<PAGE> 1
Farm Bureau Mutual Funds
EquiTrust Money
Market Fund, Inc.
[LOGO]
Annual Report
July 31, 1998
Investment Manager and
Principal Underwriter
EquiTrust Investment
Management 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
FARM BUREAU MUTUAL FUNDS unless preceded or accompanied by
a prospectus.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266
[FARM BUREAU LOGO]
737-128 (98)
<PAGE> 2
PRESIDENT'S LETTER
Dear Shareholder:
In our last report, we asked the following questions: What will be the
affect from the Asian economy being in dire straits? Because the United States
participates in global markets, will it affect the U.S. economy and throw us
into an economic slowdown? It appears the answer to both is "yes."
After a tumultuous six months, domestic capital market participants clearly
understand that today's world markets are interrelated, as worries about the
overseas markets are gripping those in the U.S. The precarious situation of the
international financial markets and economies in Asia, Russia and Latin America
has prevented the Federal Reserve (Fed) from tightening the Fed funds rate.
The U.S. trade sector is deteriorating as a result of the Asian crisis.
This past June, merchandise exports to the entire Pacific Rim were down 20.1%
versus a year ago, spawning a deceleration in industrial output. The
Philadelphia Federal Reserve Bank's survey of industrial activity in the mid-
Atlantic region was up slightly, at 13.3%, in mid-August which is low relative
to 1996, but supported by domestic demand offsetting the Asian crisis. The
resulting effect on the Treasury curve has been a dramatic "flight to quality"
with the 30-year Treasury bond yielding 5.34%, almost 16-basis points less than
the current Fed funds rate of 5.50%.
While some investors are able to withstand choppy seas and high turbulence
in their portfolio holdings, others find it easier to sell and wait for trouble
to pass. Whatever your risk tolerance, a money market fund can add stability and
liquidity to any investment portfolio.
/s/ EDWARD M. WIEDERSTEIN
EDWARD M. WIEDERSTEIN
PRESIDENT
September 1, 1998
2
<PAGE> 3
EQUITRUST MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (equivalent to amortized
cost)..................................................... $25,692,673
Cash........................................................ 674,831
Accrued interest receivable................................. 45,869
Prepaid expenses............................................ 1,192
-----------
Total Assets................................................ $26,414,565
===========
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable to EquiTrust Investment Management
Services, Inc......................................... $ 19,434
Fund shares purchased.................................. 450
Accrued expenses....................................... 31,096
-----------
Total Liabilities........................................... 50,980
Net assets applicable to 26,363,585 shares of capital stock
outstanding............................................... 26,363,585
-----------
Total Liabilities and Net Assets............................ $26,414,565
===========
NET ASSET VALUE PER SHARE................................... $ 1.00
===========
</TABLE>
See accompanying notes.
3
<PAGE> 4
EQUITRUST MONEY MARKET FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest.................................................... $1,418,729
EXPENSES
Paid to EquiTrust Investment Management Services, Inc.:
Investment advisory and management fees................... 63,950
Shareholder service, transfer and dividend disbursing
agent fees............................................. 114,730
Accounting fees........................................... 12,790
Custodian fees.............................................. 54,484
Legal fees.................................................. 9,770
Directors' fees and expenses................................ 5,080
Reports to shareholders..................................... 18,569
Registration fees........................................... 11,345
Miscellaneous............................................... 26,755
----------
Total Expenses.............................................. 317,473
----------
Net Increase in Net Assets Resulting from Operations........ $1,101,256
==========
</TABLE>
See accompanying notes.
4
<PAGE> 5
EQUITRUST MONEY MARKET FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------
1998 1997
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income....................................... $ 1,101,256 $ 945,941
DIVIDENDS TO SHAREHOLDERS FROM
Net investment income....................................... (1,101,256) (945,941)
----------- -----------
-0- -0-
CAPITAL SHARE TRANSACTIONS.................................. 3,309,857 (1,520,218)
----------- -----------
Total Increase (Decrease) in Net Assets..................... 3,309,857 (1,520,218)
NET ASSETS
Beginning of year........................................... 23,053,728 24,573,946
----------- -----------
End of year................................................. $26,363,585 $23,053,728
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE> 6
EQUITRUST MONEY MARKET FUND, INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1998
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- ---------- -----------
<S> <C> <C> <C>
COMMERCIAL PAPER (23.90%)
NONDEPOSITORY INSTITUTIONS
American General Finance Co., 5.58%, due
8/05/98........................................ 5.575% $1,200,000 $ 1,200,000
John Deere Capital Corp., 5.57%, due 9/10/98...... 5.568 1,275,000 1,275,000
Ford Motor Credit Corp., 5.55%, due 8/14/98....... 5.546 1,350,000 1,350,000
General Electric Capital Corp., 5.59%, due
9/04/98........................................ 5.594 1,275,000 1,275,000
IBM Credit Corp., 5.53%, due 8/31/98.............. 5.531 1,200,000 1,200,000
-----------
Total Commercial Paper.............................. 6,300,000
UNITED STATES GOVERNMENT AGENCIES (73.56%)
Federal Home Loan Bank, due 10/21/98.............. 5.528 1,000,000 987,880
Federal Home Loan Mortgage Corp., due 8/03/98..... 5.539 1,250,000 1,249,621
Federal Home Loan Mortgage Corp., due 8/04/98..... 5.559 700,000 699,680
Federal Home Loan Mortgage Corp., due 8/18/98..... 5.562 825,000 822,868
Federal Home Loan Mortgage Corp., due 8/21/98..... 5.510 700,000 697,893
Federal Home Loan Mortgage Corp., due 8/26/98..... 5.535 1,600,000 1,593,957
Federal Home Loan Mortgage Corp., due 8/28/98..... 5.530 1,300,000 1,294,704
Federal Home Loan Mortgage Corp., due 9/01/98..... 5.558 500,000 497,651
Federal Home Loan Mortgage Corp., due 9/18/98..... 5.538 1,000,000 992,770
Federal Home Loan Mortgage Corp., due 9/30/98..... 5.514 2,100,000 2,081,137
Federal Home Loan Mortgage Corp., due 10/06/98.... 5.532 800,000 792,077
Federal Home Loan Mortgage Corp., due 10/09/98.... 5.556 600,000 593,764
Federal Home Loan Mortgage Corp., due 10/14/98.... 5.547 500,000 494,440
Federal National Mortgage Assoc., due 8/20/98..... 5.550 700,000 697,984
Federal National Mortgage Assoc., due 8/12/98..... 5.511 2,750,000 2,745,440
Federal National Mortgage Assoc., due 9/14/98..... 5.536 500,000 496,685
Federal National Mortgage Assoc., due 9/18/98..... 5.528 775,000 769,406
Federal National Mortgage Assoc., due 9/22/98..... 5.548 900,000 892,943
Federal National Mortgage Assoc., due 9/25/98..... 5.505 1,000,000 991,773
-----------
Total United States Government Agencies............. 19,392,673
-----------
Total Investments (97.46%).......................... 25,692,673
OTHER ASSETS LESS LIABILITIES (2.54%)
Cash, receivables and prepaid expenses, less
liabilities.................................... 670,912
-----------
Total Net Assets (100.00%).......................... $26,363,585
===========
</TABLE>
See accompanying notes.
6
<PAGE> 7
EQUITRUST MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
EquiTrust 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. Prior to
May 1, 1998, the Fund was named FBL Money Market Fund, Inc.
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, 1998) 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.
7
<PAGE> 8
EQUITRUST MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into agreements with EquiTrust Investment Management
Services, Inc. ("EquiTrust Investment"), formerly known as FBL Investment
Advisory Services, Inc., relating to the management of the Fund and the
investment of its assets. Pursuant to these agreements, fees paid to EquiTrust
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 0.25%;
(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 $9.00; 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.
EquiTrust 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. For the year ended July 31,
1998, the Fund's expenses were below the reimbursement threshold, and
accordingly, no amounts were reimbursed by EquiTrust Investment.
Certain officers and directors of the Fund are also officers of FBL
Financial Group, Inc., the indirect parent of EquiTrust Investment, and other
affiliated entities. At July 31, 1998, FBL Financial Group, Inc. and its
affiliated companies owned 2,888,458 shares in the Fund.
4. CAPITAL SHARE TRANSACTIONS
Net assets as of July 31, 1998 consisted of:
<TABLE>
<S> <C>
Capital Stock (500,000,000 shares of $.001 par value
Capital Stock authorized)........................... $ 26,364
Additional paid-in capital............................ 26,337,221
-----------
Net Assets............................................ $26,363,585
===========
</TABLE>
Transactions in Capital Stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------------------------
1998 1997
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Shares sold......................... 83,625,990 $ 83,625,990 80,558,632 $80,558,632
Shares issued in reinvestment of
dividends and distributions....... 994,794 994,794 939,265 939,265
Shares redeemed..................... (81,310,927) (81,310,927) (83,018,115) (83,018,115)
----------- ------------ ----------- -----------
Net Increase (Decrease)............. 3,309,857 $ 3,309,857 (1,520,218) $(1,520,218)
=========== ============ =========== ===========
</TABLE>
8
<PAGE> 9
EQUITRUST 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, 1998
were paid as follows:
<TABLE>
<CAPTION>
PAYABLE DATE
- ------------
<S> <C>
August 30, 1997............................................ $.0035
September 30, 1997......................................... .0036
October 31, 1997........................................... .0036
November 26, 1997.......................................... .0030
December 31, 1997.......................................... .0043
January 31, 1998........................................... .0036
February 27, 1998.......................................... .0032
March 31, 1998............................................. .0036
April 30, 1998............................................. .0035
May 29, 1998............................................... .0033
June 30, 1998.............................................. .0038
July 31, 1998.............................................. .0044
------
Total Dividends Per Share.................................. $.0434
======
</TABLE>
9
<PAGE> 10
EQUITRUST MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<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............................ 0.043 0.040 0.040 0.041 0.020
------- ------- ------- ------- -------
Total from investment operations................... 0.043 0.040 0.040 0.041 0.020
------- ------- ------- ------- -------
Less Distributions
Dividends (from net investment income)........... (0.043) (0.040) (0.040) (0.041) (0.020)
------- ------- ------- ------- -------
Total distributions................................ (0.043) (0.040) (0.040) (0.041) (0.020)
------- ------- ------- ------- -------
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)......................................... 4.44% 3.99% 4.05% 4.17% 1.95%
Ratios/Supplemental Data:
Net assets, end of period ($000's omitted)......... 26,364 23,054 24,574 19,977 18,927
Ratio of net expenses to average net assets........ 1.27% 1.51% 1.50% 1.51% 1.50%
Ratio of net income to average net assets.......... 4.40% 3.90% 3.92% 4.06% 1.92%
Information assuming no voluntary reimbursement by
EquiTrust Investment of excess operating expenses
(see Note 3):
Per share net investment income.................... $ 0.043 $ 0.040 $ 0.038 $ 0.036 $ 0.019
Ratio of expenses to average net assets............ 1.27% 1.55% 1.72% 2.01% 1.57%
Amount reimbursed.................................. $ 0 $10,590 $51,886 $96,398 $ 6,978
</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> 11
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
EquiTrust Money Market Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
EquiTrust Money Market Fund, Inc. (formerly known as FBL Money Market Fund,
Inc.), including the schedule of investments, as of July 31, 1998, 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, 1998, 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
EquiTrust Money Market Fund, Inc. at July 31, 1998, 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 28, 1998
11
