FARM BUREAU MUTUAL FUNDS
FBL Series Fund, Inc.
[LOGO]
ANNUAL REPORT
JULY 31, 1997
INVESTMENT MANAGER AND
PRINCIPAL UNDERWRITER
FBL INVESTMENT ADVISORY
SERVICES, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-800-247-4170 (OUTSIDE IOWA)
1-800-422-3175 (IN IOWA)
225-5586 (DES MOINES)
This report is not to be distributed
unless preceded or accompanied by
a prospectus.
FARM BUREAU MUTUAL FUNDS
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266
[LOGO]
FARM BUREAU
FINANCIAL SERVICES
LIVING BESIDE YOU. WORKING FOR YOU
737-028 (97)
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
After an almost 10% correction earlier this year, the equity market resumed
its charge to new highs. Through July, the S&P 500 is up 30.14%, following
powerful 37.5% and 23.0% gains in 1995 and 1996, respectively. Such a large
first-half gain following +20% or more gains in the prior two years has only
occurred twice before during this century; 1929 and 1987. This bull market,
which began in 1990, now beats that of 1923-1929 as the longest in this century.
The bond market has nearly made a round trip in terms of yield. As of the
beginning of the year, the benchmark 30-year Treasury yield was 6.64%, by the
end of the first quarter it had risen to 7.10%, but by the end of July was back
down to 6.30%. After the Federal Reserve raised short-term interest rates
one-quarter of 1% in March, it was feared that rates would continue to rise. In
the months that have followed, economic data has pointed to softer growth and an
absence of dangerous levels of inflation. The core rate of inflation for the
first half was reported at 2.4%. Accordingly, the market is currently less
fearful of Fed rate hikes.
Even though inflation appears to be in check at present, it is possible
that an increase in global growth could fuel an increase in inflation, and as a
result financial assets may suffer. Alternatively, if disinflation were to
evolve into outright deflation, equities and non-investment grade bonds would
likely prove disappointing to investors. Perhaps we will remain on a moderate
growth / low inflation track, but as the market prices in less and less margin
for error, a thorough review of asset allocation decisions is prudent.
We remain concerned that investor's expectations for financial asset
returns may become unrealistic relative to longer-term historic norms. Risk is
the constant companion of return, but is easily forgotten in times such as
these. Asset allocation decisions should be based on investor risk tolerance and
a review of historic (50 to 100 years, rather than 5 or 10 years) patterns of
risk and reward.
For the actively managed FBL Series Fund, Inc. Portfolios, (those other
than the passive Blue Chip Portfolio) we constantly assess 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. The following paragraphs describe how we are currently striking
balance between risk and potential return for the various Fund Portfolios:
VALUE GROWTH: The market is completing a 15-year period of the best total
returns in stock history. It is doing so with a flourish as we've just witnessed
a rally of 20% in two months to a new high, a performance not seen since
November, 1928. The essential dynamic is fairly obvious and well heralded -- a
continuation of a well-balanced economic recovery that, despite its duration,
has yet to generate inflationary pressures.
The Dow stocks look to be overvalued, with the components of the Dow
trading at or around their all-time high P/E ratio and yields at all time lows.
By comparison, many small caps are attractively priced: trading at relatively
low P/E ratios and selling at discounts to their true business value.
The Value Growth Portfolio has not participated in the current rally
because of this divergence between blue chip stocks and smaller companies. We
continue to believe the shareholder is well
<PAGE>
served by focusing on companies that sell below their intrinsic business value,
but currently, investors are focusing their attention elsewhere and avoiding the
value stocks. We believe in the long run, value investing will win out over the
current concept of paying any price for a stock, no matter how high, just
because it is going up. Our goal is to be invested in stocks that have
appreciation potential at an acceptable level of risk.
HIGH GRADE BOND: U.S. Treasury yields were noticeably lower at the end of
our year-end reporting period. For example, the 2-year, 10-year and 30-year
Treasury issues yielded 6.22%, 6.79% and 6.97%, respectively, as of July 31,
1996, and 5.72%, 6.01% and 6.30% as of July 31, 1997.
During the twelve-month period, the Fund increased the average maturity and
effective duration of the Portfolio. This increase in effective duration will
make its total return more sensitive to overall changes in interest rates.
However, our effective duration and sensitivity to overall changes in interest
rates is still lower than more aggressive high grade bond funds. Because of
this, our future returns should continue to lag those of more aggressive funds
in both up and down markets.
HIGH YIELD BOND: During the past twelve months, the high yield bond market
outperformed the high grade corporate bond market. Fundamental and technical
factors both contributed favorably to this market's performance during this
period. On the fundamental side, an overall healthy economy and improvement in
overall market credit quality resulted in a very low rate of actual defaults in
the high yield market. On the technical side, strong demand for high yield
issues allowed the market to easily absorb new issuance, which has resulted in a
narrowing of the spread on high yield issues.
At the present time, the yield pick-up on high yield issues is near
historically low levels, which means there is little cushion to absorb any
potential negative surprises that may occur in this market. Because of this, we
feel a more aggressive stance is not prudent at this time, and the composition
of the Portfolio will probably not be dramatically altered going forward.
MANAGED: The Managed Portfolio continues to seek securities offering high
income with 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, which is currently yielding a mere 1.7%. We continue to achieve higher
income by investing in a mixture of high dividend-paying stocks, preferreds,
convertibles and corporate bonds.
Our current cash holdings put this Portfolio in an excellent position to
take advantage of buying opportunities that present themselves, and we continue
to focus on attractively priced convertibles when available. Major influences on
stock prices are still likely to be interest rates and the outlook for earnings.
Extreme changes in direction are not on the horizon, but we suspect that a
modest upticking in rates and a second half slowing in earnings momentum may
tarnish the investment environment a little, giving rise to a renewal of a more
selective market.
MONEY MARKET: The most significant activity over the past six months was
the Fed funds rate increase from 5.25% to 5.50%. One-year Treasury bills have
traded in a range from 5.45% to 6.07% during this period, indicating some
uncertainty about the U.S. economy. However, during the last few months it
appears the Fed was preemptive in averting inflation and has successfully
maneuvered the U.S. economy through a strong growth, low inflation environment.
Since the short-term market levels are flat, we have stayed very short with
maturities because there is no incentive to extend and to capture any possible
market movement.
<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.
/S/ EDWARD M. WIEDERSTEIN
EDWARD M. WIEDERSTEIN
PRESIDENT
August 29, 1997
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
VALUE GROWTH PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE VALUE GROWTH PORTFOLIO AND S&P 500
[GRAPHIC OMITTED]
Portfolio: Stock Index:
Value Growth Portfolio S&P 500 Stock Composite Index
1987 - 10,000 1987 - 10,000
1988 - 11,486 1988 - 8,833
1989 - 12,805 1989 - 11,648
1990 - 13,561 1990 - 12,401
1991 - 15,143 1991 - 13,986
1992 - 17,038 1992 - 15,770
1993 - 21,680 1993 - 17,137
1994 - 21,755 1994 - 18,025
1995 - 23,791 1995 - 22,721
1996 - 28,171 1996 - 26,475
1997 - 34,322 1997 - 40,247
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
Average Annual Total Return
1 year 5 year 10 year
21.83% 15.03% 10.19%
For the twelve-month period ended July 31, 1997, the total return for the
Value Growth Portfolio was 21.83%, compared to the 52.00% total return (income
and price appreciation) produced by the S&P 500 Stock Composite Index. The
difference in performance between the Value Growth and the S&P 500 is largely
due to the wide divergence taking place between large (usually defined as total
market value in excess of $5 billion) and small capitalization stocks. This is
evidenced by the Russell 2000 Index (a proxy for smaller companies), which
produced a return half that of the S&P 500 from December 31, 1996, to July 31,
1997. The lackluster year-to-date performance in small-caps follows
underperformance in both 1995 and 1996. According to Ibbotson Associates,
small-caps have historically outperformed large-caps, despite their current
underperformance. We continue to believe that the best long-term risk-reward
relationship favors the smaller companies of the type that the Value Growth
Portfolio owns.
<PAGE>
HIGH GRADE BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
HIGH GRADE BOND PORTFOLIO AND LEHMAN BROTHERS MUTUAL FUND AGGREGATE INDEX
[GRAPHIC OMITTED]
Portfolio: Stock Index:
High Grade Bond Portfolio Lehman Brothers Mutual Fund Aggregate
Index
1987 - 10,000 1987 - 10,000
1988 - 10,297 1988 - 10,585
1989 - 11,396 1989 - 12,194
1990 - 12,097 1990 - 13,054
1991 - 13,342 1991 - 14,451
1992 - 15,171 1992 - 16,589
1993 - 16,401 1993 - 18,278
1994 - 16,692 1994 - 18,292
1995 - 18,066 1995 - 20,141
1996 - 19,036 1996 - 21,257
1997 - 20,857 1997 - 23,544
* THE PORTFOLIO COMMENCED OPERATIONS DECEMBER 1, 1987.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
Average Annual Total Return
1 year 5 year Life of Portfolio*
9.56% 6.57% 7.90%
During the twelve-month period ended July 31, 1997, the High Grade Bond
Portfolio underperformed the Lehman Brothers Mutual Fund Aggregate Index, as
reflected by the 9.56% total return produced by the Portfolio versus the 10.76%
total return produced by the Lehman Brothers 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.
<PAGE>
HIGH YIELD BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE HIGH YIELD
BOND PORTFOLIO AND LEHMAN BROTHERS MUTUAL FUND CORPORATE/HIGH YIELD INDEX
[GRAPHIC OMITTED]
Portfolio: Stock Index:
High Yield Bond Portfolio Lehman Brothers Mutual Fund Corporate/
High Yield Index
1987 - 10,000 1987 - 10,000
1988 - 10,312 1988 - 10,776
1989 - 11,427 1989 - 12,344
1990 - 12,218 1990 - 13,103
1991 - 13,786 1991 - 14,564
1992 - 16,051 1992 - 17,092
1993 - 18,129 1993 - 19,175
1994 - 18,470 1994 - 19,251
1995 - 20,263 1995 - 21,605
1996 - 21,817 1996 - 22,975
1997 - 24,718 1997 - 26,035
* THE PORTFOLIO COMMENCED OPERATIONS DECEMBER 1, 1987.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
Average Annual Total Return
1 year 5 year Life of Portfolio*
13.29% 9.02% 9.81%
For the twelve-month period ended July 31, 1997, the 13.29% total return
produced by the High Yield Bond Portfolio was nearly equal to the 13.32% total
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 this time
period, the high yield market tended to outperform the high grade corporate bond
market. However, factors which offset the Portfolio's return were its expenses
and substantial holdings in high-coupon, premium priced, callable bonds, which
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.
<PAGE>
MANAGED PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
MANAGED PORTFOLIO AND S&P 500
[GRAPHIC OMITTED]
Portfolio: Stock Index:
Managed Portfolio S&P 500 Stock Composite Index
1987 - 10,000 1987 - 10,000
1988 - 10,318 1988 - 8,833
1989 - 11,007 1989 - 11,648
1990 - 11,773 1990 - 12,401
1991 - 12,603 1991 - 13,986
1992 - 14,467 1992 - 15,770
1993 - 17,798 1993 - 17,137
1994 - 17,689 1994 - 18,025
1995 - 19,352 1995 - 22,721
1996 - 22,700 1996 - 26,475
1997 - 26,759 1997 - 40,247
* THE PORTFOLIO COMMENCED OPERATIONS DECEMBER 1, 1987.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
Average Annual Total Return
1 year 5 year Life of Portfolio*
17.88% 13.09% 10.72%
The Managed Portfolio is an asset allocation portfolio with an emphasis on
income, and will not likely mirror any particular index (equity or fixed-income)
over time. During the twelve-month period ended July 31, 1997, the Portfolio
produced a total return of 17.88% compared to the 52.00% total return (income
and price appreciation) produced by the S&P 500 Stock Composite Index. The
Managed Portfolio has emphasized securities producing current income and
moderate growth potential, maintaining a majority of its assets in convertible
bonds and convertible preferred stocks. The Managed Portfolio will continue to
seek out high income, concentrating on convertibles and higher yielding common
stocks. The dividend yield on the S&P 500 is a paltry 1.6%, and we believe that
from these market levels, income will take on a larger role in producing
attractive low-risk total returns. The Managed Portfolio is uniquely positioned
for this type of environment.
<PAGE>
BLUE CHIP PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
BLUE CHIP PORTFOLIO AND S&P 500
[GRAPHIC OMITTED]
Portfolio: Stock Index:
Blue Chip Portfolio S&P 500 Stock Composite Index
1987 - 10,000 1987 - 10,000
1988 - 11,570 1988 - 8,833
1989 - 14,802 1989 - 11,648
1990 - 16,173 1990 - 12,401
1991 - 17,525 1991 - 13,986
1992 - 19,412 1992 - 15,770
1993 - 20,618 1993 - 17,137
1994 - 22,011 1994 - 18,025
1995 - 27,023 1995 - 22,721
1996 - 31,302 1996 - 26,475
1997 - 45,003 1997 - 40,247
* THE PORTFOLIO COMMENCED OPERATIONS DECEMBER 1, 1987.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
Average Annual Total Return
1 year 5 year Life of Portfolio*
43.77% 18.31% 16.84%
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 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 for the twelve-month period ended July 31,
1997.
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
-------------- -------------
<S> <C> <C>
ASSETS
Investments in securities, at value (cost -- $103,071,488;
$9,561,013; $8,583,798; $37,614,069; $2,417,348;
and $17,314,797, respectively) ........................... $112,787,213 $10,016,066
Cash ................................................... 121,100 63,648
Receivables:
Accrued dividends and interest ........................ 119,923 171,584
Investment securities sold .............................. 41 12,526
Prepaid expense and other assets ........................ 1,659 152
------------- ------------
Total Assets ............................................. $113,029,936 $10,263,976
============= ============
LIABILITIES AND NET ASSETS
Liabilities:
Payable to FBL Investment Advisory Services, Inc. ...... $ 18,354 $ 3,471
Dividends payable .......................................
Accrued expenses ....................................... 26,405 10,115
------------- ------------
Total Liabilities ....................................... 44,759 13,586
Net assets applicable to outstanding capital stock ...... 112,985,177 10,250,390
------------- ------------
Total Liabilities and Net Assets ........................ $113,029,936 $10,263,976
============= ============
Shares issued and outstanding as of July 31, 1997 ...... 7,228,206 976,365
NET ASSET VALUE PER SHARE .............................. $ 15.63 $ 10.50
============= ============
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ------------ ------------
$8,872,178 $40,382,372 $2,417,348 $29,745,942
58,123 155,878 52,141 101,781
237,194 149,786 4,670 35,268
353,694
133 552 42 332
---------- ----------- ---------- ------------
$9,167,628 $41,042,282 $2,474,201 $29,883,323
========== =========== ========== ============
$ 4,163 $ 10,464 $ 1,537 $ 9,114
2 26,734 1
7,802 11,061 6,947 10,803
---------- ----------- ---------- ------------
11,967 48,259 8,485 19,917
9,155,661 40,994,023 2,465,716 29,863,406
---------- ----------- ---------- ------------
$9,167,628 $41,042,282 $2,474,201 $29,883,323
========== =========== ========== ============
874,028 2,918,089 2,465,716 802,826
$ 10.48 $ 14.05 $ 1.00 $ 37.20
========== =========== ========== ============
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED JULY 31, 1997
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
-------------- ------------
<S> <C> <C>
INVESTMENT INCOME
Dividends ................................................ $ 2,005,967
Interest ................................................... 842,560 $737,807
------------ --------
Total Investment Income .................................... 2,848,527 737,807
EXPENSES
Paid to FBL Investment Advisory Services, Inc.:
Investment advisory and management fees .................. 505,350 38,467
Transfer and dividend disbursing agent fees ............... 197,923 30,388
Distribution fees .......................................... 505,350 48,084
Administrative service fees .............................. 252,675 24,042
Accounting fees .......................................... 30,000 4,808
Custodian fees ............................................. 16,216 7,013
Legal fees ................................................ 39,884 2,604
Audit fees ................................................ 12,700 1,100
Directors' fees and expenses .............................. 3,276 323
Reports to shareholders .................................... 66,578 7,077
Registration fees .......................................... 26,411 5,683
Miscellaneous ............................................. 6,944 5,466
------------ --------
Total Expenses ............................................. 1,663,307 175,055
Expense Reimbursement ....................................
------------ --------
Net Expenses ................................................ 1,663,307 175,055
------------ --------
Net Investment Income ....................................... 1,185,220 562,752
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from investment transactions ...... 10,703,882 (9,430)
Change in unrealized appreciation/depreciation
of investments ............................................. 7,399,282 330,826
------------ --------
Net Gain on Investments .................................... 18,103,164 321,396
------------ --------
Net Increase in Net Assets Resulting from Operations ...... $19,288,384 $884,148
============ ========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -------------- ------------
$ 4,748 $ 967,569 $ 365,084
725,012 868,668 $143,888 95,313
---------- ----------- -------- -----------
729,760 1,836,237 143,888 460,397
45,477 202,879 7,912 51,719
35,478 120,751 15,791 93,640
41,343 169,066 13,195 103,438
20,671 84,533 6,598 51,719
4,134 16,907 1,320 10,344
6,397 7,039 5,158 9,207
3,002 13,786 1,319 7,349
5,000 5,800 4,600 5,100
272 1,072 90 608
6,744 25,453 1,704 16,813
5,231 10,423 2,241 9,245
305 1,076 114 641
---------- ----------- -------- -----------
174,054 658,785 60,042 359,823
(8,681) (7,255)
---------- ----------- -------- -----------
165,373 658,785 52,787 359,823
---------- ----------- -------- -----------
564,387 1,177,452 91,101 100,574
94,434 2,864,737 5,998
399,538 1,762,964 7,741,835
---------- ----------- -------- -----------
493,972 4,627,701 7,747,833
---------- ----------- -------- -----------
$1,058,359 $5,805,153 $ 91,101 $7,848,407
========== =========== ======== ===========
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
----------------------------------
YEAR ENDED JULY 31,
1997 1996
--------------- ----------------
<S> <C> <C>
OPERATIONS
Net investment income ....................................... $ 1,185,220 $ 1,506,458
Net realized gain (loss) from investment transactions ...... 10,703,882 11,563,616
Change in unrealized appreciation/depreciation
of investments ............................................. 7,399,282 6,359
------------- ------------
Net Increase in Net Assets Resulting from Operations ...... 19,288,384 13,076,433
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income ....................................... (1,089,763) (2,469,514)
Net realized gain from investment transactions ............ (11,584,328) (1,454,239)
------------- ------------
(12,674,091) (3,923,753)
CAPITAL SHARE TRANSACTIONS ................................. 19,837,007 6,434,694
CONTRIBUTION FROM AFFILIATE .................................
------------- ------------
Total Increase in Net Assets .............................. 26,451,300 15,587,374
NET ASSETS
Beginning of year .......................................... 86,533,877 70,946,503
------------- ------------
End of year (including undistributed
net investment income as set forth below) .................. $112,985,177 $ 86,533,877
============= ============
Undistributed Net Investment Income ........................ $ 589,563 $ 494,106
============= ============
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
------------------------------ ------------------------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31,
1997 1996 1997 1996
-------------- ------------- ------------- --------------
$ 562,752 $ 541,191 $ 564,387 $ 506,153
(9,430) 8,240 94,434 99,065
330,826 (94,954) 399,538 (107,265)
----------- ---------- ---------- ----------
884,148 454,477 1,058,359 497,953
(562,752) (541,191) (564,387) (506,153)
(91,491) (21,547)
----------- ---------- ---------- ----------
(562,752) (541,191) (655,878) (527,700)
806,820 863,859 1,403,816 688,604
----------- ---------- ---------- ----------
1,128,216 777,145 1,806,297 658,857
9,122,174 8,345,029 7,349,364 6,690,507
----------- ---------- ---------- ----------
$10,250,390 $9,122,174 $9,155,661 $7,349,364
=========== ========== ========== ==========
$ 0 $ 0 $ 0 $ 0
=========== ========== ========== ==========
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
--------------------------------
YEAR ENDED JULY 31,
1997 1996
--------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income ....................................... $ 1,177,452 $ 860,437
Net realized gain (loss) from investment transactions ...... 2,864,737 2,276,504
Change in unrealized appreciation/depreciation
of investments ............................................. 1,762,964 531,462
------------ ------------
Net Increase in Net Assets Resulting from Operations ...... 5,805,153 3,668,403
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income ....................................... (1,173,550) (861,221)
Net realized gain from investment transactions ............ (2,710,983) (188,116)
------------ ------------
(3,884,533) (1,049,337)
CAPITAL SHARE TRANSACTIONS ................................. 11,603,627 3,700,902
CONTRIBUTION FROM AFFILIATE ................................. 44,982
------------ ------------
Total Increase in Net Assets .............................. 13,524,247 6,364,950
NET ASSETS
Beginning of year .......................................... 27,469,776 21,104,826
------------ ------------
End of year (including undistributed
net investment income as set forth below) .................. $ 40,994,023 $27,469,776
============ ============
Undistributed Net Investment Income ........................ $ 4,390 $ 488
============ ============
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
----------------------------- -------------------------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31,
1997 1996 1997 1996
------------- ------------- -------------- --------------
$ 91,101 $ 89,652 $ 100,574 $ 80,169
5,998 187,256
7,741,835 1,321,836
---------- ---------- ----------- -----------
91,101 89,652 7,848,407 1,589,261
(91,101) (89,652) (90,090) (87,281)
(184,842)
---------- ---------- ----------- -----------
(91,101) (89,652) (274,932) (87,281)
(85,838) 112,704 7,648,725 3,481,955
---------- ---------- ----------- -----------
(85,838) 112,704 15,222,200 4,983,935
2,551,554 2,438,850 14,641,206 9,657,271
---------- ---------- ----------- -----------
$2,465,716 $2,551,554 $29,863,406 $14,641,206
========== ========== =========== ===========
$ 0 $ 0 $ 44,847 $ 34,363
========== ========== =========== ===========
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
HELD VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS (63.32%)
- ---------------------------------------------------
CHEMICALS AND ALLIED PRODUCTS (3.91%)
R.P. Scherer Corp. .............................. 83,000 (1) $ 4,414,563
ELECTRIC, GAS AND SANITARY SERVICES (8.37%)
Citizens Utilities Co., Class B .................. 564,088 4,724,237
Matrix Service Co. .............................. 631,400 (1) 4,735,500
------------
9,459,737
FOOD STORES (4.07%)
Casey's General Stores, Inc. ..................... 203,500 4,604,187
FURNITURE AND FIXTURES (5.34%)
Ladd Furniture, Inc. ........................... 402,317 (1) 6,034,755
HOLDING AND OTHER INVESTMENT OFFICES (4.36%)
General Growth Properties, Inc. .................. 140,000 4,926,250
INSTRUMENTS & RELATED PRODUCTS (10.69%)
Allied Healthcare Products ..................... 250,000 1,781,250
Pall Corp. ....................................... 410,000 10,301,250
------------
12,082,500
INSURANCE CARRIERS (0.60%)
Acceptance Insurance Group Companies, Inc. ...... 21,000 (1) 480,375
EMC Insurance Group, Inc ........................ 14,840 194,775
------------
675,150
METAL MINING (3.34%)
Glamis Gold, Ltd. .............................. 539,400 3,775,800
MISCELLANEOUS MANUFACTURING INDUSTRIES (5.51%)
W.H. Brady Co., Class A ........................ 210,000 6,221,250
NONDEPOSITORY INSTITUTIONS (0.42%)
Berkshire Hathaway, Inc. ........................ 10 (1) 472,000
PRINTING & PUBLISHING (4.84%)
Belo (A.H.) Corp. .............................. 123,000 5,473,500
TRANSPORTATION - BY AIR (3.89%)
Petroleum Helicopters, Inc. (Non-Voting) ......... 276,900 4,395,787
WHOLESALE TRADE - DURABLE GOODS (3.07%)
TBC Corp. ....................................... 408,100 (1) 3,468,850
WHOLESALE TRADE - NONDURABLE GOODS (4.91%)
Howell Corp. .................................... 319,055 5,543,581
------------
Total Common Stocks .............................. 71,547,910
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
--------- -------------
<S> <C> <C>
PREFERRED STOCKS (9.56%)
- ------------------------------------------
DEPOSITORY INSTITUTIONS (5.11%)
Sterling Financial Corp. ................................ 159,300 $ 5,774,625
WATER TRANSPORTATION (4.45%)
Sea Containers, Ltd., Convertible ....................... 98,750 5,023,906
------------
Total Preferred Stocks ................................... 10,798,531
PRINCIPAL
AMOUNT
------------
CORPORATE BOND (3.52%)
- -----------------------------------------------------------
METAL MINING
Agnico-Eagle Mines, Ltd., Convertible Sub. Deb.,
3.50%, due 1/27/04 .................................... $5,000,000 3,975,000
SHORT-TERM INVESTMENTS (23.42%)
- -----------------------------------------------------------
COMMERCIAL PAPER (7.63%)
American General Finance, 5.61%, due 9/10/97 ............ 1,350,000 1,350,000
Ford Motor Credit Corp., 5.53%, due 9/30/97 ............ 1,600,000 1,600,000
General Electric Capital Corp., 5.56%, due 9/25/97 ...... 1,700,000 1,700,000
IBM Credit Corp., 5.54%, due 10/07/97 .................. 1,075,000 1,075,000
John Deere Capital Corp., 5.60%, due 9/10/97 ............ 1,500,000 1,500,000
Norwest Financial, Inc., 5.65%, due 8/26/97 ............ 1,400,000 1,400,000
------------
8,625,000
MONEY MARKET MUTUAL FUND (0.44%)
Dreyfus Treasury Cash Management, Class A ............... 500,999 500,999
UNITED STATES GOVERNMENT AGENCIES (15.35%)
Federal Home Loan Bank, due 8/28/97 ..................... 2,300,000 2,290,607
Federal Home Loan Mortgage Corp., due 8/08/97 ............ 1,162,000 1,160,734
Federal Home Loan Mortgage Corp., due 8/15/97 ............ 1,200,000 1,197,448
Federal Home Loan Mortgage Corp., due 8/26/97 ............ 4,000,000 3,985,068
Federal National Mortgage Assoc., due 8/19/97 ............ 1,650,000 1,645,569
Federal National Mortgage Assoc., due 9/04/97 ............ 4,800,000 4,774,986
Federal National Mortgage Assoc., due 9/12/97 ............ 2,300,000 2,285,361
------------
17,339,773
------------
Total Short-Term Investments .............................. 26,465,772
------------
Total Investments (99.82%) .............................. 112,787,213
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
VALUE
------------
OTHER ASSETS LESS LIABILITIES (0.18%)
- ------------------------------------------------------------
<S> <C>
Cash, receivables and prepaid expense, less liabilities .. $ 197,964
------------
Total Net Assets (100.00%) ................................ $112,985,177
============
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------
<S> <C> <C>
CORPORATE BONDS (61.50%)
- ---------------------------------------------------------------
COMMUNICATIONS (5.91%)
Comcast Cable Communications, Inc., 8.50%, due 5/01/27 ...... $300,000 $ 348,228
Hawaiian Telephone Co., 8.00%, due 9/01/01 .................. 250,000 256,968
-----------
605,196
DEPOSITORY INSTITUTIONS (10.95%)
First Bank, N.A., 6.25%, due 8/15/05 ........................ 450,000 446,657
J. P. Morgan & Co., 7.25%, due 10/01/10 ..................... 350,000 348,849
Midland America Capital Corp., 12.75%, due 11/15/03 ......... 175,000 189,453
Third National Corp., 7.50%, due 11/15/02 .................. 137,000 137,854
-----------
1,122,813
ELECTRIC, GAS AND SANITARY SERVICES (14.84%)
MDU Resources Group, Inc., 9.125%, due 10/01/16 ............ 200,000 213,006
Narragansett Electric Co., 9.125%, due 5/01/21 ............... 450,000 497,813
New England Power Co., 8.00%, due 8/01/22 .................. 400,000 429,124
Western Penn Power, 7.875%, due 12/01/04 ..................... 360,000 381,089
-----------
1,521,032
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (2.44%)
Harris Corp., 7.75%, due 12/15/01 ........................... 250,000 250,450
FOOD AND KINDRED PRODUCTS (1.35%)
Anheuser-Busch Companies, Inc., 8.50%, due 3/01/17 ......... 133,000 138,527
GENERAL MERCHANDISE STORES (0.60%)
Dayton Hudson Corp., 9.25%, due 11/15/16 ..................... 60,000 61,657
HOLDING AND OTHER INVESTMENT OFFICES (7.20%)
Federal Realty Investment Trust, 8.875%, due 1/15/00 ......... 350,000 370,493
Meditrust, 7.60%, due 9/13/05 .............................. 350,000 367,094
-----------
737,587
INSURANCE CARRIERS (4.49%)
Torchmark Corp., 8.625%, due 3/01/17 ........................ 440,000 460,095
OIL & GAS EXTRACTION (2.42%)
Burlington Resources, Inc., 9.125%, due 10/01/21 ......... 200,000 248,028
PRINTING AND PUBLISHING (3.26%)
Valassis Communications, Inc., 9.55%, due 12/01/03 ......... 300,000 334,302
RAILROAD TRANSPORTATION (3.58%)
Union Pacific Corp., 8.50%, due 1/15/17 ..................... 350,000 366,702
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -------------
<S> <C> <C>
SECURITY AND COMMODITY BROKERS (2.02%)
Lehman Brothers Holding, Inc., 8.875%, due 11/01/98 ...... $200,000 $ 206,984
TRANSPORTATION EQUIPMENT (2.44%)
Ford Motor Credit Co., 9.50%, due 9/15/11 .................. 200,000 250,380
------------
Total Corporate Bonds ....................................... 6,303,753
SHARES
HELD
-------
PREFERRED STOCK (4.55%)
- -----------------------------
New Plan Realty Trust ....................................... 9,000 466,937
PRINCIPAL
AMOUNT
----------
ASSET-BACKED SECURITIES (1.91%)
- --------------------------------------------------------------
Federal Home Loan Mortgage Corp., 10.15%, due 4/15/06 ...... $192,110 196,305
MORTGAGE-BACKED SECURITIES (20.71%)
- --------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) (0.59%)
Pool # 503442, 9.50%, due 7/01/05 ........................... 57,735 60,748
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) (20.12%)
Pool # 1512, 7.50%, due 12/20/23 ........................... 814,709 828,966
Pool # 144332, 9.00%, due 7/15/16 ........................... 37,587 40,594
Pool # 194692, 8.00%, due 5/15/17 ........................... 437,130 458,440
Pool # 236070, 10.00%, due 10/15/12 ........................ 599,089 647,580
Pool # 307097, 9.00%, due 7/15/21 ........................... 80,098 86,155
------------
2,061,735
------------
Total Mortgage-Backed Securities ........................... 2,122,483
UNITED STATES TREASURY OBLIGATION (4.18%)
- --------------------------------------------------------------
U.S. Treasury Note, 7.25%, due 8/15/04 ..................... 400,000 428,880
SHORT-TERM INVESTMENTS (4.86%)
- --------------------------------------------------------------
UNITED STATES GOVERNMENT AGENCIES
Federal National Mortgage Assoc., due 8/19/97 ............... 125,000 124,660
Federal National Mortgage Assoc., due 9/05/97 ............... 375,000 373,048
------------
Total Short-Term Investments ................................. 497,708
------------
Total Investments (97.71%) ................................. 10,016,066
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
VALUE
------------
OTHER ASSETS LESS LIABILITIES (2.29%)
- ---------------------------------------------------------------
<S> <C>
Cash, receivables and prepaid expense, less liabilities ..... $ 234,324
------------
Total Net Assets (100.00%) .................................. $10,250,390
============
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------
<S> <C> <C>
CORPORATE BONDS (87.64%)
- ---------------------------------------------------------------
AMUSEMENT AND RECREATION SERVICES (3.17%)
AMF Group, Inc., 10.875%, due 3/15/06 ........................ $260,000 $ 289,900
APPAREL AND ACCESSORY STORES (1.70%)
Genesco, Inc., 10.375%, due 2/01/03 ........................ 150,000 155,625
APPAREL AND OTHER TEXTILE PRODUCTS (5.51%)
Dan River, Inc., 10.125%, due 12/15/03 ..................... 280,000 293,300
Fieldcrest Cannon, Inc., 11.25%, due 6/15/04 ............... 200,000 211,500
-----------
504,800
AUTO REPAIR, SERVICES AND PARKING (1.44%)
Envirotest Systems Corp., 9.625%, due 4/01/03 ............ 150,000 132,000
BUSINESS SERVICES (2.85%)
Borg-Warner Corp., 9.125%, due 5/01/03 ..................... 250,000 261,250
COMMUNICATIONS (7.31%)
Comcast Cable Communications, Inc., 8.50%, due 5/01/27 ...... 350,000 406,266
PanAmSat, L.P., 9.75%, due 8/01/00 ........................... 250,000 262,655
-----------
668,921
DEPOSITORY INSTITUTIONS (3.79%)
First Bank N.A., 6.25%, due 8/15/05 ........................ 350,000 347,400
ELECTRIC, GAS AND SANITARY SERVICES (13.74%)
Montana Power Co., 7.50%, due 1/01/98 ........................ 132,000 132,341
Narragansett Electric Co., 9.125%, due 5/01/21 ............... 400,000 442,500
New England Power Co., 8.00%, due 8/01/22 .................. 250,000 268,202
Waterford 3 Nuclear Power Plant (Entergy Louisiana, Inc.),
8.09%, due 1/02/17 .......................................... 400,000 415,104
-----------
1,258,147
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (4.44%)
Advanced Micro Devices, Inc., 11.00%, due 8/01/03 ............ 360,000 406,800
FABRICATED METAL PRODUCTS (2.23%)
Earle M. Jorgensen, 10.75%, due 3/01/00 ..................... 200,000 204,000
FOOD STORES (3.36%)
P&C Food Markets, Inc., 11.50%, due 10/15/01 ............... 150,000 134,250
Penn Traffic Co., 10.25%, due 2/15/02 ........................ 200,000 173,500
-----------
307,750
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------
<S> <C> <C>
FURNITURE AND HOMEFURNISHINGS STORES (3.33%)
MacSaver Financial Services, Inc. (Guaranteed by Hellig-Meyers
Company), 7.40%, due 2/15/02 ....................................... $300,000 $ 304,614
GENERAL MERCHANDISE STORES (3.65%)
Federated Department Stores, Inc., 10.00%, due 2/15/01 ............ 300,000 334,296
HOLDING AND OTHER INVESTMENT OFFICES (4.39%)
SUSA Partnership, L.P., 8.20%, due 6/01/17 ........................... 375,000 402,015
INSURANCE CARRIERS (3.08%)
Torchmark Corp., 8.625%, due 3/01/17 ................................. 270,000 282,331
LUMBER AND WOOD PRODUCTS (6.93%)
Georgia-Pacific Corp., 9.875%, due 11/01/21 ........................ 330,000 374,837
Pacific Lumber Co., 10.50%, due 3/01/03 .............................. 250,000 259,375
-----------
634,212
MISCELLANEOUS RETAIL (3.47%)
Eckerd Corp., 9.25%, due 2/15/04 .................................... 295,000 317,345
OIL AND GAS EXTRACTION (1.69%)
Dawson Production Services, Inc., 9.375%, due 2/01/07 ............... 150,000 155,250
PAPER AND ALLIED PRODUCTS (2.97%)
Container Corp. of America, 9.75%, due 4/01/03 ..................... 250,000 271,875
PETROLEUM AND COAL PRODUCTS (1.99%)
Clark Oil & Refining Corp., 10.50%, due 12/01/01 ..................... 175,000 182,000
RUBBER AND MISCELLANEOUS PLASTICS
PRODUCTS (1.18%)
Plastic Specialties & Technologies, Inc., 11.25%, due 12/01/03 ...... 100,000 108,000
STONE, CLAY AND GLASS PRODUCTS (2.96%)
USG Corp., 9.25%, due 9/15/01 ....................................... 250,000 270,878
TRANSPORTATION SERVICES (2.46%)
Preston Corp., 7.00%, due 5/01/11 .................................... 306,000 224,910
-----------
Total Corporate Bonds ................................................ 8,024,319
SHARES
HELD
-----------
COMMON STOCK (0.53%)
- ---------------------------
TEXTILE MILL PRODUCTS
Bibb Company (The) .................................................. 7,490 (1) 48,685
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------- ------------
<S> <C> <C>
PREFERRED STOCK (7.09%)
- ------------------------------------------------------------
DEPOSITORY INSTITUTIONS (3.12%)
CFB Capital I, 8.875% Cumulative Capital Securities .......... 11,000 $ 286,000
HOLDING AND OTHER INVESTMENT OFFICES (3.97%)
New Plan Realty Trust ........................................ 7,000 363,174
-----------
Total Preferred Stocks ........................................ 649,174
PRINCIPAL
AMOUNT
----------
SHORT-TERM INVESTMENTS (1.64%)
- ----------------------------------------------------------------
UNITED STATES GOVERNMENT AGENCIES
Federal Home Loan Bank, due 8/01/97 ........................... $150,000 150,000
-----------
Total Investments (96.90%) .................................... 8,872,178
OTHER ASSETS LESS LIABILITIES (3.10%)
- ----------------------------------------------------------------
Cash, receivables and prepaid expense, less liabilities ...... 283,483
-----------
Total Net Assets (100.00%) .................................... $9,155,661
===========
</TABLE>
(1) Non-income producing security.
SEE ACCOMPANYING NOTES.
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
JULY 31, 1997
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------- -------------
<S> <C> <C>
COMMON STOCKS (24.55%)
- ------------------------------------------------------------
COMMUNICATIONS (2.10%)
Aliant Communications, Inc. .............................. 42,000 $ 861,000
ELECTRIC, GAS AND SANITARY SERVICES (7.27%)
Citizens Utilities Co., Class B ........................... 192,696 1,613,829
Montana Power Co. ....................................... 57,600 1,364,400
------------
2,978,229
HOLDING AND OTHER INVESTMENT OFFICES (5.06%)
General Growth Properties, Inc. ........................ 59,000 2,076,063
INSTRUMENTS AND RELATED PRODUCTS (4.90%)
Pall Corp. ................................................ 80,000 2,010,000
INSURANCE CARRIERS (5.22%)
EMC Insurance Group, Inc. ................................. 163,000 2,139,375
------------
Total Common Stocks ....................................... 10,064,667
PREFERRED STOCKS (26.56%)
- ------------------------------------------------------------
DEPOSITORY INSTITUTIONS (11.02%)
CFB Capital I, 8.875% Cumulative Capital Securities ...... 60,000 1,560,000
Sterling Financial Corp. .............................. 30,450 1,103,813
Taylor Capital Group, Inc. .............................. 72,000 1,854,000
------------
4,517,813
HOLDING AND OTHER INVESTMENT OFFICES (2.15%)
Security Capital Industrial .............................. 29,000 855,500
Western Gas Resources, Inc. ........................... 1,000 25,188
------------
880,688
PAPER AND ALLIED PRODUCTS (4.23%)
James River Corp., Convertible ........................... 30,000 1,732,500
WATER TRANSPORTATION (4.10%)
Sea-Containers, Ltd., Convertible ........................ 33,000 1,678,873
WHOLESALE TRADE - DURABLE GOODS (2.25%)
Kaman Corp., Convertible ................................. 14,260 923,335
WHOLESALE TRADE - NONDURABLE GOODS (2.81%)
Howell Corp. ............................................. 19,800 1,153,350
------------
Total Preferred Stocks .................................... 10,886,559
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ------------
<S> <C> <C>
CORPORATE BONDS (23.39%)
- --------------------------------------------------------------
COMMUNICATIONS (0.26%)
Hawaiian Telephone, 8.00%, due 9/01/01 ..................... $ 105,000 $ 107,926
ELECTRIC, GAS AND SANITARY SERVICES (0.36%)
National Co-op Services Corp. (Arkansas Electric),
9.48%, due 1/01/12 ....................................... 137,000 146,138
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (3.08%)
California Microwave, Inc., Convertible Sub. Deb.,
5.25%, due 12/15/03 ....................................... 1,500,000 1,260,975
FOOD AND KINDRED PRODUCTS (0.20%)
Anheuser Busch Co., 8.50%, due 3/01/17 .................. 77,000 80,200
GENERAL MERCHANDISE STORES (2.63%)
DHC Trust - Series 1996, 8.50%, due 12/01/22 ............... 1,650,000 1,076,625
INSURANCE CARRIERS (0.57%)
Torchmark Corp., 8.625%, due 3/01/17 ........................ 225,000 235,276
METAL MINING (3.68%)
Agnico-Eagle Mines, Ltd., Convertible Sub. Deb.,
3.50%, due 1/27/04 ....................................... 1,900,000 1,510,500
NONDEPOSITORY INSTITUTIONS (4.01%)
Consumer Portfolio Services, Inc., 3.50%, due 1/27/04 ...... 1,600,000 1,644,000
PETROLEUM AND COAL PRODUCTS (8.09%)
Pride Petroleum Services, Inc., Convertible Sub. Deb.,
6.25%, due 2/15/06 ....................................... 810,000 1,829,118
Trizec Hahn, Corp., 3.25%, due 12/10/18 ..................... 1,800,000 1,486,746
-----------
3,315,864
RAIL TRANSPORTATION (0.51%)
Union Pacific Corp., SFDEB, 8.50%, due 1/15/17 ............ 200,000 209,544
-----------
Total Corporate Bonds ....................................... 9,587,048
SHORT-TERM INVESTMENTS (24.01%)
- --------------------------------------------------------------
COMMERCIAL PAPER (11.89%)
Ford Motor Credit Corp., 5.52%, due 9/25/97 ............... 1,725,000 1,725,000
General Electric Capital Corp., 5.60%, due 8/20/97 ......... 1,300,000 1,300,000
Norwest Financial, Inc., 5.61%, due 8/12/97 ............... 1,850,000 1,850,000
-----------
4,875,000
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ -------------
<S> <C> <C>
UNITED STATES GOVERNMENT AGENCIES (8.51%)
Federal Home Loan Mortgage Corp., due 8/04/97 ............... $1,500,000 $ 1,499,299
Federal National Mortgage Assoc., due 8/27/97 ............... 1,100,000 1,095,745
Federal National Mortgage Assoc., due 9/03/97 ............... 900,000 895,500
------------
3,490,544
MONEY MARKET MUTUAL FUND (3.61%)
Dreyfus Treasury Cash Management .............................. 1,478,554 1,478,554
------------
Total Short-Term Investments ................................. 9,844,098
------------
Total Investments (98.51%) .................................... 40,382,372
OTHER ASSETS LESS LIABILITIES (1.49%)
- ----------------------------------------------------------------
Cash, receivables and prepaid expense, less liabilities ...... 611,651
------------
Total Net Assets (100.00%) .................................... $40,994,023
============
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
JULY 31, 1997
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
----------- ---------- ------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (98.04%)
- ----------------------------------------------------------------
COMMERCIAL PAPER (23.32%)
NONDEPOSITORY INSTITUTIONS
American General Finance, 5.57%, due 9/15/97 ............ 5.570 % $100,000 $ 100,000
Ford Motor Credit Corp., 5.64%, due 9/02/97 ............... 5.642 100,000 100,000
General Electric Capital Corp., 5.64%, due 8/26/97 ......... 5.642 125,000 125,000
IBM Credit Corp., 5.56%, due 9/29/97 ........................ 5.565 125,000 125,000
John Deere Capital Corp., 5.53%, due 10/03/97 ............... 5.531 125,000 125,000
-----------
Total Commercial Paper ....................................... 575,000
UNITED STATES GOVERNMENT
AGENCIES (74.72%)
Federal Farm Credit Bank, due 8/15/97 ..................... 5.443 100,000 99,792
Federal Farm Credit Bank, due 8/22/97 ..................... 5.496 100,000 99,685
Federal Farm Credit Bank, due 9/12/97 ..................... 5.478 125,000 124,217
Federal Farm Credit Bank, due 10/10/97 ..................... 5.550 100,000 98,956
Federal Home Loan Bank, due 8/25/97 ........................ 5.456 125,000 124,553
Federal Home Loan Bank, due 9/05/97 ........................ 5.540 125,000 124,339
Federal Home Loan Bank, due 9/10/97 ........................ 5.532 125,000 124,247
Federal Home Loan Mortgage Corp., due 8/06/97 ............... 5.451 125,000 124,907
Federal Home Loan Mortgage Corp., due 8/13/97 ............... 5.590 100,000 99,817
Federal Home Loan Mortgage Corp., due 8/19/97 ............... 5.592 175,000 174,517
Federal Home Loan Mortgage Corp., due 9/19/97 ............... 5.494 150,000 148,902
Federal Home Loan Mortgage Corp., due 9/24/97 ............... 5.682 150,000 148,750
Federal National Mortgage Assoc., due 8/04/97 ............... 5.528 125,000 124,943
Federal National Mortgage Assoc., due 8/07/97 ............... 5.559 100,000 99,909
Federal National Mortgage Assoc., due 8/11/97 ............... 5.445 125,000 124,814
-----------
Total United States Government Agencies ..................... 1,842,348
-----------
Total Short-Term Investments ................................. 2,417,348
OTHER ASSETS LESS LIABILITIES (1.96%)
- ----------------------------------------------------------------
Cash,receivables and prepaid expense, less liabilities ...... 48,368
-----------
Total Net Assets (100.00%) .................................... $2,465,716
===========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
JULY 31, 1997
SHARES
HELD VALUE
--------------- -------------
COMMON STOCKS (93.17%)
- ----------------------------------------------
CHEMICALS AND ALLIED PRODUCTS (17.74%)
Bristol-Myers Squibb Co. .................. 8,667 $ 679,818
DuPont (EI) de Nemours & Co. ............... 11,052 739,793
Eastman Chemical Co. ..................... 5,281 319,501
Johnson & Johnson ........................... 11,372 708,618
Merck & Co., Inc. ........................ 7,301 758,848
Praxair, Inc. .............................. 12,428 685,093
Procter & Gamble Co. ..................... 5,069 771,122
Union Carbide Corp. ........................ 11,465 634,874
------------
5,297,667
COMMUNICATIONS (2.59%)
American Telephone & Telegraph Co. ......... 8,468 311,728
Bell Atlantic Corp. ........................ 6,359 461,425
------------
773,153
DEPOSITORY INSTITUTIONS (1.89%)
J. P. Morgan & Co., Inc. .................. 4,878 565,238
EATING AND DRINKING PLACES (2.05%)
McDonald's Corp. ........................... 11,408 613,180
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (3.82%)
General Electric Co. ..................... 11,708 821,755
Lucent Technologies, Inc. .................. 3,733 317,072
------------
1,138,827
FOOD AND KINDRED PRODUCTS (7.45%)
Coca-Cola Co. (The) ........................ 14,054 973,240
PepsiCo, Inc. .............................. 16,117 617,483
Philip Morris Companies, Inc. ............ 14,062 634,547
------------
2,225,270
GENERAL MERCHANDISE STORES (5.32%)
Sears, Roebuck & Co. ..................... 8,191 518,593
Wal-Mart Stores, Inc. ..................... 15,832 594,690
Woolworth (F.W.) Co., Ltd. ............... 16,791 (1) 475,394
------------
1,588,677
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
----------------- -------------
<S> <C> <C>
INDUSTRIAL MACHINERY AND EQUIPMENT (5.10%)
Caterpillar, Inc. ................................. 14,831 $ 830,536
International Business Machines Corp. ............ 6,543 691,922
------------
1,522,458
INSTRUMENTS AND RELATED PRODUCTS (1.38%)
Eastman Kodak Co. ................................. 6,156 412,452
INSURANCE CARRIERS (4.93%)
Allstate Corp. .................................... 7,488 591,552
American International Group, Inc. ............... 8,271 880,862
------------
1,472,414
MOTION PICTURES (1.99%)
Disney (Walt) Co. ................................. 7,352 594,134
PAPER AND ALLIED PRODUCTS (3.72%)
International Paper Co. ........................... 9,926 555,856
Minnesota Mining & Manufacturing Co. ............ 5,863 555,519
------------
1,111,375
PETROLEUM AND COAL PRODUCTS (11.18%)
Amoco Corp. ....................................... 5,447 512,017
Chevron Corp. .................................... 7,149 565,665
Exxon Corp. ....................................... 9,920 637,360
Mobil Corp. ....................................... 7,740 592,110
Texaco, Inc. .................................... 4,680 543,173
USX Corp. -- Marathon Group ..................... 15,137 487,222
------------
3,337,547
PRIMARY METAL INDUSTRIES (3.34%)
Aluminum Company of America ..................... 7,442 658,617
Bethlehem Steel Corp. ........................... 30,105 (1) 338,681
------------
997,298
RUBBER AND MISCELLANEOUS PLASTICS
PRODUCTS (2.51%)
Goodyear Tire & Rubber Co. ........................ 11,623 750,410
SECURITY AND COMMODITY BROKERS (6.04%)
American Express Co. .............................. 8,783 735,576
Lehman Brothers Holding, Inc. ..................... 9,778 487,067
Morgan Stanley, Dean Witter, Discover & Co. ...... 11,083 579,779
------------
1,802,422
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------ -------------
<S> <C> <C>
TRANSPORTATION EQUIPMENT (10.63%)
Allied-Signal, Inc. ........................................... 9,907 $ 913,921
Boeing Co. (The) .............................................. 10,383 610,650
Ford Motor Co. .............................................. 12,569 513,758
General Motors Corp. ........................................ 7,036 435,353
United Technologies Corp. ..................................... 8,291 701,108
------------
3,174,790
WHOLESALE TRADE - DURABLE GOODS (1.49%)
Westinghouse Electric Corp. .................................. 18,485 444,795
------------
Total Common Stocks ........................................... 27,822,107
PRINCIPAL
AMOUNT
------------
SHORT-TERM INVESTMENTS (6.44%)
- ----------------------------------------------------------------
UNITED STATES GOVERNMENT AGENCIES (2.09%)
Federal Home Loan Mortgage Corp., due 8/15/97 ............... $ 250,000 249,475
Federal Home Loan Mortgage Corp., due 8/18/97 ............... 200,000 199,492
Federal National Mortgage Assoc., due 8/06/97 ............... 175,000 174,868
------------
623,835
COMMERCIAL PAPER (4.35%)
American General Finance, due 8/15/97 ........................ 1,300,000 1,300,000
------------
Total Short-Term Investments ................................. 1,923,835
------------
Total Investments (99.61%) .................................... 29,745,942
OTHER ASSETS LESS LIABILITIES (0.39%)
- ----------------------------------------------------------------
Cash, receivables and prepaid expense, less liabilities ...... 117,464
------------
Total Net Assets (100.00%) .................................... $29,863,406
============
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997
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. Effective December
1, 1996, the Growth Common Stock Portfolio was renamed the Value Growth
Portfolio. The Fund currently consists of six portfolios (known as the Value
Growth, 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.
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.
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
At July 31, 1997, the High Grade Bond Portfolio had a net capital loss
carryforward of approximately $40,000, which will expire from 2003 through 2005.
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 determined as follows: (1) annual investment advisory and
management fees, which are based on each portfolio's daily net assets as
follows: Value Growth Portfolio -- 0.50%; High Grade Bond Portfolio -- 0.40%;
High Yield Bond Portfolio -- 0.55%; Managed Portfolio -- 0.60%; Money Market
Portfolio -- 0.25% (0.40% prior to December 1, 1996); 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 FBL
Financial Group, Inc., FBL Investment, FBL Marketing and other affiliated
entities. At July 31, 1997, Farm Bureau Life Insurance Company, a wholly-owned
subsidiary of FBL Financial Group, Inc., owned shares of the Fund's portfolios
as follows:
PORTFOLIO SHARES
- ------------------------ -----------
High Yield Bond ...... 75,129
Money Market ......... 1,910,602
FBL Investment also owned 79,160 shares of the Value Growth Portfolio at
July 31, 1997.
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS
Net assets as of July 31, 1997, consisted of:
<TABLE>
<CAPTION>
PORTFOLIO
----------------------------------------------------------------------------------
VALUE HIGH GRADE HIGH YIELD MONEY BLUE
GROWTH 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) ..................... $ 7,228 $ 976 $ 874 $ 2,918 $ 2,466 $ 803
Additional paid-in capital ...... 93,255,290 9,834,299 8,793,138 36,092,543 2,463,250 17,382,583
Accumulated undistributed net
investment income ............... 589,563 4,390 44,847
Accumulated undistributed net
realized gain (loss) from
investment transactions ......... 9,417,371 (39,938) 73,269 2,125,869 4,028
Net unrealized appreciation of
investments ..................... 9,715,725 455,053 288,380 2,768,303 12,431,145
------------- ----------- ----------- ------------ ---------- ------------
Net Assets ..................... $112,985,177 $10,250,390 $9,155,661 $40,994,023 $2,465,716 $29,863,406
============= =========== =========== ============ ========== ============
</TABLE>
Transactions in Capital Stock for each portfolio were as follows:
<TABLE>
<CAPTION>
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS AND
SHARES SOLD DISTRIBUTIONS SHARES REDEEMED NET INCREASE (DECREASE)
----------------------- ----------------------- ------------------------ ----------------------------
PORTFOLIO SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------- --------- ------------- --------- ------------- ----------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended July 31, 1997:
Value Growth ......... 960,670 $14,626,866 844,969 $12,429,493 471,818 $7,219,352 1,333,821 $19,837,007
High Grade Bond ...... 181,281 1,859,302 40,462 415,160 143,086 1,467,642 78,657 806,820
High Yield Bond ...... 182,441 1,852,541 46,867 477,374 90,912 926,099 138,396 1,403,816
Managed ............ 743,749 10,143,104 269,908 3,607,125 156,795 2,146,602 856,862 11,603,627
Money Market ......... 917,859 917,859 23,674 23,674 1,027,371 1,027,371 (85,838) (85,838)
Blue Chip ............ 281,505 8,778,631 9,088 269,828 45,240 1,399,734 245,353 7,648,725
Year Ended July 31, 1996:
Value Growth ......... 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
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT TRANSACTIONS
For the year ended July 31, 1997, 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:
PORTFOLIO PURCHASES SALES
- --------------------------- ------------- -------------
Value Growth ......... $68,810,862 $82,570,596
High Grade Bond ...... 1,881,454 2,240,328
High Yield Bond ...... 4,762,349 3,374,031
Managed ............... 22,732,180 18,190,584
Blue Chip ............ 7,028,253 82,881
At July 31, 1997, net unrealized appreciation of investments by portfolio
was composed of the following:
GROSS UNREALIZED
------------------------------- NET UNREALIZED
APPRECIATION
PORTFOLIO APPRECIATION DEPRECIATION OF INVESTMENTS
- --------------------------- -------------- -------------- ----------------
Value Growth ......... $11,884,165 $2,168,440 $ 9,715,725
High Grade Bond ...... 460,550 5,497 455,053
High Yield Bond ...... 463,892 175,512 288,380
Managed ............... 3,652,616 884,313 2,768,303
Blue Chip ............ 12,458,074 26,929 12,431,145
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:
HIGH HIGH
GRADE YIELD MONEY
PAYABLE DATE BOND BOND MARKET
---------------------------------- -------- -------- --------
August 30, 1996 .................. $.0491 $.0607 $.0028
September 30, 1996 ............ .0528 .0621 .0028
October 31, 1996 ............... .0505 .0585 .0029
November 27, 1996 ............... .0463 .0542 .0025
December 31, 1996 ............... .0555 .0659 .0031
January 31, 1997 ............... .0471 .0589 .0029
February 28, 1997 ............... .0506 .0568 .0026
March 31, 1997 .................. .0481 .0568 .0031
April 30, 1997 .................. .0520 .0618 .0028
May 30, 1997 .................. .0488 .0525 .0029
June 30, 1997 .................. .0537 .0637 .0029
July 31, 1997 .................. .0464 .0517 .0030
------- ------- -------
Total Dividends Per Share ...... $.6009 $.7036 $.0343
======= ======= =======
<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, 1997, for the following portfolios:
ORDINARY INCOME DIVIDENDS:
<TABLE>
<CAPTION>
DIVIDEND PERCENT
AMOUNT QUALIFYING FOR
DECLARATION RECORD PAYABLE PER DEDUCTION BY
PORTFOLIO DATE DATE DATE SHARE CORPORATIONS
- --------------------- ------------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Value Growth ...... 12/23/96 12/30/96 12/30/96 $ 0.1825 76%
Managed ............ 10/30/96 10/31/96 11/07/96 0.1075 56
Managed ............ 12/23/96 12/30/96 12/30/96 0.0900 50
Managed ............ 04/28/97 04/30/97 05/07/97 0.1400 53
Managed ............ 07/29/97 07/31/97 08/07/97 0.1225 53
Blue Chip ......... 12/23/96 12/30/96 12/30/96 0.1450 82
</TABLE>
CAPITAL GAINS DISTRIBUTIONS:
DIVIDEND
DECLARATION RECORD PAYABLE AMOUNT
PORTFOLIO DATE DATE DATE PER SHARE
- ------------------------ ------------- ---------- ---------- -----------
Value Growth ......... 12/23/96 12/30/96 12/30/96 $ 1.9400
High Yield Bond ...... 12/23/96 12/30/96 12/30/96 0.1160
Managed ............... 12/23/96 12/30/96 12/30/96 1.2125
Blue Chip ............ 12/23/96 12/30/96 12/30/96 0.2975
The capital gains distributions related to the Value Growth, High Yield
Bond and Managed Portfolios include net short-term realized gains of $9,628,726
($1.6125 per share), $26,816 ($0.0340 per share) and $1,408,593 ($0.6300 per
share), respectively, that are taxable to shareholders as ordinary income
dividends.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
FBL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31, 1997, 1996, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..................... $ 14.68 $ 13.04 $ 13.07 $ 15.13 $ 12.48
Income From Investment Operations
Net investment income .............................. 0.18 0.27 0.43 0.60 0.51
Net gains or losses on investments
(both realized and unrealized) ........................ 2.89 2.10 0.65 (0.49) 2.75
-------- -------- -------- -------- --------
Total from investment operations ..................... 3.07 2.37 1.08 0.11 3.26
-------- -------- -------- -------- --------
Less Distributions
Dividends (from net investment income) ............... (0.18) (0.46) (0.39) (0.60) (0.48)
Distributions (from capital gains) .................. (1.94) (0.27) (0.72) (1.57) (0.13)
Distributions in excess of net realized gains .........
-------- -------- -------- -------- --------
Total distributions ................................. (2.12) (0.73) (1.11) (2.17) (0.61)
-------- -------- -------- -------- --------
Capital contribution from affiliate (see NOTE 3) ......
-------- -------- -------- -------- --------
Net asset value, end of year ........................... $ 15.63 $ 14.68 $ 13.04 $ 13.07 $ 15.13
======== ======== ======== ======== ========
Total Return:
Total investment return based on
net asset value (1) ................................. 21.83% 18.41% 9.36% 0.34% 27.25%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted) ............... $ 112,985 $ 86,534 $ 70,947 $ 64,315 $ 51,732
Ratio of net expenses to average net assets ......... 1.65% 1.62% 1.62% 1.60% 1.61%
Ratio of net income to average net assets ............ 1.18% 1.87% 3.43% 4.05% 3.80%
Portfolio turnover rate .............................. 77% 92% 85% 93% 92%
Average commission rate per share (3) .................. $ 0.0520 $ 0.0529
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 $0.03 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.
<PAGE>
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
----------------------------------------------------------- ------------------------------------------------------------
1997 1996 1995 1994 1993 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 10.16 $ 10.26 $ 10.13 $ 10.69 $ 10.68 $ 9.99 $ 10.03 $ 10.00 $ 10.76 $ 10.47
0.60 0.64 0.63 0.64 0.70 0.70 0.75 0.78 0.81 0.83
0.34 (0.10) 0.16 (0.40) 0.13 0.61 (0.01) 0.13 (0.60) 0.46
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
0.94 0.54 0.79 0.24 0.83 1.31 0.74 0.91 0.21 1.29
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
(0.60) (0.64) (0.63) (0.64) (0.70) (0.70) (0.75) (0.78) (0.81) (0.83)
(0.16) (0.12) (0.12) (0.03) (0.09) (0.16) (0.17)
(0.03) (0.01)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
(0.60) (0.64) (0.66) (0.80) (0.82) (0.82) (0.78) (0.88) (0.97) (1.00)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
$ 10.50 $ 10.16 $ 10.26 $ 10.13 $ 10.69 $ 10.48 $ 9.99 $ 10.03 $ 10.00 $ 10.76
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
9.56% 5.37% 8.23% 1.77% 8.10% 13.29% 7.67% 9.71% 1.88% 12.95%
$ 10,250 $ 9,122 $ 8,345 $ 7,596 $ 8,047 $ 9,156 $ 7,349 $ 6,691 $ 6,425 $ 5,758
1.82% 1.85% 1.99% 1.90% 1.79% 2.00% 2.00% 2.00% 2.00% 2.00%
5.85% 6.19% 6.29% 6.12% 6.59% 6.82% 7.44% 7.83% 7.68% 7.84%
30% 34% 18% 42% 54% 45% 30% 23% 26% 56%
$ 0.69 $ 0.73 $ 0.75 $ 0.79 $ 0.82
2.10% 2.22% 2.29% 2.17% 2.05%
$ 8,681 $ 15,361 $ 18,810 $ 10,754 $ 3,147
</TABLE>
<PAGE>
FBL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..................... $13.33 $ 11.85 $ 11.62 $ 12.51 $ 10.77
Income From Investment Operations
Net investment income .............................. 0.48 0.46 0.56 0.55 0.54
Net gains or losses on securities
(both realized and unrealized) ........................ 1.91 1.54 0.47 (0.62) 1.87
-------- ----------- -------- -------- --------
Total from investment operations ..................... 2.39 2.00 1.03 (0.07) 2.41
-------- ----------- -------- -------- --------
Less Distributions
Dividends (from net investment income) ............... (0.46) (0.45) (0.56) (0.50) (0.52)
Distributions (from capital gains) .................. (1.21) (0.10) (0.14) (0.32) (0.15)
Distributions in excess of net realized gains ......... (0.10)
-------- ----------- -------- -------- --------
Total distributions ................................. (1.67) (0.55) (0.80) (0.82) (0.67)
-------- ----------- -------- -------- --------
Capital contribution from affiliate (see NOTE 3) ...... 0.03
-------- ----------- -------- -------- --------
Net asset value, end of year ........................... $14.05 $ 13.33 $ 11.85 $ 11.62 $ 12.51
======== =========== ======== ======== ========
Total Return:
Total investment return based on
net asset value (1) ................................. 17.88 % 17.30(2) 9.40% -0.61% 23.02%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted) ............... $40,994 $ 27,470 $ 21,105 $ 19,100 $ 8,257
Ratio of net expenses to average net assets ......... 1.95% 1.91% 1.94% 1.96% 1.96%
Ratio of net income to average net assets ............ 3.48% 3.47% 4.86% 4.42% 4.54%
Portfolio turnover rate .............................. 74% 81% 69% 29% 52%
Average commission rate per share (3) .................. $0.0449 $ 0.0549
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>
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
------------------------------------------------------ ------------------------------------------------------------
1997 1996 1995 1994 1993 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 26.26 $ 22.85 $ 18.75 $ 17.69 $ 16.78
0.03 0.04 0.04 0.02 0.01 0.16 0.17 0.19 0.14 0.13
11.22 3.43 4.05 1.06 0.90
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
0.03 0.04 0.04 0.02 0.01 11.38 3.60 4.24 1.20 1.03
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
(0.03) (0.04) (0.04) (0.02) (0.01) (0.14) (0.19) (0.14) (0.14) (0.12)
(0.30)
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
(0.03) (0.04) (0.04) (0.02) (0.01) (0.44) (0.19) (0.14) (0.14) (0.12)
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 37.20 $ 26.26 $ 22.85 $ 18.75 $ 17.69
======= ======= ======= ======= ======= ======== ======== ======== ======== ========
3.51% 3.64% 3.60% 1.47% 1.33% 43.77% 15.83% 22.77% 6.75% 6.21%
$ 2,466 $ 2,552 $ 2,439 $ 2,627 $ 2,555 $29,863 $14,641 $ 9,657 $ 6,745 $ 5,415
2.00% 2.00% 2.00% 1.93% 1.94% 1.74% 1.79% 1.78% 1.83% 1.90%
3.46% 3.58% 3.51% 1.45% 1.33% 0.49% 0.66% 0.92% 0.75% 0.73%
0% 0% 0% 0% 0% 0% 3% 1% 1% 0%
$0.0559 $0.0748
$ 0.03 $ 0.03 $ 0.03
2.28% 2.43% 2.20%
$ 7,255 $10,718 $ 4,948
</TABLE>
<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 Value Growth, High Grade Bond, High Yield Bond, Managed, Money
Market and Blue Chip Portfolios) as of July 31, 1997, 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 and financial highlights. Our procedures included confirmation of
securities owned as of July 31, 1997, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting the FBL Series Fund, Inc. at July
31, 1997, and 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.
/S/ Ernst & Young LLP
Des Moines, Iowa
August 29, 1997
<PAGE>
SHAREHOLDER MEETING RESULTS
FBL Series Fund, Inc. held a special meeting of shareholders on November
7, 1996. At the meeting, the shareholders of the Fund elected the following
Directors: Edward M. Wiederstein, Richard D. Harris, Stephen M. Morain, Donald
G. Bartling, John R. Graham, Erwin H. Johnson, Ann Jorgensen, Kenneth Kay and
Curtis C. Pietz. The shareholders also ratified the selection of Ernst & Young
LLP as independent auditors for the fiscal year ending July 31, 1997.
The shareholders of the Fund present at the meeting, in person or by proxy,
voted by Portfolio and not in the aggregate, on the following matters (all
fractional shares have been rounded):
1.a. Approve eliminating the secondary investment objective of current income.
FOR AGAINST ABSTAIN
----------- --------- ---------
Value Growth ...... 2,736,160 124,332 223,126
b. Approve amending the statement of fundamental investment policies for
pursuing the investment objective of long-term capital appreciation.
FOR AGAINST ABSTAIN
----------- --------- ---------
Value Growth ...... 2,811,981 65,042 206,595
2. Approve amendment to the Portfolio's fundamental investment policy
permitting investment of up to 25% of net assets in foreign debt
securities, as well as foreign equity securities, traded on U.S.
exchanges and payable in U.S. dollars.
FOR AGAINST ABSTAIN
----------- --------- ---------
Value Growth ...... 2,650,529 214,992 218,097
Managed ............ 1,141,210 91,482 92,720
3. Approve amendment to the Portfolio's fundamental investment policy
permitting investment of up to 25% of net assets in foreign debt
securities traded on U.S. exchanges and payable in U.S. dollars.
FOR AGAINST ABSTAIN
----------- --------- ---------
High Grade Bond ...... 531,770 46,741 43,112
High Yield Bond ...... 440,166 29,160 37,372
4. Approve amendment to the Portfolio's fundamental investment policy
reducing its "diversification" requirement to 75% of the Portfolio's
assets instead of the present 100%.
FOR AGAINST ABSTAIN
----------- --------- ---------
Value Growth ....... 2,676,316 139,144 268,159
High Grade Bond .... 523,223 51,857 46,542
High Yield Bond .... 425,785 39,967 40,946
Managed ............. 1,111,693 109,146 104,573
<PAGE>
5. Approve eliminating the Portfolio's fundamental investment policy limiting
investments in restricted and illiquid securities (in favor of a
non-fundamental policy on such investments).
FOR AGAINST ABSTAIN
----------- --------- ---------
Value Growth ........ 2,594,857 177,186 311,574
High Grade Bond ..... 515,907 56,361 49,356
High Yield Bond ..... 422,250 35,277 49,171
Managed .............. 1,060,770 121,981 142,662
