<PAGE>
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[LOGO]
EquiTrust Series Fund, Inc.
SEMI-ANNUAL REPORT
JANUARY 31, 1999
INVESTMENT MANAGER AND
PRINCIPAL UNDERWRITER
EQUITRUST INVESTMENT
MANAGEMENT SERVICES, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-800-247-4170 (OUTSIDE IOWA)
1-800-422-3175 (IN IOWA)
225-5586 (DES MOINES)
This report is not to be
distributed unless preceded or
accompanied
by a prospectus.
737-027(99)
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
For the six-month period ending January 31, 1999, the S&P 500 was up 15.05%
on a total return basis, and the Dow Jones Industrial Average (DJIA) was up
6.03%. During the same six-month period, the Russell 2000 small cap index rose
by 2.40%. The total returns for the period were 8.43% for long-term Treasury
bonds and 6.48% for high-grade corporate bonds.
Demonstrating amazing resilience, the U.S. economy expanded at a 6.1% annual
rate in the fourth quarter of 1998, following a 3.7% annual rate of gain in the
third quarter. The consumer price index (CPI) rose only 1.6% during 1998.
Therefore, the inflation-adjusted or "real" Fed Funds rate was 4.75% minus 1.6%
(CPI), or 3.15%, leading some to argue that the Fed is still quite restrictive.
Moreover, core CPI (excluding food and energy costs) rose 2.5% during 1998,
implying a much lower real rate. The dramatic decline in energy prices along
with numerous other commodities is unlikely to be sustained. If energy and food
prices stabilize, the outlook for overall consumer prices could deteriorate.
In response to the spreading global financial turmoil and the absence of any
obvious domestic inflationary pressures, the Federal Reserve chose to ease in
three quarter-point increments during the second half of 1998. The direction of
the next rate change remains subject to debate.
At the recent Humphrey-Hawkins testimony before Congress, Federal Reserve
Chairman Greenspan discussed both downside and upside risks to the economy in
1999. The continued low level of unemployment and depletion of available workers
were noted as a "critical upside risk to the inflation outlook because it
presumably cannot continue for very much longer without putting increasing
pressure on labor markets and costs." He also mentioned the widening trade
deficit and resultant exchange rate risk as possible catalysts to higher prices.
Downside risks to the economy exist on a number of fronts. Instability may
still result from events such as the Brazilian devaluation and continued
economic weakness in Japan. Potentially developing weakness in the few remaining
areas of strength such as Europe may impair our exports. Capacity utilization
has begun to decline in the U.S. (80.9% as of December 1998 vs. 83.4% a year
earlier), which may lead to a reduction in capital spending. Overvaluation
heightens the risk of a stock market correction here in the U.S., which could
dampen consumer confidence. Greenspan noted that "in light of all these risks,
monetary policy must be poised to move quickly in either direction should we
perceive imbalances and distortion developing that could undermine the economic
expansion."
A recovery in demand growth outside the U.S. will be necessary, since the
U.S. cannot continue as the "consumer of last resort" forever. Our 1998 trade
deficit surpassed the record yearly amount achieved in 1987. Such imbalances
could ultimately create dislocations in our economy as well.
The following paragraphs describe how the various EquiTrust Series Fund
Portfolios are being positioned and where we see value that has developed as a
result of recent financial market volatility.
The Value Growth and Managed comments are from Roger F. Grefe, CFA,
Investment Management Vice President. The High Grade Bond and High Yield Bond
comments are from Robert J. Rummelhart, CFA, Fixed Income Vice President.
2
<PAGE>
VALUE GROWTH: The Value Growth Portfolio's performance suffered badly for
the six months ending January 31, 1999. Our return of -20.08% is in stark
contrast to the S&P 500 return of +15.05%. Our recent performance has been
distressing and disappointing for all the shareholders and us as well. We had
not envisioned an environment with such a large divergence of optimism and
pessimism relating to different categories of stock: e.g. small companies vs.
large, energy vs. technology, internet vs. the rest of the market, top 10 S&P
500 stocks vs. bottom 10 S&P 500 stocks and S&P top 20 vs. NYSE average.
We have had a long-standing emphasis on a fairly concentrated list of value
stocks, resulting in a portfolio that can behave very differently from the stock
market as a whole. We have seen other periods when the Value Growth Portfolio's
returns diverged significantly--sometimes positively and other times
negatively--from those of the overall market. Although we try to be very careful
and disciplined about the prices we pay for shares of businesses, we understand
that virtually ANY company's share price may fall 20-30% at any time. However,
it remains highly unlikely that all companies' share prices will fall 20-30% or
more at the same time, without company-specific negative developments, except
during world crises. As investors, we are faced with an unprecedented increase
in market volatility, including a tremendous decline in smaller company stocks
and energy issues.
For example, Santa Fe International, priced at $13, is a debt-free drilling
company recently selling for approximately 40% of the estimated value of its
drilling rigs (replacement cost). All of the drilling stocks are going begging
in this market environment, while Internet stocks, with no earnings, and no
prospect of earnings, sell at market valuations exceeding the valuations of
solid businesses with well defined prospects (as can be seen in the chart
below).
<TABLE>
<CAPTION>
MARKET VALUE PE MARKET VALUE PE
INTERNET ISSUES OF STOCK RATIO ISSUE OF STOCK RATIO
- -------------------- ------------- ------- -------------- ------------- -----
<S> <C> <C> <C> <C> <C>
America Online, Inc. $84 bil 388X GTE $ 59 bil 27X
Yahoo $33 bil 4485X Texaco $ 26 bil 27X
Amazon.com, Inc. $20 bil n/a Wendy's $3.3 bil 28X
EBay $20 bil 8142X Pioneer H.B. $4.2 bil 23X
Lycos, Inc. $4.3 bil n/a Meredith $1.3 bil 20X
</TABLE>
Fed Chairman Greenspan has suggested that the activity of Internet stock
traders may best be compared to the purchase of lottery tickets. These investors
are willing to wildly overpay for these stocks, against staggering odds. While
the Internet is a true business revolution, the stocks are priced for eternity.
This divergence between value and momentum has widened even further due to
many investors' tendencies to chase performance, i.e. buying the most recent top
ten performing funds. Many of the "value" funds that have been lagging behind
have had to liquidate equity investments in attractively priced stocks in order
to meet shareholder redemptions. Our shareholders have stayed the course and we
appreciate that. We believe those shareholders who value a value-oriented
investment strategy will be rewarded for their perseverance.
Dramatic differences can be demonstrated by looking at 1998 price
performance of all publicly traded stocks based on market capitalization tiers,
instead of weighted indices, such as the S&P 500. We believe this is more
representative of all publicly traded stocks, from those over $20 billion in
size (about 100 companies), to those with market caps under $250 million (over
5000 companies).
3
<PAGE>
<TABLE>
<CAPTION>
1998 UNWEIGHTED
CAPITALIZATION TIER PERFORMANCE
- -------------------------------------------------- ---------------
<S> <C>
7 - 20 billion.................................... 25.9%
5 - 20 billion.................................... 6.2%
2 - 5 billion..................................... (6.1)%
250 million - 2 billion........................... (16.6)%
< 250 million..................................... (24.1)%
</TABLE>
SOURCE: SALOMON SMITH BARNEY
Throughout the last 75 years of stock market history, we see that prolonged
periods of small company stock relative underperformance have eventually been
followed by long periods of strong performance. It is impossible to predict when
these changes will occur.
The past 2 1/2 years have been unprecedented, as big company stocks, selling
at extremely high valuations, have gone up while small company stocks (selling
significantly below their true business value) continue to go down, or not
recover. A value investor can't help but see the tremendous long-term
opportunities being borne out of this two-tier market.
Our stock selection is geared to finding attractive companies at reduced
prices and that strategy simply got run over by the "big-names-at-any-price"
mentality that has seized the market this year. Similar investment sentiment
also prevailed in the early seventies when investors flocked to large, well-
known stocks. The stocks traded at very high multiples while the rest of the
market languished. Eventually those "Nifty-Fifty" stocks were crushed in the
bear market of 1973 - 1974.
We continue to believe that despite the overall market's current fascination
with large stocks, most notably technology stocks, there are better buys (with
price declines of 30-80%) to be found among equities other than the largest 50
companies ("Nifty Fifty"). Despite a lack of current investor support for
anything but these "mega" companies, which may last indefinitely, we believe
that many of our current holdings are worth twice their current market quote,
particularly if evaluated as to what a "rational" business owner would pay for
the entire business. Merger activity may accelerate for these companies because
of their attractive prices, although any acquisitions will probably not occur in
straight-line fashion. Our relative performance, positive or negative, will not
either. Investing, contrary to accepted opinion, is not a straight-line
business.
As Warren Buffett states in Berkshire Hathaway's 1990 annual report:
"Investors who expect to be ongoing buyers of investments throughout
their lifetimes should adopt a similar attitude toward market fluctuations;
instead many illogically become euphoric when stock prices rise and unhappy
when they fall. They show no such confusion in their reaction to food
prices. Knowing they are forever going to be buyers of food, they welcome
falling prices and deplore price increases."
Although we strive to provide attractive risk-adjusted returns for our
shareholders, there will inevitably be periods of time when the portfolio will
not meet these expectations for all involved. It is during these periods when we
must remain committed to our goal of diligently looking for the best stock
values. Our strategy of taking significant positions in companies that are out
of favor with the "crowd" requires patience. Successful long-term investors
don't follow the crowd. And right now the "crowd" is making a mad dash to exit
energy and small-cap stocks while we have been shopping for bargains.
4
<PAGE>
We're determined to stay the course and encourage shareholders to do the same.
Over the long term, the benefits of this approach should become apparent.
By continuing to focus on "value" and "growth" at a reasonable price, we
hope to enhance the Portfolio's future returns. We derive comfort from the
empirical knowledge that the fundamental financial characteristics of the stocks
we own have in the past produced attractive returns over long periods of time.
The mettle of an investment strategy is not proven in a year or even a period of
years. We urge our fellow shareholders in the Value Growth Portfolio to maintain
a long-term focus. We believe that the Value Growth Portfolio can serve as a
valid option to a diversified portfolio of other stock funds, bond funds, and
reserves, chosen in proportions consistent with your goals, time horizon, and
tolerance for the increased volatility of the global financial markets. We
believe success is found in thoughtfully constructing an investment plan and
sticking with it.
The preface to Benjamin Graham's SECURITY ANALYSIS contains this quote from
Horace's ARS POETICA: "Many shall be restored that now are fallen and many shall
fall that are now in honor." The long-term prospects for the businesses we have
invested in remain strong and we are continuing to identify and invest in
well-managed businesses at reasonable prices.
The Value Growth Portfolio has tax loss carryforwards of over $34 million.
For existing shareholders, or any new shareholders buying into the Portfolio
that have taxable accounts, these tax loss carryforwards will offset any gains
up to an equal amount. This means that any future gains the Portfolio may
realize will not be distributed and taxed at the shareholder level. Efforts will
be made to fully utilize the capital loss carryforwards.
HIGH GRADE BOND: Treasury yields declined dramatically over our six-month
reporting period. For example, the 2-, 10- and 30-year Treasury issues yielded
5.48%, 5.49% and 5.71%, respectively, as of July 31, 1998 and 4.57%, 4.65% and
5.09% as of January 29, 1999.
This decline in Treasury yields was the result of a massive "flight to
quality" due to concerns over Asian and Latin American economic turmoil, the
Russian financial crisis, hedge fund solvency and the lack of liquidity in most
fixed-income investments except Treasury issues. These concerns, which produced
historically low Treasury rates, also created historically wide spread levels on
corporate and mortgage-backed securities.
Overall, we feel that the best returns going forward will be found in issues
that pay additional yield for taking on credit and/or prepayment risk. We have
increased our exposure to GNMA securities and will look to add more corporate
issues if attractive spreads can be found. Our duration has increased slightly
with the addition of GNMA purchases but still remains below the duration of the
Lehman Brothers Aggregate Index. As a result, 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
underperformed the high grade corporate bond market. The greater yields
available on high yield bonds were not enough to offset the widening of spreads
in high yield issues that took place over this period. According to the DLJ High
Yield Index, the average high yield spread was 409 basis points during the
second quarter of 1998 compared to 626 basis points at the end of January 1999.
The Portfolio produced very good relative returns during this difficult
period due to our lower exposure to high yield issues. Given the current wider
spreads available on high yield issues, we will look
5
<PAGE>
to increase our exposure to higher-yielding issues. It appears that we are
finally getting more than adequate compensation for taking on credit risk
considering current economic conditions.
MANAGED: The Managed Portfolio emphasizes income with moderate growth
potential. Income continues to be of importance in most portfolios, but our goal
is to produce income at twice the rate of the dividend yield on the S&P 500,
which is currently a miniscule 1.3%, the lowest in history. Growth is a
secondary objective, but nevertheless an important component of total return
(income + price appreciation). We continue to find investments that should
easily equal or better our hurdle rate of 2.6% (1.3% S&P 500 rate X 2).
We are disappointed in our short-term performance and attribute the bulk of
the decline to the energy convertible securities that the Portfolio owned. The
convertible bond market suffered extensive declines due to the decimation of
small cap stocks, and the overall "flight to quality" for Treasury bonds.
Currently we have added some excellent utility companies and non-convertible
preferreds at yields of 5-9%. We believe this is a generous yield in comparison
to 1.3% on the S&P 500 and 5.17% on a 30-year Treasury note and should generate
solid income returns in the future. The Managed Portfolio is uniquely positioned
for any investors desiring income and purchasing power protection. There are
attractive income and convertible issues as represented by some of our recent
purchases of: Healthsouth convertibles, Texaco common, Wendy's convertibles,
Sara Lee common, IdaCorp common, Campbell Soup common, and Newell Co.
convertibles.
MONEY MARKET: Treasury bills yield 70 basis points less than a year ago
reflecting the 0.75% Fed funds rate cut by the Federal Open Market Committee
(FOMC). These cuts were effected to calm the markets during a liquidity crisis
brought on by hedge fund failures. Currently, the targeted Fed funds rate is
4.75% and the discount rate is 4.50%, while a 90-day Treasury bill yields 4.48%.
Commercial paper spreads have widened in conjunction with corporate bond
spreads, which began sometime in July. We have not increased our commercial
paper exposure because agency spreads are also attractive, offering excellent
credit quality and liquidity.
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 remain
substantially invested in common stocks of large companies and 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 10, 1999
6
<PAGE>
(This page has been left blank intentionally.)
7
<PAGE>
EQUITRUST SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------- ------------
<S> <C> <C>
ASSETS
Investments in
securities, at value
(cost -- $85,152,428;
$14,538,474;
$12,819,760;
$45,117,835; $3,953,674;
and $33,953,357,
respectively)........... $ 80,998,294 $ 14,972,675
Cash..................... 20,575 7,102
Receivables:
Accrued dividends and
interest.............. 67,261 188,107
Investment securities
sold.................. 1,841,720 10,205
Prepaid expense and
other assets.......... 2,776 1,475
------------- ------------
Total Assets............. $ 82,930,626 $ 15,179,564
------------- ------------
------------- ------------
LIABILITIES AND NET
ASSETS
Liabilities:
Portfolio securities
purchased............. $ 949,696 $ 700,000
Capital stock
purchased............. 5,464 1,750
Payable to EquiTrust
Investment Management
Services, Inc......... 27,674 5,879
Dividends payable...... 150,086 60,100
Accrued expenses....... 26,969 16,057
------------- ------------
Total Liabilities........ 1,159,889 783,786
Net assets applicable to
outstanding capital
stock................... 81,770,737 14,395,778
------------- ------------
Total Liabilities and Net
Assets.................. $ 82,930,626 $ 15,179,564
------------- ------------
------------- ------------
NET ASSET VALUE PER SHARE
Class A: Net Assets...... $ 77,349,750 $ 12,927,765
Shares issued and
outstanding......... 8,860,805 1,228,724
Net asset value per
share............... $ 8.73 $ 10.52
------------- ------------
------------- ------------
Class I: Net Assets...... $ 4,420,987 $ 1,468,013
Shares issued and
outstanding......... 506,585 139,472
Net asset value per
share............... $ 8.73 $ 10.53
------------- ------------
------------- ------------
</TABLE>
SEE ACCOMPANYING NOTES.
8
<PAGE>
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in
securities, at value
(cost -- $85,152,428;
$14,538,474;
$12,819,760;
$45,117,835; $3,953,674;
and $33,953,357,
respectively)........... $ 12,886,677 $ 42,096,622 $3,953,674 $ 52,563,303
Cash..................... 13,551 3,661 4,848 1,650
Receivables:
Accrued dividends and
interest.............. 204,496 130,345 2,672 49,756
Investment securities
sold..................
Prepaid expense and
other assets.......... 3,367 1,711 4,140 882
------------ ------------ ------------- ------------
Total Assets............. $ 13,108,091 $ 42,232,339 $3,965,334 $ 52,615,591
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
LIABILITIES AND NET
ASSETS
Liabilities:
Portfolio securities
purchased.............
Capital stock
purchased............. $ 1,902 $ 4,347 $ 1,292 $ 10,499
Payable to EquiTrust
Investment Management
Services, Inc......... 4,664 23,116 4,208 16,073
Dividends payable...... 58,801 142,615 9,788
Accrued expenses....... 15,137 14,046 7,888 9,158
------------ ------------ ------------- ------------
Total Liabilities........ 80,504 184,124 23,176 35,730
Net assets applicable to
outstanding capital
stock................... 13,027,587 42,048,215 3,942,158 52,579,861
------------ ------------ ------------- ------------
Total Liabilities and Net
Assets.................. $ 13,108,091 $ 42,232,339 $3,965,334 $ 52,615,591
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
NET ASSET VALUE PER SHARE
Class A: Net Assets...... $ 11,514,340 $ 39,352,645 $3,280,434 $ 48,100,955
Shares issued and
outstanding......... 1,124,094 3,803,251 3,280,434 1,126,393
Net asset value per
share............... $ 10.24 $ 10.35 $ 1.00 $ 42.70
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Class I: Net Assets...... $ 1,513,247 $ 2,695,570 $ 661,724 $ 4,478,906
Shares issued and
outstanding......... 147,803 260,323 661,724 104,716
Net asset value per
share............... $ 10.24 $ 10.35 $ 1.00 $ 42.77
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
</TABLE>
9
<PAGE>
EQUITRUST SERIES FUND, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
INVESTMENT INCOME
Dividends................ $ 436,362 $ 19,013
Interest................. 948,592 460,191
------------ -----------
Total Investment
Income.................. 1,384,954 479,204
EXPENSES
Paid to EquiTrust
Investment Management
Services, Inc.:
Investment advisory and
management fees........ 215,871 27,448
Transfer and dividend
disbursing agent
fees................... 97,033 17,616
Distribution fees....... 204,495 30,785
Administrative service
fees................... 102,248 15,393
Accounting fees......... 21,066 3,431
Custodian fees........... 13,486 4,358
Professional fees........ 11,210 1,840
Directors' fees and
expenses................ 1,176 192
Reports to
shareholders............ 35,179 4,759
Registration fees........ 14,128 6,810
Miscellaneous............ 15,179 6,974
------------ -----------
Total Expenses........... 731,071 119,606
Expense Reimbursement.... (1,209)
Fees paid indirectly..... (825) (882)
------------ -----------
Net Expenses............. 730,246 117,515
------------ -----------
Net Investment Income.... 654,708 361,689
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss)
from investment
transactions............ (34,377,212) 104,823
Change in unrealized
appreciation/depreciation
of investments.......... 18,492,228 (87,126)
------------ -----------
Net Gain (Loss) on
Investments............. (15,884,984) 17,697
------------ -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... $(15,230,276) $379,386
------------ -----------
------------ -----------
</TABLE>
SEE ACCOMPANYING NOTES.
10
<PAGE>
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................ $ 38,216 $ 691,653 $ 352,964
Interest................. 447,156 669,147 $100,049 107,082
----------- ------------ ------------- ------------
Total Investment
Income.................. 485,372 1,360,800 100,049 460,046
EXPENSES
Paid to EquiTrust
Investment Management
Services, Inc.:
Investment advisory and
management fees........ 34,657 129,692 4,778 58,273
Transfer and dividend
disbursing agent
fees................... 19,379 90,302 8,945 65,823
Distribution fees....... 27,850 101,433 7,906 107,068
Administrative service
fees................... 13,925 50,717 3,952 53,534
Accounting fees......... 3,151 10,808 956 11,655
Custodian fees........... 3,119 3,727 5,048 4,584
Professional fees........ 1,700 5,716 500 5,013
Directors' fees and
expenses................ 179 613 52 611
Reports to
shareholders............ 4,553 16,622 1,209 17,308
Registration fees........ 7,169 10,395 5,377 12,113
Miscellaneous............ 9,795 5,294 1,910 2,551
----------- ------------ ------------- ------------
Total Expenses........... 125,477 425,319 40,633 338,533
Expense Reimbursement.... (3,108) (639) (4,056)
Fees paid indirectly..... (704) (722) (709) (887)
----------- ------------ ------------- ------------
Net Expenses............. 121,665 423,958 35,868 337,646
----------- ------------ ------------- ------------
Net Investment Income.... 363,707 936,842 64,181 122,400
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss)
from investment
transactions............ 69,631 (5,982,949) (205,710)
Change in unrealized
appreciation/depreciation
of investments.......... (236,009) 924,139 2,355,473
----------- ------------ ------------- ------------
Net Gain (Loss) on
Investments............. (166,378) (5,058,810) 2,149,763
----------- ------------ ------------- ------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... $ 197,329 $ (4,121,968) $ 64,181 $ 2,272,163
----------- ------------ ------------- ------------
----------- ------------ ------------- ------------
</TABLE>
11
<PAGE>
EQUITRUST SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
----------------------------------
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998
----------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income.... $ 654,708 $ 1,012,376
Net realized gain (loss)
from investment
transactions............ (34,377,212) 11,985,876
Change in unrealized
appreciation/depreciation
of investments.......... 18,492,228 (32,362,087)
----------------- --------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... (15,230,276) (19,363,835)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income:
Class A................ (898,292) (1,221,206)
Class I................ (71,933) (27,684)
Net realized gain from
investment transactions:
Class A................ (16,508,554)
Class I................ (353,089)
Distributions in excess
of net realized gain
from investment
transactions:
Class A................ (4,273,448)
Class I................ (248,105)
----------------- --------------
Total Dividends and
Distributions........... (5,491,778) (18,110,533)
CAPITAL SHARE
TRANSACTIONS............ 4,760,170 22,221,812
----------------- --------------
Total Increase (Decrease)
in Net Assets........... (15,961,884) (15,252,556)
NET ASSETS
Beginning of period...... 97,732,621 112,985,177
----------------- --------------
End of period (including
undistributed net
investment income as set
forth below)............ $ 81,770,737 $ 97,732,621
----------------- --------------
----------------- --------------
Undistributed Net
Investment Income....... $ 37,544 $ 353,049
----------------- --------------
----------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES.
12
<PAGE>
<TABLE>
<CAPTION>
HIGH GRADE BOND HIGH YIELD BOND
PORTFOLIO PORTFOLIO
---------------------------------- ----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31, JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
----------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income.... $ 361,689 $ 647,011 $ 363,707 $ 665,694
Net realized gain (loss)
from investment
transactions............ 104,823 4,789 69,631 53,172
Change in unrealized
appreciation/depreciation
of investments.......... (87,126) 66,274 (236,009) 14,546
----------------- -------------- ----------------- --------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... 379,386 718,074 197,329 733,412
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income:
Class A................ (323,021) (596,349) (318,277) (607,470)
Class I................ (38,668) (50,662) (45,430) (58,224)
Net realized gain from
investment transactions:
Class A................ (74,415) (106,306) (65,632)
Class I................ (8,345) (14,055) (6,891)
Distributions in excess
of net realized gain
from investment
transactions:
Class A................
Class I................
----------------- -------------- ----------------- --------------
Total Dividends and
Distributions........... (444,449) (647,011) (484,068) (738,217)
CAPITAL SHARE
TRANSACTIONS............ 1,574,199 2,565,189 878,014 3,285,456
----------------- -------------- ----------------- --------------
Total Increase (Decrease)
in Net Assets........... 1,509,136 2,636,252 591,275 3,280,651
NET ASSETS
Beginning of period...... 12,886,642 10,250,390 12,436,312 9,155,661
----------------- -------------- ----------------- --------------
End of period (including
undistributed net
investment income as set
forth below)............ $14,395,778 $ 12,886,642 $13,027,587 $ 12,436,312
----------------- -------------- ----------------- --------------
----------------- -------------- ----------------- --------------
Undistributed Net
Investment Income....... $ 0 $ 0 $ 0 $ 0
----------------- -------------- ----------------- --------------
----------------- -------------- ----------------- --------------
</TABLE>
13
<PAGE>
EQUITRUST SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
----------------------------------
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998
----------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income.... $ 936,842 $ 1,529,466
Net realized gain (loss)
from investment
transactions............ (5,982,949) 2,740,231
Change in unrealized
appreciation/depreciation
of investments.......... 924,139 (6,713,655)
----------------- --------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... (4,121,968) (2,443,958)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income:
Class A.............. (754,824) (1,467,303)
Class I.............. (51,627) (65,203)
Net realized gain from
investment transactions:
Class A.............. (2,810,723)
Class I.............. (63,897)
Distributions in excess
of net realized gain
from investment
transactions:
Class A.............. (1,862,922)
Class I.............. (128,871)
----------------- --------------
Total Dividends and
Distributions........... (2,798,244) (4,407,126)
CAPITAL SHARE
TRANSACTIONS............ 2,604,355 12,221,133
----------------- --------------
Total Increase (Decrease)
in Net Assets........... (4,315,857) 5,370,049
NET ASSETS
Beginning of period...... 46,364,072 40,994,023
----------------- --------------
End of period (including
undistributed net
investment income as set
forth below)............ $42,048,215 $ 46,364,072
----------------- --------------
----------------- --------------
Undistributed Net
Investment Income....... $ 131,741 $ 1,350
----------------- --------------
----------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES.
14
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
--------------------------------- ----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31, JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
----------------- ------------- ----------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income.... $ 64,181 $ 105,196 $ 122,401 $ 188,270
Net realized gain (loss)
from investment
transactions............ (205,710) 224,325
Change in unrealized
appreciation/depreciation
of investments.......... 2,355,473 3,823,328
----------------- ------------- ----------------- --------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... 64,181 105,196 2,272,164 4,235,923
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income:
Class A.............. (54,318) (90,846) (175,962) (139,294)
Class I.............. (9,863) (14,350) (29,314) (4,830)
Net realized gain from
investment transactions:
Class A.............. (186,035) (22,251)
Class I.............. (16,900) (681)
Distributions in excess
of net realized gain
from investment
transactions:
Class A..............
Class I..............
----------------- ------------- ----------------- --------------
Total Dividends and
Distributions........... (64,181) (105,196) (408,211) (167,056)
CAPITAL SHARE
TRANSACTIONS............ 741,150 735,292 3,685,142 13,098,493
----------------- ------------- ----------------- --------------
Total Increase (Decrease)
in Net Assets........... 741,150 735,292 5,549,095 17,167,360
NET ASSETS
Beginning of period...... 3,201,008 2,465,716 47,030,766 29,863,406
----------------- ------------- ----------------- --------------
End of period (including
undistributed net
investment income as set
forth below)............ $3,942,158 $ 3,201,008 $52,579,861 $ 47,030,766
----------------- ------------- ----------------- --------------
----------------- ------------- ----------------- --------------
Undistributed Net
Investment Income....... $ 0 $ 0 $ 6,118 $ 88,993
----------------- ------------- ----------------- --------------
----------------- ------------- ----------------- --------------
</TABLE>
15
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
COMMON STOCKS (90.26%)
- ---------------------------
BUSINESS SERVICES (2.13%)
Inprise Corp.......................... 100,000(1) $ 512,500
Man Power, Inc........................ 49,800 1,226,325
------------
1,738,825
CHEMICALS AND ALLIED PRODUCTS (7.31%)
Johnson & Johnson..................... 30,000 2,550,000
Procter & Gamble Co................... 20,000 1,817,500
Twinlab Corp.......................... 31,500(1) 393,750
Valspar Corp.......................... 35,000 1,216,250
------------
5,977,500
COMMUNICATIONS (4.36%)
Commonwealth Telephone Enterprise..... 70,000(1) 2,213,750
GTE Corp.............................. 20,000 1,350,000
------------
3,563,750
DEPOSITORY INSTITUTIONS (4.26%)
Glacier Bancorp, Inc.................. 1,900 42,987
Household International, Inc.......... 40,000 1,757,500
U. S. Bancorp......................... 50,000 1,684,375
------------
3,484,862
ELECTRIC, GAS AND SANITARY SERVICES (6.07%)
Helmerich & Payne..................... 40,000 702,500
Matrix Service Co..................... 504,000(1) 2,268,000
Northern States Power Co.............. 74,050 1,994,722
------------
4,965,222
FOOD AND KINDRED PRODUCTS (11.06%)
Campbell Soup Co...................... 67,000 3,144,813
Interstate Bakers..................... 70,000 1,719,375
Pepsi Co., Inc........................ 60,000 2,343,750
Philip Morris Companies, Inc.......... 20,000 940,000
Sara Lee Corp......................... 35,000 892,500
------------
9,040,438
FOOD STORES (3.69%)
Albertson's, Inc...................... 20,000 1,220,000
Casey's General Store................. 133,000 1,795,500
------------
3,015,500
</TABLE>
16
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
HOLDING AND OTHER INVESTMENT OFFICES (.96%)
<S> <C> <C>
Wintrust Financial Corp............... 47,750(1) $ 787,875
INDUSTRIAL MACHINERY & EQUIPMENT (.89%)
Oceaneering International, Inc........ 26,600(1) 256,025
Petroleum Geo - Svcs ADR.............. 35,000(1) 472,500
------------
728,525
INSTRUMENTS & RELATED PRODUCTS (1.27%)
Allied Healthcare Products............ 30,500(1) 61,000
Eastman Kodak Company................. 15,000 980,625
------------
1,041,625
INSURANCE CARRIERS (6.03%)
Danielson Holding Corp................ 167,200(1) 752,400
Mony Group, Inc....................... 44,500(1) 1,246,000
NAC RE Corp........................... 28,000 1,368,500
Transatlantic Holdings, Inc........... 20,850 1,562,447
------------
4,929,347
LUMBER AND WOOD PRODUCTS (3.43%)
Hon Industries........................ 137,660 2,804,822
METAL MINING (6.19%)
Barrick Gold Corp..................... 200,000 3,812,500
Freeport-McMoran Copper............... 18,200 174,038
Glamis Gold, Ltd...................... 106,750(1) 193,484
Newmont Mining Corp................... 50,000 884,375
------------
5,064,397
MISCELLANEOUS MANUFACTURING INDUSTRIES (3.91%)
Emerson Electric...................... 30,000 1,745,625
Newell Company........................ 35,000 1,454,687
------------
3,200,312
MISCELLANEOUS RETAIL (3.51%)
Mattel, Inc........................... 50,000 1,134,375
Southland Corp........................ 924,000(1) 1,732,500
------------
2,866,875
NONDEPOSITORY INSTITUTIONS (4.77%)
Berkshire Hathaway, Inc............... 60(1) 3,900,000
NONMETALLIC MINERALS EXCLUDING FUELS (.55%)
De Beers Cons Mines................... 31,500 448,875
</TABLE>
17
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
OIL AND GAS EXTRACTION (5.84%)
<S> <C> <C>
Diamond Offshore Drilling............. 15,000 $ 345,000
Evergreen Resources, Inc.............. 50,000(1) 775,000
Transocean Offshore, Inc.............. 18,000 460,125
Veritas DGC, Inc...................... 135,000(1) 1,679,063
Santa Fe International Corp........... 110,000 1,512,500
------------
4,771,688
PERSONAL SERVICES (3.49%)
Block (H & R), Inc.................... 65,000 2,851,875
PETROLEUM & COAL PRODUCTS (3.68%)
Phillips Petroleum.................... 35,000 1,351,875
Texaco, Inc........................... 35,000 1,658,125
------------
3,010,000
PRINTING AND PUBLISHING (1.18%)
Belo A.H. Corp........................ 51,500 968,844
TRANSPORTATION BY AIR (1.38%)
Petroleum Helicopters, Inc. --
Voting............................... 15,200 250,800
Petroleum Helicopters, Inc. --
Non-voting........................... 54,800 876,800
------------
1,127,600
TRUCKING & WAREHOUSING (1.21%)
Heartland Express, Inc................ 60,000(1) 993,750
WATER TRANSPORTATION (3.09%)
American Water Works, Inc............. 85,000 2,523,437
------------
Total Common Stocks..................... 73,805,944
PREFERRED STOCKS (7.25%)
- -----------------------------
EATING & DRINKING PLACES (1.83%)
Wendy's Financing..................... 28,000 1,501,500
ELECTRIC GAS & SANITARY SERVICES (.90%)
Northwestern Capital Finance I........ 28,750 734,922
HOLDING & OTHER INVESTMENT OFFICES (2.17%)
General Growth Properties, Inc........ 73,240 1,776,070
INSURANCE CARRIERS (.23%)
Equitable of Iowa Capital............. 7,000 186,375
MISCELLANEOUS MANUFACTURING INDUSTRIES (2.12%)
Cyprus Amax Minerals Company.......... 50,000 1,731,250
------------
Total Preferred Stocks.................. 5,930,117
</TABLE>
18
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------- ------------
<S> <C> <C>
CORPORATE BONDS (1.28%)
- ----------------------------
HEALTH SERVICES (1.28%)
Dura Pharmaceuticals, 3.50%, due
7/15/02.............................. $ 1,400,000 $ 1,051,750
<CAPTION>
SHARES
HELD
-------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (.26%)
- ----------------------------------
MONEY MARKET MUTUAL FUND (.26%)
Provident Treasury Cash Management.... 210,483 210,483
------------
Total Investments (99.05%).............. 80,998,294
OTHER ASSETS LESS LIABILITIES (.95%)
- ----------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... 772,443
------------
Total Net Assets (100.00%).............. $81,770,737
------------
------------
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
19
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
PREFERRED STOCK (3.08%)
- ---------------------------
New Plan Realty Trust................. 9,000 $ 443,813
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
CORPORATE BONDS (55.34%)
- -----------------------------
COMMUNICATIONS (2.67%)
Comcast Cable Communications, Inc.,
8.50%, due 5/01/27................... $ 300,000 383,868
DEPOSITORY INSTITUTIONS (5.64%)
First Bank, N.A., 6.25%, due
8/15/05.............................. 450,000 455,314
J. P. Morgan & Co., 7.25%, due
10/01/10............................. 350,000 356,451
-----------
811,765
ELECTRIC, GAS AND SANITARY SERVICES (11.56%)
National Co-op Services Corp.
(Arkansas Electric), 9.48%,
due 1/01/12.......................... 550,000 587,053
Oglethorpe Power (OPC Scherer),
6.974%, due 6/30/11.................. 679,000 708,788
Western Penn Power Co., 7.875%, due
12/01/04............................. 360,000 368,604
-----------
1,664,445
FOOD AND KINDRED PRODUCTS (.49%)
Anheuser-Busch Companies, Inc., 8.50%,
due 3/01/17.......................... 69,000 70,788
GENERAL MERCHANDISE STORES (3.03%)
J.C. Penney & Co., 8.25%, due
8/15/22.............................. 400,000 435,560
HOLDING AND OTHER INVESTMENT OFFICES (7.75%)
Federal Realty Investment Trust,
8.875%, due 1/15/00.................. 350,000 356,975
Meditrust, 7.60%, due 9/13/05......... 350,000 311,647
Washington REIT, 6.898%, due
2/25/08.............................. 450,000 446,305
-----------
1,114,927
INDUSTRIAL MACHINERY & EQUIPMENT (3.82%)
Thermo Fibertek, 4.50%, due 7/15/04... 650,000 550,316
NONDEPOSITORY INSTITUTIONS (3.72%)
Household Finance Co., 7.30%, due
7/30/12.............................. 300,000 315,108
Security Capital Pacific, 7.20%, due
3/01/13.............................. 225,000 220,797
-----------
535,905
OIL & GAS EXTRACTION (1.72%)
Burlington Resources, Inc., 9.125%,
due 10/01/21......................... 200,000 247,626
</TABLE>
20
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
PAPER AND ALLIED PRODUCTS (3.72%)
<S> <C> <C>
Union Camp Corp., 8.625%, due
4/15/16.............................. $ 516,000 $ 536,157
RAILROAD TRANSPORTATION (.42%)
Union Pacific Corp., 8.50%, due
1/15/17.............................. 58,000 60,335
TEXTILE MILL PRODUCTS (3.98%)
Unifi, 6.50%, due 2/01/08............. 550,000 573,458
TRANSPORTATION BY AIR (4.95%)
Continental Airlines, Inc., 6.545%,
due 8/02/20.......................... 700,000 712,348
TRANSPORTATION EQUIPMENT (1.87%)
Ford Motor Co., 9.215%, due 9/15/21... 200,000 268,478
-----------
Total Corporate Bonds................... 7,965,976
ASSET-BACKED SECURITIES (.46%)
- ----------------------------------
Federal Home Loan Mortgage Corp.,
10.15%, due 4/15/06.................. 66,916 66,939
MORTGAGE-BACKED SECURITIES (32.13%)
- ------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) (0.22%)
Pool # 503442, 9.50%, due 7/01/05..... 29,482 30,596
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) (31.91%)
Pool # 236070, 10.00%, due 10/15/12... 572,604 617,158
Pool # 1512, 7.50%, due 12/20/23...... 595,148 613,931
Pool # 22630, 6.50%, due 8/1/28....... 493,211 498,296
Pool # 2631, 7.00%, due 8/1/28........ 570,986 584,010
Pool # 2658, 6.50%, due 10/1/28....... 982,845 992,979
Pool # 2701, 6.50%, due 12/1/28....... 1,000,000 1,010,310
Pool # 144332, 9.00%, due 7/15/16..... 26,532 28,581
Pool # 194692, 8.00%, due 5/15/17..... 219,593 231,190
Pool # 307097, 9.00%, due 7/15/21..... 16,324 17,523
-----------
4,593,978
-----------
Total Mortgage-Backed Securities........ 4,624,574
UNITED STATES TREASURY OBLIGATION (3.12%)
- ------------------------------------------------
U.S. Treasury Note, 7.25%, due
8/15/04.............................. 400,000 449,892
SHORT-TERM INVESTMENTS (9.88%)
- -----------------------------------
COMMERCIAL PAPER (3.20%)
IBM Credit Corp., due 2/08/99......... 460,000 460,000
</TABLE>
21
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
UNITED STATES GOVERNMENT AGENCIES (5.45%)
<S> <C> <C>
Federal Farm Credit Bank, due
2/08/99.............................. $ 500,000 $ 499,408
Federal Home Loan Mtg. Corp., due
2/08/99.............................. 285,000 284,664
-----------
784,072
<CAPTION>
SHARES
HELD
----------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (1.23%)
Provident Treasury Cash Management.... 177,409 177,409
-----------
Total Short-Term Investments............ 1,421,481
-----------
Total Investments (104.01%)............. 14,972,675
OTHER ASSETS LESS LIABILITIES (-4.01%)
- ------------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... (576,897)
-----------
Total Net Assets (100.00%).............. $14,395,778
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
22
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------
<S> <C> <C>
CORPORATE BONDS (80.97%)
- -----------------------------
AMUSEMENT AND RECREATION SERVICES (1.63%)
AMF Bowling Worldwide, Inc., 10.875%,
due 3/15/06.......................... $ 260,000 $ 211,900
APPAREL AND OTHER TEXTILE PRODUCTS (2.24%)
Dan River, Inc., 10.125%, due
12/15/03............................. 280,000 291,200
BUSINESS SERVICES (2.39%)
Cendant Corporation, 7.75%, due
12/01/03............................. 300,000 311,157
CHEMICALS & ALLIED PRODUCTS (1.60%)
Terra Industries, Inc., 10.5%, due
6/15/05.............................. 200,000 208,000
COMMUNICATIONS (7.60%)
Comcast Cable Communications, Inc.,
8.50%, due 5/01/27................... 350,000 447,846
Savoy Pictures, 7.00%, due 7/01/03.... 550,000 541,750
------------
989,596
DEPOSITORY INSTITUTIONS (2.72%)
First Bank, N.A., 6.25%, due
8/15/05.............................. 350,000 354,133
EATING AND DRINKING PLACES (4.06%)
Tricon Global Restaurants, Inc.,
7.65%, due 5/15/08................... 500,000 529,250
ELECTRIC, GAS AND SANITARY SERVICES (13.84%)
ESI Tractebel, 7.99%, due 12/30/11.... 460,000 453,173
Gulf States Utilities, 8.94%, due
1/01/22.............................. 400,000 424,724
Niagara Mohawk Power, 7.875%, due
4/01/24.............................. 500,000 529,945
Waterford 3 Nuclear Power Plant
(Entergy Louisiana, Inc.),
8.09%, due 1/02/17................... 367,180 395,607
------------
1,803,449
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (2.92%)
Advanced Micro Devices, Inc., 11.00%,
due 8/01/03.......................... 360,000 380,250
FOOD STORES (1.29%)
P&C Food Markets, Inc., 11.50%, due
10/15/01............................. 150,000 72,750
Penn Traffic Co., 10.25%, due
2/15/02.............................. 200,000 96,000
------------
168,750
HEALTH SERVICES (3.11%)
Tenet Healthcare, 7.625%, due
6/01/08.............................. 400,000 405,236
</TABLE>
23
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------
HOLDING AND OTHER INVESTMENT OFFICES (15.50%)
<S> <C> <C>
Bradley Operating, L.P., 7.20%, due
1/15/08.............................. $ 500,000 $ 480,325
Federal Realty Investment Trust,
7.48%, due 8/15/26................... 600,000 665,076
Glenborough Properties, 7.625%, due
3/15/05.............................. 250,000 243,467
Price Development Company, 7.29%, due
3/11/08.............................. 250,000 256,958
SUSA Partnership, L.P., 8.20%, due
6/01/17.............................. 375,000 373,545
------------
2,019,371
INSTRUMENTS AND RELATED PRODUCTS (4.85%)
Thermo Electron Corp., 4.25%, due
1/01/03.............................. 700,000 632,296
LUMBER AND WOOD PRODUCTS (3.74%)
Georgia-Pacific Corp., 9.875%, due
11/01/21............................. 330,000 377,246
Georgia-Pacific Corp., 9.125%, due
7/01/22.............................. 100,000 109,595
------------
486,841
MISCELLANEOUS RETAIL (2.37%)
Eckerd Corp., 9.25%, due 2/15/04...... 295,000 308,815
NONDEPOSITORY INSTITUTIONS (1.85%)
Macsaver Financial, 7.40%, due
2/15/02.............................. 300,000 241,500
OIL AND GAS EXTRACTION (2.36%)
Occidental Petroleum Co., 7.375%, due
11/15/08............................. 300,000 307,749
PAPER AND ALLIED PRODUCTS (2.00%)
Container Corp. of America, 9.75%, due
4/01/03.............................. 250,000 260,000
REAL ESTATE (3.11%)
United Dominion Realty Trust, 8.125%,
due 11/15/00......................... 400,000 405,236
TRANSPORTATION SERVICES (1.79%)
Preston Corp., 7.00%, due 5/01/11..... 306,000 233,325
------------
Total Corporate Bonds................... 10,548,054
</TABLE>
<TABLE>
<CAPTION>
SHARES
HELD
----------
<S> <C> <C>
PREFERRED STOCK (9.42%)
- ---------------------------
DEPOSITORY INSTITUTIONS (2.20%)
CFB Capital I......................... 11,000 286,000
HOLDING AND OTHER INVESTMENT OFFICES (7.22%)
Cameco Corp........................... 24,000 595,500
New Plan Realty Trust................. 7,000 345,188
------------
940,688
------------
Total Preferred Stocks.................. 1,226,688
</TABLE>
24
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (8.53%)
- -----------------------------------
UNITED STATES GOVERNMENT AGENCIES (5.40%)
Federal Home Loan Mortgage Corp., due
2/08/99.............................. $ 455,000 $ 454,464
Federal Home Loan Mortgage Corp., due
2/18/99.............................. 250,000 249,382
------------
703,846
<CAPTION>
SHARES
HELD
----------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (3.13%)
Provident Treasury Cash Management.... 408,089 408,089
------------
Total Short-Term Investments............ 1,111,935
------------
Total Investments (98.92%).............. 12,886,677
OTHER ASSETS LESS LIABILITIES (1.08%)
- -----------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... 140,910
------------
Total Net Assets (100.00%).............. $ 13,027,587
------------
------------
</TABLE>
SEE ACCOMPANYING NOTES.
25
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (22.93%)
- ---------------------------
ELECTRIC, GAS AND SANITARY SERVICES (11.94%)
Citizens Utilities Co., Class B....... 32,578 $ 254,516
Idacorp, Inc.......................... 44,000 1,446,500
Northern States Power Co.
(Minnesota).......................... 43,000 1,158,312
Otter Tail Power Co................... 50,000 2,162,500
-----------
5,021,828
FOOD & KINDRED PRODUCTS (7.92%)
Campbell Soup Co...................... 20,000 938,750
Philip Morris Companies, Inc.......... 40,000 1,880,000
Sara Lee Corp......................... 20,000 510,000
-----------
3,328,750
PETROLEUM & COAL PRODUCTS (3.07%)
Texaco, Inc........................... 27,300 1,293,338
-----------
Total Common Stocks..................... 9,643,916
PREFERRED STOCKS (43.01%)
- ------------------------------
DEPOSITORY INSTITUTIONS (10.08%)
CFB Capital I, Inc.................... 67,500 1,755,000
CFB Capital II, Inc................... 3,960 100,485
Harris Preferred Capital Group,
Inc.................................. 20,000 506,250
Taylor Capital Group, Inc............. 72,000 1,876,500
-----------
4,238,235
EATING & DRINKING PLACES (1.83%)
Wendy's Financing..................... 14,300 766,837
ELECTRIC, GAS AND SANITARY SERVICES (7.37%)
Citizens Utilities Trust.............. 30,500 1,235,250
Equitable Resources................... 50,000 1,271,875
Northwestern Capital Finance, Inc..... 23,200 593,050
-----------
3,100,175
HOLDING AND OTHER INVESTMENT OFFICES (7.49%)
General Growth Properties, Inc........ 90,000 2,182,500
Wintrust Capital Trust................ 37,500(1) 967,969
-----------
3,150,469
INSURANCE CARRIERS (2.57%)
Equitable of Iowa Capital............. 40,546 1,079,537
</TABLE>
26
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
MISCELLANEOUS MANUFACTURING INDUSTRIES (2.47%)
<S> <C> <C>
Cyprus Amax Minerals Co............... 30,000 $ 1,038,750
NONDEPOSITORY INSTITUTIONS (4.35%)
Mediaone Finance Trust................ 25,000 653,125
Newell Financial Trust I.............. 22,000(1) 1,177,000
-----------
1,830,125
OIL AND GAS EXTRACTION (4.63%)
EVI, Inc.............................. 40,000(1) 1,225,000
El Paso Energy Capital Trust, Inc..... 15,000 720,000
-----------
1,945,000
PIPELINES EXCLUDING NATURAL GAS (1.75%)
Enron Capital......................... 29,200 735,475
RAILROAD TRANSPORTATION (0.47%)
Union Pacific Capital Trust........... 4,000 200,000
-----------
Total Preferred Stocks.................. 18,084,603
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
CORPORATE BONDS (25.96%)
- -----------------------------
ELECTRIC, GAS AND SANITARY SERVICES (0.32%)
National Co-op Services Corp.
(Arkansas Electric),
9.48%, due 1/01/12................... $ 126,000 134,489
FOOD AND KINDRED PRODUCTS (0.10%)
Anheuser-Busch Co., 8.50%, due
3/01/17.............................. 40,000 41,036
HEALTH SERVICES (7.49%)
Dura Pharmaceuticals, 3.50%, due
7/15/02.............................. 2,000,000 1,502,500
Healthsouth Corp., 3.25%, due
4/01/03.............................. 750,000 641,250
Quantum Healthcare Resources, 4.75%,
due 10/01/00......................... 1,125,000 1,005,041
-----------
3,148,791
INSURANCE CARRIERS (2.43%)
NAC RE Corp., 5.25%, due 12/15/02..... 1,000,000 1,019,550
METAL MINING (2.41%)
Teck Corp., 3.75%, due 7/15/06........ 1,500,000 1,012,500
NONDEPOSITORY INSTITUTIONS (2.48%)
Consumer Portfolio Services, Inc.,
10.50%, due 4/15/04.................. 1,600,000 1,044,000
</TABLE>
27
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
OIL AND GAS EXTRACTION (7.72%)
<S> <C> <C>
Diamond Offshore Drilling, 3.75%, due
2/15/07.............................. $1,700,000 $ 1,594,022
Nabors Industries, Inc., 5.00%, due
5/15/06.............................. 1,700,000 1,652,230
-----------
3,246,252
PETROLEUM AND COAL PRODUCTS (2.93%)
Trizec Hahn Corp., 3.25%, due
12/10/18............................. 1,800,000 1,233,036
RAILROAD TRANSPORTATION (0.08%)
Union Pacific Corp., SFDEB, 8.50%, due
1/15/17.............................. 33,000 34,329
-----------
Total Corporate Bonds................... 10,913,983
SHORT-TERM INVESTMENTS (8.22%)
- -----------------------------------
UNITED STATES GOVERNMENT AGENCIES (7.56%)
Federal Home Loan Mortgage Corp., due
2/25/99.............................. 710,000 707,595
Federal National Mortgage Association,
due 2/05/99.......................... 1,475,000 1,473,762
Federal National Mortgage Association,
due 2/18/99.......................... 1,000,000 997,471
-----------
3,178,828
<CAPTION>
SHARES
HELD
----------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (.66%)
Provident Treasury Cash Management.... 275,292 275,292
-----------
Total Short-Term Investments............ 3,454,120
-----------
Total Investments (100.12%)............. 42,096,622
OTHER ASSETS LESS LIABILITIES (-0.12%)
- ------------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... (48,407)
-----------
Total Net Assets (100.00%).............. $42,048,215
-----------
-----------
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
28
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
January 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- ---------- -----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (100.29%)
- --------------------------------------
COMMERCIAL PAPER (24.22%)
NONDEPOSITORY INSTITUTIONS
American General Finance,
4.84%, due 2/23/99............ 4.838% $ 160,000 $ 160,000
John Deere Capital Corp.,
4.86%, due 2/04/99............ 4.863 145,000 145,000
Ford Motor Credit Corp., 4.82%,
due 2/22/99................... 4.818 190,000 190,000
General Electric Capital Corp.,
4.87%, due 2/01/99............ 4.867 130,000 130,000
IBM Credit Corp., 4.82%, due
2/19/99....................... 4.819 135,000 135,000
Texaco, Inc., 4.83%, due
2/10/99....................... 4.834 195,000 195,000
-----------
Total Commercial Paper........... 955,000
UNITED STATES GOVERNMENT AGENCIES (76.07%)
Federal Farm Credit Bank, due
2/12/99....................... 4.865 140,000 139,758
Federal Home Loan Bank, due
2/17/99....................... 4.741 475,000 473,892
Federal Home Loan Bank, due
2/24/99....................... 4.793 145,000 144,526
Federal Home Loan Mortgage
Corp., due 2/2/99............. 4.781 250,000 249,902
Federal Home Loan Mortgage
Corp., due 2/3/99............. 5.146 105,000 104,941
Federal Home Loan Mortgage
Corp., due 2/8/99............. 4.803 225,000 224,734
Federal Home Loan Mortgage
Corp., due 2/9/99............. 4.870 255,000 254,660
Federal Home Loan Mortgage
Corp., due 2/11/99............ 4.849 260,000 259,586
Federal Home Loan Mortgage
Corp., due 2/16/99............ 4.859 200,000 199,548
Federal Home Loan Mortgage
Corp., due 2/25/99............ 4.772 195,000 194,339
Federal Home Loan Mortgage
Corp., due 2/26/99............ 4.794 180,000 179,364
Federal Home Loan Mortgage
Corp., due 3/4/99............. 4.795 210,000 209,094
Federal National Mortgage
Assoc., due 2/5/99............ 5.112 150,000 149,874
Federal National Mortgage
Assoc., due 2/18/99........... 4.870 215,000 214,456
-----------
Total United States Government
Agencies........................ 2,998,674
-----------
Total Short-Term Investments....... 3,953,674
OTHER ASSETS LESS LIABILITIES (-0.29%)
- -------------------------------------------
Cash, receivables, prepaid
expense and other assets, less
liabilities..................... (11,516)
-----------
Total Net Assets (100.00%)......... $ 3,942,158
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
29
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- ----------
<S> <C> <C>
COMMON STOCKS (88.38%)
- ---------------------------
CHEMICALS AND ALLIED PRODUCTS (14.51%)
Bristol-Myers Squibb Co............... 11,298 $1,448,262
DuPont (E.I.) de Nemours & Co......... 15,301 783,220
Johnson & Johnson..................... 15,323 1,302,455
Lilly & Company....................... 4,010 375,687
Merck & Co., Inc...................... 9,692 1,422,301
Pfizer, Inc........................... 3,089 397,323
Procter & Gamble Co................... 13,489 1,225,813
Union Carbide Corp.................... 17,086 675,965
----------
7,631,026
COMMUNICATIONS (7.10%)
AT & T Corp........................... 13,238 1,201,348
Bell Atlantic Corp.................... 18,765 1,125,900
CBS Corp.............................. 27,073 920,482
MCI Worldcom, Inc..................... 6,108(1) 487,113
----------
3,734,843
COMPUTER PROGRAMMING & SOFTWARE (1.03%)
Microsoft Corp........................ 3,087(1) 540,225
DEPOSITORY INSTITUTIONS (2.13%)
Bank America Corp..................... 5,623 376,038
J. P. Morgan & Co., Inc............... 7,043 743,036
----------
1,119,074
EATING AND DRINKING PLACES (2.45%)
McDonald's Corp....................... 16,315 1,285,826
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (7.92%)
Cisco Systems, Inc.................... 5,020(1) 560,044
General Electric Co................... 15,115 1,585,186
Intel Corporation..................... 3,145 443,248
Lucent Technologies, Inc.............. 12,146 1,367,184
Raytheon Company...................... 3,704 206,498
----------
4,162,160
FOOD AND KINDRED PRODUCTS (5.79%)
Coca-Cola Co. (The)................... 17,908 1,171,855
PepsiCo, Inc.......................... 23,149 904,258
Philip Morris Companies, Inc.......... 20,642 970,174
----------
3,046,287
</TABLE>
30
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- ----------
GENERAL MERCHANDISE STORES (4.54%)
<S> <C> <C>
Sears, Roebuck & Co................... 13,457 $ 539,962
Wal-Mart Stores, Inc.................. 21,490 1,848,140
----------
2,388,102
INDUSTRIAL MACHINERY AND EQUIPMENT (5.56%)
Caterpillar, Inc...................... 20,293 878,940
Hewlett-Packard Co.................... 5,053 396,029
International Business Machines
Corp................................. 9,001 1,649,433
----------
2,924,402
INSTRUMENTS AND RELATED PRODUCTS (1.26%)
Eastman Kodak Co...................... 10,181 665,583
INSURANCE CARRIERS (4.56%)
Allstate Corp......................... 20,903 785,169
American International Group, Inc..... 15,696 1,615,707
----------
2,400,876
MOTION PICTURES (1.89%)
Disney (Walt) Co...................... 30,120 993,960
NONDEPOSITORY INSTITUTIONS (.81%)
Citigroup, Inc........................ 7,569 424,337
PAPER AND ALLIED PRODUCTS (2.48%)
International Paper Co................ 15,452 611,320
Minnesota Mining & Manufacturing
Co................................... 8,898 690,707
----------
1,302,027
PETROLEUM AND COAL PRODUCTS (8.82%)
BP Amoco Corp......................... 11,462 929,855
Chevron Corp.......................... 10,465 782,259
Exxon Corp............................ 13,965 983,659
Mobil Corp............................ 11,406 1,000,164
Royal Dutch Petroleum Co.............. 6,917 277,112
Texaco, Inc........................... 13,979 662,255
----------
4,635,304
PRIMARY METAL INDUSTRIES (1.77%)
Aluminum Company of America........... 11,147 932,168
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (1.47%)
Goodyear Tire & Rubber Co............. 15,766 772,534
</TABLE>
31
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- ----------
SECURITY AND COMMODITY BROKERS (4.75%)
<S> <C> <C>
American Express Co................... 11,620 $1,195,408
Morgan Stanley, Dean Witter, Discover
& Co................................. 14,974 1,299,930
----------
2,495,338
TRANSPORTATION EQUIPMENT (9.54%)
Allied-Signal, Inc.................... 26,215 1,022,385
Boeing Co. (The)...................... 15,860 548,161
Ford Motor Co......................... 17,862 1,097,397
General Motors Corp................... 10,969 984,468
United Technologies Corp.............. 11,423 1,364,335
----------
5,016,746
----------
Total Common Stocks..................... 46,470,818
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (11.59%)
- ------------------------------------
UNITED STATES GOVERNMENT AGENCIES (9.49%)
Federal Home Loan Mortgage Corp., due
2/02/99.............................. $2,180,000 2,179,146
Federal Home Loan Mortgage Corp., due
2/08/99.............................. 1,435,000 1,433,302
Federal Home Loan Mortgage Corp., due
2/12/99.............................. 1,380,000 1,377,685
----------
4,990,133
<CAPTION>
SHARES
HELD
----------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (2.10%)
Provident Treasury Cash Management.... 1,102,352 1,102,352
----------
Total Short-Term Investments............ 6,092,485
----------
Total Investments (99.97%).............. 52,563,303
OTHER ASSETS LESS LIABILITIES (0.03%)
- -----------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... 16,558
----------
Total Net Assets (100.00%).............. $52,579,861
----------
----------
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
32
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
EquiTrust 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). Prior to May 1,
1998, the Fund was named FBL Series Fund, Inc.
On December 1, 1997, the initial purchases of Institutional shares ("Class
I") of the Fund 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
after December 1, 1997.
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 EquiTrust Investment Management Services,
Inc. ("EquiTrust Investment"), 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 Fund and affiliated
funds; and (e) such other types of accounts as EquiTrust Investment, the Fund's
distributor, deems appropriate. Class I shares currently are available for
purchase only from EquiTrust Investment. 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 previously, distribution fees and
administrative fees are only charged
33
<PAGE>
EQUITRUST 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, 1999, which are included in the
corresponding captions of the Statements of Operations, were as follows:
<TABLE>
<CAPTION>
TRANSFER AND
DIVIDEND
DISBURSING AGENT
FEES REGISTRATION FEES
----------------- -------------------
PORTFOLIO CLASS A CLASS I CLASS A CLASS I
- ------------------------------ ------- -------- -------- --------
<S> <C> <C> <C> <C>
Value Growth.................. $87,999 $ 9,034 $ 10,950 $ 3,178
High Grade Bond............... 13,723 3,893 3,904 2,906
High Yield Bond............... 16,537 2,842 4,228 2,941
Managed....................... 82,891 7,411 7,346 3,049
Money Market.................. 4,335 4,610 2,786 2,591
Blue Chip..................... 56,754 9,069 8,969 3,144
</TABLE>
All portfolios, other than the Money Market Portfolio, value their common
and preferred stocks, corporate bonds, United States Treasury obligations and
mortgage-backed and asset-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, EquiTrust Investment, the
investment manager, (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
34
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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, 1999, the High Grade Bond, Managed, Blue Chip, and Value
Growth Portfolios had net capital loss carryforwards of $13,000, $5,983,000,
$203,000, and $34,396,000, respectively, which will expire in 2007.
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into agreements with EquiTrust Investment relating to
the management of the portfolios and the investment of their assets. Pursuant to
these agreements, fees paid to EquiTrust 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 EquiTrust Investment
to retail dealers including EquiTrust Marketing Services, LLC ("EquiTrust
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 direct services provided and expenses incurred by the investment
adviser, plus an annual per account charge ranging from $7.00 to $9.00; 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.
EquiTrust 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 through December 31, 1999. There
can be no assurance that the Advisor will continue to waive this expense beyond
December 31, 1999.
35
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
EquiTrust 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% for "Class A" and "Class I"
shares, respectively, based on 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.
Certain officers and directors of the Fund are also officers of FBL
Financial Group, Inc., EquiTrust Investment, EquiTrust Marketing and other
affiliated entities. At January 31, 1999, Farm Bureau Life Insurance Company, a
wholly-owned subsidiary of FBL Financial Group, Inc., owned shares of the Fund's
portfolios as follows:
<TABLE>
<CAPTION>
PORTFOLIO CLASS A CLASS I
- ---------------------------------------- --------- -------
<S> <C> <C>
Value Growth............................ -- 154,703
High Grade Bond......................... -- 94,967
High Yield Bond......................... 75,129 95,057
Managed................................. -- 70,373
Money Market............................ 1,910,602 500,000
Blue Chip............................... -- 27,196
</TABLE>
EquiTrust Investment also owned 100,017 shares of Value Growth Portfolio
(Class A) at January 31, 1999.
4. CAPITAL SHARE TRANSACTIONS
Net assets as of January 31, 1999 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)....... $ 9,367 $ 1,368 $ 1,272 $ 4,064 $ 3,942 $ 1,232
Additional paid-in
capital................. 120,235,133 13,973,295 12,956,209 50,916,882 3,938,216 34,165,789
Accumulated undistributed
net investment income... 37,543 131,741 6,118
Accumulated undistributed
net realized gain (loss)
from investment
transactions............ (34,357,172) (13,086) 3,189 (5,983,259) (203,224)
Net unrealized
appreciation
(depreciation) of
investments............. (4,154,134) 434,201 66,917 (3,021,213) 18,609,946
------------ ----------- ----------- ----------- ---------- -----------
Net Assets............... $ 81,770,737 $14,395,778 $13,027,587 $42,048,215 $3,942,158 $52,579,861
------------ ----------- ----------- ----------- ---------- -----------
------------ ----------- ----------- ----------- ---------- -----------
</TABLE>
36
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in Capital Stock for each portfolio were as follows:
PERIOD ENDED JANUARY 31, 1999:
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------------------------------
VALUE HIGH GRADE HIGH YIELD MONEY BLUE
GROWTH BOND BOND MANAGED MARKET CHIP
----------- ---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A................ 529,194 191,017 146,738 236,996 1,534,814 165,287
Class I................ 63,137 10,217 10,526 30,357 141,615 20,476
Shares issued in
reinvestment of
dividends and/or capital
gains distribution:
Class A................ 572,925 24,834 27,265 233,110 16,550 8,448
Class I................ 24,508 1,099 1,670 12,284 2,539 797
Shares redeemed:
Class A................ (627,736) (76,380 ) (98,012) (256,455) (844,783) (99,294)
Class I................ (21,858) (2,101 ) (3,212) (10,091) (109,585) (3,873)
----------- ---------- ----------- ----------- ---------- -----------
Net Increase............. 540,170 148,686 84,975 246,201 741,150 91,841
----------- ---------- ----------- ----------- ---------- -----------
----------- ---------- ----------- ----------- ---------- -----------
Value of shares sold:
Class A................ $ 5,233,418 $2,025,527 $ 1,521,833 $ 2,650,144 $1,534,814 $ 6,647,576
Class I................ 542,047 110,240 101,292 339,452 141,615 808,971
Value issued in
reinvestment of
dividends and/or capital
gains distribution:
Class A................ 5,072,962 263,852 281,712 2,455,623 16,550 355,750
Class I................ 217,816 11,684 17,240 129,394 2,539 33,609
Value redeemed:
Class A................ (6,092,355) (812,228 ) (1,011,092) (2,856,359) (844,783) (4,005,938)
Class I................ (213,718) (24,875 ) (32,971) (113,900) (109,585) (154,826)
----------- ---------- ----------- ----------- ---------- -----------
Net Increase............. $ 4,760,170 $1,574,200 $ 878,014 $ 2,604,354 $ 741,150 $ 3,685,142
----------- ---------- ----------- ----------- ---------- -----------
----------- ---------- ----------- ----------- ---------- -----------
</TABLE>
37
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
YEAR ENDED JULY 31, 1998, EXCEPT AS NOTED:
<TABLE>
<CAPTION>
PORTFOLIO
---------------------------------------------------------------------------
VALUE HIGH GRADE HIGH YIELD MONEY BLUE
GROWTH BOND BOND MANAGED MARKET CHIP
------------ ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A................ 923,923 202,173 254,193 780,549 907,070 364,035
Class I *.............. 472,840 131,383 141,498 237,341 738,716 93,877
Shares issued in
reinvestment of
dividends and/or capital
gains distribution:
Class A................ 1,289,518 42,416 46,304 301,506 21,307 4,356
Class I *.............. 309 1,053 1,438 2,683 2,350 --
Shares redeemed:
Class A................ (1,055,225) (131,700 ) (126,422) (410,544) (820,239) (119,265)
Class I *.............. (32,351) (2,180 ) (4,117) (12,252) (113,912) (6,562)
------------ ----------- ----------- ----------- --------- -----------
Net Increase............. 1,599,014 243,145 312,894 899,283 735,292 336,441
------------ ----------- ----------- ----------- --------- -----------
------------ ----------- ----------- ----------- --------- -----------
Value of shares sold:
Class A................ $ 13,236,345 $2,131,708 $ 2,667,819 $10,655,935 $ 907,070 $14,203,276
Class I *.............. 6,710,307 1,387,293 1,489,392 3,192,435 738,716 3,521,895
Value issued in
reinvestment of
dividends and/or capital
gains distribution:
Class A................ 17,330,978 436,835 485,942 3,997,003 21,307 158,461
Class I *.............. 4,149 11,348 15,093 40,897 2,350 --
Value redeemed:
Class A................ (14,624,572) (1,379,042 ) (1,329,561) (5,497,121) (820,239) (4,519,381)
Class I *.............. (435,395) (22,953 ) (43,229) (168,016) (113,912) (265,758)
------------ ----------- ----------- ----------- --------- -----------
Net Increase............. $ 22,221,812 $2,565,189 $ 3,285,456 $12,221,133 $ 735,292 $13,098,493
------------ ----------- ----------- ----------- --------- -----------
------------ ----------- ----------- ----------- --------- -----------
</TABLE>
* Period from December 1, 1997 (date operations commenced) through July 31,
1998.
5. INVESTMENT TRANSACTIONS
For the six months ended January 31, 1999, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. Government securities) by portfolio, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
- ---------------------------------------- ------------ -----------
<S> <C> <C>
Value Growth............................ $103,047,996 $71,736,401
High Grade Bond......................... 4,792,216 2,377,270
High Yield Bond......................... 4,239,976 3,484,844
Managed................................. 17,898,517 14,126,664
Blue Chip............................... 4,601,539 4,622,538
</TABLE>
38
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT TRANSACTIONS (CONTINUED)
At January 31, 1999, net unrealized appreciation (depreciation) 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....................... $ 2,371,597 $ 6,525,731 $(4,154,134)
High Grade Bond.................... 491,131 56,930 434,201
High Yield Bond.................... 429,161 362,244 66,917
Managed............................ 836,325 3,857,538 (3,021,213)
Blue Chip.......................... 18,738,398 128,452 18,609,946
</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 31, 1998.......... $0.0457 $0.0483 $0.0469 $0.0508 $0.0030 $0.0034
September 30, 1998....... 0.0524 0.0550 0.0522 0.0565 0.0029 0.0033
October 30, 1998......... 0.0427 0.0450 0.0493 0.0535 0.0028 0.0032
November 30, 1998........ 0.0496 0.0517 0.0477 0.0520 0.0026 0.0030
December 31, 1998........ 0.0433 0.0453 0.0522 0.0565 0.0026 0.0030
January 29, 1999......... 0.0439 0.0457 0.0460 0.0501 0.0024 0.0028
------- ------- ------- ------- ------- -------
Total Dividends Per
Share................... $0.2776 $0.2910 $0.2943 $0.3194 $0.0163 $0.0187
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
39
<PAGE>
EQUITRUST 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
period ended January 31, 1999, for the following portfolios:
ORDINARY INCOME DIVIDENDS:
<TABLE>
<CAPTION>
DIVIDEND AMOUNT
PER SHARE
DECLARATION RECORD PAYABLE -------------------
PORTFOLIO DATE DATE DATE CLASS A CLASS I
- ------------------------- ----------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Value Growth............. 12/30/98 12/30/98 12/30/98 $ 0.1080 $ 0.1520
Managed.................. 10/30/98 10/30/98 10/30/98 0.1275 0.1142
Managed.................. 12/30/98 12/30/98 12/30/98 0.0810 0.1000
Blue Chip................ 12/30/98 12/30/98 12/30/98 0.1600 0.2940
</TABLE>
CAPITAL GAINS DISTRIBUTIONS:
<TABLE>
<CAPTION>
DIVIDEND
AMOUNT
DECLARATION RECORD PAYABLE PER SHARE
PORTFOLIO DATE DATE DATE (BOTH CLASSES)
- ------------------------------ ----------- --------- --------- ---------------
<S> <C> <C> <C> <C>
Value Growth.................. 12/30/98 12/30/98 12/30/98 $0.0180
Value Growth.................. 01/29/99 01/29/99 01/29/99 0.4911
High Grade Bond............... 12/30/98 12/30/98 12/30/98 0.0615
High Yield Bond............... 12/30/98 12/30/98 12/30/98 0.0974
Blue Chip..................... 12/30/98 12/30/98 12/30/98 0.1695
Managed....................... 01/29/99 01/29/99 01/29/99 0.5127
</TABLE>
The capital gains distributions related to the High Yield Bond and Blue Chip
Portfolios include net short-term realized gains of $105,233 ($0.0965 per A
share), $13,925 ($0.0965 per I share) and $42,162 ($0.0385 per A share), $3,839
($0.0385 per I share), respectively.
7. EXPENSE OFFSET ARRANGEMENTS
The Fund and other Funds managed by EquiTrust Investment have an agreement
with the custodian bank to indirectly pay a portion of the custodian's fees
through credits earned by the Funds' cash on deposit with the bank. Such deposit
agreement is an alternative to overnight investments.
40
<PAGE>
(This page has been left blank intentionally.)
41
<PAGE>
EQUITRUST SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
PERIOD ENDED JANUARY 31, 1999 (UNAUDITED) AND
YEARS ENDED JULY 31, 1998, 1997, 1996, 1995 AND 1994
<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:
1999................................ $ 11.07 $ 0.07 $ (1.79) $ (1.72)
1998................................ 15.63 0.13 (2.26) (2.13)
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
Class I:
1999................................ $ 11.08 $ 0.15 $ (1.84) $ (1.69)
1998................................ 16.16 0.19 (2.83) (2.64)
HIGH GRADE BOND PORTFOLIO
Class A:
1999................................ $ 10.57 $ 0.28 $ 0.01 $ 0.29
1998................................ 10.50 0.60 0.07 0.67
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
Class I:
1999................................ $ 10.57 $ 0.29 $ 0.02 $ 0.31
1998................................ 10.53 0.42 0.04 0.46
HIGH YIELD BOND PORTFOLIO
Class A:
1999................................ $ 10.48 $ 0.29 $ (0.14) $ 0.15
1998................................ 10.48 0.65 0.07 0.72
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
Class I:
1999................................ $ 10.47 $ 0.32 $ (0.13) $ 0.19
1998................................ 10.52 0.45 0.02 0.47
<CAPTION>
LESS DISTRIBUTIONS
---------------------------------------------------------------
DIVIDENDS
FROM NET DISTRIBUTIONS DISTRIBUTIONS
INVESTMENT FROM CAPITAL IN EXCESS OF TOTAL
INCOME GAINS NET REALIZED GAINS DISTRIBUTIONS
---------- ------------- ------------------ -------------
<S> <C> <C> <C> <C>
VALUE GROWTH PORTFOLIO
Class A:
1999................................ $ (0.11) $ -- $ (0.51) $ (0.62)
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)
Class I:
1999................................ $ (0.15) $ -- $ (0.51) $ (0.66)
1998................................ (0.18) (2.26) -- (2.44)
HIGH GRADE BOND PORTFOLIO
Class A:
1999................................ $ (0.28) $ (0.06) $ -- $ (0.34)
1998................................ (0.60) -- -- (0.60)
1997................................ (0.60) -- -- (0.60)
1996................................ (0.64) -- -- (0.64)
1995................................ (0.63) -- (0.03) (0.66)
1994................................ (0.64) (0.16) -- (0.80)
Class I:
1999................................ $ (0.29) $ (0.06) $ -- $ (0.35)
1998................................ (0.42) -- -- (0.42)
HIGH YIELD BOND PORTFOLIO
Class A:
1999................................ $ (0.29) $ (0.10) $ -- $ (0.39)
1998................................ (0.65) (0.07) -- (0.72)
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)
Class I:
1999................................ $ (0.32) $ (0.10) $ -- $ (0.42)
1998................................ (0.45) (0.07) -- (0.52)
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
TOTAL
INVESTMENT
NET ASSET RETURN BASED
CAPITAL VALUE AT ON
CONTRIBUTION END OF NET ASSET
FROM AFFILIATE PERIOD VALUE (1)
-------------- --------- ------------
<S> <C> <C> <C>
VALUE GROWTH PORTFOLIO
Class A:
1999................................ $ -- $ 8.73 (31.27)%(4)
1998................................ -- 11.07 (16.37)%
1997................................ -- 15.63 21.83%
1996................................ -- 14.68 18.41%
1995................................ -- 13.04 9.36%
1994................................ -- 13.07 0.34%
Class I:
1999................................ $ -- $ 8.73 (30.63)%(4)
1998................................ -- 11.08 (18.97)%(3)
HIGH GRADE BOND PORTFOLIO
Class A:
1999................................ $ -- $ 10.52 5.52%(4)
1998................................ -- 10.57 6.53%
1997................................ -- 10.50 9.56%
1996................................ -- 10.16 5.37%
1995................................ -- 10.26 8.23%
1994................................ -- 10.13 1.77%
Class I:
1999................................ $ -- $ 10.53 5.97%(4)
1998................................ -- 10.57 4.40%(3)
HIGH YIELD BOND PORTFOLIO
Class A:
1999................................ $ -- $ 10.24 2.97%(4)
1998................................ -- 10.48 7.10%
1997................................ -- 10.48 13.29%
1996................................ -- 9.99 7.67%
1995................................ -- 10.03 9.71%
1994................................ -- 10.00 1.88%
Class I:
1999................................ $ -- $ 10.24 3.65%(4)
1998................................ -- 10.47 4.62%(3)
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------
RATIO OF NET
RATIO OF TOTAL RATIO OF NET INVESTMENT
NET ASSETS AT EXPENSES TO EXPENSES TO INCOME TO PORTFOLIO
END OF PERIOD AVERAGE NET AVERAGE NET AVERAGE NET TURNOVER
(IN THOUSANDS) ASSETS (4) ASSETS (4) ASSETS (4) RATE (4)
-------------- -------------- -------------- -------------- --------
<S> <C> <C> <C> <C> <C>
VALUE GROWTH PORTFOLIO
Class A:
1999................................ $ 77,350 1.73% 1.73% 1.48% 251%
1998................................ 92,848 1.60% -- 0.87% 217%
1997................................ 112,985 1.65% -- 1.18% 77%
1996................................ 86,534 1.62% -- 1.87% 92%
1995................................ 70,947 1.62% -- 3.43% 85%
1994................................ 64,315 1.60% -- 4.05% 93%
Class I:
1999................................ $ 4,421 1.10% 1.10% 2.12% 251%
1998................................ 4,885 0.73%(3) -- 0.64%(3) 217%(3)
HIGH GRADE BOND PORTFOLIO
Class A:
1999................................ $ 12,928 1.75% 1.74% 5.25% 42%
1998................................ 11,510 1.71% -- 5.67% 38%
1997................................ 10,250 1.82% -- 5.85% 30%
1996................................ 9,122 1.85% -- 6.19% 34%
1995................................ 8,345 1.99% -- 6.29% 18%
1994................................ 7,596 1.90% -- 6.12% 42%
Class I:
1999................................ $ 1,468 1.50% 1.48% 5.48% 42%
1998................................ 1,376 0.95%(3) -- 3.89%(3) 38%(3)
HIGH YIELD BOND PORTFOLIO
Class A:
1999................................ $ 11,514 2.00% 1.98% 5.70% 42%
1998................................ 10,982 1.97% -- 6.17% 30%
1997................................ 9,156 2.00% -- 6.82% 45%
1996................................ 7,349 2.00% -- 7.44% 30%
1995................................ 6,691 2.00% -- 7.83% 23%
1994................................ 6,425 2.00% -- 7.68% 26%
Class I:
1999................................ $ 1,513 1.50% 1.48% 6.18% 42%
1998................................ 1,454 1.05%(3) -- 4.26%(3) 30%(3)
</TABLE>
43
<PAGE>
EQUITRUST SERIES FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED JANUARY 31, 1999 (UNAUDITED) AND
YEARS ENDED JULY 31, 1998, 1997, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------------------------
NET REALIZED AND
NET ASSET VALUE UNREALIZED GAIN TOTAL
AT BEGINNING OF NET INVESTMENT (LOSS) ON FROM INVESTMENT
PERIOD INCOME INVESTMENTS OPERATIONS
---------------- ----------------- ------------------- ------------------
<S> <C> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
1999................. $12.15 $ 0.24 $ (1.32) $ (1.08)
1998................. 14.05 0.44 (1.00) (0.56)
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)
Class I:
1999................. $12.13 $ 0.25 $ (1.30) $ (1.05)
1998................. 14.21 0.34 (1.16) (0.82)
MONEY MARKET PORTFOLIO
Class A:
1999................. $ 1.00 $ 0.02 $ -- $ 0.02
1998................. 1.00 0.04 -- 0.04
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
Class I:
1999................. $ 1.00 $ 0.02 $ -- $ 0.02
1998................. 1.00 0.02 -- 0.02
BLUE CHIP PORTFOLIO
Class A:
1999................. $41.27 $ 0.09 $ 1.67 $ 1.76
1998................. 37.20 0.18 4.08 4.26
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
Class I:
1999................. $41.37 0.21 1.65 1.86
1998................. 36.77 0.29 4.51 4.80
<CAPTION>
LESS DISTRIBUTIONS
------------------------------------------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM NET DISTRIBUTIONS FROM IN EXCESS OF
INVESTMENT INCOME CAPITAL GAINS NET REALIZED GAINS TOTAL DISTRIBUTIONS
------------------ --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
1999................. $ (0.21) $ -- $ (0.51) $ (0.72)
1998................. (0.44) (0.90) -- (1.34)
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)
Class I:
1999................. $ (0.21) $ -- $ (0.51) $ (0.73)
1998................. (0.36) (0.90) -- (1.26)
MONEY MARKET PORTFOLIO
Class A:
1999................. $ (0.02) $ -- $ -- $ (0.02)
1998................. (0.04) -- -- (0.04)
1997................. (0.03) -- -- (0.03)
1996................. (0.04) -- -- (0.04)
1995................. (0.04) -- -- (0.04)
1994................. (0.02) -- -- (0.02)
Class I:
1999................. $ (0.02) $ -- $ -- $ (0.02)
1998................. (0.02) -- -- (0.02)
BLUE CHIP PORTFOLIO
Class A:
1999................. $ (0.16) $ (0.17) $ -- $ (0.33)
1998................. (0.16) (0.03) -- (0.19)
1997................. (0.14) (0.30) -- (0.44)
1996................. (0.19) -- -- (0.19)
1995................. (0.14) -- -- (0.14)
1994................. (0.14) -- -- (0.14)
Class I:
1999................. $ (0.29) $ (0.17) $ -- $ (0.46)
1998................. (0.17) (0.03) -- (0.20)
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL INVESTMENT
CAPITAL CONTRIBUTION AT RETURN BASED ON
FROM AFFILIATE END OF PERIOD NET ASSET VALUE (1)
-------------------- ----------------- --------------------
<S> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
1999................. $ -- $ 10.35 (17.85)%(4)
1998................. -- 12.15 (4.54)%
1997................. -- 14.05 17.88%
1996................. 0.03(2) 13.33 17.30%(2)
1995................. -- 11.85 9.40%
1994................. -- 11.62 (0.61)%
Class I:
1999................. $ -- $ 10.35 (17.44)%(4)
1998................. -- 12.13 (6.31)%(3)
MONEY MARKET PORTFOLIO
Class A:
1999................. $ -- $ 1.00 3.37%(4)
1998................. -- 1.00 3.65%
1997................. -- 1.00 3.51%
1996................. -- 1.00 3.64%
1995................. -- 1.00 3.60%
1994................. -- 1.00 1.47%
Class I:
1999................. $ -- $ 1.00 3.84%(4)
1998................. -- 1.00 2.47%(3)
BLUE CHIP PORTFOLIO
Class A:
1999................. $ -- $ 42.70 8.56%(4)
1998................. -- 41.27 11.49%
1997................. -- 37.20 43.77%
1996................. -- 26.26 15.83%
1995................. -- 22.85 22.77%
1994................. -- 18.75 6.75%
Class I:
1999................. $ -- $ 42.77 9.07%(4)
1998................. -- 41.37 13.14%(3)
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
TOTAL NET INVESTMENT
EXPENSES EXPENSES INCOME
TO TO TO
NET ASSETS AVERAGE AVERAGE AVERAGE
AT END OF NET NET NET PORTFOLIO
PERIOD (IN ASSETS ASSETS ASSETS TURNOVER
THOUSANDS) (4) (4) (4) RATE (4)
---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
1999................. $ 39,353 2.00% 2.00% 4.30% 86%
1998................. 43,602 1.83% -- 3.33% 66%
1997................. 40,994 1.95% -- 3.48% 74%
1996................. 27,470 1.91% -- 3.47% 81%
1995................. 21,105 1.94% -- 4.86% 69%
1994................. 19,100 1.96% -- 4.42% 29%
Class I:
1999................. $ 2,696 1.42% 1.42% 4.85% 86%
1998................. 2,762 1.03%(3) -- 2.30%(3) 66%(3)
MONEY MARKET PORTFOLIO
Class A:
1999................. $ 3,280 2.00% 1.96% 3.44% 0%
1998................. 2,574 1.95% -- 3.57% 0%
1997................. 2,466 2.00% -- 3.46% 0%
1996................. 2,552 2.00% -- 3.58% 0%
1995................. 2,439 2.00% -- 3.51% 0%
1994................. 2,627 1.93% -- 1.45% 0%
Class I:
1999................. $ 662 1.50% 1.46% 2.99% 0%
1998................. 627 1.29%(3) -- 2.37%(3) 0%(3)
BLUE CHIP PORTFOLIO
Class A:
1999................. $ 48,101 1.49% 1.48% 0.49% 22%
1998................. 43,418 1.55% -- 0.49% 3%
1997................. 29,863 1.74% -- 0.49% 0%
1996................. 14,641 1.79% -- 0.66% 3%
1995................. 9,657 1.78% -- 0.92% 1%
1994................. 6,745 1.83% -- 0.75% 1%
Class I:
1999................. $ 4,479 1.01% 1.00% 0.95% 22%
1998................. 3,613 0.76%(3) -- 0.51%(3) 3%(3)
</TABLE>
45
<PAGE>
EQUITRUST 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) During the year ended July 31, 1996, EquiTrust 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. 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) Period from December 1, 1997 (date Class I operations commenced) through
July 31, 1998. Ratios presented have not been annualized.
(4) Computed on an annualized basis, unless otherwise indicated.
(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 GRADE BOND PORTFOLIO
Class I 1999 $0.28 1.67% $ 1,209
HIGH YIELD BOND PORTFOLIO
Class A 1999 $0.29 2.03% $ 2,073
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
Class I 1999 $0.31 1.63% $ 1,035
MONEY MARKET PORTFOLIO
Class A 1999 $0.02 2.20% $ 3,231
1997 0.03 2.28% 7,255
1996 0.03 2.43% 10,718
1995 0.03 2.20% 4,948
Class I 1999 $0.02 1.75% $ 825
MANAGED PORTFOLIO
Class A 1999 $0.24 2.00% $ 639
1993 0.53 2.02% 3,497
</TABLE>
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