<PAGE>
--------------------------
Farm Bureau Mutual Funds
FARM BUREAU MUTUAL FUNDS
5400 UNIVERSITY AVENUE
[LOGO]
WEST DES MOINES, IOWA 50266
737-128(96)
FBL Money
Market Fund, Inc.
R
ANNUAL REPORT
JULY 31, 1996
INVESTMENT MANAGER AND
PRINCIPAL UNDERWRITER
FBL INVESTMENT ADVISORY
SERVICES, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-800-247-4170 (OUTSIDE IOWA)
1-800- 422-3175 (IN IOWA)
225-5586 (DES MOINES)
This report is not to be distributed
unless preceded or accompanied by
a prospectus.
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder,
Although the Federal Reserve has made no change in rates since January, the
short-term fixed-income markets have been relatively volatile during 1996.
As the year began, it was difficult to determine the level of strength in
the economy given the weather extremes and the federal budget 'showdown' that
was taking place. The short-term markets appeared to be pricing in a
continuation of declining interest rates following the January reduction by the
Federal Reserve and moderate economic growth. As spring came and the initial
read of the first quarter's economic strength surfaced, it became clear that the
market's low-growth forecast was wrong. Suddenly, the focus of continued Fed
easing turned to the prospect of an increase in rates.
A series of strong releases of employment growth statistics forced an upward
ratcheting of interest rates on into the summer. Most recently, however, the
market has deemed growth to have cooled. The economic statistics presently
available could either confirm or deny the onset of a slowdown.
Currently, yields on the 90-day Treasury bill and 2-year Treasury note are
5.11% and 5.97%, respectively. With the Fed funds rate still at 5.25%, the
market is reflecting a relatively neutral outlook regarding short rates looking
ahead. Given the ambiguity of the economic data currently available, we share
that neutral outlook.
Whatever the post-election course of our economy and interest rates,
investors of FBL Money Market Fund, Inc. can be assured that their investments
are liquid and present limited credit risk. Whether you use the fund as an
interest-bearing checking account or as a haven from volatile capital markets,
we will attempt to provide an attractive investment vehicle for your cash
management needs.
[insert specimen signature]
EDWARD M. WIEDERSTEIN
PRESIDENT
August 16, 1996
2
<PAGE>
FBL MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (equivalent to amortized cost)........ $23,663,343
Cash...................................................................... 923,430
Accrued interest receivable............................................... 24,987
Prepaid expense........................................................... 671
-----------
Total Assets.............................................................. $24,612,431
-----------
-----------
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable to FBL Investment Advisory Services, Inc............... $ 12,862
Accrued expenses........................................................ 25,623
-----------
Total Liabilities......................................................... 38,485
Net assets applicable to 24,573,946 shares of capital stock
outstanding (NOTE 4)..................................................... 24,573,946
-----------
Total Liabilities and Net Assets.......................................... $24,612,431
-----------
-----------
NET ASSET VALUE PER SHARE................................................. $ 1.00
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
FBL MONEY MARKET FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest....................................................................... $1,281,043
EXPENSES
Paid to FBL Investment Advisory Services, Inc. (NOTE 3):
Investment advisory and management fees...................................... 118,225
Shareholder service, transfer and dividend disbursing agent fees............. 143,355
Accounting fees.............................................................. 11,822
Custodian fees................................................................. 58,737
Legal fees..................................................................... 19,126
Audit fees..................................................................... 8,500
Directors' fees and expenses................................................... 6,660
Reports to shareholders........................................................ 24,849
Registration fees.............................................................. 11,953
Miscellaneous.................................................................. 3,385
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Total Expenses................................................................. 406,612
Expense reimbursement (NOTE 3)................................................. (51,886)
----------
Net Expenses................................................................... 354,726
----------
Net Increase in Net Assets Resulting from Operations........................... $ 926,317
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
FBL MONEY MARKET FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income............................................................ $ 926,317 $ 778,149
DIVIDENDS TO SHAREHOLDERS FROM (NOTE 5)
Net investment income............................................................ (926,317) (778,149)
-------------- --------------
-0- -0-
CAPITAL SHARE TRANSACTIONS (NOTE 4).............................................. 4,597,142 1,050,045
-------------- --------------
Total Increase in Net Assets..................................................... 4,597,142 1,050,045
NET ASSETS
Beginning of year................................................................ 19,976,804 18,926,759
-------------- --------------
End of year...................................................................... $ 24,573,946 $ 19,976,804
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
FBL MONEY MARKET FUND, INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON PRINCIPAL
PURCHASE DATE AMOUNT VALUE
------------- ---------- -----------
<S> <C> <C> <C>
COMMERCIAL PAPER (17.90%)
NONDEPOSITORY INSTITUTIONS (15.66%)
American General Finance Corp., 5.33%, due
8/28/96........................................... 5.332% $ 900,000 $ 900,000
Deere (John) Capital Corp., 5.46%, due 9/19/96..... 5.460 600,000 600,000
Deere (John) Capital Corp., 5.40%, due 9/19/96..... 5.401 300,000 300,000
General Electric Capital Corp., 5.34%, due
8/21/96........................................... 5.340 600,000 600,000
General Electric Capital Corp., 5.46%, due
10/08/96.......................................... 5.459 500,000 500,000
Norwest Financial, Inc., 5.40%, due 10/11/96....... 5.397 950,000 950,000
-----------
3,850,000
INDUSTRIAL MACHINERY AND EQUIPMENT (2.24%)
IBM Corp., 5.51%, due 10/08/96..................... 5.506 550,000 550,000
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Total Commercial Paper............................... 4,400,000
UNITED STATES GOVERNMENT AGENCIES (78.39%)
Federal Home Loan Bank, due 10/03/96............... 5.547 1,400,000 1,386,722
Federal Home Loan Mortgage Corp., due 8/16/96...... 5.341 2,750,000 2,743,977
Federal Home Loan Mortgage Corp., due 8/30/96...... 5.322 2,200,000 2,190,736
Federal Home Loan Mortgage Corp., due 9/03/96...... 5.455 625,000 621,932
Federal Home Loan Mortgage Corp., due 9/04/96...... 5.384 1,425,000 1,417,889
Federal Home Loan Mortgage Corp., due 9/16/96...... 5.442 2,000,000 1,986,377
Federal Home Loan Mortgage Corp., due 9/26/96...... 5.467 1,100,000 1,090,851
Federal Home Loan Mortgage Corp., due 10/18/96..... 5.447 2,000,000 1,976,986
Federal National Mortgage Assoc., due 8/09/96...... 5.366 1,475,000 1,473,269
Federal National Mortgage Assoc., due 9/03/96...... 5.356 700,000 696,627
Federal National Mortgage Assoc., due 9/10/96...... 5.464 3,700,000 3,677,977
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Total United States Government Agencies.............. 19,263,343
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Total Investments (96.29%)........................... 23,663,343
OTHER ASSETS LESS LIABILITIES (3.71%)
Cash, receivables and prepaid expense, less
liabilities....................................... 910,603
-----------
Total Net Assets (100.00%)........................... $24,573,946
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
FBL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
FBL Money Market Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end, diversified management
investment company and operates in the mutual fund industry.
The Fund values investments at amortized cost, which approximates market.
Under the amortized cost method, a security is valued at its cost on the date of
purchase and thereafter is adjusted to reflect a constant amortization to
maturity of the difference between the principal amount due at maturity and the
cost of the investment to the Fund.
The value of the underlying securities serving to collateralize repurchase
agreements is marked to market daily. Should the value of the underlying
securities decline, the seller would be required to provide the Fund with
additional securities so that the aggregate value of the underlying securities
was at least equal to the repurchase price. If a seller of a repurchase
agreement were to default, the Fund might experience losses in enforcing its
rights. To minimize this risk, the investment adviser (under the supervision of
the Board of Directors) will monitor the creditworthiness of the seller of the
repurchase agreement and must find such creditworthiness satisfactory before the
Fund may enter into the repurchase agreement.
The Fund records investment transactions generally on the trade date. Net
realized gains and losses on sales of investments, if any, are determined on the
basis of identified cost. Interest income on interest bearing investments is
recognized on an accrual basis.
All of the Fund's net investment income and any realized gains and losses
(none through July 31, 1996) on portfolio investments are declared as dividends
daily to shareholders of record as of the preceding business day.
2. FEDERAL INCOME TAXES
No provision for federal income taxes is considered necessary because the
Fund is qualified as a "regulated investment company" under the Internal Revenue
Code and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments is
the same for both federal income tax and financial reporting purposes.
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into agreements with FBL Investment Advisory Services,
Inc. ("FBL Investment") relating to the management of the Fund and the
investment of its assets. Pursuant to these agreements, fees paid to FBL
Investment are as follows: (1) investment advisory and management fees, which
are based on the Fund's daily net assets, currently at an annual rate of 0.50%
for the first $200,000,000 average daily net assets; (2) shareholder service,
transfer and dividend disbursing agent fees, which are based on direct services
provided and expenses incurred by the investment adviser, plus an annual per
account charge of $12.00; and (3) accounting fees, which are based on the Fund's
daily net assets at an annual rate of 0.05%, with a maximum annual expense of
$30,000.
7
<PAGE>
FBL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
FBL Investment has agreed to reimburse the Fund annually for its total
expenses, excluding brokerage, interest, taxes and extraordinary expenses in
excess of 1.50% of the Fund's average daily net assets. The amount reimbursed,
however, shall not exceed the amount of the investment advisory and management
fees paid by the Fund for such period.
Certain officers and directors of the Fund are also officers of Farm Bureau
Life Insurance Company, the indirect parent of FBL Investment, and other
affiliated entities. At July 31, 1996, Farm Bureau and its affiliated companies
owned 3,818,080 shares in the Fund:
4. CAPITAL SHARE TRANSACTIONS
Net assets as of July 31, 1996 consisted of:
<TABLE>
<S> <C>
Capital Stock (500,000,000 shares of $.001 par value Capital
Stock authorized)............................................ $ 24,574
Additional paid-in capital.................................... 24,549,372
-----------
Net Assets.................................................... $24,573,946
-----------
-----------
</TABLE>
Transactions in Capital Stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------------------
1996 1995
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold............................ 77,494,901 $ 77,494,901 60,737,863 $ 60,737,863
Shares issued in reinvestment of
dividends and distributions........... 916,068 916,068 769,139 769,139
-------------- --------------- -------------- ---------------
78,410,969 78,410,969 61,507,002 61,507,002
Shares redeemed........................ (73,813,827) (73,813,827) (60,456,957) (60,456,957)
-------------- --------------- -------------- ---------------
Net Increase........................... 4,597,142 $ 4,597,142 1,050,045 $ 1,050,045
-------------- --------------- -------------- ---------------
-------------- --------------- -------------- ---------------
</TABLE>
8
<PAGE>
FBL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income are declared daily and are payable on
the last business day of the month. Dividends for the period ended July 31, 1996
were paid as follows:
<TABLE>
<CAPTION>
PAYABLE DATE
- -------------------------------------------------------------------
<S> <C>
August 31, 1995.................................................... $ .0037
September 29, 1995................................................. .0034
October 31, 1995................................................... .0037
November 30, 1995.................................................. .0035
December 29, 1995.................................................. .0033
January 31, 1996................................................... .0036
February 29, 1996.................................................. .0031
March 29, 1996..................................................... .0030
April 30, 1996..................................................... .0033
May 31, 1996....................................................... .0032
June 28, 1996...................................................... .0028
July 31, 1996...................................................... .0033
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Total Dividends Per Share.......................................... $ .0399
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---------
</TABLE>
9
<PAGE>
FBL MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income From Investment Operations
Net investment income.............................. 0.040 0.041 0.020 0.019 0.036
--------- --------- --------- --------- ---------
Total from investment operations..................... 0.040 0.041 0.020 0.019 0.036
--------- --------- --------- --------- ---------
Less Distributions
Dividends (from net investment income)............. (0.040) (0.041) (0.020) (0.019) (0.036)
--------- --------- --------- --------- ---------
Total distributions.................................. (0.040) (0.041) (0.020) (0.019) (0.036)
--------- --------- --------- --------- ---------
Net asset value, end of year........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total Return:
Total investment return based on net asset value
(1)................................................. 4.05% 4.17% 1.95% 1.91% 3.69%
Ratios/Supplemental Data:
Net assets, end of year ($000's omitted)............. 24,574 19,977 18,927 22,072 33,511
Ratio of net expenses to average net assets.......... 1.50% 1.51% 1.50% 1.50% 1.25%
Ratio of net income to average net assets............ 3.92% 4.06% 1.92% 1.89% 3.75%
Information assuming no voluntary reimbursement by FBL
Investment of excess operating expenses (see NOTE 3):
Per share net investment income...................... $ 0.038 $ 0.036 $ 0.019 $ 0.019
Ratio of expenses to average net assets.............. 1.72% 2.01% 1.57% 1.54%
Amount reimbursed.................................... $ 51,886 $ 96,398 $ 6,978 $ 5,116
</TABLE>
- ------------------------
Note: Per share amounts have been calculated on the basis of monthly per share
amounts (using average monthly outstanding shares) accumulated for the
period.
(1) Total investment return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
SEE ACCOMPANYING NOTES.
10
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
FBL Money Market Fund, Inc.
We have audited the accompanying statement of assets and liabilities of FBL
Money Market Fund, Inc., including the schedule of investments, as of July 31,
1996, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of FBL
Money Market Fund, Inc. at July 31, 1996, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
Des Moines, Iowa
August 30, 1996
11
