
accounting principles).
(l) Branches of U.S. Banks. (i) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking institution
which is a "bank" as defined by Section 2(a)(5) of the Investment Company Act of
1940 meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by Article 1
of this Contract.
(ii) Cash held for each Portfolio of the Fund in the United Kingdom shall
be maintained in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the direction of
the Custodian, State Street London Ltd. or both.
(m) Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the responsibility of the
Fund to notify the Custodian of the obligations imposed on the Fund or the
Custodian as custodian of the Fund by the tax law of jurisdictions other than
those mentioned in the above sentence, including responsibility for withholding
and other taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with regard to
such tax law shall be to use reasonable efforts to assist the Fund with respect
to any claim for exemption or refund under the tax law of jurisdictions for
which the Fund has provided such information.
15. Authorized Shares. The Fund has two classes of shares, Class C
(unaffiliated separate accounts and qualified plans) and Class Z (separate
accounts and qualified plans affiliated with CUNA Mutual Group).
16. Records. The books and records pertaining to the Fund which are in the
possession of State Street shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the 1940 Act; other
applicable federal and state securities laws and rules and regulations; and, any
state or federal regulatory body having appropriate jurisdiction. The Fund, or
the Fund's authorized representatives, shall have access to such books and
records at all times during State Street's normal business hours, and such books
and records shall be surrendered to the Fund promptly upon request. Upon
reasonable request of the Fund, copies of any such books and records shall be
provided by State Street to the Fund or the Fund's authorized representative at
the Fund's expense.
17. Cooperation with Accountants. State Street shall cooperate with the
Fund's independent certified public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement to assure that
the necessary information is made available to such accountants for the
expression of their unqualified opinion, including but not limited to the
opinion included in the Fund's semiannual report on Form N-SAR.
18. Confidentiality. State Street agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the Fund
all records and other information relative to the Fund and its prior, present or
potential Shareholders and relative to the investment advisers and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where State
Street may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund. Nothing contained herein,
however, shall prohibit State Street from advertising or soliciting the public
generally with respect to other products or services, regardless of whether such
advertisement or solicitation may include prior, present or potential
Shareholders of the Fund.
19. Equipment Failures. In the event of equipment failures beyond State
Street's control, State Street shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions but shall not have liability
with respect thereto. State Street shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable provision for
back up emergency use of electronic data processing equipment to the extent
appropriate equipment is available.
20. Right to Receive Advice.
(a) Advice of Fund. If State Street shall be in doubt as to any action to
be taken or omitted by it, it may request, and shall receive, from the Fund
clarification or advice.
(b) Advice of Counsel. If State Street shall be in doubt as to any question
of law involved in any action to be taken or omitted by State Street, it may
request advice at its own cost from counsel of its own choosing (who may be
counsel for the Fund or State Street, at the option of State Street).
(c) Conflicting Advice. In case of conflict between directions or advice
received by State Street pursuant to subparagraph (a) of this Article and advice
received by State Street pursuant to subparagraph (b) of this paragraph, State
Street shall be entitled to rely on and follow the advice received pursuant to
the latter provision alone.
(d) Protection of State Street. State Street shall be protected in any
action or inaction which it takes or omits to take in reliance on any directions
or advice received pursuant to subparagraph (a) of this Article which State
Street, after receipt of any such directions or advice, in good faith believes
to be consistent with such directions or advice. However, nothing in this
paragraph shall be construed as imposing upon State Street any obligation (i) to
seek such directions or advice, or (ii) to act in accordance with such
directions or advice when received, unless, under the terms or another provision
of this Agreement, the same is a condition to State Street's properly taking or
omitting to take such action. Nothing in this subparagraph shall excuse State
Street when an action or omission on the part of State Street constitutes
willful misfeasance, bad faith, gross negligence or reckless disregard by State
Street of its duties under this Agreement.
21. Compliance with Governmental Rules and Regulations. The Fund assumes
full responsibility for insuring that the contents of each Prospectus of the
Fund complies with all applicable requirements of the 1933 Act, the 1940 Act,
and any laws, rules and regulations of governmental authorities having
jurisdiction.
22. Compensation. As compensation for the services described within this
Agreement and rendered by State Street during the term of this Agreement, the
Fund will pay to State Street, in addition to reimbursement of its out-of-pocket
expenses, monthly fees as outlined in Attachment A.
23. Indemnification. The Fund, as sole owner of the Property, agrees to
indemnify and hold harmless State Street and its nominees from all taxes,
charges, expenses, assessments, claims, and liabilities (including, without
limitation, liabilities arising under the 1933 Act, the Securities Exchange Act
of 1934 as amended, the 1940 Act, and any state and foreign securities and blue
sky laws, all as or to be amended from time to time) and expenses, including
(without limitation) attorney's fees and disbursements, arising directly or
indirectly (a) from the fact that securities included in the Property are
registered in the name of any such nominee or (b) without limiting the
generality of the foregoing clause (a) from any action or thing which State
Street takes or does or omits to take or do (i) at the request or on the
direction of or in reliance on the advice of the Fund given in accordance with
the terms of this Agreement, (ii) upon Written Instructions or (iii) in carrying
out the provisions of this Contract in good faith without negligence; provided,
that neither State Street nor any of its nominees or agents shall be indemnified
against any liability to the Fund or to its Shareholders (or any expenses
incident to such liability) arising out of (x) State Street's or such nominee's
or agent's own willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties under this Agreement or any agreement between State
Street and any nominee or subcustodian or (y) State Street's own or its agent's
negligent failure to perform its duties under this Agreement. In no event shall
State Street be liable for indirect, special or consequential damages. In the
event of any advance of cash for any purpose made by State Street on behalf of a
Portfolio resulting from orders or Written Instructions of the Fund, or in the
event that State Street or its nominee or agent shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Agreement, except such as may arise from its or its
nominee's or agent's own negligent action, negligent failure to act, willful
misconduct, or reckless disregard of its duties under this Agreement or any
agreement between State Street and any nominee or agent, the Fund shall promptly
reimburse State Street for such advance of cash or such taxes, charges,
expenses, assessments, claims or liabilities and any property at any time held
for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay State Street promptly, State Street shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.
If the Fund on behalf of a Portfolio requires State Street to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of State Street, result in State Street or its
nominee assigned to the Fund or the Portfolio being liable for the payment of
money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring State Street to take such action,
shall provide indemnity to State Street in an amount and form satisfactory to
it.
State Street will indemnify the Fund for loss of Property in its care,
provided such loss is due to the gross negligence or dishonesty of State
Street's officers or employees, or to burglary, robbery, holdup, theft,
extortion, mysterious disappearance or loss due to damage or destruction. In the
event of such loss, State Street agrees that it shall promptly replace such
Property or the value of same (by, among other means, posting appropriate bond
with the issuer to obtain reissue of such Property), together with the value of
any loss of rights or privileges resulting from such loss. State Street shall
make available to the Fund for inspection any such Property or value amounts so
replaced.
24. Responsibility of State Street. State Street shall be under no duty to
take any action on behalf of the Fund except as specifically set forth herein or
as may be specifically agreed to by State Street in writing. In the performance
of its duties hereunder, State Street shall be obligated to exercise reasonable
care and diligence and to act in good faith and to use its best efforts within
reasonable limits to insure the accuracy of all services performed under this
Agreement. State Street shall be responsible for its own negligent failure or
that of any agent it shall appoint to perform its duties under this Agreement
but to the extent that duties, obligations and responsibilities are not
expressly set forth in this Agreement, State Street shall not be liable for any
act or omission which does not constitute willful misfeasance, bad faith, or
gross negligence on the part of State Street or reckless disregard of such
duties, obligations and responsibilities. Without limiting the generality of the
foregoing or of any other provision of this Agreement, State Street in
connection with its duties under this Agreement shall not be under any duty or
obligation to inquire into and shall not be liable for or in respect of (a) the
validity or invalidity or authority or lack thereof of any advice, direction,
notice or other instrument which conforms to the applicable requirements of this
Agreement, if any, and which State Street believes to be genuine, (b) the
validity of the issue of any securities purchased or sold by the Fund, the
legality of the purchase or sale thereof or the propriety of the amount paid or
received therefor, (c) the legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor, (d) the legality of the
redemption of any Shares, or the propriety of the amount to be paid therefor,
(e) the legality of the declaration or payment of any dividend or distribution
on Shares, or (f) delays or errors or loss of data occurring by reason of
circumstances beyond State Street's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown
(except as provided in Article 18), flood or catastrophe, acts of God,
insurrection, war, riots, or failure of the mail, transportation systems,
communication systems or power supply.
25. Collection. All collections of monies or other property in respect, or
which are to become part, of the Property (but not the safekeeping thereof upon
receipt by State Street) shall be at the sole risk of the Fund. In any case in
which State Street does not receive any payment due the Fund within a reasonable
time after State Street has made proper demands for the same, it shall so notify
the Fund in writing, including copies of all demand letters, any written
responses thereto, and memoranda of all oral responses thereto, and to
telephonic demands, and await instructions from the Fund. State Street shall not
be obliged to take legal action for collection unless and until reasonably
indemnified to its satisfaction. State Street shall also notify the Fund as soon
as reasonably practicable whenever income due on securities is not collected in
due course.
26. Duration and Termination. This Agreement shall be effective as of the
date hereof and shall continue until termination by the Fund or by State Street
on 90 day's written notice. Upon any termination of this Agreement, pending
appointment of a successor to State Street or a vote of the Shareholders of the
Fund to dissolve or to function without a custodian of its cash, securities or
other property, State Street shall not deliver cash, securities or other
property of the Fund to the Fund, but may deliver them to a bank or trust
company of its own selection, having aggregate capital, surplus and undivided
profits, as shown by its last published report of not less than twenty million
dollars ($20,000,000) as a successor custodian for the Fund to be held under
terms similar to those of this Agreement, provided, however, that State Street
shall not be required to make any such delivery or payment until full payment
shall have been made by the Fund of all liabilities constituting a charge on or
against the properties then held by State Street or on or against State Street
and until full payment shall have been made to State Street of all of its fees,
compensation, costs and expenses, subject to the provisions of Paragraph 21 of
this Agreement.
27. Notices. All notices and other communications (collectively referred to
as "Notice" or "Notices" in this Article) hereunder shall be in writing or by
confirming telegram, cable, telex, or facsimile sending device. Notices shall be
addressed : if to the Fund: Ultra Series Fund, 2000 Heritage Way, Waverly, IA
50677-0061, telephone: (319) 352-1000 extension 2231; and if to State Street:
State Street Bank and Trust Company, 108 Myrtle Street, North Quincy, MA
02171-2197, Attention: Kenneth A. Bergeron, Vice President, telephone: (617)
985-6489 or, in either case, at such other address as shall have been notified
to the sender of any such Notice or other communication. If the location of the
sender of a Notice and the address of the addressee thereof are, at the time of
sending, more than 100 miles apart, the Notice may be sent by first-class mail,
in which case it shall be deemed to have been given three days after it is sent,
or if sent by confirming telegram, cable, telex or facsimile sending device, it
shall be deemed to have been given immediately, and, if the location of the
sender of a Notice and the address of the addressee thereof are, at the time of
sending, not more than 100 miles apart, the Notice may be sent by first-class
mail, in which case it shall be deemed to have been given two days after it is
sent, of if sent by messenger, it shall be deemed to have been given on the day
it is delivered, or if sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. All postage,
cable, telegram, telex and facsimile sending device charges arising from the
sending of a Notice hereunder shall be paid by the sender.
28. Insurance. State Street shall at all times carry insurance with
insurers acceptable to the Fund and in amounts sufficient to cover losses,
errors, omissions, or fraud for which State Street in this custody agreement has
agreed to indemnify the Fund. From time to time the types and amounts of these
policies will be reviewed with the Fund by State Street.
29. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
30. Amendments. This Agreement or any part hereof may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of such change or waiver is sought.
31. Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the parties hereto. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in Massachusetts
and governed by Massachusetts law. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors.
32. Additional Funds. In the event that the Fund establishes one or more
series of Shares in addition to the Capital Appreciation Stock Series, Money
Market Series, Growth and Income Stock Series, Bond Series, Balanced Series and
Treasury 2000 Series with respect to which it desires to have State Street
render services as custodian under the terms hereof, it shall so notify State
Street in writing, and if State Street agrees in writing to provide such
services, such series of Shares shall become a Portfolio hereunder.
33. Reproduction of Documents. This Contract and all schedules, exhibits,
attachments and amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process. The parties hereto all/each agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
34. Shareholder Communications Election. Securities and Exchange Commission
Rule 14b-2 requires banks which hold securities for the account of customers to
respond to requests by issuers of securities for the names, addresses and
holdings of beneficial owners of securities of that issuer held by the bank
unless the beneficial owner has expressly objected to disclosure of this
information. In order to comply with the rule, State Street needs the Fund to
indicate whether it authorizes State Street to provide the Fund's name, address,
and share position to requesting companies whose securities the Fund owns. If
the Fund tells State Street "no", State Street will not provide this information
to requesting companies. If the Fund tells State Street "yes" or does not check
either "yes" or "no" below, State Street is required by the rule to treat the
Fund as consenting to disclosure of this information for all securities owned by
the Fund or any funds or accounts established by the Fund. For the Fund's
protection, the Rule prohibits the requesting company from using the Fund's name
and address for any purpose other than corporate communications. Please indicate
below whether the Fund consents or objects by checking one of the alternatives
below.
YES [X ] State Street is authorized to release the Fund's name, address,
and share positions.
NO [ ] State Street is not authorized to release the Fund's name,
address, and share positions.
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: /s/ LL Lilledahl By: /s/ Michael S. Daubs
Title: President
STATE STREET BANK AND TRUST COMPANY
Attest: By: /s/ Mark A. Bowler
Title: Senior Vice President
<PAGE>
ATTACHMENT B
Portfolios of the Ultra Series Fund
Capital Appreciation Stock Series
Money Market Series
Growth and Income Stock Series
Bond Series
Balanced Series
Treasury 2000 Series
<PAGE>
Exhibit 23(h)1
Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company Pension Plan for Home Office Employees
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 31st day of October, 1997 by
and between ULTRA SERIES FUND, an unincorporated business trust formed under the
laws of Massachusetts (the "Trust") and CUNA MUTUAL LIFE INSURANCE COMPANY
PENSION PLAN FOR HOME OFFICE EMPLOYEES (the "Plan").
WHEREAS, the Trust is a series-type open-end management investment
company offering shares of beneficial interest (the "Trust shares") consisting
of one or more separate series ("Series") of shares, each such Series
representing an interest in a particular investment portfolio of securities and
other assets (a "Portfolio"), and which Series may be subdivided into various
classes ("Classes") with each such Class supporting a distinct charge and
expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by life insurance
companies and for qualified retirement plans; and
WHEREAS, the Plan is defined benefit plan established by the board of
directors of CUNA Mutual Life Insurance Company that qualifies under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986; and
WHEREAS, the Plan desires that the Trust serve as an investment vehicle
for a certain investment options of the Plan and the Trust desires to sell
shares of certain Series and/or Class(es) to the Plan;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Plan agree as follows:
ARTICLE I
Additional Definitions
1.1. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.2. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.3 "Distributor" -- CUNA Brokerage Services, Inc., the principal
underwriter of the Trust's shares.
1.4. "Participating Account" -- a separate account of a Participating
Insurance Company investing all or a portion of its assets in the Trust,
including separate accounts of CUNA Mutual Life Insurance Company.
1.5. "Participating Insurance Company" -- any insurance company investing
in the Trust on its behalf or on behalf of a Participating Account, including
CUNA Mutual Life Insurance Company.
1.6. "Participating Plan" -- any qualified retirement plan investing in the
Trust, including the Plan.
1.7. "Participating Investor" -- any Participating Account, Participating
Insurance Company or Participating Plan.
1.8. "Plan Participant" -- a participant in or beneficiary of the Plan.
1.9. "Products" -- variable annuity contracts and variable life insurance
policies supported by Participating Accounts.
1.10. "Product Owners" -- owners of Products.
1.11. "Trust Board" -- the board of trustees of the Trust.
1.12. "Registration Statement" -- with respect to the Trust shares or a
class of Products, the registration statement filed with the SEC to register
such securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Trust's Registration Statement is filed on Form N-1A (File No.
2-87775).
1.13. "1940 Act Registration Statement" -- with respect to the Trust or a
Participating Account, the registration statement filed with the SEC to register
such person as an investment company under the 1940 Act, or the most recently
filed amendment thereto. The Trust's 1940 Act Registration Statement is filed on
Form N-1A (File No. 811-04815).
1.14. "Prospectus" -- with respect to shares of a Series (or Class) of the
Trust or a class of Products, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Products last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
1.15. "Statement of Additional Information" -- with respect to the Trust
shares or a class of Products, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to Rule
497 under the 1933 Act. With respect to any provision of this Agreement
requiring a party to take action in accordance with a Statement of Additional
Information, such reference thereto shall be deemed to be the last version so
filed prior to the taking of such action.
1.16. "Summary Plan Description" -- the written description of the Plan as
required by ERISA.
1.17. "DOL" -- the U.S. Department of Labor.
1.18. "ERISA" -- the Employee Retirement Income Security Act of 1974, as
amended.
1.19. "SEC" -- the U.S. Securities and Exchange Commission.
1.20. "NASD" -- The National Association of Securities Dealers, Inc.
1.21. "1933 Act" -- the Securities Exchange Act of 1933, as amended.
1.22. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Plan for purchase, shares of the Series and Classes listed
on Schedule 1 to this Agreement, such purchases to be effected at net asset
value in accordance with Section 2.3 of this Agreement. Such Series and
Classes shall be made available to the Plan in accordance with the terms
and provisions of this Agreement until this Agreement is terminated
pursuant to Article X or the Distributor suspends or terminates the
offering of shares of such Series or Classes in the circumstances described
in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes
of Trust shares in existence now or that may be established in the future
will be made available to the Plan only as the Trust and the Distributor
may so provide, subject to the Trust's rights set forth in Article X to
suspend or terminate the offering of shares of any Series or Class or to
terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke
the Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor; and (ii) the Trust reserves
the right in its sole discretion to refuse to accept a request for the
purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Plan's request, any full
or fractional Trust shares held by the Plan, such redemptions to be effected at
net asset value in accordance with Section 2.3 of this Agreement.
Notwithstanding the foregoing, (i) the Plan shall not redeem Trust shares except
in the circumstances permitted in Article X of this Agreement, and (ii) the
Trust may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
Prospectus for such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Plan shall pay for shares of each Series or Class on the same
day that it provides actual notice to the Trust of a purchase request for
such shares. Payment for Trust shares shall be made in Federal funds
transmitted to the Trust by wire to be received by the Trust by 12:00 noon
New York Time on the day the Trust receives actual notice of the purchase
request for shares (unless the Trust determines and so advises the Plan
that sufficient proceeds are available from redemption of shares of other
Series or Classes effected pursuant to redemption requests tendered by the
Plan). In no event may proceeds from the redemption of shares requested by
the Plan pursuant to an order received from a Plan Participant after the
Trust's close of business on any Business Day, be applied to the payment
for shares for which a purchase order was received prior to the Trust's
close of business on such day. If the issuance of shares is canceled
because Federal funds are not timely received, the Plan shall indemnify the
respective Portfolio with respect to all costs, expenses and losses
relating thereto. If Federal funds are not received on time, such funds
will be invested, and the Series or Class of shares purchased thereby will
be issued, as soon as practicable after actual receipt of such funds at the
net asset value next computed as indicated in Section 2.4 below.
(b) Payment for a Series or Class of shares redeemed by the Plan shall
be made in Federal funds transmitted by wire to the Plan or any other
person properly designated in writing by the Plan, such funds normally to
be transmitted by 6:00 p.m. New York Time on the next Business Day after
the Trust receives actual notice of the redemption order for such Series or
Class of shares (unless redemption proceeds are to be applied to the
purchase of Trust shares of other Series or Classes in accordance with
Section 2.3(b) of this Agreement), except that the Trust reserves the right
to redeem a Series or Class of shares in assets other than cash and to
delay payment of redemption proceeds to the extent permitted by the 1940
Act, any rules or regulations or orders thereunder, or the Trust's
Prospectus. The Trust shall not bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds by the Plan.
(c) Prior to the first purchase of any Trust shares hereunder, the
Plan and the Trust shall provide each other with all information necessary
to effect wire transmissions of Federal funds to the other party and all
other designated persons pursuant to such protocols and security procedures
as the parties may agree upon. Should such information change thereafter,
the Trust and the Plan, as applicable, shall notify the other in writing of
such changes, observing the same protocols and security procedures, at
least three Business Days in advance of when such change is to take effect.
The Plan and the Trust shall observe customary procedures to protect the
confidentiality and security of such information, but the Trust shall not
be liable to the Plan for any breach of security.
(d) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class or by
the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform the
Plan of the net asset value per share for each Series or Class available to the
Plan as soon as reasonably practicable after the net asset value per share for
such Series or Class is calculated. The Trust shall calculate such net asset
value in accordance with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Plan as soon as reasonably practicable of any income dividends or capital gain
distributions payable on any Series or Class of shares. The Plan hereby elects
to receive all such dividends and distributions as are payable on any Series or
Class shares in the form of additional shares of that Series or Class. The Plan
reserves the right to revoke this election and to receive all such dividends and
capital gain distributions in cash; to be effective, such revocation must be
made in writing and received by the Trust at least ten Business Days prior to a
dividend or distribution date. The Trust shall notify the Plan promptly of the
number of Series or Class shares so issued as payment of such dividends and
distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Plan. Purchase and
redemption orders for Trust shares shall be recorded in an appropriate ledger
for the Plan.
2.7. Pricing Errors. Any material errors in the calculation of net asset
value, dividends or capital gain information shall be reported to the Plan
immediately upon discovery. An error shall be deemed "material" based on the
Trust's interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. Neither the Trust or any
Portfolio, nor any of their affiliates shall be liable for any information
provided to the Plan pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Plan or any other
Participating Investor to the Trust.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell Trust
shares only to insurance companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase shares of the Trust under
Section 817(h) of the Code and the regulations thereunder without impairing the
ability of any Participating Account to consider the portfolio investments of a
Portfolio of the Trust as constituting investments of any Participating Account
for the purpose of satisfying the diversification requirements of Section
817(h). The Distributor and the Trust shall not sell Trust shares to any
insurance company or separate account unless an agreement complying with Article
VIII of this Agreement is in effect to govern such sales. The Plan hereby
represents and warrants that it is a Qualified Person.
ARTICLE III
Representations and Warranties
3.1. Plan. The Plan represents and warrants that: (i) the Plan is an
employee benefit plan that qualifies under Sections 401(a) and 501(a) of the
Code; (ii) the Plan is funded by a trust, validly existing, duly established and
maintained in accordance with applicable law; (iii) the Plan complies with the
provisions of ERISA applicable to such plans (including "Title I -Protection of
Employee Benefit Rights"); (iv) any interests or participations in the trust
funding the Plan are exempt from the registration requirements of Section 5 of
the 1933 Act pursuant to Section 3(a)(2) of the 1933 Act; (v) the trust funding
the Plan is excluded from the definition of an investment company in Section 3
of the 1940 Act by Section 3(c)(11) of the 1940 Act; and (vi) the Plan's
entering into and performing its obligations under this Agreement does not and
will not violate its declaration of trust or other plan documents, rules or
regulations, or any agreement to which it is a party. The Plan will notify the
Trust promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Massachusetts law; (ii) the Trust's 1940 Act Registration Statement has been
filed with the SEC in accordance with the provisions of the 1940 Act and the
Trust is duly registered as an open-end management investment company
thereunder; (iii) the Trust's Registration Statement has been declared effective
by the SEC; (iv) the Trust shares will be issued in compliance in all material
respects with all applicable federal laws; (v) the Trust will remain registered
under and will comply in all material respects with the 1940 Act during the term
of this Agreement; (vi) each Portfolio of the Trust intends to qualify as a
"regulated investment company" under Subchapter M of the Code and to comply with
the diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Portfolio are
in material compliance with any investment restrictions set forth on Schedule 2
to this Agreement.
3.3. Legal Authority. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust action, as applicable, by such party, and, when so executed
and delivered, this Agreement will be the valid and binding obligation of such
party enforceable in accordance with its terms.
3.4. Bonding Requirement. Each party represents and warrants that all of
its trustees, officers, plan committee members, fiduciaries and employees
dealing with the money and/or securities of the Trust are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the amount required by the
applicable rules of the NASD, ERISA and the federal securities laws. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties shall make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, shall provide evidence thereof promptly to any other party
upon written request therefor, and shall notify the other parties promptly in
the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Voting of Trust Shares. With respect to any matter put to vote by the
holders of Trust shares ("Voting Shares"), the Plan's trustee(s) or committee
members will exercise the Plan's Voting Share rights.
4.3. Compliance. Under no circumstances will the Trust or any of its
affiliates (excluding Participating Investors) be responsible or liable in any
respect for any statements or representations made by them or their legal
advisers to the Plan or any Plan Participant concerning the applicability of any
federal or state laws, regulations or other authorities to the activities
contemplated by this Agreement.
4.4. Drafts of Regulatory Filings. The Trust and the Plan shall provide to
each other copies of draft versions of any Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations for voting instructions, applications for exemptions, requests for
"no-action" letters, and all amendments or supplements to any of the above,
prepared by or on behalf of either of them and that mentions the other party by
name. Such drafts shall be provided to the other party sufficiently in advance
of filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.5. Copies of Regulatory Filings. The Trust and the Plan shall provide to
each other at least one complete copy of all Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations of voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Trust, or the Plan, as the case may be, promptly after the filing
by or on behalf of each such party of such document with the DOL, the SEC, the
NASD, or other regulatory authorities (it being understood that this provision
is not intended to require the Trust to provide to the Plan copies of any such
documents prepared, filed or used by Participating Investors other than the
Plan).
4.6. Regulatory Responses. Each party shall promptly provide to all other
parties copies of responses to "no-action" requests, notices, orders and other
decisions or rulings received by such party with respect to any filing covered
by Section 4.6 of this Agreement.
4.7. Complaints and Proceedings
(a) The Trust shall immediately notify the Plan of: (i) the issuance
by any court or regulatory body of any stop order, cease and desist order,
or other similar order (but not including an order of a regulatory body
exempting or approving a proposed transaction or arrangement) with respect
to the Trust's Registration Statement or the Prospectus of any Series or
Class; (ii) any request by the SEC for any amendment to the Trust's
Registration Statement or the Prospectus of any Series or Class; (iii) the
initiation of any proceedings for that purpose or for any other purposes
relating to the registration or offering of the Trust shares; or (iv) any
other action or circumstances that may prevent the lawful offer or sale of
Trust shares or any Class or Series in any state or jurisdiction,
including, without limitation, any circumstance in which (A) such shares
are not registered and, in all material respects, issued and sold in
accordance with applicable state and federal law or (B) such law precludes
the use of such shares as an underlying investment medium for Products or
as a funding medium for Participating Plans. The Trust will make every
reasonable effort to prevent the issuance of any such stop order, cease and
desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) The Plan shall immediately notify the Trust and the Distributor
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Plan's investment in the Trust; (ii) any
request by the DOL for any change to the Plan's investment in the Trust;
(iii) the initiation of any proceedings for that purpose or for any other
purposes relating to the operation or investments of the Plan; or (iv) any
other action or circumstances that may prevent the lawful offer of
interests in the Plan, or the trust funding the Plan, in any state or
jurisdiction, including, without limitation, any circumstance in which the
Plan or such trust is not qualified and approved, and, in all material
respects, offered [operated] [and sold] in accordance with applicable state
and federal laws. The Plan will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or the
operations of the Trust or the Plan.
(d) The Plan shall provide to the Trust any complaints it has received
from Plan Participants pertaining to the Trust or a Portfolio, and the
Trust and Distributor shall each provide to the Plan any complaints it has
received from Plan Participants relating to the Plan or the Plan's
investment in the Trust.
4.8. Cooperation. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
IRS, DOL, SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry by any such authority relating to this
Agreement or the transactions contemplated hereby. However, such access shall
not extend to attorney-client privileged information.
ARTICLE V
Offering, Administration and Operation of the Plan
5.1. Offer of the Plan. The Plan shall be fully responsible as to the Trust
and the Distributor for offering the Plan to Plan Participants.
5.2. Administration of the Plan and Servicing of the Plan Participants. The
Plan shall be fully responsible as to the Trust for offering service and
administration of the Plan and for the administration of Plan Participants'
accounts.
5.3. Trust Prospectuses and Reports. In order to enable the Plan to fulfill
its obligations under this Agreement and the federal securities laws, the Trust
shall provide the Plan with a copy, in camera-ready form or form otherwise
suitable for printing or duplication of: (i) the Trust's Prospectus for the
Series and Classes listed on Schedule 1 and any supplement thereto; (ii) each
Statement of Additional Information and any supplement thereto; (iii) any Trust
proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Plan may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Plan at least 10 days
advance written notice when any such material shall become available, provided,
however, that in the case of a supplement, the Trust shall provide the Plan
notice reasonable in the circumstances, it being understood that circumstances
surrounding such supplement may not allow for advance notice. The Plan may not
alter any material so provided by the Trust or the Distributor (including
without limitation presenting or delivering such material in a different medium,
e.g., electronic or Internet) without the prior written consent of the Trust or
the Distributor.
5.4. Trade Names. Neither party shall use the other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of the other party, or after written consent therefor has
been revoked. The Plan shall not use in advertising, publicity or otherwise the
name of the Trust, Distributor, or any of their affiliates nor any trade name,
trademark, trade device, service mark, symbol or any abbreviation, contraction
or simulation thereof of the Trust, Distributor, or their affiliates without the
prior written consent of the Trust or the Distributor in each instance.
5.5. Representations by Plan. Except with the prior written consent of the
Trust, the Plan shall not give any information or make any representations or
statements about the Trust or the Portfolios nor shall it authorize or allow any
other person to do so except information or representations contained in the
Trust's Registration Statement or the Trust's Prospectuses or in reports or
proxy statements for the Trust, or in sales literature or other promotional
material approved in writing by the Trust in accordance with this Article V, or
in published reports or statements of the Trust in the public domain.
5.6. Representations by Trust. Except with the prior written consent of the
Plan, the Trust shall not give any information or make any representations on
behalf of the Plan or concerning the Plan or the investment options of the Plan,
other than the information or representations contained in the Plan's Summary
Plan Description or in published reports of the Plan which are in the public
domain or in sales literature or other promotional material approved in writing
by the Plan in accordance with this Article V.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Portfolio of the Trust shall comply with Section
817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Portfolio as an investment company underlying a Participating
Account, and the Trust shall notify the Plan immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
6.2. Subchapter M. Each Portfolio of the Trust shall maintain the
qualification of the Portfolio as a registered investment company (under
Subchapter M or any successor or similar provision), and the Trust shall notify
the Plan immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that it might not so qualify in the
future.
6.3. Products. The Plan shall help to ensure the continued treatment of the
Products as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
immediately upon having a reasonable basis for believing that continued
investment by it would cause such Products to cease to be so treated or might
cause such Products to cease to be so treated in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports, and
preparation of a camera-ready copy of the foregoing;
(c) preparation of all statements and notices required by any federal
or state securities law;
(d) printing and mailing of all materials and reports required to be
provided by the Trust to its existing shareholders;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with
sales of Trust shares to qualified retirement plans, custody,
auditing, transfer agent and advisory fees, fees for insurance
coverage and Trust Board fees; and
(g) any expenses permitted to be paid or assumed by a Portfolio of the
Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
7.3. Plan Expenses. Expenses incident to the Plan's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) qualification of the Plan under the Code;
(b) preparation and filing with the DOL of the Summary Plan
Description;
(c) the offering of interests in the trust funding the Plan;
(d) administration of the Plan;
(e) if applicable, solicitation of voting instructions with respect to
Trust proxy materials;
(f) payment of all applicable fees relating to the Plan;
(g) preparation, printing and dissemination of all statements and
notices to Plan Participants required by any federal or state law
other than those paid for by the Trust; and
(h) preparation, printing and dissemination of all marketing or
offering materials for the Plan or investment options under the Plan
and Trust except where other arrangements are made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation to
the Plan under this Agreement, except that if the Trust or any Series or Class
of shares adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act
to finance distribution expenses, then payments may be made to the Plan in
accordance with such plan. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, the Trust undertakes to have the Trust Board,
a majority of whom are not interested persons of the Trust, formulate and
approve any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that the
Trust has obtained from the SEC an order (the "Exemptive Order") granting relief
from various provisions of the 1940 Act and the rules thereunder to the extent
necessary to permit Trust shares to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and other Qualified Persons (as defined in
Section 2.8 hereof). The Exemptive Order requires the Trust and each
Participating Plan to comply with conditions and undertakings substantially as
provided in this Article VIII. The Trust will not enter into a participation
agreement with any other Participating Plan or Participating Insurance Company
(other than CUNA Mutual Life Insurance Company) unless it imposes the same
conditions and undertakings on that Participating Plan or Participating
Insurance Company as are imposed on the Plan pursuant to this Article VIII.
8.2. Plan Monitoring Requirements. The Plan will monitor its operations and
those of the Trust for the purpose of identifying any material irreconcilable
conflicts or potential material irreconcilable conflicts between or among the
interests of Participating Plans (and participants therein), Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts.
8.3. Plan Reporting Requirements. The Plan shall report any conflicts or
potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Plan also shall
assist the Trust Board in carrying out its obligations including, but not
limited to providing such other information and reports as the Trust Board may
reasonably request.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans (and participants
therein), Product Owners of variable life insurance policies and Product Owners
of variable annuity contracts and determine what action, if any, should be taken
in response to those conflicts. A majority vote of trustees of the Trust who are
not interested persons of the Trust as defined in the 1940 Act (the
"disinterested trustees") shall represent a conclusive determination as to the
existence of a material irreconcilable conflict between or among the interests
of Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts and Participating Plans (and participants therein)
and as to whether any proposed action adequately remedies any material
irreconcilable conflict. The Trust Board shall give prompt written notice to the
Plan and other Participating Investors of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans (and participants therein), the Plan will, at its own
expense, take whatever action is necessary to remedy such conflict as it
adversely affects Plan Participants up to and including (i) establishing a new
registered management investment company, and (ii) withdrawing Plan assets from
the Trust subject to the conflict and reinvesting such assets in a different
investment medium (including another Portfolio of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Plan Participants, and, as appropriate, segregating the assets of any
group of such Plan Participants that votes in favor of such withdrawal, or
offering to such Plan Participants the option of making such a change. The Plan
will carry out the responsibility to take the foregoing action with a view only
to the interests of Plan Participants.
8.6. Expenses Associated with Remedial Action. In no event shall the Trust
be required to bear the expense of establishing a new funding medium for the
Plan.
8.7. Successor Rules. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from those
contained in the Exemptive Order, then (a) the Trust and/or the Plan, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Plan. The Plan hereby agrees to, and shall,
indemnify and hold harmless the Trust and each person who controls or is
affiliated with the Trust within the meaning of such terms under the 1933 Act or
1940 Act (but not any Participating Insurance Companies or Qualified Persons)
and any officer, trustee, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Summary Plan Description (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing to
the Plan by the Trust or the Distributor for use in the Summary Plan
Description for the Plan (or any amendment or supplement to any of the
foregoing); or
(b) arise out of any untrue statement of a material fact contained in
the Trust Registration Statement, any Prospectus for Series or Classes or
sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in reliance
upon and in conformity with information furnished to the Trust in writing
by or on behalf of the Plan; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Plan or persons under its control
or subject to its authorization, including without limitation, any Plan
fiduciaries, administrators, broker-dealers or agents authorized to offer
interests in the Plan or manage the operations of or provide administrative
services to the Plan or Plan Participants, with respect to the offer of
interests in the Plan, or distribution of Trust shares through the Plan,
including, without limitation, any impermissible or unauthorized
representations about the Plan or the Trust; or
(d) arise as a result of any failure by the Plan or persons under its
control (or subject to its authorization), including fiduciaries and
administrators, to provide services, furnish materials or make payments as
required under this Agreement; or
(e) arise out of any material breach by the Plan or persons under its
control (or subject to its authorization), including fiduciaries or
administrators, of this Agreement; or
(f) any breach of any warranties contained in Article III hereof, any
failure to transmit a request for redemption or purchase of Trust shares or
payment therefor on a timely basis in accordance with the procedures set
forth in Article II, or any unauthorized use of the names or trade names of
the Trust or the Distributor.
This indemnification is in addition to any liability that the Plan may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Plan and each person who controls or is
affiliated with the Plan within the meaning of such terms under the 1933 Act or
1940 Act and any officer, trustee, plan committee member, fiduciary, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any Prospectus
for Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made; provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by the Plan to the Trust for use in the
Trust Registration Statement, Trust Prospectus or sales literature or
promotional material for the Trust (or any amendment or supplement to any
of the foregoing) or otherwise for use in connection with the offer of
interests in the Plan or any investment option under the Plan or sale of
the Trust shares; or
(b) arise out of any untrue statement of a material fact contained in
the Summary Plan Description or sales literature or other promotional
material for the Plan or any investment option under the Plan (or any
amendment or supplement to any of the foregoing), or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in reliance
upon information furnished in writing by the Trust to the Plan; or
(c) arise out of or are based upon wrongful conduct of the Trust or
its Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services,
furnish materials or make payments as required under the terms of this
Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any warranties
contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Plan with
respect to any violation of ERISA or the Code, compliance with which is a
responsibility of the Plan under this Agreement or otherwise or as to which the
Plan failed to inform the Trust in accordance with Section 4.4 hereof. This
indemnification is in addition to any liability that the Trust may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the event
of an occurrence for which the Trust has agreed to indemnify the Plan, the Plan
shall seek indemnification from the Trust only in circumstances in which the
Trust is entitled to seek indemnification from a third party with respect to the
same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Plan is to be an independent contractor
vis-a-vis the Trust, the Distributor, or any of their affiliates for all
purposes hereunder and will have no authority to act for or represent any of
them. In addition, no officer, trustee, committee member, or other fiduciary of
the Plan will be deemed to be an employee or agent of the Trust or any of its
affiliates solely because of this Agreement. The Plan will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other qualified plans, insurance companies and other
investors (subject to Section 2.8 hereof), provided, however, that until this
Agreement is terminated pursuant to this Article X.
10.3. Termination of Agreement. This Agreement shall not terminate until
(i) the Trust is dissolved, liquidated, or merged into another entity, or (ii)
as to any Portfolio that has been made available hereunder and the Plan has
confirmed in writing to the Trust that it no longer intends to invest in such
Portfolio. However, certain obligations of, or restrictions on, the parties to
this Agreement may terminate as provided in Sections 10.4 through 10.6 and the
Plan may be required to redeem Trust shares pursuant to Section 10.8 or in the
circumstances contemplated by Article VIII. Article IX and Sections 5.7, 10.8
and 10.9 shall survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the Trust
and the Distributor to make Trust shares available to the Plan for purchase
pursuant to Article II of this Agreement shall terminate at the option of the
Trust upon written notice to the Plan as provided below:
(a) upon institution of formal proceedings against the Plan, or the
Trust's reasonable determination that institution of such proceedings is
being considered by the IRS, DOL, the SEC, the insurance commission of any
state or any other regulatory body regarding the Plan's duties under this
Agreement, the operation of the Plan, the administration of the Plan or the
purchase of Trust shares, or an expected or anticipated ruling, judgment or
outcome which would, in the Trust's reasonable judgment exercised in good
faith, materially impair the Plan's or Trust's ability to meet and perform
the Plan's or Trust's obligations and duties hereunder, such termination
effective upon 15 days prior written notice;
(b) in the event that the Plan is not operated in accordance with
applicable federal and/or state law, such termination effective immediately
upon receipt of written notice;
(c) if the Trust or the Distributor suspends or terminates the
offering of Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if such action is
required by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Trust or the Distributor acting in good faith,
suspension or termination is necessary in the best interests of the
shareholders of any Series or Class (it being understood that
"shareholders" for this purpose shall mean Product Owners, Plan
Participants or participants in other Participating Plans), such notice
effective immediately upon receipt of written notice, it being understood
that a lack of Participating Investor interest in a Series or Class may be
grounds for a suspension or termination as to such Series or Class and that
a suspension or termination shall apply only to the specified Series or
Class;
(d) upon the Plan's assignment of this Agreement unless the Trust
consents thereto, such termination effective upon 30 days prior written
notice;
(e) if the Plan is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the Trust
within 10 days after written notice of such breach has been delivered to
the Plan, such termination effective upon expiration of such 10-day period;
or
(f) upon the determination of the Trust s Board to dissolve, liquidate
or merge the Trust as contemplated by Section 10.3(i), upon termination of
the Agreement pursuant to Section 10.3(ii), or upon notice from the Plan
pursuant to Section 10.5 or 10.6, such termination pursuant hereto to be
effective upon 15 days prior written notice.
10.5. Termination of Investment in a Portfolio. The Plan may elect to cease
investing in a Portfolio or withdraw its investment in a Portfolio, subject to
compliance with applicable law, upon written notice to the Trust within 15 days
of the occurrence of any of the following events (unless provided otherwise
below):
(a) if the Trust informs the Plan that it will not cause such
Portfolio to comply with investment restrictions as requested by the Plan
(as indicated in schedule 2), and the Trust and the Plan are unable to
agree upon any reasonable alternative accommodations;
(b) if shares in such Portfolio are not reasonably available to meet
the requirements of the Plan as determined by the Plan (including any
non-availability as a result of notice given by the Distributor pursuant to
Section 10.4(c)), and the Distributor, after receiving written notice from
the Plan of such non-availability, fails to make available, within 10 days
after receipt of such notice, a sufficient number of shares in such
Portfolio or an alternate Portfolio to meet the requirements of the Plan;
or
(c) if such Portfolio fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations thereunder and
the Trust, upon written request, fails to provide reasonable assurance that
it will take action to cure or correct such failure;
Such termination shall apply only as to the affected Portfolio and shall not
apply to any other Portfolio in which the Plan invests.
10.6. Termination of Investment by the Plan. The Plan may elect to cease
investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Plan, or withdraw its
investment in the Trust, subject to compliance with applicable law, upon written
notice to the Trust within 15 days of the occurrence of any of the following
events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC or any
state securities or insurance commission or any other regulatory body;
(b) if, with respect to the Trust or a Portfolio, the Trust or the
Portfolio ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or similar
provision, or if the Plan reasonably believes that the Trust may fail to so
qualify, and the Trust, upon written request, fails to provide reasonable
assurance that it will take action to cure or correct such failure within
30 days; or
(c) if the Trust is in material breach of a provision of this
Agreement, which breach has not been cured to the satisfaction of the Plan
within 10 days after written notice of such breach has been delivered to
the Trust.
10.7. Forced Redemption of Certain Participating Investor's Shares. The
parties understand and acknowledge that it is essential for compliance with
Section 817(h) of the Code that the Products qualify as annuity contracts or
life insurance policies, as applicable, under the Code. Accordingly, if any of
the Products cease to qualify as annuity contracts or life insurance policies,
as applicable, under the Code, or if the Trust reasonably believes that any such
Products may fail to so qualify, the Trust shall have the right to require the
issuing Participating Insurance Company to redeem Trust shares attributable to
such Products upon notice to the Participating Insurance Company and the Company
shall so redeem such Trust shares in order to ensure that the Trust, or any
Portfolio of the Trust, complies with the provisions of Section 817(h) of the
Code applicable to ownership of Trust shares. Likewise, if the Trust reasonably
believes that any investment by a Participating Plan in a Portfolio may cause
the Portfolio to fail to comply with Section 817(h) of the Code, then the Trust
shall have the right to require the Participating Plan to redeem Trust shares
attributable to the extent necessary to ensure that the Portfolio complies with
the provisions of Section 817(h) upon notice to the Participating Plan.
10.8. Plan Required to Redeem. The parties understand and acknowledge that,
for the reasons stated in Section 10.7 above, if the Trust reasonably believes
that any investment by the Plan in a Portfolio may cause the Portfolio to fail
to comply with Section 817(h) of the Code, the Trust shall have the right, upon
notice to the Plan, to require the Plan to redeem Trust shares to the extent
necessary to ensure that the Portfolio complies with the provisions of Section
817(h). Notice to the Plan shall specify the period of time the Plan has to
redeem the Trust shares or to make other arrangements satisfactory to the Trust
and its counsel, such period of time to be determined with reference to the
requirements of Section 817(h) of the Code. In addition, the Plan may be
required to redeem Trust shares pursuant to action taken or request made by the
Trust Board in accordance with the Exemptive Order described in Article VIII or
any conditions or undertakings set forth or referenced therein, or other SEC
rule, regulation or order that may be adopted after the date hereof. The Plan
agrees to redeem shares in the circumstances described herein and to comply with
applicable terms and provisions. Also, in the event that the Distributor
suspends or terminates the offering of a Series or Class pursuant to Section
10.4(c) of this Agreement, the Plan, upon request by the Distributor, will
cooperate in taking appropriate action to withdraw its investment in the
respective Portfolio.
10.9. Confidentiality. The Plan will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
ARTICLE XI
Applicability to New Plan Investment Options
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Plan, any Series or Class of Trust shares. Such amendments may be made effective
by executing the form of amendment included on each schedule attached hereto.
The provisions of this Agreement shall be equally applicable to each such
Series, or Class, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all
the party.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust:
Michael S. Daubs
President
Ultra Series Fund
5910 Mineral Point Road
Madison, WI 53701
If to the Plan:
Michael B. Kitchen
Plan Committee Member
5910 Mineral Point Road
Madison, WI 53701
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Massachusetts, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act, Securities Exchange Act of 1934, as amended, ERISA and the rules,
regulations and rulings thereunder, including such exemptions from those
statutes, rules, and regulations as the SEC or the DOL may grant, and the
terms hereof shall be limited, interpreted and construed in accordance
therewith.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Plan, the Distributor or the Trust
without the prior written consent of the other parties.
13.4. Actions by the Plan. Where this Agreement requires or permits the
Plan to act (or refrain from action), the Plan's trustee(s), Plan committee (or
an authorized Plan committee member), or other appropriate fiduciary of the
Plan, as appropriate, [shall] [may] perform on behalf of the Plan.
13.5. Declaration of Trust. A copy of the Declaration of Trust of the Trust
is on file with the Secretary of State of the state of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
ULTRA SERIES FUND
(Trust)
Date: October 31, 1997 By: /s/ Michael S. Daubs
Name: Michael S. Daubs
Title: President, Ultra Series Fund
CUNA MUTUAL LIFE INSURANCE COMPANY PENSION
PLAN FOR HOME OFFICE EMPLOYEES
(Plan)
Date: October 31, 1997 By: /s/ Connie J. Wiegeshaus
Name: Connie J. Wiegeshaus
Title: Plan Committee Member
<PAGE>
Schedule 1
Trust Classes and Series
Available Under the Plan
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Plan:
Plan Trust Classes and Series
[Form of Amendment to Schedule 1]
Effective as of __________________, this Schedule 1 is hereby amended to reflect
the following changes in Trust Classes and Series:
Plan Trust Classes and Series
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 1 in
accordance with Article XI of the Agreement.
- ------------------------ ------------------------
ULTRA Series Fund CUNA Mutual Life Insurance Company
Pension Plan for Home Office
Employees
<PAGE>
Schedule 2
Investment Restrictions
Applicable to the Trust Portfolios
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
[Form of Amendment to Schedule 2]
Effective as of ___________________, this Schedule 2 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 2 in
accordance with Article XI of the Agreement.
- ------------------------- ----------------------------------
ULTRA Series Fund CUNA Mutual Life Insurance Company
Pension Plan for Home Office
Employees
<PAGE>
Exhibit 23(h)2
Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company Pension Plan for Agents
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 31st day of October, 1997 by
and between ULTRA SERIES FUND, an unincorporated business trust formed under the
laws of Massachusetts (the "Trust") and CUNA MUTUAL LIFE INSURANCE COMPANY
PENSION PLAN FOR AGENTS (the "Plan").
WHEREAS, the Trust is a series-type open-end management investment
company offering shares of beneficial interest (the "Trust shares") consisting
of one or more separate series ("Series") of shares, each such Series
representing an interest in a particular investment portfolio of securities and
other assets (a "Portfolio"), and which Series may be subdivided into various
classes ("Classes") with each such Class supporting a distinct charge and
expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by life insurance
companies and for qualified retirement plans; and
WHEREAS, the Plan is defined benefit plan established by the board of
directors of CUNA Mutual Life Insurance Company that qualifies under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986; and
WHEREAS, the Plan desires that the Trust serve as an investment vehicle
for a certain investment options of the Plan and the Trust desires to sell
shares of certain Series and/or Class(es) to the Plan;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Plan agree as follows:
ARTICLE I
Additional Definitions
1.1. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.2. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.3 "Distributor" -- CUNA Brokerage Services, Inc., the principal
underwriter of the Trust's shares.
1.4. "Participating Account" -- a separate account of a Participating
Insurance Company investing all or a portion of its assets in the Trust,
including separate accounts of CUNA Mutual Life Insurance Company.
1.5. "Participating Insurance Company" -- any insurance company investing
in the Trust on its behalf or on behalf of a Participating Account, including
CUNA Mutual Life Insurance Company.
1.6. "Participating Plan" -- any qualified retirement plan investing in the
Trust, including the Plan.
1.7. "Participating Investor" -- any Participating Account, Participating
Insurance Company or Participating Plan.
1.8. "Plan Participant" -- a participant in or beneficiary of the Plan.
1.9. "Products" -- variable annuity contracts and variable life insurance
policies supported by Participating Accounts.
1.10. "Product Owners" -- owners of Products.
1.11. "Trust Board" -- the board of trustees of the Trust.
1.12. "Registration Statement" -- with respect to the Trust shares or a
class of Products, the registration statement filed with the SEC to register
such securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Trust's Registration Statement is filed on Form N-1A (File No.
2-87775).
1.13. "1940 Act Registration Statement" -- with respect to the Trust or a
Participating Account, the registration statement filed with the SEC to register
such person as an investment company under the 1940 Act, or the most recently
filed amendment thereto. The Trust's 1940 Act Registration Statement is filed on
Form N-1A (File No. 811-04815).
1.14. "Prospectus" -- with respect to shares of a Series (or Class) of the
Trust or a class of Products, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Products last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
1.15. "Statement of Additional Information" -- with respect to the Trust
shares or a class of Products, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to Rule
497 under the 1933 Act. With respect to any provision of this Agreement
requiring a party to take action in accordance with a Statement of Additional
Information, such reference thereto shall be deemed to be the last version so
filed prior to the taking of such action.
1.16. "Summary Plan Description" -- the written description of the Plan as
required by ERISA.
1.17. "DOL" -- the U.S. Department of Labor.
1.18. "ERISA" -- the Employee Retirement Income Security Act of 1974, as
amended.
1.19. "SEC" -- the U.S. Securities and Exchange Commission.
1.20. "NASD" -- The National Association of Securities Dealers, Inc.
1.21. "1933 Act" -- the Securities Exchange Act of 1933, as amended.
1.22. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Plan for purchase, shares of the Series and Classes listed
on Schedule 1 to this Agreement, such purchases to be effected at net asset
value in accordance with Section 2.3 of this Agreement. Such Series and
Classes shall be made available to the Plan in accordance with the terms
and provisions of this Agreement until this Agreement is terminated
pursuant to Article X or the Distributor suspends or terminates the
offering of shares of such Series or Classes in the circumstances described
in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes
of Trust shares in existence now or that may be established in the future
will be made available to the Plan only as the Trust and the Distributor
may so provide, subject to the Trust's rights set forth in Article X to
suspend or terminate the offering of shares of any Series or Class or to
terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke
the Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor; and (ii) the Trust reserves
the right in its sole discretion to refuse to accept a request for the
purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Plan's request, any full
or fractional Trust shares held by the Plan, such redemptions to be effected at
net asset value in accordance with Section 2.3 of this Agreement.
Notwithstanding the foregoing, (i) the Plan shall not redeem Trust shares except
in the circumstances permitted in Article X of this Agreement, and (ii) the
Trust may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
Prospectus for such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Plan shall pay for shares of each Series or Class on the same
day that it provides actual notice to the Trust of a purchase request for
such shares. Payment for Trust shares shall be made in Federal funds
transmitted to the Trust by wire to be received by the Trust by 12:00 noon
New York Time on the day the Trust receives actual notice of the purchase
request for shares (unless the Trust determines and so advises the Plan
that sufficient proceeds are available from redemption of shares of other
Series or Classes effected pursuant to redemption requests tendered by the
Plan). In no event may proceeds from the redemption of shares requested by
the Plan pursuant to an order received from a Plan Participant after the
Trust's close of business on any Business Day, be applied to the payment
for shares for which a purchase order was received prior to the Trust's
close of business on such day. If the issuance of shares is canceled
because Federal funds are not timely received, the Plan shall indemnify the
respective Portfolio with respect to all costs, expenses and losses
relating thereto. If Federal funds are not received on time, such funds
will be invested, and the Series or Class of shares purchased thereby will
be issued, as soon as practicable after actual receipt of such funds at the
net asset value next computed as indicated in Section 2.4 below.
(b) Payment for a Series or Class of shares redeemed by the Plan shall
be made in Federal funds transmitted by wire to the Plan or any other
person properly designated in writing by the Plan, such funds normally to
be transmitted by 6:00 p.m. New York Time on the next Business Day after
the Trust receives actual notice of the redemption order for such Series or
Class of shares (unless redemption proceeds are to be applied to the
purchase of Trust shares of other Series or Classes in accordance with
Section 2.3(b) of this Agreement), except that the Trust reserves the right
to redeem a Series or Class of shares in assets other than cash and to
delay payment of redemption proceeds to the extent permitted by the 1940
Act, any rules or regulations or orders thereunder, or the Trust's
Prospectus. The Trust shall not bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds by the Plan.
(c) Prior to the first purchase of any Trust shares hereunder, the
Plan and the Trust shall provide each other with all information necessary
to effect wire transmissions of Federal funds to the other party and all
other designated persons pursuant to such protocols and security procedures
as the parties may agree upon. Should such information change thereafter,
the Trust and the Plan, as applicable, shall notify the other in writing of
such changes, observing the same protocols and security procedures, at
least three Business Days in advance of when such change is to take effect.
The Plan and the Trust shall observe customary procedures to protect the
confidentiality and security of such information, but the Trust shall not
be liable to the Plan for any breach of security.
(d) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class or by
the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform the
Plan of the net asset value per share for each Series or Class available to the
Plan as soon as reasonably practicable after the net asset value per share for
such Series or Class is calculated. The Trust shall calculate such net asset
value in accordance with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Plan as soon as reasonably practicable of any income dividends or capital gain
distributions payable on any Series or Class of shares. The Plan hereby elects
to receive all such dividends and distributions as are payable on any Series or
Class shares in the form of additional shares of that Series or Class. The Plan
reserves the right to revoke this election and to receive all such dividends and
capital gain distributions in cash; to be effective, such revocation must be
made in writing and received by the Trust at least ten Business Days prior to a
dividend or distribution date. The Trust shall notify the Plan promptly of the
number of Series or Class shares so issued as payment of such dividends and
distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Plan. Purchase and
redemption orders for Trust shares shall be recorded in an appropriate ledger
for the Plan.
2.7. Pricing Errors. Any material errors in the calculation of net asset
value, dividends or capital gain information shall be reported to the Plan
immediately upon discovery. An error shall be deemed "material" based on the
Trust's interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. Neither the Trust or any
Portfolio, nor any of their affiliates shall be liable for any information
provided to the Plan pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Plan or any other
Participating Investor to the Trust.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell Trust
shares only to insurance companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase shares of the Trust under
Section 817(h) of the Code and the regulations thereunder without impairing the
ability of any Participating Account to consider the portfolio investments of a
Portfolio of the Trust as constituting investments of any Participating Account
for the purpose of satisfying the diversification requirements of Section
817(h). The Distributor and the Trust shall not sell Trust shares to any
insurance company or separate account unless an agreement complying with Article
VIII of this Agreement is in effect to govern such sales. The Plan hereby
represents and warrants that it is a Qualified Person.
ARTICLE III
Representations and Warranties
3.1. Plan. The Plan represents and warrants that: (i) the Plan is an
employee benefit plan that qualifies under Sections 401(a) and 501(a) of the
Code; (ii) the Plan is funded by a trust, validly existing, duly established and
maintained in accordance with applicable law; (iii) the Plan complies with the
provisions of ERISA applicable to such plans (including "Title I -Protection of
Employee Benefit Rights"); (iv) any interests or participations in the trust
funding the Plan are exempt from the registration requirements of Section 5 of
the 1933 Act pursuant to Section 3(a)(2) of the 1933 Act; (v) the trust funding
the Plan is excluded from the definition of an investment company in Section 3
of the 1940 Act by Section 3(c)(11) of the 1940 Act; and (vi) the Plan's
entering into and performing its obligations under this Agreement does not and
will not violate its declaration of trust or other plan documents, rules or
regulations, or any agreement to which it is a party. The Plan will notify the
Trust promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Massachusetts law; (ii) the Trust's 1940 Act Registration Statement has been
filed with the SEC in accordance with the provisions of the 1940 Act and the
Trust is duly registered as an open-end management investment company
thereunder; (iii) the Trust's Registration Statement has been declared effective
by the SEC; (iv) the Trust shares will be issued in compliance in all material
respects with all applicable federal laws; (v) the Trust will remain registered
under and will comply in all material respects with the 1940 Act during the term
of this Agreement; (vi) each Portfolio of the Trust intends to qualify as a
"regulated investment company" under Subchapter M of the Code and to comply with
the diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Portfolio are
in material compliance with any investment restrictions set forth on Schedule 2
to this Agreement.
3.3. Legal Authority. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust action, as applicable, by such party, and, when so executed
and delivered, this Agreement will be the valid and binding obligation of such
party enforceable in accordance with its terms.
3.4. Bonding Requirement. Each party represents and warrants that all of
its trustees, officers, plan committee members, fiduciaries and employees
dealing with the money and/or securities of the Trust are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the amount required by the
applicable rules of the NASD, ERISA and the federal securities laws. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties shall make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, shall provide evidence thereof promptly to any other party
upon written request therefor, and shall notify the other parties promptly in
the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Voting of Trust Shares. With respect to any matter put to vote by the
holders of Trust shares ("Voting Shares"), the Plan's trustee(s) or committee
members will exercise the Plan's Voting Share rights.
4.3. Compliance. Under no circumstances will the Trust or any of its
affiliates (excluding Participating Investors) be responsible or liable in any
respect for any statements or representations made by them or their legal
advisers to the Plan or any Plan Participant concerning the applicability of any
federal or state laws, regulations or other authorities to the activities
contemplated by this Agreement.
4.4. Drafts of Regulatory Filings. The Trust and the Plan shall provide to
each other copies of draft versions of any Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations for voting instructions, applications for exemptions, requests for
"no-action" letters, and all amendments or supplements to any of the above,
prepared by or on behalf of either of them and that mentions the other party by
name. Such drafts shall be provided to the other party sufficiently in advance
of filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.5. Copies of Regulatory Filings. The Trust and the Plan shall provide to
each other at least one complete copy of all Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations of voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Trust, or the Plan, as the case may be, promptly after the filing
by or on behalf of each such party of such document with the DOL, the SEC, the
NASD, or other regulatory authorities (it being understood that this provision
is not intended to require the Trust to provide to the Plan copies of any such
documents prepared, filed or used by Participating Investors other than the
Plan).
4.6. Regulatory Responses. Each party shall promptly provide to all other
parties copies of responses to "no-action" requests, notices, orders and other
decisions or rulings received by such party with respect to any filing covered
by Section 4.6 of this Agreement.
4.7. Complaints and Proceedings
(a) The Trust shall immediately notify the Plan of: (i) the issuance
by any court or regulatory body of any stop order, cease and desist order,
or other similar order (but not including an order of a regulatory body
exempting or approving a proposed transaction or arrangement) with respect
to the Trust's Registration Statement or the Prospectus of any Series or
Class; (ii) any request by the SEC for any amendment to the Trust's
Registration Statement or the Prospectus of any Series or Class; (iii) the
initiation of any proceedings for that purpose or for any other purposes
relating to the registration or offering of the Trust shares; or (iv) any
other action or circumstances that may prevent the lawful offer or sale of
Trust shares or any Class or Series in any state or jurisdiction,
including, without limitation, any circumstance in which (A) such shares
are not registered and, in all material respects, issued and sold in
accordance with applicable state and federal law or (B) such law precludes
the use of such shares as an underlying investment medium for Products or
as a funding medium for Participating Plans. The Trust will make every
reasonable effort to prevent the issuance of any such stop order, cease and
desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) The Plan shall immediately notify the Trust and the Distributor
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Plan's investment in the Trust; (ii) any
request by the DOL for any change to the Plan's investment in the Trust;
(iii) the initiation of any proceedings for that purpose or for any other
purposes relating to the operation or investments of the Plan; or (iv) any
other action or circumstances that may prevent the lawful offer of
interests in the Plan, or the trust funding the Plan, in any state or
jurisdiction, including, without limitation, any circumstance in which the
Plan or such trust is not qualified and approved, and, in all material
respects, offered [operated] [and sold] in accordance with applicable state
and federal laws. The Plan will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or the
operations of the Trust or the Plan.
(d) The Plan shall provide to the Trust any complaints it has received
from Plan Participants pertaining to the Trust or a Portfolio, and the
Trust and Distributor shall each provide to the Plan any complaints it has
received from Plan Participants relating to the Plan or the Plan's
investment in the Trust.
4.8. Cooperation. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
IRS, DOL, SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry by any such authority relating to this
Agreement or the transactions contemplated hereby. However, such access shall
not extend to attorney-client privileged information.
ARTICLE V
Offering, Administration and Operation of the Plan
5.1. Offer of the Plan. The Plan shall be fully responsible as to the Trust
and the Distributor for offering the Plan to Plan Participants.
5.2. Administration of the Plan and Servicing of the Plan Participants. The
Plan shall be fully responsible as to the Trust for offering service and
administration of the Plan and for the administration of Plan Participants'
accounts.
5.3. Trust Prospectuses and Reports. In order to enable the Plan to fulfill
its obligations under this Agreement and the federal securities laws, the Trust
shall provide the Plan with a copy, in camera-ready form or form otherwise
suitable for printing or duplication of: (i) the Trust's Prospectus for the
Series and Classes listed on Schedule 1 and any supplement thereto; (ii) each
Statement of Additional Information and any supplement thereto; (iii) any Trust
proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Plan may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Plan at least 10 days
advance written notice when any such material shall become available, provided,
however, that in the case of a supplement, the Trust shall provide the Plan
notice reasonable in the circumstances, it being understood that circumstances
surrounding such supplement may not allow for advance notice. The Plan may not
alter any material so provided by the Trust or the Distributor (including
without limitation presenting or delivering such material in a different medium,
e.g., electronic or Internet) without the prior written consent of the Trust or
the Distributor.
5.4. Trade Names. Neither party shall use the other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of the other party, or after written consent therefor has
been revoked. The Plan shall not use in advertising, publicity or otherwise the
name of the Trust, Distributor, or any of their affiliates nor any trade name,
trademark, trade device, service mark, symbol or any abbreviation, contraction
or simulation thereof of the Trust, Distributor, or their affiliates without the
prior written consent of the Trust or the Distributor in each instance.
5.5. Representations by Plan. Except with the prior written consent of the
Trust, the Plan shall not give any information or make any representations or
statements about the Trust or the Portfolios nor shall it authorize or allow any
other person to do so except information or representations contained in the
Trust's Registration Statement or the Trust's Prospectuses or in reports or
proxy statements for the Trust, or in sales literature or other promotional
material approved in writing by the Trust in accordance with this Article V, or
in published reports or statements of the Trust in the public domain.
5.6. Representations by Trust. Except with the prior written consent of the
Plan, the Trust shall not give any information or make any representations on
behalf of the Plan or concerning the Plan or the investment options of the Plan,
other than the information or representations contained in the Plan's Summary
Plan Description or in published reports of the Plan which are in the public
domain or in sales literature or other promotional material approved in writing
by the Plan in accordance with this Article V.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Portfolio of the Trust shall comply with Section
817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Portfolio as an investment company underlying a Participating
Account, and the Trust shall notify the Plan immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
6.2. Subchapter M. Each Portfolio of the Trust shall maintain the
qualification of the Portfolio as a registered investment company (under
Subchapter M or any successor or similar provision), and the Trust shall notify
the Plan immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that it might not so qualify in the
future.
6.3. Products. The Plan shall help to ensure the continued treatment of the
Products as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
immediately upon having a reasonable basis for believing that continued
investment by it would cause such Products to cease to be so treated or might
cause such Products to cease to be so treated in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports, and
preparation of a camera-ready copy of the foregoing;
(c) preparation of all statements and notices required by any federal
or state securities law;
(d) printing and mailing of all materials and reports required to be
provided by the Trust to its existing shareholders;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with
sales of Trust shares to qualified retirement plans, custody,
auditing, transfer agent and advisory fees, fees for insurance
coverage and Trust Board fees; and
(g) any expenses permitted to be paid or assumed by a Portfolio of the
Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
7.3. Plan Expenses. Expenses incident to the Plan's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) qualification of the Plan under the Code;
(b) preparation and filing with the DOL of the Summary Plan
Description;
(c) the offering of interests in the trust funding the Plan;
(d) administration of the Plan;
(e) if applicable, solicitation of voting instructions with respect to
Trust proxy materials;
(f) payment of all applicable fees relating to the Plan;
(g) preparation, printing and dissemination of all statements and
notices to Plan Participants required by any federal or state law
other than those paid for by the Trust; and
(h) preparation, printing and dissemination of all marketing or
offering materials for the Plan or investment options under the Plan
and Trust except where other arrangements are made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation to
the Plan under this Agreement, except that if the Trust or any Series or Class
of shares adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act
to finance distribution expenses, then payments may be made to the Plan in
accordance with such plan. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, the Trust undertakes to have the Trust Board,
a majority of whom are not interested persons of the Trust, formulate and
approve any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that the
Trust has obtained from the SEC an order (the "Exemptive Order") granting relief
from various provisions of the 1940 Act and the rules thereunder to the extent
necessary to permit Trust shares to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and other Qualified Persons (as defined in
Section 2.8 hereof). The Exemptive Order requires the Trust and each
Participating Plan to comply with conditions and undertakings substantially as
provided in this Article VIII. The Trust will not enter into a participation
agreement with any other Participating Plan or Participating Insurance Company
(other than CUNA Mutual Life Insurance Company) unless it imposes the same
conditions and undertakings on that Participating Plan or Participating
Insurance Company as are imposed on the Plan pursuant to this Article VIII.
8.2. Plan Monitoring Requirements. The Plan will monitor its operations and
those of the Trust for the purpose of identifying any material irreconcilable
conflicts or potential material irreconcilable conflicts between or among the
interests of Participating Plans (and participants therein), Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts.
8.3. Plan Reporting Requirements. The Plan shall report any conflicts or
potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Plan also shall
assist the Trust Board in carrying out its obligations including, but not
limited to providing such other information and reports as the Trust Board may
reasonably request.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans (and participants
therein), Product Owners of variable life insurance policies and Product Owners
of variable annuity contracts and determine what action, if any, should be taken
in response to those conflicts. A majority vote of trustees of the Trust who are
not interested persons of the Trust as defined in the 1940 Act (the
"disinterested trustees") shall represent a conclusive determination as to the
existence of a material irreconcilable conflict between or among the interests
of Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts and Participating Plans (and participants therein)
and as to whether any proposed action adequately remedies any material
irreconcilable conflict. The Trust Board shall give prompt written notice to the
Plan and other Participating Investors of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans (and participants therein), the Plan will, at its own
expense, take whatever action is necessary to remedy such conflict as it
adversely affects Plan Participants up to and including (i) establishing a new
registered management investment company, and (ii) withdrawing Plan assets from
the Trust subject to the conflict and reinvesting such assets in a different
investment medium (including another Portfolio of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Plan Participants, and, as appropriate, segregating the assets of any
group of such Plan Participants that votes in favor of such withdrawal, or
offering to such Plan Participants the option of making such a change. The Plan
will carry out the responsibility to take the foregoing action with a view only
to the interests of Plan Participants.
8.6. Expenses Associated with Remedial Action. In no event shall the Trust
be required to bear the expense of establishing a new funding medium for the
Plan.
8.7. Successor Rules. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from those
contained in the Exemptive Order, then (a) the Trust and/or the Plan, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Plan. The Plan hereby agrees to, and shall,
indemnify and hold harmless the Trust and each person who controls or is
affiliated with the Trust within the meaning of such terms under the 1933 Act or
1940 Act (but not any Participating Insurance Companies or Qualified Persons)
and any officer, trustee, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Summary Plan Description (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing to
the Plan by the Trust or the Distributor for use in the Summary Plan
Description for the Plan (or any amendment or supplement to any of the
foregoing); or
(b) arise out of any untrue statement of a material fact contained in
the Trust Registration Statement, any Prospectus for Series or Classes or
sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in reliance
upon and in conformity with information furnished to the Trust in writing
by or on behalf of the Plan; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Plan or persons under its control
or subject to its authorization, including without limitation, any Plan
fiduciaries, administrators, broker-dealers or agents authorized to offer
interests in the Plan or manage the operations of or provide administrative
services to the Plan or Plan Participants, with respect to the offer of
interests in the Plan, or distribution of Trust shares through the Plan,
including, without limitation, any impermissible or unauthorized
representations about the Plan or the Trust; or
(d) arise as a result of any failure by the Plan or persons under its
control (or subject to its authorization), including fiduciaries and
administrators, to provide services, furnish materials or make payments as
required under this Agreement; or
(e) arise out of any material breach by the Plan or persons under its
control (or subject to its authorization), including fiduciaries or
administrators, of this Agreement; or
(f) any breach of any warranties contained in Article III hereof, any
failure to transmit a request for redemption or purchase of Trust shares or
payment therefor on a timely basis in accordance with the procedures set
forth in Article II, or any unauthorized use of the names or trade names of
the Trust or the Distributor.
This indemnification is in addition to any liability that the Plan may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Plan and each person who controls or is
affiliated with the Plan within the meaning of such terms under the 1933 Act or
1940 Act and any officer, trustee, plan committee member, fiduciary, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any Prospectus
for Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made; provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by the Plan to the Trust for use in the
Trust Registration Statement, Trust Prospectus or sales literature or
promotional material for the Trust (or any amendment or supplement to any
of the foregoing) or otherwise for use in connection with the offer of
interests in the Plan or any investment option under the Plan or sale of
the Trust shares; or
(b) arise out of any untrue statement of a material fact contained in
the Summary Plan Description or sales literature or other promotional
material for the Plan or any investment option under the Plan (or any
amendment or supplement to any of the foregoing), or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in reliance
upon information furnished in writing by the Trust to the Plan; or
(c) arise out of or are based upon wrongful conduct of the Trust or
its Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services,
furnish materials or make payments as required under the terms of this
Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any warranties
contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Plan with
respect to any violation of ERISA or the Code, compliance with which is a
responsibility of the Plan under this Agreement or otherwise or as to which the
Plan failed to inform the Trust in accordance with Section 4.4 hereof. This
indemnification is in addition to any liability that the Trust may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the event
of an occurrence for which the Trust has agreed to indemnify the Plan, the Plan
shall seek indemnification from the Trust only in circumstances in which the
Trust is entitled to seek indemnification from a third party with respect to the
same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Plan is to be an independent contractor
vis-a-vis the Trust, the Distributor, or any of their affiliates for all
purposes hereunder and will have no authority to act for or represent any of
them. In addition, no officer, trustee, committee member, or other fiduciary of
the Plan will be deemed to be an employee or agent of the Trust or any of its
affiliates solely because of this Agreement. The Plan will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other qualified plans, insurance companies and other
investors (subject to Section 2.8 hereof), provided, however, that until this
Agreement is terminated pursuant to this Article X.
10.3. Termination of Agreement. This Agreement shall not terminate until
(i) the Trust is dissolved, liquidated, or merged into another entity, or (ii)
as to any Portfolio that has been made available hereunder and the Plan has
confirmed in writing to the Trust that it no longer intends to invest in such
Portfolio. However, certain obligations of, or restrictions on, the parties to
this Agreement may terminate as provided in Sections 10.4 through 10.6 and the
Plan may be required to redeem Trust shares pursuant to Section 10.8 or in the
circumstances contemplated by Article VIII. Article IX and Sections 5.7, 10.8
and 10.9 shall survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the Trust
and the Distributor to make Trust shares available to the Plan for purchase
pursuant to Article II of this Agreement shall terminate at the option of the
Trust upon written notice to the Plan as provided below:
(a) upon institution of formal proceedings against the Plan, or the
Trust's reasonable determination that institution of such proceedings is
being considered by the IRS, DOL, the SEC, the insurance commission of any
state or any other regulatory body regarding the Plan's duties under this
Agreement, the operation of the Plan, the administration of the Plan or the
purchase of Trust shares, or an expected or anticipated ruling, judgment or
outcome which would, in the Trust's reasonable judgment exercised in good
faith, materially impair the Plan's or Trust's ability to meet and perform
the Plan's or Trust's obligations and duties hereunder, such termination
effective upon 15 days prior written notice;
(b) in the event that the Plan is not operated in accordance with
applicable federal and/or state law, such termination effective immediately
upon receipt of written notice;
(c) if the Trust or the Distributor suspends or terminates the
offering of Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if such action is
required by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Trust or the Distributor acting in good faith,
suspension or termination is necessary in the best interests of the
shareholders of any Series or Class (it being understood that
"shareholders" for this purpose shall mean Product Owners, Plan
Participants or participants in other Participating Plans), such notice
effective immediately upon receipt of written notice, it being understood
that a lack of Participating Investor interest in a Series or Class may be
grounds for a suspension or termination as to such Series or Class and that
a suspension or termination shall apply only to the specified Series or
Class;
(d) upon the Plan's assignment of this Agreement unless the Trust
consents thereto, such termination effective upon 30 days prior written
notice;
(e) if the Plan is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the Trust
within 10 days after written notice of such breach has been delivered to
the Plan, such termination effective upon expiration of such 10-day period;
or
(f) upon the determination of the Trust s Board to dissolve, liquidate
or merge the Trust as contemplated by Section 10.3(i), upon termination of
the Agreement pursuant to Section 10.3(ii), or upon notice from the Plan
pursuant to Section 10.5 or 10.6, such termination pursuant hereto to be
effective upon 15 days prior written notice.
10.5. Termination of Investment in a Portfolio. The Plan may elect to cease
investing in a Portfolio or withdraw its investment in a Portfolio, subject to
compliance with applicable law, upon written notice to the Trust within 15 days
of the occurrence of any of the following events (unless provided otherwise
below):
(a) if the Trust informs the Plan that it will not cause such
Portfolio to comply with investment restrictions as requested by the Plan
(as indicated in schedule 2), and the Trust and the Plan are unable to
agree upon any reasonable alternative accommodations;
(b) if shares in such Portfolio are not reasonably available to meet
the requirements of the Plan as determined by the Plan (including any
non-availability as a result of notice given by the Distributor pursuant to
Section 10.4(c)), and the Distributor, after receiving written notice from
the Plan of such non-availability, fails to make available, within 10 days
after receipt of such notice, a sufficient number of shares in such
Portfolio or an alternate Portfolio to meet the requirements of the Plan;
or
(c) if such Portfolio fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations thereunder and
the Trust, upon written request, fails to provide reasonable assurance that
it will take action to cure or correct such failure;
Such termination shall apply only as to the affected Portfolio and shall not
apply to any other Portfolio in which the Plan invests.
10.6. Termination of Investment by the Plan. The Plan may elect to cease
investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Plan, or withdraw its
investment in the Trust, subject to compliance with applicable law, upon written
notice to the Trust within 15 days of the occurrence of any of the following
events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC or any
state securities or insurance commission or any other regulatory body;
(b) if, with respect to the Trust or a Portfolio, the Trust or the
Portfolio ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or similar
provision, or if the Plan reasonably believes that the Trust may fail to so
qualify, and the Trust, upon written request, fails to provide reasonable
assurance that it will take action to cure or correct such failure within
30 days; or
(c) if the Trust is in material breach of a provision of this
Agreement, which breach has not been cured to the satisfaction of the Plan
within 10 days after written notice of such breach has been delivered to
the Trust.
10.7. Forced Redemption of Certain Participating Investor's Shares. The
parties understand and acknowledge that it is essential for compliance with
Section 817(h) of the Code that the Products qualify as annuity contracts or
life insurance policies, as applicable, under the Code. Accordingly, if any of
the Products cease to qualify as annuity contracts or life insurance policies,
as applicable, under the Code, or if the Trust reasonably believes that any such
Products may fail to so qualify, the Trust shall have the right to require the
issuing Participating Insurance Company to redeem Trust shares attributable to
such Products upon notice to the Participating Insurance Company and the Company
shall so redeem such Trust shares in order to ensure that the Trust, or any
Portfolio of the Trust, complies with the provisions of Section 817(h) of the
Code applicable to ownership of Trust shares. Likewise, if the Trust reasonably
believes that any investment by a Participating Plan in a Portfolio may cause
the Portfolio to fail to comply with Section 817(h) of the Code, then the Trust
shall have the right to require the Participating Plan to redeem Trust shares
attributable to the extent necessary to ensure that the Portfolio complies with
the provisions of Section 817(h) upon notice to the Participating Plan.
10.8. Plan Required to Redeem. The parties understand and acknowledge that,
for the reasons stated in Section 10.7 above, if the Trust reasonably believes
that any investment by the Plan in a Portfolio may cause the Portfolio to fail
to comply with Section 817(h) of the Code, the Trust shall have the right, upon
notice to the Plan, to require the Plan to redeem Trust shares to the extent
necessary to ensure that the Portfolio complies with the provisions of Section
817(h). Notice to the Plan shall specify the period of time the Plan has to
redeem the Trust shares or to make other arrangements satisfactory to the Trust
and its counsel, such period of time to be determined with reference to the
requirements of Section 817(h) of the Code. In addition, the Plan may be
required to redeem Trust shares pursuant to action taken or request made by the
Trust Board in accordance with the Exemptive Order described in Article VIII or
any conditions or undertakings set forth or referenced therein, or other SEC
rule, regulation or order that may be adopted after the date hereof. The Plan
agrees to redeem shares in the circumstances described herein and to comply with
applicable terms and provisions. Also, in the event that the Distributor
suspends or terminates the offering of a Series or Class pursuant to Section
10.4(c) of this Agreement, the Plan, upon request by the Distributor, will
cooperate in taking appropriate action to withdraw its investment in the
respective Portfolio.
10.9. Confidentiality. The Plan will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
ARTICLE XI
Applicability to New Plan Investment Options
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Plan, any Series or Class of Trust shares. Such amendments may be made effective
by executing the form of amendment included on each schedule attached hereto.
The provisions of this Agreement shall be equally applicable to each such
Series, or Class, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all
the party.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust:
Michael S. Daubs
President
Ultra Series Fund
5910 Mineral Point Road
Madison, WI 53701
If to the Plan:
Michael B. Kitchen
Plan Committee Member
5910 Mineral Point Road
Madison, WI 53701
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Massachusetts, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act, Securities Exchange Act of 1934, as amended, ERISA and the rules,
regulations and rulings thereunder, including such exemptions from those
statutes, rules, and regulations as the SEC or the DOL may grant, and the
terms hereof shall be limited, interpreted and construed in accordance
therewith.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Plan, the Distributor or the Trust
without the prior written consent of the other parties.
13.4. Actions by the Plan. Where this Agreement requires or permits the
Plan to act (or refrain from action), the Plan's trustee(s), Plan committee (or
an authorized Plan committee member), or other appropriate fiduciary of the
Plan, as appropriate, [shall] [may] perform on behalf of the Plan.
13.5. Declaration of Trust. A copy of the Declaration of Trust of the Trust
is on file with the Secretary of State of the state of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
ULTRA SERIES FUND
(Trust)
Date: October 31, 1997 By: /s/ Michael S. Daubs
Name: Michael S. Daubs
Title: President, Ultra Series Fund
CUNA MUTUAL LIFE INSURANCE COMPANY PENSION
PLAN FOR AGENTS
(Plan)
Date: October 31, 1997 By: /s/ Connie J. Wiegeshaus
Name: Connie J. Wiegeshaus
Title: Plan Committee Member
<PAGE>
Schedule 1
Trust Classes and Series
Available Under the Plan
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Plan:
Plan Trust Classes and Series
[Form of Amendment to Schedule 1]
Effective as of __________________, this Schedule 1 is hereby amended to reflect
the following changes in Trust Classes and Series:
Plan Trust Classes and Series
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 1 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Life Insurance Company
Pension Plan for Agents
<PAGE>
Schedule 2
Investment Restrictions
Applicable to the Trust Portfolios
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
[Form of Amendment to Schedule 2]
Effective as of ___________________, this Schedule 2 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 2 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Life Insurance Company
Pension Plan for Agents
<PAGE>
Exhibit 23(h)3
Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company 401(k)/Thrift Plan for Home Office Employees
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 31st day of October, 1997 by
and between ULTRA SERIES FUND, an unincorporated business trust formed under the
laws of Massachusetts (the "Trust") and CUNA MUTUAL LIFE INSURANCE COMPANY
401(k)/THRIFT PLAN FOR HOME OFFICE EMPLOYEES (the "Plan").
WHEREAS, the Trust is a series-type open-end management investment
company offering shares of beneficial interest (the "Trust shares") consisting
of one or more separate series ("Series") of shares, each such Series
representing an interest in a particular investment portfolio of securities and
other assets (a "Portfolio"), and which Series may be subdivided into various
classes ("Classes") with each such Class supporting a distinct charge and
expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by life insurance
companies and for qualified retirement plans; and
WHEREAS, the Plan is defined contribution plan established by the board
of directors of CUNA Mutual Life Insurance Company that qualifies under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986; and
WHEREAS, the Plan desires that the Trust serve as an investment vehicle
for a certain investment options of the Plan and the Trust desires to sell
shares of certain Series and/or Class(es) to the Plan;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Plan agree as follows:
ARTICLE I
Additional Definitions
1.1. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.2. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.3 "Distributor" -- CUNA Brokerage Services, Inc., the principal
underwriter of the Trust's shares.
1.4. "Participating Account" -- a separate account of a Participating
Insurance Company investing all or a portion of its assets in the Trust,
including separate accounts of CUNA Mutual Life Insurance Company.
1.5. "Participating Insurance Company" -- any insurance company investing
in the Trust on its behalf or on behalf of a Participating Account, including
CUNA Mutual Life Insurance Company.
1.6. "Participating Plan" -- any qualified retirement plan investing in the
Trust, including the Plan.
1.7. "Participating Investor" -- any Participating Account, Participating
Insurance Company or Participating Plan.
1.8. "Plan Participant" -- a participant in or beneficiary of the Plan.
1.9. "Products" -- variable annuity contracts and variable life insurance
policies supported by Participating Accounts.
1.10. "Product Owners" -- owners of Products.
1.11. "Trust Board" -- the board of trustees of the Trust.
1.12. "Registration Statement" -- with respect to the Trust shares or a
class of Products, the registration statement filed with the SEC to register
such securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Trust's Registration Statement is filed on Form N-1A (File No.
2-87775).
1.13. "1940 Act Registration Statement" -- with respect to the Trust or a
Participating Account, the registration statement filed with the SEC to register
such person as an investment company under the 1940 Act, or the most recently
filed amendment thereto. The Trust's 1940 Act Registration Statement is filed on
Form N-1A (File No. 811-04815).
1.14. "Prospectus" -- with respect to shares of a Series (or Class) of the
Trust or a class of Products, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Products last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
1.15. "Statement of Additional Information" -- with respect to the Trust
shares or a class of Products, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to Rule
497 under the 1933 Act. With respect to any provision of this Agreement
requiring a party to take action in accordance with a Statement of Additional
Information, such reference thereto shall be deemed to be the last version so
filed prior to the taking of such action.
1.16. "Summary Plan Description" -- the written description of the Plan as
required by ERISA.
1.17. "DOL" -- the U.S. Department of Labor.
1.18. "ERISA" -- the Employee Retirement Income Security Act of 1974, as
amended.
1.19. "SEC" -- the U.S. Securities and Exchange Commission.
1.20. "NASD" -- The National Association of Securities Dealers, Inc.
1.21. "1933 Act" -- the Securities Exchange Act of 1933, as amended.
1.22. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Plan for purchase, shares of the Series and Classes listed
on Schedule 1 to this Agreement, such purchases to be effected at net asset
value in accordance with Section 2.3 of this Agreement. Such Series and
Classes shall be made available to the Plan in accordance with the terms
and provisions of this Agreement until this Agreement is terminated
pursuant to Article X or the Distributor suspends or terminates the
offering of shares of such Series or Classes in the circumstances described
in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes
of Trust shares in existence now or that may be established in the future
will be made available to the Plan only as the Trust and the Distributor
may so provide, subject to the Trust's rights set forth in Article X to
suspend or terminate the offering of shares of any Series or Class or to
terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke
the Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor; and (ii) the Trust reserves
the right in its sole discretion to refuse to accept a request for the
purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Plan's request, any full
or fractional Trust shares held by the Plan, such redemptions to be effected at
net asset value in accordance with Section 2.3 of this Agreement.
Notwithstanding the foregoing, (i) the Plan shall not redeem Trust shares except
in the circumstances permitted in Article X of this Agreement, and (ii) the
Trust may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
Prospectus for such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Plan shall pay for shares of each Series or Class on the same
day that it provides actual notice to the Trust of a purchase request for
such shares. Payment for Trust shares shall be made in Federal funds
transmitted to the Trust by wire to be received by the Trust by 12:00 noon
New York Time on the day the Trust receives actual notice of the purchase
request for shares (unless the Trust determines and so advises the Plan
that sufficient proceeds are available from redemption of shares of other
Series or Classes effected pursuant to redemption requests tendered by the
Plan). In no event may proceeds from the redemption of shares requested by
the Plan pursuant to an order received from a Plan Participant after the
Trust's close of business on any Business Day, be applied to the payment
for shares for which a purchase order was received prior to the Trust's
close of business on such day. If the issuance of shares is canceled
because Federal funds are not timely received, the Plan shall indemnify the
respective Portfolio with respect to all costs, expenses and losses
relating thereto. If Federal funds are not received on time, such funds
will be invested, and the Series or Class of shares purchased thereby will
be issued, as soon as practicable after actual receipt of such funds at the
net asset value next computed as indicated in Section 2.4 below.
(b) Payment for a Series or Class of shares redeemed by the Plan shall
be made in Federal funds transmitted by wire to the Plan or any other
person properly designated in writing by the Plan, such funds normally to
be transmitted by 6:00 p.m. New York Time on the next Business Day after
the Trust receives actual notice of the redemption order for such Series or
Class of shares (unless redemption proceeds are to be applied to the
purchase of Trust shares of other Series or Classes in accordance with
Section 2.3(b) of this Agreement), except that the Trust reserves the right
to redeem a Series or Class of shares in assets other than cash and to
delay payment of redemption proceeds to the extent permitted by the 1940
Act, any rules or regulations or orders thereunder, or the Trust's
Prospectus. The Trust shall not bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds by the Plan.
(c) Prior to the first purchase of any Trust shares hereunder, the
Plan and the Trust shall provide each other with all information necessary
to effect wire transmissions of Federal funds to the other party and all
other designated persons pursuant to such protocols and security procedures
as the parties may agree upon. Should such information change thereafter,
the Trust and the Plan, as applicable, shall notify the other in writing of
such changes, observing the same protocols and security procedures, at
least three Business Days in advance of when such change is to take effect.
The Plan and the Trust shall observe customary procedures to protect the
confidentiality and security of such information, but the Trust shall not
be liable to the Plan for any breach of security.
(d) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class or by
the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform the
Plan of the net asset value per share for each Series or Class available to the
Plan as soon as reasonably practicable after the net asset value per share for
such Series or Class is calculated. The Trust shall calculate such net asset
value in accordance with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Plan as soon as reasonably practicable of any income dividends or capital gain
distributions payable on any Series or Class of shares. The Plan hereby elects
to receive all such dividends and distributions as are payable on any Series or
Class shares in the form of additional shares of that Series or Class. The Plan
reserves the right to revoke this election and to receive all such dividends and
capital gain distributions in cash; to be effective, such revocation must be
made in writing and received by the Trust at least ten Business Days prior to a
dividend or distribution date. The Trust shall notify the Plan promptly of the
number of Series or Class shares so issued as payment of such dividends and
distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Plan. Purchase and
redemption orders for Trust shares shall be recorded in an appropriate ledger
for the Plan.
2.7. Pricing Errors. Any material errors in the calculation of net asset
value, dividends or capital gain information shall be reported to the Plan
immediately upon discovery. An error shall be deemed "material" based on the
Trust's interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. Neither the Trust or any
Portfolio, nor any of their affiliates shall be liable for any information
provided to the Plan pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Plan or any other
Participating Investor to the Trust.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell Trust
shares only to insurance companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase shares of the Trust under
Section 817(h) of the Code and the regulations thereunder without impairing the
ability of any Participating Account to consider the portfolio investments of a
Portfolio of the Trust as constituting investments of any Participating Account
for the purpose of satisfying the diversification requirements of Section
817(h). The Distributor and the Trust shall not sell Trust shares to any
insurance company or separate account unless an agreement complying with Article
VIII of this Agreement is in effect to govern such sales. The Plan hereby
represents and warrants that it is a Qualified Person.
ARTICLE III
Representations and Warranties
3.1. Plan. The Plan represents and warrants that: (i) the Plan is an
employee benefit plan that qualifies under Sections 401(a) and 501(a) of the
Code; (ii) the Plan is funded by a trust, validly existing, duly established and
maintained in accordance with applicable law; (iii) the Plan complies with the
provisions of ERISA applicable to such plans (including "Title I -Protection of
Employee Benefit Rights"); (iv) any interests or participations in the trust
funding the Plan are exempt from the registration requirements of Section 5 of
the 1933 Act pursuant to Section 3(a)(2) of the 1933 Act; (v) the trust funding
the Plan is excluded from the definition of an investment company in Section 3
of the 1940 Act by Section 3(c)(11) of the 1940 Act; and (vi) the Plan's
entering into and performing its obligations under this Agreement does not and
will not violate its declaration of trust or other plan documents, rules or
regulations, or any agreement to which it is a party. The Plan will notify the
Trust promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Massachusetts law; (ii) the Trust's 1940 Act Registration Statement has been
filed with the SEC in accordance with the provisions of the 1940 Act and the
Trust is duly registered as an open-end management investment company
thereunder; (iii) the Trust's Registration Statement has been declared effective
by the SEC; (iv) the Trust shares will be issued in compliance in all material
respects with all applicable federal laws; (v) the Trust will remain registered
under and will comply in all material respects with the 1940 Act during the term
of this Agreement; (vi) each Portfolio of the Trust intends to qualify as a
"regulated investment company" under Subchapter M of the Code and to comply with
the diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Portfolio are
in material compliance with any investment restrictions set forth on Schedule 2
to this Agreement.
3.3. Legal Authority. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust action, as applicable, by such party, and, when so executed
and delivered, this Agreement will be the valid and binding obligation of such
party enforceable in accordance with its terms.
3.4. Bonding Requirement. Each party represents and warrants that all of
its trustees, officers, plan committee members, fiduciaries and employees
dealing with the money and/or securities of the Trust are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the amount required by the
applicable rules of the NASD, ERISA and the federal securities laws. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties shall make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, shall provide evidence thereof promptly to any other party
upon written request therefor, and shall notify the other parties promptly in
the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Voting of Trust Shares. With respect to any matter put to vote by the
holders of Trust shares ("Voting Shares"), the Plan's trustee(s) or committee
members will exercise the Plan's Voting Share rights.
4.3. Compliance. Under no circumstances will the Trust or any of its
affiliates (excluding Participating Investors) be responsible or liable in any
respect for any statements or representations made by them or their legal
advisers to the Plan or any Plan Participant concerning the applicability of any
federal or state laws, regulations or other authorities to the activities
contemplated by this Agreement.
4.4. Drafts of Regulatory Filings. The Trust and the Plan shall provide to
each other copies of draft versions of any Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations for voting instructions, applications for exemptions, requests for
"no-action" letters, and all amendments or supplements to any of the above,
prepared by or on behalf of either of them and that mentions the other party by
name. Such drafts shall be provided to the other party sufficiently in advance
of filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.5. Copies of Regulatory Filings. The Trust and the Plan shall provide to
each other at least one complete copy of all Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations of voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Trust, or the Plan, as the case may be, promptly after the filing
by or on behalf of each such party of such document with the DOL, the SEC, the
NASD, or other regulatory authorities (it being understood that this provision
is not intended to require the Trust to provide to the Plan copies of any such
documents prepared, filed or used by Participating Investors other than the
Plan).
4.6. Regulatory Responses. Each party shall promptly provide to all other
parties copies of responses to "no-action" requests, notices, orders and other
decisions or rulings received by such party with respect to any filing covered
by Section 4.6 of this Agreement.
4.7. Complaints and Proceedings
(a) The Trust shall immediately notify the Plan of: (i) the issuance
by any court or regulatory body of any stop order, cease and desist order,
or other similar order (but not including an order of a regulatory body
exempting or approving a proposed transaction or arrangement) with respect
to the Trust's Registration Statement or the Prospectus of any Series or
Class; (ii) any request by the SEC for any amendment to the Trust's
Registration Statement or the Prospectus of any Series or Class; (iii) the
initiation of any proceedings for that purpose or for any other purposes
relating to the registration or offering of the Trust shares; or (iv) any
other action or circumstances that may prevent the lawful offer or sale of
Trust shares or any Class or Series in any state or jurisdiction,
including, without limitation, any circumstance in which (A) such shares
are not registered and, in all material respects, issued and sold in
accordance with applicable state and federal law or (B) such law precludes
the use of such shares as an underlying investment medium for Products or
as a funding medium for Participating Plans. The Trust will make every
reasonable effort to prevent the issuance of any such stop order, cease and
desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) The Plan shall immediately notify the Trust and the Distributor
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Plan's investment in the Trust; (ii) any
request by the DOL for any change to the Plan's investment in the Trust;
(iii) the initiation of any proceedings for that purpose or for any other
purposes relating to the operation or investments of the Plan; or (iv) any
other action or circumstances that may prevent the lawful offer of
interests in the Plan, or the trust funding the Plan, in any state or
jurisdiction, including, without limitation, any circumstance in which the
Plan or such trust is not qualified and approved, and, in all material
respects, offered [operated] [and sold] in accordance with applicable state
and federal laws. The Plan will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or the
operations of the Trust or the Plan.
(d) The Plan shall provide to the Trust any complaints it has received
from Plan Participants pertaining to the Trust or a Portfolio, and the
Trust and Distributor shall each provide to the Plan any complaints it has
received from Plan Participants relating to the Plan or the Plan's
investment in the Trust.
4.8. Cooperation. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
IRS, DOL, SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry by any such authority relating to this
Agreement or the transactions contemplated hereby. However, such access shall
not extend to attorney-client privileged information.
ARTICLE V
Offering, Administration and Operation of the Plan
5.1. Offer of the Plan. The Plan shall be fully responsible as to the Trust
and the Distributor for offering the Plan to Plan Participants.
5.2. Administration of the Plan and Servicing of the Plan Participants. The
Plan shall be fully responsible as to the Trust for offering service and
administration of the Plan and for the administration of Plan Participants'
accounts.
5.3. Trust Prospectuses and Reports. In order to enable the Plan to fulfill
its obligations under this Agreement and the federal securities laws, the Trust
shall provide the Plan with a copy, in camera-ready form or form otherwise
suitable for printing or duplication of: (i) the Trust's Prospectus for the
Series and Classes listed on Schedule 1 and any supplement thereto; (ii) each
Statement of Additional Information and any supplement thereto; (iii) any Trust
proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Plan may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Plan at least 10 days
advance written notice when any such material shall become available, provided,
however, that in the case of a supplement, the Trust shall provide the Plan
notice reasonable in the circumstances, it being understood that circumstances
surrounding such supplement may not allow for advance notice. The Plan may not
alter any material so provided by the Trust or the Distributor (including
without limitation presenting or delivering such material in a different medium,
e.g., electronic or Internet) without the prior written consent of the Trust or
the Distributor.
5.4. Trade Names. Neither party shall use the other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of the other party, or after written consent therefor has
been revoked. The Plan shall not use in advertising, publicity or otherwise the
name of the Trust, Distributor, or any of their affiliates nor any trade name,
trademark, trade device, service mark, symbol or any abbreviation, contraction
or simulation thereof of the Trust, Distributor, or their affiliates without the
prior written consent of the Trust or the Distributor in each instance.
5.5. Representations by Plan. Except with the prior written consent of the
Trust, the Plan shall not give any information or make any representations or
statements about the Trust or the Portfolios nor shall it authorize or allow any
other person to do so except information or representations contained in the
Trust's Registration Statement or the Trust's Prospectuses or in reports or
proxy statements for the Trust, or in sales literature or other promotional
material approved in writing by the Trust in accordance with this Article V, or
in published reports or statements of the Trust in the public domain.
5.6. Representations by Trust. Except with the prior written consent of the
Plan, the Trust shall not give any information or make any representations on
behalf of the Plan or concerning the Plan or the investment options of the Plan,
other than the information or representations contained in the Plan's Summary
Plan Description or in published reports of the Plan which are in the public
domain or in sales literature or other promotional material approved in writing
by the Plan in accordance with this Article V.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Portfolio of the Trust shall comply with Section
817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Portfolio as an investment company underlying a Participating
Account, and the Trust shall notify the Plan immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
6.2. Subchapter M. Each Portfolio of the Trust shall maintain the
qualification of the Portfolio as a registered investment company (under
Subchapter M or any successor or similar provision), and the Trust shall notify
the Plan immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that it might not so qualify in the
future.
6.3. Products. The Plan shall help to ensure the continued treatment of the
Products as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
immediately upon having a reasonable basis for believing that continued
investment by it would cause such Products to cease to be so treated or might
cause such Products to cease to be so treated in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports, and
preparation of a camera-ready copy of the foregoing;
(c) preparation of all statements and notices required by any federal
or state securities law;
(d) printing and mailing of all materials and reports required to be
provided by the Trust to its existing shareholders;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with
sales of Trust shares to qualified retirement plans, custody,
auditing, transfer agent and advisory fees, fees for insurance
coverage and Trust Board fees; and
(g) any expenses permitted to be paid or assumed by a Portfolio of the
Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
7.3. Plan Expenses. Expenses incident to the Plan's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) qualification of the Plan under the Code;
(b) preparation and filing with the DOL of the Summary Plan
Description;
(c) the offering of interests in the trust funding the Plan;
(d) administration of the Plan;
(e) if applicable, solicitation of voting instructions with respect to
Trust proxy materials;
(f) payment of all applicable fees relating to the Plan;
(g) preparation, printing and dissemination of all statements and
notices to Plan Participants required by any federal or state law
other than those paid for by the Trust; and
(h) preparation, printing and dissemination of all marketing or
offering materials for the Plan or investment options under the Plan
and Trust except where other arrangements are made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation to
the Plan under this Agreement, except that if the Trust or any Series or Class
of shares adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act
to finance distribution expenses, then payments may be made to the Plan in
accordance with such plan. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, the Trust undertakes to have the Trust Board,
a majority of whom are not interested persons of the Trust, formulate and
approve any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that the
Trust has obtained from the SEC an order (the "Exemptive Order") granting relief
from various provisions of the 1940 Act and the rules thereunder to the extent
necessary to permit Trust shares to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and other Qualified Persons (as defined in
Section 2.8 hereof). The Exemptive Order requires the Trust and each
Participating Plan to comply with conditions and undertakings substantially as
provided in this Article VIII. The Trust will not enter into a participation
agreement with any other Participating Plan or Participating Insurance Company
(other than CUNA Mutual Life Insurance Company) unless it imposes the same
conditions and undertakings on that Participating Plan or Participating
Insurance Company as are imposed on the Plan pursuant to this Article VIII.
8.2. Plan Monitoring Requirements. The Plan will monitor its operations and
those of the Trust for the purpose of identifying any material irreconcilable
conflicts or potential material irreconcilable conflicts between or among the
interests of Participating Plans (and participants therein), Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts.
8.3. Plan Reporting Requirements. The Plan shall report any conflicts or
potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Plan also shall
assist the Trust Board in carrying out its obligations including, but not
limited to providing such other information and reports as the Trust Board may
reasonably request.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans (and participants
therein), Product Owners of variable life insurance policies and Product Owners
of variable annuity contracts and determine what action, if any, should be taken
in response to those conflicts. A majority vote of trustees of the Trust who are
not interested persons of the Trust as defined in the 1940 Act (the
"disinterested trustees") shall represent a conclusive determination as to the
existence of a material irreconcilable conflict between or among the interests
of Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts and Participating Plans (and participants therein)
and as to whether any proposed action adequately remedies any material
irreconcilable conflict. The Trust Board shall give prompt written notice to the
Plan and other Participating Investors of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans (and participants therein), the Plan will, at its own
expense, take whatever action is necessary to remedy such conflict as it
adversely affects Plan Participants up to and including (i) establishing a new
registered management investment company, and (ii) withdrawing Plan assets from
the Trust subject to the conflict and reinvesting such assets in a different
investment medium (including another Portfolio of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Plan Participants, and, as appropriate, segregating the assets of any
group of such Plan Participants that votes in favor of such withdrawal, or
offering to such Plan Participants the option of making such a change. The Plan
will carry out the responsibility to take the foregoing action with a view only
to the interests of Plan Participants.
8.6. Expenses Associated with Remedial Action. In no event shall the Trust
be required to bear the expense of establishing a new funding medium for the
Plan.
8.7. Successor Rules. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from those
contained in the Exemptive Order, then (a) the Trust and/or the Plan, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Plan. The Plan hereby agrees to, and shall,
indemnify and hold harmless the Trust and each person who controls or is
affiliated with the Trust within the meaning of such terms under the 1933 Act or
1940 Act (but not any Participating Insurance Companies or Qualified Persons)
and any officer, trustee, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Summary Plan Description (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing to
the Plan by the Trust or the Distributor for use in the Summary Plan
Description for the Plan (or any amendment or supplement to any of the
foregoing); or
(b) arise out of any untrue statement of a material fact contained in
the Trust Registration Statement, any Prospectus for Series or Classes or
sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in reliance
upon and in conformity with information furnished to the Trust in writing
by or on behalf of the Plan; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Plan or persons under its control
or subject to its authorization, including without limitation, any Plan
fiduciaries, administrators, broker-dealers or agents authorized to offer
interests in the Plan or manage the operations of or provide administrative
services to the Plan or Plan Participants, with respect to the offer of
interests in the Plan, or distribution of Trust shares through the Plan,
including, without limitation, any impermissible or unauthorized
representations about the Plan or the Trust; or
(d) arise as a result of any failure by the Plan or persons under its
control (or subject to its authorization), including fiduciaries and
administrators, to provide services, furnish materials or make payments as
required under this Agreement; or
(e) arise out of any material breach by the Plan or persons under its
control (or subject to its authorization), including fiduciaries or
administrators, of this Agreement; or
(f) any breach of any warranties contained in Article III hereof, any
failure to transmit a request for redemption or purchase of Trust shares or
payment therefor on a timely basis in accordance with the procedures set
forth in Article II, or any unauthorized use of the names or trade names of
the Trust or the Distributor.
This indemnification is in addition to any liability that the Plan may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Plan and each person who controls or is
affiliated with the Plan within the meaning of such terms under the 1933 Act or
1940 Act and any officer, trustee, plan committee member, fiduciary, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any Prospectus
for Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made; provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by the Plan to the Trust for use in the
Trust Registration Statement, Trust Prospectus or sales literature or
promotional material for the Trust (or any amendment or supplement to any
of the foregoing) or otherwise for use in connection with the offer of
interests in the Plan or any investment option under the Plan or sale of
the Trust shares; or
(b) arise out of any untrue statement of a material fact contained in
the Summary Plan Description or sales literature or other promotional
material for the Plan or any investment option under the Plan (or any
amendment or supplement to any of the foregoing), or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in reliance
upon information furnished in writing by the Trust to the Plan; or
(c) arise out of or are based upon wrongful conduct of the Trust or
its Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services,
furnish materials or make payments as required under the terms of this
Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any warranties
contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Plan with
respect to any violation of ERISA or the Code, compliance with which is a
responsibility of the Plan under this Agreement or otherwise or as to which the
Plan failed to inform the Trust in accordance with Section 4.4 hereof. This
indemnification is in addition to any liability that the Trust may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the event
of an occurrence for which the Trust has agreed to indemnify the Plan, the Plan
shall seek indemnification from the Trust only in circumstances in which the
Trust is entitled to seek indemnification from a third party with respect to the
same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Plan is to be an independent contractor
vis-a-vis the Trust, the Distributor, or any of their affiliates for all
purposes hereunder and will have no authority to act for or represent any of
them. In addition, no officer, trustee, committee member, or other fiduciary of
the Plan will be deemed to be an employee or agent of the Trust or any of its
affiliates solely because of this Agreement. The Plan will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other qualified plans, insurance companies and other
investors (subject to Section 2.8 hereof), provided, however, that until this
Agreement is terminated pursuant to this Article X.
10.3. Termination of Agreement. This Agreement shall not terminate until
(i) the Trust is dissolved, liquidated, or merged into another entity, or (ii)
as to any Portfolio that has been made available hereunder and the Plan has
confirmed in writing to the Trust that it no longer intends to invest in such
Portfolio. However, certain obligations of, or restrictions on, the parties to
this Agreement may terminate as provided in Sections 10.4 through 10.6 and the
Plan may be required to redeem Trust shares pursuant to Section 10.8 or in the
circumstances contemplated by Article VIII. Article IX and Sections 5.7, 10.8
and 10.9 shall survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the Trust
and the Distributor to make Trust shares available to the Plan for purchase
pursuant to Article II of this Agreement shall terminate at the option of the
Trust upon written notice to the Plan as provided below:
(a) upon institution of formal proceedings against the Plan, or the
Trust's reasonable determination that institution of such proceedings is
being considered by the IRS, DOL, the SEC, the insurance commission of any
state or any other regulatory body regarding the Plan's duties under this
Agreement, the operation of the Plan, the administration of the Plan or the
purchase of Trust shares, or an expected or anticipated ruling, judgment or
outcome which would, in the Trust's reasonable judgment exercised in good
faith, materially impair the Plan's or Trust's ability to meet and perform
the Plan's or Trust's obligations and duties hereunder, such termination
effective upon 15 days prior written notice;
(b) in the event that the Plan is not operated in accordance with
applicable federal and/or state law, such termination effective immediately
upon receipt of written notice;
(c) if the Trust or the Distributor suspends or terminates the
offering of Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if such action is
required by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Trust or the Distributor acting in good faith,
suspension or termination is necessary in the best interests of the
shareholders of any Series or Class (it being understood that
"shareholders" for this purpose shall mean Product Owners, Plan
Participants or participants in other Participating Plans), such notice
effective immediately upon receipt of written notice, it being understood
that a lack of Participating Investor interest in a Series or Class may be
grounds for a suspension or termination as to such Series or Class and that
a suspension or termination shall apply only to the specified Series or
Class;
(d) upon the Plan's assignment of this Agreement unless the Trust
consents thereto, such termination effective upon 30 days prior written
notice;
(e) if the Plan is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the Trust
within 10 days after written notice of such breach has been delivered to
the Plan, such termination effective upon expiration of such 10-day period;
or
(f) upon the determination of the Trust s Board to dissolve, liquidate
or merge the Trust as contemplated by Section 10.3(i), upon termination of
the Agreement pursuant to Section 10.3(ii), or upon notice from the Plan
pursuant to Section 10.5 or 10.6, such termination pursuant hereto to be
effective upon 15 days prior written notice.
10.5. Termination of Investment in a Portfolio. The Plan may elect to cease
investing in a Portfolio or withdraw its investment in a Portfolio, subject to
compliance with applicable law, upon written notice to the Trust within 15 days
of the occurrence of any of the following events (unless provided otherwise
below):
(a) if the Trust informs the Plan that it will not cause such
Portfolio to comply with investment restrictions as requested by the Plan
(as indicated in schedule 2), and the Trust and the Plan are unable to
agree upon any reasonable alternative accommodations;
(b) if shares in such Portfolio are not reasonably available to meet
the requirements of the Plan as determined by the Plan (including any
non-availability as a result of notice given by the Distributor pursuant to
Section 10.4(c)), and the Distributor, after receiving written notice from
the Plan of such non-availability, fails to make available, within 10 days
after receipt of such notice, a sufficient number of shares in such
Portfolio or an alternate Portfolio to meet the requirements of the Plan;
or
(c) if such Portfolio fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations thereunder and
the Trust, upon written request, fails to provide reasonable assurance that
it will take action to cure or correct such failure;
Such termination shall apply only as to the affected Portfolio and shall not
apply to any other Portfolio in which the Plan invests.
10.6. Termination of Investment by the Plan. The Plan may elect to cease
investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Plan, or withdraw its
investment in the Trust, subject to compliance with applicable law, upon written
notice to the Trust within 15 days of the occurrence of any of the following
events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC or any
state securities or insurance commission or any other regulatory body;
(b) if, with respect to the Trust or a Portfolio, the Trust or the
Portfolio ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or similar
provision, or if the Plan reasonably believes that the Trust may fail to so
qualify, and the Trust, upon written request, fails to provide reasonable
assurance that it will take action to cure or correct such failure within
30 days; or
(c) if the Trust is in material breach of a provision of this
Agreement, which breach has not been cured to the satisfaction of the Plan
within 10 days after written notice of such breach has been delivered to
the Trust.
10.7. Forced Redemption of Certain Participating Investor's Shares. The
parties understand and acknowledge that it is essential for compliance with
Section 817(h) of the Code that the Products qualify as annuity contracts or
life insurance policies, as applicable, under the Code. Accordingly, if any of
the Products cease to qualify as annuity contracts or life insurance policies,
as applicable, under the Code, or if the Trust reasonably believes that any such
Products may fail to so qualify, the Trust shall have the right to require the
issuing Participating Insurance Company to redeem Trust shares attributable to
such Products upon notice to the Participating Insurance Company and the Company
shall so redeem such Trust shares in order to ensure that the Trust, or any
Portfolio of the Trust, complies with the provisions of Section 817(h) of the
Code applicable to ownership of Trust shares. Likewise, if the Trust reasonably
believes that any investment by a Participating Plan in a Portfolio may cause
the Portfolio to fail to comply with Section 817(h) of the Code, then the Trust
shall have the right to require the Participating Plan to redeem Trust shares
attributable to the extent necessary to ensure that the Portfolio complies with
the provisions of Section 817(h) upon notice to the Participating Plan.
10.8. Plan Required to Redeem. The parties understand and acknowledge that,
for the reasons stated in Section 10.7 above, if the Trust reasonably believes
that any investment by the Plan in a Portfolio may cause the Portfolio to fail
to comply with Section 817(h) of the Code, the Trust shall have the right, upon
notice to the Plan, to require the Plan to redeem Trust shares to the extent
necessary to ensure that the Portfolio complies with the provisions of Section
817(h). Notice to the Plan shall specify the period of time the Plan has to
redeem the Trust shares or to make other arrangements satisfactory to the Trust
and its counsel, such period of time to be determined with reference to the
requirements of Section 817(h) of the Code. In addition, the Plan may be
required to redeem Trust shares pursuant to action taken or request made by the
Trust Board in accordance with the Exemptive Order described in Article VIII or
any conditions or undertakings set forth or referenced therein, or other SEC
rule, regulation or order that may be adopted after the date hereof. The Plan
agrees to redeem shares in the circumstances described herein and to comply with
applicable terms and provisions. Also, in the event that the Distributor
suspends or terminates the offering of a Series or Class pursuant to Section
10.4(c) of this Agreement, the Plan, upon request by the Distributor, will
cooperate in taking appropriate action to withdraw its investment in the
respective Portfolio.
10.9. Confidentiality. The Plan will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
ARTICLE XI
Applicability to New Plan Investment Options
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Plan, any Series or Class of Trust shares. Such amendments may be made effective
by executing the form of amendment included on each schedule attached hereto.
The provisions of this Agreement shall be equally applicable to each such
Series, or Class, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all
the party.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust:
Michael S. Daubs
President
Ultra Series Fund
5910 Mineral Point Road
Madison, WI 53701
If to the Plan:
Michael B. Kitchen
Plan Committee Member
5910 Mineral Point Road
Madison, WI 53701
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Massachusetts, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act, Securities Exchange Act of 1934, as amended, ERISA and the rules,
regulations and rulings thereunder, including such exemptions from those
statutes, rules, and regulations as the SEC or the DOL may grant, and the
terms hereof shall be limited, interpreted and construed in accordance
therewith.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Plan, the Distributor or the Trust
without the prior written consent of the other parties.
13.4. Actions by the Plan. Where this Agreement requires or permits the
Plan to act (or refrain from action), the Plan's trustee(s), Plan committee (or
an authorized Plan committee member), or other appropriate fiduciary of the
Plan, as appropriate, [shall] [may] perform on behalf of the Plan.
13.5. Declaration of Trust. A copy of the Declaration of Trust of the Trust
is on file with the Secretary of State of the state of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
ULTRA SERIES FUND
(Trust)
Date: October 31, 1997 By: /s/ Michael S. Daubs
Name: Michael S. Daubs
Title: President, Ultra Series Fund
CUNA MUTUAL LIFE INSURANCE COMPANY
401(k)/THRIFT PLAN FOR HOME OFFICE EMPLOYEES
(Plan)
Date: October 31, 1997 By: /s/ Connie J. Wiegeshaus
Name: Connie J. Wiegeshaus
Title: Plan Committee Member
<PAGE>
Schedule 1
Trust Classes and Series
Available Under the Plan
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Plan:
Plan Investment Option Trust Classes and Series
[Form of Amendment to Schedule 1]
Effective as of __________________, this Schedule 1 is hereby amended to reflect
the following changes in Trust Classes and Series:
Plan Investment Option Trust Classes and Series
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 1 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Life Insurance Company
401(k)/Thrift Plan for Home Office Employees
<PAGE>
Schedule 2
Investment Restrictions
Applicable to the Trust Portfolios
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
[Form of Amendment to Schedule 2]
Effective as of ___________________, this Schedule 2 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 2 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Life Insurance Company
401(k)/Thrift Plan for Home Office Employees
<PAGE>
Exhibit 23(h)4
Participation Agreement between Ultra Series Fund and CUNA Mutual
Life Insurance Company 401(k)/Thrift Plan for Agents
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 31st day of October, 1997 by
and between ULTRA SERIES FUND, an unincorporated business trust formed under the
laws of Massachusetts (the "Trust") and CUNA MUTUAL LIFE INSURANCE COMPANY
401(k)/THRIFT PLAN FOR AGENTS (the "Plan").
WHEREAS, the Trust is a series-type open-end management investment
company offering shares of beneficial interest (the "Trust shares") consisting
of one or more separate series ("Series") of shares, each such Series
representing an interest in a particular investment portfolio of securities and
other assets (a "Portfolio"), and which Series may be subdivided into various
classes ("Classes") with each such Class supporting a distinct charge and
expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by life insurance
companies and for qualified retirement plans; and
WHEREAS, the Plan is defined contribution plan established by the board
of directors of CUNA Mutual Life Insurance Company that qualifies under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986; and
WHEREAS, the Plan desires that the Trust serve as an investment vehicle
for a certain investment options of the Plan and the Trust desires to sell
shares of certain Series and/or Class(es) to the Plan;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Plan agree as follows:
ARTICLE I
Additional Definitions
1.1. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.2. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.3 "Distributor" -- CUNA Brokerage Services, Inc., the principal
underwriter of the Trust's shares.
1.4. "Participating Account" -- a separate account of a Participating
Insurance Company investing all or a portion of its assets in the Trust,
including separate accounts of CUNA Mutual Life Insurance Company.
1.5. "Participating Insurance Company" -- any insurance company investing
in the Trust on its behalf or on behalf of a Participating Account, including
CUNA Mutual Life Insurance Company.
1.6. "Participating Plan" -- any qualified retirement plan investing in the
Trust, including the Plan.
1.7. "Participating Investor" -- any Participating Account, Participating
Insurance Company or Participating Plan.
1.8. "Plan Participant" -- a participant in or beneficiary of the Plan.
1.9. "Products" -- variable annuity contracts and variable life insurance
policies supported by Participating Accounts.
1.10. "Product Owners" -- owners of Products.
1.11. "Trust Board" -- the board of trustees of the Trust.
1.12. "Registration Statement" -- with respect to the Trust shares or a
class of Products, the registration statement filed with the SEC to register
such securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Trust's Registration Statement is filed on Form N-1A (File No.
2-87775).
1.13. "1940 Act Registration Statement" -- with respect to the Trust or a
Participating Account, the registration statement filed with the SEC to register
such person as an investment company under the 1940 Act, or the most recently
filed amendment thereto. The Trust's 1940 Act Registration Statement is filed on
Form N-1A (File No. 811-04815).
1.14. "Prospectus" -- with respect to shares of a Series (or Class) of the
Trust or a class of Products, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Products last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
1.15. "Statement of Additional Information" -- with respect to the Trust
shares or a class of Products, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to Rule
497 under the 1933 Act. With respect to any provision of this Agreement
requiring a party to take action in accordance with a Statement of Additional
Information, such reference thereto shall be deemed to be the last version so
filed prior to the taking of such action.
1.16. "Summary Plan Description" -- the written description of the Plan as
required by ERISA.
1.17. "DOL" -- the U.S. Department of Labor.
1.18. "ERISA" -- the Employee Retirement Income Security Act of 1974, as
amended.
1.19. "SEC" -- the U.S. Securities and Exchange Commission.
1.20. "NASD" -- The National Association of Securities Dealers, Inc.
1.21. "1933 Act" -- the Securities Exchange Act of 1933, as amended.
1.22. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Plan for purchase, shares of the Series and Classes listed
on Schedule 1 to this Agreement, such purchases to be effected at net asset
value in accordance with Section 2.3 of this Agreement. Such Series and
Classes shall be made available to the Plan in accordance with the terms
and provisions of this Agreement until this Agreement is terminated
pursuant to Article X or the Distributor suspends or terminates the
offering of shares of such Series or Classes in the circumstances described
in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes
of Trust shares in existence now or that may be established in the future
will be made available to the Plan only as the Trust and the Distributor
may so provide, subject to the Trust's rights set forth in Article X to
suspend or terminate the offering of shares of any Series or Class or to
terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke
the Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor; and (ii) the Trust reserves
the right in its sole discretion to refuse to accept a request for the
purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Plan's request, any full
or fractional Trust shares held by the Plan, such redemptions to be effected at
net asset value in accordance with Section 2.3 of this Agreement.
Notwithstanding the foregoing, (i) the Plan shall not redeem Trust shares except
in the circumstances permitted in Article X of this Agreement, and (ii) the
Trust may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
Prospectus for such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Plan shall pay for shares of each Series or Class on the same
day that it provides actual notice to the Trust of a purchase request for
such shares. Payment for Trust shares shall be made in Federal funds
transmitted to the Trust by wire to be received by the Trust by 12:00 noon
New York Time on the day the Trust receives actual notice of the purchase
request for shares (unless the Trust determines and so advises the Plan
that sufficient proceeds are available from redemption of shares of other
Series or Classes effected pursuant to redemption requests tendered by the
Plan). In no event may proceeds from the redemption of shares requested by
the Plan pursuant to an order received from a Plan Participant after the
Trust's close of business on any Business Day, be applied to the payment
for shares for which a purchase order was received prior to the Trust's
close of business on such day. If the issuance of shares is canceled
because Federal funds are not timely received, the Plan shall indemnify the
respective Portfolio with respect to all costs, expenses and losses
relating thereto. If Federal funds are not received on time, such funds
will be invested, and the Series or Class of shares purchased thereby will
be issued, as soon as practicable after actual receipt of such funds at the
net asset value next computed as indicated in Section 2.4 below.
(b) Payment for a Series or Class of shares redeemed by the Plan shall
be made in Federal funds transmitted by wire to the Plan or any other
person properly designated in writing by the Plan, such funds normally to
be transmitted by 6:00 p.m. New York Time on the next Business Day after
the Trust receives actual notice of the redemption order for such Series or
Class of shares (unless redemption proceeds are to be applied to the
purchase of Trust shares of other Series or Classes in accordance with
Section 2.3(b) of this Agreement), except that the Trust reserves the right
to redeem a Series or Class of shares in assets other than cash and to
delay payment of redemption proceeds to the extent permitted by the 1940
Act, any rules or regulations or orders thereunder, or the Trust's
Prospectus. The Trust shall not bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds by the Plan.
(c) Prior to the first purchase of any Trust shares hereunder, the
Plan and the Trust shall provide each other with all information necessary
to effect wire transmissions of Federal funds to the other party and all
other designated persons pursuant to such protocols and security procedures
as the parties may agree upon. Should such information change thereafter,
the Trust and the Plan, as applicable, shall notify the other in writing of
such changes, observing the same protocols and security procedures, at
least three Business Days in advance of when such change is to take effect.
The Plan and the Trust shall observe customary procedures to protect the
confidentiality and security of such information, but the Trust shall not
be liable to the Plan for any breach of security.
(d) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class or by
the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform the
Plan of the net asset value per share for each Series or Class available to the
Plan as soon as reasonably practicable after the net asset value per share for
such Series or Class is calculated. The Trust shall calculate such net asset
value in accordance with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Plan as soon as reasonably practicable of any income dividends or capital gain
distributions payable on any Series or Class of shares. The Plan hereby elects
to receive all such dividends and distributions as are payable on any Series or
Class shares in the form of additional shares of that Series or Class. The Plan
reserves the right to revoke this election and to receive all such dividends and
capital gain distributions in cash; to be effective, such revocation must be
made in writing and received by the Trust at least ten Business Days prior to a
dividend or distribution date. The Trust shall notify the Plan promptly of the
number of Series or Class shares so issued as payment of such dividends and
distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Plan. Purchase and
redemption orders for Trust shares shall be recorded in an appropriate ledger
for the Plan.
2.7. Pricing Errors. Any material errors in the calculation of net asset
value, dividends or capital gain information shall be reported to the Plan
immediately upon discovery. An error shall be deemed "material" based on the
Trust's interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. Neither the Trust or any
Portfolio, nor any of their affiliates shall be liable for any information
provided to the Plan pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Plan or any other
Participating Investor to the Trust.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell Trust
shares only to insurance companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase shares of the Trust under
Section 817(h) of the Code and the regulations thereunder without impairing the
ability of any Participating Account to consider the portfolio investments of a
Portfolio of the Trust as constituting investments of any Participating Account
for the purpose of satisfying the diversification requirements of Section
817(h). The Distributor and the Trust shall not sell Trust shares to any
insurance company or separate account unless an agreement complying with Article
VIII of this Agreement is in effect to govern such sales. The Plan hereby
represents and warrants that it is a Qualified Person.
ARTICLE III
Representations and Warranties
3.1. Plan. The Plan represents and warrants that: (i) the Plan is an
employee benefit plan that qualifies under Sections 401(a) and 501(a) of the
Code; (ii) the Plan is funded by a trust, validly existing, duly established and
maintained in accordance with applicable law; (iii) the Plan complies with the
provisions of ERISA applicable to such plans (including "Title I -Protection of
Employee Benefit Rights"); (iv) any interests or participations in the trust
funding the Plan are exempt from the registration requirements of Section 5 of
the 1933 Act pursuant to Section 3(a)(2) of the 1933 Act; (v) the trust funding
the Plan is excluded from the definition of an investment company in Section 3
of the 1940 Act by Section 3(c)(11) of the 1940 Act; and (vi) the Plan's
entering into and performing its obligations under this Agreement does not and
will not violate its declaration of trust or other plan documents, rules or
regulations, or any agreement to which it is a party. The Plan will notify the
Trust promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Massachusetts law; (ii) the Trust's 1940 Act Registration Statement has been
filed with the SEC in accordance with the provisions of the 1940 Act and the
Trust is duly registered as an open-end management investment company
thereunder; (iii) the Trust's Registration Statement has been declared effective
by the SEC; (iv) the Trust shares will be issued in compliance in all material
respects with all applicable federal laws; (v) the Trust will remain registered
under and will comply in all material respects with the 1940 Act during the term
of this Agreement; (vi) each Portfolio of the Trust intends to qualify as a
"regulated investment company" under Subchapter M of the Code and to comply with
the diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Portfolio are
in material compliance with any investment restrictions set forth on Schedule 2
to this Agreement.
3.3. Legal Authority. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust action, as applicable, by such party, and, when so executed
and delivered, this Agreement will be the valid and binding obligation of such
party enforceable in accordance with its terms.
3.4. Bonding Requirement. Each party represents and warrants that all of
its trustees, officers, plan committee members, fiduciaries and employees
dealing with the money and/or securities of the Trust are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the amount required by the
applicable rules of the NASD, ERISA and the federal securities laws. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties shall make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, shall provide evidence thereof promptly to any other party
upon written request therefor, and shall notify the other parties promptly in
the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Voting of Trust Shares. With respect to any matter put to vote by the
holders of Trust shares ("Voting Shares"), the Plan's trustee(s) or committee
members will exercise the Plan's Voting Share rights.
4.3. Compliance. Under no circumstances will the Trust or any of its
affiliates (excluding Participating Investors) be responsible or liable in any
respect for any statements or representations made by them or their legal
advisers to the Plan or any Plan Participant concerning the applicability of any
federal or state laws, regulations or other authorities to the activities
contemplated by this Agreement.
4.4. Drafts of Regulatory Filings. The Trust and the Plan shall provide to
each other copies of draft versions of any Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations for voting instructions, applications for exemptions, requests for
"no-action" letters, and all amendments or supplements to any of the above,
prepared by or on behalf of either of them and that mentions the other party by
name. Such drafts shall be provided to the other party sufficiently in advance
of filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.5. Copies of Regulatory Filings. The Trust and the Plan shall provide to
each other at least one complete copy of all Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations of voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Trust, or the Plan, as the case may be, promptly after the filing
by or on behalf of each such party of such document with the DOL, the SEC, the
NASD, or other regulatory authorities (it being understood that this provision
is not intended to require the Trust to provide to the Plan copies of any such
documents prepared, filed or used by Participating Investors other than the
Plan).
4.6. Regulatory Responses. Each party shall promptly provide to all other
parties copies of responses to "no-action" requests, notices, orders and other
decisions or rulings received by such party with respect to any filing covered
by Section 4.6 of this Agreement.
4.7. Complaints and Proceedings
(a) The Trust shall immediately notify the Plan of: (i) the issuance
by any court or regulatory body of any stop order, cease and desist order,
or other similar order (but not including an order of a regulatory body
exempting or approving a proposed transaction or arrangement) with respect
to the Trust's Registration Statement or the Prospectus of any Series or
Class; (ii) any request by the SEC for any amendment to the Trust's
Registration Statement or the Prospectus of any Series or Class; (iii) the
initiation of any proceedings for that purpose or for any other purposes
relating to the registration or offering of the Trust shares; or (iv) any
other action or circumstances that may prevent the lawful offer or sale of
Trust shares or any Class or Series in any state or jurisdiction,
including, without limitation, any circumstance in which (A) such shares
are not registered and, in all material respects, issued and sold in
accordance with applicable state and federal law or (B) such law precludes
the use of such shares as an underlying investment medium for Products or
as a funding medium for Participating Plans. The Trust will make every
reasonable effort to prevent the issuance of any such stop order, cease and
desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) The Plan shall immediately notify the Trust and the Distributor
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Plan's investment in the Trust; (ii) any
request by the DOL for any change to the Plan's investment in the Trust;
(iii) the initiation of any proceedings for that purpose or for any other
purposes relating to the operation or investments of the Plan; or (iv) any
other action or circumstances that may prevent the lawful offer of
interests in the Plan, or the trust funding the Plan, in any state or
jurisdiction, including, without limitation, any circumstance in which the
Plan or such trust is not qualified and approved, and, in all material
respects, offered [operated] [and sold] in accordance with applicable state
and federal laws. The Plan will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or the
operations of the Trust or the Plan.
(d) The Plan shall provide to the Trust any complaints it has received
from Plan Participants pertaining to the Trust or a Portfolio, and the
Trust and Distributor shall each provide to the Plan any complaints it has
received from Plan Participants relating to the Plan or the Plan's
investment in the Trust.
4.8. Cooperation. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
IRS, DOL, SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry by any such authority relating to this
Agreement or the transactions contemplated hereby. However, such access shall
not extend to attorney-client privileged information.
ARTICLE V
Offering, Administration and Operation of the Plan
5.1. Offer of the Plan. The Plan shall be fully responsible as to the Trust
and the Distributor for offering the Plan to Plan Participants.
5.2. Administration of the Plan and Servicing of the Plan Participants. The
Plan shall be fully responsible as to the Trust for offering service and
administration of the Plan and for the administration of Plan Participants'
accounts.
5.3. Trust Prospectuses and Reports. In order to enable the Plan to fulfill
its obligations under this Agreement and the federal securities laws, the Trust
shall provide the Plan with a copy, in camera-ready form or form otherwise
suitable for printing or duplication of: (i) the Trust's Prospectus for the
Series and Classes listed on Schedule 1 and any supplement thereto; (ii) each
Statement of Additional Information and any supplement thereto; (iii) any Trust
proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Plan may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Plan at least 10 days
advance written notice when any such material shall become available, provided,
however, that in the case of a supplement, the Trust shall provide the Plan
notice reasonable in the circumstances, it being understood that circumstances
surrounding such supplement may not allow for advance notice. The Plan may not
alter any material so provided by the Trust or the Distributor (including
without limitation presenting or delivering such material in a different medium,
e.g., electronic or Internet) without the prior written consent of the Trust or
the Distributor.
5.4. Trade Names. Neither party shall use the other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of the other party, or after written consent therefor has
been revoked. The Plan shall not use in advertising, publicity or otherwise the
name of the Trust, Distributor, or any of their affiliates nor any trade name,
trademark, trade device, service mark, symbol or any abbreviation, contraction
or simulation thereof of the Trust, Distributor, or their affiliates without the
prior written consent of the Trust or the Distributor in each instance.
5.5. Representations by Plan. Except with the prior written consent of the
Trust, the Plan shall not give any information or make any representations or
statements about the Trust or the Portfolios nor shall it authorize or allow any
other person to do so except information or representations contained in the
Trust's Registration Statement or the Trust's Prospectuses or in reports or
proxy statements for the Trust, or in sales literature or other promotional
material approved in writing by the Trust in accordance with this Article V, or
in published reports or statements of the Trust in the public domain.
5.6. Representations by Trust. Except with the prior written consent of the
Plan, the Trust shall not give any information or make any representations on
behalf of the Plan or concerning the Plan or the investment options of the Plan,
other than the information or representations contained in the Plan's Summary
Plan Description or in published reports of the Plan which are in the public
domain or in sales literature or other promotional material approved in writing
by the Plan in accordance with this Article V.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Portfolio of the Trust shall comply with Section
817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Portfolio as an investment company underlying a Participating
Account, and the Trust shall notify the Plan immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
6.2. Subchapter M. Each Portfolio of the Trust shall maintain the
qualification of the Portfolio as a registered investment company (under
Subchapter M or any successor or similar provision), and the Trust shall notify
the Plan immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that it might not so qualify in the
future.
6.3. Products. The Plan shall help to ensure the continued treatment of the
Products as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
immediately upon having a reasonable basis for believing that continued
investment by it would cause such Products to cease to be so treated or might
cause such Products to cease to be so treated in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports, and
preparation of a camera-ready copy of the foregoing;
(c) preparation of all statements and notices required by any federal
or state securities law;
(d) printing and mailing of all materials and reports required to be
provided by the Trust to its existing shareholders;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with
sales of Trust shares to qualified retirement plans, custody,
auditing, transfer agent and advisory fees, fees for insurance
coverage and Trust Board fees; and
(g) any expenses permitted to be paid or assumed by a Portfolio of the
Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
7.3. Plan Expenses. Expenses incident to the Plan's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) qualification of the Plan under the Code;
(b) preparation and filing with the DOL of the Summary Plan
Description;
(c) the offering of interests in the trust funding the Plan;
(d) administration of the Plan;
(e) if applicable, solicitation of voting instructions with respect to
Trust proxy materials;
(f) payment of all applicable fees relating to the Plan;
(g) preparation, printing and dissemination of all statements and
notices to Plan Participants required by any federal or state law
other than those paid for by the Trust; and
(h) preparation, printing and dissemination of all marketing or
offering materials for the Plan or investment options under the Plan
and Trust except where other arrangements are made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation to
the Plan under this Agreement, except that if the Trust or any Series or Class
of shares adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act
to finance distribution expenses, then payments may be made to the Plan in
accordance with such plan. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, the Trust undertakes to have the Trust Board,
a majority of whom are not interested persons of the Trust, formulate and
approve any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that the
Trust has obtained from the SEC an order (the "Exemptive Order") granting relief
from various provisions of the 1940 Act and the rules thereunder to the extent
necessary to permit Trust shares to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and other Qualified Persons (as defined in
Section 2.8 hereof). The Exemptive Order requires the Trust and each
Participating Plan to comply with conditions and undertakings substantially as
provided in this Article VIII. The Trust will not enter into a participation
agreement with any other Participating Plan or Participating Insurance Company
(other than CUNA Mutual Life Insurance Company) unless it imposes the same
conditions and undertakings on that Participating Plan or Participating
Insurance Company as are imposed on the Plan pursuant to this Article VIII.
8.2. Plan Monitoring Requirements. The Plan will monitor its operations and
those of the Trust for the purpose of identifying any material irreconcilable
conflicts or potential material irreconcilable conflicts between or among the
interests of Participating Plans (and participants therein), Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts.
8.3. Plan Reporting Requirements. The Plan shall report any conflicts or
potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Plan also shall
assist the Trust Board in carrying out its obligations including, but not
limited to providing such other information and reports as the Trust Board may
reasonably request.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans (and participants
therein), Product Owners of variable life insurance policies and Product Owners
of variable annuity contracts and determine what action, if any, should be taken
in response to those conflicts. A majority vote of trustees of the Trust who are
not interested persons of the Trust as defined in the 1940 Act (the
"disinterested trustees") shall represent a conclusive determination as to the
existence of a material irreconcilable conflict between or among the interests
of Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts and Participating Plans (and participants therein)
and as to whether any proposed action adequately remedies any material
irreconcilable conflict. The Trust Board shall give prompt written notice to the
Plan and other Participating Investors of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans (and participants therein), the Plan will, at its own
expense, take whatever action is necessary to remedy such conflict as it
adversely affects Plan Participants up to and including (i) establishing a new
registered management investment company, and (ii) withdrawing Plan assets from
the Trust subject to the conflict and reinvesting such assets in a different
investment medium (including another Portfolio of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Plan Participants, and, as appropriate, segregating the assets of any
group of such Plan Participants that votes in favor of such withdrawal, or
offering to such Plan Participants the option of making such a change. The Plan
will carry out the responsibility to take the foregoing action with a view only
to the interests of Plan Participants.
8.6. Expenses Associated with Remedial Action. In no event shall the Trust
be required to bear the expense of establishing a new funding medium for the
Plan.
8.7. Successor Rules. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from those
contained in the Exemptive Order, then (a) the Trust and/or the Plan, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Plan. The Plan hereby agrees to, and shall,
indemnify and hold harmless the Trust and each person who controls or is
affiliated with the Trust within the meaning of such terms under the 1933 Act or
1940 Act (but not any Participating Insurance Companies or Qualified Persons)
and any officer, trustee, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Summary Plan Description (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing to
the Plan by the Trust or the Distributor for use in the Summary Plan
Description for the Plan (or any amendment or supplement to any of the
foregoing); or
(b) arise out of any untrue statement of a material fact contained in
the Trust Registration Statement, any Prospectus for Series or Classes or
sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in reliance
upon and in conformity with information furnished to the Trust in writing
by or on behalf of the Plan; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Plan or persons under its control
or subject to its authorization, including without limitation, any Plan
fiduciaries, administrators, broker-dealers or agents authorized to offer
interests in the Plan or manage the operations of or provide administrative
services to the Plan or Plan Participants, with respect to the offer of
interests in the Plan, or distribution of Trust shares through the Plan,
including, without limitation, any impermissible or unauthorized
representations about the Plan or the Trust; or
(d) arise as a result of any failure by the Plan or persons under its
control (or subject to its authorization), including fiduciaries and
administrators, to provide services, furnish materials or make payments as
required under this Agreement; or
(e) arise out of any material breach by the Plan or persons under its
control (or subject to its authorization), including fiduciaries or
administrators, of this Agreement; or
(f) any breach of any warranties contained in Article III hereof, any
failure to transmit a request for redemption or purchase of Trust shares or
payment therefor on a timely basis in accordance with the procedures set
forth in Article II, or any unauthorized use of the names or trade names of
the Trust or the Distributor.
This indemnification is in addition to any liability that the Plan may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Plan and each person who controls or is
affiliated with the Plan within the meaning of such terms under the 1933 Act or
1940 Act and any officer, trustee, plan committee member, fiduciary, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any Prospectus
for Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made; provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by the Plan to the Trust for use in the
Trust Registration Statement, Trust Prospectus or sales literature or
promotional material for the Trust (or any amendment or supplement to any
of the foregoing) or otherwise for use in connection with the offer of
interests in the Plan or any investment option under the Plan or sale of
the Trust shares; or
(b) arise out of any untrue statement of a material fact contained in
the Summary Plan Description or sales literature or other promotional
material for the Plan or any investment option under the Plan (or any
amendment or supplement to any of the foregoing), or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made in reliance
upon information furnished in writing by the Trust to the Plan; or
(c) arise out of or are based upon wrongful conduct of the Trust or
its Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services,
furnish materials or make payments as required under the terms of this
Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any warranties
contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Plan with
respect to any violation of ERISA or the Code, compliance with which is a
responsibility of the Plan under this Agreement or otherwise or as to which the
Plan failed to inform the Trust in accordance with Section 4.4 hereof. This
indemnification is in addition to any liability that the Trust may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the event
of an occurrence for which the Trust has agreed to indemnify the Plan, the Plan
shall seek indemnification from the Trust only in circumstances in which the
Trust is entitled to seek indemnification from a third party with respect to the
same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Plan is to be an independent contractor
vis-a-vis the Trust, the Distributor, or any of their affiliates for all
purposes hereunder and will have no authority to act for or represent any of
them. In addition, no officer, trustee, committee member, or other fiduciary of
the Plan will be deemed to be an employee or agent of the Trust or any of its
affiliates solely because of this Agreement. The Plan will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other qualified plans, insurance companies and other
investors (subject to Section 2.8 hereof), provided, however, that until this
Agreement is terminated pursuant to this Article X.
10.3. Termination of Agreement. This Agreement shall not terminate until
(i) the Trust is dissolved, liquidated, or merged into another entity, or (ii)
as to any Portfolio that has been made available hereunder and the Plan has
confirmed in writing to the Trust that it no longer intends to invest in such
Portfolio. However, certain obligations of, or restrictions on, the parties to
this Agreement may terminate as provided in Sections 10.4 through 10.6 and the
Plan may be required to redeem Trust shares pursuant to Section 10.8 or in the
circumstances contemplated by Article VIII. Article IX and Sections 5.7, 10.8
and 10.9 shall survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the Trust
and the Distributor to make Trust shares available to the Plan for purchase
pursuant to Article II of this Agreement shall terminate at the option of the
Trust upon written notice to the Plan as provided below:
(a) upon institution of formal proceedings against the Plan, or the
Trust's reasonable determination that institution of such proceedings is
being considered by the IRS, DOL, the SEC, the insurance commission of any
state or any other regulatory body regarding the Plan's duties under this
Agreement, the operation of the Plan, the administration of the Plan or the
purchase of Trust shares, or an expected or anticipated ruling, judgment or
outcome which would, in the Trust's reasonable judgment exercised in good
faith, materially impair the Plan's or Trust's ability to meet and perform
the Plan's or Trust's obligations and duties hereunder, such termination
effective upon 15 days prior written notice;
(b) in the event that the Plan is not operated in accordance with
applicable federal and/or state law, such termination effective immediately
upon receipt of written notice;
(c) if the Trust or the Distributor suspends or terminates the
offering of Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if such action is
required by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Trust or the Distributor acting in good faith,
suspension or termination is necessary in the best interests of the
shareholders of any Series or Class (it being understood that
"shareholders" for this purpose shall mean Product Owners, Plan
Participants or participants in other Participating Plans), such notice
effective immediately upon receipt of written notice, it being understood
that a lack of Participating Investor interest in a Series or Class may be
grounds for a suspension or termination as to such Series or Class and that
a suspension or termination shall apply only to the specified Series or
Class;
(d) upon the Plan's assignment of this Agreement unless the Trust
consents thereto, such termination effective upon 30 days prior written
notice;
(e) if the Plan is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the Trust
within 10 days after written notice of such breach has been delivered to
the Plan, such termination effective upon expiration of such 10-day period;
or
(f) upon the determination of the Trust s Board to dissolve, liquidate
or merge the Trust as contemplated by Section 10.3(i), upon termination of
the Agreement pursuant to Section 10.3(ii), or upon notice from the Plan
pursuant to Section 10.5 or 10.6, such termination pursuant hereto to be
effective upon 15 days prior written notice.
10.5. Termination of Investment in a Portfolio. The Plan may elect to cease
investing in a Portfolio or withdraw its investment in a Portfolio, subject to
compliance with applicable law, upon written notice to the Trust within 15 days
of the occurrence of any of the following events (unless provided otherwise
below):
(a) if the Trust informs the Plan that it will not cause such
Portfolio to comply with investment restrictions as requested by the Plan
(as indicated in schedule 2), and the Trust and the Plan are unable to
agree upon any reasonable alternative accommodations;
(b) if shares in such Portfolio are not reasonably available to meet
the requirements of the Plan as determined by the Plan (including any
non-availability as a result of notice given by the Distributor pursuant to
Section 10.4(c)), and the Distributor, after receiving written notice from
the Plan of such non-availability, fails to make available, within 10 days
after receipt of such notice, a sufficient number of shares in such
Portfolio or an alternate Portfolio to meet the requirements of the Plan;
or
(c) if such Portfolio fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations thereunder and
the Trust, upon written request, fails to provide reasonable assurance that
it will take action to cure or correct such failure;
Such termination shall apply only as to the affected Portfolio and shall not
apply to any other Portfolio in which the Plan invests.
10.6. Termination of Investment by the Plan. The Plan may elect to cease
investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Plan, or withdraw its
investment in the Trust, subject to compliance with applicable law, upon written
notice to the Trust within 15 days of the occurrence of any of the following
events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC or any
state securities or insurance commission or any other regulatory body;
(b) if, with respect to the Trust or a Portfolio, the Trust or the
Portfolio ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or similar
provision, or if the Plan reasonably believes that the Trust may fail to so
qualify, and the Trust, upon written request, fails to provide reasonable
assurance that it will take action to cure or correct such failure within
30 days; or
(c) if the Trust is in material breach of a provision of this
Agreement, which breach has not been cured to the satisfaction of the Plan
within 10 days after written notice of such breach has been delivered to
the Trust.
10.7. Forced Redemption of Certain Participating Investor's Shares. The
parties understand and acknowledge that it is essential for compliance with
Section 817(h) of the Code that the Products qualify as annuity contracts or
life insurance policies, as applicable, under the Code. Accordingly, if any of
the Products cease to qualify as annuity contracts or life insurance policies,
as applicable, under the Code, or if the Trust reasonably believes that any such
Products may fail to so qualify, the Trust shall have the right to require the
issuing Participating Insurance Company to redeem Trust shares attributable to
such Products upon notice to the Participating Insurance Company and the Company
shall so redeem such Trust shares in order to ensure that the Trust, or any
Portfolio of the Trust, complies with the provisions of Section 817(h) of the
Code applicable to ownership of Trust shares. Likewise, if the Trust reasonably
believes that any investment by a Participating Plan in a Portfolio may cause
the Portfolio to fail to comply with Section 817(h) of the Code, then the Trust
shall have the right to require the Participating Plan to redeem Trust shares
attributable to the extent necessary to ensure that the Portfolio complies with
the provisions of Section 817(h) upon notice to the Participating Plan.
10.8. Plan Required to Redeem. The parties understand and acknowledge that,
for the reasons stated in Section 10.7 above, if the Trust reasonably believes
that any investment by the Plan in a Portfolio may cause the Portfolio to fail
to comply with Section 817(h) of the Code, the Trust shall have the right, upon
notice to the Plan, to require the Plan to redeem Trust shares to the extent
necessary to ensure that the Portfolio complies with the provisions of Section
817(h). Notice to the Plan shall specify the period of time the Plan has to
redeem the Trust shares or to make other arrangements satisfactory to the Trust
and its counsel, such period of time to be determined with reference to the
requirements of Section 817(h) of the Code. In addition, the Plan may be
required to redeem Trust shares pursuant to action taken or request made by the
Trust Board in accordance with the Exemptive Order described in Article VIII or
any conditions or undertakings set forth or referenced therein, or other SEC
rule, regulation or order that may be adopted after the date hereof. The Plan
agrees to redeem shares in the circumstances described herein and to comply with
applicable terms and provisions. Also, in the event that the Distributor
suspends or terminates the offering of a Series or Class pursuant to Section
10.4(c) of this Agreement, the Plan, upon request by the Distributor, will
cooperate in taking appropriate action to withdraw its investment in the
respective Portfolio.
10.9. Confidentiality. The Plan will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
ARTICLE XI
Applicability to New Plan Investment Options
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Plan, any Series or Class of Trust shares. Such amendments may be made effective
by executing the form of amendment included on each schedule attached hereto.
The provisions of this Agreement shall be equally applicable to each such
Series, or Class, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all
the party.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust:
Michael S. Daubs
President
Ultra Series Fund
5910 Mineral Point Road
Madison, WI 53701
If to the Plan:
Michael B. Kitchen
Plan Committee Member
5910 Mineral Point Road
Madison, WI 53701
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Massachusetts, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act, Securities Exchange Act of 1934, as amended, ERISA and the rules,
regulations and rulings thereunder, including such exemptions from those
statutes, rules, and regulations as the SEC or the DOL may grant, and the
terms hereof shall be limited, interpreted and construed in accordance
therewith.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Plan, the Distributor or the Trust
without the prior written consent of the other parties.
13.4. Actions by the Plan. Where this Agreement requires or permits the
Plan to act (or refrain from action), the Plan's trustee(s), Plan committee (or
an authorized Plan committee member), or other appropriate fiduciary of the
Plan, as appropriate, [shall] [may] perform on behalf of the Plan.
13.5. Declaration of Trust. A copy of the Declaration of Trust of the Trust
is on file with the Secretary of State of the state of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
ULTRA SERIES FUND
(Trust)
Date: October 31, 1997 By: /s/ Michael S. Daubs
Name: Michael S. Daubs
Title: President, Ultra Series Fund
CUNA MUTUAL LIFE INSURANCE COMPANY
401(k)/THRIFT PLAN FOR AGENTS
(Plan)
Date: October 31, 1997 By: /s/ Connie J. Wiegeshaus
Name: Connie J. Wiegeshaus
Title: Plan Committee Member
<PAGE>
Schedule 1
Trust Classes and Series
Available Under the Plan
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Plan:
Plan Investment Option Trust Classes and Series
[Form of Amendment to Schedule 1]
Effective as of __________________, this Schedule 1 is hereby amended to reflect
the following changes in Trust Classes and Series:
Plan Investment Option Trust Classes and Series
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 1 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Life Insurance Company
401(k)/Thrift Plan for Agents
<PAGE>
Schedule 2
Investment Restrictions
Applicable to the Trust Portfolios
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
[Form of Amendment to Schedule 2]
Effective as of ___________________, this Schedule 2 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 2 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Life Insurance Company
401(K)/Thrift Plan For Agents
<PAGE>
Exhibit 23(h)5
Participation Agreement between Ultra Series Fund and
CUNA Mutual Pension Plan
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 31st day of October, 1997 by and
between ULTRA SERIES FUND, an unincorporated business trust formed under the
laws of Massachusetts (the "Trust") and CUNA MUTUAL PENSION PLAN (the "Plan").
WHEREAS, the Trust is a series-type open-end management investment company
offering shares of beneficial interest (the "Trust shares") consisting of one or
more separate series ("Series") of shares, each such Series representing an
interest in a particular investment portfolio of securities and other assets (a
"Portfolio"), and which Series may be subdivided into various classes
("Classes") with each such Class supporting a distinct charge and expense
arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by life insurance
companies and for qualified retirement plans; and
WHEREAS, the Plan is defined benefit plan established by the board of
directors of CUNA Mutual Life Insurance Company that qualifies under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986; and
WHEREAS, the Plan desires that the Trust serve as an investment vehicle for
a certain investment options of the Plan and the Trust desires to sell shares of
certain Series and/or Class(es) to the Plan;
NOW, THEREFORE, in consideration of their mutual promises, the Trust and
the Plan agree as follows:
ARTICLE I
Additional Definitions
1.1. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.2. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.3 "Distributor" -- CUNA Brokerage Services, Inc., the principal
underwriter of the Trust's shares.
1.4. "Participating Account" -- a separate account of a Participating
Insurance Company investing all or a portion of its assets in the Trust,
including separate accounts of CUNA Mutual Life Insurance Company.
1.5. "Participating Insurance Company" -- any insurance company
investing in the Trust on its behalf or on behalf of a Participating
Account, including CUNA Mutual Life Insurance Company.
1.6. "Participating Plan" -- any qualified retirement plan investing
in the Trust, including the Plan.
1.7. "Participating Investor" -- any Participating Account,
Participating Insurance Company or Participating Plan.
1.8. "Plan Participant" -- a participant in or beneficiary of the
Plan.
1.9. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts.
1.10. "Product Owners" -- owners of Products.
1.11. "Trust Board" -- the board of trustees of the Trust.
1.12. "Registration Statement" -- with respect to the Trust shares or
a class of Products, the registration statement filed with the SEC to
register such securities under the 1933 Act, or the most recently filed
amendment thereto, in either case in the form in which it was declared or
became effective. The Trust's Registration Statement is filed on Form N-1A
(File No. 2-87775).
1.13. "1940 Act Registration Statement" -- with respect to the Trust
or a Participating Account, the registration statement filed with the SEC
to register such person as an investment company under the 1940 Act, or the
most recently filed amendment thereto. The Trust's 1940 Act Registration
Statement is filed on Form N-1A (File No. 811-04815).
1.14. "Prospectus" -- with respect to shares of a Series (or Class) of
the Trust or a class of Products, each version of the definitive prospectus
or supplement thereto filed with the SEC pursuant to Rule 497 under the
1933 Act. With respect to any provision of this Agreement requiring a party
to take action in accordance with a Prospectus, such reference thereto
shall be deemed to be to the version for the applicable Series, Class or
Products last so filed prior to the taking of such action. For purposes of
Article IX, the term "Prospectus" shall include any statement of additional
information incorporated therein.
1.15. "Statement of Additional Information" -- with respect to the
Trust shares or a class of Products, each version of the definitive
statement of additional information or supplement thereto filed with the
SEC pursuant to Rule 497 under the 1933 Act. With respect to any provision
of this Agreement requiring a party to take action in accordance with a
Statement of Additional Information, such reference thereto shall be deemed
to be the last version so filed prior to the taking of such action.
1.16. "Summary Plan Description" -- the written description of the
Plan as required by ERISA.
1.17. "DOL" -- the U.S. Department of Labor.
1.18. "ERISA" -- the Employee Retirement Income Security Act of 1974,
as amended.
1.19. "SEC" -- the U.S. Securities and Exchange Commission.
1.20. "NASD" -- The National Association of Securities Dealers, Inc.
1.21. "1933 Act" -- the Securities Exchange Act of 1933, as amended.
1.22. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive
authority to distribute the Trust shares and to select which Series or
Classes of Trust shares shall be made available to Participating
Investors. Pursuant to such authority, and subject to Article X hereof,
the Distributor shall make available to the Plan for purchase, shares
of the Series and Classes listed on Schedule 1 to this Agreement, such
purchases to be effected at net asset value in accordance with Section
2.3 of this Agreement. Such Series and Classes shall be made available
to the Plan in accordance with the terms and provisions of this
Agreement until this Agreement is terminated pursuant to Article X or
the Distributor suspends or terminates the offering of shares of such
Series or Classes in the circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or
Classes of Trust shares in existence now or that may be established in
the future will be made available to the Plan only as the Trust and the
Distributor may so provide, subject to the Trust's rights set forth in
Article X to suspend or terminate the offering of shares of any Series
or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may
revoke the Distributor's authority pursuant to the terms and conditions
of its distribution agreement with the Distributor; and (ii) the Trust
reserves the right in its sole discretion to refuse to accept a request
for the purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Plan's request, any
full or fractional Trust shares held by the Plan, such redemptions to be
effected at net asset value in accordance with Section 2.3 of this Agreement.
Notwithstanding the foregoing, (i) the Plan shall not redeem Trust shares except
in the circumstances permitted in Article X of this Agreement, and (ii) the
Trust may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
Prospectus for such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Plan shall pay for shares of each Series or Class on
the same day that it provides actual notice to the Trust of a purchase
request for such shares. Payment for Trust shares shall be made in
Federal funds transmitted to the Trust by wire to be received by the
Trust by 12:00 noon New York Time on the day the Trust receives actual
notice of the purchase request for shares (unless the Trust determines
and so advises the Plan that sufficient proceeds are available from
redemption of shares of other Series or Classes effected pursuant to
redemption requests tendered by the Plan). In no event may proceeds
from the redemption of shares requested by the Plan pursuant to an
order received from a Plan Participant after the Trust's close of
business on any Business Day, be applied to the payment for shares for
which a purchase order was received prior to the Trust's close of
business on such day. If the issuance of shares is canceled because
Federal funds are not timely received, the Plan shall indemnify the
respective Portfolio with respect to all costs, expenses and losses
relating thereto. If Federal funds are not received on time, such funds
will be invested, and the Series or Class of shares purchased thereby
will be issued, as soon as practicable after actual receipt of such
funds at the net asset value next computed as indicated in Section 2.4
below.
(b) Payment for a Series or Class of shares redeemed by the
Plan shall be made in Federal funds transmitted by wire to the Plan or
any other person properly designated in writing by the Plan, such funds
normally to be transmitted by 6:00 p.m. New York Time on the next
Business Day after the Trust receives actual notice of the redemption
order for such Series or Class of shares (unless redemption proceeds
are to be applied to the purchase of Trust shares of other Series or
Classes in accordance with Section 2.3(b) of this Agreement), except
that the Trust reserves the right to redeem a Series or Class of shares
in assets other than cash and to delay payment of redemption proceeds
to the extent permitted by the 1940 Act, any rules or regulations or
orders thereunder, or the Trust's Prospectus. The Trust shall not bear
any responsibility whatsoever for the proper disbursement or crediting
of redemption proceeds by the Plan.
(c) Prior to the first purchase of any Trust shares hereunder,
the Plan and the Trust shall provide each other with all information
necessary to effect wire transmissions of Federal funds to the other
party and all other designated persons pursuant to such protocols and
security procedures as the parties may agree upon. Should such
information change thereafter, the Trust and the Plan, as applicable,
shall notify the other in writing of such changes, observing the same
protocols and security procedures, at least three Business Days in
advance of when such change is to take effect. The Plan and the Trust
shall observe customary procedures to protect the confidentiality and
security of such information, but the Trust shall not be liable to the
Plan for any breach of security.
(d) The procedures set forth herein are subject to any
additional terms set forth in the applicable Prospectus for the Series
or Class or by the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform
the Plan of the net asset value per share for each Series or Class available to
the Plan as soon as reasonably practicable after the net asset value per share
for such Series or Class is calculated. The Trust shall calculate such net asset
value in accordance with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Plan as soon as reasonably practicable of any income dividends or capital gain
distributions payable on any Series or Class of shares. The Plan hereby elects
to receive all such dividends and distributions as are payable on any Series or
Class shares in the form of additional shares of that Series or Class. The Plan
reserves the right to revoke this election and to receive all such dividends and
capital gain distributions in cash; to be effective, such revocation must be
made in writing and received by the Trust at least ten Business Days prior to a
dividend or distribution date. The Trust shall notify the Plan promptly of the
number of Series or Class shares so issued as payment of such dividends and
distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Plan. Purchase and
redemption orders for Trust shares shall be recorded in an appropriate ledger
for the Plan.
2.7. Pricing Errors. Any material errors in the calculation of net
asset value, dividends or capital gain information shall be reported to the Plan
immediately upon discovery. An error shall be deemed "material" based on the
Trust's interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. Neither the Trust or any
Portfolio, nor any of their affiliates shall be liable for any information
provided to the Plan pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Plan or any other
Participating Investor to the Trust.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell
Trust shares only to insurance companies and their separate accounts and to
persons or plans ("Qualified Persons") that qualify to purchase shares of the
Trust under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of any Participating Account to consider the portfolio
investments of a Portfolio of the Trust as constituting investments of any
Participating Account for the purpose of satisfying the diversification
requirements of Section 817(h). The Distributor and the Trust shall not sell
Trust shares to any insurance company or separate account unless an agreement
complying with Article VIII of this Agreement is in effect to govern such sales.
The Plan hereby represents and warrants that it is a Qualified Person.
ARTICLE III
Representations and Warranties
3.1. Plan. The Plan represents and warrants that: (i) the Plan is an
employee benefit plan that qualifies under Sections 401(a) and 501(a) of the
Code; (ii) the Plan is funded by a trust, validly existing, duly established and
maintained in accordance with applicable law; (iii) the Plan complies with the
provisions of ERISA applicable to such plans (including "Title I -Protection of
Employee Benefit Rights"); (iv) any interests or participations in the trust
funding the Plan are exempt from the registration requirements of Section 5 of
the 1933 Act pursuant to Section 3(a)(2) of the 1933 Act; (v) the trust funding
the Plan is excluded from the definition of an investment company in Section 3
of the 1940 Act by Section 3(c)(11) of the 1940 Act; and (vi) the Plan's
entering into and performing its obligations under this Agreement does not and
will not violate its declaration of trust or other plan documents, rules or
regulations, or any agreement to which it is a party. The Plan will notify the
Trust promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Massachusetts law; (ii) the Trust's 1940 Act Registration Statement has been
filed with the SEC in accordance with the provisions of the 1940 Act and the
Trust is duly registered as an open-end management investment company
thereunder; (iii) the Trust's Registration Statement has been declared effective
by the SEC; (iv) the Trust shares will be issued in compliance in all material
respects with all applicable federal laws; (v) the Trust will remain registered
under and will comply in all material respects with the 1940 Act during the term
of this Agreement; (vi) each Portfolio of the Trust intends to qualify as a
"regulated investment company" under Subchapter M of the Code and to comply with
the diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Portfolio are
in material compliance with any investment restrictions set forth on Schedule 2
to this Agreement.
3.3. Legal Authority. Each party represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate, partnership or trust action, as applicable, by such party, and, when
so executed and delivered, this Agreement will be the valid and binding
obligation of such party enforceable in accordance with its terms.
3.4. Bonding Requirement. Each party represents and warrants that all
of its trustees, officers, plan committee members, fiduciaries and employees
dealing with the money and/or securities of the Trust are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the amount required by the
applicable rules of the NASD, ERISA and the federal securities laws. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties shall make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, shall provide evidence thereof promptly to any other party
upon written request therefor, and shall notify the other parties promptly in
the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Voting of Trust Shares. With respect to any matter put to vote by
the holders of Trust shares ("Voting Shares"), the Plan's trustee(s) or
committee members will exercise the Plan's Voting Share rights.
4.3. Compliance. Under no circumstances will the Trust or any of its
affiliates (excluding Participating Investors) be responsible or liable in any
respect for any statements or representations made by them or their legal
advisers to the Plan or any Plan Participant concerning the applicability of any
federal or state laws, regulations or other authorities to the activities
contemplated by this Agreement.
4.4. Drafts of Regulatory Filings. The Trust and the Plan shall provide
to each other copies of draft versions of any Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations for voting instructions, applications for exemptions, requests for
"no-action" letters, and all amendments or supplements to any of the above,
prepared by or on behalf of either of them and that mentions the other party by
name. Such drafts shall be provided to the other party sufficiently in advance
of filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.5. Copies of Regulatory Filings. The Trust and the Plan shall provide
to each other at least one complete copy of all Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations of voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Trust, or the Plan, as the case may be, promptly after the filing
by or on behalf of each such party of such document with the DOL, the SEC, the
NASD, or other regulatory authorities (it being understood that this provision
is not intended to require the Trust to provide to the Plan copies of any such
documents prepared, filed or used by Participating Investors other than the
Plan).
4.6. Regulatory Responses. Each party shall promptly provide to all
other parties copies of responses to "no-action" requests, notices, orders and
other decisions or rulings received by such party with respect to any filing
covered by Section 4.6 of this Agreement.
4.7. Complaints and Proceedings
(a) The Trust shall immediately notify the Plan of: (i) the
issuance by any court or regulatory body of any stop order, cease and
desist order, or other similar order (but not including an order of a
regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Trust's Registration Statement or the
Prospectus of any Series or Class; (ii) any request by the SEC for any
amendment to the Trust's Registration Statement or the Prospectus of
any Series or Class; (iii) the initiation of any proceedings for that
purpose or for any other purposes relating to the registration or
offering of the Trust shares; or (iv) any other action or circumstances
that may prevent the lawful offer or sale of Trust shares or any Class
or Series in any state or jurisdiction, including, without limitation,
any circumstance in which (A) such shares are not registered and, in
all material respects, issued and sold in accordance with applicable
state and federal law or (B) such law precludes the use of such shares
as an underlying investment medium for Products or as a funding medium
for Participating Plans. The Trust will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(b) The Plan shall immediately notify the Trust and the
Distributor of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Plan's
investment in the Trust; (ii) any request by the DOL for any change to
the Plan's investment in the Trust; (iii) the initiation of any
proceedings for that purpose or for any other purposes relating to the
operation or investments of the Plan; or (iv) any other action or
circumstances that may prevent the lawful offer of interests in the
Plan, or the trust funding the Plan, in any state or jurisdiction,
including, without limitation, any circumstance in which the Plan or
such trust is not qualified and approved, and, in all material
respects, offered [operated] [and sold] in accordance with applicable
state and federal laws. The Plan will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when
it receives notice, or otherwise becomes aware of, the commencement of
any litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or
the operations of the Trust or the Plan.
(d) The Plan shall provide to the Trust any complaints it has
received from Plan Participants pertaining to the Trust or a Portfolio,
and the Trust and Distributor shall each provide to the Plan any
complaints it has received from Plan Participants relating to the Plan
or the Plan's investment in the Trust.
4.8. Cooperation. Each party hereto shall cooperate with the other
parties and all appropriate government authorities (including without limitation
the IRS, DOL, SEC, the NASD and state securities and insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry by any such authority relating to
this Agreement or the transactions contemplated hereby. However, such access
shall not extend to attorney-client privileged information.
ARTICLE V
Offering, Administration and Operation of the Plan
5.1. Offer of the Plan. The Plan shall be fully responsible as to the
Trust and the Distributor for offering the Plan to Plan Participants.
5.2. Administration of the Plan and Servicing of the Plan Participants.
The Plan shall be fully responsible as to the Trust for offering service and
administration of the Plan and for the administration of Plan Participants'
accounts.
5.3. Trust Prospectuses and Reports. In order to enable the Plan to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Plan with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (i) the Trust's Prospectus
for the Series and Classes listed on Schedule 1 and any supplement thereto; (ii)
each Statement of Additional Information and any supplement thereto; (iii) any
Trust proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Plan may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Plan at least 10 days
advance written notice when any such material shall become available, provided,
however, that in the case of a supplement, the Trust shall provide the Plan
notice reasonable in the circumstances, it being understood that circumstances
surrounding such supplement may not allow for advance notice. The Plan may not
alter any material so provided by the Trust or the Distributor (including
without limitation presenting or delivering such material in a different medium,
e.g., electronic or Internet) without the prior written consent of the Trust or
the Distributor.
5.4. Trade Names. Neither party shall use the other party's names,
logos, trademarks or service marks, whether registered or unregistered, without
the prior written consent of the other party, or after written consent therefor
has been revoked. The Plan shall not use in advertising, publicity or otherwise
the name of the Trust, Distributor, or any of their affiliates nor any trade
name, trademark, trade device, service mark, symbol or any abbreviation,
contraction or simulation thereof of the Trust, Distributor, or their affiliates
without the prior written consent of the Trust or the Distributor in each
instance.
5.5. Representations by Plan. Except with the prior written consent of
the Trust, the Plan shall not give any information or make any representations
or statements about the Trust or the Portfolios nor shall it authorize or allow
any other person to do so except information or representations contained in the
Trust's Registration Statement or the Trust's Prospectuses or in reports or
proxy statements for the Trust, or in sales literature or other promotional
material approved in writing by the Trust in accordance with this Article V, or
in published reports or statements of the Trust in the public domain.
5.6. Representations by Trust. Except with the prior written consent of
the Plan, the Trust shall not give any information or make any representations
on behalf of the Plan or concerning the Plan or the investment options of the
Plan, other than the information or representations contained in the Plan's
Summary Plan Description or in published reports of the Plan which are in the
public domain or in sales literature or other promotional material approved in
writing by the Plan in accordance with this Article V.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Portfolio of the Trust shall comply with
Section 817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Portfolio as an investment company underlying a Participating
Account, and the Trust shall notify the Plan immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
6.2. Subchapter M. Each Portfolio of the Trust shall maintain the
qualification of the Portfolio as a registered investment company (under
Subchapter M or any successor or similar provision), and the Trust shall notify
the Plan immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that it might not so qualify in the
future.
6.3. Products. The Plan shall help to ensure the continued treatment of
the Products as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
immediately upon having a reasonable basis for believing that continued
investment by it would cause such Products to cease to be so treated or might
cause such Products to cease to be so treated in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under
this Agreement (including expenses expressly assumed by such party pursuant to
this Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Trust shares under
the federal securities laws;
(b) preparation and filing with the SEC of the Trust's
Prospectuses, Trust's Statement of Additional Information,
Trust's Registration Statement, Trust proxy materials and
shareholder reports, and preparation of a camera-ready copy of
the foregoing;
(c) preparation of all statements and notices required by
any federal or state securities law;
(d) printing and mailing of all materials and reports required
to be provided by the Trust to its existing shareholders;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust,
including, without limitation, all fees due under Rule 24f-2
in connection with sales of Trust shares to qualified
retirement plans, custody, auditing, transfer agent and
advisory fees, fees for insurance coverage and Trust Board
fees; and
(g) any expenses permitted to be paid or assumed by a
Portfolio of the Trust pursuant to a plan, if any, under Rule
12b-1 under the 1940 Act.
7.3. Plan Expenses. Expenses incident to the Plan's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) qualification of the Plan under the Code;
(b) preparation and filing with the DOL of the Summary Plan
Description;
(c) the offering of interests in the trust funding the Plan;
(d) administration of the Plan;
(e) if applicable, solicitation of voting instructions with
respect to Trust proxy materials;
(f) payment of all applicable fees relating to the Plan;
(g) preparation, printing and dissemination of all
statements and notices to Plan Participants required by any
federal or state law other than those paid for by the Trust;
and
(h) preparation, printing and dissemination of all marketing
or offering materials for the Plan or investment options
under the Plan and Trust except where other arrangements are
made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation
to the Plan under this Agreement, except that if the Trust or any Series or
Class of shares adopts and implements a plan pursuant to Rule 12b-1 under the
1940 Act to finance distribution expenses, then payments may be made to the Plan
in accordance with such plan. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 and such formulation is required by
the 1940 Act or any rules or order thereunder, the Trust undertakes to have the
Trust Board, a majority of whom are not interested persons of the Trust,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that
the Trust has obtained from the SEC an order (the "Exemptive Order") granting
relief from various provisions of the 1940 Act and the rules thereunder to the
extent necessary to permit Trust shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and other Qualified Persons (as
defined in Section 2.8 hereof). The Exemptive Order requires the Trust and each
Participating Plan to comply with conditions and undertakings substantially as
provided in this Article VIII. The Trust will not enter into a participation
agreement with any other Participating Plan or Participating Insurance Company
(other than CUNA Mutual Life Insurance Company) unless it imposes the same
conditions and undertakings on that Participating Plan or Participating
Insurance Company as are imposed on the Plan pursuant to this Article VIII.
8.2. Plan Monitoring Requirements. The Plan will monitor its operations
and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans (and participants therein),
Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts.
8.3. Plan Reporting Requirements. The Plan shall report any conflicts
or potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Plan also shall
assist the Trust Board in carrying out its obligations including, but not
limited to providing such other information and reports as the Trust Board may
reasonably request.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans (and participants
therein), Product Owners of variable life insurance policies and Product Owners
of variable annuity contracts and determine what action, if any, should be taken
in response to those conflicts. A majority vote of trustees of the Trust who are
not interested persons of the Trust as defined in the 1940 Act (the
"disinterested trustees") shall represent a conclusive determination as to the
existence of a material irreconcilable conflict between or among the interests
of Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts and Participating Plans (and participants therein)
and as to whether any proposed action adequately remedies any material
irreconcilable conflict. The Trust Board shall give prompt written notice to the
Plan and other Participating Investors of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans (and participants therein), the Plan will, at its own
expense, take whatever action is necessary to remedy such conflict as it
adversely affects Plan Participants up to and including (i) establishing a new
registered management investment company, and (ii) withdrawing Plan assets from
the Trust subject to the conflict and reinvesting such assets in a different
investment medium (including another Portfolio of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Plan Participants, and, as appropriate, segregating the assets of any
group of such Plan Participants that votes in favor of such withdrawal, or
offering to such Plan Participants the option of making such a change. The Plan
will carry out the responsibility to take the foregoing action with a view only
to the interests of Plan Participants.
8.6. Expenses Associated with Remedial Action. In no event shall the
Trust be required to bear the expense of establishing a new funding medium for
the Plan.
8.7. Successor Rules. If and to the extent that Rule 6e-2 and Rule
6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provisions of the 1940 Act or the rules promulgated thereunder with respect
to mixed and shared funding on terms and conditions materially different from
those contained in the Exemptive Order, then (a) the Trust and/or the Plan, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Plan. The Plan hereby agrees to, and shall,
indemnify and hold harmless the Trust and each person who controls or is
affiliated with the Trust within the meaning of such terms under the 1933 Act or
1940 Act (but not any Participating Insurance Companies or Qualified Persons)
and any officer, trustee, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Summary Plan Description (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Plan by the Trust or the
Distributor for use in the Summary Plan Description for the Plan (or
any amendment or supplement to any of the foregoing); or
(b) arise out of any untrue statement of a material fact
contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made, if such statement
or omission was made in reliance upon and in conformity with
information furnished to the Trust in writing by or on behalf of the
Plan; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Plan or persons under its
control or subject to its authorization, including without limitation,
any Plan fiduciaries, administrators, broker-dealers or agents
authorized to offer interests in the Plan or manage the operations of
or provide administrative services to the Plan or Plan Participants,
with respect to the offer of interests in the Plan, or distribution of
Trust shares through the Plan, including, without limitation, any
impermissible or unauthorized representations about the Plan or the
Trust; or
(d) arise as a result of any failure by the Plan or persons
under its control (or subject to its authorization), including
fiduciaries and administrators, to provide services, furnish materials
or make payments as required under this Agreement; or
(e) arise out of any material breach by the Plan or persons
under its control (or subject to its authorization), including
fiduciaries or administrators, of this Agreement; or
(f) any breach of any warranties contained in Article III
hereof, any failure to transmit a request for redemption or purchase of
Trust shares or payment therefor on a timely basis in accordance with
the procedures set forth in Article II, or any unauthorized use of the
names or trade names of the Trust or the Distributor.
This indemnification is in addition to any liability that the Plan may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and
shall, indemnify and hold harmless the Plan and each person who controls or is
affiliated with the Plan within the meaning of such terms under the 1933 Act or
1940 Act and any officer, trustee, plan committee member, fiduciary, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any
Prospectus for Series or Classes or sales literature or other
promotional material of the Trust (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
by the Plan to the Trust for use in the Trust Registration Statement,
Trust Prospectus or sales literature or promotional material for the
Trust (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the offer of interests in the Plan
or any investment option under the Plan or sale of the Trust shares; or
(b) arise out of any untrue statement of a material fact
contained in the Summary Plan Description or sales literature or other
promotional material for the Plan or any investment option under the
Plan (or any amendment or supplement to any of the foregoing), or the
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
the Trust to the Plan; or
(c) arise out of or are based upon wrongful conduct of the
Trust or its Trustees or officers with respect to the sale of Trust
shares; or
(d) arise as a result of any failure by the Trust to provide
services, furnish materials or make payments as required under the
terms of this Agreement; or
(e) arise out of any material breach by the Trust of this
Agreement (including any breach of Section 6.1 of this Agreement and
any warranties contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Plan with
respect to any violation of ERISA or the Code, compliance with which is a
responsibility of the Plan under this Agreement or otherwise or as to which the
Plan failed to inform the Trust in accordance with Section 4.4 hereof. This
indemnification is in addition to any liability that the Trust may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the
event of an occurrence for which the Trust has agreed to indemnify the Plan, the
Plan shall seek indemnification from the Trust only in circumstances in which
the Trust is entitled to seek indemnification from a third party with respect to
the same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Plan is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates for
all purposes hereunder and will have no authority to act for or represent any of
them. In addition, no officer, trustee, committee member, or other fiduciary of
the Plan will be deemed to be an employee or agent of the Trust or any of its
affiliates solely because of this Agreement. The Plan will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto
acknowledge that the arrangement contemplated by this Agreement is not
exclusive; the Trust shares may be sold to other qualified plans, insurance
companies and other investors (subject to Section 2.8 hereof), provided,
however, that until this Agreement is terminated pursuant to this Article X.
10.3. Termination of Agreement. This Agreement shall not terminate
until (i) the Trust is dissolved, liquidated, or merged into another entity, or
(ii) as to any Portfolio that has been made available hereunder and the Plan has
confirmed in writing to the Trust that it no longer intends to invest in such
Portfolio. However, certain obligations of, or restrictions on, the parties to
this Agreement may terminate as provided in Sections 10.4 through 10.6 and the
Plan may be required to redeem Trust shares pursuant to Section 10.8 or in the
circumstances contemplated by Article VIII. Article IX and Sections 5.7, 10.8
and 10.9 shall survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the
Trust and the Distributor to make Trust shares available to the Plan for
purchase pursuant to Article II of this Agreement shall terminate at the option
of the Trust upon written notice to the Plan as provided below:
(a) upon institution of formal proceedings against the Plan,
or the Trust's reasonable determination that institution of such
proceedings is being considered by the IRS, DOL, the SEC, the insurance
commission of any state or any other regulatory body regarding the
Plan's duties under this Agreement, the operation of the Plan, the
administration of the Plan or the purchase of Trust shares, or an
expected or anticipated ruling, judgment or outcome which would, in the
Trust's reasonable judgment exercised in good faith, materially impair
the Plan's or Trust's ability to meet and perform the Plan's or Trust's
obligations and duties hereunder, such termination effective upon 15
days prior written notice;
(b) in the event that the Plan is not operated in accordance
with applicable federal and/or state law, such termination effective
immediately upon receipt of written notice;
(c) if the Trust or the Distributor suspends or terminates the
offering of Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if such action is
required by law or by regulatory authorities having jurisdiction or if,
in the sole discretion of the Trust or the Distributor acting in good
faith, suspension or termination is necessary in the best interests of
the shareholders of any Series or Class (it being understood that
"shareholders" for this purpose shall mean Product Owners, Plan
Participants or participants in other Participating Plans), such notice
effective immediately upon receipt of written notice, it being
understood that a lack of Participating Investor interest in a Series
or Class may be grounds for a suspension or termination as to such
Series or Class and that a suspension or termination shall apply only
to the specified Series or Class;
(d) upon the Plan's assignment of this Agreement unless the
Trust consents thereto, such termination effective upon 30 days prior
written notice;
(e) if the Plan is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the
Trust within 10 days after written notice of such breach has been
delivered to the Plan, such termination effective upon expiration of
such 10-day period; or
(f) upon the determination of the Trust s Board to dissolve,
liquidate or merge the Trust as contemplated by Section 10.3(i), upon
termination of the Agreement pursuant to Section 10.3(ii), or upon
notice from the Plan pursuant to Section 10.5 or 10.6, such termination
pursuant hereto to be effective upon 15 days prior written notice.
10.5. Termination of Investment in a Portfolio. The Plan may elect to
cease investing in a Portfolio or withdraw its investment in a Portfolio,
subject to compliance with applicable law, upon written notice to the Trust
within 15 days of the occurrence of any of the following events (unless provided
otherwise below):
(a) if the Trust informs the Plan that it will not cause such
Portfolio to comply with investment restrictions as requested by the
Plan (as indicated in schedule 2), and the Trust and the Plan are
unable to agree upon any reasonable alternative accommodations;
(b) if shares in such Portfolio are not reasonably available
to meet the requirements of the Plan as determined by the Plan
(including any non-availability as a result of notice given by the
Distributor pursuant to Section 10.4(c)), and the Distributor, after
receiving written notice from the Plan of such non-availability, fails
to make available, within 10 days after receipt of such notice, a
sufficient number of shares in such Portfolio or an alternate Portfolio
to meet the requirements of the Plan; or
(c) if such Portfolio fails to meet the diversification
requirements specified in Section 817(h) of the Code and any
regulations thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure;
Such termination shall apply only as to the affected Portfolio and shall not
apply to any other Portfolio in which the Plan invests.
10.6. Termination of Investment by the Plan. The Plan may elect to
cease investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Plan, or withdraw its
investment in the Trust, subject to compliance with applicable law, upon written
notice to the Trust within 15 days of the occurrence of any of the following
events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust
or the Distributor (but only with regard to the Trust) by the NASD, the
SEC or any state securities or insurance commission or any other
regulatory body;
(b) if, with respect to the Trust or a Portfolio, the Trust or
the Portfolio ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or
similar provision, or if the Plan reasonably believes that the Trust
may fail to so qualify, and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure within 30 days; or
(c) if the Trust is in material breach of a provision of this
Agreement, which breach has not been cured to the satisfaction of the
Plan within 10 days after written notice of such breach has been
delivered to the Trust.
10.7. Forced Redemption of Certain Participating Investor's Shares. The
parties understand and acknowledge that it is essential for compliance with
Section 817(h) of the Code that the Products qualify as annuity contracts or
life insurance policies, as applicable, under the Code. Accordingly, if any of
the Products cease to qualify as annuity contracts or life insurance policies,
as applicable, under the Code, or if the Trust reasonably believes that any such
Products may fail to so qualify, the Trust shall have the right to require the
issuing Participating Insurance Company to redeem Trust shares attributable to
such Products upon notice to the Participating Insurance Company and the Company
shall so redeem such Trust shares in order to ensure that the Trust, or any
Portfolio of the Trust, complies with the provisions of Section 817(h) of the
Code applicable to ownership of Trust shares. Likewise, if the Trust reasonably
believes that any investment by a Participating Plan in a Portfolio may cause
the Portfolio to fail to comply with Section 817(h) of the Code, then the Trust
shall have the right to require the Participating Plan to redeem Trust shares
attributable to the extent necessary to ensure that the Portfolio complies with
the provisions of Section 817(h) upon notice to the Participating Plan.
10.8. Plan Required to Redeem. The parties understand and acknowledge
that, for the reasons stated in Section 10.7 above, if the Trust reasonably
believes that any investment by the Plan in a Portfolio may cause the Portfolio
to fail to comply with Section 817(h) of the Code, the Trust shall have the
right, upon notice to the Plan, to require the Plan to redeem Trust shares to
the extent necessary to ensure that the Portfolio complies with the provisions
of Section 817(h). Notice to the Plan shall specify the period of time the Plan
has to redeem the Trust shares or to make other arrangements satisfactory to the
Trust and its counsel, such period of time to be determined with reference to
the requirements of Section 817(h) of the Code. In addition, the Plan may be
required to redeem Trust shares pursuant to action taken or request made by the
Trust Board in accordance with the Exemptive Order described in Article VIII or
any conditions or undertakings set forth or referenced therein, or other SEC
rule, regulation or order that may be adopted after the date hereof. The Plan
agrees to redeem shares in the circumstances described herein and to comply with
applicable terms and provisions. Also, in the event that the Distributor
suspends or terminates the offering of a Series or Class pursuant to Section
10.4(c) of this Agreement, the Plan, upon request by the Distributor, will
cooperate in taking appropriate action to withdraw its investment in the
respective Portfolio.
10.9. Confidentiality. The Plan will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
ARTICLE XI
Applicability to New Plan Investment Options
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Plan, any Series or Class of Trust shares. Such amendments may be made effective
by executing the form of amendment included on each schedule attached hereto.
The provisions of this Agreement shall be equally applicable to each such
Series, or Class, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all
the party.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this
Agreement is to be made in writing and shall be given:
If to the Trust:
Michael S. Daubs
President
Ultra Series Fund
5910 Mineral Point Road
Madison, WI 53701
If to the Plan:
Michael B. Kitchen
Plan Committee Member
5910 Mineral Point Road
Madison, WI 53701
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Massachusetts, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the
1933 Act, 1940 Act, Securities Exchange Act of 1934, as amended, ERISA
and the rules, regulations and rulings thereunder, including such
exemptions from those statutes, rules, and regulations as the SEC or
the DOL may grant, and the terms hereof shall be limited, interpreted
and construed in accordance therewith.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of
the provisions hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which together shall constitute one and the
same instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Plan, the Distributor or the Trust
without the prior written consent of the other parties.
13.4. Actions by the Plan. Where this Agreement requires or permits the
Plan to act (or refrain from action), the Plan's trustee(s), Plan committee (or
an authorized Plan committee member), or other appropriate fiduciary of the
Plan, as appropriate, [shall] [may] perform on behalf of the Plan.
13.5. Declaration of Trust. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of State of the state of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as trustees, and is not binding upon any of the Trustees,
officers or shareholders of the Trust individually, but binding only upon the
assets and property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
ULTRA SERIES FUND
(Trust)
Date: October 31, 1997 By: /s/ Michael S. Daubs
Name: Michael S. Daubs
Title: President, Ultra Series Fund
CUNA MUTUAL PENSION PLAN
(Plan)
Date: October 31, 1997 By: /s/ Connie J. Wiegeshaus
Name: Connie J. Wiegeshaus
Title: Plan Committee Member
<PAGE>
Schedule 1
Trust Classes and Series
Available Under the Plan
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Plan:
Plan Trust Classes and Series
[Form of Amendment to Schedule 1]
Effective as of __________________, this Schedule 1 is hereby amended to reflect
the following changes in Trust Classes and Series:
Plan Trust Classes and Series
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 1 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Pension Plan
<PAGE>
Schedule 2
Investment Restrictions
Applicable to the Trust Portfolios
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
[Form of Amendment to Schedule 2]
Effective as of ___________________, this Schedule 2 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 2 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Pension Plan
<PAGE>
Exhibit 23(h)6
Participation Agreement between Ultra Series Fund and
CUNA Mutual Savings Plan
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 31st day of October, 1997 by
and between ULTRA SERIES FUND, an unincorporated business trust formed under the
laws of Massachusetts (the "Trust") and CUNA MUTUAL SAVINGS PLAN (the "Plan").
WHEREAS, the Trust is a series-type open-end management investment
company offering shares of beneficial interest (the "Trust shares") consisting
of one or more separate series ("Series") of shares, each such Series
representing an interest in a particular investment portfolio of securities and
other assets (a "Portfolio"), and which Series may be subdivided into various
classes ("Classes") with each such Class supporting a distinct charge and
expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by life insurance
companies and for qualified retirement plans; and
WHEREAS, the Plan is defined contribution plan established by the board
of directors of CUNA Mutual Life Insurance Company that qualifies under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986; and
WHEREAS, the Plan desires that the Trust serve as an investment vehicle
for a certain investment options of the Plan and the Trust desires to sell
shares of certain Series and/or Class(es) to the Plan;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Plan agree as follows:
ARTICLE I
Additional Definitions
1.1. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.2. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.3 "Distributor" -- CUNA Brokerage Services, Inc., the principal
underwriter of the Trust's shares.
1.4. "Participating Account" -- a separate account of a Participating
Insurance Company investing all or a portion of its assets in the Trust,
including separate accounts of CUNA Mutual Life Insurance Company.
1.5. "Participating Insurance Company" -- any insurance company
investing in the Trust on its behalf or on behalf of a Participating
Account, including CUNA Mutual Life Insurance Company.
1.6. "Participating Plan" -- any qualified retirement plan investing
in the Trust, including the Plan.
1.7. "Participating Investor" -- any Participating Account,
Participating Insurance Company or Participating Plan.
1.8. "Plan Participant" -- a participant in or beneficiary of the
Plan.
1.9. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts.
1.10. "Product Owners" -- owners of Products.
1.11. "Trust Board" -- the board of trustees of the Trust.
1.12. "Registration Statement" -- with respect to the Trust shares or
a class of Products, the registration statement filed with the SEC to
register such securities under the 1933 Act, or the most recently filed
amendment thereto, in either case in the form in which it was declared or
became effective. The Trust's Registration Statement is filed on Form N-1A
(File No. 2-87775).
1.13. "1940 Act Registration Statement" -- with respect to the Trust
or a Participating Account, the registration statement filed with the SEC
to register such person as an investment company under the 1940 Act, or the
most recently filed amendment thereto. The Trust's 1940 Act Registration
Statement is filed on Form N-1A (File No. 811-04815).
1.14. "Prospectus" -- with respect to shares of a Series (or Class) of
the Trust or a class of Products, each version of the definitive prospectus
or supplement thereto filed with the SEC pursuant to Rule 497 under the
1933 Act. With respect to any provision of this Agreement requiring a party
to take action in accordance with a Prospectus, such reference thereto
shall be deemed to be to the version for the applicable Series, Class or
Products last so filed prior to the taking of such action. For purposes of
Article IX, the term "Prospectus" shall include any statement of additional
information incorporated therein.
1.15. "Statement of Additional Information" -- with respect to the
Trust shares or a class of Products, each version of the definitive
statement of additional information or supplement thereto filed with the
SEC pursuant to Rule 497 under the 1933 Act. With respect to any provision
of this Agreement requiring a party to take action in accordance with a
Statement of Additional Information, such reference thereto shall be deemed
to be the last version so filed prior to the taking of such action.
1.16. "Summary Plan Description" -- the written description of the
Plan as required by ERISA.
1.17. "DOL" -- the U.S. Department of Labor.
1.18. "ERISA" -- the Employee Retirement Income Security Act of 1974,
as amended.
1.19. "SEC" -- the U.S. Securities and Exchange Commission.
1.20. "NASD" -- The National Association of Securities Dealers, Inc.
1.21. "1933 Act" -- the Securities Exchange Act of 1933, as amended.
1.22. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive
authority to distribute the Trust shares and to select which Series or
Classes of Trust shares shall be made available to Participating
Investors. Pursuant to such authority, and subject to Article X hereof,
the Distributor shall make available to the Plan for purchase, shares
of the Series and Classes listed on Schedule 1 to this Agreement, such
purchases to be effected at net asset value in accordance with Section
2.3 of this Agreement. Such Series and Classes shall be made available
to the Plan in accordance with the terms and provisions of this
Agreement until this Agreement is terminated pursuant to Article X or
the Distributor suspends or terminates the offering of shares of such
Series or Classes in the circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or
Classes of Trust shares in existence now or that may be established in
the future will be made available to the Plan only as the Trust and the
Distributor may so provide, subject to the Trust's rights set forth in
Article X to suspend or terminate the offering of shares of any Series
or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may
revoke the Distributor's authority pursuant to the terms and conditions
of its distribution agreement with the Distributor; and (ii) the Trust
reserves the right in its sole discretion to refuse to accept a request
for the purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Plan's request, any
full or fractional Trust shares held by the Plan, such redemptions to be
effected at net asset value in accordance with Section 2.3 of this Agreement.
Notwithstanding the foregoing, (i) the Plan shall not redeem Trust shares except
in the circumstances permitted in Article X of this Agreement, and (ii) the
Trust may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
Prospectus for such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Plan shall pay for shares of each Series or Class on
the same day that it provides actual notice to the Trust of a purchase
request for such shares. Payment for Trust shares shall be made in
Federal funds transmitted to the Trust by wire to be received by the
Trust by 12:00 noon New York Time on the day the Trust receives actual
notice of the purchase request for shares (unless the Trust determines
and so advises the Plan that sufficient proceeds are available from
redemption of shares of other Series or Classes effected pursuant to
redemption requests tendered by the Plan). In no event may proceeds
from the redemption of shares requested by the Plan pursuant to an
order received from a Plan Participant after the Trust's close of
business on any Business Day, be applied to the payment for shares for
which a purchase order was received prior to the Trust's close of
business on such day. If the issuance of shares is canceled because
Federal funds are not timely received, the Plan shall indemnify the
respective Portfolio with respect to all costs, expenses and losses
relating thereto. If Federal funds are not received on time, such funds
will be invested, and the Series or Class of shares purchased thereby
will be issued, as soon as practicable after actual receipt of such
funds at the net asset value next computed as indicated in Section 2.4
below.
(b) Payment for a Series or Class of shares redeemed by the
Plan shall be made in Federal funds transmitted by wire to the Plan or
any other person properly designated in writing by the Plan, such funds
normally to be transmitted by 6:00 p.m. New York Time on the next
Business Day after the Trust receives actual notice of the redemption
order for such Series or Class of shares (unless redemption proceeds
are to be applied to the purchase of Trust shares of other Series or
Classes in accordance with Section 2.3(b) of this Agreement), except
that the Trust reserves the right to redeem a Series or Class of shares
in assets other than cash and to delay payment of redemption proceeds
to the extent permitted by the 1940 Act, any rules or regulations or
orders thereunder, or the Trust's Prospectus. The Trust shall not bear
any responsibility whatsoever for the proper disbursement or crediting
of redemption proceeds by the Plan.
(c) Prior to the first purchase of any Trust shares hereunder,
the Plan and the Trust shall provide each other with all information
necessary to effect wire transmissions of Federal funds to the other
party and all other designated persons pursuant to such protocols and
security procedures as the parties may agree upon. Should such
information change thereafter, the Trust and the Plan, as applicable,
shall notify the other in writing of such changes, observing the same
protocols and security procedures, at least three Business Days in
advance of when such change is to take effect. The Plan and the Trust
shall observe customary procedures to protect the confidentiality and
security of such information, but the Trust shall not be liable to the
Plan for any breach of security.
(d) The procedures set forth herein are subject to any
additional terms set forth in the applicable Prospectus for the Series
or Class or by the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform
the Plan of the net asset value per share for each Series or Class available to
the Plan as soon as reasonably practicable after the net asset value per share
for such Series or Class is calculated. The Trust shall calculate such net asset
value in accordance with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Plan as soon as reasonably practicable of any income dividends or capital gain
distributions payable on any Series or Class of shares. The Plan hereby elects
to receive all such dividends and distributions as are payable on any Series or
Class shares in the form of additional shares of that Series or Class. The Plan
reserves the right to revoke this election and to receive all such dividends and
capital gain distributions in cash; to be effective, such revocation must be
made in writing and received by the Trust at least ten Business Days prior to a
dividend or distribution date. The Trust shall notify the Plan promptly of the
number of Series or Class shares so issued as payment of such dividends and
distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Plan. Purchase and
redemption orders for Trust shares shall be recorded in an appropriate ledger
for the Plan.
2.7. Pricing Errors. Any material errors in the calculation of net
asset value, dividends or capital gain information shall be reported to the Plan
immediately upon discovery. An error shall be deemed "material" based on the
Trust's interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. Neither the Trust or any
Portfolio, nor any of their affiliates shall be liable for any information
provided to the Plan pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Plan or any other
Participating Investor to the Trust.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell
Trust shares only to insurance companies and their separate accounts and to
persons or plans ("Qualified Persons") that qualify to purchase shares of the
Trust under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of any Participating Account to consider the portfolio
investments of a Portfolio of the Trust as constituting investments of any
Participating Account for the purpose of satisfying the diversification
requirements of Section 817(h). The Distributor and the Trust shall not sell
Trust shares to any insurance company or separate account unless an agreement
complying with Article VIII of this Agreement is in effect to govern such sales.
The Plan hereby represents and warrants that it is a Qualified Person.
ARTICLE III
Representations and Warranties
3.1. Plan. The Plan represents and warrants that: (i) the Plan is an
employee benefit plan that qualifies under Sections 401(a) and 501(a) of the
Code; (ii) the Plan is funded by a trust, validly existing, duly established and
maintained in accordance with applicable law; (iii) the Plan complies with the
provisions of ERISA applicable to such plans (including "Title I -Protection of
Employee Benefit Rights"); (iv) any interests or participations in the trust
funding the Plan are exempt from the registration requirements of Section 5 of
the 1933 Act pursuant to Section 3(a)(2) of the 1933 Act; (v) the trust funding
the Plan is excluded from the definition of an investment company in Section 3
of the 1940 Act by Section 3(c)(11) of the 1940 Act; and (vi) the Plan's
entering into and performing its obligations under this Agreement does not and
will not violate its declaration of trust or other plan documents, rules or
regulations, or any agreement to which it is a party. The Plan will notify the
Trust promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Massachusetts law; (ii) the Trust's 1940 Act Registration Statement has been
filed with the SEC in accordance with the provisions of the 1940 Act and the
Trust is duly registered as an open-end management investment company
thereunder; (iii) the Trust's Registration Statement has been declared effective
by the SEC; (iv) the Trust shares will be issued in compliance in all material
respects with all applicable federal laws; (v) the Trust will remain registered
under and will comply in all material respects with the 1940 Act during the term
of this Agreement; (vi) each Portfolio of the Trust intends to qualify as a
"regulated investment company" under Subchapter M of the Code and to comply with
the diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Portfolio are
in material compliance with any investment restrictions set forth on Schedule 2
to this Agreement.
3.3. Legal Authority. Each party represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate, partnership or trust action, as applicable, by such party, and, when
so executed and delivered, this Agreement will be the valid and binding
obligation of such party enforceable in accordance with its terms.
3.4. Bonding Requirement. Each party represents and warrants that all
of its trustees, officers, plan committee members, fiduciaries and employees
dealing with the money and/or securities of the Trust are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the amount required by the
applicable rules of the NASD, ERISA and the federal securities laws. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties shall make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, shall provide evidence thereof promptly to any other party
upon written request therefor, and shall notify the other parties promptly in
the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Voting of Trust Shares. With respect to any matter put to vote by
the holders of Trust shares ("Voting Shares"), the Plan's trustee(s) or
committee members will exercise the Plan's Voting Share rights.
4.3. Compliance. Under no circumstances will the Trust or any of its
affiliates (excluding Participating Investors) be responsible or liable in any
respect for any statements or representations made by them or their legal
advisers to the Plan or any Plan Participant concerning the applicability of any
federal or state laws, regulations or other authorities to the activities
contemplated by this Agreement.
4.4. Drafts of Regulatory Filings. The Trust and the Plan shall provide
to each other copies of draft versions of any Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations for voting instructions, applications for exemptions, requests for
"no-action" letters, and all amendments or supplements to any of the above,
prepared by or on behalf of either of them and that mentions the other party by
name. Such drafts shall be provided to the other party sufficiently in advance
of filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.5. Copies of Regulatory Filings. The Trust and the Plan shall provide
to each other at least one complete copy of all Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations of voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Trust, or the Plan, as the case may be, promptly after the filing
by or on behalf of each such party of such document with the DOL, the SEC, the
NASD, or other regulatory authorities (it being understood that this provision
is not intended to require the Trust to provide to the Plan copies of any such
documents prepared, filed or used by Participating Investors other than the
Plan).
4.6. Regulatory Responses. Each party shall promptly provide to all
other parties copies of responses to "no-action" requests, notices, orders and
other decisions or rulings received by such party with respect to any filing
covered by Section 4.6 of this Agreement.
4.7. Complaints and Proceedings
(a) The Trust shall immediately notify the Plan of: (i) the
issuance by any court or regulatory body of any stop order, cease and
desist order, or other similar order (but not including an order of a
regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Trust's Registration Statement or the
Prospectus of any Series or Class; (ii) any request by the SEC for any
amendment to the Trust's Registration Statement or the Prospectus of
any Series or Class; (iii) the initiation of any proceedings for that
purpose or for any other purposes relating to the registration or
offering of the Trust shares; or (iv) any other action or circumstances
that may prevent the lawful offer or sale of Trust shares or any Class
or Series in any state or jurisdiction, including, without limitation,
any circumstance in which (A) such shares are not registered and, in
all material respects, issued and sold in accordance with applicable
state and federal law or (B) such law precludes the use of such shares
as an underlying investment medium for Products or as a funding medium
for Participating Plans. The Trust will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(b) The Plan shall immediately notify the Trust and the
Distributor of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Plan's
investment in the Trust; (ii) any request by the DOL for any change to
the Plan's investment in the Trust; (iii) the initiation of any
proceedings for that purpose or for any other purposes relating to the
operation or investments of the Plan; or (iv) any other action or
circumstances that may prevent the lawful offer of interests in the
Plan, or the trust funding the Plan, in any state or jurisdiction,
including, without limitation, any circumstance in which the Plan or
such trust is not qualified and approved, and, in all material
respects, offered [operated] [and sold] in accordance with applicable
state and federal laws. The Plan will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when
it receives notice, or otherwise becomes aware of, the commencement of
any litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or
the operations of the Trust or the Plan.
(d) The Plan shall provide to the Trust any complaints it has
received from Plan Participants pertaining to the Trust or a Portfolio,
and the Trust and Distributor shall each provide to the Plan any
complaints it has received from Plan Participants relating to the Plan
or the Plan's investment in the Trust.
4.8. Cooperation. Each party hereto shall cooperate with the other
parties and all appropriate government authorities (including without limitation
the IRS, DOL, SEC, the NASD and state securities and insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry by any such authority relating to
this Agreement or the transactions contemplated hereby. However, such access
shall not extend to attorney-client privileged information.
ARTICLE V
Offering, Administration and Operation of the Plan
5.1. Offer of the Plan. The Plan shall be fully responsible as to the
Trust and the Distributor for offering the Plan to Plan Participants.
5.2. Administration of the Plan and Servicing of the Plan Participants.
The Plan shall be fully responsible as to the Trust for offering service and
administration of the Plan and for the administration of Plan Participants'
accounts.
5.3. Trust Prospectuses and Reports. In order to enable the Plan to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Plan with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (i) the Trust's Prospectus
for the Series and Classes listed on Schedule 1 and any supplement thereto; (ii)
each Statement of Additional Information and any supplement thereto; (iii) any
Trust proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Plan may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Plan at least 10 days
advance written notice when any such material shall become available, provided,
however, that in the case of a supplement, the Trust shall provide the Plan
notice reasonable in the circumstances, it being understood that circumstances
surrounding such supplement may not allow for advance notice. The Plan may not
alter any material so provided by the Trust or the Distributor (including
without limitation presenting or delivering such material in a different medium,
e.g., electronic or Internet) without the prior written consent of the Trust or
the Distributor.
5.4. Trade Names. Neither party shall use the other party's names,
logos, trademarks or service marks, whether registered or unregistered, without
the prior written consent of the other party, or after written consent therefor
has been revoked. The Plan shall not use in advertising, publicity or otherwise
the name of the Trust, Distributor, or any of their affiliates nor any trade
name, trademark, trade device, service mark, symbol or any abbreviation,
contraction or simulation thereof of the Trust, Distributor, or their affiliates
without the prior written consent of the Trust or the Distributor in each
instance.
5.5. Representations by Plan. Except with the prior written consent of
the Trust, the Plan shall not give any information or make any representations
or statements about the Trust or the Portfolios nor shall it authorize or allow
any other person to do so except information or representations contained in the
Trust's Registration Statement or the Trust's Prospectuses or in reports or
proxy statements for the Trust, or in sales literature or other promotional
material approved in writing by the Trust in accordance with this Article V, or
in published reports or statements of the Trust in the public domain.
5.6. Representations by Trust. Except with the prior written consent of
the Plan, the Trust shall not give any information or make any representations
on behalf of the Plan or concerning the Plan or the investment options of the
Plan, other than the information or representations contained in the Plan's
Summary Plan Description or in published reports of the Plan which are in the
public domain or in sales literature or other promotional material approved in
writing by the Plan in accordance with this Article V.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Portfolio of the Trust shall comply with
Section 817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Portfolio as an investment company underlying a Participating
Account, and the Trust shall notify the Plan immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
6.2. Subchapter M. Each Portfolio of the Trust shall maintain the
qualification of the Portfolio as a registered investment company (under
Subchapter M or any successor or similar provision), and the Trust shall notify
the Plan immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that it might not so qualify in the
future.
6.3. Products. The Plan shall help to ensure the continued treatment of
the Products as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
immediately upon having a reasonable basis for believing that continued
investment by it would cause such Products to cease to be so treated or might
cause such Products to cease to be so treated in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under
this Agreement (including expenses expressly assumed by such party pursuant to
this Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Trust shares under
the federal securities laws;
(b) preparation and filing with the SEC of the Trust's
Prospectuses, Trust's Statement of Additional Information,
Trust's Registration Statement, Trust proxy materials and
shareholder reports, and preparation of a camera-ready copy of
the foregoing;
(c) preparation of all statements and notices required by
any federal or state securities law;
(d) printing and mailing of all materials and reports required
to be provided by the Trust to its existing shareholders;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust,
including, without limitation, all fees due under Rule 24f-2
in connection with sales of Trust shares to qualified
retirement plans, custody, auditing, transfer agent and
advisory fees, fees for insurance coverage and Trust Board
fees; and
(g) any expenses permitted to be paid or assumed by a
Portfolio of the Trust pursuant to a plan, if any, under Rule
12b-1 under the 1940 Act.
7.3. Plan Expenses. Expenses incident to the Plan's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) qualification of the Plan under the Code;
(b) preparation and filing with the DOL of the Summary Plan
Description;
(c) the offering of interests in the trust funding the Plan;
(d) administration of the Plan;
(e) if applicable, solicitation of voting instructions with
respect to Trust proxy materials;
(f) payment of all applicable fees relating to the Plan;
(g) preparation, printing and dissemination of all
statements and notices to Plan Participants required by any
federal or state law other than those paid for by the Trust;
and
(h) preparation, printing and dissemination of all marketing
or offering materials for the Plan or investment options
under the Plan and Trust except where other arrangements are
made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation
to the Plan under this Agreement, except that if the Trust or any Series or
Class of shares adopts and implements a plan pursuant to Rule 12b-1 under the
1940 Act to finance distribution expenses, then payments may be made to the Plan
in accordance with such plan. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 and such formulation is required by
the 1940 Act or any rules or order thereunder, the Trust undertakes to have the
Trust Board, a majority of whom are not interested persons of the Trust,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that
the Trust has obtained from the SEC an order (the "Exemptive Order") granting
relief from various provisions of the 1940 Act and the rules thereunder to the
extent necessary to permit Trust shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and other Qualified Persons (as
defined in Section 2.8 hereof). The Exemptive Order requires the Trust and each
Participating Plan to comply with conditions and undertakings substantially as
provided in this Article VIII. The Trust will not enter into a participation
agreement with any other Participating Plan or Participating Insurance Company
(other than CUNA Mutual Life Insurance Company) unless it imposes the same
conditions and undertakings on that Participating Plan or Participating
Insurance Company as are imposed on the Plan pursuant to this Article VIII.
8.2. Plan Monitoring Requirements. The Plan will monitor its operations
and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans (and participants therein),
Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts.
8.3. Plan Reporting Requirements. The Plan shall report any conflicts
or potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Plan also shall
assist the Trust Board in carrying out its obligations including, but not
limited to providing such other information and reports as the Trust Board may
reasonably request.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans (and participants
therein), Product Owners of variable life insurance policies and Product Owners
of variable annuity contracts and determine what action, if any, should be taken
in response to those conflicts. A majority vote of trustees of the Trust who are
not interested persons of the Trust as defined in the 1940 Act (the
"disinterested trustees") shall represent a conclusive determination as to the
existence of a material irreconcilable conflict between or among the interests
of Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts and Participating Plans (and participants therein)
and as to whether any proposed action adequately remedies any material
irreconcilable conflict. The Trust Board shall give prompt written notice to the
Plan and other Participating Investors of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans (and participants therein), the Plan will, at its own
expense, take whatever action is necessary to remedy such conflict as it
adversely affects Plan Participants up to and including (i) establishing a new
registered management investment company, and (ii) withdrawing Plan assets from
the Trust subject to the conflict and reinvesting such assets in a different
investment medium (including another Portfolio of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Plan Participants, and, as appropriate, segregating the assets of any
group of such Plan Participants that votes in favor of such withdrawal, or
offering to such Plan Participants the option of making such a change. The Plan
will carry out the responsibility to take the foregoing action with a view only
to the interests of Plan Participants.
8.6. Expenses Associated with Remedial Action. In no event shall the
Trust be required to bear the expense of establishing a new funding medium for
the Plan.
8.7. Successor Rules. If and to the extent that Rule 6e-2 and Rule
6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provisions of the 1940 Act or the rules promulgated thereunder with respect
to mixed and shared funding on terms and conditions materially different from
those contained in the Exemptive Order, then (a) the Trust and/or the Plan, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Plan. The Plan hereby agrees to, and shall,
indemnify and hold harmless the Trust and each person who controls or is
affiliated with the Trust within the meaning of such terms under the 1933 Act or
1940 Act (but not any Participating Insurance Companies or Qualified Persons)
and any officer, trustee, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Summary Plan Description (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Plan by the Trust or the
Distributor for use in the Summary Plan Description for the Plan (or
any amendment or supplement to any of the foregoing); or
(b) arise out of any untrue statement of a material fact
contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made, if such statement
or omission was made in reliance upon and in conformity with
information furnished to the Trust in writing by or on behalf of the
Plan; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Plan or persons under its
control or subject to its authorization, including without limitation,
any Plan fiduciaries, administrators, broker-dealers or agents
authorized to offer interests in the Plan or manage the operations of
or provide administrative services to the Plan or Plan Participants,
with respect to the offer of interests in the Plan, or distribution of
Trust shares through the Plan, including, without limitation, any
impermissible or unauthorized representations about the Plan or the
Trust; or
(d) arise as a result of any failure by the Plan or persons
under its control (or subject to its authorization), including
fiduciaries and administrators, to provide services, furnish materials
or make payments as required under this Agreement; or
(e) arise out of any material breach by the Plan or persons
under its control (or subject to its authorization), including
fiduciaries or administrators, of this Agreement; or
(f) any breach of any warranties contained in Article III
hereof, any failure to transmit a request for redemption or purchase of
Trust shares or payment therefor on a timely basis in accordance with
the procedures set forth in Article II, or any unauthorized use of the
names or trade names of the Trust or the Distributor.
This indemnification is in addition to any liability that the Plan may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and
shall, indemnify and hold harmless the Plan and each person who controls or is
affiliated with the Plan within the meaning of such terms under the 1933 Act or
1940 Act and any officer, trustee, plan committee member, fiduciary, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any
Prospectus for Series or Classes or sales literature or other
promotional material of the Trust (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
by the Plan to the Trust for use in the Trust Registration Statement,
Trust Prospectus or sales literature or promotional material for the
Trust (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the offer of interests in the Plan
or any investment option under the Plan or sale of the Trust shares; or
(b) arise out of any untrue statement of a material fact
contained in the Summary Plan Description or sales literature or other
promotional material for the Plan or any investment option under the
Plan (or any amendment or supplement to any of the foregoing), or the
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
the Trust to the Plan; or
(c) arise out of or are based upon wrongful conduct of the
Trust or its Trustees or officers with respect to the sale of Trust
shares; or
(d) arise as a result of any failure by the Trust to provide
services, furnish materials or make payments as required under the
terms of this Agreement; or
(e) arise out of any material breach by the Trust of this
Agreement (including any breach of Section 6.1 of this Agreement and
any warranties contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Plan with
respect to any violation of ERISA or the Code, compliance with which is a
responsibility of the Plan under this Agreement or otherwise or as to which the
Plan failed to inform the Trust in accordance with Section 4.4 hereof. This
indemnification is in addition to any liability that the Trust may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the
event of an occurrence for which the Trust has agreed to indemnify the Plan, the
Plan shall seek indemnification from the Trust only in circumstances in which
the Trust is entitled to seek indemnification from a third party with respect to
the same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Plan is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates for
all purposes hereunder and will have no authority to act for or represent any of
them. In addition, no officer, trustee, committee member, or other fiduciary of
the Plan will be deemed to be an employee or agent of the Trust or any of its
affiliates solely because of this Agreement. The Plan will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto
acknowledge that the arrangement contemplated by this Agreement is not
exclusive; the Trust shares may be sold to other qualified plans, insurance
companies and other investors (subject to Section 2.8 hereof), provided,
however, that until this Agreement is terminated pursuant to this Article X.
10.3. Termination of Agreement. This Agreement shall not terminate
until (i) the Trust is dissolved, liquidated, or merged into another entity, or
(ii) as to any Portfolio that has been made available hereunder and the Plan has
confirmed in writing to the Trust that it no longer intends to invest in such
Portfolio. However, certain obligations of, or restrictions on, the parties to
this Agreement may terminate as provided in Sections 10.4 through 10.6 and the
Plan may be required to redeem Trust shares pursuant to Section 10.8 or in the
circumstances contemplated by Article VIII. Article IX and Sections 5.7, 10.8
and 10.9 shall survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the
Trust and the Distributor to make Trust shares available to the Plan for
purchase pursuant to Article II of this Agreement shall terminate at the option
of the Trust upon written notice to the Plan as provided below:
(a) upon institution of formal proceedings against the Plan,
or the Trust's reasonable determination that institution of such
proceedings is being considered by the IRS, DOL, the SEC, the insurance
commission of any state or any other regulatory body regarding the
Plan's duties under this Agreement, the operation of the Plan, the
administration of the Plan or the purchase of Trust shares, or an
expected or anticipated ruling, judgment or outcome which would, in the
Trust's reasonable judgment exercised in good faith, materially impair
the Plan's or Trust's ability to meet and perform the Plan's or Trust's
obligations and duties hereunder, such termination effective upon 15
days prior written notice;
(b) in the event that the Plan is not operated in accordance
with applicable federal and/or state law, such termination effective
immediately upon receipt of written notice;
(c) if the Trust or the Distributor suspends or terminates the
offering of Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if such action is
required by law or by regulatory authorities having jurisdiction or if,
in the sole discretion of the Trust or the Distributor acting in good
faith, suspension or termination is necessary in the best interests of
the shareholders of any Series or Class (it being understood that
"shareholders" for this purpose shall mean Product Owners, Plan
Participants or participants in other Participating Plans), such notice
effective immediately upon receipt of written notice, it being
understood that a lack of Participating Investor interest in a Series
or Class may be grounds for a suspension or termination as to such
Series or Class and that a suspension or termination shall apply only
to the specified Series or Class;
(d) upon the Plan's assignment of this Agreement unless the
Trust consents thereto, such termination effective upon 30 days prior
written notice;
(e) if the Plan is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the
Trust within 10 days after written notice of such breach has been
delivered to the Plan, such termination effective upon expiration of
such 10-day period; or
(f) upon the determination of the Trust s Board to dissolve,
liquidate or merge the Trust as contemplated by Section 10.3(i), upon
termination of the Agreement pursuant to Section 10.3(ii), or upon
notice from the Plan pursuant to Section 10.5 or 10.6, such termination
pursuant hereto to be effective upon 15 days prior written notice.
10.5. Termination of Investment in a Portfolio. The Plan may elect to
cease investing in a Portfolio or withdraw its investment in a Portfolio,
subject to compliance with applicable law, upon written notice to the Trust
within 15 days of the occurrence of any of the following events (unless provided
otherwise below):
(a) if the Trust informs the Plan that it will not cause such
Portfolio to comply with investment restrictions as requested by the
Plan (as indicated in schedule 2), and the Trust and the Plan are
unable to agree upon any reasonable alternative accommodations;
(b) if shares in such Portfolio are not reasonably available
to meet the requirements of the Plan as determined by the Plan
(including any non-availability as a result of notice given by the
Distributor pursuant to Section 10.4(c)), and the Distributor, after
receiving written notice from the Plan of such non-availability, fails
to make available, within 10 days after receipt of such notice, a
sufficient number of shares in such Portfolio or an alternate Portfolio
to meet the requirements of the Plan; or
(c) if such Portfolio fails to meet the diversification
requirements specified in Section 817(h) of the Code and any
regulations thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure;
Such termination shall apply only as to the affected Portfolio and shall not
apply to any other Portfolio in which the Plan invests.
10.6. Termination of Investment by the Plan. The Plan may elect to
cease investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Plan, or withdraw its
investment in the Trust, subject to compliance with applicable law, upon written
notice to the Trust within 15 days of the occurrence of any of the following
events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust
or the Distributor (but only with regard to the Trust) by the NASD, the
SEC or any state securities or insurance commission or any other
regulatory body;
(b) if, with respect to the Trust or a Portfolio, the Trust or
the Portfolio ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or
similar provision, or if the Plan reasonably believes that the Trust
may fail to so qualify, and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure within 30 days; or
(c) if the Trust is in material breach of a provision of this
Agreement, which breach has not been cured to the satisfaction of the
Plan within 10 days after written notice of such breach has been
delivered to the Trust.
10.7. Forced Redemption of Certain Participating Investor's Shares. The
parties understand and acknowledge that it is essential for compliance with
Section 817(h) of the Code that the Products qualify as annuity contracts or
life insurance policies, as applicable, under the Code. Accordingly, if any of
the Products cease to qualify as annuity contracts or life insurance policies,
as applicable, under the Code, or if the Trust reasonably believes that any such
Products may fail to so qualify, the Trust shall have the right to require the
issuing Participating Insurance Company to redeem Trust shares attributable to
such Products upon notice to the Participating Insurance Company and the Company
shall so redeem such Trust shares in order to ensure that the Trust, or any
Portfolio of the Trust, complies with the provisions of Section 817(h) of the
Code applicable to ownership of Trust shares. Likewise, if the Trust reasonably
believes that any investment by a Participating Plan in a Portfolio may cause
the Portfolio to fail to comply with Section 817(h) of the Code, then the Trust
shall have the right to require the Participating Plan to redeem Trust shares
attributable to the extent necessary to ensure that the Portfolio complies with
the provisions of Section 817(h) upon notice to the Participating Plan.
10.8. Plan Required to Redeem. The parties understand and acknowledge
that, for the reasons stated in Section 10.7 above, if the Trust reasonably
believes that any investment by the Plan in a Portfolio may cause the Portfolio
to fail to comply with Section 817(h) of the Code, the Trust shall have the
right, upon notice to the Plan, to require the Plan to redeem Trust shares to
the extent necessary to ensure that the Portfolio complies with the provisions
of Section 817(h). Notice to the Plan shall specify the period of time the Plan
has to redeem the Trust shares or to make other arrangements satisfactory to the
Trust and its counsel, such period of time to be determined with reference to
the requirements of Section 817(h) of the Code. In addition, the Plan may be
required to redeem Trust shares pursuant to action taken or request made by the
Trust Board in accordance with the Exemptive Order described in Article VIII or
any conditions or undertakings set forth or referenced therein, or other SEC
rule, regulation or order that may be adopted after the date hereof. The Plan
agrees to redeem shares in the circumstances described herein and to comply with
applicable terms and provisions. Also, in the event that the Distributor
suspends or terminates the offering of a Series or Class pursuant to Section
10.4(c) of this Agreement, the Plan, upon request by the Distributor, will
cooperate in taking appropriate action to withdraw its investment in the
respective Portfolio.
10.9. Confidentiality. The Plan will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
ARTICLE XI
Applicability to New Plan Investment Options
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Plan, any Series or Class of Trust shares. Such amendments may be made effective
by executing the form of amendment included on each schedule attached hereto.
The provisions of this Agreement shall be equally applicable to each such
Series, or Class, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all
the party.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this
Agreement is to be made in writing and shall be given:
If to the Trust:
Michael S. Daubs
President
Ultra Series Fund
5910 Mineral Point Road
Madison, WI 53701
If to the Plan:
Michael B. Kitchen
Plan Committee Member
5910 Mineral Point Road
Madison, WI 53701
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Massachusetts, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the
1933 Act, 1940 Act, Securities Exchange Act of 1934, as amended, ERISA
and the rules, regulations and rulings thereunder, including such
exemptions from those statutes, rules, and regulations as the SEC or
the DOL may grant, and the terms hereof shall be limited, interpreted
and construed in accordance therewith.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of
the provisions hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which together shall constitute one and the
same instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Plan, the Distributor or the Trust
without the prior written consent of the other parties.
13.4. Actions by the Plan. Where this Agreement requires or permits the
Plan to act (or refrain from action), the Plan's trustee(s), Plan committee (or
an authorized Plan committee member), or other appropriate fiduciary of the
Plan, as appropriate, [shall] [may] perform on behalf of the Plan.
13.5. Declaration of Trust. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of State of the state of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as trustees, and is not binding upon any of the Trustees,
officers or shareholders of the Trust individually, but binding only upon the
assets and property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
ULTRA SERIES FUND
(Trust)
Date: October 31, 1997 By: /s/ Michael S. Daubs
Name: Michael S. Daubs
Title: President, Ultra Series Fund
CUNA MUTUAL SAVINGS PLAN
(Plan)
Date: October 31, 1997 By: /s/ Connie J. Wiegeshaus
Name: Connie J. Wiegeshaus
Title: Plan Committee Member
<PAGE>
Schedule 1
Trust Classes and Series
Available Under the Plan
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Plan:
Plan Investment Option Trust Classes and Series
[Form of Amendment to Schedule 1]
Effective as of __________________, this Schedule 1 is hereby amended to reflect
the following changes in Trust Classes and Series:
Plan Investment Option Trust Classes and Series
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 1 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Savings Plan
<PAGE>
Schedule 2
Investment Restrictions
Applicable to the Trust Portfolios
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
[Form of Amendment to Schedule 2]
Effective as of ___________________, this Schedule 2 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 2 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Savings Plan
<PAGE>
Exhibit 23(h)7
Participation Agreement between Ultra Series Fund and
CUNA Mutual Thrift Plan
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 31st day of October, 1997 by
and between ULTRA SERIES FUND, an unincorporated business trust formed under the
laws of Massachusetts (the "Trust") and CUNA MUTUAL THRIFT PLAN (the "Plan").
WHEREAS, the Trust is a series-type open-end management investment
company offering shares of beneficial interest (the "Trust shares") consisting
of one or more separate series ("Series") of shares, each such Series
representing an interest in a particular investment portfolio of securities and
other assets (a "Portfolio"), and which Series may be subdivided into various
classes ("Classes") with each such Class supporting a distinct charge and
expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies offered by life insurance
companies and for qualified retirement plans; and
WHEREAS, the Plan is defined contribution plan established by the board
of directors of CUNA Mutual Life Insurance Company that qualifies under Sections
401(a) and 501(a) of the Internal Revenue Code of 1986; and
WHEREAS, the Plan desires that the Trust serve as an investment vehicle
for a certain investment options of the Plan and the Trust desires to sell
shares of certain Series and/or Class(es) to the Plan;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Plan agree as follows:
ARTICLE I
Additional Definitions
1.1. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.2. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.3 "Distributor" -- CUNA Brokerage Services, Inc., the principal
underwriter of the Trust's shares.
1.4. "Participating Account" -- a separate account of a Participating
Insurance Company investing all or a portion of its assets in the Trust,
including separate accounts of CUNA Mutual Life Insurance Company.
1.5. "Participating Insurance Company" -- any insurance company
investing in the Trust on its behalf or on behalf of a Participating
Account, including CUNA Mutual Life Insurance Company.
1.6. "Participating Plan" -- any qualified retirement plan investing
in the Trust, including the Plan.
1.7. "Participating Investor" -- any Participating Account,
Participating Insurance Company or Participating Plan.
1.8. "Plan Participant" -- a participant in or beneficiary of the
Plan.
1.9. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts.
1.10. "Product Owners" -- owners of Products.
1.11. "Trust Board" -- the board of trustees of the Trust.
1.12. "Registration Statement" -- with respect to the Trust shares or
a class of Products, the registration statement filed with the SEC to
register such securities under the 1933 Act, or the most recently filed
amendment thereto, in either case in the form in which it was declared or
became effective. The Trust's Registration Statement is filed on Form N-1A
(File No. 2-87775).
1.13. "1940 Act Registration Statement" -- with respect to the Trust
or a Participating Account, the registration statement filed with the SEC
to register such person as an investment company under the 1940 Act, or the
most recently filed amendment thereto. The Trust's 1940 Act Registration
Statement is filed on Form N-1A (File No. 811-04815).
1.14. "Prospectus" -- with respect to shares of a Series (or Class) of
the Trust or a class of Products, each version of the definitive prospectus
or supplement thereto filed with the SEC pursuant to Rule 497 under the
1933 Act. With respect to any provision of this Agreement requiring a party
to take action in accordance with a Prospectus, such reference thereto
shall be deemed to be to the version for the applicable Series, Class or
Products last so filed prior to the taking of such action. For purposes of
Article IX, the term "Prospectus" shall include any statement of additional
information incorporated therein.
1.15. "Statement of Additional Information" -- with respect to the
Trust shares or a class of Products, each version of the definitive
statement of additional information or supplement thereto filed with the
SEC pursuant to Rule 497 under the 1933 Act. With respect to any provision
of this Agreement requiring a party to take action in accordance with a
Statement of Additional Information, such reference thereto shall be deemed
to be the last version so filed prior to the taking of such action.
1.16. "Summary Plan Description" -- the written description of the
Plan as required by ERISA.
1.17. "DOL" -- the U.S. Department of Labor.
1.18. "ERISA" -- the Employee Retirement Income Security Act of 1974,
as amended.
1.19. "SEC" -- the U.S. Securities and Exchange Commission.
1.20. "NASD" -- The National Association of Securities Dealers, Inc.
1.21. "1933 Act" -- the Securities Exchange Act of 1933, as amended.
1.22. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive
authority to distribute the Trust shares and to select which Series or
Classes of Trust shares shall be made available to Participating
Investors. Pursuant to such authority, and subject to Article X hereof,
the Distributor shall make available to the Plan for purchase, shares
of the Series and Classes listed on Schedule 1 to this Agreement, such
purchases to be effected at net asset value in accordance with Section
2.3 of this Agreement. Such Series and Classes shall be made available
to the Plan in accordance with the terms and provisions of this
Agreement until this Agreement is terminated pursuant to Article X or
the Distributor suspends or terminates the offering of shares of such
Series or Classes in the circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or
Classes of Trust shares in existence now or that may be established in
the future will be made available to the Plan only as the Trust and the
Distributor may so provide, subject to the Trust's rights set forth in
Article X to suspend or terminate the offering of shares of any Series
or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may
revoke the Distributor's authority pursuant to the terms and conditions
of its distribution agreement with the Distributor; and (ii) the Trust
reserves the right in its sole discretion to refuse to accept a request
for the purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Plan's request, any
full or fractional Trust shares held by the Plan, such redemptions to be
effected at net asset value in accordance with Section 2.3 of this Agreement.
Notwithstanding the foregoing, (i) the Plan shall not redeem Trust shares except
in the circumstances permitted in Article X of this Agreement, and (ii) the
Trust may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or the
Prospectus for such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Plan shall pay for shares of each Series or Class on
the same day that it provides actual notice to the Trust of a purchase
request for such shares. Payment for Trust shares shall be made in
Federal funds transmitted to the Trust by wire to be received by the
Trust by 12:00 noon New York Time on the day the Trust receives actual
notice of the purchase request for shares (unless the Trust determines
and so advises the Plan that sufficient proceeds are available from
redemption of shares of other Series or Classes effected pursuant to
redemption requests tendered by the Plan). In no event may proceeds
from the redemption of shares requested by the Plan pursuant to an
order received from a Plan Participant after the Trust's close of
business on any Business Day, be applied to the payment for shares for
which a purchase order was received prior to the Trust's close of
business on such day. If the issuance of shares is canceled because
Federal funds are not timely received, the Plan shall indemnify the
respective Portfolio with respect to all costs, expenses and losses
relating thereto. If Federal funds are not received on time, such funds
will be invested, and the Series or Class of shares purchased thereby
will be issued, as soon as practicable after actual receipt of such
funds at the net asset value next computed as indicated in Section 2.4
below.
(b) Payment for a Series or Class of shares redeemed by the
Plan shall be made in Federal funds transmitted by wire to the Plan or
any other person properly designated in writing by the Plan, such funds
normally to be transmitted by 6:00 p.m. New York Time on the next
Business Day after the Trust receives actual notice of the redemption
order for such Series or Class of shares (unless redemption proceeds
are to be applied to the purchase of Trust shares of other Series or
Classes in accordance with Section 2.3(b) of this Agreement), except
that the Trust reserves the right to redeem a Series or Class of shares
in assets other than cash and to delay payment of redemption proceeds
to the extent permitted by the 1940 Act, any rules or regulations or
orders thereunder, or the Trust's Prospectus. The Trust shall not bear
any responsibility whatsoever for the proper disbursement or crediting
of redemption proceeds by the Plan.
(c) Prior to the first purchase of any Trust shares hereunder,
the Plan and the Trust shall provide each other with all information
necessary to effect wire transmissions of Federal funds to the other
party and all other designated persons pursuant to such protocols and
security procedures as the parties may agree upon. Should such
information change thereafter, the Trust and the Plan, as applicable,
shall notify the other in writing of such changes, observing the same
protocols and security procedures, at least three Business Days in
advance of when such change is to take effect. The Plan and the Trust
shall observe customary procedures to protect the confidentiality and
security of such information, but the Trust shall not be liable to the
Plan for any breach of security.
(d) The procedures set forth herein are subject to any
additional terms set forth in the applicable Prospectus for the Series
or Class or by the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform
the Plan of the net asset value per share for each Series or Class available to
the Plan as soon as reasonably practicable after the net asset value per share
for such Series or Class is calculated. The Trust shall calculate such net asset
value in accordance with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Plan as soon as reasonably practicable of any income dividends or capital gain
distributions payable on any Series or Class of shares. The Plan hereby elects
to receive all such dividends and distributions as are payable on any Series or
Class shares in the form of additional shares of that Series or Class. The Plan
reserves the right to revoke this election and to receive all such dividends and
capital gain distributions in cash; to be effective, such revocation must be
made in writing and received by the Trust at least ten Business Days prior to a
dividend or distribution date. The Trust shall notify the Plan promptly of the
number of Series or Class shares so issued as payment of such dividends and
distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Share certificates will not be issued to the Plan. Purchase and
redemption orders for Trust shares shall be recorded in an appropriate ledger
for the Plan.
2.7. Pricing Errors. Any material errors in the calculation of net
asset value, dividends or capital gain information shall be reported to the Plan
immediately upon discovery. An error shall be deemed "material" based on the
Trust's interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. Neither the Trust or any
Portfolio, nor any of their affiliates shall be liable for any information
provided to the Plan pursuant to this Agreement which information is based on
incorrect information supplied by or on behalf of the Plan or any other
Participating Investor to the Trust.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell
Trust shares only to insurance companies and their separate accounts and to
persons or plans ("Qualified Persons") that qualify to purchase shares of the
Trust under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of any Participating Account to consider the portfolio
investments of a Portfolio of the Trust as constituting investments of any
Participating Account for the purpose of satisfying the diversification
requirements of Section 817(h). The Distributor and the Trust shall not sell
Trust shares to any insurance company or separate account unless an agreement
complying with Article VIII of this Agreement is in effect to govern such sales.
The Plan hereby represents and warrants that it is a Qualified Person.
ARTICLE III
Representations and Warranties
3.1. Plan. The Plan represents and warrants that: (i) the Plan is an
employee benefit plan that qualifies under Sections 401(a) and 501(a) of the
Code; (ii) the Plan is funded by a trust, validly existing, duly established and
maintained in accordance with applicable law; (iii) the Plan complies with the
provisions of ERISA applicable to such plans (including "Title I -Protection of
Employee Benefit Rights"); (iv) any interests or participations in the trust
funding the Plan are exempt from the registration requirements of Section 5 of
the 1933 Act pursuant to Section 3(a)(2) of the 1933 Act; (v) the trust funding
the Plan is excluded from the definition of an investment company in Section 3
of the 1940 Act by Section 3(c)(11) of the 1940 Act; and (vi) the Plan's
entering into and performing its obligations under this Agreement does not and
will not violate its declaration of trust or other plan documents, rules or
regulations, or any agreement to which it is a party. The Plan will notify the
Trust promptly if for any reason it is unable to perform its obligations under
this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Massachusetts law; (ii) the Trust's 1940 Act Registration Statement has been
filed with the SEC in accordance with the provisions of the 1940 Act and the
Trust is duly registered as an open-end management investment company
thereunder; (iii) the Trust's Registration Statement has been declared effective
by the SEC; (iv) the Trust shares will be issued in compliance in all material
respects with all applicable federal laws; (v) the Trust will remain registered
under and will comply in all material respects with the 1940 Act during the term
of this Agreement; (vi) each Portfolio of the Trust intends to qualify as a
"regulated investment company" under Subchapter M of the Code and to comply with
the diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Portfolio are
in material compliance with any investment restrictions set forth on Schedule 2
to this Agreement.
3.3. Legal Authority. Each party represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate, partnership or trust action, as applicable, by such party, and, when
so executed and delivered, this Agreement will be the valid and binding
obligation of such party enforceable in accordance with its terms.
3.4. Bonding Requirement. Each party represents and warrants that all
of its trustees, officers, plan committee members, fiduciaries and employees
dealing with the money and/or securities of the Trust are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the amount required by the
applicable rules of the NASD, ERISA and the federal securities laws. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. All parties shall make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, shall provide evidence thereof promptly to any other party
upon written request therefor, and shall notify the other parties promptly in
the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Voting of Trust Shares. With respect to any matter put to vote by
the holders of Trust shares ("Voting Shares"), the Plan's trustee(s) or
committee members will exercise the Plan's Voting Share rights.
4.3. Compliance. Under no circumstances will the Trust or any of its
affiliates (excluding Participating Investors) be responsible or liable in any
respect for any statements or representations made by them or their legal
advisers to the Plan or any Plan Participant concerning the applicability of any
federal or state laws, regulations or other authorities to the activities
contemplated by this Agreement.
4.4. Drafts of Regulatory Filings. The Trust and the Plan shall provide
to each other copies of draft versions of any Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations for voting instructions, applications for exemptions, requests for
"no-action" letters, and all amendments or supplements to any of the above,
prepared by or on behalf of either of them and that mentions the other party by
name. Such drafts shall be provided to the other party sufficiently in advance
of filing such materials with regulatory authorities in order to allow such
other party a reasonable opportunity to review the materials.
4.5. Copies of Regulatory Filings. The Trust and the Plan shall provide
to each other at least one complete copy of all Summary Plan Descriptions,
Registration Statements, Prospectuses, Statements of Additional Information,
periodic and other shareholder or Plan Participant reports, proxy statements,
solicitations of voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Trust, or the Plan, as the case may be, promptly after the filing
by or on behalf of each such party of such document with the DOL, the SEC, the
NASD, or other regulatory authorities (it being understood that this provision
is not intended to require the Trust to provide to the Plan copies of any such
documents prepared, filed or used by Participating Investors other than the
Plan).
4.6. Regulatory Responses. Each party shall promptly provide to all
other parties copies of responses to "no-action" requests, notices, orders and
other decisions or rulings received by such party with respect to any filing
covered by Section 4.6 of this Agreement.
4.7. Complaints and Proceedings
(a) The Trust shall immediately notify the Plan of: (i) the
issuance by any court or regulatory body of any stop order, cease and
desist order, or other similar order (but not including an order of a
regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Trust's Registration Statement or the
Prospectus of any Series or Class; (ii) any request by the SEC for any
amendment to the Trust's Registration Statement or the Prospectus of
any Series or Class; (iii) the initiation of any proceedings for that
purpose or for any other purposes relating to the registration or
offering of the Trust shares; or (iv) any other action or circumstances
that may prevent the lawful offer or sale of Trust shares or any Class
or Series in any state or jurisdiction, including, without limitation,
any circumstance in which (A) such shares are not registered and, in
all material respects, issued and sold in accordance with applicable
state and federal law or (B) such law precludes the use of such shares
as an underlying investment medium for Products or as a funding medium
for Participating Plans. The Trust will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(b) The Plan shall immediately notify the Trust and the
Distributor of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Plan's
investment in the Trust; (ii) any request by the DOL for any change to
the Plan's investment in the Trust; (iii) the initiation of any
proceedings for that purpose or for any other purposes relating to the
operation or investments of the Plan; or (iv) any other action or
circumstances that may prevent the lawful offer of interests in the
Plan, or the trust funding the Plan, in any state or jurisdiction,
including, without limitation, any circumstance in which the Plan or
such trust is not qualified and approved, and, in all material
respects, offered [operated] [and sold] in accordance with applicable
state and federal laws. The Plan will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when
it receives notice, or otherwise becomes aware of, the commencement of
any litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or
the operations of the Trust or the Plan.
(d) The Plan shall provide to the Trust any complaints it has
received from Plan Participants pertaining to the Trust or a Portfolio,
and the Trust and Distributor shall each provide to the Plan any
complaints it has received from Plan Participants relating to the Plan
or the Plan's investment in the Trust.
4.8. Cooperation. Each party hereto shall cooperate with the other
parties and all appropriate government authorities (including without limitation
the IRS, DOL, SEC, the NASD and state securities and insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry by any such authority relating to
this Agreement or the transactions contemplated hereby. However, such access
shall not extend to attorney-client privileged information.
ARTICLE V
Offering, Administration and Operation of the Plan
5.1. Offer of the Plan. The Plan shall be fully responsible as to the
Trust and the Distributor for offering the Plan to Plan Participants.
5.2. Administration of the Plan and Servicing of the Plan Participants.
The Plan shall be fully responsible as to the Trust for offering service and
administration of the Plan and for the administration of Plan Participants'
accounts.
5.3. Trust Prospectuses and Reports. In order to enable the Plan to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Plan with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (i) the Trust's Prospectus
for the Series and Classes listed on Schedule 1 and any supplement thereto; (ii)
each Statement of Additional Information and any supplement thereto; (iii) any
Trust proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Plan may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Plan at least 10 days
advance written notice when any such material shall become available, provided,
however, that in the case of a supplement, the Trust shall provide the Plan
notice reasonable in the circumstances, it being understood that circumstances
surrounding such supplement may not allow for advance notice. The Plan may not
alter any material so provided by the Trust or the Distributor (including
without limitation presenting or delivering such material in a different medium,
e.g., electronic or Internet) without the prior written consent of the Trust or
the Distributor.
5.4. Trade Names. Neither party shall use the other party's names,
logos, trademarks or service marks, whether registered or unregistered, without
the prior written consent of the other party, or after written consent therefor
has been revoked. The Plan shall not use in advertising, publicity or otherwise
the name of the Trust, Distributor, or any of their affiliates nor any trade
name, trademark, trade device, service mark, symbol or any abbreviation,
contraction or simulation thereof of the Trust, Distributor, or their affiliates
without the prior written consent of the Trust or the Distributor in each
instance.
5.5. Representations by Plan. Except with the prior written consent of
the Trust, the Plan shall not give any information or make any representations
or statements about the Trust or the Portfolios nor shall it authorize or allow
any other person to do so except information or representations contained in the
Trust's Registration Statement or the Trust's Prospectuses or in reports or
proxy statements for the Trust, or in sales literature or other promotional
material approved in writing by the Trust in accordance with this Article V, or
in published reports or statements of the Trust in the public domain.
5.6. Representations by Trust. Except with the prior written consent of
the Plan, the Trust shall not give any information or make any representations
on behalf of the Plan or concerning the Plan or the investment options of the
Plan, other than the information or representations contained in the Plan's
Summary Plan Description or in published reports of the Plan which are in the
public domain or in sales literature or other promotional material approved in
writing by the Plan in accordance with this Article V.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Portfolio of the Trust shall comply with
Section 817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Portfolio as an investment company underlying a Participating
Account, and the Trust shall notify the Plan immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
6.2. Subchapter M. Each Portfolio of the Trust shall maintain the
qualification of the Portfolio as a registered investment company (under
Subchapter M or any successor or similar provision), and the Trust shall notify
the Plan immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that it might not so qualify in the
future.
6.3. Products. The Plan shall help to ensure the continued treatment of
the Products as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
immediately upon having a reasonable basis for believing that continued
investment by it would cause such Products to cease to be so treated or might
cause such Products to cease to be so treated in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under
this Agreement (including expenses expressly assumed by such party pursuant to
this Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Trust shares under
the federal securities laws;
(b) preparation and filing with the SEC of the Trust's
Prospectuses, Trust's Statement of Additional Information,
Trust's Registration Statement, Trust proxy materials and
shareholder reports, and preparation of a camera-ready copy of
the foregoing;
(c) preparation of all statements and notices required by
any federal or state securities law;
(d) printing and mailing of all materials and reports required
to be provided by the Trust to its existing shareholders;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust,
including, without limitation, all fees due under Rule 24f-2
in connection with sales of Trust shares to qualified
retirement plans, custody, auditing, transfer agent and
advisory fees, fees for insurance coverage and Trust Board
fees; and
(g) any expenses permitted to be paid or assumed by a
Portfolio of the Trust pursuant to a plan, if any, under Rule
12b-1 under the 1940 Act.
7.3. Plan Expenses. Expenses incident to the Plan's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) qualification of the Plan under the Code;
(b) preparation and filing with the DOL of the Summary Plan
Description;
(c) the offering of interests in the trust funding the Plan;
(d) administration of the Plan;
(e) if applicable, solicitation of voting instructions with
respect to Trust proxy materials;
(f) payment of all applicable fees relating to the Plan;
(g) preparation, printing and dissemination of all
statements and notices to Plan Participants required by any
federal or state law other than those paid for by the Trust;
and
(h) preparation, printing and dissemination of all marketing
or offering materials for the Plan or investment options
under the Plan and Trust except where other arrangements are
made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation
to the Plan under this Agreement, except that if the Trust or any Series or
Class of shares adopts and implements a plan pursuant to Rule 12b-1 under the
1940 Act to finance distribution expenses, then payments may be made to the Plan
in accordance with such plan. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 and such formulation is required by
the 1940 Act or any rules or order thereunder, the Trust undertakes to have the
Trust Board, a majority of whom are not interested persons of the Trust,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that
the Trust has obtained from the SEC an order (the "Exemptive Order") granting
relief from various provisions of the 1940 Act and the rules thereunder to the
extent necessary to permit Trust shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and other Qualified Persons (as
defined in Section 2.8 hereof). The Exemptive Order requires the Trust and each
Participating Plan to comply with conditions and undertakings substantially as
provided in this Article VIII. The Trust will not enter into a participation
agreement with any other Participating Plan or Participating Insurance Company
(other than CUNA Mutual Life Insurance Company) unless it imposes the same
conditions and undertakings on that Participating Plan or Participating
Insurance Company as are imposed on the Plan pursuant to this Article VIII.
8.2. Plan Monitoring Requirements. The Plan will monitor its operations
and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans (and participants therein),
Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts.
8.3. Plan Reporting Requirements. The Plan shall report any conflicts
or potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Plan also shall
assist the Trust Board in carrying out its obligations including, but not
limited to providing such other information and reports as the Trust Board may
reasonably request.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans (and participants
therein), Product Owners of variable life insurance policies and Product Owners
of variable annuity contracts and determine what action, if any, should be taken
in response to those conflicts. A majority vote of trustees of the Trust who are
not interested persons of the Trust as defined in the 1940 Act (the
"disinterested trustees") shall represent a conclusive determination as to the
existence of a material irreconcilable conflict between or among the interests
of Product Owners of variable life insurance policies and Product Owners of
variable annuity contracts and Participating Plans (and participants therein)
and as to whether any proposed action adequately remedies any material
irreconcilable conflict. The Trust Board shall give prompt written notice to the
Plan and other Participating Investors of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans (and participants therein), the Plan will, at its own
expense, take whatever action is necessary to remedy such conflict as it
adversely affects Plan Participants up to and including (i) establishing a new
registered management investment company, and (ii) withdrawing Plan assets from
the Trust subject to the conflict and reinvesting such assets in a different
investment medium (including another Portfolio of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Plan Participants, and, as appropriate, segregating the assets of any
group of such Plan Participants that votes in favor of such withdrawal, or
offering to such Plan Participants the option of making such a change. The Plan
will carry out the responsibility to take the foregoing action with a view only
to the interests of Plan Participants.
8.6. Expenses Associated with Remedial Action. In no event shall the
Trust be required to bear the expense of establishing a new funding medium for
the Plan.
8.7. Successor Rules. If and to the extent that Rule 6e-2 and Rule
6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provisions of the 1940 Act or the rules promulgated thereunder with respect
to mixed and shared funding on terms and conditions materially different from
those contained in the Exemptive Order, then (a) the Trust and/or the Plan, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (b) Sections 8.2 through 8.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Plan. The Plan hereby agrees to, and shall,
indemnify and hold harmless the Trust and each person who controls or is
affiliated with the Trust within the meaning of such terms under the 1933 Act or
1940 Act (but not any Participating Insurance Companies or Qualified Persons)
and any officer, trustee, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Summary Plan Description (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Plan by the Trust or the
Distributor for use in the Summary Plan Description for the Plan (or
any amendment or supplement to any of the foregoing); or
(b) arise out of any untrue statement of a material fact
contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made, if such statement
or omission was made in reliance upon and in conformity with
information furnished to the Trust in writing by or on behalf of the
Plan; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Plan or persons under its
control or subject to its authorization, including without limitation,
any Plan fiduciaries, administrators, broker-dealers or agents
authorized to offer interests in the Plan or manage the operations of
or provide administrative services to the Plan or Plan Participants,
with respect to the offer of interests in the Plan, or distribution of
Trust shares through the Plan, including, without limitation, any
impermissible or unauthorized representations about the Plan or the
Trust; or
(d) arise as a result of any failure by the Plan or persons
under its control (or subject to its authorization), including
fiduciaries and administrators, to provide services, furnish materials
or make payments as required under this Agreement; or
(e) arise out of any material breach by the Plan or persons
under its control (or subject to its authorization), including
fiduciaries or administrators, of this Agreement; or
(f) any breach of any warranties contained in Article III
hereof, any failure to transmit a request for redemption or purchase of
Trust shares or payment therefor on a timely basis in accordance with
the procedures set forth in Article II, or any unauthorized use of the
names or trade names of the Trust or the Distributor.
This indemnification is in addition to any liability that the Plan may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and
shall, indemnify and hold harmless the Plan and each person who controls or is
affiliated with the Plan within the meaning of such terms under the 1933 Act or
1940 Act and any officer, trustee, plan committee member, fiduciary, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any
Prospectus for Series or Classes or sales literature or other
promotional material of the Trust (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
by the Plan to the Trust for use in the Trust Registration Statement,
Trust Prospectus or sales literature or promotional material for the
Trust (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the offer of interests in the Plan
or any investment option under the Plan or sale of the Trust shares; or
(b) arise out of any untrue statement of a material fact
contained in the Summary Plan Description or sales literature or other
promotional material for the Plan or any investment option under the
Plan (or any amendment or supplement to any of the foregoing), or the
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
the Trust to the Plan; or
(c) arise out of or are based upon wrongful conduct of the
Trust or its Trustees or officers with respect to the sale of Trust
shares; or
(d) arise as a result of any failure by the Trust to provide
services, furnish materials or make payments as required under the
terms of this Agreement; or
(e) arise out of any material breach by the Trust of this
Agreement (including any breach of Section 6.1 of this Agreement and
any warranties contained in Article III hereof);
it being understood that in no way shall the Trust be liable to the Plan with
respect to any violation of ERISA or the Code, compliance with which is a
responsibility of the Plan under this Agreement or otherwise or as to which the
Plan failed to inform the Trust in accordance with Section 4.4 hereof. This
indemnification is in addition to any liability that the Trust may otherwise
have; provided, however, that no party shall be entitled to indemnification if
such loss, claim, damage or liability is caused by the wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the
event of an occurrence for which the Trust has agreed to indemnify the Plan, the
Plan shall seek indemnification from the Trust only in circumstances in which
the Trust is entitled to seek indemnification from a third party with respect to
the same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Plan is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates for
all purposes hereunder and will have no authority to act for or represent any of
them. In addition, no officer, trustee, committee member, or other fiduciary of
the Plan will be deemed to be an employee or agent of the Trust or any of its
affiliates solely because of this Agreement. The Plan will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto
acknowledge that the arrangement contemplated by this Agreement is not
exclusive; the Trust shares may be sold to other qualified plans, insurance
companies and other investors (subject to Section 2.8 hereof), provided,
however, that until this Agreement is terminated pursuant to this Article X.
10.3. Termination of Agreement. This Agreement shall not terminate
until (i) the Trust is dissolved, liquidated, or merged into another entity, or
(ii) as to any Portfolio that has been made available hereunder and the Plan has
confirmed in writing to the Trust that it no longer intends to invest in such
Portfolio. However, certain obligations of, or restrictions on, the parties to
this Agreement may terminate as provided in Sections 10.4 through 10.6 and the
Plan may be required to redeem Trust shares pursuant to Section 10.8 or in the
circumstances contemplated by Article VIII. Article IX and Sections 5.7, 10.8
and 10.9 shall survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the
Trust and the Distributor to make Trust shares available to the Plan for
purchase pursuant to Article II of this Agreement shall terminate at the option
of the Trust upon written notice to the Plan as provided below:
(a) upon institution of formal proceedings against the Plan,
or the Trust's reasonable determination that institution of such
proceedings is being considered by the IRS, DOL, the SEC, the insurance
commission of any state or any other regulatory body regarding the
Plan's duties under this Agreement, the operation of the Plan, the
administration of the Plan or the purchase of Trust shares, or an
expected or anticipated ruling, judgment or outcome which would, in the
Trust's reasonable judgment exercised in good faith, materially impair
the Plan's or Trust's ability to meet and perform the Plan's or Trust's
obligations and duties hereunder, such termination effective upon 15
days prior written notice;
(b) in the event that the Plan is not operated in accordance
with applicable federal and/or state law, such termination effective
immediately upon receipt of written notice;
(c) if the Trust or the Distributor suspends or terminates the
offering of Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if such action is
required by law or by regulatory authorities having jurisdiction or if,
in the sole discretion of the Trust or the Distributor acting in good
faith, suspension or termination is necessary in the best interests of
the shareholders of any Series or Class (it being understood that
"shareholders" for this purpose shall mean Product Owners, Plan
Participants or participants in other Participating Plans), such notice
effective immediately upon receipt of written notice, it being
understood that a lack of Participating Investor interest in a Series
or Class may be grounds for a suspension or termination as to such
Series or Class and that a suspension or termination shall apply only
to the specified Series or Class;
(d) upon the Plan's assignment of this Agreement unless the
Trust consents thereto, such termination effective upon 30 days prior
written notice;
(e) if the Plan is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the
Trust within 10 days after written notice of such breach has been
delivered to the Plan, such termination effective upon expiration of
such 10-day period; or
(f) upon the determination of the Trust s Board to dissolve,
liquidate or merge the Trust as contemplated by Section 10.3(i), upon
termination of the Agreement pursuant to Section 10.3(ii), or upon
notice from the Plan pursuant to Section 10.5 or 10.6, such termination
pursuant hereto to be effective upon 15 days prior written notice.
10.5. Termination of Investment in a Portfolio. The Plan may elect to
cease investing in a Portfolio or withdraw its investment in a Portfolio,
subject to compliance with applicable law, upon written notice to the Trust
within 15 days of the occurrence of any of the following events (unless provided
otherwise below):
(a) if the Trust informs the Plan that it will not cause such
Portfolio to comply with investment restrictions as requested by the
Plan (as indicated in schedule 2), and the Trust and the Plan are
unable to agree upon any reasonable alternative accommodations;
(b) if shares in such Portfolio are not reasonably available
to meet the requirements of the Plan as determined by the Plan
(including any non-availability as a result of notice given by the
Distributor pursuant to Section 10.4(c)), and the Distributor, after
receiving written notice from the Plan of such non-availability, fails
to make available, within 10 days after receipt of such notice, a
sufficient number of shares in such Portfolio or an alternate Portfolio
to meet the requirements of the Plan; or
(c) if such Portfolio fails to meet the diversification
requirements specified in Section 817(h) of the Code and any
regulations thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure;
Such termination shall apply only as to the affected Portfolio and shall not
apply to any other Portfolio in which the Plan invests.
10.6. Termination of Investment by the Plan. The Plan may elect to
cease investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Plan, or withdraw its
investment in the Trust, subject to compliance with applicable law, upon written
notice to the Trust within 15 days of the occurrence of any of the following
events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust
or the Distributor (but only with regard to the Trust) by the NASD, the
SEC or any state securities or insurance commission or any other
regulatory body;
(b) if, with respect to the Trust or a Portfolio, the Trust or
the Portfolio ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or
similar provision, or if the Plan reasonably believes that the Trust
may fail to so qualify, and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure within 30 days; or
(c) if the Trust is in material breach of a provision of this
Agreement, which breach has not been cured to the satisfaction of the
Plan within 10 days after written notice of such breach has been
delivered to the Trust.
10.7. Forced Redemption of Certain Participating Investor's Shares. The
parties understand and acknowledge that it is essential for compliance with
Section 817(h) of the Code that the Products qualify as annuity contracts or
life insurance policies, as applicable, under the Code. Accordingly, if any of
the Products cease to qualify as annuity contracts or life insurance policies,
as applicable, under the Code, or if the Trust reasonably believes that any such
Products may fail to so qualify, the Trust shall have the right to require the
issuing Participating Insurance Company to redeem Trust shares attributable to
such Products upon notice to the Participating Insurance Company and the Company
shall so redeem such Trust shares in order to ensure that the Trust, or any
Portfolio of the Trust, complies with the provisions of Section 817(h) of the
Code applicable to ownership of Trust shares. Likewise, if the Trust reasonably
believes that any investment by a Participating Plan in a Portfolio may cause
the Portfolio to fail to comply with Section 817(h) of the Code, then the Trust
shall have the right to require the Participating Plan to redeem Trust shares
attributable to the extent necessary to ensure that the Portfolio complies with
the provisions of Section 817(h) upon notice to the Participating Plan.
10.8. Plan Required to Redeem. The parties understand and acknowledge
that, for the reasons stated in Section 10.7 above, if the Trust reasonably
believes that any investment by the Plan in a Portfolio may cause the Portfolio
to fail to comply with Section 817(h) of the Code, the Trust shall have the
right, upon notice to the Plan, to require the Plan to redeem Trust shares to
the extent necessary to ensure that the Portfolio complies with the provisions
of Section 817(h). Notice to the Plan shall specify the period of time the Plan
has to redeem the Trust shares or to make other arrangements satisfactory to the
Trust and its counsel, such period of time to be determined with reference to
the requirements of Section 817(h) of the Code. In addition, the Plan may be
required to redeem Trust shares pursuant to action taken or request made by the
Trust Board in accordance with the Exemptive Order described in Article VIII or
any conditions or undertakings set forth or referenced therein, or other SEC
rule, regulation or order that may be adopted after the date hereof. The Plan
agrees to redeem shares in the circumstances described herein and to comply with
applicable terms and provisions. Also, in the event that the Distributor
suspends or terminates the offering of a Series or Class pursuant to Section
10.4(c) of this Agreement, the Plan, upon request by the Distributor, will
cooperate in taking appropriate action to withdraw its investment in the
respective Portfolio.
10.9. Confidentiality. The Plan will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
ARTICLE XI
Applicability to New Plan Investment Options
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Plan, any Series or Class of Trust shares. Such amendments may be made effective
by executing the form of amendment included on each schedule attached hereto.
The provisions of this Agreement shall be equally applicable to each such
Series, or Class, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all
the party.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this
Agreement is to be made in writing and shall be given:
If to the Trust:
Michael S. Daubs
President
Ultra Series Fund
5910 Mineral Point Road
Madison, WI 53701
If to the Plan:
Michael B. Kitchen
Plan Committee Member
5910 Mineral Point Road
Madison, WI 53701
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Massachusetts, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the
1933 Act, 1940 Act, Securities Exchange Act of 1934, as amended, ERISA
and the rules, regulations and rulings thereunder, including such
exemptions from those statutes, rules, and regulations as the SEC or
the DOL may grant, and the terms hereof shall be limited, interpreted
and construed in accordance therewith.
(b) The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of
the provisions hereof or otherwise affect their construction or effect.
(c) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which together shall constitute one and the
same instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Plan, the Distributor or the Trust
without the prior written consent of the other parties.
13.4. Actions by the Plan. Where this Agreement requires or permits the
Plan to act (or refrain from action), the Plan's trustee(s), Plan committee (or
an authorized Plan committee member), or other appropriate fiduciary of the
Plan, as appropriate, [shall] [may] perform on behalf of the Plan.
13.5. Declaration of Trust. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of State of the state of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as trustees, and is not binding upon any of the Trustees,
officers or shareholders of the Trust individually, but binding only upon the
assets and property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
ULTRA SERIES FUND
(Trust)
Date: October 31, 1997 By: /s/ Michael S. Daubs
Name: Michael S. Daubs
Title: President, Ultra Series Fund
CUNA MUTUAL THRIFT PLAN
(Plan)
Date: October 31, 1997 By: /s/ Connie J. Wiegeshaus
Name: Connie J. Wiegeshaus
Title: Plan Committee Member
<PAGE>
Schedule 1
Trust Classes and Series
Available Under the Plan
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Plan:
Plan Investment Option Trust Classes and Series
[Form of Amendment to Schedule 1]
Effective as of __________________, this Schedule 1 is hereby amended to reflect
the following changes in Trust Classes and Series:
Plan Investment Option Trust Classes and Series
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 1 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Thrift Plan
<PAGE>
Schedule 2
Investment Restrictions
Applicable to the Trust Portfolios
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
[Form of Amendment to Schedule 2]
Effective as of ___________________, this Schedule 2 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust and the Plan hereby amend this Schedule 2 in
accordance with Article XI of the Agreement.
- ----------------------------- ----------------------------
ULTRA Series Fund CUNA Mutual Thrift Plan
<PAGE>
Exhibit 23(j)
Consent of KPMG Peat Marwick LLP
<PAGE>
Other Exhibits
Power of attorney
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 _______ day of _______________, 1999.
Gwendolyn M. Boeke
Trustee for Ultra Series Fund
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 _______ day of _______________, 1999.
Michael S. Daubs
Trustee for Ultra Series Fund
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 _______ day of _______________, 1999.
Al Disrud
Trustee for Ultra Series Fund
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 _______ day of _______________, 1999.
L.R. Halverson
Trustee for Ultra Series Fund
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 _______ day of _______________, 1999.
Keith S. Noah
Trustee for Ultra Series Fund
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 _______ day of _______________, 1999.
T.C. Watt
Trustee for Ultra Series Fund
