Dear Policyowner:
The U.S. stock market continued its strong performance in the first half of
1997. Total returns in the bond market were considerably lower than in the stock
market, but more in line with historical norms. Please see the managers'
discussions contained in this booklet for more information on market conditions
and outlook. Results for the first six months of 1997 in the subaccounts of the
MEMBERS(R) Variable Universal Life are shown below:
Percent increase
in Unit Value from
Subaccount 12/31/96 through 6/30/97
- ----------------------------------------------------------------------------
Capital Appreciation Stock 14.2%
Growth and Income Stock 15.2%
Balanced 7.6%
Bond 2.2%
Money Market 2.0%
Treasury 2000 1.9%
International Stock 11.1%
World Governments -2.1%
- ----------------------------------------------------------------------------
Emerging Growth 10.3%
- ----------------------------------------------------------------------------
This booklet is divided into several sections. Each section contains the
semiannual report for a component of MEMBERS(R) Variable Universal Life. The
first section contains the following reports for the CUNA Mutual Life Variable
Account:
Statement of Assets and Liabilities ............. page 2
Statement of Operations.......................... page 4
Statement of Changes in Net Assets............... page 7
Notes to the Financial Statements................ page 10
The CUNA Mutual Life Variable Account invests in mutual funds. The results shown
in this first section reflect the deduction of the separate account level
charges. Returns at the subaccount level (shown above) are slightly lower than
the returns at the mutual fund level as a result of these charges.
The remaining sections of this booklet cover the mutual funds. The second
section contains the report for the Ultra Series Fund which includes the Capital
Appreciation Stock Fund, Growth and Income Stock Fund, Balanced Fund, Bond Fund,
Money Market Fund, and the Treasury 2000 Fund. The third section is the report
for the International Stock Portfolio of the T. Rowe Price International Series,
Inc., and the last section has the financial information and results for the
MFS(R) World Government Series and the MFS(R) Emerging Growth Series of the
MFS(R) Variable Insurance TrustSM.
We believe that a MEMBERS(R) Variable Universal Life policy is a great way to
cover your life insurance needs while participating in the long term growth
potential of mutual fund investing. Over the last several years we have seen
strong returns in the equity markets. You should always keep in mind the fact
that strong markets are often followed by periods of slower growth or even
temporary declines. Thank you for choosing MEMBERS(R) Variable Universal Life to
help meet your life insurance and asset accumulation needs.
Sincerely,
/s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer
CUNA Mutual Life Insurance Company
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Assets and Liabilities
June 30, 1997
(Unaudited)
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount
Investments in Ultra Series Fund:
(note 2)
<S> <C> <C> <C> <C> <C>
Capital Appreciation Stock Fund,
1,206,353 shares at net asset
value of $16.70 per share
(cost $15,091,637) $20,148,982 $ -- $ -- $ -- $ --
Growth and Income Stock Fund,
2,377,338 shares at net asset
value of $24.56 per share
(cost $40,094,017) -- 58,390,099 -- -- --
Balanced Fund, 3,427,375 shares
at net asset value of $16.37
per share (cost $46,640,918) -- -- 56,110,694 -- --
Bond Fund, 239,303 shares
at net asset value of $10.45
per share (cost $2,453,913) -- -- -- 2,501,027 --
Money Market Fund, 1,158,004
shares at net asset value of
$1.00 per share
(cost $1,158,004) -- -- -- -- 1,158,004
---------- ----------- ----------- ---------- ----------
Total assets 20,148,982 58,390,099 56,110,694 2,501,027 1,158,004
---------- ----------- ----------- ---------- ----------
Liabilities:
Accrued adverse mortality and
expense charges 41,414 121,609 122,111 5,540 4,174
---------- ----------- ----------- ---------- ----------
Total liabilities 41,414 121,609 122,111 5,540 4,174
---------- ----------- ----------- ---------- ----------
Net assets $20,107,568 $58,268,490 $55,988,583 $2,495,487 $1,153,830
========== =========== =========== ========== ==========
Units outstanding (note 5) 1,079,399 1,098,228 1,557,344 98,384 63,814
========== =========== =========== ========== ==========
Net asset value per unit 18.63 53.06 35.95 25.36 18.08
========== =========== =========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Assets and Liabilities
June 30, 1997
(Unaudited)
Treasury International World Emerging
2000 Stock Governments Growth
Assets: Subaccount Subaccount Subaccount Subaccount
Investments in Ultra Series Fund:
(note 2)
<S> <C> <C> <C> <C>
Treasury 2000 Fund, 182,546
shares at net asset value of $8.84
per share (cost $1,387,537) $1,510,584 $ -- $ -- $ --
Investments in T. Rowe Price
International Fund, Inc.:
International Stock Portfolio,
269,046 shares at net asset value of
$14.11 per share (cost $3,228,233) -- 3,796,250
Investments in MFSAE Variable Insurance
TrustSM:
World Governments Series,
30,197 shares at net asset value of
$10.15 per share (cost $312,834) -- -- 306,504 --
Investments in MFSAE Variable Insurance
TrustSM:
Emerging Growth Series,
147,711 shares at net asset value of
$14.67 per share (cost $1,984,281) -- -- -- 2,166,922
---------- ----------- ----------- ----------
Total assets 1,510,584 3,796,250 306,504 2,166,922
---------- ----------- ----------- ----------
Liabilities:
Accrued adverse mortality and
expense charges 8,422 7,573 678 3,941
---------- ----------- ----------- ----------
Total liabilities 8,422 7,573 678 3,941
---------- ----------- ----------- ----------
Net assets $1,502,162 $3,788,677 $305,826 $2,162,981
========== =========== =========== ==========
Units outstanding (note 5) 196,670 282,530 26,616 193,982
========== =========== =========== ==========
Net asset value per unit 8.20 13.41 11.49 11.15
========== =========== =========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Six Months Ended June 30, 1997 and the Years Ended December 31, 1996 and 1995
(Unaudited)
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss): 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
Dividend income $37,873 $595,603 $349,394 $194,268 $1,830,435 $2,783,538
Adverse mortality and expense
charges (note 3) (78,804) (111,426) (67,332) (234,046) (363,607) (253,958)
---------- --------- -------- ---------- ---------- ----------
Net investment income (loss) (40,931) 484,177 282,062 (39,778) 1,466,828 2,529,580
---------- --------- -------- ---------- ---------- ----------
Realized and unrealized gain
(loss)on investments:
Realized gain (loss) on
security transactions:
Capital gain distributions 10,618 -- -- 28,589 -- --
Proceeds from sale of
securities 903,689 855,100 2,737,741 1,429,133 2,017,365 1,138,163
Cost of securities sold (726,533) (708,846) (2,416,409) (1,058,588) (1,615,917) (985,297)
---------- --------- -------- ---------- ---------- ----------
Net realized gain (loss) on
security transactions 187,774 146,254 321,332 399,134 401,448 152,866
Net change in unrealized
appreciation or depreciation
on investments 2,204,868 1,662,956 1,332,754 7,082,165 6,026,093 4,764,093
---------- --------- -------- ---------- ---------- ----------
Net gain (loss) on investments 2,392,642 ,809,210 1,654,086 7,481,299 6,427,541 4,916,959
---------- --------- -------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from
operations $2,351,711 $2,293,387 $1,936,148 $7,441,521 $7,894,369 $7,446,539
========== ========= ======== ========== ========== ==========
BALANCED SUBACCOUNT BOND SUBACCOUNT
Investment income (loss): 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
Dividend income $499,859 $2,949,493 $3,308,296 $35,139 $137,535 $218,461
Adverse mortality and expense
charges (note 3) (241,523) (445,353) (375,225) (10,961) (23,607) (33,879)
---------- ---------- --------- -------- --------- --------
Net investment income (loss) 258,336 2,504,140 2,933,071 24,178 113,928 184,582
---------- ---------- --------- -------- --------- --------
Realized and unrealized gain
(loss) on investments:
Realized gain (loss) on
security transactions:
Capital gain distributions 18,410 -- -- -- -- --
Proceeds from sale of
securities 2,517,796 3,759,491 2,989,211 138,109 1,799,790 885,596
Cost of securities sold (2,174,617) (3,351,391) (2,732,488) (136,824) (1,748,647) (865,874)
---------- ---------- --------- -------- --------- --------
Net realized gain (loss) on
security transactions 361,589 408,100 256,723 1,285 51,143 19,722
Net change in unrealized
appreciation or depreciation
on investments 3,357,410 1,724,491 4,759,298 28,226 (127,295) 326,701
---------- ---------- --------- -------- --------- --------
Net gain (loss) on investments 3,718,999 2,132,591 5,016,021 29,511 (76,152) 346,423
---------- ---------- --------- -------- --------- --------
Net increase (decrease) in net
assets resulting from
operations $3,977,335 $4,636,731 $7,949,092 $53,689 $37,776 $531,005
========== ========== ========= ======== ========= ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Six Months Ended June 30, 1997 and the Years Ended December 31, 1996 and 1995
(Unaudited)
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Investment income (loss): 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dividend income $39,869 $86,370 $116,648 $ -- $107,339 $105,588
Adverse mortality and expense
charges (note 3) (7,390) (16,510) (20,105) (7,092) (13,847) (12,710)
-------- -------- -------- -------- --------- --------
Net investment income (loss) 32,479 69,860 96,543 (7,092) 93,492 92,878
-------- -------- -------- -------- --------- --------
Realized and unrealized gain(loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- -- -- -- -- --
Proceeds from sale of securities 3,357,747 4,407,707 2,670,224 -- -- --
Cost of securities sold (3,357,747) (4,407,707) (2,670,224) -- -- --
-------- -------- -------- -------- --------- --------
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized
appreciation or
depreciation on investments -- -- -- (74,157) (74,946) 161,453
-------- -------- -------- -------- --------- --------
Net gain (loss) on investments -- -- -- (74,157) (74,946) 161,453
-------- -------- -------- -------- --------- --------
Net increase (decrease) in net
assets resulting from operations $32,479 $69,860 $96,543 $(81,249) $18,546 $254,331
======== ======== ======== ======== ========= ========
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
Investment income (loss): 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
Dividend income $ -- $39,586 $ -- $7,143 $ -- $19,972
Adverse mortality and expense
charges (note 3) (13,797) (14,665) (1,492) (1,313) (2,326) (1,176)
-------- ------- ------- ------- ------ -------
Net investment income (loss) (13,797) 24,921 (1,492) 5,830 (2,326) 18,796
-------- ------- ------- ------- ------ -------
Realized and unrealized gain(loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- -- -- -- -- --
Proceeds from sale of securities 68,850 121,135 17,033 27,789 52,028 19,161
Cost of securities sold (62,177) (113,341) (17,004) (28,337) (53,136) (18,440)
-------- ------- ------- ------- ------ -------
Net realized gain (loss) on
security transactions 6,673 7,794 29 (548) (1,108) 721
Net change in unrealized
appreciation or
depreciation on investments 372,023 173,915 22,078 (11,176) 12,525 (7,679)
-------- ------- ------- ------- ------ -------
Net gain (loss) on investments 378,696 181,709 22,107 (11,724) 11,417 (6,958)
-------- ------- ------- ------- ------ -------
Net increase (decrease) in net
assets resulting from operations $364,899 $206,630 $20,615 $(5,894) $9,091 $11,838
======== ======= ======= ======= ====== =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Operations
Six Months Ended June 30, 1997 and the Years Ended December 31, 1996 and 1995
(Unaudited)
EMERGING GROWTH SUBACCOUNT
Investment income (loss): 1997 1996*
---- -----
<S> <C> <C>
Dividend income $ -- $9,859
Adverse mortality and expense
charges (note 3) (7,158) (4,378)
------- -------
Net investment income (loss) (7,158) 5,481
------- -------
Realized and unrealized gain(loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- --
Proceeds from sale of securities 135,572 213,154
Cost of securities sold (135,767) (201,866)
------- -------
Net realized gain (loss) on
security transactions (195) 11,288
Net change in unrealized
appreciation or depreciation
on investments 179,850 2,792
------- -------
Net gain (loss) on investments 179,655 14,080
------- -------
Net increase (decrease) in net
assets resulting from operations $172,497 $19,561
======= =======
See accompanying notes to financial statements.
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Changes in Net Assets
Six Months Ended June 30, 1997 and the Years Ended December 31, 1996 and 1995
(Unaudited)
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
Operations: 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $(40,931) $484,177 $282,062 $(39,778) $1,466,828 $2,529,580
Net realized gain (loss) on
security transactions 187,774 146,254 321,332 399,134 401,448 152,866
Net change in unrealized
appreciation or
depreciation on investments 2,204,868 1,662,956 1,332,754 7,452,710 6,026,093 4,764,093
---------- ---------- --------- ----------- ----------- -----------
Change in net assets from
operations 2,351,711 2,293,387 1,936,148 7,441,521 7,894,369 7,446,539
---------- ---------- --------- ----------- ----------- -----------
Capital unit transactions
(note 5):
Proceeds from sale of units 4,525,440 7,622,148 5,340,463 8,284,024 13,835,588 10,831,868
Cost of units repurchased (2,319,500) (3,351,383) (4,440,885) (5,210,387) (8,554,478) (6,090,704)
---------- ---------- --------- ----------- ----------- -----------
Change in net assets from
capital unit transactions 2,205,940 4,270,765 899,578 3,073,637 5,281,110 4,741,164
---------- ---------- --------- ----------- ----------- -----------
Increase (decrease) in net
assets 4,557,651 6,564,152 2,835,726 10,515,158 13,175,479 12,187,703
Net assets:
Beginning of period 15,549,917 8,985,765 6,150,039 47,753,332 34,577,853 22,390,150
---------- ---------- --------- ----------- ----------- -----------
End of period $20,107,568 $15,549,917 $8,985,765 $58,268,490 $47,753,332 $34,577,853
========== ========== ========= =========== =========== ===========
BALANCED SUBACCOUNT BOND SUBACCOUNT
Operations: 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
Net investment income (loss) $258,336 $2,504,140 $2,933,071 $24,178 $113,928 $184,582
Net realized gain (loss) on
security transactions 361,589 408,100 256,723 1,285 51,143 19,722
Net change in unrealized
appreciation or
depreciation on investments 3,357,410 1,724,491 4,759,298 29,511 (127,295) 326,701
----------- ----------- ----------- ---------- ---------- ----------
Change in net assets from
operations 3,977,335 4,636,731 7,949,092 53,689 37,776 531,005
----------- ----------- ----------- ---------- ---------- ----------
Capital unit transactions
(note 5):
Proceeds from sale of units 5,110,976 11,796,373 11,658,626 329,205 700,575 1,036,840
Cost of units repurchased (5,450,444) (10,399,963) (9,247,633) (304,929) (2,103,924) (1,180,288)
----------- ----------- ----------- ---------- ---------- ----------
Change in net assets from
capital unit transactions (339,468) 1,396,410 2,410,993 24,275 (1,403,349) (143,446)
----------- ----------- ----------- ---------- ---------- ----------
Increase (decrease) in net
assets 3,637,867 6,033,141 10,360,085 77,964 (1,365,573) 387,559
Net assets:
Beginning of period 52,350,716 46,317,575 35,957,490 2,417,523 3,783,096 3,395,537
----------- ----------- ----------- ---------- ---------- ----------
End of period $55,988,583 $52,350,716 $46,317,575 $2,495,487 $2,417,523 $3,783,096
=========== =========== =========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Changes in Net Assets
Six Months Ended June 30, 1997 and the Years Ended December 31, 1996 and 1995
(Unaudited)
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Operations: 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $32,479 $69,860 $96,543 $(7,092) $93,492 $92,878
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized
appreciation or depreciation
on investments -- -- -- (74,157) (74,946) 161,453
--------- --------- --------- --------- ---------- ----------
Change in net assets from
operations 32,479 69,860 96,543 (81,249) 18,546 254,331
--------- --------- --------- --------- ---------- ----------
Capital unit transactions
(note 5):
Proceeds from sale of units 3,293,143 4,325,194 2,156,885 223,592 794,517 550,180
Cost of units repurchased (3,899,368) (4,801,186) (3,049,819) (223,592) (773,892) (531,450)
--------- --------- --------- --------- ---------- ----------
Change in net assets from
capital unit transactions (606,225) (475,992) (892,934) -- 20,625 18,730
--------- --------- --------- --------- ---------- ----------
Increase (decrease) in net
assets (573,746) (406,132) (796,391) (81,249) 39,171 273,061
Net assets:
Beginning of period 1,727,576 2,133,708 2,930,099 1,583,411 1,544,240 1,271,179
--------- --------- --------- --------- ---------- ----------
End of period $1,153,830 $1,727,576 $2,133,708 $1,502,162 $1,583,411 $1,544,240
========= ========= ========= ========= ========== ==========
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
Operations: 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $(13,797) $24,921 $(1,492) $5,830 $(2,326) $18,796
Net realized gain (loss) on
security transactions 6,673 7,794 29 (548) (1,108) 721
Net change in unrealized
appreciation or depreciation
on investments 378,696 173,915 22,078 (11,724) 12,525 (7,679)
-------- -------- -------- -------- ------- -------
Change in net assets from
operations 364,899 206,630 20,615 (5,894) 9,091 11,838
-------- -------- -------- -------- ------- -------
Capital unit transactions
(note 5):
Proceeds from sale of units 1,156,515 2,207,995 825,895 68,194 144,986 244,058
Cost of units repurchased (340,000) (559,568) (94,304) (44,799) (84,667) (36,981)
-------- -------- -------- -------- ------- -------
Change in net assets from
capital unit transactions 816,515 1,648,427 731,591 23,297 60,319 207,077
-------- -------- -------- -------- ------- -------
Increase (decrease) in net
assets 1,181,414 1,855,057 752,206 17,503 69,410 218,915
Net assets:
Beginning of period 2,607,263 752,206 -- 288,325 218,915 --
-------- -------- -------- -------- ------- -------
End of period $3,788,677 $2,607,263 $752,206 $305,828 $288,325 $218,915
======== ======== ======== ======== ======= =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statement of Changes in Net Assets
Six Months Ended June 30, 1997 and the Years Ended December 31, 1996 and 1995
(Unaudited)
EMERGING GROWTH SUBACCOUNT
Operations: 1997 1996*
---- -----
Net investment income (loss) $(7,158) $5,481
Net realized gain (loss) on
security transactions (195) 11,288
Net change in unrealized appreciation
or depreciation on investments 179,655 2,792
--------- ---------
Change in net assets from
operations 172,497 19,561
--------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 1,127,182 1,517,927
Cost of units repurchased (327,277) (346,909)
--------- ---------
Change in net assets from capita l
unit transactions 799,905 1,171,018
--------- ---------
Increase (decrease) in net assets 972,402 1,190,579
Net assets:
Beginning of period 1,190,579 --
--------- ---------
End of period $2,162,981 $1,190,579
========= =========
See accompanying notes to financial statements.
*The data is for the period beginning May 1, 1996 (date of initial activity).
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Notes to Financial Statements
(1) Organization
The CUNA Mutual Life Variable Account (the Account) is a unit investment
trust registered under the Investment Company Act of 1940 with the
Securities and Exchange Commission. The Account was established as a
separate investment account within CUNA Mutual Life Insurance Company,
formerly known as Century Life of America, to receive and invest net
premiums paid under flexible premium variable life insurance policies.
Although the assets of the Account are the property of CUNA Mutual Life
Insurance Company, those assets attributable to the policies are not
chargeable with liabilities arising out of any other business which CUNA
Mutual Life Insurance Company may conduct.
The net assets maintained in the Account attributable to the policies
provide the base for the periodic determination of the increased or
decreased benefits under the policies. The net assets may not be less than
the amount required under state insurance law to provide certain death
benefits and other policy benefits. Additional assets are held in CUNA
Mutual Life Insurance Company's general account to cover death benefits in
excess of the accumulated value.
(2) Significant Accounting Policies
Investments
The Account currently is divided into nine subaccounts but may, in the
future, include additional subaccounts. Each subaccount invests exclusively
in shares of a single underlying fund. (The term fund is used to mean an
investment portfolio sometimes called a series, i.e., Ultra Series Fund, T.
Rowe Price International Fund, Inc., MFSAE Variable Insurance Trusto, or
any other open-end management investment company or unit investment trust
in which a subaccount invests.) The income, gains and losses, realized or
unrealized, from the assets allocated to each subaccount are credited to or
charged against that subaccount without regard to income, gains or losses
from any other subaccount.
The Account invests in shares of Ultra Series Fund, T. Rowe Price
International Fund, Inc., and MFSAE Variable Insurance Trusto. Each is a
management investment company of the series type with one or more funds.
Each is registered with the SEC as an open-end, management investment
company. Such registration does not involve supervision of the management
or investment practices or policies of the companies or their funds by the
SEC.
Ultra Series Fund currently has six funds available as investment options
under the policies while T. Rowe Price International Fund, Inc., has one
and MFSAE Variable Insurance Trusto has two funds available as an
investment option. MFSAE Variable Insurance Trusto also has other funds
that are not available under the policies. These fund companies may, in the
future, create additional funds that may or may not be available as
investment options under the policies. Each fund has its own investment
objectives and the income, gains, and losses for each fund are determined
separately for that fund.
CIMCO Inc. (CIMCO) serves as the investment advisor to the Ultra Series
Fund and manages its assets in accordance with general policies and
guidelines established by the board of trustees of the Ultra Series Fund.
CUNA Mutual Life Insurance Company owns one half of CIMCO's outstanding
stock and one half is owned indirectly by CUNA Mutual Insurance Society.
Rowe Price-Fleming International, Inc. (RPFI) serves as the Investment
Advisor to the International Stock Portfolio and manages its assets in
accordance with general policies and guidelines established by the board of
directors of T. Rowe Price International Fund, Inc. RPFI was founded in
1979 as a joint venture between T. Rowe Price Associates, Inc. and Robert
Fleming Holdings Limited.
Massachusetts Financial Services Company (MFS) serves as the Investment
Advisor to the MFS World Governments Series and Emerging Growth Series and
manages its assets in accordance with general policies and guidelines
established by the board of trustees of MFSAE Variable Insurance Trusto.
MFS is a subsidiary of Sun Life Assurance Company of Canada (U.S.) which,
in turn, is a subsidiary of Sun Life Assurance Company of Canada.
The assets of each fund are held separate from the assets of the other
funds, and each fund is offered at a price equal to its respective net
asset value per share, without sales charge. Dividends and capital gain
distributions from each fund are reinvested in that fund. Investments in
shares of the funds are stated at market value which is the net asset value
per share as determined by the funds. Realized gains and losses from
security transactions are reported on an average cost basis.
Dividend income is recorded on the ex-dividend date.
Federal Income Taxes
The operations of the Account form a part of the operations of CUNA Mutual
Life Insurance Company and are not taxed separately. CUNA Mutual Life
Insurance Company does not initially expect to incur any income tax upon
the earnings or the realized capital gains attributable to the Account.
Accordingly, no charge for income tax is currently being made to the
Account. If such taxes are incurred by CUNA Mutual Life Insurance Company
in the future, a charge to the Account may be assessed.
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) Fees and Charges
Organization Costs
CUNA Mutual Life Insurance Company absorbed all organization expenses of
the Account.
Policy Charges
In addition to charges for state taxes, which reduce premiums prior to the
allocation of net premiums to the subaccounts of the Account, the following
charges may be deducted by CUNA Mutual Life Insurance Company by redeeming
an appropriate number of units for each policy.
Administrative Fee: CUNA Mutual Life Insurance Company will have primary
responsibility for the administration of the Account and the policies
issued. As reimbursement for these expenses, CUNA Mutual Life Insurance
Company may assess each policy a monthly administrative fee. For additional
detail, see schedule of expenses and charges in the prospectus.
Deferred Contingent Sales and Administrative Charges: The sales and
administrative expenses incurred when a policy is issued are deferred
(Deferred Charges) until the policy is surrendered. Such charges are not
collected at all if the policy is held for nine years, or if the insured
dies during that period. In no instance will the charge exceed 30 percent
of the lesser of premiums paid or the Guideline Annual Premium (as defined
under the Investment Company Act of 1940) of the policy. The Deferred
Charges are normally built up in twelve equal increments during the first
policy year. Beginning on the second policy anniversary, incremental
amounts are released by allocations back to the subaccounts on each
anniversary until the tenth policy anniversary when all remaining Deferred
Charges are released. All amounts in the Deferred Charges Account are held
and interest credited to the policy at a minimum rate of 4 percent with
CUNA Mutual Life Insurance Company crediting additional amounts at its
discretion.
Policy Fee: CUNA Mutual Life Insurance Company will incur first-year
expenses upon issue of a policy, and will assess each policy a monthly
policy fee to recover these expenses.
Cost of Insurance and Additional Benefits Provided: CUNA Mutual Life
Insurance Company will assume the responsibility for providing the
insurance benefits provided in the policy. The cost of insurance will be
determined each month based upon the applicable cost of insurance rates and
the net amount at risk. The cost of insurance can vary from month to month
since the determination of both the insurance rate and the net amount at
risk depends upon a number of variables as described in the Account's
prospectus.
Variable Account Charges
Mortality and Expense Risk Charge: CUNA Mutual Life Insurance Company will
deduct daily a mortality and expense risk charge from the Account at an
annual rate of .90 percent of the average daily net asset value of the
Account. These charges will be deducted by CUNA Mutual Life Insurance
Company in return for its assumption of risks associated with adverse
mortality experience or excess administrative expenses in connection with
policies issued.
(4) Investment Transactions
The cost of shares purchased, including reinvestment of dividend
distributions, during the six months ended June 30, 1997, was as follows:
Growth and Income Stock Fund...................... $4,607,259
Capital Appreciation Stock Fund................... 3,118,813
Balanced Fund..................................... 2,570,705
Bond Fund......................................... 191,802
Money Market Fund................................. 2,787,962
Treasury 2000 Fund................................ --
International Stock Portfolio..................... 878,827
World Governments Series.......................... 57,657
Emerging Growth................................... 932,116
----------
$15,145,141
==========
(5) Unit Activity from Contract Transactions
Transactions in units of each subaccount of the Account for the years ended
December 31, 1996, 1995, and 1994 and for the six-month period ended June
30, 1997 were as follows:
<TABLE>
<CAPTION>
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
Units outstanding at
<S> <C> <C> <C> <C> <C>
December 31, 1994 588,501 767,867 1,433,037 160,875 179,387
Units sold 437,510 320,880 420,975 45,571 129,950
Units repurchased (362,742) (180,926) (331,119) (51,065) (184,225)
-------- -------- --------- ------- --------
Units outstanding at
December 31, 1995 663,269 907,821 1,522,893 155,381 125,112
Units sold 516,098 337,323 375,764 29,061 249,298
Units repurchased (225,833) (208,539) (331,106) (87,030) (276,956)
-------- -------- --------- ------- --------
Units outstanding at
December 31, 1996 953,534 1,036,605 1,567,551 97,412 97,454
Units sold 261,001 168,162 148,116 13,184 184,105
Units repurchased (135,136) (106,539) (158,323) (12,212) (217,745)
-------- -------- --------- ------- --------
Units outstanding at
June 30, 1997 $1,079,399 $1,098,228 $1,557,344 $98,384 $63,814
======== ======== ========= ======= ========
Treasury International World Emerging
2000 Stock Governments Growth
Subaccount Subaccount Subaccount Subaccount*
Units outstanding at
December 31, 1994 191,747 -- -- --
Units sold 74,132 80,023 22,558 --
Units repurchased (71,746) (9,147) (3,339) --
-------- -------- --------- -------
Units outstanding at
December 31, 1995 194,133 70,876 19,219 --
Units sold 102,713 194,181 12,790 151,261
Units repurchased (100,176) (48,968) (7,455) (33,490)
-------- -------- --------- -------
Units outstanding at
December 31, 1996 196,670 216,089 24,554 117,771
Units sold 27,700 94,036 5,977 108,170
Units repurchased (27,700) (27,595) (3,915) (31,959)
-------- -------- --------- -------
Units outstanding at
June 30, 1997 $196,670 $282,530 $26,616 $193,982
======== ======== ========= =======
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
(6) Condensed Financial Information
The table below gives per unit information about the financial history of
each subaccount for each period.
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
1997 1996 1995 1994 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $16.31 $13.55 $10.45 $10.00 $46.07 $38.09 $29.16 $29.01 $25.73
End of period 18.63 16.31 13.55 10.45 53.06 46.07 38.09 29.16 29.01
Percentage increase
in unit value
during period* 14.2% 20.4% 29.7% 4.5% 15.2% 21.0% 30.6% 0.5% 12.8%
Number of units
outstanding at
end of period 1,079,399 953,534 663,269 588,501 1,098,228 1,036,605 907,821 767,867 612,819
BALANCED SUBACCOUNT BOND SUBACCOUNT
1997 1996 1995 1994 1993 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $33.40 $30.41 $25.09 $25.44 $23.23 $24.82 $24.35 $21.11 $21.96 $20.35
End of period 35.95 33.40 30.41 25.09 25.44 25.36 24.82 24.35 21.11 21.96
Percentage increase
in unit value
during period* 7.6% 9.8% 21.2% -1.4% 9.5% 2.2% 1.9% 15.4% -3.9% 7.9%
Number of units
outstanding at
end of period 1,557,344 1,567,551 1,522,893 1,433,037 1,310,167 98,384 97,411 155,381 160,875 164,733
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
1997 1996 1995 1994 1993 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $17.73 $17.05 $16.33 $15.91 $15.67 $8.05 $7.95 $6.63 $7.20 $6.29
End of period 18.08 17.73 17.05 16.33 15.91 8.20 8.05 7.95 6.63 7.20
Percentage increase
in unit value
during period* 2.0% 4.0% 4.4% 2.6% 1.5% 1.9% 1.3% 19.9% -7.9% 14.5%
Number of units
outstanding at
end of period 63,814 125,112 179,387 149,181 201,170 196,670 194,133 191,747 189,107 186,690
INTERNATIONAL STOCK SUBACCOUNT WORLD GOVERNMENTS SUBACCOUNT
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $12.07 $10.61 $10.00 $11.74 $11.39 $10.00
End of period 13.41 12.07 10.61 11.49 11.74 11.39
Percentage increase
in unit value
during period* 11.1% 13.7% 6.1% -2.1% 3.1% 13.9%
Number of units
outstanding at
end of period 282,530 216,089 70,876 26,616 24,554 19,219
EMERGING GROWTH SUBACCOUNT**
1997 1996
---- ----
Net asset value:
<S> <C> <C>
Beginning of period $10.11 $10.00
End of period 11.15 10.11
Percentage increase
in unit value
during period* 10.3% 1.1%
Number of units
outstanding at
end of period 193,982 117,771
For the Money Market Subaccount, the "seven-day average yield" for the
seven days ended June 30, 1997, was 4.2% and the "effective yield" for that
period was 4.3%.
<FN>
*The amount of premium invested in CUNA Mutual Life Variable Account is the
amount remaining after the policy charges described in footnote 3 have been
deducted. The policy charges have not been taken into account in this
calculation. Inclusion of the policy charges would reduce the percentage
increase in unit value during the period.
**The data is for the period beginning May 1, 1996 (date of initial
activity).
</FN>
</TABLE>
