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[LOGO]
EquiTrust Money
Market Fund, Inc.
ANNUAL REPORT
JULY 31, 2000
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(00)
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
Money market funds provided a refuge from the turbulence of the stock and
bond markets over the past year, as the Fed Funds rate rose 1.50%, closing out
at 6.50%. Due to rising interest rates, the EquiTrust Money Market Fund, Inc.
reported greater income from its investments and a total return of 4.51% for the
12-month period ended July 31, 2000, while the S&P 500 turned in a performance
of 8.97%.
Rising short term interest rates, while good for money market fund
investors, were bad for bond investors because higher interest rates erode the
prices paid for bonds. The Lehman Brothers Aggregate Index earned 5.97% during
the past year despite experiencing a great deal of volatility. Stock prices were
more volatile than bond prices as the tech-heavy NASDAQ Composite Index dropped
-27.4% from March to May after turning in a stellar performance during 1999.
It's difficult to say whether the Fed has determined if it is done raising
interest rates. The United States economy is in the 10th year of its long
running expansion and with the current low unemployment rate of 4.0%, the
concern is that inflation is right around the corner. By raising interest rates
in small steps, the FOMC gradually cooled the economy and possibly engineered a
soft landing going into the elections. While we cannot predict interest rates,
we can predict that our fund will reflect the current short-term interest rate
environment.
It is reassuring to know that in a volatile capital market environment, a
money market fund can provide for the preservation of capital, stability and
liquidity necessary for short-term financial needs. Additionally, as interest
rates have risen, a money market fund has been an excellent place to capture the
increasing yields with minimal risks.
/s/ Edward M. Wiederstein
EDWARD M. WIEDERSTEIN
PRESIDENT
August 30, 2000
2
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EQUITRUST MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (equivalent to
amortized cost)....................................... $ 30,188,941
Cash................................................... 136,019
Accrued interest receivable............................ 18,643
Prepaid expenses and other assets...................... 1,604
------------
Total Assets........................................... $ 30,345,207
============
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable to EquiTrust Investment Management
Services, Inc....................................... $ 16,031
Accrued expenses..................................... 20,196
------------
Total Liabilities...................................... 36,227
Net assets applicable to 30,308,980 shares of capital
stock outstanding..................................... 30,308,980
------------
Total Liabilities and Net Assets....................... $ 30,345,207
============
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, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest............................................... $ 1,792,051
EXPENSES
Paid to EquiTrust Investment Management
Services, Inc.:
Investment advisory and management fees............... 77,427
Shareholder service, transfer and dividend disbursing
agent fees........................................... 120,293
Accounting fees....................................... 15,485
Custodian fees......................................... 117,497
Professional fees...................................... 39,235
Directors' fees and expenses........................... 10,705
Reports to shareholders................................ 39,719
Registration fees...................................... 11,859
Miscellaneous.......................................... 3,885
------------
Total Expenses......................................... 436,105
Fees paid indirectly................................... (12,008)
------------
Net Expenses........................................... 424,097
------------
Net Increase in Net Assets Resulting from Operations... $ 1,367,954
============
</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,
------------------------
2000 1999
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income................... $ 1,367,954 $ 1,143,628
DIVIDENDS TO SHAREHOLDERS FROM
Net investment income................... (1,367,954) (1,143,628)
----------- -----------
-0- -0-
CAPITAL SHARE TRANSACTIONS.............. (1,065,346) 5,010,741
----------- -----------
Total Increase (Decrease) in Net
Assets................................. (1,065,346) 5,010,741
NET ASSETS
Beginning of year....................... 31,374,326 26,363,585
----------- -----------
End of year............................. $30,308,980 $31,374,326
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
5
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EQUITRUST MONEY MARKET FUND, INC.
SCHEDULE OF INVESTMENTS
JULY 31, 2000
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- ----------- ------------
<S> <C> <C> <C>
COMMERCIAL PAPER (21.44%)
------------------------------
NONDEPOSITORY INSTITUTIONS
American General Finance Co.,
6.55%, due 8/02/00.............. 6.552% $1,390,000 $ 1,390,000
Ford Motor Credit Corp., 6.48%,
due 8/15/00..................... 6.483 1,505,000 1,505,000
General Electric Capital Corp.,
6.50%, due 8/16/00.............. 6.497 1,350,000 1,350,000
IBM Credit Corp., 6.41%, due
8/07/00......................... 6.413 375,000 375,000
Texaco, Inc., 6.49%, due
8/03/00......................... 6.493 500,000 500,000
Wells Fargo Financial, 6.54%, due
8/04/00......................... 6.540 200,000 200,000
Wells Fargo Financial, 6.50%, due
8/10/00......................... 6.496 1,180,000 1,180,000
-----------
Total Commercial Paper............. 6,500,000
UNITED STATES GOVERNMENT AGENCIES (78.16%)
-----------------------------------------------
Federal Home Loan Bank, due
8/04/00......................... 6.433 980,000 979,482
Federal Home Loan Bank, due
8/07/00......................... 6.451 860,000 859,089
Federal Home Loan Bank, due
8/11/00......................... 6.458 2,415,000 2,410,735
Federal Home Loan Bank, due
8/24/00......................... 6.462 2,400,000 2,390,266
Federal Home Loan Bank, due
8/25/00......................... 6.497 1,035,000 1,030,597
Federal Home Loan Bank, due
8/09/00......................... 6.452 2,235,000 2,231,844
Federal Home Loan Mortgage Corp.,
due 8/01/00..................... 6.454 1,520,000 1,520,000
Federal Home Loan Mortgage Corp.,
due 8/08/00..................... 6.480 1,500,000 1,498,138
Federal Home Loan Mortgage Corp.,
due 8/18/00..................... 6.480 1,905,000 1,899,267
Federal Home Loan Mortgage Corp.,
due 8/22/00..................... 6.487 2,720,000 2,709,886
Federal Home Loan Mortgage Corp.,
due 8/29/00..................... 6.470 1,550,000 1,542,345
Federal National Mortgage Assoc.,
due 8/03/00..................... 6.530 325,000 324,884
Federal National Mortgage Assoc.,
due 8/14/00..................... 6.496 1,500,000 1,496,537
Federal National Mortgage Assoc.,
due 8/17/00..................... 6.491 1,700,000 1,695,177
Federal National Mortgage Assoc.,
due 8/23/00..................... 6.491 1,105,000 1,100,694
-----------
Total United States Government
Agencies.......................... 23,688,941
-----------
Total Investments (99.60%)......... 30,188,941
OTHER ASSETS LESS LIABILITIES (0.40%)
-----------------------------------------
Cash, receivables and prepaid
expenses, less liabilities...... 120,039
-----------
Total Net Assets (100.00%)......... $30,308,980
===========
</TABLE>
SEE ACCOMPANYING NOTES.
6
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EQUITRUST MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
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
7
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EQUITRUST MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
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 EquiTrust Investment, and
other affiliated entities. At July 31, 2000, FBL Financial Group, Inc. and its
affiliated companies owned 2,379,803 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, 2000 consisted of:
<TABLE>
<S> <C>
Capital Stock (500,000,000 shares of $.001 par value
Capital Stock authorized)............................ $ 30,309
Additional paid-in capital............................. 30,278,671
------------
Net Assets............................................. $ 30,308,980
============
</TABLE>
Transactions in Capital Stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------
2000 1999
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold................... 92,355,650 $ 92,355,650 87,713,062 $ 87,713,062
Shares issued in reinvestment
of dividends and
distributions................ 1,237,946 1,237,946 1,041,980 1,041,980
Shares redeemed............... (94,658,942) (94,658,942) (83,744,301) (83,744,301)
----------- ------------ ----------- ------------
Net Increase (Decrease)....... (1,065,346) $ (1,065,346) 5,010,741 $ 5,010,741
=========== ============ =========== ============
</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, 2000
were paid as follows:
<TABLE>
<CAPTION>
PAYABLE DATE
------------
<S> <C>
August 31, 1999................................... $ .0035
September 30, 1999................................ .0034
October 29, 1999.................................. .0033
November 30, 1999................................. .0036
December 30, 1999................................. .0037
January 31, 2000.................................. .0038
February 29, 2000................................. .0035
March 31, 2000.................................... .0038
April 28, 2000.................................... .0035
May 31, 2000...................................... .0042
June 30, 2000..................................... .0040
July 31, 2000..................................... .0039
------------
Total Dividends Per Share......................... $ .0442
============
</TABLE>
9
<PAGE>
EQUITRUST MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<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.............. 0.044 0.039 0.043 0.040 0.040
------- ------- ------- ------- -------
Total from investment
operations............ 0.044 0.039 0.043 0.040 0.040
------- ------- ------- ------- -------
Less Distributions
Dividends (from net
investment
income)............. (0.044) (0.039) (0.043) (0.040) (0.040)
------- ------- ------- ------- -------
Total distributions.... (0.044) (0.039) (0.043) (0.040) (0.040)
------- ------- ------- ------- -------
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)............. 4.51% 3.91% 4.44% 3.99% 4.05%
Ratios/Supplemental Data:
Net assets, end of
period ($000's
omitted).............. $30,309 $31,374 $26,364 $23,054 $24,574
Ratio of total expenses
to average net
assets................ 1.41% 1.30% 1.27% 1.55% 1.72%
Ratio of net expenses
to average net
assets................ 1.37% 1.23% 1.27% 1.51% 1.50%
Ratio of net investment
income to average net
assets................ 4.42% 3.83% 4.40% 3.90% 3.92%
Information assuming no
voluntary reimbursement
by EquiTrust Investment
of excess operating
expenses (see NOTE 3):
Per share net
investment income..... $ 0.040 $ 0.038
Ratio of expenses to
average net assets.... 1.55% 1.72%
Amount reimbursed...... $10,590 $51,886
</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, 2000, 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 auditing standards generally
accepted in the United States. 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, 2000, 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, 2000, 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 accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Des Moines, Iowa
August 31, 2000
11
