<PAGE>
--------------------------
Farm Bureau Mutual Funds
FBL Series Fund, Inc.
[LOGO]
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
FARM BUREAU MUTUAL FUNDS distributed
5400 UNIVERSITY AVENUE unless preceded or accompanied by
WEST DES MOINES, IOWA 50266 [LOGO] a prospectus.
737-028(96)
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder,
The Dow Jones Industrial Average reached its modern high on May 22, closing
at 5778.00. On July 23, it closed at 5346.55, a decline of 7.5% and not
insubstantial for a two-month period of time. It does not qualify, however, as a
"bear market". As of this moment, the Dow has returned to within striking
distance of 5700, reinforcing the notion that all equity market sell-offs are
buying opportunities.
But this rebound is different, in that net purchases of equity mutual funds
virtually ground to a halt during the month of July. For the week of July 17,
the industry experienced net redemptions, following months of $20 billion plus
injections into mutual funds. Whether investors will remain subdued for an
extended period is yet to be seen, as is the significance of this decrease in at
least one important source of market liquidity.
Notwithstanding the equity market behavior of the past few months, the fixed
income markets have witnessed more relative volatility over the past few years.
After a very strong bond market rally in 1995, we began this year with the
benchmark thirty-year Treasury yielding 5.95%, and by July we had moved to a
yield of 7.20%. Now, following July's more benign job statistics, the markets
are rallying again. Recall that the Labor Department releases on job creation in
the preceding five months have been somewhat of a trial for the bond and stock
markets. Each time, the market reacted negatively to what was perceived as too
much economic growth, which could rekindle inflation. It would seem to be an
awkward spot for equities to be when a rapidly growing economy knocks the market
down.
We believe that the equity markets will continue to see volatility in the
months ahead. Periodic corrections are quite normal to the stock market, but the
large number of shareholders arriving after 1990 have not seen a meaningful
setback. Accordingly, we encourage mutual fund investors to review the
longer-term characteristics of the financial markets to ensure that their asset
allocation decisions are truly appropriate to their investment objectives and
tolerance for risk.
For the actively managed portfolios of FBL Series Fund, Inc. (those other
than the passive Blue Chip Portfolio) we have sought to manage volatility by
constantly assessing the securities held to ensure that valuations are
reasonable. In so doing, we seek to produce attractive risk-adjusted performance
and create lasting value for our shareholders.
Below are activity and strategy summaries for the various portfolios of FBL
Series Fund, Inc.
GROWTH COMMON STOCK: The Growth Common Stock Portfolio benefitted from its
higher than average energy exposure. Approximately a year ago, the Portfolio had
25% of its assets in various energy company investments: oil and gas drilling,
oil and gas exploration and production, and related oil services. At the time we
made the investments, the energy industry was deeply out of favor and unloved by
Wall Street investors, allowing us to find many attractive and compelling
valuations where the private market value greatly exceeded the stock price,
spelling an investment opportunity. Twelve months later, many of these
investments appreciated 20% - 50% and, as a result, we have been taking profits
and begun searching for additional attractive investments. As of the writing of
this letter, our energy exposure has been reduced from 25% to approximately 20%
of total assets.
We continue to find value in owning smaller bank holding companies. The
growth prospects of these investments are well defined and many are attractive
merger candidates, adding to their upside potential. The banking sector
currently represents 14% of Portfolio assets. Our strategy in this market is
2
<PAGE>
to remain rational and objective when the market is not. This means that we are
willing to buy on bad news when we are able to establish a reasonable value for
the whole company well in excess of the current share price. This is the essence
of value investing. We also prefer to invest alongside good managements which
have a significant personal ownership stake in the company. Our goal is to be
invested in stocks which have appreciation potential at an acceptable level of
risk.
HIGH GRADE BOND: U.S. Treasury yields increased dramatically over the past
six months. For example, the 2-year, 10-year and 30-year Treasury issues yielded
4.92%, 5.57% and 6.02%, respectively, as of January 31, 1996, but as of July 31,
1996, were 6.22%, 6.79% and 6.97%.
In addition, corporate spreads remain at historically low levels, suggesting
that investors are not being well compensated for taking on the credit and
market risk inherent in corporate bonds. Because of this, we will probably look
to reduce the Portfolio's overall exposure to corporate bonds and increase its
holdings in mortgage-backed and/or Treasury issues.
The Portfolio continues to hold a significant portion of its assets in
high-coupon, callable bonds that offer attractive, incremental yields relative
to similar non-callable issues. Due to their call features, these types of
corporate issues tend to go up in price less than non-callable issues when
interest rates drop; and conversely, due to their incremental yield, tend to go
down less than non-callable issues when interest rates rise. Portfolio returns
should continue to lag other, more aggressive funds in both up and down markets.
HIGH YIELD BOND: During the past six months, the high yield bond market
outperformed the high grade corporate bond market. The reasons for this
outperformance were the naturally shorter duration and higher incremental income
of high yield bonds.
Throughout this period, the DLJ 100 High Yield Active Issues Index went from
a 10.15% yield and a 485 basis-point spread to a 11.13% yield and a spread of
491 basis-points. In general, we view these spread levels as reasonable, and
therefore no major changes to the Portfolio are contemplated at this time.
MANAGED: The Managed Portfolio continues to seek securities offering high
income with a modest growth potential. This Portfolio uses a value philosophy
but concentrates on securities that produce an income stream twice that of the
S&P 500. Currently, the S&P 500 is yielding a minuscule 2.2%. We achieve higher
income by investing in a mixture of high dividend-paying stocks, preferreds,
convertibles (debentures and preferreds) and corporate bonds.
We have continued to add to our convertible securities in the banking
sector. We continue to find value in owning the convertible securities of
smaller bank holding companies, as these securities are available with current
yields ranging from 4% - 6%, in addition to their attractive upside potential.
We have allowed cash to build up in anticipation of better values becoming
available in the market.
MONEY MARKET: Thus far in 1996, the money markets have gone directly from
an expectation of continued Federal Reserve easing following the January 25
basis-point decrease, to an expectation that the Fed would likely tighten
short-term rates as employment numbers began to show strength in the economy and
long-term rates pushed back above 7%. Most recently, expectations are that the
Fed will do nothing at its August meeting and possibly through the November
election. So while we have seen a relative period of calm in terms of Fed moves,
market expectations have moved short-term rates through some swings on either
side of the Fed. Looking ahead, we do not anticipate dramatic moves in short-
term rates at least until after the election.
3
<PAGE>
BLUE CHIP: True to its passive strategy, the performance of the Blue Chip
Portfolio over the past year has reflected that of the large capitalization
market sector which it represents. The Blue Chip Portfolio will, at all times,
remain substantially invested in common stocks of large companies. This
Portfolio is designed for those investors who prefer substantial exposure to
common stocks at all times or who wish to make their own market value judgments.
[INSERT SPECIMEN SIGNATURE]
EDWARD M. WIEDERSTEIN
PRESIDENT
August 27, 1996
4
<PAGE>
GROWTH COMMON STOCK PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE GROWTH COMMON STOCK PORTFOLIO AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year 5 Year
18.41% 13.22%
GROWTH COMMON STOCK PORTFOLIO
1986 10000
1987 11708
1988 10346
1989 11541
1990 12226
1991 13661
1992 15380
1993 19591
1994 19658
1995 21508
1996 25486
Past performance is not predictive of future performance.
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year 10 Year
18.41% 9.81%
S&P 500 STOCK COMPOSITE INDEX
1986 10000
1987 13923
1988 12298
1989 16217
1990 17266
1991 19473
1992 21958
1993 23861
1994 25097
1995 31635
1996 36861
Past performance is not predictive of future performance.
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
1 YEAR 5 YEAR 10 YEAR
- ----------- ----------- -----------
<S> <C> <C>
18.41% 13.22% 9.81%
</TABLE>
For the twelve-month period ended July 31, 1996, the total return for the
Growth Common Stock Portfolio was 18.41% compared to the 16.52% total return
produced by the S&P 500 Stock Composite Index. Returns were primarily achieved
in the energy area where 20% of the Portfolio's assets were invested. Most
notably, the oil and gas drilling sector, as well as the oil and gas exploration
companies, provided the majority of returns to the Portfolio. Also, additional
incremental returns were received from the banking and finance industries. We
remain committed to the undervalued sectors of the market, the same industries
which aided our performance during the recent fiscal year. Cash is likely to
accumulate as we selectively take profits and await further investment
opportunities.
5
<PAGE>
HIGH GRADE BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE HIGH GRADE BOND PORTFOLIO AND LEHMAN BROTHERS AGGREGATE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
1 Year 5 Year
5.37% 7.37%
HIGH GRADE BOND PORTFOLIO
1987 10000
1988 10297
1989 11396
1990 12097
1991 13342
1992 15171
1993 16401
1994 16692
1995 18066
1996 19036
Past performance is not predictive of future performance.
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year Life of Portfolio
5.37% 7.71%
LEHMAN BROTHERS AGGREGATE INDEX
1987 10000
1988 10585
1989 12194
1990 13054
1991 14451
1992 16589
1993 18278
1994 18292
1995 20141
1996 21257
Past performance is not predictive of future performance.
</TABLE>
For the twelve-month period ended July 31, 1996, the 5.37% total return of
the High Grade Bond Portfolio was nearly equal to the 5.54% return of the Lehman
Brothers Mutual Fund Aggregate Index. The Portfolio continued to pursue an
investment strategy of holding a large position in high-coupon, callable bonds.
These bonds generally offer additional yield for taking on call risk and allow
for a more stable return to the Portfolio. Because these securities have a call
feature, they tend to underperform similar non-callable issues when interest
rates go down, and conversely, outperform similar non-callable issues when
interest rates rise.
6
<PAGE>
HIGH YIELD BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE HIGH YIELD BOND PORTFOLIO AND LEHMAN BROTHERS CORPORATE/HIGH YIELD INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
1 Year 5 Year
7.67% 9.62%
HIGH YIELD BOND PORTFOLIO
1987 10000
1988 10312
1989 11427
1990 12218
1991 13786
1992 16051
1993 18129
1994 18470
1995 20263
1996 21817
Past performance is not predictive of future performance.
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year Life of Portfolio
7.67% 9.42%
LEHMAN BROTHERS CORPORATE/HIGH YIELD INDEX
1987 10000
1988 10776
1989 12344
1990 13103
1991 14564
1992 17092
1993 19175
1994 19251
1995 21605
1996 22975
Past performance is not predictive of future performance.
</TABLE>
For the twelve-month period ended July 31, 1996, the 7.67% total return
produced by the High Yield Bond Portfolio was greater than the 6.45% return
produced by the Lehman Brothers Mutual Fund Corporate/High Yield Index. The
Portfolio maintains a larger percentage of its investments in high yield bonds
than the Lehman Brothers Corporate/High Yield Index and during the year, the
high yield market tended to outperform the high grade corporate bond market. In
addition, the Portfolio continued to hold a substantial portion of its assets in
high-coupon, premium-priced callable bonds. These bonds generally offer
additional yield for taking on call risk and allow for a more stable return to
the Portfolio. Because these securities have a call feature, they tend to
underperform similar non-callable issues when interest rates go down, and
conversely, outperform similar non-callable issues when interest rates rise.
7
<PAGE>
MANAGED PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE MANAGED PORTFOLIO AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
1 Year 5 Year Life of Portfolio
17.30% 12.49% 9.92%
MANAGED PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
1987 10000 10000
1988 10318 8833
1989 11007 11648
1990 11773 12401
1991 12603 13986
1992 14467 15770
1993 17798 17137
1994 17689 18025
1995 19352 22721
1996 22700 26475
Past performance is not predictive of future performance.
</TABLE>
The Managed Portfolio is an asset allocation portfolio and will not likely
mirror any particular index (equity or fixed-income) over time. During the
twelve-month period ended July 31, 1996, the Portfolio produced a total return
of 17.30% compared to the 16.52% total return produced by the S&P 500 Stock
Composite Index. The Managed Portfolio has emphasized securities producing
current income, and during the year, maintained a majority of its assets in
convertible securities. The majority of the Portfolio is represented by
high-income common stocks and convertibles of the following industry groups:
banking, energy and utilities. The Managed Portfolio also benefitted from
investors' renewed interest in energy stocks which were a significant part of
its assets. The Portfolio will continue to seek out high income, concentrating
on convertible issues of smaller banking situations. We continue to believe this
is a fertile investment area where we are paid (current income) to wait for the
profitable experience created by ongoing mergers and consolidations in the
banking industry.
8
<PAGE>
BLUE CHIP PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE BLUE CHIP PORTFOLIO AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C> <C>
1 Year 5 Year Life of Portfolio
15.83% 12.30% 14.07%
BLUE CHIP PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
1987 10000 10000
1988 11570 8833
1989 14802 11648
1990 16173 12401
1991 17525 13986
1992 19412 15770
1993 20618 17137
1994 22011 18025
1995 27023 22721
1996 31302 26475
Past performance is not predictive of future performance.
</TABLE>
The Blue Chip Portfolio is designed to represent the large capitalization
sector of the domestic equity market and remains substantially invested in
approximately 40 such common stock issues at all times. Accordingly, the
performance of this Portfolio will roughly parallel that of the Dow Jones
Industrial Average and the S&P 500 Stock Composite Index. As is apparent from
the line graph, the performance of the Blue Chip Portfolio, adjusted for
expenses, was similar to that of the S&P 500 Stock Composite Index for the
twelve-month period ended July 31, 1996.
9
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<CAPTION>
GROWTH HIGH
COMMON STOCK GRADE BOND
PORTFOLIO PORTFOLIO
------------ ----------
<S> <C> <C>
ASSETS
Investments in securities, at value (cost --
$83,630,501; $8,782,711; $7,170,126;
$26,306,834; $2,488,492; and $9,814,464,
respectively) (NOTE 5).......................... $85,946,944 $8,906,938
Cash.............................................. 51,545 47,197
Receivables:
Accrued dividends and interest.................. 153,346 160,861
Investment securities sold...................... 411,736 16,099
Prepaid expense and other assets.................. 1,073 1,308
------------ ----------
Total Assets...................................... $86,564,644 $9,132,403
------------ ----------
------------ ----------
LIABILITIES AND NET ASSETS
Liabilities
Accounts payable:
FBL Investment Advisory Services, Inc. (NOTE
3).......................................... $ 14,104 $ 3,557
Accrued expenses................................ 16,663 6,672
------------ ----------
Total Liabilities................................. 30,767 10,229
Net assets applicable to outstanding capital stock
(NOTE 4)........................................ 86,533,877 9,122,174
------------ ----------
Total Liabilities and Net Assets.................. $86,564,644 $9,132,403
------------ ----------
------------ ----------
Shares issued and outstanding as of July 31,
1996............................................ 5,894,384 897,708
NET ASSET VALUE PER SHARE......................... $ 14.68 $ 10.16
------------ ----------
------------ ----------
</TABLE>
SEE ACCOMPANYING NOTES.
10
<PAGE>
<TABLE>
<CAPTION>
HIGH MONEY
YIELD BOND MANAGED MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (cost --
$83,630,501; $8,782,711; $7,170,126;
$26,306,834; $2,488,492; and $9,814,464,
respectively) (NOTE 5).......................... $7,058,968 $27,312,173 $2,488,492 $14,503,774
Cash.............................................. 107,751 81,404 67,558 131,206
Receivables:
Accrued dividends and interest.................. 192,833 115,411 2,496 19,166
Investment securities sold......................
Prepaid expense and other assets.................. 138 384 86 230
---------- ----------- ----------- -----------
Total Assets...................................... $7,359,690 $27,509,372 $2,558,632 $14,654,376
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
LIABILITIES AND NET ASSETS
Liabilities
Accounts payable:
FBL Investment Advisory Services, Inc. (NOTE
3).......................................... $ 3,978 $ 7,017 $ 1,533 $ 5,772
Accrued expenses................................ 6,348 32,579 5,545 7,398
---------- ----------- ----------- -----------
Total Liabilities................................. 10,326 39,596 7,078 13,170
Net assets applicable to outstanding capital stock
(NOTE 4)........................................ 7,349,364 27,469,776 2,551,554 14,641,206
---------- ----------- ----------- -----------
Total Liabilities and Net Assets.................. $7,359,690 $27,509,372 $2,558,632 $14,654,376
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Shares issued and outstanding as of July 31,
1996............................................ 735,632 2,061,227 2,551,554 557,473
NET ASSET VALUE PER SHARE......................... $ 9.99 $ 13.33 $ 1.00 $ 26.26
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
</TABLE>
11
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED JULY 31, 1996
<TABLE>
<CAPTION>
GROWTH HIGH
COMMON STOCK GRADE BOND
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
INVESTMENT INCOME
Dividends......................................... $2,131,001
Interest.......................................... 682,898 $ 703,030
------------ -----------
Total Investment Income........................... 2,813,899 703,030
EXPENSES
Paid to FBL Investment Advisory Services, Inc.
(NOTE 3):
Investment advisory and management fees......... 404,117 34,843
Transfer and dividend disbursing agent fees..... 154,936 32,985
Distribution fees............................... 404,117 43,554
Administrative service fees..................... 202,059 21,777
Accounting fees................................. 30,000 4,356
Custodian fees.................................... 16,977 7,917
Legal fees........................................ 16,238 1,702
Audit fees........................................ 11,000 5,100
Directors' fees and expenses...................... 3,982 438
Reports to shareholders........................... 44,016 4,829
Registration fees................................. 15,179 3,535
Miscellaneous..................................... 4,820 803
------------ -----------
Total Expenses.................................... 1,307,441 161,839
Expense Reimbursement (NOTE 3)....................
------------ -----------
Net Expenses...................................... 1,307,441 161,839
------------ -----------
Net Investment Income............................. 1,506,458 541,191
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain from investment transactions.... 11,563,616 8,240
Change in unrealized appreciation/depreciation of
investments..................................... 6,359 (94,954)
------------ -----------
Net Gain (Loss) on Investments.................... 11,569,975 (86,714)
------------ -----------
Net Increase in Net Assets Resulting from
Operations...................................... $13,076,433 $ 454,477
------------ -----------
------------ -----------
</TABLE>
SEE ACCOMPANYING NOTES.
12
<PAGE>
<TABLE>
<CAPTION>
HIGH
YIELD MONEY
BOND MANAGED MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends......................................... $ 697,044 $ 240,236
Interest.......................................... $ 641,933 637,058 $ 139,715 57,113
--------- ---------- ----------- ----------
Total Investment Income........................... 641,933 1,334,102 139,715 297,349
EXPENSES
Paid to FBL Investment Advisory Services, Inc.
(NOTE 3):
Investment advisory and management fees......... 37,339 148,741 10,012 30,418
Transfer and dividend disbursing agent fees..... 36,561 83,148 15,010 58,599
Distribution fees............................... 33,945 123,951 12,516 60,837
Administrative service fees..................... 16,972 61,976 6,258 30,418
Accounting fees................................. 3,395 12,395 1,251 6,084
Custodian fees.................................... 8,638 10,420 6,055 11,279
Legal fees........................................ 1,316 5,064 490 2,575
Audit fees........................................ 5,000 5,800 4,600 5,100
Directors' fees and expenses...................... 332 1,208 124 576
Reports to shareholders........................... 3,727 13,335 1,409 6,323
Registration fees................................. 3,256 6,037 2,640 4,033
Miscellaneous..................................... 660 1,590 416 938
--------- ---------- ----------- ----------
Total Expenses.................................... 151,141 473,665 60,781 217,180
Expense Reimbursement (NOTE 3).................... (15,361) (10,718)
--------- ---------- ----------- ----------
Net Expenses...................................... 135,780 473,665 50,063 217,180
--------- ---------- ----------- ----------
Net Investment Income............................. 506,153 860,437 89,652 80,169
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain from investment transactions.... 99,065 2,276,504 187,256
Change in unrealized appreciation/depreciation of
investments..................................... (107,265) 531,462 1,321,836
--------- ---------- ----------- ----------
Net Gain (Loss) on Investments.................... (8,200) 2,807,965 1,509,092
--------- ---------- ----------- ----------
Net Increase in Net Assets Resulting from
Operations...................................... $ 497,953 $3,668,403 $ 89,652 $1,589,261
--------- ---------- ----------- ----------
--------- ---------- ----------- ----------
</TABLE>
13
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH
COMMON STOCK
PORTFOLIO
------------------------
YEAR ENDED JULY 31,
1996 1995
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income............................. $ 1,506,458 $ 2,285,143
Net realized gain (loss) from investment
transactions.................................... 11,563,616 2,239,764
Change in unrealized appreciation/depreciation of
investments..................................... 6,359 1,538,922
----------- -----------
Net Increase in Net Assets Resulting from
Operations...................................... 13,076,433 6,063,829
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
(NOTE 6)
Net investment income............................. (2,469,514) (1,942,351)
Net realized gain from investment transactions.... (1,454,239) (3,592,463)
Distributions in excess of net realized gain from
investment transactions.........................
----------- -----------
(3,923,753) (5,534,814)
CAPITAL SHARE TRANSACTIONS (NOTE 4)............... 6,434,694 6,102,860
CONTRIBUTION FROM AFFILIATE (NOTE 3)..............
----------- -----------
Total Increase (Decrease) in Net Assets........... 15,587,374 6,631,875
NET ASSETS
Beginning of year................................. 70,946,503 64,314,628
----------- -----------
End of year (including undistributed net
investment income as set forth below)........... $86,533,877 $70,946,503
----------- -----------
----------- -----------
Undistributed Net Investment Income............... $ 494,106 $ 1,457,162
----------- -----------
----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES.
14
<PAGE>
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
---------------------- ----------------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income............................. $ 541,191 $ 495,667 $ 506,153 $ 499,603
Net realized gain (loss) from investment
transactions.................................... 8,240 (33,881) 99,065 10,149
Change in unrealized appreciation/depreciation of
investments..................................... (94,954) 170,813 (107,265) 87,294
---------- ---------- ---------- ----------
Net Increase in Net Assets Resulting from
Operations...................................... 454,477 632,599 497,953 597,046
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
(NOTE 6)
Net investment income............................. (541,191) (495,667) (506,153) (499,603)
Net realized gain from investment transactions.... (21,547) (59,344)
Distributions in excess of net realized gain from
investment transactions......................... (24,669) (7,192)
---------- ---------- ---------- ----------
(541,191) (520,336) (527,700) (566,139)
CAPITAL SHARE TRANSACTIONS (NOTE 4)............... 863,859 636,952 688,604 234,188
CONTRIBUTION FROM AFFILIATE (NOTE 3)..............
---------- ---------- ---------- ----------
Total Increase (Decrease) in Net Assets........... 777,145 749,215 658,857 265,095
NET ASSETS
Beginning of year................................. 8,345,029 7,595,814 6,690,507 6,425,412
---------- ---------- ---------- ----------
End of year (including undistributed net
investment income as set forth below)........... $9,122,174 $8,345,029 $7,349,364 $6,690,507
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Undistributed Net Investment Income............... $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
15
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
------------------------
YEAR ENDED JULY 31,
1996 1995
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income............................. $ 860,437 $ 961,614
Net realized gain from investment transactions.... 2,276,504 176,989
Change in unrealized appreciation/depreciation of
investments..................................... 531,462 671,828
----------- -----------
Net Increase in Net Assets Resulting from
Operations...................................... 3,668,403 1,810,431
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
(NOTE 6)
Net investment income............................. (861,221) (963,801)
Net realized gain from investment transactions.... (188,116) (239,223)
Distributions in excess of net realized gain from
investment transactions......................... (161,255)
----------- -----------
(1,049,337) (1,364,279)
CAPITAL SHARE TRANSACTIONS (NOTE 4)............... 3,700,902 1,558,373
CONTRIBUTION FROM AFFILIATE (NOTE 3).............. 44,982
----------- -----------
Total Increase (Decrease) in Net Assets........... 6,364,950 2,004,525
NET ASSETS
Beginning of year................................. 21,104,826 19,100,301
----------- -----------
End of year (including undistributed net
investment income as set forth below)........... $27,469,776 $21,104,826
----------- -----------
----------- -----------
Undistributed Net Investment Income............... $ 488 $ 1,272
----------- -----------
----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES.
16
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
---------------------- -----------------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31,
1996 1995 1996 1995
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income............................. $ 89,652 $ 87,948 $ 80,169 $ 72,767
Net realized gain from investment transactions.... 187,256 80
Change in unrealized appreciation/depreciation of
investments..................................... 1,321,836 1,636,574
---------- ---------- ----------- ----------
Net Increase in Net Assets Resulting from
Operations...................................... 89,652 87,948 1,589,261 1,709,421
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
(NOTE 6)
Net investment income............................. (89,652) (87,948) (87,281) (53,615)
Net realized gain from investment transactions....
Distributions in excess of net realized gain from
investment transactions.........................
---------- ---------- ----------- ----------
(89,652) (87,948) (87,281) (53,615)
CAPITAL SHARE TRANSACTIONS (NOTE 4)............... 112,704 (187,752) 3,481,955 1,256,850
CONTRIBUTION FROM AFFILIATE (NOTE 3)..............
---------- ---------- ----------- ----------
Total Increase (Decrease) in Net Assets........... 112,704 (187,752) 4,983,935 2,912,656
NET ASSETS
Beginning of year................................. 2,438,850 2,626,602 9,657,271 6,744,615
---------- ---------- ----------- ----------
End of year (including undistributed net
investment income as set forth below)........... $2,551,554 $2,438,850 $14,641,206 $9,657,271
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Undistributed Net Investment Income............... $ 0 $ 0 $ 34,363 $ 41,475
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
17
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
GROWTH COMMON STOCK PORTFOLIO
JULY 31, 1996
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- -----------
<S> <C> <C>
COMMON STOCKS (70.56%)
CHEMICALS AND ALLIED PRODUCTS (4.94%)
R.P. Scherer Corp........................................... 100,000(1) $ 4,275,000
COMMUNICATIONS (4.61%)
Lincoln Telecommunications Co............................... 245,500 3,989,375
DEPOSITORY INSTITUTIONS (3.19%)
CU Bancorp.................................................. 251,000 2,761,000
ELECTRIC, GAS AND SANITARY SERVICES (17.32%)
Citizens Utilities Co., Class B............................. 375,905 4,181,943
Howell Corp................................................. 198,600 2,780,400
Ferrellgas Partners, L.P.................................... 112,300 2,512,713
Montana Power Co............................................ 185,000 3,908,125
Western Gas Resources, Inc.................................. 108,800 1,604,800
-----------
14,987,981
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (5.10%)
Applied Materials, Inc...................................... 185,000(1) 4,416,875
FURNITURE AND FIXTURES (4.69%)
Ladd Furniture, Inc......................................... 369,017 4,059,187
HOLDING AND OTHER INVESTMENT OFFICES (5.69%)
General Growth Properties, Inc.............................. 200,000 4,925,000
INSTRUMENTS AND RELATED PRODUCTS (4.04%)
Pall Corp................................................... 145,000 3,498,125
INSURANCE CARRIERS (5.00%)
EMC Insurance Group, Inc.................................... 353,100 4,325,475
MOTION PICTURES (3.86%)
Disney (Walt) Co............................................ 60,000 3,337,500
NONDEPOSITORY INSTITUTIONS (0.36%)
Berkshire Hathaway, Inc..................................... 10(1) 309,000
PRINTING & PUBLISHING (2.23%)
Belo (A.H.) Corp............................................ 48,000 1,932,000
STONE, CLAY AND GLASS PRODUCTS (3.87%)
Lafarge Corp................................................ 183,700 3,352,525
</TABLE>
18
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH COMMON STOCK PORTFOLIO
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- -----------
<S> <C> <C>
TRANSPORTATION -- BY AIR (4.21%)
Petroleum Helicopters, Inc. (Non-Voting).................... 234,300 $ 3,455,925
Petroleum Helicopters, Inc. (Voting)........................ 12,350 185,250
-----------
3,641,175
WHOLESALE TRADE -- DURABLE GOODS (0.32%)
TBC Corporation............................................. 40,000(1) 275,000
WHOLESALE TRADE -- NONDURABLE GOODS (1.13%)
Super Valu Stores, Inc...................................... 35,000 975,625
-----------
Total Common Stocks........................................... 61,060,843
PREFERRED STOCKS (18.69%)
DEPOSITORY INSTITUTIONS (8.20%)
Community First Bankshares, Inc., Convertible............... 118,000 4,218,500
Sterling Financial Corp..................................... 99,300 2,879,700
-----------
7,098,200
ELECTRIC, GAS AND SANITARY SERVICES (0.78%)
Howell Corp................................................. 13,900 679,363
INSTRUMENTS AND RELATED PRODUCTS (3.93%)
US Surgical Corp............................................ 100,000 3,400,000
OIL AND GAS EXTRACTION (1.57%)
Chieftain International, Inc., Convertible.................. 50,200 1,355,400
WATER TRANSPORTATION (4.21%)
Sea Containers, Ltd., Convertible........................... 78,750 3,642,187
-----------
Total Preferred Stocks........................................ 16,175,150
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
CORPORATE BONDS (5.46%)
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (2.43%)
California Microwave, Convertible Sub. Deb., 5.25%, due
12/15/03.................................................. $ 2,600,000 2,099,500
HOLDING AND OTHER INVESTMENT OFFICES (3.03%)
Centennial Bancorp, Convertible Sub. Deb., 7.00%, due
5/01/04................................................... 2,073,000 2,623,775
-----------
Total Corporate Bonds......................................... 4,723,275
</TABLE>
19
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH COMMON STOCK PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (4.61%)
UNITED STATES GOVERNMENT AGENCY (2.30%)
Federal Home Loan Mortgage Corp., due 9/12/96............... $ 2,000,000 $ 1,987,676
MONEY MARKET MUTUAL FUND (2.31%)
Dreyfus Treasury Cash Management, Class A................... 2,000,000 2,000,000
-----------
Total Short-Term Investments.................................. 3,987,676
-----------
Total Investments (99.32%).................................... 85,946,944
OTHER ASSETS LESS LIABILITIES (0.68%)
Cash, receivables and prepaid expense, less liabilities..... 586,933
-----------
Total Net Assets (100.00%).................................... $86,533,877
-----------
-----------
</TABLE>
(1) Non-income producing security.
SEE ACCOMPANYING NOTES.
20
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
<S> <C> <C>
CORPORATE BONDS (70.29%)
APPAREL AND ACCESSORY STORES (4.04%)
TJX Companies, Inc., 9.50%, due 5/01/16.......................... $ 350,000 $ 368,690
COMMUNICATIONS (6.46%)
Hawaiian Telephone Co., 8.00%, due 9/01/01....................... 250,000 249,543
Pacific Telephone & Telegraph Co., 7.25%, due 2/01/08............ 350,000 339,542
----------
589,085
DEPOSITORY INSTITUTIONS (8.60%)
Midland America Capital Corp., 12.75%, due 11/15/03.............. 175,000 196,716
J.P. Morgan & Co., 7.25%, due 10/01/10........................... 350,000 337,165
Norwest Corp., 9.25%, due 5/01/97................................ 100,000 102,417
Third National Bank, 7.50%, due 11/15/02......................... 147,000 148,339
----------
784,637
ELECTRIC, GAS AND SANITARY SERVICES (12.44%)
MDU Resources Group, Inc., 9.125%, due 10/01/16.................. 200,000 213,350
New England Power Co., 8.00%, due 8/01/22........................ 400,000 394,004
Texas Eastern Transmission, 10.00%, due 10/01/11................. 150,000 158,503
Western Penn Power, 7.875%, due 12/01/04......................... 360,000 368,791
----------
1,134,648
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (2.75%)
Harris Corp., 7.75%, due 12/15/01................................ 250,000 251,347
FOOD AND KINDRED PRODUCTS (5.46%)
Anheuser-Busch Companies, Inc., 8.50%, due 3/01/17............... 133,000 137,780
Sara Lee Corp., 8.75%, due 5/15/16............................... 350,000 360,063
----------
497,843
GENERAL MERCHANDISE STORES (3.43%)
Dayton-Hudson Corporation, 9.25%, due 11/15/16................... 300,000 312,798
HOLDING AND OTHER INVESTMENT OFFICES (7.84%)
Federal Realty Investment Trust, 8.875%, due 1/15/00............. 350,000 365,873
Meditrust, 7.60%, due 9/13/05.................................... 350,000 349,717
----------
715,590
INSURANCE CARRIERS (3.69%)
Torchmark Corporation, 8.625%, due 3/01/17....................... 225,000 232,402
Torchmark Corporation, 9.625%, due 5/01/98....................... 100,000 104,569
----------
336,971
</TABLE>
21
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
HIGH GRADE BOND PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
<S> <C> <C>
OIL AND GAS EXTRACTION (2.49%)
Burlington Resources, Inc., 9.125%, due 10/01/21................. $ 200,000 $ 226,746
PETROLEUM AND COAL PRODUCTS (0.88%)
Pennzoil Co., 9.00%, due 4/01/17................................. 77,000 80,125
PRINTING AND PUBLISHING (3.36%)
Valassis Communications, Inc., 9.55%, due 12/01/03............... 300,000 306,246
RAILROAD TRANSPORTATION (4.00%)
Union Pacific Corp., 8.50%, due 1/15/17.......................... 350,000 364,693
SECURITY AND COMMODITY BROKERS (2.29%)
Lehman Brothers Holdings, Inc., 8.875%, due 11/01/98............. 200,000 208,516
TRANSPORTATION EQUIPMENT (2.56%)
Ford Motor Credit Co., 9.50%, due 9/15/11........................ 200,000 234,014
----------
Total Corporate Bonds.............................................. 6,411,949
ASSET-BACKED SECURITY (3.56%)
Federal Home Loan Mortgage Corp., 10.15%, due 4/15/06............ 320,608 325,090
MORTGAGE-BACKED SECURITIES (16.44%)
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) (0.71%)
Pool # 503442, 9.50%, due 7/01/05................................ 62,182 64,397
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) (15.73%)
Pool # 144332, 9.00%, due 7/15/16................................ 45,150 47,774
Pool # 194692, 8.00%, due 5/15/17................................ 632,312 643,934
Pool # 236070, 10.00%, due 10/15/12.............................. 614,623 658,218
Pool # 307097, 9.00%, due 7/15/21................................ 80,969 85,219
----------
1,435,145
----------
Total Mortgage-Backed Securities................................... 1,499,542
SHORT-TERM INVESTMENTS (7.35%)
UNITED STATES GOVERNMENT AGENCIES
Federal Home Loan Bank, due 8/30/96.............................. 225,000 224,054
Federal Home Loan Mortgage Corp., due 9/26/96.................... 450,000 446,303
----------
Total Short-Term Investments....................................... 670,357
----------
Total Investments (97.64%)......................................... 8,906,938
</TABLE>
22
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
HIGH GRADE BOND PORTFOLIO
<TABLE>
<CAPTION>
VALUE
----------
<S> <C> <C>
OTHER ASSETS LESS LIABILITIES (2.36%)
Cash, receivables and prepaid expense, less liabilities.......... $ 215,236
----------
Total Net Assets (100.00%)......................................... $9,122,174
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES.
23
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
<S> <C> <C>
CORPORATE BONDS (93.00%)
AGRICULTURAL PRODUCTION -- CROPS (2.17%)
Chiquita Brands International, Inc., 11.50%, due 6/01/01........ $ 150,000 $ 159,188
AMUSEMENT AND RECREATION SERVICES (3.54%)
AMF Group, Inc., 10.875%, due 3/15/06........................... 260,000 260,325
APPAREL AND ACCESSORY STORES (4.92%)
Genesco, Inc., 10.375%, due 2/01/03............................. 150,000 150,750
TJX Companies, Inc., 9.50%, due 5/01/16......................... 200,000 210,680
----------
361,430
APPAREL AND OTHER TEXTILE PRODUCTS (6.47%)
Dan River, Inc., 10.125%, due 12/15/03.......................... 280,000 270,900
Fieldcrest Cannon, Inc., 11.25%, due 6/15/04.................... 200,000 204,500
----------
475,400
AUTO REPAIR, SERVICES AND PARKING (1.56%)
Envirotest Systems Corp., 9.625%, due 4/01/03................... 150,000 114,750
BUSINESS SERVICES (3.21%)
Borg-Warner Corp., 9.125%, due 5/01/03.......................... 250,000 236,250
COMMUNICATIONS (3.55%)
Panamsat, L.P., 9.75%, due 8/01/00.............................. 250,000 260,625
ELECTRIC, GAS AND SANITARY SERVICES (8.68%)
Montana Power Co., 7.50%, due 1/01/98........................... 136,000 136,783
New England Power Co., 8.00%, due 8/01/22....................... 250,000 246,252
Public Service Company of New Mexico, 5.875%, due 5/01/97....... 150,000 148,953
Texas Eastern Transmission Corp., 10.00%, due 10/01/11.......... 100,000 105,669
----------
637,657
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (2.99%)
Amphenol Corp., 12.75%, due 12/15/02............................ 200,000 220,000
FABRICATED METAL PRODUCTS (6.77%)
Jorgensen (Earle M.) Co., 10.75%, due 3/01/00................... 200,000 199,000
Ryerson Tull, Inc. 9.125%, due 7/15/06.......................... 300,000 298,875
----------
497,875
</TABLE>
24
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
HIGH YIELD BOND PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
<S> <C> <C>
FOOD STORES (4.42%)
P&C Food Markets, Inc., 11.50%, due 10/15/01.................... $ 150,000 $ 142,125
Penn Traffic Co., 10.25%, due 2/15/02........................... 200,000 182,500
----------
324,625
GENERAL MERCHANDISE STORES (4.38%)
Federated Department Stores, Inc., 10.00%, due 2/15/01.......... 300,000 321,813
INSURANCE CARRIERS (4.22%)
Torchmark Corp., 8.625%, due 3/01/17............................ 300,000 309,870
LUMBER AND WOOD PRODUCTS (8.22%)
Georgia-Pacific Corp., 9.875%, due 11/01/21..................... 330,000 358,997
Pacific Lumber Co., 10.50%, due 3/01/03......................... 250,000 245,000
----------
603,997
MISCELLANEOUS RETAIL (4.09%)
Eckerd Corp., 9.25%, due 2/15/04................................ 295,000 300,900
PAPER AND ALLIED PRODUCTS (3.38%)
Container Corp. of America, 9.75%, due 4/01/03.................. 250,000 248,125
PETROLEUM AND COAL PRODUCTS (2.47%)
Clark Oil & Refining Corp., 10.50%, due 12/01/01................ 175,000 181,563
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (3.84%)
Foamex, L.P., 9.50%, due 6/01/00................................ 182,000 182,910
Plastic Specialties & Technologies, Inc., 11.25%, due
12/01/03...................................................... 100,000 99,500
----------
282,410
STONE, CLAY AND GLASS PRODUCTS (6.43%)
Owens-Illinois, Inc., 11.00%, due 12/01/03...................... 200,000 216,500
USG Corp., 9.25%, due 9/15/01................................... 250,000 256,250
----------
472,750
TEXTILE MILL PRODUCTS (0.84%)
Bibb Co. (The), 14.00%, due 10/01/99............................ 125,000(1) 62,031
TRANSPORTATION EQUIPMENT (2.77%)
Preston Corp., 7.00%, due 5/01/11............................... 306,000 203,490
WATER TRANSPORTATION (4.08%)
Moran Transport Co., 11.75%, due 7/15/04........................ 300,000 300,000
----------
Total Corporate Bonds............................................. 6,835,074
</TABLE>
25
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
HIGH YIELD BOND PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
<S> <C> <C>
SHORT-TERM INVESTMENT (3.05%)
UNITED STATES GOVERNMENT AGENCY
Federal Home Loan Mortgage Corp., due 9/03/96................... $ 225,000 $ 223,894
----------
Total Investments (96.05%)........................................ 7,058,968
OTHER ASSETS LESS LIABILITIES (3.95%)
Cash, receivables and prepaid expense, less liabilities......... 290,396
----------
Total Net Assets (100.00%)........................................ $7,349,364
----------
----------
</TABLE>
(1) Company has been in default since the April 1, 1995 interest payment.
SEE ACCOMPANYING NOTES.
26
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
JULY 31, 1996
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (33.06%)
COMMUNICATIONS (2.49%)
Lincoln Telecommunications Co................................. 42,000 $ 682,500
DEPOSITORY INSTITUTIONS (0.92%)
Columbia Banking System, Inc.................................. 16,098 253,544
ELECTRIC, GAS AND SANITARY SERVICES (16.88%)
Citizens Utilities Co., Class B............................... 113,792 1,265,936
Montana Power Co.............................................. 57,600 1,216,800
Peoples Energy Corp........................................... 30,000 933,750
Western Gas Resources, Inc.................................... 82,800 1,221,300
-----------
4,637,786
HOLDING AND OTHER INVESTMENT OFFICES (5.29%)
General Growth Properties, Inc................................ 59,000 1,452,875
INSURANCE CARRIERS (4.68%)
EMC Insurance Group, Inc...................................... 105,000 1,286,250
MISCELLANEOUS RETAIL (2.80%)
Ferrellgas Partners, L.P...................................... 34,400 769,700
-----------
Total Common Stocks............................................. 9,082,655
PREFERRED STOCKS (28.64%)
DEPOSITORY INSTITUTIONS (6.24%)
Community First Bankshares, Inc., Convertible................. 33,000 1,179,750
Sterling Financial Corp....................................... 18,450 535,050
-----------
1,714,800
GAS PRODUCTION AND DISTRIBUTION (0.09%)
Western Gas Resources, Inc.................................... 1,000 24,625
HOLDING AND OTHER INVESTMENT OFFICES (2.46%)
Security Capital Industrial Trust............................. 29,000 674,250
INSTRUMENTS AND RELATED PRODUCTS (4.95%)
US Surgical Corp.............................................. 40,000 1,360,000
PETROLEUM AND COAL PRODUCTS (3.90%)
Ashland Oil Co................................................ 18,000 1,071,000
WATER TRANSPORTATION (3.87%)
Sea-Containers, Ltd., Convertible............................. 23,000 1,063,750
</TABLE>
27
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
WHOLESALE TRADE -- DURABLE GOODS (3.61%)
Kaman Corp.................................................... 20,000 $ 990,000
WHOLESALE TRADE -- NONDURABLE GOODS (3.52%)
Howell Corp................................................... 19,800 967,725
-----------
Total Preferred Stocks.......................................... 7,866,150
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
CORPORATE BONDS (15.92%)
COMMUNICATIONS (0.38%)
Hawaiian Telephone Co., 8.00%, due 9/01/01.................... $ 105,000 104,808
ELECTRIC, GAS AND SANITARY SERVICES (0.54%)
National Co-op Services Corp. (Arkansas Electric), 9.48%, due
1/01/12..................................................... 140,000 148,015
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (4.41%)
California Microwave, Inc., 5.25%, due 12/15/03............... 1,500,000 1,211,250
FOOD AND KINDRED PRODUCTS (1.04%)
Anheuser-Busch Companies, Inc., 8.50%, due 3/01/17............ 77,000 79,767
Sara Lee Corp., 8.75%, due 5/15/16............................ 200,000 205,750
-----------
285,517
HOLDING AND OTHER INVESTMENT OFFICES (2.80%)
Centennial Bancorp, Convertible Sub. Deb., 7.00%, due
5/01/04..................................................... 608,000 769,540
INSURANCE CARRIERS (0.94%)
Torchmark Corp., 8.625%, due 3/01/17.......................... 250,000 258,225
PETROLEUM AND COAL PRODUCTS (0.51%)
Pennzoil Co., 9.00%, due 4/01/17.............................. 133,000 138,397
PRIMARY METAL INDUSTRIES (4.54%)
Quanex Corp., 6.88%, due 6/30/07.............................. 1,300,000 1,248,000
RAILROAD TRANSPORTATION (0.76%)
Union Pacific Corp., Sinking Fund Deb., 8.50%, due 1/15/17.... 200,000 208,396
-----------
Total Corporate Bonds........................................... 4,372,148
SHORT-TERM INVESTMENTS (21.81%)
COMMERCIAL PAPER (7.37%)
Ford Motor Credit Corp., 5.31%, due 8/22/96................... 1,100,000 1,100,000
General Electric Capital Corp., 5.41%, due 8/01/96............ 925,000 925,000
-----------
2,025,000
</TABLE>
28
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (3.35%)
Dreyfus Treasury Cash Management, Class A..................... $ 920,000 $ 920,000
UNITED STATES GOVERNMENT AGENCIES (11.09%)
Federal Home Loan Bank, due 8/07/96........................... 1,550,000 1,548,623
Federal Home Loan Mortgage Corp., due 8/12/96................. 1,500,000 1,497,597
-----------
3,046,220
-----------
Total Short-Term Investments.................................... 5,991,220
-----------
Total Investments (99.43%)...................................... 27,312,173
OTHER ASSETS LESS LIABILITIES (0.57%)
Cash, receivables and prepaid expense, less liabilities....... 157,603
-----------
Total Net Assets (100.00%)...................................... $27,469,776
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
29
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
JULY 31, 1996
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON PRINCIPAL
PURCHASE DATE AMOUNT VALUE
------------- ----------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (97.53%)
COMMERCIAL PAPER (13.72%)
NONDEPOSITORY INSTITUTIONS
American General Finance Corp., due 9/16/96......... 5.412% $ 125,000 $ 125,000
Ford Motor Credit Corp., due 8/12/96................ 5.329 100,000 100,000
General Electric Capital Corp., due 10/24/96........ 5.459 125,000 125,000
----------
Total Commercial Paper................................ 350,000
UNITED STATES GOVERNMENT AGENCIES (83.81%)
Federal Farm Credit Bank, due 9/05/96............... 5.433 200,000 198,963
Federal Home Loan Bank, due 8/20/96................. 5.332 300,000 299,170
Federal Home Loan Mortgage Corp., due 9/03/96....... 5.446 300,000 298,530
Federal Home Loan Mortgage Corp., due 10/11/96...... 5.472 225,000 222,630
Federal Home Loan Mortgage Corp., due 10/18/96...... 5.463 175,000 172,980
Federal National Mortgage Assoc., due 8/06/96....... 5.374 475,000 474,651
Federal National Mortgage Assoc., due 9/11/96....... 5.456 200,000 198,782
Federal National Mortgage Assoc., due 9/24/96....... 5.486 275,000 272,786
----------
Total United States Government Agencies............... 2,138,492
----------
Total Investments (97.53%).............................. 2,488,492
OTHER ASSETS LESS LIABILITIES (2.47%)
Cash, receivables and prepaid expense, less
liabilities......................................... 63,062
----------
Total Net Assets (100.00%).............................. $2,551,554
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES.
30
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
JULY 31, 1996
<TABLE>
<CAPTION>
SHARES
HELD VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS (89.67%)
CHEMICALS AND ALLIED PRODUCTS (17.42%)
Bristol-Myers Squibb Co....................................... 3,127 $ 270,876
DuPont (EI) de Nemours & Co................................... 4,071 328,733
Eastman Chemical Co........................................... 2,571 134,335
Johnson & Johnson............................................. 8,720 416,380
Merck & Co., Inc.............................................. 5,573 358,065
Praxair, Inc.................................................. 9,261 355,391
Procter & Gamble Co........................................... 3,807 340,251
Union Carbide Corp............................................ 8,259 346,878
-----------
2,550,909
COMMUNICATIONS (3.25%)
American Telephone & Telegraph Co............................. 4,534 236,335
Bell Atlantic Corp............................................ 4,047 239,279
-----------
475,614
DEPOSITORY INSTITUTIONS (1.97%)
Morgan JP & Co., Inc.......................................... 3,353 288,358
EATING AND DRINKING PLACES (2.62%)
McDonald's Corp............................................... 8,279 383,939
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (2.57%)
General Electric Co........................................... 4,456 367,063
Imation Corporation........................................... 408(1) 9,282
-----------
376,345
FOOD AND KINDRED PRODUCTS (8.63%)
Coca-Cola Co. (The)........................................... 11,488 538,500
PepsiCo, Inc.................................................. 11,636 367,988
Philip Morris Companies, Inc.................................. 3,413 357,085
-----------
1,263,573
GENERAL MERCHANDISE STORES (4.48%)
Sears, Roebuck & Co........................................... 5,198 213,118
Wal-Mart Stores, Inc.......................................... 10,412 249,888
Woolworth (F.W.) Co. Ltd...................................... 10,033(1) 193,135
-----------
656,141
</TABLE>
31
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
BLUE CHIP PORTFOLIO
<TABLE>
<CAPTION>
SHARES
HELD VALUE
----------- -----------
<S> <C> <C>
INDUSTRIAL MACHINERY AND EQUIPMENT (4.28%)
Caterpillar, Inc.............................................. 5,829 $ 383,985
International Business Machines Corp.......................... 2,245 242,180
-----------
626,165
INSTRUMENTS AND RELATED PRODUCTS (2.18%)
Eastman Kodak Co.............................................. 4,285 319,768
INSURANCE CARRIERS (4.30%)
Allstate Corp................................................. 5,068 226,793
American International Group, Inc............................. 4,276 402,479
-----------
629,272
MOTION PICTURES (2.00%)
Disney (Walt) Co.............................................. 5,256 292,365
NONDEPOSITORY INSTITUTIONS (1.20%)
Dean Witter, Discover & Co.................................... 3,465 176,282
PAPER AND ALLIED PRODUCTS (3.52%)
International Paper Co........................................ 6,582 249,293
Minnesota Mining & Manufacturing Co........................... 4,084 265,460
-----------
514,753
PETROLEUM AND COAL PRODUCTS (10.67%)
Amoco Corp.................................................... 3,586 239,814
Chevron Corp.................................................. 4,881 282,488
Exxon Corp.................................................... 3,471 285,489
Mobil Corp.................................................... 2,671 294,812
Texaco, Inc................................................... 3,183 270,555
USX Corp. -- Marathon Group................................... 9,234 189,297
-----------
1,562,455
PRIMARY METAL INDUSTRIES (2.99%)
Aluminum Company of America................................... 5,242 304,036
Bethlehem Steel Corp.......................................... 13,411(1) 134,110
-----------
438,146
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (2.65%)
Goodyear Tire & Rubber Co..................................... 8,787 388,825
</TABLE>
32
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
BLUE CHIP PORTFOLIO
<TABLE>
<CAPTION>
SHARES
HELD VALUE
----------- -----------
<S> <C> <C>
SECURITY AND COMMODITY BROKERS (2.67%)
American Express Co........................................... 6,272 $ 274,400
Lehman Brothers Holding, Inc.................................. 5,024 116,180
-----------
390,580
TRANSPORTATION EQUIPMENT (11.07%)
Allied-Signal, Inc............................................ 7,852 461,305
Boeing Co. (The).............................................. 3,701 327,538
Ford Motor Co................................................. 8,288 269,360
General Motors Corp........................................... 4,356 212,355
United Technologies Corp...................................... 3,105 349,701
-----------
1,620,259
WHOLESALE TRADE -- DURABLE GOODS (1.20%)
Westinghouse Electric Corp.................................... 10,457 175,155
-----------
Total Common Stocks............................................. 13,128,904
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (9.39%)
UNITED STATES GOVERNMENT AGENCIES
Federal Farm Credit Bank, due 8/01/96......................... $ 475,000 475,000
Federal Home Loan Mortgage Corp., due 8/02/96................. 900,000 899,870
-----------
Total Short-Term Investments.................................... 1,374,870
-----------
Total Investments (99.06%)...................................... 14,503,774
OTHER ASSETS LESS LIABILITIES (0.94%)
Cash, receivables and prepaid expense, less liabilities....... 137,432
-----------
Total Net Assets (100.00%)...................................... $14,641,206
-----------
-----------
</TABLE>
(1) Non-income producing security.
SEE ACCOMPANYING NOTES.
33
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
FBL Series 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 consists
of six portfolios (known as the Growth Common Stock, High Grade Bond, High Yield
Bond, Managed, Money Market and Blue Chip Portfolios).
All portfolios, other than the Money Market Portfolio, value their common
stocks, corporate bonds, United States Treasury obligations and mortgage-backed
securities that are traded on any national exchange at the last sale price on
the day of valuation or, lacking any sales, at the mean between the closing bid
and asked prices. Investments traded in the over-the-counter market are valued
at the mean between the bid and asked prices or yield equivalent as obtained
from one or more dealers that make markets in the securities. Investments for
which market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Directors. Short-term investments
(including repurchase agreements) are valued at market value, except that
obligations maturing in 60 days or less are valued using the amortized cost
method of valuation described below with respect to the Money Market Portfolio,
which approximates market.
The Money Market Portfolio 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 portfolio.
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 applicable
portfolio 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 affected portfolio 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 a portfolio may enter into the repurchase
agreement.
The Fund records investment transactions generally one day after the trade
date. The identified cost basis has been used in determining the net realized
gain or loss from investment transactions and unrealized appreciation or
depreciation on investments. Dividends are taken into income on an accrual basis
as of the ex-dividend date and interest is recognized on an accrual basis.
Discounts and premiums on investments purchased are amortized over the life of
the respective investments.
Dividends and distributions to shareholders are recorded on the record date.
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.
34
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. FEDERAL INCOME TAXES (CONTINUED)
At July 31, 1996, the High Grade Bond Portfolio had a net capital loss
carryforward of approximately $31,000, which will expire in 2003.
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 portfolios and the
investment of their assets. Pursuant to these agreements, fees paid to FBL
Investment are as follows: (1) annual investment advisory and management fees,
which are based on each portfolio's daily net assets as follows: Growth Common
Stock Portfolio - 0.50%; High Grade Bond Portfolio - 0.40%; High Yield Bond
Portfolio - 0.55%; Managed Portfolio - 0.60%; Money Market Portfolio - 0.40% and
Blue Chip Portfolio - 0.25%; (2) distribution fees, which are computed at an
annual rate of 0.50% of each portfolio's average daily net asset value and, in
part, are subsequently remitted by FBL Investment to retail dealers including
FBL Marketing Services, Inc. ("FBL Marketing"), an affiliate who serves as
principal dealer; (3) administrative service fees, which are computed at an
annual rate of 0.25% of each portfolio's average daily net asset value; (4)
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 ranging from $7.00 to $9.00, with an
annual minimum account maintenance fee of $12,000 per portfolio; and (5)
accounting fees, which are based on each portfolio's daily net assets at an
annual rate of 0.05%, with a maximum per portfolio annual expense of $30,000.
FBL Investment has agreed to reimburse the portfolios annually for total
expenses (excluding brokerage, interest, taxes, the distribution fee and
extraordinary expenses) in excess of 1.50% of each portfolio's average daily net
assets. The amount reimbursed, however, shall not exceed the amount of the
investment advisory and management fees paid by the portfolio for such period.
During the year ended July 31, 1996, FBL Investment voluntarily reimbursed
the Managed Portfolio for losses relating to the sale of a restricted security
in the amount of $44,982. The transaction was recorded as a realized capital
loss and an offsetting capital contribution from an affiliate.
Certain officers and directors of the Fund are also officers of Farm Bureau
Life Insurance Company, FBL Investment, FBL Marketing and other affiliated
entities. At July 31, 1996, Farm Bureau Life Insurance Company, the indirect
parent of FBL Investment and FBL Marketing, owned shares of the Fund's
portfolios as follows:
<TABLE>
<CAPTION>
PORTFOLIO SHARES
- --------------------------------------------------------------- ----------
<S> <C>
High Yield Bond................................................ 75,129
Money Market................................................... 1,910,602
</TABLE>
FBL Investment also owned shares of the Growth Common Stock Portfolio
aggregating 69,178 at July 31, 1996.
35
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS
Net assets as of July 31, 1996 consisted of:
<TABLE>
<CAPTION>
PORTFOLIO
-------------------------------------------------------------------------
GROWTH HIGH
COMMON HIGH GRADE YIELD MONEY BLUE
STOCK BOND BOND MANAGED MARKET CHIP
----------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Capital Stock (5,000,000,000 shares of $.001
par value Capital Stock authorized)......... $ 5,894 $ 898 $ 736 $ 2,061 $ 2,653 $ 557
Additional paid-in capital.................... 73,419,617 9,027,557 7,389,460 24,489,773 2,548,901 9,734,104
Accumulated undistributed net investment
income...................................... 494,106 488 34,363
Accumulated undistributed net realized gain
(loss) from investment transactions......... 10,297,817 (30,508) 70,326 1,972,115 182,872
Net unrealized appreciation (depreciation) of
investments................................. 2,316,443 124,227 (111,158) 1,005,339 4,689,310
----------- ---------- ---------- ----------- ---------- -----------
Net Assets.................................... $86,533,877 $9,122,174 $7,349,364 $27,469,776 $2,551,554 $14,641,206
----------- ---------- ---------- ----------- ---------- -----------
----------- ---------- ---------- ----------- ---------- -----------
</TABLE>
Transactions in Capital Stock for each portfolio were as follows:
<TABLE>
<CAPTION>
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS AND NET INCREASE
SHARES SOLD DISTRIBUTIONS SHARES REDEEMED (DECREASE)
--------------------- --------------------- --------------------- ----------------------
PORTFOLIO SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------------ --------- ---------- --------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended July 31, 1996:
Growth Common Stock........... 676,503 $9,680,344 272,420 $3,830,226 496,485 $7,075,876 452,438 $6,434,694
High Grade Bond............... 145,140 1,486,070 40,458 415,105 101,202 1,037,316 84,396 863,859
High Yield Bond............... 158,195 1,581,316 36,061 360,220 125,359 1,252,932 68,897 688,604
Managed....................... 388,866 5,132,422 72,358 945,921 180,489 2,377,441 280,735 3,700,902
Money Market.................. 524,983 524,983 20,508 20,508 432,787 432,787 112,704 112,704
Blue Chip..................... 176,665 4,548,977 3,471 85,480 45,260 1,152,502 134,876 3,481,955
Year Ended July 31, 1995:
Growth Common Stock........... 456,086 $5,716,180 465,616 $5,401,147 399,968 $5,014,467 521,734 $6,102,860
High Grade Bond............... 97,267 947,943 37,987 400,616 71,483 711,607 63,771 636,952
High Yield Bond............... 85,943 872,956 35,880 351,724 97,585 990,492 24,238 234,188
Managed....................... 206,561 2,362,969 107,958 1,216,938 178,193 2,021,534 136,326 1,558,373
Money Market.................. 194,697 194,697 19,711 19,711 402,160 402,160 (187,752) (187,752)
Blue Chip..................... 91,343 1,825,635 2,799 52,645 31,209 621,430 62,933 1,256,850
</TABLE>
36
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT TRANSACTIONS
For the year ended July 31, 1996, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. Government securities) by portfolio, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- ----------------------------------------------- ----------- -----------
<S> <C> <C>
Growth Common Stock............................ $74,938,787 $67,499,367
High Grade Bond................................ 3,111,851 2,771,564
High Yield Bond................................ 2,547,755 1,863,609
Managed........................................ 14,912,657 15,320,972
Blue Chip...................................... 3,018,744 321,285
</TABLE>
At July 31, 1996, net unrealized appreciation of investments by portfolio
was composed of the following:
<TABLE>
<CAPTION>
NET UNREALIZED
GROSS UNREALIZED APPRECIATION
---------------------------- (DEPRECIATION)
PORTFOLIO APPRECIATION DEPRECIATION OF INVESTMENTS
- ---------------------------------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
Growth Common Stock........................... $ 6,887,543 $ 4,571,100 $ 2,316,443
High Grade Bond............................... 196,768 72,541 124,227
High Yield Bond............................... 108,582 219,740 (111,158)
Managed....................................... 1,517,049 511,709 1,005,339
Blue Chip..................................... 4,786,980 97,670 4,689,310
</TABLE>
37
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income for the following portfolios are
declared daily and were payable on the last business day of the month as
follows:
<TABLE>
<CAPTION>
HIGH HIGH
GRADE YIELD MONEY
PAYABLE DATE BOND BOND MARKET
- ------------------------------------------------------------------ --------- --------- -----------
<S> <C> <C> <C>
August 31, 1995................................................... $ .0549 $ .0631 $ .0032
September 29, 1995................................................ .0530 .0611 .0030
October 31, 1995.................................................. .0561 .0639 .0032
November 30, 1995................................................. .0557 .0636 .0031
December 29, 1995................................................. .0525 .0632 .0032
January 31, 1996.................................................. .0551 .0660 .0034
February 29, 1996................................................. .0532 .0616 .0026
March 29, 1996.................................................... .0515 .0605 .0025
April 30, 1996.................................................... .0526 .0639 .0028
May 31, 1996...................................................... .0519 .0608 .0028
June 28, 1996..................................................... .0467 .0554 .0027
July 31, 1996..................................................... .0561 .0650 .0032
--------- --------- -----------
Total Dividends Per Share......................................... $ .6393 $ .7481 $ .0357
--------- --------- -----------
--------- --------- -----------
</TABLE>
38
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (CONTINUED)
In addition, dividends and distributions to shareholders from net investment
income and net realized gain on investment transactions were paid during the
year ended July 31, 1996, for the following portfolios:
<TABLE>
<CAPTION>
ORDINARY INCOME DIVIDENDS: DIVIDEND PERCENT QUALIFYING
DECLARATION RECORD PAYABLE AMOUNT PER FOR DEDUCTION BY
PORTFOLIO DATE DATE DATE SHARE CORPORATIONS
- -------------------------------- ----------- --------- --------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
Growth Common Stock............. 12/21/95 12/28/95 12/28/95 $ 0.4585 73%
Managed......................... 10/29/95 10/31/95 11/07/95 0.0825 57
Managed......................... 12/21/95 12/28/95 12/28/95 0.1196 56
Managed......................... 4/29/96 4/30/96 4/30/96 0.1175 50
Managed......................... 7/30/96 7/31/96 7/31/96 0.1275 53
Blue Chip....................... 12/21/95 12/28/95 12/28/95 0.1950 82
</TABLE>
<TABLE>
<CAPTION>
CAPITAL GAINS DISTRIBUTIONS: DIVIDEND
DECLARATION RECORD PAYABLE AMOUNT PER
PORTFOLIO DATE DATE DATE SHARE
- -------------------------------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Growth Common Stock............. 12/21/95 12/28/95 12/28/95 $ 0.2700
High Yield Bond................. 12/21/95 12/28/95 12/28/95 0.0325
Managed......................... 12/21/95 12/28/95 12/28/95 0.1029
</TABLE>
The capital gains distributions related to the Growth Common Stock, High
Yield Bond and Managed Portfolios include net short-term realized gains of
$1,152,619 ($0.2140 per share), $21,546 ($0.0325 per share) and $188,116
($0.1029 per share), respectively, that are taxable to shareholders as ordinary
income dividends.
39
<PAGE>
FBL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31, 1996, 1995, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
GROWTH
COMMON STOCK
PORTFOLIO
--------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $13.04 $13.07 $15.13 $12.48 $11.64
Income From Investment Operations
Net investment income......................... 0.27 0.43 0.60 0.51 0.48
Net gains or losses on investments (both
realized and unrealized).................... 2.10 0.65 (0.49) 2.75 0.93
------- ------- ------- ------- ------
Total from investment operations................ 2.37 1.08 0.11 3.26 1.41
------- ------- ------- ------- ------
Less Distributions
Dividends (from net investment income)........ (0.46) (0.39) (0.60) (0.48) (0.57)
Distributions (from capital gains)............ (0.27) (0.72) (1.57) (0.13)
Distributions in excess of net realized
gains.......................................
------- ------- ------- ------- ------
Total distributions............................. (0.73) (1.11) (2.17) (0.61) (0.57)
------- ------- ------- ------- ------
Net asset value, end of year...................... $14.68 $13.04 $13.07 $15.13 $12.48
------- ------- ------- ------- ------
------- ------- ------- ------- ------
Total Return:
Total investment return based on net asset value
(1)........................................... 18.41% 9.36% 0.34% 27.25% 12.51%
Ratios/Supplemental Data:
Net assets, end of year ($000's omitted)........ 86,534 70,947 64,315 51,732 39,418
Ratio of net expenses to average net assets..... 1.62% 1.62% 1.60% 1.61% 1.69%
Ratio of net income to average net assets....... 1.87% 3.43% 4.05% 3.80% 3.99%
Portfolio turnover rate......................... 92% 85% 93% 92% 87%
Average commission rate per share (3)........... $.0529
Information assuming no voluntary reimbursement by
FBL Investment of excess operating expenses (see
NOTE 3):
Per share net investment income.................
Ratio of expenses to average net assets.........
Amount reimbursed...............................
</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. Contingent deferred sales charge
is not reflected in the calculation of total investment return.
(2) The total investment return includes the effect of the capital contribution
of $0.02 per share. The return without the capital contribution would have
been 17.13%.
(3) Average commission rate per share disclosure is not required for fiscal
years prior to July 31, 1996.
SEE ACCOMPANYING NOTES.
40
<PAGE>
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
------------------------------------------------ ------------------------------------------------
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year......................... $10.26 $10.13 $10.69 $10.68 $10.15 $10.03 $10.00 $10.76 $10.47 $9.82
Income From Investment
Operations
Net investment income..... 0.64 0.63 0.64 0.70 0.73 0.75 0.78 0.81 0.83 0.90
Net gains or losses on
investments (both
realized and
unrealized)............. (0.10) 0.16 (0.40) 0.13 0.62 (0.01) 0.13 (0.60) 0.46 0.65
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations................ 0.54 0.79 0.24 0.83 1.35 0.74 0.91 0.21 1.29 1.55
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends (from net
investment income)...... (0.64) (0.63) (0.64) (0.70) (0.73) (0.75) (0.78) (0.81) (0.83) (0.90)
Distributions (from
capital gains).......... (0.16) (0.12) (0.09) (0.03) (0.09) (0.16) (0.17)
Distributions in excess of
net realized gains...... (0.03) (0.01)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions......... (0.64) (0.66) (0.80) (0.82) (0.82) (0.78) (0.88) (0.97) (1.00) (0.90)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
year......................... $10.16 $10.26 $10.13 $10.69 $10.68 $9.99 $10.03 $10.00 $10.76 $10.47
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total Return:
Total investment return
based on net asset value
(1)....................... 5.37% 8.23% 1.77% 8.10% 13.71% 7.67% 9.71% 1.88% 12.95% 16.44%
Ratios/Supplemental Data:
Net assets, end of year
($000's omitted).......... 9,122 8,345 7,596 8,047 7,676 7,349 6,691 6,425 5,758 4,835
Ratio of net expenses to
average net assets........ 1.85% 1.99% 1.90% 1.79% 1.88% 2.00% 2.00% 2.00% 2.00% 1.98%
Ratio of net income to
average net assets........ 6.19% 6.29% 6.12% 6.59% 6.94% 7.44% 7.83% 7.68% 7.84% 8.79%
Portfolio turnover rate..... 34% 18% 42% 54% 45% 30% 23% 26% 56% 56%
Average commission rate per
share (3).................
Information assuming no
voluntary reimbursement by
FBL Investment of excess
operating expenses (see NOTE
3):
Per share net investment
income.................... $0.73 $0.75 $0.79 $0.82
Ratio of expenses to average
net assets................ 2.22% 2.29% 2.17% 2.05%
Amount reimbursed........... $15,361 $18,810 $10,754 $3,147
</TABLE>
41
<PAGE>
FBL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
--------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $ 11.85 $ 11.62 $ 12.51 $ 10.77 $ 9.95
Income From Investment Operations
Net investment income......................... 0.46 0.56 0.55 0.54 0.61
Net gains or losses on investments (both
realized and unrealized).................... 1.54 0.47 (0.62) 1.87 0.82
------- ------- ------- ------- ------
Total from investment operations................ 2.00 1.03 (0.07) 2.41 1.43
------- ------- ------- ------- ------
Less Distributions
Dividends (from net investment income)........ (0.45) (0.56) (0.50) (0.52) (0.61)
Distributions (from capital gains)............ (0.10) (0.14) (0.32) (0.15)
Distributions in excess of net realized
gains....................................... (0.10)
------- ------- ------- ------- ------
Total distributions............................. (0.55) (0.80) (0.82) (0.67) (0.61)
------- ------- ------- ------- ------
Capital contribution from affiliate (see NOTE
3)............................................ 0.03
------- ------- ------- ------- ------
Net asset value, end of year...................... $ 13.33 $ 11.85 $ 11.62 $ 12.51 $10.77
------- ------- ------- ------- ------
------- ------- ------- ------- ------
Total Return:
Total investment return based on net asset value
(1)........................................... 17.30%(2) 9.40% (0.61%) 23.02% 14.79%
Ratios/Supplemental Data:
Net assets, end of year ($000's omitted)........ 27,470 21,105 19,100 8,257 3,887
Ratio of net expenses to average net assets..... 1.91% 1.94% 1.96% 1.96% 2.07%
Ratio of net income to average net assets....... 3.47% 4.86% 4.42% 4.54% 5.93%
Portfolio turnover rate......................... 81% 69% 29% 52% 77%
Average commission rate per share (3)........... $.0549
Information assuming no voluntary reimbursement by
FBL Investment of excess operating expenses (see
NOTE 3):
Per share net investment income................. $ 0.53
Ratio of expenses to average net assets......... 2.02%
Amount reimbursed............................... $ 3,497
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
------------------------------------------------ ------------------------------------------------
1996 1995 1994 1993 1992 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 22.85 $ 18.75 $ 17.69 $ 16.78 $ 15.38
Income From Investment
Operations
Net investment income..... 0.04 0.04 0.02 0.01 0.03 0.17 0.19 0.14 0.13 0.17
Net gains or losses on
investments (both
realized and
unrealized)............. 3.43 4.05 1.06 0.90 1.47
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations................ 0.04 0.04 0.02 0.01 0.03 3.60 4.24 1.20 1.03 1.64
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends (from net
investment income)...... (0.04) (0.04) (0.02) (0.01) (0.03) (0.19) (0.14) (0.14) (0.12) (0.24)
Distributions (from
capital gains)..........
Distributions in excess of
net realized gains......
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions......... (0.04) (0.04) (0.02) (0.01) (0.03) (0.19) (0.14) (0.14) (0.12) (0.24)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Capital contribution from
affiliate (see NOTE 3)....
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
year......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 26.26 $ 22.85 $ 18.75 $ 17.69 $ 16.78
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total Return:
Total investment return
based on net asset value
(1)....................... 3.64% 3.60% 1.47% 1.33% 2.82% 15.83% 22.77% 6.75% 6.21% 10.77%
Ratios/Supplemental Data:
Net assets, end of year
($000's omitted).......... 2,552 2,439 2,627 2,555 2,861 14,641 9,657 6,745 5,415 4,405
Ratio of net expenses to
average net assets........ 2.00% 2.00% 1.93% 1.94% 2.00% 1.79% 1.78% 1.83% 1.90% 1.92%
Ratio of net income to
average net assets........ 3.58% 3.51% 1.45% 1.33% 2.83% 0.66% 0.92% 0.75% 0.73% 1.09%
Portfolio turnover rate..... 0% 0% 0% 0% 0% 3% 1% 1% 0% 0%
Average commission rate per
share (3)................. $ .0748
Information assuming no
voluntary reimbursement by
FBL Investment of excess
operating expenses (see NOTE
3):
Per share net investment
income.................... $ 0.03 $ 0.03
Ratio of expenses to average
net assets................ 2.43% 2.20%
Amount reimbursed........... $ 10,718 $ 4,948
</TABLE>
43
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
FBL Series Fund, Inc.
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of FBL Series Fund, Inc. (comprising,
respectively, the Growth Common Stock, High Grade Bond, High Yield Bond,
Managed, Money Market and Blue Chip Portfolios) as of July 31, 1996, and the
related statements 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 and broker. 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
each of the respective portfolios constituting the FBL Series Fund, Inc. at July
31, 1996, the results of their operations for the year then ended, the changes
in their 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.
[SIGNATURE]
Des Moines, Iowa
August 30, 1996
44
