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[LOGO]
EquiTrust Money
Market Fund, Inc.
ANNUAL REPORT
JULY 31, 1999
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 unless preceded or
accompanied by a prospectus.
737-128(99)
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PRESIDENT'S LETTER
Dear Shareholder:
The Federal Reserve, seeking to be pre-emptive, nudged the Fed Funds rate up
one quarter of one percent on June 30th. With the June unemployment rate at
4.3%, the Fed remains concerned that at some point, the diminished labor supply
will lead to inflationary wage gains. Critics argue that productivity gains
driven by new technological developments will allow our economy to continue
generating non-inflationary growth even at relatively full employment.
Further support for a rate hike was the return to equilibrium of monetary
policy after the disruption in the fall of 1998. You may recall that the
financial markets were very unstable after the Russian crisis, bailout of a
hedge fund and bankruptcy of financial firms because of liquidity issues. The
Fed quickly lowered the Fed Funds rate 0.75% to restore calmness and liquidity
to a fragile system. As 1999 progressed, the Fed focused once again on sound
monetary policy for the United States and is adjusting the Fed Funds rate to
maintain stability.
With increasing volatility in the capital markets, a money market fund
offers liquidity and stability, allowing your investment to earn a yield while
you evaluate other investment options. As interest rates are rising, a money
market fund is an excellent place to capture increasing yields with minimal
risks.
/s/ Edward M. Wiederstein
EDWARD M. WIEDERSTEIN
PRESIDENT
August 26, 1999
2
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EQUITRUST MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (equivalent to
amortized cost).................................. $31,261,438
Cash.............................................. 121,921
Accrued interest receivable....................... 18,087
Prepaid expenses.................................. 1,154
-----------
Total Assets...................................... $31,402,600
-----------
-----------
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable to EquiTrust Investment
Management Services, Inc....................... $ 20,034
Fund shares purchased........................... 2,791
Accrued expenses................................ 5,449
-----------
Total Liabilities................................. 28,274
Net assets applicable to 31,374,326 shares of
capital stock outstanding........................ 31,374,326
-----------
Total Liabilities and Net Assets.................. $31,402,600
-----------
-----------
NET ASSET VALUE PER SHARE......................... $ 1.00
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
3
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EQUITRUST MONEY MARKET FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest.......................................... $1,511,339
EXPENSES
Paid to EquiTrust Investment Management Services,
Inc.:
Investment advisory and management fees.......... 74,472
Shareholder service, transfer and dividend
disbursing agent fees........................... 111,567
Accounting fees.................................. 14,894
Custodian fees.................................... 95,474
Legal fees........................................ 6,688
Directors' fees and expenses...................... 5,455
Reports to shareholders........................... 52,924
Registration fees................................. 13,049
Miscellaneous..................................... 12,861
----------
Total Expenses.................................... 387,384
Fees paid indirectly.............................. (19,673)
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Net Expenses...................................... 367,711
----------
Net Increase in Net Assets Resulting from
Operations....................................... $1,143,628
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES.
4
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EQUITRUST MONEY MARKET FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income................... $ 1,143,628 $ 1,101,256
DIVIDENDS TO SHAREHOLDERS FROM
Net investment income................... (1,143,628) (1,101,256)
----------- -----------
-0- -0-
CAPITAL SHARE TRANSACTIONS.............. 5,010,741 3,309,857
----------- -----------
Total Increase in Net Assets............ 5,010,741 3,309,857
NET ASSETS
Beginning of year....................... 26,363,585 23,053,728
----------- -----------
End of year............................. $31,374,326 $26,363,585
----------- -----------
----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES.
5
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EQUITRUST MONEY MARKET FUND, INC.
SCHEDULE OF INVESTMENTS
JULY 31, 1999
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- ------------ -------------
<S> <C> <C> <C>
COMMERCIAL PAPER (19.51%)
- ------------------------------
NONDEPOSITORY INSTITUTIONS
American General Finance Co.,
4.89%, due 8/04/99.............. 4.889% $ 800,000 $ 800,000
Ford Motor Credit Corp., 5.07%,
due 8/10/99..................... 5.074 1,320,000 1,320,000
General Electric Capital Corp.,
5.14%, due 8/20/99.............. 5.142 1,135,000 1,135,000
IBM Credit Corp., 5.03%, due
8/06/99......................... 5.025 1,500,000 1,500,000
Norwest Financial, Inc., 5.09%,
due 8/09/99..................... 5.089 1,365,000 1,365,000
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Total Commercial Paper............. 6,120,000
UNITED STATES GOVERNMENT AGENCIES (80.13%)
- -----------------------------------------------
Federal Home Loan Bank, due
8/11/99......................... 5.006 2,780,000 2,775,812
Federal Home Loan Bank, due
8/18/99......................... 5.026 2,635,000 2,628,485
Federal Home Loan Mortgage Corp.,
due 8/02/99..................... 5.001 1,615,000 1,614,558
Federal Home Loan Mortgage Corp.,
due 8/12/99..................... 4.969 725,000 723,817
Federal Home Loan Mortgage Corp.,
due 8/16/99..................... 5.030 315,000 314,307
Federal Home Loan Mortgage Corp.,
due 8/17/99..................... 5.007 3,265,000 3,257,404
Federal Home Loan Mortgage Corp.,
due 8/23/99..................... 5.005 865,000 862,280
Federal Home Loan Mortgage Corp.,
due 8/24/99..................... 5.012 1,275,000 1,270,812
Federal Home Loan Mortgage Corp.,
due 8/26/99..................... 4.999 425,000 423,492
Federal National Mortgage Assoc.,
due 8/03/99..................... 5.037 775,000 774,679
Federal National Mortgage Assoc.,
due 8/05/99..................... 5.038 3,035,000 3,032,907
Federal National Mortgage Assoc.,
due 8/06/99..................... 5.089 1,500,000 1,498,746
Federal National Mortgage Assoc.,
due 8/13/99..................... 4.990 1,230,000 1,227,818
Federal National Mortgage Assoc.,
due 8/19/99..................... 5.025 805,000 802,900
Federal National Mortgage Assoc.,
due 8/20/99..................... 4.977 2,735,000 2,727,562
Federal National Mortgage Assoc.,
due 8/25/99..................... 5.014 1,210,000 1,205,859
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Total United States Government
Agencies.......................... 25,141,438
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Total Investments (99.64%)......... 31,261,438
OTHER ASSETS LESS LIABILITIES (0.36%)
- -----------------------------------------
Cash, receivables and prepaid
expenses, less liabilities...... 112,888
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Total Net Assets (100.00%)......... $ 31,374,326
-------------
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</TABLE>
SEE ACCOMPANYING NOTES.
6
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EQUITRUST MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
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.
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 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 is recognized on an accrual basis.
All of the Fund's net investment income and any realized gains and losses 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 EquiTrust Investment Management
Services, Inc. ("EquiTrust Investment") 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
7
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EQUITRUST MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
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 EquiTrust Investment, and other
affiliated entities. At July 31, 1999, FBL Financial Group, Inc. and its
affiliated companies owned 5,534,083 shares in the Fund.
4. EXPENSE OFFSET ARRANGEMENTS
The Fund and other mutual funds managed by EquiTrust Investment have an
agreement with the custodian bank to indirectly pay a portion of the custodian's
fees through credits earned by the Funds' cash on deposit with the bank. Such
deposit agreement is an alternative to overnight investments.
5. CAPITAL SHARE TRANSACTIONS
Net assets as of July 31, 1999 consisted of:
<TABLE>
<S> <C>
Capital Stock (500,000,000 shares of $.001 par
value
Capital Stock authorized)....................... $ 31,374
Additional paid-in capital........................ 31,342,952
-----------
Net Assets........................................ $31,374,326
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-----------
</TABLE>
Transactions in Capital Stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold................... 87,713,062 $ 87,713,062 83,625,990 $ 83,625,990
Shares issued in reinvestment
of dividends and
distributions................ 1,041,980 1,041,980 994,794 994,794
Shares redeemed............... (83,744,301) (83,744,301) (81,310,927) (81,310,927)
----------- ------------ ----------- ------------
Net Increase.................. 5,010,741 $ 5,010,741 3,309,857 $ 3,309,857
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
8
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EQUITRUST MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. 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, 1999
were paid as follows:
<TABLE>
<CAPTION>
PAYABLE DATE
- --------------------------------------------------
<S> <C>
August 31, 1998................................... $.0040
September 30, 1998................................ .0037
October 30, 1998.................................. .0036
November 30, 1998................................. .0035
December 31, 1998................................. .0035
January 29, 1999.................................. .0032
February 26, 1999................................. .0027
March 31, 1999.................................... .0032
April 30, 1999.................................... .0028
May 28, 1999...................................... .0025
June 30, 1999..................................... .0029
July 30, 1999..................................... .0029
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Total Dividends Per Share......................... $.0385
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</TABLE>
9
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EQUITRUST MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<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.............. 0.039 0.043 0.040 0.040 0.041
------- ------- ------- ------- -------
Total from investment
operations............ 0.039 0.043 0.040 0.040 0.041
------- ------- ------- ------- -------
Less Distributions
Dividends from net
investment income... (0.039) (0.043) (0.040) (0.040) (0.041)
------- ------- ------- ------- -------
Total distributions.... (0.039) (0.043) (0.040) (0.040) (0.041)
------- ------- ------- ------- -------
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)............. 3.91% 4.44% 3.99% 4.05% 4.17%
Ratios/Supplemental Data:
Net assets, end of
period ($000's
omitted).............. 31,374 26,364 23,054 24,574 19,977
Ratio of total expenses
to average net
assets................ 1.30% 1.27% 1.55% 1.72% 2.01%
Ratio of net expenses
to average net
assets................ 1.23% 1.27% 1.51% 1.50% 1.51%
Ratio of net income to
average net assets.... 3.83% 4.40% 3.90% 3.92% 4.06%
Information assuming no
voluntary reimbursement
by EquiTrust Investment
of excess operating
expenses (see NOTE 3):
Per share net
investment income..... $ 0.040 $ 0.038 $ 0.036
Ratio of expenses to
average net assets.... 1.55% 1.72% 2.01%
Amount reimbursed...... $10,590 $51,886 $96,398
</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
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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,
including the schedule of investments, of EquiTrust Money Market Fund, Inc. as
of July 31, 1999, 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, 1999, 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, 1999, 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 27, 1999
11
