Dear Policyowner:
The U. S. stock market showed strong gains overall once again in 1999. While
gains were concentrated in the "dot coms" and other technology stocks, the
broad-based market outperformed historical averages, even though approximately
half of all stocks suffered declines for the year. Interest rate increases in
the latter half of the year didn't seem to dampen the enthusiasm, but did
depress returns in the bond market. After a down year in 1998, many of the
developing international markets rebounded in 1999. These results are reflected
in the very attractive 1999 returns of the subaccounts of MEMBERS(R) Variable
Universal Life.
MEMBERS(R) Variable Universal Life
Percent increase in
Unit Value for Type I from
Subaccount 12/31/98 through 12/31/99
Money Market 3.9%
Treasury 2000 2.2%
Bond -0.2%
Balanced 13.5%
Growth and Income Stock 16.9%
Capital Appreciation Stock 24.1%
International Stock 32.1%
Global Governments -3.4%
Emerging Growth 75.2%
The CUNA Mutual Life Variable Account invests in mutual funds. The results shown
above reflect the deduction of the separate account level charges. Returns at
the subaccount level shown above are slightly lower than at the mutual fund
level as a result of these charges.
We recently introduced a new variable universal life product, MEMBERS(R)
Variable Universal Life II, which will also be covered in this booklet. The
product was introduced in November of 1999, and therefore, unit price changes
for the entire year are not available for that product. However, you will find
information on the variable subaccounts and the underlying funds in the
following pages.
This booklet is divided into several sections. Each section contains the annual
report for a component of MEMBERS(R) Variable Universal Life and MEMBERS(R)
Variable Universal Life II. 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
Report of Independent Accountants........... page 15
The remaining sections of this booklet contain the annual reports for the mutual
funds:
(1) the Ultra Series Fund which includes the Mid-Cap Stock Fund (available in
MEMBERS VUL II only), Capital Appreciation Stock Fund, Growth and Income
Stock Fund, Balanced Fund, Bond Fund, and Money Market Fund, and T2000 Fund
(MEMBERS VUL only);
(2) the International Stock Portfolio of the T. Rowe Price International
Series, Inc.;
(3) the MFS(R) Global Governments SeriesSM and the MFS(R) Emerging Growth
SeriesSM of the MFS(R) Variable Insurance TrustSM,
(4) the Oppenheimer High Income Fund of the Oppenheimer Variable Account Funds
(VUL II only); and
(5) the Templeton Developing Markets Fund of the Templeton Variable Products
Series Fund (VUL II only).
MEMBERS(R) Variable Universal Life and MEMBERS(R) Variable Universal Life II
provide you with both life insurance protection and investment alternatives you
need to meet your long term asset accumulation goals. We look forward to serving
you in the years to come. Thank you for giving us the opportunity to do so.
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
December 31, 1999
<TABLE>
<CAPTION>
Capital
Money Treasury Growth and Appreciation
Market 2000 Bond Balanced Income Stoc Stock
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
Investments in Ultra Series Fund:
(note 2)
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund,
4,415,709 shares at net asset value of
$1.00 per share (cost $4,415,709) $4,415,709 $ -- $ -- $ -- $ -- $ --
Treasury 2000 Fund,
185,786 shares at net asset value
of $10.23 per share (cost $1,730,401) -- 1,901,140 -- -- -- --
Bond Fund,
386,266 shares at net asset value
of $10.05 per share (cost $4,031,809) -- -- 3,880,772 -- -- --
Balanced Fund,
3,856,328 shares at net asset value
of $20.44 per share (cost $57,606,958) -- -- -- 78,807,130 -- --
Growth and Income Stock Fund,
3,049,577 shares at net asset value
of $33.58 per share (cost $64,521,628) -- -- -- -- 102,397,680
Capital Appreciation Stock Fund,
1,650,768 shares at net asset value of
$25.59 per share (cost $26,563,974) -- -- -- -- -- 42,243,240
----------- ----------- ----------- ---------- ----------- ----------
Total assets 4,415,709 1,901,140 3,880,772 78,807,130 102,397,680 42,243,240
----------- ----------- ----------- ---------- ----------- ----------
Liabilities:
Accrued adverse mortality and
expense charges 3,512 795 2,983 59,572 76,580 31,271
----------- ----------- ----------- ---------- ----------- ----------
Total liabilities 3,512 795 2,983 59,572 76,580 31,271
----------- ----------- ----------- ---------- ----------- ----------
Net assets $4,412,197 $1,900,345 $3,877,789 $78,747,558 $102,321,100 $42,211,969
=========== =========== =========== ========== =========== ==========
Policyowners Equity:
Net Assets: Type 1 $4,412,197 $1,900,345 $3,876,719 $78,664,114 $102,280,992 $42,196,596
Outstanding units: Type 1 (note 5) 220,755 204,654 139,585 1,593,968 1,246,783 1,333,827
Net asset value per unit: Type 1 $19.99 $9.29 $27.77 $49.35 $82.04 $31.64
=========== =========== =========== ========== =========== ==========
Net Assets: Type 2 -- -- $1,070 $83,444 $40,108 $15,373
Outstanding units: Type 2 (note 5) -- -- 107 8,270 3,979 1,481
Net asset value per unit: Type 2 -- -- $10.00 $10.09 $10.08 $10.38
=========== =========== =========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Assets and Liabilities, continued
December 31, 1999
<TABLE>
<CAPTION>
Mid-Cap International Global Emerging High Developing
Stock Stock Governments Growth Income Markets
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
Investments in Ultra Series Fund:
(note 2)
<S> <C> <C> <C> <C> <C> <C>
Mid-Cap Stock Fund,
409 shares at net asset value of
$11.15 per share (cost $4,449) $4,562 $ -- $ -- $ -- $ -- $ --
Investments in T. Rowe Price
International Fund, Inc.:
International Stock Portfolio,
439,418 shares at net asset value of
$19.04 per share (cost $5,697,317) -- 8,366,511 -- -- -- --
Investments in MFS(R) Variable Insurance
TrustSM: Global Governments Series,
61,767 shares at net asset value of
$10.03 per share (cost $633,127) -- -- 619,522 -- -- --
Investments in MFS(R) Variable Insurance
TrustSM: Emerging Growth Series,
402,628 shares at net asset value of
$37.94 per share (cost $7,237,010) -- -- -- 15,275,690 -- --
Investments in Oppenheimer
Variable Account Funds:
High Income Series,
100 shares at net asset value of
$10.72 per share (cost $1,073) -- -- -- -- 1,076 --
Investments in Templeton
Variable Products Series Fund:
Developing Markets Series,
160 shares at net asset value of
$7.74 per share (cost $1,183) -- -- -- -- -- 1,238
---------- ---------- ---------- ---------- --------- ---------
Total assets 4,562 8,366,511 619,522 15,275,690 1,076 1,238
---------- ---------- ---------- ---------- --------- ---------
Liabilities:
Accrued adverse mortality and
expense charges 1 6,007 482 10,132 -- --
---------- ---------- ---------- ---------- --------- ---------
Total liabilities 1 6,007 482 10,132 -- --
---------- ---------- ---------- ---------- --------- ---------
Net assets $4,561 $8,360,504 $619,040 $15,265,558 $1,076 $1,238
========== ========== ========== ========== ========= =========
Policyowners Equity:
Net Assets: Type 1 -- $8,354,873 $617,980 $15,259,897 -- --
Outstanding units: Type 1 (note 5) -- 446,501 51,976 536,259 -- --
Net asset value per unit: Type 1 -- $18.71 $11.89 $28.46 -- --
========== ========== ========== ========== ========= =========
Net Assets: Type 2 $4,561 $5,631 $1,060 $5,661 $1,076 $1,238
Outstanding units: Type 2 (note 5) 439 497 106 454 107 118
Net asset value per unit: Type 2 $10.39 $11.33 $10.00 $12.47 $10.03 $10.53
========== ========== ========== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Operations
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss): 1999 1998 1997 1999 1998 1997
Dividend income $156,541 $123,985 $85,594 $105,875 $106,291 $106,851
Adverse mortality and expense charges
(note 3) (29,935) (22,312) (15,448) (16,680) (15,826) (14,583)
--------- --------- --------- ---------- ---------- ---------
Net investment income (loss) 126,606 101,673 70,146 89,195 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 4,009,628 2,979,908 4,634,860 -- -- --
Cost of securities sold (4,009,628) (2,979,908) (4,634,860) -- -- --
--------- --------- --------- ---------- ---------- ---------
Net realized gain (loss) on security
transactions -- -- -- -- -- --
Net change in unrealized appreciation
or depreciation on investments -- -- -- (49,994) 21,682 1,846
--------- --------- --------- ---------- ---------- ---------
Net gain (loss) on investments -- -- -- (49,994) 21,682 1,846
--------- --------- --------- ---------- ---------- ---------
Net increase (decrease) in net assets
resulting from operations $126,606 $101,673 $70,146 $39,201 $112,147 $94,114
========= ========= ========= ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
BOND SUBACCOUNT BALANCED SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss): 1999 1998 1997 1999 1998 1997
Dividend income $223,032 $196,337 $136,739 $1,995,000 $1,934,712 $2,062,026
Adverse mortality and expense charges
(note 3) (34,792) (30,006) (23,285) (675,563) (577,128) (509,762)
--------- --------- --------- --------- --------- ---------
Net investment income (loss) 188,240 166,331 113,454 1,319,437 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 1,743,848 3,744 758,320
Proceeds from sale of securities 585,790 441,318 402,615 6,404,678 4,012,722 4,525,247
Cost of securities sold (583,986) (426,398) (394,979) (4,654,847) (3,159,159) (3,785,014)
--------- --------- --------- --------- --------- ---------
Net realized gain (loss) on security
transactions 1,861 17,397 8,015 3,493,679 857,307 1,498,553
Net change in unrealized appreciation
or depreciation on investments (197,060) (14,556) 41,691 4,544,788 5,340,950 5,202,066
--------- --------- --------- --------- --------- ---------
Net gain (loss) on investments (195,199) 2,841 49,706 8,038,467 6,198,257 6,700,619
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations ($6,959) $169,172 $163,160 $9,357,904 $7,555,841 $8,252,883
========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Operations, continued
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK SUBACCOUNT CAPITAL APPRECIATION STOCK SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss): 1999 1998 1997 1999 1998 1997
Dividend income $916,870 $869,525 $778,858 $33,412 $88,433 $119,794
Adverse mortality and expense charges
(note 3) (870,409) (691,564) (527,025) (328,898) (259,874) (182,627)
-------- --------- --------- --------- -------- --------
Net investment income (loss) 46,461 177,961 251,833 (295,486) (171,441) (62,833)
-------- --------- --------- --------- -------- --------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions 6,072,033 3,106,051 1,145,587 3,266,215 769,968 317,275
Proceeds from sale of securities 4,764,654 3,497,748 3,033,581 2,779,984 1,770,807 1,795,596
Cost of securities sold (2,809,713) (2,160,207) (2,103,099) (1,731,081) (1,192,638) (1,354,057)
--------- --------- --------- --------- --------- ---------
Net realized gain (loss) on security
transactions 8,026,974 4,443,592 2,076,069 4,315,118 1,348,137 758,814
Net change in unrealized appreciation
or depreciation on investments 6,432,344 7,377,335 12,852,455 4,111,612 4,151,868 4,563,309
---------- ---------- ---------- --------- --------- ---------
Net gain (loss) on investments 14,459,318 11,820,927 14,928,524 8,426,730 5,500,005 5,322,123
---------- ---------- ---------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations $14,505,779 $11,998,888 $15,180,357 $8,131,244 $5,328,564 $5,259,290
========== ========== ========== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
MID-CAP STOCK SUBACCOUNT INTERNATIONAL STOCK SUBACCOUNT
<S> <C> <C> <C> <C>
Investment income (loss): 1999* 1999 1998 1997
Dividend income $1 $30,258 $90,596 $99,113
Adverse mortality and expense
charges (note 3) (1) (58,716) (47,908) (32,130)
------- --------- -------- -------
Net investment income (loss) -- (28,458) 42,688 66,983
------- --------- -------- -------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions 78 95,097 -- --
Proceeds from sale of securities 14 648,203 491,409 235,721
Cost of securities sold (14) (619,493) (442,671) (211,895)
------- --------- -------- -------
Net realized gain (loss) on security
transactions 78 123,807 48,738 23,826
Net change in unrealized appreciation
or depreciation on investments 113 1,926,801 608,851 (62,452)
------- --------- -------- -------
Net gain (loss) on investments 191 2,050,608 657,589 (38,626)
------- --------- -------- -------
Net increase (decrease) in net assets
resulting from operations $191 $2,022,150 $700,277 $28,357
======= ========= ======== =======
</TABLE>
See accompanying notes to financial statements.
*The data is for the period beginning November 8, 1999 (date of initial
activity).
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Operations, continued
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
GLOBAL GOVERNMENTS SUBACCOUNT EMERGING GROWTH SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss): 1999 1998 1997 1999 1998 1997
Dividend income $35,810 $8,821 $7,143 $ -- $45,309 $ --
Adverse mortality and expense charges
(note 3) (6,651) (6,487) (3,401) (81,732) (48,583) (21,660)
-------- -------- ------- --------- -------- -------
Net investment income (loss) 29,159 2,334 3,742 (81,732) (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 289,685 92,387 65,919 841,070 448,520 234,899
Cost of securities sold (289,946) (90,661) (66,515) (590,062) (373,845) (222,640)
-------- -------- ------- --------- -------- -------
Net realized gain (loss) on security
transactions (261) 1,726 (596) 251,008 74,675 12,259
Net change in unrealized appreciation
or depreciation on investments (57,288) 44,633 (5,796) 6,126,859 1,524,641 384,388
-------- -------- ------- --------- --------
Net gain (loss) on investments (57,549) 46,359 (6,392) 6,377,867 1,599,316 396,647
-------- -------- ------- --------- --------- --------
Net increase (decrease) in net assets
resulting from operations ($28,390) $48,693 ($2,650) $6,296,135 $1,596,042 $374,987
======== ======== ======= ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
HIGH INCOME SUBACCOUNT DEVELOPING MARKETS SUBACCOUNT
<S> <C> <C>
Investment income (loss): 1999* 1999*
Dividend income $ -- $ --
Adverse mortality and expense
charges (note 3) -- --
------- -------
Net investment income (loss) -- --
------- -------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions -- --
Proceeds from sale of securities -- --
Cost of securities sold -- --
------- -------
Net realized gain (loss) on security
transactions -- --
Net change in unrealized appreciation
or depreciation on investments 3 55
------- -------
Net gain (loss) on investments 3 55
------- -------
Net increase (decrease) in net assets
resulting from operations $3 $55
======= =======
</TABLE>
See accompanying notes to financial statements.
*The data is for the period beginning November 8, 1999 (date of initial
activity).
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Changes in Net Assets
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
MONEY MARKET SUBACCOUNT TREASURY 2000 SUBACCOUNT
Operations: 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $126,606 $101,673 $70,146 $89,195 $90,465 $92,268
Net realized gain (loss) on
security transactions -- -- -- -- -- --
Net change in unrealized appreciation
or depreciation on investments -- -- -- (49,994) 21,682 1,846
---------- ---------- ---------- ---------- ---------- ----------
Change in net assets from
operations 126,606 101,673 70,146 39,201 112,147 94,114
---------- ---------- ---------- ---------- ---------- ----------
Capital unit transactions (note 5):
Proceeds from sale of units 5,200,600 4,485,112 6,190,640 371,536 447,349 621,004
Cost of units repurchased (4,530,276) (3,592,636) (5,367,244) (344,910) (424,204) (599,303)
---------- ---------- ---------- ---------- ---------- ----------
Change in net assets from capital
unit transactions 670,324 892,476 823,396 26,626 23,145 21,701
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets 796,930 994,149 893,542 65,827 135,292 115,815
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 $4,412,197 $3,615,267 $2,621,118 $1,900,345 $1,834,518 $1,699,226
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
BOND SUBACCOUNT BALANCED SUBACCOUNT
Operations: 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $188,240 $166,331 $113,454 $1,319,437 $1,357,584 $1,552,264
Net realized gain (loss) on
security transactions 1,861 17,397 8,015 3,493,679 857,307 1,498,553
Net change in unrealized appreciation
or depreciation on investments (197,060) (14,556) 41,691 4,544,788 5,340,950 5,202,066
---------- ---------- ---------- ---------- ---------- ----------
Change in net assets from
operations (6,959) 169,172 163,160 9,357,904 7,555,841 8,252,883
---------- ---------- ---------- ---------- ---------- ----------
Capital unit transactions (note 5):
Proceeds from sale of units 1,186,455 1,182,649 1,162,322 14,839,213 10,811,007 10,763,242
Cost of units repurchased (918,722) (772,448) (705,363) (14,209,808) (10,309,524) (10,663,916)
---------- ---------- ---------- ---------- ---------- ----------
Change in net assets from capital
unit transactions 267,733 410,201 456,959 629,405 501,483 99,326
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets 260,774 579,373 620,119 9,987,309 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 $3,877,789 $3,617,015 $3,037,642 $78,747,558 $68,760,249 $60,702,925
========== ========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Changes in Net Assets, continued
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK SUBACCOUNT CAPITAL APPRECIATION SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
Operations: 1999 1998 1997 1999 1998 1997
Net investment income (loss) $46,461 $177,961 $251,833 ($295,486) ($171,441) ($62,833)
Net realized gain (loss) on
security transactions 8,026,974 4,443,592 2,076,069 4,315,118 1,348,137 758,814
Net change in unrealized appreciation
or depreciation on investments 6,432,344 7,377,335 12,852,455 4,111,612 4,151,868 4,563,309
----------- ---------- ---------- ---------- ---------- ----------
Change in net assets from
operations 14,505,779 11,998,888 15,180,357 8,131,244 5,328,564 5,259,290
----------- ---------- ---------- ---------- ---------- ----------
Capital unit transactions (note 5):
Proceeds from sale of units 17,312,510 15,135,142 16,677,681 7,912,873 7,807,048 9,240,958
Cost of units repurchased (14,188,868) (11,770,989) (10,282,732) (6,897,886) (5,420,620) (4,699,419)
----------- ---------- ---------- ---------- ---------- ----------
Change in net assets from capital
unit transactions 3,123,642 3,364,153 6,394,949 1,014,987 2,386,428 4,541,539
----------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets 17,629,421 15,363,041 21,575,306 9,146,231 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 $102,321,100 $84,691,679 $69,328,638 $42,211,969 $33,065,738 $25,350,746
=========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MID-CAP STOCK SUBACCOUNT INTERNATIONAL STOCK SUBACCOUNT
<S> <C> <C> <C> <C>
Operations: 1999* 1999 1998 1997
Net investment income (loss) $ -- ($28,458) $42,688 $66,983
Net realized gain (loss) on
security transactions 78 123,807 48,738 23,826
Net change in unrealized appreciation
or depreciation on investments 113 1,926,801 608,851 (62,452)
-------- --------- --------- ---------
Change in net assets from
operations 191 2,022,150 700,277 28,357
-------- --------- --------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 4,450 1,876,821 1,897,345 2,721,533
Cost of units repurchased (80) (1,361,528) (1,227,692) (904,022)
-------- --------- --------- ---------
Change in net assets from capital
unit transactions 4,370 515,293 669,653 1,817,511
-------- --------- --------- ---------
Increase (decrease) in net assets 4,561 2,537,443 1,369,930 1,845,868
Net assets:
Beginning of period -- 5,823,061 4,453,131 2,607,263
-------- --------- --------- ---------
End of period $4,561 $8,360,504 $5,823,061 $4,453,131
======== ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
*The data is for the period beginning November 8, 1999 (date of initial
activity).
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Statements of Changes in Net Assets, continued
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
GLOBAL GOVERNMENTS SUBACCOUNT EMERGING GROWTH SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
Operations: 1999 1998 1997 1999 1998 1997
Net investment income (loss) $29,159 $2,334 $3,742 ($81,732) ($3,274) ($21,660)
Net realized gain (loss) on
security transactions (261) 1,726 (596) 251,008 74,675 12,259
Net change in unrealized appreciation
or depreciation on investments (57,288) 44,633 (5,796) 6,126,859 1,524,641 384,388
--------- --------- --------- ---------- --------- ---------
Change in net assets from
operations (28,390) 48,693 (2,650) 6,296,135 1,596,042 374,987
--------- --------- --------- ---------- --------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 222,897 85,855 530,877 3,957,172 2,707,434 3,238,087
Cost of units repurchased (312,920) (118,224) (95,423) (2,023,998) (1,321,467) (749,413)
--------- --------- --------- ---------- --------- ---------
Change in net assets from capital
unit transactions (90,023) (32,369) 435,454 1,933,174 1,385,967 2,488,674
--------- --------- --------- ---------- --------- ---------
Increase (decrease) in net assets (118,413) 16,324 432,804 8,229,309 2,982,009 2,863,661
Net assets:
Beginning of period 737,453 721,129 288,325 7,036,249 4,054,240 1,190,579
--------- -------- --------- ---------- --------- ---------
End of period $619,040 $737,453 $721,129 $15,265,558 $7,036,249 $4,054,240
========= ========= ========= ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
HIGH INCOME SUBACCOUNT DEVELOPING MARKETS SUBACCOUNT
<S> <C> <C>
Operations: 1999* 1999*
Net investment income (loss) $ -- $ --
Net realized gain (loss) on
security transactions -- --
Net change in unrealized appreciation
or depreciation on investments 3 55
-------- ---------
Change in net assets from
operations 3 55
-------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 1,075 1,189
Cost of units repurchased (2) (6)
-------- ---------
Change in net assets from capital
unit transactions 1,073 1,183
-------- ---------
Increase (decrease) in net assets 1,076 1,238
Net assets:
Beginning of period -- --
-------- ---------
End of period $1,076 $1,238
======== =========
</TABLE>
See accompanying notes to financial statements.
*The data is for the period beginning November 8, 1999 (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 (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 twelve 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 (Class Z shares), T. Rowe Price International Fund, Inc.,
MFS(R) Variable Insurance TrustSM, Oppenheimer Variable Account Funds,
Templeton Variable Products Series Fund, 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., MFS(R) Variable Insurance TrustSM, Oppenheimer
Variable Account Funds, and Templeton Variable Products Series Fund. 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 seven funds available as investment
options under the policies. T. Rowe Price International Fund, Inc.,
Oppenheimer Variable Account Funds and Templeton Variable Products Series
Fund have one fund available as an investment option and MFS(R) Variable
Insurance TrustSM has two funds available as an investment option. MFS(R)
Variable Insurance TrustSM, Oppenheimer Variable Account Funds and
Templeton Variable Products Series Fund also have 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 adviser 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
adviser 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.
Massachusetts Financial Services Company (MFS) serves as the investment
adviser to the MFS Global Governments Series (formerly known as the MFS
World Governments Series) and Emerging Growth Series and manages their
assets in accordance with general policies and guidelines established by
the board of trustees of MFS(R) Variable Insurance TrustSM.
OppenheimerFunds, Inc. (the Manager) serves as the investment adviser to
the Oppenheimer High Income Fund and manages its assets in accordance with
general policies and guidelines established by the board of trustees of
the Oppenheimer Variable Account Funds.
<PAGE>
Templeton Asset Management Ltd. serves as the investment adviser to the
Templeton Developing Markets Fund: Class 2 and manages its assets and
makes its investments decisions.
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
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 0.90% 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.
<PAGE>
(4) Investment Transactions
The cost of shares purchased, including reinvestment of dividend
distributions, during the year ended December 31, 1999, was as follows:
Money Market Fund.......................................... $4,809,236
Treasury 2000 Fund......................................... 9,355
Bond Fund.................................................. 1,043,913
Balanced Fund.............................................. 10,140,150
Growth and Income Stock Fund............................... 14,062,665
Capital Appreciation Stock Fund............................ 6,789,057
Mid-Cap Stock Fund......................................... 4,463
International Stock Portfolio.............................. 1,234,716
Global Governments Series.................................. 229,122
Emerging Growth Series..................................... 2,700,937
High Income Fund........................................... 1,073
Developing Markets Fund.................................... 1,183
(5) Unit Activity from Contract Transactions
Transactions in units of each subaccount of the Account for the years
ended December 31, 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
Money Treasury
Market 2000 Bond Balanced
Subaccount Subaccount Subaccount Subaccount
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Type 1 Type 2 Type 1 Type 2* Type 1 Type 2 Type 1 Type 2
Outstanding at
December 31, 1996 97,454 -- 196,670 97,412 -- 1,567,551 --
Sold 342,456 -- 77,604 45,022 -- 297,548 --
Repurchased (298,002) -- (75,054) (27,507) -- (296,125) --
-------- -------- ------- ------- ------- -------- -------
Outstanding at
December 31, 1997 141,908 -- 199,220 114,927 -- 1,568,974 --
Sold 236,364 -- 52,984 43,507 -- 266,148 --
Repurchased (190,395) -- (50,435) (28,421) -- (254,086) --
-------- -------- ------- ------- ------- -------- -------
Outstanding at
December 31, 1998 187,877 -- 201,769 130,013 -- 1,581,036 --
Sold 263,945 -- 43,509 42,671 107 318,708 8,386
Repurchased (231,067) -- (40,624) (33,099) -- (305,776) (116)
-------- -------- ------- ------- ------- -------- -------
Outstanding at
December 31, 1999 220,755 -- 204,654 139,585 107 1,593,968 8,270
======== ======== ======= ======= ======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
Capital
Growth and Appreciation Mid-Cap International
Stock Stock Stock Stock
Subaccount Subaccount Subaccount Subaccount
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Type 1 Type 2 Type 1 Type 2 Type 1* Type 2 Type 1 Type 2
Outstanding at
December 31, 1996 1,036,605 -- 953,534 -- -- 216,089 --
Sold 313,426 -- 490,480 -- -- 216,687 --
Repurchased (194,852) -- (252,149) -- -- (71,570) --
-------- -------- -------- ------- ------- ------- -------
Outstanding at
December 31, 1997 1,155,179 -- 1,191,865 -- -- 361,206 --
Sold 233,645 -- 340,862 -- -- 141,913 --
Repurchased (181,819) -- (235,746) -- -- (91,869) --
-------- -------- -------- ------- ------- ------- -------
Outstanding at
December 31, 1998 1,207,005 -- 1,296,981 -- -- 411,250 --
Sold 221,525 4,044 287,074 1,509 447 125,998 504
Repurchased (181,747) (65) (250,228) (28) (8) (90,747) (7)
-------- -------- -------- ------- ------- ------- -------
Outstanding at
December 31, 1999 1,246,783 3,979 1,333,827 1,481 439 446,501 497
======== ======== ======== ======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Global Emerging High Developing
Governments Growth Income Markets
Subaccount Subaccount Subaccount Subaccount
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Type 1 Type 2 Type 1 Type 2 Type 1* Type 2 Type 1* Type 2
Outstanding at
December 31, 1996 24,554 -- 117,771 -- -- --
Sold 46,412 -- 280,804 -- -- --
Repurchased (8,295) -- (66,642) -- -- --
-------- -------- ------- ------- ------- -------
Outstanding at
December 31, 1997 62,671 -- 331,933 -- -- --
Sold 7,299 -- 197,716 -- -- --
Repurchased (10,044) -- (96,508) -- -- --
-------- -------- ------- ------- ------- -------
Outstanding at
December 31, 1998 59,926 -- 433,141 -- -- --
Sold 18,188 106 214,540 466 107 118
Repurchased (26,138) -- (111,422) (12) -- --
-------- -------- ------- ------- ------- -------
Outstanding at
December 31, 1999 51,976 106 536,259 454 107 118
======== ======== ======= ======= ======= =======
</TABLE>
*This fund not available in this product type.
(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
1999 1998 1997 1996 1995
--------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $19.24 $10.00 $18.47 $17.73 $17.05 $16.33
End of period 19.99 10.00 19.24 18.47 17.73 17.05
Percentage increase
(decrease) in unit
value during period 3.9% 0.0% 4.2% 4.1% 4.0% 4.4%
Number of units
outstanding at
end of period 220,755 -- 187,877 141,908 97,454 125,112
</TABLE>
<TABLE>
<CAPTION>
TREASURY 2000 SUBACCOUNT
1999 1998 1997 1996 1995
--------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $9.09 $8.53 $8.05 $7.95 $6.63
End of period 9.29 9.09 8.53 8.05 7.95
Percentage increase
(decrease) in unit
value during period 2.2% 6.6% 6.0% 1.3% 19.9%
Number of units
outstanding at
end of period 204,654 201,769 199,220 196,670 194,133
</TABLE>
<TABLE>
<CAPTION>
BOND SUBACCOUNT
1999 1998 1997 1996 1995
--------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $27.82 $10.00 $26.43 $24.82 $24.35 $21.11
End of period 27.77 10.00 27.82 26.43 24.82 24.35
Percentage increase
(decrease) in unit
value during period (0.2%) 0.0%*** 5.3% 6.5% 1.9% 15.4%
Number of units
outstanding at
end of period 139,585 107 130,013 114,927 97,411 155,381
</TABLE>
<TABLE>
<CAPTION>
BALANCED SUBACCOUNT
1999 1998 1997 1996 1995
--------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $43.49 $10.00 $38.69 $33.40 $30.41 $25.09
End of period 49.35 10.09 43.49 38.69 33.40 30.41
Percentage increase
(decrease) in unit
value during period 13.5% 0.9%*** 12.4% 15.8% 9.8% 21.2%
Number of units
outstanding at
end of period 1,593,968 8,270 1,581,036 1,568,974 1,567,551 1,522,893
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME STOCK SUBACCOUNT
1999 1998 1997 1996 1995
--------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $70.17 $10.00 $60.02 $46.07 $38.09 $29.16
End of period 82.04 10.08 70.17 60.02 46.07 38.09
Percentage increase
(decrease) in unit
value during period 16.9% 0.8%*** 16.9% 30.3% 21.0% 30.6%
Number of units
outstanding at
end of period 1,246,783 3,979 1,207,005 1,155,179 1,036,605 907,821
</TABLE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION STOCK SUBACCOUNT
1999 1998 1997 1996 1995
--------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $25.49 $10.00 $21.27 $16.31 $13.55 $10.45
End of period 31.64 10.38 25.49 21.27 16.31 13.55
Percentage increase
(decrease) in unit
value during period 24.1% 3.8%*** 19.9% 30.4% 20.4% 29.7%
Number of units
outstanding at
end of period 1,333,827 1,481 1,296,981 1,191,865 953,534 663,269
</TABLE>
<TABLE>
<CAPTION>
MID-CAP STOCK SUBACCOUNT
1999 1998** 1997** 1996** 1995**
--------------------- ------ ------ ------ ------
<S> <C> <C>
Net asset value: Type 1* Type 2**
Beginning of period $10.00
End of period 10.39
Percentage increase
(decrease) in unit
value during period 3.9%***
Number of units
outstanding at
end of period 439
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL STOCK SUBACCOUNT
1999 1998 1997 1996 1995
--------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $14.16 $10.00 $12.33 $12.07 $10.61 $10.00
End of period 18.71 11.33 14.16 12.33 12.07 10.61
Percentage increase
(decrease) in unit
value during period 32.1% 13.3%*** 14.8% 2.2% 13.7% 6.1%
Number of units
outstanding at
end of period 446,501 497 411,250 361,206 216,089 70,876
</TABLE>
<TABLE>
<CAPTION>
GLOBAL GOVERNMENTS SUBACCOUNT
1999 1998 1997 1996 1995
--------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $12.31 $10.00 $11.51 $11.74 $11.39 $10.00
End of period 11.89 10.00 12.31 11.51 11.74 11.39
Percentage increase
(decrease) in unit
value during period* (3.4%) 0.0% 6.9% (2.0%) 3.1% 13.9%
Number of units
outstanding at
end of period 51,976 106 59,926 62,671 24,554 19,219
</TABLE>
<TABLE>
<CAPTION>
EMERGING GROWTH SUBACCOUNT
1999 1998 1997 1996
--------------------- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $16.24 $10.00 $12.21 $10.11 $10.00
End of period 28.46 12.47 16.24 12.21 10.11
Percentage increase
(decrease) in unit
value during period 75.2% 24.7%*** 33.0% 20.8% 1.1%
Number of units
outstanding at
end of period 536,259 454 433,141 331,933 117,711
</TABLE>
<TABLE>
<CAPTION>
HIGH INCOME SUBACCOUNT
1999 1998** 1997** 1996** 1995**
---------------- ------ ------ ------ ------
<S> <C> <C>
Net asset value: Type 1* Type 2**
Beginning of period $10.00
End of period 10.03
Percentage increase
(decrease) in unit
value during period 0.3%***
Number of units
outstanding at
end of period 107
</TABLE>
<TABLE>
<CAPTION>
DEVELOPING MARKETS SUBACCOUNT
1999 1998** 1997** 1996** 1995**
--------------------- ---- ---- ---- ----
<S> <C> <C>
Net asset value: Type 1 Type 2**
Beginning of period $10.00
End of period 10.53
Percentage increase
(decrease) in unit
value during period 5.3%***
Number of units
outstanding at
end of period 118
</TABLE>
* This fund not available in this product type.
** TheVULII product inception date was November 8, 1999, with all subaccounts
starting with a $10.00 unit price.
***Not annualized.
<PAGE>
CUNA MUTUAL LIFE VARIABLE ACCOUNT
Report of Independent Accountants
To the Board of Directors of CUNA Mutual Life Insurance Company and
Contract Owners of CUNA Mutual Life Variable Account
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the CUNA Mutual Life Variable
Account (comprising, respectively, the Money Market, Treasury 2000, Bond,
Balanced, Growth and Income Stock, Capital Appreciation Stock, Mid-Cap Stock,
International Stock, Global Governments, Emerging Growth, High Income and the
Developing Markets Subaccounts) as of December 31, 1999, the results of each of
their operations and the changes in each of their net assets for the year or the
period then ended in conformity with accounting principles generally accepted in
the United States. These financial statements are the responsibility of The CUNA
Mutual Life Insurance Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits 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 audits, which included direct confirmation of the number of
shares owned at December 31, 1999 with Ultra Series Fund, T. Rowe Price
International Series, Inc., MFS Variable Insurance Trust, Oppenheimer High
Income Fund and Templeton Developing Markets Fund, provide a reasonable basis
for the opinion expressed above. The financial statements of the CUNA Mutual
Life Variable Account as of December 31, 1998 and for each of the two years 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
