Farm Bureau Mutual Funds
FBL Money
Market Fund, Inc.
[GRAPHIC]
ANNUAL REPORT
JULY 31, 1997
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)
FARM BUREAU MUTUAL FUNDS [GRAPHIC] This report is not to be
distributed unless preceded
5400 UNIVERSITY AVENUE or accompanied by a prospectus.
WEST DES MOINES, IOWA 50266
737-128 (97)
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder,
Today, long bonds are yielding 6.50% and the Federal Funds Rate is at
5.50%, which is close to the long-term spread relationship of 1.18%. These
numbers, combined with low inflation, low unemployment, high consumer confidence
and moderate capacity utilization, leads us to question if the Federal Reserve
has engineered a perfect U.S. economy.
Federal Reserve Chairman Greenspan wondered aloud how the economy could
continue to operate at its current level of resource utilization without
experiencing an increase in the inflation rate. Perhaps administrators have
learned from past monetary policy mistakes and have found a way to minimize the
development of large boom and bust cycles. This extended period of low inflation
is steadily altering expectations of consumers and investors alike. Consumers
and companies, who have become confident that authorities will be able to keep a
lid on inflation, find themselves consistently adjusting their behaviors to
react to this low-inflation environment.
However, extremely tight labor markets remain a major reason to expect a
modest increase in inflation. Companies are finding it increasingly difficult to
recruit qualified employees and there has been a corresponding increase in wage
growth. Even a slight uptick in inflation during the next year should be enough
to unsettle the financial markets. The dizzying heights of the stock markets
could topple quickly and dramatically if inflation fears become real. The
forward markets are pricing an unchanged Fed policy during the next two years,
which is extremely complacent. For now, consumer fundamentals remain in
excellent shape, capital spending is strong and export growth is firming in
response to a gradual improvement in global demand, but can it last?
Whether markets gyrate due to interest rate movements, inflation concerns
or stock market activity, a money market fund provides investment
diversification to your portfolio. FBL Money Market Fund, Inc. strives to
maintain liquidity and safety of principal for shareholders as they try to
determine what the Fed might do next.
/S/ EDWARD M. WIEDERSTEIN
EDWARD M. WIEDERSTEIN
PRESIDENT
September 4, 1997
2
<PAGE>
FBL MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (equivalent to amortized cost) ... $22,267,186
Cash .................................................................. 790,451
Accrued interest receivable. .......................................... 33,509
Prepaid expenses . ................................................... 862
-----------
Total Assets ......................................................... $23,092,008
===========
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable to FBL Investment Advisory Services, Inc. ......... $ 12,647
Accrued expenses . ................................................... 25,633
-----------
Total Liabilities ................................................... 38,280
Net assets applicable to 23,053,728 shares
of capital stock outstanding ....................................... 23,053,728
-----------
Total Liabilities and Net Assets .................................... $23,092,008
===========
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, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest................................................................ $1,311,838
EXPENSES
Paid to FBL Investment Advisory Services, Inc.:
Investment advisory and management fees............................... 81,111
Shareholder service, transfer and dividend disbursing agent fees...... 131,149
Accounting fees....................................................... 12,197
Custodian fees.......................................................... 58,405
Legal fees.............................................................. 18,774
Audit fees.............................................................. 8,800
Directors' fees and expenses............................................ 5,641
Reports to shareholders................................................. 40,443
Registration fees....................................................... 21,015
Miscellaneous........................................................... (1,048)
----------
Total Expenses.......................................................... 376,487
Expense reimbursement................................................... (10,590)
----------
Net Expenses............................................................ 365,897
----------
Net Increase in Net Assets Resulting from Operations.................... $ 945,941
==========
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
FBL MONEY MARKET FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income........................... $ 945,941 $ 926,317
DIVIDENDS TO SHAREHOLDERS FROM
Net investment income........................... (945,941) (926,317)
----------- -----------
-0- -0-
CAPITAL SHARE TRANSACTIONS...................... (1,520,218) 4,597,142
----------- -----------
Total Increase (Decrease) in Net Assets......... (1,520,218) 4,597,142
NET ASSETS
Beginning of year............................... 24,573,946 19,976,804
----------- -----------
End of year..................................... $23,053,728 $24,573,946
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
FBL MONEY MARKET FUND, INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- ---------- -----------
<S> <C> <C> <C>
COMMERCIAL PAPER (24.07%)
NONDEPOSITORY INSTITUTIONS
American General Finance Corp., 5.61%, due 9/11/97........ 5.606% $1,100,000 $ 1,100,000
Ford Motor Credit Corp., 5.65%, due 8/15/97............... 5.647 1,100,000 1,100,000
IBM Corp., 5.53%, due 10/2/97............................. 5.530 1,150,000 1,150,000
John Deere Capital Corp., 5.55%, due 9/23/97.............. 5.553 1,100,000 1,100,000
Norwest Financial, Inc., 5.56%, due 9/16/97............... 5.559 1,100,000 1,100,000
-----------
Total Commercial Paper..................................... 5,550,000
UNITED STATES GOVERNMENT AGENCIES (72.52%)
Federal Farm Credit Bank, due 8/25/97..................... 5.497 600,000 597,839
Federal Farm Credit Bank, due 9/25/97..................... 5.478 1,300,000 1,289,357
Federal Home Loan Bank, due 8/01/97....................... 5.432 1,350,000 1,350,000
Federal Home Loan Mortgage Corp., due 8/01/97............. 5.641 475,000 475,000
Federal Home Loan Mortgage Corp., due 8/06/97............. 5.686 1,300,000 1,298,989
Federal Home Loan Mortgage Corp., due 8/28/97............. 5.472 1,000,000 995,968
Federal Home Loan Mortgage Corp., due 8/29/97............. 5.600 800,000 796,578
Federal Home Loan Mortgage Corp., due 9/18/97............. 5.567 800,000 794,185
Federal National Mortgage Assoc., due 8/08/97............. 5.451 1,875,000 1,873,042
Federal National Mortgage Assoc., due 8/12/97............. 5.675 1,000,000 998,293
Federal National Mortgage Assoc., due 8/19/97............. 5.469 1,680,000 1,675,481
Federal National Mortgage Assoc., due 8/25/97............. 5.600 600,000 597,799
Federal National Mortgage Assoc., due 9/04/97............. 5.633 1,900,000 1,890,082
Federal National Mortgage Assoc., due 9/08/97............. 5.562 1,000,000 994,242
Federal National Mortgage Assoc., due 9/29/97............. 5.486 1,100,000 1,090,331
-----------
Total United States Government Agencies.................... 16,717,186
-----------
Total Investments (96.59%)................................. 22,267,186
OTHER ASSETS LESS LIABILITIES (3.41%)
Cash, receivables and prepaid expenses, less liabilities 786,542
-----------
Total Net Assets (100.00%)................................. $23,053,728
===========
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
FBL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997
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, 1997) on portfolio investments are declared as dividends
daily to shareholders of record as of the preceding business day.
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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 determined as follows: (1) investment advisory and management
fees, which are based on the Fund's average daily net assets, currently at an
annual rate of 0.25% (0.50% prior to December 1, 1996); (2) shareholder service,
transfer and dividend disbursing agent fees, which are based on direct services
provided and expenses incurred by the investment
7
<PAGE>
FBL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
adviser, plus an annual per account charge of $9.00 and miscellaneous activity
fees; 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.
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 FBL
Financial Group, Inc., the indirect parent of FBL Investment, and other
affiliated entities. At July 31, 1997, FBL Financial Group, Inc. and its
affiliated companies owned 3,072,853 shares in the Fund.
4. CAPITAL SHARE TRANSACTIONS
Net assets as of July 31, 1997, consisted of:
Capital Stock (500,000,000 shares of $.001 par value
Capital Stock authorized)........................ $ 23,054
Additional paid-in capital.......................... 23,030,674
-----------
Net Assets.......................................... $23,053,728
===========
Transactions in Capital Stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------------------------------------------
1997 1996
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold.......................... 80,558,632 $ 80,558,632 77,494,901 $ 77,494,901
Shares issued in reinvestment of
dividends and distributions......... 939,265 939,265 916,068 916,068
----------- ------------- ----------- -------------
81,497,897 81,497,897 78,410,969 78,410,969
Shares redeemed...................... (83,018,115) (83,018,115) (73,813,827) (73,813,827)
----------- ------------- ----------- -------------
Net Increase (Decrease).............. (1,520,218) $ (1,520,218) 4,597,142 $ 4,597,142
=========== ============= =========== =============
</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 year ended July 31, 1997,
were paid as follows:
PAYABLE DATE
------------
August 30, 1996................... $.0032
September 30, 1996................ .0033
October 31, 1996.................. .0033
November 27, 1996................. .0029
December 31, 1996................. .0037
January 31, 1997.................. .0033
February 28, 1997................. .0030
March 31, 1997.................... .0033
April 30, 1997.................... .0032
May 31, 1997...................... .0033
June 30, 1997..................... .0035
July 31, 1997..................... .0035
------
Total Dividends Per Share......... $.0395
======
9
<PAGE>
FBL MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<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 0.040 0.041 0.020 0.019
------- ------- ------- ------- -------
Total from investment operations.................... 0.040 0.040 0.041 0.020 0.019
------- ------- ------- ------- -------
Less Distributions
Dividends (from net investment income)............ (0.040) (0.040) (0.041) (0.020) (0.019)
------- ------- ------- ------- -------
Total distributions................................. (0.040) (0.040) (0.041) (0.020) (0.019)
------- ------- ------- ------- -------
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).......................................... 3.99% 4.05% 4.17% 1.95% 1.91%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)............. $23,054 $24,574 $19,977 $18,927 $22,072
Ratio of net expenses to average net assets......... 1.51% 1.50% 1.51% 1.50% 1.50%
Ratio of net income to average net assets........... 3.90% 3.92% 4.06% 1.92% 1.89%
Information assuming no voluntary reimbursement
by FBL Investment of excess operating expenses
(see NOTE 3):
Per share net investment income..................... $ 0.040 $ 0.038 $ 0.036 $ 0.019 $ 0.019
Ratio of expenses to average net assets............. 155% 1.72% 2.01% 1.57% 1.54%
Amount reimbursed................................... $10,590 $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 year, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the year.
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, 1997, 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 and financial highlights. Our procedures included confirmation of
securities owned as of July 31, 1997, 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, 1997, and 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.
/s/ Ernst & Young LLP
Des Moines, Iowa
August 29, 1997
11
<PAGE>
SHAREHOLDER MEETING RESULTS
FBL Money Market Fund, Inc. held a special meeting of shareholders on
November 7, 1996. At the meeting, the shareholders of the Fund elected the
following Directors: Edward M. Wiederstein, Richard D. Harris, Stephen M.
Morain, Donald G. Bartling, John R. Graham, Erwin H. Johnson, Ann Jorgensen,
Kenneth Kay and Curtis C. Pietz. The shareholders also ratified the selection of
Ernst & Young LLP as independent auditors for the fiscal year ending July 31,
1997.
12
