Farm Bureau Mutual Funds
FBL SERIES FUND, INC.
SEMI-ANNUAL REPORT [LOGO]
JANUARY 31, 1998
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)
FARM BUREAU MUTUAL FUNDS
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266
[LOGO] FARM BUREAU
FINANCIAL SERVICES
LIVING BESIDE YOU. WORKING FOR YOU.
This report is not to be distributed unless preceded or accompanied by a
prospectus.
737-027 (98)
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
For the 6- and 12-month periods ended January 31, 1998, the S&P 500 was up
3.6% and 26.9%, respectively, on a total return basis. While the last 6 months
have been relatively flat, the S&P 500 has had a phenomenal run, given the 37.5%
and 23.0% returns of the prior two calendar years. The Dow Jones Industrial
Average (DJIA) has followed a very similar path over the past three years.
Obviously most of the market's 1997 gains were realized by just past mid-year.
The DJIA hit a high of 8259 on August 6 and spent the duration of the year
trading in a band of roughly 7500 to 8000, finishing the 12-month period at
7906.
The bond market also produced substantial total returns as the benchmark
30-year Treasury rallied from a yield of 6.29% on July 31, 1997, to 5.81% by the
end of January, 1998. Earlier in 1997, yields rose over 7% as investors focused
on the rapid amount of employment growth. However, as the year progressed,
employment growth failed to translate into visible signs of inflation,
stimulating bond price gains. Later in the year, growing concern over the
collapse of several Asian currencies fueled even larger gains in bond prices.
The Federal Reserve has been inactive during the past 6 months and has made
no rate changes following the one-quarter of 1% rate hike in March of 1997.
Accordingly, the overall yield curve has flattened substantially. At the end of
July, 1997, the spread between 3-month bills and 30-year bonds was 1.07%. By
January 30, 1998, that spread had collapsed to 0.62%.
The seeming paradox of strong growth and benign inflation continued during
1997. Even without the disinflationary, or possibly even deflationary, effects
of the Asian crisis, domestic inflation has been very subdued. Inflation as
measured by the Consumer Price Index was just 1.60% for the 12 months through
January, 1998. The low level of inflation has surprised many forecasters, since
capacity utilization and unemployment point towards constraint. After all, the
service sector comprises a much larger portion of our economic growth compared
to 20 years ago, and cheap Asian goods will have much less impact on this
portion of our economy.
The equity and fixed-income markets remain somewhat at odds. The bond
market appears to be priced for continued disinflation, yet the stock market is
priced for rapid profit growth. If the situation in Asia leads to further
disinflation or deflation in the U.S., corporate profits will likely be
impaired. While this may be good for bond prices, it may well be harmful to
stock prices. If the impact from Asia is more benign and the U.S. economy
continues to do well, bond prices are vulnerable.
The fact is either scenario is possible. If policy errors are made, the
Asian slowdown could become a global event. If handled properly, it may prove to
be a more localized phenomenon and less harmful to the U.S. Accordingly, we urge
investors to focus their asset allocation decisions on longer-term historic
norms and not the shorter-term dynamics that we have observed over the past few
years. The crisis in Asia is a reminder that risk is the constant companion of
return. Investors need to evaluate both their own tolerance for risk and the
fundamental risk characteristics of the asset classes in which they invest.
2
<PAGE>
For the actively managed FBL Series Fund 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 Portfolios:
VALUE GROWTH: The longest bull market in history roared on last year, and
to the surprise of stock market pundits, the year turned out to be much better
than almost anyone expected. Of course, even the most daring market
prognosticators did not stick their necks out and say, "Standard & Poor's
Composite Index of 500 stocks will rise 33.4% over the next twelve months."
Much of the rise in the overall stock market in the first half of the year
was driven by technology stocks, which the Portfolio did not own in a meaningful
way. The Value Growth Portfolio did not participate in the recent strength of
the S&P 500 and large capitalization stocks. A key reason that we did not fully
participate in the market's run-up is because of our long-stated strategy of
low-risk investing. When matched against other portfolios, our Portfolio has
historically turned in its best comparative performance when markets fall or are
flat. And according to SALOMON SMITH BARNEY RESEARCH, the large capitalization
stocks did much better than the smaller to mid-capitalization stocks.
Small cap stocks (largely what the Value Growth Portfolio owns) are
generally considered likely to provide higher returns than large cap stocks over
periods of time because small growth companies can sometimes grow into mighty
WalMarts and provide spectacular returns. Our investments are almost evenly
divided between stocks with market capitalization above and below a billion
dollars. The range of our investments makes it difficult for those who track
portfolios to pigeon hole the Value Growth Portfolio. We continue to carry cash
reserves of approximately 30% and see our primary role as preserving the capital
you have entrusted to us.
We continue to believe that the growing disparity of performance between
the large cap and small cap market sectors will reverse and our patience will be
rewarded. Our equity holdings in the Value Growth Portfolio are still valued
well below both the market and their intrinsic business value. Many of our
smaller companies might prove to be attractive acquisitions in this
merger-dominated market. We do not think that is the case with the "over-valued"
and "over-owned" S&P 500. In fact, according to a recent report in BERNSTEIN
RESEARCH: "The risk of broad-based investor disappointments has rarely been
higher."
We are not economists, but inflation is low and the economy is growing at a
modest rate. We are comfortable with what we own as we have a mix of good
businesses at reasonable prices and out-of-favor stocks that will respond to any
favorable news. We know we cannot predict short-, or even medium-term market
movements, but we do know that if we are investing for our retirement or for our
children's education, and if we can ignore the daily reports of boom or bust, we
should be able to reach our goals over the long-term.
Our goal for 1998 is to continue to seek out under-valued securities and
increase the number of holdings from 25 to approximately 50. This should improve
our already "low risk" profile. We intend to be invested in stocks that sell at
a significant discount to their intrinsic business value. The FORBES February 9,
1998, issue contains an article entitled "The Wallflower Strategy," in which the
Value Growth Portfolio of FBL Series Fund, Inc. was spotlighted as one of the
eight best buys in small-cap value funds as of December 30, 1997. Selections
were based on expenses and risk-adjusted performance of portfolios with at least
five years' experience and $50 million in assets.
3
<PAGE>
The article does a credible job of identifying the characteristics of
growth and value philosophies, including the statement, "When growth stocks
produce disappointment, they get hammered for both the disappointment and for
losing their growth aura. If they do well, it's only what you have already paid
for. With value stocks, most surprises are on the upside because nobody expects
much from them." We will continue to adhere to our value strategy in an
over-valued market.
HIGH GRADE BOND: Treasury yields declined around 50 basis points across the
maturity curve during the six-month period ended January 30, 1998. For example,
the 2-, 10- and 30-year Treasury issues yielded 5.72%, 6.01% and 6.30%
respectively, as of July 31, 1997, and 5.31%, 5.51% and 5.81% as of January 30,
1998.
At the present time, the yield curve is very flat with the 10-year Treasury
yielding about the same as the short term Federal Funds rate of 5.50%. Because
the market is already pricing in an imminent reduction in the short-term rates
by the Federal Reserve, the market could sell off if the Federal Reserve holds
rates steady. Given the cross-currents of a strong domestic economy on the one
hand and low current inflation rates and the Asian economic crisis on the other
we feel the Federal Reserve will be on hold for at least several more months.
Based on this outlook, we will continue to maintain the Funds duration at a
level below the Lehman Brothers Aggregate Index. Because of this our returns
should continue to lag those of more aggressive funds in both up and down
markets.
HIGH YIELD BOND: During the past six months, the high yield bond market
continued to outperform the high grade corporate bond market. This
out-performance was mainly due to the higher current yield on high yield bonds
as yield spreads were generally unchanged over this period. Yield spreads
continue to remain at historically narrow levels as investors have taken comfort
in the current historically low default rate on high yield bonds, the strong
domestic economy and a vibrant equity market.
We continue to feel that much, if not all of the positive news is priced
into this market. Because of this our focus will continue to be on adding higher
rated non-investment grade, as well as investment grade, issues to the
Portfolio.
MANAGED: The Managed Portfolio continues to seek securities offering high
income with modest growth potential, which is evidenced by its high ratio of net
income to average net assets, or yield, as compared to the S&P 500 for the last
five years:
MANAGED S&P 500
------- -------
1997 3.48% 2.11%
1996 3.47% 2.54%
1995 4.86% 2.91%
1994 4.42% 2.82%
1993 4.54% 2.83%
This Portfolio uses a value philosophy, but concentrates on securities that
produce an income stream approximately twice that of the S&P 500, which is
currently yielding a mere 1.6%. We continue to achieve higher income by
investing in a mixture of high dividend-paying stocks, preferreds, convertibles
and corporate bonds.
4
<PAGE>
We have added to our convertible securities in the energy area. The recent
sell-off in energy stocks, due to the drop in the price of oil, does not
accurately reflect the world's long-term demand for oil and gas. We have taken
advantage of these depressed prices and purchased convertibles in the oil
service sector, notably Parker Drilling, EVI, Inc., Diamond Offshore Drilling
and Halter Marine. The income yields of 3-6% on these convertibles should afford
reasonable downside protection, while giving us an opportunity to participate on
the upside as the current negativism hanging over the industry dissipates. We
remain alert for opportunities.
The February 2, 1998, BUSINESS WEEK article, entitled "The Best Mutual
Funds," lists the Managed Portfolio of FBL Series Fund, Inc. as one of the
equity mutual funds having made the "A" list for delivering the best
risk-adjusted returns over the past five years (as of December 31, 1997). The
article:
* Recognizes that the market has become riskier and highlights those
funds that take management of volatility, as well as performance, into
consideration. This approach is preferred as compared to simply
considering returns.
* Contains a list featuring all equity funds grouped together to include
domestic hybrid (Managed is classified this way), as well as small-
and large-cap stocks. It is important to keep in mind that the
five-year time period reviewed was one from a very strong equity
market. We are pleased that the media and investing public are
embracing the concept of risk-adjusted returns.
MONEY MARKET: Money market rates have remained stable due to the inactivity
by the Federal Open Market Committee (FOMC) on the Federal Funds Rate. In March,
the rate was raised .25% to 5.50% because the FOMC felt the U.S. economy was
very strong and tending toward inflationary. However, inflationary measures
during the year were low, despite low unemployment and strong capacity
utilization. Spreads between long-term rates and short-term rates declined as
long-term investors purchased bonds. The Portfolio continues to invest in
commercial paper from high-grade corporations, discount notes from federal
agencies and U.S. Treasury obligations with an average maturity of 30-60 days.
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
March 13, 1998
5
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
----------------- ----------------
<S> <C> <C>
ASSETS
Investments in securities, at value (cost -$114,671,019;
$10,812,518; $10,010,140; $42,909,519; $3,088,148
and $22,470,444, respectively) ........................... $ 112,989,764 $ 11,360,518
Cash ....................................................... 7,909 40,237
Receivables:
Accrued dividends and interest ............................ 181,890 172,455
Investment securities sold ................................ 1,759,484 9,671
Prepaid expense and other assets ........................... 133 12
------------- ------------
Total Assets ............................................... $ 114,939,180 $ 11,582,893
============= ============
LIABILITIES AND NET ASSETS
Liabilities:
Portfolio securities purchased ............................ $ 73,060
Capital stock purchased. .................................. 5,583 $ 977
Payable to FBL Investment Advisory Services, Inc. ......... 33,788 5,429
Dividends payable ......................................... 48,741
Accrued expenses .......................................... 48,808 13,105
------------- ------------
Total Liabilities .......................................... 161,239 68,252
Net assets applicable to outstanding capital stock ......... 114,777,941 11,514,641
------------- ------------
Total Liabilities and Net Assets ........................... $ 114,939,180 $ 11,582,893
============= ============
NET ASSET VALUE PER SHARE
Class A: Net Assets ........................................ $ 109,439,366 $ 10,219,921
Shares issued and outstanding ........................... 8,380,320 963,998
Net asset value per share. .............................. $ 13.06 $ 10.60
============= ============
Class I: Net Assets. ....................................... $ 5,338,575 $ 1,294,720
Shares issued and outstanding ........................... 409,257 122,123
Net asset value per share ............................... $ 13.04 $ 10.60
============= ============
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
[WIDE TABLE CONTINUED]
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- -------------- ----------------
<S> <C> <C> <C>
$ 10,386,474 $ 45,054,120 $ 3,088,148 $ 34,445,492
283,844 15,164 18,675 67,808
242,316 223,496 4,598 36,128
11 44 4,284 27
------------ ------------ ----------- ------------
$ 10,912,645 $ 45,292,824 $ 3,115,705 $ 34,549,455
============ ============ =========== ============
$ 3,575 $ 768 $ 5,425
$ 6,753 17,236 2,677 18,204
54,588 9,303
11,392 19,585 7,247 17,264
------------ ------------ ----------- ------------
72,733 40,396 19,995 40,893
10,839,912 45,252,428 3,095,710 34,508,562
------------ ------------ ----------- ------------
$ 10,912,645 $ 45,292,824 $ 3,115,705 $ 34,549,455
============ ============ =========== ============
$ 9,459,405 $ 42,626,929 $ 2,480,880 $ 31,842,384
899,055 3,262,726 2,480,880 872,179
$ 10.52 $ 13.07 $ 1.00 $ 36.51
============ ============ =========== ============
$ 1,380,507 $ 2,625,499 $ 614,830 $ 2,666,178
131,269 200,954 614,830 72,995
$ 10.52 $ 13.07 $ 1.00 $ 36.53
============ ============ =========== ============
</TABLE>
7
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
---------------- ----------
<S> <C> <C>
INVESTMENT INCOME
Dividends .............................................. $ 576,975 $ 16,088
Interest . ............................................. 1,147,099 376,752
------------- --------
Total Investment Income ................................ 1,724,074 392,840
EXPENSES
Paid to FBL Investment Advisory Services, Inc.:
Investment advisory and management fees ............... 292,243 21,213
Transfer and dividend disbursing agent fees ........... 96,903 14,786
Distribution fees ..................................... 289,610 25,592
Administrative service fees . ......................... 144,805 12,796
Accounting fees ....................................... 29,224 2,651
Custodian fees ......................................... 8,280 3,212
Legal fees ............................................. 6,581 974
Directors' fees and expenses ........................... 1,157 103
Reports to shareholders ................................ 15,242 1,068
Registration fees ...................................... 21,200 3,113
Miscellaneous .......................................... 25,595 5,071
------------- --------
Total Expenses ......................................... 930,840 90,579
Expense Reimbursement ..................................
------------- --------
Net Expenses ........................................... 930,840 90,579
------------- --------
Net Investment Income .................................. 793,234 302,261
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from investment transactions ......... 8,896,077 13,467
Change in unrealized appreciation/depreciation
of investments . ...................................... (11,396,980) 92,947
------------- --------
Net Gain (Loss) on Investments ......................... (2,500,903) 106,414
------------- --------
Net Increase (Decrease) in Net Assets Resulting from
Operations ............................................ $ (1,707,669) $408,675
============= ========
</TABLE>
SEE ACCOMPANYING NOTES.
8
<PAGE>
[WIDE TABLE CONTINUED]
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- -------------- -------------
<S> <C> <C> <C>
$ 24,711 $635,851 $ 241,786
378,749 519,079 $ 75,448 77,978
-------- --------- -------- ----------
403,460 1,154,930 75,448 319,764
26,752 131,402 3,367 39,197
17,899 61,717 7,552 47,294
23,374 108,142 6,281 77,081
11,687 54,071 3,140 38,540
2,432 10,950 672 7,839
2,935 3,689 2,707 4,069
1,007 3,710 227 3,318
105 427 25 301
953 4,283 257 3,128
2,619 10,137 2,330 9,066
4,616 10,776 1,464 5,710
-------- --------- -------- ----------
94,379 399,304 28,022 235,543
(4,281)
-------- --------- -------- ----------
94,379 399,304 23,741 235,543
-------- --------- -------- ----------
309,081 755,626 51,707 84,221
26,741 165,753 25,498
87,954 (623,702) (456,097)
-------- --------- -------- ----------
114,695 (457,949) (430,599)
-------- --------- -------- ----------
$423,776 $297,677 $ 51,707 $ (346,378)
======== ========= ======== ==========
</TABLE>
9
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
------------------------------------
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1998 JULY 31,
(UNAUDITED) 1997
------------------ ---------------
<S> <C> <C>
OPERATIONS
Net investment income ......................................... $ 793,234 $ 1,185,220
Net realized gain (loss) from investment transactions ......... 8,896,077 10,703,882
Change in unrealized appreciation/depreciation
of investments ............................................... (11,396,980) 7,399,282
------------- -------------
Net Increase (Decrease) in Net Assets Resulting
from Operations .............................................. (1,707,669) 19,288,384
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A ..................................................... (1,221,221) (1,089,763)
Class I ..................................................... (27,684)
Distribution in excess of net investment income
Class A .....................................................
Class I .....................................................
Net realized gain from investment transactions
Class A ..................................................... (16,508,569) (11,584,328)
Class I ..................................................... (353,089)
Distribution in excess of net realized gain from
investment transactions
Class A .....................................................
Class I .....................................................
------------- -------------
Total Distributions ........................................... (18,110,563) (12,674,091)
CAPITAL SHARE TRANSACTIONS .................................... 21,610,996 19,837,007
------------- -------------
Total Increase (Decrease) in Net Assets ....................... 1,792,764 26,451,300
NET ASSETS
Beginning of period ........................................... 112,985,177 86,533,877
------------- -------------
End of period (including undistributed
net investment income as set forth below) .................... $ 114,777,941 $112,985,177
============= =============
Undistributed Net Investment Income ........................... $ 133,892 $ 589,563
============= =============
</TABLE>
SEE ACCOMPANYING NOTES.
10
<PAGE>
[WIDE TABLE CONTINUED]
<TABLE>
<CAPTION>
HIGH GRADE BOND HIGH YIELD BOND
PORTFOLIO PORTFOLIO
- ------------------------------------ ----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1998 JULY 31, JANUARY 31, 1998 JULY 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
- ------------------ --------------- ------------------ -------------
<S> <C> <C> <C>
$ 302,261 $ 562,752 $ 309,081 $ 564,387
13,467 (9,430) 26,741 94,434
92,947 330,826 87,954 399,538
----------- ----------- ----------- ----------
408,675 884,148 423,776 1,058,359
(290,786) (562,752) (295,620) (564,387)
(11,475) (13,461)
(65,632) (91,491)
(6,891)
----------- ----------- ----------- ----------
(302,261) (562,752) (381,604) (655,878)
1,157,837 806,820 1,642,079 1,403,816
----------- ----------- ----------- ----------
1,264,251 1,128,216 1,684,251 1,806,297
10,250,390 9,122,174 9,155,661 7,349,364
----------- ----------- ----------- ----------
$11,514,641 $10,250,390 $10,839,912 $9,155,661
=========== =========== =========== ==========
$ 0 $ 0 $ 0 $ 0
=========== =========== =========== ==========
</TABLE>
11
<PAGE>
FBL SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
------------------------------------
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1998 JULY 31,
(UNAUDITED) 1997
------------------ ---------------
<S> <C> <C>
OPERATIONS
Net investment income ......................................... $ 755,626 $ 1,177,452
Net realized gain (loss) from investment transactions ......... 165,753 2,864,737
Change in unrealized appreciation/depreciation
of investments ............................................... (623,702) 1,762,964
------------ ------------
Net Increase (Decrease) in Net Assets Resulting
from Operations .............................................. 297,677 5,805,153
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A ..................................................... (644,552) (1,173,550)
Class I ..................................................... (6,468)
Distribution in excess of net investment income
Class A .....................................................
Class I .....................................................
Net realized gain from investment transactions
Class A ..................................................... (2,240,685) (2,710,983)
Class I ..................................................... (50,937)
Distribution in excess of net realized gain from
investment transactions
Class A ..................................................... (570,038)
Class I ..................................................... (12,959)
------------ ------------
Total Distributions ........................................... (3,525,639) (3,884,533)
CAPITAL SHARE TRANSACTIONS .................................... 7,486,367 11,603,627
------------ ------------
Total Increase (Decrease) in Net Assets ....................... 4,258,405 13,524,247
NET ASSETS
Beginning of period ........................................... 40,994,023 27,469,776
------------ ------------
End of period (including undistributed
net investment income as set forth below) .................... $ 45,252,428 $40,994,023
============ ============
Undistributed Net Investment Income . ......................... $ 108,996 $ 4,390
============ ============
</TABLE>
SEE ACCOMPANYING NOTES.
12
<PAGE>
[WIDE TABLE CONTINUED]
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
- ----------------------------------- ------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1998 JULY 31, JANUARY 31, 1998 JULY 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
- ------------------ -------------- ------------------ ---------------
<S> <C> <C> <C>
$ 51,707 $ 91,101 $ 84,221 $ 100,574
25,498 5,998
(456,097) 7,741,835
---------- ---------- ----------- -----------
51,707 91,101 (346,378) 7,848,407
(47,595) (91,101) (127,959) (90,090)
(4,112) (1,109)
(11,355)
(3,721)
(22,251) (184,842)
(681)
---------- ---------- ----------- -----------
(51,707) (91,101) (167,076) (274,932)
629,994 (85,838) 5,158,590 7,648,725
---------- ---------- ----------- -----------
629,994 (85,838) 4,645,136 15,222,200
2,465,716 2,551,554 29,863,406 14,641,206
---------- ---------- ----------- -----------
$3,095,710 $2,465,716 $34,508,542 $29,863,406
========== ========== =========== ===========
$ 0 $ 0 $ (15,056) $ 44,847
========== ========== =========== ===========
</TABLE>
13
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
--------------- ---------------
<S> <C> <C>
COMMON STOCKS (64.70%)
- ----------------------
CHEMICALS AND ALLIED PRODUCTS (1.08%)
Praxair ............................................ 30,000 $ 1,243,125
COMMUNICATIONS (0.83%)
ADC Telecommunications ............................. 50,000 (1) 950,000
ELECTRIC, GAS AND SANITARY SERVICES (5.02%)
Citizens Utilities Co., Class B .................... 163,325 1,551,588
Matrix Service Co. ................................. 701,400 (1) 4,208,400
------------
5,759,988
ELECTRONICS & OTHER ELECTRIC EQUIPMENT (8.60%)
Applied Materials .................................. 170,000 (1) 5,578,125
DSC Communications ................................. 91,000 (1) 1,820,000
Novell, Inc. ....................................... 350,000 (1) 2,471,875
------------
9,870,000
FORESTRY (4.34%)
Weyerhaeuser Co. ................................... 100,100 4,986,231
INDUSTRIAL MACHINERY & EQUIPMENT (2.62%)
NCR Corporation .................................... 100,000 (1) 3,006,250
INSTRUMENTS & RELATED PRODUCTS (8.09%)
Allied Healthcare Products ......................... 390,000 (1) 2,827,500
Pall Corp. ......................................... 176,825 3,525,448
US Surgical Corp. .................................. 102,480 2,927,085
------------
9,280,033
INSURANCE CARRIER (1.22%)
Acceptance Insurance Group Companies, Inc. ......... 59,250 (1) 1,399,781
METAL MINING (1.37%)
Glamis Gold, Ltd. .................................. 364,400 1,571,475
MISCELLANEOUS MANUFACTURING INDUSTRIES (5.28%)
Hexcel Corp. ....................................... 30,000 (1) 729,375
Spectra-Physics Lasers, Inc. ....................... 15,420 (1) 213,953
W.H. Brady Co., Class A . .......................... 172,000 5,117,000
------------
6,060,328
NONDEPOSITORY INSTITUTION (0.44%)
Berkshire Hathaway, Inc. ........................... 10 (1) 503,000
</TABLE>
14
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------------ -------------
<S> <C> <C>
OIL AND GAS EXTRACTION (12.78%)
Apache Corp. ............................................... 100,000 $3,312,500
Burlington Resources ....................................... 100,000 4,275,000
Global Marine Corp ......................................... 140,000 (1) 3,211,250
Offshore Logistics. ........................................ 100,000 (1) 1,737,500
Pride International, Inc. .................................. 100,000 (1) 2,131,250
----------
14,667,500
PAPER AND ALLIED PRODUCTS (2.91%)
Minnesota Mining and Manufacturing Company ................. 40,000 3,340,000
PETROLEUM AND COAL PRODUCTS (1.90%)
Texaco, Inc ................................................ 42,000 2,186,625
TRANSPORTATION EQUIPMENT (2.19%)
Harley-Davidson, Inc. ...................................... 100,000 2,512,500
WHOLESALE TRADE -- DURABLE GOODS (2.13%)
TBC Corporation ............................................ 268,100 (1) 2,446,413
WHOLESALE TRADE -- NONDURABLE GOODS (3.90%)
Fleming Companies, Inc. .................................... 100,000 1,506,250
Howell Corp. ............................................... 201,930 2,965,847
----------
4,472,097
----------
Total Common Stocks ......................................... 74,255,346
PREFERRED STOCK (1.51%)
- -----------------------
WATER TRANSPORTATION
Sea Containers, Ltd., Convertible .......................... 32,950 1,738,113
PRINCIPAL
AMOUNT
-----------
SHORT-TERM INVESTMENTS (32.23%)
- -------------------------------
COMMERCIAL PAPER (13.79%)
American General Finance, 5.72%, due 2/05/98 ............... $ 2,000,000 2,000,000
American General Finance, 5.44%, due 3/03/98 ............... 2,500,000 2,500,000
Ford Motor Credit Corp., 5.52%, due 2/20/98 ................ 2,725,000 2,725,000
General Electric Capital Corp., 5.81%, due 2/02/98 ......... 1,900,000 1,900,000
General Electric Capital Corp., 5.88%, due 2/02/98 ......... 2,000,000 2,000,000
Norwest Financial, Inc., 5.51%, due 3/12/98 ................ 3,000,000 3,000,000
Norwest Financial, Inc., 5.65%, due 3/25/98. ............... 1,700,000 1,700,000
----------
15,825,000
</TABLE>
15
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------- ---------------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (2.43%)
Dreyfus Treasury Cash Management, Class A ....................... $2,796,487 $ 2,796,487
UNITED STATES GOVERNMENT AGENCIES (16.01%)
Federal Home Loan Bank., due 3/18/98 ............................ 1,200,000 1,191,838
Federal Home Loan Mortgage Corp., due 2/12/98 ................... 1,750,000 1,746,838
Federal Home Loan Mortgage Corp., due 2/27/98 ................... 5,000,000 4,979,831
Federal Home Loan Mortgage Corp., due 3/09/98 ................... 3,700,000 3,679,631
Federal Home Loan Mortgage Corp., due 3/31/98 ................... 1,800,000 1,784,151
Federal National Mortgage Assoc., due 2/10/98 ................... 5,000,000 4,992,529
------------
18,374,818
------------
Total Short-Term Investments ..................................... 36,996,305
------------
Total Investments (98.44%) ....................................... 112,989,764
OTHER ASSETS LESS LIABILITIES (1.56%)
- -------------------------------------
Cash, receivables and prepaid expense, less liabilities ......... 1,788,177
------------
Total Net Assets (100.00%) ....................................... $114,777,941
============
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
16
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------------- --------------
<S> <C> <C>
PREFERRED STOCK (4.10%)
- -----------------------
DEPOSITORY INSTITUTION
New Plan Realty Trust .......................................... 9,000 $ 471,960
PRINCIPAL
AMOUNT
--------
CORPORATE BONDS (61.49%)
- ------------------------
COMMUNICATIONS (3.10%)
Comcast Cable Communications, Inc., 8.50%, due 5/01/27 ......... $ 300,000 356,883
DEPOSITORY INSTITUTIONS (8.58%)
First Bank, N.A., 6.25%, due 8/15/05 ........................... 450,000 451,274
J. P. Morgan & Co., 7.25%, due 10/01/10 ........................ 350,000 352,387
Midland America Capital Corp., 12.75%, due 11/15/03 ............ 175,000 184,266
-----------
987,927
ELECTRIC, GAS AND SANITARY SERVICES (17.70%)
Narragansett Electric Co., 9.125%, due 5/01/21 ................. 450,000 506,538
New England Power Co., 8.00%, due 8/01/22 ...................... 400,000 440,180
Oglethorpe Power, 6.974,%, due 6/30/11 ......................... 700,000 720,643
Western Penn Power, 7.875%, due 12/01/04 ....................... 360,000 371,412
-----------
2,038,773
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (2.18%)
Harris Corp., 7.75%, due 12/15/01 .............................. 250,000 250,583
FOOD AND KINDRED PRODUCTS (1.20%)
Anheuser-Busch Companies, Inc., 8.50%, due 3/01/17 ............. 133,000 137,876
GENERAL MERCHANDISE STORE (3.83%)
J.C. Penny & Co., 8.25%, due 8/15/22 ........................... 400,000 441,280
HOLDING AND OTHER INVESTMENT OFFICES (6.40%)
Federal Realty Investment Trust, 8.875%, due 1/15/00 ........... 350,000 369,233
Meditrust, 7.60%, due 9/13/05 .................................. 350,000 367,892
-----------
737,125
INSURANCE CARRIER (3.98%)
Torchmark Corp., 8.625%, due 3/01/17 ........................... 440,000 457,868
NONDEPOSITORY INSTITUTION (2.69%)
Household Finance Co., 7.30%, due 7/30/17 ...................... 440,000 310,434
OIL & GAS EXTRACTION (2.21%)
Burlington Resources, Inc., 9.125%, due 10/01/21 ............... 200,000 254,032
PRINTING AND PUBLISHING (2.96%)
Valassis Communications, Inc., 9.55%, due 12/01/03 ............. 300,000 340,554
</TABLE>
17
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -------------
<S> <C> <C>
RAILROAD TRANSPORTATION (2.66%)
Union Pacific Corp., 8.50%, due 1/15/17 ........................... $293,000 $ 305,860
SECURITY AND COMMODITY BROKERS (1.77%)
Lehman Brothers Holding, Inc., 8.875%, due 11/01/98 . ............. 200,000 204,380
TRANSPORTATION EQUIPMENT (2.23%)
Ford Motor Credit Co., 9.50%, due 9/15/11 ......................... 200,000 256,470
-----------
Total Corporate Bonds .............................................. 7,080,045
ASSET BACKED SECURITY (1.29%)
- -----------------------------
Federal Home Loan Mortgage Corp., 10.15%, due 4/15/06 ............. 140,724 148,553
MORTGAGE-BACKED SECURITIES (16.10%)
- -----------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) (0.35%)
Pool # 503442, 9.50%, due 7/01/05 ................................. 38,895 40,621
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) (15.75%)
Pool # 1512, 7.50%, due 12/20/23 .................................. 756,453 778,913
Pool # 144332, 9.00%, due 7/15/16 ................................. 37,078 40,565
Pool # 194692, 8.00%, due 5/15/17 ................................. 307,790 324,623
Pool # 236070, 10.00%, due 10/15/12 ............................... 590,707 644,426
Pool # 307097, 9.00%, due 7/15/21 ................................. 22,917 24,887
-----------
1,813,414
-----------
Total Mortgage-Backed Securities ................................... 1,854,035
UNITED STATES TREASURY OBLIGATION (3.81%)
- -----------------------------------------
U.S. Treasury Note, 7.25%, due 8/15/04 ............................ 400,000 438,408
SHORT-TERM INVESTMENTS (11.87%)
- -------------------------------
UNITED STATES GOVERNMENT AGENCIES
Federal Home Loan Mortgage Corp., due 2/20/98 ..................... 200,000 199,370
Federal Home Loan Mortgage Corp., due 3/06/98 ..................... 475,000 472,594
Federal National Mortgage Assoc., due 2/18/98 ..................... 200,000 199,434
Federal National Mortgage Assoc., due 3/24/98 ..................... 500,000 496,119
-----------
Total Short-Term Investments ....................................... 1,367,517
-----------
Total Investments (98.66%) ......................................... 11,360,518
OTHER ASSETS LESS LIABILITIES (1.34%)
- -------------------------------------
Cash, receivables and prepaid expense, less liabilities . ......... 154,123
-----------
Total Net Assets (100.00%) ......................................... $11,514,641
===========
</TABLE>
SEE ACCOMPANYING NOTES.
18
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- --------------
<S> <C> <C>
CORPORATE BONDS (77.96%)
- ------------------------
AMUSEMENT AND RECREATION SERVICES (2.67%)
AMF Group, Inc., 10.875%, due 3/15/06 .......................... $260,000 $ 289,575
APPAREL AND ACCESSORY STORES (1.43%)
Genesco, Inc., 10.375%, due 2/01/03 ............................ 150,000 155,190
APPAREL AND OTHER TEXTILE PRODUCTS (2.76%)
Dan River, Inc., 10.125%, due 12/15/03 ......................... 280,000 299,250
AUTO REPAIR, SERVICES AND PARKING (1.31%)
Envirotest Systems Corp., 9.625%, due 4/01/03 . ................ 150,000 141,375
BUSINESS SERVICES (2.39%)
Borg-Warner Corp., 9.125%, due 5/01/03 ......................... 250,000 259,375
COMMUNICATIONS (3.84%)
Comcast Cable Communications, Inc., 8.50%, due 5/01/27 ......... 350,000 416,364
DEPOSITORY INSTITUTIONS (3.24%)
First Bank N.A., 6.25%, due 8/15/05 ............................ 350,000 350,991
ELECTRIC, GAS AND SANITARY SERVICES (21.10%)
Cleveland Electric Illum., 8.375%, due 12/01/11 ................ 600,000 620,202
Narragansett Electric Co., 9.125%, due 5/01/21 ................. 400,000 450,256
New England Power Co., 8.00%, due 8/01/22 ...................... 250,000 275,113
Niagara Mohawk Power, 7.875%, due 4/01/24 ...................... 500,000 509,545
Waterford 3 Nuclear Power Plant (Entergy Louisiana, Inc.),
8.09%, due 1/02/17 ............................................ 400,000 431,788
-----------
2,286,904
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (3.56%)
Advanced Micro Devices, Inc., 11.00%, due 8/01/03 .............. 360,000 385,650
FABRICATED METAL PRODUCTS (1.91%)
Earle M. Jorgensen, 10.75%, due 3/01/00 ........................ 200,000 207,000
FOOD STORES (2.92%)
P&C Food Markets, Inc., 11.50%, due 10/15/01 ................... 150,000 137,625
Penn Traffic Co., 10.25%, due 2/15/02 .......................... 200,000 178,500
-----------
316,125
GENERAL MERCHANDISE STORES (3.07%)
Federated Department Stores, Inc., 10.00%, due 2/15/01 ......... 300,000 332,847
HOLDING AND OTHER INVESTMENT OFFICES (3.81%)
SUSA Partnership, L.P., 8.20%, due 6/01/17 ..................... 375,000 413,194
</TABLE>
19
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------------- ------------
<S> <C> <C>
INSURANCE CARRIER (2.59%)
Torchmark Corp., 8.625%, due 3/01/17 ................................... $ 270,000 $ 280,965
LUMBER AND WOOD PRODUCTS (5.89%)
Georgia-Pacific Corp., 9.875%, due 11/01/21 ............................ 330,000 377,870
Pacific Lumber Co., 10.50%, due 3/01/03 ................................ 250,000 260,000
---------
637,870
MISCELLANEOUS RETAIL (2.93%)
Eckerd Corp., 9.25%, due 2/15/04 ....................................... 295,000 317,759
NONDEPOSITORY INSTITUTION (2.72%)
Macsaver Financial, 7.40%, due 2/15/02 ................................. 295,251 295,251
OIL AND GAS EXTRACTION (1.46%)
Dawson Production Services, Inc., 9.375%, due 2/01/07 .................. 158,625 158,625
PAPER AND ALLIED PRODUCTS (2.50%)
Container Corp. of America, 9.75%, due 4/01/03 ......................... 271,250 271,250
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (1.01%)
Plastic Specialties & Technologies, Inc., 11.25%, due 12/01/03 ......... 109,500 109,500
STONE, CLAY AND GLASS PRODUCTS (2.52%)
USG Corp., 9.25%, due 9/15/01 .......................................... 273,445 273,445
TRANSPORTATION SERVICES (2.33%)
Preston Corp., 7.00%, due 5/01/11 ...................................... 252,450 252,450
---------
Total Corporate Bonds ................................................... 8,450,955
SHARES
HELD
----------
COMMON STOCK (0.56%)
- --------------------
TEXTILE MILL PRODUCTS
Bibb Company (The) ..................................................... 7,490 (1) 60,856
PREFERRED STOCKS (6.08%)
- ------------------------
DEPOSITORY INSTITUTION (2.69%)
CFB Capital I, 8.875% Cumulative Capital Securites ..................... 11,000 291,500
HOLDING AND OTHER INVESTMENT OFFICES (3.39%)
New Plan Realty Trust .................................................. 7,000 367,080
---------
Total Preferred Stocks .................................................. 658,580
</TABLE>
20
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- --------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (11.22%)
- -------------------------------
UNITED STATES GOVERNMENT AGENCIES
Federal Home Loan Bank, due 3/05/98 ............................. $100,000 $ 99,506
Federal Home Loan Mortgage Corp, due 2/12/98 .................... 475,000 474,148
Federal Home Loan Mortgage Corp, due 3/05/98 .................... 125,000 124,386
Federal Home Loan Mortgage Corp, due 3/10/98 .................... 521,000 518,043
-----------
Total Short-Term Investments ..................................... 1,216,083
-----------
Total Investments (95.82%) ....................................... 10,386,474
OTHER ASSETS LESS LIABILITIES (4.18%)
- -------------------------------------
Cash, receivables and prepaid expense, less liabilities ......... 453,438
-----------
Total Net Assets (100.00%) ....................................... $10,839,912
===========
</TABLE>
(1) Non-income producing security.
SEE ACCOMPANYING NOTES.
21
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------------ ---------------
<S> <C> <C>
COMMON STOCKS (33.05%)
- ----------------------
ELECTRIC, GAS AND SANITARY SERVICES (10.23%)
Citizens Utilities Co., Class B ............................. 196,568 $ 1,867,396
Midamerican Energy Holdings Co. ............................. 50,000 1,034,375
Montana Power Co. ........................................... 57,600 1,728,000
------------
4,629,771
FORESTRY (3.30%)
Weyerhaeuser Co. ............................................ 30,000 1,494,375
HOLDING AND OTHER INVESTMENT OFFICES (4.79%)
General Growth Properties, Inc. ............................. 59,000 2,168,250
INSTRUMENTS AND RELATED PRODUCTS (3.52%)
Pall Corp. .................................................. 80,000 1,595,000
INSURANCE CARRIERS (3.49%)
EMC Insurance Group, Inc. ................................... 118,000 (1) 1,578,250
PAPER AND ALLIED PRODUCTS (3.69%)
Minnesota Mining and Manufacturing Company .................. 20,000 1,670,000
PETROLEUM AND COAL PRODUCTS (4.03%)
Texaco Inc. ................................................. 35,000 1,822,188
------------
Total Common Stocks .......................................... 14,957,834
OPTION (0.01%)
- --------------
Security Capital Group ...................................... 1,730 6,055
PREFERRED STOCKS (26.80%)
- -------------------------
DEPOSITORY INSTITUTIONS (7.50%)
CFB Capital I, 8.875% Cumulative Capital Securities ......... 60,000 1,590,000
Taylor Capital Group, Inc. .................................. 72,000 1,804,464
------------
3,394,464
ELECTRIC, GAS AND SANITARY SERVICES (0.06%)
Western Gas Resources, Inc .................................. 1,000 25,313
HOLDING AND OTHER INVESTMENT OFFICES (2.08%)
Security Capital Industrial ................................. 29,000 940,688
INDUSTRIAL MACHINERY & EQUIPMENT (4.03%)
Fort James Corporation ...................................... 30,000 1,826,250
MISCELLANEOUS MANUFACTURING INDUSTRIES (3.25%)
Cyprus Amax Minerals Co. .................................... 30,000 1,470,000
</TABLE>
22
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------------- -------------
<S> <C> <C>
OIL AND GAS EXTRACTION (3.76%)
EVI, Inc. ..................................................... 40,000 $1,700,000
WATER TRANSPORTATION (3.85%)
Sea-Containers, Ltd., Convertible ............................. 33,000 1,740,750
WHOLESALE TRADE -- NONDURABLE GOODS (2.27%)
Howell Corp. .................................................. 19,800 1,029,600
----------
Total Preferred Stocks ......................................... 12,127,065
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS (30.88%)
- ------------------------
ELECTRIC, GAS AND SANITARY SERVICES (0.30%)
National Co-op Services Corp. (Arkansas Electric), 9.48%,
due 1/01/12 .................................................. $ 128,000 137,088
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (2.99%)
California Microwave, Inc., Convertible Sub. Deb., 5.25%,
due 12/15/03 ................................................. 1,500,000 1,352,040
FOOD AND KINDRED PRODUCTS (0.18%)
Anheuser Busch Co., 8.50%, due 3/01/17 ........................ 77,000 79,823
GENERAL MERCHANDISE STORES (2.66%)
DHC Trust -- Series 1996, 8.50%, due 12/01/22 ................. 1,650,000 1,203,296
INSURANCE CARRIERS (0.52%)
Torchmark Corp., 8.625%, due 3/01/17 .......................... 225,000 234,137
MISCELLANEOUS MANUFACTURING INDUSTRIES (5.99%)
Halter Marine Group, Inc., 4.50%, due 9/15/04 ................. 625,000 599,219
Parker Drilling Corp., 5.50%, due 8/01/04 ..................... 2,000,000 2,111,960
----------
2,711,179
NONDEPOSITORY INSTITUTIONS (3.51%)
Consumer Portfolio Services, Inc., 3.50%, due 1/27/04 ......... 1,600,000 1,588,000
OIL AND GAS EXTRACTION (8.21%)
Diamond Offshore Drilling, 3.75%, due 2/15/07 ................. 1,700,000 2,149,820
Offshore Logistics, 6.00%, due 12/10/18 ....................... 1,500,000 1,566,840
----------
3,716,660
PETROLEUM AND COAL PRODUCTS (6.14%)
Pride Petroleum Services, Inc., Convertible Sub. Deb., 6.25%,
due 2/15/06 .................................................. 810,000 1,473,957
Trizec Hahn Corp., 3.25%, due 12/10/18 ........................ 1,800,000 1,302,462
----------
2,776,419
</TABLE>
23
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ -------------
<S> <C> <C>
RAIL TRANSPORTATION (0.38%)
Union Pacific Corp., SFDEB, 8.50%, due 1/15/17 .................. $ 167,000 $ 174,330
-----------
Total Corporate Bonds ............................................ 13,972,972
SHORT-TERM INVESTMENTS (8.82%)
- ------------------------------
UNITED STATES GOVERNMENT AGENCIES (6.06%)
Federal Home Loan Mortgage Corp., due 2/20/98 ................... 1,200,000 1,196,443
Federal National Mortgage Assoc., due 2/27/98 ................... 1,550,000 1,543,751
-----------
2,740,194
MONEY MARKET MUTUAL FUND (2.76%)
Dreyfus Treasury Cash Management, Class A ....................... 1,250,000 1,250,000
-----------
Total Short-Term Investments ..................................... 3,990,194
-----------
Total Investments (99.56%) ....................................... 45,054,120
OTHER ASSETS LESS LIABILITIES (0.44%)
- -------------------------------------
Cash, receivables and prepaid expense, less liabilities ......... 198,308
-----------
Total Net Assets (100.00%) ....................................... $45,252,428
===========
</TABLE>
(1) Non-income producing security.
SEE ACCOMPANYING NOTES.
24
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
----------- ---------- -------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (99.76%)
- -------------------------------
COMMERCIAL PAPER (25.04%)
NONDEPOSITORY INSTITUTIONS
American General Finance, 5.57%, due 2/13/98 ................... 5.751 % $150,000 $ 150,000
Ford Motor Credit Corp., 5.64%, due 3/04/98 ................... 5.508 150,000 150,000
General Electric Capital Corp., 5.64%, due 4/14/98 ............ 5.485 100,000 100,000
IBM Credit Corp., 5.56%, due 2/25/98 .......................... 5.512 150,000 150,000
John Deere Capital Corp., 5.53%, due 4/08/98 .................. 5.485 125,000 125,000
Norwest Financial, Inc., 5.49%, due 3/26/98 ................... 5.486 100,000 100,000
----------
Total Commercial Paper .......................................... 775,000
UNITED STATES GOVERNMENT AGENCIES (74.72%)
Federal Farm Credit Bank., due 2/06/98 ........................ 5.542 126,000 125,885
Federal Farm Credit Bank., due 4/23/98 ........................ 5.477 125,000 123,481
Federal Home Loan Bank, due 2/11/98 ........................... 5.768 175,000 174,696
Federal Home Loan Mortgage Corp., due 2/10/98 ................. 5.747 100,000 99,843
Federal Home Loan Mortgage Corp., due 2/12/98 ................. 5.506 150,000 149,729
Federal Home Loan Mortgage Corp., due 2/20/98 ................. 5.752 100,000 99,686
Federal Home Loan Mortgage Corp., due 2/23/98 ................. 5.759 100,000 99,638
Federal Home Loan Mortgage Corp., due 2/27/98 ................. 5.560 150,000 149,386
Federal Home Loan Mortgage Corp., due 3/09/98 ................. 5.463 150,000 149,174
Federal Home Loan Mortgage Corp., due 3/10/98 ................. 5.474 150,000 149,150
Federal Home Loan Mortgage Corp., due 3/12/98 ................. 5.469 150,000 149,106
Federal Home Loan Mortgage Corp., due 3/17/98 ................. 5.454 100,000 99,332
Federal Home Loan Mortgage Corp., due 3/19/98 ................. 5.459 100,000 99,302
Federal Home Loan Mortgage Corp., due 3/20/98 ................. 5.476 100,000 99,285
Federal Home Loan Mortgage Corp., due 3/25/98 ................. 5.450 100,000 99,215
Federal Home Loan Mortgage Corp., due 4/02/98 ................. 5.450 150,000 148,646
Federal Home Loan Mortgage Corp., due 4/22/98 ................. 5.476 100,000 98,799
Federal National Mortgage Assoc., due 2/05/98 ................. 5.743 100,000 99,921
Federal National Mortgage Assoc., due 4/17/98 ................. 5.472 100,000 98,874
----------
Total United States Government Agencies ......................... 2,313,148
----------
Total Short-Term Investments ..................................... 3,088,148
OTHER ASSETS LESS LIABILITIES (0.24%)
- -------------------------------------
Cash, receivables and prepaid expense, less liabilities ......... 7,562
----------
Total Net Assets (100.00%) ....................................... $3,095,710
==========
</TABLE>
SEE ACCOMPANYING NOTES.
25
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
--------- ---------------
<S> <C> <C>
COMMON STOCKS (91.58%)
- ----------------------
CHEMICALS AND ALLIED PRODUCTS (17.34%)
Bristol-Myers Squibb Co. .................... 9,671 $ 964,078
DuPont (EI) de Nemours & Co. ................ 12,589 712,852
Eastman Chemical Co. ........................ 6,809 405,561
Johnson & Johnson ........................... 12,870 861,486
Merck & Co., Inc. ........................... 8,221 963,912
Praxair, Inc. ............................... 14,453 598,896
Procter & Gamble Co. ........................ 11,352 889,713
Union Carbide Corp. . ....................... 13,422 588,051
------------
5,984,549
COMMUNICATIONS (5.74%)
American Telephone & Telegraph Co. .......... 10,240 641,280
Bell Atlantic Corp. ......................... 7,437 688,387
CBS Corp. ................................... 21,696 649,524
------------
1,979,191
DEPOSITORY INSTITUTION (1.66%)
J. P. Morgan & Co., Inc. .................... 5,655 572,215
EATING AND DRINKING PLACES (1.83%)
McDonald's Corp. ............................ 13,389 630,957
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (4.25%)
General Electric Co. ........................ 13,004 1,007,810
Lucent Technologies, Inc. ................... 4,889 432,677
Raytheon Co. ................................ 536 27,403
------------
1,467,890
FOOD AND KINDRED PRODUCTS (6.82%)
Coca-Cola Co. (The) ......................... 15,557 1,007,316
PepsiCo, Inc. ............................... 18,640 672,205
Philip Morris Companies, Inc. ............... 16,217 673,006
------------
2,352,527
GENERAL MERCHANDISE STORES (4.83%)
Sears, Roebuck & Co. ........................ 105,294 474,167
Wal-Mart Stores, Inc. ....................... 18,298 729,633
Woolworth (F.W.) Co., Ltd. .................. 21,309 463,471
------------
1,667,271
</TABLE>
26
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
--------------- ------------
<S> <C> <C>
INDUSTRIAL MACHINERY AND EQUIPMENT (4.48%)
Caterpillar, Inc. ................................... 16,909 $ 811,632
International Business Machines Corp. ............... 7,438 734,038
---------
1,545,670
INSTRUMENTS AND RELATED PRODUCTS (1.47%)
Eastman Kodak Co. ................................... 7,758 506,210
INSURANCE CARRIERS (5.11%)
Allstate Corp. ...................................... 8,556 757,206
American International Group, Inc. .................. 9,133 1,007,484
---------
1,764,690
MOTION PICTURES (2.60%)
Disney (Walt) Co. ................................... 8,405 895,658
PAPER AND ALLIED PRODUCTS (3.21%)
International Paper Co. ............................. 11,795 538,884
Minnesota Mining & Manufacturing Co. ................ 6,822 569,637
---------
1,108,521
PETROLEUM AND COAL PRODUCTS (10.44%)
Amoco Corp. ......................................... 6,472 526,659
Chevron Corp. ....................................... 8,300 620,944
Exxon Corp. ......................................... 11,372 674,502
Mobil Corp. ......................................... 9,006 613,534
Texaco, Inc. ........................................ 10,976 571,438
USX Corp. -- Marathon Group ......................... 17,787 596,976
---------
3,604,053
PRIMARY METAL INDUSTRIES (3.06%)
Aluminum Company of America ......................... 8,684 663,241
Bethlehem Steel Corp. ............................... 39,799 (1) 393,015
---------
1,056,256
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (2.37%)
Goodyear Tire & Rubber Co. .......................... 13,030 816,004
SECURITY AND COMMODITY BROKERS (6.37%)
American Express Co. ................................ 9,866 825,661
Lehman Brothers Holding, Inc. ....................... 11,554 627,527
Morgan Stanley, Dean Witter, Discover & Co. ......... 12,777 745,857
---------
2,199,045
</TABLE>
27
<PAGE>
FBL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------------- -------------
<S> <C> <C>
TRANSPORTATION EQUIPMENT (10.00%)
Allied-Signal, Inc. ............................................. 22,217 $ 865,074
Boeing Co. (The) ................................................ 12,250 582,641
Ford Motor Co. .................................................. 14,511 740,061
General Motors Corp. ............................................ 8,406 487,023
United Technologies Corp. ....................................... 9,509 776,172
-----------
3,450,971
-----------
Total Common Stocks .............................................. 31,601,678
PRINCIPAL
AMOUNT
------------
SHORT-TERM INVESTMENTS (8.24%)
- ------------------------------
UNITED STATES GOVERNMENT AGENCIES
Federal Home Loan Mortgage Corp., due 2/12/98 ................... $2,450,000 2,445,607
Federal Home Loan Mortgage Corp., due 3/20/98 ................... 200,000 198,571
Federal National Mortgage Assoc., due 2/12/98 ................... 200,000 199,636
-----------
Total Short-Term Investments ..................................... 2,843,814
-----------
Total Investments (99.82%) ....................................... 34,445,492
OTHER ASSETS LESS LIABILITIES (0.18%)
- -------------------------------------
Cash, receivables and prepaid expense, less liabilities ......... 63,070
-----------
Total Net Assets (100.00%) ....................................... $34,508,562
===========
</TABLE>
(1) Non-income producing security.
SEE ACCOMPANYING NOTES.
28
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
(UNAUDITED)
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 currently
consists of six portfolios (known as the Value Growth, High Grade Bond, High
Yield Bond, Managed, Money Market and Blue Chip Portfolios).
On December 1, 1997, the initial purchases of Institutional shares ("Class
I") of the Funds were made by Farm Bureau Life Insurance Company. Prior to the
initial Class I share purchases, the Fund issued only one class of shares. These
shares, known as Traditional shares ("Class A") also continue to be offered.
Class I shares are available for purchase exclusively by the following
investors: (a) retirement plans of FBL Financial Group, Inc. and its affiliates;
(b) investment advisory clients of FBL Investment Advisory Services, Inc.
("FBL"), including affiliated and unaffiliated benefit plans, such as qualified
retirement plans, and affiliated and unaffiliated banks and insurance companies
purchasing for their own accounts; (c) employees and directors of FBL Financial
Group, Inc., its affiliates, and affiliated state Farm Bureau Federations; (d)
directors and trustees of the Farm Bureau Mutual Funds; and (e) such other types
of accounts as FBL, the Fund's distributor, deems appropriate. Class I shares
currently are available for purchase only from FBL. Share certificates are not
available for Class I or Class A shares.
Class A shares are subject to a declining contingent deferred sales charge
("CDSC") on shares redeemed within six years of purchase. Class I shares are not
subject to a CDSC. Class I shares do not bear any distribution fee or
administrative service fee. The shares of each Portfolio have equal rights and
privileges with all other shares of that Portfolio except that Class A shares
have separate and exclusive voting rights with respect to the Fund's Rule 12b-1
Plan. Each share of a Portfolio represents an equal proportionate interest in
that Portfolio with each other share, subject to any preferences (such as
resulting from Rule 12b-1 distribution fees with respect to the Class A shares).
In addition, the Board of Directors of the Fund declares separate dividends on
each class of shares.
The Fund allocates daily all income, expenses (other than class-specific
expenses), and realized and unrealized gains or losses to each class of shares
based upon the relative proportion of the value of shares outstanding of each
class. Expenses specifically attributable to a particular class are charged
directly to such class. As noted above, distribution fees and administrative
fees are only allocated
29
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
against Class A shares. Other class-specific expenses charged to each class
during the period ended January 31, 1998, which are included in the
corresponding captions of the Statement of Operations, were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SERVICE
TRANSFER AND DIVIDEND
DISBURSING AGENT FEE REGISTRATION FEES
--------------------- --------------------
PORTFOLIO CLASS A CLASS I CLASS A CLASS I
------------------------- --------- --------- --------- --------
<S> <C> <C> <C> <C>
Value Growth ............ $96,503 $ 400 $14,879 $794
High Grade Bond ......... 14,658 128 1,797 794
High Yield Bond ......... 17,803 96 1,375 794
Managed ................. 61,392 325 7,490 794
Money Market ............ 7,488 64 1,764 423
Blue Chip ............... 46,174 1,120 7,143 794
</TABLE>
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.
30
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Dividends and distributions to shareholders from net investment income and
net realized gain from investments are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. Dividends and distributions which exceed net investment income and
net realized capital gains for financial reporting purposes, but not for tax
purposes, are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent
distributions exceed current and accumulated earnings and profits for federal
income tax purposes, they are reported as distributions of paid-in-capital.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. FEDERAL INCOME TAXES
No provision for federal income taxes is considered necessary because the
Fund is qualified as a "regulated investment company" under the Internal Revenue
Code and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments is
the same for both federal income tax and financial reporting purposes.
At January 31, 1998, the High Grade Bond Portfolio had a net capital loss
carryforward of approximately $26,000, 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 average 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%; and Blue Chip Portfolio -- 0.25%; (2) distribution fees,
which are computed at an annual rate of 0.50% of the average daily net asset
value attributable to Class A shares of each portfolio 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 the average daily net asset value attributable to Class A shares of
each portfolio; (4) shareholder service, transfer and dividend disbursing agent
fees, which are based on
31
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
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 for each portfolio in each class; 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 voluntarily waived the minimum fee associated with the
shareholder service, transfer and dividend disbursing agent fees for both
classes of shares, effective December 1, 1997. There can be no assurance that
the Advisor will continue to waive this expense beyond December 31, 1998.
FBL Investment has also 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 January 31, 1998 Farm Bureau Life Insurance Company, a wholly-owned
subsidiary of FBL Financial Group, Inc., owned shares of the Fund's portfolios
as follows:
PORTFOLIO CLASS A CLASS I
---------------------------- ------------ ----------
Value Growth ............... -- 154,703
High Grade Bond ............ -- 95,057
High Yield Bond ............ 75,129 94,967
Managed .................... -- 70,373
Money Market ............... 1,910,602 500,000
Blue Chip .................. -- 27,196
FBL Investment also owned 93,471 shares of Value Growth Portfolio at
January 31, 1998.
32
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS
Net assets as of January 31, 1998, 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) ......... $ 8,790 $ 1,086 $ 1,030 $ 3,464 $ 3,096 $ 945
Additional paid-in capital ......... 114,864,724 10,992,026 10,435,061 43,578,364 3,092,614 22,541,031
Accumulated undistributed net
investment income ................. 133,892 108,996 (15,056)
Accumulated undistributed net
realized gain (loss) from
investment transactions ........... 1,451,790 (26,471) 27,487 (582,997) 6,594
Net unrealized appreciation
(depreciation) of investments ..... (1,681,255) 548,000 376,334 2,144,601 11,975,048
------------ ----------- ----------- ----------- ---------- -----------
Net Assets ......................... $114,777,941 $11,514,641 $10,839,912 $45,252,428 $3,095,710 $34,508,562
============ =========== =========== =========== ========== ===========
</TABLE>
Transactions in Capital Stock for each portfolio were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED JANUARY 31, 1998:
VALUE HIGH GRADE HIGH YIELD MONEY
GROWTH BOND BOND MANAGED MARKET BLUE CHIP
---------------- --------------- --------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A ....................... 365,613 53,605 72,300 328,197 206,946 141,364
Class I * ..................... 417,625 122,459 131,807 202,007 712,655 73,117
Shares issued in reinvestment of
dividends and/or capital
gains distribution:
Class A ....................... 1,289,516 17,260 21,862 242,963 9,444 4,356
Class I * ..................... 309 -- -- 47 -- --
Shares redeemed:
Class A ....................... (503,015) (83,232) (69,135) (226,523) (201,226) (76,367)
Class I * ..................... (8,677) (336) (538) (1,100) (97,825) (122)
------------ ----------- ----------- ------------ ---------- ------------
Net Increase ................... 1,561,371 109,756 156,296 545,591 629,994 142,348
============ =========== =========== ============ ========== ============
Value of shares sold:
Class A ....................... $ 5,626,152 $ 563,649 $ 758,399 $ 4,539,641 $ 206,946 $ 5,095,524
Class I * ..................... 5,969,070 1,293,033 1,387,659 2,726,228 712,655 2,676,379
Value issued in reinvestment of
dividends and/or capital
gains distribution:
Class A ....................... 17,330,950 180,966 229,234 3,237,841 9,444 158,461
Class I * ..................... 4,149 -- -- 618 -- --
Value redeemed:
Class A ....................... (7,205,045) (876,247) (727,563) (3,003,652) (201,226) (2,767,414)
Class I * ..................... (114,280) (3,564) (5,650) (14,309) (97,825) (4,360)
------------ ----------- ----------- ------------ ---------- ------------
Net Increase ................... $ 21,610,996 $ 1,157,837 $ 1,642,079 $ 7,486,367 $ 629,994 $ 5,158,590
============ =========== =========== ============ ========== ============
</TABLE>
* Period from December 1, 1997, (date Class I operations commenced) through
January 31, 1998.
33
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31, 1997:
VALUE HIGH GRADE HIGH YIELD MONEY
GROWTH BOND BOND MANAGED MARKET BLUE CHIP
---------------- --------------- --------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A ....................... 960,670 181,281 182,441 743,749 917,859 281,505
Shares issued in reinvestment of
dividends and/or capital
gains distribution:
Class A ....................... 844,969 40,462 46,867 269,908 23,674 9,088
Shares redeemed:
Class A ....................... (471,818) (143,086) (90,912) (156,795) (1,027,371) (45,240)
------------ ------------ ----------- ------------ ------------- ------------
Net Increase (Decrease) ........ 1,333,821 78,657 138,396 856,862 (85,838) 245,353
============ ============ =========== ============ ============= ============
Value of shares sold:
Class A ....................... $ 14,626,866 $ 1,859,302 $ 1,852,541 $ 10,143,104 $ 917,859 $ 8,778,631
Value issued in reinvestment of
dividends and/or capital
gains distribution:
Class A ....................... 12,429,493 415,160 477,374 3,607,125 23,674 269,828
Value redeemed:
Class A ....................... (7,219,352) (1,467,642) (926,099) (2,146,602) (1,027,371) (1,399,734)
------------ ------------ ----------- ------------ ------------- ------------
Net Increase (Decrease) ........ $ 19,837,007 $ 806,820 $ 1,403,816 $ 11,603,627 $ (85,838) $ 7,648,725
============ ============ =========== ============ ============= ============
</TABLE>
5. INVESTMENT TRANSACTIONS
For the six months ended January 31, 1998, 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 ............. $66,573,407 $74,506,885
High Grade Bond .......... 1,946,251 1,250,024
High Yield Bond .......... 1,468,904 1,132,306
Managed .................. 18,259,824 7,320,771
Blue Chip ................ 4,699,169 489,003
34
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT TRANSACTIONS (CONTINUED)
At January 31, 1998, net unrealized appreciation of investments by
portfolio was composed of the following:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
------------------------------- APPRECIATION (DEPRECIATION)
PORTFOLIO APPRECIATION DEPRECIATION OF INVESTMENTS
- ------------------------- -------------- -------------- ----------------------------
<S> <C> <C> <C>
Value Growth ............ $3,294,586 $4,975,841 $ (1,681,255)
High Grade Bond ......... 557,735 9,735 548,000
High Yield Bond ......... 497,479 121,145 376,334
Managed ................. 3,347,795 1,203,194 2,144,601
Blue Chip ............... 12,040,138 65,090 11,975,048
</TABLE>
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:
ORDINARY INCOME:
<TABLE>
<CAPTION>
HIGH GRADE HIGH YIELD MONEY
BOND BOND MARKET
--------------------------- --------------------------- ---------------------------
PAYABLE DATE CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I
- ----------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
August 29, 1997 ................... $ 0.0509 $ 0.0549 $ 0.0033
September 30, 1997 ................ 0.0520 0.0557 0.0034
October 30, 1997 .................. 0.0473 0.0573 0.0033
November 26, 1997 ................. 0.0420 0.0455 0.0024
December 31, 1997 ................. 0.0618 $ 0.0589 0.0644 $ 0.0618 0.0034 $ 0.0036
January 30, 1998 .................. 0.0447 0.0501 0.0533 0.0604 0.0029 0.0037
--------- --------- --------- --------- --------- ---------
Total Dividends Per Share ......... $ 0.2987 $ 0.1090 $ 0.3311 $ 0.1222 $ 0.0187 $ 0.0073
========= ========= ========= ========= ========= =========
</TABLE>
In addition, dividends and distributions to shareholders from net
investment income and net realized gain on investment transactions were paid
during the period ended January 31, 1998, for the following portfolios:
ORDINARY INCOME DIVIDENDS:
<TABLE>
<CAPTION>
DIVIDEND AMOUNT PERCENT
PER SHARE QUALIFYING FOR
DECLARATION RECORD PAYABLE ------------------------- DEDUCTION BY
PORTFOLIO DATE DATE DATE CLASS A CLASS I CORPORATIONS
- ---------------------- ------------- ----------- ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Value Growth ......... 12/30/97 12/30/9 7 12/30/9 7 $ 0.1670 $ 0.1770 49%
Managed .............. 10/29/97 10/31/9 7 11/07/9 7 0.1225 -- 44%
Managed .............. 12/30/97 12/30/9 7 12/30/9 7 0.0850 0.0911 49%
Blue Chip ............ 12/30/97 12/30/9 7 12/30/9 7 0.1565 0.1775 77%
</TABLE>
35
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (CONTINUED)
CAPITAL GAINS DISTRIBUTIONS:
<TABLE>
<CAPTION>
DIVIDEND
DECLARATION RECORD PAYABLE AMOUNT
PORTFOLIO DATE DATE DATE PER SHARE
- ------------------------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Value Growth ............ 12/30/97 12/30/97 12/30/97 $ 2.2575
High Yield Bond ......... 12/30/97 12/30/97 12/30/97 0.0725
Managed ................. 12/30/97 12/30/97 12/30/97 0.9000
Blue Chip ............... 12/30/97 12/30/97 12/30/97 0.0250
</TABLE>
The capital gains distributions related to the Value Growth, High Yield
Bond and Managed Portfolios include net short-term realized gains of $4,014,649
($0.5375 per share), $27,957 ($0.0281 per share) and $806,491 ($0.2525 per
share), respectively, that are taxable to shareholders as ordinary income
dividends.
36
<PAGE>
(This page has been left blank intentionally.)
37
<PAGE>
FBL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
PERIOD ENDED JANUARY 31, 1998 (UNAUDITED) AND
YEARS ENDED JULY 31, 1997, 1996, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------
NET REALIZED
AND
NET ASSET UNREALIZED TOTAL
VALUE AT NET GAIN FROM
BEGINNING INVESTMENT (LOSS) ON INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS
----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
VALUE GROWTH PORTFOLIO
Class A:
1998 ......... $ 15.63 $ 0.10 $ (0.24) $ (0.14)
1997 ......... 14.68 0.18 2.89 3.07
1996 ......... 13.04 0.27 2.10 2.37
1995 ......... 13.07 0.43 0.65 1.08
1994 ......... 15.13 0.60 (0.49) 0.11
1993 ......... 12.48 0.51 2.75 3.26
Class I: (6)
1998 ......... $ 14.05 $ 0.17 $ 1.26 $ 1.43
HIGH GRADE BOND PORTFOLIO
Class A:
1998 ......... $ 10.50 $ 0.30 $ 0.10 $ 0.40
1997 ......... 10.16 0.60 0.34 0.94
1996 ......... 10.26 0.64 (0.10) 0.54
1995 ......... 10.13 0.63 0.16 0.79
1994 ......... 10.69 0.64 (0.40) 0.24
1993 ......... 10.68 0.70 0.13 0.83
Class I: (6)
1998 ......... $ 10.53 $ 0.11 $ 0.07 $ 0.18
HIGH YIELD BOND PORTFOLIO
Class A:
1998 ......... $ 10.48 $ 0.33 $ 0.11 $ 0.44
1997 ......... 9.99 0.70 0.61 1.31
1996 ......... 10.03 0.75 (0.01) 0.74
1995 ......... 10.00 0.78 0.13 0.91
1994 ......... 10.76 0.81 (0.60) 0.21
1993 ......... 10.47 0.83 0.46 1.29
Class I: (6)
1998 ......... $ 10.52 $ 0.12 $ 0.07 $ 0.19
[WIDE TABLE CONTINUED]
<CAPTION>
LESS DISTRIBUTIONS
--------------------------------------------------------------------------------
DIVIDENDS
FROM NET DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
INVESTMENT IN EXCESS OF FROM IN EXCESS OF TOTAL
INCOME NET INCOME CAPITAL GAINS NET REALIZED GAINS DISTRIBUTIONS
------------ --------------- --------------- -------------------- --------------
<S> <C> <C> <C> <C> <C>
VALUE GROWTH
PORTFOLIO
Class A:
1998 ......... $ (0.17) $ -- $ (2.26) $ -- $ (2.43)
1997 ......... (0.18) -- (1.94) -- (2.12)
1996 ......... (0.46) -- (0.27) -- (0.73)
1995 ......... (0.39) -- (0.72) -- (1.11)
1994 ......... (0.60) -- (1.57) -- (2.17)
1993 ......... (0.48) -- (0.13) -- (0.61)
Class I: (6)
1998 ......... $ (0.18) $ -- $ (2.26) $ -- $ (2.44)
HIGH GRADE BOND
PORTFOLIO
Class A:
1998 ......... $ (0.30) $ -- $ -- $ -- $ (0.30)
1997 ......... (0.60) -- -- -- (0.60)
1996 ......... (0.64) -- -- -- (0.64)
1995 ......... (0.63) -- -- (0.03) (0.66)
1994 ......... (0.64) -- (0.16) -- (0.80)
1993 ......... (0.70) -- (0.12) -- (0.82)
Class I: (6)
1998 ......... $ (0.11) $ -- $ -- $ -- $ (0.11)
HIGH YIELD BOND
PORTFOLIO
Class A:
1998 ......... $ (0.33) $ -- $ (0.07) $ -- $ (0.40)
1997 ......... (0.70) -- (0.12) -- (0.82)
1996 ......... (0.75) -- (0.03) -- (0.78)
1995 ......... (0.78) -- (0.09) (0.01) (0.88)
1994 ......... (0.81) -- (0.16) -- (0.97)
1993 ......... (0.83) -- (0.17) -- (1.00)
Class I: (6)
1998 ......... $ (0.12) $ -- $ (0.07) $ -- $ (0.19)
</TABLE>
38
<PAGE>
[WIDE TABLE CONTINUED]
<TABLE>
<CAPTION>
TOTAL
INVESTMENT
CAPITAL NET ASSET RETURN BASED
CONTRIBUTION VALUE AT ON
FROM AFFILIATE END NET ASSET
(SEE NOTE 3) OF PERIOD VALUE (1)
---------------- ----------- ----------------
<S> <C> <C> <C>
$ -- $ 13.06 (2.65)%(4)
-- 15.63 21.83%
-- 14.68 18.41%
-- 13.04 9.36%
-- 13.07 0.34%
-- 15.13 27.25%
$ -- $ 13.04 (24.78)%(4)
$ -- $ 10.60 7.87%(4)
-- 10.50 9.56%
-- 10.16 5.37%
-- 10.26 8.23%
-- 10.13 1.77%
-- 10.69 8.10%
$ -- $ 10.60 10.67%(4)
$ -- $ 10.52 7.37%(4)
-- 10.48 13.29%
-- 9.99 7.67%
-- 10.03 9.71%
-- 10.00 1.88%
-- 10.76 12.95%
$ -- $ 10.52 11.74%(4)
[WIDE TABLE CONTINUED]
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
NET ASSETS AT NET EXPENSES TO INCOME TO PORTFOLIO AVERAGE
END OF PERIOD AVERAGE AVERAGE TURNOVER COMMISSION
(IN THOUSANDS) NET ASSETS NET ASSETS RATE RATE PER SHARE (3)
---------------- ----------------- --------------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
$109,439 1.61%(4) 1.36%(4) 84%(4) $ 0.0521
112,985 1.65% 1.18% 77% 0.0520
86,534 1.62% 1.87% 92% 0.0529
70,947 1.62% 3.43% 85% --
64,315 1.60% 4.05% 93% --
51,732 1.61% 3.80% 92% --
$ 5,339 0.71%(4) 1.94%(4) 84%(4) $ 0.0521
$ 10,220 1.73%(4) 5.67%(4) 13%(4) $ --
10,250 1.82% 5.85% 30% --
9,122 1.85% 6.19% 34% --
8,345 1.99% 6.29% 18% --
7,596 1.90% 6.12% 42% --
8,047 1.79% 6.59% 54% --
$ 1,295 1.03%(4) 5.88%(4) 13%(4) $ --
$ 9,459 1.97%(4) 6.28%(4) 14%(4) $ --
9,156 2.00% 6.82% 45% --
7,349 2.00% 7.44% 30% --
6,691 2.00% 7.83% 23% --
6,425 2.00% 7.68% 26% --
5,758 2.00% 7.84% 56% --
$ 1,381 1.14%(4) 6.67%(4) 14%(4) $ --
</TABLE>
39
<PAGE>
FBL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED JANUARY 31, 1998 (UNAUDITED) AND
YEARS ENDED JULY 31, 1997, 1996, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------
NET REALIZED
AND
NET ASSET UNREALIZED TOTAL
VALUE AT NET GAIN FROM
BEGINNING INVESTMENT (LOSS) ON INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS
----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
1998 ......... $ 14.05 $ 0.44 $ (0.31) $ 0.13
1997 ......... 13.33 0.48 1.91 2.39
1996 ......... 11.85 0.46 1.54 2.00
1995 ......... 11.62 0.56 0.47 1.03
1994 ......... 12.51 0.55 (0.62) (0.07)
1993 ......... 10.77 0.54 1.87 2.41
Class I: (6)
1998 ......... $ 14.21 $ 0.16 $ (0.31) $ (0.15)
MONEY MARKET PORTFOLIO
Class A:
1998 ......... $ 1.00 $ 0.02 $ -- $ 0.02
1997 ......... 1.00 0.03 -- 0.03
1996 ......... 1.00 0.04 -- 0.04
1995 ......... 1.00 0.04 -- 0.04
1994 ......... 1.00 0.02 -- 0.02
1993 ......... 1.00 0.01 -- 0.01
Class I: (6)
1998 ......... $ 1.00 $ 0.01 $ -- $ 0.01
BLUE CHIP PORTFOLIO
Class A:
1998 ......... $ 37.20 $ 0.07 $ (0.58) $ (0.51)
1997 ......... 26.26 0.16 11.22 11.38
1996 ......... 22.85 0.17 3.43 3.60
1995 ......... 18.75 0.19 4.05 4.24
1994 ......... 17.69 0.14 1.06 1.20
1993 ......... 16.78 0.13 0.90 1.03
Class I: (6)
1998 ......... $ 36.77 $ 0.01 $ (0.05) $ (0.04)
[WIDE TABLE CONTINUED]
<CAPTION>
LESS DISTRIBUTIONS
--------------------------------------------------------------------------------
DIVIDENDS
FROM NET DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
INVESTMENT IN EXCESS OF FROM IN EXCESS OF TOTAL
INCOME NET INCOME CAPITAL GAINS NET REALIZED GAINS DISTRIBUTIONS
------------ --------------- --------------- -------------------- --------------
<S> <C> <C> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
1998 ......... $ (0.21) $ -- $ (0.72) $ (0.18) $ (1.11)
1997 ......... (0.46) -- (1.21) -- (1.67)
1996 ......... (0.45) -- (0.10) -- (0.55)
1995 ......... (0.56) -- (0.14) (0.10) (0.80)
1994 ......... (0.50) -- (0.32) -- (0.82)
1993 ......... (0.52) -- (0.15) -- (0.67)
Class I: (6)
1998 ......... $ (0.09) $ -- $ (0.72) $ (0.18) $ (0.99)
MONEY MARKET
PORTFOLIO
Class A:
1998 ......... $ (0.02) $ -- $ -- $ -- $ (0.02)
1997 ......... (0.03) -- -- -- (0.03)
1996 ......... (0.04) -- -- -- (0.04)
1995 ......... (0.04) -- -- -- (0.04)
1994 ......... (0.02) -- -- -- (0.02)
1993 ......... (0.01) -- -- -- (0.01)
Class I: (6)
1998 ......... $ (0.01) $ -- $ -- $ -- $ (0.01)
BLUE CHIP
PORTFOLIO
Class A:
1998 ......... $ (0.14) $ (0.01) $ (0.03) $ -- $ (0.18)
1997 ......... (0.14) -- (0.30) -- (0.44)
1996 ......... (0.19) -- -- -- (0.19)
1995 ......... (0.14) -- -- -- (0.14)
1994 ......... (0.14) -- -- -- (0.14)
1993 ......... (0.12) -- -- -- (0.12)
Class I: (6)
1998 ......... $ (0.04) $ (0.13) $ (0.03) $ -- $ (0.20)
</TABLE>
40
<PAGE>
[WIDE TABLE CONTINUED]
<TABLE>
<CAPTION>
TOTAL
INVESTMENT
CAPITAL NET ASSET RETURN BASED
CONTRIBUTION VALUE AT ON
FROM AFFILIATE END NET ASSET
(SEE NOTE 3) OF PERIOD VALUE (1)
---------------- ----------- ------------------
<S> <C> <C> <C>
$ -- $ 13.07 1.69%(4)
-- 14.05 17.88%
0.03 13.33 17.30%(2)
-- 11.85 9.40%
-- 11.62 (0.61)%
-- 12.51 23.02%
$ -- $ 13.07 (6.40)%(4)
$ -- $ 1.00 3.99%(4)
-- 1.00 3.51%
-- 1.00 3.64%
-- 1.00 3.60%
-- 1.00 1.47%
-- 1.00 1.33%
$ -- $ 1.00 4.49%(4)
$ -- $ 36.51 (2.71)%(4)
-- 37.20 43.77%
-- 26.26 15.83%
-- 22.85 22.77%
-- 18.75 6.75%
-- 17.69 6.21%
$ -- $ 36.53 (0.60)%(4)
[WIDE TABLE CONTINUED]
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------
RATIO OF RATIO OF NET
NET ASSETS AT NET EXPENSES TO INCOME TO PORTFOLIO AVERAGE
END OF PERIOD AVERAGE AVERAGE TURNOVER COMMISSION
(IN THOUSANDS) NET ASSETS (4) NET ASSETS (4) RATE (4) RATE PER SHARE (3)
---------------- ----------------- ---------------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
$42,628 1.84%(4) 3.44%(4) 21%(4) $ 0.0591
40,994 1.95% 3.48% 74% 0.0449
27,470 1.91% 3.47% 81% 0.0549
21,105 1.94% 4.86% 69% --
19,100 1.96% 4.42% 29% --
8,257 1.96% 4.54% 52% --
$ 2,626 1.37%(4) 5.55%(4) 21%(4) $ 0.0591
$ 2,481 1.80%(4) 3.77%(4) 0%(4) $ --
2,466 2.00% 3.46% 0% --
2,552 2.00% 3.58% 0% --
2,439 2.00% 3.51% 0% --
2,627 1.93% 1.45% 0% --
2,555 1.94% 1.33% 0% --
$ 615 1.12%(4) 4.34%(4) 0%(4) $ --
$31,842 1.51%(4) 0.54%(4) 2%(4) $ 0.0514
29,863 1.74% 0.49% 0% 0.0559
14,641 1.79% 0.66% 3% 0.0748
9,657 1.78% 0.92% 1% --
6,745 1.83% 0.75% 1% --
5,415 1.90% 0.73% 0% --
$ 2,666 1.41%(4) 0.54%(4) 2%(4) $ 0.0514
</TABLE>
41
<PAGE>
FBL SERIES FUND, INC.
NOTES TO FINANCIAL HIGHLIGHTS
(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.
(4) Computed on an annualized basis.
(5) Without the Manager's voluntary reimbursement of a portion of certain
of its expenses (see Note 3 to the financial statements) for the
periods indicated, the following funds would have had per share net
investment income and the ratios of expenses to average net assets as
shown:
<TABLE>
<CAPTION>
PER SHARE RATIO OF EXPENSES
NET INVESTMENT TO AVERAGE NET AMOUNT
YEAR INCOME ASSETS REIMBURSED
------ ---------------- ------------------ -----------
<S> <C> <C> <C> <C>
HIGH YIELD PORTFOLIO
Class A 1997 $ 0.69 2.10% $ 8,681
1996 0.73 2.22% 15,361
1995 0.75 2.29% 18,810
1994 0.79 2.17% 10,754
1993 0.82 2.05% 3,147
MONEY MARKET PORTFOLIO
Class A 1998 $ 0.02 2.14% $ 4,281
1997 0.03 2.28% 7,255
1996 0.03 2.43% 10,718
1995 0.03 2.20% 4,948
MANAGED PORTFOLIO
Class A 1993 $ 0.53 2.02% $ 3,497
</TABLE>
(6) Period from December 1, 1997, (date Class I operations commenced)
through January 31, 1998.
42
