Dear Policyowner:
The U.S. stock market has continued its unprecedented run of exceptional
performance, with double digit returns for the first six months of 1999.
Emerging international markets have come roaring back after some rough going in
1998 and the more established international markets, like those in Europe, also
saw positive returns in the first half of 1999. Results in the subaccounts of
MEMBERS(R) Variable Universal Life are reflective of these market forces:
Percent change
in Unit Value from
Subaccount 12/31/98 through 6/30/99
- --------------------------------------------------------------------------------
Money Market 1.8%
Treasury 2000 0.6%
Bond -0.7%
Balanced 9.8%
Growth and Income Stock 20.0%
Capital Appreciation Stock 12.3%
International Stock 3.3%
Global Governments -3.4%
Emerging Growth 12.4%
- --------------------------------------------------------------------------------
This booklet contains the semiannual reports for the various components of
MEMBERS(R) Variable Universal Life. The first section contains the following
reports for the CUNA Mutual Life Variable Account:
Statements of Assets and Liabilities ........................page 2
Statements of Operations ....................................page 4
Statements of Changes in Net Assets .........................page 7
Notes to the Financial Statements ...........................page 10
The subaccounts of CUNA Mutual Life Variable Account invest in mutual funds. The
returns shown above reflect the deduction of the separate account level charges.
Returns at the separate account level shown above are slightly lower than at the
mutual fund level as a result of these charges.
The remaining sections of this booklet cover the mutual funds which include
discussions of the funds' results and the managers' outlooks. The second section
contains the report for the Ultra Series Fund which includes the Money Market
Fund, Treasury 2000 Fund, Bond Fund, Balanced Fund, Growth and Income Stock
Fund, and the Capital Appreciation Stock Fund. The third section contains the
report for the International Stock Portfolio of the T. Rowe Price International
Series, Inc., and the last section contains the reports for the MFS(R) Global
Governments SeriesSM and the MFS(R) Emerging Growth SeriesSM of the MFS(R)
Variable Insurance TrustSM.
We believe that MEMBERS(R) Variable Universal Life can be a great way to meet
your life insurance protection needs, while providing the opportunity for long
term asset accumulation. We look forward to serving your life insurance and
asset accumulation needs through MEMBERS(R) Variable Universal Life.
Thank you for giving us that opportunity.
Sincerely,
/s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer
CUNA Mutual Life Insurance Company
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Assets and Liabilities
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Money Treasury Growth and
Market 2000 Bond Balanced Income Stock
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount
Investments in Ultra Series Fund:
(note 2)
<S> <C> <C> <C> <C> <C>
Money Market Fund,
3,136,335 shares at net asset value of
$1.00 per share (cost $3,136,335) $3,136,335 $ -- $ -- $ -- $ --
Treasury 2000 Fund,
184,870 shares at net asset value
of $10.03 per share (cost $1,615,171) -- 1,854,226 -- -- --
Bond Fund,
372,097 shares at net asset value
of $10.40 per share (cost $3,889,863) -- -- 3,869,724 -- --
Balanced Fund,
3,776,751 shares at net asset value
of $20.53 per share (cost $54,829,046) -- -- -- 77,539,044 --
Growth and Income Stock Fund,
2,850,946 shares at net asset value
of $36.59 per share (cost $56,685,015) -- -- -- -- 104,333,305
---------- ---------- ---------- ----------- ------------
Total assets $3,136,335 $1,854,226 $3,869,724 $77,539,044 $104,333,305
---------- ---------- ---------- ----------- ------------
Liabilities:
Accrued adverse mortality and
expense charges 2,657 9,587 3,133 62,040 82,765
---------- ---------- ---------- ----------- ------------
Total liabilities 2,657 9,587 3,133 62,040 82,765
---------- ---------- ---------- ----------- ------------
Net assets 3,133,678 1,844,639 3,866,591 77,477,004 104,250,540
========== ========== ========== =========== ============
Units outstanding (note 5) 159,983 201,769 139,957 1,623,167 1,237,595
========== ========== ========== =========== ============
Net asset value per unit $ 19.59 $ 9.14 $ 27.63 $ 47.73 $ 84.24
========== ========== ========== =========== ============
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Assets and Liabilities
June 30, 1999
(Unaudited)
Capital
Appreciation International Global Emerging
Stock Stock Governments Growth
Assets: Subaccount Subaccount Subaccount Subaccount
Investments in Ultra Series Fund:
(note 2)
<S> <C> <C> <C> <C>
Capital Appreciation Stock Fund,
1,511,324 shares at net asset value of
$25.00 per share (cost $22,503,095) $37,784,116 $ -- $ -- $ --
Investments in T. Rowe Price
International Fund, Inc.:
International Stock Portfolio,
424,341 shares at net asset value of
$15.07 per share (cost $5,458,145) -- 6,394,821 -- --
Investments in MFS(R) Variable Insurance TrustSM:
Global Governments Series,
78,601 shares at net asset value of
$9.99 per share (cost $806,018) -- -- 785,229 --
Investments in MFS(R) Variable Insurance TrustSM:
Emerging Growth Series,
361,665 shares at net asset value of
$24.22 per share (cost $6,017,656) -- -- -- 8,759,516
---------- ---------- ---------- ----------
Total assets $37,784,116 $6,394,821 $785,229 $8,759,516
---------- ---------- ---------- ----------
Liabilities:
Accrued adverse mortality and
expense charges 30,164 5,166 637 6,785
---------- ---------- ---------- ----------
Total liabilities 30,164 5,166 637 6,785
---------- ---------- ---------- ----------
Net assets 37,753,952 6,389,655 784,592 8,752,731
========== ========== ========== ==========
Units outstanding (note 5) 1,318,804 436,700 65,948 479,712
========== ========== ========== ==========
Net asset value per unit $28.63 $14.63 $11.90 $18.25
========== ========== ========== ==========
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Operations
For the six months ended June 30, 1999 and the years ended December 31, 1998 and 1997
(Unaudited)
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Investment income (loss): 1999 1998 1997 1999 1998 1997
----------- ----------- ----------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 76,896 $ 123,985 $ 85,594 $ -- $ 106,391 $ 106,851
Adverse mortality and expense charges
(note 3) (15,432) (22,312) (15,448) (8,201) (15,826) (14,583)
----------- ----------- ----------- -------- --------- ---------
Net investment income (loss) 61,464 101,673 70,146 (8,201) 90,465 92,268
----------- ----------- ----------- -------- --------- ---------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- -- -- -- -- --
Proceeds from sale of securities 1,968,342 2,979,908 4,634,860 -- -- --
Cost of securities sold (1,968,342) (2,979,908) (4,634,860) -- -- --
----------- ----------- ----------- -------- --------- ---------
Net realized gain (loss) on security
transactions -- -- -- -- -- --
Net change in unrealized appreciation
or depreciation on investments -- -- -- 18,322 21,682 1,846
----------- ----------- ----------- -------- --------- ---------
Net gain (loss) on investments -- -- -- 18,322 21,682 1,846
----------- ----------- ----------- -------- --------- ---------
Net increase (decrease) in net assets
resulting from operations $ 61,464 $ 101,673 $ 70,146 $ 10,121 $ 112,147 $ 94,114
=========== =========== =========== ======== ========= =========
BOND SUBACCOUNT BALANCED SUBACCOUNT
Investment income (loss): 1999 1998 1997 1999 1998 1997
--------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 52,054 $ 196,337 $ 136,739 $ 450,441 $ 1,934,712 $ 2,062,026
Adverse mortality and expense charges
(note 3) (17,109) (30,006) (23,285) (328,160) (577,128) (509,762)
--------- --------- --------- ----------- ----------- -----------
Net investment income (loss) 34,945 166,331 113,454 122,281 1,357,584 1,552,264
--------- --------- --------- ----------- ----------- -----------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions 57 2,477 379 -- 3,744 758,320
Proceeds from sale of securities 386,578 441,318 402,615 2,372,537 4,012,722 4,525,247
Cost of securities sold (382,478) (426,398) (394,979) (1,727,342) (3,159,159) (3,785,014)
--------- --------- --------- ----------- ----------- -----------
Net realized gain (loss) on security
transactions 4,157 17,397 8,015 645,195 857,307 1,498,553
Net change in unrealized appreciation
or depreciation on investments (66,161) (14,556) 41,691 6,054,615 5,340,950 5,202,066
--------- --------- --------- ----------- ----------- -----------
Net gain (loss) on investments (62,004) 2,841 49,706 6,699,810 6,198,257 6,700,619
--------- --------- --------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ($ 27,059) $ 169,172 $ 163,160 $ 6,822,091 $ 7,555,841 $ 8,252,883
========= ========= ========= =========== =========== ===========
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Operations
For the six months ended June 30, 1999 and the years ended December 31, 1998 and 1997
(Unaudited)
GROWTH AND INCOME STOCK SUBACCOUNT CAPITAL APPRECIATION STOCK SUBACCOUNT
Investment income (loss): 1999 1998 1997 1999 1998 1997
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 265,776 $ 869,525 $ 778,858 $ 10,602 $ 88,433 $ 119,794
Adverse mortality and expense charges
(note 3) (420,525) (691,564) (527,025) (156,180) (259,874) (182,627)
------------ ------------ ------------ ----------- ----------- -----------
Net investment income (loss) (154,749) 177,961 251,833 (145,578) (171,441) (62,833)
------------ ------------ ------------ ----------- ----------- -----------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions 377,739 3,106,051 1,145,587 19,297 769,968 317,275
Proceeds from sale of securities 1,951,606 3,497,748 3,033,581 1,391,036 1,770,807 1,795,596
Cost of securities sold (1,149,740) (2,160,207) (2,103,099) (886,566) (1,192,638) (1,354,057)
------------ ------------ ------------ ----------- ----------- -----------
Net realized gain (loss) on security
transactions 1,179,605 4,433,592 2,076,069 523,767 1,348,137 758,814
Net change in unrealized appreciation
or depreciation on investments 16,204,582 7,377,335 12,852,455 3,713,367 4,151,868 4,563,309
------------ ------------ ------------ ----------- ----------- -----------
Net gain (loss) on investments 17,834,187 11,820,927 14,928,524 4,237,134 5,500,005 5,322,123
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 17,229,438 $ 11,998,888 $ 15,180,357 $ 4,091,556 $ 5,328,564 $ 5,259,290
============ ============ ============ =========== =========== ===========
INTERNATIONAL STOCK SUBACCOUNT GLOBAL GOVERNMENTS SUBACCOUNT
Investment income (loss): 1999 1998 1997 1999 1998 1997
--------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ -- $ 90,596 $ 99,113 $ 35,810 $ 8,821 $ 7,143
Adverse mortality and expense
charges (note 3) (27,241) (47,908) (32,130) (3,253) (6,487) (3,401)
--------- --------- --------- --------- -------- --------
Net investment income (loss) (27,241) 42,688 66,983 32,557 2,334 3,742
--------- --------- --------- --------- -------- --------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- -- -- -- -- --
Proceeds from sale of securities 297,424 491,409 235,721 107,031 92,387 65,919
Cost of securities sold (257,664) (442,671) (211,895) (102,954) (90,661) (66,515)
--------- --------- --------- --------- -------- --------
Net realized gain (loss) on security
transactions 39,760 48,738 23,826 4,077 1,726 (596)
Net change in unrealized appreciation
or depreciation on investments 194,284 608,851 (62,452) (64,471) 44,633 (5,796)
--------- --------- --------- --------- -------- --------
Net gain (loss) on investments 234,044 657,589 (38,626) (60,394) 46,359 (6,392)
--------- --------- --------- --------- -------- --------
Net increase (decrease) in net assets
resulting from operations $ 206,803 $ 700,277 $ 28,357 ($ 27,837) $ 48,693 ($ 2,650)
========= ========= ========= ========= ======== ========
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Operations
For the six months ended June 30, 1999 and the years ended December 31, 1998 and 1997
(Unaudited)
EMERGING GROWTH SUBACCOUNT
Investment income (loss): 1999 1998 1997
--------- ----------- ---------
<S> <C> <C> <C>
Dividend income $ -- $ 45,309 $ --
Adverse mortality and expense charges
(note 3) (35,336) (48,583) (21,660)
--------- ----------- ---------
Net investment income (loss) (35,336) (3,274) (21,660)
--------- ----------- ---------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- -- --
Proceeds from sale of securities 486,979 448,520 234,899
Cost of securities sold (353,109) (373,845) (222,640)
--------- ----------- ---------
Net realized gain (loss) on security
transactions 133,870 74,675 12,259
Net change in unrealized appreciation
or depreciation on investments 830,039 1,524,641 384,388
--------- ----------- ---------
Net gain (loss) on investments 963,909 1,599,316 396,647
--------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations $ 928,573 $ 1,596,042 $ 374,987
========= =========== =========
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Changes in Net Assets
For the six months ended June 30, 1999 and the years ended December 31, 1998 and 1997
(Unaudited)
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Operations: 1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ 61,464 $ 101,673 $ 70,146 ($ 8,201) $ 90,465 $ 92,268
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized appreciation
or depreciation on investments -- -- -- 18,322 21,682 1,846
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
operations 61,464 101,673 70,146 10,121 112,147 94,114
----------- ----------- ----------- ----------- ----------- -----------
Capital unit transactions (note 5):
Proceeds from sale of units 1,623,638 4,485,112 6,190,640 221,100 447,349 621,004
Cost of units repurchased (2,166,691) (3,592,636) (5,367,244) (221,100) (424,204) (599,303)
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from capital
unit transactions (543,053) 892,476 823,396 -- 23,145 21,701
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets (481,589) 994,149 893,542 10,121 135,292 115,815
Net assets:
Beginning of period 3,615,267 2,621,118 1,727,576 1,834,518 1,699,226 1,583,411
----------- ----------- ----------- ----------- ----------- -----------
End of period $ 3,133,678 $ 3,615,267 $ 2,621,118 $ 1,844,639 $ 1,834,518 $ 1,699,226
=========== =========== =========== =========== =========== ===========
BOND SUBACCOUNT BALANCED SUBACCOUNT
Operations: 1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ 34,945 $ 166,331 $ 113,454 $ 122,281 $ 1,357,584 $ 1,552,264
Net realized gain (loss) on
security transactions 4,157 17,397 8,015 645,195 857,307 1,498,553
Net change in unrealized appreciation
or depreciation on investments (66,161) (14,556) 41,691 6,054,615 5,340,950 5,202,066
----------- ----------- ----------- ------------ ------------ ------------
Change in net assets from
operations (27,059) 169,172 163,160 6,822,091 7,555,841 8,252,883
----------- ----------- ----------- ------------ ------------ ------------
Capital unit transactions (note 5):
Proceeds from sale of units 830,057 1,182,649 1,162,322 8,256,338 10,811,007 10,763,242
Cost of units repurchased (553,422) (772,448) (705,363) (6,361,674) (10,309,524) (10,663,916)
----------- ----------- ----------- ------------ ------------ ------------
Change in net assets from capital
unit transactions 276,635 410,201 456,959 1,894,664 501,483 99,326
----------- ----------- ----------- ------------ ------------ ------------
Increase (decrease) in net assets 249,576 579,373 620,119 8,716,755 8,057,324 8,352,209
Net assets:
Beginning of period 3,617,015 3,037,642 2,417,523 68,760,249 60,702,925 52,350,716
----------- ----------- ----------- ------------ ------------ ------------
End of period $ 3,866,591 $ 3,617,015 $ 3,037,642 $ 77,477,004 $ 68,760,249 $ 60,702,925
=========== =========== =========== ============ ============ ============
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Changes in Net Assets
For the six months ended June 30, 1999 and the years ended December 31, 1998 and 1997
(Unaudited)
GROWTH AND INCOME STOCK SUBACCOUNT CAPITAL APPRECIATION SUBACCOUNT
Operations: 1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ($ 154,749) $ 177,961 $ 251,833 ($ 145,578) ($ 171,441) ($ 62,833)
Net realized gain (loss) on
security transactions 1,179,605 4,443,592 2,076,069 523,767 1,348,137 758,814
Net change in unrealized appreciation
or depreciation on investments 16,204,582 7,377,335 12,852,455 3,713,367 4,151,868 4,563,309
------------- ------------ ------------ ------------ ------------ ------------
Change in net assets from
operations 17,229,438 11,998,888 15,180,357 4,091,556 5,328,564 5,259,290
------------- ------------ ------------ ------------ ------------ ------------
Capital unit transactions (note 5):
Proceeds from sale of units 9,063,876 15,135,142 16,677,681 4,146,549 7,807,048 9,240,958
Cost of units repurchased (6,734,453) (11,770,989) (10,282,732) (3,549,891) (5,420,620) (4,699,419)
------------- ------------ ------------ ------------ ------------ ------------
Change in net assets from capital
unit transactions 2,329,423 3,364,153 6,394,949 596,658 2,386,428 4,541,539
------------- ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets 19,558,861 15,363,041 21,575,306 4,688,214 7,714,992 9,800,829
Net assets:
Beginning of period 84,691,679 69,328,638 47,753,332 33,065,738 25,350,746 15,549,917
------------- ------------ ------------ ------------ ------------ ------------
End of period $ 104,250,540 $ 84,691,679 $ 69,328,638 $ 37,753,952 $ 33,065,738 $ 25,350,746
============= ============ ============ ============ ============ ============
INTERNATIONAL STOCK SUBACCOUNT GLOBAL GOVERNMENTS SUBACCOUNT
Operations: 1999 1998 1997 1999 1998 1997
----------- ----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ($ 27,241) $ 42,688 $ 66,983 $ 32,557 $ 2,334 $ 3,742
Net realized gain (loss) on
security transactions 39,760 48,738 23,826 4,077 1,726 (596)
Net change in unrealized appreciation
or depreciation on investments 194,284 608,851 (62,452) (64,471) 44,633 (5,796)
----------- ----------- ----------- --------- --------- ---------
Change in net assets from
operations 206,803 700,277 28,357 (27,837) 48,693 (2,650)
----------- ----------- ----------- --------- --------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 1,024,449 1,897,345 2,721,533 194,808 85,855 530,877
Cost of units repurchased (664,658) (1,227,692) (904,022) (119,832) (118,224) (95,423)
----------- ----------- ----------- --------- --------- ---------
Change in net assets from capital
unit transactions 359,791 669,653 1,817,511 74,976 (32,369) 435,454
----------- ----------- ----------- --------- --------- ---------
Increase (decrease) in net assets 566,594 1,369,930 1,845,868 47,139 16,324 432,804
Net assets:
Beginning of period 5,823,061 4,453,131 2,607,263 737,453 721,129 288,325
----------- ----------- ----------- --------- --------- ---------
End of period $ 6,389,655 $ 5,823,061 $ 4,453,131 $ 784,592 $ 737,453 $ 721,129
=========== =========== =========== ========= ========= =========
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Changes in Net Assets
For the six months ended June30, 1999 and the years ended December 31, 1998 and 1997
(Unaudited)
EMERGING GROWTH SUBACCOUNT
Operations: 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net investment income (loss) ($35,336) ($3,274) ($21,660)
Net realized gain (loss) on
security transactions 133,870 74,675 12,259
Net change in unrealized appreciation
or depreciation on investments 830,039 1,524,641 384,388
--------- --------- ---------
Change in net assets from
operations 928,573 1,596,042 374,987
--------- --------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 1,905,566 2,707,434 3,238,087
Cost of units repurchased (1,117,657) (1,321,467) (749,413)
--------- --------- ---------
Change in net assets from capital
unit transactions 787,909 1,385,967 2,488,674
--------- --------- ---------
Increase (decrease) in net assets 1,716,482 2,982,009 2,863,661
Net assets:
Beginning of period 7,036,249 4,054,240 1,190,579
--------- -------- ---------
End of period $8,752,731 $7,036,249 $4,054,240
========= ========= =========
See accompanying notes to financial statements.
</TABLE>
<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 (SEC). The Account was established as a
separate investment account within CUNA Mutual Life Insurance Company 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., MFS(R) Variable
Insurance TrustSM, 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 MFS(R) Variable Insurance TrustSM. 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 MFS(R) Variable Insurance TrustSM has two funds available as an
investment option. MFS(R) Variable Insurance TrustSM 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 MFS(R) Variable Insurance TrustSM.
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, 1999, was as follows:
Money Market Fund.................................. $1,488,575
Treasury 2000 Fund................................. 0
Bond Fund.......................................... 700,459
Balanced Fund...................................... 4,434,732
Growth and Income Stock Fund....................... 4,566,079
Capital Appreciation Stock Fund.................... 1,883,662
International Stock Portfolio...................... 633,714
Global Governments Series.......................... 215,021
Emerging Growth.................................... 1,244,629
----------
$15,166,871
==========
(5) Unit Activity from Contract Transactions
Transactions in units of each subaccount of the Account for the year ended
December 31, 1998, 1997, and 1996, and for the six-month period ended June
30, 1999, were as follows:
<TABLE>
<CAPTION>
Money Treasury Growth and
Market 2000 Bond Balanced Income Stock
Subaccount Subaccount Subaccount Subaccount Subaccount
Units outstanding at
<S> <C> <C> <C> <C> <C>
December 31, 1996 97,454 196,670 97,412 1,567,551 1,036,605
Units sold 342,456 77,604 45,022 297,548 313,426
Units repurchased (298,002) (75,054) (27,507) (296,125) (194,852)
-------- -------- -------- ---------- ----------
Units outstanding at
December 31, 1997 141,908 199,220 114,927 1,568,974 1,155,179
Units sold 236,364 52,984 43,507 266,148 233,645
Units (190,395) (50,435) (28,421) (254,086) (181,819)
-------- -------- -------- ---------- ----------
Units outstanding at
December 31, 1998 187,877 201,769 130,013 1,581,036 1,207,005
Units sold 83,698 24,286 29,858 181,650 118,705
Units repurchased (111,592) (24,286) (19,914) (139,519) (88,115)
-------- -------- -------- ---------- ----------
Units outstanding at
June 30, 1999 159,983 201,769 139,957 1,623,167 1,237,595
======== ======== ======== ========== ==========
</TABLE>
Capital
Appreciation International Global Emerging
Stock Stock Governments Growth
Subaccount Subaccount Subaccount Subaccount*
Units outstanding at
December 31, 1996 953,534 216,089 24,554 117,771
Units sold 490,480 216,687 46,412 280,804
Units repurchased (252,149) (71,570) (8,295) (66,642)
-------- -------- --------- -------
Units outstanding at
December 31, 1997 1,191,865 361,206 62,671 331,933
Units sold 340,862 141,913 7,299 197,716
Units repurchased (235,746) (91,869) (10,044) (96,508)
-------- -------- --------- -------
Units outstanding at
December 31, 1998 1,296,981 411,250 59,926 433,141
Units sold 155,832 71,932 15,922 112,436
Units repurchased (134,009) (46,482) (9,900) (65,865)
-------- -------- --------- -------
Units outstanding at
June 30, 1999 1,318,804 436,700 65,948 479,712
======== ======== ========= =======
*The data is for the period beginning May 1, 1996 (date of initial activity).
(6) Condensed Financial Information
The table below gives per unit information about the financial history of
each subaccount for each period.
<TABLE>
<CAPTION>
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $19.24 $18.47 $17.73 $17.05 $16.33 $9.09 $8.53 $8.05 $7.95 $6.63
End of period 19.59 19.24 18.47 17.73 17.05 9.14 9.09 8.53 8.05 7.95
Percentage increase
in unit value
during period* 1.8% 4.2% 4.2% 4.0% 4.4% 0.6% 6.6% 6.0% 1.3% 19.9%
Number of units
outstanding at
end of period 159,983 187,877 141,908 97,454 125,112 201,769 201,769 199,220 196,670 194,133
BOND SUBACCOUNT BALANCED SUBACCOUNT
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $27.82 $26.43 $24.82 $24.35 $21.11 $43.49 $38.69 $33.40 $30.41 $25.09
End of period 27.63 27.82 26.43 24.82 24.35 47.73 43.49 38.69 33.40 30.41
Percentage increase
in unit value
during period* (0.7%) 5.3% 6.5% 2.0% 15.3% 9.8% 12.4% 15.8% 9.8% 21.2%
Number of units
outstanding at
end of period 139,957 130,013 114,927 97,412 155,381 1,623,167 1,581,036 1,568,974 1,567,551 1,522,893
GROWTH AND INCOME STOCK SUBACCOUNT CAPITAL APPRECIATION STOCK SUBACCOUNT
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
---- -- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $70.17 $60.02 $46.17 $38.09 $29.16 $25.49 $21.27 $16.31 $13.55 $10.45
End of period 84.24 70.17 60.02 46.17 38.09 28.63 25.49 21.27 16.31 13.55
Percentage increase
in unit value
during period* 20.0% 16.9% 30.0% 21.2% 30.6% 12.3% 19.8% 30.4% 20.4% 29.7%
Number of units
outstanding at
end of period 1,237,595 1,207,005 1,155,179 1,036,605 907,821 1,318,804 1,296,981 1,191,865 953,534 663,269
INTERNATIONAL STOCK SUBACCOUNT GLOBAL GOVERNMENTS SUBACCOUNT
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $14.16 $12.33 $12.07 $10.61 $10.00 $12.31 $11.51 $11.74 $11.39 $10.00
End of period 14.63 14.16 12.33 12.07 10.61 11.90 12.31 11.51 11.74 11.39
Percentage increase
in unit value
during period* 3.3% 14.8% 2.1% 13.8% 6.1% (3.4%) 7.0% (2.0%) 3.1% 13.9%
Number of units
outstanding at
end of period 436,700 411,250 361,206 216,089 70,876 65,948 59,926 62,671 24,554 19,219
</TABLE>
EMERGING GROWTH SUBACCOUNT**
1999 1998 1997 1996
Net asset value:
Beginning of period $16.24 $12.21 $10.11 $10.00
End of period 18.25 16.24 12.21 10.11
Percentage increase
in unit value
during period* 12.4% 33.0% 20.8% 1.1%
Number of units
outstanding at
end of period 479,712 433,141 331,933 117,711
Note: The information noted as 1999 is from June 30, 1999. All others are at
December 31 of the year indicated.
For the Money Market Subaccount, the "seven-day average yield" for the seven
days ended June 30, 1999, was 4.53% and the "effective yield" for that period
was 4.63%.
*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).
