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. [26]
and/or
Registration Statement Under the Investment Company Act of 1940 [X]
Amendment No. [29]
-----------------------------------
Ultra Series Fund
2000 Heritage Way
Waverly, Iowa 50677
(319) 352-4090, ext. 2157
(Registrant's Exact Name, Address and Telephone Number)
Barbara L. Secor, Esq.
CUNA Mutual Life Insurance Company
2000 Heritage Way
Waverly, Iowa 50677
(Name and Address of Agent for Service)
Copy to:
Stephen E. Roth, Esq.
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D. C. 20004-2404
Approximate Date of Proposed Public Offering: [ ]
--------------------------------------------
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on October 31, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[X] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
ULTRA SERIES FUND
PROSPECTUS OCTOBER 31, 2000
Money Market Fund
Bond Fund
Balanced Fund
High Income Fund
Growth and Income Stock Fund
Capital Appreciation Stock Fund
Mid-Cap Stock Fund
Emerging Growth Fund
International Stock Fund
Global Securities Fund
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the shares in these funds, nor does the Commission
guarantee the accuracy or adequacy of the prospectus. Any statement to the
contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
PAGE
THE FUND
Expenses.................................................................1
Money Market Fund........................................................2
Bond Fund................................................................4
Balanced Fund............................................................6
High Income Fund.........................................................8
Growth and Income Stock Fund............................................10
Capital Appreciation Stock Fund.........................................12
Mid-Cap Stock Fund......................................................14
Emerging Growth Fund....................................................16
International Stock Fund................................................18
Global Securities Fund..................................................20
Risk vs. Return.........................................................22
RISKS ASSOCIATED WITH CERTAIN HIGHER RISK SECURITIES
Foreign Securities......................................................23
Small Capitalization Stocks.............................................23
THE SHARES
Offer...................................................................24
Purchase and Redemption.................................................24
Dividends...............................................................25
Pricing of Fund Shares..................................................25
Taxes...................................................................26
MORE ABOUT ULTRA SERIES FUND
Portfolio Management....................................................26
Inquiries...............................................................28
Financial Highlights....................................................28
Additional information about each fund's investments is available in the
Statement of Additional Information (SAI), and the annual and semiannual reports
to shareholders. In particular, the annual reports will discuss the relevant
market conditions and investment strategies used by the portfolio manager(s)
that materially affected performance during the prior fiscal year. You may get a
copy of the most recent of these reports at no cost by calling 1-800-798-5500.
Please note that an investment in any of these funds is not a deposit in a
credit union or other financial institution and is neither insured nor endorsed
in any way by any credit union, other financial institution, or government
agency. Such an investment involves certain risks, including loss of principal,
and is not guaranteed to result in positive investment gains. The investment
objectives of the funds are "fundamental" meaning they cannot be changed without
shareholder approval. These funds may not achieve their objectives.
<PAGE>
EXPENSES
This table describes the expenses that you may pay if you buy and hold shares of
the fund.
SHAREHOLDER FEES
None
ANNUAL FUND OPERATING EXPENSES
Total Annual
Fund Management Other Operating Expenses
Money Market .45% .01% .46%
Bond .55% .01% .56%
Balanced .70% .01% .71%
High Income .75% .01% .76%
Growth and Income Stock .60% .01% .61%
Capital Appreciation Stock .80% .01% .81%
Mid-Cap Stock 1.00% .01% 1.01%
Emerging Growth .85% .01% .86%
International Stock 1.20% .01% 1.21%
Global Securities .95% .01% .96%
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.
Other expenses are trustees' fees, auditors' fees, interest on borrowings, any
taxes and extraordinary expenses. The figures in the above chart are estimates.
EXAMPLES
The examples shown below are intended to help you compare the cost of investing
in each fund with the cost of investing in other mutual funds. The examples are
based on a $10,000 initial investment in each fund over the various time periods
indicated. The examples assume: (1) 5% annual return and (2) redemption at the
end of each period.
Fund 1 year 3 years 5 years 10 years
Money Market $ 47 $ 148 $ 258 $ 579
Bond 57 179 313 701
Balanced 73 227 395 883
High Income 78 243 -- --
Growth and Income Stock 62 195 340 762
Capital Appreciation Stock 83 259 450 1,002
Mid-Cap Stock 103 322 558 1,236
Emerging Growth 88 274 -- --
International Stock 123 384 -- --
Global Securities 98 306 -- --
You should not consider the examples above as a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
<PAGE>
MONEY MARKET FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Money Market Fund seeks high current income from money market instruments
consistent with the preservation of capital and liquidity. The fund intends to
maintain a stable value of $1.00 per share.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
o require stability of principal
o are seeking a mutual fund for the cash portion of an asset allocation
program
o need to "park" your money temporarily or
o consider yourself a saver rather than an investor.
You may want to invest fewer of your assets in this fund if you:
o want federal deposit insurance
o are seeking an investment that is likely to outpace inflation
o are investing for retirement or other goals that are many years in the
future or
o are investing for growth or maximum current income.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
As with any money market fund, the yield paid by the fund will vary with changes
in interest rates. Generally, if interest rates rise, the market value of income
bearing securities will decline. There is a possibility that the fund's share
value could fall below $1.00, which could reduce the value of your account. An
investment in the Money Market Fund is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Money Market Fund attempts to maintain a stable price of $1.00 per share,
there is no assurance that it will be able to do so and it is possible to lose
money by investing in the fund.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Money Market Fund invests exclusively in U.S. dollar-denominated money
market securities maturing (or resetting their interest rates to market levels)
in thirteen months or less from the date of purchase. It includes securities
issued by U.S. and foreign financial institutions, corporate issuers, the U.S.
Government and its agencies and instrumentalities, municipalities, foreign
governments, and multi-national organizations such as the World Bank. At least
95% of the fund's assets must be rated in the highest short-term category (or
its unrated equivalent), and 100% of the fund's assets must be invested in
securities rated in the two highest rating categories. A more detailed
description of the types of permissible issuers and rating categories is
contained in the SAI. The fund maintains a dollar-weighted average portfolio
maturity of 90 days or less. The fund may also invest in U.S. dollar-denominated
foreign money market securities, although no more than 25% of the fund's assets
may be invested in these securities unless they are backed by a U.S. parent
financial institution.
<PAGE>
MONEY MARKET FUND PERFORMANCE
How has the Money Market Fund performed?
The following chart provides an indication of the risks of investing in the
Money Market Fund by showing the changes in the portfolio performance of the
Fund from year to year over a 10-year period. The chart assumes the reinvestment
of all dividends and distributions. The figures shown do not reflect charges
deducted in connection with variable contracts.
Total Returns
(for years ended 12/31)
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
the Money Market Fund. Total returns are as follows:
1990 7.53% 1995 5.21%
1991 5.36% 1996 4.72%
1992 3.05% 1997 5.01%
1993 2.86% 1998 5.00%
1994 3.34% 1999 4.69%
Best Calendar Quarter: 2Q90 1.92%
Worst Calendar Quarter: 2Q93 0.60%
Please remember that past performance is no guarantee of the results the Money
Market Fund may achieve in the future. Future returns may be higher or lower
than the returns the fund achieved in the past.
How does the performance of the Money Market Fund compare to general money
market returns?
The following table compares the performance 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
returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1999)
One Year Five Year Ten Year
Money Market Fund 4.69% 4.93% 4.67%
90-day U.S. Treasury Bill 4.73% 5.19% 5.04%
<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:
o seek an investment based on a regular stream of income
o seek higher potential returns than money market funds and are willing to
accept moderate risk of volatility
o want to diversify your investments
o seek a mutual fund for the income portion of an asset allocation program or
o are retired or nearing retirement.
You may want to invest fewer of your assets in this fund if you:
o invest for maximum return over a long time horizon or
o 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. The CIMCO MEMBERS
Capital Advisors, Inc. (formerly known as CIMCO Inc.) management team utilizes
an approach that involves frequent trading of the securities in the portfolio.
Under normal circumstances, the fund invests at least 80% of its assets in:
o Corporate debt securities: securities issued by domestic and foreign
corporations;
o U.S. government debt securities: securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities; and
o Foreign government debt securities: securities issued or guaranteed by a
foreign government or its agencies or instrumentalities, payable in U.S.
dollars. To the extent permitted by law and available in the market, the
fund may also invest in asset-backed and mortgage-backed securities,
including those representing mortgage, commercial or consumer loans
originated by credit unions.
<PAGE>
BOND FUND PERFORMANCE
How has the Bond Fund performed?
The following chart provides an indication of the risks of investing in the Bond
Fund by showing the changes in the portfolio performance of the Fund from year
to year over a 10-year period. The chart assumes the reinvestment of all
dividends and distributions. The figures shown do not reflect charges deducted
in connection with variable contracts.
Total Returns
(for years ended 12/31)
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
the Bond Fund. Total returns are as follows:
1990 7.41% 1995 16.37%
1991 14.70% 1996 2.86%
1992 6.47% 1997 7.45%
1993 8.87% 1998 6.18%
1994 -3.06% 1999 0.73%
Best Calendar Quarter: 2Q95 5.30%
Worst Calendar Quarter: 1Q94 -2.50%
Please remember that past performance is no guarantee of the results the Bond
Fund may achieve in the future. Future returns may be higher or lower than the
returns the fund achieved in the past.
How does the performance of the Bond Fund compare to the bond market?
The following table compares the performance 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. Returns shown
for the Bond Fund are after the deduction of fund management and operating
expenses. The Lehman Index returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1999)
One Year Five Year Ten Year
Bond Fund 0.73% 6.59% 6.66%
Lehman Index 0.39% 7.10% 7.26%
<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:
o are looking for a more conservative option to a growth-oriented fund
o want a well-diversified and relatively stable investment allocation
o need a core investment
o seek a reasonable total return over the long term irrespective of its form
(i.e., capital gains or ordinary income) or
o are retired or nearing retirement.
You may want to invest fewer of your assets in this fund if you:
o are investing for maximum return over a long time horizon
o want your return to be either ordinary income or capital gains, but not
both or
o require a high degree of stability of your principal.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
The risks of this fund are similar to the risks described for the Bond, Money
Market, Growth and Income Stock and Capital Appreciation Stock Funds because it
invests in the same types of securities. As with any fund that invests in stocks
and bonds, the fund is subject to market and interest rate risks, the risks that
the value of your investment will fluctuate in response to stock and bond market
movements and changes in interest rates.
Generally, if interest rates rise, the market value of income bearing securities
(including bonds) will decline. There is also the risk that the issuer will not
pay its debts. If payments on an income bearing security are not paid when due,
it may cause the net asset value of the fund to go down.
Because different stocks and bonds move in and out of favor depending on market
conditions, investor sentiment and a myriad of other issues, the fund may
sometimes outperform funds with a different investment objective and sometimes
underperform them. Loss of money is a risk of investing in this fund.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Balanced Fund invests in a broadly diversified array of securities including
common stocks, bonds and money market instruments. The fund employs regular
rebalancing to maintain a relatively static asset allocation. Stock, bond and
cash components will vary, however, reflecting the relative availability of
attractively priced stocks and bonds. Generally, however, common stocks will
constitute 60% to 40% of the fund's assets, bonds will constitute 40% to 60% of
the fund's assets and money market instruments may constitute up to 20% of the
fund's assets. The Balanced Fund will invest primarily in the same types of
equity securities in which the Capital Appreciation Stock and Growth and Income
Stock Funds invest, the same types of bonds in which the Bond Fund invests, and
the same types of money market instruments in which the Money Market Fund
invests.
The fund may invest up to 25% of its assets in foreign securities.
The fund typically sells a stock when the fundamental expectations for buying it
no longer apply, the price exceeds its perceived value or other stocks appear
more attractively priced relative to their values.
<PAGE>
BALANCED FUND PERFORMANCE
How has the Balanced Fund performed? The following chart provides an indication
of the risks of investing in the Balanced Fund by showing the changes in the
portfolio performance of the Fund from year to year over a 10-year period. The
chart assumes the reinvestment of all dividends and distributions. The figures
shown do not reflect charges deducted in connection with variable contracts.
Total Returns
(for years ended 12/31)
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
the Balanced Fund. Total returns are as follows:
1990 3.75% 1995 22.27%
1991 18.53% 1996 10.79%
1992 6.85% 1997 16.87%
1993 10.47% 1998 13.40%
1994 -0.46% 1999 14.49%
BestCalendar Quarter: 4Q98 11.43%
Worst Calendar Quarter: 3Q90 -5.69%
Please remember that past performance is no guarantee of the results the
Balanced Fund may achieve in the future. Future returns may be higher or lower
than the returns the fund achieved in the past.
How does the performance of the Balanced Fund compare to the balanced market?
The following table compares the performance of the Balanced Fund with the
performance of the Synthetic Index* and each of the components of the Synthetic
Index, which is one measure of the performance of the relevant market. Returns
shown for the Balanced Fund are after the deduction of fund management and
operating expenses. The Synthetic Index returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1999)
One Year Five Year Ten Year
Balanced Fund 14.49% 15.50% 11.50%
Synthetic Index* 10.14% 16.27% 11.95%
S&P 500 Stock Index 21.04% 28.55% 18.20%
Lehman Index 0.39% 7.10% 7.26%
90-day U.S. Treasury Bills 4.73% 5.19% 5.04%
*The synthetic 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>
HIGH INCOME FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The High Income Fund seeks high current income by investing primarily in a
diversified portfolio of lower-rated, higher-yielding income bearing securities.
The fund also seeks capital appreciation, but only when consistent with its
primary goal.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
o are seeking higher potential returns than most bond funds and are willing
to accept significant risk of volatility
o want to diversify your investments or
o are retired or nearing retirement.
You may want to invest fewer of your assets in this fund if you:
o desire relative stability of your principal or
o are investing for maximum return over a long time horizon.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
This fund is subject to above-average interest rate and credit risks, which are
risks that the value of your investment will fluctuate in response to changes in
interest rates or an issuer will not honor a financial obligation. Investors
should expect greater fluctuations in share price, yield and total return
compared to bond funds holding bonds and other income bearing securities with
higher credit ratings and/or shorter maturities. These fluctuations, whether
positive or negative, may be sharp and unanticipated. Loss of money is a
significant risk of investing in this fund.
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. "Junk" bond markets may react strongly
to adverse news about an issuer or the economy, or to the perception or
expectation of adverse news.
The fund may also invest in mortgage-backed securities that are subject to
prepayment/extension risks described in the Bond Fund Principal Risks.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The High Income Fund invests primarily in lower-rated, higher-yielding income
bearing securities, such as "junk" bonds. Because the performance of these
securities has historically been strongly influenced by economic conditions, the
fund may rotate securities selection by business sector according to the
economic outlook. Under normal market
conditions, the fund invests at least 80% of its assets in bonds rated lower
than investment grade (BBB/Baa) and their unrated equivalents or other
high-yielding securities. Types of bonds and other securities include, but are
not limited to, domestic and foreign corporate bonds, debentures, notes,
convertible securities, preferred stocks, municipal obligations and government
obligations. The fund may invest in mortgage-backed securities.
Up to 25% of its assets may be invested in the securities of issuers in any one
industry.
The fund may also invest up to 25% of its assets in high-yielding foreign
securities, including emerging market securities.
*Note: The High Income 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 Lehman Brothers High Yield Index, which is a measure of
the performance of the relevant market.
<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:
o are looking for a stock fund that has both growth and income components
o are looking for a more conservative option to a growth-oriented fund
o need a core investment
o seek above-average long-term total return through a combination of capital
gains and ordinary income or
o are retired or nearing retirement.
You may want to invest fewer of your assets in this fund if you:
o are investing for maximum return over a long time horizon
o desire your return to be either ordinary income or capital gains, but not
both or
o require a high degree of stability of your principal.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
Any fund that invests in stocks and seeks income is subject to market and
interest rate risks, meaning the value of your investment will fluctuate when
the stock market and interest rates move. Loss of money is a risk of investing
in this fund. In addition, a "value" approach to investing includes the risks
that: 1. the securities markets will not recognize the value of a security for
an unexpectedly long period of time; and 2. a stock that is believed to be
undervalued actually is appropriately priced or over-priced due to unanticipated
problems associated with the issuer or industry. The fund may carry additional
risks relating to foreign securities. The principal risks of foreign securities
are described later in this prospectus and in the SAI.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Growth and Income Fund will focus on stocks of larger companies with
financial and market strengths and a long-term record of financial performance.
Under normal market conditions, the fund will maintain at least 80% of its
assets in these stocks. Primarily through ownership of a diversified portfolio
of common stocks and securities convertible into common stocks, the fund will
seek a rate of return in excess of returns typically available from less
variable investment alternatives. The fund generally follows what is known as a
"value" approach, which generally means that the managers seek to invest in
stocks at prices below their estimated value based on fundamental analysis of
the issuing company and its prospects. By investing in value stocks, the fund
attempts to limit the downside risk over time but may also produce smaller gains
than other stock funds if their values are not realized by the market.
The fund will typically invest in securities representing every sector of the
S&P 500 in about (+/-50%) the same weightings as such sector has in the S&P 500.
For example, if technology companies represent 10% of the S&P 500, the fund will
typically have between 5% and 15% of its assets invested in securities issued by
technology companies.
The fund may also invest in warrants, preferred stocks and debt securities
(including non-investment grade debt securities). The fund may invest up to 25%
of its assets in foreign securities.
The fund typically sells a stock when the fundamental expectations for buying it
no longer apply, the price exceeds its value or other stocks appear more
attractively priced relative to their values.
<PAGE>
GROWTH AND INCOME STOCK FUND PERFORMANCE
How has the Growth and Income Stock Fund performed?
The following chart provides an indication of the risks of investing in the
Growth and Income Stock Fund by showing the changes in the portfolio performance
of the Fund from year to year over a 10-year period. The chart assumes the
reinvestment of all dividends and distributions. The figures shown do not
reflect charges deducted in connection with variable contracts.
Total Returns
(for years ended 12/31)
GRAPHIC: Bar chart that shows total returns for the past ten calendar years for
the Growth and Income Stock Fund. Total returns are as follows:
1990 -1.98% 1995 31.75%
1991 25.66% 1996 22.02%
1992 7.66% 1997 31.42%
1993 13.77% 1998 17.92%
1994 1.42% 1999 17.95%
Best Calendar Quarter: 4Q98 17.82%
Worst Calendar Quarter: 3Q90 -13.69%
Please remember that past performance is no guarantee of the results the Growth
and Income Stock Fund may achieve in the future. Future returns may be higher or
lower than the returns the fund achieved in the past.
How does the performance of the Growth and Income Stock Fund compare to the
growth and income market?
The following table compares the performance of the Growth & 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. Returns shown for the Growth
and Income Stock Fund are after the deduction of fund management and operating
expenses. The Russell 1000 Index and S&P 500 Index returns bear no such
expenses.
Average Annual Total Returns
(As of December 31, 1999)
One Year Five Year Ten Year
Growth & Income Fund 17.95% 24.06% 16.22%
S&P 500 Stock Index 21.04% 28.55% 18.20%
(Capitalization-weighted)
S&P 500 Stock Index 19.53% 21.33% 13.37%
(Equal-weighted)*
Russell 1000 Index 20.91% 28.05% 18.13%
*The source of the S&P 500 Stock Index (Equal-weighted) data is Birinyi
Associates, Inc.
<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:
o have a longer investment time horizon
o are willing to accept higher on-going short-term risk for the potential of
higher long-term returns
o want to diversify your investments
o are seeking a fund for the growth portion of an asset allocation program or
o 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:
o are investing with a shorter investment time horizon in mind
o are seeking an investment based on income rather than capital gains or
o are uncomfortable with an investment whose value may vary substantially.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
As with any fund that invests in equity securities, this fund is subject to
market risk, the risk that the value of a security may move up and down due to
factors not directly related to the issuer. Loss of money is a significant risk
of investing in this fund. Due to its focus on stocks that may appreciate in
value and lack of emphasis on those that provide current income, this fund will
typically experience greater volatility over time than the Growth and Income
Stock Fund.
In addition, a "value" approach to investing includes the risks that: 1. the
securities markets will not recognize the value of a security for an
unexpectedly long period of time; and 2. a stock that is believed to be
undervalued actually is appropriately priced or over-priced due to unanticipated
problems associated with the issuer or industry.
To the extent that the fund invests in higher-risk securities, it takes on
additional risks that could adversely affect its performance. For example, to
the extent that the fund invests in foreign securities, it will be subject to
the risks related to such securities, including the risks of adverse changes in
the rate of currency exchange and associated unstable political situations. A
further discussion of the principal risks associated with foreign securities is
contained in the foreign securities section and SAI.
To the extent that the fund invests in higher-risk securities, it takes on
additional risks that could adversely affect its performance. For example, to
the extent that the fund invests in foreign securities, it will be subject to
the risks related to such securities, including the risks of changes in the rate
of currency exchange and varying political situations. The principal risks of
foreign securities and small company stocks are described later in this
prospectus and in the SAI.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Capital Appreciation Stock Fund invests primarily in common stocks of
companies of various sizes, and will, under normal market conditions, maintain
at least 80% of its assets in such securities. The fund seeks stocks that have
low market prices relative to their values based on analysis by the fund's
investment adviser of the issuing companies and their prospects. This is
referred to as a "value" approach which is further described on the Growth and
Income Stock Fund page. Relative to the Growth and Income Stock Fund, the
Capital Appreciation Stock Fund will include some smaller, less developed
companies and some companies undergoing more significant changes in their
operations or experiencing significant changes in their markets. The fund will
diversify its holdings among various industries and among companies within those
industries, but will often be less diversified than the Growth and Income Stock
Fund. The combination of these factors introduces greater investment risk than
the Growth and Income Stock Fund, but can also provide higher long-term returns
than are typically available from less risky investments.
The fund will typically invest in securities representing every sector of the
S&P 400 in about (+/-100%) the same weightings as such sector has in the S&P
400. For example, if technology companies represent 10% of the S&P 400, the fund
will typically have between 0% and 20% of its assets invested in securities
issued by technology companies.
The fund may also invest in warrants, preferred stocks and convertible debt
securities, and may invest up to 25% of its assets in foreign securities.
The fund typically sells a stock when the fundamental expectations for buying it
no longer apply, the price exceeds its value, or other stocks appear more
attractively priced relative to their values.
<PAGE>
CAPITAL APPRECIATION STOCK FUND PERFORMANCE
How has the Capital Appreciation Stock Fund performed?
The following chart provides an indication of the risks of investing in the
Capital Appreciation Stock Fund by showing the changes in the portfolio
performance of the Fund from year to year since inception. The chart assumes the
reinvestment of all dividends and distributions. The figures shown do not
reflect charges deducted in connection with variable contracts.
Total Returns
(for years ended 12/31)
GRAPHIC: Bar chart that shows total returns for the Capital Appreciation
Stock Fund since inception. Total returns are as follows:
1994 5.44%
1995 30.75%
1996 21.44%
1997 31.57%
1998 20.90%
1999 25.19%
Best Calendar Quarter: 4Q98 20.84%
Worst Calendar Quarter: 3Q98 -12.04%
Please remember that past performance is no guarantee of the results the Capital
Appreciation Stock Fund may achieve in the future. Future returns may be higher
or lower than the returns the fund achieved in the past.
How does the performance of the Capital Appreciation Stock Fund compare to the
capital appreciation market?
The following table compares the performance of the Capital Appreciation Stock
Fund with the performance of the Russell 3000 Index and S&P 1500 SuperComposite
Stock Index, which are measures of the performance of the relevant market. The
S&P 1500 SuperComposite is a new benchmark for the Fund. We intend to include
the S&P 1500 SuperComposite, and not the S&P 400, going forward because the
Adviser believes the S&P 1500 SuperComposite more accurately reflects the
securities held in the Fund's portfolio of investments. Returns shown for the
Capital Appreciation Stock Fund are after the deduction of fund management and
operating expenses. The Russell 3000 Index, S&P 1500 SuperComposite, and S&P
Midcap 400 Index returns bear no such expenses.
Average Annual Total Returns
(As of December 31, 1999)
One Year Five Year Since Inception*
Capital Appreciation Stock Fund 25.19% 25.89% 22.23%
Russell 3000 Index 20.90% 26.94% 21.90%
S&P 1500 SuperComposite Index 20.25% 25.62% 21.74%**
* Fund commenced operations on January 3, 1994.
**Prior to 1995, the S&P Midcap 400 Index was utilized.
<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:
o have a longer investment time horizon
o are willing to accept higher on-going short-term risk for the potential of
higher long-term returns
o want to diversify your investments
o are seeking a fund for the growth portion of an asset allocation program
o are seeking exposure to smaller companies as part of an asset allocation
program or
o 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:
o are investing with a shorter investment time horizon in mind
o are seeking an investment based on income rather than capital gain or
o 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 or
over-priced due to unanticipated problems associated with the issuer or
industry.
To the extent that the fund invests in higher-risk securities, it takes on
additional risks that could adversely affect its performance. For example, to
the extent that the fund invests in foreign securities, it will be subject to
the risks related to such securities, including the risks of changes in the rate
of currency exchange and varying political situations. The principal risks of
foreign securities and small company stocks are described later in this
prospectus and in the SAI.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Mid-Cap Stock Fund invests primarily in common stocks of midsize and smaller
companies (market capitalization of less than $10 billion at the time of
purchase), and will under normal market conditions, maintain at least 80% of its
assets in such securities. However, the fund will not automatically sell a stock
just because the company's market capitalization has grown beyond the $10
billion upper limit and such position may be increased through additional
purchases.
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 includes 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 diversifies its holdings among various industries and among companies
within those industries but is often 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 typically invests 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 does not have a calendar year of investment
performance, so there is not a bar chart showing the fund returns from year to
year. Once the Fund has at least one calendar year of performance it will be
shown along with the performance of the S&P 400 Midcap Index and the Russell
Midcap Index, which we use to measure the performance of the relevant market.
The following table shows the historical performance of these indexes.
Average Annual Total Returns
(As of December 31, 1999)
One Year Three Year
S&P 400 Midcap Index 13.58%* 21.78%
Russell Midcap Index 18.23%* 21.86%
*The time period is May 1, 1999 to December 31, 1999.
<PAGE>
EMERGING GROWTH FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Emerging Growth 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:
o have a very long er investment time horizon
o are willing to accept significantly greater riskhigher on-g oing short-term
risk forfor the potential of higher long-term returns
o want to diversify your investments
o are seeking a fund for the growth portion of an asset allocation program
o are seeking exposure to smaller companies as part of an asset allocation
program or
o 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:
o are investing with a shorter investment time horizon in mind
o are seeking an investment based on income rather than capital gain or
o 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 stocks of fast-growing companies,
including those of smaller capitalization companies, it will typically
experience greater volatility over time than the Capital Appreciation Fund.
Securities of smaller capitalization companies experience greater price
volatility than securities of larger capitalization companies because growth
prospects for smaller companies are less certain and the market for such
securities is smaller. Securities of smaller capitalization companies are often
thinly traded and holders may have to sell such securities at a discount from
current market prices or in small lots over an extended period of time. In
addition, such securities are subject to the risk that during certain periods
their liquidity will shrink or disappear suddenly and without warning as a
result of adverse economic or market conditions, or adverse investor
perceptions, whether or not accurate. The fund could lose money if it has to
sell illiquid securities at a disadvantageous time. The costs of purchasing or
selling securities of smaller capitalization companies are often greater than
those of more widely traded securities and securities of smaller capitalization
companies are often difficult to value.
Many emerging growth companies do not have established financial histories;
often having limited product lines, markets or financial resources; may depend
on a few key personnel for management; and may be susceptible to losses and
risks of bankruptcy.
To the extent that the fund invests in other higher-risk securities, it takes on
additional risks that could adverslyadversely 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 associated
with changes in the rate of currency exchange and unstable political situations.
A further discussion of the principal risks associated with foreign securities
is contained in the International Stock Fund page.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Emerging Growth Fund invests generally in common stocks, securities
convertible into common stocks and related equity securities. The funds seeks
securities of emerging growth companies, which are companies that are either:
o major enterprises whose rates of earnings growth are anticipated to
accelerate because of changes such as new management, new products, changes
in demand for the company's products, or changes in the economy or segments
of the economy affecting the company; or
o relatively small or early in their life cycle, but have the potential to
become much larger enterprises.
Emerging growth companies that the fund seeks may be of any size if they have
products, proprietary technologies, management, or market opportunities that can
support earnings growth over extended time periods in excess of the growth rate
of the economy and/or the rate of inflation. Nonetheless, most such companies
are small and have securities with smaller market capitalization.
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, including emerging market securities.
*Note: The Emerging Growth 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 500 Large Cap Index and the Russell 2000 Index, which
are measures of the performance of the relevant market.
<PAGE>
INTERNATIONAL STOCK FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The International Stock Fund seeks long-term capital appreciation by investing
primarily in foreign equity companies.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
o are seeking to diversify your domestic investments
o are seeking access to access investments in securitiesto markets that can
be less accessible to individual investors in the U.S.
o are willing to accept high risk in pursuit ofto achieve higher long-term
growth
o are seeking funds for the growth portion of an asset allocation program or
o are investing for goals that are many years in the future
You may want to invest fewer of your assets in this fund if you:
o are investing with a shorter investment time horizon in mind
o are uncomfortable with an investment whose value may vary substantially
o are seeking an investment based on income rather than capital gains or
o want to limit your exposure to foreign markets or currencies or income from
foreign sources.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
As with any fund investing in stocks, the value of your investment will
fluctuate in response to stock market movements as described in the earlier fund
pages. Loss of money is a significant risk of investing in this fund. There is
also a risk that poor security selection by the adviser will cause the fund to
underperform other funds having a similar objective.
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. These risks may make
the fund more volatile than a comparable domestic stock fund. For example,
foreign securities are typically subject to:
o Fluctuations in currency exchange rates.
o Higher trading and custody charges compared to securities of U.S.
companies.
o 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.
o Less stringent securities regulation. Securities regulations in many
foreign countries are often more lax than those of the U.S.
o Potential political instability.
o 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 external influenceseconomic fluctuations.
The risks of international investing are higher in emerging markets such as
those of Latin America, Africa, Asia and Eastern Europe. Additionally, investing
in smaller companies involves a higher level of risk compared to larger, more
established companies. Some 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 stock prices may fluctuate
more over the short-term, but may also have more potential to grow. To the
extent that the fund invests in smaller capitalization companies or utilizes
higher-risk securities and practices, it takes on further risks that could
adversely affect its performance.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
Under normal market conditions, the International Stock Fund invests at least
80% of its assets in foreign equity securities. Foreign equity 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"- receipts typically issued by a
U.S. financial institution which evidence ownership of underlying securities of
foreign corporate issuers), European depository receipts ("EDRs") and Global
depository receipts ("GDRs"). EDRs and GDRs are receipts evidencing an
arrangement with a non-U.S. financial institution similar to that for ADRs and
are designed for use in non-U.S. securities markets. 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. The fund always holds securities of issuers
located in at least three countries other than the U.S.
Approximately two-thirds (66.67%) of the fund's assets are invested in
relatively large capitalization stocks of issuers located or operating in
developed countries. Such securities are those generally representative of the
securities comprising the Morgan Stanley Capital International, Europe,
Australia, and Far East ("EAFE") Index.
Currently, the fund's remaining assets are invested in small capitalization
stocks and stocks principally traded in emerging markets or of issuers located
in or having substantial business operations in emerging economies. The emerging
economies in which the fund invests are located primarily in the Asia-Pacific
region, Eastern Europe, Central and South America, and Africa. In selecting both
small capitalization stocks and emerging market stocks, the subadviser seeks
securities that are undervalued in the markets in which the securities
principally trade based on its analysis of the issuer's future prospects. Such
an analysis includes both quantitative (screening for specific financial
characteristics) and qualitative (evaluation of the management capabilities and
business prospects of the issuer) elements.
*Note: The International 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 MSCI EAFE Index, which is a measure of the performance of
the relevant market.
<PAGE>
GLOBAL SECURITIES FUND
INVESTMENT OBJECTIVE
What is this fund's goal?
The Global Securities Fund seeks capital appreciation by investing mainly in
common stocks of U.S. and foreign companies.
INVESTOR PROFILE
Who should consider investing in this fund?
You may want to invest more of your assets in this fund if you:
o are seeking to diversify your domestic investments
o are seeking investments in securitiesaccess toaccess to markets that can be
less accessible to individual investors in the U.S.
o are willing to accept high risk in pursuit ofto achieve higher long-term
growth
o are seeking funds for the growth portion of an asset allocation program or
o are investing for goals that are many years in the future
You may want to invest fewer of your assets in this fund if you:
o are investing with a shorter investment time horizon in mind
o are uncomfortable with an investment whose value may vary substantially
o are seeking investments based on income rather than capital gains or
o want to limit your exposure to foreign markets or currencies or income from
foreign sources.
PRINCIPAL RISKS
What are the main risks of investing in this fund?
As with any fund investing in stocks, the value of your investment will
fluctuate in response to stock market movements as described in the earlier fund
pages. Loss of money is a significant risk of investing in this fund. There is
also a risk that poor security selection by the advisor will cause the fund to
underperform other funds having a similar objective.
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. These risks may make
the fund more volatile than a comparable domestic stock fund. For example,
foreign securities are typically subject to:
o Fluctuations in currency exchange rates.
o Higher trading and custody charges compared to securities of U.S.
companies.
o 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.
o Less stringent securities regulation. Securities regulations in many
foreign countries are often more lax than those of the U.S.
o Potential political instability.
o 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 fluctuationsexternal influences.
The risks of international investing are higher in emerging markets such as
those of Latin America, Africa, Asia and Eastern Europe. Additionally, investing
in smaller companies involves a higher level of risk compared to larger, more
established companies. Some 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 stock prices may fluctuate
more over the short-term, but may also have more potential to grow. To the
extent that the fund invests in smaller capitalization companies or utilizes
higher-risk securities and practices, it takes on further risks that could
adversely affect its performance.
To the extent the fund invests in U.S. common stocks, it is subject to the risks
described in fund pages for the Growth and Income, Capital Appreciation and
Emerging Growth Funds.
PRINCIPAL INVESTMENT STRATEGIES
How does this fund pursue its objective?
The Fund invests mainly in foreign equity securities and equity securities of
companies in the U.S. The Fund can invest without limit in foreign securities
and can invest in any country, including countries with developed or emerging
markets. However, the Fund currently emphasizes investments in developed markets
such as the United States, Western European countries and Japan. The Fund
normally will invest in at least three countries (one of which may be the United
States). The Fund does not limit its investments to companies in a particular
capitalization range, but currently focuses its investments in mid-cap and
large-cap companies.
In selecting securities for the Fund, the adviser looks primarily for foreign
and U.S. companies with high growth potential. The adviser uses fundamental
analysis of a company's financial statements, management structure, operations
and product development, and considers factors affecting the industry of which
the issuer is part.
The adviser considers overall and relative economic conditions in U.S. and
foreign markets, and seeks broad portfolio diversification in different
countries to help moderate the special risks of foreign investing.
*Note: The Global Securities 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 MSCI World Index, which is a measure of the performance
of the relevant market.
<PAGE>
RISK VS. RETURN
The risk/return curve below demonstrates that, in general for diversified
portfolios of securities of the various types, as short-term risk increases the
potential for long-term gain also increases.
"Short-term risk" refers to the likely volatility of a fund's total return and
its potential for gain or loss over a relatively short time period. "Long-term
potential gain" means the expected average annual total return over a relatively
long time period, such as 20 years.
GRAPHIC: This graphic shows where each of the funds in the Ultra Series Fund, in
addition to other types of investments, fall on a curve that depicts the risk
taken for the gain potential. The x-axis is labelled "Long Term Potential for
Gains"; the y-axis is labelled "Short Term Risk (Volatility of Returns)."
This curve is not intended to indicate future volatility or performance. It is
merely intended to demonstrate the relationship between the ongoing short-term
risk and the long-term potential for gain of each portfolio of the Ultra Series
Fund relative to other funds and types of investments.
Although each fund expects to pursue its investment objective using its
principal investment strategies regardless of market conditions, each fund may
invest up to 100% of its assets in money market securities as a defensive tactic
in abnormal market conditions.
The preceding fund pages provide descriptions of the general investment
strategies and what we believe to be the principal risks of each of the funds.
The fund pages do not contain an exhaustive description of all the risks and
investment strategies of the funds. Please read each of the fund pages to gain a
basic understanding of the funds. For a more detailed description, including
non-principal risks, investment strategies, and investment restrictions, please
consult the Statement of Additional Information. Also, if there are terms or
concepts you do not fully understand, please consult the SAI, other reference
material or your registered representative before investing.
<PAGE>
RISKS ASSOCIATED WITH CERTAIN HIGHER RISK SECURITIES
FOREIGN SECURITIES
As indicated in the earlier pages, several of the funds may invest in foreign
equity and debt securities. Foreign securities are securities that are issued by
companies organized outside the U.S. 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:
o Fluctuations in currency exchange rates.
o Higher trading and custody charges compared to securities of U.S.
companies.
o 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.
o Less stringent securities regulations than those of the U.S.
o Potential political instability.
o Potential economic instability. The economies of individual foreign
countries may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rate of inflation, and
industry diversification. Such differences may cause the economies of these
countries to be less stable than the U.S. economy and may make them more
sensitive to economic fluctuations.
Some of the investments will be stocks or bonds of relatively large issuers
located or operating in developed countries. Such securities are those generally
representative of the companies comprising the Morgan Stanley Capital
International, Europe, Australia, and Far East ("EAFE") Stock Index.
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>
THE SHARES
OFFER
Currently, each series of shares is divided into two classes - Class C and Class
Z. Class C and Class Z are identical except that Class C shares bear a
distribution fee pursuant to a distribution plan, adopted in accordance with
Rule 12b-1 under the Act. Both Classes are sold in a continuous offering. This
prospectus offers the Class Z shares.
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
Bond Fund Bond Subaccount
Balanced Fund Balanced Subaccount
High Income Fund High Income Subaccount
Growth and Income Stock Fund Growth and Income Stock Subaccount
Capital Appreciation Stock Fund Capital Appreciation Stock Subaccount
Mid-Cap Stock Fund Mid-Cap Stock Subaccount
Emerging Growth Fund Emerging Growth Subaccount
International Stock Fund International Stock Subaccount
Global Securities Fund Global Securities 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.
<PAGE>
DIVIDENDS
Dividends of the various funds in the Ultra Series 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 and reinvested daily 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, Mid-Cap Stock, Emerging Growth, High Income,
International Stock and Global Securities Funds are declared and reinvested
quarterly in full and fractional shares. Dividends of capital gains from these
are 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.
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 regular trading on the New York Stock Exchange.
Net asset values are calculated on any day the New York Stock Exchange is open
for business. To the extent the funds have portfolio securities that are
primarily listed on foreign exchanges that trade on weekends or other days when
the funds do not price their shares, the net asset value of the fund's shares
may change on days when shareholders will not be able to purchase or redeem the
fund's shares.
Federal securities regulations will be followed in case of an emergency that
interferes with valuation of shares.
The funds' shares will be purchased and redeemed at their net asset value.
Generally, the assets of each fund are valued using market quotations and
independent pricing services. If these are not available, the value of the
assets of the funds will be based on their "fair value" as determined in
accordance with procedures adopted by the Board of Trustees. The assets of the
Money Market Fund and other short-term investments having maturities of 60 days
or less will be valued at amortized cost. More information about the calculation
of net asset value is in the SAI.
<PAGE>
TAXES
For federal income tax purposes, each Fund will be treated as a separate entity.
Each Fund intends to qualify each year as a "regulated investment company" under
the Internal Revenue Code, as amended (the "Code"). By so qualifying, a Fund is
not subject to federal income tax to the extent that its net investment income
and net realized capital gains are distributed to the separate accounts of
insurance companies or to qualified plans. Further, each Fund intends to meet
certain diversification requirements applicable to mutual funds underlying
variable life insurance and variable annuity contracts.
The Shareholders of the Funds are qualified pension and profit sharing plans and
the separate accounts of life insurance companies. Under current law, plan
participants and owners of variable life insurance and annuity contracts which
have invested in a Fund are not subject to federal income tax on Fund
distributions or on gains realized upon the sale or redemption of Fund shares
until they are withdrawn from the plan or contracts. For information concerning
the federal tax consequences to the purchasers of the variable annuity or
variable life insurance contracts, see the prospectus for such contract.
For more information about the tax status of the Funds, see "Taxes" in the SAI.
MORE ABOUT ULTRA SERIES FUND
PORTFOLIO MANAGEMENT
The investment adviser for the Ultra Series Fund is:
MEMBERS Capital Advisors Inc.
5910 Mineral Point Road
Madison, WI 53701-0391
MEMBERS Capital Advisors (formerly known as CIMCO Inc.) was established on July
6, 1982. It provides investment management of the investment portfolios of CUNA
Mutual Group, its "permanent affiliate" CUNA Mutual Life Insurance Company,
their subsidiaries and affiliates, and MEMBERS Mutual Funds. MEMBERS Capital
Advisors has over $8 billion of assets under management.
MEMBERS Capital Advisors employs a team approach in the management of
investments of all the funds. The Money Market, Bond, Balanced, Growth and
Income Stock, Capital Appreciation Stock Mid-Cap Stock are each managed by teams
of portfolio managers employed by MEMBERS Capital Advisors.
MEMBERS Capital Advisors manages the assets of the High Income, Mid-Cap Stock,
Emerging Growth, International stock and Global Securities Funds (and may in the
future manage other funds) using a "manager of managers" approach under which
MEMBERS Capital Advisors 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. MEMBERS Capital Advisors 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.
MEMBERS Capital Advisors selects subadvisers based on a continuing quantitative
and qualitative evaluation of their skills and proven abilities in managing
assets pursuant to a particular investment style. While superior performance is
the ultimate goal, short-term performance by itself will not be a significant
factor in selecting or terminating subadvisers, and MEMBERS Capital Advisors
does not expect frequent changes in subadvisers.
<PAGE>
MEMBERS Capital Advisors received an order of the Commission that permits the
Ultra Series Fund board to employ particular subadvisers without shareholder
approval. If there is a change in subadvisers, you will receive an "information
statement" within 90 days of the change. The statement will provide you with
relevant information about the reason for the change and information about any
new subadvisers.
MEMBERS Capital Advisors has engaged Wellington Management Company, llp
("Wellington Management"), 75 State Street, Boston, Massachusetts, 02109 as
sub-adviser for the small-cap portion of the assets within Mid-Cap Stock Fund.
Wellington Management became the sub-adviser on May 1, 2000. Wellington
Management is a limited liability partnership which traces its origins to 1928.
Wellington Management provides investment services to investment companies,
employee benefit plans, endowments, foundations, and other institutions and had
over $235 billion in assets under management as of December 31, 1999.
Stephen T. O'Brien, CFA is the Portfolio Manager from Wellington Management
primarily responsible for the Mid-Cap Stock Fund. Mr. O'Brien joined Wellington
Management in 1983 and has over 28 year of investment experience.
MEMBERS Capital Advisors has engaged Massachusetts Financial Services (MFS), 500
Boylston Street, Boston, Massachusetts 02116-3741 as sub-adviser for the
Emerging Growth and High Income Funds. MFS and its predecessor organizations
have a history of money management dating from 1924. MFS is a subsidiary of Sun
Life of Canada (U.S.) Financial Services Holdings, Inc., which in turn is an
indirect wholly owned subsidiary of Sun Life Assurance Company of Canada. MFS
provides investment services to investment companies, employee benefit plans,
endowments, foundations, and other institutions and had over $163 billion in
assets under management as of August 31, 2000.
MEMBERS Capital Advisors has engaged Lazard Asset Management, 30 Rockefeller
Plaza, New York, New York 10020 as sub-adviser for the International Stock Fund.
Lazard provides investment services to investment companies, employee benefit
plans, endowments, foundations, and other institutions and had over $72 billion
in assets under management as of September 27, 2000.
MEMBERS Capital Advisors has engaged Oppenheimer Funds, Inc., Two World Trade
Center, 34th Floor, New York, New York 10048-0203 as sub-adviser for the Global
Securities Fund. Oppenheimer provides investment services to investment
companies, employee benefit plans, endowments, foundations, and other
institutions and had over $131 billion in assets under management as of
September 26, 2000.
In addition to providing portfolio management services, MEMBERS Capital Advisors
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, MEMBERS Capital Advisors
receives a management fee based upon the assets of each fund. The management fee
paid to MEMBERS Capital Advisors is computed and accrued daily and paid monthly,
as indicated in the Expenses section.
<PAGE>
INQUIRIES
If you have any questions regarding the Ultra Series Fund, please contact:
CUNA Brokerage Services, Inc.
2000 Heritage Way
Waverly, IA 50677
(800) 798-5500
(319) 352-4090
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund, assuming reinvestment of all dividends and distributions. The High
Income, Emerging Growth, International Stock and Global Securities Funds do not
have a calendar year of performance and therefore do not appear in the financial
highlights. The financial highlights for the period ended June 30, 2000, are
unaudited. The financial highlights for the year ended December 31, 1999 have
been audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, are included in the SAI or annual report, which are
available upon request. The financial highlights for periods ended December 31,
1998 and prior have been audited by KPMG LLP.
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
Financial Highlights
Six Months Ended June 30, 2000 and
the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
(For a share outstanding throughout
the period): 2000 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------------
Income from Investment Operations
Net Investment Income*** 0.03 0.05 0.05 0.05 0.05 0.05
--------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.03) (0.05) (0.05) (0.05) (0.05) (0.05)
--------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=================================================================================================================
Total Return* 2.78% 4.69% 5.00% 5.01% 4.72% 5.21%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $86,054 $82,646 $56,416 $41,170 $21,011 $11,374
Ratio of Expenses to Average Net Assets** 0.45% 0.45% 0.45% 0.50% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 5.56% 4.72% 4.99% 5.05% 4.74% 5.17%
=================================================================================================================
</TABLE>
For the Money Market Fund, the "seven-day average" yield for the seven days
ended June 30, 2000, was 6.18% and the "effective" yield for that period was
6.37% (unaudited).
* These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.51%, 0.67% and 0.73% for 1997, 1996 and 1995,
respectively.
*** Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Financial Highlights
Six Months Ended June 30, 2000 and
the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
(For a share outstanding throughout
the period): 2000 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $10.05 $10.57 $10.54 $10.33 $10.63 $9.67
--------------------------------------------------------------------
Income from Investment Operations
Net Investment Income*** 0.35 0.62 0.63 0.54 0.65 0.60
Net Realized and Unrealized Gain (Loss)
on Investments (0.10) (0.54) 0.02 0.20 (0.28) 0.96
--------------------------------------------------------------------
Total from Investment Operations 0.25 0.08 0.65 0.74 0.37 1.56
--------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.16) (0.60) (0.62) (0.51) (0.64) (0.59)
Distributions from Realized Capital Gains (0.00) (0.00) (0.00) (0.02) (0.03) (0.01)
--------------------------------------------------------------------
Total Distributions (0.16) (0.60) (0.62) (0.53) (0.67) (0.60)
--------------------------------------------------------------------
Net Asset Value, End of Period $10.14 $10.05 $10.57 $10.54 $10.33 $10.63
=================================================================================================================
Total Return* 2.58% 0.73% 6.18% 7.45% 2.86% 16.37%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s
Omitted) $281,617 $250,485 $228,281 $188,840 $26,572 $13,725
Ratio of Expenses to Average Net
Assets** 0.55% 0.55% 0.55% 0.56% 0.65% 0.65%
Ratio of Net Investment Income to
Average
Net Assets 6.98% 5.92% 5.94% 6.50% 6.25% 6.08%
Portfolio Turnover Rate 331.77% 713.52% 142.98% 30.71% 25.67% 14.74%
=================================================================================================================
</TABLE>
* These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.57%, 0.67% and 0.68% for 1997, 1996 and 1995,
respectively.
*** Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Financial Highlights
Six Months Ended June 30, 2000 and
the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
(For a share outstanding throughout
the period): 2000 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $20.44 $18.74 $17.02 $15.29 $14.63 $12.90
--------------------------------------------------------------------
Income from Investment Operations
Net Investment Income*** 0.34 0.56 0.57 0.62 0.58 0.55
Net Realized and Unrealized Gain
(Loss)
on Investments 0.27 2.14 1.72 1.93 0.98 2.29
--------------------------------------------------------------------
Total from Investment Operations 0.61 2.70 2.29 2.55 1.56 2.84
--------------------------------------------------------------------
Distributions
Distributions from Net Investment
Income (0.17) (0.53) (0.57) (0.63) (0.58) (0.55)
Distributions from Realized Capital Gains (0.11) (0.47) -- (0.19) (0.32) (0.56)
--------------------------------------------------------------------
Total Distributions (0.28) (1.00) (0.57) (0.82) (0.90) (1.11)
--------------------------------------------------------------------
Net Asset Value, End of Period $20.77 $20.44 $18.74 $17.02 $15.29 $14.63
=================================================================================================================
Total Return* 3.00% 14.49% 13.40% 16.87% 10.79% 22.27%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $642,486 $603,136 $449,992 $309,804 $194,725 $110,969
Ratio of Expenses to Average Net Assets** 0.70% 0.70% 0.70% 0.68% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 3.28% 2.83% 3.20% 3.81% 3.91% 4.03%
Portfolio Turnover Rate 141.38% 269.00% 78.71% 21.15% 33.48% 36.68%
=================================================================================================================
</TABLE>
* These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.69%, 0.65% and 0.68% for 1997, 1996 and 1995,
respectively.
*** Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Financial Highlights
Six Months Ended June 30, 2000 and
the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
(For a share outstanding throughout
the period): 2000 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $33.58 $30.56 $27.20 $21.32 $18.20 $15.06
--------------------------------------------------------------------
Income from Investment Operations
Net Investment Income*** 0.17 0.34 0.34 0.31 0.34 0.37
Net Realized and Unrealized Gain (Loss)
on Investments 0.60 5.12 4.52 6.36 3.93 4.37
--------------------------------------------------------------------
Total from Investment Operations 0.77 5.46 4.86 6.67 4.27 4.74
--------------------------------------------------------------------
Distributions
Distributions from Net Investment
Income (0.09) (0.32) (0.34) (0.32) (0.34) (0.37)
Distributions from Realized
Capital Gains (0.12) (2.12) (1.16) (0.47) (0.81) (1.23)
--------------------------------------------------------------------
Total Distributions (0.21) (2.44) (1.50) (0.79) (1.15) (1.60)
--------------------------------------------------------------------
Net Asset Value, End of Period $34.14 $33.58 $30.56 $27.20 $21.32 $18.20
=================================================================================================================
Total Return* 2.29% 17.95% 17.92% 31.42% 22.02% 31.75%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $1,158,733 $1,098,330 $833,174 $590,135 $232,841 $102,138
Ratio of Expenses to Average Net Assets** 0.60% 0.60% 0.60% 0.61% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 0.99% 0.99% 1.17% 1.39% 1.78% 2.28%
Portfolio Turnover Rate 11.87% 20.13% 17.69% 20.39% 40.55% 57.80%
=================================================================================================================
</TABLE>
* These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.61%, 0.65% and 0.69% for 1997, 1996 and 1995,
respectively.
*** Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Financial Highlights
Six Months Ended June 30, 2000 and
the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
(For a share outstanding throughout
the period): 2000 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $25.59 $22.19 $18.85 $14.60 $12.51 $9.97
--------------------------------------------------------------------
Income from Investment Operations
Net Investment Income*** 0.01 0.02 0.06 0.07 0.13 0.14
Net Realized and Unrealized Gain
(Loss)
on Investments 0.83 5.55 3.87 4.52 2.55 2.91
--------------------------------------------------------------------
Total from Investment Operations 0.84 5.57 3.93 4.59 2.68 3.05
--------------------------------------------------------------------
Distributions
Distributions from Net Investment
Income (0.00) (0.02) (0.06) (0.07) (0.13) (0.14)
Distributions from Realized
Capital Gains (0.28) (2.15) (0.53) (0.27) (0.46) (0.37)
--------------------------------------------------------------------
Total Distributions (0.28) (2.17) (0.59) (0.34) (0.59) (0.51)
--------------------------------------------------------------------
Net Asset Value, End of Period $26.15 $25.59 $22.19 $18.85 $14.60 $12.51
=================================================================================================================
Total Return* 3.26% 25.19% 20.90% 31.57% 21.44% 30.75%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $878,670 $839,134 $630,373 $456,194 $98,674 $38,117
Ratio of Expenses to Average Net Assets** 0.80% 0.80% 0.80% 0.82% 0.65% 0.65%
Ratio of Net Investment Income to
Average Net Assets 0.06% 0.10% 0.31% 0.70% 0.96% 1.37%
Portfolio Turnover Rate 9.32% 38.38% 18.67% 17.06% 49.77% 61.32%
=================================================================================================================
</TABLE>
* These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
** During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.83%, 0.66% and 0.75% for 1997, 1996 and 1995,
respectively.
*** Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
MID-CAP STOCK FUND
Financial Highlights
Six Months Ended June 30, 2000 and
the Period Ended December 31
(Unaudited)
(For a share outstanding throughout
the period) 2000 1999 1
Net Asset Value, Beginning of Period $11.15 $10.00
-----------------------
Income from Investment Operations
Net Investment Income**** 0.01 0.03
Net Realized and Unrealized Gain
(Loss)
on Investments 0.72 1.34
-----------------------
Total from Investment Operations 0.73 1.37
-----------------------
Distributions
Distributions from Net Investment
Income (0.01) (0.02)
Distributions from Realized
Capital Gains (0.01) (0.20)
-----------------------
Total Distributions (0.02) (0.22)
-----------------------
Net Asset Value, End of Period $11.86 $11.15
====================================================================
Total Return* 6.56% 13.68%**
====================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $40,921 $26,479
Ratio of Expenses to Average Net Assets 0.78% 1.00%***
Ratio of Net Investment Income to Average
Net Assets 0.11% 0.39%***
Portfolio Turnover Rate 35.04% 35.55%
====================================================================
* 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.
** Not annualized.
*** Annualized.
**** Based on average shares outstanding during period.
1 Commenced operations May 1, 1999.
See accompanying notes to financial statements.
<PAGE>
The following documents contain more information about the funds and are
available free upon request:
Statement of Additional Information (SAI). The SAI contains additional
information about all aspects of the funds. A current SAI has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
Annual and Semiannual Reports. The funds' annual and semiannual reports provide
additional information about the funds' investments. The annual report contains
a discussion of the market conditions and investment strategies that
significantly affected each fund's performance during the last fiscal year.
Requesting Documents. You may request copies of these documents, ask questions
about your account, or request further information about the funds either by
contacting your broker or by contacting the funds at:
Ultra Series Fund
CUNA Mutual Life Insurance Company
2000 Heritage Way
Waverly, IA 50677
(800) 798-5500
Public Information. You can review and copy information about the funds,
including the SAI, at the Securities and Exchange Commission's Public Reference
Room in Washington D.C. You may obtain information on the operation of the
public reference room by calling the Commission at 1-800-SEC-0330. Reports and
other information about the funds also are available on the Commission's
Internet site at http://www.sec.gov. You may obtain copies of this information,
upon payment of a duplicating fee, by writing the Public Reference Section of
the Securities and Exchange Commission, Washington, D.C. 20549-6009.
The Funds are available to the public only through the purchase of:
(1) Class Z Shares by certain individual variable life insurance contracts or
variable annuity contracts;
(2) Class Z Shares by certain group variable annuity contracts for qualified
pension and retirement plans; or
(3) Class C Shares directly by qualified pension and retirement plans.
When used in connection with individual variable annuity contracts or variable
life insurance contracts, this Prospectus must be accompanied by prospectuses
for those contracts. When distributed to qualified pension and retirement plans
or to participants of such plans, this Prospectus may be accompanied by
disclosure materials relating to such plans which should be read in conjunction
with this Prospectus.
Investment Company File No.
811-4815
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ULTRA SERIES FUND
2000 HERITAGE WAY
WAVERLY, IOWA 50677
(319) 352-4090
This is not a prospectus. This statement of additional information should be
read in conjunction with the Ultra Series Fund prospectus dated October 31, 2000
which is incorporated by reference.
The prospectus contains information that an investor should know before
investing. For a copy of the most recent prospectus, call or write CUNA
Brokerage Services, Inc., 2000 Heritage Way, Waverly, Iowa 50677, (319)
352-4090, (800) 798-5500.
OCTOBER 31, 2000
<PAGE>
TABLE OF CONTENTS PAGE
General Information...........................................................1
Investment Practices..........................................................1
Lending Portfolio Securities.........................................1
Restricted Securities................................................2
ForeignTransactions..................................................2
Put and Call Options.................................................9
Financial Futures and Related Options...............................10
Stock Index Futures and Related Options.............................11
Bond Fund Practices.................................................12
Lower-Rated Corporate Debt Securities...............................13
Other Debt Securities...............................................14
Foreign Government Securities.......................................15
Convertible Securities..............................................16
Repurchase Agreements...............................................16
Reverse Repurchase Agreements.......................................17
U.S. Government Securities..........................................17
Mortgage-Backed and Asset-Backed Securities.........................18
Other Securities Related to Mortgages...............................19
Forward Commitment and When-Issued Securities.......................22
Investment Limitations.......................................................22
Portfolio Turnover...........................................................24
Management of the Fund.......................................................25
Officers and Trustees...............................................25
Trustees Compensation...............................................27
Substantial Shareholders............................................27
Beneficial Owners...................................................27
Code of Ethics......................................................27
The Investment Adviser.......................................................28
Management Agreements with Subadvisers.......................................30
The Subadviser for the High Income Fund.............................30
The Subadviser for the Mid-Cap Stock Fund...........................30
The Subadviser for the Emerging Growth Fund.........................30
The Subadviser for the International Stock Fund.....................30
The Subadviser for the Global Securities Fund.......................30
Expenses of the Fund.........................................................31
Distribution Plan and Agreement..............................................32
Transfer Agent...............................................................33
Custodian....................................................................33
Independent Accountants......................................................32
Brokerage....................................................................33
How Securities Are Offered...................................................35
Shares Of Beneficial Interest.......................................35
Limitation of Trustee and Officer Liability.........................35
Limitation of Interseries Liability.................................36
Net Asset Value of Shares....................................................37
Money Market Fund...................................................37
Bond, Balanced, High Income, Growth and Income Stock,
Capital Appreciation Stock, Mid-Cap Stock, Emerging Growth,
International Stock, and Global Securities Funds...................38
Dividends, Distributions and Taxes...........................................39
Options and Futures Transactions....................................40
Straddles...........................................................41
Distributor.........................................................42
Calculation of Yields and Total Returns......................................42
Money Market Fund Yields............................................43
Other Fund Yields...................................................44
Average Annual Total Returns........................................45
Other Total Returns.................................................45
Financial Statements.........................................................46
<PAGE>
GENERAL INFORMATION
The Ultra Series Fund is an investment company consisting of ten 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 ten Funds are Money Market, Bond,
Balanced, High Income, Growth and Income Stock, Capital Appreciation Stock,
Mid-Cap Stock, Emerging Growth, International Stock, and Global Securities. The
Ultra Series Fund was organized under the laws of the Commonwealth of
Massachusetts on September 16, 1983, and is a Massachusetts Business Trust.
Under Massachusetts's law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Ultra Series Fund. The Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Ultra Series Fund and
requires that notice of such disclaimer be given in each instrument entered into
or executed by the Ultra Series Fund. The Declaration of Trust provides for
indemnification out of the Ultra Series Fund property for any shareholder held
personally liable for the obligations of the Ultra Series Fund. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Ultra Series Fund itself would be unable
to meet its obligations.
INVESTMENT PRACTICES
The Ultra Series Fund is a diversified open-end management investment company
consisting of ten 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 ten Funds. The following
information is provided for those investors wishing to have more comprehensive
information than that contained in the Prospectus. Within the past year, no Fund
has employed any of the following practices: lending of portfolio securities,
investing in restricted securities, investing in options, financial futures,
stock index futures and related options. Except for the High Income, Mid-Cap
Stock, Emerging Growth, International Stock, and Global Securities Funds (as
described below), no Fund has a current intention of employing these practices
in the foreseeable future.
If the Ultra Series Fund enters into futures contracts or call options thereon,
reverse repurchase agreements, firm commitment agreements or standby commitment
agreements, the Ultra Series Fund will obtain approval from the Board of
Trustees to establish a segregated account with the custodian of the Ultra
Series Fund. The segregated account will hold liquid assets such as cash, U.S.
government assets and high-grade debt obligations. The cash value of the
segregated account will be not less than the market value of the futures
contracts and call options thereon, reverse repurchase agreements, firm
commitment agreements and standby commitment agreements.
Lending Portfolio Securities
All Funds, except the Money Market Fund, may lend portfolio securities. Such
loans will be made only in accordance with guidelines established by the
Trustees and on the request of broker-dealers or institutional investors deemed
qualified, and only when the borrower agrees to maintain cash or securities as
collateral with the Fund equal at all times to at least 100% of the value of the
securities. The Fund will continue to receive interest or dividends on the
securities loaned and will, at the same time, earn an agreed-upon amount of
interest on the collateral which will be invested in readily marketable
short-term obligations of high quality. The Fund will retain the right to call
the loaned securities and intends to call loaned voting securities if important
shareholder meetings are imminent. Such security loans will not be made if, as a
result, the aggregate of such loans exceeds 30% of the value of the Fund's
assets. The Fund may terminate such loans at any time. While there may be delays
in recovery of loaned securities or even a loss of rights in collateral supplied
should the borrower fail financially, loans will be made only to firms deemed by
the Investment Adviser or SubAdviser to be in good standing and will not be made
unless, in the judgment of the Investment Adviser or SubAdviser, the
consideration to be earned from such loans would justify the risk.
Restricted Securities
Each Fund, except the Money Market, High Income, Mid-Cap Stock, Emerging Growth,
International Stock, and Global Securities Funds, may invest up to 10% of its
net assets in restricted securities. The High Income, Mid-Cap Stock, Emerging
Growth, International Stock, and Global Securities Funds may invest up to 15% of
the Fund's net assets in restricted securities. Securities regulations limit the
resale of restricted securities which have been acquired through private
placement transactions, directly from the issuer or from security holders,
generally at higher yields or on terms more favorable to investors than
comparable publicly traded securities. Privately placed securities are often not
readily marketable and ordinarily can be sold only in privately negotiated
transactions to a limited number of purchasers or in public offerings made
pursuant to an effective registration statement under the Securities Act of
1933. Private or public sales of such securities by the Fund may involve
significant delays and expense. Private sales require negotiations with one or
more purchasers and generally produce less favorable prices than the sale of
comparable unrestricted securities. Public sales generally involve the time and
expense of preparing and processing a registration statement under the
Securities Act of 1933 and may involve the payment of underwriting commissions;
accordingly, the proceeds may be less than the proceeds from the sale of
securities of the same class which are freely marketable. Restricted securities
in each Fund will be valued at fair value as determined in good faith by or at
the direction of the Trustees for purposes of determining the Fund's Net Asset
Value. Such securities, when possible, will be valued on a comparative basis to
securities with similar characteristics for which market prices are available.
Foreign Transactions
Foreign Securities. All Funds may invest in foreign securities. Except for the
High Income, Mid-Cap Stock, Emerging Growth, International Stock, and Global
Securities Funds, no Fund will invest more than 10% of its total assets in
foreign securities. ADRs are not considered foreign securities for this purpose.
However, the Growth and Income Stock, and Capital Appreciation Stock Funds may
invest up to 25% of assets, and the Balanced Fund may invest up to 15% of assets
in American Depository Receipts and foreign securities. The High Income, Mid-Cap
Stock, and Emerging Growth, may invest up to 25% of the Fund's total assets in
foreign securities and has no limitations on ADRs.
The International Stock and Global Securities Funds may invest up to 100% of the
Fund's total assets in foreign securities.
Foreign securities means securities that are: (1) issued by companies organized
outside the U.S. or whose principal operations are outside the U.S. ("foreign
issuers"), (2) issued by foreign governments or their agencies or
instrumentalities (also "foreign issuers"), (3) principally traded outside of
the U.S., or (4) quoted or denominated in a foreign current ("non-dollar
securities").
Foreign securities may offer potential benefits that are not available from
investments exclusively in securities of domestic issuers or dollar denominated
securities. Such benefits may include the opportunity to invest in foreign
issuers that appear to offer better opportunity for long-term capital
appreciation or current earnings than investments in domestic issuers, the
opportunity to invest in foreign countries with economic policies or business
cycles different from those of the U.S. and the opportunity to invest in foreign
securities markets that do not necessarily move in a manner parallel to U.S.
markets.
Investing in foreign securities involves significant risks that are not
typically associated with investing in U.S. dollar denominated securities or in
securities of domestic issuers. Such investments may be affected by changes in
currency exchange rates, changes in foreign or U.S. laws or restrictions
applicable to such investments and in exchange control regulations (e.g.,
currency blockage). Some foreign stock markets may have substantially less
volume than, for example, the New York Stock Exchange and securities of some
foreign issuers may be less liquid than securities of comparable domestic
issuers. Commissions and dealer mark-ups on transactions in foreign investments
may be higher than for similar transactions in the U.S. In addition, clearance
and settlement procedures may be different in foreign countries and, in certain
markets, on certain occasions, such procedures have been unable to keep pace
with the volume of securities transactions, thus making it difficult to conduct
such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
companies. There may be less publicly available information about a foreign
issuer than about a domestic one. In addition, there is generally less
government regulation of stock exchanges, brokers, and listed and unlisted
issuers in foreign countries than in the U.S. Furthermore, with respect to
certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, imposition of withholding taxes on dividend or interest
payments, limitations on the removal of funds or other assets of the fund making
the investment, or political or social instability or diplomatic developments
which could affect investments in those countries.
Investments in short-term debt obligations issued either by foreign issuers or
foreign financial institutions or by foreign branches of U.S. financial
institutions (collectively, "foreign money market securities") present many of
the same risks as other foreign investments. In addition, foreign money market
securities present interest rate risks similar to those attendant to an
investment in domestic money market securities.
Investments in ADRs, EDRs and GDRs. Many securities of foreign issuers are
represented by American depository receipts ("ADRs"), European depository
receipts ("EDRs") and global depository receipts ("GDRs"). Each of the funds may
invest in ADRs, and each of the funds other than the Money Market Fund may
invest in GDRs and EDRs.
ADRs are receipts typically issued by a U.S. financial institution or trust
company which represent the right to receive securities of foreign issuers
deposited in a domestic bank or a foreign correspondent bank. Prices of ADRs are
quoted in U.S. dollars, and ADRs are traded in the U.S. on exchanges or
over-the-counter and are sponsored and issued by domestic banks. In general,
there is a large, liquid market in the U.S. for ADRs quoted on a national
securities exchange or the NASD's national market system. The information
available for ADRs is subject to the accounting, auditing and financial
reporting standards of the domestic market or exchange on which they are traded,
which standards are more uniform and more exacting than those to which many
foreign issuers may be subject.
EDRs and GDRs are receipts evidencing an arrangement with a non-U.S. bank
similar to that for ADRs and are designed for use in non-U.S. securities
markets. EDRs are typically issued in bearer form and are designed for trading
in the European markets. GDRs, issued either in bearer or registered form, are
designed for trading on a global basis. EDRs and GDRs are not necessarily quoted
in the same currency as the underlying security.
Depository receipts do not eliminate all the risk inherent in investing in the
securities of foreign issuers. To the extent that a fund acquires depository
receipts through banks which do not have a contractual relationship with the
foreign issuer of the security underlying the receipt to issue and service such
depository receipts, there may be an increased possibility that the fund would
not become aware of and be able to respond to corporate actions such as stock
splits or rights offerings involving the foreign issuer in a timely manner. The
market value of depository receipts is dependent upon the market value of the
underlying securities and fluctuations in the relative value of the currencies
in which the receipts and the underlying are quoted. In addition, the lack of
information may result in inefficiencies in the valuation of such instruments.
However, by investing in depository receipts rather than directly in the stock
of foreign issuers, a fund will avoid currency risks during the settlement
period for either purchases or sales.
Investments in Emerging Markets. The Emerging Growth, High Income, International
Stock and Global Securities Funds may invest in securities of issuers located in
countries with emerging economies and/or securities markets. These countries are
located in the Asia Pacific region, Eastern Europe, Central and South America
and Africa. Political and economic structures in many of these countries may be
undergoing significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristic of more
developed countries. Certain of these countries may have in the past failed to
recognize private property rights and have at times nationalized or expropriated
the assets of private companies. As a result, the risks of foreign investment
generally, including the risks of nationalization or expropriation of assets,
may be heightened. In addition, unanticipated political or social developments
may affect the values of a fund's investments in those countries and the
available to the fund of additional investments in those countries.
The small size and inexperience of the securities markets in certain of these
countries and the limited volume of trading in securities in those countries may
also make the High Income, International Stock and Global Securities Funds'
investments in such countries illiquid and more volatile than investments in
Japan or most Western European countries, and these funds may be required to
establish special custody or other arrangements before making certain
investments in those countries. There may be little financial or accounting
information available with respect to issuers located in certain of such
countries, and it may be difficult as a result to assess the value or prospects
of an investment in such issuers.
A fund's purchase or sale of portfolio securities in certain emerging markets
may be constrained by limitations as to daily changes in the prices of listed
securities, periodic trading or settlement volume and/or limitations on
aggregate holdings of foreign investors. Such limitations may be computed based
on aggregate trading volume by or holdings of a fund, MEMBERS Capital Advisors,
Inc. (formerly known as CIMCO Inc.) or its affiliates, a subadviser and its
affiliates, and each person's respective clients and other service providers. A
fund may not be able to sell securities in circumstances where price, trading or
settlement volume limitations have been reached.
Foreign investment in certain emerging securities markets is restricted or
controlled to varying degrees that may limit investment in such countries or
increase the administrative cost of such investments. For example, certain Asian
countries require government approval prior to investments by foreign persons or
limit investment by foreign persons to a specified percentage of an issuer's
outstanding securities or a specific class of securities which may have less
advantageous terms (including price) than securities of such company available
for purchase by nationals. In addition, certain countries may restrict or
prohibit investment opportunities in issuers or industries important to national
interests. Such restrictions may affect the market price, liquidity and rights
of securities that may be purchased by a fund.
Settlement procedures in emerging markets are frequently less developed and
reliable than those in the U.S. and may involve a fund's delivery of securities
before receipt of payment for their sale. In addition, significant delays are
common in certain markets in registering the transfer of securities. Settlement
or registration problems may make it more difficult for a fund to value its
portfolio assets and could cause a fund to miss attractive investment
opportunities, to have its assets uninvested or to incur losses due to the
failure of a counterparty to pay for securities that the fund has delivered or
due to the fund's inability to complete its contractual obligations.
Currently, there is no market or only a limited market for many management
techniques and instruments with respect to the currencies and securities markets
of emerging market countries. Consequently, there can be no assurance that
suitable instruments for hedging currency and market related risks will be
available at the times when the Investment Adviser of the fund wishes to use
them.
Foreign Currency Transactions Generally. Because investment in foreign issuers
will usually involve currencies of foreign countries, and because the High
Income, Emerging Growth, International Stock and Global Securities Funds may
have currency exposure independent of their securities positions, the value of
the assets of these funds, as measured in U.S. dollars, will be affected by
changes in foreign currency exchange rates.
An issuer of securities purchased by a fund may be domiciled in a country other
than the country in whose currency the instrument is denominated or quoted. The
High Income, Emerging Growth, International Stock and Global Securities Funds
may also invest in securities quoted or denominated in the European Currency
Unit ("ECU"), which is a "basket" consisting of specified amounts of the
currencies of certain of the twelve member states of the European Economic
Community. The specific amounts of currencies comprising the ECU may be adjusted
by the Council of Ministers of the European Economic Community from time to time
to reflect changes in relative values of the underlying currencies. In addition,
these two funds may invest in securities quoted or denominated in other currency
"baskets."
Currency exchange rates may fluctuate significantly over short periods of time
causing, along with other factors, a fund's NAV to fluctuate as well. They
generally are determined by the forces of supply and demand in the foreign
exchange markets and the relative merits of investments in different countries,
actual or anticipated changes in interest rates and other complex factors, as
seen from an international perspective. Currency exchange rates also can be
affected unpredictably by intervention by U.S. or foreign governments or central
banks, or the failure to intervene, or by currency controls or political
developments in the U.S. or abroad. The market in forward foreign currency
exchange contracts, currency swaps and other privately negotiated currency
instruments offers less protection against defaults by the other party to such
instruments than is available for currency instruments traded on an exchange. To
the extent that a substantial portion of a fund's total assets, adjusted to
reflect the fund's net position after giving effect to currency transactions, is
denominated or quoted in the currencies of foreign countries, the fund will be
more susceptible to the risk of adverse economic and political developments
within those countries.
In addition to investing in securities denominated or quoted in a foreign
currency, certain of the funds may engage in a variety of foreign currency
management techniques. These funds may hold foreign currency received in
connection with investments in foreign securities when, in the judgment of the
fund's Investment Adviser, it would be beneficial to convert such currency into
U.S. dollars at a later date, based on anticipated changes in the relevant
exchange rate. The funds will incur costs in connection with conversions between
various currencies.
Forward Foreign Currency Exchange Contracts. The Emerging Growth, High Income,
International Stock and Global Securities Funds may each purchase or sell
forward foreign currency exchange contracts for defensive or hedging purposes
when the fund's Investment Adviser anticipates that the foreign currency will
appreciate or depreciate in value, but securities denominated or quoted in that
currency do not present attractive investment opportunities and are not held in
the fund's portfolio. In addition, these two funds may enter into forward
foreign currency exchange contracts in order to protect against anticipated
changes in future foreign currency exchange rates and may engage in
cross-hedging by using forward contracts in a currency different from that in
which the hedged security is denominated or quoted if the fund's Investment
Adviser determines that there is a pattern of correlation between the two
currencies.
These three funds may enter into contracts to purchase foreign currencies to
protect against an anticipated rise in the U.S. dollar price of securities it
intends to purchase. They may enter into contracts to sell foreign currencies to
protect against the decline in value of its foreign currency denominated or
quoted portfolio securities, or a decline in the value of anticipated dividends
from such securities, due to a decline in the value of foreign currencies
against the U.S. dollar. Contracts to sell foreign currency could limit any
potential gain which might be realized by a fund if the value of the hedged
currency increased.
If a fund enters into a forward foreign currency exchange contract to buy
foreign currency for any purpose, the fund will be required to place cash or
liquid high grade debt securities in a segregated account with the fund's
custodian in an amount equal to the value of the fund's total assets committed
to the consummation of the forward contract. If the value of the securities
placed in the segregated account declines, additional cash or securities will be
placed in the segregated account so that the value of the account will equal the
amount of the fund's commitment with respect to the contract.
Forward contracts are subject to the risk that the counterparty to such contract
will default on its obligations. Since a forward foreign currency exchange
contract is not guaranteed by an exchange or clearinghouse, a default on the
contract would deprive a fund of unrealized profits, transaction costs or the
benefits of a currency hedge or force the fund to cover its purchase or sale
commitments, if any, at the current market price. A fund will not enter into
such transactions unless the credit quality of the unsecured senior debt or the
claims-paying ability of the counterparty is considered to be investment grade
by the fund's Investment Adviser.
Options on Foreign Currencies. The High Income, Emerging Growth, International
Stock and Global Securities Funds may also purchase and sell (write) put and
call options on foreign currencies for the purpose of protecting against
declines in the U.S. dollar value of foreign portfolio securities and
anticipated dividends on such securities and against increases in the U.S.
dollar cost of foreign securities to be acquired. These funds may use options on
currency to cross-hedge, which involves writing or purchasing options on one
currency to hedge against changes in exchange rates for a different currency, if
there is a pattern of correlation between the two currencies. As with other
kinds of option transactions, however, the writing of an option on foreign
currency will constitute only a partial hedge, up to the amount of the premium
received. A fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against exchange
rate fluctuations; however, in the event of exchange rate movements adverse to a
fund's position, the fund may forfeit the entire amount of the premium plus
related transaction costs. In addition, these funds may purchase call or put
options on currency to seek to increase total return when the fund's Investment
Adviser anticipates that the currency will appreciate or depreciate in value,
but the securities quoted or denominated in that currency do not present
attractive investment opportunities and are not held in the fund's portfolio.
When purchased or sold to increase total return, options on currencies are
considered speculative. Options on foreign currencies to be written or purchased
by these funds will be traded on U.S. and foreign exchanges or over-the-counter.
See "Stock Index Futures and Related Options" above for a discussion of the
liquidity risks associated with options transactions.
Special Risks Associated With Options on Currency. An exchange traded options
position may be closed out only on an options exchange which provides a
secondary market for an option of the same series. Although a 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 will exist for any particular option, or at any particular time. For
some options no secondary market on an exchange may exist. In such event, it
might not be possible to effect closing transactions in particular options, with
the result that a fund would have to exercise its options in order to realize
any profit and would incur transaction costs upon the sale of underlying
securities pursuant to the exercise of put options. If a 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 see the underlying currency (or security quoted
or denominated in that currency) until the option expires or it delivers the
underlying currency upon exercise.
There is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at times, render certain of the facilities of the
Options Clearing Corporation inadequate, and thereby result in the institution
by an exchange of special procedures which may interfere with the timely
execution of customers' orders.
The High Income Fund, International Stock and Global Securities Fund may each
purchase and write over-the-counter options to the extent consistent with its
limitation on investments in restricted securities. Trading in over-the-counter
options is subject to the risk that the other party will be unable or unwilling
to close-out options purchased or written by the fund.
The amount of the premiums which a fund may pay or receive may be adversely
affected as new or existing institutions, including other investment companies,
engage in or increase their option purchasing and writing activities.
Interest Rate Swaps, Currency Swaps and Interest Rate Caps, Floors and Collars.
The High Income, International Stock and Global Securities Fund may each enter
into interest rate and currency swaps for hedging purposes and to seek to
increase total return. The High Income Fund may also enter into special interest
rate swap arrangements such as caps, floors and collars for both hedging
purposes and to seek to increase total return. The High Income Fund typically
uses interest rate swaps to shorten the effective duration of its portfolio.
Interest rate swaps involve the exchange by the High Income Fund with another
party of their respective commitments to pay or receive interest, such as an
exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange by the funds with another party of their respective rights
to make or receive payments in specified currencies. The purchase of an interest
rate cap entitles the purchaser to receive from the seller of the cap payments
of interest on a notional amount equal to the amount by which a specified index
exceeds a stated interest rate. The purchase of an interest rate floor entitles
the purchaser to receive from the seller of the floor payments of interest on a
notional amount equal to the amount by which a specified index falls below a
stated interest rate. An interest rate collar is the combination of a cap and a
floor that preserves a certain return within a stated range of interest rates.
Since interest rate swaps, currency swaps and interest rate caps, floors and
collars are individually negotiated, these three funds expect to achieve an
acceptable degree of correlation between their portfolio investments and their
interest rate or currency swap positions entered into for hedging purposes.
The High Income Fund only enters into interest rate swaps on a net basis, which
means the two payment streams are netted out, with the fund receiving or paying,
as the case may be, only the net amount of the two payments. Interest rate swaps
do not involve the delivery of securities, or underlying assets or principal.
Accordingly, the risk of loss with respect to interest rate swaps is limited to
the net amount of interest payments that the fund is contractually obligated to
make. If the other party to an interest rate swap defaults, the fund's risk of
loss consists of the net amount of interest payments that the fund is
contractually entitled to receive. In contrast, currency swaps usually involve
the delivery of the entire principal value of one designated currency in
exchange for the other designated currency. Therefore, the entire principal
value of a currency swap is subject to the risk that the other party to the swap
will default on its contractual delivery obligations. The Trust maintains in a
segregated account with its custodian, cash or liquid securities equal to the
net amount, if any, of the excess of each fund's obligations over its
entitlements with respect to swap transactions. Neither fund enters into swap
transactions unless the unsecured commercial paper, senior debt or claims paying
ability of the other party is considered investment grade by such fund's
Investment Adviser.
The use of interest rate and currency swaps (including caps, floors and collars)
is a highly specialized activity which involves investment techniques and risks
different from those associated with traditional portfolio securities
activities. If the fund's Investment Adviser is incorrect in its forecasts of
market values, interest rates and currency exchange rates, the investment
performance of the High Income Fund, International Stock or Global Securities
Fund would be less favorable than it would have been if this investment
technique were not used.
Inasmuch as swaps are entered into for good faith hedging purposes or are offset
by a segregated account as described below, neither fund's Investment Adviser
believe that swaps constitute senior securities as defined in the Act and,
accordingly, will not treat swaps as being subject to such fund's borrowing
restrictions. An amount of cash or liquid, high grade debt securities having an
aggregate net asset value at least equal to the entire amount of the payment
stream payable by the fund will be maintained in a sewed account by the fund's
custodian. A fund will not enter into any interest rate swap (including caps,
floors and collars) or currency swap unless the credit quality of the unsecured
senior debt or the claim paying ability of the other party thereto is considered
to be investment grade by the fund's Investment Adviser. If there is a default
by the other party to such a transaction, the fund will have contractual
remedies pursuant to the agreement, related to the transaction. The swap market
has grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid comparison with the markets for other similar instruments
which are traded in the interbank market. Nevertheless, the staff of the
Commission takes the position that currency swaps are illiquid investments
subject to these funds' 15% limitation on such investments.
Put and Call Options
All Funds, except the Money Market Fund, may engage in the purchase, sale and
covered writing of put and call options that are traded on U.S. exchanges and
boards of trade. A call option is a contract (generally having a duration of
nine months or less) pursuant to which the purchaser of the call option in
return for a premium paid, has the right to buy the security or instrument
underlying the option at a specified exercise price at any time during the term
of the option. The writer of the call option, who receives the premium, has the
obligation, upon exercise of the option, to deliver the underlying security or
instrument against payment of the exercise price during the option period. A put
option is a similar contract which gives the purchaser of the put option, in
return for a premium, the right to sell the underlying security or instrument at
a specified price during the term of the option. The writer of the put, who
receives the premium, has the obligation to buy the underlying security or
instrument, upon exercise, at the exercise price during the option period.
The writing of a call option is "covered" if the Fund owns the underlying
security or instrument covered by the call or has an absolute and immediate
right to acquire that security or instrument without additional cash
consideration (or for additional cash consideration held in a segregated account
by its custodian) upon conversion or exchange of other securities or instruments
held in its portfolio. The writing of a call option is also covered if the Fund
holds a call on an equivalent amount of the same security or instrument as the
call written where the exercise price of the call held is equal to or less than
the exercise price of the call written or greater than the exercise price of the
call written if the difference is maintained by the Fund in cash, U.S. Treasury
bills or other high grade short-term obligations in a segregated account with
its custodian. The writing of a put option is "covered" if the Fund maintains
cash, U.S. Treasury bills or other high grade short-term obligations with a
value equal to the exercise price in a segregated account with its custodian, or
else holds a put on an equivalent amount of the same security or instrument as
the put written where the exercise price of the put held is equal to or greater
than the exercise price of the put written. The premium paid by the purchaser of
an option will reflect, among other things, the relationship of the exercise
price to the market price and volatility of the underlying security or
instrument, the remaining term of the option, supply and demand, and interest
rates.
If the writer of an option wishes to terminate his obligation, he may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same kind as the option previously written. The effect of the purchase is that
the clearing corporation will cancel the writer's position. However, a writer
may not effect a closing purchase transaction after it has been notified of the
exercise of an option. Likewise, an investor who is the holder of an option may
liquidate his position by effecting a "closing sale transaction." This is
accomplished by selling an option of the same kind as the option previously
purchased. There is no guarantee that either a closing purchase or a closing
sale transaction can be effected.
Effecting a closing transaction in the case of a written call option will permit
the Fund to write another call option on the underlying security or instrument
with either a different exercise price or expiration date or both, or in the
case of a written put option will permit the Fund to write another put option to
the extent that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction will permit the
cash or proceeds from the concurrent sale of any securities or instruments
subject to the option to be used for other Fund investments. If the Fund desires
to sell a particular security or instrument from its portfolio on which it has
written a call option, it will effect a closing transaction prior to or
concurrent with the sale of the security or instrument.
The Fund may write put and call options only if they are covered, and the
options must remain covered so long as a Fund is obligated as a writer.
An option position may be closed out only on an exchange or board of trade which
provides a secondary market for an option of the same kind. Although the Fund
will generally purchase or write only those options for which there appears to
be an active secondary market, there is no assurance that a liquid secondary
market on an exchange or board of trade will exist for any particular option, or
at any particular time, and for some options no secondary market on an exchange
or board of trade may exist. In such event it might not be possible to effect
closing transactions in particular options, with the result that the Fund would
have to exercise its options in order to realize any profit and would incur
brokerage commissions upon the exercise of call options and upon the subsequent
disposition of underlying securities or instruments acquired through the
exercise of call options or upon the purchase of underlying securities or
instruments for the exercise of put options. If the Fund, as a covered call
option writer, is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security or instrument until
the option expires or it delivers the underlying security or instrument upon
exercise.
The use of put and call options is restricted to no more than twenty percent
(20%) of the net assets in the Fund using such option.
Financial Futures and Related Options
The Balanced and Bond 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, High Income, Growth and Income Stock, Capital Appreciation Stock,
Mid-Cap Stock, Emerging Growth, International Stock, and Global Securities 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, High Income and Balanced Funds (collectively, the "Bond Funds") invest
a significant portion of their assets in debt securities. As stated in the
prospectus, the Bond Fund and Balanced 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.
Management does not currently intend to invest more than ten percent (10%) of
the total assets of either the Bond Fund or Balanced Fund in corporate debt
securities which are not in the four highest ratings by Standard & Poor's Rating
Group ("Standard & Poor's") or by Moody's Investors Service, Inc. ("Moody's")
("non-investment grade" or "junk" securities), but, on occasion, each fund may
do so. The High Income Fund may invest all of its assets in non-investment grade
securities.
All three Bond Funds may also invest in debt options, interest rate future
contracts, and options on interest rate futures contracts, and may utilize
interest rate futures and options to manage the risk of fluctuating interest
rates. These instruments will be used to control risk and obtain additional
income and not with a view toward speculation. The Bond Fund and Balanced Fund
will invest only in futures and options which are traded on U.S. exchanges or
boards of trade. The High Income Fund may invest in any non-U.S. futures and
options.
In the debt securities market, purchases of some issues are occasionally made
under firm (forward) commitment agreements. Purchase 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, no Bond Fund will commit itself to forward commitment
agreements in an amount in excess of 25% of total assets and will not engage in
such agreements for leveraging purposes. For purposes of this limitation,
forward commitment agreements are defined as those agreements involving more
than five business days between the commitment date and the settlement date.
Lower-Rated Corporate Debt Securities
As described in the prospectus, each fund, other than the Money Market Fund, may
make certain investments including corporate debt obligations that are unrated
or rated in the lower rating categories (i.e., ratings of BB or lower by
Standard & Poor's or Ba or lower by Moody's). Bonds rated BB or Ba or below by
Standard & Poor's or Moody's (or comparable unrated securities) are commonly
referred to as "lower-rated" securities or as "junk bonds" and are considered
speculative and may be questionable as to principal and interest payments. In
some cases, such bonds may be highly speculative, have poor prospects for
reaching investment standing and be in default. As a result, investment in such
bonds will entail greater speculative risks than those associated with
investment in investment-grade bonds (i.e., bonds rated AAA, AA, A or BBB by
Standard & Poor's or Aaa, Aa, A or Baa by Moody's).
An economic downturn could severely affect the ability of highly leveraged
issuers of junk bonds to service their debt obligations or to repay their
obligations upon maturity. Factors having an adverse impact on the market value
of lower rated securities will have an adverse effect on a fund's net asset
value to the extent it invests in such securities. In addition, a fund may incur
additional expenses to the extent it is required to seek recovery upon a default
in payment of principal or interest on its portfolio holdings.
The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on a
fund's ability to dispose of a particular security when necessary to meet its
liquidity needs. Under adverse market or economic conditions, the secondary
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a result,
the Investment Adviser could find it more difficult to sell these securities or
may be able to sell the securities only at prices lower than if such securities
were widely traded. Prices realized upon the sale of such lower rated or unrated
securities, under these circumstances, may be less than the prices used in
calculating a fund's net asset value.
Since investors generally perceive that there are greater risks associated with
lower-rated debt securities, the yields and prices of such securities may tend
to fluctuate more than those for higher rated securities do. In the lower
quality segments of the fixed-income securities market, changes in perceptions
of issuers' creditworthiness tend to occur more frequently and in a more
pronounced manner than do changes in higher quality segments of the fixed-income
securities market resulting in greater yield and price volatility.
Another factor which causes fluctuations in the prices of fixed-income
securities is the supply and demand for similarly rated securities. In addition,
the prices of fixed-income securities fluctuate in response to the general level
of interest rates. Fluctuations in the prices of portfolio securities subsequent
to their acquisition will not affect cash income from such securities but will
be reflected in a fund's net asset value.
Lower-rated (and comparable non-rated) securities tend to offer higher yields
than higher-rated securities with the same maturities because the historical
financial condition of the issuers of such securities may not have been as
strong as that of other issuers, increasing the risks of loss of income and
principal versus higher-rated securities. In addition to the risk of default,
there are the related costs of recovery on defaulted issues. The Investment
Adviser will attempt to reduce these risks through diversification of these
funds' portfolios and by analysis of each issuer and its ability to make timely
payments of income and principal, as well as broad economic trends in corporate
developments.
Other Debt Securities
Custody Receipts. All of the funds may also 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.
Zero Coupon, Deferred Interest, Pay-in-Kind and Capital Appreciation Bonds. The
High Income and Emerging Growth Funds may invest in zero coupon bonds as well as
in deferred interest, pay-in-kind and capital appreciation bonds. Zero coupon,
deferred interest, pay-in-kind and capital appreciation bonds are debt
obligations which are issued at a significant discount from face value. The
original discount approximates the total amount of interest the bonds will
accrue and compound over the period until maturity or the first interest accrual
date at a rate of interest reflecting the market rate of the security at the
time of issuance.
Zero coupon bonds are debt obligations that do not entitle the holder to any
periodic payments of interest prior to maturity or provide for a specified cash
payment date when the bonds begin paying current interest. As a result, zero
coupon bonds are generally issued and traded at a significant discount from
their face value. The discount approximates the present value amount of interest
the bonds would have accrued and compounded over the period until matured.
Zero coupon bonds benefit the issuer by mitigating its initial need for cash to
meet debt service, but generally provide a higher rate of return to compensate
investors for the deferment of cash interest or principal payments. Such
securities are often issued by companies that may not have the capacity to pay
current interest and so may be considered to have more risk than current
interest-bearing securities. In addition, the market price of zero coupon bonds
generally is more volatile than the market prices of securities that provide for
the periodic payment of interest. The market prices of zero coupon bonds are
likely to fluctuate more in response to changes in interest rates than those of
interest-bearing securities having similar maturities and credit quality.
Zero coupon bonds carry the additional risk that, unlike securities that provide
for the periodic payment of interest to maturity, the High Income Fund will
realize no cash until a specified future payment date unless a portion of such
securities is sold. If the issuer of such securities defaults, the fund may
obtain no return at all on their investment. In addition, the fund's investment
in zero coupon bonds may require it to sell certain of its portfolio securities
to generate sufficient cash to satisfy certain income distribution requirements.
While zero coupon bonds do not require the periodic payment of interest,
deferred interest bonds generally provide for a period of delay before the
regular payment of interest begins. Although this period of delay is different
for each deferred interest bond, a typical period is approximately one-third of
the bond's terms to maturity. Pay-in-kind securities are securities that have
interest payable by the delivery of additional securities. Such investments
benefit the issuer by mitigating its initial need for cash to meet debt service,
but some also provide a higher rate of return to attract investors who are
willing to defer receipt of such cash. Such investments experience greater
volatility in market value due to changes in interest rates than debt
obligations which provide for regular payments of interest. The fund will accrue
income on such investments for tax and accounting purposes, as required, which
is distributable to shareholders and which, because no cash is received at the
time of accrual, may require the liquidation of other portfolio securities to
satisfy the fund's distribution obligations.
Structured Securities. The High Income Fund may invest in structured securities.
The value of the principal of and/or interest on such securities is determined
by reference to changes in the value of specific currencies, interest rates,
commodities, indices or other financial indicators (the "Reference") or the
relative change in two or more References. The interest rate or the principal
amount payable upon maturity or redemption may be increased or decreased
depending upon changes in the applicable Reference. The terms of the structured
securities may provide that in certain circumstances no principal is due at
maturity and, therefore, may result in the loss of the fund's investment.
Structured securities may be positively or negatively indexed, so that
appreciation of the Reference may produce an increase or decrease in the
interest rate or value of the security at maturity. In addition, changes in
interest rates or the value of the security at maturity may be a multiple of
changes in the value of the Reference. Consequently, structured securities may
entail a greater degree of market risk than other types of fixed-income
securities. Structured securities may also be more volatile, less liquid and
more difficult to accurately price than less complex fixed-income investments.
Foreign Government Securities
All of the funds 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, High Income, Growth and Income Stock, Capital Appreciation Stock,
Mid-Cap Stock, Emerging Growth, International Stock, and Global Securities 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, Balanced and High Income 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.
Other Securities Related to Mortgages
Mortgage Pass-Through Securities. The Bond, Balanced and High Income Funds may
invest in mortgage pass-through securities. Mortgage pass-through securities are
securities representing interests in "pools" of mortgage loans. Monthly payments
of interest and principal by the individual borrowers on mortgages are passed
through to the holders of the securities (net of fees paid to the issue or
guarantor of the securities) as the mortgages in the underlying mortgage pools
are paid off. The average lives of mortgage pass-through securities are variable
when issued because their average lives depend on prepayment rates. The average
life of these securities is likely to be substantially shorter than their stated
final maturity as a result of unscheduled principal prepayment. Prepayments on
underlying mortgages result in a loss of anticipated interest, and all or part
of a premium if any has been paid, and the actual yield (or total return) to the
holder of a pass-through security may be different than the quoted yield on such
security. Mortgage prepayments generally increase with falling interest rates
and decrease with rising interest rates. Like other fixed income securities,
when interest rates rise the value of a mortgage pass-though security generally
will decline; however, when interest rates are declining, the value of mortgage
pass-through securities with prepayment features may not increase as much as
that of other fixed income securities.
Interests in pools or mortgage-related securities differ from other forms of
debt securities, which normally provide for periodic payment of interest in
fixed amounts with principal payments at maturity or specified call dates.
Instead, these securities provide a monthly payment which consists of both
interest and principal payments. In effect, these payments are a "pass-through"
of the monthly payments made by the individual borrowers on their mortgage
loans, net of any fees paid to the issuer or guarantor of such securities.
Additional payments are caused by prepayments of principal resulting from the
sale, refinancing or foreclosure of the underlying property, net of fees or
costs which may be incurred. Some mortgage pass-through securities (such as
securities issued by the Government National Mortgage Association ("GNMA"), are
described as "modified pass-through." These securities entitle the holder to
receive all interests and principal payments owned on the mortgages in the
mortgage pool, net of certain fees, at the scheduled payment dates regardless of
whether the mortgagor actually makes the payment.
The principal governmental guarantor of mortgage pass-through securities is
GNMA. GNMA is a wholly owned U.S. Government corporation within the Department
of Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the U.S. Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks and mortgage bankers) and backed by
pools of Federal Housing Administration-insured or Veteran's Administration
("VA")-guaranteed mortgages. These guarantees, however, do not apply to the
market value or yield of mortgage pass-through securities. GNMA securities are
often purchased at a premium over the maturity value of the underlying
mortgages. This premium is not guaranteed and will be lost if prepayment occurs.
Government-related guarantors (i.e., whose guarantees are not backed by the full
faith and credit of the U.S. Government) include the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
FNMA is a government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional residential mortgages (i.e.,
mortgages not insured or guaranteed by any governmental agency) from a list of
approved seller/services which include state and federally-chartered savings and
loan associations, mutual savings banks, commercial banks, credit unions and
mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to
timely payment by FNMA of principal and interest.
FHLMC was created by Congress in 1970 as a corporate instrumentality of the U.S.
Government for the purpose of increasing the availability of mortgage credit for
residential housing. FHLMC issues Participation Certificates ("PCS") which
represent interest in conventional mortgages (i.e., not federally insured or
guaranteed) from FHLMC's national portfolio. FHLMC guarantees timely payment of
interest and ultimate collection of principal regardless of the status of the
underlying mortgage loans.
Credit unions, commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create pass-through pools of mortgage loans. Such issuers may also be the
originators and/or servicers of the underlying mortgage-related securities.
Pools created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government or agency guarantees of payments in the former
pools. However, timely payment of interest and principal of mortgage loans in
these pools may be supported by various forms of insurance or guarantees,
including individual loan, title, pool and hazard insurance and letters of
credit. The insurance and guarantees are issued by governmental entities,
private insurers and the mortgage poolers. There can be no assurance that the
private insurers or guarantors can meet their obligations under the insurance
policies or guarantee arrangements. The High Income Fund may also buy
mortgage-related securities without insurance or guarantees.
Collateralized Mortgage Obligations and Multiclass Pass-Through Securities. The
Bond, Balanced and High Income Funds may invest a portion of their assets in
collateralized mortgage obligations or "CMOs", which are debt obligations
collateralized by mortgage loans or mortgage pass-through securities. Typically,
CMOs are collateralized by certificates issued by GNMA, FNMA or FHLMC, but also
may be collateralized by whole loans or private mortgage pass-through securities
(such collateral collectively hereinafter referred to as "Mortgage Assets"). The
Bond, Balanced and High Income Funds may also invest a portion of their assets
in multiclass pass-through securities which are equity interests in a trust
composed of Mortgage Assets. Unless the context indicates otherwise, all
references herein to CMOs include multiclass pass-through securities. Payments
of principal of and interest on the Mortgage Assets, and any reinvestment income
thereon, provide the funds to pay debt service on the CMOs or make scheduled
distributions on the multiclass pass-through securities. CMOs may be issued by
agencies or instrumentalities of the United States government or by private
originators of, or investors in, mortgage loans, including credit unions,
savings and loan associations, mortgage banks, commercial banks, investment
banks and special purpose subsidiaries of the foregoing. The issuer of a series
of CMOs may elect to be treated as a Real Estate Mortgage Investment Conduit (a
"REMIC").
In a CMO, a series of bonds or certificates are usually issued in multiple
classes with different maturities. Each class of CMOs, often referred to as a
"tranch", is issued at a specific fixed or floating coupon rate and has a stated
maturity or final distribution date. Principal prepayments on the Mortgage
Assets may cause the CMOs to be retired substantially earlier than their stated
maturities or final distribution dates, resulting in a loss of all or a part of
the premium if any has been paid. Interest is paid or accrues on all classes of
the CMOs on a monthly, quarterly or semiannual basis. The principal of and
interest on the Mortgage Assets may be allocated among the several classes of a
series of a CMO in innumerable ways. In a common structure, payments of
principal, including any principal pre-payments, on the Mortgage Assets are
applied to the classes of the series of a CMO in the order of their respective
stated maturities or final distribution dates, so that no payment of principal
will be made on any class of CMOs until all other classes having an earlier
stated maturity or final distribution date have been paid in full. Certain CMOs
may be stripped (securities which provide only the principal or interest factor
of the underlying security). See "Stripped Mortgage-Backed Securities" below for
a discussion of the risks of investing in these stripped securities and of
investing in classes consisting primarily of interest payments or principal
payments.
The Bond, Balanced and High Income Funds may also invest in parallel pay CMOs
and Planned Amortization Class CMOs ("PAC Bonds"). Parallel pay CMOs are
structured to provide payments of principal on each payment date to more than
one class. These simultaneous payments are taken into account in calculating the
stated maturity date or final distribution date of each class, which, as with
other CMO structures, must be retired by its stated maturity date or final
distribution date, but may be retired earlier. PAC Bonds generally require
payments of a specified amount of principal on each payment date. PAC Bonds are
always parallel pay CMOs with the required principal payment on such securities
having the highest priority after interest has been paid to all classes.
Stripped Mortgage-Backed Securities. The High Income Fund may invest a portion
of its assets in stripped mortgage-backed securities ("SMBS") which are
derivative multiclass mortgage securities issued by agencies or
instrumentalities of the United States government or by private originators of,
or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks and investment banks.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions from a pool of Mortgage Assets. A
common type of SMBS will have one class receiving some of the interest and most
of the principal from the Mortgage Assets, while another class receives most of
the interest and the remainder of the principal. In the most extreme case, one
class will receive an "IO" (the right to receive all of the interest) while the
other class will receive a "PO" (the right to receive all of the principal). The
yield to maturity on an IO is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying Mortgage Assets, and
a rapid rate of principal payments may have a material adverse effect on such
security's yield to maturity. If the underlying Mortgage Assets experience
greater than anticipated prepayments of principal, the High Income Fund may fail
to fully recoup its initial investment in these securities. The market value of
the class consisting primarily or entirely of principal payments generally is
unusually volatile in response to changes in interest rates. Because SMBS were
only recently introduced, established trading markets for these securities have
not yet developed, although the securities are traded among institutional
investors and investment banking firms.
Mortgage Dollar Rolls. The High Income Fund may enter into mortgage "dollar
rolls" in which the fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase substantially
similar (same type, coupon and maturity) but not identical securities on a
specified future date. During the roll period, the fund loses the right to
receive principal and interest paid on the securities sold. However, the fund
would benefit to the extent of any difference between the price received for the
securities sold and the lower forward price for the future purchase or fee
income plus the interest earned on the cash proceeds of the securities sold
until the settlement date for the forward purchase. Unless such benefits exceed
the income, capital appreciation and gain or loss due to mortgage prepayments
that would have been realized on the securities sold as part of the mortgage
dollar roll, the use of this technique will diminish the investment performance
of the fund. Successful use of mortgage dollar rolls depends upon the Investment
Adviser's ability to predict correctly interest rates and mortgage prepayments.
There is no assurance that mortgage dollar rolls can be successfully employed.
The fund will hold and maintain in a segregated account until the settlement
date cash or liquid assets in an amount equal to the forward purchase price. For
financial reporting and tax purposes, each fund treats mortgage dollar rolls as
two separate transactions; one involving the purchase of a security and a
separate transaction involving a sale. The fund does not currently intend to
enter into mortgage dollar rolls that are accounted for as a financing.
Forward Commitment and When-Issued Securities
Each fund may purchase securities on a when-issued or forward commitment basis.
"When-issued" refers to securities whose terms are specified and for which a
market exists, but which have not been issued. Each fund will engage in
when-issued transactions with respect to securities purchased for its portfolio
in order to obtain what is considered to be an advantageous price and yield at
the time of the transaction. For when-issued transactions, no payment is made
until delivery is due, often a month or more after the purchase. In a forward
commitment transaction, a fund contracts to purchase securities for a fixed
price at a future date beyond customary settlement time.
When a fund engages in forward commitment and when-issued transactions, it
relies on the seller to consummate the transaction. The failure of the issuer or
seller to consummate the transaction may result in the fund's losing the
opportunity to obtain a price and yield considered to be advantageous. The
purchase of securities on a when-issued or forward commitment basis also
involves a risk of loss if the value of the security to be purchased declines
prior to the settlement date.
On the date a fund enters into an agreement to purchase securities on a
when-issued or forward commitment basis, the fund will segregate in a separate
account cash or liquid securities, of any type or maturity, equal in value to
the fund's commitment. These assets will be valued daily at market, and
additional cash or securities will be segregated in a separate account to the
extent that the total value of the assets in the account declines below the
amount of the when-issued commitments. Alternatively, a fund may enter into
offsetting contracts for the forward sale of other securities that it owns.
INVESTMENT LIMITATIONS
The Ultra Series Fund has adopted the following restrictions and policies
relating to the investment of assets and the activities of each Fund. The
policies in this INVESTMENT LIMITATION section are fundamental and may not be
changed for a Fund without the approval of the holders of a majority of the
outstanding votes of that Fund (which for this purpose and under the Investment
Company Act of 1940 (the "Act") means the lesser of (i) sixty-seven percent
(67%) of the outstanding votes attributable to shares represented at a meeting
at which more than fifty percent (50%) of the outstanding votes attributable to
shares are represented or (ii) more than fifty percent (50%) of the outstanding
votes attributable to shares). Except as noted below, none of the Funds within
the Ultra Series Fund may:
1. Borrow money in excess of one-third of the value of its total assets taken
at market value (including the amount borrowed) and then only from banks as
a temporary measure for extraordinary or emergency purposes. This borrowing
provision is not for investment leverage, but solely to facilitate
management of a Fund by enabling the Fund to meet redemption requests where
the liquidation of an investment is deemed to be inconvenient or
disadvantageous. Except for the High Income, Mid-Cap Stock, Emerging
Growth, International Stock, and Global Securities Funds, a Fund will not
make additional investments while it has borrowings outstanding.
2. Underwrite securities of other issuers, except that a Fund may acquire
portfolio securities under circumstances where, if the securities are later
publicly offered or sold by the Fund, it may be deemed to be an underwriter
for purposes of the Securities Act of 1933.
3. Invest over twenty-five percent (25%) of assets taken at its market value
in any one industry. Securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or instruments secured by
these money market instruments, such as repurchase agreements, shall not be
considered investments in any one industry for purposes of these rules.
Telephone, gas, and electric utility industries shall be considered
separate industries.
4. Purchase or sell commodities, commodity contracts (except financial futures
contracts), foreign exchange or real estate, including interests in real
estate investment trusts whose securities are not readily marketable or
invest in oil, gas or other mineral development or exploration programs.
(This does not prohibit investment in the securities of corporations which
own interests in commodities, foreign exchange, real estate or oil, gas or
other mineral development or exploration programs.) The High Income,
Mid-Cap Stock, Emerging Growth, International Stock, and Global Securities
Funds may invest in securities related to oil, gas, or other mineral
development or exploration programs.
5. Invest more than five percent (5%) of the value of the assets of a Fund in
securities of any one issuer, except in the case of the securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
6. Invest in securities of a company for the purpose of exercising control or
management.
7. Invest in securities issued by any other registered investment companies in
excess of five percent (5%) of total assets, nor in excess of three percent
(3%) of the assets of the acquired investment company. Not more than ten
percent (10%) of total assets taken at market value will be invested in
such securities.
8. Purchase or sell real estate, except a Fund may purchase securities which
are issued by companies which invest in real estate or interests therein.
9. Issue senior securities as defined in the Act, except insofar as a Fund may
be deemed to have issued a senior security by reason of (a) entering into
any repurchase agreement; (b) borrowing money in accordance with
restrictions described above; (c) lending portfolio securities; (d)
purchasing securities on a when-issued or delayed delivery basis; or (e)
accommodating short sales. If the asset coverage falls below three hundred
percent (300%), when taking into account items (a) through (e), a Fund may
be required to liquidate investments to be in compliance with the Act.
10. Lend portfolio securities in excess of thirty percent (30%) of the value of
its total assets. Any loans of portfolio securities will be made according
to guidelines established by the Trustees, including maintenance of
collateral of the borrower at least equal at all times to the current
market value of the securities loaned.
11. Invest in illiquid assets (which include repurchase agreements that do not
mature within seven (7) days, non-negotiable time deposits maturing in over
seven (7) days, restricted securities, and other securities for which there
is no ready market) in an amount in excess of ten percent (10%) of the
value of its total assets. The High Income, Mid-Cap Stock, Emerging Growth,
International Stock, and Global Securities Funds may invest up to fifteen
percent (15%) of the value of the Fund's net assets in illiquid assets.
12. Make loans (the acquisition of bonds, debentures, notes and other
securities as permitted by the investment objectives of a Fund shall not be
deemed to be the making of loans) except that a Fund may purchase
securities subject to repurchase agreements under policies established by
the Trustees.
13. Invest in foreign securities (ADRs are not considered foreign securities)
in excess of ten percent (10%) of the value of its total assets. The High
Income, Mid-Cap Stock, and Emerging Growth Funds may invest up to
twenty-five percent (25%) of the value of the Fund's total assets in
foreign securities. The International Stock and Global Securities Funds may
invest up to 100% of the value of the Fund's total assets in foreign
securities.
Except for the limitations on borrowing from banks, if the above percentage
restrictions are adhered to at the time of investment, a later increase or
decrease in such percentage resulting from a change in values of securities or
amount of net assets will not be considered a violation of any of the foregoing
restrictions.
The Money Market Fund may not write put or call options, purchase common stock
or other equity securities or purchase securities on margin or sell short. The
Bond, Balanced, High Income, Growth and Income Stock, Capital Appreciation
Stock, Mid-Cap Stock, Emerging Growth, International Stock, and Global
Securities Funds may not purchase securities on margin or sell short. However,
each Fund may obtain such short-term credits as may be necessary for the
clearance of transactions and may make margin payments in connection with
transactions in futures and related options as permitted by its investment
policies.
PORTFOLIO TURNOVER
While the Money Market Fund is not subject to specific restrictions on portfolio
turnover, it generally does not seek profits by short-term trading. However, it
may dispose of a portfolio security prior to its maturity where disposition
seems advisable because of a revised credit evaluation of the issuer or other
considerations. Because money market instruments have short maturities, the Fund
expects to have a high portfolio turnover, but since brokerage commissions are
not customarily charged on money market instruments, a high turnover should not
adversely affect Net Asset Value or net investment income.
The Bond, Balanced, High Income, Growth and Income Stock, Capital Appreciation
Stock, Mid-Cap Stock, Emerging Growth, International Stock, and Global
Securities Funds will trade whenever, in management's view, changes are
appropriate to achieve the stated investment objectives. Management does not
anticipate that high portfolio turnover will be required in the stock funds and
stock portion of the Balanced Fund 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 in the stock
funds 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). In the
Bond Fund and the bond portion of the Balanced Fund, management employs active
trading techniques which may result in portfolio turnover rates of 500% or
higher. Such active trading increased the funds' transaction costs but is
intended to more than compensate for such increased costs by capitalizing on
temporary mispricing of securities in the bond market due to imbalances in
supply and demand or changing perceptions of an issuer's credit quality or
prospects.
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 MEMBERS Capital Advisors, the funds' adviser. At all
times, however, the majority of board members will not be affiliated with
MEMBERS Capital Advisors 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>
<CAPTION>
Officers and Trustees
Name and Address Fund Position(s) Principal Occupation(s)
For the Past 5 Years
<S> <C> <C>
Michael S. Daubs* President, MEMBERS Capital Advisors, Inc.
5910 Mineral Point Road 1983 - Present President, 1982 - Present
Madison, WI 53705 Trustee, CUNA Mutual Life Insurance Company
Age - 57 1997 - Present Chief Investment Officer,
1973 - Present
CUNA Mutual Insurance Society
Chief Investment Officer, 1990 - Present
Lawrence R. Halverson* Vice President, MEMBERS Capital Advisors, Inc.
5910 Mineral Point Road 1987 - Present Senior Vice President, 1996 - Present
Madison, WI 53705 Secretary, Vice President, 1987 - 1996
Age - 54 1992 - Present CUNA Brokerage Services, Inc.
Trustee, President, 1996 - 1998
1997 - Present
<PAGE>
Mary E. Hoffmann* Treasurer MEMBERS Capital Advisors, Inc.
5910 Mineral Point Road 1999-Present Product Operations and Finance Manager
Madison, WI 53705 1998 - Present
Age - 30
CUNA Mutual Insurance Society
Investment Accounting Supervisor
1996 - 1998
McGladrey and Pullen, LLP
(Madison, Wisconsin)
Financial Auditor
1993 - 1996
Thomas J. Merfeld* Secretary MEMBERS Capital Advisors, Inc.
5910 Mineral Point Road 1999 - Present Senior Vice President
Madison, WI 53705 1994 - Present
Age - 43
Robert M. Buckingham* Assistant Secretary CUNA Mutual Life Insurance Company
2000 Heritage Way 1993-Present Vice President and Valuation Actuary
Waverly, IA 50677 1991-Present
Age - 45
Michael G. Joneson* Assistant Secretary CUNA Mutual Life Insurance Company
2000 Heritage Way 1992-Present Vice President - Controller, Treasurer
Waverly, IA 50677 1986-Present
Age - 54
Gwendolyn M. Boeke Trustee Evangelical Lutheran Church in America
2000 Heritage Way 1988 - Present Area Representative - Iowa
Waverly, IA 50677 1990 - Present
Age - 65
Alfred L. Disrud Trustee Planned Giving Services
2000 Heritage Way 1987 - Present Owner
Waverly, IA 50677 1986 - Present
Age - 79
Thomas C. Watt Trustee MidAmerican Energy Company
2000 Heritage Way 1986 - Present Manager - Business Initiatives
Waverly, IA 50677 1997 - Present
Age - 64
MidAmerican Energy Company
District Manager
1995 - 1997
</TABLE>
*An interested person within the meaning of the Act.
Trustee Compensation
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from
Name, Position from Fund(1) Fund and Fund Complex(1)(2)
<S> <C> <C>
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
Thomas C. Watt $4,000 $8,000
</TABLE>
(1)Amounts for the fiscal year ending December 31, 1999.
(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. As of May 1, 2000, the separate accounts of the
Company and certain qualified plans were the only shareholders of the Ultra
Series Fund. Voting rights are described in the Ultra Series Fund Prospectus in
the GENERAL INFORMATION, Shareholder Rights section.
Beneficial Owners
As of August 31, 2000, the directors and officers as a group own less than one
percent (1%). In addition to its own beneficial interest in each Fund, the
Company holds legal title on behalf of the beneficiaries of employee benefit
plans held within the Company separate accounts not registered pursuant to an
exemption from the registration provisions of the securities acts. As of March
31, 2000, no one person had a beneficial interest exceeding five percent (5%).
Code of Ethics
The Ultra Series Fund, its adviser, MEMBERS Capital Advisors, and its principal
underwriter, CUNA Brokerage Services, Inc., have adopted codes of ethics
pursuant to Rule 17j-1. The codes permit access people to invest in securities,
including securities that may be purchased or held by the Fund, for their own
accounts. The codes, however, establish certain procedures and prohibitions on
investments in securities for personal accounts. The codes are on public file
with, and are available from, the SEC.
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 MEMBERS Capital
Advisors, Inc. (formerly known as CIMCO Inc.) The Company, and CUNA Mutual
Investment Corporation each own a one-half interest in the Investment Adviser.
CUNA Mutual Insurance Society is the sole owner of CUNA Mutual Investment
Corporation. CUNA Mutual Investment Corporation is the sole owner of CUNA
Brokerage Services, Inc., the principal underwriter. The Investment Adviser and
the Ultra Series Fund have servicing agreements with the Company and with CUNA
Mutual Insurance Society. The Company and CUNA Mutual Insurance Society entered
into a permanent affiliation July 1, 1990. At the current time, all of the
directors of the Company are also directors of CUNA Mutual Insurance Society and
many of the senior executive officers of the Company hold similar positions with
CUNA Mutual Insurance Society.
The Investment Adviser, pursuant to a Management Agreement effective May 1,
1997, provides investment advice for each Fund and provides or arranges for the
provision of substantially all other services required by the Ultra Series Fund
through services agreements with affiliated and unaffiliated service providers.
Such services include all administrative, accounting and legal services as well
as the services of custodians, transfer agents and dividend disbursing agents.
There are, however, certain expenses that The Ultra Series Fund pays for itself
under the Management Agreement. These are: fees of the independent Trustees,
fees of the independent auditors, interest on borrowings by a Fund, any taxes
that a Fund must pay, and any extraordinary expenses incurred by a Fund or Funds
not in the ordinary course of business. As full compensation for its services,
the Ultra Series Fund pays the Investment Adviser a unitary fee computed at an
annualized percentage rate of the average value of the daily net assets of each
series as set forth in the table below:
Management Fee Table
Series Management Fee
Money Market 0.45 %
Bond 0.55 %
Balanced 0.70 %
High Income 0.75%
Growth & Income Stock 0.60 %
Capital Appreciation Stock 0.80 %
Mid-Cap Stock 1.00 %
Emerging Growth 0.85%
International Stock 1.20%
Global Securities 0.95%
The total fee paid to the Investment Adviser during the years ended December 31
was as follows:
1997 $5,320,543
1998 $12,547,473
1999 $17,105,630
The Investment Adviser or subadviser (as applicable) makes the investment
decisions and is responsible for the investment and reinvestment of assets;
performs research, statistical analysis, and continuous supervision of the
Fund's investment portfolio; furnishes office space for the Ultra Series Fund;
provides the Ultra Series Fund with such accounting data concerning the
investment activities of the Ultra Series Fund as is required to be prepared and
files all periodic financial reports and returns required to be filed with the
Securities and Exchange Commission ("SEC") and any other regulatory agency;
continuously monitors compliance by the Ultra Series Fund in its investment
activities with the requirements of the Act and the rules promulgated pursuant
thereto; and renders to the Ultra Series Fund such periodic and special reports
as may be reasonably requested with respect to matters relating to the duties of
the Investment Adviser.
The Adviser contracts with the Company to perform some of these services on
behalf of the Ultra Series Fund in return for a portion of the investment
advisory fee. The Adviser paid $1,268,229, $2,800,753 and $3,827,693 for those
services in 1997, 1998 and 1999, respectively.
The Adviser contracts with CUNA Mutual Insurance Society to perform cash
management and investment accounting services on behalf of the Ultra Series Fund
in return for a portion of the investment advisory fee. The Adviser paid
$16,404, $0, and $0 for those services in 1997, 1998 and 1999, respectively.
The Management Agreement provides that the Investment Adviser shall not be
liable to the Ultra Series Fund or any shareholder for anything done or omitted
by it, or for any losses that may be sustained in the purchase, holding or sale
of any security, except for an act or omission involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties imposed upon it
by the Management Agreement.
The directors and principal officers of the Investment Adviser are as follows:
Michael S. Daubs Director and President
Kimberly M. Gant Assistant Treasurer
Tracy K. Gunderson Assistant Secretary
Lawrence R. Halverson Senior Vice President
Joyce A. Harris Director and Chair
James C. Hickman Director
Mary E. Hoffmann Treasurer
Michael B. Kitchen Director
Daniel J. Larson Vice President
Thomas J. Merfeld Senior Vice President & Secretary
George A. Nelson Director and Vice Chair
Jeffrey B. Pantages Senior Vice President
CUNA Brokerage Services, Inc., 5910 Mineral Point Road, Madison, WI 53705-4456
is the Trust's principal underwriter.
<PAGE>
MANAGEMENT AGREEMENTS WITH SUBADVISERS
As described in the prospectus, MEMBERS Capital Advisors manages the assets of
the High Income, Mid-Cap Stock, Emerging Growth, International Stock, and Global
Securities Funds using a "manager of managers" approach under which MEMBERS
Capital Advisors 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 High Income, Mid-Cap Stock, Emerging Growth, International Stock,
and Global Securities Funds, MEMBERS Capital Advisors retains the ultimate
responsibility for the performance of these funds and will oversee the
Subadvisers and recommend their hiring, termination, and replacement.
MEMBERS Capital Advisors may, at some future time, employ a subadvisory or
"manager of managers" approach to other new or existing funds in addition to the
High Income, Mid-Cap Stock, Emerging Growth, International Stock, and Global
Securities Funds.
The Subadviser for the High Income Fund
As of the date of the prospectus, Massachusetts Financial Services Company (MFS)
is the only subadviser managing the assets of the High Income Fund. For its
services to the fund, MFS receives a management fee from MEMBERS Capital
Advisors, computed and accrued daily and paid monthly, at the following annual
rates:
First $100 million 0.375%
Next $150 million 0.35%
Next $250 million 0.325%
Above $500 million 0.30%
The Subadviser for the Mid-Cap Stock Fund
As of the date of the prospectus, Wellington Management Company llp (Wellington)
is the only subadviser managing some of the assets of the Mid-Cap Stock Fund.
For its services to the fund, Wellington receives a management fee from MEMBERS
Capital Advisors, computed and accrued daily and paid monthly, equal on an
annual basis to 0.060% of net assets managed by Wellington. The minimum annual
fee shall be $100,000.
The Subadviser for the Emerging Growth Fund
As of the date of the prospectus, Massachusetts Financial Services Company (MFS)
is the only subadviser managing the assets of the Emerging Growth Fund. For its
services to the fund, MFS receives a management fee from MEMBERS Capital
Advisors, computed and accrued daily and paid monthly, at the following annual
rates:
First $200 million 0.45%
Above $200 million 0.40%
<PAGE>
The Subadviser for the International Stock Fund
As of the date of the prospectus, the assets of the International Stock Fund are
managed by Lazard Asset Management ("Lazard").
For its services to the fund, Lazard receives a management fee from MEMBERS
Capital Advisors, computed and accrued daily and paid monthly, at the following
annual rates:
EAFE:
First $25 million 0.65%
Next $25 million 0.55%
Above $50 million 0.50%
Small-cap 0.75%
Emerging markets 1.05%
The Subadviser for the Global Securities Fund
As of the date of the prospectus, Oppenheimer Funds, Inc. (Oppenheimer) is the
only subadviser managing the assets of the Global Securities Fund. For its
services to the fund, Oppenheimer receives a management fee from MEMBERS Capital
Advisors, computed and accrued daily and paid monthly, at the following annual
rates:
First $50 million 0.50%
Next $50 million 0.45%
Next $150 million 0.40%
Above $250 million 0.35%
EXPENSES OF THE FUND
The Money Market, Bond, Balanced, High Income, Growth and Income Stock, Capital
Appreciation Stock, Mid-Cap Stock, Emerging Growth, International Stock, and
Global Securities Funds are currently obligated to pay to the Investment Adviser
the Management Fee set forth in the Management Fee Table above. As part of its
services, the Investment Adviser has agreed to provide or arrange to have
provided, administrative services to each Fund. Currently, the Company provides
the Funds with administrative, fund accounting, transfer agency and shareholder
services. The Adviser pays the Company .15% of the average value of the daily
net assets for these services.
Prior to May 1, 1997, expenses which exceeded .65% of the average value of daily
net assets of such Fund were being absorbed by the Company pursuant to an
Expense Reimbursement Agreement between the Company and the Ultra Series Fund.
The Company absorbed $48,308, $0 and $0 for the years ended December 31, 1997,
December 31, 1998, and December 31, 1999, respectively.
<PAGE>
DISTRIBUTION PLAN AND AGREEMENT
The Ultra Series fund has adopted a Distribution Plan pursuant to Rule 12b-1 of
the Act under which the Ultra Series Fund bears certain expenses relating to the
distribution of Class C shares. The Distribution Plan provides for the Ultra
Series Fund to pay CUNA Brokerage Services, Inc. a distribution fee equal, on an
annual basis, to 0.25% of the average daily net assets of each Fund attributable
to Class C shares. The distribution fee is calculated and accrued daily and paid
quarterly or at such other intervals as the Ultra Series Fund and CUNA Brokerage
Services, Inc. agree. The distribution fee is paid solely out of each Fund's
assets supporting Class C shares. This means that the net asset value of Class C
shares reflects the daily accrual of the fee but that the net asset value of
Class Z shares is not affected by the distribution fee and no distribution fee
is supported by assets of any Fund representing Class Z shares.
Under the Distribution Plan, CUNA Brokerage Services, Inc. receives the entire
amount of the distribution fee and may spend any amount of the fee that it
considers appropriate to finance any activity that is primarily intended to
result in the sale of Class C shares or to service Class C shareholders. CUNA
Brokerage Services, Inc. does not have to spend all of the distribution fee and
can spend more than the amount of the fee to finance activities intended to
result in the sale of Class C shares or to service Class C shareholders. If CUNA
Brokerage Services, Inc. spends less than the entire amount of the fee in any
period, it may keep the amounts not spent. If CUNA Brokerage Services, Inc.
spends more than the amount of the fee in any period, the Ultra Series Fund will
not reimburse CUNA Brokerage Services, Inc. for the difference.
Activities primarily intended to result in the sale of Class C shares or service
Class C shareholders include, among other: (a) compensation to employees of CUNA
Brokerage Services, Inc.; (b) compensation to and expenses, including overhead
and telephone expenses, of CUNA Brokerage Services, Inc., other selected
broker-dealers, and insurance companies who engage in or support activities
primarily intended to result in the sale of Class C shares; (c) the costs of
printing and distributing prospectuses, statements of additional information and
annual and interim reports of the Ultra Series Fund for prospective Class C
shareholders; (d) the costs of preparing, printing and distributing sales
literature and advertising materials attributable to Class C shares; (e)
expenses relating to the formulation and implementation of marketing strategies
and promotional activities relating to Class C shares such as direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; and (f) the costs of obtaining such information, analyses and
reports with respect to marketing and promotional activities and investor
accounts as the Ultra Series Fund may, from time to time, deem advisable. CUNA
Brokerage Services, Inc. did not incur any expenses in 1999 relating to the sale
of Class C shares.
The Distribution Plan was initially approved on October 29, 1996, by the Board
of Trustees of the Ultra Series Fund, including all disinterested Trustees. The
Plan became effective May 1, 1997, and continues in effect from year to year
only so long as such continuance is approved at least annually by the Trustees,
including a majority of the Trustees who are not interested, as defined by the
Act, and who have no direct or indirect financial interest in the operation of
the Plan or agreements related to it.
Any amendment which would materially increase the amount which the Ultra Series
Fund may expend under the Plan requires approval by holders of a majority of the
outstanding shares of the Ultra Series Fund. Any agreement related to the Plan
may be terminated at any time, upon sixty (60) days written notice to the other
party, by a vote of a majority of the disinterested Trustees, or by vote of a
majority of the Trust's outstanding voting securities. In the event of an
assignment, the Plan terminates automatically. As long as the Plan is in effect,
the selection and nomination of the disinterested Trustees of the Ultra Series
Fund are committed to the discretion of the disinterested Trustees.
TRANSFER AGENT
CUNA Mutual Life Insurance Company, 2000 Heritage Way, Waverly, IA 50677, is the
transfer agent and dividend disbursing agent for the Fund. As transfer agent,
CUNA Mutual maintains the shareholder records and reports. MEMBERS Capital
Advisors pays CUNA Mutual Life Insurance Company .15% of the average daily net
assets for its transfer agency services and other services described in the Fund
Expenses section above.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110, is
the current custodian for the securities and cash of the Ultra Series Fund. The
custodian holds for the Ultra Series Fund all securities and cash owned by the
Ultra Series Fund, and receives for the Ultra Series Fund all payments of
income, payments of principal or capital distributions with respect to
securities owned by the Ultra Series Fund. Also, the custodian receives payment
for the shares issued by the Ultra Series Fund. The custodian releases and
delivers securities and cash upon proper instructions from the Ultra Series
Fund. Pursuant to and in furtherance of a Custody Agreement with the custodian,
the Ultra Series Fund uses automated instructions and a cash data entry system
to transfer monies to and from the Ultra Series Fund's account at the custodian.
INDEPENDENT ACCOUNTANTS
The financial statements for the period ended June 30, 2000 have been included
herein and elsewhere in the Registration Statement. The semiannual financial
statements are unaudited. The financial statements for the fiscal year ended
December 31, 1999 have been included herein and elsewhere in the Registration
Statement in reliance upon the report of PricewaterhouseCoopers LLP, 100 East
Wisconsin Avenue, Milwaukee, WI 53202, independent accountants, and upon the
authority of said firm as experts in accounting and auditing. The financial
statements for fiscal years ended December 31, 1998 and prior have been audited
by KPMG LLP.
BROKERAGE
It is the policy of the Ultra Series Fund, in effecting transactions in
portfolio securities, to seek best execution of orders at the most favorable
prices. The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations, including without limitation, the overall direct net economic
result (involving both price paid or received and any commissions and other
costs paid), the efficiency with which the transaction is effected, the ability
to effect the transaction at all where a large block is involved, the
availability of the broker to stand ready to execute potentially difficult
transactions in the future and the financial strength and stability of the
broker. Such considerations are judgmental and are weighed by management in
determining the overall reasonableness of brokerage commissions paid.
Subject to the foregoing, a factor in the selection of brokers is the receipt of
research services, analyses and reports concerning issuers, industries,
securities, economic factors and trends and other statistical and factual
information. Any such research and other statistical and factual information
provided by brokers to the Ultra Series Fund, or the Investment Adviser or
Sub-Adviser ("Advisers" for purposes of this section), is considered to be in
addition to and not in lieu of services required to be performed by the Advisers
under its contract with the Ultra Series Fund. Research obtained on behalf of
the Ultra Series Fund may be used by the Advisers in connection with other
clients of the Advisers. Conversely, research received from placement of
brokerage for other accounts may be used by the Advisers in managing investments
of the Ultra Series Fund. Therefore, the correlation of the cost of research to
individual clients of the Advisers, including the Ultra Series Fund, is
indeterminable and cannot practically be allocated among the Ultra Series Fund
and the Advisers' other clients. Consistent with the above, the Ultra Series
Fund may effect principal transactions with a broker-dealer that furnishes
brokerage and/or research services, or designate any such broker-dealer to
receive selling commissions, discounts or other allowances, or otherwise deal
with any broker-dealer, in connection with the acquisition of securities in
underwritings. Accordingly, the net prices or commission rates charged by any
such broker-dealer may be greater than the amount another firm might charge if
the management of the Ultra Series Fund determines in good faith that the amount
of such net prices and commissions is reasonable in relation to the value of the
services and research information provided by such broker-dealer to the Ultra
Series Fund. For the year ended December 31, 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 or
Money Market Funds in 1997. For the year ended December 31, 1998, Capital
Appreciation Stock Fund paid $358,785, Growth and Income Stock Fund paid
$372,675, and Balanced Fund paid $117,875 in brokerage fees. There were no
brokerage fees paid by Bond or Money Market Funds in 1998. For the year ended
December 31, 1999, Capital Appreciation Stock Fund paid $563,777, Growth and
Income Stock Fund paid $497,353, Balanced Fund paid $131,328, and the Mid-Cap
Stock Fund paid $67,763 in brokerage fees. There were no brokerage fees paid by
the Bond or Money Market Funds in 1999.
The Ultra Series Fund expects that purchases and sales of money market
instruments usually will be principal transactions. Money market instruments are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. There usually will be no brokerage commissions paid
for such purchases. Purchases from underwriters will include the underwriting
commission or concession and purchases from dealers serving as market makers
will include the spread between the bid and asked price. Where transactions are
made in the over-the-counter market, the Ultra Series Fund will deal with the
primary market makers unless equal or more favorable prices are otherwise
obtainable.
Where advantageous, the Ultra Series Fund may participate with other clients of
the Advisers in "bunching of trades" wherein one purchase or sale transaction
representing several different client accounts is placed with a broker. The
Advisers have established various policies and procedures that assure equitable
treatment of all accounts.
The policy with respect to brokerage is and will be reviewed by the Trustees
from time to time. Because of the possibility of further regulatory developments
affecting the securities exchanges and brokerage practices generally, the
foregoing practices may be changed, modified or eliminated.
<PAGE>
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.
<PAGE>
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, High Income, Growth
and Income Stock, Capital Appreciation Stock, Mid-Cap Stock, Emerging Growth,
International Stock, and Global Securities 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.)
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.
Bond, Balanced, High Income, Growth and Income Stock, Capital Appreciation
Stock, Mid-Cap Stock, Emerging Growth, International Stock, and Global
Securities Funds
Common stocks that are traded on an established exchange or over-the-counter are
valued on the basis of market price as of the end of the Valuation Period,
provided that a market quotation is readily available. Otherwise, they are
valued at fair value as determined in good faith by or at the direction of the
Trustees.
Stripped Treasury Securities, long-term straight debt obligations, and
non-convertible preferred stocks are valued using readily available market
quotations, if available. When exchange quotations are used, the latest quoted
sale price is used. If an over-the-counter quotation is used, the last bid price
will normally be used. If readily available market quotations are not available,
these securities are valued at market value as determined in good faith by or at
the direction of the Trustees. Readily available market quotations will not be
deemed available if an exchange quotation exists for a debt security, preferred
stock, or security convertible into common stock, but it does not reflect the
true value of the Fund's holdings because sales have occurred infrequently, the
market for the security is thin, or the size of the reported trade is considered
not comparable to the Fund's institutional size holdings. When readily available
market quotations are not available, the Fund will use an independent pricing
service which provides valuations for normal institutional size trading units of
such securities. Such a service may utilize a matrix system which takes into
account appropriate factors such as institutional size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data in determining valuations. These
valuations are reviewed by the Investment Adviser. If the Investment Adviser
believes that evaluation still does not represent a fair value, it will present
for approval of the Trustees such other valuation as the Investment Adviser
considers to represent a fair value. The specific pricing service or services to
be used will be presented for approval of the Trustees.
Short-term instruments having maturities of sixty (60) days or less will be
valued at amortized cost. Short-term instruments having maturities of more than
sixty (60) days will be valued at market values or values based on current
interest rates.
Options, stock index futures, interest rate futures, and related options which
are traded on U.S. exchanges or boards of trade are valued at the closing price
as of the close of the New York Stock Exchange.
The Investment Adviser, at the direction of the Trustees, values the following
at prices it deems in good faith to be fair:
1. Securities (including restricted securities) for which complete
quotations are not readily available, and
2. Listed securities if, in the opinion of the Investment Adviser, the
last sale price does not reflect the current market value or if no
sale occurred, and
3. Other assets.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends that each of the Funds will qualify each year as a regulated
investment company under Subchapter M of Chapter 1 of the Code. If, as intended,
each Fund continues to qualify as a regulated investment company and distributes
substantially all of its net investment income and net capital gains to its
shareholders, then, under the provisions of Subchapter M, there should be little
or no income or gains taxable to it. In addition, each Fund intends to comply
with other distribution rules specified in Code so that it will not incur a 4%
nondeductible federal excise tax that otherwise would apply.
Each Fund of the Trust must meet several requirements to maintain its status as
a regulated investment company. These requirements include the following: (1) at
least 90% of the Fund's gross income must be derived from dividends, interest,
payments with respect to securities loaned, and gains from the sale or
disposition of securities; and (2) at the close of each quarter of the Fund's
taxable year, (a) at least 50% of the value of the Fund's total assets must
consist of cash, U.S. Government securities and other securities (no more than
5% of the value of the Fund may consist of such other securities of any one
issuer, and the Fund must not hold more than 10% of the outstanding voting stock
of any issuer), and (b) the Fund must not invest more than 25% of the value of
its total assets in the securities of any one issuer (other than U.S. Government
securities).
Each of the Funds also intends to comply with section 817(h) of the Code and the
regulations issued thereunder, which impose certain investment diversification
requirements on separate accounts of life insurance companies that are used to
support variable annuity contracts ("VA contracts") and variable life insurance
policies ("VLI policies"). In general, these requirements are that no more than
55% of the value of the assets of a Fund may be represented by any one
investment; no more than 70% by any two investments; no more than 80% by any
three investments; and no more than 90% by any four investments. For these
purposes, all securities of the same issuer are treated as a single investment
and each United States government agency or instrumentality is treated as a
separate issuer. These diversification requirements are in addition to the
requirements of subchapter M and of the Investment Company Act, and may affect
the securities in which a Fund may invest. In order to comply with the current
or future requirements of section 817(h) (or related provisions of the Code),
the Trust may be required, for example, to alter the investment objectives of
one or more of the Funds. (To the extent required by law, approval of owners of
VA contracts or VLI policies or of the Commission will be obtained before
changing investment objectives.)
If a Fund fails to qualify as a regulated investment company, it will be subject
to federal, and possibly state, corporate taxes on its taxable income and gains
(without any deduction for its distributions to its shareholders) and
distributions to its shareholders will constitute ordinary income to the extent
of such Fund's available earnings and profits. Owners of VA contracts and VLI
policies indirectly invested in such a Fund might be taxed currently on the
investment earnings under their contracts or policies and thereby lose the
benefit of tax deferral. In addition, if a Fund fails to comply with the
diversification requirements of section 817(h) of the Code and the regulations
thereunder, owners of VA contracts and VLI policies indirectly invested in the
Fund would be taxed on the investment earnings under their contracts or policies
and thereby lose the benefit of tax deferral. Accordingly, compliance with the
above rules is carefully monitored by the investment adviser and the Trust
intends that each Fund comply with these rules as they exist or as they may be
modified from time to time. Compliance with the tax requirements described above
may result in a reduction in the return under a Fund, since, to comply with the
above rules, the investments utilized (and the time at which such investments
are entered into and closed out) may be different from what the investment
adviser might otherwise believe desirable.
The foregoing discussion of federal income tax consequences is a general and
abbreviated summary based on tax laws and regulations in effect on the date of
this SAI. Tax law is subject to change by legislative, administrative or
judicial action. Each prospective investor should consult his or her own tax
adviser as to the tax consequences of investments in the Funds. For information
concerning the federal income tax consequences to the owners of VA contracts and
VLI policies, see the prospectuses for such contracts or policies. [For
information concerning the federal income tax consequences to plan participants,
see the summary plan description.]
It is the intention of the Ultra Series Fund to distribute substantially all of
the net investment income, if any, of each Fund thereby avoiding the imposition
of any Fund-level income or excise tax as follows:
(i) Dividends on the Money Market Fund will be declared and reinvested
daily in additional full and fractional shares of the Money Market
Fund.
(ii) Dividends of ordinary income from the Bond, Balanced, High Income,
Growth and Income Stock, Capital Appreciation Stock, Mid-Cap Stock,
Emerging Growth, International Stock, and Global Securities 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.
Options and Futures Transactions
The tax consequences of options transactions entered into by a Fund will vary
depending on the nature of the underlying security, whether the option is
written or purchased and finally, whether the "straddle" rules, discussed
separately below, apply to the transaction. When a Fund writes a call or a put
option on an equity or convertible debt security, the treatment for federal
income tax purposes of the premium that it receives will, subject to the
straddle rules, depend on whether the option is exercised. If the option expires
unexercised, or if the Fund enters into a closing purchase transaction, the Fund
will realize a gain (or loss if the cost of the closing purchase transaction
exceeds the amount of the premium) without regard to any unrealized gain or loss
on the underlying security. Any such gain or loss will be short-term capital
gain or loss, except that any loss on a "qualified" covered call stock option
that is not treated as part of a straddle may be treated as long-term capital
loss. If a call option written by a Fund is exercised, the Fund will recognize a
capital gain or loss from the sale of the underlying security, and will treat
the premium as additional sales proceeds. Whether the gain or loss will be
long-term or short-term will depend on the holding period of the underlying
security. If a put option written by a Fund is exercised, the amount of the
premium will reduce the tax basis of the security that the Fund then purchases.
If a put or call option that a Fund has purchased on an equity or convertible
debt security expires unexercised, the Fund will realize a capital loss equal to
the cost of the option. If the Fund enters into a closing sale transaction with
respect to the option, it will realize a capital gain or loss (depending on
whether the proceeds from the closing transaction are greater or less than the
cost of the option). The gain or loss will be short-term or long-term depending
on the Fund's holding period in the option. If the Fund exercises such a put
option, it will realize a short-term gain or loss (long-term if the Fund holds
the underlying security for more than one year before it purchases the put) from
the sale of the underlying security measured by the sales proceeds decreased by
the premium paid. If the Fund exercises such a call option, the premium paid for
the option will be added to the tax basis of the security purchased.
One or more Funds may invest in Section 1256 contracts. Section 1256 contracts
generally include options on nonconvertible debt securities (including
securities of U.S. Government agencies or instrumentalities), options on stock
indexes, futures contracts, options on futures contracts and certain foreign
currency contracts. Options on foreign currency, futures contracts on foreign
currency, and options on foreign currency futures will qualify as Section 1256
contracts if the options or futures are traded on or subject to the rules of a
qualified board or exchange. In general, gain or loss on Section 1256 contracts
will be treated as 60% long-term and 40% short-term capital gain or loss
("60/40"), regardless of the period of time particular positions are actually
held by a Fund. In addition, any Section 1256 contracts held at the end of each
taxable year (and on October 31 of each year for purposes of determining the
amount of capital gain net income that a Fund must distribute to avoid liability
for the 4% excise tax) are "marked to market" with the result that unrealized
gains or losses are treated as though they were realized and the resulting gain
or loss is treated as 60/40 gain or loss.
Straddles
Hedging transactions undertaken by a Fund may result in "straddles" for federal
income tax purposes. Straddles are defined to include "offsetting positions" in
actively-traded personal property. Under current law, it is not clear under what
circumstances one investment made by a Fund, such as an option or futures
contract, would be treated as "offsetting" another investment also held by the
Fund, such as the underlying security (or vice versa) and, therefore, whether
the Fund would be treated as having entered into a straddle. In general,
investment positions may be "offsetting" if there is a substantial diminution in
the risk of loss from holding one position by reason of holding one or more
other positions (although certain "qualified" covered call stock options written
by a Fund may be treated as not creating a straddle).
To the extent that the straddle rules apply to positions established by a Fund,
losses realized by the Fund may be either deferred or recharacterized as
long-term losses, and long-term gains realized by the Fund may be converted to
short-term gains.
Each Fund may make one or more of the elections available under the Code which
are applicable to straddles. If a Fund makes any of the elections, the amount,
character, and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections operate to
accelerate the recognition of gains or losses from the affected straddle
positions.
Because application of the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-term capital gain, may be increased or decreased substantially as compared
to a Fund that did not engage in such hedging transactions.
Distributor
As described in the Prospectus, the Ultra Series Fund does not deal directly
with the public. Shares of the Ultra Series Fund are currently issued and
redeemed through the distributor, pursuant to a Distribution Agreement between
the Ultra Series Fund and the distributor. The principal place of business of
CUNA Brokerage Services, Inc. is 5910 Mineral Point Road, Madison, Wisconsin
53705. The distributor is owned by CUNA Mutual Investment Corporation which in
turn is owned by CUNA Mutual Insurance Society. The Company and CUNA Mutual
Insurance Society entered into an agreement of permanent affiliation on July 1,
1990. Shares of the Ultra Series Fund are purchased and redeemed at Net Asset
Value. The Distribution Agreement provides that the distributor will use its
best efforts to render services to the Ultra Series Fund, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations, it will not be liable to the Ultra Series Fund or any shareholder
for any error of judgment or mistake of law or any act or omission or for any
losses sustained by the Ultra Series Fund or its shareholders. CUNA Brokerage
has not received underwriting commissions from the Ultra Series Fund for any of
the last three fiscal years.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, the Ultra Series Fund may disclose yields, total returns, and
other performance data. Such performance data will be computed, or accompanied
by performance data computed, in accordance with the standards defined by the
SEC. The Ultra Series Fund will not disclose performance of the Ultra Series
Fund in separate account sales literature or advertising without also showing
performance at the separate account level.
The Ultra Series Fund may distribute sales literature showing total return
performance. Total return calculations are based on historical results and are
not intended to indicate future performance. Total return will vary over time
depending on market conditions, assets owned and operating expenses. Information
about the performance of the Ultra Series Fund is contained in the annual report
to shareholders which may be obtained without charge from the address shown on
the first page of this SAI.
Total return figures distributed by the Ultra Series Fund will show the change
in value of an investment in the Ultra Series Fund from the beginning of the
measuring period to the end of the measuring period. All dividends and capital
gains are assumed to be immediately reinvested. Average annual total return is
calculated by determining the growth or decline in value of a $1,000
hypothetical investment over a stated period and then calculating the annually
compounded percentage rate that would have produced the same ending value if the
rate of growth or decline in value had been constant during the entire period.
The actual rate of growth or decline varies over time, rather than being
constant, so actual year-to-year performance will be different from "average"
annual return. The Ultra Series Fund will show average annual total returns for
1, 3, 5, and 10 year periods (or, if shorter, the period since inception) and
may show actual and average total returns for other periods. The Ultra Series
Fund may also show cumulative return, computed by dividing the value at the end
of the period by the value at the beginning of the period. Cumulative total
return may be shown either as a percentage change or as a dollar value.
Performance data may be shown in the form of graphs, charts, tables and
numerical examples.
The Ultra Series Fund may also distribute sales literature showing yield figures
for its Money Market and Bond Funds. Yield figures are based on historical
earnings and are not intended to indicate future performance. The yield of the
fund refers to the income generated by an investment in the fund over the stated
period. This income is then annualized, that is, the amount of income generated
by the investment during that period is assumed to be generated over a 365-day
period and is shown as a percentage of the investment. The effective yield is
calculated similarly but, when annualized, the income earned is assumed to be
reinvested or "compounded." The effective yield will be slightly higher than the
yield because of the effect of assumed reinvestment.
The Ultra Series Fund may distribute sales literature comparing its total
returns to standard industry measures, for example, the Dow Jones Industrial
Average, one or more of the Standard & Poor's or Frank Russell Company stock
indexes, one or more of the Lehman Brothers bond indexes, the consumer price
index, and data published by Lipper Analytical Services, Morningstar, Inc., and
Ibbotson Associates. The Dow Jones Industrial Average (DJIA) is a market
value-weighted, unmanaged index of 30 large industrial stocks traded on the New
York Stock Exchange. The Standard and Poor's and Frank Russell Company stock
indexes are unmanaged, market value weighted indexes of various industrial,
transportation, utility and financial companies, grouped by size of market
capitalization, valuation characteristics (i.e. growth or value) or other
attributes. The Lehman Brothers bond indexes represent unmanaged groups of fixed
income securities of various issuers and terms to maturity which are
representative of bond market performance. The consumer price index is a
statistical measure of changes in the prices of goods and services over time
published by the U.S. Bureau of Labor Statistics. Lipper Analytical Services and
Morningstar, Inc. are independent services that monitor performance of mutual
funds and insurance company separate accounts. Lipper Performance Summary
Averages represent the average annual total return of all the funds (within a
specified investment category) that are covered by the Lipper Analytical
Services Variable Insurance Products Performance Analysis Service.
The volatility of each fund may be compared to the volatility of the relevant
market as a whole. "Beta" is a measure of the sensitivity of a particular asset
or a particular fund relative to the marketplace in which it is traded. The beta
of the market is 1.0 which serves as a benchmark to assess other assets
including the six funds within the Ultra Series Fund. Beta is a measure of the
degree to which the return on the asset or the fund moved relative to how the
return of the relevant market moved. A number that is both positive and less
than 1.0 means that the asset or fund moved in the same direction as the market
but to a smaller degree. In other words, a beta of less than 1.0 indicates less
volatility (less investment risk) than the market.
Standard deviation measures the volatility of actual periodic returns around a
statistically fitted (average) trendline of the actual returns. For example, a
portfolio that grew over a five-year period at an average annual total return of
10% with a standard deviation of 15% would be much more volatile (would involve
more investment risk) than a portfolio that grew at an average annual total
return of 8% with a standard deviation of 5%. The latter portfolio might meet
the investment needs of a risk averse investor better than the former portfolio.
Money Market Fund Yields
From time to time, sales literature may quote the current annualized yield of
the Money Market Fund for a seven-day period in a manner which does not take
into consideration any realized or unrealized gains or losses on portfolio
securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the period in the value of a
hypothetical account having a balance of 1 share at the beginning of the period,
dividing such net change in account value by the value of the hypothetical
account at the beginning of the period to determine the base period return, and
annualizing this quotient on a 365-day basis. The net change in value reflects
net income from the Fund attributable to the hypothetical account. Current yield
is calculated according to the following formula:
Current Yield = [(NCS - ES)/UV) X (365/7)] x 100
Where:
NCS= the net change in the value of the Money Market Fund (exclusive of realized
gains or losses on the sale of securities and unrealized appreciation and
depreciation) for the seven-day period attributable to a hypothetical
account having a balance of 1 share.
ES= per share expenses attributable to the hypothetical account for the
seven-day period.
UV= the share value at the close of business on the day prior to the first day
of the seven-day period.
Effective yield = [(1 + ((NCS-ES)/UV)) 365/7 - 1] x 100
Where:
NCS= the net change in the value of the Money Market Fund (exclusive of realized
gains or losses on the sale of securities and unrealized appreciation and
depreciation) for the seven-day period attributable to a hypothetical
account having a balance of 1 share.
ES = per share expenses attributable to the hypothetical account for the
seven-day period.
UV = the share value at the close of business on the day prior to the first
day of the seven-day period.
The current and effective yields on amounts held in the Money Market Fund
normally fluctuate on a daily basis. Therefore, the disclosed yield for any
given past period is not an indication or representation of future yields or
rates of return. The Money Market Fund's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity, the types
and quality of portfolio securities held and operating expenses. Yields on
amounts held in the Money Market Fund may also be presented for periods other
than a seven-day period.
Other Fund Yields
From time to time, sales literature may quote the current annualized yield of
one or more of the Funds (except the Money Market Fund) for 30-day or one-month
periods. The annualized yield of a Fund refers to income generated by the Fund
during a 30-day or one-month period and is assumed to be generated each period
over a 12-month period.
The yield is computed by: 1) dividing the net investment income of the Fund for
the period; by 2) the maximum offering price per share on the last day of the
period times the daily average number of shares outstanding for the period; by
3) compounding that yield for a six-month period; and by 4) multiplying that
result by 2. The 30-day or one-month yield is calculated according to the
following formula:
Yield = [2 X (((NI - ES)/(U X UV)) + 1)6 - 1)] x 100
<PAGE>
Where:
NI = net income of the Fund for the 30-day or one-month period attributable to
the Fund's shares.
ES = expenses of the Fund for the 30-day or one-month period.
U = the average number of shares outstanding.
UV = the share value at the close of the last day in the 30-day or one-month
period.
The yield normally fluctuates over time. Therefore, the disclosed yield for any
given past period is not an indication or representation of future yields or
rates of return. A Fund's actual yield is affected by the types and quality of
portfolio securities held and operating expenses.
Average Annual Total Returns
From time to time, sales literature may also quote average annual total returns
for one or more of the Funds for various periods of time.
When a Fund has been in operation for 1, 3, 5, and 10 years, respectively, the
average annual total return for these periods will be provided. Average annual
total returns for other periods of time may, from time to time, also be
disclosed.
Standard average annual total returns represent the average annual compounded
rates of return that would equate an initial investment of $1,000 to the
redemption value of that investment as of the last day of each of the periods.
The ending date for each period for which total return quotations are provided
will be for the most recent month or calendar quarter-end practicable,
considering the type of the communication and the media through which it is
communicated.
The total return is calculated according to the following formula:
TR = [((ERV/P)1/N) - 1] x 100
Where:
TR = the average annual total return net of any Fund recurring charges.
ERV = the ending redeemable value of the hypothetical account at the end of the
period.
P= a hypothetical initial payment of $1,000.
N = the number of years in the period.
Other Total Returns
From time to time, sales literature may also disclose cumulative total returns
in conjunction with the standard formats described above. The cumulative total
returns will be calculated using the following formula:
CTR = [(ERV/P) - 1] x 100
<PAGE>
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 semiannual report begins on the next page followed by
data from the most recent annual report
<PAGE>
MONEY MARKET FUND
Schedule of Investments
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Quality Rating Annualized Maturity Par/Shares
Assets (Unaudited)* Yield Date Amount Value
------ ------------ ----- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL PAPER 66.6%
American Express Credit Corp. A-1/P-1 6.660% 07/06/00 $1,300,000 $ 1,298,817
American Express Credit Corp. A-1/P-1 6.827 10/12/00 1,500,000 1,471,675
AT&T Corp. A-1+/P-1 6.708 07/17/00 4,000,000 3,988,338
Bell South Telecom Inc. A-1+/P-1 6.622 07/06/00 3,000,000 2,997,300
Coco-Cola Company A-1/P-1 6.673 07/27/00 2,030,000 2,020,441
Emerson Electric Co. A-1+/P-1 6.659 07/05/00 4,000,000 3,997,102
GE Capital Corp. A-1+/P-1 6.763 07/17/00 1,073,000 1,069,829
General Motors Acceptance Corporation A-1/P-1 6.530 07/11/00 3,750,000 3,743,375
Goldman Sachs Group Inc. A-1+/P-1 6.730 08/09/00 4,000,000 3,971,487
IBM Credit Corp A-1/P-1 6.629 07/14/00 4,000,000 3,990,611
John Deere Capital Corp. A-1/P-1 6.717 07/26/00 3,000,000 2,986,334
McGraw Hill Companies A-1/P-1 6.725 07/31/00 3,000,000 2,983,625
Merrill Lynch & Co Inc A-1+/P-1 6.647 07/12/00 4,000,000 3,992,019
Motorola Credit Corp. A-1/P-1 6.743 07/25/00 1,600,000 1,592,939
Pharmacia Corp. A-1+/P-1 6.779 07/24/00 4,000,000 3,983,082
Procter & Gamble Co. A-1+/P-1 6.636 07/13/00 1,312,000 1,309,157
SBC Communications, Inc. A-1+/P-1 6.718 07/20/00 4,000,000 3,986,151
Wal-Mart Stores Inc. A-1+/P-1 6.656 08/01/00 4,000,000 3,977,611
Walt Disney Company A-1/P-1 6.645 07/10/00 4,000,000 3,993,470
----------
57,353,363
----------
U.S. GOVERNMENT 1.2%
U.S. Treasury Note 5.374 07/31/00 1,000,000 1,000,000
----------
QUASI-GOVERNMENT/
GOVERNMENT SPONSORED 27.7%
Federal Home Loan Bank Discount Note 6.058 11/03/00 5,000,000 4,996,014
Federal Home Loan Bank Discount Note 6.162 08/18/00 5,000,000 4,960,533
Federal Farm Credit Discount Notes 6.560 08/21/00 4,000,000 3,963,677
Federal National Mortgage Association
Discount Notes 6.698 10/16/00 5,000,000 4,903,997
Federal Home Loan Bank 7.050 05/17/01 5,000,000 5,000,000
----------
23,824,221
----------
REGISTERED INVESTMENT COMPANY 4.4%
State Street Prime Money Market 6.580 3,786,731 3,786,731
----------
TOTAL INVESTMENTS, MONEY MARKET
FUND $85,964,315
==========
</TABLE>
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
See accompanying notes to financial statements.
<PAGE>
BOND FUND
Schedule of Investments
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
SHORT-TERM INVESTMENTS:
<S> <C> <C> <C> <C> <C> <C>
REGISTERED INVESTMENT COMPANY 3.4%
State Street Prime Money Market 6.580% 9,471,259 $9,471,259
---------
TOTAL SHORT-TERM INVESTMENTS
(COST: $9,471,259) 9,471,259
---------
Quality Rating Coupon Maturity Par
LONG-TERM INVESTMENTS: (Unaudited)* Rate Date Amount
------------ ---- ---- ------
U.S. GOVERNMENT & AGENCY BONDS: 46.3%
GOVERNMENT NOTES 15.3%
U.S. Treasury Note AAA 5.875% 11/15/04 $4,000,000 3,940,000
U.S. Treasury Note AAA 11.125 08/15/03 5,000,000 5,657,815
U.S. Treasury Note AAA 10.750 08/15/05 3,000,000 3,575,625
U.S. Treasury Note AAA 6.750 05/15/05 2,000,000 2,046,876
U.S. Treasury Note AAA 8.125 05/15/21 3,000,000 3,652,500
U.S. Treasury Note AAA 6.625 05/15/07 3,500,000 3,572,188
U.S. Treasury Note AAA 6.000 08/15/09 5,000,000 4,959,375
U.S. Treasury Note AAA 10.750 08/15/05 4,600,000 4,648,875
U.S. Treasury Note AAA 10.750 02/15/03 10,000,000 11,025,000
----------
43,078,254
----------
GOVERNMENT AGENCIES 31.0%
Federal Home Loan Mortgage Corp. Gold
Pool C01005 AAA 8.000 06/01/30 10,000,000 10,056,600
Federal Home Loan Bank Note-CPI Floating Rate AAA 5.902 02/20/07 2,000,000 1,911,440
Federal Home Loan Bank AAA 7.000 04/09/18 1,000,000 912,736
Federal Home Loan Mortgage Corp. AAA 6.600 11/19/13 1,350,000 1,227,545
Federal National Mortgage Assn. Convential Loan
Pool 541215 AAA 7.500 06/01/30 4,000,000 3,942,200
Federal National Mortgage Assn. Convential Loan
Pool 253356 AAA 8.000 06/01/30 4,999,500 5,021,548
Federal National Mortgage Assn. Convential Loan
Pool 537433 AAA 8.000 05/01/30 4,700,000 4,720,728
Federal National Mortgage Association 96-M6 G AAA 7.750 09/17/23 772,442 777,994
Federal National Mortgage Association AAA 7.000 08/27/12 3,000,000 2,859,810
Federal National Mortgage Association Pool 519049 AAA 8.000 09/01/29 4,741,890 4,771,717
Federal National Mortgage Association AAA 6.290 01/22/08 2,591,000 2,427,466
Federal National Mortgage Association Pool 537367 AAA 7.000 06/01/30 2,000,026 1,930,285
Federal National Mortgage Association Pool 523482 AAA 7.000 06/01/30 3,000,000 2,895,390
Federal Home Loan Mortgage Corp. AAA 7.000 03/15/10 2,000,000 1,983,150
Government National Mortgage Assoc. Multiple Issuer
Pool 2935 AAA 8.000 06/20/30 8,000,000 8,038,320
Government National Mortgage Assoc. Multiple Issuer
Pool 2921 AAA 7.500 05/20/30 10,929,831 10,789,383
Government National Mortgage Assoc. Multiple Issuer
Pool 2934 AAA 7.500 06/22/30 2,500,000 2,467,875
Government National Mortgage Assoc. Multiple Issuer
Pool 2909 AAA 8.000 04/20/30 11,482,547 11,537,549
Government National Mortgage Assoc. Multiple Issuer
Pool 2922 AAA 8.000 05/20/30 3,994,613 4,013,747
Small Business Administration Pool 504476 AAA 7.000 04/05/24 4,823,303 4,908,657
-----------
87,194,140
-----------
TOTAL U.S. GOVERNMENT & AGENCY BONDS 127,985,152 130,272,394
(COST: $129,519,477) -----------
U.S. CORPORATE BONDS: 44.4%
BASIC MATERIALS 4.3%
Chemicals 1.1%
---------
ICI Wilmington BAA-1/A- 9.500 11/15/00 3,000,000 3,016,722
---------
Paper/Forest Products 2.5%
---------------------
Chesapeake Corp. BA-2/BB+ 7.200 03/15/05 1,000,000 931,789
International Paper BAA-1/BBB+ 6.875 04/15/29 2,000,000 1,671,662
International Paper, 144A (A) BAA-1/BBB+ 8.125 07/08/05 2,700,000 2,723,819
Weyerhaeuser Co. A-3/A 6.950 08/01/17 2,000,000 1,774,376
---------
7,101,646
---------
Steel 0.7%
-----
Commercial Metals BAA-1/BBB+ 7.200 07/15/05 2,000,000 1,949,160
--------
</TABLE>
<PAGE>
BOND FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
------ ------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
CAPITAL GOODS 3.2%
Building Products. 1.4%
-----------------
Owens Corning BAA-3/BB+ 7.700% 05/01/08 $3,000,000 $1,912,722
Owens Corning BAA-3/BB+ 7.500 05/01/05 2,977,000 2,065,294
---------
3,978,016
---------
Engineering/Consulting 0.9%
----------------------
Foster Wheeler Corp. BAA-3/BBB- 6.750 11/15/05 3,000,000 2,509,410
---------
Manufacturing-Diversified 0.9%
-------------------------
Giddings & Lewis BA1/BBB 7.500 10/01/05 2,500,000 2,457,275
---------
COMMUNICATION SERVICES 2.6%
Telephone 2.6%
---------
AT&T Corp. A-1/AA- 6.000 03/15/09 3,000,000 2,674,917
Worldcom A-3 8.250 05/15/10 2,000,000 2,047,112
Vodafone Airtouch PLC A-2/A- 7.500 07/15/06 2,500,000 2,481,493
---------
7,203,522
---------
CONSUMER CYCLICAL 7.9%
Auto Manufacturers 3.9%
------------------
Borg-Warner Automotive BAA-2/BBB+ 7.125 02/15/29 3,000,000 2,476,941
Cummins Engine BAA-1/BBB+ 6.450 03/01/05 3,000,000 2,782,605
Meritor Automotive Inc. BAA-2/BBB 6.800 02/15/09 3,000,000 2,569,449
TRW Inc. BAA-1/BBB 8.750 05/15/06 3,000,000 3,056,154
---------
10,885,149
---------
Funeral Services 0.4%
----------------
Service Corp. International BA3/BB+ 7.200 06/01/06 2,000,000 1,090,000
---------
Retail-General 1.9%
--------------
Dollar General Corp. 144A (A) BAA-2/BBB+ 8.625 06/15/10 3,500,000 3,479,252
Saks Incorporated BAA-3/BB+ 7.250 12/01/04 2,000,000 1,796,826
---------
5,276,078
---------
Retail-Specialty 1.7%
----------------
Lowe's Companies, Inc. A-2/A 8.250 06/01/10 2,000,000 2,043,584
Whirlpool Corp. BAA-1/BBB+ 8.600 05/01/10 2,750,000 2,858,562
---------
4,902,146
---------
CONSUMER STAPLES 3.3%
Food Retailers 1.6%
--------------
Conagra Inc. BAA-1/BBB+ 6.700 08/01/27 3,000,000 2,766,657
Great Atlantic & Pacific Tea BA-1/BBB- 7.750 04/15/07 2,000,000 1,807,310
---------
4,573,967
---------
Media-TV/Radio/Cable 1.7%
--------------------
Clear Channel Communications BAA-3/BBB- 7.875 06/15/05 3,000,000 3,014,517
Liberty Media Group BAA-3/BBB- 8.250 02/01/30 2,000,000 1,836,526
---------
4,851,043
---------
ENERGY 6.0%
Refining 1.6%
--------
Valero Energy Corp. BAA-3/BBB- 7.375 03/15/06 3,000,000 2,896,344
Valero Energy Corp. BAA-3/BBB- 8.375 06/15/05 1,500,000 1,523,411
---------
4,419,755
---------
</TABLE>
<PAGE>
BOND FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
------ ------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Oil-Domestic 4.4%
------------
Amerada Hess Corp. BAA-1/BBB 7.875% 10/01/29 $2,500,000 $2,453,325
Ashland , Inc. BAA-2/BBB 6.625 02/15/08 4,000,000 3,641,068
Phillips Petroleum Co. BAA-/BBB 8.500 05/25/05 3,500,000 3,621,996
Union Oil Company of California BBB+ 6.500 05/01/08 3,000,000 2,772,414
---------
12,488,803
---------
FINANCE 4.2%
Banks 2.1%
-----
Compass Bank A-1/A- 8.100 08/15/09 3,000,000 2,979,837
Wells Fargo Company AA-2/A+ 6.400 04/26/02 3,000,000 3,000,723
---------
5,980,560
---------
Brokerage 0.7%
---------
Merrill Lynch & Co. Series B MTN AA-3/AA- 7.850 05/30/03 2,000,000 2,016,364
---------
Insurance 1.4%
---------
American General Capital II A 8.500 07/01/30 2,000,000 2,002,980
GE Global Insurance AA-1/AA 7.500 06/15/10 2,000,000 1,982,956
---------
3,985,936
---------
HEALTHCARE 1.3%
Medical Services 1.3%
----------------
Columbia/HCA Healthcare Corporation BA-2/BB+ 6.125 12/15/00 1,000,000 990,132
Tenet Healthcare 144A (A) BA-1/BB+ 9.250 09/01/10 2,600,000 2,619,500
---------
3,609,632
---------
INDUSTRIAL 1.1%
Electronics 1.1%
-----------
Avnet Inc. A-3/A- 7.875 02/15/05 3,000,000 3,039,078
---------
TRANSPORTATION 4.4%
Airlines 1.3%
--------
American Airlines A-2/BBB 8.040 09/16/11 1,705,001 1,691,719
Delta Air Lines BAA-1/BBB 8.540 01/02/07 247,457 251,113
Delta Air Lines BAA-1/BBB 8.300 12/15/29 2,000,000 1,754,106
Southwest Airlines A-1/A 8.700 07/01/11 17,925 18,763
---------
3,715,701
---------
Leasing 2.0%
-------
Amerco BA-1/BBB 8.800 02/04/05 3,000,000 2,870,763
Amerco BA-1/BBB 7.200 04/01/02 3,000,000 2,868,993
---------
5,739,756
---------
Railroads 1.1%
---------
Norfolk Southern Corp. BAA-1/BBB 8.625 05/15/10 2,600,000 2,714,421
Union Pacific RR A-1/A- 6.540 07/01/15 401,389 365,906
---------
3,080,327
---------
UTILITIES 4.4%
Electric Power 3.6%
--------------
DPL Inc 144A (A) BAA-1/BBB 8.250 03/01/07 3,200,000 3,189,910
Key Span Gas East A-3/A 7.875 02/01/10 2,000,000 2,004,786
MidAmerican Energy Holdings BAA-3/BBB- 6.960 09/15/03 3,000,000 2,938,146
Texas Utilities Co. BAA-2/BBB 6.375 02/01/04 2,000,000 1,929,666
---------
10,062,508
---------
Gas Pipeline 0.8%
------------
El Paso Natural Gas BAA-1/BBB+ 7.500 11/15/26 2,500,000 2,317,030
---------
</TABLE>
<PAGE>
BOND FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
------ ------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
MISCELLANEOUS 1.7%
Asset Backed/Commercial Backed 1.7%
------------------------------
Captec Franchise Trust Series 2000-1
Class A1 144A (A) AAA 7.892% 10/15/10 $4,881,189 $4,918,188
----------
TOTAL U.S. CORPORATE BONDS
(COST: $126,121,022) 125,167,772
----------
NON-U.S. CORPORATE BONDS: 6.1%
FOREIGN ISSUES: 6.1%
Abbey National PLC AA-3/A+ 8.963 12/29/49 2,000,000 1,986,144
ABN-Amro Bank, N.V. Series B AA-3/AA- 7.750 05/15/23 2,000,000 1,944,388
Deutsche Telekom, Int Fin AA-2/AA- 8.250 06/15/30 3,500,000 3,554,534
HSBC Capital Funding LP 144A (A) A-1 10.176 12/29/49 2,000,000 2,140,578
Petro Geo-Services ASA BAA-3/BBB 7.125 03/30/28 3,000,000 2,481,873
Teleglobe, Inc. BAA-1/BBB+ 7.700 07/20/29 3,000,000 2,834,820
YPF Sociedad Anonima BAA-1/BBB- 9.125 02/24/09 2,000,000 2,027,500
YPF Sociedad Anonima BAA-1/BBB- 7.500 02/24/09 176,634 177,076
-----------
TOTAL NON-U.S. CORPORATE BONDS
(COST $16,726,601) 17,146,913
-----------
TOTAL INVESTMENTS, BOND FUND
(COST: $281,838,359)** $282,058,338
===========
</TABLE>
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
**At June 30, 2000, the estimated cost of securities for federal income tax
purposes was $281,996,814. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation................................. $2,891,679
Gross unrealized depreciation................................. (2,830,155)
---------
Net unrealized depreciation................................... $ 61,524
=========
***If applicable, this security provides a claim on the interest component of
the underlying mortgages, but not on their principal component. That is, the
security's cash flows depend on the amount of principal outstanding at the
payment date. If prepayments on the underlying mortgages are higher than
expected, the yield on the security may be adversely affected.
(A) Restricted security sold within the terms of a private placement memorandum
exempt from registration under section 144A of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"qualified institutional investors." On June 30, 2000, the total market
value of these investments was $19,071,247, or 6.78% of total net assets.
ABS Asset Backed Security
CMO Collateralized Mortgage Obligation
CPI Consumer Price Index
IO Interest Only
MTN Medium Term Note
PLC Public Limited Company
See accompanying notes to financial statements.
<PAGE>
BALANCED FUND
Schedule of Investments
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
SHORT-TERM INVESTMENTS:
<S> <C> <C> <C> <C> <C> <C>
REGISTERED INVESTMENT COMPANY 4.8%
State Street Prime Money Market 6.580% 31,008,080 $31,008,080
----------
TOTAL SHORT-TERM INVESTMENTS
(COST: $31,008,079) 31,008,080
----------
Quality Rating Coupon Maturity Par
LONG-TERM INVESTMENTS: (Unaudited)* Rate Date Amount
------------ ---- ---- ------
BONDS: 41.2%
U.S. GOVERNMENT & AGENCY BONDS: 20.6%
GOVERNMENT NOTES 6.9%
U.S. Treasury Notes AAA 5.875% 11/15/04 $6,000,000 5,910,000
U.S. Treasury Notes AAA 11.125 08/15/03 5,000,000 5,657,815
U.S. Treasury Notes AAA 10.750 08/15/05 3,000,000 3,575,625
U.S. Treasury Notes AAA 6.250 02/15/07 5,000,000 5,004,690
U.S. Treasury Notes AAA 6.750 05/15/05 3,000,000 3,070,314
U.S. Treasury Notes AAA 8.125 05/15/21 3,000,000 3,652,500
U.S. Treasury Notes AAA 9.125 05/15/09 6,000,000 6,528,750
U.S. Treasury Notes AAA 10.750 02/15/03 10,000,000 11,025,000
----------
44,424,694
----------
GOVERNMENT AGENCIES 13.7%
Federal Home Loan Bank Note-CPI Floating Rate AAA 5.902 02/20/07 5,000,000 4,778,600
Federal Home Loan Mortgage Corp. Gold Pool C01005 AAA 8.000 06/01/30 8,000,000 8,045,280
Federal Home Loan Mortgage Corp. AAA 6.875 01/15/05 5,000,000 4,969,210
Federal National Mortgage Assn. Convential Loan
Pool 541215 AAA 7.500 06/01/30 5,000,000 4,927,750
Federal National Mortgage Assn. Convential Loan
Pool 253356 AAA 8.000 06/01/30 4,999,500 5,021,548
Federal National Mortgage Assn. Pool 533977 AAA 8.000 03/01/30 1,983,692 1,992,441
Federal National Mortgage Assn. AAA 7.000 08/27/12 3,000,000 2,859,810
Federal National Mortgage Assn. Pool 50564 AAA 7.500 04/01/22 2,031,392 2,015,629
Federal National Mortgage Assn. Pool 50665 AAA 7.500 12/01/22 2,698,092 2,677,155
Federal National Mortgage Assn. Pool 519049 AAA 8.000 09/01/29 4,741,890 4,771,717
Federal National Mortgage Assn. - 96-M6 G AAA 7.750 09/17/23 3,089,768 3,111,975
Federal Home Loan Mortgage Corp. AAA 7.000 04/28/14 2,000,000 1,858,876
Federal Home Loan Mortgage Corp. AAA 7.000 03/04/14 1,000,000 930,161
Federal Home Loan Mortgage Corp. AAA 7.000 03/15/10 3,500,000 3,470,512
Government National Mortgage Assoc. Multiple Issuer
Pool 2935 AAA 8.000 06/20/30 6,200,000 6,229,698
Government National Mortgage Assoc. Multiple Issuer
Pool 2921 AAA 7.500 05/20/30 9,992,342 9,863,940
Government National Mortgage Assoc. Multiple Issuer
Pool 2908 AAA 7.500 04/20/30 4,985,649 4,921,584
Government National Mortgage Assoc. Multiple Issuer
Pool 2934 AAA 7.500 06/22/30 2,500,000 2,467,875
Government National Mortgage Assoc. Multiple Issuer
Pool 2909 AAA 8.000 04/20/30 8,999,997 9,043,108
Small Business Admistration Pool 504476 AAA 7.000 04/25/24 3,858,643 3,926,925
----------
87,883,794
----------
TOTAL U.S. GOVERNMENT & AGENCY
BONDS (COST $131,950,847) 132,308,488
-----------
U.S. CORPORATE BONDS: 17.7%
BASIC MATERIALS 1.4%
Paper/Forest Products 0.9%
---------------------
International Paper Co. BAA-1/BBB+ 6.875 04/15/29 2,000,000 1,671,662
International Paper Co. 144A (A) BAA-1/BBB+ 8.125 07/08/05 2,000,000 2,017,644
Weyerhaeuser Co. A-3/A 6.950 08/17/17 2,000,000 1,774,376
---------
5,463,682
---------
Steel 0.5%
-----
Commercial Metals BAA-1/BBB+ 7.200 07/15/05 3,500,000 3,411,030
---------
CAPITAL GOODS 0.8%
Building Products 0.3%
-----------------
Owens Corning BAA-3/BB+ 7.700 05/01/08 3,500,000 2,231,509
---------
</TABLE>
<PAGE>
BALANCED FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
------ ------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Engineering/Consulting 0.4%
----------------------
Foster Wheeler Corp. BAA-3/BBB- 6.750% 11/15/05 $3,000,000 $2,509,410
---------
Manufacturing-Diversified 0.1%
-------------------------
Giddings & Lewis BA-1/BBB 7.500 10/01/05 500,000 491,455
---------
COMMUNICATION SERVICES 1.2%
Telephone 1.2%
---------
AT&T Corp. A-1/AA- 6.000 03/15/09 3,800,000 3,388,228
Worldcom A-3 8.250 05/15/10 2,000,000 2,047,112
Vodafone Airtouch PLC A-2/A- 7.500 07/15/06 2,500,000 2,481,493
---------
7,916,833
---------
CONSUMER CYCLICAL 3.7%
Auto Manufacturers 2.3%
------------------
Borg-Warner Automotive BAA-2/BBB+ 7.125 02/15/29 4,500,000 3,715,412
Cummins Engine BAA-1/BBB+ 6.450 03/01/05 3,000,000 2,782,605
Cummins Engine Co. Inc. BAA-1/BBB+ 7.125 03/01/05 3,000,000 2,529,018
Meritor Automotive Inc. BAA-2/BBB 6.800 02/15/09 3,000,000 2,569,449
TRW Inc. BAA-1/BBB 8.750 05/15/06 3,000,000 3,056,154
---------
14,652,638
---------
Funeral Services 0.2%
----------------
Service Corp International BA-3/BB+ 7.200 06/01/06 2,000,000 1,090,000
---------
Retail - General 0.9%
----------------
Dollar General Corp 144A (A) BAA-2/BBB+ 8.625 06/15/10 4,000,000 3,976,288
Saks Incorporated BAA-3/BB+ 7.250 12/01/04 2,000,000 1,796,826
---------
5,773,114
---------
Retail - Speciality 0.3%
-------------------
Lowe's Companies Inc. A-2/A 8.250 06/01/10 2,000,000 2,043,584
---------
CONSUMER STAPLES 1.5%
Food Retailers 0.7%
--------------
Conagra Inc. BAA1/BBB+ 6.700 08/01/27 3,000,000 2,766,657
Great Atlantic & Pacific Tea BA-1/BBB- 7.750 11/15/29 2,000,000 1,807,310
---------
4,573,967
---------
Media-TV/Radio/Cable 0.8%
--------------------
Clear Channel Communications BAA-3/BB+ 7.875 06/15/05 3,000,000 3,014,517
Liberty Media Group BAA-3/BBB- 8.250 02/01/30 2,000,000 1,836,526
---------
4,851,043
---------
ENERGY 2.4%
Refining 0.5%
--------
Valero Energy Corp. BAA-3/BBB- 7.375 03/15/06 3,000,000 2,896,344
---------
Oil-Domestic 1.9%
------------
Amerada Hess Corp. BAA-1/BBB 7.588 10/01/29 2,500,000 2,453,325
Ashland, Inc. BAA-2/BBB 6.625 02/15/08 4,000,000 3,641,068
Phillips Petroleum Co. BAA-2/BBB 8.500 05/25/25 3,000,000 3,104,568
Union Oil Company of California BAA-1/BBB+ 7.350 06/15/09 3,000,000 2,913,741
---------
12,112,702
---------
FINANCE 2.0%
Banks 0.9%
-----
Compass Bank A-1/A- 8.100 08/15/09 3,000,000 2,979,837
Wells Fargo Company AA-2/A+ 6.400 04/26/02 3,000,000 3,000,723
---------
5,980,560
---------
</TABLE>
<PAGE>
BALANCED FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
------ ------------ ---- ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Brokerage 0.3%
---------
Merrill Lynch & Co. Series B MTN AA-3/AA- 7.850% 05/30/03 $2,000,000 $2,016,364
---------
Insurance 0.8%
---------
American General Capital II A 8.500 07/01/30 2,000,000 2,002,980
GE Global Insurance AA-1/AA 7.500 06/15/10 3,000,000 2,974,434
---------
4,977,414
---------
HEALTHCARE 0.2%
Medical Services 0.2%
----------------
Columbia/HCA Healthcare Corporation BA-2/BB+ 6.125 12/15/00 1,000,000 990,132
---------
INDUSTRIAL 0.6%
Electronics 0.6%
-----------
Avnet Inc. A-3/A- 7.875 02/15/05 4,000,000 4,052,104
---------
TRANSPORTATION 1.5%
Airlines 0.6%
--------
American Airlines A-2/BBB 8.040 09/16/11 852,500 845,860
Delta Air Lines BAA-1/BBB 8.540 01/02/07 1,251,414 1,269,897
Delta Air Lines BAA-3/BBB- 8.300 12/15/29 2,000,000 1,754,106
---------
3,869,863
---------
Leasing 0.4%
-------
Amerco BA-1/BBB 8.800 02/04/05 3,000,000 2,870,763
---------
Railroad 0.4%
--------
Norfolk Southern Corp. BAA-1/BBB 8.625 05/15/10 2,600,000 2,714,421
---------
Trucking & Shipping 0.1%
-------------------
Federal Express A-3/BBB+ 7.890 09/23/08 396,531 388,406
---------
UTILITIES 1.6%
Electric Power 1.2%
--------------
DPL Inc 144A (A) BAA-1/BBB 8.250 03/01/07 3,000,000 2,990,541
Key Span Gas East A-1/A 7.875 02/01/10 2,000,000 2,004,786
MidAmerican Energy Holdings BAA-3/BBB- 6.960 09/15/03 3,000,000 2,938,146
---------
7,933,473
---------
Gas Pipeline 0.4%
------------
El Paso Natural Gas BAA-1/BBB+ 7.500 11/15/26 3,000,000 2,780,436
---------
MISCELLANEOUS 0.8%
Asset Backed/Commercial Backed 0.8%
------------------------------
Captec Franchise Trust Series 2000-1
Class A1 144A (A) AAA 7.892 10/15/10 4,881,189 4,918,188
---------
TOTAL U.S. CORPORATE BONDS
(COST: $114,069,889) 113,509,435
-----------
NON-U.S. CORPORATE BONDS: 2.9%
FOREIGN ISSUES: 2.9%
ABN-Amro Bank. N. V. Series B AA-3/AA- 7.750 05/15/23 2,000,000 1,944,388
Abbey National PLC AA-3/A+ 8.963 12/29/49 2,000,000 1,986,144
Deutsche Telekom Int Fin AA-2/AA- 8.250 06/15/30 3,500,000 3,554,534
HSBC Capital Funding LP 144A (A) A-1 10.176 12/29/49 2,000,000 2,140,578
Petro Geo-services ASA BAA-3/BBB 7.125 03/30/28 3,000,000 2,481,873
Teleglobe, Inc. BAA-1/BBB+ 7.200 07/20/09 2,000,000 1,920,026
Teleglobe, Inc. BAA-1/BBB+ 7.700 07/20/29 3,000,000 2,834,820
YPF Sociedad Anonima BAA-1/BBB- 9.125 02/24/09 1,500,000 1,520,625
---------
TOTAL NON-U.S. CORPORATE BONDS
(COST: $18,018,305) 18,382,988
----------
TOTAL BONDS (COST: $264,039,041) 264,200,911
-----------
</TABLE>
<PAGE>
BALANCED FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net
Assets Shares Value
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS: 53.8%
FOREIGN ISSUES: 4.3%
BP Amoco PLC/ADR 64,746 $3,662,196
Glaxo Wellcome PLC - ADR 46,150 2,668,047
Koninklijke (Royal) Philips Electronics N.V. - ADR 181,596 8,625,810
Telefonos de Mexico SP ADR - Cl L 75,000 4,284,375
Tyco International Ltd 76,400 3,619,450
Vodafone AirTouch PLC-SP ADR 114,625 4,749,773
---------
TOTAL FOREIGN ISSUES (COST: $12,834,176) 27,609,651
---------
DOMESTIC ISSUES: 49.5%
BASIC MATERIALS 1.2%
Chemicals 0.9%
---------
The Dow Chemical Company 102,600 3,097,238
Rohm and Haas Company 78,300 2,701,350
---------
5,798,588
---------
Paper/Forest Products 0.3%
---------------------
Willamette Industries, Inc. 68,000 1,853,000
---------
CAPITAL GOODS 2.8%
Electrical Equipment 1.0%
--------------------
Emerson Electric Co. 62,700 3,785,512
Honeywell International Inc. 69,000 2,324,438
---------
6,109,950
---------
Machinery/Equipment 0.7%
-------------------
Dover Corporation 50,000 2,028,125
Pall Corporation 130,000 2,405,000
---------
4,433,125
---------
Manufacturing-Diversified 1.1%
-------------------------
Illinois Tool Works, Inc. 58,000 3,306,000
United Technologies Corporation 59,600 3,508,950
---------
6,814,950
---------
COMMUNICATION SERVICES 1.9%
Telephone - Long Distance 1.4%
-------------------------
AT & T Corp. 149,555 4,729,677
Sprint Corporation 83,100 4,238,100
---------
8,967,777
---------
Telephone 0.5%
---------
GTE Corporation 54,600 3,398,850
---------
CONSUMER CYCLICAL 4.0%
Commercial/Consumer 0.2%
-------------------
IMS Health Incorporated 89,000 1,602,000
---------
Printing/Publishing 0.7%
-------------------
PRIMEDIA Inc. *** 195,200 4,440,800
---------
Retail-Discount 0.5%
---------------
Wal-Mart Stores, Inc. 59,200 3,411,400
---------
Retail-General 1.5%
--------------
Target Corporation 168,300 9,761,400
---------
</TABLE>
<PAGE>
BALANCED FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net
Assets Shares Value
<S> <C> <C> <C> <C> <C> <C>
Retail-Specialty 1.1%
----------------
Lowe's Companies, Inc. 52,800 $2,168,100
Tiffany & Co. 72,500 4,893,750
---------
7,061,850
---------
CONSUMER STAPLES 6.2%
Cosmetics/Toiletries 1.0%
--------------------
Kimberly-Clark Corporation 108,300 6,213,713
---------
Drug Stores 0.8%
-----------
CVS Corporation 134,452 5,378,080
---------
Entertainment 0.8%
-------------
The Walt Disney Company 135,800 5,270,737
---------
Restaurants 0.7%
-----------
McDonald's Corporation 140,800 4,637,600
---------
Food Producers 1.4%
--------------
General Mills, Inc. 71,000 2,715,750
Nabisco Holdings Corp. - Class A 71,100 3,732,750
Sara Lee Corporation 147,200 2,842,800
---------
9,291,300
---------
Food Retailers 0.7%
--------------
Safeway Inc. *** 94,800 4,277,850
---------
Media-TV/Radio/Cable 0.8%
--------------------
Cox Communications, Inc. *** 109,800 5,002,762
---------
ENERGY 3.1%
Exploration/Drilling 0.6%
--------------------
Kerr-McGee Corporation 55,100 3,247,456
Transocean Sedco Forex Inc. 15,062 804,876
---------
4,052,332
---------
Oil-Domestic 1.0%
------------
Unocal Corporation 93,700 3,103,812
USX-Marathon Group 132,300 3,315,769
---------
6,419,581
---------
Oil-International 0.5%
-----------------
Exxon Corporation 42,100 3,304,850
---------
Oil-Services 1.0%
------------
Schlumberger Limited 82,200 6,134,175
---------
FINANCE 5.8%
Banks 1.7%
-----
Bank One Corporation 110,090 2,924,266
Bank of America Corporation 83,098 3,573,214
Wells Fargo Company 121,400 4,704,250
---------
11,201,730
---------
Financial Services 2.5%
------------------
Countrywide Credit Industries, Inc. 97,100 2,943,344
Household International, Inc. 114,100 4,742,281
Morgan Stanley Dean Witter and Co. 60,000 4,995,000
MBIA, Inc. 65,200 3,141,825
---------
15,822,450
---------
</TABLE>
<PAGE>
BALANCED FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net
Assets Shares Value
<S> <C> <C> <C> <C> <C> <C>
Insurance Companies 1.6%
-------------------
The Allstate Corporation 137,214 $3,053,012
Citigroup Inc. 121,429 7,316,097
---------
10,369,109
---------
HEALTHCARE 5.5%
Drugs 2.8%
-----
American Home Products Corporation 148,400 8,718,500
Bristol-Myers Squibb Company 96,200 5,603,650
Pharmacia & Upjohn, Inc. 67,028 3,464,510
---------
17,786,660
---------
Medical Products/Supply 2.1%
-----------------------
ALZA Corporation *** 77,600 4,588,100
Baxter International Inc. 55,700 3,916,406
Johnson & Johnson 51,408 5,237,190
---------
13,741,696
---------
Medical Services 0.6%
----------------
Aetna Inc. 62,600 4,018,137
---------
TECHNOLOGY 16.2%
Communications Equipment 2.8%
------------------------
ADC Telecommunications, Inc. *** 159,200 13,352,900
Motorola, Inc. 170,100 4,943,531
---------
18,296,431
---------
Computer Related 8.4%
----------------
3Com Corporation 124,200 7,157,025
EMC Corporation *** 204,500 15,733,719
Gateway, Inc. *** 151,900 8,620,325
Hewlett-Packard Company 61,100 7,629,862
International Business Machines Corporation 80,800 8,852,650
Seagate Technology, Inc. *** 105,400 5,797,000
---------
53,790,581
---------
Computer Software/Services 1.1%
--------------------------
Compuware Corporation *** 122,000 1,265,750
Keane, Inc. *** 259,600 5,613,850
---------
6,879,600
---------
Electronics 0.3%
-----------
Agilent Technologies, Inc. *** 23,303 1,718,596
---------
Semiconductors 3.6%
--------------
Conexant Systems, Inc. *** 107,000 5,202,875
Micron Technology, Inc. *** 84,700 7,458,894
Texas Instruments Incorporated 154,100 10,584,744
---------
23,246,513
---------
TRANSPORTATION 0.8%
Airlines 0.3%
--------
Delta Air Lines, Inc. 44,400 2,244,975
---------
Trucking & Shipping 0.5%
-------------------
FedEx Corporation *** 79,400 3,017,200
---------
UTILITIES 1.2%
Electric Power 0.4%
--------------
PG&E Corporation 100,000 2,462,500
---------
</TABLE>
<PAGE>
BALANCED FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net
Assets Shares Value
<S> <C> <C> <C> <C> <C> <C>
Natural Gas 0.8%
-----------
The Williams Companies, Inc. 118,000 $4,919,125
---------
MISCELLANEOUS 0.8%
Diversified 0.4%
-----------
Minnesota Mining and Manufacturing Company *** 30,200 2,491,500
---------
Professional Services 0.4%
---------------------
Interim Services Inc. *** 150,000 2,662,500
---------
TOTAL DOMESTIC ISSUES
(COST: $210,882,878) 318,305,973
-----------
TOTAL COMMON STOCKS
(COST: $223,717,054) 345,915,624
-----------
TOTAL INVESTMENTS, BALANCED FUND
(COST: $518,764,174)** $641,124,615
===========
</TABLE>
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
**At June 30, 2000, the estimated cost of securities for federal income tax
purposes was $518,922,377. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation $144,141,281
Gross unrealized depreciation (21,939,043)
----------
Net unrealized appreciation $122,202,238
===========
***This security is non-income producing.
****If applicable, this security provides a claim on the interest component of
the underlying mortgages, but not on their principal component. That is, the
security's cash flows depend on the amount of principal outstanding at the
payment date. If prepayments on the underlying mortgages are higher than
expected, the yield on the security may be adversely affected. (A) Restricted
security sold within the terms of a private placement memorandum exempt from
registration under section 144A of the Securities Act of 1933, as amended, and
maybe sold only to dealers in that program or other "qualified institutional
investors." On June 30, 2000, the total market value of these investments was
$16,043,239 or 2.50% of total net assets.
ABS Asset Backed Security
ADR American Depository Receipt
CMO Collateralized Mortgage Obligation
CPI Consumer Price Index
IO Interest Only
MTN Medium Term Note
PLC Pubic Limited Company
See accompanying notes to financial statements.
<PAGE>
GROWTH AND INCOME STOCK FUND
Schedule of Investments
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
SHORT-TERM INVESTMENTS:
<S> <C> <C> <C> <C>
REGISTERED INVESTMENT COMPANY 3.3%
State Street Prime Money Market 6.580% 38,549,889 $38,549,889
----------
TOTAL SHORT-TERM INVESTMENTS
(COST: $38,549,889) 38,549,889
----------
LONG-TERM INVESTMENTS:
COMMON STOCKS: 95.9%
FOREIGN ISSUES: 9.6%
BP Amoco PLC- ADR 243,180 13,754,869
Glaxo Wellcome PLC - ADR 209,450 12,108,828
Koninklijke (Royal) Philips Electronics N.V. - ADR 803,376 38,160,360
Nortel Networks Corporation 695,000 47,433,750
----------
TOTAL FOREIGN ISSUES (COST: $38,600,344) 111,457,807
----------
DOMESTIC ISSUES: 86.3%
BASIC MATERIALS 2.3%
Chemicals 1.8%
---------
The Dow Chemical Company 334,650 10,102,247
PPG Industries, Inc. 234,400 10,386,850
----------
20,489,097
----------
Paper/Forest Products 0.5%
---------------------
Georgia-Pacific Group 231,800 6,084,750
----------
CAPITAL GOODS 5.2%
Electrical Equipment 3.6%
--------------------
Emerson Electric Co 413,200 24,946,950
Honeywell International Inc. 497,700 16,766,269
----------
41,713,219
----------
Manufacturing-Diversified 1.6%
-------------------------
United Technologies Corporation 320,600 18,875,325
----------
COMMUNICATION SERVICES 6.1%
Telephone - Long Distance 3.4%
-------------------------
AT&T Corp. 521,042 16,477,953
Sprint Corporation 452,300 23,067,300
----------
39,545,253
----------
Telephone 2.7%
---------
ALLTEL Corporation 260,000 16,103,750
GTE Corporation 246,750 15,360,188
----------
31,463,938
----------
CONSUMER CYCLICAL 2.9%
Auto Parts Manufacturers 0.5%
------------------------
Dana Corporation 284,885 6,036,001
----------
Retail-Discount 1.5%
---------------
Wal-Mart Stores, Inc. 307,800 17,736,975
----------
Retail-General 0.9%
--------------
Sears, Roebuck & Co. 315,100 10,280,137
----------
CONSUMER STAPLES 15.1%
Beverages 1.4%
---------
PepsiCo, Inc. 353,400 15,704,212
----------
</TABLE>
<PAGE>
GROWTH AND INCOME STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Cosmetics/Toiletries 2.3%
--------------------
Kimberly-Clark Corporation 468,300 $26,868,712
----------
Drug Stores 2.1%
-----------
CVS Corporation 602,706 24,108,240
----------
Entertainment 2.7%
-------------
The Walt Disney Company 820,800 31,857,300
----------
Food Producers 3.1%
--------------
General Mills, Inc. 245,200 9,378,900
Nabisco Holdings Corp. - Class A 293,700 15,419,250
Sara Lee Corporation 568,700 10,983,019
----------
35,781,169
----------
Food Retailers 2.0%
--------------
The Kroger Co. *** 1,045,400 23,064,137
----------
Restaurants 1.5%
-----------
McDonald's Corporation 514,900 16,959,519
----------
ENERGY 5.6%
Exploration\Drilling 0.2%
--------------------
Transocean Sedco Forex Inc. 53,046 2,834,646
----------
Oil-Domestic 1.7%
------------
Unocal Corporation 271,450 8,991,781
USX-Marathon Group 422,850 10,597,678
----------
19,589,459
----------
Oil-International 1.9%
-----------------
Exxon Corporation 140,900 11,060,650
Texaco Inc. 202,900 10,804,425
----------
21,865,075
----------
Oil-Services 1.8%
------------
Schlumberger Limited 274,000 20,447,250
----------
FINANCE 9.8%
Banks 3.2%
-----
Bank of America Corporation 269,871 11,604,453
Bank One Corporation 408,540 10,851,844
First Union Corporation 246,800 6,123,725
Wachovia Corporation 152,100 8,251,425
----------
36,831,447
----------
Financial Services 3.0%
------------------
Household International, Inc. 434,000 18,038,125
Morgan Stanley Dean Witter and Co. 201,000 16,733,250
----------
34,771,375
----------
Insurance Companies 3.6%
-------------------
The Allstate Corporation 891,026 19,825,328
Citigroup Inc. 372,686 22,454,332
----------
42,279,660
----------
HEALTHCARE 9.0%
Drugs 4.8%
-----
American Home Products Corporation 543,500 31,930,625
Bristol-Myers Squibb Company 379,000 22,076,750
Edwards Lifesciences Corporation *** 67,040 1,282,140
----------
55,289,515
----------
</TABLE>
<PAGE>
GROWTH AND INCOME STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Medical Prods/Supply 4.2%
--------------------
Baxter International Inc. 403,500 $28,371,094
Johnson & Johnson 197,700 20,140,687
----------
48,511,781
----------
TECHNOLOGY 24.8%
Communications Equipment 3.1%
------------------------
Harris Corporation 399,000 13,067,250
Motorola, Inc. 775,500 22,537,969
----------
35,605,219
----------
Computer Related 10.6%
----------------
Compaq Computer Corporation 292,600 7,479,587
EMC Corporation *** 665,000 51,163,437
Hewlett-Packard Company 251,700 31,431,038
International Business Machines Corporation 298,600 32,715,363
----------
122,789,425
----------
Computer Software/Services 5.9%
--------------------------
Automatic Data Processing, Inc. 372,100 19,930,606
Computer Associates International, Inc. 474,600 24,293,588
Computer Sciences Corporation *** 319,800 23,885,063
----------
68,109,256
----------
Electronics 0.6%
-----------
Agilent Technologies, Inc. *** 95,998 7,079,852
----------
Office Equipment 0.8%
----------------
Lanier Worldwide Inc *** 370,900 370,900
Xerox Corporation 408,700 8,480,525
----------
8,851,425
----------
Semiconductors 3.8%
--------------
Intel Corporation 69,800 9,331,387
Texas Instruments Incorporated 503,400 34,577,288
----------
43,908,675
----------
TRANSPORTATION 1.1%
Airlines 0.7%
--------
Delta Air Lines, Inc. 158,600 8,019,213
----------
Railroads 0.4%
---------
Burlington Northern Santa Fe Corporation 220,200 5,050,838
----------
UTILITIES 3.2%
Electric Power 1.6%
--------------
Duke Energy Corporation 210,000 11,838,750
PG&E Corporation 260,000 6,402,500
----------
18,241,250
----------
Natural Gas 1.6%
-----------
The Williams Companies, Inc. 455,000 18,967,813
----------
MISCELLANEOUS 1.2%
Diversified 1.2%
-----------
Minnesota Mining and Manufacturing Company 169,400 13,975,500
----------
TOTAL DOMESTIC ISSUES
(COST: $787,145,886) 999,586,658
------------
</TABLE>
<PAGE>
GROWTH AND INCOME STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
TOTAL COMMON STOCKS
(COST: $825,746,230) $1,111,044,465
------------
TOTAL INVESTMENTS, GROWTH AND INCOME
FUND (COST: $864,296,119)** $1,149,594,354
============
</TABLE>
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings, if applicable, (unaudited). See
the current Prospectus and Statement of Additional Information for a complete
description of these ratings.
**At June 30, 2000, the cost of securities for federal income tax purposes was
$864,451,393. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation............................... $367,674,797
Gross unrealized depreciation............................... (82,531,836)
-----------
Net unrealized appreciation................................. $285,142,961
===========
***This security is non-income producing.
ADR American Depository Receipt
PLC Public Limited Company
See accompanying notes to financial statements.
<PAGE>
CAPITAL APPRECIATION STOCK FUND
Schedule of Investments
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
SHORT-TERM INVESTMENTS:
<S> <C> <C> <C> <C>
REGISTERED INVESTMENT COMPANY 3.1%
State Street Prime Money Market 6.580% 26,848,421 $26,848,421
----------
TOTAL SHORT-TERM INVESTMENTS
(COST: $26,848,421) 26,848,421
----------
LONG-TERM INVESTMENTS:
COMMON STOCKS: 96.1%
FOREIGN ISSUES: 9.9%
Ace Limited 560,000 15,680,000
Elan Corp PLC - ADR *** 507,300 24,572,344
Telefonos de Mexico SP ADR - Cl L 348,900 19,930,912
Tyco International Ltd 224,600 10,640,425
Vodafone AirTouch PLC-SP ADR 391,500 16,222,781
----------
TOTAL FOREIGN ISSUES
(COST: $50,649,498) 87,046,462
----------
DOMESTIC ISSUES: 86.2%
BASIC MATERIALS 3.7%
Chemicals 2.0%
---------
Praxair, Inc. 226,500 8,479,594
Rohm and Haas Company 270,000 9,315,000
----------
17,794,594
----------
Paper/Forest Products 0.6%
---------------------
Willamette Industries, Inc. 193,000 5,259,250
----------
Steel 1.1%
-----
Grant Prideco, Inc. *** 387,600 9,690,000
----------
CAPITAL GOODS 4.5%
Machinery/Equipment 2.7%
-------------------
Dover Corporation 387,200 15,705,800
Pall Corporation 417,000 7,714,500
----------
23,420,300
----------
Manufacturing-Diversified 1.8%
-------------------------
Illinois Tool Works, Inc. 282,800 16,119,600
----------
COMMUNICATION SERVICES 3.0%
Telecom-Cel/Wireless 1.3%
--------------------
AT&T Wireless Group *** 110,900 3,091,338
Sprint PCS Group *** 140,000 8,330,000
----------
11,421,338
----------
Telecomm - Long Distance 0.7%
------------------------
AT&T Corp 203,585 6,438,376
----------
Telephone 1.0%
---------
CenturyTel, Inc. 316,300 9,093,625
----------
CONSUMER CYCLICAL 9.9%
Commercial/Consumer 0.6%
-------------------
IMS Health Incorporated 302,200 5,439,600
----------
Printing/Publishing 2.0%
-------------------
PRIMEDIA Inc. *** 790,600 17,986,150
----------
</TABLE>
<PAGE>
CAPITAL APPRECIATION STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net
Assets Shares Value
<S> <C> <C> <C> <C>
Retail-General 2.7%
--------------
Target Corporation 405,600 $23,524,800
----------
Retail-Specialty 4.6%
----------------
Lowe's Companies, Inc 259,700 10,663,931
The Sherwin-Williams Company 440,200 9,326,738
The TJX Companies, Inc. 428,400 8,032,500
Tiffany & Co. 181,200 12,231,000
----------
40,254,169
----------
CONSUMER STAPLES 6.5%
Restaurants 1.2%
-----------
Brinker International, Inc. *** 356,000 10,413,000
----------
Food Producers 1.3%
--------------
Nabisco Holdings Corp. - Class A 220,400 11,571,000
----------
Food Retailers 2.0%
--------------
Safeway Inc. *** 386,500 17,440,812
----------
Media-TV/Radio/Cable 2.0%
--------------------
Cox Communications, Inc. *** 393,100 17,910,619
----------
ENERGY 5.5%
Exploration/Drilling 1.2%
--------------------
Kerr-McGee Corporation 177,300 10,449,619
----------
Oil-Domestic 4.3%
------------
Unocal Corporation 344,350 11,406,594
USX-Marathon Group 426,400 10,686,650
Weatherford International, Inc. 387,600 15,431,325
----------
37,524,569
----------
FINANCE 9.1%
Banks 2.7%
-----
First Security Corporation 320,900 4,352,206
SunTrust Banks, Inc. 200,100 9,142,069
Wells Fargo Company 269,600 10,447,000
----------
23,941,275
----------
Financial Services 3.7%
------------------
Associates First Capital Corporation 490,900 10,953,206
Countrywide Credit Industries, Inc. 233,000 7,062,812
Freddie Mac 168,300 6,816,150.00
MBIA, Inc. 163,000 7,854,563
----------
32,686,731
----------
Insurance Companies 2.7%
-------------------
Citigroup Inc. 391,398 23,581,729
----------
HEALTHCARE 6.0%
Biotech-Spec. Pharmaceutical 1.5%
----------------------------
Pharmacia Corporation 257,516 13,310,358
----------
Medical Prod/Supply 3.4%
-------------------
ALZA Corporation *** 268,700 15,886,887
Boston Scientific Corporation *** 628,200 13,781,138
----------
29,668,025
----------
Medical Services 1.1%
----------------
Aetna Inc. 155,700 9,993,994
----------
</TABLE>
<PAGE>
CAPITAL APPRECIATION STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net
Assets Shares Value
<S> <C> <C> <C> <C>
TECHNOLOGY 32.8%
Communication Equipment 4.6%
-----------------------
ADC Telecommunications, Inc. *** 486,200 $40,780,025
----------
Computer Related 11.6%
----------------
3Com Corporation *** 354,600 20,433,825
EMC Corporation *** 519,900 39,999,806
Gateway, Inc. *** 441,700 25,066,475
Seagate Technology, Inc. *** 292,900 16,109,500
----------
101,609,606
----------
Computer Software/Services 7.8%
--------------------------
Autodesk, Inc. 540,100 18,734,719
Cadence Design Systems, Inc. *** 706,900 14,403,087
Compuware Corporation *** 434,400 4,506,900
Keane, Inc. *** 689,000 14,899,625
PeopleSoft, Inc.*** 939,600 15,738,300
----------
68,282,631
----------
Electronics 0.6%
-----------
W.W. Grainger, Inc. 181,000 5,577,063
----------
Semiconductors 8.2%
--------------
Conexant Systems Inc. *** 273,898 13,318,290
Dallas Semiconductor Corporation 269,200 10,969,900
Micron Technology, Inc. *** 237,100 20,879,619
Texas Instruments Incorporated 394,400 27,090,350
----------
72,258,159
----------
TRANSPORTATION 1.5%
Airlines 0.4%
--------
Midwest Express Holdings, Inc. *** 169,875 3,652,312
----------
Trucking & Shipping 1.1%
-------------------
FedEx Corporation *** 261,100 9,921,800
----------
UTILITIES 2.6%
Natural Gas 2.6%
-----------
El Paso Energy Corporation 174,000 8,863,125
The Williams Companies, Inc. 334,000 13,923,625
----------
22,786,750
----------
MISCELLANEOUS 1.1%
Professional Services 1.1%
---------------------
Interim Services Inc. *** 562,200 9,979,050
----------
TOTAL DOMESTIC COMMON STOCK
(COST: $556,237,120) 759,780,929
-----------
TOTAL COMMON STOCKS
(COST: $606,886,618) 846,827,391
-----------
TOTAL INVESTMENTS, CAPITAL APPRECIATION
STOCK FUND (COST: $633,735,039)** $873,675,812
===========
</TABLE>
<PAGE>
CAPITAL APPRECIATION STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings, if applicable, (unaudited). See
the current Prospectus and Statement of Additional Information for a complete
description of these ratings.
**At June 30, 2000, the cost of securities for federal income tax purposes was
$633,735,039. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation................................$305,952,746
Gross unrealized depreciation.................................(66,011,973)
-----------
Net unrealized appreciation..................................$239,940,773
===========
***This security is non-income producing.
ADR American Depository Receipt
PLC Public Limited Company
See accompanying notes to financial statements.
<PAGE>
MID-CAP STOCK FUND
Schedule of Investments
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
SHORT-TERM INVESTMENTS:
<S> <C> <C> <C> <C>
REGISTERED INVESTMENT COMPANY 4.3%
State Street Prime Money Market 6.580% 1,738,387 $1,738,387
---------
TOTAL SHORT-TERM INVESTMENTS
(COST: $1,738,387) 1,738,387
---------
LONG-TERM INVESTMENTS:
COMMON STOCKS: 96.0%
FOREIGN ISSUES: 4.1%
Alcatel SA-ADR *** 3,729 247,978
Annuity and Life Re Holdings, Inc. 2,000 49,000
Celestica Inc. *** 8,700 431,738
Elan Corp - PLC ADR *** 18,500 896,094
Numac Energy Inc. *** 20,000 66,250
--------
TOTAL FOREIGN ISSUES
(COST: $1,091,006) 1,691,060
--------
DOMESTIC ISSUES: 91.9%
BASIC MATERIALS 5.3%
Agricultural 0.3%
------------
Universal Corporation 5,600 118,300
--------
Chemicals 1.0%
---------
Air Products & Chemicals, Inc. 10,000 308,125
Chemed Corporation 3,200 90,200
--------
398,325
--------
Chemicals-Specialty 2.2%
-------------------
Ecolab Inc. 11,000 429,687
Engelhard Corporation 8,300 141,619
Sigma-Aldrich Corporation 11,000 321,750
--------
893,056
--------
Paper/Forest Products 1.8%
---------------------
Bemis Company, Inc. 10,000 336,250
Caraustar Industries, Inc. 7,700 116,463
Westvaco Corporation 12,000 297,750
--------
750,463
--------
CAPITAL GOODS 9.4%
Building Supplies 0.6%
-----------------
Lafarge Corporation 3,400 71,400
Simpson Manufacturing Co., Inc. *** 3,700 176,906
--------
248,306
--------
Construction 0.5%
------------
Carlisle Companies Incorporated 2,100 94,500
Granite Construction Incorporated 4,700 115,150
--------
209,650
--------
Containers 0.2%
----------
Liqui-Box Corporation 2,000 99,000
--------
Electrical Equipment 0.9%
--------------------
Franklin Electric Co., Inc. 800 54,200
Molex Incorporated 6,900 332,063
--------
386,263
--------
</TABLE>
<PAGE>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Machinery/Equipment 3.7%
-------------------
Danaher Corporation 10,000 $ 494,375
Graco Inc. 2,700 87,750
Ingersoll-Rand Company 13,000 523,250
Parker-Hannifin Corporation 10,000 342,500
Trinity Industries, Inc. 4,400 81,400
--------
1,529,275
--------
Manufacturing-Diversified 1.5%
-------------------------
Eaton Corporation 9,000 603,000
--------
Manufacturing-Specialty 0.2%
-----------------------
Teleflex Incorporated 2,500 92,656
--------
Office Supplies/Equipment 1.8%
-------------------------
Avery Dennison Corporation 9,000 604,125
CompX International Inc. 7,500 152,344
--------
756,469
--------
COMMUNICATION SERVICES 2.1%
Telephone 2.1%
---------
CenturyTel, Inc. 30,000 862,500
--------
CONSUMER CYCLICAL 11.4%
Apparel/Textiles 0.1%
----------------
Wolverine World Wide, Inc. 5,500 54,312
--------
Auto Parts Manufacturing 0.4%
------------------------
Cooper Tire & Rubber Company 9,000 100,125
Gentex Corporation 2,000 50,250
--------
150,375
--------
Commercial\Consumer 0.2%
-------------------
Wallace Computer Services, Inc. 8,300 81,962
--------
Furniture/Appliances 1.9%
--------------------
Ethan Allen Interiors Inc. 25,200 604,800
Steelcase Inc. 9,500 161,500
--------
766,300
--------
Leisure Time/Gaming 0.5%
-------------------
National R.V. Holdings, Inc. *** 7,200 75,600
The Topps Company, Inc. *** 10,000 115,000
--------
190,600
--------
Printing/Publishing 1.4%
-------------------
A. H. Belo Corporation, Class A 33,700 583,431
--------
Retail-Discount 1.7%
---------------
Dollar General Corporation 27,437 535,022
ShopKo Stores, Inc. *** 11,000 169,125
--------
704,147
--------
Retail - General 0.4%
----------------
Tractor Supply Company *** 9,800 162,312
--------
</TABLE>
<PAGE>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Retail-Specialty 4.8%
----------------
Chico's FAS, Inc. *** 4,900 $ 98,000
Guitar Center Inc *** 6,600 69,300
Linens 'n Things, Inc. *** 15,700 425,862
O'Reilly Automotive, Inc. *** 10,200 141,525
Ross Stores, Inc. 17,500 298,594
The Sherwin-Williams Company 15,000 317,813
Tiffany & Co. 8,300 560,250
Wilson, The Leather Experts Inc. *** 4,950 72,703
--------
1,984,047
--------
CONSUMER STAPLES 6.3%
Restaurants 2.0%
-----------
Applebee's International, Inc. 2,400 72,750
IHOP Corp *** 6,300 105,525
Outback Steakhouse, Inc. *** 21,200 620,100
--------
798,375
--------
Food Producers/Distributors 1.3%
---------------------------
Flowers Industries, Inc. 23,000 458,562
Riviana Foods Inc 3,700 64,519
--------
523,081
--------
Media-TV/Radio/Cable 3.0%
--------------------
Adelphia Communications Corporation *** 8,600 403,125
Charter Communications, Inc. *** 51,200 841,600
--------
1,244,725
--------
ENERGY 5.0%
Exploration/Drilling 4.6%
--------------------
BJ Services Company *** 9,300 581,250
ENSCO International Incorporated 18,900 676,856
Smith International, Inc *** 8,800 640,750
--------
1,898,856
--------
Oil-Domestic 0.4%
------------
Remington Oil & Gas Corporation *** 20,000 150,000
--------
FINANCE 11.9%
Banks 3.1%
-----
Associated Banc-Corp 4,840 105,572
Cullen/Frost Bankers, Inc. 3,800 99,988
First Security Corporation 8,600 116,637
First Tennessee National Corporation 7,800 129,187
Hibernia Corporation 10,600 115,275
Marshall & Ilsley Corporation 4,200 174,300
Mercantile Bankshares Corporation 3,200 95,400
Pacific Century Financial Corporation 8,500 124,313
TCF Financial Corporation 5,600 143,850
Texas Regional Bankshares, Inc. 6,500 164,938
--------
1,269,460
--------
Financial Services 2.9%
------------------
American Capital Strategies, Ltd. 4,200 100,275
The Bear Stearns Companies Inc. 20,000 832,500
Heller Financial, Inc. 6,600 135,300
Tucker Anthony Sutro Corporation 5,500 99,000
--------
1,167,075
--------
</TABLE>
<PAGE>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Insurance Companies 4.5%
-------------------
Ambac Financial Group, Inc. 16,000 $ 877,000
MGIC Investment Corporation 17,000 773,500
Radian Group Inc. 2,200 113,850
Reinsurance Group of America, Incorporated 2,300 69,288
--------
1,833,638
--------
Real Estate Investment 1.4%
----------------------
AMB Property Corporation 3,900 88,969
Boston Properties, Inc. 1,600 61,800
Kimco Realty Corporation 1,500 61,500
Liberty Property Trust 3,500 90,781
Reckson Associates Realty Corporation *** 4,100 104,294
Sun Communities, Inc. *** 2,800 93,625
Urban Shopping Centers, Inc. 1,800 60,637
--------
561,606
--------
HEALTHCARE 9.8%
Biotech-Spec. Pharmaceutical 0.9%
----------------------------
IDEXX Laboratories, Inc. *** 15,300 349,988
--------
Drugs 4.4%
-----
Chiron Corporation *** 10,900 517,750
Genzyme Corporation *** 12,000 713,250
ICN Pharmaceuticals, Inc. 17,900 497,844
NBTY, Inc. *** 9,700 61,837
--------
1,790,681
--------
Medical Products/Supplies 4.3%
-------------------------
ALZA Corporation *** 10,300 608,987
Biomet, Inc. 12,200 468,937
Genzyme Surgical Products *** 590 5,863
St. Jude Medical, Inc. *** 7,900 362,413
Sybron International Corporation *** 15,100 299,169
--------
1,745,369
--------
Medical Services 0.2%
----------------
Trigon Healthcare, Inc. *** 1,700 87,656
--------
TECHNOLOGY 22.0%
Communication Equipment 1.7%
-----------------------
ADC Telecommunications, Inc. *** 8,200 687,775
--------
Computer Related 3.7%
----------------
Electronics Boutique Holdings Corp. *** 7,300 119,537
Handspring, Inc. *** 30,000 810,000
Plantronics Inc. *** 1,200 138,600
Quantum Corporation (DSSG) *** 21,900 212,156
Storage Technology Corporation *** 14,200 155,313
StorageNetworks, Inc. *** 700 63,175
--------
1,498,781
--------
Computer Software/Services 5.9%
--------------------------
ANSYS, Inc. *** 11,200 127,400
Black Box Corporation *** 800 63,337
Concord EFS, Inc. *** 15,400 400,400
Inter-Tel Incorporated 7,900 126,894
Investment Technology Group, Inc. *** 4,000 170,250
Keane, Inc. *** 27,300 590,363
New England Business Service, Inc. 5,400 87,750
SunGard Data Systems Inc. *** 14,400 446,400
Synopsys, Inc. *** 12,000 414,750
--------
2,427,544
--------
</TABLE>
<PAGE>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Electronics 4.4%
-----------
Arrow Electronics, Inc. *** 12,100 $ 375,100
Cable Design Technologies Corporation *** 2,100 70,350
W. W. Grainger, Inc. 13,000 400,562
Micros Systems, Inc. *** 5,700 105,806
Teradyne, Inc. *** 6,000 441,000
Varian Medical Systems, Inc. *** 10,100 395,163
--------
1,787,981
--------
Semiconductors 6.3%
--------------
Atmel Corporation *** 11,800 435,125
ATMI, Inc. *** 9,600 446,400
Dallas Semiconductor Corporation 11,800 480,850
LSI Logic Corporation *** 9,200 497,950
Quantum Corp (HDDS) *** 3,450 38,166
Varian Semiconductor Equipment Associates, Inc. *** 11,000 690,937
--------
2,589,428
--------
TRANSPORTATION 1.1%
Airlines 0.2%
--------
Midwest Express Holdings, Inc. *** 4,700 101,050
--------
Transportation-Miscellaneous 0.2%
----------------------------
The Hertz Corporation, Class A 3,000 84,188
--------
Trucking & Shipping 0.7%
-------------------
Airborne Freight Corporation 5,900 111,731
USFreightways Corporation 5,200 127,725
Werner Enterprises, Inc. 5,600 64,750
--------
304,206
--------
UTILITIES 4.4%
Electric Power 3.9%
--------------
Cleco Corporation 9,200 308,200
Constellation Energy Group 14,000 455,875
Florida Progress Corporation 10,000 468,750
Sierra Pacific Resources *** 4,100 51,506
UtiliCorp United Inc. 16,400 325,950
--------
1,610,281
--------
Natural Gas 0.5%
-----------
MDU Resources Group, Inc. 2,800 60,550
Peoples Energy Corporation 1,900 61,513
Questar Corporation 5,000 96,875
--------
218,938
--------
MISCELLANEOUS 3.2%
Diversified 0.2%
-----------
Astec Industries, Inc. *** 3,700 93,888
--------
Professional Services 3.0%
---------------------
Affiliated Computer Services, Inc. *** 13,400 443,038
Manpower Inc. 23,000 736,000
NCO Group, Inc. *** 2,600 60,125
--------
1,239,163
--------
TOTAL DOMESTIC ISSUES
(COST: $34,714,532) 37,688,482
----------
</TABLE>
<PAGE>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
% Net Annualized
Assets Yield Shares Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
TOTAL COMMON STOCKS
(COST: $35,805,538) $39,379,542
----------
TOTAL INVESTMENTS, MID-CAP STOCK FUND
(COST: $37,543,925)** $41,117,929
==========
</TABLE>
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings, if applicable, (unaudited). See
the current Prospectus and Statement of Additional Information for a complete
description of these ratings.
**At June 30, 2000, the cost of securities for federal income tax purposes was
$37,544,936. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation..................................$6,763,630
Gross unrealized depreciation..................................(3,190,637)
----------
Net unrealized appreciation....................................$3,572,993
==========
***This security is non-income producing.
ADR American Depository Receipt
PLC Public Limited Company
REIT Real Estate Investment Trust
See accompanying notes to financial statements.
<PAGE>
ULTRA SERIES FUND
Statements of Assets and Liabilities
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Money Treasury Growth and Capital Mid-Cap
Market 2000 Bond Balanced Income Appreciation Stock
Assets: Fund Fund Fund Fund Stock Fund Stock Fund Fund
---- ---- ---- ---- ---------- ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Investments in securities,
at value (note 2) - see
accompanying schedule* $85,964,315 $1,959,038 $282,058,338 $641,124,615 $1,149,594,354 $873,675,812 $41,117,929
Receivable for investment
securities sold -- -- 3,078,597 3,420,108 9,803,919 8,649,650 --
Receivable for fund shares sold -- -- -- -- -- -- --
Accrued interest and
dividends receivable 136,653 -- 4,240,168 4,789,361 1,693,708 582,787 38,251
----------- ----------- ----------- ----------- ------------ ------------ -----------
Total assets 86,100,968 1,959,038 289,377,103 649,334,084 1,161,091,981 882,908,249 41,156,180
----------- ----------- ----------- ----------- ------------ ------------ -----------
Liabilities:
Payable for investment
securities purchased -- -- 7,631,117 6,471,825 1,763,009 3,649,677 202,424
Accrued management fees 31,044 4,706 126,224 370,017 584,093 579,365 32,842
Accrued other expenses 15,627 -- 2,723 6,615 12,018 9,138 300
----------- ----------- ----------- ----------- ----------- ------------ -----------
Total liabilities 46,671 4,706 7,760,064 6,848,457 2,359,120 4,238,180 235,566
----------- ----------- ----------- ----------- ----------- ------------ -----------
Net assets applicable to
outstanding capital stock $86,054,297 $1,954,332 $281,617,039 $642,485,627 $1,158,732,861 $878,670,069 $40,920,614
=========== =========== =========== =========== ============ ============ ===========
Represented by:
Capital stock (par value $.01)
and additional paid-in
capital $86,054,297 $1,730,401 $291,078,562 $512,426,574 $858,295,111 $619,371,652 $36,509,846
Undistributed net investment
income -- 52,654 4,956,970 5,290,591 2,739,234 187,852 15,712
Accumulated net realized
gain (loss) on investments -- -- (14,638,472) 2,408,021 12,400,281 19,169,792 821,052
Unrealized appreciation
(depreciation) on investments -- 171,277 219,979 122,360,441 285,298,235 239,940,773 3,574,004
----------- ----------- ----------- ----------- ------------ ----------- -----------
Total net assets - representing
net assets applicable to
outstanding capital stock $86,054,297 $1,954,332 $281,617,039 $642,485,627 $1,158,732,861 $878,670,069 $40,920,614
=========== =========== =========== =========== ============ =========== ===========
Number of Class Z Shares
issued and outstanding
(note 5) 86,054,297 185,786 27,782,091 30,930,929 33,938,315 33,600,093 3,449,078
=========== =========== =========== =========== ============ =========== ===========
Net asset value per share of
outstanding capital stock
(note 2) $1.00 $10.52 $10.14 $20.77 $34.14 $26.15 $11.86
=========== =========== =========== =========== ============ =========== ===========
*Cost of Investments $85,964,315 $1,787,761 $281,838,359 $518,764,174$ 864,296,119 $633,735,039 $37,543,925
----------- ----------- ----------- ----------- ------------ ----------- -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ULTRA SERIES FUND
Statements of Operations
Six Months Ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Money Treasury Growth and Capital Mid-Cap
Market 2000 Bond Balanced Income Appreciation Stock
Fund Fund Fund Fund Stock Fund Stock Fund Fund*
---- ---- ---- ---- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (note 2):
Interest income $2,391,936 $56,962 $10,062,861 $10,431,805 $1,057,845 $550,751 $35,692
Dividend income -- -- -- 1,883,559 7,936,401 3,097,158 155,222
----------- ---------- ------------ ------------ ----------- ----------- ----------
Total income 2,391,936 56,962 10,062,861 12,315,364 8,994,246 3,647,909 190,914
----------- ---------- ------------ ------------ ----------- ----------- ----------
Expenses (note 4):
Management fees 178,005 4,308 731,061 2,152,238 3,376,179 3,370,631 166,344
Trustees' fees 226 -- 688 1,654 3,014 2,302 73
Audit fees 394 -- 1,204 2,896 5,273 4,030 128
----------- ---------- ------------ ------------ ----------- ----------- ----------
Total expenses 178,625 4,308 732,953 2,156,788 3,384,466 3,376,963 166,545
----------- ---------- ------------ ------------ ----------- ----------- ----------
Net investment income 2,213,311 52,654 9,329,908 10,158,576 5,609,780 270,946 24,369
Realized and unrealized gain (loss) on investments (notes 2 and 3):
Net realized gain (loss)
on investments -- -- (6,545,477) 2,693,617 12,761,383 19,169,792 822,062
Net change in unrealized
appreciation (depreciation)
on investments -- 538 4,145,264 5,475,483 7,034,896 8,003,781 1,221,126
----------- ---------- ------------ ------------ ----------- ----------- ----------
Net gain (loss) on investments -- 538 (2,400,213) 8,169,100 19,796,279 27,173,573 2,043,188
----------- ---------- ------------ ------------ ----------- ----------- ----------
Net increase in net assets
resulting from operations $2,213,311 $53,192 $6,929,695 $18,327,676 $25,406,059 $27,444,519 $2,067,557
=========== ========== ============ ============ =========== =========== ==========
</TABLE>
*Commenced operations May 1, 1999.
See accompanying notes to financial statements.
<PAGE>
ULTRA SERIES FUND
Statements of Changes in Net Assets
Six Months Ended June 30, 2000 and the Year Ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
MONEY MARKET FUND TREASURY 2000 FUND BOND FUND
Operations: 2000 1999 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income $2,213,311 $3,088,037 $52,654 $105,875 $9,329,908 $4,236,584
Net realized gain (loss) on
investments -- -- -- -- (6,545,477) (8,092,995)
Net change in unrealized appreciation
or depreciation on investments -- -- 538 (49,993) 4,145,264 (4,261,091)
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
operations 2,213,311 3,088,037 53,192 55,882 6,929,695 1,882,498
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders:
From net investment income (2,213,311) (3,088,037) -- -- (4,596,078) (14,083,486)
From realized gains on investments -- -- -- -- -- (3,484)
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
distributions (2,213,311) (3,088,037) -- -- (4,596,078) (14,086,970)
----------- ----------- ----------- ----------- ----------- -----------
Class Z Share transactions (note 5):
Proceeds from sale of shares 30,843,334 57,336,829 -- 9,354 30,454,019 28,132,898
Net asset value of shares issued in
reinvestment of distributions 2,198,550 3,095,292 -- -- 4,596,078 14,086,970
----------- ----------- ----------- ----------- ----------- -----------
33,041,884 60,432,121 -- 9,354 35,050,097 42,219,868
Cost of shares repurchased (29,633,562) (34,202,634) -- -- (6,251,901) (7,811,320)
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets derived from
capital share transactions 3,408,322 26,229,487 -- 9,354 28,798,196 34,408,548
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets 3,408,322 26,229,487 53,192 65,236 31,131,813 22,204,076
Net assets:
Beginning of year 82,645,975 56,416,488 1,901,140 1,835,904 250,485,226 228,281,150
----------- ----------- ----------- ----------- ----------- -----------
End of year $86,054,297 $82,645,975 $1,954,332 $1,901,140 $281,617,039 $250,485,226
=========== =========== =========== =========== =========== ===========
Undistributed net investment
income included in net assets -- -- $52,654 -- $4,956,970 $223,139
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ULTRA SERIES FUND
Statements of Changes in Net Assets (Continued)
Six Months Ended June 30, 2000 and the Year Ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
GROWTH AND INCOME CAPITAL APPRECIATION
BALANCED FUND STOCK FUND STOCK FUND
Operations: 2000 1999 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income $10,158,576 $15,028,471 $5,609,780 $9,804,224 $270,946 $722,710
Net realized gain (loss) on
investments 2,693,617 18,937,774 12,761,383 64,716,812 19,169,792 73,587,448
Net change in unrealized appreciation
or depreciation on investments 5,475,483 37,197,027 7,034,896 81,136,793 8,003,781 91,564,086
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets from
operations 18,327,676 71,163,272 25,406,059 155,657,829 27,444,519 165,874,244
----------- ----------- ------------ ------------ ----------- -----------
Distributions to shareholders:
From net investment income (5,152,881) (14,771,068) (3,058,979) (9,615,791) (150,893) (654,910)
From realized gains on
investments (3,416,124) (13,330,805) (4,123,478) (64,716,574) (9,194,838) (64,764,832)
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets from
distributions (8,569,005) (28,101,873) (7,182,457) (74,332,365) (9,345,731) (65,419,742)
----------- ----------- ------------ ------------ ----------- -----------
Class Z Share transactions (note 5):
Proceeds from sale of shares 30,345,096 91,071,831 43,611,271 127,024,727 43,198,245 61,727,019
Net asset value of shares issued in
reinvestment of distributions 8,569,005 28,101,873 7,182,457 74,332,365 9,345,731 65,419,742
----------- ----------- ------------ ------------ ----------- -----------
38,914,101 119,173,704 50,793,728 201,357,092 52,543,976 127,146,761
Cost of shares repurchased (9,322,842) (9,091,748) (8,614,565) (17,526,082) (31,106,490) (18,840,534)
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets derived from
capital share transactions 29,591,259 110,081,956 42,179,163 183,831,010 21,437,486 108,306,227
----------- ----------- ------------ ------------ ----------- -----------
Increase (decrease) in net assets 39,349,930 153,143,355 60,402,765 265,156,474 39,536,274 208,760,729
Net assets:
Beginning of year 603,135,697 449,992,342 1,098,330,096 833,173,622 839,133,795 630,373,066
----------- ----------- ------------ ------------ ----------- -----------
End of year $642,485,627 $603,135,697 $1,158,732,861 $1,098,330,096 $878,670,069 $839,133,795
=========== =========== ============ ============ =========== ===========
Undistributed net investment
income included in net assets $5,290,591 $284,896 $2,739,234 $188,433 $187,852 $67,799
=========== =========== ============ ============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ULTRA SERIES FUND
Statements of Changes in Net Assets (Continued)
Six Months Ended June 30, 2000 and the Year Ended December 31, 1999
(Unaudited)
MID-CAP STOCK FUND*
Operations: 2000 1999
-----------------------------------------------
Net investment income $24,369 $51,863
Net realized gain (loss) on
investments 822,062 481,164
Net change in unrealized appreciation
or depreciation on investments 1,221,126 2,352,878
---------- ----------
Change in net assets from
operations 2,067,557 2,885,905
---------- ----------
Distributions to shareholders:
From net investment income (17,497) (43,023)
From realized gains on
investments (25,758) (456,416)
---------- ----------
Change in net assets from
Distributions (43,255) (499,439)
---------- ----------
Class Z Share transactions (note 5):
Proceeds from sale of shares 14,233,126 23,763,821
Net asset value of shares issued in
reinvestment of distributions 43,255 499,439
---------- ----------
14,276,381 24,263,260
Cost of shares repurchased (1,859,497) (170,298)
---------- ----------
Change in net assets derived from
capital share transactions 12,416,884 24,092,962
---------- ----------
Increase (decrease) in net assets 14,441,186 26,479,428
Net assets:
Beginning of year 26,479,428 --
---------- ----------
End of year $40,920,614 $26,479,428
========== ==========
Undistributed net investment
income included in net assets $15,712 $8,840
========== ==========
*Commenced operations May 1, 1999.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
Financial Highlights
Six Months Ended June 30, 2000 and the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income*** 0.03 0.05 0.05 0.05 0.05
------------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.03) (0.05) (0.05) (0.05) (0.05)
------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
====================================================================================================================================
Total Return* 2.78% 4.69% 5.00% 5.01% 4.72%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $86,054 $82,646 $56,416 $41,170 $21,011
Ratio of Expenses to Average Net Assets** 0.45% 0.45% 0.45% 0.50% 0.65%
Ratio of Net Investment Income to Average
Net Assets 5.56% 4.72% 4.99% 5.05% 4.74%
====================================================================================================================================
</TABLE>
For the Money Market Fund, the "seven-day average" yield for the seven days
ended June 30, 2000, was 6.18% and the "effective" yield for that period was
6.37% (unaudited).
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.51%, 0.67% and 0.73% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Financial Highlights
Six Months Ended June 30, 2000 and the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.05 $10.57 $10.54 $10.33 $10.63
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income*** 0.35 0.62 0.63 0.54 0.65
Net Realized and Unrealized Gain (Loss)
on Investments (0.10) (0.54) 0.02 0.20 (0.28)
------ ------ ------ ------ ------
Total from Investment Operations 0.25 0.08 0.65 0.74 0.37
------------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.16) (0.60) (0.62) (0.51) (0.64)
Distributions from Realized Capital Gains (0.00) (0.00) (0.00) (0.02) (0.03)
------ ------ ------ ------ ------
Total Distributions (0.16) (0.60) (0.62) (0.53) (0.67)
------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.14 $10.05 $10.57 $10.54 $10.33
====================================================================================================================================
Total Return* 2.58% 0.73% 6.18% 7.45% 2.86%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $281,617 $250,485 $228,281 $188,840 $26,572
Ratio of Expenses to Average Net Assets** 0.55% 0.55% 0.55% 0.56% 0.65%
Ratio of Net Investment Income to Average
Net Assets 6.98% 5.92% 5.94% 6.50% 6.25%
Portfolio Turnover Rate 331.77% 713.52% 142.98% 30.71% 25.67%
====================================================================================================================================
</TABLE>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.57%, 0.67% and 0.68% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Financial Highlights
Six Months Ended June 30, 2000 and the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $20.44 $18.74 $17.02 $15.29 $14.63
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income*** 0.34 0.56 0.57 0.62 0.58
Net Realized and Unrealized Gain (Loss)
on Investments 0.27 2.14 1.72 1.93 0.98
------ ------ ------ ------ ------
Total from Investment Operations 0.61 2.70 2.29 2.55 1.56
-------------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.17) (0.53) (0.57) (0.63) (0.58)
Distributions from Realized Capital Gains (0.11) (0.47) -- (0.19) (0.32)
------ ------ ------ ------ ------
Total Distributions (0.28) (1.00) (0.57) (0.82) (0.90)
-------------------------------------------------------------------------------------
Net Asset Value, End of Period $20.77 $20.44 $18.74 $17.02 $15.29
====================================================================================================================================
Total Return* 3.00% 14.49% 13.40% 16.87% 10.79%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $642,486 $603,136 $449,992 $309,804 $194,725
Ratio of Expenses to Average Net Assets** 0.70% 0.70% 0.70% 0.68% 0.65%
Ratio of Net Investment Income to Average
Net Assets 3.28% 2.83% 3.20% 3.81% 3.91%
Portfolio Turnover Rate 141.38% 269.00% 78.71% 21.15% 33.48%
====================================================================================================================================
</TABLE>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.69%, 0.65% and 0.68% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Financial Highlights
Six Months Ended June 30, 2000 and the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $33.58 $30.56 $27.20 $21.32 $18.20
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income*** 0.17 0.34 0.34 0.31 0.34
Net Realized and Unrealized Gain (Loss)
on Investments 0.60 5.12 4.52 6.36 3.93
------ ------ ------ ------ ------
Total from Investment Operations 0.77 5.46 4.86 6.67 4.27
-------------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.09) (0.32) (0.34) (0.32) (0.34)
Distributions from Realized Capital Gains (0.12) (2.12) (1.16) (0.47) (0.81)
------ ------ ------ ------ ------
Total Distributions (0.21) (2.44) (1.50) (0.79) (1.15)
-------------------------------------------------------------------------------------
Net Asset Value, End of Period $34.14 $33.58 $30.56 $27.20 $21.32
====================================================================================================================================
Total Return* 2.29% 17.95% 17.92% 31.42% 22.02%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $1,158,733 $1,098,330 $833,174 $590,135 $232,841
Ratio of Expenses to Average Net Assets** 0.60% 0.60% 0.60% 0.61% 0.65%
Ratio of Net Investment Income to Average
Net Assets 0.99% 0.99% 1.17% 1.39% 1.78%
Portfolio Turnover Rate 11.87% 20.13% 17.69% 20.39% 40.55%
====================================================================================================================================
</TABLE>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.61%, 0.65% and 0.69% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Financial Highlights
Six Months Ended June 30, 2000 and the Year Ended December 31
(Unaudited)
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $25.59 $22.19 $18.85 $14.60 $12.51
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income*** 0.01 0.02 0.06 0.07 0.13
Net Realized and Unrealized Gain (Loss)
on Investments 0.83 5.55 3.87 4.52 2.55
------ ------ ------ ------ ------
Total from Investment Operations 0.84 5.57 3.93 4.59 2.68
-------------------------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.00) (0.02) (0.06) (0.07) (0.13)
Distributions from Realized Capital Gains (0.28) (2.15) (0.53) (0.27) (0.46)
------ ------ ------ ------ ------
Total Distributions (0.28) (2.17) (0.59) (0.34) (0.59)
-------------------------------------------------------------------------------------
Net Asset Value, End of Period $26.15 $25.59 $22.19 $18.85 $14.60
====================================================================================================================================
Total Return* 3.26% 25.19% 20.90% 31.57% 21.44%
====================================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $878,670 $839,134 $630,373 $456,194 $98,674
Ratio of Expenses to Average Net Assets** 0.80% 0.80% 0.80% 0.82% 0.65%
Ratio of Net Investment Income to Average
Net Assets 0.06% 0.10% 0.31% 0.70% 0.96%
Portfolio Turnover Rate 9.32% 38.38% 18.67% 17.06% 49.77%
====================================================================================================================================
</TABLE>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.83%, 0.66% and 0.75% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
MID-CAP STOCK FUND
Financial Highlights
Six Months Ended June 30, 2000 and the Period Ended December 31
(Unaudited)
(For a share outstanding throughout the period) 2000 19991
---------------------------------
Net Asset Value, Beginning of Period $11.15 $10.00
------ ------
Income from Investment Operations
Net Investment Income**** 0.01 0.03
Net Realized and Unrealized Gain (Loss)
on Investments 0.72 1.34
------ ------
Total from Investment Operations 0.73 1.37
---------------------------------
Distributions
Distributions from Net Investment Income (0.01) (0.02)
Distributions from Realized Capital Gains (0.01) (0.20)
------ ------
Total Distributions (0.02) (0.22)
---------------------------------
Net Asset Value, End of Period $11.86 $11.15
================================================================================
Total Return* 6.56% 13.68%**
================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $40,921 $26,479
Ratio of Expenses to Average Net Assets 0.78% 1.00%***
Ratio of Net Investment Income to Average
Net Assets 0.11% 0.39%***
Portfolio Turnover Rate 35.04% 35.55%
================================================================================
*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.
**Not annualized.
***Annualized.
****Based on average shares outstanding during period.
1Commenced operations May 1, 1999.
See accompanying notes to financial statements.
<PAGE>
ULTRA SERIES FUND
Notes to Financial Statements
(1) Description of the Fund
The Ultra Series Fund (the "Fund"), a Massachusetts Business Trust, is
registered under the Investment Company Act of 1940 (the "1940 Act"), as
amended, as a diversified, open-end management investment company. The Fund
is a series fund with seven investment portfolios (the "funds"), each with
different investment objectives and policies and each having available two
separate classes of common stock with a par value of $.01 per share. Fund
shares are sold and redeemed at a price equal to the shares' net asset
value. The assets of each fund are held separate from the assets of the
other funds. The Mid-Cap Stock Fund commenced operations May 1, 1999. On or
within 12 months prior to the portfolio maturity date, the securities of
the Treasury 2000 Fund will be liquidated. Once the Treasury 2000 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.
Effective May 1, 1997, the shares of each fund were divided into Class Z
and Class C Shares. Class Z Shares are offered to all insurance company
separate accounts issued by, and all qualified retirement plans sponsored
by, CUNA Mutual Life Insurance Company or its affiliates ("CUNA Mutual
Life"). Class C Shares are offered to separate accounts of insurance
companies other than CUNA Mutual Life, and to qualified retirement plans of
companies not affiliated with the Fund or CUNA Mutual Life. Both classes of
shares are identical in all respects except that: Class C Shares may be
subject to a distribution fee (note 4); each class will have exclusive
voting rights with respect to matters that affect just that class; and each
class will bear a different name or designation. All income earned and
expenses incurred by the Fund are borne on a pro-rata basis by each
outstanding share of each class based on the daily net asset value of
shares of that class. As of June 30, 2000, no Class C Shares have been
issued.
(2) Significant Accounting Policies
(a) Valuation of Investment Securities
Portfolio securities for which market quotations are readily available
are valued at current market value. If market quotations or valuations
are not available, or if such quotations or valuations are believed to
be inaccurate, unreliable or not reflective of market value, portfolio
securities are valued according to procedures adopted by the funds'
board of trustees in good faith at fair value.
Pricing services value domestic and foreign equity securities (and
occasionally fixed-income securities) traded on a securities exchange
or Nasdaq at the last reported sale price, up to the time of valuation.
If there are no reported sales of a security on the valuation date, it
is valued at the mean between the published bid and asked prices
reported by the exchange or Nasdaq. If there are no sales and no
published bid and asked quotations for a security on the valuation date
or the security is not traded on an exchange or Nasdaq, the pricing
service may obtain market quotations directly from broker-dealers.
Fixed-income securities are valued at prices obtained from a pricing
service, when such prices are available. In circumstances where prices
are not available from the fund's pricing service, securities may be
valued using market quotations obtained from one or more dealers or a
quotation system. Short-term securities with maturities of 60 days or
less and the Money Market Fund securities are valued at amortized cost,
which approximates market value.
(b) Share Valuation and Dividends to Shareholders
The net asset value of the shares of each fund is determined daily
based on the valuation of the net assets of the funds divided by the
number of shares of the fund outstanding. Expenses, including the
investment advisory, advisory/administrative, and distribution fees
(note 4), are accrued daily and reduce the net asset value per share.
Dividends on the Money Market Fund are declared and reinvested daily in
additional full and fractional shares of the Money Market Fund.
Dividends of net investment income from the Mid-Cap Stock Fund, Capital
Appreciation Stock Fund, Growth and Income Stock Fund, Bond Fund, and
Balanced Fund are declared and reinvested quarterly in additional full
and fractional shares of the respective funds. Distributions of net
realized capital gains of these funds, if any, will be declared and
reinvested at least annually. The Treasury 2000 Fund will utilize an
annual consent dividend procedure which provides the fund with the
deduction for dividends constructively paid to shareholders.
(c) Federal Income Taxes
Each fund intends to distribute all of its taxable income and to comply
with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for income or
excise taxes is required.
Generally accepted accounting principals require that permanent
financial reporting and tax differences be reclassified in the capital
accounts.
<PAGE>
For federal income tax purposes, at December 31, 1998, the Balanced
fund had a capital loss carryover of $2,476,442 that was offset by
capital gains in 1999. At December 31, 1999, the Bond Fund had a
capital loss carryover of $7,838,884 that will expire in the year 2007
if not offset by subsequent capital gains. To the extent the Bond Fund
realizes future net capital gains, taxable distributions will be
reduced by any unused capital loss carryover.
(d) Security Transactions and Investment Income
Security transactions are recorded on the trade date. Realized gains
and losses from security transactions are reported on the identified
cost basis. Interest, including amortization of premium and discount,
is accrued daily and dividend income is recorded on the ex-dividend
date.
(e) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increase
and decrease in net assets from operations during the period. Actual
results could differ from those estimates.
(3) Purchase and Sales of Investment Securities
The cost of securities purchased and the proceeds from securities sold
(including maturities, excluding short-term) for each fund during the
six-month period ended June 30, 2000, were as follows:
<TABLE>
<CAPTION>
U.S. Government Securities Other Investment Securities
Purchases Sales Purchases Sales
<S> <C> <C> <C> <C>
Bond $590,213,674 $560,261,384 $1,076,309,390 $1,075,783,440
Balanced 549,050,722 519,500,763 892,598,260 846,332,075
Growth and Income Stock 0 0 310,188,724 193,744,371
Capital Appreciation Stock 0 0 306,070,627 266,165,035
Mid-Cap Stock 0 0 30,154,053 6,928,419
</TABLE>
(4) Transactions with Affiliates
Fees and Expenses
The Fund has entered into an investment advisory agreement with CIMCO Inc.
(the "Investment Adviser"), an affiliated company. The fees under the
agreement, paid monthly, are calculated as a percentage of the average
daily net assets for each fund at the following annual rates:
Money Market 0.45%
Treasury 2000 0.45%
Bond 0.55%
Balanced 0.70%
Growth and Income Stock 0.60%
Capital Appreciation Stock 0.80%
Mid-Cap Stock 1.00%
Under this unified fee structure, the Investment Adviser is responsible for
providing or obtaining services and paying certain expenses including
custodian fees, transfer agent fees, pricing costs, and accounting and
legal fees as indicated in the investment advisory agreement.
The Investment Advisor has entered into a Subadvisor Agreement for the
management of a portion of the investments in the Mid-Cap Stock Fund. The
Investment Advisor is solely responsible for the payment of all fees to the
Subadvisor. The Subadvisor for this Fund is Heartland Advisors, Inc.
In addition to the unified investment advisory fee and Subadvisor
Agreement, each fund also pays certain expenses including trustees fees,
brokerage commissions, interest expense, audit fees, and other
extraordinary expenses.
All capital shares outstanding at June 30, 2000, are owned by separate
investment accounts of CUNA Mutual Life.
Certain officers and trustees of the Fund are also officers of CUNA Mutual
Life or CIMCO Inc. During the six-month period ended June 30, 2000, the
Fund made no direct payments to its officers and paid trustees' fees of
approximately $7,957 to its unaffiliated trustees.
<PAGE>
Distribution Plan
All shares are distributed through CUNA Brokerage Service, Inc. ("CBSI"),
an affiliated company, or other registered broker-dealers authorized by
CBSI. Class C Shares may also be subject to an asset-based distribution fee
pursuant to Rule 12b-1 under the 1940 Act, equal to not more than 0.25%, on
an annual basis, of the average value of the daily net assets of each
series of the Fund attributable to Class C Shares on an annual basis.
(5) Share Activity
Transactions in Class Z Shares of each fund for the year ended December 31,
1999 and for the six-month period ended June 30, 2000, were as follows:
<TABLE>
<CAPTION>
Money Treasury Growth and Capital Mid-Cap
Market 2000 Bond Balanced Income Stock Appreciation Stock
Fund Fund Fund Fund Fund Stock Fund Fund*
---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Shares outstanding at
December 31, 1998 56,416,488 184,870 21,598,720 24,018,663 27,264,375 28,412,098 --
---------- -------- --------- --------- --------- --------- --------
Shares sold 57,336,829 916 2,689,111 4,567,002 3,735,034 2,570,088 2,349,783
Reinvestment dividend
shares 3,095,292 -- 1,378,627 1,376,385 2,218,655 2,576,478 42,297
Shares repurchased (34,202,634) -- (743,228) (452,501) (507,934) (767,172) (16,297)
---------- -------- --------- --------- --------- --------- --------
Shares outstanding at
December 31, 1999 82,645,975 185,786 24,923,230 29,509,549 32,710,130 32,791,492 2,375,783
---------- -------- --------- --------- --------- --------- --------
Shares sold 30,843,334 -- 3,023,096 1,467,506 1,280,141 1,675,972 1,224,040
Reinvestment dividend shares2,198,550 -- 456,931 406,568 201,224 346,539 3,535
Shares repurchased (29,633,562) -- (621,166) (452,694) (253,180) (1,213,910) (154,280)
---------- -------- --------- --------- --------- --------- --------
Shares outstanding at
June 30, 2000 86,054,297 185,786 27,782,091 30,930,929 33,938,315 33,600,093 3,449,078
========== ======== ========= ========= ========= ========= ========
</TABLE>
*Commenced operations May 1, 1999.
(6) Unaudited Interim Financial Statements
All adjustments made to the interim financials are necessary to a fair
statement of the results for the interim period presented and are of a
normal recurring nature.
<PAGE>
This page intentionally left blank.
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
Schedule of Investments
December 31, 1999
% Net Quality Rating Annualized Maturity Par/Shares
Assets (Unaudited)* Yield Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL PAPER 38.3%
Bell South Telecom Inc. A-1+/P-1 5.842% 01/19/00 $ 2,000,000 $ 1,994,350
Bell South Telecom Inc. A-1+/P-1 5.858 01/27/00 1,000,000 995,905
CIT Group Inc. A-1/P-1 6.002 02/17/00 3,500,000 3,473,360
Coca-Cola Company A-1/P-1 5.865 02/15/00 2,000,000 1,985,850
General Mills Inc. A-1/P-1 5.981 01/05/00 4,000,000 3,997,391
General Motors Acceptance Corporation A-1/P-1 6.130 02/01/00 2,000,000 1,989,770
Goldman Sachs Group Inc. A-1+/P-1 6.028 02/22/00 3,300,000 3,272,305
Lucent Technologies A-1/P-1 5.995 02/28/00 3,500,000 3,467,295
Madison Gas & Electric A-1+/P-1 6.115 01/10/00 3,000,000 2,995,500
Merrill Lynch & Co Inc A-1+/P-1 6.146 01/31/00 1,000,000 995,034
Merrill Lynch & Co Inc A-1+/P-1 6.121 01/31/00 2,000,000 1,990,100
Procter & Gamble Co. A-1+/P-1 5.983 02/24/00 3,500,000 3,469,445
Walt Disney Company A-1/P-1 6.055 02/09/00 1,000,000 993,641
-----------
31,619,946
-----------
U.S. GOVERNMENT 4.8%
U.S. Treasury Bill 5.192 03/02/00 3,000,000 2,974,380
U.S. Treasury Note 5.374 07/31/00 1,000,000 1,000,000
-----------
3,974,380
-----------
QUASI-GOVERNMENT/
GOVERNMENT SPONSORED 52.4%
Federal Home Loan Bank Discount Note 5.671 01/24/00 3,000,000 2,989,497
Federal Home Loan Bank Discount Note 5.652 03/08/00 5,000,000 4,949,005
Federal Home Loan Bank Discount Note 5.683 03/13/00 3,000,000 2,966,940
Federal Home Loan Bank Discount Note 5.893 04/17/00 4,000,000 3,932,233
Federal Farm Credit Discount Notes 5.671 03/23/00 3,000,000 2,962,485
Federal Farm Credit Discount Notes 5.980 04/03/00 1,000,000 985,017
Federal Home Loan Mortgage Corp. Discount Notes 5.694 01/10/00 2,500,000 2,496,556
Federal Home Loan Mortgage Corp. Discount Notes 5.629 01/14/00 3,000,000 2,994,129
Federal Home Loan Mortgage Corp. Discount Notes 5.691 01/20/00 1,688,000 1,683,118
Federal Home Loan Mortgage Corp. Discount Notes 5.710 02/01/00 1,000,000 995,256
Federal Home Loan Mortgage Corp. Discount Notes 5.715 02/07/00 2,000,000 1,988,674
Federal Home Loan Mortgage Corp. Discount Notes 5.763 04/04/00 2,000,000 1,970,755
Federal National Mortgage Association Discount Notes 5.738 01/18/00 5,000,000 4,986,849
Federal National Mortgage Association Discount Notes 5.688 02/03/00 3,000,000 2,984,792
Federal National Mortgage Association Discount Notes 5.056 03/03/00 439,000 435,420
Federal National Mortgage Association 5.899 04/26/00 2,000,000 1,994,212
Federal Home Loan Bank 5.092 03/29/00 2,000,000 1,999,971
-----------
43,314,909
-----------
REGISTERED INVESTMENT COMPANY 3.8%
State Street Prime Money Market 5.440 3,165,212 3,165,212
----------
TOTAL INVESTMENTS, MONEY MARKET
FUND $ 82,074,447
===========
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete description of
these ratings.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Schedule of Investments
December 31, 1999
% Net Annualized
Assets Yield Shares Value
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS:
REGISTERED INVESTMENT COMPANY 1.7%
State Street Prime Money Market 5.440% 4,290,761 $ 4,290,761
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST: $4,290,761) 4,290,761
-----------
Quality Rating Coupon Maturity Par
LONG-TERM INVESTMENTS: (Unaudited)* Rate Date Amount
U.S. GOVERNMENT & AGENCY BONDS: 40.0%
GOVERNMENT NOTES 12.0%
U.S. Treasury Note AAA 5.875% 10/31/01 $3,000,000 2,981,250
U.S. Treasury Note AAA 5.875 11/15/04 3,000,000 2,942,814
U.S. Treasury Note AAA 6.500 05/15/05 2,000,000 2,001,250
U.S. Treasury Note AAA 5.250 02/15/29 5,000,000 4,137,500
U.S. Treasury Note AAA 7.500 02/15/05 3,000,000 3,130,314
U.S. Treasury Note AAA 7.875 11/15/04 3,000,000 3,174,375
U.S. Treasury Note AAA 6.000 08/15/09 3,000,000 2,907,189
U.S. Treasury Note AAA 6.500 08/15/05 3,000,000 3,000,939
U.S. Treasury Note AAA 10.750 02/15/03 5,000,000 5,603,125
-----------
29,878,756
-----------
GOVERNMENT AGENCIES 28.0%
Federal Home Loan Bank Note-CPI Floating Rate AAA 6.142 02/20/07 2,000,000 1,897,400
Federal Home Loan Bank AAA 6.000 08/15/02 4,500,000 4,434,399
FHLMC (Gold) - Pool D92482 AAA 7.000 08/01/18 1,736,163 1,698,193
FHLMC (Gold) - Pool D92564 AAA 7.000 10/01/18 2,731,058 2,671,331
Federal Home Loan Mortgage Corp. AAA 6.625 09/15/09 3,000,000 2,911,362
Federal Home Loan Mortgage Corp. AAA 6.010 04/26/04 5,000,000 4,813,335
Federal Home Loan Mortgage Corp. AAA 6.250 10/15/02 3,000,000 2,970,861
Federal Home Loan Mortgage Corp.CMO Series 2062 BA AAA 6.500 07/15/24 3,241,878 3,167,040
Federal National Mortgage Association 96-M6 G AAA 7.750 09/17/23 1,000,000 991,195
Federal National Mortgage Association AAA 7.000 08/27/12 3,000,000 2,865,921
Federal National Mortgage Association AAA 5.960 02/23/04 2,000,000 1,930,060
Federal National Mortgage Association Pool 519049 AAA 8.000 09/01/29 4,935,515 4,970,064
Federal National Mortgage Association Pool 525277 AAA 7.500 11/01/14 2,380,235 2,398,159
Federal National Mortgage Association Pool 525281 AAA 7.500 10/01/14 2,858,744 2,878,699
Federal National Mortgage Association
CMO Series 1998-2 D AAA 6.500 04/18/25 2,497,472 2,429,679
Federal National Mortgage Association
CMO Series 1998-47 AB AAA 6.250 06/18/25 6,682,264 6,426,768
Government National Mortgage Assn. Pool 493966 AAA 7.000 06/15/29 4,946,826 4,783,482
Government National Mortgage Assn. Pool 2811 AAA 8.000 09/20/29 9,941,217 10,013,590
Government National Mortgage Assn. Pool 436306 AAA 7.500 07/15/26 3,093,233 3,067,002
Government National Mortgage Assn.
Pool CMO Series 1998-6 A AAA 6.250 07/20/21 3,021,270 2,927,596
-----------
70,246,136
-----------
TOTAL U.S. GOVERNMENT & AGENCY BONDS
(COST: $101,567,079) 100,124,892
-----------
U.S. CORPORATE BONDS: 48.0%
BASIC MATERIALS 5.9%
Chemicals 3.6%
Rohm & Haas Co. A-3/A- 6.950 07/15/04 2,334,000 2,309,397
Soultia Inc. BAA-2/BBB 6.500 10/15/02 4,000,000 3,873,000
Tosco Corp. BAA-1/BBB 8.250 05/15/03 3,000,000 3,053,004
-----------
9,235,401
-----------
Paper/Forest Products 1.5%
Chesapeake Corp. BA-1/BBB 7.200 03/15/05 1,000,000 922,262
Georgia-Pacific Corp. BAA-2/BBB- 7.750 11/15/29 3,000,000 2,867,019
-----------
3,789,281
-----------
Steel 0.8%
Commercial Metals BAA-1/BBB+ 7.200 07/15/05 2,000,000 1,934,992
-----------
</TABLE>
<TABLE>
<CAPTION>
BOND FUND
Schedule of Investments (Continued)
December 31, 1999
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
CAPITAL GOODS 8.3%
Aerospace/Defense 2.4%
Lockheed Martin Corp BAA-3/BBB- 8.200% 12/01/09 $3,000,000 $ 2,992,203
United Tech Corp. A-2/A+ 6.625 11/15/04 3,200,000 3,134,752
-----------
6,126,955
-----------
Containers 3.9%
Crown Cork & Seal BAA-2/BBB 7.125 09/01/02 2,200,000 2,175,538
Owens-Illinois Inc. BA-1/BB+ 7.150 05/15/05 2,800,000 2,602,292
Owens Corning BAA-3/BBB- 7.500 05/01/05 2,500,000 2,376,628
Temple-Inland Inc. BAA-2/BBB+ 6.750 03/01/09 3,000,000 2,761,173
-----------
9,915,631
-----------
Environmental 1.0%
Waste Management Inc., Step Coupon(A) BAA-3/BBB 7.700 10/01/02 2,500,000 2,396,042
-----------
Manufacturing-Diversified 1.0%
Giddings & Lewis BA1/BBB 7.500 10/01/05 2,500,000 2,440,065
-----------
COMMUNICATION SERVICES 4.9%
Telephone 3.3%
AT&T Corp. A-1/AA- 6.500 03/15/29 3,000,000 2,576,094
GTE Corp. BAA-1/A 6.840 04/15/18 3,000,000 2,745,009
Worldcom A-3/A- 6.400 08/15/05 3,000,000 2,885,544
-----------
8,206,647
-----------
Telephone - Long Distance 1.6%
Sprint Capital Corp. BAA-1/BBB+ 6.500 11/15/01 4,000,000 3,965,148
-----------
CONSUMER CYCLICAL 5.0%
Auto Manufacturers 3.0%
Daimler Chrysler NA Holdings A-1/A+ 6.460 12/07/01 5,000,000 4,956,950
Ford Motor Company A-1/A+ 6.375 02/01/29 3,000,000 2,531,052
-----------
7,488,002
-----------
Retail-General 0.9%
JC Penney Co Inc. A-3/BBB+ 7.950 04/01/17 2,500,000 2,229,455
-----------
Retail-Specialty 1.1%
Autozone Inc. BAA-1/A- 6.000 11/01/03 3,000,000 2,811,687
-----------
CONSUMER STAPLES 4.9%
Drug Stores 1.2%
Bergen Brunswig BAA-2/BBB- 7.375 12/15/03 3,250,000 3,127,858
-----------
Food Retailers 2.9%
Great Atlantic & Pacific Tea BA-1/BBB- 7.750 04/15/07 3,500,000 3,204,803
Supervalu Inc. BAA-1/BBB+ 7.625 09/15/04 4,000,000 3,963,004
-----------
7,167,807
-----------
Media-TV/Radio/Cable 0.8%
CSC Holdings Inc. BA-2/BB+ 7.875 12/15/07 2,000,000 1,980,000
-----------
ENERGY 4.3%
Oil-Domestic 1.1%
Ashland, Inc. BAA-2/BBB 6.860 05/01/09 3,000,000 2,787,648
-----------
Oil-International 0.8%
Chevron Corp. AA-2/AA 6.625 10/01/04 2,000,000 1,973,414
-----------
</TABLE>
<TABLE>
<CAPTION>
BOND FUND
Schedule of Investments (Continued)
December 31, 1999
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
Oil-Services 2.4%
Foster Wheeler Corp. BAA-3/BBB- 6.750% 11/15/05 $4,000,000 $ 3,362,384
Phillips Petroleum Co. A-3/A- 7.000 03/30/29 3,000,000 2,703,570
-----------
6,065,954
-----------
FINANCE 6.7%
Banks 2.4%
Citicorp A-1/A+ 6.375 01/15/06 3,000,000 2,840,112
Compass Bank A-1/A- 8.100 08/15/09 3,000,000 3,035,637
-----------
5,875,749
-----------
Financial Services 4.3%
Capital One Bank BAA-2/BBB- 6.760 07/23/02 3,000,000 2,942,784
General Electric Capital Corp. AAA/AAA 5.760 04/24/00 2,000,000 1,999,186
General Motors Acceptance Corp A-2/A 6.750 12/10/02 3,000,000 2,977,758
Heller Financial Inc., 144A (B) A-3/A- 7.375 11/01/09 3,000,000 2,921,592
-----------
10,841,320
-----------
HEALTHCARE 0.7%
Medical Services 0.7%
Columbia/HCA Healthcare Corporation BA-2/BB+ 6.125 12/15/00 1,800,000 1,763,399
-----------
TECHNOLOGY 1.6%
Computer Related 1.6%
Comdisco Inc. BAA-1/BBB+ 6.130 08/01/01 4,000,000 3,904,068
-----------
TRANSPORTATION 2.1%
Airlines 2.0%
American Airlines A-2/BBB 8.040 09/16/11 1,717,841 1,712,576
Delta Air Lines BAA-1/BBB 8.540 01/02/07 263,780 268,346
Southwest Airlines A-1/A 8.700 07/01/11 18,127 19,112
US Airways Inc., Pass Thru Cert.
Series 99-1 A-3/AA- 8.360 07/20/20 3,000,000 2,908,245
-----------
4,908,279
-----------
Railroads 0.1%
Union Pacific RR A-1/A- 6.540 07/01/15 401,389 364,054
-----------
UTILITIES 3.6%
Electric Power 3.6%
Alliant Energy Resources, 144A (B) A-3/A 7.375 11/09/09 1,500,000 1,460,272
Florida Power & Light A-2/A+ 7.375 06/01/09 2,700,000 2,656,460
MidAmerican Energy Holdings BAA-3/BBB- 6.960 09/15/03 3,000,000 2,940,513
Texas Utilities Co. BAA-2/BBB 6.375 02/01/04 2,000,000 1,916,262
-----------
8,973,507
-----------
TOTAL U.S. CORPORATE BONDS
(COST: $122,605,395) 120,272,363
-----------
NON-U.S. CORPORATE BONDS: 8.7%
FOREIGN ISSUES: 8.7%
Abbey National PLC AA-3/AA- 7.950 10/26/29 3,000,000 3,005,592
Barclays Bank PLC AA-3/AA- 7.400 12/15/09 2,000,000 1,968,322
Petro Geo-Services ASA, 144A (B) BAA-3/BBB 7.125 03/30/28 3,000,000 2,625,660
Pemex Finance LTD 144A (B) BAA-1/BBB 9.690 08/15/09 3,000,000 3,104,265
Teleglobe, Inc. BAA-1/BBB+ 7.200 07/20/09 3,000,000 2,810,097
Tyco International Group SA, 144A(B) BAA-1/A- 6.250 06/15/03 2,385,000 2,262,974
Tyco International Group SA, 144A(B) BAA-1/A- 6.875 09/05/02 3,000,000 2,954,613
YPF Sociedad Anonima BAA-1/BBB- 9.125 02/24/09 3,000,000 3,099,624
-----------
TOTAL NON-U.S. CORPORATE BONDS
(COST $21,981,212) 21,831,147
-----------
TOTAL INVESTMENTS, BOND FUND
(COST: $250,444,447)** $246,519,163
===========
</TABLE>
<PAGE>
BOND FUND
Schedule of Investments (Continued)
December 31, 1999
Values of investment securities are determined as described in Note 2 of
the financial statements.
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete
description of these ratings.
**At December 31, 1999, the cost of securities for federal income tax
purposes was $250,698,558. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation..................................$ 153,569
Gross unrealized depreciation...................................(4,332,964)
------------
Net unrealized depreciation....................................($4,179,395)
============
***If applicable, this security provides a claim on the interest component of
the underlying mortgages, but not on their principal component. That is,
the security's cash flows depend on the amount of principal outstanding at
the payment date. If prepayments on the underlying mortgages are higher
than expected, the yield on the security may be adversely affected.
(A) Represents a security that had a coupon rate of 4.1% until October 1, 1994,
at which time the stated coupon rate became the effective rate.
(B) Restricted security sold within the terms of a private placement memorandum
exempt from registration under section 144A of the
Securities Act of 1933, as amended, and may be sold only to dealers in that
program or other "qualified institutional investors." On December 31,
1999, the total market value of these investments was $15,329,376, or 6.12%
of total net assets.
ABS Asset Backed Security
CMO Collateralized Mortgage Obligation
CPI Consumer Price Index
IO Interest Only
MTN Medium Term Note
PLC Public Limited Company
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Schedule of Investments
December 31, 1999
% Net Annualized
Assets Yield Shares Value
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS:
REGISTERED INVESTMENT COMPANY 4.2%
State Street Prime Money Market 5.440% 25,039,170 $ 25,039,170
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST: $25,039,170) 25,039,170
-----------
Quality Rating Coupon Maturity Par
LONG-TERM INVESTMENTS: (Unaudited)* Rate Date Amount
BONDS: 40.7%
U.S. GOVERNMENT & AGENCY BONDS: 17.7%
GOVERNMENT NOTES 8.1%
U.S. Treasury Notes AAA 5.875% 10/31/01 $5,000,000 4,968,750
U.S. Treasury Notes AAA 5.875 11/15/04 6,000,000 5,885,628
U.S. Treasury Notes AAA 7.000 07/15/06 3,500,000 3,586,408
U.S. Treasury Notes AAA 5.250 02/15/29 5,000,000 4,137,500
U.S. Treasury Notes AAA 6.375 09/30/01 5,000,000 5,010,940
U.S. Treasury Notes AAA 6.000 08/15/09 9,000,000 8,721,567
U.S. Treasury Notes AAA 5.625 09/30/01 5,000,000 4,950,000
U.S. Treasury Notes AAA 6.500 08/15/05 2,000,000 2,000,626
U.S. Treasury Notes AAA 10.750 02/15/03 3,000,000 3,361,875
U.S. Treasury Notes AAA 4.250 11/15/03 7,000,000 6,503,441
-----------
49,126,735
-----------
GOVERNMENT AGENCIES 9.6%
Federal Home Loan Bank Note-CPI Floating Rate AAA 6.142 02/20/07 5,000,000 4,743,500
Federal Home Loan Mortgage Corp. AAA 6.625 09/15/09 2,700,000 2,620,226
Federal Home Loan Mortgage Corp. AAA 6.010 04/26/04 5,000,000 4,813,335
Federal Home Loan Mortgage Corp. AAA 6.250 10/15/02 3,000,000 2,970,861
Federal Home Loan Mortgage Corp. CMO Series 2134 H AAA 6.500 12/15/24 4,009,002 3,860,978
Federal Home Loan Mortgage Corp. CMO Series 2062 BA AAA 6.500 07/15/24 3,241,878 3,167,040
Federal National Mortgage Assn. AAA 7.000 08/27/12 3,000,000 2,865,921
Federal National Mortgage Assn. Pool 50564 AAA 7.500 04/01/22 2,137,611 2,123,696
Federal National Mortgage Assn. Pool 50665 AAA 7.500 12/01/22 2,866,141 2,847,483
Federal National Mortgage Assn. AAA 5.960 02/23/04 2,000,000 1,930,060
Federal National Mortgage Assn. Pool 519049 AAA 8.000 09/01/29 4,935,515 4,970,064
Federal National Mortgage Assn. - 96-M6 G AAA 7.750 09/17/23 4,000,000 3,964,780
Government National Mortgage Assn. Pool 2811 AAA 8.000 09/20/29 9,941,217 10,013,589
Government National Mortgage Assn. Pool 436306 AAA 7.500 07/15/26 3,026,949 3,001,281
Government National Mortgage Assn.
Pool CMO Series 1998-6 A AAA 6.250 07/20/21 3,776,588 3,659,495
-----------
57,552,309
-----------
TOTAL U.S. GOVERNMENT & AGENCY
BONDS (COST $108,372,946) 106,679,044
-----------
U.S. CORPORATE BONDS: 19.5%
BASIC MATERIALS 1.9%
Chemicals 1.6%
Rohm & Haas Co. A-3/A- 6.950 07/15/04 2,500,000 2,473,648
Soultia Inc. BAA-2/BBB 6.500 10/15/02 4,000,000 3,873,000
Tosco Corp. BAA-1/BBB 8.250 05/15/03 3,000,000 3,053,004
-----------
9,399,652
-----------
Steel 0.3%
Commercial Metals BAA-1/BBB+ 7.200 07/15/05 2,000,000 1,934,991
-----------
CAPITAL GOODS 3.1%
Aerospace/Defense 1.0%
Lockheed Martin Corp BAA-3/BBB- 8.200 12/01/09 3,000,000 2,992,203
United Tech Corp. A-2/A+ 6.625 11/15/04 3,200,000 3,134,752
-----------
6,126,955
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Schedule of Investments (Continued)
December 31, 1999
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
Containers 1.5%
Crown Cork & Seal BAA-2/BBB 7.125% 09/01/02 $2,000,000 $ 1,977,762
Owens-Illinois Inc. BA-1/BB+ 7.150 05/15/05 2,000,000 1,858,780
Owens Corning BAA-3/BBB- 7.500 05/01/05 2,500,000 2,376,628
Temple-Inland Inc. BAA-2/BBB+ 6.750 03/01/0 3,000,000 2,761,173
-----------
8,974,343
-----------
Environmental 0.5%
Waste Management Inc., Step Coupon(A) BAA-3/BBB 7.700 10/01/02 3,000,000 2,875,251
-----------
Manufacturing-Diversified 0.1%
Giddings & Lewis BA-1/BBB 7.500 10/01/05 500,000 488,013
-----------
COMMUNICATION SERVICES 2.1%
Telephone 1.3%
AT&T Corp. A-1/AA- 6.500 03/15/29 2,500,000 2,146,745
GTE Corp. BAA-1/A 6.840 04/15/18 3,000,000 2,745,009
Worldcom A-3/A- 6.400 08/15/05 3,000,000 2,885,544
-----------
7,777,298
-----------
Telephone - Long Distance 0.8%
Sprint Capital Corp. BAA-1/BBB+ 6.500 11/15/01 5,000,000 4,956,435
-----------
CONSUMER CYCLICAL 1.9%
Auto Manufacturers 1.2%
Daimler Chrysler NA Holdings A-1/A+ 6.460 12/07/01 7,000,000 6,939,729
-----------
Retail - General 0.3%
JC Penney Co Inc. A-3/BBB+ 7.950 04/01/17 2,000,000 1,783,564
-----------
Retail - Speciality 0.4%
Autozone Inc. BAA-1/A- 6.000 11/01/03 2,545,000 2,385,248
-----------
CONSUMER STAPLES 1.9%
Drug Stores 0.4%
Bergen Brunswig BAA-2/BBB- 7.375 01/15/03 2,000,000 1,924,836
Bergen Brunswig BAA-2/BBB- 7.250 06/01/05 500,000 460,303
-----------
2,385,139
-----------
Food Retailers 1.0%
Great Atlantic & Pacific Tea BA-1/BBB- 7.750 11/15/29 2,500,000 2,389,183
Supervalu Inc. BAA-1/BBB+ 7.625 09/15/04 4,000,000 3,963,004
-----------
6,352,187
-----------
Media-TV/Radio/Cable 0.5%
CSC Holdings Inc. BA-2/BB+ 7.875 12/15/07 3,000,000 2,970,000
-----------
ENERGY 1.6%
Oil-Domestic 0.5%
Ashland, Inc. BAA-2/BBB 6.860 05/01/09 3,000,000 2,787,648
-----------
Oil-International 0.3%
Chevron Corp. AA-2/AA 6.625 10/01/04 2,000,000 1,973,414
-----------
Oil-Services 0.8%
Foster Wheeler Corp. BAA-3/BBB- 6.750 11/15/05 2,520,000 2,118,302
Phillips Petroleum Co. A-3/A- 7.000 03/30/29 3,000,000 2,703,570
-----------
4,821,872
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Schedule of Investments (Continued)
December 31, 1999
% Net Quality Rating Coupon Maturity Par
Assets (Unaudited)* Rate Date Amount Value
<S> <C> <C> <C> <C> <C> <C>
FINANCE 4.0%
Banks 1.0%
Citicorp A-1/A+ 6.375% 01/15/06 $3,000,000 $ 2,840,112
Compass Bank A-1/A- 8.100 08/15/09 3,000,000 3,035,637
-----------
5,875,749
-----------
Financial Services 3.0%
Capital One Bank BAA-2/BBB- 6.760 07/23/02 4,000,000 3,923,712
Ford Motor Company A-1/A+ 6.375 02/01/29 3,200,000 2,699,789
General Electric Capital Corp. AAA/AAA 6.810 11/03/03 2,200,000 2,187,515
General Motors Acceptance Corp A-2/A 9.625 12/15/01 2,650,000 2,772,215
General Motors Acceptance Corp A-2/A 6.750 12/10/02 3,500,000 3,474,051
Heller Financial Inc., 144A (B) A-3/A- 7.375 11/01/09 3,000,000 2,921,592
-----------
17,978,874
-----------
HEALTHCARE 0.4%
Drugs 0.3%
Rite Aid B-1/BB 6.700 12/15/01 2,000,000 1,690,000
-----------
Medical Services 0.1%
Columbia/HCA Healthcare Corporation BA-2/BB+ 6.125 12/15/00 1,000,000 979,666
-----------
TECHNOLOGY 0.6%
Computer Related 0.6%
Comdisco Inc. BAA-1/BBB+ 6.130 08/01/01 4,000,000 3,904,068
-----------
TRANSPORTATION 0.9%
Airlines 0.8%
American Airlines -2/BBB 8.040 09/16/11 858,920 856,288
Delta Air Lines AA-1/BBB 8.540 01/02/07 1,333,419 1,356,498
US Airways Inc., Pass Thru Cert. Series 99-1 -3/AA- 8.360 07/20/20 3,000,000 2,908,245
-----------
5,121,031
-----------
Trucking & Shipping 0.1%
Federal Express A-3/BBB+ 7.890 09/23/08 421,894 416,311
-----------
UTILITIES 1.1%
Electric Power 1.1%
Alliant Energy Resources, 144A (B) A-3/A 7.375 11/09/09 1,000,000 973,515
Florida Power & Light A-2/A+ 7.375 06/01/09 3,000,000 2,951,622
MidAmerican Energy Holdings BAA-3/BBB- 6.960 09/15/03 3,000,000 2,940,513
-----------
6,865,650
-----------
TOTAL U.S. CORPORATE BONDS
(COST: $119,453,320) 117,763,088
-----------
NON-U.S. CORPORATE BONDS: 3.5%
FOREIGN ISSUES: 3.5%
Abbey National PLC AA-3/AA- 7.950 10/26/29 3,000,000 3,005,592
Barclays Bank PLC AA-3/AA- 7.400 12/15/09 2,000,000 1,968,322
Pemex Finance LTD, 144A (B) BAA-1/BBB 9.690 08/15/09 3,000,000 3,104,265
Petro Geo-services ASA, 144A (B) BAA-3/BBB 7.125 03/30/28 3,000,000 2,625,660
Teleglobe, Inc. BAA-1/BBB+ 7.200 07/20/09 4,000,000 3,746,796
Tyco International Group SA, 144A (B) BAA-1/A- 6.875 09/05/02 3,500,000 3,447,049
YPF Sociedad Anonima BAA-1/BBB- 9.125 02/24/09 3,000,000 3,099,624
-----------
TOTAL NON-U.S. CORPORATE BONDS
(COST: $21,186,669) 20,997,308
-----------
TOTAL BONDS (COST: $249,012,935) 245,439,440
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
COMMON STOCKS: 54.3%
FOREIGN ISSUES: 3.7%
BP Amoco PLC/ADR 64,746 $ 3,840,247
Glaxo Wellcome PLC - ADR 46,150 2,578,631
Koninklijke (Royal) Philips Electronics N.V. - ADR 41,824 5,646,240
Telefonos de Mexico SP ADR - Cl L 39,000 4,387,500
Vodafone AirTouch PLC-SP ADR 114,625 5,673,938
-----------
TOTAL FOREIGN ISSUES (COST: $8,697,693) 22,126,556
-----------
DOMESTIC ISSUES: 50.6%
BASIC MATERIALS 2.2%
Chemicals 1.7%
The Dow Chemical Company 34,200 4,569,975
Praxair, Inc. 46,000 2,314,375
Rohm and Haas Company 78,300 3,185,831
-----------
10,070,181
-----------
Paper/Forest Products 0.5%
Willamette Industries, Inc. 63,200 2,934,850
-----------
CAPITAL GOODS 3.1%
Containers 0.5%
Owens-Illinois, Inc. *** 125,800 3,152,862
-----------
Electrical Equipment 0.9%
Honeywell International Inc. 56,250 3,244,922
Rockwell International Corporation 49,900 2,388,962
-----------
5,633,884
-----------
Environmental 0.2%
Waste Management, Inc. 77,327 1,329,058
-----------
Machinery/Equipment 0.4%
Pall Corporation 123,300 2,658,656
-----------
Manufacturing-Diversified 1.1%
Illinois Tool Works, Inc. 51,700 3,492,981
United Technologies Corporation 45,000 2,925,000
-----------
6,417,981
-----------
COMMUNICATION SERVICES 1.8%
Telephone - Long Distance 0.6%
AT & T Corp. 67,650 3,433,237
-----------
Telephone 1.2%
GTE Corporation 54,600 3,852,713
SBC Communications Inc. 69,748 3,400,215
-----------
7,252,928
-----------
CONSUMER CYCLICAL 5.0%
Commercial/Consumer 0.4%
IMS Health Incorporated 89,000 2,419,687
-----------
Printing/Publishing 0.6%
PRIMEDIA Inc.*** 215,200 3,550,800
-----------
Retail-Discount 0.7%
Wal-Mart Stores, Inc. 59,200 4,092,200
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Retail-General 2.1%
Dayton Hudson Corporation 137,900 $ 10,127,031
Sears, Roebuck & Co. 91,000 2,769,813
-----------
12,896,844
-----------
Retail-Specialty 1.2%
Tiffany & Co. 81,500 7,273,875
-----------
CONSUMER STAPLES 7.0%
Cosmetics/Toiletries 1.1%
Kimberly-Clark Corporation 99,100 6,466,275
-----------
Drug Stores 0.8%
CVS Corporation 126,852 5,066,152
-----------
Entertainment 0.6%
The Walt Disney Company 135,800 3,972,150
-----------
Food Producers 1.9%
General Mills, Inc. 71,000 2,538,250
Nabisco Holdings Corp. - Class A 115,700 3,659,013
Sara Lee Corporation 131,600 2,903,425
Tyson Foods, Inc. - Class A 141,125 2,293,281
-----------
11,393,969
-----------
Food Retailers 0.5%
Safeway Inc. 94,800 3,371,325
-----------
Media-TV/Radio/Cable 2.1%
Cox Communications, Inc.*** 109,800 5,654,700
MediaOne Group, Inc.*** 91,000 6,989,938
-----------
12,644,638
-----------
ENERGY 3.0%
Exploration/Drilling 0.7%
Kerr-McGee Corporation 55,100 3,416,200
Transocean Sedco Forex Inc. 15,062 507,401
-----------
3,923,601
-----------
Oil-Domestic 1.0%
Unocal Corporation 93,700 3,144,806
USX-Marathon Group 108,700 2,683,531
-----------
5,828,337
-----------
Oil-International 0.6%
Exxon Corporation 45,900 3,697,819
-----------
Oil-Services 0.7%
Schlumberger Limited 77,800 4,376,250
-----------
FINANCE 6.3%
Banks 2.2%
Bank One Corporation 98,890 3,170,661
Bank of America Corporation 99,798 5,008,612
Wells Fargo Company 121,400 4,909,112
-----------
13,088,385
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Financial Services 2.5%
Countrywide Credit Industries, Inc. 97,100 $ 2,451,775
Household International, Inc. 114,100 4,250,225
Morgan Stanley Dean Witter and Co. 32,600 4,653,650
MBIA, Inc. 65,200 3,443,375
-----------
14,799,025
-----------
Insurance Companies 1.6%
The Allstate Corporation 137,214 3,293,136
Citigroup Inc. 121,429 6,746,899
-----------
10,040,035
-----------
HEALTHCARE 4.0%
Drugs 2.4%
American Home Products Corporation 148,400 5,852,525
Bristol-Myers Squibb Company 96,200 6,174,838
Pharmacia & Upjohn, Inc. 61,200 2,754,000
-----------
14,781,363
-----------
Medical Products/Supply 0.9%
ALZA Corporation*** 76,100 2,634,963
Johnson & Johnson 30,108 2,803,807
-----------
5,438,770
-----------
Medical Services 0.7%
Aetna Inc. 72,600 4,051,988
-----------
TECHNOLOGY 15.5%
Communications Equipment 2.3%
ADC Telecommunications, Inc.*** 78,900 5,725,181
Motorola, Inc. 56,700 8,349,075
-----------
14,074,256
-----------
Computer Related 8.4%
3Com Corporation*** 131,900 6,199,300
EMC Corporation*** 125,300 13,689,025
Gateway, Inc.*** 130,200 9,382,538
Hewlett-Packard Company 58,800 6,699,525
International Business Machines Corporation 73,600 7,948,800
Seagate Technology, Inc.*** 39,500 6,495,468
-----------
50,414,656
-----------
Computer Software/Services 1.3%
Compuware Corporation*** 55,300 2,059,925
Gartner Group, Inc.*** 11,587 160,045
Keane, Inc.*** 175,900 5,584,825
-----------
7,804,795
-----------
Semiconductors 3.5%
Conexant Systems, Inc.*** 116,600 7,739,325
Micron Technology, Inc.*** 49,650 3,860,288
Texas Instruments Incorporated 96,600 9,358,125
-----------
20,957,738
-----------
TRANSPORTATION 1.1%
Airlines 0.4%
Delta Air Lines, Inc. 44,400 2,211,675
-----------
Railroads 0.2%
Norfolk Southern Corporation 66,800 1,369,400
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Trucking & Shipping 0.5%
FDX Corporation*** 79,400 $ 3,250,438
-----------
UTILITIES 1.0%
Electric Power 0.4%
PG&E Corporation 113,000 2,316,500
-----------
Natural Gas 0.6%
The Williams Companies, Inc. 113,500 3,468,844
-----------
MISCELLANEOUS 0.6%
Professional Services 0.6%
Interim Services Inc.*** 150,000 3,712,500
-----------
TOTAL DOMESTIC ISSUES
(COST: $198,608,337) 305,637,927
-----------
TOTAL COMMON STOCKS
(COST: $207,306,030) 327,764,483
-----------
TOTAL INVESTMENTS, BALANCED FUND
(COST: $481,358,135)** $598,243,093
===========
</TABLE>
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings (unaudited). See the current
Prospectus and Statement of Additional Information for a complete
description of these ratings.
**At December 31, 1999, the cost of securities for federal income tax
purposes was $481,643,731. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation.................................$135,401,913
Gross unrealized depreciation................................. (18,802,551)
-----------
Net unrealized appreciation...................................$116,599,362
===========
***This security is non-income producing.
****If applicable, this security provides a claim on the interest component of
the underlying mortgages, but not on their principal component. That is,
the security's cash flows depend on the amount of principal outstanding at
the payment date. If prepayments on the underlying mortgages are higher
than expected, the yield on the security may be adversely affected.
(A) Represents a security that had a coupon rate of 4.1% until October 1, 1994,
at which time the stated coupon rate became the effective rate.
(B) Restricted security sold within the terms of a private placement memorandum
exempt from registration under section 144A of the Securities Act of 1933,
as amended, and maybe sold only to dealers in that program or other
"qualified institutional investors."
On December 31, 1999, the total market value of these investments was
$13,072,081 or 2.17% of total net assets.
ABS Asset Backed Security
ADR American Depository Receipt
CMO Collateralized Mortgage Obligation
CPI Consumer Price Index
IO Interest Only
MTN Medium Term Note
PLC Pubic Limited Company
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Schedule of Investments
December 31, 1999
% Net Annualized
Assets Yield Shares Value
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS:
REGISTERED INVESTMENT COMPANY 2.3%
State Street Prime Money Market 5.440% 25,405,252 $ 25,405,252
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST: $25,405,252) 25,405,252
-----------
LONG-TERM INVESTMENTS:
COMMON STOCKS: 97.5%
FOREIGN ISSUES: 8.9%
BP Amoco PLC- ADR 245,080 14,536,308
Glaxo Wellcome PLC - ADR 209,450 11,703,018
Koninklijke (Royal) Philips Electronics N.V. - ADR 194,544 26,263,440
Nortel Networks Corporation 448,000 45,248,000
-----------
TOTAL FOREIGN ISSUES
(COST: $41,266,990) 97,750,766
-----------
DOMESTIC ISSUES: 88.6%
BASIC MATERIALS 3.8%
Chemicals 2.7%
The Dow Chemical Company 111,550 14,905,869
PPG Industries, Inc. 234,400 14,664,650
-----------
29,570,519
-----------
Paper/Forest Products 1.1%
Georgia-Pacific Group 231,800 11,763,850
-----------
CAPITAL GOODS 6.6%
Electrical Equipment 4.1%
Emerson Electric Co. 170,000 9,753,750
Honeywell International Inc. 448,650 25,881,496
Rockwell International Corporation 198,800 9,517,550
-----------
45,152,796
-----------
Environmental 0.8%
Waste Management, Inc. 539,999 9,281,233
-----------
Manufacturing-Diversified 1.7%
United Technologies Corporation 280,000 18,200,000
-----------
COMMUNICATION SERVICES 6.9%
Telephone - Long Distance 3.4%
AT&T Corp. 191,752 9,731,414
Sprint Corporation 413,300 27,820,256
-----------
37,551,670
-----------
Telephone 3.5%
GTE Corporation 246,750 17,411,297
SBC Communications Inc. 423,883 20,664,296
-----------
38,075,593
-----------
CONSUMER CYCLICAL 3.7%
Auto Parts Manufacturers 0.8%
Dana Corporation 284,885 8,528,745
-----------
Retail-Discount 2.0%
Wal-Mart Stores, Inc. 324,900 22,458,713
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Retail-General 0.9%
Sears, Roebuck & Co. 315,100 $ 9,590,856
-----------
CONSUMER STAPLES 14.6%
Beverages 1.2%
PepsiCo, Inc. 377,600 13,310,400
-----------
Cosmetics/Toiletries 2.6%
Kimberly-Clark Corporation 442,900 28,899,225
-----------
Drug Stores 1.4%
CVS Corporation 392,806 15,687,690
-----------
Entertainment 2.2%
The Walt Disney Company 820,800 24,008,400
-----------
Food Producers 3.6%
ConAgra, Inc. 380,500 8,585,031
General Mills, Inc. 245,200 8,765,900
Nabisco Holdings Corp. - Class A 367,700 11,628,513
Sara Lee Corporation 494,700 10,914,319
-----------
39,893,763
-----------
Food Retailers 1.6%
The Kroger Co.*** 951,900 17,967,113
-----------
Media-TV/Radio/Cable 2.0%
MediaOne Group, Inc.*** 267,900 20,578,069
-----------
ENERGY 5.5%
Exploration/Drilling 0.2%
Transocean Sedco Forex Inc. 53,046 1,786,987
-----------
Oil-Domestic 1.8%
Unocal Corporation 271,450 9,110,541
USX-Marathon Group 422,850 10,439,109
-----------
19,549,650
-----------
Oil-International 2.1%
Exxon Corporation 155,100 12,495,244
Texaco Inc. 202,900 11,020,006
-----------
23,515,250
-----------
Oil-Services 1.4%
Schlumberger Limited 274,000 15,412,500
-----------
FINANCE 11.4%
Banks 4.5%
Bank of America Corporation 344,571 17,293,157
Bank One Corporation 408,540 13,098,814
First Union Corporation 246,800 8,098,125
Wachovia Corporation 152,100 10,342,800
-----------
48,832,896
-----------
Financial Services 3.3%
Household International, Inc. 524,700 19,545,075
Morgan Stanley Dean Witter and Co. 113,000 16,130,750
-----------
35,675,825
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Insurance Companies 3.6%
The Allstate Corporation 708,026 $ 16,992,624
Citigroup Inc. 431,486 23,974,441
-----------
40,967,065
-----------
HEALTHCARE 8.2%
Drugs 4.0%
American Home Products Corporation 543,500 21,434,281
Bristol-Myers Squibb Company 357,600 22,953,450
-----------
44,387,731
-----------
Medical Prods/Supply 3.0%
ALZA Corporation*** 283,200 9,805,800
Baxter International Inc. 193,100 12,129,094
Johnson & Johnson 121,000 11,268,125
-----------
33,203,019
-----------
Medical Services 1.2%
Aetna Inc. 237,700 13,266,631
-----------
TECHNOLOGY 22.4%
Communications Equipment 4.2%
Harris Corporation 370,900 9,898,394
Motorola, Inc. 248,200 36,547,450
-----------
46,445,844
-----------
Computer Related 9.1%
EMC Corporation*** 376,700 41,154,475
Hewlett-Packard Company 251,700 28,678,068
International Business Machines Corporation 276,200 29,829,600
-----------
99,662,143
-----------
Computer Software/Services 4.8%
Computer Associates International, Inc. 444,900 31,115,194
Computer Sciences Corporation*** 224,400 21,233,850
-----------
52,349,044
-----------
Office Equipment 1.0%
Lanier Worldwide Inc*** 370,900 1,437,238
Xerox Corporation 408,700 9,272,381
-----------
10,709,619
-----------
Semiconductors 3.3%
Texas Instruments Incorporated 376,200 36,444,375
-----------
TRANSPORTATION 1.6%
Airlines 0.7%
Delta Air Lines, Inc. 158,600 7,900,262
-----------
Railroads 0.9%
Burlington Northern Santa Fe Corporation 220,200 5,339,850
Norfolk Southern Corporation 227,700 4,667,850
-----------
10,007,700
-----------
UTILITIES 2.7%
Electric Power 1.5%
Duke Energy Corporation 180,000 9,022,500
PG&E Corporation 345,000 7,072,500
-----------
16,095,000
-----------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Natural Gas 1.2%
The Williams Companies, Inc. 445,000 $ 13,600,313
-----------
MISCELLANEOUS 1.2%
Diversified 1.2%
Minnesota Mining and Manufacturing Company 131,400 12,860,775
-----------
TOTAL DOMESTIC ISSUES
(COST: $751,411,701) 973,191,264
-----------
TOTAL COMMON STOCKS
(COST: $792,678,691) 1,070,942,030
-------------
TOTAL INVESTMENTS, GROWTH AND INCOME
FUND (COST: $818,083,943)** $1,096,347,282
=============
</TABLE>
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings, if applicable, (unaudited). See
the current Prospectus and Statement of Additional Information for a
complete description of these ratings.
**At December 31, 1999, the cost of securities for federal income tax
purposes was $818,445,045. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation................................ $376,831,064
Gross unrealized depreciation................................ (98,928,827)
-----------
Net unrealized appreciation.................................. $277,902,237
===========
***This security is non-income producing.
ADR American Depository Receipt
PLC Public Limited Company
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Schedule of Investments
December 31, 1999
% Net Annualized
Assets Yield Shares Value
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS:
REGISTERED INVESTMENT COMPANY 2.1%
State Street Prime Money Market 5.440% 17,944,730 $ 17,944,730
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST: $17,944,730) 17,944,730
-----------
LONG-TERM INVESTMENTS:
COMMON STOCKS: 97.9%
FOREIGN ISSUES: 7.9%
Ace Limited 560,000 9,345,000
Elan Corp PLC - ADR *** 507,300 14,965,350
Telefonos de Mexico SP ADR - Cl L 200,000 22,500,000
Vodafone AirTouch PLC-SP ADR 391,500 19,379,250
-----------
TOTAL FOREIGN ISSUES
(COST: $41,761,515) 66,189,600
-----------
DOMESTIC ISSUES: 90.0%
BASIC MATERIALS 3.7%
Chemicals 2.6%
Praxair, Inc. 226,500 11,395,781
Rohm and Haas Company 270,000 10,985,625
-----------
22,381,406
-----------
Paper/Forest Products 1.1%
Willamette Industries, Inc. 193,000 8,962,438
-----------
CAPITAL GOODS 5.1%
Containers 1.7%
Owens-Illinois, Inc.*** 593,700 14,879,606
-----------
Machinery/Equipment 1.1%
Pall Corporation 410,000 8,840,625
-----------
Manufacturing-Diversified 2.3%
Illinois Tool Works, Inc. 282,800 19,106,675
-----------
COMMUNICATION SERVICES 2.2%
Telecom-Cel/Wireless 0.8%
Sprint PCS Group*** 70,000 7,175,000
-----------
Telephone 1.4%
CenturyTel, Inc. 240,100 11,374,738
-----------
CONSUMER CYCLICAL 11.9%
Commercial/Consumer 1.0%
IMS Health Incorporated 302,200 8,216,063
-----------
Printing/Publishing 1.6%
PRIMEDIA Inc.*** 820,600 13,539,900
-----------
Retail-General 3.6%
Dayton Hudson Corporation 405,600 29,786,250
-----------
Retail-Specialty 5.7%
Lowe's Companies, Inc 226,200 13,515,450
The Sherwin-Williams Company 440,200 9,244,200
The TJX Companies, Inc. 428,400 8,755,425
Tiffany & Co. 186,500 16,645,125
-----------
48,160,200
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
CONSUMER STAPLES 9.2%
Food Producers 2.7%
Nabisco Holdings Corp. - Class A 257,500 $ 8,143,438
Sara Lee Corporation 253,200 5,586,225
Tyson Foods, Inc. - Class A 542,700 8,818,875
-----------
22,548,538
-----------
Food Retailers 1.6%
Safeway Inc.*** 386,500 13,744,906
-----------
Media-TV/Radio/Cable 4.9%
Cox Communications, Inc.*** 393,100 20,244,650
MediaOne Group, Inc.*** 270,900 20,808,506
-----------
41,053,156
-----------
ENERGY 5.4%
Exploration/Drilling 1.1%
Kerr-McGee Corporation 148,700 9,219,400
-----------
Oil-Domestic 4.3%
Unocal Corporation 344,350 11,557,247
USX-Marathon Group 393,800 9,721,937
Weatherford International, Inc.*** 367,200 14,665,050
-----------
35,944,234
-----------
FINANCE 11.1%
Banks 4.2%
First Security Corporation 320,900 8,192,994
SunTrust Banks, Inc. 200,100 13,769,381
Wells Fargo Company 325,600 13,166,450
-----------
35,128,825
-----------
Financial Services 4.1%
Associates First Capital Corporation 448,600 12,308,463
Countrywide Credit Industries, Inc. 233,000 5,883,250
Freddie Mac 168,300 7,920,618
MBIA, Inc. 163,000 8,608,438
-----------
34,720,769
-----------
Insurance Companies 2.8%
Citigroup Inc. 420,198 23,347,251
-----------
HEALTHCARE 4.2%
Biotech-Spec. Pharmaceutical 0.0%
Crescendo Pharmaceuticals Corporation*** 6,260 114,441
-----------
Drugs 1.2%
Pharmacia & Upjohn, Inc. 216,400 9,738,000
-----------
Medical Prod/Supply 1.6%
Boston Scientific Corporation*** 628,200 13,741,875
-----------
Medical Services 1.4%
Aetna Inc. 213,500 11,915,969
-----------
TECHNOLOGY 30.7%
Communication Equipment 2.2%
ADC Telecommunications, Inc.*** 256,200 18,590,512
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Computer Related 12.3%
3Com Corporation*** 354,600 $ 16,666,200
EMC Corporation*** 336,900 36,806,325
Gateway, Inc.*** 410,500 29,581,656
Seagate Technology, Inc.*** 428,400 19,947,375
-----------
103,001,556
-----------
Computer Software/Services 8.3%
Autodesk, Inc. 426,500 14,394,375
Cadence Design Systems, Inc.*** 570,900 13,701,600
Compuware Corporation*** 193,100 7,192,975
Gartner Group, Inc.*** 31,586 436,282
Keane, Inc.*** 586,500 18,621,375
PeopleSoft, Inc. 727,400 15,502,712
-----------
69,849,319
-----------
Electronics 1.0%
W.W. Grainger, Inc. 168,000 8,032,500
-----------
Semiconductors 6.9%
Conexant Systems Inc.*** 271,798 18,040,592
Dallas Semiconductor Corporation 144,100 9,285,444
Micron Technology, Inc.*** 129,350 10,056,963
Texas Instruments Incorporated 211,600 20,498,750
-----------
57,881,749
-----------
TRANSPORTATION 1.9%
Airlines 0.6%
Midwest Express Holdings, Inc.*** 169,875 5,414,766
-----------
Trucking & Shipping 1.3%
FDX Corporation*** 261,100 10,688,781
-----------
UTILITIES 2.9%
Electric Power 1.0%
Midamerican Energy Holdings Co.*** 254,000 8,556,625
-----------
Natural Gas 1.9%
El Paso Energy Corporation 162,000 6,287,625
The Williams Companies, Inc. 306,600 9,370,463
-----------
15,658,088
-----------
MISCELLANEOUS 1.7%
Professional Services 1.7%
Interim Services Inc.*** 562,200 13,914,450
-----------
TOTAL DOMESTIC COMMON STOCK
(COST: $547,719,703) 755,228,611
-----------
TOTAL COMMON STOCKS
(COST: $589,481,218) 821,418,211
-----------
TOTAL INVESTMENTS, CAPITAL APPRECIATION
STOCK FUND (COST: $607,425,948)** $839,362,941
===========
</TABLE>
<PAGE>
CAPITAL APPRECIATION STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings, if applicable, (unaudited). See
the current Prospectus and Statement of Additional Information for a
complete description of these ratings.
**At December 31, 1999, the cost of securities for federal income tax
purposes was $607,425,948. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation................................ $275,503,695
Gross unrealized depreciation................................ (43,566,702)
-----------
Net unrealized appreciation.................................. $231,936,993
===========
***This security is non-income producing.
ADR American Depository Receipt
PLC Public Limited Company
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MID-CAP STOCK FUND
Schedule of Investments
December 31, 1999
% Net Annualized
Assets Yield Shares Value
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS:
REGISTERED INVESTMENT COMPANY 2.2%
State Street Prime Money Market 5.440% 588,653 $ 588,653
-------
TOTAL SHORT-TERM INVESTMENTS
(COST: $588,653) 588,653
-------
LONG-TERM INVESTMENTS:
COMMON STOCKS: 98.5%
FOREIGN ISSUES: 3.0%
Elan Corp - PLC ADR*** 14,400 424,800
London Pacific Group Limited - SP ADR 3,000 108,000
Newbridge Networks Corporation*** 9,600 216,600
Zindart Limited - ADR*** 6,500 44,688
-------
TOTAL FOREIGN ISSUES
(COST: $763,300) 794,088
-------
DOMESTIC ISSUES: 95.5%
BASIC MATERIALS 4.8%
Chemicals 0.8%
Air Prod & Chemicals, Inc. 6,000 201,375
-------
Chemicals-Specialty 1.9%
Albermale Corporation 5,500 105,531
Ecolab Inc. 7,500 293,437
Oil-Dri Corporation 7,500 107,812
-------
506,780
-------
Paper/Forest Products 1.5%
Bemis Company, Inc. 6,000 209,250
Westvaco Corporation 6,000 195,750
-------
405,000
-------
Steel 0.6%
Texas Industries, Inc. 3,500 148,968
-------
CAPITAL GOODS 8.3%
Aerospace/Defense 0.5%
The B.F. Goodrich Company 4,500 123,750
-------
Building Supplies 0.4%
Lafarge Corporation 3,500 96,688
-------
Construction 0.8%
Fluor Corporation 4,500 206,438
-------
Electrical Equipment 1.6%
Hubbell Incorporated - Class B 7,000 190,750
Molex Incorporated 4,400 249,425
-------
440,175
-------
Machinery/Equipment 2.2%
Ingersoll-Rand Company 7,000 385,438
Stewart & Stevenson Services, Inc. 9,500 112,516
Trinity Industries, Inc. 3,500 99,531
-------
597,485
-------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Manufacturing-Diversified 2.1%
Eaton Corporation 5,500 $ 399,438
National Service Industries. Inc. 5,500 162,250
-------
561,688
-------
Office Supplies/Equipment 0.7%
Herman Miller, Inc. 8,000 184,000
-------
COMMUNICATION SERVICES 1.8%
Telephone 1.8%
CenturyTel, Inc. 10,000 473,750
-------
CONSUMER CYCLICAL 15.6%
Apparel/Textiles 1.4%
Saucony, Inc.*** 7,500 104,062
V.F. Corporation 4,500 135,000
Wolverine World Wide, Inc. 11,300 123,594
-------
362,656
-------
Auto Parts Manufacturing 0.4%
Cooper Tire & Rubber 6,400 99,600
-------
Commercial/Consumer 0.6%
Pittston Brink's Group 2,500 55,000
Spar Group*** 30,000 101,250
-------
156,250
-------
Furniture/Appliances 2.3%
Ethan Allen Interiors Inc. 13,400 429,638
Flexsteel Industries, Inc. 4,800 64,200
Steelcase Inc. 9,300 111,600
-------
605,438
-------
Homebuilding/Supplies 0.7%
M/I Schottenstein Homes, Inc. 6,000 93,375
U.S. Home Corporation*** 4,000 102,250
-------
195,625
-------
Leisure Time/Gaming 0.3%
K2 Inc.*** 10,000 76,250
-------
Lodging/Hotels 0.6%
Host Marriott Corp. 20,000 165,000
-------
Printing/Publishing 1.7%
A. H. Belo Corporation, Class A 23,400 446,062
-------
Retail-Discount 1.2%
Dollar General Corporation 12,150 276,412
Duckwall-ALCO Stores, Inc.*** 7,500 57,188
-------
333,600
-------
Retail-Specialty 6.4%
Borders Group, Inc.*** 9,600 154,200
Linens 'n Things, Inc.*** 12,500 370,312
OfficeMax, Inc.*** 17,100 94,050
Pier 1 Imports, Inc. 20,200 128,775
Ross Stores, Inc. 10,900 195,518
The Sherwin-Williams Company 11,000 231,000
Tiffany & Co. 5,000 446,250
Wilson, The Leather Experts Inc.*** 4,000 73,750
---------
1,693,855
---------
</TABLE>
<TABLE>
<CAPTION>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
CONSUMER STAPLES 4.7%
Cosmetics/Toiletries 0.3%
Perrigo Company*** 10,000 $80,000
--------
Food Producers/Distributors 2.1%
Flowers Industries, Inc. 20,200 321,938
Tyson Foods, Inc. - Class A 14,100 229,125
--------
551,063
--------
Food Retailers 0.7%
Hannaford Brothers Co. 2,600 180,213
--------
Media-TV/Radio/Cable 1.6%
Adelphia Communications Corporation*** 6,700 439,688
--------
ENERGY 3.9%
Exploration/Drilling 3.7%
BJ Services Company*** 7,800 326,138
ENSCO International Incorporated 14,100 322,538
Smith International, Inc*** 6,500 322,968
--------
971,644
--------
Oil-Domestic 0.2%
Remington Oil & Gas Corporation*** 15,000 58,125
--------
FINANCE 11.7%
Banks 4.7%
Associated Banc-Corp 4,400 150,700
Bank United Corp. - Class A 3,100 84,475
Commercial Federal Corporation 12,000 213,750
First Security Corporation 7,300 186,378
First Tennessee National Corporation 6,400 182,400
Hibernia Corporation 10,600 112,625
Marshall & Ilsley Corporation 2,700 169,594
TCF Financial Corporation 5,600 139,300
---------
1,239,222
---------
Financial Services 1.8%
The Bear Stearns Companies Inc. 11,500 491,625
--------
Insurance Companies 4.9%
Ambac Financial Group, Inc. 9,000 469,687
American Medical Security Group, Inc.*** 10,000 60,000
Amerus Life Holdings, Inc. 5,800 133,400
The First American Financial Corporation 7,300 90,794
MGIC Investment Corporation 9,000 541,687
---------
1,295,568
---------
Real Estate Investment 0.3%
New Plan Excel Realty Trust 5600 88,550
--------
HEALTHCARE 11.5%
Biotech-Spec. Pharmaceutical 0.8%
IDEXX Laboratories, Inc.*** 12,700 204,788
--------
Drugs 4.6%
Chiron Corporation*** 10,900 461,888
Genzyme Corporation*** 8,100 364,500
ICN Pharmaceuticals, Inc. 13,500 341,719
Rexall Sundown, Inc.*** 4,500 46,406
---------
1,214,513
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
Medical Products/Supplies 5.1%
Biomet, Inc. 8,200 $328,000
Genzyme Surgical Products*** 590 3,429
OrthoLogic Corp.*** 32,000 82,000
St. Jude Medical, Inc.*** 9,500 291,531
Henry Schein, Inc. *** 2,500 33,281
STERIS Corporation*** 12,700 130,969
Sunrise Medical Inc.*** 17,500 108,281
Sybron International Corporation*** 15,100 372,781
---------
1,350,272
---------
Medical Services 1.0%
Chronimed Inc.*** 8,000 61,500
Humana Inc.*** 14,600 119,538
NABI*** 18,000 83,250
--------
264,288
--------
TECHNOLOGY 23.0%
Communication Equipment 2.4%
ADC Telecommunications, Inc.*** 4,500 326,531
Executone Information Systems, Inc. 35,000 190,313
Norstan Inc.*** 20,000 127,500
--------
644,344
--------
Computer Related 2.5%
Exabyte Corporation*** 20,000 150,000
NeoMagic Corporation*** 10,000 109,375
Quantum Corporation (DSSG)*** 15,300 231,412
Storage Technology Corporation*** 9,300 171,469
--------
662,256
--------
Computer Software/Services 6.1%
Autodesk, Inc. 5,100 172,125
Keane, Inc.*** 10,500 333,375
Indus International, Inc.*** 10,000 121,875
Rainbow Technologies, Inc.*** 3,000 69,750
Sterling Software, Inc.*** 6,700 211,050
SunGard Data Systems Inc.*** 10,700 254,125
Sybase, Inc.*** 7,000 119,000
Synopsys, Inc.*** 5,000 333,750
---------
1,615,050
---------
Electronics 5.4%
Arrow Electronics, Inc.*** 16,600 421,225
W. W. Grainger, Inc. 6,000 286,875
Tech-Sym Corporation*** 5,000 103,125
Teradyne, Inc.*** 6,000 396,000
Varian Medical Systems, Inc. 7,700 229,556
---------
1,436,781
---------
Photography/Imaging 0.3%
Polaroid Corporation 3,700 69,606
---------
Semiconductors 6.3%
Atmel Corporation*** 13,400 396,137
Dallas Semi-Conductors 5,000 322,188
Etec Systems, Inc.*** 5,000 224,375
LSI Logic Corporation*** 5,200 351,000
Quantum Corp (HDDS)*** 3,450 23,934
Varian Semiconductor Equipment Associates, Inc.*** 10,000 340,000
---------
1,657,634
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MID-CAP STOCK FUND
Schedule of Investments (Continued)
December 31, 1999
% Net
Assets Shares Value
<S> <C> <C> <C>
TRANSPORTATION 2.0%
Airlines 1.0%
Midwest Express Holdings, Inc.*** 8,200 $ 261,375
---------
Transportation-Miscellaneous 0.6%
The Hertz Corporation, Class A 3,000 150,375
---------
Trucking & Shipping 0.4%
Airborne Freight Corporation 5,000 110,000
---------
UTILITIES 3.9%
Electric Power 3.5%
El Paso Electric Company*** 14,300 140,319
Florida Progress Corporation 6,500 275,031
Midamerican Energy Holdings Company*** 12,000 404,250
TECO Energy, Inc. 5,800 107,663
---------
927,263
---------
Natural Gas 0.4%
Southwestern Energy Company 15,000 98,438
---------
MISCELLANEOUS 4.3%
Professional Services 4.3%
Affiliated Computer Services, Inc.*** 5,400 248,400
Business Resource Group*** 20,000 106,250
EZCORP, Inc. 20,000 81,250
Manpower Inc. 15,000 564,375
Modis Professional Services, Inc.*** 10,000 142,500
---------
1,142,775
---------
TOTAL DOMESTIC ISSUES
(COST: $22,963,798) 25,285,889
----------
TOTAL COMMON STOCKS
(COST: $23,727,098) 26,079,977
----------
TOTAL INVESTMENTS, MID-CAP STOCK FUND
(COST: $24,315,751)** $26,668,630
==========
</TABLE>
Values of investment securities are determined as described in Note 2 of the
financial statements.
*Moody's/Standard & Poors' quality ratings, if applicable, (unaudited). See
the current Prospectus and Statement of Additional Information for a
complete description of these ratings.
**At December 31, 1999, the cost of securities for federal income tax
purposes was $24,316,762. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation................................ $4,073,960
Gross unrealized depreciation................................ (1,722,092)
__________
Net unrealized appreciation........................... ...... $2,351,868
==========
***This security is non-income producing.
ADR American Depository Receipt
PLC Public Limited Company
REIT Real Estate Investment Trust
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Assets and Liabilities
December 31, 1999
Money Treasury Growth and Capital Mid-Cap
Market 2000 Bond Balanced Income Appreciation Stock
Assets: Fund Fund Fund Fund Stock Fund Stock Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investments in securities,
at value (note 2) - see
accompanying schedule* $82,074,447 $1,901,538 $246,519,163 $598,243,093 $1,096,347,282 $839,362,941 $26,668,630
Receivable for investment
securities sold - - - 2,799,103 3,160,766 3,218,982 -
Receivable for fund shares
sold 519,266 - 15,211 122,705 817,703 374,028 18,990
Accrued interest and
dividends receivable 83,600 - 3,968,013 4,434,879 1,501,987 457,956 24,424
----------- ----------- ----------- ----------- ------------- ------------ ------------
Total assets 82,677,313 1,901,538 250,602,387 605,599,780 1,101,827,738 843,413,907 26,712,044
----------- ----------- ----------- ----------- ------------- ------------ ------------
Liabilities:
Payable for investment
securities purchased - - - 2,109,286 2,948,333 3,728,761 211,616
Accrued management fees 31,012 398 116,329 352,734 545,577 548,544 20,900
Accrued other expenses 326 - 832 2,063 3,732 2,807 100
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 31,338 398 117,161 2,464,083 3,497,642 4,280,112 232,616
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets applicable to
outstanding capital stock $82,645,975 $1,901,140 $250,485,226 $603,135,697 $1,098,330,096 $839,133,795 $26,479,428
=========== =========== =========== =========== ============= =========== ===========
Represented by:
Capital stock (par value $.01)
and additional paid-in
capital $82,645,975 $1,730,401 $262,280,366 $482,835,315 $816,115,948 $597,934,165 $24,092,961
Undistributed net investment
income - - 223,139 284,896 188,433 67,799 8,840
Accumulated net realized
gain (loss) on investments - - (8,092,995) 3,130,528 3,762,376 9,194,838 24,748
Unrealized appreciation
(depreciation) on investments - 170,739 (3,925,284) 116,884,958 278,263,339 231,936,993 2,352,879
----------- ----------- ----------- ----------- ------------ ----------- -----------
Total net assets - representing
net assets applicable to
outstanding capital stock $82,645,975 $1,901,140 $250,485,226 $603,135,697 $1,098,330,096 $839,133,795 $26,479,428
=========== =========== =========== =========== ============= =========== ===========
Number of Class Z Shares
issued and outstanding
(note 5) 82,645,975 185,786 24,923,230 29,509,549 32,710,130 32,791,492 2,375,783
=========== =========== =========== =========== =========== =========== ===========
Net asset value per share of
outstanding capital stock
(note 2) $1.00 $10.23 $10.05 $20.44 $33.58 $25.59 $11.15
----------- ----------- ----------- ----------- ----------- ----------- -----------
*Cost of Investments $82,074,447 $1,730,799 $250,444,447 $481,358,135 $818,083,943 $607,425,948 $24,315,751
----------- ----------- ----------- ------------ ------------ ----------- -----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Operations
Year Ended December 31, 1999
Money Treasury Growth and Capital Mid-Cap
Market 2000 Bond Balanced Income Appreciation Stock
Fund Fund Fund Fund Stock Fund Stock Fund Fund*
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (note 2):
Interest income $3,383,135 $114,237 $15,562,004 $15,302,197 $1,180,151 $833,638 $47,624
Dividend income - - - 3,451,969 14,589,000 5,586,205 135,064
----------- ---------- ----------- ------------ ----------- ----------- -----------
Total income 3,383,135 114,237 15,562,004 18,754,166 15,769,151 6,419,843 182,688
----------- ---------- ----------- ------------ ----------- ----------- -----------
Expenses (note 4):
Management fees 294,066 8,362 1,321,358 3,717,079 5,948,635 5,685,472 130,658
Trustees' fees 391 - 1,536 3,261 6,165 4,413 64
Audit fees 641 - 2,526 5,355 10,127 7,248 103
----------- ---------- ----------- ------------ ----------- ----------- -----------
Total expenses 295,098 8,362 1,325,420 3,725,695 5,964,927 5,697,133 130,825
----------- ---------- ----------- ------------ ----------- ----------- -----------
Net investment income 3,088,037 105,875 14,236,584 15,028,471 9,804,224 722,710 51,863
Realized and unrealized
gain (loss) on investments
(notes 2 and 3):
Net realized gain (loss)
on investments - - (8,092,995) 18,937,774 64,716,812 73,587,448 481,164
Net change in unrealized
appreciation (depreciation)
on investments - (49,993) (4,261,091) 37,197,027 81,136,793 91,564,086 2,352,878
----------- ---------- ----------- ------------ ----------- ----------- -----------
Net gain (loss) on investments - (49,993) (12,354,086) 56,134,801 145,853,605 165,151,534 2,834,042
----------- ---------- ----------- ------------ ----------- ----------- -----------
Net increase in net assets
resulting from operations $3,088,037 $ 55,882 $ 1,882,498 $71,163,272 $155,657,829 $165,874,244 $2,885,905
=========== ========== =========== =========== =========== =========== ===========
</TABLE>
*Commenced operations May 1, 1999.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Changes in Net Assets
Years Ended December 31, 1999 and 1998
MONEY MARKET FUND TREASURY 2000 FUND BOND FUND
<S> <C> <C> <C> <C> <C> <C>
Operations: 1999 1998 1999 1998 1999 1998
Net investment income $3,088,037 $ 2,251,161 $ 105,875 $ 106,292 $14,236,584 $12,280,579
Net realized gain (loss) on
investments - - - - (8,092,995) 159,188
Net change in unrealized appreciation
or depreciation on investments - - (49,993) 21,682 (4,261,091) (85,864)
----------- ----------- --------- ----------- ----------- -----------
Change in net assets from
operations 3,088,037 2,251,161 55,882 127,974 1,882,498 12,353,903
----------- ----------- --------- ----------- ----------- -----------
Distributions to shareholders:
From net investment income (3,088,037) (2,251,161) - - (14,083,486) (12,272,877)
From realized gains on investments - - - - (3,484) (155,703)
----------- ----------- --------- ----------- ----------- -----------
Change in net assets from
distributions (3,088,037) (2,251,161) - - (14,086,970) (12,428,580)
----------- ----------- --------- ----------- ---------- -----------
Class Z Share transactions (note 5):
Proceeds from sale of shares 57,336,829 45,266,763 9,354 7,253 28,132,898 30,878,732
Net asset value of shares issued in
reinvestment of distributions 3,095,292 2,249,737 - - 14,086,970 12,428,580
----------- ----------- --------- ----------- ----------- -----------
60,432,121 47,516,500 9,354 7,253 42,219,868 43,307,312
Cost of shares repurchased (34,202,634) (32,270,164) - - (7,811,320 (3,791,053)
----------- ----------- --------- ----------- ----------- -----------
Change in net assets derived from
capital share transactions 26,229,487 15,246,336 9,354 7,253 34,408,548 39,516,259
----------- ----------- --------- ----------- ----------- -----------
Increase in net assets 26,229,487 15,246,336 65,236 135,227 22,204,076 39,441,582
Net assets:
Beginning of year 56,416,488 41,170,152 1,835,904 1,700,677 228,281,150 188,839,568
----------- ----------- ---------- ----------- ----------- -----------
End of year $82,645,975 $56,416,488 $1,901,140 $1,835,904 $250,485,226 $228,281,150
=========== =========== ========== =========== =========== ===========
Undistributed net investment
income included in net assets - - - - $223,139 $70,041
=========== =========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Changes in Net Assets (Continued)
Years Ended December 31, 1999 and 1998
GROWTH AND INCOME CAPITAL APPRECIATION
BALANCED FUND STOCK FUND STOCK FUND
<S> <C> <C> <C> <C> <C> <C>
Operations: 1999 1998 1999 1998 1999 1998
Net investment income $ 15,028,471 $12,088,130 $ 9,804,224 $8,354,361 $ 722,710 $ 1,650,475
Net realized gain (loss) on
investments 18,937,774 (2,476,442) 64,716,812 34,291,135 73,587,448 15,075,685
Net change in unrealized appreciation
or depreciation on investments 37,197,027 38,583,512 81,136,793 73,755,119 91,564,086 86,357,794
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets from
operations 71,163,272 48,195,200 155,657,829 116,400,615 165,874,244 103,083,954
----------- ----------- ------------ ------------ ----------- -----------
Distributions to shareholders:
From net investment income (14,771,068) (12,093,642) (9,615,791) (8,355,956) (654,910) (1,663,199)
From realized gains on investments (13,330,805) (19,797) (64,716,574) (30,527,402) (64,764,832) (14,650,506)
----------- ----------- ------------ ----------- ----------- -----------
Change in net assets from
distributions (28,101,873) (12,113,439) (74,332,365) (38,883,358) (65,419,742) (16,313,705)
----------- ----------- ------------ ------------ ----------- -----------
Class Z Share transactions (note 5):
Proceeds from sale of shares 91,071,831 98,736,778 127,024,727 138,687,461 61,727,019 74,042,102
Net asset value of shares issued in
reinvestment of distributions 28,101,873 12,113,439 74,332,365 38,883,358 65,419,742 16,313,705
----------- ----------- ------------ ----------- ----------- -----------
119,173,704 110,850,217 201,357,092 177,570,819 127,146,761 90,355,807
Cost of shares repurchased (9,091,748) (6,743,348) (17,526,082) (12,049,887) (18,840,534) (2,947,225)
----------- ----------- ------------ ------------ ----------- -----------
Change in net assets derived from
capital share transactions 110,081,956 104,106,869 183,831,010 165,520,932 108,306,227 87,408,582
----------- ----------- ------------ ------------- ----------- -----------
Increase (decrease) in net assets 153,143,355 140,188,630 265,156,474 243,038,189 208,760,729 174,178,831
Net assets:
Beginning of year 449,992,342 309,803,712 833,173,622 590,135,433 630,373,066 456,194,235
----------- ----------- ------------ ------------ ----------- -----------
End of year $603,135,697 $449,992,342 $1,098,330,096 $833,173,622 $839,133,795 630,373,066
=========== =========== ============= ============ =========== ===========
Undistributed net investment
income included in net assets $284,896 $27,494 $188,433 - $67,799 -
=========== =========== =========== ============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ULTRA SERIES FUND
Statements of Changes in Net Assets (Continued)
Years Ended December 31, 1999 and 1998
MID-CAP STOCK FUND*
<S> <C>
Operations: 1999
Net investment income $ 51,863
Net realized gain (loss) on
investments 481,164
Net change in unrealized appreciation
or depreciation on investments 2,352,878
-----------
Change in net assets from
operations 2,885,905
-----------
Distributions to shareholders:
From net investment income (43,023)
From realized gains on investments (456,416)
-----------
Change in net assets from
distributions (499,439)
-----------
Class Z Share transactions (note 5):
Proceeds from sale of shares 23,763,821
Net asset value of shares issued in
reinvestment of distributions 499,439
-----------
24,263,260
Cost of shares repurchased (170,298)
-----------
Change in net assets derived from
capital share transactions 24,092,962
-----------
Increase (decrease) in net assets 26,479,428
Net assets:
Beginning of year -
-----------
End of year $26,479,428
===========
Undistributed net investment
income included in net assets $ 8,840
===========
</TABLE>
*Commenced operations May 1, 1999.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
Financial Highlights
Year Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- -------
Income from Investment Operations
Net Investment Income*** 0.05 0.05 0.05 0.05 0.05
----------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.05) (0.05) (0.05) (0.05) (0.05)
----------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
====================================================================================================================
Total Return* 4.69% 4.61% 4.75% 5.17% 5.21%
====================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $82,646 $56,416 $41,170 $21,011 $11,374
Ratio of Expenses to Average Net Assets** 0.45% 0.45% 0.50% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 4.72% 4.99% 5.05% 4.74% 5.17%
====================================================================================================================
</TABLE>
For the Money Market Fund, the "seven-day average" yield for the seven days
ended December 31, 1999, was 5.24% and the "effective" yield for that period
was 5.38%(unaudited).
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.51%, 0.67% and 0.73% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BOND FUND
Financial Highlights
Year Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $ 10.57 $ 10.54 $ 10.33 $ 10.63 $ 9.67
------- ------ ------- ------- -------
Income from Investment Operations
Net Investment Income*** 0.62 0.63 0.54 0.65 0.60
Net Realized and Unrealized Gain (Loss)
on Investments (0.54) 0.02 0.20 0.28) 0.96
------- ------ ------- ------- -------
Total from Investment Operations 0.08 0.65 0.74 0.37 1.56
----------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.60) (0.62) (0.51) (0.64) (0.59)
Distributions from Realized Capital Gains (0.00) (0.00) (0.02) (0.03) (0.01)
------- ------- ------- ------- -------
Total Distributions (0.60) (0.62) (0.53) (0.67) (0.60)
----------------------------------------------------------------------
Net Asset Value, End of Period $ 10.05 $ 10.57 $ 10.54 $ 10.33 $ 10.63
=================================================================================================================
Total Return* 0.73% 6.18% 7.45% 2.86% 16.37%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $250,485 $228,281 $188,840 $26,572 $13,725
Ratio of Expenses to Average Net Assets** 0.55% 0.55% 0.56% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 5.92% 5.94% 6.50% 6.25% 6.08%
Portfolio Turnover Rate 713.52% 142.98% 30.71% 25.67% 14.74%
=================================================================================================================
</TABLE>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.57%, 0.67% and 0.68% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND
Financial Highlights
Year Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $ 18.74 $ 17.02 $ 15.29 $ 14.63 $ 12.90
------ ------ ----- ------ ------
Income from Investment Operations
Net Investment Income*** 0.56 0.57 0.62 0.58 0.55
Net Realized and Unrealized Gain (Loss)
on Investments 2.14 1.72 1.93 0.98 2.29
------ ------ ----- ------ ------
Total from Investment Operations 2.70 2.29 2.55 1.56 2.84
----------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.53) (0.57) (0.63) (0.58) (0.55)
Distributions from Realized Capital Gains (0.47) - (0.19) (0.32) (0.56)
------ ------ ------ ------ ------
Total Distributions (1.00) (0.57) (0.82) (0.90) (1.11)
----------------------------------------------------------------------
Net Asset Value, End of Period $20.44 $18.74 $17.02 $15.29 $14.63
=================================================================================================================
Total Return* 14.49% 13.40% 16.87% 10.79% 22.27%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $603,136 $449,992 $309,804 $194,725 $110,969
Ratio of Expenses to Average Net Assets** 0.70% 0.70% 0.68% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 2.83% 3.20% 3.81% 3.91% 4.03%
Portfolio Turnover Rate 269.00% 78.71% 21.15% 33.48% 36.68%
=================================================================================================================
</TABLE>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of an
Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.69%, 0.65% and 0.68% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK FUND
Financial Highlights
Year Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $30.56 $27.20 $21.32 $18.20 $15.06
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income*** 0.34 0.34 0.31 0.34 0.37
Net Realized and Unrealized Gain (Loss)
on Investments 5.12 4.52 6.36 3.93 4.37
------ ------ ------ ------ ------
Total from Investment Operations 5.46 4.86 6.67 4.27 4.74
----------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.32) (0.34) (0.32) (0.34) (0.37)
Distributions from Realized Capital Gains (2.12) (1.16) (0.47) (0.81) (1.23)
------ ------ ------ ------ ------
Total Distributions (2.44) (1.50) (0.79) (1.15) (1.60)
----------------------------------------------------------------------
Net Asset Value, End of Period $33.58 30.56 $27.20 $21.32 $18.20
=================================================================================================================
Total Return* 17.95% 17.92% 31.42% 22.02% 31.75%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $1,098,330 $833,174 $590,135 $232,841 $102,138
Ratio of Expenses to Average Net Assets** 0.60% 0.60% 0.61% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 0.99% 1.17% 1.39% 1.78% 2.28%
Portfolio Turnover Rate 20.13% 17.69% 20.39% 40.55% 57.80%
=================================================================================================================
</TABLE>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of
an Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.61%, 0.65% and 0.69% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK FUND
Financial Highlights
Year Ended December 31
<S> <C> <C> <C> <C> <C>
(For a share outstanding throughout the period): 1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $22.19 $18.85 $14.60 $12.51 $9.97
------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income*** 0.02 0.06 0.07 0.13 0.14
Net Realized and Unrealized Gain (Loss)
on Investments 5.55 3.87 4.52 2.55 2.91
------ ------ ------ ------ ------
Total from Investment Operations 5.57 3.93 4.59 2.68 3.05
-----------------------------------------------------------------------
Distributions
Distributions from Net Investment Income (0.02) (0.06) (0.07) (0.13) (0.14)
Distributions from Realized Capital Gains (2.15) (0.53) (0.27) (0.46) (0.37)
------ ------ ------ ------ ------
Total Distributions (2.17) (0.59) (0.34) (0.59) (0.51)
-----------------------------------------------------------------------
Net Asset Value, End of Period $25.59 $22.19 $18.85 $14.60 $12.51
=================================================================================================================
Total Return* 25.19% 20.90% 31.57% 21.44% 30.75%
=================================================================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $839,134 $630,373 $456,194 $98,674 $38,117
Ratio of Expenses to Average Net Assets** 0.80% 0.80% 0.82% 0.65% 0.65%
Ratio of Net Investment Income to Average
Net Assets 0.10% 0.31% 0.70% 0.96% 1.37%
Portfolio Turnover Rate 38.38% 18.67% 17.06% 49.77% 61.32%
=================================================================================================================
</TABLE>
*These returns are after all charges at the mutual fund level have been
subtracted. These returns are higher than the returns at the separate
account level because charges made at the separate account level have not
been subtracted.
**During the periods shown, prior to May 1, 1997, CUNA Mutual Life Insurance
Company and its affiliates absorbed certain expenses under the terms of
an Expense Reimbursement Agreement between the Ultra Series Fund and CUNA
Mutual Life Insurance Company. If the Expense Reimbursement Agreement had
not been in effect and if the full expenses allowable under the Investment
Advisory Agreement between the Ultra Series Fund and the Investment Adviser
had been charged, the resulting ratio of expenses to average net assets
would have been 0.83%, 0.66% and 0.75% for 1997, 1996 and 1995,
respectively.
***Based on average shares outstanding during year.
See accompanying notes to financial statements.
<PAGE>
MID-CAP STOCK FUND
Financial Highlights
Period Ended December 31
(For a share outstanding throughout the period) 1999(1)
Net Asset Value, Beginning of Period $10.00
------
Income from Investment Operations
Net Investment Income**** 0.03
Net Realized and Unrealized Gain (Loss)
on Investments 1.34
------
Total from Investment Operations 1.37
-------------------------
Distributions
Distributions from Net Investment Income (0.02)
Distributions from Realized Capital Gains (0.20)
------
Total Distributions (0.22)
-------------------------
Net Asset Value, End of Period $11.15
==================================================================
Total Return* 13.68%**
==================================================================
Ratio/Supplemental Data
Net Assets, End of Period (000s Omitted) $26,479
Ratio of Expenses to Average Net Assets 1.00%***
Ratio of Net Investment Income to Average
Net Assets 0.39%***
Portfolio Turnover Rate 35.55%
==================================================================
*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.
**Not annualized.
***Annualized.
****Based on average shares outstanding during period.
1 Commenced operations May 1, 1999.
See accompanying notes to financial statements.
<PAGE>
ULTRA SERIES FUND
Notes to Financial Statements
(1) Description of the Fund
The Ultra Series Fund (the "Fund"), a Massachusetts Business Trust, is
registered under the Investment Company Act of 1940 (the "1940 Act"), as
amended, as a diversified, open-end management investment company. The
Fund is a series fund with seven investment portfolios (the "funds"),
each with different investment objectives and policies and each having
available two separate classes of common stock with a par value of $.01 per
share. Fund shares are sold and redeemed at a price equal to the shares'
net asset value. The assets of each fund are held separate from the assets
of the other funds. The Mid-Cap Stock Fund commenced operations May 1,
1999. On or within 12 months prior to the portfolio maturity date, the
securities of the Treasury 2000 Fund will be liquidated. Once the Treasury
2000 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.
Effective May 1, 1997, the shares of each fund were divided into Class Z
and Class C Shares. Class Z Shares are offered to all insurance company
separate accounts issued by, and all qualified retirement plans sponsored
by, CUNA Mutual Life Insurance Company or its affiliates ("CUNA Mutual
Life"). Class C Shares are offered to separate accounts of insurance
companies other than CUNA Mutual Life, and to qualified retirement plans of
companies not affiliated with the Fund or CUNA Mutual Life. Both classes
of shares are identical in all respects except that: Class C Shares may be
subject to a distribution fee (note 4); each class will have exclusive
voting rights with respect to matters that affect just that class; and each
class will bear a different name or designation. All income earned and
expenses incurred by the Fund are borne on a pro-rata basis by each
outstanding share of each class based on the daily net asset value of
shares of that class. As of December 31, 1999, no Class C Shares have
been issued.
(2) Significant Accounting Policies
(a) Valuation of Investment Securities
Portfolio securities for which market quotations are readily available
are valued at current market value. If market quotations or valuations
are not available, or if such quotations or valuations are believed to
be inaccurate, unreliable or not reflective of market value, portfolio
securities are valued according to procedures adopted by the funds'
board of trustees in good faith at fair value.
Pricing services value domestic and foreign equity securities (and
occasionally fixed-income securities) traded on a securities exchange
or Nasdaq at the last reported sale price, up to the time of valuation.
If there are no reported sales of a security on the valuation date, it
is valued at the mean between the published bid and asked prices
reported by the exchange or Nasdaq. If there are no sales and no
published bid and asked quotations for a security on the valuation
date or the security is not traded on an exchange or Nasdaq, the
pricing service may obtain market quotations directly from
broker-dealers.
Fixed-income securities are valued at prices obtained from a
pricing service, when such prices are available. In circumstances
where prices are not available from the fund's pricing service,
securities may be valued using market quotations obtained from one or
more dealers or a quotation system. Short-term securities with
maturities of 60 days or less and the Money Market Fund securities are
valued at amortized cost, which approximates market value.
(b) Share Valuation and Dividends to Shareholders
The net asset value of the shares of each fund is determined daily
based on the valuation of the net assets of the funds divided by the
number of shares of the fund outstanding. Expenses, including the
investment advisory, advisory/administrative, and distribution fees
(note 4), are accrued daily and reduce the net asset value per share.
Dividends on the Money Market Fund are declared and reinvested daily
in additional full and fractional shares of the Money Market Fund.
Dividends of net investment income from the Mid-Cap Stock Fund, Capital
Appreciation Stock Fund, Growth and Income Stock Fund, Bond Fund, and
Balanced Fund are declared and reinvested quarterly in additional full
and fractional shares of the respective funds. Distributions of net
realized capital gains of these funds, if any, will be declared and
reinvested at least annually. The Treasury 2000 Fund will utilize an
annual consent dividend procedure which provides the fund with the
deduction for dividends constructively paid to shareholders.
(c) Federal Income Taxes
Each fund intends to distribute all of its taxable income and to comply
with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for income
or excise taxes is required.
Generally accepted accounting principals require that permanent
financial reporting and tax differences be reclassified in the capital
accounts.
For federal income tax purposes, at December 31, 1998, the Balanced
fund had a capital loss carryover of $2,476,442 that was offset by
capital gains in 1999. At December 31, 1999, the Bond Fund had a
capital loss carryover of $7,838,884 that will expire in the year
2007 if not offset by subsequent capital gains. To the extent the
Bond Fund realizes future net capital gains, taxable distributions will
be reduced by any unused capital loss carryover.
(d) Security Transactions and Investment Income
Security transactions are recorded on the trade date. Realized gains
and losses from security transactions are reported on the identified
cost basis. Interest, including amortization of premium and discount,
is accrued daily and dividend income is recorded on the ex-dividend
date.
(e) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
increase and decrease in net assets from operations during the period.
Actual results could differ from those estimates.
(3) Purchase and Sales of Investment Securities
The cost of securities purchased and the proceeds from securities sold
(including maturities, excluding short-term) for each fund during the year
ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
U.S. Government Securities Other Investment Securities
Purchases Sales Purchases Sales
<S> <C> <C> <C> <C>
Bond $1,030,877,899 $1,051,193,309 $635,645,166 $584,851,515
Balanced 778,554,812 725,040,919 663,094,171 640,791,920
Growth and Income Stock 0 0 310,188,724 193,744,371
Capital Appreciation Stock 0 0 306,070,627 266,165,035
Mid-Cap Stock 0 0 30,154,053 6,928,419
</TABLE>
(4) Transactions with Affiliates
Fees and Expenses
The Fund has entered into an investment advisory agreement with CIMCO Inc.
(the "Investment Adviser"), an affiliated company. The fees under the
agreement, paid monthly, are calculated as a percentage of the average
daily net assets for each fund at the following annual rates:
Money Market 0.45%
Treasury 2000 0.45%
Bond 0.55%
Balanced 0.70%
Growth and Income Stock 0.60%
Capital Appreciation Stock 0.80%
Mid-Cap Stock 1.00%
Under this unified fee structure, the Investment Adviser is responsible for
providing or obtaining services and paying certain expenses including
custodian fees, transfer agent fees, pricing costs, and accounting and
legal fees as indicated in the investment advisory agreement.
The Investment Advisor has entered into a Subadvisor Agreement for the
management of a portion of the investments in the Mid-Cap Stock Fund. The
Investment Advisor is solely responsible for the payment of all fees to
the Subadvisor. The Subadvisor for this Fund is Heartland Advisors, Inc.
In addition to the unified investment advisory fee and Subadvisor
Agreement, each fund also pays certain expenses including trustees fees,
brokerage commissions, interest expense, audit fees, and other
extraordinary expenses.
All capital shares outstanding at December 31, 1999, are owned by separate
investment accounts of CUNA Mutual Life.
Certain officers and trustees of the Fund are also officers of CUNA Mutual
Life or CIMCO Inc. During the year ended December 31, 1999, the Fund made
no direct payments to its officers and paid trustees' fees of approximately
$15,830 to its unaffiliated trustees.
<PAGE>
Distribution Plan
All shares are distributed through CUNA Brokerage Service, Inc.
("CBSI"), an affiliated company, or other registered
broker-dealers authorized by CBSI. Class C Shares may also be subject to
an asset-based distribution fee pursuant to Rule 12b-1 under the 1940 Act,
equal to not more than 0.25%, on an annual basis, of the average value of
the daily net assets of each series of the Fund attributable to Class C
Shares on an annual basis.
(5) Share Activity
Transactions in Class Z Shares of each fund for the years ended December
31, 1999 and 1998, were as follows:
<TABLE>
<CAPTION>
Money Treasury Growth and Capital Mid-Cap
Market 2000 Bond Balanced Income Stock Appreciation Stock
Fund Fund Fund Fund Fund Stock Fund Fund*
<S> <C> <C> <C> <C> <C> <C> <C>
Shares outstanding at
December 31, 1997 41,170,152 184,138 17,909,312 18,199,350 21,692,803 24,200,359
Shares sold 45,266,764 732 2,875,932 5,517,500 4,697,780 3,603,822
Reinvestment dividend
shares2,249,736 - 1,167,465 676,936 1,286,801 750,154
Shares repurchased (32,270,164) - (353,989) (375,123) (413,009) (142,237)
__________ ________ _________ _________ _________ _________
Shares outstanding at
December 31, 1998 56,416,488 184,870 21,598,720 24,018,663 27,264,375 28,412,098 -
__________ ________ _________ _________ _________ _________ ________
Shares sold 57,336,829 916 2,689,111 4,567,002 3,735,034 2,570,088 2,349,783
Reinvestment dividend shares3,095,292 - 1,378,627 1,376,385 2,218,655 2,576,478 42,297
Shares repurchased (34,202,634) - (743,228) (452,501) (507,934) (767,172) (16,297)
__________ ________ _________ _________ _________ _________ ________
Shares outstanding at
December 31, 1999 82,645,975 185,786 24,923,230 29,509,549 32,710,130 32,791,492 2,375,783
========== ========== ========== ========== ========== ========== ==========
</TABLE>
*Commenced operations May 1, 1999.
<PAGE>
ULTRA SERIES FUND
Report of Independent Accountants
To the Board of Trustees and Shareholders
Ultra Series Fund, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Money Market Fund, Treasury
2000 Fund, Bond Fund, Balanced Fund, Growth and Income Stock Fund, Capital
Appreciation Stock Fund and Mid-Cap Stock Fund (constituting the Ultra Series
Fund, Inc., hereafter referred to as the "Fund") at December 31, 1999, the
results of each of their operations, the changes in each of their net assets
and the financial highlights for the year then ended (since commencement of
operations May 1, 1999 for the Mid-Cap Stock Fund), in conformity accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and brokers, provides a reasonable
basis for the opinion expressed above. The financial statements of the Fund for
the year ended December 31, 1998, including the financial highlights for each
of the four years in the period then ended, were audited by other independent
accountants whose report dated February 5, 1999 expressed an unqualified opinion
on those statements.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
February 11, 2000
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits:
(a) Amended and Restated Declaration of Trust. Incorporated herein by reference
to post-effective amendment number 19 to this Form N-1A registration
statement (File No. 2-87775) filed with the Commission on February 28,
1997.
(b) Amended and Restated Bylaws. Incorporated herein by reference to
post-effective amendment number 19 to this Form N-1A registration statement
(File No. 2-87775) filed with the Commission on February 28, 1997.
(c) Not Applicable.
(d) 1. Management Agreement effective May 1, 1997. Incorporated herein by
reference to post-effective amendment number 19 to this Form N-1A
registration statement (File No. 2-87775) filed with the Commission on
February 28, 1997.
2. Amendment No. 1 to Management Agreement effective May 1, 1999.
Incorporated herein by reference to post-effective amendment number 23
to this Form N-1A registration statement (File No. 2-87775) filed with
the Commission on April 23, 1999.
3. Amendment No. 2 to Management Agreement effective October 15, 2000.
4. Investment Sub-Advisory Agreement Between MEMBERS Capital Advisors,
Inc. (f/k/a CIMCO Inc.) and Wellington Management Company LLP
effective February 17, 2000. Incorporated herein by reference to
post-effective amendment number 24 to this Form N-1A registration
statement (File No. 2-87775) filed with the Commission on April 20,
2000.
5. Investment Sub-Advisory Agreement Between MEMBERS Capital Advisors,
Inc. (f/k/a CIMCO Inc.) and Lazard Asset Management effective October
15, 2000.
6. Investment Sub-Advisory Agreement Between MEMBERS Capital Advisors,
Inc. (f/k/a CIMCO Inc.) and Massachusetts Financial Services effective
October 15, 2000.
7. Investment Sub-Advisory Agreement Between MEMBERS Capital Advisors,
Inc. (f/k/a CIMCO Inc.) and Oppenheimer Funds, Inc. effective October
15, 2000.
8. Servicing Agreement between MEMBERS Capital Advisors, Inc. (f/k/a
CIMCO Inc.) and CUNA Mutual Insurance Society effective May 1, 1997.
Incorporated herein by reference to post-effective amendment number 22
to this Form N-1A registration statement (File No. 2-87775) filed with
the Commission on February 12, 1999.
<PAGE>
9. Servicing Agreement between CUNA Mutual Life Insurance Company and
MEMBERS Capital Advisors, Inc. (f/k/a CIMCO Inc.) effective May 1,
1997. Incorporated herein by reference to post-effective amendment
number 22 to this Form N-1A registration statement (File No. 2-87775)
filed with the Commission on February 12, 1999.
(e) Distribution Agreement between Ultra Series Fund and CUNA Brokerage
Services, Inc. effective December 29, 1993. Incorporated herein by
reference to post-effective amendment number 19 to this Form N-1A
registration statement (File No. 2-87775) filed with the Commission on
February 28, 1997.
(f) N/A
(g) 1. Mutual Fund Custody Agreement between Ultra Series Fund and State
Street Bank and Trust Company effective April 30, 1997. Incorporated
herein by reference to post-effective amendment number 22 to this Form
N-1A registration statement (File No. 2-87775) filed with the
Commission on February 12, 1999.
2. Amendment No. 1 to Mutual Fund Custody Agreement effective May 1,
1999. Incorporated herein by reference to post-effective amendment
number 23 to this Form N-1A registration statement (File No. 2-87775)
filed with the Commission on April 23, 1999.
3. Amendment to Mutual Fund Custody Agreement effective December 2, 1999.
4. Amendment No. 2 to Mutual Fund Custody Agreement effective October 15,
2000.
(h) 1. Participation Agreement between Ultra Series Fund and CUNA Mutual Life
Insurance Company Pension Plan for Home Office Employees. Incorporated
herein by reference to post-effective amendment number 22 to this Form
N-1A registration statement (File No. 2-87775) filed with the
Commission on February 12, 1999.
2. Participation Agreement between Ultra Series Fund and CUNA Mutual Life
Insurance Company Pension Plan for Agents. Incorporated herein by
reference to post-effective amendment number 22 to this Form N-1A
registration statement (File No. 2-87775) filed with the Commission on
February 12, 1999.
3. Participation Agreement between Ultra Series Fund and CUNA Mutual Life
Insurance Company 401(k)/Thrift Plan for Home Office Employees.
Incorporated herein by reference to post-effective amendment number 22
to this Form N-1A registration statement (File No. 2-87775) filed with
the Commission on February 12, 1999.
4. Participation Agreement between Ultra Series Fund and CUNA Mutual Life
Insurance Company 401(k)/Thrift Plan for Agents. Incorporated herein
by reference to post-effective amendment number 22 to this Form N-1A
registration statement (File No. 2-87775) filed with the Commission on
February 12, 1999.
5. Participation Agreement between Ultra Series Fund and CUNA Mutual
Pension Plan. Incorporated herein by reference to post-effective
amendment number 22 to this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12, 1999.
6. Participation Agreement between Ultra Series Fund and CUNA Mutual
Savings Plan. Incorporated herein by reference to post-effective
amendment number 22 to this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12, 1999.
7. Participation Agreement between Ultra Series Fund and CUNA Mutual
Thrift Plan. Incorporated herein by reference to post-effective
amendment number 22 to this Form N-1A registration statement (File No.
2-87775) filed with the Commission on February 12, 1999.
(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) 1. Consent of PricewaterhouseCoopers LLP. To be filed by post-effective
amendment.
2. Consent of KPMG LLP. To be filed by post-effective amendment.
(k) Not Applicable.
(l) 1. Subscription Agreement between Ultra Series Fund and CUNA Mutual
Insurance Society effective October 31, 2000.
2. Subscription Agreement between Ultra Series Fund and CUMIS Insurance
Society effective October 31, 2000.
(m) 1. Plan of Distribution dated May 1, 1997. Incorporated herein by
reference to post-effective amendment number 19 to this Form N-1A
registration statement (File No. 2-87775) filed with the Commission on
February 28, 1997.
<PAGE>
2. Supplement No. 1 to Distrubution Plan effective May 1, 1999.
Incorporated herein by reference to post-effective amendment number 23
to this Form N-1A registration statement (File No. 2-87775) filed with
the Commission on April 23, 1999.
3. Supplement No. 2 to Distribution Plan effective October 15, 2000.
(n) 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.
(o) Reserved.
(p) 1. Ultra Series Fund's Code of Ethics effective June 1, 2000.
Incorporated herein by reference to post-effective amendment number 24
to this Form N-1A registration statement (File No. 2-87775) filed with
the Commission on April 20, 2000.
2. MEMBERS Capital Advisors, Inc. (f/k/a CIMCO Inc.) (Investment Adviser)
Code of Ethics effective April 1, 2000. Incorporated herein by
reference to post-effective amendment number 24 to this Form N-1A
registration statement (File No. 2-87775) filed with the Commission on
April 20, 2000.
3. CUNA Brokerage Services, Inc.'s (Principal Underwriter) Code of Ethics
effective September 1, 1997. Incorporated herein by reference to
post-effective amendment number 24 to this Form N-1A registration
statement (File No. 2-87775) filed with the Commission on April 20,
2000.
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 September 22, 2000
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
<PAGE>
e. International Commons, Inc.
Business: Special Events
January 13, 1981*
State of domicile: Wisconsin
f. CUNA Mutual Mortgage Corporation
Business: Mortgage Servicing
November 20, 1978* Incorporated
December 1, 1995 Wholly Owned
State of domicile: Wisconsin
g. CUNA Mutual Insurance Agency, Inc.
Business: Leasing/Brokerage
March 1, 1974*
State of domicile: Wisconsin
Formerly CMCI Corporation
h. Stewart Associates Incorporated
Business: Credit Insurance
March 6, 1998
State of domicile: Wisconsin
i. CMG Mortgage Assurance Company
Business: Private Mortgage Insurance
April 14, 1994
State of domicile: California
j. CUNA Mutual Business Services, Inc.
Business: Financial Services
Incorporated April 22, 1974
Wholly owned March 6, 2000
State of domicile: Wisconsin
k. League Insurance Agency
Business: Insurance Agency
September 1, 2000
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
<PAGE>
(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
3. CUNA Caribbean Insurance Society Limited
Business: Life and Health
July 4, 1985*
Country of domicile: Trinidad and Tobago
4. CUNA Mutual Australia Holding Co. Pty. Ltd.
Business: Holding Company
September 17, 1999*
Country of domicile: Australia
<PAGE>
CUNA Mutual Australia Holding Co. Pty. Ltd is the owner of the following
subsidiary:
(1) CUNA Mutual Life Australia, Ltd.
Business: Life insurance
October 15, 1999
Australia
5. CUNA Mutual Group, Limited
Business: Brokerage
May 27, 1998
Country of domicile: U.K.
* 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. The CUMIS Group Limited
63.3% ownership by CUNA Mutual Insurance Society (as of 12-31 -96)
4. MEMBERS Capital Advisors, Inc. (f/k/a CIMCO Inc. (CIMCO))
50% ownership by CUNA Mutual Investment Corporation
50% ownership by CUNA Mutual Life Insurance Company
January 1, 1992
5. CUNA Mutual Insurance Agency of Ohio, Inc.
1% of value owned by Boris Natyshak (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
<PAGE>
6. 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
7. CMG Mortgage Insurance Company
50% ownership by CUNA Mutual Investment Corporation 50% ownership by
PMI Mortgage Insurance Co.
April 14, 1994
8. Cooperators Life Assurance Society Limited (Jamaica)
CUNA Mutual Insurance Society owns 122,500 shares
Jamaica Co-op Credit Union League owns 127,500 shares
May 10, 1990
9. CU Interchange Group, Inc.
Owned by CUNA Strategic Services, Inc. and various state league
organizations
December 15, 1993 - CUNA Mutual Investment Corporation purchased 100
shares stock
10. CMG Mortgage Reinsurance Company
50% ownership by CUNA Mutual Investment Corporation
50% ownership by PMI Insurance Company
July 26, 1999
11. Credit Union Service Corporation
Owned by Credit Union National Association, Inc. and 18 state league
organizations
March 29, 1996 - CUNA Mutual Investment Corporation purchased 1,300,000
shares of stock
12. finsure.australia limited
50% ownership by CUNA Mutual Australia Holding Company Pty. Limited
50% ownership by CUSCAL
October 15, 1999
13. CUNA Strategic Services, Inc.
CUNA Mutual Insurance Society owns 200.71 shares
December 31, 1999
Partnerships
1. CM CUSO Limited Partnership, a Washington Partnership
CUMIS Insurance Society, Inc. - General Partner
Credit Unions in Washington - Limited Partners
June 14, 1993
<PAGE>
Limited Liability Companies
1. "Sofia LTD." (Ukraine)
99.96% CUNA Mutual Insurance Society
.04% CUMIS Insurance Society, Inc.
March 6, 1996
2. 'FORTRESS' (Ukraine)
80% "Sofia LTD."
19% The Ukrainian National Association of Savings and Credit Unions
1% Service Center by UNASCU
September 25, 1996
3. MEMBERS Development Company LLC
49 % CUNA Mutual Investment Corporation
51% Credit Unions & CUSOs
September 24, 1999
4. The Center for Credit Union Innovation LLC
33.3% ownership by CUNA Mutual Insurance Society 33.3% ownership by
CUNA & Affiliates 33.3% ownership by American Association of Credit
Union Leagues
January 5, 2000
Affiliated (Nonstock)
1. MEMBERS Prime Club, Inc.
August 8, 1978
2. CUNA Mutual Group Foundation, Inc.
July 5, 1967
3. CUNA Mutual Life Insurance Company
July 1, 1990
<PAGE>
CUNA Mutual Life Insurance Company
ORGANIZATIONAL CHART AS OF September 22, 2000
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. MEMBERS Capital Advisors, Inc. (f/k/a CIMCO Inc. (CIMCO))
An Iowa Business Act Corporation
50% ownership by CUNA Mutual Life Insurance Company
50% ownership by CUNA Mutual Investment Corporation
July 16, 1982
MEMBERS Capital Advisors, Inc. (f/k/a CIMCO Inc. (CIMCO)) is the
investment adviser of:
Ultra Series Fund
MEMBERS Mutual Funds
2. Plan America Program, Inc.
A Maine Business Act Corporation
100% ownership by CUNA Mutual Life Insurance Company
March 9, 1995
3. CMIA Wisconsin Inc.
A Wisconsin Business Act Corporation
100% ownership by CUNA Mutual Life Insurance Company
May 29, 1998
<PAGE>
Item 25. Indemnification
Each officer, Trustee or agent of the Ultra Series Fund shall be indemnified by
the Ultra Series Fund to the full extent permitted under the General Laws of the
State of Massachusetts and the Investment Company Act of 1940, as amended,
except that such indemnity shall not protect any such person against any
liability to the Ultra Series Fund or any shareholder thereof to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office ("disabling conduct"). Indemnification shall be made when (1) a final
decision on the merits is made by a court or other body before whom the
proceeding was brought, that the person to be indemnified was not liable by
reason of disabling conduct or, (2) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the person to
be indemnified was not liable by reason of disabling conduct, by (a) the vote of
a majority of the quorum of Trustees who are not "interested persons" of the
Ultra Series Fund as defined in Section 2(a)(19) of the Investment Company Act
of 1940, or (b) an independent legal counsel in a written opinion. The Ultra
Series Fund may, by vote of a majority of a quorum of Trustees who are not
interested persons, advance attorneys' fees or other expenses incurred by
officers, Trustees, Investment Advisers or principal underwriters, in defending
a proceeding upon the undertaking by or on behalf of the person to be
indemnified to repay the advance unless it is ultimately determined that he is
entitled to indemnification. Such advance shall be subject to at least one of
the following: (1) the person to be indemnified shall provide a security for his
undertaking, (2) the Ultra Series Fund shall be insured against losses arising
by reason of any lawful advances, or (3) a majority of a quorum of the
disinterested non-party Trustees of the Ultra Series Fund, or an independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts, that there is reason to believe that the person to be
indemnified ultimately will be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
<PAGE>
Item 26. Business and Other Connections of Investment Adviser
The Investment Adviser for the Ultra Series Fund is MEMBERS Capital Advisors,
Inc. (f/k/a 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 MEMBERS Capital Advisors, 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
Kimberly M. Gant MEMBERS Capital Advisors, Inc.
5910 Mineral Point Rd. Assistant Treasurer
Madison, WI 53705 1999-Present
Tracy K. Gunderson MEMBERS Capital Advisors, Inc.
5910 Mineral Point Rd. Assistant Secretary
Madison, WI 53705 1999-Present
Lawrence R. Halverson MEMBERS Capital Advisors, Inc.
5910 Mineral Point Rd. Senior Vice President
Madison, WI 53705 1996-Present
Vice President
1988-Present
Secretary
1992-1999
CUNA Brokerage Services, Inc.
President
1996-1998
Director
1996-Present
<PAGE>
Joyce A. Harris MEMBERS Capital Advisors, 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 MEMBERS Capital Advisors, Inc.
975 University Avenue Director
Madison, WI 53706 1992 - Present
University of Wisconsin
Professor
1972 - Present
Mary E. Hoffmann MEMBERS Capital Advisors, Inc.
5910 Mineral Point Rd. Treasurer
Madison, WI 53705 2000 - Present
Michael B. Kitchen MEMBERS Capital Advisors, 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 MEMBERS Capital Advisors, Inc.
5910 Mineral Point Rd. Vice President
Madison, WI 53705 1995 - Present
Thomas J. Merfeld MEMBERS Capital Advisors, Inc.
5910 Mineral Point Rd. Senior Vice President & Secretary
Madison, WI 53705 2000 - Present
Vice President
1994 - 2000
George A. Nelson MEMBERS Capital Advisors, 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 MEMBERS Capital Advisors, Inc.
5910 Mineral Point Rd. Senior 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. Officers and Directors of CUNA Brokerage.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Principal Positions and Offices Positions and Offices
Business Address With the Underwriter With Registrant
Joseph L. Bauer* Assistant Treasurer Finance Reporting Operations Manager
Wayne A. Benson* Director & President Chief Officer - Sales
Donna C. Blankenheim* Assistant Secretary Vice President
Corporate Secretary
Timothy L. Carlson** Assistant Treasurer None
Jan C. Doyle* Assistant Secretary Corporate Services Manager
Mark Eisenmann* Assistant Compliance Assistant Director - Insurance & Officer
Securities Market
David S. Emery* Vice President Division Vice President Credit Union
9500 Cleveland Ave. #210 Services
Rancho Cucamonga, CA 91730
John C. Fritsche Assistant Vice President None
4455 LBJ Freeway
Suite 1108
Dallas, TX 75244
James E. Gowan* Director Vice President Relationship Management
Sales
Tracy K. Gunderson* Assistant Secretary Recording Secretary/Technical Writer
Lawrence R. Halverson* Director None
John W. Henry* Director & Vice President Vice President
<PAGE>
Michael G. Joneson* Secretary & Treasurer Forecasting & Planning Vice President,
Finance
Daniel J. LaRocque* Vice President Vice President & Deputy General
Counsel
Marcia L. Martin** Director & Assistant Vice Assistant Vice President
President Broker/Dealer Ops
Campbell D. McHugh* Compliance Officer Assistant Vice President, Associate
General Counsel
Daniel E. Meylink, Sr.* Director Chief Officer - Members Services
Andrew C. Osen* Associate Compliance Assistant Counsel
Officer
Faye A. Patzner* Vice President - General Senior Vice President and General
Counsel Counsel
Brian L. Schroeder* Associate Compliance Assistant Director, Insurance &
Officer Securities Market
Barbara L. Secor** Assistant Secretary None
Helen W. Wagabaza* Assistant Secretary Recording Secretary/Technical Writer
John W. Wiley* Associate Compliance Officer Assistant Director, Insurance Market
Conduct
*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.
</TABLE>
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. MEMBERS Capital Advisors, 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.
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund certifies that it meets all of the requirements
for effectiveness of this registration statement under rule 485(b) under the
Securities Act of 1933 and has duly caused this registration statement to be
signed on its behalf by the undersigned, duly authorized, in the City of
Madison, State of Wisconsin, on the 28th day of September, 2000.
Ultra Series Fund
By: /s/ Michael S. Daubs
--------------------
Michael S. Daubs
President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURE AND TITLE DATE
/s/ Gwendolyn M. Boeke*
Gwendolyn M. Boeke
Trustee
/s/ Robert M. Buckingham September 28, 2000
Robert M. Buckingham
Assistant Secretary
/s/ Michael S. Daubs September 28, 2000
Michael S. Daubs
President and Trustee
/s/ Alfred L. Disrud*
Alfred L. Disrud
Trustee
/s/ Lawrence R. Halverson September 28, 2000
Lawrence R. Halverson
Vice President, Secretary and Trustee
/s/ Michael G. Joneson September 28, 2000
Michael G. Joneson
Treasurer and Assistant Secretary
/s/ Thomas C. Watt*
Thomas C. Watt
Trustee
/s/ Kevin S. Thompson September 28, 2000
Kevin S. Thompson
Attorney-In-Fact
*Pursuant to Powers of Attorney.
<PAGE>
INDEX TO EXHIBITS TO
FORM N-1A FOR
ULTRA SERIES FUND
Item 23. Exhibits:
(d) 3. Amendment No. 2 to Management Agreement effective October 15, 2000.
5. Investment Sub-Advisory Agreement Between Between MEMBERS Capital
Advisors, Inc. (f/k/a CIMCO Inc.) and Lazard Asset Management
effective October 15, 2000.
6. Investment Sub-Advisory Agreement Between Between MEMBERS Capital
Advisors, Inc. (f/k/a CIMCO Inc.) and Massachusetts Financial Services
effective October 15, 2000.
7. Investment Sub-Advisory Agreement Between Between MEMBERS Capital
Advisors, Inc. (f/k/a CIMCO Inc.) and Oppenheimer Funds, Inc.
effective October 15, 2000.
(g) 3. Amendment to Mutual Fund Custody Agreement effective December 2, 1999.
4. Amendment No. 2 to Mutual Fund Custody Agreement effective October 15,
2000.
(j) 1. Consent of PricewaterhouseCoopers LLP. To be filed by post-effective
amendment.
2. Consent of KPMG LLP. To be filed by post-effective amendment.
(l) 1. Subscription Agreement between Ultra Series Fund and CUNA Mutual
Insurance Society effective October 31, 2000.
2. Subscription Agreement between Ultra Series Fund and CUMIS Insurance
Society effective October 31, 2000.
(m) 3. Supplement No. 2 to Distribution Plan effective October 15, 2000.
Other Exhibits
Powers of Attorney
<PAGE>
Exhibit (d) 3
AMENDMENT NO. 2
MANAGEMENT AGREEMENT
Effective October 15, 2000, pursuant to adoption by the Board of
Trustees on September 7, 2000, the following amendments are made to the Ultra
Series Fund Management Agreement dated February 5, 1997.
1. Paragraph No. 1 of the Recitals section of the Management Agreement is
amended to read as follows:
"1. The fund is a series-type, open-end management investment
company registered under the Investment Company Act of 1940, as amended
(the 1940 Act) that currently consists of ten investment portfolios
(each, a Series) designated as Money Market, Bond, Balanced, High
Income, Growth and Income, Mid-Cap Stock, Capital Appreciation,
Emerging Growth, International Stock, and Global Securities Funds, each
such Series having its own investment objective;"
2. Article 3 entitled Compensation of Manager is amended to add the
following annual rate to the current list of rates:
"High Income 0.75%"
"Emerging Growth 0.85%"
"International Stock 1.20%"
"Global Securities 0.95%"
Ultra Series Fund
By: /s/ L.R. Halverson
Name: Lawrence R. Halverson
Title: Senior Vice President
ATTEST:
/s/ Renee Benoy
CIMCO Inc.
By: /s/ Michael S. Daubs
Michael S. Daubs
President
ATTEST:
/s/ Candy Davis
<PAGE>
Exhibit (d) 5
INVESTMENT SUB-ADVISORY AGREEMENT
Lazard Asset Management
THIS INVESTMENT SUB-ADVISORY AGREEMENT ("Agreement"), effective the
15th day of October, 2000, by and between CIMCO Inc., an Iowa corporation (the
"Adviser"), and Lazard Asset Management, a division of Lazard Freres & Co. LLC,
a New York limited liability company (the "Sub-Adviser").
Adviser and Sub-Adviser agree as follows:
1. Adviser hereby engages the services of Sub-Adviser in connection with
Adviser's management of the International Stock Portfolio (the "Portfolio") of
the Ultra Series Fund (the "Fund"). Adviser intends to use a manager of managers
approach to the management of the Portfolio, as well as other portfolios in the
Fund. Therefore, the number of sub-advisers, the named sub-adviser, and the
percentage of assets of the Portfolio managed by each sub-adviser will be
determined by the Fund's Board of Trustees and CIMCO from time to time. Pursuant
to this Agreement and subject to the oversight and supervision by Adviser and
the officers and the Board of Trustees of the Fund, Sub-Adviser shall manage the
investment and reinvestment of the assets of the Portfolio as requested by
CIMCO. Adviser shall be responsible for determining the asset allocation of the
Portfolio between three classes of securities: 1) securities contained in the
EAFE index, 2) international small-cap securities, and 3) emerging markets
securities. A different subadvisory fee will be paid for each of these three
classes as described in Section 9.
2. Sub-Adviser hereby accepts employment by Adviser in the foregoing capacity
and agrees, at its own expense, to render the services set forth herein and to
provide the office space, furnishings, equipment and personnel required by it to
perform such services on the terms and for the compensation provided in this
Agreement.
3. In particular, Sub-Adviser shall furnish continuously an investment program
for the Portfolio and shall determine from time to time in its discretion the
securities and other investments to be purchased or sold or exchanged and what
portions of the Portfolio shall be held in various securities, cash or other
investments. Sub-Adviser shall provide Adviser and the officers and Trustees of
the Fund with such reports and documentation as the latter shall reasonably
request regarding Sub-Adviser's management of the Portfolio's assets.
4. Sub-Adviser shall carry out its responsibilities under this Agreement in
compliance with: (a) the Portfolio's investment objective, policies and
restrictions as set forth in the Fund's current registration statement, (b) such
policies or directives as the Fund's Trustees may from time to time establish or
issue, and (c) applicable law and related regulations. Adviser shall promptly
notify Sub-Adviser of changes to (a) or (b) above and shall notify Sub-Adviser
of changes to (c) above promptly after it becomes aware of such changes.
5. Sub-Adviser shall take all actions which it considers necessary to implement
the investment policies of the Portfolio, and in particular, to place all orders
for the purchase or sale of securities or other investments for the Portfolio
with brokers or dealers selected by it, and to that end, Sub-Adviser is
authorized as the agent of the Fund to give instructions to the Fund's custodian
as to deliveries of securities or other investments and payments of cash for the
account of the Portfolio. In connection with the selection of brokers or dealers
and the placing of purchase and sale orders with respect to investments of the
Portfolio, Sub-Adviser is directed at all times to seek to obtain best execution
and price within the policy guidelines determined by the Fund's board of
Trustees and set forth in the Fund's current registration statement.
In addition to seeking the best price and execution, Sub-Adviser may
also take into consideration research and statistical information and wire and
other quotation services provided by brokers and dealers to Sub-Adviser.
Sub-Adviser is also authorized to effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if it
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Sub-Adviser's overall responsibilities with respect to the Portfolio. The
policies with respect to brokerage allocation, determined from time to time by
the Fund's board of Trustees are those disclosed in the Fund's currently
effective registration statement. Sub-Adviser will periodically evaluate the
statistical data, research and other investment services provided to it by
brokers and dealers. Such services may be used by Sub-Adviser in connection with
the performance of its obligations under this Agreement or in connection with
other advisory or investment operations including using such information in
managing its own accounts.
6. Sub-Adviser's services under this Agreement are not exclusive. Sub-Adviser
may provide the same or similar services to other clients provided that the
Adviser is not treated less favorably than other clients of Sub-Adviser.
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Adviser, the Fund or the Portfolio or
otherwise be deemed agents of the Adviser, the Fund or the Portfolio.
7. Sub-Adviser is registered with the U.S. Securities and Exchange Commission
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The
Sub-Adviser shall remain so registered throughout the term of this Agreement and
shall notify Adviser immediately if Sub-Adviser ceases to be so registered as an
investment adviser.
8. Sub-Adviser or an affiliated person of Sub-Adviser may act as broker for the
Portfolio in connection with the purchase or sale of securities or other
investments for the Portfolio, subject to: (a) the requirement that Sub-Adviser
seek to obtain best execution and price within the policy guidelines determined
by the Fund's board of Trustees and set forth in the Fund's current registration
statement; (b) the provisions of the Advisers Act; (c) the provisions of the
Securities Exchange Act of 1934, as amended; and (d) other applicable provisions
of law. Such brokerage services are not within the scope of the duties of
Sub-Adviser under this Agreement. Subject to the requirements of applicable law
and any procedures adopted by Fund's board of Trustees, Sub-Adviser or its
affiliated persons may receive brokerage commissions, fees or other remuneration
from the Portfolio or the Fund for such services in addition to Sub-Adviser's
fees for services under this Agreement.
9. For the services rendered, the facilities furnished and the expenses assumed
by Sub-Adviser, Adviser shall pay Sub-Adviser at the end of each quarter a fee
based on the average daily net assets of the securities in each of the following
classes of the Portfolio at the following annual rates:
EAFE:
First $25 million 0.65%
Next $25 million 0.55%
Above $50 million 0.50%
Small-cap 0.75%
Emerging markets 1.05%
Sub-Adviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of the Portfolio shall be determined in the manner and on the dates set forth in
the current prospectus of the Fund, and, on days on which the net assets are not
so determined, the net asset value computation to be used shall be as determined
on the next day on which the net assets shall have been determined. In the event
of termination of this Agreement, all compensation due through the date of
termination will be calculated on a pro-rated basis through the date of
termination and paid within thirty business days of the date of termination.
During any period when the determination of net asset value is
suspended, the net asset value of the Portfolio as of the last business day
prior to such suspension shall for this purpose be deemed to be the net asset
value at the close of each succeeding business day until it is again determined.
10. Sub-Adviser hereby undertakes and agrees to maintain, in the form and for
the period required by Rule 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), all records relating to the Portfolio's investments
within the control of Sub-Adviser that are required to be maintained by the Fund
pursuant to the requirements of Rule 31a-1 under the 1940 Act.
Sub-Adviser agrees that all books and records which it maintains for
the Portfolio or the Fund are the property of the Fund and further agrees to
surrender promptly to the Adviser or the Fund any such books, records or
information upon the Adviser's or the Fund's request. All such books and records
shall be made available, within five business days of a written request, to the
Fund's accountants or auditors during regular business hours at Sub-Adviser's
offices. Adviser and the Fund or either of their authorized representative shall
have the right to copy any records in the possession of Sub-Adviser which
pertain to the Portfolio or the Fund. Such books, records, information or
reports shall be made available to properly authorized government
representatives consistent with state and federal law and/or regulations. In the
event of the termination of this Agreement, all such books, records or other
information shall be returned to Adviser or the Fund free from any claim or
assertion of rights by Sub-Adviser.
11. Sub-Adviser agrees that it will not disclose or use any records or
information obtained pursuant to this Agreement in any manner whatsoever except
as authorized in this Agreement and that it will keep confidential any
information obtained pursuant to this Agreement and disclose such information
only if Adviser or the Fund has authorized such disclosure, or if such
disclosure is required by federal or state regulatory authorities provided,
however, the Sub-Adviser may disclose the name of the Fund on any representative
client list and may include the performance of the subportfolios in any
composite of performance.
12. In the absence of willful misfeasance, bad faith or gross negligence on the
part of Sub-Adviser or its officers, Trustees or employees, or reckless
disregard by Sub-Adviser of its duties under this Agreement, Sub-Adviser shall
not be liable to Adviser, the Portfolio, the Fund or to any shareholder of the
Portfolio for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security, except to the extent specified in Section 36(b)
of the 1940 Act concerning loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services. Nothing herein shall be
deemed to waive any right the Adviser of the Fund may have against the
Sub-Adviser under federal or state securities or other laws.
13. This Agreement shall not become effective unless and until it is approved by
the board of Trustees of the Fund, including a majority of Trustees who are not
parties to this Agreement or interested persons of any such party to this
Agreement. This Agreement shall come into full force and effect on the date
which it is so approved. This Agreement shall continue in effect for two years
and shall thereafter continue in effect from year to year so long as such
continuance is specifically approved at least annually by (i) the board of
Trustees of the Fund, or by the vote of a majority of the outstanding shares of
the class of stock representing an interest in the Portfolio; and (ii) a
majority of those Trustees who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
14. This Agreement may be terminated at any time without the payment of any
penalty, by the Fund's board of Trustees, or by vote of a majority of the
outstanding shares of the class of stock representing an interest in the
Portfolio on sixty days written notice to the Adviser and Sub-Adviser, or by the
Adviser, or by the Sub-Adviser, on sixty days written notice to the other. This
Agreement shall automatically terminate in the event of its assignment or in the
event of the termination of the investment advisory agreement between the
Adviser and the Fund regarding the Adviser's management of the Portfolio.
15. This Agreement may be amended by either party only if such amendment is
specifically approved by a majority of those Trustees who are not parties to
this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
16. The terms "assignment", "affiliated person" and "interested person", when
used in this Agreement, shall have the respective meanings specified in the 1940
Act. The term "majority of the outstanding shares of the class" means the lesser
of (a) 67% or more of the shares of such class present at a meeting if more than
50% of such shares are present or represented by proxy or (b) more than 50% of
the shares of such class.
17. This Agreement shall be construed in accordance with laws of the Iowa, and
applicable provisions of the Advisers Act and 1940 Act.
18. 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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
CIMCO Inc.
By:
Michael S. Daubs, President
ATTEST:
Lazard Asset Management
a Division of Lazard Freres
& Co. LLC
By:
Title:
ATTEST:
<PAGE>
Exhibit (d) 6
INVESTMENT SUB-ADVISORY AGREEMENT
Massachusetts Financial Services Company
THIS INVESTMENT SUB-ADVISORY AGREEMENT ("Agreement"), effective as of
the 15th day of October, 2000, by and between CIMCO Inc., an Iowa corporation
(the "Adviser"), and Massachusetts Financial Services Company, a Delaware
corporation (the "Sub-Adviser").
Adviser and Sub-Adviser agree as follows:
1. Adviser hereby engages the services of Sub-Adviser in connection with
Adviser's management of the Emerging Growth Fund and High Income Fund (the
"Portfolios") of the Ultra Series Fund (the "Fund"). Adviser intends to use a
manager of managers approach to the management of the Portfolios, as well as
other portfolios in the Fund. Therefore, the number of sub-advisers, the named
sub-adviser, and the percentage of assets of the Portfolios managed by each
sub-adviser will be determined by the Fund's Board of Trustees and CIMCO from
time to time. The Sub-Adviser will be given thirty (30) days written notice of
all changes effecting this Agreement or the Sub-Adviser's role hereunder.
Pursuant to this Agreement and subject to the oversight and supervision by
Adviser and the officers and the Board of Trustees of the Fund, Sub-Adviser
shall manage the investment and reinvestment of the assets of the Portfolios as
requested by CIMCO.
2. Sub-Adviser hereby accepts employment by Adviser in the foregoing capacity
and agrees, at its own expense, to render the services set forth herein and to
provide the office space, furnishings, equipment and personnel required by it to
perform such services on the terms and for the compensation provided in this
Agreement.
3. In particular, Sub-Adviser shall furnish continuously an investment program
for the Portfolios and shall determine from time to time in its discretion the
securities and other investments to be purchased or sold or exchanged and what
portions of the Portfolios shall be held in various securities, cash or other
investments. In this connection, Sub-Adviser shall provide Adviser and the
officers and Trustees of the Fund with such reports and documentation as the
latter shall reasonably request regarding Sub-Adviser's management of the
Portfolios' assets.
4. Sub-Adviser shall carry out its responsibilities under this Agreement in
compliance with: (a) the Portfolios' investment objective, policies and
restrictions as set forth in the Fund's current registration statement, (b) such
policies or directives as the Fund's Trustees may from time to time establish or
issue, and (c) applicable law and related regulations. Adviser shall promptly
notify Sub-Adviser of changes to (a) or (b) above and shall notify Sub-Adviser
of changes to (c) above promptly after it becomes aware of such changes. Such
information shall not be deemed effective with respect to the Sub-Adviser until
three business days after Sub-Advisers receipt thereof.
5. The Sub-Adviser and Adviser acknowledge that the Sub-Adviser is not the
compliance agent for the Fund or for the Adviser, and does not have access to
all of the Fund's or the Portfolios' books and records necessary to perform
certain compliance testing. To the extent that the Sub-Adviser has agreed to
perform the services specified in this Agreement in accordance with the Fund's
registration statement, the Fund's Declaration of Trust, the Portfolios'
prospectuses and any policies adopted by the Fund's Board of Trustees applicable
to the Portfolios, and in accordance with applicable law, the Sub-Adviser shall
perform such services based upon its books and records with respect to the
Portfolios, which comprise a portion the Portfolios' books and records, and upon
information and written instructions received from the Fund or the Adviser, and
shall not be held responsible under this Agreement so long as it performs such
services in accordance with this Agreement, the policies of the Fund's Board of
Trustees and applicable law based upon such books and records and such
information and instructions provided by the Fund or the Adviser. The Adviser
shall promptly provide the Sub-Adviser with copies of the Fund's registration
statement, the Fund's Declaration of Trust, the Portfolios currently effective
prospectus and any written policies or procedures adopted by the Fund's Board of
Trustees applicable to the Portfolios and any amendments or revisions thereto.
6. Sub-Adviser shall take all actions which it considers necessary to implement
the investment policies of the Portfolios, and in particular, to place all
orders for the purchase or sale of securities or other investments for the
Portfolios with brokers or dealers selected by it, and to that end, Sub-Adviser
is authorized as the agent of the Fund to give instructions to the Fund's
custodian as to deliveries of securities or other investments and payments of
cash for the account of the Portfolios. In connection with the selection of
brokers or dealers and the placing of purchase and sale orders with respect to
investments of the Portfolios, Sub-Adviser is directed at all times to seek to
obtain best execution and price within the policy guidelines determined by the
Fund's board of Trustees and set forth in the Fund's current registration
statement.
In addition to seeking the best price and execution, Sub-Adviser may
also take into consideration research and statistical information and wire and
other quotation services provided by brokers and dealers to Sub-Adviser.
Sub-Adviser is also authorized to effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if it
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Sub-Adviser's overall responsibilities with respect to the Portfolios. The
policies with respect to brokerage allocation, determined from time to time by
the Fund's board of Trustees are those disclosed in the Fund's currently
effective registration statement. Sub-Adviser will periodically evaluate the
statistical data, research and other investment services provided to it by
brokers and dealers. Such services may be used by Sub-Adviser in connection with
the performance of its obligations under this Agreement or in connection with
other advisory or investment operations including using such information in
managing its own accounts.
7. On occasions when Sub-Adviser deems the purchase or sale of a security to be
in the best interest of the Portfolios as well as other clients of the
Sub-Adviser, the Sub-Adviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be purchased or sold to attempt to obtain a more favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transactions, will be made by the Sub-Adviser in the manner the Sub-Adviser
considers to be the most equitable and consistent with its fiduciary obligations
to the Portfolios and to its other clients.
Unless the Adviser gives the Sub-Adviser written instructions to the
contrary, the Sub-Adviser shall use its good faith judgment in a manner which it
reasonably believes best serves the interests of the Portfolios' shareholders to
vote or abstain from voting all proxies solicited by or with respect to the
issuers of securities in which assets of the Portfolios may be invested.
8. Sub-Adviser's services under this Agreement are not exclusive. Sub-Adviser
may provide the same or similar services to other clients provided that the
Adviser is not treated less favorably than other clients of Sub-Adviser.
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Adviser, the Fund or the Portfolios or
otherwise be deemed agents of the Adviser, the Fund or the Portfolios.
9. Sub-Adviser is registered with the U.S. Securities and Exchange Commission
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The
Sub-Adviser shall remain so registered throughout the term of this Agreement and
shall notify Adviser immediately if Sub-Adviser ceases to be so registered as an
investment adviser.
10. Sub-Adviser or an affiliated person of Sub-Adviser may act as broker for the
Portfolios in connection with the purchase or sale of securities or other
investments for the Portfolios, subject to: (a) the requirement that Sub-Adviser
seek to obtain best execution and price within the policy guidelines determined
by the Fund's board of Trustees and set forth in the Fund's current registration
statement; (b) the provisions of the Advisers Act; (c) the provisions of the
Securities Exchange Act of 1934, as amended; and (d) other applicable provisions
of law. Such brokerage services are not within the scope of the duties of
Sub-Adviser under this Agreement. Subject to the requirements of applicable law
and any procedures adopted by Fund's board of Trustees, Sub-Adviser or its
affiliated persons may receive brokerage commissions, fees or other remuneration
from the Portfolios or the Fund for such services in addition to Sub-Adviser's
fees for services under this Agreement.
11. For the services rendered, the facilities furnished and the expenses assumed
by Sub-Adviser, Adviser shall pay Sub-Adviser at the end of each month a fee
based on the average daily net assets of the Portfolios at the following annual
rates:
High Income Fund:
First $100 million 0.375%
Next $150 million 0.35%
Next $250 million 0.325%
Above $500 million 0.30%
Emerging Growth Fund:
First $200 million 0.45%
Above $200 million 0.40%
Sub-Adviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of the Portfolios shall be determined in the manner and on the dates set forth
in the current prospectus of the Fund, and, on days on which the net assets are
not so determined, the net asset value computation to be used shall be as
determined on the next day on which the net assets shall have been determined.
In the event of termination of this Agreement, all compensation due through the
date of termination will be calculated on a pro-rated basis through the date of
termination and paid within thirty business days of the date of termination.
During any period when the determination of net asset value is
suspended, the net asset value of the Portfolios as of the last business day
prior to such suspension shall for this purpose be deemed to be the net asset
value at the close of each succeeding business day until it is again determined.
12. Sub-Adviser hereby undertakes and agrees to maintain, in the form and for
the period required by Rule 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), all records relating to the Portfolios' investments
that are generated in connection with the Sub-Advisers provision of services
hereunder and are required to be maintained by the Fund pursuant to the
requirements of Rule 31a-1 under the 1940 Act.
Sub-Adviser agrees that all books and records which it maintains for
the Portfolios or the Fund are the property of the Fund and further agrees to
surrender promptly to the Adviser or the Fund any such books, records or
information upon the Adviser's or the Fund's request. All such books and records
shall be made available, within five business days of a written request, to the
Fund's accountants or auditors during regular business hours at Sub-Adviser's
offices. Adviser and the Fund or either of their authorized representative shall
have the right to copy any records in the possession of Sub-Adviser which
pertain to the Portfolios or the Fund. Such books, records, information or
reports shall be made available to properly authorized government
representatives consistent with state and federal law and/or regulations. In the
event of the termination of this Agreement, all such original books, records or
other information shall be returned to Adviser or the Fund free from any claim
or assertion of rights by Sub-Adviser.
13. Sub-Adviser agrees that it will not disclose or use any records or
information obtained pursuant to this Agreement in any manner whatsoever except
as authorized in this Agreement and that it will keep confidential any
non-public information obtained pursuant to this Agreement and disclose such
information only if Adviser or the Fund has authorized such disclosure, or if
such disclosure is required by federal or state regulatory authorities provided,
however, the Sub-Adviser may disclose the name of the Fund on any representative
client list and may include the performance of the Portfolios in any composite
of performance.
14. In the absence of willful misfeasance, bad faith or gross negligence on the
part of Sub-Adviser or its officers, Trustees or employees, or reckless
disregard by Sub-Adviser of its duties under this Agreement, Sub-Adviser shall
not be liable to Adviser, the Portfolio, the Fund or to any shareholder of the
Portfolio for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security, except to the extent specified in Section 36(b)
of the 1940 Act concerning loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services.
15. a. Adviser represents and warrants that:
(1) Adviser is registered with the U.S. Securities and Exchange Commission
under the Advisers Act. The Adviser shall remain so registered throughout the
term of this Agreement and shall notify Sub-Adviser immediately if Adviser
ceases to be so registered as an investment adviser;
(2) The Adviser is a corporation duly organized and validly existing under
the laws of the State of Iowa with the power to own and possess its assets and
carry on its business as it is now being conducted;
(3) The execution, delivery and performance by the Adviser of this
Agreement are within the Adviser's powers and have been duly authorized by all
necessary action on the part of its directors, and no action by or in respect
of, or filing with, any governmental body, agency or official is required on the
part of the Adviser for the execution, delivery and performance of this
Agreement by the parties hereto, and the execution, delivery and performance of
this Agreement by the parties hereto does not contravene or constitute a default
under: (a) any provision of applicable law, rule or regulation; (b) the Advisers
Articles of Incorporation or Bylaws; or (c) any agreement, judgment, injunction,
order, decree or other instruments binding upon the Adviser;
(4) This Agreement is a valid and binding Agreement of the Adviser;
(5) The Adviser has provided the Sub-Adviser with a copy of its Form ADV as
most recently filed with the Securities and Exchange Commission ("SEC") and the
Adviser further represents that it will, within a reasonable time after filing
any amendment to its Form ADV with the SEC furnish a copy of such amendments to
the Sub-Adviser. The information contained in the Adviser's Form ADV is accurate
and complete in all material respects and does not omit to state any material
fact necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading; and
(6) The Adviser acknowledges that it received a copy of the Sub-Adviser's
current Form ADV, at least 48 hours prior to the execution of this Agreement and
has delivered a copy of the same to the Fund.
b. Sub-Adviser represents and warrants that:
(1) Sub-Adviser is registered with the U.S. Securities and Exchange
Commission under the Advisers Act. The Sub-Adviser shall remain so registered
throughout the term of this Agreement and shall notify Adviser immediately if
Sub-Adviser ceases to be so registered as an investment adviser;
(2) The Sub-Adviser is a corporation duly organized and validly existing
under the laws of the State of Delaware with the power to own and possess its
assets and carry on its business as it is now being conducted;
(3) The execution, delivery and performance by the Sub-Adviser of this
Agreement are within the Sub-Adviser's powers and have been duly authorized by
all necessary action on the part of its directors, and no action by or in
respect of, or filing with, any governmental body, agency or official is
required on the part of the Sub-Adviser for the execution, delivery and
performance of this Agreement by the parties hereto, and the execution, delivery
and performance of this Agreement by the parties hereto does not contravene or
constitute a default under: (a) any provision of applicable law, rule or
regulation; (b) the Sub-Advisers Articles of Incorporation or Bylaws; or (c) any
agreement, judgment, injunction, order, decree or other instruments binding upon
the Sub-Adviser;
(4) This Agreement is a valid and binding Agreement of the Sub-Adviser;
(5) The Sub-Adviser has provided the Adviser with a copy of its Form ADV as
most recently filed with the SEC and the Sub-Adviser further represents that it
will, within a reasonable time after filing any amendment to its Form ADV with
the SEC furnish a copy of such amendments to the Adviser. The information
contained in the Sub-Adviser's Form ADV is accurate and complete in all material
respects and does not omit to state any material fact necessary in order to make
the statements made, in light of the circumstances under which they are made,
not misleading; and
(6) The Sub-Adviser acknowledges that it received a copy of the Adviser's
current Form ADV, at least 48 hours prior to the execution of this Agreement and
has delivered a copy of the same to the Fund.
16. The Adviser will not use, and will not permit the Fund to use, the
Sub-Adviser's name (or that of any affiliate) or any derivative thereof or logo
associated therewith in Fund literature without prior review and approval by the
Sub-Adviser.
17. This Agreement shall not become effective unless and until it is approved by
the board of Trustees of the Fund, including a majority of Trustees who are not
parties to this Agreement or interested persons of any such party to this
Agreement. This Agreement shall come into full force and effect on the date
which it is so approved. This Agreement shall continue in effect for two years
and shall thereafter continue in effect from year to year so long as such
continuance is specifically approved at least annually by (i) the board of
Trustees of the Fund, or by the vote of a majority of the outstanding shares of
the class of stock representing an interest in the Portfolios; and (ii) a
majority of those Trustees who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
18. This Agreement may be terminated at any time without the payment of any
penalty, by the Fund's board of Trustees, or by vote of a majority of the
outstanding shares of the class of stock representing an interest in the
Portfolios on sixty (60) days written notice to the Adviser and Sub-Adviser, or
by the Adviser, or by the Sub-Adviser, on sixty (60) days written notice to the
other. This Agreement shall automatically terminate in the event of its
assignment or in the event of the termination of the investment advisory
agreement between the Adviser and the Fund regarding the Adviser's management of
the Portfolios.
19. This Agreement may be amended by either party only if such amendment is
specifically approved by a majority of those Trustees who are not parties to
this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
20. The terms "assignment", "affiliated person" and "interested person", when
used in this Agreement, shall have the respective meanings specified in the 1940
Act. The term "majority of the outstanding shares of the class" means the lesser
of (a) 67% or more of the shares of such class present at a meeting if more than
50% of such shares are present or represented by proxy or (b) more than 50% of
the shares of such class.
21. This Agreement shall be construed in accordance with laws of the
Commonwealth of Massachusetts, and applicable provisions of the Advisers Act and
1940 Act.
22. 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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
CIMCO Inc.
By:
Michael S. Daubs, President
ATTEST:
Massachusetts Financial Services
Company
By:
Title:
ATTEST:
<PAGE>
Exhibit (d) 7
INVESTMENT SUB-ADVISERY AGREEMENT
OppenheimerFunds, Inc.
THIS INVESTMENT SUB-ADVISERY AGREEMENT ("Agreement effective the 15th day
of October, 2000, by and between MEMBERS Capital Advisors Inc., an Iowa
corporation (the "Adviser"), and OppenheimerFunds, Inc. (the "Sub-Adviser").
Adviser and Sub-Adviser agree as follows:
1. Adviser hereby engages the services of Sub-Adviser in connection with
Adviser's management of the Global Securities Fund (the "Portfolio") of the
Ultra Series Fund (the "Fund"). Adviser intends to use a manager of managers
approach to the management of the Portfolio, as well as other portfolios in the
Fund. Therefore, the number of sub-advisers, the named sub-adviser, and the
percentage of assets of the Portfolio managed by each sub-adviser will be
determined by the Fund's Board of Trustees and the Adviser from time to time. As
of the date of this Agreement, Sub-Adviser shall be the sole manager of the
Portfolio. Pursuant to this Agreement and subject to the oversight and
supervision by Adviser and the officers and the Board of Trustees of the Fund,
Sub-Adviser shall manage the investment and reinvestment of the assets of the
Portfolio as requested by the Adviser.
2. Sub-Adviser hereby accepts employment by Adviser in the foregoing capacity
and agrees, at its own expense, to render the services set forth herein and to
provide the office space, furnishings, equipment and personnel required by it to
perform such services on the terms and for the compensation provided in this
Agreement. The Sub-Adviser shall not be responsible for any services to the
Portfolio, or bear any expenses, other than those expressly delineated herein.
Provided the Portfolio shall not be required to pay any compensation other than
as provided by the terms of this Agreement and subject to the provisions of
paragraph 6 hereof, the Sub-Adviser may obtain investment information, research
or assistance from any other person, firm or corporation to supplement, update
or otherwise improve its investment management services hereunder.
3. In particular, Sub-Adviser shall furnish continuously an investment program
for the Portfolio and shall determine from time to time in its discretion the
securities and other investments to be purchased or sold or exchanged and what
portions of the Portfolio shall be held in various securities, cash or other
investments. Sub-Adviser shall provide Adviser and the officers and Trustees of
the Fund with such reports and documentation as the latter shall reasonably
request, with such frequency and in such form as mutually agreed upon by the
Adviser and Sub-Adviser, regarding Sub-Adviser's management of the Portfolio's
assets. Once during each of the Portfolio's fiscal years, the Sub-Adviser will
make available its officers and employees to meet with the Fund's Board of
Trustees at the Fund's principal place of business upon sufficient written
notice. The Sub-Adviser will select which of its officers and employees will
meet with the Fund's Board.
The Sub-Adviser may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker-dealer to
effect said transactions, and may enter into a contract in which the
broker-dealer acts either as principal or as agent.
The Sub-Adviser shall not be responsible for the preparation or filing
of any report required of the Portfolio or the Fund by any governmental or
regulatory agency, except as otherwise expressly agreed to hereunder. The
Sub-Adviser hereby undertakes to prepare and file any necessary Schedule 13G
reflecting the Portfolio's holdings.
Absent specific written instructions to the contrary provided to the
Sub-Adviser by the Advisor, and subject to the receipt of all necessary voting
materials, the Sub-Adviser will vote all proxies with respect to the Portfolio's
investments in accordance with the Sub-Adviser's proxy voting procedures.
In performing its obligations under this Agreement, the Sub-Adviser may
rely upon information provided to it by the Fund or on behalf of the Fund, the
Advisor, the Fund's custodian or other agent and will not independently verify
the accuracy or completeness of such information. The Sub-Adviser shall not be
liable for any loss, claim or damages related to such reliance. For the purposes
of this provision, "Sub-Adviser" shall include any affiliate of the Sub-Adviser
performing services for the Portfolio contemplated hereunder and any officer,
director, employee, agent of the Sub-Adviser or such affiliate.
4. Sub-Adviser shall carry out its responsibilities under this Agreement in
compliance with: (a) the Portfolio's investment objective, policies and
restrictions as set forth in the Fund's current registration statement, (b) such
policies or directives as the Fund's Trustees may from time to time establish or
issue as provided in writing to the Sub-Adviser, and (c) applicable law and
related regulations, provided however, that Sub-Adviser shall not be responsible
for complying with any changes to applicable law or regulation until properly
notified by Adviser. Adviser shall promptly notify Sub-Adviser of changes to (a)
or (b) above and shall notify Sub-Adviser of changes to (c) above promptly after
it becomes aware of such changes.
Notwithstanding the foregoing, the Sub-Adviser shall have no
responsibility to monitor compliance with limitations or restrictions for which
information from the Advisor or its authorized agent is necessary to enable the
Sub-Adviser to monitor compliance with such limitations or restrictions, unless
such information is provided to the Sub-Adviser in writing and as otherwise
agreed upon. Despite the Sub-Adviser's obligations hereunder, the Advisor
retains ultimate responsibility for the Portfolio's compliance with applicable
restrictions and limitations.
5. The Advisor shall continue to have responsibility for all services to be
provided to the Portfolio pursuant to the Advisory Agreement and shall oversee
Sub-Adviser's performance of its duties under this Agreement. In this regard,
the Advisor shall provide the Sub-Adviser, or shall cause the Portfolio's
custodian or other agent to provide to the Sub-Adviser, on each business day, as
of a time of day to be mutually agreed upon, a computer download (in accordance
with the Sub-Adviser's specifications as to program and format) detailing, as of
the close of the prior business day:
(i) The Portfolio's comprehensive portfolio holdings, including cash and
cash-equivalents, total assets, net assets, payables, receivables;
(ii) The Portfolio's uninvested cash;
(iii) Current valuations of portfolio securities;
(iv) Cash flows;
(v) "Market timing" transactions by Portfolio shareholders;
(vi) The cash needed to satisfy redemptions;
(vii)Corporate actions (e.g., the tendering of portfolio securities) affecting
the Portfolio's investments; and
(viii) Other information requested by the Sub-Adviser to assist it in carrying
out its duties under this Agreement.
The Portfolio's custodian or other agent who provides the foregoing
information shall enter into a network security agreement with the Sub-Adviser
with respect to the electronic transmission of such information. The Sub-Adviser
shall not be required to bear any programming costs associated with providing
the portfolio information delineated under this paragraph 5. Any costs the
parties incur associated with subsequent programming changes shall be born by
the party initiating such changes.
The Advisor shall remain responsible for, among other things, providing
the following services with respect to the Portfolio.
(i) The composition of periodic shareholder reports with respect to the
Portfolio's operations, proxy materials for meetings of the Portfolio's
shareholders, and such registration statements as may be required by
federal and state securities laws for the continuous public offering and
sale of shares of the Portfolio.
(ii) The determination of the net asset value(s) of shares of the Portfolio.
The Advisor shall furnish the Sub-Adviser with certified copies of any
financial statement or report prepared for the Portfolio by certified or
independent public accountants and with copies of any financial statements or
reports made to the Portfolio's shareholders or to any governmental body or
securities exchange.
6. Sub-Adviser shall take all actions which it considers necessary in its
discretion to implement the investment policies of the Portfolio, and in
particular, to place all orders for the purchase or sale of securities or other
investments for the Portfolio with brokers or dealers selected by it, and to
that end, Sub-Adviser is authorized as the agent of the Portfolio to give
instructions to the Portfolio's custodian as to deliveries of securities or
other investments and payments of cash for the account of the Portfolio.
Consistent with the terms and conditions of this Agreement and the Sub-Adviser's
appointment hereunder, the Sub-Adviser is hereby appointed as the Portfolio's
agent for the limited purpose of engaging in portfolio transactions on behalf of
the Portfolio. In accordance with this authority and as necessary, in the
judgement and discretion of the Sub-Adviser, to complete portfolio transactions
on behalf of the Portfolio, the Sub-Adviser may enter into trading agreements
and open brokerage accounts on behalf of the Portfolio in the name of the Fund
or otherwise.
In connection with the selection of brokers or dealers and the placing
of purchase and sale orders with respect to investments of the Portfolio,
Sub-Adviser is directed at all times to seek to obtain best execution and price
of particular and related portfolio transactions. The abilities of a
broker-dealer to obtain best execution of particular or related portfolio
transaction(s) will be judged by the Sub-Adviser on the basis of all relevant
factors and considerations including, insofar as feasible: the execution
capabilities required by the transaction or transactions; the ability and
willingness of the broker-dealer to facilitate the Portfolio's portfolio
transactions by participating therein for its own account; the importance to the
Portfolio of speed, efficiency or confidentiality; the broker-dealer's apparent
familiarity with sources from or to whom particular securities might be
purchased or sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Portfolio.
In addition to seeking the best price and execution, Sub-Adviser may
also take into consideration research and statistical information and wire and
other quotation services provided by brokers and dealers to Sub-Adviser or its
affiliates. Sub-Adviser is also authorized to effect individual securities
transactions at commission rates in excess of the minimum commission rates
available, if it determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or Sub-Adviser's overall responsibilities with respect to overall
responsibilities of the Sub-Adviser or its affiliates with respect to the
accounts as to which they exercise investment discretion. In reaching such
determination, the Sub-Adviser will not be required to place or attempt to place
a specific dollar value on the brokerage and/or research services provided or
being provided by such broker-dealer. Sub-Adviser will periodically evaluate the
statistical data, research and other investment services provided to it by
brokers and dealers. Such services may be used by Sub-Adviser in connection with
the performance of its obligations under this Agreement or in connection with
other advisory or investment operations including using such information in
managing its own accounts.
The Sub-Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate applicable to any
particular portfolio transactions or to select any broker-dealer on the basis of
its purported or "posted" commission rate but will, to the best of its ability,
endeavor to be aware of the current level of the charges of eligible
broker-dealers and to minimize the expense incurred by the Portfolio for
effecting its portfolio transactions to the extent consistent with the interests
and policies of the Portfolio as established by the determinations of the Board
of Trustees and the provisions of this paragraph 6.
Subject to the foregoing provisions of this paragraph 6, the
Sub-Adviser may also consider sales of shares or willingness to sell shares of
the Portfolio and other funds advised by Sub-Adviser or its affiliates as a
factor in the selection of broker-dealers for the Portfolio's portfolio
transactions.
7. Sub-Adviser's services under this Agreement are not exclusive. Sub-Adviser
may provide the same or similar services to other clients provided that the
Adviser is not treated less favorably than other clients of Sub-Adviser.
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Adviser, the Fund or the Portfolio or
otherwise be deemed agents of the Adviser, the Fund or the Portfolio. Nothing in
this Agreement shall prevent the Sub-Adviser or any officer, director or
affiliate thereof from acting as investment advisor or Sub-Adviser for any other
person, firm or corporation and shall not in any way limit or restrict the
Sub-Adviser or any of its directors, officers, stockholders, employees or
affiliates from buying, selling or trading any securities for its or their own
account or for the account of others for whom it or they may be acting, provided
that such activities will not adversely affect or otherwise impair the
performance by the Sub-Adviser of its duties and obligations under this
Agreement.
8. Sub-Adviser is registered with the U.S. Securities and Exchange Commission
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The
Sub-Adviser shall remain so registered throughout the term of this Agreement and
shall notify Adviser immediately if Sub-Adviser ceases to be so registered as an
investment adviser.
9. Sub-Adviser or an affiliated person of Sub-Adviser may act as broker for the
Portfolio in connection with the purchase or sale of securities or other
investments for the Portfolio, subject to: (a) the requirement that Sub-Adviser
seek to obtain best execution and price as described herein; (b) the provisions
of the Advisers Act; (c) the provisions of the Securities Exchange Act of 1934,
as amended; and (d) other applicable provisions of law. Such brokerage services
are not within the scope of the duties of Sub-Adviser under this Agreement.
Subject to the requirements of applicable law and any procedures adopted by
Fund's board of Trustees, Sub-Adviser or its affiliated persons may receive
brokerage commissions, fees or other remuneration from the Portfolio or the Fund
for such services in addition to Sub-Adviser's fees for services under this
Agreement.
10. For the services rendered, the facilities furnished and the expenses assumed
by Sub-Adviser hereunder, Adviser shall pay Sub-Adviser at the end of each
quarter a fee based on the average daily net assets of the Portfolio at the
following annual rate:
0.50% of the first $50 million in net assets;
0.45% of the next $50 million in net assets;
0.40% of the next $150 million in net assets; and
0.35% of assets in excess of $250 million in net assets.
Sub-Adviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of the Portfolio shall be determined in the manner and on the dates set forth in
the current prospectus of the Fund, and, on days on which the net assets are not
so determined, the net asset value computation to be used shall be as determined
on the previous day on which the net assets shall have been determined. In the
event of termination of this Agreement, all compensation accrued through the
date of termination will be paid within thirty business days of the date of
termination.
During any period when the determination of net asset value is
suspended, the net asset value of the Portfolio as of the last business day
prior to such suspension shall for this purpose be deemed to be the net asset
value at the close of each succeeding business day until it is again determined.
11. Sub-Adviser hereby undertakes and agrees to maintain, in the form and for
the period required by Rule 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), all records relating to the Portfolio's investments
within the control of the Sub-Adviser that are required to be maintained by the
Portfolio pursuant to the requirements of Rule 31a-1 under the 1940 Act.
Sub-Adviser agrees that all books and records which it maintains for the
Portfolio or the Fund are the property of the Fund and further agrees to
surrender promptly to the Adviser or the Fund any such books, records or
information upon the Adviser's or the Fund's request, although Sub-Adviser may
retain a copy of any such books and records. All such books and records shall be
made available, within five business days of a written request, to the Fund's
accountants or auditors during regular business hours at Sub-Adviser's offices.
Adviser and the Fund or either of their authorized representatives shall have
the right to copy any records in the possession of Sub-Adviser, which pertain to
the Portfolio or the Fund. Such books, records, information or reports shall be
made available to properly authorized government representatives consistent with
state and federal law and/or regulations. In the event of the termination of
this Agreement, all such books, records or other information shall be returned
to Adviser or the Fund free from any claim or assertion of rights by
Sub-Adviser.
12. Sub-Adviser agrees that it will not disclose or use any records or
information obtained pursuant to this Agreement in any manner detrimental to the
Portfolio. Sub-Adviser agrees that it will keep confidential any information
obtained pursuant to this Agreement and disclose such information only if
Adviser or the Fund has authorized such disclosure, or if such disclosure is
required by federal or state regulatory authorities; provided, however, the
Sub-Adviser may disclose the name of the Fund on any representative client list
and may include the performance of the subportfolios in any composite of
performance.
13. In the absence of willful misfeasance, bad faith or gross negligence on the
part of Sub-Adviser or its officers, Trustees or employees, or reckless
disregard by Sub-Adviser of its duties under this Agreement, Sub-Adviser shall
not be liable to Adviser, the Portfolio, the Fund or to any shareholder of the
Portfolio for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security. Provided nothing herein shall be deemed to
protect the Sub-Adviser from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or reckless disregard of its obligations and
duties under this Agreement, the Sub-Adviser shall not be liable for any loss
sustained by the Fund, Portfolio or the Advisor by reason of good faith errors
or omissions in connection with any matters to which this Agreement relates.
14. This Agreement shall not become effective unless and until it is approved by
the board of Trustees of the Fund, including a majority of Trustees who are not
parties to this Agreement or interested persons of any such party to this
Agreement. This Agreement shall come into full force and effect on the date
which it is so approved. This Agreement shall continue in effect for two years
and shall thereafter continue in effect from year to year so long as such
continuance is specifically approved at least annually by (i) the board of
Trustees of the Fund, or by the vote of a majority of the outstanding shares of
the class of stock representing an interest in the Portfolio; and (ii) a
majority of those Trustees who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
15. The Sub-Adviser agrees to indemnify and hold harmless the Advisor, any
affiliated person within the meaning of Section 2(a)(3) of the Act ("affiliated
person") of the Advisor and each person, if any who, within the meaning of
Section 15 of the Securities Act of 1933 (the "1933 Act"), controls
("controlling person") the Advisor and their respective officers, directors and
employees, against any and all losses, claims, damages, liabilities or
litigation (including reasonable attorneys' fees), to which the Advisor or such
affiliated person or controlling person of the Advisor or their respective
officers, directors and employees may become subject under the Act, the 1933
Act, the Advisors Act, or any other statute, law, rule or regulation, arising
directly out of the Sub-Adviser's responsibilities hereunder (1) to the extent
of and as result of the willful misconduct, bad faith, or gross negligence by
the Sub-Adviser, any of the Sub-Adviser's employees or representatives or any
other affiliate of or any person acting on behalf of the Sub-Adviser, or (2) as
a result of any untrue statement of a material fact contained in the Fund's
registration statement, including any amendment thereof or any supplement
thereto, or the omission of a material fact required to be stated in such
registration statement necessary to make the statements therein not misleading,
if such a statement or omission was made in reliance upon and in conformity with
written information furnished by the Sub-Adviser to the Fund or Portfolio;
provided, however, that in no case is the Sub-Adviser's indemnity hereunder
deemed to protect a person against any liability to which any such person would
otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in performance of its duties or by reason of its reckless disregard
of its obligations and duties under this Agreement. The Sub-Adviser shall not be
liable to the Advisor, the Portfolio or the Fund or any of their respective
affiliates or any controlling person of the Fund, Portfolio, the Advisor or
their respective affiliates for any losses that may be sustained as a result of
(1) instructions provided by the Sub-Adviser to the Advisor or the Fund's
Custodian or Administrator if the recipient had reason to believe that such
instruction was not genuine or authorized, or (2) delays in or the inaccuracy of
information provided to the Sub-Adviser pursuant to paragraph 3 of this
Agreement.
The Advisor agrees to indemnify and hold harmless the Sub-Adviser, any
affiliated person of the Sub-Adviser and each controlling person of the
Sub-Adviser, if any, and their respective officers, directors and employees
against any and all losses, claims, damages, liabilities or litigation
(including reasonable attorneys' fees), to which the Sub-Adviser or such
affiliated person or controlling person of the Sub-Adviser or their respective
officers, directors and employees may become subject under the Act, the 1933
Act, the Advisors Act, or any other statute, law, rule or regulation, arising
out of the Advisor's responsibilities as investment manager of the Portfolio or
the Advisor's obligations hereunder (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by the Advisor, any of the
Advisor's employees or representatives or any affiliate of or any person acting
on behalf of the Advisor, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in the Fund's registration
statement, including any amendment thereof or any supplement thereto, or the
omission of or alleged omission to state a material fact in such registration
statement necessary to make the statements therein not misleading; provided,
however, that in no case shall the Advisor's indemnity hereunder be deemed to
protect a person against any liability to which any such person would otherwise
be subject by reason of willful misconduct, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement. It is agreed that the Advisor's
indemnification obligations under this Section 9 will extend to expenses and
costs (including reasonable attorneys' fees) incurred by the Sub-Adviser, any
controlling person of the Sub-Adviser, the Sub-Adviser's officers, directors,
employees or affiliates as a result of any litigation brought by the Advisor
alleging the Sub-Adviser's failure to perform its obligations and duties in the
manner required under this Agreement, unless judgement is rendered for the
Advisor.
16. This Agreement may be terminated at any time without the payment of any
penalty, by the Fund's board of Trustees, or by vote of a majority of the
outstanding shares of the series of stock representing an interest in the
Portfolio on sixty days written notice to the Adviser and Sub-Adviser, or by the
Adviser, or by the Sub-Adviser, on sixty days written notice to the other. This
Agreement shall automatically terminate in the event of its assignment or in the
event of the termination of the investment advisory agreement between the
Adviser and the Fund regarding the Adviser's management of the Portfolio.
17. This Agreement may be amended by either party only if such amendment is
specifically approved by a majority of those Trustees who are not parties to
this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
18. The terms "assignment", "affiliated person" and "interested person", when
used in this Agreement, shall have the respective meanings specified in the 1940
Act. The term "majority of the outstanding shares of the class" means the lesser
of (a) 67% or more of the shares of such class present at a meeting if more than
50% of such shares are present or represented by proxy or (b) more than 50% of
the shares of such class.
19. This Agreement shall be construed in accordance with laws of the State of
New York, and applicable provisions of the Advisers Act and 1940 Act.
20. 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.
21. The Advisor has furnished the Sub-Adviser with true, accurate and complete
copies of each of the following documents:
(a) The Declaration of Trust of the Fund, as in effect on the date hereof;
(b) The By-Laws of the Fund, as in effect on the date hereof;
(c) The resolutions of the Fund's Trustees approving the engagement of the
Sub-Adviser as Sub-Adviser of the Portfolio and approving the form of this
Agreement;
(d) The resolutions of the Fund's Trustees selecting the Advisor as investment
Advisor to the Portfolio and approving the form of Advisory Agreement;
(e) The Advisory Agreement;
(f) The Fund's registration statement;
(g) The policies, procedures and guidelines adopted by the Fund's Board of
Trustees with respect to management of the Portfolio;
(h) The Advisor's Form ADV as filed with the Commission as of the date hereof;
and
(i) A list of companies the securities of which are not to be bought or sold
for the Portfolio.
The Advisor will furnish the Sub-Adviser from time to time with copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any. Such amendments or supplements to items (a) through (i) will
be provided promptly after such materials become available to the Advisor. Such
amendments or supplements to item (i) above will be provided no later than the
end of the business day following the date such amendments or supplements become
known to the Advisor. Any amendments or supplements to the foregoing will not be
deemed effective with respect to the Sub-Adviser until the Sub-Adviser's receipt
thereof. The Advisor will provide such additional information as the Sub-Adviser
may reasonably request in connection with the performance of its duties
hereunder.
The Sub-Adviser has furnished the Advisor with true, accurate and
complete copies of each of the following documents:
(a) The Sub-Adviser's Form ADV as filed with the Commission, as of date hereof.
(b) Separate lists of persons who the Sub-Adviser wishes to have authorized to
give written and/or oral instructions to custodian(s) of the Portfolio's
assets; and
(c) The Code of Ethics of the Sub-Adviser, as in effect on the date hereof.
The Sub-Adviser will furnish the Advisor from time to time with copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any. Material amendments or supplements to the foregoing, if any,
will be provided within 30 days of the time such materials become available to
the Sub-Adviser. Any amendments or supplements to the foregoing will not be
deemed effective with respect to the Advisor until the Advisor's receipt
thereof.
22. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party, with a copy to the Fund, at the
addresses below or such other address as such other party may designate for the
receipt of such notice.
If to the Sub-Adviser, to:
OppenheimerFunds, Inc.
2 World Trade Center, 34th Floor
New York, New York 10048-0203
Attention: Andrew J. Donohue, Esq.
If to the Advisor, to:
MEMBERS Capital Advisors, Inc.
5910 Mineral Point Road
P.O. Box 391
Madison, Wisconsin 53701-0391
Attention: Michael S. Daubs, President
23. Any question of interpretation of any term or provision of this Agreement
having a counterpart or otherwise derived from a term or provision of the Act
shall be resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States Courts or, in the absence
of any controlling decision of any such court, by the rules, regulations or
orders of the Commission. In addition, where the effect of a requirement of the
Act reflected in any provision of this Agreement is revised by rule, regulation
or order of the Commission, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MEMBERS Capital Advisors, Inc.
By:
Michael S. Daubs, President
ATTEST:
OppenheimerFunds, Inc.
By:
Andrew J. Donohue, Executive Vice President
ATTEST:
<PAGE>
Exhibit (g)3
AMENDMENT TO MUTUAL FUND CUSTODY AGREEMENT
This Amendment to the Mutual Fund Custody Agreement is made as of
December 2, 1999, by and between Ultra Series Fund (the "Fund") and State Street
Bank and Trust Company (the "Custodian"). Capitalized terms used in this
Amendment without definition shall have the respective meanings given to such
terms in the Custody Agreement referred to below.
WHEREAS, the Fund and the Custodian entered into a Mutual Fund Custody
Agreement dated as of April, 1997, as amended April 26, 1999 (as further amended
and in effect from time to time, the "Contract"); 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 the Fund has made each such series subject to
the Contract (each such series, together with all other series subsequently
established by the Fund and made subject to the Contract in accordance with the
terms thereof, shall be referred to as a "Portfolio", and, collectively, the
"Portfolios"); and
WHEREAS, the Fund and the Custodian desire to amend certain provisions
of the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") promulgated
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund and the Custodian desire to amend and restate certain
other provisions of the Contract relating to the custody of assets of each of
the Portfolios held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereby agree to
amend the Contract, pursuant to the terms thereof, as follows:
I. Paragraph 14 of the Contract is hereby deleted, and Paragraphs 15 through
34 of the Contract are hereby renumbered, as of the effective date of this
Amendment, as Paragraphs 16 through 35, respectively.
II. New Paragraphs 14 and 15 of the Contract are hereby added, as of the
effective date of this Amendment, as set forth below.
14. The Custodian as Foreign Custody Manager.
14.1.Definitions. Capitalized terms in this Paragraph 14 shall have the
following meanings: -----------
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including any Mandatory Securities Depositories operating in the country);
prevailing or developing custody and settlement practices; and laws and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the U.S. Securities and Exchange Commission (the "SEC")), or a foreign
branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the
requirements of a custodian under Section 17(f) of the 1940 Act, except that the
term does not include Mandatory Securities Depositories.
"Foreign Assets" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund, on the Portfolio's behalf, determines to place Foreign Assets in a country
outside the United States (i) because required by law or regulation; (ii)
because securities cannot be withdrawn from such foreign securities depository
or clearing agency; or (iii) because maintaining or effecting trades in
securities outside the foreign securities depository or clearing agency is not
consistent with prevailing or developing custodial or market practices.
14.2. Delegation to the Custodian as Foreign Custody Manager. The Fund, by
resolution adopted by its Board of Trustees (the "Board"), hereby delegates to
the Custodian, with respect to the Portfolios, subject to Section (b) of Rule
17f-5, the responsibilities set forth in this Paragraph 14 with respect to
Foreign Assets of the Portfolios held outside the United States, and the
Custodian hereby accepts such delegation, as Foreign Custody Manager with
respect to the Portfolios.
14.3. Countries Covered. The Foreign Custody Manager shall be responsible for.
Performing the delegated responsibilities defined below only with respect to the
countries and custody arrangements for each such country listed on Schedule A to
this Contract, which list of countries may be amended from time to time by the
Fund with the agreement of the Foreign Custody Manager. The Foreign Custody
Manager shall list on Schedule A the Eligible Foreign Custodians selected by the
Foreign Custody Manager to maintain the assets of the Portfolios which list of
Eligible Foreign Custodians may be amended from time to time in the sole
discretion of the Foreign Custody Manager. Mandatory Securities Depositories are
listed on Schedule B to this Contract, which Schedule B may be amended from time
to time by the Foreign Custody Manager. The Foreign Custody Manager will provide
amended versions of Schedules A and Bin accordance with Section 14.7 of this
Paragraph 14.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Fund on behalf of the Portfolios of the
applicable account opening requirements for such country, the Foreign Custody
Manager shall be deemed to have been delegated by the Board on behalf of the
Portfolios responsibility as Foreign Custody Manager with respect to that
country and to have accepted such delegation. Execution of this Amendment by the
Fund shall be deemed to be a Proper Instruction to open an account, or to place
or maintain Foreign Assets, in each country listed on Schedule A in which the
Custodian has previously placed or currently maintains Foreign Assets pursuant
to the terms of the Contract. Following the receipt of Proper Instructions
directing the Foreign Custody Manager to close the account of a Portfolio with
the Eligible Foreign Custodian selected by the Foreign Custody Manager in a
designated country, the delegation by the Board on behalf of the Portfolios to
the Custodian as Foreign Custody Manager for that country shall be deemed to
have been withdrawn and the Custodian shall immediately cease to be the Foreign
Custody Manager of the Portfolios with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to the Fund with respect to
the country as to which the Custodian's acceptance of delegation is withdrawn.
14.4. Scope of Delegated Responsibilities.
14.4.1. Selection of Eligible Foreign Custodians. Subject to the provisions of
this Paragraph 14, the Portfolio's Foreign Custody Manager may place and
maintain the Foreign Assets in the care of the Eligible Foreign Custodian
selected by the Foreign Custody Manager in each country listed on Schedule A, as
amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to place
or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign
Custody Manager shall determine that the Foreign Assets will be subject to
reasonable care, based on the standards applicable to custodians in the country
in which the Foreign Assets will be held by that Eligible Foreign Custodian,
after considering all factors relevant to the safekeeping of such assets,
including, without limitation the factors specified in Rule 17f-5(c)(1).
14.4.2. Contracts With Eligible Foreign Custodians. The Foreign Custody Manager
shall determine that the contract (or the rules or established practices or
procedures in the case of an Eligible Foreign Custodian that is a foreign
securities depository or clearing agency) governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
14.4.3. Monitoring. In each case in which the Foreign Custody Manager maintains
Foreign Assets with an Eligible Foreign Custodian selected by the Foreign
Custody Manager, the Foreign Custody Manager shall establish a system to monitor
(i) the appropriateness of maintaining the Foreign Assets with such Eligible
Foreign Custodian and (ii) the contract governing the custody arrangements
established by the Foreign Custody Manager with the Eligible Foreign Custodian
(or the rules or established practices and procedures in the case of an Eligible
Foreign Custodian selected by the Foreign Custody Manager which is a foreign
securities depository or clearing agency that is not a Mandatory Securities
Depository). In the event the Foreign Custody Manager determines that the
custody arrangements with an Eligible Foreign Custodian it has selected are no
longer appropriate, the Foreign Custody Manager shall notify the Board in
accordance with Section 14.7 hereunder.
14.5. Guidelines for the Exercise of Delegated Authority. For purposes of this
Paragraph 14, the Board shall be deemed to have considered and determined to
accept such Country Risk as is incurred by placing and maintaining the Foreign
Assets in each country for which the Custodian is serving as Foreign Custody
Manager of the Portfolios. The Fund, on behalf of the Portfolios, and the Board
shall be deemed to be monitoring on a continuing basis such Country Risk to the
extent that the Board considers necessary or appropriate. The Fund and the
Custodian each expressly acknowledge that the Foreign Custody Manager shall not
be delegated any responsibilities under this Paragraph 14 with respect to
Mandatory Securities Depositories.
14.6. Standard of Care as Foreign Custody Manager of a Portfolio. In performing
the responsibilities delegated to it, the Foreign Custody Manager agrees to
exercise reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of assets of management investment companies
registered under the 1940 Act would exercise.
14.7. Reporting Requirements. The Foreign Custody Manager shall report the
withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the
placement of such Foreign Assets with another Eligible Foreign Custodian by
providing to the Board amended Schedules A or B at the end of the calendar
quarter in which an amendment to either Schedule has occurred. The Foreign
Custody Manager shall make written reports notifying the Board of any other
material change in the foreign custody arrangements of the Portfolios described
in this Paragraph 14 after the occurrence of the material change.
14:8.Representations with Respect to Rule 17f-5. The Foreign Custody Manager
represents to the Fund that it is a U.S. Bank as defined in section (a)(7)
of Rule 17f-5.
The Fund represents to the Custodian that the Board has determined that it is
reasonable for the Board to rely on the Custodian to perform the
responsibilities delegated pursuant to this Contract to the Custodian as the
Foreign Custody Manager of the Portfolios.
14.9. Effective Date and Termination of the Custodian as Foreign Custody
Manager. The Board's delegation to the Custodian as Foreign Custody Manager of
the Portfolios shall be effective as of the date hereof and shall remain in
effect until terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective thirty (30) days after receipt by the non-terminating party of such
notice. The provisions of Section 14.3 hereof shall govern the delegation to and
termination of the Custodian as Foreign Custody Manager of the Portfolios with
respect to designated countries.
15. Duties of the Custodian with Respect to Property of the Portfolios Held
Outside the United States.
15.1 Definitions. Capitalized terms in this Paragraph 15 shall have the
following meanings:
"Foreign Securities System" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
15.2. Holding Securities. The Custodian shall identify on its books as belonging
to the Portfolios the foreign securities held by each Foreign Sub-Custodian or
Foreign Securities System. The Custodian may hold foreign securities for all of
its customers, including the Portfolios, with any Foreign Sub-Custodian in an
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 foreign securities of the Portfolios which are maintained in such account
shall identify those securities as belonging to the Portfolios and (ii), to the
extent permitted and customary in the market in which the account is maintained,
the Custodian shall require that securities so held by the Foreign Sub-Custodian
be held separately from any assets of such Foreign Sub-Custodian or of other
customers of such Foreign Sub-Custodian.
15.3.Foreign Securities Systems. Foreign securities shall be maintained in a
Foreign Securities System in a designated country only through arrangements
implemented by the Foreign Sub-Custodian in such country pursuant to the terms
of this Contract.
15.4. Transactions in Foreign Custody Account.
15.4.1. Delivery of Foreign Assets. The Custodian or a Foreign Sub-Custodian
shall release and deliver foreign securities of the Portfolios held by such
Foreign Sub-Custodian, or in a Foreign Securities System account, only upon
receipt of Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the Portfolio in
accordance with commercially reasonable market practice in the
country where such foreign securities are held or traded,
including, without limitation: (A) delivery against expectation
of receiving later payment; or (B) in the case of a sale effected
through a Foreign Securities System, in accordance with the rules
governing the operation of the Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii)to the depository agent in connection with tender or other
similar offers for foreign securities of the Portfolios;
(iv) to the issuer thereof or its agent when such foreign securities
are called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name
of the Custodian (or the name of the respective Foreign
Sub-Custodian or of any nominee of the Custodian or such Foreign
Sub-Custodian) or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market custom;
provided that in any such case the Foreign Sub-Custodian shall
have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Foreign Sub-Custodian's
own negligence or willful misconduct;
(vii)for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by the
Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii)for any other proper purpose, but only upon receipt of Proper
Instructions specifying the foreign securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities
shall be made.
15.4.2. Payment of Portfolio Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the
respective Foreign Securities System to pay out, monies of a Portfolio in the
following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, by (A) delivering
money to the seller thereof or to a dealer therefore (or an agent
for such seller or dealer) against expectation of receiving later
delivery of such foreign securities; or (B) in the case of a
purchase effected through a Foreign Securities System, in
accordance with the rules governing the operation of such Foreign
Securities System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Portfolio;
(iii)for the payment of any expense or liability of the Portfolio,
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees under
this Contract, legal fees, accounting fees, and other operating
expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed with
or through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vi) for payment of part or all of the dividends received in respect
of securities sold short;
(vii)in connection with the borrowing or lending of foreign
securities; and
(viii) for any other proper purpose, _but only upon receipt of Proper
Instructions specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such
purpose to be a proper trust purpose, and naming the person or
persons to whom such payment is to be made.
15.4.3. Market Conditions; Market Information. Notwithstanding any provision of
this Contract to the contrary, settlement and payment for Foreign Assets
received for the account of the Portfolios and delivery of Foreign Assets
maintained for the account of the Portfolios may be effected in accordance with
the customary established securities trading or processing practices and
procedures in the country or market in which the transaction occurs, including,
without limitation, delivering Foreign Assets to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) with the expectation
of receiving later payment for such Foreign Assets from such purchaser or
dealer.
The Custodian shall provide to the Board the information with respect to custody
and settlement practices in countries in which the Custodian employs a Foreign
Sub-Custodian, including without limitation information relating to Foreign
Securities Systems, described on Schedule C hereto at the time or times set
forth on such Schedule. The Custodian may revise Schedule C from time to time,
provided that no such revision shall result in the Board being provided with
substantively less information than had been previously provided hereunder.
15.5. Registration of Foreign Securities. The foreign securities maintained in
the custody of a Foreign Sub-Custodian (other than bearer securities) shall be
registered in the name of the applicable Portfolio or in the name of the
Custodian or in the name of any Foreign SubCustodian or in the name of any
nominee of the foregoing, and the Fund on behalf of such Portfolio agrees to
hold any such nominee harmless from any liability as a holder of record of such
foreign securities. The Custodian or a Foreign Sub-Custodian shall not be
obligated to accept securities on behalf of a Portfolio under the terms of this
Contract unless the form of such securities and the manner in which they are
delivered are in accordance with reasonable market practice.
15.6. Bank Accounts. The Custodian shall identify on its books as belonging to
the Fund cash (including cash denominated in foreign currencies) deposited with
the Custodian. Where the Custodian is unable to maintain, or market practice
does not facilitate the maintenance of, cash on the books of the Custodian, a
bank account or bank accounts opened and maintained outside the United States on
behalf of a Portfolio with a Foreign Sub-Custodian shall be subject only to
draft or order by the Custodian or such Foreign Sub-Custodian, acting pursuant
to the terms of this Contract to hold cash received by or from or for the
account of the Portfolio.
15.7. Collection of Income. The Custodian shall use reasonable commercial
efforts to collect all income and other payments with respect to the Foreign
Assets held hereunder to which the Portfolios shall be entitled and shall credit
such income, as collected, to the applicable Portfolio In the event that
extraordinary measures are required to collect such income, the Fund and the
Custodian shall consult as to such measures and as to the compensation and
expenses of the Custodian relating to such measures.
15.8. Shareholder Rights. With respect to the foreign securities held pursuant
to this Paragraph 15, the Custodian will use reasonable commercial efforts to
facilitate the exercise of voting and other shareholder rights, subject always
to the laws, regulations and practical constraints that may exist in the country
where such securities are issued. The Fund acknowledges that local conditions,
including lack of regulation, onerous procedural obligations, lack of notice and
other factors may have the effect of severely limiting the ability of the Fund
to exercise shareholder rights.
15.9. Communications Relating to Foreign Securities. The Custodian shall
transmit promptly to the Fund written information (including, without
limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the Custodian via the
Foreign Sub-Custodians from issuers of the foreign securities being held for the
account of the Portfolios. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund written information so received by
the Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
The Custodian shall not be liable for any untimely exercise of any tender,
exchange or other right or power in connection with foreign securities or other
property of the Portfolios at any time held by it unless (i) the Custodian or
the respective Foreign SubCustodian is in actual possession of such foreign
securities or property and (ii) the Custodian receives Proper Instructions with
regard to the exercise of any such right or power, and both (i) and (ii) occur
at least three business days prior to the date on which the Custodian is to take
action to exercise such right or power.
15.10. Liability of Foreign Sub-Custodians and Foreign Securities Systems. Each
agreement pursuant to which the Custodian employs a Foreign Sub-Custodian shall,
to the extent possible, require the Foreign Sub-Custodian to exercise reasonable
care in the performance of its duties and, to the extent possible, to indemnify,
and hold harmless, the Custodian from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the Foreign
Sub-Custodian's performance of such obligations. At the Fund's election, the
Portfolios shall be entitled to be subrogated to the rights of the Custodian
with respect to any claims against a Foreign Sub-Custodian as a consequence of
any such loss, damage, cost, expense, liability or claim if and to the extent
that the Portfolios have not been made whole for any such loss, damage, cost,
expense, liability or claim.
15.11. Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund, the Portfolios or the
Custodian as custodian of the Portfolios by the tax law of the United States or
of 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 with
respect to the Portfolios or the Custodian as custodian of the Portfolios by the
tax law of countries 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 countries for which the Fund has provided such
information.
15.12. Liability of Custodian. Except as may arise from the Custodian's own
negligence or willful misconduct or the negligence or willful misconduct of a
Sub-Custodian, the Custodian shall be without liability to the Fund for any
loss, liability, claim or expense resulting from or caused by anything which is
(A) part of Country Risk or (B) part of the "prevailing country risk" of the
Fund and the Portfolios, as such term is used in SEC Release Nos. IC-22658;
IS-1080 (May 12, 1997) or as such term or other similar terms are now or in the
future interpreted by the SEC or by the staff of the Division of Investment
Management of the SEC.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian to the same extent as set forth with respect to sub-custodians
generally in the Contract and, regardless of whether assets are maintained in
the custody of a Foreign Sub-Custodian or a Foreign Securities Depository, 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 other loss where the Sub-Custodian has
otherwise acted with reasonable care.
III. Except as specifically superseded or modified herein, the terms and
provisions of the Contract shall continue to apply with full force and
effect. In the event of any conflict between the terms of the Contract
prior to this Amendment and this Amendment, the terms of this Amendment
shall prevail. If the Custodian is delegated the responsibilities of
Foreign Custody Manager pursuant to the terms of Paragraph 14 hereof,
in the event of any conflict between the provisions of Paragraphs 14
and 15 hereof, the provisions of Paragraph 14 shall prevail.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed
in its name and behalf by its duly authorized representative as of the date
first above written.
STATE STREET BANK AND TRUST ULTRA SERIES FUND
COMPANY
By: /s/ Stephen R. Hilliard By: /s/ L. R. Halverson
Name: Stephen R. Hilliard Name: Lawrence R. Halverson
Title: Vice President Title: Vice President
<PAGE>
<TABLE>
<CAPTION>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Country Subcustodian Non-Mandatory Depositories
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain HSBC Bank Middle East --
(as delegate of The Hong Kong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Fortis Bank NV/as. --
Bermuda The Bank of Bermuda Limited --
Bolivia Citibank, N. A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada State Street Trust Company Canada --
Chile Citibank, N.A. --
People's Republic The Hong Kong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
10/5/99 1
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Costa Rica Banco BCT S.A. --
Croatia Privredna Banka Zagreb dal --
Cyprus The Cyprus Popular Bank Ltd. --
Czech Republic Eskoslovenska Obchodni --
Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt Egyptian British Bank --
(as delegate of The Hong Kong
and Shanghai Banking Corporation
Limited)
Estonia Hansabank --
Finland Merita Bank Plc. --
France Paribas, S.A. --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. Bank of Greece,
System for Monitoring Transactions in Securities in Book-Entry Form
Hong Kong Standard Chartered Bank --
Hungary Citibank Rt. --
10/5/99 2
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Iceland Icebank Ltd. --
India Deutsche Bank AG --
The Hong Kong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Paribas, S.A. --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and --
Merchant -Bank Limited
Japan The Fuji Bank, Limited Japan Securities Depository
Center (JASDEC)
The Sumitomo Bank, Limited
Jordan HSBC Bank Middle East --
(as delegate of The Hong Kong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hong Kong and Shanghai --
Banking Corporation Limited
Latvia A/s Hansabank --
10/5/99 3
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Lebanon HSBC Bank Middle East --
(as delegate of The Hong Kong and
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hong Kong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse ASA
Oman HSBC Bank Middle East --
(as delegate of The Hong Kong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Palestine HSBC Bank Middle East --
(as delegate of The Hong Kong and
Shanghai Banking Corporation Limited)
Peru Citibank, N.A. --
10/5/99 4
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Philippines Standard Chartered Bank --
Poland Citibank (Poland) S.A. --
Portugal Banco Comercial Portugues --
Qatar HSBC Bank Middle East --
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodni Banka, A.S. --
Slovenia Bank Austria Creditanstalt d.d. Ljubljana --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander Central Hispano, S.A. --
Sri Lanka The Hong Kong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AG --
10/5/99 5
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Taiwan - RO.C. Central Trust of China --
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
Ukraine ING Bank Ukraine --
United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay BankBoston N.A. --
Venezuela Citibank, N.A. --
Vietnam The Hong Kong and Shanghai --
Banking Corporation Limited
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
</TABLE>
Euroclear (The Euroclear System)/State Street London Limited
Cedelbank S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
10/5/99 6
<PAGE>
<TABLE>
<CAPTION>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<S> <C>
Country Mandatory Depositories
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle de Depots et
de Virements de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e
Custodia
Bulgaria Central Depository AD
Bulgarian National Bank
Canada Canadian Depository
for Securities Limited
Chile Deposito Central de Valores S.A
People's Republic Shanghai Securities Central Clearing &
of China Registration Corporation
Shenzhen Securities Clearing Co., Ltd.
Colombia Deposito Centralizado de Valores
Costa Rica Central de Valores S.A.
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
10/5/99 1
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Croatia Ministry of Finance
National Bank of Croatia
Sredisnja Depozitarna Agencija
Czech Republic Stredisko cennych papiru
Czech National Bank
Denmark Vaerdipapircentralen (Danish Securities Center)
Egypt Misr Company for Clearing, Settlement,
and Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland Finnish Central Securities Depository
France Societe Interprofessionnelle pour la
Compensation des Valeurs Mobilieres
Germany Deutsche Borse Clearing AG
Greece Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong Central Clearing and Settlement System
Central Moneymarkets Unit
Hungary Kozponti Elszamolohaz es Ertektar
(Budapest) Rt. (KELER)
[Mandatory for Govt Bonds and dematerialized
equities only; SSB does not use for other securities]
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
10/5/99 2
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
India The National Securities Depository Limited
Reserve Bank of India
Indonesia Bank Indonesia
PT Kustodian Sentral Efek Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel Tel Aviv Stock Exchange Clearing
House Ltd. (TASE Clearinghouse)
Bank of Israel
(As part of the TASE Clearinghouse system)
Italy Monte Titoli S.p.A.
Banca d'Italia
Ivory Coast Depositaire Central - Banque de Reglement
Jamaica Jamaica Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia Latvian Central Depository
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
10/5/99 3
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Lebanon Custodian and Clearing Center of
Financial Instruments for Lebanon
and the Middle East (MIDCLEAR) S.A.L.
The Central Bank of Lebanon
Lithuania Central Securities Depository of Lithuania
Malaysia Malaysian Central Depository Sdn. Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping
System
Mauritius Central Depository & Settlement
Co. Ltd.
Mexico S.D. INDEVAL
(Instituto para el Deposito de
Valores)
Morocco Maroclear
The Netherlands Nederlands Centraal Instituut voor Giraal
Effectenverkeer B.V. (NECIGEF)
New Zealand New Zealand Central Securities
Depository Limited
Norway Verdipapirsentralen (the Norwegian Central
Registry of Securities)
Oman Muscat Securities Market Depository & Securities
Registration Company
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
10/5/99 4
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Pakistan Central Depository Company of Pakistan Limited
State Bank of Pakistan
Palestine The Palestine Stock Exchange
Peru Caja de Valores
y Liquidaciones
CAVALI ICLV
S.A.
Philippines Philippines Central Depository, Inc.
Registry of Scripless Securities
(ROSS) of the Bureau of Treasury
Poland National Depository of Securities (Krajowy
Depozyt Papierow Wartosciowych SA)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios
Qatar Doha Securities Market
Romania National Securities Clearing, Settlement and
Depository Company
Bucharest Stock Exchange Registry Division
National Bank of Romania
Singapore Central Depository (Pte)Limited
Monetary Authority of Singapore
* Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
10/5/99 5
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Slovak Republic Stredisko
cennych papierov SR
Bratislava, a.s.
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba dal.
South Africa The Central Depository Limited
Strate Ltd.
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System
(Pvt) Limited
Sweden Vardepapperscentralen VPC AB
(the Swedish Central Securities Depository)
Switzerland SIS - SegaIntersettle
Taiwan - R.O.C. Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle pour la
Compensation et de Depots de
Valeurs Mobilieres
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
10/5/99 6
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Turkey Takas ve Saklama Bankasi A.S.
(TAKASBANK)
Central Bank of Turkey
Ukraine National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Venezuela Central Bank of Venezuela
Zambia LuSE Central Shares Depository Limited
Bank of Zambia
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
10/5/99 7
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE C
MARKET INFORMATION
Publication/Type of Information Brief Description
(Frequency)
<S> <C>
The Guide to Custody in World Markets An overview of safekeeping and settlement practices
(annually) and procedures in each market in which State Street Bank and
Trust Company offers custodial services.
Global Custody Network Review Information relating to the operating history and
(annually) structure of depositories and subcustodians located in the
markets in which Trust Company offers custodial services,
including transnational depositories.
Global Legal Survey With respect to each market in which State Street Bank and
(annually) Trust Company offers custodial services, opinions relating
to whether local law restricts (i) access of a fund's
independent public accountants to books and records of a
Foreign Sub Custodian or Foreign Securities System, (ii) the
Fund's ability to recover in the event of bankruptcy or
insolvency of a Foreign Sub-Custodian or Foreign Securities
System, (iii) the Fund's ability to recover in the event of
a loss by a Foreign Sub-Custodian or Foreign Securities
System, and (iv) the ability of a foreign investor to
convert cash and cash equivalents to U.S. dollars.
Subcustodian Agreements Copies of the subcustodian contracts State Street Bank
(annually) and Trust Company has entered into with each subcustodian in
the markets in which State Street Bank and Trust Company
offers subcustody services to its US mutual fund clients.
Network Bulletins (weekly): Developments of interest to investors in the markets in
which State Street Bank and Trust Company offers custodial
services.
Foreign Custody Advisories: With respect to markets in which State Street Bank and
(as necessary): Trust Company offers custodial services which exhibit
special custody risks, developments which may impact State
Street's ability to deliver expected levels of Service.
</TABLE>
<PAGE>
Exhibit (g) 4
AMENDMENT NO. 3 TO
MUTUAL FUND CUSTODY AGREEMENT
THIS AMENDMENT NO. 3 TO MUTUAL FUND CUSTODY AGREEMENT is made as of
October 15, 2000 by and between the ULTRA SERIES FUND, a Massachusetts Business
Trust (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
State chartered bank trust company ("State Street").
1. The parties entered into a Mutual Fund Custody Agreement dated
April 1997, Amendment No. 1 to Mutual Fund Custody Agreement
dated April 26, 1999 and Amendment to Mutual Fund Custody
Agreement dated December 2, 1999.
2. The Fund is instituting four new portfolios, to be known as High
Income Fund, Emerging Growth Fund, International Stock Fund and
Global Securities Fund.
3. The parties agree to amend Attachment B of the Custody Agreement
to read as follows:
ATTACHMENT B
Portfolios of the Ultra Series Fund:
Money Market Series
Bond Series
Balanced Series
High Income Fund
Growth and Income Stock Series
Mid-Cap Stock Fund
Capital Appreciation Stock Series
Emerging Growth Fund
International Stock Fund
Global Securities Fund
Treasury 2000 Fund
The Fund and State Street hereby ratify and confirm the Mutual Fund
Custody Agreement and agree that it remains in full force and effect and is
binding upon the parties in accordance with its terms, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized representatives designated below as of the day
and year first above written.
ULTRA SERIES FUND STATE STREET BANK AND TRUST COMPANY
By: _____________________ By: _____________________
Michael S. Daubs Ken A. Bergeron
President Senior Vice President
<PAGE>
Exhibit (l) 1
ULTRA SERIES FUND
SUBSCRIPTION AGREEMENT
Ultra Series Fund, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), and CUNA Mutual Insurance Society
("CMIS"), an insurance company organized under the laws of the State of
Wisconsin, agree as follows:
1. Offer and Purchase.
The Trust offers to CMIS, and CMIS agrees to purchase, the number and
amount of Class Z shares (the "Shares") shown on the Schedule attached to this
Agreement of the Emerging Growth and International Stock Funds. CMIS
acknowledges receipt from the Trust of the Shares and the Trust acknowledges
receipt from CMIS of an aggregate of two hundred dollars ($200) in full payment
for the Shares.
2. Representation by CMIS.
CMIS represents and warrants to the Trust that the Shares are being
acquired for investment purposes and not with a view to resale or further
distribution.
3. Filing of Certificate of Trust.
The Trust represents that a copy of its Certificate of Trust dated
November 1, 1983, as amended from time to time, is on file with the Secretary of
State of the Commonwealth of Massachusetts. The Trust represents a copy of its
Declaration of Trust dated May 1, 1997, as amended from time to time, is
maintained by the Trust.
4. Limitation of Liability.
The Trust and CMIS agree that the obligations of the Trust under this
Agreement will not be binding upon any of the Trustees, shareholders, nominees,
officers, employees or agents, whether past, present or future, of the Trust,
individually, but are binding only upon the assets and property of the Trust.
The execution and delivery of this Agreement has been authorized by the Trustees
of the Trust, and signed by an authorized officer of the Trust, acting as such,
and neither the authorization by the Trustees nor the execution and delivery by
the officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the trust
property of the Trust. No series of the Trust will be liable for any claims
against any other series.
5. No Right of Assignment.
CMIS's right under this Agreement to purchase the Shares is not
assignable.
6. Dates.
This Agreement will become effective as of the date the Trust's next
Registration Statement on Form N-1A becomes effective.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the 18th day of September, 2000.
Ultra Series Fund
By:__________________________________
Name: Michael S. Daubs
Title: President
ATTEST:
------------------------------
CUNA Mutual Insurance Society
By:__________________________________
Name: Michael B. Kitchen
Title: President & Chief Executive Officer
ATTEST:
------------------------------
<PAGE>
CMIS Schedule
Amount Price
Name of Fund of Shares Per Share Total
------------ --------- --------- -----
Emerging Growth Fund 10 $10.00 $100
International Stock Fund 10 $10.00 $100
----
Total $200
<PAGE>
Exhibit (l) 2
ULTRA SERIES FUND
SUBSCRIPTION AGREEMENT
Ultra Series Fund, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), and CUMIS Insurance Society
("CUMIS"), an insurance company organized under the laws of the State of
Wisconsin, agree as follows:
1. Offer and Purchase.
The Trust offers to CUMIS, and CUMIS agrees to purchase, the number and
amount of Class Z shares (the "Shares") shown on the Schedule attached to this
Agreement of the High Income and Global Securities Funds. CUMIS acknowledges
receipt from the Trust of the Shares and the Trust acknowledges receipt from
CUMIS of an aggregate of two hundred dollars ($200) in full payment for the
Shares.
2. Representation by CUMIS.
CUMIS represents and warrants to the Trust that the Shares are being
acquired for investment purposes and not with a view to resale or further
distribution.
3. Filing of Certificate of Trust.
The Trust represents that a copy of its Certificate of Trust dated
November 1, 1983, as amended from time to time, is on file with the Secretary of
State of the Commonwealth of Massachusetts. The Trust represents a copy of its
Declaration of Trust dated May 1, 1997, as amended from time to time, is
maintained by the Trust.
4. Limitation of Liability.
The Trust and CUMIS agree that the obligations of the Trust under this
Agreement will not be binding upon any of the Trustees, shareholders, nominees,
officers, employees or agents, whether past, present or future, of the Trust,
individually, but are binding only upon the assets and property of the Trust.
The execution and delivery of this Agreement has been authorized by the Trustees
of the Trust, and signed by an authorized officer of the Trust, acting as such,
and neither the authorization by the Trustees nor the execution and delivery by
the officer will be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but will bind only the trust
property of the Trust. No series of the Trust will be liable for any claims
against any other series.
5. No Right of Assignment.
CUMIS's right under this Agreement to purchase the Shares is not
assignable.
6. Dates.
This Agreement will become effective as of the date the Trust's next
Registration Statement on Form N-1A becomes effective.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the 18th day of September, 2000.
Ultra Series Fund
By:__________________________________
Name: Michael S. Daubs
Title: President
ATTEST:
------------------------------
CUMIS Insurance Society, Inc.
By:__________________________________
Name: Michael B. Kitchen
Title: President & Chief Executive Officer
ATTEST:
------------------------------
<PAGE>
CUMIS Schedule
Amount Price
Name of Fund of Shares Per Share Total
------------ --------- --------- -----
High Income Fund 10 $10.00 $100
Global Securities Fund 10 $10.00 $100
----
Total $200
<PAGE>
Exhibit (m) 3
ULTRA SERIES FUND
Supplement No. 2 to
Distribution Plan
A. Ultra Series Fund (the "Fund") is a diversified, open-end management
investment company registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended (the "1940 Act").
B. Paragraph B of the Distribution Plan (the "Plan") states that the Plan shall
also apply to the Shares of any other series of the Fund as shall be designated
from time to time by the board of trustees of the Fund (the "Board") in any
supplement to the Plan.
C. At its September 7, 2000 meeting, the Board of Trustees approved
supplementing the Plan to include the High Income, Emerging Growth,
International Stock and Global Securities Funds as part of the Plan.
D. The Distribution Plan is hereby supplemented to include the High Income,
Emerging Growth, International Stock and Global Securities Funds.
IN WITNESS WHEREOF, Ultra Series Fund has adopted this Supplement to
the Distribution Plan as of October 15, 2000.
ULTRA SERIES FUND
By: /s/ Michael S. Daubs
Michael S. Daubs
President
<PAGE>
Other Exhibits
Powers 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 7th day of April, 2000.
/s/ Gwendolyn M. Boeke
Gwendolyn M. Boeke
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 7th day of April, 2000.
/s/ Michael S. Daubs
Michael S. Daubs
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 7th day of April, 2000.
/s/ Alfred L. Disrud
Alfred L. Disrud
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 7th day of April, 2000.
/s/ Lawrence R. Halverson
Lawrence R. Halverson
Trustee for Ultra Series Fund
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned, a Trustee of the
ULTRA SERIES FUND (the "Fund"), a business trust duly organized under the laws
of the State of Massachusetts, do hereby appoint, authorize, and empower Kevin
S. Thompson and Michael A. Murphy, severally, as my attorney and agent, for me
and in my name as a Trustee of the Fund on behalf of the Fund or otherwise with
full power to review, execute, deliver and file with the Securities and Exchange
Commission all necessary post-effective amendments to Form N-1A filed by the
Fund, Registration No. 2-87775, as may be required under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, and to do
and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 7th day of April, 2000.
/s/ T.C. Watt
T.C. Watt
Trustee for Ultra Series Fund
